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Title 24: Housing and Urban Development</TITLE>
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<ECFRBRWS>
<AMDDATE>July 13, 2026
</AMDDATE>

<DIV1 N="1" NODE="24:1" TYPE="TITLE">

<HEAD>Title 24—Housing and Urban Development--Volume 1</HEAD>
<CFRTOC>
<PTHD>Part
</PTHD>
<CHAPTI>
<SUBJECT>SUBTITLE A—<E T="04">Office of the Secretary, Department of Housing and Urban Development</E>
</SUBJECT>
<PG>0
</PG></CHAPTI>
<SUBTI>
<HED>SUBTITLE B—<E T="04">Regulations Relating to Housing and Urban Development</E>
</HED></SUBTI>
<CHAPTI>
<SUBJECT><E T="04">chapter i</E>—Office of Assistant Secretary for Equal Opportunity, Department of Housing and Urban Development
</SUBJECT>
<PG>100


</PG></CHAPTI></CFRTOC>
<DIV2 N="Subtitle A" NODE="24:1.1" TYPE="SUBTITLE">
<HEAD>Subtitle A—Office of the Secretary, Department of Housing and Urban Development
</HEAD>

<DIV5 N="0" NODE="24:1.1.1.1.1" TYPE="PART">
<HEAD>PART 0—STANDARDS OF CONDUCT


</HEAD>

<DIV8 N="§ 0.1" NODE="24:1.1.1.1.1.0.1.1" TYPE="SECTION">
<HEAD>§ 0.1   Cross-reference to employees ethical conduct standards and financial disclosure regulations.</HEAD>
<P>Employees of the Department of Housing and Urban Development (Department) are subject to the executive branch-wide standards of ethical conduct at 5 CFR part 2635, the Department's regulation at 5 CFR part 7501 which supplements the executive branch-wide standards, and the executive branch-wide financial disclosure regulation at 5 CFR part 2634. 
</P>
<SECAUTH TYPE="N">5 U.S.C. 301, 7301; 42 U.S.C. 3535(d) 
</SECAUTH>
<CITA TYPE="N">[61 FR 36251, July 9, 1996]


</CITA>
</DIV8>

</DIV5>


<DIV5 N="1" NODE="24:1.1.1.1.2" TYPE="PART">
<HEAD>PART 1—NONDISCRIMINATION IN FEDERALLY ASSISTED PROGRAMS OF THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT—EFFECTUATION OF TITLE VI OF THE CIVIL RIGHTS ACT OF 1964
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 2000d-1 and 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>38 FR 17949, July 5, 1973, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV8 N="§ 1.1" NODE="24:1.1.1.1.2.0.1.1" TYPE="SECTION">
<HEAD>§ 1.1   Purpose.</HEAD>
<P>The purpose of this part 1 is to effectuate the provisions of title VI of the Civil Rights Act of 1964 (hereafter referred to as the <I>Act</I>) to the end that no person in the United States shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination under any program or activity receiving Federal financial assistance from the Department of Housing and Urban Development. 


</P>
</DIV8>


<DIV8 N="§ 1.2" NODE="24:1.1.1.1.2.0.1.2" TYPE="SECTION">
<HEAD>§ 1.2   Definitions.</HEAD>
<P>As used in this part 1—
</P>
<P>(a) The term <I>Department</I> means the Department of Housing and Urban Development. 
</P>
<P>(b) The term <I>Secretary</I> means the Secretary of Housing and Urban Development. 
</P>
<P>(c) The term <I>responsible Department official</I> means the Secretary or, to the extent of any delegation of authority by the Secretary to act under this part 1, any other Department official to whom the Secretary may hereafter delegate such authority. 
</P>
<P>(d) The term <I>United States</I> means the States of the United States, the District of Columbia, Puerto Rico, the Virgin Islands, American Samoa, Guam, Wake Island, the Canal Zone, and the territories and possessions of the United States, and the term <I>State</I> means any one of the foregoing. 
</P>
<P>(e) The term <I>Federal financial assistance</I> includes: (1) Grants, loans, and advances of Federal funds, (2) the grant or donation of Federal property and interests in property, (3) the detail of Federal personnel, (4) the sale and lease of, and the permission to use (on other than a casual or transient basis), Federal property or any interest in such property without consideration or at a nominal consideration, or at a consideration which is reduced for the purpose of assisting the recipient, or in recognition of the public interest to be served by such sale or lease to the recipient, and (5) any Federal agreement, arrangement, or other contract which has as one of its purposes the provision of assistance. The term <I>Federal financial assistance</I> does not include a contract of insurance or guaranty. 
</P>
<P>(f) The term <I>recipient</I> means any State, political subdivision of any State, or instrumentality of any State or political subdivision, any public or private agency, institution, organization, or other entity, or any individual, in any State, to whom Federal financial assistance is extended, directly or through another recipient, for any program or activity, or who otherwise participates in carrying out such program or activity (such as a redeveloper in the Urban Renewal Program), including any successor, assign, or transferee thereof, but such term does not include any ultimate beneficiary under any such program or activity. 
</P>
<P>(g) The term <I>applicant</I> means one who submits an application, contract, request, or plan requiring Department approval as a condition to eligibility for Federal financial assistance, and the term <I>application</I> means such an application, contract, request, or plan. 


</P>
</DIV8>


<DIV8 N="§ 1.3" NODE="24:1.1.1.1.2.0.1.3" TYPE="SECTION">
<HEAD>§ 1.3   Application of part 1.</HEAD>
<P>This part 1 applies to any program or activity for which Federal financial assistance is authorized under a law administered by the Department. It applies to money paid, property transferred, or other Federal financial assistance extended to any such program or activity on or after January 3, 1965. This part 1 does not apply to: (a) Any Federal financial assistance by way of insurance or guaranty contracts, (b) money paid, property transferred, or other assistance extended to any such program or activity before January 3, 1965, (c) any assistance to any person who is the ultimate beneficiary under any such program or activity, or (d) any employment practice, under any such program or activity, of any employer, employment agency, or labor organization, except to the extent described in § 1.4(c). 
</P>
<CITA TYPE="N">[38 FR 17949, July 5, 1973, as amended at 83 FR 26360, June 7, 2018]


</CITA>
</DIV8>


<DIV8 N="§ 1.4" NODE="24:1.1.1.1.2.0.1.4" TYPE="SECTION">
<HEAD>§ 1.4   Discrimination prohibited.</HEAD>
<P>(a) <I>General.</I> No person in the United States shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination under any program or activity to which this part 1 applies. 
</P>
<P>(b) <I>Specific discriminatory actions prohibited.</I> (1) A recipient under any program or activity to which this part 1 applies may not, directly or through contractual or other arrangements, on the ground of race, color, or national origin: 
</P>
<P>(i) Deny a person any housing, accommodations, facilities, services, financial aid, or other benefits provided under the program or activity; 
</P>
<P>(ii) Provide any housing, accommodations, facilities, services, financial aid, or other benefits to a person which are different, or are provided in a different manner, from those provided to others under the program or activity; 
</P>
<P>(iii) Subject a person to segregation or separate treatment in any matter related to his receipt of housing, accommodations, facilities, services, financial aid, or other benefits under the program or activity; 
</P>
<P>(iv) Restrict a person in any way in access to such housing, accommodations, facilities, services, financial aid, or other benefits, or in the enjoyment of any advantage or privilege enjoyed by others in connection with such housing, accommodations, facilities, services, financial aid, or other benefits under the program or activity; 
</P>
<P>(v) Treat a person differently from others in determining whether he satisfies any occupancy, admission, enrollment, eligibility, membership, or other requirement or condition which persons must meet in order to be provided any housing, accommodations, facilities, services, financial aid, or other benefits provided under the program or activity; 
</P>
<P>(vi) Deny a person opportunity to participate in the program or activity through the provision of services or otherwise, or afford him an opportunity to do so which is different from that afforded others under the program or activity (including the opportunity to participate in the program or activity as an employee but only to the extent set forth in paragraph (c) of this section). 
</P>
<P>(vii) Deny a person the opportunity to participate as a member of a planning or advisory body which is an integral part of the program. 
</P>
<P>(2)(i) A recipient, in determining the types of housing, accommodations, facilities, services, financial aid, or other benefits which will be provided under any such program or activity, or the class of persons to whom, or the situations in which, such housing, accommodations, facilities, services, financial aid, or other benefits will be provided under any such program or activity, or the class of persons to be afforded an opportunity to participate in any such program or activity, may not, directly or through contractual or other arrangements, utilize criteria or methods of administration which have the effect of subjecting persons to discrimination because of their race, color, or national origin, or have the effect of defeating or substantially impairing accomplishment of the objectives of the program or activity as respect to persons of a particular race, color, or national origin. 
</P>
<P>(ii) A recipient, in operating low-rent housing with Federal financial assistance under the United States Housing Act of 1937, as amended (42 U.S.C. 1401 <I>et seq.</I>), shall assign eligible applicants to dwelling units in accordance with a plan, duly adopted by the recipient and approved by the responsible Department official, providing for assignment on a community-wide basis in sequence based upon the date and time the application is received, the size or type of unit suitable, and factors affecting preference or priority established by the recipient's regulations, which are not inconsistent with the objectives of title VI of the Civil Rights Act of 1964 and this part 1. The plan may allow an applicant to refuse a tendered vacancy for good cause without losing his standing on the list but shall limit the number of refusals without cause as prescribed by the responsible Department official. 
</P>
<P>(iii) The responsible Department official is authorized to prescribe and promulgate plans, exceptions, procedures, and requirements for the assignment and reassignment of eligible applicants and tenants consistent with the purpose of paragraph (b)(2)(ii) of this section, this part 1, and title VI of the Civil Rights Act of 1964, in order to effectuate and insure compliance with the requirements imposed thereunder. 
</P>
<P>(3) In determining the site or location of housing, accommodations, or facilities, an applicant or recipient may not make selections with the purpose or effect of excluding individuals from, denying them the benefits of, or subjecting them to discrimination under any program to which this part 1 applies, on the ground of race, color, or national origin; or with the purpose or effect of defeating or substantially impairing the accomplishment of the objectives of the Act or this part 1. 
</P>
<P>(4) As used in this part 1 the housing, accommodations, facilities, services, financial aid, or other benefits provided under a program or activity receiving Federal financial assistance shall be deemed to include any housing, accommodations, facilities, services, financial aid, or other benefits provided in or through a facility provided with the aid of Federal financial assistance. 
</P>
<P>(5) The enumeration of specific forms of prohibited discrimination in paragraphs (b) and (c) of this section does not limit the generality of the prohibition in paragraph (a) of this section. 
</P>
<P>(6)(i) In administering a program regarding which the recipient has previously discriminated against persons on the ground of race, color, or national origin, the recipient must take affirmative action to overcome the effects of prior discrimination. 
</P>
<P>(ii) Even in the absence of such prior discrimination, a recipient in administering a program should take affirmative action to overcome the effects of conditions which resulted in limiting participation by persons of a particular race, color, or national origin. 
</P>
<FP>Where previous discriminatory practice or usage tends, on the ground of race, color, or national origin, to exclude individuals from participation in, to deny them the benefits of, or to subject them to discrimination under any program or activity to which this part 1 applies, the applicant or recipient has an obligation to take reasonable action to remove or overcome the consequences of the prior discriminatory practice or usage, and to accomplish the purpose of the Act. 
</FP>
<P>(c) <I>Employment practices.</I> (1) Where a primary objective of the Federal financial assistance to a program or activity to which this part 1 applies is to provide employment, a recipient may not, directly or through contractual or other arrangements, subject a person to discrimination on the ground of race, color, or national origin in its employment practices under such program or activity (including recruitment or recruitment advertising, employment, layoff, termination, upgrading, demotion, transfer, rates of pay or other forms of compensation and use of facilities). The requirements applicable to construction employment under such program or activity shall be those specified in or pursuant to part III of Executive Order 11246 or any executive order which supersedes or amends it. 
</P>
<P>(2) Where a primary objective of the Federal financial assistance is not to provide employment, but discrimination on the ground of race, color, or national origin in the employment practices of the recipient or other persons subject to this part 1 tends, on the ground of race, color, or national origin, to exclude individuals from participation in, to deny them the benefits of, or to subject them to discrimination under any program to which this part 1 applies, the provisions of this paragraph (c) shall apply to the employment practices of the recipient or other persons subject to this part 1 to the extent necessary to assure equality of opportunity to, and nondiscriminatory treatment of, beneficiaries. 


</P>
</DIV8>


<DIV8 N="§ 1.5" NODE="24:1.1.1.1.2.0.1.5" TYPE="SECTION">
<HEAD>§ 1.5   Assurances required.</HEAD>
<P>(a) <I>General.</I> (1) Every contract for Federal financial assistance to carry out a program or activity to which this part 1 applies, executed on or after January 3, 1965, and every application for such Federal financial assistance submitted on or after January 3, 1965, shall, as a condition to its approval and the extension of any Federal financial assistance pursuant to such contract or application, contain or be accompanied by an assurance that the program or activity will be conducted and the housing, accommodations, facilities, services, financial aid, or other benefits to be provided will be operated and administered in compliance with all requirements imposed by or pursuant to this part 1. In the case of a contract or application where the Federal financial assistance is to provide or is in the form of personal property or real property or interest therein or structures thereon, the assurance shall obligate the recipient or, in the case of a subsequent transfer, the transferee, for the period during which the property is used for a purpose for which the Federal financial assistance is extended or for another purpose involving the provision of similar services or benefits, or for as long as the recipient retains ownership or possession of the property, whichever is longer. In all other cases the assurance shall obligate the recipient for the period during which Federal financial assistance is extended pursuant to the contract or application. The responsible Department official shall specify the form of the foregoing assurance for such program or activity, and the extent to which like assurances will be required of subgrantees, contractors and subcontractors, transferees, successors in interest, and other participants in the program or activity. Any such assurance shall include provisions which give the United States a right to seek its judicial enforcement. 
</P>
<P>(2) In the case of real property, structures or improvements thereon, or interests therein, acquired through a program of Federal financial assistance the instrument effecting any disposition by the recipient of such real property, structures or improvements thereon, or interests therein, shall contain a covenant running with the land assuring nondiscrimination for the period during which the real property is used for a purpose for which the Federal financial assistance is extended or for another purpose involving the provision of similar services or benefits. In the case where Federal financial assistance is provided in the form of a transfer of real property or interests therein from the Federal Government, the instrument effecting or recording the transfer shall contain such a covenant. 
</P>
<P>(3) In program receiving Federal financial assistance in the form, or for the acquisition, of real property or an interest in real property, to the extent that rights to space on, over, or under any such property are included as part of the program receiving such assistance, the nondiscrimination requirements of this part 1 shall extend to any facility located wholly or in part in such space. 
</P>
<P>(b) <I>Preexisting contracts—funds not disbursed.</I> In any case where a contract for Federal financial assistance, to carry out a program or activity to which this part 1 applies, has been executed prior to January 3, 1965, and the funds have not been fully disbursed by the Department, the responsible Department official shall, where necessary to effectuate the purposes of this part 1, require an assurance similar to that provided in paragraph (a) of this section as a condition to the disbursement of further funds. 
</P>
<P>(c) <I>Preexisting contracts—periodic payments.</I> In any case where a contract for Federal financial assistance, to carry out a program or activity to which this part 1 applies, has been executed prior to January 3, 1965, and provides for periodic payments for the continuation of the program or activity, the recipient shall, in connection with the first application for such periodic payments on or after January 3, 1965: (1) Submit a statement that the program or activity is being conducted in compliance with all requirements imposed by or pursuant to this part 1 and (2) provide such methods of administration for the program or activity as are found by the responsible Department official to give reasonable assurance that the recipient will comply with all requirements imposed by or pursuant to this part 1. 
</P>
<P>(d) <I>Assurances from institutions.</I> (1) In the case of any application for Federal financial assistance to an institution of higher education, the assurance required by this section shall extend to admission practices and to all other practices relating to the treatment of students. 
</P>
<P>(2) The assurance required with respect to an institution of higher education, hospital, or any other institution, insofar as the assurance relates to the institution's practices with respect to admission or other treatment of persons as students, patients, or clients of the institution or to the opportunity to participate in the provision of services or other benefits to such persons, shall be applicable to the entire institution unless the applicant establishes, to the satisfaction of the responsible Department official, that the institution's practices in designated parts or programs of the institution will in no way affect its practices in the program of the institution for which Federal financial assistance is sought, or the beneficiaries of or participants in such program. If in any such case the assistance sought is for the construction of a facility or part of a facility, the assurance shall in any event extend to the entire facility and to facilities operated in connection therewith. 
</P>
<P>(e) <I>Elementary and secondary schools.</I> The requirements of this section with respect to any elementary or secondary school or school system shall be deemed to be satisfied if such school or school system (1) is subject to a final order of a court of the United States for the desegregation of such school or school system, and provides an assurance that it will comply with such order, including any future modification of such order, or (2) submits a plan for the desegregation of such school or school system which the responsible official of the Department of Health and Human Services determines is adequate to accomplish the purposes of the Act and this part 1 within the earliest practicable time, and provides reasonable assurance that it will carry out such plan. 
</P>
<CITA TYPE="N">[38 FR 17949, July 5, 1973, as amended at 50 FR 9269, Mar. 7, 1985] 


</CITA>
</DIV8>


<DIV8 N="§ 1.6" NODE="24:1.1.1.1.2.0.1.6" TYPE="SECTION">
<HEAD>§ 1.6   Compliance information.</HEAD>
<P>(a) <I>Cooperation and assistance.</I> The responsible Department official and each Department official who by law or delegation has the principal responsibility within the Department for the administration of any law extending financial assistance subject to this part 1 shall to the fullest extent practicable seek the cooperation of recipients in obtaining compliance with this part 1 and shall provide assistance and guidance to recipients to help them comply voluntarily with this part 1. 
</P>
<P>(b) <I>Compliance reports.</I> Each recipient shall keep such records and submit to the responsible Department official or his designee timely, complete, and accurate compliance reports at such times, and in such form and containing such information, as the responsible Department official or his designee may determine to be necessary to enable him to ascertain whether the recipient has complied or is complying with this part 1. In general, recipients should have available for the department racial and ethnic data showing the extent to which members of minority groups are beneficiaries of federally assisted programs. 
</P>
<P>(c) <I>Access to sources of information.</I> Each recipient shall permit access by the responsible Department official or his designee during normal business hours to such of its books, records, accounts, and other sources of information, and its facilities as may be pertinent to ascertain compliance with this part 1. Where any information required of a recipient is in the exclusive possession of any other agency, institution, or person and this agency, institution, or person shall fail or refuse to furnish this information, the recipient shall so certify in its report and shall set forth what efforts it has made to obtain the information. 
</P>
<P>(d) <I>Information to beneficiaries and participants.</I> Each recipient shall make available to participants, beneficiaries, and other interested persons such information regarding the provisions of this part 1 and its applicability to the program or activity under which the recipient receives Federal financial assistance, and make such information available to them in such manner, as the responsible Department official finds necessary to apprise such persons of the protections against discrimination assured them by the Act and this part 1. 


</P>
</DIV8>


<DIV8 N="§ 1.7" NODE="24:1.1.1.1.2.0.1.7" TYPE="SECTION">
<HEAD>§ 1.7   Conduct of investigations.</HEAD>
<P>(a) <I>Periodic compliance reviews.</I> The responsible Department official or his designee shall from time to time review the practices of recipients to determine whether they are complying with this part 1. 
</P>
<P>(b) <I>Complaints.</I> Any person who believes himself or any specific class of persons to be subjected to discrimination prohibited by this part 1 may by himself or by a representative file with the responsible Department official or his designee a written complaint. A complaint must be filed not later than 180 days from the date of the alleged discrimination, unless the time for filing is extended by the responsible Department official or his designee. 
</P>
<P>(c) <I>Investigations.</I> The responsible Department official or his designee shall make a prompt investigation whenever a compliance review, report, complaint, or any other information indicates a possible failure to comply with this part 1. The investigation should include, where appropriate, a review of the pertinent practices and policies of the recipient, the circumstances under which the possible noncompliance with this part 1 occurred, and other factors relevant to a determination as to whether the recipient has failed to comply with this part . 
</P>
<P>(d) <I>Resolution of matters.</I> (1) If an investigation pursuant to paragraph (c) of this section indicates a failure to comply with this part 1, the responsible Department official or his designee will so inform the recipient and the matter will be resolved by informal means whenever possible. If it has been determined that the matter cannot be resolved by informal means, action will be taken as provided for in § 1.8. 
</P>
<P>(2) If an investigation does not warrant action pursuant to paragraph (d)(1) of this section the responsible Department official or his designee will so inform the recipient and the complainant, if any, in writing. 
</P>
<P>(e) <I>Intimidatory or retaliatory acts prohibited.</I> No recipient or other person shall intimidate, threaten, coerce, or discriminate against any person for the purpose of interfering with any right or privilege secured by title VI of the Act or this part 1, or because he has made a complaint, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this part. The identity of complainants shall be kept confidential except to the extent necessary to carry out the purposes of this part, including the conduct of any investigation, hearing, or judicial proceeding arising thereunder. 


</P>
</DIV8>


<DIV8 N="§ 1.8" NODE="24:1.1.1.1.2.0.1.8" TYPE="SECTION">
<HEAD>§ 1.8   Procedure for effecting compliance.</HEAD>
<P>(a) <I>General.</I> If there appears to be a failure or threatened failure to comply with this part 1, and if the noncompliance or threatened noncompliance cannot be corrected by informal means, compliance with this part 1 may be effected by the suspension or termination of or refusal to grant or to continue Federal financial assistance, or by any other means authorized by law. Such other means may include, but are not limited to: (1) A reference to the Department of Justice with a recommendation that appropriate proceedings be brought to enforce any rights of the United States under any law of the United States (including other titles of the Act), or any assurance or other contractual undertaking, and (2) any applicable proceeding under State or local law. 
</P>
<P>(b) <I>Noncompliance with § 1.5.</I> If an applicant fails or refuses to furnish an assurance required under § 1.5 or otherwise fails or refuses to comply with the requirement imposed by or pursuant to that section, Federal financial assistance may be refused in accordance with the procedures of paragraph (c) of this section. The Department shall not be required to provide assistance in such a case during the pendency of the administrative proceedings under such paragraph, except that the Department shall continue assistance during the pendency of such proceedings where such assistance is due and payable pursuant to a contract therefor approved prior to January 3, 1965. 
</P>
<P>(c) <I>Termination of or refusal to grant or to continue Federal financial assistance.</I> No order suspending, terminating, or refusing to grant or continue Federal financial assistance shall become effective until (1) the responsible Department official has advised the applicant or recipient of his failure to comply and has determined that compliance cannot be secured by voluntary means, (2) there has been an express finding on the record, after opportunity for hearing, of a failure by the applicant or recipient to comply with a requirement imposed by or pursuant to this part 1, (3) the action has been approved by the Secretary, and (4) the expiration of 30 days after the Secretary has filed with the committees of the House and Senate having legislative jurisdiction over the program or activity involved a full written report of the circumstances and the grounds for such action. Any action to suspend or terminate or to refuse to grant or to continue Federal financial assistance shall be limited to the particular political entity, or part thereof, or other recipient as to whom such a finding has been made and shall be limited in its effect to the particular program, or part thereof, in which such noncompliance has been so found. 
</P>
<P>(d) <I>Other means authorized by law.</I> No action to effect compliance by any other means authorized by law shall be taken until (1) the responsible Department official has determined that compliance cannot be secured by voluntary means, (2) the recipient or other person has been notified of its failure to comply and of the action to be taken to effect compliance, and (3) the expiration of at least 10 days from the mailing of such notice to the applicant or recipient. During this period of at least 10 days additional efforts shall be made to persuade the applicant or recipient to comply with this part 1 and to take such corrective action as may be appropriate. 


</P>
</DIV8>


<DIV8 N="§ 1.9" NODE="24:1.1.1.1.2.0.1.9" TYPE="SECTION">
<HEAD>§ 1.9   Hearings.</HEAD>
<P>(a) <I>Opportunity for hearing.</I> Whenever an opportunity for a hearing is required by § 1.8(c), reasonable notice shall be given by registered or certified mail, return receipt requested, to the affected applicant or recipient. This notice shall advise the applicant or recipient of the action proposed to be taken, the specific provision under which the proposed action against it is to be taken, and the matters of fact or law asserted as the basis for this action, and either: 
</P>
<P>(1) Fix a date not less than 20 days after the date of such notice within which the applicant or recipient may request of the responsible Department official that the matter be scheduled for hearing, or (2) advise the applicant or recipient that the matter in question has been set down for hearing at a stated time and place. The time and place so fixed shall be reasonable and shall be subject to change for cause. The complainant, if any, shall be advised of the time and place of the hearing. An applicant or recipient may waive a hearing and submit written information and argument for the record. The failure of an applicant or recipient to request a hearing under this paragraph (a) or to appear at a hearing for which a date has been set shall be deemed to be a waiver of the right to a hearing under section 602 of the Act and § 1.8(c) and consent to the making of a decision on the basis of such information as is available. 
</P>
<P>(b) <I>Hearing procedures.</I> Hearings shall be conducted in accordance with 24 CFR part 180. 
</P>
<CITA TYPE="N">[38 FR 17949, July 5, 1973, as amended at 61 FR 52217, Oct. 4, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 1.10" NODE="24:1.1.1.1.2.0.1.10" TYPE="SECTION">
<HEAD>§ 1.10   Effect on other regulations; forms and instructions.</HEAD>
<P>(a) <I>Effect on other regulations.</I> All regulations, orders, or like directions heretofore issued by any officer of the Department which impose requirements designed to prohibit any discrimination against persons on the ground of race, color, or national origin under any program or activity to which this part applies, and which authorize the suspension or termination of or refusal to grant or to continue Federal financial assistance to any applicant or recipient for failure to comply with such requirements, are hereby superseded to the extent that such discrimination is prohibited by this part, except that nothing in this part shall be deemed to relieve any person of any obligation assumed or imposed under any such superseded regulation, order, instruction, or like direction prior to January 3, 1965. Nothing in this part, however, shall be deemed to supersede any of the following (including future amendments thereof): 
</P>
<P>(1) Executive Orders 11246 and 11375 and regulations issued thereunder, or 
</P>
<P>(2) Executive Order 11063 and regulations issued thereunder, or any other order, regulations or instructions, insofar as such order, regulations, or instructions, prohibit discrimination on the ground of race, color, or national origin in any program or activity or situation to which this part is inapplicable, or prohibit discrimination on any other ground. 
</P>
<P>(b) <I>Forms and instructions.</I> The responsible Department official shall assure that forms and detailed instructions and procedures for effectuating this part are issued and promptly made available to interested persons. 
</P>
<P>(c) <I>Supervision and coordination.</I> The Secretary may from time to time assign to officials of the Department, or to officials of other departments or agencies of the Government with the consent of such department or agency, responsibilities in connection with the effectuation of the purposes of title VI of the Act and this part (other than responsibility for final decision as provided in § 1.10), including the achievement of effective coordination and maximum uniformity within the Department and within the Executive Branch of the Government in the application of title VI and this part to similar programs or activities and in similar situations. Any action taken, determination made, or requirement imposed by an official of another department or agency acting pursuant to an assignment of responsibility under this paragraph shall have the same effect as though such action had been taken by the responsible official of this Department. 
</P>
<CITA TYPE="N">[38 FR 17949, July 5, 1973. Redesignated at 61 FR 52217, Oct. 4, 1996]


</CITA>
</DIV8>

</DIV5>


<DIV5 N="3" NODE="24:1.1.1.1.3" TYPE="PART">
<HEAD>PART 3—NONDISCRIMINATION ON THE BASIS OF SEX IN EDUCATION PROGRAMS OR ACTIVITIES RECEIVING FEDERAL FINANCIAL ASSISTANCE 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>20 U.S.C. 1681, 1682, 1683, 1685, 1686, 1687, 1688. 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>65 FR 52865, 52879, Aug. 30, 2000, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:1.1.1.1.3.1" TYPE="SUBPART">
<HEAD>Subpart A—Introduction</HEAD>


<DIV8 N="§ 3.100" NODE="24:1.1.1.1.3.1.1.1" TYPE="SECTION">
<HEAD>§ 3.100   Purpose and effective date.</HEAD>
<P>The purpose of these Title IX regulations is to effectuate Title IX of the Education Amendments of 1972, as amended (except sections 904 and 906 of those Amendments) (20 U.S.C. 1681, 1682, 1683, 1685, 1686, 1687, 1688), which is designed to eliminate (with certain exceptions) discrimination on the basis of sex in any education program or activity receiving Federal financial assistance, whether or not such program or activity is offered or sponsored by an educational institution as defined in these Title IX regulations. The effective date of these Title IX regulations shall be September 29, 2000. 


</P>
</DIV8>


<DIV8 N="§ 3.105" NODE="24:1.1.1.1.3.1.1.2" TYPE="SECTION">
<HEAD>§ 3.105   Definitions.</HEAD>
<P>As used in these Title IX regulations, the term: 
</P>
<P><I>Administratively separate unit</I> means a school, department, or college of an educational institution (other than a local educational agency) admission to which is independent of admission to any other component of such institution. 
</P>
<P><I>Admission</I> means selection for part-time, full-time, special, associate, transfer, exchange, or any other enrollment, membership, or matriculation in or at an education program or activity operated by a recipient. 
</P>
<P><I>Applicant</I> means one who submits an application, request, or plan required to be approved by an official of the Federal agency that awards Federal financial assistance, or by a recipient, as a condition to becoming a recipient. 
</P>
<P><I>Designated agency official</I> means Assistant Secretary for Fair Housing and Equal Opportunity. 
</P>
<P><I>Educational institution</I> means a local educational agency (LEA) as defined by 20 U.S.C. 8801(18), a preschool, a private elementary or secondary school, or an applicant or recipient that is an institution of graduate higher education, an institution of undergraduate higher education, an institution of professional education, or an institution of vocational education, as defined in this section. 
</P>
<P><I>Federal financial assistance</I> means any of the following, when authorized or extended under a law administered by the Federal agency that awards such assistance: 
</P>
<P>(1) A grant or loan of Federal financial assistance, including funds made available for: 
</P>
<P>(i) The acquisition, construction, renovation, restoration, or repair of a building or facility or any portion thereof; and
</P>
<P>(ii) Scholarships, loans, grants, wages, or other funds extended to any entity for payment to or on behalf of students admitted to that entity, or extended directly to such students for payment to that entity. 
</P>
<P>(2) A grant of Federal real or personal property or any interest therein, including surplus property, and the proceeds of the sale or transfer of such property, if the Federal share of the fair market value of the property is not, upon such sale or transfer, properly accounted for to the Federal Government. 
</P>
<P>(3) Provision of the services of Federal personnel. 
</P>
<P>(4) Sale or lease of Federal property or any interest therein at nominal consideration, or at consideration reduced for the purpose of assisting the recipient or in recognition of public interest to be served thereby, or permission to use Federal property or any interest therein without consideration. 
</P>
<P>(5) Any other contract, agreement, or arrangement that has as one of its purposes the provision of assistance to any education program or activity, except a contract of insurance or guaranty. 
</P>
<P><I>Institution of graduate higher education</I> means an institution that: 
</P>
<P>(1) Offers academic study beyond the bachelor of arts or bachelor of science degree, whether or not leading to a certificate of any higher degree in the liberal arts and sciences; 
</P>
<P>(2) Awards any degree in a professional field beyond the first professional degree (regardless of whether the first professional degree in such field is awarded by an institution of undergraduate higher education or professional education); or
</P>
<P>(3) Awards no degree and offers no further academic study, but operates ordinarily for the purpose of facilitating research by persons who have received the highest graduate degree in any field of study. 
</P>
<P><I>Institution of professional education</I> means an institution (except any institution of undergraduate higher education) that offers a program of academic study that leads to a first professional degree in a field for which there is a national specialized accrediting agency recognized by the Secretary of Education. 
</P>
<P><I>Institution of undergraduate higher education</I> means: 
</P>
<P>(1) An institution offering at least two but less than four years of college-level study beyond the high school level, leading to a diploma or an associate degree, or wholly or principally creditable toward a baccalaureate degree; or
</P>
<P>(2) An institution offering academic study leading to a baccalaureate degree; or 
</P>
<P>(3) An agency or body that certifies credentials or offers degrees, but that may or may not offer academic study. 
</P>
<P><I>Institution of vocational education</I> means a school or institution (except an institution of professional or graduate or undergraduate higher education) that has as its primary purpose preparation of students to pursue a technical, skilled, or semiskilled occupation or trade, or to pursue study in a technical field, whether or not the school or institution offers certificates, diplomas, or degrees and whether or not it offers full-time study. 
</P>
<P><I>Recipient</I> means any State or political subdivision thereof, or any instrumentality of a State or political subdivision thereof, any public or private agency, institution, or organization, or other entity, or any person, to whom Federal financial assistance is extended directly or through another recipient and that operates an education program or activity that receives such assistance, including any subunit, successor, assignee, or transferee thereof. 
</P>
<P><I>Student</I> means a person who has gained admission. 
</P>
<P><I>Title IX</I> means Title IX of the Education Amendments of 1972, Public Law 92-318, 86 Stat. 235, 373 (codified as amended at 20 U.S.C. 1681-1688) (except sections 904 and 906 thereof), as amended by section 3 of Public Law 93-568, 88 Stat. 1855, by section 412 of the Education Amendments of 1976, Public Law 94-482, 90 Stat. 2234, and by Section 3 of Public Law 100-259, 102 Stat. 28, 28-29 (20 U.S.C. 1681, 1682, 1683, 1685, 1686, 1687, 1688). 
</P>
<P><I>Title IX regulations</I> means the provisions set forth at §§ 3.100 through 3.605. 
</P>
<P><I>Transition plan</I> means a plan subject to the approval of the Secretary of Education pursuant to section 901(a)(2) of the Education Amendments of 1972, 20 U.S.C. 1681(a)(2), under which an educational institution operates in making the transition from being an educational institution that admits only students of one sex to being one that admits students of both sexes without discrimination. 
</P>
<CITA TYPE="N">[65 FR 52865, 52879, Aug. 30, 2000, as amended at 65 FR 52880, Aug. 30, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 3.110" NODE="24:1.1.1.1.3.1.1.3" TYPE="SECTION">
<HEAD>§ 3.110   Remedial and affirmative action and self-evaluation.</HEAD>
<P>(a) <I>Remedial action.</I> If the designated agency official finds that a recipient has discriminated against persons on the basis of sex in an education program or activity, such recipient shall take such remedial action as the designated agency official deems necessary to overcome the effects of such discrimination. 
</P>
<P>(b) <I>Affirmative action.</I> In the absence of a finding of discrimination on the basis of sex in an education program or activity, a recipient may take affirmative action consistent with law to overcome the effects of conditions that resulted in limited participation therein by persons of a particular sex. Nothing in these Title IX regulations shall be interpreted to alter any affirmative action obligations that a recipient may have under Executive Order 11246, 3 CFR, 1964-1965 Comp., p. 339; as amended by Executive Order 11375, 3 CFR, 1966-1970 Comp., p. 684; as amended by Executive Order 11478, 3 CFR, 1966-1970 Comp., p. 803; as amended by Executive Order 12086, 3 CFR, 1978 Comp., p. 230; as amended by Executive Order 12107, 3 CFR, 1978 Comp., p. 264. 
</P>
<P>(c) <I>Self-evaluation.</I> Each recipient education institution shall, within one year of September 29, 2000: 
</P>
<P>(1) Evaluate, in terms of the requirements of these Title IX regulations, its current policies and practices and the effects thereof concerning admission of students, treatment of students, and employment of both academic and non-academic personnel working in connection with the recipient's education program or activity; 
</P>
<P>(2) Modify any of these policies and practices that do not or may not meet the requirements of these Title IX regulations; and
</P>
<P>(3) Take appropriate remedial steps to eliminate the effects of any discrimination that resulted or may have resulted from adherence to these policies and practices. 
</P>
<P>(d) <I>Availability of self-evaluation and related materials.</I> Recipients shall maintain on file for at least three years following completion of the evaluation required under paragraph (c) of this section, and shall provide to the designated agency official upon request, a description of any modifications made pursuant to paragraph (c)(2) of this section and of any remedial steps taken pursuant to paragraph (c)(3) of this section. 


</P>
</DIV8>


<DIV8 N="§ 3.115" NODE="24:1.1.1.1.3.1.1.4" TYPE="SECTION">
<HEAD>§ 3.115   Assurance required.</HEAD>
<P>(a) <I>General.</I> Either at the application stage or the award stage, Federal agencies must ensure that applications for Federal financial assistance or awards of Federal financial assistance contain, be accompanied by, or be covered by a specifically identified assurance from the applicant or recipient, satisfactory to the designated agency official, that each education program or activity operated by the applicant or recipient and to which these Title IX regulations apply will be operated in compliance with these Title IX regulations. An assurance of compliance with these Title IX regulations shall not be satisfactory to the designated agency official if the applicant or recipient to whom such assurance applies fails to commit itself to take whatever remedial action is necessary in accordance with § 3.110(a) to eliminate existing discrimination on the basis of sex or to eliminate the effects of past discrimination whether occurring prior to or subsequent to the submission to the designated agency official of such assurance. 
</P>
<P>(b) <I>Duration of obligation.</I> (1) In the case of Federal financial assistance extended to provide real property or structures thereon, such assurance shall obligate the recipient or, in the case of a subsequent transfer, the transferee, for the period during which the real property or structures are used to provide an education program or activity. 
</P>
<P>(2) In the case of Federal financial assistance extended to provide personal property, such assurance shall obligate the recipient for the period during which it retains ownership or possession of the property. 
</P>
<P>(3) In all other cases such assurance shall obligate the recipient for the period during which Federal financial assistance is extended. 
</P>
<P>(c) <I>Form.</I> (1) The assurances required by paragraph (a) of this section, which may be included as part of a document that addresses other assurances or obligations, shall include that the applicant or recipient will comply with all applicable Federal statutes relating to nondiscrimination. These include but are not limited to: Title IX of the Education Amendments of 1972, as amended (20 U.S.C. 1681-1683, 1685-1688). 
</P>
<P>(2) The designated agency official will specify the extent to which such assurances will be required of the applicant's or recipient's subgrantees, contractors, subcontractors, transferees, or successors in interest. 


</P>
</DIV8>


<DIV8 N="§ 3.120" NODE="24:1.1.1.1.3.1.1.5" TYPE="SECTION">
<HEAD>§ 3.120   Transfers of property.</HEAD>
<P>If a recipient sells or otherwise transfers property financed in whole or in part with Federal financial assistance to a transferee that operates any education program or activity, and the Federal share of the fair market value of the property is not upon such sale or transfer properly accounted for to the Federal Government, both the transferor and the transferee shall be deemed to be recipients, subject to the provisions of §§ 3.205 through 3.235(a). 


</P>
</DIV8>


<DIV8 N="§ 3.125" NODE="24:1.1.1.1.3.1.1.6" TYPE="SECTION">
<HEAD>§ 3.125   Effect of other requirements.</HEAD>
<P>(a) <I>Effect of other Federal provisions.</I> The obligations imposed by these Title IX regulations are independent of, and do not alter, obligations not to discriminate on the basis of sex imposed by Executive Order 11246, 3 CFR, 1964-1965 Comp., p. 339; as amended by Executive Order 11375, 3 CFR, 1966-1970 Comp., p. 684; as amended by Executive Order 11478, 3 CFR, 1966-1970 Comp., p. 803; as amended by Executive Order 12087, 3 CFR, 1978 Comp., p. 230; as amended by Executive Order 12107, 3 CFR, 1978 Comp., p. 264; sections 704 and 855 of the Public Health Service Act (42 U.S.C. 295m, 298b-2); Title VII of the Civil Rights Act of 1964 (42 U.S.C. 2000e <I>et seq.</I>); the Equal Pay Act of 1963 (29 U.S.C. 206); and any other Act of Congress or Federal regulation. 
</P>
<P>(b) <I>Effect of State or local law or other requirements.</I> The obligation to comply with these Title IX regulations is not obviated or alleviated by any State or local law or other requirement that would render any applicant or student ineligible, or limit the eligibility of any applicant or student, on the basis of sex, to practice any occupation or profession. 
</P>
<P>(c) <I>Effect of rules or regulations of private organizations.</I> The obligation to comply with these Title IX regulations is not obviated or alleviated by any rule or regulation of any organization, club, athletic or other league, or association that would render any applicant or student ineligible to participate or limit the eligibility or participation of any applicant or student, on the basis of sex, in any education program or activity operated by a recipient and that receives Federal financial assistance. 


</P>
</DIV8>


<DIV8 N="§ 3.130" NODE="24:1.1.1.1.3.1.1.7" TYPE="SECTION">
<HEAD>§ 3.130   Effect of employment opportunities.</HEAD>
<P>The obligation to comply with these Title IX regulations is not obviated or alleviated because employment opportunities in any occupation or profession are or may be more limited for members of one sex than for members of the other sex. 


</P>
</DIV8>


<DIV8 N="§ 3.135" NODE="24:1.1.1.1.3.1.1.8" TYPE="SECTION">
<HEAD>§ 3.135   Designation of responsible employee and adoption of grievance procedures.</HEAD>
<P>(a) <I>Designation of responsible employee.</I> Each recipient shall designate at least one employee to coordinate its efforts to comply with and carry out its responsibilities under these Title IX regulations, including any investigation of any complaint communicated to such recipient alleging its noncompliance with these Title IX regulations or alleging any actions that would be prohibited by these Title IX regulations. The recipient shall notify all its students and employees of the name, office address, and telephone number of the employee or employees appointed pursuant to this paragraph. 
</P>
<P>(b) <I>Complaint procedure of recipient.</I> A recipient shall adopt and publish grievance procedures providing for prompt and equitable resolution of student and employee complaints alleging any action that would be prohibited by these Title IX regulations. 


</P>
</DIV8>


<DIV8 N="§ 3.140" NODE="24:1.1.1.1.3.1.1.9" TYPE="SECTION">
<HEAD>§ 3.140   Dissemination of policy.</HEAD>
<P>(a) <I>Notification of policy.</I> (1) Each recipient shall implement specific and continuing steps to notify applicants for admission and employment, students and parents of elementary and secondary school students, employees, sources of referral of applicants for admission and employment, and all unions or professional organizations holding collective bargaining or professional agreements with the recipient, that it does not discriminate on the basis of sex in the educational programs or activities that it operates, and that it is required by Title IX and these Title IX regulations not to discriminate in such a manner. Such notification shall contain such information, and be made in such manner, as the designated agency official finds necessary to apprise such persons of the protections against discrimination assured them by Title IX and these Title IX regulations, but shall state at least that the requirement not to discriminate in education programs or activities extends to employment therein, and to admission thereto unless §§ 3.300 through 3.310 do not apply to the recipient, and that inquiries concerning the application of Title IX and these Title IX regulations to such recipient may be referred to the employee designated pursuant to § 3.135, or to the designated agency official. 
</P>
<P>(2) Each recipient shall make the initial notification required by paragraph (a)(1) of this section within 90 days of September 29, 2000 or of the date these Title IX regulations first apply to such recipient, whichever comes later, which notification shall include publication in: 
</P>
<P>(i) Newspapers and magazines operated by such recipient or by student, alumnae, or alumni groups for or in connection with such recipient; and
</P>
<P>(ii) Memoranda or other written communications distributed to every student and employee of such recipient. 
</P>
<P>(b) <I>Publications.</I> (1) Each recipient shall prominently include a statement of the policy described in paragraph (a) of this section in each announcement, bulletin, catalog, or application form that it makes available to any person of a type, described in paragraph (a) of this section, or which is otherwise used in connection with the recruitment of students or employees. 
</P>
<P>(2) A recipient shall not use or distribute a publication of the type described in paragraph (b)(1) of this section that suggests, by text or illustration, that such recipient treats applicants, students, or employees differently on the basis of sex except as such treatment is permitted by these Title IX regulations. 
</P>
<P>(c) <I>Distribution.</I> Each recipient shall distribute without discrimination on the basis of sex each publication described in paragraph (b)(1) of this section, and shall apprise each of its admission and employment recruitment representatives of the policy of nondiscrimination described in paragraph (a) of this section, and shall require such representatives to adhere to such policy. 


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.1.1.1.3.2" TYPE="SUBPART">
<HEAD>Subpart B—Coverage</HEAD>


<DIV8 N="§ 3.200" NODE="24:1.1.1.1.3.2.1.1" TYPE="SECTION">
<HEAD>§ 3.200   Application.</HEAD>
<P>Except as provided in §§ 3.205 through 3.235(a), these Title IX regulations apply to every recipient and to each education program or activity operated by such recipient that receives Federal financial assistance. 


</P>
</DIV8>


<DIV8 N="§ 3.205" NODE="24:1.1.1.1.3.2.1.2" TYPE="SECTION">
<HEAD>§ 3.205   Educational institutions and other entities controlled by religious organizations.</HEAD>
<P>(a) <I>Exemption.</I> These Title IX regulations do not apply to any operation of an educational institution or other entity that is controlled by a religious organization to the extent that application of these Title IX regulations would not be consistent with the religious tenets of such organization. 
</P>
<P>(b) <I>Exemption claims.</I> An educational institution or other entity that wishes to claim the exemption set forth in paragraph (a) of this section shall do so by submitting in writing to the designated agency official a statement by the highest-ranking official of the institution, identifying the provisions of these Title IX regulations that conflict with a specific tenet of the religious organization. 


</P>
</DIV8>


<DIV8 N="§ 3.210" NODE="24:1.1.1.1.3.2.1.3" TYPE="SECTION">
<HEAD>§ 3.210   Military and merchant marine educational institutions.</HEAD>
<P>These Title IX regulations do not apply to an educational institution whose primary purpose is the training of individuals for a military service of the United States or for the merchant marine. 


</P>
</DIV8>


<DIV8 N="§ 3.215" NODE="24:1.1.1.1.3.2.1.4" TYPE="SECTION">
<HEAD>§ 3.215   Membership practices of certain organizations.</HEAD>
<P>(a) <I>Social fraternities and sororities.</I> These Title IX regulations do not apply to the membership practices of social fraternities and sororities that are exempt from taxation under section 501(a) of the Internal Revenue Code of 1954, 26 U.S.C. 501(a), the active membership of which consists primarily of students in attendance at institutions of higher education. 
</P>
<P>(b) <I>YMCA, YWCA, Girl Scouts, Boy Scouts, and Camp Fire Girls.</I> These Title IX regulations do not apply to the membership practices of the Young Men's Christian Association (YMCA), the Young Women's Christian Association (YWCA), the Girl Scouts, the Boy Scouts, and Camp Fire Girls. 
</P>
<P>(c) <I>Voluntary youth service organizations.</I> These Title IX regulations do not apply to the membership practices of a voluntary youth service organization that is exempt from taxation under section 501(a) of the Internal Revenue Code of 1954, 26 U.S.C. 501(a), and the membership of which has been traditionally limited to members of one sex and principally to persons of less than nineteen years of age.


</P>
</DIV8>


<DIV8 N="§ 3.220" NODE="24:1.1.1.1.3.2.1.5" TYPE="SECTION">
<HEAD>§ 3.220   Admissions.</HEAD>
<P>(a) Admissions to educational institutions prior to June 24, 1973, are not covered by these Title IX regulations. 
</P>
<P>(b) <I>Administratively separate units.</I> For the purposes only of this section, §§ 3.225 and 3.230, and §§ 3.300 through 3.310, each administratively separate unit shall be deemed to be an educational institution. 
</P>
<P>(c) <I>Application of §§ 3.300 through 3.310.</I> Except as provided in paragraphs (d) and (e) of this section, §§ 3.300 through 3.310 apply to each recipient. A recipient to which §§ 3.300 through 3.310 apply shall not discriminate on the basis of sex in admission or recruitment in violation of §§ 3.300 through 3.310. 
</P>
<P>(d) <I>Educational institutions.</I> Except as provided in paragraph (e) of this section as to recipients that are educational institutions, §§ 3.300 through 3.310 apply only to institutions of vocational education, professional education, graduate higher education, and public institutions of undergraduate higher education. 
</P>
<P>(e) <I>Public institutions of undergraduate higher education.</I> §§ 3.300 through 3.310 do not apply to any public institution of undergraduate higher education that traditionally and continually from its establishment has had a policy of admitting students of only one sex. 


</P>
</DIV8>


<DIV8 N="§ 3.225" NODE="24:1.1.1.1.3.2.1.6" TYPE="SECTION">
<HEAD>§ 3.225   Educational institutions eligible to submit transition plans.</HEAD>
<P>(a) <I>Application.</I> This section applies to each educational institution to which §§ 3.300 through 3.310 apply that: 
</P>
<P>(1) Admitted students of only one sex as regular students as of June 23, 1972; or
</P>
<P>(2) Admitted students of only one sex as regular students as of June 23, 1965, but thereafter admitted, as regular students, students of the sex not admitted prior to June 23, 1965. 
</P>
<P>(b) <I>Provision for transition plans.</I> An educational institution to which this section applies shall not discriminate on the basis of sex in admission or recruitment in violation of §§ 3.300 through 3.310. 


</P>
</DIV8>


<DIV8 N="§ 3.230" NODE="24:1.1.1.1.3.2.1.7" TYPE="SECTION">
<HEAD>§ 3.230   Transition plans.</HEAD>
<P>(a) <I>Submission of plans.</I> An institution to which § 3.225 applies and that is composed of more than one administratively separate unit may submit either a single transition plan applicable to all such units, or a separate transition plan applicable to each such unit. 
</P>
<P>(b) <I>Content of plans.</I> In order to be approved by the Secretary of Education, a transition plan shall: 
</P>
<P>(1) State the name, address, and Federal Interagency Committee on Education Code of the educational institution submitting such plan, the administratively separate units to which the plan is applicable, and the name, address, and telephone number of the person to whom questions concerning the plan may be addressed. The person who submits the plan shall be the chief administrator or president of the institution, or another individual legally authorized to bind the institution to all actions set forth in the plan. 
</P>
<P>(2) State whether the educational institution or administratively separate unit admits students of both sexes as regular students and, if so, when it began to do so. 
</P>
<P>(3) Identify and describe with respect to the educational institution or administratively separate unit any obstacles to admitting students without discrimination on the basis of sex. 
</P>
<P>(4) Describe in detail the steps necessary to eliminate as soon as practicable each obstacle so identified and indicate the schedule for taking these steps and the individual directly responsible for their implementation. 
</P>
<P>(5) Include estimates of the number of students, by sex, expected to apply for, be admitted to, and enter each class during the period covered by the plan. 
</P>
<P>(c) <I>Nondiscrimination.</I> No policy or practice of a recipient to which § 3.225 applies shall result in treatment of applicants to or students of such recipient in violation of §§ 3.300 through 3.310 unless such treatment is necessitated by an obstacle identified in paragraph (b)(3) of this section and a schedule for eliminating that obstacle has been provided as required by paragraph (b)(4) of this section. 
</P>
<P>(d) <I>Effects of past exclusion.</I> To overcome the effects of past exclusion of students on the basis of sex, each educational institution to which § 3.225 applies shall include in its transition plan, and shall implement, specific steps designed to encourage individuals of the previously excluded sex to apply for admission to such institution. Such steps shall include instituting recruitment programs that emphasize the institution's commitment to enrolling students of the sex previously excluded. 


</P>
</DIV8>


<DIV8 N="§ 3.235" NODE="24:1.1.1.1.3.2.1.8" TYPE="SECTION">
<HEAD>§ 3.235   Statutory amendments.</HEAD>
<P>(a) This section, which applies to all provisions of these Title IX regulations, addresses statutory amendments to Title IX. 
</P>
<P>(b) These Title IX regulations shall not apply to or preclude: 
</P>
<P>(1) Any program or activity of the American Legion undertaken in connection with the organization or operation of any Boys State conference, Boys Nation conference, Girls State conference, or Girls Nation conference; 
</P>
<P>(2) Any program or activity of a secondary school or educational institution specifically for: 
</P>
<P>(i) The promotion of any Boys State conference, Boys Nation conference, Girls State conference, or Girls Nation conference; or 
</P>
<P>(ii) The selection of students to attend any such conference; 
</P>
<P>(3) Father-son or mother-daughter activities at an educational institution or in an education program or activity, but if such activities are provided for students of one sex, opportunities for reasonably comparable activities shall be provided to students of the other sex; 
</P>
<P>(4) Any scholarship or other financial assistance awarded by an institution of higher education to an individual because such individual has received such award in a single-sex pageant based upon a combination of factors related to the individual's personal appearance, poise, and talent. The pageant, however, must comply with other nondiscrimination provisions of Federal law. 
</P>
<P>(c) <I>Program or activity</I> or <I>program</I> means: 
</P>
<P>(1) All of the operations of any entity described in paragraphs (c)(1)(i) through (iv) of this section, any part of which is extended Federal financial assistance: 
</P>
<P>(i)(A) A department, agency, special purpose district, or other instrumentality of a State or of a local government; or 
</P>
<P>(B) The entity of such State or local government that distributes such assistance and each such department or agency (and each other State or local government entity) to which the assistance is extended, in the case of assistance to a State or local government; 
</P>
<P>(ii)(A) A college, university, or other postsecondary institution, or a public system of higher education; or 
</P>
<P>(B) A local educational agency (as defined in section 8801 of title 20), system of vocational education, or other school system; 
</P>
<P>(iii)(A) An entire corporation, partnership, or other private organization, or an entire sole proprietorship— 
</P>
<P>(<I>1</I>) If assistance is extended to such corporation, partnership, private organization, or sole proprietorship as a whole; or 
</P>
<P>(<I>2</I>) Which is principally engaged in the business of providing education, health care, housing, social services, or parks and recreation; or
</P>
<P>(B) The entire plant or other comparable, geographically separate facility to which Federal financial assistance is extended, in the case of any other corporation, partnership, private organization, or sole proprietorship; or
</P>
<P>(iv) Any other entity that is established by two or more of the entities described in paragraphs (c)(1)(i), (ii), or (iii) of this section. 
</P>
<P>(2)(i) <I>Program or activity</I> does not include any operation of an entity that is controlled by a religious organization if the application of 20 U.S.C. 1681 to such operation would not be consistent with the religious tenets of such organization. 
</P>
<P>(ii) For example, all of the operations of a college, university, or other postsecondary institution, including but not limited to traditional educational operations, faculty and student housing, campus shuttle bus service, campus restaurants, the bookstore, and other commercial activities are part of a “program or activity” subject to these Title IX regulations if the college, university, or other institution receives Federal financial assistance. 
</P>
<P>(d)(1) Nothing in these Title IX regulations shall be construed to require or prohibit any person, or public or private entity, to provide or pay for any benefit or service, including the use of facilities, related to an abortion. Medical procedures, benefits, services, and the use of facilities, necessary to save the life of a pregnant woman or to address complications related to an abortion are not subject to this section. 
</P>
<P>(2) Nothing in this section shall be construed to permit a penalty to be imposed on any person or individual because such person or individual is seeking or has received any benefit or service related to a legal abortion. Accordingly, subject to paragraph (d)(1) of this section, no person shall be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any academic, extracurricular, research, occupational training, employment, or other educational program or activity operated by a recipient that receives Federal financial assistance because such individual has sought or received, or is seeking, a legal abortion, or any benefit or service related to a legal abortion. 


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:1.1.1.1.3.3" TYPE="SUBPART">
<HEAD>Subpart C—Discrimination on the Basis of Sex in Admission and Recruitment Prohibited</HEAD>


<DIV8 N="§ 3.300" NODE="24:1.1.1.1.3.3.1.1" TYPE="SECTION">
<HEAD>§ 3.300   Admission.</HEAD>
<P>(a) <I>General.</I> No person shall, on the basis of sex, be denied admission, or be subjected to discrimination in admission, by any recipient to which §§ 3.300 through 3.310 apply, except as provided in §§ 3.225 and 3.230. 
</P>
<P>(b) <I>Specific prohibitions.</I> (1) In determining whether a person satisfies any policy or criterion for admission, or in making any offer of admission, a recipient to which §§ 3.300 through 3.310 apply shall not: 
</P>
<P>(i) Give preference to one person over another on the basis of sex, by ranking applicants separately on such basis, or otherwise; 
</P>
<P>(ii) Apply numerical limitations upon the number or proportion of persons of either sex who may be admitted; or
</P>
<P>(iii) Otherwise treat one individual differently from another on the basis of sex. 
</P>
<P>(2) A recipient shall not administer or operate any test or other criterion for admission that has a disproportionately adverse effect on persons on the basis of sex unless the use of such test or criterion is shown to predict validly success in the education program or activity in question and alternative tests or criteria that do not have such a disproportionately adverse effect are shown to be unavailable. 
</P>
<P>(c) <I>Prohibitions relating to marital or parental status.</I> In determining whether a person satisfies any policy or criterion for admission, or in making any offer of admission, a recipient to which §§ 3.300 through 3.310 apply: 
</P>
<P>(1) Shall not apply any rule concerning the actual or potential parental, family, or marital status of a student or applicant that treats persons differently on the basis of sex; 
</P>
<P>(2) Shall not discriminate against or exclude any person on the basis of pregnancy, childbirth, termination of pregnancy, or recovery therefrom, or establish or follow any rule or practice that so discriminates or excludes; 
</P>
<P>(3) Subject to § 3.235(d), shall treat disabilities related to pregnancy, childbirth, termination of pregnancy, or recovery therefrom in the same manner and under the same policies as any other temporary disability or physical condition; and
</P>
<P>(4) Shall not make pre-admission inquiry as to the marital status of an applicant for admission, including whether such applicant is “Miss” or “Mrs.” A recipient may make pre-admission inquiry as to the sex of an applicant for admission, but only if such inquiry is made equally of such applicants of both sexes and if the results of such inquiry are not used in connection with discrimination prohibited by these Title IX regulations. 


</P>
</DIV8>


<DIV8 N="§ 3.305" NODE="24:1.1.1.1.3.3.1.2" TYPE="SECTION">
<HEAD>§ 3.305   Preference in admission.</HEAD>
<P>A recipient to which §§ 3.300 through 3.310 apply shall not give preference to applicants for admission, on the basis of attendance at any educational institution or other school or entity that admits as students only or predominantly members of one sex, if the giving of such preference has the effect of discriminating on the basis of sex in violation of §§ 3.300 through 3.310. 


</P>
</DIV8>


<DIV8 N="§ 3.310" NODE="24:1.1.1.1.3.3.1.3" TYPE="SECTION">
<HEAD>§ 3.310   Recruitment.</HEAD>
<P>(a) <I>Nondiscriminatory recruitment.</I> A recipient to which §§ 3.300 through 3.310 apply shall not discriminate on the basis of sex in the recruitment and admission of students. A recipient may be required to undertake additional recruitment efforts for one sex as remedial action pursuant to § 3.110(a), and may choose to undertake such efforts as affirmative action pursuant to § 3.110(b). 
</P>
<P>(b) <I>Recruitment at certain institutions.</I> A recipient to which §§ 3.300 through 3.310 apply shall not recruit primarily or exclusively at educational institutions, schools, or entities that admit as students only or predominantly members of one sex, if such actions have the effect of discriminating on the basis of sex in violation of §§ 3.300 through 3.310. 


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:1.1.1.1.3.4" TYPE="SUBPART">
<HEAD>Subpart D—Discrimination on the Basis of Sex in Education Programs or Activities Prohibited</HEAD>


<DIV8 N="§ 3.400" NODE="24:1.1.1.1.3.4.1.1" TYPE="SECTION">
<HEAD>§ 3.400   Education programs or activities.</HEAD>
<P>(a) <I>General.</I> Except as provided elsewhere in these Title IX regulations, no person shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any academic, extracurricular, research, occupational training, or other education program or activity operated by a recipient that receives Federal financial assistance. Sections 3.400 through 3.455 do not apply to actions of a recipient in connection with admission of its students to an education program or activity of a recipient to which §§ 3.300 through 3.310 do not apply, or an entity, not a recipient, to which §§ 3.300 through 3.310 would not apply if the entity were a recipient. 
</P>
<P>(b) <I>Specific prohibitions.</I> Except as provided in §§ 3.400 through 3.455, in providing any aid, benefit, or service to a student, a recipient shall not, on the basis of sex: 
</P>
<P>(1) Treat one person differently from another in determining whether such person satisfies any requirement or condition for the provision of such aid, benefit, or service; 
</P>
<P>(2) Provide different aid, benefits, or services or provide aid, benefits, or services in a different manner; 
</P>
<P>(3) Deny any person any such aid, benefit, or service; 
</P>
<P>(4) Subject any person to separate or different rules of behavior, sanctions, or other treatment; 
</P>
<P>(5) Apply any rule concerning the domicile or residence of a student or applicant, including eligibility for in-state fees and tuition; 
</P>
<P>(6) Aid or perpetuate discrimination against any person by providing significant assistance to any agency, organization, or person that discriminates on the basis of sex in providing any aid, benefit, or service to students or employees; 
</P>
<P>(7) Otherwise limit any person in the enjoyment of any right, privilege, advantage, or opportunity. 
</P>
<P>(c) <I>Assistance administered by a recipient educational institution to study at a foreign institution.</I> A recipient educational institution may administer or assist in the administration of scholarships, fellowships, or other awards established by foreign or domestic wills, trusts, or similar legal instruments, or by acts of foreign governments and restricted to members of one sex, that are designed to provide opportunities to study abroad, and that are awarded to students who are already matriculating at or who are graduates of the recipient institution; <I>Provided,</I> that a recipient educational institution that administers or assists in the administration of such scholarships, fellowships, or other awards that are restricted to members of one sex provides, or otherwise makes available, reasonable opportunities for similar studies for members of the other sex. Such opportunities may be derived from either domestic or foreign sources. 
</P>
<P>(d) <I>Aids, benefits or services not provided by recipient.</I> (1) This paragraph (d) applies to any recipient that requires participation by any applicant, student, or employee in any education program or activity not operated wholly by such recipient, or that facilitates, permits, or considers such participation as part of or equivalent to an education program or activity operated by such recipient, including participation in educational consortia and cooperative employment and student-teaching assignments. 
</P>
<P>(2) Such recipient: 
</P>
<P>(i) Shall develop and implement a procedure designed to assure itself that the operator or sponsor of such other education program or activity takes no action affecting any applicant, student, or employee of such recipient that these Title IX regulations would prohibit such recipient from taking; and 
</P>
<P>(ii) Shall not facilitate, require, permit, or consider such participation if such action occurs. 


</P>
</DIV8>


<DIV8 N="§ 3.405" NODE="24:1.1.1.1.3.4.1.2" TYPE="SECTION">
<HEAD>§ 3.405   Housing.</HEAD>
<P>(a) <I>Generally.</I> A recipient shall not, on the basis of sex, apply different rules or regulations, impose different fees or requirements, or offer different services or benefits related to housing, except as provided in this section (including housing provided only to married students). 
</P>
<P>(b) <I>Housing provided by recipient.</I> (1) A recipient may provide separate housing on the basis of sex. 
</P>
<P>(2) Housing provided by a recipient to students of one sex, when compared to that provided to students of the other sex, shall be as a whole: 
</P>
<P>(i) Proportionate in quantity to the number of students of that sex applying for such housing; and 
</P>
<P>(ii) Comparable in quality and cost to the student. 
</P>
<P>(c) <I>Other housing.</I> (1) A recipient shall not, on the basis of sex, administer different policies or practices concerning occupancy by its students of housing other than that provided by such recipient. 
</P>
<P>(2)(i) A recipient which, through solicitation, listing, approval of housing, or otherwise, assists any agency, organization, or person in making housing available to any of its students, shall take such reasonable action as may be necessary to assure itself that such housing as is provided to students of one sex, when compared to that provided to students of the other sex, is as a whole: 
</P>
<P>(A) Proportionate in quantity; and 
</P>
<P>(B) Comparable in quality and cost to the student. 
</P>
<P>(ii) A recipient may render such assistance to any agency, organization, or person that provides all or part of such housing to students of only one sex. 


</P>
</DIV8>


<DIV8 N="§ 3.410" NODE="24:1.1.1.1.3.4.1.3" TYPE="SECTION">
<HEAD>§ 3.410   Comparable facilities.</HEAD>
<P>A recipient may provide separate toilet, locker room, and shower facilities on the basis of sex, but such facilities provided for students of one sex shall be comparable to such facilities provided for students of the other sex. 


</P>
</DIV8>


<DIV8 N="§ 3.415" NODE="24:1.1.1.1.3.4.1.4" TYPE="SECTION">
<HEAD>§ 3.415   Access to course offerings.</HEAD>
<P>(a) A recipient shall not provide any course or otherwise carry out any of its education program or activity separately on the basis of sex, or require or refuse participation therein by any of its students on such basis, including health, physical education, industrial, business, vocational, technical, home economics, music, and adult education courses. 
</P>
<P>(b)(1) With respect to classes and activities in physical education at the elementary school level, the recipient shall comply fully with this section as expeditiously as possible but in no event later than one year from September 29, 2000. With respect to physical education classes and activities at the secondary and post-secondary levels, the recipient shall comply fully with this section as expeditiously as possible but in no event later than three years from September 29, 2000. 
</P>
<P>(2) This section does not prohibit grouping of students in physical education classes and activities by ability as assessed by objective standards of individual performance developed and applied without regard to sex. 
</P>
<P>(3) This section does not prohibit separation of students by sex within physical education classes or activities during participation in wrestling, boxing, rugby, ice hockey, football, basketball, and other sports the purpose or major activity of which involves bodily contact. 
</P>
<P>(4) Where use of a single standard of measuring skill or progress in a physical education class has an adverse effect on members of one sex, the recipient shall use appropriate standards that do not have such effect. 
</P>
<P>(5) Portions of classes in elementary and secondary schools, or portions of education programs or activities, that deal exclusively with human sexuality may be conducted in separate sessions for boys and girls. 
</P>
<P>(6) Recipients may make requirements based on vocal range or quality that may result in a chorus or choruses of one or predominantly one sex. 


</P>
</DIV8>


<DIV8 N="§ 3.420" NODE="24:1.1.1.1.3.4.1.5" TYPE="SECTION">
<HEAD>§ 3.420   Access to schools operated by LEAs.</HEAD>
<P>A recipient that is a local educational agency shall not, on the basis of sex, exclude any person from admission to: 
</P>
<P>(a) Any institution of vocational education operated by such recipient; or
</P>
<P>(b) Any other school or educational unit operated by such recipient, unless such recipient otherwise makes available to such person, pursuant to the same policies and criteria of admission, courses, services, and facilities comparable to each course, service, and facility offered in or through such schools. 


</P>
</DIV8>


<DIV8 N="§ 3.425" NODE="24:1.1.1.1.3.4.1.6" TYPE="SECTION">
<HEAD>§ 3.425   Counseling and use of appraisal and counseling materials.</HEAD>
<P>(a) <I>Counseling.</I> A recipient shall not discriminate against any person on the basis of sex in the counseling or guidance of students or applicants for admission. 
</P>
<P>(b) <I>Use of appraisal and counseling materials.</I> A recipient that uses testing or other materials for appraising or counseling students shall not use different materials for students on the basis of their sex or use materials that permit or require different treatment of students on such basis unless such different materials cover the same occupations and interest areas and the use of such different materials is shown to be essential to eliminate sex bias. Recipients shall develop and use internal procedures for ensuring that such materials do not discriminate on the basis of sex. Where the use of a counseling test or other instrument results in a substantially disproportionate number of members of one sex in any particular course of study or classification, the recipient shall take such action as is necessary to assure itself that such disproportion is not the result of discrimination in the instrument or its application. 
</P>
<P>(c) <I>Disproportion in classes.</I> Where a recipient finds that a particular class contains a substantially disproportionate number of individuals of one sex, the recipient shall take such action as is necessary to assure itself that such disproportion is not the result of discrimination on the basis of sex in counseling or appraisal materials or by counselors. 


</P>
</DIV8>


<DIV8 N="§ 3.430" NODE="24:1.1.1.1.3.4.1.7" TYPE="SECTION">
<HEAD>§ 3.430   Financial assistance.</HEAD>
<P>(a) <I>General.</I> Except as provided in paragraphs (b) and (c) of this section, in providing financial assistance to any of its students, a recipient shall not: 
</P>
<P>(1) On the basis of sex, provide different amounts or types of such assistance, limit eligibility for such assistance that is of any particular type or source, apply different criteria, or otherwise discriminate; 
</P>
<P>(2) Through solicitation, listing, approval, provision of facilities, or other services, assist any foundation, trust, agency, organization, or person that provides assistance to any of such recipient's students in a manner that discriminates on the basis of sex; or
</P>
<P>(3) Apply any rule or assist in application of any rule concerning eligibility for such assistance that treats persons of one sex differently from persons of the other sex with regard to marital or parental status. 
</P>
<P>(b) <I>Financial aid established by certain legal instruments.</I> (1) A recipient may administer or assist in the administration of scholarships, fellowships, or other forms of financial assistance established pursuant to domestic or foreign wills, trusts, bequests, or similar legal instruments or by acts of a foreign government that require that awards be made to members of a particular sex specified therein; <I>Provided,</I> that the overall effect of the award of such sex-restricted scholarships, fellowships, and other forms of financial assistance does not discriminate on the basis of sex. 
</P>
<P>(2) To ensure nondiscriminatory awards of assistance as required in paragraph (b)(1) of this section, recipients shall develop and use procedures under which: 
</P>
<P>(i) Students are selected for award of financial assistance on the basis of nondiscriminatory criteria and not on the basis of availability of funds restricted to members of a particular sex; 
</P>
<P>(ii) An appropriate sex-restricted scholarship, fellowship, or other form of financial assistance is allocated to each student selected under paragraph (b)(2)(i) of this section; and
</P>
<P>(iii) No student is denied the award for which he or she was selected under paragraph (b)(2)(i) of this section because of the absence of a scholarship, fellowship, or other form of financial assistance designated for a member of that student's sex. 
</P>
<P>(c) <I>Athletic scholarships.</I> (1) To the extent that a recipient awards athletic scholarships or grants-in-aid, it must provide reasonable opportunities for such awards for members of each sex in proportion to the number of students of each sex participating in interscholastic or intercollegiate athletics. 
</P>
<P>(2) A recipient may provide separate athletic scholarships or grants-in-aid for members of each sex as part of separate athletic teams for members of each sex to the extent consistent with this paragraph (c) and § 3.450. 


</P>
</DIV8>


<DIV8 N="§ 3.435" NODE="24:1.1.1.1.3.4.1.8" TYPE="SECTION">
<HEAD>§ 3.435   Employment assistance to students.</HEAD>
<P>(a) <I>Assistance by recipient in making available outside employment.</I> A recipient that assists any agency, organization, or person in making employment available to any of its students: 
</P>
<P>(1) Shall assure itself that such employment is made available without discrimination on the basis of sex; and
</P>
<P>(2) Shall not render such services to any agency, organization, or person that discriminates on the basis of sex in its employment practices. 
</P>
<P>(b) <I>Employment of students by recipients.</I> A recipient that employs any of its students shall not do so in a manner that violates §§ 3.500 through 3.550. 


</P>
</DIV8>


<DIV8 N="§ 3.440" NODE="24:1.1.1.1.3.4.1.9" TYPE="SECTION">
<HEAD>§ 3.440   Health and insurance benefits and services.</HEAD>
<P>Subject to § 3.235(d), in providing a medical, hospital, accident, or life insurance benefit, service, policy, or plan to any of its students, a recipient shall not discriminate on the basis of sex, or provide such benefit, service, policy, or plan in a manner that would violate §§ 3.500 through 3.550 if it were provided to employees of the recipient. This section shall not prohibit a recipient from providing any benefit or service that may be used by a different proportion of students of one sex than of the other, including family planning services. However, any recipient that provides full coverage health service shall provide gynecological care. 


</P>
</DIV8>


<DIV8 N="§ 3.445" NODE="24:1.1.1.1.3.4.1.10" TYPE="SECTION">
<HEAD>§ 3.445   Marital or parental status.</HEAD>
<P>(a) <I>Status generally.</I> A recipient shall not apply any rule concerning a student's actual or potential parental, family, or marital status that treats students differently on the basis of sex. 
</P>
<P>(b) <I>Pregnancy and related conditions.</I> (1) A recipient shall not discriminate against any student, or exclude any student from its education program or activity, including any class or extracurricular activity, on the basis of such student's pregnancy, childbirth, false pregnancy, termination of pregnancy, or recovery therefrom, unless the student requests voluntarily to participate in a separate portion of the program or activity of the recipient. 
</P>
<P>(2) A recipient may require such a student to obtain the certification of a physician that the student is physically and emotionally able to continue participation as long as such a certification is required of all students for other physical or emotional conditions requiring the attention of a physician. 
</P>
<P>(3) A recipient that operates a portion of its education program or activity separately for pregnant students, admittance to which is completely voluntary on the part of the student as provided in paragraph (b)(1) of this section, shall ensure that the separate portion is comparable to that offered to non-pregnant students. 
</P>
<P>(4) Subject to § 3.235(d), a recipient shall treat pregnancy, childbirth, false pregnancy, termination of pregnancy and recovery therefrom in the same manner and under the same policies as any other temporary disability with respect to any medical or hospital benefit, service, plan, or policy that such recipient administers, operates, offers, or participates in with respect to students admitted to the recipient's educational program or activity. 
</P>
<P>(5) In the case of a recipient that does not maintain a leave policy for its students, or in the case of a student who does not otherwise qualify for leave under such a policy, a recipient shall treat pregnancy, childbirth, false pregnancy, termination of pregnancy, and recovery therefrom as a justification for a leave of absence for as long a period of time as is deemed medically necessary by the student's physician, at the conclusion of which the student shall be reinstated to the status that she held when the leave began. 


</P>
</DIV8>


<DIV8 N="§ 3.450" NODE="24:1.1.1.1.3.4.1.11" TYPE="SECTION">
<HEAD>§ 3.450   Athletics.</HEAD>
<P>(a) <I>General.</I> No person shall, on the basis of sex, be excluded from participation in, be denied the benefits of, be treated differently from another person, or otherwise be discriminated against in any interscholastic, intercollegiate, club, or intramural athletics offered by a recipient, and no recipient shall provide any such athletics separately on such basis. 
</P>
<P>(b) <I>Separate teams.</I> Notwithstanding the requirements of paragraph (a) of this section, a recipient may operate or sponsor separate teams for members of each sex where selection for such teams is based upon competitive skill or the activity involved is a contact sport. However, where a recipient operates or sponsors a team in a particular sport for members of one sex but operates or sponsors no such team for members of the other sex, and athletic opportunities for members of that sex have previously been limited, members of the excluded sex must be allowed to try out for the team offered unless the sport involved is a contact sport. For the purposes of these Title IX regulations, contact sports include boxing, wrestling, rugby, ice hockey, football, basketball, and other sports the purpose or major activity of which involves bodily contact. 
</P>
<P>(c) <I>Equal opportunity.</I> (1) A recipient that operates or sponsors interscholastic, intercollegiate, club, or intramural athletics shall provide equal athletic opportunity for members of both sexes. In determining whether equal opportunities are available, the designated agency official will consider, among other factors: 
</P>
<P>(i) Whether the selection of sports and levels of competition effectively accommodate the interests and abilities of members of both sexes; 
</P>
<P>(ii) The provision of equipment and supplies; 
</P>
<P>(iii) Scheduling of games and practice time; 
</P>
<P>(iv) Travel and per diem allowance; 
</P>
<P>(v) Opportunity to receive coaching and academic tutoring; 
</P>
<P>(vi) Assignment and compensation of coaches and tutors; 
</P>
<P>(vii) Provision of locker rooms, practice, and competitive facilities; 
</P>
<P>(viii) Provision of medical and training facilities and services; 
</P>
<P>(ix) Provision of housing and dining facilities and services; 
</P>
<P>(x) Publicity. 
</P>
<P>(2) For purposes of paragraph (c)(1) of this section, unequal aggregate expenditures for members of each sex or unequal expenditures for male and female teams if a recipient operates or sponsors separate teams will not constitute noncompliance with this section, but the designated agency official may consider the failure to provide necessary funds for teams for one sex in assessing equality of opportunity for members of each sex. 
</P>
<P>(d) <I>Adjustment period.</I> A recipient that operates or sponsors interscholastic, intercollegiate, club, or intramural athletics at the elementary school level shall comply fully with this section as expeditiously as possible but in no event later than one year from September 29, 2000. A recipient that operates or sponsors interscholastic, intercollegiate, club, or intramural athletics at the secondary or postsecondary school level shall comply fully with this section as expeditiously as possible but in no event later than three years from September 29, 2000. 


</P>
</DIV8>


<DIV8 N="§ 3.455" NODE="24:1.1.1.1.3.4.1.12" TYPE="SECTION">
<HEAD>§ 3.455   Textbooks and curricular material.</HEAD>
<P>Nothing in these Title IX regulations shall be interpreted as requiring or prohibiting or abridging in any way the use of particular textbooks or curricular materials. 


</P>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:1.1.1.1.3.5" TYPE="SUBPART">
<HEAD>Subpart E—Discrimination on the Basis of Sex in Employment in Education Programs or Activities Prohibited</HEAD>


<DIV8 N="§ 3.500" NODE="24:1.1.1.1.3.5.1.1" TYPE="SECTION">
<HEAD>§ 3.500   Employment.</HEAD>
<P>(a) <I>General.</I> (1) No person shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination in employment, or recruitment, consideration, or selection therefor, whether full-time or part-time, under any education program or activity operated by a recipient that receives Federal financial assistance. 
</P>
<P>(2) A recipient shall make all employment decisions in any education program or activity operated by such recipient in a nondiscriminatory manner and shall not limit, segregate, or classify applicants or employees in any way that could adversely affect any applicant's or employee's employment opportunities or status because of sex. 
</P>
<P>(3) A recipient shall not enter into any contractual or other relationship which directly or indirectly has the effect of subjecting employees or students to discrimination prohibited by §§ 3.500 through 3.550, including relationships with employment and referral agencies, with labor unions, and with organizations providing or administering fringe benefits to employees of the recipient. 
</P>
<P>(4) A recipient shall not grant preferences to applicants for employment on the basis of attendance at any educational institution or entity that admits as students only or predominantly members of one sex, if the giving of such preferences has the effect of discriminating on the basis of sex in violation of these Title IX regulations. 
</P>
<P>(b) <I>Application.</I> The provisions of §§ 3.500 through 3.550 apply to: 
</P>
<P>(1) Recruitment, advertising, and the process of application for employment; 
</P>
<P>(2) Hiring, upgrading, promotion, consideration for and award of tenure, demotion, transfer, layoff, termination, application of nepotism policies, right of return from layoff, and rehiring; 
</P>
<P>(3) Rates of pay or any other form of compensation, and changes in compensation; 
</P>
<P>(4) Job assignments, classifications, and structure, including position descriptions, lines of progression, and seniority lists; 
</P>
<P>(5) The terms of any collective bargaining agreement; 
</P>
<P>(6) Granting and return from leaves of absence, leave for pregnancy, childbirth, false pregnancy, termination of pregnancy, leave for persons of either sex to care for children or dependents, or any other leave; 
</P>
<P>(7) Fringe benefits available by virtue of employment, whether or not administered by the recipient; 
</P>
<P>(8) Selection and financial support for training, including apprenticeship, professional meetings, conferences, and other related activities, selection for tuition assistance, selection for sabbaticals and leaves of absence to pursue training; 
</P>
<P>(9) Employer-sponsored activities, including social or recreational programs; and
</P>
<P>(10) Any other term, condition, or privilege of employment. 


</P>
</DIV8>


<DIV8 N="§ 3.505" NODE="24:1.1.1.1.3.5.1.2" TYPE="SECTION">
<HEAD>§ 3.505   Employment criteria.</HEAD>
<P>A recipient shall not administer or operate any test or other criterion for any employment opportunity that has a disproportionately adverse effect on persons on the basis of sex unless: 
</P>
<P>(a) Use of such test or other criterion is shown to predict validly successful performance in the position in question; and 
</P>
<P>(b) Alternative tests or criteria for such purpose, which do not have such disproportionately adverse effect, are shown to be unavailable.


</P>
</DIV8>


<DIV8 N="§ 3.510" NODE="24:1.1.1.1.3.5.1.3" TYPE="SECTION">
<HEAD>§ 3.510   Recruitment.</HEAD>
<P>(a) <I>Nondiscriminatory recruitment and hiring.</I> A recipient shall not discriminate on the basis of sex in the recruitment and hiring of employees. Where a recipient has been found to be presently discriminating on the basis of sex in the recruitment or hiring of employees, or has been found to have so discriminated in the past, the recipient shall recruit members of the sex so discriminated against so as to overcome the effects of such past or present discrimination. 
</P>
<P>(b) <I>Recruitment patterns.</I> A recipient shall not recruit primarily or exclusively at entities that furnish as applicants only or predominantly members of one sex if such actions have the effect of discriminating on the basis of sex in violation of §§ 3.500 through 3.550. 


</P>
</DIV8>


<DIV8 N="§ 3.515" NODE="24:1.1.1.1.3.5.1.4" TYPE="SECTION">
<HEAD>§ 3.515   Compensation.</HEAD>
<P>A recipient shall not make or enforce any policy or practice that, on the basis of sex: 
</P>
<P>(a) Makes distinctions in rates of pay or other compensation; 
</P>
<P>(b) Results in the payment of wages to employees of one sex at a rate less than that paid to employees of the opposite sex for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and that are performed under similar working conditions. 


</P>
</DIV8>


<DIV8 N="§ 3.520" NODE="24:1.1.1.1.3.5.1.5" TYPE="SECTION">
<HEAD>§ 3.520   Job classification and structure.</HEAD>
<P>A recipient shall not: 
</P>
<P>(a) Classify a job as being for males or for females; 
</P>
<P>(b) Maintain or establish separate lines of progression, seniority lists, career ladders, or tenure systems based on sex; or 
</P>
<P>(c) Maintain or establish separate lines of progression, seniority systems, career ladders, or tenure systems for similar jobs, position descriptions, or job requirements that classify persons on the basis of sex, unless sex is a bona fide occupational qualification for the positions in question as set forth in § 3.550. 


</P>
</DIV8>


<DIV8 N="§ 3.525" NODE="24:1.1.1.1.3.5.1.6" TYPE="SECTION">
<HEAD>§ 3.525   Fringe benefits.</HEAD>
<P>(a) <I>“Fringe benefits” defined.</I> For purposes of these Title IX regulations, <I>fringe benefits</I> means: Any medical, hospital, accident, life insurance, or retirement benefit, service, policy or plan, any profit-sharing or bonus plan, leave, and any other benefit or service of employment not subject to the provision of § 3.515. 
</P>
<P>(b) <I>Prohibitions.</I> A recipient shall not: 
</P>
<P>(1) Discriminate on the basis of sex with regard to making fringe benefits available to employees or make fringe benefits available to spouses, families, or dependents of employees differently upon the basis of the employee's sex; 
</P>
<P>(2) Administer, operate, offer, or participate in a fringe benefit plan that does not provide for equal periodic benefits for members of each sex and for equal contributions to the plan by such recipient for members of each sex; or 
</P>
<P>(3) Administer, operate, offer, or participate in a pension or retirement plan that establishes different optional or compulsory retirement ages based on sex or that otherwise discriminates in benefits on the basis of sex. 


</P>
</DIV8>


<DIV8 N="§ 3.530" NODE="24:1.1.1.1.3.5.1.7" TYPE="SECTION">
<HEAD>§ 3.530   Marital or parental status.</HEAD>
<P>(a) <I>General.</I> A recipient shall not apply any policy or take any employment action: 
</P>
<P>(1) Concerning the potential marital, parental, or family status of an employee or applicant for employment that treats persons differently on the basis of sex; or 
</P>
<P>(2) Which is based upon whether an employee or applicant for employment is the head of household or principal wage earner in such employee's or applicant's family unit. 
</P>
<P>(b) <I>Pregnancy.</I> A recipient shall not discriminate against or exclude from employment any employee or applicant for employment on the basis of pregnancy, childbirth, false pregnancy, termination of pregnancy, or recovery therefrom. 
</P>
<P>(c) <I>Pregnancy as a temporary disability.</I> Subject to § 3.235(d), a recipient shall treat pregnancy, childbirth, false pregnancy, termination of pregnancy, recovery therefrom, and any temporary disability resulting therefrom as any other temporary disability for all job-related purposes, including commencement, duration, and extensions of leave, payment of disability income, accrual of seniority and any other benefit or service, and reinstatement, and under any fringe benefit offered to employees by virtue of employment. 
</P>
<P>(d) <I>Pregnancy leave.</I> In the case of a recipient that does not maintain a leave policy for its employees, or in the case of an employee with insufficient leave or accrued employment time to qualify for leave under such a policy, a recipient shall treat pregnancy, childbirth, false pregnancy, termination of pregnancy, and recovery therefrom as a justification for a leave of absence without pay for a reasonable period of time, at the conclusion of which the employee shall be reinstated to the status that she held when the leave began or to a comparable position, without decrease in rate of compensation or loss of promotional opportunities, or any other right or privilege of employment. 


</P>
</DIV8>


<DIV8 N="§ 3.535" NODE="24:1.1.1.1.3.5.1.8" TYPE="SECTION">
<HEAD>§ 3.535   Effect of state or local law or other requirements.</HEAD>
<P>(a) <I>Prohibitory requirements.</I> The obligation to comply with §§ 3.500 through 3.550 is not obviated or alleviated by the existence of any State or local law or other requirement that imposes prohibitions or limits upon employment of members of one sex that are not imposed upon members of the other sex. 
</P>
<P>(b) <I>Benefits.</I> A recipient that provides any compensation, service, or benefit to members of one sex pursuant to a State or local law or other requirement shall provide the same compensation, service, or benefit to members of the other sex. 


</P>
</DIV8>


<DIV8 N="§ 3.540" NODE="24:1.1.1.1.3.5.1.9" TYPE="SECTION">
<HEAD>§ 3.540   Advertising.</HEAD>
<P>A recipient shall not in any advertising related to employment indicate preference, limitation, specification, or discrimination based on sex unless sex is a bona fide occupational qualification for the particular job in question. 


</P>
</DIV8>


<DIV8 N="§ 3.545" NODE="24:1.1.1.1.3.5.1.10" TYPE="SECTION">
<HEAD>§ 3.545   Pre-employment inquiries.</HEAD>
<P>(a) <I>Marital status.</I> A recipient shall not make pre-employment inquiry as to the marital status of an applicant for employment, including whether such applicant is “Miss” or “Mrs.” 
</P>
<P>(b) <I>Sex.</I> A recipient may make pre-employment inquiry as to the sex of an applicant for employment, but only if such inquiry is made equally of such applicants of both sexes and if the results of such inquiry are not used in connection with discrimination prohibited by these Title IX regulations. 


</P>
</DIV8>


<DIV8 N="§ 3.550" NODE="24:1.1.1.1.3.5.1.11" TYPE="SECTION">
<HEAD>§ 3.550   Sex as a bona fide occupational qualification.</HEAD>
<P>A recipient may take action otherwise prohibited by §§ 3.500 through 3.550 provided it is shown that sex is a bona fide occupational qualification for that action, such that consideration of sex with regard to such action is essential to successful operation of the employment function concerned. A recipient shall not take action pursuant to this section that is based upon alleged comparative employment characteristics or stereotyped characterizations of one or the other sex, or upon preference based on sex of the recipient, employees, students, or other persons, but nothing contained in this section shall prevent a recipient from considering an employee's sex in relation to employment in a locker room or toilet facility used only by members of one sex. 


</P>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:1.1.1.1.3.6" TYPE="SUBPART">
<HEAD>Subpart F—Procedures</HEAD>


<DIV8 N="§ 3.600" NODE="24:1.1.1.1.3.6.1.1" TYPE="SECTION">
<HEAD>§ 3.600   Notice of covered programs.</HEAD>
<P>Within 60 days of September 29, 2000, each Federal agency that awards Federal financial assistance shall publish in the <E T="04">Federal Register</E> a notice of the programs covered by these Title IX regulations. Each such Federal agency shall periodically republish the notice of covered programs to reflect changes in covered programs. Copies of this notice also shall be made available upon request to the Federal agency's office that enforces Title IX.


</P>
</DIV8>


<DIV8 N="§ 3.605" NODE="24:1.1.1.1.3.6.1.2" TYPE="SECTION">
<HEAD>§ 3.605   Enforcement procedures.</HEAD>
<P>The investigative, compliance, and enforcement procedural provisions of Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d) (“Title VI”) are hereby adopted and applied to these Title IX regulations. These procedures may be found at 24 CFR part 1.
</P>
<CITA TYPE="N">[65 FR 52880, Aug. 30, 2000]


</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="4" NODE="24:1.1.1.1.4" TYPE="PART">
<HEAD>PART 4—HUD REFORM ACT 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d), 3537a, 3545. 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 14449, Apr. 1, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:1.1.1.1.4.1" TYPE="SUBPART">
<HEAD>Subpart A—Accountability in the Provision of HUD Assistance</HEAD>


<DIV8 N="§ 4.1" NODE="24:1.1.1.1.4.1.1.1" TYPE="SECTION">
<HEAD>§ 4.1   Purpose.</HEAD>
<P>The provisions of this subpart A are authorized under section 102 of the Department of Housing and Urban Development Reform Act of 1989 (Pub. L. 101-235, approved December 15, 1989) (42 U.S.C. 3537a) (hereinafter, Section 102). Both the provisions of Section 102 and this subpart A apply for the purposes of Section 102. Section 102 contains a number of provisions designed to ensure greater accountability and integrity in the way in which the Department makes assistance available under certain of its programs. 


</P>
</DIV8>


<DIV8 N="§ 4.3" NODE="24:1.1.1.1.4.1.1.2" TYPE="SECTION">
<HEAD>§ 4.3   Definitions.</HEAD>
<P><I>Applicant</I> includes a person whose application for assistance must be submitted to HUD for any purpose including approval, environmental review, or rent determination. 
</P>
<P><I>Assistance under any program or discretionary fund administered by the Secretary</I> is subject to Section 102(a), and means any assistance, under any program administered by the Department, that provides by statute, regulation or otherwise for the competitive distribution of funding. 
</P>
<P><I>Assistance within the jurisdiction of the Department</I> is subject to Section 102(b), and means any contract, grant, loan, cooperative agreement, or other form of assistance, including the insurance or guarantee of a loan or mortgage, that is provided with respect to a specific project or activity under a program administered by the Department, whether or not it is awarded through a competitive process. 
</P>
<P><I>Assistance within the jurisdiction of the Department to any housing project</I> is subject to Section 102(d), and means: 
</P>
<P>(1) Assistance which is provided directly by HUD to any person or entity, but not to subrecipients. It includes assistance for the acquisition, rehabilitation, operation conversion, modernization, renovation, or demolition of any property containing five or more dwelling units that is to be used primarily for residential purposes. It includes assistance to independent group residences, board and care facilities, group homes and transitional housing but does not include primarily nonresidential facilities such as intermediate care facilities, nursing homes and hospitals. It also includes any change requested by a recipient in the amount of assistance previously provided, except changes resulting from annual adjustments in Section 8 rents under Section 8(c)(2)(A) of the United States Housing Act of 1937 (42 U.S.C. 1437f); 
</P>
<P>(2) Assistance to residential rental property receiving a tax credit under Federal, State or local law. 
</P>
<P>(3) For purposes of this definition, assistance includes assistance resulting from annual adjustments in Section 8 rents under Section 8(c)(2)(A) of the United States Housing Act of 1937, unless the initial assistance was made available before April 15, 1991, and no other assistance subject to this subpart A was made available on or after that date. 
</P>
<P><I>Housing project</I> means: (1) Property containing five or more dwelling units that is to be used for primarily residential purposes, including (but not limited to) living arrangements such as independent group residences, board and care facilities, group homes, and transitional housing, but excluding facilities that provide primarily non-residential services, such as intermediate care facilities, nursing homes, and hospitals. 
</P>
<P>(2) Residential rental property receiving a tax credit under Federal, State, or local law. 
</P>
<P><I>Interested party</I> means any person involved in the application for assistance, or in the planning, development or implementation of the project or activity for which assistance is sought and any other person who has a pecuniary interest exceeding the lower of $50,000 or 10 percent in the project or activity for which assistance is sought. 
</P>
<P><I>Selection criteria</I> includes, in addition to any objective measures of housing and other need, project merit, or efficient use of resources, the weight or relative importance of each published selection criterion as well as any other factors that may affect the selection of recipients. 


</P>
</DIV8>


<DIV8 N="§ 4.5" NODE="24:1.1.1.1.4.1.1.3" TYPE="SECTION">
<HEAD>§ 4.5   Notice and documentation of assistance subject to section 102(a).</HEAD>
<P>(a) <I>Notice.</I> Before the Department solicits an application for assistance subject to Section 102(a), it will post a notice describing application procedures and selection criteria not less than 30 calendar days before the deadline by which applications must be submitted.
</P>
<P>(b) <I>Documentation of decisions.</I> HUD will make available for public inspection, for at least five (5) years, and beginning not less than 30 calendars days after it provides the assistance, all documentation and other information regarding the basis for the funding decision with respect to each application submitted to HUD for assistance. HUD will also make available any written indication of support that it received from any applicant. Recipients of HUD assistance must ensure, in accordance with HUD guidance, the public availability of similar information submitted by subrecipients of HUD assistance. 
</P>
<CITA TYPE="N">[61 FR 14449, Apr. 1, 1996, as amended at 80 FR 75934, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 4.7" NODE="24:1.1.1.1.4.1.1.4" TYPE="SECTION">
<HEAD>§ 4.7   Notice of funding decisions.</HEAD>
<P>HUD will publish a Notice in the <E T="04">Federal Register</E> at least quarterly to notify the public of all decisions made by the Department to provide: 
</P>
<P>(a) Assistance subject to Section 102(a); and 
</P>
<P>(b) Assistance that is provided through grants or cooperative agreements on a discretionary (non-formula, non-demand) basis, but that is not provided on the basis of a competition. 


</P>
</DIV8>


<DIV8 N="§ 4.9" NODE="24:1.1.1.1.4.1.1.5" TYPE="SECTION">
<HEAD>§ 4.9   Disclosure requirements for assistance subject to section 102(b).</HEAD>
<P>(a) <I>Receipt and reasonable expectation of receipt.</I> (1) In determining the threshold of applicability of Section 102(b), an applicant will be deemed to have received or to have a reasonable expectation of receiving: 
</P>
<P>(i) The total amount of assistance received during the Federal fiscal year during which the application was submitted;
</P>
<P>(ii) The total amount of assistance requested for the fiscal year in which any pending application, including the current application, was submitted; and 
</P>
<P>(iii) For the fiscal year described in paragraph (a)(1)(ii) of this section, the total amount of assistance from the Department or any other entity that is likely to be made available on a formula basis or in the form of program income as defined in 2 CFR 200.80. 
</P>
<P>(2) In the case of assistance that will be provided pursuant to contract over a period of time (such as project-based assistance under Section 8 of the United States Housing Act of 1937), all amounts that are to be provided over the term of the contract, irrespective of when they are to be received. 
</P>
<P>(b) <I>Content of disclosure.</I> Applicants that receive or can reasonably be expected to receive, as defined in paragraph (a) of this section, an aggregate amount of assistance that is in excess of $200,000 must disclose the following information: 
</P>
<P>(1) Other governmental assistance that is or is expected to be made available, based upon a reasonable assessment of the circumstances, with respect to the project or activities for which the assistance is sought; 
</P>
<P>(2) The name and pecuniary interest of any interested party; and 
</P>
<P>(3) A report of the expected sources and uses of funds for the project or activity which is the subject of the application, including governmental and non-governmental sources of funds and private capital resulting from tax benefits. 
</P>
<P>(c) In the case of mortgage insurance under 24 CFR subtitle B, chapter II, the mortgagor is responsible for making the disclosures required under Section 102(b) and this section, and the mortgagee is responsible for furnishing the mortgagor's disclosures to the Department. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2510-0011)
</APPRO>
<CITA TYPE="N">[61 FR 14449, Apr. 1, 1996, as amended at 80 FR 75934, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 4.11" NODE="24:1.1.1.1.4.1.1.6" TYPE="SECTION">
<HEAD>§ 4.11   Updating of disclosure.</HEAD>
<P>(a) During the period in which an application for assistance covered under Section 102(b) is pending, or in which such assistance is being provided, the applicant must report to the Department, or to the State or unit of general local government, as appropriate: 
</P>
<P>(1) Any information referred to in Section 102(b) that the applicant should have disclosed with respect to the application, but did not disclose; 
</P>
<P>(2) Any information referred to in Section 102(b) that initially arose after the time for making disclosures under that subsection, including the name and pecuniary interest of any person who did not have a pecuniary interest in the project or activity that exceeded the threshold in Section 102(b) at the time of the application, but that subsequently exceeded the threshold. 
</P>
<P>(b) With regard to changes in information that was disclosed under Sections 102(b) or 102(c): 
</P>
<P>(1) For programs administered by the Assistant Secretary for Community Planning and Development: 
</P>
<P>(i) Any change in other government assistance covered by Section 102(b) that exceeds the amount of all assistance that was previously disclosed by the lesser of $250,000 or 10 percent of the assistance; 
</P>
<P>(ii) Any change in the expected sources or uses of funds that exceed the amount of all previously disclosed sources or uses by the lesser of $250,000 or 10 percent of previously disclosed sources; 
</P>
<P>(2) For all other programs: 
</P>
<P>(i) Any change in other government assistance under Section 102(b)(1) that exceeds the amount of assistance that was previously disclosed; 
</P>
<P>(ii) Any change in the pecuniary interest of any person under Section 102(b)(2) that exceeds the amount of all previously disclosed interests by the lesser of $50,000 or 10 percent of such interest; 
</P>
<P>(iii) For all projects receiving a tax credit under Federal, Sate or local law, any change in the expected sources or uses of funds that were previously disclosed; 
</P>
<P>(iv) For all other projects: 
</P>
<P>(A) Any change in the expected source of funds from a single source that exceeds the lesser of the amount previously disclosed for that source of funds by $250,000 or 10 percent of the funds previously disclosed for that source; 
</P>
<P>(B) Any change in the expected sources of funds from all sources previously disclosed that exceeds the lesser of $250,000 or 10 percent of the amounts previously disclosed from all sources of funds; 
</P>
<P>(C) Any change in a single expected use of funds that exceeds the lesser of $250,000 or 10 percent of the previously disclosed use; 
</P>
<P>(D) Any change in the use of all funds that exceeds the lesser of $250,000 or 10 percent of the previously disclosed uses for all funds. 
</P>
<P>(c) <I>Period of coverage.</I> For purposes of updating of Section 102(c), an application for assistance will be considered to be pending from the time the application is submitted until the Department communicates its decision with respect to the selection of the applicant. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2510-0011)


</APPRO>
</DIV8>


<DIV8 N="§ 4.13" NODE="24:1.1.1.1.4.1.1.7" TYPE="SECTION">
<HEAD>§ 4.13   Limitation of assistance subject to section 102(d).</HEAD>
<P>(a) In making the certification for assistance subject to Section 102(d), the Secretary will consider the aggregate amount of assistance from the Department and from other sources that is necessary to ensure the feasibility of the assisted activity. The Secretary will take into account all factors relevant to feasibility, which may include, but are not limited to, past rates of returns for owners, sponsors, and investors; the long-term needs of the project and its tenants; and the usual and customary fees charged in carrying out the assisted activity. 
</P>
<P>(b) If the Department determines that the aggregate of assistance within the jurisdiction of the Department to a housing project from the Department and from other governmental sources exceeds the amount that the Secretary determines is necessary to make the assisted activity feasible, the Department will consider all options available to enable it to make the required certification, including reductions in the amount of Section 8 subsidies. The Department also may impose a dollar-for-dollar, or equivalent, reduction in the amount of HUD assistance to offset the amount of other government assistance. In grant programs, this could result in a reduction of any grant amounts not yet drawn down. The Department may make these adjustments immediately, or in conjunction with servicing actions anticipated to occur in the near future (<I>e.g.,</I> in conjunction with the next annual adjustment of Section 8 rents). 
</P>
<P>(c) If an applicant does not meet the $200,000 disclosure requirement in § 4.7(b), an applicant must certify whether there is, or is expected to be made, available with respect to the housing project any other governmental assistance. The Department may also require any applicant subject to this subpart A to submit such a certification in conjunction with the Department's processing of any subsequent servicing action on that project. If there is other government assistance for purposes of the two preceding sentences, the applicant must submit such information as the Department deems necessary to make the certification and subsequent adjustments under Section 102(d). 
</P>
<P>(d) The certification under Section 102(d) shall be retained in the official file for the housing project. 


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.1.1.1.4.2" TYPE="SUBPART">
<HEAD>Subpart B—Prohibition of Advance Disclosure of Funding Decisions</HEAD>


<DIV8 N="§ 4.20" NODE="24:1.1.1.1.4.2.1.1" TYPE="SECTION">
<HEAD>§ 4.20   Purpose.</HEAD>
<P>The provisions of this subpart B are authorized under section 103 of the Department of Housing and Urban Development Reform Act of 1989 (Pub. L. 101-235, approved December 15, 1989) (42 U.S.C. 3537a) (hereinafter, Section 103). Both the provisions of Section 103 and this subpart B apply for the purposes of Section 103. Section 103 proscribes direct or indirect communication of certain information during the selection process by HUD employees to persons within or outside of the Department who are not authorized to receive that information. The purpose of the proscription is to preclude giving an unfair advantage to applicants who would receive information not available to other applicants or to the public. Section 103 also authorizes the Department to impose a civil money penalty on a HUD employee who knowingly discloses protected information, if such a violation of Section 103 is material, and authorizes the Department to sanction the person who received information improperly by, among other things, denying assistance to that person. 


</P>
</DIV8>


<DIV8 N="§ 4.22" NODE="24:1.1.1.1.4.2.1.2" TYPE="SECTION">
<HEAD>§ 4.22   Definitions.</HEAD>
<P><I>Application</I> means a written request for assistance regardless of whether the request is in proper form or format. 
</P>
<P><I>Assistance</I> does not include any contract (e.g., a procurement contract) that is subject to the Federal Acquisition Regulation (FAR) (48 CFR ch. 1). 
</P>
<P><I>Disclose</I> means providing information directly or indirectly to a person through any means of communication. 
</P>
<P><I>Employee</I> includes persons employed on a full-time, part-time, or temporary basis, and special government employees as defined in 18 U.S.C. 202. The term applies whether or not the employee is denoted as an officer of the Department. “Employee” is to be construed broadly to include persons who are retained on a contractual or consultative basis under an Office of Human Resources appointment. However, “employee” does not include an independent contractor, e.g., a firm or individual working under the authority of a procurement contract. 
</P>
<P><I>Material or materially</I> means in some influential or substantial respect or having to do more with substance than with form. 
</P>
<P><I>Person</I> means an individual, corporation, company, association, authority, firm, partnership, society, State, local government, or any other organization or group of people. 
</P>
<P><I>Selection process</I> means the period with respect to a selection for assistance that begins when the HUD official responsible for awarding the assistance involved, or his or her designee, makes a written request (which includes the selection criteria to be used in providing the assistance) to the Office of General Counsel (OGC) to prepare the NOFA, solicitation, or request for applications for assistance for publication in the <E T="04">Federal Register.</E> The period includes the evaluation of applications, and concludes with the announcement of the selection of recipients of assistance. 


</P>
</DIV8>


<DIV8 N="§ 4.24" NODE="24:1.1.1.1.4.2.1.3" TYPE="SECTION">
<HEAD>§ 4.24   Scope.</HEAD>
<P>(a) <I>Coverage.</I> The prohibitions against improper disclosure of covered selection information apply to any person who is an employee of the Department. In addition, the Department will require any other person who participates at the invitation of the Department in the selection process to sign a certification that he or she will be bound by the provisions of this part. 
</P>
<P>(b) <I>Applicability.</I> The prohibitions contained in this part apply to conduct occurring on or after June 12, 1991. 


</P>
</DIV8>


<DIV8 N="§ 4.26" NODE="24:1.1.1.1.4.2.1.4" TYPE="SECTION">
<HEAD>§ 4.26   Permissible and impermissible disclosures.</HEAD>
<P>(a) Notwithstanding the provisions of Section 103, an employee is permitted to disclose information during the selection process with respect to: 
</P>
<P>(1) The requirements of a HUD program or programs, including unpublished policy statements and the provision of technical assistance concerning program requirements, provided that the requirements or statements are disclosed on a uniform basis to any applicant or potential applicant. For purposes of this part, the term “technical assistance” includes such activities as explaining and responding to questions about program regulations, defining terms in an application package, and providing other forms of technical guidance that may be described in a NOFA. The term “technical assistance” also includes identification of those parts of an application that need substantive improvement, but this term does not include advising the applicant how to make those improvements. 
</P>
<P>(2) The dates by which particular decisions in the selection process will be made; 
</P>
<P>(3) Any information which has been published in the <E T="04">Federal Register</E> in a NOFA or otherwise;
</P>
<P>(4) Any information which has been made public through means other than the <E T="04">Federal Register</E>; 
</P>
<P>(5) An official audit, inquiry or investigation, if the disclosure is made to an auditor or investigator authorized by the HUD Inspector General to conduct the audit or investigation; 
</P>
<P>(6) Legal activities, including litigation, if the disclosure is made to an attorney who is representing or is otherwise responsible to the Department in connection with the activities; or 
</P>
<P>(7) Procedures that are required to be performed to process an application, e.g., environmental or budget reviews, and technical assistance from experts in fields who are regularly employed by other government agencies, provided that the agency with which the expert is employed or associated is not an applicant for HUD assistance during the pending funding cycle. 
</P>
<P>(b) An authorized employee, during the selection process, may contact an applicant for the purpose of: 
</P>
<P>(1) Communication of the applicant's failure to qualify, after a preliminary review for eligibility and completeness with respect to his or her application, and the reasons for the failure to qualify, or the fact of the applicant's failure to be determined to be technically acceptable after a full review; or 
</P>
<P>(2) Clarification of the terms of the applicant's application. A clarification, for the purpose of this paragraph (b), may include a request for additional information consistent with regulatory requirements. 
</P>
<P>(c) Prohibition of advance disclosure of funding decisions. During the selection process an employee shall not knowingly disclose any covered selection information regarding the selection process to any person other than an employee authorized to receive that information. 
</P>
<P>(1) The following disclosures of information are, at any time during the selection process, a violation of Section 103: 
</P>
<P>(i) Information regarding any applicant's relative standing; 
</P>
<P>(ii) The amount of assistance requested by any applicant; 
</P>
<P>(iii) Any information contained in an application; 
</P>
<P>(2) The following disclosures of information, before the deadline for the submission of applications, shall be a violation of Section 103: 
</P>
<P>(i) The identity of any applicant; and 
</P>
<P>(ii) The number of applicants. 


</P>
</DIV8>


<DIV8 N="§ 4.28" NODE="24:1.1.1.1.4.2.1.5" TYPE="SECTION">
<HEAD>§ 4.28   Civil penalties.</HEAD>
<P>Whenever any employee knowingly and materially violates the prohibition in Section 103, the Department may impose a civil money penalty on the employee in accordance with the provisions of 24 CFR part 30. 


</P>
</DIV8>


<DIV8 N="§ 4.30" NODE="24:1.1.1.1.4.2.1.6" TYPE="SECTION">
<HEAD>§ 4.30   Procedure upon discovery of a violation.</HEAD>
<P>(a) <I>In general.</I> When an alleged violation of Section 103 or this subpart B comes to the attention of any person, including an employee, he or she may either: 
</P>
<P>(1) Contact the HUD Ethics Law Division to provide information about the alleged violation; or 
</P>
<P>(2) Contact the HUD Office of Inspector General to request an inquiry or investigation into the matter. 
</P>
<P>(b) <I>Ethics Law Division.</I> When the Ethics Law Division receives information concerning an alleged violation of Section 103, it shall refer the matter to the Inspector General stating the facts of the alleged violation and requesting that the Inspector General make an inquiry or investigation into the matter. 
</P>
<P>(c) <I>Inspector General.</I> When the Inspector General receives information concerning an alleged violation of Section 103 or this subpart B, he or she shall notify the Ethics Law Division when the Inspector General begins an inquiry or investigation into the matter. 
</P>
<P>(d) <I>Protection of employee complainants.</I> (1) No official of the Ethics Law Division, after receipt of information from an employee stating the facts of an alleged violation of this part, shall disclose the identity of the employee without the consent of that employee. The Inspector General, after receipt of information stating the facts of an alleged violation of this part, shall not disclose the identity of the employee who provided the information without the consent of that employee, unless the Inspector General determines that disclosure of the employee's identity is unavoidable during the course of an investigation. However, any employee who knowingly reports a false alleged violation of this part is not so protected and may be subject to disciplinary action. 
</P>
<P>(2) Any employee who has authority to take, direct others to take, recommend or approve a personnel action is prohibited from threatening, taking, failing to take, recommending, or approving any personnel action as reprisal against another employee for providing information to investigating officials. 


</P>
</DIV8>


<DIV8 N="§ 4.32" NODE="24:1.1.1.1.4.2.1.7" TYPE="SECTION">
<HEAD>§ 4.32   Investigation by Office of Inspector General.</HEAD>
<P>The Office of Inspector General shall review every alleged violation of Section 103. If after a review the Office of Inspector General determines that further investigation is not warranted, it shall notify the Ethics Law Division of that determination. If, after a review, the Office of Inspector General determines that additional investigation is warranted, it shall conduct the investigation and upon completion issue a report of the investigation to the Ethics Law Division as to each alleged violation. 


</P>
</DIV8>


<DIV8 N="§ 4.34" NODE="24:1.1.1.1.4.2.1.8" TYPE="SECTION">
<HEAD>§ 4.34   Review of Inspector General's report by the Ethics Law Division.</HEAD>
<P>After receipt of the Inspector General's report, the Ethics Law Division shall review the facts and circumstances of the alleged violations. In addition, the Ethics Law Division may: 
</P>
<P>(a) Return the report to the Inspector General with a request for further investigation; 
</P>
<P>(b) Discuss the violation with the employee alleged to have committed the violation; or 
</P>
<P>(c) Interview any other person, including employees who it believes will be helpful in furnishing information relevant to the inquiry. 


</P>
</DIV8>


<DIV8 N="§ 4.36" NODE="24:1.1.1.1.4.2.1.9" TYPE="SECTION">
<HEAD>§ 4.36   Action by the Ethics Law Division.</HEAD>
<P>(a) After review of the Inspector General's report, the Ethics Law Division shall determine whether or not there is sufficient information providing a reasonable basis to believe that a violation of Section 103 or this subpart B has occurred. 
</P>
<P>(b) If the Ethics Law Division determines that there is no reasonable basis to believe that a violation of Section 103 or this subpart B has occurred, it shall close the matter and send its determination to the Office of Inspector General. 
</P>
<P>(c) If the Ethics Law Division determines that there is sufficient information to provide a reasonable basis to believe that a violation of Section 103 or this subpart B has occurred, it shall: 
</P>
<P>(1) Send its determination to the Office of Inspector General; and 
</P>
<P>(2) Refer the matter to the appropriate official for review as to whether to impose a civil money penalty in accordance with 24 CFR part 30; provided, however, that the Ethics Law Division shall not make a civil money penalty recommendation unless it finds the violation to have been knowing and material. The decision to impose a civil money penalty in a particular matter may be made only upon referral from the Ethics Law Division. 
</P>
<P>(d) In determining whether a violation is material, the Ethics Law Division shall consider the following factors, as applicable: 
</P>
<P>(1) The content of the disclosure and its significance to the person to whom the disclosure was made; 
</P>
<P>(2) The time during the selection process when the disclosure was made; 
</P>
<P>(3) The person to whom the disclosure was made; 
</P>
<P>(4) The dollar amount of assistance requested by the person to whom the disclosure was made; 
</P>
<P>(5) The dollar amount of assistance available for a given competition or program; 
</P>
<P>(6) The benefit, if any, received or expected by the employee, the employee's relatives or friends, or any other person with whom the employee is affiliated; 
</P>
<P>(7) The potential injury to the Department. 
</P>
<P>(e) If the Ethics Law Division determines that there is sufficient information to provide a reasonable basis to believe that a violation of Section 103 or this subpart B has occurred, it may, in addition to referring the matter under 24 CFR part 30, refer the matter to an appropriate HUD official for consideration of any other available disciplinary action. Any referral authorized by this paragraph (e) shall be reported to the Inspector General and may be reported to the employee's supervisor. 


</P>
</DIV8>


<DIV8 N="§ 4.38" NODE="24:1.1.1.1.4.2.1.10" TYPE="SECTION">
<HEAD>§ 4.38   Administrative remedies.</HEAD>
<P>(a) If the Department receives or obtains information providing a reasonable basis to believe that a violation of Section 103 has occurred, the Department may impose a sanction, as determined to be appropriate, upon an applicant for or a recipient of assistance who has received covered selection information. 
</P>
<P>(b) In determining whether a sanction is appropriate and if so which sanction or sanctions should be sought, the Secretary shall give consideration to the applicant's conduct with respect to the violation. In so doing, the Secretary shall consider the factors listed at § 4.36(d), as well as any history of prior violations in any HUD program, the benefits received or expected, deterrence of future violations and the extent of any complicity in the violation. 
</P>
<P>(c) The Secretary may impose a sanction authorized by this section whether or not the Ethics Law Division refers a case under 24 CFR part 30, and whether or not a civil money penalty is imposed. 


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="5" NODE="24:1.1.1.1.5" TYPE="PART">
<HEAD>PART 5—GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1701x; 42 U.S.C. 1437a, 1437c, 1437f, 1437n, 3535(d); 42 U.S.C. 2000bb <I>et seq.;</I> 34 U.S.C. 12471 <I>et seq.;</I> Sec. 327, Pub. L. 109-115, 119 Stat. 2396; E.O. 13279, 67 FR 77141, 3 CFR, 2002 Comp., p. 258; E.O. 13559, 75 FR 71319, 3 CFR, 2010 Comp., p. 273; E.O. 14015, 86 FR 10007, 3 CFR, 2021 Comp., p. 517.






</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 5202, Feb. 9, 1996, unless otherwise noted.
</PSPACE></SOURCE>
<EDNOTE>
<HED>Editorial Note:</HED><PSPACE>Nomenclature changes to part 5 appear at 65 FR 16715, Mar. 29, 2000.</PSPACE></EDNOTE>

<DIV6 N="A" NODE="24:1.1.1.1.5.1" TYPE="SUBPART">
<HEAD>Subpart A—Generally Applicable Definitions and Requirements; Waivers</HEAD>

<AUTH>
<HED>Authority:</HED><PSPACE>29 U.S.C. 794, 42 U.S.C. 1437a, 1437c, 1437c-1(d), 1437d, 1437f, 1437n, 3535(d), and Sec. 327, Pub. L. 109-115, 119 Stat. 2936; 42 U.S.C. 3600-3620; 42 U.S.C. 5304(b); 42 U.S.C. 12101 <I>et seq.;</I> 42 U.S.C. 12704-12708; E.O. 11063, 27 FR 11527, 3 CFR, 1958-1963 Comp., p. 652; E.O. 12892, 59 FR 2939, 3 CFR, 1994 Comp., p. 849.


</PSPACE></AUTH>

<DIV8 N="§ 5.100" NODE="24:1.1.1.1.5.1.13.1" TYPE="SECTION">
<HEAD>§ 5.100   Definitions.</HEAD>
<P>The following definitions apply to this part and also in other regulations, as noted: 
</P>
<P><I>1937 Act</I> means the United States Housing Act of 1937 (42 U.S.C. 1437 <I>et seq.</I>) 
</P>
<P><I>ADA</I> means the Americans with Disabilities Act of 1990 (42 U.S.C. 12101 <I>et seq.</I>). 
</P>
<P><I>ALJ</I> means an administrative law judge appointed to HUD pursuant to 5 U.S.C. 3105 or detailed to HUD pursuant to 5 U.S.C. 3344. 
</P>
<P><I>Broadband infrastructure</I> means cables, fiber optics, wiring, or other permanent (integral to the structure) infrastructure, including wireless infrastructure, that is capable of providing access to Internet connections in individual housing units, and that meets the definition of “advanced telecommunications capability” determined by the Federal Communications Commission under section 706 of the Telecommunications Act of 1996 (47 U.S.C. 1302).
</P>
<P><I>Covered person,</I> for purposes of 24 CFR 5, subpart I, and parts 966 and 982, means a tenant, any member of the tenant's household, a guest or another person under the tenant's control. 
</P>
<P><I>Department</I> means the Department of Housing and Urban Development. 
</P>
<P><I>Drug</I> means a controlled substance as defined in section 102 of the Controlled Substances Act (21 U.S.C. 802). 
</P>
<P><I>Drug-related criminal activity</I> means the illegal manufacture, sale, distribution, or use of a drug, or the possession of a drug with intent to manufacture, sell, distribute or use the drug. 
</P>
<P><I>Earned income</I> means income or earnings from wages, tips, salaries, other employee compensation, and net income from self-employment. Earned income does not include any pension or annuity, transfer payments (meaning payments made or income received in which no goods or services are being paid for, such as welfare, social security, and governmental subsidies for certain benefits), or any cash or in-kind benefits.
</P>
<P><I>Elderly Person</I> means an individual who is at least 62 years of age. 
</P>
<P><I>Fair Housing Act</I> means title VIII of the Civil Rights Act of 1968, as amended by the Fair Housing Amendments Act of 1988 (42 U.S.C. 3601 <I>et seq.</I>). 
</P>
<P><I>Fair Market Rent (FMR)</I> means the rent that would be required to be paid in the particular housing market area in order to obtain privately owned, decent, safe and sanitary rental housing of modest (non-luxury) nature with suitable amenities. This Fair Market Rent includes utilities (except telephone). Separate Fair Market Rents will be established by HUD for dwelling units of varying sizes (number of bedrooms) and will be published in the <E T="04">Federal Register</E> in accordance with part 888 of this title. 
</P>
<P><I>Family</I> has the meaning provided this term in § 5.403, and applies to all HUD programs unless otherwise provided in the regulations for a specific HUD program.
</P>
<P><I>Federally assisted housing</I> (for purposes of subparts I and J of this part) means housing assisted under any of the following programs: 
</P>
<P>(1) Public housing; 
</P>
<P>(2) Housing receiving project-based or tenant-based assistance under Section 8 of the U.S. Housing Act of 1937 (42 U.S.C. 1437f); 
</P>
<P>(3) Housing that is assisted under section 202 of the Housing Act of 1959, as amended by section 801 of the National Affordable Housing Act (12 U.S.C. 1701q); 
</P>
<P>(4) Housing that is assisted under section 202 of the Housing Act of 1959, as such section existed before the enactment of the National Affordable Housing Act; 
</P>
<P>(5) Housing that is assisted under section 811 of the National Affordable Housing Act (42 U.S.C. 8013); 
</P>
<P>(6) Housing financed by a loan or mortgage insured under section 221(d)(3) of the National Housing Act (12 U.S.C. 1715<I>l</I>(d)(3)) that bears interest at a rate determined under the proviso of section 221(d)(5) of such Act (12 U.S.C. 1715<I>l</I>(d)(5)); 
</P>
<P>(7) Housing insured, assisted, or held by HUD or by a State or local agency under section 236 of the National Housing Act (12 U.S.C. 1715z-1); or 
</P>
<P>(8) Housing assisted by the Rural Development Administration under section 514 or section 515 of the Housing Act of 1949 (42 U.S.C. 1483, 1484). 
</P>
<P><I>Gender identity</I> means the gender with which a person identifies, regardless of the sex assigned to that person at birth and regardless of the person's perceived gender identity. Perceived gender identity means the gender with which a person is perceived to identify based on that person's appearance, behavior, expression, other gender related characteristics, or sex assigned to the individual at birth or identified in documents.
</P>
<P><I>General Counsel</I> means the General Counsel of HUD. 
</P>
<P><I>Grantee</I> means the person or legal entity to which a grant is awarded and that is accountable for the use of the funds provided. 
</P>
<P><I>Guest,</I> only for purposes of 24 CFR part 5, subparts A and I, and parts 882, 960, 966, and 982, means a person temporarily staying in the unit with the consent of a tenant or other member of the household who has express or implied authority to so consent on behalf of the tenant. The requirements of parts 966 and 982 apply to a guest as so defined. 
</P>
<P><I>Homeownership counseling</I> means housing counseling related to homeownership and residential mortgage loans when provided in connection with HUD's Housing Counseling Program, or required by or provided in connection with HUD Programs as defined in § 5.111. Homeownership counseling is housing counseling that covers the decision to purchase a home, the selection and purchase of a home, issues arising during or affecting the period of ownership of a home (including financing, refinancing, default, and foreclosure, and other financial decisions) and the sale or other disposition of a home.
</P>
<P><I>Household,</I> for purposes of 24 CFR part 5, subpart I, and parts 960, 966, 882, and 982 of this title, means the family, foster children and adults, and PHA-approved live-in aide.


</P>
<P><I>Housing counseling</I> is independent, expert advice customized to the need of the consumer to address the consumer's housing barriers and to help achieve their housing goals and must include the following processes: Intake; financial and housing affordability analysis; an action plan, except for reverse mortgage counseling; and a reasonable effort to have follow-up communication with the client when possible. The content and process of housing counseling must meet the standards outlined in 24 CFR part 214. Homeownership counseling and rental counseling are types of housing counseling.
</P>
<P><I>HUD</I> means the same as <I>Department.</I>
</P>
<P><I>MSA</I> means a metropolitan statistical area.
</P>
<P><I>NAHA</I> means the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12701 <I>et seq.</I>). 
</P>
<P><I>NEPA</I> means the National Environmental Policy Act of 1969 (42 U.S.C. 4321). 
</P>
<P><I>NOFA</I> means Notice of Funding Availability. 
</P>
<P><I>OMB</I> means the Office of Management and Budget. 
</P>
<P><I>Organizational Unit</I> means the jurisdictional area of each Assistant Secretary, and each office head or field administrator reporting directly to the Secretary. 
</P>
<P><I>Other person under the tenant's control,</I> for the purposes of the definition of <I>covered person</I> and for parts 5, 882, 966, and 982 means that the person, although not staying as a guest (as defined in this section) in the unit, is, or was at the time of the activity in question, on the premises (as <I>premises</I> is defined in this section) because of an invitation from the tenant or other member of the household who has express or implied authority to so consent on behalf of the tenant. Absent evidence to the contrary, a person temporarily and infrequently on the premises solely for legitimate commercial purposes is not <I>under the tenant's control.</I>
</P>
<P><I>Premises,</I> for purposes of 24 CFR part 5, subpart I, and parts 960 and 966, means the building or complex or development in which the public or assisted housing dwelling unit is located, including common areas and grounds. 
</P>
<P><I>Public housing</I> means housing assisted under the 1937 Act, other than under Section 8. “Public housing” includes dwelling units in a mixed finance project that are assisted by a PHA with capital or operating assistance. 
</P>
<P><I>Public Housing Agency (PHA)</I> means any State, county, municipality, or other governmental entity or public body, or agency or instrumentality of these entities, that is authorized to engage or assist in the development or operation of low-income housing under the 1937 Act. 
</P>
<P><I>Real property</I> as used in this part has the same meaning as that provided under the law of the State in which the property is located.
</P>
<P><I>Rental housing counseling</I> means counseling related to the rental of residential property, which may include counseling regarding future homeownership opportunities when provided in connection with HUD's Housing Counseling Program, or required under or provided in connection with HUD Programs as defined in § 5.111. Rental housing counseling may also include the decision to rent, responsibilities of tenancy, affordability of renting and eviction prevention.
</P>
<P><I>Responsible entity</I> means:
</P>
<P>(1) For the public housing program, the Section 8 tenant-based assistance program (part 982 of this title), the Section 8 project-based voucher program (part 983 of this title), and the Section 8 moderate rehabilitation program (part 882 of this title), the PHA administering the program under an ACC with HUD.
</P>
<P>(2) For all other Section 8 programs, the Section 8 project owner. 




</P>
<P><I>Section 8</I> means section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f). 
</P>
<P><I>Secretary</I> means the Secretary of Housing and Urban Development. 
</P>
<P><I>Sexual orientation</I> means one's emotional or physical attraction to the same and/or opposite sex (<I>e.g.,</I> homosexuality, heterosexuality, or bisexuality).
</P>
<P><I>Substantial rehabilitation,</I> for the purposes of determining when installation of broadband infrastructure is required as part of substantial rehabilitation of multifamily rental housing, unless otherwise defined by a program, means work that involves:
</P>
<P>(1) Significant work on the electrical system of the multifamily rental housing. “Significant work” means complete replacement of the electrical system or other work for which the pre-construction cost estimate is equal to or greater than 75 percent of the cost of replacing the entire electrical system. In the case of multifamily rental housing with multiple buildings with more than 4 units, “entire system” refers to the electrical system of the building undergoing rehabilitation; or
</P>
<P>(2) Rehabilitation of the multifamily rental housing in which the pre-construction estimated cost of the rehabilitation is equal to or greater than 75 percent of the total estimated cost of replacing the multifamily rental housing after the rehabilitation is complete. In the case of multifamily rental housing with multiple buildings with more than 4 units, the replacement cost must be the replacement cost of the building undergoing rehabilitation.
</P>
<P><I>Unearned income means</I> any annual income, as calculated under § 5.609, that is not earned income.
</P>
<P><I>URA</I> means the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (42 U.S.C. 4201-4655). 
</P>
<P><I>Violent criminal activity</I> means any criminal activity that has as one of its elements the use, attempted use, or threatened use of physical force substantial enough to cause, or be reasonably likely to cause, serious bodily injury or property damage.
</P>
<CITA TYPE="N">[61 FR 5202, Feb. 9, 1996, as amended at 63 FR 23853, Apr. 30, 1998; 65 FR 16715, Mar. 29, 2000; 66 FR 28791, May 24, 2001; 77 FR 5674, Feb. 3, 2012; 81 FR 64782, Sept. 21, 2016; 81 FR 90657, Dec. 14, 2016; 81 FR 92635, Dec. 20, 2016; 88 FR 9654, Feb. 14, 2023; 89 FR 38289, May 7, 2024; 90 FR 56686, Dec. 8, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 5.105" NODE="24:1.1.1.1.5.1.13.2" TYPE="SECTION">
<HEAD>§ 5.105   Other Federal requirements.</HEAD>
<P>The requirements set forth in this section apply to all HUD programs, except as may be otherwise noted in the respective program regulations in title 24 of the CFR, or unless inconsistent with statutes authorizing certain HUD programs:
</P>
<P>(a) <I>Nondiscrimination and equal opportunity.</I> (1) The Fair Housing Act (42 U.S.C. 3601-19) and implementing regulations at 24 CFR part 100 <I>et seq.;</I> Executive Order 11063, as amended by Executive Order 12259 (3 CFR, 1959-1963 Comp., p. 652 and 3 CFR, 1980 Comp., p. 307) (Equal Opportunity in Housing Programs) and implementing regulations at 24 CFR part 107; title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d-2000d-4) (Nondiscrimination in Federally Assisted Programs) and implementing regulations at 24 CFR part 1; the Age Discrimination Act of 1975 (42 U.S.C. 6101-6107) and implementing regulations at 24 CFR part 146; section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and implementing regulations at part 8 of this title; title II of the Americans with Disabilities Act, 42 U.S.C. 12101 <I>et seq.;</I> 24 CFR part 8; Executive Order 11246, as amended by Executive Orders 11375, 11478, 12086, and 12107 (3 CFR, 1964-1965 Comp., p. 339; 3 CFR, 1966-1970 Comp., p. 684; 3 CFR, 1966-1970 Comp., p. 803; 3 CFR, 1978 Comp., p. 230; and 3 CFR, 1978 Comp., p. 264, respectively) (Equal Employment Opportunity Programs) and implementing regulations at 41 CFR chapter 60; Executive Order 11625, as amended by Executive Order 12007 (3 CFR, 1971-1975 Comp., p. 616 and 3 CFR, 1977 Comp., p. 139) (Minority Business Enterprises); Executive Order 12432 (3 CFR, 1983 Comp., p. 198) (Minority Business Enterprise Development); and Executive Order 12138, as amended by Executive Order 12608 (3 CFR, 1977 Comp., p. 393 and 3 CFR, 1987 Comp., p. 245) (Women's Business Enterprise). 
</P>
<P>(2) <I>Equal access to HUD-assisted or -insured housing.</I> A determination of eligibility for housing that is assisted by HUD or subject to a mortgage insured by HUD shall be made in accordance with the eligibility requirements provided for such program by HUD, and such housing shall be made available without regard to actual or perceived sexual orientation, gender identity, or marital status.
</P>
<P>(b) <I>Disclosure requirements.</I> The disclosure requirements and prohibitions of 31 U.S.C. 1352 and implementing regulations at 24 CFR part 87; and the requirements for funding competitions established by the Department of Housing and Urban Development Reform Act of 1989 (42 U.S.C. 3531 <I>et seq.</I>). 
</P>
<P>(c) Debarred, suspended, or ineligible contractors and participants. The prohibitions at 2 CFR part 2424 on the use of debarred, suspended, or ineligible contractors and participants.
</P>
<P>(d) <I>Drug-free workplace.</I> The Drug-Free Workplace Act of 1988 (41 U.S.C. 701, <I>et seq.</I>) and HUD's implementing regulations at 2 CFR part 2429.
</P>
<CITA TYPE="N">[61 FR 5202, Feb. 9, 1996, as amended at 65 FR 16715, Mar. 29, 2000; 72 FR 73491, Dec. 27, 2007; 76 FR 45167, July 28, 2011; 77 FR 5674, Feb. 3, 2012; 81 FR 64782, Sept. 21, 2016; 81 FR 80993, Nov. 17, 2016; 85 FR 61562, Sept. 29, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 5.106" NODE="24:1.1.1.1.5.1.13.3" TYPE="SECTION">
<HEAD>§ 5.106   Equal access in accordance with the individual's gender identity in community planning and development programs.</HEAD>
<P>(a) <I>Applicability.</I> This section applies to assistance provided under Community Planning and Development (CPD) programs, including assistance under the following CPD programs: HOME Investment Partnerships program (24 CFR part 92), Housing Trust Fund program (24 CFR part 93), Community Development Block Grant program (24 CFR part 570), Housing Opportunities for Persons With AIDS program (24 CFR part 574), Emergency Solutions Grants program (24 CFR part 576), Continuum of Care program (24 CFR part 578), or Rural Housing Stability Assistance Program (24 CFR part 579). The requirements of this section apply to recipients and subrecipients, as well as to owners, operators, and managers of shelters and other buildings and facilities and providers of services funded in whole or in part by any CPD program.
</P>
<P>(b) <I>Equal access in accordance with gender identity.</I> The admissions, occupancy, and operating policies and procedures of recipients, subrecipients, owners, operators, managers, and providers identified in paragraph (a) of this section, including policies and procedures to protect privacy, health, safety, and security, shall be established or amended, as necessary, and administered in a nondiscriminatory manner to ensure that:
</P>
<P>(1) Equal access to CPD programs, shelters, other buildings and facilities, benefits, services, and accommodations is provided to an individual in accordance with the individual's gender identity, and in a manner that affords equal access to the individual's family;
</P>
<P>(2) An individual is placed, served, and accommodated in accordance with the gender identity of the individual;
</P>
<P>(3) An individual is not subjected to intrusive questioning or asked to provide anatomical information or documentary, physical, or medical evidence of the individual's gender identity; and
</P>
<P>(4) Eligibility determinations are made and assisted housing is made available in CPD programs as required by § 5.105(a)(2).
</P>
<P>(c) <I>Placement and accommodation in temporary, emergency shelters and other buildings and facilities with shared sleeping quarters or shared bathing facilities</I>—(1) <I>Placement and accommodation.</I> Placement and accommodation of an individual in temporary, emergency shelters and other buildings and facilities with physical limitations or configurations that require and are permitted to have shared sleeping quarters or shared bathing facilities shall be made in accordance with the individual's gender identity.
</P>
<P>(2) <I>Post-admission accommodations.</I> A recipient, subrecipient, owner, operator, manager, or provider must take nondiscriminatory steps that may be necessary and appropriate to address privacy concerns raised by residents or occupants and, as needed, update its admissions, occupancy, and operating policies and procedures in accordance with paragraph (b) of this section.
</P>
<P>(d) <I>Documentation and record retention.</I> Providers shall document and maintain records of compliance with the requirements in paragraph (b) of this section for a period of 5 years.
</P>
<CITA TYPE="N">[81 FR 64782, Sept. 21, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 5.107" NODE="24:1.1.1.1.5.1.13.4" TYPE="SECTION">
<HEAD>§ 5.107   Audit requirements for non-profit organizations.</HEAD>
<P>Non-profit organizations subject to regulations in the part 200 and part 800 series of title 24 of the CFR shall comply with the audit requirements of 2 CFR part 200, subpart F. For HUD programs, a non-profit organization is the mortgagor or owner (as these terms are defined in the regulations in the part 200 and part 800 series) and not a related or affiliated organization or entity.
</P>
<CITA TYPE="N">[62 FR 61617, Nov. 18, 1997, as amended at 80 FR 75934, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 5.109" NODE="24:1.1.1.1.5.1.13.5" TYPE="SECTION">
<HEAD>§ 5.109   Equal participation of faith-based organizations in HUD programs and activities.</HEAD>
<P>(a) <I>Purpose.</I> Consistent with Executive Order 13279, entitled “Equal Protection of the Laws for Faith-Based and Community Organizations,” as amended by Executive Order 13559, entitled “Fundamental Principles and Policymaking Criteria for Partnerships With Faith-Based and Other Neighborhood Organizations,” and as amended by Executive Order 14015, entitled “Establishment of the White House Office of Faith-Based and Neighborhood Partnerships,” this section describes requirements for ensuring the equal participation of faith-based organizations in HUD programs and activities. These requirements apply to all HUD programs and activities, including all of HUD's Native American Programs, except as may be otherwise noted in the respective program regulations in title 24 of the Code of Federal Regulations (CFR), or unless inconsistent with certain HUD program authorizing statutes.
</P>
<P>(b) <I>Definitions.</I> The following definitions apply to this section:
</P>
<P><I>Direct Federal financial assistance</I> means Federal financial assistance provided when a Federal Government agency or an intermediary, as defined in this section, selects the provider and either purchases services from that provider (<I>i.e.,</I> via a contract) or awards funds to that provider to carry out an activity (<I>e.g.,</I> via grant, sub-grant, sub-award, or cooperative agreement). The recipients of sub-grants or sub-awards that receive Federal financial assistance through State-administered programs (<I>e.g.,</I> flow-through programs) are considered recipients of direct Federal financial assistance. In general, Federal financial assistance shall be treated as direct, unless it meets the definition of indirect Federal financial assistance.
</P>
<P><I>Federal financial assistance</I> means assistance that non-Federal entities receive or administer in the forms of grants, contracts, loans, loan guarantees, property, cooperative agreements, food commodities, direct appropriations, or other assistance, but does not include a tax credit, deduction, or exemption.
</P>
<P><I>Indirect Federal financial assistance</I> means Federal financial assistance provided when the choice of the provider is placed in the hands of the beneficiary, and the cost of that service is paid through a voucher, certificate, or other similar means of Government-funded payment. Federal financial assistance provided to an organization is considered indirect when the Government program through which the beneficiary receives the voucher, certificate, or other similar means of Government-funded payment is neutral toward religion meaning that it is available to providers without regard to the religious or non-religious nature of the institution and there are no program incentives that deliberately skew for or against religious or secular providers; and the organization receives the assistance wholly as a result of a genuine and independent private choice of the beneficiary, not a choice of the Government. The availability of adequate secular alternatives is a significant factor in determining whether a program affords true private choice.
</P>
<P><I>Intermediary</I> means an entity, including a nongovernmental organization, acting under a contract, grant, or other agreement with the Federal Government or with a State, tribal or local government that accepts Federal financial assistance and distributes that assistance to other entities that, in turn, carry out activities under HUD programs.
</P>
<P><I>Religious exercise</I> has the meaning given to the term in 42 U.S.C. 2000cc-5(7)(A).




</P>
<P>(c) <I>Equal participation of faith-based organizations in HUD programs and activities.</I> (1) Faith-based organizations are eligible, on the same basis as any other organization, to participate in any HUD program or activity for which they are otherwise eligible. Neither the Federal Government, nor a State, Tribal, or local government, nor any other entity that administers any HUD program or activity, shall discriminate for or against an organization on the basis of the organization's religious character, motives, or affiliation, or lack thereof, or on the basis of conduct that would not be considered grounds to favor or disfavor a similarly situated secular organization.
</P>
<P>(2) Nothing in this section shall be construed to preclude HUD from making an accommodation, including for religious exercise, with respect to one or more program requirements on a case-by-case basis in accordance with the Constitution and laws of the United States.
</P>
<P>(3) HUD shall not disqualify an organization from participating in any HUD program for which it is eligible on the basis of the organization's indication that it may request an accommodation with respect to one or more program requirements, unless the organization has made clear that the accommodation is necessary to its participation and, in accordance with the Constitution and laws of the United States, HUD has determined that it would deny the accommodation.
</P>
<P>(4) In addition, decisions about awards of Federal financial assistance must be free from political interference or even the appearance of such interference and must be made on the basis of merit, not based on the organization's religious character, affiliation, or lack thereof, or based on the organization's religious exercise. Notices of funding opportunity, grant agreements, and cooperative agreements shall include language substantially similar to that in appendix A to this subpart, where faith-based organizations are eligible for such opportunities.
</P>
<P>(d) <I>Independence and identity of faith-based organizations.</I> (1) A faith-based organization that applies for, or participates in, a HUD program or activity supported with Federal financial assistance retains its autonomy, right of expression, religious character, authority over its governance, and independence, and may continue to carry out its mission, including the definition, development, practice, and expression of its religious beliefs; provided that, it does not use direct Federal financial assistance, whether received through a prime award or sub-award, to support or engage in any explicitly religious activities, including activities that involve overt religious content such as worship, religious instruction, or proselytization.
</P>
<P>(2) A faith-based organization that receives direct Federal financial assistance may use space (including a sanctuary, chapel, prayer hall, or other space) in its facilities (including a temple, synagogue, church, mosque, or other place of worship) to carry out activities under a HUD program without concealing, altering, or removing religious art, icons, scriptures, or other religious symbols. In addition, a faith-based organization participating in a HUD program or activity retains its authority over its internal governance, and may retain religious terms in its organization's name, select its board members on the basis of their acceptance of or adherence to the religious tenets of the organization consistent with paragraph (i) of this section, and include religious references in its organization's mission statements and other governing documents.
</P>
<P>(e) <I>Explicitly religious activities.</I> If an organization engages in explicitly religious activities (including activities that involve overt religious content such as worship, religious instruction, or proselytization), the explicitly religious activities must be offered separately, in time or location, from the programs or activities supported by direct Federal financial assistance and participation must be voluntary for the beneficiaries of the programs or activities that receive direct Federal financial assistance. The use of indirect Federal financial assistance is not subject to this restriction. Nothing in this part restricts HUD's authority under applicable Federal law to fund activities, that can be directly funded by the Government consistent with the Establishment Clause of the U.S. Constitution.
</P>
<P>(f) <I>Intermediary responsibilities to ensure equal participation of faith-based organizations in HUD programs.</I> If an intermediary—acting under a contract, grant, or other agreement with the Federal Government or with a State, tribal or local government that is administering a program supported by Federal financial assistance—is given the authority to select a nongovernmental organization to receive Federal financial assistance under a contract, grant, sub-grant, sub-award, or cooperative agreement, the intermediary must ensure that such organization complies with the requirements of this section. If the intermediary is a nongovernmental organization, it retains all other rights of a nongovernmental organization under the program's statutory and regulatory provisions.
</P>
<P>(g) <I>Nondiscrimination and beneficiary notice requirements</I>—(1) <I>Nondiscrimination.</I> Any organization that receives Federal financial assistance under a HUD program or activity shall not, in providing services supported in whole or in part with Federal financial assistance, or in their outreach activities related to such services, discriminate against a beneficiary or prospective beneficiary on the basis of religion, a religious belief, a refusal to hold a religious belief, or a refusal to attend or participate in a religious practice. However, an organization that participates in a program funded by indirect Federal financial assistance need not modify its program or activities to accommodate a beneficiary who chooses to expend the indirect aid on the organization's program.
</P>
<P>(2) <I>Beneficiary notice.</I> (i) An organization providing services under a program supported by direct Federal financial assistance from HUD, or an entity that administers indirect Federal financial assistance from HUD, must give written notice to beneficiaries and prospective beneficiaries of certain protections in a manner and form prescribed by HUD, including by incorporating the notice into materials that are otherwise provided to beneficiaries. The required language for this written notice to beneficiaries is set forth in appendix C to this subpart.
</P>
<P>(ii) For the Housing Choice Voucher (HCV), Project-Based Voucher (PBV), and Section 8 Moderate Rehabilitation programs, the respective recipient (<I>i.e.,</I> Public Housing Agency) is required to provide the written beneficiary notice. For the Housing Opportunities for Persons with AIDS (HOPWA) program, the grantee or project sponsor that is responsible for making eligibility determinations is required to provide the written beneficiary notice. For the Continuum of Care (CoC) and Emergency Solutions Grants (ESG) programs, the recipient or subrecipient that is responsible for determining the eligibility of each family or individual is required to provide the written beneficiary notice. The participating or prospective providers (landlords) are not responsible for providing the written beneficiary notice for indirect aid recipients. The notice must include the following information:
</P>
<P>(A) Nondiscrimination requirements of paragraph (g)(1) of this section;
</P>
<P>(B) Notification that a beneficiary or prospective beneficiary may report an organization's violation of these protections, including any denials of services or benefits by an organization, by contacting or filing a written complaint with the Center for Faith-Based and Neighborhood Partnerships or the intermediary that awarded funds to the organization; and
</P>
<P>(C) For direct Federal financial assistance only, prohibitions with respect to explicitly religious activities as set forth in paragraph (e) of this section.
</P>
<P>(3) <I>Notice timing.</I> The written notice described in paragraph (g)(2) of this section must be given to a prospective beneficiary prior to the time the prospective beneficiary enrolls in the program or receives services from the program. When the nature of the service provided or exigent circumstances make it impracticable to provide such written notice in advance of the actual service, an organization must advise beneficiaries of their protections at the earliest available opportunity.
</P>
<P>(4) <I>Alternative option information.</I> HUD may determine that the notice described in paragraph (g)(2) of this section must inform each beneficiary or prospective beneficiary about how to obtain information from HUD, or a State agency or other entity administering the applicable program, about other federally funded service providers in their area that provide the services available under the applicable program.
</P>
<P>(h) <I>No additional assurances from faith-based organizations.</I> A faith-based organization is not rendered ineligible by its religious nature to access and participate in HUD programs. Absent regulatory or statutory authority, no notice of funding opportunity, grant agreement, cooperative agreement, covenant, memorandum of understanding, policy, or regulation that is used by HUD or a recipient or intermediary in administering Federal financial assistance from HUD shall require otherwise eligible faith-based organizations to provide assurances or notices where they are not required of similarly situated secular organizations. All organizations that participate in HUD programs or activities, including organizations with religious character, motives, or affiliation, must carry out eligible activities in accordance with all program requirements, including those prohibiting the use of direct financial assistance to engage in explicitly religious activities, subject to any accommodations that are granted to organizations on a case-by-case basis in accordance with the Constitution and laws of the United States. No notice of funding opportunity, grant agreement, cooperative agreement, covenant, memorandum of understanding, policy, or regulation that is used by HUD or a recipient or intermediary in administering financial assistance from HUD shall disqualify otherwise eligible faith-based organizations from participating in HUD's programs or activities on the basis of the organization's religious character, motives, or affiliation, or lack thereof, or on the basis of conduct that would not be considered grounds to disqualify a similarly situated secular organization.
</P>
<P>(i) <I>Exemption from Title VII employment discrimination requirements.</I> A religious organization's exemption from the Federal prohibition on employment discrimination on the basis of religion, set forth in section 702(a) of the Civil Rights Act of 1964 (42 U.S.C. 2000e-1), is not forfeited when the organization participates in a HUD program. Some HUD programs, however, contain independent statutory provisions that impose certain nondiscrimination requirements on all grantees. Accordingly, grantees should consult with the appropriate HUD program office to determine the scope of applicable requirements.
</P>
<P>(j) <I>Acquisition, construction, and rehabilitation of structures.</I> Direct Federal financial assistance may be used for the acquisition, construction, or rehabilitation of structures only to the extent that those structures are used for conducting eligible activities under a HUD program or activity. Where a structure is used for both eligible and explicitly religious activities (including activities that involve overt religious content such as worship, religious instruction, or proselytization), direct Federal financial assistance may not exceed the cost of the share of acquisition, construction, or rehabilitation attributable to eligible activities in accordance with the cost accounting requirements applicable to the HUD program or activity. However, acquisition, construction, or rehabilitation of sanctuaries, chapels, or other rooms that a HUD-funded faith-based organization uses as its principal place of worship, may not be paid with direct Federal financial assistance. Disposition of real property by a faith-based organization after its use for an authorized purpose, or any change in use of the property from an authorized purpose, is subject to Government-wide regulations governing real property disposition (2 CFR part 200, subpart D) and the HUD program regulations, as directed by HUD.
</P>
<P>(k) <I>Commingling of Federal and State, tribal, and local funds.</I> If a State, tribal, or local government voluntarily contributes its own funds to supplement direct Federal financial assistance for an activity, the State, tribal or local government has the option to segregate those funds or commingle them with the direct Federal financial assistance. However, if the funds are commingled, the requirements of this section apply to all of the commingled funds. Further, if a State, tribal, or local government is required to contribute matching funds to supplement direct Federal financial assistance for an activity, the matching funds are considered commingled with the direct Federal financial assistance and, therefore, subject to the requirements of this section. Some HUD programs' requirements govern any activity assisted under those programs. Accordingly, recipients should consult with the appropriate HUD program office to determine the scope of applicable requirements.
</P>
<P>(l) <I>Tax exempt organizations.</I> In general, HUD does not require that a recipient, including a faith-based organization, obtain tax-exempt status under section 501(c)(3) of the Internal Revenue Code to be eligible for funding under HUD programs. Many grant programs, however, do require an organization to be a nonprofit organization in order to be eligible for funding. Notices of funding availability that require organizations to have nonprofit status will specifically so indicate in the eligibility section of the notice of funding availability. In addition, if any notice of funding availability requires an organization to maintain tax-exempt status, it will expressly state the statutory authority for requiring such status. Applicants should consult with the appropriate HUD program office to determine the scope of any applicable requirements. In HUD programs in which an applicant must show that it is a nonprofit organization but this is not statutorily defined, the applicant may do so by any of the following means:
</P>
<P>(1) Proof that the Internal Revenue Service currently recognizes the applicant as an organization to which contributions are tax deductible under section 501(c)(3) of the Internal Revenue Code;
</P>
<P>(2) A statement from a State or other governmental taxing body or the State secretary of State certifying that—
</P>
<P>(i) The organization is a nonprofit organization operating within the State; and
</P>
<P>(ii) No part of its net earnings may benefit any private shareholder or individual;
</P>
<P>(3) A certified copy of the applicant's certificate of incorporation or similar document that clearly establishes the nonprofit status of the applicant; or
</P>
<P>(4) Any item described in paragraphs (l)(1) through (3) of this section, if that item applies to a State or national parent organization, together with a statement by the State or parent organization that the applicant is a local nonprofit affiliate.
</P>
<P>(m) <I>Rule of construction.</I> Neither HUD nor any recipient or other intermediary receiving funds under any HUD program or activity shall construe these provisions in such a way as to advantage or disadvantage faith-based organizations affiliated with historic or well-established religions or sects in comparison with other religions or sects.
</P>
<CITA TYPE="N">[69 FR 41717, July 9, 2004, as amended at 80 FR 75934, Dec. 7, 2015; 81 FR 19416, Apr. 4, 2016; 85 FR 82315, Dec. 17, 2020; 89 FR 15711, Mar. 4, 2024]








</CITA>
</DIV8>


<DIV8 N="§ 5.110" NODE="24:1.1.1.1.5.1.13.6" TYPE="SECTION">
<HEAD>§ 5.110   Waivers.</HEAD>
<P>Upon determination of good cause, the Secretary may, subject to statutory limitations, waive any provision of this title and delegate this authority in accordance with section 106 of the Department of Housing and Urban Development Reform Act of 1989 (42 U.S.C. 3535(q)). 


</P>
</DIV8>


<DIV8 N="§ 5.111" NODE="24:1.1.1.1.5.1.13.7" TYPE="SECTION">
<HEAD>§ 5.111   Housing counseling.</HEAD>
<P>(a) Any housing counseling, including homeownership counseling or rental housing counseling, as defined in § 5.100, required under or provided in connection with any program administered by HUD shall be provided only by organizations and counselors certified by the Secretary under 24 CFR part 214 to provide housing counseling, consistent with 12 U.S.C. 1701x.
</P>
<P>(b) For purposes of this section, <I>required under or provided in connection with any program administered by HUD</I> means:
</P>
<P>(1) Housing counseling required by statute, regulation, Notice of Funding Availability (NOFA), or otherwise required by HUD;
</P>
<P>(2) Housing counseling that is funded under a HUD program;
</P>
<P>(3) Housing counseling that is required by a grantee or subgrantee of a HUD program as a condition of receiving assistance under the HUD program; or
</P>
<P>(4) Housing counseling to which a family assisted under a HUD program is referred, by a grantee or subgrantee of the HUD program.
</P>
<CITA TYPE="N">[81 FR 90657, Dec. 14, 2016]


</CITA>
</DIV8>


<DIV7 N="13" NODE="24:1.1.1.1.5.1.13" TYPE="SUBJGRP">
<HEAD>Affirmatively Furthering Fair Housing</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>Sections 5.150 through 5.180 appear at 80 FR 42352, July 16, 2015, unless otherwise noted.




</PSPACE></SOURCE>

<DIV8 N="§ 5.150" NODE="24:1.1.1.1.5.1.13.8" TYPE="SECTION">
<HEAD>§ 5.150   Affirmatively Furthering Fair Housing: Definitions.</HEAD>
<P>(a) The phrase “fair housing” in 42 U.S.C. 5304(b)(2), 5306(d)(7)(B), 12705(b)(15), and 1437c-1(d)(16) means housing that, among other attributes, is affordable, safe, decent, free of unlawful discrimination, and accessible as required under civil rights laws.
</P>
<P>(b) The phrase “affirmatively further” in 42 U.S.C. 5304(b)(2), 5306(d)(7)(B), 12705(b)(15), and 1437c-1(d)(16) means to take any action rationally related to promoting any attribute or attributes of fair housing as defined in the preceding subsection.


</P>
<CITA TYPE="N">[90 FR 11023, Mar. 3, 2025]




</CITA>
</DIV8>


<DIV8 N="§ 5.151" NODE="24:1.1.1.1.5.1.13.9" TYPE="SECTION">
<HEAD>§ 5.151   Affirmatively Furthering Fair Housing: AFFH Certifications.</HEAD>
<P>A HUD program participant's certification that it will affirmatively further fair housing is sufficient if the participant takes, in the relevant period, any action that is rationally related to promoting one or more attributes of fair housing as defined in section 5.150(a). Nothing in this paragraph relieves jurisdictions of their other obligations under civil rights and fair housing statutes and regulations.


</P>
<CITA TYPE="N">[90 FR 11023, Mar. 3, 2025]








</CITA>
</DIV8>


<DIV8 N="§§ 5.152-5.180" NODE="24:1.1.1.1.5.1.13.10" TYPE="SECTION">
<HEAD>§§ 5.152-5.180   [Reserved]</HEAD>
</DIV8>

</DIV7>


<DIV9 N="Appendix A" NODE="24:1.1.1.1.5.1.14.11.1" TYPE="APPENDIX">
<HEAD>Appendix A to Subpart A of Part 5—Notice of Funding Opportunity




</HEAD>
<P>(a) Faith-based organizations may apply for this award on the same basis as any other organization, as set forth at § 5.109, and subject to the protections and requirements of any applicable constitutional and statutory requirements, including 42 U.S.C. 2000bb <I>et seq.</I> HUD will not, in the selection of recipients, discriminate for or against an organization on the basis of the organization's religious character, motives, or affiliation, or lack thereof, or on the basis of conduct that would not be considered grounds to favor or disfavor a similarly situated secular organization.
</P>
<P>(b) A faith-based organization that participates in this program will retain its independence from the Government and may continue to carry out its mission consistent with religious freedom and conscience protections in Federal law.
</P>
<P>(c) A faith-based organization may not use direct financial assistance from HUD to support or engage in any explicitly religious activities except where consistent with the Establishment Clause of the First Amendment and any other applicable requirements. Such an organization also may not, in providing services funded by HUD, or in their outreach activities related to such services, discriminate against a program beneficiary or prospective program beneficiary on the basis of religion, a religious belief, a refusal to hold a religious belief, or a refusal to attend or participate in a religious practice.


</P>
<CITA TYPE="N">[89 FR 15712, Mar. 4, 2024]




</CITA>
</DIV9>


<DIV9 N="Appendix B" NODE="24:1.1.1.1.5.1.14.11.2" TYPE="APPENDIX">
<HEAD>Appendix B to Subpart A of Part 5—Notice of Award or Contract








</HEAD>
<P>(a) A faith-based organization that participates in this program retains its independence from the Government and may continue to carry out its mission consistent with religious freedom and conscience protections in Federal law.
</P>
<P>(b) A faith-based organization may not use direct Federal financial assistance from HUD to support or engage in any explicitly religious activities except when consistent with the Establishment Clause of the First Amendment and any other applicable requirements. An organization receiving Federal financial assistance also may not, in providing services funded by HUD, or in their outreach activities related to such services, discriminate against a program beneficiary or prospective program beneficiary on the basis of religion, a religious belief, a refusal to hold a religious belief, or a refusal to attend or participate in a religious practice.
</P>
<CITA TYPE="N">[89 FR 15712, Mar. 4, 2024]


</CITA>
</DIV9>


<DIV9 N="Appendix C" NODE="24:1.1.1.1.5.1.14.11.3" TYPE="APPENDIX">
<HEAD>Appendix C to Subpart A of Part 5—Department of Housing and Urban Development Model Written Notice of Beneficiary Rights






</HEAD>
<P>Name of Organization:
</P>
<P>Name of Program:
</P>
<P>Contact Information for Program Staff: [provide name, phone number, and email address, if appropriate]
</P>
<P>Because this program is supported in whole or in part by financial assistance from the Federal Government, we are required to let you know that:
</P>
<P>(1) We may not discriminate against you on the basis of religion, a religious belief, a refusal to hold a religious belief, or a refusal to attend or participate in a religious practice;
</P>
<P>(2) We may not require you to attend or participate in any explicitly religious activities (including activities that involve overt religious content such as worship, religious instruction, or proselytization) that are offered by our organization, and any participation by you in such activities must be purely voluntary;
</P>
<P>(3) We must separate in time or location any privately funded explicitly religious activities from activities (including activities that involve overt religious content such as worship, religious instruction, or proselytization) from activities supported with direct Federal financial assistance;
</P>
<P>(4) You may report an organization's violations of these protections, including any denial of services or benefits by an organization, by contacting or filing a written complaint with HUD's Center for Faith-Based and Neighborhood Partnership, 451 7th Street SW, Washington, DC 20410, or by email to <I>partnerships@hud.gov</I>; and
</P>
<P>(5) If you would like to seek information about whether there are any other federally funded organizations that provide these kinds of services in your area, please use the contact information set forth above.
</P>
<P>This written notice must be given to you before you enroll in the program or receive services from the program, unless the nature of the service provided or exigent circumstances make it impracticable to provide such notice before we provide the actual service. In such an instance, this notice must be given to you at the earliest available opportunity.
</P>
<CITA TYPE="N">[89 FR 15713, Mar. 4, 2024]




</CITA>
</DIV9>

</DIV6>


<DIV6 N="B" NODE="24:1.1.1.1.5.2" TYPE="SUBPART">
<HEAD>Subpart B—Disclosure and Verification of Social Security Numbers and Employer Identification Numbers; Procedures for Obtaining Income Information</HEAD>

<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d), 3543, 3544, and 11901 <I>et seq.</I> 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 11113, Mar. 18, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 5.210" NODE="24:1.1.1.1.5.2.14.1" TYPE="SECTION">
<HEAD>§ 5.210   Purpose, applicability, and Federal preemption.</HEAD>
<P>(a) <I>Purpose.</I> This subpart B requires applicants for and participants in covered HUD programs to disclose, and submit documentation to verify, their Social Security Numbers (SSNs). This subpart B also enables HUD and PHAs to obtain income information about applicants and participants in the covered programs through computer matches with State Wage Information Collection Agencies (SWICAs) and Federal agencies, and from financial institutions and employers, in order to verify an applicant's or participant's eligibility for or level of assistance. The purpose of this subpart B is to enable HUD to decrease the incidence of fraud, waste, and abuse in the covered programs. 
</P>
<P>(b) <I>Applicability.</I> (1) This subpart B applies to mortgage and loan insurance and coinsurance and housing assistance programs contained in chapter II, subchapter B, and chapters VIII and IX of this title. 
</P>
<P>(2) The information covered by consent forms described in this subpart involves income information from SWICAs, wages, income, and resource information from financial institutions, net earnings from self-employment, payments of retirement income, and unearned income as referenced at 26 U.S.C. 6103. In addition, consent forms may authorize the collection of other information from applicants and participants to determine eligibility or level of benefits.
</P>
<P>(c) <I>Federal preemption.</I> This subpart B preempts any State law, including restrictions and penalties, that governs the collection and use of income information to the extent State law is inconsistent with this subpart. 
</P>
<CITA TYPE="N">[61 FR 11113, Mar. 18, 1996, as amended at 65 FR 16715, Mar. 29, 2000; 88 FR 9655, Feb. 14, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 5.212" NODE="24:1.1.1.1.5.2.14.2" TYPE="SECTION">
<HEAD>§ 5.212   Compliance with the Privacy Act and other requirements.</HEAD>
<P>(a) <I>Compliance with the Privacy Act.</I> The collection, maintenance, use, and dissemination of SSNs, EINs, any information derived from SSNs and Employer Identification Numbers (EINs), and income information under this subpart shall be conducted, to the extent applicable, in compliance with the Privacy Act (5 U.S.C. 552a) and all other provisions of Federal, State, and local law. 
</P>
<P>(b) <I>Privacy Act notice.</I> All assistance applicants shall be provided with a Privacy Act notice at the time of application. All participants shall be provided with a Privacy Act notice at each annual income recertification. 


</P>
</DIV8>


<DIV8 N="§ 5.214" NODE="24:1.1.1.1.5.2.14.3" TYPE="SECTION">
<HEAD>§ 5.214   Definitions.</HEAD>
<P>In addition to the definitions in § 5.100, the following definitions apply to this subpart B: 
</P>
<P><I>Assistance applicant.</I> Except as excluded pursuant to 42 U.S.C. 3543(b) and 3544(a)(2), this term means the following: 
</P>
<P>(1) For any program under 24 CFR parts 215, 221, 236, 290, or 891, or any program under Section 8 of the 1937 Act: A family or individual that seeks rental assistance under the program.
</P>
<P>(2) For the public housing program: A family or individual that seeks admission to the program. 
</P>
<P>(3) For any program under 24 CFR part 235: A homeowner or cooperative member seeking homeownership assistance (including where the individual seeks to assume an existing mortgage). 
</P>
<P><I>Computer match</I> means the automated comparison of data bases containing records about individuals. 
</P>
<P><I>Computer matching agreement</I> means the agreement that describes the responsibilities and obligations of the parties participating in a computer match. 
</P>
<P><I>Consent form</I> means any consent form approved by HUD to be signed by assistance applicants and participants for the purpose of obtaining income information from employers and SWICAs; return information from the Social Security Administration (including wages, net earnings from self-employment, and payments of retirement income), as referenced at 26 U.S.C. 6103(l)(7)(A); and return information for unearned income from the Internal Revenue Service, as referenced at 26 U.S.C. 6103(l)(7)(B). The consent forms expire after a certain time and may authorize the collection of other information from assistance applicants or participants to determine eligibility or level of benefits as provided in §§ 813.109, 913.109, and 950.315 of this title. 
</P>
<P><I>Employer Identification Number (EIN)</I> means the nine-digit taxpayer identifying number that is assigned to an individual, trust, estate, partnership, association, company, or corporation pursuant to sections 6011(b), or corresponding provisions of prior law, or 6109 of the Internal Revenue Code. 
</P>
<P><I>Entity applicant.</I> (1) Except as excluded pursuant to 42 U.S.C. 3543(b), 3544(a)(2), and paragraph (2) of this definition, this term means a partnership, corporation, or any other association or entity, other than an individual owner applicant, that seeks to participate as a private owner in any of the following: 
</P>
<P>(i) The project-based assistance programs under Section 8 of the 1937 Act;
</P>
<P>(ii) The programs in 24 CFR parts 215, 221, or 236; or 
</P>
<P>(iii) The other mortgage and loan insurance programs in 24 CFR parts 201 through 267, except that the term “entity applicant” does not include a mortgagee or lender. 
</P>
<P>(2) The term does not include a public entity, such as a PHA, IHA, or State Housing Finance Agency. 
</P>
<P><I>Federal agency</I> means a department of the executive branch of the Federal Government. 
</P>
<P><I>Income information</I> means information relating to an individual's income, including: 
</P>
<P>(1) All employment income information known to current or previous employers or other income sources that HUD or the processing entity determines is necessary for purposes of determining an assistance applicant's or participant's eligibility for, or level of assistance in, a covered program; 
</P>
<P>(2) All information about wages, as defined in the State's unemployment compensation law, including any Social Security Number; name of the employee; quarterly wages of the employee; and the name, full address, telephone number, and, when known, Employer Identification Number of an employer reporting wages under a State unemployment compensation law; 
</P>
<P>(3) With respect to unemployment compensation: 
</P>
<P>(i) Whether an individual is receiving, has received, or has applied for unemployment compensation; 
</P>
<P>(ii) The amount of unemployment compensation the individual is receiving or is entitled to receive; and 
</P>
<P>(iii) The period with respect to which the individual actually received such compensation; 
</P>
<P>(4) Unearned IRS income and self-employment, wages and retirement income as described in the Internal Revenue Code, 26 U.S.C. 6103(l)(7); and 
</P>
<P>(5) Wage, social security (Title II), and supplemental security income (Title XVI) data obtained from the Social Security Administration. 
</P>
<P><I>Individual owner applicant.</I> Except as excluded pursuant to 42 U.S.C. 3543(b), 3544(a)(2), or paragraph (2) of this definition, this term means: 
</P>
<P>(1) An individual who seeks to participate as a private owner in any of: 
</P>
<P>(i) The project-based assistance programs under Section 8 of the 1937 Act; or
</P>
<P>(ii) The programs in 24 CFR parts 215, 221, 235 (without homeownership assistance), or 236, including where the individual seeks to assume an existing mortgage; or 
</P>
<P>(2) An individual who: 
</P>
<P>(i) Either: (A) Applies for a mortgage or loan insured or coinsured under any of the programs referred to in paragraph (1)(iii) of the definition of “entity applicant” in this section; or 
</P>
<P>(B) Seeks to assume an existing mortgage or loan; and 
</P>
<P>(ii) Intends to hold the mortgaged property in his or her individual right. 
</P>
<P><I>IRS</I> means the Internal Revenue Service. 
</P>
<P><I>Owner</I> means the person or entity (or employee of an owner) that leases an assisted dwelling unit to an eligible family and includes, when applicable, a mortgagee. 
</P>
<P><I>Participant.</I> Except as excluded pursuant to 42 U.S.C. 3543(b) and 3544(a)(2), this term has the following meaning: 
</P>
<P>(1) For any program under 24 CFR part 891, or Section 8 of the 1937 Act: A family receiving rental assistance under the program;
</P>
<P>(2) For the public housing program: A family or individual that is assisted under the program; 
</P>
<P>(3) For 24 CFR parts 215, 221, 236, and 290: A tenant or qualified tenant under any of the programs; and 
</P>
<P>(4) For 24 CFR part 235: A homeowner or a cooperative member receiving homeownership assistance. 
</P>
<P><I>Processing entity</I> means the person or entity that, under any of the programs covered under this subpart B, is responsible for making eligibility and related determinations and an income reexamination. (In the Section 8 and public housing programs, the “processing entity” is the “responsible entity” as defined in § 5.100.) 
</P>
<P><I>Social Security Number (SSN)</I> means the nine-digit number that is assigned to a person by the Social Security Administration and that identifies the record of the person's earnings reported to the Social Security Administration. The term does not include a number with a letter as a suffix that is used to identify an auxiliary beneficiary. 
</P>
<P><I>SSA</I> means the Social Security Administration. 
</P>
<P><I>State Wage Information Collection Agency (SWICA)</I> means the State agency, including any Indian tribal agency, receiving quarterly wage reports from employers in the State, or an alternative system that has been determined by the Secretary of Labor to be as effective and timely in providing employment-related income and eligibility information. 
</P>
<CITA TYPE="N">[61 FR 11113, Mar. 18, 1996, as amended at 63 FR 23853, Apr. 30, 1998; 65 FR 16715, Mar. 29, 2000]


</CITA>
</DIV8>


<DIV7 N="14" NODE="24:1.1.1.1.5.2.14" TYPE="SUBJGRP">
<HEAD>Disclosure and Verification of Social Security Numbers and Employer Identification Numbers for Applicants and Participants in Certain HUD Programs</HEAD>


<DIV8 N="§ 5.216" NODE="24:1.1.1.1.5.2.14.4" TYPE="SECTION">
<HEAD>§ 5.216   Disclosure and verification of Social Security and Employer Identification Numbers.</HEAD>
<P>(a) <I>General.</I> The requirements of this section apply to applicants and participants as described in this section, except that this section is inapplicable to individuals who do not contend eligible immigration status under subpart E of this part (see § 5.508).
</P>
<P>(b) <I>Disclosure required of assistance applicants.</I> Each assistance applicant must submit the following information to the processing entity when the assistance applicant's eligibility under the program involved is being determined.
</P>
<P>(1) The complete and accurate SSN assigned to the assistance applicant and to each member of the assistance applicant's household; and
</P>
<P>(2) The documentation referred to in paragraph (g)(1) of this section to verify each such SSN.
</P>
<P>(c) <I>Disclosure required of individual owner applicants.</I> Each individual owner applicant must submit the following information to the processing entity when the individual owner applicant's eligibility under the program involved is being determined:
</P>
<P>(1) The complete and accurate SSN assigned to the individual owner applicant and to each member of the individual owner applicant's household who will be obligated to pay the debt evidenced by the mortgage or loan documents; and
</P>
<P>(2) The documentation referred to in paragraph (g)(1) of this section to verify each such SSN.
</P>
<P>(d) <I>Disclosure required of certain officials of entity applicants.</I> Each officer, director, principal stockholder, or other official of an entity applicant must submit the following information to the processing entity when the entity applicant's eligibility under the program involved is being determined:
</P>
<P>(1) The complete and accurate SSN assigned to each such individual; and
</P>
<P>(2) The documentation referred to in paragraph (g)(1) of this section to verify each SSN.
</P>
<P>(e) <I>Disclosure required of participants</I>—(1) <I>Initial disclosure.</I> (i) Each participant, except those age 62 or older as of January 31, 2010, whose initial determination of eligibility was begun before January 31, 2010, must submit the information described in paragraph (e)(1)(ii) of this section, if the participant has:
</P>
<P>(A) Not previously disclosed a SSN;
</P>
<P>(B) Previously disclosed a SSN that HUD or the SSA determined was invalid; or
</P>
<P>(C) Been issued a new SSN.
</P>
<P>(ii) Each participant subject to the disclosure requirements under paragraph (e)(1)(i) of this section must submit the following information to the processing entity at the next interim or regularly scheduled reexamination or recertification of family composition or income, or other reexamination or recertification for the program involved:
</P>
<P>(A) The complete and accurate SSN assigned to the participant and to each member of the participant's household; and
</P>
<P>(B) The documentation referred to in paragraph (g)(1) of this section to verify each such SSN.
</P>
<P>(2) <I>Subsequent disclosure.</I> Once a participant has disclosed and the processing entity has verified each SSN, the following rules apply:
</P>
<P>(i) <I>Addition of new household member who is at least 6 years of age or under the age of 6 and has an assigned SSN.</I> When the participant requests to add a new household member who is at least 6 years of age, or is under the age of 6 and has an assigned SSN, the participant must provide the following to the processing entity at the time of the request, or at the time of processing the interim reexamination or recertification of family composition that includes the new member(s):
</P>
<P>(A) The complete and accurate SSN assigned to each new member; and
</P>
<P>(B) The documentation referred to in paragraph (g)(1) of this section to verify the SSN for each new member.
</P>
<P>(ii) <I>Addition of new household member who is under the age of 6 and has no assigned SSN.</I> (A) When a participant requests to add a new household member who is under the age of 6 and has not been assigned a SSN, the participant shall be required to provide the complete and accurate SSN assigned to each new child and the documentation referred to in paragraph (g)(1) of this section to verify the SSN for each new child within 90 calendar days of the child being added to the household.
</P>
<P>(B) The processing entity shall grant an extension of one additional 90-day period if the processing entity, in its discretion, determines that the participant's failure to comply was due to circumstances that could not have reasonably been foreseen and were outside the control of the participant. During the period that the processing entity is awaiting documentation of a SSN, the processing entity shall include the child as part of the assisted household and the child shall be entitled to all the benefits of being a household member. If, upon expiration of the provided time period, the participant fails to produce a SSN, the processing entity shall follow the provisions of § 5.218.
</P>
<P>(iii) <I>Assignment of new SSN.</I> If the participant or any member of the participant's household has been assigned a new SSN, the participant must submit the following to the processing entity at either the time of receipt of the new SSN; at the next interim or regularly scheduled reexamination or recertification of family composition or income, or other reexamination or recertification; or at such earlier time specified by the processing entity:
</P>
<P>(A) The complete and accurate SSN assigned to the participant or household member involved; and
</P>
<P>(B) The documentation referred to in paragraph (g)(1) of this section to verify the SSN of each individual.
</P>
<P>(f) <I>Disclosure required of entity applicants.</I> Each entity applicant must submit the following information to the processing entity when the entity applicant's eligibility under the program involved is being determined:
</P>
<P>(1) Any complete and accurate EIN assigned to the entity applicant; and
</P>
<P>(2) The documentation referred to in paragraph (g)(2) of this section to verify the EIN.
</P>
<P>(g) <I>Required documentation</I>—(1) <I>SSN.</I> The documentation necessary to verify the SSN of an individual who is required to disclose his or her SSN under paragraphs (a) through (e) of this section is:
</P>
<P>(i) A valid SSN card issued by the SSA;
</P>
<P>(ii) An original document issued by a federal or state government agency, which contains the name of the individual and the SSN of the individual, along with other identifying information of the individual; or
</P>
<P>(iii) Such other evidence of the SSN as HUD may prescribe in administrative instructions.
</P>
<P>(2) <I>EIN.</I> The documentation necessary to verify an EIN of an entity applicant that is required to disclose its EIN under paragraph (f) of this section is the official, written communication from the Internal Revenue Service (IRS) assigning the EIN to the entity applicant, or such other evidence of the EIN as HUD may prescribe in administrative instructions.
</P>
<P>(h) <I>Effect on assistance applicants.</I> (1) Except as provided in paragraphs (h)(2) and (3) of this section, if the processing entity determines that the assistance applicant is otherwise eligible to participate in a program, the assistance applicant may retain its place on the waiting list for the program but cannot become a participant until it can provide the documentation referred to in paragraph (g)(1) of this section to verify the SSN of each member of the household.
</P>
<P>(2) For applicants to the Section 8 Moderate Rehabilitation Single Room Occupancy (SRO) Program for Homeless Individuals under 24 CFR part 882, subpart H, the documentation required in paragraph (g)(1) of this section must be provided to the processing entity within 90 calendar days from the date of admission into the program. The processing entity shall grant an extension of one additional 90-day period if the processing entity, in its discretion, determines that the applicant's failure to comply was due to circumstances that could not have reasonably been foreseen and were outside the control of the applicant. If, upon expiration of the provided time period, the individual fails to produce a SSN, the processing entity shall follow the provisions of § 5.218.
</P>
<P>(3) If a child under the age of 6 years was added to the assistance applicant household within the 6-month period prior to the household's date of admission (or, for the HCV program, the date of voucher issuance), the assistance applicant may become a participant, so long as the documentation required in paragraph (g)(1) of this section is provided to the processing entity within 90 calendar days from the date of admission into the program (or, for the HCV program, the effective date of the Housing Assistance Payment contract). The processing entity must grant an extension of one additional 90-day period if the processing entity determines that, in its discretion, the assistance applicant's failure to comply was due to circumstances that could not reasonably have been foreseen and were outside the control of the assistance applicant. If the applicant family fails to produce the documentation required in paragraph (g)(1) of this section within the required time period, the processing entity must follow the provisions of § 5.218.
</P>
<P>(i) <I>Rejection of documentation.</I> The processing entity must not reject documentation referred to in paragraph (g) of this section, except as HUD may otherwise prescribe through publicly issued notice.
</P>
<CITA TYPE="N">[74 FR 68932, Dec. 29, 2009, as amended at 81 FR 12369, Mar. 8, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 5.218" NODE="24:1.1.1.1.5.2.14.5" TYPE="SECTION">
<HEAD>§ 5.218   Penalties for failing to disclose and verify Social Security and Employer Identification Numbers.</HEAD>
<P>(a) <I>Denial of eligibility of assistance applicants and individual owner applicants.</I> The processing entity must deny the eligibility of an assistance applicant or individual owner applicant in accordance with the provisions governing the program involved, if the assistance or individual owner applicant does not meet the applicable SSN disclosure, documentation, and verification requirements as specified in § 5.216.
</P>
<P>(b) <I>Denial of eligibility of entity applicants.</I> The processing entity must deny the eligibility of an entity applicant in accordance with the provisions governing the program involved; if:
</P>
<P>(1) The entity applicant does not meet the EIN disclosure, documentation, and verification requirements specified in § 5.216; or
</P>
<P>(2) Any of the officials of the entity applicant referred to in § 5.216(d) does not meet the applicable SSN disclosure, and documentation and verification requirements specified in § 5.216.
</P>
<P>(c) <I>Termination of assistance or termination of tenancy of participants.</I> (1) The processing entity must terminate the assistance or terminate the tenancy, or both, of a participant and the participant's household, in accordance with the provisions governing the program involved, if the participant does not meet the applicable SSN disclosure, documentation, and verification requirements specified in § 5.216.
</P>
<P>(2) The processing entity may defer termination and provide the participant with an additional 90 calendar days to disclose a SSN, but only if the processing entity, in its discretion, determines that:
</P>
<P>(i) The failure to meet these requirements was due to circumstances that could not have reasonably been foreseen and were outside the control of the participant; and
</P>
<P>(ii) There is a reasonable likelihood that the participant will be able to disclose a SSN by the deadline.
</P>
<P>(3) Failure of the participant to disclose a SSN by the deadline specified in paragraph (c)(2) of this section will result in termination of the assistance or tenancy, or both, of the participant and the participant's household.
</P>
<P>(d) <I>Cross reference.</I> Individuals should consult the regulations and administrative instructions for the programs covered under this subpart B for further information on the use of SSNs and EINs in determinations regarding eligibility.
</P>
<CITA TYPE="N">[61 FR 11113, Mar. 18, 1996, as amended at 74 FR 4840, Jan. 27, 2009; 74 FR 68933, Dec. 29, 2009]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="15" NODE="24:1.1.1.1.5.2.15" TYPE="SUBJGRP">
<HEAD>Procedures for Obtaining Income Information About Applicants and Participants</HEAD>


<DIV8 N="§ 5.230" NODE="24:1.1.1.1.5.2.15.6" TYPE="SECTION">
<HEAD>§ 5.230   Consent by assistance applicants and participants.</HEAD>
<P>(a) <I>Required consent by assistance applicants and participants.</I> Each member of the family of an assistance applicant or participant who is at least 18 years of age, and each family head and spouse regardless of age, shall sign one or more consent forms.
</P>
<P>(b) <I>Consent authorization</I>—(1) <I>Applicants.</I> The assistance applicant must submit the signed consent forms to the processing entity when eligibility under a covered program is being determined.
</P>
<P>(2) <I>Subsequent consent forms.</I> Prior to January 1, 2024, participants signed and submitted consent forms at each regularly scheduled income reexamination. On or after January 1, 2024, a participant must sign and submit consent forms at their next interim or regularly scheduled income reexamination. After all applicants or participants over the age of 18 in a family have signed and submitted a consent form once on or after January 1, 2024, family members do not need to sign and submit subsequent consent forms at the next interim or regularly scheduled income examination except under the following circumstances:
</P>
<P>(i) When any person 18 years or older becomes a member of the family, that family member must sign and submit a consent form;
</P>
<P>(ii) When a member of the family turns 18 years of age, that family member must sign and submit a consent form; or
</P>
<P>(iii) As required by HUD or the PHA in administrative instructions.
</P>
<P>(c) <I>Consent form—contents.</I> The consent form required by this section shall contain, at a minimum, the following:
</P>
<P>(1) A provision authorizing HUD and PHAs to obtain from SWICAs any information or materials necessary to complete or verify the application for participation and to maintain continued assistance under a covered program; and
</P>
<P>(2) A provision authorizing HUD, PHAs, or the owner responsible for determining eligibility for or the level of assistance to verify with previous or current employers income information pertinent to the assistance applicant's or participant's eligibility for or level of assistance under a covered program;
</P>
<P>(3) A provision authorizing HUD to request income return information from the IRS and the SSA for the sole purpose of verifying income information pertinent to the assistance applicant's or participant's eligibility or level of benefits; and
</P>
<P>(4) A provision authorizing PHAs to obtain any financial record from any financial institution, as the terms financial record and financial institution are defined in the Right to Financial Privacy Act (12 U.S.C. 3401), whenever the PHA determines the record is needed to determine an applicant's or participant's eligibility for assistance or level of benefits; and
</P>
<P>(5) A statement that the authorization to release the information requested by the consent form will remain effective until the earliest of:
</P>
<P>(i) The rendering of a final adverse decision for an assistance applicant;
</P>
<P>(ii) The cessation of a participant's eligibility for assistance from HUD and the PHA; or
</P>
<P>(iii) The express revocation by the assistance applicant or recipient (or applicable family member) of the authorization, in a written notification to HUD.
</P>
<CITA TYPE="N">[61 FR 11113, Mar. 18, 1996, as amended at 88 FR 9655, Feb. 14, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 5.232" NODE="24:1.1.1.1.5.2.15.7" TYPE="SECTION">
<HEAD>§ 5.232   Penalties for failing to sign consent forms.</HEAD>
<P>(a) <I>Denial or termination of benefits.</I> In accordance with the provisions governing the program involved, if the assistance applicant or participant, or any member of the assistance applicant's or participant's family, does not sign and submit the consent form as required in § 5.230, then:
</P>
<P>(1) The processing entity shall deny assistance to and admission of an assistance applicant;
</P>
<P>(2) Assistance to, and the tenancy of, a participant may be terminated.
</P>
<P>(b) <I>Cross references.</I> Individuals should consult the regulations and administrative instructions for the programs covered under this subpart B for further information on the use of income information in determinations regarding eligibility.
</P>
<P>(c) This section does not apply if the applicant or participant, or any member of the assistance applicant's or participant's family revokes his/her consent with respect to the ability of the PHA to access financial records from financial institutions, unless the PHA establishes an admission and occupancy policy that revocation of consent to access financial records will result in denial or termination of assistance or admission.
</P>
<CITA TYPE="N">[61 FR 11113, Mar. 18, 1996, as amended at 88 FR 9655, Feb. 14, 2023]




</CITA>
</DIV8>


<DIV8 N="§ 5.233" NODE="24:1.1.1.1.5.2.15.8" TYPE="SECTION">
<HEAD>§ 5.233   Mandated use of HUD's Enterprise Income Verification (EIV) System.</HEAD>
<P>(a) <I>Programs subject to this section and requirements.</I> (1) The requirements of this section apply to entities administering assistance under the:
</P>
<P>(i) Public Housing program under 24 CFR part 960;
</P>
<P>(ii) Section 8 Housing Choice Voucher (HCV) program under 24 CFR part 982;
</P>
<P>(iii) Moderate Rehabilitation program under 24 CFR part 882;
</P>
<P>(iv) Project-based Voucher program under 24 CFR part 983;
</P>
<P>(v) Project-based Section 8 programs under 24 CFR parts 880, 881, 883, 884, 886, and 891;
</P>
<P>(vi) Section 202 of the Housing Act of 1959 (12 U.S.C. 1701q);
</P>
<P>(vii) Section 811 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 8013);
</P>
<P>(viii) Sections 221(d)(3) and 236 of the National Housing Act (12 U.S.C. 1715l(d)(3) and 1715z-1); and
</P>
<P>(ix) Rent Supplement program under section 101 of the Housing and Urban Development Act of 1965 (12 U.S.C. 1701s).
</P>
<P>(2) Processing entities must use HUD's EIV system in its entirety:
</P>
<P>(i) As a third-party source to verify tenant employment and income information during annual and streamlined reexaminations of family composition and income, in accordance with § 5.236 and administrative guidance issued by HUD; and
</P>
<P>(ii) To reduce administrative and subsidy payment errors in accordance with HUD administrative guidance.
</P>
<P>(b) <I>Penalties for noncompliance.</I> Failure to use the EIV system in its entirety may result in the imposition of sanctions and/or the assessment of disallowed costs associated with any resulting incorrect subsidy or tenant rent calculations, or both.
</P>
<CITA TYPE="N">[74 FR 68934, Dec. 29, 2009, as amended at 88 FR 9655, Feb. 14, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 5.234" NODE="24:1.1.1.1.5.2.15.9" TYPE="SECTION">
<HEAD>§ 5.234   Requests for information from SWICAs and Federal agencies; restrictions on use.</HEAD>
<P>(a) <I>Information available from SWICAs and Federal agencies—to whom and what.</I> Income information will generally be obtained through computer matching agreements between HUD and a SWICA or Federal agency, or between a PHA and a SWICA, as described in paragraph (c) of this section. Certification that the applicable assistance applicants and participants have signed appropriate consent forms and have received the necessary Privacy Act notice is required, as follows: 
</P>
<P>(1) When HUD requests the computer match, the processing entity shall certify to HUD; and 
</P>
<P>(2) When the PHA requests the computer match, the PHA shall certify to the SWICA. 
</P>
<P>(b) <I>Restrictions on use of information.</I> The restrictions of 42 U.S.C. 3544(c)(2)(A) apply to the use by HUD or a PHA of income information obtained from a SWICA. The restrictions of 42 U.S.C. 3544(c)(2)(A) and of 26 U.S.C. 6103(l)(7) apply to the use by HUD or a PHA of income information obtained from the IRS or SSA. 
</P>
<P>(c) <I>Computer matching agreements.</I> Computer matching agreements shall specify the purpose and the legal authority for the match, and shall include a description of the records to be matched, a statement regarding disposition of information generated through the match, a description of the administrative and technical safeguards to be used in protecting the information obtained through the match, a description of the use of records, the restrictions on duplication and redisclosure, a certification, and the amount that will be charged for processing a request.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2508-0008)


</APPRO>
</DIV8>


<DIV8 N="§ 5.236" NODE="24:1.1.1.1.5.2.15.10" TYPE="SECTION">
<HEAD>§ 5.236   Procedures for termination, denial, suspension, or reduction of assistance based on information obtained from a SWICA or Federal agency.</HEAD>
<P>(a) <I>Termination, denial, suspension, or reduction of assistance.</I> The provisions of 42 U.S.C. 3544(c)(2)(B) and (C) shall govern the termination, denial, suspension, or reduction of benefits for an assistance applicant or participant based on income information obtained from a SWICA or a Federal agency. Procedures necessary to comply with these provisions are provided in paragraph (b) of this section. 
</P>
<P>(b) <I>Procedures for independent verification.</I> (1) Any determination or redetermination of family income verified in accordance with this paragraph must be carried out in accordance with the requirements and procedures applicable to the individual covered program. Independent verification of information obtained from a SWICA or a Federal agency may be: 
</P>
<P>(i) By HUD; 
</P>
<P>(ii) In the case of the public housing program, by a PHA; or 
</P>
<P>(iii) In the case of any Section 8 program, by a PHA acting as contract administrator under an ACC. 
</P>
<P>(2) Upon receiving income information from a SWICA or a Federal agency, HUD or, when applicable, the PHA shall compare the information with the information about a family's income that was: 
</P>
<P>(i) Provided by the assistance applicant or participant to the PHA; or 
</P>
<P>(ii) Obtained by the owner (or mortgagee, as applicable) from the assistance applicant or participant or from his or her employer. 
</P>
<P>(3) When the income information reveals an employer or other income source that was not disclosed by the assistance applicant or participant, or when the income information differs substantially from the information received from the assistance applicant or participant or from his or her employer: 
</P>
<P>(i) HUD or, as applicable or directed by HUD, the PHA shall request the undisclosed employer or other income source to furnish any information necessary to establish an assistance applicant's or participant's eligibility for or level of assistance in a covered program. This information shall be furnished in writing, as directed to: 
</P>
<P>(A) HUD, with respect to programs under parts 221, 235, 236, or 290 of this title; 
</P>
<P>(B) The responsible entity (as defined in § 5.100) in the case of the public housing program or any Section 8 program. 
</P>
<P>(C) The owner or mortgagee, as applicable, with respect to the rent supplement, Section 221(d)(3) BMIR, Section 235 homeownership assistance, or Section 236 programs. 
</P>
<P>(ii) HUD or the PHA may verify the income information directly with an assistance applicant or participant. Such verification procedures shall not include any disclosure of income information prohibited under paragraph (b)(6) of this section. 
</P>
<P>(4) HUD and the PHA shall not be required to pursue these verification procedures when the sums of money at issue are too small to raise an inference of fraud or justify the expense of independent verification and the procedures related to termination, denial, suspension, or reduction of assistance. 
</P>
<P>(5) Based on the income information received from a SWICA or Federal agency, HUD or the PHA, as appropriate, may inform an owner (or mortgagee) that an assistance applicant's or participant's eligibility for or level of assistance is uncertain and needs to be verified. The owner (or mortgagee) shall then confirm the assistance applicant's or participant's income information by checking the accuracy of the information with the employer or other income source, or directly with the family. 
</P>
<P>(6) Nondisclosure of Income information. Neither HUD nor the PHA may disclose income information obtained from a SWICA directly to an owner (unless a PHA is the owner). Disclosure of income information obtained from the SSA or IRS is restricted under 26 U.S.C. § 6103(l)(7) and 42 U.S.C. 3544. 
</P>
<P>(c) <I>Opportunity to contest.</I> HUD, the PHA, or the owner (or mortgagee, as applicable) shall promptly notify any assistance applicant or participant in writing of any adverse findings made on the basis of the information verified in accordance with paragraph (b) of this section. The assistance applicant or participant may contest the findings in the same manner as applies to other information and findings relating to eligibility factors under the applicable program. Termination, denial, suspension, or reduction of assistance shall be carried out in accordance with requirements and procedures applicable to the individual covered program, and shall not occur until the expiration of any notice period provided by the statute or regulations governing the program. 
</P>
<CITA TYPE="N">[61 FR 11113, Mar. 18, 1996, as amended at 65 FR 16715, Mar. 29, 2000; 74 FR 68934, Dec. 29, 2009]


</CITA>
</DIV8>


<DIV8 N="§ 5.238" NODE="24:1.1.1.1.5.2.15.11" TYPE="SECTION">
<HEAD>§ 5.238   Criminal and civil penalties.</HEAD>
<P>Persons who violate the provisions of 42 U.S.C. 3544 or 26 U.S.C. 6103(l)(7) with respect to the use and disclosure of income information may be subject to civil or criminal penalties under 42 U.S.C. 3544(c)(3), 26 U.S.C. 7213(a), or 18 U.S.C. 1905. 


</P>
</DIV8>


<DIV8 N="§ 5.240" NODE="24:1.1.1.1.5.2.15.12" TYPE="SECTION">
<HEAD>§ 5.240   Family disclosure of income information to the responsible entity and verification.</HEAD>
<P>(a) This section applies to families that reside in dwelling units with assistance under the public housing program, the Section 8 tenant-based assistance programs, or for which project-based assistance is provided under the Section 8, Section 202, or Section 811 program. 
</P>
<P>(b) The family must promptly furnish to the responsible entity any letter or other notice by HUD to a member of the family that provides information concerning the amount or verification of family income. 
</P>
<P>(c) The responsible entity must verify the accuracy of the income information received from the family, and change the amount of the total tenant payment, tenant rent or Section 8 housing assistance payment, or terminate assistance, as appropriate, based on such information.
</P>
<CITA TYPE="N">[65 FR 16715, Mar. 29, 2000]


</CITA>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="C" NODE="24:1.1.1.1.5.3" TYPE="SUBPART">
<HEAD>Subpart C—Pet Ownership for the Elderly or Persons With Disabilities</HEAD>

<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1701r-1 and 3535(d). 


</PSPACE></AUTH>

<DIV7 N="16" NODE="24:1.1.1.1.5.3.16" TYPE="SUBJGRP">
<HEAD>General Requirements</HEAD>


<DIV8 N="§ 5.300" NODE="24:1.1.1.1.5.3.16.1" TYPE="SECTION">
<HEAD>§ 5.300   Purpose.</HEAD>
<P>(a) This subpart implements section 227 of the Housing and Urban-Rural Recovery Act of 1983 (12 U.S.C. 1701r-1) as it pertains to projects for the elderly or persons with disabilities under: 
</P>
<P>(1) The housing programs administered by the Assistant Secretary for Housing-Federal Housing Commissioner; 
</P>
<P>(2) Projects assisted under the programs contained in chapter VIII of this title 24; and 
</P>
<P>(3) The public housing program. 
</P>
<P>(b) [Reserved]
</P>
<CITA TYPE="N">[61 FR 5202, Feb. 9, 1996, as amended at 65 FR 16715, Mar. 29, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 5.303" NODE="24:1.1.1.1.5.3.16.2" TYPE="SECTION">
<HEAD>§ 5.303   Exclusion for animals that assist, support, or provide service to persons with disabilities.</HEAD>
<P>(a) This subpart C does not apply to animals that are used to assist, support, or provide service to persons with disabilities. Project owners and PHAs may not apply or enforce any policies established under this subpart against animals that are necessary as a reasonable accommodation to assist, support, or provide service to persons with disabilities. This exclusion applies to animals that reside in projects for the elderly or persons with disabilities, as well as to animals that visit these projects.
</P>
<P>(b) Nothing in this subpart C:
</P>
<P>(1) Limits or impairs the rights of persons with disabilities;
</P>
<P>(2) Authorizes project owners or PHAs to limit or impair the rights of persons with disabilities; or
</P>
<P>(3) Affects any authority that project owners or PHAs may have to regulate animals that assist, support, or provide service to persons with disabilities, under federal, state, or local law.
</P>
<CITA TYPE="N">[73 FR 63838, Oct. 27, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 5.306" NODE="24:1.1.1.1.5.3.16.3" TYPE="SECTION">
<HEAD>§ 5.306   Definitions.</HEAD>
<P><I>Common household pet</I> means: 
</P>
<P>(1) <I>For purposes of Housing programs:</I> A domesticated animal, such as a dog, cat, bird, rodent (including a rabbit), fish, or turtle, that is traditionally kept in the home for pleasure rather than for commercial purposes. Common household pet does not include reptiles (except turtles). If this definition conflicts with any applicable State or local law or regulation defining the pets that may be owned or kept in dwelling accommodations, the State or local law or regulation shall apply. This definition shall not include animals that are used to assist persons with disabilities. 
</P>
<P>(2) <I>For purposes of Public Housing programs:</I> PHAs may define the term “common household pet” under § 5.318. 
</P>
<P><I>Elderly or disabled family</I> means: 
</P>
<P>(1) <I>For purposes of Housing programs:</I> An elderly person, a person with a disability, or an elderly or disabled family for purposes of the program under which a project for the elderly or persons with disabilities is assisted or has its mortgage insured. 
</P>
<P>(2) <I>For purposes of Public Housing programs:</I> (i) An elderly person, a person with a disability, or an elderly or disabled family as defined in § 5.403 in subpart A of this part. 
</P>
<P>(ii) [Reserved]
</P>
<P><I>Housing programs</I> means: 
</P>
<P>(1) The housing programs administered by the Assistant Secretary for Housing-Federal Housing Commissioner; and 
</P>
<P>(2) The programs contained in chapter VIII of this title 24 that assist rental projects that meet the definition of project for the elderly or persons with disabilities in this subpart C.
</P>
<P><I>Project for the elderly or persons with disabilities</I> means:
</P>
<P>(1) <I>For purposes of Housing programs:</I> (i) A specific rental or cooperative multifamily property that, unless currently owned by HUD, is subject to a first mortgage, and: 
</P>
<P>(A) That is assisted under statutory authority identified by HUD through notice; 
</P>
<P>(B) That was designated for occupancy by elderly or disabled families when funds for the project were reserved, or when the commitment to insure the mortgage was issued or, of not then so designated, that is designated for such occupancy in an effective amendment to the regulatory agreement covering the project, made pursuant to the project owner's request, and that is assisted or insured under one of the programs identified by HUD through notice; or 
</P>
<P>(C) For which preference in tenant selection is given for all units in the project to elderly or disabled families and that is owned by HUD or assisted under one of the programs identified by HUD through notice. 
</P>
<P>(ii) This term does not include health and care facilities that have mortgage insurance under the National Housing Act. This term also does not include any of the project owner's other property that does not meet the criteria contained in any one of paragraphs (1)(i)(A) through (C) of this definition, even if the property is adjacent to or under joint or common management with such specific property. 
</P>
<P>(2) <I>For purposes of Public Housing programs:</I> Any project assisted under title I of the United States Housing Act of 1937 (other than under section 8 or 17 of the Act), including any building within a mixed-use project, that was designated for occupancy by the elderly or persons with disabilities at its inception or, although not so designated, for which the PHA gives preference in tenant selection (with HUD approval) for all units in the project (or for a building within a mixed-use project) to elderly or disabled families. For purposes of this part, this term does not include projects assisted the Low-Rent Housing Homeownership Opportunity program or under title II of the United States Housing Act of 1937. 
</P>
<P><I>Project owner</I> means an owner (including HUD, where HUD is the owner) or manager of a project for the elderly or persons with disabilities, or an agent authorized to act for an owner or manager of such housing. 
</P>
<P><I>Public Housing Agency (PHA)</I> is defined in § 5.100. 
</P>
<CITA TYPE="N">[61 FR 5202, Feb. 9, 1996, as amended at 65 FR 16715, Mar. 29, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 5.309" NODE="24:1.1.1.1.5.3.16.4" TYPE="SECTION">
<HEAD>§ 5.309   Prohibition against discrimination.</HEAD>
<P>Except as otherwise specifically authorized under this subpart no project owner or PHA that owns or manages a project for the elderly or persons with disabilities may: 
</P>
<P>(a) As a condition of tenancy or otherwise, prohibit or prevent any tenant of such housing from owning common household pets or having such pets living in the tenant's dwelling unit; or 
</P>
<P>(b) Restrict or discriminate against any person in connection with admission to, or continued occupancy of, such housing by reason of the person's ownership of common household pets or the presence of such pets in the person's dwelling unit. 


</P>
</DIV8>


<DIV8 N="§ 5.312" NODE="24:1.1.1.1.5.3.16.5" TYPE="SECTION">
<HEAD>§ 5.312   Notice to tenants.</HEAD>
<P>(a) During the development of pet rules as described in § 5.353 or § 5.380, the project owner or PHA shall serve written notice on all tenants of projects for the elderly or persons with disabilities in occupancy at the time of service, stating that: 
</P>
<P>(1) Tenants are permitted to own and keep common household pets in their dwelling units, in accordance with the pet rules (if any) promulgated under this subpart C; 
</P>
<P>(2) Animals that are used to assist persons with disabilities are excluded from the requirements of this subpart C, as provided in § 5.303; 
</P>
<P>(3) Tenants may, at any time, request a copy of any current pet rule developed under this subpart C (as well as any current proposed rule or proposed amendment to an existing rule); and 
</P>
<P>(4) Tenants may request that their leases be amended under § 5.321 to permit common household pets. 
</P>
<P>(b) The project owner or PHA shall provide to each applicant for tenancy when he or she is offered a dwelling unit in a project for the elderly or persons with disabilities, the written notice specified in paragraphs (a) (1), (2), and (3) of this section. 
</P>
<P>(c) If a PHA chooses not to promulgate pet rules, the notice shall be served within 60 days of the effective date of this part. PHAs shall serve notice under this section in accordance with their normal service of notice procedures. 


</P>
</DIV8>


<DIV8 N="§ 5.315" NODE="24:1.1.1.1.5.3.16.6" TYPE="SECTION">
<HEAD>§ 5.315   Content of pet rules: General requirements.</HEAD>
<P>(a) <I>Housing programs.</I> The project owner shall prescribe reasonable rules to govern the keeping of common household pets. The pet rules must include the mandatory rules described in § 5.350 and may, unless otherwise noted in this subpart C, include other discretionary provisions as provided in § 5.318. 
</P>
<P>(b) <I>Public Housing programs.</I> (1) PHAs may choose not to promulgate rules governing the keeping of common household pets or may include rules as provided in § 5.318. PHAs may elect to include provisions based on those in § 5.350. If they so choose, the PHAs may modify the provisions in § 5.350 in any manner consistent with this subpart C. 
</P>
<P>(2) If PHAs choose to promulgate pet rules, tenants must be permitted to own and keep pets in their units in accordance with the terms and conditions of their leases, the provisions of this subpart C, and any applicable State or local law or regulation governing the owning or keeping of pets in dwelling accommodations. 
</P>
<P>(3) PHAs that choose not to promulgate pet rules, shall not impose, by lease modification or otherwise, any requirement that is inconsistent with the provisions of this subpart C. 
</P>
<P>(c) <I>Use of discretion.</I> (1) This subpart C does not define with specificity the limits of the project owners' or PHAs' discretion to promulgate pet rules. Where a project owner or PHA has discretion to prescribe pet rules under this subpart C, the pet rules should be: 
</P>
<P>(i) Reasonably related to furthering a legitimate interest of the project owner or PHA, such as the owner's or PHA's interest in providing a decent, safe, and sanitary living environment for existing and prospective tenants and in protecting and preserving the physical condition of the project and the owner's or PHA's financial interest in it; and 
</P>
<P>(ii) Drawn narrowly to achieve the owner's or PHA's legitimate interests, without imposing unnecessary burdens and restrictions on pet owners and prospective pet owners. 
</P>
<P>(2) Where a project owner or PHA has discretion to prescribe pet rules under this subpart C, the owner or PHA may vary the rules' content among projects and within individual projects, based on factors such as the size, type, location, and occupancy of the project or its units, provided that the applicable rules are reasonable and do not conflict with any applicable State or local law or regulation governing the owning or keeping of pets in dwelling accommodations. 
</P>
<P>(d) <I>Conflict with State or local law.</I> The pet rules adopted by the project owner or PHA shall not conflict with applicable State or local law or regulations. If such a conflict may exist, the State and local law or regulations shall apply. 


</P>
</DIV8>


<DIV8 N="§ 5.318" NODE="24:1.1.1.1.5.3.16.7" TYPE="SECTION">
<HEAD>§ 5.318   Discretionary pet rules.</HEAD>
<P>Pet rules promulgated by project owners and PHAs may include, but are not limited to, consideration of the following factors: 
</P>
<P>(a) <I>Definitions of “common household pet”</I>—(1) <I>For Public Housing programs.</I> The pet rules established by a PHA may contain a reasonable definition of a common household pet. 
</P>
<P>(2) <I>For Housing programs.</I> Project owners wishing to define “common household pet” in their pet rules must use the Housing programs definition of the term in § 5.306. 
</P>
<P>(b) <I>Density of tenants and pets.</I> (1)(i) The pet rules established under this section may take into account tenant and pet density. The pet rules may place reasonable limitations on the number of common household pets that may be allowed in each dwelling unit. In the case of group homes, the pet rules may place reasonable limitations on the number of common household pets that may be allowed in each home. 
</P>
<P>(ii) <I>For Housing programs.</I> Under these rules, project owners may limit the number of four-legged, warm-blooded pets to one pet in each dwelling unit or group home. 
</P>
<P>(iii) Other than the limitations described in this paragraph (b)(1), the pet rules may not limit the total number of pets allowed in the project. 
</P>
<P>(2) As used in paragraph (b)(1) of this section, the term “group home” means: 
</P>
<P>(i) <I>For purposes of Housing programs.</I> A small, communal living arrangement designed specifically for individuals who are chronically mentally ill, developmentally disabled, or physically disabled who require a planned program of continual supportive services or supervision (other than continual nursing, medical or psychiatric care). 
</P>
<P>(ii) <I>For purposes of Public Housing programs.</I> A dwelling or dwelling unit for the exclusive residential use of elderly persons or persons with disabilities who are not capable of living completely independently and who require a planned program of continual supportive services or supervision (other than continual nursing, medical or psychiatric care). 
</P>
<P>(c) <I>Pet size and pet type.</I> The pet rules may place reasonable limitations on the size, weight, and type of common household pets allowed in the project. 
</P>
<P>(d) <I>Potential financial obligations of tenants</I>—(1) <I>Pet deposits.</I> The pet rules may require tenants who own or keep pets in their units to pay a refundable pet deposit. In the case of project owners, this pet deposit shall be limited to those tenants who own or keep cats or dogs in their units. This deposit is in addition to any other financial obligation generally imposed on tenants of the project. The project owner or PHA may use the pet deposit only to pay reasonable expenses directly attributable to the presence of the pet in the project, including (but not limited to) the cost of repairs and replacements to, and fumigation of, the tenant's dwelling unit and, for project owners, the cost of animal care facilities under § 5.363. The project owner or PHA shall refund the unused portion of the pet deposit to the tenant within a reasonable time after the tenant moves from the project or no longer owns or keeps a pet (or a cat or dog in the case of project owners) in the dwelling unit. 
</P>
<P>(2) <I>Housing programs: Maximum pet deposit.</I> (i) Pet deposits for the following tenants shall not exceed an amount periodically fixed by HUD through notice. 
</P>
<P>(A) Tenants whose rents are subsidized (including tenants of a HUD-owned project, whose rents were subsidized before HUD acquired it) under one of the programs identified by HUD through notice. 
</P>
<P>(B) Tenants who live in a project assisted (including tenants who live in a HUD-owned project that was assisted before HUD acquired it) under one of the programs identified by HUD through notice. 
</P>
<P>(C) For all other tenants of projects for the elderly or persons with disabilities, the pet deposit shall not exceed one month's rent at the time the pet is brought onto the premises. 
</P>
<P>(ii) In establishing the maximum amount of pet deposit under paragraph (d)(2)(i) of this section, HUD will consider factors such as: 
</P>
<P>(A) Projected, estimated expenses directly attributable to the presence of pets in the project; 
</P>
<P>(B) The ability of project owners to offset such expenses by use of security deposits or HUD-reimbursable expenses; and 
</P>
<P>(C) The low income status of tenants of projects for the elderly or persons with disabilities. 
</P>
<P>(iii) For pet deposits subject to paragraph (d)(2)(i)(A) of this section, the pet rules shall provide for gradual accumulation of the deposit by the pet owner through an initial payment not to exceed $50 when the pet is brought onto the premises, and subsequent monthly payments not to exceed $10 per month until the amount of the deposit is reached. 
</P>
<P>(iv) For pet deposits subject to paragraphs (d)(2)(i)(B) and (C) of this section, the pet rules may provide for gradual accumulation of the deposit by the pet owner. 
</P>
<P>(v) The project owner may (subject to the HUD-prescribed limits) increase the amount of the pet deposit by amending the house pet rules in accordance with § 5.353. 
</P>
<P>(A) For pet deposits subject to paragraph (d)(2)(i)(A) of this section, the house pet rules shall provide for gradual accumulation of any such increase not to exceed $10 per month for all deposit amounts that are being accumulated. 
</P>
<P>(B) [Reserved]
</P>
<P>(vi) Any pet deposit that is established within the parameters set forth by paragraph (d)(2) of this section shall be deemed reasonable for purposes of this subpart C. 
</P>
<P>(3) <I>Public Housing programs: Maximum pet deposit.</I> The maximum amount of pet deposit that may be charged by the PHA, on a per dwelling unit basis, shall not exceed the higher of the Total Tenant Payment (as defined in 24 CFR 913.102) or such reasonable fixed amount as the PHA may require. The pet rules may permit gradual accumulation of the pet deposit by the pet owner. 
</P>
<P>(4) <I>Housing programs: Waste removal charge.</I> The pet rules may permit the project owner to impose a separate waste removal charge of up to five dollars ($5) per occurrence on pet owners that fail to remove pet waste in accordance with the prescribed pet rules. Any pet waste removal charge that is within this five dollar ($5) limitation shall be deemed to be a reasonable amount for the purposes of this subpart C. 
</P>
<P>(5) The pet deposit (for Housing and Public Housing programs) and waste removal charge (for Housing programs) are not part of the rent payable by the tenant. Except as provided in paragraph (d) of this section for Housing programs and, paragraph (d) of this section and 24 CFR 966.4(b) for Public Housing programs, project owners or PHAs may not prescribe pet rules that impose additional financial obligations on pet owners that are designed to compensate the project owner or PHA for costs associated with the presence of pets in the project, including (but not limited to) requiring pet owners: 
</P>
<P>(i) To obtain liability or other insurance to cover damage caused by the pet; 
</P>
<P>(ii) To agree to be strictly liable for all damages caused by the pet where this liability is not otherwise imposed by State or local law, or 
</P>
<P>(iii) To indemnify the project owner for pet-related litigation and attorney's fees. 
</P>
<P>(e) <I>Standards of pet care.</I> The pet rules may prescribe standards of pet care and handling, but must be limited to those necessary to protect the condition of the tenant's unit and the general condition of the project premises, or to protect the health or safety of present tenants, project employees, and the public. The pet rules may not require pet owners to have any pet's vocal cords removed. Permitted rules may: 
</P>
<P>(1) Bar pets from specified common areas (such as lobbies, laundry rooms, and social rooms), unless the exclusion will deny a pet reasonable ingress and egress to the project or building. 
</P>
<P>(2) Require the pet owner to control noise and odor caused by a pet. 
</P>
<P>(3) Housing programs: Project owners may also: 
</P>
<P>(i) Require pet owners to have their dogs and cats spayed or neutered; and 
</P>
<P>(ii) Limit the length of time that a pet may be left unattended in a dwelling unit. 
</P>
<P>(f) <I>Pet licensing.</I> The pet rules may require pet owners to license their pets in accordance with applicable State and local laws and regulations. (Failure of the pet rules to contain this requirement does not relieve the pet owner of responsibility for complying with applicable State and local pet licensing requirements.) 
</P>
<P>(g) <I>Public Housing programs: Designated pet areas.</I> (1) PHAs may designate buildings, floors of buildings, or sections of buildings as no-pet areas where pets generally may not be permitted. Similarly, the pet rules may designate buildings, floors of buildings, or sections of buildings for residency generally by pet-owning tenants. The PHA may direct such initial tenant moves as may be necessary to establish pet and no-pet areas. The PHA may not refuse to admit (or delay admission of) an applicant for tenancy on the grounds that the applicant's admission would violate a pet or no-pet area. The PHA may adjust the pet and no-pet areas or may direct such additional moves as may be necessary (or both) to accommodate such applicants for tenancy or to meet the changing needs of existing tenants. 
</P>
<P>(2) Project owners may not designate pet areas in buildings in their pet rules. 
</P>
<P>(h) <I>Pets temporarily on the premises.</I> The pet rules may exclude from the project pets not owned by a tenant that are to be kept temporarily on the project premises. For the purposes of paragraph (h) of this section, pets are to be kept “temporarily” if they are to be kept in the tenant's dwelling accommodations for a period of less than 14 consecutive days and nights. HUD, however, encourages project owners and PHAs to permit the use of a visiting pet program sponsored by a humane society, or other nonprofit organization. 


</P>
</DIV8>


<DIV8 N="§ 5.321" NODE="24:1.1.1.1.5.3.16.8" TYPE="SECTION">
<HEAD>§ 5.321   Lease provisions.</HEAD>
<P>(a) <I>Lease provisions.</I> (1) PHAs which have established pet rules and project owners shall ensure that the leases for all tenants of projects for the elderly or persons with disabilities: 
</P>
<P>(i) State that tenants are permitted to keep common household pets in their dwelling units (subject to the provisions of this subpart and the pet rules); 
</P>
<P>(ii) Shall incorporate by reference the pet rules promulgated by the project owner or PHA; 
</P>
<P>(iii) Shall provide that the tenant agrees to comply with these rules; and 
</P>
<P>(iv) Shall state that violation of these rules may be grounds for removal of the pet or termination of the pet owner's tenancy (or both), in accordance with the provisions of this subpart and applicable regulations and State or local law. 
</P>
<P>(2) [Reserved]
</P>
<P>(b) Where a PHA has not established pet rules, the leases of all tenants of such projects shall not contain any provisions prohibiting the owning or keeping of common household pets, and shall state that owning and keeping of such pets will be subject to the general obligations imposed on the PHA and tenants in the lease and any applicable State or local law or regulation governing the owning or keeping of pets in dwelling accommodations. 


</P>
</DIV8>


<DIV8 N="§ 5.324" NODE="24:1.1.1.1.5.3.16.9" TYPE="SECTION">
<HEAD>§ 5.324   Implementation of lease provisions.</HEAD>
<P>The lease for each tenant of a project for the elderly or persons with disabilities who is admitted on or after the date on which this subpart C is implemented shall contain the lease provisions described in § 5.321 and, if applicable, § 5.360. The lease for each tenant who occupies a unit in such a project under lease on the date of implementation of this part shall be amended to include the provisions described in § 5.321 and, if applicable, § 5.360: 
</P>
<P>(a) For Housing programs: 
</P>
<P>(1) Upon renewal of the lease and in accordance with any applicable regulation; and 
</P>
<P>(2) When a Housing program tenant registers a common household pet under § 5.350 
</P>
<P>(b) For Public Housing programs: 
</P>
<P>(1) Upon annual reexamination of tenant income in accordance with any applicable regulation; and 
</P>
<P>(2) When a Public Housing program tenant wishes to own or keep a common household pet in his or her unit. 


</P>
</DIV8>


<DIV8 N="§ 5.327" NODE="24:1.1.1.1.5.3.16.10" TYPE="SECTION">
<HEAD>§ 5.327   Nuisance or threat to health or safety.</HEAD>
<P>Nothing in this subpart C prohibits a project owner, PHA, or an appropriate community authority from requiring the removal of any pet from a project, if the pet's conduct or condition is duly determined to constitute, under the provisions of State or local law, a nuisance or a threat to the health or safety of other occupants of the project or of other persons in the community where the project is located. 


</P>
</DIV8>

</DIV7>


<DIV7 N="17" NODE="24:1.1.1.1.5.3.17" TYPE="SUBJGRP">
<HEAD>Pet Ownership Requirements for Housing Programs</HEAD>


<DIV8 N="§ 5.350" NODE="24:1.1.1.1.5.3.17.11" TYPE="SECTION">
<HEAD>§ 5.350   Mandatory pet rules for housing programs.</HEAD>
<P><I>Mandatory rules.</I> The project owner must prescribe the following pet rules: 
</P>
<P>(a) <I>Inoculations.</I> The pet rules shall require pet owners to have their pets inoculated in accordance with State and local laws. 
</P>
<P>(b) <I>Sanitary standards.</I> (1) The pet rules shall prescribe sanitary standards to govern the disposal of pet waste. These rules may: 
</P>
<P>(i) Designate areas on the project premises for pet exercise and the deposit of pet waste; 
</P>
<P>(ii) Forbid pet owners from exercising their pets or permitting their pets to deposit waste on the project premises outside the designated areas; 
</P>
<P>(iii) Require pet owners to remove and properly dispose of all removable pet waste; and 
</P>
<P>(iv) Require pet owners to remove pets from the premises to permit the pet to exercise or deposit waste, if no area in the project is designated for such purposes. 
</P>
<P>(2) In the case of cats and other pets using litter boxes, the pet rules may require the pet owner to change the litter (but not more than twice each week), may require pet owners to separate pet waste from litter (but not more than once each day), and may prescribe methods for the disposal of pet waste and used litter. 
</P>
<P>(c) <I>Pet restraint.</I> The pet rules shall require that all cats and dogs be appropriately and effectively restrained and under the control of a responsible individual while on the common areas of the project. 
</P>
<P>(d) <I>Registration.</I> (1) The pet rules shall require pet owners to register their pets with the project owner. The pet owner must register the pet before it is brought onto the project premises, and must update the registration at least annually. The project owner may coordinate the annual update with the annual reexamination of tenant income, if applicable. The registration must include: 
</P>
<P>(i) A certificate signed by a licensed veterinarian or a State or local authority empowered to inoculate animals (or designated agent of such an authority) stating that the pet has received all inoculations required by applicable State and local law; 
</P>
<P>(ii) Information sufficient to identify the pet and to demonstrate that it is a common household pet; and 
</P>
<P>(iii) The name, address, and phone number of one or more responsible parties who will care for the pet if the pet owner dies, is incapacitated, or is otherwise unable to care for the pet. 
</P>
<P>(2) The project owner may require the pet owner to provide additional information necessary to ensure compliance with any discretionary rules prescribed under § 5.318, and shall require the pet owner to sign a statement indicating that he or she has read the pet rules and agrees to comply with them. 
</P>
<P>(3) The pet rules shall permit the project owner to refuse to register a pet if: 
</P>
<P>(i) The pet is not a common household pet; 
</P>
<P>(ii) The keeping of the pet would violate any applicable house pet rule; 
</P>
<P>(iii) The pet owner fails to provide complete pet registration information or fails annually to update the pet registration; or 
</P>
<P>(iv) The project owner reasonably determines, based on the pet owner's habits and practices, that the pet owner will be unable to keep the pet in compliance with the pet rules and other lease obligations. The pet's temperament may be considered as a factor in determining the prospective pet owner's ability to comply with the pet rules and other lease obligations. 
</P>
<P>(4) The project owner may not refuse to register a pet based on a determination that the pet owner is financially unable to care for the pet or that the pet is inappropriate, based on the therapeutic value to the pet owner or the interests of the property or existing tenants. 
</P>
<P>(5) The pet rules shall require the project owner to notify the pet owner if the project owner refuses to register a pet. The notice shall state the basis for the project owner's action and shall be served on the pet owner in accordance with the requirements of § 5.353(f)(1)(i) or (ii). The notice of refusal to register a pet may be combined with a notice of pet violation as required in § 5.356. 


</P>
</DIV8>


<DIV8 N="§ 5.353" NODE="24:1.1.1.1.5.3.17.12" TYPE="SECTION">
<HEAD>§ 5.353   Housing programs: Procedure for development of pet rules.</HEAD>
<P>(a) <I>General.</I> Project owners shall use the procedures specified in this section to promulgate the pet rules referred to in §§ 5.318 and 5.350. 
</P>
<P>(b) <I>Development and notice of proposed pet rules.</I> Project owners shall develop proposed rules to govern the owning or keeping of common household pets in projects for the elderly or persons with disabilities. Notice of the proposed pet rules shall be served on each tenant of the project as provided in paragraph (f) of this section. The notice shall: 
</P>
<P>(1) Include the text of the proposed rules; 
</P>
<P>(2) State that tenants or tenant representatives may submit written comments on the rules; and 
</P>
<P>(3) State that all comments must be submitted to the project owner no later than 30 days from the effective date of the notice of the proposed rules. 
</P>
<P>(4) The notice may also announce the date, time, and place for a meeting to discuss the proposed rules (as provided in paragraph (c) of this section). 
</P>
<P>(c) <I>Tenant consultation.</I> Tenants or tenant representatives may submit written comments on the proposed pet rules to the project owner by the date specified in the notice of proposed rules. In addition, the owner may schedule one or more meetings with tenants during the comment period to discuss the proposed rules. Tenants and tenant representatives may make oral comments on the proposed rules at these meetings. The project owner must consider comments made at these meetings only if they are summarized, reduced to writing, and submitted to the project owner before the end of the comment period. 
</P>
<P>(d) <I>Development and notice of final pet rules.</I> The project owner shall develop the final rules after reviewing tenants' written comments and written summaries of any owner-tenant meetings. The project owner may meet with tenants and tenant representatives to attempt to resolve issues raised by the comments. Subject to this subpart C, the content of the final pet rules, however, is within the sole discretion of the project owner. The project owner shall serve on each tenant of the project, a notice of the final pet rules as provided in paragraph (f) of this section. The notice must include the text of the final pet rules and must specify the effective date of the final pet rules. 
</P>
<P>(e) <I>Amendment of pet rules.</I> The project owner may amend the pet rules at any time by following the procedure for the development of pet rules specified in paragraphs (b) through (d) of this section. 
</P>
<P>(f) <I>Service of notice.</I> (1) The project owner must serve the notice required under this section by: 
</P>
<P>(i) Sending a letter by first class mail, properly stamped and addressed to the tenant at the dwelling unit, with a proper return address; or 
</P>
<P>(ii) Serving a copy of the notice on any adult answering the door at the tenant's leased dwelling unit, or if no adult responds, by placing the notice under or through the door, if possible, or else by attaching the notice to the door; or 
</P>
<P>(iii) For service of notice to tenants of a high-rise building, posting the notice in at least three conspicuous places within the building and maintaining the posted notices intact and in legible form for 30 days. For purposes of paragraph (f) of this section, a high-rise building is a structure that is equipped with an elevator and has a common lobby. 
</P>
<P>(2) For purposes of computing time periods following service of the notice, service is effective on the day that all notices are delivered or mailed, or in the case of service by posting, on the day that all notices are initially posted. 


</P>
</DIV8>


<DIV8 N="§ 5.356" NODE="24:1.1.1.1.5.3.17.13" TYPE="SECTION">
<HEAD>§ 5.356   Housing programs: Pet rule violation procedures.</HEAD>
<P>(a) <I>Notice of pet rule violation.</I> If a project owner determines on the basis of objective facts, supported by written statements, that a pet owner has violated a rule governing the owning or keeping of pets; the project owner may serve a written notice of pet rule violation on the pet owner in accordance with § 5.353(f)(1)(i) or (ii). The notice of pet rule violation must: 
</P>
<P>(1) Contain a brief statement of the factual basis for the determination and the pet rule or rules alleged to be violated; 
</P>
<P>(2) State that the pet owner has 10 days from the effective date of service of the notice to correct the violation (including, in appropriate circumstances, removal of the pet) or to make a written request for a meeting to discuss the violation; 
</P>
<P>(3) State that the pet owner is entitled to be accompanied by another person of his or her choice at the meeting; and 
</P>
<P>(4) State that the pet owner's failure to correct the violation, to request a meeting, or to appear at a requested meeting may result in initiation of procedures to terminate the pet owner's tenancy. 
</P>
<P>(b)(1) <I>Pet rule violation meeting.</I> If the pet owner makes a timely request for a meeting to discuss an alleged pet rule violation, the project owner shall establish a mutually agreeable time and place for the meeting but no later than 15 days from the effective date of service of the notice of pet rule violation (unless the project owner agrees to a later date). At the pet rule violation meeting, the pet owner and project owner shall discuss any alleged pet rule violation and attempt to correct it. The project owner may, as a result of the meeting, give the pet owner additional time to correct the violation. 
</P>
<P>(2) <I>Notice for pet removal.</I> If the pet owner and project owner are unable to resolve the pet rule violation at the pet rule violation meeting, or if the project owner determines that the pet owner has failed to correct the pet rule violation within any additional time provided for this purpose under paragraph (b)(1) of this section, the project owner may serve a written notice on the pet owner in accordance with § 5.353(f)(1) (i) or (ii) (or at the meeting, if appropriate), requiring the pet owner to remove the pet. The notice must: 
</P>
<P>(i) Contain a brief statement of the factual basis for the determination and the pet rule or rules that have been violated; 
</P>
<P>(ii) State that the pet owner must remove the pet within 10 days of the effective date of service of the notice of pet removal (or the meeting, if notice is served at the meeting); and 
</P>
<P>(iii) State that failure to remove the pet may result in initiation of procedures to terminate the pet owner's tenancy. 
</P>
<P>(c) <I>Initiation of procedures to remove a pet or terminate the pet owner's tenancy.</I> (1) The project owner may not initiate procedures to terminate a pet owner's tenancy based on a pet rule violation, unless: 
</P>
<P>(i) The pet owner has failed to remove the pet or correct a pet rule violation within the applicable time period specified in this section (including any additional time permitted by the owner); and 
</P>
<P>(ii) The pet rule violation is sufficient to begin procedures to terminate the pet owner's tenancy under the terms of the lease and applicable regulations. 
</P>
<P>(2) The project owner may initiate procedures to remove a pet under § 5.327 at any time, in accordance with the provisions of applicable State or local law.


</P>
</DIV8>


<DIV8 N="§ 5.359" NODE="24:1.1.1.1.5.3.17.14" TYPE="SECTION">
<HEAD>§ 5.359   Housing programs: Rejection of units by applicants for tenancy.</HEAD>
<P>(a) An applicant for tenancy in a project for the elderly or persons with disabilities may reject a unit offered by a project owner if the unit is in close proximity to a dwelling unit in which an existing tenant of the project owns or keeps a common household pet. An applicant's rejection of a unit under this section shall not adversely affect his or her application for tenancy in the project, including (but not limited to) his or her position on the project waiting list or qualification for any tenant selection preference.
</P>
<P>(b) Nothing in this subpart C imposes a duty on project owners to provide alternate dwelling units to existing or prospective tenants because of the proximity of common household pets to a particular unit or the presence of such pets in the project.


</P>
</DIV8>


<DIV8 N="§ 5.360" NODE="24:1.1.1.1.5.3.17.15" TYPE="SECTION">
<HEAD>§ 5.360   Housing programs: Additional lease provisions.</HEAD>
<P>(a) <I>Inspections.</I> In addition to other inspections permitted under the lease, the leases for all Housing program tenants of projects for the elderly or persons with disabilities may state that the project owner may, after reasonable notice to the tenant and during reasonable hours, enter and inspect the premises. The lease shall permit entry and inspection only if the project owner has received a signed, written complaint alleging (or the project owner has reasonable grounds to believe) that the conduct or condition of a pet in the dwelling unit constitutes, under applicable State or local law, a nuisance or a threat to the health or safety of the occupants of the project or other persons in the community where the project is located.
</P>
<P>(b) <I>Emergencies.</I> (1) If there is no State or local authority (or designated agent of such an authority) authorized under applicable State or local law to remove a pet that becomes vicious, displays symptoms of severe illness, or demonstrates other behavior that constitutes an immediate threat to the health or safety of the tenancy as a whole, the project owner may place a provision in tenant leases permitting the project owner to enter the premises (if necessary), remove the pet, and take such action with respect to the pet as may be permissible under State and local law, which may include placing it in a facility that will provide care and shelter for a period not to exceed 30 days.
</P>
<P>(2) The lease shall permit the project owner to enter the premises and remove the pet or take such other permissible action only if the project owner requests the pet owner to remove the pet from the project immediately, and the pet owner refuses to do so, or if the project owner is unable to contact the pet owner to make a removal request. The lease may not contain a provision relieving the project owner from liability for wrongful removal of a pet. The cost of the animal care facility shall be paid as provided in § 5.363.
</P>
<P>(3) The project owner may place a provision in tenant leases permitting the project owner to enter the premises, remove the pet, and place the pet in a facility that will provide care and shelter, in accordance with the provisions of § 5.363. The lease may not contain a provision relieving the project owner from liability for wrongful removal of a pet.


</P>
</DIV8>


<DIV8 N="§ 5.363" NODE="24:1.1.1.1.5.3.17.16" TYPE="SECTION">
<HEAD>§ 5.363   Housing programs: Protection of the pet.</HEAD>
<P>(a) If the health or safety of a pet is threatened by the death or incapacity of the pet owner, or by other factors that render the pet owner unable to care for the pet, the project owner may contact the responsible party or parties listed in the pet registration required under § 5.350(d)(1)(iii).
</P>
<P>(b) If the responsible party or parties are unwilling or unable to care for the pet, or the project owner, despite reasonable efforts, has been unable to contact the responsible party or parties, the project owner may contact the appropriate State or local authority (or designated agent of such an authority) and request the removal of the pet.
</P>
<P>(c) If there is no State or local authority (or designated agent of such an authority) authorized to remove a pet under these circumstances and the project owner has placed a provision in the lease agreement (as described in § 5.360(c)(2)), the project owner may enter the pet owner's unit, remove the pet, and place the pet in a facility that will provide care and shelter until the pet owner or a representative of the pet owner is able to assume responsibility for the pet, but not longer than 30 days.
</P>
<P>(d) The cost of the animal care facility provided under this section shall be borne by the pet owner. If the pet owner (or the pet owner's estate) is unable or unwilling to pay, the cost of the animal care facility may be paid from the pet deposit, if imposed under the pet rules.


</P>
</DIV8>

</DIV7>


<DIV7 N="18" NODE="24:1.1.1.1.5.3.18" TYPE="SUBJGRP">
<HEAD>Pet Ownership Requirements for Public Housing Programs</HEAD>


<DIV8 N="§ 5.380" NODE="24:1.1.1.1.5.3.18.17" TYPE="SECTION">
<HEAD>§ 5.380   Public housing programs: Procedure for development of pet rules.</HEAD>
<P>PHAs that choose to promulgate pet rules shall consult with tenants of projects for the elderly or persons with disabilities administered by them with respect to their promulgation and subsequent amendment. PHAs shall develop the specific procedures governing tenant consultation, but these procedures must be designed to give tenants (or, if appropriate, tenant councils) adequate opportunity to review and comment upon the pet rules before they are issued for effect. PHAs are solely responsible for the content of final pet rules, but must give consideration to tenant comments. PHAs shall send to the responsible HUD field office, copies of the final (or amended) pet rules, as well as summaries or copies of all tenant comments received in the course of the tenant consultation.


</P>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="D" NODE="24:1.1.1.1.5.4" TYPE="SUBPART">
<HEAD>Subpart D—Definitions for Section 8 and Public Housing Assistance Under the United States Housing Act of 1937</HEAD>

<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437a and 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 5665, Feb. 13, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 5.400" NODE="24:1.1.1.1.5.4.19.1" TYPE="SECTION">
<HEAD>§ 5.400   Applicability.</HEAD>
<P>This part applies to public housing and Section 8 programs. 
</P>
<CITA TYPE="N">[61 FR 5665, Feb. 13, 1996, as amended at 65 FR 16715, Mar. 29, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 5.403" NODE="24:1.1.1.1.5.4.19.2" TYPE="SECTION">
<HEAD>§ 5.403   Definitions.</HEAD>
<P><I>Annual contributions contract</I> (ACC) means the written contract between HUD and a PHA under which HUD agrees to provide funding for a program under the 1937 Act, and the PHA agrees to comply with HUD requirements for the program.
</P>
<P><I>Applicant</I> means a person or a family that has applied for housing assistance. 
</P>
<P><I>Disabled family</I> means a family whose head (including co-head), spouse, or sole member is a person with a disability. It may include two or more persons with disabilities living together, or one or more persons with disabilities living with one or more live-in aides.
</P>
<P><I>Displaced family</I> means a family in which each member, or whose sole member, is a person displaced by governmental action, or a person whose dwelling has been extensively damaged or destroyed as a result of a disaster declared or otherwise formally recognized pursuant to Federal disaster relief 
</P>
<P><I>Elderly family</I> means a family whose head (including co-head), spouse, or sole member is a person who is at least 62 years of age. It may include two or more persons who are at least 62 years of age living together, or one or more persons who are at least 62 years of age living with one or more live-in aides.
</P>
<P><I>Family</I> includes, but is not limited to, the following, regardless of actual or perceived sexual orientation, gender identity, or marital status:
</P>
<P>(1) A single person, who may be:
</P>
<P>(i) An elderly person, displaced person, disabled person, near-elderly person, or any other single person;
</P>
<P>(ii) An otherwise eligible youth who has attained at least 18 years of age and not more than 24 years of age and who has left foster care, or will leave foster care within 90 days, in accordance with a transition plan described in section 475(5)(H) of the Social Security Act (42 U.S.C. 675(5)(H)), and is homeless or is at risk of becoming homeless at age 16 or older; or
</P>
<P>(2) A group of persons residing together, and such group includes, but is not limited to:
</P>
<P>(i) A family with or without children (a child who is temporarily away from the home because of placement in foster care is considered a member of the family);
</P>
<P>(ii) An elderly family;
</P>
<P>(iii) A near-elderly family;
</P>
<P>(iv) A disabled family;
</P>
<P>(v) A displaced family; and
</P>
<P>(vi) The remaining member of a tenant family.
</P>
<P><I>Live-in aide</I> means a person who resides with one or more elderly persons, or near-elderly persons, or persons with disabilities, and who: 
</P>
<P>(1) Is determined to be essential to the care and well-being of the persons; 
</P>
<P>(2) Is not obligated for the support of the persons; and 
</P>
<P>(3) Would not be living in the unit except to provide the necessary supportive services. 
</P>
<P><I>Near-elderly family</I> means a family whose head (including co-head), spouse, or sole member is a person who is at least 50 years of age but below the age of 62; or two or more persons, who are at least 50 years of age but below the age of 62, living together; or one or more persons who are at least 50 years of age but below the age of 62, living with one or more live-in aides.
</P>
<P><I>Person with disabilities:</I> 
</P>
<P>(1) Means a person who: 
</P>
<P>(i) Has a disability, as defined in 42 U.S.C. 423; 
</P>
<P>(ii) Is determined, pursuant to HUD regulations, to have a physical, mental, or emotional impairment that: 
</P>
<P>(A) Is expected to be of long-continued and indefinite duration; 
</P>
<P>(B) Substantially impedes his or her ability to live independently, and
</P>
<P>(C) Is of such a nature that the ability to live independently could be improved by more suitable housing conditions; or
</P>
<P>(iii) Has a developmental disability as defined in 42 U.S.C. 6001. 
</P>
<P>(2) Does not exclude persons who have the disease of acquired immunodeficiency syndrome or any conditions arising from the etiologic agent for acquired immunodeficiency syndrome; 
</P>
<P>(3) For purposes of qualifying for low-income housing, does not include a person whose disability is based solely on any drug or alcohol dependence; and
</P>
<P>(4) Means “individual with handicaps”, as defined in § 8.3 of this title, for purposes of reasonable accommodation and program accessibility for persons with disabilities. 
</P>
<CITA TYPE="N">[61 FR 5665, Feb. 13, 1996, as amended at 63 FR 23853, Apr. 30, 1998; 65 FR 16715, Mar. 29, 2000; 77 FR 5674, Feb. 3, 2012; 88 FR 9655, Feb. 14, 2023]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:1.1.1.1.5.5" TYPE="SUBPART">
<HEAD>Subpart E—Restrictions on Assistance to Noncitizens</HEAD>

<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1436a and 3535(d).


</PSPACE></AUTH>

<DIV8 N="§ 5.500" NODE="24:1.1.1.1.5.5.19.1" TYPE="SECTION">
<HEAD>§ 5.500   Applicability.</HEAD>
<P>(a) <I>Covered programs/assistance.</I> This subpart E implements Section 214 of the Housing and Community Development Act of 1980, as amended (42 U.S.C. 1436a). Section 214 prohibits HUD from making financial assistance available to persons who are not in eligible status with respect to citizenship or noncitizen immigration status. This subpart E is applicable to financial assistance provided under: 
</P>
<P>(1) Section 235 of the National Housing Act (12 U.S.C. 1715z) (the Section 235 Program); 
</P>
<P>(2) Section 236 of the National Housing Act (12 U.S.C. 1715z-1) (tenants paying below market rent only) (the Section 236 Program); 
</P>
<P>(3) Section 101 of the Housing and Urban Development Act of 1965 (12 U.S.C. 1701s) (the Rent Supplement Program); and 
</P>
<P>(4) The United States Housing Act of 1937 (42 U.S. C. 1437 <I>et seq.</I>) which covers: 
</P>
<P>(i) HUD's Public Housing Programs; 
</P>
<P>(ii) The Section 8 Housing Assistance Programs; and 
</P>
<P>(iii) The Housing Development Grant Programs (with respect to low income units only). 
</P>
<P>(b) <I>Covered individuals and entities</I>—(1) <I>Covered individuals/persons and families.</I> The provisions of this subpart E apply to both applicants for assistance and persons already receiving assistance covered under this subpart E. 
</P>
<P>(2) <I>Covered entities.</I> The provisions of this subpart E apply to Public Housing Agencies (PHAs), project (or housing) owners, and mortgagees under the Section 235 Program. The term “responsible entity” is used in this subpart E to refer collectively to these entities, and is further defined in § 5.504. 


</P>
</DIV8>


<DIV8 N="§ 5.502" NODE="24:1.1.1.1.5.5.19.2" TYPE="SECTION">
<HEAD>§ 5.502   Requirements concerning documents.</HEAD>
<P>For any notice or document (decision, declaration, consent form, etc.) that this subpart E requires the responsible entity to provide to an individual, or requires the responsible entity to obtain the signature of an individual, the responsible entity, where feasible, must arrange for the notice or document to be provided to the individual in a language that is understood by the individual if the individual is not proficient in English. (See 24 CFR 8.6 of HUD's regulations for requirements concerning communications with persons with disabilities.) 


</P>
</DIV8>


<DIV8 N="§ 5.504" NODE="24:1.1.1.1.5.5.19.3" TYPE="SECTION">
<HEAD>§ 5.504   Definitions.</HEAD>
<P>(a) The definitions <I>1937 Act, HUD, Public Housing Agency (PHA),</I> and <I>Section 8</I> are defined in subpart A of this part. 
</P>
<P>(b) As used in this subpart E: 
</P>
<P><I>Child</I> means a member of the family other than the family head or spouse who is under 18 years of age. 
</P>
<P><I>Citizen</I> means a citizen or national of the United States. 
</P>
<P><I>Evidence of citizenship or eligible status</I> means the documents which must be submitted to evidence citizenship or eligible immigration status. (See § 5.508(b).) 
</P>
<P><I>Family</I> has the same meaning as provided in the program regulations of the relevant Section 214 covered program. 
</P>
<P><I>Head of household</I> means the adult member of the family who is the head of the household for purposes of determining income eligibility and rent. 
</P>
<P><I>Housing covered programs</I> means the following programs administered by the Assistant Secretary for Housing: 
</P>
<P>(1) Section 235 of the National Housing Act (12 U.S.C. 1715z) (the Section 235 Program); 
</P>
<P>(2) Section 236 of the National Housing Act (12 U.S.C. 1715z-1) (tenants paying below market rent only) (the Section 236 Program); and 
</P>
<P>(3) Section 101 of the Housing and Urban Development Act of 1965 (12 U.S.C. 1701s) (the Rent Supplement Program). 
</P>
<P><I>INS</I> means the U.S. Immigration and Naturalization Service. 
</P>
<P><I>Mixed family</I> means a family whose members include those with citizenship or eligible immigration status, and those without citizenship or eligible immigration status. 
</P>
<P><I>National</I> means a person who owes permanent allegiance to the United States, for example, as a result of birth in a United States territory or possession. 
</P>
<P><I>Noncitizen</I> means a person who is neither a citizen nor national of the United States. 
</P>
<P><I>Project owner</I> means the person or entity that owns the housing project containing the assisted dwelling unit. 
</P>
<P><I>Public Housing covered programs</I> means the public housing programs administered by the Assistant Secretary for Public and Indian Housing under title I of the 1937 Act. This definition does not encompass HUD's Indian Housing programs administered under title II of the 1937 Act. Further, this term does not include those programs providing assistance under section 8 of the 1937 Act. (See definition of “Section 8 Covered Programs” in this section.) 

 
</P>
<P><I>Responsible entity</I> means the person or entity responsible for administering the restrictions on providing assistance to noncitizens with ineligible immigrations status. The entity responsible for administering the restrictions on providing assistance to noncitizens with ineligible immigration status under the various covered programs is as follows:
</P>
<P>(1) For the Section 235 Program, the mortgagee.
</P>
<P>(2) For Public Housing, the Section 8 tenant-based assistance, the Section 8 project-based voucher, and the Section 8 Moderate Rehabilitation programs, the PHA administering the program under an ACC with HUD.
</P>
<P>(3) For all other Section 8 programs, the Section 236 Program, and the Rent Supplement Program, the owner.


</P>
<P><I>Section 8 covered programs</I> means all HUD programs which assist housing under Section 8 of the 1937 Act, including Section 8-assisted housing for which loans are made under section 202 of the Housing Act of 1959. 
</P>
<P><I>Section 214</I> means section 214 of the Housing and Community Development Act of 1980, as amended (42 U.S.C. 1436a). 
</P>
<P><I>Section 214 covered programs</I> is the collective term for the HUD programs to which the restrictions imposed by Section 214 apply. These programs are set forth in § 5.500. 
</P>
<P><I>Tenant</I> means an individual or a family renting or occupying an assisted dwelling unit. For purposes of this subpart E, the term tenant will also be used to include a homebuyer, where appropriate. 
</P>
<CITA TYPE="N">[61 FR 5202, Feb. 9, 1996, as amended at 89 FR 38289, May 7, 2024; 90 FR 56687, Dec. 8, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 5.506" NODE="24:1.1.1.1.5.5.19.4" TYPE="SECTION">
<HEAD>§ 5.506   General provisions.</HEAD>
<P>(a) <I>Restrictions on assistance.</I> Financial assistance under a Section 214 covered program is restricted to: 
</P>
<P>(1) <I>Citizens;</I> or 
</P>
<P>(2) <I>Noncitizens</I> who have eligible immigration status under one of the categories set forth in Section 214 (see 42 U.S.C. 1436a(a)). 
</P>
<P>(b) <I>Family eligibility for assistance.</I> (1) A family shall not be eligible for assistance unless every member of the family residing in the unit is determined to have eligible status, as described in paragraph (a) of this section, or unless the family meets the conditions set forth in paragraph (b)(2) of this section. 
</P>
<P>(2) Despite the ineligibility of one or more family members, a mixed family may be eligible for one of the three types of assistance provided in §§ 5.516 and 5.518. A family without any eligible members and receiving assistance on June 19, 1995 may be eligible for temporary deferral of termination of assistance as provided in §§ 5.516 and 5.518. 
</P>
<P>(c) <I>Preferences.</I> Citizens of the Republic of Marshall Islands, the Federated States of Micronesia, and the Republic of Palau who are eligible for assistance under paragraph (a)(2) of this section are entitled to receive local preferences for housing assistance, except that, within Guam, such citizens who have such local preference will not be entitled to housing assistance in preference to any United States citizen or national resident therein who is otherwise eligible for such assistance.
</P>
<CITA TYPE="N">[61 FR 5202, Feb. 9, 1996, as amended at 67 FR 65273, Oct. 23, 2002]


</CITA>
</DIV8>


<DIV8 N="§ 5.508" NODE="24:1.1.1.1.5.5.19.5" TYPE="SECTION">
<HEAD>§ 5.508   Submission of evidence of citizenship or eligible immigration status.</HEAD>
<P>(a) <I>General.</I> Eligibility for assistance or continued assistance under a Section 214 covered program is contingent upon a family's submission to the responsible entity of the documents described in paragraph (b) of this section for each family member. If one or more family members do not have citizenship or eligible immigration status, the family members may exercise the election not to contend to have eligible immigration status as provided in paragraph (e) of this section, and the provisions of §§ 5.516 and 5.518 shall apply. 
</P>
<P>(b) <I>Evidence of citizenship or eligible immigration status.</I> Each family member, regardless of age, must submit the following evidence to the responsible entity. 
</P>
<P>(1) For U.S. citizens or U.S. nationals, the evidence consists of a signed declaration of U.S. citizenship or U.S. nationality. The responsible entity may request verification of the declaration by requiring presentation of a United States passport or other appropriate documentation, as specified in HUD guidance.
</P>
<P>(2) For noncitizens who are 62 years of age or older or who will be 62 years of age or older and receiving assistance under a Section 214 covered program on September 30, 1996 or applying for assistance on or after that date, the evidence consists of:
</P>
<P>(i) A signed declaration of eligible immigration status; and
</P>
<P>(ii) Proof of age document.
</P>
<P>(3) For all other noncitizens, the evidence consists of: 
</P>
<P>(i) A signed declaration of eligible immigration status; 
</P>
<P>(ii) One of the INS documents referred to in § 5.510; and 
</P>
<P>(iii) A signed verification consent form. 
</P>
<P>(c) <I>Declaration.</I> (1) For each family member who contends that he or she is a U.S. citizen or a noncitizen with eligible immigration status, the family must submit to the responsible entity a written declaration, signed under penalty of perjury, by which the family member declares whether he or she is a U.S. citizen or a noncitizen with eligible immigration status. 
</P>
<P>(i) For each adult, the declaration must be signed by the adult. 
</P>
<P>(ii) For each child, the declaration must be signed by an adult residing in the assisted dwelling unit who is responsible for the child. 
</P>
<P>(2) <I>For Housing covered programs:</I> The written declaration may be incorporated as part of the application for housing assistance or may constitute a separate document. 
</P>
<P>(d) <I>Verification consent form</I>—(1) <I>Who signs.</I> Each noncitizen who declares eligible immigration status (except certain noncitizens who are 62 years of age or older as described in paragraph (b)(2) of this section) must sign a verification consent form as follows. 
</P>
<P>(i) For each adult, the form must be signed by the adult. 
</P>
<P>(ii) For each child, the form must be signed by an adult residing in the assisted dwelling unit who is responsible for the child. 
</P>
<P>(2) <I>Notice of release of evidence by responsible entity.</I> The verification consent form shall provide that evidence of eligible immigration status may be released by the responsible entity without responsibility for the further use or transmission of the evidence by the entity receiving it, to: 
</P>
<P>(i) HUD, as required by HUD; and 
</P>
<P>(ii) The INS for purposes of verification of the immigration status of the individual. 
</P>
<P>(3) <I>Notice of release of evidence by HUD.</I> The verification consent form also shall notify the individual of the possible release of evidence of eligible immigration status by HUD. Evidence of eligible immigration status shall only be released to the INS for purposes of establishing eligibility for financial assistance and not for any other purpose. HUD is not responsible for the further use or transmission of the evidence or other information by the INS. 
</P>
<P>(e) <I>Individuals who do not contend that they have eligible status.</I> If one or more members of a family elect not to contend that they have eligible immigration status, and other members of the family establish their citizenship or eligible immigration status, the family may be eligible for assistance under §§ 5.516 and 5.518, or § 5.520, despite the fact that no declaration or documentation of eligible status is submitted for one or more members of the family. The family, however, must identify in writing to the responsible entity, the family member (or members) who will elect not to contend that he or she has eligible immigration status. 
</P>
<P>(f) <I>Notification of requirements of Section 214</I>—(1) <I>When notice is to be issued.</I> Notification of the requirement to submit evidence of citizenship or eligible immigration status, as required by this section, or to elect not to contend that one has eligible status as provided by paragraph (e) of this section, shall be given by the responsible entity as follows: 
</P>
<P>(i) <I>Applicant's notice.</I> The notification described in paragraph (f)(1) of this section shall be given to each applicant at the time of application for assistance. Applicants whose applications are pending on June 19, 1995, shall be notified of the requirement to submit evidence of eligible status as soon as possible after June 19, 1995. 
</P>
<P>(ii) <I>Notice to tenants.</I> The notification described in paragraph (f)(1) of this section shall be given to each tenant at the time of, and together with, the responsible entity's notice of regular reexamination of income, but not later than one year following June 19, 1995. 
</P>
<P>(iii) <I>Timing of mortgagor's notice.</I> A mortgagor receiving Section 235 assistance must be provided the notification described in paragraph (f)(1) of this section and any additional requirements imposed under the Section 235 Program. 
</P>
<P>(2) <I>Form and content of notice.</I> The notice shall: 
</P>
<P>(i) State that financial assistance is contingent upon the submission and verification, as appropriate, of evidence of citizenship or eligible immigration status as required by paragraph (a) of this section; 
</P>
<P>(ii) Describe the type of evidence that must be submitted, and state the time period in which that evidence must be submitted (see paragraph (g) of this section concerning when evidence must be submitted); and 
</P>
<P>(iii) State that assistance will be prorated, denied or terminated, as appropriate, upon a final determination of ineligibility after all appeals have been exhausted (see § 5.514 concerning INS appeal, and informal hearing process) or, if appeals are not pursued, at a time to be specified in accordance with HUD requirements. Tenants also shall be informed of how to obtain assistance under the preservation of families provisions of §§ 5.516 and 5.518.
</P>
<P>(g) <I>When evidence of eligible status is required to be submitted.</I> The responsible entity shall require evidence of eligible status to be submitted at the times specified in paragraph (g) of this section, subject to any extension granted in accordance with paragraph (h) of this section. 
</P>
<P>(1) <I>Applicants.</I> For applicants, responsible entities must ensure that evidence of eligible status is submitted not later than the date the responsible entity anticipates or has knowledge that verification of other aspects of eligibility for assistance will occur (see § 5.512(a)). 
</P>
<P>(2) <I>Tenants.</I> For tenants, evidence of eligible status is required to be submitted as follows: 
</P>
<P>(i) For financial assistance under a Section 214 covered program, with the exception of Section 235 assistance payments, the required evidence shall be submitted at the first regular reexamination after June 19, 1995, in accordance with program requirements. 
</P>
<P>(ii) For financial assistance in the form of Section 235 assistance payments, the mortgagor shall submit the required evidence in accordance with requirements imposed under the Section 235 Program. 
</P>
<P>(3) <I>New occupants of assisted units.</I> For any new occupant of an assisted unit (e.g., a new family member comes to reside in the assisted unit), the required evidence shall be submitted at the first interim or regular reexamination following the person's occupancy. 
</P>
<P>(4) <I>Changing participation in a HUD program.</I> Whenever a family applies for admission to a Section 214 covered program, evidence of eligible status is required to be submitted in accordance with the requirements of this subpart unless the family already has submitted the evidence to the responsible entity for a Section 214 covered program. 
</P>
<P>(5) <I>One-time evidence requirement for continuous occupancy.</I> For each family member, the family is required to submit evidence of eligible status only one time during continuously assisted occupancy under any Section 214 covered program. 
</P>
<P>(h) <I>Extensions of time to submit evidence of eligible status</I>—(1) <I>When extension must be granted.</I> The responsible entity shall extend the time, provided in paragraph (g) of this section, to submit evidence of eligible immigration status if the family member: 
</P>
<P>(i) Submits the declaration required under § 5.508(a) certifying that any person for whom required evidence has not been submitted is a noncitizen with eligible immigration status; and 
</P>
<P>(ii) Certifies that the evidence needed to support a claim of eligible immigration status is temporarily unavailable, additional time is needed to obtain and submit the evidence, and prompt and diligent efforts will be undertaken to obtain the evidence. 
</P>
<P>(2) <I>Thirty-day extension period.</I> Any extension of time, if granted, shall not exceed thirty (30) days. The additional time provided should be sufficient to allow the individual the time to obtain the evidence needed. The responsible entity's determination of the length of the extension needed shall be based on the circumstances of the individual case.
</P>
<P>(3) <I>Grant or denial of extension to be in writing.</I> The responsible entity's decision to grant or deny an extension as provided in paragraph (h)(1) of this section shall be issued to the family by written notice. If the extension is granted, the notice shall specify the extension period granted (which shall not exceed thirty (30) days). If the extension is denied, the notice shall explain the reasons for denial of the extension.
</P>
<P>(i) <I>Failure to submit evidence or to establish eligible status.</I> If the family fails to submit required evidence of eligible immigration status within the time period specified in the notice, or any extension granted in accordance with paragraph (h) of this section, or if the evidence is timely submitted but fails to establish eligible immigration status, the responsible entity shall proceed to deny, prorate or terminate assistance, or provide continued assistance or temporary deferral of termination of assistance, as appropriate, in accordance with the provisions of §§ 5.514, 5.516, and 5.518.
</P>
<P>(ii) [Reserved] 
</P>
<CITA TYPE="N">[61 FR 13616, Mar. 27, 1996, as amended at 61 FR 60538, Nov. 29, 1996; 64 FR 25731, May 12, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 5.510" NODE="24:1.1.1.1.5.5.19.6" TYPE="SECTION">
<HEAD>§ 5.510   Documents of eligible immigration status.</HEAD>
<P>(a) <I>General.</I> A responsible entity shall request and review original documents of eligible immigration status. The responsible entity shall retain photocopies of the documents for its own records and return the original documents to the family. 
</P>
<P>(b) <I>Acceptable evidence of eligible immigration status.</I> Acceptable evidence of eligible immigration status shall be the original of a document designated by INS as acceptable evidence of immigration status in one of the six categories mentioned in § 5.506(a) for the specific immigration status claimed by the individual.
</P>
<CITA TYPE="N">[61 FR 13616, Mar. 27, 1996, as amended at 61 FR 60539, Nov. 29, 1996; 64 FR 25731, May 12, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 5.512" NODE="24:1.1.1.1.5.5.19.7" TYPE="SECTION">
<HEAD>§ 5.512   Verification of eligible immigration status.</HEAD>
<P>(a) <I>General.</I> Except as described in paragraph (b) of this section and § 5.514, no individual or family applying for assistance may receive such assistance prior to the verification of the eligibility of at least the individual or one family member. Verification of eligibility consistent with § 5.514 occurs when the individual or family members have submitted documentation to the responsible entity in accordance with § 5.508.
</P>
<P>(b) <I>PHA election to provide assistance before verification.</I> A PHA that is a responsible entity under this subpart may elect to provide assistance to a family before the verification of the eligibility of the individual or one family member.
</P>
<P>(c) <I>Primary verification</I>—(1) <I>Automated verification system.</I> Primary verification of the immigration status of the person is conducted by the responsible entity through the INS automated system (INS Systematic Alien Verification for Entitlements (SAVE)). The INS SAVE system provides access to names, file numbers and admission numbers of noncitizens. 
</P>
<P>(2) <I>Failure of primary verification to confirm eligible immigration status.</I> If the INS SAVE system does not verify eligible immigration status, secondary verification must be performed. 
</P>
<P>(d) <I>Secondary verification</I>—(1) <I>Manual search of INS records.</I> Secondary verification is a manual search by the INS of its records to determine an individual's immigration status. The responsible entity must request secondary verification, within 10 days of receiving the results of the primary verification, if the primary verification system does not confirm eligible immigration status, or if the primary verification system verifies immigration status that is ineligible for assistance under a Section 214 covered program. 
</P>
<P>(2) <I>Secondary verification initiated by responsible entity.</I> Secondary verification is initiated by the responsible entity forwarding photocopies of the original INS documents required for the immigration status declared (front and back), attached to the INS document verification request form G-845S (Document Verification Request), or such other form specified by the INS to a designated INS office for review. (Form G-845S is available from the local INS Office.) 
</P>
<P>(3) <I>Failure of secondary verification to confirm eligible immigration status.</I> If the secondary verification does not confirm eligible immigration status, the responsible entity shall issue to the family the notice described in § 5.514(d), which includes notification of the right to appeal to the INS of the INS finding on immigration status (see § 5.514(d)(4)). 
</P>
<P>(e) <I>Exemption from liability for INS verification.</I> The responsible entity shall not be liable for any action, delay, or failure of the INS in conducting the automated or manual verification. 
</P>
<CITA TYPE="N">[61 FR 13616, Mar. 27, 1996, as amended at 61 FR 60539, Nov. 29, 1996; 64 FR 25731, May 12, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 5.514" NODE="24:1.1.1.1.5.5.19.8" TYPE="SECTION">
<HEAD>§ 5.514   Delay, denial, reduction or termination of assistance.</HEAD>
<P>(a) <I>General.</I> Assistance to a family may not be delayed, denied, reduced or terminated because of the immigration status of a family member except as provided in this section. 
</P>
<P>(b) <I>Restrictions on delay, denial, reduction or termination of assistance</I>—(1) <I>Restrictions on reduction, denial or termination of assistance for applicants and tenants.</I> Assistance to an applicant or tenant shall not be delayed, denied, reduced, or terminated, on the basis of ineligible immigration status of a family member if:
</P>
<P>(i) The primary and secondary verification of any immigration documents that were timely submitted has not been completed;
</P>
<P>(ii) The family member for whom required evidence has not been submitted has moved from the assisted dwelling unit;
</P>
<P>(iii) The family member who is determined not to be in an eligible immigration status following INS verification has moved from the assisted dwelling unit;
</P>
<P>(iv) The INS appeals process under § 5.514(e) has not been concluded;
</P>
<P>(v) Assistance is prorated in accordance with § 5.520; or
</P>
<P>(vi) Assistance for a mixed family is continued in accordance with §§ 5.516 and 5.518; or
</P>
<P>(vii) Deferral of termination of assistance is granted in accordance with §§ 5.516 and 5.518.
</P>
<P>(2) <I>Restrictions on delay, denial, reduction or termination of assistance pending fair hearing for tenants.</I> In addition to the factors listed in paragraph (b)(1) of this section, assistance to a tenant cannot be delayed, denied, reduced or terminated until the completion of the informal hearing described in paragraph (f) of this section.
</P>
<P>(c) <I>Events causing denial or termination of assistance</I>—(1) <I>General.</I> Assistance to an applicant shall be denied, and a tenant's assistance shall be terminated, in accordance with the procedures of this section, upon the occurrence of any of the following events:
</P>
<P>(i) Evidence of citizenship (i.e., the declaration) and eligible immigration status is not submitted by the date specified in § 5.508(g) or by the expiration of any extension granted in accordance with § 5.508(h);
</P>
<P>(ii) Evidence of citizenship and eligible immigration status is timely submitted, but INS primary and secondary verification does not verify eligible immigration status of a family member; and
</P>
<P>(A) The family does not pursue INS appeal or informal hearing rights as provided in this section; or
</P>
<P>(B) INS appeal and informal hearing rights are pursued, but the final appeal or hearing decisions are decided against the family member; or
</P>
<P>(iii) The responsible entity determines that a family member has knowingly permitted another individual who is not eligible for assistance to reside (on a permanent basis) in the public or assisted housing unit of the family member. Such termination shall be for a period of not less than 24 months. This provision does not apply to a family if the ineligibility of the ineligible individual was considered in calculating any proration of assistance provided for the family.
</P>
<P>(2) <I>Termination of assisted occupancy.</I> For termination of assisted occupancy, see paragraph (i) of this section. 
</P>
<P>(d) <I>Notice of denial or termination of assistance.</I> The notice of denial or termination of assistance shall advise the family: 
</P>
<P>(1) That financial assistance will be denied or terminated, and provide a brief explanation of the reasons for the proposed denial or termination of assistance; 
</P>
<P>(2) That the family may be eligible for proration of assistance as provided under § 5.520; 
</P>
<P>(3) In the case of a tenant, the criteria and procedures for obtaining relief under the provisions for preservation of families in §§ 5.514 and 5.518; 
</P>
<P>(4) That the family has a right to request an appeal to the INS of the results of secondary verification of immigration status and to submit additional documentation or a written explanation in support of the appeal in accordance with the procedures of paragraph (e) of this section; 
</P>
<P>(5) That the family has a right to request an informal hearing with the responsible entity either upon completion of the INS appeal or in lieu of the INS appeal as provided in paragraph (f) of this section; 
</P>
<P>(6) For applicants, the notice shall advise that assistance may not be delayed until the conclusion of the INS appeal process, but assistance may be delayed during the pendency of the informal hearing process. 
</P>
<P>(e) <I>Appeal to the INS</I>—(1) <I>Submission of request for appeal.</I> Upon receipt of notification by the responsible entity that INS secondary verification failed to confirm eligible immigration status, the responsible entity shall notify the family of the results of the INS verification, and the family shall have 30 days from the date of the responsible entity's notification, to request an appeal of the INS results. The request for appeal shall be made by the family communicating that request in writing directly to the INS. The family must provide the responsible entity with a copy of the written request for appeal and proof of mailing.
</P>
<P>(2) <I>Documentation to be submitted as part of appeal to INS.</I> The family shall forward to the designated INS office any additional documentation or written explanation in support of the appeal. This material must include a copy of the INS document verification request form G-845S (used to process the secondary verification request) or such other form specified by the INS, and a cover letter indicating that the family is requesting an appeal of the INS immigration status verification results. 
</P>
<P>(3) <I>Decision by INS</I>—(i) <I>When decision will be issued.</I> The INS will issue to the family, with a copy to the responsible entity, a decision within 30 days of its receipt of documentation concerning the family's appeal of the verification of immigration status. If, for any reason, the INS is unable to issue a decision within the 30 day time period, the INS will inform the family and responsible entity of the reasons for the delay. 
</P>
<P>(ii) <I>Notification of INS decision and of informal hearing procedures.</I> When the responsible entity receives a copy of the INS decision, the responsible entity shall notify the family of its right to request an informal hearing on the responsible entity's ineligibility determination in accordance with the procedures of paragraph (f) of this section. 
</P>
<P>(4) <I>No delay, denial, reduction, or termination of assistance until completion of INS appeal process; direct appeal to INS.</I> Pending the completion of the INS appeal under this section, assistance may not be delayed, denied, reduced or terminated on the basis of immigration status. 
</P>
<P>(f) <I>Informal hearing</I>—(1) <I>When request for hearing is to be made.</I> After notification of the INS decision on appeal, or in lieu of request of appeal to the INS, the family may request that the responsible entity provide a hearing. This request must be made either within 30 days of receipt of the notice described in paragraph (d) of this section, or within 30 days of receipt of the INS appeal decision issued in accordance with paragraph (e) of this section.
</P>
<P>(2) <I>Informal hearing procedures</I>—(i) <I>Tenants assisted under a Section 8 covered program:</I> For tenants assisted under a Section 8 covered program, the procedures for the hearing before the responsible entity are set forth in: 
</P>
<P>(A) <I>For Section 8 Moderate Rehabilitation assistance:</I> 24 CFR part 882; and 
</P>
<P>(B) <I>For Section 8 tenant-based assistance:</I> 24 CFR part 982. 

 
</P>
<P>(ii) <I>Tenants assisted under any other Section 8 covered program or a Public Housing covered program:</I> For tenants assisted under a Section 8 covered program not listed in paragraph (f)(3)(i) of this section or a Public Housing covered program, the procedures for the hearing before the responsible entity are set forth in 24 CFR part 966. 
</P>
<P>(iii) <I>Families under Housing covered programs and applicants for assistance under all covered programs.</I> For all families under Housing covered programs (applicants as well as tenants already receiving assistance) and for applicants for assistance under all covered programs, the procedures for the informal hearing before the responsible entity are as follows: 
</P>
<P>(A) <I>Hearing before an impartial individual.</I> The family shall be provided a hearing before any person(s) designated by the responsible entity (including an officer or employee of the responsible entity), other than a person who made or approved the decision under review, and other than a person who is a subordinate of the person who made or approved the decision; 
</P>
<P>(B) <I>Examination of evidence.</I> The family shall be provided the opportunity to examine and copy at the individual's expense, at a reasonable time in advance of the hearing, any documents in the possession of the responsible entity pertaining to the family's eligibility status, or in the possession of the INS (as permitted by INS requirements), including any records and regulations that may be relevant to the hearing; 
</P>
<P>(C) <I>Presentation of evidence and arguments in support of eligible status.</I> The family shall be provided the opportunity to present evidence and arguments in support of eligible status. Evidence may be considered without regard to admissibility under the rules of evidence applicable to judicial proceedings; 
</P>
<P>(D) <I>Controverting evidence of the responsible entity.</I> The family shall be provided the opportunity to controvert evidence relied upon by the responsible entity and to confront and cross-examine all witnesses on whose testimony or information the responsible entity relies; 
</P>
<P>(E) <I>Representation.</I> The family shall be entitled to be represented by an attorney, or other designee, at the family's expense, and to have such person make statements on the family's behalf; 
</P>
<P>(F) <I>Interpretive services.</I> The family shall be entitled to arrange for an interpreter to attend the hearing, at the expense of the family, or responsible entity, as may be agreed upon by the two parties to the proceeding; and 
</P>
<P>(G) <I>Hearing to be recorded.</I> The family shall be entitled to have the hearing recorded by audiotape (a transcript of the hearing may, but is not required to, be provided by the responsible entity). 
</P>
<P>(3) <I>Hearing decision.</I> The responsible entity shall provide the family with a written final decision, based solely on the facts presented at the hearing, within 14 days of the date of the informal hearing. The decision shall state the basis for the decision. 
</P>
<P>(g) <I>Judicial relief.</I> A decision against a family member, issued in accordance with paragraphs (e) or (f) of this section, does not preclude the family from exercising the right, that may otherwise be available, to seek redress directly through judicial procedures. 
</P>
<P>(h) <I>Retention of documents.</I> The responsible entity shall retain for a minimum of 5 years the following documents that may have been submitted to the responsible entity by the family, or provided to the responsible entity as part of the INS appeal or the informal hearing process: 
</P>
<P>(1) The application for financial assistance; 
</P>
<P>(2) The form completed by the family for income reexamination; 
</P>
<P>(3) Photocopies of any original documents (front and back), including original INS documents; 
</P>
<P>(4) The signed verification consent form; 
</P>
<P>(5) The INS verification results; 
</P>
<P>(6) The request for an INS appeal; 
</P>
<P>(7) The final INS determination; 
</P>
<P>(8) The request for an informal hearing; and 
</P>
<P>(9) The final informal hearing decision. 
</P>
<P>(i) <I>Termination of assisted occupancy.</I> (1) Under Housing covered programs, and in the Section 8 covered programs other than the Section 8 Rental Voucher, and Moderate Rehabilitation programs, assisted occupancy is terminated by: 
</P>
<P>(i) If permitted under the lease, the responsible entity notifying the tenant that because of the termination of assisted occupancy the tenant is required to pay the HUD-approved market rent for the dwelling unit. 
</P>
<P>(ii) The responsible entity and tenant entering into a new lease without financial assistance. 
</P>
<P>(iii) The responsible entity evicting the tenant. While the tenant continues in occupancy of the unit, the responsible entity may continue to receive assistance payments if action to terminate the tenancy under an assisted lease is promptly initiated and diligently pursued, in accordance with the terms of the lease, and if eviction of the tenant is undertaken by judicial action pursuant to State and local law. Action by the responsible entity to terminate the tenancy and to evict the tenant must be in accordance with applicable HUD regulations and other HUD requirements. For any jurisdiction, HUD may prescribe a maximum period during which assistance payments may be continued during eviction proceedings and may prescribe other standards of reasonable diligence for the prosecution of eviction proceedings. 
</P>
<P>(2) In the Section 8 Rental Voucher, and Moderate Rehabilitation programs, assisted occupancy is terminated by terminating assistance payments. (See provisions of this section concerning termination of assistance.) The PHA shall not make any additional assistance payments to the owner after the required procedures specified in this section have been completed. In addition, the PHA shall not approve a lease, enter into an assistance contract, or process a portability move for the family after those procedures have been completed. 
</P>
<CITA TYPE="N">[61 FR 13616, Mar. 27, 1996, as amended at 61 FR 60539, Nov. 29, 1996; 64 FR 25731, May 12, 1999; 89 FR 38290, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 5.516" NODE="24:1.1.1.1.5.5.19.9" TYPE="SECTION">
<HEAD>§ 5.516   Availability of preservation assistance to mixed families and other families.</HEAD>
<P>(a) <I>Assistance available for tenant mixed families</I>—(1) <I>General.</I> Preservation assistance is available to tenant mixed families, following completion of the appeals and informal hearing procedures provided in § 5.514. There are three types of preservation assistance: 
</P>
<P>(i) Continued assistance (see paragraph (a) of § 5.518); 
</P>
<P>(ii) Temporary deferral of termination of assistance (see paragraph (b) of § 5.518); or 
</P>
<P>(iii) Prorated assistance (see § 5.520, a mixed family must be provided prorated assistance if the family so requests). 
</P>
<P>(2) <I>Availability of assistance</I>—(i) <I>For Housing covered programs:</I> One of the three types of assistance described is available to tenant mixed families assisted under a National Housing Act or 1965 HUD Act covered program, depending upon the family's eligibility for such assistance. Continued assistance must be provided to a mixed family that meets the conditions for eligibility for continued assistance. 
</P>
<P>(ii) <I>For Section 8 or Public Housing covered programs.</I> One of the three types of assistance described may be available to tenant mixed families assisted under a Section 8 or Public Housing covered program. 
</P>
<P>(b) <I>Assistance available for applicant mixed families.</I> Prorated assistance is also available for mixed families applying for assistance as provided in § 5.520. 
</P>
<P>(c) <I>Assistance available to other families in occupancy.</I> Temporary deferral of termination of assistance may be available to families receiving assistance under a Section 214 covered program on June 19, 1995, and who have no members with eligible immigration status, as set forth in paragraphs (c)(1) and (2) of this section.
</P>
<P>(1) <I>For Housing covered programs:</I> Temporary deferral of termination of assistance is available to families assisted under a Housing covered program. 
</P>
<P>(2) <I>For Section 8 or Public Housing covered programs:</I> The responsible entity may make temporary deferral of termination of assistance to families assisted under a Section 8 or Public Housing covered program. 
</P>
<P>(d) <I>Section 8 covered programs: Discretion afforded to provide certain family preservation assistance</I>—(1) <I>Project owners.</I> With respect to assistance under a Section 8 Act covered program administered by a project owner, HUD has the discretion to determine under what circumstances families are to be provided one of the two statutory forms of assistance for preservation of the family (continued assistance or temporary deferral of assistance). HUD is exercising its discretion by specifying the standards in this section under which a project owner must provide one of these two types of assistance to a family. However, project owners and PHAs must offer prorated assistance to eligible mixed families. 
</P>
<P>(2) <I>PHAs.</I> The PHA, rather than HUD, has the discretion to determine the circumstances under which a family will be offered one of the two statutory forms of assistance (continued assistance or temporary deferral of termination of assistance). The PHA must establish its own policy and criteria to follow in making its decision. In establishing the criteria for granting continued assistance or temporary deferral of termination of assistance, the PHA must incorporate the statutory criteria, which are set forth in paragraphs (a) and (b) of § 5.518. However, the PHA must offer prorated assistance to eligible families. 
</P>
<CITA TYPE="N">[61 FR 13616, Mar. 27, 1996, as amended at 61 FR 60539, Nov. 29, 1996; 64 FR 25732, May 12, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 5.518" NODE="24:1.1.1.1.5.5.19.10" TYPE="SECTION">
<HEAD>§ 5.518   Types of preservation assistance available to mixed families and other families.</HEAD>
<P>(a) <I>Continued assistance</I>—(1) <I>General.</I> A mixed family may receive continued housing assistance if all of the following conditions are met (a mixed family assisted under a Housing covered program must be provided continued assistance if the family meets the following conditions):
</P>
<P>(i) The family was receiving assistance under a Section 214 covered program on June 19, 1995;
</P>
<P>(ii) The family's head of household or spouse has eligible immigration status as described in § 5.506; and
</P>
<P>(iii) The family does not include any person (who does not have eligible immigration status) other than the head of household, any spouse of the head of household, any parents of the head of household, any parents of the spouse, or any children of the head of household or spouse.
</P>
<P>(2) <I>Proration of continued assistance.</I> A family entitled to continued assistance before November 29, 1996 is entitled to continued assistance as described in paragraph (a) of this section. A family entitled to continued assistance after November 29, 1996 shall receive prorated assistance as described in § 5.520.
</P>
<P>(b) <I>Temporary deferral of termination of assistance</I>—(1) <I>Eligibility for this type of assistance.</I> If a mixed family qualifies for prorated assistance (and does not qualify for continued assistance), but decides not to accept prorated assistance, or if a family has no members with eligible immigration status, the family may be eligible for temporary deferral of termination of assistance if necessary to permit the family additional time for the orderly transition of those family members with ineligible status, and any other family members involved, to other affordable housing. Other affordable housing is used in the context of transition of an ineligible family from a rent level that reflects HUD assistance to a rent level that is unassisted; the term refers to housing that is not substandard, that is of appropriate size for the family and that can be rented for an amount not exceeding the amount that the family pays for rent, including utilities, plus 25 percent. 
</P>
<P>(2) <I>Housing covered programs: Conditions for granting temporary deferral of termination of assistance.</I> The responsible entity shall grant a temporary deferral of termination of assistance to a mixed family if the family is assisted under a Housing covered program and one of the following conditions is met: 
</P>
<P>(i) The family demonstrates that reasonable efforts to find other affordable housing of appropriate size have been unsuccessful (for purposes of this section, reasonable efforts include seeking information from, and pursuing leads obtained from the State housing agency, the city government, local newspapers, rental agencies and the owner); 
</P>
<P>(ii) The vacancy rate for affordable housing of appropriate size is below five percent in the housing market for the area in which the project is located; or 
</P>
<P>(iii) The consolidated plan, as described in 24 CFR part 91 and if applicable to the covered program, indicates that the local jurisdiction's housing market lacks sufficient affordable housing opportunities for households having a size and income similar to the family seeking the deferral. 
</P>
<P>(3) <I>Time limit on deferral period.</I> If temporary deferral of termination of assistance is granted, the deferral period shall be for an initial period not to exceed six months. The initial period may be renewed for additional periods of six months, but the aggregate deferral period for deferrals provided after November 29, 1996 shall not exceed a period of eighteen months. The aggregate deferral period for deferrals granted prior to November 29, 1996 shall not exceed 3 years. These time periods do not apply to a family which includes a refugee under section 207 of the Immigration and Nationality Act or an individual seeking asylum under section 208 of that Act.
</P>
<P>(4) <I>Notification requirements for beginning of each deferral period.</I> At the beginning of each deferral period, the responsible entity must inform the family of its ineligibility for financial assistance and offer the family information concerning, and referrals to assist in finding, other affordable housing. 
</P>
<P>(5) <I>Determination of availability of affordable housing at end of each deferral period.</I> (i) Before the end of each deferral period, the responsible entity must satisfy the applicable requirements of either paragraph (b)(5)(i)(A) or (B) of this section. Specifically, the responsible entity must:
</P>
<P>(A) <I>For Housing covered programs:</I> Make a determination that one of the two conditions specified in paragraph (b)(2) of this section continues to be met (note: affordable housing will be determined to be available if the vacancy rate is five percent or greater), the owner's knowledge and the tenant's evidence indicate that other affordable housing is available; or
</P>
<P>(B) <I>For Section 8 or Public Housing covered programs:</I> Make a determination of the availability of affordable housing of appropriate size based on evidence of conditions which when taken together will demonstrate an inadequate supply of affordable housing for the area in which the project is located, the consolidated plan (if applicable, as described in 24 CFR part 91), the responsible entity's own knowledge of the availability of affordable housing, and on evidence of the tenant family's efforts to locate such housing.
</P>
<P>(ii) The responsible entity must also:
</P>
<P>(A) Notify the tenant family in writing, at least 60 days in advance of the expiration of the deferral period, that termination will be deferred again (provided that the granting of another deferral will not result in aggregate deferral periods that exceeds the maximum deferral period). This time period does not apply to a family which includes a refugee under section 207 of the Immigration and Nationality Act or an individual seeking asylum under section 208 of that Act, and a determination was made that other affordable housing is not available; <I>or</I>
</P>
<P>(B) Notify the tenant family in writing, at least 60 days in advance of the expiration of the deferral period, that termination of financial assistance will not be deferred because either granting another deferral will result in aggregate deferral periods that exceed the maximum deferral period (unless the family includes a refugee under section 207 of the Immigration and Nationality Act or an individual seeking asylum under section 208 of that Act), or a determination has been made that other affordable housing is available.
</P>
<P>(c) <I>Option to select proration of assistance at end of deferral period.</I> A family who is eligible for, and receives temporary deferral of termination of assistance, may request, and the responsible entity shall provide proration of assistance at the end of the deferral period if the family has made a good faith effort during the deferral period to locate other affordable housing. 
</P>
<P>(d) <I>Notification of decision on family preservation assistance.</I> A responsible entity shall notify the family of its decision concerning the family's qualification for family preservation assistance. If the family is ineligible for family preservation assistance, the notification shall state the reasons, which must be based on relevant factors. For tenant families, the notice also shall inform the family of any applicable appeal rights.
</P>
<CITA TYPE="N">[61 FR 13616, Mar. 27, 1996, as amended at 61 FR 60539, Nov. 29, 1996; 64 FR 25732, May 12, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 5.520" NODE="24:1.1.1.1.5.5.19.11" TYPE="SECTION">
<HEAD>§ 5.520   Proration of assistance.</HEAD>
<P>(a) <I>Applicability.</I> This section applies to a mixed family other than a family receiving continued assistance, or other than a family who is eligible for and requests and receives temporary deferral of termination of assistance. An eligible mixed family who requests prorated assistance must be provided prorated assistance. 
</P>
<P>(b) <I>Method of prorating assistance for Housing covered programs</I>—(1) <I>Proration under Rent Supplement Program.</I> If the household participates in the Rent Supplement Program, the rent supplement paid on the household's behalf shall be the rent supplement the household would otherwise be entitled to, multiplied by a fraction, the denominator of which is the number of people in the household and the numerator of which is the number of eligible persons in the household; 
</P>
<P>(2) <I>Proration under Section 235 Program.</I> If the household participates in the Section 235 Program, the interest reduction payments paid on the household's behalf shall be the payments the household would otherwise be entitled to, multiplied by a fraction the denominator of which is the number of people in the household and the numerator of which is the number of eligible persons in the household; 
</P>
<P>(3) <I>Proration under Section 236 Program without the benefit of additional assistance.</I> If the household participates in the Section 236 Program without the benefit of any additional assistance, the household's rent shall be increased above the rent the household would otherwise pay by an amount equal to the difference between the market rate rent for the unit and the rent the household would otherwise pay multiplied by a fraction the denominator of which is the number of people in the household and the numerator of which is the number of ineligible persons in the household; 
</P>
<P>(4) <I>Proration under Section 236 Program with the benefit of additional assistance.</I> If the household participates in the Section 236 Program with the benefit of additional assistance under the rent supplement, rental assistance payment or Section 8 programs, the household's rent shall be increased above the rent the household would otherwise pay by: 
</P>
<P>(i) An amount equal to the difference between the market rate rent for the unit and the basic rent for the unit multiplied by a fraction, the denominator of which is the number of people in the household, and the numerator of which is the number of ineligible persons in the household, plus; 
</P>
<P>(ii) An amount equal to the rent supplement, housing assistance payment or rental assistance payment the household would otherwise be entitled to multiplied by a fraction, the denominator of which is the number of people in the household and the numerator of which is the number of ineligible persons in the household. 
</P>
<P>(c) <I>Method of prorating assistance for Section 8 covered programs</I>—(1) <I>Section 8 assistance other than assistance provided for a tenancy under the Section 8 Housing Choice Voucher Program.</I> For Section 8 assistance other than assistance for a tenancy under the voucher program, the PHA must prorate the family's assistance as follows:
</P>
<P>(i) <I>Step 1.</I> Determine gross rent for the unit. (Gross rent is contract rent plus any allowance for tenant paid utilities). 
</P>
<P>(ii) <I>Step 2.</I> Determine total tenant payment in accordance with section 5.613(a). (Annual income includes income of all family members, including any family member who has not established eligible immigration status.)
</P>
<P>(iii) <I>Step 3.</I> Subtract amount determined in paragraph (c)(1)(ii), (Step 2), from amount determined in paragraph (c)(1)(i), (Step 1). 
</P>
<P>(iv) <I>Step 4.</I> Multiply the amount determined in paragraph (c)(1)(iii), (Step 3) by a fraction for which: 
</P>
<P>(A) The numerator is the number of family members who have established eligible immigration status; and 
</P>
<P>(B) The denominator is the total number of family members. 
</P>
<P>(v) <I>Prorated housing assistance.</I> The amount determined in paragraph (c)(1)(iv) (Step 4) is the prorated housing assistance payment for a mixed family. 
</P>
<P>(vi) <I>No effect on contract rent.</I> Proration of the housing assistance payment does not affect contract rent to the owner. The family must pay as rent the portion of contract rent not covered by the prorated housing assistance payment. 
</P>
<P>(2) <I>Assistance for a Section 8 voucher tenancy.</I> For a tenancy under the voucher program, the PHA must prorate the family's assistance as follows:
</P>
<P>(i) <I>Step 1.</I> Determine the amount of the pre-proration housing assistance payment. (Annual income includes income of all family members, including any family member who has not established eligible immigration status.)
</P>
<P>(ii) <I>Step 2.</I> Multiply the amount determined in paragraph (c)(2)(i) (Step 1) by a fraction for which: 
</P>
<P>(A) The numerator is the number of family members who have established eligible immigration status; and 
</P>
<P>(B) The denominator is the total number of family members. 
</P>
<P>(iii) <I>Prorated housing assistance.</I> The amount determined in paragraph (c)(2)(ii) (Step 2) is the prorated housing assistance payment for a mixed family. 
</P>
<P>(iv) <I>No effect on rent to owner.</I> Proration of the housing assistance payment does not affect rent to owner. The family must pay the portion of rent to owner not covered by the prorated housing assistance payment.
</P>
<P>(d) <I>Method of prorating assistance for Public Housing covered programs.</I> (1) The PHA must prorate the family's assistance;, except as provided in § 960.507 of this title, as follows:
</P>
<P>(i) <I>Step 1.</I> Determine the total tenant payment in accordance with section 5.628. (Annual income includes income of all family members, including any family member who has not established eligible immigration status.)
</P>
<P>(ii) <I>Step 2.</I> Subtract the total tenant payment from the PHA-established flat rent applicable to the unit. The result is the maximum subsidy for which the family could qualify if all members were eligible (“family maximum subsidy”).
</P>
<P>(iii) <I>Step 3.</I> Divide the family maximum subsidy by the number of persons in the family (all persons) to determine the maximum subsidy per each family member who has citizenship or eligible immigration status (“eligible family member”). The subsidy per eligible family member is the “member maximum subsidy.”
</P>
<P>(iv) <I>Step 4.</I> Multiply the member maximum subsidy by the number of family members who have citizenship or eligible immigration status (“eligible family members”).
</P>
<P>(2) The product of steps 1 through 4 of paragraphs (d)(1)(i) through (iv) of this section is the amount of subsidy for which the family is eligible (“eligible subsidy”). The family's rent is the PHA-established flat rent minus the amount of the eligible subsidy.
</P>
<P>(e) <I>Method of prorating assistance when the mixed family's total tenant payment (TTP) is greater than the public housing flat rent.</I> When the mixed family's TTP is greater than the flat rent, the PHA must use the TTP as the mixed family TTP. The PHA subtracts from the mixed family TTP any established utility allowance, and the sum becomes the mixed family rent.
</P>
<CITA TYPE="N">[61 FR 5202, Feb. 9, 1996, as amended at 63 FR 23853, Apr. 30, 1998; 64 FR 13056, Mar. 16, 1999; 81 FR 12370, Mar. 8, 2016; 88 FR 9655, Feb. 14, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 5.522" NODE="24:1.1.1.1.5.5.19.12" TYPE="SECTION">
<HEAD>§ 5.522   Prohibition of assistance to noncitizen students.</HEAD>
<P>(a) <I>General.</I> The provisions of §§ 5.516 and 5.518 permitting continued assistance or temporary deferral of termination of assistance for certain families do not apply to any person who is determined to be a noncitizen student as in paragraph (c)(2)(A) of Section 214 (42 U.S.C. 1436a(c)(2)(A)). The family of a noncitizen student may be eligible for prorated assistance, as provided in paragraph (b)(2) of this section. 
</P>
<P>(b) <I>Family of noncitizen students.</I> (1) The prohibition on providing assistance to a noncitizen student as described in paragraph (a) of this section extends to the noncitizen spouse of the noncitizen student and minor children accompanying the student or following to join the student. 
</P>
<P>(2) The prohibition on providing assistance to a noncitizen student does not extend to the citizen spouse of the noncitizen student and the children of the citizen spouse and noncitizen student. 


</P>
</DIV8>


<DIV8 N="§ 5.524" NODE="24:1.1.1.1.5.5.19.13" TYPE="SECTION">
<HEAD>§ 5.524   Compliance with nondiscrimination requirements.</HEAD>
<P>The responsible entity shall administer the restrictions on use of assisted housing by noncitizens with ineligible immigration status imposed by this part in conformity with all applicable nondiscrimination and equal opportunity requirements, including, but not limited to, title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d-2000d-5) and the implementing regulations in 24 CFR part 1, section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and the implementing regulations in 24 CFR part 8, the Fair Housing Act (42 U.S.C. 3601-3619) and the implementing regulations in 24 CFR part 100. 


</P>
</DIV8>


<DIV8 N="§ 5.526" NODE="24:1.1.1.1.5.5.19.14" TYPE="SECTION">
<HEAD>§ 5.526   Protection from liability for responsible entities and State and local government agencies and officials.</HEAD>
<P>(a) <I>Protection from liability for responsible entities.</I> Responsible entities are protected from liability as set forth in Section 214(e) (42 U.S.C 1436a(e)).
</P>
<P>(b) <I>Protection from liability for State and local government agencies and officials.</I> State and local government agencies and officials shall not be liable for the design or implementation of the verification system described in § 5.512, as long as the implementation by the State and local government agency or official is in accordance with prescribed HUD rules and requirements.
</P>
<CITA TYPE="N">[64 FR 25732, May 12, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 5.528" NODE="24:1.1.1.1.5.5.19.15" TYPE="SECTION">
<HEAD>§ 5.528   Liability of ineligible tenants for reimbursement of benefits.</HEAD>
<P>Where a tenant has received the benefit of HUD financial assistance to which the tenant was not entitled because the tenant intentionally misrepresented eligible status, the ineligible tenant is responsible for reimbursing HUD for the assistance improperly paid. If the amount of the assistance is substantial, the responsible entity is encouraged to refer the case to the HUD Inspector General's office for further investigation. Possible criminal prosecution may follow based on the False Statements Act (18 U.S.C. 1001 and 1010). 


</P>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:1.1.1.1.5.6" TYPE="SUBPART">
<HEAD>Subpart F—Section 8 and Public Housing, and Other HUD Assisted Housing Serving Persons with Disabilities: Family Income and Family Payment; Occupancy Requirements for Section 8 Project-Based Assistance</HEAD>

<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437a, 1437c, 1437d, 1437f, 1437n, and 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 54498, Oct. 18, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 5.601" NODE="24:1.1.1.1.5.6.19.1" TYPE="SECTION">
<HEAD>§ 5.601   Purpose and applicability.</HEAD>
<P>This subpart states HUD requirements on the following subjects: 
</P>
<P>(a) Determining annual and adjusted income of families who apply for or receive assistance in the Section 8 (tenant-based and project-based) and public housing programs; 
</P>
<P>(b) Determining payments by and utility reimbursements to families assisted in these programs; 
</P>
<P>(c) Additional occupancy requirements that apply to the Section 8 project-based assistance programs. These additional requirements concern: 
</P>
<P>(1) Income-eligibility and income-targeting when a Section 8 owner admits families to a Section 8 project or unit; 
</P>
<P>(2) Owner selection preferences; and
</P>
<P>(3) Owner reexamination of family income and composition; 
</P>
<P>(d) Determining adjusted income, as provided in § 5.611(a) and (c) through (e), for families who apply for or receive assistance under the following programs: Section 202 Supportive Housing Program for the Elderly (24 CFR 891, subpart B); Section 202 Direct Loans for Housing for the Elderly and Persons with Disabilities (24 CFR part 891, subpart E); and the Section 811 Supportive Housing for Persons with Disabilities (24 CFR part 891, subpart C). Unless specified in the regulations for each of the programs listed in this paragraph (d) or in another regulatory section of this part 5, subpart F, then the regulations in part 5, subpart F, generally are not applicable to these programs; and
</P>
<P>(e) Limitations on eligibility for assistance based on assets, as provided in § 5.618, in the Section 8 (tenant-based and project-based) and public housing programs.
</P>
<CITA TYPE="N">[66 FR 6222, Jan. 19, 2001, as amended at 88 FR 9655, Feb. 14, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 5.603" NODE="24:1.1.1.1.5.6.19.2" TYPE="SECTION">
<HEAD>§ 5.603   Definitions.</HEAD>
<P>As used in this subpart: 
</P>
<P>(a) <I>Terms found elsewhere in part 5</I>—(1) <I>Subpart A.</I> The terms <I>1937 Act, elderly person, public housing, public housing agency (PHA), responsible entity</I> and <I>Section 8</I> are defined in § 5.100. 
</P>
<P>(2) <I>Subpart D.</I> The terms “disabled family”, “elderly family”, “family”, “live-in aide”, and “person with disabilities” are defined in § 5.403. 
</P>
<P>(b) The following terms shall have the meanings set forth below: 
</P>
<P><I>Adjusted income.</I> See § 5.611. 
</P>
<P><I>Annual income.</I> See § 5.609. 
</P>
<P><I>Child care expenses.</I> Amounts anticipated to be paid by the family for the care of children under 13 years of age during the period for which annual income is computed, but only where such care is necessary to enable a family member to actively seek employment, be gainfully employed, or to further his or her education and only to the extent such amounts are not reimbursed. The amount deducted shall reflect reasonable charges for child care. In the case of child care necessary to permit employment, the amount deducted shall not exceed the amount of employment income that is included in annual income. 
</P>
<P><I>Day laborer.</I> An individual hired and paid one day at a time without an agreement that the individual will be hired or work again in the future.
</P>
<P><I>Dependent.</I> A member of the family (which excludes foster children and foster adults) other than the family head or spouse who is under 18 years of age, or is a person with a disability, or is a full-time student.
</P>
<P><I>Disability assistance expenses.</I> Reasonable expenses that are anticipated, during the period for which annual income is computed, for attendant care and auxiliary apparatus for a disabled family member and that are necessary to enable a family member (including the disabled member) to be employed, provided that the expenses are neither paid to a member of the family nor reimbursed by an outside source. 
</P>
<P><I>Economic self-sufficiency program.</I> Any program designed to encourage, assist, train, or facilitate the economic independence of HUD-assisted families or to provide work for such families. These programs include programs for job training, employment counseling, work placement, basic skills training, education, English proficiency, workfare, financial or household management, apprenticeship, and any program necessary to ready a participant for work (including a substance abuse or mental health treatment program), or other work activities. 
</P>
<P><I>Extremely low-income family.</I> A very low-income family whose annual income does not exceed the higher of:
</P>
<P>(1) The poverty guidelines established by the Department of Health and Human Services applicable to the family of the size involved (except in the case of families living in Puerto Rico or any other territory or possession of the United States); or
</P>
<P>(2) Thirty (30) percent of the median income for the area, as determined by HUD, with adjustments for smaller and larger families, except that HUD may establish income ceilings higher or lower than 30 percent of the area median income for the area if HUD finds that such variations are necessary because of unusually high or low family incomes.
</P>
<P><I>Foster adult.</I> A member of the household who is 18 years of age or older and meets the definition of a foster adult under State law. In general, a foster adult is a person who is 18 years of age or older, is unable to live independently due to a debilitating physical or mental condition and is placed with the family by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction.
</P>
<P><I>Foster child.</I> A member of the household who meets the definition of a foster child under State law. In general, a foster child is placed with the family by an authorized placement agency (<I>e.g.,</I> public child welfare agency) or by judgment, decree, or other order of any court of competent jurisdiction.
</P>
<P><I>Full-time student.</I> A person who is attending school or vocational training on a full-time basis. 
</P>
<P><I>Health and medical care expenses.</I> Health and medical care expenses are any costs incurred in the diagnosis, cure, mitigation, treatment, or prevention of disease or payments for treatments affecting any structure or function of the body. Health and medical care expenses include medical insurance premiums and long-term care premiums that are paid or anticipated during the period for which annual income is computed.
</P>
<P><I>Imputed welfare income.</I> See § 5.615. 
</P>
<P><I>Independent contractor.</I> An individual who qualifies as an independent contractor instead of an employee in accordance with the Internal Revenue Code Federal income tax requirements and whose earnings are consequently subject to the Self-Employment Tax. In general, an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.
</P>
<P><I>Low income family.</I> A family whose annual income does not exceed 80 percent of the median income for the area, as determined by HUD with adjustments for smaller and larger families, except that HUD may establish income ceilings higher or lower than 80 percent of the median income for the area on the basis of HUD's findings that such variations are necessary because of unusually high or low family incomes. 
</P>
<P><I>Medical expenses.</I> Medical expenses, including medical insurance premiums, that are anticipated during the period for which annual income is computed, and that are not covered by insurance. 
</P>
<P><I>Minor.</I> A member of the family, other than the head of family or spouse, who is under 18 years of age.
</P>
<P><I>Monthly adjusted income.</I> One twelfth of adjusted income. 
</P>
<P><I>Monthly income.</I> One twelfth of annual income. 
</P>
<P><I>Net family assets.</I> (1) Net family assets is the net cash value of all assets owned by the family, after deducting reasonable costs that would be incurred in disposing real property, savings, stocks, bonds, and other forms of capital investment.
</P>
<P>(2) In determining net family assets, PHAs or owners, as applicable, must include the value of any business or family assets disposed of by an applicant or tenant for less than fair market value (including a disposition in trust, but not in a foreclosure or bankruptcy sale) during the two years preceding the date of application for the program or reexamination, as applicable, in excess of the consideration received therefor. In the case of a disposition as part of a separation or divorce settlement, the disposition will not be considered to be for less than fair market value if the applicant or tenant receives consideration not measurable in dollar terms. Negative equity in real property or other investments does not prohibit the owner from selling the property or other investments, so negative equity alone would not justify excluding the property or other investments from family assets.
</P>
<P>(3) Excluded from the calculation of net family assets are:
</P>
<P>(i) The value of necessary items of personal property;
</P>
<P>(ii) The combined value of all non-necessary items of personal property if the combined total value does not exceed $50,000 (which amount will be adjusted by HUD in accordance with the Consumer Price Index for Urban Wage Earners and Clerical Workers);
</P>
<P>(iii) The value of any account under a retirement plan recognized as such by the Internal Revenue Service, including individual retirement arrangements (IRAs), employer retirement plans, and retirement plans for self-employed individuals;
</P>
<P>(iv) The value of real property that the family does not have the effective legal authority to sell in the jurisdiction in which the property is located;
</P>
<P>(v) Any amounts recovered in any civil action or settlement based on a claim of malpractice, negligence, or other breach of duty owed to a family member arising out of law, that resulted in a family member being a person with a disability;
</P>
<P>(vi) The value of any Coverdell education savings account under section 530 of the Internal Revenue Code of 1986, the value of any qualified tuition program under section 529 of such Code, the value of any Achieving a Better Life Experience (ABLE) account authorized under Section 529A of such Code, and the value of any “baby bond” account created, authorized, or funded by Federal, State, or local government.
</P>
<P>(vii) Interests in Indian trust land;
</P>
<P>(viii) Equity in a manufactured home where the family receives assistance under 24 CFR part 982;
</P>
<P>(ix) Equity in property under the Homeownership Option for which a family receives assistance under 24 CFR part 982;
</P>
<P>(x) Family Self-Sufficiency Accounts; and
</P>
<P>(xi) Federal tax refunds or refundable tax credits for a period of 12 months after receipt by the family.
</P>
<P>(4) In cases where a trust fund has been established and the trust is not revocable by, or under the control of, any member of the family or household, the trust fund is not a family asset and the value of the trust is not included in the calculation of net family assets, so long as the fund continues to be held in a trust that is not revocable by, or under the control of, any member of the family or household.
</P>
<P><I>Owner</I> has the meaning provided in the relevant program regulations. As used in this subpart, where appropriate, the term “owner” shall also include a “borrower” as defined in part 891 of this title. 
</P>
<P><I>Responsible entity.</I> For § 5.611, in addition to the definition of “responsible entity” in § 5.100, “responsible entity” means:
</P>
<P>(1) For the Section 202 Supportive Housing Program for the Elderly, the “Owner” as defined in 24 CFR 891.205;
</P>
<P>(2) For the Section 202 Direct Loans for Housing for the Elderly and Persons with Disabilities, the “Borrower” as defined in 24 CFR 891.505; and
</P>
<P>(3) For the Section 811 Supportive Housing Program for Persons with Disabilities, the “Owner” as defined in 24 CFR 891.305.
</P>
<P><I>Seasonal worker.</I> An individual who is hired into a short-term position and the employment begins about the same time each year (such as summer or winter). Typically, the individual is hired to address seasonal demands that arise for the particular employer or industry.
</P>
<P><I>Tenant rent.</I> The amount payable monthly by the family as rent to the unit owner (Section 8 owner or PHA in public housing). (This term is not used in the Section 8 voucher program.) 
</P>
<P><I>Total tenant payment.</I> See § 5.628.
</P>
<P><I>Utility allowance.</I> If the cost of utilities (except telephone) and other housing services for an assisted unit is not included in the tenant rent but is the responsibility of the family occupying the unit, an amount equal to the estimate made or approved by a PHA or HUD of the monthly cost of a reasonable consumption of such utilities and other services for the unit by an energy-conservative household of modest circumstances consistent with the requirements of a safe, sanitary, and healthful living environment. 
</P>
<P><I>Utility reimbursement.</I> The amount, if any, by which the utility allowance for a unit, if applicable, exceeds the total tenant payment for the family occupying the unit. (This definition is not used in the Section 8 voucher program, or for a public housing family that is paying a flat rent.) 
</P>
<P><I>Very low income family.</I> A family whose annual income does not exceed 50 percent of the median family income for the area, as determined by HUD with adjustments for smaller and larger families, except that HUD may establish income ceilings higher or lower than 50 percent of the median income for the area if HUD finds that such variations are necessary because of unusually high or low family incomes. 
</P>
<P><I>Welfare assistance.</I> Welfare or other payments to families or individuals, based on need, that are made under programs funded, separately or jointly, by Federal, State or local governments (including assistance provided under the Temporary Assistance for Needy Families (TANF) program, as that term is defined under the implementing regulations issued by the Department of Health and Human Services at 45 CFR 260.31). 
</P>
<P><I>Work activities.</I> See definition at section 407(d) of the Social Security Act (42 U.S.C. 607(d)). 
</P>
<CITA TYPE="N">[61 FR 54498, Oct. 18, 1996, as amended at 65 FR 16716, Mar. 29, 2000; 65 FR 55161, Sept. 12, 2000; 66 FR 6223, Jan. 19, 2001; 67 FR 47432, July 18, 2002; 81 FR 12370, Mar. 8, 2016; 88 FR 9656, Feb. 14, 2023; 88 FR 12560, Feb. 28, 2023]


</CITA>
</DIV8>


<DIV7 N="19" NODE="24:1.1.1.1.5.6.19" TYPE="SUBJGRP">
<HEAD>Family Income</HEAD>


<DIV8 N="§ 5.609" NODE="24:1.1.1.1.5.6.19.3" TYPE="SECTION">
<HEAD>§ 5.609   Annual income.</HEAD>
<P>(a) Annual income includes, with respect to the family:
</P>
<P>(1) All amounts, not specifically excluded in paragraph (b) of this section, received from all sources by each member of the family who is 18 years of age or older or is the head of household or spouse of the head of household, plus unearned income by or on behalf of each dependent who is under 18 years of age, and
</P>
<P>(2) When the value of net family assets exceeds $50,000 (which amount HUD will adjust annually in accordance with the Consumer Price Index for Urban Wage Earners and Clerical Workers) and the actual returns from a given asset cannot be calculated, imputed returns on the asset based on the current passbook savings rate, as determined by HUD.
</P>
<P>(b) Annual income does not include the following:
</P>
<P>(1) Any imputed return on an asset when net family assets total $50,000 or less (which amount HUD will adjust annually in accordance with the Consumer Price Index for Urban Wage Earners and Clerical Workers) and no actual income from the net family assets can be determined.
</P>
<P>(2) The following types of trust distributions:
</P>
<P>(i) For an irrevocable trust or a revocable trust outside the control of the family or household excluded from the definition of net family assets under § 5.603(b):
</P>
<P>(A) Distributions of the principal or corpus of the trust; and
</P>
<P>(B) Distributions of income from the trust when the distributions are used to pay the costs of health and medical care expenses for a minor.
</P>
<P>(ii) For a revocable trust under the control of the family or household, any distributions from the trust; except that any actual income earned by the trust, regardless of whether it is distributed, shall be considered income to the family at the time it is received by the trust.
</P>
<P>(3) Earned income of children under the 18 years of age.
</P>
<P>(4) Payments received for the care of foster children or foster adults, or State or Tribal kinship or guardianship care payments.
</P>
<P>(5) Insurance payments and settlements for personal or property losses, including but not limited to payments through health insurance, motor vehicle insurance, and workers' compensation.
</P>
<P>(6) Amounts received by the family that are specifically for, or in reimbursement of, the cost of health and medical care expenses for any family member.
</P>
<P>(7) Any amounts recovered in any civil action or settlement based on a claim of malpractice, negligence, or other breach of duty owed to a family member arising out of law, that resulted in a member of the family becoming disabled.
</P>
<P>(8) Income of a live-in aide, foster child, or foster adult as defined in §§ 5.403 and 5.603, respectively.
</P>
<P>(9)(i) Any assistance that section 479B of the Higher Education Act of 1965, as amended (20 U.S.C. 1087uu), requires be excluded from a family's income; and
</P>
<P>(ii) Student financial assistance for tuition, books, and supplies (including supplies and equipment to support students with learning disabilities or other disabilities), room and board, and other fees required and charged to a student by an institution of higher education (as defined under Section 102 of the Higher Education Act of 1965 (20 U.S.C. 1002)) and, for a student who is not the head of household or spouse, the reasonable and actual costs of housing while attending the institution of higher education and not residing in an assisted unit.
</P>
<P>(A) Student financial assistance, for purposes of this paragraph (9)(ii), means a grant or scholarship received from—
</P>
<P>(<I>1</I>) The Federal government;
</P>
<P>(<I>2</I>) A State, Tribe, or local government;
</P>
<P>(<I>3</I>) A private foundation registered as a nonprofit under 26 U.S.C. 501(c)(3);
</P>
<P>(<I>4</I>) A business entity (such as corporation, general partnership, limited liability company, limited partnership, joint venture, business trust, public benefit corporation, or nonprofit entity); or
</P>
<P>(<I>5</I>) An institution of higher education.
</P>
<P>(B) Student financial assistance, for purposes of this paragraph (9)(ii), does not include—
</P>
<P>(<I>1</I>) Any assistance that is excluded pursuant to paragraph (b)(9)(i) of this section;
</P>
<P>(<I>2</I>) Financial support provided to the student in the form of a fee for services performed (<I>e.g.,</I> a work study or teaching fellowship that is not excluded pursuant to paragraph (b)(9)(i) of this section);
</P>
<P>(<I>3</I>) Gifts, including gifts from family or friends; or
</P>
<P>(<I>4</I>) Any amount of the scholarship or grant that, either by itself or in combination with assistance excluded under this paragraph or paragraph (b)(9)(i), exceeds the actual covered costs of the student. The actual covered costs of the student are the actual costs of tuition, books and supplies (including supplies and equipment to support students with learning disabilities or other disabilities), room and board, or other fees required and charged to a student by the education institution, and, for a student who is not the head of household or spouse, the reasonable and actual costs of housing while attending the institution of higher education and not residing in an assisted unit. This calculation is described further in paragraph (b)(9)(ii)(E) of this section.
</P>
<P>(C) Student financial assistance, for purposes of this paragraph (b)(9)(ii) must be:
</P>
<P>(<I>1</I>) Expressly for tuition, books, room and board, or other fees required and charged to a student by the education institution;
</P>
<P>(<I>2</I>) Expressly to assist a student with the costs of higher education; or
</P>
<P>(<I>3</I>) Expressly to assist a student who is not the head of household or spouse with the reasonable and actual costs of housing while attending the education institution and not residing in an assisted unit.
</P>
<P>(D) Student financial assistance, for purposes of this paragraph (b)(9)(ii), may be paid directly to the student or to the educational institution on the student's behalf. Student financial assistance paid to the student must be verified by the responsible entity as student financial assistance consistent with this paragraph (b)(9)(ii).
</P>
<P>(E) When the student is also receiving assistance excluded under paragraph (b)(9)(i) of this section, the amount of student financial assistance under this paragraph (b)(9)(ii) is determined as follows:
</P>
<P>(<I>1</I>) If the amount of assistance excluded under paragraph (b)(9)(i) of this section is equal to or exceeds the actual covered costs under paragraph (b)(9)(ii)(B)(4) of this section, none of the assistance described in this paragraph (b)(9)(ii) of this section is considered student financial assistance excluded from income under this paragraph (b)(9)(ii)(E).
</P>
<P>(<I>2</I>) If the amount of assistance excluded under paragraph (b)(9)(i) of this section is less than the actual covered costs under paragraph (b)(9)(ii)(B)(4) of this section, the amount of assistance described in paragraph (b)(9)(ii) of this section that is considered student financial assistance excluded under this paragraph is the lower of:
</P>
<P>(<I>i</I>) the total amount of student financial assistance received under this paragraph (b)(9)(ii) of this section, or
</P>
<P>(<I>ii</I>) the amount by which the actual covered costs under paragraph (b)(9)(ii)(B)(4) of this section exceeds the assistance excluded under paragraph (b)(9)(i) of this section.
</P>
<P>(10) Income and distributions from any Coverdell education savings account under section 530 of the Internal Revenue Code of 1986 or any qualified tuition program under section 529 of such Code; and income earned by government contributions to, and distributions from, “baby bond” accounts created, authorized, or funded by Federal, State, or local government.
</P>
<P>(11) The special pay to a family member serving in the Armed Forces who is exposed to hostile fire.
</P>
<P>(12)(i) Amounts received by a person with a disability that are disregarded for a limited time for purposes of Supplemental Security Income eligibility and benefits because they are set aside for use under a Plan to Attain Self-Sufficiency (PASS);
</P>
<P>(ii) Amounts received by a participant in other publicly assisted programs which are specifically for or in reimbursement of out-of-pocket expenses incurred (<I>e.g.,</I> special equipment, clothing, transportation, child care, etc.) and which are made solely to allow participation in a specific program;
</P>
<P>(iii) Amounts received under a resident service stipend not to exceed $200 per month. A resident service stipend is a modest amount received by a resident for performing a service for the PHA or owner, on a part-time basis, that enhances the quality of life in the development.
</P>
<P>(iv) Incremental earnings and benefits resulting to any family member from participation in training programs funded by HUD or in qualifying Federal, State, Tribal, or local employment training programs (including training programs not affiliated with a local government) and training of a family member as resident management staff. Amounts excluded by this provision must be received under employment training programs with clearly defined goals and objectives and are excluded only for the period during which the family member participates in the employment training program unless those amounts are excluded under paragraph (b)(9)(i) of this section.
</P>
<P>(13) Reparation payments paid by a foreign government pursuant to claims filed under the laws of that government by persons who were persecuted during the Nazi era.
</P>
<P>(14) Earned income of dependent full-time students in excess of the amount of the deduction for a dependent in § 5.611.
</P>
<P>(15) Adoption assistance payments for a child in excess of the amount of the deduction for a dependent in § 5.611.
</P>
<P>(16) Deferred periodic amounts from Supplemental Security Income and Social Security benefits that are received in a lump sum amount or in prospective monthly amounts, or any deferred Department of Veterans Affairs disability benefits that are received in a lump sum amount or in prospective monthly amounts.
</P>
<P>(17) Payments related to aid and attendance under 38 U.S.C. 1521 to veterans in need of regular aid and attendance.
</P>
<P>(18) Amounts received by the family in the form of refunds or rebates under State or local law for property taxes paid on the dwelling unit.
</P>
<P>(19) Payments made by or authorized by a State Medicaid agency (including through a managed care entity) or other State or Federal agency to a family to enable a family member who has a disability to reside in the family's assisted unit. Authorized payments may include payments to a member of the assisted family through the State Medicaid agency (including through a managed care entity) or other State or Federal agency for caregiving services the family member provides to enable a family member who has a disability to reside in the family's assisted unit.
</P>
<P>(20) Loan proceeds (the net amount disbursed by a lender to or on behalf of a borrower, under the terms of a loan agreement) received by the family or a third party (<I>e.g.,</I> proceeds received by the family from a private loan to enable attendance at an educational institution or to finance the purchase of a car).
</P>
<P>(21) Payments received by Tribal members as a result of claims relating to the mismanagement of assets held in trust by the United States, to the extent such payments are also excluded from gross income under the Internal Revenue Code or other Federal law.
</P>
<P>(22) Amounts that HUD is required by Federal statute to exclude from consideration as income for purposes of determining eligibility or benefits under a category of assistance programs that includes assistance under any program to which the exclusions set forth in paragraph (b) of this section apply. HUD will publish a notice in the <E T="04">Federal Register</E> to identify the benefits that qualify for this exclusion. Updates will be published when necessary.
</P>
<P>(23) Replacement housing “gap” payments made in accordance with 49 CFR part 24 that offset increased out of pocket costs of displaced persons that move from one federally subsidized housing unit to another Federally subsidized housing unit. Such replacement housing “gap” payments are not excluded from annual income if the increased cost of rent and utilities is subsequently reduced or eliminated, and the displaced person retains or continues to receive the replacement housing “gap” payments.
</P>
<P>(24) Nonrecurring income, which is income that will not be repeated in the coming year based on information provided by the family. Income received as an independent contractor, day laborer, or seasonal worker is not excluded from income under this paragraph, even if the source, date, or amount of the income varies. Nonrecurring income includes:
</P>
<P>(i) Payments from the U.S. Census Bureau for employment (relating to decennial census or the American Community Survey) lasting no longer than 180 days and not culminating in permanent employment.
</P>
<P>(ii) Direct Federal or State payments intended for economic stimulus or recovery.
</P>
<P>(iii) Amounts directly received by the family as a result of State refundable tax credits or State tax refunds at the time they are received.
</P>
<P>(iv) Amounts directly received by the family as a result of Federal refundable tax credits and Federal tax refunds at the time they are received.
</P>
<P>(v) Gifts for holidays, birthdays, or other significant life events or milestones (<I>e.g.,</I> wedding gifts, baby showers, anniversaries).
</P>
<P>(vi) Non-monetary, in-kind donations, such as food, clothing, or toiletries, received from a food bank or similar organization.
</P>
<P>(vii) Lump-sum additions to net family assets, including but not limited to lottery or other contest winnings.
</P>
<P>(25) Civil rights settlements or judgments, including settlements or judgments for back pay.
</P>
<P>(26) Income received from any account under a retirement plan recognized as such by the Internal Revenue Service, including individual retirement arrangements (IRAs), employer retirement plans, and retirement plans for self-employed individuals; except that any distribution of periodic payments from such accounts shall be income at the time they are received by the family.
</P>
<P>(27) Income earned on amounts placed in a family's Family Self Sufficiency Account.
</P>
<P>(28) Gross income a family member receives through self-employment or operation of a business; except that the following shall be considered income to a family member:
</P>
<P>(i) Net income from the operation of a business or profession. Expenditures for business expansion or amortization of capital indebtedness shall not be used as deductions in determining net income. An allowance for depreciation of assets used in a business or profession may be deducted, based on straight line depreciation, as provided in Internal Revenue Service regulations; and
</P>
<P>(ii) Any withdrawal of cash or assets from the operation of a business or profession will be included in income, except to the extent the withdrawal is reimbursement of cash or assets invested in the operation by the family.
</P>
<P>(c) <I>Calculation of Income.</I> The PHA or owner must calculate family income as follows:
</P>
<P>(1) <I>Initial occupancy or assistance and interim reexaminations.</I> The PHA or owner must estimate the income of the family for the upcoming 12-month period:
</P>
<P>(i) To determine family income for initial occupancy or for the initial provision of housing assistance; or
</P>
<P>(ii) To determine family income for an interim reexamination of family income under § 5.657(c), § 960.257(b), or § 982.516(c) of this title.
</P>
<P>(2) <I>Annual Reexaminations.</I> (i) The PHA or owner must determine the income of the family for the previous 12-month period and use this amount as the family income for annual reexaminations, except where the PHA or owner uses a streamlined income determination under § 5.657(d), § 960.257(c), or § 982.516(b) of this title.
</P>
<P>(ii) In determining the income of the family for the previous 12-month period, the PHA or owner must take into consideration any redetermination of income during the previous 12-month period resulting from an interim reexamination of family income under § 5.657(c), § 960.257(b), or § 982.516(c) of this title.
</P>
<P>(iii) The PHA or owner must make adjustments to reflect current income if there was a change in income during the previous 12-month period that was not accounted for in a redetermination of income.
</P>
<P>(3) <I>Use of other programs' determination of income.</I> (i) The PHA or owner may, using the verification methods in paragraph (c)(3)(ii) of this section, determine the family's income prior to the application of any deductions applied in accordance with § 5.611 based on income determinations made within the previous 12-month period for purposes of the following means-tested forms of Federal public assistance:
</P>
<P>(A) The Temporary Assistance for Needy Families block grant (42 U.S.C. 601, <I>et seq.</I>).
</P>
<P>(B) Medicaid (42 U.S.C. 1396 <I>et seq.</I>).
</P>
<P>(C) The Supplemental Nutrition Assistance Program (42 U.S.C. 2011 <I>et seq.</I>).
</P>
<P>(D) The Earned Income Tax Credit (26 U.S.C. 32).
</P>
<P>(E) The Low-Income Housing Credit (26 U.S.C. 42).
</P>
<P>(F) The Special Supplemental Nutrition Program for Woman, Infants, and Children (42 U.S.C. 1786).
</P>
<P>(G) Supplemental Security Income (42 U.S.C. 1381 <I>et seq.</I>).
</P>
<P>(H) Other programs administered by the Secretary.
</P>
<P>(I) Other means-tested forms of Federal public assistance for which HUD has established a memorandum of understanding.
</P>
<P>(J) Other Federal benefit determinations made in other forms of means-tested Federal public assistance that the Secretary determines to have comparable reliability and announces through the <E T="04">Federal Register</E>.
</P>
<P>(ii) If a PHA or owner intends to use the annual income determination made by an administrator for allowable forms of Federal means-tested public assistance under this paragraph (c)(3), the PHA or owner must obtain it using the appropriate third-party verification. If the appropriate third-party verification is unavailable, or if the family disputes the determination made for purposes of the other form of Federal means-tested public assistance, the PHA or owner must calculate annual income in accordance with 24 CFR part 5, subpart F. The verification must indicate the tenant's family size and composition and state the amount of the family's annual income. The verification must also meet all HUD requirements related to the length of time that is permitted before the third-party verification is considered out-of-date and is no longer an eligible source of income verification.
</P>
<P>(4) <I>De minimis errors.</I> The PHA or owner will not be considered out of compliance with the requirements in this paragraph (c) solely due to de minimis errors in calculating family income. A de minimis error is an error where the PHA or owner determination of family income deviates from the correct income determination by no more than $30 per month in monthly adjusted income ($360 in annual adjusted income) per family.
</P>
<P>(i) The PHA or owner must still take any corrective action necessary to credit or repay a family if the family has been overcharged for their rent or family share as a result of the de minimis error in the income determination, but families will not be required to repay the PHA or owner in instances where a PHA or owner has miscalculated income resulting in a family being undercharged for rent or family share.
</P>
<P>(ii) HUD may revise the amount of de minimis error in this paragraph (c)(4) through a rulemaking published in the <E T="04">Federal Register</E> for public comment.
</P>
<CITA TYPE="N">[88 FR 9657, Feb. 14, 2023]




</CITA>
</DIV8>


<DIV8 N="§ 5.611" NODE="24:1.1.1.1.5.6.19.4" TYPE="SECTION">
<HEAD>§ 5.611   Adjusted income.</HEAD>
<P><I>Adjusted income</I> means annual income (as determined under § 5.609) of the members of the family residing or intending to reside in the dwelling unit, after making the following deductions:
</P>
<P>(a) <I>Mandatory deductions.</I> (1) $480 for each dependent, which amount will be adjusted by HUD annually in accordance with the Consumer Price Index for Urban Wage Earners and Clerical Workers, rounded to the next lowest multiple of $25;
</P>
<P>(2) $525 for any elderly family or disabled family, which amount will be adjusted by HUD annually in accordance with the Consumer Price Index for Urban Wage Earners and Clerical Workers, rounded to the next lowest multiple of $25;
</P>
<P>(3) The sum of the following, to the extent the sum exceeds ten percent of annual income:
</P>
<P>(i) Unreimbursed health and medical care expenses of any elderly family or disabled family; and
</P>
<P>(ii) Unreimbursed reasonable attendant care and auxiliary apparatus expenses for each member of the family who is a person with a disability, to the extent necessary to enable any member of the family (including the member who is a person with a disability) to be employed. This deduction may not exceed the combined earned income received by family members who are 18 years of age or older and who are able to work because of such attendant care or auxiliary apparatus; and
</P>
<P>(4) Any reasonable child care expenses necessary to enable a member of the family to be employed or to further his or her education.
</P>
<P>(b) <I>Additional deductions.</I> (1) For public housing, the Housing Choice Voucher (HCV) and the Section 8 moderate rehabilitation programs (including the moderate rehabilitation Single-Room Occupancy (SRO) program), a PHA may adopt additional deductions from annual income.
</P>
<P>(i) <I>Public housing.</I> A PHA that adopts such deductions will not be eligible for an increase in Capital Fund and Operating Fund formula grants based on the application of such deductions. The PHA must establish a written policy for such deductions.
</P>
<P>(ii) <I>HCV, moderate rehabilitation, and moderate rehabilitation Single-Room Occupancy (SRO) programs.</I> A PHA that adopts such deductions must have sufficient funding to cover the increased housing assistance payment cost of the deductions. A PHA will not be eligible for an increase in HCV renewal funding or moderate rehabilitation program funding for subsidy costs resulting from such deductions. For the HCV program, the PHA must include such deductions in its administrative plan. For moderate rehabilitation, the PHA must establish a written policy for such deductions.
</P>
<P>(2) For the HUD programs listed in § 5.601(d), the responsible entity must calculate such other deductions as required and permitted by the applicable program regulations.
</P>
<P>(c) <I>Financial hardship exemption for unreimbursed health and medical care expenses and reasonable attendant care and auxiliary apparatus expenses.</I> (1) <I>Phased-in relief.</I> This paragraph provides financial hardship relief for families affected by the statutory increase in the threshold to receive health and medical care expense and reasonable attendant care and auxiliary apparatus expense deductions from annual income.
</P>
<P>(i) <I>Eligibility for relief.</I> To receive hardship relief under this paragraph (c)(1), the family must have received a deduction from annual income because their sum of expenses under paragraph (a)(3) of this section exceeded 3 percent of annual income as of January 1, 2024.
</P>
<P>(ii) <I>Form of relief.</I> (A) The family will receive a deduction totaling the sum of the expenses under paragraph (a)(3) of this section that exceed 5 percent of annual income.
</P>
<P>(B) Twelve months after the relief in this paragraph (c)(1)(ii) is provided, the family must receive a deduction totaling the sum of expenses under paragraph (a)(3) of this section that exceed 7.5 percent of annual income.
</P>
<P>(C) Twenty-four months after the relief in this paragraph (c)(1)(ii) is provided, the family must receive a deduction totaling the sum of expenses under paragraph (a)(3) of this section that exceed ten percent of annual income and the only remaining relief that may be available to the family will be paragraph (d)(1) of this section.
</P>
<P>(D) A family may request hardship relief under paragraph (c)(2) of this section prior to the end of the twenty-four-month transition period. If a family making such a request is determined eligible for hardship relief under paragraph (c)(2) of this section, hardship relief under this paragraph ends and the family's hardship relief shall be administered in accordance with paragraph (c)(2) of this section. Once a family chooses to obtain relief under paragraph (c)(2) of this section, a family may no longer receive relief under this paragraph.
</P>
<P>(2) <I>General.</I> This paragraph (c)(2) provides financial relief for an elderly or disabled family or a family that includes a person with disabilities that is experiencing a financial hardship.
</P>
<P>(i) <I>Eligibility for relief.</I> (A) To receive hardship relief under this paragraph (c)(2), a family must demonstrate that the family's applicable health and medical care expenses or reasonable attendant care and auxiliary apparatus expenses increased or the family's financial hardship is a result of a change in circumstances (as defined by the responsible entity) that would not otherwise trigger an interim reexamination.
</P>
<P>(B) Relief under this paragraph (c)(2) is available regardless of whether the family previously received deductions under paragraph (a)(3) of this section, is currently receiving relief under paragraph (c)(1) of this section, or previously received relief under paragraph (c)(1) of this section.
</P>
<P>(ii) <I>Form and duration of relief.</I> (A) The family will receive a deduction for the sum of the eligible expenses in paragraph (a)(3) of this section that exceed 5 percent of annual income.
</P>
<P>(B) The family's hardship relief ends when the circumstances that made the family eligible for the relief are no longer applicable or after 90 days, whichever comes earlier. However, responsible entities may, at their discretion, extend the relief for one or more additional 90-day periods while the family's hardship condition continues.
</P>
<P>(d) <I>Exemption to continue child care expense deduction.</I> A family whose eligibility for the child care expense deduction is ending may request a financial hardship exemption to continue the child care expense deduction under paragraph (a)(4) of this section. The responsible entity must recalculate the family's adjusted income and continue the child care deduction if the family demonstrates to the responsible entity's satisfaction that the family is unable to pay their rent because of loss of the child care expense deduction, and the child care expense is still necessary even though the family member is no longer employed or furthering his or her education. The hardship exemption and the resulting alternative adjusted income calculation must remain in place for a period of up to 90 days. Responsible entities, at their discretion, may extend such hardship exemptions for additional 90-day periods based on family circumstances.
</P>
<P>(e) <I>Hardship policy requirements.</I> (1) <I>Responsible entity determination of family's inability to pay the rent.</I> The responsible entity must establish a policy on how it defines what constitutes a hardship under paragraphs (c) and (d) of this section, which includes determining the family's inability to pay the rent, for purposes of determining eligibility for a hardship exemption under paragraph (d) of this section.
</P>
<P>(2) <I>Family notification.</I> The responsible entity must promptly notify the family in writing of the change in the determination of adjusted income and the family's rent resulting from the hardship exemption. The notice must also inform the family of when the hardship exemption will begin and expire (<I>i.e.,</I> the time periods specified under paragraph (c)(1)(ii) of this section or within 90 days or at such time as the responsibility entity determines the exemption is no longer necessary in accordance with paragraphs (c)(2)(ii)(B) or (d) of this section).
</P>
<CITA TYPE="N">[88 FR 9659, Feb. 14, 2023]




</CITA>
</DIV8>


<DIV8 N="§ 5.612" NODE="24:1.1.1.1.5.6.19.5" TYPE="SECTION">
<HEAD>§ 5.612   Restrictions on assistance to students enrolled in an institution of higher education.</HEAD>
<P>No assistance shall be provided under section 8 of the 1937 Act to any individual who:
</P>
<P>(a) Is enrolled as a student at an institution of higher education, as defined under section 102 of the Higher Education Act of 1965 (20 U.S.C. 1002);
</P>
<P>(b) Is under 24 years of age;
</P>
<P>(c) Is not a veteran of the United States military;
</P>
<P>(d) Is unmarried;
</P>
<P>(e) Does not have a dependent child;
</P>
<P>(f) Is not a person with disabilities, as such term is defined in section 3(b)(3)(E) of the 1937 Act and was not receiving assistance under section 8 of the 1937 Act as of November 30, 2005; and
</P>
<P>(g) Is not otherwise individually eligible, or has parents who, individually or jointly, are not eligible on the basis of income to receive assistance under section 8 of the 1937 Act.
</P>
<CITA TYPE="N">[70 FR 77743, Dec. 30, 2005, as amended at 73 FR 49333, Aug. 21, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 5.613" NODE="24:1.1.1.1.5.6.19.6" TYPE="SECTION">
<HEAD>§ 5.613   Public housing program and Section 8 tenant-based assistance program: PHA cooperation with welfare agency.</HEAD>
<P>(a) This section applies to the public housing program and the Section 8 tenant-based assistance program. 
</P>
<P>(b) The PHA must make best efforts to enter into cooperation agreements with welfare agencies under which such agencies agree: 
</P>
<P>(1) To target public assistance, benefits and services to families receiving assistance in the public housing program and the Section 8 tenant-based assistance program to achieve self-sufficiency; 
</P>
<P>(2) To provide written verification to the PHA concerning welfare benefits for families applying for or receiving assistance in these housing assistance programs. 
</P>
<CITA TYPE="N">[65 FR 16717, Mar. 29, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 5.615" NODE="24:1.1.1.1.5.6.19.7" TYPE="SECTION">
<HEAD>§ 5.615   Public housing program and Section 8 tenant-based assistance program: How welfare benefit reduction affects family income.</HEAD>
<P>(a) <I>Applicability.</I> This section applies to covered families who reside in public housing (part 960 of this title) or receive Section 8 tenant-based assistance (part 982 of this title). 
</P>
<P>(b) <I>Definitions.</I> The following definitions apply for purposes of this section: 
</P>
<P><I>Covered families.</I> Families who receive welfare assistance or other public assistance benefits (“welfare benefits”) from a State or other public agency (“welfare agency”) under a program for which Federal, State, or local law requires that a member of the family must participate in an economic self-sufficiency program as a condition for such assistance. 
</P>
<P><I>Economic self-sufficiency program.</I> See definition at § 5.603. 
</P>
<P><I>Imputed welfare income.</I> The amount of annual income not actually received by a family, as a result of a specified welfare benefit reduction, that is nonetheless included in the family's annual income for purposes of determining rent. 
</P>
<P><I>Specified welfare benefit reduction.</I> 
</P>
<P>(1) A reduction of welfare benefits by the welfare agency, in whole or in part, for a family member, as determined by the welfare agency, because of fraud by a family member in connection with the welfare program; or because of welfare agency sanction against a family member for noncompliance with a welfare agency requirement to participate in an economic self-sufficiency program. 
</P>
<P>(2) “Specified welfare benefit reduction” does not include a reduction or termination of welfare benefits by the welfare agency: 
</P>
<P>(i) at expiration of a lifetime or other time limit on the payment of welfare benefits; 
</P>
<P>(ii) because a family member is not able to obtain employment, even though the family member has complied with welfare agency economic self-sufficiency or work activities requirements; or 
</P>
<P>(iii) because a family member has not complied with other welfare agency requirements. 
</P>
<P>(c) <I>Imputed welfare income.</I> (1) A family's annual income includes the amount of imputed welfare income (because of a specified welfare benefits reduction, as specified in notice to the PHA by the welfare agency), plus the total amount of other annual income as determined in accordance with § 5.609. 
</P>
<P>(2) At the request of the PHA, the welfare agency will inform the PHA in writing of the amount and term of any specified welfare benefit reduction for a family member, and the reason for such reduction, and will also inform the PHA of any subsequent changes in the term or amount of such specified welfare benefit reduction. The PHA will use this information to determine the amount of imputed welfare income for a family. 
</P>
<P>(3) A family's annual income includes imputed welfare income in family annual income, as determined at the PHA's interim or regular reexamination of family income and composition, during the term of the welfare benefits reduction (as specified in information provided to the PHA by the welfare agency). 
</P>
<P>(4) The amount of the imputed welfare income is offset by the amount of additional income a family receives that commences after the time the sanction was imposed. When such additional income from other sources is at least equal to the imputed welfare income, the imputed welfare income is reduced to zero. 
</P>
<P>(5) The PHA may not include imputed welfare income in annual income if the family was not an assisted resident at the time of sanction. 
</P>
<P>(d) <I>Review of PHA decision</I>—(1) <I>Public housing.</I> If a public housing tenant claims that the PHA has not correctly calculated the amount of imputed welfare income in accordance with HUD requirements, and if the PHA denies the family's request to modify such amount, the PHA shall give the tenant written notice of such denial, with a brief explanation of the basis for the PHA determination of the amount of imputed welfare income. The PHA notice shall also state that if the tenant does not agree with the PHA determination, the tenant may request a grievance hearing in accordance with part 966, subpart B of this title to review the PHA determination. The tenant is not required to pay an escrow deposit pursuant to § 966.55(e) for the portion of tenant rent attributable to the imputed welfare income in order to obtain a grievance hearing on the PHA determination. 
</P>
<P>(2) <I>Section 8 participant.</I> A participant in the Section 8 tenant-based assistance program may request an informal hearing, in accordance with § 982.555 of this title, to review the PHA determination of the amount of imputed welfare income that must be included in the family's annual income in accordance with this section. If the family claims that such amount is not correctly calculated in accordance with HUD requirements, and if the PHA denies the family's request to modify such amount, the PHA shall give the family written notice of such denial, with a brief explanation of the basis for the PHA determination of the amount of imputed welfare income. Such notice shall also state that if the family does not agree with the PHA determination, the family may request an informal hearing on the determination under the PHA hearing procedure. 
</P>
<P>(e) <I>PHA relation with welfare agency.</I> (1) The PHA must ask welfare agencies to inform the PHA of any specified welfare benefits reduction for a family member, the reason for such reduction, the term of any such reduction, and any subsequent welfare agency determination affecting the amount or term of a specified welfare benefits reduction. If the welfare agency determines a specified welfare benefits reduction for a family member, and gives the PHA written notice of such reduction, the family's annual incomes shall include the imputed welfare income because of the specified welfare benefits reduction. 
</P>
<P>(2) The PHA is responsible for determining the amount of imputed welfare income that is included in the family's annual income as a result of a specified welfare benefits reduction as determined by the welfare agency, and specified in the notice by the welfare agency to the PHA. However, the PHA is not responsible for determining whether a reduction of welfare benefits by the welfare agency was correctly determined by the welfare agency in accordance with welfare program requirements and procedures, nor for providing the opportunity for review or hearing on such welfare agency determinations. 
</P>
<P>(3) Such welfare agency determinations are the responsibility of the welfare agency, and the family may seek appeal of such determinations through the welfare agency's normal due process procedures. The PHA shall be entitled to rely on the welfare agency notice to the PHA of the welfare agency's determination of a specified welfare benefits reduction. 
</P>
<CITA TYPE="N">[65 FR 16717, Mar. 29, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 5.617" NODE="24:1.1.1.1.5.6.19.8" TYPE="SECTION">
<HEAD>§ 5.617   Self-sufficiency incentives for persons with disabilities—Disallowance of increase in annual income.</HEAD>
<P>(a) <I>Applicable programs.</I> The disallowance of earned income provided by this section is applicable only to the following programs: HOME Investment Partnerships Program (24 CFR part 92); Housing Opportunities for Persons with AIDS (24 CFR part 574); Supportive Housing Program (24 CFR part 583); and the Housing Choice Voucher Program (24 CFR part 982).
</P>
<P>(b) <I>Definitions.</I> The following definitions apply for purposes of this section. 
</P>
<P><I>Baseline income.</I> The annual income immediately prior to implementation of the disallowance described in paragraph (c)(1) of this section of a person with disabilities (who is a member of a qualified family).
</P>
<P><I>Disallowance.</I> Exclusion from annual income. 
</P>
<P><I>Previously unemployed</I> includes a person with disabilities who has earned, in the twelve months previous to employment, no more than would be received for 10 hours of work per week for 50 weeks at the established minimum wage. 
</P>
<P><I>Qualified family.</I> A family residing in housing assisted under one of the programs listed in paragraph (a) of this section or receiving tenant-based rental assistance under one of the programs listed in paragraph (a) of this section. 
</P>
<P>(1) Whose annual income increases as a result of employment of a family member who is a person with disabilities and who was previously unemployed for one or more years prior to employment; 
</P>
<P>(2) Whose annual income increases as a result of increased earnings by a family member who is a person with disabilities during participation in any economic self-sufficiency or other job training program; or
</P>
<P>(3) Whose annual income increases, as a result of new employment or increased earnings of a family member who is a person with disabilities, during or within six months after receiving assistance, benefits or services under any state program for temporary assistance for needy families funded under Part A of Title IV of the Social Security Act, as determined by the responsible entity in consultation with the local agencies administering temporary assistance for needy families (TANF) and Welfare-to-Work (WTW) programs. The TANF program is not limited to monthly income maintenance, but also includes such benefits and services as one-time payments, wage subsidies and transportation assistance—provided that the total amount over a six-month period is at least $500. 
</P>
<P>(c) <I>Disallowance of increase in annual income</I>—(1) <I>Initial 12-month exclusion.</I> During the 12-month period beginning on the date a member who is a person with disabilities of a qualified family is first employed or the family first experiences an increase in annual income attributable to employment, the responsible entity must exclude from annual income (as defined in the regulations governing the applicable program listed in paragraph (a) of this section) of a qualified family any increase in income of the family member who is a person with disabilities as a result of employment over prior income of that family member.
</P>
<P>(2) <I>Second 12-month exclusion and phase-in.</I> Upon the expiration of the 12-month period defined in paragraph (c)(1) of this section and for the subsequent 12-month period, the responsible entity must exclude from annual income of a qualified family at least 50 percent of any increase in income of such family member as a result of employment over the family member's baseline income.
</P>
<P>(3) <I>Maximum 2-year disallowance.</I> The disallowance of increased income of an individual family member who is a person with disabilities as provided in paragraph (c)(1) or (c)(2) of this section is limited to a lifetime 24-month period. The disallowance applies for a maximum of 12 months for disallowance under paragraph (c)(1) of this section and a maximum of 12 months for disallowance under paragraph (c)(2) of this section, during the 24- month period starting from the initial exclusion under paragraph (c)(1) of this section.
</P>
<P>(4) <I>Effect of changes on currently participating families.</I> Families eligible for and participating in the disallowance of earned income under this section prior to <I>May 9, 2016</I> will continue to be governed by this section in effect as it existed immediately prior to that date (see 24 CFR parts 0 to 199, revised as of April 1, 2016).
</P>
<P>(d) <I>Inapplicability to admission.</I> The disallowance of increases in income as a result of employment of persons with disabilities under this section does not apply for purposes of admission to the program (including the determination of income eligibility or any income targeting that may be applicable).
</P>
<P>(e) <I>Limitation.</I> This section applies to a family that is receiving the disallowance of earned income under this section on December 31, 2023
</P>
<P>(f) <I>Sunset.</I> This section will lapse on January 1, 2026.
</P>
<CITA TYPE="N">[66 FR 6223, Jan. 19, 2001, as amended at 67 FR 6820, Feb. 13, 2002; 81 FR 12370, Mar. 8, 2016; 88 FR 9660, Feb. 14, 2023]




</CITA>
</DIV8>


<DIV8 N="§ 5.618" NODE="24:1.1.1.1.5.6.19.9" TYPE="SECTION">
<HEAD>§ 5.618   Restriction on assistance to families based on assets.</HEAD>
<P>(a) <I>Restrictions based on net assets and property ownership.</I> (1) A dwelling unit in the public housing program may not be rented, and assistance under the Section 8 (tenant-based and project-based) programs may not be provided, either initially or upon reexamination of family income, to any family if:
</P>
<P>(i) The family's net assets (as defined in § 5.603) exceed $100,000, which amount will be adjusted annually by HUD in accordance with the Consumer Price Index for Urban Wage Earners and Clerical Workers; or
</P>
<P>(ii) The family has a present ownership interest in, a legal right to reside in, and the effective legal authority to sell, based on State or local laws of the jurisdiction where the property is located, real property that is suitable for occupancy by the family as a residence, except this real property restriction does not apply to:
</P>
<P>(A) Any property for which the family is receiving assistance under 24 CFR 982.620; or under the Homeownership Option in 24 CFR part 982;
</P>
<P>(B) Any property that is jointly owned by a member of the family and at least one non-household member who does not live with the family, if the non-household member resides at the jointly owned property;
</P>
<P>(C) Any person who is a victim of domestic violence, dating violence, sexual assault, or stalking, as defined in this part 5 (subpart L); or
</P>
<P>(D) Any family that is offering such property for sale.
</P>
<P>(2) A property will be considered “suitable for occupancy” under paragraph (a)(1)(ii) of this section unless the family demonstrates that it:
</P>
<P>(i) Does not meet the disability-related needs for all members of the family (<I>e.g.,</I> physical accessibility requirements, disability-related need for additional bedrooms, proximity to accessible transportation, etc.);
</P>
<P>(ii) Is not sufficient for the size of the family;
</P>
<P>(iii) Is geographically located so as to be a hardship for the family (<I>e.g.,</I> the distance or commuting time between the property and the family's place of work or school would be a hardship to the family, as determined by the PHA or owner);
</P>
<P>(iv) Is not safe to reside in because of the physical condition of the property (<I>e.g.,</I> property's physical condition poses a risk to the family's health and safety and the condition of the property cannot be easily remedied); or
</P>
<P>(v) Is not a property that a family may reside in under the State or local laws of the jurisdiction where the property is located.
</P>
<P>(b) <I>Acceptable documentation; confidentiality.</I> (1) A PHA or owner may determine the net assets of a family based on a certification by the family that the net family assets (as defined in § 5.603) do not exceed $50,000, which amount will be adjusted annually in accordance with the Consumer Price Index for Urban Wage Earners and Clerical Workers, without taking additional steps to verify the accuracy of the declaration. The declaration must state the amount of income the family expects to receive from such assets; this amount must be included in the family's income.
</P>
<P>(2) A PHA or owner may determine compliance with paragraph (a)(1)(ii) of this section based on a certification by a family that certifies that such family does not have any present ownership interest in any real property at the time of the income determination or review.
</P>
<P>(3) When a family asks for or about an exception to the real property restriction because a family member is a victim of domestic violence, dating violence, sexual assault, or stalking, the PHA or owner must comply with the confidentiality requirements under § 5.2007. The PHA or owner must accept a self-certification from the family member, and the restrictions on requesting documentation under § 5.2007 apply.
</P>
<P>(c) <I>Enforcement.</I> (1) When recertifying the income of a family that is subject to the restrictions in paragraph (a) of this section, a PHA or owner may choose not to enforce such restrictions, or alternatively, may establish exceptions to the restrictions based on eligibility criteria.
</P>
<P>(2) The PHA or owner may choose not to enforce the restrictions in paragraph (a) of this section or establish exceptions to such restrictions only pursuant to a policy adopted by the PHA or owner.
</P>
<P>(3) Eligibility criteria for establishing exceptions may provide for separate treatment based on family type and may be based on different factors, such as age, disability, income, the ability of the family to find suitable alternative housing, and whether supportive services are being provided. Such policies must be in conformance with all applicable fair housing statutes and regulations, as discussed in this part 5.
</P>
<P>(d) <I>Delay of eviction or termination of assistance.</I> The PHA or owner may delay for a period of not more than 6 months the initiation of eviction or termination proceedings of a family based on noncompliance under this provision unless it conflicts with other provisions of law.
</P>
<P>(e) <I>Applicability.</I> This section applies to the Section 8 (tenant-based and project-based) and public housing programs.
</P>
<CITA TYPE="N">[88 FR 9660, Feb. 14, 2023]




</CITA>
</DIV8>

</DIV7>


<DIV7 N="20" NODE="24:1.1.1.1.5.6.20" TYPE="SUBJGRP">
<HEAD>Family Payment</HEAD>


<DIV8 N="§ 5.628" NODE="24:1.1.1.1.5.6.20.10" TYPE="SECTION">
<HEAD>§ 5.628   Total tenant payment.</HEAD>
<P>(a) <I>Determining total tenant payment (TTP).</I> Total tenant payment is the highest of the following amounts, rounded to the nearest dollar: 
</P>
<P>(1) 30 percent of the family's monthly adjusted income; 
</P>
<P>(2) 10 percent of the family's monthly income; 
</P>
<P>(3) If the family is receiving payments for welfare assistance from a public agency and a part of those payments, adjusted in accordance with the family's actual housing costs, is specifically designated by such agency to meet the family's housing costs, the portion of those payments which is so designated; 
</P>
<P>(4) The minimum rent, as determined in accordance with § 5.630; or 
</P>
<P>(5) For public housing only, the alternative non-public housing rent, as determined in accordance with § 960.102 of this title.
</P>
<P>(b) <I>Determining TTP if family's welfare assistance is ratably reduced.</I> If the family's welfare assistance is ratably reduced from the standard of need by applying a percentage, the amount calculated under paragraph (a)(3) of this section is the amount resulting from one application of the percentage. 
</P>
<CITA TYPE="N">[65 FR 16718, Mar. 29, 2000, as amended at 88 FR 9661, Feb. 14, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 5.630" NODE="24:1.1.1.1.5.6.20.11" TYPE="SECTION">
<HEAD>§ 5.630   Minimum rent.</HEAD>
<P>(a) <I>Minimum rent.</I> (1) The PHA must charge a family no less than a minimum monthly rent established by the responsible entity, except as described in paragraph (b) of this section. 
</P>
<P>(2) For the public housing program and the section 8 moderate rehabilitation or voucher programs, the PHA may establish a minimum rent of up to $50. 
</P>
<P>(3) For other section 8 programs, the minimum rent is $25. 
</P>
<P>(b) <I>Financial hardship exemption from minimum rent</I>—(1) <I>When is family exempt from minimum rent?</I> The responsible entity must grant an exemption from payment of minimum rent if the family is unable to pay the minimum rent because of financial hardship, as described in the responsible entity's written policies. Financial hardship includes these situations: 
</P>
<P>(i) When the family has lost eligibility for or is awaiting an eligibility determination for a Federal, State, or local assistance program, including a family that includes a member who is a noncitizen lawfully admitted for permanent residence under the Immigration and Nationality Act who would be entitled to public benefits but for title IV of the Personal Responsibility and Work Opportunity Act of 1996; 
</P>
<P>(ii) When the family would be evicted because it is unable to pay the minimum rent; 
</P>
<P>(iii) When the income of the family has decreased because of changed circumstances, including loss of employment; 
</P>
<P>(iv) When a death has occurred in the family; and 
</P>
<P>(v) Other circumstances determined by the responsible entity or HUD. 
</P>
<P>(2) <I>What happens if family requests a hardship exemption?</I> (i) <I>Public housing.</I> (A) If a family requests a financial hardship exemption, the PHA must suspend the minimum rent requirement beginning the month following the family's request for a hardship exemption, and continuing until the PHA determines whether there is a qualifying financial hardship and whether it is temporary or long term. 
</P>
<P>(B) The PHA must promptly determine whether a qualifying hardship exists and whether it is temporary or long term. 
</P>
<P>(C) The PHA may not evict the family for nonpayment of minimum rent during the 90-day period beginning the month following the family's request for a hardship exemption. 
</P>
<P>(D) If the PHA determines that a qualifying financial hardship is temporary, the PHA must reinstate the minimum rent from the beginning of the suspension of the minimum rent. The PHA must offer the family a reasonable repayment agreement, on terms and conditions established by the PHA, for the amount of back minimum rent owed by the family. 
</P>
<P>(ii) <I>All section 8 programs.</I> (A) If a family requests a financial hardship exemption, the responsible entity must suspend the minimum rent requirement beginning the month following the family's request for a hardship exemption until the responsible entity determines whether there is a qualifying financial hardship, and whether such hardship is temporary or long term. 
</P>
<P>(B) The responsible entity must promptly determine whether a qualifying hardship exists and whether it is temporary or long term. 
</P>
<P>(C) If the responsible entity determines that a qualifying financial hardship is temporary, the PHA must not impose the minimum rent during the 90-day period beginning the month following the date of the family's request for a hardship exemption. At the end of the 90-day suspension period, the responsible entity must reinstate the minimum rent from the beginning of the suspension. The family must be offered a reasonable repayment agreement, on terms and conditions established by the responsible entity, for the amount of back rent owed by the family. 
</P>
<P>(iii) <I>All programs.</I> (A) If the responsible entity determines there is no qualifying financial hardship exemption, the responsible entity must reinstate the minimum rent, including back rent owed from the beginning of the suspension. The family must pay the back rent on terms and conditions established by the responsible entity. 
</P>
<P>(B) If the responsible entity determines a qualifying financial hardship is long term, the responsible entity must exempt the family from the minimum rent requirements so long as such hardship continues. Such exemption shall apply from the beginning of the month following the family's request for a hardship exemption until the end of the qualifying financial hardship. 
</P>
<P>(C) The financial hardship exemption only applies to payment of the minimum rent (as determined pursuant to § 5.628(a)(4) and § 5.630), and not to the other elements used to calculate the total tenant payment (as determined pursuant to § 5.628(a)(1), (a)(2) and (a)(3)). 
</P>
<P>(3) <I>Public housing: Grievance hearing concerning PHA denial of request for hardship exemption.</I> If a public housing family requests a hearing under the PHA grievance procedure, to review the PHA's determination denying or limiting the family's claim to a financial hardship exemption, the family is not required to pay any escrow deposit in order to obtain a grievance hearing on such issues. 
</P>
<CITA TYPE="N">[65 FR 16718, Mar. 29, 2000, as amended at 89 FR 38290, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 5.632" NODE="24:1.1.1.1.5.6.20.12" TYPE="SECTION">
<HEAD>§ 5.632   Utility reimbursements.</HEAD>
<P>(a) <I>Applicability.</I> This section is applicable to: 
</P>
<P>(1) The Section 8 programs other than the Section 8 voucher program (for distribution of a voucher housing assistance payment that exceeds rent to owner, see § 982.514(b) of this title); 
</P>
<P>(2) A public housing family paying an income-based rent (see § 960.253 of this title). (Utility reimbursement is not paid for a public housing family that is paying a flat rent.) 
</P>
<P>(b) <I>Payment of utility reimbursement.</I> (1) The responsible entity pays a utility reimbursement if the utility allowance (for tenant-paid utilities) exceeds the amount of the total tenant payment. The responsible entity has the option of making utility reimbursement payments not less than once per calendar-year quarter, for reimbursements totaling $45 or less per quarter. In the event a family leaves the program in advance of its next quarterly reimbursement, the responsible entity must reimburse the family for a prorated share of the applicable reimbursement. PHAs and owners exercising this option must have a hardship policy in place for tenants.
</P>
<P>(2) In the public housing program (where the family is paying an income-based rent), the Section 8 moderate rehabilitation program and the Section 8 voucher program, the PHA may pay the utility reimbursement either to the family or directly to the utility supplier to pay the utility bill on behalf of the family. If the PHA elects to pay the utility supplier, the PHA must notify the family of the amount paid to the utility supplier. 
</P>
<P>(3) In the other Section 8 programs, the owner must pay the utility reimbursement either: 
</P>
<P>(i) To the family, or 
</P>
<P>(ii) With consent of the family, to the utility supplier to pay the utility bill on behalf of the family. 
</P>
<CITA TYPE="N">[65 FR 16719, Mar. 29, 2000, as amended at 82 FR 58339, Dec. 12, 2017; 89 FR 38290, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 5.634" NODE="24:1.1.1.1.5.6.20.13" TYPE="SECTION">
<HEAD>§ 5.634   Tenant rent.</HEAD>
<P>(a) <I>Section 8 programs.</I> For Section 8 programs other than the Section 8 voucher program, tenant rent is total tenant payment minus any utility allowance. 
</P>
<P>(b) <I>Public housing.</I> See § 960.253 of this title for the determination of tenant rent. 
</P>
<CITA TYPE="N">[65 FR 16719, Mar. 29, 2000]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="21" NODE="24:1.1.1.1.5.6.21" TYPE="SUBJGRP">
<HEAD>Section 8 Project-Based Assistance: Occupancy Requirements</HEAD>


<DIV8 N="§ 5.653" NODE="24:1.1.1.1.5.6.21.14" TYPE="SECTION">
<HEAD>§ 5.653   Section 8 project-based assistance programs: Admission—Income-eligibility and income-targeting.</HEAD>
<P>(a) <I>Applicability.</I> This section describes requirements concerning income-eligibility and income-targeting that apply to the Section 8 project-based assistance programs, except for the moderate rehabilitation and the project-based voucher programs. 
</P>
<P>(b) <I>Who is eligible?</I>—(1) <I>Basic eligibility.</I> An applicant must meet all eligibility requirements in order to receive housing assistance. At a minimum, the applicant must be a family, as defined in § 5.403, and must be income-eligible, as described in this section. Such eligible applicants include single persons. 
</P>
<P>(2) <I>Low income limit.</I> No family other than a low income family is eligible for admission to the Section 8 project-based assistance programs. (This paragraph (b) does not apply to the Section 8 project-based voucher program under part 983 of this title.) 
</P>
<P>(c) <I>Targeting to extremely low income families.</I> For each project assisted under a contract for project-based assistance, of the dwelling units that become available for occupancy in any fiscal year that are assisted under the contract, not less than 40 percent shall be available for leasing only by families that are extremely low income families at the time of admission. 
</P>
<P>(d) <I>Limitation on admission of non-very low income families</I>—(1) <I>Admission to units available before October 1, 1981.</I> Not more than 25 percent of the Section 8 project-based dwelling units that were available for occupancy under Section 8 Housing Assistance Payments Contracts effective before October 1, 1981 and that are leased on or after that date shall be available for leasing by low income families other than very low income families. HUD reserves the right to limit the admission of low income families other than very low income families to these units. 
</P>
<P>(2) <I>Admission to units available on or after October 1, 1981.</I> Not more than 15 percent of the Section 8 project-based dwelling units that initially become available for occupancy under Section 8 Housing Assistance Payments (HAP) Contracts on or after October 1, 1981 shall be available for leasing by low income families other than families that are very low income families at the time of admission to the Section 8 program. Except with the prior approval of HUD under paragraphs (d)(3) and (d)(4) of this section, the owner may only lease such units to very low income families. 
</P>
<P>(3) <I>Request for exception.</I> A request by an owner for approval of admission of low income families other than very low income families to section 8 project-based units must state the basis for requesting the exception and provide supporting data. Bases for exceptions that may be considered include the following: 
</P>
<P>(i) Need for admission of a broader range of tenants to preserve the financial or management viability of a project because there is an insufficient number of potential applicants who are very low income families; 
</P>
<P>(ii) Commitment of an owner to attaining occupancy by families with a broad range of incomes; 
</P>
<P>(iii) Project supervision by a State Housing Finance Agency having a policy of occupancy by families with a broad range of incomes supported by evidence that the Agency is pursuing this goal throughout its assisted projects in the community, or a project with financing through Section 11(b) of the 1937 Act (42 U.S.C. 1437i) or under Section 103 of the Internal Revenue Code (26 U.S.C. 103); and 
</P>
<P>(iv) Low-income families that otherwise would be displaced from a Section 8 project. 
</P>
<P>(4) <I>Action on request for exception.</I> Whether to grant any request for exception is a matter committed by law to HUD's discretion, and no implication is intended to be created that HUD will seek to grant approvals up to the maximum limits permitted by statute, nor is any presumption of an entitlement to an exception created by the specification of certain grounds for exception that HUD may consider. HUD will review exceptions granted to owners at regular intervals. HUD may withdraw permission to exercise those exceptions for program applicants at any time that exceptions are not being used or after a periodic review, based on the findings of the review. 
</P>
<P>(e) <I>Income used for eligibility and targeting.</I> Family annual income (see § 5.609) is used both for determination of income-eligibility and for income-targeting under this section. 
</P>
<P>(f) <I>Reporting.</I> The Section 8 owner must comply with HUD-prescribed reporting requirements, including income reporting requirements that will permit HUD to maintain the data necessary to monitor compliance with income-eligibility and income-targeting requirements. 
</P>
<CITA TYPE="N">[65 FR 16719, Mar. 29, 2000, as amended at 89 FR 38290, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 5.655" NODE="24:1.1.1.1.5.6.21.15" TYPE="SECTION">
<HEAD>§ 5.655   Section 8 project-based assistance programs: Owner preferences in selection for a project or unit.</HEAD>
<P>(a) <I>Applicability.</I> This section applies to the section 8 project-based assistance programs. The section describes requirements concerning the Section 8 owner's selection of residents to occupy a project or unit, except for the moderate rehabilitation and the project-based voucher programs. 
</P>
<P>(b) <I>Selection</I>—(1) <I>Selection for owner's project or unit.</I> Selection for occupancy of a project or unit is the function of the Section 8 owner. However, selection is subject to the income-eligibility and income-targeting requirements in § 5.653. 
</P>
<P>(2) <I>Tenant selection plan.</I> The owner must adopt a written tenant selection plan in accordance with HUD requirements. 
</P>
<P>(3) <I>Amount of income.</I> The owner may not select a family for occupancy of a project or unit in an order different from the order on the owner's waiting list for the purpose of selecting a relatively higher income family. However, an owner may select a family for occupancy of a project or unit based on its income in order to satisfy the targeting requirements of § 5.653(c). 
</P>
<P>(4) <I>Selection for particular unit.</I> In selecting a family to occupy a particular unit, the owner may match family characteristics with the type of unit available, for example, number of bedrooms. If a unit has special accessibility features for persons with disabilities, the owner must first offer the unit to families which include persons with disabilities who require such features (see §§ 8.27 and 100.202 of this title). 
</P>
<P>(5) <I>Housing assistance limitation for single persons.</I> A single person who is not an elderly or displaced person, a person with disabilities, or the remaining member of a resident family may not be provided a housing unit with two or more bedrooms. 
</P>
<P>(c) <I>Particular owner preferences.</I> The owner must inform all applicants about available preferences and must give applicants an opportunity to show that they qualify for available preferences. 
</P>
<P>(1) <I>Residency requirements or preferences.</I> (i) Residency requirements are prohibited. Although the owner is not prohibited from adopting a residency preference, the owner may only adopt or implement residency preferences in accordance with non-discrimination and equal opportunity requirements listed at § 5.105(a). 
</P>
<P>(ii) A residency preference is a preference for admission of persons who reside in a specified geographic area (“residency preference area”). 
</P>
<P>(iii) An owner's residency preference must be approved by HUD in one of the following methods: 
</P>
<P>(A) Prior approval of the housing market area in the Affirmative Fair Housing Marketing plan (in accordance with § 108.25 of this title) as a residency preference area; 
</P>
<P>(B) Prior approval of the residency preference area in the PHA plan of the jurisdiction in which the project is located; 
</P>
<P>(C) Modification of the Affirmative Fair Housing Marketing Plan, in accordance with § 108.25 of this title, 
</P>
<P>(iv) Use of a residency preference may not have the purpose or effect of delaying or otherwise denying admission to a project or unit based on the race, color, ethnic origin, gender, religion, disability, or age of any member of an applicant family. 
</P>
<P>(v) A residency preference must not be based on how long an applicant has resided or worked in a residency preference area. 
</P>
<P>(vi) Applicants who are working or who have been notified that they are hired to work in a residency preference area must be treated as residents of the residency preference area. The owner may treat graduates of, or active participants in, education and training programs in a residency preference area as residents of the residency preference area if the education or training program is designed to prepare individuals for the job market. 
</P>
<P>(2) <I>Preference for working families.</I> (i) The owner may adopt a preference for admission of working families (families where the head, spouse or sole member is employed). However, an applicant shall be given the benefit of the working family preference if the head and spouse, or sole member, is age 62 or older, or is a person with disabilities. 
</P>
<P>(ii) If the owner adopts a preference for admission of working families, the owner must not give a preference based on the amount of earned income. 
</P>
<P>(3) <I>Preference for person with disabilities.</I> The owner may adopt a preference for admission of families that include a person with disabilities. However, the owner may not adopt a preference for admission of persons with a specific disability. 
</P>
<P>(4) <I>Preference for victims of domestic violence.</I> The owner should consider whether to adopt a preference for admission of families that include victims of domestic violence. 
</P>
<P>(5) <I>Preference for single persons who are elderly, displaced, homeless or persons with disabilities over other single persons.</I> The owner may adopt a preference for admission of single persons who are age 62 or older, displaced, homeless, or persons with disabilities over other single persons. 
</P>
<CITA TYPE="N">[65 FR 16720, Mar. 29, 2000, as amended at 89 FR 38290, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 5.657" NODE="24:1.1.1.1.5.6.21.16" TYPE="SECTION">
<HEAD>§ 5.657   Section 8 project-based assistance programs: Reexamination of family income and composition.</HEAD>
<P>(a) <I>Applicability.</I> This section states requirements for reexamination of family income and composition in the Section 8 project-based assistance programs, except for the moderate rehabilitation and the project-based voucher programs. 
</P>
<P>(b) <I>Regular reexamination.</I> The owner must conduct a reexamination and redetermination of family income and composition at least annually. 
</P>
<P>(c) <I>Interim reexaminations.</I> (1) <I>Generally.</I> A family may request an interim reexamination of family income because of any changes since the last examination. The owner must conduct any interim reexamination within a reasonable time after the family request or when the owner becomes aware of an increase in family adjusted income under paragraph (c)(3) of this section. What qualifies as a “reasonable time” may vary based on the amount of time it takes to verify information, but such time generally should not exceed 30 days from the date a family reports changes in income to an owner.
</P>
<P>(2) <I>Decreases in the family's annual adjusted income.</I> The owner may decline to conduct an interim reexamination of family income if the owner estimates that the family's adjusted income will decrease by an amount that is less than ten percent of the family's annual adjusted income (or a lower amount established by HUD through notice), or such lower threshold established by the owner.
</P>
<P>(3) <I>Increases in the family's annual adjusted income.</I> The owner must conduct an interim reexamination of family income when the owner becomes aware that the family's adjusted income (as defined in § 5.611) has changed by an amount that the owner estimates will result in an increase of ten percent or more in annual adjusted income or such other amount established by HUD through notice, except:
</P>
<P>(i) The owner may not consider any increase in the earned income of the family when estimating or calculating whether the family's adjusted income has increased, unless the family has previously received an interim reduction under paragraph (c)(1) of this section during the certification period; and
</P>
<P>(ii) The owner may choose not to conduct an interim reexamination in the last three months of a certification period.
</P>
<P>(4) <I>Policies on reporting changes in family income or composition.</I> The owner must adopt policies consistent with this paragraph (c), prescribing when and under what conditions the family must report a change in family income or composition.
</P>
<P>(5) <I>Effective date of rent changes.</I> (i) If the family has reported a change in family income or composition in a timely manner according to the owner's policies, the owner must provide the family with 30 days advance notice of any rent increase, and such rent increase will be effective the first day of the month beginning after the end of that 30-day notice period. Rent decreases will be effective on the first day of the first month after the date of the actual change leading to the interim reexamination of family income.
</P>
<P>(ii) If the family has failed to report a change in family income or composition in a timely manner according to the owner's policies, owners must implement any resulting rent increases retroactively to the first of the month following the date of the change leading to the interim reexamination of family income. Any resulting rent decrease must be implemented no later than the first rent period following completion of the reexamination. However, rent decreases may be applied retroactively at the discretion of the owner, in accordance with the owner's conditions as established in written policy, and subject to paragraph (c)(5)(iii) of this section.
</P>
<P>(iii) A retroactive rent decrease may not be applied by the owner prior to the later of the first of the month following:
</P>
<P>(A) The date of the change leading to the interim reexamination of family income; or
</P>
<P>(B) The effective date of the family's most recent previous interim or annual reexamination (or initial examination if that was the family's last examination).
</P>
<P>(d) <I>Streamlined income determination</I>—(1) <I>General.</I> An owner may elect to apply a streamlined income determination to families receiving fixed income as described in paragraph (d)(3) of this section.
</P>
<P>(2) <I>Definition of “fixed income”.</I> For purposes of this section, “fixed income” means periodic payments at reasonably predictable levels from one or more of the following sources:
</P>
<P>(i) Social Security, Supplemental Security Income, Supplemental Disability Insurance.
</P>
<P>(ii) Federal, state, local, or private pension plans.
</P>
<P>(iii) Annuities or other retirement benefit programs, insurance policies, disability or death benefits, or other similar types of periodic receipts.
</P>
<P>(iv) Any other source of income subject to adjustment by a verifiable COLA or current rate of interest.
</P>
<P>(3) <I>Method of streamlined income determination.</I> Owners using the streamlined income determination must adjust a family's income according to the percentage of a family's unadjusted income that is from fixed income.
</P>
<P>(i) When 90 percent or more of a family's unadjusted income consists of fixed income, owners using streamlined income determinations must apply a COLA or COLAs to the family's fixed-income sources, provided that the family certifies both that 90 percent or more of their unadjusted income is fixed income and that their sources of fixed income have not changed from the previous year. For non-fixed income, owners are not required to make adjustments pursuant to paragraph (b) of this section.
</P>
<P>(ii) When less than 90 percent of a family's unadjusted income consists of fixed income, owners using streamlined income determinations must apply a COLA to each of the family's sources of fixed income. Owners must determine all other income pursuant to paragraph (b) of this section.
</P>
<P>(4) <I>COLA rate applied by owners.</I> Owners using streamlined income determinations must adjust a family's fixed income using a COLA or current interest rate that applies to each specific source of fixed income and is available from a public source or through tenant-provided, third-party-generated documentation. If no public verification or tenant-provided documentation is available, then the owner must obtain third-party verification of the income amounts in order to calculate the change in income for the source.
</P>
<P>(5) <I>Triennial verification.</I> For any income determined pursuant to a streamlined income determination, an owner must obtain third-party verification of all income amounts every 3 years.
</P>
<P>(e) <I>Other applicable requirements.</I> Reviews of family income under this section are subject to the provisions in Section 904 of the Stewart B. McKinney Homeless Assistance Amendments Act of 1988, as amended (42 U.S.C. 3544), and any applicable privacy rules in subpart B of this part.
</P>
<P>(f) <I>De minimis errors.</I> The owner will not be considered out of compliance with the requirements in this section due solely to de minimis errors in calculating family income but is still obligated to correct errors once the owner becomes aware of the errors. A de minimis error is an error where the owner determination of family income varies from the correct income determination by no more than $30 per month in monthly adjusted income ($360 in annual adjusted income) per family.
</P>
<P>(1) The owner must take any corrective action necessary to credit or repay a family if the family has been overcharged for their rent as a result of the de minimis error in the income determination. Families will not be required to repay the owner in instances where the owner has miscalculated income resulting in a family being undercharged for rent or family share.
</P>
<P>(2) HUD may revise the amount of de minimis error in this paragraph (f) through a rulemaking published in the <E T="04">Federal Register</E> for public comment.
</P>
<CITA TYPE="N">[65 FR 16720, Mar. 29, 2000, as amended at 81 FR 12371, Mar. 8, 2016; 82 FR 58340, Dec. 12, 2017; 85 FR 27139, May 7, 2020; 88 FR 9661, Feb. 14, 2023; 89 FR 38290, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 5.659" NODE="24:1.1.1.1.5.6.21.17" TYPE="SECTION">
<HEAD>§ 5.659   Family information and verification.</HEAD>
<P>(a) <I>Applicability.</I> This section states requirements for reexamination of family income and composition in the Section 8 project-based assistance programs, except for the moderate rehabilitation program and the project-based voucher programs. 
</P>
<P>(b) <I>Family obligation to supply information.</I> (1) The family must supply any information that HUD or the owner determines is necessary in administration of the Section 8 program, including submission of required evidence of citizenship or eligible immigration status (as provided by part 5, subpart E of this title). “Information” includes any requested certification, release or other documentation. 
</P>
<P>(2) The family must supply any information requested by the owner or HUD for use in a regularly scheduled reexamination or an interim reexamination of family income and composition in accordance with HUD requirements. 
</P>
<P>(3) For requirements concerning the following, see part 5, subpart B of this title: 
</P>
<P>(i) Family verification and disclosure of social security numbers; 
</P>
<P>(ii) Family execution and submission of consent forms for obtaining wage and claim information from State Wage Information Collection Agencies (SWICAs). 
</P>
<P>(4) Any information supplied by the family must be true and complete. 
</P>
<P>(c) <I>Family release and consent.</I> (1) As a condition of admission to or continued occupancy of a unit with Section 8 assistance, the owner must require the family head, and such other family members as the owner designates, to execute a HUD-approved release and consent form (including any release and consent as required under § 5.230 of this title) authorizing any depository or private source of income, or any Federal, State or local agency, to furnish or release to the owner or HUD such information as the owner or HUD determines to be necessary. 
</P>
<P>(2) The use or disclosure of information obtained from a family or from another source pursuant to this release and consent shall be limited to purposes directly connected with administration of the Section 8 program. 
</P>
<P>(d) <I>Owner responsibility for verification.</I> Except as allowed under paragraph (e), the owner must obtain and document in the family file third party verification of the following factors, or must document in the file why third party verification was not available:
</P>
<P>(1) Reported family annual income; 
</P>
<P>(2) The value of assets; 
</P>
<P>(3) Expenses related to deductions from annual income; and 
</P>
<P>(4) Other factors that affect the determination of adjusted income. 
</P>
<P>(e) <I>Verification of assets.</I> For a family with net family assets (as the term is defined in § 5.603) equal to or less than $50,000, which amount will be adjusted annually by HUD in accordance with the Consumer Price Index for Urban Wage Earners and Clerical Workers, an owner may accept, for purposes of recertification of income, a family's declaration under § 5.618(b), except that the owner must obtain third-party verification of all family assets every 3 years.
</P>
<CITA TYPE="N">[65 FR 16721, Mar. 29, 2000, as amended at 82 FR 58340, Dec. 12, 2017; 88 FR 9662, Feb. 14, 2023; 89 FR 38290, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 5.661" NODE="24:1.1.1.1.5.6.21.18" TYPE="SECTION">
<HEAD>§ 5.661   Section 8 project-based assistance programs: Approval for police or other security personnel to live in project.</HEAD>
<P>(a) <I>Applicability.</I> This section describes when a Section 8 owner may lease a Section 8 unit to police or other security personnel with continued Section 8 assistance for the unit. This section applies to the Section 8 project-based assistance programs. 
</P>
<P>(b) <I>Terms.</I> (1) <I>Security personnel</I> means: 
</P>
<P>(i) A police officer, or 
</P>
<P>(ii) A qualified security professional, with adequate training and experience to provide security services for project residents. 
</P>
<P>(2) <I>Police officer</I> means a person employed on a full-time basis as a duly licensed professional police officer by a Federal, State or local government or by any agency of these governments. 
</P>
<P>(3) <I>Security</I> includes the protection of project residents, including resident project management from criminal or other activity that is a threat to person or property, or that arouses fears of such threat. 
</P>
<P>(c) <I>Owner application.</I> (1) The owner may submit a written application to the contract administrator (PHA or HUD) for approval to lease an available unit in a Section 8 project to security personnel who would not otherwise be eligible for Section 8 assistance, for the purpose of increasing security for Section 8 families residing in the project.
</P>
<P>(2) The owner's application must include the following information: 
</P>
<P>(i) A description of criminal activities in the project and the surrounding community, and the effect of criminal activity on the security of project residents. 
</P>
<P>(ii) Qualifications of security personnel who will reside in the project, and the period of residence by such personnel. How owner proposes to check backgrounds and qualifications of any security personnel who will reside in the project. 
</P>
<P>(iii) Full disclosure of any family relationship between the owner and any security personnel. For this purpose, “owner” includes a principal or other interested party. 
</P>
<P>(iv) How residence by security personnel in a project unit will increase security for Section 8 assisted families residing in the project. 
</P>
<P>(v) The amount payable monthly as rent to the unit owner by security personnel residing in the project (including a description of how this amount is determined), and the amount of any other compensation by the owner to such resident security personnel. 
</P>
<P>(vi) The terms of occupancy by such security personnel. The lease by owner to the approved security personnel may provide that occupancy of the unit is authorized only while the security personnel is satisfactorily performing any agreed responsibilities and functions for project security. 
</P>
<P>(vii) Other information as requested by the contract administrator. 
</P>
<P>(d) <I>Action by contract administrator.</I> (1) The contract administrator shall have discretion to approve or disapprove owner's application, and to impose conditions for approval of occupancy by security personnel in a section 8 project unit. 
</P>
<P>(2) Notice of approval by the contract administrator shall specify the term of such approved occupancy. Such approval may be withdrawn at the discretion of the contract administrator, for example, if the contract administrator determines that such occupancy is not providing adequate security benefits as proposed in the owner's application; or that security benefits from such occupancy are not a sufficient return for program costs. 
</P>
<P>(e) <I>Housing assistance payment and rent.</I> (1) During approved occupancy by security personnel as provided in this section, the amount of the monthly housing assistance payment to the owner shall be equal to the contract rent (as determined in accordance with the HAP contract and HUD requirements) minus the amount (as approved by the contract administrator) of rent payable monthly as rent to the unit owner by such security personnel. The owner shall bear the risk of collecting such rent from such security personnel, and the amount of the housing assistance payment shall not be increased because of non-payment by such security personnel. The owner shall not be entitled to receive any vacancy payment for the period following occupancy by such security personnel. 
</P>
<P>(2) In approving the amount of monthly rent payable by security personnel for occupancy of a contract unit, the contract administrator may consider whether security services to be performed are an adequate return for housing assistance payments on the unit, or whether the cost of security services should be borne by the owner from other project income. 
</P>
<CITA TYPE="N">[65 FR 16721, Mar. 29, 2000]
</CITA>
<EFFDNOT>
<HED>Effective Date Note:</HED><PSPACE>At 65 FR 16721, Mar. 29, 2000, § 5.661 was added. This section contains information collection and recordkeeping requirements and will not become effective until approval has been given by the Office of Management and Budget.</PSPACE></EFFDNOT>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="G" NODE="24:1.1.1.1.5.7" TYPE="SUBPART">
<HEAD>Subpart G—Physical Inspection of Real Estate</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>88 FR 30490, May 11, 2023, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 5.701" NODE="24:1.1.1.1.5.7.22.1" TYPE="SECTION">
<HEAD>§ 5.701   Applicability.</HEAD>
<P>(a) <I>Scope.</I> This subpart applies the national standards for the physical inspection of real estate standards to the following HUD programs:
</P>
<P>(1) All Public Housing programs (programs for housing assisted under the U.S. Housing Act of 1937 other than section 8 of the Act);
</P>
<P>(2) The Housing Choice Voucher program under section 8(o) of the U.S. Housing Act of 1937, part 982 of this title and the Project-Based Voucher program under section 8(o)(13) of the Act and the regulations at 24 CFR part 983 (referred to in this part as the HCV and PBV programs, or HCV and PBV housing);
</P>
<P>(3) All project-based Section 8 programs;
</P>
<P>(4) Section 202 Supportive Housing for the Elderly (Capital Advances);
</P>
<P>(5) Section 811 Supportive Housing for Persons with Disabilities (Capital Advances);
</P>
<P>(6) Section 202 direct loan program for projects for the elderly and persons with disabilities as it existed before October 1, 1991 (including 202/8 projects and 202/162 projects); and
</P>
<P>(7) Housing with mortgages insured or held by HUD, or housing that is receiving assistance from HUD, under the following authorities:
</P>
<P>(i) Section 207 of the National Housing Act (NHA) (12 U.S.C. 1701 <I>et seq.</I>) (Rental Housing Insurance);
</P>
<P>(ii) Section 213 of the NHA (Cooperative Housing Insurance);
</P>
<P>(iii) Section 220 of the NHA (Rehabilitation and Neighborhood Conservation Housing Insurance);
</P>
<P>(iv) Section 221(d)(3) of the NHA (Market Interest Rate (MIR) program);
</P>
<P>(v) Section 221(d)(3) and (5) of the NHA (Below Market Interest Rate (BMIR) program);
</P>
<P>(vi) Section 221(d)(4) of the NHA (Housing for Moderate Income and Displaced Families);
</P>
<P>(vii) Section 231 of the NHA (Housing for Elderly Persons);
</P>
<P>(viii) Section 232 of the NHA (Mortgage Insurance for Nursing Homes, Intermediate Care Facilities, Assisted Living Facilities, Board and Care Homes);
</P>
<P>(ix) Section 234(d) of the NHA (Rental) (Mortgage Insurance for Condominiums);
</P>
<P>(x) Section 236 of the NHA (Rental and Cooperative Housing for Lower Income Families);
</P>
<P>(xi) Section 241 of the NHA (Supplemental Loans for Multifamily Projects). (Where, however, the primary mortgage of a Section 241 property is insured or assisted by HUD under a program covered in this part, the coverage by two HUD programs does not trigger two inspections); and
</P>
<P>(xii) Section 542(c) of the Housing and Community Development Act of 1992 (12 U.S.C. 1707 note) (Housing Finance Agency Risk Sharing program).
</P>
<P>(b) <I>Conflicts.</I> The regulations in this subpart may be supplemented by the specific regulations for the HUD-assisted programs listed in paragraph (a) of this section. The program-specific regulations may address the frequency of inspections, who performs the inspections and whether alternative inspections are available given the statutory and regulatory framework for the program. When there is a conflict between the regulations of this subpart and the program-specific regulations, the program-specific regulations govern.
</P>
<P>(c) <I>HUD housing.</I> For purposes of this subpart, the term “HUD housing” means the types of housing listed in paragraph (a) of this section.




</P>
</DIV8>


<DIV8 N="§ 5.703" NODE="24:1.1.1.1.5.7.22.2" TYPE="SECTION">
<HEAD>§ 5.703   National standards for the condition of HUD housing.</HEAD>
<P>(a) <I>General.</I> To ensure that all residents live in safe, habitable dwellings, the items and components located inside the building, outside the building, and within the units of HUD housing must be functionally adequate, operable, and free of health and safety hazards. The standards under this section apply to all HUD housing. HUD housing under the HCV, PBV, and Moderate Rehabilitation programs shall be subject to these standards only for:
</P>
<P>(1) The subsidized unit itself; and
</P>
<P>(2) Items and components within the primary and secondary means of egress from a unit's entry door(s) to the public way, those common features related to the residential use of the building (e.g., the laundry room, community room, mail room), and the systems equipment that directly services the subsidized unit.
</P>
<P>(b) <I>Inside.</I> Inside of HUD housing (or “inside areas”) refers to the common areas and building systems that can be generally found within the building interior and are not inside a unit. Examples of “inside” common areas may include, basements, interior or attached garages, enclosed carports, restrooms, closets, utility rooms, mechanical rooms, community rooms, day care rooms, halls, corridors, stairs, shared kitchens, laundry rooms, offices, enclosed porches, enclosed patios, enclosed balconies, and trash collection areas. Examples of building systems include those components that provide domestic water such as pipes, electricity, elevators, emergency power, fire protection, HVAC, and sanitary services. The inside area must meet the following affirmative requirements:
</P>
<P>(1) The inside area must include at least one battery-operated or hard-wired smoke detector, in proper working condition, on each level of the property. The Secretary may establish additional standards through <E T="04">Federal Register</E> notification;
</P>
<P>(2) Except for housing subject to this subpart only through § 5.701(a)(6) or (7), or housing otherwise exempt from this requirement as provided elsewhere in this title, the inside area must meet or exceed the carbon monoxide detection standards set by the Secretary through <E T="04">Federal Register</E> notification;
</P>
<P>(3) For the inside area, any outlet installed within 6 feet of a water source must be ground-fault circuit interrupter (GFCI) protected;
</P>
<P>(4) The inside area must have a guardrail when there is an elevated walking surface with a drop off of 30 inches or greater measured vertically;
</P>
<P>(5) The inside area must have permanently mounted light fixtures in any kitchens and each bathroom; and
</P>
<P>(6) The inside area may not contain unvented space heaters that burn gas, oil, or kerosene.
</P>
<P>(c) <I>Outside.</I> Outside of HUD housing (or “outside areas”) refers to the building site, building exterior components, and any building systems located outside of the building or unit. Examples of “outside” components may include fencing, retaining walls, grounds, lighting, mailboxes, project signs, parking lots, detached garage or carport, driveways, play areas and equipment, refuse disposal, roads, storm drainage, non-dwelling buildings, and walkways. Components found on the exterior of the building are also considered outside areas, and examples may include doors, attached porches, attached patios, balconies, car ports, fire escapes, foundations, lighting, roofs, walls, and windows. The outside area must meet the following affirmative requirements:
</P>
<P>(1) For the outside area, outlets within 6 feet of a water source must be GFCI protected; and
</P>
<P>(2) The outside area must have a guardrail when there is an elevated walking surface with a drop off of 30 inches or greater measured vertically.
</P>
<P>(d) <I>Units.</I> A unit (or “dwelling unit”) of HUD housing refers to the interior components of an individual unit. Examples of components included in the interior of a unit may include the balcony, bathroom, call-for-aid (if applicable), carbon monoxide devices, ceiling, doors, electrical systems, enclosed patio, floors, HVAC (where individual units are provided), kitchen, lighting, outlets, smoke detectors, stairs, switches, walls, water heater, and windows. The unit must also meet the following affirmative requirements:
</P>
<P>(1) The unit must have hot and cold running water in both the bathroom and kitchen, including an adequate source of safe drinking water in the bathroom and kitchen;
</P>
<P>(2) The unit must include its own bathroom or sanitary facility that is in proper operating condition and usable in privacy. It must contain a sink, a bathtub or shower, and an interior flushable toilet;
</P>
<P>(3) (i) The unit must include at least one battery-operated or hard-wired smoke detector, in proper working condition, in the following locations:
</P>
<P>(A) On each level of the unit;
</P>
<P>(B) Inside each bedroom;
</P>
<P>(C) Within 21 feet of any door to a bedroom measured along a path of travel; and
</P>
<P>(D) Where a smoke detector installed outside a bedroom is separated from an adjacent living area by a door, a smoke detector must also be installed on the living area side of the door.
</P>
<P>(ii) If the unit is occupied by any hearing-impaired person, the smoke detectors must have an alarm system designed for hearing-impaired persons;
</P>
<P>(iii) The Secretary may establish additional standards through <E T="04">Federal Register</E> notification;
</P>
<P>(iv) Following the specifications of National Fire Protection Association Standard (NFPA) 72 satisfies the requirements of this paragraph (d)(3);
</P>
<P>(4) The unit must have a living room and a kitchen area with a sink, cooking appliance, refrigerator, food preparation area, and food storage area;
</P>
<P>(5) For units assisted under the HCV or PBV program, the unit must have at least one bedroom or living/sleeping room for each two persons;
</P>
<P>(6) Except for units subject to this subpart only through § 5.701(a)(6) or (7), or housing otherwise exempt from this requirement as provided elsewhere in this title, the unit must meet or exceed the carbon monoxide detection standards set by HUD through <E T="04">Federal Register</E> notification;
</P>
<P>(7) The unit must have two working outlets or one working outlet and a permanent light within all habitable rooms;
</P>
<P>(8) Outlets within 6 feet of a water source must be GFCI protected:
</P>
<P>(9) For climate zones designated by the Secretary through notice, the unit must have a permanently installed heating source. No units may contain unvented space heaters that burn gas, oil, or kerosene;
</P>
<P>(10) The unit must have a guardrail when there is an elevated walking surface with a drop off of 30 inches or greater measured vertically; and
</P>
<P>(11) The unit must have a permanently mounted light fixture in the kitchen and each bathroom.
</P>
<P>(e) <I>Health and safety concerns</I>—(1) <I>General.</I> The inside, outside and unit must be free of health and safety hazards that pose a danger to residents. Types of health and safety concerns include, but are not limited to carbon monoxide, electrical hazards, extreme temperature, flammable materials or other fire hazards, garbage and debris, handrail hazards, infestation, lead-based paint, mold, and structural soundness.
</P>
<P>(2) <I>Lead-based paint.</I> HUD housing must comply with all requirements related to the evaluation and control of lead-based paint hazards and have available proper documentation of such (<I>see</I> 24 CFR part 35). The Lead-based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead-based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and the applicable regulations at 24 CFR part 35 apply.
</P>
<P>(f) <I>Compliance with State and local codes.</I> (1) The standards for the condition of HUD housing in this section do not supersede State and local housing codes (such as fire, mechanical, plumbing, carbon monoxide, property maintenance, or residential code requirements).
</P>
<P>(2) All HUD housing other than units assisted under the HCV and PBV programs must comply with State or local housing codes in order to comply with this subpart.
</P>
<P>(3) State and local code compliance is not part of the determination of whether a unit passes the standards for the condition of HUD housing under this section for the HCV and PBV programs (except in accordance with § 5.705(a)(3)).
</P>
<P>(g) <I>Use of an alternative inspection or additional standard for HCV and PBV programs.</I> A PHA is not subject to the standards set by this section when the PHA is relying on an alternative inspection in accordance with 24 CFR 982.406. PHAs may also elect to establish additional requirements for quality, architecture, or design of PBV housing, and any such additional requirements must be specified in the Agreement to enter into a HAP Contract or HAP Contract as provided in 24 CFR part 983.
</P>
<P>(h) <I>Special housing types in the HCV, PBV and Moderate Rehabilitation programs.</I> Part 982, subpart M, of this title identifies special housing types which require standards unique to special types of housing. Unless modified by program-specific regulations, NSPIRE Standards will apply for these special housing types.




</P>
</DIV8>


<DIV8 N="§ 5.705" NODE="24:1.1.1.1.5.7.22.3" TYPE="SECTION">
<HEAD>§ 5.705   Inspection requirements.</HEAD>
<P>(a) <I>Procedures</I>—(1) <I>General.</I> Any entity responsible for conducting an inspection of HUD housing to determine compliance with this subpart, must inspect and score such HUD housing in accordance with the standards and procedures for identifying safe, habitable housing set out by the Secretary and published in the <E T="04">Federal Register</E> as described in § 5.711. The entity conducting the inspection shall identify each deficiency as “Life Threatening”, “Severe,” “Moderate”, or “Low.”
</P>
<P>(2) <I>Inspection scope.</I> The inspection requirement for HUD housing generally requires the inside, outside and unit to be inspected, in accordance with § 5.703. The inspection requirement for the tenant-based HCV program and the unit inspection for the PBV and Moderate Rehabilitation programs only applies to units occupied or to be occupied by HCV, PBV, and Moderate Rehabilitation participants, and common areas and exterior areas which either service or are associated with such units.
</P>
<P>(3) <I>HCV and PBV variant inspection standards.</I> (i) HUD may approve inspection criteria variations for the following purposes:
</P>
<P>(A) Variations which apply standards in local housing codes or other codes adopted by the PHA; or
</P>
<P>(B) Variations because of local climatic or geographic conditions.
</P>
<P>(ii) Acceptability criteria variations may only be approved by HUD pursuant to paragraph (a)(3)(i) of this section if such variations either:
</P>
<P>(A) Meet or exceed the performance requirements; or
</P>
<P>(B) Significantly expand affordable housing opportunities for families assisted under the program.
</P>
<P>(iii) HUD will not approve any inspection criteria variation if HUD believes that such variation is likely to adversely affect the health or safety of participant families, or severely restrict housing choice.
</P>
<P>(iv) Approved variations must be added to the Administrative Plan as described in 24 CFR 982.54(d)(21).
</P>
<P>(b) <I>Entity conducting inspections.</I> HUD housing must be inspected by the appropriate entity as described in paragraph (b)(1) of this section, except as described in paragraph (b)(2) of this section.
</P>
<P>(1) <I>General.</I> The owner, lender, contract administrator, or HUD is the entity responsible for performing inspections of HUD housing as provided in this title, or a regulatory agreement or contract. For properties with more than one HUD-insured loan, only the first mortgage lender is required to conduct the inspection. The second mortgage lender will be provided a copy of the physical inspection report by the first mortgage lender.
</P>
<P>(2) <I>Exception.</I> Under the HCV and PBV programs, the Public Housing Agency is responsible for inspecting HUD housing under those programs, unless another entity is assigned the inspection by the program regulations governing the housing, regulatory agreements or contracts. A PHA-owned unit receiving assistance under section 8(o) of the 1937 act must be inspected by an independent entity as specified in 24 CFR parts 982 and 983. Under the Moderate Rehabilitation program, the PHA is responsible for inspecting the HUD housing unless the PHA is managing units on which it is also administering the HAP Contract in accordance with 24 CFR 882.412, in which case HUD is responsible for the inspections in accordance with 24 CFR 882.516(d).
</P>
<P>(c) <I>Timing of inspections</I>—(1) <I>Generally.</I> A property must be inspected before the property is approved for participation in any of the HUD housing programs under this part unless there is a program specific exception to this requirement. An entity responsible for conducting an inspection of HUD housing to determine compliance with this subpart must inspect such housing annually unless specified otherwise below. An inspection shall be conducted no earlier than 3 months before and no later than 3 months after the date marking the anniversary of the previous inspection, except that inspections due on or before July 1, 2024, shall be conducted no earlier than 6 months before and no later than 6 months after the date marking the anniversary of the previous inspection. HUD may approve requests by an owner or PHA for extensions of the deadline for an inspection for good cause as determined by HUD and HUD may extend inspection deadlines without owner request, as deemed necessary by the Secretary.
</P>
<P>(2) <I>Extended inspection cycle.</I> HUD housing, except as specified below, shall be scored and ranked in accordance with the methodology provided through <E T="04">Federal Register</E> notification.
</P>
<P>(i) <I>Standard 1 performing property.</I> If a property receives a score of 90 points or higher on its physical condition inspection, the property will be designated a standard 1 performing property. Properties designated as standard 1 performing properties will be required to undergo a physical inspection once every three (3) years.
</P>
<P>(ii) <I>Standard 2 performing property.</I> If a property receives a score of 80 points or higher but less than 90 on its physical condition inspection, the property will be designated a standard 2 performing property. Properties designated as standard 2 performing properties will be required to undergo a physical inspection once every two (2) years.
</P>
<P>(iii) <I>Standard 3 performing property.</I> If a property receives a score of less than 80 points, the property will be designated a standard 3 performing property. Properties designated as standard 3 performing properties will continue to undergo an annual physical inspection as currently required under covered HUD programs.
</P>
<P>(3) <I>Triennial cycle for small rural PHAs.</I> Small rural PHAs as defined in 24 CFR 902.101 shall be assessed in accordance with part 902, subpart H of this title.
</P>
<P>(4) <I>Triennial cycle for small PHAs.</I> Small PHAs as defined in 24 CFR 902.13(a) shall be assessed in accordance with 24 CFR 902.13(a).
</P>
<P>(5) <I>Housing choice vouchers.</I> PHAs must inspect units subject to part 982 of this title in accordance with the frequency described in 24 CFR 982.405.
</P>
<P>(6) <I>Project based vouchers.</I> PHAs must inspect units subject to 24 CFR part 983 in accordance with the frequency described in 24 CFR 983.103.
</P>
<P>(7) <I>FHA insured mortgages section 232 facilities.</I> HUD may exempt assisted-living facilities, board and care facilities, and intermediate care facilities from physical inspections under this part if HUD determines that the State or local government has a reliable and adequate inspection system in place, with the results of the inspection being readily and timely available to HUD. For any other section 232 facilities, the inspection will be conducted only when and if HUD determines, on the basis of information received, such as through a complaint, site inspection, or referral by a State agency, on a case-by-case basis, that inspection of a particular facility is needed to assure protection of the residents or the adequate preservation of the project.
</P>
<P>(8) <I>Section 8 Moderate Rehabilitation program.</I> PHAs must inspect units subject to the Moderate Rehabilitation program under 24 CFR part 882 in accordance with the frequency described in 24 CFR 882.516.
</P>
<P>(d) <I>Inspection costs.</I> The cost of an inspection shall be the responsibility of the entity responsible for the inspection as identified in paragraph (a) of this section, except that a reasonable fee may be required of the owner of a property for a reinspection if an owner notifies the entity responsible for the inspection that a repair has been made or the allotted time for repairs has elapsed and a reinspection reveals that any deficiency cited in the previous inspection that the owner is responsible for repairing was not corrected. No fee may be passed along to the household residing in the unit or units.
</P>
<P>(e) <I>Access to property for inspection.</I> Nothing in this subpart shall restrict the right of HUD, or an entity contracted by HUD, to inspect a property. All owners and PHAs are required to provide HUD or its representative with full and free access to all HUD-assisted properties. All owners and PHAs are required to provide HUD or its representative with access to all units and appurtenances in order to permit physical inspections, monitoring reviews, and quality assurance reviews under this part. Access to the units shall be provided whether or not the resident is home or has installed additional locks for which the owner or PHA did not obtain keys. In the event that an owner or PHA fails to provide access as required by HUD or its representative, the owner or PHA shall be given a physical condition score of zero for the project or projects involved. A score of zero for an owner or PHA shall be used to calculate the physical condition indicator score and the overall assessment score for that owner or PHA.
</P>
<P>(f) <I>Tenant involvement in inspections.</I> HUD will establish, through notice, a procedure for tenants to recommend to HUD particular units which HUD may choose to inspect either during or separate from its standard inspection. HUD will evaluate the condition of these units and issue a report on findings, but they will not be included in the official score unless they were randomly selected independent of the tenant's recommendation. The owner or PHA is required to correct any deficiency HUD identifies within the timeframes HUD has established for the identified deficiency.




</P>
</DIV8>


<DIV8 N="§ 5.707" NODE="24:1.1.1.1.5.7.22.4" TYPE="SECTION">
<HEAD>§ 5.707   Uniform self-inspection requirement and report.</HEAD>
<P>All PHAs and owners of HUD housing subject to an assistance contract, other than owners participating in the HCV, PBV, and Moderate Rehabilitation programs, are required to annually self-inspect their properties, including all units, to ensure the units are maintained in accordance with the standards in § 5.703. The owner or PHA must maintain the results of such self-inspections for three years and must provide the results to HUD upon request. This self-inspection is independent of other HUD inspections discussed in § 5.705. The owner or PHA may choose to conduct this inspection after a HUD inspection to satisfy this requirement and the post-report survey requirement at § 5.711(c)(2) simultaneously.




</P>
</DIV8>


<DIV8 N="§ 5.709" NODE="24:1.1.1.1.5.7.22.5" TYPE="SECTION">
<HEAD>§ 5.709   Administrative process for defining and revising inspection criteria.</HEAD>
<P>(a) <I>Inspection standards and scoring methodology.</I> The Secretary will publish in the <E T="04">Federal Register,</E> following notice and the opportunity to comment, a standards notification with a list of deficiencies and the relative severity of these deficiencies to use for inspecting HUD housing. This <E T="04">Federal Register</E> document will also include the factors for determining if an HCV, PBV, or Moderate Rehabilitation unit passes or fails the inspection. The Secretary will also publish in the <E T="04">Federal Register,</E> following notice and opportunity to comment, a scoring notification containing the methodologies to use for scoring and ranking HUD housing. After considering the public comments received on these <E T="04">Federal Register</E> documents, the Secretary will publish documents announcing the new inspections standards and scoring methodologies, and the date on which these notifications become effective.
</P>
<P>(1) <I>Revisions.</I> The Secretary will issue a notification in the <E T="04">Federal Register</E> published for at least 30 days of public comment making any revisions to the inspection and scoring procedures HUD deems necessary, at least once every three years, or three years after the most recent revision, whichever is later.
</P>
<P>(2) <I>Emergency revisions.</I> The Secretary may publish a notification without 30 days of public comment in the case of an emergency to protect Federal financial resources or the health or safety of residents of HUD housing, after HUD makes a documented determination that such action is warranted due to:
</P>
<P>(i) A Life-Threatening deficiency or Severe deficiency and other significant risks to safety as outlined in § 5.703;
</P>
<P>(ii) A new safety concern due to changing construction technology; or
</P>
<P>(iii) Other events as determined by the Secretary.
</P>
<P>(b) [Reserved]




</P>
</DIV8>


<DIV8 N="§ 5.711" NODE="24:1.1.1.1.5.7.22.6" TYPE="SECTION">
<HEAD>§ 5.711   Scoring, ranking criteria, and appeals.</HEAD>
<P>(a) <I>Applicability.</I> Administrative process for scoring and ranking the physical condition of HUD housing properties under this section does not apply to the HCV, PBV or Moderate Rehabilitation programs. PHAs administering HCV and PBV programs will be assessed under the Section 8 Management Assessment Program (“SEMAP”) or the small rural PHA assessment in accordance with 24 CFR part 985, and PHAs administering the Moderate Rehabilitation programs are subject to HUD review in accordance with 24 CFR 882.517.
</P>
<P>(b) <I>Scoring and ranking of HUD housing</I>—(1) <I>General.</I> HUD's Real Estate Assessment Center (REAC), or the appropriate entity either as described in § 5.705(b), or as identified in the regulator agreement or contract for the property as described in § 5.705(b)(1), will score and rank the physical condition of HUD housing properties in accordance with the procedures set out by the Secretary in § 5.709.
</P>
<P>(2) <I>Public housing programs.</I> PHAs operating public housing will be scored and ranked under the Public Housing Assessment System (“PHAS”) outlined in part 902 of this title.
</P>
<P>(c) <I>Inspection report requirements.</I> (1) <I>Life-Threatening deficiencies and Severe deficiencies.</I> Upon completion of an inspection, or at the end of each day on a multiple-day inspection, REAC, or the appropriate party as described in §  5.705(b), will provide the owner or PHA or owner's representative, a notice of any items classified as Life-Threatening or Severe deficiencies. All Life-Threatening items must be corrected within 24 hours of receipt of notice of these items, unless HUD approves a variation. All Severe items must be corrected within 24 hours of receipt of notice, unless indicated otherwise within the individual inspection standards published in the <E T="04">Federal Register</E> with notice and the opportunity for comment, or HUD approves a variation. The owner or PHA or owner's representative must electronically certify and provide supporting evidence within 2 business days after the deadline to correct the Life-Threatening and Severe items that the items have been resolved or sufficiently corrected such that they no longer pose a severe health or safety risk to residents of the property, or that the hazard is blocked until permanent repairs can be completed. If permanent repair will take longer than the allowable time in the relevant standard for the deficiency, the owner or PHA must provide HUD a timeframe for completing permanent repairs for HUD approval.
</P>
<P>(2) <I>Post-report inspection.</I> The owner or PHA must carefully review the inspection report and is responsible for conducting its own survey of the total property. Moderate deficiencies must be corrected within thirty days and Low deficiencies must be corrected within sixty days, unless indicated otherwise within the individual inspection standards published in the <E T="04">Federal Register</E> with notice and the opportunity for comment or within such other reasonable time prescribed by a HUD notice to the owner or PHA. For properties that scored at or above 60, the survey may be limited to inspecting for deficiencies based on the inspecting entity's inspection findings. For properties that scored below 60, the owner or PHA must conduct a survey of the entire project, including all units, inside areas, and outside areas, for any deficiency, and must electronically submit a copy of the results of the survey to HUD.
</P>
<P>(d) <I>Technical review of inspection results</I>—(1) <I>Timing.</I> A request for a technical review of inspection results must be submitted electronically and must be received by the inspecting entity no later than the 45th calendar day following the day the inspection report is provided to the owner or PHA.
</P>
<P>(2) <I>Request for technical review.</I> The request must be accompanied by the owner's or PHA's relevant evidence that an objectively verifiable and material error occurred or adverse conditions beyond the owner or PHA's control occurred, which if corrected will result in a significant improvement in the overall score of the property. A technical review of the inspection results will not be conducted based on conditions that were corrected subsequent to the inspection. Upon receipt of this request from the owner or PHA, the REAC will review the inspection and the evidence. If the REAC review determines that an objectively verifiable and material error (or errors) or adverse condition(s) beyond the owner's or PHA's control has been documented and that it is likely to result in a significant improvement in the property's overall score, the REAC will take one or a combination of the following actions:
</P>
<P>(i) Undertake a new inspection;
</P>
<P>(ii) Correct the original inspection; or
</P>
<P>(iii) Issue a new physical condition score.
</P>
<P>(3) <I>Burden of proof that error or adverse conditions occurred rests with owner or PHA.</I> The burden of proof rests with the owner or PHA to demonstrate that an objectively verifiable and material error (or errors) or adverse conditions occurred in the REAC's inspection through submission of evidence, which if corrected will result in a significant improvement in the property's overall score. The REAC will apply a rebuttable presumption that the inspection was conducted accurately. To support its request for a technical review of the physical inspection results, the owner or PHA may submit photographic evidence, written material from an objective source with subject matter expertise that pertains to the item being reviewed such as a local fire marshal, building code official, registered architect, or professional engineer, or other similar evidence.
</P>
<P>(4) <I>Basis for technical review.</I> An objectively verifiable material error must be present, or an adjustment to the score must be necessary, to allow for a technical review of inspection results. The basis for a technical review must not be due to the fault of the owner or PHA and must exhibit specific characteristics and meet specific thresholds. The applicable types of material errors and bases for adjustment are as follows.
</P>
<P>(i) <I>Building data error.</I> A building data error occurs if the inspector inspected the wrong building or a building that was not owned by the property, including common or site areas that were not a part of the property. Incorrect data due to the failure of an owner or PHA to ensure HUD's systems of records are updated cannot form the basis of a review. Incorrect building data that does not affect the score, such as the address and building name would not be considered material.
</P>
<P>(ii) <I>Unit count error.</I> A unit count error occurs if the total number of units considered in scoring is incorrect due to the fault of HUD. Since scoring uses total units, REAC will examine instances where the participant can provide evidence that the total units used was incorrect and that the results were not representative of the condition of the property.
</P>
<P>(iii) <I>A non-existent deficiency error.</I> A non-existent deficiency error occurs if the inspection records an observed deficiency that does not satisfy or does not meet a reasonable interpretation of the definition of that deficiency as defined by inspection procedures.
</P>
<P>(iv) <I>Adjustments for factors not reflected or inappropriately reflected in physical condition score.</I> HUD may determine it is appropriate to review the results of a property's physical inspection if facts and circumstances affecting the owner's or PHA's property are not reflected in the inspection or are reflected inappropriately in the inspection. The circumstances addressed in this may include inconsistencies between local code requirements and the HUD physical inspection protocol; conditions that are permitted by local variance or license or which are preexisting physical features that do not conform to, or are inconsistent with, HUD's physical condition protocol; or the project or PHA having been scored for elements (e.g., roads, sidewalks, mail boxes, resident-owned appliances, etc.) that it does not own and is not responsible for maintaining.
</P>
<P>(v) <I>Adjustments for adverse conditions beyond the control of the owner or PHA.</I> HUD may determine that certain deficiencies that adversely and significantly affect the physical condition score of the project were caused by circumstances beyond the control of the owner or PHA. The correction of these conditions, however, remains the responsibility of the owner or PHA. The circumstances addressed by this paragraph may include, but are not limited to, damage caused by third parties (such as a private entity or public entity undertaking work near a Public Housing project that results in damage to the project) or natural disasters.
</P>
<P>(vi) <I>Adjustments for modernization work in progress.</I> HUD may determine that occupied dwelling units or other areas of a property, which are subject to physical inspection, and which are undergoing modernization work, require an adjustment to the physical condition score. An occupied dwelling unit or other areas of an owner's or PHA's property undergoing modernization are subject to physical inspection; the unit(s) and other areas of the property are not exempt from physical inspection. All elements of the unit or of the other areas of the owner or PHA's project that are subject to inspection and are not undergoing modernization at the time of the inspection (even if modernization is planned) will be subject to HUD's physical inspection protocol without adjustment. For those elements of the unit or of the property that are undergoing modernization, deficiencies will be noted in accordance with HUD's physical inspection protocol, but the owner or PHA may request adjustment of the physical condition score as a result of current modernization or rehab work in progress.
</P>
<P>(5) <I>Significant improvement.</I> Significant improvement in the project's overall score refers to an increase in a score for the owner or PHA such that the new score crosses an administratively significant threshold.
</P>
<P>(6) <I>Reinspection.</I> If HUD determines that a reinspection is appropriate, it will arrange for a complete reinspection of the project(s) in question, not just the deficiencies previously identified. The reinspection will constitute the final inspection for the project, and HUD will issue a new inspection report (the final inspection report).
</P>
<P>(e) <I>Independent HUD review.</I> Under certain circumstances, HUD may find it appropriate absent an owner or PHA request for technical review to review the results of an inspection which are anomalous or have an incorrect result due to facts and circumstances affecting the inspected property which are not reflected in the inspection or reflected inappropriately in the inspection.
</P>
<P>(f) <I>Responsibility for the cost of a new inspection.</I> If a new inspection is undertaken by the inspecting party and the new inspection score results in a significant improvement in the property's overall score, then the entity responsible for the inspection shall bear the expense of the new inspection. If no significant improvement occurs, then the owner or PHA responsible for the property must bear the expense of the new inspection. The inspection cost of a new inspection, if paid by the owner or PHA, is not an eligible project operating expense. The new inspection score will be considered the final score.
</P>
<P>(g) <I>Issuance of final score and publication of score.</I> (1) The score of the property is the final score if the owner or PHA files no request for technical review, as provided in paragraph (d) of this section, or for other adjustment of the physical condition score, as provided in paragraph (e) of this section. If the owner or PHA files a request for technical review or score adjustments in accordance with paragraphs (d), or there is a HUD review under paragraph (e) of this section, the final inspection score is the score issued by HUD after any adjustments are determined necessary and made by HUD at the conclusion of these processes.
</P>
<P>(2) HUD will make public the final scores of the properties of the owners and PHAs through posting on HUD's internet site, or other appropriate means.
</P>
<P>(h) <I>Responsibility to notify residents of inspection; and availability of documents to residents</I>—(1) <I>Notification to residents.</I> An owner or PHA must notify its residents of any planned inspections of their units or the housing development generally.
</P>
<P>(2) <I>Availability of documents for review.</I> (i) Once a final score has been issued the owner or PHA must make the physical inspection report and all related documents available to residents during regular business hours upon reasonable request for review and copying. Related documents include the owner's or PHA's survey plan, plan of correction, certification, and related correspondence.
</P>
<P>(ii) Once the owner's final inspection score is issued and published, the owner or PHA must make any additional information, such as the results of any reinspection or appeal requests, available for review and copying by its residents upon reasonable request during regular business hours.
</P>
<P>(iii) The owner or PHA must maintain the documents related to the inspection of the property, as described in paragraphs (h)(2)(i) and (ii) of this section, for review by residents for a period of 60 days from the date HUD provides the inspection score for the property in which the residents reside.
</P>
<P>(3) <I>Posting on the availability of materials.</I> The owner or PHA must post a notice to the residents in the owner's or PHA's management office and on any bulletin boards in all common areas on the date of submission to the owner of the inspection score for the property in which the resident resides that advises residents of the availability of the materials described in this section. The notice must be translated into other languages if necessary to provide meaningful access for limited English proficient (LEP) individuals. The notice should include, where applicable, the name, address, and telephone number of the HUD field office contact.
</P>
<P>(4) Residents are encouraged to comment on this information provided by the owner or PHA and submit any comments directly to the applicable HUD field office or responsible entity. Should residents discover the owner or PHA provided HUD with a false certification during the review, they are encouraged to notify the applicable HUD field office where appropriate inquiry and action will be taken.
</P>
<P>(i) <I>Administrative review of properties.</I> The file of a property that receives a score of 30 points or less, or two successive scores under 60, on its inspection will be subject to additional administrative review. Properties that receive two successive scores under 60 may be referred to HUD's Departmental Enforcement Center (DEC) for evaluation. Properties that receive a score of 30 points or less shall be automatically referred to the DEC for evaluation.
</P>
<P>(1) <I>Notification to owner of submission of property file to the DEC.</I> Upon referral to the DEC, the Department will provide for notification to the PHA or owner that the file on the owner's property is being submitted to the DEC for evaluation. The notification will be provided at the time the REAC issues the inspection report to the owner or at such other time as a referral occurs.
</P>
<P>(2) <I>Evaluation of the property.</I> During the DEC's evaluation period, the DEC will perform an analysis of the property, which may include input from tenants, HUD officials, elected officials, maintenance staff and others as may be appropriate. Although program offices will assist with the evaluation, the DEC will have primary responsibility for the conclusion of the evaluation of the property after taking into consideration the input of interested parties as described in this paragraph. The DEC's evaluation may include a site visit to the PHA's or owner's property.
</P>
<P>(3) <I>Continuing responsibilities of HUD program offices and mortgagee.</I> During the period of DEC evaluation, HUD's program offices continue to be responsible for routine business, oversight, and monitoring. In addition, during this period of evaluation, the mortgagee, as applicable, shall continue to carry out its duties and responsibilities with respect to the mortgage.
</P>
<P>(4) <I>Enforcement action.</I> Except as otherwise provided by statute, if, based on the DEC's evaluation and in consultation with HUD program offices, the DEC determines that enforcement actions are appropriate, it may take those actions for which the DEC has delegated authority and/or make recommendations to HUD program office with respect to resolving identified physical deficiencies and owner or PHA noncompliance.
</P>
<P>(j) <I>No limitation on existing enforcement authority.</I> The administrative process provided in this section does not prohibit HUD from taking whatever action may be necessary (notwithstanding the commencement of this process), as authorized under existing statutes, regulations, contracts, grant agreements or other documents, to protect HUD's interests in HUD housing properties and to protect the residents of these properties.




</P>
</DIV8>


<DIV8 N="§ 5.713" NODE="24:1.1.1.1.5.7.22.7" TYPE="SECTION">
<HEAD>§ 5.713   Second- and third-party rights.</HEAD>
<P>Nothing in this subpart is intended to create any right of the family residing in HUD Housing or any party, other than HUD or a PHA, to require enforcement of the standards required by this subpart or to assert any claim against HUD or the PHA for damages, injunction, or other relief for alleged failure to enforce the standards.


</P>
</DIV8>

</DIV6>


<DIV6 N="H" NODE="24:1.1.1.1.5.8" TYPE="SUBPART">
<HEAD>Subpart H—Uniform Financial Reporting Standards</HEAD>


<DIV8 N="§ 5.801" NODE="24:1.1.1.1.5.8.22.1" TYPE="SECTION">
<HEAD>§ 5.801   Uniform financial reporting standards.</HEAD>
<P>(a) <I>Applicability.</I> This subpart H implements uniform financial reporting standards for:
</P>
<P>(1) Public housing agencies (PHAs) receiving assistance under sections 5, 9, or 14 of the 1937 Act (42 U.S.C. 1437c, 1437g, and 1437<I>l</I>) (Public Housing);
</P>
<P>(2) PHAs as contract administrators for any Section 8 project-based or tenant-based housing assistance payments program, which includes assistance under the following programs:
</P>
<P>(i) Section 8 project-based housing assistance payments programs, including, but not limited to, the Section 8 New Construction, Substantial Rehabilitation, Loan Management Set-Aside, Property Disposition, and Moderate Rehabilitation (including the Single Room Occupancy program for homeless individuals);
</P>
<P>(ii) Section 8 Project-Based Voucher programs;
</P>
<P>(iii) Any program providing Section 8 project-based renewal contracts; and
</P>
<P>(iv) Section 8 tenant-based assistance under the Section 8 Voucher program.
</P>
<P>(3) Owners of housing assisted under any Section 8 project-based housing assistance payments program:
</P>
<P>(i) Including, but not limited to, the Section 8 New Construction, Substantial Rehabilitation, Loan Management Set-Aside, and Property Disposition programs;
</P>
<P>(ii) Excluding the Section 8 Moderate Rehabilitation Program (which includes the Single Room Occupancy program for homeless individuals) and the Section 8 Project-Based Voucher Program;
</P>
<P>(4) Owners of multifamily projects receiving direct or indirect assistance from HUD, or with mortgages insured, coinsured, or held by HUD, including but not limited to housing under the following HUD programs:
</P>
<P>(i) Section 202 Program of Supportive Housing for the Elderly;
</P>
<P>(ii) Section 811 Program of Supportive Housing for Persons with Disabilities;
</P>
<P>(iii) Section 202 loan program for projects for the elderly and handicapped (including 202/8 projects and 202/162 projects);
</P>
<P>(iv) Section 207 of the National Housing Act (NHA) (12 U.S.C. 1701 <I>et seq.</I>) (Rental Housing Insurance);
</P>
<P>(v) Section 213 of the NHA (Cooperative Housing Insurance);
</P>
<P>(vi) Section 220 of the NHA (Rehabilitation and Neighborhood Conservation Housing Insurance);
</P>
<P>(vii) Section 221(d) (3) and (5) of the NHA (Housing for Moderate Income and Displaced Families);
</P>
<P>(viii) Section 221(d)(4) of the NHA (Housing for Moderate Income and Displaced Families);
</P>
<P>(ix) Section 231 of the NHA (Housing for Elderly Persons);
</P>
<P>(x) Section 232 of the NHA (Mortgage Insurance for Nursing Homes, Intermediate Care Facilities, Board and Care Homes);
</P>
<P>(xi) Section 234(d) of the NHA (Rental) (Mortgage Insurance for Condominiums);
</P>
<P>(xii) Section 236 of the NHA (Rental and Cooperative Housing for Lower Income Families);
</P>
<P>(xiii) Section 241 of the NHA (Supplemental Loans for Multifamily Projects); and
</P>
<P>(5) HUD-approved Title I and Title II supervised, nonsupervised, and investing lenders and investing mortgagees.
</P>
<P>(6) Operators of projects with mortgages insured or held by HUD under section 232 of the Act (Mortgage Insurance for Nursing Homes, Intermediate Care Facilities, Board and Care Homes).
</P>
<P>(b) <I>Submission of financial information.</I> Entities (or individuals) to which this subpart is applicable must provide to HUD such financial information as required by HUD. Such information must be provided on an annual basis, except as required more frequently under paragraph (c)(4) of this section. This information must be:
</P>
<P>(1) Prepared in accordance with Generally Accepted Accounting Principles as further defined by HUD in supplementary guidance;
</P>
<P>(2) Submitted electronically to HUD through the internet, or in such other electronic format designated by HUD, or in such non-electronic format as HUD may allow if the burden or cost of electronic reporting is determined by HUD to be excessive; and
</P>
<P>(3) Submitted in such form and substance as prescribed by HUD.
</P>
<P>(4) With respect to financial reports relating to properties insured under section 232 of the Act, concurrently with submitting the information to HUD, submitted to the mortgagee in a format and manner prescribed and/or approved by HUD.
</P>
<P>(c) <I>Filing of financial reports.</I> (1) For entities listed in paragraphs (a)(1) and (2) of this section, the financial information to be submitted to HUD in accordance with paragraph (b) of this section, must be submitted to HUD annually, no later than 60 days after the end of the fiscal year of the reporting period, and as otherwise provided by law (for public housing agencies, see also 24 CFR 903.33). 
</P>
<P>(2) For entities listed in paragraphs (a)(3) and (4) of this section, the financial information to be submitted to HUD in accordance with paragraph (b) of this section, must be submitted to HUD annually, no later than 90 days after the end of the fiscal year of the reporting period, and as otherwise provided by law. 
</P>
<P>(3) For those entities listed in paragraph (a)(5) of this section, the financial information to be submitted to HUD in accordance with paragraph (b) of this section must be submitted to HUD annually, no later than 90 days after the end of the fiscal year (or within an extended time if an extension is granted at the sole discretion of the Secretary). An extension request must be received no earlier than 45 days and no later than 15 days prior to the submission deadline. 
</P>
<P>(4) For entities listed in paragraph (a)(6) of this section, the financial information to be submitted to HUD in accordance with paragraph (b) of this section must be submitted to HUD on a quarterly and fiscal-year-to-date basis, within 60 calendar days of the end of each quarterly reporting period deadline, except that the final fiscal-year-end quarter and fiscal-year-to-date reports must be submitted to HUD within 90 calendar days of the end of the fiscal-year-end quarter, or within such additional time as may be provided by the Commissioner for good cause shown. HUD may direct that such forms be submitted to the lender or another third party in addition to or in lieu of submission to HUD.
</P>
<P>(i) The financial statements submitted by entities listed in paragraph (a)(6) of this section may, at the operator's option, be operator-certified rather than audited, provided, however, if the operator is also the borrower, then that entity's obligation to submit an annual audited financial statement (in addition to its obligation as an operator to submit financial information on a quarterly and year-to-date basis) remains and is not obviated.
</P>
<P>(ii) If HUD has reason to believe that a particular operator's operator-certified statements may be unreliable (for example, indicate a likely prohibited use of project funds), or are presented in a manner that is inconsistent with Generally Accepted Accounting Principles, HUD may, on a case-by-case basis, require audited financial statements from the operator. With respect to facilities with FHA-insured or HUD-held Section 232 mortgages, HUD may request more frequent financial statements from the borrower and/or the operator on a case-by-case basis when the circumstances warrant. Nothing in this section limits HUD's ability to obtain further or more frequent information when appropriate pursuant to the applicable regulatory agreement.
</P>
<P>(d) <I>Reporting compliance dates.</I> Entities (or individuals) that are subject to the reporting requirements in this section must commence compliance with these requirements as follows:
</P>
<P>(1) For PHAs listed in paragraphs (a)(1) and (a)(2) of this section, the requirements of this section will begin with those PHAs with fiscal years ending September 30, 1999 and later. Unaudited financial statements will be required 60 days after the PHA's fiscal year end, and audited financial statements will then be required no later than 9 months after the PHA's fiscal year end, in accordance with the Single Audit Act and 2 CFR part 200, subpart F. A PHA with a fiscal year ending September 30, 1999 that elects to submit its unaudited financial report earlier than the due date of November 30, 1999 must submit its report as required in this section. On or after September 30, 1998, but prior to November 30, 1999 (except for a PHA with its fiscal year ending September 30, 1999), PHAs may submit their financial reports in accordance with this section.
</P>
<P>(2) For entities listed in paragraphs (a)(3) and (a)(4) of this section, the requirements of this section will begin with those entities with fiscal years ending December 31, 1998 and later. Entities listed in paragraphs (a)(3) and (a)(4) of this section with fiscal years ending December 31, 1998 that elect to submit their reports earlier than the due date must submit their financial reports as required in this section. On or after September 30, 1998 but prior to January 1, 1999, these entities may submit their financial reports in accordance with this section.
</P>
<P>(3) The requirements of this section apply to the entities listed in paragraph (a)(5) of this section with fiscal years ending on or after September 30, 2002. Audited financial statements submitted by lenders with fiscal years ending before September 30, 2002, may either be submitted in paper or electronically at the lenders' option. Audited financial statements submitted by lenders with fiscal years ending on or after September 30, 2002, must be submitted electronically. 
</P>
<P>(4) Entities described in paragraph (a)(6) of this section must comply with the requirements of this section with respect to fiscal years commencing on or after the date that is 60 calendar days after the date on which HUD announces, through <E T="04">Federal Register</E> notice, that it has issued guidance on the manner in which these reports will be transmitted to HUD.
</P>
<P>(e) <I>Limitation on changing fiscal years.</I> To allow for a period of consistent assessment of the financial reports submitted to HUD under this subpart part, PHAs listed in paragraphs (a)(1) and (a)(2) of this section will not be allowed to change their fiscal years for their first three full fiscal years following October 1, 1998.
</P>
<P>(f) <I>Responsibility for submission of financial report.</I> The responsibility for submission of the financial report due to HUD under this section rests with the individuals and entities listed in paragraph (a) of this section.
</P>
<CITA TYPE="N">[63 FR 46591, Sept. 1, 1998, as amended at 64 FR 1505, Jan. 11, 1999; 64 FR 33755, June 24, 1999; 65 FR 16295, Mar. 27, 2000; 67 FR 53451, Aug. 15, 2002; 77 FR 55134, Sept. 7, 2012; 78 FR 57060, Sept. 17, 2013; 79 FR 55362, Sept. 16, 2014; 80 FR 75934, Dec. 7, 2015; 89 FR 30276, Apr. 23, 2024; 89 FR 38290, May 7, 2024]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="I" NODE="24:1.1.1.1.5.9" TYPE="SUBPART">
<HEAD>Subpart I—Preventing Crime in Federally Assisted Housing—Denying Admission and Terminating Tenancy for Criminal Activity or Alcohol Abuse</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>66 FR 28792, May 24, 2001, unless otherwise noted.


</PSPACE></SOURCE>

<DIV7 N="22" NODE="24:1.1.1.1.5.9.22" TYPE="SUBJGRP">
<HEAD>General</HEAD>


<DIV8 N="§ 5.850" NODE="24:1.1.1.1.5.9.22.1" TYPE="SECTION">
<HEAD>§ 5.850   Which subsidized housing is covered by this subpart?</HEAD>
<P>(a) If you are the owner of federally assisted housing, your federally assisted housing is covered, except as provided in paragraph (b) or (c) of this section. 
</P>
<P>(b) If you are operating public housing, this subpart does not apply, but similar provisions applicable to public housing units are found in parts 960 and 966 of this title. If you administer tenant-based assistance under Section 8 or you are the owner of housing assisted with tenant-based assistance under Section 8, this subpart does not apply to you, but similar provisions that do apply are located in part 982 of this title. 
</P>
<P>(c) If you own or administer housing assisted by the Rural Housing Administration under section 514 or section 515 of the Housing Act of 1949, this subpart does not apply to you. 


</P>
</DIV8>


<DIV8 N="§ 5.851" NODE="24:1.1.1.1.5.9.22.2" TYPE="SECTION">
<HEAD>§ 5.851   What authority do I have to screen applicants and to evict tenants?</HEAD>
<P>(a) <I>Screening applicants.</I> You are authorized to screen applicants for the programs covered by this part. The provisions of this subpart implement statutory directives that either <I>require</I> or <I>permit</I> you to take action to deny admission to applicants under certain circumstances in accordance with established standards, as described in this subpart. The provisions of this subpart do not constrain your authority to screen out applicants who you determined are unsuitable under your standards for admission. 
</P>
<P>(b) <I>Terminating tenancy.</I> You are authorized to terminate tenancy of tenants, in accordance with your leases and landlord-tenant law for the programs covered by this part. The provisions of this subpart implement statutory directives that either require or permit you to terminate tenancy under certain circumstances, as provided in 42 U.S.C. 1437f, 1437n, and 13662, in accordance with established standards, as described in this subpart. You retain authority to terminate tenancy on any basis that is otherwise authorized. 


</P>
</DIV8>


<DIV8 N="§ 5.852" NODE="24:1.1.1.1.5.9.22.3" TYPE="SECTION">
<HEAD>§ 5.852   What discretion do I have in screening and eviction actions?</HEAD>
<P>(a) <I>General.</I> If the law and regulation permit you to take an action but do not require action to be taken, you may take or not take the action in accordance with your standards for admission and eviction. Consistent with the application of your admission and eviction standards, you may consider all of the circumstances relevant to a particular admission or eviction case, such as: 
</P>
<P>(1) The seriousness of the offending action; 
</P>
<P>(2) The effect on the community of denial or termination or the failure of the responsible entity to take such action; 
</P>
<P>(3) The extent of participation by the leaseholder in the offending action; 
</P>
<P>(4) The effect of denial of admission or termination of tenancy on household members not involved in the offending action; 
</P>
<P>(5) The demand for assisted housing by families who will adhere to lease responsibilities; 
</P>
<P>(6) The extent to which the leaseholder has shown personal responsibility and taken all reasonable steps to prevent or mitigate the offending action; and 
</P>
<P>(7) The effect of the responsible entity's action on the integrity of the program. 
</P>
<P>(b) <I>Exclusion of culpable household member.</I> You may require an applicant (or tenant) to exclude a household member in order to be admitted to the housing program (or continue to reside in the assisted unit), where that household member has participated in or been culpable for action or failure to act that warrants denial (or termination). 
</P>
<P>(c) <I>Consideration of rehabilitation.</I> (1) In determining whether to deny admission or terminate tenancy for illegal use of drugs or alcohol abuse by a household member who is no longer engaged in such behavior, you may consider whether such household member is participating in or has successfully completed a supervised drug or alcohol rehabilitation program, or has otherwise been rehabilitated successfully (42 U.S.C. 13661). For this purpose, you may require the applicant or tenant to submit evidence of the household member's current participation in, or successful completion of, a supervised drug or alcohol rehabilitation program or evidence of otherwise having been rehabilitated successfully. 
</P>
<P>(2) If rehabilitation is not an element of the eligibility determination (see § 5.854(a)(1) for the case where it must be considered), you may choose not to consider whether the person has been rehabilitated. 
</P>
<P>(d) <I>Length of period of mandatory prohibition on admission.</I> If a statute requires that you prohibit admission of persons for a prescribed period of time after some disqualifying behavior or event, you may apply that prohibition for a longer period of time. 
</P>
<P>(e) <I>Nondiscrimination limitation.</I> Your admission and eviction actions must be consistent with fair housing and equal opportunity provisions of § 5.105. 


</P>
</DIV8>


<DIV8 N="§ 5.853" NODE="24:1.1.1.1.5.9.22.4" TYPE="SECTION">
<HEAD>§ 5.853   Definitions.</HEAD>
<P>(a) <I>Terms found elsewhere.</I> The following terms are defined in subpart A of this part: <I>1937 Act, covered person, drug, drug-related criminal activity, federally assisted housing, guest, household, HUD, other person under the tenant's control, premises, public housing, public housing agency (PHA), Section 8, violent criminal activity.</I> 
</P>
<P>(b) <I>Additional terms</I> used in this part are as follows. 
</P>
<P><I>Currently engaging in.</I> With respect to behavior such as illegal use of a drug, other drug-related criminal activity, or other criminal activity, <I>currently engaging in</I> means that the individual has engaged in the behavior recently enough to justify a reasonable belief that the individual's behavior is current. 
</P>
<P><I>Owner.</I> The owner of federally assisted housing. 
</P>
<P><I>Responsible entity.</I> For the Section 8 project-based voucher program (part 983 of this title) and the Section 8 moderate rehabilitation program (part 882 of this title), <I>responsible entity</I> means the PHA administering the program under an Annual Contributions Contract with HUD. For all other federally assisted housing, the responsible entity means the owner of the housing.
</P>
<CITA TYPE="N">[66 FR 28792, May 24, 2001, as amended at 89 FR 38290, May 7, 2024] 


</CITA>
</DIV8>

</DIV7>


<DIV7 N="23" NODE="24:1.1.1.1.5.9.23" TYPE="SUBJGRP">
<HEAD>Denying Admissions</HEAD>


<DIV8 N="§ 5.854" NODE="24:1.1.1.1.5.9.23.5" TYPE="SECTION">
<HEAD>§ 5.854   When must I prohibit admission of individuals who have engaged in drug-related criminal activity?</HEAD>
<P>(a) You <I>must</I> prohibit admission to your federally assisted housing of an applicant for three years from the date of eviction if any household member has been evicted from federally assisted housing for drug-related criminal activity. However, you may admit the household if: 
</P>
<P>(1) The evicted household member who engaged in drug-related criminal activity has successfully completed an approved supervised drug rehabilitation program; or 
</P>
<P>(2) The circumstances leading to the eviction no longer exist (for example, the criminal household member has died or is imprisoned). 
</P>
<P>(b) You <I>must</I> establish standards that prohibit admission of a household to federally assisted housing if: 
</P>
<P>(1) You determine that any household member is currently engaging in illegal use of a drug; or 
</P>
<P>(2) You determine that you have reasonable cause to believe that a household member's illegal use or a pattern of illegal use of a drug may interfere with the health, safety, or right to peaceful enjoyment of the premises by other residents. 


</P>
</DIV8>


<DIV8 N="§ 5.855" NODE="24:1.1.1.1.5.9.23.6" TYPE="SECTION">
<HEAD>§ 5.855   When am I specifically authorized to prohibit admission of individuals who have engaged in criminal activity?</HEAD>
<P>(a) You may prohibit admission of a household to federally assisted housing under your standards if you determine that any household member is currently engaging in, or has engaged in during a reasonable time before the admission decision: 
</P>
<P>(1) Drug-related criminal activity; 
</P>
<P>(2) Violent criminal activity; 
</P>
<P>(3) Other criminal activity that would threaten the health, safety, or right to peaceful enjoyment of the premises by other residents; or 
</P>
<P>(4) Other criminal activity that would threaten the health or safety of the PHA or owner or any employee, contractor, subcontractor or agent of the PHA or owner who is involved in the housing operations. 
</P>
<P>(b) You may establish a period before the admission decision during which an applicant must not have engaged in the activities specified in paragraph (a) of this section (<I>reasonable time</I>). 
</P>
<P>(c) If you previously denied admission to an applicant because of a determination concerning a member of the household under paragraph (a) of this section, you may reconsider the applicant if you have sufficient evidence that the members of the household are not currently engaged in, and have not engaged in, such criminal activity during a reasonable period, determined by you, before the admission decision. 
</P>
<P>(1) You would have <I>sufficient evidence</I> if the household member submitted a certification that she or he is not currently engaged in and has not engaged in such criminal activity during the specified period and provided supporting information from such sources as a probation officer, a landlord, neighbors, social service agency workers and criminal records, which you verified. (See subpart J of this part for one method of checking criminal records.) 
</P>
<P>(2) For purposes of this section, a household member is <I>currently engaged in</I> the criminal activity if the person has engaged in the behavior recently enough to justify a reasonable belief that the behavior is current. 


</P>
</DIV8>


<DIV8 N="§ 5.856" NODE="24:1.1.1.1.5.9.23.7" TYPE="SECTION">
<HEAD>§ 5.856   When must I prohibit admission of sex offenders?</HEAD>
<P>You must establish standards that prohibit admission to federally assisted housing if any member of the household is subject to a lifetime registration requirement under a State sex offender registration program. In the screening of applicants, you must perform necessary criminal history background checks in the State where the housing is located and in other States where the household members are known to have resided. (See § 5.905.) 


</P>
</DIV8>


<DIV8 N="§ 5.857" NODE="24:1.1.1.1.5.9.23.8" TYPE="SECTION">
<HEAD>§ 5.857   When must I prohibit admission of alcohol abusers?</HEAD>
<P>You must establish standards that prohibit admission to federally assisted housing if you determine you have reasonable cause to believe that a household member's abuse or pattern of abuse of alcohol interferes with the health, safety, or right to peaceful enjoyment of the premises by other residents. 


</P>
</DIV8>

</DIV7>


<DIV7 N="24" NODE="24:1.1.1.1.5.9.24" TYPE="SUBJGRP">
<HEAD>Terminating Tenancy</HEAD>


<DIV8 N="§ 5.858" NODE="24:1.1.1.1.5.9.24.9" TYPE="SECTION">
<HEAD>§ 5.858   What authority do I have to evict drug criminals?</HEAD>
<P>The lease must provide that drug-related criminal activity engaged in on or near the premises by any tenant, household member, or guest, and any such activity engaged in on the premises by any other person under the tenant's control, is grounds for you to terminate tenancy. In addition, the lease must allow you to evict a family when you determine that a household member is illegally using a drug or when you determine that a pattern of illegal use of a drug interferes with the health, safety, or right to peaceful enjoyment of the premises by other residents. 


</P>
</DIV8>


<DIV8 N="§ 5.859" NODE="24:1.1.1.1.5.9.24.10" TYPE="SECTION">
<HEAD>§ 5.859   When am I specifically authorized to evict other criminals?</HEAD>
<P>(a) <I>Threat to other residents.</I> The lease <I>must</I> provide that the owner may terminate tenancy for any of the following types of criminal activity by a covered person: 
</P>
<P>(1) Any criminal activity that threatens the health, safety, or right to peaceful enjoyment of the premises by other residents (including property management staff residing on the premises); or 
</P>
<P>(2) Any criminal activity that threatens the health, safety, or right to peaceful enjoyment of their residences by persons residing in the immediate vicinity of the premises. 
</P>
<P>(b) <I>Fugitive felon or parole violator.</I> The lease <I>must</I> provide that you may terminate the tenancy during the term of the lease if a tenant is: 
</P>
<P>(1) Fleeing to avoid prosecution, or custody or confinement after conviction, for a crime, or attempt to commit a crime, that is a felony under the laws of the place from which the individual flees, or that, in the case of the State of New Jersey, is a high misdemeanor; or 
</P>
<P>(2) Violating a condition of probation or parole imposed under Federal or State law. 


</P>
</DIV8>


<DIV8 N="§ 5.860" NODE="24:1.1.1.1.5.9.24.11" TYPE="SECTION">
<HEAD>§ 5.860   When am I specifically authorized to evict alcohol abusers?</HEAD>
<P>The lease must provide that you may terminate the tenancy if you determine that a household member's abuse or pattern of abuse of alcohol threatens the health, safety, or right to peaceful enjoyment of the premises by other residents. 


</P>
</DIV8>


<DIV8 N="§ 5.861" NODE="24:1.1.1.1.5.9.24.12" TYPE="SECTION">
<HEAD>§ 5.861   What evidence of criminal activity must I have to evict?</HEAD>
<P>You may terminate tenancy and evict the tenant through judicial action for criminal activity by a covered person in accordance with this subpart if you determine that the covered person has engaged in the criminal activity, regardless of whether the covered person has been arrested or convicted for such activity and without satisfying a criminal conviction standard of proof of the activity. 


</P>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="J" NODE="24:1.1.1.1.5.10" TYPE="SUBPART">
<HEAD>Subpart J—Access to Criminal Records and Information</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>66 FR 28794, May 24, 2001, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 5.901" NODE="24:1.1.1.1.5.10.25.1" TYPE="SECTION">
<HEAD>§ 5.901   To what criminal records and searches does this subpart apply?</HEAD>
<P>(a) <I>General criminal records searches.</I> This subpart applies to criminal conviction background checks by PHAs that administer the Section 8 and public housing programs when they obtain criminal conviction records, under the authority of section 6(q) of the 1937 Act (42 U.S.C. 1437d(q)), from a law enforcement agency to prevent admission of criminals to public housing and Section 8 housing and to assist in lease enforcement and eviction. 
</P>
<P>(b) <I>Sex offender registration records searches.</I> This subpart applies to PHAs that administer the Section 8 and public housing programs when they obtain sex offender registration information from State and local agencies, under the authority of 42 U.S.C. 13663, to prevent admission of dangerous sex offenders to federally assisted housing. 
</P>
<P>(c) <I>Excluded records searches.</I> The provisions of this subpart do not apply to criminal conviction information or sex offender information searches by a PHA or others of information from law enforcement agencies or other sources other than as provided under this subpart. 


</P>
</DIV8>


<DIV8 N="§ 5.902" NODE="24:1.1.1.1.5.10.25.2" TYPE="SECTION">
<HEAD>§ 5.902   Definitions.</HEAD>
<P>(a) <I>Terms found elsewhere.</I> The following terms used in this subpart are defined in subpart A of this part: <I>1937 Act, drug, federally assisted housing, household, HUD, public housing, public housing agency (PHA), Section 8.</I> 
</P>
<P>(b) <I>Additional terms</I> used in this subpart are as follows: 
</P>
<P><I>Adult.</I> A person who is 18 years of age or older, or who has been convicted of a crime as an adult under any Federal, State, or tribal law. 
</P>
<P><I>Covered housing.</I> Public housing, project-based assistance under section 8 (including new construction and substantial rehabilitation projects), and tenant-based assistance under section 8. 
</P>
<P><I>Law enforcement agency.</I> The National Crime Information Center (NCIC), police departments and other law enforcement agencies that hold criminal conviction records. 
</P>
<P><I>Owner.</I> The owner of federally assisted housing. 
</P>
<P><I>Responsible entity.</I> For the public housing program, the Section 8 tenant-based assistance program (part 982 of this title), the Section 8 project-based voucher program (part 983 of this title), and the Section 8 moderate rehabilitation program (part 882 of this title), <I>responsible entity</I> means the PHA administering the program under an Annual Contributions Contract with HUD. For all other Section 8 programs, responsible entity means the Section 8 owner. 
</P>
<CITA TYPE="N">[66 FR 28794, May 24, 2001, as amended at 89 FR 38290, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 5.903" NODE="24:1.1.1.1.5.10.25.3" TYPE="SECTION">
<HEAD>§ 5.903   What special authority is there to obtain access to criminal records?</HEAD>
<P>(a) <I>Authority.</I> If you are a PHA that administers the Section 8 program and/or the public housing program, this section authorizes you to obtain criminal conviction records from a law enforcement agency, as defined in § 5.902. You may use the criminal conviction records that you obtain from a law enforcement agency under the authority of this section to screen applicants for admission to covered housing programs and for lease enforcement or eviction of families residing in public housing or receiving Section 8 project-based assistance. 
</P>
<P>(b) <I>Consent for release of criminal conviction records.</I> (1) In order to obtain access to records under this section, as a responsible entity you must require every applicant family to submit a consent form signed by each adult household member. 
</P>
<P>(2) By execution of the consent form, an adult household member consents that: 
</P>
<P>(i) Any law enforcement agency may release criminal conviction records concerning the household member to a PHA in accordance with this section; 
</P>
<P>(ii) The PHA may receive the criminal conviction records from a law enforcement agency, and may use the records in accordance with this section. 
</P>
<P>(c) <I>Procedure for PHA.</I> (1) When the law enforcement agency receives your request, the law enforcement agency must promptly release to you a certified copy of any criminal conviction records concerning the household member in the possession or control of the law enforcement agency. NCIC records must be provided in accordance with NCIC procedures. 
</P>
<P>(2) The law enforcement agency may charge you a reasonable fee for releasing criminal conviction records. 
</P>
<P>(d) <I>Owner access to criminal records</I>—(1) <I>General.</I> (i) If an owner submits a request to the PHA for criminal records concerning an adult member of an applicant or resident household, in accordance with the provisions of paragraph (d) of this section, the PHA must request the criminal conviction records from the appropriate law enforcement agency or agencies, as determined by the PHA. 
</P>
<P>(ii) If the PHA receives criminal conviction records requested by an owner, the PHA must determine whether criminal action by a household member, as shown by such criminal conviction records, may be a basis for applicant screening, lease enforcement or eviction, as applicable in accordance with HUD regulations and the owner criteria. 
</P>
<P>(iii) The PHA must notify the owner whether the PHA has received criminal conviction records concerning the household member, and of its determination whether such criminal conviction records may be a basis for applicant screening, lease enforcement or eviction. However, except as provided in paragraph (e)(2)(ii) of this section, the PHA must not disclose the household member's criminal conviction record or the content of that record to the owner. 
</P>
<P>(2) <I>Screening.</I> If you are an owner of covered housing, you may request that the PHA in the jurisdiction of the property obtain criminal conviction records of an adult household member from a law enforcement agency on your behalf for the purpose of screening applicants. 
</P>
<P>(i) Your request must include a copy of the consent form, signed by the household member. 
</P>
<P>(ii) Your request must include your standards for prohibiting admission of drug criminals in accordance with § 5.854, and for prohibiting admission of other criminals in accordance with § 5.855. 
</P>
<P>(3) <I>Eviction or lease enforcement.</I> If you are an owner of a unit with Section 8 project-based assistance, you may request that the PHA in the location of the project obtain criminal conviction records of a household member from an appropriate law enforcement agency on your behalf in connection with lease enforcement or eviction. 
</P>
<P>(i) Your request must include a copy of the consent form, signed by the household member. 
</P>
<P>(ii) If you intend to use the PHA determination regarding any such criminal conviction records in connection with eviction, your request must include your standards for evicting drug criminals in accordance with § 5.857, and for evicting other criminals in accordance with § 5.858. 
</P>
<P>(iii) If you intend to use the PHA determination regarding any such criminal conviction records for lease enforcement other than eviction, your request must include your standards for lease enforcement because of criminal activity by members of a household. 
</P>
<P>(4) <I>Fees.</I> If an owner requests a PHA to obtain criminal conviction records in accordance with this section, the PHA may charge the owner reasonable fees for making the request on behalf of the owner and for taking other actions for the owner. The PHA may require the owner to reimburse costs incurred by the PHA, including reimbursement of any fees charged to the PHA by the law enforcement agency, the PHA's own related staff and administrative costs. The owner may not pass along to the applicant or tenant the costs of a criminal records check. 
</P>
<P>(e) <I>Permitted use and disclosure of criminal conviction records received by PHA</I>—(1) <I>Use of records.</I> Criminal conviction records received by a PHA from a law enforcement agency in accordance with this section may only be used for the following purposes: 
</P>
<P>(i) <I>Applicant screening.</I> (A) PHA screening of applicants for admission to public housing (part 960 of this title); 
</P>
<P>(B) PHA screening of applicants for admission to the Housing Choice Voucher Program (section 8 tenant-based assistance) (part 982 of this title); 
</P>
<P>(C) PHA screening of applicants for admission to the Section 8 moderate rehabilitation program (part 882 of this title); or the Section 8 project-based voucher program (part 983 of this title); or 
</P>
<P>(D) PHA screening concerning criminal conviction of applicants for admission to Section 8 project-based assistance, at the request of the owner. (For requirements governing use of criminal conviction records obtained by a PHA at the request of a Section 8 owner under this section, see paragraph (d) of this section.) 
</P>
<P>(ii) <I>Lease enforcement and eviction.</I> (A) PHA enforcement of public housing leases and PHA eviction of public housing residents; 
</P>
<P>(B) Enforcement of leases by a Section 8 project owner and eviction of residents by a Section 8 project owner. (However, criminal conviction records received by a PHA from a law enforcement agency under this section may not be used for lease enforcement or eviction of residents receiving Section 8 tenant-based assistance.) 
</P>
<P>(2) <I>PHA disclosure of records.</I> (i) A PHA may disclose the criminal conviction records which the PHA receives from a law enforcement agency only as follows: 
</P>
<P>(A) To officers or employees of the PHA, or to authorized representatives of the PHA who have a job-related need to have access to the information. For example, if the PHA is seeking to evict a public housing tenant on the basis of criminal activity as shown in criminal conviction records provided by a law enforcement agency, the records may be disclosed to PHA employees performing functions related to the eviction, or to a PHA hearing officer conducting an administrative grievance hearing concerning the proposed eviction. 
</P>
<P>(B) To the owner for use in connection with judicial eviction proceedings by the owner to the extent necessary in connection with a judicial eviction proceeding. For example, criminal conviction records may be included in pleadings or other papers filed in an eviction action, may be disclosed to parties to the action or the court, and may be filed in court or offered as evidence. 
</P>
<P>(ii) This disclosure may be made only if the following conditions are satisfied: 
</P>
<P>(A) If the PHA has determined that criminal activity by the household member as shown by such records received from a law enforcement agency may be a basis for eviction from a Section 8 unit; and 
</P>
<P>(B) If the owner certifies in writing that it will use the criminal conviction records only for the purpose and only to the extent necessary to seek eviction in a judicial proceeding of a Section 8 tenant based on the criminal activity by the household member that is described in the criminal conviction records. 
</P>
<P>(iii) The PHA may rely on an owner's certification that the criminal record is necessary to proceed with a judicial eviction to evict the tenant based on criminal activity of the identified household member, as shown in the criminal conviction record. 
</P>
<P>(iv) Upon disclosure as necessary in connection with judicial eviction proceedings, the PHA is not responsible for controlling access to or knowledge of such records after such disclosure. 
</P>
<P>(f) <I>Opportunity to dispute.</I> If a PHA obtains criminal record information from a State or local agency under this section showing that a household member has been convicted of a crime relevant to applicant screening, lease enforcement or eviction, the PHA must notify the household of the proposed action to be based on the information and must provide the subject of the record and the applicant or tenant a copy of such information, and an opportunity to dispute the accuracy and relevance of the information. This opportunity must be provided before a denial of admission, eviction or lease enforcement action on the basis of such information. 
</P>
<P>(g) <I>Records management.</I> Consistent with the limitations on disclosure of records in paragraph (e) of this section, the PHA must establish and implement a system of records management that ensures that any criminal record received by the PHA from a law enforcement agency is: 
</P>
<P>(1) Maintained confidentially; 
</P>
<P>(2) Not misused or improperly disseminated; and 
</P>
<P>(3) Destroyed, once the purpose(s) for which the record was requested has been accomplished, including expiration of the period for filing a challenge to the PHA action without institution of a challenge or final disposition of any such litigation. 
</P>
<P>(h) <I>Penalties for improper release of information</I>—(1) <I>Criminal penalty.</I> Conviction for a misdemeanor and imposition of a penalty of not more than $5,000 is the potential for: 
</P>
<P>(i) Any person, including an officer, employee, or authorized representative of any PHA or of any project owner, who knowingly and willfully requests or obtains any information concerning an applicant for, or tenant of, covered housing assistance under the authority of this section under false pretenses; or 
</P>
<P>(ii) Any person, including an officer, employee, or authorized representative of any PHA or a project owner, who knowingly and willfully discloses any such information in any manner to any individual not entitled under any law to receive the information. 
</P>
<P>(2) <I>Civil liability.</I> (i) A PHA may be held liable to any applicant for, or tenant of, covered housing assistance affected by either of the following: 
</P>
<P>(A) A negligent or knowing disclosure of criminal records information obtained under the authority of this section about such person by an officer, employee, or authorized representative of the PHA if the disclosure is not authorized by this section; or 
</P>
<P>(B) Any other negligent or knowing action that is inconsistent with this section. 
</P>
<P>(ii) An applicant for, or tenant of, covered housing assistance may seek relief against a PHA in these circumstances by bringing a civil action for damages and such other relief as may be appropriate against the PHA responsible for such unauthorized action. The United States district court in which the affected applicant or tenant resides, in which the unauthorized action occurred, or in which the officer, employee, or representative alleged to be responsible resides, has jurisdiction. Appropriate relief may include reasonable attorney's fees and other litigation costs. 
</P>
<CITA TYPE="N">[66 FR 28794, May 24, 2001, as amended at 89 FR 38290, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 5.905" NODE="24:1.1.1.1.5.10.25.4" TYPE="SECTION">
<HEAD>§ 5.905   What special authority is there to obtain access to sex offender registration information?</HEAD>
<P>(a) <I>PHA obligation to obtain sex offender registration information.</I> (1) A PHA that administers a Section 8 or public housing program under an Annual Contributions Contract with HUD must carry out background checks necessary to determine whether a member of a household applying for admission to any federally assisted housing program is subject to a lifetime sex offender registration requirement under a State sex offender registration program. This check must be carried out with respect to the State in which the housing is located and with respect to States where members of the applicant household are known to have resided. 
</P>
<P>(2) If the PHA requests such information from any State or local agency responsible for the collection or maintenance of such information, the State or local agency must promptly provide the PHA such information in its possession or control. 
</P>
<P>(3) The State or local agency may charge a reasonable fee for providing the information. 
</P>
<P>(b) <I>Owner's request for sex offender registration information</I>—(1) <I>General.</I> An owner of federally assisted housing that is located in the jurisdiction of a PHA that administers a Section 8 or public housing program under an Annual Contributions Contract with HUD may request that the PHA obtain information necessary to determine whether a household member is subject to a lifetime registration requirement under a State sex offender registration requirement. 
</P>
<P>(2) <I>Procedure.</I> If the request is made in accordance with the provisions of paragraph (b) of this section: 
</P>
<P>(i) The PHA must request the information from a State or local agency; 
</P>
<P>(ii) The State or local agency must promptly provide the PHA such information in its possession or control; 
</P>
<P>(iii) The PHA must determine whether such information may be a basis for applicant screening, lease enforcement or eviction, based on the criteria used by the owner as specified in the owner's request, and inform the owner of the determination. 
</P>
<P>(iv) The PHA must notify the owner of its determination whether sex offender registration information received by the PHA under this section concerning a household member may be a basis for applicant screening, lease enforcement or eviction in accordance with HUD requirements and the criteria used by the owner. 
</P>
<P>(3) <I>Contents of request.</I> As the owner, your request must specify whether you are asking the PHA to obtain the sex offender registration information concerning the household member for applicant screening, for lease enforcement, or for eviction and include the following information: 
</P>
<P>(i) Addresses or other information about where members of the household are known to have lived. 
</P>
<P>(ii) If you intend to use the PHA determination regarding any such sex offender registration information for applicant screening, your request must include your standards in accordance with § 5.855(c) for prohibiting admission of persons subject to a lifetime sex offender registration requirement. 
</P>
<P>(iii) If you intend to use the PHA determination regarding any such sex offender registration information for eviction, your request must include your standards for evicting persons subject to a lifetime registration requirement in accordance with § 5.858. 
</P>
<P>(iv) If you intend to use the PHA determination regarding any such sex offender registration information for lease enforcement other than eviction, your request must include your standards for lease enforcement because of criminal activity by members of a household. 
</P>
<P>(4) <I>PHA disclosure of records.</I> The PHA must not disclose to the owner any sex offender registration information obtained by the PHA under this section. 
</P>
<P>(5) <I>Fees.</I> If an owner asks a PHA to obtain sex offender registration information concerning a household member in accordance with this section, the PHA may charge the owner reasonable fees for making the request on behalf of the owner and for taking other actions for the owner. The PHA may require the owner to reimburse costs incurred by the PHA, including reimbursement of any fees charged to the PHA by a State or local agency for releasing the information, the PHA's own related staff and administrative costs. The owner may not pass along to the applicant or tenant the costs of a sex offender registration records check. 
</P>
<P>(c) <I>Records management.</I> (1) The PHA must establish and implement a system of records management that ensures that any sex offender registration information record received by the PHA from a State or local agency under this section is: 
</P>
<P>(i) Maintained confidentially; 
</P>
<P>(ii) Not misused or improperly disseminated; and 
</P>
<P>(iii) Destroyed, once the purpose for which the record was requested has been accomplished, including expiration of the period for filing a challenge to the PHA action without institution of a challenge or final disposition of any such litigation. 
</P>
<P>(2) The records management requirements do not apply to information that is public information, or is obtained by a PHA other than under this section. 
</P>
<P>(d) <I>Opportunity to dispute.</I> If a PHA obtains sex offender registration information from a State or local agency under paragraph (a) of this section showing that a household member is subject to a lifetime sex offender registration requirement, the PHA must notify the household of the proposed action to be based on the information and must provide the subject of the record, and the applicant or tenant, with a copy of such information, and an opportunity to dispute the accuracy and relevance of the information. This opportunity must be provided before a denial of admission, eviction or lease enforcement action on the basis of such information.


</P>
</DIV8>

</DIV6>


<DIV6 N="K" NODE="24:1.1.1.1.5.11" TYPE="SUBPART">
<HEAD>Subpart K—Application, Registration, and Submission Requirements</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>69 FR 15673, Mar. 26, 2004, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 5.1001" NODE="24:1.1.1.1.5.11.25.1" TYPE="SECTION">
<HEAD>§ 5.1001   Applicability.</HEAD>
<P>This subpart applies to all applicants for HUD grants, cooperative agreements, capital fund or operating fund subsidy, capital advance, or other assistance under HUD programs, including grant programs that are classified by OMB as including formula grant programs or activities, but excluding FHA insurance and loan guarantees that are not associated with a grant program or grant award.


</P>
</DIV8>


<DIV8 N="§ 5.1003" NODE="24:1.1.1.1.5.11.25.2" TYPE="SECTION">
<HEAD>§ 5.1003   Use of a universal identifier for organizations applying for HUD grants.</HEAD>
<P>(a) Every application for a new or renewal of a grant, cooperative agreement, capital fund or operating fund subsidy, capital advance, or other assistance, including an application or plan under a grant program that is classified by OMB as including formula grant programs, must include a unique entity identifier number for the applicant. 
</P>
<P>(b)(1) Applicants or groups of applicants under a consortium arrangement must have a unique entity identifier for the organization that is submitting the application for federal assistance as the lead applicant on behalf of the other applicants. If each organization is submitting a separate application as part of a group of applications, then each organization must include its unique entity identifier with its application submission. 
</P>
<P>(2) If an organization is submitting an application as a sponsor or on behalf of other applicants, and the other entities will be receiving funds directly from HUD, then the applicant or sponsor must submit an application for funding that includes the unique entity identifier of each applicant that would receive funds directly from HUD. 
</P>
<P>(3) If an organization is managing funds for a group of organizations, a unique entity identifier must be submitted for the managing organization, if it is drawing down funds directly from HUD. 
</P>
<P>(4) If an organization is drawing down funds directly from HUD and subsequently turning the funds over to a management organization, then the management organization must obtain a unique entity identifier and submit the number to HUD. 
</P>
<P>(c) Individuals who would personally receive a grant or other assistance from HUD, independent from any business or nonprofit organization with which they may operate or participate, are exempt from this requirement.
</P>
<P>(d) In cases where individuals apply for funding, but the funding will be awarded to an institution or other entity on the individual's behalf, the institution or entity must obtain a unique entity identifier and the individual must submit the institution's unique entity identifier number with the application.
</P>
<P>(e) Unless an exemption is granted by OMB, HUD will not consider an application as complete until a valid unique entity identifier is provided by the applicant. For classes of grants and grantees subject to this part, exceptions to this rule must be submitted to OMB for approval in accordance with procedures prescribed by the Department.
</P>
<CITA TYPE="N">[69 FR 15673, Mar. 26, 2004, as amended at 80 FR 75934, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 5.1004" NODE="24:1.1.1.1.5.11.25.3" TYPE="SECTION">
<HEAD>§ 5.1004   System of award management.</HEAD>
<P>Applicants for HUD financial assistance that are subject to this subpart are required to register with the System of Award Management (SAM) and have an active registration in SAM in accordance with 2 CFR part 25, appendix A in order for HUD to obligate funds and for an awardee to receive an award of funds from HUD.
</P>
<CITA TYPE="N">[75 FR 41089, July 15, 2010, as amended at 80 FR 75934, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 5.1005" NODE="24:1.1.1.1.5.11.25.4" TYPE="SECTION">
<HEAD>§ 5.1005   Electronic submission of applications for grants and other financial assistance.</HEAD>
<P>Applicants described under 24 CFR 5.1001 are required to submit electronic applications or plans for grants and other financial assistance in response to any application that HUD has placed on the <I>www.grants.gov/Apply</I> Web site or its successor. The HUD Assistant Secretary, General Deputy Assistant Secretary or, the individual authorized to perform duties and responsibilities of these positions, with authority over the specific program for which the waiver is sought, may in writing, waive the electronic submission requirement for an applicant on the basis of good cause.
</P>
<CITA TYPE="N">[70 FR 77294, Dec. 29, 2005]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="L" NODE="24:1.1.1.1.5.12" TYPE="SUBPART">
<HEAD>Subpart L—Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>81 FR 80798, Nov. 16, 2016, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 5.2001" NODE="24:1.1.1.1.5.12.25.1" TYPE="SECTION">
<HEAD>§ 5.2001   Applicability.</HEAD>
<P>(a) This subpart addresses the protections for victims of domestic violence, dating violence, sexual assault, or stalking who are applying for, or are the beneficiaries of, assistance under a HUD program covered by the Violence Against Women Act (VAWA), as amended (42 U.S.C. 13925 and 42 U.S.C. 14043e <I>et seq.</I>) (“covered housing program,” as defined in § 5.2003). Notwithstanding the title of the statute, protections are not limited to women but cover victims of domestic violence, dating violence, sexual assault, and stalking, regardless of sex, gender identity, or sexual orientation. Consistent with the nondiscrimination and equal opportunity requirements at 24 CFR 5.105(a), victims cannot be discriminated against on the basis of any protected characteristic, including race, color, national origin, religion, sex, familial status, disability, or age. HUD programs must also be operated consistently with HUD's Equal Access Rule at § 5.105(a)(2), which requires that HUD-assisted and HUD-insured housing are made available to all otherwise eligible individuals and families regardless of actual or perceived sexual orientation, gender identity, or marital status.
</P>
<P>(b)(1) The applicable assistance provided under a covered housing program generally consists of two types of assistance (one or both may be provided): Tenant-based rental assistance, which is rental assistance that is provided to the tenant; and project-based assistance, which is assistance that attaches to the unit in which the tenant resides. For project-based assistance, the assistance may consist of such assistance as operating assistance, development assistance, and mortgage interest rate subsidy.
</P>
<P>(2) The regulations in this subpart are supplemented by the specific regulations for the HUD-covered housing programs listed in § 5.2003. The program-specific regulations address how certain VAWA requirements are to be implemented and whether they can be implemented (for example, reasonable time to establish eligibility for assistance as provided in § 5.2009(b)) for the applicable covered housing program, given the statutory and regulatory framework for the program. When there is conflict between the regulations of this subpart and the program-specific regulations, the program-specific regulations govern. Where assistance is provided under more than one covered housing program and there is a conflict between VAWA protections or remedies under those programs, the individual seeking the VAWA protections or remedies may choose to use the protections or remedies under any or all of those programs, as long as the protections or remedies would be feasible and permissible under each of the program statutes.


</P>
</DIV8>


<DIV8 N="§ 5.2003" NODE="24:1.1.1.1.5.12.25.2" TYPE="SECTION">
<HEAD>§ 5.2003   Definitions.</HEAD>
<P>The definitions of <I>PHA, HUD,</I> <I>household,</I> and <I>other person under the tenant's control</I> are defined in subpart A of this part. As used in this subpart L:
</P>
<P><I>Actual and imminent threat</I> refers to a physical danger that is real, would occur within an immediate time frame, and could result in death or serious bodily harm. In determining whether an individual would pose an actual and imminent threat, the factors to be considered include: The duration of the risk, the nature and severity of the potential harm, the likelihood that the potential harm will occur, and the length of time before the potential harm would occur.
</P>
<P><I>Affiliated individual,</I> with respect to an individual, means:
</P>
<P>(1) A spouse, parent, brother, sister, or child of that individual, or a person to whom that individual stands in the place of a parent or guardian (for example, the affiliated individual is a person in the care, custody, or control of that individual); or
</P>
<P>(2) Any individual, tenant, or lawful occupant living in the household of that individual.
</P>
<P><I>Bifurcate</I> means to divide a lease as a matter of law, subject to the permissibility of such process under the requirements of the applicable HUD-covered program and State or local law, such that certain tenants or lawful occupants can be evicted or removed and the remaining tenants or lawful occupants can continue to reside in the unit under the same lease requirements or as may be revised depending upon the eligibility for continued occupancy of the remaining tenants and lawful occupants.
</P>
<P><I>Covered housing program</I> consists of the following HUD programs:
</P>
<P>(1) Section 202 Supportive Housing for the Elderly (12 U.S.C. 1701q), with implementing regulations at 24 CFR part 891.
</P>
<P>(2) Section 811 Supportive Housing for Persons with Disabilities (42 U.S.C. 8013), with implementing regulations at 24 CFR part 891.
</P>
<P>(3) Housing Opportunities for Persons With AIDS (HOPWA) program (42 U.S.C. 12901 <I>et seq.</I>), with implementing regulations at 24 CFR part 574.
</P>
<P>(4) HOME Investment Partnerships (HOME) program (42 U.S.C. 12741 <I>et seq.</I>), with implementing regulations at 24 CFR part 92.
</P>
<P>(5) Homeless programs under title IV of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11360 <I>et seq.</I>), including the Emergency Solutions Grants program (with implementing regulations at 24 CFR part 576), the Continuum of Care program (with implementing regulations at 24 CFR part 578), and the Rural Housing Stability Assistance program (with regulations forthcoming).
</P>
<P>(6) Multifamily rental housing under section 221(d)(3) of the National Housing Act (12 U.S.C. 17151(d)) with a below-market interest rate (BMIR) pursuant to section 221(d)(5), with implementing regulations at 24 CFR part 221.
</P>
<P>(7) Multifamily rental housing under section 236 of the National Housing Act (12 U.S.C. 1715z-1), with implementing regulations at 24 CFR part 236.
</P>
<P>(8) HUD programs assisted under the United States Housing Act of 1937 (42 U.S.C. 1437 <I>et seq.</I>); specifically, public housing under section 6 of the 1937 Act (42 U.S.C. 1437d) (with regulations at 24 CFR Chapter IX), tenant-based and project-based rental assistance under section 8 of the 1937 Act (42 U.S.C. 1437f) (with regulations at 24 CFR chapters VIII and IX), and the Section 8 Moderate Rehabilitation Single Room Occupancy (with implementing regulations at 24 CFR part 882, subpart H).
</P>
<P>(9) The Housing Trust Fund (12 U.S.C. 4568) (with implementing regulations at 24 CFR part 93).
</P>
<P><I>Covered housing provider</I> refers to the individual or entity under a covered housing program that has responsibility for the administration and/or oversight of VAWA protections and includes PHAs, sponsors, owners, mortgagors, managers, State and local governments or agencies thereof, nonprofit or for-profit organizations or entities. The program-specific regulations for the covered housing programs identify the individual or entity that carries out the duties and responsibilities of the covered housing provider as set forth in part 5, subpart L. For any of the covered housing programs, it is possible that there may be more than one covered housing provider; that is, depending upon the VAWA duty or responsibility to be performed by a covered housing provider, the covered housing provider may not always be the same individual or entity.
</P>
<P><I>Dating violence</I> means violence committed by a person:
</P>
<P>(1) Who is or has been in a social relationship of a romantic or intimate nature with the victim; and
</P>
<P>(2) Where the existence of such a relationship shall be determined based on a consideration of the following factors:
</P>
<P>(i) The length of the relationship;
</P>
<P>(ii) The type of relationship; and
</P>
<P>(iii) The frequency of interaction between the persons involved in the relationship.
</P>
<P><I>Domestic violence</I> includes felony or misdemeanor crimes of violence committed by a current or former spouse or intimate partner of the victim, by a person with whom the victim shares a child in common, by a person who is cohabitating with or has cohabitated with the victim as a spouse or intimate partner, by a person similarly situated to a spouse of the victim under the domestic or family violence laws of the jurisdiction receiving grant monies, or by any other person against an adult or youth victim who is protected from that person's acts under the domestic or family violence laws of the jurisdiction. The term “spouse or intimate partner of the victim” includes a person who is or has been in a social relationship of a romantic or intimate nature with the victim, as determined by the length of the relationship, the type of the relationship, and the frequency of interaction between the persons involved in the relationship.
</P>
<P><I>Sexual assault</I> means any nonconsensual sexual act proscribed by Federal, tribal, or State law, including when the victim lacks capacity to consent.
</P>
<P><I>Stalking</I> means engaging in a course of conduct directed at a specific person that would cause a reasonable person to:
</P>
<P>(1) Fear for the person's individual safety or the safety of others; or
</P>
<P>(2) Suffer substantial emotional distress.
</P>
<P><I>VAWA</I> means the Violence Against Women Act of 1994, as amended (42 U.S.C. 13925 and 42 U.S.C. 14043e <I>et seq.</I>).


</P>
</DIV8>


<DIV8 N="§ 5.2005" NODE="24:1.1.1.1.5.12.25.3" TYPE="SECTION">
<HEAD>§ 5.2005   VAWA protections.</HEAD>
<P>(a) <I>Notification of occupancy rights under VAWA, and certification form.</I> (1) A covered housing provider must provide to each of its applicants and to each of its tenants the notice of occupancy rights and the certification form as described in this section:
</P>
<P>(i) A “Notice of Occupancy Rights under the Violence Against Women Act,” as prescribed and in accordance with directions provided by HUD, that explains the VAWA protections under this subpart, including the right to confidentiality, and any limitations on those protections; and
</P>
<P>(ii) A certification form, in a form approved by HUD, to be completed by the victim to document an incident of domestic violence, dating violence, sexual assault or stalking, and that:
</P>
<P>(A) States that the applicant or tenant is a victim of domestic violence, dating violence, sexual assault, or stalking;
</P>
<P>(B) States that the incident of domestic violence, dating violence, sexual assault, or stalking that is the ground for protection under this subpart meets the applicable definition for such incident under § 5.2003; and
</P>
<P>(C) Includes the name of the individual who committed the domestic violence, dating violence, sexual assault, or stalking, if the name is known and safe to provide.
</P>
<P>(2) The notice required by paragraph (a)(1)(i) of this section and certification form required by paragraph (a)(1)(ii) of this section must be provided to an applicant or tenant no later than at each of the following times:
</P>
<P>(i) At the time the applicant is denied assistance or admission under a covered housing program;
</P>
<P>(ii) At the time the individual is provided assistance or admission under the covered housing program;
</P>
<P>(iii) With any notification of eviction or notification of termination of assistance; and
</P>
<P>(iv) During the 12-month period following <I>December 16, 2016,</I> either during the annual recertification or lease renewal process, whichever is applicable, or, if there will be no recertification or lease renewal for a tenant during the first year after the rule takes effect, through other means.
</P>
<P>(3) The notice required by paragraph (a)(1)(i) of this section and the certification form required by paragraph (a)(1)(ii) of this section must be made available in multiple languages, consistent with guidance issued by HUD in accordance with Executive Order 13166 (Improving Access to Services for Persons with Limited English Proficiency, signed August 11, 2000, and published in the <E T="04">Federal Register</E> on August 16, 2000 (at 65 FR 50121).
</P>
<P>(4) For the Housing Choice Voucher program under 24 CFR part 982, the project-based voucher program under 24 CFR part 983, the public housing admission and occupancy requirements under 24 CFR part 960, and renewed funding or leases of the Section 8 project-based program under 24 CFR parts 880, 882, 883, 884, 886, as well as project-based section 8 provided in connection with housing under part 891, the HUD-required lease, lease addendum, or tenancy addendum, as applicable, must include a description of specific protections afforded to the victims of domestic violence, dating violence, sexual assault, or stalking, as provided in this subpart.
</P>
<P>(b) <I>Prohibited basis for denial or termination of assistance or eviction</I>—(1) <I>General.</I> An applicant for assistance or tenant assisted under a covered housing program may not be denied admission to, denied assistance under, terminated from participation in, or evicted from the housing on the basis or as a direct result of the fact that the applicant or tenant is or has been a victim of domestic violence, dating violence, sexual assault, or stalking, if the applicant or tenant otherwise qualifies for admission, assistance, participation, or occupancy.
</P>
<P>(2) <I>Termination on the basis of criminal activity.</I> A tenant in a covered housing program may not be denied tenancy or occupancy rights solely on the basis of criminal activity directly relating to domestic violence, dating violence, sexual assault, or stalking if:
</P>
<P>(i) The criminal activity is engaged in by a member of the household of the tenant or any guest or other person under the control of the tenant, and
</P>
<P>(ii) The tenant or an affiliated individual of the tenant is the victim or threatened victim of such domestic violence, dating violence, sexual assault or stalking.
</P>
<P>(c) <I>Construction of lease terms and terms of assistance.</I> An incident of actual or threatened domestic violence, dating violence, sexual assault, or stalking shall not be construed as:
</P>
<P>(1) A serious or repeated violation of a lease executed under a covered housing program by the victim or threatened victim of such incident; or
</P>
<P>(2) Good cause for terminating the assistance, tenancy, or occupancy rights under a covered housing program of the victim or threatened victim of such incident.
</P>
<P>(d) <I>Limitations of VAWA protections.</I> (1) Nothing in this section limits the authority of a covered housing provider, when notified of a court order, to comply with a court order with respect to:
</P>
<P>(i) The rights of access or control of property, including civil protection orders issued to protect a victim of domestic violence, dating violence, sexual assault, or stalking; or
</P>
<P>(ii) The distribution or possession of property among members of a household.
</P>
<P>(2) Nothing in this section limits any available authority of a covered housing provider to evict or terminate assistance to a tenant for any violation not premised on an act of domestic violence, dating violence, sexual assault, or stalking that is in question against the tenant or an affiliated individual of the tenant. However, the covered housing provider must not subject the tenant, who is or has been a victim of domestic violence, dating violence, sexual assault, or stalking, or is affiliated with an individual who is or has been a victim of domestic violence, dating violence, sexual assault or stalking, to a more demanding standard than other tenants in determining whether to evict or terminate assistance.
</P>
<P>(3) Nothing in this section limits the authority of a covered housing provider to terminate assistance to or evict a tenant under a covered housing program if the covered housing provider can demonstrate an actual and imminent threat to other tenants or those employed at or providing service to property of the covered housing provider would be present if that tenant or lawful occupant is not evicted or terminated from assistance. In this context, words, gestures, actions, or other indicators will be considered an “actual and imminent threat” if they meet the standards provided in the definition of “actual and imminent threat” in § 5.2003.
</P>
<P>(4) Any eviction or termination of assistance, as provided in paragraph (d)(3) of this section should be utilized by a covered housing provider only when there are no other actions that could be taken to reduce or eliminate the threat, including, but not limited to, transferring the victim to a different unit, barring the perpetrator from the property, contacting law enforcement to increase police presence or develop other plans to keep the property safe, or seeking other legal remedies to prevent the perpetrator from acting on a threat. Restrictions predicated on public safety cannot be based on stereotypes, but must be tailored to particularized concerns about individual residents.
</P>
<P>(e) <I>Emergency transfer plan.</I> Each covered housing provider, as identified in the program-specific regulations for the covered housing program, shall adopt an emergency transfer plan, no later than June 14, 2017 based on HUD's model emergency transfer plan, in accordance with the following:
</P>
<P>(1) For purposes of this section, the following definitions apply:
</P>
<P>(i) <I>Internal emergency transfer</I> refers to an emergency relocation of a tenant to another unit where the tenant would not be categorized as a new applicant; that is, the tenant may reside in the new unit without having to undergo an application process.
</P>
<P>(ii) <I>External emergency transfer</I> refers to an emergency relocation of a tenant to another unit where the tenant would be categorized as a new applicant; that is the tenant must undergo an application process in order to reside in the new unit.
</P>
<P>(iii) <I>Safe unit</I> refers to a unit that the victim of domestic violence, dating violence, sexual assault, or stalking believes is safe.
</P>
<P>(2) The emergency transfer plan must provide that a tenant receiving rental assistance through, or residing in a unit subsidized under, a covered housing program who is a victim of domestic violence, dating violence, sexual assault, or stalking qualifies for an emergency transfer if:
</P>
<P>(i) The tenant expressly requests the transfer; and
</P>
<P>(ii)(A) The tenant reasonably believes there is a threat of imminent harm from further violence if the tenant remains within the same dwelling unit that the tenant is currently occupying; or
</P>
<P>(B) In the case of a tenant who is a victim of sexual assault, either the tenant reasonably believes there is a threat of imminent harm from further violence if the tenant remains within the same dwelling unit that the tenant is currently occupying, or the sexual assault occurred on the premises during the 90-calendar-day period preceding the date of the request for transfer.
</P>
<P>(3) The emergency transfer plan must detail the measure of any priority given to tenants who qualify for an emergency transfer under VAWA in relation to other categories of tenants seeking transfers and individuals seeking placement on waiting lists.
</P>
<P>(4) The emergency transfer plan must incorporate strict confidentiality measures to ensure that the covered housing provider does not disclose the location of the dwelling unit of the tenant to a person who committed or threatened to commit an act of domestic violence, dating violence, sexual assault, or stalking against the tenant.
</P>
<P>(5) The emergency transfer plan must allow a tenant to make an internal emergency transfer under VAWA when a safe unit is immediately available.
</P>
<P>(6) The emergency transfer plan must describe policies for assisting a tenant in making an internal emergency transfer under VAWA when a safe unit is not immediately available, and these policies must ensure that requests for internal emergency transfers under VAWA receive, at a minimum, any applicable additional priority that housing providers may already provide to other types of emergency transfer requests.
</P>
<P>(7) The emergency transfer plan must describe reasonable efforts the covered housing provider will take to assist a tenant who wishes to make an external emergency transfer when a safe unit is not immediately available. The plan must include policies for assisting a tenant who is seeking an external emergency transfer under VAWA out of the covered housing provider's program or project, and a tenant who is seeking an external emergency transfer under VAWA into the covered housing provider's program or project. These policies may include:
</P>
<P>(i) Arrangements, including memoranda of understanding, with other covered housing providers to facilitate moves; and
</P>
<P>(ii) Outreach activities to organizations that assist or provide resources to victims of domestic violence, dating violence, sexual assault, or stalking.
</P>
<P>(8) Nothing may preclude a tenant from seeking an internal emergency transfer and an external emergency transfer concurrently if a safe unit is not immediately available.
</P>
<P>(9) Where applicable, the emergency transfer plan must describe policies for a tenant who has tenant-based rental assistance and who meets the requirements of paragraph (e)(2) of this section to move quickly with that assistance.
</P>
<P>(10) The emergency transfer plan may require documentation from a tenant seeking an emergency transfer, provided that:
</P>
<P>(i) The tenant's submission of a written request to the covered housing provider, where the tenant certifies that they meet the criteria in paragraph (e)(2)(ii) of this section, shall be sufficient documentation of the requirements in paragraph (e)(2) of this section;
</P>
<P>(ii) The covered housing provider may, at its discretion, ask an individual seeking an emergency transfer to document the occurrence of domestic violence, dating violence, sexual assault, or stalking, in accordance with § 5.2007, for which the individual is seeking the emergency transfer, if the individual has not already provided documentation of that occurrence; and
</P>
<P>(iii) No other documentation is required to qualify the tenant for an emergency transfer.
</P>
<P>(11) The covered housing provider must make its emergency transfer plan available upon request and, when feasible, must make its plan publicly available.
</P>
<P>(12) The covered housing provider must keep a record of all emergency transfers requested under its emergency transfer plan, and the outcomes of such requests, and retain these records for a period of three years, or for a period of time as specified in program regulations. Requests and outcomes of such requests must be reported to HUD annually.
</P>
<P>(13) Nothing in this paragraph (e) may be construed to supersede any eligibility or other occupancy requirements that may apply under a covered housing program.


</P>
</DIV8>


<DIV8 N="§ 5.2007" NODE="24:1.1.1.1.5.12.25.4" TYPE="SECTION">
<HEAD>§ 5.2007   Documenting the occurrence of domestic violence, dating violence, sexual assault, or stalking.</HEAD>
<P>(a) <I>Request for documentation.</I> (1) Under a covered housing program, if an applicant or tenant represents to the covered housing provider that the individual is a victim of domestic violence, dating violence, sexual assault, or stalking entitled to the protections under § 5.2005, or remedies under § 5.2009, the covered housing provider may request, in writing, that the applicant or tenant submit to the covered housing provider the documentation specified in paragraph (b)(1) of this section.
</P>
<P>(2)(i) If an applicant or tenant does not provide the documentation requested under paragraph (a)(1) of this section within 14 business days after the date that the tenant receives a request in writing for such documentation from the covered housing provider, nothing in § 5.2005 or § 5.2009, which addresses the protections of VAWA, may be construed to limit the authority of the covered housing provider to:
</P>
<P>(A) Deny admission by the applicant or tenant to the covered housing program;
</P>
<P>(B) Deny assistance under the covered housing program to the applicant or tenant;
</P>
<P>(C) Terminate the participation of the tenant in the covered housing program; or
</P>
<P>(D) Evict the tenant, or a lawful occupant that commits a violation of a lease.
</P>
<P>(ii) A covered housing provider may, at its discretion, extend the 14-business-day deadline under paragraph (a)(2)(i) of this section.
</P>
<P>(b) <I>Permissible documentation and submission requirements.</I> (1) In response to a written request to the applicant or tenant from the covered housing provider, as provided in paragraph (a) of this section, the applicant or tenant may submit, as documentation of the occurrence of domestic violence, dating violence, sexual assault, or stalking, any one of the following forms of documentation, where it is at the discretion of the tenant or applicant which one of the following forms of documentation to submit:
</P>
<P>(i) The certification form described in § 5.2005(a)(1)(ii); or
</P>
<P>(ii) A document:
</P>
<P>(A) Signed by an employee, agent, or volunteer of a victim service provider, an attorney, or medical professional, or a mental health professional (collectively, “professional”) from whom the victim has sought assistance relating to domestic violence, dating violence, sexual assault, or stalking, or the effects of abuse;
</P>
<P>(B) Signed by the applicant or tenant; and
</P>
<P>(C) That specifies, under penalty of perjury, that the professional believes in the occurrence of the incident of domestic violence, dating violence, sexual assault, or stalking that is the ground for protection and remedies under this subpart, and that the incident meets the applicable definition of domestic violence, dating violence, sexual assault, or stalking under § 5.2003; or
</P>
<P>(iii) A record of a Federal, State, tribal, territorial or local law enforcement agency, court, or administrative agency; or
</P>
<P>(iv) At the discretion of a covered housing provider, a statement or other evidence provided by the applicant or tenant.
</P>
<P>(2) If a covered housing provider receives documentation under paragraph (b)(1) of this section that contains conflicting information (including certification forms from two or more members of a household each claiming to be a victim and naming one or more of the other petitioning household members as the perpetrator), the covered housing provider may require an applicant or tenant to submit third-party documentation, as described in paragraphs (b)(1)(ii), (b)(1)(iii), or (b)(1)(iv) of this section, within 30 calendar days of the date of the request for the third-party documentation.
</P>
<P>(3) Nothing in this paragraph (b) shall be construed to require a covered housing provider to request that an individual submit documentation of the status of the individual as a victim of domestic violence, dating violence, sexual assault, or stalking.
</P>
<P>(c) <I>Confidentiality.</I> Any information submitted to a covered housing provider under this section, including the fact that an individual is a victim of domestic violence, dating violence, sexual assault, or stalking (confidential information), shall be maintained in strict confidence by the covered housing provider.
</P>
<P>(1) The covered housing provider shall not allow any individual administering assistance on behalf of the covered housing provider or any persons within their employ (<I>e.g.,</I> contractors) or in the employ of the covered housing provider to have access to confidential information unless explicitly authorized by the covered housing provider for reasons that specifically call for these individuals to have access to this information under applicable Federal, State, or local law.
</P>
<P>(2) The covered housing provider shall not enter confidential information described in paragraph (c) of this section into any shared database or disclose such information to any other entity or individual, except to the extent that the disclosure is:
</P>
<P>(i) Requested or consented to in writing by the individual in a time-limited release
</P>
<P>(ii) Required for use in an eviction proceeding or hearing regarding termination of assistance from the covered program; or
</P>
<P>(iii) Otherwise required by applicable law.
</P>
<P>(d) A covered housing provider's compliance with the protections of §§ 5.2005 and 5.2009, based on documentation received under this section shall not be sufficient to constitute evidence of an unreasonable act or omission by the covered housing provider. However, nothing in this paragraph (d) of this section shall be construed to limit the liability of a covered housing provider for failure to comply with §§ 5.2005 and 5.2009.


</P>
</DIV8>


<DIV8 N="§ 5.2009" NODE="24:1.1.1.1.5.12.25.5" TYPE="SECTION">
<HEAD>§ 5.2009   Remedies available to victims of domestic violence, dating violence, sexual assault, or stalking.</HEAD>
<P>(a) <I>Lease bifurcation.</I> (1) A covered housing provider may in accordance with paragraph (a)(2) of this section, bifurcate a lease, or remove a household member from a lease in order to evict, remove, terminate occupancy rights, or terminate assistance to such member who engages in criminal activity directly relating to domestic violence, dating violence, sexual assault, or stalking against an affiliated individual or other individual:
</P>
<P>(i) Without regard to whether the household member is a signatory to the lease; and
</P>
<P>(ii) Without evicting, removing, terminating assistance to, or otherwise penalizing a victim of such criminal activity who is also a tenant or lawful occupant.
</P>
<P>(2) A lease bifurcation, as provided in paragraph (a)(1) of this section, shall be carried out in accordance with any requirements or procedures as may be prescribed by Federal, State, or local law for termination of assistance or leases and in accordance with any requirements under the relevant covered housing program.
</P>
<P>(b) <I>Reasonable time to establish eligibility for assistance or find alternative housing following bifurcation of a lease</I>—(1) <I>Applicability.</I> The reasonable time to establish eligibility under a covered housing program or find alternative housing is specified in paragraph (b) of this section, or alternatively in the program-specific regulations governing the applicable covered housing program. Some covered housing programs may provide different time frames than are specified in this paragraph (b), and in such cases, the program-specific regulations govern.
</P>
<P>(2) <I>Reasonable time to establish eligibility assistance or find alternative housing.</I> (i) If a covered housing provider exercises the option to bifurcate a lease as provided in paragraph (a) of this section, and the individual who was evicted or for whom assistance was terminated was the eligible tenant under the covered housing program, the covered housing provider shall provide to any remaining tenant or tenants that were not already eligible a period of 90 calendar days from the date of bifurcation of the lease to:
</P>
<P>(A) Establish eligibility for the same covered housing program under which the evicted or terminated tenant was the recipient of assistance at the time of bifurcation of the lease; or
</P>
<P>(B) Establish eligibility under another covered housing program; or
</P>
<P>(C) Find alternative housing.
</P>
<P>(ii) The 90-calendar-day period provided by paragraph (b)(2) of this section will not be available to a remaining household member if the statutory requirements for the covered housing program prohibit it. The 90-day calendar period also will not apply beyond the expiration of a lease, unless this is permitted by program regulations. The 90-calendar-day period is the total period provided to a remaining tenant to establish eligibility under the three options provided in paragraphs (b)(2)(i)(A), (B), and (C) of this section.
</P>
<P>(iii) The covered housing provider may extend the 90-calendar-day period in paragraph (b)(2) of this section up to an additional 60 calendar days, unless prohibited from doing so by statutory requirements of the covered program or unless the time period would extend beyond expiration of the lease.
</P>
<P>(c) <I>Efforts to promote housing stability for victims of domestic violence, dating violence, sexual assault, or stalking.</I> Covered housing providers are encouraged to undertake whatever actions permissible and feasible under their respective programs to assist individuals residing in their units who are victims of domestic violence, dating violence, sexual assault, or stalking to remain in their units or other units under the covered housing program or other covered housing providers, and for the covered housing provider to bear the costs of any transfer, where permissible.


</P>
</DIV8>


<DIV8 N="§ 5.2011" NODE="24:1.1.1.1.5.12.25.6" TYPE="SECTION">
<HEAD>§ 5.2011   Effect on other laws.</HEAD>
<P>(a) Nothing in this subpart shall be construed to supersede any provision of any Federal, State, or local law that provides greater protection than this section for victims of domestic violence, dating violence, sexual assault, or stalking.
</P>
<P>(b) All applicable fair housing and civil rights statutes and requirements apply in the implementation of VAWA requirements. See § 5.105(a).




</P>
</DIV8>

</DIV6>


<DIV6 N="M" NODE="24:1.1.1.1.5.13" TYPE="SUBPART">
<HEAD>Subpart M—Core Based Statistical Areas</HEAD>


<DIV8 N="§ 5.3001" NODE="24:1.1.1.1.5.13.25.1" TYPE="SECTION">
<HEAD>§ 5.3001   Automatic propagation of OMB's Core Based Statistical Area Standards.</HEAD>
<P>When using Core Based Statistical Areas (CBSAs), HUD shall use the 2020 CBSA standards adopted by the Office of Management and Budget and published in the <E T="04">Federal Register</E> on July 16, 2021, as well as any subsequent updates to the CBSA delineations based on these standards made by the Office of Management and Budget. Purposes and programs that use the CBSA standards include, but are not limited to:
</P>
<P>(a) The Community Development Block Grant Program (24 CFR part 570);
</P>
<P>(b) The Community Development Block Grant Disaster Recovery funds (applicable appropriations and <E T="04">Federal Register</E> notices);
</P>
<P>(c) The Housing Opportunities for Persons with AIDS Program (24 CFR part 574);
</P>
<P>(d) The HOME Investment Partnerships Program (24 CFR part 92);
</P>
<P>(e) The Continuum of Care Program (24 CFR part 578);
</P>
<P>(f) The Emergency Solutions Grants Program (24 CFR part 576);
</P>
<P>(g) The FHA Title II Program (National Housing Act of 1934 Title II);
</P>
<P>(h) The Choice Neighborhoods Initiative Program (42 U.S.C. 1437v, as applied by the applicable annual appropriations act(s); 24 CFR 905.602(d));
</P>
<P>(i) The Housing Trust Fund Program (24 CFR part 93); and
</P>
<P>(j) The calculation of: Fair Market Rents (24 CFR part 888); HUD Area Median Family Income (this part); Income Limits (this part); Difficult Development Areas; and Qualified Census Tracts.


</P>
<CITA TYPE="N">[89 FR 96901, Dec. 6, 2024]






</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="6" NODE="24:1.1.1.1.6" TYPE="PART">
<HEAD>PART 6—NONDISCRIMINATION IN PROGRAMS AND ACTIVITIES RECEIVING ASSISTANCE UNDER TITLE I OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d) 42 U.S.C. 5309.
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>64 FR 3797, Jan. 25, 1999, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:1.1.1.1.6.1" TYPE="SUBPART">
<HEAD>Subpart A—General Provisions</HEAD>


<DIV8 N="§ 6.1" NODE="24:1.1.1.1.6.1.25.1" TYPE="SECTION">
<HEAD>§ 6.1   Purpose.</HEAD>
<P>The purpose of this part is to implement the provisions of section 109 of title I of the Housing and Community Development Act of 1974 (Title I) (42 U.S.C. 5309). Section 109 provides that no person in the United States shall, on the ground of race, color, national origin, religion, or sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity funded in whole or in part with Federal financial assistance. Section 109 does not directly prohibit discrimination on the bases of age or disability, and the regulations in this part 6 do not apply to age or disability discrimination in Title I programs. Instead, section 109 directs that the prohibitions against discrimination on the basis of age under the Age Discrimination Act of 1975 (42 U.S.C. 6101-6107) (Age Discrimination Act) and the prohibitions against discrimination on the basis of disability under section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) (Section 504) apply to programs or activities funded in whole or in part with Federal financial assistance. Thus, the regulations of 24 CFR part 8, which implement Section 504 for HUD programs, and the regulations of 24 CFR part 146, which implement the Age Discrimination Act for HUD programs, apply to disability and age discrimination in Title I programs.


</P>
</DIV8>


<DIV8 N="§ 6.2" NODE="24:1.1.1.1.6.1.25.2" TYPE="SECTION">
<HEAD>§ 6.2   Applicability.</HEAD>
<P>(a) This part applies to any program or activity funded in whole or in part with funds under title I of the Housing and Community Development Act of 1974, including Community Development Block Grants—Entitlement, State and HUD-Administered Small Cities, and Section 108 Loan Guarantees; Urban Development Action Grants; Economic Development Initiative Grants; and Special Purpose Grants.
</P>
<P>(b) The provisions of this part and sections 104(b)(2) and 109 of Title I that relate to discrimination on the basis of race shall not apply to the provision of Federal financial assistance by grantees under this title to the Hawaiian Homelands (42 U.S.C. 5309).
</P>
<P>(c) The provisions of this part and sections 104(b)(2) and 109 of Title I that relate to discrimination on the basis of race and national origin shall not apply to the provision of Federal financial assistance to grant recipients under the Native American Housing Assistance and Self-Determination Act (25 U.S.C. 4101). See also, 24 CFR 1003.601(a).


</P>
</DIV8>


<DIV8 N="§ 6.3" NODE="24:1.1.1.1.6.1.25.3" TYPE="SECTION">
<HEAD>§ 6.3   Definitions.</HEAD>
<P>The terms <I>Department, HUD,</I> and <I>Secretary</I> are defined in 24 CFR part 5. Other terms used in this part 6 are defined as follows:
</P>
<P><I>Act</I> means the Housing and Community Development Act of 1974, as amended (42 U.S.C. 5301-5320).
</P>
<P><I>Assistant Secretary</I> means the Assistant Secretary for Fair Housing and Equal Opportunity.
</P>
<P><I>Award Official</I> means the HUD official who has been delegated the Secretary's authority to implement a Title I funded program and to make grants under that program.
</P>
<P><I>Complete complaint</I> means a written statement that contains the complainant's name and address, identifies the Recipient against which the complaint is made, and describes the Recipient's alleged discriminatory action in sufficient detail to inform HUD of the nature and date of the alleged violation of section 109. It shall be signed by the complainant or by someone authorized to do so on his or her behalf. Complaints filed on behalf of classes or third parties shall describe or identify (by name, if possible) the alleged victims of discrimination.
</P>
<P><I>Federal financial assistance</I> means: (1) Any assistance made available under title I of the Housing and Community Development Act of 1974, as amended, and includes income generated from such assistance, and any grant, loan, contract, or any other arrangement, in the form of:
</P>
<P>(i) Funds;
</P>
<P>(ii) Services of Federal personnel; or
</P>
<P>(iii) Real or personal property or any interest in or use of such property, including:
</P>
<P>(A) Transfers or leases of the property for less than fair market value or for reduced consideration; and
</P>
<P>(B) Proceeds from a subsequent transfer or lease of the property if the Federal share of its fair market value is not returned to the Federal Government.
</P>
<P>(2) Any assistance in the form of proceeds from loans guaranteed under section 108 of the Act, but does not include assistance made available through direct Federal procurement contracts or any other contract of insurance or guaranty.
</P>
<P><I>Program or activity (funded in whole or in part)</I> means all of the operations of—
</P>
<P>(1)(i) A department, agency, special purpose district, or other instrumentality of a State or local government; or
</P>
<P>(ii) The entity of a State or local government that distributes Federal financial assistance, and each department or agency (and each State or local government entity) to which the assistance is extended, in the case of assistance to a State or local government;
</P>
<P>(2)(i) A college, university, or other post-secondary institution, or a public system of higher education; or
</P>
<P>(ii) A local educational agency (as defined in section 198(a)(10) of the Elementary and Secondary Education Act of 1965), system of vocational education or other school system;
</P>
<P>(3)(i) An entire corporation, partnership, or other private organization, or an entire sole proprietorship—
</P>
<P>(A) If assistance is extended to the corporation, partnership, private organization, or sole proprietorship as a whole; or
</P>
<P>(B) Which is principally engaged in the business of providing education, health care, housing, social services, or parks and recreation; or
</P>
<P>(ii) The entire plant or other comparable, geographically separate facility to which Federal financial assistance is extended, in the case of any other corporation, partnership, private organization, or sole proprietorship; or
</P>
<P>(4) Any other entity that is described in paragraphs (1), (2), or (3) of this definition, any part of which is extended Federal financial assistance.
</P>
<P><I>Recipient</I> means any State, political subdivision of any State, or instrumentality of any State or political subdivision; any public or private agency, institution, organization, or other entity; or any individual, in any State, to whom Federal financial assistance is extended, directly or through another Recipient, for any program or activity, or who otherwise participates in carrying out such program or activity, including any successor, assign, or transferee thereof. Recipient does not include any ultimate beneficiary under any program or activity.
</P>
<P><I>Responsible Official</I> means the Assistant Secretary for Fair Housing and Equal Opportunity or his or her designee.
</P>
<P><I>Section 109</I> means section 109 of the Housing and Community Development Act of 1974, as amended.
</P>
<P><I>Title I</I> means title I of the Housing and Community Development Act of 1974 (42 U.S.C. 5301-5321).


</P>
</DIV8>


<DIV8 N="§ 6.4" NODE="24:1.1.1.1.6.1.25.4" TYPE="SECTION">
<HEAD>§ 6.4   Discrimination prohibited.</HEAD>
<P>(a) Section 109 requires that no person in the United States shall be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity funded in whole or in part with Federal financial assistance, on the grounds of race, color, national origin, religion, or sex.
</P>
<P>(1) A Recipient under any program or activity to which this part applies may not, directly or through contractual, licensing, or other arrangements, take any of the following actions on the grounds of race, color, national origin, religion, or sex:
</P>
<P>(i) Deny any individual any facilities, services, financial aid, or other benefits provided under the program or activity;
</P>
<P>(ii) Provide any facilities, services, financial aid, or other benefits that are different, or are provided in a different form, from that provided to others under the program or activity;
</P>
<P>(iii) Subject an individual to segregated or separate treatment in any facility, or in any matter of process related to the receipt of any service or benefit under the program or activity;
</P>
<P>(iv) Restrict an individual's access to, or enjoyment of, any advantage or privilege enjoyed by others in connection with facilities, services, financial aid or other benefits under the program or activity;
</P>
<P>(v) Treat an individual differently from others in determining whether the individual satisfies any admission, enrollment, eligibility, membership, or other requirements or conditions that the individual must meet in order to be provided any facilities, services, or other benefit provided under the program or activity;
</P>
<P>(vi) Deny an individual an opportunity to participate in a program or activity as an employee;
</P>
<P>(vii) Aid or otherwise perpetuate discrimination against an individual by providing Federal financial assistance to an agency, organization, or person that discriminates in providing any housing, aid, benefit, or service;
</P>
<P>(viii) Otherwise limit an individual in the enjoyment of any right, privilege, advantage, or opportunity enjoyed by other individuals receiving the housing, aid, benefit, or service;
</P>
<P>(ix) Use criteria or methods of administration that have the effect of subjecting persons to discrimination or have the effect of defeating or substantially impairing accomplishment of the objectives of the program or activity with respect to persons of a particular race, color, national origin, religion, or sex; or
</P>
<P>(x) Deny a person the opportunity to participate as a member of planning or advisory boards.
</P>
<P>(2) In determining the site or location of housing, accommodations, or facilities, a Recipient may not make selections that have the effect of excluding persons from, denying them the benefits of, or subjecting them to discrimination on the ground of race, color, national origin, religion, or sex. The Recipient may not make selections that have the purpose or effect of defeating or substantially impairing the accomplishment of the objectives of section 109 and of this part 6.
</P>
<P>(3)(i) In administering a program or activity in which the Recipient has discriminated on the grounds of race, color, national origin, religion or sex, the Recipient must take any necessary steps to overcome the effects of prior discrimination.
</P>
<P>(ii) In the absence of discrimination, a Recipient, in administering a program or activity, may take any steps necessary to overcome the effects of conditions that resulted in limiting participation by persons of a particular race, color, national origin, religion, or sex.
</P>
<P>(iii) After a finding of noncompliance, or after a Recipient has reasonable cause to believe that discrimination has occurred, a Recipient shall not be prohibited by this section from taking any action eligible under subpart C of 24 CFR part 570 to ameliorate an imbalance in benefits, services or facilities provided to any geographic area or specific group of persons within its jurisdiction, where the purpose of such action is to remedy discriminatory practices or usage.
</P>
<P>(iv)(A) Notwithstanding anything to the contrary in this part, nothing contained in this section shall be construed to prohibit any Recipient from maintaining or constructing separate living facilities or restroom facilities for the different sexes in order to protect personal privacy or modesty concerns. Furthermore, selectivity on the basis of sex is not prohibited when institutional or custodial services can, in the interest of personal privacy or modesty, only be performed by a member of the same sex as those receiving the services.
</P>
<P>(B) Section 109 of the Act does not directly prohibit discrimination on the basis of age or disability, but directs that the prohibitions against discrimination on the basis of age under the Age Discrimination Act and the prohibitions against discrimination on the basis of disability under Section 504 apply to Title I programs and activities. Accordingly, for programs or activities receiving Federal financial assistance, the regulations in this part 6 apply to discrimination on the bases of race, color, national origin, religion, or sex; the regulations at 24 CFR part 8 apply to discrimination on the basis of disability; and the regulations at 24 CFR part 146 apply to discrimination on the basis of age.
</P>
<P>(b) [Reserved]


</P>
</DIV8>


<DIV8 N="§ 6.5" NODE="24:1.1.1.1.6.1.25.5" TYPE="SECTION">
<HEAD>§ 6.5   Discrimination prohibited—employment.</HEAD>
<P>(a) <I>General.</I> A Recipient may not, under any program or activity funded in whole or in part with Federal financial assistance, directly or through contractual agents or other arrangements including contracts and consultants, subject a person to discrimination in the terms and conditions of employment. Terms and conditions of employment include advertising, interviewing, selection, promotion, demotion, transfer, recruitment and advertising, layoff or termination, pay or other compensation, including benefits, and selection for training.
</P>
<P>(b) <I>Determination of compliance status.</I> The Assistant Secretary will follow the procedures set forth in this part and 29 CFR part 1691 and look to the substantive guidelines and policy of the Equal Employment Opportunity Commission when reviewing employment practices under Section 109.


</P>
</DIV8>


<DIV8 N="§ 6.6" NODE="24:1.1.1.1.6.1.25.6" TYPE="SECTION">
<HEAD>§ 6.6   Records to be maintained.</HEAD>
<P>(a) <I>General.</I> Recipients shall maintain records and data as required by 24 CFR 91.105, 91.115, 570.490, and 570.506.
</P>
<P>(b) <I>Employment.</I> Recipients shall maintain records and data as required by the Equal Employment Opportunity Commission at 29 CFR part 1600.
</P>
<P>(c) Recipients shall make available such records and any supporting documentation upon request of the Responsible Official.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control numbers 2506-0117 and 2506-0077)


</APPRO>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.1.1.1.6.2" TYPE="SUBPART">
<HEAD>Subpart B—Enforcement</HEAD>


<DIV8 N="§ 6.10" NODE="24:1.1.1.1.6.2.25.1" TYPE="SECTION">
<HEAD>§ 6.10   Compliance information.</HEAD>
<P>(a) <I>Cooperation and assistance.</I> The Responsible Official and the Award Official will provide assistance and guidance to Recipients to help them comply voluntarily with this part.
</P>
<P>(b) <I>Access to data and other sources of information.</I> Each Recipient shall permit access by authorized representatives of HUD to its facilities, books, records, accounts, minutes and audio tapes of meetings, personnel, computer disks and tapes, and other sources of information as may be pertinent to a determination of whether the Recipient is complying with this part. Where information required of a Recipient is in the exclusive possession of any other agency, institution, or person, and that agency, institution, or person fails or refuses to furnish this information, the Recipient shall so certify in any requested report and shall set forth what efforts it has made to obtain the information. Failure or refusal to furnish pertinent information (whether maintained by the Recipient or some other agency, institution, or person) without a credible reason for the failure or refusal will be considered to be noncompliance under this part.
</P>
<P>(c) <I>Compliance data.</I> Each Recipient shall keep records and submit to the Responsible Official, timely, complete, and accurate data at such times and in such form as the Responsible Official may determine to be necessary to ascertain whether the Recipient has complied or is complying with this part.
</P>
<P>(d) <I>Notification to employees, beneficiaries, and participants.</I> Each Recipient shall make available to employees, participants, beneficiaries, and other interested persons information regarding the provisions of this part and its applicability to the program or activity under which the Recipient receives Federal financial assistance and make such information available to them in such manner as the Responsible Official finds necessary to apprise such persons of the protections against discrimination assured them by Section 109 and this part.


</P>
</DIV8>


<DIV8 N="§ 6.11" NODE="24:1.1.1.1.6.2.25.2" TYPE="SECTION">
<HEAD>§ 6.11   Conduct of investigations.</HEAD>
<P>(a) <I>Filing a complaint</I>—(1) <I>Who may file.</I> Any person who believes that he or she has been subjected to discrimination prohibited by this part may file, or may have an authorized representative file on his or her behalf, a complaint with the Responsible Official. Any person who believes that any specific class of persons has been subjected to discrimination prohibited by this part and who is a member of that class or who is the authorized representative of a member of that class may file a complaint with the Responsible Official.
</P>
<P>(2) <I>Confidentiality.</I> Generally, the Responsible Official shall hold in confidence the identity of any person submitting a complaint, unless the person submits written authorization otherwise. However, an exception to maintaining confidentiality of the identity of the person may be required to carry out the purposes of this part, including the conduct of any investigation, hearing, or proceeding under this part.
</P>
<P>(3) <I>When to file.</I> Complaints shall be filed within 180 days of the alleged act of discrimination, unless the Responsible Official waives this time limit for good cause. For purposes of determining when a complaint is filed under this part, a complaint mailed to the Responsible Official via the U.S. Postal Service will be deemed filed on the date it is postmarked. A complaint delivered to the Responsible Official in any other manner will be deemed filed on the date it is received by the Responsible Official.
</P>
<P>(4) <I>Where to file complaints.</I> Complaints must be in writing, signed, addressed to the Responsible Official, and filed with (mailed to or otherwise delivered to) the Office of Fair Housing and Equal Opportunity at any HUD Office.
</P>
<P>(5) <I>Content of complaints.</I> Each complaint should contain the complainant's name, address, and phone number; a description or name, if available, of the Recipient alleged to have violated this part; an address where the violation occurred; and a description of the Recipient's alleged discriminatory action in sufficient detail to inform the Responsible Official of the nature and date of the alleged violation of this part.
</P>
<P>(6) <I>Amendments to complaints.</I> Amendments to complaints, such as clarification and amplification of allegations in a complaint or the addition of other Recipients, may be made by the complainant or the complainant's authorized representative at any time while the complaint is being considered, and any amendment shall be deemed to be made as of the original filing date.
</P>
<P>(7) <I>Notification.</I> To the extent practicable, the Responsible Official will notify the complainant and the Recipient of the Responsible Official's receipt of a complaint within 10 calendar days of receipt of a complete complaint. If the Responsible Official receives a complaint that is not complete, the Responsible Official will notify the complainant and specify the additional information that is needed to make the complaint complete. If the complainant fails to complete the complaint, the Responsible Official will close the complaint without prejudice and notify the complainant. When a complete complaint has been received, the Responsible Official, or his or her designee, will assess the complaint for acceptance, rejection, or referral to an appropriate Federal agency within 20 calendar days.
</P>
<P>(8) <I>Resolution of complaints.</I> After the acceptance of a complete complaint, the Responsible Official will investigate the complaint, attempt informal resolution, and, if resolution is not achieved, the Responsible Official will notify the Recipient and complainant, to the extent practicable within 180 days of the receipt of the complete complaint, of the results of the investigation in a letter of findings sent by certified mail, return receipt requested, containing the following:
</P>
<P>(i) Findings of fact and a finding of compliance or noncompliance;
</P>
<P>(ii) A description of an appropriate remedy for each violation believed to exist; and
</P>
<P>(iii) A notice of the right of the Recipient and the complainant to request a review of the letter of findings by the Responsible Official. A copy of the final investigative report will be made available upon request.
</P>
<P>(b) <I>Compliance reviews</I>—(1) <I>Periodic compliance reviews.</I> The Responsible Official may periodically review the practices of Recipients to determine whether they are complying with this part and may conduct on-site reviews. The Responsible Official will initiate an on-site review by sending to the Recipient a letter advising the Recipient of the practices to be reviewed; the programs affected by the review; and the opportunity, at any time before a final determination, to submit information that explains, validates, or otherwise addresses the practices under review. In addition, the Award Official will include, in normal program compliance reviews and monitoring procedures, appropriate actions to review and monitor compliance with general or specific program requirements designed to implement the requirements of this part.
</P>
<P>(2) <I>Time period of the review.</I> (i) For the Entitlement program, compliance reviews will cover the three years before the date of the review.
</P>
<P>(ii) For the Urban Development Action Grant (UDAG) program, the compliance review is applicable only to UDAG loan repayments or other payments or revenues classified as program income. UDAG repayments or other payments or revenues classified as miscellaneous revenue are not subject to compliance review under this part. (<I>See</I> 24 CFR 570.500(a).) The compliance review will cover the time period that program income is being repaid.
</P>
<P>(iii) For the State and HUD-Administered Small Cities programs, the compliance review will cover the four years before the date of the review.
</P>
<P>(iv) For all other programs, the time period covered by the review will be four years before the date of the review.
</P>
<P>(v) On a case-by-case basis, at the discretion of the Responsible Official, the above time frames for review can be expanded where facts or allegations warrant further investigation.
</P>
<P>(3) <I>Early compliance resolution.</I> On the last day of the on-site visit, after the compliance review, the Recipient will be given an opportunity to supplement the record. Additionally, a prefinding conference may be held and a summary of the proposed findings may be presented to the Recipient. In those instances where the issue(s) cannot be resolved at a prefinding conference or with the supplemental information, a meeting will be scheduled to attempt a voluntary settlement.
</P>
<P>(4) <I>Notification of findings.</I> (i) The Assistant Secretary will notify the Recipient of Federal financial assistance of the results of the compliance review in a letter of findings sent by certified mail, return receipt requested.
</P>
<P>(ii) <I>Letter of findings.</I> The letter of findings will include the findings of fact and the conclusions of law; a description of a remedy for each violation found; and a notice that a copy of HUD's final report concerning its compliance review will be made available, upon request, to the Recipient.
</P>
<P>(c) <I>Right to a review of the letter of findings.</I> (1) Within 30 days of receipt of the letter of findings, any party may request that a review be made of the letter of findings, by mailing or delivering to the Responsible Official, Room 5100, Office of Fair Housing and Equal Opportunity, HUD, Washington, DC 20410, a written statement of the reasons why the letter of findings should be modified.
</P>
<P>(2) The Responsible Official will send by certified mail, return receipt requested, a copy of the request for review to all parties. Parties other than the party requesting review and HUD shall have 20 days from receipt to respond to the request for review.
</P>
<P>(3) The Responsible Official will either sustain or modify the letter of findings or require that further investigation be conducted, within 60 days of the request for review. The Responsible Official's decision shall constitute the formal determination of compliance or noncompliance.
</P>
<P>(4) If no party requests that the letter of findings be reviewed, the Responsible Official, within 14 calendar days of the expiration of the time period in paragraph (a)(9)(i) of this section, will send a formal written determination of compliance or noncompliance to all parties.
</P>
<P>(d) <I>Voluntary compliance time limits.</I> The Recipient will have 10 calendar days from receipt of the letter of findings of noncompliance, or such other reasonable time as specified in the letter, within which to agree, in writing, to come into voluntary compliance or to contact the Responsible Official for settlement discussions. If the Recipient fails to meet this deadline, HUD will proceed in accordance with §§ 6.12 and 6.13.
</P>
<P>(e) <I>Informal resolution/voluntary compliance</I>—(1) <I>General.</I> It is the policy of HUD to encourage the informal resolution of matters. A complaint or a compliance review may be resolved by informal means at any time. If a letter of findings is issued, and the letter makes a finding of noncompliance, the Responsible Official will attempt to resolve the matter through a voluntary compliance agreement.
</P>
<P>(2) <I>Objectives of informal resolution/voluntary compliance.</I> In attempting informal resolution, the Responsible Official will attempt to achieve a just resolution of the matter and to obtain assurances, where appropriate, that the Recipient will satisfactorily remedy any violations of the rights of any complainant, and will take such action as will assure the elimination of any violation of this part or the prevention of the occurrence of such violation in the future. If a finding of noncompliance has been made, the terms of such an informal resolution shall be reduced to a written voluntary compliance agreement, signed by the Recipient and the Responsible Official, and be made part of the file. Such voluntary compliance agreements shall seek to protect the interests of the complainant (if any), other persons similarly situated, and the public.
</P>
<P>(3) <I>Right to file a private civil action.</I> At any time in the process, the complainant has the right to file a private civil action. If the complainant does so, the Responsible Official has the discretion to administratively close the investigation or continue the investigation, if he or she decides that it is in the best interests of the Department to do so. If the Responsible Official makes a finding of noncompliance and an agreement to voluntarily comply is not obtained from the Recipient, the procedures at §§ 6.12 and 6.13 for effecting compliance shall be followed.
</P>
<P>(f) <I>Intimidatory or retaliatory acts prohibited.</I> No Recipient or other person shall intimidate, threaten, coerce, or discriminate against any person for the purpose of interfering with any right or privilege secured by this part, or because he or she has made a complaint, testified, assisted, or participated in any manner in an investigation, compliance review, proceeding, or hearing under this part.


</P>
</DIV8>


<DIV8 N="§ 6.12" NODE="24:1.1.1.1.6.2.25.3" TYPE="SECTION">
<HEAD>§ 6.12   Procedure for effecting compliance.</HEAD>
<P>(a) Whenever the Assistant Secretary determines that a Recipient of Federal financial assistance has failed to comply with Section 109(a) or this part and voluntary compliance efforts have failed, the Secretary will notify the Governor of the State or the Chief Executive Officer of the unit of general local government of the findings of noncompliance and will request that the Governor or the Chief Executive Officer secure compliance. If within a reasonable period of time, not to exceed 60 days, the Governor or the Chief Executive Officer fails or refuses to secure compliance, the Secretary will:
</P>
<P>(1) Refer the matter to the Attorney General with a recommendation that an appropriate civil action be instituted;
</P>
<P>(2) Exercise the powers and functions provided by Title VI;
</P>
<P>(3) Terminate or reduce payments under Title I, or limit the availability of payments under Title I to programs or activities not affected by the failure to comply; or
</P>
<P>(4) Take such other actions as may be provided by law, including, but not limited to, the initiation of proceedings under 2 CFR part 2424 or any applicable proceeding under State or local law. 
</P>
<P>(b) <I>Termination, reduction, or limitation of the availability of Title I payments.</I> No order terminating, reducing, or limiting the availability of Title I payments under this part shall become effective until:
</P>
<P>(1) The Secretary has notified the Governor of the State or the Chief Executive Officer of the unit of general local government of the Recipient's failure to comply in accordance with paragraph (a) of this section and of the termination, reduction or limitation of the availability of Title I payments to be taken;
</P>
<P>(2) The Secretary has determined that compliance cannot be secured by voluntary means;
</P>
<P>(3) The Recipient has been extended an opportunity for a hearing in accordance with § 6.13(a); and
</P>
<P>(4) A final agency notice or decision has been rendered in accordance with paragraph (c) of this section or 24 CFR part 180.
</P>
<P>(c) If a Recipient does not respond to the notice of opportunity for a hearing or does not elect to proceed with a hearing within 20 days of the issuance of the Secretary's actions listed in paragraphs (b)(1), (2) and (3) of this section, then the Secretary's approval of the termination, reduction or limitation of the availability of Title I payments is considered a final agency notice and the Recipient may seek judicial review in accordance with section 111(c) of the Act.
</P>
<CITA TYPE="N">[64 FR 3797, Jan. 25, 1999, as amended at 72 FR 73491, Dec. 27, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 6.13" NODE="24:1.1.1.1.6.2.25.4" TYPE="SECTION">
<HEAD>§ 6.13   Hearings and appeals.</HEAD>
<P>(a) When a Recipient requests an opportunity for a hearing, in accordance with § 6.12(b)(3), the General Counsel will follow the notification procedures set forth in 24 CFR 180.415. The hearing, and any petition for review, will be conducted in accordance with the procedures set forth in 24 CFR part 180.
</P>
<P>(b) After a hearing is held and a final agency decision is rendered under 24 CFR part 180, the Recipient may seek judicial review in accordance with section 111(c) of the Act.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="8" NODE="24:1.1.1.1.7" TYPE="PART">
<HEAD>PART 8—NONDISCRIMINATION BASED ON HANDICAP IN FEDERALLY ASSISTED PROGRAMS AND ACTIVITIES OF THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>29 U.S.C. 794; 42 U.S.C. 3535(d) and 5309.
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>53 FR 20233, June 2, 1988, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:1.1.1.1.7.1" TYPE="SUBPART">
<HEAD>Subpart A—General Provisions</HEAD>


<DIV8 N="§ 8.1" NODE="24:1.1.1.1.7.1.25.1" TYPE="SECTION">
<HEAD>§ 8.1   Purpose.</HEAD>
<P>(a) The purpose of this part is to effectuate section 504 of the Rehabilitation Act of 1973, as amended (29 U.S.C 794), to the end that no otherwise qualified individual with handicaps in the United States shall, solely by reason of his or her handicap, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance from the Department of Housing and Urban Development. This part also implements section 109 of the Housing and Community Development Act of 1974, as amended (42 U.S.C. 5309). This part does not effectuate section 504 as it applies to any program or activity conducted by the Department. Compliance with this part does not assure compliance with requirements for accessibility by physically-handicapped persons imposed under the Architectural Barriers Act of 1968 (42 U.S.C. 4151-4157; 24 CFR part 40).
</P>
<P>(b) The policies and standards for compliance established by this part are established in contemplation of, and with a view to enforcement through, the Department's administration of programs or activities receiving Federal financial assistance and the administrative procedures described in subpart D (including, without limitation, judicial enforcement under § 8.57(a)).
</P>
<CITA TYPE="N">[53 FR 20233, June 2, 1988, as amended at 83 FR 26361, June 7, 2018]


</CITA>
</DIV8>


<DIV8 N="§ 8.2" NODE="24:1.1.1.1.7.1.25.2" TYPE="SECTION">
<HEAD>§ 8.2   Applicability.</HEAD>
<P>This part applies to all applicants for, and recipients of, HUD assistance in the operation of programs or activities receiving such assistance. 
</P>
<CITA TYPE="N">[53 FR 20233, June 2, 1988, as amended at 83 FR 26361, June 7, 2018]


</CITA>
</DIV8>


<DIV8 N="§ 8.3" NODE="24:1.1.1.1.7.1.25.3" TYPE="SECTION">
<HEAD>§ 8.3   Definitions.</HEAD>
<P>As used in this part:
</P>
<P><I>Accessible,</I> when used with respect to the design, construction, or alteration of a facility or a portion of a facility other than an individual dwelling unit, means that the facility or portion of the facility when designed, constructed or altered, can be approached, entered, and used by individuals with physical handicaps. The phrase <I>accessible to and usable by</I> is synonomous with accessible.
</P>
<P><I>Accessible,</I> when used with respect to the design, construction, or alteration of an individual dwelling unit, means that the unit is located on an accessible route and when designed, constructed, altered or adapted can be approached, entered, and used by individuals with physical handicaps. A unit that is on an accessible route and is adaptable and otherwise in compliance with the standards set forth in § 8.32 is <I>accessible</I> within the meaning of this paragraph. When a unit in an existing facility which is being made accessible as a result of alterations is intended for use by a specific qualified individual with handicaps (e.g., a current occupant of such unit or of another unit under the control of the same recipient, or an applicant on a waiting list), the unit will be deemed accessible if it meets the requirements of applicable standards that address the particular disability or impairment of such person.
</P>
<P><I>Accessible route</I> means a continuous unobstructed path connecting accessible elements and spaces in a building or facility that complies with the space and reach requirements of applicable standards prescribed by § 8.32. An accessible route that serves only accessible units occupied by persons with hearing or vision impairments need not comply with those requirements intended to effect accessibility for persons with mobility impairments.
</P>
<P><I>Adaptability</I> means the ability of certain elements of a dwelling unit, such as kitchen counters, sinks, and grab bars, to be added to, raised, lowered, or otherwise altered, to accommodate the needs of persons with or without handicaps, or to accommodate the needs of persons with different types or degrees of disability. For example, in a unit adaptable for a hearing-impaired person, the wiring for visible emergency alarms may be installed but the alarms need not be installed until such time as the unit is made ready for occupancy by a hearing-impaired person.
</P>
<P><I>Alteration</I> means any change in a facility or its permanent fixtures or equipment. It includes, but is not limited to, remodeling, renovation, rehabilitation, reconstruction, changes or rearrangements in structural parts and extraordinary repairs. It does not include normal maintenance or repairs, reroofing, interior decoration, or changes to mechanical systems.
</P>
<P><I>Applicant for assistance</I> means one who submits an application, request, plan, or statement required to be approved by a Department official or by a primary recipient as a condition of eligibility for Federal financial assistance. An application means such a request, plan or statement.
</P>
<P><I>Auxiliary aids</I> means services or devices that enable persons with impaired sensory, manual, or speaking skills to have an equal opportunity to participate in, and enjoy the benefits of, programs or activities receiving Federal financial assistance. For example, auxiliary aids for persons with impaired vision may include readers, Brailled materials, audio recordings, and other similar services and devices. Auxiliary aids for persons with impaired hearing may include telephone handset amplifiers, telephones compatible with hearing aids, telecommunication devices for deaf persons (TDD's), interpreters, notetakers, written materials, and other similar services and devices.
</P>
<P><I>Department</I> or <I>HUD</I> means the Department of Housing and Urban Development.
</P>
<P><I>Facility</I> means all or any portion of buildings, structures, equipment, roads, walks, parking lots, rolling stock or other real or personal property or interest in the property.
</P>
<P><I>Federal financial assistance</I> means any assistance provided or otherwise made available by the Department through any grant, loan, contract or any other arrangement, in the form of:
</P>
<P>(a) Funds;
</P>
<P>(b) Services of Federal personnel; or
</P>
<P>(c) Real or personal property or any interest in or use of such property, including:
</P>
<P>(1) Transfers or leases of the property for less than fair market value or for reduced consideration; and
</P>
<P>(2) Proceeds from a subsequent transfer or lease of the property if the Federal share of its fair market value is not returned to the Federal Government.
</P>
<P><I>Federal financial assistance</I> includes community development funds in the form of proceeds from loans guaranteed under section 108 of the Housing and Community Development Act of 1974, as amended, but does not include assistance made available through direct Federal procurement contracts or payments made under these contracts or any other contract of insurance or guaranty.
</P>
<P><I>Handicap</I> means any condition or characteristic that renders a person an individual with handicaps.
</P>
<P><I>Historic preservation programs or activities</I> means programs or activities receiving Federal financial assistance that have preservation of historic properties as a primary purpose.
</P>
<P><I>Historic properties</I> means those properties that are listed or are eligible for listing in the National Register of Historic Places, or such properties designated as historic under a statute of the appropriate State or local government body.
</P>
<P><I>Individual with handicaps</I> means any person who has a physical or mental impairment that substantially limits one or more major life activities; has a record of such an impairment; or is regarded as having such an impairment. For purposes of employment, this term does not include: Any individual who is an alcoholic or drug abuser whose current use of alcohol or drugs prevents the individual from performing the duties of the job in question, or whose employment, by reason of current alcohol or drug abuse, would constitute a direct threat to property or the safety of others; or any individual who has a currently contagious disease or infection and who, by reason of such disease or infection, would constitute a direct threat to the health or safety of other individuals or who, by reason of the currently contagious disease or infection, is unable to perform the duties of the job. For purposes of other programs and activities, the term does not include any individual who is an alcoholic or drug abuser whose current use of alcohol or drugs prevents the individual from participating in the program or activity in question, or whose participation, by reason of such current alcohol or drug abuse, would constitute a direct threat to property or the safety of others. As used in this definition, the phrase:
</P>
<P>(a) <I>Physical or mental impairment</I> includes:
</P>
<P>(1) Any physiological disorder or condition, cosmetic disfigurement, or anatomical loss affecting one or more of the following body systems: Neurological; musculoskeletal; special sense organs; respiratory, including speech organs; cardiovascular; reproductive; digestive; genito-urinary; hemic and lymphatic; skin; and endocrine; or
</P>
<P>(2) Any mental or psychological disorder, such as mental retardation, organic brain syndrome, emotional or mental illness, and specific learning disabilities. The term <I>physical or mental impairment</I> includes, but is not limited to, such diseases and conditions as orthopedic, visual, speech and hearing impairments, cerebral palsy, autism, epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart disease, diabetes, mental retardation, emotional illness, drug addiction and alcoholism.
</P>
<P>(b) <I>Major life activities</I> means functions such as caring for one's self, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning and working.
</P>
<P>(c) <I>Has a record of such an impairment</I> means has a history of, or has been misclassified as having, a mental or physical impairment that substantially limits one or more major life activities.
</P>
<P>(d) <I>Is regarded as having an impairment</I> means:
</P>
<P>(1) Has a physical or mental impairment that does not substantially limit one or more major life activities but that is treated by a recipient as constituting such a limitation;
</P>
<P>(2) Has a physical or mental impairment that substantially limits one or more major life activities only as a result of the attitudes of others toward such impairment; or
</P>
<P>(3) Has none of the impairments defined in paragraph (a) of this section but is treated by a recipient as having such an impairment.
</P>
<P><I>Multifamily housing project</I> means a project containing five or more dwelling units.
</P>
<P><I>Primary recipient</I> means a person, group, organization, State or local unit of government that is authorized or required to extend Federal financial assistance to another recipient for the purpose of carrying out a program or activity.
</P>
<P><I>Program or activity</I> means all of the operations of:
</P>
<P>(a)(1) A department, agency, special purpose district, or other instrumentality of a State or of a local government; or
</P>
<P>(2) The entity of such State or local government that distributes such assistance and each such department or agency (and each other State or local government entity) to which the assistance is extended, in the case of assistance to a State or local government;
</P>
<P>(b)(1) A college, university, or other post-secondary institution, or a public system of higher education; or
</P>
<P>(2) A local educational agency (as defined in section 198(a)(10) of the Elementary and Secondary Education Act of 1965), system of vocational education, or other school system;
</P>
<P>(c)(1) An entire corporation, partnership, or other private organization, or an entire sole proprietorship—
</P>
<P>(i) If assistance is extended to such corporation, partnership, private organization, or sole proprietorship as a whole; or
</P>
<P>(ii) Which is principally engaged in the business of providing education, health care, housing, social services, or parks and recreation; or
</P>
<P>(2) The entire plant or other comparable, geographically separate facility to which Federal financial assistance is extended, in the case of any other corporation, partnership, private organization, or sole proprietorship; or 
</P>
<P>(d) Any other entity which is established by two or more of the entities described in paragraphs (a), (b), or (c) of this section;
</P>
<FP>any part of which is extended Federal financial assistance. 
</FP>
<P><I>Project</I> means the whole of one or more residential structures and appurtenant structures, equipment, roads, walks, and parking lots which are covered by a single contract for Federal financial assistance or application for assistance, or are treated as a whole for processing purposes, whether or not located on a common site. 
</P>
<P><I>Qualified individual with handicaps</I> means: 
</P>
<P>(a) With respect to employment, an individual with handicaps who, with reasonable accommodation, can perform the essential functions of the job in question; and 
</P>
<P>(b) With respect to any non-employment program or activity which requires a person to perform services or to achieve a level of accomplishment, an individual with handicaps who meets the essential eligibility requirements and who can achieve the purpose of the program or activity without modifications in the program or activity that the recipient can demonstrate would result in a fundamental alteration in its nature; or
</P>
<P>(c) With respect to any other non-employment program or activity, an individual with handicaps who meets the essential eligibility requirements for participation in, or receipt of benefits from, that program or activity. <I>Essential eligibility requirements</I> include stated eligibility requirements such as income as well as other explicit or implicit requirements inherent in the nature of the program or activity, such as requirements that an occupant of multifamily housing be capable of meeting the recipient's selection criteria and be capable of complying with all obligations of occupancy with or without supportive services provided by persons other than the recipient. For example, a chronically mentally ill person whose particular condition poses a significant risk of substantial interference with the safety or enjoyment of others or with his or her own health or safety in the absence of necessary supportive services may be <I>qualified</I> for occupancy in a project where such supportive services are provided by the recipient as part of the assisted program. The person may not be <I>qualified</I> for a project lacking such services. 
</P>
<P><I>Recipient</I> means any State or its political subdivision, any instrumentality of a State or its political subdivision, any public or private agency, institution, organization, or other entity, or any person to which Federal financial assistance is extended for any program or activity directly or through another recipient, including any successor, assignee, or transferee of a recipient, but excluding the ultimate beneficiary of the assistance. An entity or person receiving housing assistance payments from a recipient on behalf of eligible families under a housing assistance payments program or a voucher program is not a recipient or subrecipient merely by virtue of receipt of such payments. 
</P>
<P><I>Replacement cost of the completed facility</I> means the current cost of construction and equipment for a newly constructed housing facility of the size and type being altered. Construction and equipment costs do not include the cost of land, demolition, site improvements, non-dwelling facilities and administrative costs for project development activities. 
</P>
<P><I>Secretary</I> means the Secretary of Housing and Urban Development. 
</P>
<P><I>Section 504</I> means section 504 of the Rehabilitation Act of 1973, as amended, 29 U.S.C. 794, as it applies to programs or activities receiving Federal financial assistance. 
</P>
<P><I>Substantial impairment</I> means a significant loss of the integrity of finished materials, design quality, or special character resulting from a permanent alteration. 
</P>
<CITA TYPE="N">[53 FR 20233, June 2, 1988; 54 FR 8188, Feb. 27, 1989]


</CITA>
</DIV8>


<DIV8 N="§ 8.4" NODE="24:1.1.1.1.7.1.25.4" TYPE="SECTION">
<HEAD>§ 8.4   Discrimination prohibited.</HEAD>
<P>(a) No qualified individual with handicaps shall, solely on the basis of handicap, be excluded from participation in, be denied the benefits of, or otherwise be subjected to discrimination under any program or activity that receives Federal financial assistance from the Department. 
</P>
<P>(b)(1) A recipient, in providing any housing, aid, benefit, or service in a program or activity that receives Federal financial assistance from the Department may not, directly or through contractual, licensing, or other arrangements, solely on the basis of handicap: 
</P>
<P>(i) Deny a qualified individual with handicaps the opportunity to participate in, or benefit from, the housing, aid, benefit, or service; 
</P>
<P>(ii) Afford a qualified individual with handicaps an opportunity to participate in, or benefit from, the housing, aid, benefit, or service that is not equal to that afforded to others;
</P>
<P>(iii) Provide a qualified individual with handicaps with any housing, aid, benefit, or service that is not as effective in affording the individual an equal opportunity to obtain the same result, to gain the same benefit, or to reach the same level of achievement as that provided to others; 
</P>
<P>(iv) Provide different or separate housing, aid, benefits, or services to individuals with handicaps or to any class of individuals with handicaps from that provided to others unless such action is necessary to provide qualified individuals with handicaps with housing, aid, benefits, or services that are as effective as those provided to others. 
</P>
<P>(v) Aid or perpetuate discrimination against a qualified individual with handicaps by providing significant assistance to an agency, organization, or person that discriminates on the basis of handicap in providing any housing, aid, benefit, or service to beneficiaries in the recipient's federally assisted program or activity; 
</P>
<P>(vi) Deny a qualified individual with handicaps the opportunity to participate as a member of planning or advisory boards;
</P>
<P>(vii) Deny a dwelling to an otherwise qualified buyer or renter because of a handicap of that buyer or renter or a person residing in or intending and eligible to reside in that dwelling after it is sold, rented or made available; or 
</P>
<P>(viii) Otherwise limit a qualified individual with handicaps in the enjoyment of any right, privilege, advantage, or opportunity enjoyed by other qualified individuals receiving the housing, aid, benefit, or service. 
</P>
<P>(2) For purposes of this part, housing, aids, benefits, and services, to be equally effective, are not required to produce the identical result or level of achievement for individuals with handicaps and non-handicapped persons, but must afford individuals with handicaps equal opportunity to obtain the same result, to gain the same benefit, or to reach the same level of achievement. 
</P>
<P>(3) A recipient may not deny a qualified individual with handicaps the opportunity to participate in any federally assisted program or activity that is not separate or different despite the existence of permissibly separate or different programs or activities.
</P>
<P>(4) In any program or activity receiving Federal financial assistance from the Department, a recipient may not, directly or through contractual or other arrangements, utilize criteria or methods of administration the purpose or effect of which would:
</P>
<P>(i) Subject qualified individuals with handicaps to discrimination solely on the basis of handicap;
</P>
<P>(ii) Defeat or substantially impair the accomplishment of the objectives of the recipient's federally assisted program or activity for qualified individuals with a particular handicap involved in the program or activity, unless the recipient can demonstrate that the criteria or methods of administration are manifestly related to the accomplishment of an objective of a program or activity; or
</P>
<P>(iii) Perpetuate the discrimination of another recipient if both recipients are subject to common administrative control or are agencies of the same State.
</P>
<P>(5) In determining the site or location of a federally assisted facility, an applicant for assistance or a recipient may not make selections the purpose or effect of which would:
</P>
<P>(i) Exclude qualified individuals with handicaps from, deny them the benefits of, or otherwise subject them to discrimination under, any program or activity that receives Federal financial assistance from the Department, or 
</P>
<P>(ii) Defeat or substantially impair the accomplishment of the objectives of the program or activity with respect to qualified individuals with handicaps.
</P>
<P>(6) As used in this section, the housing, aid, benefit, or service provided under a program or activity receiving Federal financial assistance includes any housing, aid, benefit, or service provided in or through a facility that has been constructed, altered, leased or rented, or otherwise acquired, in whole or in part, with Federal financial assistance.
</P>
<P>(c)(1) Non-handicapped persons may be excluded from the benefits of a program if the program is limited by Federal statute or executive order to individuals with handicaps. A specific class of individuals with handicaps may be excluded from a program if the program is limited by Federal statute or Executive order to a different class of individuals.
</P>
<P>(2) Certain Department programs operate under statutory definitions of <I>handicapped person</I> that are more restrictive than the definition of <I>individual with handicaps</I> contained in § 8.3. Those definitions are not superseded or otherwise affected by this regulation.
</P>
<P>(d) Recipients shall administer programs and activities receiving Federal financial assistance in the most integrated setting appropriate to the needs of qualified individuals with handicaps.
</P>
<P>(e) The obligation to comply with this part is not obviated or alleviated by any State or local law or other requirement that, based on handicap, imposes inconsistent or contradictory prohibitions or limits upon the eligibility of qualified individuals with handicaps to receive services or to practice any occupation or profession.
</P>
<P>(f) The enumeration of specific forms of prohibited discrimination in paragraphs (b) through (e) of this section does not limit the general prohibition in paragraph (a) of this section.
</P>
<CITA TYPE="N">[53 FR 20233, June 2, 1988; 53 FR 28115, July 26, 1988, as amended at 83 FR 23961, June 7, 2018]


</CITA>
</DIV8>


<DIV8 N="§ 8.5" NODE="24:1.1.1.1.7.1.25.5" TYPE="SECTION">
<HEAD>§ 8.5   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 8.6" NODE="24:1.1.1.1.7.1.25.6" TYPE="SECTION">
<HEAD>§ 8.6   Communications.</HEAD>
<P>(a) The recipient shall take appropriate steps to ensure effective communication with applicants, beneficiaries, and members of the public.
</P>
<P>(1) The recipient shall furnish appropriate auxiliary aids where necessary to afford an individual with handicaps an equal opportunity to participate in, and enjoy the benefits of, a program or activity receiving Federal financial assistance.
</P>
<P>(i) In determining what auxiliary aids are necessary, the recipient shall give primary consideration to the requests of the individual with handicaps.
</P>
<P>(ii) The recipient is not required to provide individually prescribed devices, readers for personal use or study, or other devices of a personal nature.
</P>
<P>(2) Where a recipient communicates with applicants and beneficiaries by telephone, telecommunication devices for deaf persons (TDD's) or equally effective communication systems shall be used.
</P>
<P>(b) The recipient shall adopt and implement procedures to ensure that interested persons (including persons with impaired vision or hearing) can obtain information concerning the existence and location of accessible services, activities, and facilities.
</P>
<P>(c) This section does not require a recipient to take any action that the recipient can demonstrate would result in a fundamental alteration in the nature of a program or activity or in undue financial and administrative burdens. If an action would result in such an alteration or burdens, the recipient shall take any other action that would not result in such an alteration or such burdens but would nevertheless ensure that, to the maximum extent possible, individuals with handicaps receive the benefits and services of the program or activity receiving HUD assistance.


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.1.1.1.7.2" TYPE="SUBPART">
<HEAD>Subpart B—Employment</HEAD>


<DIV8 N="§ 8.10" NODE="24:1.1.1.1.7.2.25.1" TYPE="SECTION">
<HEAD>§ 8.10   General prohibitions against employment discrimination.</HEAD>
<P>(a) No qualified individual with handicaps shall, solely on the basis of handicap, be subjected to discrimination in employment under any program or activity that receives Federal financial assistance from the Department.
</P>
<P>(b) A recipient may not limit, segregate, or classify applicants or employees in any way that adversely affects their opportunities or status because of handicap.
</P>
<P>(c) The prohibition against discrimination in employment applies to the following activities:
</P>
<P>(1) Recruitment, advertising, and the processing of applications for employment;
</P>
<P>(2) Hiring, upgrading, promotion, award of tenure, demotion, transfer, layoff, termination, right of return from layoff, injury or illness, and rehiring;
</P>
<P>(3) Rates of pay or any other form of compensation and changes in compensation;
</P>
<P>(4) Job assignments, job classifications, organizational structures, position descriptions, lines of progression, and seniority lists;
</P>
<P>(5) Leaves of absence, sick leave, or any other leave;
</P>
<P>(6) Fringe benefits available by virtue of employment, whether or not administered by the recipient;
</P>
<P>(7) Selection and financial support for training, including apprenticeship, professional meetings, conferences, and other related activities, and selection for leaves of absence for training;
</P>
<P>(8) Employer sponsored activities, including social or recreational programs; and
</P>
<P>(9) Any other term, condition, or privilege of employment.
</P>
<P>(d) A recipient may not participate in a contractual or other relationship that has the effect of subjecting qualified applicants with handicaps or employees with handicaps to discrimination prohibited by this subpart. The relationships referred to in this paragraph (d) include relationships with employment and referral agencies, labor unions, organizations providing or administering fringe benefits to employees of the recipient, and organizations providing training and apprenticeship programs.


</P>
</DIV8>


<DIV8 N="§ 8.11" NODE="24:1.1.1.1.7.2.25.2" TYPE="SECTION">
<HEAD>§ 8.11   Reasonable accommodation.</HEAD>
<P>(a) A recipient shall make reasonable accommodation to the known physical or mental limitations of an otherwise qualified applicant with handicaps or employee with handicaps, unless the recipient can demonstrate that the accommodation would impose an undue hardship on the operation of its program.
</P>
<P>(b) Reasonable accommodation may include:
</P>
<P>(1) Making facilities used by employees accessible to and usable by individuals with handicaps and
</P>
<P>(2) Job restructuring, job relocation, part-time or modified work schedules, acquisitions or modification of equipment or devices, the provision of readers or interpreters, and other similar actions.
</P>
<P>(c) In determining, under paragraph (a) of this section, whether an accommodation would impose an undue hardship on the operation of a recipient's program, factors to be considered include:
</P>
<P>(1) The overall size of the recipient's program with respect to number of employees, number and type of facilities, and size of budget;
</P>
<P>(2) The type of the recipient's operation, including the composition and structure of the recipient's workforce; and 
</P>
<P>(3) The nature and cost of the accommodation needed.
</P>
<P>(d) A recipient may not deny any employment opportunity to a qualified handicapped employee or applicant if the basis for the denial is the need to make reasonable accommodation to the physical or mental limitations of the employee or applicant.


</P>
</DIV8>


<DIV8 N="§ 8.12" NODE="24:1.1.1.1.7.2.25.3" TYPE="SECTION">
<HEAD>§ 8.12   Employment criteria.</HEAD>
<P>(a) A recipient may not use any employment test or other selection criterion that screens out or tends to screen out individuals with handicaps or any class of individuals with handicaps unless:
</P>
<P>(1) The recipient demonstrates that the test score or other selection criterion, as used by the recipient, is job-related for the position in question; and
</P>
<P>(2) The appropriate HUD official demonstrates that alternative job-related tests or criteria that tend to screen out fewer individuals with handicaps are unavailable.
</P>
<P>(b) A recipient shall select and administer tests concerning employment to ensure that, when administered to an applicant or employee who has a handicap that impairs sensory, manual, or speaking skills, the test results accurately reflect the applicant's or employee's job skills, aptitude, or whatever other factor the test purports to measure, rather than the applicant's or employee's impaired sensory, manual, or speaking skills (except where those skills are the factors that the test purports to measure).


</P>
</DIV8>


<DIV8 N="§ 8.13" NODE="24:1.1.1.1.7.2.25.4" TYPE="SECTION">
<HEAD>§ 8.13   Preemployment inquiries.</HEAD>
<P>(a) Except as provided in paragraphs (b) and (c) of this section, a recipient may not make a preemployment inquiry or conduct a preemployment medical examination of an applicant to determine whether the applicant is an individual with handicaps or the nature or severity of a handicap. A recipient may, however, make preemployment inquiry into an applicant's ability to perform job-related functions.
</P>
<P>(b) When a recipient is undertaking affirmative action efforts, voluntary or otherwise, the recipient may invite applicants for employment to indicate whether and to what extent they are handicapped, if the following conditions are met:
</P>
<P>(1) The recipient states clearly on any written questionnaire used for this purpose, or makes clear orally if no written questionnaire is used, that the information requested is intended for use solely in connection with its remedial action obligations, or its voluntary or affirmative action efforts; and
</P>
<P>(2) The recipient states clearly that the information is being requested on a voluntary basis, that it will be kept confidential (as provided in paragraph (d) of this section), that refusal to provide the information will not subject the applicant or employee to any adverse treatment, and that the information will be used only in accordance with this part.
</P>
<P>(c) Nothing in this section shall prohibit a recipient from conditioning an offer of employment on the results of a medical examination conducted before the employee's entrance on duty if all entering employees in that category of job classification must take such an examination regardless of handicap, and the results of such examination are used only in accordance with the requirements of this part.
</P>
<P>(d) Information obtained under this section concerning the medical condition or history of the applicant is to be collected and maintained on separate forms that are accorded confidentiality as medical records, except that:
</P>
<P>(1) Supervisors and managers may be informed of restrictions on the work or duties of individuals with handicaps and informed of necessary accommodations;
</P>
<P>(2) First aid and safety personnel may be informed if the condition might require emergency treatment; and
</P>
<P>(3) Government officials investigating compliance with section 504 shall be provided relevant information upon request.


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:1.1.1.1.7.3" TYPE="SUBPART">
<HEAD>Subpart C—Program Accessibility</HEAD>


<DIV8 N="§ 8.20" NODE="24:1.1.1.1.7.3.25.1" TYPE="SECTION">
<HEAD>§ 8.20   General requirement concerning program accessibility.</HEAD>
<P>Except as otherwise provided in §§ 8.21(c)(1), 8.24(a), 8.25, and 8.31, no qualified individual with handicaps shall, because a recipient's facilities are inaccessible to or unusable by individuals with handicaps, be denied the benefits of, be excluded from participation in, or otherwise be subjected to discrimination under any program or activity that receives Federal financial assistance.


</P>
</DIV8>


<DIV8 N="§ 8.21" NODE="24:1.1.1.1.7.3.25.2" TYPE="SECTION">
<HEAD>§ 8.21   Non-housing facilities.</HEAD>
<P>(a) <I>New construction.</I> New non-housing facilities shall be designed and constructed to be readily accessible to and usable by individuals with handicaps.
</P>
<P>(b) <I>Alterations to facilities.</I> Alterations to existing non-housing facilities shall, to the maximum extent feasible, be made to be readily accessible to and usable by individuals with handicaps. For purposes of this paragraph, the phrase <I>to the maximum extent feasible</I> shall not be interpreted as requiring that a recipient make a non-housing facility, or element thereof, accessible if doing so would impose undue financial and administrative burdens on the operation of the recipient's program or activity.
</P>
<P>(c) <I>Existing non-housing facilities</I>—(1) <I>General.</I> A recipient shall operate each non-housing program or activity receiving Federal financial assistance so that the program or activity, when viewed in its entirety, is readily accessible to and usable by individuals with handicaps. This paragraph does not— 
</P>
<P>(i) Necessarily require a recipient to make each of its existing non-housing facilities accessible to and usable by individuals with handicaps; 
</P>
<P>(ii) In the case of historic preservation programs or activities, require the recipient to take any action that would result in a substantial impairment of significant historic features of an historic property; or 
</P>
<P>(iii) Require a recipient to take any action that it can demonstrate would result in a fundamental alteration in the nature of its program or activity or in undue financial and administrative burdens. If an action would result in such an alteration or such burdens, the recipient shall take any action that would not result in such an alteration or such burdens but would nevertheless ensure that individuals with handicaps receive the benefits and services of the program or activity. 
</P>
<P>(2) <I>Methods</I>—(i) <I>General.</I> A recipient may comply with the requirements of this section in its programs and activities receiving Federal financial assistance through such means as location of programs or services to accessible facilities or accessible portions of facilities, assignment of aides to beneficiaries, home visits, the addition or redesign of equipment (e.g., appliances or furnishings) changes in management policies or procedures, acquisition or construction of additional facilities, or alterations to existing facilities on a selective basis, or any other methods that result in making its program or activity accessible to individuals with handicaps. A recipient is not required to make structural changes in existing facilities where other methods are effective in achieving compliance with this section. In choosing among available methods for meeting the requirements of this section, the recipient shall give priority to those methods that offer programs and activities to qualified individuals with handicaps in the most integrated setting appropriate. 
</P>
<P>(ii) <I>Historic preservation programs or activities.</I> In meeting the requirements of § 8.21(c) in historic preservation programs or activities, a recipient shall give priority to methods that provide physical access to individuals with handicaps. In cases where a physical alteration to an historic property is not required because of § 8.21(c)(1)(ii) or (iii), alternative methods of achieving program accessibility include using audio-visual materials and devices to depict those portions of an historic property that cannot otherwise be made accessible; assigning persons to guide individuals with handicaps into or through portions of historic properties that cannot otherwise be made accessible; or adopting other innovative methods. 
</P>
<P>(3) <I>Time period for compliance.</I> The recipient shall comply with the obligations established under this section within sixty days of July 11, 1988, except that where structural changes in facilities are undertaken, such changes shall be made within three years of July 11, 1988, but in any event as expeditiously as possible. 
</P>
<P>(4) <I>Transition plan.</I> If structural changes to non-housing facilities will be undertaken to achieve program accessibility, a recipient shall develop, within six months of July 11, 1988, a transition plan setting forth the steps necessary to complete such changes. The plan shall be developed with the assistance of interested persons, including individuals with handicaps or organizations representing individuals with handicaps. A copy of the transition plan shall be made available for public inspection. The plan shall, at a minimum— 
</P>
<P>(i) Identify physical obstacles in the recipient's facilities that limit the accessibility of its programs or activities to individuals with handicaps; 
</P>
<P>(ii) Describe in details the methods that will be used to make the facilities accessible; 
</P>
<P>(iii) Specify the schedule for taking the steps necessary to achieve compliance with this section and, if the time period of the transition plan is longer than one year, identify steps that will be taken during each year of the transition period; 
</P>
<P>(iv) Indicate the official responsible for implementation of the plan; and 
</P>
<P>(v) Identify the persons or groups with whose assistance the plan was prepared.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2529-0034)
</APPRO>
<CITA TYPE="N">[53 FR 20233, June 2, 1988; 53 FR 28115, July 26, 1988, as amended at 54 FR 37645, Sept. 12, 1989]


</CITA>
</DIV8>


<DIV8 N="§ 8.22" NODE="24:1.1.1.1.7.3.25.3" TYPE="SECTION">
<HEAD>§ 8.22   New construction—housing facilities.</HEAD>
<P>(a) New multifamily housing projects (including public housing and Indian housing projects as required by § 8.25) shall be designed and constructed to be readily accessible to and usable by individuals with handicaps.
</P>
<P>(b) Subject to paragraph (c) of this section, a minimum of five percent of the total dwelling units or at least one unit in a multifamily housing project, whichever is greater, shall be made accessible for persons with mobility impairments. A unit that is on an accessible route and is adaptable and otherwise in compliance with the standards set forth in § 8.32 is accessible for purposes of this section. An additional two percent of the units (but not less than one unit) in such a project shall be accessible for persons with hearing or vision impairments.
</P>
<P>(c) HUD may prescribe a higher percentage or number than that prescribed in paragraph (b) of this section for any area upon request therefor by any affected recipient or by any State or local government or agency thereof based upon demonstration to the reasonable satisfaction of HUD of a need for a higher percentage or number, based on census data or other available current data (including a currently effective Housing Assistance Plan or Comprehensive Homeless Assistance Plan), or in response to evidence of a need for a higher percentage or number received in any other manner. In reviewing such request or otherwise assessing the existence of such needs, HUD shall take into account the expected needs of eligible persons with and without handicaps.
</P>
<CITA TYPE="N">[53 FR 20233, June 2, 1988, as amended at 56 FR 920, Jan. 9, 1991]


</CITA>
</DIV8>


<DIV8 N="§ 8.23" NODE="24:1.1.1.1.7.3.25.4" TYPE="SECTION">
<HEAD>§ 8.23   Alterations of existing housing facilities.</HEAD>
<P>(a) <I>Substantial alteration.</I> If alterations are undertaken to a project (including a public housing project as required by § 8.25(a)(2)) that has 15 or more units and the cost of the alterations is 75 percent or more of the replacement cost of the completed facility, then the provisions of § 8.22 shall apply.
</P>
<P>(b) <I>Other alterations.</I> (1) Subject to paragraph (b)(2) of this section, alterations to dwelling units in a multifamily housing project (including public housing) shall, to the maximum extent feasible, be made to be readily accessible to and usable by individuals with handicaps. If alterations of single elements or spaces of a dwelling unit, when considered together, amount to an alteration of a dwelling unit, the entire dwelling unit shall be made accessible. Once five percent of the dwelling units in a project are readily accessible to and usable by individuals with mobility impairments, then no additional elements of dwelling units, or entire dwelling units, are required to be accessible under this paragraph. Alterations to common areas or parts of facilities that affect accessibility of existing housing facilities shall, to the maximum extent feasible, be made to be accessible to and usable by individuals with handicaps. For purposes of this paragraph, the phrase <I>to the maximum extent feasible</I> shall not be interpreted as requiring that a recipient (including a PHA) make a dwelling unit, common area, facility or element thereof accessible if doing so would impose undue financial and administrative burdens on the operation of the multifamily housing project.
</P>
<P>(2) HUD may prescribe a higher percentage or number than that prescribed in paragraph (b)(1) of this section for any area upon request therefor by any affected recipient or by any State or local government or agency thereof based upon demonstration to the reasonable satisfaction of HUD of a need for a higher percentage or number, based on census data or other available current data (including a currently effective Housing Assistance Plan or Comprehensive Homeless Assistance Plan), or in response to evidence of a need for a higher percentage or number received in any other manner. In reviewing such request or otherwise assessing the existence of such needs, HUD shall take into account the expected needs of eligible persons with and without handicaps.


</P>
</DIV8>


<DIV8 N="§ 8.24" NODE="24:1.1.1.1.7.3.25.5" TYPE="SECTION">
<HEAD>§ 8.24   Existing housing programs.</HEAD>
<P>(a) <I>General.</I> A recipient shall operate each existing housing program or activity receiving Federal financial assistance so that the program or activity, when viewed in its entirety, is readily accessible to and usable by individuals with handicaps. This paragraph does not—
</P>
<P>(1) Necessarily require a recipient to make each of its existing facilities accessible to and usable by individuals with handicaps;
</P>
<P>(2) Require a recipient to take any action that it can demonstrate would result in a fundamental alteration in the nature of its program or activity or in undue financial and administrative burdens. If an action would result in such an alteration or such burdens, the recipient shall take any action that would not result in such an alteration or such burdens but would nevertheless ensure that individuals with handicaps receive the benefits and services of the program or activity.
</P>
<P>(b) <I>Methods.</I> A recipient may comply with the requirements of this section through such means as reassignment of services to accessible buildings, assignment of aides to beneficiaries, provision of housing or related services at alternate accessible sites, alteration of existing facilities and construction of new facilities, or any other methods that result in making its programs or activities readily accessible to and usable by individuals with handicaps. A recipient is not required to make structural changes in existing housing facilities where other methods are effective in achieving compliance with this section or to provide supportive services that are not part of the program. In choosing among available methods for meeting the requirements of this section, the recipient shall give priority to those methods that offer programs and activities to qualified individuals with handicaps in the most integrated setting appropriate.
</P>
<P>(c) <I>Time period for compliance.</I> The recipient shall comply with the obligations established under this section within sixty days of July 11, 1988 except that—
</P>
<P>(1) In a public housing program where structural changes in facilities are undertaken, such changes shall be made within the timeframes established in § 8.25(c).
</P>
<P>(2) In other housing programs, where structural changes in facilities are undertaken, such changes shall be made within three years of July 11, 1988, but in any event as expeditiously as possible.
</P>
<P>(d) <I>Transition plan and time period for structural changes.</I> Except as provided in § 8.25(c), in the event that structural changes to facilities will be undertaken to achieve program accessibility, a recipient shall develop, within six months of July 11, 1988, a transition plan setting forth the steps necessary to complete such changes. The plan shall be developed with the assistance of interested persons, including individuals with handicaps or organizations representing individuals with handicaps. A copy of the transition plan shall be made available for public inspection. The plan shall, at a minimum—
</P>
<P>(1) Identify physical obstacles in the recipient's facilities that limit the accessibility of its programs or activities to individuals with handicaps;
</P>
<P>(2) Describe in detail the methods that will be used to make the facilities accessible;
</P>
<P>(3) Specify the schedule for taking the steps necessary to achieve compliance with this section and, if the time period of the transition plan is longer than one year, identify steps that will be taken during each year of the transition period;
</P>
<P>(4) Indicate the official responsible for implementation of the plan; and
</P>
<P>(5) Identify the persons or groups with whose assistance the plan was prepared.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2529-0034)
</APPRO>
<CITA TYPE="N">[53 FR 20233, June 2, 1988; 53 FR 28115, July 26, 1988, as amended at 54 FR 37645, Sept. 12, 1989]


</CITA>
</DIV8>


<DIV8 N="§ 8.25" NODE="24:1.1.1.1.7.3.25.6" TYPE="SECTION">
<HEAD>§ 8.25   Public housing and multi-family Indian housing.</HEAD>
<P>(a) <I>Development and alteration of public housing and multi-family Indian housing.</I> (1) The requirements of § 8.22 shall apply to all newly constructed public housing and multi-family Indian housing.
</P>
<P>(2) The requirements of § 8.23 shall apply to public housing and multi-family Indian housing developed through rehabilitation and to the alteration of public housing and multi-family Indian housing.
</P>
<P>(3) In developing public housing and multi-family Indian housing through the purchase of existing properties PHAs and IHAs shall give priority to facilities which are readily accessible to and usable by individuals with handicaps.
</P>
<P>(b) <I>Existing public housing and multi-family Indian housing—general.</I> The requirements of § 8.24(a) shall apply to public housing and multi-family Indian housing programs.
</P>
<P>(c) <I>Existing public housing and multi-family Indian housing—needs assessment and transition plan.</I> As soon as possible, each PHA (for the purpose of this paragraph, this includes an Indian Housing Authority) shall assess, on a PHA-wide basis, the needs of current tenants and applicants on its waiting list for accessible units and the extent to which such needs have not been met or cannot reasonably be met within four years through development, alterations otherwise contemplated, or other programs administered by the PHA (e.g., Section 8 Moderate Rehabilitation or Section 8 Existing Housing or Housing Vouchers). If the PHA currently has no accessible units or if the PHA or HUD determines that information regarding the availability of accessible units has not been communicated sufficiently so that, as a result, the number of eligible qualified individuals with handicaps on the waiting list is not fairly representative of the number of such persons in the area, the PHA's assessment shall include the needs of eligible qualified individuals with handicaps in the area. If the PHA determines, on the basis of such assessment, that there is no need for additional accessible dwelling units or that the need is being or will be met within four years through other means, such as new construction, Section 8 or alterations otherwise contemplated, no further action is required by the PHA under this paragraph. If the PHA determines, on the basis of its needs assessment, that alterations to make additional units accessible must be made so that the needs of eligible qualified individuals with handicaps may be accommodated proportionally to the needs of non-handicapped individuals in the same categories, then the PHA shall develop a transition plan to achieve program accessibility. The PHA shall complete the needs assessment and transition plan, if one is necessary, as expeditiously as possible, but in any event no later than two years after July 11, 1988. The PHA shall complete structural changes necessary to achieve program accessibility as soon as possible but in any event no later than four years after July 11, 1988. The Assistant Secretary for Fair Housing and Equal Opportunity and the Assistant Secretary for Public and Indian Housing may extend the four year period for a period not to exceed two years, on a case-by-case determination that compliance within that period would impose undue financial and administrative burdens on the operation of the recipient's public housing and multi-family Indian housing program. The Secretary or the Undersecretary may further extend this time period in extraordinary circumstances, for a period not to exceed one year. The plan shall be developed with the assistance of interested persons including individuals with handicaps or organizations representing individuals with handicaps. A copy of the needs assessment and transition plan shall be made available for public inspection. The transition plan shall, at a minimum—
</P>
<P>(1) Identify physical obstacles in the PHA's facilities (e.g., dwelling units and common areas) that limit the accessibility of its programs or activities to individuals with handicaps;
</P>
<P>(2) Describe in detail the methods that will be used to make the PHA's facilities accessible. A PHA may, if necessary, provide in its plan that it will seek HUD approval, under 24 CFR part 968, of a comprehensive modernization program to meet the needs of eligible individuals with handicaps;
</P>
<P>(3) Specify the schedule for taking the steps necessary to achieve compliance with this section and, if the time of the transition plan is longer than one year, identify steps that will be taken during each year of the transition period;
</P>
<P>(4) Indicate the official responsible for implementation of the plan; and
</P>
<P>(5) Identify the persons or groups with whose assistance the plan was prepared.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2529-0034)
</APPRO>
<CITA TYPE="N">[53 FR 20233, June 2, 1988, as amended at 54 FR 37645, Sept. 12, 1989; 56 FR 920, Jan. 9, 1991]


</CITA>
</DIV8>


<DIV8 N="§ 8.26" NODE="24:1.1.1.1.7.3.25.7" TYPE="SECTION">
<HEAD>§ 8.26   Distribution of accessible dwelling units.</HEAD>
<P>Accessible dwelling units required by § 8.22, 8.23, 8.24 or 8.25 shall, to the maximum extent feasible and subject to reasonable health and safety requirements, be distributed throughout projects and sites and shall be available in a sufficient range of sizes and amenities so that a qualified individual with handicaps' choice of living arrangements is, as a whole, comparable to that of other persons eligible for housing assistance under the same program. This provision shall not be construed to require provision of an elevator in any multifamily housing project solely for the purpose of permitting location of accessible units above or below the accessible grade level.


</P>
</DIV8>


<DIV8 N="§ 8.27" NODE="24:1.1.1.1.7.3.25.8" TYPE="SECTION">
<HEAD>§ 8.27   Occupancy of accessible dwelling units.</HEAD>
<P>(a) Owners and managers of multifamily housing projects having accessible units shall adopt suitable means to assure that information regarding the availability of accessible units reaches eligible individuals with handicaps, and shall take reasonable nondiscriminatory steps to maximize the utilization of such units by eligible individuals whose disability requires the accessibility features of the particular unit. To this end, when an accessible unit becomes vacant, the owner or manager before offering such units to a non-handicapped applicant shall offer such unit:
</P>
<P>(1) First, to a current occupant of another unit of the same project, or comparable projects under common control, having handicaps requiring the accessibility features of the vacant unit and occupying a unit not having such features, or, if no such occupant exists, then
</P>
<P>(2) Second, to an eligible qualified applicant on the waiting list having a handicap requiring the accessibility features of the vacant unit.
</P>
<P>(b) When offering an accessible unit to an applicant not having handicaps requiring the accessibility features of the unit, the owner or manager may require the applicant to agree (and may incorporate this agreement in the lease) to move to a non-accessible unit when available.


</P>
</DIV8>


<DIV8 N="§ 8.28" NODE="24:1.1.1.1.7.3.25.9" TYPE="SECTION">
<HEAD>§ 8.28   Housing voucher programs.</HEAD>
<P>(a) In carrying out the requirements of this subpart, a recipient administering a Section 8 housing voucher program shall:
</P>
<P>(1) In providing notice of the availability and nature of housing assistance for low-income families under program requirements, adopt suitable means to assure that the notice reaches eligible individuals with handicaps;
</P>
<P>(2) In its activities to encourage participation by owners, include encouragement of participation by owners having accessible units;
</P>
<P>(3) When issuing a Housing Voucher to a family which includes an individual with handicaps include a current listing of available accessible units known to the PHA and, if necessary, otherwise assist the family in locating an available accessible dwelling unit;
</P>
<P>(4) Take into account the special problem of ability to locate an accessible unit when considering requests by eligible individuals with handicaps for extensions of Housing Vouchers; and
</P>
<P>(5) If necessary as a reasonable accommodation for a person with disabilities, approve a family request for an exception payment standard under § 982.503(d)(5) for a regular tenancy under the Section 8 voucher program so that the program is readily accessible to and usable by persons with disabilities.


</P>
<P>(b) In order to ensure that participating owners do not discriminate in the recipient's federally assisted program, a recipient shall enter into a HUD-approved contract with participating owners, which contract shall include necessary assurances of nondiscrimination.
</P>
<CITA TYPE="N">[53 FR 20233, June 2, 1988, as amended at 63 FR 23853, Apr. 30, 1998; 89 FR 38290, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 8.29" NODE="24:1.1.1.1.7.3.25.10" TYPE="SECTION">
<HEAD>§ 8.29   Homeownership programs (sections 235(i) and 235(j), Turnkey III and Indian housing mutual self-help programs).</HEAD>
<P>Any housing units newly constructed or rehabilitated for purchase or single family (including semi-attached and attached) units to be constructed or rehabilitated in a program or activity receiving Federal financial assistance shall be made accessible upon request of the prospective buyer if the nature of the handicap of an expected occupant so requires. In such case, the buyer shall consult with the seller or builder/sponsor regarding the specific design features to be provided. If accessibility features selected at the option of the homebuyer are ones covered by the standards prescribed by § 8.32, those features shall comply with the standards prescribed in § 8.32. The buyer shall be permitted to depart from particular specifications of these standards in order to accommodate his or her specific handicap. The cost of making a facility accessible under this paragraph may be included in the mortgage amount within the allowable mortgage limits, where applicable. To the extent such costs exceed allowable mortgage limits, they may be passed on to the prospective homebuyer, subject to maximum sales price limitations (see 24 CFR 235.320.)


</P>
</DIV8>


<DIV8 N="§ 8.30" NODE="24:1.1.1.1.7.3.25.11" TYPE="SECTION">
<HEAD>§ 8.30   Rental rehabilitation program.</HEAD>
<P>Each grantee or state recipient in the rental rehabilitation program shall, subject to the priority in 24 CFR 511.10(l) and in accordance with other requirements in 24 CFR part 511, give priority to the selection of projects that will result in dwelling units being made readily accessible to and usable by individuals with handicaps.
</P>
<CITA TYPE="N">[53 FR 20233, June 2, 1988; 53 FR 28115, July 26, 1988]


</CITA>
</DIV8>


<DIV8 N="§ 8.31" NODE="24:1.1.1.1.7.3.25.12" TYPE="SECTION">
<HEAD>§ 8.31   Historic properties.</HEAD>
<P>If historic properties become subject to alterations to which this part applies the requirements of § 4.1.7 of the standards of § 8.32 of this part shall apply, except in the case of the Urban Development Action Grant (UDAG) program. In the UDAG program the requirements of 36 CFR part 801 shall apply. Accessibility to historic properties subject to alterations need not be provided if such accessibility would substantially impair the significant historic features of the property or result in undue financial and administrative burdens.


</P>
</DIV8>


<DIV8 N="§ 8.32" NODE="24:1.1.1.1.7.3.25.13" TYPE="SECTION">
<HEAD>§ 8.32   Accessibility standards.</HEAD>
<P>(a) Effective as of July 11, 1988, design, construction, or alteration of buildings in conformance with sections 3-8 of the Uniform Federal Accessibility Standards (UFAS) shall be deemed to comply with the requirements of §§ 8.21, 8.22, 8.23, and 8.25 with respect to those buildings. Departures from particular technical and scoping requirements of the UFAS by the use of other methods are permitted where substantially equivalent or greater access to and usability of the building is provided. The alteration of housing facilities shall also be in conformance with additional scoping requirements contained in this part. Persons interested in obtaining a copy of the UFAS are directed to § 40.7 of this title. 
</P>
<P>(b) For purposes of this section, section 4.1.6(1)(g) of UFAS shall be interpreted to exempt from the requirements of UFAS only mechanical rooms and other spaces that, because of their intended use, will not require accessibility to the public or beneficiaries or result in the employment or residence therein of individuals with physical handicaps.
</P>
<P>(c) This section does not require recipients to make building alterations that have little likelihood of being accomplished without removing or altering a load-bearing structural member.
</P>
<P>(d) For purposes of this section, section 4.1.4(11) of UFAS may not be used to waive or lower the minimum of five percent accessible units required by § 8.22(b) or to apply the minimum only to projects of 15 or more dwelling units.
</P>
<P>(e) Except as otherwise provided in this paragraph, the provisions of §§ 8.21 (a) and (b), 8.22 (a) and (b), 8.23, 8.25(a) (1) and (2), and 8.29 shall apply to facilities that are designed, constructed or altered after July 11, 1988. If the design of a facility was commenced before July 11, 1988, the provisions shall be followed to the maximum extent practicable, as determined by the Department. For purposes of this paragraph, the date a facility is constructed or altered shall be deemed to be the date bids for the construction or alteration of the facility are solicited. For purposes of the Urban Development Action Grant (UDAG) program, the provisions shall apply to the construction or alteration of facilities that are funded under applications submitted after July 11, 1988. If the UDAG application was submitted before July 11, 1988, the provisions shall apply, to the maximum extent practicable, as determined by the Department.
</P>
<CITA TYPE="N">[53 FR 20233, June 2, 1988, as amended at 61 FR 5203, Feb. 9, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 8.33" NODE="24:1.1.1.1.7.3.25.14" TYPE="SECTION">
<HEAD>§ 8.33   Housing adjustments.</HEAD>
<P>A recipient shall modify its housing policies and practices to ensure that these policies and practices do not discriminate, on the basis of handicap, against a qualified individual with handicaps. The recipient may not impose upon individuals with handicaps other policies, such as the prohibition of assistive devices, auxiliary alarms, or guides in housing facilities, that have the effect of limiting the participation of tenants with handicaps in the recipient's federally assisted housing program or activity in violation of this part. Housing policies that the recipient can demonstrate are essential to the housing program or activity will not be regarded as discriminatory within the meaning of this section if modifications to them would result in a fundamental alteration in the nature of the program or activity or undue financial and administrative burdens. 


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:1.1.1.1.7.4" TYPE="SUBPART">
<HEAD>Subpart D—Enforcement</HEAD>


<DIV8 N="§ 8.50" NODE="24:1.1.1.1.7.4.25.1" TYPE="SECTION">
<HEAD>§ 8.50   Assurances required.</HEAD>
<P>(a) <I>Assurances.</I> An applicant for Federal financial assistance for a program or activity to which this part applies shall submit an assurance to HUD, or in the case of a subrecipient to a primary recipient, on a form specified by the responsible civil rights official, that the program or activity will be operated in compliance with this part. An applicant may incorporate these assurances by reference in subsequent applications to the Department.
</P>
<P>(b) <I>Duration of obligation.</I> (1) In the case of Federal financial assistance extended in the form of real property or to provide real property or structures on the property, the assurance will obligate the recipient or, in the case of a subsequent transfer, the transferee, for the period during which the real property or structures are used for the purpose for which Federal financial assistance is extended or for another purpose involving the provision of similar services or benefits.
</P>
<P>(2) In the case of Federal financial assistance extended to provide personal property, the assurance will obligate the recipient for the period during which it retains ownership or possession of the property.
</P>
<P>(3) In all other cases the assurance will obligate the recipient for the period during which Federal financial assistance is extended.
</P>
<P>(c) <I>Covenants.</I> (1) Where Federal financial assistance is provided in the form of real property or interest in the property from the Department, the instrument effecting or recording this transfer shall contain a covenant running with the land to assure nondiscrimination for the period during which the real property is used for a purpose for which the Federal financial assistance is extended or for another purpose involving the provision of similar services or benefits.
</P>
<P>(2) Where no transfer of property is involved but property is purchased or improved with Federal financial assistance, the recipient shall agree to include the covenant described in paragraph (b)(2) of this section in the instrument effecting or recording any subsequent transfer of the property.
</P>
<P>(3) Where Federal financial assistance is provided in the form of real property or interest in the property from the Department, the covenant shall also include a condition coupled with a right to be reserved by the Department to revert title to the property in the event of a breach of the covenant. If a transferee of real property proposes to mortgage or otherwise encumber the real property as security for financing construction of new, or improvement of existing, facilities on the property for the purposes for which the property was transferred, the Secretary may, upon request of the transferee and if necessary to accomplish such financing and upon such conditions as he or she deems appropriate, agree to forbear the exercise of such right to revert title for so long as the lien of such mortgage or other encumbrance remains effective.


</P>
</DIV8>


<DIV8 N="§ 8.51" NODE="24:1.1.1.1.7.4.25.2" TYPE="SECTION">
<HEAD>§ 8.51   Self-evaluation.</HEAD>
<P>(a) Each recipient shall, within one year of July 11, 1988, and after consultation with interested persons, including individuals with handicaps or organizations representing individuals with handicaps:
</P>
<P>(1) Evaluate its current policies and practices to determine whether, in whole or in part, they do not or may not meet the requirements of this part;
</P>
<P>(2) Modify any policies and practices that do not meet the requirements of this part; and
</P>
<P>(3) Take appropriate corrective steps to remedy the discrimination revealed by the self-evaluation.
</P>
<P>(b) A recipient that employs fifteen or more persons shall, for at least three years following completion of the evaluation required under paragraph (a)(1) of this section, maintain on file, make available for public inspection, and provide to the responsible civil rights official, upon request: (1) A list of the interested persons consulted; (2) a description of areas examined and any problems identified; and (3) a description of any modifications made and of any remedial steps taken.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2529-0034)
</APPRO>
<CITA TYPE="N">[53 FR 20233, June 2, 1988, as amended at 54 FR 37645, Sept. 12, 1989]


</CITA>
</DIV8>


<DIV8 N="§ 8.52" NODE="24:1.1.1.1.7.4.25.3" TYPE="SECTION">
<HEAD>§ 8.52   Remedial and affirmative action.</HEAD>
<P>(a) <I>Remedial action.</I> (1) If the responsible civil rights official finds that a recipient has discriminated against persons on the basis of handicap in violation of section 504 or this part, the recipient shall take such remedial action as the responsible civil rights official deems necessary to overcome the effects of the discrimination.
</P>
<P>(2) The responsible civil rights official may, where necessary to overcome the effects of discrimination in violation of section 504 or this part, require a recipient to take remedial action—
</P>
<P>(i) With respect to individuals with handicaps who are no longer participants in the program but who were participants in the program when such discrimination occurred or
</P>
<P>(ii) With respect to individuals with handicaps who would have been participants in the program had the discrimination not occurred.
</P>
<P>(b) <I>Voluntary action.</I> A recipient may take nondiscriminatory steps, in addition to any action that is required by this part, to overcome the effects of conditions that resulted in limited participation in the recipient's program or activity by qualified individuals with handicaps.


</P>
</DIV8>


<DIV8 N="§ 8.53" NODE="24:1.1.1.1.7.4.25.4" TYPE="SECTION">
<HEAD>§ 8.53   Designation of responsible employee and adoption of grievance procedures.</HEAD>
<P>(a) <I>Designation of responsible employee.</I> A recipient that employs fifteen or more persons shall designate at least one person to coordinate its efforts to comply with this part.
</P>
<P>(b) <I>Adoption of grievance procedures.</I> A recipient that employees fifteen or more persons shall adopt grievance procedures that incorporate appropriate due process standards and that provide for the prompt and equitable resolution of complaints alleging any action prohibited by this part. Such procedures need not be established with respect to complaints from applicants for employment or from applicants for admission to housing covered by this part.


</P>
</DIV8>


<DIV8 N="§ 8.54" NODE="24:1.1.1.1.7.4.25.5" TYPE="SECTION">
<HEAD>§ 8.54   Notice.</HEAD>
<P>(a) A recipient that employs fifteen or more persons shall take appropriate initial and continuing steps to notify participants, beneficiaries, applicants, and employees, including those with impaired vision or hearing, and unions or professional organizations holding collective bargaining or professional agreements with the recipient that it does not discriminate on the basis of handicap in violation of this part. The notification shall state, where appropriate, that the recipient does not discriminate in admission or access to, or treatment or employment in, its federally assisted programs and activities. The notification shall also include an identification of the responsible employee designated pursuant to § 8.53. A recipient shall make the initial notification required by this paragraph within 90 days of July 11, 1988. Methods of initial and continuing notification may include the posting of notices, publication in newspapers and magazines, placement of notices in recipients' publications, and distribution of memoranda or other written communications.
</P>
<P>(b) If a recipient publishes or uses recruitment materials or publications containing general information that it makes available to participants, beneficiaries, applicants, or employees, it shall include in those materials or publications a statement of the policy described in paragraph (a) of this section. A recipient may meet the requirement of this paragraph either by including appropriate inserts in existing materials and publications or by revising and reprinting the materials and publications.
</P>
<P>(c) The recipient shall ensure that members of the population eligible to be served or likely to be affected directly by a federally assisted program who have visual or hearing impairments are provided with the information necessary to understand and participate in the program. Methods for ensuring participation include, but are not limited to, qualified sign language and oral interpreters, readers, or the use of taped and Braille materials.


</P>
</DIV8>


<DIV8 N="§ 8.55" NODE="24:1.1.1.1.7.4.25.6" TYPE="SECTION">
<HEAD>§ 8.55   Compliance information.</HEAD>
<P>(a) <I>Cooperation and assistance.</I> The responsible civil rights official and the award official shall, to the fullest extent practicable, seek the cooperation of recipients in obtaining compliance with this part and shall provide assistance and guidance to recipients to help them comply voluntarily with this part.
</P>
<P>(b) <I>Compliance reports.</I> Each recipient shall keep such records and submit to the responsible civil rights official or his or her designee timely, complete, and accurate compliance reports at such times, and in such form and containing such information, as the responsible civil rights official or his or her designee may determine to be necessary to enable him or her to ascertain whether the recipient has complied or is complying with this part. In general, recipients should have available for the Department data showing the extent to which individuals with handicaps are beneficiaries of federally assisted programs.
</P>
<P>(c) <I>Access to sources of information.</I> Each recipient shall permit access by the responsible civil rights official during normal business hours to such of its books, records, accounts, and other sources of information, and its facilities, as may be pertinent to ascertain compliance with this part. Where any information required of a recipient is in the exclusive possession of any other agency, institution, or person and this agency, institution, or person shall fail or refuse to furnish this information, the recipient shall so certify in its report and shall set forth what efforts it has made to obtain the information.
</P>
<P>(d) <I>Information to beneficiaries and participants.</I> Each recipient shall make available to participants, beneficiaries, and other interested persons such information regarding the provisions of this part and its applicability to the program or activity under which the recipient receives Federal financial assistance, and make such information available to them in such manner as the responsible civil rights official finds necessary to apprise such persons of the protections against discrimination assured them by this part.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2529-0034)
</APPRO>
<CITA TYPE="N">[53 FR 20233, June 2, 1988, as amended at 54 FR 37645, Sept. 12, 1989]


</CITA>
</DIV8>


<DIV8 N="§ 8.56" NODE="24:1.1.1.1.7.4.25.7" TYPE="SECTION">
<HEAD>§ 8.56   Conduct of investigations.</HEAD>
<P>(a) <I>Periodic compliance reviews.</I> The responsible civil rights official or designee may periodically review the practices of recipients to determine whether they are complying with this part and where he or she has a reasonable basis to do so may conduct on-site reviews. Such basis may include any evidence that a problem exists or that programmatic matters exist that justify on-site investigation in selected circumstances. The responsible civil rights official shall initiate an on-site review by sending to the recipient a letter advising the recipient of the practices to be reviewed; the programs affected by the review; and the opportunity, at any time prior to receipt of a final determination, to make a documentary or other submission that explains, validates, or otherwise addresses the practices under review. In addition, each award official shall include in normal program compliance reviews and monitoring procedures appropriate actions to review and monitor compliance with general or specific program requirements designed to effectuate the requirements of this part.
</P>
<P>(b) <I>Investigations.</I> The responsible civil rights official shall make a prompt investigation whenever a compliance review, report, complaint or any other information indicates a possible failure to comply with this part.
</P>
<P>(c) <I>Filing a complaint</I>—(1) <I>Who may file.</I> Any person who believes that he or she has been subjected to discrimination prohibited by this part may by himself or herself or by his or her authorized representative file a complaint with the responsible civil rights official. Any person who believes that any specific class of persons has been subjected to discrimination prohibited by this part and who is a member of that class or who is the authorized representative of a member of that class may file a complaint with the responsible civil rights official.
</P>
<P>(2) <I>Confidentiality.</I> The responsible civil rights official shall hold in confidence the identity of any person submitting a complaint, unless the person submits written authorization otherwise, and except to the extent necessary to carry out the purposes of this part, including the conduct of any investigation, hearing, or proceeding under this part.
</P>
<P>(3) <I>When to file.</I> Complaints shall be filed within 180 days of the alleged act of discrimination, unless the responsible civil rights official waives this time limit for good cause shown. For purposes of determining when a complaint is filed under this paragraph, a complaint mailed to the Department shall be deemed filed on the date it is postmarked. Any other complaint shall be deemed filed on the date it is received by the Department.
</P>
<P>(4) <I>Where to file complaints.</I> Complaints may be filed by mail with the Office of Fair Housing and Equal Opportunity, Department of Housing and Urban Development, Washington, DC 20410, or any Regional or Field Office of the Department.
</P>
<P>(5) <I>Contents of complaints.</I> Each complaint should contain the complainant's name and address, the name and address of the recipient alleged to have violated this part, and a description of the recipient's alleged discriminatory action in sufficient detail to inform the Department of the nature and date of the alleged violation of this part. 
</P>
<P>(6) <I>Amendments of complaints.</I> Complaints may be reasonably and fairly amended at any time. Amendments to complaints such as clarification and amplification of allegations in a complaint or the addition of other recipients may be made at any time during the pendency of the complaint and any amendment shall be deemed to be made as of the original filing date. 
</P>
<P>(d) <I>Notification.</I> The responsible civil rights official will notify the complainant and the recipient of the agency's receipt of the complaint within ten (10) calendar days. 
</P>
<P>(e) <I>Complaint processing procedures.</I> After acknowledging receipt of a complaint, the responsible civil rights official will immediately initiate complaint processing procedures. 
</P>
<P>(1) Preliminary investigation. 
</P>
<P>(i) Within twenty (20) calendar days of acknowledgement of the complaint, the responsible civil rights official will review the complaint for acceptance, rejection, or referral to the appropriate Federal agency. 
</P>
<P>(ii) If the complaint is accepted, the responsible civil rights official will notify the complainant and the award official. The responsible civil righs official will also notify the applicant or recipient complained against of the allegations and give the applicant or recipient an opportunity to make a written submission responding to, rebutting, or denying the allegations raised in the complaint. 
</P>
<P>(iii) The party complained against may send the responsible civil rights official a response to the notice of complaint within thirty (30) calendar days of receiving it. With leave of the responsible civil rights official, an answer may be amended at any time. The responsible civil rights official will permit answers to be amended for good cause shown. 
</P>
<P>(2) Informal resolution. In accordance with paragraph (j) of this section, the responsible civil rights official shall attempt to resolve complaints informally whenever possible. 
</P>
<P>(f) <I>Dismissal of complaint.</I> If the investigation reveals no violation of this part, the responsible civil rights official will dismiss the complaint and notify the complainant and recipient. 
</P>
<P>(g) <I>Letter of findings.</I> If an informal resolution of the complaint is not reached the responsible civil rights official or his or her designee shall, within 180 days of receipt of the complaint, notify the recipient and the complainant (if any) of the results of the investigation in a letter sent by certified mail, return receipt requested, containing the following:
</P>
<P>(1) Preliminary findings of fact and a preliminary finding of compliance or noncompliance; 
</P>
<P>(2) A description of an appropriate remedy for each violation believed to exist; 
</P>
<P>(3) A notice that a copy of the Final Investigative Report of the Department will be made available, upon request, to the recipient and the complainant (if any); and 
</P>
<P>(4) A notice of the right of the recipient and the complainant (if any) to request a review of the letter of findings by the reviewing civil rights official. 
</P>
<P>(h) <I>Right to review of the letter of findings.</I> (1) A complainant or recipient may request that a complete review be made of the letter of findings within 30 days of receipt, by mailing or delivering to the reviewing civil rights official, Office of Fair Housing and Equal Opportunity, Washington, DC 20410, a written statement of the reasons why the letter of findings should be modified in light of supplementary information. 
</P>
<P>(2) The reviewing civil rights official shall send by certified mail, return receipt requested, a copy of the request for review to the other party, if any. Such other party shall have 20 days to respond to the request for review. 
</P>
<P>(3) The reviewing civil rights official shall either sustain or modify the letter of findings within 60 days of the request for review. The reviewing civil rights official's decision shall constitute the formal determination. 
</P>
<P>(4) If neither party requests that the letter of findings be reviewed, the responsible civil rights official shall, within fourteen (14) calendar days of the expiration of the time period in paragraph (h)(1) of this section, send a formal written determination of compliance or noncompliance to the recipient and copies to the award official. 
</P>
<P>(i) <I>Voluntary compliance time limits.</I> The recipient will have ten (10) calendar days from receipt of the formal determination of noncompliance within which to come into voluntary compliance. If the recipient fails to meet this deadline, HUD shall proceed under § 8.57. 
</P>
<P>(j) <I>Informal resolution/voluntary compliance</I>—(1) <I>General.</I> It is the policy of the Department to encourage the informal resolution of matters. The responsible civil rights official may attempt to resolve a matter through informal means at any stage of processing. A matter may be resolved by informal means at any time. If a letter of findings making a preliminary finding of noncompliance is issued, the responsible civil rights official shall attempt to resolve the matter by informal means. 
</P>
<P>(2) <I>Objectives of informal resolution/voluntary compliance.</I> In attempting informal resolution, the responsible civil rights official shall attempt to achieve a just resolution of the matter and to obtain assurances where appropriate, that the recipient will satisfactorily remedy any violations of the rights of any complainant and will take such action as will assure the elimination of any violation of this part or the prevention of the occurrence of such violation in the future. The terms of such an informal resolution shall be reduced to a written voluntary compliance agreement, signed by the recipient and the responsible civil rights official, and be made part of the file for the matter. Such voluntary compliance agreements shall seek to protect the interests of the complainant (if any), other persons similarly situated, and the public interest. 
</P>
<P>(k) <I>Intimidatory or retaliatory acts prohibited.</I> No recipient or other person shall intimidate, threaten, coerce, or discriminate against any person for the purpose of interfering with any right or privilege secured by this part, or because he or she has made a complaint, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this part. The identity of complainants shall be kept confidential except to the extent necessary to carry out the purposes of this part, including the conduct of investigation, hearing or judicial proceeding arising thereunder. 
</P>
<CITA TYPE="N">[53 FR 20233, June 2, 1988; 53 FR 28115, July 26, 1988; 53 FR 34634, Sept. 7, 1988]


</CITA>
</DIV8>


<DIV8 N="§ 8.57" NODE="24:1.1.1.1.7.4.25.8" TYPE="SECTION">
<HEAD>§ 8.57   Procedure for effecting compliance.</HEAD>
<P>(a) <I>General.</I> If there appears to be a failure or threatened failure to comply with this part and if the noncompliance or threatened noncompliance cannot be corrected by informal means, compliance with this part may be effected by the suspension or termination of or refusal to grant or to continue Federal financial assistance, or by other means authorized by law. Such other means may include, but are not limited to: 
</P>
<P>(1) A referral to the Department of Justice with a recommendation that appropriate proceedings be brought to enforce any rights of the United States under any law of the United States, or any assurance or other contractual undertaking; 
</P>
<P>(2) The initiation of debarment proceedings pursuant to 2 CFR part 2424; and 
</P>
<P>(3) Any applicable proceeding under State or local law.
</P>
<P>(b) <I>Noncompliance with § 8.50.</I> If an applicant or a recipient of assistance under a contract which is extended or amended on or after July 11, 1988, fails or refuses to furnish an assurance required under § 8.50 or otherwise fails or refuses to comply with the requirements imposed by that section, Federal financial assistance may be refused under paragraph (c) of this section. The Department is not required to provide assistance during the pendency of the administrative proceeding under such paragraph (c), except where the assistance is due and payable under a contract approved before July 11, 1988.
</P>
<P>(c) <I>Termination of or refusal to grant or to continue Federal financial assistance.</I> No order suspending, terminating, or refusing to grant or continue Federal financial assistance shall become effective until:
</P>
<P>(1) The responsible civil rights official has advised the applicant or recipient of its failure to comply and has determined that compliance cannot be secured by voluntary means;
</P>
<P>(2) There has been an express finding on the record, after opportunity for hearing, of a failure by the applicant or recipient to comply with a requirement imposed under this part;
</P>
<P>(3) The action has been approved by the Secretary; and
</P>
<P>(4) The expiration of 30 days after the Secretary has filed with the committees of the House and Senate having legislative jurisdiction over the program or activity involved a full written report of the circumstances and the grounds for such action. Any action to suspend or terminate, or to refuse to grant or to continue Federal financial assistance shall be limited to the particular political entity, or part thereof, or other applicant or recipient as to whom such a finding has been made and shall be limited in its effect to the particular program, or part thereof, in which such noncompliance has been so found.
</P>
<P>(d) <I>Notice to State or local government.</I> Whenever the Secretary determines that a State or unit of general local government which is a recipient of Federal financial assistance under title I of the Housing and Community Development Act of 1974, as amended (42 U.S.C. 5301-5318) has failed to comply with a requirement of this part with respect to a program or activity funded in whole or in part with such assistance, the Secretary shall notify the Governor of the State or the chief executive officer of the unit of general local government of the noncompliance and shall request the Governor or the chief executive officer to secure compliance. The notice shall be given at least sixty days before:
</P>
<P>(1) An order suspending, terminating, or refusing to grant or continue Federal financial assistance becomes effective under paragraph (c) of this section; or
</P>
<P>(2) Any action to effect compliance by any other means authorized by law is taken under paragraph (a) of this section.
</P>
<P>(e) <I>Other means authorized by law.</I> No action to effect compliance by any other means authorized by law shall be taken until:
</P>
<P>(1) The responsible civil rights official has determined that compliance cannot be secured by voluntary means;
</P>
<P>(2) The recipient or other person has been notified of its failure to comply and of the action to be taken to effect compliance; and
</P>
<P>(3) At least 10 days have elapsed since the mailing of such notice to the applicant or recipient. During this period, additional efforts shall be made to persuade the applicant or recipient to comply with this part and to take such corrective action as may be appropriate.
</P>
<FP>However, this paragraph shall not be construed to prevent an award official from utilizing appropriate procedures and sanctions established under the program to assure or secure compliance with a specific requirement of the program designed to effectuate the objectives of this part.
</FP>
<CITA TYPE="N">[53 FR 20233, June 2, 1988; 53 FR 28115, July 26, 1988, as amended at 72 FR 73491, Dec. 27, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 8.58" NODE="24:1.1.1.1.7.4.25.9" TYPE="SECTION">
<HEAD>§ 8.58   Hearings.</HEAD>
<P>(a) <I>Opportunity for hearing.</I> Whenever an opportunity for a hearing is required by § 8.57(c), reasonable notice shall be given by registered or certified mail, return receipt requested, to the affected applicant or recipient. This notice shall advise the applicant or recipient of the action proposed to be taken, the specific provision under which the proposed action against it is to be taken, and the matters of fact or law asserted as the basis for this action. The notice shall:
</P>
<P>(1) Fix a date not less than 20 days after the date of the notice for the applicant or recipient to request the administrative law judge to schedule a hearing, or
</P>
<P>(2) Advise the applicant or recipient that the matter has been scheduled for hearing at a stated time and place. The time and place so fixed shall be reasonable and shall be subject to change for cause. The complainant, if any, shall be advised of the time and place of the hearing. An applicant or recipient may waive a hearing and submit written information and argument for the record. The failure of an applicant or recipient to request a hearing under this paragraph or to appear at a hearing for which a date has been set is a waiver of the right to a hearing under § 8.57(c) and consent to the making of a decision on the basis of available information.
</P>
<P>(b) <I>Hearing procedures.</I> Hearings shall be conducted in accordance with 24 CFR part 180. 
</P>
<CITA TYPE="N">[53 FR 20233, June 2, 1988, as amended at 61 FR 52218, Oct. 4, 1996]


</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="9" NODE="24:1.1.1.1.8" TYPE="PART">
<HEAD>PART 9—ENFORCEMENT OF NONDISCRIMINATION ON THE BASIS OF DISABILITY IN PROGRAMS OR ACTIVITIES CONDUCTED BY THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>29 U.S.C. 794; 42 U.S.C. 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>59 FR 31047, June 16, 1994, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 9.101" NODE="24:1.1.1.1.8.0.25.1" TYPE="SECTION">
<HEAD>§ 9.101   Purpose.</HEAD>
<P>The purpose of this part is to effectuate section 119 of the Rehabilitation, Comprehensive Services, and Developmental Disabilities Amendments of 1978, which amended section 504 of the Rehabilitation Act of 1973 to prohibit discrimination on the basis of disability in programs or activities conducted by Executive agencies or the United States Postal Service. 


</P>
</DIV8>


<DIV8 N="§ 9.102" NODE="24:1.1.1.1.8.0.25.2" TYPE="SECTION">
<HEAD>§ 9.102   Applicability.</HEAD>
<P>This part applies to all programs or activities conducted by the agency, except for programs or activities conducted outside the United States that do not involve individuals with disabilities in the United States. 


</P>
</DIV8>


<DIV8 N="§ 9.103" NODE="24:1.1.1.1.8.0.25.3" TYPE="SECTION">
<HEAD>§ 9.103   Definitions.</HEAD>
<P>For purposes of this part: 
</P>
<P><I>Accessible:</I> (1) When used with respect to the design, construction, or alteration of a facility or a portion of a facility other than an individual dwelling unit, means that the facility or portion of the facility when designed, constructed or altered, complies with applicable accessibility standards and can be approached, entered, and used by individuals with physical disabilities. The phrase “accessible to and usable by” is synonymous with accessible. 
</P>
<P>(2) When used with respect to the design, construction, or alteration of an individual dwelling unit, means that the unit is located on an accessible route and, when designed, constructed, altered or adapted, complies with applicable accessibility standards, and can be approached, entered, and used by individuals with physical disabilities. A unit that is on an accessible route and is adaptable and otherwise in compliance with the standards set forth in § 9.151 is “accessible” within the meaning of this definition. When a unit in an existing facility which is being made accessible as a result of alterations is intended for use by a specific qualified individual with disabilities (e.g., a current occupant of such unit or of another unit under the control of the same agency, or an applicant on a waiting list), the unit will be deemed accessible if it meets the requirements of applicable standards that address the particular disability or impairment of such person. 
</P>
<P><I>Accessible route</I> means a continuous unobstructed path connecting accessible elements and spaces of a building or facility. Interior accessible routes may include corridors, floors, ramps, elevators, lifts, and clear floor space at fixtures. Exterior accessible routes may include parking access aisles, curb ramps, crosswalks at vehicular ways, walks, ramps and lifts. 
</P>
<P><I>ADA</I> means the Americans with Disabilities Act of 1990 (42 U.S.C. 12101 through 12213) 
</P>
<P><I>ADA Accessibility Guidelines (ADAAG)</I> means the Accessibility Guidelines issued under the ADA, and which are codified in the Appendix to 39 CFR part 1191. 
</P>
<P><I>Adaptability</I> means the ability of certain building, spaces and elements, such as kitchen counters, sinks, and grab bars, to be added or altered, to accommodate the needs of persons with or without disabilities, or to accommodate the needs of persons with different types or degrees of disability. For example, in a unit adaptable for a person with impaired hearing, the wiring for visible emergency alarms may be installed but the alarms need not be installed until such time as the unit is made ready for occupancy by a person with impaired hearing. 
</P>
<P><I>Agency</I> means the Department of Housing and Urban Development. 
</P>
<P><I>Alteration</I> means a change to a building or facility or its permanent fixtures or equipment that affects or could affect the usability of the building or facility or part thereof. Alterations include, but are not limited to, remodeling, renovation, rehabilitation, reconstruction, historic restoration, changes or rearrangements of the structural parts and changes or rearrangements in the plan configuration of walls and full-height partitions. Normal maintenance, re-roofing, painting, or wallpapering or changes to mechanical and electrical systems are not alterations unless they affect the usability of the building or facility. 
</P>
<P><I>Assistant Attorney General</I> means the Assistant Attorney General, Civil Rights Division, United States Department of Justice. 
</P>
<P><I>Assistant Secretary</I> means the Assistant Secretary of Housing and Urban Development for Fair Housing and Equal Opportunity. 
</P>
<P><I>Auxiliary aids</I> means services or devices that enable persons with impaired sensory, manual, or communication skills to have an equal opportunity to participate in, and enjoy the benefits of, programs or activities conducted by the agency. For example, auxiliary aids useful for persons with impaired vision include readers, Brailled materials, audio recordings, and other similar services and devices. Auxiliary aids useful for persons with impaired hearing include telephone handset amplifiers, telephones compatible with hearing aids, telecommunication devices for deaf persons (TDD's), interpreters, note takers, written materials, and other similar services and devices. 
</P>
<P><I>Complete complaint</I> means a written statement that contains the complainant's name and address and describes the agency's alleged discriminatory action in sufficient detail to inform the agency of the nature and date of the alleged violation of section 504. It shall be signed by the complainant or by someone authorized to do so on his or her behalf. Complaints filed on behalf of classes or third parties shall describe or identify (by name, if possible) the alleged victims of discrimination. 
</P>
<P><I>Current illegal use of drugs</I> means illegal use of drugs that occurred recently enough to justify a reasonable belief that a person's drug use is current or that continuing use is a real and ongoing problem. 
</P>
<P><I>Drug</I> means a controlled substance, as defined in schedules I through V of section 202 of the Controlled Substances Act (21 U.S.C. 812). 
</P>
<P><I>Facility</I> means all or any portion of buildings, structures, site improvements, complexes, equipment, roads, walks, passageways, parking lots, rolling stock or other conveyances, or other real or personal property located on a site. 
</P>
<P><I>Historic properties</I> means those properties that are listed or are eligible for listing in the National Register of Historic Places, or such properties designated as historic under a statute of the appropriate State or local government body. 
</P>
<P><I>Illegal use of drugs</I> means the use of one or more drugs, the possession or distribution of which is unlawful under the Controlled Substances Act (21 U.S.C. 812). The term “illegal use of drugs” does not include the use of a drug taken under supervision by a licensed health care professional, or other uses authorized by the Controlled Substances Act or other provisions of Federal law. 
</P>
<P><I>Individual with disabilities</I> means any person who has a physical or mental impairment that substantially limits one or more major life activities, has a record of such an impairment, or is regarded as having such an impairment. As used in this definition, the phrase: 
</P>
<P>(1) “Physical or mental impairment” includes: 
</P>
<P>(i) Any physiological disorder or condition, cosmetic disfigurement, or anatomical loss affecting one or more of the following body systems: Neurological; musculoskeletal; special sense organs; respiratory, including speech organs; cardiovascular; reproductive; digestive; genito-urinary; hemic and lymphatic; skin; and endocrine; or 
</P>
<P>(ii) Any mental or psychological disorder, such as mental retardation, organic brain syndrome, emotional or mental illness, and specific learning disabilities. The term “physical or mental impairment” includes, but is not limited to, such diseases and conditions as orthopedic, visual, speech, and hearing impairments, cerebral palsy, autism, epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart disease, diabetes, Human Immunodeficiency Virus disease (symptomatic or asymptomatic), mental retardation, emotional illness, drug addiction and alcoholism. 
</P>
<P>(2) The term “individual with disabilities” does not include: 
</P>
<P>(i) An individual who is currently engaging in the illegal use of drugs, when the agency acts on the basis of such use. This exclusion, however, does not exclude an individual with disabilities who—
</P>
<P>(A) Has successfully completed a supervised drug rehabilitation program, and is no longer engaging in the illegal use of drugs, or has otherwise been rehabilitated successfully, and is no longer engaging in such use; 
</P>
<P>(B) Is participating in a supervised rehabilitation program, and is no longer engaging in such use; or 
</P>
<P>(C) Is erroneously regarded as engaging in such use, but is not engaging in such use. 
</P>
<P>(ii) Except that it shall not violate this part for the agency to adopt or administer reasonable policies and procedures, including but not limited to drug testing, designed to ensure than an individual described in paragraphs (2)(i) (A) and (B) of this definition is no longer engaging in the illegal use of drugs. 
</P>
<P>(iii) Nothing in paragraph (2) of this definition shall be construed to encourage, prohibit, restrict or authorize the conduct of testing for illegal use of drugs. 
</P>
<P>(iv) The agency shall not deny health services provided under titles I, II and III of the Rehabilitation Act of 1973 (29 U.S.C. 701 through 777f) to an individual with disabilities on the basis of that individual's current illegal use of drugs, if the individual is otherwise entitled to such services. 
</P>
<P>(3) For purposes of employment, the term “individual with disabilities” does not include: 
</P>
<P>(i) An individual who has a currently contagious disease or infection and who, by reason of such disease or infection—
</P>
<P>(A) Has been determined, in accordance with the provisions of § 9.131, to pose a direct threat to the health or safety of other individuals, which threat cannot be eliminated or reduced by reasonable accommodation, or 
</P>
<P>(B) Is unable to perform the essential duties of the job, with or without reasonable accommodation; or 
</P>
<P>(ii) An individual who is an alcoholic and whose current use of alcohol prevents him or her from performing the duties of the job in question or whose employment would constitute a direct threat to the property or the safety of others by reason of his or her current alcohol abuse. 
</P>
<P>(4) “Major life activities” means functions such as caring for one's self, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, and working. 
</P>
<P>(5) “Has a record of such an impairment” means has a history of, or has been misclassified as having, a mental or physical impairment that substantially limits one or more major life activities. 
</P>
<P>(6) “Is regarded as having an impairment” means—
</P>
<P>(i) Has a physical or mental impairment that does not substantially limit major life activities but is treated by the agency as constituting such a limitation; 
</P>
<P>(ii) Has a physical or mental impairment that substantially limits major life activities only as a result of the attitudes of others toward such impairment; or 
</P>
<P>(iii) Has none of the impairments defined in paragraph (1) of this definition but is treated by the agency as having such an impairment. 
</P>
<P><I>Multifamily housing project</I> means a project containing five or more dwelling units. 
</P>
<P><I>Official or Responsible Official</I> means the Assistant Secretary of HUD for Fair Housing and Equal Opportunity. 
</P>
<P><I>PDP housing facility</I> means a housing facility administered under HUD's Property Disposition Program. 
</P>
<P><I>Project</I> means the whole of one or more residential structures and appurtenant structures, equipment, roads, walks, and parking lots which are covered by a single mortgage or contract or otherwise treated as a whole by the agency for processing purposes, whether or not located on a common site. 
</P>
<P><I>Property Disposition Program (PDP)</I> means the HUD program which administers the housing facilities that are either owned by the Secretary or where, even though the Secretary has not obtained title, the Secretary is mortgagee-in-possession. Such properties are deemed to be in the possession or control of the agency. 
</P>
<P><I>Qualified individual with disabilities</I> means: 
</P>
<P>(1) With respect to any agency non-employment program or activity under which a person is required to perform services or to achieve a level of accomplishment, an individual with disabilities who meets the essential eligibility requirements and who can achieve the purpose of the program or activity without modifications in the program or activity that the agency can demonstrate would result in a fundamental alteration in its nature; or 
</P>
<P>(2) With respect to any other agency non-employment program or activity, an individual with disabilities who meets the essential eligibility requirements for participation in, or receipt of benefits from, that program or activity. 
</P>
<P>(3) “Essential eligibility requirements” include stated eligibility requirements such as income, as well as other explicit or implicit requirements inherent in the nature of the program or activity, such as requirements that an occupant of a PDP multifamily housing facility be capable of meeting selection criteria and be capable of complying with all obligations of occupancy with or without supportive services provided by persons other than the agency. 
</P>
<P>(4) “Qualified person with disabilities” as that term is defined for purposes of employment in 29 CFR 1613.702(f), which is made applicable to this part by § 9.140. 
</P>
<P><I>Replacement cost of the completed facility</I> means the current cost of construction and equipment for a newly constructed housing facility of the size and type being altered. Construction and equipment costs do not include the cost of land, demolition, site improvements, non-dwelling facilities and administrative costs for project development activities. 
</P>
<P><I>Secretary</I> means the Secretary of Housing and Urban Development. 
</P>
<P><I>Section 504</I> means section 504 of the Rehabilitation Act of 1973, as amended (29 U.S.C. 794). As used in this part, section 504 applies only to programs or activities conducted by the agency and not to federally assisted programs. 
</P>
<P><I>Substantial impairment</I> means a significant loss of the integrity of finished materials, design quality, or special character resulting from a permanent alteration. 
</P>
<P><I>UFAS</I> means the Uniform Federal Accessibility Standards, which implement the accessibility standards required by the Architectural Barriers Act (42 U.S.C. 4151 through 4157), and which are established at 24 CFR part 40, appendix A for residential structures, and 41 CFR 101-19.600 through 101-19.607, and appendix A to these sections, for non-residential structures. 


</P>
</DIV8>


<DIV8 N="§ 9.110" NODE="24:1.1.1.1.8.0.25.4" TYPE="SECTION">
<HEAD>§ 9.110   Self-evaluation.</HEAD>
<P>(a) The agency shall, within one year of the effective date of this part, evaluate its current policies and practices, and the effects of those policies and practices, including regulations, handbooks, notices and other written guidance, that do not or may not meet the requirements of this part. To the extent modification of any such policies is required, the agency shall take the necessary corrective actions. 
</P>
<P>(b) The agency shall provide an opportunity to interested persons, including individuals with disabilities or organizations representing individuals with disabilities, to participate in the self-evaluation process by submitting comments (both oral and written). 
</P>
<P>(c) The agency shall, for at least three years following the completion of the self-evaluation, maintain on file and make available for public inspection: 
</P>
<P>(1) A list of interested persons; 
</P>
<P>(2) A description of the areas examined and any problems identified; and 
</P>
<P>(3) A description of any modifications made or to be made. 


</P>
</DIV8>


<DIV8 N="§ 9.111" NODE="24:1.1.1.1.8.0.25.5" TYPE="SECTION">
<HEAD>§ 9.111   Notice.</HEAD>
<P>The agency shall make available to employees, applicants, participants, beneficiaries, and other interested persons information regarding the provisions of this part and its applicability to the programs or activities conducted by the agency. The agency shall make such information available to such persons in such manner as the Secretary finds necessary to apprise them of the protections against discrimination assured them by section 504 and this part. All publications and recruitment materials distributed to participants, beneficiaries, applicants or employees shall include a statement that the agency does not discriminate on the basis of disability. The notice shall include the name of the person or office responsible for the implementation of section 504. 


</P>
</DIV8>


<DIV8 N="§§ 9.112-9.129" NODE="24:1.1.1.1.8.0.25.6" TYPE="SECTION">
<HEAD>§§ 9.112-9.129   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 9.130" NODE="24:1.1.1.1.8.0.25.7" TYPE="SECTION">
<HEAD>§ 9.130   General prohibitions against discrimination.</HEAD>
<P>(a) No qualified individual with disabilities shall, on the basis of disability, be excluded from participation in, be denied the benefits of, or otherwise be subjected to discrimination under any program or activity conducted by the agency. 
</P>
<P>(b)(1) The agency, in providing any housing, aid, benefit, or service, may not, directly or through contractual, licensing, or other arrangements, on the basis of disability—
</P>
<P>(i) Deny a qualified individual with disabilities the opportunity to participate in or benefit from the housing, aid, benefit, or service; 
</P>
<P>(ii) Afford a qualified individual with disabilities an opportunity to participate in or benefit from the housing, aid, benefit, or service that is not equal to that afforded others; 
</P>
<P>(iii) Provide a qualified individual with disabilities with any housing, aid, benefit, or service that is not as effective in affording equal opportunity to obtain the same result, to gain the same benefit, or to reach the same level of achievement as that provided to others; 
</P>
<P>(iv) Provide different or separate housing, aid, benefits, or services to individuals with disabilities or to any class of individuals with disabilities than is provided to others unless such action is necessary to provide qualified individuals with disabilities with housing, aid, benefits, or services that are as effective as those provided to others; 
</P>
<P>(v) Deny a qualified individual with disabilities the opportunity to participate as a member of planning or advisory boards; 
</P>
<P>(vi) Deny a dwelling to an otherwise qualified buyer or renter because of a disability of that buyer or renter or a person residing in or intending to reside in that dwelling after it is sold, rented or made available; or 
</P>
<P>(vii) Otherwise limit a qualified individual with disabilities in the enjoyment of any right, privilege, advantage, or opportunity enjoyed by others receiving the housing, aid, benefit, or service. 
</P>
<P>(2) For purposes of this part, housing, aids, benefits, and services, to be equally effective, are not required to produce the identical result or level of achievement for individuals with disabilities and for persons without disabilities, but must afford individuals with disabilities equal opportunity to obtain the same result, to gain the same benefit, or to reach the same level of achievement. 
</P>
<P>(3) The agency may not deny a qualified individual with disabilities the opportunity to participate in programs or activities that are not separate or different, despite the existence of programs or activities that are permissibly separate or different for persons with disabilities. 
</P>
<P>(4) The agency may not, directly or through contractual or other arrangements, utilize criteria or methods of administration the purpose or effect of which would: 
</P>
<P>(i) Subject qualified individuals with disabilities to discrimination on the basis of disability; or 
</P>
<P>(ii) Defeat or substantially impair accomplishment of the objectives of a program or activity with respect to individuals with disabilities. 
</P>
<P>(5) The agency may not, in determining the site or location of a facility, make selections the purpose or effect of which would: 
</P>
<P>(i) Exclude individuals with disabilities from, deny them the benefits of, or otherwise subject them to discrimination under any program or activity conducted by the agency; or 
</P>
<P>(ii) Defeat or substantially impair the accomplishment of the objectives of a program or activity with respect to individuals with disabilities. 
</P>
<P>(6) The agency, in the selection of procurement contractors, may not use criteria that subject qualified individuals with disabilities to discrimination on the basis of disability. 
</P>
<P>(7) The agency may not administer a licensing or certification program in a manner that subjects qualified individuals with disabilities to discrimination on the basis of disability, nor may the agency establish requirements for the programs or activities of licensees or certified entities that subject qualified individuals with disabilities to discrimination on the basis of disability. However, the programs or activities of entities that are licensed or certified by the agency are not, themselves, covered by this part. 
</P>
<P>(c)(1) Notwithstanding any other provision of this part, persons without disabilities may be excluded from the benefits of a program if the program is limited by Federal statute or Executive order to individuals with disabilities. A specific class of individuals with disabilities may be excluded from a program if the program is limited by Federal statute or Executive order to a different class of individuals. 
</P>
<P>(2) Certain agency programs operate under statutory definitions of “persons with disabilities” that are more restrictive than the definition of “individual with disabilities” contained in § 9.103. Those definitions are not superseded or otherwise affected by this regulation. 
</P>
<P>(d) The agency shall administer programs and activities in the most integrated setting appropriate to the needs of qualified individuals with disabilities. 
</P>
<P>(e) The obligation to comply with this part is not obviated or alleviated by any State or local law or other requirement that, based on disability, imposes inconsistent or contradictory prohibitions or limits upon the eligibility of qualified individuals with disabilities to receive services or to practice any occupation or profession. 
</P>
<P>(f) The enumeration of specific forms of prohibited discrimination in paragraphs (b) and (d) of this section does not limit the general prohibition in paragraph (a) of this section. 


</P>
</DIV8>


<DIV8 N="§ 9.131" NODE="24:1.1.1.1.8.0.25.8" TYPE="SECTION">
<HEAD>§ 9.131   Direct threat.</HEAD>
<P>(a) This part does not require the agency to permit an individual to participate in, or benefit from the goods, services, facilities, privileges, advantages and accommodations of that agency when that individual poses a direct threat to the health or safety of others. 
</P>
<P>(b) “Direct threat” means a significant risk to the health or safety of others that cannot be eliminated by a modification of policies, practices, or procedures, or by the provision of auxiliary aids or services. 
</P>
<P>(c) In determining whether an individual poses a direct threat to the health or safety of others, the agency must make an individualized assessment, based on reasonable judgment that relies on current medical knowledge or on the best available objective evidence to ascertain: the nature, duration, and severity of the risk; the probability that the potential injury will actually occur; and whether reasonable modifications of policies, practices, or procedures will mitigate the risk. 


</P>
</DIV8>


<DIV8 N="§§ 9.132-9.139" NODE="24:1.1.1.1.8.0.25.9" TYPE="SECTION">
<HEAD>§§ 9.132-9.139   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 9.140" NODE="24:1.1.1.1.8.0.25.10" TYPE="SECTION">
<HEAD>§ 9.140   Employment.</HEAD>
<P>No qualified individual with disabilities shall, on the basis of disability, be subjected to discrimination in employment under any program or activity conducted by the agency. The definitions, requirements, and procedures of section 501 of the Rehabilitation Act of 1973 (29 U.S.C. 791), as established by the Equal Employment Opportunity Commission in 29 CFR part 1613 (subpart G), shall apply to employment in federally conducted programs or activities. 


</P>
</DIV8>


<DIV8 N="§§ 9.141-9.148" NODE="24:1.1.1.1.8.0.25.11" TYPE="SECTION">
<HEAD>§§ 9.141-9.148   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 9.149" NODE="24:1.1.1.1.8.0.25.12" TYPE="SECTION">
<HEAD>§ 9.149   Program accessibility: discrimination prohibited.</HEAD>
<P>Except as otherwise provided in § 9.150, no qualified individual with disabilities shall, because the agency's facilities are inaccessible to or unusable by individuals with disabilities, be denied the benefits of, be excluded from participation in, or otherwise be subjected to discrimination under any program or activity conducted by the agency. 


</P>
</DIV8>


<DIV8 N="§ 9.150" NODE="24:1.1.1.1.8.0.25.13" TYPE="SECTION">
<HEAD>§ 9.150   Program accessibility: existing facilities.</HEAD>
<P>(a) <I>General.</I> Except as otherwise provided in paragraph (e) of this section, the agency shall operate each program or activity so that the program or activity, when viewed in its entirety, is readily accessible to and usable by individuals with disabilities. This section does not— 
</P>
<P>(1) Necessarily require the agency to make each of its existing facilities accessible to and usable by individuals with disabilities; 
</P>
<P>(2) In the case of historic properties, require the agency to take any action that would result in a substantial impairment of significant historic features of an historic property; or 
</P>
<P>(3) Require the agency to take any action that it can demonstrate would result in a fundamental alteration in the nature of a program or activity or in undue financial and administrative burdens. In those circumstances where agency personnel believe that the proposed action would fundamentally alter the program or activity or would result in undue financial and administrative burdens, the agency has the burden of proving that compliance with § 9.150(a) would result in such alteration or burdens. The decision that compliance would result in such alteration or burdens must be made by the Secretary or his or her designee after considering all agency resources available for use in the funding and operation of the conducted program or activity, and must be accompanied by a written statement of the reasons for reaching that conclusion. If an action would result in such an alteration or such burdens, the agency shall take any other action that would not result in such an alteration or such burdens but would nevertheless ensure that individuals with disabilities receive the benefits and services of the program or activity. 
</P>
<P>(b) <I>Methods.</I> The agency may comply with the requirements of this section through such means as redesign of equipment, reassignment of services to accessible buildings, assignment of aides to beneficiaries, home visits, delivery of services at alternate accessible sites, alteration of existing facilities and construction of new facilities, use of accessible rolling stock, or any other methods that result in making its programs or activities readily accessible to and usable by individuals with disabilities. The agency is not required to make structural changes in existing facilities where other methods are effective in achieving compliance with this section. The agency, in making alterations to existing buildings, also shall meet accessibility requirements to the extent compelled by the Architectural Barriers Act of 1968, as amended (42 U.S.C. 4151 through 4157), and any regulations implementing it. In choosing among available methods for meeting the requirements of this section, the agency shall give priority to those methods that offer programs and activities to qualified individuals with disabilities in the most integrated setting appropriate. 
</P>
<P>(c) <I>Time period for compliance.</I> The agency shall comply with the obligations established under this section within sixty days of July 18, 1994 except that where structural changes in facilities are undertaken, such changes shall be made within three years of July 18, 1994, but in any event as expeditiously as possible. 
</P>
<P>(d) <I>Transition plan.</I> In the event that structural changes to facilities will be undertaken to achieve program accessibility, the agency shall develop, within six months of July 18, 1994, a transition plan setting forth the steps necessary to complete such changes. The agency shall provide an opportunity to interested persons, including individuals with disabilities or organizations representing individuals with disabilities, to participate in the development of the transition plan by submitting comments (both oral and written). A copy of the transition plan shall be made available for public inspection. The plan shall, at a minimum—
</P>
<P>(1) Identify physical obstacles in the agency's facilities that limit the accessibility of its programs or activities to individuals with disabilities; 
</P>
<P>(2) Describe in detail the methods that will be used to make the facilities accessible; 
</P>
<P>(3) Specify the schedule for taking the steps necessary to achieve compliance with this section and, if the time period of the transition plan is longer than one year, identify steps that will be taken during each year of the transition period; and 
</P>
<P>(4) Indicate the official responsible for implementation of the plan. 
</P>
<P>(e) The requirements of paragraphs (a), (b), and (c) of this section shall apply to the Property Disposition Programs. However, this section does not require HUD to make alterations to existing facilities that are part of the Property Disposition Programs unless such alterations are necessary to meet the needs of a current or prospective tenant during the time when HUD expects to retain legal possession of the facilities, and there is no alternative method to meet the needs of that current or prospective tenant. Nothing in this section shall be construed to require alterations to make facilities accessible to persons with disabilities who are expected to occupy the facilities only after HUD relinquishes legal possession. 


</P>
</DIV8>


<DIV8 N="§ 9.151" NODE="24:1.1.1.1.8.0.25.14" TYPE="SECTION">
<HEAD>§ 9.151   Program accessibility: new construction and alterations.</HEAD>
<P>Each building or part of a building that is constructed or altered by, on behalf of, or for the use of the agency shall be designed, constructed, or altered and provide emergency egress so as to be readily accessible to and usable by individuals with disabilities. The definitions, requirements, and accessibility standards that apply to buildings covered by this section are those contained in the UFAS, except where the ADAAG provides for greater accessibility for the type of construction or alteration being undertaken, and in this case, the definitions, requirements and standards of the ADAAG shall apply. 


</P>
</DIV8>


<DIV8 N="§ 9.152" NODE="24:1.1.1.1.8.0.25.15" TYPE="SECTION">
<HEAD>§ 9.152   Program accessibility: alterations of Property Disposition Program multifamily housing facilities.</HEAD>
<P>(a) <I>Substantial alteration.</I> If the agency undertakes alterations to a PDP multifamily housing project that has 15 or more units and the cost of the alterations is 75 percent or more of the replacement cost of the completed facility, then the project shall be designed and altered to be readily accessible to and usable by individuals with disabilities. Subject to paragraph (c) of this section, a minimum of five percent of the total dwelling units, or at least one unit, whichever is greater, shall be made accessible for persons with mobility impairments. A unit that is on an accessible route and is adaptable and otherwise in compliance with the standards set forth in paragraph (d) of this section is accessible for purposes of this section. An additional two percent of the units (but not less that one unit) in such a project shall be accessible for persons with hearing or vision impairments. If state or local requirements for alterations require greater action than this paragraph, those requirements shall prevail. 
</P>
<P>(b) <I>Other alteration.</I> (1) Subject to paragraph (c) of this section, alterations to dwelling units in a PDP multifamily housing project shall, to the maximum extent feasible, be made to be readily accessible to and usable by individuals with disabilities. If alterations of single elements or spaces of a dwelling unit, when considered together, amount to an alteration of a dwelling unit, the entire dwelling unit shall be made accessible. Once five percent of the dwelling units in a project are readily accessible to and usable by individuals with mobility impairments, then no additional elements of dwelling units, or entire dwelling units, are required to be accessible under this paragraph. Once two percent of the dwelling units in a project are readily accessible to or usable by individuals with hearing or vision impairments, then no additional elements of dwelling units, or entire dwelling units, are required to be accessible under this paragraph. 
</P>
<P>(2) Alterations to common areas or parts of facilities that affect accessibility of existing housing facilities, shall, to the maximum extent feasible, be made to be accessible to and usable by individuals with disabilities. 
</P>
<P>(c) The agency may establish a higher percentage or number of accessible units than that prescribed in paragraphs (a) or (b) of this section if the agency determines that there is a need for a higher percentage or number, based on census data or other available current data. In making such a determination, HUD shall take into account the expected needs of eligible persons with and without disabilities. 
</P>
<P>(d) The definitions, requirements, and accessibility standards that apply to PDP multifamily housing projects covered by this section are those contained in the UFAS, except where the ADAAG provides for greater accessibility for the type of alteration being undertaken, and, in this case, the definitions, requirements and standards of the ADAAG shall apply. 
</P>
<P>(e) With respect to multifamily housing projects operated by HUD, but in which HUD does not have an ownership interest, alterations under this section need not be made if doing so would impose undue financial and administrative burdens on the operation of the multifamily housing project. 


</P>
</DIV8>


<DIV8 N="§ 9.153" NODE="24:1.1.1.1.8.0.25.16" TYPE="SECTION">
<HEAD>§ 9.153   Distribution of accessible dwelling units.</HEAD>
<P>Accessible dwelling units required by § 9.152 shall, to the maximum extent feasible, be distributed throughout projects and sites and shall be available in a sufficient range of sizes and amenities so that a qualified individual with disabilities' choice of living arrangements is, as a whole, comparable to that of other persons eligible for housing assistance under the same agency conducted program. This provision shall not be construed to require (but does allow) the provision of an elevator in any multifamily housing project solely for the purpose of permitting location of accessible units above or below the accessible grade level. 


</P>
</DIV8>


<DIV8 N="§ 9.154" NODE="24:1.1.1.1.8.0.25.17" TYPE="SECTION">
<HEAD>§ 9.154   Occupancy of accessible dwelling units.</HEAD>
<P>(a) The agency shall adopt suitable means to assure that information regarding the availability of accessible units in PDP housing facilities reaches eligible individuals with disabilities, and shall take reasonable nondiscriminatory steps to maximize the utilization of such units by eligible individuals whose disability requires the accessibility features of the particular unit. To this end, when an accessible unit becomes vacant, the agency (or its management agent) before offering such units to an applicant without disabilities shall offer such unit: 
</P>
<P>(1) First, to a current occupant of another unit of the same project, or comparable projects under common control, having disabilities requiring the accessibility features of the vacant unit and occupying a unit not having such features, or, if no such occupant exists, then 
</P>
<P>(2) Second, to an eligible qualified applicant on the waiting list having a disability requiring the accessibility features of the vacant unit.
</P>
<P>(b) When offering an accessible unit to an applicant not having disabilities requiring the accessibility features of the unit, the agency may require the applicant to agree (and may incorporate this agreement in the lease) to move to a non-accessible unit when available. 


</P>
</DIV8>


<DIV8 N="§ 9.155" NODE="24:1.1.1.1.8.0.25.18" TYPE="SECTION">
<HEAD>§ 9.155   Housing adjustments.</HEAD>
<P>(a) The agency shall modify its housing policies and practices as they relate to PDP housing facilities to ensure that these policies and practices do not discriminate, on the basis of disability, against a qualified individual with disabilities. The agency may not impose upon individuals with disabilities other policies, such as the prohibition of assistive devices, auxiliary aids, alarms, or guides in housing facilities, that have the effect of limiting the participation of tenants with disabilities in any agency conducted housing program or activity in violation of this part. Housing policies that the agency can demonstrate are essential to the housing program or activity will not be regarded as discriminatory within the meaning of this section if modifications would result in a fundamental alteration in the nature of the program or activity or undue financial and administrative burdens. 
</P>
<P>(b) The decision that compliance would result in such alteration or burdens must be made by the Secretary or his or her designee after considering all agency resources available for use in the funding and operation of the conducted program or activity, and must be accompanied by a written statement of the reasons for reaching that conclusion. If an action required to comply with this section would result in such an alteration or such burdens, the agency shall take any other action that would not result in such an alteration or such burdens but would nevertheless ensure that, to the maximum extent possible, individuals with disabilities receive the benefits and services of the program or activity. 


</P>
</DIV8>


<DIV8 N="§ 9.160" NODE="24:1.1.1.1.8.0.25.19" TYPE="SECTION">
<HEAD>§ 9.160   Communications.</HEAD>
<P>(a) The agency shall take appropriate steps to ensure effective communication with applicants, participants, personnel of other Federal entities, and members of the public. 
</P>
<P>(1) The agency shall furnish appropriate auxiliary aids where necessary to afford an individual with disabilities an equal opportunity to participate in, and enjoy the benefits of, a program or activity conducted by the agency. 
</P>
<P>(i) In determining what type of auxiliary aid is necessary, the agency shall give primary consideration to the requests of the individual with disabilities. 
</P>
<P>(ii) The agency need not provide individually prescribed devices, readers for personal use or study, or other devices of a personal nature. 
</P>
<P>(2) Where the agency communicates with applicants and beneficiaries or members of the public by telephone, telecommunication devices for deaf persons (TDD's) or equally effective telecommunication systems shall be used to communicate with persons with impaired hearing. 
</P>
<P>(b) The agency shall ensure that interested persons, including persons with impaired vision or hearing, can obtain information as to the existence and location of accessible services, activities, and facilities. 
</P>
<P>(c) The agency shall provide signage at a primary entrance to each of its inaccessible facilities, directing users to a location at which they can obtain information about accessible facilities. The international symbol for accessibility shall be used at each primary entrance of an accessible facility. 
</P>
<P>(d) This section does not require the agency to take any action that it can demonstrate would result in a fundamental alteration in the nature of a program or activity or in undue financial and administrative burdens. In those circumstances where agency personnel believe that the proposed action would fundamentally alter the program or activity or would result in undue financial and administrative burdens, the agency has the burden of proving that compliance with this section would result in such alteration or burdens. The decision that compliance would result in such alteration or burdens must be made by the Secretary or his or her designee after considering all agency resources available for use in the funding and operation of the conducted program or activity and must be accompanied by a written statement of the reasons for reaching that conclusion. If an action required to comply with § 9.160 would result in such an alteration or such burdens, the agency shall take any other action that would not result in such an alteration or such burdens but would nevertheless ensure that, to the maximum extent possible, individuals with disabilities receive the benefits and services of the program or activity. 


</P>
</DIV8>


<DIV8 N="§ 9.170" NODE="24:1.1.1.1.8.0.25.20" TYPE="SECTION">
<HEAD>§ 9.170   Compliance procedures.</HEAD>
<P>(a) Except as provided in paragraph (b) of this section, this section applies to all allegations of discrimination on the basis of disability in programs or activities conducted by the agency. 
</P>
<P>(b) The agency shall process complaints alleging violations of section 504 with respect to employment according to the procedures established by the Equal Employment Opportunity Commission in 29 CFR part 1613 under section 501 of the Rehabilitation Act of 1973 (29 U.S.C. 791). 
</P>
<P>(c) The Responsible Official shall coordinate implementation of this section. 
</P>
<P>(d) Persons may submit complete complaints to the Assistant Secretary for Fair Housing and Equal Opportunity, 451 Seventh St., SW., Washington, DC 20410, or to any HUD Area Office. The agency shall accept and investigate all complete complaints for which the agency has jurisdiction. All complete complaints shall be filed within 180 days of the alleged act of discrimination. The agency may extend this time period for good cause. For purposes of determining when a complaint is filed, a complaint mailed to the agency shall be deemed filed on the date it is postmarked. Any other complaint shall be deemed filed on the date it is received by the agency. The agency shall acknowledge all complaints, in writing, within ten (10) working days of receipt of the complaint. 
</P>
<P>(e) If the agency receives a complaint over which it does not have jurisdiction, it shall promptly notify the complainant and shall make reasonable efforts to refer the complaint to the appropriate Government entity. 
</P>
<P>(f) The agency shall notify the Architectural and Transportation Barriers Compliance Board upon receipt of any complaint alleging that a building or facility that is subject to the Architectural Barriers Act of 1968, as amended (42 U.S.C. 4151 through 4157), is not readily accessible to and usable by individuals with disabilities. The agency shall delete the identity of the complainant from the copy of the complaint. 
</P>
<P>(g)(1) Within 180 days of the receipt of a complete complaint for which it has jurisdiction, the Office of Fair Housing and Equal Opportunity shall complete the investigation of the complaint, attempt informal resolution, and if no informal resolution is achieved, issue a letter of findings. If a complaint is filed against the Office of Fair Housing and Equal Opportunity, the Secretary or a designee of the Secretary shall investigate and resolve the complaint through informal agreement or letter of findings. 
</P>
<P>(2) If a complaint is resolved informally, the terms of the agreement shall be reduced to writing and made part of the complaint file, with a copy of the agreement provided to the complainant and the agency. The written agreement may include a finding on the issue of discrimination and shall describe any corrective action to which the complainant and the respondent have agreed. 
</P>
<P>(3) If a complaint is not resolved informally, the Office of Fair Housing and Equal Opportunity or a person designated under this paragraph shall notify the complainant of the results of the investigation in a letter containing—
</P>
<P>(i) Findings of fact and conclusions of law; 
</P>
<P>(ii) A description of a remedy for each violation found; 
</P>
<P>(iii) A notice of the right to appeal to the Secretary; 
</P>
<P>(h)(1) Appeals of the findings of fact and conclusions of law or remedies must be filed by the complainant within 90 days of receipt from the agency of the letter required by § 9.170(g). The Assistant Secretary or the person designated by the Secretary to decide an appeal of a complaint filed against the Office of Fair Housing and Equal Opportunity may extend this time for good cause. 
</P>
<P>(2) Timely appeals shall be accepted and processed by the Assistant Secretary. Decisions on an appeal shall not be issued by the person who made the initial determination. 
</P>
<P>(i) The Assistant Secretary or the person designated by the Secretary to decide an appeal of a complaint filed against the Office of Fair Housing and Equal Opportunity shall notify the complainant of the results of the appeal within 60 days of the receipt of the request. If the agency determines that it needs additional information from the complainant, it shall have 60 days from the date it receives the additional information to make its determination on the appeal. 
</P>
<P>(j) The time limits cited in paragraphs (g) and (i) of this section may be extended with the permission of the Assistant Attorney General. 
</P>
<P>(k) The agency may delegate its authority for conducting complaint investigations to other Federal agencies, except that the authority for making the final determination may not be delegated to another agency. 


</P>
</DIV8>

</DIV5>


<DIV5 N="10" NODE="24:1.1.1.1.9" TYPE="PART">
<HEAD>PART 10—RULEMAKING: POLICY AND PROCEDURES 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>44 FR 1606, Jan. 5, 1979, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:1.1.1.1.9.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 10.1" NODE="24:1.1.1.1.9.1.25.1" TYPE="SECTION">
<HEAD>§ 10.1   Policy.</HEAD>
<P>It is the policy of the Department of Housing and Urban Development to provide for public participation in rulemaking with respect to all HUD programs and functions, including matters that relate to public property, loans, grants, benefits, or contracts even though such matters would not otherwise be subject to rulemaking by law or Executive policy. The Department therefore publishes notices of proposed rulemaking in the <E T="04">Federal Register</E> and gives interested persons an opportunity to participate in the rulemaking through submission of written data, views, and arguments with or without opportunity for oral presentation. It is the policy of the Department that its notices of proposed rulemaking are to afford the public not less than sixty days for submission of comments. For some rules the Secretary will employ additional methods of inviting public participation. These methods include, but are not limited to, publishing Advance Notices of Proposed Rulemaking (ANPR), conducting public surveys, and convening public forums or panels. An ANPR will be used to solicit public comment early in the rulemaking process for significant rules unless the Secretary grants an exception based upon legitimate and pressing time constraints. Unless required by statute, notice and public procedure will be omitted if the Department determines in a particular case or class of cases that notice and public procedure are impracticable, unnecessary or contrary to the public interest. In a particular case, the reasons for the determination shall be stated in the rulemaking document. Notice and public procedure may also be omitted with respect to statements of policy, interpretative rules, rules governing the Department's organization or its own internal practices or procedures, or if a statute expressly so authorizes. A final substantive rule will be published not less than 30 days before its effective date, unless it grants or recognizes an exemption or relieves a restriction or unless the rule itself states good cause for taking effect upon publication or less than 30 days thereafter. Statements of policy and interpretative rules will usually be made effective on the date of publication. 
</P>
<CITA TYPE="N">[44 FR 1606, Jan. 5, 1979, as amended at 47 FR 56625, Dec. 20, 1982]


</CITA>
</DIV8>


<DIV8 N="§ 10.2" NODE="24:1.1.1.1.9.1.25.2" TYPE="SECTION">
<HEAD>§ 10.2   Definitions.</HEAD>
<P>(a) <I>Rule</I> or <I>Regulation</I> means all or part of any Departmental statement of general or particular applicability and future effect designed to: (1) Implement, interpret, or prescribe law or policy, or (2) describe the Department's organization, or its procedure or practice requirements. The term <I>regulation</I> is sometimes applied to a rule which has been published in the Code of Federal Regulations.
</P>
<P>(b) <I>Rulemaking</I> means the Departmental process for considering and formulating the issuance, modification, or repeal of a rule. 
</P>
<P>(c) <I>Secretary</I> means the Secretary or the Under Secretary of Housing and Urban Development, or an official to whom the Secretary has expressly delegated authority to issue rules.


</P>
</DIV8>


<DIV8 N="§ 10.3" NODE="24:1.1.1.1.9.1.25.3" TYPE="SECTION">
<HEAD>§ 10.3   Applicability.</HEAD>
<P>(a) This part prescribes general rulemaking procedures for the issuance, amendment, or repeal of rules in which participation by interested persons is required by 5 U.S.C. or by Department policy.
</P>
<P>(b) The authority to issue rules, delegated by the Secretary, may not be redelegated unless expressly permitted.
</P>
<P>(c) This part is not applicable to a determination by HUD under 24 CFR part 966 (public housing) or 24 CFR part 950 (Indian housing) that the law of a jurisdiction requires that, prior to eviction, a tenant be given a hearing in court which provides the basic elements of due process (“due process determination”). 
</P>
<CITA TYPE="N">[44 FR 1606, Jan. 5, 1979, as amended at 61 FR 13273, Mar. 26, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 10.4" NODE="24:1.1.1.1.9.1.25.4" TYPE="SECTION">
<HEAD>§ 10.4   Rules docket.</HEAD>
<P>(a) All documents relating to rulemaking procedures including but not limited to advance notices of proposed rulemaking, notices of proposed rulemaking, written comments received in response to notices, withdrawals or terminations of proposed rulemaking, petitions for rulemaking, requests for oral argument in public participation cases, requests for extension of time, grants or denials of petitions or requests, transcripts or minutes of informal hearings, final rules and general notices are maintained in the Rules Docket Room (Room 5218), Department of Housing and Urban Development, 451 7th Street, SW., Washington, DC 20410. All public rulemaking comments should refer to the docket number which appears in the heading of the rule and should be addressed to the Rules Docket Clerk, Room 5218, Department of Housing and Urban Development, 451 7th Street, SW., Washington, DC 20410.
</P>
<P>(b) Documents relating to rulemaking proceedings are public records. After a docket is established, any person may examine docketed material at any time during regular business hours, and may obtain a copy of any docketed material upon payment of the prescribed fee. (See part 15 of this title). 


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.1.1.1.9.2" TYPE="SUBPART">
<HEAD>Subpart B—Procedures</HEAD>


<DIV8 N="§ 10.6" NODE="24:1.1.1.1.9.2.25.1" TYPE="SECTION">
<HEAD>§ 10.6   Initiation of rulemaking.</HEAD>
<P>Rulemaking proceedings may be initiated on the Secretary's motion, or on the recommendation of a Federal, State, or local government or government agency, or on the petition of any interested person.


</P>
</DIV8>


<DIV8 N="§ 10.7" NODE="24:1.1.1.1.9.2.25.2" TYPE="SECTION">
<HEAD>§ 10.7   Advance Notice of Proposed Rulemaking.</HEAD>
<P>An Advance Notice of Proposed Rulemaking issued in accordance with § 10.1 of this part is published in the <E T="04">Federal Register</E> and briefly outlines: 
</P>
<P>(a) The proposed new program or program changes, and why they are needed;
</P>
<P>(b) The major policy issues involved;
</P>
<P>(c) A request for comments, both specific and general, as to the need for the proposed rule and the provisions that the rule might include;
</P>
<P>(d) If appropriate, a list of questions about the proposal that will elicit detailed comments;
</P>
<P>(e) If known, an estimate of the reporting or recordkeeping requirements, if any, that the rule would impose; and
</P>
<P>(f) Where comments should be addressed and the time within which they must be submitted.


</P>
</DIV8>


<DIV8 N="§ 10.8" NODE="24:1.1.1.1.9.2.25.3" TYPE="SECTION">
<HEAD>§ 10.8   Notice of proposed rulemaking.</HEAD>
<P>Each notice of proposed rulemaking required by statute or by § 10.1 is published in the <E T="04">Federal Register</E> and includes: 
</P>
<P>(a) The substance or terms of the proposed rule or a description of the subject matter and issues involved;
</P>
<P>(b) A statement of how and to what extent interested persons may participate in the proceeding;
</P>
<P>(c) Where participation is limited to written comments, a statement of the time within which such comments must be submitted;
</P>
<P>(d) A reference to the legal authority under which the proposal is issued; and 
</P>
<P>(e) In a proceeding which has provided Advance Notice of Proposed Rulemaking, an analysis of the principal issues and recommendations raised by the comments, and the manner in which they have been addressed in the proposed rulemaking.


</P>
</DIV8>


<DIV8 N="§ 10.10" NODE="24:1.1.1.1.9.2.25.4" TYPE="SECTION">
<HEAD>§ 10.10   Participation by interested persons.</HEAD>
<P>(a) Unless the notice otherwise provides, any interested person may participate in rulemaking proceedings by submitting written data, views or arguments within the comment time stated in the notice. In addition, the Secretary may permit the filing of comments in response to original comments.
</P>
<P>(b) In appropriate cases, the Secretary may provide for oral presentation of views in additional proceedings described in § 10.12.


</P>
</DIV8>


<DIV8 N="§ 10.12" NODE="24:1.1.1.1.9.2.25.5" TYPE="SECTION">
<HEAD>§ 10.12   Additional rulemaking proceedings.</HEAD>
<P>The Secretary may invite interested persons to present oral arguments, appear at informal hearings, or participate in any other procedure affording opportunity for oral presentation of views. The transcript or minutes of such meetings, as appropriate, will be kept and filed in the Rules Docket.


</P>
</DIV8>


<DIV8 N="§ 10.14" NODE="24:1.1.1.1.9.2.25.6" TYPE="SECTION">
<HEAD>§ 10.14   Hearings.</HEAD>
<P>(a) The provisions of 5 U.S.C. 556 and 557, which govern formal hearings in adjudicatory proceedings, do not apply to informal rule making proceedings described in this part. When opportunity is afforded for oral presentation, such informal <I>hearing</I> is a nonadversary, fact-finding proceeding. Any rule issued in a proceeding under this part in which a hearing is held is not based exclusively on the record of such hearing.
</P>
<P>(b) When a hearing is provided, the Secretary will designate a representative to conduct the hearing, and if the presence of a legal officer is desirable, the General Counsel will designate a staff attorney to serve as the officer.


</P>
</DIV8>


<DIV8 N="§ 10.16" NODE="24:1.1.1.1.9.2.25.7" TYPE="SECTION">
<HEAD>§ 10.16   Adoption of a final rule.</HEAD>
<P>All timely comments are considered in taking final action on a proposed rule. Each preamble to a final rule will contain a short analysis and evaluation of the relevant significant issues set forth in the comments submitted, and a clear concise statement of the basis and purpose of the rule.


</P>
</DIV8>


<DIV8 N="§ 10.18" NODE="24:1.1.1.1.9.2.25.8" TYPE="SECTION">
<HEAD>§ 10.18   Petitions for reconsideration.</HEAD>
<P>Petitions for reconsideration of a final rule will not be considered. Such petitions, if filed, will be treated as petitions for rulemaking in accordance with § 10.20.


</P>
</DIV8>


<DIV8 N="§ 10.20" NODE="24:1.1.1.1.9.2.25.9" TYPE="SECTION">
<HEAD>§ 10.20   Petition for rulemaking.</HEAD>
<P>(a) Any interested person may petition the Secretary for the issuance, amendment, or repeal of a rule. Each petition shall:
</P>
<P>(1) Be submitted to the Rules Docket Clerk, Room 5218, Department of Housing and Urban Development, Washington, DC 20410;
</P>
<P>(2) Set forth the text of substance of the rule or amendment proposed or specify the rule sought to be repealed;
</P>
<P>(3) Explain the interest of the petitioner in the action sought; and
</P>
<P>(4) Set forth all data and arguments available to the petitioner in support of the action sought.
</P>
<P>(b) No public procedures will be held directly on the petition before its disposition. If the Secretary finds that the petition contains adequate justification, a rulemaking proceeding will be initiated or a final rule will be issued as appropriate. If the Secretary finds that the petition does not contain adequate justification, the petition will be denied by letter or other notice, with a brief statement of the ground for denial. The Secretary may consider new evidence at any time; however, repetitious petitions for rulemaking will not be considered. 




</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="13" NODE="24:1.1.1.1.10" TYPE="PART">
<HEAD>PART 13—USE OF PENALTY MAIL IN THE LOCATION AND RECOVERY OF MISSING CHILDREN
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>39 U.S.C. 3220(a)(2); 5 U.S.C. 301.
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>51 FR 19830, June 3, 1986, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 13.1" NODE="24:1.1.1.1.10.0.25.1" TYPE="SECTION">
<HEAD>§ 13.1   Purpose.</HEAD>
<P>To support the national effort to locate and recover missing children, the Department of Housing and Urban Development (HUD) joins other executive departments and independent establishments of the Government of the United States in using penalty mail to disseminate photographs and biographical information on hundreds of missing children.
</P>
<CITA TYPE="N">[51 FR 19830, June 3, 1986; 51 FR 43608, Dec. 3, 1986]


</CITA>
</DIV8>


<DIV8 N="§ 13.2" NODE="24:1.1.1.1.10.0.25.2" TYPE="SECTION">
<HEAD>§ 13.2   Procedures for obtaining and disseminating data.</HEAD>
<P>(a) HUD shall insert, manually and via automated inserts, pictures and biographical data related to missing children in domestic penalty mail directed to members of the public in the United States, its territories and possessions. These include:
</P>
<P>(1) Standard letter-size envelopes (4
<FR>1/2</FR>″ × 9
<FR>1/2</FR>″);
</P>
<P>(2) Document-size envelopes (9
<FR>1/2</FR>″ × 12″, 9
<FR>1/2</FR>″ × 11
<FR>1/2</FR>″, 10″ × 13″); and
</P>
<P>(3) Other envelopes (miscellaneous size).
</P>
<P>(b) Missing children information shall not be placed on the <I>Penalty Indicia, OCR Read Area, Bar Code Read Area,</I> and <I>Return Address</I> areas of letter-size envelopes.
</P>
<P>(c) Posters containing pictures and biographical data shall be placed on bulletin boards in Headquarters and Field offices.
</P>
<P>(d) HUD shall accept camera-ready and other photographic and biographical materials solely from the National Center for Missing and Exploited Children (National Center). Photographs that were reasonably current as of the time of the child's disappearance shall be the only acceptable form of visual media or pictorial likeness used in penalty mail or posters.


</P>
</DIV8>


<DIV8 N="§ 13.3" NODE="24:1.1.1.1.10.0.25.3" TYPE="SECTION">
<HEAD>§ 13.3   Withdrawal of data.</HEAD>
<P>HUD shall remove all printed penalty mail envelopes and other materials from circulation or other use within a three month period from the date the National Center receives information or notice that a child, whose picture and biographical information have been made available to HUD, has been recovered or that the parent or guardian's permission to use the child's photograph and biographical information has been withdrawn. The HUD contact person shall be notified immediately and in writing by the National Center of the need to withdraw from circulation penalty mail envelopes and other materials related to a particular child.


</P>
</DIV8>


<DIV8 N="§ 13.4" NODE="24:1.1.1.1.10.0.25.4" TYPE="SECTION">
<HEAD>§ 13.4   Reports.</HEAD>
<P>HUD shall compile and submit to Office of Juvenile Justice and Deliquency Prevention (OJJDP), by June 30, 1987, a consolidated report on its experience in implementing S. 1195 <I>Official Mail Use in the Location and Recovery of Missing Children</I> along with recommendations for future Departmental action.


</P>
</DIV8>

</DIV5>


<DIV5 N="14" NODE="24:1.1.1.1.11" TYPE="PART">
<HEAD>PART 14—IMPLEMENTATION OF THE EQUAL ACCESS TO JUSTICE ACT IN ADMINISTRATIVE PROCEEDINGS
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>5 U.S.C. 504(c)(1); 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>52 FR 27126, July 17, 1987, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:1.1.1.1.11.1" TYPE="SUBPART">
<HEAD>Subpart A—General Provisions</HEAD>


<DIV8 N="§ 14.50" NODE="24:1.1.1.1.11.1.25.1" TYPE="SECTION">
<HEAD>§ 14.50   Definitions.</HEAD>
<P><I>Act.</I> The Equal Access to Justice Act, 5 U.S.C. 504, title II of Pub. L. 96-481, as amended by Pub. L. 99-80. 
</P>
<P><I>Adjudicative officer.</I> The Administrative Law Judge, Administrative Judge of the HUD Office of Hearings and Appeals, or other officer designated by the Secretary, who presided at the adversary adjudication.
</P>
<P><I>Adversary adjudication.</I> (a) An adjudication under 5 U.S.C. 554 in which the position of the United States is represented by counsel or otherwise, but not including an adjudication for the purpose of establishing or fixing a rate or for the purpose of granting or renewing a license; and 
</P>
<P>(b) Appeals of decisions of contracting officers made pursuant to section 6 of the Contract Disputes Act of 1978 (41 U.S.C. 605) before agency boards of contract appeals as provided in section 8 of that Act (41 U.S.C. 607). 
</P>
<P><I>Agency counsel</I> (a) When the position of the Department is being represented, the attorney or attorneys designated by the Department's General Counsel to represent the Department in a proceeding covered by this part, and 
</P>
<P>(b) When the position of another agency of the United States is being represented, the representative as designated by that agency. 
</P>
<P><I>Department.</I> The Department of Housing and Urban Development, or the organizational unit within the Department responsible for conducting an adversary adjudication subject to this part. 
</P>
<P><I>Proceeding.</I> An adversary adjudication as defined above. 
</P>
<P><I>Secretary.</I> The Secretary of Housing and Urban Development. 
</P>
<CITA TYPE="N">[52 FR 27126, July 17, 1987, as amended at 72 FR 53877, Sept. 20, 2007; 87 FR 8196, Feb. 14, 2022]


</CITA>
</DIV8>


<DIV8 N="§ 14.100" NODE="24:1.1.1.1.11.1.25.2" TYPE="SECTION">
<HEAD>§ 14.100   Time computation.</HEAD>
<P>Time periods stated in this part shall be computed in accordance with the Department's rules with respect to computation of time which apply to the underlying proceeding. 


</P>
</DIV8>


<DIV8 N="§ 14.105" NODE="24:1.1.1.1.11.1.25.3" TYPE="SECTION">
<HEAD>§ 14.105   Purpose of these rules.</HEAD>
<P>The Act provides for the award of attorney fees and other expenses to eligible individuals and entities who are parties to certain administrative proceedings (<I>adversary adjudications</I>) before the Department. An eligible party may receive an award when it prevails over an agency, unless the agency's position was substantially justified or special circumstances make an award unjust. The rules in this part described the parties eligible for awards and the proceedings that are covered. They also explain how to apply for awards and the procedures and standards that the Department will use to make them. 


</P>
</DIV8>


<DIV8 N="§ 14.110" NODE="24:1.1.1.1.11.1.25.4" TYPE="SECTION">
<HEAD>§ 14.110   When the Act applies.</HEAD>
<P>The Act applies to any adversary adjudication pending or commenced before this Department on or after August 5, 1985. It also applies to any adversary adjudication commenced on or after October 1, 1984, and finally disposed of before August 5, 1985, provided that an application for fees and expenses, as described in subpart B of these rules, has been filed with the Department no later than 30 days after August 5, 1985, and to any adversary adjudication pending on or commenced on or after October 1, 1981, in which an application for fees and other expenses was timely filed and was dismissed for lack of jurisdiction. 


</P>
</DIV8>


<DIV8 N="§ 14.115" NODE="24:1.1.1.1.11.1.25.5" TYPE="SECTION">
<HEAD>§ 14.115   Proceedings covered.</HEAD>
<P>(a) The proceedings to which this part applies are adversary adjudications conducted by the Department under: 
</P>
<P>(1) The Interstate Land Sales Full Disclosure Act, as amended, 15 U.S.C. 1701 <I>et seq.,</I> pursuant to 15 U.S.C. 1715 and 24 CFR part 1720; 
</P>
<P>(2) Section 602 of the Civil Rights Act of 1964, 42 U.S.C. 2000d-1, and 24 CFR parts 1 and 2; 
</P>
<P>(3) Section 505(a) of the Rehabilitation Act of 1973, as amended, 29 U.S.C. 794a, 28 CFR part 41, and any applicable HUD regulations;
</P>
<P>(4) Section 305(a) of the Age Discrimination Act of 1975, 42 U.S.C. 6104(a), 45 CFR part 90 and any applicable HUD regulations; 
</P>
<P>(5) [Reserved]
</P>
<P>(6) Debt Collection Act of 1982 (Salary Offset), 5 U.S.C. 5514, and 24 CFR 17.125-.140; 
</P>
<P>(7) Manufactured Home Construction and Safety Standards Act of 1974, 42 U.S.C. 5401 <I>et seq.,</I> and 24 CFR part 3280; 
</P>
<P>(8) Section 111 of title I of the Housing and Community Development Act of 1974, 42 U.S.C. 5311, and 24 CFR 570.913; 
</P>
<P>(9) Appeals of decisions of contracting officers made pursuant to section 6 of the Contract Disputes Act of 1978 (41 U.S.C. 605) before the HUD Board of Contract Appeals as provided in section 8 of that Act (41 U.S.C. 607); or 
</P>
<P>(10) Title VIII of the Civil Rights Act of 1968 (42 U.S.C. 3600-3620) and 24 CFR part 104. 
</P>
<P>(b) The Department's failure to identify a type of proceeding as an adversary adjudication shall not preclude the filing of an application by a party who believes the proceeding is covered by the Act; whether the proceeding is covered will then be an issue for resolution in proceedings on the application. 
</P>
<P>(c) If a proceeding includes both matters covered by the Act and matters specifically excluded from coverage, any award made will include only fees and expenses related to covered issues. 
</P>
<CITA TYPE="N">[52 FR 27126, July 17, 1987, as amended at 54 FR 3283, Jan. 23, 1989; 85 FR 61562, Sept. 29, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 14.120" NODE="24:1.1.1.1.11.1.25.6" TYPE="SECTION">
<HEAD>§ 14.120   Eligibility of applicants.</HEAD>
<P>(a) To be eligible for an award of attorney fees and other expenses under the Act, the applicant must be a party to the adversary adjudication for which it seeks an award. The term <I>party</I> is defined in 5 U.S.C. 551(3). The applicant must show that it meets all conditions of eligibility set out in this subpart and in subpart B. 
</P>
<P>(b) The types of eligible applicants are as follows: 
</P>
<P>(1) An individual with a net worth of not more than $2 million; 
</P>
<P>(2) The sole owner of an unincorporated business who has a net worth of not more than $7 million, including both personal and business interests, and not more than 500 employees; 
</P>
<P>(3) A charitable or other tax-exempt organization described in section 501(c)(3) of the Internal Revenue Code, 26 U.S.C. 501(c)(3), with not more than 500 employees; 
</P>
<P>(4) A cooperative association as defined in section 15(a) of the Agricultural Marketing Act, 12 U.S.C. 1141j(a), with not more than 500 employees; or 
</P>
<P>(5) Any other partnership, corporation, association, unit of local government, or organization with a net worth of not more than $7 million and not more than 500 employees.
</P>
<P>(c) For the purpose of eligibility, the net worth and number of employees of an applicant shall be determined as of the date the proceeding was initiated. For the purpose of eligibility of applicants before the HUD Board of Contract Appeals, the net worth and number of employees of an applicant shall be determined as of the date the applicant filed its appeal under 41 U.S.C. 606. 
</P>
<P>(d) An applicant who owns an unincorporated business will be considered as an <I>individual</I> rather than a <I>sole owner of an unincorporated business</I> if the issues on which the application prevails are related primarily to personal interests rather than to business interests. 
</P>
<P>(e) The employees of an applicant include all persons who regularly perform services for remuneration for the applicant, under the applicant's direction and control. Part-time employees shall be included on a proportional basis. 
</P>
<P>(f) The net worth and number of employees of the applicant and all of its affiliates shall be aggregated to determine eligibility. Any individual, corporation or other entity that directly or indirectly controls or owns a majority of the voting shares or other interests of the applicant, or any corporation or other entity of which the applicant directly or indirectly owns or controls a majority of the voting shares or other interest, will be considered an affiliate for purposes of this part, unless the adjudicative officer determines that such treatment would be unjust and contrary to the purposes of the Act in light of the actual relationship between the affiliated entities. In addition, the adjudicative officer may determine that financial relationships of the applicant other than those described in this paragraph constitute special circumstances that would make an award unjust. 
</P>
<P>(g) An applicant that participates in a proceeding primarily on behalf of one or more other persons or entities that would be ineligible is not itself eligible for an award. 


</P>
</DIV8>


<DIV8 N="§ 14.125" NODE="24:1.1.1.1.11.1.25.7" TYPE="SECTION">
<HEAD>§ 14.125   Standards for awards.</HEAD>
<P>(a) A prevailing applicant may receive an award for fees and expenses incurred in connection with a proceeding, or in a significant and discrete substantive portion of the proceeding, unless the position of the agency over which the applicant has prevailed was substantially justified. The position of the agency includes, in addition to the position taken by the agency in the adversary adjudication, the action or failure to act by the agency upon which the adversary adjudication is based. The burden of proof that an award should not be made to an ineligible prevailing applicant because the agency's position was substantially justified is on the agency counsel, who may avoid an award by showing that its position was reasonable in law and fact. 
</P>
<P>(b) An award will be reduced or denied if the applicant has unduly or unreasonably protracted the proceeding, if the applicant has falsified the application (including documentation) or net worth exhibit or if special circumstances make the award sought unjust. 


</P>
</DIV8>


<DIV8 N="§ 14.130" NODE="24:1.1.1.1.11.1.25.8" TYPE="SECTION">
<HEAD>§ 14.130   Allowable fees and expenses.</HEAD>
<P>(a) No award for the fee of an attorney or agent under these rules may exceed $75.00 per hour. However, an award may also include the reasonable expenses of the attorney, agent or witness as a separate item, if the attorney, agent or witness ordinarily charges clients separately for such expenses. 
</P>
<P>(b) In determining the reasonableness of the fee sought for an attorney, agent or expert witness, the adjudicative officer shall consider the following: 
</P>
<P>(1) If the attorney, agent or witness is in private practice, his or her customary fee for similar services, or, if an employee of the applicant, the fully allocated cost of the services; 
</P>
<P>(2) The prevailing rate for the kind and quality of services furnished in the community in which the attorney, agent or witness ordinarily performs services; 
</P>
<P>(3) The time actually spent in the representation of the applicant; 
</P>
<P>(4) The time reasonably spent in the light of the difficulty or complexity of the issues in the proceeding; and 
</P>
<P>(5) Such other factors as may bear on the value of the services provided. 
</P>
<P>(c) The reasonable cost of any study, analysis, engineering report, test, project, or similar matter prepared on behalf of a party may be awarded, to the extent that the charge for the services does not exceed the prevailing rate for similar services, and the study or other matter was necessary for preparation of the applicant's case. 


</P>
</DIV8>


<DIV8 N="§ 14.135" NODE="24:1.1.1.1.11.1.25.9" TYPE="SECTION">
<HEAD>§ 14.135   Rulemaking on maximum rates for attorney fees.</HEAD>
<P>Any person may file with the Department a petition for rulemaking to increase the maximum rate for attorney fees as provided in 5 U.S.C. 504(b)(1)(A)(ii), in accordance with 24 CFR part 10. The petition should identify the rate the petitioner believes the Department should establish and the types of proceedings in which the rate should be used. It should also explain fully the reasons why the higher rate is warranted. The Department will respond to the petition in accordance with 24 CFR 10.20(b). 


</P>
</DIV8>


<DIV8 N="§ 14.140" NODE="24:1.1.1.1.11.1.25.10" TYPE="SECTION">
<HEAD>§ 14.140   Awards against other agencies.</HEAD>
<P>If an applicant is entitled to an award because it prevails over another agency of the United States that participates in a proceeding before the Department and takes a position that is not substantially justified, the award or an appropriate portion of the award shall be made against that agency. 


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.1.1.1.11.2" TYPE="SUBPART">
<HEAD>Subpart B—Information Required From Applicants</HEAD>


<DIV8 N="§ 14.200" NODE="24:1.1.1.1.11.2.25.1" TYPE="SECTION">
<HEAD>§ 14.200   Contents of application.</HEAD>
<P>(a) An application for an award of fees and expenses under the Act shall identify the applicant and the proceeding for which an award is sought. The application shall show that the applicant has prevailed and identify the position of the Department or other agencies that the applicant alleges was not substantially justified. Unless the applicant is an individual, the application shall also state the number of employees of the applicant and describe briefly the type and purpose of its organization or business. 
</P>
<P>(b) The application shall also include a statement that the applicant's net worth does not exceed $2 million (if an individual) or $7 million (for all other applicants, including their affiliates). However, an applicant may omit this statement if: 
</P>
<P>(1) It attaches a copy of a ruling by the Internal Revenue Service that it qualifies as an organization described in section 501(c)(3) of the Internal Revenue Code, 26 U.S.C. 501(c)(3), or, in the case of a tax-exempt organization not required to obtain a ruling from the Internal Revenue Service on its exempt status, a statement that describes the basis for the applicant's belief that it qualifies under such section; or 
</P>
<P>(2) It states that it is a cooperative association as defined in section 15(a) of the Agricultural Marketing Act, 12 U.S.C. 1141j(a). 
</P>
<P>(c) If the applicant is a partnership, corporation, association, or organization, or a sole owner of an unincorporated business, the applicant shall state that it did not have more than 500 employees at the time the proceeding was initiated, giving the number of its employees and describing briefly the type and purpose of its organization or business. 
</P>
<P>(d) The application shall also itemize the amount of fees and expenses for which an award is sought.
</P>
<P>(e) The application also may include any other matters that the applicant wishes the Department to consider in determining whether and in what amount an award should be made. 
</P>
<P>(f) The application shall be signed by the applicant or an authorized officer with respect to the eligibility of the applicant and by the attorney of the applicant with respect to fees and expenses sought. The application shall contain or be accompanied by a written verification under oath or affirmation under penalty of perjury that the information provided in the application and all accompanying material is true and complete to the best of the applicant's or authorized officer's information and belief.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2510-0001)


</APPRO>
</DIV8>


<DIV8 N="§ 14.205" NODE="24:1.1.1.1.11.2.25.2" TYPE="SECTION">
<HEAD>§ 14.205   Net worth exhibit.</HEAD>
<P>(a) Each applicant except a qualified tax-exempt organization or a qualified cooperative association must submit with its application a detailed exhibit showing the net worth of the applicant and any affiliates (as defined in § 14.120(f) of this part) when the proceeding was initiated. The exhibit may be in any form convenient to the applicant that provides full disclosure of the applicant's and its affiliates' assets and liabilities, and is sufficient to determine whether the applicant qualifies under the standards of the Act and this part. The adjudicative officer may require an applicant to file additional information to determine its eligibility for an award. 
</P>
<P>(b) The net worth exhibit shall describe any transfers of assets from, or obligations incurred by, the applicant or any affiliate, occurring in the one-year period before the date on which the proceeding was initiated, that reduced the net worth of the applicant and its affiliates below the applicable net worth ceiling. If there were no such transactions, the applicant shall so state. 
</P>
<P>(c) Ordinarily, the net worth exhibit will be included in the public record of the proceeding. However, an applicant that objects to public disclosure of information in any portion of the exhibit and believes there are legal grounds for withholding it from disclosure may submit that portion of the exhibit directly to the adjudicative officer in a sealed envelope labeled “Confidential Financial Information,” accompanied by a motion to withhold the information from public disclosure. The motion shall describe the information sought to be withheld and explain, in detail, why it falls within one or more of the specific exemptions from mandatory disclosure under the Freedom of Information Act (5 U.S.C. 552(b) (1)-(9)), why public disclosure of the information would adversely affect the applicant, and why disclosure is not required in the public interest. The material in question shall be served on counsel representing the agency against which the applicant seeks an award, but need not be served on any other party to the proceeding. If the adjudicative officer finds that the information should not be withheld from disclosure, it shall be placed in the public record of the proceeding. Otherwise, any request to inspect or copy the exhibit shall be disposed of in accordance with the Department's established procedures under the Freedom of Information Act, 24 CFR part 15. In either case, disclosure shall be subject to the provisions of the Privacy Act of 1974, 5 U.S.C. 552a, and the Department's procedures implementing the Privacy Act of 1974 at 24 CFR part 16.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2510-0001)


</APPRO>
</DIV8>


<DIV8 N="§ 14.210" NODE="24:1.1.1.1.11.2.25.3" TYPE="SECTION">
<HEAD>§ 14.210   Documentation of fees and expenses.</HEAD>
<P>(a) The application shall be accompanied by full and itemized documentation of the fees and expenses, including the cost of any study, analysis, engineering report, test, project or similar matter, for which an award is sought. 
</P>
<P>(b) The documentation shall include an affidavit from any attorney, agent or expert witness representing or appearing in behalf of the party, stating the actual time expended and the rate at which fees and other expenses were computed and describing the specific services performed. 
</P>
<P>(c) The documentation shall also include a description of any expenses for which reimbursement is sought and a statement of the amounts paid and payable by the applicant or by any other person or entity for the services provided. Vouchers, receipts, logs, or other substantiation for any expenses paid or payable shall be provided. 
</P>
<P>(d) The adjudicative officer may require the applicant to provide additional substantiation for any expenses claimed.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2510-0001)


</APPRO>
</DIV8>


<DIV8 N="§ 14.215" NODE="24:1.1.1.1.11.2.25.4" TYPE="SECTION">
<HEAD>§ 14.215   When an application may be filed.</HEAD>
<P>(a) An application may be filed whenever the applicant has prevailed in the proceeding or in a significant and discrete substantive portion of the proceeding, but in no case later than 30 days after the Department's final disposition of the proceeding. 
</P>
<P>(b) For purposes of this rule, final disposition means the date on which a decision or order disposing of the merits of the proceeding or any other complete resolution of the proceeding, such as a settlement of voluntary dismissal, become final and unappealable, both within the Department and to the courts. 
</P>
<P>(c) If review or reconsideration (under HUD Board of Contract Appeals Rule 29, 24 CFR 20.10) is sought or taken of a decision as to which an applicant believes it has prevailed, proceedings for the award of fees shall be stayed pending final disposition of the underlying controversy. When the United States appeals the underlying merits of an adversary adjudication to a court, no decision on an application for fees and other expenses in connection with that adversary adjudication shall be made until a final and unreviewable decision is rendered by the court on the appeal or until the underlying merits of the case have been finally determined pursuant to the appeal. 


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:1.1.1.1.11.3" TYPE="SUBPART">
<HEAD>Subpart C—Procedures for Considering Applications</HEAD>


<DIV8 N="§ 14.300" NODE="24:1.1.1.1.11.3.25.1" TYPE="SECTION">
<HEAD>§ 14.300   Jurisdiction of adjudicative officer.</HEAD>
<P>Any provision in the Department's rules and regulations other than this part which limits or terminates the jurisdiction of an adjudicative officer upon the effective date of his or her decision in the underlying proceeding shall not in any way affect his or her jurisdiction to render a decision under this part. 


</P>
</DIV8>


<DIV8 N="§ 14.305" NODE="24:1.1.1.1.11.3.25.2" TYPE="SECTION">
<HEAD>§ 14.305   Filing and service of documents.</HEAD>
<P>Any application for an award or other pleading or document related to an application shall be filed and served on all parties to the proceeding in the same manner as other pleadings in the proceeding, except as provided in § 14.205(c) for confidential financial information. 


</P>
</DIV8>


<DIV8 N="§ 14.310" NODE="24:1.1.1.1.11.3.25.3" TYPE="SECTION">
<HEAD>§ 14.310   Answer to application.</HEAD>
<P>(a) Within 30 days after service of an application, agency counsel may file an answer to the application. Agency counsel may request an extension of time for filing. If agency counsel fails to answer or otherwise fails to contest or settle the application, the adjudicative officer, upon a satisfactory showing of entitlement by the applicant, may make an award for the applicant's fees and other expenses under the Act. 
</P>
<P>(b) If agency counsel and the applicant believe that the issues in the fee application can be settled, they may jointly file a statement of their intent to negotiate a settlement. The filing of this statement shall extend the time for filing an answer for an additional 30 days, and further extensions may be granted by the adjudicative officer upon request by agency counsel and the applicant.
</P>
<P>(c) The answer shall explain in detail any objections to the award requested and identify the facts relied on in support of agency counsel's position. If the answer is based on any alleged facts not already in the record of the proceeding, agency counsel shall include with the answer either supporting affidavits or a request for further proceedings under § 14.325.


</P>
</DIV8>


<DIV8 N="§ 14.315" NODE="24:1.1.1.1.11.3.25.4" TYPE="SECTION">
<HEAD>§ 14.315   Comments by other parties.</HEAD>
<P>Any party to a proceeding other than the applicant and agency counsel may file comments on an application within 30 days after it is served, or on an answer within 15 days after it is served. A commenting party may not participate further in proceedings on the application unless the adjudicative officer determines that the public interest requires such participation in order to permit full exploration of matters raised in the comments.


</P>
</DIV8>


<DIV8 N="§ 14.320" NODE="24:1.1.1.1.11.3.25.5" TYPE="SECTION">
<HEAD>§ 14.320   Settlement.</HEAD>
<P>The applicant and agency counsel may agree on a proposed settlement of the award before final action on the application, either in connection with a settlement of the underlying proceeding, or after the underlying proceeding has been concluded, in accordance with the settlement procedure applicable to the underlying proceeding. If a prevailing party and agency counsel agree on a proposed settlement of an award before an application has been filed, the application shall be filed with the proposed settlement.


</P>
</DIV8>


<DIV8 N="§ 14.325" NODE="24:1.1.1.1.11.3.25.6" TYPE="SECTION">
<HEAD>§ 14.325   Extensions of time and further proceedings.</HEAD>
<P>(a) The adjudicative officer on motion and for good cause shown may grant extensions of time other than for filing an application for fees and expenses after final disposition in the adversary adjudication. 
</P>
<P>(b) Ordinarily, the determination of an award will be made on the basis of the written record. However, on request of either the applicant or agency counsel, or on his or her own initiative, the adjudicative officer may order further proceedings, such as an informal conference, oral argument, additional written submissions, or as to issues other than substantial justification (such as the applicant's eligibility or substantiation of fees and expenses), pertinent discovery or an evidentiary hearing. Such further proceedings shall be held only when necessary for full and fair resolution of the issues arising from the application, and shall be conducted as promptly as possible. Whether or not the position of the agency was substantially justified shall be determined on the basis of the administrative record, as a whole, which is made in the adversary adjudication for which fees and other expenses are sought.
</P>
<P>(c) A request that the adjudicative officer order further proceedings under this section shall specifically identify the information sought or the disputed issues and shall explain why the additional proceedings are necessary to resolve the issues.


</P>
</DIV8>


<DIV8 N="§ 14.330" NODE="24:1.1.1.1.11.3.25.7" TYPE="SECTION">
<HEAD>§ 14.330   Decision.</HEAD>
<P>The adjudicative officer shall issue an initial decision on the application within 30 days after completion of proceedings on the application. The decision shall include written findings and conclusions on such of the following as are relevant to the decision:
</P>
<P>(a) The applicant's status as a prevailing party;
</P>
<P>(b) The applicant's qualification as a <I>party</I> under 5 U.S.C. 504(b)(1)(B);
</P>
<P>(c) Whether the agency's position was substantially justified;
</P>
<P>(d) Whether special circumstances make an award unjust;
</P>
<P>(e) Whether the applicant during the course of the proceedings engaged in conduct that unduly and unreasonably protracted the final resolution of the matter in controversy; and
</P>
<P>(f) The amounts, if any, awarded for fees and other expenses, with reasons for any difference between the amount requested and the amount awarded.
</P>
<FP>If the applicant has sought an award against more than one agency, the decision shall allocate responsibility for payment of any award made among the agencies, and shall explain the reasons for the allocation made. 


</FP>
</DIV8>


<DIV8 N="§ 14.335" NODE="24:1.1.1.1.11.3.25.8" TYPE="SECTION">
<HEAD>§ 14.335   Departmental review.</HEAD>
<P>(a) Either the applicant or agency counsel may seek review of the initial decision on the fee application, or the Secretary (or his or her delegate, if any) may decide to review the decision on his or her own initiative, in accordance with the Department's review or appeals procedures applicable to the underlying proceeding. If neither the applicant nor agency counsel seeks review and the Secretary (or his or her delegate, if any) does not take review on his or her own initiative, the initial decision on the application shall become a final decision of the Department in the same manner as a decision in the underlying proceeding becomes final. Whether to review a decision is a matter within the discretion of the Secretary (or his or her delegate, if any). If review is taken, the Department will issue a final decision on the application or remand the application to the adjudicative officer for further proceedings. 
</P>
<P>(b) Either party may seek reconsideration of the decision on the fee application in accordance with Rule 29, 24 CFR 20.10. 


</P>
</DIV8>


<DIV8 N="§ 14.340" NODE="24:1.1.1.1.11.3.25.9" TYPE="SECTION">
<HEAD>§ 14.340   Judicial review.</HEAD>
<P>Judicial review of final departmental decisions on awards may be sought as provided in 5 U.S.C. 504(c)(2). 


</P>
</DIV8>


<DIV8 N="§ 14.345" NODE="24:1.1.1.1.11.3.25.10" TYPE="SECTION">
<HEAD>§ 14.345   Payment of award.</HEAD>
<P>An applicant seeking payment of an award shall submit a copy of the final decision granting the award to: Director, Office of Finance and Accounting, Room 2202, Department of Housing and Urban Development, Washington, DC 20410, with a copy to: Associate General Counsel for Equal Opportunity and Administrative Law, Room 10244, Department of Housing and Urban Development, Washington, DC 20410. A statement that review of the underlying decision is not being sought in the United States courts, or that the process for seeking review of the award, if initiated, has been completed, must also be included. The agency will pay the amount awarded to the applicant within 60 days, unless judicial review of the award or of the underlying decision of the adversary adjudication has been sought by the applicant or any other party to the proceeding. 


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="15" NODE="24:1.1.1.1.12" TYPE="PART">
<HEAD>PART 15—PUBLIC ACCESS TO HUD RECORDS UNDER THE FREEDOM OF INFORMATION ACT AND TESTIMONY AND PRODUCTION OF INFORMATION BY HUD EMPLOYEES 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d), 5 U.S.C. 552.


</PSPACE></AUTH>

<DIV6 N="A" NODE="24:1.1.1.1.12.1" TYPE="SUBPART">
<HEAD>Subpart A—General Provisions</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>80 FR 49144, Aug. 17, 2015, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 15.1" NODE="24:1.1.1.1.12.1.25.1" TYPE="SECTION">
<HEAD>§ 15.1   General provisions.</HEAD>
<P>(a) <I>Scope.</I> Requests for material from HUD will be processed as set forth in this part. The Federal Housing Administration and the Government National Mortgage Association are components of HUD and are also covered by this part.
</P>
<P>(b) <I>Subpart B.</I> Subpart B of this part contains the rules that HUD follows in processing requests for records under the Freedom of Information Act (FOIA) (5 U.S.C. 552). These rules should be read together with the FOIA, which provides additional information about access to records maintained by HUD. Information routinely provided to the public as part of a regular Department activity may be provided to the public without following this subpart.
</P>
<P>(c) <I>Subpart C.</I> Subpart C of this part describes the procedures to be followed and standards to be applied in processing demands for the production of material or provision of testimony in legal proceedings among private litigants.
</P>
<P>(d) <I>Subpart D.</I> Subpart D of this part describes the procedures to be followed and standards to be applied in processing demands for the production of material or provision of testimony in legal proceedings in which the United States is a party.
</P>
<P>(e) <I>Inspector General.</I> Subparts B and C of this part do not apply to the Office of Inspector General. The procedures that apply to the Office of Inspector General are described in parts 2002 and 2004 of this title.


</P>
</DIV8>


<DIV8 N="§ 15.2" NODE="24:1.1.1.1.12.1.25.2" TYPE="SECTION">
<HEAD>§ 15.2   Definitions.</HEAD>
<P>(a) The following definitions apply to this part.
</P>
<P><I>Agency record</I> means any documentary material that is either created or obtained by an agency in the transaction of agency business and is under agency control. “Agency record” does not include records that are not already in existence and which would have to be created specifically to meet a request.
</P>
<P><I>Business information</I> means commercial or financial information provided to HUD by a submitter that arguably is protected from disclosure under Exemption 4 (42 U.S.C. 552(b)(4)) of the FOIA.
</P>
<P><I>FOIA</I> means the Freedom of Information Act (5 U.S.C. 552).
</P>
<P><I>HUD</I> means the Department of Housing and Urban Development.
</P>
<P><I>Review</I> means the examination of a record located in response to a request in order to determine whether any portion of it is exempt from disclosure. Review time includes processing any record for disclosure (for example, doing all that is necessary to redact it and prepare it for disclosure). Review costs are recoverable even if a record ultimately is not disclosed. Review time includes time spent considering any formal objection to disclosure, made by a business submitter under § 15.108, but does not include time spent resolving general legal or policy issues regarding the application of exemptions.
</P>
<P><I>Search</I> means the process of looking for and retrieving records or information responsive to a request. It includes page-by-page or line-by-line identification of information within records and also includes reasonable efforts to locate and retrieve information from records maintained in electronic form or format.
</P>
<P><I>Secretary</I> means the Secretary of Housing and Urban Development.
</P>
<P><I>Submitter</I> means any person or entity that provides business information, directly or indirectly, to HUD. The term includes, but is not limited to, corporations, State governments, and foreign governments.
</P>
<P>(b) The following definitions apply to subparts C and D of this part.
</P>
<P><I>Appropriate Associate General Counsel</I> means the Associate General Counsel for Litigation or the Associate General Counsel for HUD Headquarters employees in those programs for which the Associate General Counsel provides legal advice.
</P>
<P><I>Appropriate Regional Counsel</I> means the Regional Counsel for the regional office having delegated authority over the project or activity with respect to which the information is sought. For assistance in identifying the Appropriate Regional Counsel, see appendix A to this part.
</P>
<P><I>Authorized Approving Official</I> means the Secretary, General Counsel, Appropriate Associate General Counsel, or Appropriate Regional Counsel.
</P>
<P><I>Demand</I> means a subpoena, order, or other demand of a court or other authority that is issued in a legal proceeding and any accompanying submissions.
</P>
<P><I>Employee of the Department</I> means a current or former officer or employee of the United States appointed by or subject to the supervision of the Secretary, but does not include an officer or employee covered by part 2004 of this title.
</P>
<P><I>Good cause</I> means necessary to prevent a miscarriage of justice or to promote a significant interest of the Department.
</P>
<P><I>Legal proceeding</I> includes any proceeding before a court of law or other authority; <I>e.g.,</I> an administrative board or commission, a hearing officer, an arbitrator, or other body conducting a quasi-judicial or legislative proceeding.
</P>
<P><I>Legal proceeding among private litigants</I> means any legal proceeding in which the United States is not a party.
</P>
<P><I>Legal proceeding in which the United States is a party</I> means any legal proceeding including as a named party the United States, the Department of Housing and Urban Development, any other Federal executive or administrative agency or department, or any official thereof in his official capacity.
</P>
<P><I>Material</I> means either documents or information contained in, or relating to contents of, the files of the Department, or documents or information acquired by any person, while such person was an employee of the Department, as a part of the performance of his or her official duties or because of his or her official status.
</P>
<P><I>Production</I> means to produce material by any means other than through the provision of oral testimony.
</P>
<P><I>Testimony</I> means any oral or written statements made in litigation under oath or penalty of perjury.
</P>
<P><I>United States</I> means the Federal Government of the United States (including the Department), the Secretary, and any employees of the Department in their official capacities.


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.1.1.1.12.2" TYPE="SUBPART">
<HEAD>Subpart B—Procedures for Disclosure of Records Under the FOIA</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>80 FR 49145, Aug. 17, 2015, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 15.101" NODE="24:1.1.1.1.12.2.25.1" TYPE="SECTION">
<HEAD>§ 15.101   Proactive disclosures of department records.</HEAD>
<P>(a) <I>In General.</I> Records that are required to be made available for public inspection in an electronic format are accessible on the Department's Web site at <I>http://www.hud.gov/FOIA.</I> Published agency records, whether or not they are available for purchase, are made available for examination. Each HUD office (headquarters and field) has a FOIA Public Liaison that can assist individuals in locating records. A list of the Department's FOIA Public Liaisons is available at <I>http://www.hud.gov/FOIA.</I>
</P>
<P>(b) <I>Electronic FOIA reading room.</I> As required by 5 U.S.C. 552(a)(2), HUD makes records created on or after November 1, 1996, available through its electronic FOIA Reading Room, located on HUD's FOIA Web site at <I>http://www.hud.gov/FOIA.</I> These records include:
</P>
<P>(1) Final opinions and orders.
</P>
<P>(2) Public access to high-value, machine readable datasets via <I>http://www.data.gov.</I>
</P>
<P>(3) Statements of policy and interpretation, including:
</P>
<P>(i) HUD's Client and Information Policy Systems (HUDCLIPS);
</P>
<P>(ii) Housing policy;
</P>
<P>(iii) Public and Indian Housing policy and regulations;
</P>
<P>(iv) Public and Indian Housing policy and guidance (PHA Plans); and
</P>
<P>(v) Community Planning and Development policy and guidance.
</P>
<P>(4) Administrative staff manuals.
</P>
<P>(5) HUD's online library.
</P>
<P>(6) Fair housing information.
</P>
<P>(7) Copies of all records, regardless of form or format that have been released to any person under § 15.105; and
</P>
<P>(i) Because of the nature of their subject matter, the agency determines that the records have become or are likely to become the subject of subsequent requests for substantially the same records; or
</P>
<P>(ii) Have been requested three or more times.
</P>
<P>(8) Report for the preceding fiscal year submitted to the U.S. Attorney General and the Director of the Office of Government Information Services (OGIS) as required by 5 U.S.C. 552(e) and the raw statistical data used in each report. This report will be made available:
</P>
<P>(i) Without charge, license, or registration requirement;
</P>
<P>(ii) In an aggregated, searchable format; and
</P>
<P>(iii) In a format that may be downloaded in bulk.
</P>
<P>(c) <I>Frequently requested materials.</I> HUD also makes frequently requested materials available on its FOIA Web site at <I>http://www.hud.gov/FOIA.</I> These frequently requested materials include information related to:
</P>
<P>(1) Highest-scoring funding grant applications.
</P>
<P>(2) Purchase charge cardholders.
</P>
<P>(3) FHA refunds.
</P>
<P>(4) FHA-approved lenders.
</P>
<P>(5) Homes for sale.
</P>
<P>(6) How to buy a HUD home.
</P>
<P>(7) How to apply for public housing and Section 8 housing.
</P>
<P>(8) Housing for the elderly.
</P>
<P>(9) Housing for individuals with disabilities.
</P>
<P>(10) HUD contracting home page.
</P>
<P>(11) FHA mortgage insurance programs.
</P>
<P>(12) HUD handbooks.
</P>
<P>(13) HUD programs.
</P>
<P>(14) HUD telephone directory.
</P>
<P>(15) HUD homes listing.
</P>
<P>(16) HUD's organization.
</P>
<P>(17) Multifamily housing data.
</P>
<P>(18) Public housing authority contact information.
</P>
<P>(19) Weekly listing of multifamily properties for sale.
</P>
<P>(20) Catalog of Federal Domestic Assistance (CFDA) materials.
</P>
<P>(21) Grants.
</P>
<P>(22) FOIA request logs.
</P>
<CITA TYPE="N">[80 FR 49145, Aug. 17, 2015, as amended at 82 FR 3622, Jan. 12, 2017; 82 FR 21694, May 10, 2017]


</CITA>
</DIV8>


<DIV8 N="§ 15.102" NODE="24:1.1.1.1.12.2.25.2" TYPE="SECTION">
<HEAD>§ 15.102   Requirements for making requests for records.</HEAD>
<P>(a) <I>In general.</I> Any request for HUD records must be made in writing and submitted to the FOIA Public Liaison in the HUD field office where the records are located or to the Office of the Executive Secretariat in HUD Headquarters if the request is for records located in HUD Headquarters.
</P>
<P>(b) <I>HUD field office records.</I> Requests for records located in a HUD field office may be submitted by mail (including courier or delivery service), email, or facsimile to the FOIA Public Liaison at the field office.
</P>
<P>(c) <I>HUD headquarters records.</I> Requests for records located in HUD Headquarters may be submitted via an electronic request form on HUD's FOIA Web site at <I>http://www.hud.gov/FOIA.</I> Requests can also be submitted in person or by mail (including courier or delivery service), email, or facsimile to the Office of the Executive Secretariat in HUD Headquarters.
</P>
<P>(d) <I>Form of requests.</I> FOIA requests should:
</P>
<P>(1) Be in writing and clearly identifiable as a FOIA request. To facilitate identification, the requester should place the phrase “FOIA Request” on the front of the envelope or on the cover sheet or other transmittal document used when submitting the request in person or by mail, email, facsimile, or electronic request form;
</P>
<P>(2) Include, whenever possible, detailed and specific information about each record sought, such as the date, title or name, author, recipient, and subject matter of the record. The more specific the FOIA request for records, the more likely HUD officials will be able to locate the records requested. Requests for categories of information should be for specific and well-defined categories. Insufficient descriptions may lead HUD officials to contact the requester to seek additional information for their record search;
</P>
<P>(3) Indicate the form or format in which the requester would like the record made available, if the requester has a preference;
</P>
<P>(4) Specify the fee amount the requester is willing to pay. In general, HUD provides records at no cost up to $25. Requesters are required to agree to pay for any costs that exceed $25. Requesters may also request a dollar amount above which HUD should consult with them before they agree to pay the fee. If a requester seeks a fee waiver or reduction, the requester should include this request with the FOIA disclosure request and should describe, consistent with § 15.106(k), how the disclosure of the requested information is likely to contribute significantly to public understanding of the operations or activities of the government and is not primarily in the commercial interest of the requester;
</P>
<P>(5) Indicate the fee category that the requester believes applies to each of his or her requests (fee categories are defined in § 15.106(b));
</P>
<P>(6) Include verification information of the requester's identity, if the requester requests agency records pertaining to the requester, a minor, or an individual who is legally incompetent. Information about what constitutes acceptable verification information can be found in HUD's Privacy Act regulations in 24 CFR part 16;
</P>
<P>(7) Contain signed authorization from the other person, if the requester makes a request on another person's behalf for information about that person. If necessary, HUD will inform the requester of the authorization needed from the other person and give the requester an opportunity to provide such authorization. Requests for information about another person should be accompanied by either written, notarized authorization or proof that the individual is deceased (for example, a copy of a death certificate or an obituary), or the request will be deemed insufficient; and
</P>
<P>(8) Contain a detailed explanation of the basis for the request, if the requester makes a request for expedited processing as provided by § 15.104(c). The requester should also include a statement certifying the truth of the circumstances alleged or other evidence, acceptable to HUD, of the requester's compelling need.


</P>
</DIV8>


<DIV8 N="§ 15.103" NODE="24:1.1.1.1.12.2.25.3" TYPE="SECTION">
<HEAD>§ 15.103   Timing of responses to requests.</HEAD>
<P>(a) <I>In general.</I> HUD will generally make a determination whether to comply with a FOIA request within 20 working days, depending on the size of the request. The 20-day period will begin on the day the request is received by the appropriate component of HUD, but in any event not later than 10 working days after the request is received by any component of HUD designated to receive FOIA requests.
</P>
<P>(b) <I>Tolling the 20-day time period.</I> Under the OPEN Government Act of 2007, HUD may toll the 20-day period:
</P>
<P>(1) One time to make a reasonable request for additional information from the requester; or
</P>
<P>(2) As many times as necessary to clarify issues regarding fee assessment with the requester. The agency's receipt of the requester's response to the agency's request for information or resolution of all fee assessment issues ends the tolling period.
</P>
<P>(c) <I>Extension of time periods for processing a request.</I> In unusual circumstances, as defined in this paragraph, HUD may extend the time period for processing a FOIA request. In such circumstances, HUD will provide the requester with written notice setting forth the unusual circumstances for the extension and the date on which a determination is expected to be dispatched. If processing a request would require more than 10 working days beyond the general time limit established in paragraph (a) of this section, HUD will offer the requester an opportunity to limit the scope of the request so that HUD may process it within the extra 10-day working period or arrange an alternative time period within which the FOIA request will be processed. To aid the requester, HUD shall make available its FOIA Public Liaison, who shall assist in the resolution of any disputes between the requester and HUD, and notify the requester of the right of the requester to seek dispute resolution services from the Office of Government Information Services. For purposes of this section, unusual circumstances include:
</P>
<P>(1) The need to search for and collect records not located in the office processing the request;
</P>
<P>(2) The need to search for, collect, and appropriately examine a voluminous amount of separate and distinct records; or
</P>
<P>(3) The need to consult with another agency or two or more HUD components having a substantial interest in the determination of the FOIA request.
</P>
<P>(d) <I>Aggregating multiple requests.</I> (1) HUD may aggregate multiple requests in cases where unusual circumstances exist and HUD determines that:
</P>
<P>(i) Certain requests from the same requester or from a group of requesters acting in concert actually constitute a single request; and
</P>
<P>(ii) The requests involve clearly related matters.
</P>
<P>(2) Aggregation of requests for this purpose will be conducted independent of aggregation of requests for fee purposes under § 15.106(h).
</P>
<CITA TYPE="N">[80 FR 49145, Aug. 17, 2015, as amended at 82 FR 3622, Jan. 12, 2017]


</CITA>
</DIV8>


<DIV8 N="§ 15.104" NODE="24:1.1.1.1.12.2.25.4" TYPE="SECTION">
<HEAD>§ 15.104   Procedures for processing FOIA requests.</HEAD>
<P>(a) <I>In general.</I> HUD will ordinarily respond to FOIA requests according to their order of receipt.
</P>
<P>(b) <I>Tracking number.</I> FOIA requests will be logged in the order that they are received and be assigned a tracking number. A requester should use the tracking number to identify his or her request when contacting the FOIA office for any reason.
</P>
<P>(c) <I>Expedited processing.</I> (1) Requests and appeals will be taken out of order and given expedited treatment whenever it is determined that they involve:
</P>
<P>(i) Circumstances in which the lack of expedited treatment could reasonably be expected to pose an imminent threat to the life or physical safety of an individual;
</P>
<P>(ii) An urgency to inform the public about an actual or alleged Federal Government activity, if made by a person primarily engaged in disseminating information; or
</P>
<P>(iii) The loss of substantial due process rights.
</P>
<P>(2) A request for expedited processing may be made at the time of the initial request for records or at any later time. For a prompt determination, a request for expedited processing should be received by the proper office designated to receive FOIA requests as provided in § 15.102.
</P>
<P>(3) A requester who seeks expedited processing should submit a statement, certified to be true and correct to the best of that person's knowledge and belief, explaining in detail the basis for requesting expedited processing. For example, a requester who makes a request under paragraph (c)(1)(ii) of this section, if not a full-time member of the news media, should establish that he or she is a person primarily engaged in disseminating information, though it need not be his or her sole occupation. A requester making a request under paragraph (c)(1)(ii) of this section also should establish a particular urgency to inform the public about the government activity involved in the request, beyond the public's right to know about government activity generally. The formality of certification may be waived as a matter of administrative discretion.
</P>
<P>(4) HUD will make a determination within 10 calendar days of receipt by the appropriate component of HUD, as provided in § 15.103, whether to grant or deny a request for expedited processing and notify the requester of HUD's determination. FOIA requests accepted for expedited processing will be processed as soon as practicable and on a priority basis.
</P>
<P>(d) <I>Multitrack processing.</I> (1) For requests that do not qualify for expedited processing, HUD may use two or more processing tracks by distinguishing between simple and complex FOIA requests based on the following: The time and work necessary to process the FOIA request and the volume of agency records responsive to the FOIA request.
</P>
<P>(2) When HUD uses multitrack processing, it may provide requesters in its slower track an opportunity to limit the scope of their requests in order to qualify for faster processing within the specified limits of HUD's faster track. When HUD chooses to provide this option, HUD will contact the requester by telephone, letter, or email, whichever is more efficient in each case.
</P>
<CITA TYPE="N">[80 FR 49145, Aug. 17, 2015, as amended at 82 FR 3622, Jan. 12, 2017]


</CITA>
</DIV8>


<DIV8 N="§ 15.105" NODE="24:1.1.1.1.12.2.25.5" TYPE="SECTION">
<HEAD>§ 15.105   Responses to requests.</HEAD>
<P>(a) <I>Acknowledgements of requests.</I> The FOIA office in the Office of the Executive Secretariat in HUD Headquarters and FOIA Public Liaison in each HUD field office will ordinarily send an acknowledgement letter to the requester that will confirm receipt of the request by the appropriate HUD office and provide an assigned tracking number, as provided by § 15.104(b), for further reference.
</P>
<P>(b) <I>Consultations, coordination, and referrals.</I> When HUD receives a request for a record in its possession, it shall determine whether another agency of the Federal Government is better able to determine whether the record is exempt from disclosure under the FOIA or whether it should be disclosed as a matter of administrative discretion. If HUD determines that it is best able to determine whether the record is exempt from disclosure, then it shall do so. If HUD determines that it is not best able to make that determination, then it shall either:
</P>
<P>(1) Respond to the request regarding that record, after consulting with the agency best able to determine whether to disclose it and with any other agency that has a substantial interest in it; or
</P>
<P>(2) Refer the responsibility for responding to the request regarding that record to the agency that originated the record, but only if that agency is subject to the FOIA. Ordinarily, the agency with which the record originated will be presumed to be best able to determine whether to disclose it.
</P>
<P>(c) <I>Fee estimates.</I> HUD will notify the requester if HUD's estimate of the fee is more than the requester has agreed to pay. Consistent with § 15.106(e), the requester shall have 15 working days to agree to pay the higher fee.
</P>
<P>(d) <I>Forms of response.</I> Once HUD makes a determination regarding whether to comply with a request pursuant to time limits established in § 15.103(a), HUD shall immediately notify the requester of such determination and the reasons therefor, and the requester's right to seek assistance from the FOIA Public Liaison.
</P>
<P>(1) <I>Granting requests in whole or in part.</I> If HUD makes a determination to grant a request in whole or in part, it will notify the requester in writing. HUD will make a record available in the form or format requested, if the record is readily reproducible in that format. HUD will inform the requester in the notice of any fee charged under § 15.106 and disclose records to the requester promptly upon payment of any applicable fee. Records disclosed in part will be marked or annotated to show the amount of information deleted and the exemption(s) under which each deletion is made, unless doing so would harm an interest protected by an applicable FOIA exemption. The location of the information deleted and the exemption(s) under which the deletion is made will be indicated directly on the record itself, if technically feasible.
</P>
<P>(2) <I>Adverse determination of requests.</I> If a determination is made to deny a request in any respect, HUD shall notify the requester of that determination in writing. Adverse determinations, or denials of requests, include: A determination to withhold any requested record, in whole or in part; a determination that a requested record does not exist, cannot be located, or has not been retained; a determination that a record is not readily reproducible in the form or format sought by the requester; a determination that what has been requested is not a record subject to the FOIA; a determination on any disputed fee matter, including a denial of a request for a fee waiver or reduction; and a denial of a request for expedited treatment. The denial letter shall be signed by the Director of the Office of the Executive Secretariat, or a designee of the Director, in HUD Headquarters or the FOIA Public Liaison for the HUD field office where the adverse determination was made, and shall include:
</P>
<P>(i) The name and title or position of the person responsible for the denial;
</P>
<P>(ii) A brief statement of the reason(s) for the denial, including any FOIA exemption applied by HUD in denying the request;
</P>
<P>(iii) An estimate of the volume of records or information withheld, when appropriate, in number of pages or in some other reasonable form of estimation. This estimate does not need to be provided if the volume is otherwise indicated through deletions on records disclosed in part, or if providing an estimate would harm an interest protected by an applicable exemption; and
</P>
<P>(iv) Notice of the right of the requester to appeal to the head of the agency, within a period determined by the head of the agency that is not less than 90 days after the date of such adverse determination;
</P>
<P>(v) Notice of the right of the requester to seek dispute resolution services from the FOIA Public Liaison of the agency or the Office of Government Information Services;
</P>
<P>(vi) A statement that the denial may be appealed as provided by § 15.109 and a description of the requirements for appeal.
</P>
<CITA TYPE="N">[80 FR 49145, Aug. 17, 2015, as amended at 82 FR 3622, Jan. 12, 2017; 82 FR 21694, May 10, 2017]


</CITA>
</DIV8>


<DIV8 N="§ 15.106" NODE="24:1.1.1.1.12.2.25.6" TYPE="SECTION">
<HEAD>§ 15.106   Fees.</HEAD>
<P>(a) <I>In general.</I> HUD will charge for processing requests under the FOIA in accordance with paragraph (c) of this section, except where fees are limited under paragraph (d) of this section or where a waiver or reduction of fees is granted under paragraph (k) of this section. HUD shall collect all applicable fees before sending copies of requested records to a requester. In order to resolve any fee issues that arise under this section, HUD may contact a requester for additional information. Requesters shall pay fees by check or money order made payable to the United States Treasury.
</P>
<P>(b) <I>Definitions.</I> For purposes of this section:
</P>
<P><I>Commercial use</I> means a request from or on behalf of a person who seeks information for a use or purpose that furthers his or her commercial, trade, or profit interests, which can include furthering those interests through litigation. HUD shall determine, whenever reasonably possible, the use to which a requester will put the requested records. When it appears that the requester will put the records to a commercial use, either because of the nature of the request itself or because HUD has reasonable cause to doubt a requester's stated use, HUD shall provide the requester a reasonable opportunity to submit further clarification.
</P>
<P><I>Direct costs</I> means those expenses that HUD actually incurs in searching for and duplicating and, in the case of commercial use requests, reviewing records to respond to a FOIA request. Direct costs include, for example, the salary of the employee performing the work and the cost of operating computers and other electronic equipment, such as for mainframe computer run time. Not included in direct costs are overhead expenses such as the costs of space and heating or lighting a facility.
</P>
<P><I>Duplication</I> means the process of making a copy of a document necessary to respond to a FOIA request. Such copies can take the form of paper copy, audiovisual materials, or machine readable documentation (<I>e.g.,</I> diskette), among others. HUD shall honor a requester's specified preference of form or format of disclosure if the record is readily reproducible with reasonable efforts in the requested form or format by the office responding to the request.
</P>
<P><I>Educational institution</I> means:
</P>
<P>(i)(A) A preschool;
</P>
<P>(B) A public or private elementary or secondary school;
</P>
<P>(C) An institution of graduate higher education;
</P>
<P>(D) An institution of undergraduate higher education;
</P>
<P>(E) An institution of professional education; or
</P>
<P>(F) An institution of vocational education, that primarily (or solely) operates a program or programs of scholarly research.
</P>
<P>(ii) To be in this category, a requester should show that the request is authorized by, and is made under the auspices of, a qualifying institution and that the records are not sought for a commercial use but are sought to further scholarly research. Records requested for the intention of fulfilling credit requirements are not considered to be sought for a scholarly purpose.
</P>
<P><I>Other requester</I> means any requester that does not fall within the categories of requesters described in this section.
</P>
<P><I>Noncommercial scientific institution</I> means an institution that is not operated on a “commercial” basis, as defined in this section, and that is operated solely for the purpose of conducting scientific research the results of which are not intended to promote any particular product or industry. To be in this category, a requester should show that the request is authorized by, and is made under the auspices of, a qualifying institution and that the records are not sought for a commercial use but are sought to further scientific research.
</P>
<P><I>Representative of the news media,</I> or <I>news media requester,</I> means any person actively gathering news for an entity that is organized and operated to publish or broadcast news to the public, uses its editorial skills to turn the raw materials into a distinct work, and distributes that work to an audience. The term <I>news</I> means information that is about current events or that would be of current interest to the public. Examples of news media entities include television or radio stations broadcasting to the public at large and publishers of periodicals that disseminate news and make their products available to the general public through a variety of means. For freelance journalists to be regarded as working for a news media entity, they should demonstrate a solid basis for expecting publication through a news media entity. A publication contract would be the clearest proof, but HUD will also look to the past publication record of a requester in making this determination. To be in this category a requester should not be seeking the requested records for a commercial use. However, a request for records supporting the news dissemination function of the requester shall not be considered to be for a commercial use.
</P>
<P>(c) <I>Fees</I>—(1) <I>Schedule.</I> In responding to FOIA requests, HUD will use the fee schedule set out in the following table, unless a waiver or reduction of fees has been granted under paragraph (k) of this section.
</P>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">FOIA Fee Schedule
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Activity
</TH><TH class="gpotbl_colhed" scope="col">Rate
</TH><TH class="gpotbl_colhed" scope="col">Commercial use requester
</TH><TH class="gpotbl_colhed" scope="col">News media, educational institution, or
<br/>noncommercial scientific
<br/>institution requester
</TH><TH class="gpotbl_colhed" scope="col">Other requester
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">(i) Professional search</TD><TD align="left" class="gpotbl_cell">$13 per quarter hour</TD><TD align="left" class="gpotbl_cell">Applies</TD><TD align="left" class="gpotbl_cell">Does not apply</TD><TD align="left" class="gpotbl_cell">Applies. No charge for first 2 hours of cumulative search time.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">(ii) Professional review</TD><TD align="left" class="gpotbl_cell">$13 per quarter hour</TD><TD align="left" class="gpotbl_cell">Applies</TD><TD align="left" class="gpotbl_cell">Does not apply</TD><TD align="left" class="gpotbl_cell">Does not apply.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">(iii) Clerical search</TD><TD align="left" class="gpotbl_cell">$6 per quarter hour</TD><TD align="left" class="gpotbl_cell">Applies</TD><TD align="left" class="gpotbl_cell">Does not apply</TD><TD align="left" class="gpotbl_cell">Applies. No charge for first 2 hours of cumulative search time.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">(iv) Clerical review</TD><TD align="left" class="gpotbl_cell">$6 per quarter hour</TD><TD align="left" class="gpotbl_cell">Applies</TD><TD align="left" class="gpotbl_cell">Does not apply</TD><TD align="left" class="gpotbl_cell">Does not apply.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">(v) Programming services required</TD><TD align="left" class="gpotbl_cell">Direct costs associated with search</TD><TD align="left" class="gpotbl_cell">Applies</TD><TD align="left" class="gpotbl_cell">Does not apply</TD><TD align="left" class="gpotbl_cell">Applies.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">(vi) Duplication costs</TD><TD align="left" class="gpotbl_cell">$0.10 per page</TD><TD align="left" class="gpotbl_cell">Applies</TD><TD align="left" class="gpotbl_cell">Applies. No charge for first 100 pages</TD><TD align="left" class="gpotbl_cell">Applies. No charge for first 100 pages.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">(vii) Duplication costs—tape, CD ROM or diskette</TD><TD align="left" class="gpotbl_cell">Actual cost</TD><TD align="left" class="gpotbl_cell">Applies</TD><TD align="left" class="gpotbl_cell">Applies</TD><TD align="left" class="gpotbl_cell">Applies.</TD></TR></TABLE></DIV></DIV>
<P>(2) <I>Search.</I> (i) Search fees will be charged for all requests other than requests made by educational institutions, noncommercial scientific institutions, or representatives of the news media, subject to the limitations of paragraph (d) of this section. HUD may charge for time spent searching even if HUD does not locate any responsive record or if HUD withholds the record(s) located as entirely exempt from disclosure.
</P>
<P>(ii) For each hour spent by personnel searching for requested records, including electronic searches that do not require new programming, the fees will be $13 per quarter hour for professional personnel and $6 per quarter hour for clerical personnel.
</P>
<P>(iii) Requesters will be charged the direct costs associated with conducting any search that requires the creation of a new program to locate the requested records.
</P>
<P>(iv) For requests requiring the retrieval of records from any Federal records center, certain additional costs may be incurred in accordance with the Transactional Billing Rate Schedule established by the National Archives and Records Administration.
</P>
<P>(3) <I>Duplication.</I> Duplication fees will be charged to all requesters, subject to the limitations of paragraph (d) of this section. For a paper photocopy of a record (no more than one copy of which need be supplied), the fee will be $0.10 per page. For copies in digital format, HUD will charge the direct costs, including operator time, of producing the copy. Where paper documents must be scanned in order to comply with a requester's preference to receive the records in an electronic format, the requester shall pay the direct costs associated with scanning those materials. For other forms of duplication, HUD will charge the direct costs.
</P>
<P>(4) <I>Review.</I> Review fees will be charged to requesters who make a commercial use request. Review fees will be charged only for the initial record review (the review done where HUD determines whether an exemption applies to a particular record or record portion, at the initial request level). No charge will be made for review at the administrative appeal level for an exemption already applied. However, records or portions of records withheld under an exemption that is subsequently determined not to apply may be reviewed again to determine whether any other exemption not previously considered applies. The cost of that review is chargeable where it is made necessary by such a change of circumstances. Fees for the review time will be $13 per quarter hour for professional personnel and $6 per quarter hour for clerical personnel.
</P>
<P>(d) <I>Restrictions on charging fees.</I> (1) No search fee will be charged for requests by educational institutions, noncommercial scientific institutions, or representatives of the news media. In addition, except as provided in paragraphs (d)(5), (d)(6), and (d)(7) of this section, HUD shall not assess any search fees (or, for requesters that are educational institutions, noncommercial scientific institutions or representatives of the news media requesting records not sought for commercial use, duplication fees) if HUD has failed to comply with any time limit described in § 15.103.
</P>
<P>(2) Search and review fees will be charged in quarter-hour increments. HUD will round up a quarter hour when professional and clerical search and review time exceeds a quarter-hour increment.
</P>
<P>(3) Except for requesters seeking records for a commercial use, HUD will provide without charge:
</P>
<P>(i) The first 100 pages of duplication (or the cost equivalent); and
</P>
<P>(ii) The first 2 hours of search (or the cost equivalent).
</P>
<P>(4) No fee will be charged whenever a total fee calculated under paragraph (c) of this section is less than HUD's cost to process the payment. Currently, whenever a total fee calculated is $25 or less, no fee will be charged.
</P>
<P>(5) If HUD determines that unusual circumstances apply and HUD provides timely written notice to the requester pursuant to requirements provided in § 15.103(c), a failure to comply with any time limit as described in § 15.103 is excused for an additional 10 days. If HUD fails to comply with the extended time limit, HUD may not assess any search fees (or for requesters that are educational or noncommercial scientific institutions or representatives of the news media requesting records not sought for commercial use, duplication fees).
</P>
<P>(6) If unusual circumstances apply and more than 5000 pages are necessary to respond to the request, HUD may charge search fees or, for requesters that are educational or noncommercial scientific institutions or representatives of the news media requesting records not sought for commercial use, duplication fees, if timely written notice has been made to the requester pursuant to requirements provided in § 15.103(c) and HUD has discussed with the requester through written mail, electronic mail, or telephone (or made not less than 3 good-faith attempts to do so) how the requester could effectively limit the scope of the request as stipulated in § 15.103(c).
</P>
<P>(7)(i) If a court has determined that exceptional circumstances exist, a failure to comply with any time limit as described in § 15.103 shall be excused for the length of time provided by the court order.
</P>
<P>(ii) For purposes of this section, the term “exceptional circumstances” does not include a delay that results from a predictable workload of requests, unless HUD demonstrates reasonable progress in reducing its backlog of pending requests. However, refusal by the requester to reasonably modify the scope of a request or arrange an alternative time frame for processing a request (or a modified request) after HUD gives them an opportunity to do so shall be considered a factor in determining whether exceptional circumstances exist.
</P>
<P>(e) <I>Notice of anticipated fees in excess of $25.</I> When HUD determines or estimates that the fees to be charged under this section will amount to more than $25, HUD will notify the requester of the actual or estimated amount of the fees, unless the requester has indicated a willingness to pay fees as high as the amount anticipated. If only a portion of the fee can be readily estimated, HUD shall advise the requester that the estimated fee may be only a portion of the total fee. In cases in which a requester has been notified that actual or estimated fees amount to more than $25, the request will be held in abeyance for 15 working days. Further work will not be done on that request until the requester has either made a firm commitment to pay the anticipated total fee, or has made payment in advance if the total fee exceeds $250. Any such agreement should be memorialized by the requester in writing, should indicate a given dollar amount, and should be received by HUD within the time period specified by HUD in its notice to the requester. If the requester does not provide a firm commitment to pay the anticipated fee within the time period specified by HUD, the request will be closed. A notice under this paragraph will offer the requester an opportunity to discuss the matter of fees with HUD personnel in order to reformulate the request to meet the requester's needs at a lower cost. HUD is not required to accept payments in installments.
</P>
<P>(f) <I>Charges for other services.</I> Although not required to provide special services, if HUD chooses to do so as a matter of administrative discretion, HUD will charge the direct costs of providing these services. Examples of such services include certifying that records are true copies, providing multiple copies of the same document, or sending documents by means other than ordinary mail.
</P>
<P>(g) <I>Charging interest.</I> HUD may charge interest on any unpaid bill starting on the 31st day following the date of billing the requester. Interest charges will be assessed at the rate provided in 31 U.S.C. 3717 and will accrue from the date of the billing until payment is received by HUD. HUD will follow the provisions of the Debt Collection Act of 1982 (Pub. L. 97-365, 96 Stat. 1749), as amended, and its administrative procedures, including the use of consumer reporting agencies, collection agencies, and offset.
</P>
<P>(h) <I>Aggregating requests.</I> If HUD reasonably believes that a requester or a group of requesters acting together is attempting to divide a request into a series of requests for the purpose of avoiding fees, HUD may aggregate those requests and charge accordingly. HUD may presume that multiple requests of this type made within a 30-day period have been made in order to avoid fees. Where requests are separated by a longer period, HUD will aggregate them only where there is a reasonable basis for determining that aggregation is warranted under all the circumstances involved. Multiple requests involving unrelated matters will not be aggregated. Aggregation of requests for fee purposes under this paragraph will be conducted independent of aggregation of requests under § 15.103(d).
</P>
<P>(i) <I>Advance payments.</I> (1) For requests other than those described in paragraphs (i)(2) and (3) of this section, HUD will not require the requester to make an advance payment before work is begun or continued on a request. Payment owed for work already completed, such as prepayment before copies are sent to a requester, is not an advance payment.
</P>
<P>(2) If HUD determines or estimates that a total fee to be charged under this section will be more than $250, it may require the requester to make an advance payment of an amount up to the amount of the entire anticipated fee before beginning to process the request, except where it receives a satisfactory assurance of full payment from a requester who has a history of prompt payment.
</P>
<P>(3) If a requester has previously failed to pay a properly charged FOIA fee to HUD within 30 days of the date of billing, before HUD begins to process a new request or continues to process a pending request from that requester, HUD will require the requester to pay the full amount due, plus any applicable interest, and to make an advance payment of the full amount of any anticipated fee. If HUD has a reasonable basis to believe that a requester has misrepresented his or her identity in order to avoid paying outstanding fees, HUD may require that the requester provide proof of identity.
</P>
<P>(4) When HUD requires advance payment, the request will be held in abeyance for 15 working days to allow the requester an opportunity to make payment in advance and/or modify the scope of the request. If the requester does not pay the advance payment or modify the scope of the request within the allotted time frame, the request will be closed.
</P>
<P>(j) <I>Other statutes specifically providing for fees.</I> The fee schedule in this section does not apply to fees charged under any statute that specifically requires an agency to set and collect fees for particular types of records. Where records responsive to requests are maintained for distribution by agencies operating such statutorily based fee schedule programs, HUD will inform requesters of the contact information for that source.
</P>
<P>(k) <I>Requirements for waiver or reduction of fees.</I> (1) Records responsive to a request will be furnished without charge or at a charge reduced below that established under paragraph (c) of this section if HUD determines, based on all available information, that the requester has demonstrated the following:
</P>
<P>(i) Disclosure of the requested information is in the public interest because it is likely to contribute significantly to public understanding of the operations or activities of the government; and
</P>
<P>(ii) Disclosure of the information is not primarily in the commercial interest of the requester.
</P>
<P>(2) To determine whether the first fee waiver requirement is met, HUD will consider the following factors:
</P>
<P>(i) The subject of the requested records should concern identifiable operations or activities of the Federal Government, with a connection that is direct and clear, not remote or attenuated.
</P>
<P>(ii) The disclosable portions of the requested records should be meaningfully informative about government operations or activities and “likely to contribute” to an increased public understanding of those operations or activities. The disclosure of information that already is in the public domain, in either a duplicative or a substantially identical form, would not be as likely to contribute to such increased understanding, where nothing new would be added to the public's understanding.
</P>
<P>(iii) The disclosure should contribute to the understanding of a reasonably broad audience of persons interested in the subject, as opposed to the individual understanding of the requester. A requester's expertise in the subject area and ability and intention to effectively convey information to the public will be considered. It will be presumed that a representative of the news media will satisfy this consideration.
</P>
<P>(iv) The public's understanding of the subject in question, as compared to the level of public understanding existing prior to the disclosure, should be enhanced by the disclosure to a significant extent. However, HUD will not make value judgments about whether information at issue is “important” enough to be made public.
</P>
<P>(3) To determine whether the second fee waiver requirement is met, HUD will consider the following factors:
</P>
<P>(i) HUD will identify any commercial interest of the requester as defined in paragraph (b) of this section, or of any person on whose behalf the requester may be acting, that would be furthered by the requested disclosure. Requesters shall be given an opportunity in the administrative process to provide explanatory information regarding this consideration.
</P>
<P>(ii) A fee waiver or reduction is justified where the public interest standard is satisfied and that public interest is greater than that of any identified commercial interest in disclosure. HUD ordinarily will presume that where a news media requester has satisfied the public interest standard, the public interest will be the interest primarily served by disclosure to that requester. Disclosure to data brokers or others who merely compile and market government information for direct economic return will not be presumed to primarily serve the public interest.
</P>
<P>(4) Where only some of the records to be released satisfy the requirements for a waiver of fees, a waiver will be granted for those records.
</P>
<P>(5) Requests for the waiver or reduction of fees should address the factors listed in paragraphs (k)(2) and (3) of this section, insofar as they apply to each request. In deciding to grant waivers or reductions of fees, HUD will exercise its discretion to consider the cost effectiveness of its investment of administrative resources.
</P>
<CITA TYPE="N">[80 FR 49145, Aug. 17, 2015, as amended at 82 FR 3622, Jan. 12, 2017]


</CITA>
</DIV8>


<DIV8 N="§ 15.107" NODE="24:1.1.1.1.12.2.25.7" TYPE="SECTION">
<HEAD>§ 15.107   Documents generally protected from disclosure.</HEAD>
<P>(a) HUD shall withhold information only if HUD reasonably foresees that disclosure would harm an interest protected by an exemption as provided in paragraph (b) of this section, or disclosure is prohibited by law. HUD will consider whether partial disclosure of information is possible whenever HUD determines that a full disclosure of a requested record is not possible, and will take reasonable steps necessary to segregate and release nonexempt information. Nothing in this section requires disclosure of information that is otherwise prohibited from disclosure by law, or otherwise exempted from disclosure as provided in paragraph (b)(3) of this section.
</P>
<P>(b) The FOIA contains nine exemptions (5 U.S.C. 552(b)) that authorize agencies to withhold various records from disclosure. With regard to certain types of records, HUD generally applies the exemptions as follows:
</P>
<P>(1) <I>Classified documents.</I> Exemption 1 (5 U.S.C. 552(b)(1)) protects classified national defense and foreign relations information. HUD seldom relies on this exception to withhold documents. However, where applicable, HUD will refer a request for records classified under Executive Order 13526 and the pertinent records to the originating agency for processing. HUD may refuse to confirm or deny the existence of the requested information if the originating agency determines that the fact of the existence of the information itself is classified.
</P>
<P>(2) <I>Internal agency rules and practices.</I> Exemption 2 (5 U.S.C. 552(b)(2)) protects records relating to internal personnel rules and practices.
</P>
<P>(3) <I>Information prohibited from disclosure by another statute.</I> Exemption 3 (5 U.S.C. 552(b)(3)) protects information that is prohibited from disclosure by another Federal law. HUD generally will not disclose competitive proposals prior to contract award, competitive proposals that are not set forth or incorporated by reference into the awarded contract (see 41 U.S.C. 4702), or, during the selection process, any covered selection information regarding such selection, either directly or indirectly (see 42 U.S.C. 3537a).
</P>
<P>(4) <I>Commercial or financial information.</I> Exemption 4 (5 U.S.C. 552(b)(4)) protects trade secrets and commercial or financial information obtained from a person and privileged or confidential. HUD will handle this type of information as provided by § 15.108.
</P>
<P>(5) <I>Certain interagency or intra-agency communications.</I> Exemption 5 (5 U.S.C. 552(b)(5)) protects interagency or intra-agency communications that are protected by legal privileges, such as the attorney-client privilege, attorney work-product privilege, or communications reflecting the agency's deliberative process. The deliberative process privilege shall not apply to records created 25 years or more before the date on which the records were requested.
</P>
<P>(6) <I>Personal privacy.</I> Exemption 6 (5 U.S.C. 552(b)(6)) protects information involving matters of personal privacy. This information may include personnel, medical, and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy. Names, addresses, telephone numbers, and email addresses of persons residing in public or assisted housing or of borrowers in FHA-insured single family mortgage transactions generally will not be disclosed.
</P>
<P>(7) <I>Law enforcement records.</I> Exemption 7 (5 U.S.C. 552(b)(7)) protects certain records or information compiled for law enforcement purposes. This exemption protects records where the production could reasonably be expected to interfere with enforcement proceedings; for example, the names of individuals who have filed fair housing complaints. The protection of this exemption also encompasses, but is not limited to, information in law enforcement files that could reasonably be expected to constitute an unwarranted invasion of personal privacy; the names of confidential informants, and techniques and procedures for law enforcement investigations, or guidelines for law enforcement investigations if such disclosure could reasonably be expected to risk circumvention of the law.
</P>
<P>(8) <I>Supervision of financial institutions.</I> Exemption 8 (5 U.S.C. 552(b)(8)) protects information relating to the supervision of financial institutions. For purposes of Exemption 8, HUD is an “agency responsible for the regulation and supervision of financial institutions” for purposes of monitoring fair housing compliance.
</P>
<P>(9) <I>Wells.</I> Exemption 9 (5 U.S.C. 552(b)(9)) protects geological information on wells.
</P>
<CITA TYPE="N">[82 FR 21694, May 10, 2017]


</CITA>
</DIV8>


<DIV8 N="§ 15.108" NODE="24:1.1.1.1.12.2.25.8" TYPE="SECTION">
<HEAD>§ 15.108   Business information.</HEAD>
<P>(a) <I>In general.</I> Business information obtained by HUD from a submitter will be disclosed under the FOIA only under this section. In making final confidentiality determinations under this section, HUD relies to a large extent upon the information furnished by the affected business to substantiate its claim of confidentiality. HUD may be unable to verify the accuracy of much of the information submitted by the affected business. HUD will comply with Executive Order 12600 and follow the procedure in this section by giving notice to the affected business and an opportunity for the business to present evidence of its confidentiality claim. If HUD is sued by a requester under the FOIA for nondisclosure of confidential business information, HUD expects the affected business to cooperate to the fullest extent possible in defending such a decision.
</P>
<P>(b) <I>Designation of business information.</I> A submitter of business information will use good faith efforts to designate, by appropriate markings, either at the time of submission or at a reasonable time thereafter, any portions of its submission that it considers to be protected from disclosure under Exemption 4. These designations will expire 10 years after the date of the submission unless the submitter requests, and provides justification for, a longer designation period.
</P>
<P>(c) <I>Notice to submitters.</I> HUD will provide a submitter with prompt written notice of a FOIA request or administrative appeal that seeks business information, wherever required under paragraph (d) of this section, in order to give the submitter an opportunity to object to disclosure of any specified portion of that information under paragraph (e) of this section. The notice will either describe the business information requested or include copies of the requested records or portions of records containing the information. When notification of a voluminous number of submitters is required, notification may be made by posting or publishing the notice in a place reasonably likely to accomplish notification.
</P>
<P>(d) <I>Where notice is required.</I> Notice will be given to a submitter wherever:
</P>
<P>(1) The information has been designated in good faith by the submitter as information considered protected from disclosure under Exemption 4; or
</P>
<P>(2) HUD has reason to believe that the information may be protected from disclosure under Exemption 4.
</P>
<P>(e) <I>Opportunity to object to disclosure.</I> HUD will allow a submitter a reasonable time to respond to the notice described in paragraph (c) of this section and will specify that time period within the notice. If a submitter has any objection to disclosure, the submitter should submit a detailed written statement specifying the grounds for withholding any portion of the information under any exemption of the FOIA and, in the case of Exemption 4, the submitter should show why the information is a trade secret or commercial or financial information that is privileged or confidential. HUD generally will not consider conclusory statements that particular information would be useful to competitors or would impair sales, or other similar statements, sufficient to justify confidential treatment. In the event that a submitter fails to respond to the notice within the time specified, the submitter will be considered to have no objection to the disclosure of the information. Information provided by the submitter that is not received until after the disclosure decision has been made will not be considered by HUD. Information provided by a submitter under this paragraph may itself be subject to disclosure under the FOIA.
</P>
<P>(f) <I>Notice of intent to disclose.</I> HUD will consider a submitter's objections and specific grounds for nondisclosure in deciding whether to disclose business information. Whenever HUD decides to disclose business information over the objection of a submitter, HUD will give the submitter written notice, which will include:
</P>
<P>(1) A statement of the reason(s) why each of the submitter's disclosure objections was not sustained;
</P>
<P>(2) A description of the business information to be disclosed; and
</P>
<P>(3) A specified disclosure date, which shall be a reasonable time subsequent to the notice.
</P>
<P>(g) <I>Exceptions to notice requirements.</I> The notice requirements of paragraphs (c) and (f) of this section will not apply if:
</P>
<P>(1) HUD determines that the information should not be disclosed;
</P>
<P>(2) The information lawfully has been published or has been officially made available to the public; or
</P>
<P>(3) Disclosure of the information is required by statute (other than the FOIA) or by a regulation issued in accordance with the requirements of Executive Order 12600.
</P>
<P>(h) <I>Notice of a FOIA lawsuit.</I> Whenever a requester files a lawsuit seeking to compel the disclosure of business information, HUD will promptly notify the submitter.
</P>
<P>(i) <I>Corresponding notice to requesters.</I> Whenever HUD provides a submitter with notice and an opportunity to object to disclosure under paragraph (f) of this section, HUD will also notify the requester(s). Whenever a submitter files a lawsuit seeking to prevent the disclosure of business information, HUD will notify the requester(s).


</P>
</DIV8>


<DIV8 N="§ 15.109" NODE="24:1.1.1.1.12.2.25.9" TYPE="SECTION">
<HEAD>§ 15.109   Appeals.</HEAD>
<P>(a) <I>In general.</I> A requester may appeal an adverse determination denying a request, in any respect, in writing. The letter of appeal should clearly identify the determination that is being appealed and the assigned tracking number. The appeal letter and envelope should be marked “Freedom of Information Act Appeal” for the quickest possible handling. If mailed, the requester's letter of appeal must be postmarked within 90 calendar days of the date of HUD's letter of determination. If the letter of appeal is transmitted electronically or by a means other than the United States Postal Service, it must be received in the appropriate office by the close of business on the 30th calendar day after the date of HUD's letter of determination.
</P>
<P>(b) <I>Time frames</I>—(1) Expedited processing. HUD will decide an appeal of a denial of a request to expedite processing of a FOIA request within 10 working days of receipt of the appeal.
</P>
<P>(2) <I>All other appeals.</I> HUD will make a determination on appeals within 20 working days of receipt, unless unusual circumstances require HUD to extend the time for an additional 10 working days.
</P>
<P>(3) <I>Exceptions.</I> An appeal ordinarily will not be acted upon if the subject of the appeal is simultaneously being litigated in an applicable Federal court.
</P>
<P>(c) <I>Content of appeals.</I> An appeal letter should include the following:
</P>
<P>(1) A copy of the original request;
</P>
<P>(2) A copy of the adverse determination;
</P>
<P>(3) A statement of facts and legal arguments supporting the appeal; and
</P>
<P>(4) Any additional information the appellant wishes to include.
</P>
<P>(d) <I>When appeal is required.</I> Before seeking a court review of HUD's adverse determination, a requester generally must have exhausted their administrative remedies.
</P>
<CITA TYPE="N">[80 FR 49145, Aug. 17, 2015 as amended at 82 FR 21695, May 10, 2017]


</CITA>
</DIV8>


<DIV8 N="§ 15.110" NODE="24:1.1.1.1.12.2.25.10" TYPE="SECTION">
<HEAD>§ 15.110   HUD response to appeals.</HEAD>
<P>(a) <I>In general.</I> (1) The appellate official will conduct a de novo review of the entire record and applicable law when making a decision.
</P>
<P>(2) The decision on the appeal will be made in writing and will be considered the final action of HUD.
</P>
<P>(i) A decision affirming an adverse determination, in whole or in part, will contain a statement of the reason(s) for the affirmation, including any FOIA exemption(s) applied, and will inform the appellant of the FOIA provisions for potential court review of the decision.
</P>
<P>(ii) If the adverse determination is modified on appeal, in whole or in part, a written decision will be sent to the appellant and the FOIA request will be reprocessed in accordance with the appeal decision.
</P>
<P>(iii) Adverse decisions will include the name and contact information of dispute resolution services that offer mediation services to resolve disputes between FOIA requesters and Federal agencies as a nonexclusive alternative to litigation.
</P>
<P>(b) <I>Appeal of a denial of record request.</I> Upon appeal of a denial of a record request, the appellate official will issue a decision that either:
</P>
<P>(1) Overturns the adverse determination, in whole or in part, and remands the request to the appropriate office. The requester will be notified of the rationale for the determination in writing. The original office will then reprocess the request in accordance with the appeal determination and respond directly to the requester; or
</P>
<P>(2) Affirms the adverse determination and declines to provide the requested records to the appellant.
</P>
<P>(c) <I>Appeal of a fee determination.</I> Upon appeal of a fee determination, the appellate official will issue a decision that either:
</P>
<P>(1) Waives the fee or charges the fee that the appellant requested;
</P>
<P>(2) Modifies the original fee charged and explains why the modified fee is appropriate; or
</P>
<P>(3) Advises the appellant that the original fee charged was appropriate and gives the reason behind this determination.
</P>
<P>(d) <I>Appeal of a denial of expedited processing.</I> Upon appeal of a denial of an expedited processing request, the appellate official will issue a decision that either:
</P>
<P>(1) Overturns the adverse determination and grants the expedited processing request; or
</P>
<P>(2) Affirms the decision to deny expedited processing.


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:1.1.1.1.12.3" TYPE="SUBPART">
<HEAD>Subpart C—Production of Material or Provision of Testimony in Response to Demands in Legal Proceedings Among Private Litigants</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>72 FR 8582, Feb. 26, 2007, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 15.201" NODE="24:1.1.1.1.12.3.25.1" TYPE="SECTION">
<HEAD>§ 15.201   Purpose and scope.</HEAD>
<P>(a) This subpart contains the regulations of the Department concerning the procedures to be followed and standards to be applied when demand is issued in a legal proceeding among private litigants for the production or disclosure of any material, whether provided through production of material or provision of testimony.
</P>
<P>(b) This subpart does not apply to demands, which are covered by part 2004 of this title, for production of material in the files of the Office of Inspector General or provision of testimony by employees within the Office of Inspector General. 
</P>
<P>(c) This subpart also provides guidance to persons engaged in private litigation, to which the United States is not a party, on the procedures to be followed when making a demand for documents or testimony on the Department of Housing and Urban Development. This subpart does not, and may not be relied upon to, create any affirmative right or benefit, substantive or procedural, enforceable against HUD.
</P>
<CITA TYPE="N">[72 FR 8582, Feb. 26, 2007, as amended at 73 FR 72205, Nov. 26, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 15.202" NODE="24:1.1.1.1.12.3.25.2" TYPE="SECTION">
<HEAD>§ 15.202   Production of material or provision of testimony prohibited unless approved.</HEAD>
<P>Neither the Department nor any employee of the Department shall comply with any demand for production of material or provision of testimony in a legal proceeding among private litigants, unless the prior approval of the Authorized Approving Official has been obtained in accordance with this subpart. This rule does not apply to any legal proceeding in which an employee may be called to participate, either through the production of documents or the provision of testimony, not on official time, as to facts or opinions that are in no way related to material described in § 15.201.
</P>
<CITA TYPE="N">[73 FR 72205, Nov. 26, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 15.203" NODE="24:1.1.1.1.12.3.25.3" TYPE="SECTION">
<HEAD>§ 15.203   Making a demand for production of material or provision of testimony.</HEAD>
<P>(a) Any demand made to the Department or an employee of the Department to produce any material or provide any testimony in a legal proceeding among private litigants must:
</P>
<P>(1) Be submitted in writing to the Department or employee of the Department, with a copy to the Appropriate Associate General Counsel or Appropriate Regional Counsel, no later than 30 days before the date the material or testimony is required;
</P>
<P>(2) State, with particularity, the material or testimony sought;
</P>
<P>(3) If testimony is requested, state:
</P>
<P>(i) The intended use of the testimony, and
</P>
<P>(ii) Whether expert or opinion testimony will be sought from the employee;
</P>
<P>(4) State whether the production of such material or provision of such testimony could reveal classified, confidential, or privileged material;
</P>
<P>(5) Summarize the need for and relevance of the material or testimony sought in the legal proceeding and include a copy of the complaint, if available;
</P>
<P>(6) State whether the material or testimony is available from any other source and, if so, state all such other sources;
</P>
<P>(7) State why no document[s], or declaration[s] or affidavit[s], could be used in lieu of oral testimony that is being sought;
</P>
<P>(8) Estimate the amount of time the employee will need in order to prepare for, travel to, and attend the legal proceeding, as appropriate;
</P>
<P>(9) State why the production of the material or provision of the testimony is appropriate under the rules of procedure governing the legal proceeding for which it is sought (e.g., not be unduly burdensome or otherwise inappropriate under the relevant rules governing discovery); and
</P>
<P>(10) Describe how producing such material or providing such testimony would affect the interests of the United States.
</P>
<P>(b) If the Department determines that the requestor has failed to provide the information required by paragraph (a) of this section, or that the information provided is insufficient to consider the demand in accordance with § 15.204, the Department may require that additional information be provided by the requestor before the demand is considered.
</P>
<P>(c) Whenever a demand is made upon the Department or an employee of the Department for the production of material or provision of testimony, the employee shall immediately notify the Appropriate Associate General Counsel or Appropriate Regional Counsel.
</P>
<CITA TYPE="N">[73 FR 72205, Nov. 26, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 15.204" NODE="24:1.1.1.1.12.3.25.4" TYPE="SECTION">
<HEAD>§ 15.204   Consideration of demands for production of material or provision of testimony.</HEAD>
<P>(a) The Authorized Approving Official shall determine what material is to be produced or what testimony is to be provided, based upon the following standards:
</P>
<P>(1) <I>Expert or opinion material or testimony.</I> In any legal proceeding among private litigants, no employee of the Department may produce material or provide testimony as described in § 15.201(a) that is of an expert or opinion nature, unless specifically authorized by the Authorized Approving Official for good cause shown.
</P>
<P>(2) <I>Factual material or testimony.</I> In any legal proceeding among private litigants, no employee of the Department may produce material or provide testimony as described in § 15.201(a) that is of a factual nature, unless specifically authorized by the Authorized Approving Official. The Authorized Approving Official shall determine whether any of the following factors are applicable. Such a demand may either be denied, or conditionally granted in accordance with § 15.204(c), if any such factors are applicable:
</P>
<P>(i) Producing such material or providing such testimony would violate a statute or regulation;
</P>
<P>(ii) Producing such material or providing such testimony would reveal classified, confidential, or privileged material;
</P>
<P>(iii) Such material or testimony would be irrelevant to the legal proceeding;
</P>
<P>(iv) Such material or testimony could be obtained from any other source;
</P>
<P>(v) One or more documents, or a declaration or affidavit, could reasonably be provided in lieu of oral testimony;
</P>
<P>(vi) The amount of employees' time necessary to comply with the demand would be unreasonable;
</P>
<P>(vii) Production of the material or provision of the testimony would not be required under the rules of procedure governing the legal proceeding for which it is sought (e.g., unduly burdensome or otherwise inappropriate under the relevant rules governing discovery);
</P>
<P>(viii) Producing such material or providing such testimony would impede a significant interest of the United States; or
</P>
<P>(ix) The Department has any other legally cognizable objection to the release of such information or testimony in response to a demand.
</P>
<P>(b) Once a determination has been made, the requester will be notified of the determination. If the demand is denied, the requestor shall be notified of the reasons for the denial. If the demand is conditionally approved, the requestor shall be notified of the conditions that have been imposed upon the production of the material or provision of the testimony demanded, and the reasons for the conditional approval of the demand.
</P>
<P>(c) The Authorized Approving Official may impose conditions or restrictions on the production of any material or provision of any testimony. Such conditions or restrictions may include the following:
</P>
<P>(1) A requirement that the parties to the legal proceeding obtain a protective order or execute a confidentiality agreement to limit access to, and limit any further disclosure of, material or testimony;
</P>
<P>(2) A requirement that the requester accept examination of documentary material on HUD premises in lieu of production of copies;
</P>
<P>(3) A limitation on the subject areas of testimony permitted;
</P>
<P>(4) A requirement that testimony of a HUD employee be provided by deposition at a location prescribed by HUD or by written declaration;
</P>
<P>(5) A requirement that the parties to the legal proceeding agree that a transcript of the permitted testimony be kept under seal or will only be used or only made available in the particular legal proceeding for which testimony was demanded;
</P>
<P>(6) A requirement that the requester purchase an extra copy of the transcript of the employee's testimony from the court reporter and provide the Department with a copy at the requester's expense; or
</P>
<P>(7) Any other condition or restriction deemed to be in the best interests of the United States, including reimbursement of costs to the Department.
</P>
<P>(d) The determination made with respect to the production of material or provision of testimony pursuant to this subpart is within the sole discretion of the Authorized Approving Official and shall constitute final agency action from which no administrative appeal is available.
</P>
<CITA TYPE="N">[73 FR 72205, Nov. 26, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 15.205" NODE="24:1.1.1.1.12.3.25.5" TYPE="SECTION">
<HEAD>§ 15.205   Method of production of material or provision of testimony.</HEAD>
<P>(a) Where the Authorized Approving Official has authorized the production of material or provision of testimony, the Department shall produce such material or provide such testimony in accordance with this section and any conditions imposed upon production of material or provision of testimony pursuant to § 15.204(c).
</P>
<P>(b) In any legal proceeding where the Authorized Approving Official has authorized the production of documents, the Department shall respond by producing authenticated copies of the documents, to which the seal of the Department has been affixed, in accordance with its authentication procedures. The authentication shall be evidence that the documents are true copies of documents in the Department's files and shall be sufficient for the purposes of Rules 803(8) and 902 of the Federal Rules of Evidence and Rule 44(a)(1) of the Federal Rules of Civil Procedure.
</P>
<P>(c) If response to a demand is required before the determination from the Authorized Approving Official is received, the U.S. Attorney, Department of Justice Attorney, or such other attorney as may be designated for the purpose will appear or make such filings as are necessary to furnish the court or other authority with a copy of the regulations contained in this subpart and will inform the court or other authority that the demand has been, or is being, as the case may be, referred for prompt consideration. The court or other authority shall be requested respectfully to stay the demand pending receipt of the requested determination from the Authorized Approving Official.
</P>
<CITA TYPE="N">[73 FR 72206, Nov. 26, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 15.206" NODE="24:1.1.1.1.12.3.25.6" TYPE="SECTION">
<HEAD>§ 15.206   Procedure in the event of an adverse ruling regarding production of material or provision of testimony.</HEAD>
<P>If the court or other authority declines to stay the demand made in accordance with § 15.205(c) pending receipt of the determination from the Authorized Approving Official, or if the court or other authority rules that the demand must be complied with irrespective of the determination by the Authorized Approving Official not to produce the material or provide the testimony demanded or to produce subject to conditions or restrictions, the employee upon whom the demand has been made shall, if so directed by an attorney representing the Department, respectfully decline to comply with the demand. (<I>United States ex rel. Touhy</I> v. <I>Ragen,</I> 340 U.S. 462 (1951)).
</P>
<CITA TYPE="N">[73 FR 72206, Nov. 26, 2008]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:1.1.1.1.12.4" TYPE="SUBPART">
<HEAD>Subpart D—Production of Material or Provision of Testimony in Response to Demands in Legal Proceedings in Which the United States Is a Party</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>72 FR 8583, Feb. 26, 2007, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 15.301" NODE="24:1.1.1.1.12.4.25.1" TYPE="SECTION">
<HEAD>§ 15.301   Purpose and scope.</HEAD>
<P>(a) This subpart contains the regulations of the Department concerning the procedures to be followed and standards to be applied when demand is issued in a legal proceeding in which the United States is a party for the production or disclosure of any material, whether provided through production of material or provision of testimony.
</P>
<P>(b) This subpart does not apply to demands, which are covered by part 2004 of this title, for production of material in the files of the Office of Inspector General or provision of testimony by employees within the Office of Inspector General. 


</P>
</DIV8>


<DIV8 N="§ 15.302" NODE="24:1.1.1.1.12.4.25.2" TYPE="SECTION">
<HEAD>§ 15.302   Production of material or provision of testimony prohibited unless approved.</HEAD>
<P>Neither the Department nor any employee of the Department shall comply with any demand for production of material or provision of testimony in a legal proceeding in which the United States is a party, unless the prior approval of the attorney representing the United States has been obtained in accordance with this subpart. This rule does not apply to any legal proceeding in which an employee may be called to participate, either through the production of documents or the provision of testimony, not on official time, as to facts or opinions that are in no way related to material described in § 15.301.
</P>
<CITA TYPE="N">[73 FR 72206, Nov. 26, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 15.303" NODE="24:1.1.1.1.12.4.25.3" TYPE="SECTION">
<HEAD>§ 15.303   Procedure for review of demands for production of material or provision of testimony in any legal proceeding in which the United States is a party.</HEAD>
<P>Whenever a demand is made upon the Department or an employee of the Department for the production of material or provision of testimony, the employee shall immediately notify the Appropriate Associate General Counsel or Appropriate Regional Counsel.
</P>
<CITA TYPE="N">[73 FR 72207, Nov. 26, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 15.304" NODE="24:1.1.1.1.12.4.25.4" TYPE="SECTION">
<HEAD>§ 15.304   Consideration of demands for production of material or provision of testimony.</HEAD>
<P>Consideration of demands shall be within the province of the attorney representing the United States, who may raise any valid objection to the production of material or provision of testimony in response to the demand.
</P>
<CITA TYPE="N">[73 FR 72207, Nov. 26, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 15.305" NODE="24:1.1.1.1.12.4.25.5" TYPE="SECTION">
<HEAD>§ 15.305   Method of production of material or provision of testimony.</HEAD>
<P>If the production of material or provision of testimony has been authorized, the Department may respond by producing authenticated copies of the documents, to which the seal of the Department has been affixed in accordance with its authentication procedures. The authentication shall be evidence that the documents are true copies of documents in the Department's files and shall be sufficient for the purposes of Rules 803(8) and 902 of the Federal Rules of Evidence and Rule 44(a)(1) of the Federal Rules of Civil Procedure.
</P>
<CITA TYPE="N">[73 FR 72207, Nov. 26, 2008]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="0" NODE="24:1.1.1.1.12.5" TYPE="SUBPART">
<HEAD> </HEAD>

</DIV6>


<DIV9 N="Appendix A" NODE="24:1.1.1.1.12.6.25.1.4" TYPE="APPENDIX">
<HEAD>Appendix A to Part 15—Location Information for HUD FOIA Reading Rooms and Contact Information for Regional Counsel
</HEAD>
<P>The Department maintains a reading room in Headquarters and in each of the Secretary's Representative's Offices. In addition, each of the Secretary's Representative's Offices has a Regional Counsel. The location and contact information for HUD's FOIA Reading Rooms and for the Regional Counsel can be found in HUD's Local Office Directory, on HUD's Internet site at <I>http://www.hud.gov.</I>
</P>
<CITA TYPE="N">[73 FR 72207, Nov. 26, 2008]


</CITA>
</DIV9>

</DIV5>


<DIV5 N="16" NODE="24:1.1.1.1.13" TYPE="PART">
<HEAD>PART 16—IMPLEMENTATION OF THE PRIVACY ACT OF 1974
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>5 U.S.C. 552(a); 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>40 FR 39729, Aug. 28, 1975, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV8 N="§ 16.1" NODE="24:1.1.1.1.13.0.25.1" TYPE="SECTION">
<HEAD>§ 16.1   Purpose and statement of policy.</HEAD>
<P>(a) The purpose of this part is to establish policies and procedures for implementing the Privacy Act of 1974 (Pub. L. 93-579), 5 U.S.C. 552(a). The main objectives are to facilitate full exercise of rights conferred on individuals under the Act and to insure the protection of privacy as to individuals about whom the Department maintains records in systems of records under the Act. The Department accepts the responsibility to act promptly and in accordance with the Act upon receipt of any inquiry, request or appeal from a citizen of the United States or an alien lawfully admitted for permanent residence into the United States, regardless of the age of the individual. 
</P>
<P>(b) Further, the Department accepts the obligations to maintain only such information on individuals as is relevant and necessary to the performance of its lawful functions, to maintain that information with such accuracy, relevancy, timeliness and completeness as is reasonably necessary to assure fairness in determinations made by the Department about the individual, to obtain information from the individual to the extent practicable, and to take every reasonable step to protect that information from unwarranted disclosure. The Department will maintain no record describing how an individual exercises rights guaranteed by the First Amendment unless expressly authorized by statute or by the individual about whom the record is maintained or unless pertinent to and within the scope of an authorized law enforcement activity. 
</P>
<P>(c) This part applies to all organizational components in the Department in order to assure the maximum amount of uniformity and consistency within the Department in its implementation of the Act. 
</P>
<P>(d) The Assistant Secretary for Administration shall be responsible for carrying out the requirements of this part, for issuing such orders and directives internal to the Department as are necessary for full compliance with the Act, and for effecting publication of all required notices concerning systems of records. 
</P>
<P>(e) Requests involving information pertaining to an individual which is in a record or file but not within the scope of a System of Records Notice published in the <E T="04">Federal Register</E> are outside the scope of this part. Requests for departmental records will be considered to determine whether processing under this part, part 15, or both is most appropriate, notwithstanding the requester's characterization of the request, as follows: 
</P>
<P>(1) <I>A Privacy Act request from an individual for records about that individual and not contained in a Privacy Act Records System</I> shall be considered a Freedom of Information Act request and processed under HUD Freedom of Information Act regulations (24 CFR part 15) to the extent that the requester has provided the Department a reasonable description of the documents requested. When a request for records is so considered as a Freedom of Information Act request, the Privacy Act Officer shall promptly refer it to the head of the appropriate organizational unit in accordance with HUD FOIA Regulations and shall advise the requester that time of receipt for processing purposes will be the time when it is received by the appropriate official. 
</P>
<P>(2) <I>A Freedom of Information Act request from an individual for records about that individual contained in a Privacy Act Records System</I> shall be processed as follows: 
</P>
<P>(i) If the request in whole or in part contains a reasonable description of any HUD document, processing shall be carried out pursuant to HUD FOIA Regulations. 
</P>
<P>(ii) If the request in whole or in part does not contain a reasonable description of any HUD document, but does provide sufficient information under HUD Privacy Act Regulations to undertake a Privacy Act Records System search, the Department will provide full access under HUD Privacy Act Regulations. In this situation, the Department will comply with the deadlines for response set forth in the Privacy Act and HUD implementing regulations. In that event, an explanation will be provided to the requester advising that the request did not contain a reasonable description of a particular document as required under the FOIA and offering to process the request under FOIA procedures upon receipt of additional information sufficient to constitute a <I>reasonable description.</I> 
</P>
<P>(3) <I>A Freedom of Information Act request from an individual for records about another individual contained in a Privacy Act Records System</I> shall be processed as follows: When an exemption under subsection (b) of FOIA is available, the Privacy Act governs the public interest determination under HUD FOIA Regulations (24 CFR 15.21) and compels the withholding of such documents unless: (i) The subject of those records consents to their release or (ii) disclosure comes within one of the subsections of 5 U.S.C. § 552a(b). 
</P>
<P>(4) <I>A Privacy Act request from an individual for records about another individual</I> shall be processed as follows: Except as expressly permitted in this part, requests by persons who are not the subject of a record contained in a Privacy Act Records System shall be outside the scope of this part. If the request satisfies the Freedom of Information Act requirement that requested records be reasonably described, the Privacy Act Officer shall consider the requests as a Freedom of Information Act request and shall proceed as in § 16.1(e)(1) of this section. 
</P>
<CITA TYPE="N">[40 FR 39729, Aug. 28, 1975, as amended at 41 FR 13917, Apr. 1, 1976] 


</CITA>
</DIV8>


<DIV8 N="§ 16.2" NODE="24:1.1.1.1.13.0.25.2" TYPE="SECTION">
<HEAD>§ 16.2   Definitions.</HEAD>
<P>(a) The definitions of 5 U.S.C. 552a apply in this part. 
</P>
<P>(b) As used in this part: 
</P>
<P>(1) <I>Act</I> means the <I>Privacy Act of 1974,</I> Pub. L. 93-579. 
</P>
<P>(2) <I>Privacy Act Officer</I> means those officials, or their designees, who are authorized to receive and act upon inquiries, requests for access, and requests for correction or amendment. 
</P>
<P>(3) <I>Privacy Appeals Officer</I> means the General Counsel. 
</P>
<P>(4) <I>Inquiry</I> means a request by an individual that the Department determine whether it has any record in a system of records which pertains to that individual. 
</P>
<P>(5) <I>Request for access</I> means a request by an individual or guardian to inspect and/or copy and/or obtain a copy of a record which is in a particular system of records and which pertains to that individual. 
</P>
<P>(6) <I>Request for correction or amendment</I> means the request by an individual or guardian that the Department change (either by correction, addition or deletion) a particular record in a system of records which pertains to that individual. 
</P>
<P>(7) <I>Appeal</I> means the request by an individual that an initial denial of a request for access or correction or amendment by that individual be reviewed and reversed. 
</P>
<CITA TYPE="N">[40 FR 39729, Aug. 28, 1975, as amended at 41 FR 13917, Apr. 1, 1976; 61 FR 5204, Feb. 9, 1996; 83 FR 26361, June 7, 2018] 


</CITA>
</DIV8>


<DIV8 N="§ 16.3" NODE="24:1.1.1.1.13.0.25.3" TYPE="SECTION">
<HEAD>§ 16.3   Procedures for inquiries.</HEAD>
<P>(a) Any individual, regardless of age, may submit an inquiry to the Department. The inquiry should be made either in person at the office of, or by mail addressed to, the appropriate Privacy Act Officer. Although oral requests may be honored, a requester may be asked to submit his request in writing. The envelope containing the request and the letter itself should both clearly indicate that the subject is a “PRIVACY ACT INQUIRY”. If an individual believes the Department maintains a record pertaining to that individual but does not know which system of records might contain such a record and/or which organizational component of the Department maintains the system of records, assistance in person or by mail will be provided at the following address: Privacy Act Officer, Department of Housing and Urban Development, 451 7th St. SW, Room 10139, Washington, DC 20410. 
</P>
<P>(b)(1) An inquiry should contain the following information: 
</P>
<P>(i) Name, address and telephone number of the individual making the request; 
</P>
<P>(ii) Name, address and telephone number of the individual to whom the record pertains, if the requesting individual is either the parent of a minor or the legal guardian of the individual to whom the record pertains; 
</P>
<P>(iii) A certified or authenticated copy of documents establishing parentage or guardianship; 
</P>
<P>(iv) Whether the individual to whom the record pertains is a citizen of the United States or an alien lawfully admitted for permanent residence in to the United States; 
</P>
<P>(v) Name of the system of records, as published in the <E T="04">Federal Register</E>; 
</P>
<P>(vi) Location of the system of records, as published in the <E T="04">Federal Register</E>; 
</P>
<P>(vii) Such additional information as the individual knows will or believes might assist the Department in responding to the inquiry (for example, the individual's past or present relationship with the Department, e.g. mortgagor, contractor, employee, including relevant dates) and in verifying the individual's identity (for example, date of birth, place of birth, names of parents, place of work, dates of employment, position title, etc.); 
</P>
<P>(viii) Date of inquiry; and, 
</P>
<P>(ix) Individual's signature. 
</P>
<FP>The Department reserves the right to require compliance with the identification procedures appearing at § 16.4(d) where circumstances warrant. 
</FP>
<P>(2) In compliance with 5 U.S.C. 552a (e)(3) each individual supplying the information in accordance with paragraph (b)(1) of this section hereby is informed that: 
</P>
<P>(i) The authority authorizing solicitation of the information is 5 U.S.C. 552a, disclosure is voluntary, and no penalty is attached for failure to respond; 
</P>
<P>(ii) The principal purpose for which the information is intended to be used is processing the inquiry under the Act; 
</P>
<P>(iii) The routine uses which may be made of the information are the routine uses appearing as a prefatory statement to the Department's notice of systems of records published in the <E T="04">Federal Register</E>; and, 
</P>
<P>(iv) The effects of not providing all or any part of the information may delay, or in some cases make impossible, the Department's processing of the action on the request under the Act. 
</P>
<P>(3) If, having been made aware of the contents of paragraph (b)(2) of this section, an individual submits the information listed in paragraph (b)(1) of this section, he or she will be deemed to have made the submission on a purely voluntary and consensual basis. 
</P>
<P>(c) When an inquiry is misdirected by the requester, or not addressed as specified in paragraph (a) of this section, the Department official receiving same shall make reasonable effort to identify, and promptly refer it to, the appropriate Privacy Act Officer and the time of receipt for processing purposes will be the time when it is received by the Privacy Act Officer. 
</P>
<P>(d) When an inquiry fails to provide necessary information as set forth in paragraph (b) of this section, the requester shall be advised that the time of receipt for processing purposes will be the time when the additional necessary information is received by the Privacy Act Officer. 
</P>
<P>(e) Each inquiry received shall be acted upon promptly by the responsible Privacy Act Officer. Every effort will be made to respond within ten days (excluding Saturdays, Sundays and holidays) of the date of receipt. If a response cannot be made within ten days, the Privacy Act Officer shall send an acknowledgement during that period providing information on the status of the inquiry. The Privacy Act Officer may indicate that additional information would facilitate processing or that further information is necessary to process the inquiry. 
</P>
<CITA TYPE="N">[40 FR 39729, Aug. 28, 1975, as amended at 83 FR 26361, June 7, 2018]


</CITA>
</DIV8>


<DIV8 N="§ 16.4" NODE="24:1.1.1.1.13.0.25.4" TYPE="SECTION">
<HEAD>§ 16.4   Requests for access; requirements.</HEAD>
<P>(a) Any individual, regardless of age, may submit to the Department a request for access to records of the Department. The request should be made either in person at the Office of, or by mail addressed to, the responsible Privacy Act Officer. Although oral requests may be honored, a requester may be asked to submit his request in writing. The envelope containing the request and the letter itself should both clearly indicate that the subject is a PRIVACY ACT REQUEST FOR ACCESS TO RECORDS. 
</P>
<P>(b) When a request for access to records is misdirected by the requester, or not addressed as specified in paragraph (a) of this section, the Department official receiving same shall promptly refer it to the appropriate Privacy Act Officer and the time of receipt for processing purposes will be the time when it is received by that official. 
</P>
<P>(c) When a request for access to records fails to provide necessary information as set forth in paragraph (b) of this section the requester shall be advised that the time of receipt for processing purposes will be the time when the additional necessary information is received by the appropriate official. 
</P>
<P>(d) The requirements for identification of individuals seeking access to records are as follows: 
</P>
<P>(1) <I>In person.</I> Each individual making a request in person shall be required to present satisfactory proof of identity. The means of proof, in the order of preference and priority, are: 
</P>
<P>(i) A document bearing the individual's photograph (for example, passport or military or civilian identification card); 
</P>
<P>(ii) A document bearing the individual's signature (for example, driver's license, social security card, unemployment insurance book, employer's identification card, national credit card and professional, craft or union membership card); and 
</P>
<P>(iii) A document bearing neither the photograph nor the signature of the individual (for example, a Medicaid card). In the event the individual can provide no suitable documentation of identity, the Department will require a signed statement asserting the individual's identity and stipulating that the individual understands the penalty provision of 5 U.S.C. 552a(i)(3). That penalty provision also appears at § 16.13(a). In order to avoid any unwarranted disclosure of an individual's records, the Department reserves the right to determine to its satisfaction whether proof of identity offered by any individual is adequate. 
</P>
<P>(2) <I>Not in person.</I> If the individual making a request does not appear in person before a Privacy Act Officer, the information set forth in § 16.3(b)(1) and a certificate of a notary public or equivalent officer empowered to administer oaths must accompany the request. The certificate within or attached to the letter must be substantially in accord with the following text:
</P>
<EXTRACT>
<FP>City of __________ 
</FP>
<FP>County of __________:
</FP>
<P>ss __________ (name of individual), who affixed (his) (her) signature below in my presence, came before me, a ________ (title), in and for the aforesaid County and State, this ______ day of ______, 19—, and established (his) (her) identity to my satisfaction. 
</P>
<P>My commission expires __________.
</P>
<FP-1>__________________
</FP-1>
<P2>      (signature)</P2></EXTRACT>
<FP>If the request follows inquiry under § 16.3, this should be indicated in the request for access in order to facilitate processing. 
</FP>
<P>(3) <I>Parents of minors and legal guardians.</I> An individual acting as the parent of a minor or the legal guardian of the individual to whom a record pertains shall establish his or her personal identity in the same manner prescribed in either paragraph (d) (1) or (2) of this section. In addition, such other individual shall establish his or her representative capacity of parent or legal guardian. In the case of the parent of a minor, the proof of identity shall be a certified or authenticated copy of the minor's birth certificate. In the case of a legal guardian of an individual who has been declared incompetent due to physical or mental incapacity or age by a court of competent jurisdiction, the proof of identity shall be a certified or authenticated copy of the court's order. A parent or legal guardian may act only for a living individual, not for a decedent. A parent or legal guardian may be accompanied during personal access to a record by another individual, provided the provisions of § 16.5(e) are satisfied. 
</P>
<P>(e) When the provisions of this part are alleged to have the effect of impeding an individual in exercising his or her right to access, the Department will consider alternative suggestions from an individual making a request, regarding proof of identity and access to records. 
</P>
<P>(f) An individual shall not be required to state a reason or otherwise justify his or her request for access to a record. 
</P>
<CITA TYPE="N">[40 FR 39729, Aug. 28, 1975, as amended at 83 FR 26361, June 7, 2018]


</CITA>
</DIV8>


<DIV8 N="§ 16.5" NODE="24:1.1.1.1.13.0.25.5" TYPE="SECTION">
<HEAD>§ 16.5   Disclosure of requested information to individuals.</HEAD>
<P>(a) Each request received shall be acted upon promptly by the responsible Privacy Act Officer. Every effort will be made to respond within ten days (excluding Saturdays, Sundays and holidays) of the date of receipt. If a response cannot be made within ten days due to unusual circumstances, the Privacy Act Officer shall send an acknowledgement during that period providing information on the status of the request and asking for such further information as may be necessary to process the request. <I>Unusual circumstances</I> shall include circumstances where a search for and collection of requested records from inactive storage, field facilities or other establishments are required, cases where a voluminous amount of data is involved, instances where information on other individuals must be separated or expunged from the particular record, and cases where consultations with other agencies having a substantial interest in the determination of the request are necessary. 
</P>
<P>(b) <I>Grant of access</I>—(1) <I>Notification.</I> An individual shall be granted access to a record pertaining to him or her, except where the provisions of § 16.6 apply. The Privacy Act Officer shall notify the individual of such determination and provide the following information: 
</P>
<P>(i) The methods of access, as set forth in paragraph (b)(2) of this section; 
</P>
<P>(ii) The place at which the record may be inspected; 
</P>
<P>(iii) The earliest date on which the record may be inspected and the period of time that the records will remain available for inspection and/or the estimated date by which a copy of the record could be mailed and the estimate of fees pursuant to § 16.12; 
</P>
<P>(iv) The fact that the individual, if he or she wishes, may be accompanied by another individual during personal access, subject to procedures set forth in paragraph (e) of this section; and 
</P>
<P>(v) Any additional requirements needed to grant access to a specific record. 
</P>
<P>(2) <I>Methods of access.</I> The following methods of access to records by an individual may be available depending on the circumstances of a given situation: 
</P>
<P>(i) Inspection in person may be had in the office specified by the Privacy Act Officer granting access during hours indicated by the Privacy Act Officer; 
</P>
<P>(ii) Transfer of records to a Federal facility more convenient to the individual may be arranged, but only if the Privacy Act Officer determines that a suitable facility is available, that the individual's access can be properly supervised at the facility, and that transmittal of the records to that facility will not unduly interfere with operations of the Department or involve unreasonable costs, in terms of both money and manpower; and 
</P>
<P>(iii) Copies may be mailed at the request of the individual, subject to payment of the fees prescribed in § 16.12. The Department, at its own initiative, may elect to provide a copy by mail, in which case no fee will be charged the individual. 
</P>
<P>(c) The Department shall supply such other information and assistance at the time of access as to make the record intelligible to the individual. 
</P>
<P>(d) The Department reserves the right to limit access to copies and abstracts of original records, rather than the original records. This election would be appropriate, for example, when the record is in an automated data media such as tape or disc, when the record contains information on other individuals, and when deletion of information is permissible under exemptions (for example, 5 U.S.C. 552a(k)(2)). In no event shall original records of the Department be made available to the individual except under the immediate supervision of the Privacy Act Officer or his designee. It is a crime to conceal, mutilate, obliterate, or destroy any record filed in a public office, or to attempt to do any of the foregoing, Title 18, United States Code, 2701(a). 
</P>
<P>(e) Any individual who requests access to a record pertaining to that individual may be accompanied by another individual of his or her choice. <I>Accompanied</I> includes discussion of the record in the presence of the other individual. The individual to whom the record pertains shall authorize the presence of the other individual by a signed and dated document which includes the name of the other individual and specifically describes the record to which access is sought. The other individual shall sign the authorization in the presence of the Privacy Act Officer. An individual shall not be required to state a reason or otherwise justify his or her decision to be accompanied by another individual during personal access to a record. 


</P>
</DIV8>


<DIV8 N="§ 16.6" NODE="24:1.1.1.1.13.0.25.6" TYPE="SECTION">
<HEAD>§ 16.6   Initial denial of access.</HEAD>
<P>(a) <I>Grounds.</I> Access by an individual to a record which pertains to that individual will be denied only upon a determination by the Privacy Act Officer that: 
</P>
<P>(1) The record is subject to an exemption under § 16.14, § 16.15 or to an exemption determined by another agency noticing the system of records; 
</P>
<P>(2) The record is information compiled in reasonable anticipation of a civil action or proceeding; or
</P>
<P>(3) The individual unreasonably has failed to comply with the procedural requirements of this part. 
</P>
<P>(b) <I>Notification.</I> The Privacy Act Officer shall give notice of denial of access to records to the individual in writing and shall include the following information: 
</P>
<P>(1) The Privacy Act Officer's name and title or position; 
</P>
<P>(2) The date of the denial; 
</P>
<P>(3) The reasons for the denial, including citation to the appropriate section of the Act and/or this part; 
</P>
<P>(4) The individual's opportunities, if any, for further administrative consideration, including the identity and address of the appropriate Privacy Appeals Officer. If no further administrative consideration within the Department is available, the notice shall state that the denial is administratively final; and, 
</P>
<P>(5) If stated to be administratively final; and, within the Department, the individual's right to judicial review under 5 U.S.C. 552a(g)(1), as amended by 5 U.S.C. 552a(g)(5). 
</P>
<CITA TYPE="N">[40 FR 39729, Aug. 28, 1975, as amended at 42 FR 20297, Apr. 19, 1977] 


</CITA>
</DIV8>


<DIV8 N="§ 16.7" NODE="24:1.1.1.1.13.0.25.7" TYPE="SECTION">
<HEAD>§ 16.7   Administrative review of initial denial of access.</HEAD>
<P>(a) Review shall be available only from a written denial of a request for access issued under § 16.6(a) (2) or (3) and only if a written request for review is filed within thirty calendar days after the issuance of the written denial. 
</P>
<P>(b) A request for review shall be addressed to the Privacy Appeals Officer identified in the initial denial, which official is authorized to make final determinations. The envelope containing the request for review and the letter itself should both clearly indicate that the subject is a PRIVACY ACT REQUEST FOR REVIEW. 
</P>
<P>(c) When a request for review is misdirected by the requester, or not addressed as specified in paragraph (b) of this section, the Department official receiving same shall promptly refer it to the Privacy Appeals Officer and the time of receipt for processing purposes will be the time when it is received by the appropriate official. 
</P>
<P>(d) When a request for review fails to provide necessary information as set forth in paragraph (e) of this section, the requester shall be given reasonable opportunity to amend the request and shall be advised that the time of receipt for processing purposes will be the time when the additional necessary information is received by the appropriate official. 
</P>
<P>(e) The filing of a request for review may be accomplished by mailing to the Privacy Appeals Officer a copy of the request for access, if in writing; a copy of the written denial issued under § 16.6; and a statement of the reasons why the initial denial is believed to be in error. The appeal shall be signed by the individual. 
</P>
<P>(f) No hearing will be allowed in connection with administrative review of an initial denial of access. 
</P>
<P>(g) The Privacy Appeals Officer shall act upon the appeal and issue a final determination in writing not later than thirty days (excluding Saturdays, Sundays and holidays) from the date on which the appeal is received; provided, that the Privacy Appeals officer may extend the thirty days upon deciding that a fair and equitable review cannot be made within that period, but only if the individual is advised in writing of the reason for the extension and the estimated date by which a final determination will issue, which estimated date should not be later than the sixtieth day (excluding Saturdays, Sundays and holidays) after receipt of the appeal unless there exist unusual circumstances, as described in § 16.5(a). 
</P>
<P>(h) The decision after review will be in writing, will constitute final action of the Department on a request for access, and, if the denial of the request is in whole or part upheld, the Department shall notify the person making the request of his right to judicial review under 5 U.S.C. 552a(g)(1), as amended by 5 U.S.C. 552a(g)(5). 


</P>
</DIV8>


<DIV8 N="§ 16.8" NODE="24:1.1.1.1.13.0.25.8" TYPE="SECTION">
<HEAD>§ 16.8   Request for correction or amendment to record.</HEAD>
<P>(a) Any individual, regardless of age, may submit to the Department a request for correction or amendment of a record pertaining to that individual. The request should be made either in person at the office of, or by mail addressed to, the Privacy Act Officer who processed the individual's request for access to the record. Although an oral request may be honored, a requester may be asked to submit his or her request in writing. The envelope containing the request and the letter itself should both clearly indicate that the subject is a PRIVACY ACT REQUEST FOR CORRECTION OR AMENDMENT. 
</P>
<P>(b) When a request for correction or amendment is misdirected by the requester, or not addressed as specified in paragraph (a) of this section, the Department official receiving same shall make reasonable effort to identify, and promptly refer it to, the appropriate Privacy Act Officer and the time of receipt for processing purposes will be the time when it is received by the appropriate official. 
</P>
<P>(c) When a request for correction or amendment fails to provide necessary information as set forth in paragraph (e) of this section, the requester shall be given reasonable opportunity to answer the request and shall be advised that the time of receipt for processing purposes will be the time when the additional necessary information is received by the appropriate official. 
</P>
<P>(d) Since the request, in all cases, will follow a request for access under § 16.4, the individual's identity will be established by his or her signature on the request. 
</P>
<P>(e) A request for correction or amendment should include the following: 
</P>
<P>(1) A specific identification of the record sought to be corrected or amended (for example, description, title, date, paragraph, sentence, line and words); 
</P>
<P>(2) The specific wording to be deleted, if any; 
</P>
<P>(3) The specific wording to be inserted or added, if any, and the exact place at which it is to be inserted or added; and 
</P>
<P>(4) A statement of the basis for the requested correction or amendment, with all available supporting documents and materials which substantiate the statement. 
</P>
<P>(f) The provisions of § 16.3(b) (2) and (3) apply to the information obtained under paragraph (e) of this section. 


</P>
</DIV8>


<DIV8 N="§ 16.9" NODE="24:1.1.1.1.13.0.25.9" TYPE="SECTION">
<HEAD>§ 16.9   Agency procedures upon request for correction or amendment of record.</HEAD>
<P>(a)(1) Not later than ten days (excluding Saturdays, Sundays and holidays) after receipt of a request to correct or amend a record, the Privacy Act Officer shall send an acknowledgment providing an estimate of time within which action will be taken on the request and asking for such further information as may be necessary to process the request. The estimate of time may take into account unusual circumstances as described in § 16.5(a). No acknowledgment will be sent if the request can be reviewed, processed, and the individual notified of the results of review (either compliance or denial) within the ten days. Requests filed in person will be acknowledged at the time submitted. 
</P>
<P>(2) Promptly after acknowledging receipt of a request, or after receiving such further information as might have been requested, or after arriving at a decision within the time prescribed in § 16.9(a)(1), the Privacy Act Officer shall either: 
</P>
<P>(i) Make the requested correction or amendment and advise the individual in writing of such action, providing either a copy of the corrected or amended record or a statement as to the means whereby the correction or amendment was effected in cases where a copy cannot be provided; or, 
</P>
<P>(ii) Inform the individual in writing that his or her request is denied and provide the following information: 
</P>
<P>(A) The Privacy Act Officer's name and title and position; 
</P>
<P>(B) The date of the denial; 
</P>
<P>(C) The reasons for the denial, including citation to the appropriate sections of the Act and this part; and, 
</P>
<P>(D) The procedures for appeal of the denial as set forth in § 16.10, including the name and address of the Privacy Appeals Officer. The term <I>promptly</I> in this § 16.9 means within thirty days (excluding Saturdays, Sundays and holidays). If the Privacy Act Officer cannot make the determination within thirty days, the individual will be advised in writing of the reason therefor and of the estimated date by which the determination will be made. 
</P>
<P>(b) Whenever an individual's record is corrected or amended pursuant to a request by that individual, the Privacy Act Officer shall see to the notification of all persons and agencies to which the corrected or amended portion of the record had been disclosed prior to its correction or amendment, if an accounting of such disclosure was made as required by the Act. The notification shall require a recipient agency maintaining the record to acknowledge receipt of the notification, to correct or amend the record and to appraise any agency or person to which it had disclosed the record of the substance of the correction or amendment. 
</P>
<P>(c) The following criteria will be considered by the Privacy Act Officer in reviewing a request for correction or amendment: 
</P>
<P>(1) The sufficiency of the evidence submitted by the individual; 
</P>
<P>(2) The factual accuracy of the information; 
</P>
<P>(3) The relevance and necessity of the information in terms of the purpose for which it was collected; 
</P>
<P>(4) The timeliness and currency of the information in terms of the purpose for which it was collected: 
</P>
<P>(5) The completeness of the information in terms of the purpose for which it was collected: 
</P>
<P>(6) The possibility that denial of the request could unfairly result in determinations adverse to the individual; 
</P>
<P>(7) The character of the record sought to be corrected or amended; and 
</P>
<P>(8) The propriety and feasibility of complying with the specific means of correction or amendment requested by the individual. 
</P>
<P>(d) The Department will not undertake to gather evidence for the individual, but does reserve the right to verify the evidence which the individual submits. 
</P>
<P>(e) Correction or amendment of a record requested by an individual will be denied only upon a determination by the Privacy Act Officer that: 
</P>
<P>(1) There has been a failure to establish, by the evidence presented, the propriety of the correction or amendment in light of the criteria set forth in paragraph (c) of this section; 
</P>
<P>(2) The record sought to be corrected or amended was compiled in a terminated judicial, quasi-judicial, legislative or quasi-legislative proceeding to which the individual was a party or participant; 
</P>
<P>(3) The information in the record sought to be corrected or amended, or the record sought to be corrected or amended, is the subject of a pending judicial, quasi-judicial or quasi-legislative proceeding to which the individual is a party or participant; 
</P>
<P>(4) The correction or amendment would violate a duly enacted statute or promulgated regulation; or, 
</P>
<P>(5) The individual unreasonably has failed to comply with the procedural requirements of this part. 
</P>
<P>(f) If a request is partially granted and partially denied, the Privacy Act Officer shall follow the appropriate procedures of this section as to the records within the grant and the records within the denial. 


</P>
</DIV8>


<DIV8 N="§ 16.10" NODE="24:1.1.1.1.13.0.25.10" TYPE="SECTION">
<HEAD>§ 16.10   Appeal of initial adverse agency determination on correction or amendment.</HEAD>
<P>(a) Appeal shall be available only from a written denial of a request for correction or amendment of a record issued under § 16.9, and only if a written appeal is filed within thirty calendar days after the issuance of the written denial. 
</P>
<P>(b) Each appeal shall be addressed to the Privacy Appeals Officer identified in the written denial. The envelope containing the appeal and the letter itself should both clearly indicate that the subject is PRIVACY ACT APPEAL. 
</P>
<P>(c) When an appeal is misdirected by the requester, or not addressed as specified in paragraph (b) of this section, the Department official receiving same shall promptly refer it to the appropriate Privacy Appeals Officer and the time of receipt for processing purposes will be the time when it is received by the appropriate official. 
</P>
<P>(d) When an appeal fails to provide the necessary information as set forth in paragraph (e) of this section, the requester shall be advised that the time for receipt for processing purposes will be the time when the additional necessary information is received by the appropriate official. 
</P>
<P>(e) The individual's appeal papers shall include the following: A copy of the original request for correction or amendment; a copy of the initial denial; and a statement of the reasons why the initial denial is believed to be in error. The appeal shall be signed by the individual. The record which the individual requests be corrected or amended will be supplied by the Privacy Act Officer who issued the initial denial. While the foregoing normally will comprise the entire record on appeal, the Privacy Appeals Officer may seek additional information necessary to assure that the final determination is fair and equitable and, in such instances, the additional information will be disclosed to the individual to the greatest extent possible and an opportunity provided for comment thereon. 
</P>
<P>(f) No hearing on appeal will be allowed. 
</P>
<P>(g) The Privacy Appeals Officer shall act upon the appeal and issue a final Department determination in writing not later than thirty days (excluding Saturdays, Sundays and holidays) from the date on which the appeal is received; provided, that the Privacy Appeals Officer may extend the thirty days upon deciding that a fair and equitable review cannot be made within that period, but only if the individual is advised in writing of the reason for the extension and the estimated date by which a final determination will issue (which estimated date should not be later than the sixtieth day (excluding Saturdays, Sundays and holidays) after receipt of the appeal unless unusual circumstances, as described in § 16.5(a), are met). 
</P>
<P>(h) If the appeal is determined in favor of the individual, the final determination shall include the specific corrections or amendments to be made and a copy thereof shall be transmitted promptly both to the individual and to the Privacy Act Officer who issued the initial denial. Upon receipt of such final determination, the Privacy Act Officer promptly shall take the actions set forth in § 16.9(a)(2)(i) and § 16.9(b). 
</P>
<P>(i) If the appeal is denied, the final determination shall be transmitted promptly to the individual and shall state the reasons for the denial. The notice of final determination also shall inform the individual of the following information: 
</P>
<P>(1) The right of the individual to file a concise statement of reasons for disagreeing with the final determination. The statement ordinarily should not exceed one page and the Department reserves the right to reject a statement of excessive length. Such a statement shall be filed with the Privacy Appeals Officer. It should identify the date of the final determination and be signed by the individual. The Privacy Appeals Officer shall acknowledge receipt of such statement and inform the individual of the date on which it was received; 
</P>
<P>(2) The fact that any such disagreement statement filed by the individual will be noted in the disputed record and that a copy of the statement will be provided to persons and agencies to which the record is disclosed subsequent to the date of receipt of such statement; 
</P>
<P>(3) The fact that prior recipients of the disputed record will be provided a copy of any statement of the dispute to the extent that an accounting of disclosures, as required by the Act, was made; 
</P>
<P>(4) The fact that the Department will append to any such disagreement statement filed by the individual, a copy of the final determination or summary thereof which also will be provided to persons and agencies to which the disagreement statement is disclosed; and, 
</P>
<P>(5) The right of the individual to judicial review of the final determination under 5 U.S.C. 552a(g)(1)(A), as limited by 5 U.S.C. 552a(g)(5). 
</P>
<P>(j) In making the final determination, the Privacy Appeals Officer shall employ the criteria set forth in paragraph 16.9(c) and shall deny an appeal only on the grounds set forth in § 16.9(e). 
</P>
<P>(k) If an appeal is partially granted and partially denied, the Privacy Appeals Officer shall follow the appropriate procedures of this section as to the records within the grant and the records within the denial. 
</P>
<P>(l) Although a copy of the final determination or a summary thereof will be treated as part of the individual's record for purposes of disclosure in instances where the individual has filed a disagreement statement, it will not be subject to correction or amendment by the individual. 
</P>
<P>(m) The provisions of § 16.3(b) (2) and (3) apply to the information obtained under paragraphs (e) and (i)(1) of this section. 


</P>
</DIV8>


<DIV8 N="§ 16.11" NODE="24:1.1.1.1.13.0.25.11" TYPE="SECTION">
<HEAD>§ 16.11   Disclosure of record to person other than the individual to whom it pertains.</HEAD>
<P>(a) The Department may disclose a record pertaining to an individual to a person other than the individual only in the following instances: 
</P>
<P>(1) Upon written request by the individual, including authorization under § 16.5(e); 
</P>
<P>(2) With the prior written consent of the individual; 
</P>
<P>(3) To a parent or legal guardian under 5 U.S.C. 552a(h); and, 
</P>
<P>(4) When required by the Act and not covered explicitly by the provisions of 5 U.S.C. 552a(b); and, 
</P>
<P>(5) When permitted under 5 U.S.C. 552a(b) (1) through (11), which read as follows: 
</P>
<EXTRACT>
<P>(1) To those officers and employees of the agency which maintains the record who have a need for the record in the performance of their duties; 
</P>
<P>(2) Required under section 552 of this title; 
</P>
<P>(3) For a routine use as defined in subsection (a)(7) of this section and described under subsection (e)(4)(D) of this section; 
</P>
<P>(4) To the Bureau of the Census for purposes of planning or carrying out a census or survey or related activity pursuant to the provisions of title 13; 
</P>
<P>(5) To a recipient who has provided the agency with advance adequate written assurance that the record will be used solely as a statistical research or reporting record, and the record is to be transferred in a form that is not individually identifiable; 
</P>
<P>(6) To the National Archives of the United States as a record which has sufficient historical or other value to warrant its continued preservation by the United States Government, or for evaluation by the Administrator of General Services or his designee to determine whether the record has such value; 
</P>
<P>(7) To another agency or to an instrumentality of any governmental jurisdiction within or under the control of the United States for a civil or criminal law enforcement activity if the activity is authorized by law, and if the head of the agency or instrumentality has made a written request to the agency which maintains the record specifying the particular portion desired and the law enforcement activity for which the record is sought; 
</P>
<P>(8) To a person pursuant to a showing of compelling circumstances affecting the health or safety of an individual if upon such disclosure notification is transmitted to the last known address of such individual; 
</P>
<P>(9) To either House of Congress, or, to the extent of matter within its jurisdiction, any committee or subcommittee thereof, any joint committee of Congress or subcommittee of any such joint committee; 
</P>
<P>(10) To the Comptroller General, or any of his authorized representatives, in the course of the performance of the duties of the General Accounting Office; or 
</P>
<P>(11) Pursuant to the order of a court of competent jurisdiction.</P></EXTRACT>
<P>(b) The situations referred to in paragraph (a)(4) of this section include the following: 
</P>
<P>(1) 5 U.S.C. 552a(c)(4) requires dissemination of a corrected or amended record or notation of a disagreement statement by the Department in certain circumstances: 
</P>
<P>(2) 5 U.S.C. 552(a)(g) authorizes civil action by an individual and requires disclosure by the Department or the court; 
</P>
<P>(3) Section 5(e)(2) of the Act authorizes release of any records or information by the Department to the Privacy Protection Study Commission upon request of the Chairman; and 
</P>
<P>(4) Section 6 of the Act authorizes the Office of Management and Budget to provide the Department with continuing oversight and assistance in implementation of the Act. 
</P>
<P>(c) The Department shall make an accounting of each disclosure of any record contained in a system of records in accordance with 5 U.S.C. 552a(c) (1) and (2). Except for a disclosure made under 5 U.S.C. 552a(b)(7), the Privacy Act Officer shall make such accounting available to any individual, insofar as it pertains to that individual, on request submitted in accordance with § 16.4. The Privacy Act Officer shall make reasonable efforts to notify any individual when any record in a system of records is disclosed to any person under compulsory legal process, promptly upon being informed that such process has become a matter of public record. 


</P>
</DIV8>


<DIV8 N="§ 16.12" NODE="24:1.1.1.1.13.0.25.12" TYPE="SECTION">
<HEAD>§ 16.12   Fees.</HEAD>
<P>(a) The only fees to be charged to or collected from an individual under the provisions of this part are for copying records at the request of the individual. 
</P>
<P>(1) No fees shall be charged or collected for the following: Search for and retrieval of the records; review of the records; copying at the initiative of the Department without a request from the individual; transportation of records and personnel; and first class postage. 
</P>
<P>(2) It is the policy of the Department to provide an individual with one copy of each record corrected or amended pursuant to his or her request without charge as evidence of the correction or amendment. 
</P>
<P>(3) As requested by the United States Civil Service Commission in its published regulations implementing the Act, the Department will charge no fee to an individual who requests copies of a personnel record covered by that Commission's Government-wide published notice of systems of records. However, when such records are voluminous and the cost of copying would be in excess of five dollars ($5) the Department may, in its discretion, charge a fee.
</P>
<P>(b) The copying fees prescribed by paragraph (a) of this section are: 
</P>
<EXTRACT>
<FP-1>$0.10 Each copy of each page, up to 8
<FR>1/2</FR>″ × 14″ made by photocopy or similar process. 
</FP-1>
<FP-1>$0.20 Each page of computer printout without regard to the number of carbon copies concurrently printed.</FP-1></EXTRACT>
<P>(c) Payment of fees under this section shall be made in cash, or preferably by check or money order payable to the “Treasurer of the United States.” Payment shall be delivered or sent to the office stated in the billing notice or, if none is stated, to the Privacy Act Officer processing the request. Payment may be required in the form of a certified check in appropriate circumstances. Postage stamps will not be accepted. 
</P>
<P>(d) A copying fee totaling $1 or less shall be waived, but the copying fees for contemporaneous requests by the same individual shall be aggregated to determine the total fee. A copying fee shall not be charged or collected, or alternatively, it may be reduced when such action is determined by the Privacy Act Officer to be in the public interest. 
</P>
<P>(e) Special and additional services provided at the request of the individual, such as certification or authentication, postal insurance and special mailing arrangement costs, will be charged to the individual in accordance with other published regulations of the Department pursuant to statute (for example, 31 U.S.C. 433a). 
</P>
<P>(f) This section applies only to individuals making requests under this part. All other persons shall remain subject to fees and charges prescribed by other and appropriate authorities. 
</P>
<CITA TYPE="N">[40 FR 39729, Aug. 28, 1975, as amended at 42 FR 29479, June 9, 1977]


</CITA>
</DIV8>


<DIV8 N="§ 16.13" NODE="24:1.1.1.1.13.0.25.13" TYPE="SECTION">
<HEAD>§ 16.13   Penalties.</HEAD>
<P>(a) The Act provides, in pertinent part: 
</P>
<EXTRACT>
<P>Any person who knowingly and willfully requests or obtains any record concerning an individual from an agency under false pretences shall be guilty of a misdemeanor and fined not more than $5,000. (5 U.S.C. 552a(i)(3))</P></EXTRACT>
<P>(b) A person who falsely or fraudulently attempts to obtain records under the Act may also be subject to prosecution under such other criminal statutes as 18 U.S.C. 494, 495 and 1001. 


</P>
</DIV8>


<DIV8 N="§ 16.14" NODE="24:1.1.1.1.13.0.25.14" TYPE="SECTION">
<HEAD>§ 16.14   General exemptions.</HEAD>
<P>(a) Individuals may not have access to records maintained by the Department but which were provided by another agency which has determined by regulation that such information is subject to general exemption under 5 U.S.C. 552a(j). If such exempt records are within a request for access, the Department will advise the individual of their existence and of the name and address of the source agency. For any further information concerning the record and the exemption, the individual must contact that source agency. 
</P>
<P>(b) The Secretary of Housing and Urban Development has determined that the Office of the Assistant Inspector General for Investigation performs, as its principal function, activities pertaining to the enforcement of criminal laws. The records maintained by that office in a system identified as “HUD/DEPT-24, Investigation Files,” primarily consist of information compiled for the purpose of criminal investigations and are associated with identifiable individuals. Therefore, the Secretary has determined that this system of records shall be exempt, consistent with 5 U.S.C. 552a(j)(2), from all requirements of the Privacy Act except 5 U.S.C. 552a (b), (c) (1) and (2), (e)(4) (A) through (F), (e) (6), (7), (9), (10), and (11), and (i) unless elsewhere exempted.
</P>
<CITA TYPE="N">[40 FR 39729, Aug. 28, 1975, as amended at 49 FR 20486, May 15, 1984]


</CITA>
</DIV8>


<DIV8 N="§ 16.15" NODE="24:1.1.1.1.13.0.25.15" TYPE="SECTION">
<HEAD>§ 16.15   Specific exemptions.</HEAD>
<P>Whenever the Secretary of Housing and Urban Development determines it to be necessary and proper, with respect to any system of records maintained by the Department, to exercise the right to promulgate rules to exempt such systems in accordance with the provisions of 5 U.S.C. 552a(k), each specific exemption, including the parts of each system to be exempted, the provisions of the Act from which they are exempted, and the justification for each exemption shall be published in the <E T="04">Federal Register</E> as part of the Department's Notice of Systems of Records. 
</P>
<P>(a) Exempt under 5 U.S.C. 552a(k)(2) from the requirements of 5 U.S.C. 552a (c)(3), (d), (e)(1), (e)(4) (G), (H), (I), and (f). This exemption allows the Department to withhold records compiled for law enforcement purposes. The reasons for adopting this exemption are to prevent individuals, who are the subjects of investigation, from frustrating the investigatory process, to ensure the integrity of the investigatory process, to ensure the integrity of law enforcement activities, to prevent disclosure of investigative techniques, and to protect the confidentiality of sources of information. The names of systems correspond to those published in the <E T="04">Federal Register</E> as part of the Department's Notice of Systems of Records.
</P>
<P>(1) HUD/DEPT-15. Equal Opportunity Housing Complaints.
</P>
<P>(2) HUD/DEPT-24. Investigation Files in the Office of the Inspector General.
</P>
<P>(3) HUD/DEPT-25. Legal Action Files.
</P>
<P>(b) Exempt under 5 U.S.C. 552(k)(5) from the requirements of 5 U.S.C. 552a (c)(3), (d), (e)(1), (e)(4), (G), (H), and (I), and (f). This exemption allows the Department to withhold records compiled solely for the purpose of determining suitability, eligibility, or qualifications for Federal contracts, or access to classified material. The reasons for adopting this exemption are to insure the proper functioning of the investigatory process, to insure effective determination of suitability, eligibility and qualification for employment and to protect the confidentiality of sources of information. The names of systems correspond to those published in the <E T="04">Federal Register</E> as part of the Department's Notice of Systems of Records.
</P>
<P>(1) HUD/DEPT-24. Investigation Files in the Office of the Inspector General.
</P>
<P>(2) HUD/DEPT-25. Legal Action Files.
</P>
<P>(c) The system of records entitled “HUD/PIH-1. Tenant Eligibility Verification Files” consists in part of investigatory material compiled for law enforcement purposes. Relevant records will be used by appropriate Federal, state or local agencies charged with the responsibility for investigating or prosecuting violations of law. Therefore, to the extent that information in the system falls within the coverage of subsection (k)(2) of the Privacy Act, 5 U.S.C. 552a(k)(2), the system is exempt from the requirements of the following subsections of the Privacy Act, for the reasons stated below. 
</P>
<P>(1) From subsection (c)(3) because release of an accounting of disclosures to an individual who may be the subject of an investigation could reveal the nature and scope of the investigation and could result in the altering or destruction of evidence, improper influencing of witnesses, and other evasive actions that could impede or compromise the investigation. 
</P>
<P>(2) From subsection (d)(1) because release of the records to an individual who may become or has become the subject of an investigation could interfere with pending or prospective law enforcement proceedings, constitute an unwarranted invasion of the personal privacy of third parties, reveal the identity of confidential sources, or reveal sensitive investigative techniques and procedures. 
</P>
<P>(3) From subsection (d)(2) because amendment or correction of the records could interfere with pending or prospective law enforcement proceedings, or could impose an impossible administrative and investigative burden by requiring the office that maintains the records to continuously retrograde its verifications of tenant eligibility attempting to resolve questions of accuracy, relevance, timeliness and completeness. 
</P>
<P>(4) From subsection (e)(1) because it is often impossible to determine relevance or necessity of information in pre-investigative early stages. The value of such information is a question of judgment and timing; what appears relevant and necessary when collected may ultimately be evaluated and viewed as irrelevant and unnecessary to an investigation. In addition, the Assistant Secretary for Public and Indian Housing, or investigators, may obtain information concerning the violation of laws other than those within the scope of its jurisdiction. In the interest of effective law enforcement, the Assistant Secretary for Public and Indian Housing, or investigators, should retain this information because it may aid in establishing patterns of unlawful activity and provide leads for other law enforcement agencies. Further, in obtaining the evidence, information may be provided which relates to matters incidental to the main purpose of the inquiry or investigation but which may be pertinent to the investigative jurisdiction of another agency. Such information cannot readily be identified. 
</P>
<P>(d) The system of records entitled “HUD/PIH-1. Tenant Eligibility Verification Files” consists in part of material that may be used for the purpose of determining suitability, eligibility, or qualifications for Federal civilian employment or Federal contracts, the release of which would reveal the identity of a source who furnished information to the Government under an express promise that the identity of the source would be held in confidence. Therefore, to the extent that information in this system falls within the coverage of subsection (k)(5) of the Privacy Act, 5 U.S.C. 552a(k)(5), the system is exempt from the requirements of the following subsection of the Privacy Act, for the reasons stated below. 
</P>
<P>(1) From subsection (d)(1) because release would reveal the identity of a source who furnished information to the Government under an express promise of confidentiality. Revealing the identity of a confidential source could impede future cooperation by sources, and could result in harassment or harm to such sources.
</P>
<CITA TYPE="N">[42 FR 49810, Sept. 28, 1977, as amended at 59 FR 9407, Feb. 28, 1994] 


</CITA>
</DIV8>

</DIV5>


<DIV5 N="17" NODE="24:1.1.1.1.14" TYPE="PART">
<HEAD>PART 17—ADMINISTRATIVE CLAIMS 


</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>28 U.S.C. 2672; 31 U.S.C. 3711, 3716-18, 3721, and 5 U.S.C. 5514; 42 U.S.C. 3535(d). 


</PSPACE></AUTH>
<EDNOTE>
<HED>Editorial Note:</HED><PSPACE>Nomenclature changes to part 17 appear at 87 FR 8196, Feb. 14, 2022.</PSPACE></EDNOTE>

<DIV6 N="A" NODE="24:1.1.1.1.14.1" TYPE="SUBPART">
<HEAD>Subpart A—Claims Against Government Under Federal Tort Claims Act</HEAD>

<AUTH>
<HED>Authority:</HED><PSPACE>5 U.S.C. 5514; 28 U.S.C. 2672; 31 U.S.C. 3711, 3716-3718, 3721; 42 U.S.C. 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>36 FR 24427, Dec. 22, 1971, unless otherwise noted.


</PSPACE></SOURCE>

<DIV7 N="31" NODE="24:1.1.1.1.14.1.31" TYPE="SUBJGRP">
<HEAD>General Provisions</HEAD>


<DIV8 N="§ 17.1" NODE="24:1.1.1.1.14.1.31.1" TYPE="SECTION">
<HEAD>§ 17.1   Scope; definitions.</HEAD>
<P>(a) This subpart applies to claims asserted under the Federal Tort Claims Act, as amended, accruing on or after January 18, 1967, for money damages against the United States for injury to or loss of property or personal injury or death caused by the negligent or wrongful act or omission of an officer or employee of the Department while acting within the scope of his office or employment. 
</P>
<P>(b) This subpart is issued subject to and consistent with applicable regulations on administrative claims under the Federal Tort Claims Act issued by the Attorney General (31 FR 16616; 28 CFR part 14). 
</P>
<P>(c) The terms <I>Department</I> and <I>Organizational unit</I> are defined in 24 CFR part 5. 
</P>
<CITA TYPE="N">[36 FR 24427, Dec. 22, 1971, as amended at 61 FR 5204, Feb. 9, 1996]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="32" NODE="24:1.1.1.1.14.1.32" TYPE="SUBJGRP">
<HEAD>Procedures</HEAD>


<DIV8 N="§ 17.2" NODE="24:1.1.1.1.14.1.32.2" TYPE="SECTION">
<HEAD>§ 17.2   Administrative claim; when presented; appropriate HUD office.</HEAD>
<P>(a) For purposes of this subpart, a claim shall be deemed to have been presented when the Department receives, at a place designated in paragraph (b) of this section, an executed <I>Claim for Damages or Injury,</I> Standard Form 95, or other written notification of an incident, accompanied by a claim for money damages in a sum certain for injury to or loss of property, for personal injury, or for death alleged to have occurred by reason of the incident. A claim which should have been presented to the Department, but which was mistakenly addressed to or filed with another Federal agency, is deemed to be presented to the Department as of the date that the claim is received by the Department. If a claim is mistakenly addressed to or filed with the Department, the Department shall forthwith transfer it to the appropriate Federal agency, if ascertainable, or return it to the claimant. 
</P>
<P>(b) A claimant shall mail or deliver his claim to the office of employment of the Department employee or employees whose negligent or wrongful act or omission is alleged to have caused the loss or injury complained of. Where such office of employment is the Department Central Office in Washington, or is not reasonably known and not reasonably ascertainable, claimant shall file his claim with the Assistant Secretary for Administration, Department of Housing and Urban Development, 451 Seventh Street SW., Washington, DC 20410. In all other cases, claimant shall address his claim to the head of the appropriate office, the address of which will generally be found listed in the local telephone directory. 


</P>
</DIV8>


<DIV8 N="§ 17.3" NODE="24:1.1.1.1.14.1.32.3" TYPE="SECTION">
<HEAD>§ 17.3   Administrative claim; who may file.</HEAD>
<P>(a) A claim for injury to or loss of property may be presented by the owner of the property, his duly authorized agent, or his legal representative. 
</P>
<P>(b) A claim for personal injury may be presented by the injured person, his duly authorized agent, or his legal representative. 
</P>
<P>(c) A claim based on death may be presented by the executor or administrator of the decedent's estate, or by any other person legally entitled to assert such a claim in accordance with applicable State law. 
</P>
<P>(d) A claim for loss wholly compensated by an insurer with the rights of a subrogee may be presented by the insurer. A claim for loss partially compensated by an insurer with the rights of a subrogee may be presented by the insurer or the insured individually, as their respective interests appear, or jointly. Whenever an insurer presents a claim asserting the rights of a subrogee, he shall present with his claim appropriate evidence that he has the rights of a subrogee. 
</P>
<P>(e) A claim presented by an agent or legal representative shall be presented in the name of the claimant, be signed by the agent or legal representative, show the title or legal capacity of the person signing, and be accompanied by evidence of his authority to present a claim on behalf of the claimant as agent, executor, administrator, parent, guardian, or other representative. 


</P>
</DIV8>


<DIV8 N="§ 17.4" NODE="24:1.1.1.1.14.1.32.4" TYPE="SECTION">
<HEAD>§ 17.4   Administrative claim; evidence and information to be submitted.</HEAD>
<P>(a) <I>Personal injury.</I> In support of a claim for personal injury, including pain and suffering, the claimant may be required to submit the following evidence or information: 
</P>
<P>(1) A written report by his attending physician or dentist setting forth the nature and extent of the injury, nature and extent of treatment, any degree of temporary or permanent disability, the prognosis, period of hospitalization, and any diminished earning capacity. In addition, the claimant may be required to submit to a physical or mental examination by a physician employed or designated by the Department or another Federal agency. A copy of the report of the examining physician shall be made available to the claimant upon the claimant's written request provided that he has, upon request, furnished the report referred to in the first sentence of this subparagraph and has made or agrees to make available to the Department any other physician's report previously or thereafter made of the physical or mental condition which is the subject matter of his claim; 
</P>
<P>(2) Itemized bills for medical, dental, and hospital expenses incurred, or itemized receipts of payment for such expenses; 
</P>
<P>(3) If the prognosis reveals the necessity for future treatment, a statement of expected expenses for such treatment; 
</P>
<P>(4) If a claim is made for loss of time from employment, a written statement from his employer showing actual time lost from employment, whether he is a full- or part-time employee, and wages or salary actually lost; 
</P>
<P>(5) If a claim is made for loss of income and the claimant is self-employed, documentary evidence showing the amount of earnings actually lost; 
</P>
<P>(6) Any other evidence or information which may have a bearing on either the responsibility of the United States for the personal injury or the damages claimed. 
</P>
<P>(b) <I>Death.</I> In support of a claim based on death, the claimant may be required to submit the following evidence or information: 
</P>
<P>(1) An authenticated death certificate or other competent evidence showing cause of death, date of death, and age of the decedent; 
</P>
<P>(2) Decedent's employment or occupation at time of death, including his monthly or yearly salary or earnings (if any), and the duration of his last employment or occupation; 
</P>
<P>(3) Full names, addresses, birth dates, kinship, and marital status of the decedent's survivors, including identification of those survivors who were dependent for support upon the decedent at the time of his death; 
</P>
<P>(4) Degree of support afforded by the decedent to each survivor dependent upon him for support at the time of his death; 
</P>
<P>(5) Decedent's general physical and mental condition before death; 
</P>
<P>(6) Itemized bills for medical and burial expenses incurred by reason of the incident causing death, or itemized receipts of payment for such expenses; 
</P>
<P>(7) If damages for pain and suffering prior to death are claimed, a physician's detailed statement specifying the injuries suffered, duration of pain and suffering, any drugs administered for pain, and the decedent's physical condition in the interval between injury and death; 
</P>
<P>(8) Any other evidence or information which may have a bearing on either the responsibility of the United States for the death or the damages claimed. 
</P>
<P>(c) <I>Property damage.</I> In support of a claim for injury to or loss of property, real or personal, the claimant may be required to submit the following evidence or information: 
</P>
<P>(1) Proof of ownership; 
</P>
<P>(2) A detailed statement of the amount claimed with respect to each item of property; 
</P>
<P>(3) An itemized receipt of payment for necessary repairs or itemized written estimates of the cost of such repairs; 
</P>
<P>(4) A statement listing date of purchase, purchase price, and salvage value where repair is not economical; 
</P>
<P>(5) Any other evidence or information which may have a bearing on either the responsibility of the United States for the injury to or loss of property or the damages claimed. 


</P>
</DIV8>


<DIV8 N="§ 17.5" NODE="24:1.1.1.1.14.1.32.5" TYPE="SECTION">
<HEAD>§ 17.5   Investigations.</HEAD>
<P>The Department may investigate, or may request any other Federal agency to investigate, a claim filed under this subpart. 


</P>
</DIV8>


<DIV8 N="§ 17.6" NODE="24:1.1.1.1.14.1.32.6" TYPE="SECTION">
<HEAD>§ 17.6   Claims investigation.</HEAD>
<P>(a) When a claim has been filed with the Department, the head of the organizational unit concerned or his designee shall designate one employee in that unit who shall act as, and who shall be referred to herein as, the Claims Investigating Officer for that particular claim. When a claim is received by the head of an organizational unit to which this subpart applies, it shall be forwarded with or without comment to the designated Claims Investigating Officer, who shall: 
</P>
<P>(1) Investigate as completely as is practicable the nature and circumstances of the occurrence causing the loss or damage of the claimant's property; 
</P>
<P>(2) Ascertain the extent of loss or damage to the claimant's property; 
</P>
<P>(3) Assemble the necessary forms with required data contained therein; 
</P>
<P>(4) Prepare a brief statement setting forth the facts relative to the claim, a statement whether the claim satisfies the requirements of this subpart, and a recommendation as to the amount to be paid in settlement of the claim; 
</P>
<P>(5) Submit such forms, statements, and all necessary supporting papers to the head of the organizational unit having jurisdiction over the employee involved, who will be responsible for assuring that all necessary data has been obtained for the file. The head of the organizational unit will transmit the entire file to the General Counsel. 


</P>
</DIV8>


<DIV8 N="§ 17.7" NODE="24:1.1.1.1.14.1.32.7" TYPE="SECTION">
<HEAD>§ 17.7   Authority to adjust, determine, compromise, and settle claims.</HEAD>
<P>The General Counsel, the Deputy General Counsel, and such employees of the Office of the General Counsel as may be designated by the General Counsel, are authorized to consider, ascertain, adjust, determine, compromise, and settle claims pursuant to the Federal Tort Claims Act, 28 U.S.C. 2671, and the regulations contained in 28 CFR part 14 and in this subpart. 


</P>
</DIV8>


<DIV8 N="§ 17.8" NODE="24:1.1.1.1.14.1.32.8" TYPE="SECTION">
<HEAD>§ 17.8   Limitations on authority.</HEAD>
<P>(a) An award, compromise, or settlement of a claim under section 2672 of Title 28, United States Code, and this subpart in excess of $25,000 may be effected only with the prior written approval of the Attorney General or his designee. For the purpose of this paragraph, a principal claim and any derivative or subrogated claim shall be treated as a single claim. 
</P>
<P>(b) An administrative claim may be adjusted, determined, compromised, or settled only after consultation with the Department of Justice when, in the opinion of the General Counsel or his designee: 
</P>
<P>(1) A new precedent or a new point of law is involved; or 
</P>
<P>(2) A question of policy is or may be involved; or 
</P>
<P>(3) The United States is or may be entitled to indemnity or contribution from a third party, and the Department is unable to adjust the third party claim; or 
</P>
<P>(4) The compromise of a particular claim, as a practical matter, will or may control the disposition of a related claim in which the amount to be paid may exceed $25,000. 
</P>
<P>(c) An administrative claim may be adjusted, determined, compromised, or settled only after consultation with the Department of Justice when the Department is informed or is otherwise aware that the United States or an officer, employee, agent, or cost-type contractor of the United States is involved in litigation based on a claim arising out of the same incident or transaction. 


</P>
</DIV8>


<DIV8 N="§ 17.9" NODE="24:1.1.1.1.14.1.32.9" TYPE="SECTION">
<HEAD>§ 17.9   Referral to Department of Justice.</HEAD>
<P>When Department of Justice approval or consultation is required under § 17.8, the referral or request shall be transmitted to the Department of Justice by the General Counsel of the Department or his designee. 


</P>
</DIV8>


<DIV8 N="§ 17.11" NODE="24:1.1.1.1.14.1.32.10" TYPE="SECTION">
<HEAD>§ 17.11   Final denial of claim.</HEAD>
<P>Final denial of an administrative claim shall be in writing, and notification of denial shall be sent to the claimant, his attorney, or legal representative by certified or registered mail. The notification of final denial may include a statement of the reasons for the denial and shall include a statement that, if the claimant is dissatisfied with the Department action, he may file suit in an appropriate U.S. District Court not later than 6 months after the date of mailing of the notification. 


</P>
</DIV8>


<DIV8 N="§ 17.12" NODE="24:1.1.1.1.14.1.32.11" TYPE="SECTION">
<HEAD>§ 17.12   Action on approved claim.</HEAD>
<P>(a) Payment of a claim approved under this subpart is contingent on claimant's execution of: (1) A <I>Claim for Damage or Injury,</I> Standard Form 95; (2) a claims settlement agreement; and (3) a <I>Voucher for Payment,</I> Standard Form 1145, as appropriate. When a claimant is represented by an attorney, the voucher for payment shall designate both the claimant and his attorney as payees, and the check shall be delivered to the attorney, whose address shall appear on the voucher. 
</P>
<P>(b) Acceptance by the claimant, his agent, or legal representative of an award, compromise, or settlement made under section 2672 or 2677 of Title 28, United States Code, is final and conclusive on the claimant, his agent or legal representative, and any other person on whose behalf or for whose benefit the claim has been presented, and constitutes a complete release of any claim against the United States and against any officer or employee of the Government whose act or omission gave rise to the claim, by reason of the same subject matter. 


</P>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="B" NODE="24:1.1.1.1.14.2" TYPE="SUBPART">
<HEAD>Subpart B—Claims Under the Military Personnel and Civilian Employees Claims Act of 1964</HEAD>

<AUTH>
<HED>Authority:</HED><PSPACE>Sec. 3, 78 Stat. 767 (31 U.S.C. 3721).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>36 FR 24427, Dec. 22, 1971, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 17.40" NODE="24:1.1.1.1.14.2.33.1" TYPE="SECTION">
<HEAD>§ 17.40   Scope and purpose.</HEAD>
<P>(a) This subpart applies to all claims filed by or on behalf of employees of the Department of Housing and Urban Development for loss of or damage to personal property which occurs incident to their service with HUD under the Military Personnel and Civilian Employees' Claims Act of 1964. A claim must be substantiated and the possession of the property determined to be reasonable, useful, or proper. The maximum amount that can be paid under any claim under the Act is $25,000 and property may be replaced in kind at the option of the Government. Nothing in this subpart shall be construed to bar claims payable under statutory authority. 
</P>
<P>(b) HUD is not an insurer and does not underwrite all personal property losses that an employee may sustain. Employees are encouraged to carry private insurance to the maximum extent practicable to avoid large losses or losses which may not be recoverable from HUD. The procedures set forth in this section are designed to enable the claimant to obtain the maximum amount of compensation for his loss or damage. Failure of the claimant to comply with these procedures may reduce or preclude payment of his claim under this subpart. 
</P>
<CITA TYPE="N">[36 FR 24427, Dec. 22, 1971, as amended at 48 FR 6536, Feb. 14, 1983] 


</CITA>
</DIV8>


<DIV8 N="§ 17.41" NODE="24:1.1.1.1.14.2.33.2" TYPE="SECTION">
<HEAD>§ 17.41   Claimants.</HEAD>
<P>(a) A claim pursuant to this subpart may only be made by: 
</P>
<P>(1) An employee of HUD. 
</P>
<P>(2) A former employee of HUD whose claim arises out of an incident occurring before his separation from HUD. 
</P>
<P>(3) Survivors of a person named in paragraph (a) (1) or (2) of this section, in the following order of precedence: 
</P>
<P>(i) Spouse. 
</P>
<P>(ii) Children. 
</P>
<P>(iii) Father or mother, or both. 
</P>
<P>(iv) Brothers or sisters, or both. 
</P>
<P>(4) The authorized agent or legal representative of a person named in paragraphs (a) (1), (2), and (3) of this section. 
</P>
<P>(b) A claim may not be presented by or for the benefit of a subrogee, assignee, conditional vendor, or other third party. 


</P>
</DIV8>


<DIV8 N="§ 17.42" NODE="24:1.1.1.1.14.2.33.3" TYPE="SECTION">
<HEAD>§ 17.42   Time limitations.</HEAD>
<P>A claim under this part may be allowed only if: 
</P>
<P>(a) Except as provided in paragraph (b) of this section, it is filed in writing within 2 years after accrual. For purposes of this part, a claim accrues at the time of the accident or incident causing the loss or damage, or at such time as the loss or damage should have been discovered by the claimant by the exercise of due diligence. 
</P>
<P>(b) It cannot be filed within the time limits of paragraph (a) of this section, because it accrues in time of war or in time of armed conflict in which any armed force of the United States is engaged or if such a war or armed conflict intervenes within 2 years after it accrues, and if good cause is shown, and if it is filed not later than 2 years after that cause ceases to exist, or 2 years after the war or armed conflict is terminated, whichever is earlier. 


</P>
</DIV8>


<DIV8 N="§ 17.43" NODE="24:1.1.1.1.14.2.33.4" TYPE="SECTION">
<HEAD>§ 17.43   Allowable claims.</HEAD>
<P>(a) A claim may be allowed only if: 
</P>
<P>(1) The damage or loss was not caused wholly or partly by the negligent or wrongful act of the claimant, his agent, the members of his family, or his private employee (the standard to be applied is that of reasonable care under the circumstances); and 
</P>
<P>(2) The possession of the property lost or damaged and the quantity possessed is determined to have been reasonable, useful, or proper under the circumstances; and 
</P>
<P>(3) The claim is substantiated by proper and convincing evidence. 
</P>
<P>(b) Claims which are otherwise allowable under this part shall not be disallowed solely because the property was not in the possession of the claimant at the time of the damage or loss, or solely because the claimant was not the legal owner of the property for which the claim is made. For example, borrowed property may be the subject of a claim. 
</P>
<P>(c) Subject to the conditions in paragraph (a) of this section, and the other provisions of this subpart, any claim for damage to, or loss of, personal property incident to service with HUD may be considered and allowed. The following are examples of the principal types of claims which may be allowed, but these examples are not exclusive and other types of claims may be allowed, unless excluded by §§ 17.44 and 17.45: 
</P>
<P>(1) <I>Property loss or damage in quarters or other authorized places.</I> Claims may be allowed for damage to, or loss of, property arising from fire, flood, hurricane, other natural disaster, theft, or other unusual occurrence, while such property is located at: 
</P>
<P>(i) Quarters within the 50 States or the District of Columbia that were assigned to the claimant or otherwise provided in kind by the United States; 
</P>
<P>(ii) Quarters outside the 50 States and the District of Columbia that were occupied by the claimant, whether or not they were assigned or otherwise provided in kind by the United States, except when the claimant is a civilian employee who is a local inhabitant; or 
</P>
<P>(iii) Any warehouse, office, working area, or other place (except quarters) authorized or apparently authorized for the reception or storage of property. 
</P>
<P>(2) <I>Transportation or travel losses.</I> Claims may be allowed for damage to, or loss of, property incident to transportation or storage pursuant to orders, or in connection with travel under orders, including property in the custody of a carrier, an agent or agency of the Government, or the claimant. 
</P>
<P>(3) <I>Manufactured homes.</I> Claims may be allowed for damage to, or loss of, manufactured homes and their contents under the provisions of paragraph (c)(2) of this section. Claims for structural damage to manufactured homes, other than that caused by collision, and damage to contents of manufactured homes resulting from such structural damage, must contain conclusive evidence that the damage was not caused by structural deficiency of the manufactured home and that it was not overloaded. Claims for damage to, or loss of, tires mounted on manufactured homes will not be allowed, except in cases of collision, theft, or vandalism. 
</P>
<P>(4) <I>Enemy action or public service.</I> Claims may be allowed for damage to, or loss of, property as a direct consequence of: 
</P>
<P>(i) Enemy action or threat thereof, or combat, guerrilla, brigandage, or other belligerent activity, or unjust confiscation by a foreign power or its nationals; 
</P>
<P>(ii) Action by the claimant to quiet a civil disturbance or to alleviate a public disaster; or 
</P>
<P>(iii) Efforts by the claimant to save human life or Government property. 
</P>
<P>(5) <I>Property used for benefit of the Government.</I> Claims may be allowed for damage to, or loss of, property when used for the benefit of the Government at the request of, or with the knowledge and consent of, superior authority. 
</P>
<P>(6) <I>Clothing and accessories.</I> Claims may be allowed for damage to, or loss of, clothing or accessories customarily worn on the person, such as eyeglasses, hearing aids, or dentures. 
</P>
<CITA TYPE="N">[36 FR 24427, Dec. 22, 1971, as amended at 50 FR 9268, Mar. 7, 1985] 


</CITA>
</DIV8>


<DIV8 N="§ 17.44" NODE="24:1.1.1.1.14.2.33.5" TYPE="SECTION">
<HEAD>§ 17.44   Restrictions on certain claims.</HEAD>
<P>Claims of the type described in this section are only allowable subject to the restrictions noted: 
</P>
<P>(a) <I>Money or currency.</I> Claims may be allowed for loss of money or currency only when lost incident to fire, flood, hurricane, other natural disaster, or by theft from quarters (as limited by paragraph (a) of § 17.45). In instances of theft from quarters, it must be conclusively shown that the quarters were locked at the time of the theft. Reimbursement for loss of money or currency is limited to an amount which is determined to have been reasonable for the claimant to have had in his possession at the time of the loss. 
</P>
<P>(b) <I>Government property.</I> Claims may only be allowed for property owned by the United States for which the claimant is financially responsible to any agency of the Government other than HUD. 
</P>
<P>(c) <I>Estimate fees.</I> Claims may include fees paid to obtain estimates of repair only when it is clear that an estimate could not have been obtained without paying a fee. In that case, the fee may be allowed only in an amount determined to be reasonable in relation to the value of the property or the cost of the repairs. 
</P>
<P>(d) <I>Automobiles and other motor vehicles.</I> Claims may only be allowed for damage to, or loss of, automobiles and other motor vehicles if: 
</P>
<P>(1) Such motor vehicles were required to be used for official Government business (official Government business, as used here, does not include travel, or parking incident thereto, between quarters and office, or use of vehicles for the convenience of the owner. However, it does include travel, and parking incident thereto, between quarters and assigned place of duty specifically authorized by the employee's supervisor as being more advantageous to the Government); or 
</P>
<P>(2) Shipment of such motor vehicles was being furnished or provided by the Government, subject to the provisions of § 17.46. 


</P>
</DIV8>


<DIV8 N="§ 17.45" NODE="24:1.1.1.1.14.2.33.6" TYPE="SECTION">
<HEAD>§ 17.45   Unallowable claims.</HEAD>
<P>Claims are not allowable for the following: 
</P>
<P>(a) <I>Unassigned quarters in United States.</I> Property loss or damage in quarters occupied by the claimant within the 50 States or the District of Columbia that were not assigned to him or otherwise provided in kind by the United States. 
</P>
<P>(b) <I>Business property.</I> Property used for business or profit. 
</P>
<P>(c) <I>Unserviceable property.</I> Wornout or unserviceable property. 
</P>
<P>(d) <I>Illegal possession.</I> Property acquired, possessed, or transported in violation of law or in violation of applicable regulations or directives. 
</P>
<P>(e) <I>Articles of extraordinary value.</I> Valuable articles, such as cameras, watches, jewelry, furs, or other articles of extraordinary value, when shipped with household goods or as unaccompanied baggage (shipment includes storage). This prohibition does not apply to articles in the personal custody of the claimant or articles properly checked, provided that reasonable protection or security measures have been taken by claimant. 
</P>
<P>(f) <I>Minimum amount.</I> Loss or damage amounting to less than $10. 


</P>
</DIV8>


<DIV8 N="§ 17.46" NODE="24:1.1.1.1.14.2.33.7" TYPE="SECTION">
<HEAD>§ 17.46   Claims involving carriers or insurers.</HEAD>
<P>In the event the property which is the subject of a claim was lost or damaged while in the possession of a carrier or was insured, the following procedures will apply: 
</P>
<P>(a) Whenever property is damaged, lost, or destroyed while being shipped pursuant to authorized travel orders, the owner must file a written claim for reimbursement with the last commercial carrier known or believed to have handled the goods, or the carrier known to be in possession of the property when the damage or loss occurred, according to the terms of its bill of lading or contract, before submitting a claim against the Government under this subpart. 
</P>
<P>(1) If more than one bill of lading or contract was issued, a separate demand should be made against the last carrier on each such document. 
</P>
<P>(2) The demand should be made within 9 months of the date that delivery was made, or within 9 months of the date that delivery should ordinarily have been made. 
</P>
<P>(3) If it is apparent that the damage or loss is attributable to packing, storage, or unpacking while in the custody of the Government, no demand need be made against the carrier. 
</P>
<P>(b) Whenever property which is damaged, lost, or destroyed incident to the claimant's service is insured in whole or in part, the claimant must make demand in writing against the insurer for reimbursement under the terms and conditions of the insurance coverage, prior to the filing of the concurrent claim against the Government. 
</P>
<P>(c) Failure to make a demand on a carrier or insurer or to make all reasonable efforts to protect and prosecute rights available against a carrier or insurer and to collect the amount recoverable from the carrier or insurer may result in reducing the amount recoverable from the Government by the maximum amount which would have been recoverable from the carrier or insurer, had the claim been timely or diligently prosecuted. However, no deduction will be made where the circumstances of the claimant's service preclude reasonable filing of such a claim or diligent prosecution, or the evidence indicates a demand was impracticable or would have been unavailing. 
</P>
<P>(d) Following the submission of the claim against the carrier or insurer, the claimant may immediately submit his claim against the Government in accordance with the provisions of this subpart, without waiting until either final approval or denial of his claim is made by the carrier or insurer. 
</P>
<P>(1) Upon submitting his claim, he will certify in his claim that he has or has not gained any recovery from a carrier or insurer, and enclose all correspondence pertinent thereto. 
</P>
<P>(2) If final action has not been taken by the carrier or insurer on his claim, he will immediately notify them to address all correspondence in regard to his claim to him, in care of the General Counsel of HUD. 
</P>
<P>(3) The claimant shall advise the General Counsel of any action taken by the carrier or insurer on his claim and upon request shall furnish all correspondence documents, and other evidence pertinent to the matter. 
</P>
<P>(e) The claimant will assign to the United States to the extent of any payment on his claim accepted by him, all his right, title and interest in any claim he may have against any carrier, insurer, or other party arising out of the incident on which the claim against the United States is based. After payment of his claim by the United States, the claimant will, upon receipt of any payment from a carrier or insurer, pay the proceeds to the United States to the extent of the payment received by him from the United States. 
</P>
<P>(f) Where a claimant recovers for the loss from the carrier or insurer before his claim under this subpart is settled, the amount or recovery shall be applied to his claim as follows: 
</P>
<P>(1) When the amount recovered from a carrier, insurer, or other third party is greater than or equal to the claimant's total loss as determined under this part, no compensation is allowable under this part. 
</P>
<P>(2) When the amount recovered is less than such total loss, the allowable amount is determined by deducting the recovery from the amount of such total loss. 
</P>
<P>(3) For the purpose of this paragraph (f) the claimant's total loss is to be determined without regard to the $6,500 maximum set forth above. However, if the resulting amount, after making this deduction, exceeds $6,500, the claimant will be allowed only $6,500. 


</P>
</DIV8>


<DIV8 N="§ 17.47" NODE="24:1.1.1.1.14.2.33.8" TYPE="SECTION">
<HEAD>§ 17.47   Settlement of claims.</HEAD>
<P>(a) The General Counsel, HUD, is authorized to settle (consider, ascertain, adjust, determine, and dispose of, whether by full or partial allowance or disallowance) any claim under this subpart. 
</P>
<P>(b) The General Counsel may formulate such procedures and make such redelegations as may be required to fulfill the objectives of this subpart. 
</P>
<P>(c) The General Counsel shall conduct such investigation as may be appropriate in order to determine the validity of a claim. 
</P>
<P>(d) The General Counsel shall notify a claimant in writing of action taken on his claim, and if partial or full disallowance is made, the reasons therefor. 
</P>
<P>(e) In the event a claim submitted against a carrier under § 17.46 has not been settled before settlement of the claim against the Government pursuant to this subpart, the General Counsel shall notify such carrier or insurer to pay the proceeds of the claim to HUD to the extent HUD has paid such to claimant in settlement. 


</P>
</DIV8>


<DIV8 N="§ 17.48" NODE="24:1.1.1.1.14.2.33.9" TYPE="SECTION">
<HEAD>§ 17.48   Computation of amount of award.</HEAD>
<P>(a) The amount allowed for damage to or loss of any item of property may not exceed the cost of the item (either the price paid in cash or property, or the value at the time of acquisition if not acquired by purchase or exchange); and there will be no allowance for replacement cost or for appreciation in the value of the property. Subject to these limitations, the amount allowable is either: 
</P>
<P>(1) The depreciated value, immediately prior to the loss or damage, of property lost or damaged beyond economical repair, less any salvage value; or 
</P>
<P>(2) The reasonable cost of repairs, when property is economically repairable, provided that the cost of repairs does not exceed the amount allowable under paragraph (a)(1) of this section. 
</P>
<P>(b) Depreciation in value is determined by considering the type of article involved, its cost, its condition when damaged or lost, and the time elapsed between the date of acquisition and the date of damage or loss. 
</P>
<P>(c) Replacement of lost or damaged property may be made in kind whenever appropriate. 


</P>
</DIV8>


<DIV8 N="§ 17.49" NODE="24:1.1.1.1.14.2.33.10" TYPE="SECTION">
<HEAD>§ 17.49   Attorney's fees.</HEAD>
<P>No more than 10 per centum of the amount paid in settlement of each individual claim submitted and settled under this subpart shall be paid or delivered to or received by any agent or attorney on account of services rendered in connection with that claim. 


</P>
</DIV8>


<DIV8 N="§ 17.50" NODE="24:1.1.1.1.14.2.33.11" TYPE="SECTION">
<HEAD>§ 17.50   Claims procedures.</HEAD>
<P>(a) Claims by, or on behalf of, employees of field offices shall be filed in writing with the appropriate Regional Counsel. Claims by, or on behalf of, employees of Department Headquarters shall be filed in writing with the General Counsel, Department of Housing and Urban Development, 451 7th Street, SW., Washington, DC 20410.
</P>
<P>(b) Each written claim shall contain, as a minimum: 
</P>
<P>(1) Name, address, place of employment of claimant. 
</P>
<P>(2) Place and date of loss or damage. 
</P>
<P>(3) A brief statement of the facts and circumstances surrounding loss or damage. 
</P>
<P>(4) Cost, date, and place of acquisition of each piece of property lost or damaged. 
</P>
<P>(5) Two itemized repair estimates, or value estimates, whichever is applicable. 
</P>
<P>(6) Copies of police reports, if applicable. 
</P>
<P>(7) With respect to claims involving thefts or losses in quarters or other places where the property was reasonably kept, a statement as to what security precautions were taken to protect the property involved. 
</P>
<P>(8) With respect to claims involving property being used for the benefit of the Government, a statement by the employee's supervisor evidencing that the claimant was required to provide such property or that his providing it was in the interest of the Government. 
</P>
<P>(9) Other evidence as may be required by the General Counsel. 
</P>
<CITA TYPE="N">[36 FR 24427, Dec. 22, 1971, as amended at 48 FR 6536, Feb. 14, 1983] 


</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:1.1.1.1.14.3" TYPE="SUBPART">
<HEAD>Subpart C—Procedures for the Collection of Claims by the Government</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>76 FR 69045, Nov. 7, 2011, unless otherwise noted.


</PSPACE></SOURCE>

<DIV7 N="33" NODE="24:1.1.1.1.14.3.33" TYPE="SUBJGRP">
<HEAD>General Provisions</HEAD>


<DIV8 N="§ 17.61" NODE="24:1.1.1.1.14.3.33.1" TYPE="SECTION">
<HEAD>§ 17.61   Purpose and scope.</HEAD>
<P>(a) <I>In general.</I> HUD will undertake debt collection pursuant to this subpart in accordance with the Debt Collection Improvement Act of 1996, codified in scattered sections of 31 U.S.C. chapter 37; the revised Federal Claims Collection Standards, codified at 31 CFR parts 900 through 904; the Treasury debt collection regulations set forth in 31 CFR part 285; and such additional provisions as provided in this subpart.
</P>
<P>(b) <I>Applicability of other statutes and regulations.</I> (1) Nothing in this subpart precludes the authority under statutes and regulations other than those described in this subpart to collect, settle, compromise, or close claims, including, but not limited to:
</P>
<P>(i) Debts incurred by contractors under contracts for supplies and services awarded by HUD under the authority of subpart 32.6 of the Federal Acquisition Regulation (FAR);
</P>
<P>(ii) Debts arising out of the business operations of the Government National Mortgage Association; and
</P>
<P>(iii) Debts arising under Title I or section 204(g) of Title II of the National Housing Act (12 U.S.C. 1701 <I>et seq.</I>).
</P>
<P>(2) This subpart is not applicable to tax debts or to any debt for which there is an indication of fraud or misrepresentation, unless the debt is returned by the Department of Justice to HUD for handling.
</P>
<P>(c) <I>Scope.</I> Sections 17.65 through 17.79, under the heading Administrative Offset and Other Actions, includes the procedures that apply when HUD seeks satisfaction of debts owed to HUD by administrative offset of payments by the Federal Government other than Federal salary payments, and when HUD takes other administrative actions for nonpayment of debt. Section 17.81, under the heading Administrative Wage Garnishment, includes the procedures that apply when HUD seeks to satisfy a debt owed to HUD out of the debtor's compensation from an employer other than the Federal Government. Sections 17.83 through 17.113, under the heading Salary Offset, include procedures that apply when HUD or another Federal agency seeks to satisfy a debt owed to it through offset of the salary of a current Federal employee.


</P>
</DIV8>


<DIV8 N="§ 17.63" NODE="24:1.1.1.1.14.3.33.2" TYPE="SECTION">
<HEAD>§ 17.63   Definitions.</HEAD>
<P>As used in this subpart:
</P>
<P><I>Department or HUD</I> means the Department of Housing and Urban Development, and includes a person authorized to act for HUD.
</P>
<P><I>Office</I> means the organization of each Assistant Secretary of HUD or other HUD official at the Assistant Secretary level, and each Field Office.
</P>
<P><I>Office of Hearings and Appeals</I> or <I>OHA</I> means the HUD Office of Hearings and Appeals.
</P>
<P><I>Secretary</I> means the Secretary of HUD.
</P>
<P><I>Treasury</I> means the Department of the Treasury.
</P>
<P><I>United States</I> includes an agency of the United States.
</P>
<CITA TYPE="N">[76 FR 69045, Nov. 7, 2011, as amended at 87 FR 8196, Feb. 14, 2022]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="34" NODE="24:1.1.1.1.14.3.34" TYPE="SUBJGRP">
<HEAD>Administrative Offset and Other Actions</HEAD>


<DIV8 N="§ 17.65" NODE="24:1.1.1.1.14.3.34.3" TYPE="SECTION">
<HEAD>§ 17.65   Demand and notice of intent to offset.</HEAD>
<P>HUD will make written demand upon the debtor pursuant to the requirements of 31 CFR 901.2 and send written notice of intent to offset to the debtor pursuant to the requirements of 31 CFR 901.3 and 31 CFR part 285, subpart A. The Secretary shall mail the demand and notice of intent to offset to the debtor, at the most current address that is available to the Secretary. HUD may refer the debt to the Treasury for collection and shall request that the amount of the debt be offset against any amount payable by the Treasury as a Federal payment, at any time after 60 days from the date such notice is sent to the debtor.


</P>
</DIV8>


<DIV8 N="§ 17.67" NODE="24:1.1.1.1.14.3.34.4" TYPE="SECTION">
<HEAD>§ 17.67   Review of departmental records related to the debt.</HEAD>
<P>(a) <I>Notification by the debtor.</I> A debtor who intends to inspect or copy departmental records related to the debt pursuant to 31 CFR 901.3 must, within 20 calendar days after the date of the notice in § 17.65, send a letter to HUD, at the address indicated in the notice of intent to offset, stating his or her intention. A debtor may also request, within 20 calendar days from the date of such notice, that HUD provide the debtor with a copy of departmental records related to the debt.
</P>
<P>(b) <I>HUD's response.</I> In response to a timely notification by the debtor as described in paragraph (a) of this section, HUD shall notify the debtor of the location and the time when the debtor may inspect or copy departmental records related to the debt. If the debtor requests that HUD provide a copy of departmental records related to the debt, HUD shall send the records to the debtor within 10 calendar days from the date that HUD receives the debtor's request. HUD may charge the debtor a reasonable fee to compensate for the cost of providing a copy of the departmental records related to the debt.


</P>
</DIV8>


<DIV8 N="§ 17.69" NODE="24:1.1.1.1.14.3.34.5" TYPE="SECTION">
<HEAD>§ 17.69   Review within HUD of a determination that an amount is past due and legally enforceable.</HEAD>
<P>(a) <I>Notification by the debtor.</I> A debtor who receives notice of intent to offset pursuant to § 17.65 has the right to a review of the case and to present evidence that all or part of the debt is not past due or not legally enforceable. The debtor may send a copy of the notice with a letter notifying the Office of Hearings and Appeals of his or her intention to present evidence. Failure to give this notice shall not jeopardize the debtor's right to present evidence within the 60 calendar days provided for in paragraph (b) of this section. If the Office of Hearings and Appeals has additional procedures governing the review process, a copy of the procedures shall be mailed to the debtor after the request for review is received and docketed by the Office of Hearings and Appeals.
</P>
<P>(b) <I>Submission of evidence.</I> If the debtor wishes to submit evidence showing that all or part of the debt is not past due or not legally enforceable, the debtor must submit such evidence to the Office of Hearings and Appeals within 60 calendar days after the date of the notice of intent to offset. Failure to submit evidence will result in a dismissal of the request for review by the OHA.
</P>
<P>(c) <I>Review of the record.</I> After timely submission of evidence by the debtor, the OHA will review the evidence submitted by the Department that shows that all or part of the debt is past due and legally enforceable. The decision of an administrative judge of the OHA will be based on a preponderance of the evidence as to whether there is a debt that is past due and whether it is legally enforceable. The administrative judge of the OHA shall make a determination based upon a review of the evidence that comprises the written record, except that the OHA may order an oral hearing if the administrative judge of the OHA finds that:
</P>
<P>(1) An applicable statute authorizes or requires the Department to consider a waiver of the indebtedness and the waiver determination turns on credibility or veracity; or
</P>
<P>(2) The question of indebtedness cannot be resolved by review of the documentary evidence.
</P>
<P>(d) <I>Previous decision by an administrative judge of the Office of Hearings and Appeals.</I> The debtor is not entitled to a review of the Department's intent to offset if an administrative judge of the OHA has previously issued a decision on the merits that the debt is past due and legally enforceable, except when the debt has become legally unenforceable since the issuance of that decision, or the debtor can submit newly discovered material evidence that the debt is presently not legally enforceable.


</P>
</DIV8>


<DIV8 N="§ 17.71" NODE="24:1.1.1.1.14.3.34.6" TYPE="SECTION">
<HEAD>§ 17.71   Request for hearing.</HEAD>
<P>The debtor shall file a request for a hearing with the OHA at the address specified in the notice or at such other address as the OHA may direct in writing to the debtor.


</P>
</DIV8>


<DIV8 N="§ 17.73" NODE="24:1.1.1.1.14.3.34.7" TYPE="SECTION">
<HEAD>§ 17.73   Determination of the HUD Office of Hearings and Appeals.</HEAD>
<P>(a) <I>Determination.</I> An administrative judge of the OHA shall issue a written decision that includes the supporting rationale for the decision. The decision of the administrative judge of the OHA concerning whether a debt or part of a debt is past due and legally enforceable is the final agency decision with respect to the past due status and enforceability of the debt.
</P>
<P>(b) <I>Copies.</I> Copies of the decision of the administrative judge of the OHA shall be distributed to HUD's General Counsel, HUD's Chief Financial Officer (CFO), or other appropriate HUD program official, the debtor, and the debtor's attorney or other representative, if any.
</P>
<P>(c) <I>Notification to the Department of the Treasury.</I> If the decision of the administrative judge of the OHA affirms that all or part of the debt is past due and legally enforceable, HUD shall notify the Treasury after the date that the determination of the OHA has been issued under paragraph (a) of this section and a copy of the determination has been received by HUD's CFO or other appropriate HUD program official. No referral shall be made to the Treasury if the review of the debt by an administrative judge of the OHA subsequently determines that the debt is not past due or not legally enforceable.


</P>
</DIV8>


<DIV8 N="§ 17.75" NODE="24:1.1.1.1.14.3.34.8" TYPE="SECTION">
<HEAD>§ 17.75   Postponements, withdrawals, and extensions of time.</HEAD>
<P>(a) <I>Postponements and withdrawals.</I> HUD may, for good cause, postpone or withdraw referral of the debt to the Treasury.
</P>
<P>(b) <I>Extensions of time.</I> At the discretion of an administrative judge of the OHA, time limitations required in these procedures may be extended in appropriate circumstances for good cause.


</P>
</DIV8>


<DIV8 N="§ 17.77" NODE="24:1.1.1.1.14.3.34.9" TYPE="SECTION">
<HEAD>§ 17.77   Stay of referral for offset.</HEAD>
<P>If the debtor timely submits evidence in accordance with § 17.69(b), the referral to the Treasury in § 17.65 shall be stayed until the date of the issuance of a written decision by an administrative judge of the OHA that determines that a debt or part of a debt is past due and legally enforceable.


</P>
</DIV8>


<DIV8 N="§ 17.79" NODE="24:1.1.1.1.14.3.34.10" TYPE="SECTION">
<HEAD>§ 17.79   Administrative actions for nonpayment of debt.</HEAD>
<P>(a) <I>Referrals for nonpayment of debt.</I> When a contractor, grantee, or other participant in a program sponsored by HUD, fails to pay its debt to HUD within a reasonable time after demand, HUD shall take such measures to:
</P>
<P>(1) Refer such contractor, grantee, or other participant to the Office of General Counsel for investigation of the matter and possible suspension or debarment pursuant to 2 CFR part 2424, 2 CFR 180.800, and 48 CFR subpart 9.4 of the Federal Acquisition Regulation (FAR); and
</P>
<P>(2) In the case of matters involving fraud or suspected fraud, refer such contractor, grantee, or other participant to the Office of Inspector General for investigation. However, the failure to pay HUD within a reasonable time after demand is not a prerequisite for referral for fraud or suspected fraud.
</P>
<P>(b) <I>Excluded Parties List System (EPLS).</I> Depending upon the outcome of the referral in paragraph (a) of this section, HUD shall take such measures to insure that the contractor, grantee, or other participant is placed on the EPLS.
</P>
<P>(c) <I>Report to the Treasury.</I> The failure of any surety to honor its obligations in accordance with 31 U.S.C. 9304 shall be reported to the Chief Financial Officer, who shall inform the Treasury.


</P>
</DIV8>

</DIV7>


<DIV7 N="35" NODE="24:1.1.1.1.14.3.35" TYPE="SUBJGRP">
<HEAD>Administrative Wage Garnishment</HEAD>


<DIV8 N="§ 17.81" NODE="24:1.1.1.1.14.3.35.11" TYPE="SECTION">
<HEAD>§ 17.81   Administrative wage garnishment.</HEAD>
<P>(a) <I>In general.</I> HUD may collect a debt by using administrative wage garnishment pursuant to 31 CFR 285.11. To the extent that situations arise that are not covered by 31 CFR 285.11, those situations shall be governed by 24 CFR part 26, subpart A.
</P>
<P>(b) <I>Hearing official.</I> Any hearing required to establish HUD's right to collect a debt through administrative wage garnishment shall be conducted by an administrative judge of the OHA under 24 CFR part 26, subpart A of part 26.


</P>
</DIV8>

</DIV7>


<DIV7 N="36" NODE="24:1.1.1.1.14.3.36" TYPE="SUBJGRP">
<HEAD>Salary Offset</HEAD>


<DIV8 N="§ 17.83" NODE="24:1.1.1.1.14.3.36.12" TYPE="SECTION">
<HEAD>§ 17.83   Scope and definitions.</HEAD>
<P>(a) The provisions set forth in §§ 17.83 through 17.113 are the Department's procedures for the collection of delinquent nontax debts by salary offset of a Federal employee's pay to satisfy certain debts owed the government, including centralized salary offsets in accordance with 31 CFR part 285.
</P>
<P>(b)(1) This section and §§ 17.85 through 17.99 apply to collections by the Secretary through salary offset from current employees of the Department and other agencies who owe debts to the Department; and
</P>
<P>(2) This section, § 17.85, and §§ 17.101 through 17.113 apply to HUD's offset of pay to current employees of the Department and of other agencies who owe debts to HUD or other agencies under noncentralized salary offset procedures, in accordance with 5 CFR 550.1109.
</P>
<P>(c) These regulations do not apply to debts or claims arising under the Internal Revenue Code of 1954 (26 U.S.C. 1-9602), the Social Security Act (42 U.S.C. 301-1397f), the tariff laws of the United States, or to any case where collection of a debt by salary offset is explicitly provided for or prohibited by another statute.
</P>
<P>(d) These regulations identify the types of salary offset available to the Department, as well as certain rights provided to the employee, which include a written notice before deductions begin, the opportunity to petition for a hearing, receiving a written decision if a hearing is granted, and the opportunity to propose a repayment agreement in lieu of offset. These employee rights do not apply to any adjustment to pay arising out of an employee's election of coverage or a change in coverage under a Federal benefits program requiring periodic deductions from pay, if the amount to be recovered was accumulated over four pay periods or less.
</P>
<P>(e) Nothing in these regulations precludes the compromise, suspension, or termination of collection actions where appropriate under the Department's regulations contained elsewhere in this subpart (see 24 CFR 17.61 through 17.79).
</P>
<P>(f) As used in the salary offset provisions at §§ 17.83 through 17.113:
</P>
<P><I>Agency</I> means:
</P>
<P>(i) An Executive department, military department, Government corporation, or independent establishment as defined in 5 U.S.C. 101, 102, 103, or 104, respectively;
</P>
<P>(ii) The United States Postal Service; or
</P>
<P>(iii) The Postal Regulatory Commission.
</P>
<P><I>Debt</I> means an amount owed to the United States and past due, from sources which include loans insured or guaranteed by the United States and all other amounts due the United States from assigned mortgages or deeds of trust, direct loans, advances, repurchase demands, fees, leases, rents, royalties, services, sale of real or personal property, overpayments, penalties, damages, interest, fines and forfeitures (except those arising under the Uniform Code of Military Justice), and all other similar sources.
</P>
<P><I>Determination</I> means the point at which the Secretary or his designee decides that the debt is valid.
</P>
<P><I>Disposable pay</I> means that part of current basic pay, special pay, incentive pay, retired pay, retainer pay, or in the case of an employee not entitled to basic pay, other authorized pay remaining after deductions required by law. Deductions from pay include:
</P>
<P>(i) Amounts owed by the individual to the United States;
</P>
<P>(ii) Amounts withheld for Federal employment taxes;
</P>
<P>(iii) Amounts properly withheld for Federal, state, or local income tax purposes, if the withholding of the amount is authorized or required by law and if amounts withheld are not greater than would be the case if the individual claimed all dependents to which he or she were entitled. The withholding of additional amounts under 26 U.S.C. 3402(i) may be permitted only when the individual presents evidence of tax obligation that supports the additional withholding;
</P>
<P>(iv) Amounts deducted as health insurance premiums, including, but not limited to, amounts deducted from civil service annuities for Medicare where such deductions are requested by the Health Care Financing Administration;
</P>
<P>(v) Amounts deducted as normal retirement contributions, not including amounts deducted for supplementary coverage. Amounts withheld as Survivor Benefit Plan or Retired Serviceman's Family Protection Plan payments are considered to be normal retirement contributions. Amounts voluntarily contributed toward additional civil service annuity benefits are considered to be supplementary;
</P>
<P>(vi) Amounts deducted as normal life insurance premiums from salary or other remuneration for employment, not including amounts deducted for supplementary coverage. Both Servicemembers' Group Life Insurance and “Basic Life” Federal Employees' Group Life Insurance premiums are considered to be normal life insurance premiums; all optional Federal Employees' Group Life Insurance premiums and life insurance premiums paid for by allotment, such as National Service Life Insurance, are considered to be supplementary;
</P>
<P>(vii) Amounts withheld from benefits payable under title II of the Social Security Act where the withholding is required by law;
</P>
<P>(viii) Amounts mandatorily withheld for the U.S. Soldiers' and Airmen's Home; and
</P>
<P>(ix) Fines and forfeitures ordered by a court-martial or by a commanding officer.
</P>
<P><I>Employee</I> means a current employee of a Federal agency, including a current member of the Armed Forces or Reserve of the Armed Forces of the United States.
</P>
<P><I>Pay</I> means basic pay, special pay, income pay, retired pay, retainer pay, or, in the case of an employee not entitled to basic pay, other authorized pay.
</P>
<P><I>Salary offset</I> means a deduction from the pay of an employee without his or her consent to satisfy a debt. Salary offset is one type of administrative offset that may be used by the Department in the collection of claims.
</P>
<P><I>Waiver</I> means the cancellation, remission, forgiveness, or nonrecovery of a debt allegedly owed by an employee of an agency as permitted or required by 5 U.S.C. 5584, 10 U.S.C. 2774, 32 U.S.C. 716, or 5 U.S.C. 8346(b), or any other law.


</P>
</DIV8>


<DIV8 N="§ 17.85" NODE="24:1.1.1.1.14.3.36.13" TYPE="SECTION">
<HEAD>§ 17.85   Coordinating offset with another Federal agency.</HEAD>
<P>(a) <I>When HUD is owed the debt.</I> When the Department is owed a debt by an employee of another agency, the other agency shall not initiate the requested offset until the Department provides the agency with a written certification that the debtor owes the Department a debt (including the amount and basis of the debt and the due date of the payment) and that the Department has complied with these regulations.
</P>
<P>(b) <I>When another agency is owed the debt.</I> The Department may use salary offset against one of its employees who is indebted to another agency if requested to do so by that agency. Such a request must be accompanied by a certification by the requesting agency that the person owes the debt (including the amount) and that the employee has been given the procedural rights required by 5 U.S.C. 5514 and 5 CFR part 550, subpart K.


</P>
</DIV8>


<DIV8 N="§ 17.87" NODE="24:1.1.1.1.14.3.36.14" TYPE="SECTION">
<HEAD>§ 17.87   Determination of indebtedness.</HEAD>
<P>In determining that an employee is indebted to HUD, the Secretary will review the debt to make sure that it is valid and past due.


</P>
</DIV8>


<DIV8 N="§ 17.89" NODE="24:1.1.1.1.14.3.36.15" TYPE="SECTION">
<HEAD>§ 17.89   Notice requirements before offset.</HEAD>
<P>Except as provided in § 17.83(d), deductions will not be made unless the Secretary first provides the employee with a minimum of 30 calendar days written notice. This Notice of Intent to Offset Salary (Notice of Intent) will state:
</P>
<P>(a) That the Secretary has reviewed the records relating to the claim and has determined that a debt is owed, the amount of the debt, and the facts giving rise to the debt;
</P>
<P>(b) The Secretary's intention to collect the debt by means of deduction from the employee's current disposable pay account until the debt and all accumulated interest are paid in full;
</P>
<P>(c) The amount, frequency, approximate beginning date, and duration of the intended deductions;
</P>
<P>(d) An explanation of the Department's requirements concerning interest, penalties, and administrative costs, including a statement that such assessments must be made unless excused in accordance with the Federal Claims Collection Standards as provided in 31 CFR 901.9 (although this information may alternatively be provided in the demand notice pursuant to 24 CFR 17.65);
</P>
<P>(e) The employee's right to inspect and copy Department records relating to the debt or, if the employee or his or her representative cannot personally inspect the records, to request and receive a copy of such records;
</P>
<P>(f) The employee's right to enter into a written agreement with the Secretary for a repayment schedule differing from that proposed by the Secretary, so long as the terms of the repayment schedule proposed by the employee are agreeable to the Secretary;
</P>
<P>(g) The right to a hearing, conducted in accordance with subpart A of part 26 of this chapter by an administrative law judge of the Department or a hearing official of another agency, on the Secretary's determination of the debt, the amount of the debt, or percentage of disposable pay to be deducted each pay period, so long as a petition is filed by the employee as prescribed by the Secretary;
</P>
<P>(h) That the timely filing of a petition for hearing will stay the collection proceedings (See § 17.91);
</P>
<P>(i) That a final decision on the hearing will be issued at the earliest practical date, but not later than 60 calendar days after the filing of the petition requesting the hearing, unless the employee requests and the hearing officer grants a delay in the proceedings;
</P>
<P>(j) That any knowingly false or frivolous statements, representations, or evidence may subject the employee to:
</P>
<P>(1) Disciplinary procedures appropriate under 5 U.S.C. Ch. 75, 5 CFR part 752, or any other applicable statutes or regulations;
</P>
<P>(2) Penalties under the False Claims Act, 31 U.S.C. 3729-3731, or any other applicable statutory authority; or
</P>
<P>(3) Criminal penalties under 18 U.S.C. 286, 287, 1001, and 1002 or any other applicable statutory authority.
</P>
<P>(k) Any other rights and remedies available to the employee under statutes or regulations governing the program for which the collection is being made;
</P>
<P>(l) Unless there are applicable contractual or statutory provisions to the contrary, that amounts paid on or deducted for the debt which are later waived or found not owed to the United States will be promptly refunded to the employee; and
</P>
<P>(m) The method and time period for requesting a hearing, including the address of the Office of Hearings and Appeals to which the request must be sent.


</P>
</DIV8>


<DIV8 N="§ 17.91" NODE="24:1.1.1.1.14.3.36.16" TYPE="SECTION">
<HEAD>§ 17.91   Request for a hearing.</HEAD>
<P>(a) Except as provided in paragraph (d) of this section, an employee must file a petition for a hearing that is received by the Office of Hearings and Appeals not later than 20 calendar days from the date of the Department's notice described in § 17.89 if an employee wants a hearing concerning—
</P>
<P>(1) The existence or amount of the debt; or
</P>
<P>(2) The Secretary's proposed offset schedule.
</P>
<P>(b) The petition must be signed by the employee, must include a copy of HUD's Notice of Intent to Offset Salary, and should admit or deny the existence of or the amount of the debt, or any part of the debt, briefly setting forth any basis for a denial. If the employee objects to the percentage of disposable pay to be deducted from each check, the petition should state the objection and the reasons for it. The petition should identify and explain with reasonable specificity and brevity the facts, evidence, and witnesses that the employee believes support his or her position.
</P>
<P>(c) Upon receipt of the petition, the Office of Hearings and Appeals will send the employee a copy of the Salary Offset Hearing Procedures Manual of the Department of Housing and Urban Development.
</P>
<P>(d) If the employee files a petition for hearing later than the 20 calendar days as described in paragraph (a) of this section, the hearing officer may accept the request if the employee can show that the delay was because of circumstances beyond his or her control or because of failure to receive notice of the filing deadline (unless the employee has actual notice of the filing deadline).


</P>
</DIV8>


<DIV8 N="§ 17.93" NODE="24:1.1.1.1.14.3.36.17" TYPE="SECTION">
<HEAD>§ 17.93   Result if employee fails to meet deadlines.</HEAD>
<P>An employee waives the right to a hearing, and will have his or her disposable pay offset in accordance with the Secretary's offset schedule, if the employee:
</P>
<P>(a) Fails to file a petition for a hearing as prescribed in § 17.91; or
</P>
<P>(b) Is scheduled to appear and fails to appear at the hearing.


</P>
</DIV8>


<DIV8 N="§ 17.95" NODE="24:1.1.1.1.14.3.36.18" TYPE="SECTION">
<HEAD>§ 17.95   Written decision following a hearing.</HEAD>
<P>Written decisions provided after a request for a hearing will include:
</P>
<P>(a) A statement of the facts presented to support the nature and origin of the alleged debt;
</P>
<P>(b) The hearing officer's analysis, findings, and conclusions, in light of the hearing, concerning the employee's or the Department's grounds;
</P>
<P>(c) The amount and validity of the alleged debt; and
</P>
<P>(d) The repayment schedule, if applicable.


</P>
</DIV8>


<DIV8 N="§ 17.97" NODE="24:1.1.1.1.14.3.36.19" TYPE="SECTION">
<HEAD>§ 17.97   Review of departmental records related to the debt.</HEAD>
<P>(a) <I>Notification by employee.</I> An employee who intends to inspect or copy departmental records related to the debt must send a letter to the Secretary stating his or her intention. The letter must be received by the Secretary within 20 calendar days of the date of the Notice of Intent.
</P>
<P>(b) <I>Secretary's response.</I> In response to timely notice submitted by the debtor as described in paragraph (a) of this section, the Secretary will notify the employee of the location and time when the employee may inspect and copy Department records related to the debt.


</P>
</DIV8>


<DIV8 N="§ 17.99" NODE="24:1.1.1.1.14.3.36.20" TYPE="SECTION">
<HEAD>§ 17.99   Written agreement to repay debt as alternative to salary offset.</HEAD>
<P>(a) <I>Notification by employee.</I> The employee may propose, in response to a Notice of Intent, a written agreement to repay the debt as an alternative to salary offset. Any employee who wishes to do this must submit a proposed written agreement to repay the debt, which is received by the Secretary within 20 calendar days of the date of the Notice of Intent.
</P>
<P>(b) <I>Secretary's response.</I> In response to timely notice by the debtor as described in paragraph (a) of this section, the Secretary will notify the employee whether the employee's proposed written agreement for repayment is acceptable. It is within the Secretary's discretion to accept a repayment agreement instead of proceeding by offset. In making this determination, the Secretary will balance the Department's interest in collecting the debt against hardship to the employee. If the debt is delinquent and the employee has not disputed its existence or amount, the Secretary will accept a repayment agreement instead of offset only if the employee is able to establish that offset would result in undue financial hardship or would be against equity and good conscience.


</P>
</DIV8>


<DIV8 N="§ 17.101" NODE="24:1.1.1.1.14.3.36.21" TYPE="SECTION">
<HEAD>§ 17.101   Procedures for salary offset: when deductions may begin.</HEAD>
<P>(a) Deductions to liquidate an employee's debt will be by the method and in the amount stated in the Secretary's Notice of Intent to collect from the employee's current pay.
</P>
<P>(b) If the employee filed a petition for hearing with the Secretary before the expiration of the period provided for in § 17.91, then deductions will begin after:
</P>
<P>(1) The hearing officer has provided the employee with a hearing; and
</P>
<P>(2) The hearing officer has issued a final written decision in favor of the Secretary.
</P>
<P>(c) If an employee retires or resigns before collection of the amount of the indebtedness is completed, the remaining indebtedness will be collected according to the procedures for the collection of claims under §§ 17.61 through 17.79.


</P>
</DIV8>


<DIV8 N="§ 17.103" NODE="24:1.1.1.1.14.3.36.22" TYPE="SECTION">
<HEAD>§ 17.103   Procedures for salary offset: types of collection.</HEAD>
<P>A debt will be collected in a lump sum or in installments. Collection will be by lump-sum collection unless the debt is for other than travel advances and training expenses, and the employee is financially unable to pay in one lump sum, or the amount of the debt exceeds 15 percent of disposable pay. In these cases, deduction will be by installments.


</P>
</DIV8>


<DIV8 N="§ 17.105" NODE="24:1.1.1.1.14.3.36.23" TYPE="SECTION">
<HEAD>§ 17.105   Procedures for salary offset: methods of collection.</HEAD>
<P>(a) <I>General.</I> A debt will be collected by deductions at officially established pay intervals from an employee's current pay account, unless the employee and the Secretary agree to alternative arrangements for repayment. The alternative arrangement must be in writing, signed by both the employee and the Secretary.
</P>
<P>(b) <I>Installment deductions.</I> Installment deductions will be made over a period not greater than the anticipated period of employment. The size and frequency of installment deductions will bear a reasonable relation to the size of the debt and the employee's ability to pay. However, the amount deducted for any period will not exceed 15 percent of the disposable pay from which the deduction is made, unless the employee has agreed in writing to the deduction of a greater amount. If possible, the installment payment will be sufficient in size and frequency to liquidate the debt in 3 years. Installment payments of less than $25 per pay period or $50 a month will be accepted only in the most unusual circumstances.
</P>
<P>(c) <I>Sources of deductions.</I> The Department will make deductions only from basic pay, special pay, incentive pay, retired pay, retainer pay, or, in the case of an employee not entitled to basic pay, other authorized pay.


</P>
</DIV8>


<DIV8 N="§ 17.107" NODE="24:1.1.1.1.14.3.36.24" TYPE="SECTION">
<HEAD>§ 17.107   Procedures for salary offset: imposition of interest.</HEAD>
<P>Interest will be charged in accordance with the Federal Claims Collection Standards as provided in 31 CFR 901.9.


</P>
</DIV8>


<DIV8 N="§ 17.109" NODE="24:1.1.1.1.14.3.36.25" TYPE="SECTION">
<HEAD>§ 17.109   Nonwaiver of rights.</HEAD>
<P>So long as there are no statutory or contractual provisions to the contrary, no employee involuntary payment (of all or a portion of a debt) collected under these regulations will be interpreted as a waiver of any rights that the employee may have under 5 U.S.C. 5514 or any other provision of contract or law.


</P>
</DIV8>


<DIV8 N="§ 17.111" NODE="24:1.1.1.1.14.3.36.26" TYPE="SECTION">
<HEAD>§ 17.111   Refunds.</HEAD>
<P>The Department will refund promptly to the appropriate individual amounts offset under these regulations when:
</P>
<P>(a) A debt is waived or otherwise found not owing the United States (unless expressly prohibited by statute or regulation); or
</P>
<P>(b) The Department is directed by an administrative or judicial order to refund amounts deducted from the employee's current pay.


</P>
</DIV8>


<DIV8 N="§ 17.113" NODE="24:1.1.1.1.14.3.36.27" TYPE="SECTION">
<HEAD>§ 17.113   Miscellaneous provisions: correspondence with the Department.</HEAD>
<P>The employee shall file a request for a hearing with the Clerk, OHA, 409 3rd Street SW., 2nd Floor, Washington, DC 20024, on official work days between the hours of 8:45 a.m. and 5:15 p.m. (or such other address as HUD may provide by notice from time to time). All other correspondence shall be submitted to the Departmental Claims Officer, Office of the Chief Financial Officer, Department of Housing and Urban Development, 451 Seventh Street SW., Washington, DC 20410 (or such other officer or address as HUD may provide by notice from time to time). Documents may be filed by personal delivery or mail.


</P>
</DIV8>

</DIV7>

</DIV6>

</DIV5>


<DIV5 N="18" NODE="24:1.1.1.1.15" TYPE="PART">
<HEAD>PART 18—INDEMNIFICATION OF HUD EMPLOYEES
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>5 U.S.C. 301; 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>62 FR 6096, Feb. 10, 1997, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 18.1" NODE="24:1.1.1.1.15.0.37.1" TYPE="SECTION">
<HEAD>§ 18.1   Policy.</HEAD>
<P>(a) The Department of Housing and Urban Development may indemnify, in whole or in part, a Department employee (which for the purpose of this part includes a former Department employee) for any verdict, judgment or other monetary award which is rendered against any such employee, provided the Secretary or his or her designee determines that:
</P>
<P>(1) The conduct giving rise to the verdict, judgment or award was taken within the scope of his or her employment with the Department; and
</P>
<P>(2) Such indemnification is in the interest of the United States.
</P>
<P>(b) The Department of Housing and Urban Development may settle or compromise a personal damage claim against a Department employee by the payment of available funds, at any time, provided the Secretary or his or her designee determines that:
</P>
<P>(1) The alleged conduct giving rise to the personal damage claim was taken within the scope of employment; and
</P>
<P>(2) That such settlement or compromise is in the interest of the United States.
</P>
<P>(c) Absent exceptional circumstances, as determined by the Secretary or his or her designee, the Department will not entertain a request either to agree to indemnify or to settle a personal damage claim before entry of an adverse verdict, judgment or monetary award.
</P>
<P>(d) When an employee of the Department becomes aware that an action has been filed against the employee in his or her individual capacity as a result of conduct taken within the scope of his or her employment, the employee should immediately notify his or her supervisor that such an action is pending. The supervisor shall promptly notify the head of his or her operating component and the Associate General Counsel for Litigation and Fair Housing Enforcement, if the supervisor is located at headquarters, or Field Assistant General Counsel—who shall promptly notify the Associate General Counsel for Litigation and Fair Housing Enforcement—if the supervisor is located in the field. As used in this section, the term “principal operating component” means an office in the Department headed by an Assistant Secretary, the General Counsel, the Inspector General, or an equivalent departmental officer who reports directly to the Secretary. Questions regarding representation of the employee will be determined by the Department of Justice pursuant to 28 CFR 50.15 (Representation of Federal officials and employees by Department of Justice attorneys or by private counsel furnished by the Department in civil, criminal, and congressional proceedings in which Federal employees are sued, subpoenaed, or charged in their individual capacities).
</P>
<P>(e) The employee may, thereafter, request indemnification to satisfy a verdict, judgment or monetary award entered against the employee or to compromise a claim pending against the employee. The employee shall submit a written request, with appropriate documentation including a copy of the verdict, judgment, award or other order or settlement proposal, in a timely manner to the head of the employee's principal operating component. The head of the employee's principal operating component shall submit the written request and accompanying documentation, together with a recommended disposition of the request, in a timely manner to the General Counsel.
</P>
<P>(f) The General Counsel shall seek the views of the Department of Justice on the request. Where the Department of Justice has rendered a decision denying representation of the employee pursuant to 28 CFR 50.15, the General Counsel shall seek the concurrence of the Department of Justice on the request. If the Department of Justice does not concur in the request, the General Counsel shall so advise the employee and no further action on the employee's request shall be taken.
</P>
<P>(g) In all instances except those where the Department of Justice has non-concurred in the request, the General Counsel shall forward for decision to the Secretary or his or her designee the employee's request, the recommendation of the head of the employee's principal operating component, the views of the Department of Justice, and the General Counsel's recommendation.
</P>
<P>(h) Any payment under this part, either to indemnify a Department employee or to settle a personal damage claim, is contingent upon the availability of appropriated funds of the Department that are permitted by law to be utilized for this purpose. 


</P>
</DIV8>

</DIV5>


<DIV5 N="20" NODE="24:1.1.1.1.16" TYPE="PART">
<HEAD>PART 20—OFFICE OF HEARINGS AND APPEALS
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>72 FR 53878, Sept. 20, 2007, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 20.1" NODE="24:1.1.1.1.16.0.37.1" TYPE="SECTION">
<HEAD>§ 20.1   Establishment of the Office of Hearings and Appeals.</HEAD>
<P>There is established in the Office of the Secretary the Office of Hearings and Appeals. The Administrative Law Judges and the Administrative Judges within the Office of Hearings and Appeals are appointed by the Secretary of the Department pursuant to the Appointments Clause of the United States Constitution.
</P>
<CITA TYPE="N">[87 FR 8196, Feb. 14, 2022]


</CITA>
</DIV8>


<DIV8 N="§ 20.3" NODE="24:1.1.1.1.16.0.37.2" TYPE="SECTION">
<HEAD>§ 20.3   Location, organization, and officer qualifications.</HEAD>
<P>(a) <I>Mailing address.</I> The Office of Hearings and Appeals is located at the U.S. Department of Housing and Urban Development, 451 7th Street, SW., Room B-133, Washington, DC 20410.
</P>
<P>(b) <I>Location.</I> For deliveries, the Office of Hearings and Appeals is physically located at 409 Third Street, SW., Suite 201, Washington, DC 20024. The telephone number of the Office of Hearings and Appeals is 202-254-0000. Hearing- or speech-impaired individuals may access this number via TTY by calling the toll-free Federal Information Relay Service at 800-877-8339. The facsimile number is 202-619-7304.
</P>
<P>(c) <I>Organization.</I> The Office of Hearings and Appeals is supervised by the Chief Administrative Law Judge and a Deputy Chief Administrative Law Judge.
</P>
<P>(d) <I>Officer qualifications.</I> (1) The Administrative Judges of the Office of Hearings and Appeals shall be attorneys at law actively licensed by any state, commonwealth, territory, or the District of Columbia.
</P>
<P>(2) The Administrative Law Judges of the Office of Hearings and Appeals shall be qualified in accordance with the Office of Personnel Management regulations at 5 CFR part 930.
</P>
<CITA TYPE="N">[72 FR 53878, Sept. 20, 2007, as amended at 74 FR 4635, Jan. 26, 2009; 87 FR 8196, Feb. 14, 2022]


</CITA>
</DIV8>


<DIV8 N="§ 20.5" NODE="24:1.1.1.1.16.0.37.3" TYPE="SECTION">
<HEAD>§ 20.5   Jurisdiction of Office of Hearings and Appeals.</HEAD>
<P>The Office of Hearings and Appeals shall, consistent with statute and regulation, have jurisdiction over matters assigned to it by the Secretary or designee. Determinations shall have the finality provided by the applicable statute, regulation, or agreement.
</P>
<CITA TYPE="N">[72 FR 53878, Sept. 20, 2007, as amended at 87 FR 8196, Feb. 14, 2022]


</CITA>
</DIV8>

</DIV5>


<DIV5 N="24" NODE="24:1.1.1.1.17" TYPE="PART">
<HEAD>PART 24—GOVERNMENTWIDE DEBARMENT AND SUSPENSION (NONPROCUREMENT) 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d). 


</PSPACE></AUTH>

<DIV8 N="§ 24.1" NODE="24:1.1.1.1.17.0.37.1" TYPE="SECTION">
<HEAD>§ 24.1   Debarment and Suspension (Nonprocurement).</HEAD>
<P>The policies, procedures, and requirements for debarment, suspension, and limited denial of participation are set forth in 2 CFR part 2424.
</P>
<CITA TYPE="N">[72 FR 73491, Dec. 27, 2007]


</CITA>
</DIV8>

</DIV5>


<DIV5 N="25" NODE="24:1.1.1.1.18" TYPE="PART">
<HEAD>PART 25—MORTGAGEE REVIEW BOARD
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1708(c), 1708(d), 1709(s), 1715b and 1735(f)-14; 42 U.S.C. 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>57 FR 31051, July 13, 1992, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 25.1" NODE="24:1.1.1.1.18.0.37.1" TYPE="SECTION">
<HEAD>§ 25.1   Scope of rules in this part.</HEAD>
<P>The rules in this part are applicable to the operation of the Mortgagee Review Board and to proceedings arising from administrative actions of the Mortgagee Review Board.


</P>
</DIV8>


<DIV8 N="§ 25.2" NODE="24:1.1.1.1.18.0.37.2" TYPE="SECTION">
<HEAD>§ 25.2   Establishment and authority of Board.</HEAD>
<P>(a) <I>Establishment of the Board.</I> The Mortgagee Review Board (Board) was established in the Federal Housing Administration, which is in the Office of the Assistant Secretary for Housing—Federal Housing Commissioner, by section 202(c)(1) of the National Housing Act (12 U.S.C. 1708(c)(1)), as added by section 142 of the Department of Housing and Urban Development Reform Act of 1989 (Pub. L. 101-235, approved December 15, 1989).
</P>
<P>(b) <I>Authority of the Board.</I> The Board has the authority to initiate administrative actions against mortgagees and lenders under 12 U.S.C. 1708(c) and shall exercise all of the functions of the Secretary with respect to administrative actions against mortgagees and lenders and such other functions as are provided in this part. The Board shall have all powers necessary and incident to the performance of these functions and such other functions as are provided in this part, except as limited by this part.
</P>
<P>(1) <I>Administrative Actions.</I> The Board has the authority to take any administrative action against mortgagees and lenders as provided in 12 U.S.C. 1708(c). The Board may delegate its authority to take all nondiscretionary acts.
</P>
<P>(2) <I>Civil Money Penalties.</I> The Board is authorized pursuant to section 536 of the National Housing Act (12 U.S.C. 1735(f)-14) to impose civil money penalties upon mortgagees and lenders, as set forth in 24 CFR part 30. The violations for which a civil money penalty may be imposed are listed in subpart B (Violations) of 24 CFR part 30. Hearings to challenge the imposition of civil money penalties shall be conducted according to the applicable rules of 24 CFR part 30.
</P>
<P>(3) <I>Authorization for other administrative actions.</I> The Board may, in its discretion, approve the initiation of a suspension or debarment action against a mortgagee or lender by any Suspending or Debarring Official under 24 CFR part 24.
</P>
<CITA TYPE="N">[73 FR 60540, Oct. 10, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 25.3" NODE="24:1.1.1.1.18.0.37.3" TYPE="SECTION">
<HEAD>§ 25.3   Definitions.</HEAD>
<P><I>Adequate evidence.</I> Information sufficient to support the reasonable belief that a particular act or omission has occurred.
</P>
<P><I>Board.</I> The Mortgagee Review Board.
</P>
<P><I>Lender.</I> A financial institution as defined in paragraphs (a) and (b) of the definition of lender in § 202.2 of this title.
</P>
<P><I>Mortgagee.</I> For purposes of this part, the term “mortgagee” includes:
</P>
<P>(1) The original lender under the mortgage, as that term is defined at sections 201(a) and 207(a)(1) of the National Housing Act (12 U.S.C. 1707(a), 1713(a)(1));
</P>
<P>(2) A lender, as defined in this section;
</P>
<P>(3) A branch office or subsidiary of the mortgagee or lender; or
</P>
<P>(4) Successors and assigns of the mortgagee or lender, as are approved by the Commissioner.
</P>
<P><I>Person.</I> Any individual, corporation, partnership, association, unit of government or legal entity, however organized.
</P>
<P><I>Secretary.</I> The Secretary of the Department of Housing and Urban Development or a person designated by the Secretary.
</P>
<CITA TYPE="N">[57 FR 31051, July 13, 1992; 57 FR 37085, Aug. 18, 1992, as amended at 60 FR 13835, Mar. 14, 1995; 60 FR 39237, Aug. 1, 1995; 61 FR 685, Jan. 9, 1996; 62 FR 20081, Apr. 24, 1997; 72 FR 53878, Sept. 20, 2007; 73 FR 60540, Oct. 10, 2008; 77 FR 51467, Aug. 24, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 25.4" NODE="24:1.1.1.1.18.0.37.4" TYPE="SECTION">
<HEAD>§ 25.4   Operation of the Mortgagee Review Board.</HEAD>
<P>(a) <I>Members.</I> The Board consists of the following HUD officials designated to serve on the Board by section 202(c)(2) of the National Housing Act (12 U.S.C. 1708(c)(2)):
</P>
<P>(1) The Assistant Secretary of Housing-Federal Housing Commissioner;
</P>
<P>(2) The General Counsel of the Department;
</P>
<P>(3) The President of the Government National Mortgage Association (GNMA);
</P>
<P>(4) The Assistant Secretary for Administration;
</P>
<P>(5) The Assistant Secretary for Fair Housing and Equal Opportunity (in cases involving violations of nondiscrimination requirements);
</P>
<P>(6) The Chief Financial Officer of the Department; and
</P>
<P>(7) The Director of the Enforcement Center; or their designees.
</P>
<P>(b) <I>Advisors.</I> The Inspector General or his or her designee, and the Director of the Office of Lender Activities and Program Compliance (or such other position as may be assigned such duties), and such other persons as the Board may appoint, shall serve as nonvoting advisors to the Board.
</P>
<P>(c) <I>Quorum.</I> Four members of the Board or their designees shall constitute a quorum.
</P>
<P>(d) <I>Determination by the Board.</I> Any administrative action taken by the Board shall be determined by a majority vote of the quorum.
</P>
<CITA TYPE="N">[57 FR 31051, July 13, 1992; 57 FR 37085, Aug. 18, 1992, as amended at 73 FR 60540, Oct. 10, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 25.5" NODE="24:1.1.1.1.18.0.37.5" TYPE="SECTION">
<HEAD>§ 25.5   Administrative actions.</HEAD>
<P>(a) <I>General.</I> The Board is authorized to take administrative actions in accordance with 12 U.S.C. 1708(c), including, but not limited to, the following: issue a letter of reprimand, probation, suspension, or withdrawal; or enter into a settlement agreement.
</P>
<P>(b) <I>Letter of reprimand.</I> A letter of reprimand shall be effective upon receipt of the letter by the mortgagee. Failure to comply with a directive in the letter of reprimand may result in any other administrative action that the Board finds appropriate as provided by 12 U.S.C. 1708(c).
</P>
<P>(c) <I>Probation.</I> Probation shall be effective upon receipt of the notice of probation by the mortgagee. Failure to comply with the terms of probation may result in any other administrative action that the Board finds appropriate as provided by 12 U.S.C. 1708(c).
</P>
<P>(d) <I>Suspension</I>—(1) <I>Effect of suspension.</I> (i) During the period of suspension, HUD will not endorse any mortgage originated by the suspended mortgagee under the Title II program unless prior to the date of suspension:
</P>
<P>(A) A firm commitment has been issued relating to any such mortgage; or
</P>
<P>(B) A Direct Endorsement underwriter has approved the mortgagor for any such mortgage.
</P>
<P>(ii) During the period of suspension, a lender may not originate new Title I loans under its Title I Contract of Insurance or apply for a new Contract of Insurance.
</P>
<P>(2) <I>Effective date of suspension.</I> A suspension issued pursuant to § 25.7(d) is effective upon issuance. Any other suspension is effective upon receipt of the notice of suspension by the mortgagee.
</P>
<P>(e) <I>Withdrawal</I>—(1) <I>Effect of withdrawal.</I> (i) During the period of withdrawal, HUD will not endorse any mortgage originated by the withdrawn mortgagee under the Title II program, unless prior to the date of withdrawal:
</P>
<P>(A) A firm commitment has been issued relating to any such mortgage; or
</P>
<P>(B) A Direct Endorsement underwriter has approved the mortgagor for any such mortgage.
</P>
<P>(ii) During the period of withdrawal, a lender may not originate new Title I loans under its Title I Contract of Insurance or apply for a new Contract of Insurance. The Board may limit the geographical extent of the withdrawal, or limit its scope (e.g., to either the single family or multifamily activities of a withdrawn mortgagee). Upon the expiration of the period of withdrawal, the mortgagee may file a new application for approval under 24 CFR part 202.
</P>
<P>(2) <I>Effective date of withdrawal.</I> (i) If the Board determines that immediate action is in the public interest or in the best interests of the Department, then withdrawal shall be effective upon receipt of the Board's notice of withdrawal.
</P>
<P>(ii) If the Board does not determine that immediate action is necessary according to paragraph (e)(2)(i) of this section, then withdrawal shall be effective either:
</P>
<P>(A) Upon the expiration of the 30-day period specified in § 25.10, if the mortgagee has not requested a hearing; or
</P>
<P>(B) Upon receipt of the Board's decision under § 25.10, if the mortgagee requests a hearing.
</P>
<CITA TYPE="N">[73 FR 60540, Oct. 10, 2008, as amended at 77 FR 51467, Aug. 24, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 25.6" NODE="24:1.1.1.1.18.0.37.6" TYPE="SECTION">
<HEAD>§ 25.6   Violations creating grounds for administrative action.</HEAD>
<P>Any administrative action imposed under 12 U.S.C. 1708(c) shall be based upon one or more of the following violations:
</P>
<P>(a) The transfer of an insured mortgage to non-approved mortgagee, except pursuant to 24 CFR 203.433 or 203.435; 
</P>
<P>(b) The failure of a mortgagee to segregate all escrow funds received from mortgagors on account of ground rents, taxes, assessments and insurance premiums, or failure to deposit these funds with one or more financial institutions in a special account or accounts that are fully insured by the Federal Deposit Insurance Corporation or by the National Credit Union Administration except as otherwise provided in writing by the Assistant Secretary for Housing—Federal Housing Commissioner; 
</P>
<P>(c) The use of escrow funds for any purpose other than that for which they are received;
</P>
<P>(d) The termination of a mortgagee's supervision by a governmental agency;
</P>
<P>(e) The failure of a nonsupervised mortgagee to submit the required annual audit report of its financial condition prepared in accordance with instructions issued by the Secretary within 90 days of the close of its fiscal year, or such longer period as the Assistant Secretary of Housing—Federal Housing Commissioner may authorize in writing prior to the expiration of 90 days;
</P>
<P>(f) The payment by a mortgagee of a referral fee to any person or organization; or payment of any thing of value, directly or indirectly, in connection with any insured mortgage transaction or transactions to any person, including but not limited to an attorney, escrow agent, title company, consultant, mortgage broker, seller, builder or real estate agent, if that person has received any other compensation from the mortgagor, the seller, the builder or any other person for services related to such transactions or from or related to the purchase or sale of the mortgaged property, except compensation paid for the actual performance of such services as may be approved by the Assistant Secretary for Housing—Federal Housing Commissioner;
</P>
<P>(g) Failure to comply with any agreement, certification, undertaking, or condition of approval listed on, or applicable to, either a mortgagee's application for approval or an approved mortgagee's branch office notification;
</P>
<P>(h) Failure of an approved mortgagee to meet or maintain the applicable net worth, liquidity or warehouse line of credit requirements of 24 CFR part 202 pertaining to net worth, liquid assets, and warehouse line of credit or other acceptable funding plan;
</P>
<P>(i) Failure or refusal of an approved mortgagee to comply with an order of the Board, the Secretary, the hearing official, hearing officer or other independent official to whom matters are referred under § 25.8(d)(2). 
</P>
<P>(j) Violation of the requirements of any contract or agreement with the Department, or violation of the requirements set forth in any statute, regulation, handbook, mortgagee letter, or other written rule or instruction;
</P>
<P>(k) Submission of false information to HUD in connection with any HUD/FHA insured mortgage transaction;
</P>
<P>(l) Failure of a mortgagee to respond to inquiries from the Board; 
</P>
<P>(m) Indictment or conviction of a mortgagee or any of its officers, directors, principals or employees for an offense which reflects upon the responsibility, integrity, or ability of the mortgagee to participate in HUD/FHA programs as an approved mortgagee;
</P>
<P>(n) Employing or retaining:
</P>
<P>(1) An officer, partner, director, or principal at such time when such person was suspended, debarred, ineligible, or subject to a limited denial of participation under 2 CFR part 2424 or otherwise prohibited from participation in HUD programs, where the mortgagee knew or should have known of the prohibition;
</P>
<P>(2) An employee who is not an officer, partner, director, or principal and who is or will be working on HUD/FHA program matters at a time when such person was suspended, debarred, ineligible, or subject to a limited denial of participation under 2 CFR part 2424 or otherwise prohibited from participation in HUD programs, where the mortgagee knew or should have known of the prohibition; 
</P>
<P>(o) Violation by an approved mortgagee of the nondiscrimination requirements of the Equal Credit Opportunity Act (15 U.S.C. 1691-1691f), Fair Housing Act (42 U.S.C. 3601-3619), Executive Order 11063 (27 FR 11527), and all regulations issued pursuant thereto;
</P>
<P>(p) Business practices which do not conform to generally accepted practices of prudent mortgagees or which demonstrate irresponsibility; 
</P>
<P>(q) Failure to cooperate with an audit or investigation by the Department's Office of Inspector General or an inquiry by HUD/FHA into the conduct of the mortgagee's HUD/FHA insured business or any other failure to provide information to the Secretary or a representative related to the conduct of the mortgagee's HUD/FHA business;
</P>
<P>(r) Violation by an approved mortgagee of the requirements or prohibitions of the Real Estate Settlement Procedures Act (12 U.S.C. 2601-2617);
</P>
<P>(s) Without regard to the date of the insurance of the mortgage, failure to service an insured mortgage in accordance with the regulations and any other requirements of the Secretary which are in effect at the time the act or omission occurs;
</P>
<P>(t) Failure to administer properly an assistance payment contract under section 235 of the National Housing Act (12 U.S.C. 1715z);
</P>
<P>(u) Failure to pay the application and annual fees required by 24 CFR part 202; 
</P>
<P>(v) The failure of a coinsuring mortgagee:
</P>
<P>(1) To properly perform underwriting, servicing or property disposition functions in accordance with instructions and standards issued by the Commissioner;
</P>
<P>(2) To make full payment to an investing mortgagee as required by 24 CFR part 204;
</P>
<P>(3) To discharge responsibilities under a contract for coinsurance;
</P>
<P>(4) To comply with restrictions concerning the transfer of a coinsured mortgage to an agency not approved under 24 CFR part 250;
</P>
<P>(5) To maintain additional net worth requirements, as applicable;
</P>
<P>(w) Failure to remit, or timely remit, mortgage insurance premiums, loan insurance charges, late charges, or interest penalties to the Department; 
</P>
<P>(x) Failure to submit a report required under 24 CFR 202.12(c) within the time determined by the Commissioner, or to commence or complete a plan for corrective action under that section within the time agreed upon with the Commissioner.
</P>
<P>(y) Failure to properly perform underwriting functions in accordance with instructions and standards issued by the Department;
</P>
<P>(z) Failure to fund mortgage loans or any other misuse of mortgage loan proceeds;
</P>
<P>(aa) Permitting the use of strawbuyer mortgagors in an insured mortgage transaction where the mortgagee knew or should have known of such use of strawbuyers;
</P>
<P>(bb) Breach by the mortgagee of a fiduciary duty owed by it to any person as defined in § 25.3, including GNMA and the holder of any mortgage-backed security guaranteed by GNMA, with respect to an insured loan or mortgage transaction. 
</P>
<P>(cc) Violation by a Title I lender of any of the applicable provisions of this section or 24 CFR 202.11(a)(2).
</P>
<P>(dd) Failure to pay any civil money penalty, but only after all administrative appeals requested by the mortgagee have been exhausted.
</P>
<P>(ee) Submitting, or causing to be submitted, with an application for FHA mortgage insurance an appraisal, valuation condition sheet, or any other documentation relating to an appraisal that does not satisfy FHA requirements. 
</P>
<P>(ff) Any other violation of Federal Housing Administration requirements that the Board or the Secretary determines to be so serious as to justify an administrative sanction.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under Control Number 2502-0450)
</APPRO>
<CITA TYPE="N">[57 FR 31051, July 13, 1992; 57 FR 37085, Aug. 18, 1992, as amended at 57 FR 58339, Dec. 9, 1992; 60 FR 13836, Mar. 14, 1995; 60 FR 39238, Aug. 1, 1995; 61 FR 685, Jan. 9, 1996; 62 FR 20081, Apr. 24, 1997; 69 FR 43509, July 20, 2004; 72 FR 73492, Dec. 27, 2007. Redesignated and amended at 73 FR 60541, Oct. 10, 2008; 77 FR 51467, Aug. 24, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 25.7" NODE="24:1.1.1.1.18.0.37.7" TYPE="SECTION">
<HEAD>§ 25.7   Notice of violation.</HEAD>
<P>(a) <I>General.</I> The Chairperson of the Board, or the Chairperson's designee, shall issue a written notice to the mortgagee at the mortgagee's address of record at least 30 days prior to taking any action under 12 U.S.C. 1708(c) against the mortgagee. Proof of delivery to the mortgagee's address of record shall establish the mortgagee's receipt of the notice. The notice shall state the specific violations that have been alleged, and shall direct the mortgagee to reply in writing to the Board within 30 days after receipt of the notice by the mortgagee. The notice shall also provide the address to which the response shall be sent. If the mortgagee fails to reply during such time period, the Board may make a determination without considering any comments of the mortgagee.
</P>
<P>(b) <I>Mortgagee's response.</I> The mortgagee's response to the Board shall be in a format prescribed by the Secretary and shall not exceed 15 double-spaced typewritten pages. The response shall include an executive summary, a statement of the facts surrounding the matter, an argument, and a conclusion. Such response shall also address the factors listed in § 25.8. A more lengthy submission, including documents and other exhibits, may be simultaneously submitted to Board staff for review.
</P>
<P>(c) <I>Exception for letter of reprimand.</I> Whenever information comes before the Board that discloses a basis for the issuance of a letter of reprimand, the Board may issue the letter without having previously issued a notice of violation.
</P>
<P>(d) <I>Exception for immediate suspension.</I> If the Board determines that there exists adequate evidence that immediate action is required to protect the financial interests of the Department or the public, the Board may take a suspension action without having previously issued a notice of violation.
</P>
<CITA TYPE="N">[73 FR 60541, Oct. 10, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 25.8" NODE="24:1.1.1.1.18.0.37.8" TYPE="SECTION">
<HEAD>§ 25.8   Factors considered in taking administrative action.</HEAD>
<P>In determining which administrative action under 12 U.S.C. 1708(c), if any, should be taken, the Board will consider, among other factors, the seriousness and extent of the violations, the degree of mortgagee responsibility for the occurrences, and any other mitigating or aggravating facts. Where the Board is considering a withdrawal action, the Board will also consider whether the violations were egregious or willful, in order to determine whether a permanent withdrawal is mandated by 12 U.S.C. 1708(c).
</P>
<CITA TYPE="N">[73 FR 60541, Oct. 10, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 25.9" NODE="24:1.1.1.1.18.0.37.9" TYPE="SECTION">
<HEAD>§ 25.9   Notice of administrative action.</HEAD>
<P>(a) Whenever the Board decides to take an action in accordance with 12 U.S.C. 1708(c)(3), the Chairperson of the Board, or the Chairperson's designee, shall issue a written notice of the action to the mortgagee at the mortgagee's address of record of the determination. Proof of delivery to the mortgagee's address of record shall establish the mortgagee's receipt of the notice.
</P>
<P>(b) In actions for probation, suspension, or withdrawal, the notice shall describe the nature and duration of the administrative action, and shall specifically state the reasons for the action. In actions for probation, suspension, or withdrawal, the notice shall inform the mortgagee of its right to a hearing regarding the administrative action and of the manner and time in which to request a hearing.
</P>
<CITA TYPE="N">[73 FR 60541, Oct. 10, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 25.10" NODE="24:1.1.1.1.18.0.37.10" TYPE="SECTION">
<HEAD>§ 25.10   Hearings and hearing request.</HEAD>
<P>(a) <I>Hearing request.</I> A mortgagee subject to any administrative action under 12 U.S.C. 1708(c), except for a letter of reprimand, may request a hearing, which shall be held on the record before an administrative law judge. The mortgagee shall submit its request for a hearing within 30 days of receiving the Board's notice of administrative action. The request shall be addressed to the Mortgagee Review Board Docket Clerk, Department of Housing and Urban Development, 451 7th Street, SW., Washington, DC 20410. The request shall specifically respond to the violations set forth in the notice of administrative action. If the mortgagee fails to request a hearing within 30 days after receiving the notice of administrative action, the Board's action shall become final.
</P>
<P>(b) <I>Hearing by Administrative Law Judge.</I> Hearings are to be conducted by an Administrative Law Judge (ALJ), as set forth in this part. The ALJ shall commence a de novo hearing within 30 days of HUD's receipt of the mortgagee's request, unless the mortgagee moves for an extension of time. The ALJ may extend this time period for good cause.
</P>
<P>(c) <I>Procedural rules.</I> The hearing shall be conducted in accordance with the applicable provisions of 24 CFR part 26, with the following modifications:
</P>
<P>(1) The mortgagee or its representative shall be afforded an opportunity to appear, submit documentary evidence, present witnesses, and confront any witness the agency presents, except that the parties shall not be allowed to present members of the Board as witnesses.
</P>
<P>(2) Discovery of information and/or documents that do not pertain to the appealing mortgagee, including, but not limited to, reviews or audits by the Department or administrative actions by the Board against mortgagees other than the appealing mortgagee, shall not be permitted. Members of the Board shall not be subject to deposition.
</P>
<P>(3) The hearing shall generally be held in Washington, DC. However, upon a showing of undue hardship or other cause, the ALJ may, in his or her discretion, order the hearing to be held in a location other than Washington, DC.
</P>
<CITA TYPE="N">[73 FR 60542, Oct. 10, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 25.11" NODE="24:1.1.1.1.18.0.37.11" TYPE="SECTION">
<HEAD>§ 25.11   Modification of Board orders.</HEAD>
<P>No order of an ALJ before whom proceedings are conducted under § 25.10 may modify or otherwise disturb in any way an order or notice by the Board, unless the order of the ALJ becomes final agency action in accordance with subpart B of part 26 of this title.
</P>
<CITA TYPE="N">[73 FR 60542, Oct. 10, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 25.12" NODE="24:1.1.1.1.18.0.37.12" TYPE="SECTION">
<HEAD>§ 25.12   Public access to information; publication of actions.</HEAD>
<P>(a) Where a notice of administrative action does not result in a hearing and in any cases in which a settlement is entered into by the Board and a mortgagee, all non-privileged information regarding the nature of the violation and the resolution of the action shall be available to the public.
</P>
<P>(b) Publication in the <E T="04">Federal Register.</E> The Secretary shall publish, in the <E T="04">Federal Register,</E> a description of and the cause for each administrative action taken by the Board against a mortgagee.
</P>
<P>(c) <I>Notification of other agencies.</I> Whenever the Board has taken any discretionary action to suspend and/or withdraw the approval of a mortgagee, the Secretary shall provide prompt notice of the action and a statement of the reasons for the action to the Secretary of Veterans Affairs; the chief executive officer of the Federal National Mortgage Association; the chief executive officer of the Federal Home Loan Mortgage Corporation; the Administrator of the Rural Housing Service (formerly the Farmers Home Administration); the Comptroller of the Currency, if the mortgagee is a National Bank or District Bank or subsidiary or affiliate of such a bank; the Board of Governors of the Federal Reserve System, if the mortgagee is a state bank that is a member of the Federal Reserve System or a subsidiary or affiliate of such a bank, or a bank holding company or a subsidiary or affiliate of such a company; the Board of Directors of the Federal Deposit Insurance Corporation, if the mortgagee is a state bank that is not a member of the Federal Reserve System, or is a subsidiary or affiliate of such a bank; and the Director of the Office of Thrift Supervision, if the mortgagee is a federal or state savings association or a subsidiary or affiliate of a savings association.
</P>
<P>(d) <I>Notification to GNMA of withdrawal actions.</I> Whenever the Board issues a notice of violation that could lead to withdrawal of a mortgagee's approval, or is notified by GNMA of an action that could lead to withdrawal of GNMA approval, the Board shall proceed in accordance with 12 U.S.C. 1708(d).
</P>
<CITA TYPE="N">[73 FR 60542, Oct. 10, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 25.13" NODE="24:1.1.1.1.18.0.37.13" TYPE="SECTION">
<HEAD>§ 25.13   Notifying GNMA of withdrawal actions.</HEAD>
<P>When the Board issues a notice of violation that could lead to withdrawal of a mortgagee's approval, or is notified by GNMA of an action that could lead to withdrawal of GNMA approval, the Board shall proceed in accordance with 12 U.S.C. 1708(d).
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under Control Number 2502-0450)
</APPRO>
<CITA TYPE="N">[61 FR 685, Jan. 9, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 25.15" NODE="24:1.1.1.1.18.0.37.14" TYPE="SECTION">
<HEAD>§ 25.15   Retroactive application of Board regulations.</HEAD>
<P>Limitations on participation in HUD mortgage insurance programs proposed or imposed prior to August 12, 1992, under an ancillary procedure shall not be affected by this part. This part shall apply to sanctions initiated after the effective date of the Department of Housing and Urban Development Reform Act of 1989 (December 15, 1989) regardless of the date of the cause giving rise to the sanction. 
</P>
<CITA TYPE="N">[57 FR 31051, July 13, 1992. Redesignated at 61 FR 685, Jan. 9, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 25.17" NODE="24:1.1.1.1.18.0.37.15" TYPE="SECTION">
<HEAD>§ 25.17   [Reserved]</HEAD>
</DIV8>

</DIV5>


<DIV5 N="26" NODE="24:1.1.1.1.19" TYPE="PART">
<HEAD>PART 26—HEARING PROCEDURES
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>73 FR 76833, Dec. 17, 2008, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:1.1.1.1.19.1" TYPE="SUBPART">
<HEAD>Subpart A—Hearings Before Hearing Officers</HEAD>


<DIV8 N="§ 26.1" NODE="24:1.1.1.1.19.1.48.1" TYPE="SECTION">
<HEAD>§ 26.1   Purpose and scope.</HEAD>
<P>This part sets forth rules of procedure in certain proceedings of the Department of Housing and Urban Development presided over by a hearing officer. These rules of procedure apply to administrative sanction hearings pursuant to 2 CFR part 2424 and to hearings with respect to determinations by the Multifamily Participation Review Committee pursuant to 24 CFR part 200, subpart H, to the extent that these regulations are not inconsistent and unless these regulations provide otherwise. They also apply in any other case where a hearing is required by statute or regulation, to the extent that rules adopted under such statute or regulation are not inconsistent.


</P>
</DIV8>


<DIV7 N="48" NODE="24:1.1.1.1.19.1.48" TYPE="SUBJGRP">
<HEAD>Hearing Officer</HEAD>


<DIV8 N="§ 26.2" NODE="24:1.1.1.1.19.1.48.2" TYPE="SECTION">
<HEAD>§ 26.2   Hearing officer, powers, and duties.</HEAD>
<P>(a) <I>Hearing officer.</I> Proceedings conducted under these rules shall be presided over by a hearing officer who shall be an Administrative Law Judge or Administrative Judge authorized by the Secretary or designee to conduct proceedings under this part.
</P>
<P>(b) <I>Time and place of hearing.</I> The hearing officer shall set the time and place of any hearing and shall give reasonable notice to the parties.
</P>
<P>(c) <I>Powers of hearing officers.</I> The hearing officer shall conduct a fair and impartial hearing and take all action necessary to avoid delay in the disposition of proceedings and to maintain order. The hearing officer shall have all powers necessary to those ends, including, but not limited to, the power:
</P>
<P>(1) To administer oaths and affirmations;
</P>
<P>(2) To cause subpoenas to be issued as authorized by law;
</P>
<P>(3) To rule upon offers of proof and receive evidence;
</P>
<P>(4) To order or limit discovery as the interests of justice may require;
</P>
<P>(5) To regulate the course of the hearing and the conduct of the parties and their counsel;
</P>
<P>(6) To hold conferences for the settlement or simplification of the issues by consent of the parties;
</P>
<P>(7) To consider and rule upon all procedural and other motions appropriate in adjudicative proceedings;
</P>
<P>(8) To take notice of any material fact not appearing in evidence in the record that is properly a matter of judicial notice;
</P>
<P>(9) To make and file determinations; and
</P>
<P>(10) To exercise such other authority as is necessary to carry out the responsibilities of the hearing officer under subpart A of this part.
</P>
<CITA TYPE="N">[73 FR 76833, Dec. 17, 2008, as amended at 87 FR 8196, Feb. 14, 2022]


</CITA>
</DIV8>


<DIV8 N="§ 26.3" NODE="24:1.1.1.1.19.1.48.3" TYPE="SECTION">
<HEAD>§ 26.3   <E T="7462">Ex parte</E> communications.</HEAD>
<P>(a) <I>Definition.</I> An ex parte communication is any communication with a hearing officer, direct or indirect, oral or written, concerning the merits or procedures of any pending proceeding that is made by a party in the absence of any other party.
</P>
<P>(b) <I>Prohibition of ex parte communications.</I> Ex parte communications are prohibited except where:
</P>
<P>(1) The purpose and content of the communication have been disclosed in advance or simultaneously to all parties; or
</P>
<P>(2) The communication is a request for information concerning the status of the case.
</P>
<P>(c) <I>Procedure after receipt of ex parte communication.</I> Any hearing officer who receives an ex parte communication that the hearing officer knows or has reason to believe is unauthorized shall promptly place the communication, or its substance, in all files and shall furnish copies to all parties. Unauthorized ex parte communications shall not be taken into consideration in deciding any matter in issue.


</P>
</DIV8>


<DIV8 N="§ 26.4" NODE="24:1.1.1.1.19.1.48.4" TYPE="SECTION">
<HEAD>§ 26.4   Sanctions.</HEAD>
<P>(a) The hearing officer may sanction a person, including any party or representative, for failing to comply with an order, rule, or procedure governing the proceeding; failing to prosecute or defend an action; or engaging in other misconduct that interferes with the speedy, orderly, or fair conduct of the hearing.
</P>
<P>(b) Any sanction, including, but not limited to, those listed in paragraphs (c), (d), and (e) of this section, shall reasonably relate to the severity and nature of the failure or misconduct.
</P>
<P>(c) If a party refuses or fails to comply with an order of the hearing officer, including an order compelling discovery, the hearing officer may enter any appropriate order necessary to the disposition of the hearing including a determination against the noncomplying party, including but not limited to, the following:
</P>
<P>(1) Draw an inference in favor of the requesting party with regard to the information sought;
</P>
<P>(2) In the case of requests for admission, regard each matter about which an admission is requested to be admitted;
</P>
<P>(3) Prohibit the party failing to comply with the order from introducing evidence concerning, or otherwise relying upon, testimony relating to the information sought; or
</P>
<P>(4) Strike any part of the pleadings or other submissions of the party failing to comply with the order.
</P>
<P>(d) If a party fails to prosecute or defend an action brought under subpart A of this part, the hearing officer may dismiss the action or may issue an initial decision against the non-prosecuting or defending party.
</P>
<P>(e) The hearing officer may refuse to consider any motion, request, response, brief, or other document that is not filed in a timely fashion.


</P>
</DIV8>


<DIV8 N="§ 26.5" NODE="24:1.1.1.1.19.1.48.5" TYPE="SECTION">
<HEAD>§ 26.5   Disqualification of hearing officer.</HEAD>
<P>(a) When a hearing officer believes there is a basis for disqualification in a particular proceeding, the hearing officer shall withdraw by notice on the record and shall notify the Secretary and the official initiating the action under appeal.
</P>
<P>(b) Whenever any party believes that the hearing officer should be disqualified from presiding in a particular proceeding, the party may file a motion with the hearing officer requesting the hearing officer to withdraw from presiding over the proceedings. This motion shall be supported by affidavits setting forth the alleged grounds for disqualification.
</P>
<P>(c) Upon the filing of a motion and affidavit, the hearing officer shall proceed no further in the case until the matter of disqualification is resolved.
</P>
<P>(d) If the hearing officer does not withdraw, a written statement of his or her reasons shall be incorporated in the record and the hearing shall proceed, unless the decision is appealed in accordance with the procedures set forth in § 26.27.


</P>
</DIV8>

</DIV7>


<DIV7 N="49" NODE="24:1.1.1.1.19.1.49" TYPE="SUBJGRP">
<HEAD>Representation of the Parties</HEAD>


<DIV8 N="§ 26.6" NODE="24:1.1.1.1.19.1.49.6" TYPE="SECTION">
<HEAD>§ 26.6   Department representative.</HEAD>
<P>In each case heard before a hearing officer under this part, the Department shall be represented by attorneys from the Office of General Counsel.


</P>
</DIV8>


<DIV8 N="§ 26.7" NODE="24:1.1.1.1.19.1.49.7" TYPE="SECTION">
<HEAD>§ 26.7   Respondent's representative.</HEAD>
<P>The party against whom the administrative action is taken may be represented at hearing, as follows:
</P>
<P>(a) Individuals may appear on their own behalf;
</P>
<P>(b) A member of a partnership or joint venture may appear on behalf of the partnership or joint venture;
</P>
<P>(c) A bona fide officer may appear on behalf of a corporation or association upon a showing of adequate authorization;
</P>
<P>(d) An attorney who files a notice of appearance with the hearing officer may represent any party. For purposes of this paragraph, an attorney is defined as a member of the bar of a federal court or of the highest court of any state or territory of the United States; or
</P>
<P>(e) An individual not included within paragraphs (a) through (d) of this section may represent the respondent upon an adequate showing, as determined by the hearing officer, that the individual possesses the legal, technical, or other qualifications necessary to advise and assist in the presentation of the case.


</P>
</DIV8>


<DIV8 N="§ 26.8" NODE="24:1.1.1.1.19.1.49.8" TYPE="SECTION">
<HEAD>§ 26.8   Standards of practice.</HEAD>
<P>Attorneys shall conform to the standards of professional and ethical conduct required of practitioners in the courts of the United States and by the bars of which the attorneys are members. Any attorney may be prohibited by the hearing officer from representing a party if the attorney is not qualified under § 26.7 or if such action is necessary to maintain order in or the integrity of the pending proceeding.


</P>
</DIV8>

</DIV7>


<DIV7 N="50" NODE="24:1.1.1.1.19.1.50" TYPE="SUBJGRP">
<HEAD>Pleadings and Motions</HEAD>


<DIV8 N="§ 26.9" NODE="24:1.1.1.1.19.1.50.9" TYPE="SECTION">
<HEAD>§ 26.9   Form and filing requirements.</HEAD>
<P>(a) <I>Filing.</I> Unless otherwise provided by statute, rule, or regulation: 
</P>
<P>(1) Requests for hearings shall be filed with the Office of General Counsel's Docket Clerk, Department of Housing and Urban Development, 451 7th Street, SW., Washington, DC 20410. The OGC Docket Clerk shall assign the docket number and forward the case to HUD's Office of Hearings and Appeals.
</P>
<P>(2) All other pleadings, submissions, and documents should be filed directly with the appropriate hearing officer.
</P>
<P>(3) Filing may be made by first class mail, delivery, facsimile transmission, or electronic means; however, the hearing officer may place reasonable limits on filing by facsimile or electronic means. Duplicate copies are not required unless so ordered by the hearing officer. A document is considered timely filed if postmarked on or before the date due or delivered to the appropriate person by the date due.
</P>
<P>(b) <I>Title.</I> Documents shall show clearly the title of the action and the docket number assigned by the Docket Clerk.
</P>
<P>(c) <I>Form.</I> To the fullest extent possible, all documents shall be printed or typewritten in clear, legible form.
</P>
<CITA TYPE="N">[73 FR 76833, Dec. 17, 2008, as amended at 87 FR 8196, Feb. 14, 2022]


</CITA>
</DIV8>


<DIV8 N="§ 26.10" NODE="24:1.1.1.1.19.1.50.10" TYPE="SECTION">
<HEAD>§ 26.10   Service.</HEAD>
<P>(a) <I>Method of Service.</I> One copy of all pleadings, motions, and other documents required or permitted under these rules shall be served upon all parties by the person filing them and shall be accompanied by a certificate of service stating how and when such service has been made. Whenever these rules require or permit service to be made upon a party represented by an attorney, the service shall be made upon the attorney, unless service upon the party is ordered by the hearing officer. Service shall be made by delivery, by first class mail or overnight delivery to that person's last known address, by facsimile transmission, or by electronic means; however, the hearing officer may place reasonable limits on service by facsimile transmission or electronic means. Delivery of a copy within this rule means: handing it to the person to be served; or leaving it at that person's office with a clerk or other person in charge; or, if there is no one in charge, leaving it in a conspicuous place in the office; or, if the office is closed or the person to be served has no office, leaving it at that person's residence or usual place of abode with some person of suitable age and discretion who resides there. Service by mail, overnight delivery, facsimile transmission, or electronic means is complete upon deposit in a mail box, or upon posting, or upon electronic transmission.
</P>
<P>(b) <I>Proof of Service.</I> Proof of service shall not be required unless the fact of service is put in issue by appropriate motion or objection on the part of the person allegedly served. In these cases, service may be established by written receipt signed by or on behalf of the person to be served, or may be established prima facie by affidavit, certificate of service of mailing, or electronic receipt of sending.


</P>
</DIV8>


<DIV8 N="§ 26.11" NODE="24:1.1.1.1.19.1.50.11" TYPE="SECTION">
<HEAD>§ 26.11   Time computation.</HEAD>
<P>(a) <I>Generally.</I> Computation of any period of time prescribed or allowed by this part shall begin with the first business day following the day on which the act, event, development, or default initiating the period of time occurred. When the last day of the period computed is a Saturday, Sunday, national holiday, or other day on which the Department of Housing and Urban Development is closed, the period shall run until the end of the next following business day. When any prescribed or allowed period of time is 7 days or less, each of the Saturdays, Sundays, and national holidays shall be excluded from the computation of the prescribed or allowed period.
</P>
<P>(b) <I>Entry of orders.</I> In computing any time period involving the date of the issuance of an order or decision by a hearing officer, the date of the issuance is the date the order or decision is served on the parties by the hearing officer or Docket Clerk.
</P>
<P>(c) <I>Service by mail.</I> If a document is served by mail, 3 days shall be added to the time permitted for a response.
</P>
<P>(d) <I>Extensions of time periods.</I> Except where mandated by statute, the hearing officer (or in the case of a review under §§ 26.26 and 26.27, the Secretary or designee) may upon motion enlarge the time within which any act required by these rules must be performed where necessary to avoid prejudicing the public interest or the rights of the parties.


</P>
</DIV8>


<DIV8 N="§ 26.12" NODE="24:1.1.1.1.19.1.50.12" TYPE="SECTION">
<HEAD>§ 26.12   Notice of administrative action.</HEAD>
<P>In every case, there shall be a notice of administrative action. The notice shall be in writing and inform the party of the nature of that administrative action. The notice shall state the reasons for the proposed or imposed action, except where general terms are permitted by 2 CFR part 2424, and shall inform the party of any right to a hearing to challenge the administrative action, and the manner and time in which to request such hearing. A supplemental notice may be issued in the discretion of the initiating official to add to or modify the reasons for the action.


</P>
</DIV8>


<DIV8 N="§ 26.13" NODE="24:1.1.1.1.19.1.50.13" TYPE="SECTION">
<HEAD>§ 26.13   Complaint.</HEAD>
<P>(a) <I>Respondent.</I> A complaint shall be served upon the party against whom an administrative action is taken, who shall be called the respondent.
</P>
<P>(b) <I>Grounds.</I> The complaint shall state the legal and factual grounds upon which the administrative action is based. The grounds set forth in the complaint may not contain allegations beyond the scope of the notice of administrative action or any amendment thereto.
</P>
<P>(c) <I>Notice of administrative action as complaint.</I> A notice of administrative action may serve as a complaint provided the notice states it is also a complaint and complies with paragraph (b) of this section.
</P>
<P>(d) <I>Timing.</I> When the notice does not serve as a complaint, the complaint shall be served on or before the 30th day after the referral to a hearing officer or a request for hearing is made, or within any other time period designated by the hearing officer.


</P>
</DIV8>


<DIV8 N="§ 26.14" NODE="24:1.1.1.1.19.1.50.14" TYPE="SECTION">
<HEAD>§ 26.14   Answer.</HEAD>
<P>(a) Respondent shall file an answer within 30 days of receipt of the complaint, unless otherwise specified in this title or ordered by the hearing officer.
</P>
<P>(b) The answer shall:
</P>
<P>(1) Respond specifically to each factual allegation contained in the complaint;
</P>
<P>(2) Specifically plead any affirmative defense; and
</P>
<P>(3) Set forth any mitigating factors or extenuating circumstances.
</P>
<P>(c) A general denial shall not be permitted. Allegations are admitted when not specifically denied in respondent's answer.


</P>
</DIV8>


<DIV8 N="§ 26.15" NODE="24:1.1.1.1.19.1.50.15" TYPE="SECTION">
<HEAD>§ 26.15   Amendments and supplemental pleadings.</HEAD>
<P>(a) <I>Amendments.</I> (1) By right: The Department may amend its complaint without leave at any time within 30 days of the date the complaint is filed or at any time before respondent's responsive pleading is filed, whichever is later. Respondent may amend its answer without leave at any time within 30 days of filing of its answer. A party shall plead in response to an amended pleading within 15 days of receipt of the amended pleading.
</P>
<P>(2) By leave: Upon conditions as are necessary to avoid prejudicing the public interest and the rights of the parties, the hearing officer may allow amendments to pleadings upon motion of any party.
</P>
<P>(3) Conformance to evidence: When issues not raised by the pleadings, but reasonably within the scope of the proceeding initiated by the complaint, are tried by express or implied consent to the parties, they shall be treated in all respects as if they had been raised in the pleadings, and amendments of the pleadings necessary to make them conform to the evidence shall be allowed at any time.
</P>
<P>(b) <I>Supplemental pleadings.</I> The hearing officer may, upon reasonable notice, permit service of a supplemental pleading concerning transactions, occurrences, or events that have happened or been discovered since the date of prior pleadings.


</P>
</DIV8>


<DIV8 N="§ 26.16" NODE="24:1.1.1.1.19.1.50.16" TYPE="SECTION">
<HEAD>§ 26.16   Motions.</HEAD>
<P>(a) <I>Motions.</I> Requests for rulings or actions to be taken by the hearing officer should be made, wherever appropriate, in the form of a motion. All motions from the commencement of the action until the issuance of a decision shall be addressed to the hearing officer, and shall be served upon all parties to the proceeding.
</P>
<P>(b) <I>Content.</I> All written motions shall state the particular order, ruling, or action desired and the grounds for granting the motion. The parties may submit a proposed order with any motion.
</P>
<P>(c) <I>Responses to motions.</I> Within 10 days after receipt of any written motion, or within any other period as may be designated by the hearing officer, the opposing party shall respond to the motion and set forth any objections to the motion. Failure to file a timely response to the motion may constitute a party's consent to the granting of the motion. The moving party shall have no right to reply, except as permitted by the hearing officer.
</P>
<P>(d) <I>Motions for extensions of time.</I> Either party may file a motion for extension. At the discretion of the hearing officer, a motion for an extension of time may be granted for good cause at any time, notwithstanding an objection or any reply to the motion consistent with the provisions of § 26.2(c)(5) and (7). The hearing officer may waive the requirements of this section as to motions for extensions of time.
</P>
<P>(e) <I>Oral argument.</I> The hearing officer may order oral argument on any motion.
</P>
<P>(f) <I>Motions for summary judgment.</I> (1) A party claiming relief or a party against whom relief is sought may timely move, with or without supporting affidavits, for summary judgment on all or part of the claim.
</P>
<P>(2) Objections in the consideration of summary judgment motions or answers thereto based upon a failure to strictly comply with the provisions of Rule 56 of the Federal Rules of Civil Procedure may, at the discretion of the hearing officer, be overruled.
</P>
<P>(g) <I>Motions for dismissal.</I> When a motion to dismiss the proceeding is granted, the hearing officer shall issue a determination and order in accordance with the provisions of § 26.25.


</P>
</DIV8>

</DIV7>


<DIV7 N="51" NODE="24:1.1.1.1.19.1.51" TYPE="SUBJGRP">
<HEAD>Discovery</HEAD>


<DIV8 N="§ 26.17" NODE="24:1.1.1.1.19.1.51.17" TYPE="SECTION">
<HEAD>§ 26.17   Prehearing conference.</HEAD>
<P>(a) <I>Prehearing conference.</I> The hearing officer may, sua sponte or at the request of any party, direct counsel for all parties to confer with the hearing officer before the hearing for the purpose of considering:
</P>
<P>(1) Simplification and clarification of the issues;
</P>
<P>(2) Stipulations and admissions of fact and of the contents and authenticity of documents; 
</P>
<P>(3) The disclosure of the names of witnesses;
</P>
<P>(4) Matters of which official notice will be taken;
</P>
<P>(5) Other matters as may aid in the orderly disposition of the proceeding, including disclosure of the documents or other physical exhibits that will be introduced into evidence in the course of the proceeding.
</P>
<P>(b) <I>Recordation of prehearing conference.</I> The prehearing conference shall, at the request of any party, be recorded or transcribed.
</P>
<P>(c) <I>Order on prehearing conference.</I> The hearing officer shall enter in the record an order that states the rulings upon matters considered during the conference, together with appropriate directions to the parties. The order shall control the subsequent course of the proceeding, subject to modifications upon good cause shown.


</P>
</DIV8>


<DIV8 N="§ 26.18" NODE="24:1.1.1.1.19.1.51.18" TYPE="SECTION">
<HEAD>§ 26.18   Discovery.</HEAD>
<P>(a) <I>General.</I> The parties are encouraged to engage in voluntary discovery procedures, which may commence at any time after an answer has been filed. Parties may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense of any party, including the existence, description, nature, custody, condition, and location of any books, documents, or other tangible things and the identity and location of persons having knowledge of any discoverable matter. For good cause, the hearing officer may order discovery of any matter relevant to the subject matter involved in the action. To be relevant, information need not be admissible at the hearing, if the discovery appears reasonably calculated to lead to the discovery of admissible evidence. Each party shall bear its own expenses associated with discovery. Discovery may include:
</P>
<P>(1) Requests for production of documents as set forth in § 26.19;
</P>
<P>(2) Depositions as set forth in § 26.20;
</P>
<P>(3) Written interrogatories as set forth in § 26.21; and
</P>
<P>(4) Requests for admissions as set forth in § 26.22.
</P>
<P>(b) <I>Supplementation of responses.</I> A party who has responded to a request for discovery with a response is under a duty to timely amend a prior response to an interrogatory, request for production, or request for admission if so ordered by the hearing officer, or if the party learns that the response is in some material respect incomplete or incorrect and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing.
</P>
<P>(c) <I>Requesting an order.</I> In connection with any discovery procedure, by motion addressed to the hearing officer and upon a showing of a good faith attempt to resolve the issue without the hearing officer's intervention, either party may:
</P>
<P>(1) Request an order compelling a response with respect to any objection to or other failure to respond to the discovery requested or any part thereof, or any failure to respond as specifically requested, or
</P>
<P>(2) Request a protective order limiting the scope, methods, time and place for discovery, and provisions for protecting privileged information or documents.
</P>
<P>(d) <I>Limitations.</I> (1) By order, the hearing officer may set or alter limits on the number of document requests, depositions, and interrogatories, or the length of depositions.
</P>
<P>(2) Orders compelling discovery shall be issued only where such discovery will not compel the disclosure of privileged information, unduly delay the hearing, or result in prejudice to the public interest or the rights of the parties, and upon a showing of good cause.
</P>
<P>(3) Protective orders may be issued by a hearing officer if the hearing officer determines such an order is necessary to protect a party or other person from annoyance, embarrassment, oppression, or undue burden or expense because:
</P>
<P>(i) The discovery sought is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive;
</P>
<P>(ii) The party seeking discovery has had ample opportunity by discovery in the action to obtain the information sought; or
</P>
<P>(iii) The burden or expense of the proposed discovery outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving the issues.
</P>
<P>(4) A party need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost. On motion to compel discovery or for a protective order, the party from whom discovery is sought must show that the information is not reasonably accessible because of undue burden or cost. If that showing is made, the hearing officer may nonetheless order discovery from such sources if the requesting party shows good cause or, when the party's refusal to provide the information sought is solely due to undue expense, if the party seeking the discovery agrees to bear the expense associated with the request.
</P>
<P>(e) <I>Refusal to honor discovery order.</I> When a party refuses to honor a discovery order, the hearing officer may issue such orders in regard to the refusal as justice shall require.


</P>
</DIV8>


<DIV8 N="§ 26.19" NODE="24:1.1.1.1.19.1.51.19" TYPE="SECTION">
<HEAD>§ 26.19   Request for production of documents.</HEAD>
<P>(a) <I>Request to produce.</I> Any party may serve upon any other party a written request to produce, and permit the party making the request, or someone acting on the requestor's behalf, to inspect, copy, test, or sample any designated documents—including writings, drawings, graphs, charts, photographs, sound recordings, images, and other data or data compilations stored in any medium from which information can be obtained—translated, if necessary, by the respondent into reasonably usable form, or to inspect, copy, test, or sample any designated tangible things that constitute or contain matters within the scope of § 26.18(a) and which are in the possession, custody, or control of the party upon whom the request is served.
</P>
<P>(b) <I>Procedure.</I> The request shall set forth, either by individual item or by category, the items to be inspected, and describe each with reasonable particularity. The request shall specify a reasonable time, place, and manner of making the inspection and performing the related acts. The request may specify the form or forms in which electronically stored information is to be produced.
</P>
<P>(c) <I>Response to request to produce.</I> The party upon whom the request is served shall serve a written response within 20 days after service of the request. A shorter or longer time may be directed by the hearing officer, or in the absence of such an order, agreed to by the parties in a written document that shall be timely submitted to the hearing officer. The response shall state, with respect to each item or category, whether inspection and related activities will be permitted as requested. If there are any objections to any requests, including objections to the requested form or forms for producing electronically stored information, the response shall state the reasons for such objections. If objection is made to part of an item or category, the part shall be specified and inspection of the remaining parts shall be permitted. If objection is made to the requested format or forms for producing electronically stored information—or if no form was specified in the request—the responding party must state the form or forms it intends to use. The party submitting the request may move for an order under § 26.18(c)(1) with respect to any objection to or other failure to respond to the request or any part thereof, or any failure to permit inspection as requested.
</P>
<P>(d) <I>Form of production.</I> Unless the parties otherwise agree, or the hearing officer otherwise orders:
</P>
<P>(1) A party who produces documents for inspection shall produce them as they are kept in the usual course of business or shall organize and label them to correspond with the categories in the request;
</P>
<P>(2) If a request does not specify the format or forms for producing electronically stored information, a responding party must produce the information in a form or forms in which it is ordinarily maintained or in a form or forms that are reasonably usable; and
</P>
<P>(3) A party need not produce the same electronically stored information in more than one form.


</P>
</DIV8>


<DIV8 N="§ 26.20" NODE="24:1.1.1.1.19.1.51.20" TYPE="SECTION">
<HEAD>§ 26.20   Depositions.</HEAD>
<P>(a) <I>Taking oral deposition.</I> A party may take the oral deposition of any person. Reasonable written notice of deposition shall be served upon the opposing party and the deponent. The attendance of a deponent may be compelled by subpoena where authorized by law or by other order of the hearing officer.
</P>
<P>(b) <I>Testifying on oral deposition.</I> Each person testifying on oral deposition shall be placed under oath by the person before whom the deposition is taken. The deponent may be examined and cross-examined. The questions and the answers, together with all objections made, shall be recorded by the person before whom the deposition is to be taken, or under that person's direction.
</P>
<P>(c) <I>Objections.</I> Objection may be made to questions or answers for any reason that would require the exclusion of the testimony under § 26.24 as if the witness were present and testifying at hearing. Objections shall be in short form, stating every ground for objection. Failure to object to any question or answer shall be considered a waiver of objection, unless the parties agree otherwise. Rulings on any objections shall be made by the hearing officer at hearing, or at such other time requested by motion. The examination shall proceed, with the testimony being taken subject to the objections; the deponent may be instructed not to answer only when necessary to preserve a privilege, to enforce a limitation directed by the hearing officer, or to present a motion for a protective order under § 26.18(c)(2).
</P>
<P>(d) <I>Submission to deponent.</I> A transcript of the deposition shall be submitted to the deponent for examination and signature, unless submission is waived by the deponent and the parties. Any changes in form or substance that the deponent desires to make shall be entered upon the transcript by the person before whom the deposition was taken, with a statement of reasons given by the deponent for making them. The transcript shall then be signed by the deponent, unless the parties by stipulation waive the signing or the deponent is ill, cannot be found, or refuses to sign. If the transcript is not signed, the person before whom the deposition was taken shall sign it and state on the record the reason that it is not signed.
</P>
<P>(e) <I>Certification and filing.</I> The person before whom the deposition was taken shall make a certification on the transcript as to its accuracy. Interested parties shall make their own arrangements with the person recording the testimony for copies of the testimony and the exhibits.
</P>
<P>(f) <I>Deposition as evidence.</I> Subject to appropriate rulings by the hearing officer on objections, the deposition or any part may be introduced into evidence for any purpose if the deponent is unavailable. Only that part of a deposition that is received in evidence at a hearing shall constitute a part of the record in the proceeding upon which a decision may be based. Nothing in this rule is intended to limit the use of a deposition for impeachment purposes.
</P>
<P>(g) <I>Payment of fees.</I> Fees shall be paid by the person upon whose application the deposition is taken.


</P>
</DIV8>


<DIV8 N="§ 26.21" NODE="24:1.1.1.1.19.1.51.21" TYPE="SECTION">
<HEAD>§ 26.21   Written interrogatories.</HEAD>
<P>(a) <I>Service of interrogatories.</I> Any party may serve upon any other party written interrogatories, not to exceed 25 in number, including all discrete subparts, unless additional interrogatories are agreed to by the parties or leave to serve additional interrogatories is granted by the hearing officer.
</P>
<P>(b) <I>Response to interrogatories.</I> Within 20 days after service of the request, the party upon whom the interrogatories are served shall serve a written response, unless the parties agree in a written document submitted to the hearing officer or the hearing officer determines that a shorter or longer period is appropriate under the circumstances. The response shall specifically answer each interrogatory, separately and fully in writing, unless it is objected to, in which event the objecting party shall state the reasons for any objections with specificity. Any ground not stated in a timely objection is waived unless the party's failure to object is excused by the hearing officer for good cause shown. If objection is made to only part of an interrogatory, the objectionable part shall be specified and the party shall answer to the extent that the interrogatory is not objectionable.
</P>
<P>(c) <I>Option to produce business records.</I> Where the answer to an interrogatory may be derived or ascertained from the business records, including electronically stored information, of the party upon whom the interrogatory has been served or from an examination, audit, or inspection of such business records, including a compilation, abstract, or summary thereof, and the burden of deriving or ascertaining the answer is substantially the same for the party serving the interrogatory as for the party served, it is a sufficient answer to such interrogatory to specify the records from which the answer may be derived or ascertained and to afford to the party serving the interrogatory reasonable opportunity to examine, audit, or inspect such records and to make copies, compilations, abstracts, or summaries. A specification shall be in sufficient detail to permit the interrogating party to locate and to identify, as readily as can by the party served, the records from which the answer may be ascertained.


</P>
</DIV8>


<DIV8 N="§ 26.22" NODE="24:1.1.1.1.19.1.51.22" TYPE="SECTION">
<HEAD>§ 26.22   Requests for admissions.</HEAD>
<P>(a) Any party may serve upon any other party a written request for the admission of the genuineness of any relevant documents described in the request or of the truth of any relevant matters of fact. Copies of documents shall be delivered with the request unless copies have already been furnished. Each requested admission shall be considered admitted, unless within 30 days after service of the request, or within such other time as the parties may agree, or the hearing officer determines, the party from whom the admission is sought serves upon the party making the request either:
</P>
<P>(1) A statement that:
</P>
<P>(i) Denies specifically the relevant matters for which an admission is requested, or sets forth in detail the reasons why the party can neither truthfully admit nor deny them;
</P>
<P>(ii) Fairly meets the substance of the requested admission and, when good faith requires that a party qualify an answer or deny only a part of the matter of which an admission is requested, specifies as much of it as is true and qualifies or denies the remainder; and
</P>
<P>(iii) Does not assert lack of information or knowledge as a reason for failure to admit or deny, unless the party states that the party has made reasonable inquiry, and that the information known or readily obtainable by the party is insufficient to enable the party to admit or deny; or
</P>
<P>(2) Written objections to a requested admission that:
</P>
<P>(i) State the grounds for the objection; and
</P>
<P>(ii) Object to a requested admission, if necessary, either in whole or in part, on the basis of privilege or relevance.
</P>
<P>(b) Responses to the request for admission on matters to which objections have been made may be deferred until the objection is ruled upon, but if written objections are made only to a part of a request, a response to the remainder of the request shall be provided.
</P>
<P>(c) Any matter admitted under this rule is conclusively established unless the hearing officer, on motion, permits withdrawal or amendment of the admission. Admissions obtained pursuant to this procedure may be used in evidence only for the purposes of the pending action. The use of obtained admissions as evidence is permitted to the same extent and subject to the same objections as other evidence.


</P>
</DIV8>

</DIV7>


<DIV7 N="52" NODE="24:1.1.1.1.19.1.52" TYPE="SUBJGRP">
<HEAD>Hearings</HEAD>


<DIV8 N="§ 26.23" NODE="24:1.1.1.1.19.1.52.23" TYPE="SECTION">
<HEAD>§ 26.23   Public nature and timing of hearings; transcripts.</HEAD>
<P>(a) <I>Public hearings.</I> All hearings in adjudicative proceedings shall be public.
</P>
<P>(b) <I>Conduct of hearing.</I> Hearings shall proceed with all reasonable speed. The hearing officer may order recesses for good cause, stated on the record. The hearing officer may, for convenience of the parties or witnesses, or in the interests of justice, order that hearings be conducted outside of Washington, DC, and, if necessary, in more than one location.
</P>
<P>(c) <I>Transcripts.</I> Hearings shall be recorded and transcribed only by a reporter designated by the Department under the supervision of the hearing officer. The original transcript shall be a part of the record and shall constitute the sole official transcript. Any party or a member of the public, at his own expense, may obtain copies of transcripts from the reporter.


</P>
</DIV8>


<DIV8 N="§ 26.24" NODE="24:1.1.1.1.19.1.52.24" TYPE="SECTION">
<HEAD>§ 26.24   Rules of evidence.</HEAD>
<P>(a) <I>Evidence.</I> Every party shall have the right to present its case or defense by oral and documentary evidence, unless otherwise limited by law or regulation, to conduct such cross-examination and to submit rebuttal evidence as may be required for a full and true disclosure of the facts. Irrelevant, immaterial, privileged, or unduly repetitious evidence shall be excluded. Unless otherwise provided for in this part, the Federal Rules of Evidence shall provide guidance to the hearing officer in the conduct of proceedings under this part, but shall not be binding. Parties may object to clearly irrelevant material, but technical and hearsay objections to testimony as used in a court of law will not be sustained.
</P>
<P>(b) <I>Testimony under oath or affirmation.</I> All witnesses shall testify under oath or affirmation.
</P>
<P>(c) <I>Objections.</I> Objections to the admission or exclusion of evidence shall be in short form, stating the grounds of objections. Rulings on objections shall be a part of the transcript. Failure to object to admission or exclusion of evidence or to any evidentiary ruling shall be considered a waiver of objection, but no exception to a ruling on an objection is necessary in order to preserve it for appeal.
</P>
<P>(d) <I>Authenticity of documents.</I> Unless specifically challenged, it shall be presumed that all relevant documents are authentic. An objection to the authenticity of a document shall not be sustained merely on the basis that it is not the original.
</P>
<P>(e) <I>Stipulations.</I> The parties may stipulate as to any relevant matters of fact. Stipulations may be received in evidence at a hearing, and when received shall be binding on the parties with respect to the matters stipulated. The parties are encouraged to enter into stipulations of fact whenever possible.
</P>
<P>(f) <I>Official notice.</I> All matters officially noticed by the hearing officer shall appear on the record.
</P>
<P>(g) <I>Burden of proof.</I> The burden of proof shall be upon the proponent of an action or affirmative defense, including, where applicable, mitigating factors, unless otherwise provided by law or regulation.


</P>
</DIV8>


<DIV8 N="§ 26.25" NODE="24:1.1.1.1.19.1.52.25" TYPE="SECTION">
<HEAD>§ 26.25   Hearing officer's determination and order.</HEAD>
<P>(a) <I>Scope of review.</I> The hearing officer shall conduct a de novo review of the administrative action to determine whether it is supported by a preponderance of the evidence, unless a different standard of proof is required by law or regulation. Each and every charge alleged by the Department need not be proven to support the administrative action. The hearing officer may modify or vacate the administrative action under review only upon a particularized finding of facts that justifies a deviation from the administrative action.
</P>
<P>(b) <I>Closing of hearing.</I> At the discretion of the hearing officer, the closing of the record may be postponed in order to permit the admission of other evidence into the record. In the event further evidence is admitted, each party shall be given an opportunity to respond to such evidence.
</P>
<P>(c) <I>Briefs.</I> Upon conclusion of the hearing, the hearing officer may request the parties to file proposed findings of fact and legal briefs. The hearing officer shall make a written determination and order based upon evidence and arguments presented by the parties. The determination shall be founded upon reliable and probative evidence. This determination and order shall be served upon all parties.
</P>
<P>(d) <I>Bench decisions.</I> Where the parties agree and where appropriate in the judgment of the hearing officer, a bench decision will be issued.
</P>
<P>(e) <I>Time period for issuance of decision.</I> The hearing officer shall endeavor to issue a determination within 60 days from the date of the closing of the record.
</P>
<P>(f) <I>Finality of determination.</I> The determination and order shall be final unless a party timely appeals the determination in accordance with § 26.26. The determination shall inform the parties that, if provided for and consistent with Departmental regulations, any party may request, in writing, Secretarial review of the determination within 30 days after the hearing officer issues the determination, in accordance with § 26.26 of this part. The determination shall include the mailing address, facsimile number, and electronic submission information to which the request for Secretarial review should be sent. A request for Secretarial review may be made by mail, delivery, facsimile, or electronic submission.


</P>
</DIV8>

</DIV7>


<DIV7 N="53" NODE="24:1.1.1.1.19.1.53" TYPE="SUBJGRP">
<HEAD>Secretarial Review</HEAD>


<DIV8 N="§ 26.26" NODE="24:1.1.1.1.19.1.53.26" TYPE="SECTION">
<HEAD>§ 26.26   Review of determination of hearing officers.</HEAD>
<P>(a) Except in matters arising under 2 CFR part 2424, any party may file with the Secretary an appeal within 30 days after the date that the hearing officer issues a determination or order. The Secretary or designee may extend the 30-day period, in the Secretary's sole discretion, for good cause.
</P>
<P>(b) <I>Brief in support of appeal.</I> The appeal shall be accompanied by a written brief, not to exceed 15 pages, setting forth the party's specific objections to the determination or order of the hearing officer and the party's supporting reasons for any objections. The appealing party may request leave to file a brief in excess of 15 pages for good cause shown. Alternative proposed findings and conclusions, if any, may be appended as an exhibit.
</P>
<P>(c) <I>Briefs in opposition.</I> Any opposing party may submit a brief in opposition to the appeal, not to exceed 15 pages, within 20 days of receiving a copy of the appeal and accompanying brief. The opposing party may request leave to file a brief in excess of 15 pages for good cause shown. The brief in opposition shall specifically state the opposing party's reasons for supporting the hearing officer's determination, or for objecting to any part of the hearing officer's determination.
</P>
<P>(d) <I>Service.</I> The appeal and all briefs shall be served on all parties and on the Docket Clerk.
</P>
<P>(e) <I>Forwarding of the record.</I> Upon request by the Office of the Secretary, the hearing officer shall forward the record of the proceeding to the Secretary or the Secretary's designee.
</P>
<P>(f) <I>Time extensions.</I> The Secretary, or designee, in his or her sole discretion, may extend the deadlines or page limitations set forth in paragraphs (b) and (c) of this section. The Secretary or designee may also permit the filing of additional briefs, in his or her sole discretion.
</P>
<P>(g) <I>Personal appearance.</I> There is no right to appear personally before the Secretary or designee.
</P>
<P>(h) <I>Interlocutory rulings.</I> There is no right to appeal any interlocutory ruling by the hearing officer, except as provided for in § 26.27.
</P>
<P>(i) <I>Objection not raised before hearing officer.</I> In reviewing the determination or order, the Secretary, or designee, shall not consider any objection that was not raised before the hearing officer unless a demonstration is made of extraordinary circumstances causing the failure to raise the objection.
</P>
<P>(j) <I>Evidence in the record.</I> The Secretary or designee shall consider only evidence contained in the record forwarded by the hearing officer. However, if any party demonstrates to the satisfaction of the Secretary or designee that additional evidence not presented at the hearing is material, and that there were reasonable grounds for the failure to present such evidence at the hearing, the Secretary or designee shall remand the matter to the hearing officer for reconsideration in light of the additional evidence.
</P>
<P>(k) <I>Ex parte communications.</I> The prohibitions of ex parte communications in § 26.3 shall apply to contacts with the Secretary or the Secretary's designee.
</P>
<P>(l) <I>Determination.</I> The Secretary or designee may affirm, modify, reverse, remand, reduce, compromise, or settle any determination made or action ordered in the initial determination or order. The Secretary or designee shall consider, and include in any final determination, such factors as may be set forth in applicable statutes or regulations.
</P>
<P>(m) <I>Written determination.</I> Where a request for Secretarial review has been timely made, the Secretary, or designee, shall issue a written determination within 30 days after receipt of the request for review, and shall serve it upon the parties to the hearing and the hearing officer. The Secretary, or designee, may extend the time in which a written determination must be issued by an additional 60 days for good cause shown in a written justification issued to the parties. The written determination of the Secretary shall be final. If the Secretary, or designee, does not act upon the request for review of a determination within 90 days of service of the request, then the initial determination shall be the final agency action.


</P>
</DIV8>


<DIV8 N="§ 26.27" NODE="24:1.1.1.1.19.1.53.27" TYPE="SECTION">
<HEAD>§ 26.27   Interlocutory rulings.</HEAD>
<P>(a) <I>Interlocutory rulings by the hearing officer.</I> A party seeking review of an interlocutory ruling shall file a motion with the hearing officer within 10 days of the ruling requesting certification of the ruling for review by the Secretary, or in cases arising under 2 CFR part 2424, with the Debarring Official. Certification may be granted if the hearing officer believes that:
</P>
<P>(1) It involves an important issue of law or policy as to which there is substantial ground for difference of opinion; and
</P>
<P>(2) An immediate appeal from the order may materially advance the ultimate termination of the litigation.
</P>
<P>(b) <I>Petition for review.</I> Any party may file a petition for review of an interlocutory ruling within 10 days of the hearing officer's determination regarding certification.
</P>
<P>(c) <I>Secretarial review.</I> The Secretary, or designee, or Debarring Official shall review a certified ruling. The Secretary, designee, or Debarring Official has the discretion to grant or deny a petition for review from an uncertified ruling.
</P>
<P>(d) <I>Continuation of hearing.</I> Unless otherwise ordered by the hearing officer or the Secretary, designee, or Debarring Official, the hearing shall proceed pending the determination of any interlocutory appeal, and the order or ruling of the hearing officer shall be effective pending review.


</P>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="B" NODE="24:1.1.1.1.19.2" TYPE="SUBPART">
<HEAD>Subpart B—Hearings Pursuant to the Administrative Procedure Act</HEAD>


<DIV8 N="§ 26.28" NODE="24:1.1.1.1.19.2.54.1" TYPE="SECTION">
<HEAD>§ 26.28   Purpose and scope.</HEAD>
<P>Unless otherwise specified in this title, the rules in this subpart B of this part apply to hearings that HUD is required by statute to conduct pursuant to the Administrative Procedure Act (5 U.S.C. 554 <I>et seq.</I>)


</P>
</DIV8>


<DIV8 N="§ 26.29" NODE="24:1.1.1.1.19.2.54.2" TYPE="SECTION">
<HEAD>§ 26.29   Definitions.</HEAD>
<P>The following definitions apply to subpart B of this part:
</P>
<P><I>Complaint</I> means the notice from HUD alleging violations of a HUD statute and/or regulation, citing the legal authority upon which it is issued, stating the relief HUD seeks, and informing a respondent of his or her right to submit a response to a designated office and to request an opportunity for a hearing before an Administrative Law Judge.
</P>
<P><I>Docket Clerk</I> means the Docket Clerk of the Office of Hearings and Appeals, located at the following address—409 Third Street, SW., Second Floor, Washington, DC 20024; mailing address is 451 7th Street, SW., Room B-133, Washington, DC 20410.
</P>
<P><I>Respondent,</I> unless otherwise identified by other governing statute, rule, or regulation, is the party against whom the administrative action is taken.
</P>
<P><I>Response</I> means the written response to a complaint, admitting or denying the allegations in the complaint and setting forth any affirmative defense and any mitigating factors or extenuating circumstances. The response shall be submitted to the division of the Office of General Counsel that initiates the complaint or to such other office as may be designated in the complaint. A response is deemed a request for a hearing.
</P>
<CITA TYPE="N">[73 FR 76833, Dec. 17, 2008, as amended at 87 FR 8197, Feb. 14, 2022]


</CITA>
</DIV8>


<DIV8 N="§ 26.30" NODE="24:1.1.1.1.19.2.54.3" TYPE="SECTION">
<HEAD>§ 26.30   Service and filing.</HEAD>
<P>(a) <I>Filing.</I> Unless otherwise provided by statute, rule, or regulation, all documents shall be filed with the Docket Clerk. Filing may be by delivery, first-class mail, overnight delivery, facsimile transmission, or electronic means; however, the ALJ may place reasonable limits on filing by facsimile transmission or electronic means. All documents shall clearly designate the docket number and title of the proceeding. Duplicate copies are not required unless ordered by the ALJ.
</P>
<P>(b) <I>Service.</I> One copy of all documents filed with the Docket Clerk shall be served upon each party by the persons filing them and shall be accompanied by a certificate of service stating how and when such service has been made. Service may be made by delivery, first-class mail, overnight delivery, facsimile transmission, or electronic means; however, the ALJ may place reasonable limits on service by facsimile transmission or electronic means. Documents shall be served upon a party's address of residence or principal place of business, or, if the party is represented by counsel, upon counsel of record at the address of counsel. Service is complete when handed to the person or delivered to the person's office or residence and deposited in a conspicuous place. If service is by first-class mail, overnight delivery, facsimile transmission, or electronic means, service is complete upon deposit in the mail or upon electronic transmission.


</P>
</DIV8>


<DIV8 N="§ 26.31" NODE="24:1.1.1.1.19.2.54.4" TYPE="SECTION">
<HEAD>§ 26.31   Time computations.</HEAD>
<P>(a) <I>General.</I> In computing any period of time under subpart B of this part, the time period begins the day following the act, event, or default, and includes the last day of the period, unless the last day is a Saturday, Sunday, or legal holiday observed by the Federal Government, in which case the time period includes the next business day. When the prescribed time period is 7 days or less, intermediate Saturdays, Sundays, and legal holidays shall be excluded from the computation.
</P>
<P>(b) <I>Entry of orders.</I> In computing any time period involving the date of the issuance of an order or decision by an Administrative Law Judge, the date of issuance is the date the order or decision is served by the Docket Clerk.
</P>
<P>(c) <I>Service by mail.</I> If a document is served by mail, 3 days shall be added to the time permitted for a response.


</P>
</DIV8>


<DIV7 N="54" NODE="24:1.1.1.1.19.2.54" TYPE="SUBJGRP">
<HEAD>Administrative Law Judge</HEAD>


<DIV8 N="§ 26.32" NODE="24:1.1.1.1.19.2.54.5" TYPE="SECTION">
<HEAD>§ 26.32   Powers and duties of the Administrative Law Judge (ALJ).</HEAD>
<P>The ALJ shall conduct a fair and impartial hearing, avoid delay, maintain order, and ensure that a record of the proceeding is made. The ALJ is authorized to:
</P>
<P>(a) Set and change the date, time, and place of the hearing upon reasonable notice to the parties;
</P>
<P>(b) Continue or recess the hearing, in whole or in part, for a reasonable period of time;
</P>
<P>(c) Hold conferences to identify or simplify the issues, or to consider other matters that may aid in the expeditious disposition of the proceeding;
</P>
<P>(d) Administer oaths and affirmations;
</P>
<P>(e) Issue subpoenas requiring the attendance of witnesses and the production of documents at depositions or at hearings;
</P>
<P>(f) Rule on motions and other procedural matters;
</P>
<P>(g) Regulate the scope and timing of discovery;
</P>
<P>(h) Regulate the course of the hearing and the conduct of representatives and parties;
</P>
<P>(i) Examine witnesses;
</P>
<P>(j) Receive, rule on, exclude, or limit evidence;
</P>
<P>(k) Upon motion of a party, take official notice of facts;
</P>
<P>(l) Upon motion of a party, decide cases, in whole or in part, by summary judgment where there is no disputed issue of material fact;
</P>
<P>(m) Conduct any conference, argument, or hearing on motions in person or by telephone;
</P>
<P>(n) Upon motion, except where mandated by statute, extend the time within which any act required by these rules must be performed where necessary to avoid prejudicing the public interest or the rights of the parties, or upon showing of good cause; and
</P>
<P>(o) Exercise such other authority as is necessary to carry out the responsibilities of the ALJ under subpart B of this part.


</P>
</DIV8>


<DIV8 N="§ 26.33" NODE="24:1.1.1.1.19.2.54.6" TYPE="SECTION">
<HEAD>§ 26.33   Ex parte communications.</HEAD>
<P>No party or person (except employees of the ALJ's office) shall communicate in any way with the ALJ on any matter at issue in a case, unless on notice and opportunity for all parties to participate. This provision does not prohibit a person or party from inquiring about the status of a case or asking routine questions concerning administrative functions or procedures.


</P>
</DIV8>


<DIV8 N="§ 26.34" NODE="24:1.1.1.1.19.2.54.7" TYPE="SECTION">
<HEAD>§ 26.34   Sanctions.</HEAD>
<P>(a) The ALJ may sanction a person, including any party or representative, for failing to comply with an order, rule, or procedure governing the proceeding; failing to prosecute or defend an action; or engaging in other misconduct that interferes with the speedy, orderly, or fair conduct of the hearing.
</P>
<P>(b) Any sanction, including, but not limited to, those listed in paragraphs (c), (d), and (e) of this section, shall reasonably relate to the severity and nature of the failure or misconduct.
</P>
<P>(c) When a party fails to comply with an order, including an order compelling discovery, the ALJ may impose an appropriate sanction for such noncompliance, including, but not limited to, the following:
</P>
<P>(1) Drawing an inference in favor of the requesting party with regard to the information sought;
</P>
<P>(2) In the case of requests for admission, deeming any matter about which an admission is requested to be admitted;
</P>
<P>(3) Prohibiting the party failing to comply with the order from introducing evidence concerning, or otherwise relying upon, testimony relating to the information sought; or
</P>
<P>(4) Striking any part of the pleadings or other submissions of the party failing to comply with the order.
</P>
<P>(d) If a party fails to prosecute or defend an action brought under subpart B of this part, the ALJ may dismiss the action or may issue a decision against the non-prosecuting or defending party. Such decision of the ALJ shall constitute final agency action and shall not be appealable to the Secretary under § 26.52 of this part.
</P>
<P>(e) The ALJ may refuse to consider any motion, request, response, brief, or other document that is not filed in a timely fashion.


</P>
</DIV8>


<DIV8 N="§ 26.35" NODE="24:1.1.1.1.19.2.54.8" TYPE="SECTION">
<HEAD>§ 26.35   Disqualification of ALJ.</HEAD>
<P>(a) An ALJ in a particular case may disqualify himself or herself.
</P>
<P>(b) A party may file with the ALJ a motion for the ALJ's disqualification. The motion shall be accompanied by an affidavit alleging the grounds for disqualification.
</P>
<P>(c) Upon the filing of a motion and affidavit, the ALJ shall proceed no further in the case until the matter of disqualification is resolved.
</P>
<P>(d) If the ALJ does not withdraw from the proceedings, a written statement of his or her reasons for electing not to withdraw shall be incorporated into the record and the hearing shall proceed.


</P>
</DIV8>

</DIV7>


<DIV7 N="55" NODE="24:1.1.1.1.19.2.55" TYPE="SUBJGRP">
<HEAD>Parties</HEAD>


<DIV8 N="§ 26.36" NODE="24:1.1.1.1.19.2.55.9" TYPE="SECTION">
<HEAD>§ 26.36   Parties to the hearing.</HEAD>
<P>(a) <I>General.</I> The parties to the hearing shall be the respondent and HUD.
</P>
<P>(b) <I>Rights of parties.</I> Except as otherwise limited by subpart B of this part, all parties may:
</P>
<P>(1) Be accompanied, represented, and advised by a representative;
</P>
<P>(2) Participate in any conference held by the ALJ;
</P>
<P>(3) Conduct discovery;
</P>
<P>(4) Agree to stipulations of fact or law, which shall be made part of the record;
</P>
<P>(5) Present evidence relevant to the issues at the hearing;
</P>
<P>(6) Present and cross-examine witnesses;
</P>
<P>(7) Present oral arguments at the hearing as permitted by the ALJ; and
</P>
<P>(8) Submit written briefs and proposed findings of fact and conclusions of law after the hearing, as permitted by the ALJ.


</P>
</DIV8>


<DIV8 N="§ 26.37" NODE="24:1.1.1.1.19.2.55.10" TYPE="SECTION">
<HEAD>§ 26.37   Separation of functions.</HEAD>
<P>No officer, employee, or agent of the Federal Government engaged in the performance of investigative, conciliatory, or prosecutorial functions in connection with the proceeding shall, in that proceeding or any factually related proceeding under subpart B of this part, participate or advise in the decision of the Administrative Law Judge, except as a witness or counsel during the proceeding, or in its appellate review.


</P>
</DIV8>

</DIV7>


<DIV7 N="56" NODE="24:1.1.1.1.19.2.56" TYPE="SUBJGRP">
<HEAD>Prehearing Procedures</HEAD>


<DIV8 N="§ 26.38" NODE="24:1.1.1.1.19.2.56.11" TYPE="SECTION">
<HEAD>§ 26.38   Commencement of action.</HEAD>
<P>Proceedings under subpart B of this part shall commence with the Government's filing of a complaint, as that term is defined in § 26.29, with the Docket Clerk. The respondent's response to the complaint shall be timely filed with the Docket Clerk and served upon the Government in accordance with the procedures set forth in the complaint. If the respondent fails to submit a response to the Docket Clerk, then the Government may file a motion for a default judgment in accordance with § 26.41.


</P>
</DIV8>


<DIV8 N="§ 26.39" NODE="24:1.1.1.1.19.2.56.12" TYPE="SECTION">
<HEAD>§ 26.39   Prehearing conferences.</HEAD>
<P>(a) The ALJ may schedule prehearing conferences as appropriate.
</P>
<P>(b) Upon the motion of any party or <I>sua sponte</I>, the ALJ may schedule a prehearing conference at a reasonable time in advance of the hearing.
</P>
<P>(c) The ALJ may consider the following at a prehearing conference:
</P>
<P>(1) Simplification of the issues;
</P>
<P>(2) Stipulations of fact and of the authenticity, accuracy, and admissibility of documents;
</P>
<P>(3) Submission of the case on briefs in lieu of an oral hearing;
</P>
<P>(4) Limitation of the number of witnesses;
</P>
<P>(5) The exchange of witness lists and of proposed exhibits;
</P>
<P>(6) Discovery;
</P>
<P>(7) The time and place for the hearing; and
</P>
<P>(8) Such other matters as may tend to expedite the fair and just disposition of the proceedings.


</P>
</DIV8>


<DIV8 N="§ 26.40" NODE="24:1.1.1.1.19.2.56.13" TYPE="SECTION">
<HEAD>§ 26.40   Motions.</HEAD>
<P>(a) <I>General.</I> All motions shall state the specific relief requested and the basis therefore and, except during a conference or the hearing, shall be in writing. Written motions shall be filed and served in accordance with § 26.30. Either party may submit a proposed order with any motion.
</P>
<P>(b) <I>Response to motions.</I> Unless otherwise ordered by the ALJ, a response to a written motion may be filed within 10 days after service of the motion. A party failing to respond timely to a motion may be deemed to have waived any objection to the granting of the motion.
</P>
<P>(c) <I>Motions for extensions.</I> Either party may file a motion for extension. At the discretion of the ALJ, a motion for an extension of time may be granted for good cause at any time, notwithstanding an objection or any reply to the motion, consistent with § 26.32(f). The ALJ may waive the requirements of this section as to motions for extensions of time or any page limits.
</P>
<P>(d) <I>Right to reply.</I> The moving party shall have no right to reply, except as permitted by the ALJ.
</P>
<P>(e) <I>Oral Argument.</I> Either party may request oral argument on any motion, but such argument shall be available at the sole discretion of the ALJ.
</P>
<P>(f) <I>Motions for summary judgment.</I> (1) A party claiming relief or a party against whom relief is sought may timely move, with or without supporting affidavits, for summary judgment on all or part of the claim.
</P>
<P>(2) Objections in the consideration of summary judgment motions or answers thereto based upon a failure to strictly comply with the provisions of Rule 56 of the Federal Rules of Civil Procedure may, at the discretion of the ALJ, be overruled.
</P>
<P>(g) <I>Motions for dismissal.</I> When a motion to dismiss the proceeding is granted, the ALJ shall make and file a determination and order in accordance with the provisions of § 26.50.


</P>
</DIV8>


<DIV8 N="§ 26.41" NODE="24:1.1.1.1.19.2.56.14" TYPE="SECTION">
<HEAD>§ 26.41   Default.</HEAD>
<P>(a) <I>General.</I> The respondent may be found in default, upon motion, for failure to file a timely response to the Government's complaint. The motion shall include a copy of the complaint and a proposed default order, and shall be served upon all parties. The respondent shall have 10 days from such service to respond to the motion.
</P>
<P>(b) <I>Default order.</I> The ALJ shall issue a decision on the motion within 15 days after the expiration of the time for filing a response to the default motion. If a default order is issued, it shall constitute the final agency action.
</P>
<P>(c) <I>Effect of default.</I> A default shall constitute an admission of all facts alleged in the Government's complaint and a waiver of respondent's right to a hearing on such allegations. The penalty proposed in the complaint shall be set forth in the default order and shall be immediately due and payable by respondent without further proceedings.


</P>
</DIV8>

</DIV7>


<DIV7 N="57" NODE="24:1.1.1.1.19.2.57" TYPE="SUBJGRP">
<HEAD>Discovery</HEAD>


<DIV8 N="§ 26.42" NODE="24:1.1.1.1.19.2.57.15" TYPE="SECTION">
<HEAD>§ 26.42   Discovery.</HEAD>
<P>(a) <I>General.</I> The parties are encouraged to engage in voluntary discovery procedures, which may commence at any time after an answer has been filed. Parties may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense of any party, including the existence, description, nature, custody, condition, and location of any books, documents, or other tangible things and the identity and location of persons having knowledge of any discoverable matter. For good cause, the ALJ may order discovery of any matter relevant to the subject matter of the action. To be relevant, information need not be admissible at the hearing, if the discovery appears reasonably calculated to lead to the discovery of admissible evidence. Each party shall bear its own expenses associated with discovery.
</P>
<P>(b) <I>Discovery in Program Fraud Civil Remedies Actions.</I> (1) Upon receipt of a complaint, the defendant may, upon written request to the Office of General Counsel, review any relevant and material nonprivileged documents, including any exculpatory documents, that relate to the allegations set out in the complaint. Exculpatory information that is contained in a privileged document must be disclosed; however, the privileged document need not be provided.
</P>
<P>(2) With the exception of the limited discovery permitted under paragraph (b)(1) of this section, unless agreed to by the parties, discovery shall be available only as ordered by the ALJ. The ALJ shall order only that discovery that he or she determines is necessary for the expeditious, fair, and reasonable consideration of the issues, is not unduly costly or burdensome, and will not unduly delay the proceeding. Discovery of privileged information shall not be permitted. The request for approval sent to the Attorney General from the General Counsel or designee, as described in 31 U.S.C. § 3803(a)(2), is not discoverable under any circumstances. The ALJ may grant discovery subject to a protective order under § 26.44.
</P>
<P>(c) <I>Authorized discovery.</I> The following types of discovery are authorized:
</P>
<P>(1) <I>Requests for production of documents.</I> (i) Any party may serve upon any other party a written request to produce and permit the party making the request, or someone acting on the requestor's behalf, to inspect, copy, test, or sample any designated documents or electronically stored information—including writings, drawings, graphs, charts, photographs, sound recordings, images, and other data or data compilations stored in any medium from which information can be obtained—translated, if necessary, by the respondent into reasonably usable form, or to inspect, copy, test, or sample any designated tangible things that constitute or contain matters within the scope of § 26.42(a) and which are in the possession, custody, or control of the party upon whom the request is served.
</P>
<P>(ii) The request shall set forth, either by individual item or by category, the items to be inspected, and describe each with reasonable particularity. The request shall specify a reasonable time, place, and manner of making the inspection and performing the related acts. The request may specify the form or forms in which electronically stored information is to be produced.
</P>
<P>(iii) The party upon whom the request is served shall serve a written response within 20 days after the service of the request. A shorter or longer time may be directed by the ALJ or, in the absence of such an order, agreed to in a written document by the parties, which shall be submitted to the ALJ in a timely manner. The response shall state, with respect to each item or category, whether inspection and related activities will be permitted as requested. If there are any objections to any requests, including objections to the requested form or forms for producing electronically stored information, the response shall state the reasons for such objections. If objection is made to part of an item or category, the part shall be specified and inspection permitted of the remaining parts. If objection is made to the requested format for producing electronically stored information—or if no format was specified in the request—the responding party must state the format it intends to use. The party submitting the request may move for an order under paragraph (e) of this section with respect to any objection to or other failure to respond to the request or any part thereof, or any failure to permit inspection as requested.
</P>
<P>(iv) Unless the parties otherwise agree, or the ALJ otherwise orders:
</P>
<P>(A) A party who produces documents for inspection shall produce them as they are kept in the usual course of business or shall organize and label them to correspond with the categories in the request;
</P>
<P>(B) If a request does not specify the form or forms for producing electronically stored information, a responding party must produce the information in a format in which it is ordinarily maintained or in a format that is reasonably usable; and
</P>
<P>(C) A party need not produce the same electronically stored information in more than one form.
</P>
<P>(2) <I>Requests for admissions.</I> Any party may serve upon any other party a written request for the admission of the genuineness of any documents described in the request or of the truth of any relevant matters of fact. Copies of documents shall be delivered with the request unless copies have already been furnished. Each requested admission shall be considered admitted, unless, within 30 days after service of the request, or within such other time as the parties may agree to or the ALJ determines, the party from whom the admission is sought serves upon the party making the request either:
</P>
<P>(i) A statement, which:
</P>
<P>(A) Denies specifically the relevant matters for which an admission is requested, or sets forth in detail the reasons why the party can neither truthfully admit nor deny them;
</P>
<P>(B) Fairly meets the substance of the requested admission, and when good faith requires that a party qualify an answer or deny only a part of the matter of which an admission is requested, the party specifies as much of it as is true and qualifies or denies the remainder; and
</P>
<P>(C) Does not assert lack of information or knowledge as a reason for failure to admit or deny, unless the party states that the party has made reasonable inquiry, and that the information known or readily obtainable by the party is insufficient to enable the party to admit or deny; or
</P>
<P>(ii) Written objections to a requested admission, which state the grounds for the objection and which object to a requested admission, if necessary, either in whole or in part, on the basis of privilege or relevance. Responses to the request for admission on matters to which objections have been made may be deferred until each objection is ruled upon, but if written objections are made only to a part of a request, a response to the remainder of the request shall be provided.
</P>
<P>(iii) Any matter admitted under this rule is conclusively established unless the ALJ, on motion, permits withdrawal or amendment of the admission. Admissions obtained pursuant to this procedure may be used in evidence only for the purposes of the pending action. The use of obtained admissions as evidence is permitted to the same extent and subject to the same objections as other evidence.
</P>
<P>(3) <I>Written interrogatories</I>—(i) <I>Service of written interrogatories.</I> Any party may serve upon any other party written interrogatories, not exceeding 25 in number, including all discrete subparts, unless additional interrogatories are agreed to by the parties or leave to serve additional interrogatories is granted by the ALJ.
</P>
<P>(ii) <I>Response to interrogatories.</I> Within 20 days after service of the request, the party upon whom the interrogatories are served shall serve a written response, unless the parties agree in a written document submitted to the ALJ or the ALJ determines that a shorter or longer period is appropriate under the circumstances. The response shall specifically answer each interrogatory separately and fully in writing, unless it is objected to, in which event the objecting party shall state the reasons for objection with specificity. Any ground not stated in a timely objection is waived unless the party's failure to object is excused by the ALJ for good cause shown. If objection is made to only part of an interrogatory, the objectionable part shall be specified and the party shall answer to the extent the interrogatory is not objectionable.
</P>
<P>(iii) <I>Option to produce business records.</I> Where the answer to an interrogatory may be derived or ascertained from the business records, including electronically stored information, of the party upon whom the interrogatory has been served or from an examination, audit, or inspection of such business records, including a compilation, abstract, or summary thereof, and the burden of deriving or ascertaining the answer is substantially the same for the party serving the interrogatory as for the party served, it is a sufficient answer to such interrogatory to specify the records from which the answer may be derived or ascertained and to afford to the party serving the interrogatory reasonable opportunity to examine, audit, or inspect such records and to make copies, compilations, abstracts, or summaries. A specification shall be in sufficient detail to permit the interrogating party to locate and to identify, as readily as can the party served, the records from which the answer may be ascertained.
</P>
<P>(4) <I>Depositions.</I> (i) A party may take the oral deposition of any person. Reasonable written notice of deposition shall be served upon the opposing party and the deponent. The attendance of a deponent may be compelled by subpoena where authorized by law or other order by the ALJ.
</P>
<P>(ii) Each person testifying on oral deposition shall be placed under oath by the person before whom the deposition is taken. The deponent may be examined and cross-examined. The questions and the answers, together with all objections made, shall be recorded by the person before whom the deposition is to be taken or under that person's direction.
</P>
<P>(iii) <I>Objections.</I> Objection may be made to questions or answers for any reason that would require the exclusion of the testimony under § 26.47 as if the witness were present and testifying at hearing. Objections shall be in short form, stating every ground for objection. Failure to object to any question or answer shall be considered a waiver of objection, unless the parties agree otherwise. Rulings on any objections shall be made by the ALJ at hearing, or at such other time as is requested by motion. The examination shall proceed, with the testimony being taken subject to the objections; a person may instruct a deponent not to answer only when necessary to preserve a privilege, to enforce a limitation directed by the ALJ, or to present a motion under § 26.44.
</P>
<P>(iv) <I>Submission to deponent.</I> A transcript of the deposition shall be submitted to the deponent for examination and signature, unless submission is waived by the deponent and the parties. Any changes in form or substance that the deponent desires to make shall be entered upon the transcript by the person before whom the deposition was taken, with a statement of reasons given by the deponent for making them. The transcript shall then be signed by the deponent, unless the parties by stipulation waive the signing or the deponent is ill, cannot be found, or refuses to sign. If the transcript is not signed, the person before whom the deposition was taken shall sign it and state on the record the reason that it is not signed by the deponent.
</P>
<P>(v) <I>Certification and filing.</I> The person before whom the deposition was taken shall make a certification on the transcript as to its accuracy. Interested parties shall make their own arrangements with the person recording the testimony for copies of the testimony and the exhibits.
</P>
<P>(vi) <I>Deposition as evidence.</I> Subject to appropriate rulings by the ALJ on objections, the deposition or any part may be introduced into evidence for any purpose if the deponent is unavailable. Only that part of a deposition that is received in evidence at hearing shall constitute a part of the record in the proceeding upon which a decision may be based. Nothing in this rule is intended to limit the use of a deposition for impeachment purposes.
</P>
<P>(vii) <I>Payment of fees.</I> Fees shall be paid by the person upon whose application the deposition is taken.
</P>
<P>(d) <I>Supplementation of responses.</I> A party who has responded to a request for discovery by providing a response is under a duty to timely amend any prior response to an interrogatory, request for production, or request for admission if so ordered by the ALJ, or if the party learns that the response is in some material respect incomplete or incorrect and if the additional or corrective information has not otherwise been made known to all other parties during the discovery process or in writing.
</P>
<P>(e) <I>Motions to compel.</I> (1) In connection with any discovery procedure, by motion addressed to the ALJ and upon a showing of a good faith attempt to resolve the issue without the ALJ's intervention, either party may file a motion to compel a response with respect to any objection or other failure to respond to the discovery requested or to any part thereof, or any failure to respond as specifically requested. An evasive or incomplete answer to a request for discovery is treated as a failure to answer.
</P>
<P>(2) The motion shall describe the information sought, cite the opposing party's objection, and provide arguments supporting the motion.
</P>
<P>(3) The opposing party may file a response to the motion, including a request for a protective order in accordance with § 26.44.
</P>
<P>(4) Orders compelling discovery shall be issued only where such discovery will not compel the disclosure of privileged information, unduly delay the hearing, or result in prejudice to the public interest or the rights of the parties, and upon a showing of good cause.
</P>
<P>(5) A party need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost. On motion to compel discovery, the party from whom discovery is sought must show that the information is not reasonably accessible because of undue burden or cost. If that showing is made, the ALJ may nonetheless order discovery from such sources if the requesting party shows good cause or, when the party's refusal to provide the information sought is solely due to undue expense, the party seeking the discovery agrees to bear the expense associated with the request.
</P>
<P>(f) <I>Refusal to honor discovery order.</I> When a party refuses to honor a discovery order, the ALJ may issue such orders in regard to the refusal as justice shall require, including the imposition of sanctions pursuant to § 26.34.


</P>
</DIV8>


<DIV8 N="§ 26.43" NODE="24:1.1.1.1.19.2.57.16" TYPE="SECTION">
<HEAD>§ 26.43   Subpoenas.</HEAD>
<P>(a) <I>General.</I> Upon written request of a party, the ALJ may issue a subpoena requiring the attendance of a witness at a deposition or hearing, and/or the production of documents. The request shall specify any documents to be produced and shall list the names and addresses of the witnesses.
</P>
<P>(b) <I>Time of request.</I> A request for a subpoena in aid of discovery shall be filed in time to permit the conclusion of discovery 15 days before the date fixed for the hearing. A request for a subpoena to testify at the hearing shall be filed at least 3 days prior to the hearing, unless otherwise allowed by the ALJ for good cause shown.
</P>
<P>(c) <I>Content.</I> The subpoena shall specify the time and place at which the witness is to appear and any documents the witness is to produce.
</P>
<P>(d) <I>Service and fees.</I> Subpoenas shall be served, and fees and costs paid to subpoenaed witnesses, in accordance with Rule 45(b)(1) of the Federal Rules of Civil Procedure.
</P>
<P>(e) <I>Motion to quash.</I> The individual to whom the subpoena is directed or a party may file a motion to quash the subpoena within 10 days after service, or on or before the time specified in the subpoena for compliance if it is less than 10 days after service.


</P>
</DIV8>


<DIV8 N="§ 26.44" NODE="24:1.1.1.1.19.2.57.17" TYPE="SECTION">
<HEAD>§ 26.44   Protective orders.</HEAD>
<P>(a) A party, a prospective witness, or a deponent may file a motion for a protective order with respect to discovery sought by an opposing party or with respect to the hearing, seeking to limit the availability or disclosure of evidence.
</P>
<P>(b) Protective orders may be issued by an ALJ if the ALJ determines such an order is necessary to protect a party or other person from annoyance, embarrassment, oppression, or undue burden or expense because:
</P>
<P>(1) The discovery sought is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive;
</P>
<P>(2) The party seeking discovery has had ample opportunity by discovery in the action to obtain the information sought; or
</P>
<P>(3) The burden or expense of the proposed discovery outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving the issues.


</P>
</DIV8>

</DIV7>


<DIV7 N="58" NODE="24:1.1.1.1.19.2.58" TYPE="SUBJGRP">
<HEAD>Hearings</HEAD>


<DIV8 N="§ 26.45" NODE="24:1.1.1.1.19.2.58.18" TYPE="SECTION">
<HEAD>§ 26.45   General.</HEAD>
<P>(a) <I>Time of hearing.</I> The hearing shall commence not later than 90 days following the date of the Government's filing of the complaint and response with the Docket Clerk under § 26.38, unless the time is extended for good cause. The ALJ shall provide written notice to all parties of the reasons for any extension of time.
</P>
<P>(b) <I>Location of hearing.</I> The hearing shall be held in a place most convenient for the respondent and witnesses, or in such other place as may be agreed upon by the parties and the ALJ.
</P>
<P>(c) <I>Notice of hearing.</I> The ALJ shall issue a notice of hearing to all parties specifying the time and location of the hearing, the matters of fact and law to be heard, the legal authority under which the hearing is to be held, a description of the procedures for the conduct of the hearing, and such other matters as the ALJ determines to be appropriate.
</P>
<P>(d) <I>Exceptions for Program Fraud Civil Remedies Act matters.</I> For Program Fraud Civil Remedies actions, the hearing is commenced by the issuance of a notice of hearing and order by the ALJ, as set forth in 31 U.S.C. 3803(d)(2)(B). Hearings for Program Fraud Civil Remedies Act matters shall be located in accordance with 31 U.S.C. 3803(g)(4).
</P>
<P>(e) <I>Burden and standard of proof.</I> HUD shall prove the respondent's liability and any aggravating factors by a preponderance of the evidence. Respondent shall prove any affirmative defenses and any mitigating factors by a preponderance of the evidence.
</P>
<P>(f) <I>Public hearings.</I> Unless otherwise ordered by the ALJ for good cause shown, the hearing shall be open to the public.


</P>
</DIV8>


<DIV8 N="§ 26.46" NODE="24:1.1.1.1.19.2.58.19" TYPE="SECTION">
<HEAD>§ 26.46   Witnesses.</HEAD>
<P>(a) Except as provided in paragraph (b) of this section, testimony at the hearing shall be given orally by witnesses under oath or affirmation.
</P>
<P>(b) At the discretion of the ALJ, testimony may be admitted in the form of a written statement or deposition. In order to be admissible, any written statement must be provided to all other parties along with the last known address of the witness, in a manner that allows sufficient time for other parties to subpoena the witness for cross-examination at the hearing.


</P>
</DIV8>


<DIV8 N="§ 26.47" NODE="24:1.1.1.1.19.2.58.20" TYPE="SECTION">
<HEAD>§ 26.47   Evidence.</HEAD>
<P>The ALJ shall admit any relevant oral or documentary evidence that is not privileged. Unless otherwise provided for in this part, the Federal Rules of Evidence shall provide guidance to the ALJ's evidentiary ruling, but shall not be binding. Parties may object to clearly irrelevant material, but technical and hearsay objections to testimony as used in a court of law will not be sustained. The ALJ may, however, exclude evidence if its probative value is substantially outweighed by confusion of the issues, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence.


</P>
</DIV8>


<DIV8 N="§ 26.48" NODE="24:1.1.1.1.19.2.58.21" TYPE="SECTION">
<HEAD>§ 26.48   Posthearing briefs.</HEAD>
<P>Posthearing briefs shall be filed only upon order by the ALJ.


</P>
</DIV8>


<DIV8 N="§ 26.49" NODE="24:1.1.1.1.19.2.58.22" TYPE="SECTION">
<HEAD>§ 26.49   The record.</HEAD>
<P>The hearing will be recorded and transcribed by a reporter designated by the Department under the supervision of the ALJ. The parties and the public, at their own expense, may obtain copies of transcripts from the reporter. A copy of the transcript shall be made available at cost to the parties upon request. The transcript of testimony, exhibits, and other evidence admitted at the hearing and all papers and requests filed in the proceeding constitute the record for the decision by the ALJ and the Secretary or designee.


</P>
</DIV8>


<DIV8 N="§ 26.50" NODE="24:1.1.1.1.19.2.58.23" TYPE="SECTION">
<HEAD>§ 26.50   Initial decision.</HEAD>
<P>(a) The ALJ shall issue an initial decision based only on the record, which shall contain findings of fact, conclusions of law, and the relief granted. The ALJ's initial decision shall not become effective unless it becomes or is incorporated into final agency action in accordance with § 26.50(c) or § 26.52(l).
</P>
<P>(b) The ALJ shall serve the initial decision on all parties within 60 days after either the close of the record or the expiration of time permitted for submission of posthearing briefs, whichever is later. The ALJ may extend the 60-day period for serving the initial decision in writing for good cause. The initial decision shall inform the parties that, if provided for and consistent with Departmental regulations, any party may request, in writing, Secretarial review of the determination within 30 days after the ALJ issues the initial decision, in accordance with § 26.52 of this part. The determination shall include the mailing address, facsimile number, and electronic submission information to which the request for Secretarial review should be sent. A request for Secretarial review may be made by mail, delivery, facsimile, or electronic submission.
</P>
<P>(c) If no appeal is timely filed with the Secretary or designee, the initial decision shall become the final agency action.


</P>
</DIV8>


<DIV8 N="§ 26.51" NODE="24:1.1.1.1.19.2.58.24" TYPE="SECTION">
<HEAD>§ 26.51   Interlocutory rulings.</HEAD>
<P>(a) <I>Interlocutory rulings by the ALJ.</I> A party seeking review of an interlocutory ruling shall file a motion with the ALJ within 10 days of the ruling requesting certification of the ruling for review by the Secretary. Certification may be granted if the ALJ believes that:
</P>
<P>(1) It involves an important issue of law or policy as to which there is substantial ground for difference of opinion; and
</P>
<P>(2) An immediate appeal from the order may materially advance the ultimate termination of the litigation.
</P>
<P>(b) <I>Petition for review.</I> Any party may file a petition for review of an interlocutory ruling within 10 days of the ALJ's determination regarding certification.
</P>
<P>(c) <I>Secretarial review.</I> The Secretary, or designee, shall review a certified ruling. The Secretary, or designee, has the discretion to grant or deny a petition for review from an uncertified ruling.
</P>
<P>(d) <I>Continuation of hearing.</I> Unless otherwise ordered by the ALJ or the Secretary, or designee, the hearing shall proceed pending the determination of any interlocutory appeal, and the order or ruling of the ALJ shall be effective pending review.


</P>
</DIV8>


<DIV8 N="§ 26.52" NODE="24:1.1.1.1.19.2.58.25" TYPE="SECTION">
<HEAD>§ 26.52   Appeal to the Secretary.</HEAD>
<P>(a) <I>General.</I> Either party may file with the Secretary an appeal within 30 days after the date that the ALJ issues an initial decision. The Secretary or the Secretary's designee may extend the 30-day period in his or her sole discretion, for good cause.
</P>
<P>(b) <I>Brief in support of appeal.</I> The appeal shall be accompanied by a written brief, not to exceed 15 pages, specifically identifying the party's objections to the initial decision or order of the ALJ and the party's supporting reasons for any objections. The appealing party may request leave to file a brief in excess of 15 pages for good cause shown. Alternative proposed findings and conclusions, if any, may be appended as an exhibit.
</P>
<P>(c) <I>Briefs in opposition.</I> Any opposing party may submit a brief in opposition to the appeal, not to exceed 15 pages, within 20 days of the date a copy of the appeal and accompanying brief were received. The opposing party may request leave to file a brief in excess of 15 pages for good cause shown. The brief in opposition shall specifically state the opposing party's reasons for supporting the ALJ's determination or taking exceptions to any part of the ALJ's determination. 
</P>
<P>(d) <I>Extensions and additional briefs.</I> The Secretary or Secretary's designee may extend the deadlines or page limitations set forth in paragraphs (b), (c), and (d) of this section, in his or her sole discretion. The Secretary may also permit the filing of additional briefs, in his or her sole discretion.
</P>
<P>(e) <I>Forwarding of the record.</I> Upon request by the Office of the Secretary, the ALJ shall forward the record of the proceeding to the Secretary or designee.
</P>
<P>(f) <I>Personal appearance.</I> There is no right to appear personally before the Secretary or designee.
</P>
<P>(g) <I>ALJ decisions upon failure to prosecute or defend.</I> There is no right to appeal any decision issued by an ALJ in accordance with § 26.37(d) of this part.
</P>
<P>(h) <I>Objections not raised before ALJ.</I> In reviewing the initial decision, the Secretary or designee shall not consider any objection that was not raised before the ALJ, unless a demonstration is made of extraordinary circumstances causing the failure to raise the objection.
</P>
<P>(i) <I>Evidence considered.</I> The Secretary or designee shall consider only evidence contained in the record forwarded by the ALJ. However, if any party demonstrates to the satisfaction of the Secretary or designee that additional evidence not presented at the hearing is material and that there were reasonable grounds for the failure to present such evidence at the hearing, the Secretary or designee shall remand the matter to the ALJ for reconsideration in light of the additional evidence.
</P>
<P>(j) <I>Ex parte communications.</I> The prohibitions of ex parte communications in § 26.33 shall apply to contacts with the Secretary or designee.
</P>
<P>(k) <I>Relief.</I> The Secretary or designee may affirm, modify, reduce, reverse, compromise, remand, or settle any relief granted in the initial decision. The Secretary or designee shall consider, and include in any final determination, such factors as may be set forth in applicable statutes or regulations.
</P>
<P>(l) <I>Decision</I>—(1) <I>Generally.</I> Where a Secretarial appeal has been timely made, the Secretary, or designee, shall issue a written determination within 30 days after receipt of the brief in opposition, if any, and shall serve it upon the parties to the hearing. The Secretary, or designee, may extend the time in which a written determination must be issued by an additional 60 days for good cause shown in a written justification issued to the parties. The written decision of the Secretary shall be the final agency action. If the Secretary, or designee, does not act upon the appeal of an initial decision within 90 days of service of the appeal, then the initial determination shall be the final agency action.
</P>
<P>(2) <I>Exception for cases brought under the Program Fraud Civil Remedies Act.</I> Where a Secretarial appeal has been timely made in a case brought under the Program Fraud Civil Remedies Act, the Secretary, or designee, shall issue a written determination within 30 days after receipt of appeal and shall serve it upon the parties to the hearing. The written decision of the Secretary shall be the final agency action. If the Secretary, or designee, does not act upon the appeal of an initial decision within 30 days of service of the appeal, the initial decision shall become final and the Respondent will be served with a statement describing the right to seek judicial review, if any.


</P>
</DIV8>


<DIV8 N="§ 26.53" NODE="24:1.1.1.1.19.2.58.26" TYPE="SECTION">
<HEAD>§ 26.53   Exhaustion of administrative remedies.</HEAD>
<P>In order to fulfill the requirement of exhausting administrative remedies, a party must seek Secretarial review under § 26.52 prior to seeking judicial review of any initial decision issued under subpart B of this part.


</P>
</DIV8>


<DIV8 N="§ 26.54" NODE="24:1.1.1.1.19.2.58.27" TYPE="SECTION">
<HEAD>§ 26.54   Judicial review.</HEAD>
<P>Judicial review shall be available in accordance with applicable statutory procedures and the procedures of the appropriate federal court.


</P>
</DIV8>


<DIV8 N="§ 26.55" NODE="24:1.1.1.1.19.2.58.28" TYPE="SECTION">
<HEAD>§ 26.55   Collection of civil penalties and assessments.</HEAD>
<P>Collection of civil penalties and assessments shall be in accordance with applicable statutory provisions.


</P>
</DIV8>


<DIV8 N="§ 26.56" NODE="24:1.1.1.1.19.2.58.29" TYPE="SECTION">
<HEAD>§ 26.56   Right to administrative offset.</HEAD>
<P>The amount of any penalty or assessment that has become final under § 26.50 or § 26.52, or for which a judgment has been entered after action under § 26.54 or § 26.55, or agreed upon in a compromise or settlement among the parties, may be collected by administrative offset under 31 U.S.C. 3716 or other applicable law. In Program Fraud Civil Remedies Act matters, an administrative offset may not be collected against a refund of an overpayment of federal taxes then or later owing by the United States to the Respondent.


</P>
</DIV8>

</DIV7>

</DIV6>

</DIV5>


<DIV5 N="27" NODE="24:1.1.1.1.20" TYPE="PART">
<HEAD>PART 27—NONJUDICIAL FORECLOSURE OF MULTIFAMILY AND SINGLE FAMILY MORTGAGES 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1715b, 3701-3717, 3751-3768; 42 U.S.C. 1452b, 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 48548, Sept. 13, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:1.1.1.1.20.1" TYPE="SUBPART">
<HEAD>Subpart A—Nonjudicial Foreclosure of Multifamily Mortgages</HEAD>


<DIV8 N="§ 27.1" NODE="24:1.1.1.1.20.1.59.1" TYPE="SECTION">
<HEAD>§ 27.1   Purpose.</HEAD>
<P>The purpose of this subpart is to implement requirements for the administration of the Multifamily Mortgage Foreclosure Act of 1981 (the Act) (12 U.S.C. 3701-3717), that clarify, or are in addition to, the requirements contained in the Act, which are not republished here and must be consulted in conjunction with the requirements of this subpart. The Act creates a uniform Federal remedy for foreclosure of multifamily mortgages. Under a delegation of authority published on February 5, 1982 (47 FR 5468), the Secretary has delegated to the HUD General Counsel his powers under the Act to appoint a foreclosure commissioner or commissioners and to substitute therefor, to fix the compensation of commissioners, and to promulgate implementing regulations. 


</P>
</DIV8>


<DIV8 N="§ 27.2" NODE="24:1.1.1.1.20.1.59.2" TYPE="SECTION">
<HEAD>§ 27.2   Scope and applicability.</HEAD>
<P>(a) Under the Act and this subpart, the Secretary may foreclose on any defaulted Secretary-held multifamily mortgage encumbering real estate in any State. The Secretary may use the provisions of these regulations to foreclose on any multifamily mortgage regardless of when the mortgage was executed. 
</P>
<P>(b) The Secretary may, at the Secretary's option, use other procedures to foreclose defaulted multifamily mortgages, including judicial foreclosure in Federal court and nonjudicial foreclosure under State law. This subpart applies only to foreclosure procedures authorized by the Act and not to any other foreclosure procedures the Secretary may use. 


</P>
</DIV8>


<DIV8 N="§ 27.3" NODE="24:1.1.1.1.20.1.59.3" TYPE="SECTION">
<HEAD>§ 27.3   Definitions.</HEAD>
<P>The definitions contained in the Act (at 12 U.S.C. 3702) shall apply to this subpart, in addition to and as further clarified by the following definitions. As used in this subpart: 
</P>
<P><I>General Counsel</I> means the General Counsel of the Department of Housing and Urban Development; 
</P>
<P><I>Multifamily mortgage</I> does not include a mortgage covering a property on which there is located a one- to four-family residence, except when the one- to four-family residence is subject to a mortgage pursuant to section 202 of the Housing Act of 1959 (12 U.S.C. 1701q), or section 811 (42 U.S.C. 8013) of the National Affordable Housing Act. The definition of multifamily mortgage also includes a mortgage taken by the Secretary in connection with the previous sale of the project by the Secretary (purchase money mortgage). 


</P>
</DIV8>


<DIV8 N="§ 27.5" NODE="24:1.1.1.1.20.1.59.4" TYPE="SECTION">
<HEAD>§ 27.5   Prerequisites to foreclosure.</HEAD>
<P>Before commencement of a foreclosure under the Act and this subpart, HUD will provide to the mortgagor an opportunity informally to present reasons why the mortgage should not be foreclosed. Such opportunity may be provided before or after the designation of the foreclosure commissioner but before service of the notice of default and foreclosure. 


</P>
</DIV8>


<DIV8 N="§ 27.10" NODE="24:1.1.1.1.20.1.59.5" TYPE="SECTION">
<HEAD>§ 27.10   Designation of a foreclosure commissioner.</HEAD>
<P>(a) When the Secretary determines that a multifamily mortgage should be foreclosed under the Act and this subpart, the General Counsel will select and designate one or more foreclosure commissioners to conduct the foreclosure and sale. The method of selection and determination of the qualifications of the foreclosure commissioner shall be at the discretion of the General Counsel, and the execution of a designation pursuant to paragraph (b) of this section shall be conclusive evidence that the commissioner selected has been determined to be qualified by the General Counsel. 
</P>
<P>(b) After selection of a foreclosure commissioner, the General Counsel shall designate the commissioner in writing to conduct the foreclosure and sale of the particular multifamily mortgage. The written designation shall be duly acknowledged and shall state the name and business or residential address of the commissioner and any other information the General Counsel deems necessary. The designation shall be effective upon execution by the General Counsel or his designate. Upon receipt of the designation, the commissioner shall demonstrate acceptance by signing the designation and returning a signed copy to the General Counsel. 
</P>
<P>(c) The General Counsel may at any time, with or without cause, designate a substitute commissioner to replace a previously designated commissioner. Designation of a substitute commissioner shall be in writing and shall contain the same information and be made effective in the same manner as the designation of the original commissioner. Upon designation of a substitute commissioner, the substitute commissioner shall serve a copy of the written notice of designation upon the persons listed at sections 369(1) (A) through (C) of the Act (12 U.S.C. 3708(1) (A) through (C)) either by mail, in accordance with section 369(1) of the Act (12 U.S.C. 3708(1)), except that the time limitations in that section will not apply, or by any other manner which in the substitute commissioner's discretion is conducive to giving timely notice of substitution. 


</P>
</DIV8>


<DIV8 N="§ 27.15" NODE="24:1.1.1.1.20.1.59.6" TYPE="SECTION">
<HEAD>§ 27.15   Notice of default and foreclosure sale.</HEAD>
<P>(a) Within 45 days after accepting his or her designation to act as commissioner, the commissioner shall commence the foreclosure by serving a Notice of Default and Foreclosure Sale. 
</P>
<P>(b) The Notice of Default and Foreclosure Sale shall contain the following information: 
</P>
<P>(1) The Notice shall state that all deposits and the balance of the purchase price shall be paid by certified or cashier's check. The Notice shall state that no deposit will be required of the Secretary when the Secretary bids at the foreclosure sale. 
</P>
<P>(2) Any terms and conditions to which the purchaser at the foreclosure sale must agree under § 27.20. The Notice need not describe at length each and every pertinent term and condition, including any required use agreements and deed covenants, if it describes these terms and conditions in a general way and if it states that the precise terms will be available from the commissioner upon request. 
</P>
<P>(c) The Notice need not be mailed to mortgagors who have been released from all obligations under the mortgage. 
</P>
<P>(d) In deciding which newspaper or newspapers to select as general circulation newspapers for purposes of publication of the required notice, the commissioner need not select the newspaper with the largest circulation. 
</P>
<P>(e) In addition to Notice posting requirements included in the Act, the Notice shall also be posted in the project office and in such other appropriate conspicuous places as the commissioner deems appropriate for providing notice to all tenants. Posting shall not be required if the commissioner in his or her discretion finds that the act of posting is likely to lead to a breach of the peace or may result in the increased risk of vandalism or damage to the property. Any such finding will be made in writing. Entry on the premises by the commissioner for the purpose of posting shall be privileged as against all other persons. 
</P>
<P>(f) When service of the Notice of Default and Foreclosure Sale is made by mail, the commissioner shall at the same time and in the same manner serve a copy of the instrument by which the General Counsel, under § 27.10(b), has designated him or her to act as commissioner. 
</P>
<P>(g) At least 7 days before the foreclosure sale, the commissioner will record both the instrument designating him or her to act as commissioner and the Notice of Default and Foreclosure Sale in the same office or offices in which the mortgage was recorded. 


</P>
</DIV8>


<DIV8 N="§ 27.20" NODE="24:1.1.1.1.20.1.59.7" TYPE="SECTION">
<HEAD>§ 27.20   Conditions of foreclosure sale.</HEAD>
<P>(a) The requirements of section 367(b)(2)(A) of the Act (12 U.S.C. 3706(b)(2)(A)) apply if a majority of the residential units in a property subject to foreclosure sale pursuant to the Act and this subpart are occupied by residential tenants either on the date of the foreclosure sale or on the date on which the General Counsel designates the foreclosure commissioner. 
</P>
<P>(b) Terms which the Secretary may find appropriate to require pursuant to section 367(b) of the Act (12 U.S.C. 3706(b)), and such other provisions of law as may be applicable, may include provisions relating to use and ownership of the project property, tenant admission standards and procedures, rent schedules and increases, and project operation and maintenance. In determining terms which may be appropriate to require, the Secretary shall consider: 
</P>
<P>(1) The history of the project, including the purposes of the program under which the mortgage insurance or assistance was provided, and any other program of HUD under which the project was developed or otherwise assisted and the probable causes of project failure resulting in its default; 
</P>
<P>(2) A financial analysis of the project, including an appraisal of the fair market value of the property for its highest and best use; 
</P>
<P>(3) A physical analysis of the project, including the condition of the structure and grounds, the need for rehabilitation or repairs, and the estimated costs of any such rehabilitation or repairs; 
</P>
<P>(4) The income levels of the occupants of the project; 
</P>
<P>(5) Characteristics, including rental levels, of comparable housing in the area, with particular reference to whether current conditions and discernible trends in the area fairly indicate a likelihood that, for the foreseeable future after foreclosure and sale, the project will continue to provide rental or cooperative housing and market rentals obtainable in the project will be affordable by low- or moderate-income persons; 
</P>
<P>(6) The availability of or need for rental housing for low- and moderate-income persons in the area, including actions being taken or projected to be taken to address such needs and the impact of such actions on the project; 
</P>
<P>(7) An assessment of the number of occupants who might be displaced as a result of the manner of disposition; 
</P>
<P>(8) The eligibility of the occupants of the property for rental assistance under any program administered by HUD and the availability of funding for such assistance if necessary in order that the units occupied by such occupants will remain available to and affordable by such persons, or if necessary in order to assure the financial feasibility of the project after foreclosure and sale subject to the terms to be required by the Secretary; and 
</P>
<P>(9) Such other factors relating to the project as the Secretary shall consider appropriate. 
</P>
<P>(c) Terms which the Secretary may require to be agreed to by the purchaser pursuant to section 367(b) of the Act (12 U.S.C. 3706(b)) shall generally not be more restrictive, or binding for a longer duration, than the terms by which the mortgagor was bound prior to the foreclosure. For example: If the mortgage being foreclosed was held by the Secretary under section 312 of the Housing Act of 1964 (42 U.S.C. 1452b), any terms required by the Secretary pursuant to this section shall be in effect no longer than five years after the completion of the rehabilitation work funded by the section 312 loan. No terms shall be required pursuant to this section if the foreclosure sale occurs more than five years after the completion of such rehabilitation work (signified by the due date for commencement of amortization payments in the section 312 loan note). 
</P>
<P>(d) The limitation contained in paragraph (c) of this section applies only to such terms as the Secretary may require the purchaser to agree to, as a condition and term of the sale, under paragraph (a) of this section. Nothing contained in paragraph (c) of this section shall prevent the Secretary and the purchaser from entering into a subsidy agreement under any program administered by the Secretary containing terms binding upon either party which are longer in duration than would be permitted to be required by paragraph (c) of this section. 
</P>
<P>(e) Any terms required by the Secretary to be agreed to by the purchaser as a condition and term of sale under this section and section 367(b) of the Act (12 U.S.C. 3706(b)) shall be embodied in a use agreement to be executed by the Secretary and the purchaser. Such terms also may be included, or referred to, in appropriate covenants contained in the deed to be delivered by the foreclosure commissioner under § 27.45. Terms required by the Secretary pursuant to this section shall be stated or described in the Notice of Default and Foreclosure Sale under § 27.15. 
</P>
<P>(f) The defaulting mortgagor, or any principal, successor, affiliate, or assignee thereof, on the multifamily mortgage being foreclosed, shall not be eligible to bid on, or otherwise acquire, the property being foreclosed by the Department under this subpart or any other provision of law. A “principal” and an “affiliate” are defined as provided at 24 CFR 24.105.
</P>
<CITA TYPE="N">[61 FR 48548, Sept. 13, 1996, as amended at 66 FR 35847, July 9, 2001]


</CITA>
</DIV8>


<DIV8 N="§ 27.25" NODE="24:1.1.1.1.20.1.59.8" TYPE="SECTION">
<HEAD>§ 27.25   Termination or adjournment of foreclosure sale.</HEAD>
<P>(a) Before withdrawing the security property from foreclosure under section 369A(a) of the Act (12 U.S.C. 3709(a)), the commissioner shall notify the Secretary of the proposed withdrawal by telephone or telegram and shall provide the Secretary with a written statement of the reasons for the proposed withdrawal along with all documents submitted by the mortgagor in support of the proposed withdrawal. Upon receipt of this statement, the Secretary shall have 10 days within which to demonstrate orally or in writing why the security property should not be withdrawn from foreclosure. The Secretary shall provide the mortgagor with a copy of any statement prepared by the Secretary in opposition to the proposed withdrawal at the same time the statement is submitted to the commissioner. If the Secretary receives the commissioner's written statement less than 10 days before the scheduled foreclosure sale, the sale shall automatically be postponed for 14 days. Under these circumstances, notice of the rescheduled sale shall be served as described in section 369B(c) of the Act (12 U.S.C. 3710(c)). 
</P>
<P>(b) The commissioner may not withdraw the security property from foreclosure under section 369A(a) of the Act (12 U.S.C. 3709(a)) more than once unless the Secretary consents in writing to such withdrawal. 
</P>
<P>(c) The commissioner shall, in the case of a sale adjourned to a later date, mail a copy of the revised Notice of Default and Foreclosure Sale to the Secretary at least seven days before the date to which the sale has been adjourned. 
</P>
<P>(d) If upon application by the mortgagor, the commissioner refuses to withdraw the property from foreclosure under section 369A(a) of the Act (12 U.S.C. 3709(a)), the commissioner shall provide the mortgagor and the Secretary with a written statement of the reasons for the refusal. 


</P>
</DIV8>


<DIV8 N="§ 27.30" NODE="24:1.1.1.1.20.1.59.9" TYPE="SECTION">
<HEAD>§ 27.30   Conduct of the sale.</HEAD>
<P>(a) The commissioner shall accept written one-price sealed bids from any party including the Secretary so long as those bids conform to the requirements described in the Notice of Default and Foreclosure Sale. The commissioner shall announce the name of each such bidder and the amount of the bid. The commissioner shall accept oral bids from any party, including parties who submitted one-price sealed bids, if those oral bids conform to the requirements described in the Notice of Default and Foreclosure Sale. The commissioner will announce the amount of the high bid and the name of the successful bidder before the close of the sale. 
</P>
<P>(b) Relatives of the commissioner who may not bid at the foreclosure sale include parents, siblings, spouses and children. Related business entities which may not bid include entities or concerns whose relationship with the commissioner at the time the commissioner is designated is such that, directly or indirectly, one concern or individual formulates, directs, or controls the other concern; or has the power to formulate, direct, or control the other concern; or has the responsibility and authority either to prevent in the first instance, or promptly to correct, the offensive conduct of the other concern. Business concerns are also affiliates of each other when a third party is similarly situated with respect to both concerns. 
</P>
<P>(c) If the commissioner employs an auctioneer to conduct the foreclosure sale, the auctioneer must be a licensed auctioneer, an officer of State or local government, or any other person who commonly conducts foreclosure sales in the area in which the security property is located. 


</P>
</DIV8>


<DIV8 N="§ 27.35" NODE="24:1.1.1.1.20.1.59.10" TYPE="SECTION">
<HEAD>§ 27.35   Foreclosure costs.</HEAD>
<P>Pursuant to section 369C(5) of the Act (12 U.S.C. 3711(5)), a commission to the foreclosure commissioner for the conduct of the foreclosure will be paid in an amount to be determined by the General Counsel. A commission may be allowed to the commissioner notwithstanding termination of the sale or appointment of a substitute commissioner before the sale takes place. 


</P>
</DIV8>


<DIV8 N="§ 27.40" NODE="24:1.1.1.1.20.1.59.11" TYPE="SECTION">
<HEAD>§ 27.40   Disposition of sale proceeds.</HEAD>
<P>(a) The priority of the Secretary's lien shall be determined by the Federal first-in-time first-in-right rule. State laws affording priority to liens recorded after the mortgage are preempted. 
</P>
<P>(b) If there is more than one party holding a lien or assessment payable from sales proceeds, the claim of each party holding the same kind of lien or assessment will be given the relative priority to which it would be entitled under the law of the State in which the security property is located. 
</P>
<P>(c) The commissioner will keep such records as will permit the Secretary to verify the costs claimed under section 369C of the Act (12 U.S.C. 3711), and otherwise to audit the commissioner's disposition of the sale proceeds. 


</P>
</DIV8>


<DIV8 N="§ 27.45" NODE="24:1.1.1.1.20.1.59.12" TYPE="SECTION">
<HEAD>§ 27.45   Transfer of title and possession.</HEAD>
<P>(a) If the Secretary is the successful bidder, the foreclosure commissioner shall issue a deed to the Secretary upon receipt of the amount needed to pay the costs listed in sections 369D (1) through (3) of the Act (12 U.S.C. 3712(1) through (3)). If the Secretary is not the successful bidder, the foreclosure commissioner shall issue a deed to the purchaser upon receipt of the entire purchase price and execution by the Secretary and the purchaser of any use agreement referred to in § 27.20(e). Any covenants reflecting terms required by § 27.20 shall be contained in the commissioner's deed. 
</P>
<P>(b) Subject to any terms required to be agreed to by § 27.20, any commercial tenant and any residential tenant remaining in possession after the expiration of his or her lease or after the passage of one year, whichever event occurs first, shall be deemed a tenant at sufferance and may be evicted in accordance with applicable State or local law. 


</P>
</DIV8>


<DIV8 N="§ 27.50" NODE="24:1.1.1.1.20.1.59.13" TYPE="SECTION">
<HEAD>§ 27.50   Management and disposition by the Secretary.</HEAD>
<P>When the Secretary is the purchaser of the security property, the Secretary shall manage and dispose of it in accordance with section 203 of the Housing and Community Development Amendments of 1978, as amended, 12 U.S.C. 1701z-11, and in accordance with 24 CFR part 290. 


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.1.1.1.20.2" TYPE="SUBPART">
<HEAD>Subpart B—Nonjudicial Foreclosure of Single Family Mortgages</HEAD>


<DIV8 N="§ 27.100" NODE="24:1.1.1.1.20.2.59.1" TYPE="SECTION">
<HEAD>§ 27.100   Purpose, scope and applicability.</HEAD>
<P>(a) <I>Purpose.</I> The purpose of this subpart is to implement requirements for the administration of the Single Family Mortgage Foreclosure Act of 1994 (the Statute), 12 U.S.C. 3751-3768, that clarify, or are in addition to, the requirements contained in the Statute, which are not republished here and must be consulted in conjunction with the requirements of this subpart. 
</P>
<P>(b) <I>Scope.</I> The Secretary may foreclose on any defaulted single family mortgage described in the Statute regardless of when the mortgage was executed. 
</P>
<P>(c) <I>Applicability.</I> The Secretary may, at the Secretary's option, use other procedures to foreclose defaulted single family mortgages, including judicial foreclosure in State or Federal Court, and nonjudicial foreclosures under State law or any other Federal law. This subpart applies only to foreclosure procedures authorized by the Statute and not to any other foreclosure procedures the Secretary may use. 


</P>
</DIV8>


<DIV8 N="§ 27.101" NODE="24:1.1.1.1.20.2.59.2" TYPE="SECTION">
<HEAD>§ 27.101   Definitions.</HEAD>
<P>The definitions contained in the Statute (at 12 U.S.C. 3752) shall apply to this subpart, in addition to and as further clarified by the following definitions. As used in this subpart: 
</P>
<P><I>County</I> means a political subdivision of a State or Territory of the United States, created to aid in the administration of State law for the purpose of local self government, and includes a parish or any other equivalent subdivision. 
</P>
<P><I>Mortgage</I> is as defined in the Statute except that the reference to property as “(real, personal or mixed)” means “any property (real or mixed real and personal).” 
</P>
<P><I>Mortgage agreement</I> is as defined in the Statute, and also means any other similar instrument or instruments creating the security interest in the real estate for the repayment of the note or debt instrument. 
</P>
<P><I>Mortgagor</I> is as defined in the Statute, except that the reference to “trustee” means “trustor.” 
</P>
<P><I>Record; Recorded</I> means to enter or entered in public land record systems established under State statutes for the purpose of imparting constructive notice to purchasers of real property for value and without knowledge, and includes “register” and “registered” in the instance of registered land, and “file” and its variants in the context of entering documents in public land records. 
</P>
<P><I>Secretary</I> means the Secretary of Housing and Urban Development, acting by and through any authorized designee exclusive of the foreclosure commissioner. 
</P>
<P><I>Security Property</I> is as defined in the statute except that the reference to property as “(real, personal or mixed)” means “any property (real or mixed real and personal).” 


</P>
</DIV8>


<DIV8 N="§ 27.102" NODE="24:1.1.1.1.20.2.59.3" TYPE="SECTION">
<HEAD>§ 27.102   Designation of foreclosure commissioner and substitute commissioner.</HEAD>
<P>(a) The Secretary may designate foreclosure commissioners, including substitute commissioners, as set forth in the Statute. 
</P>
<P>(b) The method of selection and determination of the qualifications of the foreclosure commissioner shall be at the discretion of the Secretary. The execution of a designation pursuant to this section shall be conclusive evidence that the commissioner selected has been determined to be qualified by the Secretary. The designation is effective upon execution. 


</P>
</DIV8>


<DIV8 N="§ 27.103" NODE="24:1.1.1.1.20.2.59.4" TYPE="SECTION">
<HEAD>§ 27.103   Notice of default and foreclosure sale.</HEAD>
<P>(a) The foreclosure commissioner shall commence the foreclosure under the procedures set forth in the Statute. 
</P>
<P>(b) The Notice of Default and Foreclosure Sale (Notice) shall include, in addition to the provisions as required by the Statute: 
</P>
<P>(1) The foreclosure commissioner's telephone number; 
</P>
<P>(2) A description of the security property sufficient to identify the property to be sold; 
</P>
<P>(3) The date the mortgage was recorded; 
</P>
<P>(4) Identification of the failure to make payment, including the entire amount delinquent as of a date specified, a statement generally describing the other costs that must be paid if the mortgage is to be reinstated, the due date of the earliest principal installment payment remaining wholly unpaid as of the date on which the notice is issued upon which the foreclosure is based, or a description of any other default or defaults upon which foreclosure is based, and the acceleration of the secured indebtedness; and 
</P>
<P>(5) The bidding and payment requirements for the foreclosure sale, including the time and method of payment of the balance of the foreclosure purchase price, that all deposits and the balance of the purchase price shall be paid by certified or cashier's check, and that no deposit will be required of the Secretary when the Secretary bids at the foreclosure sale. 


</P>
</DIV8>


<DIV8 N="§ 27.105" NODE="24:1.1.1.1.20.2.59.5" TYPE="SECTION">
<HEAD>§ 27.105   Service of Notice of Default and Foreclosure Sale.</HEAD>
<P>(a) The Notice of Default and Foreclosure Sale shall be served in accordance with the provisions of the Statute. When notice is sent by mail, multiple mailings are not required to be sent to any party with multiple capacities, e.g., an original mortgagor who is the security property owner and lives in one of the units. The date of the receipt for the postage paid for the mailing may serve as proof of the date of mailing of the notice. 
</P>
<P>(b) Notice need not be mailed to any mortgagors who have been released from all obligations under the mortgage. 


</P>
</DIV8>


<DIV8 N="§ 27.107" NODE="24:1.1.1.1.20.2.59.6" TYPE="SECTION">
<HEAD>§ 27.107   Presale reinstatement.</HEAD>
<P>(a) The foreclosure commissioner shall withdraw the security property from foreclosure and cancel the foreclosure sale only in accordance with the provisions of the Statute and as more fully provided in paragraphs (b) and (c) of this section in regard to presale reinstatements. 
</P>
<P>(b) To obtain a presale reinstatement in cases involving a monetary default, there must be tendered to the foreclosure commissioner before public auction is completed all amounts which would be due under the mortgage agreement if payments under the mortgage had not been accelerated and all costs of foreclosure incurred for which payment from the proceeds of foreclosure is provided in the Statute, and the foreclosure commissioner must find that there are no nonmonetary defaults; provided, however, that the Secretary may refuse to cancel a foreclosure sale pursuant to this subparagraph if the current mortgagor or owner of record has, on one or more previous occasions, caused a foreclosure of the mortgage, commenced pursuant to the Statute and this subpart or otherwise, to be canceled by curing a default. 
</P>
<P>(c) To obtain a presale reinstatement in cases involving a nonmonetary default: 
</P>
<P>(1) The foreclosure commissioner, upon application of the mortgagor before the date of foreclosure sale, must find that all nonmonetary defaults are cured and that there are no monetary defaults; and 
</P>
<P>(2) There must be tendered to the foreclosure commissioner before public auction is completed all amounts due under the mortgage agreement (excluding all amounts which would be due under the mortgage agreement if the mortgage payments had been accelerated), including all amounts of expenditures secured by the mortgage and all costs of foreclosure incurred for which payment would be made from the proceeds of foreclosure as provided in the Statute. 
</P>
<P>(d) Before withdrawing the security property from foreclosure, the foreclosure commissioner shall notify the Secretary of the proposed withdrawal by telephone or other telecommunication device and shall also provide the Secretary with a written statement of the reasons for the proposed withdrawal along with all documents submitted by the mortgagor in support of the proposed withdrawal. Upon receipt of this statement, the Secretary shall have ten (10) days in which to demonstrate why the security property should not be withdrawn from foreclosure, and if the Secretary makes this demonstration, the property shall not be withdrawn from foreclosure. The Secretary shall provide the mortgagor with a copy of any statement prepared by the Secretary in opposition to the proposed withdrawal at the same time the statement is submitted to the foreclosure commissioner. If the Secretary receives the foreclosure commissioner's written statement less than 10 days before the scheduled foreclosure sale, the sale shall automatically be adjourned for 14 days, during which time it may be cancelled. Notice of the re-scheduled sale, if any, shall be served as described in § 27.111. 


</P>
</DIV8>


<DIV8 N="§ 27.109" NODE="24:1.1.1.1.20.2.59.7" TYPE="SECTION">
<HEAD>§ 27.109   Conduct of sale.</HEAD>
<P>(a) The foreclosure sale shall be conducted in a manner and at a time and place as identified in the Notice of Default and Foreclosure Sale and in accordance with the provisions of the Statute. 
</P>
<P>(b) In addition to bids made in person at the sale, the foreclosure commissioner shall accept written one-price sealed bids from any party, including the Secretary, for entry by announcement at the sale so long as those bids conform to the requirements described in the Notice of Default and Foreclosure Sale. The foreclosure commissioner shall announce the name of each such bidder and the amount of the bid. The commissioner shall accept oral bids from any party, including parties who submitted one-price sealed bids, if those oral bids conform to the requirements in the Notice of Default and Foreclosure Sale. Before the close of the sale the commissioner shall announce the amount of the high bid and the name of the successful bidder. If the successful bidder fails to comply with the terms of the sale, the HUD Field Office representative will provide instructions to the commissioner about offering the property to the second highest bidder, or having a new sale, or other instruction at the discretion of the HUD representative. 
</P>
<P>(c) <I>Prohibited participants.</I> Relatives of the foreclosure commissioner who may not bid include parents, siblings, spouses and children. A related business entity that may not bid or whose employees may not bid is one whose relationship (at the time the foreclosure commissioner is designated and during the term of service as foreclosure commissioner) with the entity of the foreclosure commissioner is such that, directly or indirectly, one entity formulates, directs, or controls the other entity; or has the power to formulate, direct, or control the other entity; or has the responsibility and authority to prevent, or promptly to correct, the offensive conduct of the other entity. 
</P>
<P>(d) <I>Auctioneers.</I> If the commissioner employs an auctioneer to conduct the foreclosure sale, the auctioneer must be a licensed auctioneer, an officer of State or local government, or any other person who commonly conducts foreclosure sales in the area in which the security property is located. 


</P>
</DIV8>


<DIV8 N="§ 27.111" NODE="24:1.1.1.1.20.2.59.8" TYPE="SECTION">
<HEAD>§ 27.111   Adjournment or cancellation of sale.</HEAD>
<P>(a) The foreclosure commissioner may, before or at the time of the foreclosure sale, adjourn or cancel the foreclosure sale in accordance with the provisions of the Statute. The publication of the Notice of Default and Foreclosure Sale, revised pursuant to the Statute, may be made on any of three separate days before the revised date of foreclosure sale. If there is no newspaper of general circulation that would permit publication on any of three separate days before the revised date of foreclosure sale, the Notice of Default and Foreclosure Sale must be posted, not less than nine days before the date to which the sale has been adjourned, at the courthouse of any county or counties in which the property is located, and at the place where the sale is to be held. The commissioner must also, in the case of a sale adjourned to a later date, mail a copy of the revised Notice of Default and Foreclosure Sale to the Secretary at least seven days before the date to which the sale has been adjourned. 
</P>
<P>(b) When a substitute commissioner is designated by the Secretary to replace a previously designated foreclosure commissioner, the sale shall continue without prejudice unless the substitute commissioner finds, in that commissioner's sole discretion, that continuation of the foreclosure sale will unfairly affect the interests of the mortgagor. Any such finding shall be in writing. If the substitute commissioner makes such a finding, the substitute commissioner shall cancel or adjourn the sale. 


</P>
</DIV8>


<DIV8 N="§ 27.113" NODE="24:1.1.1.1.20.2.59.9" TYPE="SECTION">
<HEAD>§ 27.113   Foreclosure costs.</HEAD>
<P>A commission may be allowed to the foreclosure commissioner notwithstanding termination of the sale or appointment of a substitute commissioner before the sale takes place. 


</P>
</DIV8>


<DIV8 N="§ 27.115" NODE="24:1.1.1.1.20.2.59.10" TYPE="SECTION">
<HEAD>§ 27.115   Disposition of sales proceeds.</HEAD>
<P>The foreclosure commissioner will keep such records as will permit the Secretary to verify the costs claimed, and otherwise to enable the Secretary to audit the foreclosure commissioner's disposition of the sale proceeds. 


</P>
</DIV8>


<DIV8 N="§ 27.117" NODE="24:1.1.1.1.20.2.59.11" TYPE="SECTION">
<HEAD>§ 27.117   Transfer of title and possession.</HEAD>
<P>(a) If the Secretary is the successful bidder, the foreclosure commissioner shall issue a deed to the Secretary upon receipt of the amount needed to pay the costs of tax liens and prior liens, as set forth in 12 U.S.C. 3762(a)(2) and (a)(3). If the Secretary is not the successful bidder, the foreclosure commissioner shall issue a deed to the purchaser or purchasers upon receipt of the entire purchase price in accordance with the terms of the sale as provided in the Notice of Default and Foreclosure Sale. 
</P>
<P>(b) The register of deeds or other appropriate official in the county where the property is located shall, upon tendering of the customary recording fees, accept all instruments pertaining to the foreclosure which are submitted by the foreclosure commissioner for recordation. The instruments to be accepted shall include, but not be limited to, the foreclosure commissioner's deed. If the foreclosure commissioner elects to include the recitations required under the Statute (12 U.S.C. 3764) in an affidavit or an addendum to the deed, the affidavit or addendum shall be accepted along with the deed for recordation. The Clerk of the Court or other appropriate official shall cancel all liens as requested by the foreclosure commissioner. 


</P>
</DIV8>


<DIV8 N="§ 27.119" NODE="24:1.1.1.1.20.2.59.12" TYPE="SECTION">
<HEAD>§ 27.119   Redemption rights.</HEAD>
<P>Only for purposes of redemption rights under the Statute, a foreclosure shall be considered completed upon the date and at the time of the foreclosure sale. 


</P>
</DIV8>


<DIV8 N="§ 27.121" NODE="24:1.1.1.1.20.2.59.13" TYPE="SECTION">
<HEAD>§ 27.121   Record of foreclosure and sale.</HEAD>
<P>The statements regarding the foreclosed mortgage required to establish a sufficient record shall include the date the mortgage was recorded. The statements regarding the service of the Notice of Default and Foreclosure Sale shall include the names and addresses of the persons to whom the Notice was mailed and the date on which the Notice was mailed, the name of the newspaper in which the Notice was published and the dates of publication, and the date on which service by posting, if required, was accomplished. 


</P>
</DIV8>


<DIV8 N="§ 27.123" NODE="24:1.1.1.1.20.2.59.14" TYPE="SECTION">
<HEAD>§ 27.123   Deficiency judgment.</HEAD>
<P>If the price at which the security property is sold at the foreclosure sale is less than the unpaid balance of the debt secured by such property after disposition of sale proceeds in accordance with the order of priority provided under the Statute, the Secretary may refer the matter to the Attorney General who may commence an action or actions against any and all debtors to recover the deficiency, unless such an action is specifically prohibited by the mortgage. 


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="28" NODE="24:1.1.1.1.21" TYPE="PART">
<HEAD>PART 28—IMPLEMENTATION OF THE PROGRAM FRAUD CIVIL REMEDIES ACT OF 1986
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>28 U.S.C. 2461 note; 31 U.S.C. 3801-3812; 42 U.S.C. 3535(d).


</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 50213, Sept. 24, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 28.1" NODE="24:1.1.1.1.21.0.59.1" TYPE="SECTION">
<HEAD>§ 28.1   Purpose.</HEAD>
<P>This part: 
</P>
<P>(a) Establishes administrative procedures for imposing civil penalties and assessments against persons who make, submit, or present, or cause to be made, submitted, or presented, false, fictitious, or fraudulent claims or written statements to Federal authorities or to their agents; and 
</P>
<P>(b) Specifies the hearing and appeal rights of persons subject to allegations of liability for such penalties and assessments. Hearings under this part shall be conducted in accordance with the Administrative Procedure Act pursuant to part 26, subpart B, of this chapter.
</P>
<CITA TYPE="N">[61 FR 50213, Sept. 24, 1996, as amended at 73 FR 76831, Dec. 17, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 28.5" NODE="24:1.1.1.1.21.0.59.2" TYPE="SECTION">
<HEAD>§ 28.5   Definitions.</HEAD>
<P>(a) The terms <I>ALJ</I> and <I>HUD</I> are defined in 24 CFR part 5.
</P>
<P>(b) The terms <I>Claim, Knows or has reason to know, Person, Reviewing Official,</I> and <I>Statement</I> have the same meanings as defined in 31 U.S.C. 3801.
</P>
<P>(c) <I>Ability to pay</I> is determined based on an assessment of the respondent's resources available both presently and prospectively from which the Department could ultimately recover the total award, which may be predicted based on historical evidence.
</P>
<P>(d) <I>Benefit</I> means anything of value, including, but not limited to, any advantage, preference, privilege, license, permit, favorable decision, ruling, status, or loan insurance or guarantee.
</P>
<P>(e) <I>Respondent</I> means any person alleged to be liable for a civil penalty or assessment under § 28.25.
</P>
<P>(f) The <I>reasonable prospect of collecting an appropriate amount of penalties and assessments</I> is determined based on a generalized assessment made by a Reviewing Official based on the limited information available in the Report of Investigation for purposes of determining whether the allocation of HUD's resources to any particular action is appropriate. This assessment is not the same as the assessment made when determining ability to pay, nor is the reasonable prospect of collecting a factor to be considered in determining the amount of any penalty or assessment in any particular case.
</P>
<P>(g) <I>Report of Investigation</I> means a report containing the findings and conclusions of a Program Fraud Civil Remedies Act investigation by the Inspector General or his or her designee, as described in § 28.15.
</P>
<CITA TYPE="N">[73 FR 76831, Dec. 17, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 28.10" NODE="24:1.1.1.1.21.0.59.3" TYPE="SECTION">
<HEAD>§ 28.10   Basis for civil penalties and assessments.</HEAD>
<P>(a) <I>Claims.</I> (1) A civil penalty of not more than $14,308 may be imposed upon any person who makes, presents, or submits, or causes to be made, presented, or submitted, a claim that the person knows or has reason to know:




</P>
<P>(i) Is false, fictitious, or fraudulent;
</P>
<P>(ii) Includes or is supported by a written statement which asserts a material fact which is false, fictitious, or fraudulent;
</P>
<P>(iii) Includes or is supported by any written statement that:
</P>
<P>(A) Omits a material fact;
</P>
<P>(B) Is false, fictitious, or fraudulent as a result of the omission; and
</P>
<P>(C) Is a statement in which the person making, presenting, or submitting such statement has a duty to include such material fact; or
</P>
<P>(iv) Is for payment for the provision of property or services which the person has not provided as claimed.
</P>
<P>(2) Each voucher, invoice, claim form, or other individual request or demand for property, services, or money constitutes a separate claim. 
</P>
<P>(3) A claim shall be considered made to HUD, to a recipient, or to a party when the claim actually is made to an agent, fiscal intermediary, or other entity, including any State or political subdivision of a State, acting for or on behalf of HUD, the recipient, or the party. 
</P>
<P>(4) Each claim for property, services, or money is subject to a civil penalty without regard to whether the property, services, or money actually is delivered or paid. 
</P>
<P>(5) Liability under this part shall not lie if the amount of money or value of property or services claimed exceeds $150,000 as to each claim that a person submits. For purposes of paragraph (a) of this section, a group of claims submitted simultaneously as part of a single transaction shall be considered a single claim. 
</P>
<P>(6) If the Government has made any payment, transferred property, or provided services on a claim, then the Government may assess a person found liable up to twice the amount of the claim or portion of the claim that is determined to be in violation of paragraph (a)(1) of this section. 
</P>
<P>(b) <I>Statements.</I> (1) A civil penalty of not more than $14,308 may be imposed upon any person who makes, presents, or submits, or causes to be made, presented, or submitted, a written statement that:
</P>
<P>(i)(A) Asserts a material fact which is false, fictitious, or fraudulent; or
</P>
<P>(B)(<I>1</I>) Omits a material fact; and
</P>
<P>(<I>2</I>) Is false, fictitious, or fraudulent as a result of such omission;
</P>
<P>(ii) In the case of a statement described in (b)(1)(i)(B) of this section, is a statement in which the person making, presenting, or submitting such statement has a duty to include such material fact; and
</P>
<P>(iii) Contains or is accompanied by an express certification or affirmation of the truthfulness and accuracy of the contents of the statement.
</P>
<P>(2) Each written representation, certification, or affirmation constitutes a separate statement. 
</P>
<P>(3) A statement shall be considered made to HUD when the statement is actually made to an agent, fiscal intermediary, or other entity, including any State or political subdivision of a State, acting for or on behalf of HUD. 
</P>
<P>(c) <I>Limit on liability.</I> If the claim or statement relates to low-income housing benefits or housing benefits for the elderly or handicapped, then a person may be held liable only if he or she has made or caused to be made the claim or statement in the course of applying for such benefits, with respect to his or her eligibility, or family's eligibility, to receive such benefits. For purposes of paragraph (c) of this section, “<I>housing benefits</I>” means any instance wherein funds administered by the Secretary directly or indirectly permit low-income families or elderly or handicapped persons to reside in housing that otherwise would not be available to them. 
</P>
<P>(d) <I>Specific intent.</I> No proof of specific intent to defraud is required to establish liability under this section. 
</P>
<P>(e) <I>Joint and several liability.</I> A civil penalty or assessment may be imposed jointly and severally if more than one person is determined to be liable. 
</P>
<CITA TYPE="N">[61 FR 50213, Sept. 24, 1996, as amended at 68 FR 12787, Mar. 17, 2003; 72 FR 5588, Feb. 6, 2007; 73 FR 76831, Dec. 17, 2008; 78 FR 4059, Jan. 18, 2013; 81 FR 38935, June 15, 2016; 82 FR 24524, May 30, 2017; 83 FR 32793, July 16, 2018; 84 FR 9453, Mar. 15, 2019; 85 FR 13043, Mar. 6, 2020; 86 FR 14372, Mar. 16, 2021; 86 FR 31619, June 15, 2021; 87 FR 24420, Apr. 26, 2022; 88 FR 9748, Feb. 15, 2023; 89 FR 13616, Feb. 23, 2024; 90 FR 24747, June 12, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 28.15" NODE="24:1.1.1.1.21.0.59.4" TYPE="SECTION">
<HEAD>§ 28.15   Investigation.</HEAD>
<P>(a) <I>General.</I> HUD may initiate a Program Fraud Civil Remedies Act (31 U.S.C. 3801) case against a respondent only upon an investigation by the Inspector General or his or her designee. 
</P>
<P>(b) <I>Subpoena.</I> Pursuant to 31 U.S.C. 3804(a), the Inspector General or designee may require by subpoena the production of records and other documents. The subpoena shall state the authority under which it is issued, identify the records sought, and name the person designated to receive the records. The recipient of the subpoena shall provide a certification that the documents sought have been produced, that the documents are not available and the reasons they are not available, or that the documents, suitably identified, have been withheld based upon the assertion of an identified privilege. 
</P>
<P>(c) <I>Investigation report.</I> If the Inspector General or designee concludes that an action under the Program Fraud Civil Remedies Act may be warranted, her or she shall submit a report containing the findings and conclusions of the investigation to the General Counsel or his or her designee. 
</P>
<P>(d) The Inspector General may refer allegations directly to the Department of Justice for suit under the False Claims Act (31 U.S.C. 3730) or for other civil relief, or may postpone submitting a report to the General Counsel to avoid interference with a criminal investigation or prosecution. The Inspector General shall report violations of criminal law to the Attorney General. 


</P>
</DIV8>


<DIV8 N="§ 28.20" NODE="24:1.1.1.1.21.0.59.5" TYPE="SECTION">
<HEAD>§ 28.20   Request for approval by the Department of Justice.</HEAD>
<P>(a) If the General Counsel or designee determines that the Report of Investigation supports an action under this part, he or she must submit a written request to the Department of Justice for approval to issue a complaint under § 28.25.
</P>
<P>(b) The request shall include a description of the claims or statements at issue; the evidence supporting the allegations; an estimate of the amount of money or the value of property, services, or other benefits requested or demanded in violation of § 28.10; any exculpatory or mitigating circumstances that may relate to the claims or statements; and a statement that there is a reasonable prospect of collecting an appropriate amount of penalties and assessments.
</P>
<CITA TYPE="N">[73 FR 76831, Dec. 17, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 28.25" NODE="24:1.1.1.1.21.0.59.6" TYPE="SECTION">
<HEAD>§ 28.25   Complaint.</HEAD>
<P>(a) <I>General.</I> Upon obtaining approval from the Department of Justice, the General Counsel or designee may issue a complaint to the respondent. The complaint shall be mailed, by registered or certified mail, or shall be delivered through such other means by which delivery may be confirmed. The complaint shall also be filed simultaneously with the Office of Hearings and Appeals in accordance with § 26.30(a) of this chapter.
</P>
<P>(b) <I>Complaint.</I> The complaint shall include:
</P>
<P>(1) The allegations of liability against the respondent, including the statutory basis for liability, the claims or statements at issue, and the reasons why liability arises from those claims or statements;
</P>
<P>(2) A statement that the required approval to issue the complaint was received from the Department of Justice as required by 24 CFR 28.20;
</P>
<P>(3) The amount of penalties and assessments for which the respondent may be held liable;
</P>
<P>(4) A statement that the respondent may request a hearing by submitting a written response to the complaint;
</P>
<P>(5) The addresses to which a response must be sent in accordance with § 26.38 of this title; and
</P>
<P>(6) A statement that failure to submit an answer within 30 days of receipt of the complaint may result in the imposition of the maximum amount of penalties and assessments sought without right of appeal.
</P>
<P>(c) <I>Parts 26 and 28.</I> A copy of this part 28 and part 26, subpart B of this chapter, shall be included with the complaint.
</P>
<P>(d) <I>Obligation to preserve documents.</I> Upon receipt of the complaint, the respondent is required to preserve and maintain all documents and data, including electronically stored data, within their possession or control that may relate to the allegations in the complaint. The Department shall also preserve such documents or data upon the issuance of the complaint.
</P>
<CITA TYPE="N">[73 FR 76832, Dec. 17, 2008, as amended at 87 FR 8197, Feb. 14, 2022]


</CITA>
</DIV8>


<DIV8 N="§ 28.30" NODE="24:1.1.1.1.21.0.59.7" TYPE="SECTION">
<HEAD>§ 28.30   Response.</HEAD>
<P>(a) The respondent may file a written response to the complaint, in accordance with § 26.30 of this title, within 30 days of service of the complaint. The response shall be deemed to be a request for a hearing. The response must include the admission or denial of each allegation of liability made in the complaint; any defense on which the respondent intends to rely; any reasons why the penalties and assessments should be less than the amount set forth in the complaint; and the name, address, and telephone number of the person who will act as the respondent's representative, if any.
</P>
<P>(b) <I>Failure to respond.</I> If no response is submitted, HUD may file a motion for default judgment in accordance with § 26.41 of this chapter.
</P>
<CITA TYPE="N">[73 FR 76832, Dec. 17, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 28.35" NODE="24:1.1.1.1.21.0.59.8" TYPE="SECTION">
<HEAD>§ 28.35   Statute of limitations.</HEAD>
<P>The statute of limitations for commencing hearings under this part shall be tolled:
</P>
<P>(a) If the hearing is commenced in accordance with 31 U.S.C. 3803(d)(2)(B) within 6 years after the date on which the claim or statement is made; or
</P>
<P>(b) If the parties agree to such tolling.
</P>
<CITA TYPE="N">[73 FR 76832, Dec. 17, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 28.40" NODE="24:1.1.1.1.21.0.59.9" TYPE="SECTION">
<HEAD>§ 28.40   Hearings.</HEAD>
<P>(a) <I>General.</I> Hearings under this part shall be conducted in accordance with the procedures in part 26, subpart B, of this chapter, governing actions in accordance with the Administrative Procedure Act.
</P>
<P>(b) <I>Factors to consider in determining amount of penalties and assessments.</I> In determining an appropriate amount of civil penalties and assessments, the ALJ and, upon appeal, the Secretary or designee, shall consider and state in his or her opinion any mitigating or aggravating circumstances. Because of the intangible costs of fraud, the expense of investigating fraudulent conduct, and the need for deterrence, ordinarily twice the amount of the claim as alleged by the government, and a significant civil penalty, should be imposed. The amount of penalties and assessments imposed shall be based on the ALJ's and the Secretary's or designee's consideration of evidence in support of one or more of the following factors: 
</P>
<P>(1) The number of false, fictitious, or fraudulent claims or statements; 
</P>
<P>(2) The time period over which such claims or statements were made; 
</P>
<P>(3) The degree of the respondent's culpability with respect to the misconduct; 
</P>
<P>(4) The amount of money or the value of the property, services, or benefit falsely claimed; 
</P>
<P>(5) The value of the Government's actual loss as a result of the misconduct, including foreseeable consequential damages and the cost of investigation; 
</P>
<P>(6) The relationship of the civil penalties to the amount of the Government's loss; 
</P>
<P>(7) The potential or actual impact of the misconduct upon national defense, public health or safety, or public confidence in the management of Government programs and operations, including particularly the impact on the intended beneficiaries of such programs; 
</P>
<P>(8) Whether the respondent has engaged in a pattern of the same or similar misconduct; 
</P>
<P>(9) Whether the respondent attempted to conceal the misconduct; 
</P>
<P>(10) The degree to which the respondent has involved others in the misconduct or in concealing it; 
</P>
<P>(11) If the misconduct of employees or agents is imputed to the respondent, the extent to which the respondent's practices fostered or attempted to preclude the misconduct; 
</P>
<P>(12) Whether the respondent cooperated in or obstructed an investigation of the misconduct; 
</P>
<P>(13) Whether the respondent assisted in identifying and prosecuting other wrongdoers; 
</P>
<P>(14) The complexity of the program or transaction, and the degree of the respondent's sophistication with respect to it, including the extent of the respondent's prior participation in the program or in similar transactions; 
</P>
<P>(15) Whether the respondent has been found, in any criminal, civil, or administrative proceeding, to have engaged in similar misconduct or to have dealt dishonestly with the Government of the United States or of a State, directly or indirectly; 
</P>
<P>(16) The need to deter the respondent and others from engaging in the same or similar misconduct; and 
</P>
<P>(17) The respondent's ability to pay, and
</P>
<P>(18) Any other factors that in any given case may mitigate or aggravate the seriousness of the false claim or statement.
</P>
<P>(c) <I>Stays ordered by the Department of Justice.</I> If at any time the Attorney General of the United States or an Assistant Attorney General designated by the Attorney General notifies the Secretary in writing that continuation of HUD's case may adversely affect any pending or potential criminal or civil action related to the claim or statement at issue, the ALJ or the Secretary shall stay the process immediately. The case may be resumed only upon receipt of the written authorization of the Attorney General. 
</P>
<CITA TYPE="N">[61 FR 50213, Sept. 24, 1996, as amended at 73 FR 76832, Dec. 17, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 28.45" NODE="24:1.1.1.1.21.0.59.10" TYPE="SECTION">
<HEAD>§ 28.45   Settlements.</HEAD>
<P>(a) HUD and the respondent may enter into a settlement agreement at any time prior to the issuing of a notice of final determination under § 26.50 of this title. 
</P>
<P>(b) Failure of the respondent to comply with a settlement agreement shall be sufficient cause for resuming an action under this part, or for any other judicial or administrative action. 


</P>
</DIV8>

</DIV5>


<DIV5 N="30" NODE="24:1.1.1.1.22" TYPE="PART">
<HEAD>PART 30—CIVIL MONEY PENALTIES: CERTAIN PROHIBITED CONDUCT 


</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1701q-1, 1703, 1723i, 1735f-14, and 1735f-15; 15 U.S.C. 1717a; 28 U.S.C. 1 note and 2461 note; 42 U.S.C. 1437z-1 and 3535(d).


</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 50215, Sept. 24, 1996, unless otherwise noted.


</PSPACE></SOURCE>
<EDNOTE>
<HED>Editorial Note:</HED><PSPACE>Nomenclature changes to part 30 appear at 87 FR 8197, Feb. 14, 2022.</PSPACE></EDNOTE>

<DIV6 N="A" NODE="24:1.1.1.1.22.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 30.1" NODE="24:1.1.1.1.22.1.59.1" TYPE="SECTION">
<HEAD>§ 30.1   Purpose and scope.</HEAD>
<P>Unless provided for elsewhere in this title or under separate authority, this part implements HUD's civil money penalty provisions. The procedural rules for hearings under this part are those applicable to hearings in accordance with the Administrative Procedure Act, as set forth in 24 CFR part 26.
</P>
<CITA TYPE="N">[74 FR 2751, Jan. 15, 2009]


</CITA>
</DIV8>


<DIV8 N="§ 30.5" NODE="24:1.1.1.1.22.1.59.2" TYPE="SECTION">
<HEAD>§ 30.5   Effective dates.</HEAD>
<P>(a) Under § 30.20, a civil money penalty may be imposed for violations occurring on or after May 22, 1991. 
</P>
<P>(b) <I>Maximum penalty.</I> The maximum penalty is $23,727 for each violation.
</P>
<P>(c) Under § 30.40, concerning loan guarantees for Indian housing, a civil money penalty may be imposed for violations occurring on or after October 28, 1992. 
</P>
<P>(d) Under § 30.65, a civil money penalty may be imposed for violations occurring on or after the following dates: 
</P>
<P>(1) September 6, 1996, for owners of more than four residential dwellings; or 
</P>
<P>(2) December 6, 1996, for owners of one to four residential dwellings. 
</P>
<P>(e) Under § 30.68, a civil money penalty may be imposed for violations, or for those parts of continuing violations, occurring on or after January 7, 2002.
</P>
<CITA TYPE="N">[61 FR 50215, Sept. 24, 1996, as amended at 66 FR 63441, Dec. 6, 2001; 82 FR 24524, May 30, 2017; 88 FR 9748, Feb. 15, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 30.10" NODE="24:1.1.1.1.22.1.59.3" TYPE="SECTION">
<HEAD>§ 30.10   Definitions.</HEAD>
<P>Since this part is primarily procedural, terms not defined in this section shall have the meanings given them in relevant program regulations. Comprehensive definitions are in 24 CFR part 4 (HUD Reform Act). The terms <I>ALJ, Department, HUD,</I> and <I>Secretary</I> are defined in 24 CFR part 5. 
</P>
<P><I>Ability to pay.</I> Determined based on an assessment of the respondent's resources available both presently and prospectively from which the Department could ultimately recover the total award, which may be predicted based on historical evidence.
</P>
<P><I>Agent.</I> Any person, including an officer, director, partner, or trustee, who acts on behalf of another person. 
</P>
<P><I>Dealer.</I> A seller, contractor or supplier of goods or services having a direct or indirect financial interest in the transaction between the borrower and the lender, and who assists the borrower in preparing the credit application or otherwise assists the borrower in obtaining the loan from the lender. 
</P>
<P><I>Knowing</I> or <I>Knowingly.</I> Having actual knowledge of or acting with deliberate ignorance of or reckless disregard for the prohibitions under subpart B of this part or under 24 CFR part 4. For purposes of §§ 30.35 and 30.36, <I>knowing</I> or <I>knowingly</I> is defined at 12 U.S.C. 1735f-14(g).
</P>
<P><I>Material or Materially.</I> Having the natural tendency or potential to influence, or when considering the totality of the circumstances, in some significant respect or to some significant degree.
</P>
<P><I>Person.</I> An individual, corporation, company, association, authority, firm, partnership, society, State, local government or agency thereof, or any other organization or group of people. 
</P>
<P><I>Respondent.</I> A person against whom a civil money penalty action is initiated. 
</P>
<P><I>Sponsored third-party originato</I>r. A sponsored third-party originator as defined at § 202.8 of this title.
</P>
<CITA TYPE="N">[61 FR 50215, Sept. 24, 1996, as amended at 74 FR 2751, Jan. 15, 2009; 77 FR 51468, Aug. 24, 2012; 82 FR 24524, May 30, 2017]


</CITA>
</DIV8>


<DIV8 N="§ 30.15" NODE="24:1.1.1.1.22.1.59.4" TYPE="SECTION">
<HEAD>§ 30.15   Application of other remedies.</HEAD>
<P>A civil money penalty may be imposed in addition to other administrative sanctions or any other civil remedy or criminal penalty. 


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.1.1.1.22.2" TYPE="SUBPART">
<HEAD>Subpart B—Violations</HEAD>


<DIV8 N="§ 30.20" NODE="24:1.1.1.1.22.2.59.1" TYPE="SECTION">
<HEAD>§ 30.20   Ethical violations by HUD employees.</HEAD>
<P>(a) <I>General.</I> The General Counsel, or his or her designee, may initiate a civil money penalty action against HUD employees who improperly disclose information pursuant to section 103 of the HUD Reform Act of 1989 (42 U.S.C. 3537a(c)) and 24 CFR part 4, subpart B. 


</P>
<P>(b) <I>Maximum penalty.</I> The maximum penalty is $25,132 for each violation.
</P>
<CITA TYPE="N">[61 FR 50215, Sept. 24, 1996, as amended at 72 FR 5588, Feb. 6, 2007; 81 FR 38935, June 15, 2016; 82 FR 24524, May 30, 2017; 83 FR 32793, July 16, 2018; 84 FR 9453, Mar. 15, 2019; 85 FR 13044, Mar. 6, 2020; 86 FR 14373, Mar. 16, 2021; 87 FR 24420, Apr. 26, 2022; 88 FR 9748, Feb. 15, 2023; 89 FR 13616, Feb. 23, 2024; 90 FR 24747, June 12, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 30.25" NODE="24:1.1.1.1.22.2.59.2" TYPE="SECTION">
<HEAD>§ 30.25   Violations by applicants for assistance.</HEAD>
<P>(a) <I>General.</I> The General Counsel, or his or her designee, may initiate a civil money penalty action against applicants for assistance, as defined in 24 CFR part 4, subpart A, who knowingly and materially violate the provisions of subsections (b) or (c) of section 102 of the HUD Reform Act of 1989 (42 U.S.C. 3545). 
</P>
<P>(b) <I>Maximum penalty.</I> The maximum penalty is $25,132 for each violation.


</P>
<CITA TYPE="N">[61 FR 50215, Sept. 24, 1996, as amended at 72 FR 5588, Feb. 6, 2007; 81 FR 38935, June 15, 2016; 82 FR 24524, May 30, 2017; 83 FR 32793, July 16, 2018; 84 FR 9453, Mar. 15, 2019; 85 FR 13044, Mar. 6, 2020; 86 FR 14373, Mar. 16, 2021; 87 FR 24420, Apr. 26, 2022; 88 FR 9748, Feb. 15, 2023; 89 FR 13616, Feb. 23, 2024; 90 FR 24747, June 12, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 30.35" NODE="24:1.1.1.1.22.2.59.3" TYPE="SECTION">
<HEAD>§ 30.35   Mortgagees and lenders.</HEAD>
<P>(a) <I>General.</I> The Mortgagee Review Board may initiate a civil money penalty action against any mortgagee or lender who knowingly and materially: 
</P>
<P>(1) Violates the provisions listed in 12 U.S.C. 1735f-14(b); 
</P>
<P>(2) Fails to comply with the requirements of § 201.27(a) of this title regarding approval and supervision of dealers; 
</P>
<P>(3) Approves a dealer that has been suspended, debarred, or otherwise denied participation in HUD's programs; 
</P>
<P>(4) Makes a payment that is prohibited under § 202.5(l). 
</P>
<P>(5) Fails to remit, or timely remit, mortgage insurance premiums, loan insurance charges, or late charges or interest penalties; 
</P>
<P>(6) Permits loan documents for an FHA insured loan to be signed in blank by its agents or any other party to the loan transaction unless expressly approved by the Secretary;
</P>
<P>(7) Fails to follow the mortgage assignment procedures set forth in § 203.664 of this title or in §§ 207.255 through 207.258b of this title.
</P>
<P>(8) Fails to timely submit documents that are complete and accurate in connection with a conveyance of a property or a claim for insurance benefits, in accordance with § 203.365, § 203.366, or § 203.368, or a claim for insurance benefits in accordance with § 206.127 of this title;
</P>
<P>(9) Fails to:
</P>
<P>(i) Process requests for formal release of liability under an FHA insured mortgage;
</P>
<P>(ii) Obtain a credit report, issued not more than 90 days prior to approval of a person as a borrower, as to the person's creditworthiness to assume an FHA insured mortgage;
</P>
<P>(iii) Timely submit proper notification of a change in mortgagor or mortgagee as required by § 203.431 of this title;
</P>
<P>(iv) Timely submit proper notification of mortgage insurance termination as required by § 203.318 of this title;
</P>
<P>(v) Timely submit proper notification of a change in mortgage servicing as required by § 203.502 of this title; or
</P>
<P>(vi) Report all delinquent mortgages to HUD, as required by § 203.330 of this title;
</P>
<P>(10) Fails to service FHA insured mortgages, in accordance with the requirements of 24 CFR parts 201, 203, 206, and 235;
</P>
<P>(11) Fails to fund loans that it originated, or otherwise misuses loan proceeds;
</P>
<P>(12) Fails to comply with the conditions relating to the assignment or pledge of mortgages;
</P>
<P>(13) Fails to comply with the provisions of the Real Estate Settlement Procedures Act (12 U.S.C. 2601 <I>et seq.</I>), the Equal Credit Opportunity Act (15 U.S.C. 1691 <I>et seq.</I>), or the Fair Housing Act (42 U.S.C. 3601 <I>et seq.</I>);
</P>
<P>(14) Fails to engage in loss mitigation as provided in § 203.605 of this title. 
</P>
<P>(b) <I>Continuing violation.</I> Each day that a violation continues shall constitute a separate violation.
</P>
<P>(c)(1) <I>Amount of penalty.</I> The maximum penalty is $12,567 for each violation, up to a limit of $2,513,215 for all violations committed during any one-year period. Each violation shall constitute a separate violation as to each mortgage or loan application.
</P>
<P>(2) <I>Maximum penalty for failing to engage in loss mitigation.</I> The penalty for a violation of paragraph (a)(14) of this section shall be three times the amount of the total mortgage insurance benefits claimed by the mortgagee with respect to any mortgage for which the mortgagee failed to engage in such loss mitigation actions.
</P>
<CITA TYPE="N">[61 FR 50215, Sept. 24, 1996, as amended at 63 FR 9742, Feb. 26, 1998; 68 FR 12788, Mar. 17, 2003; 70 FR 21578, Apr. 26, 2005; 72 FR 5588, Feb. 6, 2007; 74 FR 2751, Jan. 15, 2009; 74 FR 14725, Apr. 1, 2009; 78 FR 4059, Jan. 18, 2013; 81 FR 38935, June 15, 2016; 82 FR 24524, May 30, 2017; 82 FR 7117, Jan. 19, 2017; 83 FR 32793, July 16, 2018; 84 FR 9453, Mar. 15, 2019; 85 FR 13044, Mar. 6, 2020; 86 FR 14373, Mar. 16, 2021; 87 FR 24420, Apr. 26, 2022; 88 FR 9748, Feb. 15, 2023; 89 FR 13616, Feb. 23, 2024; 90 FR 24747, June 12, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 30.36" NODE="24:1.1.1.1.22.2.59.4" TYPE="SECTION">
<HEAD>§ 30.36   Other participants in FHA programs.</HEAD>
<P>(a) <I>General.</I> The Assistant Secretary for Housing-Federal Housing Commissioner (or his/her designee) may initiate a civil money penalty action against any principal, officer, or employee of a mortgagee or lender, or other participants in either a mortgage insured under the National Housing Act or any loan that is covered by a contract of insurance under title I of the National Housing Act, or a provider of assistance to the borrower in connection with any such mortgage or loan, including: 
</P>
<P>(1) Sellers; 
</P>
<P>(2) Borrowers; 
</P>
<P>(3) Closing agents; 
</P>
<P>(4) Title companies; 
</P>
<P>(5) Real estate agents; 
</P>
<P>(6) Mortgage brokers; 
</P>
<P>(7) Appraisers; 
</P>
<P>(8) Sponsored third-party originators;
</P>
<P>(9) Dealers; 
</P>
<P>(10) Consultants; 
</P>
<P>(11) Contractors; 
</P>
<P>(12) Subcontractors; and 
</P>
<P>(13) Inspectors. 
</P>
<P>(b) <I>Knowing and material violations.</I> The Assistant Secretary for Housing-Federal Housing Commissioner or his/her designee may impose a civil penalty on any person or entity identified in paragraph (a) of this section who knowingly and materially: 
</P>
<P>(1) Submits false information to the Secretary in connection with any mortgage insured under the National Housing Act (12 U.S.C. 1701 <I>et seq.</I>), or any loan that is covered by a contract of insurance under title I of the National Housing Act; 
</P>
<P>(2) Falsely certifies to the Secretary or submits a false certification by another person or entity to the Secretary in connection with any mortgage insured under the National Housing Act or any loan that is covered by a contract of insurance under title I of the National Housing Act; or 
</P>
<P>(3) Is a loan dealer and fails to submit to the Secretary information which is required by regulations or directives in connection with any loan that is covered by a contract of insurance under title I of the National Housing Act. 
</P>
<P>(c) <I>Amount of penalty.</I> The maximum penalty is $12,567 for each violation, up to a limit of $2,513,215 for all violations committed during any one-year period. Each violation shall constitute a separate violation as to each mortgage or loan application.
</P>
<CITA TYPE="N">[65 FR 9087, Feb. 23, 2000, as amended at 72 FR 5588, Feb. 6, 2007; 77 FR 51468, Aug. 24, 2012; 78 FR 4059, Jan. 18, 2013; 81 FR 38935, June 15, 2016; 82 FR 24524, May 30, 2017; 83 FR 32793, July 16, 2018; 84 FR 9453, Mar. 15, 2019; 85 FR 13044, Mar. 6, 2020; 86 FR 14373, Mar. 16, 2021; 87 FR 24420, Apr. 26, 2022; 88 FR 9748, Feb. 15, 2023; 89 FR 13616, Feb. 23, 2024; 90 FR 24747, June 12, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 30.40" NODE="24:1.1.1.1.22.2.59.5" TYPE="SECTION">
<HEAD>§ 30.40   Loan guarantees for Indian housing.</HEAD>
<P>(a) <I>General.</I> The Assistant Secretary for Public and Indian Housing (or his/her designee) may initiate a civil money penalty action against any mortgagee or holder of a guarantee certificate who knowingly and materially violates the provisions of 12 U.S.C. 1715z-13a(g)(2) concerning loan guarantees for Indian housing. 
</P>
<P>(b) <I>Continuing violation.</I> Each day that a violation continues shall constitute a separate violation.
</P>
<P>(c) <I>Amount of penalty.</I> The maximum penalty is $12,567 for each violation, up to a limit of $2,513,215 for all violations committed during any one-year period. Each violation shall constitute a separate violation as to each mortgage or loan application.
</P>
<CITA TYPE="N">[61 FR 50215, Sept. 24, 1996, as amended at 65 FR 9087, Feb. 23, 2000; 68 FR 12788, Mar. 17, 2003; 72 FR 5588, Feb. 6, 2007; 78 FR 4059, Jan. 18, 2013; 81 FR 38935, June 15, 2016; 82 FR 24524, May 30, 2017; 83 FR 32793, July 16, 2018; 84 FR 9453, Mar. 15, 2019; 85 FR 13044, Mar. 6, 2020; 86 FR 14373, Mar. 16, 2021; 87 FR 24420, Apr. 26, 2022; 88 FR 9748, Feb. 15, 2023; 89 FR 13616, Feb. 23, 2024; 90 FR 24747, June 12, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 30.45" NODE="24:1.1.1.1.22.2.59.6" TYPE="SECTION">
<HEAD>§ 30.45   Multifamily and section 202 or 811 mortgagors.</HEAD>
<P>(a) <I>Definitions.</I> The following definitions apply to this section only: 
</P>
<P>(1) <I>Agent employed to manage the property that has an identity of interest</I> and <I>identity of interest agent.</I> An entity: 
</P>
<P>(i) That has management responsibility for a project; 
</P>
<P>(ii) In which the ownership entity, including its general partner or partners (if applicable) and its officers or directors (if applicable), has an ownership interest; and 
</P>
<P>(iii) Over which the ownership entity exerts effective control. 
</P>
<P>(2) <I>Effective control.</I> The ability to direct, alter, supervise, or otherwise influence the actions, policies, decisions, duties, employment, or personnel of the management agent. 
</P>
<P>(3) <I>Entity.</I> An individual corporation; company; association; partnership; authority; firm; society; trust; state, local government or agency thereof; or any other organization or group of people.
</P>
<P>(4) <I>Multifamily property.</I> Property that includes 5 or more living units and that has a mortgage insured, co-insured, or held pursuant to the National Housing Act (12 U.S.C. 1702 <I>et seq.</I>). 
</P>
<P>(5) <I>Ownership interest.</I> Any direct or indirect interest in the stock, partnership interests, beneficial interests (for a trust) or other medium of equity participation. An indirect interest includes equity participation in any entity that holds a management interest (e.g. general partner, managing member of an LLC, majority stockholder, trustee) or minimum equity interest (e.g., a 25% or more limited partner, 10% or more stockholder) in the ownership entity of the management agent. 
</P>
<P>(6) <I>Section 202 or 811 property.</I> Property that includes 5 or more living units and that has a mortgage held pursuant to a direct loan or capital advances under section 202 of the Housing Act of 1959 (12 U.S.C. 1701q) or capital advances under section 811 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 8013). 
</P>
<P>(b) <I>Violation of agreement</I>—(1) <I>General.</I> The Assistant Secretary for Housing-Federal Housing Commissioner, or his or her designee, may initiate a civil money penalty action against a mortgagor of a section 202 or 811 property or a mortgagor, general partner of a partnership mortgagor, or any officer or director of a corporate mortgagor of a multifamily property who: 
</P>
<P>(i) Has agreed in writing, as a condition of a transfer of physical assets, a flexible subsidy loan, a capital improvement loan, a modification of the mortgage terms, or a workout agreement, to use nonproject income to make cash contributions for payments due under the note and mortgage, for payments to the reserve for replacements, to restore the project to good physical condition, or to pay other project liabilities; and 
</P>
<P>(ii) Knowingly and materially fails to comply with any of the commitments listed in paragraph (b)(1)(i) of this section. 
</P>
<P>(2) <I>Maximum penalty.</I> The maximum penalty for each violation under paragraph (b) of this section is the amount of loss that the Secretary would experience at a foreclosure sale, or a sale after foreclosure, of the property involved. 
</P>
<P>(c) <I>Other violations.</I> The Assistant Secretary for Housing-Federal Housing Commissioner, or his or her designee, may initiate a civil money penalty action against any of the following who knowingly and materially take any of the actions listed in 12 U.S.C. 1735f-15(c)(1)(B): 
</P>
<P>(1) Any mortgagor of a multifamily property; 
</P>
<P>(2) Any general partner of a partnership mortgagor of such property; 
</P>
<P>(3) Any officer or director of a corporate mortgagor; 
</P>
<P>(4) Any agent employed to manage the property that has an identity of interest with the mortgagor, with the general partner of a partnership mortgagor, or with any officer or director of a corporate mortgagor of such property; or 
</P>
<P>(5) Any member of a limited liability company that is the mortgagor of such property or is the general partner of a limited partnership mortgagor or is a partner of a general partnership mortgagor. 
</P>
<P>(d) <I>Acceptable management.</I> For purposes of this rule, management acceptable to the Secretary under 12 U.S.C. 1735f-15(c)(1)(B)(xiv) shall include:
</P>
<P>(1) Fiscal management in accordance with HUD regulations and requirements;
</P>
<P>(2) Handling of vacancies and tenanting in accordance with HUD regulations and requirements;
</P>
<P>(3) Handling of rent collection in accordance with HUD regulations and requirements;
</P>
<P>(4) Maintenance in accordance with HUD regulations and requirements;
</P>
<P>(5) Compliance with HUD regulations and requirements on tenant organization; and
</P>
<P>(6) Any other matters that pertain to proper management in accordance with HUD regulations and requirements.
</P>
<P>(e) <I>Civil money penalty.</I> A consistent pattern of violations of HUD program requirements, or a single violation that causes serious injury to the public or tenants, can be a basis for an action to assess a civil money penalty. 
</P>
<P>(f) <I>Section 202 or 811 projects.</I> The Assistant Secretary for Housing-Federal Housing Commissioner, or his or her designee, may initiate a civil money penalty action against any mortgagor of a section 202 or 811 property who knowingly and materially takes any of the actions listed in 12 U.S.C. 1701q-1(c)(1). 
</P>
<P>(g) <I>Maximum penalty.</I> The maximum penalty for each violation under paragraphs (c) and (f) of this section is $62,829.


</P>
<P>(h) <I>Payment of penalty.</I> No payment of a civil money penalty levied under this section shall be payable out of project income. 
</P>
<P>(i) <I>Exceptions.</I> The Secretary may not impose penalties under this section for a violation, if a material cause of the violation is the failure of the Secretary, an agent of the Secretary, or a public housing agency to comply with an existing agreement.
</P>
<CITA TYPE="N">[66 FR 63441, Dec. 6, 2001, as amended at 68 FR 12788, Mar. 17, 2003; 72 FR 5588, Feb. 6, 2007; 74 FR 2751, Jan. 15, 2009; 78 FR 4059, Jan. 18, 2013; 81 FR 38935, June 15, 2016; 82 FR 24524, May 30, 2017; 83 FR 32793, July 16, 2018; 84 FR 9453, Mar. 15, 2019; 85 FR 13044, Mar. 6, 2020; 86 FR 14373, Mar. 16, 2021; 87 FR 24420, Apr. 26, 2022; 88 FR 9748, Feb. 15, 2023; 89 FR 13616, Feb. 23, 2024; 90 FR 24747, June 12, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 30.50" NODE="24:1.1.1.1.22.2.59.7" TYPE="SECTION">
<HEAD>§ 30.50   GNMA issuers and custodians.</HEAD>
<P>(a) <I>General.</I> The President of GNMA, or his or her designee, may initiate a civil money penalty action against a GNMA issuer or custodian that knowingly and materially violates any provision of 12 U.S.C. 1723i(b), title III of the National Housing Act, or any implementing regulation, handbook, guaranty agreement, or contractual agreement, or participant letter issued by GNMA, or fails to comply with the terms of a settlement agreement with GNMA.
</P>
<P>(b) <I>Continuing violation.</I> Each day that a violation continues shall constitute a separate violation.
</P>
<P>(c) <I>Amount of penalty.</I> The maximum penalty is $12,567 for each violation, up to a limit of $2,513,215 during any one-year period. Each violation shall constitute a separate violation with respect to each pool of mortgages.


</P>
<CITA TYPE="N">[61 FR 50215, Sept. 24, 1996, as amended at 68 FR 12788, Mar. 17, 2003; 72 FR 5588, Feb. 6, 2007; 78 FR 4059, Jan. 18, 2013; 81 FR 38935, June 15, 2016; 82 FR 24524, May 30, 2017; 83 FR 32793, July 16, 2018; 84 FR 9453, Mar. 15, 2019; 85 FR 13044, Mar. 6, 2020; 86 FR 14373, Mar. 16, 2021; 87 FR 24420, Apr. 26, 2022; 88 FR 9748, Feb. 15, 2023; 89 FR 13616, Feb. 23, 2024; 90 FR 24747, June 12, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 30.60" NODE="24:1.1.1.1.22.2.59.8" TYPE="SECTION">
<HEAD>§ 30.60   Dealers or sponsored third-party originators.</HEAD>
<P>(a) <I>General.</I> The Assistant Secretary for Housing-Federal Housing Commissioner, or his or her designee, may initiate a civil money penalty action against any dealer or sponsored third-party originator that violates section 2(b)(7) of the National Housing Act (12 U.S.C. 1703). Such violations include, but are not limited to:
</P>
<P>(1) Falsifying information on an application for dealer approval or reapproval submitted to a lender;
</P>
<P>(2) Falsifying statements on a HUD credit application, improvement contract, note, security instrument, completion certificate, or other loan document;
</P>
<P>(3) Failing to sign a credit application if the dealer or sponsored third-party originator assisted the borrower in completing the application;
</P>
<P>(4) Falsely certifying to a lender that the loan proceeds have been or will be spent on eligible improvements;
</P>
<P>(5) Falsely certifying to a lender that the property improvements have been completed;
</P>
<P>(6) Falsely certifying that a borrower has not been given or promised any cash payment, rebate, cash bonus, or anything of more than nominal value as an inducement to enter into a loan transaction;
</P>
<P>(7) Making a false representation to a lender with respect to the creditworthiness of a borrower or the eligibility of the improvements for which a loan is sought.
</P>
<P>(b) <I>Continuing violation.</I> Each day that a violation continues shall constitute a separate violation.
</P>
<P>(c) <I>Amount of penalty.</I> The maximum penalty is $12,567 for each violation, up to a limit for any particular person of $2,513,215 during any one-year period.




</P>
<CITA TYPE="N">[61 FR 50215, Sept. 24, 1996, as amended at 68 FR 12788, Mar. 17, 2003; 72 FR 5588, Feb. 6, 2007; 77 FR 51467, Aug. 24, 2012; 78 FR 4059, Jan. 18, 2013; 81 FR 38935, June 15, 2016; 82 FR 24524, May 30, 2017; 83 FR 32793, July 16, 2018; 84 FR 9453, Mar. 15, 2019; 85 FR 13044, Mar. 6, 2020; 86 FR 14373, Mar. 16, 2021; 87 FR 24420, Apr. 26, 2022; 88 FR 9748, Feb. 15, 2023; 89 FR 13616, Feb. 23, 2024;90 FR 24747, June 12, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 30.65" NODE="24:1.1.1.1.22.2.59.9" TYPE="SECTION">
<HEAD>§ 30.65   Failure to disclose lead-based paint hazards.</HEAD>
<P>(a) <I>General.</I> The Director of the Office of Lead Hazard Control and Healthy Homes, or his or her designee, may initiate a civil money penalty action against any person who knowingly violates 42 U.S.C. 4852d.
</P>
<P>(b) <I>Amount of penalty.</I> The maximum penalty is $22,263 for each violation.




</P>
<CITA TYPE="N">[65 FR 50593, Aug. 18, 2000, as amended at 76 FR 36851, June 22, 2011; 79 FR 35042, June 19, 2014; 81 FR 38935, June 15, 2016; 82 FR 24524, May 30, 2017; 83 FR 32793, July 16, 2018; 84 FR 9453, Mar. 15, 2019; 85 FR 13044, Mar. 6, 2020; 86 FR 14373, Mar. 16, 2021; 87 FR 24420, Apr. 26, 2022; 88 FR 9748, Feb. 15, 2023; 89 FR 13616, Feb. 23, 2024; 90 FR 24747, June 12, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 30.68" NODE="24:1.1.1.1.22.2.59.10" TYPE="SECTION">
<HEAD>§ 30.68   Section 8 owners.</HEAD>
<P>(a) <I>Definitions.</I> The following definitions apply to this section only: 
</P>
<P><I>Agent employed to manage the property that has an identity of interest</I> and <I>identity of interest agent.</I> An entity: 
</P>
<P>(1) That has management responsibility for a project; 
</P>
<P>(2) In which the ownership entity, including its general partner or partners (if applicable), has an ownership interest; and 
</P>
<P>(3) Over which the ownership entity exerts effective control. 
</P>
<P><I>Effective control.</I> The ability to direct, alter, supervise, or otherwise influence the actions, policies, decisions, duties, employment, or personnel of the management agent. 
</P>
<P><I>Entity.</I> An individual corporation; company; association; partnership; authority; firm; society; trust; state, local government or agency thereof; or any other organization or group of people. 
</P>
<P><I>Ownership interest.</I> Any direct or indirect interest in the stock, partnership interests, beneficial interests (for a trust) or other medium of equity participation. An indirect interest includes equity participation in any entity that holds a management interest (<I>e.g.</I> general partner, managing member of an LLC, majority stockholder, trustee) or minimum equity interest (<I>e.g.,</I> a 25% or more limited partner, 10% or more stockholder) in the ownership entity of the management agent. 
</P>
<P>(b) <I>General.</I> The Assistant Secretary for Housing—Federal Housing Commissioner, or his or her designee, or the Assistant Secretary for Public and Indian Housing, or his or her designee, may initiate a civil money penalty against any owner, any general partner of a partnership owner, or any agent employed to manage the property that has an identity of interest with the owner or the general partner of a partnership owner of a property receiving project-based assistance under section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f) for a knowing and material breach of a housing assistance payments contract. Examples of covered violations include, but are not limited to, the following:
</P>
<P>(1) Failure to provide decent, safe, and sanitary housing pursuant to section 8 of the United States Housing Act of 1937 and 24 CFR 5.703; or 
</P>
<P>(2) Knowing or willful submission of false, fictitious, or fraudulent statements or requests for housing assistance payments to the Secretary or to any department or agency of the United States. 
</P>
<P>(c) <I>Maximum penalty.</I> The maximum penalty for each violation under this section is $48,833.
</P>
<P>(d) <I>Payment of penalty.</I> No payment of a civil money penalty levied under this section shall be payable out of project income. 
</P>
<P>(e) <I>Exceptions.</I> The Secretary may not impose penalties under this section for a violation, if a material cause of the violation is the failure of the Secretary, an agent of the Secretary, or a public housing agency to comply with an existing agreement.


</P>
<CITA TYPE="N">[66 FR 63442, Dec. 6, 2001, as amended at 74 FR 2751, Jan. 15, 2009; 78 FR 4059, Jan. 18, 2013; 81 FR 38935, June 15, 2016; 82 FR 24525, May 30, 2017; 83 FR 32793, July 16, 2018; 84 FR 9454, Mar. 15, 2019; 85 FR 13044, Mar. 6, 2020; 86 FR 14373, Mar. 16, 2021; 87 FR 24421, Apr. 26, 2022; 88 FR 9748, Feb. 15, 2023; 89 FR 13616, Feb. 23, 2024; 90 FR 24747, June 12, 2025]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:1.1.1.1.22.3" TYPE="SUBPART">
<HEAD>Subpart C—Procedures</HEAD>


<DIV8 N="§ 30.70" NODE="24:1.1.1.1.22.3.59.1" TYPE="SECTION">
<HEAD>§ 30.70   Prepenalty notice.</HEAD>
<P>(a) Prior to determining whether to issue a complaint under § 30.85, the official designated in subpart B of this part, or his or her designee (or the chairperson of the Mortgagee Review Board, or his or her designee, in actions under § 30.35), shall issue a written notice to the respondent. This prepenalty notice shall include the following:
</P>
<P>(1) That HUD is considering seeking a civil money penalty;
</P>
<P>(2) The specific violations alleged;
</P>
<P>(3) The maximum civil money penalty that may be imposed;
</P>
<P>(4) The opportunity to reply in writing to the designated program official within 30 days after receipt of the notice;
</P>
<P>(5) That failure to respond within the 30-day period may result in issuance of a complaint under § 30.85 without consideration of any information that the respondent may wish to provide; and
</P>
<P>(6) That if a complaint is issued under § 30.85, the respondent may request a hearing before an administrative law judge in accordance with § 30.95.
</P>
<P>(b) <I>Obligation to preserve documents.</I> Upon receipt of the prepenalty notice, the respondent is required to preserve and maintain all documents or data, including electronically stored data, within his or her possession or control that may relate to the violations alleged in the prepenalty notice. The Department shall also preserve such documents or data upon the issuance of the prepenalty notice.
</P>
<CITA TYPE="N">[74 FR 2751, Jan. 15, 2009]


</CITA>
</DIV8>


<DIV8 N="§ 30.75" NODE="24:1.1.1.1.22.3.59.2" TYPE="SECTION">
<HEAD>§ 30.75   Response to prepenalty notice.</HEAD>
<P>(a) The response shall be in a format prescribed in the prepenalty notice. The response shall address the factors set forth in § 30.80 and include any arguments opposing the imposition of a civil money penalty that the respondent may wish to present.
</P>
<P>(b) In any case where respondent seeks to raise ability to pay as an affirmative defense or argument in mitigation, the respondent shall provide documentary evidence as part of its response.
</P>
<CITA TYPE="N">[74 FR 2751, Jan. 15, 2009]


</CITA>
</DIV8>


<DIV8 N="§ 30.80" NODE="24:1.1.1.1.22.3.59.3" TYPE="SECTION">
<HEAD>§ 30.80   Factors in determining amount of civil money penalty.</HEAD>
<P>After determining that a respondent has committed a violation as described in subpart B of this part that subjects the respondent to liability under this part, the officials designated in subpart B of this part shall consider the following factors to determine the amount of penalty to seek against a respondent, if any:
</P>
<P>(a) The gravity of the offense;
</P>
<P>(b) Any history of prior offenses;
</P>
<P>(c) The ability to pay the penalty, which ability shall be presumed unless specifically raised as an affirmative defense or mitigating factor by the respondent;
</P>
<P>(d) The injury to the public;
</P>
<P>(e) Any benefits received by the violator;
</P>
<P>(f) The extent of potential benefit to other persons;
</P>
<P>(g) Deterrence of future violations;
</P>
<P>(h) The degree of the violator's culpability; and
</P>
<P>(i) Such other matters as justice may require.
</P>
<P>(j) In addition to the above factors, with respect to violations under §§ 30.45, 30.55, 30.60, and 30.68, the Assistant Secretary for Housing—Federal Housing Commissioner, or his or her designee, or the Assistant Secretary for Public and Indian Housing, or his or her designee, shall also consider:
</P>
<P>(1) Any injury to tenants; and/or
</P>
<P>(2) Any injury to lot owners.
</P>
<P>(k) HUD may consider the factors listed in paragraphs (a) through (k) of this section to determine the appropriateness of imposing a penalty under § 30.35(c)(2); however, HUD cannot change the amount of the penalty under § 30.35(c)(2).
</P>
<CITA TYPE="N">[74 FR 2751, Jan. 15, 2009, as amended at 82 FR 24525, May 30, 2017]


</CITA>
</DIV8>


<DIV8 N="§ 30.85" NODE="24:1.1.1.1.22.3.59.4" TYPE="SECTION">
<HEAD>§ 30.85   Complaint.</HEAD>
<P>(a) <I>General.</I> Upon the expiration of the period for the respondent to submit a response to the prepenalty notice, the official designated in subpart B of this part, or his or her designee (or the Mortgagee Review Board in actions under § 30.35) shall determine whether to seek a civil money penalty. Such determination shall be based upon a review of the prepenalty notice, the response, if any, and the factors listed at § 30.80. A determination by the Mortgagee Review Board to seek a civil money penalty shall be by a majority vote of the Board.
</P>
<P>(b) If a determination is made to seek a civil money penalty, government counsel shall issue a complaint to the respondent on behalf of the officials listed at subpart B of this part or the Mortgagee Review Board for violations under § 30.35. The complaint shall be served upon respondent and simultaneously filed with the Office of Hearings and Appeals, and shall state the following:
</P>
<P>(1) The factual basis for the decision to seek a penalty;
</P>
<P>(2) The applicable civil money penalty statute;
</P>
<P>(3) The amount of penalty sought;
</P>
<P>(4) The right to submit a response in writing, within 15 days of receipt of the complaint, requesting a hearing on any material fact in the complaint, or on the appropriateness of the penalty sought;
</P>
<P>(5) The address to which a response must be sent;
</P>
<P>(6) That the failure to submit a response may result in the imposition of the penalty in the amount sought.
</P>
<P>(c) A copy of this part and of 24 CFR part 26, subpart B, shall be included with the complaint.
</P>
<P>(d) <I>Service of the complaint.</I> The complaint shall be served on the respondent by first class mail, personal delivery, or other means.
</P>
<CITA TYPE="N">[61 FR 50215, Sept. 24, 1996, as amended at 74 FR 2752, Jan. 15, 2009; 90 FR 24747, June 12, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 30.90" NODE="24:1.1.1.1.22.3.59.5" TYPE="SECTION">
<HEAD>§ 30.90   Response to the complaint.</HEAD>
<P>(a) <I>Request for a hearing.</I> If the respondent desires a hearing before an administrative law judge, the respondent shall submit a request for a hearing to HUD and the Office of Hearings and Appeals no later than 15 days following receipt of the complaint, as required by statute. This mandated period cannot be extended.
</P>
<P>(b) <I>Answer.</I> In any case in which the respondent has requested a hearing, the respondent shall serve upon HUD and file with the Office of Hearings and Appeals a written answer to the complaint within 30 days of receipt of the complaint, unless such time is extended by the administrative law judge for good cause. The answer shall include the admission or denial of each allegation of liability made in the complaint; any defense on which the respondent intends to rely; any reasons why the civil money penalty should be less than the amount sought in the complaint, based on the factors listed at § 30.80; and the name, address, and telephone number of the person who will act as the respondent's representative, if any.
</P>
<P>(c) <I>Filing with the administrative law judges.</I> HUD shall file the complaint and response with the Docket Clerk, Office of Hearings and Appeals, in accordance with § 26.38 of this chapter. If no response is submitted, then HUD may file a motion for default judgment, together with a copy of the complaint, in accordance with § 26.41 of this title.
</P>
<CITA TYPE="N">[61 FR 50215, Sept. 24, 1996, as amended at 74 FR 2752, Jan. 15, 2009; 74 FR 7313, Feb. 17, 2009; 74 FR 4635, Jan. 26, 2009; 78 FR 4060, Jan. 18, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 30.95" NODE="24:1.1.1.1.22.3.59.6" TYPE="SECTION">
<HEAD>§ 30.95   Hearings.</HEAD>
<P>Hearings under this part shall be conducted in accordance with the procedures applicable to hearings in accordance with the Administrative Procedure Act, set forth in 24 CFR part 26.
</P>
<CITA TYPE="N">[74 FR 2752, Jan. 15, 2009]


</CITA>
</DIV8>


<DIV8 N="§ 30.100" NODE="24:1.1.1.1.22.3.59.7" TYPE="SECTION">
<HEAD>§ 30.100   Settlement of a civil money penalty action.</HEAD>
<P>The officials listed at subpart B of this part, or their designees (or the Mortgagee Review Board, or designee, for violations under § 30.35), are authorized to enter into settlement agreements resolving civil money penalty actions that may be brought under part 30.
</P>
<CITA TYPE="N">[74 FR 2752, Jan. 15, 2009]


</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="35" NODE="24:1.1.1.1.23" TYPE="PART">
<HEAD>PART 35—LEAD-BASED PAINT POISONING PREVENTION IN CERTAIN RESIDENTIAL STRUCTURES 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d), 4821, and 4851.


</PSPACE></AUTH>

<DIV6 N="A" NODE="24:1.1.1.1.23.1" TYPE="SUBPART">
<HEAD>Subpart A—Disclosure of Known Lead-Based Paint and/or Lead-Based Paint Hazards Upon Sale or Lease of Residential Property</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 9082, Mar. 6, 1996, unless otherwise noted. Redesignated at 64 FR 50201, Sept. 15, 1999.


</PSPACE></SOURCE>

<DIV8 N="§ 35.80" NODE="24:1.1.1.1.23.1.59.1" TYPE="SECTION">
<HEAD>§ 35.80   Purpose.</HEAD>
<P>This subpart implements the provisions of 42 U.S.C. 4852d, which impose certain requirements on the sale or lease of target housing. Under this subpart, a seller or lessor of target housing shall disclose to the purchaser or lessee the presence of any known lead-based paint and/or lead-based paint hazards; provide available records and reports; provide the purchaser or lessee with a lead hazard information pamphlet; give purchasers a 10-day opportunity to conduct a risk assessment or inspection; and attach specific disclosure and warning language to the sales or leasing contract before the purchaser or lessee is obligated under a contract to purchase or lease target housing. 


</P>
</DIV8>


<DIV8 N="§ 35.82" NODE="24:1.1.1.1.23.1.59.2" TYPE="SECTION">
<HEAD>§ 35.82   Scope and applicability.</HEAD>
<P>This subpart applies to all transactions to sell or lease target housing, including subleases, with the exception of the following:
</P>
<P>(a) Sales of target housing at foreclosure.
</P>
<P>(b) Leases of target housing that have been found to be lead-based paint free by an inspector certified under the Federal certification program or under a federally accredited State or tribal certification program. Until a Federal certification program or federally accredited State certification program is in place within the State, inspectors shall be considered qualified to conduct an inspection for this purpose if they have received certification under any existing State or tribal inspector certification program. The lessor has the option of using the results of additional test(s) by a certified inspector to confirm or refute a prior finding.
</P>
<P>(c) Short-term leases of 100 days or less, where no lease renewal or extension can occur.
</P>
<P>(d) Renewals of existing leases in target housing in which the lessor has previously disclosed all information required under § 35.88 and where no new information described in § 35.88 has come into the possession of the lessor. For the purposes of this paragraph, renewal shall include both renegotiation of existing lease terms and/or ratification of a new lease.


</P>
</DIV8>


<DIV8 N="§ 35.84" NODE="24:1.1.1.1.23.1.59.3" TYPE="SECTION">
<HEAD>§ 35.84   Effective dates.</HEAD>
<P>The requirements in this subpart take effect in the following manner:
</P>
<P>(a) For owners of more than four residential dwellings, the requirements shall take effect on September 6, 1996.
</P>
<P>(b) For owners of one to four residential dwellings, the requirements shall take effect on December 6, 1996. 


</P>
</DIV8>


<DIV8 N="§ 35.86" NODE="24:1.1.1.1.23.1.59.4" TYPE="SECTION">
<HEAD>§ 35.86   Definitions.</HEAD>
<P>The following definitions apply to this subpart.
</P>
<P><I>The Act</I> means the Residential Lead-Based Paint Hazard Reduction Act of 1992, 42 U.S.C. 4852d.
</P>
<P><I>Agent</I> means any party who enters into a contract with a seller or lessor, including any party who enters into a contract with a representative of the seller or lessor, for the purpose of selling or leasing target housing. This term does not apply to purchasers or any purchaser's representative who receives all compensation from the purchaser.
</P>
<P><I>Available</I> means in the possession of or reasonably obtainable by the seller or lessor at the time of the disclosure.
</P>
<P><I>Common area</I> means a portion of a building generally accessible to all residents/users including, but not limited to, hallways, stairways, laundry and recreational rooms, playgrounds, community centers, and boundary fences.
</P>
<P><I>Contract for the purchase and sale of residential real property</I> means any contract or agreement in which one party agrees to purchase an interest in real property on which there is situated one or more residential dwellings used or occupied, or intended to be used or occupied, in whole or in part, as the home or residence of one or more persons.
</P>
<P><I>EPA</I> means the Environmental Protection Agency.
</P>
<P><I>Evaluation</I> means a risk assessment and/or inspection.
</P>
<P><I>Foreclosure</I> means any of the various methods, statutory or otherwise, known in different jurisdictions, of enforcing payment of a debt, by the taking and selling of real property.
</P>
<P><I>Housing for the elderly</I> means retirement communities or similar types of housing reserved for households composed of one or more persons 62 years of age or more at the time of initial occupancy.
</P>
<P><I>Inspection</I> means:
</P>
<P>(1) A surface-by-surface investigation to determine the presence of lead-based paint as provided in section 302(c) of the Lead-Based Paint Poisoning and Prevention Act [42 U.S.C. 4822], and
</P>
<P>(2) The provision of a report explaining the results of the investigation.
</P>
<P><I>Lead-based paint</I> means paint or other surface coatings that contain lead equal to or in excess of 1.0 milligram per square centimeter or 0.5 percent by weight.
</P>
<P><I>Lead-based paint free housing</I> means target housing that has been found to be free of paint or other surface coatings that contain lead equal to or in excess of 1.0 milligram per square centimeter or 0.5 percent by weight.
</P>
<P><I>Lead-based paint hazard</I> means any condition that causes exposure to lead from lead-contaminated dust, lead-contaminated soil, or lead-contaminated paint that is deteriorated or present in accessible surfaces, friction surfaces, or impact surfaces that would result in adverse human health effects as established by the appropriate Federal agency.
</P>
<P><I>Lessee</I> means any entity that enters into an agreement to lease, rent, or sublease target housing, including but not limited to individuals, partnerships, corporations, trusts, government agencies, housing agencies, Indian tribes, and nonprofit organizations.
</P>
<P><I>Lessor</I> means any entity that offers target housing for lease, rent, or sublease, including but not limited to individuals, partnerships, corporations, trusts, government agencies, housing agencies, Indian tribes, and nonprofit organizations.
</P>
<P><I>Owner</I> means any entity that has legal title to target housing, including but not limited to individuals, partnerships, corporations, trusts, government agencies, housing agencies, Indian tribes, and nonprofit organizations, except where a mortgagee holds legal title to property serving as collateral for a mortgage loan, in which case the owner would be the mortgagor.
</P>
<P><I>Purchaser</I> means an entity that enters into an agreement to purchase an interest in target housing, including but not limited to individuals, partnerships, corporations, trusts, government agencies, housing agencies, Indian tribes, and nonprofit organizations.
</P>
<P><I>Reduction</I> means measures designed to reduce or eliminate human exposure to lead-based paint hazards through methods including interim controls and abatement.
</P>
<P><I>Residential dwelling</I> means:
</P>
<P>(1) A single-family dwelling, including attached structures such as porches and stoops; or
</P>
<P>(2) A single-family dwelling unit in a structure that contains more than one separate residential dwelling unit, and in which each such unit is used or occupied, or intended to be used or occupied, in whole or in part, as the residence of one or more persons.
</P>
<P><I>Risk assessment</I> means an on-site investigation to determine and report the existence, nature, severity, and location of lead-based paint hazards in residential dwellings, including:
</P>
<P>(1) Information gathering regarding the age and history of the housing and occupancy by children under age 6;
</P>
<P>(2) Visual inspection;
</P>
<P>(3) Limited wipe sampling or other environmental sampling techniques;
</P>
<P>(4) Other activity as may be appropriate; and
</P>
<P>(5) Provision of a report explaining the results of the investigation.
</P>
<P><I>Seller</I> means any entity that transfers legal title to target housing, in whole or in part, in return for consideration, including but not limited to individuals, partnerships, corporations, trusts, government agencies, housing agencies, Indian tribes, and nonprofit organizations. The term “seller” also includes:
</P>
<P>(1) An entity that transfers shares in a cooperatively owned project, in return for consideration; and
</P>
<P>(2) An entity that transfers its interest in a leasehold, in jurisdictions or circumstances where it is legally permissible to separate the fee title from the title to the improvement, in return for consideration.
</P>
<P><I>Target housing</I> means any housing constructed prior to 1978, except housing for the elderly or persons with disabilities (unless any child who is less than 6 years of age resides or is expected to reside in such housing) or any 0-bedroom dwelling.
</P>
<P><I>TSCA</I> means the Toxic Substances Control Act, 15 U.S.C. 2601.
</P>
<P><I>0-bedroom dwelling</I> means any residential dwelling in which the living area is not separated from the sleeping area. The term includes efficiencies, studio apartments, dormitory housing, military barracks, and rentals of individual rooms in residential dwellings. 


</P>
</DIV8>


<DIV8 N="§ 35.88" NODE="24:1.1.1.1.23.1.59.5" TYPE="SECTION">
<HEAD>§ 35.88   Disclosure requirements for sellers and lessors.</HEAD>
<P>(a) The following activities shall be completed before the purchaser or lessee is obligated under any contract to purchase or lease target housing that is not otherwise an exempt transaction pursuant to § 35.82. Nothing in this section implies a positive obligation on the seller or lessor to conduct any evaluation or reduction activities.
</P>
<P>(1) The seller or lessor shall provide the purchaser or lessee with an EPA-approved lead hazard information pamphlet. Such pamphlets include the EPA document entitled <I>Protect Your Family From Lead in Your Home</I> (EPA −747-K-94-001) or an equivalent pamphlet that has been approved for use in that State by EPA.
</P>
<P>(2) The seller or lessor shall disclose to the purchaser or lessee the presence of any known lead-based paint and/or lead-based paint hazards in the target housing being sold or leased. The seller or lessor shall also disclose any additional information available concerning the known lead-based paint and/or lead-based paint hazards, such as the basis for the determination that lead-based paint and/or lead-based paint hazards exist, the location of the lead-based paint and/or lead-based paint hazards, and the condition of the painted surfaces.
</P>
<P>(3) The seller or lessor shall disclose to each agent the presence of any known lead-based paint and/or lead-based paint hazards in the target housing being sold or leased and the existence of any available records or reports pertaining to lead-based paint and/or lead-based paint hazards. The seller or lessor shall also disclose any additional information available concerning the known lead-based paint and/or lead-based paint hazards, such as the basis for the determination that lead-based paint and/or lead-based paint hazards exist, the location of the lead-based paint and/or lead-based paint hazards, and the condition of the painted surfaces.
</P>
<P>(4) The seller or lessor shall provide the purchaser or lessee with any records or reports available to the seller or lessor pertaining to lead-based paint and/or lead-based paint hazards in the target housing being sold or leased. This requirement includes records and reports regarding common areas. This requirement also includes records and reports regarding other residential dwellings in multifamily target housing, provided that such information is part of an evaluation or reduction of lead-based paint and/or lead-based paint hazards in the target housing as a whole.
</P>
<P>(b) If any of the disclosure activities identified in paragraph (a) of this section occurs after the purchaser or lessee has provided an offer to purchase or lease the housing, the seller or lessor shall complete the required disclosure activities prior to accepting the purchaser's or lessee's offer and allow the purchaser or lessee an opportunity to review the information and possibly amend the offer. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2070-0151)
</APPRO>
<CITA TYPE="N">[61 FR 9082, Mar. 6, 1996, as amended at 64 FR 14382, Mar. 25, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 35.90" NODE="24:1.1.1.1.23.1.59.6" TYPE="SECTION">
<HEAD>§ 35.90   Opportunity to conduct an evaluation.</HEAD>
<P>(a) Before a purchaser is obligated under any contract to purchase target housing, the seller shall permit the purchaser a 10-day period (unless the parties mutually agree, in writing, upon a different period of time) to conduct a risk assessment or inspection for the presence of lead-based paint and/or lead-based paint hazards.
</P>
<P>(b) Notwithstanding paragraph (a) of this section, a purchaser may waive the opportunity to conduct the risk assessment or inspection by so indicating in writing. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2070-0151)
</APPRO>
<CITA TYPE="N">[61 FR 9082, Mar. 6, 1996, as amended at 64 FR 14382, Mar. 25, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 35.92" NODE="24:1.1.1.1.23.1.59.7" TYPE="SECTION">
<HEAD>§ 35.92   Certification and acknowledgment of disclosure.</HEAD>
<P>(a) <I>Seller requirements.</I> Each contract to sell target housing shall include an attachment containing the following elements, in the language of the contract (e.g., English, Spanish):
</P>
<P>(1) A Lead Warning Statement consisting of the following language:
</P>
<EXTRACT>
<P>Every purchaser of any interest in residential real property on which a residential dwelling was built prior to 1978 is notified that such property may present exposure to lead from lead-based paint that may place young children at risk of developing lead poisoning. Lead poisoning in young children may produce permanent neurological damage, including learning disabilities, reduced intelligence quotient, behavioral problems, and impaired memory. Lead poisoning also poses a particular risk to pregnant women. The seller of any interest in residential real property is required to provide the buyer with any information on lead-based paint hazards from risk assessments or inspections in the seller's possession and notify the buyer of any known lead-based paint hazards. A risk assessment or inspection for possible lead-based paint hazards is recommended prior to purchase.</P></EXTRACT>
<P>(2) A statement by the seller disclosing the presence of known lead-based paint and/or lead-based paint hazards in the target housing being sold or indicating no knowledge of the presence of lead-based paint and/or lead-based paint hazards. The seller shall also provide any additional information available concerning the known lead-based paint and/or lead-based paint hazards, such as the basis for the determination that lead-based paint and/or lead-based paint hazards exist, the location of the lead-based paint and/or lead-based paint hazards, and the condition of the painted surfaces.
</P>
<P>(3) A list of any records or reports available to the seller pertaining to lead-based paint and/or lead-based paint hazards in the housing that have been provided to the purchaser. If no such records or reports are available, the seller shall so indicate.
</P>
<P>(4) A statement by the purchaser affirming receipt of the information set out in paragraphs (a)(2) and (a)(3) of this section and the lead hazard information pamphlet required under section 15 U.S.C. 2696.
</P>
<P>(5) A statement by the purchaser that he/she has either:
</P>
<P>(i) Received the opportunity to conduct the risk assessment or inspection required by § 35.90(a); or
</P>
<P>(ii) Waived the opportunity.
</P>
<P>(6) When any agent is involved in the transaction to sell target housing on behalf of the seller, a statement that:
</P>
<P>(i) The agent has informed the seller of the seller's obligations under 42 U.S.C. 4852d; and
</P>
<P>(ii) The agent is aware of his/her duty to ensure compliance with the requirements of this subpart.
</P>
<P>(7) The signatures of the sellers, agents, and purchasers, certifying to the accuracy of their statements, to the best of their knowledge, along with the dates of signature.
</P>
<P>(b) <I>Lessor requirements.</I> Each contract to lease target housing shall include, as an attachment or within the contract, the following elements, in the language of the contract (e.g., English, Spanish):
</P>
<P>(1) A Lead Warning Statement with the following language:
</P>
<EXTRACT>
<P>Housing built before 1978 may contain lead-based paint. Lead from paint, paint chips, and dust can pose health hazards if not managed properly. Lead exposure is especially harmful to young children and pregnant women. Before renting pre-1978 housing, lessors must disclose the presence of lead-based paint and/or lead-based paint hazards in the dwelling. Lessees must also receive a federally approved pamphlet on lead poisoning prevention.</P></EXTRACT>
<P>(2) A statement by the lessor disclosing the presence of known lead-based paint and/or lead-based paint hazards in the target housing being leased or indicating no knowledge of the presence of lead-based paint and/or lead-based paint hazards. The lessor shall also disclose any additional information available concerning the known lead-based paint and/or lead-based paint hazards, such as the basis for the determination that lead-based paint and/or lead-based paint hazards exist in the housing, the location of the lead-based paint and/or lead-based paint hazards, and the condition of the painted surfaces.
</P>
<P>(3) A list of any records or reports available to the lessor pertaining to lead-based paint and/or lead-based paint hazards in the housing that have been provided to the lessee. If no such records or reports are available, the lessor shall so indicate.
</P>
<P>(4) A statement by the lessee affirming receipt of the information set out in paragraphs (b)(2) and (b)(3) of this section and the lead hazard information pamphlet required under 15 U.S.C. 2696.
</P>
<P>(5) When any agent is involved in the transaction to lease target housing on behalf of the lessor, a statement that:
</P>
<P>(i) The agent has informed the lessor of the lessor's obligations under 42 U.S.C. 4852d; and
</P>
<P>(ii) The agent is aware of his/her duty to ensure compliance with the requirements of this subpart.
</P>
<P>(6) The signatures of the lessors, agents, and lessees certifying to the accuracy of their statements to the best of their knowledge, along with the dates of signature.
</P>
<P>(c) <I>Retention of certification and acknowledgment information.</I> (1) The seller, and any agent, shall retain a copy of the completed attachment required under paragraph (a) of this section for no less than 3 years from the completion date of the sale. The lessor, and any agent, shall retain a copy of the completed attachment or lease contract containing the information required under paragraph (b) of this section for no less than 3 years from the commencement of the leasing period.
</P>
<P>(2) This recordkeeping requirement is not intended to place any limitations on civil suits under the Act, or to otherwise affect a lessee's or purchaser's rights under the civil penalty provisions of 42 U.S.C. 4852d(b)(3). 
</P>
<P>(d) The seller, lessor, or agent shall not be responsible for the failure of a purchaser's or lessee's legal representative (where such representative receives all compensation from the purchaser or lessee) to transmit disclosure materials to the purchaser or lessee, provided that all required parties have completed and signed the necessary certification and acknowledgment language required under paragraphs (a) and (b) of this section.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2070-0151)
</APPRO>
<CITA TYPE="N">[61 FR 9082, Mar. 6, 1996, as amended at 64 FR 14382, Mar. 25, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 35.94" NODE="24:1.1.1.1.23.1.59.8" TYPE="SECTION">
<HEAD>§ 35.94   Agent responsibilities.</HEAD>
<P>(a) Each agent shall ensure compliance with all requirements of this subpart. To ensure compliance, the agent shall:
</P>
<P>(1) Inform the seller or lessor of his/her obligations under §§ 35.88, 35.90, and 35.92.
</P>
<P>(2) Ensure that the seller or lessor has performed all activities required under §§ 35.88, 35.90, and 35.92, or personally ensure compliance with the requirements of §§ 35.88, 35.90, and 35.92.
</P>
<P>(b) If the agent has complied with paragraph (a)(1) of this section, the agent shall not be liable for the failure to disclose to a purchaser or lessee the presence of lead-based paint and/or lead-based paint hazards known by a seller or lessor but not disclosed to the agent. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2070-0151)
</APPRO>
<CITA TYPE="N">[61 FR 9082, Mar. 6, 1996, as amended at 64 FR 14382, Mar. 25, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 35.96" NODE="24:1.1.1.1.23.1.59.9" TYPE="SECTION">
<HEAD>§ 35.96   Enforcement.</HEAD>
<P>(a) Any person who knowingly fails to comply with any provision of this subpart shall be subject to civil monetary penalties in accordance with the provisions of 42 U.S.C. 3545 and 24 CFR part 30.
</P>
<P>(b) The Secretary is authorized to take such action as may be necessary to enjoin any violation of this subpart in the appropriate Federal district court.
</P>
<P>(c) Any person who knowingly violates the provisions of this subpart shall be jointly and severally liable to the purchaser or lessee in an amount equal to 3 times the amount of damages incurred by such individual.
</P>
<P>(d) In any civil action brought for damages pursuant to 42 U.S.C. 4852d(b)(3), the appropriate court may award court costs to the party commencing such action, together with reasonable attorney fees and any expert witness fees, if that party prevails.
</P>
<P>(e) Failure or refusal to comply with § 35.88 (disclosure requirements for sellers and lessors), § 35.90 (opportunity to conduct an evaluation), § 35.92 (certification and acknowledgment of disclosure), or § 35.94 (agent responsibilities) is a violation of 42 U.S.C. 4852d(b)(5) and of TSCA section 409 (15 U.S.C. 2689).
</P>
<P>(f) Violators may be subject to civil and criminal sanctions pursuant to TSCA section 16 (15 U.S.C. 2615) for each violation. For purposes of enforcing this subpart, the penalty for each violation applicable under 15 U.S.C. 2615 shall be not more than $10,000. 


</P>
</DIV8>


<DIV8 N="§ 35.98" NODE="24:1.1.1.1.23.1.59.10" TYPE="SECTION">
<HEAD>§ 35.98   Impact on State and local requirements.</HEAD>
<P>Nothing in this subpart shall relieve a seller, lessor, or agent from any responsibility for compliance with State or local laws, ordinances, codes, or regulations governing notice or disclosure of known lead-based paint and/or lead-based paint hazards. Neither HUD nor EPA assumes any responsibility for ensuring compliance with such State or local requirements. 


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.1.1.1.23.2" TYPE="SUBPART">
<HEAD>Subpart B—General Lead-Based Paint Requirements and Definitions for All Programs.</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>64 FR 50202, Sept. 15, 1999, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 35.100" NODE="24:1.1.1.1.23.2.59.1" TYPE="SECTION">
<HEAD>§ 35.100   Purpose and applicability.</HEAD>
<P>(a) <I>Purpose.</I> The requirements of subparts B through R of this part are promulgated to implement the Lead-Based Paint Poisoning Prevention Act, as amended (42 U.S.C. 4821 <I>et seq.</I>), and the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851 <I>et seq.</I>).
</P>
<P>(b) <I>Applicability</I>—(1) <I>This subpart.</I> This subpart applies to all target housing that is federally owned and target housing receiving Federal assistance to which subparts C, D, F through M, and R of this part apply, except where indicated.
</P>
<P>(2) <I>Other subparts</I>—(i) <I>General.</I> Subparts C, D, and F through M of this part each set forth requirements for a specific type of Federal housing activity or assistance, such as multifamily mortgage insurance, project-based rental assistance, rehabilitation, or tenant-based rental assistance. Subpart R of this part provides standards and methods for activities required in subparts B, C, D, and F through M of this part.
</P>
<P>(ii) <I>Application to programs.</I> Most HUD housing programs are covered by only one subpart of this part, but some programs can be used for more than one type of assistance and therefore are covered by more than one subpart of this part. A current list of programs covered by each subpart of this part is available on the internet at <I>www.hud.gov,</I> or by mail from the National Lead Information Center at 1-800-424-LEAD. Examples of flexible programs that can provide more than one type of assistance are the HOME Investment Partnerships program, the Community Development Block Grant program, and the Indian Housing Block Grant Program. Grantees, participating jurisdictions, Indian tribes and other entities administering such flexible programs must decide which subpart applies to the type of assistance being provided to a particular dwelling unit or residential property.
</P>
<P>(iii) <I>Application to dwelling units.</I> In some cases, more than one type of assistance may be provided to the same dwelling unit. In such cases, the subpart or section with the most protective initial hazard reduction requirements applies. Paragraph (c) of this section provides a table that lists the subparts and sections of this part in order from the most protective to the least protective. (This list is based only on the requirements for initial hazard reduction. The summary of requirements on this list is not a complete list of requirements. It is necessary to refer to the applicable subparts and sections to determine all applicable requirements.)
</P>
<P>(iv) <I>Example.</I> A multifamily building has 100 dwelling units and was built in 1965. The property is financed with HUD multifamily mortgage insurance. This building is covered by subpart G of this part (see § 35.625—Multifamily mortgage insurance for properties constructed after 1959), which is at protectiveness level 5 in the table set forth in paragraph (c) of this section. In the same building, however, 50 of the 100 dwelling units are receiving project-based assistance, and the average annual assistance per assisted unit is $5,500. Those 50 units, and common areas servicing those units, are covered by the requirements of subpart H of this part (see § 35.715—Project-based assistance for multifamily properties receiving more than $5,000 per unit), which are at protectiveness level 3. Therefore, because level 3 is a higher level of protectiveness than level 5, the units receiving project-based assistance, and common areas servicing those units, must comply at level 3, while the rest of the building can be operated at level 5. The owner may choose to operate the entire building at level 3 for simplicity.
</P>
<P>(c) <I>Table One.</I> The following table lists the subparts and sections of this part applying to HUD programs in order from most protective to least protective hazard reduction requirements. The summary of hazard reduction requirements in this table is not complete. Readers must refer to relevant subpart for complete requirements.
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Level of protection
</TH><TH class="gpotbl_colhed" scope="col">Subpart, section, and type of assistance
</TH><TH class="gpotbl_colhed" scope="col">Hazard reduction
<br/>requirements
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1</TD><TD align="left" class="gpotbl_cell">Subpart L, Public housing. Subpart G, § 35.630, Multifamily mortgage insurance for conversions and major rehabilitations</TD><TD align="left" class="gpotbl_cell">Full abatement of lead-based paint.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">2</TD><TD align="left" class="gpotbl_cell">Subpart J, § 35.930(d), Properties receiving more than $25,000 per unit in rehabilitation assistance</TD><TD align="left" class="gpotbl_cell">Abatement of lead-based paint hazards.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">3</TD><TD align="left" class="gpotbl_cell">Subpart G, § 35.620, Multifamily mortgage insurance for properties constructed before 1960, other than conversions and major rehabilitations. Subpart H, § 35.715, Project-based assistance for multifamily properties receiving more than $5,000 per unit. Subpart I, HUD-owned multifamily property. Subpart J, § 35.930(c), Properties receiving more than $5,000 and up to $25,000 per unit in rehabilitation assistance</TD><TD align="left" class="gpotbl_cell">Interim controls.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">4</TD><TD align="left" class="gpotbl_cell">Subpart F, HUD-owned single family properties. Subpart H, § 35.720, Project-based rental assistance for multifamily properties receiving up to $5,000 per unit and single family properties. Subpart K, Acquisition, leasing, support services, or operation. Subpart M, Tenant-based rental assistance</TD><TD align="left" class="gpotbl_cell">Paint stabilization.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">5</TD><TD align="left" class="gpotbl_cell">Subpart G, § 35.625, Multifamily mortgage insurance for properties constructed after 1959</TD><TD align="left" class="gpotbl_cell">Ongoing lead-based paint maintenance.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">6</TD><TD align="left" class="gpotbl_cell">Subpart J, § 35.930(b), Properties receiving up to and including $5,000 in rehabilitation assistance</TD><TD align="left" class="gpotbl_cell">Safe work practices during rehabilitation.</TD></TR></TABLE></DIV></DIV>
</DIV8>


<DIV8 N="§ 35.105" NODE="24:1.1.1.1.23.2.59.2" TYPE="SECTION">
<HEAD>§ 35.105   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 35.106" NODE="24:1.1.1.1.23.2.59.3" TYPE="SECTION">
<HEAD>§ 35.106   Information collection requirements.</HEAD>
<P>The information collection requirements contained in this part have been approved by the Office of Management and Budget (OMB) in accordance with the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 2501-3520), and have been assigned OMB control number 2539-0009. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection displays a valid control number.


</P>
</DIV8>


<DIV8 N="§ 35.110" NODE="24:1.1.1.1.23.2.59.4" TYPE="SECTION">
<HEAD>§ 35.110   Definitions.</HEAD>
<P><I>Abatement</I> means any set of measures designed to permanently eliminate lead-based paint or lead-based paint hazards (see definition of “permanent”). Abatement includes:
</P>
<P>(1) The removal of lead-based paint and dust-lead hazards, the permanent enclosure or encapsulation of lead-based paint, the replacement of components or fixtures painted with lead-based paint, and the removal or permanent covering of soil-lead hazards; and
</P>
<P>(2) All preparation, cleanup, disposal, and post abatement clearance testing activities associated with such measures.
</P>
<P><I>Act</I> means the Lead-Based Paint Poisoning Prevention Act, as amended, 42 U.S.C. 4822 <I>et seq.</I>
</P>
<P><I>Bare soil</I> means soil or sand not covered by grass, sod, other live ground covers, wood chips, gravel, artificial turf, or similar covering.
</P>
<P><I>Certified</I> means certified to perform such activities as risk assessment, lead-based paint inspection, abatement supervision, or renovation, either by a State or Indian tribe with a lead-based paint certification program authorized by the Environmental Protection Agency (EPA), in accordance with 40 CFR part 745, subpart Q, or by the EPA, in accordance with 40 CFR part 745, subparts E or L.
</P>
<P><I>Chewable</I> surface means an interior or exterior surface painted with lead-based paint that a young child can mouth or chew. A chewable surface is the same as an “accessible surface” as defined in 42 U.S.C. 4851b(2)). Hard metal substrates and other materials that cannot be dented by the bite of a young child are not considered chewable.
</P>
<P><I>Clearance examination</I> means an activity conducted following lead-based paint hazard reduction activities to determine that the hazard reduction activities are complete and that no soil-lead hazards or settled dust-lead hazards, as defined in this part, exist in the dwelling unit or worksite. The clearance process includes a visual assessment and collection and analysis of environmental samples. Dust-lead standards for clearance are found at § 35.1320.
</P>
<P><I>Common area</I> means a portion of a residential property that is available for use by occupants of more than one dwelling unit. Such an area may include, but is not limited to, hallways, stairways, laundry and recreational rooms, playgrounds, community centers, on-site day care facilities, garages and boundary fences.
</P>
<P><I>Component</I> means an architectural element of a dwelling unit or common area identified by type and location, such as a bedroom wall, an exterior window sill, a baseboard in a living room, a kitchen floor, an interior window sill in a bathroom, a porch floor, stair treads in a common stairwell, or an exterior wall.
</P>
<P><I>Composite sample</I> means a collection of more than one sample of the same medium (e.g., dust, soil or paint) from the same type of surface (e.g., floor, interior window sill, or window trough), such that multiple samples can be analyzed as a single sample.
</P>
<P><I>Containment</I> means the physical measures taken to ensure that dust and debris created or released during lead-based paint hazard reduction are not spread, blown or tracked from inside to outside of the worksite.
</P>
<P><I>Designated party</I> means a Federal agency, grantee, subrecipient, participating jurisdiction, housing agency, Indian Tribe, tribally designated housing entity (TDHE), sponsor, or property owner responsible for complying with applicable requirements.
</P>
<P><I>Deteriorated paint</I> means any interior or exterior paint or other coating that is peeling, chipping, chalking or cracking, or any paint or coating located on an interior or exterior surface or fixture that is otherwise damaged or separated from the substrate.
</P>
<P><I>Dry sanding</I> means sanding without moisture and includes both hand and machine sanding.
</P>
<P>Dust-lead hazard means surface dust that contains a dust-lead loading (area concentration of lead) equal to or exceeding the levels promulgated by the EPA at 40 CFR 745.65 or, if such levels are not in effect, the standards for dust-lead hazards in § 35.1320.
</P>
<P><I>Dwelling unit</I> means a:
</P>
<P>(1) Single-family dwelling, including attached structures such as porches and stoops; or
</P>
<P>(2) Housing unit in a structure that contains more than 1 separate housing unit, and in which each such unit is used or occupied, or intended to be used or occupied, in whole or in part, as the home or separate living quarters of 1 or more persons.
</P>
<P><I>Elevated blood lead level</I> means a confirmed concentration of lead in whole blood of a child under age 6 equal to or greater than the concentration in the most recent guidance published by the U.S. Department of Health and Human Services (HHS) on recommending that an environmental intervention be conducted. (When HHS changes the value, HUD will publish a notice in the <E T="04">Federal Register,</E> with the opportunity for public comment, on its intent to apply the changed value to this part, and, after considering comments, publish a notice on its applying the changed value to this part.)
</P>
<P><I>Encapsulation</I> means the application of a covering or coating that acts as a barrier between the lead-based paint and the environment and that relies for its durability on adhesion between the encapsulant and the painted surface, and on the integrity of the existing bonds between paint layers and between the paint and the substrate. Encapsulation may be used as a method of abatement if it is designed and performed so as to be permanent (see definition of “permanent”).
</P>
<P><I>Enclosure</I> means the use of rigid, durable construction materials that are mechanically fastened to the substrate in order to act as a barrier between lead-based paint and the environment. Enclosure may be used as a method of abatement if it is designed to be permanent (see definition of “permanent”).
</P>
<P><I>Environmental investigation</I> means the process of determining the source of lead exposure for a child under age 6 with an elevated blood lead level, consisting of administration of a questionnaire, comprehensive environmental sampling, case management, and other measures, in accordance with chapter 16 of the HUD Guidelines for the Evaluation and Control of Lead-Based Paint Hazards in Housing (“Guidelines”).
</P>
<P><I>Evaluation</I> means a risk assessment, a lead hazard screen, a lead-based paint inspection, paint testing, or a combination of these to determine the presence of lead-based paint hazards or lead-based paint, or an environmental investigation.
</P>
<P><I>Expected to reside</I> means there is actual knowledge that a child will reside in a dwelling unit reserved or designated exclusively for the elderly or reserved or designated exclusively for persons with disabilities. If a resident woman is known to be pregnant, there is actual knowledge that a child will reside in the dwelling unit.
</P>
<P><I>Federal agency</I> means the United States or any executive department, independent establishment, administrative agency and instrumentality of the United States, including a corporation in which all or a substantial amount of the stock is beneficially owned by the United States or by any of these entities. The term “Federal agency” includes, but is not limited to, Rural Housing Service (formerly Rural Housing and Community Development Service that was formerly Farmer's Home Administration), Resolution Trust Corporation, General Services Administration, Department of Defense, Department of Veterans Affairs, Department of the Interior, and Department of Transportation.
</P>
<P><I>Federally owned property</I> means residential property owned or managed by a Federal agency, or for which a Federal agency is a trustee or conservator.
</P>
<P><I>Firm commitment</I> means a valid commitment issued by HUD or the Federal Housing Commissioner setting forth the terms and conditions upon which a mortgage will be insured or guaranteed.
</P>
<P><I>Friction surface</I> means an interior or exterior surface that is subject to abrasion or friction, including, but not limited to, certain window, floor, and stair surfaces.
</P>
<P><I>g</I> means gram, <I>mg</I> means milligram (thousandth of a gram), and µg means microgram (millionth of a gram).
</P>
<P><I>Grantee</I> means any state or local government, Indian Tribe, IHBG recipient, insular area or nonprofit organization that has been designated by HUD to administer Federal housing assistance under a program covered by subparts J and K of this part, except the HOME program.
</P>
<P><I>Hard costs of rehabilitation</I> means:
</P>
<P>(1) Costs to correct substandard conditions or to meet applicable local rehabilitation standards;
</P>
<P>(2) Costs to make essential improvements, including energy-related repairs, and those necessary to permit use by persons with disabilities; and costs to repair or replace major housing systems in danger of failure; and
</P>
<P>(3) Costs of non-essential improvements, including additions and alterations to an existing structure; but
</P>
<P>(4) Hard costs do not include administrative costs (e.g., overhead for administering a rehabilitation program, processing fees, etc.).
</P>
<P><I>Hazard reduction</I> means measures designed to reduce or eliminate human exposure to lead-based paint hazards through methods including interim controls or abatement or a combination of the two.
</P>
<P><I>HEPA vacuum</I> means a vacuum cleaner device with an included high-efficiency particulate air (HEPA) filter through which the contaminated air flows, operated in accordance with the instructions of its manufacturer. A HEPA filter is one that captures at least 99.97 percent of airborne particles of at least 0.3 micrometers in diameter.
</P>
<P><I>Housing for the elderly</I> means retirement communities or similar types of housing reserved for households composed of one or more persons 62 years of age or more, or other age if recognized as elderly by a specific Federal housing assistance program.
</P>
<P><I>Housing receiving Federal assistance</I> means housing which is covered by an application for HUD mortgage insurance, receives housing assistance payments under a program administered by HUD, or otherwise receives more than $5,000 in project-based assistance under a Federal housing program administered by an agency other than HUD.
</P>
<P><I>HUD</I> means the United States Department of Housing and Urban Development.
</P>
<P><I>HUD-owned property</I> means residential property owned or managed by HUD, or for which HUD is a trustee or conservator.
</P>
<P><I>Impact surface</I> means an interior or exterior surface that is subject to damage by repeated sudden force, such as certain parts of door frames.
</P>
<P><I>Indian Housing Block Grant (IHBG) recipient</I> means a tribe or a tribally designated housing entity (TDHE) receiving IHBG funds.
</P>
<P><I>Indian tribe</I> means a tribe as defined in the Native American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4101 <I>et seq.</I>)
</P>
<P><I>Inspection</I> (See Lead-based paint inspection).
</P>
<P><I>Insular areas</I> means Guam, the Northern Mariana Islands, the United States Virgin Islands and American Samoa.
</P>
<P><I>Interim controls</I> means a set of measures designed to reduce temporarily human exposure or likely exposure to lead-based paint hazards. Interim controls include, but are not limited to, repairs, painting, temporary containment, specialized cleaning, clearance, ongoing lead-based paint maintenance activities, and the establishment and operation of management and resident education programs.
</P>
<P><I>Interior window sill</I> means the portion of the horizontal window ledge that protrudes into the interior of the room, adjacent to the window sash when the window is closed. The interior window sill is sometimes referred to as the window stool.
</P>
<P><I>Lead-based paint</I> means paint or other surface coatings that contain lead equal to or exceeding 1.0 milligram per square centimeter or 0.5 percent by weight or 5,000 parts per million (ppm) by weight.
</P>
<P><I>Lead-based paint hazard</I> means any condition that causes exposure to lead from dust-lead hazards, soil-lead hazards, or lead-based paint that is deteriorated or present in chewable surfaces, friction surfaces, or impact surfaces, and that would result in adverse human health effects.
</P>
<P><I>Lead-based paint inspection</I> means a surface-by-surface investigation to determine the presence of lead-based paint and the provision of a report explaining the results of the investigation.
</P>
<P><I>Lead hazard screen</I> means a limited risk assessment activity that involves paint testing and dust sampling and analysis as described in 40 CFR 745.227(c) and soil sampling and analysis as described in 40 CFR 745.227(d).
</P>
<P><I>Mortgagee</I> means a lender of a mortgage loan.
</P>
<P><I>Mortgagor</I> means a borrower of a mortgage loan.
</P>
<P><I>Multifamily property</I> means a residential property containing five or more dwelling units.
</P>
<P><I>Occupant</I> means a person who inhabits a dwelling unit.
</P>
<P><I>Owner</I> means a person, firm, corporation, nonprofit organization, partnership, government, guardian, conservator, receiver, trustee, executor, or other judicial officer, or other entity which, alone or with others, owns, holds, or controls the freehold or leasehold title or part of the title to property, with or without actually possessing it. The definition includes a vendee who possesses the title, but does not include a mortgagee or an owner of a reversionary interest under a ground rent lease.
</P>
<P><I>Paint stabilization</I> means repairing any physical defect in the substrate of a painted surface that is causing paint deterioration, removing loose paint and other material from the surface to be treated, and applying a new protective coating or paint.
</P>
<P><I>Paint testing</I> means the process of determining, by a certified lead-based paint inspector or risk assessor, the presence or the absence of lead-based paint on deteriorated paint surfaces or painted surfaces to be disturbed or replaced.
</P>
<P><I>Paint removal</I> means a method of abatement that permanently eliminates lead-based paint from surfaces.
</P>
<P><I>Painted surface to be disturbed</I> means a paint surface that is to be scraped, sanded, cut, penetrated or otherwise affected by rehabilitation work in a manner that could potentially create a lead-based paint hazard by generating dust, fumes, or paint chips.
</P>
<P><I>Participating jurisdiction</I> means any State or local government that has been designated by HUD to administer a HOME program grant.
</P>
<P><I>Permanent</I> means an expected design life of at least 20 years.
</P>
<P><I>Play area</I> means an area of frequent soil contact by children of less than 6 years of age, as indicated by the presence of play equipment (e.g. sandboxes, swing sets, sliding boards, etc.) or toys or other children's possessions, observations of play patterns, or information provided by parents, residents or property owners.
</P>
<P><I>Project-based rental assistance</I> means Federal rental assistance that is tied to a residential property with a specific location and remains with that particular location throughout the term of the assistance.
</P>
<P><I>Public health department</I> means a State, tribal, county or municipal public health department or the Indian Health Service.
</P>
<P><I>Public housing development</I> means a residential property assisted under the United States Housing Act of 1937 (42 U.S.C. 1437 <I>et seq.</I>), but not including housing assisted under section 8 of the 1937 Act.
</P>
<P><I>Reevaluation</I> means a visual assessment of painted surfaces and limited dust and soil sampling conducted periodically following lead-based paint hazard reduction where lead-based paint is still present.
</P>
<P><I>Rehabilitation</I> means the improvement of an existing structure through alterations, incidental additions or enhancements. Rehabilitation includes repairs necessary to correct the results of deferred maintenance, the replacement of principal fixtures and components, improvements to increase the efficient use of energy, and installation of security devices.
</P>
<P><I>Replacement</I> means a strategy of abatement that entails the removal of building components that have surfaces coated with lead-based paint and the installation of new components free of lead-based paint.
</P>
<P><I>Residential property</I> means a dwelling unit, common areas, building exterior surfaces, and any surrounding land, including outbuildings, fences and play equipment affixed to the land, belonging to an owner and available for use by residents, but not including land used for agricultural, commercial, industrial or other non-residential purposes, and not including paint on the pavement of parking lots, garages, or roadways.
</P>
<P><I>Risk assessment</I> means:
</P>
<P>(1) An on-site investigation to determine the existence, nature, severity, and location of lead-based paint hazards; and
</P>
<P>(2) The provision of a report by the individual or firm conducting the risk assessment explaining the results of the investigation and options for reducing lead-based paint hazards.
</P>
<P><I>Single family property</I> means a residential property containing one through four dwelling units.
</P>
<P><I>Single room occupancy (SRO) housing</I> means housing consisting of zero-bedroom dwelling units that may contain food preparation or sanitary facilities or both (see Zero-bedroom dwelling).
</P>
<P><I>Soil-lead hazard</I> means bare soil on residential property that contains lead equal to or exceeding levels promulgated by the EPA at 40 CFR 745.65 or, if such levels are not in effect, the standards for soil-lead hazards in § 35.1320.
</P>
<P><I>Sponsor</I> means mortgagor (borrower).
</P>
<P><I>Subrecipient</I> means any nonprofit organization selected by the grantee or participating jurisdiction to administer all or a portion of the Federal rehabilitation assistance or other non-rehabilitation assistance, or any such organization selected by a subrecipient of the grantee or participating jurisdiction. An owner or developer receiving Federal rehabilitation assistance or other assistance for a residential property is not considered a subrecipient for the purposes of carrying out that project.
</P>
<P><I>Standard treatments</I> means a series of hazard reduction measures designed to reduce all lead-based paint hazards in a dwelling unit without the benefit of a risk assessment or other evaluation.
</P>
<P><I>Substrate</I> means the material directly beneath the painted surface out of which the components are constructed, including wood, drywall, plaster, concrete, brick or metal.
</P>
<P><I>Target housing</I> means any housing constructed prior to 1978, except housing for the elderly or persons with disabilities (unless a child of less than 6 years of age resides or is expected to reside in such housing for the elderly or persons with disabilities) or any zero-bedroom dwelling. In the case of jurisdictions which banned the sale or use of lead-based paint prior to 1978, HUD may designate an earlier date.
</P>
<P><I>Tenant</I> means the individual named as the lessee in a lease, rental agreement or occupancy agreement for a dwelling unit.
</P>
<P>A <I>visual assessment</I> alone is not considered an evaluation for the purposes of this part. Visual assessment means looking for, as applicable:
</P>
<P>(1) Deteriorated paint;
</P>
<P>(2) Visible surface dust, debris, and residue as part of a risk assessment or clearance examination; or
</P>
<P>(3) The completion or failure of a hazard reduction measure.
</P>
<P><I>Wet sanding</I> or <I>wet scraping</I> means a process of removing loose paint in which the painted surface to be sanded or scraped is kept wet to minimize the dispersal of paint chips and airborne dust.
</P>
<P><I>Window trough</I> means the area between the interior window sill (stool) and the storm window frame. If there is no storm window, the window trough is the area that receives both the upper and lower window sashes when they are both lowered.
</P>
<P><I>Worksite</I> means an interior or exterior area where lead-based paint hazard reduction activity takes place. There may be more than one worksite in a dwelling unit or at a residential property.
</P>
<P><I>Zero-bedroom dwelling</I> means any residential dwelling in which the living areas are not separated from the sleeping area. The term includes efficiencies, studio apartments, dormitory or single room occupancy housing, military barracks, and rentals of individual rooms in residential dwellings (see Single room occupancy (SRO)).
</P>
<CITA TYPE="N">[64 FR 50202, Sept. 15, 1999, as amended at 69 FR 34271, June 21, 2004; 69 FR 40474, July 2, 2004; 82 FR 4166, Jan. 13, 2017]


</CITA>
</DIV8>


<DIV8 N="§ 35.115" NODE="24:1.1.1.1.23.2.59.5" TYPE="SECTION">
<HEAD>§ 35.115   Exemptions.</HEAD>
<P>(a) Subparts B through R of this part do not apply to the following:
</P>
<P>(1) A residential property for which construction was completed on or after January 1, 1978, or, in the case of jurisdictions which banned the sale or residential use of lead-containing paint prior to 1978, an earlier date as HUD may designate (see § 35.160).
</P>
<P>(2) A zero-bedroom dwelling unit, including a single room occupancy (SRO) dwelling unit.
</P>
<P>(3) Housing for the elderly, or a residential property designated exclusively for persons with disabilities; except this exemption shall not apply if a child less than age 6 resides or is expected to reside in the dwelling unit (see definitions of “housing for the elderly” and “expected to reside” in § 35.110).
</P>
<P>(4) Residential property found not to have lead-based paint by a lead-based paint inspection conducted in accordance with § 35.1320(a) (for more information regarding inspection procedures consult the 1997 edition of Chapter 7 of the HUD Guidelines). Results of additional test(s) by a certified lead-based paint inspector may be used to confirm or refute a prior finding.
</P>
<P>(5) Residential property in which all lead-based paint has been identified, removed, and clearance has been achieved in accordance with 40 CFR 745.227(b)(e) before September 15, 2000, or in accordance with §§ 35.1320, 35.1325 and 35.1340 on or after September 15, 2000. This exemption does not apply to residential property where enclosure or encapsulation has been used as a method of abatement.
</P>
<P>(6) An unoccupied dwelling unit or residential property that is to be demolished, provided the dwelling unit or property will remain unoccupied until demolition.
</P>
<P>(7) A property or part of a property that is not used and will not be used for human residential habitation, except that spaces such as entryways, hallways, corridors, passageways or stairways serving both residential and nonresidential uses in a mixed-use property shall not be exempt.
</P>
<P>(8) Any rehabilitation that does not disturb a painted surface.
</P>
<P>(9) For emergency actions immediately necessary to safeguard against imminent danger to human life, health or safety, or to protect property from further structural damage (such as when a property has been damaged by a natural disaster, fire, or structural collapse), occupants shall be protected from exposure to lead in dust and debris generated by such emergency actions to the extent practicable, and the requirements of subparts B through R of this part shall not apply. This exemption applies only to repairs necessary to respond to the emergency. The requirements of subparts B through R of this part shall apply to any work undertaken subsequent to, or above and beyond, such emergency actions.
</P>
<P>(10) If a Federal law enforcement agency has seized a residential property and owns the property for less than 270 days, §§ 35.210 and 35.215 shall not apply to the property.
</P>
<P>(11) The requirements of subpart K of this part do not apply if the assistance being provided is emergency rental assistance or foreclosure prevention assistance, provided that this exemption shall expire for a dwelling unit no later than 100 days after the initial payment or assistance.
</P>
<P>(12) Performance of an evaluation or lead-based paint hazard reduction or lead-based paint abatement on an exterior painted surface as required under this part may be delayed for a reasonable time during a period when weather conditions are unsuitable for conventional construction activities.
</P>
<P>(13) Where abatement of lead-based paint hazards or lead-based paint is required by this part and the property is listed or has been determined to be eligible for listing in the National Register of Historic Places or contributing to a National Register Historic District, the designated party may, if requested by the State Historic Preservation Office, conduct interim controls in accordance with § 35.1330 instead of abatement. If interim controls are conducted, ongoing lead-based paint maintenance and reevaluation shall be conducted as required by the applicable subpart of this part in accordance with § 35.1355.
</P>
<P>(b) For the purposes of subpart C of this part, each Federal agency other than HUD will determine whether appropriations are sufficient to implement this rule. If appropriations are not sufficient, subpart C of this part shall not apply to that Federal agency. If appropriations are sufficient, subpart C of this part shall apply.


</P>
</DIV8>


<DIV8 N="§ 35.120" NODE="24:1.1.1.1.23.2.59.6" TYPE="SECTION">
<HEAD>§ 35.120   Options.</HEAD>
<P>(a) <I>Standard treatments.</I> Where interim controls are required by this part, the designated party has the option to presume that lead-based paint or lead-based paint hazards or both are present throughout the residential property. In such a case, evaluation is not required. Standard treatments shall then be conducted in accordance with § 35.1335 on all applicable surfaces, including soil. Standard treatments are completed only when clearance is achieved in accordance with § 35.1340.
</P>
<P>(b) <I>Abatement.</I> Where abatement is required by this part, the designated party may presume that lead-based paint or lead-based paint hazards or both are present throughout the residential property. In such a case, evaluation is not required. Abatement shall then be conducted on all applicable surfaces, including soil, in accordance with § 35.1325, and completed when clearance is achieved in accordance with § 35.1340. This option is not available in public housing, where inspection is required.
</P>
<P>(c) <I>Lead hazard screen.</I> Where a risk assessment is required, the designated party may choose first to conduct a lead hazard screen in accordance with § 35.1320(b). If the results of the lead hazard screen indicate the need for a full risk assessment (e.g., if the environmental measurements exceed levels established for lead hazard screens in § 35.1320(b)(2)), a complete risk assessment shall be conducted. Environmental samples collected for the lead hazard screen may be used in the risk assessment. If the results of the lead hazard screen do not indicate the need for a follow-up risk assessment, a risk assessment is not required.
</P>
<P>(d) <I>Paint testing.</I> Where paint stabilization or interim controls of deteriorated paint surfaces are required by this rule, the designated party has the option to conduct paint testing of all surfaces with non-intact paint. If paint testing indicates the absence of lead-based paint on a specific surface, paint stabilization or interim controls are not required on that surface.


</P>
</DIV8>


<DIV8 N="§ 35.125" NODE="24:1.1.1.1.23.2.59.7" TYPE="SECTION">
<HEAD>§ 35.125   Notice of evaluation and hazard reduction activities.</HEAD>
<P>The following activities shall be conducted if notice is required by subparts D and F through M of this part.
</P>
<P>(a) <I>Notice of evaluation or presumption.</I> When evaluation is undertaken and lead-based paint or lead-based paint hazards are found to be present, or if a presumption is made that lead-based paint or lead-based paint hazards are present in accordance with the options described in § 35.120, the designated party shall provide a notice to occupants within 15 calendar days of the date when the designated party receives the report or makes the presumption. A visual assessment alone is not considered an evaluation for the purposes of this part. If only a visual assessment alone is required by this part, and no evaluation is performed, a notice of evaluation or presumption is not required.
</P>
<P>(1) The notice of the evaluation shall include:
</P>
<P>(i) A summary of the nature, dates, scope, and results of the evaluation; 
</P>
<P>(ii) A contact name, address and telephone number for more information, and to obtain access to the actual evaluation report; and
</P>
<P>(iii) The date of the notice.
</P>
<P>(2) The notice of presumption shall include:
</P>
<P>(i) The nature and scope of the presumption;
</P>
<P>(ii) A contact name, address and telephone number for more information; and
</P>
<P>(iii) The date of the notice.
</P>
<P>(b) <I>Notice of hazard reduction activity.</I> When hazard reduction activities are undertaken, each designated party shall:
</P>
<P>(1) Provide a notice to occupants not more than 15 calendar days after the hazard reduction activities (including paint stabilization) have been completed. Notice of hazard reduction shall include, but not be limited to:
</P>
<P>(i) A summary of the nature, dates, scope, and results (including clearance) of the hazard reduction activities;
</P>
<P>(ii) A contact name, address, and telephone number for more information;
</P>
<P>(iii) Available information on the location of any remaining lead-based paint in the rooms, spaces, or areas where hazard reduction activities were conducted, on a surface-by-surface basis; and
</P>
<P>(iv) The date of the notice.
</P>
<P>(2) Update the notice, based on reevaluation of the residential property and as any additional hazard reduction work is conducted.
</P>
<P>(3) Provision of a notice of hazard reduction is not required if a clearance examination is not required.
</P>
<P>(c) <I>Availability of notices of evaluation, presumption, and hazard reduction activities.</I> (1) The notices of evaluation, presumption, and hazard reduction shall be of a size and type that is easily read by occupants.
</P>
<P>(2) To the extent practicable, each notice shall be made available, upon request, in a format accessible to persons with disabilities (e.g., Braille, large type, computer disk, audio tape).
</P>
<P>(3) Each notice shall be provided in the occupants' primary language or in the language of the occupants' contract or lease.
</P>
<P>(4) The designated party shall provide each notice to the occupants by:
</P>
<P>(i) Posting and maintaining it in centrally located common areas and distributing it to any dwelling unit if necessary because the head of household is a person with a known disability; or
</P>
<P>(ii) Distributing it to each occupied dwelling unit affected by the evaluation, presumption, or hazard reduction activity or serviced by common areas in which an evaluation, presumption or hazard reduction has taken place.
</P>
<P>(iii) However, for the protection of the privacy of the child and the child's family or guardians, no notice of environmental investigation shall be posted to any centrally located common area.
</P>
<CITA TYPE="N">[64 FR 50202, Sept. 15, 1999, as amended at 69 FR 34271, June 21, 2004; 82 FR 4167, Jan. 13, 2017]


</CITA>
</DIV8>


<DIV8 N="§ 35.130" NODE="24:1.1.1.1.23.2.59.8" TYPE="SECTION">
<HEAD>§ 35.130   Lead hazard information pamphlet.</HEAD>
<P>If provision of a lead hazard information pamphlet is required in subparts D and F through M of this part, the designated party shall provide to each occupied dwelling unit to which subparts D and F through M of this part apply, the lead hazard information pamphlet developed by EPA, HUD and the Consumer Product Safety Commission pursuant to section 406 of the Toxic Substances Control Act (15 U.S.C. 2686), or an EPA-approved alternative; except that the designated party need not provide a lead hazard information pamphlet if the designated party can demonstrate that the pamphlet has already been provided in accordance with the lead-based paint notification and disclosure requirements at § 35.88(a)(1), or 40 CFR 745.107(a)(1) or in accordance with the requirements for hazard education before renovation at 40 CFR part 745, subpart E.


</P>
</DIV8>


<DIV8 N="§ 35.135" NODE="24:1.1.1.1.23.2.59.9" TYPE="SECTION">
<HEAD>§ 35.135   Use of paint containing lead.</HEAD>
<P>(a) <I>New use prohibition.</I> The use of paint containing more than 0.06 percent dry weight of lead on any interior or exterior surface in federally owned housing or housing receiving Federal assistance is prohibited. As appropriate, each Federal agency shall include the prohibition in contracts, grants, cooperative agreements, insurance agreements, guaranty agreements, trust agreements, or other similar documents.
</P>
<P>(b) <I>Pre-1978 prohibition.</I> In the case of a jurisdiction which banned the sale or residential use of lead-containing paint before 1978, HUD may designate an earlier date for certain provisions of subparts D and F through M of this part.


</P>
</DIV8>


<DIV8 N="§ 35.140" NODE="24:1.1.1.1.23.2.59.10" TYPE="SECTION">
<HEAD>§ 35.140   Prohibited methods of paint removal.</HEAD>
<P>The following methods shall not be used to remove paint that is, or may be, lead-based paint:
</P>
<P>(a) Open flame burning or torching.
</P>
<P>(b) Machine sanding or grinding without a high-efficiency particulate air (HEPA) local exhaust control.
</P>
<P>(c) Abrasive blasting or sandblasting without HEPA local exhaust control.
</P>
<P>(d) Heat guns operating above 1100 degrees Fahrenheit or charring the paint.
</P>
<P>(e) Dry sanding or dry scraping, except dry scraping in conjunction with heat guns or within 1.0 ft. (0.30 m.) of electrical outlets, or when treating defective paint spots totaling no more than 2 sq. ft. (0.2 sq. m.) in any one interior room or space, or totaling no more than 20 sq. ft. (2.0 sq. m.) on exterior surfaces.
</P>
<P>(f) Paint stripping in a poorly ventilated space using a volatile stripper that is a hazardous substance in accordance with regulations of the Consumer Product Safety Commission at 16 CFR 1500.3, and/or a hazardous chemical in accordance with the Occupational Safety and Health Administration regulations at 29 CFR 1910.1200 or 1926.59, as applicable to the work.


</P>
</DIV8>


<DIV8 N="§ 35.145" NODE="24:1.1.1.1.23.2.59.11" TYPE="SECTION">
<HEAD>§ 35.145   Compliance with Federal laws and authorities.</HEAD>
<P>All lead-based paint activities, including waste disposal, performed under this part shall be performed in accordance with applicable Federal laws and authorities. For example, such activities are subject to the applicable environmental review requirements of the National Environmental Policy Act of 1969 (42 U.S.C. 4321 <I>et seq.</I>), the Toxic Substances Control Act, Title IV (15 U.S.C. 2860 <I>et seq.</I>), and other environmental laws and authorities (see, e.g., laws and authorities listed in § 50.4 of this title).


</P>
</DIV8>


<DIV8 N="§ 35.150" NODE="24:1.1.1.1.23.2.59.12" TYPE="SECTION">
<HEAD>§ 35.150   Compliance with other State, tribal, and local laws.</HEAD>
<P>(a) <I>HUD responsibility.</I> If HUD determines that a State, tribal or local law, ordinance, code or regulation provides for evaluation or hazard reduction in a manner that provides a comparable level of protection from the hazards of lead-based paint poisoning to that provided by the requirements of subparts B, C, D, F through M and R of this part and that adherence to the requirements of subparts B, C, D, F through M, and R of this part, would be duplicative or otherwise cause inefficiencies, HUD may modify or waive some or all of the requirements of the subparts in a manner that will promote efficiency while ensuring a comparable level of protection.
</P>
<P>(b) <I>Participant responsibility.</I> Nothing in this part is intended to relieve any participant in a program covered by this subpart of any responsibility for compliance with State, tribal or local laws, ordinances, codes or regulations governing evaluation and hazard reduction. If a State, tribal or local law, ordinance, code or regulation defines lead-based paint differently than the Federal definition, the more protective definition (i.e., the lower level) shall be followed in that State, tribal or local jurisdiction.


</P>
</DIV8>


<DIV8 N="§ 35.155" NODE="24:1.1.1.1.23.2.59.13" TYPE="SECTION">
<HEAD>§ 35.155   Minimum requirements.</HEAD>
<P>(a) Nothing in subparts B, C, D, F through M, and R of this part is intended to preclude a designated party or owner from conducting additional evaluation or hazard reduction measures beyond the minimum requirements established for each program in this regulation. For example, if the applicable subpart requires visual assessment, the designated party may choose to perform a risk assessment in accordance with § 35.1320. Similarly, if the applicable subpart requires interim controls, a designated party or owner may choose to implement abatement in accordance with § 35.1325.
</P>
<P>(b) To the extent that assistance from any of the programs covered by subparts B, C, D, and F through M of this part is used in conjunction with other HUD program assistance, the most protective requirements prevail.
</P>
<CITA TYPE="N">[64 FR 50202, Sept. 15, 1999, as amended at 82 FR 4167, Jan. 13, 2017]


</CITA>
</DIV8>


<DIV8 N="§ 35.160" NODE="24:1.1.1.1.23.2.59.14" TYPE="SECTION">
<HEAD>§ 35.160   Waivers.</HEAD>
<P>In accordance with § 5.110 of this title, on a case-by-case basis and upon determination of good cause, HUD may, subject to statutory limitations, waive any provision of subparts B, C, D, F through M, and R of this part.


</P>
</DIV8>


<DIV8 N="§ 35.165" NODE="24:1.1.1.1.23.2.59.15" TYPE="SECTION">
<HEAD>§ 35.165   Prior evaluation or hazard reduction.</HEAD>
<P>If an evaluation or hazard reduction was conducted at a residential property or dwelling unit before the property or dwelling unit became subject to the requirements of subparts B, C, D, F through M, and R of this part, such an evaluation, hazard reduction or abatement meets the requirements of subparts B, C, D, F through M, and R of this part and need not be repeated under the following conditions:
</P>
<P>(a) <I>Lead-based paint inspection.</I> (1) A lead-based paint inspection conducted before March 1, 2000, meets the requirements of this part if:
</P>
<P>(i) At the time of the inspection the lead-based paint inspector was approved by a State or Indian tribe to perform lead-based paint inspections. It is not necessary that the State or tribal approval program had EPA authorization at the time of the inspection.
</P>
<P>(ii) Notwithstanding paragraph (a)(1)(i) of this section, the inspection was conducted and accepted as valid by a housing agency in fulfillment of the lead-based paint inspection requirement of the public and Indian housing program.
</P>
<P>(2) A lead-based paint inspection conducted on or after March 1, 2000, must have been conducted by a certified lead-based paint inspector.
</P>
<P>(b) <I>Risk assessment.</I> (1) A risk assessment must be no more than 12 months old to be considered current.
</P>
<P>(2) A risk assessment conducted before March 1, 2000, meets the requirements of this part if, at the time of the risk assessment, the risk assessor was approved by a state or Indian Tribe to perform risk assessments. It is not necessary that the state or tribal approval program had EPA authorization at the time of the risk assessment.
</P>
<P>(3) A risk assessment conducted on or after March 1, 2000, must have been conducted by a certified risk assessor.
</P>
<P>(4) Paragraph (b) of this section does not apply in a case where a risk assessment is required in response to the identification of a child with an elevated blood lead level. In such a case, the requirements in the applicable subpart for responding to a child with an elevated blood lead level shall apply.
</P>
<P>(c) <I>Interim controls.</I> If a residential property is under a program of interim controls and ongoing lead-based paint maintenance and reevaluation activities established pursuant to a risk assessment conducted in accordance with paragraph (b) of this section, the interim controls that have been conducted meet the requirements of this part if clearance was achieved after such controls were implemented. In such a case, the program of interim controls and ongoing activities shall be continued in accordance with the requirements of this part.
</P>
<P>(d) <I>Abatement.</I> (1) An abatement conducted before March 1, 2000, meets the requirements of this part if:
</P>
<P>(i) At the time of the abatement the abatement supervisor was approved by a State or Indian tribe to perform lead-based paint abatement. It is not necessary that the State or tribal approval program had EPA authorization at the time of the abatement.
</P>
<P>(ii) Notwithstanding paragraph (d)(1)(i) of this section, it was conducted and accepted by a housing agency in fulfillment of the lead-based paint abatement requirement of the public housing program or by an Indian housing authority (as formerly defined under the U.S. Housing Act of 1937) in fulfillment of the lead-based paint requirement of the Indian housing program formerly funded under the U.S. Housing Act of 1937.
</P>
<P>(2) An abatement conducted on or after March 1, 2000, must have been conducted under the supervision of a certified lead-based paint abatement supervisor.
</P>
<CITA TYPE="N">[64 FR 50202, Sept. 15, 1999; 65 FR 3387, Jan. 21, 2000, as amended at 69 FR 34272, June 21, 2004; 82 FR 4167, Jan. 13, 2017]


</CITA>
</DIV8>


<DIV8 N="§ 35.170" NODE="24:1.1.1.1.23.2.59.16" TYPE="SECTION">
<HEAD>§ 35.170   Noncompliance with the requirements of subparts B through R of this part.</HEAD>
<P>(a) <I>Monitoring and enforcement.</I> A designated party who fails to comply with any requirement of subparts B, C, D, F through M, and R of this part shall be subject to the sanctions available under the relevant Federal housing assistance or ownership program and may be subject to other penalties authorized by law.
</P>
<P>(b) A property owner who informs a potential purchaser or occupant of lead-based paint or possible lead-based paint hazards in a residential property or dwelling unit, in accordance with subpart A of this part, is not relieved of the requirements to evaluate and reduce lead-based paint hazards in accordance with subparts B through R of this part as applicable.


</P>
</DIV8>


<DIV8 N="§ 35.175" NODE="24:1.1.1.1.23.2.59.17" TYPE="SECTION">
<HEAD>§ 35.175   Records.</HEAD>
<P>The designated party, as specified in subparts C, D, and F through M of this part, shall keep a copy of each notice, evaluation, and clearance or abatement report required by subparts C, D, and F through M of this part for at least three years. Those records applicable to a portion of a residential property for which ongoing lead-based paint maintenance and/or reevaluation activities are required shall be kept and made available for the Department's review, until at least three years after such activities are no longer required.


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:1.1.1.1.23.3" TYPE="SUBPART">
<HEAD>Subpart C—Disposition of Residential Property Owned by a Federal Agency Other Than HUD</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>64 FR 50208, Sept. 15, 1999, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 35.200" NODE="24:1.1.1.1.23.3.59.1" TYPE="SECTION">
<HEAD>§ 35.200   Purpose and applicability.</HEAD>
<P>The purpose of this subpart C is to establish procedures to eliminate as far as practicable lead-based paint hazards prior to the sale of a residential property that is owned by a Federal agency other than HUD. The requirements of this subpart apply to any residential property offered for sale on or after September 15, 2000.


</P>
</DIV8>


<DIV8 N="§ 35.205" NODE="24:1.1.1.1.23.3.59.2" TYPE="SECTION">
<HEAD>§ 35.205   Definitions and other general requirements.</HEAD>
<P>Definitions and other general requirements that apply to this subpart are found in subpart B of this part.


</P>
</DIV8>


<DIV8 N="§ 35.210" NODE="24:1.1.1.1.23.3.59.3" TYPE="SECTION">
<HEAD>§ 35.210   Disposition of residential property constructed before 1960.</HEAD>
<P>(a) <I>Evaluation.</I> The Federal agency shall conduct a risk assessment and a lead-based paint inspection in accordance with 40 CFR 745.227 before the closing of the sale.
</P>
<P>(b) <I>Abatement of lead-based paint hazards.</I> The risk assessment used for the identification of hazards to be abated shall have been performed no more than 12 months before the beginning of the abatement. The Federal agency shall abate all identified lead-based paint hazards in accordance with 40 CFR 745.227. Abatement is completed when clearance is achieved in accordance with 40 CFR 745.227. Where abatement of lead-based paint hazards is not completed before the closing of the sale, the Federal agency shall be responsible for assuring that abatement is carried out by the purchaser before occupancy of the property as target housing and in accordance with 40 CFR 745.227.


</P>
</DIV8>


<DIV8 N="§ 35.215" NODE="24:1.1.1.1.23.3.59.4" TYPE="SECTION">
<HEAD>§ 35.215   Disposition of residential property constructed after 1959 and before 1978.</HEAD>
<P>The Federal agency shall conduct a risk assessment and a lead-based paint inspection in accordance with 40 CFR 745.227. Evaluation shall be completed before closing of the sale according to a schedule determined by the Federal agency. The results of the risk assessment and lead-based paint inspection shall be made available to prospective purchasers as required in subpart A of this part.


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:1.1.1.1.23.4" TYPE="SUBPART">
<HEAD>Subpart D—Project-Based Assistance Provided by a Federal Agency Other Than HUD</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>64 FR 50209, Sept. 15, 1999, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 35.300" NODE="24:1.1.1.1.23.4.59.1" TYPE="SECTION">
<HEAD>§ 35.300   Purpose and applicability.</HEAD>
<P>The purpose of this subpart D is to establish procedures to eliminate as far as practicable lead-based paint hazards in a residential property that receives more than $5,000 annually per project in project-based assistance on or after September 15, 2000, under a program administered by a Federal agency other than HUD.


</P>
</DIV8>


<DIV8 N="§ 35.305" NODE="24:1.1.1.1.23.4.59.2" TYPE="SECTION">
<HEAD>§ 35.305   Definitions and other general requirements.</HEAD>
<P>Definitions and other general requirements that apply to this subpart are found in subpart B of this part.


</P>
</DIV8>


<DIV8 N="§ 35.310" NODE="24:1.1.1.1.23.4.59.3" TYPE="SECTION">
<HEAD>§ 35.310   Notices and pamphlet.</HEAD>
<P>(a) <I>Notice.</I> A notice of evaluation or hazard reduction shall be provided to the occupants in accordance with § 35.125.
</P>
<P>(b) <I>Lead hazard information pamphlet.</I> The owner shall provide the lead hazard information pamphlet in accordance with § 35.130.


</P>
</DIV8>


<DIV8 N="§ 35.315" NODE="24:1.1.1.1.23.4.59.4" TYPE="SECTION">
<HEAD>§ 35.315   Risk assessment.</HEAD>
<P>Each owner shall complete a risk assessment in accordance with 40 CFR 745.227(d). Each risk assessment shall be completed in accordance with the schedule established by the Federal agency.


</P>
</DIV8>


<DIV8 N="§ 35.320" NODE="24:1.1.1.1.23.4.59.5" TYPE="SECTION">
<HEAD>§ 35.320   Hazard reduction.</HEAD>
<P>Each owner shall conduct interim controls consistent with the findings of the risk assessment report. Hazard reduction shall be conducted in accordance with subpart R of this part.


</P>
</DIV8>


<DIV8 N="§ 35.325" NODE="24:1.1.1.1.23.4.59.6" TYPE="SECTION">
<HEAD>§ 35.325   Child with an elevated blood lead level.</HEAD>
<P>(a) If a child less than 6 years of age living in a federally assisted dwelling unit has an elevated blood lead level, the owner shall immediately conduct an environmental investigation. Interim controls of identified lead-based paint hazards shall be conducted in accordance with § 35.1330.
</P>
<P>(b) <I>Other assisted dwelling units in the property.</I> (1) If the environmental investigation conducted under paragraph (a) of this section identifies lead-based paint hazards, the owner shall conduct a risk assessment for other assisted dwelling units covered by this subpart in which a child under age 6 resides or is expected to reside on the date interim controls are complete, and for the common areas servicing those units. The risk assessments shall be conducted within 30 calendar days after receipt of the environmental investigation report on the index unit if there are 20 or fewer such units, or 60 calendar days for risk assessments if there are more than 20 such units. If the risk assessment identifies lead-based paint hazards, the owner shall control identified hazards in accordance with § 35.1325 or § 35.1330 in those units and common areas within 30 calendar days, or within 90 calendar days if more than 20 units have lead-based paint hazards such that the control work would disturb painted surfaces that total more than the de minimis threshold of § 35.1350(d).
</P>
<P>(2) The requirements for other assisted dwelling units covered by paragraph (b)(1) of this section do not apply if:
</P>
<P>(i) The owner both conducted a risk assessment of the other assisted dwelling units covered by paragraph (b)(1), and the common areas servicing those units, and conducted reduction of identified lead-based paint hazards in accordance with § 35.1325 or § 35.1330 between the date the child's blood was last sampled and the date the owner received the notification of the elevated blood lead level; or
</P>
<P>(ii) The owner provides the Federal agency documentation of compliance with evaluation, notification, lead disclosure, ongoing lead-based paint maintenance, and lead-based paint management requirements under this part throughout the 12 months preceding the date the owner received the environmental investigation report.
</P>
<P>(c) Interim controls are complete when clearance is achieved in accordance with § 35.1340.
</P>
<P>(d) The Federal agency shall establish a timetable for completing, and providing documentation to the agency on the environmental investigation, risk assessments, and lead-based paint hazard reduction when a child is identified as having an elevated blood lead level.
</P>
<CITA TYPE="N">[82 FR 4167, Jan. 13, 2017]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:1.1.1.1.23.5" TYPE="SUBPART">
<HEAD>Subpart E [Reserved]</HEAD>

</DIV6>


<DIV6 N="F" NODE="24:1.1.1.1.23.6" TYPE="SUBPART">
<HEAD>Subpart F—HUD-Owned Single Family Property</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>64 FR 50209, Sept. 15, 1999, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 35.500" NODE="24:1.1.1.1.23.6.59.1" TYPE="SECTION">
<HEAD>§ 35.500   Purpose and applicability.</HEAD>
<P>The purpose of this subpart F is to establish procedures to eliminate as far as practicable lead-based paint hazards in HUD-owned single family properties that have been built before 1978 and are sold with mortgages insured under a program administered by HUD. The requirements of this subpart apply to any such residential properties offered for sale on or after September 15, 2000.


</P>
</DIV8>


<DIV8 N="§ 35.505" NODE="24:1.1.1.1.23.6.59.2" TYPE="SECTION">
<HEAD>§ 35.505   Definitions and other general requirements.</HEAD>
<P>Definitions and other general requirements that apply to this subpart are found in subpart B of this part.


</P>
</DIV8>


<DIV8 N="§ 35.510" NODE="24:1.1.1.1.23.6.59.3" TYPE="SECTION">
<HEAD>§ 35.510   Required procedures.</HEAD>
<P>(a) The following activities shall be conducted for all properties to which this subpart is applicable:
</P>
<P>(1) A visual assessment of all painted surfaces in order to identify deteriorated paint;
</P>
<P>(2) Paint stabilization of all deteriorated paint in accordance with § 35.1330(a) and (b); and
</P>
<P>(3) Clearance in accordance with § 35.1340.
</P>
<P>(b) Occupancy shall not be permitted until all required paint stabilization is complete and clearance is achieved.
</P>
<P>(c) If paint stabilization and clearance are not completed before the closing of the sale, the Department shall assure that paint stabilization and clearance are carried out pursuant to subpart R of this part by the purchaser before occupancy.


</P>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:1.1.1.1.23.7" TYPE="SUBPART">
<HEAD>Subpart G—Multifamily Mortgage Insurance</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>64 FR 50209, Sept. 15, 1999, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 35.600" NODE="24:1.1.1.1.23.7.59.1" TYPE="SECTION">
<HEAD>§ 35.600   Purpose and applicability.</HEAD>
<P>The purpose of this subpart G is to establish procedures to eliminate as far as practicable lead-based paint hazards in a multifamily residential property for which HUD is the owner of the mortgage or the owner receives mortgage insurance, under a program administered by HUD.


</P>
</DIV8>


<DIV8 N="§ 35.605" NODE="24:1.1.1.1.23.7.59.2" TYPE="SECTION">
<HEAD>§ 35.605   Definitions and other general requirements.</HEAD>
<P>Definitions and other general requirements that apply to this subpart are found in subpart B of this part.


</P>
</DIV8>


<DIV8 N="§ 35.610" NODE="24:1.1.1.1.23.7.59.3" TYPE="SECTION">
<HEAD>§ 35.610   Exemption.</HEAD>
<P>An application for insurance in connection with a refinancing transaction where an appraisal is not required under the applicable procedures established by HUD is excluded from the coverage of this subpart.


</P>
</DIV8>


<DIV8 N="§ 35.615" NODE="24:1.1.1.1.23.7.59.4" TYPE="SECTION">
<HEAD>§ 35.615   Notices and pamphlet.</HEAD>
<P>(a) <I>Notice.</I> If evaluation or hazard reduction is undertaken, the sponsor shall provide a notice to occupants in accordance with § 35.125. A visual assessment alone is not considered an evaluation for the purposes of this part.
</P>
<P>(b) <I>Lead hazard information pamphlet.</I> The sponsor shall provide the lead hazard information pamphlet in accordance with § 35.130.
</P>
<CITA TYPE="N">[64 FR 50209, Sept. 15, 1999, as amended at 69 FR 34272, June 21, 2004]


</CITA>
</DIV8>


<DIV8 N="§ 35.620" NODE="24:1.1.1.1.23.7.59.5" TYPE="SECTION">
<HEAD>§ 35.620   Multifamily insured property constructed before 1960.</HEAD>
<P>Except as provided in § 35.630, the following requirements apply to multifamily insured property constructed before 1960:
</P>
<P>(a) <I>Risk assessment.</I> Before the issuance of a firm commitment the sponsor shall conduct a risk assessment in accordance with § 35.1320(b).
</P>
<P>(b) <I>Interim controls.</I> (1) The sponsor shall conduct interim controls in accordance with § 35.1330 to treat the lead-based paint hazards identified in the risk assessment. Interim controls are considered completed when clearance is achieved in accordance with § 35.1340.
</P>
<P>(2) The sponsor shall complete interim controls before the issuance of the firm commitment or interim controls may be made a condition of the Federal Housing Administration (FHA) firm commitment, with sufficient repair or rehabilitation funds escrowed at initial endorsement of the FHA insured loan.
</P>
<P>(c) <I>Ongoing lead-based paint maintenance activities.</I> Before the issuance of the firm commitment, the sponsor shall agree to incorporate ongoing lead-based paint maintenance into regular building operations and maintenance activities in accordance with § 35.1355(a).


</P>
</DIV8>


<DIV8 N="§ 35.625" NODE="24:1.1.1.1.23.7.59.6" TYPE="SECTION">
<HEAD>§ 35.625   Multifamily insured property constructed after 1959 and before 1978.</HEAD>
<P>Except as provided in § 35.630, before the issuance of the firm commitment, the sponsor shall agree to incorporate ongoing lead-based paint maintenance practices into regular building operations, in accordance with § 35.1355(a).


</P>
</DIV8>


<DIV8 N="§ 35.630" NODE="24:1.1.1.1.23.7.59.7" TYPE="SECTION">
<HEAD>§ 35.630   Conversions and major rehabilitations.</HEAD>
<P>The procedures and requirements of this section apply when a nonresidential property constructed before 1978 is to be converted to residential use, or a residential property constructed before 1978 is to undergo rehabilitation that is estimated to cost more than 50 percent of the estimated replacement cost after rehabilitation.
</P>
<P>(a) <I>Lead-based paint inspection.</I> Before issuance of a firm FHA commitment, the sponsor shall conduct a lead-based paint inspection in accordance with § 35.1320(a).
</P>
<P>(b) <I>Abatement.</I> Prior to occupancy, the sponsor shall conduct abatement of all lead-based paint on the property in accordance with § 35.1325. Whenever practicable, abatement shall be achieved through the methods of paint removal or component replacement. If paint removal or component replacement are not practicable, that is if such methods would damage substrate material considered architecturally significant, permanent encapsulation or enclosure may be used as methods of abatement. Abatement is considered complete when clearance is achieved in accordance with § 35.1340. If encapsulation or enclosure is used, the sponsor shall incorporate ongoing lead-based paint maintenance into regular building operations maintenance activities in accordance with § 35.1355.
</P>
<P>(c) <I>Historic properties.</I> Section 35.115(a)(13) applies to this section.


</P>
</DIV8>

</DIV6>


<DIV6 N="H" NODE="24:1.1.1.1.23.8" TYPE="SUBPART">
<HEAD>Subpart H—Project-Based Assistance</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>64 FR 50210, Sept. 15, 1999, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 35.700" NODE="24:1.1.1.1.23.8.59.1" TYPE="SECTION">
<HEAD>§ 35.700   Purpose and applicability.</HEAD>
<P>(a) This subpart H establishes procedures to eliminate as far as practicable lead-based paint hazards in residential properties receiving project-based assistance under a HUD program. The requirements of this subpart apply only to the assisted dwelling units in a covered property and any common areas servicing those dwelling units. This subpart does not apply to housing receiving rehabilitation assistance or to public housing, which are covered by subparts J and M of this part, respectively.
</P>
<P>(b) For the purposes of competitively awarded grants under the Housing Opportunities for Persons with AIDS Program (HOPWA), the Supportive Housing Program (42 U.S.C. 11381-11389) and the Shelter Plus Care Program project-based rental assistance and sponsor-based rental assistance components (42 U.S.C. 11402-11407), the requirements of this subpart shall apply to grants awarded pursuant to Notices of Funding Availability published on or after October 1, 1999. For the purposes of formula grants awarded under the Housing Opportunities for Persons with AIDS Program (HOPWA) (42 U.S.C. 12901 <I>et seq.</I>), the requirements of this subpart shall apply to activities for which program funds are first obligated on or after September 15, 2000.


</P>
</DIV8>


<DIV8 N="§ 35.705" NODE="24:1.1.1.1.23.8.59.2" TYPE="SECTION">
<HEAD>§ 35.705   Definitions and other general requirements.</HEAD>
<P>Definitions and other general requirements that apply to this subpart are found in subpart B of this part.


</P>
</DIV8>


<DIV8 N="§ 35.710" NODE="24:1.1.1.1.23.8.59.3" TYPE="SECTION">
<HEAD>§ 35.710   Notices and pamphlet.</HEAD>
<P>(a) <I>Notice.</I> If evaluation or hazard reduction is undertaken, each owner shall provide a notice to occupants in accordance with § 35.125. A visual assessment alone is not considered an evaluation for the purposes of this part.
</P>
<P>(b) <I>Lead hazard information pamphlet.</I> The owner shall provide the lead hazard information pamphlet in accordance with § 35.130.
</P>
<CITA TYPE="N">[64 FR 50210, Sept. 15, 1999, as amended at 69 FR 34272, June 21, 2004]


</CITA>
</DIV8>


<DIV8 N="§ 35.715" NODE="24:1.1.1.1.23.8.59.4" TYPE="SECTION">
<HEAD>§ 35.715   Multifamily properties receiving more than $5,000 per unit.</HEAD>
<P>The requirements of this section shall apply to a multifamily residential property that is receiving an average of more than $5,000 per assisted dwelling unit annually in project-based assistance.
</P>
<P>(a) <I>Risk assessment.</I> Each owner shall complete a risk assessment in accordance with § 35.1320(b). A risk assessment is considered complete when the owner receives the risk assessment report. Until the owner conducts a risk assessment as required by this section, the requirements of paragraph (d) of this section shall apply. After the risk assessment has been conducted the requirements of paragraphs (b) and (c) of this section shall apply. Each risk assessment shall be completed no later than the following schedule or a schedule otherwise determined by HUD:
</P>
<P>(1) Risk assessments shall be completed on or before September 17, 2001, in a multifamily residential property constructed before 1960.
</P>
<P>(2) Risk assessments shall be completed on or before September 15, 2003, in a multifamily residential property constructed after 1959 and before 1978.
</P>
<P>(b) <I>Interim controls.</I> Each owner shall conduct interim controls in accordance with § 35.1330 to treat the lead-based paint hazards identified in the risk assessment. Interim controls are considered completed when clearance is achieved in accordance with § 35.1340. Interim controls shall be completed no later than the following schedule:
</P>
<P>(1) In units occupied by families with children of less than 6 years of age and in common areas servicing those units, interim controls shall be completed no later than 90 days after the completion of the risk assessment. In units in which a child of less than 6 years of age moves in after the completion of the risk assessment, interim controls shall be completed no later than 90 days after the move-in.
</P>
<P>(2) In all other dwelling units, common areas, and the remaining portions of the residential property, interim controls shall be completed no later than 12 months after completion of the risk assessment for those units.
</P>
<P>(c) <I>Ongoing lead-based paint maintenance and reevaluation activities.</I> Effective immediately after completion of the risk assessment required in § 35.715(a), the owner shall incorporate ongoing lead-based paint maintenance and reevaluation into the regular building operations in accordance with § 35.1355, unless all lead-based paint has been removed. If the reevaluation identifies new lead-based paint hazards, the owner shall conduct interim controls in accordance with § 35.1330.
</P>
<P>(d) <I>Transitional requirements</I>—(1) <I>Effective date.</I> The requirements of this paragraph shall apply effective September 15, 2000, and continuing until the applicable date specified in § 35.715(a) (1) or (2) or until the owner conducts a risk assessment, whichever is first.
</P>
<P>(2) Definitions and other general requirements that apply to this paragraph are found in subpart B of this part.
</P>
<P>(3) <I>Ongoing lead-based paint maintenance.</I> The owner shall incorporate ongoing lead-based paint maintenance activities into regular building operations, in accordance with § 35.1355(a), except that clearance is not required.
</P>
<P>(e) <I>Child with an elevated blood lead level.</I> If a child of less than 6 years of age living in a dwelling unit covered by this paragraph has an elevated blood lead level, the owner shall comply with the requirements of § 35.730.
</P>
<CITA TYPE="N">[64 FR 50210, Sept. 15, 1999, as amended at 82 FR 4167, Jan. 13, 2017]


</CITA>
</DIV8>


<DIV8 N="§ 35.720" NODE="24:1.1.1.1.23.8.59.5" TYPE="SECTION">
<HEAD>§ 35.720   Multifamily properties receiving up to $5,000 per unit, and single family properties.</HEAD>
<P>Effective September 15, 2000, the requirements of this section shall apply to a multifamily residential property that is receiving an average of up to and including $5,000 per assisted dwelling unit annually in project-based assistance and to a single family residential property that is receiving project-based assistance through the Section 8 Moderate Rehabilitation program, the Project-Based Certificate program, or any other HUD program providing project-based assistance.
</P>
<P>(a) <I>Activities at initial and periodic inspection</I>—(1) <I>Visual assessment.</I> During the initial and periodic inspections, an inspector trained in visual assessment for deteriorated paint surfaces in accordance with procedures established by HUD shall conduct a visual assessment of all painted surfaces in order to identify any deteriorated paint.
</P>
<P>(2) <I>Paint stabilization.</I> The owner shall stabilize each deteriorated paint surface in accordance with § 35.1330(a) and § 35.1330(b) before occupancy of a vacant dwelling unit or, where a unit is occupied, within 30 days of notification of the results of the visual assessment. Paint stabilization is considered complete when clearance is achieved in accordance with § 35.1340.
</P>
<P>(3) <I>Notice.</I> The owner shall provide a notice to occupants in accordance with § 35.125(b) (1) and (c) describing the results of the clearance examination.
</P>
<P>(b) <I>Ongoing lead-based paint maintenance activities.</I> The owner shall incorporate ongoing lead-based paint maintenance activities into regular building operations in accordance with § 35.1355(a), unless all lead-based paint has been removed.
</P>
<P>(c) <I>Child with an elevated blood lead level.</I> If a child of less than 6 years of age living in a dwelling unit covered by this section has an elevated blood lead level, the owner shall comply with the requirements of § 35.730.
</P>
<CITA TYPE="N">[64 FR 50210, Sept. 15, 1999, as amended at 82 FR 4167, Jan. 13, 2017]


</CITA>
</DIV8>


<DIV8 N="§ 35.725" NODE="24:1.1.1.1.23.8.59.6" TYPE="SECTION">
<HEAD>§ 35.725   Section 8 Rent adjustments.</HEAD>
<P>HUD may, subject to the availability of appropriations for Section 8 contract amendments, on a project by project basis for projects receiving Section 8 project-based assistance, provide adjustments to the maximum monthly rents to cover the costs of evaluation for and reduction of lead-based paint hazards, as defined in section 1004 of the Residential Lead-Based Paint Hazard Reduction Act of 1992.


</P>
</DIV8>


<DIV8 N="§ 35.730" NODE="24:1.1.1.1.23.8.59.7" TYPE="SECTION">
<HEAD>§ 35.730   Child with an elevated blood lead level.</HEAD>
<P>(a) <I>Environmental investigation.</I> Within 15 calendar days after being notified by a public health department or other medical health care provider that a child of less than 6 years of age living in a dwelling unit to which this subpart applies has been identified as having an elevated blood lead level, the owner shall complete an environmental investigation of the dwelling unit in which the child lived at the time the blood was last sampled and of common areas servicing the dwelling unit. The requirements of this paragraph apply regardless of whether the child is or is not still living in the unit when the owner receives the notification of the elevated blood lead level. The requirements of this paragraph shall not apply if the owner conducted an environmental investigation of the unit and common areas servicing the unit between the date the child's blood was last sampled and the date when the owner received the notification of the elevated blood lead level. If the owner conducted a risk assessment of the unit and common areas servicing the unit during that period, the owner need not conduct another risk assessment there but shall conduct the elements of an environmental investigation not already conducted during the risk assessment. If a public health department has already conducted an evaluation of the dwelling unit in regard to the child's elevated blood lead level case, the requirements of this paragraph shall not apply.
</P>
<P>(b) <I>Verification.</I> After receiving information from a person who is not a medical health care provider that a child of less than 6 years of age living in a dwelling unit covered by this subpart may have an elevated blood lead level, the owner shall immediately verify the information with the public health department or other medical health care provider. If the public health department or provider denies the request, such as because it does not have the capacity to verify that information, the owner shall send documentation of the denial to the HUD rental assistance program manager, who shall make an effort to verify the information. If the public health department or provider verifies that the child has an elevated blood lead level, such verification shall constitute notification, and the owner shall take the action required in paragraphs (a) and (c) of this section.
</P>
<P>(c) <I>Lead-based paint hazard reduction.</I> Within 30 calendar days after receiving the report of the environmental investigation conducted pursuant to paragraph (a) of this section or the evaluation from the public health department, the owner shall complete the reduction of identified lead-based paint hazards in accordance with § 35.1325 or § 35.1330. Lead-based paint hazard reduction is considered complete when clearance is achieved in accordance with § 35.1340 and the clearance report states that all lead-based paint hazards identified in the environmental investigation have been treated with interim controls or abatement or the public health department certifies that the lead-based paint hazard reduction is complete. The requirements of this paragraph do not apply if the owner, between the date the child's blood was last sampled and the date the owner received the notification of the elevated blood lead level, already conducted an environmental investigation of the unit and common areas servicing the unit and completed reduction of identified lead-based paint hazards. If the owner conducted a risk assessment of the unit and common areas servicing the unit during that period, the owner is not required to conduct another risk assessment there but shall conduct the elements of an environmental investigation not already conducted during the risk assessment.
</P>
<P>(d) If an environmental investigation or lead-based paint hazard evaluation or reduction is undertaken, each owner shall provide notice to occupants in accordance with § 35.125.
</P>
<P>(e) <I>Reporting requirement.</I> (1) The owner shall report the name and address of a child identified as having an elevated blood lead level to the public health department within 5 business days of being so notified by any other medical health care professional.
</P>
<P>(2) The owner shall also report each confirmed case of a child with an elevated blood lead level to the HUD field office and HUD Office of Lead Hazard Control and Healthy Homes within 5 business days of being so notified.
</P>
<P>(3) The owner shall provide to the HUD field office documentation that the designated party has conducted the activities of paragraphs (a) through (d) of this section, within 10 business days of the deadline for each activity.
</P>
<P>(f) <I>Other assisted dwelling units in the property.</I> (1) If the environmental investigation conducted pursuant to paragraph (a) of this section identifies lead-based paint hazards, the owner shall, for other assisted dwelling units covered by this part in which a child under age 6 resides or is expected to reside on the date lead-based paint hazard reduction under paragraph (c) of this section is complete, and for the common areas servicing those units, conduct a risk assessment within 30 calendar days after receipt of the environmental investigation report if there are 20 or fewer such other units, or 60 calendar days if there are more than 20 such other units.
</P>
<P>(2) <I>Control measures.</I> If the risk assessment conducted under paragraph (f)(1) of this section identifies lead-based paint hazards, the owner shall complete the reduction of identified lead-based paint hazards in accordance with § 35.1325 or § 35.1330 in those units and common areas within 30 calendar days, or within 90 calendar days if more than 20 units have lead-based paint hazards such that the control work would disturb painted surfaces that total more than the de minimis threshold of § 35.1350(d). Lead-based paint hazard reduction is considered complete when clearance is achieved in accordance with § 35.1340 and the clearance report states that all lead-based paint hazards identified in the risk assessment have been treated with interim controls or abatement.
</P>
<P>(3) The owner shall provide to the HUD field office documentation that the designated party has conducted the activities of paragraph (f)(1) and (f)(2) of this section, within 10 business days of the deadline for each activity.
</P>
<P>(4) The requirements of this paragraph (f) do not apply if:
</P>
<P>(i) The owner both conducted a risk assessment of the other assisted dwelling units covered by paragraph (f)(1) of this section and the common areas servicing those units, and conducted reduction of identified lead-based paint hazards in accordance with § 35.1325 or § 35.1330 between the date the child's blood was last sampled and the date the owner received the notification of the elevated blood lead level; or
</P>
<P>(ii) The owner has documentation of compliance with evaluation, notification, lead disclosure, ongoing lead-based paint maintenance, and lead-based paint management requirements under this part throughout the 12 months preceding the date the owner received the environmental investigation report pursuant to paragraph (a) of this section; and
</P>
<P>(iii) In either case, the owner provides to the HUD field office documentation that it has conducted the activities of paragraphs (f)(4)(i) and (ii) of this section, within 10 business days of the deadline for each activity.
</P>
<CITA TYPE="N">[82 FR 4167, Jan. 13, 2017]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="I" NODE="24:1.1.1.1.23.9" TYPE="SUBPART">
<HEAD>Subpart I—HUD-Owned and Mortgagee-in-Possession Multifamily Property</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>64 FR 50211, Sept. 15, 1999, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 35.800" NODE="24:1.1.1.1.23.9.59.1" TYPE="SECTION">
<HEAD>§ 35.800   Purpose and applicability.</HEAD>
<P>The purpose of this subpart I is to establish procedures to eliminate as far as practicable lead-based paint hazards in a HUD-owned multifamily residential property or a multifamily residential property for which HUD is identified as mortgagee-in-possession. The requirements of this subpart apply to any such property that is offered for sale or held or managed on or after September 15, 2000.


</P>
</DIV8>


<DIV8 N="§ 35.805" NODE="24:1.1.1.1.23.9.59.2" TYPE="SECTION">
<HEAD>§ 35.805   Definitions and other general requirements.</HEAD>
<P>Definitions and other general requirements that apply to this subpart are found in subpart B of this part.


</P>
</DIV8>


<DIV8 N="§ 35.810" NODE="24:1.1.1.1.23.9.59.3" TYPE="SECTION">
<HEAD>§ 35.810   Notices and pamphlet.</HEAD>
<P>(a) <I>Notices.</I> When evaluation or hazard reduction is undertaken, the Department shall provide a notice to occupants in accordance with § 35.125. A visual assessment alone is not considered an evaluation for the purposes of this part.
</P>
<P>(b) <I>Lead hazard information pamphlet.</I> HUD shall provide the lead hazard information pamphlet in accordance with § 35.130.
</P>
<CITA TYPE="N">[64 FR 50211, Sept. 15, 1999, as amended at 69 FR 34272, June 21, 2004]


</CITA>
</DIV8>


<DIV8 N="§ 35.815" NODE="24:1.1.1.1.23.9.59.4" TYPE="SECTION">
<HEAD>§ 35.815   Evaluation.</HEAD>
<P>HUD shall conduct a risk assessment and a lead-based paint inspection in accordance with § 35.1320(a) and (b). For properties to which this subpart applies on September 15, 2000, the lead-based paint inspection and risk assessment shall be conducted no later than December 15, 2000, or before publicly advertising the property for sale, whichever is sooner. For properties to which this subpart becomes applicable after September 15, 2000, the lead-based paint inspection and risk assessment shall be conducted no later than 90 days after this subpart becomes applicable or before publicly advertising the property for sale, whichever is sooner.


</P>
</DIV8>


<DIV8 N="§ 35.820" NODE="24:1.1.1.1.23.9.59.5" TYPE="SECTION">
<HEAD>§ 35.820   Interim controls.</HEAD>
<P>HUD shall conduct interim controls in accordance with § 35.1330 to treat the lead-based paint hazards identified in the evaluation conducted in accordance with § 35.815. Interim controls are considered completed when clearance is achieved in accordance with § 35.1340. Interim controls of all lead-based paint hazards shall be completed no later than the following schedule:
</P>
<P>(a) In units occupied by families with children of less than 6 years of age and in common areas servicing those units, interim controls shall be completed no later than 90 days after the completion of the risk assessment. In units in which a child of less than 6 years of age moves in after the completion of the risk assessment, interim controls shall be completed no later than 90 days after the move-in.
</P>
<P>(b) In all other dwelling units, common areas, and the remaining portions of the residential property, interim controls shall be completed no later than 12 months after completion of the risk assessment for those units.
</P>
<P>(c) If conveyance of the title by HUD at a sale of a HUD-owned property or a foreclosure sale caused by HUD when HUD is mortgagee-in-possession occurs before the schedule in paragraphs (a) and (b) of this section, HUD shall complete interim controls before conveyance or foreclosure, or HUD shall be responsible for assuring that interim controls are carried out by the purchaser. If interim controls are made a condition of sale, such controls shall be completed according to the following schedule:
</P>
<P>(1) In units occupied by families with children of less than 6 years of age and in common areas servicing those units, interim controls shall be completed no later than 90 days after the date of the closing of the sale. In units in which a child of less than 6 years of age moves in after the closing of the sale, interim controls shall be completed no later than 90 days after the move-in.
</P>
<P>(2) In all other dwelling units, in common areas servicing those units, and in the remaining portions of the residential property, interim controls shall be completed no later than 180 days after the closing of the sale.


</P>
</DIV8>


<DIV8 N="§ 35.825" NODE="24:1.1.1.1.23.9.59.6" TYPE="SECTION">
<HEAD>§ 35.825   Ongoing lead-based paint maintenance and reevaluation.</HEAD>
<P>HUD shall incorporate ongoing lead-based paint maintenance and reevaluation, in accordance with § 35.1355, into regular building operations if HUD retains ownership of the residential property for more than 12 months.


</P>
</DIV8>


<DIV8 N="§ 35.830" NODE="24:1.1.1.1.23.9.59.7" TYPE="SECTION">
<HEAD>§ 35.830   Child with an elevated blood lead level.</HEAD>
<P>(a) <I>Environmental investigation.</I> Within 15 calendar days after being notified by a public health department or other medical health care provider that a child of less than 6 years of age living in a dwelling unit owned by HUD (or where HUD is mortgagee-in-possession) has been identified as having an elevated blood lead level, HUD shall complete an environmental investigation of the dwelling unit in which the child lived at the time the blood was last sampled and of common areas servicing the dwelling unit. The requirements of this paragraph apply regardless of whether the child is or is not still living in the unit when HUD receives the notification of the elevated blood lead level. The requirements of this paragraph shall not apply if HUD conducted an environmental investigation of the unit and common areas servicing the unit between the date the child's blood was last sampled and the date when HUD received the notification of the elevated blood lead level. If HUD conducted a risk assessment of the unit and common areas servicing the unit during that period, HUD is not required to conduct another risk assessment there but it shall conduct the elements of an environmental investigation not already conducted during the risk assessment. If a public health department has already conducted an evaluation of the dwelling unit in regard to the child's elevated blood lead level case, the requirements of this paragraph shall not apply.
</P>
<P>(b) <I>Verification.</I> After receiving information from a person who is not a medical health care provider that a child of less than 6 years of age living in a dwelling unit covered by this subpart may have an elevated blood lead level, HUD shall immediately verify the information with the public health department or other medical health care provider. If the public health department or provider denies the request, such as because it does not have the capacity to verify that information, the HUD Realty Specialist assigned to that property shall send documentation of the denial to the HUD Office of Lead Hazard Control and Healthy Homes, which shall make an effort to verify the information. If the public health department or provider verifies that the child has an elevated blood lead level, such verification shall constitute notification, and HUD shall take the action required in paragraphs (a) and (c) of this section.
</P>
<P>(c) <I>Lead-based paint hazard reduction.</I> Within 30 calendar days after receiving the report of the environmental investigation conducted pursuant to paragraph (a) of this section or the evaluation from the public health department, HUD shall complete the reduction of identified lead-based paint hazards in accordance with § 35.1325 or § 35.1330. Lead-based paint hazard reduction is considered complete when clearance is achieved in accordance with § 35.1340 and the clearance report states that all lead-based paint hazards identified in the environmental investigation have been treated with interim controls or abatement or the public health department certifies that the lead-based paint hazard reduction is complete. The requirements of this paragraph do not apply if HUD, between the date the child's blood was last sampled and the date HUD received the notification of the elevated blood lead level, already conducted an environmental investigation of the unit and common areas servicing the unit and completed reduction of identified lead-based paint hazards. If HUD conducted a risk assessment of the unit and common areas servicing the unit during that period, it is not required to conduct another risk assessment there but it shall conduct the elements of an environmental investigation not already conducted during the risk assessment.
</P>
<P>(d) <I>Notice.</I> If lead-based paint hazard evaluation or reduction is undertaken, each owner shall provide a notice to occupants in accordance with § 35.125.
</P>
<P>(e) <I>Reporting requirement.</I> (1) HUD shall report the name and address of a child identified as having an elevated blood lead level to the public health department within 5 business days of being so notified by any other medical health care professional.
</P>
<P>(2) HUD shall also report each confirmed case of a child with an elevated blood lead level to the HUD Office of Lead Hazard Control and Healthy Homes within 5 business days of being so notified.
</P>
<P>(3) HUD shall provide to the HUD Office of Lead Hazard Control and Healthy Homes documentation that it has conducted the activities of paragraphs (a) through (d) of this section, within 10 business days of the deadline for each activity.
</P>
<P>(f) <I>Other assisted dwelling units in the property.</I> (1) If the environmental investigation conducted pursuant to paragraph (a) of this section identifies lead-based paint hazards, HUD shall, for other assisted dwelling units covered by this part in which a child under age 6 resides or is expected to reside on the date lead-based paint hazard reduction under paragraph (c) of this section, and the common areas servicing those units, is complete, conduct a risk assessment in accordance with § 35.815 within 30 calendar days after receipt of the environmental investigation report if there are 20 or fewer such other units, or 60 calendar days if there are more than 20 such other units.
</P>
<P>(2) If the risk assessment conducted under paragraph (f)(1) of this section identifies lead-based paint hazards, HUD shall complete the reduction of identified lead-based paint hazards in accordance with § 35.1325 or § 35.1330 in those units and common areas within 30 calendar days, or within 90 calendar days if more than 20 units have lead-based paint hazards such that the control work would disturb painted surfaces that total more than the de minimis threshold of § 35.1350(d). Lead-based paint hazard reduction is considered complete when clearance is achieved in accordance with § 35.1340 and the clearance report states that all lead-based paint hazards identified in the risk assessment have been treated with interim controls or abatement.
</P>
<P>(3) The requirements of this paragraph (f) do not apply if:
</P>
<P>(i) HUD, between the date the child's blood was last sampled and the date HUD received the notification of the elevated blood lead level, both conducted a risk assessment in the other assisted dwelling units covered by paragraph (f)(1) of this section and the common areas servicing those units, and conducted interim controls of identified lead-based paint hazards in accordance with § 35.820; or
</P>
<P>(ii) HUD has documentation of compliance with evaluation, notification, lead disclosure, ongoing lead-based paint maintenance, and lead-based paint management requirements under this part throughout the 12 months preceding the date HUD received the environmental investigation report pursuant to paragraph (a) of this section.
</P>
<P>(4) HUD shall provide to the HUD Office of Lead Hazard Control and Healthy Homes documentation that it has conducted the activities of paragraph (f)(1) through (2) of this section, or that it has complied with the requirements in paragraph (f)(3) of this section, within 10 business days of the deadline for each activity.
</P>
<P>(g) <I>Closing.</I> If the closing of a sale is scheduled during the period when HUD is responding to a case of a child with an elevated blood lead level, HUD may arrange for the completion of the procedures required by paragraphs (a) through (d) of this section by the purchaser within a reasonable period of time.
</P>
<P>(h) <I>Extensions.</I> The Assistant Secretary for Housing-Federal Housing Commissioner or designee may consider and approve a request for an extension of deadlines established by this section for lead-based paint inspection, risk assessment, environmental investigation, lead-based paint hazard reduction, clearance, and reporting. Such a request may be considered, however, only during the first six months during which HUD is owner or mortgagee-in-possession of a multifamily property.
</P>
<CITA TYPE="N">[82 FR 4168, Jan. 13, 2017]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="J" NODE="24:1.1.1.1.23.10" TYPE="SUBPART">
<HEAD>Subpart J—Rehabilitation</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>64 FR 50212, Sept. 15, 1999, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 35.900" NODE="24:1.1.1.1.23.10.59.1" TYPE="SECTION">
<HEAD>§ 35.900   Purpose and applicability.</HEAD>
<P>(a) <I>Purpose and applicability.</I> (1) The purpose of this subpart J is to establish procedures to eliminate as far as practicable lead-based paint hazards in a residential property that receives Federal rehabilitation assistance under a program administered by HUD. Rehabilitation assistance does not include project-based rental assistance, rehabilitation mortgage insurance or assistance to public housing.
</P>
<P>(2) The requirements of this subpart shall not apply to HOME funds which are committed to a specific project in accordance with § 92.2 of this title before September 15, 2000. Such projects shall be subject to the requirements of § 92.355 of this title that were in effect at the time of project commitment or the requirements of this subpart.
</P>
<P>(3) For the purposes of the Indian Housing Block Grant program and the CDBG Entitlement program, the requirements of this subpart shall apply to all residential rehabilitation activities (except those otherwise exempted) for which funds are first obligated on or after September 15, 2000. For the purposes of the State, HUD-Administered Small Cities, and Insular Areas CDBG programs, the requirements of this subpart shall apply to all covered activities (except those otherwise exempted) for which grant funding is awarded to the unit of local government by the State or HUD, as applicable, on or after September 15, 2000. For the purposes of the Emergency Shelter Grant Program (42 U.S.C. 11371-11378) and the formula grants awarded under the Housing Opportunities for Persons with AIDS Program (HOPWA) (42 U.S.C. 12901 <I>et. seq.</I>), the requirements of this subpart shall apply to activities for which program funds are first obligated on or after September 15, 2000.
</P>
<P>(4) For the purposes of competitively awarded grants under the HOPWA Program and the Supportive Housing Program (42 U.S.C. 11481-11389), the requirements of this subpart shall apply to grants awarded under Notices of Funding Availability published on or after September 15, 2000.
</P>
<P>(5) For the purposes of the Indian CDBG program (§ 1003.607 of this title), the requirements of this subpart shall not apply to funds whose notice of funding availability is announced or funding letter is sent before September 15, 2000. Such project grantees shall be subject to the regulations in effect at the time of announcement or funding letter.
</P>
<P>(b) The grantee or participating jurisdiction may assign to a subrecipient or other entity the responsibilities set forth in this subpart.


</P>
</DIV8>


<DIV8 N="§ 35.905" NODE="24:1.1.1.1.23.10.59.2" TYPE="SECTION">
<HEAD>§ 35.905   Definitions and other general requirements.</HEAD>
<P>Definitions and other general requirements that apply to this subpart are found in subpart B of this part.


</P>
</DIV8>


<DIV8 N="§ 35.910" NODE="24:1.1.1.1.23.10.59.3" TYPE="SECTION">
<HEAD>§ 35.910   Notices and pamphlet.</HEAD>
<P>(a) <I>Notices.</I> In cases where evaluation or hazard reduction or both are undertaken as part of federally funded rehabilitation, the grantee or participating jurisdiction shall provide a notice to occupants in accordance with § 35.125. A visual assessment alone is not considered an evaluation for the purposes of this part.
</P>
<P>(b) <I>Lead hazard information pamphlet.</I> The grantee or participating jurisdiction shall provide the lead hazard information pamphlet in accordance with § 35.130.
</P>
<CITA TYPE="N">[69 FR 34272, June 21, 2004]


</CITA>
</DIV8>


<DIV8 N="§ 35.915" NODE="24:1.1.1.1.23.10.59.4" TYPE="SECTION">
<HEAD>§ 35.915   Calculating Federal rehabilitation assistance.</HEAD>
<P>(a) <I>Applicability.</I> This section applies to recipients of Federal rehabilitation assistance.
</P>
<P>(b) <I>Rehabilitation assistance.</I> (1) Lead-based paint requirements for rehabilitation fall into three categories that depend on the amount of Federal rehabilitation assistance provided. The three categories are:
</P>
<P>(i) Assistance of up to and including $5,000 per unit;
</P>
<P>(ii) Assistance of more than $5,000 per unit up to and including $25,000 per unit; and
</P>
<P>(iii) Assistance of more than $25,000 per unit.
</P>
<P>(2) For purposes of implementing §§ 35.930 and 35.935, the amount of rehabilitation assistance is the lesser of two amounts: the average Federal assistance per assisted dwelling unit and the average per unit hard costs of rehabilitation. Federal assistance includes all Federal funds assisting the project, regardless of the use of the funds. Federal funds being used for acquisition of the property are to be included as well as funds for construction, permits, fees, and other project costs. The hard costs of rehabilitation include all hard costs, regardless of source, except that the costs of lead-based paint hazard evaluation and hazard reduction activities are not to be included. Costs of site preparation, occupant protection, relocation, interim controls, abatement, clearance, and waste handling attributable to compliance with the requirements of this part are not to be included in the hard costs of rehabilitation. All other hard costs are to be included, regardless of whether the source of funds is Federal or non-Federal, public or private.
</P>
<P>(c) <I>Calculating rehabilitation assistance in properties with both assisted and unassisted dwelling units.</I> For a residential property that includes both federally assisted and non-assisted units, the rehabilitation costs and Federal assistance associated with non-assisted units are not included in the calculations of the average per unit hard costs of rehabilitation and the average Federal assistance per unit.
</P>
<P>(1) The average per unit hard costs of rehabilitation for the assisted units is calculated using the following formula:
</P>
<FP-2>Per Unit Hard Costs of Rehabilitation $ = (a/c) + (b/d) 
</FP-2>
<EXTRACT>
<FP>Where: 
</FP>
<FP-2>a = Rehabilitation hard costs for all assisted units (not including common areas and exterior surfaces) 
</FP-2>
<FP-2>b = Rehabilitation hard costs for common areas and exterior painted surfaces 
</FP-2>
<FP-2>c = Number of federally assisted units 
</FP-2>
<FP-2>d = Total number of units</FP-2></EXTRACT>
<P>(2) The average Federal assistance per assisted dwelling unit is calculated using the following formula: 
</P>
<FP-2>Per unit Federal assistance = e/c
</FP-2>
<EXTRACT>
<FP>Where: 
</FP>
<FP-2>e = Total Federal assistance for the project 
</FP-2>
<FP-2>c = Number of federally assisted units</FP-2></EXTRACT>
<CITA TYPE="N">[69 FR 34272, June 21, 2004]


</CITA>
</DIV8>


<DIV8 N="§ 35.920" NODE="24:1.1.1.1.23.10.59.5" TYPE="SECTION">
<HEAD>§ 35.920   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 35.925" NODE="24:1.1.1.1.23.10.59.6" TYPE="SECTION">
<HEAD>§ 35.925   Examples of determining applicable requirements.</HEAD>
<P>The following examples illustrate how to determine whether the requirements of § 35.930(b), (c), or (d) apply to a dwelling unit receiving Federal rehabilitation assistance (dollar amounts are on a per unit basis):
</P>
<P>(a) If the total amount of Federal assistance for a dwelling is $2,000, and the hard costs of rehabilitation are $10,000, the lead-based paint requirements would be those described in § 35.930(b), because Federal rehabilitation assistance is up to and including $5,000.
</P>
<P>(b) If the total amount of Federal assistance for a dwelling unit is $6,000, and the hard costs of rehabilitation are $2,000, the lead-based paint requirements would be those described in § 35.930(b). Although the total amount of Federal dollars is more than $5,000, only the $2,000 of that total can be applied to rehabilitation. Therefore, the Federal rehabilitation assistance is $2,000 which is not more than $5,000.
</P>
<P>(c) If the total amount of Federal assistance for a unit is $6,000, and the hard costs of rehabilitation are $6,000, the lead-based paint requirements are those described in § 35.930(c), because the amount of Federal rehabilitation assistance is more than $5,000 but not more than $25,000.
</P>
<P>(d) If eight dwelling units in a residential property receive Federal rehabilitation assistance [symbol c in § 35.915(c)(2)] out of a total of 10 dwelling units [d], the total Federal assistance for the rehabilitation project is $300,000 [e], the total hard costs of rehabilitation for the dwelling units are $160,000 [a], and the total hard costs of rehabilitation for the common areas and exterior surfaces are $20,000 [b], then the lead-based paint requirements would be those described in § 35.930(c), because the level of Federal rehabilitation assistance is $22,000, which is not greater than $25,000. This is calculated as follows: The total Federal assistance per assisted unit is $37,500 (e/c = $300,000/8), the per unit hard costs of rehabilitation is $22,000 (a/c + b/d = $160,000/8 + $20,000/10), and the level of Federal rehabilitation assistance is the lesser of $37,500 and $22,000.
</P>
<CITA TYPE="N">[64 FR 50212, Sept. 15, 1999, as amended at 69 FR 34272, June 21, 2004]


</CITA>
</DIV8>


<DIV8 N="§ 35.930" NODE="24:1.1.1.1.23.10.59.7" TYPE="SECTION">
<HEAD>§ 35.930   Evaluation and hazard reduction requirements.</HEAD>
<P>(a) <I>Paint testing.</I> The grantee or participating jurisdiction shall either perform paint testing on the painted surfaces to be disturbed or replaced during rehabilitation activities, or presume that all these painted surfaces are coated with lead-based paint.
</P>
<P>(b) <I>Residential property receiving an average of up to and including $5,000 per unit in Federal rehabilitation assistance.</I> Each grantee or participating jurisdiction shall:
</P>
<P>(1) Conduct paint testing or presume the presence of lead-based paint, in accordance with paragraph (a) of this section. If paint testing indicates that the painted surfaces are not coated with lead-based paint, safe work practices and clearance are not required.
</P>
<P>(2) Implement safe work practices during rehabilitation work in accordance with § 35.1350 and repair any paint that is disturbed.
</P>
<P>(3) After completion of any rehabilitation disturbing painted surfaces, perform a clearance examination of the worksite(s) in accordance with § 35.1340. Clearance is not required if rehabilitation did not disturb painted surfaces of a total area more than that set forth in § 35.1350(d).
</P>
<P>(c) <I>Residential property receiving an average of more than $5,000 and up to and including $25,000 per unit in Federal rehabilitation assistance.</I> Each grantee or participating jurisdiction shall:
</P>
<P>(1) Conduct paint testing or presume the presence of lead-based paint, in accordance with paragraph (a) of this section.
</P>
<P>(2) Perform a risk assessment in the dwelling units receiving Federal assistance, in common areas servicing those units, and exterior painted surfaces, in accordance with § 35.1320(b), before rehabilitation begins.
</P>
<P>(3) Perform interim controls in accordance with § 35.1330 of all lead-based paint hazards identified pursuant to paragraphs (c)(1) and (c)(2) of this section.
</P>
<P>(4) Implement safe work practices during rehabilitation work in accordance with § 35.1350 and repair any paint that is disturbed and is known or presumed to be lead-based paint.
</P>
<P>(d) <I>Residential property receiving an average of more than $25,000 per unit in Federal rehabilitation assistance.</I> Each grantee or participating jurisdiction shall:
</P>
<P>(1) Conduct paint testing or presume the presence of lead-based paint in accordance with paragraph (a) of this section.
</P>
<P>(2) Perform a risk assessment in the dwelling units receiving Federal assistance and in associated common areas and exterior painted surfaces in accordance with § 35.1320(b) before rehabilitation begins.
</P>
<P>(3) Abate all lead-based paint hazards identified by the paint testing or risk assessment conducted pursuant to paragraphs (d)(1) and (d)(2) of this section, in accordance with § 35.1325, except that interim controls are acceptable on exterior surfaces that are not disturbed by rehabilitation and on paint-lead hazards that have an area smaller than the <I>de minimis</I> limits of § 35.1350(d). If abatement of a paint-lead hazard is required, it is necessary to abate only the surface area with hazardous conditions.
</P>
<P>(4) Implement safe work practices during rehabilitation work in accordance with § 35.1350 and repair any paint that is disturbed and is known or presumed to be lead-based paint.
</P>
<CITA TYPE="N">[64 FR 50214, Sept. 15, 1999; 65 FR 3387, Jan. 21, 2000, as amended at 69 FR 34273, June 21, 2004]


</CITA>
</DIV8>


<DIV8 N="§ 35.935" NODE="24:1.1.1.1.23.10.59.8" TYPE="SECTION">
<HEAD>§ 35.935   Ongoing lead-based paint maintenance activities.</HEAD>
<P>In the case of a rental property receiving Federal rehabilitation assistance under the HOME program, the grantee or participating jurisdiction shall require the property owner to incorporate ongoing lead-based paint maintenance activities in regular building operations, in accordance with § 35.1355(a).
</P>
<CITA TYPE="N">[69 FR 34273, June 21, 2004]


</CITA>
</DIV8>


<DIV8 N="§ 35.940" NODE="24:1.1.1.1.23.10.59.9" TYPE="SECTION">
<HEAD>§ 35.940   Special requirements for insular areas.</HEAD>
<P>If a dwelling unit receiving Federal assistance under a program covered by this subpart is located in an insular area, the requirements of this section shall apply and the requirements of § 35.930 shall not apply. All other sections of this subpart J shall apply. The insular area shall conduct the following activities for the dwelling unit, common areas servicing the dwelling unit, and the exterior surfaces of the building in which the dwelling unit is located:
</P>
<P>(a) <I>Residential property receiving an average of up to and including $5,000 per unit in Federal rehabilitation assistance.</I> (1) Implement safe work practices during rehabilitation work in accordance with § 35.1350 and repair any paint that is disturbed by rehabilitation.
</P>
<P>(2) After completion of any rehabilitation disturbing painted surfaces, perform a clearance examination of the worksite(s) in accordance with § 35.1340. Clearance shall be achieved before residents are allowed to occupy the worksite(s). Clearance is not required if rehabilitation did not disturb painted surfaces of a total area more than that set forth in § 35.1350(b).
</P>
<P>(b) <I>Residential property receiving an average of more than $5,000 per unit in Federal rehabilitation assistance.</I> (1) Before beginning rehabilitation, perform a visual assessment of all painted surfaces in order to identify deteriorated paint.
</P>
<P>(2) Perform paint stabilization of each deteriorated paint surface and each painted surface being disturbed by rehabilitation, in accordance with § 35.1330(a) and (b).
</P>
<P>(3) After completion of all paint stabilization, perform a clearance examination of the affected dwelling units and common areas in accordance with § 35.1340. Clearance shall be achieved before residents are allowed to occupy rooms or spaces in which paint stabilization has been performed.


</P>
</DIV8>

</DIV6>


<DIV6 N="K" NODE="24:1.1.1.1.23.11" TYPE="SUBPART">
<HEAD>Subpart K—Acquisition, Leasing, Support Services, or Operation</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>64 FR 50214, Sept. 15, 1999, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 35.1000" NODE="24:1.1.1.1.23.11.59.1" TYPE="SECTION">
<HEAD>§ 35.1000   Purpose and applicability.</HEAD>
<P>(a) The purpose of this subpart K is to establish procedures to eliminate as far as practicable lead-based paint hazards in a residential property that receives Federal assistance under certain HUD programs for acquisition, leasing, support services, or operation. Acquisition, leasing, support services, and operation do not include mortgage insurance, sale of federally-owned housing, project-based or tenant-based rental assistance, rehabilitation assistance, or assistance to public housing. For requirements pertaining to those activities or types of assistance, see the applicable subpart of this part.
</P>
<P>(b) The grantee or participating jurisdiction may assign to a subrecipient or other entity the responsibilities set forth in this subpart.
</P>
<P>(c)(1) The requirements of this subpart shall not apply to HOME funds which are committed to a specific project in accordance with § 92.2 of this title before September 15, 2000. Such projects shall be subject to the requirements of § 92.355 of this title that were in effect at the time of project commitment, or the requirements of this subpart.
</P>
<P>(2) For purposes of the CDBG Entitlement program and the Indian Housing Block Grant program, the requirements of this subpart shall apply to activities (except those otherwise exempted) for which funds are first obligated on or after September 15, 2000. For the purposes of the State, HUD-Administered Small Cities, and Insular Areas CDBG programs, the requirements of this subpart shall apply to all covered activities (except those otherwise exempted) for which grant funding is awarded to the unit of local government by the State or HUD, as applicable, on or after September 15, 2000. For the purposes of the Emergency Shelter Grant Program (42 U.S.C. 11371-11378) and the formula grants awarded under the Housing Opportunities for Persons with AIDS Program (HOPWA) (42 U.S.C. 12901 et. seq.), the requirements of this subpart shall apply to activities for which program funds are first obligated on or after September 15, 2000.
</P>
<P>(3) For the purposes of competitively awarded grants under the HOPWA Program and the Supportive Housing Program (42 U.S.C. 11481-11389), the requirements of this subpart shall apply to grants awarded under Notices of Funding Availability published on or after September 15, 2000.
</P>
<P>(4) For the purposes of the Indian CDBG program (§ 1003.607 of this title), the requirements of this subpart shall not apply to funds whose notice of funding availability is announced or funding letter is sent before September 15, 2000. Such project grantees shall be subject to the regulations in effect at the time of announcement or funding letter.
</P>
<CITA TYPE="N">[64 FR 50213, Sept. 15, 1999; 65 FR 3387, Jan. 21, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 35.1005" NODE="24:1.1.1.1.23.11.59.2" TYPE="SECTION">
<HEAD>§ 35.1005   Definitions and other general requirements.</HEAD>
<P>Definitions and other general requirements that apply to this subpart are found in subpart B of this part.


</P>
</DIV8>


<DIV8 N="§ 35.1010" NODE="24:1.1.1.1.23.11.59.3" TYPE="SECTION">
<HEAD>§ 35.1010   Notices and pamphlet.</HEAD>
<P>(a) <I>Notice.</I> In cases where evaluation or hazard reduction, including paint stabilization, is undertaken, each grantee or participating jurisdiction shall provide a notice to residents in accordance with § 35.125. A visual assessment is not considered an evaluation for purposes of this part.
</P>
<P>(b) <I>Lead hazard information pamphlet.</I> The grantee or participating jurisdiction shall provide the lead hazard information pamphlet in accordance with § 35.130.


</P>
</DIV8>


<DIV8 N="§ 35.1015" NODE="24:1.1.1.1.23.11.59.4" TYPE="SECTION">
<HEAD>§ 35.1015   Visual assessment, paint stabilization, and maintenance.</HEAD>
<P>If a dwelling unit receives Federal assistance under a program covered by this subpart, each grantee or participating jurisdiction shall conduct the following activities for the dwelling unit, common areas servicing the dwelling unit, and the exterior surfaces of the building in which the dwelling unit is located:
</P>
<P>(a) A visual assessment of all painted surfaces in order to identify deteriorated paint;
</P>
<P>(b) Paint stabilization of each deteriorated paint surface, and clearance, in accordance with § 35.1330(a) and (b), before occupancy of a vacant dwelling unit or, where a unit is occupied, immediately after receipt of Federal assistance; and
</P>
<P>(c) The grantee or participating jurisdiction shall require the incorporation of ongoing lead-based paint maintenance activities into regular building operations, in accordance with § 35.1355(a), if the dwelling unit has a continuing, active financial relationship with a Federal housing assistance program, except that mortgage insurance or loan guarantees are not considered to constitute an active programmatic relationship for the purposes of this part.
</P>
<P>(d) The grantee or participating jurisdiction shall provide a notice to occupants in accordance with § 35.125(b)(1) and (c), describing the results of the clearance examination.
</P>
<CITA TYPE="N">[64 FR 50214, Sept. 15, 1999, as amended at 69 FR 34273, June 21, 2004]


</CITA>
</DIV8>


<DIV8 N="§ 35.1020" NODE="24:1.1.1.1.23.11.59.5" TYPE="SECTION">
<HEAD>§ 35.1020   Funding for evaluation and hazard reduction.</HEAD>
<P>The grantee or participating jurisdiction shall determine whether the cost of evaluation and hazard reduction is to be borne by the owner/developer, the grantee or a combination of the owner/developer and the grantee, based on program requirements and local program design.


</P>
</DIV8>

</DIV6>


<DIV6 N="L" NODE="24:1.1.1.1.23.12" TYPE="SUBPART">
<HEAD>Subpart L—Public Housing Programs</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>64 FR 50215, Sept. 15, 1999, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 35.1100" NODE="24:1.1.1.1.23.12.59.1" TYPE="SECTION">
<HEAD>§ 35.1100   Purpose and applicability.</HEAD>
<P>The purpose of this subpart L is to establish procedures to eliminate as far as practicable lead-based paint hazards in residential property assisted under the U.S. Housing Act of 1937 (42 U.S.C. 1437 <I>et seq.</I>) but not including housing assisted under section 8 of the 1937 Act.


</P>
</DIV8>


<DIV8 N="§ 35.1105" NODE="24:1.1.1.1.23.12.59.2" TYPE="SECTION">
<HEAD>§ 35.1105   Definitions and other general requirements.</HEAD>
<P>Definitions and other general requirements that apply to this subpart are found in subpart B of this part.


</P>
</DIV8>


<DIV8 N="§ 35.1110" NODE="24:1.1.1.1.23.12.59.3" TYPE="SECTION">
<HEAD>§ 35.1110   Notices and pamphlet.</HEAD>
<P>(a) <I>Notice.</I> In cases where evaluation or hazard reduction is undertaken, each public housing agency (PHA) shall provide a notice to residents in accordance with § 35.125. A visual assessment alone is not considered an evaluation for purposes of this part.
</P>
<P>(b) <I>Lead hazard information pamphlet.</I> The PHA shall provide the lead hazard information pamphlet in accordance with § 35.130.
</P>
<CITA TYPE="N">[64 FR 50215, Sept. 15, 1999, as amended at 69 FR 34273, June 21, 2004]


</CITA>
</DIV8>


<DIV8 N="§ 35.1115" NODE="24:1.1.1.1.23.12.59.4" TYPE="SECTION">
<HEAD>§ 35.1115   Evaluation.</HEAD>
<P>(a) A lead-based paint inspection shall be conducted in all public housing unless a lead-based paint inspection that meets the conditions of § 35.165(a) has already been completed. If a lead-based paint inspection was conducted by a lead-based paint inspector who was not certified, the PHA shall review the quality of the inspection, in accordance with quality control procedures established by HUD, to determine whether the lead-based paint inspection has been properly performed and the results are reliable. Lead-based paint inspections of all housing to which this subpart applies shall be completed no later than September 15, 2000. Revisions or augmentations of prior inspections found to be of insufficient quality shall be completed no later than September 17, 2001.
</P>
<P>(b) If a lead-based paint inspection has found the presence of lead-based paint, or if no lead-based paint inspection has been conducted, the PHA shall conduct a risk assessment according to the following schedule, unless a risk assessment that meets the conditions of § 35.165(b) has already been completed:
</P>
<P>(1) Risk assessments shall be completed on or before March 15, 2001, in a multifamily residential property constructed before 1960.
</P>
<P>(2) Risk assessments shall be completed on or before March 15, 2002, in a multifamily residential property constructed after 1959 and before 1978.
</P>
<P>(c) A PHA that advertises a construction contract (including architecture/engineering contracts) for bid or award or plans to start force account work shall not execute such contract until a lead-based paint inspection and, if required, a risk assessment, has taken place and any necessary abatement is included in the modernization budget, except for contracts solely for emergency work in accordance with § 35.115(a)(9).
</P>
<P>(d) The five-year funding request plan for CIAP and CGP shall be amended to include the schedule and funding for lead-based paint activities.


</P>
</DIV8>


<DIV8 N="§ 35.1120" NODE="24:1.1.1.1.23.12.59.5" TYPE="SECTION">
<HEAD>§ 35.1120   Hazard reduction.</HEAD>
<P>(a) Each PHA shall, in accordance with § 35.1325, abate all lead-based paint and lead-based paint hazards identified in the evaluations conducted pursuant to § 35.1115. The PHA shall abate lead-based paint and lead-based paint hazards in accordance with § 35.1325 during the course of physical improvements conducted under the modernization.
</P>
<P>(b) In all housing where abatement of all lead-based paint and lead-based paint hazards required in paragraph (a) of this section has not yet occurred, each PHA shall conduct interim controls, in accordance with § 35.1330, of the lead-based paint hazards identified in the most recent risk assessment.
</P>
<P>(1) Interim controls of dwelling units in which any child who is less than 6 years of age resides and common areas servicing those dwelling units shall be completed within 90 days of the evaluation under § 35.1330. If a unit becomes newly occupied by a family with a child of less than 6 years of age or such child moves into a unit, interim controls shall be completed within 90 days after the new occupancy or move-in if they have not already been completed.
</P>
<P>(2) Interim controls in dwelling units not occupied by families with one or more children of less than 6 years of age, common areas servicing those units, and the remaining portions of the residential property shall be completed no later than 12 months after completion of the evaluation conducted under § 35.1115.
</P>
<P>(c) The PHA shall incorporate ongoing lead-based paint maintenance and reevaluation activities into regular building operations in accordance with § 35.1355. In accordance with § 35.115(a) (6) and (7), this requirement does not apply to a development or part thereof if it is to be demolished or disposed of in accordance with disposition requirements in part 970 of this title, provided the dwelling unit will remain unoccupied until demolition, or if it is not used and will not be used for human habitation.


</P>
</DIV8>


<DIV8 N="§ 35.1125" NODE="24:1.1.1.1.23.12.59.6" TYPE="SECTION">
<HEAD>§ 35.1125   Evaluation and hazard reduction before acquisition and development.</HEAD>
<P>(a) For each residential property constructed before 1978 and proposed to be acquired for a family project (whether or not it will need rehabilitation) a lead-based paint inspection and risk assessment for lead-based paint hazards shall be conducted in accordance with § 35.1320.
</P>
<P>(b) If lead-based paint is found in a residential property to be acquired, the cost of evaluation and abatement shall be considered when making the cost comparison to justify new construction, as well as when meeting maximum total development cost limitations.
</P>
<P>(c) If lead-based paint is found, compliance with this subpart is required, and abatement of lead-based paint and lead-based paint hazards shall be completed in accordance with § 35.1325 before occupancy.


</P>
</DIV8>


<DIV8 N="§ 35.1130" NODE="24:1.1.1.1.23.12.59.7" TYPE="SECTION">
<HEAD>§ 35.1130   Child with an elevated blood lead level.</HEAD>
<P>(a) <I>Environmental investigation.</I> Within 15 calendar days after being notified by a public health department or other medical health care provider that a child of less than 6 years of age living in a dwelling unit to which this subpart applies has been identified as having an elevated blood lead level, the PHA shall complete an environmental investigation of the dwelling unit in which the child lived at the time the blood was last sampled and of common areas servicing the dwelling unit. The environmental investigation is considered complete when the PHA receives the environmental investigation report. The requirements of this paragraph apply regardless of whether the child is or is not still living in the unit when the PHA receives the notification of the elevated blood lead level. The requirements of this paragraph shall not apply if the PHA conducted an environmental investigation of the unit and common areas servicing the unit between the date the child's blood was last sampled and the date when the PHA received the notification of the elevated blood lead level. If the PHA conducted a risk assessment of the unit and common areas servicing the unit during that period, the PHA need not conduct another risk assessment there but shall conduct the elements of an environmental investigation not already conducted during the risk assessment. If a public health department has already conducted an evaluation of the dwelling unit in regard to the child's elevated blood lead level case, the requirements of this paragraph shall not apply.
</P>
<P>(b) <I>Verification.</I> After receiving information from a person who is not a medical health care provider that a child of less than 6 years of age living in a dwelling unit covered by this subpart may have an elevated blood lead level, the PHA shall immediately verify the information with the public health department or other medical health care provider. If that department or provider denies the request, such as because it does not have the capacity to verify that information, the PHA shall send documentation of the denial to its HUD field office, who shall make an effort to verify the information. If that department or provider verifies that the child has an elevated blood lead level, such verification shall constitute notification, and the housing agency shall take the action required in paragraphs (a) and (c) of this section.
</P>
<P>(c) <I>Lead-based paint hazard reduction.</I> Within 30 calendar days after receiving the report of the environmental investigation conducted pursuant to paragraph (a) of this section or the evaluation from the public health department, the PHA shall complete the reduction of identified lead-based paint hazards in accordance with § 35.1325 or § 35.1330. Lead-based paint hazard reduction is considered complete when clearance is achieved in accordance with § 35.1340 and the clearance report states that all lead-based paint hazards identified in the environmental investigation have been treated with interim controls or abatement or the local or State health department certifies that the lead-based paint hazard reduction is complete. The requirements of this paragraph do not apply if the PHA, between the date the child's blood was last sampled and the date the PHA received the notification of the elevated blood lead level, already conducted an environmental investigation of the unit and common areas servicing the unit and completed reduction of identified lead-based paint hazards. If the PHA conducted a risk assessment of the unit and common areas servicing the unit during that period, it is not required to conduct another risk assessment there but it shall conduct the elements of an environmental investigation not already conducted during the risk assessment. If the PHA does not complete the lead-based paint hazard reduction required by this section, the dwelling unit is in violation of the standards of 24 CFR 965.601, which incorporates the uniform physical condition standards of § 5.703(f), including that it be free of lead-based paint hazards.
</P>
<P>(d) <I>Notice of lead-based paint hazard evaluation and reduction.</I> The PHA shall notify building residents of any lead-based paint hazard evaluation or reduction activities in accordance with § 35.125.
</P>
<P>(e) <I>Reporting requirement.</I> (1) The PHA shall report the name and address of a child identified as having an elevated blood lead level to the public health department within 5 business days of being so notified by any other medical health care professional.
</P>
<P>(2) The PHA shall report each confirmed case of a child with an elevated blood lead level to the HUD field office and the HUD Office of Lead Hazard Control and Healthy Homes within 5 business days of being so notified.
</P>
<P>(3) The PHA shall provide to the HUD field office documentation that it has conducted the activities of paragraphs (a) through (d) of this section, within 10 business days of the deadline for each activity.
</P>
<P>(f) <I>Other units in the property.</I> (1) If the environmental investigation conducted pursuant to paragraph (a) of this section identifies lead-based paint hazards, the PHA shall conduct a risk assessment of other units of the building in which a child under age 6 resides or is expected to reside on the date lead-based paint hazard reduction under paragraph (c) of this section is complete, and the common areas servicing those units within 30 calendar days after receipt of the environmental investigation report if there are 20 or fewer such other units, or 60 calendar days if there are more such units.
</P>
<P>(2) If the risk assessment conducted under paragraph (f)(1) of this section identifies lead-based paint hazards, the PHA shall control the hazards, in accordance with Sec. 35.1325 or § 35.1330, in those units and common areas within 30 calendar days, or within 90 calendar days if more than 20 units have lead-based paint hazards such that the control work would disturb painted surfaces that total more than the de minimis threshold of § 35.1350(d). Lead-based paint hazard reduction is considered complete when clearance is achieved in accordance with § 35.1340 and the clearance report states that all lead-based paint hazards identified in the risk assessment have been treated with interim controls or abatement.
</P>
<P>(3) The PHA shall provide to the HUD field office documentation that it has conducted the activities of paragraphs (f)(1) and (2) of this section, within 10 business days of the deadline for each activity.
</P>
<P>(4) The requirements of this paragraph (f) of this section do not apply if:
</P>
<P>(i) The PHA, between the date the child's blood was last sampled and the date the PHA received the notification of the elevated blood lead level, both conducted a risk assessment of the other assisted dwelling units covered by paragraph (f)(1) of this section and the common areas servicing those units, and conducted interim controls of identified hazards in accordance with § 35.1120(b); or
</P>
<P>(ii) If the PHA has documentation of compliance with evaluation, notification, lead disclosure, ongoing lead-based paint maintenance, and lead-based paint management requirements under this part throughout the 12 months preceding the date the PHA received the environmental investigation report pursuant to paragraph (a) of this section; and,
</P>
<P>(iii) In either case, the PHA provided the HUD field office, within 10 business days after receiving the notification of the elevated blood lead level, documentation that it has conducted the activities described in this paragraph (f)(4) of this section.
</P>
<CITA TYPE="N">[82 FR 4169, Jan. 13, 2017]


</CITA>
</DIV8>


<DIV8 N="§ 35.1135" NODE="24:1.1.1.1.23.12.59.8" TYPE="SECTION">
<HEAD>§ 35.1135   Eligible costs.</HEAD>
<P>A PHA may use financial assistance received under the modernization program (CIAP or CGP) for the notice, evaluation and reduction of lead-based paint hazards in accordance with § 968.112 of this title. Eligible costs include:
</P>
<P>(a) <I>Evaluation and insurance costs.</I> Evaluation and hazard reduction activities, and costs for insurance coverage associated with these activities.
</P>
<P>(b) <I>Planning costs.</I> Planning costs are costs that are incurred before HUD approval of the CGP or CIAP application and that are related to developing the CIAP application or carrying out eligible modernization planning, such as planning for abatement, detailed design work, preparation of solicitations, and evaluation. Planning costs may be funded as a single work item. Planning costs shall not exceed 5 percent of the CIAP funds available to a HUD Field Office in a particular fiscal year.
</P>
<P>(c) <I>Architectural/engineering and consultant fees.</I> Eligible costs include fees for planning, identification of needs, detailed design work, preparation of construction and bid documents and other required documents, evaluation, planning and design for abatement, and inspection of work in progress.
</P>
<P>(d) <I>Elevated blood lead level response costs.</I> The PHA may use its operating reserves and, when necessary, may request reimbursement from the current fiscal year CIAP funds, or request the reprogramming of previously approved CIAP funds to cover the costs of evaluation and hazard reduction.
</P>
<CITA TYPE="N">[64 FR 50215, Sept. 15, 1999, as amended at 82 FR 4170, Jan. 13, 2017]


</CITA>
</DIV8>


<DIV8 N="§ 35.1140" NODE="24:1.1.1.1.23.12.59.9" TYPE="SECTION">
<HEAD>§ 35.1140   Insurance coverage.</HEAD>
<P>For the requirements concerning the obligation of a PHA to obtain reasonable insurance coverage with respect to the hazards associated with evaluation and hazard reduction activities, see § 965.215 of this title.


</P>
</DIV8>

</DIV6>


<DIV6 N="M" NODE="24:1.1.1.1.23.13" TYPE="SUBPART">
<HEAD>Subpart M—Tenant-Based Rental Assistance</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>64 FR 50216, Sept. 15, 1999, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 35.1200" NODE="24:1.1.1.1.23.13.59.1" TYPE="SECTION">
<HEAD>§ 35.1200   Purpose and applicability.</HEAD>
<P>(a) <I>Purpose.</I> The purpose of this subpart M is to establish procedures to eliminate as far as practicable lead-based paint hazards in housing occupied by families receiving tenant-based rental assistance. Such assistance includes tenant-based rental assistance under the Section 8 certificate program, the Section 8 voucher program, the HOME program, the Shelter Plus Care program, the Housing Opportunities for Persons With AIDS (HOPWA) program, and the Indian Housing Block Grant program. <I>Tenant-based rental assistance</I> means rental assistance that is not attached to the structure.
</P>
<P>(b) <I>Applicability.</I> (1) This subpart applies only to dwelling units occupied or to be occupied by families or households that have one or more children of less than 6 years of age, common areas servicing such dwelling units, and exterior painted surfaces associated with such dwelling units or common areas. Common areas servicing a dwelling unit include those areas through which residents pass to gain access to the unit and other areas frequented by resident children of less than 6 years of age, including on-site play areas and child care facilities.
</P>
<P>(2) For the purposes of the Section 8 tenant-based certificate program and the Section 8 voucher program:
</P>
<P>(i) The requirements of this subpart are applicable where an initial or periodic inspection occurs on or after September 15, 2000; and 
</P>
<P>(ii) The PHA shall be the designated party.
</P>
<P>(3) For the purposes of formula grants awarded under the Housing Opportunities for Persons with AIDS Program (HOPWA) (42 U.S.C. 12901 <I>et seq.</I>):
</P>
<P>(i) The requirements of this subpart shall apply to activities for which program funds are first obligated on or after September 15, 2000; and
</P>
<P>(ii) The grantee shall be the designated party.
</P>
<P>(4) For the purposes of competitively awarded grants under the HOPWA Program and the Shelter Plus Care program (42 U.S.C. 11402-11407) tenant-based rental assistance component:
</P>
<P>(i) The requirements of this subpart shall apply to grants awarded pursuant to Notices of Funding Availability published on or after September 15, 2000; and 
</P>
<P>(ii) The grantee shall be the designated party.
</P>
<P>(5) For the purposes of the HOME program:
</P>
<P>(i) The requirements of this subpart shall not apply to funds which are committed in accordance with § 92.2 of this title before September 15, 2000; and
</P>
<P>(ii) The participating jurisdiction shall be the designated party.
</P>
<P>(6) For the purposes of the Indian Housing Block Grant program:
</P>
<P>(i) The requirements of this subpart shall apply to activities for which funds are first obligated on or after September 15, 2000; and
</P>
<P>(ii) The IHBG recipient shall be the designated party.
</P>
<P>(7) The housing agency, grantee, participating jurisdiction, or IHBG recipient may assign to a subrecipient or other entity the responsibilities of the designated party in this subpart.
</P>
<CITA TYPE="N">[64 FR 50216, Sept. 15, 1999; 65 FR 3387, Jan. 21, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 35.1205" NODE="24:1.1.1.1.23.13.59.2" TYPE="SECTION">
<HEAD>§ 35.1205   Definitions and other general requirements.</HEAD>
<P>Definitions and other general requirements that apply to this subpart are found in subpart B of this part.


</P>
</DIV8>


<DIV8 N="§ 35.1210" NODE="24:1.1.1.1.23.13.59.3" TYPE="SECTION">
<HEAD>§ 35.1210   Notices and pamphlet.</HEAD>
<P>(a) <I>Notice.</I> In cases where evaluation or paint stabilization is undertaken, the owner shall provide a notice to residents in accordance with § 35.125. A visual assessment alone is not considered an evaluation for purposes of this part.
</P>
<P>(b) <I>Lead hazard information pamphlet.</I> The owner shall provide the lead hazard information pamphlet in accordance with § 35.130.
</P>
<CITA TYPE="N">[64 FR 50216, Sept. 15, 1999, as amended at 69 FR 34273, June 21, 2004]


</CITA>
</DIV8>


<DIV8 N="§ 35.1215" NODE="24:1.1.1.1.23.13.59.4" TYPE="SECTION">
<HEAD>§ 35.1215   Activities at initial and periodic inspection.</HEAD>
<P>(a) (1) During the initial and periodic inspections, an inspector acting on behalf of the designated party and trained in visual assessment for deteriorated paint surfaces in accordance with procedures established by HUD shall conduct a visual assessment of all painted surfaces in order to identify any deteriorated paint.
</P>
<P>(2) For tenant-based rental assistance provided under the HOME program, visual assessment shall be conducted as part of the initial and periodic inspections required under § 92.209(i) of this title.
</P>
<P>(b) The owner shall stabilize each deteriorated paint surface in accordance with § 35.1330(a) and (b) before commencement of assisted occupancy. If assisted occupancy has commenced prior to a periodic inspection, such paint stabilization must be completed within 30 days of notification of the owner of the results of the visual assessment. Paint stabilization is considered complete when clearance is achieved in accordance with § 35.1340. If the owner does not complete the hazard reduction required by this section, the dwelling unit is in violation of Housing Quality Standards (HQS) until the hazard reduction is completed or the unit is no longer covered by this subpart because the unit is no longer under a housing assistance payment (HAP) contract with the housing agency. For the unit subsequently to come under a HAP contract with the housing agency for occupancy by a family with a child under age 6, paint stabilization must be completed, including clearance being achieved in accordance with § 35.1340.
</P>
<P>(c) The owner shall provide a notice to occupants in accordance with § 35.125(b)(1) and (c) describing the results of the clearance examination.
</P>
<P>(d) The designated party may grant the owner an extension of time to complete paint stabilization and clearance for reasonable cause, but such an extension shall not extend beyond 90 days after the date of notification to the owner of the results of the visual assessment.
</P>
<CITA TYPE="N">[64 FR 50216, Sept. 15, 1999, as amended at 69 FR 34273, June 21, 2004; 82 FR 4170, Jan. 13, 2017]


</CITA>
</DIV8>


<DIV8 N="§ 35.1220" NODE="24:1.1.1.1.23.13.59.5" TYPE="SECTION">
<HEAD>§ 35.1220   Ongoing lead-based paint maintenance activities.</HEAD>
<P>Notwithstanding the designation of the PHA, grantee, participating jurisdiction, or Indian Housing Block Grant (IHBG) recipient as the designated party for this subpart, the owner shall incorporate ongoing lead-based paint maintenance activities into regular building operations in accordance with § 35.1355(a).
</P>
<CITA TYPE="N">[69 FR 34273, June 21, 2004]


</CITA>
</DIV8>


<DIV8 N="§ 35.1225" NODE="24:1.1.1.1.23.13.59.6" TYPE="SECTION">
<HEAD>§ 35.1225   Child with an elevated blood lead level.</HEAD>
<P>(a) Within 15 calendar days after being notified by a public health department or other medical health care provider that a child of less than 6 years of age living in a dwelling unit to which this subpart applies has been identified as having an elevated blood lead level, the designated party shall complete an environmental investigation of the dwelling unit in which the child lived at the time the blood was last sampled and of common areas servicing the dwelling unit. When the environmental investigation is complete, the designated party shall immediately provide the report of the environmental investigation to the owner of the dwelling unit. If the child identified as having an elevated blood lead level is no longer living in the unit when the designated party receives notification from the public health department or other medical health care provider, but another household receiving tenant-based rental assistance is living in the unit or is planning to live there, the requirements of this section apply just as they do if the child still lives in the unit. If a public health department has already conducted an evaluation of the dwelling unit in regard to the child's elevated blood lead level case, or the designated party conducted an environmental investigation of the unit and common areas servicing the unit between the date the child's blood was last sampled and the date when the designated party received the notification of the elevated blood lead level, the requirements of this paragraph shall not apply. If the designated party or the owner conducted a risk assessment of the unit and common areas servicing the unit during that period, the designated party need not conduct another risk assessment there but shall conduct the elements of an environmental investigation not already conducted during the risk assessment.
</P>
<P>(b) <I>Verification.</I> After receiving information from a person who is not a medical health care provider that a child of less than 6 years of age living in a dwelling unit covered by this subpart may have an elevated blood lead level, the designated party shall immediately verify the information with the public health department or other medical health care provider. If the public health department or provider denies the request, such as because it does not have the capacity to verify that information, the designated party shall send documentation of the denial to the HUD rental assistance program manager, who shall make an effort to verify the information. If that department or provider verifies that the child has an elevated blood lead level, such verification shall constitute notification, and the designated party shall take the action required in paragraphs (a) and (c) of this section.
</P>
<P>(c) <I>Lead-based paint hazard reduction.</I> Within 30 calendar days after receiving the report of the environmental investigation from the designated party or the evaluation from the public health department, the owner shall complete the reduction of identified lead-based paint hazards in accordance with § 35.1325 or § 35.1330. Lead-based paint hazard reduction is considered complete when clearance is achieved in accordance with § 35.1340 and the clearance report states that all lead-based paint hazards identified in the environmental investigation have been treated with interim controls or abatement or the public health department certifies that the lead-based paint hazard reduction is complete. The requirements of this paragraph do not apply if the designated party or the owner, between the date the child's blood was last sampled and the date the designated party received the notification of the elevated blood lead level, already conducted an environmental investigation of the unit and common areas servicing the unit and the owner completed reduction of identified lead-based paint hazards. If the owner does not complete the lead-based paint hazard reduction required by this section, the dwelling unit is in violation of the standards of 24 CFR 982.401.
</P>
<P>(d) <I>Notice of lead-based paint hazard evaluation and reduction.</I> The owner shall notify building residents of any lead-based paint hazard evaluation or reduction activities in accordance with § 35.125.
</P>
<P>(e) <I>Reporting requirement.</I> (1) The owner shall report the name and address of a child identified as having an elevated blood lead level to the public health department within 5 business days of being so notified by any other medical health care professional.
</P>
<P>(2) The owner shall also report each confirmed case of a child with an elevated blood lead level to the HUD field office and the HUD Office of Lead Hazard Control and Healthy Homes within 5 business days of being so notified.
</P>
<P>(3) The owner shall provide to the HUD field office documentation that it has conducted the activities of paragraphs (a) through (d) of this section, within 10 business days of the deadline for each activity.
</P>
<P>(f) <I>Other assisted dwelling units in the property.</I> (1) If the environmental investigation conducted pursuant to paragraph (a) of this section identifies lead-based paint hazards, the designated party or the owner shall, for other assisted dwelling units covered by this part in which a child under age 6 resides or is expected to reside on the date lead-based paint hazard reduction under paragraph (c) of this section is complete, and the common areas servicing those units, conduct a risk assessment in accordance with § 35.1320(b) within 30 calendar days after receipt of the environmental investigation report if there are 20 or fewer such units, or 60 calendar days if there are more such units.
</P>
<P>(2) If the risk assessment conducted under paragraph (f)(1) of this section identifies lead-based paint hazards, the owner shall complete the reduction of the lead-based paint hazards in accordance with § 35.1325 or § 35.1330 within 30 calendar days, or within 90 calendar days if more than 20 units have lead-based paint hazards such that the control work would disturb painted surfaces that total more than the de minimis threshold of § 35.1350(d). Lead-based paint hazard reduction is considered complete when clearance is achieved in accordance with § 35.1340 and the clearance report states that all lead-based paint hazards identified in the risk assessment have been treated with interim controls or abatement.
</P>
<P>(3) The requirements of this paragraph (f) of this section do not apply if:
</P>
<P>(i) The designated party or the owner, between the date the child's blood was last sampled and the date the owner received the notification of the elevated blood lead level, both conducted a risk assessment of the other assisted dwelling units covered by paragraph (f)(1) of this section and the common areas servicing those units, and the owner conducted interim controls of identified lead-based paint hazards in accordance with § 35.1225(c); or
</P>
<P>(ii) The owner has documentation of compliance with evaluation, notification, lead disclosure, ongoing lead-based paint maintenance, and lead-based paint management requirements under this part throughout the 12 months preceding the date the owner received the environmental investigation report pursuant to paragraph (a) of this section; and,
</P>
<P>(iii) In either case, the owner provided the HUD field office, within 10 business days after receiving the notification of the elevated blood lead level, documentation that it has conducted the activities described in this paragraph (f)(3).
</P>
<P>(g) <I>Data collection and record keeping responsibilities.</I> At least quarterly, the designated party shall attempt to obtain from the public health department(s) with area(s) of jurisdiction similar to that of the designated party the names and/or addresses of children of less than 6 years of age with an identified elevated blood lead level. At least quarterly, the designated party shall also report an updated list of the addresses of units receiving assistance under a tenant-based rental assistance program to the same public health department(s), except that the report(s) to the public health department(s) is not required if the health department states that it does not wish to receive such report. If it obtains names and addresses of elevated blood lead level children from the public health department(s), the designated party shall match information on cases of elevated blood lead levels with the names and addresses of families receiving tenant-based rental assistance, unless the public health department performs such a matching procedure.
</P>
<P>If a match occurs, the designated party shall carry out the requirements of this section.
</P>
<CITA TYPE="N">[82 FR 4171, Jan. 13, 2017]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="N" NODE="24:1.1.1.1.23.14" TYPE="SUBPART">
<HEAD>Subparts N-Q [Reserved]</HEAD>

</DIV6>


<DIV6 N="R" NODE="24:1.1.1.1.23.15" TYPE="SUBPART">
<HEAD>Subpart R—Methods and Standards for Lead-Paint Hazard Evaluation and Hazard Reduction Activities</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>64 FR 50218, Sept. 15, 1999, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 35.1300" NODE="24:1.1.1.1.23.15.59.1" TYPE="SECTION">
<HEAD>§ 35.1300   Purpose and applicability.</HEAD>
<P>The purpose of this subpart R is to provide standards and methods for evaluation and hazard reduction activities required in subparts B, C, D, and F through M of this part.


</P>
</DIV8>


<DIV8 N="§ 35.1305" NODE="24:1.1.1.1.23.15.59.2" TYPE="SECTION">
<HEAD>§ 35.1305   Definitions and other general requirements.</HEAD>
<P>Definitions and other general requirements that apply to this subpart are found in subpart B of this part.


</P>
</DIV8>


<DIV8 N="§ 35.1310" NODE="24:1.1.1.1.23.15.59.3" TYPE="SECTION">
<HEAD>§ 35.1310   References.</HEAD>
<P>Further guidance information regarding evaluation and hazard reduction activities described in this subpart is found in the following:
</P>
<P>(a) The HUD Guidelines for the Evaluation and Control of Lead-Based Paint Hazards in Housing (Guidelines);
</P>
<P>(b) The EPA Guidance on Residential Lead-Based Paint, Lead-Contaminated Dust, and Lead Contaminated Soil;
</P>
<P>(c) Guidance, methods or protocols issued by States and Indian tribes that have been authorized by EPA under 40 CFR 745.324 to administer and enforce lead-based paint programs.


</P>
</DIV8>


<DIV8 N="§ 35.1315" NODE="24:1.1.1.1.23.15.59.4" TYPE="SECTION">
<HEAD>§ 35.1315   Collection and laboratory analysis of samples.</HEAD>
<P>All paint chip, dust, or soil samples shall be collected and analyzed in accordance with standards established either by a State or Indian tribe under a program authorized by EPA in accordance with 40 CFR part 745, subpart Q, or by the EPA in accordance with 40 CFR 745.227, and as further provided in this subpart.


</P>
</DIV8>


<DIV8 N="§ 35.1320" NODE="24:1.1.1.1.23.15.59.5" TYPE="SECTION">
<HEAD>§ 35.1320   Lead-based paint inspections, paint testing, risk assessments, lead-hazard screens, and reevaluations.</HEAD>
<P>(a) <I>Lead-based paint inspections and paint testing.</I> Lead-based paint inspections shall be performed in accordance with methods and standards established either by a State or Tribal program authorized by the EPA under 40 CFR 745.324, or by the EPA at 40 CFR 745.227(b) and (h). Paint testing to determine the presence or absence of lead-based paint on deteriorated paint surfaces or surfaces to be disturbed or replaced shall be performed by a certified lead-based paint inspector or risk assessor.
</P>
<P>(b) Risk assessments, lead-hazard screens and reevaluations. (1) Risk assessments and lead-hazard screens shall be performed in accordance with methods and standards established either by a state or tribal program authorized by the EPA, or by the EPA at 40 CFR 745.227(c), (d), and (h) and paragraph (b)(2) of this section. Reevaluations shall be performed by a certified risk assessor in accordance with § 35.1355(b) and paragraph (b)(2) of this section.
</P>
<P>(2) Risk assessors shall use standards for determining dust-lead hazards and soil-lead hazards that are at least as protective as those promulgated by the EPA at 40 CFR 745.227(h) or, if such standards are not in effect, the following levels for dust or soil:
</P>
<P>(i) <I>Dust.</I> A dust-lead hazard is surface dust that contains a mass-per-area concentration (loading) of lead, based on wipe samples, equal to or exceeding the applicable level in the following table:
</P>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Dust Lead Standards
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" rowspan="2" scope="col">Evaluation method 
</TH><TH class="gpotbl_colhed" colspan="3" scope="col">Surface 
</TH></TR><TR><TH class="gpotbl_colhed" scope="col">Floors, µg/ft 
<sup>2</sup>
<br/>(mg/m 
<sup>2</sup>) 
</TH><TH class="gpotbl_colhed" scope="col">Interior window
<br/>sills, µg/ft 
<sup>2</sup>
<br/>(mg/m 
<sup>2</sup>) 
</TH><TH class="gpotbl_colhed" scope="col">Window troughs,
<br/>µg/ft 
<sup>2</sup> (mg/m 
<sup>2</sup>) 
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Risk Assessment</TD><TD align="right" class="gpotbl_cell">40 (0.43)</TD><TD align="right" class="gpotbl_cell">250 (2.7)</TD><TD align="left" class="gpotbl_cell">Not Applicable.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Lead Hazard Screen</TD><TD align="right" class="gpotbl_cell">25 (0.27)</TD><TD align="right" class="gpotbl_cell">125 (1.4)</TD><TD align="left" class="gpotbl_cell">Not Applicable.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Reevaluation</TD><TD align="right" class="gpotbl_cell">40 (0.43)</TD><TD align="right" class="gpotbl_cell">250 (2.7)</TD><TD align="left" class="gpotbl_cell">Not Applicable.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Clearance</TD><TD align="right" class="gpotbl_cell">40 (0.43)</TD><TD align="right" class="gpotbl_cell">250 (2.7)</TD><TD align="left" class="gpotbl_cell">400 (4.3).
</TD></TR></TABLE></DIV><DIV class="table_foot"><P class="gpotbl_note">Note 1: “Floors” includes carpeted and uncarpeted interior floors.
</P><P class="gpotbl_note">Note 2: A dust-lead hazard is present or clearance fails when the weighted arithmetic mean lead loading for all single-surface or composite samples is equal to or greater than the applicable standard. For composite samples of two to four subsamples, the standard is determined by dividing the standard in the table by one half the number of subsamples. See EPA regulations at 40 CFR 745.63 and 745.227(h)(3)(i).</P></DIV></DIV>
<P>(ii) <I>Soil.</I> (A) A soil-lead hazard for play areas frequented by children under six years of age is bare soil with lead equal to or exceeding 400 parts per million (micrograms per gram).
</P>
<P>(B) For the rest of the yard, a soil-lead hazard is bare soil that totals more than 9 square feet (0.8 square meters) per property with lead equal to or exceeding an average of 1,200 parts per million (micrograms per gram).
</P>
<P>(3) Lead-hazard screens shall be performed in accordance with the methods and standards established either by a state or Tribal program authorized by the EPA, or by the EPA at 40 CFR 745.227(c), and paragraphs (b)(1) and (b)(2) of this section. If the lead-hazard screen indicates the need for a follow-up risk assessment (<I>e.g.</I>, if dust-lead measurements exceed the levels established for lead-hazard screens in paragraph (b)(2)(i) of this section), a risk assessment shall be conducted in accordance with paragraphs (b)(1) and (b)(2) of this section. Dust, soil, and paint samples collected for the lead-hazard screen may be used in the risk assessment. If the lead hazard screen does not indicate the need for a follow-up risk assessment, no further risk assessment is required.
</P>
<P>(c) It is strongly recommended, but not required, that lead-based paint inspectors, risk assessors, and sampling technicians provide a plain-language summary of the results suitable for posting or distribution to occupants in compliance with § 35.125.
</P>
<CITA TYPE="N">[69 FR 34273, June 21, 2004]


</CITA>
</DIV8>


<DIV8 N="§ 35.1325" NODE="24:1.1.1.1.23.15.59.6" TYPE="SECTION">
<HEAD>§ 35.1325   Abatement.</HEAD>
<P>Abatement shall be performed in accordance with methods and standards established either by a State or Indian tribe under a program authorized by EPA, or by EPA at 40 CFR 745.227(e), and shall be completed by achieving clearance in accordance with § 35.1340. If encapsulation or enclosure is used as a method of abatement, ongoing lead-based paint maintenance activities shall be performed as required by the applicable subpart of this part in accordance with § 35.1355. Abatement of an intact, factory-applied prime coating on metal surfaces is not required unless the surface is a friction surface.


</P>
</DIV8>


<DIV8 N="§ 35.1330" NODE="24:1.1.1.1.23.15.59.7" TYPE="SECTION">
<HEAD>§ 35.1330   Interim controls.</HEAD>
<P>Interim controls of lead-based paint hazards identified in a risk assessment shall be conducted in accordance with the provisions of this section. Interim control measures include paint stabilization of deteriorated paint, treatments for friction and impact surfaces where levels of lead dust are above the levels specified in § 35.1320, dust control, and lead-contaminated soil control. As provided by § 35.155, interim controls may be performed in combination with, or be replaced by, abatement methods.
</P>
<P>(a) <I>General requirements.</I> (1) Only those interim control methods identified as acceptable methods in a current risk assessment report shall be used to control identified hazards, except that, if only paint stabilization is required in accordance with subparts F, H, K or M of this part, it shall not be necessary to have conducted a risk assessment.
</P>
<P>(2) Occupants of dwelling units where interim controls are being performed shall be protected during the course of the work in accordance with § 35.1345.
</P>
<P>(3) Clearance testing shall be performed at the conclusion of interim control activities in accordance with § 35.1340.
</P>
<P>(4) A person performing interim controls must be trained in accordance with the hazard communication standard for the construction industry issued by the Occupational Safety and Health Administration of the U.S. Department of Labor at 29 CFR 1926.59, and either be supervised by an individual certified as a lead-based paint abatement supervisor or have completed successfully one of the following lead-safe work practices courses, except that this supervision or lead-safe work practices training requirement does not apply to work that disturbs painted surfaces less than the <I>de minimis</I> limits of § 35.1350(d):
</P>
<P>(i) A lead-based paint abatement supervisor course accredited in accordance with 40 CFR 745.225;
</P>
<P>(ii) A lead-based paint abatement worker course accredited in accordance with 40 CFR 745.225; or
</P>
<P>(iii) A renovator course accredited in accordance with 40 CFR 745.225.
</P>
<P>(iv) “The Remodeler's and Renovator's Lead-Based Paint Training Program,” prepared by HUD and the National Association of the Remodeling Industry; or
</P>
<P>(v) Another course approved by HUD for this purpose after consultation with EPA.
</P>
<P>(b) <I>Paint stabilization.</I> (1) Interim control treatments used to stabilize deteriorated lead-based paint shall be performed in accordance with the requirements of this section. Interim control treatments of intact, factory applied prime coatings on metal surfaces are not required. Finish coatings on such surfaces shall be treated by interim controls if those coatings contain lead-based paint.
</P>
<P>(2) Any physical defect in the substrate of a painted surface or component that is causing deterioration of the surface or component shall be repaired before treating the surface or component. Examples of defective substrate conditions include dry-rot, rust, moisture-related defects, crumbling plaster, and missing siding or other components that are not securely fastened.
</P>
<P>(3) Before applying new paint, all loose paint and other loose material shall be removed from the surface to be treated. Acceptable methods for preparing the surface to be treated include wet scraping, wet sanding, and power sanding performed in conjunction with a HEPA filtered local exhaust attachment operated according to the manufacturer's instructions.
</P>
<P>(4) Dry sanding or dry scraping is permitted only in accordance with § 35.140(e) (i.e., for electrical safety reasons or for specified minor amounts of work).
</P>
<P>(5) Paint stabilization shall include the application of a new protective coating or paint. The surface substrate shall be dry and protected from future moisture damage before applying a new protective coating or paint. All protective coatings and paints shall be applied in accordance with the manufacturer's recommendations.
</P>
<P>(6) Paint stabilization shall incorporate the use of safe work practices in accordance with § 35.1350.
</P>
<P>(c) <I>Friction and impact surfaces.</I> (1) Friction surfaces are required to be treated only if:
</P>
<P>(i) Lead dust levels on the nearest horizontal surface underneath the friction surface (e.g., the window sill, window trough, or floor) are equal to or greater than the standards specified in 35.1320(b);
</P>
<P>(ii) There is evidence that the paint surface is subject to abrasion; and
</P>
<P>(iii) Lead-based paint is known or presumed to be present on the friction surface.
</P>
<P>(2) Impact surfaces are required to be treated only if:
</P>
<P>(i) Paint on an impact surface is damaged or otherwise deteriorated;
</P>
<P>(ii) The damaged paint is caused by impact from a related building component (such as a door knob that knocks into a wall, or a door that knocks against its door frame); and
</P>
<P>(iii) Lead-based paint is known or presumed to be present on the impact surface.
</P>
<P>(3) Examples of building components that may contain friction or impact surfaces include the following:
</P>
<P>(i) Window systems;
</P>
<P>(ii) Doors;
</P>
<P>(iii) Stair treads and risers;
</P>
<P>(iv) Baseboards;
</P>
<P>(v) Drawers and cabinets; and
</P>
<P>(vi) Porches, decks, interior floors, and any other painted surfaces that are abraded, rubbed, or impacted.
</P>
<P>(4) Interim control treatments for friction surfaces shall eliminate friction points or treat the friction surface so that paint is not subject to abrasion. Examples of acceptable treatments include rehanging and/or planing doors so that the door does not rub against the door frame, and installing window channel guides that reduce or eliminate abrasion of painted surfaces. Paint on stair treads and floors shall be protected with a durable cover or coating that will prevent abrasion of the painted surfaces. Examples of acceptable materials include carpeting, tile, and sheet flooring.
</P>
<P>(5) Interim control treatments for impact surfaces shall protect the paint from impact. Examples of acceptable treatments include treatments that eliminate impact with the paint surface, such as a door stop to prevent a door from striking a wall or baseboard.
</P>
<P>(6) Interim control for impact or friction surfaces does not include covering such a surface with a coating or other treatment, such as painting over the surface, that does not protect lead-based paint from impact or abrasion.
</P>
<P>(d) <I>Chewable surfaces.</I> (1) Chewable surfaces are required to be treated only if there is evidence of teeth marks, indicating that a child of less than six years of age has chewed on the painted surface, and lead-based paint is known or presumed to be present on the surface. 
</P>
<P>(2) Interim control treatments for chewable surfaces shall make the lead-based paint inaccessible for chewing by children of less than 6 years of age. Examples include enclosures or coatings that cannot be penetrated by the teeth of such children.
</P>
<P>(e) <I>Dust-lead hazard control.</I> (1) Interim control treatments used to control dust-lead hazards shall be performed in accordance with the requirements of this section. Additional information on dust removal is found in the HUD Guidelines, particularly Chapter 11 (see § 35.1310).
</P>
<P>(2) Dust control shall involve a thorough cleaning of all horizontal surfaces, such as interior window sills, window troughs, floors, and stairs, but excluding ceilings. All horizontal surfaces, such as floors, stairs, window sills and window troughs, that are rough, pitted, or porous shall be covered with a smooth, cleanable covering or coating, such as metal coil stock, plastic, polyurethane, or linoleum.
</P>
<P>(3) Surfaces covered by a rug or carpeting shall be cleaned as follows:
</P>
<P>(i) The floor surface under a rug or carpeting shall be cleaned where feasible, including upon removal of the rug or carpeting, with a HEPA vacuum or other method of equivalent efficacy.
</P>
<P>(ii) An unattached rug or an attached carpet that is to be removed, and padding associated with such rug or carpet, located in an area of the dwelling unit with dust-lead hazards on the floor, shall be thoroughly vacuumed with a HEPA vacuum or other method of equivalent efficacy. Protective measures shall be used to prevent the spread of dust during removal of a rug, carpet or padding from the dwelling. For example, it shall be misted to reduce dust generation during removal. The item(s) being removed shall be wrapped or otherwise sealed before removal from the worksite.
</P>
<P>(iii) An attached carpet located in an area of the dwelling unit with dust-lead hazards on the floor shall be thoroughly vacuumed with a HEPA vacuum or other method of equivalent efficacy if it is not to be removed.
</P>
<P>(f) <I>Soil-lead hazards.</I> (1) Interim control treatments used to control soil-lead hazards shall be performed in accordance with this section.
</P>
<P>(2) Soil with a lead concentration equal to or greater than 5,000 µg/g of lead shall be abated in accordance with 40 CFR 745.227(e).
</P>
<P>(3) Acceptable interim control methods for soil lead are impermanent surface coverings and land use controls.
</P>
<P>(i) Impermanent surface coverings may be used to treat lead-contaminated soil if applied in accordance with the following requirements. Examples of acceptable impermanent coverings include gravel, bark, sod, and artificial turf.
</P>
<P>(A) Impermanent surface coverings selected shall be designed to withstand the reasonably-expected traffic. For example, if the area to be treated is heavily traveled, neither grass or sod shall be used.
</P>
<P>(B) When loose impermanent surface coverings such as bark or gravel are used, they shall be applied in a thickness not less than six inches deep.
</P>
<P>(C) The impermanent surface covering material shall not contain more than 400 µg/g of lead.
</P>
<P>(D) Adequate controls to prevent erosion shall be used in conjunction with impermanent surface coverings.
</P>
<P>(ii) Land use controls may be used to reduce exposure to soil-lead hazards only if they effectively control access to areas with soil-lead hazards. Examples of land use controls include: fencing, warning signs, and landscaping.
</P>
<P>(A) Land use controls shall be implemented only if residents have reasonable alternatives to using the area to be controlled.
</P>
<P>(B) If land use controls are used for a soil area that is subject to erosion, measures shall be taken to contain the soil and control dispersion of lead.
</P>
<CITA TYPE="N">[64 FR 50218, Sept. 15, 1999, as amended at 69 FR 34274, June 21, 2004; 79 FR 35043, June 19, 2014; 82 FR 4172, Jan. 13, 2017]


</CITA>
</DIV8>


<DIV8 N="§ 35.1335" NODE="24:1.1.1.1.23.15.59.8" TYPE="SECTION">
<HEAD>§ 35.1335   Standard treatments.</HEAD>
<P>Standard treatments shall be conducted in accordance with this section.
</P>
<P>(a) <I>Paint stabilization.</I> All deteriorated paint on exterior and interior surfaces located on the residential property shall be stabilized in accordance with § 35.1330(a)(b), or abated in accordance with § 35.1325.
</P>
<P>(b) <I>Smooth and cleanable horizontal surfaces.</I> All horizontal surfaces, such as uncarpeted floors, stairs, interior window sills and window troughs, that are rough, pitted, or porous, shall be covered with a smooth, cleanable covering or coating, such as metal coil stock, plastic, polyurethane, or linoleum.
</P>
<P>(c) <I>Correcting dust-generating conditions.</I> Conditions causing friction or impact of painted surfaces shall be corrected in accordance with § 35.1330(c)(4)-(6).
</P>
<P>(d) <I>Bare residential soil.</I> Bare soil shall be treated in accordance with the requirements of § 35.1330, unless it is found not to be a soil-lead hazard in accordance with § 35.1320(b).
</P>
<P>(e) <I>Safe work practices.</I> All standard treatments described in paragraphs (a) through (d) of this section shall incorporate the use of safe work practices in accordance with § 35.1350.
</P>
<P>(f) <I>Clearance.</I> A clearance examination shall be performed in accordance with § 35.1340 at the conclusion of any lead hazard reduction activities.
</P>
<P>(g) <I>Qualifications.</I> An individual performing standard treatments must meet the training and/or supervision requirements of § 35.1330(a)(4).


</P>
</DIV8>


<DIV8 N="§ 35.1340" NODE="24:1.1.1.1.23.15.59.9" TYPE="SECTION">
<HEAD>§ 35.1340   Clearance.</HEAD>
<P>Clearance examinations required under subparts B, C, D, F through M, and R, of this part shall be performed in accordance with the provisions of this section.
</P>
<P>(a) <I>Clearance following abatement.</I> Clearance examinations performed following abatement of lead-based paint or lead-based paint hazards shall be performed in accordance with 40 CFR 745.227(e) and paragraphs (c)-(f) of this section. Such clearances shall be performed by a person certified to perform risk assessments or lead-based paint inspections.
</P>
<P>(b) <I>Clearance following activities other than abatement.</I> Clearance examinations performed following interim controls, paint stabilization, standard treatments, ongoing lead-based paint maintenance, or rehabilitation shall be performed in accordance with the requirements of this paragraph (b) and paragraphs (c) through (g) of this section. Clearance is not required if the work being cleared does not disturb painted surfaces of a total area more than that set forth in § 35.1350(d).
</P>
<P>(1) <I>Qualified personnel.</I> Clearance examinations shall be performed by:
</P>
<P>(i) A certified risk assessor;
</P>
<P>(ii) A certified lead-based paint inspector;
</P>
<P>(iii) A person who has successfully completed a training course for sampling technicians (or a discipline of similar purpose and title) that is developed or accepted by EPA or a State or tribal program authorized by EPA pursuant to 40 CFR part 745, subpart Q, and that is given by a training provider accredited by EPA or a State or Indian Tribe for training in lead-based paint inspection or risk assessment, provided a certified risk assessor or a certified lead-based paint inspector approves the work of the sampling technician and signs the report of the clearance examination; or
</P>
<P>(iv) A technician licensed or certified by EPA or a State or Indian Tribe to perform clearance examinations without the approval of a certified risk assessor or certified lead-based paint inspector, provided that a clearance examination by such a licensed or certified technician shall be performed only for a single-family property or individual dwelling units and associated common areas in a multi-unit property, and provided further that a clearance examination by such a licensed or certified sampling technician shall not be performed using random sampling of dwelling units or common areas in multifamily properties, except that a clearance examination performed by such a licensed or certified sampling technician is acceptable for any residential property if the clearance examination is approved and the report signed by a certified risk assessor or a certified lead-based paint inspector.
</P>
<P>(2) <I>Required activities.</I> (i) Clearance examinations shall include a visual assessment, dust sampling, submission of samples for analysis for lead in dust, interpretation of sampling results, and preparation of a report. Soil sampling is not required. Clearance examinations shall be performed in dwelling units, common areas, and exterior areas in accordance with this section and the steps set forth at 40 CFR 745.227(e)(8). If clearance is being performed after lead-based paint hazard reduction, paint stabilization, maintenance, or rehabilitation that affected exterior surfaces but did not disturb interior painted surfaces or involve elimination of an interior dust-lead hazard, interior clearance is not required if window, door, ventilation, and other openings are sealed during the exterior work. If clearance is being performed for more than 10 dwelling units of similar construction and maintenance, as in a multifamily property, random sampling for the purpose of clearance may be conducted in accordance with 40 CFR 745.227(e)(9).
</P>
<P>(ii) The visual assessment shall be performed to determine if deteriorated paint surfaces and/or visible amounts of dust, debris, paint chips or other residue are still present. Both exterior and interior painted surfaces shall be examined for the presence of deteriorated paint. If deteriorated paint or visible dust, debris or residue are present in areas subject to dust sampling, they must be eliminated prior to the continuation of the clearance examination, except elimination of deteriorated paint is not required if it has been determined, through paint testing or a lead-based paint inspection, that the deteriorated paint is not lead-based paint. If exterior painted surfaces have been disturbed by the hazard reduction, maintenance or rehabilitation activity, the visual assessment shall include an assessment of the ground and any outdoor living areas close to the affected exterior painted surfaces. Visible dust or debris in living areas shall be cleaned up and visible paint chips on the ground shall be removed.
</P>
<P>(iii) Dust samples shall be wipe samples and shall be taken on floors and, where practicable, interior window sills and window troughs. Dust samples shall be collected and analyzed in accordance with § 35.1315 of this part.
</P>
<P>(iv) Clearance reports shall be prepared in accordance with paragraph (c) of this section.
</P>
<P>(c) <I>Clearance report.</I> When clearance is required, the designated party shall ensure that a clearance report is prepared that provides documentation of the hazard reduction or maintenance activity as well as the clearance examination. When abatement is performed, the report shall be an abatement report in accordance with 40 CFR 745.227(e)(10). When another hazard reduction or maintenance activity requiring a clearance report is performed, the report shall include the following information:
</P>
<P>(1) The address of the residential property and, if only part of a multifamily property is affected, the specific dwelling units and common areas affected.
</P>
<P>(2) The following information on the clearance examination:
</P>
<P>(i) The date(s) of the clearance examination;
</P>
<P>(ii) The name, address, and signature of each person performing the clearance examination, including certification number;
</P>
<P>(iii) The results of the visual assessment for the presence of deteriorated paint and visible dust, debris, residue or paint chips;
</P>
<P>(iv) The results of the analysis of dust samples, in µg/sq.ft., by location of sample; and
</P>
<P>(v) The name and address of each laboratory that conducted the analysis of the dust samples, including the identification number for each such laboratory recognized by EPA under section 405(b) of the Toxic Substances Control Act (15 U.S.C. 2685(b)).
</P>
<P>(3) The following information on the hazard reduction or maintenance activity for which clearance was performed:
</P>
<P>(i) The start and completion dates of the hazard reduction or maintenance activity;
</P>
<P>(ii) The name and address of each firm or organization conducting the hazard reduction or maintenance activity and the name of each supervisor assigned;
</P>
<P>(iii) A detailed written description of the hazard reduction or maintenance activity, including the methods used, locations of exterior surfaces, interior rooms, common areas, and/or components where the hazard reduction activity occurred, and any suggested monitoring of encapsulants or enclosures; and
</P>
<P>(iv) If soil hazards were reduced, a detailed description of the location(s) of the hazard reduction activity and the method(s) used.
</P>
<P>(d) <I>Standards.</I> The clearance standards in § 35.1320(b)(2) shall apply. If test results equal or exceed the standards, the dwelling unit, worksite, or common area represented by the sample fails the clearance examination.
</P>
<P>(e) <I>Clearance failure.</I> All surfaces represented by a failed clearance sample shall be recleaned or treated by hazard reduction, and retested, until the applicable clearance level in § 35.1320(b)(2) is met.
</P>
<P>(f) <I>Independence.</I> Clearance examinations shall be performed by persons or entities independent of those performing hazard reduction or maintenance activities, unless the designated party uses qualified in-house employees to conduct clearance. An in-house employee shall not conduct both a hazard reduction or maintenance activity and its clearance examination.
</P>
<P>(g) <I>Worksite clearance.</I> Clearance of only the worksite is permitted after work covered by § 35.930, § 35.1330, § 35.1335, or § 35.1355, when containment is used to ensure that dust and debris generated by the work is kept within the worksite. Otherwise, clearance must be of the entire dwelling unit, common area, or outbuilding, as applicable. When clearance is of an interior worksite that is not an entire dwelling unit, common area, or outbuilding, dust samples shall be taken for paragraph (b) of this section as follows:
</P>
<P>(1) Sample, from each of at least four rooms, hallways, stairwells, or common areas within the dust containment area:
</P>
<P>(i) The floor (one sample); and
</P>
<P>(ii) Windows (one interior sill sample and one trough sample, if present); and
</P>
<P>(2) Sample the floor in a room, hallway, stairwell, or common area connected to the dust containment area, within five feet outside the area (one sample).
</P>
<CITA TYPE="N">[64 FR 50218, Sept. 15, 1999, as amended at 69 FR 34274, June 21, 2004]


</CITA>
</DIV8>


<DIV8 N="§ 35.1345" NODE="24:1.1.1.1.23.15.59.10" TYPE="SECTION">
<HEAD>§ 35.1345   Occupant protection and worksite preparation.</HEAD>
<P>This section establishes procedures for protecting dwelling unit occupants and the environment from contamination from lead-contaminated or lead-containing materials during hazard reduction activities.
</P>
<P>(a) <I>Occupant protection.</I> (1) Occupants shall not be permitted to enter the worksite during hazard reduction activities (unless they are employed in the conduct of these activities at the worksite), until after hazard reduction work has been completed and clearance, if required, has been achieved.
</P>
<P>(2) Occupants shall be temporarily relocated before and during hazard reduction activities to a suitable, decent, safe, and similarly accessible dwelling unit that does not have lead-based paint hazards, except if:
</P>
<P>(i) Treatment will not disturb lead-based paint, dust-lead hazards or soil-lead hazards;
</P>
<P>(ii) Only the exterior of the dwelling unit is treated, and windows, doors, ventilation intakes and other openings in or near the worksite are sealed during hazard control work and cleaned afterward, and entry free of dust-lead hazards, soil-lead hazards, and debris is provided;
</P>
<P>(iii) Treatment of the interior will be completed within one period of 8-daytime hours, the worksite is contained so as to prevent the release of leaded dust and debris into other areas, and treatment does not create other safety, health or environmental hazards (e.g., exposed live electrical wiring, release of toxic fumes, or on-site disposal of hazardous waste); or
</P>
<P>(iv) Treatment of the interior will be completed within 5 calendar days, the worksite is contained so as to prevent the release of leaded dust and debris into other areas, treatment does not create other safety, health or environmental hazards; and, at the end of work on each day, the worksite and the area within at least 10 feet (3 meters) of the containment area is cleaned to remove any visible dust or debris, and occupants have safe access to sleeping areas, and bathroom and kitchen facilities.
</P>
<P>(3) The dwelling unit and the worksite shall be secured against unauthorized entry, and occupants' belongings protected from contamination by dust-lead hazards and debris during hazard reduction activities. Occupants' belongings in the containment area shall be relocated to a safe and secure area outside the containment area, or covered with an impermeable covering with all seams and edges taped or otherwise sealed.
</P>
<P>(b) <I>Worksite preparation.</I> (1) The worksite shall be prepared to prevent the release of leaded dust, and contain lead-based paint chips and other debris from hazard reduction activities within the worksite until they can be safely removed. Practices that minimize the spread of leaded dust, paint chips, soil and debris shall be used during worksite preparation.
</P>
<P>(2) A warning sign shall be posted at each entry to a room where hazard reduction activities are conducted when occupants are present; or at each main and secondary entryway to a building from which occupants have been relocated; or, for an exterior hazard reduction activity, where it is easily read 20 feet (6 meters) from the edge of the hazard reduction activity worksite. Each warning sign shall be as described in 29 CFR 1926.62(m), except that it shall be posted irrespective of employees' lead exposure and, to the extent practicable, provided in the occupants' primary language.


</P>
</DIV8>


<DIV8 N="§ 35.1350" NODE="24:1.1.1.1.23.15.59.11" TYPE="SECTION">
<HEAD>§ 35.1350   Safe work practices.</HEAD>
<P>(a) <I>Prohibited methods.</I> Methods of paint removal listed in § 35.140 shall not be used.
</P>
<P>(b) <I>Occupant protection and worksite preparation.</I> Occupants and their belongings shall be protected, and the worksite prepared, in accordance with § 35.1345. A person performing this work shall be trained on hazards and either be supervised or have completed successfully one of the specified courses, in accordance with § 35.1330(a)(4).
</P>
<P>(c) <I>Specialized cleaning.</I> After hazard reduction activities have been completed, the worksite shall be cleaned using cleaning methods, products, and devices that are successful in cleaning up dust-lead hazards, such as a HEPA vacuum or other method of equivalent efficacy, and lead-specific detergents or equivalent.
</P>
<P>(d) <I>De minimis levels.</I> Safe work practices are not required when maintenance or hazard reduction activities do not disturb painted surfaces that total more than:
</P>
<P>(1) 20 square feet (2 square meters) on exterior surfaces;
</P>
<P>(2) 2 square feet (0.2 square meters) in any one interior room or space; or
</P>
<P>(3) 10 percent of the total surface area on an interior or exterior type of component with a small surface area. Examples include window sills, baseboards, and trim.
</P>
<CITA TYPE="N">[64 FR 50218, Sept. 15, 1999, as amended at 69 FR 34275, June 21, 2004]


</CITA>
</DIV8>


<DIV8 N="§ 35.1355" NODE="24:1.1.1.1.23.15.59.12" TYPE="SECTION">
<HEAD>§ 35.1355   Ongoing lead-based paint maintenance and reevaluation activities.</HEAD>
<P>(a) <I>Maintenance.</I> Maintenance activities shall be conducted in accordance with paragraphs (a)(2)-(6) of this section, except as provided in paragraph (a)(1) of this section.
</P>
<P>(1) Maintenance activities need not be conducted in accordance with this section if a lead-based paint inspection indicates that no lead-based paint is present in the dwelling units, common areas, and on exterior surfaces, or a clearance report prepared in accordance with § 35.1340(a) indicates that all lead-based paint has been removed.
</P>
<P>(2) A visual assessment for deteriorated paint, bare soil, and the failure of any hazard reduction measures shall be performed at unit turnover and every twelve months.
</P>
<P>(3) (i) <I>Deteriorated paint.</I> All deteriorated paint on interior and exterior surfaces located on the residential property shall be stabilized in accordance with § 35.1330(a)(b), except for any paint that an evaluation has found is not lead-based paint.
</P>
<P>(ii) <I>Bare soil.</I> All bare soil shall be treated with standard treatments in accordance with § 35.1335(d) through (g), or interim controls in accordance with § 35.1330(a) and (f); except for any bare soil that a current evaluation has found is not a soil-lead hazard.
</P>
<P>(4) Safe work practices, in accordance with sec. 35.1350, shall be used when performing any maintenance or renovation work that disturbs paint that may be lead-based paint.
</P>
<P>(5) Any encapsulation or enclosure of lead-based paint or lead-based paint hazards which has failed to maintain its effectiveness shall be repaired, or abatement or interim controls shall be performed in accordance with § 35.1325 or § 35.1330, respectively.
</P>
<P>(6) Clearance testing of the worksite shall be performed at the conclusion of repair, abatement or interim controls in accordance with § 35.1340.
</P>
<P>(7) Each dwelling unit shall be provided with written notice asking occupants to report deteriorated paint and, if applicable, failure of encapsulation or enclosure, along with the name, address and telephone number of the person whom occupants should contact. The language of the notice shall be in accordance with § 35.125(c)(3). The designated party shall respond to such report and stabilize the deteriorated paint or repair the encapsulation or enclosure within 30 days.
</P>
<P>(b) <I>Reevaluation.</I> Reevaluation shall be conducted in accordance with this paragraph (b), and the designated party shall conduct interim controls of lead-based paint hazards found in the reevaluation.
</P>
<P>(1) Reevaluation shall be conducted if hazard reduction has been conducted to reduce lead-based paint hazards found in a risk assessment or if standard treatments have been conducted, except that reevaluation is not required if any of the following cases are met:
</P>
<P>(i) An initial risk assessment found no lead-based paint hazards;
</P>
<P>(ii) A lead-based paint inspection found no lead-based paint; or
</P>
<P>(iii) All lead-based paint was abated in accordance with § 35.1325, provided that no failures of encapsulations or enclosures have been found during visual assessments conducted in accordance with § 35.1355(a)(2) or during other observations by maintenance and repair workers in accordance with § 35.1355(a)(5) since the encapsulations or enclosures were performed.
</P>
<P>(2) Reevaluation shall be conducted to identify:
</P>
<P>(i) Deteriorated paint surfaces with known or suspected lead-based paint;
</P>
<P>(ii) Deteriorated or failed interim controls of lead-based paint hazards or encapsulation or enclosure treatments;
</P>
<P>(iii) Dust-lead hazards; and
</P>
<P>(iv) Soil that is newly bare with lead levels equal to or above the standards in § 35.1320(b)(2).
</P>
<P>(3) Each reevaluation shall be performed by a certified risk assessor.
</P>
<P>(4) Each reevaluation shall be conducted in accordance with the following schedule if a risk assessment or other evaluation has found deteriorated lead-based paint in the residential property, a soil-lead hazard, or a dust-lead hazard on a floor or interior window sill. (Window troughs are not sampled during reevaluation). The first reevaluation shall be conducted no later than two years from completion of hazard reduction. Subsequent reevaluation shall be conducted at intervals of two years, plus or minus 60 days. To be exempt from additional reevaluation, at least two consecutive reevaluations conducted at such two-year intervals must be conducted without finding lead-based paint hazards or a failure of an encapsulation or enclosure. If, however, a reevaluation finds lead-based paint hazards or a failure, at least two more consecutive reevaluations conducted at such two year intervals must be conducted without finding lead-based paint hazards or a failure.
</P>
<P>(5) Each reevaluation shall be performed as follows:
</P>
<P>(i) Dwelling units and common areas shall be selected and reevaluated in accordance with § 35.1320(b).
</P>
<P>(ii) The worksites of previous hazard reduction activities that are similar on the basis of their original lead-based paint hazard and type of treatment shall be grouped. Worksites within such groups shall be selected and reevaluated in accordance with § 35.1320(b).
</P>
<P>(6) Each reevaluation shall include reviewing available information, conducting selected visual assessment, recommending responses to hazard reduction omissions or failures, performing selected evaluation of paint, soil and dust, and recommending response to newly-found lead-based paint hazards.
</P>
<P>(i) <I>Review of available information.</I> The risk assessor shall review any available past evaluation, hazard reduction and clearance reports, and any other available information describing hazard reduction measures, ongoing maintenance activities, and relevant building operations.
</P>
<P>(ii) <I>Visual assessment.</I> The risk assessor shall:
</P>
<P>(A) Visually evaluate all lead-based paint hazard reduction treatments, any known or suspected lead-based paint, any deteriorated paint, and each exterior site, and shall identify any new areas of bare soil;
</P>
<P>(B) Determine acceptable options for controlling the hazard; and
</P>
<P>(C) Await the correction of any hazard reduction omission or failure and the reduction of any lead-based paint hazard before sampling any dust or soil the risk assessor determines may reasonably be associated with such hazard.
</P>
<P>(iii) <I>Reaction to hazard reduction omission or failure.</I> If any hazard reduction control has not been implemented or is failing (e.g., an encapsulant is peeling away from the wall, a paint-stabilized surface is no longer intact, or gravel covering an area of bare soil has worn away), or deteriorated lead-based paint is present, the risk assessor shall:
</P>
<P>(A) Determine acceptable options for controlling the hazard; and
</P>
<P>(B) Await the correction of any hazard reduction omission or failure and the reduction of any lead-based paint hazard before sampling any dust or soil the risk assessor determines may reasonably be associated with such hazard.
</P>
<P>(iv) <I>Selected paint, soil and dust evaluation.</I> (A) The risk assessor shall sample deteriorated paint surfaces identified during the visual assessment and have the samples analyzed, in accordance with 40 CFR 745.227(b)(3)(4), but only if reliable information about lead content is unavailable.
</P>
<P>(B) The risk assessor shall evaluate new areas of bare soil identified during the visual assessment. Soil samples shall be collected and analyzed in accordance with 40 CFR 745.227(d)(8)-(11), but only if the soil lead levels have not been previously measured.
</P>
<P>(C) The risk assessor shall take selected dust samples and have them analyzed. Dust samples shall be collected and analyzed in accordance with § 35.1320(b). At least two composite samples, one from floors and the other from interior window sills, shall be taken in each dwelling unit and common area selected. Each composite sample shall consist of four individual samples, each collected from a different room or area. If the dwelling unit contains both carpeted and uncarpeted living areas, separate floor samples are required from the carpeted and uncarpeted areas. Equivalent single-surface sampling may be used instead of composite sampling.
</P>
<P>(7) The risk assessor shall provide the designated party with a written report documenting the presence or absence of lead-based paint hazards, the current status of any hazard reduction and standard treatment measures used previously and any newly-conducted evaluation and hazard reduction activities. The report shall include the information in 40 CFR 745.227(d)(11), and shall:
</P>
<P>(i) Identify any lead-based paint hazards previously detected and discuss the effectiveness of any hazard reduction or standard treatment measures used, and list those for which no measures have been used.
</P>
<P>(ii) Describe any new hazards found and present the owner with acceptable control options and their accompanying reevaluation schedules.
</P>
<P>(iii) Identify when the next reevaluation, if any, must occur, in accordance with the requirements of paragraph (b)(4) of this section.
</P>
<P>(c) <I>Response to the reevaluation</I>—(1) <I>Hazard reduction omission or failure found by a reevaluation.</I> The designated party shall respond in accordance with paragraph (b)(6)(iii)(A) of this section to a report by the risk assessor of a hazard reduction control that has not been implemented or is failing, or that deteriorated lead-based paint is present.
</P>
<P>(2) <I>Newly-identified lead-based paint hazard found by a reevaluation.</I> The designated party shall treat each:
</P>
<P>(i) Dust-lead hazard or paint lead hazard by cleaning or hazard reduction measures, which are considered completed when clearance is achieved in accordance with § 35.1340.
</P>
<P>(ii) Soil-lead hazard by hazard reduction measures, which are considered completed when clearance is achieved in accordance with § 35.1340.
</P>
<CITA TYPE="N">[64 FR 50218, Sept. 15, 1999, as amended at 69 FR 34275, June 21, 2004]


</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="40" NODE="24:1.1.1.1.24" TYPE="PART">
<HEAD>PART 40—ACCESSIBILITY STANDARDS FOR DESIGN, CONSTRUCTION, AND ALTERATION OF PUBLICLY OWNED RESIDENTIAL STRUCTURES
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d), 4153. 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>36 FR 24437, Dec. 22, 1971, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV8 N="§ 40.1" NODE="24:1.1.1.1.24.0.59.1" TYPE="SECTION">
<HEAD>§ 40.1   Purpose.</HEAD>
<P>This part prescribes standards for the design, construction, and alteration of publicly owned residential structures to insure that physically handicapped persons will have ready access to, and use of, such structures. 


</P>
</DIV8>


<DIV8 N="§ 40.2" NODE="24:1.1.1.1.24.0.59.2" TYPE="SECTION">
<HEAD>§ 40.2   Definition of “residential structure”.</HEAD>
<P>(a) As used in this part, the term <I>residential structure</I> means a residential structure (other than a privately owned residential structure and a residential structure on a military reservation): 
</P>
<P>(1) Constructed or altered by or on behalf of the United States; 
</P>
<P>(2) Leased in whole or in part by the United States after August 12, 1968, if constructed or altered in accordance with plans and specifications of the United States; or 
</P>
<P>(3) Financed in whole or in part by a grant or loan made by the United States after August 12, 1968, if such residential structure is subject to standards for design, construction, or alteration issued under authority of the law authorizing such grant or loan.
</P>
<P>(b) As used in this part, <I>residential structure</I> includes the following: 
</P>
<P>(1) Any residential structure which, in whole or in part, is intended for occupancy by the physically handicapped or designed for occupancy by the elderly; 
</P>
<P>(2) All elevator residential structures; 
</P>
<P>(3) Any residential structure that contains 15 or more housing units, unless otherwise specifically prescribed by the Uniform Federal Accessibility Standards.
</P>
<P>(4) Nonresidential structures appurtenant to a residential structure covered under this part. 
</P>
<CITA TYPE="N">[36 FR 24437, Dec. 22, 1971, as amended at 49 FR 31620, Aug. 7, 1984; 83 FR 26361, June 7, 2018]


</CITA>
</DIV8>


<DIV8 N="§ 40.3" NODE="24:1.1.1.1.24.0.59.3" TYPE="SECTION">
<HEAD>§ 40.3   Applicability.</HEAD>
<P>(a) The standards prescribed in § 40.4 are applicable to residential structures designed after the effective date of this part. If the design of a structure commenced prior to that date, the standards shall be made applicable to the maximum extent practicable, as determined by the head of the department, agency, or instrumentality of the United States concerned. If no design stage is involved in the construction or alteration of a residential structure, the standards of § 40.4 shall be applicable to construction or alteration for which bids are solicited after the effective date of this part. 
</P>
<P>(b) The standards prescribed in § 40.4 are not applicable to: 
</P>
<P>(1) Any portion of a residential structure or its grounds which need not, because of its intended use, be made accessible to, or usable by, the public or by physically handicapped persons; 
</P>
<P>(2) The alteration of an existing residential structure to the extent that the alteration does not involve work which is related to the standards of this part; or 
</P>
<P>(3) The alteration of an existing building, or of such portions thereof, to which application of the standards is not structurally feasible. 


</P>
</DIV8>


<DIV8 N="§ 40.4" NODE="24:1.1.1.1.24.0.59.4" TYPE="SECTION">
<HEAD>§ 40.4   Standards.</HEAD>
<P>Residential structures subject to this part shall be designed, constructed or altered to ensure that physically handicapped persons have access to, and use of, these structures. This requirement is satisfied by using the Uniform Federal Accessibility Standards (UFAS).
</P>
<CITA TYPE="N">[49 FR 31621, Aug. 7, 1984, as amended at 83 FR 26361, June 7, 2018]


</CITA>
</DIV8>


<DIV8 N="§ 40.5" NODE="24:1.1.1.1.24.0.59.5" TYPE="SECTION">
<HEAD>§ 40.5   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 40.6" NODE="24:1.1.1.1.24.0.59.6" TYPE="SECTION">
<HEAD>§ 40.6   Records.</HEAD>
<P>The administering agency's file on each contract, grant, or loan involving the design, construction, or alteration of a residential structure shall include appropriate documentation indicating: (a) That the standards prescribed in § 40.4 are applicable to and have been or will be incorporated in the residential structure, or (b) that the grant or loan has been or will be made subject to the requirement that the standards are applicable and will be incorporated in the residential structure. The file should also indicate any modification or waiver of the standards which has been issued by the Secretary of HUD. 


</P>
</DIV8>


<DIV8 N="§ 40.7" NODE="24:1.1.1.1.24.0.59.7" TYPE="SECTION">
<HEAD>§ 40.7   Availability of Accessibility Standards.</HEAD>
<P>Copies of the Uniform Federal Accessibility Standards are available from the Office of Fair Housing and Equal Opportunity, U.S. Department of Housing and Urban Development, Room 5230, 451 Seventh Street, SW., Washington, DC 20410, telephone (202) 755-5404 (this is not a toll-free number). Hearing or speech-impaired individuals may call HUD's TDD number (202) 708-0113 or 1-800-877-8399 (Federal Information Relay Service TDD). (Other than the “800” number, these are not toll-free numbers.) 
</P>
<CITA TYPE="N">[61 FR 5204, Feb. 9, 1996]


</CITA>
</DIV8>

</DIV5>


<DIV5 N="41" NODE="24:1.1.1.1.25" TYPE="PART">
<HEAD>PART 41—POLICIES AND PROCEDURES FOR THE ENFORCEMENT OF STANDARDS AND REQUIREMENTS FOR ACCESSIBILITY BY THE PHYSICALLY HANDICAPPED 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>Architectural Barriers Act of 1968, as amended by Pub. L. 90-480, 42 U.S.C. 4151 <I>et seq.</I> 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>44 FR 62806, Oct. 31, 1979, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV8 N="§ 41.1" NODE="24:1.1.1.1.25.0.59.1" TYPE="SECTION">
<HEAD>§ 41.1   Applicability.</HEAD>
<P>This part sets forth policies and procedures for the enforcement of standards and requirements for accessibility by the physically handicapped imposed: 
</P>
<P>(a) For nonresidential buildings or facilities by regulations issued by the General Services Administration at subchapter D of the Federal Property Management Regulations, subpart 101-19.6—Accommodations for the Physically Handicapped, or 
</P>
<P>(b) By regulation or contract under any other program of the Department, except a program subject only to standards or requirements at 24 CFR part 8 imposed pursuant to section 504 of the Rehabilitation Act of 1973. 
</P>
<FP>The policies and procedures of this part shall apply after the effective date of these regulations to all complaints received, and/or findings of noncompliance made, regarding buildings or facilities subject to such regulatory or contractural requirements. 


</FP>
</DIV8>


<DIV8 N="§ 41.2" NODE="24:1.1.1.1.25.0.59.2" TYPE="SECTION">
<HEAD>§ 41.2   Definitions.</HEAD>
<P>As used in this part, the term Secretary means the Secretary of Housing and Urban Development, or to the extent of any delegation of authority by the Secretary to act under this part, any other Department Official to whom authority has been delegated. 


</P>
</DIV8>


<DIV8 N="§ 41.3" NODE="24:1.1.1.1.25.0.59.3" TYPE="SECTION">
<HEAD>§ 41.3   Assurance and declaration required.</HEAD>
<P>(a) Each Assistant Secretary shall, as a condition for approval of any contract or application for assistance under a program imposing standards and/or requirements for accessibility which are subject to this part, require an assurance of compliance with those standards and requirements. Such assurance shall be in a form acceptable to the Secretary. 
</P>
<P>(b) For each project covered under this part, except a project subject to Departmental examinations and inspections as set forth in § 41.5(a), the responsible Assistant Secretary shall require a declaration as to project drawings, specifications, and other construction documents. The declaration shall be signed by the licensed, or registered, architect or engineer, or by such other responsible official as designated by HUD, who has prepared such construction documents. The declaration shall affirm that the proposed project, to the best knowledge and belief of the declarer, conforms to applicable accessibility design standards and requirements. The declaration statement shall be in a form acceptable to the Secretary. 


</P>
</DIV8>


<DIV8 N="§ 41.4" NODE="24:1.1.1.1.25.0.59.4" TYPE="SECTION">
<HEAD>§ 41.4   Waiver or modification of standards.</HEAD>
<P>(a) The applicability of standards and requirements for accessibility by the physically handicapped may be waived or modified on a case-by-case basis upon a written request from a recipient of a Departmental grant or loan or from a Departmental agency leasing a building or facility. 
</P>
<P>(b) For residential buildings or facilities, a waiver or modification may be granted only by the Secretary. 
</P>
<P>(c) Upon the recommendation of an Assistant Secretary, a waiver or modification for nonresidential buildings or facilities may be granted only by the Administrator, General Services Administration. 
</P>
<P>(d) No request for a waiver or modification shall be recommended for approval by an Assistant Secretary or approved by the Secretary unless the following criteria obtain: 
</P>
<P>(1) The granting of the waiver or modification is based upon findings of fact, and is not inconsistent with the provisions of the Architectural Barriers Act, and 
</P>
<P>(2) Application of the requirement or standard would adversely affect the purposes of the Departmental program under which the loan or grant is being provided or for which the building or facility is being leased. 
</P>
<P>(e) Requests for a waiver or modification shall be submitted to the appropriate Assistant Secretary for review. Each request shall include: 
</P>
<P>(1) The name and address of the requestor. 
</P>
<P>(2) The name and location of the involved building or facility. 
</P>
<P>(3) Any applicable plans, drawings, specifications or other descriptions of the building or facility. 
</P>
<P>(4) The standard provision or requirement from which the requestor seeks a waiver or modification. 
</P>
<P>(5) A description of the building or facility as to its accessibility for the physically handicapped and how the waiving or modification of a standard or requirement would affect that accessibility. 
</P>
<P>(6) A statement of the facts which establish that the criteria of paragraph (d) of this section would be satisfied. 
</P>
<P>(7) A description of the steps taken, or to be taken, to comply with standards and requirements for which a waiver or modification is not being requested. 
</P>
<P>(8) Such other information as the requestor or the responsible Assistant Secretary deems appropriate or necessary. 
</P>
<P>(f) If the responsible Assistant Secretary finds that the criteria of paragraph (d) of this section are satisfied, then he or she shall submit the request along with his or her recommendations to the Secretary for action or for referral to the Administrator, General Services Administration for action. In reviewing request for waiver and modifications, the Secretary shall assure consistent Department policy regarding the removal of architectural barriers and accessibility by physically handicapped persons. 
</P>
<P>(g) All waivers and modifications granted pursuant to this part shall have only future effect on; and are limited to cases for which the request is made. 


</P>
</DIV8>


<DIV8 N="§ 41.5" NODE="24:1.1.1.1.25.0.59.5" TYPE="SECTION">
<HEAD>§ 41.5   Achieving compliance.</HEAD>
<P>(a) <I>Examinations and inspections.</I> If, for any project, an Assistant Secretary requires Departmental architectural and engineering examinations of drawings and specifications or other construction documents or requires Departmental architectural and engineering inspections during or upon completion of construction, those examinations and inspections shall include a determination of compliance with standards and requirements for accessibility referenced in this part. 
</P>
<P>(b) <I>Periodic compliance reviews.</I> The Secretary, in consultation with the appropriate Assistant Secretary, shall conduct surveys and investigations as deemed appropriate to achieve compliance with standards or requirements subject to this part. 
</P>
<P>(c) <I>Complaints.</I> Any interested person who has reason to believe that there has been noncompliance with standards or requirements subject to this part, may, by himself or herself, or by a representative, file a written complaint with the responsible Department Official or with the Architectural and Transportation Barriers Compliance Board, Washington, DC 20201. 
</P>
<P>(d) <I>Investigations.</I> The Secretary shall, after consultation with the appropriate Assistant Secretary, make a prompt investigation whenever a compliance review, report, complaint, or any other information indicates a possible failure to comply with standards or requirements subject to this part. The investigation should include a determination of the authority under which the standards or requirements were imposed and, where appropriate, a review of the records kept pursuant to 24 CFR 40.6; the circumstances under which the building of facility was designed, constructed or altered; and other factors relevant to a determination as to whether there has been noncompliance with this part. 
</P>
<P>(e) <I>Resolution of matters.</I> (1) If any examination, inspection, periodic compliance review, complaint, or investigation pursuant to this section indicates a failure to comply with the applicable standards or requirements, the Secretary shall attempt to gain voluntary compliance whenever possible. 
</P>
<P>(2) If it has been determined that voluntary compliance cannot be achieved, the Secretary shall refer the matter to the appropriate Assistant Secretary for action pursuant to his or her program authority regarding the residential structure or other building or facility under investigation, to achieve compliance with the requirements subject to this part. The Assistant Secretary shall report to the Secretary within 30 days of the date of such referral regarding the action taken and the schedule and means of achieving compliance, except that the Secretary may specify a shorter or longer reporting period, as deeded appropriate. 
</P>
<P>(f) <I>Disposition of unresolved complaints.</I> Unresolved complaints shall be referred to the Architectural and Transportation Barriers Compliance Board to be processed in accordance with 36 CFR part 1150. A complaint shall be deemed unresolved if it is not resolved within 90 days of the date of the filing of the complaint with the Department. 
</P>
<P>(g) <I>Compliance action by other individuals.</I> Individuals other than the Secretary may receive complaints and undertake other appropriate actions to achieve compliance with requirements subject to this part, so long as initial notification of such complaints or proposed actions is given both to the Secretary and the appropriate Assistant Secretary. 


</P>
</DIV8>


<DIV8 N="§ 41.6" NODE="24:1.1.1.1.25.0.59.6" TYPE="SECTION">
<HEAD>§ 41.6   Matters involving the Architectural and Transportation Barriers Compliance Board.</HEAD>
<P>(a) <I>Complaints.</I> With respect to any complaint referred to the responsible Department Official by the Architectural and Transportation Barriers Compliance Board (A&amp;TBCB), the procedures set forth in this part shall apply. In such a case, the Secretary shall coordinate all investigations and/or other compliance actions to assure that the Department resolves any architectural barriers deficiencies so as to respond to the A&amp;TBCB within its required 60-day period set forth at 36 CFR 1150.41 for the informal resolution of complaints. 
</P>
<P>(b) <I>Citations.</I> The Office of General Counsel shall, with the assistance of the appropriate Assistant Secretary, respond to any citation issued by the A&amp;TBCB to the Department alleging noncompliance with the standards issued pursuant to the Architectural Barriers Act of 1968, as amended. The applicable procedures regarding such a citation are set forth at 36 CFR part 1150. 


</P>
</DIV8>

</DIV5>


<DIV5 N="42" NODE="24:1.1.1.1.26" TYPE="PART">
<HEAD>PART 42—DISPLACEMENT, RELOCATION ASSISTANCE, AND REAL PROPERTY ACQUISITION FOR HUD AND HUD-ASSISTED PROGRAMS 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d), 4601, 5304, and 12705(b). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 51757, Oct. 3, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:1.1.1.1.26.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 42.1" NODE="24:1.1.1.1.26.1.59.1" TYPE="SECTION">
<HEAD>§ 42.1   Applicable rules.</HEAD>
<P>(a) <I>URA.</I> HUD-assisted programs and projects are subject to the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, 42 U.S.C. 4601 (URA) (42 U.S.C. 4601), and implementing regulations issued by the Department of Transportation at 49 CFR part 24. 
</P>
<P>(b) <I>Section 104(d).</I> In addition to the URA, the Community Development Block Grant (CDBG), Urban Development Action Grant (UDAG), and HOME Investment Partnerships (HOME) programs are also subject to section 104(d) of the Housing and Community Development Act of 1974 (42 U.S.C. 5304(d)). The provisions applicable to these programs are set out in subpart C of this part. 
</P>
<P>(c) <I>Additional requirements.</I> Applicable program regulations may contain additional relocation provisions. 


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.1.1.1.26.2" TYPE="SUBPART">
<HEAD>Subpart B [Reserved]</HEAD>

</DIV6>


<DIV6 N="C" NODE="24:1.1.1.1.26.3" TYPE="SUBPART">
<HEAD>Subpart C—Requirements Under Section 104(d) of Housing and Community Development Act of 1974</HEAD>


<DIV8 N="§ 42.301" NODE="24:1.1.1.1.26.3.59.1" TYPE="SECTION">
<HEAD>§ 42.301   Applicability.</HEAD>
<P>This subpart applies only to CDBG grants under 24 CFR part 570, subparts D, F, and I (Entitlement grants, HUD-Administered Small Cities, and State programs); grants under 24 CFR part 570, subpart G (Urban Development Action Grants), and Loan Guarantees under 24 CFR part 570, subpart M; and assistance to State and local governments under 24 CFR part 92 (HOME program). 


</P>
</DIV8>


<DIV8 N="§ 42.305" NODE="24:1.1.1.1.26.3.59.2" TYPE="SECTION">
<HEAD>§ 42.305   Definitions.</HEAD>
<P>The terms <I>Fair Market Rent (FMR), HUD, Section 8,</I> and <I>Uniform Relocation Act (URA)</I> are defined in part 5 of this title. Otherwise, as used in this subpart: 
</P>
<P><I>Comparable replacement dwelling unit</I> means a dwelling unit that: 
</P>
<P>(1) Meets the criteria of 49 CFR 24.2(d)(1) through (6); and 
</P>
<P>(2) Is available at a monthly cost for rent plus estimated average monthly utility costs that does not exceed the “Total Tenant Payment” determined under § 813.107 of this title, after taking into account any rental assistance the household would receive. 
</P>
<P><I>Conversion.</I> (1) This term means altering a housing unit so that it is:
</P>
<P>(i) Used for nonhousing purposes; 
</P>
<P>(ii) Used for housing purposes, but no longer meets the definition of lower-income dwelling unit; or 
</P>
<P>(iii) Used as an emergency shelter. 
</P>
<P>(2) A housing unit that continues to be used for housing after completion of the project is not considered a “conversion” if, upon completion of the project, the unit is owned and occupied by a person who owned and occupied the unit before the project. 
</P>
<P><I>Displaced person</I> means a lower-income person who, in connection with an activity assisted under any program subject to this subpart, permanently moves from real property or permanently moves personal property from real property as a direct result of the demolition or conversion of a lower-income dwelling. For purposes of this definition, a permanent move includes a move made permanently and: 
</P>
<P>(1) After notice by the grantee to move from the property following initial submission to HUD of the consolidated plan required of entitlement grantees pursuant to § 570.302; of an application for assistance pursuant to § 570.426, § 570.430, or § 570.465 that is thereafter approved; or an application for loan assistance under § 570.701 that is thereafter approved; 
</P>
<P>(2) After notice by the property owner to move from the property, following the submission of a request for financial assistance by the property owner (or other person in control of the site) that is thereafter approved; or 
</P>
<P>(3) Before the dates described in this definition, if HUD or the grantee determine that the displacement was a direct result of conversion or demolition in connection with an activity subject to this subpart for which financial assistance has been requested and is thereafter approved. 
</P>
<P><I>HCD Act of 1974</I> means the Housing and Community Development Act of 1974 (42 U.S.C. 5301 <I>et seq.</I>). 
</P>
<P><I>Lower-income dwelling unit</I> means a dwelling unit with a market rent (including utility costs) that does not exceed the applicable Fair Market Rent (FMR) for existing housing established under 24 CFR part 888. 
</P>
<P><I>Lower-income person</I> means, as appropriate, a “low and moderate income person” as that term is defined in § 570.3 of this title, or a “low-income family” as that term is defined in § 92.2 of this title. 
</P>
<P><I>Recipient</I> means CDBG grantee, UDAG grantee, or the HOME participating jurisdiction. 
</P>
<P><I>Standard condition</I> and <I>substandard condition suitable for rehabilitation</I> have the meaning the recipient has established for those terms in its HUD-approved consolidated plan pursuant to 24 CFR part 91. In the case of a unit of general local government funded by a State, either the State's definitions for those terms or the definitions adopted by the unit of general local government for this purpose shall apply. 
</P>
<P><I>Vacant occupiable dwelling unit</I> means a vacant dwelling unit that is in a standard condition; a vacant dwelling unit that is in a substandard condition, but is suitable for rehabilitation; or a dwelling unit in any condition that has been occupied (except by a squatter) at any time within the period beginning 3 months before the date of execution of the agreement by the recipient covering the rehabilitation or demolition. 


</P>
</DIV8>


<DIV8 N="§ 42.325" NODE="24:1.1.1.1.26.3.59.3" TYPE="SECTION">
<HEAD>§ 42.325   Residential antidisplacement and relocation assistance plan.</HEAD>
<P>(a) <I>Certification.</I> (1) As part of its consolidated plan under 24 CFR part 91, the recipient must certify that it has in effect and is following a residential antidisplacement and relocation assistance plan. 
</P>
<P>(2) A unit of general local government receiving funds from the State must certify to the State that it has in effect and is following a residential antidisplacement and relocation assistance plan, and that it will minimize displacement of persons as a result of assisted activities. The State may require the unit of general local government to follow the State's plan or permit it to develop its own plan. A unit of general local government that develops its own plan must adopt the plan and make it public. 
</P>
<P>(b) <I>Plan contents.</I> (1) The plan shall indicate the steps that will be taken consistent with other goals and objectives of the program, as provided in parts 92 and 570 of this title, to minimize the displacement of families and individuals from their homes and neighborhoods as a result of any assisted activities. 
</P>
<P>(2) The plan shall provide for relocation assistance in accordance with § 42.350. 
</P>
<P>(3) The plan shall provide one-for-one replacement units to the extent required by § 42.375. 


</P>
</DIV8>


<DIV8 N="§ 42.350" NODE="24:1.1.1.1.26.3.59.4" TYPE="SECTION">
<HEAD>§ 42.350   Relocation assistance for displaced persons.</HEAD>
<P>A displaced person may choose to receive either assistance under the URA and implementing regulations at 49 CFR part 24 or assistance under section 104(d) of the HCD Act of 1974, including: 
</P>
<P>(a) <I>Advisory services.</I> Advisory services at the levels described in 49 CFR part 24. A displaced person must be advised of his or her rights under the Fair Housing Act (42 U.S.C. 3601-19). If the comparable replacement dwelling to be provided to a minority person is located in an area of minority concentration, as defined in the recipient's consolidated plan, if applicable, the minority person must also be given, if possible, referrals to comparable and suitable decent, safe, and sanitary replacement dwellings not located in such areas. 
</P>
<P>(b) <I>Moving expenses.</I> Payment for moving expenses at the levels described in 49 CFR part 24. 
</P>
<P>(c) <I>Security deposits and credit checks.</I> The reasonable and necessary cost of any security deposit required to rent the replacement dwelling unit, and for credit checks required to rent or purchase the replacement dwelling unit. 
</P>
<P>(d) <I>Interim living costs.</I> The recipient shall reimburse a person for actual reasonable out-of-pocket costs incurred in connection with a displacement, including moving expenses and increased housing costs, if: 
</P>
<P>(1) The person must relocate temporarily because continued occupancy of the dwelling unit constitutes a substantial danger to the health or safety of the person or the public; or 
</P>
<P>(2) The person is displaced from a “lower-income dwelling unit,” none of the comparable replacement dwelling units to which the person has been referred qualifies as a lower-income dwelling unit, and a suitable lower-income dwelling unit is scheduled to become available in accordance with § 42.375. 
</P>
<P>(e) <I>Replacement housing assistance.</I> Persons are eligible to receive one of the following two forms of replacement housing assistance: 
</P>
<P>(1) Each person must be offered rental assistance equal to 60 times the amount necessary to reduce the monthly rent and estimated average monthly cost of utilities for a replacement dwelling (comparable replacement dwelling or decent, safe, and sanitary replacement dwelling to which the person relocates, whichever costs less) to the “Total Tenant Payment,” as determined under part 813 of this title. All or a portion of this assistance may be offered through a voucher for rental assistance (if available) provided under Section 8. If a Section 8 voucher is provided to a person, the recipient must provide referrals to comparable replacement dwelling units where the owner is willing to participate in the Section 8 Tenant-Based Assistance Existing Housing Program (see part 982 of this title). When provided, cash assistance will generally be in installments, in accordance with 42 U.S.C. 3537c; or 
</P>
<P>(2) If the person purchases an interest in a housing cooperative or mutual housing association and occupies a decent, safe, and sanitary dwelling in the cooperative or association, the person may elect to receive a payment equal to the capitalized value of 60 times the amount that is obtained by subtracting the “Total Tenant Payment,” as determined under part 813 of this title, from the monthly rent and estimated average monthly cost of utilities at a comparable replacement dwelling unit. To compute the capitalized value, the installments shall be discounted at the rate of interest paid on passbook savings deposits by a federally insured financial institution conducting business within the recipient's jurisdiction. To the extent necessary to minimize hardship to the household, the recipient shall, subject to appropriate safeguards, issue a payment in advance of the purchase of the interest in the housing cooperative or mutual housing association. 
</P>
<CITA TYPE="N">[61 FR 51757, Oct. 3, 1996, as amended at 89 FR 38290, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 42.375" NODE="24:1.1.1.1.26.3.59.5" TYPE="SECTION">
<HEAD>§ 42.375   One-for-one replacement of lower-income dwelling units.</HEAD>
<P>(a) <I>Units that must be replaced.</I> All occupied and vacant occupiable lower-income dwelling units that are demolished or converted to a use other than as lower-income dwelling units in connection with an assisted activity must be replaced with comparable lower-income dwelling units. 
</P>
<P>(b) <I>Acceptable replacement units.</I> Replacement lower-income dwelling units may be provided by any government agency or private developer and must meet the following requirements: 
</P>
<P>(1) The units must be located within the recipient's jurisdiction. To the extent feasible and consistent with other statutory priorities, the units shall be located within the same neighborhood as the units replaced. 
</P>
<P>(2) The units must be sufficient in number and size to house no fewer than the number of occupants who could have been housed in the units that are demolished or converted. The number of occupants who could have been housed in units shall be determined in accordance with applicable local housing occupancy codes. The recipient may not replace those units with smaller units (e.g., a 2-bedroom unit with two 1-bedroom units), unless the recipient has provided the information required under paragraph (c)(7) of this section. 
</P>
<P>(3) The units must be provided in standard condition. Replacement lower-income dwelling units may include units that have been raised to standard from substandard condition if: 
</P>
<P>(i) No person was displaced from the unit (see definition of “displaced person” in § 42.305); and 
</P>
<P>(ii) The unit was vacant for at least 3 months before execution of the agreement between the recipient and the property owner. 
</P>
<P>(4) The units must initially be made available for occupancy at any time during the period beginning 1 year before the recipient makes public the information required under paragraph (d) of this section and ending 3 years after the commencement of the demolition or rehabilitation related to the conversion. 
</P>
<P>(5) The units must be designed to remain lower-income dwelling units for at least 10 years from the date of initial occupancy. Replacement lower-income dwelling units may include, but are not limited to, public housing or existing housing receiving Section 8 project-based assistance. 
</P>
<P>(c) <I>Preliminary information to be made public.</I> Before the recipient enters into a contract committing it to provide funds under programs covered by this subpart for any activity that will directly result in the demolition of lower-income dwelling units or the conversion of lower-income dwelling units to another use, the recipient must make public, and submit in writing to the HUD field office (or State, in the case of a unit of general local government funded by the State), the following information: 
</P>
<P>(1) A description of the proposed assisted activity; 
</P>
<P>(2) The location on a map and number of dwelling units by size (number of bedrooms) that will be demolished or converted to a use other than for lower-income dwelling units as a direct result of the assisted activity; 
</P>
<P>(3) A time schedule for the commencement and completion of the demolition or conversion; 
</P>
<P>(4) The location on a map and the number of dwelling units by size (number of bedrooms) that will be provided as replacement dwelling units. If such data are not available at the time of the general submission, the submission shall identify the general location on an area map and the approximate number of dwelling units by size, and information identifying the specific location and number of dwelling units by size shall be submitted and disclosed to the public as soon as it is available; 
</P>
<P>(5) The source of funding and a time schedule for the provision of replacement dwelling units; 
</P>
<P>(6) The basis for concluding that each replacement dwelling unit will remain a lower-income dwelling unit for at least 10 years from the date of initial occupancy; and 
</P>
<P>(7) Information demonstrating that any proposed replacement of dwelling units with smaller dwelling units (e.g., a 2-bedroom unit with two 1-bedroom units) is consistent with the needs assessment contained in its HUD-approved consolidated plan. A unit of general local government funded by the State that is not required to submit a consolidated plan to HUD must make public information demonstrating that the proposed replacement is consistent with the housing needs of lower-income households in the jurisdiction. 
</P>
<P>(d) <I>Replacement not required.</I> (1) In accordance with 42 U.S.C. 5304(d)(3), the one-for-one replacement requirement of this section does not apply to the extent the HUD field office determines, based upon objective data, that there is an adequate supply of vacant lower-income dwelling units in standard condition available on a nondiscriminatory basis within the area. 
</P>
<P>(2) The recipient must submit directly to the HUD field office the request for determination that the one-for-one replacement requirement does not apply. Simultaneously with the submission of the request, the recipient must make the submission public and inform interested persons that they have 30 days from the date of submission to provide to HUD additional information supporting or opposing the request. 
</P>
<P>(3) A unit of general local government funded by the State must submit the request for determination under this paragraph to the State. Simultaneously with the submission of the request, the unit of general local government must make the submission public and inform interested persons that they have 30 days from the date of submission to provide to the State additional information supporting or opposing the request. If the State, after considering the submission and the additional data, agrees with the request, the State must provide its recommendation with supporting information to the field office. 


</P>
</DIV8>


<DIV8 N="§ 42.390" NODE="24:1.1.1.1.26.3.59.6" TYPE="SECTION">
<HEAD>§ 42.390   Appeals.</HEAD>
<P>A person who disagrees with the recipient's determination concerning whether the person qualifies as a “displaced person,” or with the amount of relocation assistance for which the person is eligible, may file a written appeal of that determination with the recipient. A person who is dissatisfied with the recipient's determination on his or her appeal may submit a written request for review of that determination to the HUD field office (or to the State in the case of a unit of general local government funded by the State). If the full relief is not granted, the recipient shall advise the person of his or her right to seek judicial review. 


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="43-45" NODE="24:1.1.1.1.27" TYPE="PART">
<HEAD>PARTS 43-45 [RESERVED]


</HEAD>
</DIV5>


<DIV5 N="50" NODE="24:1.1.1.1.28" TYPE="PART">
<HEAD>PART 50—PROTECTION AND ENHANCEMENT OF ENVIRONMENTAL QUALITY 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d) and 4321-4336e.








</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 50916, Sept. 27, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:1.1.1.1.28.1" TYPE="SUBPART">
<HEAD>Subpart A—General: Federal Laws and Authorities</HEAD>


<DIV8 N="§ 50.1" NODE="24:1.1.1.1.28.1.59.1" TYPE="SECTION">
<HEAD>§ 50.1   Purpose, authority, and applicability.</HEAD>
<P>(a) This part implements the policies of the National Environmental Policy Act (NEPA) and other environmental requirements (as specified in § 50.4). 
</P>
<P>(b) NEPA (42 U.S.C. 4321 <I>et seq.</I>), establishes national policy, goals and procedures for protecting, restoring and enhancing environmental quality. NEPA is implemented by Executive Order 11514 of March 5, 1970, (3 CFR, 1966-1970 Comp., p. 902) as amended by Executive Order 11991 of May 24, 1977, (3 CFR, 1977 Comp., p. 123) and by the Council on Environmental Quality (CEQ) Regulations, 40 CFR parts 1500-1508. 
</P>
<P>(c) The regulations issued by CEQ at 40 CFR parts 1500-1508 establish the basic procedural requirements for compliance with NEPA. These procedures are to be followed by all Federal agencies and are incorporated by reference into this part. This part, therefore, provides supplemental instructions to reflect the particular nature of HUD programs, and is to be used in tandem with 40 CFR parts 1500-1508 and regulations that implement authorities cited at § 50.4. 
</P>
<P>(d) These regulations apply to all HUD policy actions (as defined in § 50.16), and to all HUD project actions (see § 50.2(a)(2)). Also, they apply to projects and activities carried out by recipients subject to environmental policy and procedures of 24 CFR part 58, when the recipient that is regulated under 24 CFR part 58 claims the lack of legal capacity to assume the Secretary's environmental review responsibilities and the claim is approved by HUD or when HUD determines to conduct an environmental review itself in place of a nonrecipient responsible entity. For programs, activities or actions not specifically identified or when there are questions regarding the applicability of this part, the Assistant Secretary for Community Planning and Development shall be consulted. 


</P>
</DIV8>


<DIV8 N="§ 50.2" NODE="24:1.1.1.1.28.1.59.2" TYPE="SECTION">
<HEAD>§ 50.2   Terms and abbreviations.</HEAD>
<P>(a) The definitions for most of the key terms or phrases contained in this part appear in 40 CFR part 1508 and in the authorities cited in § 50.4. 
</P>
<P>The following definitions also apply to this part: 
</P>
<P><I>Environmental review</I> means a process for complying with NEPA (through an EA or EIS) and/or with the laws and authorities cited in § 50.4.
</P>
<P><I>HUD approving official</I> means the HUD official authorized to make the approval decision for any proposed policy or project subject to this part. 
</P>
<P><I>Project</I> means an activity, or a group of integrally-related activities, undertaken directly by HUD or proposed for HUD assistance or insurance. 
</P>
<P>(b) The following abbreviations are used throughout this part: 
</P>
<P><I>AS/CPD</I>—Assistant Secretary for Community Planning and Development. 
</P>
<P><I>CEQ</I>—Council on Environmental Quality 
</P>
<P><I>EA</I>—Environmental Assessment 
</P>
<P><I>EIS</I>—Environmental Impact Statement 
</P>
<P><I>FONSI</I>—Finding of No Significant Impact 
</P>
<P><I>HUD</I>—Department of Housing and Urban Development 
</P>
<P><I>NEPA</I>—National Environmental Policy Act 
</P>
<P><I>NOI/EIS</I>—Notice of Intent to Prepare an Environmental Impact Statement 


</P>
</DIV8>


<DIV8 N="§ 50.3" NODE="24:1.1.1.1.28.1.59.3" TYPE="SECTION">
<HEAD>§ 50.3   Environmental policy.</HEAD>
<P>(a) It is the policy of the Department to reject proposals which have significant adverse environmental impacts and to encourage the modification of projects in order to enhance environmental quality and minimize environmental harm. 
</P>
<P>(b) The HUD approving official shall consider environmental and other Departmental objectives in the decisionmaking process. 
</P>
<P>(c) When EA's or EIS's or reviews under § 50.4 reveal conditions or safeguards that should be implemented once a proposal is approved in order to protect and enhance environmental quality or minimize adverse environmental impacts, such conditions or safeguards must be included in agreements or other relevant documents. 
</P>
<P>(d) A systematic, interdisciplinary approach shall be used to assure the integrated use of the natural and social sciences and the environmental design arts in making decisions. 
</P>
<P>(e) Environmental impacts shall be evaluated on as comprehensive a scale as is practicable. 
</P>
<P>(f) HUD offices shall begin the environmental review process at the earliest possible time so that potential conflicts between program procedures and environmental requirements are identified at an early stage. 
</P>
<P>(g) Applicants for HUD assistance shall be advised of environmental requirements and consultation with governmental agencies and individuals shall take place at the earliest time feasible. 
</P>
<P>(h) For HUD grant programs in which the funding approval for an applicant's program must occur before the applicant's selection of properties, the application shall contain an <I>assurance</I> that the applicant agrees to assist HUD to comply with this part and that the applicant shall: 
</P>
<P>(1) Supply HUD with all available, relevant information necessary for HUD to perform for each property any environmental review required by this part; 
</P>
<P>(2) Carry out mitigating measures required by HUD or select alternate eligible property; and 
</P>
<P>(3) Not acquire, rehabilitate, convert, lease, repair or construct property, nor commit or expend HUD or local funds for these program activities with respect to any eligible property, until HUD approval of the property is received. 
</P>
<P>(i)(1) It is HUD policy that all property proposed for use in HUD programs be free of hazardous materials, contamination, toxic chemicals and gasses, and radioactive substances, where a hazard could affect the health and safety of occupants or conflict with the intended utilization of the property. 
</P>
<P>(2) HUD environmental review of multifamily and non-residential properties shall include evaluation of previous uses of the site and other evidence of contamination on or near the site, to assure that occupants of proposed sites are not adversely affected by the hazards listed in paragraph (i)(1) of this section. 
</P>
<P>(3) Particular attention should be given to any proposed site on or in the general proximity of such areas as dumps, landfills, industrial sites or other locations that contain hazardous wastes. 
</P>
<P>(4) HUD shall require the use of current techniques by qualified professionals to undertake investigations determined necessary. 


</P>
</DIV8>


<DIV8 N="§ 50.4" NODE="24:1.1.1.1.28.1.59.4" TYPE="SECTION">
<HEAD>§ 50.4   Related Federal laws and authorities.</HEAD>
<P>HUD and/or applicants must comply, where applicable, with all environmental requirements, guidelines and statutory obligations under the following authorities and HUD standards: 
</P>
<P>(a) <I>Historic properties.</I> (1) The National Historic Preservation Act of 1966 (16 U.S.C. 470 <I>et seq.</I>), as amended. 
</P>
<P>(2) Executive Order 11593, Protection and Enhancement of the Cultural Environment, May 13, 1971 (3 CFR, 1971-1975 Comp., p. 559). 
</P>
<P>(3) The Archaeological and Historic Preservation Act of 1974, which amends the Reservoir Salvage Act of 1960 (16 U.S.C. 469 <I>et seq.</I>). 
</P>
<P>(4) Procedures for the Protection of Historic and Cultural Properties (Advisory Council on Historic Preservation—36 CFR part 800). 
</P>
<P>(b) <I>Flood insurance, floodplain management and wetland protection.</I> (1) Flood Disaster Protection Act of 1973 (42 U.S.C. 4001-4128) and the National Flood Insurance Reform Act of 1994 (Pub.L. 103-325, 108 Stat. 2160). 
</P>
<P>(2) HUD procedure for the implementation of Executive Order 11988 (Floodplain Management), as amended by Executive Order 13690, February 4, 2015 (3 CFR, 2016 Comp., p. 268) —24 CFR part 55, Floodplain Management and Protection of Wetlands.
</P>
<P>(3) HUD procedure for the implementation of Executive Order 11990 (Protection of Wetlands), (3 CFR, 1977 Comp., p. 121)—24 CFR part 55, Floodplain Management and Protection of Wetlands.
</P>
<P>(c) <I>Coastal areas protection and management.</I> (1) The Coastal Barrier Resources Act, as amended by the Coastal Barrier Improvement Act of 1990 (16 U.S.C. 3501 <I>et seq.</I>). 
</P>
<P>(2) The Coastal Zone Management Act of 1972 (16 U.S.C. 1451 <I>et seq.</I>), as amended. 
</P>
<P>(d) <I>Sole source aquifers.</I> The Safe Drinking Water Act of 1974 (42 U.S.C. 201, 300 <I>et seq.,</I> and 21 U.S.C. 349), as amended. (See 40 CFR part 149.) 
</P>
<P>(e) <I>Endangered species.</I> The Endangered Species Act of 1973 (16 U.S.C. 1531 <I>et seq.</I>), as amended. (See 50 CFR part 402.) 
</P>
<P>(f) <I>Wild and scenic rivers.</I> The Wild and Scenic Rivers Act (16 U.S.C 1271 <I>et seq.</I>), as amended. 
</P>
<P>(g) <I>Water quality.</I> The Federal Water Pollution Control Act, as amended by the Federal Water Pollution Control Act Amendments of 1972 (33 U.S.C. 1251 <I>et seq.</I>), and later enactments. 
</P>
<P>(h) <I>Air quality.</I> The Clean Air Act (42 U.S.C. 7401 <I>et seq.</I>), as amended. (See 40 CFR parts 6, 51, and 93.) 
</P>
<P>(i) <I>Solid waste management.</I> (1) The Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 (42 U.S.C. 6901 <I>et seq.</I>), and later enactments. 
</P>
<P>(2) The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. 9601 <I>et seq.</I>), as amended. 
</P>
<P>(j) <I>Farmlands protection.</I> The Farmland Protection Policy Act of 1981 (7 U.S.C. 4201 <I>et seq.</I>), as amended. (See 7 CFR part 658.) 
</P>
<P>(k) <I>HUD environmental standards.</I> Applicable criteria and standards specified in HUD environmental regulations (24 CFR part 51). 
</P>
<P>(l) <I>Environmental justice.</I> Executive Order 12898—Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (3 CFR, 1994 Comp., p. 859). 
</P>
<CITA TYPE="N">[61 FR 50916, Sept. 27, 1996, as amended at 78 FR 68728, Nov. 15, 2013; 89 FR 30903, Apr. 23, 2024]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.1.1.1.28.2" TYPE="SUBPART">
<HEAD>Subpart B—General Policy: Responsibilities and Program Coverage</HEAD>


<DIV8 N="§ 50.10" NODE="24:1.1.1.1.28.2.59.1" TYPE="SECTION">
<HEAD>§ 50.10   Basic environmental responsibility.</HEAD>
<P>(a) It is the responsibility of all Assistant Secretaries, the General Counsel, and the HUD approving official to assure that the requirements of this part are implemented. 
</P>
<P>(b) The Assistant Secretary for Community Planning and Development (A/S CPD), represented by the Office of Community Viability, whose Director shall serve as the Departmental Environmental Clearance Officer (DECO), is assigned the overall Departmental responsibility for environmental policies and procedures for compliance with NEPA and the related laws and authorities. To the extent permitted by applicable laws and the CEQ regulations, the A/S CPD shall approve waivers and exceptions or establish criteria for exceptions from the requirements of this part. 


</P>
</DIV8>


<DIV8 N="§ 50.11" NODE="24:1.1.1.1.28.2.59.2" TYPE="SECTION">
<HEAD>§ 50.11   Responsibility of the HUD approving official.</HEAD>
<P>(a) The HUD approving official shall make an independent evaluation of the environmental issues, take responsibility for the scope and content of the compliance finding, EA or EIS, and make the environmental finding, where applicable. (Also, see § 50.32.) 
</P>
<P>(b) Copies of environmental reviews and findings shall be maintained in the project file for projects, in the rules docket files for <E T="04">Federal Register</E> publications, and in program files for non-<E T="04">Federal Register</E> policy documents. 


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:1.1.1.1.28.3" TYPE="SUBPART">
<HEAD>Subpart C—General Policy: Decision Points</HEAD>


<DIV8 N="§ 50.16" NODE="24:1.1.1.1.28.3.59.1" TYPE="SECTION">
<HEAD>§ 50.16   Decision points for policy actions.</HEAD>
<P>Either an EA and FONSI or an EIS on all policy actions not meeting the criteria of § 50.19 shall be completed prior to the approval action. Policy actions include all proposed <E T="04">Federal Register</E> policy documents and other policy-related Federal actions (40 CFR 1508.18). The decision as to whether a proposed policy action is categorically excluded from an EA shall be made by the Program Environmental Clearance Officer (PECO) in Headquarters as early as possible. Where the PECO has any doubt as to whether a proposed action qualifies for exclusion, the PECO shall request a determination by the AS/CPD. The EA and FONSI may be combined into a single document. 


</P>
</DIV8>


<DIV8 N="§ 50.17" NODE="24:1.1.1.1.28.3.59.2" TYPE="SECTION">
<HEAD>§ 50.17   Decision points for projects.</HEAD>
<P>Either an EA and FONSI or an EIS for individual projects shall be completed before the applicable program decision points below for projects not meeting the criteria of § 50.20. Compliance with applicable authorities cited in § 50.4 shall be completed before the applicable program decision points below unless the project meets the criteria for exclusion under § 50.19. 
</P>
<P>(a) <I>New Construction.</I> (1) Project mortgage insurance or other financial assistance for multifamily housing projects (including sections 202 and 811), nursing homes, hospitals, group practice facilities and manufactured home parks: Issuance of Site Appraisal and Market Analysis (SAMA) Letter or initial equivalent indication of HUD approval of a specific site; 
</P>
<P>(2) <I>Public Housing: HUD approval of the proposal.</I> 
</P>
<P>(3) <I>Loan Guarantee Recovery Fund Program (24 CFR part 573).</I> HUD issuance of a letter of commitment or initial equivalent indication of HUD approval. 
</P>
<P>(b) <I>Rehabilitation projects.</I> Use the decision points under “new construction” for HUD programs cited in paragraph (a) of this section; otherwise the decision point is the HUD project approval. 
</P>
<P>(c) <I>Public housing modernization programs.</I> HUD approval of the modernization grants. 
</P>
<P>(d) <I>Property Disposition.</I> Multifamily structures, college housing, nursing homes, manufactured homes and parks, group practice facilities, vacant land and one to four family structures: HUD approval of the Disposition Program. 
</P>
<P>(e) <I>HUD programs subject to 24 CFR part 58.</I> For cases in which HUD exercises environmental responsibility under this part where a recipient lacks legal capacity to do so or HUD determines to do so in place of a nonrecipient responsible entity under 24 CFR part 58 (see § 50.1(d)), the decision point is: HUD's execution of an agreement or contract, whichever comes first, or in the case of Section 8 Project-Based Voucher Assistance and Moderate Rehabilitation, HUD notification to the Public Housing Agency to proceed with execution of an Agreement to Enter into Housing Assistance Payments (HAP) Contract. 
</P>
<P>(f) <I>Section 50.3(h).</I> Notwithstanding the other paragraphs of this section, the decision point for grant programs in which HUD approval of funding for an applicant's program must occur before the applicant's selection of properties for use in its program is: HUD approval of specific properties. 
</P>
<P>(g) <I>Stewart B. McKinney Homeless Assistance Act Programs.</I> Where the recipients are nonprofit organizations or governmental entities with special or limited purpose powers, the decision point is: HUD project approval. 
</P>
<P>(h) <I>Programs not specifically covered in this section.</I> Consult with the AS/CPD for decision points. 
</P>
<CITA TYPE="N">[61 FR 50916, Sept. 27, 1996, as amended at 89 FR 38290, May 7, 2024]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:1.1.1.1.28.4" TYPE="SUBPART">
<HEAD>Subpart D—General Policy: Environmental Review Procedures</HEAD>


<DIV8 N="§ 50.18" NODE="24:1.1.1.1.28.4.59.1" TYPE="SECTION">
<HEAD>§ 50.18   General.</HEAD>
<P>(a) The Departmental Environmental Clearance Officer (DECO) shall establish a prescribed format to be used to document compliance with NEPA and the Federal laws and authorities cited in § 50.4. The DECO may prescribe alternative formats as necessary to meet specific program needs.
</P>
<P>(b) HUD may, from time to time, complete programmatic reviews that further avoid the necessity of complying with the laws and authorities in § 50.4 on a property-by-property basis. 
</P>
<CITA TYPE="N">[61 FR 50916, Sept. 27, 1996, as amended at 79 FR 49228, Aug. 20, 2014]


</CITA>
</DIV8>


<DIV8 N="§ 50.19" NODE="24:1.1.1.1.28.4.59.2" TYPE="SECTION">
<HEAD>§ 50.19   Categorical exclusions not subject to the Federal laws and authorities cited in § 50.4.</HEAD>
<P>(a) <I>General.</I> The activities and related approvals of policy documents listed in paragraphs (b) and (c) of this section are not subject to the individual compliance requirements of the Federal laws and authorities cited in § 50.4, unless otherwise indicated below. These activities and approvals of policy documents are also categorically excluded from the EA required by NEPA except in extraordinary circumstances (§ 50.20(b)). HUD approval or implementation of these categories of activities and policy documents does not require environmental review, because they do not alter physical conditions in a manner or to an extent that would require review under NEPA or the other laws and authorities cited at § 50.4. 
</P>
<P>(b) <I>Activities.</I> (1) Environmental and other studies, resource identification and the development of plans and strategies. 
</P>
<P>(2) Information and financial advisory services. 
</P>
<P>(3) Administrative and management expenses. 
</P>
<P>(4) Public services that will not have a physical impact or result in any physical changes, including but not limited to services concerned with employment, crime prevention, child care, health, drug abuse, education, counseling, energy conservation and welfare or recreational needs. 
</P>
<P>(5) Inspections and testing of properties for hazards or defects. 
</P>
<P>(6) Purchase of insurance. 
</P>
<P>(7) Purchase of tools. 
</P>
<P>(8) Engineering or design costs. 
</P>
<P>(9) Technical assistance and training. 
</P>
<P>(10) Assistance for temporary or permanent improvements that do not alter environmental conditions and are limited to protection, repair or restoration activities necessary only to control or arrest the effects from disasters or imminent threats to public safety including those resulting from physical deterioration. 
</P>
<P>(11) Tenant-based rental assistance. 
</P>
<P>(12) Supportive services including, but not limited to, health care, housing services, permanent housing placement, day care, nutritional services, short-term payments for rent/mortgage/utility costs, and assistance in gaining access to local, State, and Federal government benefits and services. 
</P>
<P>(13) Operating costs including maintenance, security, operation, utilities, furnishings, equipment, supplies, staff training and recruitment and other incidental costs; however, in the case of equipment, compliance with § 50.4(b)(1) is required. 
</P>
<P>(14) Economic development activities, including but not limited to, equipment purchase, inventory financing, interest subsidy, operating expenses and similar costs not associated with construction or physical expansion of existing facilities; however, in the case of equipment purchase, compliance with § 50.4(b)(1) is required. 
</P>
<P>(15) Activities to assist homebuyers to purchase existing dwelling units or dwelling units under construction, including closing costs and downpayment assistance, interest buydowns, and similar activities that result in the transfer of title.
</P>
<P>(16) Housing pre-development costs including legal, consulting, developer and other costs related to site options, project financing, administrative costs and fees for loan commitments, zoning approvals, and other related activities which do not have a physical impact. 
</P>
<P>(17) HUD's insurance of one-to-four family mortgages under the Direct Endorsement program, the insurance of one-to-four family mortgages under the Lender Insurance program, and HUD's guarantee of loans for one-to-four family dwellings under the Direct Guarantee procedure for the Indian Housing loan guarantee program, without any HUD review or approval before the completion of construction or rehabilitation and the loan closing; and HUD's acceptance for insurance of loans insured under Title I of the National Housing Act; however, compliance with § 50.4(b)(1) and (c)(1) and 24 CFR 51.303(a)(3) is required.
</P>
<P>(18) HUD's endorsement of one-to-four family mortgage insurance for proposed construction under Improved Area processing; however, the Appraiser/Review Appraiser Checksheet (Form HUD-54891) must be completed. 
</P>
<P>(19) Activities of the Government National Mortgage Association under Title III of the National Housing Act (12 U.S.C. 1716 <I>et seq.</I>). 
</P>
<P>(20) Activities under the Interstate Land Sales Full Disclosure Act (15 U.S.C. 1701 <I>et seq.</I>). 
</P>
<P>(21) Refinancing of HUD-insured mortgages that will not allow new construction or rehabilitation, nor result in any physical impacts or changes except for routine maintenance; however, compliance with § 50.4(b)(1) is required. 
</P>
<P>(22) Approval of the sale of a HUD-held mortgage. 
</P>
<P>(23) Approval of the foreclosure sale of a property with a HUD-held mortgage; however, appropriate restrictions will be imposed to protect historic properties. 
</P>
<P>(24) HUD guarantees under the Loan Guarantee Recovery Fund Program (24 CFR part 573) of loans that refinance existing loans and mortgages, where any new construction or rehabilitation financed by the existing loan or mortgage has been completed prior to the filing of an application under the program, and the refinancing will not allow further construction or rehabilitation, nor result in any physical impacts or changes except for routine maintenance; however, compliance with §§ 50.4 (b)(1) and (c)(1) and 51.303(a) is required.
</P>
<P>(c) <I>Approval of policy documents.</I> (1) Approval of rules and notices proposed for publication in the <E T="04">Federal Register</E> or other policy documents that do not:
</P>
<P>(i) Direct, provide for assistance or loan and mortgage insurance for, or otherwise govern or regulate, real property acquisition, disposition, leasing (other than tenant-based rental assistance), rehabilitation, alteration, demolition, or new construction; or 
</P>
<P>(ii) Establish, revise, or provide for standards for construction or construction materials, manufactured housing, or occupancy.
</P>
<P>(2) Approval of policy documents that amend an existing document where the existing document as a whole would not fall within an exclusion in this paragraph (c) but the amendment by itself would do so;
</P>
<P>(3) Approval of policy documents that set out fair housing or nondiscrimination standards or enforcement procedures or provide for assistance in promoting or enforcing fair housing or nondiscrimination; 
</P>
<P>(4) Approval of handbooks, notices and other documents that provide operating instructions and procedures in connection with activities under a <E T="04">Federal Register</E> document that has previously been subject to a required environmental review.
</P>
<P>(5) Approval of a Notice of Funding Availability (NOFA) that provides funding under, and does not alter any environmental requirements of, a regulation or program guideline that was previously published in the <E T="04">Federal Register,</E> provided that
</P>
<P>(i) The NOFA specifically refers to the environmental review provisions of the regulation or guideline; or
</P>
<P>(ii) The regulation or guideline contains no environmental review provisions because it concerns only activities listed in paragraph (b) of this section.
</P>
<P>(6) Statutorily required and/or discretionary establishment and review of interest rates, loan limits, building cost limits, prototype costs, fair market rent schedules, HUD-determined prevailing wage rates, income limits and exclusions with regard to eligibility for or calculation of HUD housing assistance or rental assistance, and similar rate and cost determinations and related external administrative or fiscal requirements or procedures which do not constitute a development decision that affects the physical condition of specific project areas or building sites.
</P>
<CITA TYPE="N">[61 FR 50916, Sept. 27, 1996, as amended at 62 FR 15802, Apr. 2, 1997; 63 FR 48990, Sept. 11, 1998; 68 FR 56127, Sept. 29, 2003]


</CITA>
</DIV8>


<DIV8 N="§ 50.20" NODE="24:1.1.1.1.28.4.59.3" TYPE="SECTION">
<HEAD>§ 50.20   Categorical exclusions subject to the Federal laws and authorities cited in § 50.4.</HEAD>
<P>(a) The following actions, activities, and programs are categorically excluded from the NEPA requirements for further review in an Environmental Assessment or an Environmental Impact Statement as set forth in this part. They are not excluded from individual compliance requirements of other environmental statutes, Executive orders, and HUD standards cited in § 50.4, where appropriate. Where the responsible official determines that any proposed action identified below may have an environmental effect because of extraordinary circumstances (40 CFR 1508.4), the requirements for further review under NEPA shall apply (see paragraph (b) of this section).
</P>
<P>(1) Special projects directed to the removal of material and architectural barriers that restrict the mobility of and accessibility to elderly and persons with disabilities. 
</P>
<P>(2) Rehabilitation of buildings and improvements when the following conditions are met:
</P>
<P>(i) In the case of a building for residential use (with one to four units), the density is not increased beyond four units and the land use is not changed;


</P>
<P>(ii) In the case of multifamily residential buildings:
</P>
<P>(A) Unit density is not changed more than 20 percent;
</P>
<P>(B) The project does not involve changes in land use from residential to non-residential; and
</P>
<P>(C) The estimated cost of rehabilitation is less than 75 percent of the total estimated cost of replacement after rehabilitation.
</P>
<P>(iii) In the case of non-residential structures, including commercial, industrial, and public buildings:
</P>
<P>(A) The facilities and improvements are in place and will not be changed in size nor capacity by more than 20 percent; and
</P>
<P>(B) The activity does not involve a change in land use, such as from non-residential to residential, commercial to industrial, or from one industrial use to another.
</P>
<P>(3)(i) An individual action on up to four dwelling units where there is a maximum of four units on any one site. The units can be four one-unit buildings or one four-unit building or any combination in between; or
</P>
<P>(ii) An individual action on a project of five or more housing units developed on scattered sites when the sites are more than 2,000 feet apart and there are not more than four housing units on any one site.
</P>
<P>(iii) Paragraphs (a)(3)(i) and (ii) of this section do not apply to rehabilitation of a building for residential use (with one to four units) (see paragraph (a)(2)(i) of this section).
</P>
<P>(4) Acquisition (including leasing) or disposition of, or equity loans on an existing structure, or acquisition (including leasing) of vacant land provided that the structure or land acquired, financed, or disposed of will be retained for the same use.
</P>
<P>(5) Purchased or refinanced housing and medical facilities under section 223(f) of the National Housing Act (12 U.S.C. 1715n). 
</P>
<P>(6) Mortgage prepayments or plans of action (including incentives) under 24 CFR part 248. 
</P>
<P>(b) For categorical exclusions having the potential for significant impact because of extraordinary circumstances, HUD must prepare an EA in accordance with subpart E. If it is evident without preparing an EA that an EIS is required pursuant to § 50.42, HUD should proceed directly to the preparation of an EIS in accordance with subpart F. 
</P>
<CITA TYPE="N">[61 FR 50916, Sept. 27, 1996, as amended at 68 FR 56127, Sept. 29, 2003; 79 FR 49229, Aug. 20, 2014; 89 FR 30903, Apr. 23, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 50.21" NODE="24:1.1.1.1.28.4.59.4" TYPE="SECTION">
<HEAD>§ 50.21   Aggregation.</HEAD>
<P>Activities which are geographically related and are logical parts of a composite of contemplated HUD projects shall be evaluated together. 


</P>
</DIV8>


<DIV8 N="§ 50.22" NODE="24:1.1.1.1.28.4.59.5" TYPE="SECTION">
<HEAD>§ 50.22   Environmental management and monitoring.</HEAD>
<P>An Environmental Management and Monitoring Program shall be established prior to project approval when it is deemed necessary by the HUD approving official. The program shall be part of the approval document and must: 
</P>
<P>(a) Be concurred in by the Field Environmental Clearance Officer (FECO) (in the absence of a FECO, by the Program Environmental Clearance Officer in Headquarters) and any cooperating agencies; 
</P>
<P>(b) Contain specific standards, safeguards and commitments to be completed during project implementation; 
</P>
<P>(c) Identify the staff who will be responsible for the post-approval inspection; and 
</P>
<P>(d) Specify the time periods for conducting the evaluation and monitoring the applicant's compliance with the project agreements. 


</P>
</DIV8>


<DIV8 N="§ 50.23" NODE="24:1.1.1.1.28.4.59.6" TYPE="SECTION">
<HEAD>§ 50.23   Public participation.</HEAD>
<P>HUD shall inform the affected public about NEPA-related hearings, public meetings, and the availability of environmental documents (see 40 CFR 1506.6(b)) in accordance with this section. Where project actions result in a FONSI, the FONSI will be available in the project file. The local HUD field office may be contacted by persons who wish to review the FONSI. In all cases, HUD shall mail notices to those who have requested them. Additional efforts for involving the public in specific notice or compliance requirements shall be made in accord with the implementing procedures of the laws and authorities cited in § 50.4. Notices pertaining to an EIS or an amendment to an EIS or a FONSI subject to § 50.34 shall be given to the public in accordance with paragraphs (a) through (d) of this section. 
</P>
<P>(a) A NOI/EIS shall be forwarded to the AS/CPD to the attention of the Departmental Environmental Clearance Officer for publication in the <E T="04">Federal Register.</E> 
</P>
<P>(b) Notices will be bilingual if the affected public includes a significant portion of non-English speaking persons and will identify a date when the official public involvement element of the proposed action is to be completed and HUD internal processing is to continue. 
</P>
<P>(c) All required notices shall be published in an appropriate local printed news medium or on an appropriate government website that is accessible to individuals with disabilities and provides meaningful access for individuals with Limited English Proficiency. The required notices shall be sent to individuals and groups known to be interested in the proposed action.


</P>
<P>(d) All notices shall inform the public where additional information may be obtained. 
</P>
<CITA TYPE="N">[61 FR 50916, Sept. 27, 1996, as amended at 89 FR 30903, Apr. 23, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 50.24" NODE="24:1.1.1.1.28.4.59.7" TYPE="SECTION">
<HEAD>§ 50.24   HUD review of another agency's EIS.</HEAD>
<P>Where another agency's EIS is referred to the HUD Field Office in whose jurisdiction the project is located, the Field Environmental Clearance Officer shall determine whether HUD has an interest in the EIS and, if so, will review and comment. Any EIS received from another Federal agency requesting comment on legislative proposals, regulations, or other policy documents shall be sent to the AS/CPD for comment, and the AS/CPD shall provide the General Counsel the opportunity for comment. 


</P>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:1.1.1.1.28.5" TYPE="SUBPART">
<HEAD>Subpart E—Environmental Assessments and Related Reviews</HEAD>


<DIV8 N="§ 50.31" NODE="24:1.1.1.1.28.5.59.1" TYPE="SECTION">
<HEAD>§ 50.31   The EA.</HEAD>
<P>(a) The Departmental Environmental Clearance Officer (DECO) shall establish a prescribed format used for the environmental analysis and documentation of projects and activities under subpart E. The DECO may prescribe alternative formats as necessary to meet specific program needs.
</P>
<P>(b) The program representative shall obtain interdisciplinary assistance from professional experts and other HUD staff as needed. Additional information may also be requested of the sponsor/applicant. HUD is responsible for assessing and documenting the extent of the environmental impact.
</P>
<CITA TYPE="N">[61 FR 50916, Sept. 27, 1996, as amended at 79 FR 49229, Aug. 20, 2014]


</CITA>
</DIV8>


<DIV8 N="§ 50.32" NODE="24:1.1.1.1.28.5.59.2" TYPE="SECTION">
<HEAD>§ 50.32   Responsibility for environmental processing.</HEAD>
<P>The program staff in the HUD office responsible for processing the project application or recommending a policy action is responsible for conducting the compliance finding, EA, or EIS. The collection of data and studies as part of the information contained in the environmental review may be done by an applicant or the applicant's contractor. The HUD program staff may use any information supplied by the applicant or contractor, provided HUD independently evaluates the information, will be responsible for its accuracy, supplements the information, if necessary, to conform to the requirements of this part, and prepares the environmental finding.


</P>
<CITA TYPE="N">[91 FR 30212, May 22, 2026]




</CITA>
</DIV8>


<DIV8 N="§ 50.33" NODE="24:1.1.1.1.28.5.59.3" TYPE="SECTION">
<HEAD>§ 50.33   Action resulting from the assessment.</HEAD>
<P>(a) A proposal may be accepted without modifications if the EA indicates that the proposal will not significantly (see 40 CFR 1508.27) affect the quality of the human environment and a FONSI is prepared.
</P>
<P>(b) A proposal may be accepted with modifications provided that:
</P>
<P>(1) Changes have been made that would reduce adverse environmental impact to acceptable and insignificant levels; and
</P>
<P>(2) An Environmental Management and Monitoring Program is developed in accordance with § 50.22 when it is deemed necessary by the HUD approving official.
</P>
<P>(c) A proposal should be rejected if significant and unavoidable adverse environmental impacts would still exist after modifications have been made to the proposal and an EIS is not prepared.
</P>
<P>(d) A proposal (if not rejected) shall require an EIS if the EA indicates that significant environmental impacts would result.


</P>
</DIV8>


<DIV8 N="§ 50.34" NODE="24:1.1.1.1.28.5.59.4" TYPE="SECTION">
<HEAD>§ 50.34   Time delays for exceptional circumstances.</HEAD>
<P>(a) Under the circumstances described in this section, the FONSI must be made available for public review for 30 calendar days before a final decision is made whether to prepare an EIS and before the HUD action is taken. The circumstances are:
</P>
<P>(1) When the proposed action is, or is closely similar to, one which normally requires the preparation of an EIS pursuant to § 50.42(b) but it is determined, as a result of an EA or in the course of preparation of a draft EIS, that the proposed action will not have a significant impact on the human environment; or
</P>
<P>(2) When the nature of the proposed action is without precedent and does not appear to require more than an assessment.
</P>
<P>(b) In such cases, the FONSI must be concurred in by the AS/CPD and the Program Environmental Clearance Officer. Notice of the availability of the FONSI shall be given to the public in accordance with paragraphs (a) through (d) of § 50.23.


</P>
</DIV8>


<DIV8 N="§ 50.35" NODE="24:1.1.1.1.28.5.59.5" TYPE="SECTION">
<HEAD>§ 50.35   Use of prior environmental assessments.</HEAD>
<P>When other Federal, State, or local agencies have prepared an EA or other environmental analysis for a proposed HUD project, these documents should be requested and used to the extent possible. HUD must, however, conduct the environmental analysis and prepare the EA and be responsible for the required environmental finding.


</P>
</DIV8>


<DIV8 N="§ 50.36" NODE="24:1.1.1.1.28.5.59.6" TYPE="SECTION">
<HEAD>§ 50.36   Updating of environmental reviews.</HEAD>
<P>The environmental review must be re-evaluated and updated when the basis for the original environmental or compliance findings is affected by a major change requiring HUD approval in the nature, magnitude or extent of a project and the project is not yet complete. A change only in the amount of financing or mortgage insurance involved does not normally require the environmental review to be re-evaluated or updated.


</P>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:1.1.1.1.28.6" TYPE="SUBPART">
<HEAD>Subpart F—Environmental Impact Statements</HEAD>


<DIV8 N="§ 50.41" NODE="24:1.1.1.1.28.6.59.1" TYPE="SECTION">
<HEAD>§ 50.41   EIS policy.</HEAD>
<P>EIS's will be prepared and considered in program determinations pursuant to the general environmental policy stated in § 50.3 and 40 CFR 1505.2 (b) and (c).


</P>
</DIV8>


<DIV8 N="§ 50.42" NODE="24:1.1.1.1.28.6.59.2" TYPE="SECTION">
<HEAD>§ 50.42   Cases when an EIS is required.</HEAD>
<P>(a) An EIS is required if the proposal is determined to have a significant impact on the human environment pursuant to subpart E.
</P>
<P>(b) An EIS will normally be required if the proposal:
</P>
<P>(1) Would provide a site or sites for hospitals or nursing homes containing a total of 2,500 or more beds; or
</P>
<P>(2) Would remove, demolish, convert, or substantially rehabilitate 2,500 or more existing housing units (but not including rehabilitation projects categorically excluded under § 50.20), or which would result in the construction or installation of 2,500 or more housing units, or which would provide sites for 2,500 or more housing units.
</P>
<P>(c) When the environmental concerns of one or more Federal authorities cited in § 50.4 will be affected by the proposal, the cumulative impact of all such effects should be assessed to determine whether an EIS is required. Where all of the affected authorities provide alternative procedures for resolution, those procedures should be used in lieu of an EIS.


</P>
</DIV8>


<DIV8 N="§ 50.43" NODE="24:1.1.1.1.28.6.59.3" TYPE="SECTION">
<HEAD>§ 50.43   Emergencies.</HEAD>
<P>In cases of national emergency and disasters or cases of imminent threat to health and safety or other emergency which require the taking of an action with significant environmental impact, the provisions of 40 CFR 1506.11 and of any applicable § 50.4 authorities which provide for emergencies shall apply.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="51" NODE="24:1.1.1.1.29" TYPE="PART">
<HEAD>PART 51—ENVIRONMENTAL CRITERIA AND STANDARDS 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d), unless otherwise noted. 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>44 FR 40861, July 12, 1979, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:1.1.1.1.29.1" TYPE="SUBPART">
<HEAD>Subpart A—General Provisions</HEAD>


<DIV8 N="§ 51.1" NODE="24:1.1.1.1.29.1.59.1" TYPE="SECTION">
<HEAD>§ 51.1   Purpose.</HEAD>
<P>The Department of Housing and Urban Development is providing program Assistant Secretaries and administrators and field offices with environmental standards, criteria and guidelines for determining project acceptability and necessary mitigating measures to insure that activities assisted by the Department achieve the goal of a suitable living environment. 


</P>
</DIV8>


<DIV8 N="§ 51.2" NODE="24:1.1.1.1.29.1.59.2" TYPE="SECTION">
<HEAD>§ 51.2   Authority.</HEAD>
<P>This part implements the Department's responsibilities under: The National Housing Act (12 U.S.C. 1701 <I>et seq.</I>); sec. 2 of the Housing Act of 1949 (42 U.S.C. 1441); secs. 2 and 7(d) of the Department of Housing and Urban Development Act (42 U.S.C. 3531 and 3535(d)); the National Environmental Policy Act of 1969 (42 U.S.C. 4321); and the other statutes that are referred to in this part. 
</P>
<CITA TYPE="N">[61 FR 13333, Mar. 26, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 51.3" NODE="24:1.1.1.1.29.1.59.3" TYPE="SECTION">
<HEAD>§ 51.3   Responsibilities.</HEAD>
<P>The Assistant Secretary for Community Planning and Development is responsible for administering HUD's environmental criteria and standards as set forth in this part. The Assistant Secretary for Community Planning and Development may be assisted by HUD officials in implementing the responsibilities established by this part. </P>
<CITA TYPE="N">[61 FR 13333, Mar. 26, 1996, as amended at 91 FR 35626, June 12, 2026]


</CITA>
</DIV8>


<DIV8 N="§ 51.4" NODE="24:1.1.1.1.29.1.59.4" TYPE="SECTION">
<HEAD>§ 51.4   Program coverage.</HEAD>
<P>Environmental standards shall apply to all HUD actions except where special provisions and exemptions are contained in each subpart. 


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.1.1.1.29.2" TYPE="SUBPART">
<HEAD>Subpart B—Noise Abatement and Control</HEAD>


<DIV8 N="§ 51.100" NODE="24:1.1.1.1.29.2.59.1" TYPE="SECTION">
<HEAD>§ 51.100   Purpose and authority.</HEAD>
<P>(a) It is the purpose of this subpart B to: 
</P>
<P>(1) Call attention to the threat of noise pollution; 
</P>
<P>(2) Encourage the control of noise at its source in cooperation with other Federal departments and agencies; 
</P>
<P>(3) Encourage land use patterns for housing and other noise sensitive urban needs that will provide a suitable separation between them and major noise sources; 
</P>
<P>(4) Generally prohibit HUD support for new construction of noise sensitive uses on sites having unacceptable noise exposure; 
</P>
<P>(5) Provide policy on the use of structural and other noise attenuation measures where needed; and 
</P>
<P>(6) Provide policy to guide implementation of various HUD programs. 
</P>
<P>(b) <I>Authority.</I> Specific authorities for noise abatement and control are contained in the Noise Control Act of 1972, as amended (42 U.S.C. 4901 <I>et seq.</I>); and the General Services Administration, Federal Management Circular 75-2; <I>Compatible Land Uses at Federal Airfields.</I> 
</P>
<CITA TYPE="N">[44 FR 40861, July 12, 1979, as amended at 61 FR 13333, Mar. 26, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 51.101" NODE="24:1.1.1.1.29.2.59.2" TYPE="SECTION">
<HEAD>§ 51.101   General policy.</HEAD>
<P>(a) It is HUD's general policy to provide minimum national standards applicable to HUD programs to protect citizens against excessive noise in their communities and places of residence. 
</P>
<P>(1) <I>Planning assistance.</I> HUD requires that grantees give adequate consideration to noise exposures and sources of noise as an integral part of the urban environment when HUD assistance is provided for planning purposes, as follows: 
</P>
<P>(i) Particular emphasis shall be placed on the importance of compatible land use planning in relation to airports, highways and other sources of high noise. 
</P>
<P>(ii) Applicants shall take into consideration HUD environmental standards impacting the use of land. 
</P>
<P>(2) <I>Activities subject to 24 CFR part 58.</I> (i) Responsible entities under 24 CFR part 58 must take into consideration the noise criteria and standards in the environmental review process and consider ameliorative actions when noise sensitive land development is proposed in noise exposed areas. Responsible entities shall address deviations from the standards in their environmental reviews as required in 24 CFR part 58. 
</P>
<P>(ii) Where activities are planned in a noisy area, and HUD assistance is contemplated later for housing and/or other noise sensitive activities, the responsible entity risks denial of the HUD assistance unless the HUD standards are met. 
</P>
<P>(3) <I>HUD support for new construction.</I> HUD assistance for the construction of new noise sensitive uses is prohibited generally for projects with unacceptable noise exposures and is discouraged for projects with normally unacceptable noise exposure. (Standards of acceptability are contained in § 51.103(c).) This policy applies to all HUD programs providing assistance, subsidy or insurance for housing, manufactured home parks, nursing homes, hospitals, and all programs providing assistance or insurance for land development, redevelopment or any other provision of facilities and services which are directed to making land available for housing or noise sensitive development. The policy does not apply to research demonstration projects which do not result in new construction or reconstruction, flood insurance, interstate land sales egistration, or any action or emergency assistance under disaster assistance provisions or appropriations which are provided to save lives, protect property, protect public health and safety, remove debris and wreckage, or assistance that has the effect of restoring facilities substantially as they existed prior to the disaster. 
</P>
<P>(4) <I>HUD support for existing construction.</I> Noise exposure by itself will not result in the denial of HUD support for the resale and purchase of otherwise acceptable existing buildings. However, environmental noise is a marketability factor which HUD will consider in determining the amount of insurance or other assistance that may be given. 
</P>
<P>(5) <I>HUD support of modernization and rehabilitation.</I> For modernization projects located in all noise exposed areas, HUD shall encourage noise attenuation features in alterations. For major or substantial rehabilitation projects in the Normally Unacceptable and Unacceptable noise zones, HUD actively shall seek to have project sponsors incorporate noise attenuation features, given the extent and nature of the rehabilitation being undertaken and the level or exterior noise exposure. In Unacceptable noise zones, HUD shall strongly encourage conversion of noise-exposed sites to land uses compatible with the high noise levels. 
</P>
<P>(6) <I>Research, guidance and publications.</I> HUD shall maintain a continuing program designed to provide new knowledge of noise abatement and control to public and private bodies, to develop improved methods for anticipating noise encroachment, to develop noise abatement measures through land use and building construction practices, and to foster better understanding of the consequences of noise. It shall be HUD's policy to issue guidance documents periodically to assist HUD personnel in assigning an acceptability category to projects in accordance with noise exposure standards, in evaluating noise attenuation measures, and in advising local agencies about noise abatement strategies. The guidance documents shall be updated periodically in accordance with advances in the state-of-the-art. 
</P>
<P>(7) <I>Construction equipment, building equipment and appliances.</I> HUD shall encourage the use of quieter construction equipment and methods in population centers, the use of quieter equipment and appliances in buildings, and the use of appropriate noise abatement techniques in the design of residential structures with potential noise problems. 
</P>
<P>(8) <I>Exterior noise goals.</I> It is a HUD goal that exterior noise levels do not exceed a day-night average sound level of 55 decibels. This level is recommended by the Environmental Protection Agency as a goal for outdoors in residential areas. The levels recommended by EPA are not standards and do not take into account cost or feasibility. For the purposes of this regulation and to meet other program objectives, sites with a day-night average sound level of 65 and below are acceptable and are allowable (see Standards in § 51.103(c)). 
</P>
<P>(9) <I>Interior noise goals.</I> It is a HUD goal that the interior auditory environment shall not exceed a day-night average sound level of 45 decibels. Attenuation measures to meet these interior goals shall be employed where feasible. Emphasis shall be given to noise sensitive interior spaces such as bedrooms. Minimum attenuation requirements are prescribed in § 51.104(a). 
</P>
<P>(10) <I>Acoustical privacy in multifamily buildings.</I> HUD shall require the use of building design and acoustical treatment to afford acoustical privacy in multifamily buildings pursuant to requirements of the Minimum Property Standards. 
</P>
<CITA TYPE="N">[44 FR 40861, July 12, 1979, as amended at 50 FR 9268, Mar. 7, 1985; 61 FR 13333, Mar. 26, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 51.102" NODE="24:1.1.1.1.29.2.59.3" TYPE="SECTION">
<HEAD>§ 51.102   Responsibilities.</HEAD>
<P>(a) <I>Notice to applicants.</I> At the earliest possible stage, HUD program staff shall: 
</P>
<P>(1) Determine the suitability of the acoustical environment of proposed projects; 
</P>
<P>(2) Notify applicants of any adverse or questionable situations; and 
</P>
<P>(3) Assure that prospective applicants are apprised of the standards contained herein so that future site choices will be consistent with these standards. 
</P>
<P>(b) <I>Interdepartmental coordination.</I> HUD shall foster appropriate coordination between field offices and other departments and agencies, particularly the Environmental Protection Agency, the Department of Transportation, Department of Defense representatives, and the Department of Veterans Affairs. HUD staff shall utilize the acceptability standards in commenting on the prospective impacts of transportation facilities and other noise generators in the Environmental Impact Statement review process. 
</P>
<CITA TYPE="N">[44 FR 40861, July 12, 1979, as amended at 54 FR 39525, Sept. 27, 1989; 61 FR 13333, Mar. 26, 1996; 91 FR 35626, June 12, 2026]


</CITA>
</DIV8>


<DIV8 N="§ 51.103" NODE="24:1.1.1.1.29.2.59.4" TYPE="SECTION">
<HEAD>§ 51.103   Criteria and standards.</HEAD>
<P>These standards apply to all programs as indicated in § 51.101. 
</P>
<P>(a) <I>Measure of external noise environments.</I> The magnitude of the external noise environment at a site is determined by the value of the day-night average sound level produced as the result of the accumulation of noise from all sources contributing to the external noise environment at the site. Day-night average sound level, abbreviated as DNL and symbolized as L<E T="52">dn</E>, is the 24-hour average sound level, in decibels, obtained after addition of 10 decibels to sound levels in the night from 10 p.m. to 7 a.m. Mathematical expressions for average sound level and day-night average sound level are stated in the Appendix I to this subpart. 
</P>
<P>(b) <I>Loud impulsive sounds.</I> On an interim basis, when loud impulsive sounds, such as explosions or sonic booms, are experienced at a site, the day-night average sound level produced by the loud impulsive sounds alone shall have 8 decibels added to it in assessing the acceptability of the site (see appendix I to this subpart). Alternatively, the C-weighted day-night average sound level (L<E T="52">Cdn</E>) may be used without the 8 decibel addition, as indicated in § 51.106(a)(3). Methods for assessing the contribution of loud impulsive sounds to day-night average sound level at a site and mathematical expressions for determining whether a sound is classed as “loud impulsive” are provided in the appendix I to this subpart. 
</P>
<P>(c) <I>Exterior standards.</I> (1) The degree of acceptability of the noise environment at a site is determined by the sound levels external to buildings or other facilities containing noise sensitive uses. The standards shall usually apply at a location 2 meters (6.5 feet) from the building housing noise sensitive activities in the direction of the predominant noise source. Where the building location is undetermined, the standards shall apply 2 meters (6.5 feet) from the building setback line nearest to the predominant noise source. The standards shall also apply at other locations where it is determined that quiet outdoor space is required in an area ancillary to the principal use on the site. 
</P>
<P>(2) The noise environment inside a building is considered acceptable if: (i) The noise environment external to the building complies with these standards, and (ii) the building is constructed in a manner common to the area or, if of uncommon construction, has at least the equivalent noise attenuation characteristics.
</P>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Site Acceptability Standards
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col"> 
</TH><TH class="gpotbl_colhed" scope="col">Day-night average sound level (in decibels)
</TH><TH class="gpotbl_colhed" scope="col">Special approvals and requirements
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Acceptable</TD><TD align="left" class="gpotbl_cell">Not exceeding 65 dB(1)</TD><TD align="left" class="gpotbl_cell">None.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Normally Unacceptable</TD><TD align="left" class="gpotbl_cell">Above 65 dB but not exceeding 75 dB</TD><TD align="left" class="gpotbl_cell">Special Approvals (2)
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell">Environmental Review (3).
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell">Attenuation (4).
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Unacceptable</TD><TD align="left" class="gpotbl_cell">Above 75 dB</TD><TD align="left" class="gpotbl_cell">Special Approvals (2).
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell">Environmental Review (3).
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell">Attenuation (5).
</TD></TR></TABLE></DIV><DIV class="table_foot"><P class="gpotbl_note">Notes: (1) Acceptable threshold may be shifted to 70 dB in special circumstances pursuant to § 51.105(a).
</P><P class="gpotbl_note">(2) See § 51.104(b) for requirements.
</P><P class="gpotbl_note">(3) See § 51.104(b) for requirements.
</P><P class="gpotbl_note">(4) 5 dB additional attenuation required for sites above 65 dB but not exceeding 70 dB and 10 dB additional attenuation required for sites above 70 dB but not exceeding 75 dB. (See § 51.104(a).)
</P><P class="gpotbl_note">(5) Attenuation measures to be submitted to the Program Assistant Secretary or their designee for approval on a case-by-case basis.</P></DIV></DIV>
<CITA TYPE="N">[44 FR 40861, July 12, 1979, as amended at 49 FR 12214, Mar. 29, 1984; 91 FR 35626, June 12, 2026]



</CITA>
</DIV8>


<DIV8 N="§ 51.104" NODE="24:1.1.1.1.29.2.59.5" TYPE="SECTION">
<HEAD>§ 51.104   Special requirements.</HEAD>
<P>(a)(1) <I>Noise attenuation.</I> Noise attenuation measures are those required in addition to attenuation provided by buildings as commonly constructed in the area, and requiring open windows for ventilation. Measures that reduce external noise at a site shall be used wherever practicable in preference to the incorporation of additional noise attenuation in buildings. Building designs and construction techniques that provide more noise attenuation than typical construction may be employed also to meet the noise attenuation requirements. 
</P>
<P>(2) <I>Normally unacceptable noise zones and unacceptable noise zones.</I> Approvals in Normally Unacceptable Noise Zones require a minimum of 5 decibels additional sound attenuation for buildings having noise-sensitive uses if the day-night average sound level is greater than 65 decibels but does not exceed 70 decibels, or a minimum of 10 decibels of additional sound attenuation if the day-night average sound level is greater than 70 decibels but does not exceed 75 decibels. Noise attenuation measures in Unacceptable Noise Zones require the approval of the Program Assistant Secretary or their designee, or the Certifying Officer for activities subject to 24 CFR part 58. (See § 51.104(b)(2).) 
</P>
<P>(b) <I>Environmental review requirements.</I> Environmental reviews shall be conducted pursuant to the requirements of 24 CFR parts 50 and 58, as applicable, or other environmental regulations issued by the Department. These requirements are hereby modified for all projects proposed in the Normally Unacceptable and Unacceptable noise exposure zones as follows: 
</P>
<P>(1) <I>Normally unacceptable noise zone.</I> (i) All projects located in the Normally Unacceptable Noise Zone require a Special Environmental Clearance except an EIS is required for a proposed project located in a largely undeveloped area, or where the HUD action is likely to encourage the establishment of incompatible land use in this noise zone.
</P>
<P>(ii) When an EIS is required, the concurrence of the Program Assistant Secretary is also required before a project can be approved. For the purposes of this paragraph, an area will be considered as largely undeveloped unless the area within a 2-mile radius of the project boundary is more than 50 percent developed for urban uses and infrastructure (particularly water and sewers) is available and has capacity to serve the project. 
</P>
<P>(iii) All other projects in the Normally Unacceptable zone require a Special Environmental Clearance, except where an EIS is required for other reasons pursuant to HUD environmental policies.
</P>
<P>(2) <I>Unacceptable noise zone.</I> An EIS is required prior to the approval of projects with unacceptable noise exposure. Projects in or partially in an Unacceptable Noise Zone shall be submitted to the Assistant Secretary for Community Planning and Development, or the Certifying Officer for activities subject to 24 CFR part 58, for approval. The Assistant Secretary or their designee, or the Certifying Officer, may waive the EIS requirement in cases where noise is the only environmental issue and no outdoor noise sensitive activity will take place on the site. In such cases, an environmental review shall be made pursuant to the requirements of 24 CFR parts 50 or 58, as appropriate. 
</P>
<CITA TYPE="N">[44 FR 40861, July 12, 1979, as amended at 61 FR 13333, Mar. 26, 1996; 91 FR 35626, June 12, 2026]


</CITA>
</DIV8>


<DIV8 N="§ 51.105" NODE="24:1.1.1.1.29.2.59.6" TYPE="SECTION">
<HEAD>§ 51.105   Exceptions.</HEAD>
<P>(a) <I>Flexibility for non-acoustic benefits.</I> Where it is determined that program objectives cannot be achieved on sites meeting the acceptability standard of 65 decibels, the Acceptable Zone may be shifted to L<E T="52">dn</E> 70 on a case-by-case basis if all the following conditions are satisfied:
</P>
<P>(1) The project does not require an Environmental Impact Statement under provisions of § 51.104(b)(1) and noise is the only environmental issue. 
</P>
<P>(2) The project has received a Special Environmental Clearance and has received the concurrence of the Environmental Clearance Officer. 
</P>
<P>(3) The project meets other program goals to provide housing in proximity to employment, public facilities and transportation. 
</P>
<P>(4) The project is in conformance with local goals and maintains the character of the neighborhood. 
</P>
<P>(5) The project sponsor has set forth reasons, acceptable to HUD, as to why the noise attenuation measures that would normally be required for new construction in the L<E T="52">dn</E> 65 to L<E T="52">dn</E> 70 zone cannot be met. 
</P>
<P>(6) Other sites which are not exposed to noise above L<E T="52">dn</E> 65 and which meet program objectives are generally not available. 
</P>
<FP>The above factors shall be documented and made part of the project file. 
</FP>
<CITA TYPE="N">[44 FR 40861, July 12, 1979, as amended at 61 FR 13334, Mar. 26, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 51.106" NODE="24:1.1.1.1.29.2.59.7" TYPE="SECTION">
<HEAD>§ 51.106   Implementation.</HEAD>
<P>(a) <I>Use of available data.</I> HUD field staff shall make maximum use of noise data prepared by others when such data are determined to be current and adequately projected into the future and are in terms of the following: 
</P>
<P>(1) <I>Sites in the vicinity of airports.</I> The noise environment around airports is described sometimes in terms of Noise Exposure Forecasts, abbreviated as NEF or, in the State of California, as Community Noise Equivalent Level, abbreviated as CNEL. The noise environment for sites in the vicinity of airports for which day-night average sound level data are not available may be evaluated from NEF or CNEL analyses using the following conversions to DNL:
</P>
<EXTRACT>
<FP>DNL ≉ NEF + 35 
</FP>
<FP>DNL ≉ CNEL</FP></EXTRACT>
<P>(2) <I>Sites in the vicinity of highways.</I> Highway projects receiving Federal aid are subject to noise analyses under the procedures of the Federal Highway Administration. Where such analyses are available they may be used to assess sites subject to the requirements of this standard. The Federal Highway Administration employs two alternate sound level descriptors: (i) The A-weighted sound level not exceeded more than 10 percent of the time for the highway design hour traffic flow, symbolized as L<E T="52">10</E>; or (ii) the equivalent sound level for the design hour, symbolized as L<E T="52">eq</E>. The day-night average sound level may be estimated from the design hour L<E T="52">10</E> or L<E T="52">eq</E> values by the following relationships, provided heavy trucks do not exceed 10 percent of the total traffic flow in vehicles per 24 hours and the traffic flow between 10 p.m. and 7 a.m. does not exceed 15 percent of the average daily traffic flow in vehicles per 24 hours:
</P>
<EXTRACT>
<FP>DNL ≉ L<E T="52">10</E> (design hour)—3 decibels 
</FP>
<FP>DNL ≉ L<E T="52">eq</E> (design hour) decibels</FP></EXTRACT>
<FP>Where the auto/truck mix and time of day relationships as stated in this section do not exist, the HUD Noise Assessment Guidelines or other noise analysis shall be used. 
</FP>
<P>(3) <I>Sites in the vicinity of installations producing loud impulsive sounds.</I> Certain Department of Defense installations produce loud impulsive sounds from artillery firing and bombing practice ranges. Noise analyses for these facilities sometimes encompass sites that may be subject to the requirements of this standard. Where such analyses are available they may be used on an interim basis to establish the acceptability of sites under this standard. The Department of Defense uses day-night average sound level based on C-weighted sound level, symbolized L<E T="52">Cdn</E>, for the analysis of loud impulsive sounds. Where such analyses are provided, the 8 decibel addition specified in § 51.103(b), is not required, and the same numerical values of day-night average sound level used on an interim basis to determine site suitability for non-impulsive sounds apply to the L<E T="52">Cdn</E>. 




</P>
<P>(4) <I>Use of areawide acoustical data.</I> HUD encourages the preparation and use of areawide acoustical information, such as noise contours for airports.


</P>
<P>(b) <I>Site assessments.</I> Compliance with the standards contained in § 51.103(c) shall, where necessary, be determined using noise assessment guidelines, handbooks, technical documents and procedures issued by the Department.
</P>
<P>(c) <I>Variations in site noise levels.</I> In many instances the noise environment will vary across a site, with portions of the site being in an Acceptable noise environment and other portions in a Normally Unacceptable noise environment. The standards in § 51.103(c) shall apply to the portions of a building or buildings used for residential purposes and for ancillary noise sensitive open spaces. 
</P>
<P>(d) <I>Noise measurements.</I> Where noise assessments result in a finding that the site is borderline or questionable, or is controversial, noise measurements may be performed. Where it is determined that noise measurements are required, such measurements will be conducted in accordance with methods and measurement criteria established by the Department. Locations for noise measurements will depend on the location of noise sensitive uses that are nearest to the predominant noise source (see § 51.103(c)). 
</P>
<P>(e) <I>Projections of noise exposure.</I> In addition to assessing existing exposure, future conditions should be projected. To the extent possible, noise exposure shall be projected to be representative of conditions that are expected to exist at a time at least 10 years beyond the date of the project or action under review. 
</P>
<P>(f) <I>Reduction of site noise by use of berms and/or barriers.</I> If it is determined by adequate analysis that a berm and/or barrier will reduce noise at a housing site, and if the barrier is existing or there are assurances that it will be in place prior to occupancy, the environmental noise analysis for the site may reflect the benefits afforded by the berm and/or barrier. In the environmental review process under § 51.104(b), the location height and design of the berm and/or barrier shall be evaluated to determine its effectiveness, and impact on design and aesthetic quality, circulation and other environmental factors. 
</P>
<CITA TYPE="N">[44 FR 40861, July 12, 1979, as amended at 61 FR 13334, Mar. 26, 1996; 91 FR 35626, June 12, 2026]


</CITA>
</DIV8>


<DIV9 N="Appendix I" NODE="24:1.1.1.1.29.2.59.8.5" TYPE="APPENDIX">
<HEAD>Appendix I to Subpart B of Part 51—Definition of Acoustical Quantities
</HEAD>
<P>1. <I>Sound Level.</I> The quantity in decibels measured with an instrument satisfying requirements of American National Standard Specification for Type 1 Sound Level Meters S1.4-1971. Fast time-averaging and A-frequency weighting are to be used, unless others are specified. The sound level meter with the A-weighting is progressively less sensitive to sounds of frequency below 1,000 hertz (cycles per second), somewhat as is the ear. With fast time averaging the sound level meter responds particularly to recent sounds almost as quickly as does the ear in judging the loudness of a sound.
</P>
<P>2. <I>Average Sound Level.</I> Average sound level, in decibels, is the level of the mean-square A-weighted sound pressure during the stated time period, with reference to the square of the standard reference sound pressure of 20 micropascals.
</P>
<P>Day-night average sound level, abbreviated as DNL, and symbolized mathematically as L<E T="52">dn</E> is defined as:
</P>
<img src="/graphics/ec12oc91.000.gif"/>
<P>Time t is in seconds, so the limits shown in hours and minutes are actually interpreted in seconds. L<E T="52">A</E>(t) is the time varying value of A-weighted sound level, the quantity in decibels measured by an instrument satisfying requirements of American National Standard Specification for Type 1 Sound Level Meters S1.4-1971.
</P>
<P>3. <I>Loud Impulsive Sounds.</I> When loud impulsive sounds such as sonic booms or explosions are anticipated contributors to the noise environment at a site, the contribution to day-night average sound level produced by the loud impulsive sounds shall have 8 decibels added to it in assessing the acceptability of a site.
</P>
<P>A loud impulsive sound is defined for the purpose of this regulation as one for which:
</P>
<P>(i) The sound is definable as a discrete event wherein the sound level increases to a maximum and then decreases in a total time interval of approximately one second or less to the ambient background level that exists without the sound; and
</P>
<P>(ii) The maximum sound level (obtained with slow averaging time and A-weighting of a Type 1 sound level meter whose characteristics comply with ANSI S1.4-1971) exceeds the sound level prior to the onset of the event by at least 6 decibels; and
</P>
<P>(iii) The maximum sound level obtained with fast averaging time of a sound level meter exceeds the maximum value obtained with slow averaging time by at least 4 decibels.
</P>
<CITA TYPE="N">[44 FR 40861, July 12, 1979; 49 FR 10253, Mar. 20, 1984; 49 FR 12214, Mar. 29, 1984] 


</CITA>
</DIV9>

</DIV6>


<DIV6 N="C" NODE="24:1.1.1.1.29.3" TYPE="SUBPART">
<HEAD>Subpart C—Siting of HUD-Assisted Projects Near Hazardous Operations Handling Conventional Fuels or Chemicals of an Explosive or Flammable Nature</HEAD>

<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>49 FR 5103, Feb. 10, 1984, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 51.200" NODE="24:1.1.1.1.29.3.59.1" TYPE="SECTION">
<HEAD>§ 51.200   Purpose.</HEAD>
<P>The purpose of this subpart C is to:
</P>
<P>(a) Establish safety standards which can be used as a basis for calculating acceptable separation distances (ASD) for HUD-assisted projects from specific, stationary, hazardous operations which store, handle, or process hazardous substances;
</P>
<P>(b) Alert those responsible for the siting of HUD-assisted projects to the inherent potential dangers when such projects are located in the vicinity of such hazardous operations;
</P>
<P>(c) Provide guidance for identifying those hazardous operations which are most prevalent;
</P>
<P>(d) Provide the technical guidance required to evaluate the degree of danger anticipated from explosion and thermal radiation (fire); and
</P>
<P>(e) Provide technical guidance required to determine acceptable separation distances from such hazards.
</P>
<CITA TYPE="N">[49 FR 5103, Feb. 10, 1984, as amended at 61 FR 13334, Mar. 26, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 51.201" NODE="24:1.1.1.1.29.3.59.2" TYPE="SECTION">
<HEAD>§ 51.201   Definitions.</HEAD>
<P>The terms <I>Department</I> and <I>Secretary</I> are defined in 24 CFR part 5. 
</P>
<P><I>Acceptable separation distance (ASD)</I>—means the distance beyond which the explosion or combustion of a hazard is not likely to cause structures or individuals to be subjected to blast overpressure or thermal radiation flux levels in excess of the safety standards in § 51.203. The ASD is determined by applying the safety standards established by this subpart C to the guidance set forth in HUD Guidebook, “Siting of HUD-Assisted Projects Near Hazardous Facilities.” 
</P>
<P><I>Blast overpressure—</I>means the pressure, in pounds per square inch, in excess of normal atmospheric pressure on the surrounding medium caused by an explosion.
</P>
<P><I>Danger zone—</I>means the land area circumscribed by the radius which delineates the ASD of a given hazard.
</P>
<P><I>Hazard</I>—means any stationary container which stores, handles, or processes hazardous substances of an explosive or fire prone nature. The term “hazard” does not include:
</P>
<P>(1) Pipelines for the transmission of hazardous substances, if such pipelines are located underground, or comply with applicable Federal, State and local safety standards;
</P>
<P>(2) Containers with a capacity of 100 gallons or less when they contain common liquid industrial fuels, such as gasoline, fuel oil, kerosene, and crude oil, since they generally would pose no danger in terms of thermal radiation or blast overpressure to a project;
</P>
<P>(3) Facilities that are shielded from a proposed HUD-assisted project by the topography, because these topographic features effectively provide a mitigating measure already in place;
</P>
<P>(4) All underground containers; and
</P>
<P>(5) Containers used to hold liquefied petroleum gas with a volumetric capacity not to exceed 1,000 gallons water capacity, if they comply with National Fire Protection Association (NFPA) 58. NFPA 58, Liquefied Petroleum Gas Code, 2017 Edition, copyright 2016 is incorporated by reference into this section with the approval of the Director of the Federal Register, under 5 U.S.C. 552(a) and 1 CFR part 51. All approved material is available for inspection at HUD's Office of Environment and Energy, 202-402-5226, and is available from National Fire Protection Association, 1 Batterymarch Park, Quincy, MA 02169, telephone number 800-344-3555, fax number 800-593-6372, <I>www.nfpa.org</I>. It is also available for inspection at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, <I>email fedreg.legal@nara.gov</I> or visit <I>www.archives.gov/federal-register/cfr/ibr-locations.html</I>. Persons with hearing or speech impairments may access the numbers above through TTY by calling the Federal Relay Service, toll-free, at 800-877-8339.
</P>
<P><I>Hazardous substances</I>—means petroleum products (petrochemicals) and chemicals that can produce blast overpressure or thermal radiation levels in excess of the standards set forth in § 51.203. A specific list of hazardous substance is found in appendix I to this subpart.
</P>
<P><I>HUD-assisted project—</I>the development, construction, rehabilitation, modernization or conversion with HUD subsidy, grant assistance, loan, loan guarantee, or mortgage insurance, of any project which is intended for residential, institutional, recreational, commercial or industrial use. For purposes of this subpart the terms “rehabilitation” and “modernization” refer only to such repairs and renovation of a building or buildings as will result in an increased number of people being exposed to hazardous operations by increasing residential densities, converting the type of use of a building to habitation, or making a vacant building habitable.
</P>
<P><I>Thermal radiation level—</I>means the emission and propagation of heat energy through space or a material medium, expressed in BTU per square foot per hour (BTU/ft.
<SU>2</SU> hr.).
</P>
<CITA TYPE="N">[49 FR 5103, Feb. 10, 1984, as amended at 61 FR 5204, Feb. 9, 1996; 61 FR 13334, Mar. 26, 1996; 85 FR 4228, Jan. 24, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 51.202" NODE="24:1.1.1.1.29.3.59.3" TYPE="SECTION">
<HEAD>§ 51.202   Approval of HUD-assisted projects.</HEAD>
<P>(a) The Department will not approve an application for assistance for a proposed project located at less than the acceptable separation distance from a hazard, as defined in § 51.201, unless appropriate mitigating measures, as defined in § 51.205, are implemented, or unless mitigating measures are already in place.
</P>
<P>(b) In the case of all applications for proposed HUD-assisted projects, the Department shall evaluate projected development plans in the vicinity of these projects to determine whether there are plans to install a hazardous operation in close proximity to the proposed project. If the evaluation shows that such a plan exists, the Department shall not approve assistance for the project unless the Department obtains satisfactory assurances that adequate mitigating measures will be taken when the hazardous operation is installed.
</P>
<CITA TYPE="N">[49 FR 5103, Feb. 10, 1984, as amended at 61 FR 13334, Mar. 26, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 51.203" NODE="24:1.1.1.1.29.3.59.4" TYPE="SECTION">
<HEAD>§ 51.203   Safety standards.</HEAD>
<P>The following standards shall be used in determining the acceptable separation distance of a proposed HUD-assisted project from a hazard:
</P>
<P>(a) <I>Thermal Radiation Safety Standard.</I> Projects shall be located so that:
</P>
<P>(1) The allowable thermal radiation flux level at the building shall not exceed 10,000 BTU/sq. ft. per hr.;
</P>
<P>(2) The allowable thermal radiation flux level for outdoor, unprotected facilities or areas of congregation shall not exceed 450 BTU/sq. ft. per hour.
</P>
<P>(b) <I>Blast Overpressure Safety Standard.</I> Projects shall be located so that the maximum allowable blast overpressure at both buildings and outdoor, unprotected facilities or areas shall not exceed 0.5 psi.
</P>
<P>(c) If a hazardous substance constitutes both a thermal radiation and blast overpressure hazard, the ASD for each hazard shall be calculated, and the larger of the two ASDs shall be used to determine compliance with this subpart.
</P>
<P>(d) Background information on the standards and the logarithmic thermal radiation and blast overpressure charts that provide assistance in determining acceptable separation distances are contained in appendix II to this subpart C. 
</P>
<CITA TYPE="N">[49 FR 5103, Feb. 10, 1984, as amended at 61 FR 13334, Mar. 26, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 51.204" NODE="24:1.1.1.1.29.3.59.5" TYPE="SECTION">
<HEAD>§ 51.204   HUD-assisted hazardous facilities.</HEAD>
<P>In reviewing applications for proposed HUD-assisted projects involving the installation of hazardous facilities, the Department shall ensure that such hazardous facilities are located at an acceptable separation distance from residences and from any other facility or area where people may congregate or be present. The mitigating measures listed in § 51.205 may be taken into account in determining compliance with this section.


</P>
</DIV8>


<DIV8 N="§ 51.205" NODE="24:1.1.1.1.29.3.59.6" TYPE="SECTION">
<HEAD>§ 51.205   Mitigating measures.</HEAD>
<P>Application of the standards for determining an Acceptable Separation Distance (ASD) for a HUD-assisted project from a potential hazard of an explosion or fire prone nature is predicated on level topography with no intervening object(s) between the hazard and the project. Application of the standards can be eliminated or modified if:
</P>
<P>(a) The nature of the topography shields the proposed project from the hazard.
</P>
<P>(b) An existing permanent fire resistant structure of adequate size and strength will shield the proposed project from the hazard.
</P>
<P>(c) A barrier is constructed surrounding the hazard, at the site of the project, or in between the potential hazard and the proposed project.
</P>
<P>(d) The structure and outdoor areas used by people are designed to withstand blast overpressure and thermal radiation anticipated from the potential hazard (e.g., the project is of masonry and steel or reinforced concrete and steel construction).


</P>
</DIV8>


<DIV8 N="§ 51.206" NODE="24:1.1.1.1.29.3.59.7" TYPE="SECTION">
<HEAD>§ 51.206   Implementation.</HEAD>
<P>This subpart C shall be implemented for each proposed HUD-assisted project by the HUD approving official or responsible entity responsible for review of the project. The implementation procedure will be part of the environmental review process in accordance with the procedures set forth in 24 CFR parts 50 and 58. 
</P>
<CITA TYPE="N">[61 FR 13334, Mar. 26, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 51.207" NODE="24:1.1.1.1.29.3.59.8" TYPE="SECTION">
<HEAD>§ 51.207   Special circumstances.</HEAD>
<P>The Secretary or the Secretary's designee may, on a case-by-case basis, when circumstances warrant, require the application of this subpart C with respect to a substance not listed in appendix I to this subpart C that would create thermal or overpressure effect in excess of that listed in § 51.203. 
</P>
<CITA TYPE="N">[61 FR 13334, Mar. 26, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 51.208" NODE="24:1.1.1.1.29.3.59.9" TYPE="SECTION">
<HEAD>§ 51.208   Reservation of administrative and legal rights.</HEAD>
<P>Publication of these standards does not constitute a waiver of any right: (a) Of HUD to disapprove a project proposal if the siting is too close to a potential hazard not covered by this subpart, and (b) of HUD or any person or other entity to seek to abate or to collect damages occasioned by a nuisance, whether or not covered by the subpart.


</P>
</DIV8>


<DIV9 N="Appendix I" NODE="24:1.1.1.1.29.3.59.10.6" TYPE="APPENDIX">
<HEAD>Appendix I to Subpart C of Part 51—Specific Hazardous Substances
</HEAD>
<P>The following is a list of specific petroleum products and chemicals defined to be hazardous substances under § 51.201.
</P>
<HD1>Hazardous Liquids
</HD1>
<SCOL2>
<LI>Acetic Acid</LI>
<LI>Acetic Anhydride</LI>
<LI>Acetone</LI>
<LI>Acrylonitrile</LI>
<LI>Amyl Acetate</LI>
<LI>Amyl Alcohol</LI>
<LI>Benzene</LI>
<LI>Butyl Acetate</LI>
<LI>Butyl Acrylate</LI>
<LI>Butyl Alcohol</LI>
<LI>Carbon Bisulfide</LI>
<LI>Carbon Disulfide</LI>
<LI>Cellosolve</LI>
<LI>Cresols</LI>
<LI>Crude Oil (Petroleum)</LI>
<LI>Cumene</LI>
<LI>Cyclohexane</LI>
<LI>No. 2 Diesel Fuel</LI>
<LI>Ethyl Acetate</LI>
<LI>Ethyl Acrylate</LI>
<LI>Ethyl Alcohol</LI>
<LI>Ethyl Benzene</LI>
<LI>Ethyl Dichloride</LI>
<LI>Ethyl Ether</LI>
<LI>Gasoline</LI>
<LI>Heptane</LI>
<LI>Hexane</LI>
<LI>Isobutyl Acetate</LI>
<LI>Isobutyl Alcohol</LI>
<LI>Isopropyl Acetate</LI>
<LI>Isopropyl Alcohol</LI>
<LI>Jet Fuel and Kerosene</LI>
<LI>Methyl Alcohol</LI>
<LI>Methyl Amyl Alcohol</LI>
<LI>Methyl Cellosolve</LI>
<LI>Methyl Ethyl Ketone</LI>
<LI>Naptha</LI>
<LI>Pentane</LI>
<LI>Propylene Oxide</LI>
<LI>Toluene</LI>
<LI>Vinyl Acetate</LI>
<LI>Xylene
</LI></SCOL2>
<HD1>Hazardous Gases
</HD1>
<SCOL2>
<LI>Acetaldehyde</LI>
<LI>Butadiene</LI>
<LI>Butane</LI>
<LI>Ethene</LI>
<LI>Ethylene</LI>
<LI>Ethylene Oxide</LI>
<LI>Hydrogen</LI>
<LI>Liquefied Natural Gas (LNG)</LI>
<LI>Liquefied Petroleum Gas (LPG)</LI>
<LI>Propane</LI>
<LI>Propylene</LI>
<LI>Vinyl Chloride
</LI></SCOL2>
<FP>(Primary Source: “Urban Development Siting with respect to Hazardous Commercial/Industrial Facilities,” by Rolf Jensen and Associates, Inc., April 1982)
</FP>
<CITA TYPE="N">[49 FR 5105, Feb. 10, 1984; 49 FR 12214, Mar. 29, 1984]


</CITA>
</DIV9>


<DIV9 N="Appendix II" NODE="24:1.1.1.1.29.3.59.10.7" TYPE="APPENDIX">
<HEAD>Appendix II to Subpart C of Part 51—Development of Standards; Calculation Methods
</HEAD>
<HD2>I. Background Information Concerning the Standards
</HD2>
<P>(a) <I>Thermal Radiation:</I>
</P>
<P>(1) <I>Introduction.</I> Flammable products stored in above ground containers represent a definite, potential threat to human life and structures in the event of fire. The resulting fireball emits thermal radiation which is absorbed by the surroundings. Combustible structures, such as wooden houses, may be ignited by the thermal radiation being emitted. The radiation can cause severe burn, injuries and even death to exposed persons some distance away from the site of the fire.
</P>
<P>(2) <I>Criteria for Acceptable Separation Distance (ASD).</I> Wooden buildings, window drapes and trees generally ignite spontaneously when exposed for a relatively long period of time to thermal radiation levels of approximately 10,000 Btu/hr. sq. ft. It will take 15 to 20 minutes for a building to ignite at that degree of thermal intensity. Since the reasonable response time for fire fighting units in urbanized areas is approximately five to ten minutes, a standard of 10,000 BTU/hr. sq. ft. is considered an acceptable level of thermal radiation for buildings.
</P>
<P>People in outdoor areas exposed to a thermal radiation flux level of approximately 1,500 Btu/ft
<SU>2</SU> hr will suffer intolerable pain after 15 seconds. Longer exposure causes blistering, permanent skin damage, and even death. Since it is assumed that children and the elderly could not take refuge behind walls or run away from the thermal effect of the fire within the 15 seconds before skin blistering occurs, unprotected (outdoor) areas, such as playgrounds, parks, yards, school grounds, etc., must be placed at such a distance from potential fire locations so that the radiation flux level is well below 1500 Btu/ft
<SU>2</SU> hr. An acceptable flux level, particularly for elderly people and children, is 450 Btu/ft
<SU>2</SU> hr. The skin can be exposed to this degree of thermal radiation for 3 minutes or longer with no serious detrimental effect. The result would be the same as a bad sunburn. Therefore, the standard for areas in which there will be exposed people, e.g. outdoor recreation areas such as playgrounds and parks, is set at 450 Btu/hr. sq. ft. Areas covered also include open space ancillary to residential structures, such as yard areas and vehicle parking areas.
</P>
<P>(3) <I>Acceptable Separation Distance From a Potential Fire Hazard.</I> This is the actual setback required for the safety of occupied buildings and their inhabitants, and people in open spaces (exposed areas) from a potential fire hazard. The specific distance required for safety from such a hazard depends upon the nature and the volume of the substance. The Technical Guidebook entitled “Urban Development Siting With Respect to Hazardous/Commercial Industrial Facilities,” which supplements this regulation, contains the technical guidance required to compute Acceptable Separation Distances (ASD) for those flammable substances most often encountered.
</P>
<P>(b) <I>Blast Overpressure:</I> The Acceptable Separation Distance (ASD) for people and structures from materials prone to explosion is dependent upon the resultant blast measured in pounds per square inch (psi) overpressure. It has been determined by the military and corroborated by two independent studies conducted for the Department of Housing and Urban Development that 0.5 psi is the acceptable level of blast overpressure for both buildings and occupants, because a frame structure can normally withstand that level of external exertion with no serious structural damage, and it is unlikely that human beings inside the building would normally suffer any serious injury. Using this as the safety standard for blast overpressure, nomographs have been developed from which an ASD can be determined for a given quantify of hazardous substance. These nomographs are contained in the handbook with detailed instructions on their use.
</P>
<P>(c) <I>Hazard evaluation:</I> The Acceptable Separation Distances for buildings, which are determined for thermal radiation and blast overpressure, delineate separate identifiable danger zones for each potential accident source. For some materials the fire danger zone will have the greatest radius and cover the largest area, while for others the explosion danger zone will be the greatest. For example, conventional petroleum fuel products stored in unpressurized tanks do not emit blast overpressure of dangerous levels when ignited. In most cases, hazardous substances will be stored in pressurized containers. The resulting blast overpressure will be experienced at a greater distance than the resulting thermal radiation for the standards set in Section 51.203. In any event the hazard requiring the greatest separation distance will prevail in determining the location of HUD-assisted projects.
</P>
<P>The standards developed for the protection of people and property are given in the following table.
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col"> 
</TH><TH class="gpotbl_colhed" scope="col">Thermal radiation
</TH><TH class="gpotbl_colhed" scope="col">Blast overpressure
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Amount of acceptable exposure allowed for building structures</TD><TD align="left" class="gpotbl_cell">10,000 BTU/ft
<sup>2</sup> hr</TD><TD align="left" class="gpotbl_cell">0.5 psi.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Amount of acceptable exposure allowed for people in open areas</TD><TD align="left" class="gpotbl_cell">450 BTU/ft
<sup>2</sup> hr</TD><TD align="left" class="gpotbl_cell">0.5 psi.</TD></TR></TABLE></DIV></DIV>
<HD2>Problem Example
</HD2>
<P>The following example is given as a guide to assist in understanding how the procedures are used to determine an acceptable separation distance. The technical data are found in the HUD Guidebook. Liquid propane is used in the example since it is both an explosion and a fire hazard.
</P>
<P>In this hypothetical case a proposed housing project is to be located 850 feet from a 30,000 gallon liquid propane (LPG) tank. The objective is to determine the acceptable separation distance from the LPG tank. Since propane is both explosive and fire prone it will be necessary to determine the ASD for both explosion and for fire. The greatest of the two will govern. There is no dike around the tank in this example.
</P>
<P>Nomographs from the technical Guidebook have been reproduced to facilitate the solving of the problem.
</P>
<HD2>ASD For Explosion
</HD2>
<P>Use Figure 1 to determine the acceptable separation distance for explosion.
</P>
<P>The graph depicted on Figure 1 is predicated on a blast overpressure of 0.5 psi.
</P>
<P>The ASD in feet can be determined by applying the quantity of the hazard (in gallons) to the graph.
</P>
<P>In this case locate the 30,000 gallon point on the horizontal axis and draw a vertical line from that point to the intersection with the straight line curve. Then draw a horizontal line from the point where the lines cross to the left vertical axis where the ACCEPTABLE SEPARATION DISTANCE of 660 feet is found.
</P>
<P><I>Therefore the ASD for explosion is 660 feet</I>
</P>
<P>Since the proposed project site is located 850 feet from the tank it is located at a safe distance with regards to blast overpressure.
</P>
<img src="/graphics/ec12oc91.001.gif"/>
<HD2>ASD For Fire
</HD2>
<P>To determine the ASD for fire it will be necessary to first find the fire width (diameter of the fireball) on Figure 2. Then apply this to Figure 3 to determine the ASD.
</P>
<P>Since there are two safety standards for fire: (a) 10,000 BTU/ft
<SU>2</SU> hr. for buildings; and (b) 450 BTU/ft
<SU>2</SU> hr. for people in exposed areas, it will be necessary to determine an ASD for each.
</P>
<P>To determine the fire width locate the 30,000 gallon point on the horizontal axis on <I>Figure 2</I> and draw a vertical line to the straight line curve. Then draw a horizontal line from the point where the lines cross to the left vertical axis where the FIRE WIDTH is found to be <I>350 feet.</I>
</P>
<P>Now locate the 350 ft. point on the horizontal axis of <I>Figure 3</I> and draw a vertical line from that point to curves 1 and 2. Then draw horizontal lines from the points where the lines cross to the left vertical axis where the ACCEPTABLE SEPARATION DISTANCES of <I>240 feet</I> for buildings and <I>1,150 feet</I> for exposure to people is found.
</P>
<P>Based on this the proposed project site is located at a safe distance from a potential fireball. However, exposed playgrounds or other exposed areas of congregation must be at least 1,150 feet from the tank, or be appropriately shielded from a potential fireball.
</P>
<FP>(Source: HUD Handbook, “Urban Development Siting With Respect to Hazardous Commercial/Industrial Facilities.”)
</FP>
<img src="/graphics/ec12oc91.002.gif"/>
<img src="/graphics/ec12oc91.003.gif"/>
<CITA TYPE="N">[49 FR 5105, Feb. 10, 1984; 49 FR 12214, Mar. 29, 1984] 



</CITA>
</DIV9>

</DIV6>


<DIV6 N="D" NODE="24:1.1.1.1.29.4" TYPE="SUBPART">
<HEAD>Subpart D—Siting of HUD Assisted Projects in Runway Clear Zones at Civil Airports and Clear Zones and Accident Potential Zones at Military Airfields</HEAD>

<AUTH>
<HED>Authority:</HED><PSPACE>Sec. 2, Housing Act of 1949, as amended, 42 U.S.C. 1441, affirmed by sec. 2, HUD Act of 1969, Pub. L. 90-448; sec. 7(d), HUD Act of 1965, 42 U.S.C. 3535(d); OMB, Fed'l Mgmt. Cir. 75-2: Compatible Land Uses At Federal Airfields.
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>49 FR 880, Jan. 6, 1984, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 51.300" NODE="24:1.1.1.1.29.4.59.1" TYPE="SECTION">
<HEAD>§ 51.300   Purpose.</HEAD>
<P>It is the purpose of this subpart to promote compatible land uses around civil airports and military airfields by identifying suitable land uses for Runway Clear Zones at civil airports and Clear Zones and Accident Potential Zones at military airfields and by establishing them as standards for providing HUD assistance, subsidy or insurance.
</P>
<CITA TYPE="N">[49 FR 880, Jan. 6, 1984, as amended at 61 FR 13334, Mar. 26, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 51.301" NODE="24:1.1.1.1.29.4.59.2" TYPE="SECTION">
<HEAD>§ 51.301   Definitions.</HEAD>
<P>For the purposes of this regulation, the following definitions apply:
</P>
<P>(a) <I>Accident Potential Zone.</I> An area at military airfields which is beyond the Clear Zone. The standards for the Accident Potential Zones are set out in Department of Defense Instruction 4165.57, “Air Installations Compatible Use Zones,” November 8, 1977, 32 CFR part 256. There are no Accident Potential Zones at civil airports.
</P>
<P>(b) <I>Airport Operator.</I> The civilian or military agency, group or individual which exercises control over the operations of the civil airport or military airfield.
</P>
<P>(c) <I>Civil Airport.</I> An existing commercial service airport as designated in the National Plan of Integrated Airport Systems prepared by the Federal Aviation Administration in accordance with section 504 of the Airport and Airway Improvement Act of 1982.
</P>
<P>(d) <I>Runway Clear Zones and Clear Zones.</I> Areas immediately beyond the ends of a runway. The standards for Runway Clear Zones for civil airports are established by FAA regulation 14 CFR part 152. The standards for Clear Zones for military airfields are established by DOD Instruction 4165.57, 32 CFR part 256.


</P>
</DIV8>


<DIV8 N="§ 51.302" NODE="24:1.1.1.1.29.4.59.3" TYPE="SECTION">
<HEAD>§ 51.302   Coverage.</HEAD>
<P>(a) These policies apply to HUD programs which provide assistance, subsidy or insurance for construction, land development, community development or redevelopment or any other provision of facilities and services which are designed to make land available for construction. When the HUD assistance, subsidy or insurance is used to make land available for construction rather than for the actual construction, the provision of the HUD assistance, subsidy or insurance shall be dependent upon whether the facility to be built is itself acceptable in accordance with the standards in § 51.303.
</P>
<P>(b) These policies apply not only to new construction but also to substantial or major modernization and rehabilitation and to any other program which significantly prolongs the physical or economic life of existing facilities or which, in the case of Accident Potential Zones:
</P>
<P>(1) Changes the use of the facility so that it becomes one which is no longer acceptable in accordance with the standards contained in § 51.303(b);
</P>
<P>(2) Significantly increases the density or number of people at the site; or
</P>
<P>(3) Introduces explosive, flammable or toxic materials to the area.
</P>
<P>(c) Except as noted in § 51.303(a)(3), these policies do not apply to HUD programs where the action only involves the purchase, sale or rental of an existing property without significantly prolonging the physical or economic life of the property.
</P>
<P>(d) The policies do not apply to research or demonstration projects which do not result in new construction or reconstruction, to interstate land sales registration, or to any action or emergency assistance which is provided to save lives, protect property, protect public health and safety, or remove debris and wreckage.
</P>
<CITA TYPE="N">[49 FR 880, Jan. 6, 1984, as amended at 61 FR 13334, Mar. 26, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 51.303" NODE="24:1.1.1.1.29.4.59.4" TYPE="SECTION">
<HEAD>§ 51.303   General policy.</HEAD>
<P>It is HUD's general policy to apply standards to prevent incompatible development around civil airports and military airfields. 
</P>
<P>(a) HUD policy for actions in Runway Clear Zones and Clear Zones. 
</P>
<P>(1) HUD policy is not to provide any assistance, subsidy or insurance for projects and actions covered by this part except as stated in § 51.303(a)(2) below. 
</P>
<P>(2) If a project proposed for HUD assistance, subsidy or insurance is one which will not be frequently used or occupied by people, HUD policy is to provide assistance, subsidy or insurance only when written assurances are provided to HUD by the airport operator to the effect that there are no plans to purchase the land involved with such facilities as part of a Runway Clear Zone or Clear Zone acquisition program. 
</P>
<P>(3) Special notification requirements for Runway Clear Zones and Clear Zones. In all cases involving HUD assistance, subsidy, or insurance for the purchase or sale of an existing property in a Runway Clear Zone or Clear Zone, HUD (or the responsible entity or recipient under 24 CFR part 58) shall advise the buyer that the property is in a Runway Clear Zone or Clear Zone, what the implications of such a location are, and that there is a possibility that the property may, at a later date, be acquired by the airport operator. The buyer must sign a statement acknowledging receipt of this information. 
</P>
<P>(b) HUD policy for actions in Accident Potential Zones at Military Airfields. HUD policy is to discourage the provision of any assistance, subsidy or insurance for projects and actions in the Accident Potential Zones. To be approved, projects must be generally consistent with the recommendations in the <I>Land Use Compatibility Guidelines For Accident Potential Zones</I> chart contained in DOD Instruction 4165.57, 32 CFR part 256. 
</P>
<CITA TYPE="N">[49 FR 880, Jan. 6, 1984, as amended at 61 FR 13334, Mar. 26, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 51.304" NODE="24:1.1.1.1.29.4.59.5" TYPE="SECTION">
<HEAD>§ 51.304   Responsibilities.</HEAD>
<P>(a) The following persons have the authority to approve actions in Accident Potential Zones: 
</P>
<P>(1) For programs subject to environmental review under 24 CFR part 58: the Certifying Officer of the responsible entity as defined in 24 CFR part 58. 
</P>
<P>(2) For all other HUD programs: the HUD approving official having approval authority for the project. 
</P>
<P>(b) The following persons have the authority to approve actions in Runway Clear Zones and Clear Zones: 
</P>
<P>(1) For programs subject to environmental review under 24 CFR part 58: The Certifying Officer of the responsible entity as defined in 24 CFR part 58. 
</P>
<P>(2) For all other HUD programs: the Program Assistant Secretary. 
</P>
<CITA TYPE="N">[61 FR 13335, Mar. 26, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 51.305" NODE="24:1.1.1.1.29.4.59.6" TYPE="SECTION">
<HEAD>§ 51.305   Implementation.</HEAD>
<P>(a) Projects already approved for assistance. This regulation does not apply to any project approved for assistance prior to the effective date of the regulation whether the project was actually under construction at that date or not.
</P>
<P>(b) Acceptable data on Runway Clear Zones, Clear Zones and Accident Potential Zones. The only Runway Clear Zones, Clear Zones and Accident Potential Zones which will be recognized in applying this part are those provided by the airport operators and which for civil airports are defined in accordance with FAA regulations 14 CFR part 152 or for military airfields, DOD Instruction 4165.57, 32 CFR part 256. All data, including changes, related to the dimensions of Runway Clear Zones for civil airports shall be verified with the nearest FAA Airports District Office before use by HUD.
</P>
<P>(c) Changes in Runway Clear Zones, Clear Zones, and Accident Potential Zones. If changes in the Runway Clear Zones, Clear Zones or Accident Potential Zones are made, the field offices shall immediately adopt these revised zones for use in reviewing proposed projects.
</P>
<P>(d) The decision to approve projects in the Runway Clear Zones, Clear Zones and Accident Potential Zones must be documented as part of the enviornmental assessment or, when no assessment is required, as part of the project file. 


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="52" NODE="24:1.1.1.1.30" TYPE="PART">
<HEAD>PART 52—INTERGOVERNMENTAL REVIEW OF DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT PROGRAMS AND ACTIVITIES
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>31 U.S.C. 6506; 42 U.S.C. 3334, 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>48 FR 29216, June 24, 1983, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 52.1" NODE="24:1.1.1.1.30.0.59.1" TYPE="SECTION">
<HEAD>§ 52.1   What is the purpose of these regulations?</HEAD>
<P>(a) The regulations in this part implement Executive Order 12372, “Intergovernmental Review of Federal Programs,” issued July 14, 1982 and amended on April 8, 1983. These regulations also implement applicable provisions of section 401 of the Intergovernmental Cooperation Act of 1968 and section 204 of the Demonstration Cities and Metropolitan Development Act of 1966.
</P>
<P>(b) These regulations are intended to foster an intergovernmental partnership and a strengthened Federalism by relying on state processes and on state, areawide, regional and local coordination for review of proposed Federal financial assistance and direct Federal development.
</P>
<P>(c) These regulations are intended to aid the internal management of the Department, and are not intended to create any right or benefit enforceable at law by a party against the Department or its officers.


</P>
</DIV8>


<DIV8 N="§ 52.2" NODE="24:1.1.1.1.30.0.59.2" TYPE="SECTION">
<HEAD>§ 52.2   What definitions apply to these regulations?</HEAD>
<P><I>Order</I> means Executive Order 12372, issued July 14, 1982, and amended April 8, 1983 and titled “Intergovernmental Review of Federal Programs.”
</P>
<P><I>Secretary</I> means the Secretary of the U.S. Department of Housing and Urban Development or an official or employee of the Department acting for the Secretary under a delegation of authority.
</P>
<P><I>State</I> means any of the 50 states, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, Guam, American Samoa, the U.S. Virgin Islands, or the Trust Territory of the Pacific Islands.
</P>
<CITA TYPE="N">[48 FR 29216, June 24, 1983, as amended at 61 FR 5205, Feb. 9, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 52.3" NODE="24:1.1.1.1.30.0.59.3" TYPE="SECTION">
<HEAD>§ 52.3   What programs and activities of the Department are subject to these regulations?</HEAD>
<P>The Secretary publishes in the <E T="04">Federal Register</E> a list of the Department's programs and activities that are subject to these regulations and identifies which of these are subject to the requirements of section 204 of the Demonstration Cities and Metropolitan Development Act.


</P>
</DIV8>


<DIV8 N="§ 52.4" NODE="24:1.1.1.1.30.0.59.4" TYPE="SECTION">
<HEAD>§ 52.4   What are the Secretary's general responsibilities under the Order?</HEAD>
<P>(a) The Secretary provides opportunities for consultation by elected officials of those state and local governments that would provide the non-federal funds for, or that would be directly affected by, proposed Federal financial assistance from, or direct Federal development by, the Department.
</P>
<P>(b) If a state adopts a process under the Order to review and coordinate proposed Federal financial assistance and direct Federal development, the Secretary, to the extent permitted by law:
</P>
<P>(1) Uses the state process to determine official views of state and local elected officials;
</P>
<P>(2) Communicates with state and local elected officials as early in a program planning cycle as is reasonably feasible to explain specific plans and actions;
</P>
<P>(3) Makes efforts to accommodate state and local elected officials' concerns with proposed Federal financial assistance and direct Federal development that are communicated through the state process;
</P>
<P>(4) Allows the states to simplify and consolidate existing federally required state plan submissions;
</P>
<P>(5) Where state planning and budgeting systems are sufficient and where permitted by law, encourages the substitution of state plans for federally required state plans;
</P>
<P>(6) Seeks the coordination of views of affected state and local elected officials in one state with those of another state when proposed Federal financial assistance or direct Federal development has an impact on interstate metropolitan urban centers or other interstate areas; and
</P>
<P>(7) Supports state and local governments by discouraging the reauthorization or creation of any planning organization which is federally-funded, which has a limited purpose, and which is not adequately representative of, or accountable to, state or local elected officials.


</P>
</DIV8>


<DIV8 N="§ 52.5" NODE="24:1.1.1.1.30.0.59.5" TYPE="SECTION">
<HEAD>§ 52.5   What is the Secretary's obligation with respect to Federal interagency coordination?</HEAD>
<P>The Secretary, to the extent practicable, consults with and seeks advice from all other substantially affected Federal departments and agencies in an effort to assure full coordination between such agencies and the Department regarding programs and activities covered under these regulations.


</P>
</DIV8>


<DIV8 N="§ 52.6" NODE="24:1.1.1.1.30.0.59.6" TYPE="SECTION">
<HEAD>§ 52.6   What procedures apply to the selection of programs and activities under these regulations?</HEAD>
<P>(a) A state may select any program or activity published in the <E T="04">Federal Register</E> in accordance with § 52.3 of this part for intergovernmental review under these regulations. Each state, before selecting programs and activities shall consult with local elected officials.
</P>
<P>(b) Each state that adopts a process shall notify the Secretary of the Department's programs and activities selected for that process.
</P>
<P>(c) A state may notify the Secretary of changes in its selections at any time. For each change, the state shall submit to the Secretary an assurance that the state has consulted with local elected officials regarding the change. The Department may establish deadlines by which states are required to inform the Secretary of changes in their program selections.
</P>
<P>(d) The Secretary uses a state's process as soon as feasible, depending on individual programs and activities, after the Secretary is notified of its selections. 


</P>
</DIV8>


<DIV8 N="§ 52.7" NODE="24:1.1.1.1.30.0.59.7" TYPE="SECTION">
<HEAD>§ 52.7   How does the Secretary communicate with state and local officials concerning the Department's programs and activities?</HEAD>
<P>(a) For those programs and activities covered by a state process under § 52.6, the Secretary, to the extent permitted by law—
</P>
<P>(1) Uses the state process to determine views of state and local elected officials; and,
</P>
<P>(2) Communicates with state and local elected officials, through the state process, as early in a program planning cycle as is reasonably feasible to explain specific plans and actions.
</P>
<P>(b) The Secretary provides notice to directly affected state, areawide, regional, and local entities in a state of proposed Federal financial assistance or direct Federal development if—
</P>
<P>(1) The state has not adopted a process under the Order; or
</P>
<P>(2) The assistance or development involves a program or activity not selected for the state process.
</P>
<FP>This notice may be made by publication in the <E T="04">Federal Register</E> or other appropriate means, which the Department in its discretion deems appropriate.


</FP>
</DIV8>


<DIV8 N="§ 52.8" NODE="24:1.1.1.1.30.0.59.8" TYPE="SECTION">
<HEAD>§ 52.8   How does the Secretary provide states an opportunity to comment on proposed Federal financial assistance and direct Federal development?</HEAD>
<P>(a) Except in unusual circumstances, the Secretary gives state processes or directly affected state, areawide, regional and local officials and entities—
</P>
<P>(1) At least 30 days from the date established by the Secretary to comment on proposed Federal financial assistance under: (i) A covered mortgage insurance program, (ii) the Urban Development Action Grant Program, or (iii) the Housing Development Grant Program.
</P>
<P>(2) At least 60 days from the date established by the Secretary to comment on proposed Federal financial assistance other than under a program covered by paragraph (a)(1).
</P>
<P>(b) This section also applies to comments in cases in which the review, coordination, and communication with the Department have been delegated.
</P>
<P>(c) Applicants for programs and activities subject to section 204 of the Demonstration Cities and Metropolitan Act shall allow areawide agencies a 60-day opportunity for review and comment.
</P>
<CITA TYPE="N">[48 FR 29216, June 24, 1983, as amended at 49 FR 24653, June 14, 1984]


</CITA>
</DIV8>


<DIV8 N="§ 52.9" NODE="24:1.1.1.1.30.0.59.9" TYPE="SECTION">
<HEAD>§ 52.9   How does the Secretary receive and respond to comments?</HEAD>
<P>(a) The Secretary follows the procedures in § 52.10 if—
</P>
<P>(1) A state office or official is designated to act as a single point of contact between a state process and all Federal agencies, and
</P>
<P>(2) That office or official transmits a state process recommendation for a program selected under § 52.6.
</P>
<P>(b)(1) The single point of contact is not obligated to transmit comments from state, areawide, regional or local officials and entities where there is no state process recommendation.
</P>
<P>(2) If a state process recommendation is transmitted by a single point of contact, all comments from state, areawide, regional, and local officials and entities that differ from it must also be transmitted.
</P>
<P>(c) If a state has not established a process, or is unable to submit a state process recommendation, state, areawide, regional and local officials and entities may submit comments either to the applicant or to the Department.
</P>
<P>(d) If a program or activity is not selected for a state process, state, areawide, regional and local officials and entities may submit comments either to the applicant or to the Department. In addition, if a state process recommendation for a nonselected program or activity is transmitted to the Department by the single point of contact, the Secretary follows the procedures of § 52.10 of this part.
</P>
<P>(e) The Secretary considers comments which do not constitute a state process recommendation submitted under these regulations and for which the Secretary is not required to apply the procedures of § 52.10 of this part, when such comments are provided by a single point of contact, by the applicant, or directly to the Department by a commenting party.


</P>
</DIV8>


<DIV8 N="§ 52.10" NODE="24:1.1.1.1.30.0.59.10" TYPE="SECTION">
<HEAD>§ 52.10   How does the Secretary make efforts to accommodate intergovernmental concerns?</HEAD>
<P>(a) If a state process provides a state process recommendation to the Department through its single point of contact, the Secretary either—
</P>
<P>(1) Accepts the recommendation;
</P>
<P>(2) Reaches a mutually agreeable solution with the state process; or
</P>
<P>(3) Provides the single point of contact with such written explanation of its decision, as the Secretary in his or her discretion deems appropriate. The Secretary may also supplement the written explanation by providing the explanation to the single point of contact by telephone, other telecommunication, or other means.
</P>
<P>(b) In any explanation under paragraph (a)(3) of this section, the Secretary informs the single point of contact that—
</P>
<P>(1) The Department will not implement its decision for at least ten days after the single point of contact receives the explanation; or
</P>
<P>(2) The Secretary has reviewed the decision and determined that, because of unusual circumstances, the waiting period of at least ten days is not feasible.
</P>
<P>(c) For purposes of computing the waiting period under paragraph (b)(1) of this section, a single point of contact is presumed to have received written notification 5 days after the date of mailing of such notification.


</P>
</DIV8>


<DIV8 N="§ 52.11" NODE="24:1.1.1.1.30.0.59.11" TYPE="SECTION">
<HEAD>§ 52.11   What are the Secretary's obligations in interstate situations?</HEAD>
<P>(a) The Secretary is responsible for—
</P>
<P>(1) Identifying proposed Federal financial assistance and direct Federal development that have an impact on interstate areas;
</P>
<P>(2) Notifying appropriate officials and entities in states which have adopted a process and which select the Department's program or activity.
</P>
<P>(3) Making efforts to identify and notify the affected state, areawide, regional, and local officials and entities in those states that have not adopted a process under the Order or do not select the Department's program or activity;
</P>
<P>(4) Responding pursuant to § 52.10 of this part if the Secretary receives a recommendation from a designated areawide agency transmitted by a single point of contact, in cases in which review, coordination, and communication with the Department have been delegated.
</P>
<P>(b) The Secretary uses the procedures in § 52.10 if a state process provides a state process recommendation to the Department through a single point of contact.


</P>
</DIV8>


<DIV8 N="§ 52.12" NODE="24:1.1.1.1.30.0.59.12" TYPE="SECTION">
<HEAD>§ 52.12   [Reserved]</HEAD>
</DIV8>

</DIV5>


<DIV5 N="55" NODE="24:1.1.1.1.31" TYPE="PART">
<HEAD>PART 55—FLOODPLAIN MANAGEMENT AND PROTECTION OF WETLANDS


</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d), 4001-4128, and 5154a; 42 U.S.C. 4321 <I>et seq.;</I> E.O. 13690, 80 FR 6425; Pub. L. 93-234, 87 Stat. 975; E.O. 11988, 42 FR 26951, 3 CFR, 1977 Comp., p. 117; E.O. 11990, 42 FR 26961, 3 CFR, 1977 Comp., p 121.




</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>59 FR 19107, Apr. 21, 1994, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:1.1.1.1.31.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 55.1" NODE="24:1.1.1.1.31.1.59.1" TYPE="SECTION">
<HEAD>§ 55.1   Purpose.</HEAD>
<P>(a)(1) The purpose of Executive Order 11988, Floodplain Management, as amended, is “to avoid to the extent possible the long and short-term adverse impacts associated with the occupancy and modification of floodplains and to avoid direct or indirect support of floodplain development wherever there is a practicable alternative.”
</P>
<P>(2) The purpose of Executive Order 11990, Protection of Wetlands, is “to avoid to the extent possible the long- and short-term adverse impacts associated with the destruction or modification of wetlands and to avoid direct or indirect support of new construction in wetlands wherever there is a practicable alternative.”
</P>
<P>(3) This part implements requirements consistent with Executive Order 11988, Floodplain Management, as amended, and Executive Order 11990, Protection of Wetlands, and employs the principles of the Unified National Program for Floodplain Management. These regulations apply to all proposed actions for which approval is required, either from HUD (under any applicable HUD program) or from a recipient (under programs subject to 24 CFR part 58), that are subject to potential harm by location in floodplains or wetlands. Covered actions include acquisition, construction, demolition, improvement, disposition, financing, and use of properties located in floodplains or wetlands.
</P>
<P>(b) [Reserved]

 
</P>
<CITA TYPE="N">[59 FR 19107, Apr. 21, 1994, as amended at 78 FR 68728, Nov. 15, 2013; 89 FR 30903, Apr. 23, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 55.2" NODE="24:1.1.1.1.31.1.59.2" TYPE="SECTION">
<HEAD>§ 55.2   Terminology.</HEAD>
<P>(a) With the exception of those terms defined in paragraph (b) of this section, the terms used in this part shall follow the definitions contained in section 6 of Executive Order 11988, section 7 of Executive Order 11990, and the “Guidelines for Implementing Executive Order 11988, Floodplain Management, and Executive Order 13690, Establishing a Federal Flood Risk Management Standard and a Process for Further Soliciting and Considering Stakeholder Input”; the terms “special flood hazard area,” “criteria,” and “Regular Program” shall follow the definitions contained in FEMA regulations at 44 CFR 59.1; and the terms “Letter of Map Revision” and “Letter of Map Amendment” shall refer to letters issued by FEMA, as provided in 44 CFR part 65 and 44 CFR part 70, respectively.
</P>
<P>(b) For purposes of this part, the following definitions apply:
</P>
<P>(1) <I>Coastal high hazard area</I> means the area subject to high velocity waters, including but not limited to hurricane wave wash or tsunamis. The area is designated on a Flood Insurance Rate Map (FIRM) or Flood Insurance Study (FIS) under FEMA regulations, or according to best available information. (See § 55.8(b) for appropriate data sources.)
</P>
<P>(2) <I>Compensatory mitigation</I> means the restoration (reestablishment or rehabilitation), establishment (creation), enhancement, and/or, in certain circumstances, preservation of aquatic resources for the purposes of offsetting unavoidable adverse impacts that remain after all appropriate and practicable avoidance and minimization have been achieved. Examples include, but are not limited to:
</P>
<P>(i) <I>Permittee-responsible mitigation:</I> On-site or off-site mitigation undertaken by the holder of a wetlands permit under section 404 of the Clean Water Act (or an authorized agent or contractor), for which the permittee retains full responsibility;
</P>
<P>(ii) <I>Mitigation banking:</I> A permittee's purchase of credits from a wetlands mitigation bank, comprising wetlands that have been set aside to compensate for conversions of other wetlands; the mitigation obligation is transferred to the sponsor of the mitigation bank; and
</P>
<P>(iii) <I>In-lieu fee mitigation:</I> A permittee's provision of funds to an in-lieu fee sponsor (public agency or nonprofit organization) that builds and maintains a mitigation site, often after the permitted adverse wetland impacts have occurred; the mitigation obligation is transferred to the in-lieu fee sponsor.
</P>
<P>(3)(i) <I>Critical action</I> means any activity for which even a slight chance of flooding would be too great, because such flooding might result in loss of life, injury to persons, or damage to property. Critical actions include activities that create, maintain or extend the useful life of those structures or facilities that:
</P>
<P>(A) Produce, use or store highly volatile, flammable, explosive, toxic or water-reactive materials;
</P>
<P>(B) Provide essential and irreplaceable records or utility or emergency services that may become lost or inoperative during flood and storm events (<I>e.g.,</I> community stormwater management infrastructure, water treatment plants, data storage centers, generating plants, principal utility lines, emergency operations centers including fire and police stations, and roadways providing sole egress from flood-prone areas); or
</P>
<P>(C) Are likely to contain occupants who may not be sufficiently mobile to avoid loss of life or injury during flood or storm events, <I>e.g.,</I> persons who reside in hospitals, nursing homes, convalescent homes, intermediate care facilities, board and care facilities, and retirement service centers. Housing for independent living for the elderly is not considered a critical action.
</P>
<P>(ii) Critical actions shall not be approved in floodways, LiMWAs, or coastal high hazard areas unless they meet an exception at § 55.8 or § 55.21.
</P>
<P>(4) <I>Federal Flood Risk Management Standard (FFRMS) floodplain</I> means the floodplain as defined by Executive Order 13690 and the Guidelines for Implementing Executive Order 11988, Floodplain Management, and Executive Order 13690, Establishing a Federal Flood Risk Management Standard and a Process for Further Soliciting and Considering Stakeholder Input and further described as applied to HUD-assisted activities by § 55.7 of this part.
</P>
<P>(5) <I>0.2-percent-annual-chance (500-year) floodplain</I> means the area, including the base flood elevation, subject to inundation from a flood having a 0.2 percent chance or greater of being equaled or exceeded in any given year. (See § 55.8(b) for appropriate data sources).
</P>
<P>(6) <I>Floodway</I> means that portion of the floodplain which is effective in carrying flow, where the flood hazard is generally the greatest, and where water depths and velocities are the highest. The term “floodway” as used here is consistent with “regulatory floodways” as identified by FEMA. (See § 55.8(b) for appropriate data sources.)
</P>
<P>(7) <I>Functionally dependent use</I> means a land use that must necessarily be conducted in close proximity to water (<I>e.g.,</I> a dam, marina, port facility, water-front park, and many types of bridges).
</P>
<P>(8) <I>High hazard area</I> means a floodway or a coastal high hazard area.
</P>
<P>(9) <I>Impervious surface area</I> means an improved surface that measurably reduces the rate of water infiltration below the rate that would otherwise be provided by the soil present in a location prior to improvement, based on the soil type identified either by the Natural Resource Conservation Service Soil Survey or geotechnical study. Impervious surfaces include, but are not limited to, unperforated concrete or asphalt ground cover, unvegetated roofing materials, and other similar treatments that impede infiltration.
</P>
<P>(10) <I>Limit of Moderate Wave Action (LiMWA)</I> means the inland limit of the portion of Coastal A Zone where wave heights can be between 1.5 and 3 feet during a base flood event, subjecting properties to damage from waves and storm surge. (See § 55.8(b) for appropriate data sources.)
</P>
<P>(11) <I>1-percent-annual-chance (100-year) floodplain</I> means the area subject to inundation from a flood having a one percent or greater chance of being equaled or exceeded in any given year. (See § 55.8(b) for appropriate data sources.)
</P>
<P>(12) <I>Substantial improvement</I>—(i) <I>Substantial improvement</I> means either:
</P>
<P>(A) Any repair, reconstruction, modernization, or improvement of a structure, including a manufactured housing unit, the cost of which equals or exceeds 50 percent of the market value of the structure either:
</P>
<P>(<I>1</I>) Before the improvement or repair is started; or
</P>
<P>(<I>2</I>) If the structure has been damaged, and is being restored, before the damage occurred; or
</P>
<P>(B) Any repair, reconstruction, modernization, or improvement of a structure, including a manufactured housing unit, that results in an increase of more than twenty percent in the number of dwelling units in a residential project or in the average peak number of customers and employees likely to be on-site at any one time for a commercial or industrial project.
</P>
<P>(ii) <I>Substantial improvement</I> may not be defined to include either:
</P>
<P>(A) Any project for improvement of a structure to comply with existing state or local health, sanitary or safety code specifications that is solely necessary to assure safe living conditions, or
</P>
<P>(B) Any alteration of a structure listed on the National Register of Historical Places or on a State Inventory of Historic Places.
</P>
<P>(iii) Structural repairs, reconstruction, or improvements not meeting this definition are considered “minor improvements”.
</P>
<P>(13) <I>Wetlands</I> means those areas that are inundated or saturated by surface or ground water with a frequency sufficient to support, and under normal circumstances does or would support, a prevalence of vegetative or aquatic life that requires saturated or seasonally saturated soil conditions for growth and reproduction. Wetlands generally include swamps, marshes, bogs, and similar areas such as sloughs, prairie potholes, wet meadows, river overflows, mud flats, and natural ponds. This definition includes those wetland areas separated from their natural supply of water as a result of activities such as the construction of structural flood protection methods or solid fill roadbeds and activities such as mineral extraction and navigation improvements. This definition includes both wetlands subject to and those not subject to Section 404 of the Clean Water Act as well as constructed wetlands.

 


</P>
<CITA TYPE="N">[59 FR 19107, Apr. 21, 1994, as amended at 78 FR 68729, Nov. 15, 2013; 89 FR 30904, Apr. 23, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 55.3" NODE="24:1.1.1.1.31.1.59.3" TYPE="SECTION">
<HEAD>§ 55.3   Assignment of responsibilities.</HEAD>
<P>(a) <I>General.</I> The implementation of Executive Orders 11988 and 11990 under this part shall be conducted by HUD for Department-administered programs subject to environmental review under 24 CFR part 50 and by authorized responsible entities that are responsible for environmental review under 24 CFR part 58.
</P>
<P>(b)(1) <I>The Assistant Secretary for Community Planning and Development (CPD)</I> shall oversee:
</P>
<P>(i) The Department's implementation of Executive Orders 11988 and 11990 and this part in all HUD programs; and
</P>
<P>(ii) The implementation activities of HUD program managers and, for HUD financial assistance subject to 24 CFR part 58, of grant recipients and responsible entities.
</P>
<P>(2) In performing these responsibilities, the Assistant Secretary for CPD shall make pertinent policy determinations in cooperation with appropriate program offices and provide necessary assistance, training, publications, and procedural guidance.
</P>
<P>(c) <I>Other HUD Assistant Secretaries, the General Counsel, and the President of the Government National Mortgage Association (GNMA)</I> shall: 
</P>
<P>(1) Ensure compliance with this part for all actions under their jurisdiction that are proposed to be conducted, supported, or permitted in a floodplain or wetland, including taking full responsibility for all decisions made under their jurisdiction that are made pursuant to § 55.20 for environmental reviews completed pursuant to 24 CFR part 50;


</P>
<P>(2) Ensure that actions approved by HUD or responsible entities are monitored and that any prescribed mitigation is implemented;
</P>
<P>(3) Ensure that the offices under their jurisdiction have the resources to implement the requirements of this part; and
</P>
<P>(4) Incorporate in departmental regulations, handbooks, and project and site standards those criteria, standards, and procedures related to compliance with this part.
</P>
<P>(d) <I>Responsible entity Certifying Officer.</I> Certifying Officers of responsible entities administering or reviewing activities subject to 24 CFR part 58 shall comply with this part in carrying out HUD-assisted programs. Certifying Officers shall monitor approved actions and ensure that any prescribed mitigation is implemented.
</P>
<P>(e) <I>Grantees and applicants.</I> Grantees and Applicants that are not acting as responsible entities shall:
</P>
<P>(1) Supply HUD (or the responsible entity authorized by 24 CFR part 58) with all available, relevant information necessary for HUD (or the responsible entity) to perform the compliance required by this part, including environmental review record documentation described in 24 CFR 58.38, as applicable;
</P>
<P>(2) Implement mitigating measures required by HUD (or the responsible entity authorized by 24 CFR part 58) under this part or select alternate eligible property; and
</P>
<P>(3) Monitor approved actions and ensure that any prescribed mitigation is implemented.
</P>
<P>(f) <I>Third party providers.</I> Consultants and other parties to the environmental review process may prepare maps, studies (<I>e.g.,</I> hydraulic and hydrologic studies), and reports to support compliance with this part, including identification of floodplains and wetlands and development of alternatives or minimization measures. The following responsibilities, however, may not be delegated to the third-party provider:
</P>
<P>(1) Receipt of public or agency comments;
</P>
<P>(2) Selection or rejection of alternatives analyzed in Step 3 of the 8-step decision making process in § 55.20;
</P>
<P>(3) Selection or rejection of minimization measures analyzed in Step 5 of the 8-step decision making process in § 55.20;
</P>
<P>(4) Determination whether avoidance of floodplain or wetland impacts, according to the purpose of Executive Orders 11988 and 11990, is or is not practicable.


</P>
<CITA TYPE="N">[59 FR 19107, Apr. 21, 1994, as amended at78 FR 68730, Nov. 15, 2013; 89 FR 30905, Apr. 23, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 55.4" NODE="24:1.1.1.1.31.1.59.4" TYPE="SECTION">
<HEAD>§ 55.4   Notification of floodplain hazard.</HEAD>
<P>(a) <I>Notification for property owners, buyers, and developers.</I> For actions in the FFRMS floodplain (as defined in § 55.7), HUD (or HUD's designee) or the responsible entity must ensure that any party participating in the transaction is notified that the property is in the FFRMS floodplain and whether flood insurance is required or available in this location. Notification shall also include a description of the approximate elevation of the FFRMS floodplain, proximity to flood-related infrastructure impacting the site including dams and levees, the location of ingress and egress or evacuation routes relative to the FFRMS floodplain, disclosure of information on flood insurance claims filed on the property to the extent available from FEMA, and other relevant information such as available emergency notification resources.
</P>
<P>(b) <I>Renter notification.</I> For HUD-assisted, HUD-acquired, and HUD-insured rental properties within the FFRMS floodplain, new and renewal leases must include acknowledgements signed by residents indicating that they have been advised that the property is in a floodplain and flood insurance is available for their personal property. Notification shall also include the location of ingress and egress routes relative to the FFRMS floodplain, available emergency notification resources, and the property's emergency procedures for residents in the event of flooding.
</P>
<P>(c) <I>Conveyance restrictions for the disposition of multifamily real property.</I> (1) In the disposition (including leasing) of multifamily properties acquired by HUD that are located in the FFRMS floodplain, the documents used for the conveyance must:
</P>
<P>(i) Refer to those uses that are restricted under identified Federal, State, or local floodplain regulations; and
</P>
<P>(ii) Include any land use restrictions limiting the use of the property by a grantee or purchaser and any successors under State or local laws.
</P>
<P>(2)(i) For disposition of multifamily properties acquired by HUD that are located in the FFRMS floodplain and contain critical actions, HUD shall, as a condition of approval of the disposition, require by covenant or comparable restriction on the property's use that the property owner and successive owners provide written notification to each current and prospective tenant concerning:
</P>
<P>(A) The hazards to life and to property for those persons who reside or work in a structure located within the FFRMS floodplain, and
</P>
<P>(B) The availability of flood insurance on the contents of their dwelling unit or business.
</P>
<P>(ii) The notice described in paragraph (c)(2)(i) of this section shall also be posted in the building so that it will be legible at all times and easily visible to all persons entering or using the building.
</P>
<CITA TYPE="N">[89 FR 30905, Apr. 23, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 55.5" NODE="24:1.1.1.1.31.1.59.5" TYPE="SECTION">
<HEAD>§ 55.5   Flood insurance.</HEAD>
<P>(a)(1) As required by section 102(a) of the Flood Disaster Protection Act of 1973, as amended (42 U.S.C. 4012a), when HUD financial assistance (including mortgage insurance) is proposed for acquisition or construction purposes in any special flood hazard area (as designated by the Federal Emergency Management Agency (FEMA) on an effective Flood Insurance Rate Map (FIRM) or Flood Insurance Study (FIS)), structures for which HUD financial assistance is provided must be covered by flood insurance in an amount at least equal to the project cost less estimated land cost, the outstanding principal balance of any HUD-assisted or HUD-insured loan, or the maximum limit of coverage available under the National Flood Insurance Program, whichever is least. Under section 202(a) of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4106(a), such proposed assistance in any special flood hazard area shall not be approved in communities identified by FEMA as eligible for flood insurance but which are not participating in the National Flood Insurance Program. This prohibition only applies to proposed HUD financial assistance in a FEMA-designated special flood hazard area one year after the community has been formally notified by FEMA of the designation of the affected area. This requirement is not applicable to HUD financial assistance in the form of formula grants to States, including financial assistance under the State-administered CDBG Program (24 CFR part 570, subpart I), Emergency Solutions Grant amounts allocated to States (24 CFR part 576), and HOME funds provided to a State under Title II of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12701-12839). HUD strongly encourages that flood insurance be obtained and maintained for all HUD-assisted structures in the FFRMS floodplain, sites that have previously flooded, or sites in close proximity to a floodplain.
</P>
<P>(2) Under section 582 of the National Flood Insurance Reform Act of 1994 (42 U.S.C. 5154a), HUD disaster assistance that is made available in a special flood hazard area may not be used to make a payment (including any loan assistance payment) to a person for repair, replacement, or restoration of damage to any personal, residential, or commercial property if:
</P>
<P>(i) The person had previously received Federal flood disaster assistance conditioned on obtaining and maintaining flood insurance; and
</P>
<P>(ii) The person failed to obtain and maintain the flood insurance.
</P>
<P>(b) HUD or the responsible entity may impose flood insurance requirements that exceed the minimums established by the Flood Disaster Protection Act of 1973 or by Tribal, State, or local requirements when needed to minimize financial risk from flood hazards. HUD and responsible entities have discretion to require that flood insurance be maintained for structures outside of the FEMA-mapped floodplain but within the FFRMS floodplain and/or that structures be insured up to the full replacement cost of the structure when needed to minimize financial risk from flood hazards. Nothing in this part limits additional flood insurance requirements that may be imposed by a mortgagee participating in a HUD assistance or mortgage insurance or guarantee program.
</P>
<CITA TYPE="N">[89 FR 30905, Apr. 23, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 55.6" NODE="24:1.1.1.1.31.1.59.6" TYPE="SECTION">
<HEAD>§ 55.6   Complying with this part.</HEAD>
<P>(a) <I>Process.</I> The process to comply with this part is as follows:
</P>
<P>(1) HUD or the responsible entity shall determine whether compliance with this part is required. Refer to § 55.12 for a list of activities that do not require further compliance with this part beyond the provisions of paragraph (c) of this section.
</P>
<P>(2) HUD or the responsible entity shall refer to § 55.8 to determine whether the proposed action is eligible for HUD assistance or if it must be rejected as proposed.
</P>
<P>(3) If the project requires compliance under this part and is not prohibited by § 55.8, HUD or the responsible entity shall refer to § 55.13 to determine whether the 8-step decision making process in § 55.20 is required.
</P>
<P>(4) HUD or the responsible entity shall refer to § 55.10 to determine whether the 8-step decision making process in § 55.20 for wetland protection is required or whether best practices to minimize potential indirect impacts to wetlands should be pursued.
</P>
<P>(5) HUD or the responsible entity shall determine whether an exception in § 55.14 applies that would allow them to complete an abbreviated decision-making process under § 55.20.
</P>
<P>(6) Where the decision-making process is required, HUD or the responsible entity shall follow the decision-making process described in § 55.20, eliminating any steps as permitted under § 55.14.
</P>
<P>(b) <I>Decision making.</I> HUD or the responsible entity shall determine whether to approve the action as proposed, approve the action with modifications or at an alternative site, or reject the proposed action, based on its analysis of the proposed risks and impacts. HUD or the responsible entity has discretion to reject any project where it determines that the level of flood hazard is incompatible with the proposed use of the site or that the extent of impacts to wetlands or to the beneficial function of floodplains is not acceptable, regardless of whether it would otherwise be acceptable under this part.
</P>
<P>(c) <I>Other requirements.</I> Refer to §§ 55.4 and 55.5 to determine whether the proposed action may require notifications and/or flood insurance. Actions that do not require full compliance under this part may still trigger notification and flood insurance requirements.
</P>
<P>(d) <I>Documentation.</I> HUD or the responsible entity shall require that all of the analysis required under this part, including applicable exceptions and all required steps described in § 55.20, be documented in the environmental review record.
</P>
<CITA TYPE="N">[89 FR 30905, Apr. 23, 2024]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.1.1.1.31.2" TYPE="SUBPART">
<HEAD>Subpart B—Application of Executive Orders on Floodplain Management and Protection of Wetlands</HEAD>


<DIV8 N="§ 55.7" NODE="24:1.1.1.1.31.2.59.1" TYPE="SECTION">
<HEAD>§ 55.7   Identifying the FFRMS floodplain.</HEAD>
<P>(a) HUD or the responsible entity shall determine all compliance with the floodplain review requirements of this part based on the FFRMS floodplain.
</P>
<P>(b) For a non-critical action, HUD or the responsible entity shall define the FFRMS floodplain using the following process:
</P>
<P>(1) The climate-informed science approach (CISA) to identify the area having an elevated flood risk during the anticipated life of the project if data is available and actionable. Data is available and actionable for a particular project where:
</P>
<P>(i) The data can be accessed via a tool, resource, or other process developed or identified by a Federal agency or agencies to define the floodplain using the CISA, and
</P>
<P>(ii) HUD has adopted the particular tool, resource, or other process through a <E T="04">Federal Register</E> publication for comment.
</P>
<P>(2) If CISA data is not available or actionable but FEMA has defined the 0.2-percent-annual-chance floodplain, those areas that FEMA has designated as within the 0.2-percent-annual-chance floodplain; or
</P>
<P>(3) If neither CISA data nor FEMA-mapped 0.2-percent-annual-chance floodplain data is available, those areas that result from adding an additional two feet to the base flood elevation as established by the effective FIRM or FIS or—if available—FEMA-provided interim or preliminary maps or studies or advisory base flood elevations.
</P>
<P>(4) FFRMS floodplain determinations under paragraphs (b)(2) and (3) of this section shall be made using the information provided in the latest FEMA resources. Elevation determinations based on CISA data or an interim or preliminary FEMA map cannot be used as a basis for a lower elevation than the base flood elevation on the current FIRM or FIS.
</P>
<P>(c) For a critical action, the FFRMS floodplain is either:
</P>
<P>(1) Those areas designated as having an elevated flood risk identified by the climate-informed science approach (CISA)—as determined based on the criticality of the action—during the anticipated life of the project if the data is available and actionable, as available and actionable is described in paragraph (b)(1) of this section; or
</P>
<P>(2) If CISA data as described above is not available or actionable, an area either within the 0.2-percent-annual-chance floodplain or within the area that results from adding an additional three feet to the base flood elevation. The larger floodplain and higher elevation must be applied where the 0.2-percent-annual-chance floodplain is mapped. If FEMA resources do not map the 0.2-percent-annual-chance floodplain, the FFRMS floodplain is the area that results from adding an additional three feet to the base flood elevation based on best available information.
</P>
<P>(3) FFRMS floodplain determinations under paragraph (c)(2) of this section shall be made using the information provided in the latest FEMA resources.
</P>
<P>(d) If CISA data is not available or actionable and if FEMA FIRMS, FIS, preliminary maps or advisory base flood elevations are unavailable or insufficiently detailed to determine base flood elevation, other Federal, Tribal, State, or local data shall be used as “best available information.” If best available information is based only on past flooding and does not consider future flood risk:
</P>
<P>(1) For non-critical actions, the FFRMS floodplain includes those areas that result from adding an additional two feet to the base flood elevation based on best available information.
</P>
<P>(2) For critical actions, the FFRMS floodplain includes those areas that result from adding an additional three feet to the base flood elevation based on best available information.
</P>
<P>(e) When preparing an Environmental Impact Statement (EIS), an analysis of the best available, actionable climate science, where available and actionable data exists or can be generated in accordance with 42 U.S.C. 4336(b)(3), as determined by HUD or the responsible entity, must be performed to define the FFRMS floodplain. These sources may supplement the FIRM or Advisory Base Flood Elevation (ABFE) in order to better minimize impacts to projects or to elevate or floodproof structures above the risk adjusted floodplain. These sources may not be used as a basis for a lower elevation than otherwise required under this section.
</P>
<P>(f)(1) Regardless of whether HUD has adopted a particular tool, resource, or other process to define the floodplain using CISA, as described in paragraphs (b)(1) and (c)(1) of this section, HUD or a responsible entity may voluntarily define the FFRMS floodplain utilizing CISA when:
</P>
<P>(i) A State, Tribal, or local government formally adopts, through code or other formal adoption measures, a tool, resource, or other written standard developed or utilized by the State, Tribal, or local government that provides data or other methods to identify the FFRMS floodplain using CISA for a particular project; or
</P>
<P>(ii) HUD publishes guidance identifying a particular tool, resource, or other process that may be used to define the floodplain using CISA, and the tool, resource, or other process identified in the HUD-published guidance contains the necessary data or information to define the floodplain for the project being considered.
</P>
<P>(2)(i) The approach in this paragraph (f) may not be used as a basis for a lower elevation than the lowest of:
</P>
<P>(A) The 0.2-percent-annual-chance floodplain elevation;
</P>
<P>(B) The elevation that results from adding an additional two feet to the base flood elevation; or
</P>
<P>(C) The elevation required by paragraph (b) or (c) of this section, if CISA data is available and actionable under paragraph (b)(1) or (c)(1).
</P>
<P>(ii) Where HUD or a responsible entity voluntarily defines the FFRMS floodplain using the options in paragraph (f)(1)(i) or (ii) of this section, the criticality of the action must be considered when determining the appropriate elevation of the FFRMS floodplain.
</P>
<CITA TYPE="N">[89 FR 30906, Apr. 23, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 55.8" NODE="24:1.1.1.1.31.2.59.2" TYPE="SECTION">
<HEAD>§ 55.8   Limitations on HUD assistance in floodplains.</HEAD>
<P>(a) HUD financial assistance (including mortgage insurance) may not be approved with respect to:
</P>
<P>(1) Any action located in a floodway unless one of the following applies:
</P>
<P>(i) An exception listed in § 55.12 applies; or
</P>
<P>(ii) A permanent covenant or comparable restriction will preserve all onsite FFRMS floodplain and/or wetland areas from future development or expansion of existing uses in the floodplain and/or wetland areas. Any rehabilitation, including reconstruction in the case of properties affected by Presidentially declared disasters, that does not expand the footprint of the buildings or the number of units on the site would be allowed within the FFRMS floodplain outside of the floodway. No buildings or improvements may modify or occupy the floodway, with the exception of:
</P>
<P>(A) Functionally dependent uses (as defined in § 55.2(b)(7)) and utility lines;
</P>
<P>(B) De minimis improvements, including minimal ground disturbance or placement of impervious surface area to ensure accessibility where this is permitted by local ordinances and does not increase flood risk to the property; or
</P>
<P>(C) Buildings and improvements that will be removed as part of the proposed action.
</P>
<P>(2) Any critical action located in a floodway, other than a functionally dependent use where any existing or new structure has been or will be elevated or floodproofed to the FFRMS elevation for critical actions; or any critical action in a coastal high hazard area or LiMWA, other than a functionally dependent use where any existing or new structure has been or will be elevated and constructed in accordance with current FEMA V-zone construction standards at 44 CFR 60.3(e); provided that, for a critical action that is insurance of a mortgage on a property containing a floodway with no structures or improvements in the floodway, paragraph (a)(1) of this section applies; or
</P>
<P>(3) Any noncritical action located in a coastal high hazard area, or LiMWA, unless the action is a functionally dependent use, is limited to existing structures or improvements, or is reconstruction following destruction caused by a Presidentially declared disaster. If the action is not a functionally dependent use, the action must be designed for location in a coastal high hazard area. An action will be considered designed for a coastal high hazard area if:
</P>
<P>(i) In the case of reconstruction following destruction caused by a disaster, or substantial improvement, the work meets the current standards for V zones in FEMA regulations (44 CFR 60.3(e)) and, if applicable, the Minimum Property Standards for such construction in 24 CFR 200.926d(c)(4)(iii); or
</P>
<P>(ii) In the case of existing construction (including any minor improvements that are not substantial improvements):
</P>
<P>(A) The work met FEMA elevation and construction standards for a coastal high hazard area (or if such a zone or such standards were not designated, the 1-percent-annual-chance floodplain) applicable at the time the original improvements were constructed; or
</P>
<P>(B) If the original improvements were constructed before FEMA standards for the 1-percent-annual-chance floodplain became effective or before FEMA designated the location of the action as within the 1-percent-annual-chance floodplain, the work would meet at least the earliest FEMA standards for construction in the 1-percent-annual-chance floodplain.
</P>
<P>(b) All determinations made pursuant to this section shall be based on the effective FIRM or FIS unless FEMA has provided more current information. When FEMA provides interim flood hazard data, such as ABFE or preliminary maps and studies, HUD or the responsible entity shall use the latest of these sources. However, a base flood elevation from an interim or preliminary source cannot be used if it is lower than the base flood elevation on the current FIRM and FIS.
</P>
<P>(c) Where HUD assistance is proposed for actions subject to § 55.20 on structures designated by FEMA as Severe Repetitive Loss (SRL) properties, and FEMA has approved measures that if implemented would qualify the property for a status of “Mitigated” as to the SRL list, HUD or the responsible entity will ensure that FEMA-identified mitigation measures are identified and implemented as part of the decision making process under § 55.20(e).
</P>
<CITA TYPE="N">[89 FR 30906, Apr. 23, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 55.9" NODE="24:1.1.1.1.31.2.59.3" TYPE="SECTION">
<HEAD>§ 55.9   Identifying wetlands.</HEAD>
<P>The following process shall be followed in making the wetlands determination:
</P>
<P>(a) HUD or the responsible entity shall determine whether the action involves new construction that is located in or impacts a wetland.
</P>
<P>(b) As primary screening, HUD or the responsible entity shall verify whether the project area is located in proximity to wetlands identified on the National Wetlands Inventory (NWI) and assess the site for visual indication of the presence of wetlands such as hydrology (water), hydric soils, or wetland vegetation. Where the primary screening is inconclusive, potential wetlands should be further evaluated using one or more of the following methods:
</P>
<P>(1) Consultation with the Department of the Interior, U.S. Fish and Wildlife Service (USFWS), for information concerning the location, boundaries, scale, and classification of wetlands within the area.
</P>
<P>(2) Reference to the Department of Agriculture, Natural Resources Conservation Service (NRCS) National Soil Survey (NSS), and any Tribal, State, or local information concerning the location, boundaries, scale, and classification of wetlands within the action area and further site study by the environmental review preparer with reference to Federal guidance on field identification of the biological (rather than jurisdictional) characteristics of wetlands.
</P>
<P>(3) Evaluation by a qualified wetlands scientist to delineate the wetland boundaries on site.
</P>
<CITA TYPE="N">[89 FR 30906, Apr. 23, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 55.10" NODE="24:1.1.1.1.31.2.59.4" TYPE="SECTION">
<HEAD>§ 55.10   Limitations on HUD assistance in wetlands.</HEAD>
<P>(a) When the proposed project includes new construction activities (including grading, clearing, draining, filling, diking, impounding, and related activities for any structure or facilities including the siting of new manufactured housing units) that will have a direct impact to onsite wetlands identified by the process described in § 55.9, compliance with this part requires completion of the 8-step decision making process in § 55.20 to address wetland impacts.
</P>
<P>(b) When the proposed project may indirectly affect wetlands by modifying the flow of stormwater, releasing pollutants, or otherwise changing conditions that contribute to wetlands viability, the significance of these impacts must be evaluated and the impacts minimized through best management practices. If the project site includes wetlands that will not be impacted by new construction, HUD strongly encourages measures to preserve such wetlands from future impacts, including by obtaining a restrictive covenant, conservation easement, or other mechanism.
</P>
<P>(c) When the proposed project may indirectly affect off-site wetlands, impacts should be minimized to the extent practicable. While this part does not require further decision making to address these effects under the authority of Executive Order 11990, measures to address offsite wetlands impacts may be necessary to comply with related laws and authorities including the Endangered Species Act or to address significant impacts under the National Environmental Policy Act.
</P>
<CITA TYPE="N">[89 FR 30908, Apr. 23, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 55.11" NODE="24:1.1.1.1.31.2.59.5" TYPE="SECTION">
<HEAD>§ 55.11   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 55.12" NODE="24:1.1.1.1.31.2.59.6" TYPE="SECTION">
<HEAD>§ 55.12   Inapplicability of 24 CFR part 55 to certain categories of proposed actions.</HEAD>
<P>With the exception of the flood insurance requirements in § 55.5, this part shall not apply to the following categories of proposed HUD actions:
</P>
<P>(a) HUD-assisted activities described in 24 CFR 58.34 and 58.35(b);
</P>
<P>(b) HUD-assisted activities described in 24 CFR 50.19, except as otherwise indicated in § 50.19;
</P>
<P>(c) The approval of financial assistance for restoring and preserving the natural and beneficial functions and values of floodplains and wetlands, including through acquisition of such floodplain and wetland property, where a permanent covenant or comparable restriction is placed on the property's continued use for flood control, wetland protection, open space, or park land, but only if:
</P>
<P>(1) The property is cleared of all existing buildings and walled structures; and
</P>
<P>(2) The property is cleared of related improvements except those which:
</P>
<P>(i) Are directly related to flood control, wetland protection, open space, or park land (including playgrounds and recreation areas);
</P>
<P>(ii) Do not modify existing wetland areas or involve fill, paving, or other ground disturbance beyond minimal trails or paths; and
</P>
<P>(iii) Are designed to be compatible with the beneficial floodplain or wetland function of the property.
</P>
<P>(d) An action involving a repossession, receivership, foreclosure, or similar acquisition of property to protect or enforce HUD's financial interests under previously approved loans, grants, mortgage insurance, or other HUD assistance;
</P>
<P>(e) Policy-level actions described at 24 CFR 50.16 that do not involve site-based decisions;
</P>
<P>(f) A minor amendment to a previously approved action with no additional adverse impact on or from a floodplain or wetland;
</P>
<P>(g) HUD's or the responsible entity's approval of a project site, an incidental portion of which is situated in the FFRMS floodplain (not including the floodway, LiMWA, or coastal high hazard area), but only if:
</P>
<P>(1) The proposed project site does not include any existing or proposed buildings or improvements that modify or occupy the FFRMS floodplain except de minimis improvements such as recreation areas and trails; and
</P>
<P>(2) The proposed project will not result in any new construction in or modifications of a wetland.
</P>
<P>(h) Issuance or use of Housing Vouchers or other forms of rental subsidy where HUD, the awarding community, or the public housing agency that administers the contract awards rental subsidies that are not project-based (<I>i.e.,</I> do not involve site-specific subsidies);
</P>
<P>(i) Special projects directed to the removal of material and architectural barriers that restrict the mobility of and accessibility to elderly and persons with disabilities.
</P>
<CITA TYPE="N">[89 FR 30908, Apr. 23, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 55.13" NODE="24:1.1.1.1.31.2.59.7" TYPE="SECTION">
<HEAD>§ 55.13   Inapplicability of 8-step decision making process to certain categories of proposed actions.</HEAD>
<P>The decision-making process in § 55.20 shall not apply to the following categories of proposed actions:
</P>
<P>(a) HUD's mortgage insurance actions and other financial assistance for the purchasing, mortgaging, or refinancing of existing one- to four-family properties in communities that are in the Regular Program of the National Flood Insurance Program (NFIP) and in good standing (<I>i.e.,</I> not suspended from program eligibility or placed on probation under 44 CFR 59.24), where the action is not a critical action and the property is not located in a floodway, coastal high hazard area, or LiMWA;
</P>
<P>(b) Financial assistance for minor repairs or improvements on one- to four-family properties that do not meet the thresholds for “substantial improvement” under § 55.2(b)(12);
</P>
<P>(c) HUD or a recipient's actions involving the disposition of individual HUD or recipient held one- to four-family properties;
</P>
<P>(d) HUD guarantees under the Loan Guarantee Recovery Fund Program (24 CFR part 573), where any new construction or rehabilitation financed by the existing loan or mortgage has been completed prior to the filing of an application under the program, and the refinancing will not allow further construction or rehabilitation, nor result in any physical impacts or changes except for routine maintenance;
</P>
<P>(e) The approval of financial assistance to lease an existing structure and/or units within an existing structure located within the floodplain, but only if;
</P>
<P>(1) The structure is located outside the floodway or coastal high hazard area, and is in a community that is in the Regular Program of the NFIP and in good standing (<I>i.e.,</I> not suspended from program eligibility or placed on probation under 44 CFR 59.24);
</P>
<P>(2) The project is not a critical action; and
</P>
<P>(3) The entire structure is or will be fully insured or insured to the maximum extent available under the NFIP for at least the term of the lease.
</P>
<P>(f) Special projects for the purpose of improving the energy or water efficiency of utilities or installing renewable energy that involve the repair, rehabilitation, modernization, weatherization, or improvement of existing structures or infrastructure, do not meet the thresholds for “substantial improvement” under § 55.2(b)(12), and do not include the installation of equipment below the FFRMS floodplain elevation; and
</P>
<CITA TYPE="N">[89 FR 30909, Apr. 23, 2024]


</CITA>
<EDNOTE>
<HED>Editorial Note:</HED><PSPACE>At 89 FR 30909, Apr. 23, 2024, § 55.13 was added; the text provided ended with "; and".</PSPACE></EDNOTE>
</DIV8>


<DIV8 N="§ 55.14" NODE="24:1.1.1.1.31.2.59.8" TYPE="SECTION">
<HEAD>§ 55.14   Modified 5-step decision making process for certain categories of proposed actions.</HEAD>
<P>The decision making steps in § 55.20(b), (c), and (g) (Steps 2, 3, and 7) do not apply to the following categories of proposed actions:
</P>
<P>(a) HUD's or the recipient's actions involving the disposition of acquired multifamily housing projects or “bulk sales” of HUD-acquired (or under part 58 of recipients') one- to four-family properties in communities that are in the Regular Program of the NFIP and in good standing (<I>i.e.,</I> not suspended from program eligibility or placed on probation under 44 CFR 59.24). For programs subject to part 58, this paragraph applies only to recipients' disposition activities that are subject to review under part 58.
</P>
<P>(b) HUD's actions under the National Housing Act (12 U.S.C. 1701 <I>et seq.</I>) for the purchase or refinancing of existing multifamily housing projects, hospitals, nursing homes, assisted living facilities, board and care facilities, and intermediate care facilities, in communities that are in good standing under the NFIP.
</P>
<P>(c) HUD's or the recipient's actions under any HUD program involving the repair, rehabilitation, modernization, weatherization, or improvement of existing multifamily housing projects, hospitals, nursing homes, assisted living facilities, board and care facilities, intermediate care facilities, and one- to four-family properties, in communities that are in the Regular Program of the NFIP and are in good standing (<I>i.e.,</I> not suspended from program eligibility or placed on probation under 44 CFR 59.24), provided that the number of units is not increased more than 20 percent, the action does not involve a conversion from nonresidential to residential land use, the action does not meet the thresholds for “substantial improvement” under § 55.2(b)(12), and the footprint of the structure and paved areas is not increased by more than 20 percent.
</P>
<P>(d) HUD's or the recipient's actions under any HUD program involving the repair, rehabilitation, modernization, weatherization, or improvement of existing nonresidential buildings and structures, in communities that are in the Regular Program of the NFIP and are in good standing (<I>i.e.,</I> not suspended from program eligibility or placed on probation under 44 CFR 59.24), provided that the action does not meet the thresholds for “substantial improvement” under § 55.2(b)(12) and the footprint of the structure and paved areas is not increased by more than 20 percent.
</P>
<P>(e) HUD's or the recipient's actions under any HUD program involving the repair, rehabilitation, or replacement of existing nonstructural improvements including streets, curbs, and gutters, where any increase of the total impervious surface area of the facility is de minimis. This provision does not include critical actions, levee systems, chemical storage facilities (including any tanks), wastewater facilities, or sewer lagoons.
</P>
<CITA TYPE="N">[89 FR 30909, Apr. 23, 2024]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:1.1.1.1.31.3" TYPE="SUBPART">
<HEAD>Subpart C—Procedures for Making Determinations on Floodplain Management and Protection of Wetlands</HEAD>


<DIV8 N="§ 55.16" NODE="24:1.1.1.1.31.3.59.1" TYPE="SECTION">
<HEAD>§ 55.16   Applicability of subpart C decision making process.</HEAD>
<P>Table 1 to this section indicates the applicability, by location and type of action, of the decision making process for implementing Executive Order 11988 and Executive Order 11990 under this subpart.
</P>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Table 1 to § 55.16
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Type of proposed action
<br/>(new reviewable action or an amendment) 
<sup>1</sup>
</TH><TH class="gpotbl_colhed" scope="col">Floodways
</TH><TH class="gpotbl_colhed" scope="col">Coastal high hazard and LiMWA areas
</TH><TH class="gpotbl_colhed" scope="col">Wetlands or FFRMS
<br/>floodplain outside coastal high hazard area, LiMWA area, and floodways
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Critical actions as defined in § 55.2(b)(3)</TD><TD align="left" class="gpotbl_cell">Critical actions not allowed unless they meet the requirements for critical actions in § 55.8 and are processed under § 55.20 
<sup>2</sup></TD><TD align="left" class="gpotbl_cell">Critical actions not allowed unless they meet the requirements for critical actions in § 55.8 and are processed under § 55.20 
<sup>2</sup></TD><TD align="left" class="gpotbl_cell">Allowed if the proposed critical action is processed under § 55.20.
<sup>2</sup>
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Noncritical actions not excluded under § 55.12 or § 55.13</TD><TD align="left" class="gpotbl_cell">Allowed only if the proposed non-critical action is not prohibited under § 55.8(a)(1) and is processed under § 55.20 
<sup>2</sup></TD><TD align="left" class="gpotbl_cell">Allowed only if the proposed noncritical action is processed under § 55.20 
<sup>2</sup> and is (1) a functionally dependent use, (2) existing construction (including improvements), or (3) reconstruction following destruction caused by a disaster. If the action is not a functionally dependent use, the action must be designed for location in a coastal high hazard area under § 55.8(a)(3)</TD><TD align="left" class="gpotbl_cell">Allowed if proposed noncritical action is processed under § 55.20.
<sup>2</sup>
</TD></TR></TABLE></DIV><DIV class="table_foot"><P class="gpotbl_note">
<sup>1</sup> Under Executive Order 11990, the decision making process in § 55.20 only applies to Federal assistance for new construction in wetlands locations.
</P><P class="gpotbl_note">
<sup>2</sup> Or those paragraphs of § 55.20 that are applicable to an action listed in § 55.14.</P></DIV></DIV>
<CITA TYPE="N">[89 FR 30910, Apr. 23, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 55.20" NODE="24:1.1.1.1.31.3.59.2" TYPE="SECTION">
<HEAD>§ 55.20   Decision making process.</HEAD>
<P>Except for actions covered by § 55.14, the decision making process for compliance with this part contains eight steps, including public notices and an examination of practicable alternatives when addressing floodplains and wetlands. Third parties may provide analysis and information to support the decision making process; however, final determinations for each step, authorization of public notices, and receipt of public comments, are the responsibility of HUD or the responsible entity. The steps to be followed in the decision making process are as follows:


</P>
<P>(a) <I>Step 1.</I> Using the processes described in §§ 55.7 and 55.9, determine whether the proposed action is located in the FFRMS floodplain or results in new construction that directly impacts an onsite wetland. If the action does not occur in the FFRMS floodplain or include new construction directly impacting an onsite wetland, then no further compliance with this section is required. Where the proposed action would be located in the FFRMS floodplain and includes new construction directly impacting an onsite wetland, these impacts should be evaluated together in a single 8-step decision making process. In such a case, the wetland will be considered among the primary natural and beneficial functions and values of the floodplain. For purposes of this section, an “action” includes areas required for ingress and egress, even if they are not within the site boundary, and other integral components of the proposed action, even if they are not within the site boundary.

 
</P>
<P>(b) <I>Step 2.</I> Notify the public and agencies responsible for floodplain management or wetlands protection at the earliest possible time of a proposal to consider an action in an FFRMS floodplain or wetland and involve the affected and interested public and agencies in the decision making process.
</P>
<P>(1) The public notices required by paragraphs (b) and (g) of this section may be combined with other project notices wherever appropriate. Notices required under this part must be bilingual or multilingual, as appropriate, if the affected public has Limited English Proficiency. In addition, all notices must be published in a newspaper of general circulation in the affected community or on an appropriate government website that is accessible to individuals with disabilities and provides meaningful access for individuals with Limited English Proficiency, and must be sent to Federal, State, and local public agencies, organizations, and, where not otherwise covered, individuals known to be interested in the proposed action.
</P>
<P>(2) A minimum of 15 calendar days shall be allowed for comment on the public notice. The first day of a time period begins at 12:01 a.m. local time on the day following the publication or the mailing and posting date of the notice which initiates the time period.
</P>
<P>(3) A notice under this paragraph shall state: The name, proposed location, and description of the activity; the total number of acres of floodplain or wetland involved; the related natural and beneficial functions and values of the floodplain or wetland that may be adversely affected by the proposed activity; the HUD approving official (or the Certifying Officer of the responsible entity authorized by 24 CFR part 58); and the phone number to call for information. The notice shall indicate the hours of HUD's or the responsible entity's office, and any Web site at which a full description of the proposed action may be reviewed.
</P>
<P>(4) When the proposed activity is located in or affects a community with environmental justice concerns, public comment and decision making under this part shall be coordinated with consultation and decision making under HUD policies implementing 24 CFR 58.5(j) or 50.4(l).
</P>
<P>(c) <I>Step 3.</I> Identify and evaluate practicable alternatives to locating the proposed action in the FFRMS floodplain or wetland.
</P>
<P>(1) Except as provided in paragraph (c)(3) of this section, HUD's or the responsible entity's consideration of practicable alternatives to the proposed site selected for a project should include:
</P>
<P>(i) Locations outside and not affecting the FFRMS floodplain or wetland;
</P>
<P>(ii) Alternative methods to serve the identical project objective, including but not limited to design alternatives such as repositioning or reconfiguring proposed siting of structures and improvements or incorporating natural systems, ecosystem processes, and nature-based solutions to avoid floodplain and wetland impacts; and
</P>
<P>(iii) A determination not to approve any action proposing the occupancy or modification of a floodplain or wetland.
</P>
<P>(2) Practicability of alternatives should be addressed in light of the goals identified in the project description related to the following:
</P>
<P>(i) Natural values such as topography, habitat, and hazards;
</P>
<P>(ii) Social values such as aesthetics, historic and cultural values, land use patterns, and environmental justice; and
</P>
<P>(iii) Economic values such as the cost of space, construction, services, relocation, potential property losses from flooding, and cost of flood insurance.


</P>
<P>(3) For multifamily and healthcare projects involving HUD mortgage insurance that are initiated by third parties, HUD in its consideration of practicable alternatives is not required to consider alternative sites, but must include consideration of:
</P>
<P>(i) A determination to approve the request without modification;
</P>
<P>(ii) A determination to approve the request with modification; and
</P>
<P>(iii) A determination not to approve the request.


</P>
<P>(d) <I>Step 4.</I> Identify and evaluate the potential direct and indirect impacts associated with the occupancy or modification of the FFRMS floodplain or the wetland and the potential direct and indirect support of floodplain and wetland development that could result from the proposed action, including impacts related to future climate-related flood levels, sea level rise, and the related increased value of beneficial floodplain and wetland functions.


</P>
<P>(1) <I>Floodplain evaluation.</I> The floodplain evaluation for the proposed action must evaluate floodplain characteristics (both existing and as proposed for modification by the project) to determine potential adverse impacts to lives, property, and natural and beneficial floodplain values as compared with alternatives identified in Step 3.
</P>
<P>(i) Floodplain characteristics include:
</P>
<P>(A) Identification of portions of the site that are subject to flood risk, documented through mapping and, as required by § 55.7(e) or commensurate with the scale of the project and available resources as permitted by § 55.7(f), climate-informed analysis of factors including development patterns, streamflow, and hydrologic and hydraulic modeling;
</P>
<P>(B) Topographic information that can inform flooding patterns and distance to flood sources, as described in flood mapping, Flood Insurance Studies, and other data sources; and
</P>
<P>(C) Public safety communications and data related to flood risk including available information on structures such as dams, levees, or other flood protection infrastructure located in proximity to the site.
</P>
<P>(ii) Impacts to lives and property include:
</P>
<P>(A) Potential loss of life, injury, or hardship to residents of the subject property during a flood event;
</P>
<P>(B) Damage to the subject property during a flood event;
</P>
<P>(C) Damage to surrounding properties from increased runoff or reduction in floodplain function during a flood event due to modification of the subject site;
</P>
<P>(D) Health impacts due to exposure to toxic substance releases that may be caused or exacerbated by flood events; and
</P>
<P>(E) Damage to a community as a result of project failure (<I>e.g.,</I> failure of stormwater management infrastructure due to scouring).
</P>
<P>(iii) Impacts to natural and beneficial values include changes to:
</P>
<P>(A) Water resources such as natural moderation of floods, water quality maintenance, and groundwater recharge;
</P>
<P>(B) Living resources such as flora and fauna (if the project requires consultation under 24 CFR 50.4(e) or 58.5(e), consultation with the U.S. Fish and Wildlife Service or National Marine Fisheries Service must include a description of impacts evaluated under this part);
</P>
<P>(C) Cultural resources such as archaeological, historic, aesthetic and recreational aspects; and
</P>
<P>(D) Agricultural, aquacultural, and forestry resources.


</P>
<P>(2) <I>Wetland evaluation.</I> In accordance with section 5 of Executive Order 11990, the decision maker shall consider factors relevant to a proposal's effect on the survival and quality of the wetland. Factors that must be evaluated include, but are not limited to:


</P>
<P>(i) Public health, safety, and welfare, including water supply, quality, recharge, and discharge; pollution; flood and storm hazards and hazard protection; and sediment and erosion, including the impact of increased quantity or velocity of stormwater runoff on, or to areas outside of, the proposed site;


</P>
<P>(ii) Maintenance of natural systems, including conservation and long-term productivity of existing flora and fauna; species and habitat diversity and stability; natural hydrologic function; wetland type; fish; wildlife; timber; and food and fiber resources;
</P>
<P>(iii) Cost increases attributed to wetland-required new construction and mitigation measures to minimize harm to wetlands that may result from such use; and
</P>
<P>(iv) Other uses of wetlands in the public interest, including recreational, scientific, and cultural uses.


</P>
<P>(e) <I>Step 5.</I> Where practicable, design or modify the proposed action to minimize the potential adverse impacts to and from the FFRMS floodplain or wetland and to restore and preserve their natural and beneficial functions and values.
</P>
<P>(1) <I>Elevation.</I> For actions in the FFRMS floodplain, the required elevation described in this section must be documented on an Elevation Certificate or a Floodproofing Certificate in the Environmental Review Record prior to construction, or by such other means as HUD may from time to time direct, provided that notwithstanding any language to the contrary, the minimum elevation or floodproofing requirement for new construction or substantial improvement actions shall be the elevation of the FFRMS floodplain as defined in this section.
</P>
<P>(i) If a residential structure undergoing new construction or substantial improvement is located in the FFRMS floodplain, the lowest floor or FEMA-approved equivalent must be designed using the elevation of the FFRMS floodplain as the baseline standard for elevation, except where higher elevations are required by Tribal, State, or locally adopted code or standards, in which case those higher elevations apply. Where non-elevation standards such as setbacks or other flood risk reduction standards that have been issued to identify, communicate, or reduce the risks and costs of floods are required by Tribal, State, or locally adopted code or standards, those standards shall apply in addition to the FFRMS baseline elevation standard.
</P>
<P>(ii) New construction and substantial improvement of residential structures that have no dwelling units below the FFRMS floodplain and that are not critical actions as defined at § 55.2(b)(3), or of non-residential structures, shall be designed either:
</P>
<P>(A) With the lowest floor, including basement, elevated to or above the elevation of the FFRMS floodplain; or
</P>
<P>(B) With the structure floodproofed at least up to the elevation of the FFRMS floodplain. Floodproofing standards are as stated in FEMA's regulations at 44 CFR 60.3(c)(3)(ii) and (c)(4)(i), or such other regulatory standard as FEMA may issue, and applicable guidance, except that where the standard refers to base flood level, floodproofing is required at or above the FFRMS floodplain, as defined in this part.
</P>
<P>(iii) The term “lowest floor” must be applied consistent with FEMA regulations in 44 CFR 59.1 and FEMA's Elevation Certificate guidance or other applicable current FEMA guidance.
</P>
<P>(2) <I>Minimization.</I> Potential harm to or within the floodplain and/or wetland must be reduced to the smallest possible amount. E.O. 11988's requirement to minimize potential harm applies to the investment at risk or the flood loss potential of the action itself, the impact the action may have on others, and the impact the action may have on floodplain and wetland values. The record must include a discussion of all minimization techniques that will be incorporated into project designs as well as those that were considered but not approved. Minimization techniques for floodplain and wetlands purposes include, but are not limited to:
</P>
<P>(i) <I>Stormwater management and green infrastructure:</I> The use of permeable surfaces; natural landscape enhancements that maintain or restore natural hydrology through infiltration, native plant species, bioswales, rain gardens, or evapotranspiration; stormwater capture and reuse; green or vegetative roofs with drainage provisions; WaterSense products; rain barrels and grey water diversion systems; protective gates or angled safety grates for culverts and stormwater drains; and other low impact development and green infrastructure strategies, technologies, and techniques. Where possible, use natural systems, ecosystem processes, and nature-based approaches when developing alternatives for consideration.
</P>
<P>(ii) <I>Adjusting project footprint:</I> Evaluate options to relocate or redesign structures, amenities, and infrastructure to minimize the amount of impermeable surfaces and other impacts in the FFRMS floodplain or wetland. This may include changes such as designing structures to be taller and narrower or avoiding tree clearing to reduce potential erosion from flooding.
</P>
<P>(iii) <I>Resilient building standards:</I> Consider implementing resilient building codes or standards to ensure a reliable and consistent level of safety.
</P>
<P>(iv) <I>Severe Repetitive Loss (SRL) mitigation:</I> Identify and incorporate FEMA identified SRL mitigation as outlined in § 55.8(c), if applicable.
</P>
<P>(3) <I>Restoration and preservation.</I> Restore means to reestablish a setting or environment in which the natural and beneficial values of floodplains and wetlands could again function. Where floodplain and wetland values have been degraded by past actions, restoration is informed by evaluation of the impacts of such actions on beneficial values of the floodplain or wetland and identification, evaluation, and implementation of practicable measures to restore the values diminished or lost. Preserve means to prevent modification to the natural floodplain or wetland environment or to maintain it as closely as possible to its natural state. If an action will result in harm to or within the floodplain or wetland, HUD or the responsible entity must ensure that the action is designed or modified to assure that it will be carried out in a manner which preserves as much of the natural and beneficial floodplain and values as is possible. Restoration and preservation techniques for floodplain and wetlands purposes include, but are not limited to:
</P>
<P>(i) Natural Resource Conservation Service or other conservation easements;
</P>
<P>(ii) Appropriate and practicable compensatory mitigation, which is required for unavoidable adverse impacts to more than one acre of wetlands. Compensatory mitigation includes but is not limited to: permittee-responsible mitigation, mitigation banking, in-lieu fee mitigation, the use of preservation easements or protective covenants, and any form of mitigation promoted by State or Federal agencies. The use of compensatory mitigation may not substitute for the requirement to avoid and minimize impacts to the maximum extent practicable.
</P>
<P>(4) <I>Planning for residents' and occupants' safety.</I> (i) For multifamily residential properties and residential healthcare facilities, an evacuation plan must be developed that includes safe egress route(s) out of the FFRMS floodplain, plans for evacuating residents with special needs, and clear communication of the evacuation plan and safety resources for residents.
</P>
<P>(ii) For all healthcare facilities, evacuation route(s) out of the FFRMS floodplain must be identified and clearly communicated to all residents and employees. Such actions must include a plan for emergency evacuation and relocation to a facility of like capacity that is equipped to provide required critical needs-related care and services at a level similar to the originating facility.
</P>
<P>(iii) All critical actions in the FFRMS floodplain must operate and maintain an early warning system that serves all facility occupants.




</P>
<P>(f) <I>Step 6.</I> HUD or the responsible entity shall consider the totality of the previous steps and the criteria in this section to make a decision as to whether to approve, approve with modifications, or reject the proposed action. Adverse impacts to floodplains and wetlands must be avoided if there is a practicable alternative. This analysis must consider:


</P>
<P>(1) Whether the action is still practicable in light of exposure to flood hazards in the floodplain or wetland, possible adverse impacts on the floodplain or wetland, the extent to which it will aggravate the current hazards to other floodplains or wetlands, and the potential to disrupt the natural and beneficial functions and values of floodplains or wetlands; and
</P>
<P>(2) Whether alternatives preliminarily rejected at Step 3 (paragraph (c)) of this section are practicable in light of information gained in Steps 4 and 5 (paragraphs (d) and (e)) of this section.
</P>
<P>(i) The reevaluation of alternatives shall include the potential impacts avoided or caused inside and outside the floodplain or wetland area. The impacts should include the protection of human life, real property, and the natural and beneficial functions and values served by the floodplain or wetland.
</P>
<P>(ii) A reevaluation of alternatives under this step should include a discussion of economic costs. For floodplains, the cost estimates should include savings or the costs of flood insurance, where applicable; flood proofing; replacement of services or functions of critical actions that might be lost; and elevation to at least the elevation of the FFRMS floodplain, as appropriate based on the applicable source under § 55.7. For wetlands, the cost estimates should include the cost of filling the wetlands and mitigation.
</P>
<P>(iii) If the proposed activity is located in or affects a community with environmental justice concerns, the reevaluation must address public input provided during environmental justice outreach, if conducted, and must document the ways in which the activity, in light of information analyzed, mitigation measures applied, and alternatives selected, serves to reduce any historical environmental disparities related to flood risk or wetlands impacts in the community.


</P>
<P>(g) <I>Step 7.</I> (1) 

If the reevaluation results in a determination that there is no practicable alternative to locating the proposal in the FFRMS floodplain or the wetland, publish a final notice that includes:
</P>
<P>(i) The reasons why the proposal must be located in the floodplain or wetland;
</P>
<P>(ii) A list of the alternatives considered in accordance with paragraphs(c)(1) and (c)(2) of this section; and
</P>
<P>(iii) All mitigation measures to be taken to minimize adverse impacts and to restore and preserve natural and beneficial functions and values.
</P>
<P>(2) In addition, the public notice procedures of § 55.20(b)(1) shall be followed, and a minimum of 7 calendar days for public comment before approval of the proposed action shall be provided. 
</P>
<P>(h) <I>Step 8.</I> Upon completion of the decisionmaking process in Steps 1 through 7, implement the proposed action. There is a continuing responsibility on HUD (or on the responsible entity authorized by 24 CFR part 58) and the recipient (if other than the responsible entity) to ensure that the mitigating measures identified in Step 7 are implemented.
</P>
<CITA TYPE="N">[59 FR 19107, Apr. 21, 1994, as amended at 78 FR 68732, Nov. 15, 2013; 89 FR 30910, Apr. 23, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 55.21" NODE="24:1.1.1.1.31.3.59.3" TYPE="SECTION">
<HEAD>§ 55.21   Alternate processing for existing nonconforming sites.</HEAD>
<P>Notwithstanding the limitations on HUD assistance defined in § 55.8, in exceptional circumstances, the Assistant Secretary for Community Planning and Development may approve HUD assistance or insurance to improve an existing property with ongoing HUD assistance or mortgage insurance if the following conditions are satisfied:
</P>
<P>(a) HUD completes an environmental review pursuant to 24 CFR part 50, including the 8-step decision making process pursuant to § 55.20, that:
</P>
<P>(1) Documents that it is not practicable to transfer the HUD assistance to a site with lower flood risk under existing program rules, financial limitations, and site availability; and
</P>
<P>(2) Mandates measures to ensure that the elevated flood risk is the only environmental hazard or impact that does not comply or that requires mitigation to comply, with HUD's environmental requirements at 24 CFR parts 50, 51, 55, and 58; and
</P>
<P>(b) The proposed project incorporates all practicable measures to minimize flood risk, preserve the function of the floodplain and any impacted wetlands as described in § 55.20(e), and increase the overall resilience of the site, as approved and/or required by HUD. At minimum, these measures must include:
</P>
<P>(1) Removal of all residential units and critical action structures from the floodway;
</P>
<P>(2) Identification of evacuation routes out of the FFRMS floodplain;
</P>
<P>(3) A No-Rise Certification for any new improvements in the floodway; and
</P>
<P>(4) Elevation (or floodproofing pursuant to § 55.20(e)(1)) of existing structures within the FFRMS Floodplain, where practicable.
</P>
<CITA TYPE="N">[89 FR 30912, Apr. 23, 2024]




</CITA>
</DIV8>


<DIV8 N="§§ 55.22-55.25" NODE="24:1.1.1.1.31.3.59.4" TYPE="SECTION">
<HEAD>§§ 55.22-55.25   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 55.26" NODE="24:1.1.1.1.31.3.59.5" TYPE="SECTION">
<HEAD>§ 55.26   Adoption of another agency's review under the Executive orders.</HEAD>
<P>If a proposed action covered under this part is already covered in a prior review performed under Executive Order 11988 or Executive Order 11990 by another agency, including HUD or a different responsible entity, that review may be adopted by HUD or by a responsible entity authorized under 24 CFR part 58 without further public notice, provided that:


</P>
<P>(a) There is no pending litigation relating to the other agency's review for floodplain management or wetland protection;
</P>
<P>(b) The adopting agency makes a finding that: 


</P>
<P>(1) The action currently proposed has not substantially changed in project description, scope, and magnitude from the action previously reviewed by the other agency; and</P>
<P>(2) There has been no material change in circumstances since the previous review was conducted; and 


</P>
<P>(c) HUD assistance must be conditioned on mitigation measures prescribed in the previous review.
</P>
<CITA TYPE="N">[59 FR 19107, Apr. 21, 1994, as amended at78 FR 68734, Nov. 15, 2013; 89 FR 30913, Apr. 23, 2024]


</CITA>
</DIV8>


<DIV8 N="§§ 55.27-55.28" NODE="24:1.1.1.1.31.3.59.6" TYPE="SECTION">
<HEAD>§§ 55.27-55.28   [Reserved]</HEAD>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:1.1.1.1.31.4" TYPE="SUBPART">
<HEAD>Subpart D—Severability</HEAD>


<DIV8 N="§ 55.30" NODE="24:1.1.1.1.31.4.59.1" TYPE="SECTION">
<HEAD>§ 55.30   Severability.</HEAD>
<P>Any provision of this part held to be invalid or unenforceable as applied to any action should be construed so as to continue to give the maximum effect to the provision permitted by law, unless such holding is that the provision of this part is invalid and unenforceable in all circumstances, in which event the provision should be severable from the remainder of this part and shall not affect the remainder thereof.
</P>
<CITA TYPE="N">[89 FR 30913, Apr. 23, 2024]


</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="58" NODE="24:1.1.1.1.32" TYPE="PART">
<HEAD>PART 58—ENVIRONMENTAL REVIEW PROCEDURES FOR ENTITIES ASSUMING HUD ENVIRONMENTAL RESPONSIBILITIES
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1707 note, 1715z-13a(k); 25 U.S.C. 4115 and 4226; 42 U.S.C. 1437x, 3535(d), 3547, 4321-4336e, 4852, 5304(g), 12838, and 12905(h); title II of Pub. L. 105-276; E.O. 11514 as amended by E.O. 11991, 3 CFR, 1977 Comp., p. 123.








</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 19122, Apr. 30, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:1.1.1.1.32.1" TYPE="SUBPART">
<HEAD>Subpart A—Purpose, Legal Authority, Federal Laws and Authorities</HEAD>


<DIV8 N="§ 58.1" NODE="24:1.1.1.1.32.1.59.1" TYPE="SECTION">
<HEAD>§ 58.1   Purpose and applicability.</HEAD>
<P>(a) <I>Purpose.</I> This part provides instructions and guidance to recipients of HUD assistance and other responsible entities for conducting an environmental review for a particular project or activity and for obtaining approval of a Request for Release of Funds. 


</P>
<P>(b) <I>Applicability.</I> This part applies to activities and projects where specific statutory authority exists for recipients or other responsible entities to assume environmental responsibilities. Programs and activities subject to this part include: 
</P>
<P>(1) Community Development Block Grant programs authorized by Title I of the Housing and Community Development Act of 1974, in accordance with section 104(g) (42 U.S.C. 5304(g)); 
</P>
<P>(2) [Reserved]
</P>
<P>(3)(i) Grants to states and units of general local government under the Emergency Shelter Grant Program, Supportive Housing Program (and its predecessors, the Supportive Housing Demonstration Program (both Transitional Housing and Permanent Housing for Homeless Persons with Disabilities) and Supplemental Assistance for Facilities to Assist the Homeless), Shelter Plus Care Program, Safe Havens for Homeless Individuals Demonstration Program, and Rural Homeless Housing Assistance, authorized by Title IV of the McKinney-Vento Homeless Assistance Act, in accordance with section 443 (42 U.S.C. 11402);
</P>
<P>(ii) Grants beginning with Fiscal Year 2001 to private non-profit organizations and housing agencies under the Supportive Housing Program and Shelter Plus Care Program authorized by Title IV of the McKinney-Vento Homeless Assistance Act, in accordance with section 443 (42 U.S.C. 11402);
</P>
<P>(4) The HOME Investment Partnerships Program authorized by Title II of the Cranston-Gonzalez National Affordable Housing Act (NAHA), in accordance with section 288 (42 U.S.C. 12838); 
</P>
<P>(5) Grants to States and units of general local government for abatement of lead-based paint and lead dust hazards pursuant to Title II of the Departments of Veterans Affairs and Housing and Urban Development and Independent Agencies Appropriations Act, 1992, and grants for lead-based paint hazard reduction under section 1011 of the Housing and Community Development Act of 1992, in accordance with section 1011(o) (42 U.S.C. 4852(o)); 
</P>
<P>(6)(i) Public Housing Programs under Title I of the United States Housing Act of 1937, including HOPE VI grants authorized under section 24 of the Act for Fiscal Year 2000 and later, in accordance with section 26 (42 U.S.C. 1437x);
</P>
<P>(ii) Grants for the revitalization of severely distressed public housing (HOPE VI) for Fiscal Year 1999 and prior years, in accordance with Title II of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1999 (Pub. L. 105-276, approved October 21, 1998); and
</P>
<P>(iii) Assistance administered by a public housing agency under section 8 of the United States Housing Act of 1937, except for assistance provided under part 886 of this title, in accordance with section 26 (42 U.S.C. 1437x);
</P>
<P>(7) Special Projects appropriated under an appropriation act for HUD, such as special projects under the heading “Annual Contributions for Assisted Housing” in Title II of various Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Acts, in accordance with section 305(c) of the Multifamily Housing Property Disposition Reform Act of 1994 (42 U.S.C. 3547); 
</P>
<P>(8) The FHA Multifamily Housing Finance Agency Pilot Program under section 542(c) of the Housing and Community Development Act of 1992, in accordance with section 542(c)(9)(12 U.S.C. 1707 note); 
</P>
<P>(9) The Self-Help Homeownership Opportunity Program under section 11 of the Housing Opportunity Program Extension Act of 1996 (Pub. L. 104-120, 110 Stat. 834), in accordance with section 11(m)); 
</P>
<P>(10) Assistance provided under the Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA), in accordance with:
</P>
<P>(i) Section 105 for Indian Housing Block Grants and Federal Guarantees or Financing for Tribal Housing Authorities (25 U.S.C. 4115 and 4226); and
</P>
<P>(ii) Section 806 for Native Hawaiian Housing Block Grants (25 U.S.C. 4226);


</P>
<P>(11) Indian Housing Loan Guarantees authorized by section 184 of the Housing and Community Development Act of 1992 on trust land and on fee land within an Indian reservation, and on fee land owned by the Indian Tribe outside of the Tribe's Indian reservation boundaries, in accordance with section 184(k) (12 U.S.C. 1715z-13a(k)); and


</P>
<P>(12) Grants for Housing Opportunities for Persons with AIDS (HOPWA) under the AIDS Housing Opportunity Act, as follows: competitive grants beginning with Fiscal Year 2001 and all formula grants, in accordance with section 856(h) (42 U.S.C. 12905(h)); all grants for Fiscal Year 1999 and prior years, in accordance with section 207(c) of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1999 (Pub. L. 105-276, approved October 21, 1998).
</P>
<P>(c) When HUD assistance is used to help fund a revolving loan fund that is administered by a recipient or another party, the activities initially receiving assistance from the fund are subject to the requirements in this part. Future activities receiving assistance from the revolving loan fund, after the fund has received loan repayments, are subject to the environmental review requirements if the rules of the HUD program that initially provided assistance to the fund continue to treat the activities as subject to the Federal requirements. If the HUD program treats the activities as not being subject to any Federal requirements, then the activities cease to become Federally-funded activities and the provisions of this part do not apply.
</P>
<P>(d) To the extent permitted by applicable laws and the applicable regulations of the Council on Environmental Quality, the Assistant Secretary for Community Planning and Development may, for good cause and with appropriate conditions, approve waivers and exceptions or establish criteria for exceptions from the requirements of this part.
</P>
<CITA TYPE="N">[61 FR 19122, Apr. 30, 1996, as amended at 68 FR 56127, Sept. 29, 2003; 89 FR 20056, Mar. 20, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 58.2" NODE="24:1.1.1.1.32.1.59.2" TYPE="SECTION">
<HEAD>§ 58.2   Terms, abbreviations and definitions.</HEAD>
<P>(a) For the purposes of this part, the following definitions supplement the uniform terminology provided in 40 CFR part 1508: 
</P>
<P>(1) <I>Activity</I> means an action that a grantee or recipient puts forth as part of an assisted project, regardless of whether its cost is to be borne by the HUD assistance or is an eligible expense under the HUD assistance program. 
</P>
<P>(2) <I>Certifying Officer</I> means the official who is authorized to execute the Request for Release of Funds and Certification and has the legal capacity to carry out the responsibilities of § 58.13. 
</P>
<P>(3) <I>Extraordinary Circumstances</I> means a situation in which an environmental assessment (EA) or environmental impact statement (EIS) is not normally required, but due to unusual conditions, an EA or EIS is appropriate. Indicators of unusual conditions are: 
</P>
<P>(i) Actions that are unique or without precedent; 
</P>
<P>(ii) Actions that are substantially similar to those that normally require an EIS; 
</P>
<P>(iii) Actions that are likely to alter existing HUD policy or HUD mandates; or 
</P>
<P>(iv) Actions that, due to unusual physical conditions on the site or in the vicinity, have the potential for a significant impact on the environment or in which the environment could have a significant impact on users of the facility. 
</P>
<P>(4) <I>Project</I> means an activity, or a group of integrally related activities, designed by the recipient to accomplish, in whole or in part, a specific objective. 
</P>
<P>(5) <I>Recipient</I> means any of the following entities, when they are eligible recipients or grantees under a program listed in § 58.1(b): 
</P>
<P>(i) A State that does not distribute HUD assistance under the program to a unit of general local government; 
</P>
<P>(ii) Guam, the Northern Mariana Islands, the Virgin Islands, American Samoa, and Palau; 
</P>
<P>(iii) A unit of general local government; 
</P>
<P>(iv) An Indian tribe; 
</P>
<P>(v) With respect to Public Housing Programs under § 58.1(b)(6)(i), fiscal year 1999 and prior HOPE VI grants under § 58.1(b)(6)(ii) or Section 8 assistance under § 58.1(b)(6)(iii), a public housing agency;
</P>
<P>(vi) Any direct grantee of HUD for a special project under § 58.1(b)(7); 
</P>
<P>(vii) With respect to the FHA Multifamily Housing Finance Agency Program under 58.1(b)(8), a qualified housing finance agency;
</P>
<P>(viii) With respect to the Self-Help Homeownership Opportunity Program under § 58.1(b)(9), any direct grantee of HUD. 
</P>
<P>(ix)(A) With respect to NAHASDA assistance under § 58.1(b)(10), the Indian tribe or the Department of Hawaiian Home Lands; and
</P>
<P>(B) With respect to the Section 184 Indian Housing Loan Guarantee program under § 58.1(b)(11), the Indian tribe.
</P>
<P>(x) With respect to the Shelter Plus Care and Supportive Housing Programs under § 58.1(b)(3)(ii), nonprofit organizations and other entities.
</P>
<P>(6) <I>Release of funds.</I> In the case of the FHA Multifamily Housing Finance Agency Program under § 58.1(b)(8), Release of Funds, as used in this part, refers to HUD issuance of a firm approval letter, and Request for Release of Funds refers to a recipient's request for a firm approval letter. In the case of the Section 184 Indian Housing Loan Guarantee program under § 58.1(b)(11), Release of Funds refers to HUD's issuance of a commitment to guarantee a loan, or if there is no commitment, HUD's issuance of a certificate of guarantee.
</P>
<P>(7) <I>Responsible Entity.</I> Responsible Entity means:
</P>
<P>(i) With respect to environmental responsibilities under programs listed in § 58.1(b)(1), (2), (3)(i), (4), and (5), a recipient under the program.
</P>
<P>(ii) With respect to environmental responsibilities under the programs listed in § 58.1(b)(3)(ii) and (6) through (12), a state, unit of general local government, Indian tribe or Alaska Native Village, or the Department of Hawaiian Home Lands, when it is the recipient under the program. Under the Native American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4101 <I>et seq.</I>) listed in § 58.1(b)(10)(i), the Indian tribe is the responsible entity whether or not a Tribally Designated Housing Entity is authorized to receive grant amounts on behalf of the tribe. The Indian tribe is also the responsible entity under the Section 184 Indian Housing Loan Guarantee program listed in § 58.1(b)(11). Regional Corporations in Alaska are considered Indian tribes in this part. Non-recipient responsible entities are designated as follows:
</P>
<P>(A) For qualified housing finance agencies, the State or a unit of general local government, Indian tribe or Alaska native village whose jurisdiction contains the project site; 
</P>
<P>(B) For public housing agencies, the unit of general local government within which the project is located that exercises land use responsibility, or if HUD determines this infeasible, the county, or if HUD determines this infeasible, the State; 
</P>
<P>(C) For non-profit organizations and other entities, the unit of general local government, Indian tribe or Alaska native village within which the project is located that exercises land use responsibility, or if HUD determines this infeasible, the county, or if HUD determines this infeasible, the State;
</P>
<P>(8) <I>Unit Density</I> refers to a change in the number of dwelling units. Where a threshold is identified as a percentage change in density that triggers review requirements, no distinction is made between an increase or a decrease in density. 
</P>
<P>(9) <I>Tiering</I> means the evaluation of an action or an activity at various points in the development process as a proposal or event becomes ripe for an Environment Assessment or Review. 
</P>
<P>(10) <I>Vacant Building</I> means a habitable structure that has been vacant for more than one year. 
</P>
<P>(b) The following abbreviations are used throughout this part: 
</P>
<P>(1) CDBG—Community Development Block Grant; 
</P>
<P>(2) CEQ—Council on Environmental Quality; 
</P>
<P>(3) EA—Environmental Assessment; 
</P>
<P>(4) EIS—Environmental Impact Statement; 
</P>
<P>(5) EPA—Environmental Protection Agency; 
</P>
<P>(6) ERR—Environmental Review Record; 
</P>
<P>(7) FONSI—Finding of No Significant Impact; 
</P>
<P>(8) HUD—Department of Housing and Urban Development; 
</P>
<P>(9) NAHA—Cranston-Gonzalez National Affordable Housing Act of 1990; 
</P>
<P>(10) NEPA—National Environmental Policy Act of 1969, as amended; 
</P>
<P>(11) NOI/EIS—Notice of Intent to Prepare an EIS; 
</P>
<P>(12) NOI/RROF—Notice of Intent to Request Release of Funds; 
</P>
<P>(13) ROD—Record of Decision; 
</P>
<P>(14) ROF—Release of Funds; and 
</P>
<P>(15) RROF—Request for Release of Funds.
</P>
<CITA TYPE="N">[61 FR 19122, Apr. 30, 1996, as amended at 68 FR 56128, Sept. 29, 2003]


</CITA>
</DIV8>


<DIV8 N="§ 58.4" NODE="24:1.1.1.1.32.1.59.3" TYPE="SECTION">
<HEAD>§ 58.4   Assumption authority.</HEAD>
<P>(a) <I>Assumption authority for responsible entities: General.</I> Responsible entities shall assume the responsibility for environmental review, decision-making, and action that would otherwise apply to HUD under NEPA and other provisions of law that further the purposes of NEPA, as specified in § 58.5. Responsible entities that receive assistance directly from HUD assume these responsibilities by execution of a grant agreement with HUD and/or a legally binding document such as the certification contained on HUD Form 7015.15, certifying to the assumption of environmental responsibilities. When a State distributes funds to a responsible entity, the State must provide for appropriate procedures by which these responsible entities will evidence their assumption of environmental responsibilities. 
</P>
<P>(b) <I>Particular responsibilities of the States.</I> (1) States are recipients for purposes of directly undertaking a State project and must assume the environmental review responsibilities for the State's activities and those of any non-governmental entity that may participate in the project. In this case, the State must submit the certification and RROF to HUD for approval. 
</P>
<P>(2) States must exercise HUD's responsibilities in accordance with § 58.18, with respect to approval of a unit of local government's environmental certification and RROF for a HUD assisted project funded through the state. Approval by the state of a unit of local government's certification and RROF satisfies the Secretary's responsibilities under NEPA and the related laws cited in § 58.5.
</P>
<P>(c) <I>Particular responsibilities of Indian tribes.</I> An Indian tribe may, but is not required to, assume responsibilities for environmental review, decision-making and action for programs authorized by the Native American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4101 <I>et seq.</I>) (other than title VIII) or section 184 of the Housing and Community Development Act of 1992 (12 U.S.C. 1715z-13a). The tribe must make a separate decision regarding assumption of responsibilities for each of these Acts and communicate that decision in writing to HUD. If the tribe assumes these responsibilities, the requirements of this part shall apply. If a tribe formally declines assumption of these responsibilities, they are retained by HUD and the provisions of part 50 of this title apply.
</P>
<CITA TYPE="N">[61 FR 19122, Apr. 30, 1996, as amended at 68 FR 56128, Sept. 29, 2003]


</CITA>
</DIV8>


<DIV8 N="§ 58.5" NODE="24:1.1.1.1.32.1.59.4" TYPE="SECTION">
<HEAD>§ 58.5   Related Federal laws and authorities.</HEAD>
<P>In accordance with the provisions of law cited in § 58.1(b), the responsible entity must assume responsibilities for environmental review, decision-making and action that would apply to HUD under the following specified laws and authorities. The responsible entity must certify that it has complied with the requirements that would apply to HUD under these laws and authorities and must consider the criteria, standards, policies and regulations of these laws and authorities. 
</P>
<P>(a) <I>Historic properties.</I> (1) The National Historic Preservation Act of 1966 (16 U.S.C. 470 <I>et seq.</I>), particularly sections 106 and 110 (16 U.S.C. 470 and 470h-2).
</P>
<P>(2) Executive Order 11593, Protection and Enhancement of the Cultural Environment, May 13, 1971 (36 FR 8921), 3 CFR 1971-1975 Comp., p. 559, particularly section 2(c). 
</P>
<P>(3) Federal historic preservation regulations as follows: 
</P>
<P>(i) 36 CFR part 800 with respect to HUD programs other than Urban Development Action Grants (UDAG); and 
</P>
<P>(ii) 36 CFR part 801 with respect to UDAG. 
</P>
<P>(4) The Reservoir Salvage Act of 1960 as amended by the Archeological and Historic Preservation Act of 1974 (16 U.S.C. 469 <I>et seq.</I>), particularly section 3 (16 U.S.C. 469a-1). 
</P>
<P>(b) <I>Floodplain management and wetland protection.</I> (1) Executive Order 11988, Floodplain Management, as amended by Executive Order 13690, February 4, 2015 (3 CFR, 2016 Comp., p. 268), as implemented in HUD regulations at 24 CFR part 55, particularly section 2(a) of Executive Order 11988, as amended. 
</P>
<P>(2) Executive Order 11990, Protection of Wetlands, May 24, 1977 (42 FR 26961), 3 CFR, 1977 Comp., p. 121, as interpreted in HUD regulations at 24 CFR part 55, particularly sections 2 and 5 of the order.
</P>
<P>(c) <I>Coastal Zone Management.</I> The Coastal Zone Management Act of 1972 (16 U.S.C. 1451 <I>et seq.</I>), as amended, particularly section 307(c) and (d) (16 U.S.C. 1456(c) and (d)). 
</P>
<P>(d) <I>Sole source aquifers.</I> (1) The Safe Drinking Water Act of 1974 (42 U.S.C. 201, 300(f) <I>et seq.,</I> and 21 U.S.C. 349) as amended; particularly section 1424(e)(42 U.S.C. 300h-3(e)). 
</P>
<P>(2) Sole Source Aquifers (Environmental Protection Agency—40 CFR part 149). 
</P>
<P>(e) <I>Endangered species.</I> The Endangered Species Act of 1973 (16 U.S.C. 1531 <I>et seq.</I>) as amended, particularly section 7 (16 U.S.C. 1536). 
</P>
<P>(f) <I>Wild and scenic rivers.</I> The Wild and Scenic Rivers Act of 1968 (16 U.S.C. 1271 <I>et seq.</I>) as amended, particularly section 7(b) and (c) (16 U.S.C. 1278(b) and (c)). 
</P>
<P>(g) <I>Air quality.</I> (1) The Clean Air Act (42 U.S.C. 7401 <I>et. seq.</I>) as amended; particularly section 176(c) and (d) (42 U.S.C. 7506(c) and (d)). 
</P>
<P>(2) Determining Conformity of Federal Actions to State or Federal Implementation Plans (Environmental Protection Agency—40 CFR parts 6, 51, and 93). 
</P>
<P>(h) <I>Farmlands protection.</I> (1) Farmland Protection Policy Act of 1981 (7 U.S.C. 4201 <I>et seq.</I>) particularly sections 1540(b) and 1541 (7 U.S.C. 4201(b) and 4202). 
</P>
<P>(2) Farmland Protection Policy (Department of Agriculture—7 CFR part 658). 
</P>
<P>(i) <I>HUD environmental standards.</I> (1) Applicable criteria and standards specified in part 51 of this title, other than the runway clear zone notification requirement in § 51.303(a)(3).
</P>
<P>(2)(i) Also, it is HUD policy that all properties that are being proposed for use in HUD programs be free of hazardous materials, contamination, toxic chemicals and gases, and radioactive substances, where a hazard could affect the health and safety of occupants or conflict with the intended utilization of the property.
</P>
<P>(ii) The environmental review of multifamily housing with five or more dwelling units (including leasing), or non-residential property, must include the evaluation of previous uses of the site or other evidence of contamination on or near the site, to ensure that the occupants of proposed sites are not adversely affected by any of the hazards listed in paragraph (i)(2)(i) of this section.
</P>
<P>(iii) Particular attention should be given to any proposed site on or in the general proximity of such areas as dumps, landfills, industrial sites, or other locations that contain, or may have contained, hazardous wastes.
</P>
<P>(iv) The responsible entity shall use current techniques by qualified professionals to undertake investigations determined necessary.
</P>
<P>(j) <I>Environmental justice.</I> Executive Order 12898—Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations, February 11, 1994 (59 FR 7629), 3 CFR, 1994 Comp. p. 859. 
</P>
<CITA TYPE="N">[61 FR 19122, Apr. 30, 1996, as amended at 68 FR 56128, Sept. 29, 2003; 78 FR 68734, Nov. 15, 2013; 89 FR 30913, Apr. 23, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 58.6" NODE="24:1.1.1.1.32.1.59.5" TYPE="SECTION">
<HEAD>§ 58.6   Other requirements.</HEAD>
<P>In addition to the duties under the laws and authorities specified in § 58.5 for assumption by the responsible entity under the laws cited in § 58.1(b), the responsible entity must comply with the following requirements. Applicability of the following requirements does not trigger the certification and release of funds procedure under this part or preclude exemption of an activity under § 58.34(a)(12) and/or the applicability of § 58.35(b). However, the responsible entity remains responsible for addressing the following requirements in its ERR and meeting these requirements, where applicable, regardless of whether the activity is exempt under § 58.34 or categorically excluded under § 58.35(a) or (b). 
</P>
<P>(a)(1) Under the Flood Disaster Protection Act of 1973, as amended (42 U.S.C. 4001-4128), Federal financial assistance for acquisition and construction purposes (including rehabilitation) may not be used in an area identified by the Federal Emergency Management Agency (FEMA) as having special flood hazards, unless: 
</P>
<P>(i) The community in which the area is situated is participating in the National Flood Insurance Program (see 44 CFR parts 59 through 79), or less than one year has passed since the FEMA notification regarding such hazards; and 
</P>
<P>(ii) Where the community is participating in the National Flood Insurance Program, flood insurance protection is to be obtained as a condition of the approval of financial assistance to the property owner.
</P>
<P>(2) Where the community is participating in the National Flood Insurance Program and the recipient provides financial assistance for acquisition or construction purposes (including rehabilitation) for property located in an area identified by FEMA as having special flood hazards, the responsible entity is responsible for assuring that flood insurance under the National Flood Insurance Program is obtained and maintained.
</P>
<P>(3) Paragraph (a) of this section does not apply to Federal formula grants made to a State. 
</P>
<P>(4) Flood insurance requirements cannot be fulfilled by self-insurance except as authorized by law for assistance to state-owned projects within states approved by the Federal Insurance Administrator consistent with 44 CFR 75.11.
</P>
<P>(b) Under section 582 of the National Flood Insurance Reform Act of 1994, 42 U.S.C. 5154a, HUD disaster assistance that is made available in a special flood hazard area may not be used to make a payment (including any loan assistance payment) to a person for repair, replacement or restoration for flood damage to any personal, residential or commercial property if:
</P>
<P>(1) The person had previously received Federal flood disaster assistance conditioned on obtaining and maintaining flood insurance; and
</P>
<P>(2) The person failed to obtain and maintain flood insurance.
</P>
<P>(c) Pursuant to the Coastal Barrier Resources Act, as amended by the Coastal Barrier Improvement Act of 1990 (16 U.S.C. 3501), HUD assistance may not be used for most activities proposed in the Coastal Barrier Resources System. 
</P>
<P>(d) In all cases involving HUD assistance, subsidy, or insurance for the purchase or sale of an existing property in a Runway Clear Zone or Clear Zone, as defined in 24 CFR part 51, the responsible entity shall advise the buyer that the property is in a runway clear zone or clear zone, what the implications of such a location are, and that there is a possibility that the property may, at a later date, be acquired by the airport operator. The buyer must sign a statement acknowledging receipt of this information. 
</P>
<CITA TYPE="N">[61 FR 19122, Apr. 30, 1996, as amended at 63 FR 15271, Mar. 30, 1998; 78 FR 68734, Nov. 15, 2013]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.1.1.1.32.2" TYPE="SUBPART">
<HEAD>Subpart B—General Policy: Responsibilities of Responsible Entities</HEAD>


<DIV8 N="§ 58.10" NODE="24:1.1.1.1.32.2.59.1" TYPE="SECTION">
<HEAD>§ 58.10   Basic environmental responsibility.</HEAD>
<P>In accordance with the provisions of law cited in § 58.1(b), except as otherwise provided in § 58.4(c), the responsible entity must assume the environmental responsibilities for projects under programs cited in § 58.1(b). In doing so, the responsible entity must comply with the provisions of NEPA and the CEQ regulations contained in 40 CFR parts 1500 through 1508, including the requirements set forth in this part.
</P>
<CITA TYPE="N">[68 FR 56128, Sept. 29, 2003]


</CITA>
</DIV8>


<DIV8 N="§ 58.11" NODE="24:1.1.1.1.32.2.59.2" TYPE="SECTION">
<HEAD>§ 58.11   Legal capacity and performance.</HEAD>
<P>(a) A responsible entity which believes that it does not have the legal capacity to carry out the environmental responsibilities required by this part must contact the appropriate local HUD Office or the State for further instructions. Determinations of legal capacity will be made on a case-by-case basis. 
</P>
<P>(b) If a public housing, special project, HOPWA, Supportive Housing, Shelter Plus Care, or Self-Help Homeownership Opportunity recipient that is not a responsible entity objects to the non-recipient responsible entity conducting the environmental review on the basis of performance, timing, or compatibility of objectives, HUD will review the facts to determine who will perform the environmental review.
</P>
<P>(c) At any time, HUD may reject the use of a responsible entity to conduct the environmental review in a particular case on the basis of performance, timing or compatibility of objectives, or in accordance with § 58.77(d)(1). 
</P>
<P>(d) If a responsible entity, other than a recipient, objects to performing an environmental review, or if HUD determines that the responsible entity should not perform the environmental review, HUD may designate another responsible entity to conduct the review in accordance with this part or may itself conduct the environmental review in accordance with the provisions of 24 CFR part 50. 
</P>
<CITA TYPE="N">[61 FR 19122, Apr. 30, 1996, as amended at 68 FR 56129, Sept. 29, 2003]


</CITA>
</DIV8>


<DIV8 N="§ 58.12" NODE="24:1.1.1.1.32.2.59.3" TYPE="SECTION">
<HEAD>§ 58.12   Technical and administrative capacity.</HEAD>
<P>The responsible entity must develop the technical and administrative capability necessary to comply with 40 CFR parts 1500 through 1508 and the requirements of this part. 


</P>
</DIV8>


<DIV8 N="§ 58.13" NODE="24:1.1.1.1.32.2.59.4" TYPE="SECTION">
<HEAD>§ 58.13   Responsibilities of the certifying officer.</HEAD>
<P>Under the terms of the certification required by § 58.71, a responsible entity's certifying officer is the “responsible Federal official” as that term is used in section 102 of NEPA and in statutory provisions cited in § 58.1(b). The Certifying Officer is therefore responsible for all the requirements of section 102 of NEPA and the related provisions in 40 CFR parts 1500 through 1508, and 24 CFR part 58, including the related Federal authorities listed in § 58.5. The Certifying Officer must also: 
</P>
<P>(a) Represent the responsible entity and be subject to the jurisdiction of the Federal courts. The Certifying Officer will not be represented by the Department of Justice in court; and 
</P>
<P>(b) Ensure that the responsible entity reviews and comments on all EISs prepared for Federal projects that may have an impact on the recipient's program. 


</P>
</DIV8>


<DIV8 N="§ 58.14" NODE="24:1.1.1.1.32.2.59.5" TYPE="SECTION">
<HEAD>§ 58.14   Interaction with State, Federal and non-Federal entities.</HEAD>
<P>A responsible entity shall consult with appropriate environmental agencies, State, Federal and non-Federal entities and the public in the preparation of an EIS, EA or other environmental reviews undertaken under the related laws and authorities cited in § 58.5 and § 58.6. The responsible entity must also cooperate with other agencies to reduce duplication between NEPA and comparable environmental review requirements of the State (see 40 CFR 1506.2 (b) and (c)). The responsible entity must prepare its EAs and EISs so that they comply with the environmental review requirements of both Federal and State laws unless otherwise specified or provided by law. State, Federal and local agencies may participate or act in a joint lead or cooperating agency capacity in the preparation of joint EISs or joint environmental assessments (see 40 CFR 1501.5(b) and 1501.6). A single EIS or EA may be prepared and adopted by multiple users to the extent that the review addresses the relevant environmental issues and there is a written agreement between the cooperating agencies which sets forth the coordinated and overall responsibilities.
</P>
<CITA TYPE="N">[63 FR 15271, Mar. 30, 1998]


</CITA>
</DIV8>


<DIV8 N="§ 58.15" NODE="24:1.1.1.1.32.2.59.6" TYPE="SECTION">
<HEAD>§ 58.15   Tiering.</HEAD>
<P>Responsible entities may tier their environmental reviews and assessments to eliminate repetitive discussions of the same issues at subsequent levels of review. Tiering is appropriate when there is a requirement to evaluate a policy or proposal in the early stages of development or when site-specific analysis or mitigation is not currently feasible and a more narrow or focused analysis is better done at a later date. The site specific review need only reference or summarize the issues addressed in the broader review. The broader review should identify and evaluate those issues ripe for decision and exclude those issues not relevant to the policy, program or project under consideration. The broader review should also establish the policy, standard or process to be followed in the site specific review. The Finding of No Significant Impact (FONSI) with respect to the broader assessment shall include a summary of the assessment and identify the significant issues to be considered in site specific reviews. Subsequent site-specific reviews will not require notices or a Request for Release of Funds unless the Certifying Officer determines that there are unanticipated impacts or impacts not adequately addressed in the prior review. A tiering approach can be used for meeting environmental review requirements in areas designated for special focus in local Consolidated Plans. Local and State Governments are encouraged to use the Consolidated Plan process to facilitate environmental reviews. 


</P>
</DIV8>


<DIV8 N="§ 58.17" NODE="24:1.1.1.1.32.2.59.7" TYPE="SECTION">
<HEAD>§ 58.17   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 58.18" NODE="24:1.1.1.1.32.2.59.8" TYPE="SECTION">
<HEAD>§ 58.18   Responsibilities of States assuming HUD environmental responsibilities.</HEAD>
<P>States that elect to administer a HUD program shall ensure that the program complies with the provisions of this part. The state must:
</P>
<P>(a) Designate the state agency or agencies that will be responsible for carrying out the requirements and administrative responsibilities set forth in subpart H of this part and which will:
</P>
<P>(1) Develop a monitoring and enforcement program for post-review actions on environmental reviews and monitor compliance with any environmental conditions included in the award.
</P>
<P>(2) Receive public notices, RROFs, and certifications from recipients pursuant to §§ 58.70 and 58.71; accept objections from the public and from other agencies (§ 58.73); and perform other related responsibilities regarding releases of funds.
</P>
<P>(b) Fulfill the state role in subpart H relative to the time period set for the receipt and disposition of comments, objections and appeals (if any) on particular projects.
</P>
<CITA TYPE="N">[68 FR 56129, Sept. 29, 2003]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:1.1.1.1.32.3" TYPE="SUBPART">
<HEAD>Subpart C—General Policy: Environmental Review Procedures</HEAD>


<DIV8 N="§ 58.21" NODE="24:1.1.1.1.32.3.59.1" TYPE="SECTION">
<HEAD>§ 58.21   Time periods.</HEAD>
<P>All time periods in this part shall be counted in calendar days. The first day of a time period begins at 12:01 a.m. local time on the day following the publication or the mailing and posting date of the notice which initiates the time period. 


</P>
</DIV8>


<DIV8 N="§ 58.22" NODE="24:1.1.1.1.32.3.59.2" TYPE="SECTION">
<HEAD>§ 58.22   Limitations on activities pending clearance.</HEAD>
<P>(a) Neither a recipient nor any participant in the development process, including public or private nonprofit or for-profit entities, or any of their contractors, may commit HUD assistance under a program listed in § 58.1(b) on an activity or project until HUD or the state has approved the recipient's RROF and the related certification from the responsible entity. In addition, until the RROF and the related certification have been approved, neither a recipient nor any participant in the development process may commit non-HUD funds on or undertake an activity or project under a program listed in § 58.1(b) if the activity or project would have an adverse environmental impact or limit the choice of reasonable alternatives.
</P>
<P>(b) If a project or activity is exempt under § 58.34, or is categorically excluded (except in extraordinary circumstances) under § 58.35(b), no RROF is required and the recipient may undertake the activity immediately after the responsible entity has documented its determination as required in § 58.34(b) and § 58.35(d), but the recipient must comply with applicable requirements under § 58.6.
</P>
<P>(c) If a recipient is considering an application from a prospective subrecipient or beneficiary and is aware that the prospective subrecipient or beneficiary is about to take an action within the jurisdiction of the recipient that is prohibited by paragraph (a) of this section, then the recipient will take appropriate action to ensure that the objectives and procedures of NEPA are achieved.
</P>
<P>(d) An option agreement on a proposed site or property is allowable prior to the completion of the environmental review if the option agreement is subject to a determination by the recipient on the desirability of the property for the project as a result of the completion of the environmental review in accordance with this part and the cost of the option is a nominal portion of the purchase price. There is no constraint on the purchase of an option by third parties that have not been selected for HUD funding, have no responsibility for the environmental review and have no say in the approval or disapproval of the project.
</P>
<P>(e) <I>Self-Help Homeownership Opportunity Program (SHOP).</I> In accordance with section 11(d)(2)(A) of the Housing Opportunity Program Extension Act of 1996 (42 U.S.C. 12805 note), an organization, consortium, or affiliate receiving assistance under the SHOP program may advance nongrant funds to acquire land prior to completion of an environmental review and approval of a Request for Release of Funds (RROF) and certification, notwithstanding paragraph (a) of this section. Any advances to acquire land prior to approval of the RROF and certification are made at the risk of the organization, consortium, or affiliate and reimbursement for such advances may depend on the result of the environmental review. This authorization is limited to the SHOP program only and all other forms of HUD assistance are subject to the limitations in paragraph (a) of this section.
</P>
<P>(f) <I>Relocation.</I> Funds may be committed for relocation assistance before the approval of the RROF and related certification for the project provided that the relocation assistance is required by 24 CFR part 42.
</P>
<CITA TYPE="N">[68 FR 56129, Sept. 29, 2003]


</CITA>
</DIV8>


<DIV8 N="§ 58.23" NODE="24:1.1.1.1.32.3.59.3" TYPE="SECTION">
<HEAD>§ 58.23   Financial assistance for environmental review.</HEAD>
<P>The costs of environmental reviews, including costs incurred in complying with any of the related laws and authorities cited in § 58.5 and § 58.6, are eligible costs to the extent allowable under the HUD assistance program regulations. 


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:1.1.1.1.32.4" TYPE="SUBPART">
<HEAD>Subpart D—Environmental Review Process: Documentation, Range of Activities, Project Aggregation and Classification</HEAD>


<DIV8 N="§ 58.30" NODE="24:1.1.1.1.32.4.59.1" TYPE="SECTION">
<HEAD>§ 58.30   Environmental review process.</HEAD>
<P>(a) The environmental review process consists of all the actions that a responsible entity must take to determine compliance with this part. The environmental review process includes all the compliance actions needed for other activities and projects that are not assisted by HUD but are aggregated by the responsible entity in accordance with § 58.32. 
</P>
<P>(b) The environmental review process should begin as soon as a recipient determines the projected use of HUD assistance. 


</P>
</DIV8>


<DIV8 N="§ 58.32" NODE="24:1.1.1.1.32.4.59.2" TYPE="SECTION">
<HEAD>§ 58.32   Project aggregation.</HEAD>
<P>(a) A responsible entity must group together and evaluate as a single project all individual activities which are related either on a geographical or functional basis, or are logical parts of a composite of contemplated actions. 
</P>
<P>(b) In deciding the most appropriate basis for aggregation when evaluating activities under more than one program, the responsible entity may choose: <I>functional aggregation</I> when a specific type of activity (e.g., water improvements) is to take place in several separate locales or jurisdictions; <I>geographic aggregation</I> when a mix of dissimilar but related activities is to be concentrated in a fairly specific project area (e.g., a combination of water, sewer and street improvements and economic development activities); or <I>a combination of aggregation approaches,</I> which, for various project locations, considers the impacts arising from each functional activity and its interrelationship with other activities. 
</P>
<P>(c) The purpose of project aggregation is to group together related activities so that the responsible entity can: 
</P>
<P>(1) Address adequately and analyze, in a single environmental review, the separate and combined impacts of activities that are similar, connected and closely related, or that are dependent upon other activities and actions. (See 40 CFR 1508.25(a)). 
</P>
<P>(2) Consider reasonable alternative courses of action. 
</P>
<P>(3) Schedule the activities to resolve conflicts or mitigate the individual, combined and/or cumulative effects.
</P>
<P>(4) Prescribe mitigation measures and safeguards including project alternatives and modifications to individual activities.
</P>
<P>(d) <I>Multi-year project aggregation</I>—(1) <I>Release of funds.</I> When a recipient's planning and program development provide for activities to be implemented over two or more years, the responsible entity's environmental review should consider the relationship among all component activities of the multi-year project regardless of the source of funds and address and evaluate their cumulative environmental effects. The estimated range of the aggregated activities and the estimated cost of the total project must be listed and described by the responsible entity in the environmental review and included in the RROF. The release of funds will cover the entire project period.
</P>
<P>(2) When one or more of the conditions described in § 58.47 exists, the recipient or other responsible entity must re-evaluate the environmental review.


</P>
</DIV8>


<DIV8 N="§ 58.33" NODE="24:1.1.1.1.32.4.59.3" TYPE="SECTION">
<HEAD>§ 58.33   Emergencies.</HEAD>
<P>(a) In the cases of emergency, disaster or imminent threat to health and safety which warrant the taking of an action with significant environmental impact, the provisions of 40 CFR 1506.11 shall apply.
</P>
<P>(b) If funds are needed on an emergency basis and adherence to separate comment periods would prevent the giving of assistance during a Presidentially declared disaster, or during a local emergency that has been declared by the chief elected official of the responsible entity who has proclaimed that there is an immediate need for public action to protect the public safety, the combined Notice of FONSI and Notice of Intent to Request Release of Funds (NOI/RROF) may be disseminated and/or published simultaneously with the submission of the RROF. The combined Notice of FONSI and NOI/RROF shall state that the funds are needed on an emergency basis due to a declared disaster and that the comment periods have been combined. The Notice shall also invite commenters to submit their comments to both HUD and the responsible entity issuing the notice to ensure that these comments will receive full consideration.
</P>
<CITA TYPE="N">[61 FR 19122, Apr. 30, 1996, as amended at 68 FR 56129, Sept. 29, 2003]


</CITA>
</DIV8>


<DIV8 N="§ 58.34" NODE="24:1.1.1.1.32.4.59.4" TYPE="SECTION">
<HEAD>§ 58.34   Exempt activities.</HEAD>
<P>(a) Except for the applicable requirements of § 58.6, the responsible entity does not have to comply with the requirements of this part or undertake any environmental review, consultation or other action under NEPA and the other provisions of law or authorities cited in § 58.5 for the activities exempt by this section or projects consisting solely of the following exempt activities:
</P>
<P>(1) Environmental and other studies, resource identification and the development of plans and strategies;
</P>
<P>(2) Information and financial services;
</P>
<P>(3) Administrative and management activities;
</P>
<P>(4) Public services that will not have a physical impact or result in any physical changes, including but not limited to services concerned with employment, crime prevention, child care, health, drug abuse, education, counseling, energy conservation and welfare or recreational needs;
</P>
<P>(5) Inspections and testing of properties for hazards or defects;
</P>
<P>(6) Purchase of insurance;
</P>
<P>(7) Purchase of tools;
</P>
<P>(8) Engineering or design costs;
</P>
<P>(9) Technical assistance and training;
</P>
<P>(10) Assistance for temporary or permanent improvements that do not alter environmental conditions and are limited to protection, repair, or restoration activities necessary only to control or arrest the effects from disasters or imminent threats to public safety including those resulting from physical deterioration;
</P>
<P>(11) Payment of principal and interest on loans made or obligations guaranteed by HUD;
</P>
<P>(12) Any of the categorical exclusions listed in § 58.35(a) provided that there are no circumstances which require compliance with any other Federal laws and authorities cited in § 58.5.
</P>
<P>(b) A recipient does not have to submit an RROF and certification, and no further approval from HUD or the State will be needed by the recipient for the drawdown of funds to carry out exempt activities and projects. However, the responsible entity must document in writing its determination that each activity or project is exempt and meets the conditions specified for such exemption under this section.
</P>
<CITA TYPE="N">[61 FR 19122, Apr. 30, 1996, as amended at 63 FR 15271, Mar. 30, 1998]


</CITA>
</DIV8>


<DIV8 N="§ 58.35" NODE="24:1.1.1.1.32.4.59.5" TYPE="SECTION">
<HEAD>§ 58.35   Categorical exclusions.</HEAD>
<P>Categorical exclusion refers to a category of activities for which no environmental impact statement or environmental assessment and finding of no significant impact under NEPA is required, except in extraordinary circumstances (see § 58.2(a)(3)) in which a normally excluded activity may have a significant impact. Compliance with the other applicable Federal environmental laws and authorities listed in § 58.5 is required for any categorical exclusion listed in paragraph (a) of this section.
</P>
<P>(a) <I>Categorical exclusions subject to § 58.5.</I> The following activities are categorically excluded under NEPA, but may be subject to review under authorities listed in § 58.5:
</P>
<P>(1) Acquisition, repair, improvement, reconstruction, or rehabilitation of public facilities and improvements (other than buildings) when the facilities and improvements are in place and will be retained in the same use without change in size or capacity of more than 20 percent (e.g., replacement of water or sewer lines, reconstruction of curbs and sidewalks, repaving of streets).
</P>
<P>(2) Special projects directed to the removal of material and architectural barriers that restrict the mobility of and accessibility to elderly and handicapped persons.
</P>
<P>(3) Rehabilitation of buildings and improvements when the following conditions are met:
</P>
<P>(i) In the case of a building for residential use (with one to four units), the density is not increased beyond four units, and the land use is not changed;
</P>
<P>(ii) In the case of multifamily residential buildings:
</P>
<P>(A) Unit density is not changed more than 20 percent;
</P>
<P>(B) The project does not involve changes in land use from residential to non-residential; and
</P>
<P>(C) The estimated cost of rehabilitation is less than 75 percent of the total estimated cost of replacement after rehabilitation.
</P>
<P>(iii) In the case of non-residential structures, including commercial, industrial, and public buildings:
</P>
<P>(A) The facilities and improvements are in place and will not be changed in size or capacity by more than 20 percent; and
</P>
<P>(B) The activity does not involve a change in land use, such as from non-residential to residential, commercial to industrial, or from one industrial use to another.
</P>
<P>(4)(i) An individual action on up to four dwelling units where there is a maximum of four units on any one site. The units can be four one-unit buildings or one four-unit building or any combination in between; or
</P>
<P>(ii) An individual action on a project of five or more housing units developed on scattered sites when the sites are more than 2,000 feet apart and there are not more than four housing units on any one site.
</P>
<P>(iii) Paragraphs (a)(4)(i) and (ii) of this section do not apply to rehabilitation of a building for residential use (with one to four units) (see paragraph (a)(3)(i) of this section). 
</P>
<P>(5) Acquisition (including leasing) or disposition of, or equity loans on an existing structure, or acquisition (including leasing) of vacant land provided that the structure or land acquired, financed, or disposed of will be retained for the same use. 
</P>
<P>(6) Combinations of the above activities.


</P>
<P>(b) <I>Categorical exclusions not subject to § 58.5.</I> The Department has determined that the following categorically excluded activities would not alter any conditions that would require a review or compliance determination under the Federal laws and authorities cited in § 58.5. When the following kinds of activities are undertaken, the responsible entity does not have to publish a NOI/RROF or execute a certification and the recipient does not have to submit a RROF to HUD (or the State) except in the circumstances described in paragraph (c) of this section. Following the award of the assistance, no further approval from HUD or the State will be needed with respect to environmental requirements, except where paragraph (c) of this section applies. The recipient remains responsible for carrying out any applicable requirements under § 58.6.
</P>
<P>(1) Tenant-based rental assistance;
</P>
<P>(2) Supportive services including, but not limited to, health care, housing services, permanent housing placement, day care, nutritional services, short-term payments for rent/mortgage/utility costs, and assistance in gaining access to local, State, and Federal government benefits and services;
</P>
<P>(3) Operating costs including maintenance, security, operation, utilities, furnishings, equipment, supplies, staff training and recruitment and other incidental costs;
</P>
<P>(4) Economic development activities, including but not limited to, equipment purchase, inventory financing, interest subsidy, operating expenses and similar costs not associated with construction or expansion of existing operations;
</P>
<P>(5) Activities to assist homebuyers to purchase existing dwelling units or dwelling units under construction, including closing costs and down payment assistance, interest buydowns, and similar activities that result in the transfer of title.
</P>
<P>(6) Affordable housing pre-development costs including legal, consulting, developer and other costs related to obtaining site options, project financing, administrative costs and fees for loan commitments, zoning approvals, and other related activities which do not have a physical impact.
</P>
<P>(7) Approval of supplemental assistance (including insurance or guarantee) to a project previously approved under this part, if the approval is made by the same responsible entity that conducted the environmental review on the original project and re-evaluation of the environmental findings is not required under § 58.47. 
</P>
<P>(8) HUD's guarantee of loans for one- to-four family dwellings on trust land and on fee land within an Indian reservation and on fee land owned by the Indian Tribe outside the Tribe's Indian Reservation boundaries, under the Direct Guarantee procedure for the Section 184 Indian Housing loan guarantee program without any review or approval of the application for the loan guarantee by HUD or the responsible entity or approval of the loan guarantee by HUD before the execution of the contract for construction or rehabilitation and the loan closing.


</P>
<P>(c) <I>Circumstances requiring NEPA review.</I> If a responsible entity determines that an activity or project identified in paragraph (a) or (b) of this section, because of extraordinary circumstances and conditions at or affecting the location of the activity or project, may have a significant environmental effect, it shall comply with all the requirements of this part.
</P>
<P>(d) The Environmental Review Record (ERR) must contain a well organized written record of the process and determinations made under this section.




</P>
<CITA TYPE="N">[61 FR 19122, Apr. 30, 1996, as amended at 63 FR 15272, Mar. 30, 1998; 68 FR 56129, Sept. 29, 2003; 78 FR 68734, Nov. 15, 2013; 89 FR 20056, Mar. 20, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 58.36" NODE="24:1.1.1.1.32.4.59.6" TYPE="SECTION">
<HEAD>§ 58.36   Environmental assessments.</HEAD>
<P>If a project is not exempt or categorically excluded under §§ 58.34 and 58.35, the responsible entity must prepare an EA in accordance with subpart E of this part. If it is evident without preparing an EA that an EIS is required under § 58.37, the responsible entity should proceed directly to an EIS.


</P>
</DIV8>


<DIV8 N="§ 58.37" NODE="24:1.1.1.1.32.4.59.7" TYPE="SECTION">
<HEAD>§ 58.37   Environmental impact statement determinations.</HEAD>
<P>(a) An EIS is required when the project is determined to have a potentially significant impact on the human environment. 
</P>
<P>(b) An EIS is required under any of the following circumstances, except as provided in paragraph (c) of this section: 
</P>
<P>(1) The project would provide a site or sites for, or result in the construction of, hospitals or nursing homes containing a total of 2,500 or more beds. 
</P>
<P>(2) The project would remove, demolish, convert or substantially rehabilitate 2,500 or more existing housing units (but not including rehabilitation projects categorically excluded under § 58.35), or would result in the construction or installation of 2,500 or more housing units, or would provide sites for 2,500 or more housing units. 
</P>
<P>(3) The project would provide enough additional water and sewer capacity to support 2,500 or more additional housing units. The project does not have to be specifically intended for residential use nor does it have to be totally new construction. If the project is designed to provide upgraded service to existing development as well as to serve new development, only that portion of the increased capacity which is intended to serve new development should be counted. 
</P>
<P>(c) If, on the basis of an EA, a responsible entity determines that the thresholds in paragraph (b) of this section are the sole reason for the EIS, the responsible entity may prepare a FONSI pursuant to 40 CFR 1501.4. In such cases, the FONSI must be made available for public review for at least 30 days before the responsible entity makes the final determination whether to prepare an EIS. 
</P>
<P>(d) Notwithstanding paragraphs (a) through (c) of this section, an EIS is not required where § 58.53 is applicable. 
</P>
<P>(e) <I>Recommended EIS Format.</I> The responsible entity must use the EIS format recommended by the CEQ regulations (40 CFR 1502.10) unless a determination is made on a particular project that there is a compelling reason to do otherwise. In such a case, the EIS format must meet the minimum requirements prescribed in 40 CFR 1502.10. 


</P>
</DIV8>


<DIV8 N="§ 58.38" NODE="24:1.1.1.1.32.4.59.8" TYPE="SECTION">
<HEAD>§ 58.38   Environmental review record.</HEAD>
<P>The responsible entity must maintain a written record of the environmental review undertaken under this part for each project. This document will be designated the “Environmental Review Record” (ERR) and shall be available for public review. The Departmental Environmental Clearance Officer (DECO) shall establish a prescribed format that the responsible entity shall use to prepare the ERR. The DECO may prescribe alternative formats as necessary to meet specific program needs.
</P>
<P>(a) <I>ERR Documents.</I> The ERR shall contain all the environmental review documents, public notices and written determinations or environmental findings required by this part as evidence of review, decisionmaking and actions pertaining to a particular project of a recipient. The document shall: 
</P>
<P>(1) Describe the project and the activities that the recipient has determined to be part of the project; 
</P>
<P>(2) Evaluate the effects of the project or the activities on the human environment; 
</P>
<P>(3) Document compliance with applicable statutes and authorities, in particular those cited in § 58.5 and 58.6; and 
</P>
<P>(4) Record the written determinations and other review findings required by this part (e.g., exempt and categorically excluded projects determinations, findings of no significant impact). 
</P>
<P>(b) <I>Other documents and information.</I> The ERR shall also contain verifiable source documents and relevant base data used or cited in EAs, EISs or other project review documents. These documents may be incorporated by reference into the ERR provided that each source document is identified and available for inspection by interested parties. Proprietary material and special studies prepared for the recipient that are not otherwise generally available for public review shall not be incorporated by reference but shall be included in the ERR. 
</P>
<CITA TYPE="N">[61 FR 19122, Apr. 30, 1996, as amended at 79 FR 49229, Aug. 20, 2014]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:1.1.1.1.32.5" TYPE="SUBPART">
<HEAD>Subpart E—Environmental Review Process: Environmental Assessments (EA's)</HEAD>


<DIV8 N="§ 58.40" NODE="24:1.1.1.1.32.5.59.1" TYPE="SECTION">
<HEAD>§ 58.40   Preparing the environmental assessment.</HEAD>
<P>The DECO shall establish a prescribed format that the responsible entity shall use to prepare the EA. The DECO may prescribe alternative formats as necessary to meet specific program needs. In preparing an EA for a particular proposed project or other action, the responsible entity must:
</P>
<P>(a) Determine existing conditions and describe the character, features and resources of the project area and its surroundings; identify the trends that are likely to continue in the absence of the project. 
</P>
<P>(b) Identify all potential environmental impacts, whether beneficial or adverse, and the conditions that would change as a result of the project. 
</P>
<P>(c) Identify, analyze and evaluate all impacts to determine the significance of their effects on the human environment and whether the project will require further compliance under related laws and authorities cited in § 58.5 and § 58.6. 
</P>
<P>(d) Examine and recommend feasible ways in which the project or external factors relating to the project could be modified in order to eliminate or minimize adverse environmental impacts. 
</P>
<P>(e) Discuss the need for the proposal, appropriate alternatives where the proposal involves unresolved conflicts concerning alternative uses of available resources, the environmental impacts of the proposed action and alternatives, and a listing of agencies and persons consulted.
</P>
<P>(f) Complete all environmental review requirements necessary for the project's compliance with applicable authorities cited in §§ 58.5 and 58.6. 
</P>
<P>(g) Based on steps set forth in paragraph (a) through (f) of this section, make one of the following findings: 
</P>
<P>(1) A Finding of No Significant Impact (FONSI), in which the responsible entity determines that the project is not an action that will result in a significant impact on the quality of the human environment. The responsible entity may then proceed to § 58.43. 
</P>
<P>(2) A finding of significant impact, in which the project is deemed to be an action which may significantly affect the quality of the human environment. The responsible entity must then proceed with its environmental review under subpart F or G of this part. 
</P>
<CITA TYPE="N">[61 FR 19122, Apr. 30, 1996, as amended at 79 FR 49229, Aug. 20, 2014]


</CITA>
</DIV8>


<DIV8 N="§ 58.43" NODE="24:1.1.1.1.32.5.59.2" TYPE="SECTION">
<HEAD>§ 58.43   Dissemination and/or publication of the findings of no significant impact.</HEAD>
<P>(a) If the responsible entity makes a finding of no significant impact, it must prepare a FONSI notice, using the current HUD-recommended format or an equivalent format. As a minimum, the responsible entity must send the FONSI notice to individuals and groups known to be interested in the activities, to the local news media, to the appropriate Tribal, Federal, State, and local agencies to the Regional Offices of the Environmental Protection Agency having jurisdiction and to the HUD Field Office (or the State where applicable). The responsible entity may also publish the FONSI notice in a newspaper of general circulation in the affected community or on an appropriate Government website that is accessible to individuals with disabilities and provides meaningful access for individuals with Limited English Proficiency. If the notice is not published, it must also be prominently displayed in public buildings, such as the local Post Office and within the project area or in accordance with procedures established as part of the citizen participation process. 
</P>
<P>(b) The responsible entity may disseminate or publish a FONSI notice at the same time it disseminates or publishes the NOI/RROF required by § 58.70. If the notices are released as a combined notice, the combined notice shall: 
</P>
<P>(1) Clearly indicate that it is intended to meet two separate procedural requirements; and 
</P>
<P>(2) Advise the public to specify in their comments which “notice” their comments address. 
</P>
<P>(c) The responsible entity must consider the comments and make modifications, if appropriate, in response to the comments, before it completes its environmental certification and before the recipient submits its RROF. If funds will be used in Presidentially declared disaster areas, modifications resulting from public comment, if appropriate, must be made before proceeding with the expenditure of funds. 
</P>
<CITA TYPE="N">[61 FR 19122, Apr. 30, 1996, as amended at 89 FR 30913, Apr. 23, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 58.45" NODE="24:1.1.1.1.32.5.59.3" TYPE="SECTION">
<HEAD>§ 58.45   Public comment periods.</HEAD>
<P>Required notices must afford the public the following minimum comment periods, counted in accordance with § 58.21:
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col"> 
</TH><TH class="gpotbl_colhed" scope="col"> 
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">(a) Notice of Finding of No Significant Impact (FONSI)</TD><TD align="left" class="gpotbl_cell">15 days when published in a general circulation newspaper or on a Government website that is accessible to individuals with disabilities and provides meaningful access for individuals with Limited English Proficiency or, if no publication, 18 days when mailing and posting.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">(b) Notice of Intent to Request Release of Funds (NOI-RROF)</TD><TD align="left" class="gpotbl_cell">7 days when published in a general circulation newspaper or on a Government website that is accessible to individuals with disabilities and provides meaningful access for individuals with Limited English Proficiency or, if no publication, 10 days when mailing and posting.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">(c) Concurrent or combined notices</TD><TD align="left" class="gpotbl_cell">15 days when published in a general circulation newspaper or on a Government website that is accessible to individuals with disabilities and provides meaningful access for individuals with Limited English Proficiency or, if no publication, 18 days when mailing and posting.</TD></TR></TABLE></DIV></DIV>
<CITA TYPE="N">[68 FR 56130, Sept. 29, 2003, as amended at 89 FR 30913, Apr. 23, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 58.46" NODE="24:1.1.1.1.32.5.59.4" TYPE="SECTION">
<HEAD>§ 58.46   Time delays for exceptional circumstances.</HEAD>
<P>The responsible entity must make the FONSI available for public comments for 30 days before the recipient files the RROF when: 
</P>
<P>(a) There is a considerable interest or controversy concerning the project; 
</P>
<P>(b) The proposed project is similar to other projects that normally require the preparation of an EIS; or 
</P>
<P>(c) The project is unique and without precedent. 


</P>
</DIV8>


<DIV8 N="§ 58.47" NODE="24:1.1.1.1.32.5.59.5" TYPE="SECTION">
<HEAD>§ 58.47   Re-evaluation of environmental assessments and other environmental findings.</HEAD>
<P>(a) A responsible entity must re-evaluate its environmental findings to determine if the original findings are still valid, when:
</P>
<P>(1) The recipient proposes substantial changes in the nature, magnitude or extent of the project, including adding new activities not anticipated in the original scope of the project;
</P>
<P>(2) There are new circumstances and environmental conditions which may affect the project or have a bearing on its impact, such as concealed or unexpected conditions discovered during the implementation of the project or activity which is proposed to be continued; or 
</P>
<P>(3) The recipient proposes the selection of an alternative not in the original finding. 
</P>
<P>(b)(1) If the original findings are still valid but the data or conditions upon which they were based have changed, the responsible entity must affirm the original findings and update its ERR by including this re-evaluation and its determination based on its findings. Under these circumstances, if a FONSI notice has already been published, no further publication of a FONSI notice is required.
</P>
<P>(2) If the responsible entity determines that the original findings are no longer valid, it must prepare an EA or an EIS if its evaluation indicates potentially significant impacts.
</P>
<P>(3) Where the recipient is not the responsible entity, the recipient must inform the responsible entity promptly of any proposed substantial changes under paragraph (a)(1) of this section, new circumstances or environmental conditions under paragraph (a)(2) of this section, or any proposals to select a different alternative under paragraph (a)(3) of this section, and must then permit the responsible entity to re-evaluate the findings before proceeding.
</P>
<CITA TYPE="N">[61 FR 19122, Apr. 30, 1996, as amended at 63 FR 15272, Mar. 30, 1998]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:1.1.1.1.32.6" TYPE="SUBPART">
<HEAD>Subpart F—Environmental Review Process: Environmental Impact Statement Determinations</HEAD>


<DIV8 N="§ 58.52" NODE="24:1.1.1.1.32.6.59.1" TYPE="SECTION">
<HEAD>§ 58.52   Adoption of other agencies' EISs.</HEAD>
<P>The responsible entity may adopt a draft or final EIS prepared by another agency provided that the EIS was prepared in accordance with 40 CFR parts 1500 through 1508. If the responsible entity adopts an EIS prepared by another agency, the procedure in 40 CFR 1506.3 shall be followed. An adopted EIS may have to be revised and modified to adapt it to the particular environmental conditions and circumstances of the project if these are different from the project reviewed in the EIS. In such cases the responsible entity must prepare, circulate, and file a supplemental draft EIS in the manner prescribed in § 58.60(d) and otherwise comply with the clearance and time requirements of the EIS process, except that scoping requirements under 40 CFR 1501.7 shall not apply. The agency that prepared the original EIS should be informed that the responsible entity intends to amend and adopt the EIS. The responsible entity may adopt an EIS when it acts as a cooperating agency in its preparation under 40 CFR 1506.3. The responsible entity is not required to re-circulate or file the EIS, but must complete the clearance process for the RROF. The decision to adopt an EIS shall be made a part of the project ERR. 


</P>
</DIV8>


<DIV8 N="§ 58.53" NODE="24:1.1.1.1.32.6.59.2" TYPE="SECTION">
<HEAD>§ 58.53   Use of prior environmental impact statements.</HEAD>
<P>Where any final EIS has been listed in the <E T="04">Federal Register</E> for a project pursuant to this part, or where an areawide or similar broad scale final EIS has been issued and the EIS anticipated a subsequent project requiring an environmental clearance, then no new EIS is required for the subsequent project if all the following conditions are met: 
</P>
<P>(a) The ERR contains a decision based on a finding pursuant to § 58.40 that the proposed project is not a new major Federal action significantly affecting the quality of the human environment. The decision shall include: 
</P>
<P>(1) References to the prior EIS and its evaluation of the environmental factors affecting the proposed subsequent action subject to NEPA; 
</P>
<P>(2) An evaluation of any environmental factors which may not have been previously assessed, or which may have significantly changed; 
</P>
<P>(3) An analysis showing that the proposed project is consistent with the location, use, and density assumptions for the site and with the timing and capacity of the circulation, utility, and other supporting infrastructure assumptions in the prior EIS; 
</P>
<P>(4) Documentation showing that where the previous EIS called for mitigating measures or other corrective action, these are completed to the extent reasonable given the current state of development. 
</P>
<P>(b) The prior final EIS has been filed within five (5) years, and updated as follows: 
</P>
<P>(1) The EIS has been updated to reflect any significant revisions made to the assumptions under which the original EIS was prepared; 
</P>
<P>(2) The EIS has been updated to reflect new environmental issues and data or legislation and implementing regulations which may have significant environmental impact on the project area covered by the prior EIS. 
</P>
<P>(c) There is no litigation pending in connection with the prior EIS, and no final judicial finding of inadequacy of the prior EIS has been made. 


</P>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:1.1.1.1.32.7" TYPE="SUBPART">
<HEAD>Subpart G—Environmental Review Process: Procedures for Draft, Final and Supplemental Environmental Impact Statements</HEAD>


<DIV8 N="§ 58.55" NODE="24:1.1.1.1.32.7.59.1" TYPE="SECTION">
<HEAD>§ 58.55   Notice of intent to prepare an EIS.</HEAD>
<P>As soon as practicable after the responsible entity decides to prepare an EIS, it must publish a NOI/EIS, using the HUD recommended format and disseminate it in the same manner as required by 40 CFR parts 1500 through 1508. 


</P>
</DIV8>


<DIV8 N="§ 58.56" NODE="24:1.1.1.1.32.7.59.2" TYPE="SECTION">
<HEAD>§ 58.56   Scoping process.</HEAD>
<P>The determination on whether or not to hold a scoping meeting will depend on the same circumstances and factors as for the holding of public hearings under § 58.59. The responsible entity must wait at least 15 days after disseminating or publishing the NOI/EIS before holding a scoping meeting. 


</P>
</DIV8>


<DIV8 N="§ 58.57" NODE="24:1.1.1.1.32.7.59.3" TYPE="SECTION">
<HEAD>§ 58.57   Lead agency designation.</HEAD>
<P>If there are several agencies ready to assume the lead role, the responsible entity must make its decision based on the criteria in 40 CFR 1501.5(c). If the responsible entity and a Federal agency are unable to reach agreement, then the responsible entity must notify HUD (or the State, where applicable). HUD (or the State) will assist in obtaining a determination based on the procedure set forth in 40 CFR 1501.5(e). 


</P>
</DIV8>


<DIV8 N="§ 58.59" NODE="24:1.1.1.1.32.7.59.4" TYPE="SECTION">
<HEAD>§ 58.59   Public hearings and meetings.</HEAD>
<P>(a) <I>Factors to consider.</I> In determining whether or not to hold public hearings in accordance with 40 CFR 1506.6, the responsible entity must consider the following factors: 
</P>
<P>(1) The magnitude of the project in terms of economic costs, the geographic area involved, and the uniqueness or size of commitment of resources involved. 
</P>
<P>(2) The degree of interest in or controversy concerning the project. 
</P>
<P>(3) The complexity of the issues and the likelihood that information will be presented at the hearing which will be of assistance to the responsible entity. 
</P>
<P>(4) The extent to which public involvement has been achieved through other means. 
</P>
<P>(b) <I>Procedure.</I> All public hearings must be preceded by a notice of public hearing, which must be published in the local news media or on an appropriate government website that is accessible to individuals with disabilities and provides meaningful access for individuals with Limited English Proficiency 15 days before the hearing date. The Notice must: 
</P>
<P>(1) State the date, time, place, and purpose of the hearing or meeting. 
</P>
<P>(2) Describe the project, its estimated costs, and the project area. 
</P>
<P>(3) State that persons desiring to be heard on environmental issues will be afforded the opportunity to be heard. 
</P>
<P>(4) State the responsible entity's name and address and the name and address of its Certifying Officer. 
</P>
<P>(5) State what documents are available, where they can be obtained, and any charges that may apply. 
</P>
<CITA TYPE="N">[61 FR 19122, Apr. 30, 1996, as amended at 89 FR 30913, Apr. 23, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 58.60" NODE="24:1.1.1.1.32.7.59.5" TYPE="SECTION">
<HEAD>§ 58.60   Preparation and filing of environmental impact statements.</HEAD>
<P>(a) The responsible entity must prepare the draft environmental impact statement (DEIS) and the final environmental impact statements (FEIS) using the current HUD recommended format or its equivalent. 
</P>
<P>(b) The responsible entity must file and distribute the (DEIS) and the (FEIS) in the following manner: 
</P>
<P>(1) Five copies to EPA Headquarters; 
</P>
<P>(2) Five copies to EPA Regional Office; 
</P>
<P>(3) Copies made available in the responsible entity's and the recipient's office; 
</P>
<P>(4) Copies or summaries made available to persons who request them; and 
</P>
<P>(5) FEIS only—one copy to State, HUD Field Office, and HUD Headquarters library. 
</P>
<P>(c) The responsible entity may request waivers from the time requirements specified for the draft and final EIS as prescribed in 40 CFR 1506.6. 
</P>
<P>(d) When substantial changes are proposed in a project or when significant new circumstances or information becomes available during an environmental review, the recipient may prepare a supplemental EIS as prescribed in 40 CFR 1502.9. 
</P>
<P>(e) The responsible entity must prepare a Record of Decision (ROD) as prescribed in 40 CFR 1505.2. 
</P>
<CITA TYPE="N">[61 FR 19122, Apr. 30, 1996, as amended at 63 FR 15272, Mar. 30, 1998]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="H" NODE="24:1.1.1.1.32.8" TYPE="SUBPART">
<HEAD>Subpart H—Release of Funds for Particular Projects</HEAD>


<DIV8 N="§ 58.70" NODE="24:1.1.1.1.32.8.59.1" TYPE="SECTION">
<HEAD>§ 58.70   Notice of intent to request release of funds.</HEAD>
<P>The NOI/RROF must be disseminated and/or published in the manner prescribed by § 58.43 and § 58.45 before the certification is signed by the responsible entity. 


</P>
</DIV8>


<DIV8 N="§ 58.71" NODE="24:1.1.1.1.32.8.59.2" TYPE="SECTION">
<HEAD>§ 58.71   Request for release of funds and certification.</HEAD>
<P>(a) The RROF and certification shall be sent to the appropriate HUD Field Office (or the State, if applicable), except as provided in paragraph (b) of this section. This request shall be executed by the Certifying Officer. The request shall describe the specific project and activities covered by the request and contain the certification required under the applicable statute cited in § 58.1(b). The RROF and certification must be in a form specified by HUD. 
</P>
<P>(b) When the responsible entity is conducting an environmental review on behalf of a recipient, as provided for in § 58.10, the recipient must provide the responsible entity with all available project and environmental information and refrain from undertaking any physical activities or choice limiting actions until HUD (or the State, if applicable) has approved its request for release of funds. The certification form executed by the responsible entity's certifying officer shall be sent to the recipient that is to receive the assistance along with a description of any special environmental conditions that must be adhered to in carrying out the project. The recipient is to submit the RROF and the certification of the responsible entity to HUD (or the State, if applicable) requesting the release of funds. The recipient must agree to abide by the special conditions, procedures and requirements of the environmental review, and to advise the responsible entity of any proposed change in the scope of the project or any change in environmental conditions. 
</P>
<P>(c) If the responsible entity determines that some of the activities are exempt under applicable provisions of this part, the responsible entity shall advise the recipient that it may commit funds for these activities as soon as programmatic authorization is received. This finding shall be documented in the ERR maintained by the responsible entity and in the recipient's project files. 


</P>
</DIV8>


<DIV8 N="§ 58.72" NODE="24:1.1.1.1.32.8.59.3" TYPE="SECTION">
<HEAD>§ 58.72   HUD or State actions on RROFs and certifications.</HEAD>
<P>The actions which HUD (or a State) may take with respect to a recipient's environmental certification and RROF are as follows: 
</P>
<P>(a) In the absence of any receipt of objection to the contrary, except as provided in paragraph (b) of this section, HUD (or the State) will assume the validity of the certification and RROF and will approve these documents after expiration of the 15-day period prescribed by statute. 
</P>
<P>(b) HUD (or the state) may disapprove a certification and RROF if it has knowledge that the responsible entity or other participants in the development process have not complied with the items in § 58.75, or that the RROF and certification are inaccurate. 
</P>
<P>(c) In cases in which HUD has approved a certification and RROF but subsequently learns (e.g., through monitoring) that the recipient violated § 58.22 or the recipient or responsible entity otherwise failed to comply with a clearly applicable environmental authority, HUD shall impose appropriate remedies and sanctions in accord with the law and regulations for the program under which the violation was found. 
</P>
<CITA TYPE="N">[61 FR 19122, Apr. 30, 1996, as amended at 68 FR 56130, Sept. 29, 2003]


</CITA>
</DIV8>


<DIV8 N="§ 58.73" NODE="24:1.1.1.1.32.8.59.4" TYPE="SECTION">
<HEAD>§ 58.73   Objections to release of funds.</HEAD>
<P>HUD (or the State) will not approve the ROF for any project before 15 calendar days have elapsed from the time of receipt of the RROF and the certification or from the time specified in the notice published pursuant to § 58.70, whichever is later. Any person or agency may object to a recipient's RROF and the related certification. However, the objections must meet the conditions and procedures set forth in subpart H of this part. HUD (or the State) can refuse the RROF and certification on any grounds set forth in § 58.75. All decisions by HUD (or the State) regarding the RROF and the certification shall be final. 


</P>
</DIV8>


<DIV8 N="§ 58.74" NODE="24:1.1.1.1.32.8.59.5" TYPE="SECTION">
<HEAD>§ 58.74   Time for objecting.</HEAD>
<P>All objections must be received by HUD (or the State) within 15 days from the time HUD (or the State) receives the recipient's RROF and the related certification, or within the time period specified in the notice, whichever is later. 


</P>
</DIV8>


<DIV8 N="§ 58.75" NODE="24:1.1.1.1.32.8.59.6" TYPE="SECTION">
<HEAD>§ 58.75   Permissible bases for objections.</HEAD>
<P>HUD (or the State), will consider objections claiming a responsible entity's noncompliance with this part based only on any of the following grounds: 
</P>
<P>(a) The certification was not in fact executed by the responsible entity's Certifying Officer. 
</P>
<P>(b) The responsible entity has failed to make one of the two findings pursuant to § 58.40 or to make the written determination required by § 58.35, § 58.47 or § 58.53 for the project, as applicable. 
</P>
<P>(c) The responsible entity has omitted one or more of the steps set forth at subpart E of this part for the preparation, publication and completion of an EA. 
</P>
<P>(d) The responsible entity has omitted one or more of the steps set forth at subparts F and G of this part for the conduct, preparation, publication and completion of an EIS. 
</P>
<P>(e) The recipient or other participants in the development process have committed funds, incurred costs or undertaken activities not authorized by this part before release of funds and approval of the environmental certification by HUD (or the state). 
</P>
<P>(f) Another Federal agency acting pursuant to 40 CFR part 1504 has submitted a written finding that the project is unsatisfactory from the standpoint of environmental quality. 
</P>
<CITA TYPE="N">[61 FR 19122, Apr. 30, 1996, as amended at 68 FR 56130, Sept. 29, 2003]


</CITA>
</DIV8>


<DIV8 N="§ 58.76" NODE="24:1.1.1.1.32.8.59.7" TYPE="SECTION">
<HEAD>§ 58.76   Procedure for objections.</HEAD>
<P>A person or agency objecting to a responsible entity's RROF and certification shall submit objections in writing to HUD (or the State). The objections shall: 
</P>
<P>(a) Include the name, address and telephone number of the person or agency submitting the objection, and be signed by the person or authorized official of an agency. 
</P>
<P>(b) Be dated when signed. 
</P>
<P>(c) Describe the basis for objection and the facts or legal authority supporting the objection. 
</P>
<P>(d) State when a copy of the objection was mailed or delivered to the responsible entity's Certifying Officer. 


</P>
</DIV8>


<DIV8 N="§ 58.77" NODE="24:1.1.1.1.32.8.59.8" TYPE="SECTION">
<HEAD>§ 58.77   Effect of approval of certification.</HEAD>
<P>(a) <I>Responsibilities of HUD and States.</I> HUD's (or, where applicable, the State's) approval of the certification shall be deemed to satisfy the responsibilities of the Secretary under NEPA and related provisions of law cited at § 58.5 insofar as those responsibilities relate to the release of funds as authorized by the applicable provisions of law cited in § 58.1(b). 
</P>
<P>(b) <I>Public and agency redress.</I> Persons and agencies seeking redress in relation to environmental reviews covered by an approved certification shall deal with the responsible entity and not with HUD. It is HUD's policy to refer all inquiries and complaints to the responsible entity and its Certifying Officer. Similarly, the State (where applicable) may direct persons and agencies seeking redress in relation to environmental reviews covered by an approved certification to deal with the responsible entity, and not the State, and may refer inquiries and complaints to the responsible entity and its Certifying Officer. Remedies for noncompliance are set forth in program regulations. 
</P>
<P>(c) <I>Implementation of environmental review decisions.</I> Projects of a recipient will require post-review monitoring and other inspection and enforcement actions by the recipient and the State or HUD (using procedures provided for in program regulations) to assure that decisions adopted through the environmental review process are carried out during project development and implementation. 
</P>
<P>(d) <I>Responsibility for monitoring and training.</I> (1) At least once every three years, HUD intends to conduct in-depth monitoring and exercise quality control (through training and consultation) over the environmental activities performed by responsible entities under this part. Limited monitoring of these environmental activities will be conducted during each program monitoring site visit. If through limited or in-depth monitoring of these environmental activities or by other means, HUD becomes aware of any environmental deficiencies, HUD may take one or more of the following actions: 
</P>
<P>(i) In the case of problems found during limited monitoring, HUD may schedule in-depth monitoring at an earlier date or may schedule in-depth monitoring more frequently; 
</P>
<P>(ii) HUD may require attendance by staff of the responsible entity at HUD-sponsored or approved training, which will be provided periodically at various locations around the country; 
</P>
<P>(iii) HUD may refuse to accept the certifications of environmental compliance on subsequent grants; 
</P>
<P>(iv) HUD may suspend or terminate the responsible entity's assumption of the environmental review responsibility; 
</P>
<P>(v) HUD may initiate sanctions, corrective actions, or other remedies specified in program regulations or agreements or contracts with the recipient. 
</P>
<P>(2) HUD's responsibilities and action under paragraph (d)(1) of this section shall not be construed to limit or reduce any responsibility assumed by a responsible entity with respect to any particular release of funds under this part. Whether or not HUD takes action under paragraph (d)(1) of this section, the Certifying Officer remains the responsible Federal official under § 58.13 with respect to projects and activities for which the Certifying Officer has submitted a certification under this part. 


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="60" NODE="24:1.1.1.1.33" TYPE="PART">
<HEAD>PART 60—PROTECTION OF HUMAN SUBJECTS
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>5 U.S.C. 301; 42 U.S.C. 300v-1(b) and 3535(d).


</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>82 FR 7271, Jan. 19, 2017, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 60.101" NODE="24:1.1.1.1.33.0.59.1" TYPE="SECTION">
<HEAD>§ 60.101   To what does this policy apply?</HEAD>
<P>(a) Except as detailed in § 60.104, this policy applies to all research involving human subjects conducted, supported, or otherwise subject to regulation by any Federal department or agency that takes appropriate administrative action to make the policy applicable to such research. This includes research conducted by Federal civilian employees or military personnel, except that each department or agency head may adopt such procedural modifications as may be appropriate from an administrative standpoint. It also includes research conducted, supported, or otherwise subject to regulation by the Federal Government outside the United States. Institutions that are engaged in research described in this paragraph and institutional review boards (IRBs) reviewing research that is subject to this policy must comply with this policy.
</P>
<P>(b) [Reserved]
</P>
<P>(c) Department or agency heads retain final judgment as to whether a particular activity is covered by this policy and this judgment shall be exercised consistent with the ethical principles of the Belmont Report.
<SU>62</SU>
<FTREF/>
</P>
<FTNT>
<P>
<SU>62</SU> The National Commission for the Protection of Human Subjects of Biomedical and Behavioral Research.- Belmont Report. Washington, DC: U.S. Department of Health and Human Services. 1979.</P></FTNT>
<P>(d) Department or agency heads may require that specific research activities or classes of research activities conducted, supported, or otherwise subject to regulation by the Federal department or agency but not otherwise covered by this policy comply with some or all of the requirements of this policy.
</P>
<P>(e) Compliance with this policy requires compliance with pertinent federal laws or regulations that provide additional protections for human subjects.
</P>
<P>(f) This policy does not affect any state or local laws or regulations (including tribal law passed by the official governing body of an American Indian or Alaska Native tribe) that may otherwise be applicable and that provide additional protections for human subjects.
</P>
<P>(g) This policy does not affect any foreign laws or regulations that may otherwise be applicable and that provide additional protections to human subjects of research.
</P>
<P>(h) When research covered by this policy takes place in foreign countries, procedures normally followed in the foreign countries to protect human subjects may differ from those set forth in this policy. In these circumstances, if a department or agency head determines that the procedures prescribed by the institution afford protections that are at least equivalent to those provided in this policy, the department or agency head may approve the substitution of the foreign procedures in lieu of the procedural requirements provided in this policy. Except when otherwise required by statute, Executive Order, or the department or agency head, notices of these actions as they occur will be published in the <E T="04">Federal Register</E> or will be otherwise published as provided in department or agency procedures.
</P>
<P>(i) Unless otherwise required by law, department or agency heads may waive the applicability of some or all of the provisions of this policy to specific research activities or classes of research activities otherwise covered by this policy, provided the alternative procedures to be followed are consistent with the principles of the Belmont Report.
<SU>63</SU>
<FTREF/> Except when otherwise required by statute or Executive Order, the department or agency head shall forward advance notices of these actions to the Office for Human Research Protections, Department of Health and Human Services (HHS), or any successor office, or to the equivalent office within the appropriate Federal department or agency, and shall also publish them in the <E T="04">Federal Register</E> or in such other manner as provided in department or agency procedures. The waiver notice must include a statement that identifies the conditions under which the waiver will be applied and a justification as to why the waiver is appropriate for the research, including how the decision is consistent with the principles of the Belmont Report.
</P>
<FTNT>
<P>
<SU>63</SU> <I>Id.</I></P></FTNT>
<P>(j) Federal guidance on the requirements of this policy shall be issued only after consultation, for the purpose of harmonization (to the extent appropriate), with other Federal departments and agencies that have adopted this policy, unless such consultation is not feasible.
</P>
<P>(k) [Reserved]
</P>
<P>(l) Compliance dates and transition provisions:
</P>
<P>(1) <I>Pre-2018 Requirements.</I> For purposes of this section, the <I>pre-2018 Requirements</I> means this subpart as published in the 2016 edition of the Code of Federal Regulations.
</P>
<P>(2) <I>2018 Requirements.</I> For purposes of this section, the <I>2018 Requirements</I> means the Federal Policy for the Protection of Human Subjects requirements contained in this part. The general compliance date for the 2018 Requirements is January 21, 2019. The compliance date for § 60.114(b) (cooperative research) of the 2018 Requirements is January 20, 2020.
</P>
<P>(3) <I>Research subject to pre-2018 requirements.</I> The pre-2018 Requirements shall apply to the following research, unless the research is transitioning to comply with the 2018 Requirements in accordance with paragraph (l)(4) of this section:
</P>
<P>(i) Research initially approved by an IRB under the pre-2018 Requirements before January 21, 2019;
</P>
<P>(ii) Research for which IRB review was waived pursuant to § 60.101(i) of the pre-2018 Requirements before January 21, 2019; and
</P>
<P>(iii) Research for which a determination was made that the research was exempt under § 60.101(b) of the pre-2018 Requirements before January 21, 2019.
</P>
<P>(4) <I>Transitioning research.</I> If, on or after July 19, 2018, an institution planning or engaged in research otherwise covered by paragraph (l)(3) of this section determines that such research instead will transition to comply with the 2018 Requirements, the institution or an IRB must document and date such determination.
</P>
<P>(i) If the determination to transition is documented between July 19, 2018, and January 20, 2019, the research shall:
</P>
<P>(A) Beginning on the date of such documentation through January 20, 2019, comply with the pre-2018 Requirements, except that the research shall comply with the following:
</P>
<P>(<I>1</I>) Section 60.102(l) of the 2018 Requirements (definition of research) (instead of § 60.102(d) of the pre-2018 Requirements);
</P>
<P>(<I>2</I>) Section 60.103(d) of the 2018 Requirements (revised certification requirement that eliminates IRB review of application or proposal) (instead of § 60.103(f) of the pre-2018 Requirements); and
</P>
<P>(<I>3</I>) Section 60.109(f)(1)(i) and (iii) of the 2018 Requirements (exceptions to mandated continuing review) (instead of § 60.103(b), as related to the requirement for continuing review, and in addition to § 60.109, of the pre-2018 Requirements); and
</P>
<P>(B) Beginning on January 21, 2019, comply with the 2018 Requirements.
</P>
<P>(ii) If the determination to transition is documented on or after January 21, 2019, the research shall, beginning on the date of such documentation, comply with the 2018 Requirements.
</P>
<P>(5) <I>Research subject to 2018 Requirements.</I> The 2018 Requirements shall apply to the following research:
</P>
<P>(i) Research initially approved by an IRB on or after January 21, 2019;
</P>
<P>(ii) Research for which IRB review is waived pursuant to paragraph (i) of this section on or after January 21, 2019; and
</P>
<P>(iii) Research for which a determination is made that the research is exempt on or after January 21, 2019.
</P>
<P>(m) Severability: Any provision of this part held to be invalid or unenforceable by its terms, or as applied to any person or circumstance, shall be construed so as to continue to give maximum effect to the provision permitted by law, unless such holding shall be one of utter invalidity or unenforceability, in which event the provision shall be severable from this part and shall not affect the remainder thereof or the application of the provision to other persons not similarly situated or to other dissimilar circumstances.
</P>
<CITA TYPE="N">[82 FR 7271, Jan. 19, 2017, as amended at 83 FR 3591, Jan. 28, 2018; 83 FR 28514, June 19, 2018]


</CITA>
</DIV8>


<DIV8 N="§ 60.102" NODE="24:1.1.1.1.33.0.59.2" TYPE="SECTION">
<HEAD>§ 60.102   Definitions for purposes of this policy.</HEAD>
<P>(a) <I>Certification</I> means the official notification by the institution to the supporting Federal department or agency component, in accordance with the requirements of this policy, that a research project or activity involving human subjects has been reviewed and approved by an IRB in accordance with an approved assurance.
</P>
<P>(b) <I>Clinical trial</I> means a research study in which one or more human subjects are prospectively assigned to one or more interventions (which may include placebo or other control) to evaluate the effects of the interventions on biomedical or behavioral health-related outcomes.
</P>
<P>(c) <I>Department or agency head</I> means the head of any Federal department or agency, for example, the Secretary of HHS, and any other officer or employee of any Federal department or agency to whom the authority provided by these regulations to the department or agency head has been delegated.
</P>
<P>(d) <I>Federal department or agency</I> refers to a federal department or agency (the department or agency itself rather than its bureaus, offices or divisions) that takes appropriate administrative action to make this policy applicable to the research involving human subjects it conducts, supports, or otherwise regulates (<I>e.g.,</I> the U.S. Department of Health and Human Services, the U.S. Department of Defense, or the Central Intelligence Agency).
</P>
<P>(e)(1) <I>Human subject</I> means a living individual about whom an investigator (whether professional or student) conducting research:
</P>
<P>(i) Obtains information or biospecimens through intervention or interaction with the individual, and uses, studies, or analyzes the information or biospecimens; or (ii) Obtains, uses, studies, analyzes, or generates identifiable private information or identifiable biospecimens.
</P>
<P>(2) <I>Intervention</I> includes both physical procedures by which information or biospecimens are gathered (<I>e.g.,</I> venipuncture) and manipulations of the subject or the subject's environment that are performed for research purposes.
</P>
<P>(3) <I>Interaction</I> includes communication or interpersonal contact between investigator and subject.
</P>
<P>(4) <I>Private information</I> includes information about behavior that occurs in a context in which an individual can reasonably expect that no observation or recording is taking place, and information that has been provided for specific purposes by an individual and that the individual can reasonably expect will not be made public (<I>e.g.,</I> a medical record).
</P>
<P>(5) <I>Identifiable private information</I> is private information for which the identity of the subject is or may readily be ascertained by the investigator or associated with the information.
</P>
<P>(6) <I>An identifiable biospecimen</I> is a biospecimen for which the identity of the subject is or may readily be ascertained by the investigator or associated with the biospecimen.
</P>
<P>(7) Federal departments or agencies implementing this policy shall:
</P>
<P>(i) Upon consultation with appropriate experts (including experts in data matching and re-identification), reexamine the meaning of “identifiable private information,” as defined in paragraph (e)(5) of this section, and “identifiable biospecimen,” as defined in paragraph (e)(6) of this section. This reexamination shall take place within 1 year and regularly thereafter (at least every 4 years). This process will be conducted by collaboration among the Federal departments and agencies implementing this policy. If appropriate and permitted by law, such Federal departments and agencies may alter the interpretation of these terms, including through the use of guidance.
</P>
<P>(ii) Upon consultation with appropriate experts, assess whether there are analytic technologies or techniques that should be considered by investigators to generate “identifiable private information,” as defined in paragraph (e)(5) of this section, or an “identifiable biospecimen,” as defined in paragraph (e)(6) of this section. This assessment shall take place within 1 year and regularly thereafter (at least every 4 years). This process will be conducted by collaboration among the Federal departments and agencies implementing this policy. Any such technologies or techniques will be included on a list of technologies or techniques that produce identifiable private information or identifiable biospecimens. This list will be published in the <E T="04">Federal Register</E> after notice and an opportunity for public comment. The Secretary, HHS, shall maintain the list on a publicly accessible Web site.
</P>
<P>(f) <I>Institution</I> means any public or private entity, or department or agency (including federal, state, and other agencies).
</P>
<P>(g) <I>IRB</I> means an institutional review board established in accord with and for the purposes expressed in this policy.
</P>
<P>(h) <I>IRB approval</I> means the determination of the IRB that the research has been reviewed and may be conducted at an institution within the constraints set forth by the IRB and by other institutional and federal requirements.
</P>
<P>(i) <I>Legally authorized representative</I> means an individual or judicial or other body authorized under applicable law to consent on behalf of a prospective subject to the subject's participation in the procedure(s) involved in the research. If there is no applicable law addressing this issue, <I>legally authorized representative</I> means an individual recognized by institutional policy as acceptable for providing consent in the nonresearch context on behalf of the prospective subject to the subject's participation in the procedure(s) involved in the research.
</P>
<P>(j) <I>Minimal risk</I> means that the probability and magnitude of harm or discomfort anticipated in the research are not greater in and of themselves than those ordinarily encountered in daily life or during the performance of routine physical or psychological examinations or tests.
</P>
<P>(k) <I>Public health authority</I> means an agency or authority of the United States, a state, a territory, a political subdivision of a state or territory, an Indian tribe, or a foreign government, or a person or entity acting under a grant of authority from or contract with such public agency, including the employees or agents of such public agency or its contractors or persons or entities to whom it has granted authority, that is responsible for public health matters as part of its official mandate.
</P>
<P>(l) <I>Research</I> means a systematic investigation, including research development, testing, and evaluation, designed to develop or contribute to generalizable knowledge. Activities that meet this definition constitute research for purposes of this policy, whether or not they are conducted or supported under a program that is considered research for other purposes. For example, some demonstration and service programs may include research activities. For purposes of this part, the following activities are deemed not to be research:
</P>
<P>(1) Scholarly and journalistic activities (<I>e.g.,</I> oral history, journalism, biography, literary criticism, legal research, and historical scholarship), including the collection and use of information, that focus directly on the specific individuals about whom the information is collected.
</P>
<P>(2) Public health surveillance activities, including the collection and testing of information or biospecimens, conducted, supported, requested, ordered, required, or authorized by a public health authority. Such activities are limited to those necessary to allow a public health authority to identify, monitor, assess, or investigate potential public health signals, onsets of disease outbreaks, or conditions of public health importance (including trends, signals, risk factors, patterns in diseases, or increases in injuries from using consumer products). Such activities include those associated with providing timely situational awareness and priority setting during the course of an event or crisis that threatens public health (including natural or man-made disasters).
</P>
<P>(3) Collection and analysis of information, biospecimens, or records by or for a criminal justice agency for activities authorized by law or court order solely for criminal justice or criminal investigative purposes.
</P>
<P>(4) Authorized operational activities (as determined by each agency) in support of intelligence, homeland security, defense, or other national security missions.
</P>
<P>(m) <I>Written,</I> or <I>in writing,</I> for purposes of this part, refers to writing on a tangible medium (<I>e.g.,</I> paper) or in an electronic format.


</P>
</DIV8>


<DIV8 N="§ 60.103" NODE="24:1.1.1.1.33.0.59.3" TYPE="SECTION">
<HEAD>§ 60.103   Assuring compliance with this policy—research conducted or supported by any Federal department or agency.</HEAD>
<P>(a) Each institution engaged in research that is covered by this policy, with the exception of research eligible for exemption under § 60.104, and that is conducted or supported by a Federal department or agency, shall provide written assurance satisfactory to the department or agency head that it will comply with the requirements of this policy. In lieu of requiring submission of an assurance, individual department or agency heads shall accept the existence of a current assurance, appropriate for the research in question, on file with the Office for Human Research Protections, HHS, or any successor office, and approved for Federal-wide use by that office. When the existence of an HHS-approved assurance is accepted in lieu of requiring submission of an assurance, reports (except certification) required by this policy to be made to department and agency heads shall also be made to the Office for Human Research Protections, HHS, or any successor office. Federal departments and agencies will conduct or support research covered by this policy only if the institution has provided an assurance that it will comply with the requirements of this policy, as provided in this section, and only if the institution has certified to the department or agency head that the research has been reviewed and approved by an IRB (if such certification is required by § 60.103(d)).
</P>
<P>(b) The assurance shall be executed by an individual authorized to act for the institution and to assume on behalf of the institution the obligations imposed by this policy and shall be filed in such form and manner as the department or agency head prescribes.
</P>
<P>(c) The department or agency head may limit the period during which any assurance shall remain effective or otherwise condition or restrict the assurance.
</P>
<P>(d) Certification is required when the research is supported by a Federal department or agency and not otherwise waived under § 60.101(i) or exempted under § 60.104. For such research, institutions shall certify that each proposed research study covered by the assurance and this section has been reviewed and approved by the IRB. Such certification must be submitted as prescribed by the Federal department or agency component supporting the research. Under no condition shall research covered by this section be initiated prior to receipt of the certification that the research has been reviewed and approved by the IRB.
</P>
<P>(e) For nonexempt research involving human subjects covered by this policy (or exempt research for which limited IRB review takes place pursuant to § 60.104(d)(2)(iii), (d)(3)(i)(C), or (d)(7) or (8)) that takes place at an institution in which IRB oversight is conducted by an IRB that is not operated by the institution, the institution and the organization operating the IRB shall document the institution's reliance on the IRB for oversight of the research and the responsibilities that each entity will undertake to ensure compliance with the requirements of this policy (<I>e.g.,</I> in a written agreement between the institution and the IRB, by implementation of an institution-wide policy directive providing the allocation of responsibilities between the institution and an IRB that is not affiliated with the institution, or as set forth in a research protocol).
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under Control Number 0990-0260)


</APPRO>
</DIV8>


<DIV8 N="§ 60.104" NODE="24:1.1.1.1.33.0.59.4" TYPE="SECTION">
<HEAD>§ 60.104   Exempt research.</HEAD>
<P>(a) Unless otherwise required by law or by department or agency heads, research activities in which the only involvement of human subjects will be in one or more of the categories in paragraph (d) of this section are exempt from the requirements of this policy, except that such activities must comply with the requirements of this section and as specified in each category.
</P>
<P>(b) Use of the exemption categories for research subject to the requirements of subparts B, C, and D: Application of the exemption categories to research subject to the requirements of 45 CFR part 46, subparts B, C, and D, is as follows:
</P>
<P>(1) <I>Subpart B.</I> Each of the exemptions at this section may be applied to research subject to subpart B if the conditions of the exemption are met.
</P>
<P>(2) <I>Subpart C.</I> The exemptions at this section do not apply to research subject to subpart C, except for research aimed at involving a broader subject population that only incidentally includes prisoners.
</P>
<P>(3) <I>Subpart D.</I> The exemptions at paragraphs (d)(1), (4), (5), (6), (7), and (8) of this section may be applied to research subject to subpart D if the conditions of the exemption are met. Paragraphs (d)(2)(i) and (ii) of this section only may apply to research subject to subpart D involving educational tests or the observation of public behavior when the investigator(s) do not participate in the activities being observed. Paragraph (d)(2)(iii) of this section may not be applied to research subject to subpart D.
</P>
<P>(c) [Reserved]
</P>
<P>(d) Except as described in paragraph (a) of this section, the following categories of human subjects research are exempt from this policy:
</P>
<P>(1) Research, conducted in established or commonly accepted educational settings, that specifically involves normal educational practices that are not likely to adversely impact students' opportunity to learn required educational content or the assessment of educators who provide instruction. This includes most research on regular and special education instructional strategies, and research on the effectiveness of or the comparison among instructional techniques, curricula, or classroom management methods.
</P>
<P>(2) Research that only includes interactions involving educational tests (cognitive, diagnostic, aptitude, achievement), survey procedures, interview procedures, or observation of public behavior (including visual or auditory recording) if at least one of the following criteria is met:
</P>
<P>(i) The information obtained is recorded by the investigator in such a manner that the identity of the human subjects cannot readily be ascertained, directly or through identifiers linked to the subjects;
</P>
<P>(ii) Any disclosure of the human subjects' responses outside the research would not reasonably place the subjects at risk of criminal or civil liability or be damaging to the subjects' financial standing, employability, educational advancement, or reputation; or
</P>
<P>(iii) The information obtained is recorded by the investigator in such a manner that the identity of the human subjects can readily be ascertained, directly or through identifiers linked to the subjects, and an IRB conducts a limited IRB review to make the determination required by § 60.111(a)(7).
</P>
<P>(3)(i) Research involving benign behavioral interventions in conjunction with the collection of information from an adult subject through verbal or written responses (including data entry) or audiovisual recording if the subject prospectively agrees to the intervention and information collection and at least one of the following criteria is met:
</P>
<P>(A) The information obtained is recorded by the investigator in such a manner that the identity of the human subjects cannot readily be ascertained, directly or through identifiers linked to the subjects;
</P>
<P>(B) Any disclosure of the human subjects' responses outside the research would not reasonably place the subjects at risk of criminal or civil liability or be damaging to the subjects' financial standing, employability, educational advancement, or reputation; or
</P>
<P>(C) The information obtained is recorded by the investigator in such a manner that the identity of the human subjects can readily be ascertained, directly or through identifiers linked to the subjects, and an IRB conducts a limited IRB review to make the determination required by § 60.111(a)(7).
</P>
<P>(ii) For the purpose of this provision, benign behavioral interventions are brief in duration, harmless, painless, not physically invasive, not likely to have a significant adverse lasting impact on the subjects, and the investigator has no reason to think the subjects will find the interventions offensive or embarrassing. Provided all such criteria are met, examples of such benign behavioral interventions would include having the subjects play an online game, having them solve puzzles under various noise conditions, or having them decide how to allocate a nominal amount of received cash between themselves and someone else.
</P>
<P>(iii) If the research involves deceiving the subjects regarding the nature or purposes of the research, this exemption is not applicable unless the subject authorizes the deception through a prospective agreement to participate in research in circumstances in which the subject is informed that he or she will be unaware of or misled regarding the nature or purposes of the research.
</P>
<P>(4) Secondary research for which consent is not required: Secondary research uses of identifiable private information or identifiable biospecimens, if at least one of the following criteria is met:
</P>
<P>(i) The identifiable private information or identifiable biospecimens are publicly available;
</P>
<P>(ii) Information, which may include information about biospecimens, is recorded by the investigator in such a manner that the identity of the human subjects cannot readily be ascertained directly or through identifiers linked to the subjects, the investigator does not contact the subjects, and the investigator will not re-identify subjects;
</P>
<P>(iii) The research involves only information collection and analysis involving the investigator's use of identifiable health information when that use is regulated under 45 CFR parts 160 and 164, subparts A and E, for the purposes of “health care operations” or “research” as those terms are defined at 45 CFR 164.501 or for “public health activities and purposes” as described under 45 CFR 164.512(b); or
</P>
<P>(iv) The research is conducted by, or on behalf of, a Federal department or agency using government-generated or government-collected information obtained for nonresearch activities, if the research generates identifiable private information that is or will be maintained on information technology that is subject to and in compliance with section 208(b) of the E-Government Act of 2002, 44 U.S.C. 3501 note, if all of the identifiable private information collected, used, or generated as part of the activity will be maintained in systems of records subject to the Privacy Act of 1974, 5 U.S.C. 552a, and, if applicable, the information used in the research was collected subject to the Paperwork Reduction Act of 1995, 44 U.S.C. 3501 <I>et seq.</I>
</P>
<P>(5) Research and demonstration projects that are conducted or supported by a Federal department or agency, or otherwise subject to the approval of department or agency heads (or the approval of the heads of bureaus or other subordinate agencies that have been delegated authority to conduct the research and demonstration projects), and that are designed to study, evaluate, improve, or otherwise examine public benefit or service programs, including procedures for obtaining benefits or services under those programs, possible changes in or alternatives to those programs or procedures, or possible changes in methods or levels of payment for benefits or services under those programs. Such projects include, but are not limited to, internal studies by Federal employees, and studies under contracts or consulting arrangements, cooperative agreements, or grants. Exempt projects also include waivers of otherwise mandatory requirements using authorities such as sections 1115 and 1115A of the Social Security Act, as amended.
</P>
<P>(i) Each Federal department or agency conducting or supporting the research and demonstration projects must establish, on a publicly accessible Federal Web site or in such other manner as the department or agency head may determine, a list of the research and demonstration projects that the Federal department or agency conducts or supports under this provision. The research or demonstration project must be published on this list prior to commencing the research involving human subjects.
</P>
<P>(ii) [Reserved]
</P>
<P>(6) Taste and food quality evaluation and consumer acceptance studies:
</P>
<P>(i) If wholesome foods without additives are consumed, or
</P>
<P>(ii) If a food is consumed that contains a food ingredient at or below the level and for a use found to be safe, or agricultural chemical or environmental contaminant at or below the level found to be safe, by the Food and Drug Administration or approved by the Environmental Protection Agency or the Food Safety and Inspection Service of the U.S. Department of Agriculture.
</P>
<P>(7) Storage or maintenance for secondary research for which broad consent is required: Storage or maintenance of identifiable private information or identifiable biospecimens for potential secondary research use if an IRB conducts a limited IRB review and makes the determinations required by § 60.111(a)(8).
</P>
<P>(8) Secondary research for which broad consent is required: Research involving the use of identifiable private information or identifiable biospecimens for secondary research use, if the following criteria are met:
</P>
<P>(i) Broad consent for the storage, maintenance, and secondary research use of the identifiable private information or identifiable biospecimens was obtained in accordance with § 60.116(a)(1) through (4), (a)(6), and (d);
</P>
<P>(ii) Documentation of informed consent or waiver of documentation of consent was obtained in accordance with § 60.117;
</P>
<P>(iii) An IRB conducts a limited IRB review and makes the determination required by § 60.111(a)(7) and makes the determination that the research to be conducted is within the scope of the broad consent referenced in paragraph (d)(8)(i) of this section; and (iv) The investigator does not include returning individual research results to subjects as part of the study plan. This provision does not prevent an investigator from abiding by any legal requirements to return individual research results.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under Control Number 0990-0260)


</APPRO>
</DIV8>


<DIV8 N="§§ 60.105-60.106" NODE="24:1.1.1.1.33.0.59.5" TYPE="SECTION">
<HEAD>§§ 60.105-60.106   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 60.107" NODE="24:1.1.1.1.33.0.59.6" TYPE="SECTION">
<HEAD>§ 60.107   IRB membership.</HEAD>
<P>(a) Each IRB shall have at least five members, with varying backgrounds to promote complete and adequate review of research activities commonly conducted by the institution. The IRB shall be sufficiently qualified through the experience and expertise of its members (professional competence), and the diversity of its members, including race, gender, and cultural backgrounds and sensitivity to such issues as community attitudes, to promote respect for its advice and counsel in safeguarding the rights and welfare of human subjects. The IRB shall be able to ascertain the acceptability of proposed research in terms of institutional commitments (including policies and resources) and regulations, applicable law, and standards of professional conduct and practice. The IRB shall therefore include persons knowledgeable in these areas. If an IRB regularly reviews research that involves a category of subjects that is vulnerable to coercion or undue influence, such as children, prisoners, individuals with impaired decision-making capacity, or economically or educationally disadvantaged persons, consideration shall be given to the inclusion of one or more individuals who are knowledgeable about and experienced in working with these categories of subjects.
</P>
<P>(b) Each IRB shall include at least one member whose primary concerns are in scientific areas and at least one member whose primary concerns are in nonscientific areas.
</P>
<P>(c) Each IRB shall include at least one member who is not otherwise affiliated with the institution and who is not part of the immediate family of a person who is affiliated with the institution.
</P>
<P>(d) No IRB may have a member participate in the IRB's initial or continuing review of any project in which the member has a conflicting interest, except to provide information requested by the IRB.
</P>
<P>(e) An IRB may, in its discretion, invite individuals with competence in special areas to assist in the review of issues that require expertise beyond or in addition to that available on the IRB. These individuals may not vote with the IRB.


</P>
</DIV8>


<DIV8 N="§ 60.108" NODE="24:1.1.1.1.33.0.59.7" TYPE="SECTION">
<HEAD>§ 60.108   IRB functions and operations.</HEAD>
<P>(a) In order to fulfill the requirements of this policy each IRB shall:
</P>
<P>(1) Have access to meeting space and sufficient staff to support the IRB's review and recordkeeping duties;
</P>
<P>(2) Prepare and maintain a current list of the IRB members identified by name; earned degrees; representative capacity; indications of experience such as board certifications or licenses sufficient to describe each member's chief anticipated contributions to IRB deliberations; and any employment or other relationship between each member and the institution, for example, full-time employee, part-time employee, member of governing panel or board, stockholder, paid or unpaid consultant;
</P>
<P>(3) Establish and follow written procedures for:
</P>
<P>(i) Conducting its initial and continuing review of research and for reporting its findings and actions to the investigator and the institution;
</P>
<P>(ii) Determining which projects require review more often than annually and which projects need verification from sources other than the investigators that no material changes have occurred since previous IRB review; and
</P>
<P>(iii) Ensuring prompt reporting to the IRB of proposed changes in a research activity, and for ensuring that investigators will conduct the research activity in accordance with the terms of the IRB approval until any proposed changes have been reviewed and approved by the IRB, except when necessary to eliminate apparent immediate hazards to the subject.
</P>
<P>(4) Establish and follow written procedures for ensuring prompt reporting to the IRB; appropriate institutional officials; the department or agency head; and the Office for Human Research Protections, HHS, or any successor office, or the equivalent office within the appropriate Federal department or agency of
</P>
<P>(i) Any unanticipated problems involving risks to subjects or others or any serious or continuing noncompliance with this policy or the requirements or determinations of the IRB; and
</P>
<P>(ii) Any suspension or termination of IRB approval.
</P>
<P>(b) Except when an expedited review procedure is used (as described in § 60.110), an IRB must review proposed research at convened meetings at which a majority of the members of the IRB are present, including at least one member whose primary concerns are in nonscientific areas. In order for the research to be approved, it shall receive the approval of a majority of those members present at the meeting.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under Control Number 0990-0260)


</APPRO>
</DIV8>


<DIV8 N="§ 60.109" NODE="24:1.1.1.1.33.0.59.8" TYPE="SECTION">
<HEAD>§ 60.109   IRB review of research.</HEAD>
<P>(a) An IRB shall review and have authority to approve, require modifications in (to secure approval), or disapprove all research activities covered by this policy, including exempt research activities under § 60.104 for which limited IRB review is a condition of exemption (under § 60.104(d)(2)(iii), (d)(3)(i)(C), and (d)(7), and (8)).
</P>
<P>(b) An IRB shall require that information given to subjects (or legally authorized representatives, when appropriate) as part of informed consent is in accordance with § 60.116. The IRB may require that information, in addition to that specifically mentioned in § 60.116, be given to the subjects when in the IRB's judgment the information would meaningfully add to the protection of the rights and welfare of subjects.
</P>
<P>(c) An IRB shall require documentation of informed consent or may waive documentation in accordance with § 60.117.
</P>
<P>(d) An IRB shall notify investigators and the institution in writing of its decision to approve or disapprove the proposed research activity, or of modifications required to secure IRB approval of the research activity. If the IRB decides to disapprove a research activity, it shall include in its written notification a statement of the reasons for its decision and give the investigator an opportunity to respond in person or in writing.
</P>
<P>(e) An IRB shall conduct continuing review of research requiring review by the convened IRB at intervals appropriate to the degree of risk, not less than once per year, except as described in § 60.109(f).
</P>
<P>(f)(1) Unless an IRB determines otherwise, continuing review of research is not required in the following circumstances:
</P>
<P>(i) Research eligible for expedited review in accordance with § 60.110;
</P>
<P>(ii) Research reviewed by the IRB in accordance with the limited IRB review described in § 60.104(d)(2)(iii), (d)(3)(i)(C), or (d)(7) or (8);
</P>
<P>(iii) Research that has progressed to the point that it involves only one or both of the following, which are part of the IRB-approved study:
</P>
<P>(A) Data analysis, including analysis of identifiable private information or identifiable biospecimens, or
</P>
<P>(B) Accessing follow-up clinical data from procedures that subjects would undergo as part of clinical care.
</P>
<P>(2) [Reserved]
</P>
<P>(g) An IRB shall have authority to observe or have a third party observe the consent process and the research.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under Control Number 0990-0260)


</APPRO>
</DIV8>


<DIV8 N="§ 60.110" NODE="24:1.1.1.1.33.0.59.9" TYPE="SECTION">
<HEAD>§ 60.110   Expedited review procedures for certain kinds of research involving no more than minimal risk, and for minor changes in approved research.</HEAD>
<P>(a) The Secretary of HHS has established, and published as a Notice in the <E T="04">Federal Register,</E> a list of categories of research that may be reviewed by the IRB through an expedited review procedure. The Secretary will evaluate the list at least every 8 years and amend it, as appropriate, after consultation with other federal departments and agencies and after publication in the <E T="04">Federal Register</E> for public comment. A copy of the list is available from the Office for Human Research Protections, HHS, or any successor office.
</P>
<P>(b)(1) An IRB may use the expedited review procedure to review the following:
</P>
<P>(i) Some or all of the research appearing on the list described in paragraph (a) of this section, unless the reviewer determines that the study involves more than minimal risk;
</P>
<P>(ii) Minor changes in previously approved research during the period for which approval is authorized; or
</P>
<P>(iii) Research for which limited IRB review is a condition of exemption under § 60.104(d)(2)(iii), (d)(3)(i)(C), and (d)(7) and (8).
</P>
<P>(2) Under an expedited review procedure, the review may be carried out by the IRB chairperson or by one or more experienced reviewers designated by the chairperson from among members of the IRB. In reviewing the research, the reviewers may exercise all of the authorities of the IRB except that the reviewers may not disapprove the research. A research activity may be disapproved only after review in accordance with the nonexpedited procedure set forth in § 60.108(b).
</P>
<P>(c) Each IRB that uses an expedited review procedure shall adopt a method for keeping all members advised of research proposals that have been approved under the procedure.
</P>
<P>(d) The department or agency head may restrict, suspend, terminate, or choose not to authorize an institution's or IRB's use of the expedited review procedure.


</P>
</DIV8>


<DIV8 N="§ 60.111" NODE="24:1.1.1.1.33.0.59.10" TYPE="SECTION">
<HEAD>§ 60.111   Criteria for IRB approval of research.</HEAD>
<P>(a) In order to approve research covered by this policy the IRB shall determine that all of the following requirements are satisfied:
</P>
<P>(1) Risks to subjects are minimized:
</P>
<P>(i) By using procedures that are consistent with sound research design and that do not unnecessarily expose subjects to risk, and
</P>
<P>(ii) Whenever appropriate, by using procedures already being performed on the subjects for diagnostic or treatment purposes.
</P>
<P>(2) Risks to subjects are reasonable in relation to anticipated benefits, if any, to subjects, and the importance of the knowledge that may reasonably be expected to result. In evaluating risks and benefits, the IRB should consider only those risks and benefits that may result from the research (as distinguished from risks and benefits of therapies subjects would receive even if not participating in the research). The IRB should not consider possible long-range effects of applying knowledge gained in the research (<I>e.g.,</I> the possible effects of the research on public policy) as among those research risks that fall within the purview of its responsibility.
</P>
<P>(3) Selection of subjects is equitable. In making this assessment the IRB should take into account the purposes of the research and the setting in which the research will be conducted. The IRB should be particularly cognizant of the special problems of research that involves a category of subjects who are vulnerable to coercion or undue influence, such as children, prisoners, individuals with impaired decision-making capacity, or economically or educationally disadvantaged persons.
</P>
<P>(4) Informed consent will be sought from each prospective subject or the subject's legally authorized representative, in accordance with, and to the extent required by, § 60.116.
</P>
<P>(5) Informed consent will be appropriately documented or appropriately waived in accordance with § 60.117.
</P>
<P>(6) When appropriate, the research plan makes adequate provision for monitoring the data collected to ensure the safety of subjects.
</P>
<P>(7) When appropriate, there are adequate provisions to protect the privacy of subjects and to maintain the confidentiality of data.
</P>
<P>(i) The Secretary of HHS will, after consultation with the Office of Management and Budget's privacy office and other Federal departments and agencies that have adopted this policy, issue guidance to assist IRBs in assessing what provisions are adequate to protect the privacy of subjects and to maintain the confidentiality of data.
</P>
<P>(ii) [Reserved]
</P>
<P>(8) For purposes of conducting the limited IRB review required by § 60.104(d)(7)), the IRB need not make the determinations at paragraphs (a)(1) through (7) of this section, and shall make the following determinations:
</P>
<P>(i) Broad consent for storage, maintenance, and secondary research use of identifiable private information or identifiable biospecimens is obtained in accordance with the requirements of § 60.116(a)(1)-(4), (a)(6), and (d);
</P>
<P>(ii) Broad consent is appropriately documented or waiver of documentation is appropriate, in accordance with § 60.117; and
</P>
<P>(iii) If there is a change made for research purposes in the way the identifiable private information or identifiable biospecimens are stored or maintained, there are adequate provisions to protect the privacy of subjects and to maintain the confidentiality of data.
</P>
<P>(b) When some or all of the subjects are likely to be vulnerable to coercion or undue influence, such as children, prisoners, individuals with impaired decision-making capacity, or economically or educationally disadvantaged persons, additional safeguards have been included in the study to protect the rights and welfare of these subjects.


</P>
</DIV8>


<DIV8 N="§ 60.112" NODE="24:1.1.1.1.33.0.59.11" TYPE="SECTION">
<HEAD>§ 60.112   Review by Institution</HEAD>
<P>Research covered by this policy that has been approved by an IRB may be subject to further appropriate review and approval or disapproval by officials of the institution. However, those officials may not approve the research if it has not been approved by an IRB.


</P>
</DIV8>


<DIV8 N="§ 60.113" NODE="24:1.1.1.1.33.0.59.12" TYPE="SECTION">
<HEAD>§ 60.113   Suspension or Termination of IRB Approval of Research.</HEAD>
<P>An IRB shall have authority to suspend or terminate approval of research that is not being conducted in accordance with the IRB's requirements or that has been associated with unexpected serious harm to subjects. Any suspension or termination of approval shall include a statement of the reasons for the IRB's action and shall be reported promptly to the investigator, appropriate institutional officials, and the department or agency head.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under Control Number 0990-0260)


</APPRO>
</DIV8>


<DIV8 N="§ 60.114" NODE="24:1.1.1.1.33.0.59.13" TYPE="SECTION">
<HEAD>§ 60.114   Cooperative Research.</HEAD>
<P>(a) Cooperative research projects are those projects covered by this policy that involve more than one institution. In the conduct of cooperative research projects, each institution is responsible for safeguarding the rights and welfare of human subjects and for complying with this policy.
</P>
<P>(b)(1) Any institution located in the United States that is engaged in cooperative research must rely upon approval by a single IRB for that portion of the research that is conducted in the United States. The reviewing IRB will be identified by the Federal department or agency supporting or conducting the research or proposed by the lead institution subject to the acceptance of the Federal department or agency supporting the research.
</P>
<P>(2) The following research is not subject to this provision:
</P>
<P>(i) Cooperative research for which more than single IRB review is required by law (including tribal law passed by the official governing body of an American Indian or Alaska Native tribe); or
</P>
<P>(ii) Research for which any Federal department or agency supporting or conducting the research determines and documents that the use of a single IRB is not appropriate for the particular context.
</P>
<P>(c) For research not subject to paragraph (b) of this section, an institution participating in a cooperative project may enter into a joint review arrangement, rely on the review of another IRB, or make similar arrangements for avoiding duplication of effort.


</P>
</DIV8>


<DIV8 N="§ 60.115" NODE="24:1.1.1.1.33.0.59.14" TYPE="SECTION">
<HEAD>§ 60.115   IRB Records.</HEAD>
<P>(a) An institution, or when appropriate an IRB, shall prepare and maintain adequate documentation of IRB activities, including the following:
</P>
<P>(1) Copies of all research proposals reviewed, scientific evaluations, if any, that accompany the proposals, approved sample consent forms, progress reports submitted by investigators, and reports of injuries to subjects.
</P>
<P>(2) Minutes of IRB meetings, which shall be in sufficient detail to show attendance at the meetings; actions taken by the IRB; the vote on these actions including the number of members voting for, against, and abstaining; the basis for requiring changes in or disapproving research; and a written summary of the discussion of controverted issues and their resolution.
</P>
<P>(3) Records of continuing review activities, including the rationale for conducting continuing review of research that otherwise would not require continuing review as described in § 60.109(f)(1).
</P>
<P>(4) Copies of all correspondence between the IRB and the investigators.
</P>
<P>(5) A list of IRB members in the same detail as described in § 60.108(a)(2).
</P>
<P>(6) Written procedures for the IRB in the same detail as described in § 60.108(a)(3) and (4).
</P>
<P>(7) Statements of significant new findings provided to subjects, as required by § 60.116(c)(5).
</P>
<P>(8) The rationale for an expedited reviewer's determination under § 60.110(b)(1)(i) that research appearing on the expedited review list described in § 60.110(a) is more than minimal risk.
</P>
<P>(9) Documentation specifying the responsibilities that an institution and an organization operating an IRB each will undertake to ensure compliance with the requirements of this policy, as described in § 60.103(e).
</P>
<P>(b) The records required by this policy shall be retained for at least 3 years, and records relating to research that is conducted shall be retained for at least 3 years after completion of the research. The institution or IRB may maintain the records in printed form, or electronically. All records shall be accessible for inspection and copying by authorized representatives of the Federal department or agency at reasonable times and in a reasonable manner.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under Control Number 0990-0260)


</APPRO>
</DIV8>


<DIV8 N="§ 60.116" NODE="24:1.1.1.1.33.0.59.15" TYPE="SECTION">
<HEAD>§ 60.116   General Requirements for Informed Consent.</HEAD>
<P>(a) <I>General.</I> General requirements for informed consent, whether written or oral, are set forth in this paragraph and apply to consent obtained in accordance with the requirements set forth in paragraphs (b) through (d) of this section. Broad consent may be obtained in lieu of informed consent obtained in accordance with paragraphs (b) and (c) of this section only with respect to the storage, maintenance, and secondary research uses of identifiable private information and identifiable biospecimens. Waiver or alteration of consent in research involving public benefit and service programs conducted by or subject to the approval of state or local officials is described in paragraph (e) of this section. General waiver or alteration of informed consent is described in paragraph (f) of this section. Except as provided elsewhere in this policy:
</P>
<P>(1) Before involving a human subject in research covered by this policy, an investigator shall obtain the legally effective informed consent of the subject or the subject's legally authorized representative.
</P>
<P>(2) An investigator shall seek informed consent only under circumstances that provide the prospective subject or the legally authorized representative sufficient opportunity to discuss and consider whether or not to participate and that minimize the possibility of coercion or undue influence.
</P>
<P>(3) The information that is given to the subject or the legally authorized representative shall be in language understandable to the subject or the legally authorized representative.
</P>
<P>(4) The prospective subject or the legally authorized representative must be provided with the information that a reasonable person would want to have in order to make an informed decision about whether to participate, and an opportunity to discuss that information.
</P>
<P>(5) Except for broad consent obtained in accordance with paragraph (d) of this section:
</P>
<P>(i) Informed consent must begin with a concise and focused presentation of the key information that is most likely to assist a prospective subject or legally authorized representative in understanding the reasons why one might or might not want to participate in the research. This part of the informed consent must be organized and presented in a way that facilitates comprehension.
</P>
<P>(ii) Informed consent as a whole must present information in sufficient detail relating to the research, and must be organized and presented in a way that does not merely provide lists of isolated facts, but rather facilitates the prospective subject's or legally authorized representative's understanding of the reasons why one might or might not want to participate.
</P>
<P>(6) No informed consent may include any exculpatory language through which the subject or the legally authorized representative is made to waive or appear to waive any of the subject's legal rights, or releases or appears to release the investigator, the sponsor, the institution, or its agents from liability for negligence.
</P>
<P>(b) <I>Basic elements of informed consent.</I> Except as provided in paragraph (d), (e), or (f) of this section, in seeking informed consent the following information shall be provided to each subject or the legally authorized representative:
</P>
<P>(1) A statement that the study involves research, an explanation of the purposes of the research and the expected duration of the subject's participation, a description of the procedures to be followed, and identification of any procedures that are experimental;
</P>
<P>(2) A description of any reasonably foreseeable risks or discomforts to the subject;
</P>
<P>(3) A description of any benefits to the subject or to others that may reasonably be expected from the research;
</P>
<P>(4) A disclosure of appropriate alternative procedures or courses of treatment, if any, that might be advantageous to the subject;
</P>
<P>(5) A statement describing the extent, if any, to which confidentiality of records identifying the subject will be maintained;
</P>
<P>(6) For research involving more than minimal risk, an explanation as to whether any compensation and an explanation as to whether any medical treatments are available if injury occurs and, if so, what they consist of, or where further information may be obtained;
</P>
<P>(7) An explanation of whom to contact for answers to pertinent questions about the research and research subjects' rights, and whom to contact in the event of a research-related injury to the subject;
</P>
<P>(8) A statement that participation is voluntary, refusal to participate will involve no penalty or loss of benefits to which the subject is otherwise entitled, and the subject may discontinue participation at any time without penalty or loss of benefits to which the subject is otherwise entitled; and
</P>
<P>(9) One of the following statements about any research that involves the collection of identifiable private information or identifiable biospecimens:
</P>
<P>(i) A statement that identifiers might be removed from the identifiable private information or identifiable biospecimens and that, after such removal, the information or biospecimens could be used for future research studies or distributed to another investigator for future research studies without additional informed consent from the subject or the legally authorized representative, if this might be a possibility; or
</P>
<P>(ii) A statement that the subject's information or biospecimens collected as part of the research, even if identifiers are removed, will not be used or distributed for future research studies.
</P>
<P>(c) <I>Additional elements of informed consent.</I> Except as provided in paragraph (d), (e), or (f) of this section, one or more of the following elements of information, when appropriate, shall also be provided to each subject or the legally authorized representative:
</P>
<P>(1) A statement that the particular treatment or procedure may involve risks to the subject (or to the embryo or fetus, if the subject is or may become pregnant) that are currently unforeseeable;
</P>
<P>(2) Anticipated circumstances under which the subject's participation may be terminated by the investigator without regard to the subject's or the legally authorized representative's consent;
</P>
<P>(3) Any additional costs to the subject that may result from participation in the research;
</P>
<P>(4) The consequences of a subject's decision to withdraw from the research and procedures for orderly termination of participation by the subject;
</P>
<P>(5) A statement that significant new findings developed during the course of the research that may relate to the subject's willingness to continue participation will be provided to the subject;
</P>
<P>(6) The approximate number of subjects involved in the study;
</P>
<P>(7) A statement that the subject's biospecimens (even if identifiers are removed) may be used for commercial profit and whether the subject will or will not share in this commercial profit;
</P>
<P>(8) A statement regarding whether clinically relevant research results, including individual research results, will be disclosed to subjects, and if so, under what conditions; and
</P>
<P>(9) For research involving biospecimens, whether the research will (if known) or might include whole genome sequencing (<I>i.e.,</I> sequencing of a human germline or somatic specimen with the intent to generate the genome or exome sequence of that specimen).
</P>
<P>(d) <I>Elements of broad consent for the storage, maintenance, and secondary research use of identifiable private information or identifiable biospecimens.</I> Broad consent for the storage, maintenance, and secondary research use of identifiable private information or identifiable biospecimens (collected for either research studies other than the proposed research or nonresearch purposes) is permitted as an alternative to the informed consent requirements in paragraphs (b) and (c) of this section. If the subject or the legally authorized representative is asked to provide broad consent, the following shall be provided to each subject or the subject's legally authorized representative:
</P>
<P>(1) The information required in paragraphs (b)(2), (b)(3), (b)(5), and (b)(8) and, when appropriate, (c)(7) and (9) of this section;
</P>
<P>(2) A general description of the types of research that may be conducted with the identifiable private information or identifiable biospecimens. This description must include sufficient information such that a reasonable person would expect that the broad consent would permit the types of research conducted;
</P>
<P>(3) A description of the identifiable private information or identifiable biospecimens that might be used in research, whether sharing of identifiable private information or identifiable biospecimens might occur, and the types of institutions or researchers that might conduct research with the identifiable private information or identifiable biospecimens;
</P>
<P>(4) A description of the period of time that the identifiable private information or identifiable biospecimens may be stored and maintained (which period of time could be indefinite), and a description of the period of time that the identifiable private information or identifiable biospecimens may be used for research purposes (which period of time could be indefinite);
</P>
<P>(5) Unless the subject or legally authorized representative will be provided details about specific research studies, a statement that they will not be informed of the details of any specific research studies that might be conducted using the subject's identifiable private information or identifiable biospecimens, including the purposes of the research, and that they might have chosen not to consent to some of those specific research studies;
</P>
<P>(6) Unless it is known that clinically relevant research results, including individual research results, will be disclosed to the subject in all circumstances, a statement that such results may not be disclosed to the subject; and
</P>
<P>(7) An explanation of whom to contact for answers to questions about the subject's rights and about storage and use of the subject's identifiable private information or identifiable biospecimens, and whom to contact in the event of a research-related harm.
</P>
<P>(e) <I>Waiver or alteration of consent in research involving public benefit and service programs conducted by or subject to the approval of state or local officials</I>—(1) <I>Waiver.</I> An IRB may waive the requirement to obtain informed consent for research under paragraphs (a) through (c) of this section, provided the IRB satisfies the requirements of paragraph (e)(3) of this section. If an individual was asked to provide broad consent for the storage, maintenance, and secondary research use of identifiable private information or identifiable biospecimens in accordance with the requirements at paragraph (d) of this section, and refused to consent, an IRB cannot waive consent for the storage, maintenance, or secondary research use of the identifiable private information or identifiable biospecimens.
</P>
<P>(2) <I>Alteration.</I> An IRB may approve a consent procedure that omits some, or alters some or all, of the elements of informed consent set forth in paragraphs (b) and (c) of this section provided the IRB satisfies the requirements of paragraph (e)(3) of this section. An IRB may not omit or alter any of the requirements described in paragraph (a) of this section. If a broad consent procedure is used, an IRB may not omit or alter any of the elements required under paragraph (d) of this section.
</P>
<P>(3) <I>Requirements for waiver and alteration.</I> In order for an IRB to waive or alter consent as described in this subsection, the IRB must find and document that:
</P>
<P>(i) The research or demonstration project is to be conducted by or subject to the approval of state or local government officials and is designed to study, evaluate, or otherwise examine:
</P>
<P>(A) Public benefit or service programs;
</P>
<P>(B) Procedures for obtaining benefits or services under those programs;
</P>
<P>(C) Possible changes in or alternatives to those programs or procedures; or
</P>
<P>(D) Possible changes in methods or levels of payment for benefits or services under those programs; and
</P>
<P>(ii) The research could not practicably be carried out without the waiver or alteration.
</P>
<P>(f) <I>General waiver or alteration of consent</I>—(1) <I>Waiver.</I> An IRB may waive the requirement to obtain informed consent for research under paragraphs (a) through (c) of this section, provided the IRB satisfies the requirements of paragraph (f)(3) of this section. If an individual was asked to provide broad consent for the storage, maintenance, and secondary research use of identifiable private information or identifiable biospecimens in accordance with the requirements at paragraph (d) of this section, and refused to consent, an IRB cannot waive consent for the storage, maintenance, or secondary research use of the identifiable private information or identifiable biospecimens.
</P>
<P>(2) <I>Alteration.</I> An IRB may approve a consent procedure that omits some, or alters some or all, of the elements of informed consent set forth in paragraphs (b) and (c) of this section provided the IRB satisfies the requirements of paragraph (f)(3) of this section. An IRB may not omit or alter any of the requirements described in paragraph (a) of this section. If a broad consent procedure is used, an IRB may not omit or alter any of the elements required under paragraph (d) of this section.
</P>
<P>(3) <I>Requirements for waiver and alteration.</I> In order for an IRB to waive or alter consent as described in this subsection, the IRB must find and document that:
</P>
<P>(i) The research involves no more than minimal risk to the subjects;
</P>
<P>(ii) The research could not practicably be carried out without the requested waiver or alteration;
</P>
<P>(iii) If the research involves using identifiable private information or identifiable biospecimens, the research could not practicably be carried out without using such information or biospecimens in an identifiable format;
</P>
<P>(iv) The waiver or alteration will not adversely affect the rights and welfare of the subjects; and
</P>
<P>(v) Whenever appropriate, the subjects or legally authorized representatives will be provided with additional pertinent information after participation.
</P>
<P>(g) <I>Screening, recruiting, or determining eligibility.</I> An IRB may approve a research proposal in which an investigator will obtain information or biospecimens for the purpose of screening, recruiting, or determining the eligibility of prospective subjects without the informed consent of the prospective subject or the subject's legally authorized representative, if either of the following conditions are met:
</P>
<P>(1) The investigator will obtain information through oral or written communication with the prospective subject or legally authorized representative, or
</P>
<P>(2) The investigator will obtain identifiable private information or identifiable biospecimens by accessing records or stored identifiable biospecimens.
</P>
<P>(h) <I>Posting of clinical trial consent form.</I> (1) For each clinical trial conducted or supported by a Federal department or agency, one IRB-approved informed consent form used to enroll subjects must be posted by the awardee or the Federal department or agency component conducting the trial on a publicly available Federal Web site that will be established as a repository for such informed consent forms.
</P>
<P>(2) If the Federal department or agency supporting or conducting the clinical trial determines that certain information should not be made publicly available on a Federal Web site (<I>e.g.</I> confidential commercial information), such Federal department or agency may permit or require redactions to the information posted.
</P>
<P>(3) The informed consent form must be posted on the Federal Web site after the clinical trial is closed to recruitment, and no later than 60 days after the last study visit by any subject, as required by the protocol.
</P>
<P>(i) <I>Preemption.</I> The informed consent requirements in this policy are not intended to preempt any applicable Federal, state, or local laws (including tribal laws passed by the official governing body of an American Indian or Alaska Native tribe) that require additional information to be disclosed in order for informed consent to be legally effective.
</P>
<P>(j) <I>Emergency medical care.</I> Nothing in this policy is intended to limit the authority of a physician to provide emergency medical care, to the extent the physician is permitted to do so under applicable Federal, state, or local law (including tribal law passed by the official governing body of an American Indian or Alaska Native tribe).
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under Control Number 0990-0260)


</APPRO>
</DIV8>


<DIV8 N="§ 60.117" NODE="24:1.1.1.1.33.0.59.16" TYPE="SECTION">
<HEAD>§ 60.117   Documentation of informed consent.</HEAD>
<P>(a) Except as provided in paragraph (c) of this section, informed consent shall be documented by the use of a written informed consent form approved by the IRB and signed (including in an electronic format) by the subject or the subject's legally authorized representative. A written copy shall be given to the person signing the informed consent form.
</P>
<P>(b) Except as provided in paragraph (c) of this section, the informed consent form may be either of the following:
</P>
<P>(1) A written informed consent form that meets the requirements of § 60.116. The investigator shall give either the subject or the subject's legally authorized representative adequate opportunity to read the informed consent form before it is signed; alternatively, this form may be read to the subject or the subject's legally authorized representative.
</P>
<P>(2) A short form written informed consent form stating that the elements of informed consent required by § 60.116 have been presented orally to the subject or the subject's legally authorized representative, and that the key information required by § 60.116(a)(5)(i) was presented first to the subject, before other information, if any, was provided. The IRB shall approve a written summary of what is to be said to the subject or the legally authorized representative. When this method is used, there shall be a witness to the oral presentation. Only the short form itself is to be signed by the subject or the subject's legally authorized representative. However, the witness shall sign both the short form and a copy of the summary, and the person actually obtaining consent shall sign a copy of the summary. A copy of the summary shall be given to the subject or the subject's legally authorized representative, in addition to a copy of the short form.
</P>
<P>(c)(1) An IRB may waive the requirement for the investigator to obtain a signed informed consent form for some or all subjects if it finds any of the following:
</P>
<P>(i) That the only record linking the subject and the research would be the informed consent form and the principal risk would be potential harm resulting from a breach of confidentiality. Each subject (or legally authorized representative) will be asked whether the subject wants documentation linking the subject with the research, and the subject's wishes will govern;
</P>
<P>(ii) That the research presents no more than minimal risk of harm to subjects and involves no procedures for which written consent is normally required outside of the research context; or
</P>
<P>(iii) If the subjects or legally authorized representatives are members of a distinct cultural group or community in which signing forms is not the norm, that the research presents no more than minimal risk of harm to subjects and provided there is an appropriate alternative mechanism for documenting that informed consent was obtained.
</P>
<P>(2) In cases in which the documentation requirement is waived, the IRB may require the investigator to provide subjects or legally authorized representatives with a written statement regarding the research.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under Control Number 0990-0260)


</APPRO>
</DIV8>


<DIV8 N="§ 60.118" NODE="24:1.1.1.1.33.0.59.17" TYPE="SECTION">
<HEAD>§ 60.118   Applications and proposals lacking definite plans for involvement of human subjects.</HEAD>
<P>Certain types of applications for grants, cooperative agreements, or contracts are submitted to Federal departments or agencies with the knowledge that subjects may be involved within the period of support, but definite plans would not normally be set forth in the application or proposal. These include activities such as institutional type grants when selection of specific projects is the institution's responsibility; research training grants in which the activities involving subjects remain to be selected; and projects in which human subjects' involvement will depend upon completion of instruments, prior animal studies, or purification of compounds. Except for research waived under § 60.101(i) or exempted under § 60.104, no human subjects may be involved in any project supported by these awards until the project has been reviewed and approved by the IRB, as provided in this policy, and certification submitted, by the institution, to the Federal department or agency component supporting the research.


</P>
</DIV8>


<DIV8 N="§ 60.119" NODE="24:1.1.1.1.33.0.59.18" TYPE="SECTION">
<HEAD>§ 60.119   Research undertaken without the intention of involving human subjects.</HEAD>
<P>Except for research waived under § 60.101(i) or exempted under § 60.104, in the event research is undertaken without the intention of involving human subjects, but it is later proposed to involve human subjects in the research, the research shall first be reviewed and approved by an IRB, as provided in this policy, a certification submitted by the institution to the Federal department or agency component supporting the research, and final approval given to the proposed change by the Federal department or agency component.


</P>
</DIV8>


<DIV8 N="§ 60.120" NODE="24:1.1.1.1.33.0.59.19" TYPE="SECTION">
<HEAD>§ 60.120   Evaluation and disposition of applications and proposals for research to be conducted or supported by a Federal department or agency.</HEAD>
<P>(a) The department or agency head will evaluate all applications and proposals involving human subjects submitted to the Federal department or agency through such officers and employees of the Federal department or agency and such experts and consultants as the department or agency head determines to be appropriate. This evaluation will take into consideration the risks to the subjects, the adequacy of protection against these risks, the potential benefits of the research to the subjects and others, and the importance of the knowledge gained or to be gained.
</P>
<P>(b) On the basis of this evaluation, the department or agency head may approve or disapprove the application or proposal, or enter into negotiations to develop an approvable one.


</P>
</DIV8>


<DIV8 N="§ 60.121" NODE="24:1.1.1.1.33.0.59.20" TYPE="SECTION">
<HEAD>§ 60.121   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 60.122" NODE="24:1.1.1.1.33.0.59.21" TYPE="SECTION">
<HEAD>§ 60.122   Use of Federal funds.</HEAD>
<P>Federal funds administered by a Federal department or agency may not be expended for research involving human subjects unless the requirements of this policy have been satisfied.


</P>
</DIV8>


<DIV8 N="§ 60.123" NODE="24:1.1.1.1.33.0.59.22" TYPE="SECTION">
<HEAD>§ 60.123   Early termination of research support: Evaluation of applications and proposals.</HEAD>
<P>(a) The department or agency head may require that Federal department or agency support for any project be terminated or suspended in the manner prescribed in applicable program requirements, when the department or agency head finds an institution has materially failed to comply with the terms of this policy.
</P>
<P>(b) In making decisions about supporting or approving applications or proposals covered by this policy the department or agency head may take into account, in addition to all other eligibility requirements and program criteria, factors such as whether the applicant has been subject to a termination or suspension under paragraph (a) of this section and whether the applicant or the person or persons who would direct or has/have directed the scientific and technical aspects of an activity has/have, in the judgment of the department or agency head, materially failed to discharge responsibility for the protection of the rights and welfare of human subjects (whether or not the research was subject to federal regulation).


</P>
</DIV8>


<DIV8 N="§ 60.124" NODE="24:1.1.1.1.33.0.59.23" TYPE="SECTION">
<HEAD>§ 60.124   Conditions.</HEAD>
<P>With respect to any research project or any class of research projects the department or agency head of either the conducting or the supporting Federal department or agency may impose additional conditions prior to or at the time of approval when in the judgment of the department or agency head additional conditions are necessary for the protection of human subjects.


</P>
</DIV8>

</DIV5>


<DIV5 N="70" NODE="24:1.1.1.1.34" TYPE="PART">
<HEAD>PART 70—USE OF VOLUNTEERS ON PROJECTS SUBJECT TO DAVIS-BACON AND HUD-DETERMINED WAGE RATES
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>Sec. 955, Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 1437(j), 5310 and 12 U.S.C. 1701q(c)(3); Sec. 7(d) Department of Housing and Urban Development Act (42 U.S.C. 3535(d)).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>57 FR 14756, Apr. 22, 1992, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV8 N="§ 70.1" NODE="24:1.1.1.1.34.0.59.1" TYPE="SECTION">
<HEAD>§ 70.1   Purpose and authority.</HEAD>
<P>(a) This part implements section 955 of the National Affordable Housing Act (NAHA), which provides an exemption from the requirement to pay prevailing wage rates determined under the Davis-Bacon Act or (in the case of laborers and mechanics employed in the operation of public housing projects, and architects, technical engineers, draftsmen and technicians employed in the development of public housing projects) determined or adopted by HUD, for volunteers employed on projects that are subject to prevailing wage rates under Title I of the Housing and Community Development Act of 1974 (including Community Development Block Grants, section 108 loan guarantees, and Urban Development Action Grants), under section 12 of the United States Housing Act of 1937 (public housing development and operation and section 8 projects), and under section 202 of the Housing Act of 1959 for elderly and handicapped housing projects prior to the effective date of the amendment of section 202 by section 801 of NAHA. This part also implements other provisions that provide an exemption for volunteers, including section 286 of NAHA (the HOME program), section 202 of the House Act of 1959, as amended by NAHA (supportive housing for the elderly), and any later-enacted exemptions.
</P>
<P>(b) This part is also applicable to all HUD programs for which there is a statutory provision allowing HUD to waive Davis-Bacon wage rates for volunteers that are not otherwise employed at any time on the work for which the individual volunteers. These programs include section 811 of NAHA (supportive housing for persons with disabilities), FHA mortgage insurance programs under sections 221(d)(3) and (d)(4) (each with respect to cooperative housing projects only), 221(h)(1) (but only where a nonprofit organization undertakes the construction), 235(j)(1) (but only where a nonprofit organization undertakes the construction), 231, 232, 236 and 242 of the National Housing Act, rehabilitation under section 312 of the Housing Act of 1964 and college housing under section 402 of the Housing Act of 1950.
</P>
<P>(c) This part provides definitions and procedures for determining allowable payments to volunteers, determining who is a bona fide volunteer, and otherwise implementing exemptions from and waivers of prevailing wage requirements where volunteers are employed.


</P>
</DIV8>


<DIV8 N="§ 70.2" NODE="24:1.1.1.1.34.0.59.2" TYPE="SECTION">
<HEAD>§ 70.2   Applicability.</HEAD>
<P>This part applies to all HUD programs for which there is a statutory exemption from Davis-Bacon or HUD-determined prevailing wage rates for volunteers or a statutory provision allowing HUD waiver of Davis-Bacon prevailing wage rates for volunteers. The programs to which this part applies include the programs listed in section 70.1(a) and (b) and any other program for which a statutory exemption or HUD waiver provision for volunteers is enacted. This part does not, however, apply to HUD waivers of prevailing wage requirements under section 20 of the United States Housing Act of 1937 for public housing residents who volunteer a portion of their labor (see 24 CFR 964.41). This part also does not apply to the contribution of labor by an eligible family under the Mutual Help Homeownership Opportunity Program for Indian families under section 202 of the United States Housing Act of 1937.


</P>
</DIV8>


<DIV8 N="§ 70.3" NODE="24:1.1.1.1.34.0.59.3" TYPE="SECTION">
<HEAD>§ 70.3   Definitions.</HEAD>
<P>(a) A <I>volunteer,</I> for purposes of this part, is an individual who performs service for a public or private entity for civic, charitable, or humanitarian reasons, without promise, expectation or receipt of compensation for services rendered, on a HUD-assisted or insured project which is subject to a requirement to pay prevailing wage rates.
</P>
<P>(1) Individuals shall be considered volunteers only where their services are offered freely and without pressure and coercion, direct or implied, from an employer. 
</P>
<P>(2) An individual shall not be considered a volunteer if the individual is otherwise employed at any time in the construction or maintenance work for which the individual volunteers.
</P>
<P>(b) <I>Expenses, reasonable benefits, or nominal fees</I> may be provided to volunteers without the status of the volunteer being lost but only after a determination is made by HUD on a case-by-case basis by examining the total amount of payments made (expenses, benefits, fees) in the context of the economic realities of the particular situation. Subject to this determination:
</P>
<P>(1) A payment for an <I>expense</I> may be received by a volunteer for items such as uniform allowances or reimbursement for reasonable cleaning expenses or wear and tear on personal clothing worn while performing the volunteer work. Additionally, reimbursement for approximate out-of-pocket expenses for the cost of meals and transportation expenses may be made.
</P>
<P>(2) <I>Reasonable benefits</I> may constitute inclusion of individual volunteers in group insurance plans (such as liability, health, life, disability, workers' compensation) or pension plan or length of service awards.
</P>
<P>(3) A <I>nominal fee</I> is not a substitute for compensation and must not be tied to productivity. The decision as to what constitutes “nominal” must be made on a case-by-case basis and in the context of the economic realities of the situation.
</P>
<P>(4) The phrase <I>economic realities</I> means that in determining whether the fee described in paragraph (b)(3) of this section may be deemed “nominal”, the amount of the fee must be judged in the context of what paid workers doing the same work would earn in the particular locality involved. For example, a “payment” made to a “homeless” volunteer in an amount which covers basic necessities but nonetheless represents an insignificant amount when compared with local cost of living and real wages may be determined to be nominal for purposes of qualifying as a volunteer, provided the payment is not in fact a substitute for compensation and is not tied in any way to productivity.
</P>
<P>(c) <I>Prevailing wage rates,</I> for purposes of this part, means:
</P>
<P>(1) Wage rates required to be paid to laborers and mechanics employed in the construction (including rehabilitation) of a project (or in the case of public housing, the development of the project), as determined by the Secretary of Labor under the Davis-Bacon Act;
</P>
<P>(2) Wage rates required to be paid to laborers and mechanics employed in the operation of a public housing project, as determined or adopted by the Secretary of HUD; and
</P>
<P>(3) Wage rates required to be paid to architects, technical engineers, draftsmen and technicians employed in the development of a public housing project, as determined or adopted by the Secretary of HUD.


</P>
</DIV8>


<DIV8 N="§ 70.4" NODE="24:1.1.1.1.34.0.59.4" TYPE="SECTION">
<HEAD>§ 70.4   Procedure for implementing prevailing wage exemptions for volunteers.</HEAD>
<P>(a) This section applies to those HUD programs for which there is a statutory <I>exemption</I> for volunteers, as referenced in § 70.1(a).
</P>
<P>(b) Local or State agencies or private parties whose employees are otherwise subject to Davis-Bacon or HUD-determined prevailing wage rates which propose to use volunteers and wish to pay the volunteers' expenses, reasonable benefits, or nominal fees shall request a determination from HUD that these payments meet the criteria in § 70.3(b). A written determination shall be provided to the requester by the Department within ten days of receipt by the Department of sufficient information to allow for the determination.
</P>
<P>(c) A determination under paragraph (b) shall not be construed in any way as limiting the use of bona fide volunteers on HUD-assisted construction, but rather is required to ensure that the Department performs its appropriate responsibilities under Reorganization Plan No. 14 of 1950 and related Department of Labor Regulations in title 29 CFR part 5, regarding the administration and enforcement of the Davis-Bacon and Related Acts, and its responsibility for the administration and enforcement of HUD-determined or adopted wage rates in the operation of public housing assisted under the United States Housing Act of 1937.
</P>
<P>(d) For a project covered by prevailing wage rate requirements in which all the work is to be done by volunteers and there are no paid construction employees, the local or State funding agency (or, if none, the entity that employs the volunteers) shall record in the pertinent project file the name and address of the agency sponsoring the project, a description of the project (location, cost, nature of the work), and the number of volunteers and the hours of work they performed. The entity responsible for recording this information shall also provide a copy of this information to HUD.
</P>
<P>(e) For a project covered by prevailing wage rate requirements in which there is to be a mix of paid workers and volunteers, the local or State funding agency (or, if none, the entity responsible for generating certified payrolls) shall provide HUD the information in paragraph (d) of this section, along with the names of the volunteers. 
</P>
<P>(f) Volunteers who receive no expenses, benefits or fees described in (c) and are otherwise bona fide shall be recorded as in (d) or (e). 


</P>
</DIV8>


<DIV8 N="§ 70.5" NODE="24:1.1.1.1.34.0.59.5" TYPE="SECTION">
<HEAD>§ 70.5   Procedure for obtaining HUD waiver of prevailing wage rates for volunteers.</HEAD>
<P>(a) This section applies to those HUD programs under which HUD is statutorily authorized to <I>waive</I> prevailing wage requirements for volunteers, as referenced in § 70.1(b). 
</P>
<P>(b) Local or State agencies or private parties whose employees are otherwise subject to prevailing wage rates and which wish to use volunteers shall request a waiver of prevailing wage requirements from HUD for the volunteers. A request for waiver shall indicate that the proposed volunteers are volunteering their services for the purposes of lowering the costs of construction. The request shall include information sufficient for HUD to make a determination, as required by statute, that any amounts saved through the use of volunteers are fully credited to the corporation, cooperative, or public body or agency undertaking the construction and a determination that any payments to volunteers meet the criteria in section 70.3(b). Information regarding the crediting of amounts saved is required in order to insure that the statutorily prescribed purpose of lowering the costs of construction is fulfilled by passing savings from the use of volunteers on to the sponsor or other body or agency undertaking the construction, rather than permitting the retention of any savings as a windfall by a contractor or subcontractor. A written waiver shall be provided to the requestor by the Department within ten days of receipt by the Department of sufficient information to meet the requirements for a waiver. 
</P>
<P>(c) For a project covered by prevailing wage rate requirements in which all the work is to be done by volunteers and there are no paid construction employees, the local or State funding agency (or, if none, the entity that employs the volunteers) shall record in the pertinent project file the name and address of the agency sponsoring the project, the name, location, and HUD project number (if any) of the project, the number of volunteers, and type of work and hours of work they performed. The entity responsible for recording this information shall provide a copy of the information to HUD. 
</P>
<P>(d) For a project covered by prevailing wage rate requirements in which there is to be a mix of paid workers and volunteers, the local or State funding agency (or, if none, the entity responsible for generating certified payrolls) shall provide HUD the information in (c) of this section, along with the names of the proposed volunteers. 


</P>
</DIV8>

</DIV5>


<DIV5 N="75" NODE="24:1.1.1.1.35" TYPE="PART">
<HEAD>PART 75—ECONOMIC OPPORTUNITIES FOR LOW- AND VERY LOW-INCOME PERSONS
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1701u; 42 U.S.C. 3535(d).


</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>85 FR 61562, Sept. 29, 2020, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:1.1.1.1.35.1" TYPE="SUBPART">
<HEAD>Subpart A—General Provisions</HEAD>


<DIV8 N="§ 75.1" NODE="24:1.1.1.1.35.1.59.1" TYPE="SECTION">
<HEAD>§ 75.1   Purpose.</HEAD>
<P>This part establishes the requirements to be followed to ensure the objectives of Section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) (Section 3) are met. The purpose of Section 3 is to ensure that economic opportunities, most importantly employment, generated by certain HUD financial assistance shall be directed to low- and very low-income persons, particularly those who are recipients of government assistance for housing or residents of the community in which the Federal assistance is spent.


</P>
</DIV8>


<DIV8 N="§ 75.3" NODE="24:1.1.1.1.35.1.59.2" TYPE="SECTION">
<HEAD>§ 75.3   Applicability.</HEAD>
<P>(a) <I>General applicability.</I> Section 3 applies to public housing financial assistance and Section 3 projects, as follows:
</P>
<P>(1) <I>Public housing financial assistance.</I> Public housing financial assistance means:
</P>
<P>(i) Development assistance provided pursuant to section 5 of the United States Housing Act of 1937 (the 1937 Act);
</P>
<P>(ii) Operations and management assistance provided pursuant to section 9(e) of the 1937 Act;
</P>
<P>(iii) Development, modernization, and management assistance provided pursuant to section 9(d) of the 1937 Act; and
</P>
<P>(iv) The entirety of a mixed-finance development project as described in 24 CFR 905.604, regardless of whether the project is fully or partially assisted with public housing financial assistance as defined in paragraphs (a)(1)(i) through (iii) of this section.
</P>
<P>(2) <I>Section 3 projects.</I> (i) Section 3 projects means housing rehabilitation, housing construction, and other public construction projects assisted under HUD programs that provide housing and community development financial assistance when the total amount of assistance to the project exceeds a threshold of $200,000. The threshold is $100,000 where the assistance is from the Lead Hazard Control and Healthy Homes programs, as authorized by Sections 501 or 502 of the Housing and Urban Development Act of 1970 (12 U.S.C. 1701z-1 or 1701z-2), the Lead-Based Paint Poisoning Prevention Act (42 U.S.C 4801 <I>et seq.</I>); and the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851 <I>et seq.</I>). The project is the site or sites together with any building(s) and improvements located on the site(s) that are under common ownership, management, and financing.
</P>
<P>(ii) The Secretary must update the thresholds provided in paragraph (a)(2)(i) of this section not less than once every 5 years based on a national construction cost inflation factor through <E T="04">Federal Register</E> notice not subject to public comment. When the Secretary finds it is warranted to ensure compliance with Section 3, the Secretary may adjust, regardless of the national construction cost factor, such thresholds through <E T="04">Federal Register</E> notice, subject to public comment.
</P>
<P>(iii) The requirements in this part apply to an entire Section 3 project, regardless of whether the project is fully or partially assisted under HUD programs that provide housing and community development financial assistance.
</P>
<P>(b) <I>Contracts for materials.</I> Section 3 requirements do not apply to material supply contracts.
</P>
<P>(c) <I>Indian and Tribal preferences.</I> Contracts, subcontracts, grants, or subgrants subject to Section 7(b) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 5307(b)) or subject to tribal preference requirements as authorized under 101(k) of the Native American Housing Assistance and Self-Determination Act (25 U.S.C. 4111(k)) must provide preferences in employment, training, and business opportunities to Indians and Indian organizations, and are therefore not subject to the requirements of this part.
</P>
<P>(d) <I>Other HUD assistance and other Federal assistance.</I> Recipients that are not subject to Section 3 are encouraged to consider ways to support the purpose of Section 3.


</P>
</DIV8>


<DIV8 N="§ 75.5" NODE="24:1.1.1.1.35.1.59.3" TYPE="SECTION">
<HEAD>§ 75.5   Definitions.</HEAD>
<P>The terms <I>HUD, Public housing,</I> and <I>Public Housing Agency (PHA)</I> are defined in 24 CFR part 5. The following definitions also apply to this part:
</P>
<P><I>1937 Act</I> means the United States Housing Act of 1937, 42 U.S.C. 1437 <I>et seq.</I>
</P>
<P><I>Contractor</I> means any entity entering into a contract with:
</P>
<P>(1) A recipient to perform work in connection with the expenditure of public housing financial assistance or for work in connection with a Section 3 project; or
</P>
<P>(2) A subrecipient for work in connection with a Section 3 project.
</P>
<P><I>Labor hours</I> means the number of paid hours worked by persons on a Section 3 project or by persons employed with funds that include public housing financial assistance.
</P>
<P><I>Low-income person</I> means a person as defined in Section 3(b)(2) of the 1937 Act.
</P>
<P><I>Material supply contracts</I> means contracts for the purchase of products and materials, including, but not limited to, lumber, drywall, wiring, concrete, pipes, toilets, sinks, carpets, and office supplies.
</P>
<P><I>Professional services</I> means non-construction services that require an advanced degree or professional licensing, including, but not limited to, contracts for legal services, financial consulting, accounting services, environmental assessment, architectural services, and civil engineering services.
</P>
<P><I>Public housing financial assistance</I> means assistance as defined in § 75.3(a)(1).
</P>
<P><I>Public housing project</I> is defined in 24 CFR 905.108.
</P>
<P><I>Recipient</I> means any entity that receives directly from HUD public housing financial assistance or housing and community development assistance that funds Section 3 projects, including, but not limited to, any State, local government, instrumentality, PHA, or other public agency, public or private nonprofit organization.
</P>
<P><I>Section 3</I> means Section 3 of the Housing and Urban Development Act of 1968, as amended (12 U.S.C. 1701u).
</P>
<P><I>Section 3 business concern</I> means:
</P>
<P>(1) A business concern meeting at least one of the following criteria, documented within the last six-month period:
</P>
<P>(i) It is at least 51 percent owned and controlled by low- or very low-income persons;
</P>
<P>(ii) Over 75 percent of the labor hours performed for the business over the prior three-month period are performed by Section 3 workers; or
</P>
<P>(iii) It is a business at least 51 percent owned and controlled by current public housing residents or residents who currently live in Section 8-assisted housing.
</P>
<P>(2) The status of a Section 3 business concern shall not be negatively affected by a prior arrest or conviction of its owner(s) or employees.
</P>
<P>(3) Nothing in this part shall be construed to require the contracting or subcontracting of a Section 3 business concern. Section 3 business concerns are not exempt from meeting the specifications of the contract.
</P>
<P><I>Section 3 project</I> means a project defined in § 75.3(a)(2).
</P>
<P><I>Section 3 worker</I> means:
</P>
<P>(1) Any worker who currently fits or when hired within the past five years fit at least one of the following categories, as documented:
</P>
<P>(i) The worker's income for the previous or annualized calendar year is below the income limit established by HUD.
</P>
<P>(ii) The worker is employed by a Section 3 business concern.
</P>
<P>(iii) The worker is a YouthBuild participant.
</P>
<P>(2) The status of a Section 3 worker shall not be negatively affected by a prior arrest or conviction.
</P>
<P>(3) Nothing in this part shall be construed to require the employment of someone who meets this definition of a Section 3 worker. Section 3 workers are not exempt from meeting the qualifications of the position to be filled.
</P>
<P><I>Section 8-assisted housing</I> refers to housing receiving project-based rental assistance or tenant-based assistance under Section 8 of the 1937 Act.
</P>
<P><I>Service area or the neighborhood of the project</I> means an area within one mile of the Section 3 project or, if fewer than 5,000 people live within one mile of a Section 3 project, within a circle centered on the Section 3 project that is sufficient to encompass a population of 5,000 people according to the most recent U.S. Census.
</P>
<P><I>Small PHA</I> means a public housing authority that manages or operates fewer than 250 public housing units.
</P>
<P><I>Subcontractor</I> means any entity that has a contract with a contractor to undertake a portion of the contractor's obligation to perform work in connection with the expenditure of public housing financial assistance or for a Section 3 project.
</P>
<P><I>Subrecipient</I> has the meaning provided in the applicable program regulations or in 2 CFR 200.93.
</P>
<P><I>Targeted Section 3 worker</I> has the meanings provided in § 75.11, § 75.21, or § 75.29, and does not exclude an individual that has a prior arrest or conviction.
</P>
<P><I>Very low-income person</I> means the definition for this term set forth in section 3(b)(2) of the 1937 Act.
</P>
<P><I>YouthBuild programs</I> refers to YouthBuild programs receiving assistance under the Workforce Innovation and Opportunity Act (29 U.S.C. 3226).


</P>
</DIV8>


<DIV8 N="§ 75.7" NODE="24:1.1.1.1.35.1.59.4" TYPE="SECTION">
<HEAD>§ 75.7   Requirements applicable to HUD NOFAs for Section 3 covered programs.</HEAD>
<P>All notices of funding availability (NOFAs) issued by HUD that announce the availability of funding covered by § 75.3 will include notice that this part is applicable to the funding and may include, as appropriate for the specific NOFA, points or bonus points for the quality of Section 3 plans.


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.1.1.1.35.2" TYPE="SUBPART">
<HEAD>Subpart B—Additional Provisions for Public Housing Financial Assistance</HEAD>


<DIV8 N="§ 75.9" NODE="24:1.1.1.1.35.2.59.1" TYPE="SECTION">
<HEAD>§ 75.9   Requirements.</HEAD>
<P>(a) <I>Employment and training.</I> (1) Consistent with existing Federal, state, and local laws and regulations, PHAs or other recipients receiving public housing financial assistance, and their contractors and subcontractors, must make their best efforts to provide employment and training opportunities generated by the public housing financial assistance to Section 3 workers.
</P>
<P>(2) PHAs or other recipients, and their contractors and subcontractors, must make their best efforts described in paragraph (a)(1) of this section in the following order of priority:
</P>
<P>(i) To residents of the public housing projects for which the public housing financial assistance is expended;
</P>
<P>(ii) To residents of other public housing projects managed by the PHA that is providing the assistance or for residents of Section 8-assisted housing managed by the PHA;
</P>
<P>(iii) To participants in YouthBuild programs; and
</P>
<P>(iv) To low- and very low-income persons residing within the metropolitan area (or nonmetropolitan county) in which the assistance is expended.
</P>
<P>(b) <I>Contracting.</I> (1) Consistent with existing Federal, state, and local laws and regulations, PHAs and other recipients of public housing financial assistance, and their contractors and subcontractors, must make their best efforts to award contracts and subcontracts to business concerns that provide economic opportunities to Section 3 workers.
</P>
<P>(2) PHAs and other recipients, and their contractors and subcontractors, must make their best efforts described in paragraph (b)(1) of this section in the following order of priority:
</P>
<P>(i) To Section 3 business concerns that provide economic opportunities for residents of the public housing projects for which the assistance is provided;
</P>
<P>(ii) To Section 3 business concerns that provide economic opportunities for residents of other public housing projects or Section-8 assisted housing managed by the PHA that is providing the assistance;
</P>
<P>(iii) To YouthBuild programs; and
</P>
<P>(iv) To Section 3 business concerns that provide economic opportunities to Section 3 workers residing within the metropolitan area (or nonmetropolitan county) in which the assistance is provided.


</P>
</DIV8>


<DIV8 N="§ 75.11" NODE="24:1.1.1.1.35.2.59.2" TYPE="SECTION">
<HEAD>§ 75.11   Targeted Section 3 worker for public housing financial assistance.</HEAD>
<P>(a) <I>Targeted Section 3 worker.</I> A Targeted Section 3 worker for public housing financial assistance means a Section 3 worker who is:
</P>
<P>(1) A worker employed by a Section 3 business concern; or
</P>
<P>(2) A worker who currently fits or when hired fit at least one of the following categories, as documented within the past five years:
</P>
<P>(i) A resident of public housing or Section 8-assisted housing;
</P>
<P>(ii) A resident of other public housing projects or Section 8-assisted housing managed by the PHA that is providing the assistance; or
</P>
<P>(iii) A YouthBuild participant.
</P>
<P>(b) [Reserved]


</P>
</DIV8>


<DIV8 N="§ 75.13" NODE="24:1.1.1.1.35.2.59.3" TYPE="SECTION">
<HEAD>§ 75.13   Section 3 safe harbor.</HEAD>
<P>(a) <I>General.</I> PHAs and other recipients will be considered to have complied with requirements in this part, in the absence of evidence to the contrary, if they:
</P>
<P>(1) Certify that they have followed the prioritization of effort in § 75.9; and
</P>
<P>(2) Meet or exceed the applicable Section 3 benchmarks as described in paragraph (b) of this section.
</P>
<P>(b) <I>Establishing benchmarks.</I> (1) HUD will establish Section 3 benchmarks for Section 3 workers or Targeted Section 3 workers or both through a document published in the <E T="04">Federal Register.</E> HUD may establish a single nationwide benchmark for Section 3 workers and a single nationwide benchmark for Targeted Section 3 workers, or may establish multiple benchmarks based on geography, the type of public housing financial assistance, or other variables. HUD will update the benchmarks through a document published in the <E T="04">Federal Register,</E> subject to public comment, not less frequently than once every 3 years. Such notice shall include aggregate data on labor hours and the proportion of PHAs and other recipients meeting benchmarks, as well as other metrics reported pursuant to § 75.15 as deemed appropriate by HUD, for the 3 most recent reporting years.
</P>
<P>(2) In establishing the Section 3 benchmarks, HUD may consider the industry averages for labor hours worked by specific categories of workers or in different localities or regions; averages for labor hours worked by Section 3 workers and Targeted Section 3 workers as reported by recipients pursuant to this section; and any other factors HUD deems important. In establishing the Section 3 benchmarks, HUD will exclude professional services from the total number of labor hours as such hours are excluded from the total number of labor hours to be reported per § 75.15(a)(4).
</P>
<P>(3) Section 3 benchmarks will consist of the following two ratios:
</P>
<P>(i) The number of labor hours worked by Section 3 workers divided by the total number of labor hours worked by all workers funded by public housing financial assistance in the PHA's or other recipient's fiscal year.
</P>
<P>(ii) The number of labor hours worked by Targeted Section 3 workers, as defined in § 75.11(a), divided by the total number of labor hours worked by all workers funded by public housing financial assistance in the PHA's or other recipient's fiscal year.


</P>
</DIV8>


<DIV8 N="§ 75.15" NODE="24:1.1.1.1.35.2.59.4" TYPE="SECTION">
<HEAD>§ 75.15   Reporting.</HEAD>
<P>(a) <I>Reporting of labor hours.</I> (1) For public housing financial assistance, PHAs and other recipients must report in a manner prescribed by HUD:
</P>
<P>(i) The total number of labor hours worked;
</P>
<P>(ii) The total number of labor hours worked by Section 3 workers; and
</P>
<P>(iii) The total number of labor hours worked by Targeted Section 3 workers.
</P>
<P>(2) Section 3 workers' and Targeted Section 3 workers' labor hours may be counted for five years from when their status as a Section 3 worker or Targeted Section 3 worker is established pursuant to § 75.31.
</P>
<P>(3) The labor hours reported under paragraph (a)(1) of this section must include the total number of labor hours worked with public housing financial assistance in the fiscal year of the PHA or other recipient, including labor hours worked by any contractors and subcontractors that the PHA or other recipient is required, or elects pursuant to paragraph (a)(4) of this section, to report.
</P>
<P>(4) PHAs and other recipients reporting under this section, as well as contractors and subcontractors who report to PHAs and recipients, may report labor hours by Section 3 workers, under paragraph (a)(1)(ii) of this section, and labor hours by Targeted Section 3 workers, under paragraph (a)(1)(iii) of this section, from professional services without including labor hours from professional services in the total number of labor hours worked under paragraph (a)(1)(i) of this section. If a contract covers both professional services and other work and the PHA, other recipient, contractor, or subcontractor chooses not to report labor hours from professional services, the labor hours under the contract that are not from professional services must still be reported.
</P>
<P>(5) PHAs and other recipients may report on the labor hours of the PHA, the recipient, a contractor, or a subcontractor based on the employer's good faith assessment of the labor hours of a full-time or part-time employee informed by the employer's existing salary or time and attendance based payroll systems, unless the project or activity is otherwise subject to requirements specifying time and attendance reporting.
</P>
<P>(b) <I>Additional reporting if Section 3 benchmarks are not met.</I> If the PHA's or other recipient's reporting under paragraph (a) of this section indicates that the PHA or other recipient has not met the Section 3 benchmarks described in § 75.13, the PHA or other recipient must report in a form prescribed by HUD on the qualitative nature of its Section 3 compliance activities and those of its contractors and subcontractors. Such qualitative efforts may, for example, include but are not limited to the following:
</P>
<P>(1) Engaged in outreach efforts to generate job applicants who are Targeted Section 3 workers.
</P>
<P>(2) Provided training or apprenticeship opportunities.
</P>
<P>(3) Provided technical assistance to help Section 3 workers compete for jobs (<I>e.g.,</I> resume assistance, coaching).
</P>
<P>(4) Provided or connected Section 3 workers with assistance in seeking employment including: drafting resumes, preparing for interviews, and finding job opportunities connecting residents to job placement services.
</P>
<P>(5) Held one or more job fairs.
</P>
<P>(6) Provided or referred Section 3 workers to services supporting work readiness and retention (<I>e.g.,</I> work readiness activities, interview clothing, test fees, transportation, child care).
</P>
<P>(7) Provided assistance to apply for/or attend community college, a four-year educational institution, or vocational/technical training.
</P>
<P>(8) Assisted Section 3 workers to obtain financial literacy training and/or coaching.
</P>
<P>(9) Engaged in outreach efforts to identify and secure bids from Section 3 business concerns.
</P>
<P>(10) Provided technical assistance to help Section 3 business concerns understand and bid on contracts.
</P>
<P>(11) Divided contracts into smaller jobs to facilitate participation by Section 3 business concerns.
</P>
<P>(12) Provided bonding assistance, guaranties, or other efforts to support viable bids from Section 3 business concerns.
</P>
<P>(13) Promoted use of business registries designed to create opportunities for disadvantaged and small businesses.
</P>
<P>(14) Outreach, engagement, or referrals with the state one-stop system as defined in Section 121(e)(2) of the Workforce Innovation and Opportunity Act.
</P>
<P>(c) <I>Reporting frequency.</I> Unless otherwise provided, PHAs or other recipients must report annually to HUD under paragraph (a) of this section, and, where required, under paragraph (b) of this section, in a manner consistent with reporting requirements for the applicable HUD program.
</P>
<P>(d) <I>Reporting by Small PHAs.</I> Small PHAs may elect not to report under paragraph (a) of this section. Small PHAs that make such election are required to report on their qualitative efforts, as described in paragraph (b) of this section, in a manner consistent with reporting requirements for the applicable HUD program.


</P>
</DIV8>


<DIV8 N="§ 75.17" NODE="24:1.1.1.1.35.2.59.5" TYPE="SECTION">
<HEAD>§ 75.17   Contract provisions.</HEAD>
<P>(a) PHAs or other recipients must include language in any agreement or contract to apply Section 3 to contractors.
</P>
<P>(b) PHAs or other recipients must require contractors to include language in any contract or agreement to apply Section 3 to subcontractors.
</P>
<P>(c) PHAs or other recipients must require all contractors and subcontractors to meet the requirements of § 75.9, regardless of whether Section 3 language is included in contracts.


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:1.1.1.1.35.3" TYPE="SUBPART">
<HEAD>Subpart C—Additional Provisions for Housing and Community Development Financial Assistance</HEAD>


<DIV8 N="§ 75.19" NODE="24:1.1.1.1.35.3.59.1" TYPE="SECTION">
<HEAD>§ 75.19   Requirements.</HEAD>
<P>(a) <I>Employment and training.</I> (1) To the greatest extent feasible, and consistent with existing Federal, state, and local laws and regulations, recipients covered by this subpart shall ensure that employment and training opportunities arising in connection with Section 3 projects are provided to Section 3 workers within the metropolitan area (or nonmetropolitan county) in which the project is located.
</P>
<P>(2) Where feasible, priority for opportunities and training described in paragraph (a)(1) of this section should be given to:
</P>
<P>(i) Section 3 workers residing within the service area or the neighborhood of the project, and
</P>
<P>(ii) Participants in YouthBuild programs.
</P>
<P>(b) <I>Contracting.</I> (1) To the greatest extent feasible, and consistent with existing Federal, state, and local laws and regulations, recipients covered by this subpart shall ensure contracts for work awarded in connection with Section 3 projects are provided to business concerns that provide economic opportunities to Section 3 workers residing within the metropolitan area (or nonmetropolitan county) in which the project is located.
</P>
<P>(2) Where feasible, priority for contracting opportunities described in paragraph (b)(1) of this section should be given to:
</P>
<P>(i) Section 3 business concerns that provide economic opportunities to Section 3 workers residing within the service area or the neighborhood of the project, and
</P>
<P>(ii) YouthBuild programs.


</P>
</DIV8>


<DIV8 N="§ 75.21" NODE="24:1.1.1.1.35.3.59.2" TYPE="SECTION">
<HEAD>§ 75.21   Targeted Section 3 worker for housing and community development financial assistance.</HEAD>
<P>(a)<I> Targeted Section 3 worker.</I> A Targeted Section 3 worker for housing and community development financial assistance means a Section 3 worker who is:
</P>
<P>(1) A worker employed by a Section 3 business concern; or
</P>
<P>(2) A worker who currently fits or when hired fit at least one of the following categories, as documented within the past five years:
</P>
<P>(i) Living within the service area or the neighborhood of the project, as defined in § 75.5; or
</P>
<P>(ii) A YouthBuild participant.
</P>
<P>(b) [Reserved]


</P>
</DIV8>


<DIV8 N="§ 75.23" NODE="24:1.1.1.1.35.3.59.3" TYPE="SECTION">
<HEAD>§ 75.23   Section 3 safe harbor.</HEAD>
<P>(a) <I>General.</I> Recipients will be considered to have complied with requirements in this part, in the absence of evidence to the contrary if they:
</P>
<P>(1) Certify that they have followed the prioritization of effort in § 75.19; and
</P>
<P>(2) Meet or exceed the applicable Section 3 benchmark as described in paragraph (b) of this section.
</P>
<P>(b) <I>Establishing benchmarks.</I> (1) HUD will establish Section 3 benchmarks for Section 3 workers or Targeted Section 3 workers or both through a document published in the <E T="04">Federal Register.</E> HUD may establish a single nationwide benchmark for Section 3 workers and a single nationwide benchmark for Targeted Section 3 workers, or may establish multiple benchmarks based on geography, the nature of the Section 3 project, or other variables. HUD will update the benchmarks through a document published in the <E T="04">Federal Register,</E> subject to public comment, not less frequently than once every 3 years. Such notice shall include aggregate data on labor hours and the proportion of recipients meeting benchmarks, as well as other metrics reported pursuant to § 75.25 as deemed appropriate by HUD, for the 3 most recent reporting years.
</P>
<P>(2) In establishing the Section 3 benchmarks, HUD may consider the industry averages for labor hours worked by specific categories of workers or in different localities or regions; averages for labor hours worked by Section 3 workers and Targeted Section 3 workers as reported by recipients pursuant to this section; and any other factors HUD deems important. In establishing the Section 3 benchmarks, HUD will exclude professional services from the total number of labor hours as such hours are excluded from the total number of labor hours to be reported per § 75.25(a)(4).
</P>
<P>(3) Section 3 benchmarks will consist of the following two ratios:
</P>
<P>(i) The number of labor hours worked by Section 3 workers divided by the total number of labor hours worked by all workers on a Section 3 project in the recipient's program year.
</P>
<P>(ii) The number of labor hours worked by Targeted Section 3 workers as defined in § 75.21(a), divided by the total number of labor hours worked by all workers on a Section 3 project in the recipient's program year.


</P>
</DIV8>


<DIV8 N="§ 75.25" NODE="24:1.1.1.1.35.3.59.4" TYPE="SECTION">
<HEAD>§ 75.25   Reporting.</HEAD>
<P>(a) <I>Reporting of labor hours.</I> (1) For Section 3 projects, recipients must report in a manner prescribed by HUD:
</P>
<P>(i) The total number of labor hours worked;
</P>
<P>(ii) The total number of labor hours worked by Section 3 workers; and
</P>
<P>(iii) The total number of labor hours worked by Targeted Section 3 workers.
</P>
<P>(2) Section 3 workers' and Targeted Section 3 workers' labor hours may be counted for five years from when their status as a Section 3 worker or Targeted Section 3 worker is established pursuant to § 75.31.
</P>
<P>(3) The labor hours reported under paragraph (a)(1) of this section must include the total number of labor hours worked on a Section 3 project, including labor hours worked by any subrecipients, contractors and subcontractors that the recipient is required, or elects pursuant to paragraph (a)(4) of this section, to report.
</P>
<P>(4) Recipients reporting under this section, as well as subrecipients, contractors and subcontractors who report to recipients, may report labor hours by Section 3 workers, under paragraph (a)(1)(ii) of this section, and labor hours by Targeted Section 3 workers, under paragraph (a)(1)(iii) of this section, from professional services without including labor hours from professional services in the total number of labor hours worked under paragraph (a)(1)(i) of this section. If a contract covers both professional services and other work and the recipient or contractor or subcontractor chooses not to report labor hours from professional services, the labor hours under the contract that are not from professional services must still be reported.
</P>
<P>(5) Recipients may report their own labor hours or that of a subrecipient, contractor, or subcontractor based on the employer's good faith assessment of the labor hours of a full-time or part-time employee informed by the employer's existing salary or time and attendance based payroll systems, unless the project or activity is otherwise subject to requirements specifying time and attendance reporting.
</P>
<P>(b) <I>Additional reporting if Section 3 benchmarks are not met.</I> If the recipient's reporting under paragraph (a) of this section indicates that the recipient has not met the Section 3 benchmarks described in § 75.23, the recipient must report in a form prescribed by HUD on the qualitative nature of its activities and those its contractors and subcontractors pursued. Such qualitative efforts may, for example, include but are not limited to the following:
</P>
<P>(1) Engaged in outreach efforts to generate job applicants who are Targeted Section 3 workers.
</P>
<P>(2) Provided training or apprenticeship opportunities.
</P>
<P>(3) Provided technical assistance to help Section 3 workers compete for jobs (<I>e.g.,</I> resume assistance, coaching).
</P>
<P>(4) Provided or connected Section 3 workers with assistance in seeking employment including: drafting resumes, preparing for interviews, and finding job opportunities connecting residents to job placement services.
</P>
<P>(5) Held one or more job fairs.
</P>
<P>(6) Provided or referred Section 3 workers to services supporting work readiness and retention (<I>e.g.,</I> work readiness activities, interview clothing, test fees, transportation, child care).
</P>
<P>(7) Provided assistance to apply for/or attend community college, a four-year educational institution, or vocational/technical training.
</P>
<P>(8) Assisted Section 3 workers to obtain financial literacy training and/or coaching.
</P>
<P>(9) Engaged in outreach efforts to identify and secure bids from Section 3 business concerns.
</P>
<P>(10) Provided technical assistance to help Section 3 business concerns understand and bid on contracts.
</P>
<P>(11) Divided contracts into smaller jobs to facilitate participation by Section 3 business concerns.
</P>
<P>(12) Provided bonding assistance, guaranties, or other efforts to support viable bids from Section 3 business concerns.
</P>
<P>(13) Promoted use of business registries designed to create opportunities for disadvantaged and small businesses.
</P>
<P>(14) Outreach, engagement, or referrals with the state one-stop system as defined in Section 121(e)(2) of the Workforce Innovation and Opportunity Act.
</P>
<P>(c) <I>Reporting frequency.</I> Unless otherwise provided, recipients must report annually to HUD under paragraph (a) of this section, and, where required, under paragraph (b) of this section, on all projects completed within the reporting year in a manner consistent with reporting requirements for the applicable HUD program.


</P>
</DIV8>


<DIV8 N="§ 75.27" NODE="24:1.1.1.1.35.3.59.5" TYPE="SECTION">
<HEAD>§ 75.27   Contract provisions.</HEAD>
<P>(a) Recipients must include language applying Section 3 requirements in any subrecipient agreement or contract for a Section 3 project.
</P>
<P>(b) Recipients of Section 3 funding must require subrecipients, contractors, and subcontractors to meet the requirements of § 75.19, regardless of whether Section 3 language is included in recipient or subrecipient agreements, program regulatory agreements, or contracts.


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:1.1.1.1.35.4" TYPE="SUBPART">
<HEAD>Subpart D—Provisions for Multiple Funding Sources, Recordkeeping, and Compliance</HEAD>


<DIV8 N="§ 75.29" NODE="24:1.1.1.1.35.4.59.1" TYPE="SECTION">
<HEAD>§ 75.29   Multiple funding sources.</HEAD>
<P>(a) If a housing rehabilitation, housing construction or other public construction project is subject to Section 3 pursuant to § 75.3(a)(1) and (2), the recipient must follow subpart B of this part for the public housing financial assistance and may follow either subpart B or C of this part for the housing and community development financial assistance. For such a project, the following applies:
</P>
<P>(1) For housing and community development financial assistance, a Targeted Section 3 worker is any worker who meets the definition of a Targeted Section 3 worker in either subpart B or C of this part; and
</P>
<P>(2) The recipients of both sources of funding shall report on the housing rehabilitation, housing construction, or other public construction project as a whole and shall identify the multiple associated recipients. PHAs and other recipients must report the following information:
</P>
<P>(i) The total number of labor hours worked on the project;
</P>
<P>(ii) The total number of labor hours worked by Section 3 workers on the project; and
</P>
<P>(iii) The total number of labor hours worked by Targeted Section 3 workers on the project.
</P>
<P>(b) If a housing rehabilitation, housing construction, or other public construction project is subject to Section 3 because the project is assisted with funding from multiple sources of housing and community development assistance that exceed the thresholds in § 75.3(a)(2), the recipient or recipients must follow subpart C of this part, and must report to the applicable HUD program office, as prescribed by HUD.


</P>
</DIV8>


<DIV8 N="§ 75.31" NODE="24:1.1.1.1.35.4.59.2" TYPE="SECTION">
<HEAD>§ 75.31   Recordkeeping.</HEAD>
<P>(a) HUD shall have access to all records, reports, and other documents or items of the recipient that are maintained to demonstrate compliance with the requirements of this part, or that are maintained in accordance with the regulations governing the specific HUD program by which the Section 3 project is governed, or the public housing financial assistance is provided or otherwise made available to the recipient, subrecipient, contractor, or subcontractor.
</P>
<P>(b) Recipients must maintain documentation, or ensure that a subrecipient, contractor, or subcontractor that employs the worker maintains documentation, to ensure that workers meet the definition of a Section 3 worker or Targeted Section 3 worker, at the time of hire or the first reporting period, as follows:
</P>
<P>(1) For a worker to qualify as a Section 3 worker, one of the following must be maintained:
</P>
<P>(i) A worker's self-certification that their income is below the income limit from the prior calendar year;
</P>
<P>(ii) A worker's self-certification of participation in a means-tested program such as public housing or Section 8-assisted housing;
</P>
<P>(iii) Certification from a PHA, or the owner or property manager of project-based Section 8-assisted housing, or the administrator of tenant-based Section 8-assisted housing that the worker is a participant in one of their programs;
</P>
<P>(iv) An employer's certification that the worker's income from that employer is below the income limit when based on an employer's calculation of what the worker's wage rate would translate to if annualized on a full-time basis; or
</P>
<P>(v) An employer's certification that the worker is employed by a Section 3 business concern.
</P>
<P>(2) For a worker to qualify as a Targeted Section 3 worker, one of the following must be maintained:
</P>
<P>(i) For a worker to qualify as a Targeted Section 3 worker under subpart B of this part:
</P>
<P>(A) A worker's self-certification of participation in public housing or Section 8-assisted housing programs;
</P>
<P>(B) Certification from a PHA, or the owner or property manager of project-based Section 8-assisted housing, or the administrator of tenant-based Section 8-assisted housing that the worker is a participant in one of their programs;
</P>
<P>(C) An employer's certification that the worker is employed by a Section 3 business concern; or
</P>
<P>(D) A worker's certification that the worker is a YouthBuild participant.
</P>
<P>(ii) For a worker to qualify as a Targeted Section 3 worker under subpart C of this part:
</P>
<P>(A) An employer's confirmation that a worker's residence is within one mile of the work site or, if fewer than 5,000 people live within one mile of a work site, within a circle centered on the work site that is sufficient to encompass a population of 5,000 people according to the most recent U.S. Census;
</P>
<P>(B) An employer's certification that the worker is employed by a Section 3 business concern; or
</P>
<P>(C) A worker's self-certification that the worker is a YouthBuild participant.
</P>
<P>(c) The documentation described in paragraph (b) of this section must be maintained for the time period required for record retentions in accordance with applicable program regulations or, in the absence of applicable program regulations, in accordance with 2 CFR part 200.
</P>
<P>(d) A PHA or recipient may report on Section 3 workers and Targeted Section 3 workers for five years from when their certification as a Section 3 worker or Targeted Section 3 worker is established.


</P>
</DIV8>


<DIV8 N="§ 75.33" NODE="24:1.1.1.1.35.4.59.3" TYPE="SECTION">
<HEAD>§ 75.33   Compliance.</HEAD>
<P>(a) <I>Records of compliance.</I> Each recipient shall maintain adequate records demonstrating compliance with this part, consistent with other recordkeeping requirements in 2 CFR part 200.
</P>
<P>(b) <I>Complaints.</I> Complaints alleging failure of compliance with this part may be reported to the HUD program office responsible for the public housing financial assistance or the Section 3 project, or to the local HUD field office.
</P>
<P>(c) <I>Monitoring.</I> HUD will monitor compliance with the requirements of this part. The applicable HUD program office will determine appropriate methods by which to oversee Section 3 compliance. HUD may impose appropriate remedies and sanctions in accordance with the laws and regulations for the program under which the violation was found.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="81" NODE="24:1.1.1.1.36" TYPE="PART">
<HEAD>PART 81—THE SECRETARY OF HUD'S REGULATION OF THE FEDERAL NATIONAL MORTGAGE ASSOCIATION (FANNIE MAE) AND THE FEDERAL HOME LOAN MORTGAGE CORPORATION (FREDDIE MAC) 




</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1451 <I>et seq.,</I> 1716-1723h, and 4501-4641; 28 U.S.C. 2461 note; 42 U.S.C. 3535(d) and 3601-3619.
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>60 FR 61888, Dec. 1, 1995, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:1.1.1.1.36.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 81.1" NODE="24:1.1.1.1.36.1.59.1" TYPE="SECTION">
<HEAD>§ 81.1   Scope of part.</HEAD>
<P>(a) <I>Authority.</I> The Secretary has general regulatory power respecting the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”) (referred to collectively as Government-sponsored enterprises (“GSEs”)) and is required to make such rules and regulations as are necessary and proper to ensure that the provisions of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (“FHEFSSA”), codified generally at 12 U.S.C. 4501-4641; the Fannie Mae Charter Act, 12 U.S.C. 1716-1723h; and the Freddie Mac Act, 12 U.S.C. 1451-59, are accomplished. 
</P>
<P>(b) <I>Relation between this part and the authorities of OFHEO.</I> The Director of the Office of Federal Housing Enterprise Oversight (“OFHEO”) will issue separate regulations implementing the Director's authority respecting the GSEs. In this part, OFHEO and the Director are only referenced when the Director's responsibilities are connected with the Secretary's responsibilities. 


</P>
</DIV8>


<DIV8 N="§ 81.2" NODE="24:1.1.1.1.36.1.59.2" TYPE="SECTION">
<HEAD>§ 81.2   Definitions.</HEAD>
<P>(a) <I>Statutory terms.</I> All terms defined in FHEFSSA (12 U.S.C. 4502) are used in accordance with their statutory meaning unless otherwise defined in paragraph (b) of this section. 
</P>
<P>(b) <I>Other terms.</I> As used in this part, the term—
</P>
<P><I>AHAR</I> means the Annual Housing Activities Report that a GSE submits to the Secretary under sections 309(n) of the Fannie Mae Charter Act or 307(f) of the Freddie Mac Act. 
</P>
<P><I>AHAR information</I> means data or information contained in the AHAR. 
</P>
<P><I>AHS</I> means the American Housing Survey published by HUD and the Department of Commerce. 
</P>
<P><I>Balloon mortgage</I> means a mortgage providing for payments at regular intervals, with a final payment (“balloon payment”) that is at least 5 percent more than the periodic payments. The periodic payments may cover some or all of the periodic principal or interest. Typically, the periodic payments are level monthly payments that would fully amortize the mortgage over a stated term and the balloon payment is a single payment due after a specified period (but before the mortgage would fully amortize) and pays off or satisfies the outstanding balance of the mortgage. 
</P>
<P><I>Book-entry GSE Security</I> means a GSE Security issued or maintained in the Book-entry System. Book-entry GSE Security also means the separate interest and principal components of a Book-entry GSE Security if such security has been designated by the GSE as eligible for division into such components and the components are maintained separately on the books of one or more Federal Reserve Banks. 
</P>
<P><I>Book-entry System</I> means the automated book-entry system operated by the Federal Reserve Banks acting as the fiscal agent for the GSEs, on which Book-entry GSE Securities are issued, recorded, transferred and maintained in book-entry form. 
</P>
<P><I>Central city</I> means the underserved areas located in any political subdivision designated as a central city by the Office of Management and Budget of the Executive Office of the President. 
</P>
<P><I>Charter Act</I> means the Federal National Mortgage Association Charter Act (12 U.S.C. 1716 <I>et seq.</I>) or the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1451 <I>et seq.</I>). 
</P>
<P><I>Contract rent</I> means the total rent that is, or is anticipated to be, specified in the rental contract as payable by the tenant to the owner for rental of a dwelling unit, including fees or charges for management and maintenance services and those utility charges that are included in the rental contract. In determining contract rent, rent concessions shall not be considered, <I>i.e.,</I> contract rent is not decreased by any rent concessions. Contract rent is rent net of rental subsidies. 
</P>
<P><I>Conventional mortgage</I> means a mortgage other than a mortgage as to which a GSE has the benefit of any guaranty, insurance or other obligation by the United States or any of its agencies or instrumentalities. 
</P>
<P><I>Day</I> means a calendar day. 
</P>
<P><I>Definitive GSE Security</I> means a GSE Security in engraved or printed form, or that is otherwise represented by a certificate. 
</P>
<P><I>Director</I> means the Director of OFHEO. 
</P>
<P><I>Dwelling unit</I> means a room or unified combination of rooms intended for use, in whole or in part, as a dwelling by one or more persons, and includes a dwelling unit in a single-family property, multifamily property, or other residential or mixed-use property. 
</P>
<P><I>ECOA</I> means the Equal Credit Opportunity Act (15 U.S.C. 1691 <I>et seq.</I>). 
</P>
<P><I>Eligible Book-entry GSE Security</I> means a Book-entry GSE Security issued or maintained in the Book-entry System which by the terms of its Security Documentation is eligible to be converted from book-entry form into definitive form. 
</P>
<P><I>Entitlement Holder</I> means a Person or a GSE to whose account an interest in a Book-entry GSE Security is credited on the records of a Securities Intermediary. 
</P>
<P><I>Familial status</I> has the same definition as is set forth at 24 CFR 100.20. 
</P>
<P><I>Family</I> means one or more individuals who occupy the same dwelling unit. 
</P>
<P><I>Fannie Mae</I> means the Federal National Mortgage Association and any affiliate thereof. 
</P>
<P><I>Federal Reserve Bank Operating Circular</I> means the publication issued by each Federal Reserve Bank that sets forth the terms and conditions under which the Reserve Bank maintains book-entry Securities accounts (including Book-entry GSE Securities) and transfers book-entry Securities (including Book-entry GSE Securities). 
</P>
<P><I>FHEFSSA</I> means the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, codified generally at 12 U.S.C. 4501-4651. 
</P>
<P><I>FOIA</I> means the Freedom of Information Act (5 U.S.C. 552). 
</P>
<P><I>Freddie Mac</I> means the Federal Home Loan Mortgage Corporation and any affiliate thereof. 
</P>
<P><I>Freddie Mac Act</I> means the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1451 <I>et seq.</I>). 
</P>
<P><I>Government-sponsored enterprise</I> or <I>GSE</I> means Fannie Mae or Freddie Mac. 
</P>
<P><I>GSE Security</I> means any security or obligation of Fannie Mae or Freddie Mac issued under its respective Charter Act in the form of a Definitive GSE Security or a Book-entry GSE Security. 
</P>
<P><I>Handicap</I> has the same definition as is set forth at 24 CFR 100.201. 
</P>
<P><I>HOEPA mortgage</I>” means a mortgage for which the annual percentage rate (as calculated in accordance with the relevant provisions of section 107 of the Home Ownership Equity Protection Act (HOEPA) (15 U.S.C. 1606)) exceeds the threshold described in section 103(aa)(1)(A) of HOEPA (15 U.S.C. 1602(aa)(1)(A)), or for which the total points and fees payable by the borrower exceed the threshold described in section 103(aa)(1)(B) of HOEPA (15 U.S.C. 1602(aa)(1)(B)), as those thresholds may be increased or decreased by the Federal Reserve Board or by Congress, unless the GSEs are otherwise notified in writing by HUD. Notwithstanding the exclusions in section 103(aa)(1) of HOEPA, for purposes of this part, the term “<I>HOEPA mortgage</I>” includes all types of mortgages as defined in this section, including residential mortgage transactions as that term is defined in section 103(w) of HOEPA (15 U.S.C. 1602(w)), but does not include reverse mortgages. 
</P>
<P><I>Home Purchase Mortgage</I> means a residential mortgage for the purchase of an owner-occupied single-family property. 
</P>
<P><I>HUD</I> means the United States Department of Housing and Urban Development. 
</P>
<P><I>Lender</I> means any entity that makes, originates, sells, or services mortgages, and includes the secured creditors named in the debt obligation and document creating the mortgage. 
</P>
<P><I>Low-income area</I> means a census tract or block numbering area in which the median income does not exceed 80 percent of the area median income. 
</P>
<P><I>Median income</I> means, with respect to an area, the unadjusted median family income for the area as most recently determined and published by HUD. HUD will provide the GSEs annually with information specifying how HUD's published median family income estimates for metropolitan areas are to be applied for the purposes of determining median family income. 
</P>
<P><I>Metropolitan area</I> means a metropolitan statistical area (“MSA”), or a portion of such an area for which median family income estimates are published annually by HUD.
</P>
<P><I>Minority</I> means any individual who is included within any one or more of the following racial and ethnic categories:
</P>
<P>(1) American Indian or Alaskan Native—a person having origins in any of the original peoples of North and South America (including Central America), and who maintains tribal affiliation or community attachment;
</P>
<P>(2) Asian—a person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian subcontinent, including, for example, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the Philippine Islands, Thailand, and Vietnam;
</P>
<P>(3) Black or African American—a person having origins in any of the black racial groups of Africa;
</P>
<P>(4) Hispanic or Latino—a person of Cuban, Mexican, Puerto Rican, South or Central American, or other Spanish culture or origin, regardless of race; and
</P>
<P>(5) Native Hawaiian or Other Pacific Islander—a person having origins in any of the original peoples of Hawaii, Guam, Samoa, or other Pacific Islands. 
</P>
<P><I>Mortgage</I> means a member of such classes of liens, including subordinate liens, as are commonly given or are legally effective to secure advances on, or the unpaid purchase price of, real estate under the laws of the State in which the real estate is located, or a manufactured home that is personal property under the laws of the State in which the manufactured home is located, together with the credit instruments, if any, secured thereby, and includes interests in mortgages. “Mortgage” includes a mortgage, lien, including a subordinate lien, or other security interest on the stock or membership certificate issued to a tenant-stockholder or resident-member by a cooperative housing corporation, as defined in section 216 of the Internal Revenue Code of 1986, and on the proprietary lease, occupancy agreement, or right of tenancy in the dwelling unit of the tenant-stockholder or resident-member in such cooperative housing corporation. 
</P>
<P><I>Mortgage data</I> means data obtained by the Secretary from the GSEs under subsection 309(m) of the Fannie Mae Charter Act and subsection 307(e) of the Freddie Mac Act. 
</P>
<P><I>Mortgage purchase</I> means a transaction in which a GSE bought or otherwise acquired with cash or other thing of value, a mortgage for its portfolio or for securitization. 
</P>
<P><I>Mortgages contrary to good lending practices</I> means a mortgage or a group or category of mortgages entered into by a lender and purchased by a GSE where it can be shown that a lender engaged in a practice of failing to: 
</P>
<P>(1) Report monthly on borrowers' repayment history to credit repositories on the status of each GSE loan that a lender is servicing; 
</P>
<P>(2) Offer mortgage applicants products for which they qualify, but rather steer applicants to high cost products that are designed for less credit worthy borrowers. Similarly, for consumers who seek financing through a lender's higher-priced subprime lending channel, lenders should not fail to offer or direct such consumers toward the lender's standard mortgage line if they are able to qualify for one of the standard products; 
</P>
<P>(3) Comply with fair lending requirements; or 
</P>
<P>(4) Engage in other good lending practices that are: 
</P>
<P>(i) Identified in writing by a GSE as good lending practices for inclusion in this definition; and 
</P>
<P>(ii) Determined by the Secretary to constitute good lending practices. 
</P>
<P><I>Mortgages with unacceptable terms or conditions or resulting from unacceptable practices</I> means a mortgage or a group or category of mortgages with one or more of the following terms or conditions: 
</P>
<P>(1) Excessive fees, where the total points and fees charged to a borrower exceed the greater of 5 percent of the loan amount or a maximum dollar amount of $1000, or an alternative amount requested by a GSE and determined by the Secretary as appropriate for small mortgages. 
</P>
<P>(i) For purposes of this definition, points and fees include: 
</P>
<P>(A) Origination fees; 
</P>
<P>(B) Underwriting fees; 
</P>
<P>(C) Broker fees; 
</P>
<P>(D) Finder's fees; and 
</P>
<P>(E) Charges that the lender imposes as a condition of making the loan, whether they are paid to the lender or a third party. 
</P>
<P>(ii) For purposes of this definition, points and fees do not include: 
</P>
<P>(A) Bona fide discount points; 
</P>
<P>(B) Fees paid for actual services rendered in connection with the origination of the mortgage, such as attorneys' fees, notary's fees, and fees paid for property appraisals, credit reports, surveys, title examinations and extracts, flood and tax certifications, and home inspections; 
</P>
<P>(C) The cost of mortgage insurance or credit-risk price adjustments; 
</P>
<P>(D) The costs of title, hazard, and flood insurance policies; 
</P>
<P>(E) State and local transfer taxes or fees; 
</P>
<P>(F) Escrow deposits for the future payment of taxes and insurance premiums; and 
</P>
<P>(G) Other miscellaneous fees and charges that, in total, do not exceed 0.25 percent of the loan amount. 
</P>
<P>(2) Prepayment penalties, except where: 
</P>
<P>(i) The mortgage provides some benefits to the borrower (<I>e.g.,</I> such as rate or fee reduction for accepting the prepayment premium); 
</P>
<P>(ii) The borrower is offered the choice of another mortgage that does not contain payment of such a premium; 
</P>
<P>(iii) The terms of the mortgage provision containing the prepayment penalty are adequately disclosed to the borrower; and 
</P>
<P>(iv) The prepayment penalty is not charged when the mortgage debit is accelerated as the result of the borrower's default in making his or her mortgage payments. 
</P>
<P>(3) The sale or financing of prepaid single-premium credit life insurance products in connection with the origination of the mortgage;
</P>
<P>(4) Evidence that the lender did not adequately consider the borrower's ability to make payments, <I>i.e.,</I> mortgages that are originated with underwriting techniques that focus on the borrower's equity in the home, and do not give full consideration of the borrower's income and other obligations. Ability to repay must be determined and must be based upon relating the borrower's income, assets, and liabilities to the mortgage payments; or
</P>
<P>(5) Other terms or conditions that are: 
</P>
<P>(i) Identified in writing by a GSE as unacceptable terms or conditions or resulting from unacceptable practices for inclusion in this <I>definition;</I> and 
</P>
<P>(ii) Determined by the Secretary as an unacceptable term or condition of a mortgage for which goals credit should not be received.
</P>
<P><I>Multifamily housing</I> means a residence consisting of more than 4 dwelling units. The term includes cooperative buildings and condominium projects. 
</P>
<P><I>New England</I> means Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont. 
</P>
<P><I>OFHEO</I> means the Office of Federal Housing Enterprise Oversight. 
</P>
<P><I>Ongoing program</I> means a program that is expected to continue for the foreseeable future. 
</P>
<P><I>Other underserved area</I> means any underserved area that is in a metropolitan area, but not in a central city. 
</P>
<P><I>Owner-occupied unit</I> means a dwelling unit in single-family housing in which a mortgagor of the unit resides. 
</P>
<P><I>Participant</I> means a Person or GSE that maintains a Participant's Securities Account with a Federal Reserve Bank.
</P>
<P><I>Participation</I> means a fractional interest in the principal amount of a mortgage. 
</P>
<P><I>Person,</I> as used in subpart H, means and includes an individual, corporation, company, governmental entity, association, firm, partnership, trust, estate, representative, and any other similar organization, but does not mean or include the United States, a GSE, or a Federal Reserve Bank. 
</P>
<P><I>Portfolio of loans</I> means 10 or more loans. 
</P>
<P><I>Proprietary information</I> means all mortgage data and all AHAR information that the GSEs submit to the Secretary in the AHARs that contain trade secrets or privileged or confidential, commercial, or financial information that, if released, would be likely to cause substantial competitive harm. 
</P>
<P><I>Public data</I> means all mortgage data and all AHAR information that the GSEs submit to the Secretary in the AHARs, that the Secretary determines are not proprietary and may appropriately be disclosed consistent with other applicable laws and regulations. 
</P>
<P><I>Real estate mortgage investment conduit (REMIC)</I> means multi-class mortgage securities issued by a tax-exempt entity. 
</P>
<P><I>Refinancing</I> means a transaction in which an existing mortgage is satisfied or replaced by a new mortgage undertaken by the same borrower. The term does not include: 
</P>
<P>(1) A renewal of a single payment obligation with no change in the original terms; 
</P>
<P>(2) A reduction in the annual percentage rate of the mortgage as computed under the Truth in Lending Act, with a corresponding change in the payment schedule; 
</P>
<P>(3) An agreement involving a court proceeding; 
</P>
<P>(4) A workout agreement, in which a change in the payment schedule or collateral requirements is agreed to as a result of the mortgagor's default or delinquency, unless the rate is increased or the new amount financed exceeds the unpaid balance plus earned finance charges and premiums for the continuation of insurance; 
</P>
<P>(5) The renewal of optional insurance purchased by the mortgagor and added to an existing mortgage; and 
</P>
<P>(6) A renegotiated balloon mortgage on a multifamily property where the balloon payment was due within 1 year after the date of the closing of the renegotiated mortgage. 
</P>
<P>(7) A conversion of a balloon mortgage note on a single family property to a fully amortizing mortgage note where the GSE already owns or has an interest in the balloon note at the time of the conversion
</P>
<P><I>Rent</I> means, for a dwelling unit: 
</P>
<P>(1) When the contract rent includes all utilities, the contract rent; or 
</P>
<P>(2) When the contract rent does not include all utilities, the contract rent plus: 
</P>
<P>(i) The actual cost of utilities not included in the contract rent; or 
</P>
<P>(ii) A utility allowance. 
</P>
<P><I>Rental housing</I> means dwelling units in multifamily housing and dwelling units that are not owner occupied in single-family housing. 
</P>
<P><I>Rental unit</I> means a dwelling unit that is not owner-occupied and is rented or available to rent. 
</P>
<P><I>Residence</I> means a property where one or more families reside. 
</P>
<P><I>Residential mortgage</I> means a mortgage on single-family or multifamily housing. 
</P>
<P><I>Revised Article 8</I> has the same meaning as in 31 CFR 357.2. 
</P>
<P><I>Rural area</I> means any underserved area located outside of any metropolitan area. 
</P>
<P><I>Seasoned mortgage</I> means a mortgage on which the date of the mortgage note is more than 1 year before the GSE purchased the mortgage. 
</P>
<P><I>Second mortgage</I> means any mortgage that has a lien position subordinate only to the lien of the first mortgage. 
</P>
<P><I>Secondary residence</I> means a dwelling where the mortgagor maintains (or will maintain) a part-time place of abode and typically spends (or will spend) less than the majority of the calendar year. A person may have more than one secondary residence at a time. 
</P>
<P><I>Secretary</I> means the Secretary of Housing and Urban Development and, where appropriate, any person designated by the Secretary to perform a particular function for the Secretary, including any HUD officer, employee, or agent. 
</P>
<P><I>Security</I> means any mortgage participation certificate, note, bond, debenture, evidence of indebtedness, collateral-trust certificate, transferable share, certificate of deposit for a security, or, in general, any interest or instrument commonly known as a “security.” 
</P>
<P><I>Securities Documentation</I> means the applicable statement of terms, trust indenture, securities agreement or other documents establishing the terms of a Book-entry GSE Security. 
</P>
<P><I>Single-family housing</I> means a residence consisting of one to four dwelling units. Single-family housing includes condominium dwelling units and dwelling units in cooperative housing projects. 
</P>
<P><I>Transfer message</I> means an instruction of a Participant to a Federal Reserve Bank to effect a transfer of a Book-entry Security (including a Book-entry GSE Security) maintained in the Book-entry System, as set forth in Federal Reserve Bank Operating Circulars.
</P>
<P><I>Underserved area</I> means: 
</P>
<P>(1) For purposes of the definitions of “Central city” and “Other underserved area,” a census tract, a Federal or State American Indian reservation or tribal or individual trust land, or the balance of a census tract excluding the area within any Federal or State American Indian reservation or tribal or individual trust land, having: 
</P>
<P>(i) A median income at or below 120 percent of the median income of the metropolitan area and a minority population of 30 percent or greater; or
</P>
<P>(ii) A median income at or below 90 percent of median income of the metropolitan area.
</P>
<P>(2) For purposes of the definition of “Rural area,” a whole census tract, a Federal or State American Indian reservation or tribal or individual trust land, or the balance of a census tract excluding the area within any Federal or State American Indian reservation or tribal or individual trust land, having:
</P>
<P>(i) A median income at or below 120 percent of the greater of the State non-metropolitan median income or the nationwide non-metropolitan median income and a minority population of 30 percent or greater; or
</P>
<P>(ii) A median income at or below 95 percent of the greater of the State non-metropolitan median income or nationwide non-metropolitan median income. 
</P>
<P>(3) Any Federal or State American Indian reservation or tribal or individual trust land that includes land that is both within and outside of a metropolitan area and that is designated as an underserved area by HUD. In such cases, HUD will notify the GSEs as to applicability of other definitions and counting conventions.
</P>
<P><I>Utilities</I> means charges for electricity, piped or bottled gas, water, sewage disposal, fuel (oil, coal, kerosene, wood, solar energy, or other), and garbage and trash collection. Utilities do not include charges for telephone service. 
</P>
<P><I>Utility allowance</I> means either: 
</P>
<P>(1) The amount to be added to contract rent when utilities are not included in contract rent (also referred to as the “AHS-derived utility allowance”), as issued annually by the Secretary; or 
</P>
<P>(2) The utility allowance established under the HUD Section 8 Program (42 U.S.C. 1437f) for the area where the property is located. 
</P>
<P><I>Very-low-income</I> has the same definition as “very low-income” has in FHEFSSA. 
</P>
<P><I>Wholesale exchange</I> means a transaction in which a GSE buys or otherwise acquires mortgages held in portfolio or securitized by the other GSE, or where both GSEs swap such mortgages. 
</P>
<P><I>Working day</I> means a day when HUD is officially open for business. 
</P>
<P>(c) <I>Subpart H terms.</I> Unless the context requires otherwise, terms used in subpart H of this part that are not defined in this part, have the meanings as set forth in 31 CFR 357.2. Definitions and terms used in 31 CFR part 357 should read as though modified to effectuate their application to the GSEs. 
</P>
<CITA TYPE="N">[60 FR 61888, Dec. 1, 1995, as amended at 61 FR 63947, Dec. 2, 1996; 62 FR 28977, May 29, 1997; 65 FR 65084, Oct. 31, 2000; 69 FR 63638, Nov. 2, 2004]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.1.1.1.36.2" TYPE="SUBPART">
<HEAD>Subpart B—Housing Goals</HEAD>


<DIV8 N="§ 81.11" NODE="24:1.1.1.1.36.2.59.1" TYPE="SECTION">
<HEAD>§ 81.11   General.</HEAD>
<P>This subpart establishes: three housing goals, as required by FHEFSSA; requirements for measuring performance under the goals; and procedures for monitoring and enforcing the goals. 


</P>
</DIV8>


<DIV8 N="§ 81.12" NODE="24:1.1.1.1.36.2.59.2" TYPE="SECTION">
<HEAD>§ 81.12   Low- and Moderate-Income Housing Goal.</HEAD>
<P>(a) <I>Purpose of goal.</I> This annual goal for the purchase by each GSE of mortgages on housing for low- and moderate-income families (“the Low- and Moderate-Income Housing Goal”) is intended to achieve increased purchases by the GSEs of such mortgages. 
</P>
<P>(b) <I>Factors.</I> In establishing the Low- and Moderate-Income Housing Goals, the Secretary considered the factors in 12 U.S.C. 4562(b). A statement documenting HUD's considerations and findings with respect to these factors, entitled “Departmental Considerations to Establish the Low- and Moderate-Income Housing Goal,” was published in the <E T="04">Federal Register</E> on November 2, 2004.
</P>
<P>(c) <I>Goals.</I> The annual goals for each GSE's purchases of mortgages on housing for low- and moderate-income families are:
</P>
<P>(1) For the year 2005, 52 percent of the total number of dwelling units financed by that GSE's mortgage purchases unless otherwise adjusted by HUD in accordance with FHEFSSA. In addition, as a Low- and Moderate-Income Housing Home Purchase Subgoal, 45 percent of the total number of home purchase mortgages in metropolitan areas financed by that GSE's mortgage purchases shall be home purchase mortgages in metropolitan areas which count toward the Low- and Moderate-Income Housing Goal in the year 2005 unless otherwise adjusted by HUD in accordance with FHEFSSA;
</P>
<P>(2) For the year 2006, 53 percent of the total number of dwelling units financed by that GSE's mortgage purchases unless otherwise adjusted by HUD in accordance with FHEFSSA. In addition, as a Low- and Moderate-Income Housing Home Purchase Subgoal, 46 percent of the total number of home purchase mortgages in metropolitan areas financed by that GSE's mortgage purchases shall be home purchase mortgages in metropolitan areas which count toward the Low- and Moderate-Income Housing Goal in the year 2006 unless otherwise adjusted by HUD in accordance with FHEFSSA;
</P>
<P>(3) For the year 2007, 55 percent of the total number of dwelling units financed by that GSE's mortgage purchases unless otherwise adjusted by HUD in accordance with FHEFSSA. In addition, as a Low- and Moderate-Income Housing Home Purchase Subgoal, 47 percent of the total number of home purchase mortgages in metropolitan areas financed by that GSE's mortgage purchases shall be home purchase mortgages in metropolitan areas which count toward the Low- and Moderate-Income Housing Goal in the year 2007 unless otherwise adjusted by HUD in accordance with FHEFSSA;
</P>
<P>(4) For the year 2008, 56 percent of the total number of dwelling units financed by that GSE's mortgage purchases unless otherwise adjusted by HUD in accordance with FHEFSSA. In addition, as a Low- and Moderate-Income Housing Home Purchase Subgoal, 47 percent of the total number of home purchase mortgages in metropolitan areas financed by that GSE's mortgage purchases shall be home purchase mortgages in metropolitan areas which count toward the Low- and Moderate-Income Housing Goal in the year 2008 unless otherwise adjusted by HUD in accordance with FHEFSSA; and
</P>
<P>(5) For the year 2009 and thereafter HUD shall establish annual goals. Pending establishment of goals for the year 2009 and thereafter, the annual goal for each of those years shall be 56 percent of the total number of dwelling units financed by that GSE's mortgage purchases in each of those years. In addition, as a Low and Moderate Income Housing Home Purchase Subgoal, 47 percent of the total number of home purchase mortgages in metropolitan areas financed by that GSE's mortgage purchases shall be home purchase mortgages in metropolitan areas which count toward the Low- and Moderate-Income Housing Goal in each of those years unless otherwise adjusted by HUD in accordance with FHEFSSA.
</P>
<CITA TYPE="N">[60 FR 61888, Dec. 1, 1995, as amended at 65 FR 65085, Oct. 31, 2000; 69 FR 63639, Nov. 2, 2004]


</CITA>
</DIV8>


<DIV8 N="§ 81.13" NODE="24:1.1.1.1.36.2.59.3" TYPE="SECTION">
<HEAD>§ 81.13   Central Cities, Rural Areas, and Other Underserved Areas Housing Goal.</HEAD>
<P>(a) <I>Purpose of the goal.</I> This annual goal for the purchase by each GSE of mortgages on housing located in central cities, rural areas, and other underserved areas is intended to achieve increased purchases by the GSEs of mortgages financing housing in areas that are underserved in terms of mortgage credit. 
</P>
<P>(b) <I>Factors.</I> In establishing the Central Cities, Rural Areas, and Other Underserved Areas Goals, the Secretary considered the factors in 12 U.S.C. 4564(b). A statement documenting HUD's considerations and findings with respect to these factors, entitled “Departmental Considerations to Establish the Central Cities, Rural Areas, and Other Underserved Areas Housing Goal,” was published in the <E T="04">Federal Register</E> on November 2, 2004. 
</P>
<P>(c) <I>Goals.</I> The annual goals for each GSE's purchases of mortgages on housing located in central cities, rural areas, and other underserved areas are:
</P>
<P>(1) For the year 2005, 37 percent of the total number of dwelling units financed by that GSE's mortgage purchases unless otherwise adjusted by HUD in accordance with FHEFSSA. In addition, as a Central Cities, Rural Areas, and Other Underserved Areas Home Purchase Subgoal, 32 percent of the total number of home purchase mortgages in metropolitan areas financed by that GSE's mortgage purchases shall be home purchase mortgages in metropolitan areas which count toward the Central Cities, Rural Areas, and Other Underserved Areas Housing Goal in the year 2005 unless otherwise adjusted by HUD in accordance with FHEFSSA;
</P>
<P>(2) For the year 2006, 38 percent of the total number of dwelling units financed by that GSE's mortgage purchases unless otherwise adjusted by HUD in accordance with FHEFSSA. In addition, as a Central Cities, Rural Areas, and Other Underserved Areas Home Purchase Subgoal, 33 percent of the total number of home purchase mortgages in metropolitan areas financed by that GSE's mortgage purchases shall be home purchase mortgages in metropolitan areas which count toward the Central Cities, Rural Areas, and Other Underserved Areas Housing Goal in the year 2006 unless otherwise adjusted by HUD in accordance with FHEFSSA;
</P>
<P>(3) For the year 2007, 38 percent of the total number of dwelling units financed by that GSE's mortgage purchases unless otherwise adjusted by HUD in accordance with FHEFSSA. In addition, as a Central Cities, Rural Areas, and Other Underserved Areas Home Purchase Subgoal, 33 percent of the total number of home purchase mortgages in metropolitan areas financed by that GSE's mortgage purchases shall be home purchase mortgages in metropolitan areas which count toward the Central Cities, Rural Areas, and Other Underserved Areas Housing Goal in the year 2007 unless otherwise adjusted by HUD in accordance with FHEFSSA;
</P>
<P>(4) For the year 2008, 39 percent of the total number of dwelling units financed by that GSE's mortgage purchases unless otherwise adjusted by HUD in accordance with FHEFSSA. In addition, as a Central Cities, Rural Areas, and Other Underserved Areas Home Purchase Subgoal, 34 percent of the total number of home purchase mortgages in metropolitan areas financed by that GSE's mortgage purchases shall be home purchase mortgages in metropolitan areas which count toward the Central Cities, Rural Areas, and Other Underserved Areas Housing Goal in the year 2008 unless otherwise adjusted by HUD in accordance with FHEFSSA; and
</P>
<P>(5) For the year 2009 and thereafter HUD shall establish annual goals. Pending establishment of goals for the year 2009 and thereafter, the annual goal for each of those years shall be 39 percent of the total number of dwelling units financed by that GSE's mortgage purchases in each of those years. In addition, as a Central Cities, Rural Areas, and Other Underserved Areas Home Purchase Subgoal, 34 percent of the total number of home purchase mortgages in metropolitan areas financed by that GSE's mortgage purchases shall be home purchase mortgages in metropolitan areas which count toward the Central Cities, Rural Areas, and Other Underserved Areas Housing Goal in each of those years unless otherwise adjusted by HUD in accordance with FHEFSSA. 
</P>
<P>(d) <I>Measuring performance.</I> The GSEs shall determine on a mortgage-by-mortgage basis, through geocoding or any similarly accurate and reliable method, whether a mortgage finances one or more dwelling units located in a central city, rural area, or other underserved area. 
</P>
<CITA TYPE="N">[60 FR 61888, Dec. 1, 1995, as amended at 65 FR 65086, Oct. 31, 2000; 69 FR 63639, Nov. 2, 2004]


</CITA>
</DIV8>


<DIV8 N="§ 81.14" NODE="24:1.1.1.1.36.2.59.4" TYPE="SECTION">
<HEAD>§ 81.14   Special Affordable Housing Goal.</HEAD>
<P>(a) <I>Purpose of the goal.</I> This goal is intended to achieve increased purchases by the GSEs of mortgages on rental and owner-occupied housing meeting the then-existing unaddressed needs of, and affordable to, low-income families in low-income areas and very-low-income families. 
</P>
<P>(b) <I>Factors.</I> In establishing the Special Affordable Housing Goals, the Secretary considered the factors in 12 U.S.C. 4563(a)(2). A statement documenting HUD's considerations and findings with respect to these factors, entitled “Departmental Considerations to Establish the Special Affordable Housing Goal,” was published in the <E T="04">Federal Register</E> on November 2, 2004. 
</P>
<P>(c) <I>Goals.</I> The annual goals for each GSE's purchases of mortgages on rental and owner-occupied housing meeting the then-existing, unaddressed needs of and affordable to low-income families in low-income areas and very low-income families are:
</P>
<P>(1) For the year 2005, 22 percent of the total number of dwelling units financed by each GSE's mortgage purchases unless otherwise adjusted by HUD in accordance with FHEFSSA. The goal for the year 2005 shall include mortgage purchases financing dwelling units in multifamily housing totaling not less than 1.0 percent of the average annual dollar volume of combined (single-family and multifamily) mortgages purchased by the respective GSE in 2000, 2001, and 2002, unless otherwise adjusted by HUD in accordance with FHEFSSA. In addition, as a Special Affordable Housing Home Purchase Subgoal, 17 percent of the total number of home purchase mortgages in metropolitan areas financed by each GSE's mortgage purchases shall be home purchase mortgages in metropolitan areas which count toward the Special Affordable Housing Goal in the year 2005 unless otherwise adjusted by HUD in accordance with FHEFSSA;
</P>
<P>(2) For the year 2006, 23 percent of the total number of dwelling units financed by each GSE's mortgage purchases unless otherwise adjusted by HUD in accordance with FHEFSSA. The goal for the year 2006 shall include mortgage purchases financing dwelling units in multifamily housing totaling not less than 1.0 percent of the average annual dollar volume of combined (single-family and multifamily) mortgages purchased by the respective GSE in 2000, 2001, and 2002, unless otherwise adjusted by HUD in accordance with FHEFSSA. In addition, as a Special Affordable Housing Home Purchase Subgoal, 17 percent of the total number of home purchase mortgages in metropolitan areas financed by each GSE's mortgage purchases shall be home purchase mortgages in metropolitan areas which count toward the Special Affordable Housing Goal in the year 2006 unless otherwise adjusted by HUD in accordance with FHEFSSA;
</P>
<P>(3) For the year 2007, 25 percent of the total number of dwelling units financed by each GSE's mortgage purchases unless otherwise adjusted by HUD in accordance with FHEFSSA. The goal for the year 2007 shall include mortgage purchases financing dwelling units in multifamily housing totaling not less than 1.0 percent of the average annual dollar volume of combined (single-family and multifamily) mortgages purchased by the respective GSE in 2000, 2001, and 2002, unless otherwise adjusted by HUD in accordance with FHEFSSA. In addition, as a Special Affordable Housing Home Purchase Subgoal, 18 percent of the total number of home purchase mortgages in metropolitan areas financed by each GSE's mortgage purchases shall be home purchase mortgages in metropolitan areas which count toward the Special Affordable Housing Goal in the year 2007 unless otherwise adjusted by HUD in accordance with FHEFSSA;
</P>
<P>(4) For the year 2008, 27 percent of the total number of dwelling units financed by each GSE's mortgage purchases unless otherwise adjusted by HUD in accordance with FHEFSSA. The goal for the year 2008 shall include mortgage purchases financing dwelling units in multifamily housing totaling not less than 1.0 percent of the average annual dollar volume of combined (single-family and multifamily) mortgages purchased by the respective GSE in 2000, 2001, and 2002, unless otherwise adjusted by HUD in accordance with FHEFSSA. In addition, as a Special Affordable Housing Home Purchase Subgoal, 18 percent of the total number of home purchase mortgages in metropolitan areas financed by each GSE's mortgage purchases shall be home purchase mortgages in metropolitan areas which count toward the Special Affordable Housing Goal in the year 2008 unless otherwise adjusted by HUD in accordance with FHEFSSA; and
</P>
<P>(5) For the year 2009 and thereafter HUD shall establish annual goals. Pending establishment of goals for the year 2009 and thereafter, the annual goal for each of those years shall be 27 percent of the total number of dwelling units financed by each GSE's mortgage purchases in each of those years. The goal for each such year shall include mortgage purchases financing dwelling units in multifamily housing totaling not less than 1.0 percent of the annual average dollar volume of combined (single-family and multifamily) mortgages purchased by the respective GSE in the years 2000, 2001, and 2002. In addition, as a Special Affordable Housing Home Purchase Subgoal, 18 percent of the total number of home purchase mortgages in metropolitan areas financed by each GSE's mortgage purchases shall be home purchase mortgages in metropolitan areas which count toward the Special Affordable Housing Goal in each of those years unless otherwise adjusted by HUD in accordance with FHEFSSA. 
</P>
<P>(d) <I>Counting of multifamily units.</I> (1) Dwelling units affordable to low-income families and financed by a particular purchase of a mortgage on multifamily housing shall count toward achievement of the Special Affordable Housing Goal where at least: 
</P>
<P>(i) 20 percent of the dwelling units in the particular multifamily property are affordable to especially low-income families; or
</P>
<P>(ii) 40 percent of the dwelling units in the particular multifamily property are affordable to very-low-income families. 
</P>
<P>(2) Where only some of the units financed by a purchase of a mortgage on multifamily housing count under the multifamily component of the goal, only a portion of the unpaid principal balance of the mortgage attributable to such units shall count toward the multifamily component. The portion of the mortgage counted under the multifamily requirement shall be equal to the ratio of the total units that count to the total number of units in the mortgaged property. 
</P>
<P>(e) <I>Full Credit Activities.</I> (1) For purposes of 12 U.S.C. 4563(b)(1) and this paragraph (e), full credit means that each unit financed by a mortgage purchased by a GSE and meeting the requirements of this section shall count toward achievement of the Special Affordable Housing Goal for that GSE. 
</P>
<P>(2) Mortgages insured under HUD's Home Equity Conversion Mortgage (“HECM”) Insurance Program, 12 U.S.C. 1715 z-20; mortgages guaranteed under the Rural Housing Service's Single Family Housing Guaranteed Loan Program, 42 U.S.C. 1472; mortgages on properties on tribal lands insured under FHA's Section 248 program, 12 U.S.C. 1715 z-13, HUD's Section 184 program, 12 U.S.C. 1515 z-13a, or Title VI of the Native American Housing Assistance and Self-Determination Act of 1996, 25 U.S.C. 4191-4195; meet the requirements of 12 U.S.C. 4563(b)(1)(A)(i) and (ii).
</P>
<P>(3) HUD will give full credit toward achievement of the Special Affordable Housing Goal for the activities in 12 U.S.C. 4563(b)(1)(A), provided the GSE submits documentation to HUD that supports eligibility under 12 U.S.C. 4563(b)(1)(A) for HUD's approval.
</P>
<P>(4)(i) For purposes of determining whether a seller meets the requirement in 12 U.S.C. 4563(b)(1)(B), a seller must currently operate on its own or actively participate in an on-going, discernible, active, and verifiable program directly targeted at the origination of new mortgage loans that qualify under the Special Affordable Housing Goal.
</P>
<P>(ii) A seller's activities must evidence a current intention or plan to reinvest the proceeds of the sale into mortgages qualifying under the Special Affordable Housing Goal, with a current commitment of resources on the part of the seller for this purpose.
</P>
<P>(iii) A seller's actions must evidence willingness to buy qualifying loans when these loans become available in the market as part of active, on-going, sustainable efforts to ensure that additional loans that meet the goal are originated.
</P>
<P>(iv) Actively participating in such a program includes purchasing qualifying loans from a correspondent originator, including a lender or qualified housing group, that operates an on-going program resulting in the origination of loans that meet the requirements of the goal, has a history of delivering, and currently delivers qualifying loans to the seller.
</P>
<P>(v) The GSE must verify and monitor that the seller meets the requirements in paragraphs (e)(4)(i) through (e)(4)(iv) of this section and develop any necessary mechanisms to ensure compliance with the requirements, except as provided in paragraph (e)(4)(vi) and (vii) of this section.
</P>
<P>(vi) Where a seller's primary business is originating mortgages on housing that qualifies under this Special Affordable Housing Goal such seller is presumed to meet the requirements in paragraphs (e)(4)(i) through (e)(4)(iv) of this section. Sellers that are institutions that are:
</P>
<P>(A) Regularly in the business of mortgage lending;
</P>
<P>(B) A BIF-insured or SAIF-insured depository institution; and
</P>
<P>(C) Subject to, and has received at least a satisfactory performance evaluation rating for
</P>
<P>(<I>1</I>) At least the two most recent consecutive examinations under, the Community Reinvestment Act, if the lending institution has total assets in excess of $250 million; or
</P>
<P>(<I>2</I>) The most recent examination under the Community Reinvestment Act if the lending institutions which have total assets no more than $250 million are identified as sellers that are presumed to have a primary business of originating mortgages on housing that qualifies under this Special Affordable Housing Goal and, therefore, are presumed to meet the requirements in paragraphs (e)(4)(i) through (e)(4)(iv) of this section.
</P>
<P>(vii) Classes of institutions or organizations that are presumed have as their primary business originating mortgages on housing that qualifies under this Special Affordable Housing Goal and, therefore. are presumed in paragraphs (e)(4)(i) through (e)(4)(iv) of this section to meet the requirements are as follows: State housing finance agencies; affordable housing loan consortia; Federally insured credit unions that are:
</P>
<P>(A) Members of the Federal Home Loan Bank System and meet the first-time homebuyer standard of the Community Support Program; or
</P>
<P>(B) Community development credit unions; community development financial institutions; public loan funds; or non-profit mortgage lenders. HUD may determine that additional classes of institutions or organizations are primarily engaged in the business of financing affordable housing mortgages for purposes of this presumption, and if, so will notify the GSEs in writing.
</P>
<P>(viii) For purposes of paragraph (e)(4) of this section, if the seller did not originate the mortgage loans, but the originator of the mortgage loans fulfills the requirements of either paragraphs (e)(4)(i) through (e)(4)(iv), paragraph (e)(4)(vi) or paragraph (e)(4)(vii) of this section; and the seller has held the loans for six months or less prior to selling the loans to the GSE, HUD will consider that the seller has met the requirements of this paragraph (e)(4) and of 12 U.S.C. 4563(b)(1)(B).
</P>
<P>(f) <I>Partial credit activities.</I> Mortgages insured under HUD's Title I program, which includes property improvement and manufactured home loans, shall receive one-half credit toward the Special Affordable Housing Goal until such time as the Government National Mortgage Association fully implements a program to purchase and securitize Title I loans. 
</P>
<P>(g) <I>No credit activities.</I> Neither the purchase nor the securitization of mortgages associated with the refinancing of a GSE's existing mortgage or mortgage-backed securities portfolios shall receive credit toward the achievement of the Special Affordable Housing Goal. Refinancings that result from the wholesale exchange of mortgages between the two GSEs shall not count toward the achievement of this goal. Refinancings of individual mortgages shall count toward achievement of this goal when the refinancing is an arms-length transaction that is borrower-driven and the mortgage otherwise counts toward achievement of this goal. For purposes of this paragraph (g), “mortgages or mortgage-backed securities portfolios” includes mortgages retained by Fannie Mae or Freddie Mac and mortgages utilized to back mortgage-backed securities.
</P>
<CITA TYPE="N">[60 FR 61888, Dec. 1, 1995, as amended at 65 FR 65086, Oct. 31, 2000; 69 FR 63640, Nov. 2, 2004]


</CITA>
</DIV8>


<DIV8 N="§ 81.15" NODE="24:1.1.1.1.36.2.59.5" TYPE="SECTION">
<HEAD>§ 81.15   General requirements.</HEAD>
<P>(a) <I>Calculating the numerator and denominator.</I> Performance under each of the housing goals shall be measured using a fraction that is converted into a percentage.
</P>
<P>(1) <I>The numerator.</I> The numerator of each fraction is the number of dwelling units financed by a GSE's mortgage purchases in a particular year that count toward achievement of the housing goal. 
</P>
<P>(2) <I>The denominator.</I> The denominator of each fraction is, for all mortgages purchased, the number of dwelling units that could count toward achievement of the goal under appropriate circumstances. The denominator shall not include GSE transactions or activities that are not mortgages or mortgage purchases as defined by HUD or transactions that are specifically excluded as ineligible under § 81.16(b). 
</P>
<P>(3) <I>Missing data or information.</I> When a GSE lacks sufficient data or information to determine whether the purchase of a mortgage originated after 1992 counts toward achievement of a particular housing goal, that mortgage purchase shall be included in the denominator for that housing goal, except under the circumstances described in paragraphs (d) and (e)(6) of this section. 
</P>
<P>(b) <I>Properties with multiple dwelling units.</I> For the purposes of counting toward the achievement of the goals, whenever the property securing a mortgage contains more than one dwelling unit, each such dwelling unit shall be counted as a separate dwelling unit financed by a mortgage purchase. 
</P>
<P>(c) <I>Credit toward multiple goals.</I> A mortgage purchase (or dwelling unit financed by such purchase) by a GSE in a particular year shall count toward the achievement of each housing goal for which such purchase (or dwelling unit) qualifies in that year. 
</P>
<P>(d) <I>Counting owner-occupied units.</I> (1) For purposes of counting owner-occupied units toward achievement of the Low- and Moderate-Income Housing Goal or the Special Affordable Housing Goal, mortgage purchases financing such units shall be evaluated based on the income of the mortgagors and the area median income at the time of origination of the mortgage. To determine whether mortgages may be counted under a particular family income level, i.e., especially low, very low, low or moderate income, the income of the mortgagors is compared to the median income for the area at the time of the mortgage application, using the appropriate percentage factor provided under § 81.17.
</P>
<P>(2)(i) When the income of the mortgagor(s) is not available to determine whether an owner-occupied unit in a property securing a single-family mortgage originated after 1992 and purchased by a GSE counts toward achievement of the Low- and Moderate-Income Housing Goal or the Special Affordable Housing Goal, a GSE's performance with respect to such unit may be evaluated using estimated affordability information in accordance with one of the following methods:
</P>
<P>(A) Excluding from the denominator and the numerator single-family owner-occupied units located in census tracts with median incomes less than, or equal to, area median income based on the most recent decennial census, up to a maximum of one percent of the total number of single-family owner-occupied dwelling units eligible to be counted toward the respective housing goal in the current year. Mortgage purchases with missing data in excess of the maximum will be included in the denominator and excluded from the numerator;
</P>
<P>(B) For home purchase mortgages and for refinance mortgages separately, multiplying the number of owner-occupied units with missing borrower income information in properties securing mortgages purchased by the GSE in each census tract by the percentage of all single-family owner-occupied mortgage originations in the respective tracts that would count toward achievement of each goal, as determined by HUD based on the most recent HMDA data available; or
</P>
<P>(C) Such other data source and methodology as may be approved by HUD.
</P>
<P>(ii) In any calendar year, a GSE may use only one of the methods specified in paragraph (d)(2)(i) of this section to estimate affordability information for single-family owner-occupied units.
</P>
<P>(iii) If a GSE chooses to use an estimation methodology under paragraph (d)(2)(i)(B) or (d)(2)(i)(C) of this section to determine affordability for owner-occupied units in properties securing single-family mortgage purchases eligible to be counted toward the respective housing goal, then that methodology may be used up to nationwide maximums for home purchase mortgages and for refinance mortgages that shall be calculated by multiplying, for each census tract, the percentage of all single-family owner-occupied mortgage originations with missing borrower incomes (as determined by HUD based on the most recent HMDA data available for home purchase and refinance mortgages, respectively) by the number of single-family owner-occupied units in properties securing mortgages purchased by the GSE for each census tract, summed up over all census tracts. If this nationwide maximum is exceeded, then the estimated number of goal-qualifying units will be adjusted by the ratio of the applicable nationwide maximum number of units for which income information may be estimated to the total number of single-family owner-occupied units with missing income information in properties securing mortgages purchased by the GSE. Owner-occupied units in excess of the nationwide maximum, and any units for which estimation information is not available, shall remain in the denominator of the respective goal calculation.
</P>
<P>(e) <I>Counting rental units</I>—(1) <I>Use of income, rent</I>—(i) <I>Generally.</I> For purposes of counting rental units toward achievement of the Low- and Moderate-Income Housing Goal or the Special Affordable Housing Goal, mortgage purchases financing such units shall be evaluated based on the income of actual or prospective tenants where such data is available, <I>i.e.,</I> known to a lender. 
</P>
<P>(ii) <I>Availability of income information.</I> (A) Each GSE shall require lenders to provide to the GSE tenant income information under paragraphs (e)(3) and (4) of this section, but only when such information is known to the lender. 
</P>
<P>(B) When such tenant income information is available for all occupied units, the GSE's performance shall be based on the income of the tenants in the occupied units. For unoccupied units that are vacant and available for rent and for unoccupied units that are under repair or renovation and not available for rent, the GSE shall use the income of prospective tenants, if paragraph (e)(4) of this section is applicable. If paragraph (e)(4) of this section is not applicable, the GSE shall use rent levels for comparable units in the property to determine affordability. 
</P>
<P>(2) <I>Model units and rental offices.</I> A model unit or rental office in a multifamily property may count toward achievement of the housing goals only if a GSE determines that: 
</P>
<P>(i) It is reasonably expected that the units will be occupied by a family within one year; 
</P>
<P>(ii) The number of such units is reasonable and minimal considering the size of the multifamily property; and 
</P>
<P>(iii) Such unit otherwise meets the requirements for the goal. 
</P>
<P>(3) <I>Income of actual tenants.</I> When the income of actual tenants is available, to determine whether a tenant is very-low-, low-, or moderate-income, the income of the tenant shall be compared to the median income for the area, adjusted for family size as provided in § 81.17. 
</P>
<P>(4) <I>Income of prospective tenants.</I> When income for tenants is available to a lender because a project is subject to a Federal housing program that establishes the maximum income for a tenant or a prospective tenant in rental units, the income of prospective tenants may be counted at the maximum income level established under such housing program for that unit. In determining the income of prospective tenants, the income shall be projected based on the types of units and market area involved. Where the income of prospective tenants is projected, each GSE must determine that the income figures are reasonable considering the rents (if any) on the same units in the past and considering current rents on comparable units in the same market area. 
</P>
<P>(5) <I>Use of rent.</I> When the income of the prospective or actual tenants of a dwelling unit is not available, performance under these goals will be evaluated based on rent and whether the rent is affordable to the income group targeted by the housing goal. A rent is affordable if the rent does not exceed 30 percent of the maximum income level of very-low-, low-, or moderate-income families as provided in § 81.19. In determining contract rent for a dwelling unit, the actual rent or average rent by unit type shall be used. 
</P>
<P>(6) <I>Affordability data unavailable.</I> (i) <I>Multifamily.</I> (A) When a GSE lacks sufficient information to determine whether a rental unit in a property securing a multifamily mortgage purchased by a GSE counts toward achievement of the Low- and Moderate-Income Housing Goal or the Special Affordable Housing Goal because neither the income of prospective or actual tenants, nor the actual or average rental data, are available, a GSE's performance with respect to such unit may be evaluated using estimated affordability information in accordance with one of the following methods:
</P>
<P>(<I>1</I>) Multiplying the number of rental units with missing affordability information in properties securing multifamily mortgages purchased by the GSE in each census tract by the percentage of all rental dwelling units in the respective tracts that would count toward achievement of each goal, as determined by HUD based on the most recent decennial census. For units with missing affordability information in tracts for which such methodology is not possible, such units will be excluded from the denominator as well as the numerator in calculating performance under the respective housing goal(s); or
</P>
<P>(<I>2</I>) Such other data source and methodology as may be approved by HUD.
</P>
<P>(B) In any calendar year, a GSE may use only one of the methods specified in paragraph (e)(6)(i)(A) of this section to estimate affordability information for multifamily rental units.
</P>
<P>(C) If a GSE chooses to use an estimation methodology under paragraph (e)(6)(i)(A) of this section to determine affordability for rental units in properties securing multifamily mortgage purchases eligible to be counted toward the respective housing goal, then that methodology may be used up to a nationwide maximum of ten percent of the total number of rental units in properties securing multifamily mortgages purchased by the GSE in the current year. If this maximum is exceeded, the estimated number of goal-qualifying units will be adjusted by the ratio of the nationwide maximum number of units for which affordability information may be estimated to the total number of multifamily rental units with missing affordability information in properties securing mortgages purchased by the GSE. Multifamily rental units in excess of the maximum set forth in this paragraph (e)(6)(i)(C), and any units for which estimation information is not available, shall be removed from the denominator of the respective goal calculation.
</P>
<P>(ii) <I>Rental units in 1-4 unit single-family properties.</I> (A) When a GSE lacks sufficient information to determine whether a rental unit in a property securing a single-family mortgage purchased by a GSE counts toward achievement of the Low- and Moderate-Income Housing Goal or the Special Affordable Housing Goal because neither the income of prospective or actual tenants, nor the actual or average rental data, are available, a GSE's performance with respect to such unit may be evaluated using estimated affordability information in accordance with one of the following methods:
</P>
<P>(<I>1</I>) Excluding rental units in 1-to 4-unit properties with missing affordability information from the denominator as well as the numerator in calculating performance under those goals;
</P>
<P>(<I>2</I>) Multiplying the number of rental units with missing affordability information in properties securing single family mortgages purchased by the GSE in each census tract by the percentage of all rental dwelling units in the respective tracts that would count toward achievement of each goal, as determined by HUD based on the most recent decennial census. For units with missing affordability information in tracts for which such methodology is not possible, such units will be excluded from the denominator as well as the numerator in calculating performance under the respective housing goal(s); or
</P>
<P>(<I>3</I>) Such other data source and methodology as may be approved by HUD.
</P>
<P>(B) In any calendar year, a GSE may use only one of the methods specified in paragraph (e)(6)(ii)(A) of this section to estimate affordability information for single-family rental units.
</P>
<P>(C) If a GSE chooses to use an estimation methodology under paragraph (e)(6)(ii)(A)(<I>2</I>) or (e)(6)(ii)(A)(<I>3</I>) of this section to determine affordability for rental units in properties securing single-family mortgage purchases eligible to be counted toward the respective housing goal, then that methodology may be used up to nationwide maximums of five percent of the total number of rental units in properties securing non-seasoned single-family mortgage purchases by the GSE in the current year and 20 percent of the total number of rental units in properties securing seasoned single-family mortgage purchases by the GSE in the current year. If either or both of these maximums are exceeded, the estimated number of goal-qualifying units will be adjusted by the ratio of the applicable nationwide maximum number of units for which affordability information may be estimated to the total number of single-family rental units with missing affordability information in properties securing seasoned or unseasoned mortgages purchased by the GSE, as applicable. Single-family rental units in excess of the maximums set forth in this paragraph (e)(6)(ii)(C), and any units for which estimation information is not available, shall be removed from the denominator of the respective goal calculation. 
</P>
<P>(7) <I>Timeliness of information.</I> In determining performance under the housing goals, each GSE shall use tenant and rental information as of the time of mortgage: 
</P>
<P>(i) Acquisition for mortgages on multifamily housing; and 
</P>
<P>(ii) Origination for mortgages on single-family housing. 
</P>
<P>(f) <I>Application of Median income.</I> (1) For purposes of determining an area's median income under §§ 81.17 through 81.19 and for the definition of “low-income area,” the area is: 
</P>
<P>(i) The metropolitan area, if the property which is the subject of the mortgage is in a metropolitan area; and 
</P>
<P>(ii) In all other areas, the county in which the property is located, except that where the State nonmetropolitan median income is higher than the county's median income, the area is the State nonmetropolitan area. 
</P>
<P>(2) When a GSE cannot precisely determine whether a mortgage is on dwelling unit(s) located in one area, the GSE shall determine the median income for the split area in the manner prescribed by the Federal Financial Institutions Examination Council for reporting under the Home Mortgage Disclosure Act, if the GSE can determine that the mortgage is on dwelling unit(s) located in: 
</P>
<P>(i) A census tract; 
</P>
<P>(ii) A census place code; 
</P>
<P>(iii) A block-group enumeration district; 
</P>
<P>(iv) A nine-digit zip code; or 
</P>
<P>(v) Another appropriate geographic segment that is partially located in more than one area (“split area”). 
</P>
<P>(g) <I>Sampling not permitted.</I> Performance under the housing goals for each year shall be based on a complete tabulation of mortgage purchases for that year; a sampling of such purchases is not acceptable. 
</P>
<P>(h) <I>Newly available data.</I> When a GSE uses data to determine whether a mortgage purchase counts toward achievement of any goal and new data is released after the start of a calendar quarter, the GSE need not use the new data until the start of the following quarter. 
</P>
<P>(i) <I>Counting mortgages toward the Home Purchase Subgoals</I>—(1) <I>General.</I> The requirements of this section, except for paragraphs (b) and (e) of this section, shall apply to counting mortgages toward the Home Purchase Subgoals at §§ 81.12 through 81.14. However, performance under the subgoals shall be counted using a fraction that is converted into a percentage for each subgoal and the numerator of the fraction for each subgoal shall be the number of home purchase mortgages in metropolitan areas financed by each GSE's mortgage purchases in a particular year that count towards achievement of the applicable housing goal. The denominator of each fraction shall be the total number of home purchase mortgages in metropolitan areas financed by each GSE's mortgage purchases in a particular year. For purposes of each subgoal, the procedure for addressing missing data or information, as set forth in paragraph (d) of this section, shall be implemented using numbers of home purchase mortgages in metropolitan areas and not single-family owner-occupied dwelling units.
</P>
<P>(2) <I>Special counting rule for mortgages with more than one owner-occupied unit.</I> For purposes of counting mortgages toward the Home Purchase Subgoals, where a single home purchase mortgage finances the purchase of two or more owner-occupied units in a metropolitan area, the mortgage shall count once toward each subgoal that applies to the GSE's mortgage purchase.
</P>
<CITA TYPE="N">[60 FR 61888, Dec. 1, 1995, as amended at 65 FR 65087, Oct. 31, 2000; 69 FR 63641, Nov. 2, 2004]


</CITA>
</DIV8>


<DIV8 N="§ 81.16" NODE="24:1.1.1.1.36.2.59.6" TYPE="SECTION">
<HEAD>§ 81.16   Special counting requirements.</HEAD>
<P>(a) <I>General.</I> HUD shall determine whether a GSE shall receive full, partial, or no credit for a transaction toward achievement of any of the housing goals. In this determination, HUD will consider whether a transaction or activity of the GSE is substantially equivalent to a mortgage purchase and either creates a new market or adds liquidity to an existing market, provided however that such mortgage purchase actually fulfills the GSE's purposes and is in accordance with its Charter Act. 
</P>
<P>(b) <I>Not counted.</I> The following transactions or activities shall not count toward achievement of any of the housing goals and shall not be included in the denominator in calculating either GSE's performance under the housing goals: 
</P>
<P>(1) Equity investments in housing development projects; 
</P>
<P>(2) Purchases of State and local government housing bonds except as provided in 81.16(c)(8); 
</P>
<P>(3) Purchases of non-conventional mortgages except: 
</P>
<P>(i) Where such mortgages are acquired under a risk-sharing arrangement with a Federal agency; 
</P>
<P>(ii) Mortgages insured under HUD's Home Equity Conversion Mortgage (“HECM”) insurance program, 12 U.S.C. 1715z-20; mortgages guaranteed under the Rural Housing Service's Single Family Housing Guaranteed Loan Program, 42 U.S.C. 1472; mortgages on properties on lands insured under FHA's Section 248 program, 12 U.S.C. 1715z-13, or HUD's Section 184 program, 12 U.S.C. 1515z-13a, or Title VI of the Native American Housing Assistance and Self-Determination Act of 1996, 25 U.S.C. 4191-4195; and mortgages with expiring assistance contracts as defined at 42 U.S.C. 1737f; 
</P>
<P>(iii) Mortgages under other mortgage programs involving Federal guarantees, insurance or other Federal obligation where the Department determines in writing that the financing needs addressed by the particular mortgage program are not well served and that the mortgage purchases under such program should count under the housing goals, provided the GSE submits documentation to HUD that supports eligibility and that HUD makes such a determination, or 
</P>
<P>(iv) As provided in § 81.14(e)(3)
</P>
<P>(4) Commitments to buy mortgages at a later date or time; 
</P>
<P>(5) Options to acquire mortgages; 
</P>
<P>(6) Rights of first refusal to acquire mortgages; 
</P>
<P>(7) Any interests in mortgages that the Secretary determines, in writing, shall not be treated as interests in mortgages; 
</P>
<P>(8) Mortgage purchases to the extent they finance any dwelling units that are secondary residences; and 
</P>
<P>(9) Single family mortgage refinancings that result from conversion of balloon notes to fully amortizing notes, if the GSE already owns or has an interest in the balloon note at the time conversion occurs. 
</P>
<P>(10) Any combination of factors in paragraphs (b)(1) through (9) of this section. 
</P>
<P>(c) <I>Other special rules.</I> Subject to HUD's primary determination of whether a GSE shall receive full, partial, or no credit for a transaction toward achievement of any of the housing goals as provided in paragraph (a) of this section, the following supplemental rules apply: 
</P>
<P>(1) <I>Credit enhancements.</I> (i) Dwelling units financed under a credit enhancement entered into by a GSE shall be treated as mortgage purchases and count toward achievement of the housing goals when: 
</P>
<P>(A) The GSE provides a specific contractual obligation to ensure timely payment of amounts due under a mortgage or mortgages financed by the issuance of housing bonds (such bonds may be issued by any entity, including a State or local housing finance agency); 
</P>
<P>(B) The GSE assumes a credit risk in the transaction substantially equivalent to the risk that would have been assumed by the GSE if it had securitized the mortgages financed by such bonds; and 
</P>
<P>(C) Such dwelling units otherwise qualify under this part. 
</P>
<P>(ii) When a GSE provides a specific contractual obligation to ensure timely payment of amounts due under any mortgage originally insured by a public purpose mortgage insurance entity or fund, the GSE may, on a case-by-case basis, seek approval from the Secretary for such activities to count toward achievement of the housing goals. 
</P>
<P>(2) <I>Real estate mortgage investment conduits (“REMICs”).</I> (i) A GSE's purchase or guarantee of all or a portion of a REMIC shall be treated as a mortgage purchase and receive credit toward the achievement of the housing goals provided: 
</P>
<P>(A) The underlying mortgages or mortgage-backed securities for the REMIC were not: 
</P>
<P>(<I>1</I>) Guaranteed by the Government National Mortgage Association; or 
</P>
<P>(<I>2</I>) Previously counted toward any housing goal by the GSE; and 
</P>
<P>(B) The GSE has the information necessary to support counting the dwelling units financed by the REMIC, or that part of the REMIC purchased or guaranteed by the GSE, toward the achievement of a particular housing goal. 
</P>
<P>(ii) For REMICs that meet the requirements in paragraph (c)(2)(i) of this section and for which the GSE purchased or guaranteed: 
</P>
<P>(A) The whole REMIC, all of the units financed by the REMIC shall be treated as a mortgage purchase and count toward achievement of the housing goals; or 
</P>
<P>(B) A portion of the REMIC, the GSE shall receive partial credit toward achievement of the housing goals. This credit shall be equal to the percentage of the REMIC purchased or guaranteed by the GSE (the dollar amount of the purchase or guarantee divided by the total dollar amount of the REMIC) multiplied by the number of dwelling units that would have counted toward the goal(s) if the GSE had purchased or guaranteed the whole REMIC. In calculating performance under the housing goals, the denominator shall include the number of dwelling units included in the whole REMIC multiplied by the percentage of the REMIC purchased or guaranteed by the GSE. 
</P>
<P>(3) <I>Risk-sharing.</I> Mortgage purchases under risk-sharing arrangements between the GSEs and any Federal agency where the units would otherwise count toward achievement of the housing goal under which the GSE is responsible for a substantial amount (50 percent or more) of the risk shall be treated as mortgage purchases and count toward achievement of the housing goal or goals. 
</P>
<P>(4) <I>Participations.</I> Participations purchased by a GSE shall be treated as mortgage purchases and count toward the achievement of the housing goals, if the GSE's participation in the mortgage is 50 percent or more. 
</P>
<P>(5) <I>Cooperative housing and condominium projects.</I> (i) The purchase of a mortgage on a cooperative housing unit (“a share loan”) or a condominium unit is a mortgage purchase. Such a purchase is counted toward achievement of a housing goal in the same manner as a mortgage purchase of single-family owner-occupied units, <I>i.e.,</I> affordability is based on the income of the owner(s). 
</P>
<P>(ii) The purchase of a mortgage on a cooperative building (“a blanket loan”) or a condominium project is a mortgage purchase and shall count toward achievement of the housing goals. Where a GSE purchases both “a blanket loan” and mortgages for units in the same building (“share loans”), both the blanket loan and the share loan(s) are mortgage purchases and shall count toward achievement of the housing goals. Where a GSE purchases both a condominium project mortgage and mortgages on condominium dwelling units in the same project, both the condominium project mortgages and the mortgages on condominium dwelling units are mortgage purchases and shall count toward achievement of the housing goals. 
</P>
<P>(6) <I>Seasoned mortgages.</I> A GSE's purchase of a seasoned mortgage shall be treated as a mortgage purchase for purposes of these goals and shall be included in the numerator, as appropriate, and the denominator in calculating the GSE's performance under the housing goals, except where:
</P>
<P>(i) The GSE has already counted the mortgage under a housing goal applicable to 1993 or any subsequent year; or
</P>
<P>(ii) HUD determines, based upon a written request by a GSE, that a seasoned mortgage or class of such mortgages should be excluded from the numerator and the denominator in order to further the purposes of the Special Affordable Housing Goal.
</P>
<P>(7) <I>Purchase of refinanced mortgages.</I> Except as otherwise provided in this part, the purchase of a refinanced mortgage by a GSE is a mortgage purchase and shall count toward achievement of the housing goals to the extent the mortgage qualifies. 
</P>
<P>(8) <I>Mortgage revenue bonds.</I> (i) The purchase of a state or local mortgage revenue bond shall be treated as a mortgage purchase and units financed under such MRB shall count toward achievement of the goals where: 
</P>
<P>(A) The MRB is to be repaid only from the principal and interest of the underlying mortgages originated with funds made available by the MRB; and 
</P>
<P>(B) The MRB is not a general obligation of a state or local government or agency or is not credit enchanced by any government or agency, third party guarantor or surety. 
</P>
<P>(ii) Dwelling units financed by a mortgage revenue bond meeting the requirements of paragraph (c)(8)(i) of this section shall count toward a housing goal to the extent such dwelling units otherwise qualify under this part. 
</P>
<P>(9) <I>Expiring assistance contracts.</I> In accordance with 12 U.S.C. 4565(a)(5), actions that assist in maintaining the affordability of assisted units in eligible multifamily housing projects with expiring contracts shall receive credit under the housing goals as provided in paragraph (b)(3)(ii) and in accordance with paragraphs (b) and (c)(1) through (c)(9) of this section. 
</P>
<P>(i) For restructured (modified) multifamily mortgage loans with an expiring assistance contract where a GSE holds the loan in portfolio and facilitates modification of loan terms that results in lower debt service to the project's owner, the GSE shall receive full credit under any of the housing goals for which the units covered by the mortgage otherwise qualify. 
</P>
<P>(ii) Where a GSE undertakes more than one action to assist a single project or where a GSE engages in an activity that it believes assists in maintaining the affordability of assisted units in eligible multifamily housing projects but which is not otherwise covered in paragraph (c)(9)(i) of this section, the GSE must submit the transaction to HUD for a determination on appropriate goals counting treatment.
</P>
<P>(10)-(11) [Reserved]
</P>
<P>(12) <I>HOEPA mortgages and mortgages with unacceptable terms and conditions.</I> HOEPA mortgages and mortgages with unacceptable terms or conditions as defined in § 81.2 will not receive credit toward any of the three housing goals. 
</P>
<P>(13) <I>Mortgages contrary to good lending practices.</I> The Secretary will monitor the practices and processes of the GSEs to ensure that they are not purchasing loans that are contrary to good lending practices as defined in § 81.2. Based on the results of such monitoring, the Secretary may determine in accordance with paragraph (d) of this section that mortgages or categories of mortgages where a lender has not engaged in good lending practices will not receive credit toward the three housing goals. 
</P>
<P>(14) <I>Seller dissolution option.</I> (i) Mortgages acquired through transactions involving seller dissolution options shall be treated as mortgage purchases, and receive credit toward the achievement of the housing goals, only when:
</P>
<P>(A) The terms of the transaction provide for a lockout period that prohibits the exercise of the dissolution option for at least one year from the date on which the transaction was entered into by the GSE and the seller of the mortgages; and
</P>
<P>(B) The transaction is not dissolved during the one-year minimum lockout period.
</P>
<P>(ii) The Secretary may grant an exception to the one-year minimum lockout period described in paragraph (c)(14)(i)(A) and (B) of this section, in response to a written request from an enterprise, if the Secretary determines that the transaction furthers the purposes of FHEFSSA and the GSE's charter act;
</P>
<P>(iii) For purposes of this paragraph (c)(14), “seller dissolution option” means an option for a seller of mortgages to the GSEs to dissolve or otherwise cancel a mortgage purchase agreement or loan sale. 
</P>
<P>(d) <I>HUD review of transactions.</I> HUD will determine whether a class of transactions counts as a mortgage purchase under the housing goals. If a GSE seeks to have a class of transactions counted under the housing goals that does not otherwise count under the rules in this part, the GSE may provide HUD detailed information regarding the transactions for evaluation and determination by HUD in accordance with this section. In making its determination, HUD may also request and evaluate additional information from a GSE with regard to how the GSE believes the transactions should be counted. HUD will notify the GSE of its determination regarding the extent to which the class of transactions may count under the goals.
</P>
<CITA TYPE="N">[60 FR 61888, Dec. 1, 1995, as amended at 65 FR 65088, Oct. 31, 2000; 69 FR 63642, Nov. 2, 2004]


</CITA>
</DIV8>


<DIV8 N="§ 81.17" NODE="24:1.1.1.1.36.2.59.7" TYPE="SECTION">
<HEAD>§ 81.17   Affordability—Income level definitions—family size and income known (owner-occupied units, actual tenants, and prospective tenants).</HEAD>
<P>In determining whether a dwelling unit is affordable to very-low-, low-, or moderate-income families, where the unit is owner-occupied or, for rental housing, family size and income information for the dwelling unit is known to the GSE, the affordability of the unit shall be determined as follows: 
</P>
<P>(a) <I>Moderate-income</I> means: 
</P>
<P>(1) In the case of owner-occupied units, income not in excess of 100 percent of area median income; and 
</P>
<P>(2) In the case of rental units, where the income of actual or prospective tenants is available, income not in excess of the following percentages of area median income corresponding to the following family sizes: 
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Number of persons in family 
</TH><TH class="gpotbl_colhed" scope="col">Percentage of area median income
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1</TD><TD align="center" class="gpotbl_cell">70 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">2</TD><TD align="center" class="gpotbl_cell">80
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">3</TD><TD align="center" class="gpotbl_cell">90 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">4</TD><TD align="center" class="gpotbl_cell">100 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">5 or more</TD><TD align="center" class="gpotbl_cell">(*) 
</TD></TR></TABLE></DIV><DIV class="table_foot"><P class="gpotbl_note">*100% plus (8% multiplied by the number of persons in excess of 4).</P></DIV></DIV>
<P>(b) <I>Low-income</I> means: 
</P>
<P>(1) In the case of owner-occupied units, income not in excess of 80 percent of area median income; and 
</P>
<P>(2) In the case of rental units, where the income of actual or prospective tenants is available, income not in excess of the following percentages of area median income corresponding to the following family sizes: 
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Number of persons in family 
</TH><TH class="gpotbl_colhed" scope="col">Percentage of area median income
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1</TD><TD align="center" class="gpotbl_cell">56 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">2</TD><TD align="center" class="gpotbl_cell">64 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">3</TD><TD align="center" class="gpotbl_cell">72 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">4</TD><TD align="center" class="gpotbl_cell">80
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">5 or more</TD><TD align="center" class="gpotbl_cell">(*) 
</TD></TR></TABLE></DIV><DIV class="table_foot"><P class="gpotbl_note">*80% plus (6.4% multiplied by the number of persons in excess of 4).</P></DIV></DIV>
<P>(c) <I>Very-low-income</I> means: 
</P>
<P>(1) In the case of owner-occupied units, income not in excess of 60 percent of area median income; and 
</P>
<P>(2) In the case of rental units, where the income of actual or prospective tenants is available, income not in excess of the following percentages of area median income corresponding to the following family sizes: 
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Number of persons in family 
</TH><TH class="gpotbl_colhed" scope="col">Percentage of area median income
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1</TD><TD align="center" class="gpotbl_cell">42 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">2</TD><TD align="center" class="gpotbl_cell">48
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">3</TD><TD align="center" class="gpotbl_cell">54 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">4</TD><TD align="center" class="gpotbl_cell">60
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">5 or more</TD><TD align="center" class="gpotbl_cell">(*) 
</TD></TR></TABLE></DIV><DIV class="table_foot"><P class="gpotbl_note">*60% plus (4.8% multiplied by the number of persons in excess of 4).</P></DIV></DIV>
<P>(d) <I>Especially-low-income</I> means, in the case of rental units, where the income of actual or prospective tenants is available, income not in excess of the following percentages of area median income corresponding to the following family sizes: 
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Number of persons in family 
</TH><TH class="gpotbl_colhed" scope="col">Percentage of area median income 
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1</TD><TD align="center" class="gpotbl_cell">35 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">2</TD><TD align="center" class="gpotbl_cell">40 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">3</TD><TD align="center" class="gpotbl_cell">45 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">4</TD><TD align="center" class="gpotbl_cell">50 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">5 or more</TD><TD align="center" class="gpotbl_cell">(*) 
</TD></TR></TABLE></DIV><DIV class="table_foot"><P class="gpotbl_note">* 50% plus (4.0% multiplied by the number of persons in excess of 4).</P></DIV></DIV>
<CITA TYPE="N">[60 FR 61888, Dec. 1, 1995, as amended at 65 FR 65089, Oct. 31, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 81.18" NODE="24:1.1.1.1.36.2.59.8" TYPE="SECTION">
<HEAD>§ 81.18   Affordability—Income level definitions—family size not known (actual or prospective tenants).</HEAD>
<P>In determining whether a rental unit is affordable to very-low, low-, or moderate-income families where family size is not known to the GSE, income will be adjusted using unit size, and affordability determined as follows: 
</P>
<P>(a) <I>For moderate-income,</I> the income of prospective tenants shall not exceed the following percentages of area median income with adjustments, depending on unit size: 
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Unit size 
</TH><TH class="gpotbl_colhed" scope="col">Percentage of area median income
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Efficiency</TD><TD align="center" class="gpotbl_cell">70
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1 bedroom</TD><TD align="center" class="gpotbl_cell">75 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">2 bedrooms</TD><TD align="center" class="gpotbl_cell">90 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">3 bedrooms or more</TD><TD align="center" class="gpotbl_cell">(*) 
</TD></TR></TABLE></DIV><DIV class="table_foot"><P class="gpotbl_note">*104% plus (12% multiplied by the number of bedrooms in excess of 3).</P></DIV></DIV>
<P>(b) <I>For low-income,</I> income of prospective tenants shall not exceed the following percentages of area median income with adjustments, depending on unit size: 
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Unit size
</TH><TH class="gpotbl_colhed" scope="col">Percentage of area median income
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Efficiency</TD><TD align="center" class="gpotbl_cell">56
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1 bedroom</TD><TD align="center" class="gpotbl_cell">60 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">2 bedrooms</TD><TD align="center" class="gpotbl_cell">72 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">3 bedrooms or more</TD><TD align="center" class="gpotbl_cell">(*) 
</TD></TR></TABLE></DIV><DIV class="table_foot"><P class="gpotbl_note">*83.2% plus (9.6% multiplied by the number of bedrooms in excess of 3).</P></DIV></DIV>
<P>(c) <I>For very-low-income,</I> income of prospective tenants shall not exceed the following percentages of area median income with adjustments, depending on unit size: 
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Unit size
</TH><TH class="gpotbl_colhed" scope="col">Percentage of area median income
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Efficiency</TD><TD align="center" class="gpotbl_cell">42 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1 bedroom</TD><TD align="center" class="gpotbl_cell">45 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">2 bedrooms</TD><TD align="center" class="gpotbl_cell">54
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">3 bedrooms or more</TD><TD align="center" class="gpotbl_cell">(*)
</TD></TR></TABLE></DIV><DIV class="table_foot"><P class="gpotbl_note">*62.4% plus (7.2% multiplied by the number of bedrooms in excess of 3).</P></DIV></DIV>
<P>(d) <I>For especially-low-income,</I> income of prospective tenants shall not exceed the following percentages of area median income with adjustments, depending on unit size: 
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Unit size 
</TH><TH class="gpotbl_colhed" scope="col">Percentage of area median income 
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Efficiency</TD><TD align="center" class="gpotbl_cell">35 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1 bedroom</TD><TD align="center" class="gpotbl_cell">37.5 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">2 bedrooms</TD><TD align="center" class="gpotbl_cell">45 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">3 bedrooms or more</TD><TD align="center" class="gpotbl_cell">(*) 
</TD></TR></TABLE></DIV><DIV class="table_foot"><P class="gpotbl_note">* 52% plus (6.0% multiplied by the number of bedrooms in excess of 3).</P></DIV></DIV>
<CITA TYPE="N">[60 FR 61888, Dec. 1, 1995, as amended at 65 FR 65089, Oct. 31, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 81.19" NODE="24:1.1.1.1.36.2.59.9" TYPE="SECTION">
<HEAD>§ 81.19   Affordability—Rent level definitions—tenant income is not known.</HEAD>
<P>For purposes of determining whether a rental unit is affordable to very-low-, low-, or moderate-income families where the income of the family in the dwelling unit is not known to the GSE, the affordability of the unit is determined based on unit size as follows: 
</P>
<P>(a) <I>For moderate-income,</I> maximum affordable rents to count as housing for moderate-income families shall not exceed the following percentages of area median income with adjustments, depending on unit size: 
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Unit size
</TH><TH class="gpotbl_colhed" scope="col">Percentage of area median income
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Efficiency</TD><TD align="center" class="gpotbl_cell">21
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1 bedroom</TD><TD align="center" class="gpotbl_cell">22.5
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">2 bedrooms</TD><TD align="center" class="gpotbl_cell">27
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">3 bedrooms or more</TD><TD align="center" class="gpotbl_cell">(*)
</TD></TR></TABLE></DIV><DIV class="table_foot"><P class="gpotbl_note">*31.2% plus (3.6% multiplied by the number of bedrooms in excess of 3);</P></DIV></DIV>
<P>(b) <I>For low-income,</I> maximum affordable rents to count as housing for low-income families shall not exceed the following percentages of area median income with adjustments, depending on unit size:
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Unit size
</TH><TH class="gpotbl_colhed" scope="col">Percentage of area median income
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Efficiency</TD><TD align="center" class="gpotbl_cell">16.8
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1 bedroom</TD><TD align="center" class="gpotbl_cell">18
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">2 bedrooms</TD><TD align="center" class="gpotbl_cell">21.6
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">3 bedrooms or more</TD><TD align="center" class="gpotbl_cell">(*)
</TD></TR></TABLE></DIV><DIV class="table_foot"><P class="gpotbl_note">*24.96% plus (2.88% multiplied by the number of bedrooms in excess of 3); and</P></DIV></DIV>
<P>(c) <I>For very-low-income,</I> maximum affordable rents to count as housing for very-low-income families shall not exceed the following percentages of area median income with adjustments, depending on unit size: 
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Unit size 
</TH><TH class="gpotbl_colhed" scope="col">Percentage of area median income
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Efficiency</TD><TD align="center" class="gpotbl_cell">12.6
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1 bedroom</TD><TD align="center" class="gpotbl_cell">13.5 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">2 bedrooms</TD><TD align="center" class="gpotbl_cell">16.2 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">3 bedrooms or more</TD><TD align="center" class="gpotbl_cell">(*) 
</TD></TR></TABLE></DIV><DIV class="table_foot"><P class="gpotbl_note">*18.72% plus (2.16% multiplied by the number of bedrooms in excess of 3).</P></DIV></DIV>
<P>(d) <I>For especially-low-income,</I> maximum affordable rents to count as housing for especially-low-income families shall not exceed the following percentages of area median income with adjustments, depending on unit size: 
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Unit size 
</TH><TH class="gpotbl_colhed" scope="col">Percentage of area median income 
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Efficiency</TD><TD align="center" class="gpotbl_cell">10.5 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1 bedroom</TD><TD align="center" class="gpotbl_cell">11.25 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">2 bedrooms</TD><TD align="center" class="gpotbl_cell">13.5 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">3 bedrooms or more</TD><TD align="center" class="gpotbl_cell">(*) 
</TD></TR></TABLE></DIV><DIV class="table_foot"><P class="gpotbl_note">* 15.6% plus (1.8% multiplied by the number of bedrooms in excess of 3).</P></DIV></DIV>
<P>(e) <I>Missing Information.</I> Each GSE shall make every effort to obtain the information necessary to make the calculations in this section. If a GSE makes such efforts but cannot obtain data on the number of bedrooms in particular units, in making the calculations on such units, the units shall be assumed to be efficiencies except as provided in § 81.15(e)(6)(i).
</P>
<CITA TYPE="N">[60 FR 61888, Dec. 1, 1995, as amended at 65 FR 65089, Oct. 31, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 81.20" NODE="24:1.1.1.1.36.2.59.10" TYPE="SECTION">
<HEAD>§ 81.20   Actions to be taken to meet the goals.</HEAD>
<P>To meet the goals under this rule, each GSE shall operate in accordance with 12 U.S.C. 4565. 


</P>
</DIV8>


<DIV8 N="§ 81.21" NODE="24:1.1.1.1.36.2.59.11" TYPE="SECTION">
<HEAD>§ 81.21   Notice and determination of failure to meet goals.</HEAD>
<P>If the Secretary determines that a GSE has failed or there is a substantial probability that a GSE will fail to meet any housing goal, the Secretary shall follow the procedures at 12 U.S.C. 4566(b). 


</P>
</DIV8>


<DIV8 N="§ 81.22" NODE="24:1.1.1.1.36.2.59.12" TYPE="SECTION">
<HEAD>§ 81.22   Housing plans.</HEAD>
<P>(a) If the Secretary determines, under § 81.21, that a GSE has failed or there is a substantial probability that a GSE will fail to meet any housing goal and that the achievement of the housing goal was or is feasible, the Secretary shall require the GSE to submit a housing plan for approval by the Secretary. 
</P>
<P>(b) <I>Nature of plan.</I> Each housing plan shall: 
</P>
<P>(1) Be feasible; 
</P>
<P>(2) Be sufficiently specific to enable the Secretary to monitor compliance periodically; 
</P>
<P>(3) Describe the specific actions that the GSE will take: 
</P>
<P>(i) To achieve the goal for the next calendar year; or 
</P>
<P>(ii) If the Secretary determines that there is substantial probability that the GSE will fail to meet a housing goal in the current year, to make such improvements as are reasonable in the remainder of the year; and 
</P>
<P>(4) Address any additional matters relevant to the plan as required, in writing, by the Secretary. 
</P>
<P>(c) <I>Deadline for submission.</I> The GSE shall submit a housing plan to the Secretary within 30 days after issuance of a notice under § 81.21 requiring the GSE to submit a housing plan. The Secretary may extend the deadline for submission of a plan, in writing and for a time certain, to the extent the Secretary determines an extension is necessary. 
</P>
<P>(d) <I>Review of housing plans.</I> The Secretary shall review and approve or disapprove housing plans in accordance with 12 U.S.C. 4566(c)(4) and (5). 
</P>
<P>(e) <I>Resubmission.</I> If the Secretary disapproves an initial housing plan submitted by a GSE, the GSE shall submit an amended plan acceptable to the Secretary within 30 days of the Secretary disapproving the initial plan; the Secretary may extend the deadline if the Secretary determines an extension is in the public interest. If the amended plan is not acceptable to the Secretary, the Secretary may afford the GSE 15 days to submit a new plan. 


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:1.1.1.1.36.3" TYPE="SUBPART">
<HEAD>Subpart C—Fair Housing</HEAD>


<DIV8 N="§ 81.41" NODE="24:1.1.1.1.36.3.59.1" TYPE="SECTION">
<HEAD>§ 81.41   General.</HEAD>
<P>In this subpart, the Secretary: prohibits discrimination by the GSEs in their mortgage purchases because of race, color, religion, sex, handicap, familial status, age, or national origin, including any consideration of the age or location of a dwelling or age of the neighborhood or census tract where the dwelling is located in a manner that has a discriminatory effect; requires that the GSEs submit information to the Secretary to assist Fair Housing Act and ECOA investigations; provides for advising the GSEs of Fair Housing Act and ECOA violations; provides for reviewing the GSEs' underwriting and appraisal guidelines to ensure compliance with the Fair Housing Act; and requires that the GSEs take actions as directed by the Secretary following Fair Housing Act and ECOA adjudications. Because FHEFSSA provides, generally, that the Director of OFHEO shall enforce violations by the GSEs of FHEFSSA and regulations in this subpart, this subpart also provides for referral of such cases to the Director. 


</P>
</DIV8>


<DIV8 N="§ 81.42" NODE="24:1.1.1.1.36.3.59.2" TYPE="SECTION">
<HEAD>§ 81.42   Prohibitions against discrimination.</HEAD>
<P>Neither GSE shall discriminate in any manner in making any mortgage purchases because of race, color, religion, sex, handicap, familial status, age, or national origin, including any consideration of the age or location of the dwelling or the age of the neighborhood or census tract where the dwelling is located in a manner that has a discriminatory effect. 


</P>
</DIV8>


<DIV8 N="§ 81.43" NODE="24:1.1.1.1.36.3.59.3" TYPE="SECTION">
<HEAD>§ 81.43   Reports; underwriting and appraisal guideline review.</HEAD>
<P>(a) <I>Reports.</I> Each GSE, in the AHAR required under § 81.63, shall assess underwriting standards, business practices, repurchase requirements, pricing, fees, and procedures that affect the purchase of mortgages for low- and moderate-income families, or that may yield disparate results based on the race, color, religion, sex, handicap, familial status, age, or national origin of the borrower, including revisions thereto to promote affordable housing or fair lending. 
</P>
<P>(b) <I>Review of Underwriting and Appraisal Guidelines.</I> The Secretary shall periodically review and comment on the underwriting and appraisal guidelines of each enterprise to ensure that such guidelines are consistent with the Fair Housing Act and 12 U.S.C. 4545. 


</P>
</DIV8>


<DIV8 N="§ 81.44" NODE="24:1.1.1.1.36.3.59.4" TYPE="SECTION">
<HEAD>§ 81.44   Submission of information to the Secretary.</HEAD>
<P>(a) <I>General.</I> Upon request from the Secretary, the GSEs shall submit information and data to the Secretary to assist in investigating whether any mortgage lender with which the GSE does business has failed to comply with the Fair Housing Act or ECOA. 
</P>
<P>(b) <I>Information requests and submissions</I>—(1) <I>Information requests by the Secretary.</I> The Secretary may require the GSEs to submit information to assist in Fair Housing Act or ECOA investigations of lenders. Under FHEFSSA, other Federal agencies responsible for the enforcement of ECOA must submit requests for information from the GSEs through the Secretary. For matters involving only ECOA, the Secretary will only issue requests for information upon request from the appropriate Federal agency responsible for ECOA. 
</P>
<P>(2) <I>Information from established data systems.</I> The Secretary may request that a GSE generate information or reports from its data system(s) to assist a Fair Housing Act or ECOA investigation. 
</P>
<P>(3) <I>GSE replies.</I> A GSE receiving any request(s) for information under this section shall reply in a complete and timely manner with any and all information that it is privy to and collects that is responsive to the request. 
</P>
<P>(c) <I>Submission to ECOA enforcers.</I> The Secretary shall submit any information received under paragraph (b) of this section concerning compliance with ECOA to appropriate Federal agencies responsible for ECOA enforcement, as provided in section 704 of ECOA. 


</P>
</DIV8>


<DIV8 N="§ 81.45" NODE="24:1.1.1.1.36.3.59.5" TYPE="SECTION">
<HEAD>§ 81.45   Obtaining and disseminating information.</HEAD>
<P>(a) The Secretary shall obtain information from other regulatory and enforcement agencies of the Federal Government and State and local governments regarding violations by lenders of the Fair Housing Act, ECOA, and/or State or local fair housing/lending laws, and shall make such information available to the GSEs as the Secretary deems appropriate in accordance with applicable law regarding the confidentiality of supervisory information and the right to financial privacy, and subject to the terms of memoranda of understanding and other arrangements between the Secretary and Federal financial regulators and other agencies. In addition, the Secretary shall make information that the Secretary possesses regarding violations of the Fair Housing Act available to the GSEs. 
</P>
<P>(b) As contemplated in paragraph (a) of this section, the Secretary shall obtain information regarding violations by lenders of the Fair Housing Act or ECOA involving discrimination with respect to the availability of credit in a residential real-estate-related transaction from other Federal regulatory or enforcement agencies. The Secretary will obtain information from regulators regarding violations of ECOA by lenders only in circumstances in which there is either more than a single ECOA violation, or the ECOA violation could also be a violation of the Fair Housing Act. 


</P>
</DIV8>


<DIV8 N="§ 81.46" NODE="24:1.1.1.1.36.3.59.6" TYPE="SECTION">
<HEAD>§ 81.46   Remedial actions.</HEAD>
<P>(a) <I>General.</I> The Secretary shall direct the GSEs to take one or more remedial actions, including suspension, probation, reprimand or settlement, against lenders found to have engaged in discriminatory lending practices in violation of the Fair Housing Act or ECOA, pursuant to a final adjudication on the record and an opportunity for a hearing under subchapter II of chapter 5 of title 5, United States Code. 
</P>
<P>(b) <I>Definitions.</I> For purposes of this subpart, the following definitions apply: 
</P>
<P><I>Indefinite suspension</I> means that, until directed to do otherwise by the Secretary, the GSEs will refrain from purchasing mortgages from a lender. 
</P>
<P><I>Probation</I> means that, for a fixed period of time specified by the Secretary, a lender that has been found to have violated the Fair Housing Act or ECOA will be subject automatically to more severe sanctions than probation, <I>e.g.,</I> suspension, if further violations are found. 
</P>
<P><I>Remedial action</I> includes a reprimand, probation, temporary suspension, indefinite suspension, or settlement. 
</P>
<P><I>Reprimand</I> means a written letter to a lender from a GSE, which has been directed to be sent by the Secretary, stating that the lender has violated the Fair Housing Act or ECOA and warning of the possibility that the Secretary may impose more severe remedial actions than reprimand if any further violation occurs. 
</P>
<P><I>Temporary Suspension</I> means that, for a fixed period of time specified by the Secretary, the GSEs will not purchase mortgages from a lender. 
</P>
<P>(c) <I>Institution of remedial actions.</I> (1) The Secretary shall direct the GSE to take remedial action(s) against a lender charged with violating ECOA only after a final determination on the charge has been made by an appropriate United States District Court or any other court of competent jurisdiction. The Secretary shall direct the GSE to take remedial action(s) against a lender charged with violating the Fair Housing Act only after a final determination on the matter has been made by a United States Court, a HUD Administrative Law Judge, or the Secretary. 
</P>
<P>(2) Following a final determination sustaining a charge against a lender for violating the Fair Housing Act or ECOA, in accordance with paragraph (c)(1) of this section, the Secretary shall determine the remedial action(s) that the GSE is to be directed to take for such violation. 
</P>
<P>(3) In determining the appropriate remedial action(s), the Secretary shall solicit and fully consider the views of the Federal financial regulator responsible for the subject lender concerning the action(s) that are contemplated to be directed against such lender, prior to directing any such action(s). If such responsible Federal financial regulator makes a written determination that a particular remedial action would threaten the financial safety and soundness of a Federally-insured lender, the Secretary shall consider other remedial actions. Where warranted, the Secretary also shall solicit and fully consider the views of the Director regarding the effect of the action(s) that are contemplated on the safety and soundness of the GSE. In determining what action(s) to direct, the Secretary will also, without limitation, consider the following: 
</P>
<P>(i) The gravity of the violation; 
</P>
<P>(ii) The extent to which other action has been taken against the lender for discriminatory activities; 
</P>
<P>(iii) Whether the lender's actions demonstrate a discriminatory pattern or practice or an individual instance of discrimination; 
</P>
<P>(iv) The impact or seriousness of the harm; 
</P>
<P>(v) The number of people affected by the discriminatory act(s); 
</P>
<P>(vi) Whether the lender operates an effective program of self assessment and correction; 
</P>
<P>(vii) The extent of any actions or programs by the lender designed to compensate victims and prevent future fair lending violations; 
</P>
<P>(viii) The extent that a finding of liability against a lender is based on a lender's use of a facially-neutral underwriting guideline of a secondary mortgage market entity applied appropriately by the lender in order to sell loans to that secondary mortgage market entity; and 
</P>
<P>(ix) Any other information deemed relevant by the Secretary. 
</P>
<P>(d) <I>Notice of remedial action(s).</I> (1) Following the Secretary's decision concerning the appropriate remedial action(s) that the GSE is to be directed to take, the Secretary shall prepare and issue to the GSE and the lender a written notice setting forth the remedial action(s) to be taken and the date such remedial action(s) are to commence. The Notice shall inform the lender of its right to request a hearing on the appropriateness of the proposed remedial action(s), within 20 days of service of the Notice, by filing a request with the Docket Clerk, HUD Office of Hearings and Appeals. 
</P>
<P>(2) Where a lender does not timely request a hearing on a remedial action, the GSE shall take the action in accordance with the Notice. 
</P>
<P>(e) <I>Review and decision on remedial action(s).</I> (1) Where a lender timely requests a hearing on a remedial action, a hearing shall be conducted before a HUD administrative law judge (ALJ) and a final decision rendered in accordance with the procedures set forth in 24 CFR part 26, subpart B, to the extent such provisions are not inconsistent with subpart C of this part or FHEFSSA. The lender and the Secretary, but not the GSE, shall be parties to the action. At such hearing, the appropriateness of the remedial action for the violation(s) will be the sole matter for review. The validity or appropriateness of the underlying determination on the violation(s) shall not be subject to review at such hearing. 
</P>
<P>(2) The Secretary shall transmit to the GSEs each final decision by HUD on a remedial action and any dispositive settlement of a proceeding on such action. 
</P>
<P>(3) The GSE shall take the action(s) set forth in a final decision by HUD on remedial action(s) or any dispositive settlement of such a proceeding setting forth remedial action(s) in accordance with such decision or settlement. 
</P>
<CITA TYPE="N">[60 FR 61888, Dec. 1, 1995, as amended at 61 FR 50218, Sept. 24, 1996; 87 FR 8197, Feb. 14, 2022]


</CITA>
</DIV8>


<DIV8 N="§ 81.47" NODE="24:1.1.1.1.36.3.59.7" TYPE="SECTION">
<HEAD>§ 81.47   Violations of provisions by the GSEs.</HEAD>
<P>(a) FHEFSSA empowers the Director of OFHEO to initiate enforcement actions for GSE violations of the provisions of section 1325 of FHEFSSA and these regulations. The Secretary shall refer violations and potential violations of 12 U.S.C. 4545 and this subpart C to the Director. 
</P>
<P>(b) Where a private complainant or the Secretary is also proceeding against a GSE under the Fair Housing Act, the Assistant Secretary for Fair Housing and Equal Opportunity shall conduct the investigation of the complaint and make the reasonable cause/no reasonable cause determination required by section 810(g) of the Fair Housing Act. Where reasonable cause is found, a charge shall be issued and the matter will proceed to enforcement pursuant to sections 812(b) and (o) of the Fair Housing Act. 


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:1.1.1.1.36.4" TYPE="SUBPART">
<HEAD>Subpart D—New Program Approval</HEAD>


<DIV8 N="§ 81.51" NODE="24:1.1.1.1.36.4.59.1" TYPE="SECTION">
<HEAD>§ 81.51   General.</HEAD>
<P>This subpart details the requirements and procedures for review of requests for new program approval by the Secretary. 


</P>
</DIV8>


<DIV8 N="§ 81.52" NODE="24:1.1.1.1.36.4.59.2" TYPE="SECTION">
<HEAD>§ 81.52   Requirement for program requests.</HEAD>
<P>(a) Before implementing a new program, a GSE shall submit a request for new program approval (“program request”) to the Secretary for the Secretary's review. Submission of a program request is not required where the program that the GSE proposes to implement is not significantly different from: 
</P>
<P>(1) A program that has already been approved in writing by the Secretary; or 
</P>
<P>(2) A program that was engaged in by the GSE prior to October 28, 1992. 
</P>
<P>(b) If a GSE does not submit a program request for a program, the Secretary may request information about the program and require that the GSE submit a program request. The GSE shall comply with the request and may indicate in such response its views respecting whether the program is subject to the Secretary's review. 


</P>
</DIV8>


<DIV8 N="§ 81.53" NODE="24:1.1.1.1.36.4.59.3" TYPE="SECTION">
<HEAD>§ 81.53   Processing of program requests.</HEAD>
<P>(a) Each program request submitted to the Secretary by a GSE shall be in writing and shall be submitted to the Secretary and the Director, Office of Government-Sponsored Enterprises, Department of Housing and Urban Development, Washington, DC. For those requests submitted before 1 year after the effective date of the regulations issued by the Director of OFHEO under 12 U.S.C. 4611(e), the GSE shall simultaneously submit the program request to the Director. 
</P>
<P>(b) Each program request shall include: 
</P>
<P>(1) An opinion from counsel stating the statutory authority for the new program (Freddie Mac Act section 305(a) (1), (4), or (5), or Fannie Mae Charter Act section 302(b)(2)-(5) or 304); 
</P>
<P>(2) A good-faith estimate of the anticipated dollar volume of the program over the short- and long-term; 
</P>
<P>(3) A full description of: (i) The purpose and operation of the proposed program; 
</P>
<P>(ii) The market targeted by the program; 
</P>
<P>(iii) The delivery system for the program; 
</P>
<P>(iv) The effect of the program on the mortgage market; and 
</P>
<P>(v) Material relevant to the public interest. 
</P>
<P>(c) Following receipt of a program request, the Secretary and, where a program request is submitted to the Director pursuant to paragraph (a) of this section, the Director shall review the program request. 
</P>
<P>(d) <I>Transition standard for approval.</I> Program requests submitted by the GSEs before the date occurring 1 year after the effective date of the regulations issued by the Director under 12 U.S.C. 4611(e) shall be approved or disapproved by the Secretary as provided in 12 U.S.C. 4542(b)(2). 
</P>
<P>(e) <I>Permanent standard for approval by the Secretary.</I> Program requests submitted after the date occurring one year after the effective date of the regulations issued by the Director under 12 U.S.C. 4611(e) establishing the risk-based capital test shall be approved by the Secretary in accordance with 12 U.S.C. 4542(b)(1). 
</P>
<P>(f) <I>Time for review.</I> Unless the Secretary and, where appropriate, the Director of OFHEO, need additional information, a program request shall be approved or disapproved within 45 days from the date it is received by the Director, Office of Government-Sponsored Enterprises, and, where applicable, the Director of OFHEO. If within 45 days after receiving a request, the Secretary or the Director of OFHEO determine that additional information is necessary to review the matter and request such information from the GSE, the Secretary may extend the time period for consideration for an additional 15 days. 
</P>
<P>(1) Where additional information is requested, the GSE must provide the requested information to the Secretary and, where appropriate, the Director, within 10 days after the request for additional information. 
</P>
<P>(2) If the GSE fails to furnish requested information within 10 days after the request for information, the Secretary may deny the GSE's request for approval based on such failure and so report to the Committees of Congress in accordance with paragraph (g) of this section. 
</P>
<P>(g) <I>Approval or report.</I> Within 45 days or, if the period is extended, 60 days following receipt of a program request, the Secretary shall approve the request, in writing, or submit a report to the Committee on Banking and Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate, explaining the reasons for not approving the request. If the Secretary does not act within this time period, the GSE's program request will be deemed approved. 


</P>
</DIV8>


<DIV8 N="§ 81.54" NODE="24:1.1.1.1.36.4.59.4" TYPE="SECTION">
<HEAD>§ 81.54   Review of disapproval.</HEAD>
<P>(a) <I>Programs disapproved as unauthorized.</I> (1) Where the Secretary disapproves a program request on the grounds that the new program is not authorized, as defined in § 81.53(d) or (e), the GSE may, within 30 days of the date of receipt of the decision on disapproval, request an opportunity to review and supplement the administrative record for the decision, in accordance with paragraphs (a) (2) and (3) of this section. 
</P>
<P>(2) <I>Supplementing in writing.</I> A GSE supplementing the record in writing must submit written materials within 30 days after the date of receipt of the decision on disapproval, but no later than the date of a meeting, if requested, under paragraph (a)(3) of this section. 
</P>
<P>(3) <I>Meeting.</I> Within 10 days of the date of receipt of the decision of disapproval, the GSE may request a meeting. If the request for the meeting is timely, the Secretary shall arrange such a meeting, which shall be conducted by the Secretary or the Secretary's designee within 10 working days after receipt of the request. The GSE may be represented by counsel and may submit relevant written materials to supplement the record. 
</P>
<P>(4) <I>Determination.</I> The Secretary shall: 
</P>
<P>(i) In writing and within 10 days after submission of any materials under paragraph (a)(2) of this section or the conclusion of any meeting under paragraph (a)(3) of this section, whichever is later, withdraw, modify, or affirm the program disapproval; and 
</P>
<P>(ii) Provide the GSE with that decision. 
</P>
<P>(b) <I>Programs disapproved under public interest determination.</I> When a program request is disapproved because the Secretary determines that the program is not in the public interest or the Director makes the determination in 12 U.S.C. 4542(b)(2)(B), the Secretary shall provide the GSE with notice of, and opportunity for, a hearing on the record regarding such disapproval. A request for a hearing must be submitted by a GSE within 30 days of the Secretary's submission of a report under § 81.53(g) disapproving a program request or the provision of the notice under this paragraph (b), whichever is later. The procedures for such hearings are provided in subpart G of this part. 


</P>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:1.1.1.1.36.5" TYPE="SUBPART">
<HEAD>Subpart E—Reporting Requirements</HEAD>


<DIV8 N="§ 81.61" NODE="24:1.1.1.1.36.5.59.1" TYPE="SECTION">
<HEAD>§ 81.61   General.</HEAD>
<P>This subpart establishes data submission and reporting requirements to carry out the requirements of the GSEs' Charter Acts and FHEFSSA. 


</P>
</DIV8>


<DIV8 N="§ 81.62" NODE="24:1.1.1.1.36.5.59.2" TYPE="SECTION">
<HEAD>§ 81.62   Mortgage reports.</HEAD>
<P>(a) <I>Loan-level data elements.</I> To implement the data collection and submission requirements for mortgage data and to assist the Secretary in monitoring the GSEs' housing goal activities, each GSE shall collect and compile computerized loan-level data on each mortgage purchased in accordance with 12 U.S.C. 1456(e) and 1723a(m). The Secretary may, from time-to-time, issue a list entitled “Required Loan-level Data Elements” specifying the loan-level data elements to be collected and maintained by the GSEs and provided to the Secretary. The Secretary may revise the list by written notice to the GSEs.
</P>
<P>(b) <I>Quarterly Mortgage reports.</I> Each GSE shall submit to the Secretary quarterly a Mortgage Report. The fourth quarter report shall serve as the Annual Mortgage Report and shall be designated as such. 
</P>
<P>(1) Each Mortgage Report shall include: 
</P>
<P>(i) Aggregations of the loan-level mortgage data compiled by the GSE under paragraph (a) of this section for year-to-date mortgage purchases, in the format specified in writing by the Secretary; and 
</P>
<P>(ii) Year-to-date dollar volume, number of units, and number of mortgages on owner-occupied and rental properties purchased by the GSE that do and do not qualify under each housing goal as set forth in this part. 
</P>
<P>(2) To facilitate the Secretary's monitoring of the GSE's housing goal activities, the Mortgage Report for the second quarter shall include year-to-date computerized loan-level data consisting of the data elements required under paragraph (a) of this section. 
</P>
<P>(3) To implement the data collection and submission requirements for mortgage data and to assist the Secretary in monitoring the GSE's housing goal activities, each Annual Mortgage Report shall include year-to-date computerized loan-level data consisting of the data elements required by under paragraph (a) of this section. 
</P>
<P>(c) <I>Timing of Reports.</I> The GSEs shall submit the Mortgage Report for each of the first 3 quarters of each year within 60 days of the end of the quarter. Each GSE shall submit its Annual Mortgage Report within 75 days after the end of the calendar year. 
</P>
<P>(d) <I>Revisions to Reports.</I> At any time before submission of its Annual Mortgage Report, a GSE may revise any of its quarterly reports for that year. 
</P>
<P>(e) <I>Format.</I> The GSEs shall submit to the Secretary computerized loan-level data with the Mortgage Report, in the format specified in writing by the Secretary. 


</P>
</DIV8>


<DIV8 N="§ 81.63" NODE="24:1.1.1.1.36.5.59.3" TYPE="SECTION">
<HEAD>§ 81.63   Annual Housing Activities Report.</HEAD>
<P>To comply with the requirements in sections 309(n) of the Fannie Mae Charter Act and 307(f) of the Freddie Mac Act and assist the Secretary in preparing the Secretary's Annual Report to Congress, each GSE shall submit to the Secretary an AHAR including the information listed in those sections of the Charter Acts and as provided in § 81.43(a) of this part. Each GSE shall submit such report within 75 days after the end of each calendar year, to the Secretary the Committee on Banking and Financial Services of the House of Representatives, and the Committee on Banking, Housing, and Urban Affairs of the Senate. Each GSE shall make its AHAR available to the public at its principal and regional offices. Before making any such report available to the public, the GSE may exclude from the report any information that the Secretary has deemed proprietary under subpart F of this part. 


</P>
</DIV8>


<DIV8 N="§ 81.64" NODE="24:1.1.1.1.36.5.59.4" TYPE="SECTION">
<HEAD>§ 81.64   Periodic reports.</HEAD>
<P>Each GSE shall provide to the Secretary all: 
</P>
<P>(a) Material distributed to the GSE's Housing Advisory Council; 
</P>
<P>(b) Press releases; 
</P>
<P>(c) Investor reports; 
</P>
<P>(d) Proxy statements; 
</P>
<P>(e) Seller-servicer guides; and 
</P>
<P>(f) Other information disclosed by the GSE to entities outside of the GSE, but only where the GSE determines that such information is relevant to the Secretary's regulatory responsibilities. 


</P>
</DIV8>


<DIV8 N="§ 81.65" NODE="24:1.1.1.1.36.5.59.5" TYPE="SECTION">
<HEAD>§ 81.65   Other information and analyses.</HEAD>
<P>When deemed appropriate and requested in writing, on a case by-case basis, by the Secretary, a GSE shall furnish the data underlying any of the reports required under this part and shall conduct additional analyses concerning any such report. A GSE shall submit additional reports or other information concerning its activities when deemed appropriate to carry out the Secretary's responsibilities under FHEFSSA or the Charter Acts and requested in writing by the Secretary. 


</P>
</DIV8>


<DIV8 N="§ 81.66" NODE="24:1.1.1.1.36.5.59.6" TYPE="SECTION">
<HEAD>§ 81.66   Submission of reports.</HEAD>
<P>Each GSE shall submit all hard copy reports or other written information required under this subpart to the Secretary and the Director, Office of Government-Sponsored Enterprises. Each GSE shall submit computerized data required under this subpart to the Director, Financial Institutions Regulations, Office of Policy Development and Research. The address for both of these offices is Department of Housing and Urban Development, 451 7th Street, SW. Washington, DC 20410. 


</P>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:1.1.1.1.36.6" TYPE="SUBPART">
<HEAD>Subpart F—Access to Information</HEAD>


<DIV8 N="§ 81.71" NODE="24:1.1.1.1.36.6.59.1" TYPE="SECTION">
<HEAD>§ 81.71   General.</HEAD>
<P>This subpart: 
</P>
<P>(a) Provides for the establishment of a public-use database to make available to the public mortgage data that the GSEs submit to the Secretary under subsection 309(m) of the Fannie Mae Charter Act and subsection 307(e) of the Freddie Mac Act, and AHAR information that the GSEs submit to the Secretary in the AHAR under subsection 309(n) of the Fannie Mae Charter Act and subsection 307(f) of the Freddie Mac Act; 
</P>
<P>(b) Establishes mechanisms for the GSEs to designate mortgage data or AHAR information as proprietary information and for the Secretary to determine whether such mortgage data or AHAR information is proprietary information which should be withheld from disclosure; 
</P>
<P>(c) Addresses the availability of HUD procedures to protect from public disclosure proprietary information and other types of confidential business information submitted by or relating to the GSEs; 
</P>
<P>(d) Addresses protections from disclosure when there is a request from Congress for information and sets forth protections for treatment of data or information submitted by or relating to the GSEs by HUD officers, employees, and contractors; and 
</P>
<P>(e) Provides that data or information submitted by or relating to the GSEs that would constitute a clearly unwarranted invasion of personal privacy shall not be disclosed to the public. 


</P>
</DIV8>


<DIV8 N="§ 81.72" NODE="24:1.1.1.1.36.6.59.2" TYPE="SECTION">
<HEAD>§ 81.72   Public-use database and public information.</HEAD>
<P>(a) <I>General.</I> Except as provided in paragraph (c) of this section, the Secretary shall establish and make available for public use, a public-use database containing public data as defined in § 81.2. 
</P>
<P>(b) <I>Examination of submissions.</I> Following receipt of mortgage data and AHAR information from the GSEs, the Secretary shall, as expeditiously as possible, examine the submissions for mortgage data and AHAR information that: 
</P>
<P>(1) Has been deemed to be proprietary information under this part by a temporary order, final order, or regulation in effect at the time of submission; 
</P>
<P>(2) Has been designated as proprietary information by the GSE in accordance with § 81.73; 
</P>
<P>(3) Would constitute a clearly unwarranted invasion of personal privacy if such data or information were released to the public; or 
</P>
<P>(4) Is required to be withheld or, in the determination of the Secretary, is not appropriate for public disclosure under other applicable laws and regulations, including the Trade Secrets Act (18 U.S.C. 1905) and Executive Order 12600. 
</P>
<P>(c) <I>Public data and proprietary data.</I> The Secretary shall place public data in the public-use database. The Secretary shall exclude from the public-use database and from public disclosure: 
</P>
<P>(1) All mortgage data and AHAR information within the scope of paragraphs (b)(1), (b)(3), and (b)(4) of this section; 
</P>
<P>(2) Any other mortgage data and AHAR information under (b)(2) when determined by the Secretary under § 81.74 to be proprietary information; and 
</P>
<P>(3) Mortgage data that is not year-end data. 
</P>
<P>(d) <I>Access.</I> The Secretary shall provide such means as the Secretary determines are reasonable for the public to gain access to the public-use database. To obtain access to the public-use database, the public should contact the Director, Office of Government-Sponsored Enterprises, Department of Housing and Urban Development, 451 Seventh Street, S.W., Washington, DC 20410, telephone (202) 708-2224 (this is not a toll-free number). 
</P>
<P>(e) <I>Fees.</I> The Secretary may charge reasonable fees to cover the cost of providing access to the public-use database. These fees will include the costs of system access, computer use, copying fees, and other costs. 


</P>
</DIV8>


<DIV8 N="§ 81.73" NODE="24:1.1.1.1.36.6.59.3" TYPE="SECTION">
<HEAD>§ 81.73   GSE request for proprietary treatment.</HEAD>
<P>(a) <I>General.</I> A GSE may request proprietary treatment of any mortgage data or AHAR information that the GSE submits to the Secretary. Such a request does not affect the GSE's responsibility to provide data or information required by the Secretary. Where the Secretary grants a request for proprietary treatment, HUD will not include the data or information in the public-use database or publicly disclose the data or information, except as otherwise provided in accordance with this subpart. 
</P>
<P>(b) <I>Request for proprietary treatment of mortgage data and AHAR information.</I> Except as provided in paragraph (c) of this section, a GSE requesting proprietary treatment of mortgage data or AHAR information shall: 
</P>
<P>(1) Clearly designate those portions of the mortgage data or AHAR information to be treated as proprietary, with a prominent stamp, typed legend, or other suitable form of notice, stating “Proprietary Information—Confidential Treatment Requested by [name of GSE]” on each page or portion of page to which the request applies. If such marking is impractical, the GSE shall attach to the mortgage data or information for which confidential treatment is requested a cover sheet prominently marked “Proprietary Information—Confidential Treatment Requested by [name of GSE];” 
</P>
<P>(2) Accompany its request with a certification by an officer or authorized representative of the GSE that the mortgage data or information is proprietary; and 
</P>
<P>(3) Submit any additional statements in support of proprietary designation that the GSE chooses to provide. 
</P>
<P>(c) <I>Alternative procedure available for mortgage data or AHAR information subject to a temporary order, final order, or regulation in effect.</I> When the request for proprietary treatment pertains to mortgage data or AHAR information that has been deemed proprietary by the Secretary under a temporary order, final order, or regulation in effect, the GSE may reference such temporary order, final order, or regulation in lieu of complying with paragraphs (b)(2) and (3) of this section. 
</P>
<P>(d) <I>Nondisclosure during pendency.</I> Except as may otherwise be required by law, during the time any Request for Proprietary Treatment under § 81.73 is pending determination by the Secretary, the data or information submitted by the GSE that is the subject of the request shall not be disclosed to, or be subject to examination by, the public or any person or representative of any person or agency outside of HUD. 


</P>
</DIV8>


<DIV8 N="§ 81.74" NODE="24:1.1.1.1.36.6.59.4" TYPE="SECTION">
<HEAD>§ 81.74   Secretarial determination on GSE request.</HEAD>
<P>(a) <I>General.</I> The Secretary shall review all Requests for Proprietary Treatment from the GSEs, along with any other information that the Secretary may elicit from other sources regarding the Request. 
</P>
<P>(b) <I>Factors for proprietary treatment.</I> Except as provided in paragraph (c) of this section, in making the determination of whether to accord proprietary treatment to mortgage data or AHAR information, the Secretary's considerations shall include, but are not limited to: 
</P>
<P>(1) The type of data or information involved and the nature of the adverse consequences to the GSE, financial or otherwise, that would result from disclosure, including any adverse effect on the GSE's competitive position; 
</P>
<P>(2) The existence and applicability of any prior determinations by HUD, any other Federal agency, or a court, concerning similar data or information; 
</P>
<P>(3) The measures taken by the GSE to protect the confidentiality of the mortgage data or AHAR information in question, and similar data or information, before and after its submission to the Secretary; 
</P>
<P>(4) The extent to which the mortgage data or AHAR information is publicly available including whether the data or information is available from other entities, from local government offices or records, including deeds, recorded mortgages, and similar documents, or from publicly available data bases; 
</P>
<P>(5) The difficulty that a competitor, including a seller/servicer, would face in obtaining or compiling the mortgage data or AHAR information; and 
</P>
<P>(6) Such additional facts and legal and other authorities as the Secretary may consider appropriate, including the age of the mortgage data (see 24 CFR 81.75(b)(3)), or the extent to which particular mortgage data or AHAR information, when considered together with other information, could reveal proprietary information.
</P>
<P>(c) <I>Alternative criterion for mortgage data or AHAR information subject to a temporary order, final order, or regulation in effect.</I> Where the request for proprietary treatment pertains to mortgage data or AHAR information that has been deemed proprietary by the Secretary under a temporary order, final order, or regulation in effect, the Secretary shall grant the request with respect to any mortgage data or AHAR information which comes within the order or regulation.
</P>
<P>(d) <I>Determination of proprietary treatment.</I> The Secretary shall determine, as expeditiously as possible, whether mortgage data or AHAR information designated as proprietary by a GSE is proprietary information, or whether it is not proprietary and subject to inclusion in the public-use database and public release notwithstanding the GSE's request.
</P>
<P>(e) <I>Action when according proprietary treatment to mortgage data and AHAR information.</I> (1) When the Secretary determines that mortgage data or AHAR information designated as proprietary by a GSE is proprietary, and the mortgage data or AHAR information is not subject to a temporary order, a final order, or a regulation in effect providing that the mortgage data or AHAR information is not subject to public disclosure, the Secretary shall notify the GSE that the request has been granted. In such cases, the Secretary shall issue either a temporary order, a final order, or a regulation providing that the mortgage data or information is not subject to public disclosure. Such a temporary order, final order, or regulation shall:
</P>
<P>(i) Document the reasons for the determination; and
</P>
<P>(ii) Be provided to the GSE, made available to members of the public, and published in the <E T="04">Federal Register,</E> except that any portions of such order or regulation that would reveal the proprietary information shall be withheld from public disclosure. Publications of temporary orders shall invite public comments when feasible.
</P>
<P>(2) Where the Secretary determines that such mortgage data or information is proprietary, the Secretary shall not make it publicly available, except as otherwise provided in accordance with this subpart.
</P>
<P>(f) <I>Determination not to accord proprietary treatment to mortgage data and AHAR information or to seek further information.</I> When the Secretary determines that such mortgage data or AHAR information designated as proprietary by a GSE may not be proprietary, that the request may be granted only in part, or that questions exist concerning the request, the following procedure shall apply:
</P>
<P>(1) The Secretary shall provide the GSE with an opportunity for a meeting with HUD to discuss the matter, for the purpose of gaining additional information concerning the request.
</P>
<P>(2) Following the meeting, based on the Secretary's review of the mortgage data or AHAR information that is the subject of a request and the GSE's objections, if any, to disclosure of such mortgage data or AHAR information, the Secretary shall make a determination:
</P>
<P>(i) If the Secretary determines to withhold from the public-use database as proprietary the mortgage data or AHAR information that is the subject of a request, the procedures in paragraph (e) of this section shall apply; or
</P>
<P>(ii) If the Secretary determines that any mortgage data or AHAR information that is the subject of a request is not proprietary, the Secretary shall provide notice in writing to the GSE of the reasons for this determination, and such notice shall provide that the Secretary shall not release the mortgage data or AHAR information to the public for 10 working days.
</P>
<CITA TYPE="N">[60 FR 61888, Dec. 1, 1995, as amended at 70 FR 69031, Nov. 10, 2005]


</CITA>
</DIV8>


<DIV8 N="§ 81.75" NODE="24:1.1.1.1.36.6.59.5" TYPE="SECTION">
<HEAD>§ 81.75   Proprietary information withheld by order or regulation.</HEAD>
<P>(a) <I>Secretarial determination of proprietary classification.</I> Following a determination by the Secretary that mortgage data or AHAR information are proprietary information under FHEFSSA, the Secretary shall expeditiously issue a temporary order, final order, or regulation withholding the mortgage data or AHAR information from the public-use database and from public disclosure by HUD in accordance with 12 U.S.C. 4546. The Secretary may, from time to time, by regulation or order, issue a list providing that certain mortgage data or AHAR information shall be treated as proprietary information.
</P>
<P>(b) <I>Modification of proprietary classification</I>—(1) <I>General.</I> The Secretary may, based upon a consideration of the factors in § 81.74(b), modify a previous determination that mortgage data or AHAR information are proprietary information (and may also make conforming changes to the list designating certain mortgage data or AHAR information as proprietary information) by regulation, or by order using the procedures described in paragraph (d) of this section, as applicable.
</P>
<P>(2) <I>Release of data following a modification of proprietary classification.</I> Following the Secretary's determination under paragraph (b)(1) of this section to modify a previous proprietary determination by reclassifying certain mortgage data as non-proprietary, the Secretary shall release the reclassified, non-proprietary mortgage data to the public both prospectively and for all prior years' public use databases, unless otherwise provided by the Secretary.
</P>
<P>(3) <I>Release of aged data.</I> The Secretary may determine, through case-by-case consideration of individual data elements under paragraph (b)(1) of this section, that certain mortgage data previously determined to be proprietary may lose their proprietary status if they are at least five years old (as measured from the end of the calendar year to which the mortgage data pertain). The Secretary will evaluate the age of the data as one of the relevant factors that may be considered under 24 CFR 81.74(b)(6). If the Secretary determines that such aged mortgage data have lost their proprietary status, these data shall be released publicly.
</P>
<P>(c) <I>Release of aggregated data derived from proprietary loan-level data.</I> The Secretary may, based upon a consideration of the factors in § 81.74(b) and using the procedures in paragraph (d) of this section, determine that certain aggregated data derived from proprietary loan-level mortgage data are not proprietary. If the Secretary makes such a determination, then the aggregated data shall be released to the public both prospectively and for all prior years, unless otherwise provided by the Secretary.
</P>
<P>(d) <I>Procedures.</I> The following procedures apply to the Secretary's issuance of an order in connection with a determination under paragraph (b)(1) or (c) of this section:
</P>
<P>(1) The Secretary shall provide each GSE with written notice of the mortgage data, AHAR information or aggregated data proposed to be released, and an opportunity to submit written comments. The Secretary may also provide each GSE with an opportunity for a meeting with HUD to discuss the proposed release of mortgage data, AHAR information, or aggregated data;
</P>
<P>(2) The Secretary shall make a determination regarding the proposed release of the GSE mortgage data, AHAR information, or aggregated data based upon a consideration of the data or information under the standards set forth in 24 CFR 81.74(b) and the GSEs' written and oral objections, if any, to the proposed release of such mortgage data, AHAR information, or aggregated data;
</P>
<P>(3) The Secretary shall provide notice in writing to each GSE of the Secretary's determination and the reasons under § 81.74(b) for his or her determination. If the Secretary determines that the mortgage data, AHAR information, or aggregated data may be released, the notice will also provide that the Secretary shall not release the mortgage data, AHAR information, or aggregated data to the public for 10 working days;
</P>
<P>(4) The Secretary shall, no earlier than the end of the ten-working-day period referred to in paragraph (d)(3) of this section, publish an order in the <E T="04">Federal Register</E> notifying the public of the Secretary's determination to release the mortgage data or AHAR information that has been reclassified as non-proprietary and/or to release certain non-proprietary aggregations of data derived from proprietary loan-level mortgage data. The order will also modify the list described in paragraph (a) of this section to reflect the Secretary's reclassification of the mortgage data or AHAR information. The Secretary shall omit from the published order any information that would reveal proprietary information.
</P>
<CITA TYPE="N">[70 FR 69031, Nov. 10, 2005]


</CITA>
</DIV8>


<DIV8 N="§ 81.76" NODE="24:1.1.1.1.36.6.59.6" TYPE="SECTION">
<HEAD>§ 81.76   FOIA requests and protection of GSE information.</HEAD>
<P>(a) <I>General.</I> HUD shall process FOIA requests for information submitted to the Secretary by the GSEs in accordance with:
</P>
<P>(1) HUD's FOIA and Privacy Act regulations, 24 CFR parts 15 and 16;
</P>
<P>(2) 12 U.S.C. 4525, 4543, and 4546 and this subpart; and
</P>
<P>(3) Other applicable statutes, regulations, and guidelines, including the Trade Secrets Act, 18 U.S.C. 1905, and Executive Order 12600. In responding to requests for data or information submitted by or relating to the GSEs, the Secretary may invoke provisions of these authorities to protect data or information from disclosure.
</P>
<P>(b) <I>Protection of confidential business information other than mortgage data and AHAR information.</I> When a GSE seeks to protect from disclosure confidential business information, the GSE may seek protection of such confidential business information pursuant to the provisions of HUD's FOIA regulations at 24 CFR part 15, without regard to whether or not it is mortgage data or AHAR information.
</P>
<P>(c) <I>Processing of FOIA requests</I>—(1) <I>FOIA Exemption (b)(4).</I> HUD will process FOIA requests for confidential business information of the GSEs to which FOIA exemption 4 may apply in accordance with 24 CFR part 15, and the predisclosure notification procedures of Executive Order 12,600.
</P>
<P>(2) <I>FOIA Exemption (b)(8).</I> Under section 1319F of FHEFSSA, the Secretary may invoke FOIA exemption (b)(8) to withhold from the public any GSE data or information contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of HUD. HUD may make data or information available for the confidential use of other government agencies in their official duties or functions, but all data or information remains the property of HUD and any unauthorized use or disclosure of such data or information may be subject to the penalties of 18 U.S.C. 641.
</P>
<P>(3) <I>Other FOIA exemptions.</I> Under 24 CFR part 15, the Secretary may invoke other exemptions including, without limitation, exemption (b)(6) (5 U.S.C. 552(b)(6)), to protect data and information that would constitute a clearly unwarranted invasion of personal privacy.
</P>
<P>(d) <I>Protection of information by HUD officers and employees.</I> The Secretary will institute all reasonable safeguards to protect data or information submitted by or relating to either GSE, including, but not limited to, advising all HUD officers and employees having access to data or information submitted by or relating to either GSE of the legal restrictions against unauthorized disclosure of such data or information under the executive branch-wide standards of ethical conduct, 5 CFR part 2635, and the Trade Secrets Act, 18 U.S.C. 1905. Officers and employees shall be advised of the penalties for unauthorized disclosure, ranging from disciplinary action under 5 CFR part 2635 to criminal prosecution. 
</P>
<P>(e) <I>Protection of information by contractors.</I> (1) In contracts and agreements entered into by HUD where contractors have access to data or information submitted by or relating to either GSE, HUD shall include detailed provisions specifying that:
</P>
<P>(i) Neither the contractor nor any of its officers, employees, agents, or subcontractors may release data submitted by or relating to either GSE without HUD's authorization; and
</P>
<P>(ii) Unauthorized disclosure may be a basis for:
</P>
<P>(A) Terminating the contract for default;
</P>
<P>(B) Suspending or debarring the contractor; and
</P>
<P>(C) Criminal prosecution of the contractor, its officers, employees, agents, or subcontractors under the Federal Criminal Code.
</P>
<P>(2) Contract provisions shall require safeguards against unauthorized disclosure, including training of contractor and subcontractor agents and employees, and provide that the contractor will indemnify and hold HUD harmless against unauthorized disclosure of data or information belonging to the GSEs or HUD.
</P>
<CITA TYPE="N">[60 FR 61888, Dec. 1, 1995, as amended at 65 FR 65089, Oct. 31, 2000] 


</CITA>
</DIV8>


<DIV8 N="§ 81.77" NODE="24:1.1.1.1.36.6.59.7" TYPE="SECTION">
<HEAD>§ 81.77   Requests for GSE information on behalf of Congress, the Comptroller General, a subpoena, or other legal process.</HEAD>
<P>(a) <I>General.</I> With respect to information submitted by or relating to the GSEs, nothing in this subpart F may be construed to grant authority to the Secretary under FHEFSSA to withhold any information from or to prohibit the disclosure of any information to the following persons or entities:
</P>
<P>(1) Either House of Congress or, to the extent of matters within its jurisdiction, any committee or subcommittee thereof, or any joint committee of Congress or subcommittee of any such joint committee;
</P>
<P>(2) The Comptroller General, or any of the Comptroller General's authorized representatives, in the course of the performance of the duties of the General Accounting Office;
</P>
<P>(3) A court of competent jurisdiction pursuant to a subpoena; or
</P>
<P>(4) As otherwise compelled by law.
</P>
<P>(b) <I>Notice of proprietary or confidential nature of GSE information.</I> (1) In releasing data or information in response to a request as set out in paragraph (a) of this section, the Secretary will, where applicable, include a statement with the data or information to the effect that:
</P>
<P>(i) The GSE regards the data or information as proprietary information and/or confidential business information;
</P>
<P>(ii) Public disclosure of the data or information may cause competitive harm to the GSE; and
</P>
<P>(iii) The Secretary has determined that the data or information is proprietary information and/or confidential business information.
</P>
<P>(2) To the extent practicable, the Secretary will provide notice to the GSE after a request from the persons or entities described in paragraphs (a)(1)-(4) of this section for proprietary information or confidential business information is received and before the data or information is provided in response to the request.
</P>
<P>(c) <I>Procedures for requests pursuant to subpoena or other legal process.</I> The procedures in 24 CFR 15.71-15.74 shall be followed when a subpoena, order, or other demand of a court or other authority is issued for the production or disclosure of any GSE data or information that:
</P>
<P>(1) Is contained in HUD's files;
</P>
<P>(2) Relates to material contained in HUD's files; or
</P>
<P>(3) Was acquired by any person while such person was an employee of HUD, as a part of the performance of the employee's official duties or because of the employee's official status.
</P>
<P>(d) <I>Requests pursuant to subpoena or other legal process not served on HUD.</I> If an individual who is not a HUD employee or an entity other than HUD is served with a subpoena, order, or other demand of a court or authority for the production or disclosure of HUD data or information relating to a GSE and such data or information may not be disclosed to the public under this subpart or 24 CFR part 15, such individual or entity shall comply with 24 CFR 15.71-15.74 as if the individual or entity is a HUD employee, including immediately notifying HUD in accordance with the procedures set forth in 24 CFR 15.73(a).
</P>
<P>(e) <I>Reservation of additional actions.</I> Nothing in this section precludes further action by the Secretary, in his or her discretion, to protect data or information submitted by a GSE from unwarranted disclosure in appropriate circumstances.


</P>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:1.1.1.1.36.7" TYPE="SUBPART">
<HEAD>Subpart G—Procedures for Actions and Review of Actions</HEAD>


<DIV8 N="§ 81.81" NODE="24:1.1.1.1.36.7.59.1" TYPE="SECTION">
<HEAD>§ 81.81   General.</HEAD>
<P>This subpart sets forth procedures for: 
</P>
<P>(a) The Secretary to issue cease-and-desist orders and impose civil money penalties to enforce the housing goal provisions implemented in subpart B of this part and the information submission and reporting requirements implemented in subpart E of this part; and 
</P>
<P>(b) Hearings, in accordance with 12 U.S.C. 4542(c)(4)(B), on the Secretary's disapproval of new programs that the Secretary determines are not in the public interest. 


</P>
</DIV8>


<DIV8 N="§ 81.82" NODE="24:1.1.1.1.36.7.59.2" TYPE="SECTION">
<HEAD>§ 81.82   Cease-and-desist proceedings.</HEAD>
<P>(a) <I>Issuance.</I> The Secretary may issue and serve upon a GSE a written notice of charges justifying issuance of a cease-and-desist order, if the Secretary determines the GSE: 
</P>
<P>(1) Has failed to submit, within the time prescribed in § 81.22, a housing plan that substantially complies with 12 U.S.C. 4566(c), as implemented by § 81.22; 
</P>
<P>(2) Is failing or has failed, or there is reasonable cause to believe that the GSE is about to fail, to make a good-faith effort to comply with a housing plan submitted to and approved by the Secretary; or 
</P>
<P>(3) Has failed to submit any of the information required under sections 309(m) or (n) of the Fannie Mae Charter Act, sections 307(e) or (f) of the Freddie Mac Act, or subpart E of this part. 
</P>
<P>(b) <I>Procedures</I>—(1) <I>Content of notice.</I> The notice of charges shall provide: 
</P>
<P>(i) A concise statement of the facts constituting the alleged misconduct and the violations with which the GSE is charged; 
</P>
<P>(ii) Notice of the GSE's right to a hearing on the record; 
</P>
<P>(iii) A time and date for a hearing on the record; 
</P>
<P>(iv) A statement of the consequences of failing to contest the matter; and 
</P>
<P>(v) The effective date of the order if the GSE does not contest the matter. 
</P>
<P>(2) <I>Administrative Law Judge.</I> A HUD Administrative Law Judge (ALJ) shall preside over any hearing conducted under this section. The hearing shall be conducted in accordance with § 81.84 and, to the extent the provisions are not inconsistent with any of the procedures in this part or FHEFSSA, with 24 CFR part 26, subpart B.
</P>
<P>(3) <I>Issuance of order.</I> If the GSE consents to the issuance of the order or the ALJ finds, based on the hearing record, that a preponderance of the evidence established the conduct specified in the notice of charges, the ALJ may issue and serve upon the GSE an order requiring the GSE to: 
</P>
<P>(i) Submit a housing plan that substantially complies with 12 U.S.C. 4566(c), as implemented by § 81.22; 
</P>
<P>(ii) Comply with a housing plan; or 
</P>
<P>(iii) Provide the information required under subpart E of this part. 
</P>
<P>(4) <I>Effective date.</I> An order under this section shall be effective as provided in 12 U.S.C. 4581(c) and § 81.84(m). 
</P>
<CITA TYPE="N">[60 FR 61888, Dec. 1, 1995, as amended at 61 FR 50218, Sept. 24, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 81.83" NODE="24:1.1.1.1.36.7.59.3" TYPE="SECTION">
<HEAD>§ 81.83   Civil money penalties.</HEAD>
<P>(a) <I>Imposition.</I> The Secretary may impose a civil money penalty on a GSE that has failed: 
</P>
<P>(1) To submit, within the time prescribed in § 81.22, a housing plan that substantially complies with 12 U.S.C. 4566(c), as implemented by § 81.22; 
</P>
<P>(2) To make a good-faith effort to comply with a housing plan submitted and approved by the Secretary; or 
</P>
<P>(3) To submit any of the information required under sections 309(m) or (n) of the Fannie Mae Charter Act, sections 307(e) or (f) of the Freddie Mac Act, or subpart E of this part. 
</P>
<P>(b) <I>Amount of penalty.</I> The amount of the penalty shall not exceed: 
</P>
<P>(1) For any failure described in paragraph (a)(1) of this section, $35,000 for each day that the failure occurs; and
</P>
<P>(2) For any failure described in paragraphs (a)(2) or (a)(3) of this section, $16,000 for each day that the failure occurs.
</P>
<P>(c) <I>Factors in determining amount of penalty.</I> In determining the amount of a penalty under this section, the Secretary shall consider the factors in 12 U.S.C. 4585(c)(2) including the public interest. 
</P>
<P>(d) <I>Procedures</I>—(1) <I>Notice of Intent.</I> The Secretary shall notify the GSE in writing of the Secretary's determination to impose a civil money penalty by issuing a Notice of Intent to Impose Civil Money Penalties (“Notice of Intent”). The Notice of Intent shall provide: 
</P>
<P>(i) A concise statement of the facts constituting the alleged misconduct; 
</P>
<P>(ii) The amount of the civil money penalty; 
</P>
<P>(iii) Notice of the GSE's right to a hearing on the record; 
</P>
<P>(iv) The procedures to follow to obtain a hearing; 
</P>
<P>(v) A statement of the consequences of failing to request a hearing; and 
</P>
<P>(vi) The date the penalty shall be due unless the GSE contests the matter. 
</P>
<P>(2) To appeal the Secretary's decision to impose a civil money penalty, the GSE shall, within 20 days of service of the Notice of Intent, file a written Answer with the Chief Docket Clerk, Office of Hearings and Appeals, Department of Housing and Urban Development, at the address provided in the Notice of Intent. 
</P>
<P>(3) <I>Administrative law judge.</I> A HUD ALJ shall preside over any hearing conducted under this section, in accordance with § 81.84 and, to the extent the provisions are not inconsistent with any of the procedures in this part or FHEFSSA, with 24 CFR part 26, subpart B. 
</P>
<P>(4) <I>Issuance of order.</I> If the GSE consents to the issuance of the order or the ALJ finds, on the hearing record, that a preponderance of the evidence establishes the conduct specified in the notice of charges, the ALJ may issue an order imposing a civil money penalty. 
</P>
<P>(5) <I>Consultation with the Director.</I> In the Secretary's discretion, the Director of OFHEO may be requested to review any Notice of Intent, determination, order, or interlocutory ruling arising from a hearing. 
</P>
<P>(e) <I>Action to collect penalty.</I> The Secretary may request the Attorney General of the United States to bring an action to collect the penalty, in accordance with 12 U.S.C. 4585(d). Interest on, and other charges for, any unpaid penalty may be assessed in accordance with 31 U.S.C. 3717. 
</P>
<P>(f) <I>Settlement by Secretary.</I> The Secretary may compromise, modify, or remit any civil money penalty that may be, or has been, imposed under this section. 
</P>
<CITA TYPE="N">[60 FR 61888, Dec. 1, 1995, as amended at 61 FR 50218, Sept. 24, 1996; 68 FR 12788, Mar. 17, 2003; 72 FR 5588, Feb. 6, 2007; 87 FR 8197, Feb. 14, 2022]


</CITA>
</DIV8>


<DIV8 N="§ 81.84" NODE="24:1.1.1.1.36.7.59.4" TYPE="SECTION">
<HEAD>§ 81.84   Hearings.</HEAD>
<P>(a) <I>Applicability.</I> The hearing procedures in this section apply to hearings on the record to review cease-and-desist orders, civil money penalties, and new programs disapproved based upon a determination by the Secretary that such programs are not in the public interest, in accordance with 12 U.S.C. 4542(c)(4)(B). 
</P>
<P>(b) <I>Hearing requirements.</I> (1) Hearings shall be held in the District of Columbia. 
</P>
<P>(2) Hearings shall be conducted by a HUD ALJ authorized to conduct proceedings under 24 CFR part 26, subpart B. 
</P>
<P>(c) <I>Timing.</I> Unless an earlier or later date is requested by a GSE and the request is granted by the ALJ, a hearing shall be fixed for a date not earlier than 30 days, nor later than 60 days, after: 
</P>
<P>(1) Service of the notice of charges under § 81.82; 
</P>
<P>(2) Service of the Notice of Intent to Impose Civil Money Penalty(ies) under § 81.83; or 
</P>
<P>(3) Filing of a request for a hearing under § 81.54(b). 
</P>
<P>(d) <I>Procedure.</I> Hearings shall be conducted in accordance with the procedures set forth in 24 CFR part 26, subpart B to the extent that such provisions are not inconsistent with any of the procedures in this part or FHEFSSA. 
</P>
<P>(e) <I>Service</I>—(1) <I>To GSE.</I> Any service required or authorized to be made by the Secretary under this subpart G may be made to the Chief Executive Officer of a GSE or any other representative as the GSE may designate in writing to the Secretary. 
</P>
<P>(2) <I>How service may be made.</I> A serving party shall use one or more of the following methods of service: 
</P>
<P>(i) Personal service; 
</P>
<P>(ii) Delivering the papers to a reliable commercial courier service, overnight delivery service, or the U.S. Post Office for Express Mail Delivery; or 
</P>
<P>(iii) Transmission by electronic media, only if the parties mutually agree. The serving party shall mail an original of the filing after any proper service using electronic media. 
</P>
<P>(f) <I>Subpoena authority</I>—(1) <I>General.</I> In the course of or in connection with any hearing, the Secretary and the ALJ shall have the authority to: 
</P>
<P>(i) Administer oaths and affirmations; 
</P>
<P>(ii) Take and preserve testimony under oath; 
</P>
<P>(iii) Issue subpoenas and subpoenas duces tecum; and 
</P>
<P>(iv) Revoke, quash, or modify subpoenas and subpoenas duces tecum issued under this paragraph (f). 
</P>
<P>(2) <I>Witnesses and documents.</I> The attendance of witnesses and the production of documents provided for in this section may be required from any place in any State. A witness may be required to appear, and a document may be required to be produced, at: 
</P>
<P>(i) The hearing; and 
</P>
<P>(ii) Any place that is designated for attendance at a deposition or production of a document under this section. 
</P>
<P>(3) <I>Enforcement.</I> In accordance with 12 U.S.C. 4588(c), the Secretary may request the Attorney General of the United States to enforce any subpoena or subpoena duces tecum issued pursuant to this section. If a subpoenaed person fails to comply with all or any portion of a subpoena issued pursuant to this paragraph (f), the subpoenaing party or any other aggrieved person may petition the Secretary to seek enforcement of the subpoena. A party's petition to the Secretary for enforcement of a subpoena in no way limits the sanctions that may be imposed by the ALJ on a party who fails to comply with a subpoena issued under this paragraph (f). 
</P>
<P>(4) <I>Fees and expenses.</I> Witnesses subpoenaed under this section shall be paid the same fees and mileage that are paid witnesses in the district courts of the United States and may seek reasonable expenses and attorneys fees in any court having jurisdiction of any proceeding instituted under this section. Such expenses and fees shall be paid by the GSE or from its assets. 
</P>
<P>(g) <I>Failure to appear.</I> If a GSE fails to appear at a hearing through a duly authorized representative, the GSE shall be deemed to have consented to the issuance of the cease-and-desist order, the imposition of the penalty, or the disapproval of the new program, whichever is applicable. 
</P>
<P>(h) <I>Public hearings.</I> (1) All hearings shall be open to the public, unless the ALJ determines that an open hearing would be contrary to the public interest. Where a party makes a timely motion to close a hearing and the ALJ denies the motion, such party may file with the Secretary within 5 working days a request for a closed hearing, and any party may file a reply to such a request within 5 working days of service of such a motion. Such motions, requests, and replies are governed by § 26.38 of this title. When a request for a closed hearing has been filed with the Secretary under this paragraph (h)(1), the hearing shall be stayed until the Secretary has advised the parties and the ALJ, in writing, of the Secretary's decision on whether the hearing should be closed. 
</P>
<P>(2) Failure to file a timely motion, request or reply is deemed a waiver of any objection regarding whether the hearing will be public or closed. A party must file any motion for a closed hearing within 10 days after: 
</P>
<P>(i) Service of the notice of charges under § 81.82; 
</P>
<P>(ii) Service of the Notice of Intent to Impose Civil Money Penalt(ies) under § 81.83; or 
</P>
<P>(iii) Filing of a request for a hearing under § 81.54(b). 
</P>
<P>(i) <I>Decision of ALJ.</I> After each hearing, the ALJ shall issue an initial decision and serve the initial decision on the GSE, the Secretary, any other parties, and the HUD General Counsel. This service will constitute notification that the case has been submitted to the Secretary. 
</P>
<P>(j) <I>Review of initial decision</I>—(1) <I>Secretary's discretion.</I> The Secretary, in the Secretary's discretion, may review any initial decision. 
</P>
<P>(2) <I>Requested by a party.</I> Any party may file a notice of appeal of an initial decision to the Secretary in accordance with § 26.51(c) of this title. Any waiver of the limitations contained in § 26.51(f) of this title on the number of pages for notices of appeal and responses, of the time limitation in § 26.51(c) of this title for filing a notice of appeal of the initial decision, or any other waivers under this subpart shall not be subject to the publication requirements in 42 U.S.C. 3535(q). 
</P>
<P>(k) <I>Final decision.</I> (1) The initial decision will become the final decision unless the Secretary issues a final decision within 90 days after the initial decision is served on the Secretary. 
</P>
<P>(2) <I>Issuance of final decision by Secretary.</I> The Secretary may review any finding of fact, conclusion of law, or order contained in the initial decision of the ALJ and may issue a final decision in the proceeding. Any decision shall include findings of fact upon which the decision is predicated. The Secretary may affirm, modify, or set aside, in whole or in part, the initial decision or may remand the initial decision for further proceedings. The final decision shall be served on all parties and the ALJ. 
</P>
<P>(l) <I>Decisions on remand.</I> If the initial decision is remanded for further proceedings, the ALJ shall issue an initial decision on remand within 60 days of the date of issuance of the decision to remand, unless it is impractical to do so. 
</P>
<P>(m) <I>Modification.</I> The Secretary may modify, terminate, or set aside any order in accordance with 12 U.S.C. 4582(b)(2). 
</P>
<CITA TYPE="N">[60 FR 61888, Dec. 1, 1995, as amended at 61 FR 50219 Sept. 24, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 81.85" NODE="24:1.1.1.1.36.7.59.5" TYPE="SECTION">
<HEAD>§ 81.85   Public disclosure of final orders and agreements.</HEAD>
<P>(a) <I>Disclosure.</I> Except as provided in paragraph (b) of this section, the Secretary shall make available to the public final orders; written agreements and statements; and modifications and terminations of those orders, agreements, and statements, as set forth in 12 U.S.C. 4586(a) and the implementing regulations in this subpart G. The retention of records of these orders, agreements, and statements, and their modifications and terminations, are governed by 12 U.S.C. 4586(e). 
</P>
<P>(b) <I>Exceptions to disclosure.</I> Exceptions to disclosure will be determined in accordance with 12 U.S.C. 4586 (c), (d), and (f) and paragraph (c) of this section. 
</P>
<P>(c) <I>Filing documents under seal</I>—(1) <I>Request by party.</I> Upon the denial by the ALJ of a motion for a protective order, any party may request the Secretary to file any document or part of a document under seal if the party believes that disclosure of the document would be contrary to the public interest. Any other party may file with the Secretary a reply to such a request within 5 working days after a request is made or some other time to be determined by the Secretary. Such requests and replies are governed by § 26.38 of this title. 
</P>
<P>(2) <I>Effect of request.</I> A document or part of a document that is the subject of a timely request to the Secretary to file under seal will not be disclosed under this section until the Secretary has advised the parties and the ALJ, in writing, of the Secretary's decision on whether the document or part of a document should be filed under seal. The ALJ shall take all appropriate steps to preserve the confidentiality of such documents or parts of documents, including closing portions of the hearing to the public. 
</P>
<P>(3) <I>Time of request.</I> Failure to file with the Secretary a timely request or a reply is deemed a waiver of any objection regarding the decision on whether a document is to be disclosed. A party must make its request to file a document under seal at least 10 days before the commencement of the hearing. A request may be filed at any other time before or during the course of the hearing, but the requesting party's obligation to produce the document or parts of the document will not be affected by the party's pending request to the Secretary, unless the Secretary expressly directs the ALJ to treat the document as protected from disclosure until the Secretary makes a final written decision on whether the document should be filed under seal. If the Secretary's direction to the ALJ is made orally, that direction must be reduced to writing and filed with the ALJ within 3 working days of the making of the oral order or the document will then be subject to disclosure pending the Secretary's final written decision on disclosure. 
</P>
<CITA TYPE="N">[60 FR 61888, Dec. 1, 1995, as amended at 61 FR 50219 Sept. 24, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 81.86" NODE="24:1.1.1.1.36.7.59.6" TYPE="SECTION">
<HEAD>§ 81.86   Enforcement and jurisdiction.</HEAD>
<P>If a GSE fails to comply with a final decision, the Secretary may request the Attorney General of the United States to bring an action in the United States District Court for the District of Columbia for the enforcement of the notice or order. Such request may be made: 
</P>
<P>(a) <I>For a cease-and-desist order:</I> 
</P>
<P>(1) Upon expiration of the 30-day period beginning on the service of the order on the GSE; or 
</P>
<P>(2) Upon the effective time specified in an order issued upon consent; and 
</P>
<P>(b) <I>For a civil money penalty,</I> when the order imposing the penalty is no longer subject to review under 12 U.S.C. 4582 and 4583 and the implementing regulations at §§ 81.84 and 81.87. 


</P>
</DIV8>


<DIV8 N="§ 81.87" NODE="24:1.1.1.1.36.7.59.7" TYPE="SECTION">
<HEAD>§ 81.87   Judicial review.</HEAD>
<P>(a) <I>Commencement.</I> In a proceeding under 12 U.S.C. 4581 or 4585, as implemented by § 81.82 or § 81.83, a GSE that is a party to the proceeding may obtain review of any final order issued under § 81.84 by filing in the United States Court of Appeals for the District of Columbia Circuit, within 30 days after the date of service of such order, a written petition praying that the order of the Secretary be modified, terminated, or set aside. 
</P>
<P>(b) <I>Filing of record.</I> Upon receiving a copy of a petition, the Chief Docket Clerk, Office of Hearings and Appeals, shall file in the court the record in the proceeding, as provided in 28 U.S.C. 2112. 
</P>
<P>(c) <I>No automatic stay.</I> The commencement of proceedings for judicial review under this section shall not, unless specifically ordered by the court, operate as a stay of any order issued by the Secretary. 
</P>
<CITA TYPE="N">[60 FR 61888, Dec. 1, 1995, as amended at 87 FR 8197, Feb. 14, 2022]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="H" NODE="24:1.1.1.1.36.8" TYPE="SUBPART">
<HEAD>Subpart H—Book-Entry Procedures</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 63948, Dec. 2, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 81.91" NODE="24:1.1.1.1.36.8.59.1" TYPE="SECTION">
<HEAD>§ 81.91   Maintenance of GSE Securities.</HEAD>
<P>A GSE Security may be maintained in the form of a Definitive GSE Security or a Book-entry GSE Security. A Book-entry GSE Security shall be maintained in the Book-entry System. 


</P>
</DIV8>


<DIV8 N="§ 81.92" NODE="24:1.1.1.1.36.8.59.2" TYPE="SECTION">
<HEAD>§ 81.92   Law governing rights and obligations of United States, Federal Reserve Banks, and GSEs; rights of any Person against United States, Federal Reserve Banks, and GSEs; Law governing other interests.</HEAD>
<P>(a) Except as provided in paragraph (b) of this section, the following rights and obligations are governed solely by the book-entry regulations contained in this subpart H, the Securities Documentation, and Federal Reserve Bank Operating Circulars (but not including any choice of law provisions in the Security Documentation to the extent such provisions conflict with the Book-entry regulations contained in this subpart H): 
</P>
<P>(1) The rights and obligations of a GSE and the Federal Reserve Banks with respect to: 
</P>
<P>(i) A Book-entry GSE Security or Security Entitlement; and 
</P>
<P>(ii) The operation of the Book-entry System as it applies to GSE Securities; and 
</P>
<P>(2) The rights of any Person, including a Participant, against a GSE and the Federal Reserve Banks with respect to: 
</P>
<P>(i) A Book-entry GSE Security or Security Entitlement; and 
</P>
<P>(ii) The operation of the Book-entry System as it applies to GSE Securities; 
</P>
<P>(b) A security interest in a Security Entitlement that is in favor of a Federal Reserve Bank from a Participant and that is not recorded on the books of a Federal Reserve Bank pursuant to § 81.93(c)(1), is governed by the law (not including the conflict-of-law rules) of the jurisdiction where the head office of the Federal Reserve Bank maintaining the Participant's Securities Account is located. A security interest in a Security Entitlement that is in favor of a Federal Reserve Bank from a Person that is not a Participant, and that is not recorded on the books of a Federal Reserve Bank pursuant to § 81.93(c)(1), is governed by the law determined in the manner specified in paragraph (d) of this section. 
</P>
<P>(c) If the jurisdiction specified in the first sentence of paragraph (b) of this section is a State that has not adopted Revised Article 8, then the law specified in paragraph (b) of this section shall be the law of that State as though Revised Article 8 had been adopted by that State. 
</P>
<P>(d) To the extent not otherwise inconsistent with this subpart H, and notwithstanding any provision in the Security Documentation setting forth a choice of law, the provisions set forth in 31 CFR 357.11 regarding law governing other interests apply and shall be read as though modified to effectuate the application of 31 CFR 357.11 to the GSEs. 
</P>
<CITA TYPE="N">[61 FR 63948, Dec. 2, 1996, as amended at 62 FR 28977, May 29, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 81.93" NODE="24:1.1.1.1.36.8.59.3" TYPE="SECTION">
<HEAD>§ 81.93   Creation of Participant's Security Entitlement; security interests.</HEAD>
<P>(a) A Participant's Security Entitlement is created when a Federal Reserve Bank indicates by book-entry that a Book-entry GSE Security has been credited to a Participant's Securities Account. 
</P>
<P>(b) A security interest in a Security Entitlement of a Participant in favor of the United States to secure deposits of public money, including without limitation deposits to the Treasury tax and loan accounts, or other security interest in favor of the United States that is required by Federal statute, regulation, or agreement, and that is marked on the books of a Federal Reserve Bank is thereby effected and perfected, and has priority over any other interest in the securities. Where a security interest in favor of the United States in a Security Entitlement of a Participant is marked on the books of a Federal Reserve Bank, such Reserve Bank may rely, and is protected in relying, exclusively on the order of an authorized representative of the United States directing the transfer of the security. For purposes of this paragraph, an “authorized representative of the United States” is the official designated in the applicable regulations or agreement to which a Federal Reserve Bank is a party, governing the security interest. 
</P>
<P>(c)(1) A GSE and the Federal Reserve Banks have no obligation to agree to act on behalf of any Person or to recognize the interest of any transferee of a security interest or other limited interest in favor of any Person except to the extent of any specific requirement of Federal law or regulation or to the extent set forth in any specific agreement with the Federal Reserve Bank on whose books the interest of the Participant is recorded. To the extent required by such law or regulation or set forth in an agreement with a Federal Reserve Bank, or the Federal Reserve Bank Operating Circular, a security interest in a Security Entitlement that is in favor of a Federal Reserve Bank, a GSE, or a Person may be created and perfected by a Federal Reserve Bank marking its books to record the security interest. Except as provided in paragraph (b) of this section, a security interest in a Security Entitlement marked on the books of a Federal Reserve Bank shall have priority over any other interest in the securities. 
</P>
<P>(2) In addition to the method provided in paragraph (c)(1) of this section, a security interest, including a security interest in favor of a Federal Reserve Bank, may be perfected by any method by which a security interest may be perfected under applicable law as described in § 81.92(b) or (d). The perfection, effect of perfection or non-perfection and priority of a security interest are governed by such applicable law. A security interest in favor of a Federal Reserve Bank shall be treated as a security interest in favor of a clearing corporation in all respects under such law, including with respect to the effect of perfection and priority of such security interest. A Federal Reserve Bank Operating Circular shall be treated as a rule adopted by a clearing corporation for such purposes. 
</P>
<CITA TYPE="N">[61 FR 63948, Dec. 2, 1996, as amended at 62 FR 28977, May 29, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 81.94" NODE="24:1.1.1.1.36.8.59.4" TYPE="SECTION">
<HEAD>§ 81.94   Obligations of GSEs; no adverse claims.</HEAD>
<P>(a) Except in the case of a security interest in favor of the United States or a Federal Reserve Bank or otherwise as provided in § 81.93(c)(1), for the purposes of this subpart H, the GSE and the Federal Reserve Banks shall treat the Participant to whose Securities Account an interest in a Book-entry GSE Security has been credited as the person exclusively entitled to issue a Transfer Message, to receive interest and other payments with respect thereof and otherwise to exercise all the rights and powers with respect to such Security, notwithstanding any information or notice to the contrary. Neither the Federal Reserve Banks nor a GSE is liable to a Person asserting or having an adverse claim to a Security Entitlement or to a Book-entry GSE Security in a Participant's Securities Account, including any such claim arising as a result of the transfer or disposition of a Book-entry GSE Security by a Federal Reserve Bank pursuant to a Transfer Message that the Federal Reserve Bank reasonably believes to be genuine. 
</P>
<P>(b) The obligation of the GSE to make payments (including payments of interest and principal) with respect to Book-entry GSE Securities is discharged at the time payment in the appropriate amount is made as follows: 
</P>
<P>(1) Interest or other payments on Book-entry GSE Securities is either credited by a Federal Reserve Bank to a Funds Account maintained at such Bank or otherwise paid as directed by the Participant. 
</P>
<P>(2) Book-entry GSE Securities are redeemed in accordance with their terms by a Federal Reserve Bank withdrawing the securities from the Participant's Securities Account in which they are maintained and by either crediting the amount of the redemption proceeds, including both redemption proceeds, where applicable, to a Funds Account at such Bank or otherwise paying such redemption proceeds as directed by the Participant. No action by the Participant ordinarily is required in connection with the redemption of a Book-entry GSE Security. 
</P>
<CITA TYPE="N">[61 FR 63948, Dec. 2, 1996, as amended at 62 FR 28977, May 28, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 81.95" NODE="24:1.1.1.1.36.8.59.5" TYPE="SECTION">
<HEAD>§ 81.95   Authority of Federal Reserve Banks.</HEAD>
<P>(a) Each Federal Reserve Bank is hereby authorized as fiscal agent of the GSEs to perform the following functions with respect to the issuance of Book-entry GSE Securities offered and sold by a GSE to which this subpart H applies, in accordance with the Securities Documentation, Federal Reserve Bank Operating Circulars, this subpart H, and procedures established by the Secretary consistent with these authorities: 
</P>
<P>(1) To service and maintain Book-entry GSE Securities in accounts established for such purposes; 
</P>
<P>(2) To make payments with respect to such securities, as directed by the GSE; 
</P>
<P>(3) To effect transfer of Book-entry GSE Securities between Participants' Securities Accounts as directed by the Participants; 
</P>
<P>(4) To effect conversions between Book-entry GSE Securities and Definitive GSE Securities with respect to those securities as to which conversion rights are available pursuant to the applicable Securities Documentation; and 
</P>
<P>(5) To perform such other duties as fiscal agent as may be requested by the GSE. 
</P>
<P>(b) Each Federal Reserve Bank may issue Operating Circulars not inconsistent with this subpart H, governing the details of its handling of Book-entry GSE Securities, Security Entitlements, and the operation of the book-entry system under this subpart H. 


</P>
</DIV8>


<DIV8 N="§ 81.96" NODE="24:1.1.1.1.36.8.59.6" TYPE="SECTION">
<HEAD>§ 81.96   Withdrawal of Eligible Book-entry GSE Securities for conversion to definitive form.</HEAD>
<P>(a) Eligible Book-entry GSE Securities may be withdrawn from the Book-entry System by requesting delivery of like Definitive GSE Securities. 
</P>
<P>(b) A Reserve bank shall, upon receipt of appropriate instructions to withdraw Eligible Book-entry GSE Securities from book-entry in the Book-entry System, convert such securities into Definitive GSE Securities and deliver them in accordance with such instructions. No such conversion shall affect existing interests in such GSE Securities. 
</P>
<P>(c) All requests for withdrawal of Eligible Book-entry GSE Securities must be made prior to the maturity or date of call of the securities. 
</P>
<P>(d) GSE Securities which are to be delivered upon withdrawal may be issued in either registered or bearer form, to the extent permitted by the applicable Securities Documentation.
</P>
<CITA TYPE="N">[61 FR 63948, Dec. 2, 1996, as amended at 62 FR 28977, May 29, 1997] 


</CITA>
</DIV8>


<DIV8 N="§ 81.97" NODE="24:1.1.1.1.36.8.59.7" TYPE="SECTION">
<HEAD>§ 81.97   Waiver of regulations.</HEAD>
<P>The Secretary reserves the right in the Secretary's discretion, to waive any provision(s) of these regulations in any case or class of cases for the convenience of a GSE, the United States, or in order to relieve any person(s) of unnecessary hardship, if such action is not inconsistent with law, does not adversely affect any substantial existing rights, and the Secretary is satisfied that such action will not subject a GSE or the United States to any substantial expense or liability. 


</P>
</DIV8>


<DIV8 N="§ 81.98" NODE="24:1.1.1.1.36.8.59.8" TYPE="SECTION">
<HEAD>§ 81.98   Liability of GSEs and Federal Reserve Banks.</HEAD>
<P>A GSE and the Federal Reserve Banks may rely on the information provided in a Transfer Message, and are not required to verify the information. A GSE and the Federal Reserve Banks shall not be liable for any action taken in accordance with the information set out in a Transfer Message, or evidence submitted in support thereof. 


</P>
</DIV8>


<DIV8 N="§ 81.99" NODE="24:1.1.1.1.36.8.59.9" TYPE="SECTION">
<HEAD>§ 81.99   Additional provisions.</HEAD>
<P>(a) <I>Additional requirements.</I> In any case or any class of cases arising under these regulations, a GSE may require such additional evidence and a bond of indemnity, with or without surety, as may in the judgment of the GSE be necessary for the protection of the interests of the GSE. 
</P>
<P>(b) <I>Notice of attachment for GSE Securities in Book-entry system.</I> The interest of a debtor in a Security Entitlement may be reached by a creditor only by legal process upon the Securities Intermediary with whom the debtor's securities account is maintained, except where a Security Entitlement is maintained in the name of a secured party, in which case the debtor's interest may be reached by legal process upon the secured party. These regulations do not purport to establish whether a Federal Reserve Bank is required to honor an order or other notice of attachment in any particular case or class of cases. 


</P>
</DIV8>

</DIV6>


<DIV6 N="I" NODE="24:1.1.1.1.36.9" TYPE="SUBPART">
<HEAD>Subpart I—Other Provisions</HEAD>


<DIV8 N="§ 81.101" NODE="24:1.1.1.1.36.9.59.1" TYPE="SECTION">
<HEAD>§ 81.101   Equal employment opportunity.</HEAD>
<P>Fannie Mae and Freddie Mac shall comply with sections 1 and 2 of Executive Order 11478 (3 CFR, 1966-1970 Compilation, p. 803), as amended by Executive Order 12106, (3 CFR, 1978, Compilation, p. 263), providing for the adoption and implementation of equal employment opportunity, as required by section 1216 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1833e). 


</P>
</DIV8>


<DIV8 N="§ 81.102" NODE="24:1.1.1.1.36.9.59.2" TYPE="SECTION">
<HEAD>§ 81.102   Verification and enforcement to ensure GSE data integrity.</HEAD>
<P>(a) <I>Independent verification authority.</I> The Secretary may independently verify the accuracy and completeness of the data, information, and reports provided by each GSE, including conducting on-site verification, when such steps are reasonably related to determining whether a GSE is complying with 12 U.S.C. 4541-4589 and the GSE's Charter Act.
</P>
<P>(b) <I>Certification.</I> (1) The senior officer of each GSE who is responsible for submitting to HUD the fourth quarter Annual Mortgage Report and the AHAR under sections 309(m) and (n) of the Fannie Mae Charter Act or sections 307(e) and (f) of the Freddie Mac Act, as applicable, or for submitting to the Secretary such other report(s), data, or information for which certification is requested in writing by the Secretary, shall certify such report(s), data or information.
</P>
<P>(2) The certification shall state as follows: “To the best of my knowledge and belief, the information provided herein is true, correct and complete.”
</P>
<P>(3) If the Secretary determines that a GSE has failed to provide the certification required by paragraphs (b)(1) and (b)(2) of this section, or that a GSE has provided the certification required by paragraph (b) in connection with data, information or report(s) that the Secretary later determines are not true, correct and complete, the Secretary may pursue the enforcement remedies under paragraph (e) of this section. For data, information or report(s) subject to paragraphs (c) or (d) of this section, the Secretary may pursue the enforcement remedies described in paragraph (e) only in connection with material errors, omissions or discrepancies as those terms are defined in § 81.102(c) or (d).
</P>
<P>(c) <I>Verification procedure and adjustment to correct errors, omissions or discrepancies in AHAR data for the immediately preceding year.</I> (1) This paragraph (c) pertains to the GSEs' submission of year-end data. For purposes of this paragraph, “year-end data” means data that HUD receives from the GSEs related to housing goals performance in the immediately preceding year and covering data reported in the fourth quarter Annual Mortgage Report and the GSE's AHAR. An “error” means a technical mistake, such as a mistake in coding or calculating data. An “omission” means a GSE's failure to count units in the denominator. A “discrepancy” means any difference between HUD's analysis of data and the analysis contained in a GSE's submission of data, including a discrepancy in goal or Special Affordable subgoal performance.
</P>
<P>(2) If HUD finds errors, omissions or discrepancies in a GSE's year-end data submissions relative to HUD's regulations, HUD will first notify the GSE by telephone or e-mail transmission of each such error, omission or discrepancy. The GSE must respond within five working days of each such notification. HUD may, in its discretion or upon a request by a GSE within the five working day period, extend the response period for up to an additional 20 working days. Information exchanges during the five working day period following initial notification, and any subsequent extensions of time that may be granted, may be by electronic mail. Any person with delegated authority from the Secretary, or the Director of HUD's Financial Institution Regulation Division, or his or her designee, shall be responsible for issuing initial notifications regarding errors, omissions, or discrepancies; making determinations on the adequacy of responses received; approving any extensions of time permitted under this provision; and managing the data verification process.
</P>
<P>(3) If each error, omission or discrepancy is not resolved to HUD's satisfaction during the initial five working day period from notification, and any extension period, the Secretary will notify the GSE in writing and seek clarification or additional information to correct the error, omission or discrepancy. The GSE shall have 10 working days (or such longer period as the Secretary may establish, not to exceed 30 working days) from the date of the Secretary's written notice to respond in writing to the notice. If the GSE fails to submit a written response to the Secretary within this period, or if the Secretary determines that the GSE's written response fails to correct or otherwise resolve each error, omission or discrepancy in its reported year-end data to the Secretary's satisfaction, the Secretary will determine the appropriate adjustments to the numerator and the denominator of the applicable housing goal(s) and Special Affordable subgoal(s) due to the GSE's failure to provide the Secretary with accurate submissions of data.
</P>
<P>(4) The Secretary, or his or her designee, shall inform a GSE in writing, at least five working days prior to HUD's release of its official performance figures to the public, of HUD's determination of official goals performance figures, including any adjustments. During the five working days prior to such public release, a GSE may request, in writing, a reconsideration of HUD's final determination of its performance and must provide the basis for requesting the reconsideration. If the request is granted, the Secretary will consider the GSE's request for reconsideration of its determination of goals performance and make a final determination regarding the GSE's performance, within 10 working days of the Secretary's granting of the GSE's written request for reconsideration.
</P>
<P>(5) Should the Secretary determine that additional enforcement action against the GSE is warranted for material errors, omissions or discrepancies with regard to a housing goal or Special Affordable subgoal, it may pursue additional remedies under paragraph (e) of this section. An error, omission or discrepancy is material if it results in an overstatement of credit for a housing goal or Special Affordable subgoal, and, without such overstatement, the GSE would have failed to meet such housing goal or Special Affordable subgoal for the immediately preceding year.
</P>
<P>(d) <I>Adjustment to correct prior year reporting errors, omissions or discrepancies</I>—(1) <I>General.</I> The Secretary may require a GSE to correct a material error, omission or discrepancy in a GSE's prior year's data reported in the fourth quarter Annual Mortgage Report and the GSE's AHAR under sections 309(m) and (n) of the Fannie Mae Charter Act or sections 307(e) and (f) of the Freddie Mac Act, as applicable. An error, omission or discrepancy is material if it results in an overstatement of credit for a housing goal or Special Affordable subgoal and, without such overstatement, the GSE would have failed to meet such housing goal or Special Affordable subgoal for the prior year. A “prior year” for purposes of this section is any one of the two years immediately preceding the latest year for which data on housing goals performance was reported to HUD.
</P>
<P>(2) <I>Procedural requirements.</I> In the event the Secretary determines that a GSE's prior year's fourth quarter Annual Mortgage Report or AHAR contain a material error, omission or discrepancy, the Secretary will provide the GSE with an initial letter containing written findings and determinations within 24 months of the end of the relevant GSE reporting year. The GSE shall have an opportunity, not to exceed 30 days from the date of receipt of the Secretary's initial letter, to respond in writing with supporting documentation, to contest the Secretary's initial determination that there was a material error, omission or discrepancy in a prior year's data. The Secretary shall then issue a final determination letter within 60 days of the date of HUD's receipt of the GSE's written response or, if no response is received, within 90 days of the date of the GSE's receipt of the Secretary's initial letter. The Secretary may extend the period for issuing a final determination letter by an additional 30 days and may grant the GSE an opportunity, for a period not to exceed 10 working days from the date of the GSE's receipt of the determination letter to request that the determination be reconsidered.
</P>
<P>(3) If the Secretary determines that a GSE's prior year's fourth quarter Annual Mortgage Report or AHAR contained a material error, omission or discrepancy, the Secretary may direct the GSE to correct the overstatement by purchasing mortgages to finance the number of units that HUD has determined were overstated in the prior year's goal performance (or, for the Special Affordable subgoal, the number or dollar amount, as applicable, of mortgage purchases that HUD has determined were overstated), or that equal the percentage of the overstatement in the prior year's goal or Special Affordable subgoal performance as applied to the most current year-end performance, whichever is less. Units or mortgages purchased to remedy an overstatement in the housing goals or the Special Affordable subgoal must be eligible to qualify under the same goal or Special Affordable subgoal that HUD has determined were overstated in the prior year.
</P>
<P>(4) If a GSE does not purchase a sufficient amount or type of mortgages to meet the requirements set forth in paragraph (d)(3) of this section as directed by the Secretary by no later than the end of the calendar year immediately following the year in which the Secretary notifies the GSE of such overstatement (unless, upon written request from the GSE, the Secretary, in his or her discretion, determines that a grant of additional time is appropriate to correct or compensate for the overstatement) the Department may pursue any or all of the following remedies:
</P>
<P>(i) Issue a notice that the GSE has failed a housing goal or Special Affordable subgoal in the prior year;
</P>
<P>(ii) Seek additional enforcement remedies under paragraph (e) of this section;
</P>
<P>(iii) Pursue any other civil or administrative remedies as are available to it.
</P>
<P>(e) <I>Additional enforcement options</I>—(1) <I>General.</I> In the event the Secretary determines, either as a result of his or her independent verification authority described in paragraph (a) of this section, or by the authority set forth in paragraphs (b), (c) or (d) of this section, that any of the following circumstances has occurred with respect to data, information or report(s) required by sections 309(m) or (n) of the Fannie Mae Charter Act, sections 307(e) or (f) of the Freddie Mac Act, or subpart E of this part, the Secretary may regard this as a GSE's failure to submit such data, information or report(s) and, accordingly, the Secretary may take the additional enforcement actions authorized by paragraph (e)(2) of this section:
</P>
<P>(i) A GSE fails to submit the certification required by paragraphs (b)(1) and (b)(2) of this section in connection with such data, information or report(s); or
</P>
<P>(ii) A GSE submits the certification required by paragraph (b) of this section, but the Secretary later determines that the data, information or report(s) are not true, correct and complete. For data, information or report(s) subject to paragraphs (c) or (d) of this section, the Secretary may pursue the additional enforcement remedies under paragraph (e)(2) only in connection with material errors, omissions or discrepancies, as those terms are defined in § 81.102(c) or (d). In addition, the Secretary may only pursue such remedies in connection with material errors, omissions or discrepancies arising under paragraph (d) of this section if the GSE has failed to purchase a sufficient amount or type of mortgages, as provided in paragraphs (d)(3) and (d)(4) of this section.
</P>
<P>(2) <I>Remedies.</I> (i) <I>Submissions required under the GSE's charter acts.</I> After the Secretary makes a determination under paragraph (e)(1) of this section that any of the circumstances described in paragraphs (e)(1)(i) or (ii) has occurred with respect to data, information, or report(s) required by sections 309(m) or (n) of the Fannie Mae Charter Act, or by sections 307(e) or (f) of the Freddie Mac Act, the Secretary may pursue any or all of the following remedies in accordance with paragraph (e)(3), or applicable law, as appropriate:
</P>
<P>(A) A cease-and-desist order against the GSE for failing to submit the required data, information or report(s) in accordance with this section;
</P>
<P>(B) Civil money penalties against the GSE for failing to submit the required data, information or report(s) in accordance with this section;
</P>
<P>(C) Any other civil or administrative remedies or penalties against the GSE that may be available to the Secretary by virtue of the GSE's failing to submit or certify the required data, information or report(s) in accordance with this section.
</P>
<P>(ii) <I>Submissions required under subpart E of this part.</I> After the Secretary makes a determination under paragraph (e)(1) of this section that any of the circumstances described in paragraphs (e)(1)(i) or (ii) has occurred with respect to data, information or report(s) required under subpart E of this part (but that are not required by sections 309(m) or (n) of the Fannie Mae Charter Act or by sections 307(e) or (f) of the Freddie Mac Act), the Secretary may pursue any civil or administrative remedies or penalties against the GSE that may be available to the Secretary. The Secretary shall pursue such remedies under applicable law.
</P>
<P>(3) <I>Procedures.</I> The Secretary shall comply with the procedures set forth in subpart G of this part in connection with any enforcement action that he or she may initiate against a GSE under paragraph (e) of this section.
</P>
<CITA TYPE="N">[69 FR 63642, Nov. 2, 2004]


</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="84" NODE="24:1.1.1.1.37" TYPE="PART">
<HEAD>PART 84—UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION, HOSPITALS, AND OTHER NON-PROFIT ORGANIZATIONS 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>59 FR 47011, Sept. 13, 1994, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 84.1" NODE="24:1.1.1.1.37.0.59.1" TYPE="SECTION">
<HEAD>§ 84.1   Applicability of and cross reference to 2 CFR part 200.</HEAD>
<P>(a) Federal awards to institutions of higher education, hospitals and other non-profit organizations are subject to the Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards at 2 CFR part 200.
</P>
<P>(b) Federal awards made prior to December 26, 2014 will continue to be governed by the regulations in effect and codified in 24 CFR part 84 (2013 edition) or as provided under the terms of the Federal award. Where the terms of a Federal award made prior to December 26, 2014, state that the award will be subject to regulations as may be amended, the Federal award shall be subject to 2 CFR part 200.
</P>
<CITA TYPE="N">[79 FR 76078, Dec. 19, 2014]


</CITA>
</DIV8>

</DIV5>


<DIV5 N="85" NODE="24:1.1.1.1.38" TYPE="PART">
<HEAD>PART 85—ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPERATIVE AGREEMENTS TO STATE, LOCAL AND FEDERALLY RECOGNIZED INDIAN TRIBAL GOVERNMENTS 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>53 FR 8068, 8087, Mar. 11, 1988, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 85.1" NODE="24:1.1.1.1.38.0.59.1" TYPE="SECTION">
<HEAD>§ 85.1   Applicability of and cross reference to 2 CFR part 200.</HEAD>
<P>(a) Federal awards with State, local and Indian tribal governments are subject to the Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards at 2 CFR part 200.
</P>
<P>(b) Federal awards made prior to December 26, 2014 will continue to be governed by the regulations in effect and codified in 24 CFR part 85 (2013 edition) or as provided by the terms of the Federal award. Where the terms of a Federal award made prior to December 26, 2014, state that the award will be subject to regulations as may be amended, the Federal award shall be subject to 2 CFR part 200.
</P>
<CITA TYPE="N">[79 FR 76079, Dec. 19, 2014]


</CITA>
</DIV8>

</DIV5>


<DIV5 N="87" NODE="24:1.1.1.1.39" TYPE="PART">
<HEAD>PART 87—NEW RESTRICTIONS ON LOBBYING
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>28 U.S.C. 1 note; 31 U.S.C. 1352; 42 U.S.C. 3535(d).


</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>55 FR 6737, 6750, Feb. 26, 1990, unless otherwise noted.
</PSPACE></SOURCE>
<CROSSREF>
<HED>Cross Reference:</HED>
<P>See also OMB notice published at 54 FR 52306, December 20, 1989.</P></CROSSREF>

<DIV6 N="A" NODE="24:1.1.1.1.39.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 87.100" NODE="24:1.1.1.1.39.1.59.1" TYPE="SECTION">
<HEAD>§ 87.100   Conditions on use of funds.</HEAD>
<P>(a) No appropriated funds may be expended by the recipient of a Federal contract, grant, loan, or cooperative ageement to pay any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with any of the following covered Federal actions: the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement.
</P>
<P>(b) Each person who requests or receives from an agency a Federal contract, grant, loan, or cooperative agreement shall file with that agency a certification, set forth in appendix A, that the person has not made, and will not make, any payment prohibited by paragraph (a) of this section.
</P>
<P>(c) Each person who requests or receives from an agency a Federal contract, grant, loan, or a cooperative agreement shall file with that agency a disclosure form, set forth in appendix B, if such person has made or has agreed to make any payment using nonappropriated funds (to include profits from any covered Federal action), which would be prohibited under paragraph (a) of this section if paid for with appropriated funds.
</P>
<P>(d) Each person who requests or receives from an agency a commitment providing for the United States to insure or guarantee a loan shall file with that agency a statement, set forth in appendix A, whether that person has made or has agreed to make any payment to influence or attempt to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with that loan insurance or guarantee.
</P>
<P>(e) Each person who requests or receives from an agency a commitment providing for the United States to insure or guarantee a loan shall file with that agency a disclosure form, set forth in appendix B, if that person has made or has agreed to make any payment to influence or attempt to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with that loan insurance or guarantee.


</P>
</DIV8>


<DIV8 N="§ 87.105" NODE="24:1.1.1.1.39.1.59.2" TYPE="SECTION">
<HEAD>§ 87.105   Definitions.</HEAD>
<P>For purposes of this part:
</P>
<P>(a) <I>Agency,</I> as defined in 5 U.S.C. 552(f), includes Federal executive departments and agencies as well as independent regulatory commissions and Government corporations, as defined in 31 U.S.C. 9101(1).
</P>
<P>(b) <I>Covered Federal action</I> means any of the following Federal actions:
</P>
<P>(1) The awarding of any Federal contract;
</P>
<P>(2) The making of any Federal grant;
</P>
<P>(3) The making of any Federal loan;
</P>
<P>(4) The entering into of any cooperative agreement; and,
</P>
<P>(5) The extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement.
</P>
<FP>Covered Federal action does not include receiving from an agency a commitment providing for the United States to insure or guarantee a loan. Loan guarantees and loan insurance are addressed independently within this part.
</FP>
<P>(c) <I>Federal contract</I> means an acquisition contract awarded by an agency, including those subject to the Federal Acquisition Regulation (FAR), and any other acquisition contract for real or personal property or services not subject to the FAR.
</P>
<P>(d) <I>Federal cooperative agreement</I> means a cooperative agreement entered into by an agency.
</P>
<P>(e) <I>Federal grant</I> means an award of financial assistance in the form of money, or property in lieu of money, by the Federal Government or a direct appropriation made by law to any person. The term does not include technical assistance which provides services instead of money, or other assistance in the form of revenue sharing, loans, loan guarantees, loan insurance, interest subsidies, insurance, or direct United States cash assistance to an individual.
</P>
<P>(f) <I>Federal loan</I> means a loan made by an agency. The term does not include loan guarantee or loan insurance.
</P>
<P>(g) <I>Indian tribe</I> and <I>tribal organization</I> have the meaning provided in section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450B). Alaskan Natives are included under the definitions of Indian tribes in that Act.
</P>
<P>(h) <I>Influencing or attempting to influence</I> means making, with the intent to influence, any communication to or appearance before an officer or employee or any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with any covered Federal action.
</P>
<P>(i) <I>Loan guarantee</I> and <I>loan insurance</I> means an agency's guarantee or insurance of a loan made by a person.
</P>
<P>(j) <I>Local government</I> means a unit of government in a State and, if chartered, established, or otherwise recognized by a State for the performance of a governmental duty, including a local public authority, a special district, an intrastate district, a council of governments, a sponsor group representative organization, and any other instrumentality of a local government.
</P>
<P>(k) <I>Officer or employee of an agency</I> includes the following individuals who are employed by an agency:
</P>
<P>(1) An individual who is appointed to a position in the Government under title 5, U.S. Code, including a position under a temporary appointment;
</P>
<P>(2) A member of the uniformed services as defined in section 101(3), title 37, U.S. Code; 
</P>
<P>(3) A special Government employee as defined in section 202, title 18, U.S. Code; and,
</P>
<P>(4) An individual who is a member of a Federal advisory committee, as defined by the Federal Advisory Committee Act, title 5, U.S. Code appendix 2.
</P>
<P>(l) <I>Person</I> means an individual, corporation, company, association, authority, firm, partnership, society, State, and local government, regardless of whether such entity is operated for profit or not for profit. This term excludes an Indian tribe, tribal organization, or any other Indian organization with respect to expenditures specifically permitted by other Federal law.
</P>
<P>(m) <I>Reasonable compensation</I> means, with respect to a regularly employed officer or employee of any person, compensation that is consistent with the normal compensation for such officer or employee for work that is not furnished to, not funded by, or not furnished in cooperation with the Federal Government. 
</P>
<P>(n) <I>Reasonable payment</I> means, with respect to perfessional and other technical services, a payment in an amount that is consistent with the amount normally paid for such services in the private sector.
</P>
<P>(o) <I>Recipient</I> includes all contractors, subcontractors at any tier, and subgrantees at any tier of the recipient of funds received in connection with a Federal contract, grant, loan, or cooperative agreement. The term excludes an Indian tribe, tribal organization, or any other Indian organization with respect to expenditures specifically permitted by other Federal law. 
</P>
<P>(p) <I>Regularly employed</I> means, with respect to an officer or employee of a person requesting or receiving a Federal contract, grant, loan, or cooperative agreement or a commitment providing for the United States to insure or guarantee a loan, an officer or employee who is employed by such person for at least 130 working days within one year immediately preceding the date of the submission that initiates agency consideration of such person for receipt of such contract, grant, loan, cooperative agreement, loan insurance commitment, or loan guarantee commitment. An officer or employee who is employed by such person for less than 130 working days within one year immediately preceding the date of the submission that initiates agency consideration of such person shall be considered to be regularly employed as soon as he or she is employed by such person for 130 working days. 
</P>
<P>(q) <I>State</I> means a State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, a territory or possession of the United States, an agency or instrumentality of a State, and a multi-State, regional, or interstate entity having governmental duties and powers. 


</P>
</DIV8>


<DIV8 N="§ 87.110" NODE="24:1.1.1.1.39.1.59.3" TYPE="SECTION">
<HEAD>§ 87.110   Certification and disclosure.</HEAD>
<P>(a) Each person shall file a certification, and a disclosure form, if required, with each submission that initiates agency consideration of such person for: 
</P>
<P>(1) Award of a Federal contract, grant, or cooperative agreement exceeding $100,000; or 
</P>
<P>(2) An award of a Federal loan or a commitment providing for the United States to insure or guarantee a loan exceeding $150,000 or the single family maximum mortgage limit for affected programs, whichever is greater. 
</P>
<P>(b) Each person shall file a certification, and a disclosure form, if required, upon receipt by such person of: 
</P>
<P>(1) A Federal contract, grant, or cooperative agreement exceeding $100,000; or 
</P>
<P>(2) A Federal loan or a commitment providing for the United States to insure or guarantee a loan exceeding $150,000 or the single family maximum mortgage limit for affected programs, whichever is greater. 
</P>
<FP>Unless such person previously filed a certification, and a disclosure form, if required, under paragraph (a) of this section. 
</FP>
<P>(c) Each person shall file a disclosure form at the end of each calendar quarter in which there occurs any event that requires disclosure or that materially affects the accuracy of the information contained in any disclosure form previously filed by such person under paragraphs (a) or (b) of this section. An event that materially affects the accuracy of the information reported includes: 
</P>
<P>(1) A cumulative increase of $25,000 or more in the amount paid or expected to be paid for influencing or attempting to influence a covered Federal action; or 
</P>
<P>(2) A change in the person(s) or individual(s) influencing or attempting to influence a covered Federal action; or, 
</P>
<P>(3) A change in the officer(s), employee(s), or Member(s) contacted to influence or attempt to influence a covered Federal action. 
</P>
<P>(d) Any person who requests or receives from a person referred to in paragraphs (a) or (b) of this section: 
</P>
<P>(1) A subcontract exceeding $100,000 at any tier under a Federal contract; 
</P>
<P>(2) A subgrant, contract, or subcontract exceeding $100,000 at any tier under a Federal grant; 
</P>
<P>(3) A contract or subcontract exceeding $100,000 at any tier under a Federal loan exceeding $150,000; or, 
</P>
<P>(4) A contract or subcontract exceeding $100,000 at any tier under a Federal cooperative agreement,
</P>
<FP>Shall file a certification, and a disclosure form, if required, to the next tier above.
</FP>
<P>(e) All disclosure forms, but not certifications, shall be forwarded from tier to tier until received by the person referred to in paragraphs (a) or (b) of this section. That person shall forward all disclosure forms to the agency.
</P>
<P>(f) Any certification or disclosure form filed under paragraph (e) of this section shall be treated as a material representation of fact upon which all receiving tiers shall rely. All liability arising from an erroneous representation shall be borne solely by the tier filing that representation and shall not be shared by any tier to which the erroneous representation is forwarded. Submitting an erroneous certification or disclosure constitutes a failure to file the required certification or disclosure, respectively. If a person fails to file a required certification or disclosure, the United States may pursue all available remedies, including those authorized by section 1352, title 31, U.S. Code.
</P>
<P>(g) For awards and commitments in process prior to December 23, 1989, but not made before that date, certifications shall be required at award or commitment, covering activities occurring between December 23, 1989, and the date of award or commitment. However, for awards and commitments in process prior to the December 23, 1989 effective date of these provisions, but not made before December 23, 1989, disclosure forms shall not be required at time of award or commitment but shall be filed within 30 days.
</P>
<P>(h) No reporting is required for an activity paid for with appropriated funds if that activity is allowable under either subpart B or C. 
</P>
<CITA TYPE="N">[55 FR 6737, 6750, Feb. 26, 1990, as amended at 59 FR 5321, Feb. 4, 1994]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.1.1.1.39.2" TYPE="SUBPART">
<HEAD>Subpart B—Activities by Own Employees</HEAD>


<DIV8 N="§ 87.200" NODE="24:1.1.1.1.39.2.59.1" TYPE="SECTION">
<HEAD>§ 87.200   Agency and legislative liaison.</HEAD>
<P>(a) The prohibition on the use of appropriated funds, in § 87.100 (a), does not apply in the case of a payment of reasonable compensation made to an officer or employee of a person requesting or receiving a Federal contract, grant, loan, or cooperative agreement if the payment is for agency and legislative liaison activities not directly related to a covered Federal action.
</P>
<P>(b) For purposes of paragraph (a) of this section, providing any information specifically requested by an agency or Congress is allowable at any time.
</P>
<P>(c) For purposes of paragraph (a) of this section, the following agency and legislative liaison activities are allowable at any time only where they are not related to a specific solicitation for any covered Federal action:
</P>
<P>(1) Discussing with an agency (including individual demonstrations) the qualities and characteristics of the person's products or services, conditions or terms of sale, and service capabilities; and, 
</P>
<P>(2) Technical discussions and other activities regarding the application or adaptation of the person's products or services for an agency's use.
</P>
<P>(d) For purposes of paragraph (a) of this section, the following agencies and legislative liaison activities are allowable only where they are prior to formal solicitation of any covered Federal action:
</P>
<P>(1) Providing any information not specifically requested but necessary for an agency to make an informed decision about initiation of a covered Federal action; 
</P>
<P>(2) Technical discussions regarding the preparation of an unsolicited proposal prior to its official submission; and, 
</P>
<P>(3) Capability presentations by persons seeking awards from an agency pursuant to the provisions of the Small Business Act, as amended by Pub. L. 95-507 and other subsequent amendments. 
</P>
<P>(e) Only those activities expressly authorized by this section are allowable under this section.


</P>
</DIV8>


<DIV8 N="§ 87.205" NODE="24:1.1.1.1.39.2.59.2" TYPE="SECTION">
<HEAD>§ 87.205   Professional and technical services.</HEAD>
<P>(a) The prohibition on the use of appropriated funds, in § 87.100 (a), does not apply in the case of a payment of reasonable compensation made to an officer or employee of a person requesting or receiving a Federal contract, grant, loan, or cooperative agreement or an extension, continuation, renewal, amendment, or modification of a Federal contract, grant, loan, or cooperative agreement if payment is for professional or technical services rendered directly in the preparation, submission, or negotiation of any bid, proposal, or application for that Federal contract, grant, loan, or cooperative agreement or for meeting requirements imposed by or pursuant to law as a condition for receiving that Federal contract, grant, loan, or cooperative agreement. 
</P>
<P>(b) For purposes of paragraph (a) of this section, <I>professional and technical services</I> shall be limited to advice and analysis directly applying any professional or technical discipline. For example, drafting of a legal document accompanying a bid or proposal by a lawyer is allowable. Similarly, technical advice provided by an engineer on the performance or operational capability of a piece of equipment rendered directly in the negotiation of a contract is allowable. However, communications with the intent to influence made by a professional (such as a licensed lawyer) or a technical person (such as a licensed accountant) are not allowable under this section unless they provide advice and analysis directly applying their professional or technical expertise and unless the advice or analysis is rendered directly and solely in the preparation, submission or negotiation of a covered Federal action. Thus, for example, communications with the intent to influence made by a lawyer that do not provide legal advice or analysis directly and solely related to the legal aspects of his or her client's proposal, but generally advocate one proposal over another are not allowable under this section because the lawyer is not providing professional legal services. Similarly, communications with the intent to influence made by an engineer providing an engineering analysis prior to the preparation or submission of a bid or proposal are not allowable under this section since the engineer is providing technical services but not directly in the preparation, submission or negotiation of a covered Federal action.
</P>
<P>(c) Requirements imposed by or pursuant to law as a condition for receiving a covered Federal award include those required by law or regulation, or reasonably expected to be required by law or regulation, and any other requirements in the actual award documents.
</P>
<P>(d) Only those services expressly authorized by this section are allowable under this section.


</P>
</DIV8>


<DIV8 N="§ 87.210" NODE="24:1.1.1.1.39.2.59.3" TYPE="SECTION">
<HEAD>§ 87.210   Reporting.</HEAD>
<P>No reporting is required with respect to payments of reasonable compensation made to regularly employed officers or employees of a person.


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:1.1.1.1.39.3" TYPE="SUBPART">
<HEAD>Subpart C—Activities by Other Than Own Employees</HEAD>


<DIV8 N="§ 87.300" NODE="24:1.1.1.1.39.3.59.1" TYPE="SECTION">
<HEAD>§ 87.300   Professional and technical services.</HEAD>
<P>(a) The prohibition on the use of appropriated funds, in § 87.100 (a), does not apply in the case of any reasonable payment to a person, other than an officer or employee of a person requesting or receiving a covered Federal action, if the payment is for professional or technical services rendered directly in the preparation, submission, or negotiation of any bid, proposal, or application for that Federal contract, grant, loan, or cooperative agreement or for meeting requirements imposed by or pursuant to law as a condition for receiving that Federal contract, grant, loan, or cooperative agreement.
</P>
<P>(b) The reporting requirements in § 87.110 (a) and (b) regarding filing a disclosure form by each person, if required, shall not apply with respect to professional or technical services rendered directly in the preparation, submission, or negotiation of any commitment providing for the United States to insure or guarantee a loan.
</P>
<P>(c) For purposes of paragraph (a) of this section, <I>professional and technical services</I> shall be limited to advice and analysis directly applying any professional or technical discipline. For example, drafting or a legal document accompanying a bid or proposal by a lawyer is allowable. Similarly, technical advice provided by an engineer on the performance or operational capability of a piece of equipment rendered directly in the negotiation of a contract is allowable. However, communications with the intent to influence made by a professional (such as a licensed lawyer) or a technical person (such as a licensed accountant) are not allowable under this section unless they provide advice and analysis directly applying their professional or technical expertise and unless the advice or analysis is rendered directly and solely in the preparation, submission or negotiation of a covered Federal action. Thus, for example, communications with the intent to influence made by a lawyer that do not provide legal advice or analysis directly and solely related to the legal aspects of his or her client's proposal, but generally advocate one proposal over another are not allowable under this section because the lawyer is not providing professional legal services. Similarly, communications with the intent to influence made by an engineer providing an engineering analysis prior to the preparation or submission of a bid or proposal are not allowable under this section since the engineer is providing technical services but not directly in the preparation, submission or negotiation of a covered Federal action.
</P>
<P>(d) Requirements imposed by or pursuant to law as a condition for receiving a covered Federal award include those required by law or regulation, or reasonably expected to be required by law or regulation, and any other requirements in the actual award documents.
</P>
<P>(e) Persons other than officers or employees of a person requesting or receiving a covered Federal action include consultants and trade associations.
</P>
<P>(f) Only those services expressly authorized by this section are allowable under this section.


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:1.1.1.1.39.4" TYPE="SUBPART">
<HEAD>Subpart D—Penalties and Enforcement</HEAD>


<DIV8 N="§ 87.400" NODE="24:1.1.1.1.39.4.59.1" TYPE="SECTION">
<HEAD>§ 87.400   Penalties.</HEAD>
<P>(a) Any person who makes an expenditure prohibited herein shall be subject to a civil penalty of not less than $25,132 and not more than $251,322 for each such expenditure.
</P>
<P>(b) Any person who fails to file or amend the disclosure form (see appendix B to this part) to be filed or amended if required herein, shall be subject to a civil penalty of not less than $25,132 and not more than $251,322 for each such failure.


</P>
<P>(c) A filing or amended filing on or after the date on which an administrative action for the imposition of a civil penalty is commenced does not prevent the imposition of such civil penalty for a failure occurring before that date. An administrative action is commenced with respect to a failure when an investigating official determines in writing to commence an investigation of an allegation of such failure.
</P>
<P>(d) In determining whether to impose a civil penalty, and the amount of any such penalty, by reason of a violation by any person, the agency shall consider the nature, circumstances, extent, and gravity of the violation, the effect on the ability of such person to continue in business, any prior violations by such person, the degree of culpability of such person, the ability of the person to pay the penalty, and such other matters as may be appropriate.


</P>
<P>(e) First offenders under paragraphs (a) or (b) of this section shall be subject to a civil penalty of $25,132, absent aggravating circumstances. Second and subsequent offenses by persons shall be subject to an appropriate civil penalty between $25,132 and $251,322, as determined by the agency head or his or her designee.
</P>
<P>(f) An imposition of a civil penalty under this section does not prevent the United States from seeking any other remedy that may apply to the same conduct that is the basis for the imposition of such civil penalty.
</P>
<CITA TYPE="N">[55 FR 6737, 6750, Feb. 26, 1990, as amended at 81 FR 38935, June 15, 2016; 82 FR 24525, May 30, 2017, as amended at 83 FR 32793, July 16, 2018; 84 FR 9454, Mar. 15, 2019; 85 FR 13044, Mar. 6, 2020; 86 FR 14373, Mar. 16, 2021; 87 FR 24421, Apr. 26, 2022; 88 FR 9748, Feb. 15, 2023; 89 FR 13617, Feb. 23, 2024; 90 FR 24747, June 12, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 87.405" NODE="24:1.1.1.1.39.4.59.2" TYPE="SECTION">
<HEAD>§ 87.405   Penalty procedures.</HEAD>
<P>Agencies shall impose and collect civil penalties pursuant to the provisions of the Program Fraud and Civil Remedies Act, 31 U.S.C. sections 3803 (except subsection (c)), 3804, 3805, 3806, 3807, 3808, and 3812, insofar as these provisions are not inconsistent with the requirements herein.


</P>
</DIV8>


<DIV8 N="§ 87.410" NODE="24:1.1.1.1.39.4.59.3" TYPE="SECTION">
<HEAD>§ 87.410   Enforcement.</HEAD>
<P>The head of each agency shall take such actions as are necessary to ensure that the provisions herein are vigorously implemented and enforced in that agency. 


</P>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:1.1.1.1.39.5" TYPE="SUBPART">
<HEAD>Subpart E—Exemptions</HEAD>


<DIV8 N="§ 87.500" NODE="24:1.1.1.1.39.5.59.1" TYPE="SECTION">
<HEAD>§ 87.500   Secretary of Defense.</HEAD>
<P>(a) The Secretary of Defense may exempt, on a case-by-case basis, a covered Federal action from the prohibition whenever the Secretary determines, in writing, that such an exemption is in the national interest. The Secretary shall transmit a copy of each such written exemption to Congress immediately after making such a determination.
</P>
<P>(b) The Department of Defense may issue supplemental regulations to implement paragraph (a) of this section.


</P>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:1.1.1.1.39.6" TYPE="SUBPART">
<HEAD>Subpart F—Agency Reports</HEAD>


<DIV8 N="§ 87.600" NODE="24:1.1.1.1.39.6.59.1" TYPE="SECTION">
<HEAD>§ 87.600   Semi-annual compilation.</HEAD>
<P>(a) The head of each agency shall collect and compile the disclosure reports (see appendix B) and, on May 31 and November 30 of each year, submit to the Secretary of the Senate and the Clerk of the House of Representatives a report containing a compilation of the information contained in the disclosure reports received during the six-month period ending on March 31 or September 30, respectively, of that year.
</P>
<P>(b) The report, including the compilation, shall be available for public inspection 30 days after receipt of the report by the Secretary and the Clerk.
</P>
<P>(c) Information that involves intelligence matters shall be reported only to the Select Committee on Intelligence of the Senate, the Permanent Select Committee on Intelligence of the House of Representatives, and the Committees on Appropriations of the Senate and the House of Representatives in accordance with procedures agreed to by such committees. Such information shall not be available for public inspection.
</P>
<P>(d) Information that is classified under Executive Order 12356 or any successor order shall be reported only to the Committee on Foreign Relations of the Senate and the Committee on Foreign Affairs of the House of Representatives or the Committees on Armed Services of the Senate and the House of Representatives (whichever such committees have jurisdiction of matters involving such information) and to the Committees on Appropriations of the Senate and the House of Representatives in accordance with procedures agreed to by such committees. Such information shall not be available for public inspection.
</P>
<P>(e) The first semi-annual compilation shall be submitted on May 31, 1990, and shall contain a compilation of the disclosure reports received from December 23, 1989 to March 31, 1990.
</P>
<P>(f) Major agencies, designated by the Office of Management and Budget (OMB), are required to provide machine-readable compilations to the Secretary of the Senate and the Clerk of the House of Representatives no later than with the compilations due on May 31, 1991. OMB shall provide detailed specifications in a memorandum to these agencies.
</P>
<P>(g) Non-major agencies are requested to provide machine-readable compilations to the Secretary of the Senate and the Clerk of the House of Representatives.
</P>
<P>(h) Agencies shall keep the originals of all disclosure reports in the official files of the agency.


</P>
</DIV8>


<DIV8 N="§ 87.605" NODE="24:1.1.1.1.39.6.59.2" TYPE="SECTION">
<HEAD>§ 87.605   Inspector General report.</HEAD>
<P>(a) The Inspector General, or other official as specified in paragraph (b) of this section, of each agency shall prepare and submit to Congress each year, commencing with submission of the President's Budget in 1991, an evaluation of the compliance of that agency with, and the effectiveness of, the requirements herein. The evaluation may include any recommended changes that may be necessary to strengthen or improve the requirements.
</P>
<P>(b) In the case of an agency that does not have an Inspector General, the agency official comparable to an Inspector General shall prepare and submit the annual report, or, if there is no such comparable official, the head of the agency shall prepare and submit the annual report.
</P>
<P>(c) The annual report shall be submitted at the same time the agency submits its annual budget justifications to Congress.
</P>
<P>(d) The annual report shall include the following: All alleged violations relating to the agency's covered Federal actions during the year covered by the report, the actions taken by the head of the agency in the year covered by the report with respect to those alleged violations and alleged violations in previous years, and the amounts of civil penalties imposed by the agency in the year covered by the report.


</P>
</DIV8>

</DIV6>


<DIV6 N="0" NODE="24:1.1.1.1.39.7" TYPE="SUBPART">
<HEAD> </HEAD>

</DIV6>


<DIV9 N="Appendix A" NODE="24:1.1.1.1.39.8.59.1.8" TYPE="APPENDIX">
<HEAD>Appendix A to Part 87—Certification Regarding Lobbying
</HEAD>
<HD2>Certification for Contracts, Grants, Loans, and Cooperative Agreements
</HD2>
<P>The undersigned certifies, to the best of his or her knowledge and belief, that:
</P>
<P>(1) No Federal appropriated funds have been paid or will be paid, by or on behalf of the undersigned, to any person for influencing or attempting to influence an officer or employee of an agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement.
</P>
<P>(2) If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan, or cooperative agreement, the undersigned shall complete and submit Standard Form-LLL, “Disclosure Form to Report Lobbying,” in accordance with its instructions.
</P>
<P>(3) The undersigned shall require that the language of this certification be included in the award documents for all subawards at all tiers (including subcontracts, subgrants, and contracts under grants, loans, and cooperative agreements) and that all subrecipients shall certify and disclose accordingly.
</P>
<P>This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by section 1352, title 31, U.S. Code. Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure.
</P>
<HD2>Statement for Loan Guarantees and Loan Insurance
</HD2>
<P>The undersigned states, to the best of his or her knowledge and belief, that:
</P>
<P>If any funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this commitment providing for the United States to insure or guarantee a loan, the undersigned shall complete and submit Standard Form-LLL, “Disclosure Form to Report Lobbying,” in accordance with its instructions.
</P>
<P>Submission of this statement is a prerequisite for making or entering into this transaction imposed by section 1352, title 31, U.S. Code. Any person who fails to file the required statement shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure.



</P>
</DIV9>


<DIV9 N="Appendix B" NODE="24:1.1.1.1.39.8.59.1.9" TYPE="APPENDIX">
<HEAD>Appendix B to Part 87—Disclosure Form To Report Lobbying

</HEAD>
<img src="/graphics/ec12oc91.004.gif"/>
<img src="/graphics/ec12oc91.005.gif"/>
<img src="/graphics/ec12oc91.006.gif"/>
</DIV9>

</DIV5>


<DIV5 N="91" NODE="24:1.1.1.1.40" TYPE="PART">
<HEAD>PART 91—CONSOLIDATED SUBMISSIONS FOR COMMUNITY PLANNING AND DEVELOPMENT PROGRAMS 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d), 3601-3619, 5301-5315, 11331-11388, 12701-12711, 12741-12756, and 12901-12912. 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>60 FR 1896, Jan. 5, 1995, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:1.1.1.1.40.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 91.1" NODE="24:1.1.1.1.40.1.59.1" TYPE="SECTION">
<HEAD>§ 91.1   Purpose.</HEAD>
<P>(a) <I>Overall goals.</I> (1) The overall goal of the community planning and development programs covered by this part is to develop viable urban communities by providing decent housing and a suitable living environment and expanding economic opportunities principally for low- and moderate-income persons. The primary means towards this end is to extend and strengthen partnerships among all levels of government and the private sector, including for-profit and non-profit organizations, in the production and operation of affordable housing. 
</P>
<P>(i) Decent housing includes assisting homeless persons to obtain appropriate housing and assisting persons at risk of becoming homeless; retention of the affordable housing stock; and increasing the availability of permanent housing in standard condition and affordable cost to low-income and moderate-income families, particularly to members of disadvantaged minorities, without discrimination on the basis of race, color, religion, sex, national origin, familial status, or disability. Decent housing also includes increasing the supply of supportive housing, which combines structural features and services needed to enable persons with special needs, including persons with HIV/AIDS and their families, to live with dignity and independence; and providing housing affordable to low-income persons accessible to job opportunities. 
</P>
<P>(ii) A suitable living environment includes improving the safety and livability of neighborhoods; increasing access to quality public and private facilities and services; reducing the isolation of income groups within a community or geographical area through the spatial deconcentration of housing opportunities for persons of lower income and the revitalization of deteriorating or deteriorated neighborhoods; restoring and preserving properties of special historic, architectural, or aesthetic value; and conservation of energy resources. 
</P>
<P>(iii) Expanded economic opportunities includes job creation and retention; establishment, stabilization and expansion of small businesses (including microbusinesses); the provision of public services concerned with employment; the provision of jobs involved in carrying out activities under programs covered by this plan to low-income persons living in areas affected by those programs and activities; availability of mortgage financing for low-income persons at reasonable rates using nondiscriminatory lending practices; access to capital and credit for development activities that promote the long-term economic and social viability of the community; and empowerment and self-sufficiency opportunities for low-income persons to reduce generational poverty in federally assisted and public housing. 
</P>
<P>(2) The consolidated submission described in this part 91 requires the jurisdiction to state in one document its plan to pursue these goals for all the community planning and development programs, as well as for housing programs. It is these goals against which the plan and the jurisdiction's performance under the plan will be evaluated by HUD. 
</P>
<P>(b) <I>Functions of plan.</I> The consolidated plan serves the following functions:
</P>
<P>(1) A planning document for the jurisdiction, which builds on a participatory process among citizens, organizations, businesses, and other stakeholders;
</P>
<P>(2) A submission for federal funds under HUD's formula grant programs for jurisdictions;
</P>
<P>(3) A strategy to be followed in carrying out HUD programs; and
</P>
<P>(4) A management tool for assessing performance and tracking results.
</P>
<CITA TYPE="N">[60 FR 1896, Jan. 5, 1995, as amended at 71 FR 6961, Feb. 9, 2006]


</CITA>
</DIV8>


<DIV8 N="§ 91.2" NODE="24:1.1.1.1.40.1.59.2" TYPE="SECTION">
<HEAD>§ 91.2   Applicability.</HEAD>
<P>(a) The following formula grant programs are covered by the consolidated plan: 
</P>
<P>(1) The Community Development Block Grant (CDBG) programs (see 24 CFR part 570, subparts D and I); 
</P>
<P>(2) The Emergency Solutions Grants (ESG) program (see 24 CFR part 576);
</P>
<P>(3) The HOME Investment Partnerships (HOME) program (see 24 CFR part 92);
</P>
<P>(4) The Housing Opportunities for Persons With AIDS (HOPWA) program (see 24 CFR part 574); and
</P>
<P>(5) The Housing Trust Fund (HTF) program (see 24 CFR part 93).</P>
<P>(b) The following programs require either that the jurisdiction receiving funds directly from HUD have a consolidated plan that is approved by HUD or that the application for HUD funds contain a certification that the application is consistent with a HUD-approved consolidated plan: 
</P>
<P>(1) The HOPE I Public Housing Homeownership (HOPE I) program (see 24 CFR Subtitle A, Appendix A); 
</P>
<P>(2) The HOPE II Homeownership of Multifamily Units (HOPE II) program (see 24 CFR Subtitle A, Appendix B); 
</P>
<P>(3) The HOPE III Homeownership of Single Family Homes (HOPE III) program (see 24 CFR part 572); 
</P>
<P>(4) The Low-Income Housing Preservation (prepayment avoidance incentives) program, when administered by a State agency (see 24 CFR 248.177); 
</P>
<P>(5) The Supportive Housing for the Elderly (Section 202) program (see 24 CFR part 889); 
</P>
<P>(6) The Supportive Housing for Persons with Disabilities program (see 24 CFR part 890); 
</P>
<P>(7) The Supportive Housing program (see 24 CFR part 583); 
</P>
<P>(8) The Single Room Occupancy Housing (SRO) program (see 24 CFR part 882, subpart H); 
</P>
<P>(9) The Shelter Plus Care program (see 24 CFR part 582); 
</P>
<P>(10) The Community Development Block Grant program—Small Cities (see 24 CFR part 570, subpart F); 
</P>
<P>(11) HOME program reallocations; 
</P>
<P>(12) Revitalization of Severely Distressed Public Housing (section 24 of the United States Housing Act of 1937, (42 U.S.C. 1437 <I>et seq.</I>)); 
</P>
<P>(13) Hope for Youth: Youthbuild (see 24 CFR part 585); 
</P>
<P>(14) The John Heinz Neighborhood Development program (see 24 CFR part 594); 
</P>
<P>(15) The “Lead-Based Paint Hazard Reduction Program (see 42 U.S.C. 4852(o));”
</P>
<P>(16) Grants for Regulatory Barrier Removal Strategies and Implementation (section 1204, Housing and Community Development Act of 1992 (42 U.S.C. 12705c)); and 
</P>
<P>(17) Competitive grants under the Housing Opportunities for Persons With AIDS (HOPWA) program (see 24 CFR part 574). 
</P>
<P>(c) Other programs do not require consistency with an approved consolidated plan. However, HUD funding allocations for the Section 8 Voucher Programs are to be made in a way that enables participating jurisdictions to carry out their consolidated plans. 
</P>
<P>(d) The Public Housing Agency Plan submission (PHA Plan) (see 24 CFR part 903) includes a certification by the appropriate state or local official that the PHA Plan is consistent with the applicable consolidated plan for the jurisdiction in which the public housing agency is located and must describe the manner in which the applicable contents of the PHA Plan are consistent with the consolidated plan.
</P>
<CITA TYPE="N">[60 FR 1896, Jan. 5, 1995, as amended at 60 FR 16379, Mar. 30, 1995; 64 FR 50223, Sept. 15, 1999; 71 FR 6961, Feb. 9, 2006; 76 FR 75966, Dec. 5, 2011; 80 FR 5219, Jan. 30, 2015; 89 FR 38290, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 91.5" NODE="24:1.1.1.1.40.1.59.3" TYPE="SECTION">
<HEAD>§ 91.5   Definitions.</HEAD>
<P>The terms Affirmatively Furthering Fair Housing, elderly person, and HUD are defined in 24 CFR part 5.
</P>
<P><I>At risk of homelessness.</I> (1) An individual or family who:
</P>
<P>(i) Has an annual income below 30 percent of median family income for the area, as determined by HUD;
</P>
<P>(ii) Does not have sufficient resources or support networks, <I>e.g.,</I> family, friends, faith-based or other social networks, immediately available to prevent them from moving to an emergency shelter or another place described in paragraph (1) of the “Homeless” definition in this section; and
</P>
<P>(iii) Meets one of the following conditions:
</P>
<P>(A) Has moved because of economic reasons two or more times during the 60 days immediately preceding the application for homelessness prevention assistance;
</P>
<P>(B) Is living in the home of another because of economic hardship;
</P>
<P>(C) Has been notified in writing that their right to occupy their current housing or living situation will be terminated within 21 days after the date of application for assistance;
</P>
<P>(D) Lives in a hotel or motel and the cost of the hotel or motel stay is not paid by charitable organizations or by federal, State, or local government programs for low-income individuals;
</P>
<P>(E) Lives in a single-room occupancy or efficiency apartment unit in which there reside more than two persons or lives in a larger housing unit in which there reside more than 1.5 people per room, as defined by the U.S. Census Bureau;
</P>
<P>(F) Is exiting a publicly funded institution, or system of care (such as a health-care facility, a mental health facility, foster care or other youth facility, or correction program or institution); or
</P>
<P>(G) Otherwise lives in housing that has characteristics associated with instability and an increased risk of homelessness, as identified in the recipient's approved consolidated plan;
</P>
<P>(2) A child or youth who does not qualify as “homeless” under this section, but qualifies as “homeless” under section 387(3) of the Runaway and Homeless Youth Act (42 U.S.C. 5732a(3)), section 637(11) of the Head Start Act (42 U.S.C. 9832(11)), section 41403(6) of the Violence Against Women Act of 1994 (42 U.S.C. 14043e-2(6)), section 330(h)(5)(A) of the Public Health Service Act (42 U.S.C. 254b(h)(5)(A)), section 3(m) of the Food and Nutrition Act of 2008 (7 U.S.C. 2012(m)), or section 17(b)(15) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(b)(15)); or
</P>
<P>(3) A child or youth who does not qualify as “homeless” under this section, but qualifies as “homeless” under section 725(2) of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11434a(2)), and the parent(s) or guardian(s) of that child or youth if living with her or him.
</P>
<P><I>Certification.</I> A written assertion, based on supporting evidence, that must be kept available for inspection by HUD, by the Inspector General of HUD, and by the public. The assertion shall be deemed to be accurate unless HUD determines otherwise, after inspecting the evidence and providing due notice and opportunity for comment. 
</P>
<P><I>Chronically homeless</I> means:
</P>
<P>(1) A “homeless individual with a disability,” as defined in section 401(9) of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11360(9)), who:
</P>
<P>(i) Lives in a place not meant for human habitation, a safe haven, or in an emergency shelter; and
</P>
<P>(ii) Has been homeless and living as described in paragraph (1)(i) of this definition continuously for at least 12 months or on at least 4 separate occasions in the last 3 years, as long as the combined occasions equal at least 12 months and each break in homelessness separating the occasions included at least 7 consecutive nights of not living as described in paragraph (1)(i). Stays in institutional care facilities for fewer than 90 days will not constitute as a break in homelessness, but rather such stays are included in the 12-month total, as long as the individual was living or residing in a place not meant for human habitation, a safe haven, or an emergency shelter immediately before entering the institutional care facility;
</P>
<P>(2) An individual who has been residing in an institutional care facility, including a jail, substance abuse or mental health treatment facility, hospital, or other similar facility, for fewer than 90 days and met all of the criteria in paragraph (1) of this definition, before entering that facility; or
</P>
<P>(3) A family with an adult head of household (or if there is no adult in the family, a minor head of household) who meets all of the criteria in paragraph (1) or (2) of this definition, including a family whose composition has fluctuated while the head of household has been homeless.
</P>
<P><I>Consolidated plan</I> or (“the plan”). The document that is submitted to HUD that serves as the comprehensive housing affordability strategy, community development plan, and submissions for funding under any of the Community Planning and Development formula grant programs (e.g., CDBG, ESG, HOME, and HOPWA), that is prepared in accordance with the process described in this part. 
</P>
<P><I>Consortium.</I> An organization of geographically contiguous units of general local government that are acting as a single unit of general local government for purposes of the HOME program (see 24 CFR part 92).
</P>
<P><I>Continuum of Care.</I> The group composed of representatives of relevant organizations, which generally includes nonprofit homeless providers, victim service providers, faith-based organizations, governments, businesses, advocates, public housing agencies, school districts, social service providers, mental health agencies, hospitals, universities, affordable housing developers, law enforcement, organizations that serve homeless and formerly homeless veterans, and homeless and formerly homeless persons that are organized to plan for and provide, as necessary, a system of outreach, engagement, and assessment; emergency shelter; rapid re-housing; transitional housing; permanent housing; and prevention strategies to address the various needs of homeless persons and persons at risk of homelessness for a specific geographic area.
</P>
<P><I>Cost burden.</I> The extent to which gross housing costs, including utility costs, exceed 30 percent of gross income, based on data available from the U.S. Census Bureau. 
</P>
<P><I>Emergency shelter.</I> Any facility, the primary purpose of which is to provide a temporary shelter for the homeless in general or for specific populations of the homeless, and which does not require occupants to sign leases or occupancy agreements.
</P>
<P><I>Extremely low-income family.</I> Family whose income is between 0 and 30 percent of the median income for the area, as determined by HUD with adjustments for smaller and larger families, except that HUD may establish income ceilings higher or lower than 30 percent of the median for the area on the basis of HUD's findings that such variations are necessary because of prevailing levels of construction costs or fair market rents, or unusually high or low family incomes. 
</P>
<P><I>Homeless.</I> (1) An individual or family who lacks a fixed, regular, and adequate nighttime residence, meaning:
</P>
<P>(i) An individual or family with a primary nighttime residence that is a public or private place not designed for or ordinarily used as a regular sleeping accommodation for human beings, including a car, park, abandoned building, bus or train station, airport, or camping ground;
</P>
<P>(ii) An individual or family living in a supervised publicly or privately operated shelter designated to provide temporary living arrangements (including congregate shelters, transitional housing, and hotels and motels paid for by charitable organizations or by federal, state, or local government programs for low-income individuals); or
</P>
<P>(iii) An individual who is exiting an institution where he or she resided for 90 days or less and who resided in an emergency shelter or place not meant for human habitation immediately before entering that institution;
</P>
<P>(2) An individual or family who will imminently lose their primary nighttime residence, provided that:
</P>
<P>(i) The primary nighttime residence will be lost within 14 days of the date of application for homeless assistance;
</P>
<P>(ii) No subsequent residence has been identified; and
</P>
<P>(iii) The individual or family lacks the resources or support networks, e.g., family, friends, faith-based or other social networks needed to obtain other permanent housing;
</P>
<P>(3) Unaccompanied youth under 25 years of age, or families with children and youth, who do not otherwise qualify as homeless under this definition, but who:
</P>
<P>(i) Are defined as homeless under section 387 of the Runaway and Homeless Youth Act (42 U.S.C. 5732a), section 637 of the Head Start Act (42 U.S.C. 9832), section 41403 of the Violence Against Women Act of 1994 (42 U.S.C. 14043e-2), section 330(h) of the Public Health Service Act (42 U.S.C. 254b(h)), section 3 of the Food and Nutrition Act of 2008 (7 U.S.C. 2012), section 17(b) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(b)), or section 725 of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11434a);
</P>
<P>(ii) Have not had a lease, ownership interest, or occupancy agreement in permanent housing at any time during the 60 days immediately preceding the date of application for homeless assistance;
</P>
<P>(iii) Have experienced persistent instability as measured by two moves or more during the 60-day period immediately preceding the date of applying for homeless assistance; and
</P>
<P>(iv) Can be expected to continue in such status for an extended period of time because of chronic disabilities, chronic physical health or mental health conditions, substance addiction, histories of domestic violence or childhood abuse (including neglect), the presence of a child or youth with a disability, or two or more barriers to employment, which include the lack of a high school degree or General Education Development (GED), illiteracy, low English proficiency, a history of incarceration or detention for criminal activity, and a history of unstable employment; or
</P>
<P>(4) Any individual or family who:
</P>
<P>(i) Is fleeing, or is attempting to flee, domestic violence, dating violence, sexual assault, stalking, or other dangerous or life-threatening conditions that relate to violence against the individual or a family member, including a child, that has either taken place within the individual's or family's primary nighttime residence or has made the individual or family afraid to return to their primary nighttime residence;
</P>
<P>(ii) Has no other residence; and
</P>
<P>(iii) Lacks the resources or support networks, e.g., family, friends, faith-based or other social networks, to obtain other permanent housing.
</P>
<P><I>Homeless Management Information System (HMIS).</I> The information system designated by the Continuum of Care to comply with HUD's data collection, management, and reporting standards and used to collect client-level data and data on the provision of housing and services to homeless individuals and families and persons at risk of homelessness.
</P>
<P><I>Homeless person.</I> A youth (17 years or younger) not accompanied by an adult (18 years or older) or an adult without children, who is homeless (not imprisoned or otherwise detained pursuant to an Act of Congress or a State law), including the following: 
</P>
<P>(1) An individual who lacks a fixed, regular, and adequate nighttime residence; and 
</P>
<P>(2) An individual who has a primary nighttime residence that is: 
</P>
<P>(i) A supervised publicly or privately operated shelter designed to provide temporary living accommodations (including welfare hotels, congregate shelters, and transitional housing for the mentally ill); 
</P>
<P>(ii) An institution that provides a temporary residence for individuals intended to be institutionalized; or 
</P>
<P>(iii) A public or private place not designed for, or ordinarily used as, a regular sleeping accommodation for human beings. 
</P>
<P><I>Jurisdiction.</I> A State or unit of general local government. 
</P>
<P><I>Large family.</I> Family of five or more persons.
</P>
<P><I>Lead-based paint hazards</I> means lead-based paint hazards as defined in part 35, subpart B of this title.
</P>
<P><I>Low-income families.</I> Low-income families whose incomes do not exceed 50 percent of the median family income for the area, as determined by HUD with adjustments for smaller and larger families, except that HUD may establish income ceilings higher or lower than 50 percent of the median for the area on the basis of HUD's findings that such variations are necessary because of prevailing levels of construction costs or fair market rents, or unusually high or low family incomes. 
</P>
<P><I>Middle-income family.</I> Family whose income is between 80 percent and 95 percent of the median income for the area, as determined by HUD, with adjustments for smaller and larger families, except that HUD may establish income ceilings higher or lower than 95 percent of the median for the area on the basis of HUD's findings that such variations are necessary because of prevailing levels of construction costs or fair market rents, or unusually high or low family incomes. (This corresponds to the term “moderate income family” under the CHAS statute, 42 U.S.C. 12705.) 
</P>
<P><I>Moderate-income family.</I> Family whose income does not exceed 80 percent of the median income for the area, as determined by HUD with adjustments for smaller and larger families, except that HUD may establish income ceilings higher or lower than 80 percent of the median for the area on the basis of HUD's findings that such variations are necessary because of prevailing levels of construction costs or fair market rents, or unusually high or low family incomes. 
</P>
<P><I>Overcrowding.</I> For purposes of describing relative housing needs, a housing unit containing more than one person per room, as defined by the U.S. Census Bureau, for which data are made available by the Census Bureau. (See 24 CFR 791.402(b).) 
</P>
<P><I>Person with a disability.</I> A person who is determined to: 
</P>
<P>(1) Have a physical, mental or emotional impairment that: 
</P>
<P>(i) Is expected to be of long-continued and indefinite duration; 
</P>
<P>(ii) Substantially impedes his or her ability to live independently; and 
</P>
<P>(iii) Is of such a nature that the ability could be improved by more suitable housing conditions; or
</P>
<P>(2) Have a developmental disability, as defined in section 102(7) of the Developmental Disabilities Assistance and Bill of Rights Act (42 U.S.C. 6001-6007); or
</P>
<P>(3) Be the surviving member or members of any family that had been living in an assisted unit with the deceased member of the family who had a disability at the time of his or her death.
</P>
<P><I>Poverty level family.</I> Family with an income below the poverty line, as defined by the Office of Management and Budget and revised annually.
</P>
<P><I>Rapid re-housing assistance.</I> The provision of housing relocation and stabilization services and short- and/or medium-term rental assistance as necessary to help a homeless individual or family move as quickly as possible into permanent housing and achieve stability in that housing.
</P>
<P><I>Severe cost burden.</I> The extent to which gross housing costs, including utility costs, exceed 50 percent of gross income, based on data available from the U.S. Census Bureau.
</P>
<P><I>State.</I> Any State of the United States and the Commonwealth of Puerto Rico.
</P>
<P><I>Transitional housing.</I> A project that is designed to provide housing and appropriate supportive services to homeless persons to facilitate movement to independent living within 24 months, or a longer period approved by HUD. For purposes of the HOME program, there is no HUD-approved time period for moving to independent living.
</P>
<P><I>Victim service provider.</I> A private nonprofit organization whose primary mission is to provide services to victims of domestic violence, dating violence, sexual assault, or stalking. This term includes rape crisis centers, battered women's shelters, domestic violence transitional housing programs, and other programs.
</P>
<P><I>Unit of general local government.</I> A city, town, township, county, parish, village, or other general purpose political subdivision of a State; an urban county; and a consortium of such political subdivisions recognized by HUD in accordance with the HOME program (24 CFR part 92) or the CDBG program (24 CFR part 570).
</P>
<P><I>Urban county.</I> See definition in 24 CFR 570.3.
</P>
<CITA TYPE="N">[60 FR 1896, Jan. 5, 1995; 60 FR 4861, Jan. 25, 1995, as amended at 61 FR 5205, Feb. 9, 1996; 64 FR 50223, Sept. 15, 1999; 71 FR 6961, Feb. 9, 2006; 76 FR 75966, 76013, Dec. 5, 2011; 80 FR 42360, July 16, 2015; 80 FR 75804, Dec. 4, 2015; 85 FR 47906, Aug. 7, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 91.10" NODE="24:1.1.1.1.40.1.59.4" TYPE="SECTION">
<HEAD>§ 91.10   Consolidated program year.</HEAD>
<P>(a) Each of the following programs shall be administered by a jurisdiction on a single consolidated program year, established by the jurisdiction: CDBG, ESG, HOME, HOPWA, and HTF. Except as provided in paragraph (b) of this section, the program year shall run for a twelve month period and begin on the first calendar day of a month.
</P>
<P>(b) Once a program year is established, the jurisdiction may either shorten or lengthen its program year to change the beginning date of the following program year, provided that it notifies HUD in writing at least two months before the date the program year would have ended if it had not been lengthened or at least two months before the end of a proposed shortened program year.
</P>
<P>(c) See subpart E of this part for requirements concerning program year for units of general local government that are part of a consortium. 
</P>
<CITA TYPE="N">[60 FR 1896, Jan. 5, 1995, as amended at 80 FR 5219, Jan. 30, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 91.15" NODE="24:1.1.1.1.40.1.59.5" TYPE="SECTION">
<HEAD>§ 91.15   Submission date.</HEAD>
<P>(a) <I>General.</I> (1) In order to facilitate continuity in its program and to provide accountability to citizens, each jurisdiction should submit its consolidated plan to HUD at least 45 days before the start of its program year. (But see § 92.104 of this subtitle with respect to newly eligible jurisdictions under the HOME program.) With the exception of the August 16 date noted in paragraph (a)(2) of this section, HUD may grant a jurisdiction an extension of the submission deadline for good cause.
</P>
<P>(2) In no event will HUD accept a submission earlier than November 15 or later than August 16 of the federal fiscal year for which the grant funds are appropriated. Failure to receive the plan by August 16 will automatically result in a loss of the CDBG funds to which the jurisdiction would otherwise be entitled.
</P>
<P>(3) A jurisdiction may have a program year that coincides with the federal fiscal year (e.g., October 1, 2005 through September 30, 2006, for federal fiscal year 2006 funds). However, the consolidated plan may not be submitted earlier than November 15 of the federal fiscal year and HUD has the period specified in § 91.500 to review the consolidated plan.
</P>
<P>(4) See § 91.20 for HUD field office authorization to grant exceptions to these provisions.
</P>
<P>(b) <I>Frequency of submission.</I> (1) The summary of the citizen participation and consultation process, the action plan, and the certifications must be submitted on an annual basis.
</P>
<P>(2) The housing, and homeless needs assessment, market analysis, and strategic plan must be submitted at least once every five years, or as such time agreed upon by HUD and the jurisdiction in order to facilitate orderly program management, coordinate consolidated plans with time periods used for cooperation agreements, other plans, or the availability of data.
</P>
<P>(3) A jurisdiction may make amendments that extend the time period covered by their plan if agreed upon by HUD.
</P>
<CITA TYPE="N">[71 FR 6961, Feb. 9, 2006]


</CITA>
</DIV8>


<DIV8 N="§ 91.20" NODE="24:1.1.1.1.40.1.59.6" TYPE="SECTION">
<HEAD>§ 91.20   Exceptions.</HEAD>
<P>The HUD Field Office may grant a jurisdiction an exception from the submission deadline for plans and reports and from a requirement in the implementation guidelines for good cause, as determined by the field office and reported in writing to HUD Headquarters, unless the requirement is required by statute or regulation.
</P>
<CITA TYPE="N">[71 FR 6962, Feb. 9, 2006]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.1.1.1.40.2" TYPE="SUBPART">
<HEAD>Subpart B—Citizen Participation and Consultation</HEAD>


<DIV8 N="§ 91.100" NODE="24:1.1.1.1.40.2.59.1" TYPE="SECTION">
<HEAD>§ 91.100   Consultation; local governments.</HEAD>
<P>(a) <I>General.</I> (1) When preparing the consolidated plan, the jurisdiction shall consult with other public and private agencies that provide assisted housing, health services, and social services (including those focusing on services to children, elderly persons, persons with disabilities, persons with HIV/AIDS and their families, homeless persons), community-based and regionally-based organizations that represent protected class members, and organizations that enforce fair housing laws. When preparing the consolidated plan, the jurisdiction shall also consult with public and private organizations. Commencing with consolidated plans submitted on or after January 1, 2018, such consultations shall include broadband internet service providers, organizations engaged in narrowing the digital divide, agencies whose primary responsibilities include the management of flood prone areas, public land or water resources, and emergency management agencies.
</P>
<P>(2) When preparing the portions of the consolidated plan describing the jurisdiction's homeless strategy and the resources available to address the needs of homeless persons (particularly chronically homeless individuals and families, families with children, veterans and their families, and unaccompanied youth) and persons at risk of homelessness, the jurisdiction must consult with:
</P>
<P>(i) The Continuum(s) of Care that serve(s) the jurisdiction's geographic area;
</P>
<P>(ii) Public and private agencies that address housing, health, social service, victim services, employment, or education needs of low-income individuals and families; homeless individuals and families, including homeless veterans; youth; and/or other persons with special needs;
</P>
<P>(iii) Publicly funded institutions and systems of care that may discharge persons into homelessness (such as health-care facilities, mental health facilities, foster care and other youth facilities, and corrections programs and institutions); and
</P>
<P>(iv) Business and civic leaders.
</P>
<P>(3) When preparing the portion of its consolidated plan concerning lead-based paint hazards, the jurisdiction shall consult with state or local health and child welfare agencies and examine existing data related to lead-based paint hazards and poisonings, including health department data on the addresses of housing units in which children have been identified as lead poisoned.
</P>
<P>(4) When preparing the description of priority nonhousing community development needs, a unit of general local government must notify adjacent units of general local government, to the extent practicable. The nonhousing community development plan must be submitted to the state, and, if the jurisdiction is a CDBG entitlement grantee other than an urban county, to the county.
</P>
<P>(5) The jurisdiction also should consult with adjacent units of general local government and local and regional government agencies, including local government agencies with metropolitan-wide planning and transportation responsibilities, particularly for problems and solutions that go beyond a single jurisdiction.
</P>
<P>(b) <I>HOPWA.</I> The largest city in each eligible metropolitan statistical area (EMSA) that is eligible to receive a HOPWA formula allocation must consult broadly to develop a metropolitan-wide strategy for addressing the needs of persons with HIV/AIDS and their families living throughout the EMSA. All jurisdictions within the EMSA must assist the jurisdiction that is applying for a HOPWA allocation in the preparation of the HOPWA submission.
</P>
<P>(c) <I>Public housing agencies (PHAs).</I> (1) The jurisdiction shall consult with local PHAs operating in the jurisdiction regarding consideration of public housing needs, planned programs and activities, strategies for affirmatively furthering fair housing, and proposed actions to affirmatively further fair housing in the consolidated plan. This consultation will help provide a better basis for the certification by the authorized official that the PHA Plan is consistent with the consolidated plan and the local government's description of its strategy for affirmatively furthering fair housing and the manner in which it will address the needs of public housing and, where necessary, the manner in which it will provide financial or other assistance to a troubled PHA to improve the PHA's operations and remove the designation of troubled, as well as obtaining PHA input on addressing fair housing issues in the Public Housing and Housing Choice Voucher programs.
</P>
<P>(2) This consultation will also help ensure that activities with regard to affirmatively furthering fair housing, local drug elimination, neighborhood improvement programs, and resident programs and services, those funded under a PHA's program and those funded under a program covered by the consolidated plan, are fully coordinated to achieve comprehensive community development goals and affirmatively further fair housing. If a PHA is required to implement remedies under a Voluntary Compliance Agreement, the local jurisdiction should work with or consult with the PHA, as appropriate, to identify actions the jurisdiction may take, if any, to assist the PHA in implementing the required remedies. A local jurisdiction may use CDBG funds for eligible activities or other funds to implement remedies required under a Voluntary Compliance Agreement.
</P>
<P>(d) Emergency Solutions Grants (ESG). A jurisdiction that receives an ESG grant must consult with the Continuum of Care in determining how to allocate its ESG grant for eligible activities; in developing the performance standards for, and evaluating the outcomes of, projects and activities assisted by ESG funds; and in developing funding, policies, and procedures for the operation and administration of the HMIS.
</P>
<CITA TYPE="N">[60 FR 1896, Jan. 5, 1995, as amended at 71 FR 6962, Feb. 9, 2006; 76 FR 75967, Dec. 5, 2011; 80 FR 42360, July 16, 2015; 81 FR 91011, Dec. 16, 2016; 85 FR 47906, Aug. 7, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 91.105" NODE="24:1.1.1.1.40.2.59.2" TYPE="SECTION">
<HEAD>§ 91.105   Citizen participation plan; local governments.</HEAD>
<P>(a) <I>Applicability and adoption of the citizen participation plan.</I> (1) The jurisdiction is required to adopt a citizen participation plan that sets forth the jurisdiction's policies and procedures for citizen participation. (Where a jurisdiction, before August 17, 2015, adopted a citizen participation plan it, will need to amend the citizen participation plan to comply with provisions of this section.)
</P>
<P>(2) <I>Encouragement of citizen participation.</I> (i) The citizen participation plan must provide for and encourage citizens to participate in the development of the consolidated plan, any substantial amendment to the consolidated plan, and the performance report. These requirements are designed especially to encourage participation by low- and moderate-income persons, particularly those persons living in areas designated by the jurisdiction as a revitalization area or in a slum and blighted area and in areas where CDBG funds are proposed to be used, and by residents of predominantly low- and moderate-income neighborhoods, as defined by the jurisdiction. A jurisdiction must take appropriate actions to encourage the participation of all its citizens, including minorities and non-English speaking persons, as provided in paragraph (a)(4) of this section, as well as persons with disabilities.
</P>
<P>(ii) The jurisdiction shall encourage the participation of local and regional institutions, Continuums of Care, and other organizations (including businesses, developers, nonprofit organizations, philanthropic organizations, and community-based and faith-based organizations) in the process of developing and implementing the consolidated plan.
</P>
<P>(iii) The jurisdiction shall encourage, in conjunction with consultation with public housing agencies, the participation of residents of public and assisted housing developments (including any resident advisory boards, resident councils, and resident management corporations) in the process of developing and implementing the consolidated plan, along with other low-income residents of targeted revitalization areas in which the developments are located. The jurisdictions shall make an effort to provide information to the PHA about affirmatively furthering fair housing strategy, and consolidated plan activities related to its developments and surrounding communities so that the PHA can make this information available at the annual public hearing(s) required for the PHA Plan.
</P>
<P>(iv) The jurisdiction should explore alternative public involvement techniques and quantitative ways to measure efforts that encourage citizen participation in a shared vision for change in communities and neighborhoods, and the review of program performance; <I>e.g.,</I> use of focus groups and the Internet.
</P>
<P>(3) <I>Citizen comment on the citizen participation plan and amendments.</I> The jurisdiction must provide citizens with a reasonable opportunity to comment on the original citizen participation plan and on substantial amendments to the citizen participation plan, and must make the citizen participation plan public. The citizen participation plan must be in a format accessible to persons with disabilities, upon request. 
</P>
<P>(4) The citizen participation plan shall describe the jurisdiction's procedures for assessing its language needs and identify any need for translation of notices and other vital documents. At a minimum, the citizen participation plan shall require that the jurisdiction take reasonable steps to provide language assistance to ensure meaningful access to participation by non-English-speaking residents of the community.
</P>
<P>(b) <I>Development of the consolidated plan.</I> The citizen participation plan must include the following minimum requirements for the development of the consolidated plan:
</P>
<P>(1)(i) The citizen participation plan must require that at or as soon as feasible after the start of the public participation process the jurisdiction will make the HUD-provided data and any other supplemental information the jurisdiction plans to incorporate into its consolidated plan available to its residents, public agencies, and other interested parties. The jurisdiction may make the HUD-provided data available to the public by cross-referencing to the data on HUD's website.
</P>
<P>(ii) The citizen participation plan must require that, before the jurisdiction adopts a consolidated plan, the jurisdiction will make available to residents, public agencies, and other interested parties information that includes the amount of assistance the jurisdiction expects to receive (including grant funds and program income) and the range of activities that may be undertaken, including the estimated amount that will benefit persons of low- and moderate-income. The citizen participation plan also must set forth the jurisdiction's plans to minimize displacement of persons and to assist any persons displaced, specifying the types and levels of assistance the jurisdiction will make available (or require others to make available) to persons displaced, even if the jurisdiction expects no displacement to occur.
</P>
<P>(iii) The citizen participation plan must state when and how the jurisdiction will make this information available.
</P>
<P>(2) The citizen participation plan must require the jurisdiction to publish the proposed consolidated plan in a manner that affords its residents, public agencies, and other interested parties a reasonable opportunity to examine its content and to submit comments. The citizen participation plan must set forth how the jurisdiction will publish the proposed consolidated plan and give reasonable opportunity to examine each document's content. The requirement for publishing may be met by publishing a summary of each document in one or more newspapers of general circulation, and by making copies of each document available on the internet, on the jurisdiction's official government website, and as well at libraries, government offices, and public places. The summary must describe the content and purpose of the consolidated plan and must include a list of the locations where copies of the entire proposed document may be examined. In addition, the jurisdiction must provide a reasonable number of free copies of the plan to residents and groups that request it.
</P>
<P>(3) The citizen participation plan must provide for at least one public hearing during the development of the consolidated plan. See paragraph (e) of this section for public hearing requirements, generally.
</P>
<P>(4) The citizen participation plan must provide a period, not less than 30 calendar days, to receive comments from residents of the community on the consolidated plan.
</P>
<P>(5) The citizen participation plan shall require the jurisdiction to consider any comments or views of residents of the community received in writing, or orally at the public hearings, in preparing the final consolidated plan. A summary of these comments or views, and a summary of any comments or views not accepted and the reasons why, shall be attached to the final consolidated plan.
</P>
<P>(c) <I>Consolidated plan amendments.</I> (1) The citizen participation plan must specify the criteria the jurisdiction will use for determining what changes in the jurisdiction's planned or actual activities constitute a substantial amendment to the consolidated plan. (See § 91.505.) The citizen participation plan must include, among the criteria for a substantial amendment, changes in the use of CDBG funds from one eligible activity to another.
</P>
<P>(2) The citizen participation plan must provide community residents with reasonable notice and an opportunity to comment on substantial amendments to the consolidated plan. The citizen participation plan must state how reasonable notice and an opportunity to comment will be given. The citizen participation plan must provide a period, of not less than 30 calendar days, to receive comments on the consolidated plan substantial amendment before the consolidated plan substantial amendment is implemented is submitted to HUD for review.
</P>
<P>(3) The citizen participation plan shall require the jurisdiction to consider any comments or views of residents of the community received in writing, or orally at public hearings, if any, in preparing the substantial amendment of the consolidated plan. A summary of these comments or views, and a summary of any comments or views not accepted and the reasons why, shall be attached to the substantial amendment of the consolidated plan.
</P>
<P>(d) <I>Performance reports.</I> (1) The citizen participation plan must provide citizens with reasonable notice and an opportunity to comment on performance reports. The citizen participation plan must state how reasonable notice and an opportunity to comment will be given. The citizen participation plan must provide a period, not less than 15 days, to receive comments on the performance report that is to be submitted to HUD before its submission. 
</P>
<P>(2) The citizen participation plan shall require the jurisdiction to consider any comments or views of citizens received in writing, or orally at public hearings in preparing the performance report. A summary of these comments or views shall be attached to the performance report. 
</P>
<P>(e) <I>Public hearings</I>—(1)(i). <I>Consolidated plan.</I> The citizen participation plan must provide for at least two public hearings per year to obtain residents' views and to respond to proposals and questions, to be conducted at a minimum of two different stages of the program year. Together, the hearings must address housing and community development needs, development of proposed activities, proposed strategies and actions for affirmatively furthering fair housing, and a review of program performance.
</P>
<P>(ii) <I>Minimum number of hearings.</I> To obtain the views of residents of the community on housing and community development needs, including priority nonhousing community development needs and affirmatively furthering fair housing, the citizen participation plan must provide that at least one of these hearings is held before the proposed consolidated plan is published for comment.
</P>
<P>(2) The citizen participation plan must state how and when adequate advance notice will be given to citizens of each hearing, with sufficient information published about the subject of the hearing to permit informed comment. (Publishing small print notices in the newspaper a few days before the hearing does not constitute adequate notice. Although HUD is not specifying the length of notice required, it would consider two weeks adequate.) 
</P>
<P>(3) The citizen participation plan must provide that hearings be held at times and locations convenient to potential and actual beneficiaries, and with accommodation for persons with disabilities. The citizen participation plan must specify how it will meet these requirements.
</P>
<P>(4) The citizen participation plan must identify how the needs of non-English speaking residents will be met in the case of public hearings where a significant number of non-English speaking residents can be reasonably expected to participate.
</P>
<P>(f) <I>Meetings.</I> The citizen participation plan must provide residents of the community with reasonable and timely access to local meetings, consistent with accessibility and reasonable accommodation requirements, in accordance with section 504 of the Rehabilitation Act of 1973 and the regulations at 24 CFR part 8; and the Americans with Disabilities Act and the regulations at 28 CFR parts 35 and 36, as applicable.
</P>
<P>(g) <I>Availability to the public.</I> The citizen participation plan must provide that the consolidated plan as adopted, consolidated plan substantial amendments, and the performance report will be available to the public, including the availability of materials in a form accessible to persons with disabilities, upon request. The citizen participation plan must state how these documents will be available to the public.
</P>
<P>(h) <I>Access to records.</I> The citizen participation plan must require the jurisdiction to provide residents of the community, public agencies, and other interested parties with reasonable and timely access to information and records relating to the jurisdiction's consolidated plan and use of assistance under the programs covered by this part during the preceding 5 years.
</P>
<P>(i) <I>Technical assistance.</I> The citizen participation plan must provide for technical assistance to groups representative of persons of low- and moderate-income that request such assistance in developing proposals for funding assistance under any of the programs covered by the consolidated plan, with the level and type of assistance determined by the jurisdiction. The assistance need not include the provision of funds to the groups.
</P>
<P>(j) <I>Complaints.</I> The citizen participation plan shall describe the jurisdiction's appropriate and practicable procedures to handle complaints from its residents related to the consolidated plan, amendments, revisions, and the performance report. At a minimum, the citizen participation plan shall require that the jurisdiction must provide a timely, substantive written response to every written resident complaint, within an established period of time (within 15 working days, where practicable, if the jurisdiction is a CDBG grant recipient).
</P>
<P>(k) <I>Use of citizen participation plan.</I> The jurisdiction must follow its citizen participation plan.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0117)
</APPRO>
<CITA TYPE="N">[60 FR 1896, Jan. 5, 1995; 60 FR 10427, Feb. 24, 1995, as amended at 71 FR 6962, Feb. 9, 2006; 76 FR 75967, Dec. 5, 2011; 80 FR 42360, July 16, 2015; 81 FR 91011, Dec. 16, 2016; 85 FR 47906, Aug. 7, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 91.110" NODE="24:1.1.1.1.40.2.59.3" TYPE="SECTION">
<HEAD>§ 91.110   Consultation; States.</HEAD>
<P>(a) When preparing the consolidated plan, the State shall consult with other public and private agencies that provide assisted housing (including any state housing agency administering public housing), health services, and social and fair housing services (including those focusing on services to children, elderly persons, persons with disabilities, persons with HIV/AIDS and their families, and homeless persons) during preparation of the consolidated plan.
</P>
<P>(b) When preparing the portions of the consolidated plan describing the State's homeless strategy and the resources available to address the needs of homeless persons (particularly chronically homeless individuals and families, families with children, veterans and their families, and unaccompanied youth) and persons at risk of homelessness, the State must consult with:
</P>
<P>(1) Each Continuum of Care within the state;
</P>
<P>(2) Public and private agencies that address housing, health, social services, victim services, employment, or education needs of low-income individuals and families; of homeless individuals and families, including homeless veterans; youth; and/or of other persons with special needs;
</P>
<P>(3) Publicly funded institutions and systems of care that may discharge persons into homelessness (such as health-care facilities, mental health facilities, foster care and other youth facilities, and corrections programs and institutions); and
</P>
<P>(4) Business and civic leaders.
</P>
<P>(c) When preparing the portion of its consolidated plan concerning lead-based paint hazards, the State shall consult with state or local health and child welfare agencies and examine existing data related to lead-based paint hazards and poisonings, including health department data on the addresses of housing units in which children have been identified as lead-poisoned.
</P>
<P>(d) When preparing its method of distribution of assistance under the CDBG program, a State must consult with local governments in nonentitlement areas of the state.
</P>
<P>(e) The State must also consult with each Continuum of Care within the state in determining how to allocate its ESG grant for eligible activities; developing the performance standards for, and evaluating the outcomes of, projects and activities assisted by ESG funds; and developing funding, policies, and procedures for the operation and administration of the HMIS.
</P>
<CITA TYPE="N">[85 FR 47907, Aug. 7, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 91.115" NODE="24:1.1.1.1.40.2.59.4" TYPE="SECTION">
<HEAD>§ 91.115   Citizen participation plan; States.</HEAD>
<P>(a) <I>Applicability and adoption of the citizen participation plan</I>—(1) <I>When citizen participation plan must be amended.</I> The State is required to adopt a citizen participation plan that sets forth the State's policies and procedures for citizen participation. (Where a State, before August 17, 2015, adopted a citizen participation plan, it will need to amend the citizen participation plan to comply with provisions of this section.)
</P>
<P>(2) <I>Encouragement of citizen participation.</I> (i) The citizen participation plan must provide for and encourage citizens to participate in the development of the consolidated plan, any substantial amendments to the consolidated plan, and the performance report. These requirements are designed especially to encourage participation by low- and moderate-income persons, particularly those living in slum and blighted areas and in areas where CDBG funds are proposed to be used and by residents of predominantly low- and moderate-income neighborhoods. A State must take appropriate actions to encourage the participation of all its residents, including minorities and non-English speaking persons, as provided in paragraph (a)(4) of this section, as well as persons with disabilities.
</P>
<P>(ii) The State shall encourage the participation of Statewide and regional institutions, Continuums of Care, and other organizations (including businesses, developers, nonprofit organizations, philanthropic organizations, and community-based and faith-based organizations) that are involved with or affected by the programs or activities covered by the consolidated plan in the process of developing and implementing the consolidated plan. Commencing with consolidated plans submitted in or after January 1, 2018, the State shall also encourage the participation of public and private organizations, including broadband internet service providers, organizations engaged in narrowing the digital divide, agencies whose primary responsibilities include the management of flood prone areas, public land or water resources, and emergency management agencies in the process of developing the consolidated plan.
</P>
<P>(iii) The State should also explore alternative public involvement techniques that encourage a shared vision of change for the community and the review of program performance; e.g., use of focus groups and use of the Internet.
</P>
<P>(3) <I>Citizen and local government comment on the citizen participation plan and amendments.</I> The State must provide citizens and units of general local government a reasonable opportunity to comment on the original citizen participation plan and on substantial amendments to the citizen participation plan, and must make the citizen participation plan public. The citizen participation plan must be in a format accessible to persons with disabilities, upon request.
</P>
<P>(4) <I>Language assistance for those with limited English proficiency.</I> The citizen participation plan shall describe the State's procedures for assessing its language needs and identify any need for translation of notices and other vital documents. At a minimum, the citizen participation plan shall require the State to make reasonable efforts to provide language assistance to ensure meaningful access to participation by non-English speaking persons.
</P>
<P>(b) <I>Development of the consolidated plan.</I> The citizen participation plan must include the following minimum requirements for the development of the consolidated plan:
</P>
<P>(1) The citizen participation plan must require that, before the State adopts a consolidated plan, the State will make available to its residents, public agencies, and other interested parties information that includes the amount of assistance the State expects to receive and the range of activities that may be undertaken, including the estimated amount that will benefit persons of low- and moderate-income and the plans to minimize displacement of persons and to assist any persons displaced. The citizen participation plan must state when and how the State will make this information available.
</P>
<P>(2) The citizen participation plan must require the State to publish the proposed consolidated plan in a manner that affords residents, units of general local governments, public agencies, and other interested parties a reasonable opportunity to examine the document's content and to submit comments. The citizen participation plan must set forth how the State will make publicly available the proposed consolidated plan and give reasonable opportunity to examine each document's content. To ensure that the consolidated plan and the PHA plan are informed by meaningful community participation, program participants should employ communications means designed to reach the broadest audience. Such communications may be met by publishing a summary of each document in one or more newspapers of general circulation, and by making copies of each document available on the internet, on the grantee's official government website, and as well at libraries, government offices, and public places. The summary must describe the content and purpose of the consolidated plan, and must include a list of the locations where copies of the entire proposed document(s) may be examined. In addition, the State must provide a reasonable number of free copies of the plan to its residents and groups that request a copy of the plan.
</P>
<P>(3) The citizen participation plan must provide for at least one public hearing on housing and community development needs before the proposed consolidated plan is published for comment.
</P>
<P>(i) The citizen participation plan must state how and when adequate advance notice of the hearing will be given to residents, with sufficient information published about the subject of the hearing to permit informed comment. (Publishing small print notices in the newspaper a few days before the hearing does not constitute adequate notice. Although HUD is not specifying the length of notice required, HUD would consider 2 weeks adequate.)
</P>
<P>(ii) The citizen participation plan must provide that the hearing be held at a time and accessible location convenient to potential and actual beneficiaries, and with accommodation for persons with disabilities. The citizen participation plan must specify how it will meet these requirements.
</P>
<P>(iii) The citizen participation plan must identify how the needs of non-English speaking residents will be met in the case of a public hearing where a significant number of non-English speaking residents can be reasonably expected to participate.
</P>
<P>(4) The citizen participation plan must provide a period, of not less than 30 calendar days, to receive comments from residents and units of general local government on the consolidated plan.
</P>
<P>(5) The citizen participation plan shall require the State to consider any comments or views of its residents and units of general local government received in writing, or orally at the public hearings, in preparing the final consolidated plan. A summary of these comments or views, and a summary of any comments or views not accepted and the reasons therefore, shall be attached to the final consolidated plan (as applicable).
</P>
<P>(c) <I>Amendments</I>—(1) <I>Criteria for amendment to consolidated plan.</I> The citizen participation plan must specify the criteria the State will use for determining what changes in the State's planned or actual activities constitute a substantial amendment to the consolidated plan. (See § 91.505.) The citizen participation plan must include, among the criteria for a consolidated plan, substantial amendment changes in the method of distribution of such funds.
</P>
<P>(2) The citizen participation plan must provide residents and units of general local government with reasonable notice and an opportunity to comment on consolidated plan substantial amendments. The citizen participation plan must state how reasonable notice and an opportunity to comment will be given. The citizen participation plan must provide a period, of not less than 30 calendar days, to receive comments on the consolidated plan substantial amendment before the consolidated plan substantial amendment is implemented.
</P>
<P>(3) The citizen participation plan shall require the State to consider any comments or views of its residents and units of general local government received in writing, or orally at public hearings, if any, in preparing the substantial amendment of the consolidated plan. A summary of these comments or views, and a summary of any comments or views not accepted and the reasons why, shall be attached to the substantial amendment of the consolidated plan.
</P>
<P>(d) <I>Performance Reports.</I> (1) The citizen participation plan must provide citizens with reasonable notice and an opportunity to comment on performance reports. The citizen participation plan must state how reasonable notice and an opportunity to comment will be given. The citizen participation plan must provide a period, not less than 15 days, to receive comments on the performance report that is to be submitted to HUD before its submission.
</P>
<P>(2) The citizen participation plan shall require the state to consider any comments or views of citizens received in writing, or orally at public hearings in preparing the performance report. A summary of these comments or views shall be attached to the performance report.
</P>
<P>(e) <I>Citizen participation requirements for local governments.</I> The citizen participation plan must describe the citizen participation requirements for units of general local government receiving CDBG funds from the State in 24 CFR 570.486. The citizen participation plan must explain how the requirements will be met.
</P>
<P>(f) <I>Availability to the public.</I> The citizen participation plan must provide that the consolidated plan as adopted, consolidated plan substantial amendments and the performance report will be available to the public, including the availability of materials in a form accessible to persons with disabilities, upon request. The citizen participation plan must state how these documents will be available to the public.
</P>
<P>(g) <I>Access to records.</I> The citizen participation plan must require the State to provide its residents, public agencies, and other interested parties with reasonable and timely access to information and records relating to the State's consolidated plan and use of assistance under the programs covered by this part during the preceding 5 years.
</P>
<P>(h) <I>Complaints.</I> The citizen participation plan shall describe the State's appropriate and practicable procedures to handle complaints from its residents related to the consolidated plan, consolidated plan amendments, and the performance report. At a minimum, the citizen participation plan shall require that the State must provide a timely, substantive written response to every written resident complaint, within an established period of time (within 15 working days, where practicable, if the State is a CDBG grant recipient).
</P>
<P>(i) <I>Use of citizen participation plan.</I> The State must follow its citizen participation plan.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0117)
</APPRO>
<CITA TYPE="N">[60 FR 1896, Jan. 5, 1995, as amended at 71 FR 6963, Feb. 9, 2006; 76 FR 75968, Dec. 5, 2011; 80 FR 42363, July 16, 2015; 81 FR 91011, Dec. 16, 2016; 85 FR 47907, Aug. 7, 2020]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:1.1.1.1.40.3" TYPE="SUBPART">
<HEAD>Subpart C—Local Governments; Contents of Consolidated Plan</HEAD>


<DIV8 N="§ 91.200" NODE="24:1.1.1.1.40.3.59.1" TYPE="SECTION">
<HEAD>§ 91.200   General.</HEAD>
<P>(a) A complete consolidated plan consists of the information required in § 91.200 through § 91.230, submitted in accordance with instructions prescribed by HUD (including tables and narratives), or in such other format as jointly agreed upon by HUD and the jurisdiction. A comprehensive housing affordability strategy consists of the information required in § 91.200 through § 91.215(e), § 91.215(h) through § 91.215(l), § 91.220(c), § 91.220(g), § 91.225 and § 91.230.
</P>
<P>(b) The jurisdiction shall describe:
</P>
<P>(1) The lead agency or entity responsible for overseeing the development of the plan and the significant aspects of the process by which the consolidated plan was developed;
</P>
<P>(2) The identity of the agencies, groups, organizations, and others who participated in the process; and
</P>
<P>(3) A jurisdiction's consultations with:
</P>
<P>(i) The Continuum of Care that serves the jurisdiction's geographic area;
</P>
<P>(ii) Public and private agencies that address housing, health, social services, employment, or education needs of low-income individuals and families, of homeless individuals and families, of youth, and/or of other persons with special needs;
</P>
<P>(iii) Publicly funded institutions and systems of care that may discharge persons into homelessness (such as health-care facilities, mental health facilities, foster care and other youth facilities, and corrections programs and institutions);
</P>
<P>(iv) Commencing with consolidated plans submitted on or after January 1, 2018, public and private organizations, including broadband internet service providers and organizations engaged in narrowing the digital divide;
</P>
<P>(v) Commencing with consolidated plans submitted on or after January 1, 2018, agencies whose primary responsibilities include the management of flood prone areas, public land or water resources, and emergency management agencies; and
</P>
<P>(vi) Other entities.
</P>
<P>(c) In order to facilitate citizen review and comment each year, the plan shall contain a concise executive summary that includes the objectives and outcomes identified in the plan as well as an evaluation of past performance. The plan shall also include a concise summary of the citizen participation process, public comments, and efforts made to broaden public participation in the development of the consolidated plan.
</P>
<CITA TYPE="N">[71 FR 6963, Feb. 9, 2006, as amended at 76 FR 75968, Dec. 5, 2011; 81 FR 91011, Dec. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 91.205" NODE="24:1.1.1.1.40.3.59.2" TYPE="SECTION">
<HEAD>§ 91.205   Housing and homeless needs assessment.</HEAD>
<P>(a) <I>General.</I> The consolidated plan must provide a concise summary of the jurisdiction's estimated housing needs projected for the ensuing five-year period. Housing data included in this portion of the plan shall be based on U.S. Census data, as provided by HUD, as updated by any properly conducted local study, or any other reliable source that the jurisdiction clearly identifies, and should reflect the consultation with social service agencies and other entities conducted in accordance with § 91.100 and the citizen participation process conducted in accordance with § 91.105. For a jurisdiction seeking funding on behalf of an eligible metropolitan statistical area under the HOPWA program, the needs described for housing and supportive services must address the unmet needs of low-income persons with HIV/AIDS and their families throughout the eligible metropolitan statistical area.


</P>
<P>(b) <I>Categories of persons affected.</I> (1)(i) The plan shall estimate the number and type of families in need of housing assistance for:
</P>
<P>(A) Extremely low-income, low-income, moderate-income, and middle-income families;
</P>
<P>(B) Renters and owners;
</P>
<P>(C) Elderly persons;
</P>
<P>(D) Single persons;
</P>
<P>(E) Large families;
</P>
<P>(F) Public housing residents;
</P>
<P>(G) Families on the public housing and Section 8 tenant-based waiting list;
</P>
<P>(H) Persons with HIV/AIDS and their families;
</P>
<P>(I) Victims of domestic violence, dating violence, sexual assault, and stalking;
</P>
<P>(J) Persons with disabilities; and
</P>
<P>(K) Formerly homeless families and individuals who are receiving rapid re-housing assistance and are nearing the termination of that assistance.
</P>
<P>(ii) The description of housing needs shall include a concise summary of the cost burden and severe cost burden, overcrowding (especially for large families), and substandard housing conditions being experienced by extremely low-income, low-income, moderate-income, and middle-income renters and owners compared to the jurisdiction as a whole. (The jurisdiction must define in its consolidated plan the terms “standard condition” and “substandard condition but suitable for rehabilitation.”)


</P>
<P>(2) [Reserved]


</P>
<P>(c) <I>Persons who are homeless or at risk of homelessness.</I> (1) The plan must describe, in a form prescribed by HUD, the nature and extent of unsheltered and sheltered homelessness, including rural homelessness, within the jurisdiction. At a minimum, the recipient must use data from the Homeless Management Information System (HMIS) and data from the Point-In-Time (PIT) count conducted in accordance with HUD standards.
</P>
<P>(i) The description must include, for each category of homeless persons specified by HUD (including chronically homeless individuals and families, families with children, veterans and their families, and unaccompanied youth), the number of persons experiencing homelessness on a given night, the number of persons who experience homelessness each year, the number of persons who lose their housing and become homeless each year, the number of persons who exit homelessness each year, the number of days that persons experience homelessness, and other measures specified by HUD.
</P>
<P>(ii) The plan also must contain a brief narrative description of the nature and extent of homelessness by racial and ethnic group, to the extent information is available.
</P>
<P>(2) The plan must include a narrative description of the characteristics and needs of low-income individuals and families with children (especially extremely low-income) who are currently housed but threatened with homelessness. This information may be evidenced by the characteristics and needs of individuals and families with children who are currently entering the homeless assistance system or appearing for the first time on the streets. The description must also specify particular housing characteristics that have been linked with instability and an increased risk of homelessness.
</P>
<P>(d) <I>Other special needs.</I> (1) The jurisdiction shall estimate, to the extent practicable, the number of persons who are not homeless but require supportive housing, including the elderly, frail elderly, persons with disabilities (mental, physical, developmental), persons with alcohol or other drug addiction, persons with HIV/AIDS and their families, public housing residents, and any other categories the jurisdiction may specify, and describe their supportive housing needs. 
</P>
<P>(2) With respect to a jurisdiction seeking funding on behalf of an eligible metropolitan statistical area under the HOPWA program, the plan must identify the size and characteristics of the population with HIV/AIDS and their families within the eligible metropolitan statistical area it will serve. 
</P>
<P>(e) <I>Lead-based paint hazards.</I> The plan must estimate the number of housing units within the jurisdiction that are occupied by low-income families or moderate-income families that contain lead-based paint hazards, as defined in this part. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0117)


</APPRO>
<CITA TYPE="N">[60 FR 1896, Jan. 5, 1995, as amended at 61 FR 51760, Oct. 3, 1996; 71 FR 6963, Feb. 9, 2006; 73 FR 72342, Nov. 28, 2008; 75 FR 66260, Oct. 27, 2010; 76 FR 75968, Dec. 5, 2011; 80 FR 42364, July 16, 2015; 85 FR 47909, Aug. 7, 2020; 90 FR 11023, Mar. 3, 2025]




</CITA>
</DIV8>


<DIV8 N="§ 91.210" NODE="24:1.1.1.1.40.3.59.3" TYPE="SECTION">
<HEAD>§ 91.210   Housing market analysis.</HEAD>
<P>(a) <I>General characteristics.</I> (1) Based on information available to the jurisdiction, the plan must describe the significant characteristics of the jurisdiction's housing market, including the supply, demand, and condition and cost of housing and the housing stock available to serve persons with disabilities, and to serve other low-income persons with special needs, including persons with HIV/AIDS and their families.
</P>
<P>(2) Data on the housing market should include, to the extent information is available, an estimate of the number of vacant or abandoned buildings and whether units in these buildings are suitable for rehabilitation.
</P>
<P>(3) The jurisdiction must also identify and describe any areas within the jurisdiction with concentrations of racial/ethnic minorities and/or low-income families, stating how it defines the terms “area of low-income concentration” and “area of minority concentration” for this purpose. The locations and degree of these concentrations must be identified, either in a narrative or on one or more maps.
</P>
<P>(4) Commencing with consolidated plans submitted on or after January 1, 2018, the jurisdiction must also describe the broadband needs of housing occupied by low- and moderate-income households based on an analysis of data, identified by the jurisdiction, for its low- and moderate-income neighborhoods. These needs include the need for broadband wiring and for connection to the broadband service in the household units and the need for increased competition by having more than one broadband Internet service provider serve the jurisdiction.
</P>
<P>(5) Commencing with consolidated plans submitted on or after January 1, 2018, the jurisdiction must also describe the vulnerability of housing occupied by low- and moderate-income households to increased natural hazard risks associated with climate change based on an analysis of data, findings, and methods identified by the jurisdiction in its consolidated plan.
</P>
<P>(b) <I>Public and assisted housing.</I> (1) The plan must describe and identify the public housing developments and the number of public housing units in the jurisdiction, the physical condition of such units, the restoration and revitalization needs, results from the Section 504 needs assessment (i.e., assessment of needs of tenants and applicants on waiting list for accessible units, as required by 24 CFR 8.25), and the public housing agency's strategy for improving the management and operation of such public housing and for improving the living environment of low- and moderate-income families residing in public housing. The consolidated plan must identify the public housing developments in the jurisdictions that are participating in an approved PHA Plan.
</P>
<P>(2) The jurisdiction shall include a description of the number and targeting (income level and type of family served) of units currently assisted by local, state, or federally funded programs, and an assessment of whether any such units are expected to be lost from the assisted housing inventory for any reason, such as expiration of Section 8 contracts.
</P>
<P>(c) <I>Facilities, housing, and services for homeless persons.</I> The plan must include a brief inventory of facilities, housing, and services that meet the needs of homeless persons within the jurisdiction, particularly chronically homeless individuals and families, families with children, veterans and their families, and unaccompanied youth.
</P>
<P>(1) The inventory of facilities and housing (<I>e.g.,</I> emergency shelter, transitional housing, and permanent supportive housing) must be presented in a form specified by HUD.
</P>
<P>(2) The inventory of services must include both services targeted to homeless persons and mainstream services, such as health, mental health, and employment services to the extent those services are used to complement services targeted to homeless persons.
</P>
<P>(d) <I>Special need facilities and services.</I> The plan must describe, to the extent information is available, the facilities and services that assist persons who are not homeless but who require supportive housing, and programs for ensuring that persons returning from mental and physical health institutions receive appropriate supportive housing. 
</P>
<P>(e) <I>Barriers to affordable housing.</I> The plan must explain whether the cost of housing or the incentives to develop, maintain, or improve affordable housing in the jurisdiction are affected by public policies, particularly by policies of the jurisdiction, including tax policies affecting land and other property, land use controls, zoning ordinances, building codes, fees and charges, growth limits, and policies that affect the return on residential investment. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0117)
</APPRO>
<CITA TYPE="N">[60 FR 1896, Jan. 5, 1995, as amended at 71 FR 6964, Feb. 9, 2006; 76 FR 75969, Dec. 5, 2011; 81 FR 91012, Dec. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 91.215" NODE="24:1.1.1.1.40.3.59.4" TYPE="SECTION">
<HEAD>§ 91.215   Strategic plan.</HEAD>
<P>(a) <I>General.</I> For the categories described in paragraphs (b), (c), (d), (e), and (f) of this section, the consolidated plan must do the following:
</P>
<P>(1) Indicate the general priorities for allocating investment geographically within the jurisdiction (or within the EMSA for the HOPWA program) and among different activities and needs, as identified in tables prescribed by HUD.
</P>
<P>(2) Describe the rationale for establishing the allocation priorities given to each category of priority needs, particularly among extremely low-income, low-income, and moderate-income households;
</P>
<P>(3) Identify any obstacles to meeting underserved needs;
</P>
<P>(4) Summarize the priorities and specific objectives the jurisdiction intends to initiate and/or complete during the time period covered by the strategic plan and how funds that are reasonably expected to be available will be used to address identified needs. For each specific objective statement, identify proposed accomplishments and outcomes the jurisdiction hopes to achieve in quantitative terms over a specified time period (e.g., one, two, three or more years), or in other measurable terms as identified and defined by the jurisdiction. This information is to be provided in accordance with guidance to be issued by HUD.
</P>
<P>(b) <I>Affordable housing.</I> With respect to affordable housing, the consolidated plan must include the priority housing needs table prescribed by HUD and must do the following:
</P>
<P>(1) The affordable housing section shall describe how the characteristics of the housing market and the severity of housing problems and needs of extremely low-income, low-income, and moderate-income renters and owners, persons at risk of homelessness, and homeless persons identified in accordance with § 91.205 provided the rationale for establishing allocation priorities and use of funds made available for rental assistance, production of new units, rehabilitation of existing units, or acquisition of existing units (including preserving affordable housing units that may be lost from the assisted housing inventory for any reason). Household and income types may be grouped together for discussion where the analysis would apply to more than one of them. If the jurisdiction intends to use HOME funds for tenant-based assistance, the jurisdiction must specify local market conditions that led to the choice of that option.
</P>
<P>(2) The affordable housing section shall include specific objectives that describe proposed accomplishments the jurisdiction hopes to achieve and must specify the number of extremely low-income, low-income, and moderate-income families to whom the jurisdiction will provide affordable housing as defined in 24 CFR 92.252 for rental housing, 24 CFR 92.254 for homeownership, and 24 CFR 93.302 and 24 CFR 93.304 (if the jurisdiction receives HTF funds from the State) over a specific time period.
</P>
<P>(c) <I>Public housing.</I> The consolidated plan must describe the manner in which the plan of the jurisdiction will address the needs of public housing, including the need to increase the number of accessible units where required by a Section 504 Voluntarily Compliance Agreement. The consolidated plan must also describe the jurisdiction's activities to encourage public housing residents to become more involved in management and participate in homeownership. If the public housing agency is designated as “troubled” by HUD under 24 CFR part 902, the jurisdiction must describe the manner in which it will provide financial or other assistance to improve its operations and remove the “troubled” designation.
</P>
<P>(d) <I>Homelessness.</I> The consolidated plan must include the priority homeless needs table prescribed by HUD and must describe the jurisdiction's strategy for reducing and ending homelessness through:
</P>
<P>(1) Reaching out to homeless persons (especially unsheltered persons) and assessing their individual needs;
</P>
<P>(2) Addressing the emergency shelter and transitional housing needs of homeless persons;
</P>
<P>(3) Helping homeless persons (especially chronically homeless individuals and families, families with children, veterans and their families, and unaccompanied youth) make the transition to permanent housing and independent living, including shortening the period of time individuals and families experience homelessness, facilitating access for homeless individuals and families to affordable housing units, and preventing individuals and families who were recently homeless from becoming homeless again; and
</P>
<P>(4) Helping low-income individuals and families avoid becoming homeless, especially extremely low-income individuals and families who are:
</P>
<P>(i) Likely to become homeless after being discharged from publicly funded institutions and systems of care into homelessness (such as health-care facilities, mental health facilities, foster care and other youth facilities, and corrections programs and institutions) or
</P>
<P>(ii) Receiving assistance from public and private agencies that address housing, health, social services, employment, education, or youth needs.
</P>
<P>(e) <I>Other special needs.</I> With respect to special needs of the non-homeless, the consolidated plan must provide a concise summary of the priority housing and supportive service needs of persons who are not homeless but who may or may not require supportive housing (i.e., elderly, frail elderly, persons with disabilities (mental, physical, developmental), persons with alcohol or other drug addiction, persons with HIV/AIDS and their families, and public housing residents). If the jurisdiction intends to use HOME funds for tenant-based assistance to assist one or more of these subpopulations, it must specify local market conditions that led to the choice of this option.
</P>
<P>(f) <I>Nonhousing community development plan.</I> If the jurisdiction seeks assistance under the Community Development Block Grant (CDBG) program, the consolidated plan must provide a concise summary of the jurisdiction's priority non-housing community development needs eligible for assistance under HUD's community development programs by CDBG eligibility category, in accordance with a table prescribed by HUD. This community development component of the plan must state the jurisdiction's specific long-term and short-term community development objectives (including economic development activities that create jobs), which must be developed in accordance with the primary objective of the CDBG program to develop viable urban communities by providing decent housing and a suitable living environment and expanding economic opportunities, principally for low-income and moderate-income persons.
</P>
<P>(g) <I>Neighborhood Revitalization.</I> Jurisdictions are encouraged to identify locally designated areas where geographically targeted revitalization efforts are carried out through multiple activities in a concentrated and coordinated manner. In addition, a jurisdiction may elect to carry out a HUD-approved neighborhood revitalization strategy that includes the economic empowerment of low-income residents with respect to one or more of its areas. If HUD approves such a strategy, the jurisdiction can obtain greater flexibility in the use of the CDBG funds in the revitalization area(s) as described in 24 CFR part 570, subpart C. This strategy must identify long-term and short-term objectives (e.g., physical improvements, social initiatives and economic empowerment), expressing them in terms of measures of outputs and outcomes the jurisdiction expects to achieve in the neighborhood through the use of HUD programs.
</P>
<P>(h) <I>Barriers to affordable housing.</I> The consolidated plan must describe the jurisdiction's strategy to remove or ameliorate negative effects of public policies that serve as barriers to affordable housing, as identified in accordance with § 91.210(e), except that, if a State requires a unit of general local government to submit a regulatory barrier assessment that is substantially equivalent to the information required under this paragraph (h), as determined by HUD, the unit of general local government may submit its assessment submitted to the State to HUD and shall be considered to have complied with this requirement.
</P>
<P>(i) <I>Lead-based paint hazards.</I> The consolidated plan must outline actions proposed or being taken to evaluate and reduce lead-based paint hazards and increase access to housing without such health hazards, how the plan for the reduction of lead-based hazards is related to the extent of lead poisoning and hazards, and how the plan for the reduction of lead-based hazards will be integrated into housing policies and programs.
</P>
<P>(j) <I>Anti-poverty strategy.</I> The consolidated plan must provide a concise summary of the jurisdiction's goals, programs, and policies for reducing the number of poverty-level families and how the jurisdiction's goals, programs, and policies for producing and preserving affordable housing, set forth in the housing component of the consolidated plan, will be coordinated with other programs and services for which the jurisdiction is responsible and the extent to which they will reduce (or assist in reducing) the number of poverty-level families, taking into consideration factors over which the jurisdiction has control. These policies may include the jurisdiction's policies for providing employment and training opportunities to section 3 residents pursuant to 24 CFR part 75.
</P>
<P>(k) <I>Institutional structure.</I> The consolidated plan must provide a concise summary of the institutional structure, including private industry; nonprofit organizations; community and faith-based organizations; philanthropic organizations; the Continuum of Care; and public institutions, departments and agencies through which the jurisdiction will carry out its housing, homeless, and community development plan; a brief assessment of the strengths and gaps in that delivery system; and a concise summary of what the jurisdiction will do to overcome gaps in the institutional structure for carrying out its strategy for addressing its priority needs.
</P>
<P>(l) <I>Coordination.</I> The consolidated plan must provide a concise summary of the jurisdiction's activities to enhance coordination among the Continuum of Care, public and assisted housing providers, and private and governmental health, mental health, and service agencies. The summary must address the jurisdiction's efforts to coordinate housing assistance and services for homeless persons (especially chronically homeless individuals and families, families with children, veterans and their families, and unaccompanied youth) and persons who were recently homeless but now live in permanent housing. With respect to the public entities involved, the plan must describe the means of cooperation and coordination among the State and any units of general local government in the metropolitan area in the implementation of its consolidated plan. With respect to economic development, the jurisdiction should describe efforts to enhance coordination with private industry, businesses, developers, and social service agencies.
</P>
<CITA TYPE="N">[71 FR 6964, Feb. 9, 2006, as amended at 76 FR 75969, Dec. 5, 2011; 80 FR 5219, Jan. 30, 2015; 80 FR 42364, July 16, 2015; 85 FR 47909, Aug. 7, 2020; 85 FR 61567, Sept. 29, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 91.220" NODE="24:1.1.1.1.40.3.59.5" TYPE="SECTION">
<HEAD>§ 91.220   Action plan.</HEAD>
<P>The action plan must include the following:
</P>
<P>(a) Standard Form 424;
</P>
<P>(b) A concise executive summary that includes the objectives and outcomes identified in the plan as well as an evaluation of past performance, a summary of the citizen participation and consultation process (including efforts to broaden public participation) (24 CFR 91.200 (b)), a summary of comments or views, and a summary of comments or views not accepted and the reasons therefore (24 CFR 91.105 (b)(5)).
</P>
<P>(c) <I>Resources and objectives</I>—(1) <I>Federal resources.</I> The consolidated plan must provide a concise summary of the federal resources (including grant funds and program income) expected to be made available. Federal resources should include Section 8 funds made available to jurisdictions, Low-Income Housing Tax Credits, and competitive McKinney-Vento Homeless Assistance Act funds, expected to be available to address priority needs and specific objectives identified in the strategic plan.
</P>
<P>(2) <I>Other resources.</I> The consolidated plan must indicate resources from private and state and local sources that are reasonably expected to be made available to address the needs identified in the plan. The plan must explain how federal funds will leverage those additional resources, including a description of how matching requirements of the HUD programs will be satisfied. Where the jurisdiction deems it appropriate, the jurisdiction may indicate publicly owned land or property located within the jurisdiction that may be used to address the needs identified in the plan;
</P>
<P>(3) <I>Annual objectives.</I> The consolidated plan must contain a summary of the annual objectives the jurisdiction expects to achieve during the forthcoming program year.
</P>
<P>(d) <I>Activities to be undertaken.</I> The action plan must provide a description of the activities the jurisdiction will undertake during the next year to address priority needs and objectives. This description of activities shall estimate the number and type of families that will benefit from the proposed activities, the specific local objectives and priority needs (identified in accordance with § 91.215) that will be addressed by the activities using formula grant funds and program income the jurisdiction expects to receive during the program year, proposed accomplishments, and a target date for completion of the activity. This information is to be presented in the form of a table prescribed by HUD. The plan must also describe the reasons for the allocation priorities and identify any obstacles to addressing underserved needs;
</P>
<P>(e) <I>Outcome measures.</I> Each jurisdiction must provide outcome measures for activities included in its action plan in accordance with guidance to be issued by HUD.
</P>
<P>(f) <I>Geographic distribution.</I> A description of the geographic areas of the jurisdiction (including areas of low-income and minority concentration) in which it will direct assistance during the ensuing program year, giving the rationale for the priorities for allocating investment geographically. When appropriate, jurisdictions should estimate the percentage of funds they plan to dedicate to target areas.
</P>
<P>(g) <I>Affordable housing.</I> The jurisdiction must specify one-year goals for the number of homeless, non-homeless, and special-needs households to be provided affordable housing using funds made available to the jurisdiction and one-year goals for the number of households to be provided affordable housing through activities that provide rental assistance, production of new units, rehabilitation of existing units, or acquisition of existing units using funds made available to the jurisdiction. The term affordable housing shall be as defined in 24 CFR 92.252 for rental housing and 24 CFR 92.254 for homeownership.
</P>
<P>(h) <I>Public housing.</I> Actions it plans to take during the next year to address the needs of public housing and actions to encourage public housing residents to become more involved in management and participate in homeownership. If the public housing agency is designated as “troubled” by HUD under part 902 of this title, the jurisdiction must describe the manner in which it will provide financial or other assistance to improve its operations and remove the “troubled” designation.
</P>
<P>(i) <I>Homeless and other special needs activities.</I> (1) The jurisdiction must describe its one-year goals and specific actions steps for reducing and ending homelessness through:
</P>
<P>(i) Reaching out to homeless persons (especially unsheltered persons) and assessing their individual needs;
</P>
<P>(ii) Addressing the emergency shelter and transitional housing needs of homeless persons; and
</P>
<P>(iii) Helping homeless persons (especially chronically homeless individuals and families, families with children, veterans and their families, and unaccompanied youth) make the transition to permanent housing and independent living, including shortening the period of time that individuals and families experience homelessness, facilitating access for homeless individuals and families to affordable housing units, and preventing individuals and families who were recently homeless from becoming homeless again; and
</P>
<P>(iv) Helping low-income individuals and families avoid becoming homeless, especially extremely low-income individuals and families who are:
</P>
<P>(A) Being discharged from publicly funded institutions and systems of care, such as health-care facilities, mental health facilities, foster care and other youth facilities, and corrections programs and institutions; or
</P>
<P>(B) Receiving assistance from public and private agencies that address housing, health, social services, employment, education, or youth needs.
</P>
<P>(2) The jurisdiction must specify the activities that it plans to undertake during the next year to address the housing and supportive service needs identified in accordance with § 91.215(e) with respect to persons who are not homeless but have other special needs.
</P>
<P>(j) <I>Barriers to affordable housing.</I> Actions it plans to take during the next year to remove or ameliorate the negative effects of public policies that serve as barriers to affordable housing. Such policies, procedures and processes include, but are not limited to, land use controls, tax policies affecting land, zoning ordinances, building codes, fees and charges, growth limitations, and policies affecting the return on residential investment.
</P>
<P>(k) <I>Other actions.</I> Actions it plans to take during the next year to address obstacles to meeting underserved needs, foster and maintain affordable housing, evaluate and reduce lead-based paint hazards, reduce the number of poverty-level families, develop institutional structure, and enhance coordination between public and private housing and social service agencies (see § 91.215(a), (b), (i), (j), (k), and (l)).




</P>
<P>(l) <I>Program-specific requirements</I>—(1) <I>CDBG.</I> (i) A jurisdiction must describe activities planned with respect to all CDBG funds expected to be available during the program year, except that an amount generally not to exceed 10 percent of such total available CDBG funds may be excluded from the funds for which eligible activities are described if it has been identified for the contingency of cost overruns.
</P>
<P>(ii) “CDBG funds expected to be available during the program year” includes all of the following:
</P>
<P>(A) The CDBG origin year grant.
</P>
<P>(B) Any program income expected to be received during the program year.
</P>
<P>(C) Any program income amounts not included in a prior action plan.
</P>
<P>(D) Any program income previously generated under a lump sum drawdown agreement for which a new agreement will be executed during the program year pursuant to 24 CFR 570.513(b).
</P>
<P>(E) Proceeds from Section 108 loan guarantees that will be used during the year to address the priority needs and specific objectives identified in its strategic plan.
</P>
<P>(F) Surplus from urban renewal settlements.
</P>
<P>(G) Reimbursements, other than program income, made to a local account.
</P>
<P>(H) Income from float-funded activities: The full amount of income expected to be generated by a float-funded activity must be shown, whether or not some or all of the income is expected to be received in a future program year. To assure that citizens understand the risks inherent in undertaking float-funded activities, the recipient must specify the total amount of program income expected to be received and the month(s) and year(s) that it expects the float-funded activity to generate such program income.
</P>
<P>(iii) An “urgent needs” activity (one that is expected to qualify under § 570.208(c) of this title) may be included only if the jurisdiction identifies the activity in the action plan and certifies that the activity is designed to meet other community development needs having a particular urgency because existing conditions pose a serious and immediate threat to the health or welfare of the community and because other financial resources are not available.
</P>
<P>(iv) The plan shall identify the estimated amount of CDBG funds that will be used for activities that benefit persons of low- and moderate-income. The information about activities shall be in sufficient detail, including location, to allow citizens to determine the degree to which they are affected.


</P>
<P>(2) <I>HOME.</I> (i) The HOME program resources that the participating jurisdiction must describe in the action plan are the fiscal year HOME allocation plus the amount of program income, repayments, and recaptured funds in the participating jurisdiction's HOME Investment Trust Fund local account (see 24 CFR 92.500(c)(1)) at the beginning of the participating jurisdiction's program year. The jurisdiction may choose to include program income, repayments, and recaptured funds that are expected to be received during the program year if the jurisdiction plans to commit these funds during the program year.
</P>
<P>(ii) For HOME funds, a participating jurisdiction shall describe other forms of investment that are not described in 24 CFR 92.205(b). HUD's specific written approval to the jurisdiction is required for other forms of investment, as provided in § 92.205(b). Approval of the consolidated plan or action plan under § 91.500 or the failure to disapprove the consolidated plan or action plan does not satisfy the requirement for specific HUD approval for other forms of investment.
</P>
<P>(iii) If the participating jurisdiction intends to use HOME funds for homebuyers, it must set forth the guidelines for resale or recapture, and obtain HUD's specific, written approval, as required in 24 CFR 92.254. Approval of the consolidated plan or action plan under § 91.500 or the failure to disapprove the consolidated plan or action does not satisfy the requirement for specific HUD approval for resale or recapture guidelines.


</P>
<P>(iv) If the participating jurisdiction intends to use HOME funds to refinance existing debt secured by multifamily housing that is being rehabilitated with HOME funds, it must state its refinancing guidelines required under 24 CFR 92.206(b). The guidelines shall describe the conditions under which the participating jurisdictions will refinance existing debt. At minimum, the guidelines must:
</P>
<P>(A) Demonstrate that rehabilitation is the primary eligible activity and ensure that this requirement is met by establishing a minimum level of rehabilitation per unit or a required ratio between rehabilitation and refinancing.


</P>
<P>(B) Require a review of management practices to demonstrate that disinvestment in the property has not occurred; that the long-term needs of the project can be met; and that the feasibility of serving the targeted population over an extended period of affordability can be demonstrated.


</P>
<P>(C) State whether the new investment is being made to maintain current affordable units, create additional affordable units, or both.
</P>
<P>(D) Specify the required period of affordability, whether it is the minimum 15 years or longer.
</P>
<P>(E) Specify whether the investment of HOME funds may be jurisdiction-wide or limited to a specific geographic area, such as a neighborhood identified in a neighborhood revitalization strategy under 24 CFR 91.215(g) or a federally designated Empowerment Zone or Enterprise Community.
</P>
<P>(F) State that HOME funds cannot be used to refinance multifamily loans made or insured by any federal program, including CDBG.




</P>
<P>(v) If the participating jurisdiction intends to use HOME funds for homebuyer assistance or for rehabilitation of owner-occupied single family housing and does not use the HOME affordable homeownership limits for the area provided by HUD, it must determine 95 percent of the median area purchase price and set forth the information in accordance with 24 CFR 92.254(a)(2)(iv).


</P>
<P>(vi) The jurisdiction must describe eligible applicants (e.g., categories of eligible applicants), describe its process for soliciting and funding applications or proposals (e.g., competition, first-come first-serve) and state where detailed information may be obtained (e.g., application packages are available at the office of the jurisdiction or on the jurisdiction's Web site).


</P>
<P>(vii) The participating jurisdiction may limit the beneficiaries or give preferences to a particular segment of the low-income population only if described in the action plan.
</P>
<P>(A) Any limitation or preference must not violate nondiscrimination requirements in 24 CFR 92.350, and the participating jurisdiction must not limit or give preferences to students.
</P>
<P>(B) A limitation or preference may include, in addition to targeting tenant- based rental assistance to persons with special needs, as provided in 24 CFR 92.209(c)(2), limiting beneficiaries or giving preferences to such professions as police officers, teachers, or artists.
</P>
<P>(C) The participating jurisdiction must not limit beneficiaries or give a preference to all employees of the jurisdiction.


</P>
<P>(D) The participating jurisdiction may permit rental housing owners to limit tenants or give a preference in accordance with 24 CFR 92.253(e) only if such limitation or preference is described in the action plan.




</P>
<P>(3) <I>HOPWA.</I> For HOPWA funds, the jurisdiction must specify one-year goals for the number of households to be provided housing through the use of HOPWA activities for: short-term rent, mortgage, and utility assistance payments to prevent homelessness of the individual or family; tenant-based rental assistance; and units provided in housing facilities that are being developed, leased, or operated with HOPWA funds and shall identify the method of selecting project sponsors (including providing full access to grassroots faith-based and other community organizations).
</P>
<P>(4) <I>ESG.</I> (i) The jurisdiction must include its written standards for providing ESG assistance. The minimum requirements regarding these standards are set forth in 24 CFR 576.400(e)(1) and (e)(3).
</P>
<P>(ii) If the Continuum of Care for the jurisdiction's area has established a centralized or coordinated assessment system that meets HUD requirements, the jurisdiction must describe that centralized or coordinated assessment system. The requirements for using a centralized or coordinated assessment system, including the exception for victim service providers, are set forth under 24 CFR 576.400(d).
</P>
<P>(iii) The jurisdiction must identify its process for making subawards and a description of how the jurisdiction intends to make its allocation available to private nonprofit organizations (including community and faith-based organizations), and in the case of urban counties, funding to participating units of local government.
</P>
<P>(iv) If the jurisdiction is unable to meet the homeless participation requirement in 24 CFR 576.405(a), the jurisdiction must specify its plan for reaching out to and consulting with homeless or formerly homeless individuals in considering and making policies and decisions regarding any facilities or services that receive funding under ESG.
</P>
<P>(v) The jurisdiction must describe the performance standards for evaluating ESG activities.
</P>
<P>(vi) The jurisdiction must describe its consultation with each Continuum of Care that serves the jurisdiction in determining how to allocate ESG funds each program year; developing the performance standards for, and evaluating the outcomes of, projects and activities assisted by ESG funds; and developing funding, policies, and procedures for the administration and operation of the HMIS.
</P>
<P>(5) <I>Housing Trust Fund.</I> (i) If the jurisdiction receives HTF funds from the State under 24 CFR 93.105, the action plan must include the HTF allocation plan (consistent with the State's HTF requirements) that describes the distribution of the HTF funds, and establishes the application requirements and the criteria for selection of applications submitted by eligible recipients that meet the jurisdiction's priority housing needs. The plan must include the following:
</P>
<P>(A) The plan must identify priority factors for funding that shall include the following: geographic distribution which is a description of the geographic areas of the State (including areas of low-income and minority concentration) in which it will direct assistance during the ensuing program year; the applicant's ability to obligate HTF funds and undertake eligible activities in a timely manner; in the case of rental housing projects, the extent to which rents for units in the project are affordable to extremely low-income families; in the case of rental housing projects, the duration of the units' affordability period; the merits of the application in meeting the priority housing needs of the jurisdiction (such as housing that is accessible to transit or employment centers, housing that includes green building and sustainable development features, and housing that serves special needs populations); the location of existing affordable housing, and the extent to which the application makes use of non-federal funding sources.
</P>
<P>(B) The plan must include the requirement that the application contain a description of the eligible activities to be conducted with the HTF funds (as provided in 24 CFR 93.200) and contain a certification by each eligible recipient that housing units assisted with the HTF will comply with HTF requirements. The plan must also describe eligibility requirements for recipients (as defined in 24 CFR 93.2).
</P>
<P>(C) The plan must provide for performance goals, consistent with the jurisdiction's goals established under 24 CFR 91.215(b)(2).
</P>
<P>(D) The plan must provide the jurisdiction's rehabilitation standards, as required by 24 CFR 93.301(b).
</P>
<P>(E) If the jurisdiction intends to use HTF funds for first-time homebuyers, it must set forth the guidelines for resale or recapture, and obtain HUD's specific, written approval, as required in § 93.304(f). Approval of the consolidated plan or action plan under § 91.500 or the failure to disapprove the consolidated plan or action plan does not satisfy the requirement for specific HUD approval for resale or recapture guidelines.
</P>
<P>(F) If the jurisdiction intends to use HTF funds for homebuyer assistance and does not use the HTF affordable homeownership limits for the area provided by HUD, it must determine 95 percent of the median area purchase price and set forth the information in accordance with § 93.305.
</P>
<P>(G) The jurisdiction may limit the beneficiaries or give preferences to a particular segment of the extremely low- or very low-income population only if described in the action plan.
</P>
<P>(<I>1</I>) Any limitation or preference must not violate nondiscrimination requirements in 24 CFR 93.350, and the jurisdiction must not limit or give preferences to students.
</P>
<P>(<I>2</I>) The jurisdiction may permit rental housing owners to limit tenants or give a preference in accordance with 24 CFR 93.303 only if such limitation or preference is described in the action plan.
</P>
<P>(H) The plan must describe the conditions under which the jurisdiction will refinance existing rental housing project debt.
</P>
<P>(ii) [Reserved].
</P>
<CITA TYPE="N">[71 FR 6965, Feb. 9, 2006, as amended at 76 FR 75970, Dec. 5, 2011; 78 FR 44663, July 24, 2013; 80 FR 5219, Jan. 30, 2015; 80 FR 42364, July 16, 2015; 80 FR 69869, Nov. 12, 2015; 81 FR 86951, Dec. 2, 2016; 85 FR 47909, Aug. 7, 2020; 90 FR 863, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 91.225" NODE="24:1.1.1.1.40.3.59.6" TYPE="SECTION">
<HEAD>§ 91.225   Certifications.</HEAD>
<P>(a) <I>General.</I> The following certifications, satisfactory to HUD, must be included in the annual submission to HUD. (See definition of “certification” in § 91.5.) 


</P>
<P>(1) <I>Affirmatively furthering fair housing.</I> Each jurisdiction is required to submit a certification that it will affirmatively further fair housing. This includes certification that the grantee will affirmatively further fair housing, consistent with §§ 5.150 and 5.151 of this title.


</P>
<P>(2) <I>Anti-displacement and relocation plan.</I> Each jurisdiction is required to submit a certification that it has in effect and is following a residential antidisplacement and relocation assistance plan in connection with any activity assisted with funding under the CDBG or HOME programs. 
</P>
<P>(3) <I>Anti-lobbying.</I> The jurisdiction must submit a certification with regard to compliance with restrictions on lobbying required by 24 CFR part 87, together with disclosure forms, if required by that part. 
</P>
<P>(4) <I>Authority of jurisdiction.</I> The jurisdiction must submit a certification that the consolidated plan is authorized under State and local law (as applicable) and that the jurisdiction possesses the legal authority to carry out the programs for which it is seeking funding, in accordance with applicable HUD regulations. 
</P>
<P>(5) <I>Consistency with plan.</I> The jurisdiction must submit a certification that the housing activities to be undertaken with CDBG, HOME, ESG, and HOPWA funds are consistent with the strategic plan. Where the HOPWA funds are to be received by a city that is the most populous unit of general local government in an EMSA, it must obtain and keep on file certifications of consistency from the authorized public officials for each other locality in the EMSA in which housing assistance is provided. 
</P>
<P>(6) <I>Acquisition and relocation.</I> The jurisdiction must submit a certification that it will comply with the acquisition and relocation requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (42 U.S.C. 4601), and implementing regulations at 49 CFR part 24. 
</P>
<P>(7) <I>Section 3.</I> The jurisdiction must submit a certification that it will comply with section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u), and implementing regulations at 24 CFR part 75. 
</P>
<P>(b) <I>Community Development Block Grant program.</I> For jurisdictions that seek funding under CDBG, the following certifications are required: 
</P>
<P>(1) <I>Citizen participation.</I> Each jurisdiction must certify that it is in full compliance and following a detailed citizen participation plan that satisfies the requirements of § 91.105. 
</P>
<P>(2) <I>Community development plan.</I> A certification that this consolidated housing and community development plan identifies community development and housing needs and specifies both short-term and long-term community development objectives that have been developed in accordance with the primary objective of the statute authorizing the CDBG program, as described in 24 CFR 570.2, and requirements of this part and 24 CFR part 570. 
</P>
<P>(3) <I>Following a plan.</I> A certification that the jurisdiction is following a current consolidated plan (or Comprehensive Housing Affordability Strategy) that has been approved by HUD. 
</P>
<P>(4) <I>Use of funds.</I> A certification that the jurisdiction has complied with the following criteria: 
</P>
<P>(i) With respect to activities expected to be assisted with CDBG funds, the Action Plan has been developed so as to give the maximum feasible priority to activities that will benefit low- and moderate-income families or aid in the prevention or elimination of slums or blight. The plan may also include CDBG-assisted activities that are certified to be designed to meet other community development needs having particular urgency because existing conditions pose a serious and immediate threat to the health or welfare of the community where other financial resources are not available to meet such needs; 
</P>
<P>(ii) The aggregate use of CDBG funds, including section 108 guaranteed loans, during a period specified by the jurisdiction, consisting of one, two, or three specific consecutive program years, shall principally benefit low- and moderate-income families in a manner that ensures that at least 70 percent of the amount is expended for activities that benefit such persons during the designated period (see 24 CFR 570.3 for definition of “CDBG funds”); and 
</P>
<P>(iii) The jurisdiction will not attempt to recover any capital costs of public improvements assisted with CDBG funds, including Section 108 loan guaranteed funds, by assessing any amount against properties owned and occupied by persons of low- and moderate-income, including any fee charged or assessment made as a condition of obtaining access to such public improvements. However, if CDBG funds are used to pay the proportion of a fee or assessment attributable to the capital costs of public improvements (assisted in part with CDBG funds) financed from other revenue sources, an assessment or charge may be made against the property with respect to the public improvements financed by a source other than CDBG funds. In addition, with respect to properties owned and occupied by moderate-income (but not low-income) families, an assessment or charge may be made against the property with respect to the public improvements financed by a source other than CDBG funds if the jurisdiction certifies that it lacks CDBG funds to cover the assessment. 
</P>
<P>(5) <I>Excessive force.</I> A certification that the jurisdiction has adopted and is enforcing: 
</P>
<P>(i) A policy prohibiting the use of excessive force by law enforcement agencies within its jurisdiction against any individuals engaged in non-violent civil rights demonstrations; and 
</P>
<P>(ii) A policy of enforcing applicable State and local laws against physically barring entrance to or exit from, a facility or location that is the subject of such non-violent civil rights demonstrations within its jurisdiction. 
</P>
<P>(6) <I>Compliance with anti-discrimination laws.</I> The jurisdiction must submit a certification that the grant will be conducted and administered in conformity with title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d), the Fair Housing Act (42 U.S.C. 3601-3619), and implementing regulations. 
</P>
<P>(7) <I>Compliance with lead-based paint procedures.</I> The jurisdiction must submit a certification that its activities concerning lead-based paint will comply with the requirements of part 35, subparts A, B, J, K, and R of this title.
</P>
<P>(8) <I>Compliance with laws.</I> A certification that the jurisdiction will comply with applicable laws. 
</P>
<P>(c) <I>ESG.</I> For jurisdictions that seek ESG funding under 24 CFR part 576, the following certifications are required:
</P>
<P>(1) If an emergency shelter's rehabilitation costs exceed 75 percent of the value of the building before rehabilitation, the jurisdiction will maintain the building as a shelter for homeless individuals and families for a minimum of 10 years after the date the building is first occupied by a homeless individual or family after the completed rehabilitation;
</P>
<P>(2) If the cost to convert a building into an emergency shelter exceeds 75 percent of the value of the building after conversion, the jurisdiction will maintain the building as a shelter for homeless individuals and families for a minimum of 10 years after the date the building is first occupied by a homeless individual or family after the completed conversion;
</P>
<P>(3) In all other cases where ESG funds are used for renovation, the jurisdiction will maintain the building as a shelter for homeless individuals and families for a minimum of 3 years after the date the building is first occupied by a homeless individual or family after the completed renovation;
</P>
<P>(4) In the case of assistance involving shelter operations or essential services related to street outreach or emergency shelter, the jurisdiction will provide services or shelter to homeless individuals and families for the period during which the ESG assistance is provided, without regard to a particular site or structure, so long as the jurisdiction serves the same type of persons (<I>e.g.,</I> families with children, unaccompanied youth, disabled individuals, or victims of domestic violence) or persons in the same geographic area;
</P>
<P>(5) Any renovation carried out with ESG assistance shall be sufficient to ensure that the building involved is safe and sanitary;
</P>
<P>(6) The jurisdiction will assist homeless individuals in obtaining permanent housing, appropriate supportive services (including medical and mental health treatment, victim services, counseling, supervision, and other services essential for achieving independent living), and other Federal, State, local, and private assistance available for these individuals;
</P>
<P>(7) The jurisdiction will obtain matching amounts required under 24 CFR 576.201;
</P>
<P>(8) The jurisdiction has established and is implementing procedures to ensure the confidentiality of records pertaining to any individual provided family violence prevention or treatment services under any project assisted under the ESG program, including protection against the release of the address or location of any family violence shelter project, except with the written authorization of the person responsible for the operation of that shelter;
</P>
<P>(9) To the maximum extent practicable, the jurisdiction will involve, through employment, volunteer services, or otherwise, homeless individuals and families in constructing, renovating, maintaining, and operating facilities assisted under the ESG program, in providing services assisted under the program, and in providing services for occupants of facilities assisted under the program;
</P>
<P>(10) All activities the jurisdiction undertakes with assistance under ESG are consistent with the jurisdiction's consolidated plan; and
</P>
<P>(11) The jurisdiction will establish and implement, to the maximum extent practicable and where appropriate, policies and protocols for the discharge of persons from publicly funded institutions or systems of care (such as health-care facilities, mental health facilities, foster care or other youth facilities, or correction programs and institutions) in order to prevent this discharge from immediately resulting in homelessness for these persons.
</P>
<P>(d) <I>HOME program.</I> Each participating jurisdiction must provide the following certifications: 
</P>
<P>(1) If it plans to use HOME funds for tenant-based rental assistance, a certification that rental-based assistance is an essential element of its consolidated plan; 
</P>
<P>(2) A certification that it is using and will use HOME funds for eligible activities and costs, as described in §§ 92.205 through 92.209 of this subtitle and that it is not using and will not use HOME funds for prohibited activities, as described in § 92.214 of this subtitle; and 
</P>
<P>(3) A certification that before committing funds to a project, the participating jurisdiction will evaluate the project in accordance with guidelines that it adopts for this purpose and will not invest any more HOME funds in combination with other federal assistance than is necessary to provide affordable housing. 
</P>
<P>(e) <I>Housing Opportunities for Persons With AIDS.</I> For jurisdictions that seek funding under the Housing Opportunities for Persons With AIDS program, a certification is required by the jurisdiction that: 
</P>
<P>(1) Activities funded under the program will meet urgent needs that are not being met by available public and private sources; and 
</P>
<P>(2) Any building or structure assisted under that program shall be operated for the purpose specified in the plan: 
</P>
<P>(i) For a period of not less than 10 years in the case of assistance involving new construction, substantial rehabilitation, or acquisition of a facility; or 
</P>
<P>(ii) For a period of not less than three years in the case of assistance involving non-substantial rehabilitation or repair of a building or structure. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0117)
</APPRO>
<CITA TYPE="N">[60 FR 1896, Jan. 5, 1995; 60 FR 4861, Jan. 25, 1995, as amended at 64 FR 50224, Sept. 15, 1999; 71 FR 6967, Feb. 9, 2006; 72 FR 73493, Dec. 27, 2007; 76 FR 75970, Dec. 5, 2011; 80 FR 42365, July 16, 2015; 85 FR 47909, Aug. 7, 2020; 85 FR 61567, Sept. 29, 2020; 86 FR 30792, June 10, 2021; 86 FR 30792, June 10, 2021; 90 FR 11023, Mar. 3, 2025]






</CITA>
</DIV8>


<DIV8 N="§ 91.230" NODE="24:1.1.1.1.40.3.59.7" TYPE="SECTION">
<HEAD>§ 91.230   Monitoring.</HEAD>
<P>The plan must describe the standards and procedures that the jurisdiction will use to monitor activities carried out in furtherance of the plan and will use to ensure long-term compliance with requirements of the programs involved, including civil rights related program requirements and the comprehensive planning requirements.


</P>
<CITA TYPE="N">[90 FR 11023, Mar. 3, 2025]




</CITA>
</DIV8>


<DIV8 N="§ 91.235" NODE="24:1.1.1.1.40.3.59.8" TYPE="SECTION">
<HEAD>§ 91.235   Special case; abbreviated consolidated plan.</HEAD>
<P>(a) <I>Who may submit an abbreviated plan?</I> A jurisdiction that is not a CDBG entitlement community under 24 CFR part 570, subpart D, and is not expected to be a participating jurisdiction in the HOME program under 24 CFR part 92, as well as an Insular Area that is a HOME or CDBG grantee, may submit an abbreviated consolidated plan that is appropriate to the types and amounts of assistance sought from HUD, instead of a full consolidated plan.
</P>
<P>(b) <I>When is an abbreviated plan necessary?</I>—(1) <I>Jurisdiction.</I> When a jurisdiction that is permitted to use an abbreviated plan applies to HUD for funds under a program that requires an approved consolidated plan (see § 91.2(b)), it must obtain approval of an abbreviated plan (or full consolidated plan) and submit a certification that the housing activities are consistent with the plan. 
</P>
<P>(2) <I>Other applicants.</I> When an eligible applicant other than a jurisdiction (e.g., a public housing agency or nonprofit organization) seeks to apply for funding under a program requiring certification of consistency with an approved consolidated plan, the jurisdiction—if it is permitted to use an abbreviated plan—may prepare an abbreviated plan appropriate to the project. See § 91.510. 
</P>
<P>(3) <I>Limitation.</I> For the HOME program, an abbreviated consolidated plan is permitted only with respect to reallocations to other than participating jurisdictions (see 24 CFR part 92, subpart J), and for Insular Area grantees that submit an abbreviated consolidated plan pursuant to 24 CFR 570.440. For the CDBG program, an abbreviated plan may be submitted for the HUD-administered Small Cities program (except that an abbreviated plan may not be submitted for the HUD-administered Small Cities program in the state of Hawaii), and for Insular Area grantees pursuant to 24 CFR 570.440.




</P>
<P>(c) <I>What is an abbreviated plan?</I>—(1) <I>Assessment of needs, resources, and planned activities.</I> An abbreviated plan must contain sufficient information about needs, resources, and planned activities to address the needs to cover the type and amount of assistance anticipated to be funded by HUD.






</P>
<P>(2) <I>Nonhousing community development plan.</I> If the jurisdiction seeks assistance under the Community Development Block Grant program, it must describe the jurisdiction's priority non-housing community development needs eligible for assistance under HUD's community development programs by CDBG eligibility category, reflecting the needs of families for each type of activity, as appropriate, in terms of dollar amounts estimated to meet the priority need for the type of activity, in accordance with a table prescribed by HUD. This community development component of the plan must state the jurisdiction's specific long-term and short-term community development objectives (including economic development activities that create jobs), which must be developed in accordance with the statutory goals described in § 91.1 and the primary objective of the Housing and Community Development Act of 1974, 42 U.S.C. 5301(c), of the development of viable urban communities by providing decent housing and a suitable living environment and expanding economic opportunities, principally for low-income and moderate-income persons. 
</P>
<P>(3) <I>Separate application for funding.</I> In addition to submission of the abbreviated consolidated plan, an application must be submitted for funding is sought under a competitive program. The applicable program requirements are found in the regulations for the program and in the Notice of Funding Availability published for the applicable fiscal year. For the CDBG Small Cities program, the applicable regulations are found at 24 CFR part 570, subpart F. 


</P>
<P>(4) <I>Submissions, certifications, amendments, and performance reports.</I> An Insular Area grantee that submits an abbreviated consolidated plan under this section must comply with the submission, certification, amendment, and performance report requirements of § 570.440 of this title. This includes certification that the grantee will affirmatively further fair housing, consistent with §§ 5.150 and 5.151 of this title.
</P>
<P>(d) <I>What consultation is applicable?</I> The jurisdiction must make reasonable efforts to consult with appropriate public and private social service agencies regarding the needs to be served with the funding sought from HUD. The jurisdiction must attempt some consultation with the State. (Section 91.100 does not apply.) 
</P>
<P>(e) <I>Citizen Participation.</I> An Insular Area grantee that submits an abbreviated consolidated plan under this section must comply with the citizen participation requirements of 24 CFR 570.441.


</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0117)


</APPRO>
<CITA TYPE="N">[60 FR 1896, Jan. 5, 1995; 60 FR 4861, Jan. 25, 1995; 72 FR 12535, Mar. 15, 2007; 80 FR 42365, July 16, 2015; 85 FR 47909, Aug. 7, 2020; 86 FR 30792, June 10, 2021; 86 FR 30792, June 10, 2021; 90 FR 11024, Mar. 3, 2025]




</CITA>
</DIV8>


<DIV8 N="§ 91.236" NODE="24:1.1.1.1.40.3.59.9" TYPE="SECTION">
<HEAD>§ 91.236   Special case; District of Columbia.</HEAD>
<P>For consolidated planning purposes, the District of Columbia must follow the requirements applicable to local jurisdictions (§§ 91.100, 91.105, and 91.200 through 91.230). In addition, it must submit the component of the State requirements dealing with the use of Low Income Housing Tax Credits (§ 91.315(j)).
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0117)


</APPRO>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:1.1.1.1.40.4" TYPE="SUBPART">
<HEAD>Subpart D—State Governments; Contents of Consolidated Plan</HEAD>


<DIV8 N="§ 91.300" NODE="24:1.1.1.1.40.4.59.1" TYPE="SECTION">
<HEAD>§ 91.300   General.</HEAD>
<P>(a) A complete consolidated plan consists of the information required in § 91.300 through § 91.330, submitted in accordance with instructions prescribed by HUD (including tables and narratives), or in such other format as jointly agreed upon by HUD and the state. A comprehensive housing affordability strategy consists of the information required in §§ 91.300 through 91.315(e), 91.315(h) through 91.315(m), 91.320(c), 91.320 (g), 91.225 and 91.330.
</P>
<P>(b) The State shall describe:
</P>
<P>(1) The lead agency or entity responsible for overseeing the development of the plan and the significant aspects of the process by which the consolidated plan was developed;
</P>
<P>(2) The identity of the agencies, groups, organizations, and others who participated in the process;
</P>
<P>(3) The State's consultations with:
</P>
<P>(i) Continuums of Care;
</P>
<P>(ii) Public and private agencies that address housing, health, social services, employment, or education needs of low-income individuals and families, homeless individuals and families, youth, and/or other persons with special needs;
</P>
<P>(iii) Publicly funded institutions and systems of care that may discharge persons into homelessness (such as health-care facilities, mental health facilities, foster care and other youth facilities, and corrections programs and institutions); 
</P>
<P>(iv) Commencing with consolidated plans submitted on or after January 1, 2018, public and private organizations, including broadband internet service providers and organizations engaged in narrowing the digital divide;
</P>
<P>(v) Commencing with consolidated plans submitted on or after January 1, 2018, agencies whose primary responsibilities include the management of flood prone areas, public land or water resources, and emergency management agencies; and
</P>
<P>(vi) Other entities.
</P>
<P>(c) The plan shall contain a concise executive summary that includes the objectives and outcomes identified in the plan as well as an evaluation of past performance. The plan shall also contain a concise summary of the citizen participation process, public comments, and efforts made to broaden public participation in the development of the consolidated plan.
</P>
<CITA TYPE="N">[71 FR 6967, Feb. 9, 2006, as amended at 76 FR 75970, Dec. 5, 2011; 81 FR 91012, Dec. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 91.305" NODE="24:1.1.1.1.40.4.59.2" TYPE="SECTION">
<HEAD>§ 91.305   Housing and homeless needs assessment.</HEAD>
<P>(a) <I>General.</I> The consolidated plan must provide a concise summary of the state's estimated housing needs projected for the ensuing five-year period. Housing data included in this portion of the plan shall be based on U.S. Census data, as provided by HUD, as updated by any properly conducted local study, or any other reliable source that the state clearly identifies and should reflect the consultation with social service agencies and other entities conducted in accordance with § 91.110 and the citizen participation process conducted in accordance with § 91.115. For a state seeking funding under the HOPWA program, the needs described for housing and supportive services must address the unmet needs of low-income persons with HIV/AIDS and their families in areas outside of eligible metropolitan statistical areas.


</P>
<P>(b) <I>Categories of persons affected.</I> (1)(i) The plan shall estimate the number and type of families in need of housing assistance for:
</P>
<P>(A) Extremely low-income, low-income, moderate-income, and middle-income families;
</P>
<P>(B) Renters and owners;
</P>
<P>(C) Elderly persons;
</P>
<P>(D) Single persons;
</P>
<P>(E) Large families;
</P>
<P>(F) Public housing residents;
</P>
<P>(G) Families on the public housing and Section 8 tenant-based waiting list;
</P>
<P>(H) Persons with HIV/AIDS and their families;
</P>
<P>(I) Victims of domestic violence, dating violence, sexual assault, and stalking;
</P>
<P>(J) Persons with disabilities; and
</P>
<P>(K) Formerly homeless families and individuals who are receiving rapid re-housing assistance and are nearing the termination of that assistance.
</P>
<P>(ii) The description of housing needs shall include a concise summary of the cost burden and severe cost burden, overcrowding (especially for large families), and substandard housing conditions being experienced by extremely low-income, low-income, moderate-income, and middle-income renters and owners compared to the state as a whole. (The state must define in its consolidated plan the terms “standard condition” and “substandard condition but suitable for rehabilitation.”)


</P>
<P>(2) [Reserved]


</P>
<P>(c) <I>Persons who are homeless or at risk of homelessness.</I> (1) The plan must describe, in a form prescribed by HUD, the nature and extent of homelessness, including rural homelessness, within the state.
</P>
<P>(i) The description must include, for each category of homeless persons specified by HUD (including chronically homeless individuals and families, families with children, veterans and their families, and unaccompanied youth), the number of persons experiencing homelessness on a given night, the number of persons who experience homelessness each year, the number of persons who lose their housing and become homeless each year, the number of persons who exit homelessness each year, and the number of days that persons experience homelessness, and any other measures specified by HUD.
</P>
<P>(ii) The plan also must contain a brief narrative description of the nature and extent of homelessness by racial and ethnic group, to the extent that information is available.
</P>
<P>(2) The plan must include a narrative description of the characteristics and needs of low-income individuals and families with children (especially extremely low-income) who are currently housed but threatened with homelessness. This information may be evidenced by the characteristics and needs of individuals and families with children who are currently entering the homeless assistance system or appearing for the first time on the streets. The description must also include specific housing characteristics linked to instability and an increased risk of homelessness.
</P>
<P>(d) <I>Other special needs.</I> (1) The State shall estimate, to the extent practicable, the number of persons who are not homeless but require supportive housing, including the elderly, frail elderly, persons with disabilities (mental, physical, developmental), persons with alcohol or other drug addiction, persons with HIV/AIDS and their families, and any other categories the State may specify, and describe their supportive housing needs. 
</P>
<P>(2) With respect to a State seeking assistance under the HOPWA program, the plan must identify the size and characteristics of the population with HIV/AIDS and their families within the area it will serve.
</P>
<P>(e) <I>Lead-based paint hazards.</I> The plan must estimate the number of housing units within the State that are occupied by low-income families or moderate-income families that contain lead-based paint hazards, as defined in this part.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0117)


</APPRO>
<CITA TYPE="N">[60 FR 1896, Jan. 5, 1995, as amended at 61 FR 51760, Oct. 3, 1996; 71 FR 6967, Feb. 9, 2006; 73 FR 72342, Nov. 28, 2008; 75 FR 66260, Oct. 27, 2010; 76 FR 75970, Dec. 5, 2011; 80 FR 42365, July 16, 2015; 85 FR 47909, Aug. 7, 2020; 90 FR 11024, Mar. 3, 2025]




</CITA>
</DIV8>


<DIV8 N="§ 91.310" NODE="24:1.1.1.1.40.4.59.3" TYPE="SECTION">
<HEAD>§ 91.310   Housing market analysis.</HEAD>
<P>(a) <I>General characteristics.</I> (1) Based on data available to the State, the plan must describe the significant characteristics of the State's housing markets (including such aspects as the supply, demand, and condition and cost of housing).
</P>
<P>(2) Commencing with consolidated plans submitted on or after January 1, 2018, the State must describe the broadband needs of housing in the State based on an analysis of data identified by the State. These needs include the need for broadband wiring and for connection to the broadband service in the household units, the need for increased competition by having more than one broadband Internet service provider serve the jurisdiction.
</P>
<P>(3) Commencing with consolidated plans submitted on or after January 1, 2018, the State must also describe the vulnerability of housing occupied by low- and moderate-income households to increased natural hazard risks due to climate change based on an analysis of data, findings, and methods identified by the State in its consolidated plan.
</P>
<P>(b) <I>Facilities, housing, and services for homeless persons.</I> The plan must include a brief inventory of facilities and services that meet the needs of homeless persons within the state, particularly chronically homeless individuals and families, families with children, veterans and their families, and unaccompanied youth.
</P>
<P>(1) The inventory of facilities and housing (<I>e.g.,</I> emergency shelter, transitional housing, and permanent supportive housing) must be presented in a form specified by HUD.
</P>
<P>(2) The inventory of services must include both services targeted to homeless persons and mainstream services, such as health, mental health, and employment services to the extent those services are used to complement services targeted to homeless persons.
</P>
<P>(c) <I>Special need facilities and services.</I> The plan must describe, to the extent information is available, the facilities and services that assist persons who are not homeless but who require supportive housing, and programs for ensuring that persons returning from mental and physical health institutions receive appropriate supportive housing.
</P>
<P>(d) <I>Barriers to affordable housing.</I> The plan must explain whether the cost of housing or the incentives to develop, maintain, or improve affordable housing in the State are affected by its policies, including tax policies affecting land and other property, land use controls, zoning ordinances, building codes, fees and charges, growth limits, and policies that affect the return on residential investment.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0117)
</APPRO>
<CITA TYPE="N">[60 FR 1896, Jan. 5, 1995; 60 FR 4861, Jan. 25, 1995, as amended at 71 FR 6967, Feb. 9, 2006; 76 FR 75971, Dec. 5, 2011; 81 FR 91012, Dec. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 91.315" NODE="24:1.1.1.1.40.4.59.4" TYPE="SECTION">
<HEAD>§ 91.315   Strategic plan.</HEAD>
<P>(a) <I>General.</I> For the categories described in paragraphs (b), (c), (d), (e), and (f) of this section, the consolidated plan must do the following:
</P>
<P>(1) Indicate the general priorities for allocating investment geographically within the state and among different activities and needs.
</P>
<P>(2) Describe the rationale for establishing the allocation priorities given to each category of priority needs, particularly among extremely low-income, low-income, and moderate-income households.
</P>
<P>(3) Identify any obstacles to meeting underserved needs.
</P>
<P>(4) Summarize the priorities and specific objectives the state intends to initiate and/or complete during the time period covered by the strategic plan describing how the proposed distribution of funds will address identified needs. For each specific objective statement, identify proposed accomplishments and outcomes the state hopes to achieve in quantitative terms over a specified time period (e.g., one, two, three or more years), or in other measurable terms as identified and defined by the state. This information shall be provided in accordance with guidance to be issued by HUD.
</P>
<P>(b) <I>Affordable housing.</I> With respect to affordable housing, the consolidated plan must include the priority housing needs table prescribed by HUD and the following:
</P>
<P>(1) The affordable housing section shall describe how the characteristics of the housing market and the severity of housing problems and needs of extremely low-income, low-income, and moderate-income renters and owners, persons at risk of homelessness, and homeless persons identified in accordance with § 91.305 provided the rationale for establishing allocation priorities and use of funds made available for rental assistance, production of new units, rehabilitation of existing units, or acquisition of existing units (including preserving affordable housing units that may be lost from the assisted housing inventory for any reason). Household and income types may be grouped together for discussion where the analysis would apply to more than one of them. If the State intends to use HOME funds for tenant-based rental assistance, the State must specify local market conditions that led to the choice of that option.
</P>
<P>(2) The affordable housing section shall include specific objectives that describe proposed accomplishments the State hopes to achieve and must specify the number of extremely low-income, low-income, and moderate-income families to which the State will provide affordable housing, as defined in 24 CFR 92.252 for rental housing, 24 CFR 92.254 for homeownership, and 24 CFR 93.302 for rental housing and 24 CFR 93.304 for homeownership over a specific time period.
</P>
<P>(c) <I>Public housing.</I> With respect to public housing, the consolidated plan must do the following:
</P>
<P>(1) <I>Resident initiatives.</I> For a state that has a state housing agency administering public housing funds, the consolidated plan must describe the state's activities to encourage public housing residents to become more involved in management and participate in homeownership;
</P>
<P>(2) <I>Public housing needs.</I> The consolidated plan must describe the manner in which the plan of the state will address the needs of public housing; and
</P>
<P>(3) <I>Troubled public housing agencies.</I> If a public housing agency located within a state is designated as “troubled” by HUD under part 902 of this title, the strategy for the state or unit of local government in which any troubled public housing agency is located must describe the manner in which the state or unit of general local government will provide financial or other assistance to improve the public housing agency's operations and remove the “troubled” designation. A state is not required to describe the manner in which financial or other assistance is provided if the troubled public housing agency is located entirely within the boundaries of a unit of general local government that must submit a consolidated plan to HUD.
</P>
<P>(d) <I>Homelessness.</I> The consolidated plan must include the priority homeless needs table prescribed by HUD and must describe the State's strategy for reducing and ending homelessness through:
</P>
<P>(1) Reaching out to homeless persons (especially unsheltered persons) and assessing their individual needs;
</P>
<P>(2) Addressing the emergency shelter and transitional housing needs of homeless persons;
</P>
<P>(3) Helping homeless persons (especially chronically homeless individuals and families, families with children, veterans and their families, and unaccompanied youth) make the transition to permanent housing and independent living, including shortening the period of time individuals and families experience homelessness, facilitating access for homeless individuals and families to affordable housing units, and preventing individuals and families who were recently homeless from becoming homeless again; and
</P>
<P>(4) Helping low-income individuals and families avoid becoming homeless, especially extremely low-income individuals and families who are:
</P>
<P>(i) Likely to become homeless after being discharged from publicly funded institutions and systems of care (such as health-care facilities, mental health facilities, foster care and other youth facilities, and corrections programs and institutions); or
</P>
<P>(ii) Receiving assistance from public or private agencies that address housing, health, social services, employment, education, or youth needs.
</P>
<P>(e) <I>Other special needs.</I> With respect to supportive needs of the non-homeless, the consolidated plan must provide a concise summary of the priority housing and supportive service needs of persons who are not homeless but require supportive housing, i.e., elderly, frail elderly, persons with disabilities (mental, physical, developmental), persons with alcohol or other drug addiction, persons with HIV/AIDS and their families, and public housing residents. If the state intends to use HOME funds for tenant-based assistance to assist one or more of these subpopulations, it must specify local market conditions that led to the choice of this option.
</P>
<P>(f) <I>Nonhousing community development plan.</I> If the state seeks assistance under the CDBG program, the consolidated plan must concisely describe the state's priority nonhousing community development needs that affect more than one unit of general local government. These priority needs must be described by CDBG eligibility category, reflecting the needs of persons or families for each type of activity. This community development component of the plan must identify the state's specific long-term and short-term community development objectives (including economic development activities that create jobs), which must be developed in accordance with the primary objective of the CDBG program to develop viable urban communities by providing decent housing and a suitable living environment and expanding economic opportunities, principally for low-income and moderate-income persons.
</P>
<P>(g) <I>Community Revitalization.</I> States are encouraged to identify areas where geographically targeted revitalization efforts are carried out through multiple activities in a concentrated and coordinated manner. In addition, a state may elect to allow units of general local government to carry out a community revitalization strategy that includes the economic empowerment of low-income residents, in order to obtain the additional flexibility available as provided in 24 CFR part 570, subpart I. A state must approve a local government's revitalization strategy before it may be implemented. If a state elects to allow revitalization strategies in its program, the method of distribution contained in a state's action plan pursuant to § 91.320(k)(1) must reflect the state's process and criteria for approving local government's revitalization strategies. The strategy must identify the long-term and short-term objectives (e.g., physical improvements, social initiatives, and economic empowerment), expressing them in terms of measures of outputs and outcomes that are expected through the use of HUD programs. The state's process and criteria are subject to HUD approval.
</P>
<P>(h) <I>Barriers to affordable housing.</I> The consolidated plan must describe the state's strategy to remove or ameliorate negative effects of its policies that serve as barriers to affordable housing, as identified in accordance with § 91.310.
</P>
<P>(i) <I>Lead based paint.</I> The consolidated plan must outline the actions proposed or being taken to evaluate and reduce lead-based paint hazards, and describe how the lead-based paint hazard reduction will be integrated into housing policies and programs.
</P>
<P>(j) <I>Anti-poverty strategy.</I> The consolidated plan must provide a concise summary of the state's goals, programs, and policies for reducing the number of poverty-level families and how the state's goals, programs, and policies for producing and preserving affordable housing, set forth in the housing component of the consolidated plan, will be coordinated with other programs such as Temporary Assistance for Needy Families as well as employment and training programs and services for which the state is responsible and the extent to which they will reduce (or assist in reducing) the number of poverty-level families, taking into consideration factors over which the state has control.
</P>
<P>(k) <I>Institutional structure.</I> The consolidated plan must provide a concise summary of the institutional structure, including businesses, developers, nonprofit organizations, philanthropic organizations, community-based and faith-based organizations, the Continuum of Care, and public institutions, departments, and agencies through which the State will carry out its housing, homeless, and community development plan; a brief assessment of the strengths and gaps in that delivery system; and a concise summary of what the State will do to overcome gaps in the institutional structure for carrying out its strategy for addressing its priority needs.
</P>
<P>(l) <I>Coordination.</I> The consolidated plan must provide a concise summary of the jurisdiction's activities to enhance coordination among Continuums of Care, public and assisted housing providers, and private and governmental health, mental health, and service agencies. The summary must include the jurisdiction's efforts to coordinate housing assistance and services for homeless persons (especially chronically homeless individuals and families, families with children, veterans and their families, and unaccompanied youth) and persons who were recently homeless but now live in permanent housing. With respect to the public entities involved, the plan must describe the means of cooperation and coordination among the State and any units of general local government in the implementation of its consolidated plan. With respect to economic development, the State should describe efforts to enhance coordination with private industry, businesses, developers, and social service agencies.
</P>
<P>(m) <I>Low-income housing tax credit.</I> The consolidated plan must describe the strategy to coordinate the Low-Income Housing Tax Credit with the development of housing that is affordable to low-income and moderate-income families.
</P>
<CITA TYPE="N">[71 FR 6968, Feb. 9, 2006, as amended at 76 FR 75972, Dec. 5, 2011; 80 FR 5220, Jan. 30, 2015; 80 FR 42365, July 16, 2015; 85 FR 47909, Aug. 7, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 91.320" NODE="24:1.1.1.1.40.4.59.5" TYPE="SECTION">
<HEAD>§ 91.320   Action plan.</HEAD>
<P>The action plan must include the following:
</P>
<P>(a) Standard Form 424;
</P>
<P>(b) A concise executive summary that includes the objectives and outcomes identified in the plan as well as an evaluation of past performance, a summary of the citizen participation and consultation process (including efforts to broaden public participation) (24 CFR 91.300 (b)), a summary of comments or views, and a summary of comments or views not accepted and the reasons therefore (24 CFR 91.115 (b)(5)).
</P>
<P>(c) <I>Resources and objectives</I>—(1) <I>Federal resources.</I> The consolidated plan must provide a concise summary of the federal resources expected to be made available. These resources include grant funds and program income.
</P>
<P>(2) <I>Other resources.</I> The consolidated plan must indicate resources from private and non-federal public sources that are reasonably expected to be made available to address the needs identified in the plan. The plan must explain how federal funds will leverage those additional resources, including a description of how matching requirements of the HUD programs will be satisfied. Where the State deems it appropriate, it may indicate publicly owned land or property located within the State that may be used to carry out the purposes identified in the plan;
</P>
<P>(3) <I>Annual objectives.</I> The consolidated plan must contain a summary of the annual objectives the State expects to achieve during the forthcoming program year.
</P>
<P>(d) <I>Activities.</I> A description of the State's method for distributing funds to local governments and nonprofit organizations to carry out activities, or the activities to be undertaken by the State, using funds that are expected to be received under formula allocations (and related program income) and other HUD assistance during the program year, the reasons for the allocation priorities, how the proposed distribution of funds will address the priority needs and specific objectives described in the consolidated plan, and any obstacles to addressing underserved needs.
</P>
<P>(e) <I>Outcome measures.</I> Each State must provide outcome measures for activities included in its action plan in accordance with guidance issued by HUD. For the CDBG program, this would include activities that are likely to be funded as a result of the implementation of the State's method of distribution.
</P>
<P>(f) <I>Geographic distribution.</I> A description of the geographic areas of the State (including areas of low-income and minority concentration) in which it will direct assistance during the ensuing program year, giving the rationale for the priorities for allocating investment geographically. When appropriate, the State should estimate the percentage of funds they plan to dedicate to target area(s).
</P>
<P>(g) <I>Affordable housing goals.</I> The State must specify one-year goals for the number of households to be provided affordable housing through activities that provide rental assistance, production of new units, rehabilitation of existing units, or acquisition of existing units using funds made available to the State, and one-year goals for the number of homeless, non-homeless, and special-needs households to be provided affordable housing using funds made available to the State. The term affordable housing shall be as defined in 24 CFR 92.252 for rental housing and 24 CFR 92.254 for homeownership.
</P>
<P>(h) <I>Homeless and other special needs activities.</I> (1) The State must describe its one-year goals and specific actions steps for reducing and ending homelessness through:
</P>
<P>(i) Reaching out to homeless persons (especially unsheltered persons) and assessing their individual needs;
</P>
<P>(ii) Addressing the emergency shelter and transitional housing needs of homeless persons;
</P>
<P>(iii) Helping homeless persons (especially chronically homeless individuals and families, families with children, veterans and their families, and unaccompanied youth) make the transition to permanent housing and independent living, including shortening the period of time that individuals and families experience homelessness, facilitating access for homeless individuals and families to affordable housing units, and preventing individuals and families who were recently homeless from becoming homeless again; and
</P>
<P>(iv) Helping low-income individuals and families avoid becoming homeless, especially extremely low-income individuals and families who are:
</P>
<P>(A) Being discharged from publicly funded institutions and systems of care (such as health-care facilities, mental health facilities, foster care and other youth facilities, and corrections programs and institutions); or
</P>
<P>(B) Receiving assistance from public or private agencies that address housing, health, social services, employment, education, or youth needs.
</P>
<P>(2) The State must specify the activities that it plans to undertake during the next year to address the housing and supportive service needs identified in accordance with § 91.315(e) with respect to persons who are not homeless but have other special needs.
</P>
<P>(i) <I>Barriers to affordable housing.</I> Actions it plans to take during the next year to remove or ameliorate the negative effects of public policies that serve as barriers to affordable housing. Such policies, procedures, and processes include but are not limited to: land use controls, tax policies affecting land, zoning ordinances, building codes, fees and charges, growth limitations, and policies affecting the return on residential investment.
</P>
<P>(j) <I>Other actions.</I> Actions it plans to take during the next year to implement its strategic plan and address obstacles to meeting underserved needs, foster and maintain affordable housing (including allocation plans and policies governing the use of Low-Income Housing Credits under 26 U.S.C. 42, which are more commonly referred to as Low-Income Housing Tax Credits), evaluate and reduce lead-based paint hazards, reduce the number of poverty-level families, develop institutional structure, enhance coordination between public and private housing and social service agencies, address the needs of public housing (including providing financial or other assistance to troubled PHAs), and encourage public housing residents to become more involved in management and participate in homeownership.


</P>
<P>(k) <I>Program-specific requirements.</I> In addition, the plan must include the following specific information:
</P>
<P>(1) <I>CDBG.</I> The action plan must set forth the State's method of distribution.
</P>
<P>(i) The method of distribution must contain a description of all criteria used to select applications from local governments for funding, including the relative importance of the criteria, where applicable. The method of distribution must provide sufficient information so that units of general local government will be able to understand and comment on it, understand what criteria and information their application will be judged on, and be able to prepare responsive applications. The method of distribution may provide a summary of the selection criteria, provided that all criteria are summarized and the details are set forth in application manuals or other official State publications that are widely distributed to eligible applicants.
</P>
<P>(ii) The action plan must include a description of how all CDBG resources will be allocated among funding categories and the threshold factors and grant size limits that are to be applied. The total CDBG resources to be described in the action plan include all of the following:
</P>
<P>(A) The CDBG origin year grant.
</P>
<P>(B) Any program income expected to be returned to the State in accordance with 24 CFR 570.489(e)(3)(i) in the program year or not included in a prior action plan, and any program income expected to be received by any State revolving fund in accordance with 24 CFR 570.489(f)(2) in the program year or not included in a prior action plan.
</P>
<P>(C) Reimbursements, other than program income, made to a local account.
</P>
<P>(iii) If the State intends to help nonentitlement units of general local government apply for guaranteed loan funds under 24 CFR part 570, subpart M, it must describe available guarantee amounts and how applications will be selected for assistance. If a State elects to allow units of general local government to carry out community revitalization strategies, the method of distribution shall reflect the State's process and criteria for approving local government's revitalization strategies.
</P>
<P>(iv) If the State permits units of general local government to retain program income per 24 CFR 570.489(e)(3) or establish local revolving funds per 24 CFR 570.489(f)(1), the State must include a description of each of the local accounts including the name of the local entity administering the funds, contact information for the entity administering the funds, the amounts expected to be available during the program year, the eligible activity type(s) expected to be carried out with the program income, and the national objective(s) served with the funds.
</P>
<P>(iv) HUD may monitor the method of distribution as part of its audit and review responsibilities, as provided in 24 CFR 570.493(a)(1), in order to determine compliance with program requirements.


</P>
<P>(2) <I>HOME.</I> (i) The HOME program resources that the State must describe in the action plan are the fiscal year HOME allocation plus the amount of program income, repayments, and recaptured funds in the State's HOME Investment Trust Fund local account (see 24 CFR 92.500(c)(1)) at the beginning of the State's program year. The State may choose to include program income, repayments, and recaptured funds that are expected to be received during the program year if the State plans to commit these funds during the program year.
</P>
<P>(ii) The State shall describe other forms of investment that are not described in 24 CFR 92.205(b). HUD's specific written approval is required for other forms of investment, as provided in § 92.205(b). Approval of the consolidated plan or action plan under § 91.500 or the failure to disapprove the consolidated plan or action plan does not satisfy the requirement for specific HUD approval for resale or recapture guidelines.
</P>
<P>(iii) If the State intends to use HOME funds for homebuyers, it must set forth the guidelines for resale or recapture, and obtain HUD's specific, written approval, as required in 24 CFR 92.254. Approval of the consolidated plan or action plan under § 91.500 or the failure to disapprove the consolidated plan or action does not satisfy the requirement for specific HUD approval for other forms of investment.


</P>
<P>(iv) If the State intends to use HOME funds to refinance existing debt secured by multifamily housing that is being rehabilitated with HOME funds, it must State its refinancing guidelines required under 24 CFR 92.206(b). The guidelines shall describe the conditions under which the State will refinance existing debt. At minimum, the guidelines must:
</P>
<P>(A) Demonstrate that rehabilitation is the primary eligible activity and ensure that this requirement is met by establishing a minimum level of rehabilitation per unit or a required ratio between rehabilitation and refinancing.


</P>
<P>(B) Require a review of management practices to demonstrate that disinvestment in the property has not occurred; that the long-term needs of the project can be met; and that the feasibility of serving the targeted population over an extended period of affordabilitycan be demonstrated.


</P>
<P>(C) State whether the new investment is being made to maintain current affordable units, create additional affordable units, or both.
</P>
<P>(D) Specify the required period of affordability, whether it is the minimum 15 years or longer.
</P>
<P>(E) Specify whether the investment of HOME funds may be state-wide or limited to a specific geographic area, such as a community identified in a neighborhood revitalization strategy under 24 CFR 91.315(g), or a federally designated Empowerment Zone or Enterprise Community.
</P>
<P>(F) State that HOME funds cannot be used to refinance multifamily loans made or insured by any federal program, including the CDBG program.


</P>
<P>(v) If the participating jurisdiction intends to use HOME funds for homebuyer assistance or for rehabilitation of owner-occupied single family housing and does not use the HOME affordable homeownership limits for the area provided by HUD, it must determine 95 percent of the median area purchase price and set forth the information in accordance with 24 CFR 92.254(a)(2)(iv).


</P>
<P>(vi) The State must describe eligible applicants (e.g., categories of eligible applicants), describe its process for soliciting and funding applications or proposals (e.g., competition, first-come first-serve; subgrants to local jurisdictions) and State where detailed information may be obtained (e.g., application packages are available at the office of the State or on the State's Web site).
</P>
<P>(vii) The participating jurisdiction may limit the beneficiaries or give preferences to a particular segment of the low-income population only if described in the action plan.
</P>
<P>(A) Any limitation or preference must not violate nondiscrimination requirements in 24 CFR 92.350, and the participating jurisdiction must not limit or give preferences to students.
</P>
<P>(B) A limitation or preference may include, in addition to targeting tenant-based rental assistance to persons with special needs as provided in 24 CFR 92.209(c)(2), limiting beneficiaries or giving preferences to persons in certain occupations, such as police officers, firefighters, or teachers.
</P>
<P>(C) The participating jurisdiction must not limit beneficiaries or give a preference to all employees of the jurisdiction.
</P>
<P>(D) The participating jurisdiction may permit rental housing owners to limit tenants or give a preference in accordance with 24 CFR 92.253(e) only if such limitation or preference is described in the action plan.




</P>
<P>(3) <I>ESG.</I> (i) The State must either include its written standards for providing Emergency Solutions Grant (ESG) assistance or describe its requirements for its subrecipients to establish and implement written standards for providing ESG assistance. The minimum requirements regarding these standards are set forth in 24 CFR 576.400(e)(2) and (e)(3).
</P>
<P>(ii) For each area of the State in which a Continuum of Care has established a centralized or coordinated assessment system that meets HUD requirements, the State must describe that centralized or coordinated assessment system. The requirements for using a centralized or coordinated assessment system, including the exception for victim service providers, are set forth under 24 CFR 576.400(d).
</P>
<P>(iii) The State must identify its process for making subawards and a description of how the State intends to make its allocation available to units of general local government and private nonprofit organizations, including community and faith-based organizations.
</P>
<P>(iv) The State must describe the performance standards for evaluating ESG activities.
</P>
<P>(v) The State must describe its consultation with each Continuum of Care in determining how to allocate ESG funds each program year; developing the performance standards for, and evaluating the outcomes of, projects and activities assisted by ESG funds; and developing funding, policies and procedures for the administration and operation of the HMIS.
</P>
<P>(4) <I>HOPWA.</I> For HOPWA funds, the State must specify one-year goals for the number of households to be provided housing through the use of HOPWA activities for short-term rent; mortgage and utility assistance payments to prevent homelessness of the individual or family; tenant-based rental assistance; and units provided in housing facilities that are being developed, leased or operated with HOPWA funds, and shall identify the method of selecting project sponsors (including providing full access to grassroots faith-based and other community-based organizations).
</P>
<P>(5) <I>Housing Trust Fund.</I> The action plan must include the HTF allocation plan that describes the distribution of the HTF funds, and establishes the application requirements and the criteria for selection of applications submitted by eligible recipients that meet the State's priority housing needs. The plan must also establish the State's maximum per-unit development subsidy limit for housing assisted with HTF funds. If the HTF funds will be used for first-time homebuyers, it must State the guidelines for resale and recapture as required in 24 CFR 93.304. The plan must reflect the State's decision to distribute HTF funds through grants to subgrantees and/or to select applications submitted by eligible recipients. If the State is selecting applications submitted by eligible recipients, the plan must include the following:
</P>
<P>(i) The plan must provide priority for funding based on geographic diversity (as defined by the State in the consolidated plan); the applicant's ability to obligate HTF funds and undertake eligible activities in a timely manner; in the case of rental housing projects, the extent to which the project has Federal, State, or local project-based rental assistance so that rents are affordable to extremely low-income families; in the case of rental housing projects, the duration of the units' affordability period; the merits of the application in meeting the priority housing needs of the State (such as housing that is accessible to transit or employment centers, housing that includes green building and sustainable development features, or housing that serves special needs populations); and the extent to which the application makes use of non-federal funding sources.
</P>
<P>(ii) The plan must include the requirement that the application contain a description of the eligible activities to be conducted with the HTF funds (as provided in 24 CFR 93.200) and contain a certification by each eligible recipient that housing units assisted with the HTF will comply with HTF requirements. The plan must also describe eligibility requirements for recipients (as defined in 24 CFR 93.2).
</P>
<P>(iii) The plan must provide for performance goals and benchmarks against which the State will measure its progress, consistent with the State's goals established under 24 CFR 91.315(b)(2).
</P>
<P>(iv) The plan must include the State's rehabilitation standards, as required by 24 CFR 93.301(b)(1).
</P>
<P>(v) If the State intends to use HTF funds for first-time homebuyers, it must set forth the guidelines for resale or recapture, and obtain HUD's specific, written approval, as required in § 93.304(f). Approval of the consolidated plan or action plan under § 91.500 or the failure to disapprove the consolidated plan or action does not satisfy the requirement for specific HUD approval for resale or recapture guidelines.
</P>
<P>(vi) If the State intends to use HTF funds for homebuyer assistance and does not use the HTF affordable homeownership limits for the area provided by HUD, it must determine 95 percent of the median area purchase price and set forth the information in accordance with § 93.305.
</P>
<P>(vii) The State may limit the beneficiaries or give preferences to a particular segment of the extremely low- or very low-income population only if described in the action plan.
</P>
<P>(A) Any limitation or preference must not violate nondiscrimination requirements in 24 CFR 93.350, and the State must not limit or give preferences to students.
</P>
<P>(B) The State may permit rental housing owners to limit tenants or give a preference in accordance with 24 CFR 93.303(d)(3) only if such limitation or preference is described in the action plan.
</P>
<P>(viii) The plan must describe the conditions under which the State will refinance existing debt.
</P>
<CITA TYPE="N">[71 FR 6969, Feb. 9, 2006, as amended at 76 FR 75972, Dec. 5, 2011; 78 FR 44664, July 24, 2013; 80 FR 5220, Jan. 30, 2015; 80 FR 42365, July 16, 2015; 80 FR 69869, Nov. 12, 2015; 81 FR 86951, Dec. 1, 2016; 85 FR 47909, Aug. 7, 2020; 90 FR 863, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 91.325" NODE="24:1.1.1.1.40.4.59.6" TYPE="SECTION">
<HEAD>§ 91.325   Certifications.</HEAD>
<P>(a) <I>General</I>—(1) <I>Affirmatively furthering fair housing.</I> Each State is required to submit a certification that the grantee will affirmatively further fair housing, consistent with §§ 5.150 and 5.151 of this title.


</P>
<P>(2) <I>Anti-displacement and relocation plan.</I> The State is required to submit a certification that it has in effect and is following a residential antidisplacement and relocation assistance plan in connection with any activity assisted with funding under the CDBG or HOME programs. 
</P>
<P>(3) <I>Anti-lobbying.</I> The State must submit a certification with regard to compliance with restrictions on lobbying required by 24 CFR part 87, together with disclosure forms, if required by that part. 
</P>
<P>(4) <I>Authority of State.</I> The State must submit a certification that the consolidated plan is authorized under State law and that the State possesses the legal authority to carry out the programs for which it is seeking funding, in accordance with applicable HUD regulations. 
</P>
<P>(5) <I>Consistency with plan.</I> The State must submit a certification that the housing activities to be undertaken with CDBG, HOME, ESG, and HOPWA funds are consistent with the strategic plan. 
</P>
<P>(6) <I>Acquisition and relocation.</I> The State must submit a certification that it will comply with the acquisition and relocation requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended, and implementing regulations at 49 CFR part 24. 
</P>
<P>(7) <I>Section 3.</I> The State must submit a certification that it will comply with section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u), and implementing regulations at 24 CFR part 75. 
</P>
<P>(b) <I>Community Development Block Grant program.</I> For States that seek funding under CDBG, the following certifications are required: 
</P>
<P>(1) <I>Citizen participation.</I> A certification that the State is following a detailed citizen participation plan that satisfies the requirements of § 91.115, and that each unit of general local government that is receiving assistance from the State is following a detailed citizen participation plan that satisfies the requirements of § 570.486 of this title. 
</P>
<P>(2) <I>Consultation with local governments.</I> A certification that: 
</P>
<P>(i) It has consulted with affected units of local government in the nonentitlement area of the State in determining the method of distribution of funding; 
</P>
<P>(ii) It engages or will engage in planning for community development activities; 
</P>
<P>(iii) It provides or will provide technical assistance to units of general local government in connection with community development programs; 
</P>
<P>(iv) It will not refuse to distribute funds to any unit of general local government on the basis of the particular eligible activity selected by the unit of general local government to meet its community development needs, except that a State is not prevented from establishing priorities in distributing funding on the basis of the activities selected; and 
</P>
<P>(v) Each unit of general local government to be distributed funds will be required to identify its community development and housing needs, including the needs of the low-income and moderate-income families, and the activities to be undertaken to meet these needs. 
</P>
<P>(3) <I>Community development plan.</I> A certification that this consolidated plan identifies community development and housing needs and specifies both short-term and long-term community development objectives that have been developed in accordance with the primary objective of the statute authorizing the CDBG program, as described in 24 CFR 570.2, and requirements of this part and 24 CFR part 570. 
</P>
<P>(4) <I>Use of funds.</I> A certification that the State has complied with the following criteria: 
</P>
<P>(i) With respect to activities expected to be assisted with CDBG funds, the action plan has been developed so as to give the maximum feasible priority to activities that will benefit low- and moderate-income families or aid in the prevention or elimination of slums or blight. The plan may also include CDBG-assisted activities that are certified to be designed to meet other community development needs having particular urgency because existing conditions pose a serious and immediate threat to the health or welfare of the community where other financial resources are not available to meet such needs; 
</P>
<P>(ii) In the aggregate, not less than 70 percent of the CDBG funds received by the State during a period specified by the State, not to exceed three years, will be used for activities that benefit persons of low and moderate income. The period selected and certified to by the State shall be designated by fiscal year of annual grants, and shall be for one, two, or three consecutive annual grants. (See 24 CFR 570.481 for definition of “CDBG funds”); and
</P>
<P>(iii) The State will not attempt to recover any capital costs of public improvements assisted with CDBG funds, including Section 108 loan guaranteed funds, by assessing any amount against properties owned and occupied by persons of low- and moderate-income, including any fee charged or assessment made as a condition of obtaining access to such public improvements. However, if CDBG funds are used to pay the proportion of a fee or assessment attributable to the capital costs of public improvements (assisted in part with CDBG funds) financed from other revenue sources, an assessment or charge may be made against the property with respect to the public improvements financed by a source other than with CDBG funds. In addition, with respect to properties owned and occupied by moderate-income (but not low-income) families, an assessment or charge may be made against the property with respect to the public improvements financed by a source other than CDBG funds if the State certifies that it lacks CDBG funds to cover the assessment. 
</P>
<P>(5) <I>Compliance with anti-discrimination laws.</I> A certification that the grant will be conducted and administered in conformity with title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d) and the Fair Housing Act (42 U.S.C. 3601-3619) and implementing regulations. 
</P>
<P>(6) <I>Excessive force.</I> A certification that the State will require units of general local government that receive CDBG funds to certify that they have adopted and are enforcing: 
</P>
<P>(i) A policy prohibiting the use of excessive force by law enforcement agencies within its jurisdiction against any individuals engaged in non-violent civil rights demonstrations; and 
</P>
<P>(ii) A policy of enforcing applicable State and local laws against physically barring entrance to or exit from a facility or location that is the subject of such non-violent civil rights demonstrations within its jurisdiction. 
</P>
<P>(7) <I>Compliance with laws.</I> A certification that the State will comply with applicable laws. 
</P>
<P>(c) <I>ESG.</I> Each State that seeks funding under ESG must provide the following certifications:
</P>
<P>(1) The State will obtain any matching amounts required under 24 CFR 576.201 in a manner so that its subrecipients that are least capable of providing matching amounts receive the benefit of the exception under 24 CFR 576.201(a)(2);
</P>
<P>(2) The State will establish and implement, to the maximum extent practicable and where appropriate, policies, and protocols for the discharge of persons from publicly funded institutions or systems of care (such as health-care facilities, mental health facilities, foster care or other youth facilities, or correction programs and institutions) in order to prevent this discharge from immediately resulting in homelessness for these persons;
</P>
<P>(3) The State will develop and implement procedures to ensure the confidentiality of records pertaining to any individual provided family violence prevention or treatment services under any project assisted under the ESG program, including protection against the release of the address or location of any family violence shelter project, except with the written authorization of the person responsible for the operation of that shelter; and
</P>
<P>(4) The State will ensure that its subrecipients comply with the following criteria:
</P>
<P>(i) If an emergency shelter's rehabilitation costs exceed 75 percent of the value of the building before rehabilitation, the building will be maintained as a shelter for homeless individuals and families for a minimum of 10 years after the date the building is first occupied by a homeless individual or family after the completed rehabilitation;
</P>
<P>(ii) If the cost to convert a building into an emergency shelter exceeds 75 percent of the value of the building after conversion, the building will be maintained as a shelter for homeless individuals and families for a minimum of 10 years after the date the building is first occupied by a homeless individual or family after the completed conversion;
</P>
<P>(iii) In all other cases where ESG funds are used for renovation, the building will be maintained as a shelter for homeless individuals and families for a minimum of 3 years after the date the date the building is first occupied by a homeless individual or family after the completed renovation;
</P>
<P>(iv) If ESG funds are used for shelter operations or essential services related to street outreach or emergency shelter, the subrecipient will provide services or shelter to homeless individuals and families for the period during which the ESG assistance is provided, without regard to a particular site or structure, so long as the applicant serves the same type of persons (<I>e.g.,</I> families with children, unaccompanied youth, veterans, disabled individuals, or victims of domestic violence) or persons in the same geographic area;
</P>
<P>(v) Any renovation carried out with ESG assistance shall be sufficient to ensure that the building involved is safe and sanitary;
</P>
<P>(vi) The subrecipient will assist homeless individuals in obtaining permanent housing, appropriate supportive services (including medical and mental health treatment, counseling, supervision, and other services essential for achieving independent living), and other Federal, State, local, and private assistance available for such individuals;
</P>
<P>(vii) To the maximum extent practicable, the subrecipient will involve, through employment, volunteer services, or otherwise, homeless individuals and families in constructing, renovating, maintaining, and operating facilities assisted under ESG, in providing services assisted under ESG, and in providing services for occupants of facilities assisted under ESG; and
</P>
<P>(viii) All activities the subrecipient undertakes with assistance under ESG are consistent with the State's current HUD-approved consolidated plan.
</P>
<P>(d) <I>HOME program.</I> Each State must provide the following certifications: 
</P>
<P>(1) If it plans to use program funds for tenant-based rental assistance, a certification that rental-based assistance is an essential element of its consolidated plan; 
</P>
<P>(2) A certification that it is using and will use HOME funds for eligible activities and costs, as described in §§ 92.205 through 92.209 of this subtitle and that it is not using and will not use HOME funds for prohibited activities, as described in § 92.214 of this subtitle; and 
</P>
<P>(3) A certification that before committing funds to a project, the State or its recipients will evaluate the project in accordance with guidelines that it adopts for this purpose and will not invest any more HOME funds in combination with other federal assistance than is necessary to provide affordable housing. 
</P>
<P>(e) <I>Housing Opportunities for Persons With AIDS.</I> For States that seek funding under the Housing Opportunities for Persons With AIDS program, a certification is required by the State that: 
</P>
<P>(1) Activities funded under the program will meet urgent needs that are not being met by available public and private sources; and 
</P>
<P>(2) Any building or structure purchased, leased, rehabilitated, renovated, or converted with assistance under that program shall be operated for not less than 10 years specified in the plan, or for a period of not less than three years in cases involving non-substantial rehabilitation or repair of a building or structure.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0117)
</APPRO>
<CITA TYPE="N">[60 FR 1896, Jan. 5, 1995, as amended at 71 FR 6970, Feb. 9, 2006; 72 FR 73493, Dec. 27, 2007; 76 FR 75973, Dec. 5, 2011; 80 FR 42365, July 16, 2015; 80 FR 69870, Nov. 12, 2015; 85 FR 47909, Aug. 7, 2020; 85 FR 61567, Sept. 29, 2020; 86 FR 30792, June 10, 2021; 86 FR 30792, June 10, 2021; 90 FR 11024, Mar. 3, 2025]




</CITA>
</DIV8>


<DIV8 N="§ 91.330" NODE="24:1.1.1.1.40.4.59.7" TYPE="SECTION">
<HEAD>§ 91.330   Monitoring.</HEAD>
<P>The consolidated plan must describe the standards and procedures that the State will use to monitor activities carried out in furtherance of the plan and will use to ensure long-term compliance with requirements of the programs involved, including the comprehensive planning requirements. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0117)
</APPRO>
<CITA TYPE="N">[60 FR 1896, Jan. 5, 1995; 60 FR 4861, Jan. 25, 1995]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:1.1.1.1.40.5" TYPE="SUBPART">
<HEAD>Subpart E—Consortia; Contents of Consolidated Plan</HEAD>


<DIV8 N="§ 91.400" NODE="24:1.1.1.1.40.5.59.1" TYPE="SECTION">
<HEAD>§ 91.400   Applicability.</HEAD>
<P>This subpart applies to HOME program consortia, as defined in § 91.5 (see 24 CFR part 92). Units of local government that participate in a consortium must participate in submission of a consolidated plan for the consortium, prepared in accordance with this subpart. CDBG entitlement communities that are members of a consortium must provide additional information for the consolidated plan, as described in this subpart. 


</P>
</DIV8>


<DIV8 N="§ 91.401" NODE="24:1.1.1.1.40.5.59.2" TYPE="SECTION">
<HEAD>§ 91.401   Citizen participation plan.</HEAD>
<P>The consortium must have a citizen participation plan that complies with the requirements of § 91.105. If the consortium contains one or more CDBG entitlement communities, the consortium's citizen participation plan must provide for citizen participation within each CDBG entitlement community, either by the consortium or by the CDBG entitlement community, in a manner sufficient for the CDBG entitlement community to certify that it is following a citizen participation plan. 


</P>
</DIV8>


<DIV8 N="§ 91.402" NODE="24:1.1.1.1.40.5.59.3" TYPE="SECTION">
<HEAD>§ 91.402   Consolidated program year.</HEAD>
<P>(a) <I>Same program year for consortia members.</I> All units of general local government that are members of a consortium must be on the same program year for CDBG, HOME, ESG, and HOPWA. The program year shall run for a twelve month period and begin on the first calendar day of a month. 
</P>
<P>(b) <I>Transition period.</I> (1) A consortium in existence on February 6, 1995, with all members having aligned program years must comply with paragraph (a) of this section. A consortium in existence on February 6, 1995, in which all members do not have aligned program years will be allowed a transition period during the balance of its current consortium agreement to bring the program year for all members into alignment. 
</P>
<P>(2) During any such transition period, the lead agency (if it is a CDBG entitlement community) must submit, as its consolidated plan, a plan that complies with this subpart for the consortium, plus its nonhousing Community Development Plan (in accordance with § 91.215). All other CDBG entitlement communities in the consortium may submit their respective nonhousing Community Development Plans (§ 91.215(e)), an Action Plan (§ 91.220) and the certifications (§ 91.425(a) and (b)) in accordance with their individual program years.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0117)
</APPRO>
<CITA TYPE="N">[60 FR 1896, Jan. 5, 1995; 60 FR 10427, Feb. 24, 1995]


</CITA>
</DIV8>


<DIV8 N="§ 91.405" NODE="24:1.1.1.1.40.5.59.4" TYPE="SECTION">
<HEAD>§ 91.405   Housing and homeless needs assessment.</HEAD>
<P>Housing and homeless needs must be described in the consolidated plan in accordance with the provisions of § 91.205 for the entire consortium. In addition to describing these needs for the entire consortium, the consolidated plan may also describe these needs for individual communities that are members of the consortium.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0117)


</APPRO>
</DIV8>


<DIV8 N="§ 91.410" NODE="24:1.1.1.1.40.5.59.5" TYPE="SECTION">
<HEAD>§ 91.410   Housing market analysis.</HEAD>
<P>Housing market analysis must be described in the consolidated plan in accordance with the provisions of § 91.210 for the entire consortium. In addition to describing market conditions for the entire consortium, the consolidated plan may also describe these conditions for individual communities that are members of the consortium.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0117)


</APPRO>
</DIV8>


<DIV8 N="§ 91.415" NODE="24:1.1.1.1.40.5.59.6" TYPE="SECTION">
<HEAD>§ 91.415   Strategic plan.</HEAD>
<P>Strategies and priority needs must be described in the consolidated plan, in accordance with the provisions of § 91.215, for the entire consortium. The consortium is not required to submit a nonhousing Community Development Plan; however, if the consortium includes CDBG entitlement communities, the consolidated plan must include the nonhousing Community Development Plans of the CDBG entitlement community members of the consortium. The consortium must set forth its priorities for allocating housing (including CDBG and ESG, where applicable) resources geographically within the consortium, describing how the consolidated plan will address the needs identified (in accordance with § 91.405), describing the reasons for the consortium's allocation priorities, and identifying any obstacles there are to addressing underserved needs.
</P>
<CITA TYPE="N">[85 FR 47909, Aug. 7, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 91.420" NODE="24:1.1.1.1.40.5.59.7" TYPE="SECTION">
<HEAD>§ 91.420   Action plan.</HEAD>
<P>(a) <I>Form application.</I> The action plan for the consortium must include a Standard Form 424 for the consortium for the HOME program. Each entitlement jurisdiction also must submit a Standard Form 424 for its funding under the CDBG program and, if applicable, the ESG and HOPWA programs. 
</P>
<P>(b) <I>Description of resources and activities.</I> The action plan must describe the resources to be used and activities to be undertaken to pursue its strategic plan. The consolidated plan must provide this description for all resources and activities within the entire consortium as a whole, as well as a description for each individual community that is a member of the consortium.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0117)
</APPRO>
<CITA TYPE="N">[60 FR 1896, Jan. 5, 1995, as amended at 80 FR 42366, July 16, 2015; 85 FR 47909, Aug. 7, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 91.425" NODE="24:1.1.1.1.40.5.59.8" TYPE="SECTION">
<HEAD>§ 91.425   Certifications.</HEAD>
<P>(a) <I>Consortium certifications</I>—(1) <I>General</I>(i) <I>Affirmatively furthering fair housing.</I> Each consortium must submit a certification that it will affirmatively further fair housing, consistent with §§ 5.150 and 5.151 of this title.


</P>
<P>(ii) <I>Anti-displacement and relocation plan.</I> Each consortium must certify that it has in effect and is following a residential antidisplacement and relocation assistance plan in connection with any activity assisted with funding under the HOME or CDBG program. 
</P>
<P>(iii) <I>Anti-lobbying.</I> The consortium must submit a certification with regard to compliance with restrictions on lobbying required by 24 CFR part 87, together with disclosure forms, if required by that part. 
</P>
<P>(iv) <I>Authority of consortium.</I> The consortium must submit a certification that the consolidated plan is authorized under State and local law (as applicable) and that the consortium possesses the legal authority to carry out the programs for which it is seeking funding, in accordance with applicable HUD regulations. 
</P>
<P>(v) <I>Consistency with plan.</I> The consortium must certify that the housing activities to be undertaken with CDBG, HOME, ESG, and HOPWA funds are consistent with the strategic plan. 
</P>
<P>(vi) <I>Acquisition and relocation.</I> The consortium must certify that it will comply with the acquisition and relocation requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (42 U.S.C. 4601), and implementing regulations at 49 CFR part 24. 
</P>
<P>(vii) <I>Section 3.</I> The consortium must certify that it will comply with section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u), and implementing regulations at 24 CFR part 75. 
</P>
<P>(2) <I>HOME program.</I> The consortium must provide the following certifications: 
</P>
<P>(i) If it plans to use HOME funds for tenant-based rental assistance, a certification that rental-based assistance is an essential element of its consolidated plan; 
</P>
<P>(ii) That it is using and will use HOME funds for eligible activities and costs, as described in §§ 92.205 through 92.209 of this subtitle and that it is not using and will not use HOME funds for prohibited activities, as described in § 92.214 of this subtitle; and 
</P>
<P>(iii) That before committing funds to a project, the consortium will evaluate the project in accordance with guidelines that it adopts for this purpose and will not invest any more HOME funds in combination with other federal assistance than is necessary to provide affordable housing. 
</P>
<P>(b) <I>CDBG entitlement community certifications.</I> A CDBG entitlement community that is a member of a consortium must submit the certifications required by § 91.225 (a) and (b), and, if applicable, of § 91.225 (c) and (d).
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0117)


</APPRO>
<CITA TYPE="N">[60 FR 1896, Jan. 5, 1995, as amended at 72 FR 73493, Dec. 27, 2007; 80 FR 42366, July 16, 2015; 85 FR 47910, Aug. 7, 2020; 85 FR 61567, Sept. 29, 2020; 86 FR 30792, June 10, 2021; 90 FR 11024, Mar. 3, 2025]




</CITA>
</DIV8>


<DIV8 N="§ 91.430" NODE="24:1.1.1.1.40.5.59.9" TYPE="SECTION">
<HEAD>§ 91.430   Monitoring.</HEAD>
<P>The consolidated plan must describe the standards and procedures that the consortium will use to monitor activities carried out in furtherance of the plan and will use to ensure long-term compliance with requirements of the programs involved, including minority business outreach and the comprehensive planning requirements. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0117)
</APPRO>
<CITA TYPE="N">[60 FR 1896, Jan. 5, 1995; 60 FR 4861, Jan. 25, 1995]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:1.1.1.1.40.6" TYPE="SUBPART">
<HEAD>Subpart F—Other General Requirements</HEAD>


<DIV8 N="§ 91.500" NODE="24:1.1.1.1.40.6.59.1" TYPE="SECTION">
<HEAD>§ 91.500   HUD approval action.</HEAD>
<P>(a) <I>General.</I> HUD will review the plan upon receipt. The plan will be deemed approved 45 days after HUD receives the plan, unless before that date HUD has notified the jurisdiction that the plan is disapproved. 
</P>
<P>(b) <I>Standard of review.</I> HUD may disapprove a plan or a portion of a plan if it is inconsistent with the purposes of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12703), if it is substantially incomplete, or, in the case of certifications applicable to the CDBG program under §§ 91.225 (a) and (b) or 91.325 (a) and (b), if it is not satisfactory to the Secretary in accordance with § 570.304, § 570.429(g), or § 570.485(c) of this title, as applicable. The following are examples of consolidated plans that are substantially incomplete: 
</P>
<P>(1) A plan that was developed without the required citizen participation or the required consultation; 
</P>
<P>(2) A plan that fails to satisfy all the required elements in this part; and 
</P>
<P>(3) A plan for which a certification is rejected by HUD as inaccurate, after HUD has inspected the evidence and provided due notice and opportunity to the jurisdiction for comment; and
</P>
<P>(4) A plan that does not include a description of the manner in which the unit of general local government or state will provide financial or other assistance to a public housing agency if the public housing agency is designated as “troubled” by HUD. 
</P>
<P>(c) <I>Written notice of disapproval.</I> Within 15 days after HUD notifies a jurisdiction that it is disapproving its plan, it must inform the jurisdiction in writing of the reasons for disapproval and actions that the jurisdiction could take to meet the criteria for approval. Disapproval of a plan with respect to one program does not affect assistance distributed on the basis of a formula under other programs. 
</P>
<P>(d) <I>Revisions and resubmission.</I> The jurisdiction may revise or resubmit a plan within 45 days after the first notification of disapproval. HUD must respond to approve or disapprove the plan within 30 days of receiving the revisions or resubmission.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0117)
</APPRO>
<CITA TYPE="N">[60 FR 1896, Jan. 5, 1995, as amended at 60 FR 56909, Nov. 9, 1995; 61 FR 54920, Oct. 22, 1996; 71 FR 6970, Feb. 9, 2006]


</CITA>
</DIV8>


<DIV8 N="§ 91.505" NODE="24:1.1.1.1.40.6.59.2" TYPE="SECTION">
<HEAD>§ 91.505   Amendments to the consolidated plan.</HEAD>
<P>(a) <I>Amendments to the plan.</I> The jurisdiction shall amend its approved plan whenever it makes one of the following decisions: 
</P>
<P>(1) To make a change in its allocation priorities or a change in the method of distribution of funds; 
</P>
<P>(2) To carry out an activity, using funds from any program covered by the consolidated plan (including program income, reimbursements, repayment, recaptures, or reallocations from HUD), not previously described in the action plan; or
</P>
<P>(3) To change the purpose, scope, location, or beneficiaries of an activity. 
</P>
<P>(b) <I>Criteria for substantial amendment.</I> The jurisdiction shall identify in its citizen participation plan the criteria it will use for determining what constitutes a substantial amendment. It is these substantial amendments that are subject to a citizen participation process, in accordance with the jurisdiction's citizen participation plan. (See §§ 91.105 and 91.115.) 
</P>
<P>(c) <I>Submission to HUD.</I> (1) Upon completion, the jurisdiction must make the amendment public and must notify HUD that an amendment has been made. The jurisdiction may submit a copy of each amendment to HUD as it occurs, or at the end of the program year. Letters transmitting copies of amendments must be signed by the official representative of the jurisdiction authorized to take such action. 
</P>
<P>(2) See subpart B of this part for the public notice procedures applicable to substantial amendments. For any amendment affecting the HOPWA program that would involve acquisition, rehabilitation, conversion, lease, repair or construction of properties to provide housing, an environmental review of the revised proposed use of funds must be completed by HUD in accordance with 24 CFR 574.510.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0117)
</APPRO>
<CITA TYPE="N">[60 FR 1896, Jan. 5, 1995, as amended at 80 FR 42366, July 16, 2015; 80 FR 69870, Nov. 12, 2015; 81 FR 86951, Dec. 2, 2016; 85 FR 47910, Aug. 7, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 91.510" NODE="24:1.1.1.1.40.6.59.3" TYPE="SECTION">
<HEAD>§ 91.510   Consistency determinations.</HEAD>
<P>(a) <I>Applicability.</I> For competitive programs, a certification of consistency of the application with the approved consolidated plan for the jurisdiction may be required, whether the applicant is the jurisdiction or another applicant. 
</P>
<P>(b) <I>Certifying authority.</I> (1) The certification must be obtained from the unit of general local government if the project will be located in a unit of general local government that: is required to have a consolidated plan, is authorized to use an abbreviated consolidated plan but elects to prepare and has submitted a full consolidated plan, or is authorized to use an abbreviated consolidated plan and is applying for the same program as the applicant pursuant to the same Notice of Funding Availability (and therefore has or will have an abbreviated consolidated plan for the fiscal year for that program). 
</P>
<P>(2) If the project will not be located in a unit of general local government, the certification may be obtained from the State or, if the project will be located in a unit of general local government authorized to use an abbreviated consolidated plan, from the unit of general local government if it is willing to prepare such a plan. 
</P>
<P>(3) Where the recipient of a HOPWA grant is a city that is the most populous unit of general local government in an EMSA, it also must obtain and keep on file certifications of consistency from such public officials for each other locality in the EMSA in which housing assistance is provided. 
</P>
<P>(c) <I>Meaning.</I> A jurisdiction's certification that an application is consistent with its consolidated plan means the jurisdiction's plan shows need, the proposed activities are consistent with the jurisdiction's strategic plan, and the location of the proposed activities is consistent with the geographic areas specified in the plan. The jurisdiction shall provide the reasons for the denial when it fails to provide a certification of consistency.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0117)


</APPRO>
</DIV8>


<DIV8 N="§ 91.515" NODE="24:1.1.1.1.40.6.59.4" TYPE="SECTION">
<HEAD>§ 91.515   Funding determinations by HUD.</HEAD>
<P>(a) <I>Formula funding.</I> The action plan submitted by the jurisdiction will be considered as the application for the CDBG, HOME, ESG, and HOPWA formula grant programs. The Department will make its funding award determination after reviewing the plan submission in accordance with § 91.500. 
</P>
<P>(b) <I>Other funding.</I> For other funding, the jurisdiction must still respond to Notices of Funding Availability for the individual programs in order to receive funding.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0117)


</APPRO>
</DIV8>


<DIV8 N="§ 91.520" NODE="24:1.1.1.1.40.6.59.5" TYPE="SECTION">
<HEAD>§ 91.520   Performance reports.</HEAD>
<P>(a) <I>General.</I> Each jurisdiction that has an approved consolidated plan shall annually review and report, in a form prescribed by HUD, on the progress it has made in carrying out its strategic plan and its action plan. The performance report must include a description of the resources made available, the investment of available resources, the geographic distribution and location of investments, the families and persons assisted (including the racial and ethnic status of persons assisted), actions taken to affirmatively further fair housing, and other actions indicated in the strategic plan and the action plan. This performance report shall be submitted to HUD within 90 days after the close of the jurisdiction's program year. 
</P>
<P>(b) <I>Affordable housing.</I> The report shall include an evaluation of the jurisdiction's progress in meeting its specific objective of providing affordable housing, including the number and types of families served. This element of the report must include the number of extremely low-income, low-income, moderate-income, middle-income, and homeless persons served.
</P>
<P>(c) <I>Homelessness.</I> The report must include, in a form prescribed by HUD, an evaluation of the jurisdiction's progress in meeting its specific objectives for reducing and ending homelessness through:
</P>
<P>(1) Reaching out to homeless persons (especially unsheltered persons) and assessing their individual needs;
</P>
<P>(2) Addressing the emergency shelter and transitional housing needs of homeless persons;
</P>
<P>(3) Helping homeless persons (especially chronically homeless individuals and families, families with children, veterans and their families, and unaccompanied youth) make the transition to permanent housing and independent living, including shortening the period of time that individuals and families experience homelessness, facilitating access for homeless individuals and families to affordable housing units, and preventing individuals and families who were recently homeless from becoming homeless again; and
</P>
<P>(4) Helping low-income individuals and families avoid becoming homeless, especially extremely low-income individuals and families and those who are
</P>
<P>(i) Likely to become homeless after being discharged from publicly funded institutions and systems of care (such as health-care facilities, mental health facilities, foster care and other youth facilities, and corrections programs and institutions);
</P>
<P>(ii) Receiving assistance from public or private agencies that address housing, health, social services, employment, education, or youth needs.
</P>
<P>(d) <I>CDBG.</I> For CDBG recipients, the report shall include a description of the use of CDBG funds during the program year and an assessment by the jurisdiction of the relationship of that use to the priorities and specific objectives identified in the plan, giving special attention to the highest priority activities that were identified. This element of the report must specify the nature of and reasons for any changes in its program objectives and indications of how the jurisdiction would change its programs as a result of its experiences. This element of the report also must include the number of extremely low-income, low-income, and moderate-income persons served by each activity where information on income by family size is required to determine the eligibility of the activity. 
</P>
<P>(e) <I>HOME.</I> For HOME participating jurisdictions, the report shall include the results of on-site inspections of affordable rental housing assisted under the program to determine compliance with housing codes and other applicable regulations, an assessment of the jurisdiction's affirmative marketing actions and outreach to minority-owned and women-owned businesses, data on the amount and use of program income for projects, including the number of projects and owner and tenant characteristics, and data on emergency transfers requested under 24 CFR 5.2005(e) and 24 CFR 92.359, pertaining to victims of domestic violence, dating violence, sexual assault, or stalking, including data on the outcomes of such requests.
</P>
<P>(f) <I>HOPWA.</I> For jurisdictions receiving funding under the Housing Opportunities for Persons With AIDS program, the report must include the number of individuals assisted and the types of assistance provided, as well as data on emergency transfers requested under 24 CFR 5.2005(e), pertaining to victims of domestic violence, dating violence, sexual assault, or stalking, including data on the outcomes of such requests.
</P>
<P>(g) <I>ESG.</I> For jurisdictions receiving funding under the ESG program provided in 24 CFR part 576, the report, in a form prescribed by HUD, must include the number of persons assisted, the types of assistance provided, the project or program outcomes data measured under the performance standards developed in consultation with the Continuum(s) of Care, and data on emergency transfers requested under 24 CFR 5.2005(e) and 24 CFR 576.409, pertaining to victims of domestic violence, dating violence, sexual assault, or stalking, including data on the outcomes of such requests.
</P>
<P>(h) <I>HTF.</I> For jurisdictions receiving HTF funds, the report must describe the HTF program's accomplishments, and the extent to which the jurisdiction complied with its approved HTF allocation plan and the requirements of 24 CFR part 93, as well as data on emergency transfers requested under 24 CFR 5.2005(e) and 24 CFR 93.356, pertaining to victims of domestic violence, dating violence, sexual assault, or stalking, including data on the outcomes of such requests.
</P>
<P>(i) <I>Evaluation by HUD.</I> HUD shall review the performance report and determine whether it is satisfactory. If a satisfactory report is not submitted in a timely manner, HUD may suspend funding until a satisfactory report is submitted, or may withdraw and reallocate funding if HUD determines, after notice and opportunity for a hearing, that the jurisdiction will not submit a satisfactory report.
</P>
<P>(j) The report will include a comparison of the proposed versus actual outcomes for each outcome measure submitted with the consolidated plan and explain, if applicable, why progress was not made toward meeting goals and objectives.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0117)
</APPRO>
<CITA TYPE="N">[60 FR 1896, Jan. 5, 1995, as amended at 71 FR 6971, Feb. 9, 2006; 76 FR 75973, Dec. 5, 2011; 80 FR 5220, Jan. 30, 2015; 81 FR 80803, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 91.525" NODE="24:1.1.1.1.40.6.59.6" TYPE="SECTION">
<HEAD>§ 91.525   Performance review by HUD.</HEAD>
<P>(a) <I>General.</I> HUD shall review the performance of each jurisdiction covered by this part at least annually, including site visits by employees—insofar as practicable, assessing the following: 
</P>
<P>(1) Management of funds made available under programs administered by HUD; 
</P>
<P>(2) Compliance with the consolidated plan; 
</P>
<P>(3) Accuracy of performance reports; 
</P>
<P>(4) Extent to which the jurisdiction made progress towards the statutory goals identified in § 91.1; and 
</P>
<P>(5) Efforts to ensure that housing assisted under programs administered by HUD is in compliance with contractual agreements and the requirements of law. 
</P>
<P>(b) <I>Report by HUD.</I> HUD shall report on the performance review in writing, stating the length of time the jurisdiction has to review and comment on the report, which will be at least 30 days. HUD may revise the report after considering the jurisdiction's views, and shall make the report, the jurisdiction's comments, and any revisions available to the public within 30 days after receipt of the jurisdiction's comments. 


</P>
</DIV8>


<DIV8 N="§ 91.600" NODE="24:1.1.1.1.40.6.59.7" TYPE="SECTION">
<HEAD>§ 91.600   Waiver authority.</HEAD>
<P>Upon determination of good cause, HUD may, subject to statutory limitations, waive any provision of this part. Each such waiver must be in writing and must be supported by documentation of the pertinent facts and grounds.
</P>
<CITA TYPE="N">[60 FR 50802, Sept. 29, 1995]


</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="92" NODE="24:1.1.1.1.41" TYPE="PART">
<HEAD>PART 92—HOME INVESTMENT PARTNERSHIPS PROGRAM 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d) and 12701—12839, 12 U.S.C. 1701x.


</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 48750, Sept. 16, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:1.1.1.1.41.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 92.1" NODE="24:1.1.1.1.41.1.63.1" TYPE="SECTION">
<HEAD>§ 92.1   Overview.</HEAD>
<P>This part implements the HOME Investment Partnerships Act (the HOME Investment Partnerships Program). In general, under the HOME Investment Partnerships Program, HUD allocates funds by formula among eligible State and local governments to strengthen public-private partnerships and to expand the supply of decent, safe, sanitary, and affordable housing, with primary attention to rental housing, for very low-income and low-income families. Generally, HOME funds must be matched by nonfederal resources. State and local governments that become participating jurisdictions may use HOME funds to carry out multi-year housing strategies through acquisition, rehabilitation, and new construction of housing, and tenant-based rental assistance. Participating jurisdictions may provide assistance in a number of eligible forms, including loans, advances, equity investments, interest subsidies and other forms of investment that HUD approves. 


</P>
</DIV8>


<DIV8 N="§ 92.2" NODE="24:1.1.1.1.41.1.63.2" TYPE="SECTION">
<HEAD>§ 92.2   Definitions.</HEAD>
<P>The terms <I>1937 Act, ALJ,</I> <I>Fair Housing Act, HUD,</I> <I>Indian Housing Authority (IHA), Public housing,</I> <I>Public Housing Agency (PHA),</I> and <I>Secretary</I> are defined in 24 CFR 5.100.
</P>
<P><I>Act</I> means the HOME Investment Partnerships Act at title II of the Cranston-Gonzalez National Affordable Housing Act, as amended, 42 U.S.C. 12701 <I>et seq.</I> 
</P>
<P><I>Adjusted income.</I> See § 92.203. 
</P>
<P><I>Annual income.</I> See § 92.203. 
</P>
<P><I>CDBG program</I> means the Community Development Block Grant program under 24 CFR part 570.
</P>
<P><I>Certification</I> shall have the meaning provided in section 104(21) of the Cranston-Gonzalez National Affordable Housing Act, as amended, 42 U.S.C. 12704. 
</P>
<P><I>Commitment</I> means: 
</P>
<P>(1) The participating jurisdiction has executed a legally binding written agreement (that includes the date of the signature of each person signing the agreement) that meets the minimum requirements for a written agreement in § 92.504(c). An agreement between the participating jurisdiction and a subrecipient that is controlled by the participating jurisdiction (<I>e.g.,</I> an agency whose officials or employees are officials or employees of the participating jurisdiction) does not constitute a commitment. An agreement between the representative unit and a member unit of general local government of a consortium does not constitute a commitment. Funds for administrative and planning costs of the HOME program are committed based on the amount in the program disbursement and information system for administration and planning. The written agreement must be:


</P>
<P>(i) With a State recipient or a subrecipient to use a specific amount of HOME funds to produce affordable housing, provide homeownership assistance, or provide tenant-based rental assistance;


</P>
<P>(ii) With a community housing development organization to provide operating expenses;
</P>
<P>(iii) With a community housing development organization to provide project-specific technical assistance and site control loans or project-specific seed money loans, in accordance with § 92.301;
</P>
<P>(iv) To develop the capacity of community housing development organizations in the jurisdiction, in accordance with § 92.300(b); or
</P>
<P>(v) To commit to a specific local project, as defined in paragraph (2) of this definition.


</P>
<P>(2) <I>Commit to a specific local project</I> means:
</P>
<P>(i) If the project consists of rehabilitation or new construction (with or without acquisition) the participating jurisdiction (or State recipient or sub recipient) and project owner have executed a written legally binding agreement under which HOME assistance will be provided to the owner for an identifiable project for which all necessary financing has been secured, a budget and schedule have been established, and underwriting has been completed and under which construction is scheduled to start within twelve months of the agreement date. If the project is owned by the participating jurisdiction or State recipient, the project has been set up in the disbursement and information system established by HUD, and construction can reasonably be expected to start within twelve months of the project set-up date.


</P>
<P>(ii)(A) If the project consists of acquisition of standard housing and the participating jurisdiction (or State recipient) is acquiring the property with HOME funds, the participating jurisdiction (or State recipient) and the property owner have executed a legally binding contract for sale of an identifiable property and the property title will be transferred to the participating jurisdiction (or State recipient) within six months of the date of the contract. 
</P>
<P>(B) If the project consists of acquisition of standard housing and the participating jurisdiction (or State recipient or subrecipient) is providing HOME funds to a family to acquire single family housing for homeownership or to a purchaser to acquire rental housing, the participating jurisdiction (or State recipient or subrecipient) and the family or purchaser have executed a written agreement under which HOME assistance will be provided for the purchase of the single family housing or rental housing and the property title will be transferred to the family or purchaser within six months of the agreement date. 


</P>
<P>(C) If the participating jurisdiction (or State recipient or subrecipient) is providing HOME funds to a family to acquire single family housing for homeownership that does not meet the participating jurisdiction's property standards, as described in § 92.251(c)(3), then the commitment must meet the requirements of this paragraph (2)(ii)(C). The participating jurisdiction (or State recipient or subrecipient) and the family must have executed a written agreement under which HOME assistance will be provided for the purchase of the single family housing. The written agreement will require the property to meet the standards in accordance with § 92.251(c)(3) and will require the property title to be transferred to the family within six months of the agreement date.


</P>
<P>(iii) If the project consists of tenant-based rental assistance, the participating jurisdiction (or State recipient, or subrecipient) has entered into a rental assistance contract with the owner and tenantin accordance with the provisions of § 92.209. 


</P>
<P><I>Community housing development organization</I> means a private nonprofit organization that: 
</P>
<P>(1) Is organized under State or local laws; 
</P>
<P>(2) Has no part of its net earnings inuring to the benefit of any member, founder, contributor, or individual; 
</P>
<P>(3) Is neither controlled by, nor under the direction of, individuals or entities seeking to derive profit or gain from the organization. A community housing development organization may be sponsored or created by a for-profit entity, but: 
</P>
<P>(i) The for-profit entity may not be an entity whose primary purpose is the development or management of housing, such as a builder, developer, or real estate management firm. 
</P>
<P>(ii) The for-profit entity may not have the right to appoint more than one-third of the membership of the organization's governing body. Board members appointed by the for-profit entity may not appoint the remaining two-thirds of the board members;
</P>
<P>(iii) The community housing development organization must be free to contract for goods and services from vendors of its own choosing; and


</P>
<P>(iv) The officers and employees of the for-profit entity may not be officers or employees of the community housing development organization.


</P>
<P>(4) Is tax exempt as follows:
</P>
<P>(i) The private nonprofit organization has a tax exemption ruling from the Internal Revenue Service under section 501(c)(3) or (4) of the Internal Revenue Code of 1986 (26 CFR 1.501(c)(3)-1 or 1.501(c)(4)-1));
</P>
<P>(ii) The private nonprofit organization is a subordinate organization that has been included in its 501(c)(3) or (4) central organization's group exemption letter by the Internal Revenue Service; or
</P>
<P>(iii) The private nonprofit organization is wholly owned by the community housing development organization, as defined in this part, and is disregarded as an entity separate from its owner organization for Federal tax purposes.
</P>
<P>(5) Is not a governmental entity (including the participating jurisdiction, other jurisdiction, Indian Tribe, public housing authority, Indian housing authority, housing finance agency, or redevelopment authority) and is not controlled by a governmental entity. An organization that is created by a governmental entity may qualify as a community housing development organization; however, no more than one-third of the board members of the organization may be officials or employees of the participating jurisdiction or governmental entity that created the community housing development organization. Further, no governmental entity may have the right to appoint more than one-third of the organization's board members. The board members appointed by a governmental entity and the board members that are officials or employees of the participating jurisdiction or governmental entity that created the organization may not appoint any of the remaining two-thirds of the board members. The officers or employees of a governmental entity may not be officers or employees of a community housing development organization;


</P>
<P>(6) Has standards of financial accountability that conform to 2 CFR 200.302, ‘Financial Management’ and 2 CFR 200.303, ‘Internal Controls;’ 
</P>
<P>(7) Has among its purposes the provision of decent housing that is affordable to low-income and moderate-income persons, as evidenced in its charter, articles of incorporation, resolutions or by-laws; 


</P>
<P>(8) Maintains accountability to low-income community residents by:</P>
<P>(i) Maintaining at least one-third of its governing board's membership for residents of low-income neighborhoods, low-income beneficiaries of HUD programs, other low-income community residents, designees of low-income neighborhood organizations, or designees of nonprofit organizations in the community that address the housing or supportive service needs of low-income residents or residents of low-income neighborhoods, including homeless providers, Fair Housing Initiatives Program providers, Legal Aid, disability rights organizations, and victim service providers. For urban areas, “community” may be a neighborhood or neighborhoods, city, county, or metropolitan area; for rural areas, it may be a neighborhood or neighborhoods, town, village, county, or multi-county area (but not the entire State); and


</P>
<P>(ii) Providing a formal process for low-income program beneficiaries to advise the organization in its decisions regarding the design, siting, development, and management of affordable housing; 


</P>
<P>(9) Has a demonstrated capacity for carrying out housing projects assisted with Federal funds, Low-Income Housing Credits (26 U.S.C. 42), Federal Home Loan Bank Affordable Housing Program (12 U.S.C. 1430) funds, or local and State affordable housing funds.
</P>
<P>(i) To satisfy this requirement and demonstrate capacity as a developer of a HOME-assisted project, the nonprofit organization must have paid employees with housing development experience who will work directly on the HOME-assisted project. Where the paid employees of the organization do not demonstrate capacity to develop a HOME-assisted project alone, the experience of paid employees may be supplemented by board members or officers of the organization that are volunteers. If a nonprofit organization is demonstrating capacity using a volunteer board member's or officer's experience, the volunteer may not be compensated by or have their services donated by another organization. For its first year of funding as a community housing development organization, an organization may satisfy this requirement through a contract with a consultant who has housing development experience to train appropriate key, paid staff of the organization;
</P>
<P>(ii) An organization that will own housing must demonstrate capacity to act as owner of a project and meet the requirements of § 92.300(a)(2);
</P>
<P>(iii) An organization that will sponsor housing must demonstrate capacity as a developer or capacity to act as owner, as described in paragraphs (9)(i) and (ii) of this definition; and


</P>
<P>(10) Has a history of serving the community within which housing to be assisted with HOME funds is to be located. In general, an organization must be able to show one year of serving the community before HOME funds are reserved for the organization. However, a newly created organization formed by local churches, service organizations or neighborhood organizations may meet this requirement by demonstrating that its parent organization has at least a year of serving the community. 




</P>
<P><I>Community land trust</I> means a nonprofit organization that:
</P>
<P>(1) Has as its primary purposes acquiring, developing, or holding land to provide housing that is permanently affordable to low-income persons;
</P>
<P>(2) Is not sponsored or controlled by a for-profit organization;
</P>
<P>(3) Uses a lease, covenant, agreement, or other enforceable mechanisms to require housing and related improvements on land held by the community land trust to be affordable to low-income persons for at least 30 years; and
</P>
<P>(4) Retains a right of first refusal or preemptive right to purchase the housing and related improvements on land held by the community land trust to maintain long-term affordability.


</P>
<P><I>Consolidated plan</I> means the plan submitted and approved in accordance with 24 CFR part 91.


</P>
<P><I>Family</I> has the same meaning given that term in 24 CFR 5.403. 


</P>
<P><I>Foster adult</I> has the same meaning given that term in 24 CFR 5.603.
</P>
<P><I>Foster child</I> has the same meaning given that term in 24 CFR 5.603.
</P>
<P><I>Full-time student</I> has the same meaning given that term in 24 CFR 5.603.
</P>
<P><I>HOME funds</I> means funds made available under this part through allocations and reallocations, plus program income. 
</P>
<P><I>Homebuyer counseling</I> has the same meaning as homeownership counseling in 24 CFR 5.100, and is a type of housing counseling.


</P>
<P><I>Homeownership</I> means ownership in fee simple title in single family housing or an equivalent form of ownership approved by HUD.
</P>
<P>(1) The land upon which the housing is located may be owned in fee simple or the homeowner may have a ground lease for the lowest of the following time periods, as applicable:
</P>
<P>(i) For housing, the ground lease must be for 99 years or more;
</P>
<P>(ii) For housing located in an insular area, the ground lease must be 40 years or more;
</P>
<P>(iii) For housing located on Indian trust or restricted Indian lands or a Community Land Trust, the ground lease must be 50 years or more; or
</P>
<P>(iv) For manufactured housing, the ground lease must be for a period at least equal to the applicable period of affordability in § 92.254.


</P>
<P>(2) Right to possession under a contract for deed, installment contract, or land contract (pursuant to which the deed is not given until the final payment is made) is not an equivalent form of ownership.
</P>
<P>(3) The ownership interest may be subject only to the restrictions on resale required under § 92.254(a); mortgages, deeds of trust, or other liens or instruments securing debt on the property as approved by the participating jurisdiction; or any other restrictions or encumbrances that do not impair the good and marketable nature of title to the ownership interest.


</P>
<P>(4) The participating jurisdiction must determine whether or not ownership or membership in a cooperative or mutual housing project constitutes homeownership under State law; however, if the cooperative or mutual housing project receives Low-Income Housing Credits (26 U.S.C. 42), the ownership or membership does not constitute homeownership.


</P>
<P><I>Household</I> means one or more persons occupying a housing unit. 


</P>
<P><I>Housing</I> includes manufactured housing and manufactured housing lots, permanent housing for disabled homeless persons, transitional housing, single-room occupancy housing, and group homes. Housing also includes elder cottage housing opportunity (ECHO) units that are small, free- standing, barrier-free, energy-efficient, removable, and designed to be installed adjacent to existing single family housing units. Housing does not include emergency shelters (including shelters for disaster victims) or facilities such as nursing homes, convalescent homes, hospitals, residential treatment facilities, correctional facilities, halfway houses, housing for students, or dormitories (including farmworker dormitories).


</P>
<P><I>Housing counseling</I> has the meaning given the term in 24 CFR 5.100.
</P>
<P><I>Insular areas</I> means Guam, the Northern Mariana Islands, the United States Virgin Islands, and American Samoa. 
</P>
<P><I>Jurisdiction</I> means a State or unit of general local government. 
</P>
<P><I>Live-in aide</I> has the same meaning given that term in 24 CFR 5.403.
</P>
<P><I>Low-income families</I> means families whose annual incomes do not exceed 80 percent of the median income for the area, as determined by HUD, with adjustments for smaller and larger families, except that HUD may establish income ceilings higher or lower than 80 percent of the median for the area on the basis of HUD findings that such variations are necessary because of prevailing levels of construction costs or fair market rents, or unusually high or low family incomes. An individual does not qualify as a low-income family if the individual is a student who is not eligible to receive Section 8 assistance under 24 CFR 5.612.
</P>
<P><I>Metropolitan city</I> has the meaning given the term in 24 CFR 570.3. 
</P>
<P><I>Neighborhood</I> means a geographic location designated in comprehensive plans, ordinances, or other local documents as a neighborhood, village, or similar geographical designation that is within the boundary but does not encompass the entire area of a unit of general local government; except that if the unit of general local government has a population under 25,000, the neighborhood may, but need not, encompass the entire area of a unit of general local government. 
</P>
<P><I>Participating jurisdiction</I> means a jurisdiction (as defined in this section) that has been so designated by HUD in accordance with § 92.105. 


</P>
<P><I>Period of affordability</I> means the period of time, as specified in §§ 92.252 and 92.254, that requirements under this part apply to HOME-assisted housing.


</P>
<P><I>Person with disabilities</I> means a household composed of one or more persons, at least one of whom is an adult, who has a disability. 
</P>
<P>(1) A person is considered to have a disability if the person has a physical, mental, or emotional impairment that: 
</P>
<P>(i) Is expected to be of long-continued and indefinite duration; 
</P>
<P>(ii) Substantially impedes his or her ability to live independently; and 
</P>
<P>(iii) Is of such a nature that such ability could be improved by more suitable housing conditions. 
</P>
<P>(2) A person will also be considered to have a disability if he or she has a developmental disability, which is a severe, chronic disability that: 
</P>
<P>(i) Is attributable to a mental or physical impairment or combination of mental and physical impairments; 
</P>
<P>(ii) Is manifested before the person attains age 22; 
</P>
<P>(iii) Is likely to continue indefinitely; 
</P>
<P>(iv) Results in substantial functional limitations in three or more of the following areas of major life activity: self-care, receptive and expressive language, learning, mobility, self-direction, capacity for independent living, and economic self-sufficiency; and 
</P>
<P>(v) Reflects the person's need for a combination and sequence of special, interdisciplinary, or generic care, treatment, or other services that are of lifelong or extended duration and are individually planned and coordinated. Notwithstanding the preceding provisions of this definition, the term “person with disabilities” includes two or more persons with disabilities living together, one or more such persons living with another person who is determined to be important to their care or well-being, and the surviving member or members of any household described in the first sentence of this definition who were living, in a unit assisted with HOME funds, with the deceased member of the household at the time of his or her death. 


</P>
<P><I>Program income</I> means gross income received by the participating jurisdiction, State recipient, or a subrecipient at any time, generated from the use of HOME funds or matching contributions. When program income is generated by housing that is only partially assisted with HOME funds or matching funds, the program income shall be the amount prorated to reflect the percentage of HOME funds invested in the project. Program income includes, but is not limited to, the following:


</P>
<P>(1) Proceeds from the disposition by sale or long-term lease of real property acquired, rehabilitated, or constructed with HOME funds or matching contributions; 


</P>
<P>(2) Gross income from the use or rental of real property, owned by the participating jurisdiction or State recipient that was acquired, rehabilitated, or constructed, with HOME funds or matching contributions, less costs incidental to generation of the income. <I>Program income</I> does not include gross income from the use, rental, or sale of real property received by the project owner or developer, unless all or a portion of the income must be paid to the participating jurisdiction, subrecipient, or State recipient, in which case, the amount that must be paid to the participating jurisdiction, subrecipient, or State recipient is program income;
</P>
<P>(3) Payments and repayments on grants, loans (<I>i.e.,</I> principal and interest), or investments made using HOME funds or matching contributions, including such payments and repayments made after the period of affordability;


</P>
<P>(4) Proceeds from the sale of loans made with HOME funds or matching contributions; 
</P>
<P>(5) Proceeds from the sale of obligations secured by loans made with HOME funds or matching contributions; 
</P>
<P>(6) Interest earned on program income pending its disposition; and 
</P>
<P>(7) Any other interest or return on the investment permitted under § 92.205(b) of HOME funds or matching contributions. 


</P>
<P><I>Project</I> means a site or sites together with any building (including a manufactured housing unit) or buildings located on the site(s) that are under common ownership, management, and financing and are to be assisted with HOME funds as a single undertaking under this part. The project includes all the activities associated with the site and building. For tenant-based rental assistance, project means assistance to one or more families. 
</P>
<P><I>Project completion</I> means that all necessary title transfer requirements and construction work have been performed; the project complies with the requirements of this part (including the property standards under § 92.251); the final drawdown of HOME funds has been disbursed for the project; and the project completion information has been entered into the disbursement and information system established by HUD, except that with respect to rental housing project completion, for the purposes of § 92.502(d) of this part, project completion occurs upon completion of construction and before occupancy. For tenant-based rental assistance, project completion means the final drawdown has been disbursed for the project.


</P>
<P><I>Reconstruction</I> means the rebuilding, on the same lot, of housing standing on a site at the time of project commitment, except that housing that was destroyed may be rebuilt on the same lot if HOME funds are committed within 12 months of the date of destruction. The number of housing units on the lot may not be decreased or increased as part of a reconstruction project, but the number of rooms per unit may be increased or decreased. Reconstruction also includes replacing an existing substandard unit of manufactured housing with a new or standard unit of manufactured housing. Reconstruction is rehabilitation for purposes of this part, except that the property standards for new construction in § 92.251(a) apply to all reconstruction projects.
</P>
<P><I>Single family housing</I> means a one-to four-unit residence, condominium unit, cooperative unit, combination of manufactured housing and lot, or manufactured housing lot.






</P>
<P><I>Single room occupancy (SRO) housing</I> means housing (consisting of single- room housing units) that is the primary residence of its occupant or occupants. The unit must contain either food preparation or sanitary facilities (and may contain both) if the project consists of new construction, conversion of nonresidential space, or reconstruction. For acquisition or rehabilitation of an existing residential structure or hotel, neither food preparation nor sanitary facilities are required to be in the unit. If the units do not contain sanitary facilities, the building must contain sanitary facilities that are shared by tenants. A project's designation as an SRO cannot be inconsistent with the building's zoning and building code classification.


</P>
<P><I>Small-scale housing</I> means a rental housing project of no more than four units or a homeownership project with no more than three rental units on the same site.


</P>
<P><I>State</I> means any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any agency or instrumentality thereof that is established pursuant to legislation and designated by the chief executive officer to act on behalf of the state with regard to the provisions of this part.


</P>
<P><I>State recipient</I> means a unit of general local government designated by a State participating jurisdiction to receive HOME funds to administer all or some of the State participating jurisdiction's HOME programs, own or develop affordable housing, provide homeownership assistance, or provide tenant-based rental assistance.




</P>
<P><I>Subrecipient</I> means a governmental entity or nonprofit organization selected by the participating jurisdiction to administer all or some of the participating jurisdiction's HOME programs to produce affordable housing, provide homeownership assistance, or provide tenant-based rental assistance. A governmental entity or nonprofit organization that receives HOME funds  as a developer or owner of a housing project is not a subrecipient. The participating jurisdiction's selection of a subrecipient is not subject to the procurement procedures and requirements.
</P>
<P><I>Tenant-based rental assistance</I> is a form of rental assistance in which the assisted tenant may move from a housing unit with a right to continued assistance. Tenant-based rental assistance under this part also includes security deposits for rental of housing units. 


</P>
<P><I>Transitional housing</I> means housing that: 
</P>
<P>(1) Is designed to provide housing and appropriate supportive services to persons, including (but not limited to) deinstitutionalized individuals with disabilities, homeless individuals with disabilities, and homeless families with children; and 
</P>
<P>(2) Has as its purpose facilitating the movement of individuals and families to independent living within a time period that is set by the participating jurisdiction or project owner before occupancy. 
</P>
<P><I>Unit of general local government</I> means a city, town, township, county, parish, village, or other general purpose political subdivision of a State; a consortium of such political subdivisions recognized by HUD in accordance with § 92.101; and any agency or instrumentality thereof that is established pursuant to legislation and designated by the chief executive to act on behalf of the jurisdiction with regard to provisions of this part. When a county is an urban county, the urban county is the unit of general local government for purposes of the HOME Investment Partnerships Program. 
</P>
<P><I>Urban county</I> has the meaning given the term in 24 CFR 570.3. 
</P>
<P><I>Very low-income families</I> means low- income families whose annual incomes do not exceed 50 percent of the median family income for the area, as determined by HUD with adjustments for smaller and larger families, except that HUD may establish income ceilings higher or lower than 50 percent of the median for the area on the basis of HUD findings that such variations are necessary because of prevailing levels of construction costs or fair market rents, or unusually high or low family incomes. An individual does not qualify as a very low-income family if the individual is a student who is not eligible to receive Section 8 assistance under 24 CFR 5.612.
</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 67 FR 61755, Oct. 1, 2002; 69 FR 16765, Mar. 30, 2004; 72 FR 16685, Apr. 4, 2007; 78 FR 44664, July 24, 2013; 80 FR 75934, Dec. 7, 2015; 81 FR 86952, Dec. 2, 2016; 81 FR 90657, Dec. 14, 2016; 88 FR 30496, May 11, 2023; 88 FR 9662, Feb. 14, 2023; 90 FR 863, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.3" NODE="24:1.1.1.1.41.1.63.3" TYPE="SECTION">
<HEAD>§ 92.3   Applicability of 2025 regulatory changes.</HEAD>
<P>This part applies to projects based on when an income determination is made or when the HOME funds for the project were committed, as applicable. Projects where the HOME funds were committed before a certain date may be subject to previous versions of this part. This section provides instruction regarding which version of this part applies.
</P>
<P>(a) <I>Effective date of this part as it exists on April 20, 2025.</I> Except as described in this section, this part, as it exists on April 20, 2025 is applicable to projects for which HOME funds are committed on or after April 20, 2025. A participating jurisdiction must perform income determinations in accordance with § 92.203 after April 20, 2025.


</P>
<P>(b) <I>One year compliance period.</I> Participating jurisdictions are permitted to choose to continue to comply with the requirements of this part as they existed on April 19, 2025 for commitments made on or before April 20, 2026.
</P>
<P>(c) <I>Delayed compliance date for income determinations.</I> Participating jurisdictions are permitted to continue to comply with the income determination requirements in accordance with § 92.203 that the participating jurisdiction was implementing on April 19, 2025 until February 5, 2026, or longer as determined by HUD.
</P>
<P>(d) <I>Applicability of this part as it exists on April 20, 2025</I> <I>to prior agreement</I>s. A participating jurisdiction may choose to amend its written agreements for funds committed prior to April 20, 2025 to conform to the requirements of this part, except that:
</P>
<P>(1)<I> Certain cost</I>s allowed to be reimbursable under <I>§ 92.206(d)(1) and (2), as effective April 20, 2025</I> may only be included in written agreements for projects if the participating jurisdiction committed the HOME funds for the project on or after April 20, 2025.
</P>
<P>(2) Requesting an increase in maximum per-unit subsidy in accordance with § 92.250(c) is only permitted for projects if the participating jurisdiction committed the HOME funds for the project on or after April 20, 2025.
</P>
<P>(3) Use of the revised dollar thresholds for the periods of affordability in §§ 92.252 and 92.254 is only permitted for projects if the participating jurisdiction committed the HOME funds for the project on or after April 20, 2025.
</P>
<P>(4) Tenant protections provided in § 92.253, including the tenancy addenda requirements in § 92.253(b) through (d), apply for rental housing projects if the participating jurisdiction committed the HOME funds for the project, entered into the rental assistance contract, or entered into an agreement to provide security deposit assistance on or after April 20, 2025.
</P>
<P>(5) The revisions to the roles of community housing development organizations in owning, developing, and sponsoring affordable housing in § 92.300 only apply if the participating jurisdiction committed the community housing development organization set-aside funds for the project on or after April 20, 2025.
</P>
<P>(e) The following table summarizes the information provided in this section:
</P>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Table 1 to Paragraph (<E T="01">e</E>)—Summary of Effective Dates and Compliance Deadlines
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">2025 Rule effective date
</TH><TH class="gpotbl_colhed" scope="col">April 20, 2025
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Applicability</TD><TD align="left" class="gpotbl_cell">Rule applies to projects for which HOME funds are committed on or after April 20, 2025.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Compliance Date</TD><TD align="left" class="gpotbl_cell">Participating jurisdictions must set compliance date: as early as April 20, 2025, and no later than April 20, 2026.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Exceptions for Income Determinations</TD><TD align="left" class="gpotbl_cell">Participating jurisdictions must set compliance date: as early as April 20, 2025, and no later than April 20, 2026.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Participating jurisdictions may continue to calculate income in accordance with the provisions that were being implemented by the participating jurisdiction on April 19, 2025 until compliance date set by the participating jurisdiction, or longer as determined by HUD.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Applicability Limitations</TD><TD align="left" class="gpotbl_cell">Listed provisions are not applicable to commitments made to projects prior to April 20, 2025. Participating jurisdictions may not amend written agreements of projects with commitments existing prior to April 20, 2025 to incorporate any of the following provisions:
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">§ 92.206(d)(1) and (2).
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">§ 92.250(c).
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">§§ 92.252 and 92.254.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">§ 92.253.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">§ 92.300.</TD></TR></TABLE></DIV></DIV>
<CITA TYPE="N">[90 FR 865, Jan. 6, 2025; 90 FR 16086, Apr. 17, 2025]




</CITA>
</DIV8>


<DIV8 N="§ 92.4" NODE="24:1.1.1.1.41.1.63.4" TYPE="SECTION">
<HEAD>§ 92.4   Waivers and suspension of requirements for disaster areas.</HEAD>
<P>HUD's authority for waiver of regulations and for the suspension of requirements to address damage in a Presidentially declared disaster area is described in 24 CFR 5.110 and in section 290 of the Act, respectively. 


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.1.1.1.41.2" TYPE="SUBPART">
<HEAD>Subpart B—Allocation Formula</HEAD>


<DIV8 N="§ 92.50" NODE="24:1.1.1.1.41.2.63.1" TYPE="SECTION">
<HEAD>§ 92.50   Formula allocation.</HEAD>
<P>(a) <I>Jurisdictions eligible for a formula allocation.</I> HUD will provide allocations of funds in amounts determined by the formula described in this section to units of general local governments that, as of the end of the previous fiscal year, are metropolitan cities, urban counties, or consortia approved under § 92.101; and States. 
</P>
<P>(b) <I>Amounts available for allocation; State and local share.</I> The amount of funds that are available for allocation by the formula under this section is equal to the balance of funds remaining after reserving amounts for insular areas, housing education and organizational support, other support for State and local housing strategies, and other purposes authorized by Congress, in accordance with the Act and appropriations. 


</P>
<P>(c) <I>Formula factors.</I> The formula for determining allocations uses the following factors. The first and sixth factors are weighted 0.1; the other four factors are weighted 0.2. 
</P>
<P>(1) Vacancy-adjusted rental units where the household head is at or below the poverty level. These rental units are multiplied by the ratio of the national rental vacancy rate over a jurisdiction's rental vacancy rate. 
</P>
<P>(2) Occupied rental units with at least one of four problems (overcrowding, incomplete kitchen facilities, incomplete plumbing, or high rent costs). <I>Overcrowding</I> is a condition that exists if there is more than one person per room occupying the unit. <I>Incomplete kitchen facilities</I> means the unit lacks a sink with running water, a range, or a refrigerator. <I>Incomplete plumbing</I> means the unit lacks hot and cold piped water, a flush toilet, or a bathtub or shower inside the unit for the exclusive use of the occupants of the unit. <I>High rent costs</I> occur when more than 30 percent of household income is used for rent. 


</P>
<P>(3) Rental units built before 1950 occupied by households below the poverty line. 


</P>
<P>(4) Rental units described in paragraph (c)(2) of this section multiplied by the ratio of the cost of producing housing for a jurisdiction divided by the national cost. 
</P>
<P>(5) Number of families at or below the poverty level. 
</P>
<P>(6) Population of a jurisdiction multiplied by a net per capita income (pci). To compute net pci for a jurisdiction or for the nation, the pci of a three person family at the poverty threshold is subtracted from the pci of the jurisdiction or of the nation. The index is constructed by dividing the national net pci by the net pci of a jurisdiction.
</P>
<P>(d) <I>Calculating formula allocations for units of general local government.</I> (1) Initial allocation amounts for units of general local government described in paragraph (a) of this section are determined by multiplying the sum of the shares of the six factors in paragraph (c) of this section by 60 percent of the amount available under paragraph (b) of this section for formula allocation. The shares are the ratio of the weighted factor for each jurisdiction over the corresponding factor for the total for all of these units of general local government. 
</P>
<P>(2) If any of the initial amounts for such units of general local government in Puerto Rico exceeds twice the national average, on a per rental unit basis, that amount is capped at twice the national average. 
</P>
<P>(3) To determine the maximum number of units of general local government that receive a formula allocation, only one jurisdiction (the unit of general local government with the smallest allocation of HOME funds) is dropped from the pool of eligible jurisdictions on each successive recalculation, except that jurisdictions that are participating jurisdictions (other than consortia that fail to renew the membership of all of their member jurisdictions) are not dropped. Then the amount of funds available for units of general local government is redistributed to all others. This recalculation/redistribution continues until all remaining units of general local government receive an allocation of $500,000 or more or are participating jurisdictions. Only units of general local government which receive an allocation of $500,000 or more under the formula or which are participating jurisdictions will be awarded an allocation. In fiscal years in which Congress appropriates less than $1.5 billion of HOME funds, $335,000 is substituted for $500,000. 
</P>
<P>(4) The allocation amounts determined under paragraph (d)(3) of this section are reduced by any amounts that are necessary to provide increased allocations to States that have no unit of general local government receiving a formula allocation (see paragraph (e)(4) of this section). These reductions are made on a <I>pro rata</I> basis, except that no unit of general local government allocation is reduced below $500,000 (or $335,000 in fiscal years in which Congress appropriates less than $1.5 billion of HOME funds) and no participating jurisdiction allocation which is below this amount is reduced.
</P>
<P>(e) <I>Calculating formula allocations for States.</I> (1) Forty percent of the funds available for allocation under paragraph (b) of this section are allocated to States. The allocation amounts for States are calculated by determining initial amounts for each State, based on the sum of the shares of the six factors. For 20 percent of the funds to be allocated to States, the shares are the ratio of the weighted factor for the entire State over the corresponding factor for the total for all States. For 80 percent of the funds to be allocated to States, the shares are the ratio of the weighted factor for all units of general local government within the State that do not receive a formula allocation over the corresponding factor for the total for all States. 
</P>
<P>(2) If the initial amounts for Puerto Rico (based on either or both the 80 percent of funds or 20 percent of funds calculation) exceed twice the national average, on a per rental unit basis, each amount that exceeds the national average is capped at twice the national average, and the resultant funds are reallocated to other States on a prorata basis. 
</P>
<P>(3) If the initial amounts when combined for any State are less than the $3,000,000, the allocation to that State is increased to the $3,000,000 and all other State allocations are reduced by an equal amount on a prorata basis, except that no State allocation is reduced below $3,000,000. 
</P>
<P>(4) The allocation amount for each State that has no unit of general local government within the State receiving an allocation under paragraph (d) of this section is increased by $500,000. Funds for this increase are derived from the funds available for units of general local government, in accordance with paragraph (d)(4) of this section. 
</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 28928, May 28, 1997; 67 FR 61755, Oct. 1, 2002; 90 FR 866, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV7 N="63" NODE="24:1.1.1.1.41.2.63" TYPE="SUBJGRP">
<HEAD>Insular Areas Program</HEAD>


<DIV8 N="§ 92.60" NODE="24:1.1.1.1.41.2.63.2" TYPE="SECTION">
<HEAD>§ 92.60   Allocation amounts for insular areas.</HEAD>
<P>(a) <I>Initial allocation amount for each insular area.</I> The initial allocation amount for each insular area is determined based upon the insular area's population and occupied rental units compared to all insular areas. 
</P>
<P>(b) <I>Threshold requirements.</I> The HUD Field Office shall review each insular area's progress on outstanding allocations made under this section, based on the insular area's performance report, the timeliness of close-outs, and compliance with fund management requirements and regulations, taking into consideration the size of the allocation and the degree and complexity of the program. If HUD determines from this review that the insular area does not have the capacity to administer effectively a new allocation, or a portion of a new allocation, in addition to allocations currently under administration, HUD may reduce the insular area's initial allocation amount. 
</P>
<P>(c) <I>Previous audit findings and outstanding monetary obligations.</I> HUD shall not make an allocation to an insular area that has either an outstanding audit finding for any HUD program, or an outstanding monetary obligation to HUD that is in arrears, or for which a repayment schedule has not been established. This restriction does not apply if the HUD Field Office finds that the insular area has made a good faith effort to clear the audit and, when there is an outstanding monetary obligation to HUD, the insular area has made a satisfactory arrangement for repayment of the funds due HUD and payments are current. 
</P>
<P>(d) <I>Increases to the initial allocation amount.</I> If funds reserved for the insular areas are available because HUD has decreased the amount for one or more insular areas in accordance with paragraphs (b) or (c) of this section, or for any other reason, HUD may increase the allocation amount for one or more of the remaining insular areas based upon the insular area's performance in committing HOME funds within the 24 month deadline, producing housing units described in its program description, and meeting HOME program requirements. Funds that become available but which are not used to increase the allocation amount for one or more of the remaining insular areas will be reallocated in accordance with § 92.66. 
</P>
<P>(e) <I>Notice of allocation amounts.</I> HUD will notify each insular area, in writing, as to the amount of its HOME allocation. 


</P>
</DIV8>


<DIV8 N="§ 92.61" NODE="24:1.1.1.1.41.2.63.3" TYPE="SECTION">
<HEAD>§ 92.61   Program description.</HEAD>
<P>(a) <I>Submission requirement.</I> Not later than 90 days after HUD notifies the insular area of the amount of its allocation, the insular area must submit a program description and certifications to HUD. 
</P>
<P>(b) <I>Content of program description.</I> The program description must contain the following: 
</P>
<P>(1) An executed Standard Form 424; 
</P>
<P>(2) The estimated use of HOME funds and a description of projects and eligible activities, including number of units to be assisted, estimated costs, and tenure type (rental or owner occupied) and, for tenant assistance, number of households to be assisted; 
</P>
<P>(3) A timetable for the implementation of the projects or eligible activities; 
</P>
<P>(4) If the insular area intends to use HOME funds for homebuyers, the guidelines for resale or recapture as required in § 92.254(a)(5); 
</P>
<P>(5) If the insular area intends to use HOME funds for tenant-based rental assistance, a description of how the program will be administered consistent with the minimum guidelines described in § 92.209; 
</P>
<P>(6) If an insular area intends to use other forms of investment not described in § 92.205(b), a description of the other forms of investment; 
</P>
<P>(7) A statement of the policy and procedures to be followed by the insular area to meet the requirements for affirmative marketing, and establishing and overseeing a minority and women business outreach program under § 92.351; 
</P>
<P>(8) If the insular intends to use HOME funds for refinancing along with rehabilitation, the insular area's guidelines described in § 92.206(b). 
</P>
<P>(c) <I>Certifications.</I> The following certifications must accompany the program description: 
</P>
<P>(1) A certification that, before committing funds to a project, the insular area will evaluate the project in accordance with guidelines that it adopts for this purpose and will not invest any more HOME funds in combination with other governmental assistance than is necessary to provide affordable housing; 
</P>
<P>(2) If the insular area intends to provide tenant-based rental assistance, the certification required by § 92.209; 
</P>
<P>(3) A certification that the submission of the program description is authorized under applicable law and the insular area possesses the legal authority to carry out the HOME Investment Partnerships Program, in accordance with the HOME regulations; 
</P>
<P>(4) A certification that it will comply with the acquisition and relocation requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended, implementing regulations at 49 CFR part 24 and the requirements of § 92.353; 
</P>
<P>(5) A certification that the insular area will use HOME funds in compliance with all requirements of this part; 
</P>
<P>(6) The certification required with regard to lobbying required by 24 CFR part 87, together with disclosure forms, if required by 24 CFR part 87. 
</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 72 FR 73493, Dec. 27, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 92.62" NODE="24:1.1.1.1.41.2.63.4" TYPE="SECTION">
<HEAD>§ 92.62   Review of program description and certifications.</HEAD>
<P>(a) <I>Review of program description.</I> The responsible HUD Field Office will review an insular area's program description and will approve the description unless the insular area has failed to submit information sufficient to allow HUD to make the necessary determinations required for § 92.61 (b)(4), (b)(6), and (b)(7), or the guidelines under (b)(8) are not satisfactory to HUD, if applicable; or if the level of proposed projects or eligible activities is not within the management capability demonstrated by past performance in housing and community development programs. If the insular area has not submitted information on § 92.61 (b)(4), (b)(6), and (b)(7), or the guidelines under (b)(8) are not satisfactory to HUD, if applicable; or if the level of proposed projects or eligible activities is not within the management capability demonstrated by past performance in housing and community development programs, the insular area may be required to furnish such further information or assurances as HUD may consider necessary to find the program description and certifications satisfactory. The HUD Field Office shall work with the insular area to achieve a complete and satisfactory program description. 
</P>
<P>(b) <I>Review period.</I> Within thirty days of receipt of the program description, the HUD Field Office will notify the insular area if determinations cannot be made under § 92.61 (b)(4), (b)(6), (b)(7), or (b)(8) with the supporting information submitted, or if the proposed projects or activities are beyond currently demonstrated capability. The insular area will have a reasonable period of time, agreed upon mutually, to submit the necessary supporting information or to revise the proposed projects or activities in its program description. 
</P>
<P>(c) <I>HOME Investment Partnership Agreement.</I> After HUD Field Office approval under this section, a HOME funds allocation is made by HUD execution of the agreement, subject to execution by the insular area. The funds are obligated on the date HUD notifies the insular area of HUD's execution of the agreement. 


</P>
</DIV8>


<DIV8 N="§ 92.63" NODE="24:1.1.1.1.41.2.63.5" TYPE="SECTION">
<HEAD>§ 92.63   Amendments to program description.</HEAD>
<P>An insular area must submit to HUD for approval any substantial change in its HUD-approved program description that it makes and must document any other changes in its file. A substantial change involves a change in the guidelines for resale or recapture (§ 92.61(b)(4)), other forms of investment (§ 92.61(b)(6)), minority and women business outreach program (§ 92.61(b)(7)) or refinancing (§ 92.61(b)(8)); or a change in the tenure type of the project or activities; or a funding increase to a project or activity of $100,000 or 50% (whichever is greater). The HUD Field Office will notify the insular area if its program description, as amended, does not permit determinations to be made under § 92.61 (b)(4), (b)(6), (b)(7), or (b)(8), or if the level of proposed projects or eligible activities is not within the management capability demonstrated by past performance in housing and community development programs, within 30 days of receipt. The insular area will have a reasonable period of time, agreed upon mutually, to submit the necessary supporting information to revise the proposed projects or activities in its program description. 


</P>
</DIV8>


<DIV8 N="§ 92.64" NODE="24:1.1.1.1.41.2.63.6" TYPE="SECTION">
<HEAD>§ 92.64   Applicability of requirements to insular areas.</HEAD>
<P>(a) Insular areas are subject to the same requirements in subpart E (Program Requirements), subpart F (Project Requirements), subpart K (Program Administration), and subpart L (Performance Reviews and Sanctions) of this part as participating jurisdictions, except for the following: 
</P>
<P>(1) Subpart E (Program Requirements): Administrative costs, as described in § 92.207, are eligible costs for insular areas in an amount not to exceed 15 percent of the HOME funds provided to the insular area. The matching contribution requirements in this part do not apply. 
</P>
<P>(2) Subpart K (Program Administration): 
</P>
<P>(i) Section 92.500 (The HOME Investment Trust Fund) does not apply. HUD will establish a HOME account in the United States Treasury for each insular area and the HOME funds must be used for approved activities. A local account must be established for program income. Each insular area may use either a separate local HOME account or a subsidiary account within its general fund (or other appropriate fund) as the local HOME account. HUD will recapture HOME funds in the HOME Treasury account by the amount of: 
</P>
<P>(A) Any funds that are not committed within 24 months after the last day of the month in which HUD notifies the insular area of HUD's execution of the HOME Investment Partnership Agreement; 
</P>
<P>(B) Any funds that are not expended within five years after the last day of the month in which HUD notifies the insular area of HUD's execution of the HOME Investment Partnership Agreement; and 
</P>
<P>(C) Any penalties assessed by HUD under § 92.552. 
</P>
<P>(ii) Section 92.502 (Program disbursement and information system) applies, except that references to the HOME Investment Trust Fund mean HOME account. In addition, § 92.502(c) does not apply, and instead compliance with Treasury Circular No. 1075 (31 CFR part 205) and 2 CFR 200.305 is required. 
</P>
<P>(iii) Section 92.503 (Program income, repayments, and recaptured funds) applies, except that the funds may be retained provided the funds are used for eligible activities in accordance with the requirements of this section. 
</P>
<P>(3) Section 92.504 (Participating jurisdiction responsibilities; written agreements; on-site inspections) applies, except that the written agreement must ensure compliance with the requirements in this section. 
</P>
<P>(4) Section 92.508 (Recordkeeping) applies with respect to the records that relate to the requirements of this section. 
</P>
<P>(5) Section 92.509 (Performance reports) applies, except that a performance report is required for the fiscal year allocation only after completion of the approved projects funded by the allocation. 
</P>
<P>(6) Subpart L (Performance Reviews and Sanctions): Section 92.552 does not apply. Instead, § 92.65 applies. 
</P>
<P>(b) The requirements of subpart H (Other Federal Requirements) of this part apply as follows: § 92.357 Executive Order 12372 applies as written, and the requirements of the remaining sections which apply to participating jurisdictions are applicable to the insular areas. 
</P>
<P>(c) Subpart B (Allocation Formula), subpart C (Consortia; Designation and Revocation as a Participating Jurisdiction), subpart D (Submission Requirements), and subpart G (Community Housing Development Organizations) of this part do not apply. 
</P>
<P>(d) Subpart A (General) applies, except that for the definitions of <I>commitment</I>, <I>program income</I>, and <I>subrecipient</I>, “participating jurisdiction” means “insular area.” 
</P>
<CITA TYPE="N">[69 FR 15673, Mar. 26, 2004, as amended at 80 FR 75935, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 92.65" NODE="24:1.1.1.1.41.2.63.7" TYPE="SECTION">
<HEAD>§ 92.65   Funding sanctions.</HEAD>
<P>Following notice and opportunity for informal consultation, HUD may withhold, reduce or terminate the assistance where any corrective or remedial actions taken under § 92.551 fail to remedy an insular area's performance deficiencies, and the deficiencies are sufficiently substantial, in the judgment of HUD, to warrant sanctions. 


</P>
</DIV8>


<DIV8 N="§ 92.66" NODE="24:1.1.1.1.41.2.63.8" TYPE="SECTION">
<HEAD>§ 92.66   Reallocation.</HEAD>
<P>Any HOME funds which are reduced or recaptured from an insular area's allocation and which are not used to increase the allocation amount for one or more of the remaining insular areas as provided in § 92.60 of this part, will be reallocated by HUD to the States in accordance with the requirements in subpart J for reallocating funds initially allocated to a State. 


</P>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="C" NODE="24:1.1.1.1.41.3" TYPE="SUBPART">
<HEAD>Subpart C—Consortia; Designation and Revocation of Designation as a Participating Jurisdiction</HEAD>


<DIV8 N="§ 92.100" NODE="24:1.1.1.1.41.3.64.1" TYPE="SECTION">
<HEAD>§ 92.100   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 92.101" NODE="24:1.1.1.1.41.3.64.2" TYPE="SECTION">
<HEAD>§ 92.101   Consortia.</HEAD>
<P>(a) A consortium of geographically contiguous units of general local government is a unit of general local government for purposes of this part if the requirements of this section are met. A unit of general local government separated by a body of water that is only accessible by the public through a permanent means other than a connecting road, bridge, railway, or highway may be considered geographically contiguous if the consortium demonstrates that the unit of general local government separated by the body of water is part of the same housing market and local commuting area as one or more members of the consortium. A local commuting area is the geographic area that encompasses neighborhoods where people live and are reasonably expected to routinely travel back and forth to a common employment hub, population center, or worksite.


</P>
<P>(1) One or more members of a proposed consortium or an existing consortium whose consortium qualification terminates at the end of the fiscal year, must provide written notification to the HUD Field Office of its intent to participate as a consortium in the HOME Program for the following fiscal year. HUD shall establish the deadline for this submission. 
</P>
<P>(2) The proposed consortium must provide, at such time and in a manner and form prescribed by HUD, the qualification documents, which will include submission of: 
</P>
<P>(i) A written certification by the State that the consortium will direct its activities to alleviation of housing problems within the State; and 
</P>
<P>(ii) Documentation which demonstrates that the consortium has executed one legally binding cooperation agreement among its members authorizing one member unit of general local government to act in a representative capacity for all member units of general local government for the purposes of this part and providing that the representative member assumes overall responsibility for ensuring that the consortium's HOME Program is carried out in compliance with the requirements of this part. 
</P>
<P>(3) Before the end of the fiscal year in which the notice of intent and documentation are submitted, HUD must determine that a proposed consortium has sufficient authority and administrative capability to carry out the purposes of this part on behalf of its member jurisdictions. HUD will endeavor to make its determination as quickly as practicable after receiving the consortium's documentation in order to provide the consortium an opportunity to correct its submission, if necessary. If the submission is deficient, HUD will work with the consortium to resolve the issue, but will not delay the formula allocations. HUD, at its discretion, may review the performance of an existing consortium that wishes to requalify to determine whether it continues to have sufficient authority and administrative capacity to successfully administer the program. 
</P>
<P>(b) A metropolitan city or an urban county may be a member of a consortium. A unit of general local government that is included in an urban county may be part of a consortium, only if the urban county joins the consortium. The included local government cannot join the consortium except through participation in the urban county. 
</P>
<P>(c) A non-urban county may be a member of a consortium. However, the county cannot on its own include the whole county in the consortium. A unit of local government located within the non-urban county that wishes to participate as a member of the consortium must sign the HOME consortium agreement. 




</P>
<P>(d) If the representative unit of general local government distributes HOME funds to member units of general local government, the representative unit is responsible for applying to the member units of general local government the same requirements as are applicable to subrecipients, including the written agreement requirements in § 92.504(c)(2).




</P>
<P>(e) The consortium's qualification as a unit of general local government continues for a period of three successive Federal fiscal years, or until HUD revokes its designation as a participating jurisdiction, or until an urban county member fails to requalify under the CDBG program as an urban county for a fiscal year included in the consortium's qualification period, or the consortium fails to receive a HOME allocation for the first Federal fiscal year of the consortium's qualification period and does not request to be considered to receive a HOME allocation in each of the subsequent two years. However, if a member urban county's three year CDBG qualification cycle is not the same as the consortium, the consortium may elect a shorter qualification period than three years to synchronize with the urban county's qualification period. During the period of qualification, additional units of general local government may join the consortium, but no included unit of general local government may withdraw from the consortium. See 24 CFR part 91, subpart E, for consolidated plan requirements for consortia, including the requirement that all members of the consortia must be on the same program year. 
</P>
<P>(f) The consortium agreement may, at the option of its member units of general local government, contain a provision that authorizes automatic renewals for the successive qualification period of three Federal fiscal years. The provision authorizing automatic renewal must require the lead consortium member to give the consortium members written notice of their right to elect not to continue participation for the new qualification period.


</P>
<P>(g) If a consortium changes its representative unit of general local government but retains the same membership, the consortium shall still be considered the same unit of general local government for purposes of this part. If the representative unit of general local government changes and the composition of the consortium changes, either by adding or removing individual members, then the consortium shall be a new unit of general local government for purposes of this part and shall be required to comply with all applicable consolidated plan requirements in 24 CFR part 91.


</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 67 FR 61756, Oct. 1, 2002; 90 FR 866, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.102" NODE="24:1.1.1.1.41.3.64.3" TYPE="SECTION">
<HEAD>§ 92.102   Participation threshold amount.</HEAD>
<P>(a) To be eligible to become a participating jurisdiction, a unit of general local government must have a formula allocation under § 92.50 that is equal to or greater than $750,000; or 
</P>
<P>(b) If a unit of general local government's formula allocation is less than $750,000, HUD must find: 
</P>
<P>(1) The unit of general local government has a local PHA and has demonstrated a capacity to carry out the provisions of this part, as evidenced by satisfactory performance under one or more HUD-administered programs that provide assistance for activities comparable to the eligible activities under this part; and 
</P>
<P>(2) The State has authorized HUD to transfer to the unit of general local government a portion of the State's allocation or the State, the unit of general local government, or both, has made available its own resources such that the sum of the amounts transferred or made available are equal to or greater than the difference between the unit of general local government's formula allocation and $750,000. 
</P>
<P>(c) In fiscal years in which Congress appropriates less than $1.5 billion for this part, $500,000 is substituted for $750,000 each time it appears in this section. 


</P>
</DIV8>


<DIV8 N="§ 92.103" NODE="24:1.1.1.1.41.3.64.4" TYPE="SECTION">
<HEAD>§ 92.103   Notification of intent to participate.</HEAD>
<P>(a) Not later than 30 days after receiving notice of its formula allocation amount, a jurisdiction must notify HUD in writing of its intention to become a participating jurisdiction. 
</P>
<P>(b) A unit of general local government that has a formula allocation of less than $750,000, or less than $500,000 in fiscal years in which Congress appropriates less than $1.5 billion for this part, must submit, with its notice, one or more of the following, as appropriate, as evidence that it has met the threshold allocation requirements in § 92.102(b): 
</P>
<P>(1) Authorization from the State to transfer a portion of its allocation to the unit of general local government; 
</P>
<P>(2) A letter from the governor or designee indicating that the required funds have been approved and budgeted for the unit of general local government; 
</P>
<P>(3) A letter from the chief executive officer of the unit of general local government indicating that the required funds have been approved and budgeted. 


</P>
</DIV8>


<DIV8 N="§ 92.104" NODE="24:1.1.1.1.41.3.64.5" TYPE="SECTION">
<HEAD>§ 92.104   Submission of a consolidated plan.</HEAD>
<P>A jurisdiction that has not submitted a consolidated plan to HUD must submit to HUD, not later than 90 calendar days after providing notification under §  92.103, a consolidated plan in accordance with 24 CFR part 91.
</P>
<CITA TYPE="N">[85 FR 47910, Aug. 7, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 92.105" NODE="24:1.1.1.1.41.3.64.6" TYPE="SECTION">
<HEAD>§ 92.105   Designation as a participating jurisdiction.</HEAD>
<P>When a jurisdiction has complied with the requirements of §§ 92.102 through 92.104 and HUD has approved the jurisdiction's consolidated plan in accordance with 24 CFR part 91, HUD will designate the jurisdiction as a participating jurisdiction. 


</P>
</DIV8>


<DIV8 N="§ 92.106" NODE="24:1.1.1.1.41.3.64.7" TYPE="SECTION">
<HEAD>§ 92.106   Continuous designation as a participating jurisdiction.</HEAD>
<P>Once a State or unit of general local government is designated a participating jurisdiction, it remains a participating jurisdiction for subsequent fiscal years and the requirements of §§ 92.102 through 92.105 do not apply, unless HUD revokes the designation in accordance with § 92.107. 


</P>
</DIV8>


<DIV8 N="§ 92.107" NODE="24:1.1.1.1.41.3.64.8" TYPE="SECTION">
<HEAD>§ 92.107   Revocation of designation as a participating jurisdiction.</HEAD>
<P>HUD may revoke a jurisdiction's designation as a participating jurisdiction if: 
</P>
<P>(a) HUD finds, after reasonable notice and opportunity for hearing as provided in § 92.552(b) that the jurisdiction is unwilling or unable to carry out the provisions of this part, including failure to meet matching contribution requirements; or 
</P>
<P>(b) The jurisdiction's formula allocation falls below $750,000 (or below $500,000 in fiscal years in which Congress appropriates less than $1.5 billion for this part) for three consecutive years, below $625,000 (or below $410,000 in fiscal years in which Congress appropriates less than $1.5 billion for this part) for two consecutive years, or the jurisdiction does not receive a formula allocation in any one year. 
</P>
<P>(c) When HUD revokes a participating jurisdiction's designation as a participating jurisdiction, HUD will reallocate any remaining funds in the jurisdiction's HOME Investment Trust Fund established under § 92.500 in accordance with § 92.451. 


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:1.1.1.1.41.4" TYPE="SUBPART">
<HEAD>Subpart D—Submission Requirements</HEAD>


<DIV8 N="§ 92.150" NODE="24:1.1.1.1.41.4.64.1" TYPE="SECTION">
<HEAD>§ 92.150   Submission requirements.</HEAD>
<P>In order to receive its HOME allocation, a participating jurisdiction must submit a consolidated plan in accordance with 24 CFR part 91. That part includes requirements for the content of the consolidated plan, the process of developing the consolidated plan, including citizen participation, the submission date, HUD approval, and amendments. 


</P>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:1.1.1.1.41.5" TYPE="SUBPART">
<HEAD>Subpart E—Program Requirements</HEAD>


<DIV8 N="§ 92.200" NODE="24:1.1.1.1.41.5.64.1" TYPE="SECTION">
<HEAD>§ 92.200   Private-public partnership.</HEAD>
<P>Each participating jurisdiction must make all reasonable efforts to maximize participation by the private sector in accordance with section 221 of the Act. 


</P>
</DIV8>


<DIV8 N="§ 92.201" NODE="24:1.1.1.1.41.5.64.2" TYPE="SECTION">
<HEAD>§ 92.201   Distribution of assistance.</HEAD>
<P>(a) <I>Local.</I> (1) Each local participating jurisdiction must, insofar as is feasible, distribute HOME funds geographically within its boundaries and among different categories of housing need, according to the priorities of housing need identified in its approved consolidated plan. 


</P>
<P>(2) The participating jurisdiction may only invest its HOME funds in eligible projects within its boundaries, or in jointly funded projects within the boundaries of contiguous local jurisdictions which serve residents from both jurisdictions. For a project to be jointly funded, both jurisdictions must make a financial contribution to the project. A jurisdiction's financial contribution may take the form of a grant or loan (including a loan of funds that comes from other federal sources and that are in the jurisdiction's control, such as CDBG program funds) or relief of a significant tax or fee (such as waiver of impact fees, property taxes, or other taxes or fees customarily imposed on projects within the jurisdiction). A participating jurisdiction may not commit HOME funds to a project outside its jurisdiction and within the boundaries of a contiguous local jurisdiction until it has secured the financial contribution of the jurisdiction in which the project is located.


</P>
<P>(b) <I>State.</I> (1) Each State participating jurisdiction is responsible for distributing HOME funds throughout the State according to the State's assessment of the geographical distribution of the housing needs within the State, as identified in the State's approved consolidated plan. The State must distribute HOME funds to rural areas in amounts that take into account the non-metropolitan share of the State's total population and objective measures of rural housing need, such as poverty and substandard housing, as set forth in the State's approved consolidated plan. To the extent the need is within the boundaries of a participating unit of general local government, the State and the unit of general local government shall coordinate activities to address that need. 


</P>
<P>(2) A State may carry out its own HOME program without active participation of units of general local government or may distribute HOME funds to units of general local government to carry out HOME programs in which both the State and all or some of the units of general local government perform specified program functions. 


</P>
<P>(3)(i) A State that uses State recipients to perform program functions shall require that the State recipients use HOME funds in accordance with the requirements of this part and other applicable laws. The State may require the State recipient to comply with requirements established by the State or may permit the State recipient to establish its own requirements to comply with this part. 


</P>
<P>(ii) The State shall conduct such reviews and audit of its State recipients as may be necessary or appropriate to determine whether the State recipient has committed and expended the HOME funds in the United States Treasury account as required by § 92.500, and has met the requirements of this part, particularly eligible activities, income targeting, affordability, and matching contribution requirements. 
</P>
<P>(4) A State and local participating jurisdiction may jointly fund a project within the boundaries of the local participating jurisdiction. The State may provide the HOME funds to the project or it may provide the HOME funds to the local participating jurisdiction to fund the project. 
</P>
<P>(5) A State may fund projects on Indian reservations located within the State provided that the State includes Indian reservations in its consolidated plan. 
</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 78 FR 44666, July 24, 2013; 90 FR 866, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.202" NODE="24:1.1.1.1.41.5.64.3" TYPE="SECTION">
<HEAD>§ 92.202   Site and neighborhood standards.</HEAD>
<P>(a) <I>General.</I> A participating jurisdiction must administer its HOME program in a manner that provides housing that is suitable from the standpoint of facilitating and furthering full compliance with the applicable provisions of title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d—2000d-4), the Fair Housing Act (42 U.S.C. 3601 <I>et seq.,</I> E.O. 11063 (3 CFR, 1959-1963 Comp., p. 652), and HUD regulations issued pursuant thereto; and promotes greater choice of housing opportunities. 
</P>
<P>(b) <I>New rental housing.</I> In carrying out the site and neighborhood requirements with respect to new construction of rental housing, a participating jurisdiction is responsible for making the determination that proposed sites for new construction meet the requirements in 24 CFR 983.55(e)(2) and (3).
</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 28928, May 28, 1997; 78 FR 44666, July 24, 2013; 89 FR 38290, May 7, 2024] 


</CITA>
</DIV8>


<DIV8 N="§ 92.203" NODE="24:1.1.1.1.41.5.64.4" TYPE="SECTION">
<HEAD>§ 92.203   Income determinations.</HEAD>
<P>(a) <I>Income eligibility.</I> To determine a family is income eligible, the participating jurisdiction must determine the family's income as follows:




</P>
<P>(1) If a family is applying for or living in a HOME-assisted rental unit, and the unit is assisted by a Federal or State project-based rental subsidy program, then a participating jurisdiction may accept the public housing agency, owner, or rental subsidy provider's determination of the family's annual income and adjusted income under that program's rules.


</P>
<P>(2) If a family is applying for or living in a HOME-assisted rental unit, and the family is assisted by a Federal tenant-based rental assistance program (<I>e.g.,</I> housing choice vouchers, etc.), then a participating jurisdiction may accept the rental assistance provider's determination of the family's annual income and adjusted income under that program's rules.


</P>
<P>(3) If a family is applying, renewing, or entering into a new rental assistance contract for tenant-based rental assistance pursuant to § 92.209, or applying for or living in a HOME-assisted rental unit in accordance with § 92.252, and the family is assisted by a form of Federal, State, or local public assistance (<I>e.g.,</I> TANF, Medicaid, LIHTC, local rental subsidy programs, etc.) which examines the annual income of the family each year, then a participating jurisdiction may accept a written statement from a Federal or non-Federal entity administering the assistance. The statement must indicate the tenant's family size and state the amount of the family's annual income. When accepting the statement from a government administrator, the participating jurisdiction must still adjust income in accordance with paragraph (f) of this section. The statement must be for an income determination made within the previous 12-month period.


</P>
<P>(4) In all other cases, the participating jurisdiction must calculate annual income in accordance with paragraphs (b) through (e) of this section and calculate adjusted income in accordance with paragraph (f) of this section.


</P>
<P>(b) <I>Determining and documenting annual income.</I> (1) For families who are tenants in HOME-assisted housing and not receiving HOME tenant-based rental assistance, the participating jurisdiction must initially determine annual income using the method in paragraph (b)(1)(i) of this section. For subsequent income determinations during the period of affordability, the participating jurisdiction may use one of the following two methods in accordance with § 92.252(g):


</P>
<P>(i) Examine at least 2 months of source documents evidencing annual income (<I>e.g.,</I> wage statement, interest statement, unemployment compensation statement) for the family.


</P>
<P>(ii) Obtain from the family a written statement or, where needed due to disability, a statement in another format, of the amount of the family's annual income and family size, along with a certification that the information is complete and accurate. The certification must state that the family will provide source documents upon request. If there is evidence that a tenant's statement and certification provided in accordance with this paragraph (b)(1)(ii) failed to completely and accurately state information about the family's size or income, a tenant's income must be re-examined in accordance with paragraph (b)(1)(i) of this section.








</P>
<P>(2) For families applying for HOME homeownership activities (<I>i.e.,</I> homeowners receiving rehabilitation assistance, homebuyers), the participating jurisdiction must determine annual income by examining at least 2 months of source documents evidencing annual income (<I>e.g.,</I> wage statement, interest statement, unemployment compensation statement) for the family.




</P>
<P>(3) For families applying for or receiving tenant-based rental assistance, the participating jurisdiction may determine annual income for the family in accordance with either paragraph (a)(3) or (b)(1)(i) of this section, as applicable. Income must be calculated at the times described in § 92.209(e)(3).


</P>
<P>(c) <I>Definitions of “annual income.”</I> When determining whether a family is income eligible, the participating jurisdiction must use one of the following two definitions of “annual income”:
</P>
<P>(1) Annual income as defined at 24 CFR 5.609(a) and (b) (except when determining the income of a homeowner for an owner-occupied rehabilitation project, the value of the homeowner's principal residence may be excluded from the calculation of net family assets, as defined in § 5.603 of this title); or


</P>
<P>(2) Adjusted gross income as defined for purposes of reporting under Internal Revenue Service (IRS) Form 1040 series for individual Federal annual income tax purposes.




</P>
<P>(d) <I>Use of income definitions.</I> A participating jurisdiction may use either of the definitions of “annual income” in paragraph (c) of this section, however, the participating jurisdiction may use only one definition of “annual income” for each HOME-assisted program (<I>e.g.,</I> homeownership assistance program) that it administers and only one definition for each rental housing project. For rental housing projects containing units assisted by a Federal or State project-based rental subsidy program or tenants receiving Federal tenant-based rental assistance, where a participating jurisdiction is accepting a public housing agency, owner, or rental assistance provider's determination of annual and adjusted income, the participating jurisdiction must calculate annual income in accordance with paragraph (c)(1) of this section so that only one definition of annual income is used in the rental housing project.


</P>
<P>(e) <I>Determining family composition and projecting income.</I> (1) The participating jurisdiction must calculate the annual income of the family by projecting the prevailing rate of income of the family at the time the participating jurisdiction determines that the family is income eligible. Annual income includes income from all persons in the household, except live-in aides, foster children, and foster adults. Income or asset enhancement derived from the HOME-assisted project shall not be considered in calculating annual income. Families may use the certification process in 24 CFR 5.618 to certify that their net family assets are below the threshold for imputing income used in 24 CFR 5.609(a)(2), as applicable. Families using the certification process in 24 CFR 5.618 that are homeowners applying for an owner-occupied rehabilitation project may also exclude the value of the homeowner's principal residence from the calculation of their Net Family Assets for purposes of the certification. For families living in HOME-assisted rental housing units, any rental assistance provided to the family under a Federal tenant-based rental assistance program or any Federal or State project-based rental subsidy provided to the HOME rental housing unit shall not be counted as tenant income for purposes of determining annual income.


</P>
<P>(2) The participating jurisdiction is not required to redetermine the family's income eligibility at the time the HOME assistance (<I>i.e.,</I> homeownership assistance and tenant-based rental assistance) is provided, unless more than six months has elapsed since the participating jurisdiction determined that the family is income eligible.




</P>
<P>(3) The participating jurisdiction must follow the requirements in 24 CFR 5.617 when making subsequent income determinations of persons with disabilities who are tenants in HOME-assisted rental housing or who receive HOME tenant-based rental assistance. This paragraph (e)(3) will lapse on January 1, 2026.


</P>
<P>(f) <I>Determining Adjusted Income.</I> (1) The three cases where a participating jurisdiction must calculate a tenant's adjusted income are as follows:


</P>
<P>(i) A participating jurisdiction must calculate the adjusted income of a family receiving tenant-based rental assistance to determine the amount of assistance in accordance with § 92.209(h). To calculate the family's adjusted income for a family in tenant-based rental assistance, the participating jurisdiction must apply the deductions in 24 CFR 5.611(a) and may choose to grant financial hardship exemptions in accordance with the process described in 24 CFR 5.611(c) through (e).


</P>
<P>(ii) A participating jurisdiction must calculate a tenant's adjusted income if the tenant is living in a Low HOME Rent unit and is subject to the provisions of § 92.252(a)(2)(ii). To calculate a family's adjusted income to determine the Low HOME Rent in accordance with § 92.252(a)(2)(ii), a participating jurisdiction must apply the deductions in 24 CFR 5.611(a) and may choose to grant financial hardship exemptions in accordance with the process described in 24 CFR 5.611(c) through (e).


</P>
<P>(iii) A participating jurisdiction must calculate a tenant's adjusted income if the tenant is over-income, and rent must be recalculated in accordance with § 92.252(h)(2). To calculate the family's adjusted income for an over-income family, the participating jurisdiction must apply the deductions in 24 CFR 5.611(a).


</P>
<P>(2) If a unit is assisted by a Federal or State project-based rental subsidy program, then a participating jurisdiction may accept the public housing agency, owner, or rental subsidy provider's determination of the family's adjusted income under that program's rules.




</P>
<CITA TYPE="N">[88 FR 9662, Feb. 14, 2023, as amended at 90 FR 866, Jan. 6, 2025]




</CITA>
</DIV8>


<DIV8 N="§ 92.204" NODE="24:1.1.1.1.41.5.64.5" TYPE="SECTION">
<HEAD>§ 92.204   Applicability of requirements to entities that receive a reallocation of HOME funds, other than participating jurisdictions.</HEAD>
<P>(a) Jurisdictions other than participating jurisdictions and community housing development organizations receiving competitive reallocations from HUD are subject to the same requirements in subpart E (Program Requirements), subpart F (Project Requirements), subpart K (Program Administration), and subpart L (Performance Reviews and Sanctions) of this part as participating jurisdictions, except for the following: 
</P>
<P>(1) Subpart E (Program Requirements): the matching contribution requirements in § 92.218 through § 92.221 do not apply. 
</P>
<P>(2) Subpart K (Program Administration): 
</P>
<P>(i) Section 92.500 (The HOME Investment Trust Fund) does not apply. HUD will establish a HOME account in the United States Treasury and the HOME funds must be used for approved activities. A local account must be established for program income. HUD will recapture HOME funds in the HOME Treasury account by the amount of: 
</P>
<P>(A) Any funds that are not committed within 24 months after the last day of the month in which HUD notifies the entity of HUD's execution of the HOME Investment Partnership Agreement; 
</P>
<P>(B) Any funds that are not expended within five years after the last day of the month in which HUD notifies the entity of HUD's execution of the HOME Investment Partnership Agreement; and 
</P>
<P>(C) Any penalties assessed by HUD under § 92.552. 
</P>
<P>(ii) Section 92.502 (Program disbursement and information system) applies, except that references to the HOME Investment Trust Fund mean HOME account and the reference to 24 CFR part 58 does not apply. In addition, § 92.502(c) does not apply, and instead, compliance with Treasury Circular No. 1075 (31 CFR part 205) and 2 CFR 200.305 is required. 
</P>
<P>(iii) Section 92.503 (Program income, repayments, and recaptured funds) applies, except that program income may be retained provided the funds are used for eligible activities in accordance with the requirements of this section. 
</P>
<P>(3) Section 92.504 (Participating jurisdiction responsibilities; written agreements; on-site inspections) applies, except that the written agreement must ensure compliance with the requirements in this section. 
</P>
<P>(4) Section 92.508 (Recordkeeping) applies with respect to the records that relate to the requirements of this section. 
</P>
<P>(5) Section 92.509 (Performance reports) applies, except that a performance report is required only after completion of the approved projects. 
</P>
<P>(b) The requirements in subpart H (Other Federal Requirements) of this part apply as written, except that jurisdictions and community housing development organizations receiving reallocations from HUD must comply with affirmative marketing requirements, labor requirements, and lead-based paint requirements, applicable to participating jurisdictions. 
</P>
<P>(c) Subpart B (Allocation Formula), subpart C (Consortia; Designation and Revocation of Designation as a Participating Jurisdiction), and subpart G (Community Housing Development Organizations) of this part do not apply. 
</P>
<P>(d) Subpart A (General) applies, except that for the definitions of <I>commitment, program income,</I> and <I>subrecipient,</I> “participating jurisdiction” means jurisdiction or community housing development organization receiving the competitive reallocation. 
</P>
<CITA TYPE="N">[69 FR 15673, Mar. 26, 2004, as amended at 80 FR 75935, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV7 N="64" NODE="24:1.1.1.1.41.5.64" TYPE="SUBJGRP">
<HEAD>Eligible and Prohibited Activities</HEAD>


<DIV8 N="§ 92.205" NODE="24:1.1.1.1.41.5.64.6" TYPE="SECTION">
<HEAD>§ 92.205   Eligible activities: General.</HEAD>
<P>(a) <I>Eligible activities.</I> (1) HOME funds may be used by a participating jurisdiction to provide incentives to develop and support affordable rental housing and homeownership affordability through the acquisition (including assistance to homebuyers), new construction, reconstruction, or rehabilitation of nonluxury housing with suitable amenities, including real property acquisition, site improvements, conversion, demolition, and other expenses, including financing costs, relocation expenses of any displaced persons, families, businesses, or organizations; to provide tenant-based rental assistance, including security deposits; to provide payment of reasonable administrative and planning costs; and to provide for the payment of operating expenses of community housing development organizations. The housing must be permanent or transitional housing. The specific eligible costs for these activities are set forth in §§ 92.206 through 92.209. The activities and costs are eligible only if the housing meets the property standards in § 92.251 upon project completion.


</P>
<P>(2) Acquisition of vacant land or demolition may only be undertaken for a project that will provide affordable housing and meets the requirements for a specific local project in paragraph (2)(i) of the definition of “commitment” in § 92.2.


</P>
<P>(3) Conversion of an existing structure to affordable housing is rehabilitation, unless the conversion entails adding one or more units beyond the existing walls, in which case, the project is new construction for purposes of this part. 
</P>
<P>(4) <I>Manufactured housing.</I> HOME funds may be used to purchase and/or rehabilitate a manufactured housing unit, or purchase the land upon which a manufactured housing unit is located. Except for existing, owner-occupied manufactured housing that is rehabilitated with HOME funds, the manufactured housing unit must, at the time of project completion, be connected to permanent utility hook-ups and be located on land that is owned by the manufactured housing unit owner or land for which the manufactured housing owner has a lease for a period at least equal to the applicable period of affordability. 


</P>
<P>(b) <I>Forms of assistance.</I> (1) A participating jurisdiction may invest HOME funds as equity investments, interest-bearing loans or advances, non-interest-bearing loans or advances, interest subsidies consistent with the purposes of this part, deferred payment loans, grants, or other forms of assistance that HUD determines to be consistent with the purposes of this part and specifically approves in writing. 


</P>
<P>(2) A participating jurisdiction may invest HOME funds to guarantee loans made by lenders and, if required, the participating jurisdiction may establish a loan guarantee account with HOME funds. The HOME funds may be used to guarantee the timely payment of principal and interest or payment of the outstanding principal and interest upon foreclosure of the loan. The amount of the loan guarantee account must be based on a reasonable estimate of the default rate on the guaranteed loans, but under no circumstances may the amount on deposit exceed 20 percent of the total outstanding principal amount guaranteed; except that the account may include a reasonable minimum balance. While loan funds guaranteed with HOME funds are subject to all HOME requirements, funds which are used to repay the guaranteed loans are not. 


</P>
<P>(3) The participating jurisdiction must establish the terms of assistance, subject to the requirements of this part.


</P>
<P>(c) <I>Minimum amount of assistance.</I> The minimum amount of HOME funds that must be invested in a project involving rental housing or homeownership is $1,000 times the number of HOME-assisted units in the project. 
</P>
<P>(d) <I>Multi-unit projects.</I> HOME funds may be used to assist one or more housing units in a multi-unit project.
</P>
<P>(1) Only the actual HOME eligible development costs of the assisted units may be charged to the HOME program. If the assisted and nonassisted units are not comparable, the actual costs may be determined based on a method of cost allocation. If the assisted and non- assisted units are comparable in terms of size, features, and number of bedrooms, the actual cost of the HOME- assisted units can be determined by prorating the total HOME eligible development costs of the project so that the proportion of the total development costs charged to the HOME program does not exceed the proportion of the HOME-assisted units in the project.
</P>
<P>(2) After project completion, the number of units designated as HOME- assisted may be reduced only in accordance with § 92.210, except that in a project consisting of all HOME- assisted units, one unit may be subsequently converted to an on-site manager's unit if the participating jurisdiction determines that the conversion will contribute to the stability or effectiveness of the housing and that, notwithstanding the loss of one HOME-assisted unit, the costs charged to the HOME program do not exceed the actual costs of the HOME- assisted units and do not exceed the subsidy limit in § 92.250(b).


</P>
<P>(e) <I>Terminated projects.</I> A HOME assisted project that is terminated before completion, either voluntarily or involuntarily, constitutes an ineligible activity, and the participating jurisdiction must repay any HOME funds invested in the project to the participating jurisdiction's HOME Investment Trust Fund in accordance with § 92.503(b) (except for project- specific assistance to community housing development organizations as provided in § 92.301(a)(3) and (b)(3)).
</P>
<P>(1) A project that does not meet the requirements for affordable housing must be terminated and the participating jurisdiction must repay all HOME funds invested in the project to the participating jurisdiction's HOME Investment Trust Fund in accordance with § 92.503(b).


</P>
<P>(2) If project completion, as defined in § 92.2, does not occur within 4 years of the date of commitment of funds for a specific local project, the project is considered to be terminated, and the participating jurisdiction must repay all funds invested in the project to the participating jurisdiction's HOME Investment Trust Fund in accordance with § 92.503(b). The participating jurisdiction may request a one-year extension of this deadline in writing, by submitting information about the status of the project, steps being taken to overcome any obstacles to completion, proof of adequate funding to complete the project, and a schedule with milestones for completion of the project for HUD's review and approval.
</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 28928, May 28, 1997; 78 FR 44667, July 24, 2013; 90 FR 867, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.206" NODE="24:1.1.1.1.41.5.64.7" TYPE="SECTION">
<HEAD>§ 92.206   Eligible project costs.</HEAD>
<P>HOME funds may be used to pay the following eligible costs: 
</P>
<P>(a) <I>Development hard costs.</I> The actual cost of constructing or rehabilitating housing. These costs include the following: 
</P>
<P>(1) For new construction projects, costs to meet the new construction standards in § 92.251(a);


</P>
<P>(2) For rehabilitation, costs to meet the property standards for rehabilitation projects in § 92.251(b);


</P>
<P>(3) For both new construction and rehabilitation projects, costs:
</P>
<P>(i) To demolish existing structures; 
</P>
<P>(ii) To make utility connections including off-site connections from the property line to the adjacent street; and 
</P>
<P>(iii) To make improvements to the project site that are in keeping with improvements of surrounding, standard projects. Site improvements may include on-site roads and sewer and water lines necessary to the development of the project. The project site is the property, owned by the project owner, upon which the project is located. 
</P>
<P>(4) For both new construction and rehabilitation of multifamily rental housing projects, costs to construct or rehabilitate laundry and community facilities that are located within the same building as the housing and which are for the use of the project residents and their guests.
</P>
<P>(5) Costs to make utility connections or to make improvements to the project site, in accordance with the provisions of § 92.206(a)(3) (ii) and (iii) are also eligible in connection with acquisition of standard housing.


</P>
<P>(b) <I>Refinancing costs.</I> The cost to refinance existing debt secured by a housing project that is being rehabilitated with HOME funds. These costs include the following:
</P>
<P>(1) For single family (one- to four- family) owner-occupied housing, when loaning HOME funds to rehabilitate the housing, if the refinancing is necessary to reduce the overall housing costs to the borrower and make the housing more affordable and if the rehabilitation cost is greater than the amount of debt that is refinanced.


</P>
<P>(2) For single family or multifamily projects, when loaning HOME funds to rehabilitate the units if refinancing is necessary to permit or continue affordability under § 92.252. The participating jurisdiction must establish refinancing guidelines and state them in its consolidated plan described in 24 CFR part 91. Regardless of the amount of HOME funds invested, the minimum period of affordability shall be 15 years. The guidelines shall describe the conditions under which the participating jurisdictions will refinance existing debt. At minimum, the guidelines must:
</P>
<P>(i) Demonstrate that rehabilitation is the primary eligible activity and ensure that this requirement is met by establishing a minimum level of rehabilitation per unit or a required ratio between rehabilitation and refinancing; 


</P>
<P>(ii) Require a review of management practices to demonstrate that disinvestment in the property has not occurred, that the long-term needs of the project can be met, and that the feasibility of serving the targeted population over the minimum period of affordability of 15 years can be demonstrated;




</P>
<P>(iii) State whether the new investment is being made to maintain current affordable units, create additional affordable units, or both; 
</P>
<P>(iv) Specify the required period of affordability, whether it is the minimum 15 years or longer; 
</P>
<P>(v) Specify whether the investment of HOME funds may be jurisdiction-wide or limited to a specific geographic area, such as a neighborhood identified in a neighborhood revitalization strategy under 24 CFR 91.215(e)(2) or a Federally designated Empowerment Zone or Enterprise Community; and 
</P>
<P>(vi) State that HOME funds cannot be used to refinance single family or multifamily housing loans made or insured by any Federal program, including CDBG.


</P>
<P>(c) <I>Acquisition costs.</I> Costs of acquiring improved or unimproved real property and costs for a long-term ground lease, including costs of acquisition by homebuyers.


</P>
<P>(d) <I>Related soft costs.</I> Other reasonable and necessary costs incurred by the owner or participating jurisdiction and associated with the financing, or development (or both) of new construction, rehabilitation or acquisition of housing assisted with HOME funds. These costs include, but are not limited to: 
</P>
<P>(1) Architectural, engineering, or related professional services required to prepare plans, drawings, specifications, work write-ups; for HUD environmental reviews or other environmental studies, assessments, or fees; and for certain costs to process and settle the financing for a project, such as private lender origination fees, credit reports, fees for title evidence, legal fees, accounting fees, filing fees for zoning or planning review and approval, private appraisal fees, fees for independent cost estimates, and other lender required third-party reporting fees. The costs may be paid if they were incurred not more than 24 months before the date that HOME funds are committed to the project and the participating jurisdiction expressly permits HOME funds to be used to pay the costs in the written agreement committing the funds.
</P>
<P>(2) Fees for recordation and filing of legal documents, building permits, and builders or developers fees.


</P>
<P>(3) Costs of a project audit, including certification of costs performed by a certified public accountant, that the participating jurisdiction may require with respect to the development of the project.
</P>
<P>(4) Costs to provide information services such as affirmative marketing and fair housing information to prospective homeowners and tenants as required by § 92.351. 
</P>
<P>(5) For new construction or rehabilitation, the cost of funding an initial operating deficit reserve, which is a reserve to meet any shortfall in project income during the period of project rent-up (not to exceed 18 months) and which may only be used to pay project operating expenses, scheduled payments to a replacement reserve, and debt service. Any HOME funds placed in an operating deficit reserve that remain unexpended after the period of project rent-up may be retained for project reserves if permitted by the participating jurisdiction. 
</P>
<P>(6) Staff and overhead costs of the participating jurisdiction directly related to carrying out the project, such as work specifications preparation, loan processing inspections, and other services related to assisting potential owners, tenants, and homebuyers, e.g., housing counseling, may be charged to project costs only if the project is funded and the individual becomes the owner or tenant of the HOME-assisted project. For multi-unit projects, such costs must be allocated among HOME- assisted units in a reasonable manner and documented. Although these costs may be charged as project costs, these costs (except housing counseling) cannot be charged to or paid by low-income families.
</P>
<P>(7) For both new construction and rehabilitation, costs for the payment of impact fees that are charged for all projects within a jurisdiction. 


</P>
<P>(8) Cost of property insurance during development.




</P>
<P>(e) <I>Community housing development organization costs.</I> Eligible costs of project-specific assistance are set forth in § 92.301. 
</P>
<P>(f) <I>Relocation costs.</I> The cost of relocation payments and other relocation assistance to persons displaced by the project are eligible costs. 
</P>
<P>(1) Relocation payments include replacement housing payments, payments for moving expenses, and payments for reasonable out-of-pocket costs incurred in the temporary relocation of persons. 
</P>
<P>(2) Other relocation assistance means staff and overhead costs directly related to providing advisory and other relocation services to persons displaced by the project, including timely written notices to occupants, referrals to comparable and suitable replacement property, property inspections, counseling, and other assistance necessary to minimize hardship. 
</P>
<P>(g) <I>Costs relating to payment of loans.</I> If the HOME funds are not used to directly pay a cost specified in this section, but are used to pay off a construction loan, bridge financing loan, or guaranteed loan, the payment of principal and interest for such loan is an eligible cost only if: 
</P>
<P>(1) The loan was used for eligible costs specified in this section, and 
</P>
<P>(2) The HOME assistance is part of the original financing for the project and the project meets the requirements of this part. 
</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 28928, May 28, 1997; 64 FR 50224, Sept. 15, 1999; 78 FR 44667, July 24, 2013; 90 FR 867, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.207" NODE="24:1.1.1.1.41.5.64.8" TYPE="SECTION">
<HEAD>§ 92.207   Eligible administrative and planning costs.</HEAD>
<P>A participating jurisdiction may expend, for payment of reasonable administrative and planning costs of the HOME program and ADDI, an amount of HOME funds that is not more than ten percent of the sum of the Fiscal Year HOME basic formula allocation plus any funds received in accordance with § 92.102(b) to meet or exceed participation threshold requirements that Fiscal Year. A state that transfers any HOME funds in accordance with § 92.102(b) must exclude these funds in calculating the amount it may expend for administrative and planning costs. A participating jurisdiction may also expend, for payment of reasonable administrative and planning costs of the HOME program and the ADDI described in subpart M of this part, a sum up to ten percent of the program income deposited into its local account or received and reported by its state recipients or subrecipients during the program year. A participating jurisdiction may expend such funds directly or may authorize its state recipients or subrecipients, if any, to expend all or a portion of such funds, provided total expenditures for planning and administrative costs do not exceed the maximum allowable amount. Reasonable administrative and planning costs include:
</P>
<P>(a) <I>General management, oversight and coordination.</I> Reasonable costs of overall program management, coordination, monitoring, and evaluation. Such costs include, but are not limited to, necessary expenditures for the following: 
</P>
<P>(1) Salaries, wages, and related costs of the participating jurisdiction's staff. In charging costs to this category the participating jurisdiction may either include the entire salary, wages, and related costs allocable to the program of each person whose <I>primary</I> responsibilities with regard to the program involves program administration assignments, or the prorated share of the salary, wages, and related costs of each person whose job includes <I>any</I> program administration assignments. The participating jurisdiction may use only one of these methods. Program administration includes the following types of assignments: 
</P>
<P>(i) Developing systems and schedules for ensuring compliance with program requirements; 
</P>
<P>(ii) Developing interagency agreements and agreements with entities receiving HOME funds; 
</P>
<P>(iii) Monitoring HOME-assisted housing for progress and compliance with program requirements; 
</P>
<P>(iv) Developing agreements and monitoring housing not assisted with HOME funds that the participating jurisdiction designates as a matching contribution in accordance with § 92.219(b) for compliance with applicable program requirements; 
</P>
<P>(v) Preparing reports and other documents related to the program for submission to HUD; 
</P>
<P>(vi) Coordinating the resolution of audit and monitoring findings; 
</P>
<P>(vii) Evaluating program results against stated objectives; and 
</P>
<P>(viii) Managing or supervising persons whose primary responsibilities with regard to the program include such assignments as those described in paragraphs (a)(1)(i) through (vii) of this section; 
</P>
<P>(2) Travel costs incurred for official business in carrying out the program; 
</P>
<P>(3) Administrative services performed under third party contracts or agreements, including such services as general legal services, accounting services, and audit services; 
</P>
<P>(4) Other costs for goods and services required for administration of the program, including such goods and services as rental or purchase of equipment, insurance, utilities, office supplies, and rental and maintenance (but not purchase) of office space; and 
</P>
<P>(5) Costs of administering tenant-based rental assistance programs. 
</P>
<P>(b) <I>Staff and overhead.</I> Staff and overhead costs of the participating jurisdiction directly related to carrying out the project, such as work specifications preparation, loan processing, inspections, lead-based paint evaluations (visual assessments, inspections, and risk assessments) and other services related to assisting potential owners, tenants, and homebuyers (e.g., housing counseling); and staff and overhead costs directly related to providing advisory and other relocation services to persons displaced by the project, including timely written notices to occupants, referrals to comparable and suitable replacement property, property inspections, counseling, and other assistance necessary to minimize hardship. These costs may be charged as administrative costs or as project costs under § 92.206(d)(6) and (f)(2), at the discretion of the participating jurisdiction; however, these costs (except housing counseling) cannot be charged to or paid by the low-income families.
</P>
<P>(c) <I>Public information.</I> The provision of information and other resources to residents and citizen organizations participating in the planning, implementation, or assessment of projects being assisted with HOME funds. 
</P>
<P>(d) <I>Fair housing.</I> Activities to affirmatively further fair housing in accordance with the participating jurisdiction's certification under 24 CFR part 91. 


</P>
<P>(e) <I>Indirect Costs.</I> Indirect costs may be charged to the HOME program in accordance with 2 CFR part 200, subpart E. 


</P>
<P>(f) <I>Preparation of the consolidated plan.</I> Preparation of the consolidated plan required under 24 CFR part 91. Preparation includes the costs of public hearings, consultations, and publication. 
</P>
<P>(g) <I>Other Federal requirements.</I> Costs of complying with the Federal requirements in subpart H of this part. Project-specific environmental review costs may be charged as administrative costs or as project costs in accordance with § 92.206(d)(8), at the discretion of the participating jurisdiction. 
</P>
<P>(h) <I>Preserving affordable housing already assisted with HOME funds.</I> Costs specified under § 92.254(a)(9) may be charged as an administrative cost or may be charged to the project as provided in § 92.254(a)(9). In addition, the foreclosure cost of a HOME-assisted rental housing project with a HOME loan in default is an eligible administrative cost.
</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 67 FR 61756, Oct. 1, 2002; 69 FR 16766, Mar. 30, 2004; 72 FR 16685, Apr. 4, 2007; 78 FR 44668, July 24, 2013; 80 FR 75935, Dec. 7, 2015; 90 FR 868, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.208" NODE="24:1.1.1.1.41.5.64.9" TYPE="SECTION">
<HEAD>§ 92.208   Eligible community housing development organization (CHDO) operating expense and capacity building costs.</HEAD>
<P>(a) Up to 5 percent of a participating jurisdiction's fiscal year HOME allocation may be used for the operating expenses of community housing development organizations (CHDOs). This amount is in addition to amounts set aside for housing projects that are owned, developed, or sponsored by CHDOs as described in § 92.300(a). These funds may not be used to pay operating expenses incurred by a CHDO acting as a subrecipient or contractor under the HOME Program. Operating expenses means reasonable and necessary costs for the operation of the community housing development organization. Such costs include salaries, wages, and other employee compensation and benefits; employee education, training, and travel; rent; utilities; communication costs; taxes; insurance; equipment; materials; and supplies. The requirements and limitations on the receipt of these funds by CHDOs are set forth in § 92.300(e) and (f).
</P>
<P>(b) HOME funds may be used for capacity building costs under § 92.300(b). 


</P>
<P>(c) An organization that meets the definition of “community housing development organization” in § 92.2, except for the requirements in paragraph (9) of the definition, may receive HOME funds for operating expenses in accordance with paragraph (a) of this section in order to develop demonstrated capacity and qualify as a community housing development organization.


</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 78 FR 44668, July 24, 2013; 90 FR 868, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.209" NODE="24:1.1.1.1.41.5.64.10" TYPE="SECTION">
<HEAD>§ 92.209   Tenant-based rental assistance: Eligible costs and requirements.</HEAD>
<P>(a) <I>Eligible costs.</I> Eligible costs are the rental assistance and security deposit payments made to provide tenant-based rental assistance for a family pursuant to this section. Eligible costs also include utility deposit assistance, but only if this assistance is provided with tenant-based rental assistance or security deposit payment. Administration of tenant-based rental assistance is eligible only under general management oversight and coordination at § 92.207(a), except that the costs of inspecting the housing and determining the income eligibility of the family are eligible as costs of the tenant-based rental assistance.
</P>
<P>(b) <I>General requirement.</I> A participating jurisdiction may use HOME funds for tenant-based rental assistance only if the participating jurisdiction makes the certification about inclusion of this type of assistance in its consolidated plan in accordance with 24 CFR 91.225(d)(1), 91.325(d)(1), or 91.425(a)(2)(i), and specifies local market conditions that lead to the choice of this option. 


</P>
<P>(c) <I>Tenant selection.</I> The participating jurisdiction must select low-income families in accordance with written tenant selection policies and criteria that are based on local housing needs and priorities established in the participating jurisdiction's consolidated plan.


</P>
<P>(1) <I>Low-income families.</I> Tenant-based rental assistance may only be provided to very low- and low-income families. The participating jurisdiction must determine that the family is very low- or low-income before the assistance is provided. 


</P>
<P>(2) <I>Targeted assistance.</I> (i) The participating jurisdiction may establish a preference for individuals with special needs (e.g., homeless persons or elderly persons) or persons with disabilities. The participating jurisdiction may offer, in conjunction with a tenant-based rental assistance program, particular types of nonmandatory services that may be most appropriate for persons with a special need or a particular disability. Generally, tenant-based rental assistance and the related services should be made available to all persons with special needs or disabilities who can benefit from such services. Participation may be limited to persons with a specific disability if necessary to provide as effective housing, aid, benefit, or services as those provided to others in accordance with 24 CFR 8.4(b)(1)(iv).
</P>
<P>(ii) The participating jurisdiction may also provide a preference for a specific category of individuals with disabilities (e.g., persons with HIV/AIDS or chronic mental illness) if the specific category is identified in the participating jurisdiction's consolidated plan as having unmet need and the preference is needed to narrow the gap in benefits and services received by such persons.
</P>
<P>(iii) <I>Self-sufficiency program.</I> The participating jurisdiction may require the family to participate in a self- sufficiency program as a condition of selection for assistance. The family's failure to continue participation in the self-sufficiency program is not a basis for terminating the assistance; however, renewal of the assistance may be conditioned on participation in the program. Tenants living in a HOME- assisted rental project who receive tenant-based rental assistance as relocation assistance must not be required to participate in a self- sufficiency program as a condition of receiving assistance.


</P>
<P>(iv) <I>Homebuyer program.</I> HOME tenant-based rental assistance may assist a tenant who has been identified as a potential low-income homebuyer through a lease-purchase agreement, with monthly rental assistance payments for a period up to 36 months (<I>i.e.,</I> 24 months, with a 12-month renewal in accordance with paragraph (e) of this section). The HOME tenant-based rental assistance payment may not be used to accumulate a downpayment or closing costs for the purchase; however, all or a portion of the homebuyer-tenant's monthly contribution toward rent may be set aside for this purpose, in accordance with the lease-purchase agreement. If a participating jurisdiction determines that the tenant has met the lease-purchase criteria and is ready to assume ownership, HOME funds may be provided for homeownership assistance in accordance with the requirements of this part.


</P>
<P>(v) Preferences cannot be administered in a manner that limits the opportunities of persons on any basis prohibited by the laws listed under 24 CFR 5.105(a). For example, a participating jurisdiction may not determine that persons given a preference under the program are therefore prohibited from applying for or participating in other programs or forms of assistance. Persons who are eligible for a preference must have the opportunity to participate in all programs of the participating jurisdiction, including programs that are not separate or different.


</P>
<P>(3) <I>Existing tenants in projects that will receive HOME assistance.</I> A participating jurisdiction may select low-income families currently residing in housing units that will be rehabilitated or acquired with HOME funds under the participating jurisdiction's HOME program. Participating jurisdictions using HOME funds for tenant-based rental assistance programs may establish local preferences for the provision of this assistance. Families so selected may use the tenant-based rental assistance in the rehabilitated or acquired housing unit or in other qualified housing.


</P>
<P>(d) <I>Portability of assistance.</I> A participating jurisdiction may require the family to use the tenant-based assistance within the participating jurisdiction's boundaries or may permit the family to use the assistance outside its boundaries. 


</P>
<P>(e) <I>Rental assistance contract</I>—(1) <I>Parties to the rental assistance contract.</I> A participating jurisdiction must enter into a rental assistance contract with the owner and the family. A participating jurisdiction may have one agreement with the owner and a separate agreement with the family, or one tri-party agreement with the participating jurisdiction, the owner, and the family.
</P>
<P>(2) <I>Term of the rental assistance contract.</I> The term of the rental assistance contract providing assistance with HOME funds may not exceed 24 months, but the rental assistance contract may be amended or renewed, subject to the availability of HOME funds. The term of the rental assistance contract must begin on the first day of the term of the lease or the beginning of the first month in which tenant-based rental assistance is provided.
</P>
<P>(3) <I>Amending or renewing a rental assistance contract.</I> (i) A rental assistance contract within its term may only be amended through the consent of all parties. A rental assistance contract may be amended:
</P>
<P>(A) Because the lease between the family and owner has been amended or renewed, if the lease term or amount charged under the lease are the only terms of the contract being changed.
</P>
<P>(B) To extend its term up to 24 months from the original date of execution.
</P>
<P>(C) When a tenant changes units within the same building or development if the parties to the lease, the family size, and the number of bedrooms in the housing remain the same.
</P>
<P>(ii) Subject to the availability of HOME funds, a rental assistance contract may be renewed after the expiration of its initial term.
</P>
<P>(iii) In all other instances, the participating jurisdiction must enter into a new rental assistance contract with the family and the owner in accordance with this paragraph (e).
</P>
<P>(4) <I>Initial and subsequent income determinations.</I> (i) Before the participating jurisdiction enters into an initial or new rental assistance contract with the family, the participating jurisdiction must determine that the family is income eligible in accordance with § 92.203.
</P>
<P>(ii) When a rental assistance contract is amended, the participating jurisdiction will not be required to perform a new income examination in accordance with § 92.203.
</P>
<P>(iii) Before a rental assistance contract is renewed, the participating jurisdiction must determine that the family is income eligible in accordance with § 92.203.
</P>
<P>(iv) If a family is participating in a HOME lease-purchase program and receiving tenant-based rental assistance, then the participating jurisdiction is only required to determine the family's income at the time that the family enters into the lease-purchase agreement and does not need to engage in further income examination during the term of the lease-purchase agreement.


</P>
<P>(f) <I>Rent reasonableness.</I> The participating jurisdiction must disapprove a lease if the rent is not reasonable, based on rents that are charged for comparable unassisted rental units. 


</P>
<P>(g) <I>Tenant protections.</I> The tenant must have a lease that complies with the requirements in § 92.253. Upon termination of the rental assistance contract, the HOME tenant-based rental assistance tenancy addendum shall automatically terminate.


</P>
<P>(h) <I>Maximum subsidy.</I> (1) The amount of the monthly assistance that a participating jurisdiction may pay to, or on behalf of, a family may not exceed the difference between a rent standard for the unit size established by the participating jurisdiction and 30 percent of the family's monthly adjusted income. 


</P>
<P>(2) The participating jurisdiction must establish a minimum tenant contribution to rent, except that the participating jurisdiction may establish conditions in its written policies under which a tenant would be relieved of all or a portion of the minimum contribution due to financial hardship.


</P>
<P>(3) The participating jurisdiction's rent standard for a unit size must be based on: 
</P>
<P>(i) Local market conditions; or 


</P>
<P>(ii) The Section 8 Housing Choice Voucher Program payment standard as determined in accordance with 24 CFR 982.503(a) through (c).




</P>
<P>(i) <I>Housing standards.</I> The participating jurisdiction must require the housing occupied by a family receiving tenant-based rental assistance under this section to meet the participating jurisdiction's property standards under § 92.251. Initially and annually thereafter, the participating jurisdiction must determine the housing complies with its property standards and is decent, safe, sanitary, and in good repair in accordance with § 92.251(f).






</P>
<P>(j) <I>Security deposits.</I> (1) A participating jurisdiction may use HOME funds provided for tenant-based rental assistance to provide loans or grants to very low- and low-income families for security deposits for rental of housing units whether or not the participating jurisdiction provides any other tenant-based rental assistance under this section. 
</P>
<P>(2) The relevant State or local definition of “security deposit” in the jurisdiction where the unit is located is applicable for the purposes of this part, except that the amount of HOME funds that may be provided for a security deposit may not exceed the equivalent of two month's rent for the unit. 
</P>
<P>(3) Only the prospective tenant may apply for HOME security deposit assistance, although the participating jurisdiction may pay the funds directly to the tenant or to the landlord. 
</P>
<P>(4) HOME funds for security deposits may be provided as a grant or as a loan. If they are provided as a loan, the loan repayments are program income to be used in accordance with § 92.503. 


</P>
<P>(5) Paragraphs (b), (c), (d), (f), (g), and (i) of this section are applicable when HOME funds are provided for security deposit assistance, except that income determinations pursuant to paragraph (c)(1) of this section and inspections pursuant to paragraph (i) of this section are required only at the time the security deposit assistance is provided.


</P>
<P>(6) Surety bonds, security deposit insurance, or instruments similar to surety bonds or security deposit insurance may not be used in lieu of or in addition to a security deposit in units occupied by tenants receiving tenant-based rental assistance.




</P>
<P>(k) <I>Program operation.</I> A tenant-based rental assistance program must be operated consistent with the requirements of this section. The participating jurisdiction may operate the program itself or may contract with a PHA or other entity with the capacity to operate a rental assistance program. The tenant-based rental assistance may be provided through a rental assistance contract in accordance with paragraph (e) of this section. The participating jurisdiction (or entity operating the program) must approve the lease.


</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 28928, May 28, 1997; 67 FR 61756, Oct. 1, 2002; 78 FR 44668, July 24, 2013; 88 FR 30496, May 11, 2023; 90 FR 868, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.210" NODE="24:1.1.1.1.41.5.64.11" TYPE="SECTION">
<HEAD>§ 92.210   Troubled HOME-assisted rental housing projects.</HEAD>
<P>(a) The provisions of this section apply only to an existing HOME-assisted rental project that, within the HOME period of affordability, is no longer financially viable or its physical viability has substantively deteriorated due to unforeseen circumstances.
</P>
<P>(1) For purposes of this section, a HOME-assisted rental project is no longer financially viable through the period of affordability if:
</P>
<P>(i) The project's operating costs exceed its operating revenue, considering project reserves;
</P>
<P>(ii) The owner is unable to pay for necessary capital repair costs or ongoing expenses for the project; or
</P>
<P>(iii) The project reserves are insufficient to be able to operate the project.
</P>
<P>(2) For purposes of this section, physical viability means a project's current or future ability to maintain affordability based on the physical characteristics and factors of the project's site and improvements.
</P>
<P>(3) HUD may approve the actions described in paragraphs (b) and (c) of this section to strategically preserve the affordability of a rental project after consideration of market needs, available resources, and the likelihood of the long-term physical and financial viability of the project.
</P>
<P>(b) Notwithstanding § 92.214, a participating jurisdiction may request and HUD may permit, pursuant to a written memorandum of agreement, a participating jurisdiction to invest additional HOME funds in the existing HOME-assisted rental project. The total HOME funding for the project (original investment plus additional investment) must be necessary to improve the physical and financial viability of the project and may not exceed the per-unit subsidy limit in § 92.250(a) in effect at the time of the additional investment. The use of HOME funds may include, but is not limited to, rehabilitation of the HOME units and recapitalization of project reserves for the HOME units (to fund capital costs). If additional HOME funds are invested, HUD may impose additional conditions, including requiring the participating jurisdiction to extend the period of affordability, increase the number of HOME-assisted units, and change the number or designation of Low HOME rent and High HOME rent units.
</P>
<P>(c) HUD may, through written approval, permit the participating jurisdiction to reduce the total number of HOME-assisted units or change the designation of units from Low HOME rent units to High HOME rent units where there are more than the minimum number of Low HOME rent units in the project. In determining whether to permit a reduction in the number of HOME-assisted units, HUD will take into account the required period of affordability and the amount of HOME assistance provided to the project.


</P>
<CITA TYPE="N">[90 FR 869, Jan. 6, 2025]




</CITA>
</DIV8>


<DIV8 N="§ 92.212" NODE="24:1.1.1.1.41.5.64.12" TYPE="SECTION">
<HEAD>§ 92.212   Pre-award costs.</HEAD>
<P>(a) <I>General.</I> Before the effective date of the HOME Investment Partnership Agreement, the participating jurisdiction may incur costs described in this section which may be charged to the HOME allocation after the award of the HOME allocation, provided the costs are in compliance with the requirements of this part (including environmental review requirements) and with the statutory and regulatory requirements in effect at the time the costs are charged to the HOME allocation. 


</P>
<P>(b) <I>Administrative and planning costs.</I> (1) Eligible administrative and planning costs may be incurred as of the beginning of the participating jurisdiction's consolidated program year (see 24 CFR 91.10) or the date HUD receives the consolidated plan describing the HOME allocation to which the costs will be charged, whichever is later.
</P>
<P>(2) In any year in which an appropriation has not been enacted 90 days before a participating jurisdiction's program year start date, a participating jurisdiction may incur eligible administrative and planning costs as of the beginning of its program year or the date that HUD receives its consolidated plan describing the HOME allocation to which the costs will be charged, whichever is earlier.
</P>
<P>(c) <I>Project costs.</I> Eligible project costs may be incurred during the current program year in an amount not to exceed 25% of the current HOME allocation amount, to be charged to the following year's HOME allocation. Before incurring the pre-award costs, the participating jurisdiction must comply with its citizen participation plan requirements addressing 24 CFR 91.105(b)(2), (4), (5) and (g) (local governments) or 24 CFR 91.115(b)(2), (4), (5) and (f) (States). In lieu of a full action plan, the participating jurisdiction may develop a mini-action plan which describes the proposed pre-award projects and costs in accordance with 24 CFR 91.220(c) and includes, if applicable, 24 CFR 91.220(g)(2) (local governments) or 24 CFR 91.320(c) and, if applicable, 24 CFR 91.320(g)(2) (States). The mini-action plan must state that HOME funding for the project(s) is subject to the future availability of HOME funds. The subsequent action plan (i.e., action plan for the HOME allocation to which the costs will be charged) must also include the use of HOME funds contained in the mini-action plan. 
</P>
<P>(d) <I>Subrecipient or State recipient costs.</I> The participating jurisdiction may authorize its subrecipient or State recipient to incur pre-award costs in accordance with the requirements of this section. The authorization must be in writing. 
</P>
<P>(e) <I>Other pre-agreement costs.</I> Pre-agreement costs in excess of the amount set forth in paragraph (c) of this section must be approved, in writing, by the HUD Field Office before the costs are incurred. 


</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 90 FR 869, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.213" NODE="24:1.1.1.1.41.5.64.13" TYPE="SECTION">
<HEAD>§ 92.213   HOME Funds and Public Housing.</HEAD>
<P>(a) <I>General rule.</I> HOME funds may not be used for public housing units. HOME-assisted housing units may not receive Operating Fund or Capital Fund assistance under section 9 of the 1937 Act during the HOME period of affordability.
</P>
<P>(b) <I>Exception.</I> HOME funds may be used for the development of public housing units, if the units are developed under section 24 of the 1937 Act (HOPE VI) and no Capital Fund assistance under section 9(d) of the Act is used for the development of the unit. Units developed with both HOME and HOPE VI may receive operating assistance under section 9 of the 1937 Act. Units developed with HOME and HOPE VI funds under this paragraph may subsequently receive Capital Funds for rehabilitation or modernization.
</P>
<P>(c) <I>Using HOME funds in public housing projects.</I> Consistent with § 92.205(d), HOME funds may be used for affordable housing units in a project that also contains public housing units, provided that the HOME funds are not used for the public housing units (except as provided in paragraph (b) of this section) and HOME funds are used only for eligible costs in accordance with this part.
</P>
<P>(d) The HOME funds must be used in accordance with the requirements of this part and the project must meet the requirements of this part, including rent requirements in § 92.252.
</P>
<CITA TYPE="N">[78 FR 44669, July 24, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 92.214" NODE="24:1.1.1.1.41.5.64.14" TYPE="SECTION">
<HEAD>§ 92.214   Prohibited activities and fees.</HEAD>
<P>(a) HOME funds may not be used to: 
</P>
<P>(1) Provide project reserve accounts, except as provided in § 92.206(d)(5), or operating subsidies; 
</P>
<P>(2) Provide tenant-based rental assistance for the special purposes of the existing section 8 program, in accordance with section 212(d) of the Act; 
</P>
<P>(3) Provide non-federal matching contributions required under any other Federal program; 
</P>
<P>(4) Provide assistance for uses authorized under section 9 of the 1937 Act (Public Housing Capital and Operating Funds);
</P>
<P>(5) Provide assistance to eligible low-income housing under 24 CFR part 248 (Prepayment of Low Income Housing Mortgages), except that assistance may be provided to priority purchasers as defined in 24 CFR 248.101; 


</P>
<P>(6) Provide assistance (other than tenant-based rental assistance, assistance to a homebuyer to acquire housing previously assisted with HOME funds, assistance permitted under § 92.210, or assistance to preserve affordability of homeownership housing in accordance with § 92.254(b)) to a project previously assisted with HOME funds during the period of affordability. However, additional HOME funds may be committed to a project for up to one year after project completion (see § 92.502), but the amount of HOME funds in the project may not exceed the maximum per-unit subsidy amount established under § 92.250 at the time of underwriting;
</P>
<P>(7) Pay for the acquisition of property owned by the participating jurisdiction, unless such property is acquired by the participating jurisdiction in anticipation of carrying out a HOME project;
</P>
<P>(8) Pay delinquent taxes, fees, or charges on properties to be assisted with HOME funds;
</P>
<P>(9) Pay for any cost that is not eligible under §§ 92.206 through 92.209; or
</P>
<P>(10) Pay for surety bonds, security deposit insurance, or instruments similar to surety bonds or security deposit insurance, in lieu of or in addition to a security deposit in units occupied by tenants receiving tenant-based rental assistance (including assistance in paying security deposits).




</P>
<P>(b)(1) Participating jurisdictions may not charge (and must prohibit State recipients, subrecipients, and community housing development organizations from charging) servicing, origination, or other fees for the purpose of covering costs of administering the HOME program (e.g., fees on low-income families for construction management or for inspections for compliance with property standards) (see § 92.206(d)(6) and § 92.207), except that:
</P>
<P>(i) Participating jurisdictions and State recipients may charge owners of rental projects reasonable annual fees for compliance monitoring during the period of affordability. The fees must be based upon the average actual cost of performing the monitoring of HOME-assisted rental projects. The basis for determining the amount of for the fee amount must be documented and the fee must be included in the costs of the project as part of the project underwriting;
</P>
<P>(ii) Participating jurisdictions, subrecipients and State recipients may charge nominal application fees (although these fees are not an eligible HOME cost) to project owners to discourage frivolous applications. The amount of application fees must be appropriate to the type of application and may not create an undue impediment to a low-income family's, subrecipient's, State recipient's, or other entity's participation in the participating jurisdiction's program; and
</P>
<P>(iii) Participating jurisdictions, subrecipients and State recipients may charge homebuyers a fee for housing counseling.
</P>
<P>(2) All fees charged under paragraph (b)(1) of this section are applicable credits under 2 CFR 200.406.


</P>
<P>(3) The participating jurisdiction must prohibit project owners from charging for:
</P>
<P>(i) Surety bonds, security deposit insurance, or instruments similar to surety bonds or security deposit insurance, in lieu of or in addition to a security deposit in units;
</P>
<P>(ii) Fees that are not customarily charged in rental housing (<I>e.g.,</I> laundry room access fees); and
</P>
<P>(iii) Fees to inspect units or correct deficiencies in the property condition of units or common areas of the project that were not caused by the tenant or are only due to normal wear and tear.


</P>
<P>(4) Rental project owners may charge:
</P>
<P>(i) Reasonable application fees to prospective tenants;
</P>
<P>(ii) Parking fees to tenants only if such fees are customary for rental housing projects in the neighborhood; and
</P>
<P>(iii) Fees for services such as bus transportation or meals, as long as the services are voluntary and fees are charged for services provided.


</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 28929, May 28, 1997; 67 FR 61756, Oct. 1, 2002; 72 FR 16685, Apr. 4, 2007; 78 FR 44669, July 24, 2013; 80 FR 75935, Dec. 7, 2015; 90 FR 869, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.215" NODE="24:1.1.1.1.41.5.64.15" TYPE="SECTION">
<HEAD>§ 92.215   Limitation on jurisdictions under court order.</HEAD>
<P>Limitations on the use of HOME funds in connection with litigation involving discrimination or fair housing are set forth in section 224 of the Act. 


</P>
</DIV8>

</DIV7>


<DIV7 N="65" NODE="24:1.1.1.1.41.5.65" TYPE="SUBJGRP">
<HEAD>Income Targeting</HEAD>


<DIV8 N="§ 92.216" NODE="24:1.1.1.1.41.5.65.16" TYPE="SECTION">
<HEAD>§ 92.216   Income targeting: Tenant-based rental assistance and rental units.</HEAD>
<P>Each participating jurisdiction must invest HOME funds made available during a fiscal year so that, with respect to tenant-based rental assistance and rental units: 
</P>
<P>(a) Not less than 90 percent of: 
</P>
<P>(1) The families receiving such rental assistance are families whose annual incomes do not exceed 60 percent of the median family income for the area, as determined and made available by HUD with adjustments for smaller and larger families (except that HUD may establish income ceilings higher or lower than 60 percent of the median for the area on the basis of HUD's findings that such variations are necessary because of prevailing levels of construction cost or fair market rent, or unusually high or low family income) at the time of occupancy or at the time funds are invested, whichever is later; or 


</P>
<P>(2) The housing units assisted with such funds are occupied by families having such incomes; and 


</P>
<P>(b) The remainder of: 
</P>
<P>(1) The families receiving such rental assistance are households that qualify as low-income families (other than families described in paragraph (a)(1) of this section) at the time of occupancy or at the time funds are invested, whichever is later; or 


</P>
<P>(2) The housing units assisted with such funds are occupied by such households. 


</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 90 FR 870, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.217" NODE="24:1.1.1.1.41.5.65.17" TYPE="SECTION">
<HEAD>§ 92.217   Income targeting: Homeownership.</HEAD>
<P>Each participating jurisdiction must invest HOME funds made available during a fiscal year so that with respect to homeownership assistance, 100 percent of these funds are invested in housing units that are occupied by households that qualify as low-income families.
</P>
<CITA TYPE="N">[67 FR 61756, Oct. 1, 2002, as amended at 90 FR 870, Jan. 6, 2025]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="66" NODE="24:1.1.1.1.41.5.66" TYPE="SUBJGRP">
<HEAD>Matching Contribution Requirement</HEAD>


<DIV8 N="§ 92.218" NODE="24:1.1.1.1.41.5.66.18" TYPE="SECTION">
<HEAD>§ 92.218   Amount of matching contribution.</HEAD>
<P>(a) <I>General.</I> Each participating jurisdiction must make contributions to housing that qualifies as affordable housing under the HOME program, throughout a fiscal year. The contributions must total not less than 25 percent of the funds drawn from the jurisdiction's HOME Investment Trust Fund Treasury account in that fiscal year, excluding funds drawn for purposes identified in paragraph (c) of this section. 
</P>
<P>(b) <I>Shortfall amount from State or local resources.</I> Amounts made available under § 92.102(b)(2) from the resources of a State (other than a transfer of the State's formula allocation), the local participating jurisdiction, or both, to enable the local participating jurisdiction to meet the participation threshold amount are not required to be matched and do not constitute matching contributions. 
</P>
<P>(c) <I>HOME funds not required to be matched.</I> HOME funds used for administrative and planning costs (pursuant to § 92.207); community housing development organization operating expenses (pursuant to § 92.208); capacity building (pursuant to § 92.300(b)) of community housing development organizations; and project specific assistance to community housing development organizations (pursuant to § 92.301) when the participating jurisdiction waives repayment under the provisions of § 92.301(a)(3) or § 92.301(b)(3) are not required to be matched. 
</P>
<P>(d) <I>Match contribution for other programs.</I> Contributions that have been or will be counted as satisfying a matching requirement of another Federal grant or award may not count as satisfying the matching contribution requirement for the HOME program. 


</P>
</DIV8>


<DIV8 N="§ 92.219" NODE="24:1.1.1.1.41.5.66.19" TYPE="SECTION">
<HEAD>§ 92.219   Recognition of matching contribution.</HEAD>
<P>(a) <I>Match contribution to HOME-assisted housing.</I> A contribution is recognized as a matching contribution if it is made with respect to: 
</P>
<P>(1) A tenant who is assisted with HOME funds; 
</P>
<P>(2) A HOME-assisted unit; 
</P>
<P>(3) The portion of a project that is not HOME-assisted provided that at least 50 percent of the housing units in the project are HOME-assisted. If the match contribution to the portion of the project that is not HOME-assisted meets the affordable housing requirements of § 92.219(b)(2), the percentage requirement for HOME-assisted units does not apply; or 
</P>
<P>(4) The commercial space in a mixed-use project in which at least 51 percent of the floor space is residential provided that at least 50 percent of the housing units are HOME-assisted. 


</P>
<P>(b) <I>Match contribution to affordable housing that is not HOME-assisted.</I> The following requirements apply for recognition of matching contributions made to affordable housing that is not HOME-assisted: 
</P>
<P>(1) For tenant-based rental assistance that is not HOME-assisted: 
</P>
<P>(i) The contribution must be made with respect to a tenant who is assisted with tenant-based rental assistance that meets the requirements of § 92.203 (Income determinations) and paragraphs (a), (c), (f), and (i) of § 92.209 (Tenant-based rental assistance); and 
</P>
<P>(ii) The participating jurisdiction must demonstrate in writing that such assistance meets the provisions of §§ 92.203 and 92.209 (except § 92.209(e)). 


</P>
<P>(2) For affordable housing that is not HOME-assisted: 
</P>
<P>(i) The contribution must be made with respect to housing that qualifies as affordable housing under § 92.252 or § 92.254. 




</P>
<P>(ii) The participating jurisdiction must execute, with the owner of the housing (or, if the participating jurisdiction is the owner, with the manager or developer), a written agreement that imposes and enumerates all of the requirements applicable to the project, including affordability requirements in § 92.252 or § 92.254; tenant protection requirements in § 92.253; property standards requirements in § 92.251; and income determination requirements in § 92.203. This written agreement must be executed before any match contributions may be made. 


</P>
<P>(iii) A participating jurisdiction must establish a procedure to monitor HOME match-eligible housing to ensure continued compliance with the requirements of § 92.203 (Income determinations), § 92.252 (Qualification as affordable housing: Rental housing), § 92.253 (Tenant protections), and § 92.254 (Qualification as affordable housing: Homeownership). No other HOME requirements apply. 


</P>
<P>(iv) The match may be in any eligible form of match except those in § 92.220(a)(2) (forbearance of fees), (a)(4) (on-site and off-site infrastructure), (a)(10) (direct cost of supportive services) and (a)(11) (direct costs of homebuyer counseling services). 
</P>
<P>(v) Match contributions to mixed-use or mixed-income projects that contain affordable housing units will be recognized only if the contribution is made to the project's affordable housing units. 


</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 28929, May 28, 1997; 90 FR 870, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.220" NODE="24:1.1.1.1.41.5.66.20" TYPE="SECTION">
<HEAD>§ 92.220   Form of matching contribution.</HEAD>
<P>(a) <I>Eligible forms.</I> Matching contributions must be made from nonfederal resources and may be in the form of one or more of the following: 
</P>
<P>(1) <I>Cash contributions from nonfederal sources.</I> To be recognized as a cash contribution, funds must be contributed permanently to the HOME program (or to affordable housing not assisted with HOME funds), regardless of the form of investment provided to the project. Therefore, to receive match credit for the full amount of a loan to a HOME project, all repayment, interest, or other return on investment of the contribution must be deposited in the local account of the participating jurisdiction's HOME Investment Trust Fund to be used for eligible HOME activities in accordance with the requirements of this part. A cash contribution to affordable housing that is not assisted with HOME funds must be contributed permanently to the project. Repayments of matching contributions in affordable housing projects, as defined in § 92.219(b), that are not HOME-assisted, must be made to the local account of the participating jurisdiction's HOME Investment Trust Fund to get match credit for the full loan amount. 
</P>
<P>(i) A cash contribution may be made by the participating jurisdiction, non-Federal public entities, private entities, or individuals, except as prohibited under paragraph (b)(4) of this section. A cash contribution made to a nonprofit organization for use in a HOME project may be counted as a matching contribution. 
</P>
<P>(ii) A cash contribution may be made from program income (as defined by 2 CFR 200.80) from a Federal grant earned after the end of the award period if no Federal requirements govern the disposition of the program income. Included in this category are repayments from closed out grants under the Urban Development Action Grant Program (24 CFR part 570, subpart G) and the Housing Development Grant Program (24 CFR part 850), and from the Rental Rehabilitation Grant Program (24 CFR part 511) after all fiscal year Rental Rehabilitation grants have been closed out. 
</P>
<P>(iii) The grant equivalent of a below-market interest rate loan to the project that is not repayable to the participating jurisdiction's HOME Investment Trust Fund may be counted as a cash contribution, as follows: 
</P>
<P>(A) If the loan is made from funds borrowed by a jurisdiction or public agency or corporation the contribution is the present discounted cash value of the difference between the payments to be made on the borrowed funds and payments to be received from the loan to the project based on a discount rate equal to the interest rate on the borrowed funds. 
</P>
<P>(B) If the loan is made from funds other than funds borrowed by a jurisdiction or public agency or corporation, the contribution is the present discounted cash value of the yield foregone. In determining the yield foregone, the participating jurisdiction must use as a measure of a market rate yield one of the following, as appropriate: 
</P>
<P>(<I>1</I>) With respect to one- to four-unit housing financed with a fixed interest rate mortgage, a rate equal to the 10-year Treasury note rate plus 200 basis points; 
</P>
<P>(<I>2</I>) With respect to one- to four-unit housing financed with an adjustable interest rate mortgage, a rate equal to the one-year Treasury bill rate plus 250 basis points; 
</P>
<P>(<I>3</I>) With respect to a multifamily project, a rate equal to the 10-year Treasury note rate plus 300 basis points; or
</P>
<P>(<I>4</I>) With respect to housing receiving financing for rehabilitation, a rate equal to the 10-year Treasury note rate plus 400 basis points. 
</P>
<P>(iv) Proceeds of bonds that are not repaid with revenue from an affordable housing project (e.g., general obligation bonds) and that are loaned to a HOME-assisted or other qualified affordable housing project constitute a cash contribution under this paragraph. 
</P>
<P>(v) A cash contribution may be counted as a matching contribution only if it is used for costs eligible under § 92.206 or § 92.209, or for the following (which are not HOME eligible costs): the cost of removing and relocating an ECHO housing unit during the period of affordability in accordance with § 92.258(d)(3)(ii), payments to a project reserve account beyond payments permitted by § 92.206(d)(5), operating subsidies, or costs relating to the portion of a mixed-income or mixed-use HOME-assisted project not related to the affordable housing units. 
</P>
<P>(2) <I>Forbearance of fees</I>—(i) <I>State and local taxes, charges or fees.</I> The value (based on customary and reasonable means for establishing value) of State or local taxes, fees, or other charges that are normally and customarily imposed or charged by a State or local government on all transactions or projects in the conduct of its operations, which are waived, foregone, or deferred (including State low-income housing tax credits) in a manner that achieves affordability of HOME-assisted projects, may be counted as match. The amount of any real estate taxes may be based on post-improvement property value. For taxes, fees, or charges that are forgiven for future years, the value is the present discounted cash value, based on a rate equal to the rate for the Treasury security with a maturity closest to the number of years for which the taxes, fees, or charges are waived, foregone, or deferred. 
</P>
<P>(ii) <I>Other charges or fees.</I> The value of fees or charges associated with the transfer or development of real estate that are normally and customarily imposed or charged by public or private entities, which are waived or foregone, in whole or in part, in a manner that achieves affordability of HOME-assisted projects, may be counted as match. Fees and charges under this paragraph do not include fees or charges for legal or other professional services; professional services which are donated, in whole or in part, are an eligible matching contribution in accordance with paragraph (a)(7) of this section. 
</P>
<P>(iii) Fees or charges that are associated with the HOME Program only (rather than normally and customarily imposed or charged on all transactions or projects) are not eligible forms of matching contributions. 
</P>
<P>(3) <I>Donated Real Property.</I> The value, before the HOME assistance is provided and minus any debt burden, lien, or other encumbrance, of donated land or other real property may be counted as match. The donation may be made by the participating jurisdiction, non-Federal public entities, private entities, or individuals, except as prohibited under paragraph (b)(4) of this section. 
</P>
<P>(i) Donated property not acquired with Federal resources is a contribution in the amount of 100% of the value. 
</P>
<P>(ii) Donated property acquired with Federal assistance may provide a partial contribution as follows. The property must be acquired with Federal assistance specifically for a HOME project (or for affordable housing that will be counted as match pursuant to § 92.219(b)(2)). The property must be acquired with the Federal assistance at demonstrably below the appraised value and must be acknowledged by the seller as a donation to affordable housing at the time of the acquisition with the Federal assistance. The amount of the contribution is the difference between the acquisition price and the appraised value at the time of acquisition with the Federal assistance. If the property is acquired with the Federal assistance by someone other than the HOME project (or affordable housing) owner, to continue to qualify as a contribution, the property must be given to the HOME project (or affordable housing) owner at a price that does not exceed the amount of the Federal assistance used to acquire the property. 
</P>
<P>(iii) Property must be appraised in conformance with established and generally recognized appraisal practice and procedures in common use by professional appraisers. Opinions of value must be based on the best available data properly analyzed and interpreted. The appraisal of land and structures must be performed by an independent, certified appraiser. 
</P>
<P>(4) The cost, not paid with Federal resources, of on-site and off-site infrastructure that the participating jurisdiction documents are directly required for HOME-assisted projects. The infrastructure must have been completed no earlier than 12 months before HOME funds are committed to the project. 


</P>
<P>(5) Proceeds from multifamily and single family affordable housing project bond financing validly issued by a State or local government, or an agency or instrumentality of a State or local government or a political subdivision of a State and repayable with revenues from the affordable housing project financed as follows: 
</P>
<P>(i) Fifty percent of the loan amount made from bond proceeds to a multifamily affordable housing project owner may qualify as match. 


</P>
<P>(ii) Twenty-five percent of the loan amount from bond proceeds made to a single family affordable housing project owner may qualify as match. 


</P>
<P>(iii) Loans made from bond proceeds may not constitute more than 25 percent of a participating jurisdiction's total annual match contribution. 
</P>
<P>(6) The reasonable value of donated site-preparation and construction materials, not acquired with Federal resources. The value of site-preparation and construction materials is to be determined in accordance with the participating jurisdiction's cost estimate procedures. 
</P>
<P>(7) The reasonable rental value of the donated use of site preparation or construction equipment. 
</P>
<P>(8) The value of donated or voluntary labor or professional services (see § 92.354(b)) in connection with the provision of affordable housing. A single rate established by HUD shall be applicable for determining the value of unskilled labor. The value of skilled labor or professional services shall be determined by the rate that the individual or entity performing the labor or service normally charges. 
</P>
<P>(9) The value of sweat equity (see § 92.354(c)) provided to a homeownership project, under an established component of a participating jurisdiction's program, up until the time of project completion (i.e., submission of a project completion form). Such labor shall be valued at the rate established for unskilled labor at paragraph (a)(8) of this section. 
</P>
<P>(10) The direct cost of supportive services provided to families residing in HOME-assisted units during the period of affordability or receiving HOME tenant-based rental assistance during the term of the tenant-based rental assistance contract. The supportive services must be necessary to facilitate independent living or be required as part of a self-sufficiency program. Examples of supportive services include: case management, mental health services, assistance with the tasks of daily living, substance abuse treatment and counseling, day care, and job training and counseling. 
</P>
<P>(11) The direct cost of homebuyer counseling services provided to families that acquire properties with HOME funds under the provisions of § 92.254(a), including ongoing counseling services provided during the period of affordability. These services may be provided as part of a homebuyer counseling program that is not specific to the HOME Program, but only the cost of services to families that complete purchases with HOME assistance may be counted as match. 
</P>
<P>(b) <I>Ineligible forms.</I> The following are examples that do not meet the requirements of paragraph (a) of this section and do not count toward meeting a participating jurisdiction's matching contribution requirement: 
</P>
<P>(1) Contributions made with or derived from Federal resources or funds, regardless of when the Federal resources or funds were received or expended. CDBG funds (defined in 24 CFR 570.3) are Federal funds for this purpose; 
</P>
<P>(2) The interest rate subsidy attributable to the Federal tax-exemption on financing or the value attributable to Federal tax credits; 
</P>
<P>(3) Owner equity or investment in a project; and 
</P>
<P>(4) Cash or other forms of contributions from applicants for or recipients of HOME assistance or contracts, or investors who own, are working on, or are proposing to apply for assistance for a HOME-assisted project. The prohibition in this paragraph (b)(4) does not apply to contractors (who do not own any HOME project) contributing professional services in accordance with paragraph (a)(8) of this section or to persons contributing sweat equity in accordance with paragraph (a)(9) of this section. 
</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 28929, May 28, 1997; 62 FR 44840, Aug. 22, 1997; 80 FR 75935, Dec. 7, 2015; 90 FR 870, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.221" NODE="24:1.1.1.1.41.5.66.21" TYPE="SECTION">
<HEAD>§ 92.221   Match credit.</HEAD>
<P>(a) <I>When credit is given.</I> Contributions are credited on a fiscal year basis at the time the contribution is made, as follows: 
</P>
<P>(1) A cash contribution is credited when the funds are expended. 
</P>
<P>(2) The grant equivalent of a below-market interest rate loan is credited at the time of the loan closing. 
</P>
<P>(3) The value of state or local taxes, fees, or other charges that are normally and customarily imposed but are waived, foregone, or deferred is credited at the time the state or local government or other public or private entity officially waives, forgoes, or defers the taxes, fees, or other charges and notifies the project owner. 
</P>
<P>(4) The value of donated land or other real property is credited at the time ownership of the property is transferred to the HOME project (or affordable housing) owner. 
</P>
<P>(5) The cost of investment in infrastructure directly required for HOME-assisted projects is credited at the time funds are expended for the infrastructure or at the time the HOME funds are committed to the project if the infrastructure was completed before the commitment of HOME funds. 
</P>
<P>(6) The value of donated material is credited as match at the time it is used for affordable housing. 
</P>
<P>(7) The value of the donate use of site preparation or construction equipment is credited as match at the time the equipment is used for affordable housing. 
</P>
<P>(8) The value of donated or voluntary labor or professional services is credited at the time the work is performed. 
</P>
<P>(9) A loan made from bond proceeds under § 92.220(a)(5) is credited at the time of the loan closing. 
</P>
<P>(10) The direct cost of social services provided to residents of HOME-assisted units is credited at the time that the social services are provided during the period of affordability. 
</P>
<P>(11) The direct cost of homebuyer counseling services provided to families that purchase HOME-assisted units is credited at the time that the homebuyer purchases the unit or for post-purchase counseling services, at the time the counseling services are provided. 


</P>
<P>(b) <I>Excess match.</I> Contributions made in a fiscal year that exceed the participating jurisdiction's match liability for the fiscal year in which they were made may be carried over and applied to future fiscal years' match liability. Loans made from bond proceeds in excess of 25 percent of a participating jurisdiction's total annual match contribution may be carried over to subsequent fiscal years as excess match, subject to the annual 25 percent limitation. 


</P>
<P>(1) To apply an excess matching contribution to a future fiscal year's match liability, the participating jurisdiction must have documentation, at the time of application, demonstrating the matching contribution complied with the matching requirements at §§ 92.218 through 92.221 at the time it was made. Documentation must include project records of the type and amount of the matching contribution.
</P>
<P>(2) A participating jurisdiction must maintain the records in paragraph (b)(1) of this section for five years from the date of application of the excess matching contribution to the liability.


</P>
<P>(c) Credit for match contributions shall be assigned as follows: 
</P>
<P>(1) For HOME-assisted projects involving more than one participating jurisdiction, the participating jurisdiction that makes the match contribution may decide to retain the match credit or permit the other participating jurisdiction to claim the credit. 
</P>
<P>(2) For HOME match contributions to affordable housing that is not HOME-assisted (match pursuant to § 92.219(b)) involving more than one participating jurisdiction, the participating jurisdiction that makes the match contribution receives the match credit. 
</P>
<P>(3) A State that provides non-Federal funds to a local participating jurisdiction to be used for a contribution to affordable housing, whether or not HOME-assisted, may take the match credit for itself or may permit the local participating jurisdiction to receive the match credit. 
</P>
<P>(d) Match credit for the development of affordable homeownership housing for sale to homebuyers. Contributions to the development of homeownership housing may be credited as a match only to the extent that the sales price of the housing is reduced by the amount of the contribution or, if the development costs exceed the fair market value of the housing, the contribution may be credited to the extent that the contributions enable the housing to be sold for less than the cost of development.
</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 78 FR 44670, July 24, 2013; 90 FR 870, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.222" NODE="24:1.1.1.1.41.5.66.22" TYPE="SECTION">
<HEAD>§ 92.222   Reduction of matching contribution requirement.</HEAD>
<P>(a) <I>Reduction for fiscal distress.</I> HUD will determine match reductions annually. 
</P>
<P>(1) <I>Distress criteria for local government participating jurisdictions.</I> If a local government participating jurisdiction satisfies both of the distress factors in paragraphs (a)(1)(i) and (ii) of this section, it is in severe fiscal distress and its match requirement will be reduced by 100% for the period specified in paragraph (a)(3) of this section. If a local government participating jurisdiction satisfies either distress factor in paragraphs (a)(1)(i) or (ii) of this section, it is in fiscal distress and its match requirement will be reduced by 50 percent, for the period specified in paragraph (a)(4) of this section. 
</P>
<P>(i) <I>Poverty rate.</I> The average poverty rate in the participating jurisdiction was equal to or greater than 125 percent of the average national poverty rate during the calendar year for which the most recent data are available, as determined according to information of the Bureau of the Census. 
</P>
<P>(ii) <I>Per capita income.</I> The average per capita income in the participating jurisdiction was less than 75 percent of the average national per capita income, during the calendar year for which the most recent data are available, as determined according to information from the Bureau of the Census. 
</P>
<P>(2) <I>Distress criteria for participating jurisdictions that are States.</I> If a State satisfies at least 2 of the 3 distress factors in paragraphs (a)(2)(i) through (iii) of this section, it is in severe fiscal distress and its match requirement will be reduced by 100% for the period specified in paragraph (a)(3) of this section. If a State satisfies any 1 of the 3 distress factors in paragraphs (a)(2)(i) through (iii) of this section, it is in fiscal distress and its match requirement will be reduced by 50 percent, for the period specified in paragraph (a)(4) of this section. 
</P>
<P>(i) <I>Poverty rate.</I> The average poverty rate in the State was equal to or greater than 125 percent of the average national poverty rate during the calendar year for which the most recent data are available, as determined according to information from the Bureau of the Census. 
</P>
<P>(ii) <I>Per capita income.</I> The average per capita income in the State was less than 75 percent of the average national per capita income, during the calendar year for which the most recent data are available, as determined according to information from the Bureau of the Census. 
</P>
<P>(iii) <I>Personal income growth.</I> The average personal income growth rate in the State over the most recent four quarters for which the data are available was less than 75 percent of the average national personal income growth rate during that period, as determined according to information from the Bureau of Economic Analysis. 
</P>
<P>(3) <I>Period of match reduction for severe fiscal distress.</I> A 100% match reduction is effective for the fiscal year in which the severe fiscal distress determination is made and for the following fiscal year. 
</P>
<P>(4) <I>Period of match reduction for fiscal distress.</I> A 50% match reduction is effective for the fiscal year in which the fiscal distress determination is made and for the following fiscal year, except that if a severe fiscal distress determination is published in that following fiscal year, the participating jurisdiction starts a new two-year match reduction period in accordance with the provisions of paragraph (a)(3) of this section. 
</P>
<P>(b) Reduction of match for participating jurisdictions in disaster areas. If a participating jurisdiction is located in an area in which a declaration of major disaster is made pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121-5206), the participating jurisdiction may request a reduction of its matching requirement.
</P>
<P>(1) In determining whether to grant the request and the amount and duration of the reduction, if any, HUD must consider the fiscal impact of the disaster on the participating jurisdiction.
</P>
<P>(i) For a local participating jurisdiction, the HUD Field office may reduce the matching requirement specified in § 92.218 by up to 100 percent for the fiscal year in which the declaration of major disaster is made and the following fiscal year.
</P>
<P>(ii) For a State participating jurisdiction, the HUD Field office may reduce the matching requirement specified in § 92.218, by up to 100 percent for the fiscal year in which the declaration of major disaster is made and the following fiscal year with respect to any HOME funds expended in an area to which the declaration of a major disaster applies.
</P>
<P>(2) At its discretion and upon request of the participating jurisdiction, the HUD Field Office may extend the reduction for an additional year.
</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 78 FR 44670, July 24, 2013]


</CITA>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="F" NODE="24:1.1.1.1.41.6" TYPE="SUBPART">
<HEAD>Subpart F—Project Requirements</HEAD>


<DIV8 N="§ 92.250" NODE="24:1.1.1.1.41.6.67.1" TYPE="SECTION">
<HEAD>§ 92.250   Maximum per-unit subsidy amount, underwriting, and subsidy layering.</HEAD>
<XREF ID="20250417" REFID="5">Link to an amendment published at 90 FR 16087, Apr. 17, 2025.</XREF>
<XREF ID="20251022" REFID="1">This amendment was delayed until Apr. 30, 2026, at 90 FR 48443, Oct. 22, 2025.</XREF>
<XREF ID="20260429" REFID="28">This amendment was further delayed indefinitely, at 91 FR 23014, Apr. 29, 2026.</XREF>
<P>(a) <I>Maximum per-unit subsidy amount.</I> The total amount of HOME funds that a participating jurisdiction may invest on a per-unit basis in affordable housing may not exceed the per-unit dollar limits established by HUD in accordance with section 212(e) of the Act. HUD will publish the per-unit dollar limits for the area in which the housing is located annually. HUD will publish its methodology for determining maximum per-unit dollar limits through a publication in the <E T="04">Federal Register</E> with the opportunity for comment.
</P>
<P>(b) <I>Underwriting and subsidy layering.</I> Before committing funds to a project, the participating jurisdiction must evaluate the project in accordance with guidelines that it has adopted for determining a reasonable level of profit or return on owner's or developer's investment in a project and must not invest any more HOME funds, alone or in combination with other governmental assistance, than is necessary to provide quality affordable housing that is financially viable for a reasonable period (at minimum, the period of affordability in § 92.252 or § 92.254) and that will not provide a profit or return on the owner's or developer's investment that exceeds the participating jurisdiction's established standards for the size, type, and complexity of the project. The participating jurisdiction's guidelines must require the participating jurisdiction to undertake:
</P>
<P>(1) An examination of the sources and uses of funds for the project and a determination that the costs are reasonable; and
</P>
<P>(2) An assessment, at minimum, of the current market demand in the neighborhood in which the project will be located, the experience of the developer, the financial capacity of the developer, and firm written financial commitments for the project.
</P>
<P>(3) For projects involving rehabilitation of owner-occupied housing pursuant to § 92.254(b):
</P>
<P>(i) An underwriting analysis of the homeowner's ability to repay the HOME-funded rehabilitation loan is required only if the loan is an amortizing loan; and
</P>
<P>(ii) A market analysis or evaluation of developer capacity is not required.
</P>
<P>(4) For projects involving HOME-funded homeownership assistance pursuant to § 92.254(a) and which do not include HOME-funded development activity, a market analysis or evaluation of developer capacity is not required.
</P>
<CITA TYPE="N">[78 FR 44670, July 24, 2013, as amended at 90 FR 16086, Apr. 17, 2025]
</CITA>
</DIV8>


<DIV8 N="§ 92.251" NODE="24:1.1.1.1.41.6.67.2" TYPE="SECTION">
<HEAD>§ 92.251   Property standards and inspections.</HEAD>
<P>(a) <I>New construction projects</I>—(1) <I>State and local codes, ordinances, and zoning requirements.</I> Housing that is newly constructed with HOME funds must meet all applicable State and local codes, ordinances, and zoning requirements. HOME-assisted new construction projects must meet State or local residential and building codes, as applicable or, in the absence of a State or local building code, the International Residential Code or International Building Code (as applicable to the type of housing) of the International Code Council. The housing must meet the applicable requirements upon project completion.


</P>
<P>(2) <I>Construction progress and final inspections.</I> The participating jurisdiction must conduct on-site progress and final inspections of construction to ensure that work is done in accordance with the applicable codes, the construction contract, and construction documents. Before completing the project in the disbursement and information system established by HUD, the participating jurisdiction must perform an on-site inspection of the project to determine that all contracted work has been completed and that the project complies with the property standards and requirements in this paragraph (a). All inspections performed by the participating jurisdiction must be conducted in accordance with the participating jurisdiction's inspection procedures.


</P>
<P>(3) <I>HUD requirements.</I> All new construction projects must also meet the following requirements upon project completion, unless an earlier deadline is otherwise required by the applicable statute, regulation, or standard:
</P>
<P>(i) <I>Accessibility.</I> The housing must meet the accessibility requirements of 24 CFR part 8, which implements section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), and Titles II and III of the Americans with Disabilities Act (42 U.S.C. 12131-12189) implemented at 28 CFR parts 35 and 36, as applicable. Covered multifamily dwellings, as defined at 24 CFR 100.201, must also meet the design and construction requirements at 24 CFR 100.205, which implements the Fair Housing Act (42 U.S.C. 3601-3619).
</P>
<P>(ii) <I>Energy efficiency standards.</I> Newly constructed housing shall qualify as affordable housing under this part only if it meets the energy efficiency standards promulgated by the Secretary in accordance with section 109 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12709).
</P>
<P>(iii) <I>Disaster mitigation.</I> Where relevant, the housing must be constructed to mitigate the impact of future disasters (<I>e.g.,</I> earthquakes, hurricanes, flooding, and wildfires) in accordance with State and local codes, ordinances, and requirements, and such other requirements that HUD may establish.
</P>
<P>(iv) <I>Written cost estimates, construction contracts, and construction documents.</I> The participating jurisdiction must require the construction contract(s) and construction documents to describe the work to be undertaken in adequate detail so that inspections can be conducted. The participating jurisdiction must review and approve written cost estimates for construction and determine that costs are reasonable.
</P>
<P>(v) <I>Broadband infrastructure.</I> For new commitments made after January 19, 2017, for a new construction housing project of a building with more than 4 rental units, the construction must include installation of broadband infrastructure, as this term is defined in 24 CFR 5.100, except where the participating jurisdiction determines and, in accordance with § 92.508(a)(3)(iv), documents the determination that:
</P>
<P>(A) The location of the new construction makes installation of broadband infrastructure infeasible; or
</P>
<P>(B) The cost of installing the infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden.
</P>
<P>(vi) <I>Carbon monoxide and smoke detection</I>—(A) <I>Carbon monoxide detection.</I> A carbon monoxide alarm must be installed in the housing unit in a manner that meets or exceeds the carbon monoxide detection standards set by HUD through <E T="04">Federal Register</E> publication.
</P>
<P>(B) <I>Smoke detection.</I> (<I>1</I>) A hardwired smoke alarm must be installed:
</P>
<P>(<I>i</I>) On each level of each housing unit;
</P>
<P>(<I>ii</I>) In or near each sleeping area in each housing unit;
</P>
<P>(<I>iii</I>) In the basement of each housing unit and in each common area of a project. A hardwired smoke alarm is not required in crawl spaces or unfinished attics of housing units;
</P>
<P>(<I>iv</I>) Within 21 feet of any door to a sleeping area measured along a path of travel; and
</P>
<P>(<I>v</I>) Where a smoke alarm installed outside a sleeping area is separated from an adjacent living area by a door, a smoke alarm must also be installed on the living area side of the door.
</P>
<P>(<I>2</I>) Each hardwired smoke alarm must have an alarm system designed for hearing-impaired persons.
</P>
<P>(<I>3</I>) The Secretary may establish additional standards through <E T="04">Federal Register</E> publication.
</P>
<P>(<I>4</I>) Following the relevant specifications of the International Code Council (ICC) or the National Fire Protection Association Standard (NFPA) 72 satisfies the requirements of this paragraph (a)(3)(vi)(B).
</P>
<P>(vii) <I>Green building standards.</I> If a participating jurisdiction exceeds the maximum per-unit subsidy limit pursuant to § 92.250(c), then upon completion, the housing must meet one of the green building standards established by HUD through <E T="04">Federal Register</E> publication.


</P>
<P>(b) <I>Rehabilitation projects.</I> All rehabilitation that is performed using HOME funds must meet the requirements of this paragraph (b).
</P>
<P>(1) <I>Rehabilitation standards.</I> The participating jurisdiction must establish rehabilitation standards for all HOME- assisted housing rehabilitation activities that set forth the requirements that the housing must meet upon project completion. The participating jurisdiction's description of its standards must be in sufficient detail to determine the required rehabilitation work including methods and materials. The standards may refer to applicable codes or they may establish requirements that exceed the minimum requirements of the codes. The rehabilitation standards must address each of the following:
</P>
<P>(i) <I>Health and safety.</I> The participating jurisdiction's standards must identify life-threatening deficiencies that must be addressed immediately if the housing is occupied.
</P>
<P>(ii) <I>Major systems.</I> Major systems are: structural support; roofing; cladding and weatherproofing (e.g., windows, doors, siding, gutters); plumbing; electrical; and heating, ventilation, and air conditioning. For rental housing, the participating jurisdiction's standards must require the participating jurisdiction to estimate (based on age and condition) the remaining useful life of these systems, upon project completion of each major systems. For multifamily housing projects of 26 units or more, the participating jurisdiction's standards must require the participating jurisdiction to determine the useful life of major systems through a capital needs assessment of the project. For rental housing, if the remaining useful life of one or more major system is less than the applicable period of affordability, the participating jurisdiction's standards must require the participating jurisdiction to ensure that a replacement reserve is established and monthly payments are made to the reserve that are adequate to repair or replace the systems as needed. For homeownership housing, the participating jurisdiction's standards must require, upon project completion, each of the major systems to have a remaining useful life for a minimum of 5 years or for such longer period specified by the participating jurisdiction, or the major systems must be rehabilitated or replaced as part of the rehabilitation work.
</P>
<P>(iii) <I>Lead-based paint.</I> The participating jurisdiction's standards must require the housing to meet the lead-based paint requirements at 24 CFR part 35.


</P>
<P>(iv) <I>Accessibility.</I> The participating jurisdiction's standards must require the housing to meet the accessibility requirements in 24 CFR part 8, which implements Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), and Titles II and III of the Americans with Disabilities Act (42 U.S.C. 12131-12189) implemented at 28 CFR parts 35 and 36, as applicable. Covered multifamily dwellings, as defined at 24 CFR 100.201, must also meet the design and construction requirements at 24 CFR 100.205, which implements the Fair Housing Act (42 U.S.C. 3601-3619). Rehabilitation may include improvements that are not required by regulation or statute that permit use by a person with disabilities.</P>
<P>(v) [Reserved]


</P>
<P>(vi) <I>Disaster mitigation.</I> Where relevant, the participating jurisdiction's standards must require the housing to be improved to mitigate the impact of future disasters (<I>e.g.,</I> earthquake, hurricanes, flooding, and wildfires) in accordance with State and local codes, ordinances, and requirements, and such other requirements that HUD may establish.




</P>
<P>(vii) <I>State and local codes, ordinances, and zoning requirements.</I> The participating jurisdiction's standards must require the housing to meet all applicable State and local codes, ordinances, and requirements or, in the absence of a State or local building code, the International Existing Building Code of the International Code Council.


</P>
<P>(viii) <I>HUD housing standards.</I> The standards of the participating jurisdiction must be such that, upon completion, the HOME-assisted project and units will be decent, safe, sanitary, and in good repair. This means that the HOME-assisted project and units will meet the standards in 24 CFR 5.703, except that the carbon monoxide detection requirements at 24 CFR 5.703(b)(2) and (d)(6) shall not apply. For all HOME-assisted projects and units, the requirements at 24 CFR 5.705 through 5.713 do not apply. At minimum, the participating jurisdiction's rehabilitation standards must require correction of the specific deficiencies published in the <E T="04">Federal Register</E> for HOME-assisted projects and units. For SRO housing, 24 CFR 5.703(d) shall only apply to the extent that the SRO unit contains the room or facility referenced in 24 CFR 5.703(d).


</P>
<P>(A) The participating jurisdiction may accept a determination in satisfaction of another funding source's requirements that, upon the completion of the rehabilitation, the HOME-assisted project and units are decent, safe, sanitary, and in good repair in an inspection conducted under the National Standards for the Condition of HUD housing (24 CFR part 5, subpart G) or an alternative inspection standard, which HUD may establish through <E T="04">Federal Register</E> publication.
</P>
<P>(B) If a participating jurisdiction is accepting a determination pursuant to paragraph (b)(1)(viii)(A) of this section, then the participating jurisdiction must document the determination in accordance with § 92.508(a)(3)(iv) and is not required to perform a HOME inspection of the project and units for compliance with 24 CFR 5.703.


</P>
<P>(ix) <I>Capital Needs Assessments.</I> For multifamily rental housing projects of 26 or more total units, the participating jurisdiction must determine all work that will be performed in the rehabilitation of the housing and the long-term physical needs of the project through a capital needs assessment of the project.
</P>
<P>(x) <I>Broadband infrastructure.</I> For new commitments made after January 19, 2017 for a substantial rehabilitation project of a building with more than 4 rental units, any substantial rehabilitation, as defined in 24 CFR 5.100, must provide for installation of broadband infrastructure, as this term is also defined in 24 CFR 5.100, except where the participating jurisdiction determines and, in accordance with § 92.508(a)(3)(iv), documents the determination that:
</P>
<P>(A) The location of the substantial rehabilitation makes installation of broadband infrastructure infeasible;
</P>
<P>(B) The cost of installing broadband infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden; or
</P>
<P>(C) The structure of the housing to be substantially rehabilitated makes installation of broadband infrastructure infeasible.


</P>
<P>(xi) <I>Carbon monoxide and smoke detection</I>—(A) <I>Carbon monoxide detection.</I> A carbon monoxide alarm must be installed in the housing unit in a manner that meets or exceeds the carbon monoxide detection standards set by HUD through <E T="04">Federal Register</E> publication.
</P>
<P>(B) <I>Smoke detection.</I> (<I>1</I>) A hardwired smoke alarm must be installed:
</P>
<P>(<I>i</I>) On each level of each housing unit;
</P>
<P>(<I>ii</I>) In or near each sleeping area in each housing unit;
</P>
<P>(<I>iii</I>) In the basement of each housing unit, and in each common area of a project. A hardwired smoke alarm is not required in crawl spaces or unfinished attics of housing units;
</P>
<P>(<I>iv</I>) Within 21 feet of any door to a sleeping area measured along a path of travel; and
</P>
<P>(<I>v</I>) Where a smoke alarm installed outside a sleeping area is separated from an adjacent living area by a door, a smoke alarm must also be installed on the living area side of the door.
</P>
<P>(<I>2</I>) Each hardwired smoke alarm must have an alarm system designed for hearing-impaired persons.
</P>
<P>(<I>3</I>) The Secretary may establish additional standards through <E T="04">Federal Register</E> publication.
</P>
<P>(<I>4</I>) Where the use of hardwired smoke detectors places an undue financial burden on the owner or is infeasible, a participating jurisdiction may provide a written exception to allow the owner to install a smoke detector that uses 10-year non rechargeable, nonreplaceable primary batteries. The smoke detector must be sealed, tamper-resistant, contain a means to silence the alarm, and otherwise comply with the requirements of this section.
</P>
<P>(<I>5</I>) Following the relevant specification of the International Code Council (ICC) or the National Fire Protection Association Standard (NFPA) 72 satisfies the requirements of this paragraph (b)(1)(xi)(B).
</P>
<P>(xii) <I>Green building standards.</I> If a participating jurisdiction exceeds the maximum per-unit subsidy limit pursuant to § 92.250(c), then upon completion of the rehabilitation the housing must meet one of the green building standards established by HUD through <E T="04">Federal Register</E> publication.


</P>
<P>(2) <I>Construction documents and cost estimates.</I> The participating jurisdiction must require that the work to be undertaken will meet the participating jurisdiction's rehabilitation standards. The construction contract and documents (i.e., written scope of work to be performed) must be in sufficient detail to establish the basis for a uniform inspection of the housing to determine compliance with the participating jurisdiction's standards. The participating jurisdiction must review and approve a written cost estimate for rehabilitation after determining that costs are reasonable.


</P>
<P>(3) <I>Frequency of inspections.</I> The participating jurisdiction must conduct an initial property inspection to identify the deficiencies that must be addressed and must conduct on-site progress and final inspections to determine that work was done in accordance with the construction contract and construction documents. Before completing the project in the disbursement and information system established by HUD, the participating jurisdiction must perform an on-site inspection of the project to determine that all contracted work has been completed and that the project complies with the property standards and requirements in this paragraph (b). All inspections performed by the participating jurisdiction must be conducted in accordance with the participating jurisdiction's inspection procedures.




</P>
<P>(c) <I>Acquisition of standard housing.</I> (1) Existing housing that is acquired with HOME assistance for rental housing, and that was newly constructed or rehabilitated less than 12 months before the date of commitment of HOME funds, must meet the property standards for new construction in paragraph (a) or rehabilitation in paragraph (b) of this section, as applicable. The participating jurisdiction must document this compliance based upon a review of approved building plans and Certificates of Occupancy, and an inspection that is conducted no earlier than 90 days before the commitment of HOME assistance.</P>
<P>(2) All other existing housing that is acquired with HOME assistance for rental housing must meet the rehabilitation property standards requirements of paragraph (b) of this section. The participating jurisdiction must document this compliance based upon an inspection that is conducted no earlier than 90 days before the commitment of HOME assistance. If the property does not meet these standards, HOME funds cannot be used to acquire the property unless it is rehabilitated to meet the standards of paragraph (b) of this section.


</P>
<P>(3) Existing housing that is acquired for homeownership using homeownership assistance must be decent, safe, sanitary, and in good repair. The participating jurisdiction must establish standards to determine that the housing is decent, safe, sanitary, and in good repair. At minimum, the standards must provide that the housing meets all applicable State and local housing quality standards and code requirements, and the housing does not contain the specific deficiencies established by HUD based on the applicable standards in 24 CFR 5.703 and published in the <E T="04">Federal Register</E> for HOME-assisted projects and units. The housing must also meet or exceed the carbon monoxide and smoke detection standards contained in the participating jurisdiction's rehabilitation standards pursuant to paragraph (b) of this section. If the use of hardwired smoke detectors places an undue financial burden on the homebuyer or is infeasible, a participating jurisdiction may provide a written exception to the homebuyer consistent with the requirements contained in paragraph (b) of this section.
</P>
<P>(i) The participating jurisdiction must inspect the housing and document compliance with this paragraph (c)(3) based upon an inspection that is conducted no earlier than 90 days before the commitment of HOME assistance. If the housing does not meet these standards, the housing must be rehabilitated to meet the standards of this paragraph (c)(3) before the acquisition, except as provided in paragraph (c)(3)(ii) of this section.
</P>
<P>(ii) If the housing is not rehabilitated to meet the standards in this paragraph (c)(3) before acquisition, then the housing may still be acquired if all of the following conditions are satisfied:
</P>
<P>(A) The written agreement between the participating jurisdiction and the homebuyer requires the property to meet the standards within 6 months of acquisition with HOME assistance;
</P>
<P>(B) Funding is secured to complete the rehabilitation necessary to comply with the standards; and
</P>
<P>(C) Unless an extension is provided pursuant to paragraph (c)(3)(ii)(D) of this section, the participating jurisdiction conducts a final inspection within six months after acquisition and determines that the property meets the standards.
</P>
<P>(D) The participating jurisdiction may provide the homebuyer with an extension of up to 12 months from acquisition to meet the standards. If the participating jurisdiction provides an extension, the participating jurisdiction must amend the written agreement to reflect the extension and conduct a final inspection within 12 months of acquisition and determine that the property meets the standards.
</P>
<P>(iii) All inspections performed by the participating jurisdiction must be conducted in accordance with the participating jurisdiction's inspection procedures.










</P>
<P>(d) <I>Projects involving a combination of rehabilitation and either new construction or reconstruction.</I> If a project includes both rehabilitation of housing units and either new construction or reconstruction of housing units, then the participating jurisdiction must apply the rehabilitation standards to the housing units that are rehabilitated and the new construction requirements to housing that is either newly constructed or reconstructed.


</P>
<P>(e) <I>Manufactured housing.</I> Construction of all manufactured housing including manufactured housing that replaces an existing substandard unit under the definition of “reconstruction” must meet the Manufactured Home Construction and Safety Standards codified at 24 CFR part 3280. These standards preempt State and local codes which are not identical to the federal standards for the new construction of manufactured housing. Participating jurisdictions providing HOME funds to assist manufactured housing units must comply with applicable State and local laws or codes. In the absence of such laws or codes, the installation must comply with the manufacturer's written instructions for installation of manufactured housing units. All new manufactured housing and all manufactured housing that replaces an existing substandard unit under the definition of “reconstruction” must be on a permanent foundation that meets the requirements for foundation systems as set forth in 24 CFR 203.43f(c)(i). All new manufactured housing and all manufactured housing that replaces an existing substandard unit under the definition of “reconstruction” must, at the time of project completion, be connected to permanent utility hook-ups and be located on land that is owned by the manufactured housing unit owner or land for which the manufactured housing owner has a lease for a period at least equal to the applicable period of affordability. In HOME-funded rehabilitation of existing manufactured housing the foundation and anchoring must meet all applicable State and local codes, ordinances, and requirements or in the absence of local or state codes, the Model Manufactured Home Installation Standards at 24 CFR part 3285. Manufactured housing that is rehabilitated using HOME funds must meet the property standards requirements in paragraph (b) of this section, as applicable. The participating jurisdiction must document this compliance in accordance with inspection procedures that the participating jurisdiction has established pursuant to § 92.251, as applicable.


</P>
<P>(f) <I>Ongoing property condition standards and inspections: Rental housing and housing occupied by tenants receiving HOME tenant-based rental assistance</I>—(1) <I>Ongoing property standards.</I> The participating jurisdiction must establish property standards for rental housing (including manufactured housing) that apply throughout the period of affordability and for housing occupied by tenants receiving HOME tenant-based rental assistance. The standards must require that owners maintain the housing as decent, safe, sanitary, and in good repair. The participating jurisdiction's description of its property standards must be in sufficient detail to establish the basis for a uniform inspection of HOME rental projects and housing occupied by tenants receiving HOME tenant-based rental assistance. The participating jurisdiction's ongoing property standards must address all of the following:
</P>
<P>(i) <I>Compliance with State and local codes, ordinances, and requirements.</I> The participating jurisdiction's standards must require the housing to meet all applicable State and local code requirements and ordinances. In the absence of existing applicable State or local code requirements and ordinances, at a minimum, the participating jurisdiction's ongoing property standards must provide that the property does not contain the specific deficiencies established by HUD based on the applicable standards in 24 CFR 5.703 and published in the <E T="04">Federal Register</E> for HOME rental housing (including manufactured housing) and housing occupied by tenants receiving HOME tenant-based rental assistance, except that the carbon monoxide detection requirements at 24 CFR 5.703(b)(2) and (d)(6) shall not apply. The participating jurisdiction's property standards are not required to comply with 24 CFR 5.705 through 5.713.




</P>
<P>(ii) <I>Health and safety.</I> The participating jurisdiction's standards must require the housing to be free of all health and safety defects. The standards must identify life-threatening deficiencies that the owner must immediately correct and the time frames for addressing these deficiencies.
</P>
<P>(iii) <I>Lead-based paint.</I> The participating jurisdiction's standards must require the housing to meet the lead-based paint requirements in 24 CFR part 35.


</P>
<P>(iv) <I>Carbon monoxide and smoke detection</I>—(A) <I>Carbon monoxide detection.</I> A carbon monoxide alarm must be installed in the housing unit in a manner that meets or exceeds the carbon monoxide detection standards set by HUD through <E T="04">Federal Register</E> publication.
</P>
<P>(B) <I>Smoke detection.</I> The participating jurisdiction's standards must require housing to contain smoke detectors in accordance with the requirements contained in 24 CFR 5.703(b) and (d).


</P>
<P>(2) Projects to which HOME funds were committed before January 24, 2015 must meet all applicable State or local housing quality standards or code requirements, and if there are no such standard or code requirements, the housing must meet the housing quality standards in 24 CFR 982.401.


</P>
<P>(3) <I>Ongoing inspections of HOME-assisted rental housing.</I> During the period of affordability, the participating jurisdiction must perform on-site inspections of HOME-assisted rental housing to determine compliance with the property standards in paragraph (f)(1) of this section and to verify the information submitted by owners in accordance with the requirements of § 92.252. The participating jurisdiction must perform inspections in accordance with its established inspection procedures. These procedures, at minimum, must include the following requirements:
</P>
<P>(i) <I>Frequency of inspections.</I> The participating jurisdiction must perform an on-site inspection within 12 months after project completion and complete one of the following every 3 years during the period of affordability:
</P>
<P>(A) Perform an on-site inspection in accordance with the participating jurisdiction's inspection procedures to determine compliance with the property standards; or
</P>
<P>(B) Accept a determination made within the past 12 months in satisfaction of another funding source's requirements, that the HOME-assisted project and units are decent, safe, sanitary, and in good repair in an inspection conducted under the National Standards for the Condition of HUD housing (24 CFR part 5, subpart G) or an alternative inspection standard, which HUD may establish through <E T="04">Federal Register</E> publication. If a participating jurisdiction is accepting a determination, then the participating jurisdiction must document the determination in accordance with § 92.508(a)(3)(iv) and is not required to perform an on-site HOME inspection of the project and the units for compliance with 24 CFR 5.703.
</P>
<P>(ii) <I>Annual certification.</I> The owner must annually certify to the participating jurisdiction that each building and all HOME-assisted units in the project are suitable for occupancy, taking into account State and local health, safety, and other applicable codes, ordinances, and requirements, and the ongoing property standards established by the participating jurisdiction.
</P>
<P>(iii) <I>Units inspected.</I> Inspections must be based on a random sample of the HOME-assisted units in the project with a mix of unit sizes (<I>e.g.,</I> a mix of one-bedroom, two-bedroom, and three-bedroom units) in accordance with the chart contained in this paragraph. All inspections must include the inspectable areas for each building containing HOME-assisted units. For projects with one-to-four HOME-assisted units, the participating jurisdiction must inspect 100 percent of the HOME-assisted units and the inspectable areas for each building with HOME-assisted units.
</P>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Table 1 to Paragraph (<E T="01">f</E>)(3)(<E T="01">iii</E>)—Minimum Inspection Sample Size for HOME Rental Housing Projects
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col"> Number of HOME-assisted units in the HOME project
</TH><TH class="gpotbl_colhed" scope="col">Number of units that must be selected in the random sample (<E T="03">i.e.</E>, minimum unit sample size)
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1-20</TD><TD align="right" class="gpotbl_cell">4
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">21-25</TD><TD align="right" class="gpotbl_cell">5
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">26-30</TD><TD align="right" class="gpotbl_cell">6
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">31-35</TD><TD align="right" class="gpotbl_cell">7
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">36-40</TD><TD align="right" class="gpotbl_cell">8
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">41-45</TD><TD align="right" class="gpotbl_cell">9
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">46-50</TD><TD align="right" class="gpotbl_cell">10
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">51-55</TD><TD align="right" class="gpotbl_cell">11
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">56-60</TD><TD align="right" class="gpotbl_cell">12
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">61-65</TD><TD align="right" class="gpotbl_cell">13
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">66-70</TD><TD align="right" class="gpotbl_cell">14
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">71-75</TD><TD align="right" class="gpotbl_cell">15
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">76-80</TD><TD align="right" class="gpotbl_cell">16
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">81-85</TD><TD align="right" class="gpotbl_cell">17
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">86-90</TD><TD align="right" class="gpotbl_cell">18
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">91-95</TD><TD align="right" class="gpotbl_cell">19
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">96-100</TD><TD align="right" class="gpotbl_cell">20
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">101-105</TD><TD align="right" class="gpotbl_cell">21
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">106-110</TD><TD align="right" class="gpotbl_cell">22
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">111-115</TD><TD align="right" class="gpotbl_cell">23
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">116-120</TD><TD align="right" class="gpotbl_cell">24
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">121-125</TD><TD align="right" class="gpotbl_cell">25
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">126-130</TD><TD align="right" class="gpotbl_cell">26
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">131-166</TD><TD align="right" class="gpotbl_cell">27
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">167-214</TD><TD align="right" class="gpotbl_cell">28
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">215-295</TD><TD align="right" class="gpotbl_cell">29
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">296-455</TD><TD align="right" class="gpotbl_cell">30
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">456-920</TD><TD align="right" class="gpotbl_cell">31
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">921+</TD><TD align="right" class="gpotbl_cell">32</TD></TR></TABLE></DIV></DIV>
<P>(iv) <I>Financial oversight.</I> During the period of affordability, the participating jurisdiction must at least annually examine the financial condition of projects with 10 or more HOME-assisted units to determine the continued financial viability of the housing and must take actions to correct problems, to the extent feasible.
</P>
<P>(4) <I>Annual inspections for housing with tenants receiving HOME tenant-based rental assistance.</I> All housing occupied by tenants receiving HOME tenant-based rental assistance must meet the property standards of paragraph (f)(1) of this section. The participating jurisdiction must annually determine that the housing is decent, safe, sanitary, and in good repair through one of the following methods:
</P>
<P>(i) An annual on-site inspection in accordance with its inspection procedures for annual inspections to determine the housing meets the property standards in paragraph (f)(1) of this section; or
</P>
<P>(ii) An inspection conducted within the past 3 months in satisfaction of another funding source's requirements under the National Standards for the Condition of HUD housing (24 CFR part 5, subpart G) or an alternative inspection standard, which HUD may establish through <E T="04">Federal Register</E> publication. A participating jurisdiction may move its inspection cycle to align with an inspection covered by this paragraph. If a participating jurisdiction is accepting an inspection pursuant to this paragraph, then the participating jurisdiction must document the inspection's determination that the housing is decent, safe, sanitary, and in good repair in accordance with § 92.508(a)(3)(iv) and is not required to perform a HOME inspection of the project and units for compliance with 24 CFR 5.703.
</P>
<P>(5) <I>Corrective and remedial actions.</I> The participating jurisdiction must have procedures for requiring that timely corrective and remedial actions are taken by the owner to address identified deficiencies.
</P>
<P>(i) <I>Health and safety deficiencies.</I> Health and safety deficiencies must be corrected immediately. Except for small-scale housing, the participating jurisdiction must adopt a more frequent inspection schedule for properties that have been found to have health and safety deficiencies. For small-scale housing, the participating jurisdiction may adopt a more frequent inspection schedule if the small-scale housing is found to have health and safety deficiencies, as described in its inspection procedures.
</P>
<P>(ii) <I>Other deficiencies.</I> If there are observed deficiencies for any of the inspectable areas in the property standards established by the participating jurisdiction, in accordance with the inspection procedures, a follow-up on-site inspection to verify that deficiencies are corrected must occur within 12 months. The participating jurisdiction may establish a list of non-hazardous deficiencies for which correction can be verified by third party documentation (<I>e.g.,</I> paid invoice for work order) rather than re-inspection.


</P>
<P>(g) <I>Inspection procedures.</I> The participating jurisdiction must establish written inspection procedures. The procedures must include detailed inspection checklists, a description of how and by whom inspections will be carried out, and procedures for training and certifying qualified inspectors. For ongoing property inspections, the procedures must also describe how frequently the property will be inspected, consistent with this section and § 92.209.


</P>
<CITA TYPE="N">[78 FR 44670, July 24, 2013, as amended at 81 FR 92635, Dec. 20, 2016; 88 FR 30496, May 11, 2023; 90 FR 870, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.252" NODE="24:1.1.1.1.41.6.67.3" TYPE="SECTION">
<HEAD>§ 92.252   Qualification as affordable housing: Rental housing.</HEAD>
<P>The HOME-assisted units in a rental housing project must be occupied by households that are eligible as low-income families and must meet the requirements of this section to qualify as affordable housing. If the housing is not occupied by eligible tenants within six months following the date of project completion, the participating jurisdiction must revise its marketing plan to enable the project to reach required occupancy. The participating jurisdiction must repay HOME funds invested in any housing unit that has not been rented to eligible tenants within 18 months after the date of project completion. The affordability requirements in this section also apply to the HOME-assisted non-owner-occupied units in single family housing purchased with HOME funds in accordance with § 92.254. A tenant must have a written lease that complies with § 92.253.
</P>
<P>(a) <I>HOME rent limits.</I> The rent for a HOME-assisted unit must not exceed the rent limits in this section. HUD will publish the HOME rent limits on an annual basis, with adjustments for number of bedrooms in the unit. The rent limits do not apply to any rental assistance or subsidy payment provided under a Federal, State, or local rental assistance or subsidy program. Regardless of changes in fair market rents and in median income over time, the rents for a project are not required to be lower than the HOME rent limits for the project in effect at the time of project commitment. The participating jurisdiction may designate (in its written agreement with the owner) more than the minimum HOME units in a rental housing project, regardless of project size. The rent limits apply to the rent plus the utilities or utility allowance.
</P>
<P>(1) <I>High HOME rent limits.</I> If a low-income family is participating in a program where the family pays as a contribution toward rent no more than 30 percent of the family's monthly adjusted income or 10 percent of the family's monthly income, then the maximum rent due from the family is the family's contribution. For all other cases, the rent does not exceed the lesser of:
</P>
<P>(i) The fair market rent for existing housing for comparable units in the area as established by HUD under 24 CFR 888.111; or
</P>
<P>(ii) 30 percent of the adjusted income of a family whose annual income equals 65 percent of the median income for the area, as determined by HUD.
</P>
<P>(2) <I>Low HOME rent limits.</I> In rental projects with five or more HOME-assisted rental units, at least 20 percent of the HOME-assisted units must be occupied by very low-income families. If a very low-income family is participating in a program where the family pays as a contribution toward rent no more than 30 percent of the family's monthly adjusted income or 10 percent of the family's monthly income, then the maximum rent due from the family is the family's contribution. All other Low HOME Rent units must have rent that meet one of the following requirements:
</P>
<P>(i) The rent does not exceed 30 percent of the annual income of a family whose income equals 50 percent of the median income for the area, as determined by HUD. If the rent determined under this paragraph is higher than the fair market rent under paragraph (a)(1)(i) of this section, then the maximum rent for units under this paragraph is the fair market rent under paragraph (a)(1)(i);
</P>
<P>(ii) The rent contribution of the family is not more than 30 percent of the family's adjusted income; or
</P>
<P>(iii) The unit is a LIHTC unit and has rents not greater than the gross rent for rent-restricted residential units as determined under 26 U.S.C. 42(g)(2).
</P>
<P>(3) <I>HOME rent limits for SRO projects.</I> (i) For SRO units that have both sanitary and food preparation facilities, the rent limit is the zero-bedroom fair market rent as established by HUD under 24 CFR part 888. The project must meet the requirements of paragraphs (a)(1) and (2) of this section.
</P>
<P>(ii) For SRO units that have no sanitary or food preparation facilities or only one of the two, the rent limit is 75 percent of the zero-bedroom fair market rent as established by HUD under 24 CFR part 888. The project must be occupied by very low-income tenants.
</P>
<P>(b) <I>Utility allowances.</I> The participating jurisdiction must establish maximum monthly allowances for utilities and services (excluding telephone, cable, and broadband) and update the allowances annually. The participating jurisdiction may determine the utility allowance for the project based on the type of utilities and services paid by the tenant, including any energy efficiency measures. The participating jurisdiction may use any of the following for its maximum monthly allowances: the HUD Utility Schedule Model, the utility allowance established by the applicable local public housing authority, or another method approved by HUD.
</P>
<P>(c) <I>Review and approval of rents.</I> The participating jurisdiction must review and approve rents proposed by the owner for units, subject to the rent limits in paragraph (a) of this section. For all units subject to the rent limits in paragraph (a) for which the tenant is paying utilities and services, the participating jurisdiction must require that the rents do not exceed the rent limits in paragraph (a) minus the monthly allowances for utilities and services in paragraph (b) of this section.
</P>
<P>(d) <I>Period of affordability.</I> The HOME-assisted units must meet requirements under this part for the applicable period specified in the table in this paragraph (d), beginning from project completion.
</P>
<P>(1) The affordability requirements, including the applicable rent limits, period of affordability, and income requirements:
</P>
<P>(i) Apply without regard to the term of any loan or mortgage, repayment of the HOME investment, or the transfer of ownership;
</P>
<P>(ii) Must be imposed by a deed or use restriction, lien on real property, a covenant running with the land, a recorded agreement restricting the use of the property, or other mechanisms approved by HUD in writing, under which the participating jurisdiction has the right to require specific performance (except that the participating jurisdiction may provide that the affordability requirements may terminate upon foreclosure or transfer in lieu of foreclosure); and
</P>
<P>(iii) Must be recorded in accordance with State recordation laws.
</P>
<P>(2) The participating jurisdiction may use purchase options, rights of first refusal, or other preemptive rights to purchase the housing before foreclosure or deed in lieu of foreclosure in order to preserve affordability.
</P>
<P>(3) The affordability restrictions shall be revived according to the original terms if, during the original period of affordability, the owner of record before the foreclosure, or deed in lieu of foreclosure, or any entity that includes the former owner or those with whom the former owner has or had family or business ties, obtains an ownership interest in the project or property.
</P>
<P>(4) The termination of the affordability requirements on the project does not terminate the participating jurisdiction's repayment obligation under § 92.503(b).
</P>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Table 1 to Paragraph (<E T="01">d</E>)(4)—Minimum Period of Affordability for Rental Housing
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Rental housing activity
</TH><TH class="gpotbl_colhed" scope="col">Minimum


<br/>period of

<br/>affordability

<br/>in years
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Rehabilitation or acquisition of existing housing per-unit amount of HOME funds: Under $25,000</TD><TD align="right" class="gpotbl_cell">5
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row" style="padding-left: 2em">$25,000 to $50,000</TD><TD align="right" class="gpotbl_cell">10
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row" style="padding-left: 2em">Over $50,000 or rehabilitation involving refinancing</TD><TD align="right" class="gpotbl_cell">15
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row" style="padding-left: 2em">New construction or acquisition of newly constructed housing</TD><TD align="right" class="gpotbl_cell">20</TD></TR></TABLE></DIV></DIV>
<P>(e) <I>Subsequent rents during the period of affordability.</I> (1) The HOME rent limits are recalculated on a periodic basis after HUD determines fair market rents and median incomes. HUD then publishes the updated HOME rent limits.
</P>
<P>(2) The participating jurisdiction must provide project owners with information on updated HOME rent limits so that rents may be adjusted (not to exceed the rent limits in paragraph (a) of this section) in accordance with the written agreement between the participating jurisdiction and the owner. Owners must annually provide the participating jurisdiction with information on rents and occupancy of HOME-assisted units to demonstrate compliance with this section. The participating jurisdiction must review rents for compliance and approve or disapprove them every year.
</P>
<P>(3) Any increase in rents for HOME-assisted units is subject to the provisions of outstanding leases, and in any event, the owner must provide tenants of those units not less than 60 days prior written notice before implementing any increase in rents.
</P>
<P>(f) <I>Adjustment of HOME rent limits for an existing project.</I> (1) Changes in fair market rents and in median income over time should be sufficient to maintain the financial viability of a project within the HOME rent limits in this section.
</P>
<P>(2) HUD may adjust the HOME rent limits for a project, only if HUD finds that an adjustment is necessary to support the continued financial viability of the project and only by an amount that HUD determines is necessary to maintain continued financial viability of the project. HUD expects that this authority will be used sparingly.
</P>
<P>(g) <I>Tenant income.</I> The income of each tenant must be determined initially in accordance with § 92.203(b)(1)(i) unless the participating jurisdiction accepts an annual income determination pursuant to § 92.203(a)(1), (2), or (3) or determines income in accordance with § 92.203(b)(3). In addition, each year during the period of affordability, the participating jurisdiction must require the project owner to re-examine each tenant's annual income in accordance with the option in § 92.203(b)(1) selected by the participating jurisdiction and included in the written agreement, except as follows:
</P>
<P>(1) A participating jurisdiction may permit an owner of small-scale housing to re-examine each tenant's annual income in accordance with the chart in this paragraph (g)(1), instead of annually, during the period of affordability.
</P>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Table 2 to Paragraph (<E T="01">g</E>)(1)—Alternative Income Examination Cycle for Small-Scale Rental Housing Projects
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col"> 
</TH><TH class="gpotbl_colhed" scope="col"> 
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Initial Examination


<br/>(All Projects)</TD><TD align="left" class="gpotbl_cell">The income of each tenant must be determined initially in accordance with § 92.203(b)(1)(i) unless the participating jurisdiction accepts an annual income determination pursuant to § 92.203(a)(1), § 92.203(a)(2), or § 92.203(a)(3), or determines income in accordance with § 92.203(b)(3).
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Year 3</TD><TD align="left" class="gpotbl_cell">The income of each tenant must be examined in accordance with the option selected by the participating jurisdiction in § 92.203(b)(1) and included in the written agreement between the owner and the participating jurisdiction pursuant to § 92.504(c)(3).
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Year 6


<br/>(Projects with a period of affordability of greater than 5 years)</TD><TD align="left" class="gpotbl_cell">The income of each tenant must be examined in accordance with § 92.203(b)(1)(i).
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Year 9


<br/>(Projects with a period of affordability of greater than 5 years)</TD><TD align="left" class="gpotbl_cell">The income of each tenant must be examined in accordance with the option selected by the participating jurisdiction in § 92.203(b)(1) and included in the written agreement between the owner and the participating jurisdiction pursuant to § 92.504(c)(3).
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Year 12


<br/>(Projects with a period of affordability of greater than 10 years)</TD><TD align="left" class="gpotbl_cell">The income of each tenant must be examined in accordance with § 92.203(b)(1)(i).
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Year 15


<br/>(Projects with a period of affordability of 20 years)</TD><TD align="left" class="gpotbl_cell">The income of each tenant must be examined in accordance with the option selected by the participating jurisdiction in § 92.203(b)(1) and included in the written agreement between the owner and the participating jurisdiction pursuant to § 92.504(c)(3).
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Year 18


<br/>(Projects with a period of affordability of 20 years)</TD><TD align="left" class="gpotbl_cell">The income of each tenant must be examined in accordance with § 92.203(b)(1)(i).</TD></TR></TABLE></DIV></DIV>
<P>(2) A participating jurisdiction that permits an owner of a rental project (including small-scale housing projects) with a period of affordability of ten years or more to re-examine a tenant's annual income through a statement and certification in accordance with § 92.203(b)(1)(ii), must require the owner to re-examine the income of each tenant, in accordance with § 92.203(b)(1)(i), at minimum, every sixth year during the period of affordability; and,
</P>
<P>(3) If the participating jurisdiction accepts an annual income determination pursuant to § 92.203(a)(1), (2), or (3), an owner is not required to re-examine a tenant's annual income in accordance with § 92.203(b) for HOME.
</P>
<P>(h) <I>Over-income tenants.</I> (1) HOME-assisted units continue to qualify as affordable housing despite a temporary noncompliance caused by increases in the incomes of existing tenants if actions satisfactory to HUD are being taken to ensure that all vacancies are filled in accordance with this section until the noncompliance is corrected.
</P>
<P>(2) A tenant who no longer qualifies as low-income must pay a rent amount equal to the lesser of the amount payable by the tenant under State or local law or 30 percent of the family's adjusted income, except that:
</P>
<P>(i) A tenant of a HOME-assisted unit subject to rent restrictions under section 42 of the Internal Revenue Code of 1986 (26 U.S.C. 42) must pay a rent amount that complies with that section;
</P>
<P>(ii) A tenant in a HOME-assisted unit designated as floating pursuant to paragraph (j) of this section shall pay a rent amount no greater than the fair market rent for comparable, unassisted units in the neighborhood; and
</P>
<P>(iii) The rent limits do not apply to any rental assistance or subsidy payment provided under a Federal, State, or local rental assistance or subsidy program.
</P>
<P>(i) <I>Surety bonds.</I> Surety bonds, security deposit insurance, or instruments similar to surety bonds and security deposit insurance may not be used in lieu of or in addition to a security deposit in HOME-assisted units.
</P>
<P>(j) <I>Fixed and floating HOME units.</I> In a project containing HOME-assisted and other units, the participating jurisdiction may designate fixed or floating HOME units. This designation must be made at the time of project commitment in the written agreement between the participating jurisdiction and the owner, and the HOME units must be identified not later than the time of initial unit occupancy. Fixed units remain the same throughout the period of affordability. Floating units are changed to maintain conformity with the requirements of this section during the period of affordability so that the total number of housing units meeting the requirements of this section remains the same, and each substituted unit is comparable in terms of size, features, and number of bedrooms to the originally designated HOME-assisted unit.
</P>
<P>(k) <I>Tenant selection.</I> The tenants must be selected in accordance with § 92.253(e).
</P>
<P>(l) <I>Ongoing responsibilities.</I> The participating jurisdiction's responsibilities for on-site inspections and financial oversight of rental projects are set forth in § 92.251(f).


</P>
<CITA TYPE="N">[90 FR 873, Jan. 6, 2025]




</CITA>
</DIV8>


<DIV8 N="§ 92.253" NODE="24:1.1.1.1.41.6.67.4" TYPE="SECTION">
<HEAD>§ 92.253   Tenant protections and selection.</HEAD>
<XREF ID="20250106" REFID="43">Link to an amendment published at 90 FR 876, Jan. 6, 2025.</XREF>
<XREF ID="20250203" REFID="4">This amendment was delayed until Apr. 20, 2025, at 90 FR 8780, Feb. 3, 2025.</XREF>
<XREF ID="20250417" REFID="5a">This amendment was further delayed until Oct. 30, 2025 at 90 FR 16085, Apr. 17, 2025.</XREF>
<XREF ID="20251022" REFID="2">This amendment was further delayed until Apr. 30, 2026, at 90 FR 48443, Oct. 22, 2025.</XREF>
<XREF ID="20260429" REFID="28">This amendment was further delayed indefinitely, at 91 FR 23014, Apr. 29, 2026.</XREF>
<P>(a) <I>Lease.</I> There must be a written lease between the tenant and the owner of rental housing assisted with HOME funds that is for a period of not less than 1 year, unless by mutual agreement between the tenant and the owner a shorter period is specified. The lease must incorporate the VAWA lease term/addendum required under § 92.359(e), except as otherwise provided by § 92.359(b).
</P>
<P>(b) <I>Prohibited lease terms.</I> The lease may not contain any of the following provisions: 
</P>
<P>(1) <I>Agreement to be sued.</I> Agreement by the tenant to be sued, to admit guilt, or to a judgment in favor of the owner in a lawsuit brought in connection with the lease; 
</P>
<P>(2) <I>Treatment of property.</I> Agreement by the tenant that the owner may take, hold, or sell personal property of household members without notice to the tenant and a court decision on the rights of the parties. This prohibition, however, does not apply to an agreement by the tenant concerning disposition of personal property remaining in the housing unit after the tenant has moved out of the unit. The owner may dispose of this personal property in accordance with State law; 
</P>
<P>(3) <I>Excusing owner from responsibility.</I> Agreement by the tenant not to hold the owner or the owner's agents legally responsible for any action or failure to act, whether intentional or negligent; 
</P>
<P>(4) <I>Waiver of notice.</I> Agreement of the tenant that the owner may institute a lawsuit without notice to the tenant; 
</P>
<P>(5) <I>Waiver of legal proceedings.</I> Agreement by the tenant that the owner may evict the tenant or household members without instituting a civil court proceeding in which the tenant has the opportunity to present a defense, or before a court decision on the rights of the parties; 
</P>
<P>(6) <I>Waiver of a jury trial.</I> Agreement by the tenant to waive any right to a trial by jury; 
</P>
<P>(7) <I>Waiver of right to appeal court decision.</I> Agreement by the tenant to waive the tenant's right to appeal, or to otherwise challenge in court, a court decision in connection with the lease; 
</P>
<P>(8) <I>Tenant chargeable with cost of legal actions regardless of outcome.</I> Agreement by the tenant to pay attorney's fees or other legal costs even if the tenant wins in a court proceeding by the owner against the tenant. The tenant, however, may be obligated to pay costs if the tenant loses; and 
</P>
<P>(9) <I>Mandatory supportive services.</I> Agreement by the tenant (other than a tenant in transitional housing) to accept supportive services that are offered.
</P>
<P>(c) <I>Termination of tenancy.</I> An owner may not terminate the tenancy or refuse to renew the lease of a tenant of rental housing assisted with HOME funds, except for serious or repeated violation of the terms and conditions of the lease; for violation of applicable Federal, State, or local law; for completion of the tenancy period for transitional housing or failure to follow any required transitional housing supportive services plan; or for other good cause. Good cause does not include an increase in the tenant's income or refusal of the tenant to purchase the housing. To terminate or refuse to renew tenancy, the owner must serve written notice upon the tenant specifying the grounds for the action at least 30 days before the termination of tenancy.
</P>
<P>(d) <I>Tenant selection.</I> An owner of rental housing assisted with HOME funds must comply with the affirmative marketing requirements established by the participating jurisdiction pursuant to § 92.351(a). The owner must adopt and follow written tenant selection policies and criteria that:
</P>
<P>(1) Limit the housing to very low- income and low-income families;
</P>
<P>(2) Are reasonably related to the applicants' ability to perform the obligations of the lease (i.e., to pay the rent, not to damage the housing; not to interfere with the rights and quiet enjoyment of other tenants);
</P>
<P>(3) Limit eligibility or give a preference to a particular segment of the population if permitted in its written agreement with the participating jurisdiction (and only if the limitation or preference is described in the participating jurisdiction's consolidated plan).
</P>
<P>(i) Any limitation or preference must not violate nondiscrimination requirements in § 92.350. A limitation or preference does not violate nondiscrimination requirements if the housing also receives funding from a Federal program that limits eligibility to a particular segment of the population (e.g., the Housing Opportunity for Persons with AIDS program under 24 CFR part 574, the Shelter Plus Care program under 24 CFR part 582, the Supportive Housing program under 24 CFR part 583, supportive housing for the elderly or persons with disabilities under 24 CFR part 891), and the limit or preference is tailored to serve that segment of the population.
</P>
<P>(ii) If a project does not receive funding from a Federal program that limits eligibility to a particular segment of the population, the project may have a limitation or preference for persons with disabilities who need services offered at a project only if:
</P>
<P>(A) The limitation or preference is limited to the population of families (including individuals) with disabilities that significantly interfere with their ability to obtain and maintain housing;
</P>
<P>(B) Such families will not be able to obtain or maintain themselves in housing without appropriate supportive services; and
</P>
<P>(C) Such services cannot be provided in a nonsegregated setting. The families must not be required to accept the services offered at the project. In advertising the project, the owner may advertise the project as offering services for a particular type of disability; however, the project must be open to all otherwise eligible persons with disabilities who may benefit from the services provided in the project.
</P>
<P>(4) Do not exclude an applicant with a voucher under the Section 8 Tenant-Based Assistance: Housing Choice Voucher Program (24 CFR part 982) or an applicant participating in a HOME tenant-based rental assistance program because of the status of the prospective tenant as a holder of such voucher or comparable HOME tenant-based assistance document.
</P>
<P>(5) Provide for the selection of tenants from a written waiting list in the chronological order of their application, insofar as is practicable;
</P>
<P>(6) Give prompt written notification to any rejected applicant of the grounds for any rejection; and
</P>
<P>(7) Comply with the VAWA requirements prescribed in § 92.359.
</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 67 FR 61756, Oct. 1, 2002; 78 FR 44674, July 24, 2013; 81 FR 80803, Nov. 16, 2016; 89 FR 38290, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 92.254" NODE="24:1.1.1.1.41.6.67.5" TYPE="SECTION">
<HEAD>§ 92.254   Qualification as affordable housing: Homeownership.</HEAD>
<P>(a) <I>Acquisition with or without rehabilitation.</I> Housing that is for acquisition by a family must meet the affordability requirements of this paragraph (a). 
</P>
<P>(1) The housing must be single family housing.


</P>
<P>(2) The housing must be modest housing as follows: 
</P>
<P>(i) In the case of acquisition of newly constructed housing or standard housing, the housing has a purchase price for the type of single family housing that does not exceed 95 percent of the median purchase price for the area, as described in paragraph (a)(2)(iii) of this section. 
</P>
<P>(ii) In the case of acquisition with rehabilitation, the housing has an estimated value after rehabilitation that does not exceed 95 percent of the median purchase price for the area, described in paragraph (a)(2)(iii) of this section. 




</P>
<P>(iii) If a participating jurisdiction intends to use HOME funds for homebuyer assistance or for the rehabilitation of owner-occupied single family properties, the participating jurisdiction must use the HOME affordable homeownership limits provided by HUD for newly constructed housing and for existing housing.
</P>
<P>(A) HUD will provide limits for affordable newly constructed housing based on 95 percent of the median purchase price for the area using Federal Housing Administration (FHA) single family mortgage program data for newly constructed housing, with a minimum limit based on 95 percent of the U.S. median purchase price for new construction for nonmetropolitan areas.
</P>
<P>(B) HUD will provide limits for affordable existing housing based on 95 percent of the median area purchase price for the area using FHA single family mortgage program data for existing housing and other appropriate data that are available Nation-wide for purchase of existing housing, with a minimum limit based on 95 percent of the State-wide nonmetropolitan area median area purchase price using this data.




</P>
<P>(iv) In lieu of the limits provided by HUD, the participating jurisdiction may determine 95 percent of the median area purchase price for single family housing in the jurisdiction annually, as follows:
</P>
<P>(A) The participating jurisdiction must set forth the limits for single family housing of one, two, three, and four units, for the jurisdiction. The participating jurisdiction may determine separate limits for existing housing and newly constructed housing.
</P>
<P>(B) For the limits on housing located outside of metropolitan areas, a State may aggregate sales data from more than one county if the counties are contiguous and similarly situated.
</P>
<P>(C) The participating jurisdiction must include the following information in the annual action plan of the Consolidated Plan submitted to HUD for review and must update the information in each action plan.
</P>
<P>(<I>1</I>) The 95 percent of median area purchase price must be established in accordance with a market analysis that ensured that a sufficient number of recent housing sales are included in the survey;
</P>
<P>(<I>2</I>) Sales must cover the requisite number of months based on volume: For 500 or more sales per month, a 1-month reporting period; for 250 through 499 sales per month, a 2-month reporting period; for less than 250 sales per month, at least a 3-month reporting period. The data must be listed in ascending order of purchase price;
</P>
<P>(<I>3</I>) The address of the listed properties must include the location within the participating jurisdiction. Lot, square, and subdivision data may be substituted for the street address;
</P>
<P>(<I>4</I>) The housing sales data must reflect all, or nearly all, of the single family housing sales in the entire participating jurisdiction; and.
</P>
<P>(<I>5</I>) To determine the median area purchase price, a participating jurisdiction must take the middle sale on the list if an odd number of sales, and if an even number, take the higher of the middle numbers and consider it the median. After identifying the median area purchase price, the amount should be multiplied by 0.95 to determine the 95 percent of the median area purchase price.


</P>
<P>(3) The housing must be acquired by a homebuyer whose family qualifies as a low-income family, and the housing must be the principal residence of the family throughout the period described in paragraph (a)(4) of this section. If there is no ratified sales contract with an eligible homebuyer for the housing within 12 months of the date of completion of construction or rehabilitation, the housing must be rented to an eligible tenant as affordable rental housing and must comply with the requirements in § 92.252, including the period of affordability in § 92.252(d). In determining the income eligibility of the family, the participating jurisdiction must include the income of all persons living in the housing. The homebuyer must receive housing counseling. If housing is being purchased by an in-place tenant pursuant to § 92.255, then the housing may be acquired if the homebuyer's family was low-income at the time the homebuyer's family began occupying the HOME rental housing unit. If the housing does not meet the participating jurisdiction's property standards in § 92.251 at the time of acquisition, then the housing may still be acquired if the written agreement between the participating jurisdiction and the homebuyer requires the property to meet the standards within the period specified in § 92.251(c)(3)(ii) and funding is secured to complete the rehabilitation necessary to comply with the standards.
</P>
<P>(4) <I>Periods of affordability.</I> The HOME-assisted housing must meet the affordability requirements for not less than the applicable period specified in the following table, beginning after execution of the instrument that requires the recapture of the HOME investment or recordation of the resale restrictions for sale to the next homebuyer. Execution of the instrument that requires the recapture of the HOME investment or recordation of the resale restrictions for sale to the next homebuyer may only occur after the housing meets the participating jurisdiction's property standards in accordance with § 92.251(c)(3) and the property title is transferred to the homebuyer. The per unit amount of HOME funds and the period of affordability that they trigger are described more fully in paragraphs (a)(5)(i) (resale) and (ii) (recapture) of this section. The period of affordability is based on the total amount of HOME funds invested in the housing.
</P>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Table 1 to Paragraph (<E T="01">a</E>)(4)
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Homeownership assistance HOME amount per-unit
</TH><TH class="gpotbl_colhed" scope="col">Minimum


<br/>period of

<br/>affordability in years
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Under $25,000</TD><TD align="right" class="gpotbl_cell">5
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">$25,000 to $50,000</TD><TD align="right" class="gpotbl_cell">10
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Over $50,000</TD><TD align="right" class="gpotbl_cell">15</TD></TR></TABLE></DIV></DIV>
<P>(5) <I>Resale and recapture.</I> The participating jurisdiction must establish the resale or recapture requirements that comply with the standards of this section and set forth the requirements in its consolidated plan. HUD must determine that they are appropriate and must specifically approve them in writing.


</P>
<P>(i) <I>Resale.</I> Resale requirements must ensure, if the housing does not continue to be the principal residence of the family for the duration of the period of affordability, that the housing is made available for subsequent purchase only to a buyer whose family qualifies as a low-income family and will use the property as the family's principal residence. The resale requirement must also ensure that the price at resale provides the HOME-assisted homeowner a fair return on investment (including the homeowner's investment and any improvements) and ensure the housing will remain affordable to a reasonable range of low-income homebuyers. The resale price is the fair return on investment added to the original sales price of the property, subject to market conditions. The participating jurisdiction must specifically define “fair return on investment” and “affordability to a reasonable range of low-income homebuyers,” and specifically address how it will make the housing affordable to a low-income homebuyer in the event that the resale price necessary to provide a fair return is not affordable to the subsequent homebuyer. The period of affordability is based on the total amount of HOME funds invested in the housing.
</P>
<P>(A) Permissible methods of determining fair return and the resale price include but are not limited to the following:
</P>
<P>(<I>1</I>) <I>Itemized formula.</I> To determine fair return on investment and resale price, the participating jurisdiction may use an itemized formula to add or subtract common, clearly defined factors that increase or decrease the value of a homeowner's investment in the property over the term of ownership. This formula must include the value of capital improvements and the sum of the downpayment and all principal payments by the homeowner on the loan secured by the property. The formula may depreciate the value of the capital improvements and may take into consideration any reduction in value due to property damage or delayed or deferred maintenance of the property condition. The fair return on a homeowner's investment under this formula is calculated by taking the sum of the defined factors for the homeowner's investment in the property over the term of ownership and multiplying this amount by a clearly defined, publicly accessible index or standard.



</P>
<HD1>Formula 1 to Paragraph (<E T="01">a</E>)(5)(<E T="01">i</E>)(A)(<I>1</I>)

</HD1>
<img src="/graphics/er06ja25.000.gif"/>
<P>(<I>2</I>) <I>Appraisal formula.</I> The participating jurisdiction may use an appraisal formula to determine fair return on investment and resale price based on the amount of market appreciation, if any, over the term of ownership. Under this method, the appraisals must be conducted by a State licensed or certified third-party appraiser. The amount of market appreciation over the term of ownership is determined by subtracting the appraised value at the time of initial purchase from the appraised value of the property at the time of resale. The fair return on a homeowner's investment under this formula is calculated by multiplying a clearly defined, publicly accessible standard or index by the amount of market appreciation over the term of homeownership.

</P>
<HD1>Formula 2 to Paragraph (<E T="01">a</E>)(5)(<E T="01">i</E>)(A)(<I>2</I>)

</HD1>
<img src="/graphics/er06ja25.001.gif"/>
<P>(<I>3</I>) <I>Index formula.</I> The participating jurisdiction may use an index formula to determine fair return on investment and resale price based on the change in value of a homeowner's investment over the term of ownership. Index formulas adjust the value of the homeowner's investment in proportion to changes in an index, such as the change in median household income. To determine the homeowner's fair return using this model, the sum of the property's original purchase price and the value of any capital improvements to the property is multiplied by the change in the specified index during the term of ownership. The formula may also depreciate the value of the capital improvements and may take into consideration any reduction in value due to property damage or delayed or deferred maintenance of the property condition.



</P>
<HD1>Formula 3 to Paragraph (<E T="01">a</E>)(5)(<E T="01">i</E>)(A)(<I>3</I>)

</HD1>
<img src="/graphics/er06ja25.002.gif"/>
<P>(<I>4</I>) <I>Fixed-rate formula.</I> The participating jurisdiction may use a fixed-rate formula to determine the homeowner's fair return on investment. Fixed-rate formulas adjust the value of the homeowner's investment by a fixed percentage (rate) per year (<I>e.g.,</I> 3.5 percent). To determine the fair return on investment using this model, the fixed rate is multiplied by the number of years the homeowner owned and occupied the home (<I>e.g.,</I> 3.5 percent × 10 years = 35%). The resulting rate is then multiplied by the sum of the original purchase price of the home and the value of any capital improvements to the property to calculate the fair return to the homeowner. The formula may also depreciate the value of the capital improvements and may take into consideration any reduction in value due to property damage or delayed or deferred maintenance of the property condition.



</P>
<HD1>Formula 4 to Paragraph (<E T="01">a</E>)(5)(<E T="01">i</E>)(A)(<I>4</I>)

</HD1>
<img src="/graphics/er06ja25.003.gif"/>
<P>(B) Except as provided in paragraph (a)(5)(i)(C) of this section, deed or use restrictions, a recorded agreement restricting the use of the property, liens on real property, covenants running with the land, or other similar mechanisms approved by HUD in writing must be used to impose the resale requirements.
</P>
<P>(C) The affordability restrictions may terminate upon occurrence of any of the following termination events: foreclosure, transfer in lieu of foreclosure, or assignment of an FHA-insured mortgage to HUD. If the owner of record before the termination event obtains an ownership interest in the property after the termination event, then the affordability restrictions shall be revived under the same terms prior to the termination event, including a minimum period of affordability equal to the terminated period of affordability.
</P>
<P>(D) Certain housing may be presumed to meet the resale restrictions (<I>i.e.,</I> the housing will be available and affordable to a reasonable range of low-income homebuyers; a low-income homebuyer will occupy the housing as the family's principal residence; and the original owner will be afforded a fair return on investment) during the period of affordability without the imposition of enforcement mechanisms by the participating jurisdiction. The presumption must be based upon a market analysis of the neighborhood in which the housing is located. The market analysis must include an evaluation of the location and characteristics of the housing and residents in the neighborhood (<I>e.g.,</I> sale prices, age and amenities of the housing stock, incomes of residents, percentage of owner-occupants) in relation to housing and incomes in the housing market area. An analysis of the current and projected incomes of neighborhood residents for an average period of affordability for homebuyers in the neighborhood must support the conclusion that a reasonable range of low-income families will continue to qualify for mortgage financing. For example, an analysis shows that the housing is modestly priced within the housing market area and that families with incomes of 65 percent to 80 percent of the area median income can afford monthly payments under average FHA terms without other government assistance and housing will remain affordable at least during the next five to seven years compared to other housing in the market area; the size and amenities of the housing are modest and substantial rehabilitation will not significantly increase the market value; the neighborhood has housing that is not currently owned by the occupants, but the participating jurisdiction is encouraging homeownership in the neighborhood by providing homeownership assistance and by making improvements to the streets, sidewalks, and other public facilities and services. If a participating jurisdiction in preparing a neighborhood revitalization strategy under § 91.215(e)(2) of its Consolidated Plan has incorporated the type of market data described above, that submission may serve as the required analysis under this section. If the participating jurisdiction continues to provide homeownership assistance for housing in the neighborhood, it must periodically update the market analysis to verify the original presumption of continued affordability.</P>
<P>(ii) <I>Recapture.</I> (A) Recapture provisions must require that the participating jurisdiction recoups all or a portion of the HOME assistance provided to the homebuyers if the housing does not continue to be the principal residence of the family for the duration of the period of affordability. The participating jurisdiction may structure its recapture provisions based on its program design and market conditions. The period of affordability is based upon the amount of HOME funds that directly assisted the homebuyer to buy the housing unit. This amount includes any HOME assistance that assisted the homebuyer to purchase the housing or reduced the purchase price paid by the homebuyer from fair market value to an affordable price but excludes the amount of HOME assistance provided to develop the unit that does not assist the homebuyer or reduce the purchase price paid by the homebuyer. Recapture provisions may permit the subsequent homebuyer to assume the HOME assistance (subject to the HOME requirements for the remainder of the period of affordability) if the subsequent homebuyer is low-income and no additional HOME assistance is provided.
</P>
<P>(B) The following options for recapture requirements are acceptable to HUD. The participating jurisdiction may adopt, modify, or develop its own recapture requirements for HUD approval. In establishing its recapture requirements, the participating jurisdiction is subject to the limitation that when the recapture requirement is triggered by a sale (voluntary or involuntary) of the housing unit, the amount recaptured cannot exceed the net proceeds, if any. The net proceeds are the sales price minus superior loan repayment (other than HOME funds) and any closing costs.
</P>
<P>(<I>1</I>) <I>Recapture entire amount.</I> The participating jurisdiction may recapture the entire amount of the HOME investment from the homeowner.
</P>
<P>(<I>2</I>) <I>Reduction during period of affordability.</I> The participating jurisdiction may reduce the HOME investment amount to be recaptured on a pro rata basis for the time the homeowner has owned and occupied the housing measured against the required period of affordability.
</P>
<P>(<I>3</I>) <I>Shared net proceeds.</I> If the net proceeds are not sufficient to recapture the full HOME investment (or a reduced amount as provided for in paragraph (a)(5)(ii)(A)(<I>2</I>) of this section) plus enable the homeowner to recover the amount of the homeowner's downpayment and any capital improvement investment made by the owner since purchase, the participating jurisdiction may share the net proceeds. The net proceeds are the sales price minus loan repayment (other than HOME funds) and closing costs. The net proceeds may be divided proportionally as set forth in the following mathematical formulas:

</P>
<HD1>Formula 5 to Paragraph (<I>a</I>)(5)(<I>ii</I>)(A)(<I>2</I>)

</HD1>
<img src="/graphics/er06ja25.004.gif"/>
<P>(<I>4</I>) <I>Owner investment returned first.</I> The participating jurisdiction may permit the homebuyer to recover the homebuyer's entire investment (downpayment and capital improvements made by the owner since purchase) before recapturing the HOME investment.
</P>
<P>(<I>5</I>) <I>Amount subject to recapture.</I> The HOME investment subject to recapture is the amount of HOME funds that directly assisted the homebuyer to buy the housing. This includes the amount that assisted the homebuyer to purchase the housing or reduced the purchase price paid by the homebuyer from fair market value to an affordable price but excludes the amount of HOME assistance provided to develop the unit that did not assist the homebuyer or reduce the purchase price paid by the homebuyer. The recaptured funds must be used to carry out HOME-eligible activities in accordance with the requirements of this part. If the HOME assistance is only used for the development subsidy and therefore not subject to recapture, the resale option must be used.




</P>
<P>(6) <I>Special considerations for single family properties with more than one unit.</I> If the HOME funds are only used to assist a low-income homebuyer to acquire one unit in single family housing containing more than one unit and the assisted unit will be the principal residence of the homebuyer, the affordability requirements of this section apply only to the assisted unit. If HOME funds are also used to assist the low-income homebuyer to acquire one or more rental units in the single-family housing, the affordability requirements of § 92.252 apply to the assisted rental units, except that the participating jurisdiction may impose resale or recapture restrictions on all assisted units (owner-occupied and rental units) in the single-family housing. If resale restrictions are used, the affordability requirements on all assisted units continue for the period of affordability. If recapture restrictions are used, the affordability requirements on the assisted rental units may be terminated, at the discretion of the participating jurisdiction, upon recapture of the HOME investment. If HOME funds are used to assist only the rental units in a single-family property, then the requirements of § 92.252 would apply and the owner-occupied unit would not be subject to the income targeting or affordability provisions of § 92.254.
</P>
<P>(7) <I>Lease-purchases in the HOME program.</I> A homeownership project may consist of acquisition, rehabilitation, or new construction of housing to be sold to an eligible low-income homebuyer through a lease-purchase program.
</P>
<P>(i) The homebuyer must qualify as a low-income family at the time of signing the lease-purchase agreement. In determining the income eligibility of the family, the participating jurisdiction must include the income of all persons living in the housing. If a family is also receiving HOME tenant-based rental assistance, the participating jurisdiction is not required to reexamine the family's income during the term of the lease-purchase agreement.
</P>
<P>(ii) The owner and homebuyer must execute a lease-purchase agreement under an existing lease-purchase program prior to occupancy of the unit. The lease-purchase agreement must require the purchase of the housing within 36 months of execution. Owners and homebuyers that have entered into a lease-purchase agreement pursuant to the requirements in this paragraph are subject to the affordability requirements in this section unless the housing is not purchased within the required timeframes in this paragraph in accordance with the lease-purchase agreement.
</P>
<P>(iii) If the first homebuyer does not acquire the housing in accordance with the lease-purchase agreement, the owner must sell the housing to another eligible low-income homebuyer within 48 months from the execution of the original lease-purchase agreement. The next homebuyer is eligible for homeownership assistance from the participating jurisdiction. The owner is not permitted to sell the unit through another lease-purchase agreement. When the next homebuyer purchases the housing, the homebuyer shall be subject to the affordability requirements in this section.
</P>
<P>(iv) If the owner is unable to sell the unit within 48 months from the execution of the lease-purchase agreement, the housing is subject to the requirements for affordable rental housing in § 92.252.
</P>
<P>(8) <I>Contract to purchase.</I> If HOME funds are used to assist a homebuyer who has entered into a contract to purchase housing to be constructed, the homebuyer must qualify as a low-income family at the time the contract is signed.




</P>
<P>(b) <I>Preserving affordability of housing assisted with HOME funds.</I> When there is a termination event for affordability restrictions, a participating jurisdiction may take the following actions to preserve the affordability of the property:
</P>
<P>(1) The participating jurisdiction may exercise purchase options, rights of first refusal, or other preemptive rights to obtain ownership of the housing before foreclosure to preserve affordability, subject to the following requirements:
</P>
<P>(i) The housing must be sold to an eligible homebuyer in accordance with paragraph (a)(3) of this section within 12 months of the date the participating jurisdiction obtains ownership;
</P>
<P>(ii) The period of affordability for the eligible homebuyer must be equal to the remaining period of affordability of the former homeowner unless additional HOME funds are used to directly assist the eligible homebuyer (<I>i.e.,</I> homeownership assistance);
</P>
<P>(iii) If the participating jurisdiction directly assists the eligible homebuyer with additional HOME funds, then the period of affordability must be recalculated in accordance with the table in § 92.254(a)(4) based on the total amount of additional HOME funds invested. The additional investment must be treated as a new project; and
</P>
<P>(iv) The total HOME funds for a project (original investment plus additional investment) must not exceed the per-unit subsidy limit in § 92.250(a) in effect at the time of the additional investment, subject to HUD approval.
</P>
<P>(2) The participating jurisdiction may use additional HOME funds for the following costs:
</P>
<P>(i) The cost for the participating jurisdiction to obtain ownership of the HOME-assisted housing through a purchase option, right of first refusal, or other preemptive right before foreclosure or at the foreclosure sale. This cost must be treated as an amendment to the original project. The foreclosure costs to acquire housing with a HOME loan in default is an eligible cost; however, HOME funds may not be used to repay a loan made with HOME funds.
</P>
<P>(ii) The cost of the participating jurisdiction to undertake any necessary rehabilitation for the housing acquired. This includes the rehabilitation required for the housing to meet applicable property standards in § 92.251. This cost must be treated as an amendment to the original project.
</P>
<P>(iii) The cost to the participating jurisdiction of owning the housing pending resale to another homebuyer. This cost must be treated as an amendment to the original project.
</P>
<P>(iv) The cost to assist an eligible homebuyer in purchasing the housing. This cost must be treated as a cost for a new project and not as an amendment to the original project.
</P>
<P>(v) As an alternative to charging costs to the HOME program under § 92.206, the participating jurisdiction may charge the costs to the HOME program under § 92.207 as a reasonable administrative cost of its HOME program. To the extent administrative funds are used, they may be reimbursed, in whole or in part, when the housing is sold to a new eligible homebuyer. If the housing is sold for more than the amount of administrative funds that the participating jurisdiction expended to preserve the affordability, then the excess sale proceeds shall be program income.
</P>
<P>(3) The participating jurisdiction may permit the Community Land Trust, as defined in § 92.2, that originally developed the HOME-assisted housing, to exercise a purchase option, right of first refusal, or other preemptive right to obtain ownership of the housing to preserve affordability, including but not limited to the right to purchase the housing in lieu of foreclosure, under the following conditions:
</P>
<P>(i) The Community Land Trust obtains ownership of the housing, subject to existing HOME affordability restrictions;
</P>
<P>(ii) The housing must be resold to an eligible homebuyer in accordance with paragraph (a)(3) of this section within 12 months;
</P>
<P>(iii) The period of affordability for the eligible homebuyer is equal to the remaining period of affordability of the former homeowner, unless the participating jurisdiction provides additional HOME funds to directly assist the eligible homebuyer in accordance with subparagraph (b)(3)(iv) below (<I>i.e.,</I> homeownership assistance); and,
</P>
<P>(iv) The participating jurisdiction may not provide additional HOME funds to the Community Land Trust to obtain ownership, rehabilitate the housing, own/hold the housing pending resale to the next homebuyer, or provide homeownership assistance to the next eligible homebuyer. The participating jurisdiction may provide homeownership assistance to the next eligible homebuyer and the period of affordability shall be based upon the homeownership assistance provided to the homebuyer, in accordance with subparagraphs (b)(1)(iii) and (b)(1)(iv) of this section.




</P>
<P>(c) <I>Rehabilitation not involving acquisition.</I> Housing that is currently owned by a family qualifies as affordable housing only if: 
</P>
<P>(1) The estimated value of the property, after rehabilitation, does not exceed 95 percent of the median purchase price for the area, described in paragraph (a)(2)(iii) of this section; and 
</P>
<P>(2) The housing is the principal residence of an owner whose family qualifies as a low-income family at the time HOME funds are committed to the housing. In determining the income eligibility of the family, the participating jurisdiction must include the income of all persons living in the housing.
</P>
<P>(d) <I>Ownership interest.</I> The ownership in the housing assisted under this section must meet the definition of “homeownership” in § 92.2, except that housing that is rehabilitated pursuant to paragraph (b) of this section may also include inherited property with multiple owners, life estates, living trusts and beneficiary deeds under the following conditions. The participating jurisdiction has the right to establish the terms of assistance.
</P>
<P>(1) <I>Inherited property.</I> Inherited property with multiple owners: Housing for which title has been passed to several individuals by inheritance, but not all heirs reside in the housing, sharing ownership with other nonresident heirs. (The occupant of the housing has a divided ownership interest.) The participating jurisdiction may assist the owner-occupant if the occupant is low-income, occupies the housing as his or her principal residence, and pays all the costs associated with ownership and maintenance of the housing (e.g., mortgage, taxes, insurance, utilities).
</P>
<P>(2) <I>Life estate.</I> The person who has the life estate has the right to live in the housing for the remainder of his or her life and does not pay rent. The participating jurisdiction may assist the person holding the life estate if the person is low-income and occupies the housing as his or her principal residence.
</P>
<P>(3) <I>Inter vivos trust, also known as a living trust.</I> A living trust is created during the lifetime of a person. A living trust is created when the owner of property conveys his or her property to a trust for his or her own benefit or for that of a third party (the beneficiaries). The trust holds legal title and the beneficiary holds equitable title. The person may name him or herself as the beneficiary. The trustee is under a fiduciary responsibility to hold and manage the trust assets for the beneficiary. The participating jurisdiction may assist if all beneficiaries of the trust qualify as a low-income family and occupy the property as their principal residence (except that contingent beneficiaries, who receive no benefit from the trust nor have any control over the trust assets until the beneficiary is deceased, need not be low-income). The trust must be valid and enforceable and ensure that each beneficiary has the legal right to occupy the property for the remainder of his or her life.
</P>
<P>(4) <I>Beneficiary deed.</I> A beneficiary deed conveys an interest in real property, including any debt secured by a lien on real property, to a grantee beneficiary designated by the owner and that expressly states that the deed is effective on the death of the owner. Upon the death of the owner, the grantee beneficiary receives ownership in the property, subject to all conveyances, assignments, contracts, mortgages, deeds of trust, liens, security pledges, and other encumbrances made by the owner or to which the owner was subject during the owner's lifetime. The participating jurisdiction may assist if the owner qualifies as low-income and the owner occupies the property as his or her principal residence.
</P>
<P>(e) <I>New construction without acquisition.</I> Newly constructed housing that is built on property currently owned by a family which will occupy the housing upon completion, qualifies as affordable housing if it meets the requirements under paragraph (a) of this section. 


</P>
<P>(f) <I>Providing homeownership assistance through lenders.</I> Subject to the requirements of paragraph (f) of this section, the participating jurisdiction may provide homeownership assistance through a lending institution that is a contractor or nonprofit lending institution that is a subrecipient that also provides the first mortgage loan to a low-income family.


</P>
<P>(1) The homeownership assistance may be provided only as specified in a written agreement between the participating jurisdiction and the lender. The written agreement must specify the forms and amounts of homeownership assistance that the participating jurisdiction authorizes the lender to provide to families and any conditions that apply to the provision of such homeownership assistance.
</P>
<P>(2) Before the lender provides any homeownership assistance to a family, the participating jurisdiction must verify that the family is low-income and must inspect the housing for compliance with the property standards in § 92.251.
</P>
<P>(3) No fees (e.g., origination fees or points) may be charged to a family for the HOME homeownership assistance provided pursuant to this paragraph (e), and the participating jurisdiction must determine that the fees and other amounts charged to the family by the lender for the first mortgage financing are reasonable. Reasonable administrative costs may be charged to the HOME program as a project cost. If the participating jurisdiction requires lenders to pay a fee to participate in the HOME program, the fee is program income to the HOME program.
</P>
<P>(4) If the nonprofit lender is a subrecipient or contractor that is receiving HOME assistance to determine that the family is eligible for homeownership assistance, but the participating jurisdiction or another entity is making the assistance to the homebuyer (e.g., signing the documents for the loan or the grant), the requirements of paragraphs (e)(2) and (3) of this section are applicable.


</P>
<P>(g) <I>Homebuyer program policies.</I> The participating jurisdiction must have and follow written policies for:
</P>
<P>(1) Underwriting standards for homeownership assistance to determine the amount of assistance necessary to achieve sustainable homeownership. These standards must evaluate the projected overall debt of the family after the purchase of the housing, the maximum amount that a participating jurisdiction may provide a family, the appropriateness of the amount of assistance, assets available to a family to acquire the housing, and financial resources to sustain homeownership. A participating jurisdiction may not provide a single, fixed amount of assistance to each homebuyer that participates in the participating jurisdiction's homebuyer program;
</P>
<P>(2) Responsible lending, and




</P>
<P>(3) Refinancing loans to which HOME loans are subordinated to require that the terms of the new loan are reasonable.


</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 67 FR 61756, Oct. 1, 2002; 68 FR 10161, Mar. 4, 2003; 69 FR 16766, Mar. 30, 2004; 69 FR 68052, Nov. 22, 2004; 72 FR 16685, Apr. 4, 2007; 78 FR 44674, July 24, 2013; 90 FR 881, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.255" NODE="24:1.1.1.1.41.6.67.6" TYPE="SECTION">
<HEAD>§ 92.255   Purchase of HOME units by in-place tenants.</HEAD>
<P>(a) During a HOME-assisted rental unit's period of affordability, the participating jurisdiction may permit an owner to sell or otherwise convey a HOME-assisted rental unit to an existing tenant in accordance with the requirements of § 92.254. However, refusal by the tenant to purchase the housing does not constitute good cause for termination of tenancy or failure to renew the lease. The participating jurisdiction may not permit the use of a lease-purchase program under this section.
</P>
<P>(b) If no additional HOME funds are used to enable the tenants to become homeowners, the homeownership units are subject to a period of affordability equal to the remaining period of affordability if the units continued as rental units. The participating jurisdiction must impose resale requirements that comply with § 92.254(a) for the required period of affordability. The period of affordability and resale restrictions must be applied to the property regardless of the income of the family at purchase. If the tenant's family is no longer low-income at the time of the purchase, then the family must occupy the housing as a principal residence in accordance with § 92.254(a)(3) and must agree to the imposition of resale restrictions on the housing, in accordance with § 92.254(a)(5), for the period of affordability specified in this paragraph (b).
</P>
<P>(c) If additional HOME funds are used to directly assist the tenants to become homeowners, the period of affordability is the remaining period of affordability if the unit had remained a rental unit or the required period under § 92.254(a)(4) for the amount of direct homeownership assistance provided, whichever is longer. No additional HOME funds may be provided to an in-place tenant to become a homebuyer if the tenant's family is no longer low-income at the time of the purchase.


</P>
<CITA TYPE="N">[90 FR 886, Jan. 6, 2025]




</CITA>
</DIV8>


<DIV8 N="§ 92.256" NODE="24:1.1.1.1.41.6.67.7" TYPE="SECTION">
<HEAD>§ 92.256   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 92.257" NODE="24:1.1.1.1.41.6.67.8" TYPE="SECTION">
<HEAD>§ 92.257   Equal participation of faith-based organizations.</HEAD>
<P>The HUD program requirements in § 5.109 apply to the HOME program, including the requirements regarding disposition and change in use of real property by a faith-based organization.
</P>
<CITA TYPE="N">[81 FR 19418, Apr. 4, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 92.258" NODE="24:1.1.1.1.41.6.67.9" TYPE="SECTION">
<HEAD>§ 92.258   Elder cottage housing opportunity (ECHO) units.</HEAD>
<P>(a) <I>General.</I> HOME funds may be used for the initial purchase and initial placement costs of elder cottage housing opportunity (ECHO) units that meet the requirements of this section, and that are small, free-standing, barrier-free, energy-efficient, removable, and designed to be installed adjacent to existing single family housing units. 


</P>
<P>(b) <I>Eligible owners.</I> The owner of a HOME-assisted ECHO unit may be: 


</P>
<P>(1) The owner-occupant of the single family host property on which the ECHO unit will be located; 


</P>
<P>(2) A participating jurisdiction; or 
</P>
<P>(3) A non-profit organization. 


</P>
<P>(c) <I>Eligible tenants.</I> During the period of affordability, the tenant of a HOME-assisted ECHO unit must be an elderly or disabled family as defined in 24 CFR 5.403 and must also be a low-income family. 


</P>
<P>(d) <I>Applicable requirements.</I> The requirements of § 92.252 apply to HOME-assisted ECHO units, with the following modifications: 
</P>
<P>(1) Only one ECHO unit may be provided per host property. 
</P>
<P>(2) The ECHO unit owner may choose whether or not to charge the tenant of the ECHO unit rent, but if a rent is charged, it must meet the requirements of § 92.252. 


</P>
<P>(3) The ECHO housing must remain affordable for the period specified in § 92.252(d). If within the period of affordability the original occupant no longer occupies the unit, the ECHO unit owner must: 
</P>
<P>(i) Rent the unit to another eligible occupant on site; 
</P>
<P>(ii) Move the ECHO unit to another site for occupancy by an eligible occupant; or 
</P>
<P>(iii) If the owner of the ECHO unit is the host property owner-occupant, the owner may repay the HOME funds in accordance with the recapture provisions imposed by the participating jurisdiction consistent with § 92.254(a)(5)(ii). The participating jurisdiction must use the recaptured HOME funds for additional HOME activities. 
</P>
<P>(4) The participating jurisdiction has the responsibility to enforce the project requirements applicable to ECHO units.


</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 90 FR 886, Jan. 6, 2025]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:1.1.1.1.41.7" TYPE="SUBPART">
<HEAD>Subpart G—Community Housing Development Organizations</HEAD>


<DIV8 N="§ 92.300" NODE="24:1.1.1.1.41.7.67.1" TYPE="SECTION">
<HEAD>§ 92.300   Set-aside for community housing development organizations (CHDOs).</HEAD>
<P>(a) Within 24 months after the date that HUD notifies the participating jurisdiction of HUD's execution of the HOME Investment Partnerships Agreement, the participating jurisdiction must reserve not less than 15 percent of the HOME allocation for investment only in housing to be owned, developed, or sponsored by community housing development organizations. For a State, the HOME allocation includes funds reallocated under § 92.451(c)(2)(i) and, for a unit of general local government, includes funds transferred from a State under § 92.102(b). The participating jurisdiction must certify the organization as meeting the definition of “community housing development organization” and must document that the organization has capacity to own, develop, or sponsor housing each time it commits funds to the organization. For purposes of this paragraph:
</P>
<P>(1) Funds are reserved when a participating jurisdiction enters into a written agreement with the community housing development organization (or project owner as described in paragraph (a)(4) of this section) committing the funds to a specific local project in accordance with paragraph (2) of the definition of “commitment” in § 92.2.


</P>
<P>(2) Rental housing is “owned” by the community housing development organization if the community housing development organization is the owner in fee simple absolute of rental housing (or has a long term ground lease running for the full period of affordability in § 92.252) leased to low-income families in accordance with § 92.252. If the housing is to be rehabilitated or constructed, the community housing development organization hires and oversees the developer that rehabilitates or constructs the housing. The community housing development organization must oversee or hire and contract with an experienced project manager to oversee all aspects of the development, including obtaining zoning, securing non-HOME financing, selecting a developer or general contractor, overseeing the progress of the work, and determining the reasonableness of costs. The community housing development organization must own the rental housing during development and for a period at least equal to the period of affordability in § 92.252. If the CHDO acquires housing that meets the property standards in § 92.251, the CHDO must own the rental housing for a period at least equal to the period of affordability in § 92.252.
</P>
<P>(3) Rental housing is “developed” by the community housing development organization if the community housing development organization is the owner in fee simple absolute (or has a long term ground lease running for the full period of affordability in § 92.252) and the developer of new housing that will be constructed or existing substandard housing that will be rehabilitated for rent to low-income families in accordance with § 92.252. To be the “developer,” the community housing development organization may share developer responsibilities with another entity but must be in charge of all aspects of the development process, including selecting the site, obtaining permit approvals and all project financing, selecting architects, engineers, and general contractors, overseeing project progress, and determining the reasonableness of costs. The requirement that a community housing development organization is in charge of all aspects of the development process must be enforceable through a written agreement (<I>e.g.,</I> a joint venture agreement or master development agreement). At a minimum, the community housing development organization must own the housing during development and for a period at least equal to the period of affordability in § 92.252. The participating jurisdiction may permit the community housing development organization to sell or otherwise convey the housing to a nonprofit organization other than a community housing development organization, subject to all applicable requirements of this part, if the participating jurisdiction determines and documents that the community housing development organization no longer has the capacity to own and manage the housing for the full period of affordability and there are no other community housing development organizations within the jurisdiction with capacity to own and manage the project for the full period of affordability.
</P>
<P>(4) Rental housing is “sponsored” by the community housing development organization if it is rental housing “owned” or “developed” in accordance with paragraph (a)(2) or (3) of this section, as applicable, by a subsidiary of a community housing development organization, a limited partnership of which the community housing development organization or its subsidiary is the managing general partner, or a limited liability company of which the community housing development organization or its subsidiary is the managing member.
</P>
<P>(i) The subsidiary of the community housing development organization may be a for-profit or nonprofit organization and must be wholly owned by the community housing development organization. If the limited partnership or limited liability company agreement permits the community housing development organization or its subsidiary to be removed as the managing general partner or managing member, the agreement must provide that the removal must be for cause and that the community housing development organization must be replaced with another community housing development organization.
</P>
<P>(ii) The HOME funds must be provided by the participating jurisdiction directly to the entity that owns the project.


</P>
<P>(5) HOME-assisted rental housing is also “sponsored” by a community housing development organization if the community housing development organization “developed” the rental housing project in accordance with paragraph (a)(3) of this section and agrees to convey the project to an identified private nonprofit organization at a predetermined time after completion of the project. Sponsored rental housing, as provided in this paragraph (a)(5), is subject to the following requirements:




</P>
<P>(i) The private nonprofit organization may not be created by a governmental entity.
</P>
<P>(ii) The HOME funds must be invested in the project that is owned by the community housing development organization.


</P>
<P>(iii) Before commitment of HOME funds, the community housing development organization sponsor must select the private nonprofit organization that will obtain ownership of the property.


</P>
<P>(A) The nonprofit organization assumes the community housing development organization's HOME obligations (including any repayment of loans) for the rental project at a specified time after completion of development.
</P>
<P>(B) If the housing is not transferred to the nonprofit organization, the community housing development organization sponsor remains responsible for the HOME assistance and the HOME project.


</P>
<P>(6) Housing for homeownership is “developed” by the community housing development organization if the community housing development organization is the owner (in fee simple absolute) and developer of housing that will be constructed or existing substandard housing that will be rehabilitated for sale to low-income families in accordance with § 92.254.


</P>
<P>(i) To be the “developer,” the community housing development organization may share the developer role with another entity but must be in charge of all aspects of the development process, including selecting the site, obtaining permit approvals and all project financing, selecting architects, engineers, and general contractors, overseeing project progress, determining the reasonableness of costs, identifying eligible homebuyers, and overseeing the sale of homeownership units. The community housing development organization may provide direct homeownership assistance (<I>e.g.,</I> assistance with a downpayment, payment of closing costs, mortgage rate buy-downs, etc.) when it sells the housing to low-income families and the community housing development organization will not be considered a subrecipient. The HOME funds for homeownership assistance shall not be greater than 10 percent of the amount of HOME funds for development of the housing.




</P>
<P>(ii) The participating jurisdiction must determine and set forth in its written agreement with the community housing development organization the actual sales prices of the housing or the method by which the sales prices for the housing will be established and whether the proceeds must be returned to the participating jurisdiction or may be retained by the community housing development organization.


</P>
<P>(A) While proceeds retained by the community housing development organization are not subject to the requirements of this part, the participating jurisdiction must specify in the written agreement with the community housing development organization whether the proceeds are to be used for HOME-eligible activities or other housing activities to benefit low-income families.




</P>
<P>(B) Funds that are recaptured because the housing no longer meets the affordability requirements under § 92.254(a)(5)(ii) are subject to the requirements of this part in accordance with § 92.503.


</P>
<P>(7) The participating jurisdiction must determine the form of assistance (<I>e.g.,</I> grant or loan) in accordance with § 92.205(b) that it will provide to the community housing development organization for a rental housing project under paragraph (a)(4) of this section and must provide the assistance directly to the entity that owns the project.


</P>
<P>(b) Each participating jurisdiction must make reasonable efforts to identify community housing development organizations that are capable, or can reasonably be expected to become capable, of carrying out elements of the jurisdiction's approved consolidated plan and to encourage such community housing development organizations to do so. If during the first 24 months of its participation in the HOME Program a participating jurisdiction cannot identify a sufficient number of capable community housing development organizations, up to 20 percent of the minimum community housing development organization set aside specified in paragraph (a) of this section (but not more than $150,000 during the 24 month period) may be committed to an organization that meets the definition of “community housing development organization” in § 92.2, except for the requirements in paragraph (9) of the definition, in order to develop demonstrated capacity and qualify as a community housing development organization in the jurisdiction. 


</P>
<P>(c) Up to 10 percent of the HOME funds reserved under this section may be used for activities specified under § 92.301. 
</P>
<P>(d) HOME funds required to be reserved under this section are subject to reduction, as provided in § 92.500(d). 


</P>
<P>(e) If funds for operating expenses are provided under § 92.208 to a community housing development organization that is not also receiving funds under paragraph (a) of this section for housing to be owned, developed, or sponsored by the community housing development organization, the participating jurisdiction's written agreement with the community housing development organization must provide that the community housing development organization is expected to receive funds under paragraph (a) of this section for a project within 24 months of the date of receiving the funds for operating expenses, and must specify the terms and conditions upon which this expectation is based.


</P>
<P>(f) The participating jurisdiction must ensure that a community housing development organization does not receive HOME funding for any fiscal year in an amount that provides more than $50,000 or 50 percent of the community housing development organization's total operating expenses in that fiscal year, whichever is greater. This also includes organizational support and housing education provided under section 233(b)(1), (2), and (6) of the Act, as well as funds for operating expenses provided under § 92.208.


</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 28930, May 28, 1997; 78 FR 44677, July 24, 2013; 90 FR 886, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.301" NODE="24:1.1.1.1.41.7.67.2" TYPE="SECTION">
<HEAD>§ 92.301   Project-specific assistance to community housing development organizations.</HEAD>
<P>(a) <I>Project-specific technical assistance and site control loans</I>—(1) <I>General.</I> Within the percentage specified in § 92.300(c), HOME funds may be used by a participating jurisdiction to provide technical assistance and site control loans to community housing development organizations in the early stages of site development for an eligible project. These loans may not exceed amounts that the participating jurisdiction determines to be customary and reasonable project preparation costs allowable under paragraph (a)(2) of this section. All costs must be related to a specific eligible project or projects. 
</P>
<P>(2) <I>Allowable costs.</I> A loan may be provided to cover project costs necessary to determine project feasibility (including costs of an initial feasibility study), consulting fees, costs of preliminary financial applications, legal fees, architectural fees, engineering fees, engagement of a development team, option to acquire property, site control and title clearance. General operational expenses of the community housing development organization are not allowable costs. 
</P>
<P>(3) <I>Repayment.</I> The community housing development organization must repay the loan to the participating jurisdiction from construction loan proceeds or other project income. The participating jurisdiction may waive repayment of the loan, in part or in whole, if there are impediments to project development that the participating jurisdiction determines are reasonably beyond the control of the borrower. 
</P>
<P>(b) <I>Project-specific seed money loans</I>—(1) <I>General.</I> Within the percentage specified in § 92.300(c), HOME funds may be used to provide loans to community housing development organizations to cover preconstruction project costs that the participating jurisdiction determines to be customary and reasonable, including, but not limited to the costs of obtaining firm construction loan commitments, architectural plans and specifications, zoning approvals, engineering studies, and legal fees. 
</P>
<P>(2) <I>Eligible sponsors.</I> A loan may be provided only to a community housing development organization that has, with respect to the project concerned, site control (evidenced by a deed, a sales contract, or an option contract to acquire the property), a preliminary financial commitment, and a capable development team. 
</P>
<P>(3) <I>Repayment.</I> The community housing development organization must repay the loan to the participating jurisdiction from construction loan proceeds or other project income. The participating jurisdiction may waive repayment of the loan, in whole or in part, if there are impediments to project development that the participating jurisdiction determines are reasonably beyond the control of the community housing development organization. 


</P>
</DIV8>


<DIV8 N="§ 92.302" NODE="24:1.1.1.1.41.7.67.3" TYPE="SECTION">
<HEAD>§ 92.302   Housing education and organizational support.</HEAD>
<P>HUD is authorized to provide education and organizational support assistance, in conjunction with HOME funds made available to community housing development organizations in accordance with section 233 of the Act.
</P>
<P>(a) HUD will issue a publication in the <E T="04">Federal Register</E> announcing the availability of funding under this section, as appropriate. The publication need not include funding for each of the eligible activities but may target funding from among the eligible activities.
</P>
<P>(b) Notwithstanding the definition of “community land trust” in § 92.2, HUD may provide housing education and organizational support assistance under this section to a community land trust only if the following requirements are met:
</P>
<P>(1) The community land trust meets the definition of a “community housing development organization” at § 92.2, except for the requirements in paragraphs (9) and (10) of the definition.
</P>
<P>(2) The community land trust is established to complete the activities in paragraph (b)(3) of this section.
</P>
<P>(3) The community land trust:
</P>
<P>(i) Acquires land to hold in perpetuity and primarily for conveyance under long-term ground leases;
</P>
<P>(ii) Transfers ownership of any structural improvements located on such leased land to the lessees; and
</P>
<P>(iii) Retains a preemptive option to purchase any such structural improvement at a price determined by formula that is designed to ensure that the improvement remains affordable to low- and moderate-income families in perpetuity;
</P>
<P>(4) The community land trust's corporate membership is open to residents of a particular geographic area, as specified in the organization's bylaws; and
</P>
<P>(5) The board of directors:
</P>
<P>(i) Includes a majority of members who are elected by the corporate membership; and
</P>
<P>(ii) Is composed of equal numbers of lessees pursuant to paragraph (b)(2)(ii), members who are not lessees, and any other category of persons described in the organization's bylaws.


</P>
<CITA TYPE="N">[90 FR 887, Jan. 6, 2025]



 


</CITA>
</DIV8>


<DIV8 N="§ 92.303" NODE="24:1.1.1.1.41.7.67.4" TYPE="SECTION">
<HEAD>§ 92.303   Tenant participation plan.</HEAD>
<P>A community housing development organization that receives assistance under this part must adhere to a fair lease and grievance procedure approved by the participating jurisdiction and provide a plan for and follow a program of tenant participation in management decisions. 


</P>
</DIV8>

</DIV6>


<DIV6 N="H" NODE="24:1.1.1.1.41.8" TYPE="SUBPART">
<HEAD>Subpart H—Other Federal Requirements</HEAD>


<DIV8 N="§ 92.350" NODE="24:1.1.1.1.41.8.67.1" TYPE="SECTION">
<HEAD>§ 92.350   Other Federal requirements and nondiscrimination.</HEAD>
<P>(a) The Federal requirements set forth in 24 CFR part 5, subpart A, are applicable to participants in the HOME program. The requirements of this subpart include: nondiscrimination and equal opportunity; disclosure requirements; debarred, suspended or ineligible contractors; drug-free work; and housing counseling.
</P>
<P>(b) The nondiscrimination requirements at section 282 of the Act are applicable. These requirements are waived in connection with the use of HOME funds on lands set aside under the Hawaiian Homes Commission Act, 1920 (42 Stat. 108).
</P>
<CITA TYPE="N">[62 FR 28930, May 28, 1997, as amended at 81 FR 90657, Dec. 14, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 92.351" NODE="24:1.1.1.1.41.8.67.2" TYPE="SECTION">
<HEAD>§ 92.351   Affirmative marketing; minority outreach program.</HEAD>
<P>(a) <I>Affirmative marketing.</I> (1) Each participating jurisdiction must adopt and follow affirmative marketing procedures and requirements for rental and homebuyer projects containing five or more HOME-assisted housing units. Affirmative marketing requirements and procedures also apply to all HOME- funded programs, including, but not limited to, tenant-based rental assistance and homeownership assistance programs. Affirmative marketing steps consist of actions to provide information and otherwise attract eligible persons in the housing market area to the available housing without regard to race, color, national origin, sex, religion, familial status, or disability. If the participating jurisdiction's written agreement with the project owner permits the rental housing project to limit tenant eligibility or to have a tenant preference in accordance with § 92.253(e)(3), the participating jurisdiction must have affirmative marketing procedures and requirements that apply in the context of the limited/preferred tenant eligibility for the project.


</P>
<P>(2) The affirmative marketing requirements and procedures adopted must include: 
</P>
<P>(i) Methods for informing the public, owners, and potential tenants about Federal fair housing laws and the participating jurisdiction's affirmative marketing policy (e.g., the use of the Equal Housing Opportunity logotype or slogan in press releases and solicitations for owners, and written communication to fair housing and other groups); 
</P>
<P>(ii) Requirements and practices each subrecipient and owner must adhere to in order to carry out the participating jurisdiction's affirmative marketing procedures and requirements (e.g., use of commercial media, use of community contacts, use of the Equal Housing Opportunity logotype or slogan, and display of fair housing poster);
</P>
<P>(iii) Procedures to be used by subrecipients and owners to inform and solicit applications from persons in the housing market area who are not likely to apply for the housing program or the housing without special outreach (e.g., through the use of community organizations, places of worship, employment centers, fair housing groups, or housing counseling agencies);
</P>
<P>(iv) Records that will be kept describing actions taken by the participating jurisdiction and by subrecipients and owners to affirmatively market the program and units and records to assess the results of these actions; and
</P>
<P>(v) A description of how the participating jurisdiction will annually assess the success of affirmative marketing actions and what corrective actions will be taken where affirmative marketing requirements are not met. 
</P>
<P>(3) A State that distributes HOME funds to units of general local government must require each unit of general local government to adopt affirmative marketing procedures and requirements that meet the requirement in paragraphs (a) and (b) of this section. 
</P>
<P>(b) <I>Minority outreach.</I> A participating jurisdiction must prescribe procedures acceptable to HUD to establish and oversee a minority outreach program within its jurisdiction to ensure the inclusion, to the maximum extent possible, of minorities and women, and entities owned by minorities and women, including, without limitation, real estate firms, construction firms, appraisal firms, management firms, financial institutions, investment banking firms, underwriters, accountants, and providers of legal services, in all contracts entered into by the participating jurisdiction with such persons or entities, public and private, in order to facilitate the activities of the participating jurisdiction to provide affordable housing authorized under this Act or any other Federal housing law applicable to such jurisdiction. Section 200.321 of title 2 Code of Federal Regulations describes actions to be taken by a participating jurisdiction to assure that minority business enterprises and women business enterprises are used when possible in the procurement of property and services. 
</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 78 FR 44678, July 24, 2013; 80 FR 75935, Dec. 7, 2015; 90 FR 887, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.352" NODE="24:1.1.1.1.41.8.67.3" TYPE="SECTION">
<HEAD>§ 92.352   Environmental review.</HEAD>
<P>(a) <I>General.</I> The environmental effects of each activity carried out with HOME funds must be assessed in accordance with the provisions of the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321) and the related authorities listed in HUD's implementing regulations at 24 CFR parts 50 and 58. The applicability of the provisions of 24 CFR part 50 or part 58 is based on the HOME project (new construction, rehabilitation, acquisition) or activity (tenant-based rental assistance) as a whole, not on the type of cost paid with HOME funds.


</P>
<P>(b) <I>Responsibility for review.</I> (1) The jurisdiction (e.g., the participating jurisdiction or State recipient) or insular area must assume responsibility for environmental review, decision making, and action for each activity that it carries out with HOME funds, in accordance with the requirements imposed on a recipient under 24 CFR part 58. No funds may be committed to a HOME activity or project before the completion of the environmental review and approval of the request for release of funds and related certification, except as authorized by 24 CFR part 58. 


</P>
<P>(2) A State participating jurisdiction must also assume responsibility for approval of requests for release of HOME funds submitted by State recipients. 
</P>
<P>(3) HUD will perform the environmental review, in accordance with 24 CFR part 50, for a competitively awarded application for HOME funds submitted to HUD by an entity that is not a jurisdiction. 
</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 78 FR 44678, July 24, 2013; 90 FR 887, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.353" NODE="24:1.1.1.1.41.8.67.4" TYPE="SECTION">
<HEAD>§ 92.353   Displacement, relocation, and acquisition.</HEAD>
<P>(a) <I>Minimizing displacement.</I> Consistent with the other goals and objectives of this part, the participating jurisdiction must ensure that it has taken all reasonable steps to minimize the displacement of persons (families, individuals, businesses, nonprofit organizations, and farms) as a result of a project assisted with HOME funds. To the extent feasible, residential tenants must be provided a reasonable opportunity to lease and occupy a suitable, decent, safe, sanitary, and affordable dwelling unit in the building/complex upon completion of the project. 
</P>
<P>(b) <I>Temporary relocation.</I> The following policies cover residential tenants who will not be required to move permanently but who must relocate temporarily for the project. Such tenants must be provided: 
</P>
<P>(1) Reimbursement for all reasonable out-of-pocket expenses incurred in connection with the temporary relocation, including the cost of moving to and from the temporarily occupied housing and any increase in monthly rent/utility costs. 
</P>
<P>(2) Appropriate advisory services, including reasonable advance written notice of: 
</P>
<P>(i) The date and approximate duration of the temporary relocation; 
</P>
<P>(ii) The location of the suitable, decent, safe, and sanitary dwelling to be made available for the temporary period; 
</P>
<P>(iii) The terms and conditions under which the tenant may lease and occupy a suitable, decent, safe, and sanitary dwelling in the building/complex upon completion of the project; and 
</P>
<P>(iv) The provisions of paragraph (b)(1) of this section. 


</P>
<P>(c) <I>Relocation assistance for displaced persons</I>—(1) <I>General.</I> A displaced person (defined in paragraph (c)(2) of this section) must be provided relocation assistance at the levels described in, and in accordance with the requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA) (42 U.S.C. 4201-4655) and 49 CFR part 24. A “displaced person” must be advised of his or her rights under the Fair Housing Act and, if the comparable replacement dwelling used to establish the amount of the replacement housing payment to be provided to a minority person is located in an area of minority concentration, the minority person also must be given, if possible, referrals to comparable and suitable, decent, safe, and sanitary replacement dwellings not located in such areas. 


</P>
<P>(2) <I>Displaced Person.</I> (i) For purposes of paragraph (c) of this section, the term <I>displaced person</I> means a person (family individual, business, nonprofit organization, or farm, including any corporation, partnership or association) that moves from real property or moves personal property from real property, permanently, as a direct result of acquisition, rehabilitation, or demolition for a project assisted with HOME funds. This includes any permanent, involuntary move for an assisted project, including any permanent move from the real property that is made: 
</P>
<P>(A) After notice by the owner to move permanently from the property, if the move occurs on or after: 
</P>
<P>(<I>1</I>) The date of the submission of an application to the participating jurisdiction or HUD, if the applicant has site control and the application is later approved; or 
</P>
<P>(<I>2</I>) The date the jurisdiction approves the applicable site, if the applicant does not have site control at the time of the application; or 
</P>
<P>(B) Before the date described in paragraph (c)(2)(i)(A) of this section, if the jurisdiction or HUD determines that the displacement resulted directly from acquisition, rehabilitation, or demolition for the project; or 
</P>
<P>(C) By a tenant-occupant of a dwelling unit, if any one of the following three situations occurs: 
</P>
<P>(<I>1</I>) The tenant moves after execution of the agreement covering the acquisition, rehabilitation, or demolition and the move occurs before the tenant is provided written notice offering the tenant the opportunity to lease and occupy a suitable, decent, safe, and sanitary dwelling in the same building/complex upon completion of the project under reasonable terms and conditions. Such reasonable terms and conditions must include a term of at least one year at a monthly rent and estimated average monthly utility costs that do not exceed the greater of: 
</P>
<P>(<I>i</I>) The tenant's monthly rent before such agreement and estimated average monthly utility costs; or 
</P>
<P>(<I>ii</I>) The total tenant payment, as determined under 24 CFR 5.628, if the tenant is low-income, or 30 percent of gross household income, if the tenant is not low-income;
</P>
<P>(<I>2</I>) The tenant is required to relocate temporarily, does not return to the building/complex, and either 
</P>
<P>(<I>i</I>) The tenant is not offered payment for all reasonable out-of-pocket expenses incurred in connection with the temporary relocation; or 
</P>
<P>(<I>ii</I>) Other conditions of the temporary relocation are not reasonable; or 
</P>
<P>(<I>3</I>) The tenant is required to move to another dwelling unit in the same building/complex but is not offered reimbursement for all reasonable out-of-pocket expenses incurred in connection with the move, or other conditions of the move are not reasonable. 


</P>
<P>(ii) Notwithstanding paragraph (c)(2)(i) of this section, a person does not qualify as a <I>displaced person</I> if: 


</P>
<P>(A) The person has been evicted for cause based upon a serious or repeated violation of the terms and conditions of the lease or occupancy agreement, violation of applicable federal, State or local law, or other good cause, and the participating jurisdiction determines that the eviction was not undertaken for the purpose of evading the obligation to provide relocation assistance. The effective date of any termination or refusal to renew must be in accordance with § 92.253. 


</P>
<P>(B) The person moved into the property after the submission of the application but, before signing a lease and commencing occupancy, was provided written notice of the project, its possible impact on the person (e.g., the person may be displaced, temporarily relocated, incur a rent increase), and the fact that the person would not qualify as a “displaced person” (or for any assistance under this section) as a result of the project; 


</P>
<P>(C) For purposes of the URA, the person meets the definition of “persons not displaced” as defined in 49 CFR 24.2; or


</P>
<P>(D) HUD determines that the person was not displaced as a direct result of acquisition, rehabilitation, or demolition for the project. 
</P>
<P>(iii) The jurisdiction may, at any time, ask HUD to determine whether a displacement is or would be covered by this rule. 
</P>
<P>(3) <I>Initiation of negotiations.</I> For purposes of determining the formula for computing replacement housing assistance to be provided under paragraph (c) of this section to a tenant displaced from a dwelling as a direct result of private-owner rehabilitation, demolition or acquisition of the real property, the term <I>initiation of negotiations</I> means the execution of the agreement covering the acquisition, rehabilitation, or demolition. 
</P>
<P>(d) <I>Optional relocation assistance.</I> The participating jurisdiction may provide relocation payments and other relocation assistance to families, individuals, businesses, nonprofit organizations, and farms displaced by a project assisted with HOME funds where the displacement is not subject to paragraph (c) of this section. The jurisdiction may also provide relocation assistance to persons covered under paragraph (c) of this section beyond that required. For any such assistance that is not required by State or local law, the jurisdiction must adopt a written policy available to the public that describes the optional relocation assistance that it has elected to furnish and provides for equal relocation assistance within each class of displaced persons. 
</P>
<P>(e) <I>Residential antidisplacement and relocation assistance plan.</I> The participating jurisdiction shall comply with the requirements of 24 CFR part 42, subpart C. 
</P>
<P>(f) <I>Real property acquisition requirements.</I> The acquisition of real property for a project is subject to the URA and the requirements of 49 CFR part 24, subpart B. 
</P>
<P>(g) <I>Appeals.</I> A person who disagrees with the participating jurisdiction's determination concerning whether the person qualifies as a displaced person, or the amount of relocation assistance for which the person may be eligible, may file a written appeal of that determination with the jurisdiction. A low-income person who is dissatisfied with the jurisdiction's determination on his or her appeal may submit a written request for review of that determination to the HUD Field Office. 
</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 61 FR 51760, Oct. 3, 1996; 62 FR 28930, May 28, 1997; 67 FR 61756, Oct. 1, 2002; 78 FR 44678, July 24, 2013; 90 FR 887, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.354" NODE="24:1.1.1.1.41.8.67.5" TYPE="SECTION">
<HEAD>§ 92.354   Labor.</HEAD>
<P>(a) <I>General.</I> (1) Every contract for the construction (rehabilitation or new construction) of housing that includes 12 or more units assisted with HOME funds must contain a provision requiring the payment of not less than the wages prevailing in the locality, as predetermined by the Secretary of Labor pursuant to the Davis-Bacon Act (40 U.S.C. 3141), to all laborers and mechanics employed in the development of any part of the housing. Such contracts must also be subject to the overtime provisions, as applicable, of the Contract Work Hours and Safety Standards Act (40 U.S.C. 3701).


</P>
<P>(2) The contract for construction must contain these wage provisions if HOME funds are used for any project costs in § 92.206, including construction or nonconstruction costs, of housing with 12 or more HOME-assisted units. When HOME funds are only used to assist homebuyers to acquire single family housing, and not for any other project costs, the wage provisions apply to the construction of the housing if there is a written agreement with the owner or developer of the housing that HOME funds will be used to assist homebuyers to buy the housing and the construction contract covers 12 or more housing units to be purchased with HOME assistance. The wage provisions apply to any construction contract that includes a total of 12 or more HOME-assisted units, whether one or more than one project is covered by the construction contract. Once they are determined to be applicable, the wage provisions must be contained in the construction contract so as to cover all laborers and mechanics employed in the development of the entire project, including portions other than the assisted units. Arranging multiple construction contracts within a single project for the purpose of avoiding the wage provisions is not permitted. 


</P>
<P>(3) Participating jurisdictions, contractors, subcontractors, and other participants must comply with regulations issued under these acts and with other Federal laws and regulations pertaining to labor standards, as applicable. Participating jurisdictions shall be responsible for ensuring compliance by contractors and subcontractors with labor standards described in this section. In accordance with procedures specified by HUD, participating jurisdictions shall:
</P>
<P>(i) Ensure that bid and contract documents contain required labor standards provisions and the appropriate Department of Labor wage determinations;
</P>
<P>(ii) Conduct on-site inspections and employee interviews;
</P>
<P>(iii) Collect and review certified weekly payroll reports;
</P>
<P>(iv) Correct all labor standards violations promptly;
</P>
<P>(v) Maintain documentation of administrative and enforcement activities; and
</P>
<P>(vi) Require certification as to compliance with the provisions of this section before making any payment under such contracts.
</P>
<P>(b) <I>Volunteers.</I> The prevailing wage provisions of paragraph (a) of this section do not apply to an individual who receives no compensation or is paid expenses, reasonable benefits, or a nominal fee to perform the services for which the individual volunteered and who is not otherwise employed at any time in the construction work. See 24 CFR part 70. 
</P>
<P>(c) <I>Sweat equity.</I> The prevailing wage provisions of paragraph (a) of this section do not apply to members of an eligible family who provide labor in exchange for acquisition of a property for homeownership or provide labor in lieu of, or as a supplement to, rent payments. 
</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 78 FR 44678, July 24, 2013; 90 FR 888, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.355" NODE="24:1.1.1.1.41.8.67.6" TYPE="SECTION">
<HEAD>§ 92.355   Lead-based paint.</HEAD>
<P>Housing assisted with HOME funds is subject to the Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and implementing regulations at part 35, subparts A, B, J, K, M and R of this title.
</P>
<CITA TYPE="N">[64 FR 50224, Sept. 15, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 92.356" NODE="24:1.1.1.1.41.8.67.7" TYPE="SECTION">
<HEAD>§ 92.356   Conflict of interest.</HEAD>
<P>(a) <I>Applicability.</I> In the procurement of property and services by participating jurisdictions, State recipients, and subrecipients, the conflict of interest provisions in 2 CFR 200.317 and 2 CFR 200.318, apply. In all cases not governed by 2 CFR 200.317 and 2 CFR 200.318, the provisions of this section apply. 
</P>
<P>(b) <I>Conflicts prohibited.</I> No persons described in paragraph (c) of this section who exercise or have exercised any functions or responsibilities with respect to activities assisted with HOME funds or who are in a position to participate in a decision-making process or gain inside information with regard to these activities may obtain a financial interest or financial benefit from a HOME-assisted activity, or have a financial interest in any contract, subcontract, or agreement with respect to the HOME-assisted activity, or the proceeds from such activity, either for themselves or those with whom they have business or immediate family ties, during their tenure or for one year thereafter. Immediate family ties include (whether by blood, marriage or adoption) the spouse, parent (including a stepparent), child (including a stepchild), brother, sister (including a stepbrother or stepsister), grandparent, grandchild, and in-laws of a covered person.
</P>
<P>(c) <I>Persons covered.</I> The conflict of interest provisions of paragraph (b) of this section apply to any person who is an employee, agent, consultant, officer, or elected official or appointed official of the participating jurisdiction, State recipient, or subrecipient which are receiving HOME funds. 


</P>
<P>(d) <I>Exceptions: Threshold requirements.</I> Upon the written request of the participating jurisdiction, HUD may grant an exception to the provisions of paragraph (b) of this section on a case-by-case basis when it determines that the exception will serve to further the purposes of the HOME Investment Partnerships Program and the effective and efficient administration of the participating jurisdiction's program or project. An exception may be considered only after the participating jurisdiction has provided the following: 


</P>
<P>(1) A disclosure of the nature of the conflict, accompanied by an assurance that there has been public disclosure of the conflict (public disclosure is considered a combination of at least two of the following: publication on the recipient's website, including social media; electronic mailings; media advertisements; public service announcements; and display in public areas such as libraries, grocery store bulletin boards, and neighborhood centers), evidence of the public disclosure, and a description of how the public disclosure was made; and


</P>
<P>(2) An opinion of the participating jurisdiction's or State recipient's attorney that the interest for which the exception is sought would not violate State or local law. 


</P>
<P>(e) <I>Factors to be considered for exceptions.</I> In determining whether to grant a requested exception after the participating jurisdiction has satisfactorily met the requirements of paragraph (d) of this section, HUD will consider the cumulative effect of the following factors, where applicable: 
</P>
<P>(1) Whether the exception would provide a significant cost benefit or an essential degree of expertise to the program or project which would otherwise not be available; 
</P>
<P>(2) Whether an opportunity was provided for open competitive bidding or negotiation;
</P>
<P>(3) Whether the person affected is a member of a group or class of low-income persons intended to be the beneficiaries of the assisted activity, and the exception will permit such person to receive generally the same interests or benefits as are being made available or provided to the group or class; 
</P>
<P>(4) Whether the affected person has withdrawn from his or her functions or responsibilities, or the decisionmaking process with respect to the specific assisted activity in question; 
</P>
<P>(5) Whether the interest or benefit was present before the affected person was in a position as described in paragraph (c) of this section; 
</P>
<P>(6) Whether undue hardship will result either to the participating jurisdiction or the person affected when weighed against the public interest served by avoiding the prohibited conflict; and 
</P>
<P>(7) Any other relevant considerations. 


</P>
<P>(f) <I>Owners and developers.</I> (1) No owner, developer, or sponsor of a project assisted with HOME funds (or officer, employee, agent, elected or appointed official, or consultant of the owner, developer, or sponsor or immediate family member or immediate family member of an officer, employee, agent, elected or appointed official, or consultant of the owner, developer, or sponsor) whether private, for-profit or nonprofit (including a community housing development organization (CHDO) when acting as an owner, developer, or sponsor) may occupy a HOME-assisted affordable housing unit in a project during the required period of affordability specified in § 92.252(d) or § 92.254(a)(4). This provision does not apply to an individual who receives HOME funds to acquire or rehabilitate his or her principal residence or to an employee or agent of the owner or developer of a rental housing project who occupies a housing unit as the project manager or maintenance worker.
</P>
<P>(2) <I>Exceptions.</I> Upon written request of a housing owner or developer, the participating jurisdiction (or State recipient, if authorized by the State participating jurisdiction) may grant an exception to the provisions of paragraph (f)(1) of this section on a case-by-case basis when it determines that the exception will serve to further the purposes of the HOME program and the effective and efficient administration of the owner's or developer's HOME-assisted project. In determining whether to grant a requested exception, the participating jurisdiction shall consider the following factors: 
</P>
<P>(i) Whether the person receiving the benefit is a member of a group or class of low-income persons intended to be the beneficiaries of the assisted housing, and the exception will permit such person to receive generally the same interests or benefits as are being made available or provided to the group or class; 
</P>
<P>(ii) Whether the person has withdrawn from his or her functions or responsibilities, or the decisionmaking process with respect to the specific assisted housing in question; 
</P>
<P>(iii) Whether the tenant protection requirements of § 92.253 are being observed; 
</P>
<P>(iv) Whether the affirmative marketing requirements of § 92.351 are being observed and followed; and 
</P>
<P>(v) Any other factor relevant to the participating jurisdiction's determination, including the timing of the requested exception. 
</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 28930, May 28, 1997; 78 FR 44679, July 24, 2013; 80 FR 75935, Dec. 7, 2015; 90 FR 888, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.357" NODE="24:1.1.1.1.41.8.67.8" TYPE="SECTION">
<HEAD>§ 92.357   Executive Order 12372.</HEAD>
<P>(a) <I>General.</I> Executive Order 12372, as amended by Executive Order 12416 (3 CFR, 1982 Comp., p. 197 and 3 CFR, 1983 Comp., p. 186) (Intergovernmental Review of Federal Programs) and HUD's implementing regulations at 24 CFR part 52, allow each State to establish its own process for review and comment on proposed Federal financial assistance programs. 
</P>
<P>(b) <I>Applicability.</I> Executive Order 12372 applies to applications submitted with respect to HOME funds being competitively reallocated under subpart J of this part to units of general local government. 


</P>
</DIV8>


<DIV8 N="§ 92.358" NODE="24:1.1.1.1.41.8.67.9" TYPE="SECTION">
<HEAD>§ 92.358   Consultant activities.</HEAD>
<P>No person providing consultant services in an employer-employee type relationship shall receive more than a reasonable rate of compensation for personal services paid with HOME funds. In no event, however, shall such compensation exceed the limits in effect under the provisions of any applicable statute (e.g., annual HUD appropriations acts which have set the limit at the equivalent of the daily rate paid for Level IV of the Executive Schedule, see the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1997, Pub. L. 104-204 (September 26, 1996)). Such services shall be evidenced by written agreements between the parties which detail the responsibilities, standards, and compensation. Consultant services provided under an independent contractor relationship are not subject to the compensation limitation of Level IV of the Executive Schedule.
</P>
<CITA TYPE="N">[62 FR 28930, May 28, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 92.359" NODE="24:1.1.1.1.41.8.67.10" TYPE="SECTION">
<HEAD>§ 92.359   VAWA requirements.</HEAD>
<P>(a) <I>General.</I> (1) The Violence Against Women Act (VAWA) requirements set forth in 24 CFR part 5, subpart L, apply to all HOME tenant-based rental assistance and rental housing assisted with HOME funds, as supplemented by this section.
</P>
<P>(2) For the HOME program, the “covered housing provider,” as this term is used in HUD's regulations in 24 CFR part 5, subpart L, refers to:
</P>
<P>(i) The housing owner for the purposes of 24 CFR 5.2005(d)(1), (d)(3), and (d)(4) and § 5.2009(a); and
</P>
<P>(ii) The participating jurisdiction and the owner for purposes of 24 CFR 5.2005(d)(2), 5.2005(e), and 5.2007, except as otherwise provided in paragraph (g) of this section.
</P>
<P>(b) <I>Effective date.</I> The core statutory protections of VAWA that prohibit denial or termination of assistance or eviction solely because an applicant or tenant is a victim of domestic violence, dating violence, sexual assault, or stalking became applicable upon enactment of VAWA 2013 on March 7, 2013. Compliance with the VAWA regulatory requirements under this section and 24 CFR part 5, subpart L, are required for any tenant-based rental assistance or rental housing project for which the date of the HOME funding commitment is on or after <I>December 16, 2016</I>.
</P>
<P>(c) <I>Notification requirements.</I> The participating jurisdiction must provide a notice and certification form that meet the requirements of 24 CFR 5.2005(a) to the owner of HOME-assisted rental housing.
</P>
<P>(1) <I>For HOME-assisted units.</I> The owner of HOME-assisted rental housing must provide the notice and certification form described in 24 CFR 5.2005(a) to the applicant for a HOME-assisted unit at the time the applicant is admitted to a HOME-assisted unit, or denied admission to a HOME-assisted unit based on the owner's tenant selection policies and criteria. The owner of HOME-assisted rental housing must also provide the notice and certification form described in 24 CFR 5.2005 with any notification of eviction from a HOME-assisted unit.
</P>
<P>(2) <I>For HOME tenant-based rental assistance.</I> The participating jurisdiction must provide the notice and certification form described in 24 CFR 5.2005(a) to the applicant for HOME tenant-based rental assistance when the applicant's HOME tenant-based rental assistance is approved or denied. The participating jurisdiction must also provide the notice and certification form described in 24 CFR 5.2005(a) to a tenant receiving HOME tenant-based rental assistance when the participating jurisdiction provides the tenant with notification of termination of the HOME tenant-based rental assistance, and when the participating jurisdiction learns that the tenant's housing owner intends to provide the tenant with notification of eviction.
</P>
<P>(d) <I>Bifurcation of lease requirements.</I> For the purposes of this part, the following requirements shall apply in place of the requirements at 24 CFR 5.2009(b):
</P>
<P>(1) If a family living in a HOME-assisted rental unit separates under 24 CFR 5.2009(a), the remaining tenant(s) may remain in the HOME-assisted unit.
</P>
<P>(2) If a family who is receiving HOME tenant-based rental assistance separates under 24 CFR 5.2009(a), the remaining tenant(s) will retain the HOME tenant-based rental assistance. The participating jurisdiction must determine whether the tenant that was removed from the unit will receive HOME tenant-based rental assistance.
</P>
<P>(e) <I>VAWA lease term/addendum.</I> The participating jurisdiction must develop a VAWA lease term/addendum to incorporate all requirements that apply to the owner or lease under 24 CFR part 5, subpart L, and this section, including the prohibited bases for eviction and restrictions on construing lease terms under 24 CFR 5.2005(b) and (c). This VAWA lease term/addendum must also provide that the tenant may terminate the lease without penalty if the participating jurisdiction determines that the tenant has met the conditions for an emergency transfer under 24 CFR 5.2005(e). When HOME tenant-based rental assistance is provided, the lease term/addendum must require the owner to notify the participating jurisdiction before the owner bifurcates the lease or provides notification of eviction to the tenant. If HOME tenant-based rental assistance is the only assistance provided (<I>i.e.,</I> the unit is not receiving project-based assistance under a covered housing program, as defined in 24 CFR 5.2003), the VAWA lease term/addendum may be written to expire at the end of the rental assistance period.


</P>
<P>(f) <I>Period of applicability.</I> For HOME-assisted rental housing, the requirements of this section shall apply to the owner of the housing for the duration of the period of affordability. For HOME tenant-based rental assistance, the requirements of this section shall apply to the owner of the tenant's housing for the period for which the rental assistance is provided.


</P>
<P>(g) <I>Emergency Transfer Plan.</I> (1) The participating jurisdiction must develop and implement an emergency transfer plan and must make the determination of whether a tenant qualifies under the plan. The plan must meet the requirements in 24 CFR 5.2005(e), as supplemented by this section.
</P>
<P>(2) For the purposes of § 5.2005(e)(7), the required policies must specify that for tenants who qualify for an emergency transfer and who wish to make an external emergency transfer when a safe unit is not immediately available, the participating jurisdiction must provide a list of properties in the jurisdiction that include HOME-assisted units. The list must include the following information for each property: The property's address, contact information, the unit sizes (number of bedrooms) for the HOME-assisted units, and, to the extent known, any tenant preferences or eligibility restrictions for the HOME-assisted units. In addition, the participating jurisdiction may:
</P>
<P>(i) Establish a preference under the participating jurisdiction's HOME program for tenants who qualify for emergency transfers under 24 CFR 5.2005(e);
</P>
<P>(ii) Provide HOME tenant-based rental assistance to tenants who qualify for emergency transfers under 24 CFR 5.2005(e); or
</P>
<P>(iii) Coordinate with victim service providers and advocates to develop the emergency transfer plan, make referrals, and facilitate emergency transfers to safe and available units.
</P>
<CITA TYPE="N">[81 FR 80803, Nov. 16, 2016, as amended at 90 FR 888, Jan. 6, 2025]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="I" NODE="24:1.1.1.1.41.9" TYPE="SUBPART">
<HEAD>Subpart I—Technical Assistance</HEAD>


<DIV8 N="§ 92.400" NODE="24:1.1.1.1.41.9.67.1" TYPE="SECTION">
<HEAD>§ 92.400   Coordinated Federal support for housing strategies.</HEAD>
<P>(a) <I>General.</I> HUD will provide assistance in accordance with Subtitle C of the Act. 
</P>
<P>(b) <I>Notice of funding.</I> HUD will publish a notice in the <E T="04">Federal Register</E> announcing the availability of funding under this section as appropriate. 


</P>
</DIV8>

</DIV6>


<DIV6 N="J" NODE="24:1.1.1.1.41.10" TYPE="SUBPART">
<HEAD>Subpart J—Reallocations</HEAD>


<DIV8 N="§ 92.450" NODE="24:1.1.1.1.41.10.67.1" TYPE="SECTION">
<HEAD>§ 92.450   General.</HEAD>
<P>(a) This subpart J sets out the conditions under which HUD reallocates HOME funds that have been allocated, reserved, or placed in a HOME Investment Trust Fund. 
</P>
<P>(b) A jurisdiction that is not a participating jurisdiction but is meeting the requirements of §§ 92.102, 92.103, and 92.104, (participation threshold, notice of intent, and submission of consolidated plan) is treated as a participating jurisdiction for purposes of receiving a reallocation under subpart J of this part. 


</P>
</DIV8>


<DIV8 N="§ 92.451" NODE="24:1.1.1.1.41.10.67.2" TYPE="SECTION">
<HEAD>§ 92.451   Reallocation of HOME funds from a jurisdiction that is not designated a participating jurisdiction or has its designation revoked.</HEAD>
<P>(a) <I>Failure to be designated a participating jurisdiction.</I> HUD will reallocate, under this section, any HOME funds allocated to or reserved for a jurisdiction that is not a participating jurisdiction if: 
</P>
<P>(1) HUD determines that the jurisdiction has failed to: 
</P>
<P>(i) Meet the participation threshold amount in § 92.102; 
</P>
<P>(ii) Provide notice of its intent to become a participating jurisdiction in accordance with § 92.103; or 
</P>
<P>(iii) Submit its consolidated plan, in accordance with 24 CFR part 91; or 
</P>
<P>(2) HUD after providing for amendments and resubmissions in accordance with 24 CFR part 91 disapproves the jurisdiction's consolidated plan. 
</P>
<P>(b) <I>Designation revoked.</I> HUD will reallocate, under this section, any funds remaining in a jurisdiction's HOME Investment Trust Fund after HUD has revoked the jurisdiction's designation as a participating jurisdiction under § 92.107. 
</P>
<P>(c) <I>Manner of reallocation.</I> HUD will reallocate funds that are subject to reallocation under this section in the following manner: 
</P>
<P>(1) If the funds to be reallocated under this section are from a State, HUD will: 
</P>
<P>(i) Make the funds available by competition in accordance with criteria in § 92.453 among applications submitted by units of general local government within the State and with preference being given to applications from units of general local government that are not participating jurisdictions, and 
</P>
<P>(ii) Reallocate the remainder by formula in accordance with § 92.454. 
</P>
<P>(2) If the funds to be reallocated are from a unit of general local government: 
</P>
<P>(i) Located in a State that is participating jurisdiction, HUD will reallocate the funds to that State. The State, in distributing these funds, must give preference to the provision of affordable housing within the unit of general local government; or 
</P>
<P>(ii) Located in a State that is not a participating jurisdiction, HUD will reallocate the funds by competition among units of general local government and community housing development organizations within the State, with priority going to applications for affordable housing within the unit of general local government; and reallocate the remainder by formula in accordance with § 92.454. 


</P>
</DIV8>


<DIV8 N="§ 92.452" NODE="24:1.1.1.1.41.10.67.3" TYPE="SECTION">
<HEAD>§ 92.452   Reallocation of community housing development organization set-aside.</HEAD>
<P>HUD will reallocate, under this section, any HOME funds reduced or recaptured by HUD from a participating jurisdiction's HOME Investment Trust Fund under § 92.300(d). HUD will reallocate these funds by competition in accordance with criteria in § 92.453 to other participating jurisdictions for affordable housing developed, sponsored, or owned by community housing development organizations. 


</P>
</DIV8>


<DIV8 N="§ 92.453" NODE="24:1.1.1.1.41.10.67.4" TYPE="SECTION">
<HEAD>§ 92.453   Competitive reallocations.</HEAD>
<P>(a) HUD will invite applications through <E T="04">Federal Register</E> publication of a Notice of Funding Availability (NOFA), in accordance with section 102 of the Department of Housing and Urban Development Reform Act of 1989 (42 U.S.C. 3545) and the requirements of sec. 217(c) of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12747(c)), for HOME funds that become available for competitive reallocation under § 92.451 or § 92.452, or both. The NOFA will describe the application requirements and procedures, including the total funding available for the competition and any maximum amount of individual awards. The NOFA will also describe the selection criteria and any special factors to be evaluated in awarding points under the selection criteria. 
</P>
<P>(b) The NOFA will include the selection criteria at sec. 217(c) of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12747(c)), with the following maximum number of points awarded for each category of criteria: 
</P>
<P>(1) <I>Commitment.</I> Up to 25 points for the criteria at sec. 217(c)(1) of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12747(c)(1)); 
</P>
<P>(2) <I>Actions.</I> Up to 50 points for the criteria at sec. 217(c)(2) of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12747(c)(2)); and 
</P>
<P>(3) <I>Policies.</I> Up to 25 points for the criteria at sec. 217(c)(3) of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12747(c)(3)). 
</P>
<CITA TYPE="N">[62 FR 44840, Aug. 22, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 92.454" NODE="24:1.1.1.1.41.10.67.5" TYPE="SECTION">
<HEAD>§ 92.454   Reallocations by formula.</HEAD>
<P>(a) HUD will reallocate under this section: 
</P>
<P>(1) Any HOME funds remaining available for reallocation after HUD has made competitive reallocations under § 92.451 and § 92.452; 
</P>
<P>(2) Any HOME funds available for reallocation because HUD reduced or recaptured funds from participating jurisdiction under § 92.500(d) for failure to commit the funds within the time specified; 


</P>
<P>(3) Any HOME funds withdrawn by HUD from a participating jurisdiction under 24 CFR 91.520(f) for failure to submit in a timely manner a performance report required by 24 CFR 91.520 that is satisfactory to HUD;  


</P>
<P>(4) Any HOME funds remitted to HUD under § 92.503(b) when a jurisdiction ceases to be a participating jurisdiction; and 


</P>
<P>(5) Any HOME funds available for reallocation as a result of any reductions under 24 CFR 92.551 or 92.552.


</P>
<P>(b) Any reallocation of funds from a State must be made only among all participating States, and any reallocation of funds from units of general local government must be made only among all participating units of general local government, except those participating jurisdictions whose funds were reduced under § 92.551 or that HUD has removed from participating in reallocations under § 92.552. 


</P>
<P>(c) A local participating jurisdiction's share of a reallocation is calculated by multiplying the amount available for reallocation to units of general local government by a factor that is that ratio of the participating jurisdiction's formula allocation provided under § 92.50 to the total of the formula allocations provided for all local participating jurisdictions sharing in the reallocation. A State participating jurisdiction's share is comparably determined using the amount available for reallocation to States. 
</P>
<P>(d) HUD will make reallocations under this section quarterly, unless the amount available for such reallocation is insufficient to warrant making a reallocation. In any event, HUD will make a reallocation under this section at least once a year. The minimum amount of a reallocation is $1000. 


</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 90 FR 888, Jan. 6, 2025]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="K" NODE="24:1.1.1.1.41.11" TYPE="SUBPART">
<HEAD>Subpart K—Program Administration</HEAD>


<DIV8 N="§ 92.500" NODE="24:1.1.1.1.41.11.67.1" TYPE="SECTION">
<HEAD>§ 92.500   The HOME Investment Trust Fund.</HEAD>
<P>(a) <I>General.</I> A HOME Investment Trust Fund consists of the accounts described in this section solely for investment in accordance with the provisions of this part. HUD will establish a HOME Investment Trust Fund United States Treasury account for each participating jurisdiction. Each participating jurisdiction may use either a separate local HOME Investment Trust Fund account or, a subsidiary account within its general fund (or other appropriate fund) as the local HOME Investment Trust Fund account. 
</P>
<P>(b) <I>Treasury Account.</I> The United States Treasury account of the HOME Investment Trust Fund includes funds allocated to the participating jurisdiction under § 92.50 (including for a local participating jurisdiction, any transfer of the State's allocation pursuant to § 92.102(b)(2)) and funds reallocated to the participating jurisdiction, either by formula or by competition, under subpart J of this part; and


</P>
<P>(c) <I>Local account.</I> (1) The local account of the HOME Investment Trust Fund includes deposits of HOME funds disbursed from the Treasury account; the deposit of any State funds (other than HOME funds transferred pursuant to § 92.102(b)(2)) or local funds that enable the jurisdiction to meet the participating threshold amount in § 92.102, any program income (from both the allocated funds and matching contributions in accordance with the definition of program income), and any repayments or recaptured funds as required by § 92.503. The local account must be interest-bearing.


</P>
<P>(2) The participating jurisdiction may establish a second local account of the HOME Investment Trust Funds if: 
</P>
<P>(i) The participating jurisdiction has its own affordable housing trust fund that the participating jurisdiction will use for matching contributions to the HOME program; 


</P>
<P>(ii) The statute or local ordinance requires repayments from its own affordable housing trust fund to be made to the local account;




</P>
<P>(iii) The participating jurisdiction establishes a separate account within its own trust fund for repayments of the matching contributions; and 
</P>
<P>(iv) The funds in the account are used solely for investment in eligible activities within the participating jurisdiction's boundaries in accordance with the provisions of this part, except as provided under § 92.201(a)(2). 
</P>
<P>(3) The funds in the local account cannot be used for the matching contribution and do not need to be matched. 
</P>
<P>(d)(1) <I>Reductions of Fiscal Year 2015 and subsequent fiscal year allocations.</I> HUD will reduce or recapture HOME funds in the HOME Investment Trust Fund, as follows:
</P>
<P>(i) Any funds from a specific fiscal year allocation that are in the United States Treasury account that are not committed (including funds for community housing development organizations under § 92.300) within 24 months after the last day of the month in which HUD notifies the participating jurisdiction of HUD's execution of the HOME Investment Partnership Agreement for the specific fiscal year allocation;
</P>
<P>(ii) Any funds from a specific fiscal year allocation that were committed to a State recipient or subrecipient that are not committed to a specific local project within 36 months after the last day of the month in which HUD notifies the participating jurisdiction of HUD's execution of the HOME Investment Partnership Agreement for the specific fiscal year allocation;
</P>
<P>(iii) Any funds from a specific fiscal year allocation that are in the United States Treasury account that are not expended (drawn down) by September 30 of the fifth year after the end of the period of availability of the fiscal year allocation for obligation by HUD. Due to end-of-year financial system closeouts that begin before this date and prevent electronic access to the payment system, requests to draw down the funds must be made at least 7 full business days before this date to ensure that the funds still can be drawn from the United States Treasury account through the computerized disbursement and information system; and
</P>
<P>(iv) Any penalties assessed by HUD under § 92.552.
</P>
<P>(2)(i) <I>Reductions of Fiscal Year 2014 and prior fiscal year allocations.</I> HUD will reduce or recapture HOME funds in the HOME Investment Trust Fund by the amount of:
</P>
<P>(A) Any funds from Fiscal Year 2014 and prior fiscal year allocations in the United States Treasury account that are required to be reserved (<I>i.e.,</I> 15 percent of the funds) by a participating jurisdiction, under § 92.300, and which are not committed to a community housing development organization project within 24 months after the last day of the month in which HUD notifies the participating jurisdiction of HUD's execution of the HOME Investment Partnership Agreement;
</P>
<P>(B) Any funds from Fiscal Year 2014 and prior fiscal year allocations in the United States Treasury account that are not committed within 24 months after the last day of the month in which HUD notifies the participating jurisdiction of HUD's execution of the HOME Investment Partnership Agreement;
</P>
<P>(C) Any funds from Fiscal Year 2014 and prior fiscal year allocations in the United States Treasury account that are not expended within 5 years after the last day of the month in which HUD notifies the participating jurisdiction of HUD's execution of the HOME Investment Partnership Agreement; and
</P>
<P>(D) Any penalties assessed by HUD under § 92.552.
</P>
<P>(ii) For purposes of determining the amount by which the HOME Investment Trust Fund will be reduced or recaptured under paragraphs (d)(2)(i)(A), (B), and (C) of this section, HUD will consider the sum of commitments to CHDOs, commitments, or expenditures, as applicable, from all fiscal year allocations through the Fiscal Year 2014 allocation. This sum must be equal to or greater than the sum of all fiscal year allocations through the fiscal year allocation being examined (minus previous reductions to the HOME Investment Trust Fund), or in the case of commitments to CHDOs, 15 percent of those fiscal year allocations.
</P>
<P>(iii) HUD will reduce or recapture HOME funds in the HOME Investment Trust Fund by the amount of all fiscal year allocations through the Fiscal Year 2014 allocation that are uncommitted by the commitment deadline for the Fiscal Year 2015 allocation.
</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 28930, May 28, 1997; 78 FR 44679, July 24, 2013; 81 FR 86952, Dec. 2, 2016; 90 FR 888, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.501" NODE="24:1.1.1.1.41.11.67.2" TYPE="SECTION">
<HEAD>§ 92.501   HOME Investment Partnership Agreement.</HEAD>
<P>Allocated and reallocated funds will be made available pursuant to a HOME Investment Partnership Agreement. The agreement ensures that HOME funds invested in affordable housing are repayable if the housing ceases to qualify as affordable housing before the period of affordability expires. 


</P>
</DIV8>


<DIV8 N="§ 92.502" NODE="24:1.1.1.1.41.11.67.3" TYPE="SECTION">
<HEAD>§ 92.502   Program disbursement and information system.</HEAD>
<P>(a) <I>General.</I> The HOME Investment Trust Fund account established in the United States Treasury is managed through a computerized disbursement and information system established by HUD. The system disburses HOME funds that are allocated or reallocated, and collects and reports information on the use of HOME funds in the United States Treasury account. (For purposes of reporting in the Integrated Disbursement and Information System, a HOME project is an activity.) The participating jurisdiction must report all program income in HUD's computerized disbursement and information system.


</P>
<P>(b) <I>Project funding.</I> After the participating jurisdiction executes the HOME Investment Partnership Agreement, submits the applicable banking and security documents, complies with the environmental requirements under 24 CFR part 58 for release of funds, and commits funds to a specific local project, the participating jurisdiction may provide funding to an activity by identifying specific investments in the disbursement and information system. The participating jurisdiction is required to enter complete project set-up information before providing funding to the project.






</P>
<P>(c) <I>Disbursement of HOME funds.</I> (1) After complete project information is entered into the disbursement and information system, HOME funds for the project may be drawn down from the United States Treasury account by the participating jurisdiction by electronic funds transfer. The funds will be deposited in the local account of the HOME Investment Trust Fund of the participating jurisdiction within 48 to 72 hours of the disbursement request. Any drawdown of HOME funds from the United States Treasury account is conditioned upon the provision of satisfactory information by the participating jurisdiction about the project or tenant-based rental assistance and compliance with other procedures, as specified by HUD. 


</P>
<P>(2) HOME funds drawn from the United States Treasury account must be expended for eligible costs within 15 days. Any interest earned within the 15-day period may be retained by the participating jurisdiction as HOME funds. Any funds that are drawn down and not expended for eligible costs within 15 days of the disbursement must be returned to HUD for deposit in the participating jurisdiction's United States Treasury account of the HOME Investment Trust Fund. Interest earned after 15 days belongs to the United States and must be remitted to the United States as provided in 2 CFR 200.305(b)(9), except interest amounts up to $500 per year may be retained for administrative expenses.
</P>
<P>(3) HOME funds in the local account of the HOME Investment Trust Fund must be disbursed before requests are made for HOME funds in the United States Treasury account. Beginning with the Fiscal Year 2015 allocation, the specific funds that are committed to a project will be disbursed for that project. If both funds in the local account and funds in the United States Treasury account are committed to a project, the funds in the local account must be disbursed before requests are made for HOME funds in the United States Treasury account for the project.
</P>
<P>(4) A participating jurisdiction will be paid on an advance basis provided it complies with the requirements of this part. 


</P>
<P>(d) <I>Project completion.</I> (1) Complete project completion information must be entered into the disbursement and information system, or otherwise provided to HUD.
</P>
<P>(2) Additional HOME funds may be committed to a project up to one year after project completion, but the amount of HOME funds in the project may not exceed the maximum per-unit subsidy amount established under § 92.250 at the time of underwriting.


</P>
<P>(e) <I>Access by other participants.</I> Access to the disbursement and information system by other entities participating in the HOME program (e.g., State recipients) will be governed by procedures established by HUD. Only participating jurisdictions and State recipients (if permitted by the State) may request disbursement.
</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 78 FR 44679, July 24, 2013; 80 FR 75935, Dec. 7, 2015; 81 FR 86952, Dec. 2, 2016; 90 FR 888, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.503" NODE="24:1.1.1.1.41.11.67.4" TYPE="SECTION">
<HEAD>§ 92.503   Program income, repayments, and recaptured funds.</HEAD>
<P>(a) <I>Program income.</I> (1) Program income must be used in accordance with the requirements of this part. Program income must be deposited in the participating jurisdiction's HOME Investment Trust Fund local account unless the participating jurisdiction permits the State recipient or subrecipient to retain the program income for additional HOME projects pursuant to the written agreement required by § 92.504. 
</P>
<P>(2) If the jurisdiction is not a participating jurisdiction when the program income is received, the funds are not subject to the requirements of this part. 
</P>
<P>(3) Program income derived from consortium activities undertaken by or within a member unit of general local government which thereafter terminates its participation in the consortium continues to be program income of the consortium. 
</P>
<P>(b) <I>Repayments.</I> (1) Any HOME funds invested in housing that does not meet the affordability requirements for the period specified in § 92.252 or § 92.254, as applicable, must be repaid by the participating jurisdiction in accordance with paragraph (b)(3) of this section. 
</P>
<P>(2) Any HOME funds invested in a project that is terminated before completion, either voluntarily or otherwise, must be repaid by the participating jurisdiction, in accordance with paragraph (b)(3) of this section, except for repayments of project-specific community housing development organization loans that are waived, in accordance with § 92.301(a)(3) and (b)(3). In addition, any HOME funds used for costs that are not eligible under this part must be repaid by the participating jurisdiction, in accordance with paragraph (b)(3) of this section.
</P>
<P>(3) HUD will instruct the participating jurisdiction to either repay the funds to the HOME Investment Trust Fund Treasury account or the local account. If the jurisdiction is not a participating jurisdiction at the time the repayment is made, the funds must be remitted to HUD and reallocated, in accordance with § 92.454.
</P>
<P>(c) <I>Recaptures.</I> HOME funds recaptured in accordance with § 92.254(a)(5)(ii) must be used in accordance with the requirements of this part. Recaptured funds must be deposited in the participating jurisdiction's HOME Investment Trust Fund local account unless the participating jurisdiction permits the State recipient, subrecipient, or community housing development organization to retain the recaptured funds for additional HOME projects pursuant to the written agreement required by § 92.504. If the jurisdiction is not a participating jurisdiction when the recaptured funds are received, the funds must be remitted to HUD and reallocated in accordance with § 92.454. 
</P>
<P>(d) <I>Commitment of funds in the local account.</I> Beginning with the Fiscal Year 2017 action plan, as provided in 24 CFR 91.220(l)(2) and 91.320(k)(2), program income, repayments, and recaptured funds in the participating jurisdiction's HOME Investment Trust Fund local account must be used in accordance with the requirements of this part, and the amount of program income, repayments, and recaptured funds in the participating jurisdiction's HOME Investment Trust Fund local account at the beginning of the program year must be committed before HOME funds in the HOME Investment Trust Fund United States Treasury account, except for the HOME funds in the United States Treasury account that are required to be reserved (<I>i.e.,</I> 15 percent of the funds), under § 92.300(a), for investment only in housing to be owned, developed, or sponsored by community housing development organizations. The deadline for committing program income, repayments, and recaptured funds received during a program year is the date of the participating jurisdiction's commitment deadline for the subsequent year's grant allocation.
</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 78 FR 44680, July 24, 2013; 81 FR 86952, Dec. 2, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 92.504" NODE="24:1.1.1.1.41.11.67.5" TYPE="SECTION">
<HEAD>§ 92.504   Participating jurisdiction responsibilities; written agreements.</HEAD>
<P>(a) <I>Responsibilities.</I> The participating jurisdiction is responsible for managing the day-to-day operations of its HOME program, ensuring that HOME funds are used in accordance with all program requirements and written agreements, and taking appropriate action when performance problems arise. The use of State recipients, subrecipients, or contractors does not relieve the participating jurisdiction of this responsibility. The performance and compliance of each contractor, State recipient, and subrecipient must be reviewed at least annually. The participating jurisdiction must have and follow written policies, procedures, and systems, including a system for assessing risk of activities and projects and a system for monitoring entities consistent with this section, to ensure that the requirements of this part are met.


</P>
<P>(b) <I>Executing a written agreement.</I> Before disbursing any HOME funds to any entity, the participating jurisdiction must enter into a legally binding written agreement with that entity. Before disbursing any HOME funds to any entity, a State recipient, subrecipient, or contractor that is administering all or a part of the HOME program on behalf of the participating jurisdiction, must also enter into a legally binding written agreement with that entity. The written agreement must ensure compliance with the requirements of this part and be a separate agreement from project financing documents (<I>e.g.,</I> mortgage or deed of trust, regulatory agreement, or promissory note).








</P>
<P>(c) <I>Provisions in written agreements.</I> The contents of the agreement may vary depending upon the role the entity is asked to assume or the type of project undertaken. This section details basic requirements and the minimum provisions by role and type of entity that must be included in a written agreement.
</P>
<P>(1) <I>State recipient.</I> The provisions in the written agreement between the State and a State recipient will depend on the program functions that the State specifies the State recipient will carry out in accordance with § 92.201(b). In accordance with § 92.201, the written agreement must either require the State recipient to comply with the requirements established by the State or require the State recipient to establish its own requirements to comply with this part, including requirements for income determinations and underwriting subsidy layering guidelines, rehabilitation standards, refinancing guidelines, homebuyer program policies, and affordability.
</P>
<P>(i) <I>Use of the HOME funds.</I> The agreement must describe the amount and use of the HOME funds to administer one or more programs to produce affordable housing, provide homeownership assistance, or provide tenant-based rental assistance, including the anticipated type and number of housing projects to be funded (<I>e.g.,</I> the number of single family homeowner loans to be made or number of homebuyers to receive homeownership assistance), tasks to be performed, a schedule for completing the tasks (including a schedule for committing funds to projects that meet the deadlines established by this part), a budget for each program, and any requirement for matching contributions. These items must be in sufficient detail to provide a sound basis for the State to effectively monitor performance under the agreement.
</P>
<P>(ii) <I>Affordability.</I> The agreement must require housing assisted with HOME funds to meet the affordability requirements of § 92.252 or § 92.254, as applicable, and must require repayment of the funds if the housing does not meet the affordability requirements for the period of affordability. The agreement must require a means of enforcement of the affordability requirements by the State participating jurisdiction or, if the State recipient will be the owner at project completion of the affordable housing, the intended beneficiaries. The means of enforcement may include liens on real property, deed or use restrictions, a recorded agreement restricting the use of the property, covenants running with the land, or other mechanisms approved by HUD in writing, under which the participating jurisdiction has the right to require specific performance. The agreement must establish whether repayment of HOME funds must be remitted to the State or retained by the State recipient for additional eligible activities.
</P>
<P>(iii) <I>Program income.</I> The agreement must state whether program income is to be remitted to the State or retained by the State recipient for additional eligible activities.
</P>
<P>(iv) <I>Uniform administrative requirements.</I> The agreement must require the State recipient to comply with applicable uniform administrative requirements, as described in § 92.505.
</P>
<P>(v) <I>Project requirements.</I> The agreement must require compliance with project requirements in subpart F of this part, as applicable in accordance with the type of project assisted. For any projects involving HOME rental housing, tenant-based rental assistance, or security deposit assistance, the agreement must require that the applicable HOME tenancy addendum is used in accordance with § 92.253 for all HOME-assisted units or tenants.
</P>
<P>(vi) <I>Other program requirements.</I> The agreement must require the State recipient to carry out each activity in compliance with all Federal laws and regulations described in subpart H of this part, except that the State recipient does not assume the State's responsibilities for release of funds under § 92.352 and the intergovernmental review process in § 92.357 does not apply to the State recipient. If HOME funds are provided for development of rental housing or provision of tenant-based rental assistance, the agreement must set forth all obligations the State imposes on the State recipient in order to meet the Violence Against Women Act (VAWA) requirements under § 92.359, including notice obligations and any obligations with respect to the emergency transfer plan (including whether the State recipient must develop its own plan or follow the State's plan).
</P>
<P>(vii) <I>Affirmative marketing.</I> The agreement must specify the State recipient's affirmative marketing responsibilities in accordance with § 92.351.
</P>
<P>(viii) <I>Requests for disbursement of funds.</I> The agreement must specify that the State recipient may not request disbursement of HOME funds under this agreement until the funds are needed for payment of eligible costs. The amount of each request must be limited to the amount needed. Program income must be disbursed before the State recipient requests funds from the State.
</P>
<P>(ix) <I>Records and reports.</I> The agreement must specify the particular records that must be maintained and the information or reports that must be submitted in order to assist the State in meeting its recordkeeping and reporting requirements.
</P>
<P>(x) <I>Enforcement of the written agreement.</I> The agreement must specify remedies for breach of the provisions of the written agreement. The agreement must specify that, in accordance with 2 CFR 200.339, suspension or termination may occur if the State recipient materially fails to comply with any term of the agreement. The State may permit the agreement to be terminated in whole or in part in accordance with 2 CFR 200.340.
</P>
<P>(xi) <I>Written agreement.</I> Before providing HOME funds to any owner, community housing development organization, subrecipient, homeowner, homebuyer, tenant (or landlord) receiving tenant-based rental assistance, or contractor providing services to or on behalf of the State recipient, the State recipient must have a fully executed written agreement with such person or entity that meets the requirements of this section. For affordable housing assisted with HOME funds, the State recipient must provide HOME funds directly to the owner under the terms and conditions of the written agreement. The agreement must establish that any repayment on any form of assistance of HOME funds must be remitted to the State or, if permitted by the State, retained by the State recipient for additional eligible activities.
</P>
<P>(xii) <I>Duration of the agreement.</I> The duration of the agreement will depend on which functions the State recipient performs (<I>e.g.,</I> whether the State recipient or the State has responsibility for monitoring rental projects for the period of affordability) and which activities are funded under the agreement.
</P>
<P>(xiii) <I>Fees.</I> The agreement must prohibit the State recipient and its subrecipients and community housing development organizations from charging for any of the prohibited costs listed in § 92.214, including but not limited to servicing, origination, processing, inspection, or other fees for the costs of administering a HOME program.
</P>
<P>(2) <I>Subrecipient.</I> The agreement must set forth and require the subrecipient to follow the participating jurisdiction's requirements, including requirements for income determinations, underwriting and subsidy layering guidelines, rehabilitation standards, refinancing guidelines, homebuyer program policies, and affordability requirements. The agreement between the participating jurisdiction and the subrecipient must include the following:
</P>
<P>(i) <I>Use of the HOME funds.</I> The agreement must describe the amount and use of the HOME funds for one or more programs, including the anticipated type and number of housing projects to be funded (<I>e.g.,</I> the number of single family homeowner loans to be made or the number of homebuyers to receive homeownership assistance), tasks to be performed, a schedule for completing the tasks (including a schedule for committing funds to projects in accordance with deadlines established by this part), a budget, any requirement for matching contributions, and the period of the agreement. These items must be in sufficient detail to provide a sound basis for the participating jurisdiction to effectively monitor performance under the agreement.
</P>
<P>(ii) <I>Program income.</I> The agreement must state if program income is to be remitted to the participating jurisdiction or retained by the subrecipient for additional eligible activities.
</P>
<P>(iii) <I>Uniform administrative requirements.</I> The agreement must require the subrecipient to comply with applicable uniform administrative requirements, as described in § 92.505.
</P>
<P>(iv) <I>Other program requirements.</I> The agreement must require the subrecipient to carry out each activity in compliance with all Federal laws and regulations described in subpart H of this part, except that the subrecipient does not assume the participating jurisdiction's responsibilities for environmental review under § 92.352 and the intergovernmental review process in § 92.357 does not apply. The agreement must set forth the requirements the subrecipient must follow to enable the participating jurisdiction to carry out environmental review responsibilities before HOME funds are committed to a project. If the subrecipient is administering a HOME rental housing program or tenant-based rental assistance program on behalf of the participating jurisdiction, the participating jurisdiction must set forth in the written agreement all obligations of the subrecipient to meet the VAWA requirements under § 92.359, including notice obligations and obligations under the emergency transfer plan.
</P>
<P>(v) <I>Affirmative marketing.</I> The agreement must specify the subrecipient's affirmative marketing responsibilities in accordance with § 92.351.
</P>
<P>(vi) <I>Requests for disbursement of funds.</I> The agreement must specify that the subrecipient may not request disbursement of funds under the agreement until the funds are needed for payment of eligible costs. The amount of each request must be limited to the amount needed. Program income must be disbursed before the subrecipient requests funds from the participating jurisdiction.
</P>
<P>(vii) <I>Reversion of assets.</I> The agreement must specify that upon expiration of the agreement, the subrecipient must transfer to the participating jurisdiction any HOME funds on hand at the time of expiration and any accounts receivable attributable to the use of HOME funds.
</P>
<P>(viii) <I>Records and reports.</I> The agreement must specify the particular records that must be maintained and the information or reports that must be submitted in order to assist the participating jurisdiction in meeting its recordkeeping and reporting requirements.
</P>
<P>(ix) <I>Enforcement of the written agreement.</I> The agreement must specify remedies for breach of the provisions of the written agreement. The agreement must specify that, in accordance with 2 CFR 200.339, suspension or termination may occur if the subrecipient materially fails to comply with any term of the agreement. The participating jurisdiction may permit the agreement to be terminated in whole or in part in accordance with 2 CFR 200.340.
</P>
<P>(x) <I>Written agreement.</I> Before the subrecipient provides HOME funds to any owner, community housing development organization, subrecipient, homeowner, homebuyer, tenant (or landlord) receiving tenant-based rental assistance, or contractor providing services to or on behalf of the subrecipient, the subrecipient must have a fully executed written agreement with such entity that meets the requirements of this section. For housing projects assisted with HOME funds, the subrecipient must provide HOME funds directly to the owner under the terms and conditions of the written agreement. The agreement must establish whether repayment of HOME funds must be remitted to the participating jurisdiction or may be retained by the subrecipient for additional eligible activities.
</P>
<P>(xi) <I>Fees.</I> The agreement must prohibit the subrecipient from charging for any of the prohibited costs listed in § 92.214, including but not limited to servicing, origination, or other fees for the costs of administering the HOME program.
</P>
<P>(xii) <I>Project requirements.</I> The agreement must require enforcement of project requirements in subpart F of this part, as applicable in accordance with the type of project assisted. For any projects involving HOME rental housing, tenant-based rental assistance, or security deposit assistance, the agreement must require that the applicable HOME tenancy addendum is used in accordance with § 92.253 for all HOME-assisted units or tenants.
</P>
<P>(3) <I>For-profit or nonprofit housing owner (other than a community housing development organization or single family owner-occupant).</I> The participating jurisdiction may preliminarily award HOME funds for a proposed project, contingent on conditions such as obtaining other financing for the project. This preliminary award is not a commitment to a project. The written agreement committing the HOME funds to the project must meet the requirements of “commit to a specific local project” in the definition of “commitment” in § 92.2. The HOME assistance must be provided directly to the owner under the terms and conditions of a written agreement that complies with the requirements of this part and contains the following:
</P>
<P>(i) <I>Use of the HOME funds.</I> The agreement between the participating jurisdiction and a for-profit or nonprofit housing owner must include the address of the project or the legal description of the property if a street address has not been assigned to the property, the specific amount and use of the HOME funds and other funds for the project, including the tasks to be performed for the project, a schedule for completing the tasks and the project, and a complete budget. These items must be in sufficient detail to provide a sound basis for the participating jurisdiction to effectively monitor performance under the agreement to achieve project completion and compliance with the HOME requirements. If HOME funds are being used to reimburse costs incurred not more than 24 months before the date that the HOME funds are committed to the project, the written agreement must explicitly permit the use of HOME funds for costs described in § 92.206(d)(1). The agreement must state that any and all repayments made by the owner on HOME assistance (<I>e.g.,</I> grants or loans) must be remitted to the participating jurisdiction, unless the participating jurisdiction permits a subrecipient or State recipient to retain the funds.
</P>
<P>(ii) <I>Affordability.</I> The agreement must require housing assisted with HOME funds to meet the affordability requirements of § 92.252 or § 92.254, as applicable, and must require repayment of the funds if the housing does not meet the affordability requirements for the specified period of affordability. The agreement must require a means of enforcement of the affordability requirements by the participating jurisdiction and the intended beneficiaries. The means of enforcement may include liens on real property, deed or use restrictions, a recorded agreement restricting the use of the property, covenants running with the land, or other mechanisms approved by HUD in writing, under which the participating jurisdiction has the right to require specific performance.
</P>
<P>(A) If an owner is undertaking a rental project, the agreement must establish the initial rents, the procedures for rent increases pursuant to § 92.252(e)(2), the number of HOME units, the size of the HOME units, the designation of the HOME units as fixed or floating, and include the requirement that the owner provide the address (<I>e.g.,</I> street address and apartment number) of each HOME unit no later than the time of initial occupancy. In accordance with § 92.252(g), the written agreement must specify the option in § 92.203(b)(1) that the participating jurisdiction selected for calculating annual income.
</P>
<P>(B) If the owner is undertaking a homeownership project for sale to homebuyers in accordance with § 92.254(a), the agreement must set forth the resale or recapture requirements that must be imposed on the housing, the sales price or the basis upon which the sales price will be determined, and the disposition of the sales proceeds. Recaptured funds must be returned to the participating jurisdiction. If the owner is a Community Land Trust, as defined in § 92.2, the Community Land Trust may preserve affordability in accordance with § 92.254.
</P>
<P>(iii) <I>Project requirements.</I> As applicable and in accordance with the type of project assisted, the agreement must require compliance with the project requirements in subpart F of this part, including compliance with tenant protections in 24 CFR 92.253. The agreement may permit the owner to limit eligibility or give a preference to a particular segment of the population in accordance with § 92.253(e).
</P>
<P>(iv) <I>Property standards.</I> The agreement must require the housing to meet the property requirements as specified in § 92.251. The agreement must also require owners of rental housing assisted with HOME funds to maintain the housing in compliance with § 92.251 for the duration of the period of affordability.
</P>
<P>(v) <I>Other program requirements.</I> The agreement must require the owner to carry out each project in compliance with the following requirements of subpart H of this part:
</P>
<P>(A) The agreement must specify the owner's affirmative marketing responsibilities as enumerated by the participating jurisdiction in accordance with § 92.351.
</P>
<P>(B) The Federal and nondiscrimination requirements in § 92.350.
</P>
<P>(C) Any displacement, relocation, and acquisition requirements imposed by the participating jurisdiction consistent with § 92.353.
</P>
<P>(D) The labor requirements in § 92.354.
</P>
<P>(E) The conflict of interest provisions prescribed in § 92.356(f).
</P>
<P>(F) If HOME funds are being provided to develop rental housing, the agreement must set forth all obligations the participating jurisdiction imposes on the owner in order to meet the VAWA requirements under § 92.359, including the owner's notice obligations and owner obligations under the emergency transfer plan.
</P>
<P>(vi) <I>Records and reports.</I> The agreement must specify the particular records that must be maintained and the information or reports that must be submitted in order to assist the participating jurisdiction in meeting its recordkeeping and reporting requirements. The written agreement must require the owner of rental housing to annually provide the participating jurisdiction with information on rents (including rental amounts charged to the tenant), and occupancy of HOME-assisted units to demonstrate compliance with § 92.252. If the rental housing project has floating HOME units, the written agreement must require that the owner provide the participating jurisdiction with information regarding unit substitution and filling vacancies so that the project remains in compliance with § 92.252. The agreement must specify the reporting requirements (including copies of financial statements) to enable the participating jurisdiction to determine the financial condition (and continued financial viability) of the rental project.
</P>
<P>(vii) <I>Enforcement of the written agreement.</I> The agreement must specify remedies for breach of the provisions of the written agreement. The agreement must require a means of enforcement of the affordability requirements by the participating jurisdiction and the intended beneficiaries. The means of enforcement may include liens on real property, deed or use restrictions, a recorded agreement restricting the use of the property, covenants running with the land, or other mechanisms approved by HUD in writing, under which the participating jurisdiction has the right to require specific performance.
</P>
<P>(viii) <I>Requests for disbursement of funds.</I> The agreement must specify that the owner may not request disbursement of funds under the agreement until the funds are needed for payment of eligible costs. The amount of each request must be limited to the amount needed.
</P>
<P>(ix) <I>Duration of the agreement.</I> The agreement must specify the duration of the agreement. If the housing assisted under this agreement is rental housing, the agreement must be in effect through the period of affordability required by the participating jurisdiction under § 92.252. If the housing assisted under this agreement is homeownership housing, the agreement must be in effect at least until completion of the project and ownership by the low-income family.
</P>
<P>(x) <I>Fees.</I> The agreement must state the fees that may be charged by the owner in accordance with § 92.214(b)(4) and prohibit owners from charging tenants for any of the prohibited charges listed in § 92.214(b), including but not limited to fees that are not customarily charged in rental housing, such as laundry room access fees. The agreement must also prohibit the owner undertaking a homeownership project from charging servicing, origination, processing, inspection, or other fees for the costs of providing homeownership assistance.
</P>
<P>(4) <I>Contractor.</I> The participating jurisdiction selects a contractor through applicable procurement procedures and requirements. The contractor provides goods or services in accordance with a written agreement (the contract). For contractors who are administering any of the participating jurisdiction's HOME programs or specific services for one or more programs, the contract must include at a minimum the following provisions:
</P>
<P>(i) <I>Use of the HOME funds.</I> The agreement must describe the use of the HOME funds, including the tasks to be performed, a schedule for completing the tasks, and budget.
</P>
<P>(ii) <I>Program requirements.</I> The agreement must provide that the contractor is subject to the requirements in this part that are applicable to the participating jurisdiction, except for §§ 92.505 and 92.506, and the contractor cannot assume the participating jurisdiction responsibilities for environmental review, decision making, and action under § 92.352. The agreement must provide that the requirements at 2 CFR part 200 applicable to a contractor apply. The agreement must list the requirements applicable to the activities the contractor is administering. If applicable to the work under the contract, the agreement must set forth all obligations the participating jurisdiction imposes on the contractor in order to meet the VAWA requirements under § 92.359, including any notice obligations and any obligations under the emergency transfer plan.
</P>
<P>(iii) <I>Duration of agreement.</I> The agreement must specify the duration of the contract.
</P>
<P>(5) <I>Homebuyer, homeowner, tenant, or owner receiving tenant-based rental or security deposit assistance.</I> When a participating jurisdiction provides assistance to a homebuyer, homeowner, tenant, or owner for tenant-based rental assistance, the written agreement may take many forms depending upon the nature of assistance. At minimum, it must include the following:
</P>
<P>(i) For homebuyers, the agreement must contain the requirements in § 92.254(a), the value of the property, principal residence, lease-purchase, if applicable, and the resale or recapture provisions.
</P>
<P>(A) The agreement must specify the amount of HOME funds, the form of assistance, (<I>e.g.,</I> grant, amortizing loan, deferred payment loan), the use of the funds (<I>e.g.,</I> downpayment, closing costs, rehabilitation), and the time by which the housing must be acquired.
</P>
<P>(B) For existing housing that is acquired for homeownership, the agreement must require the participating jurisdiction to inspect the housing to determine that the project meets the property standards in § 92.251 and require compliance with the requirements in § 92.251(c)(3).
</P>
<P>(ii) For homeowners, the agreement must contain the requirements in § 92.254(b) and specify the amount and form of HOME assistance, rehabilitation work to be undertaken, date for completion, and property standards to be met.
</P>
<P>(iii) For tenants or owners receiving payments under a HOME tenant-based rental assistance program, the rental assistance contract or the security deposit assistance contract must meet the requirements in § 92.209 and applicable requirements in § 92.253.
</P>
<P>(6) <I>Community housing development organization.</I> When HOME funds are provided to a community housing development organization, the requirements in the written agreement depend upon the type of HOME assistance. At minimum, the agreement must comply with the following requirements for the type of HOME assistance:
</P>
<P>(i) <I>Using set-aside funds under § 92.300 for affordable housing.</I> The written agreement must contain the requirements described in paragraph (c)(3) of this section and the following additional requirements:
</P>
<P>(A) <I>Role of community housing development organization.</I> The agreement must state whether the community housing development organization will own, develop, or sponsor rental housing, as described in § 92.300(a)(2) through (5), and require the community housing development organization to comply with the applicable requirements in § 92.300(a), based on its role.
</P>
<P>(B) <I>Developer of homeownership housing</I>—(<I>1</I>) <I>Retaining proceeds and recaptured funds.</I> If the community development organization is a “developer” of homeownership housing, as defined in § 92.300(a)(6), the agreement must specify whether the organization may retain proceeds from the sale of the housing and whether the proceeds are to be used for HOME-eligible or other housing activities to benefit low-income families. A participating jurisdiction may permit a community housing development organization to retain recaptured funds for additional HOME projects pursuant to the written agreement required under this paragraph.
</P>
<P>(<I>2</I>) <I>Providing homeownership assistance.</I> If a community housing development organization is providing homeownership assistance, then the agreement between the participating jurisdiction and the community housing development organization must describe the amount and use of the HOME funds for homeownership assistance, the number of homebuyers to receive homeownership assistance, any requirement for matching contributions, and the period of the agreement. The HOME funds for homeownership assistance shall not be greater than 10 percent of the amount of HOME funds for development of the housing. The community housing development organization must enter into agreements with homebuyers that meet the requirements in paragraph (c)(5)(i) of this section.
</P>
<P>(C) <I>Sharing of developer responsibilities.</I> If the community housing development organization will share developer responsibilities with another entity pursuant to § 92.300(a)(3) or (6), the participating jurisdiction must enter into a written agreement only with the community housing development organization. The written agreement must require the community housing development organization to enter into a separate agreement with the co-developer. At minimum, the agreement between the community housing development organization and its co-developer must contain the following:
</P>
<P>(<I>1</I>) The responsibilities of the community housing development organization and co-developer with descriptions of the responsibilities in sufficient detail to demonstrate compliance with § 92.300(a)(3) or (a)(6), as applicable;
</P>
<P>(<I>2</I>) A description of the amount of developer fee and other compensation, if any, to be paid to the co-developer;
</P>
<P>(<I>3</I>) A description of any ownership interest in the community housing development organization and, if applicable, any membership or partnership interest in the owner held by the co-developer; and
</P>
<P>(<I>4</I>) A provision that the agreement's terms and conditions are subject to review by the participating jurisdiction and if such terms and conditions affect a project's compliance with HOME requirements, the terms and conditions are subject to approval by the participating jurisdiction.
</P>
<P>(ii) <I>Receiving assistance for operating expenses.</I> The agreement must describe the use of HOME funds for operating expenses (<I>e.g.,</I> salaries, wages, and other employee compensation and benefits); employee education, training, and travel; rent; utilities; communication costs; taxes; insurance; equipment; and materials and supplies. If the community housing development organization is not also receiving funds for a housing project to be developed, sponsored, or owned by the community housing development organization, the agreement must provide that the community housing development organization is expected to receive funds for a project within 24 months of the date of receiving the funds for operating expenses, and must specify the terms and conditions upon which this expectation is based and the consequences of failure to receive funding for a project. If the community housing development organization is also receiving funds for a project, there must be a separate written agreement that complies with this section for the use of HOME funds for the project and the agreement must contain the applicable requirements in paragraph (c)(6)(i) of this section.
</P>
<P>(iii) <I>Receiving assistance for project-specific technical assistance and site control loans or project-specific seed money loans.</I> The agreement must identify the specific site or sites and describe the amount and use of the HOME funds (in accordance with § 92.301), including a budget for work, a period of performance, and a schedule for completion. The agreement must also set forth the basis upon which the participating jurisdiction may waive repayment of the loans, consistent with § 92.301, if applicable.
</P>
<P>(7) <I>Technical assistance provider to develop the capacity of community housing development organizations in the jurisdiction.</I> The agreement must identify the specific nonprofit organization(s) to receive capacity building assistance. The agreement must describe the amount and use (scope of work) of the HOME funds, including a budget, a period of performance, and a schedule for completion.








</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 64 FR 50224, Sept. 15, 1999; 67 FR 61757, Oct. 1, 2002; 68 FR 56404, Sept. 30, 2003; 78 FR 44680, July 24, 2013; 80 FR 75935, Dec. 7, 2015; 81 FR 80804, Nov. 16, 2016; 81 FR 86952, Dec. 2, 2016; 88 FR 30497, May 11, 2023; 90 FR 888, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.505" NODE="24:1.1.1.1.41.11.67.6" TYPE="SECTION">
<HEAD>§ 92.505   Applicability of uniform administrative requirements.</HEAD>
<P>The requirements of 2 CFR part 200 apply to participating jurisdictions, State recipients, and subrecipients receiving HOME funds, except for the following provisions: §§ 200.306, 200.307, 200.308 (not applicable to participating jurisdictions), 200.311 (except as provided in § 92.257), 200.312, 200.328, 200.330, 200.334, 200.335, and 200.344 (except as provided in § 92.507). The provisions of 2 CFR 200.305 apply as modified by § 92.502(c). If there is a conflict between definitions in 2 CFR part 200 and 24 CFR part 92, the definitions in 24 CFR part 92 govern.
</P>
<CITA TYPE="N">[80 FR 75935, Dec. 7, 2015, as amended at 90 FR 892, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.506" NODE="24:1.1.1.1.41.11.67.7" TYPE="SECTION">
<HEAD>§ 92.506   Audit.</HEAD>
<P>Audits of the participating jurisdiction, State recipients, and subrecipients must be conducted in accordance with 2 CFR part 200, subpart F.
</P>
<CITA TYPE="N">[67 FR 61757, Oct. 1, 2002, as amended at 80 FR 75935, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 92.507" NODE="24:1.1.1.1.41.11.67.8" TYPE="SECTION">
<HEAD>§ 92.507   Closeout.</HEAD>
<P>This section specifies the procedure and actions that must be completed by a participating jurisdiction and HUD to closeout a grant. The requirements of 2 CFR 200.344 apply to closeouts, except to the extent that such requirements conflict with the following:
</P>
<P>(a) <I>Closeout process.</I> (1) HUD will close out a grant after the period of performance has ended. A participating jurisdiction must complete all required activities and closeout actions for the grant, as required by HUD. If the participating jurisdiction fails to complete the requirements in accordance with this section, HUD may close out the Federal award with the information available. HUD may close out individual grants or multiple grants simultaneously.
</P>
<P>(2) To prepare for closeout, before the end of the budget period of the grant, the participating jurisdiction shall. review all eligible activities under the grant and reconcile its accounts as follows:
</P>
<P>(i) For any eligible costs incurred under the grant and not yet drawn down from the U.S. Treasury account, the grantee must draw down those funds in a timely manner.
</P>
<P>(ii) The participating jurisdiction must promptly refund to the proper accounts any previously disbursed balances of unobligated cash paid in advance. All such refunds must be completed prior to submission of the information and reports required in paragraph (b) of this section.
</P>
<P>(3) At the end of the grant budget period, no additional eligible activities may be undertaken by the participating jurisdiction using the grant funds and no additional eligible costs incurred after the budget period may be submitted by the participating jurisdiction. Unused funds remaining on the grant will be returned to the U.S. Treasury by HUD. The participating jurisdiction must promptly refund any unused grant funds not authorized to be retained, consistent with HUD's instructions.
</P>
<P>(4) HUD will initiate closeout actions in the computerized disbursement and information system when the participating jurisdiction has met the requirements established in paragraph (b) of this section.
</P>
<P>(i) If the participating jurisdiction does not submit and enter all required data, information, and reports or complete the actions described in paragraph (b) of this section, HUD will proceed to close out the grant with the information available within one year of the period of performance end date.
</P>
<P>(ii) HUD may report the participating jurisdiction's material failure to comply with the terms and conditions of the award or requirements or the requirements of this section in <I>SAM.gov.</I> HUD may also pursue other enforcement actions in 2 CFR 200.339.
</P>
<P>(5) A participating jurisdiction may request, and HUD may provide an extension of the period of performance or closeout deadlines provided good cause is demonstrated.
</P>
<P>(b) <I>Actions required for closeout.</I> A participating jurisdiction must complete the following actions for closeout of the grant:
</P>
<P>(1) Submit a complete and final Federal Financial Report for the grant to HUD within 120 days of the end date of the period of performance, as indicated in the grant agreement;
</P>
<P>(2) Demonstrate that it has fulfilled all programmatic and administrative requirements for the project (<I>i.e.,</I> property inspections, obtaining certificates of occupancy, etc.) within the period of performance in accordance with 2 CFR 200.344(a);
</P>
<P>(3) Enter all data for activities in the computerized disbursement and information system established by HUD, within one year from the end of the period of performance, as required by the grant agreement;
</P>
<P>(4) Demonstrate that all HOME-assisted units are occupied by eligible occupants by entering accurate beneficiary data in the computerized disbursement and information system established by HUD, within one year from the end of the period of performance, as required by the grant agreement;
</P>
<P>(5) Comply with the requirements in 2 CFR 200.313(e) for the disposition of any equipment acquired under one or more HOME grants, that is no longer needed for the HOME program, or for other activities previously supported by a Federal agency;
</P>
<P>(6) Resolve and close all HOME monitoring findings for the grant (if applicable);
</P>
<P>(7) Resolve and close all OIG audit findings for the grant (if applicable);
</P>
<P>(8) Resolve and close all Single Audit findings for the grant (if applicable);
</P>
<P>(9) Carry out all other responsibilities under the grant agreement and applicable laws and regulations satisfactorily; and
</P>
<P>(10) Complete a closeout certification prepared by HUD. The certification shall identify the grant being closed out and include provisions with respect to the following:
</P>
<P>(i) Identification of any unused grant funds that were returned to the U.S. Treasury by HUD;
</P>
<P>(ii) Compliance with the recordkeeping requirements in § 92.508, including maintaining program, project, financial, program administration, community housing development organization records, records concerning other Federal requirements, and such other records as necessary to carry out responsibilities for the grant by the participating jurisdiction, its State recipients, and subrecipients;
</P>
<P>(iii) Monitoring and enforcement of the requirements for all HOME-assisted units set forth in this part for the period specified in the HOME written agreement with the property owner;
</P>
<P>(iv) Compliance with use of program income, recaptured funds, and repayments in accordance with § 92.503. If the jurisdiction is not a participating jurisdiction (as a State, metropolitan city, urban county, consortium, or consortium member) when it receives funds, the funds are not subject to the requirements of this part;
</P>
<P>(v) All actions required in 2 CFR 200.344 applicable to the grant have been taken by the participating jurisdiction;
</P>
<P>(vi) All actions required in 2 CFR 200.344 applicable to the participating jurisdiction's subrecipients have been taken;
</P>
<P>(vii) Other provisions appropriate to any special circumstances of the grant closeout, in modification of or in addition to the obligations in paragraphs (c)(1) and (2) of this section;
</P>
<P>(viii) Acknowledge future monitoring by HUD, including that findings of noncompliance may be taken into account by HUD as unsatisfactory performance of the participating jurisdiction and in any risk-based assessment of a future grant award under this part; and
</P>
<P>(ix) Unless otherwise provided in a closeout certification, the Consolidated Plan will remain in effect after closeout until the expiration of the program year covered by the most recent Consolidated Plan.
</P>
<P>(c) <I>Post closeout adjustments and continuing responsibilities.</I> The closeout of a grant does not affect any of the obligations required under this part and under 2 CFR 200.345, including:
</P>
<P>(1) The right of HUD to disallow costs and recover funds on the basis of a later audit or other review. HUD must make any cost disallowance determination and notify the participating jurisdiction within the record retention period;
</P>
<P>(2) Compliance with the requirements in § 92.508;
</P>
<P>(3) Compliance with the requirements in § 92.509;
</P>
<P>(4) Records retention as required in 2 CFR 200.345, as applicable;
</P>
<P>(5) Monitoring and enforcement of the requirements for all HOME-assisted units set forth in this part for the period of affordability specified in the HOME written agreement with the property owner;
</P>
<P>(6) Compliance with use of program income, recaptured funds, and repayments in accordance with § 92.503. If the jurisdiction is not a participating jurisdiction (as a metropolitan city, urban county, State, consortium, or consortium member) when it receives funds, the funds are not subject to the requirements of this part;
</P>
<P>(7) Compliance with the requirement in 2 CFR 200.345(a)(2) that the participating jurisdiction return any funds due as a result of a later refund, corrections, or other transactions including final indirect cost rate adjustments; and
</P>
<P>(8) Compliance with the audit requirements at 2 CFR part 200, subpart F).


</P>
<CITA TYPE="N">[90 FR 892, Jan. 6, 2025]




</CITA>
</DIV8>


<DIV8 N="§ 92.508" NODE="24:1.1.1.1.41.11.67.9" TYPE="SECTION">
<HEAD>§ 92.508   Recordkeeping.</HEAD>
<P>(a) <I>General.</I> Each participating jurisdiction must establish and maintain sufficient records to enable HUD to determine whether the participating jurisdiction has met the requirements of this part. At a minimum, the following records are needed: 
</P>
<P>(1) <I>Records concerning designation as a participating jurisdiction.</I> (i) For a consortium, the consortium agreement among the participating member units of general local government as required by § 92.101. 
</P>
<P>(ii) For a unit of general local government receiving a formula allocation of less than $750,000 (or less than $500,000 in fiscal years in which Congress appropriates less than $1.5 billion for this part), records demonstrating that funds have been made available (either by the State or the unit of general local government, or both) equal to or greater than the difference between its formula allocation and $750,000 (or $500,000 in fiscal years in which Congress appropriates less than $1.5 billion) as required by § 92.102(b).


</P>
<P>(2) <I>Program records.</I> (i) Records of the efforts to maximize participation by the private sector as required by § 92.200. 
</P>
<P>(ii) The forms of HOME assistance used in the program, including any forms of investment described in the Consolidated Plan under 24 CFR part 91 that are not identified in § 92.205(b), and which are specifically approved by HUD.
</P>
<P>(iii) The underwriting and subsidy layering guidelines adopted in accordance with § 92.250 that support the participating jurisdiction's Consolidated Plan certification.
</P>
<P>(iv) If existing debt is refinanced for multi-family rehabilitation projects, the refinancing guidelines established in accordance with § 92.206(b), described in the Consolidated Plan. 
</P>
<P>(v) If HOME funds are used for tenant-based rental assistance, records supporting the participating jurisdiction's Consolidated Plan certification in accordance with § 92.209(b), including documentation of the local market conditions that led to the choice of this option; written selection policies and criteria; supporting documentation for preferences for specific categories of individuals with disabilities; and records supporting the rent standard and minimum tenant contribution established in accordance with § 92.209(h). 
</P>
<P>(vi) If HOME funds are used for tenant-based rental assistance or rental housing, records evidencing that not less than 90 percent of the families receiving such rental assistance meet the income requirements of § 92.216. 
</P>
<P>(vii) If HOME funds are used for homeownership housing, the procedures used for establishing 95 percent of the median purchase price for the area in accordance with § 92.254(a)(2), in the Consolidated Plan. 
</P>
<P>(viii) If HOME funds are used for acquisition of housing for homeownership, the resale or recapture guidelines established in accordance with § 92.254(a)(5), as set forth in the Consolidated Plan.


</P>
<P>(ix) Records demonstrating compliance with the matching requirements of § 92.218 through § 92.222 including a running log and project records documenting the type and amount of match contributions by project. If the participating jurisdiction will apply excess matching contribution to a future fiscal year's liability, records demonstrating compliance with the matching requirements of §§ 92.218 through 92.221 for the excess amount applied, as described in § 92.221(b)(1), must be provided at the time of application and maintained for five years from the date of application.


</P>
<P>(x) Records documenting compliance with the 24 month commitment deadline of § 92.500(d). 
</P>
<P>(xi) Records demonstrating compliance with the fifteen percent CHDO set-aside requirement of § 92.300(a). 
</P>
<P>(xii) Records documenting compliance with the ten percent limitation on administrative and planning costs in accordance with § 92.207. 


</P>
<P>(3) <I>Project records.</I> (i) A full description of each project assisted with HOME funds, including the location (address of each unit), form of HOME assistance, and the units or tenants assisted with HOME funds.
</P>
<P>(ii) The source and application of funds for each project, including supporting documentation in accordance with 2 CFR 200.302; and records to document the eligibility and permissibility of the project costs, including the documentation of the actual HOME-eligible development costs of each HOME-assisted unit (through allocation of costs, if permissible under § 92.205(d)) where HOME funds are used to assist less than all of the units in a multi-unit project.


</P>
<P>(iii) Records demonstrating that each rental housing or homeownership project meets the minimum per-unit subsidy amount of § 92.205(c), the maximum per-unit subsidy amount in accordance with the requirement in § 92.250(a), the subsidy layering and underwriting evaluation adopted in accordance with § 92.250(b), and, if applicable, compliance with a green building standard established by HUD in accordance with the requirements in § 92.250(c).




</P>
<P>(iv) Records (e.g., inspection reports) demonstrating that each project meets the property standards of § 92.251 at project completion. In addition, during the period of affordability, records for rental projects demonstrating compliance with the property standards and financial reviews and actions pursuant to § 92.251(f).


</P>
<P>(v) Records demonstrating that each family is income eligible in accordance with § 92.203. 


</P>
<P>(vi) Records demonstrating that each tenant-based rental assistance project meets the written tenant selection policies and criteria of § 92.209(c), including any targeting requirements, the rent reasonableness requirements of § 92.209(f), the maximum subsidy provisions of § 92.209(h), housing standards of § 92.209(i) (including property inspection reports), security deposit requirements of § 92.209(j), and calculation of the HOME subsidy.


</P>
<P>(vii) Records demonstrating that each rental housing project met the affordability and income targeting requirements of § 92.252 for the required period or met the requirements in § 92.255 for conversion to homeownership for in-place tenants. Records must be kept for each family assisted. 


</P>
<P>(viii) Records demonstrating that each multifamily rental housing project involving rehabilitation with refinancing complies with the refinancing guidelines established in accordance with § 92.206(b). 


</P>
<P>(ix) Records demonstrating that each lease for a tenant receiving tenant-based rental assistance, security deposit assistance, and for an assisted rental housing unit complies with the applicable tenant and participant protections of § 92.253. Records must be kept for each family.




</P>
<P>(x) Records demonstrating that the purchase price or estimated value after rehabilitation for each homeownership housing project does not exceed 95 percent of the median purchase price for the area in accordance with § 92.254(a)(2). The records must demonstrate how the estimated value was determined. 
</P>
<P>(xi) Records demonstrating that each homeownership project meets the affordability requirements of § 92.254 for the required period. 
</P>
<P>(xii) Records demonstrating that any pre-award costs charged to the HOME allocation meet the requirements of § 92.212. 
</P>
<P>(xiii) Records demonstrating that a site and neighborhood standards review was conducted for each project which includes new construction of rental housing assisted under this part to determine that the site meets the requirements of 24 CFR 983.55(e)(2) and (3), in accordance with § 92.202.
</P>
<P>(xiv) Records (written agreements) demonstrating compliance with the written agreements requirements in § 92.504.


</P>
<P>(4) <I>Community Housing Development Organizations (CHDOs) Records.</I> (i) Written agreements committing HOME funds to CHDO projects in accordance with § 92.300(a).
</P>
<P>(ii) Records setting forth the efforts made to identify and encourage CHDOs, as required by § 92.300(b). 
</P>
<P>(iii) The name and qualifications of each CHDO and amount of HOME CHDO set-aside funds committed.
</P>
<P>(iv) Records demonstrating that each CHDO complies with the written agreements required by § 92.504. 
</P>
<P>(v) Records concerning the use of CHDO setaside funds, including funds used to develop CHDO capacity pursuant to § 92.300(b). 
</P>
<P>(vi) Records concerning the use of funds for CHDO operating expenses and demonstrating compliance with the requirements of §§ 92.208, 92.300(e) and 92.300(f). 
</P>
<P>(vii) Records concerning the tenant participation plan required by § 92.303. 
</P>
<P>(viii) Records concerning project-specific assistance to CHDOs pursuant to § 92.301, including the impediments to repayment, if repayment is waived. 


</P>
<P>(5) <I>Financial records.</I> (i) Records, in accordance with 2 CFR 200.302, identifying the source and application of funds for each fiscal year, including the formula allocation, any reallocation (identified by federal fiscal year appropriation), and any State or local funds provided under § 92.102(b). 
</P>
<P>(ii) Records concerning the HOME Investment Trust Fund Treasury account and local account required to be established and maintained by § 92.500, including deposits, disbursements, balances, supporting documentation and any other information required by the program disbursement and information system established by HUD. 
</P>
<P>(iii) Records identifying the source and application of program income, repayments and recaptured funds. 


</P>
<P>(iv) Records demonstrating adequate budget control and other records required by 2 CFR 200.302 and 200.303, including evidence of periodic account reconciliations. 


</P>
<P>(6) <I>Program administration records.</I> (i) Written policies, procedures, and systems, including a system for assessing risk of activities and projects and a system for monitoring entities consistent with this section, to ensure that the requirements of this part are met.
</P>
<P>(ii) Records demonstrating compliance with the written agreements required by § 92.504. 
</P>
<P>(iii) Records demonstrating compliance with the applicable uniform administrative requirements required by § 92.505. 
</P>
<P>(iv) Records documenting required inspections, monitoring reviews and audits, and the resolution of any findings or concerns. 




</P>
<P>(7) <I>Records concerning other Federal requirements</I>—(i) <I>Equal opportunity and fair housing records.</I> (A) Data on the extent to which each racial and ethnic group and single-headed households (by gender of household head) have applied for, participated in, or benefited from, any program or activity funded in whole or in part with HOME funds. 


</P>
<P>(B) Documentation that the participating jurisdiction submitted a certification that it will affirmatively further fair housing, consistent with §§ 5.150 and 5.151 of this title.
</P>
<P>(ii) <I>Affirmative marketing and MBE/WBE records.</I> (A) Records demonstrating compliance with the affirmative marketing procedures and requirements of § 92.351. 
</P>
<P>(B) Documentation and data on the steps taken to implement the jurisdiction's outreach programs to minority-owned (MBE) and female-owned (WBE) businesses including data indicating the racial/ethnic or gender character of each business entity receiving a contract or subcontract of $25,000 or more paid, or to be paid, with HOME funds; the amount of the contract or subcontract, and documentation of participating jurisdiction's affirmative steps to assure that minority business and women's business enterprises have an equal opportunity to obtain or compete for contracts and subcontracts as sources of supplies, equipment, construction, and services. 
</P>
<P>(iii) Records demonstrating compliance with the environmental review requirements of § 92.352 and 24 CFR part 58, including flood insurance requirements. 
</P>
<P>(iv) Records demonstrating compliance with the requirements of § 92.353 regarding displacement, relocation, and real property acquisition, including project occupancy lists identifying the name and address of all persons occupying the real property on the date described in § 92.353(c)(2)(i)(A), moving into the property on or after the date described in § 92.353(c)(2)(i)(A), and occupying the property upon completion of the project. 
</P>
<P>(v) Records demonstrating compliance with the labor requirements of § 92.354, including contract provisions and payroll records. 
</P>
<P>(vi) Records demonstrating compliance with the lead-based paint requirements of part 35, subparts A, B, J, K, M and R of this title.
</P>
<P>(vii) Records supporting exceptions to the conflict of interest prohibition pursuant to § 92.356. 
</P>
<P>(viii) Records demonstrating compliance with debarment and suspension requirements in 2 CFR part 2424. 
</P>
<P>(ix) Records concerning intergovernmental review, as required by § 92.357. 
</P>
<P>(x) Records of emergency transfers requested under 24 CFR 5.2005(e) and 92.359 pertaining to victims of domestic violence, dating violence, sexual assault, or stalking, including data on the outcomes of those requests.
</P>
<P>(xi) Documentation of actions undertaken to meet the requirements of 24 CFR part 75 which implements section 3 of the Housing Development Act of 1968, as amended (12 U.S.C. 1701u).


</P>
<P>(b) <I>States with State recipients.</I> A State that distributes HOME funds to State recipients must require State recipients to keep the records required by paragraphs (a)(2), (a)(3), (a)(5), (a)(6) and (a)(7) of this section, and such other records as the State determines to be necessary to enable the State to carry out its responsibilities under this part. The State need not duplicate the records kept by the State recipients. The State must keep records concerning its review of State recipients required under § 92.201(b)(3). 


</P>
<P>(c) <I>Period of record retention.</I> All records pertaining to each fiscal year of HOME funds must be retained for the most recent five year period, except as provided below. 


</P>
<P>(1) For rental housing projects, records may be retained for five years after the project completion date; except that records of individual tenant income verifications, project rents and project inspections must be retained for the most recent five year period, until five years after the period of affordability terminates. 


</P>
<P>(2) For homeownership housing projects, records may be retained for five years after the project completion date, except for documents imposing recapture/resale restrictions which must be retained for five years after the period of affordability terminates. 


</P>
<P>(3) For tenant-based rental assistance projects, records must be retained for five years after the period of rental assistance terminates. 
</P>
<P>(4) Written agreements must be retained for five years after the agreement terminates. 
</P>
<P>(5) Records covering displacements and acquisition must be retained for five years after the date by which all persons displaced from the property and all persons whose property is acquired for the project have received the final payment to which they are entitled in accordance with § 92.353. 
</P>
<P>(6) If any litigation, claim, negotiation, audit, monitoring, inspection or other action has been started before the expiration of the required record retention period records must be retained until completion of the action and resolution of all issues which arise from it, or until the end of the required period, whichever is later. 
</P>
<P>(d) <I>Access to records.</I> (1) The participating jurisdiction must provide citizens, public agencies, and other interested parties with reasonable access to records, consistent with applicable state and local laws regarding privacy and obligations of confidentiality. 
</P>
<P>(2) HUD and the Comptroller General of the United States, any of their representatives, have the right of access to any pertinent books, documents, papers or other records of the participating jurisdiction, state recipients, and subrecipients, in order to make audits, examinations, excerpts, and transcripts. 
</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 64 FR 50224, Sept. 15, 1999; 67 FR 61757, Oct. 1, 2002; 72 FR 73493, Dec. 27, 2007; 78 FR 44682, July 24, 2013; 80 FR 42366, July 16, 2015; 80 FR 75935, Dec. 7, 2015; 81 FR 80805, Nov. 16, 2016; 85 FR 47910, Aug. 7, 2020; 85 FR 61567, Sept. 29, 2020; 85 FR 82137, Dec. 17, 2020; 86 FR 30792, June 10, 2021; 86 FR 34943, July 1, 2021; 86 FR 30792, June 10, 2021; 86 FR 32767, June 23, 2021; 89 FR 38290, May 7, 2024; 90 FR 11024, Mar. 3, 2025; 90 FR 894, Jan. 6, 2025]




</CITA>
</DIV8>


<DIV8 N="§ 92.509" NODE="24:1.1.1.1.41.11.67.10" TYPE="SECTION">
<HEAD>§ 92.509   Performance reports.</HEAD>
<P>(a) <I>Management reports.</I> Each participating jurisdiction must submit management reports on its HOME Investment Partnerships Program in such format and at such time as HUD may prescribe. 
</P>
<P>(b) <I>Annual performance report.</I> For annual performance report requirements, see 24 CFR part 91. 


</P>
</DIV8>

</DIV6>


<DIV6 N="L" NODE="24:1.1.1.1.41.12" TYPE="SUBPART">
<HEAD>Subpart L—Performance Reviews and Sanctions</HEAD>


<DIV8 N="§ 92.550" NODE="24:1.1.1.1.41.12.67.1" TYPE="SECTION">
<HEAD>§ 92.550   Performance reviews.</HEAD>
<P>(a) <I>General.</I> HUD will review the performance of each participating jurisdiction in carrying out its responsibilities under this part whenever determined necessary by HUD, but at least annually. In conducting performance reviews, HUD will rely primarily on information obtained from the participating jurisdiction's and, as appropriate, the State recipient's records and reports, findings from on-site monitoring, audit reports, and information generated from the disbursement and information system established by HUD. Where applicable, HUD may also consider relevant information pertaining to a participating jurisdiction's or State recipient's performance gained from other sources, including citizen comments, complaint determinations, and litigation. Reviews to determine compliance with specific requirements of this part will be conducted as necessary, with or without prior notice to the participating jurisdiction or State recipient. Comprehensive performance reviews under the standards in paragraph (b) of this section will be conducted after prior notice to the participating jurisdiction. 
</P>
<P>(b) <I>Standards for comprehensive performance review.</I> A participating jurisdiction's performance will be comprehensively reviewed periodically, as prescribed by HUD, to determine: 
</P>
<P>(1) For local participating jurisdictions and State participating jurisdictions administering their own HOME programs, whether the participating jurisdiction has committed the HOME funds in the United States Treasury account as required by § 92.500 and expended the funds in the United States Treasury account as required by § 92.500, and has met the requirements of this part, particularly eligible activities, income targeting, affordability, and matching requirements; or 
</P>
<P>(2) For State participating jurisdictions distributing HOME funds to State recipients, whether the State has met the matching contribution and other requirements of this part; has distributed the funds in accordance with the requirements of this part; and has made such reviews and audits of its State recipients as may be appropriate to determine whether they have satisfied the requirements of paragraph (b)(1) of this section. 


</P>
</DIV8>


<DIV8 N="§ 92.551" NODE="24:1.1.1.1.41.12.67.2" TYPE="SECTION">
<HEAD>§ 92.551   Corrective and remedial actions.</HEAD>
<P>(a) <I>General.</I> HUD will use the procedures in this section in conducting the performance review as provided in § 92.550 and in taking corrective and remedial actions. 
</P>
<P>(b) <I>Performance review.</I> (1) If HUD determines preliminarily that the participating jurisdiction has not met a requirement of this part, the participating jurisdiction will be given notice of this determination and an opportunity to demonstrate, within the time prescribed by HUD (not to exceed 30 days) and on the basis of substantial facts and data, that it has done so. 
</P>
<P>(2) If the participating jurisdiction fails to demonstrate to HUD's satisfaction that it has met the requirement, HUD will take corrective or remedial action in accordance with this section or § 92.552. 


</P>
<P>(c) <I>Corrective and remedial actions.</I> Corrective or remedial actions for a performance deficiency (failure to meet a provision of this part) will be designed to prevent a continuation of the deficiency; mitigate, to the extent possible, its adverse effects or consequences; and prevent its recurrence. 
</P>
<P>(1) HUD may instruct the participating jurisdiction to submit and comply with proposals for action to correct, mitigate and prevent a performance deficiency, including: 
</P>
<P>(i) Preparing and following a schedule of actions for carrying out the affected activities, consisting of schedules, timetables, and milestones necessary to implement the affected activities; 
</P>
<P>(ii) Establishing and following a management plan that assigns responsibilities for carrying out the remedial actions; 
</P>
<P>(iii) Canceling or revising activities likely to be affected by the performance deficiency, before expending HOME funds for the activities; 
</P>
<P>(iv) Reprogramming HOME funds that have not yet been expended from affected activities to other eligible activities; 
</P>
<P>(v) Reimbursing its HOME Investment Trust Fund in any amount not used in accordance with the requirements of this part; 
</P>
<P>(vi) Suspending disbursement of HOME funds for affected activities; and 
</P>
<P>(vii) Establishing procedures to ensure compliance with HOME requirements;
</P>
<P>(viii) Making matching contributions as draws are made from the participating jurisdiction's HOME Investment Trust Fund United States Treasury Account and establishing a remedial plan to make up the matching contributions deficit; and
</P>
<P>(ix) If the participating jurisdiction is a metropolitan city, forming a consortium with the urban county if the urban county is willing to carry out the HOME program in the metropolitan city.
</P>
<P>(2) HUD may also change the method of payment from an advance to reimbursement basis and may require supporting documentation to be submitted for HUD review for each payment request before payment is made; determine the participating jurisdiction to be high risk and impose special conditions or restrictions on the next year's allocation in accordance with 2 CFR 200.207; and take other remedies that may be legally available, including remedies under 2 CFR 200.338.


</P>
<P>(3) A participating jurisdiction may request HUD reduce grant payments by an amount equal to the amount of expenditures that did not comply with the requirements of this part. The amount of a reduction may be for the entire grant amount.


</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 78 FR 44683, July 24, 2013; 80 FR 75935, Dec. 7, 2015; 90 FR 894, Jan. 6, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 92.552" NODE="24:1.1.1.1.41.12.67.3" TYPE="SECTION">
<HEAD>§ 92.552   Notice and opportunity for hearing; sanctions.</HEAD>
<P>(a) If HUD finds after reasonable notice and opportunity for hearing that a participating jurisdiction has failed to comply with any provision of this part and until HUD is satisfied that there is no longer any such failure to comply: 
</P>
<P>(1) HUD shall reduce the funds in the participating jurisdiction's HOME Investment Trust Fund by the amount of any expenditures that were not in accordance with the requirements of this part; and 


</P>
<P>(2) HUD may do one or more of the following: 
</P>
<P>(i) Prevent withdrawals from the participating jurisdiction's HOME Investment Trust Fund for activities affected by the failure to comply; 
</P>
<P>(ii) Restrict the participating jurisdiction's activities under this part to activities that conform to one or more model programs which HUD has developed in accordance with section 213 of the Act; 
</P>
<P>(iii) Remove the participating jurisdiction from participation in allocations or reallocations of funds made available under subpart B or J of this part; 


</P>
<P>(iv) Require the participating jurisdiction to make matching contributions in amounts required by § 92.218(a) as HOME funds are drawn from the participating jurisdiction's HOME Investment Trust Fund United States Treasury Account. Provided, however, that HUD may on due notice suspend payments at any time after the issuance of a notice of opportunity for hearing pursuant to paragraph (b)(1) of this section, pending such hearing and a final decision, to the extent HUD determines such action necessary to preclude the further expenditure of funds for activities affected by the failure to comply;


</P>
<P>(v) Reduce grant amounts paid to the participating jurisdiction by an amount equal to the amount of any expenditures that did not comply with the requirements of this part. The amount of a reduction may be for the entire grant amount;
</P>
<P>(vi) Revoke a jurisdiction's designation as a participating jurisdiction; and
</P>
<P>(vii) Terminate the assistance in whole or in part in accordance with 2 CFR 200.340.
</P>
<P>(b) <I>Proceedings.</I> When HUD proposes to take action pursuant to this section, the respondent in the proceedings will be the participating jurisdiction or, at HUD's option, the State recipient. Proceedings will be conducted in accordance with 24 CFR part 26.


</P>
<CITA TYPE="N">[61 FR 48750, Sept. 16, 1996, as amended at 62 FR 44840, Aug. 22, 1997; 78 FR 44683, July 24, 2013; 90 FR 894, Jan. 6, 2025] 




</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="93" NODE="24:1.1.1.1.42" TYPE="PART">
<HEAD>PART 93—HOUSING TRUST FUND
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d), 12 U.S.C. 4568.


</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>80 FR 5220, Jan. 30, 2015, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:1.1.1.1.42.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 93.1" NODE="24:1.1.1.1.42.1.67.1" TYPE="SECTION">
<HEAD>§ 93.1   Overview.</HEAD>
<P>(a) This part implements the Housing Trust Fund (HTF) program established under section 1338 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended (12 U.S.C. 4501 <I>et seq.</I>) (the Act). In general, under the HTF program, HUD allocates funds by formula to eligible States to increase and preserve the supply of decent, safe, sanitary, and affordable housing, with primary attention to rental housing for extremely low-income and very low-income households, including homeless families.
</P>
<P>(b) Section 1337 of the Act requires a percentage of the unpaid principal balance of total new business for the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae) (collectively, the government-sponsored enterprises or GSEs) to be setaside and allocated as a dedicated source of annual funding for the HTF, unless allocations are suspended by the Director of the Federal Housing Finance Agency, the agency that regulates the GSEs. These funds will be deposited into an HTF account established in the Treasury of the United States by the Secretary of the Treasury to carry out the HTF program. The Act also provides that the HTF may be funded with amounts appropriated, transferred, or credited to the HTF under other provisions of law.


</P>
</DIV8>


<DIV8 N="§ 93.2" NODE="24:1.1.1.1.42.1.67.2" TYPE="SECTION">
<HEAD>§ 93.2   Definitions.</HEAD>
<P><I>1937 Act</I> means the United States Housing Act of 1937 (42 U.S.C. 1437 <I>et seq.</I>).
</P>
<P><I>Act</I> means the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended (12 U.S.C. 4501 <I>et seq</I>).
</P>
<P><I>Annual income.</I> See § 93.151.
</P>
<P><I>Commitment</I> means:
</P>
<P>(1) The grantee has executed a legally binding written agreement (that includes the date of the signature of each person signing the agreement) with an eligible recipient for a project that meets the definition of “commit to a specific local project” of paragraph (2) of this definition.
</P>
<P>(2) “Commit to a specific local project” means:
</P>
<P>(i) If the project consists of rehabilitation or new construction (with or without acquisition), the grantee and recipient have executed a written legally binding agreement under which HTF assistance will be provided to the recipient for an identifiable project for which construction can reasonably be expected to start within 12 months of the agreement date. The written agreement for rehabilitation or new construction of rental housing may also provide operating cost assistance and/or operating cost assistance reserves.
</P>
<P>(ii) If the project consists of acquisition of standard housing and the grantee is providing HTF funds to a recipient to acquire rental housing, or to a first-time homebuyer family to acquire single family housing for homeownership, the grantee and recipient or the family have executed a written agreement under which HTF assistance will be provided for the purchase of the rental housing or single family housing and the property title will be transferred to the recipient or family within 6 months of the agreement date. The written agreement for acquisition of rental housing may also provide operating cost assistance and/or operating cost assistance reserves.
</P>
<P>(iii) If the project is for renewal of operating cost assistance or operating cost assistance reserves, the grantee and the recipient must have executed a legally binding written agreement under which HTF funds will be provided to the recipient for operating cost assistance or operating cost assistance reserves for the identified HTF project.
</P>
<P><I>Consolidated plan</I> means the plan submitted and approved in accordance with 24 CFR part 91.
</P>
<P><I>Displaced homemaker</I> means an individual who:
</P>
<P>(1) Is an adult;
</P>
<P>(2) Has not worked full-time full-year in the labor force for a number of years, but has, during such years, worked primarily without remuneration to care for the home and family; and
</P>
<P>(3) Is unemployed or underemployed and is experiencing difficulty in obtaining or upgrading employment.
</P>
<P><I>Extremely low-income families</I> means low-income families whose annual incomes do not exceed 30 percent of the median family income of a geographic area, as determined by HUD with adjustments for smaller and larger families.
</P>
<P><I>Family</I> has the same meaning given that term in 24 CFR 5.403.
</P>
<P><I>First-time homebuyer</I> means an individual and his or her spouse who have not owned a home during the 3-year period prior to purchase of a home with assistance under this part. The term first-time homebuyer also includes an individual who is a displaced homemaker or single parent, as those terms are defined in this section.
</P>
<P><I>Foster adult</I> has the same meaning given that term in 24 CFR 5.603.
</P>
<P><I>Foster child</I> has the same meaning given that term in 24 CFR 5.603.
</P>
<P><I>Full-time student</I> has the same meaning given that term in 24 CFR 5.603.
</P>
<P><I>Grantee</I> means the State or the State-designated entity that receives the HTF funds from HUD.
</P>
<P><I>HTF allocation plan</I> means the annual submission to HUD required by the Act that describes how the grantee will distribute its HTF funds, including how it will use the funds to address its priority housing needs, what activities may be undertaken with those funds, and how recipients and projects will be selected to receive those funds. See 24 CFR 91.220(l)(4) and 91.320(k)(5).
</P>
<P><I>HTF funds</I> means funds made available under this part through formula allocations and reallocations, plus program income.
</P>
<P><I>Homeownership</I> means ownership in fee simple title in a 1- to 4-unit dwelling or in a condominium unit, or equivalent form of ownership approved by HUD.
</P>
<P>(1) The land may be owned in fee simple or the homeowner may have a 99-year ground lease.
</P>
<P>(i) For housing located in the insular areas, the ground lease must be 40 years or more.
</P>
<P>(ii) For housing located on Indian trust or restricted Indian lands or a Community Land Trust, the ground lease must be 50 years or more.
</P>
<P>(iii) For manufactured housing, the ground lease must be for a period at least equal to the applicable period of affordability in § 93.304(e).
</P>
<P>(2) Right to possession under a contract for deed, installment contract, or land contract (pursuant to which the deed is not given until the final payment is made) is not an equivalent form of ownership.
</P>
<P>(3) The ownership interest may be subject only to the restrictions on resale required under § 93.304; mortgages, deeds of trust, or other liens or instruments securing debt on the property as approved by the grantee; or any other restrictions or encumbrances that do not impair the good and marketable nature of title to the ownership interest.
</P>
<P>(4) The grantee must determine whether or not ownership or membership in a cooperative or mutual housing project constitutes homeownership under State law; however, if the cooperative or mutual housing project receives low income housing tax credits, the ownership or membership does not constitute homeownership.
</P>
<P><I>Homeownership counseling</I> has the same meaning given the term in 24 CFR 5.100, and is a type of housing counseling.
</P>
<P><I>Household</I> means one or more persons occupying a housing unit.
</P>
<P><I>Housing</I> includes manufactured housing and manufactured housing lots, permanent housing for disabled homeless persons, single-room occupancy housing, and group homes. Housing does not include emergency shelters (including shelters for disaster victims) or facilities such as nursing homes, convalescent homes, hospitals, residential treatment facilities, correctional facilities, halfway houses, housing for students, or dormitories (including farmworker dormitories).
</P>
<P><I>Housing counseling</I> has the meaning given the term in 24 CFR 5.100.
</P>
<P><I>HUD</I> means the Department of Housing and Urban Development.
</P>
<P><I>Income-eligible</I> means a family, homeowner, or household (as appropriate given the context of the specific regulatory provision) that is very low-income, extremely low-income, or both, depending on the income-targeting requirements set forth in § 93.250.
</P>
<P><I>Insular areas</I> means Guam, the Commonwealth of the Northern Mariana Islands, the United States Virgin Islands, and American Samoa.
</P>
<P><I>Live-in aide</I> has the same meaning given that term in 24 CFR 5.403.
</P>
<P><I>Neighborhood</I> means a geographic location designated in comprehensive plans, ordinances, or other local documents as a neighborhood, village, or similar geographical designation that is within the boundary but does not encompass the entire area of a unit of general local government; except that if the unit of general local government has a population under 25,000, the neighborhood may, but need not, encompass the entire area of a unit of general local government.
</P>
<P><I>Poverty line</I> is defined in section 673 of the Omnibus Budget Reconciliation Act of 1981 (42 U.S.C. 9902).
</P>
<P><I>Program income</I> means gross income received by the grantee that is directly generated from the use of HTF funds. When program income is generated by housing that is only partially assisted with HTF funds, the income shall be prorated to reflect the percentage of HTF funds used. Program income includes, but is not limited to, the following:
</P>
<P>(1) Proceeds from the disposition by sale or long-term lease of real property acquired, rehabilitated, or constructed with HTF funds;
</P>
<P>(2) Gross income from the use or rental of real property owned by the grantee that was acquired, rehabilitated, or constructed with HTF funds, minus costs that were incidental to generation of the income; therefore, program income does not include gross income from the use, rental, or sale of real property received by the recipient, unless the funds are paid by the recipient to the grantee);
</P>
<P>(3) Payments of principal and interest on loans made using HTF funds;
</P>
<P>(4) Proceeds from the sale of loans made with HTF funds;
</P>
<P>(5) Proceeds from the sale of obligations secured by loans made with HTF funds;
</P>
<P>(6) Interest earned on program income pending its disposition; and
</P>
<P>(7) Any other interest or return on the investment of HTF funds, as permitted under § 93.200(b).
</P>
<P><I>Project</I> means a site or sites together with any building (including a manufactured housing unit) or buildings located on the site(s) that are under common ownership, management, and financing and are to be assisted with HTF funds as a single undertaking under this part. The project includes all the activities associated with the site and building.
</P>
<P><I>Project completion</I> means that all necessary title transfer requirements and construction work have been performed, the project complies with the requirements of this part (including the property standards under § 93.301 of this part), the final drawdown has been disbursed for the project, and the project completion information has been entered in the disbursement and information system established by HUD, except that with respect to rental housing project completion, for the purposes of § 93.402(d) of this part, project completion occurs upon completion of construction before occupancy.
</P>
<P><I>Public Housing Agency (PHA)</I> has the same meaning given that term in 24 CFR 5.100.
</P>
<P><I>Recipient</I> means an organization, agency, or other entity (including a public housing agency, or a for-profit entity or a nonprofit entity) that receives HTF assistance from a grantee as an owner or developer to carry out an HTF-assisted project. A recipient must:
</P>
<P>(1) Make acceptable assurances to the grantee that it will comply with the requirements of the HTF program during the entire period that begins upon selection of the recipient to receive HTF funds, and ending upon the conclusion of all HTF-funded activities;
</P>
<P>(2) Demonstrate the ability and financial capacity to undertake, comply, and manage the eligible activity;
</P>
<P>(3) Demonstrate its familiarity with the requirements of other Federal, State, or local housing programs that may be used in conjunction with HTF funds to ensure compliance with all applicable requirements and regulations of such programs; and
</P>
<P>(4) Have demonstrated experience and capacity to conduct an eligible HTF activity as evidenced by its ability to:
</P>
<P>(i) Own, construct, or rehabilitate, and manage and operate an affordable multifamily rental housing development; or
</P>
<P>(ii) Design, construct, or rehabilitate, and market affordable housing for homeownership.
</P>
<P>(iii) Provide forms of assistance, such as down payments, closing costs, or interest rate buydowns for purchasers.
</P>
<P><I>Reconstruction</I> means the rebuilding, on the same lot, of housing standing on a site at the time of project commitment, except that housing that was destroyed may be rebuilt on the same lot if HTF funds are committed within 12 months of the date of destruction. The number of housing units on the lot may not be decreased or increased as part of a reconstruction project, but the number of rooms per unit may be increased or decreased. Reconstruction also includes replacing an existing substandard unit of manufactured housing with a new or standard unit of manufactured housing. Reconstruction is new construction for purposes of this part.
</P>
<P><I>Shortage of standard rental units both affordable and available to extremely low-income renter households</I> means
</P>
<P>(1) For any State or other geographical area the gap between:
</P>
<P>(i) The number of units with complete plumbing and kitchen facilities with a rent that does not exceed 30 percent of 30 percent of the adjusted area median income (AMI) as determined by HUD that either are occupied by extremely low-income renter households or are vacant for rent; and
</P>
<P>(ii) The number of extremely low-income renter households.
</P>
<P>(2) If the number of units described in paragraph (1)(i) of this definition exceeds the number of extremely low-income households described in paragraph (1)(ii) of this definition, there is no shortage.
</P>
<P><I>Single family housing</I> means a one-to four-family residence, condominium unit, cooperative unit, combination of manufactured housing and lot, or manufactured housing lot.
</P>
<P><I>Single parent</I> means an individual who:
</P>
<P>(1) Is unmarried or legally separated from a spouse; and
</P>
<P>(2) Has one or more minor children of whom the individual has custody or joint custody, or is pregnant.
</P>
<P><I>State</I> means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, Guam, the Virgin Islands, and American Samoa.
</P>
<P><I>State-designated entity</I> means a State housing finance agency, tribally designated housing entity, or any other qualified instrumentality of the State that is designated by the State to be the grantee.
</P>
<P><I>Subgrantee</I> means a unit of general local government or State agency selected by the grantee to administer all or a portion of its HTF program. A local government subgrantee must have an approved consolidated plan submitted in accordance with 24 CFR part 91. The selection of a subgrantee by a grantee is not subject to the procurement procedures and requirements.
</P>
<P><I>Tribally designated housing entity</I> has the meaning given the term in section 4 of the Native American Housing Assistance and Self-Determination Act of 1997 (25 U.S.C. 4103).
</P>
<P><I>Unit of general local government</I> means a city, town, township, county, parish, village, or other general purpose political subdivision of a State; and any agency or instrumentality thereof that is established pursuant to legislation and designated by the chief executive to act on behalf of the jurisdiction with regard to provisions of this part. When a county is an urban county, the urban county is the unit of general local government for purposes of the HTF program.
</P>
<P><I>Urban county</I> has the meaning given the term in 24 CFR 570.3.
</P>
<P><I>Very low-income renter households</I> means a household whose income is in excess of 30 percent but not greater than 50 percent of the area median income, with adjustments for smaller and larger families, as determined by HUD.
</P>
<P><I>Very low-income families</I> means low-income families whose annual incomes are in excess of 30 percent but not greater than 50 percent of the median family income of a geographic area, as determined by HUD with adjustments for smaller and larger families. “Very low-income family” also includes any family that resides in a nonmetropolitan area that does not exceed the poverty line applicable to the family size involved.
</P>
<CITA TYPE="N">[80 FR 5220, Jan. 30, 2015, as amended at 81 FR 90657, Dec. 14, 2016; 88 FR 9664, Feb. 14, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 93.3" NODE="24:1.1.1.1.42.1.67.3" TYPE="SECTION">
<HEAD>§ 93.3   Waivers.</HEAD>
<P>HUD may, upon a determination of good cause and subject to statutory limitations, waive any provision of this part and delegate this authority in accordance with section 106 of the Department of Housing and Urban Development Reform Act of 1989 (42 U.S.C. 3535(q)).


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.1.1.1.42.2" TYPE="SUBPART">
<HEAD>Subpart B—Allocation Formula; Reallocations</HEAD>


<DIV8 N="§ 93.50" NODE="24:1.1.1.1.42.2.67.1" TYPE="SECTION">
<HEAD>§ 93.50   Formula allocation.</HEAD>
<P>(a) <I>Allocations to States.</I> HUD will provide to the States allocations of funds in amounts determined by the formula described in this part.
</P>
<P>(b) <I>Amount available for allocation.</I> The amount of funds available for allocation by the formula is the balance remaining after providing for other purposes authorized by Congress, in accordance with the Act and appropriations.
</P>
<P>(c) <I>Allocations for the insular areas.</I> The allocation amount for each insular area is determined by multiplying the funds available times the ratio of renter households in each insular area to the total number of renter households in the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, and the insular areas.
</P>
<P>(d) <I>Allocations for the 50 States, the Commonwealth of Puerto Rico, and the District of Columbia</I>—(1) <I>Amounts available for allocations.</I> The amount of funds that is available for allocation by the formula to the 50 States, the Commonwealth of Puerto Rico, and the District of Columbia is determined using the most current data available from the U.S. Census Bureau that is available for the same year for all these geographic areas. The amount is equal to the balance of funds remaining after determining formula allocations for the insular areas under § 93.50(c). For purposes of paragraphs (d)(1) and (2) of this section, the term “State” means any of the 50 United States, the Commonwealth of Puerto Rico, and the District of Columbia.
</P>
<P>(2) <I>Allocations.</I> (i) Allocations to the States are determined using the four needs factors described in § 93.51(a) through (d), multiplying each factor by the amount available under § 93.51(d)(1) by its priority weight, and summing the four factors for each State.
</P>
<P>(ii) The factor described in § 93.51(a) is weighted 0.5. The factors described in § 93.51(b) and (d) are weighted at 0.125 and the factor described in § 93.51(c) of this section is weighted at 0.25.
</P>
<P>(iii) The sum of the four needs factors for each State is then multiplied by the construction cost factor described in § 93.51(e) of this section and by the total amount of funds available for State allocations.


</P>
</DIV8>


<DIV8 N="§ 93.51" NODE="24:1.1.1.1.42.2.67.2" TYPE="SECTION">
<HEAD>§ 93.51   Formula factors.</HEAD>
<P>(a) <I>Need factor one.</I> The ratio of the shortage of standard rental units both affordable and available to extremely low-income renter households in the State to the aggregate shortage of standard rental units both affordable and available to extremely low-income renter households in all the States.
</P>
<P>(b) <I>Need factor two.</I> The ratio of the shortage of standard rental units both affordable and available to very low-income renter households in the State to the aggregate shortage of standard rental units both affordable and available to very low-income renter households in all the States.
</P>
<P>(c) <I>Need factor three.</I> The ratio of:
</P>
<P>(1) Extremely low-income renter households in the State living with either incomplete kitchen or plumbing facilities, more than one person per room, or paying more than 50 percent of income for housing costs, to
</P>
<P>(2) The aggregate number of extremely low-income renter households living with either incomplete kitchen or plumbing facilities, more than one person per room, or paying more than 50 percent of income for housing costs in all the States.
</P>
<P>(d) <I>Need factor four.</I> The ratio of very low-income renter households in the State paying more than 50 percent of income on rent relative to the aggregate number of very low-income renter households paying more than 50 percent of income on rent in all the States.
</P>
<P>(e) <I>Construction cost factor.</I> The resulting sum calculated from the factors described in paragraphs (a) through (d) of this section shall be multiplied by the relative cost of construction in the state. For purposes of calculating this factor, the term “cost of construction”:
</P>
<P>(1) Means the cost of construction or building rehabilitation in the State relative to the national cost of construction or building rehabilitation; and
</P>
<P>(2) Is calculated so that values higher than 1.0 indicate that the State's construction costs are higher than the national average, a value of 1.0 indicates that the State's construction costs are exactly the same as the national average, and values lower than 1.0 indicate that the State's cost of construction are lower than the national average.


</P>
</DIV8>


<DIV8 N="§ 93.52" NODE="24:1.1.1.1.42.2.67.3" TYPE="SECTION">
<HEAD>§ 93.52   Minimum allocations.</HEAD>
<P>(a) In accordance with the HTF statute, HUD is required to provide each of the States and the District of Columbia with a minimum grant of $3 million. If the formula amount determined for a fiscal year is less than $3 million to any of the 50 States or the District of Columbia, then the allocation to that State or the District of Columbia is increased to $3 million, and allocations to States and the District of Columbia above $3 million and to the Commonwealth of Puerto Rico and the insular areas are adjusted by an equal amount on a pro rata basis.
</P>
<P>(b) If in any fiscal year, funding in the HTF is insufficient to provide each of the 50 States and the District of Columbia with a minimum grant of $3 million, HUD will, through notice published in the <E T="04">Federal Register</E> for public comment, describe an alternative method for allocating grant funds to the 50 States and the District of Columbia.


</P>
</DIV8>


<DIV8 N="§ 93.53" NODE="24:1.1.1.1.42.2.67.4" TYPE="SECTION">
<HEAD>§ 93.53   Federal Register notice of formula allocations.</HEAD>
<P>Not later than 60 calendar days after the date that HUD determines the formula amounts under this subpart, HUD will publish a notice in the <E T="04">Federal Register</E> announcing the availability of the allocations to States.


</P>
</DIV8>


<DIV8 N="§ 93.54" NODE="24:1.1.1.1.42.2.67.5" TYPE="SECTION">
<HEAD>§ 93.54   Reallocations by formula.</HEAD>
<P>(a) HUD will reallocate under this section:
</P>
<P>(1) Any HTF funds available for reallocation because HUD reduced or recaptured funds from an HTF grantee under § 93.400(d) for failure to commit or expend the funds within the time specified, or under § 93.453 for failure to comply substantially with any provision of this part;
</P>
<P>(2) Any HTF funds reduced for failure by the grantee to obtain funds required to be reimbursed or returned under § 93.450; and
</P>
<P>(3) Any HTF funds remitted to HUD under § 93.403(b)(4) when a grantee ceases to be an HTF grantee for any reason.
</P>
<P>(b) Any reallocation of funds must be made only among all participating States, except those States from which the funds were recaptured or reduced.
</P>
<P>(c) Any amounts that become available for reallocation shall be added to amounts for formula allocation in the succeeding fiscal year.


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:1.1.1.1.42.3" TYPE="SUBPART">
<HEAD>Subpart C—Participation and Submission Requirements; Distribution of Assistance</HEAD>


<DIV8 N="§ 93.100" NODE="24:1.1.1.1.42.3.67.1" TYPE="SECTION">
<HEAD>§ 93.100   Participation and submission requirements.</HEAD>
<P>(a) <I>Notification of intent to participate.</I> Not later than 30 calendar days after HUD's publication of the formula allocation amounts as provided in § 93.53, the State must notify HUD in writing of its intention to become an HTF grantee for the first year of HTF funding.
</P>
<P>(b) <I>Submission requirement.</I> To receive its HTF grant, the grantee must submit a consolidated plan in accordance with 24 CFR part 91.


</P>
</DIV8>


<DIV8 N="§ 93.101" NODE="24:1.1.1.1.42.3.67.2" TYPE="SECTION">
<HEAD>§ 93.101   Distribution of assistance.</HEAD>
<P>(a) A State may choose to be the HTF grantee to receive and administer its grant or it may choose a qualified State-designated entity to be the HTF grantee.
</P>
<P>(b) Each grantee is responsible for distributing HTF funds throughout the State according to the State's assessment of the priority housing needs within the State, as identified in the State's approved consolidated plan.
</P>
<P>(c) An HTF grantee may choose to directly fund projects by eligible recipients in accordance with the State's HTF allocation plan or to fund projects by eligible recipients through one or more subgrantees. An HTF subgrantee that is a unit of general local government must have a consolidated plan under 24 CFR part 91, and must include an HTF allocation plan in its consolidated plan (see 24 CFR 91.220(l)(4)), and must select projects by eligible recipients in accordance with its HTF allocation plan. Because a State has only one consolidated plan, and HTF allocation plan for an HTF subgrantee that is a State agency must be included in the State's HTF allocation plan. The grantee or subgrantee must determine that the applicant is an eligible recipient that meets the definition of “recipient” in § 93.2 before awarding HTF assistance.
</P>
<P>(d) If the HTF grantee subgrants HTF funds to subgrantees, the grantee must ensure that its subgrantees comply with the requirements of this part and carry out the responsibilities of the grantee. The grantee must annually review the performance of subgrantees in accordance with 24 CFR 93.404(a).


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:1.1.1.1.42.4" TYPE="SUBPART">
<HEAD>Subpart D—Program Requirements</HEAD>


<DIV8 N="§ 93.150" NODE="24:1.1.1.1.42.4.67.1" TYPE="SECTION">
<HEAD>§ 93.150   Site and neighborhood standards.</HEAD>
<P>(a) <I>General.</I> A grantee must administer its HTF program in a manner that provides housing that is suitable from the standpoint of facilitating and furthering full compliance with the applicable provisions of title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d-2000d-4), the Fair Housing Act (42 U.S.C. 3601 <I>et seq.,</I> E.O. 11063, 3 CFR, 1959-1963 Comp., p. 652) and HUD regulations issued pursuant thereto; and promotes greater choice of housing opportunities.
</P>
<P>(b) <I>New rental housing.</I> In carrying out the site and neighborhood requirements with respect to new construction of rental housing, a grantee is responsible for making the determination that proposed sites for new construction meet the requirements in 24 CFR 983.55(e)(2).
</P>
<CITA TYPE="N">[80 FR 5220, Jan. 30, 2015, as amended at 89 FR 38290, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 93.151" NODE="24:1.1.1.1.42.4.67.2" TYPE="SECTION">
<HEAD>§ 93.151   Income determinations.</HEAD>
<P>(a) <I>General.</I> The HTF program has income-targeting requirements. Therefore, the grantee must determine that each family occupying an HTF-assisted unit is income-eligible by determining the family's annual income.
</P>
<P>(1) If a family is applying for or living in an HTF-assisted rental unit, and the unit is assisted under the public housing program, then a grantee must accept the public housing agency's determination of the family's annual income and adjusted income under §§ 5.609 and 5.611 of this title, respectively.
</P>
<P>(2) If a family is applying for or living in an HTF-assisted rental unit, and the family is assisted under a Federal tenant-based rental assistance program (<I>e.g.,</I> housing choice voucher program, HOME tenant based rental assistance, etc.), then a grantee must accept the rental assistance provider's determination of the family's annual income and adjusted income under the rules of that program.
</P>
<P>(3) If a family is applying for or living in an HTF-assisted rental unit, and the unit is assisted with a Federal or State project-based rental subsidy program, then a grantee must accept the public housing agency, owner, or rental subsidy provider's determination of the family's annual income and adjusted income under the rules of that program.
</P>
<P>(4) In all other cases, the grantee must calculate annual income in accordance with paragraphs (b) through (e) of this section.
</P>
<P>(b) <I>Definition of “annual income.”</I> (1) When determining whether a family is income-eligible, the grantee must use one of the following two definitions of “annual income”:
</P>
<P>(i) “<I>Annual income”</I> as defined at § 5.609 (a) and (b) of this title; or
</P>
<P>(ii) “<I>Adjusted gross income”</I> as defined for purposes of reporting under the Internal Revenue Service (IRS) Form 1040 series for individual Federal annual income tax purposes.
</P>
<P>(2) The grantee may use only one definition of annual income for each HTF-assisted program (<I>e.g.,</I> down payment assistance program) that it administers and only one definition for each rental housing project. For projects where either a family or unit is assisted under the public housing program, a Federal tenant-based rental assistance program (<I>e.g.,</I> housing choice voucher program, HOME tenant-based rental assistance, etc.), or a Federal or State project-based rental subsidy program, the grantee must calculate annual income in accordance with paragraph (b)(1)(i) of this section so that only one definition of annual income is used in the project.
</P>
<P>(c) <I>Determining annual income</I>—(1) <I>Tenants in HTF-assisted housing.</I> For families who are tenants in HTF-assisted housing, the grantee must initially determine annual income using the method in paragraph (d)(1) of this section. For subsequent income determinations during the period of affordability, the grantee may use any one of the methods described in paragraph (d) of this section, in accordance with § 93.302(e).
</P>
<P>(2) <I>HTF-assisted homebuyers.</I> For families who are HTF-assisted homebuyers, the grantee must determine annual income using the method described in paragraph (d)(1) of this section.
</P>
<P>(d) <I>Required documentation for Annual Income calculations.</I> (1) Examine at least 2 months of source documents evidencing annual income (<I>e.g.,</I> wage statement, interest statement, unemployment compensation statement) for the family.
</P>
<P>(2) Obtain from the family a written statement of the amount of the family's annual income and family size, along with a certification that the information is complete and accurate. The certification must state that the family will provide source documents upon request.
</P>
<P>(3) Obtain a written statement from the administrator of a government program under which the family receives benefits and which examines each year the annual income of the family. The statement must indicate the tenant's family size and state the amount of the family's annual income; or alternatively, the statement must indicate the current dollar limit for very low- or low-income families for the family size of the tenant and state that the tenant's annual income does not exceed this limit.
</P>
<P>(e) <I>Determining family composition and projecting income.</I> (1) The grantee must calculate the annual income of the family by projecting the prevailing rate of income of the family at the time the grantee determines that the family is income eligible. Annual income includes income from all persons in the household, except live-in aides, foster children, and foster adults. Income or asset enhancement derived from the HTF-assisted project shall not be considered in calculating annual income. Families may use the certification process in § 5.618 of this title to certify that their net family assets are below the threshold for imputing income used in § 5.609(a)(2) of this title. For families living in HTF-assisted rental housing units, any rental assistance provided to the family under a Federal tenant-based rental assistance program or any Federal or State project-based rental subsidy provided to the HTF rental housing unit shall not be counted as tenant income for purposes of determining annual income.
</P>
<P>(2) The grantee is not required to re-examine the family's income at the time the HTF assistance is provided, unless more than six months has elapsed since the grantee determined that the family qualified as income eligible.
</P>
<P>(f) <I>Adjusted Income.</I> The HTF program does not require that adjusted income be used or calculated by HTF grantees. If a family or unit is assisted with public housing, Federal tenant-based rental assistance, (<I>e.g.,</I> housing choice voucher program, HOME tenant-based rental assistance, etc.), or by a Federal or State project-based rental subsidy program, then a grantee must accept the determination of adjusted income made under the rules of that program in accordance with paragraphs (a)(1) through (3) of this section, as applicable.
</P>
<CITA TYPE="N">[88 FR 9664, Feb. 14, 2023]




</CITA>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:1.1.1.1.42.5" TYPE="SUBPART">
<HEAD>Subpart E—Eligible and Prohibited Activities</HEAD>


<DIV8 N="§ 93.200" NODE="24:1.1.1.1.42.5.67.1" TYPE="SECTION">
<HEAD>§ 93.200   Eligible activities: General.</HEAD>
<P>(a)(1) HTF funds may be used for the production, preservation, and rehabilitation of affordable rental housing and affordable housing for first-time homebuyers through the acquisition (including assistance to homebuyers), new construction, reconstruction, or rehabilitation of nonluxury housing with suitable amenities, including real property acquisition, site improvements, conversion, demolition, and other expenses, including financing costs, relocation expenses of any displaced persons, families, businesses, or organizations; for operating costs of HTF-assisted rental housing; and for reasonable administrative and planning costs. Not more than one third of each annual grant may be used for operating cost assistance and operating cost assistance reserves. Operating cost assistance and operating cost assistance reserves may be provided only to rental housing acquired, rehabilitated, reconstructed, or newly constructed with HTF funds. Not more than 10 percent of the annual grant shall be used for housing for homeownership. HTF-assisted housing must be permanent housing. The specific eligible costs for these activities are found in §§ 93.201 and 93.202. The activities and costs are eligible only if the housing meets the property standards in § 93.301, as applicable, upon project completion.
</P>
<P>(2) Acquisition of vacant land or demolition must be undertaken only with respect to a particular housing project intended to provide affordable housing within the time frames established in the definition of “commitment” in § 93.2.
</P>
<P>(3) HTF funds may be used to purchase and/or rehabilitate a manufactured housing unit, and purchase the land upon which a manufactured housing unit is located. The manufactured housing unit must, at the time of project completion, be connected to permanent utility hook-ups and be located on land that is owned by the manufactured housing unit owner or land for which the manufactured housing owner has a lease for a period at least equal to the applicable period of affordability.
</P>
<P>(b) <I>Forms of assistance to projects.</I> A grantee may provide HTF funds as equity investments, interest-bearing loans or advances, non-interest-bearing loans or advances, interest subsidies consistent with the purposes of this part, deferred payment loans, grants, or other forms of assistance that HUD determines to be consistent with the purposes of this part. Each grantee has the right to establish the terms of assistance, subject to the requirements of this part.
</P>
<P>(c) <I>Multi-unit projects.</I> (1) HTF funds may be used to assist in the development of one or more housing units in a multi-unit project. Only the actual HTF eligible development costs of the assisted units may be charged to the HTF program. If the assisted and non-assisted units are not comparable, the actual costs may be determined based on a method of cost allocation. If the assisted and non-assisted units are comparable in terms of size, features, and number of bedrooms, the actual cost of the HTF-assisted units can be determined by prorating the total HTF-eligible development costs of the project so that the proportion of the total development costs charged to the HTF program does not exceed the proportion of the HTF-assisted units in the project.
</P>
<P>(2) After project completion, the number of units designated as HTF-assisted may be reduced only in accordance with § 93.203, except that in a project consisting of all HTF-assisted units, one unit may be converted to an onsite manager's unit if the grantee determines the conversion is reasonable and that, based on one fewer HTF-assisted unit, the costs charged to the HTF program do not exceed the actual costs of the HTF-assisted units and do not exceed the subsidy limit established pursuant to § 93.300(a).
</P>
<P>(d) <I>Terminated projects.</I> An HTF-assisted project that is terminated before completion, either voluntarily or otherwise, constitutes an ineligible activity and the grantee must repay any HTF funds invested in the project to its HTF account from which the funds were drawn (<I>i.e.,</I> local or Treasury account), in accordance with § 93.403(b). A project that does not meet the requirements for affordable housing must be terminated and the grantee must repay the HTF funds to the grantee's HTF account.


</P>
</DIV8>


<DIV8 N="§ 93.201" NODE="24:1.1.1.1.42.5.67.2" TYPE="SECTION">
<HEAD>§ 93.201   Eligible project costs.</HEAD>
<P>HTF funds may be used to pay the following eligible costs:
</P>
<P>(a) <I>Development hard costs.</I> The actual cost of constructing or rehabilitating housing. These costs include the following:
</P>
<P>(1) For new construction projects, costs to meet the new construction standards of the grantee in § 93.301;
</P>
<P>(2) For rehabilitation, costs to meet the property standards for rehabilitation projects in § 93.301(b);
</P>
<P>(3) For both new construction and rehabilitation projects, costs:
</P>
<P>(i) To demolish existing structures;
</P>
<P>(ii) To make utility connections including off-site connections from the property line to the adjacent street; and
</P>
<P>(iii) To make improvements to the project site that are in keeping with improvements of surrounding, standard projects. Site improvements may include onsite roads and sewer and water lines necessary to the development of the project. The project site is the property, owned by the project owner, upon which the project is located.
</P>
<P>(4) For both new construction and rehabilitation of multifamily rental housing projects, costs to construct or rehabilitate laundry and community facilities that are located within the same building as the housing and which are for the use of the project residents and their guests.
</P>
<P>(5) Costs to make utility connections or to make improvements to the project site, in accordance with the provisions of paragraphs (a)(3)(ii) and (iii) of this section are also eligible in connection with the acquisition of standard housing.
</P>
<P>(b) <I>Refinancing costs.</I> (1) The cost to refinance existing debt secured by rental housing units that are being rehabilitated with HTF funds, but only if the refinancing is necessary to reduce the overall housing costs and to make the housing more affordable and proportional to the number of HTF-assisted units in the rental project. The proportional rehabilitation cost must be greater than the proportional amount of debt that is refinanced.
</P>
<P>(2) The grantee must establish refinancing guidelines and state them in its consolidated plan described in 24 CFR part 91. The guidelines shall describe the conditions under which the grantee will refinance existing debt. At minimum, the guidelines must demonstrate that rehabilitation is the primary eligible activity and ensure that this requirement is met by establishing a minimum level of rehabilitation per unit or a required ratio between rehabilitation and refinancing.
</P>
<P>(c) <I>Acquisition costs.</I> Costs of acquiring improved or unimproved real property, including acquisition by homebuyers.
</P>
<P>(d) <I>Related soft costs.</I> Other reasonable and necessary costs incurred by the owner or grantee and associated with the financing, or development (or both) of new construction, rehabilitation or acquisition of housing assisted with HTF funds. These costs include, but are not limited to:
</P>
<P>(1) Architectural, engineering, or related professional services required to prepare plans, drawings, specifications, or work write-ups. The costs may be paid if they were incurred not more than 24 months before the date that HTF funds are committed to the project and the grantee expressly permits HTF funds to be used to pay the costs in the written agreement committing the funds.
</P>
<P>(2) Costs to process and settle the financing for a project, such as private lender origination fees, credit reports, fees for title evidence, fees for recordation and filing of legal documents, building permits, attorneys' fees, private appraisal fees and fees for an independent cost estimate, and builders' or developers' fees.
</P>
<P>(3) Costs of a project audit, including certification of costs performed by a certified public accountant, that the grantee may require with respect to the development of the project.
</P>
<P>(4) Costs to provide information services such as affirmative marketing and fair housing information to prospective homeowners and tenants as required by § 93.350.
</P>
<P>(5) For new construction or rehabilitation, the cost of funding an initial operating deficit reserve, which is a reserve to meet any shortfall in project income during the period of project rent-up (not to exceed 18 months) and which may only be used to pay project operating expenses, scheduled payments to a replacement reserve, and debt service. Any HTF funds placed in an operating deficit reserve that remain unexpended after the period of project rent-up may be retained for project reserves if permitted by the grantee.
</P>
<P>(6) Staff and overhead costs of the grantee directly related to carrying out the project, such as work specifications preparation, loan processing, and inspections. For multi-unit projects, such costs must be allocated among HTF-assisted units in a reasonable manner and documented. Although these costs may be charged as project costs, these costs cannot be charged to or paid by the assisted families.
</P>
<P>(7) For both new construction and rehabilitation, costs for the payment of impact fees that are charged for all projects within a jurisdiction.
</P>
<P>(e) <I>Operating cost assistance and operating cost assistance reserves.</I> For HTF-assisted units for which project-based assistance is not available, when necessary and subject to the limitations in § 93.200(a), HTF funds may be used to pay for operating cost assistance and operating cost assistance reserves, as follows:
</P>
<P>(1) Operating costs are costs for insurance, utilities, real property taxes, and maintenance and scheduled payments to a reserve for replacement of major systems (provided that the payments must be based on the useful life of each major system and expected replacement cost) of an HTF-assisted unit. The eligible amount of HTF funds per unit for operating cost assistance is determined based on the deficit remaining after the monthly rent payment for the HTF-assisted unit is applied to the HTF-assisted unit's share of monthly operating costs. The maximum amount of the operating cost assistance to be provided to an HTF-assisted rental project must be based on the underwriting of the project and must be specified in a written agreement between the grantee and the recipient. The written agreement may commit, from a fiscal year HTF grant, funds for operating cost assistance for a multiyear period provided that the grantee is able meet its expenditure deadline in § 93.400(d). The grantee may renew operating cost assistance with future fiscal year HTF grants during the affordability period and the amount must be based on the need for the operating cost assistance at the time the assistance is renewed.
</P>
<P>(2) An operating cost assistance reserve may be funded by the grantee for HTF-assisted units in a project where the grantee determines in its underwriting of the project the reserve is necessary to ensure the project's financial feasibility. If the operating cost assistance reserve is funded with appropriated HTF funds, the allowable amount of the reserve shall not exceed the amount determined by the grantee to be necessary to provide operating cost assistance for HTF-assisted units, for a period not to exceed 5 years, based on an analysis of potential deficits remaining after the expected rent payments for the HTF-assisted unit are applied to the HTF-assisted unit's expected share of operating costs. The grantee may renew operating cost assistance reserves with future fiscal year HTF grants during the affordability period and the amount must be based on the need for the operating cost assistance reserve at the time the assistance for the reserve is renewed. If the operating cost assistance reserve is funded with non-appropriated HTF funds, the reserve may be funded for the period of affordability.
</P>
<P>(f) <I>Relocation costs.</I> The cost of relocation payments and other relocation assistance to persons displaced by the project are eligible costs.
</P>
<P>(1) Relocation payments include replacement housing payments, payments for moving expenses, and payments for reasonable out-of-pocket costs incurred in the temporary relocation of persons.
</P>
<P>(2) Other relocation assistance means staff and overhead costs directly related to providing advisory and other relocation services to persons displaced by the project, including timely written notices to occupants, referrals to comparable and suitable replacement property, property inspections, counseling, and other assistance necessary to minimize hardship.
</P>
<P>(g) <I>Costs relating to payment of loans.</I> If the HTF funds are not used to directly pay a cost specified in this section, but are used to pay off a construction loan, bridge financing loan, or guaranteed loan, the payment of principal and interest for such loan is an eligible cost only if:
</P>
<P>(1) The loan was used for eligible costs specified in this section, and
</P>
<P>(2) The HTF assistance is part of the original financing for the project and the project meets the requirements of this part.
</P>
<P>(h) <I>Construction undertaken before the HTF funds are committed to the project.</I> HTF funds cannot be used for development hard costs, as provided in paragraph (a) of this section, or for acquisition, undertaken before the HTF funds are committed to the project. However, the written agreement committing the HTF funds to the project may authorize HTF funds to be used for architectural and engineering costs and other related professional services, as provided in paragraph (d)(1) of this section.


</P>
</DIV8>


<DIV8 N="§ 93.202" NODE="24:1.1.1.1.42.5.67.3" TYPE="SECTION">
<HEAD>§ 93.202   Eligible administrative and planning costs.</HEAD>
<P>(a) <I>General.</I> A HTF grantee may expend, for payment of reasonable administrative and planning costs of the HTF, an amount of HTF funds that is not more than 10 percent of the sum of each fiscal year HTF grant and of program income deposited into its local account or received and reported by its subgrantees during the program year. A HTF grantee may expend the funds directly or may authorize its subgrantees, if any, to expend all or a portion of such funds, provided total expenditures for planning and administrative costs do not exceed the maximum allowable amount. Reasonable administrative and planning costs are those costs described in paragraphs (b) through (h) of this section:
</P>
<P>(b) <I>General management, oversight and coordination.</I> Reasonable costs of overall program management, coordination, monitoring, and evaluation. Such costs include, but are not limited to, necessary expenditures for the following:
</P>
<P>(1) Salaries, wages, and related costs of the grantee's staff. In charging costs to this category the grantee may either include the entire salary, wages, and related costs allocable to the program of each person whose <I>primary</I> responsibilities with regard to the program involves program administration assignments, or the prorated share of the salary, wages, and related costs of each person whose job includes <I>any</I> program administration assignments. The grantee may use only one of these methods. Program administration includes the following types of assignments:
</P>
<P>(i) Developing systems and schedules for ensuring compliance with program requirements;
</P>
<P>(ii) Developing interagency agreements and agreements with entities receiving HTF funds;
</P>
<P>(iii) Monitoring HTF-assisted housing for progress and compliance with program requirements;
</P>
<P>(iv) Preparing reports and other documents related to the program for submission to HUD;
</P>
<P>(v) Coordinating the resolution of audit and monitoring findings;
</P>
<P>(vi) Evaluating program results against stated objectives; and
</P>
<P>(vii) Managing or supervising persons whose primary responsibilities with regard to the program include such assignments as those described in paragraphs (a)(1)(i) through (vi) of this section;
</P>
<P>(2) Travel costs incurred for official business in carrying out the program;
</P>
<P>(3) Administrative services performed under third party contracts or agreements, including such services as general legal services, accounting services, and audit services;
</P>
<P>(4) Other costs for goods and services required for administration of the program, including such goods and services as rental or purchase of equipment, insurance, utilities, office supplies, and rental and maintenance (but not purchase) of office space; and
</P>
<P>(c) <I>Staff and overhead.</I> Staff and overhead costs of the grantee directly related to carrying out the project, such as work specifications preparation, loan processing, inspections, lead-based paint evaluations (visual assessments, inspections, and risk assessments), other services related to assisting potential owners, tenants and homebuyers (<I>e.g.,</I> housing counseling); and staff and overhead costs directly related to providing advisory and other relocation services to persons displaced by the project, including timely written notices to occupants, referrals to comparable and suitable replacement property, property inspections, counseling, and other assistance necessary to minimize hardship. These costs (except homeownership counseling) may be charged as administrative costs or as project costs under § 93.201(d)(6) and (f)(2), at the discretion of the grantee; however, these costs (except homeownership counseling) cannot be charged to or paid by the low-income families.
</P>
<P>(d) <I>Public information.</I> The provision of information and other resources to residents and citizen organizations participating in the planning, implementation, or assessment of projects being assisted with HTF funds.
</P>
<P>(e) <I>Fair housing.</I> Activities to affirmatively further fair housing in accordance with the grantee's certification under 24 CFR part 91.
</P>
<P>(f) <I>Indirect costs.</I> Indirect costs may be charged to the HTF program in accordance with 2 CFR part 200, subpart E.
</P>
<P>(g) <I>Preparation of the consolidated plan.</I> Preparation of the consolidated plan required under 24 CFR part 91. Preparation includes the costs of public hearings, consultations, and publication.
</P>
<P>(h) <I>Other Federal requirements.</I> Costs of complying with the Federal requirements in subpart H of this part.


</P>
</DIV8>


<DIV8 N="§ 93.203" NODE="24:1.1.1.1.42.5.67.4" TYPE="SECTION">
<HEAD>§ 93.203   HTF funds and public housing.</HEAD>
<P>(a) HTF funds may be used for new construction or rehabilitation of public housing units only in accordance with the following:
</P>
<P>(1) HTF funds may be used for new construction of public housing as part of the Choice Neighborhoods (Choice) program under a HUD appropriation act or for new public housing units that have been allocated and will receive low-income housing tax credits under section 42 of the Internal Revenue Code of 1986 (26 U.S.C. 42).
</P>
<P>(2) HTF funds may be used for the rehabilitation of existing public housing units in which the public housing assistance will be converted and used at the properties under the Rental Assistance Demonstration (RAD) program under HUD's 2012 Appropriations Act (Pub. L. 112-55, 125 Stat. 552, approved November 18, 2011) or subsequent statutes. HTF funds may also be used for the rehabilitation of existing public housing under the Choice program, and of existing public housing units that have been allocated and will receive low-income housing tax credits under section 42 of the Internal Revenue Code of 1986 (26 U.S.C. 42).
</P>
<P>(b) The public housing units constructed using funds under this part must replace units that were removed from a public housing agency's public housing inventory as part of a Choice program grant, or as part of a mixed-financed development under section 35 of the 1937 Act. The number of replacement units cannot be more than the number of units removed from the public housing agency's inventory. The public housing units constructed or rehabilitated using funds under this part must receive Public Housing Operating Fund assistance (and may receive Public Housing Capital Fund assistance) under section 9 of the 1937 Act. These units cannot receive operating costs assistance or operating cost assistance reserves under this part.
</P>
<P>(c) Except as provided in paragraph (b) of this section, HTF-assisted housing may not receive Operating Fund or Capital Fund assistance under section 9 of the 1937 Act during the HTF period of affordability.
</P>
<P>(d) Consistent with § 93.200(c), HTF funds may be used for affordable housing in a project that also contains public housing units, provided that the HTF funds are not used for the public housing units and HTF funds are used only for eligible costs, in accordance with this part.


</P>
</DIV8>


<DIV8 N="§ 93.204" NODE="24:1.1.1.1.42.5.67.5" TYPE="SECTION">
<HEAD>§ 93.204   Prohibited activities and fees.</HEAD>
<P>(a) HTF funds may not be used to:
</P>
<P>(1) Provide assistance (other than assistance to a homebuyer to acquire housing previously assisted with HTF funds or renewal of operating cost assistance or renewal of operating cost assistance reserve) to a project previously assisted with HTF funds during the period of affordability established by the grantee in the written agreement under § 93.404 (c)(2)(iv). However, additional HTF funds may be committed to a project up to one year after project completion, but the amount of HTF funds in the project may not exceed the maximum per-unit development subsidy amount established pursuant to § 93.300.
</P>
<P>(2) Pay for the acquisition of property owned by the grantee, except for property acquired by the grantee with HTF funds or property acquired in anticipation of carrying out an HTF project.
</P>
<P>(3) Pay delinquent taxes, fees, or charges on properties to be assisted with HTF funds.
</P>
<P>(4) Pay for political activities, advocacy, lobbying (whether directly or through other parties), counseling services (except for housing counseling), travel expenses (other than those eligible under § 93.202(b)), or preparing or providing advice on tax returns. The prohibited use of funds for political activities includes influencing the selection, nomination, election, or appointment of one or more candidates to any Federal, State, or local office as codified in section 501 of the Internal Revenue Code of 1986 (26 U.S.C. 501).
</P>
<P>(5) Pay for administrative, outreach, or other costs to manage and operate the grantee of HTF funds, except those administrative costs necessary to carry out the HTF program in § 93.202, including housing counseling.
</P>
<P>(6) Pay for any cost that is not eligible under § 93.201 and § 93.202.
</P>
<P>(b)(1) The grantee may not charge (and must prohibit subgrantees and recipients from charging) servicing, origination, or other fees for the costs of administering the HTF program. However, the grantee may charge owners of rental projects reasonable annual fees for monitoring compliance during the period of affordability. The fees must be based upon the average actual cost of performing the monitoring of HTF-assisted rental projects. The basis for determining the amount of the fee must be documented and the fee must be included in the costs of the project as part of the project underwriting.
</P>
<P>(2) The grantee may also charge nominal application fees (although these fees are not an eligible HTF cost) to eligible recipients, to discourage frivolous applications. The amount of application fees must be appropriate to the type of application and may not create an undue impediment to an extremely low-income family to be able to participate in the grantee's program.
</P>
<P>(3) All fees are applicable credits under 2 CFR part 200, subpart E.
</P>
<P>(4) In addition, the grantee must prohibit project owners from charging fees that are not customarily charged in rental housing (<I>e.g.,</I> laundry room access fees), except that rental project owners may charge:
</P>
<P>(i) Reasonable application fees to prospective tenants;
</P>
<P>(ii) Parking fees to tenants only if such fees are customary for rental housing projects in the neighborhood; and
</P>
<P>(iii) Fees for services such as bus transportation or meals, as long as the services are voluntary and fees are charged for services provided.


</P>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:1.1.1.1.42.6" TYPE="SUBPART">
<HEAD>Subpart F—Income Targeting</HEAD>


<DIV8 N="§ 93.250" NODE="24:1.1.1.1.42.6.67.1" TYPE="SECTION">
<HEAD>§ 93.250   Income targeting.</HEAD>
<P>(a) In any fiscal year in which the total amount available for allocation of HTF funds is less than $1 billion, the grantee must use 100 percent of its HTF grant for the benefit of extremely low-income families or families with incomes at or below the poverty line (whichever is greater). In any fiscal year in which the total amount available for allocation of HTF funds is greater than $1 billion, the grantee must use at least 75 percent of its grant for the benefit of extremely low-income families or families with incomes at or below the poverty line.
</P>
<P>(b) Any grant funds not used in accordance with paragraph (a) of this section must be used for the benefit of very-low income families.


</P>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:1.1.1.1.42.7" TYPE="SUBPART">
<HEAD>Subpart G—Project Requirements</HEAD>


<DIV8 N="§ 93.300" NODE="24:1.1.1.1.42.7.67.1" TYPE="SECTION">
<HEAD>§ 93.300   Maximum per-unit development subsidy amount, underwriting, and subsidy layering.</HEAD>
<P>(a) <I>Maximum per-unit development subsidy amount.</I> The grantee must establish maximum limitations on the total amount of HTF funds that the grantee may invest per-unit for development of non-luxury housing, with adjustments for the number of bedrooms and the geographic location of the project. These limits must be reasonable and based on actual costs of developing non-luxury housing in the area. The grantee must include these limits in its consolidated plan and update these limits annually.
</P>
<P>(b) <I>Underwriting and subsidy layering.</I> Before committing funds to a project, the grantee must evaluate the project in accordance with guidelines that it has adopted for determining a reasonable level of profit or return on recipient's investment in a project and must not invest any more HTF funds, alone or in combination with other governmental assistance, than is necessary to provide quality affordable housing that is financially viable for a reasonable period (at minimum, the period of affordability in § 93.302 or § 93.304) and that will not provide a profit or return on the recipient's investment that exceeds the grantee's established standards for the size, type, and complexity of the project. The guidelines adopted by the grantees must require the grantee to undertake:
</P>
<P>(1) An examination of the sources and uses of funds for the project (including any operating cost assistance, operating cost assistance reserve, or project-based rental assistance that will be provided to the project) and a determination that the costs are reasonable; and
</P>
<P>(2) An assessment, at minimum, of the current market demand in the neighborhood in which the project will be located, the experience of the recipient, the financial capacity of the recipient, and firm written financial commitments for the project.
</P>
<P>(3) For HTF-funded downpayment assistance, a market analysis is not required.


</P>
</DIV8>


<DIV8 N="§ 93.301" NODE="24:1.1.1.1.42.7.67.2" TYPE="SECTION">
<HEAD>§ 93.301   Property standards.</HEAD>
<P>(a) <I>New construction projects.</I> (1) State and local codes, ordinances, and zoning requirements. Housing that is newly constructed with HTF funds must meet all applicable State and local codes, ordinances, and zoning requirements. HTF-assisted new construction projects must meet State or local residential and building codes, as applicable or, in the absence of a State or local building code, the International Residential Code or International Building Code (as applicable to the type of housing) of the International Code Council. The housing must meet the applicable requirements upon project completion.
</P>
<P>(2) <I>HUD requirements.</I> All new construction projects must also meet the requirements described in this paragraph:
</P>
<P>(i) <I>Accessibility.</I> The housing must meet the accessibility requirements of 24 CFR part 8, which implements section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), and Titles II and III of the Americans with Disabilities Act (42 U.S.C. 12131-12189) implemented at 28 CFR parts 35 and 36, as applicable. “Covered multifamily dwellings,” as defined at 24 CFR 100.201, must also meet the design and construction requirements at 24 CFR 100.205, which implements the Fair Housing Act (42 U.S.C. 3601-3619).
</P>
<P>(ii) <I>Energy efficiency.</I> The housing must meet the energy efficiency standards established pursuant to section 109 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12709).
</P>
<P>(iii) <I>Disaster mitigation.</I> Where relevant, the housing must be constructed to mitigate the impact of potential disasters (<I>e.g.,</I> earthquakes, hurricanes, flooding, and wildfires), in accordance with State and local codes, ordinances, or other State and local requirements, or such other requirements as HUD may establish.
</P>
<P>(iv) <I>Written cost estimates, construction contracts, and construction documents.</I> The grantee must ensure the construction contract(s) and construction documents describe the work to be undertaken in adequate detail so that inspections can be conducted. The grantee must review and approve written cost estimates for construction and determine that costs are reasonable.
</P>
<P>(v) <I>Construction progress inspections.</I> The grantee must conduct progress and final inspections of construction to ensure that work is done in accordance with the applicable codes, the construction contract, and construction documents.
</P>
<P>(vi) <I>Broadband infrastructure.</I> For new commitments made after January 19, 2017 for a new construction housing project of a building with more than 4 rental units, the construction must include installation of broadband infrastructure, as this term is defined in 24 CFR 5.100, except where the grantee determines and, in accordance with § 93.407(a)(2)(iv), documents the determination that:
</P>
<P>(A) The location of the new construction makes installation of broadband infrastructure infeasible; or
</P>
<P>(B) The cost of installing broadband infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden.
</P>
<P>(b) <I>Rehabilitation projects.</I> All rehabilitation that is performed using HTF funds must meet the requirements of this paragraph (b).
</P>
<P>(1) <I>Rehabilitation standards.</I> The grantee must establish rehabilitation standards for all HTF-assisted housing rehabilitation activities that set forth the requirements that the housing must meet upon project completion. The grantee's description of its standards must be in sufficient detail to determine the required rehabilitation work including methods and materials. The standards may refer to applicable codes or they may establish requirements that exceed the minimum requirements of the codes. The rehabilitation standards must address each of the following:
</P>
<P>(i) <I>Health and safety.</I> The grantee's standards must identify life-threatening deficiencies that must be addressed immediately if the housing is occupied.
</P>
<P>(ii) <I>Major systems.</I> Major systems are: structural support; roofing; cladding and weatherproofing (<I>e.g.,</I> windows, doors, siding, gutters); plumbing; electrical; and heating, ventilation, and air conditioning. For rental housing, the grantee's standards must require the grantee to estimate (based on age and condition) the remaining useful life of these systems, upon project completion of each major system. For multifamily housing projects of 26 units or more, the grantee's standards must require the grantee to determine the useful life of major systems through a capital needs assessment of the project. For rental housing, if the remaining useful life of one or more major system is less than the applicable period of affordability, the grantee's standards must require the grantee to ensure that a replacement reserve is established and monthly payments are made to the reserve that are adequate to repair or replace the systems as needed. For homeownership housing, the grantee's standards must require, upon project completion, each of the major systems to have a remaining useful life for a minimum of 5 years or for such longer period specified by grantee, or the major systems must be rehabilitated or replaced as part of the rehabilitation work.
</P>
<P>(iii) <I>Lead-based paint.</I> The grantee's standards must require the housing to meet the lead-based paint requirements at 24 CFR part 35.
</P>
<P>(iv) <I>Accessibility.</I> The grantee's standards must require the housing to meet the accessibility requirements in 24 CFR part 8, which implements section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), and Titles II and III of the Americans with Disabilities Act (42 U.S.C. 12131-12189) implemented at 28 CFR parts 35 and 36, as applicable. “Covered multifamily dwellings,” as defined at 24 CFR 100.201, must also meet the design and construction requirements at 24 CFR 100.205, which implements the Fair Housing Act (42 U.S.C. 3601-3619). Rehabilitation may include improvements that are not required by regulation or statute that permit use by a person with disabilities.
</P>
<P>(v) [Reserved].
</P>
<P>(vi) <I>Disaster mitigation.</I> Where relevant, the grantee's standards must require the housing to be improved to mitigate the impact of potential disasters (<I>e.g.,</I> earthquake, hurricanes, flooding, and wildfires) in accordance with State and local codes, ordinances, and requirements, or such other requirements as HUD may establish.
</P>
<P>(vii) <I>State and local codes, ordinances, and zoning requirements.</I> The grantee's standards must require the housing to meet all applicable State and local codes, ordinances, and requirements or, in the absence of a State or local building code, the International Existing Building Code of the International Code Council.
</P>
<P>(viii) <I>Housing standards.</I> The standards of the grantee must be such that, upon completion, the HTF-assisted project and units will be decent, safe, sanitary, and in good repair. This means that the HTF-assisted project and units will meet the standards in 24 CFR 5.703, except that the carbon monoxide detection requirement at 24 CFR 5.703(b)(2) and (d)(6) shall not apply. For all HTF-assisted projects and units, the requirements at 24 CFR 5.705 through 5.713 do not apply. At minimum, the grantee's rehabilitation standards must require correction of the specific deficiencies published in the <E T="04">Federal Register</E> for HTF-assisted projects and units. For SRO housing, the requirements at 24 CFR 5.703(d) shall only apply to the extent that the SRO unit contains the room or facility referenced in 24 CFR 5.703(d).
</P>
<P>(ix) <I>Capital Needs Assessments.</I> For multifamily rental housing projects of 26 or more total units, the grantee must determine all work that will be performed in the rehabilitation of the housing and the long-term physical needs of the project through a capital needs assessment of the project.
</P>
<P>(x) <I>Broadband infrastructure.</I> For new commitments made after January 19, 2017 for a substantial rehabilitation project of a building with more than 4 rental units, any substantial rehabilitation, as defined in 24 CFR 5.100, must provide for installation of broadband infrastructure, as this term is also defined in 24 CFR 5.100, except where the grantee determines and, in accordance with § 93.407(a)(2)(iv), documents the determination that:
</P>
<P>(A) The location of the substantial rehabilitation makes installation of broadband infrastructure infeasible;
</P>
<P>(B) The cost of installing broadband infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden; or
</P>
<P>(C) The structure of the housing to be substantially rehabilitated makes installation of broadband infrastructure infeasible.
</P>
<P>(2) <I>Construction documents and cost estimates.</I> The grantee must ensure that the work to be undertaken will meet the grantee's rehabilitation standards. The construction documents (<I>i.e.,</I> written scope of work to be performed) must be in sufficient detail to establish the basis for a uniform inspection of the housing to determine compliance with the grantee's standards. The grantee must review and approve a written cost estimate for rehabilitation after determining that costs are reasonable.
</P>
<P>(3) <I>Frequency of inspections.</I> The grantee must conduct an initial property inspection to identify the deficiencies that must be addressed. The grantee must conduct progress and final inspections to determine that work was done in accordance with work write-ups.
</P>
<P>(c) <I>Acquisition of standard housing.</I> (1) Existing housing that is acquired with HTF assistance for rental housing, and that was newly constructed or rehabilitated less than 12 months before the date of commitment of HTF funds, must meet the property standards of paragraph (a) or paragraph (b) of this section, as applicable, for new construction and rehabilitation projects. The grantee must document this compliance based upon a review of approved building plans and Certificates of Occupancy, and an inspection that is conducted no earlier than 90 calendar days before the date of commitment of HTF assistance.
</P>
<P>(2) All other existing housing that is acquired with HTF assistance for rental housing must meet the rehabilitation property standards requirements of paragraph (b) of this section. The grantee must document this compliance based upon an inspection that is conducted no earlier than 90 calendar days before the date of commitment of HTF assistance. If the property does not meet these standards, HTF funds cannot be used to acquire the property unless it is rehabilitated to meet the standards of paragraph (b) of this section.
</P>
<P>(3) Existing housing that is acquired for homeownership (e.g., down payment assistance) must be decent, safe, sanitary, and in good repair. The grantee must establish standards to determine that the housing is decent, safe, sanitary, and in good repair. At minimum, the standards must provide that the housing meets all applicable State and local standards and code requirements, and the housing does not contain the specific deficiencies established by HUD based on the applicable standards in 24 CFR 5.703 and published in the <E T="04">Federal Register</E> for HTF-assisted projects and units. The grantee must inspect the housing and document compliance based upon an inspection that is conducted no earlier than 90 calendar days before the date of commitment of HTF assistance. If the housing does not meet these standards, the housing must be rehabilitated to meet the standards of this paragraph or it cannot be assisted with HTF funds.
</P>
<P>(d) <I>Manufactured housing.</I> Construction of all manufactured housing (including manufactured housing that replaces an existing substandard unit under the definition of “reconstruction”) must meet the Manufactured Home Construction and Safety Standards codified at 24 CFR part 3280. These standards preempt State and local codes which are not identical to the Federal standards for the new construction of manufactured housing. The grantees providing HTF funds to assist manufactured housing units must comply with applicable State and local laws or codes. In the absence of such laws or codes, the installation must comply with the manufacturer's written instructions for installation of manufactured housing units. All new manufactured housing and all manufactured housing that replaces an existing substandard unit under the definition of “reconstruction” must be on a permanent foundation that meets the requirements for foundation systems as set forth in 24 CFR 203.43f(c)(i). All new manufactured housing (and all manufactured housing that replaces an existing substandard unit under the definition of “reconstruction”) must, at the time of project completion, be connected to permanent utility hook-ups and be located on land that is owned by the manufactured housing unit owner or land for which the manufactured housing owner has a lease for a period at least equal to the applicable period of affordability. In HTF-funded rehabilitation of existing manufactured housing the foundation and anchoring must meet all applicable State and local codes, ordinances, and requirements or in the absence of local or State codes, the Model Manufactured Home Installation Standards at 24 CFR part 3285. Manufactured housing that is rehabilitated using HTF funds must meet the property standards requirements in paragraph (b) of this section, as applicable. The grantee must document this compliance in accordance with inspection procedures that the grantee has established pursuant to § 92.301, as applicable.
</P>
<P>(e) <I>Ongoing property condition standards: Rental housing</I>—(1) <I>Ongoing property standards.</I> The grantee must establish property standards for rental housing (including manufactured housing) that apply throughout the affordability period. The standards must require that owners maintain the housing as decent, safe, sanitary and in good repair. The grantee's description of its property standards must be in sufficient detail to establish the basis for a uniform inspection of HTF rental projects. The grantee's ongoing property standards must address each of the following:
</P>
<P>(i) <I>Minimum Property Standards.</I> At a minimum, the grantee's ongoing property standards must provide that the property does not contain the specific deficiencies established by HUD based on the applicable standards in 24 CFR 5.703 and published in the <E T="04">Federal Register</E> for rental housing (including manufactured housing). The requirements in 24 CFR 5.705 through 5.713 do not apply to the grantee's ongoing property standards.
</P>
<P>(ii) <I>Health and safety.</I> The grantee's standards must require the housing to be free of all health and safety defects. The standards must identify life-threatening deficiencies that the owner must immediately correct and the time frames for addressing these deficiencies.
</P>
<P>(iii) <I>Lead-based paint.</I> The grantee's standards must require the housing to meet the lead-based paint requirements in 24 CFR part 35.
</P>
<P>(2) <I>Inspections.</I> The grantee must undertake ongoing property inspections, in accordance with § 93.404.
</P>
<P>(3) <I>Corrective and remedial actions.</I> The grantee must have procedures for ensuring that timely corrective and remedial actions are taken by the project owner to address identified deficiencies.
</P>
<P>(4) <I>Inspection procedures.</I> The grantee must establish written inspection procedures. The procedures must include detailed inspection checklists, description of how and by whom inspections will be carried out, and procedures for training and certifying qualified inspectors. The procedures must also describe how frequently the property will be inspected, consistent with section § 93.404(d).
</P>
<P>(f) <I>Environmental provisions</I>—(1) <I>New construction projects environmental requirements</I>—(i) <I>Historic preservation</I>—(A) <I>Standards.</I> The project activities (including demolition) must not be performed on properties that are either listed in or determined eligible for listing in the National Register of Historic Places, unless the project activities meet the <I>Secretary of the Interior's Standards for Rehabilitation,</I> either as certified through the Federal and/or State historic rehabilitation tax credit programs or as verified by someone that meets the relevant <I>Secretary of the Interior's Professional Qualification Standards;</I>
</P>
<P>(B) <I>Archaeological resources.</I> If archaeological resources or human remains are discovered on the project site during construction, the grantee must consult with affected tribes and/or descendant communities and comply with the Native American Graves Protection and Repatriation Act (25 U.S.C. 3001-3013), State law and/or local ordinance (<I>e.g.,</I> State unmarked burial law).
</P>
<P>(ii) <I>Farmland.</I> Project activities must not result in the conversion of unique, prime, or statewide or locally significant agricultural properties to urban uses.
</P>
<P>(iii) <I>Airport zones.</I> Projects are not permitted within the runway protection zones of civilian airports, or the clear zones or accident potential zones of military airfields.
</P>
<P>(iv) <I>Coastal Barrier Resource System.</I> No projects may be assisted in Coastal Barrier Resource System (CBRS) units. CBRS units are mapped and available from the U.S. Fish and Wildlife Service.
</P>
<P>(v) <I>Coastal zone management.</I> Development must be consistent with the appropriate State coastal zone management plan. Plans are available from the local coastal zone management agency.
</P>
<P>(vi) <I>Floodplains.</I> Except as modified below, definitions for terms used below can be found at 24 CFR part 55.
</P>
<P>(A) Construction and other activities in the 100-year floodplain are to be avoided when practicable. If there are no practicable alternatives to new construction or substantial improvement in the 100-year floodplain, the structure must be elevated at least the base flood elevation (BFE) or floodproofed to one foot above the BFE. Elevated and floodproofed buildings must adhere to National Flood Insurance Program standards. The primary sources of floodplain data are Federal Emergency Management Agency (FEMA) Flood Insurance Rate Maps (FIRMs). When FEMA provides interim flood hazard data, such as Advisory Base Flood Elevations (ABFE) or preliminary maps or studies, the latest of these sources shall be used.
</P>
<P>(B) No HTF assistance may be approved with respect to:
</P>
<P>(<I>1</I>) Any action, other than a functionally dependent use, located in a floodway;
</P>
<P>(<I>2</I>) Any new construction critical action located in a coastal high hazard area, 100- or 500-year floodplain; or
</P>
<P>(<I>3</I>) Any non-critical new construction action in a coastal high hazard area, unless the action is reconstruction following destruction caused by a disaster and is designed for location in a coastal high hazard area consistent with the FEMA National Flood Insurance Program requirements for V-Zones.
</P>
<P>(vii) <I>Wetlands.</I> (A) No draining, dredging, channelizing, filling, diking, impounding, or related grading activities are to be performed in wetlands. No activities, structures, or facilities funded under this program are to adversely impact a wetland.
</P>
<P>(B) A wetland means those areas that are inundated by surface or ground water with a frequency sufficient to support, and under normal circumstances, does or would support a prevalence of vegetative or aquatic life that requires saturated or seasonally saturated soil conditions for growth and reproduction. Wetlands generally include swamps, marshes, bogs, and similar areas such as sloughs, potholes, wet meadows, river overflows, mud flats, and natural ponds. This definition includes those wetland areas separated from their natural supply of water as a result of activities, such as the construction of structural flood protection methods or solid-fill road beds, or mineral extraction and navigation improvements. This definition is independent of the definition of jurisdictional wetland used by the U. S. Army Corps of Engineers under section 404 of the Clean Water Act (33 U.S.C. 1251 <I>et seq.</I>).
</P>
<P>(viii) <I>Explosives and hazards.</I> Projects must be in compliance with the standards for acceptable separation distance, as set forth at 24 CFR part 51, subpart C.
</P>
<P>(ix) <I>Contamination.</I> All properties assisted with HTF funds must be free of hazardous materials, contamination, toxic chemicals and gases, and radioactive substances, where a hazard could affect the health and safety of occupants or conflict with the intended use of the property.
</P>
<P>(A) All proposed multifamily (more than four housing units) HTF projects require a Phase I Environmental Site Assessment (ESA-ASTM). If the Phase I ESA identifies recognized environmental concerns (RECs), a Phase II (ESA-ASTM) will be required. ASTM reports shall be prepared in accordance with the most current ASTM standard. Single family housing does not require a Phase I ESA.
</P>
<P>(B) HTF projects must avoid sites located within 0.25 miles of a Superfund or CERCLIS (Comprehensive Environmental Response, Compensation, and Liability Information System) site or other contaminated site reported to Federal, State, or local authorities without a statement in writing from the U.S. Environmental Protection Agency (EPA) or the appropriate State agency that there is no hazard that could affect the health and safety of the occupants or conflict with the intended use of the property.
</P>
<P>(x) <I>Noise.</I> (A) Internal noise levels: All activities will be developed to ensure an interior noise level of no more than 45 decibels (dB).
</P>
<P>(B) External noise levels:
</P>
<P>(<I>1</I>) Project sites exposed to less than or equal to 65 dB of environmental noise are acceptable.
</P>
<P>(<I>2</I>) Sites between 65 dB and less than 75 dB are acceptable with mitigation (<I>e.g.,</I> noise walls, careful site planning) that result in an interior standard of 45 dB.
</P>
<P>(<I>3</I>) Locations with environmental noise levels of 75 dB or greater may not have noise sensitive outdoor uses (<I>e.g.,</I> picnic areas, tot lots, balconies, or patios) and <I>require</I> sound attenuation in the building shell to achieve the 45 dB interior standard.
</P>
<P>(xi) <I>Endangered species.</I> The grantee must avoid all actions which could jeopardize the continued existence of any endangered or threatened species, as designated by the U.S. Fish and Wildlife Service or National Marine Fisheries Service, or would result in the destruction or adversely modify the designated critical habitat of such species.
</P>
<P>(xii) <I>Wild and scenic rivers.</I> The grantee must avoid activities that are inconsistent with conservation easements, land-use protections, and restrictions adjacent to wild and scenic rivers, as designated/listed by the Departments of Agriculture or Interior. Maps for the National Wild and Scenic Rivers System are available at the governing departments.
</P>
<P>(xiii) <I>Safe drinking water.</I> Projects with a potable water system must use only lead-free pipes, solder, and flux.
</P>
<P>(xiv) <I>Sole-source aquifers.</I> Project activities should avoid sites and activities that have the potential to contaminate sole source aquifer areas (SSAs). EPA defines a sole or principal source aquifer as an aquifer that supplies at least 50 percent of the drinking water consumed in the area overlying the aquifer. If the project overlies an SSA, EPA must review the project. EPA review is designed to reduce the risk of ground water contamination that could pose a health hazard to those who use it.
</P>
<P>(2) <I>Rehabilitation projects environmental requirements</I>—(i) <I>Historic preservation.</I> (A) The project activities (including demolition) must not be performed on properties that are either listed in or determined eligible for listing in the National Register of Historic Places, unless the project activities meet the <I>Secretary of the Interior's Standards for Rehabilitation,</I> either as certified through the Federal and/or State historic rehabilitation tax credit programs or as verified by someone that meets the relevant <I>Secretary of the Interior's Professional Qualification Standards;</I>
</P>
<P>(B) <I>Archaeological resources.</I> If archaeological resources or human remains are discovered on the project site during construction or rehabilitation, the grantee must consult with affected tribes and/or descendant communities and comply with the Native American Graves Protection and Repatriation Act (25 U.S.C. 3001-3013), State law, and/or local ordinance (<I>e.g.,</I> State unmarked burial law).
</P>
<P>(ii) <I>Farmland.</I> Project activities must not result in the conversion of unique, prime, or locally significant agricultural properties to urban uses.
</P>
<P>(iii) <I>Airport zones.</I> Projects are not permitted within the runway protection zones of civilian airports, or the clear zones or accident potential zones of military airfields.
</P>
<P>(iv) <I>Coastal Barrier Resource System.</I> No projects may be assisted in Coastal Barrier Resource System (CBRS) units. CBRS units are mapped and available from the U.S. Fish and Wildlife Service.
</P>
<P>(v) <I>Coastal zone management.</I> Development must be consistent with the appropriate State coastal zone management plan. Plans are available from the local coastal zone management agency.
</P>
<P>(vi) <I>Floodplains.</I> Except as modified below, definitions for terms used below can be found at 24 CFR part 55.
</P>
<P>(A) Construction and other activities in the 100-year floodplain are to be avoided when practicable. If there are no practicable alternatives to new construction or substantial improvement in the 100-year floodplain, the structure must be elevated at least to the base flood elevation (BFE) or floodproofed to one foot above the BFE. Elevated and floodproofed buildings must adhere to National Flood Insurance Program standards. The primary sources of floodplain data are Federal Emergency Management Agency (FEMA) Flood Insurance Rate Maps (FIRMS). When FEMA provides interim flood hazard data, such as Advisory Base Flood Elevations (ABFE) or preliminary maps or studies, the latest of these sources shall be used.
</P>
<P>(B) No HTF assistance may be approved with respect to:
</P>
<P>(<I>1</I>) Any action, other than functionally dependent uses, located in a floodway;
</P>
<P>(<I>2</I>) Any critical action located in a coastal high hazard area, 100- or 500-year floodplain; or
</P>
<P>(<I>3</I>) Any non-critical action located in a coastal high hazard area, unless the action is designed for location in a coastal high hazard area consistent with the FEMA National Flood Insurance Program requirements for V-Zones. “Any non-critical action in a coastal high hazard area, unless the action is reconstruction following destruction caused by a disaster and is designed for location in a coastal high hazard area consistent with the FEMA National Flood Insurance Program requirements for V-Zones.”
</P>
<P>(vii) <I>Wetlands.</I> No rehabilitation of existing properties that expands the footprint into a wetland is allowed. A wetland means those areas that are inundated by surface or ground water with a frequency sufficient to support, and under normal circumstances, does or would support a prevalence of vegetative or aquatic life that requires saturated or seasonally saturated soil conditions for growth and reproduction. Wetlands generally include swamps, marshes, bogs, and similar areas such as sloughs, potholes, wet meadows, river overflows, mud flats, and natural ponds. This definition includes those wetland areas separated from their natural supply of water as a result of activities such as the construction of structural flood protection methods or solid-fill road beds and activities such as mineral extraction and navigation improvements. This definition is independent of the definition of jurisdictional wetland used by the U.S. Army Corps of Engineers under section 404 of the Clean Water Act (33 U.S.C. 1251 <I>et seq.</I>).
</P>
<P>(viii) <I>Explosives and hazards.</I> If the rehabilitation of the building increases the number of dwelling units, then the project must be in compliance with the standards for acceptable separation distance as set forth at 24 CFR part 51, subpart C.
</P>
<P>(ix) <I>Contamination.</I> All properties assisted with HTF funds must be free of hazardous materials, contamination, toxic chemicals and gases, and radioactive substances, where a hazard could affect the health and safety of occupants or conflict with the intended use of the property:
</P>
<P>(A) All proposed multifamily (more than four housing units) HTF project activities require a Phase I Environmental Site Assessment (ESA—ASTM). If the Phase I ESA identifies recognized environmental concerns (RECs), a Phase II (ESA-ASTM) will be required. ASTM reports shall be prepared in accordance with the most current ASTM standard. Single family housing does not require a Phase I ESA.
</P>
<P>(B) HTF projects must avoid sites located within 0.25 miles of a Superfund or CERCLIS (Comprehensive Environmental Response, Compensation, and Liability Information System) site or other contaminated site reported to Federal, State, or local authorities without a statement in writing from EPA or the appropriate State agency that there is no hazard that could affect the health and safety of the occupants or conflict with the intended utilization of the property.
</P>
<P>(x) <I>Noise</I>—(A) <I>Internal noise levels.</I> All activities will be developed to ensure an interior noise level of no more than45 decibels (dB).
</P>
<P>(B) [Reserved].
</P>
<P>(xi) <I>Endangered species.</I> (A) The grantee must avoid all actions that could jeopardize the continued existence of any species designated by the U.S. Fish and Wildlife Service or National Marine Fisheries Service as endangered or threatened.
</P>
<P>(B) The grantee must avoid all actions that adversely modify the critical habitat of such species.
</P>
<P>(xii) <I>Wild and scenic rivers.</I> The grantee must avoid activities that are inconsistent with conservation easements, land-use protections, and restrictions adjacent to wild and scenic rivers, as designated/listed by the Departments of Agriculture and Interior. Maps for the National Wild and Scenic Rivers System are available at the governing departments.
</P>
<P>(xiii) <I>Safe drinking water.</I> Projects with a potable water system must use only lead-free pipes, solder, and flux.
</P>
<P>(xiv) <I>Sole-source aquifers.</I> Project activities should avoid sites and activities that have the potential to contaminate sole source aquifer areas (SSAs). The EPA defines a sole or principal source aquifer as an aquifer that supplies at least 50 percent of the drinking water consumed in the area overlying the aquifer. If the project overlies an SSA, the EPA must review the project. The EPA review is designed to reduce the risk of ground water contamination, which could pose a health hazard to those who use it.
</P>
<P>(3) <I>Acquisition projects environmental requirements.</I> (i)(A) Existing housing that is acquired with HTF funds, and has been newly constructed or rehabilitated less than 12 months before the commitment of HTF funds must meet the property standards at paragraph (f)(1) of this section.
</P>
<P>(B) All other existing housing that is acquired with HTF assistance must meet the property standards requirements of paragraph (f)(2) of this section.
</P>
<P>(ii) If under paragraph (f)(3)(i)(A) or paragraph (B) of this section, the property does not meet these standards, with the exception of the noise standards in paragraph (f)(2) of this section, HTF funds cannot be used to acquire the property.
</P>
<P>(4) <I>Manufactured housing environmental requirements.</I> Manufactured housing is subject to the environmental standards in paragraph (f)(1) of this section for new construction or paragraph (f)(2) of this section for rehabilitation, as applicable. If an existing property does not meet these standards, HTF funds cannot be used to acquire the property unless it is rehabilitated to meet the standards in paragraph (f)(2), as applicable, with the exception of noise standards in paragraph (f)(2)(x).
</P>
<CITA TYPE="N">[80 FR 5220, Jan. 30, 2015, as amended at 81 FR 92636, Dec. 20, 2016; 88 FR 30497, May 11, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 93.302" NODE="24:1.1.1.1.42.7.67.3" TYPE="SECTION">
<HEAD>§ 93.302   Qualification as affordable housing: rental housing.</HEAD>
<P>(a) <I>Eligible tenants.</I> The HTF-assisted units in a rental housing project must be occupied by households who are eligible families in accordance with the income targeting requirements in § 93.250.
</P>
<P>(b) <I>Rent limitations</I>—(1)(i) <I>Extremely low-income tenants.</I> The HTF rent plus utilities of an extremely low-income tenant shall not exceed the greater of 30 percent of the federal poverty line or 30 percent of the income of a family whose annual income equals 30 percent of the median income for the area, as determined by HUD, with adjustments for the number of bedrooms in the unit. HUD will publish the HTF rent limits on an annual basis.
</P>
<P>(ii) <I>Very-low income tenants.</I> The HTF rent plus utilities of a very low-income tenant shall not exceed 30 percent of the income of a family whose annual income equals 50 percent of the median income for the area, as determined by HUD, with adjustments for the number of bedrooms in the unit. HUD will publish the HTF rent limits on an annual basis.
</P>
<P>(2) If the unit receives Federal or State project-based rental subsidy, and the tenant pays as a contribution toward rent not more than 30 percent of the tenant's adjusted income, the maximum rent is the rent allowable under the Federal or State project-based rental subsidy program.
</P>
<P>(c) <I>Initial rent schedule and utility allowance.</I> (1) The grantee must establish maximum monthly allowances for utilities and services (excluding telephone, television, and Internet service).
</P>
<P>(2) The grantee must annually review and approve rents proposed by the owner for HTF units. For all units for which the tenant is paying utilities, the grantee must ensure that the rents do not exceed the maximum rent minus the monthly allowances for utilities.
</P>
<P>(d) <I>Periods of affordability.</I> (1) HTF-assisted units must meet the affordability requirements for not less than 30 years, beginning after project completion. The grantee may impose longer periods.
</P>
<P>(2) The affordability requirements apply without regard to the term of any loan or mortgage, repayment of the HTF investment, or the transfer of ownership. They must be imposed by a deed restriction, covenant running with the land, an agreement restricting the use of the property, or other mechanisms approved by HUD under which the grantee and beneficiaries have the right to require specific performance, except that the affordability restrictions may terminate upon foreclosure or transfer in lieu of foreclosure. The affordability requirements must be recorded in accordance with State recordation laws.
</P>
<P>(3) The grantee may use purchase options, rights of first refusal, or other preemptive rights to purchase the housing before foreclosure or deed in lieu of foreclosure to preserve affordability.
</P>
<P>(4) The affordability restrictions shall be revived according to the original terms if, during the original affordability period, the owner of record before the foreclosure, or deed in lieu of foreclosure, or any entity that includes the former owner or those with whom the former owner has or had family or business ties, obtains an ownership interest in the project or property.
</P>
<P>(5) The termination of the restrictions on the project does not terminate the grantee's repayment obligation under § 93.403.
</P>
<P>(e) <I>Tenant income.</I> (1) The income of each tenant must be determined initially in accordance with § 93.151. In addition, in each year during the period of affordability, the project owner must re-examine each tenant's annual income in accordance with one of the options in § 93.151(d) selected by the grantee.
</P>
<P>(2) An owner who re-examines a tenant's annual income through a statement and certification in accordance with § 93.151(d)(2) must examine the source documentation of the income of each tenant every 6th year of the affordability period unless the tenant or unit is assisted under the public housing program, Federal or State project-based rental assistance program, or a Federal tenant-based rental assistance program (<I>e.g.,</I> housing choice voucher assistance, HOME tenant-based rental assistance, etc.). For families or units that receive assistance under the public housing program, a Federal or State project-based rental subsidy program, or Federal tenant-based rental assistance program, the grantee must accept the calculation of a tenant's annual and adjusted income in accordance with the rules of those programs pursuant to § 93.151(a)(1) through (3). Otherwise, an owner who accepts the tenant's statement and certification in accordance with § 93.151(d)(2) is not required to examine the income of tenants unless there is evidence that the tenant's written statement failed to completely and accurately state information about the family's size or income.
</P>
<P>(f) <I>Over-income tenants.</I> HTF-assisted units continue to qualify as affordable housing despite a temporary noncompliance caused by increases in the incomes of existing tenants if actions satisfactory to HUD are being taken to ensure that all vacancies are filled in accordance with this section until the noncompliance is corrected.
</P>
<P>(g) <I>Fixed and floating HTF units.</I> In a project containing HTF-assisted and other units, the grantee may designate fixed or floating HTF units. This designation must be made at the time of project commitment in the written agreement between the grantee and the recipient, and the HTF units must be identified not later than the time of project completion. Fixed units must remain the same throughout the period of affordability. Floating units must be changed to maintain conformity with the requirements of this section during the period of affordability so that the total number of housing units meeting the requirements of this section remains the same, and each substituted unit must be comparable in terms of size, features, and number of bedrooms to the originally designated HTF-assisted unit.
</P>
<P>(h) <I>Tenant selection.</I> The tenants must be selected in accordance with § 93.303.
</P>
<P>(i) <I>Onsite inspections and financial oversight.</I> See § 93.404(d) for the grantee's ongoing responsibilities for onsite inspections and financial oversight.
</P>
<CITA TYPE="N">[80 FR 5220, Jan. 30, 2015, as amended at 88 FR 9665, Feb. 14, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 93.303" NODE="24:1.1.1.1.42.7.67.4" TYPE="SECTION">
<HEAD>§ 93.303   Tenant protections and selection.</HEAD>
<P>(a) <I>Lease.</I> There must be a written lease between the tenant and the owner of rental housing assisted with HTF funds that is for a period of not less than one year, unless by mutual agreement between the tenant and the owner a shorter period is specified. The lease must incorporate the VAWA lease term/addendum required under § 93.356(d).
</P>
<P>(b) <I>Prohibited lease terms.</I> The lease may not contain any of the following provisions:
</P>
<P>(1) <I>Agreement to be sued.</I> Agreement by the tenant to be sued, to admit guilt, or to a judgment in favor of the owner in a lawsuit brought in connection with the lease;
</P>
<P>(2) <I>Treatment of property.</I> Agreement by the tenant that the owner may take, hold, or sell personal property of household members without notice to the tenant and a court decision on the rights of the parties. This prohibition, however, does not apply to an agreement by the tenant concerning disposition of personal property remaining in the housing unit after the tenant has moved out of the unit. The owner may dispose of this personal property in accordance with State law;
</P>
<P>(3) <I>Excusing owner from responsibility.</I> Agreement by the tenant not to hold the owner or the owner's agents legally responsible for any action or failure to act, whether intentional or negligent;
</P>
<P>(4) <I>Waiver of notice.</I> Agreement of the tenant that the owner may institute a lawsuit without notice to the tenant;
</P>
<P>(5) <I>Waiver of legal proceedings.</I> Agreement by the tenant that the owner may evict the tenant or household members without instituting a civil court proceeding in which the tenant has the opportunity to present a defense, or before a court decision on the rights of the parties;
</P>
<P>(6) <I>Waiver of a jury trial.</I> Agreement by the tenant to waive any right to a trial by jury;
</P>
<P>(7) <I>Waiver of right to appeal court decision.</I> Agreement by the tenant to waive the tenant's right to appeal, or to otherwise challenge in court, a court decision in connection with the lease;
</P>
<P>(8) <I>Tenant chargeable with cost of legal actions regardless of outcome.</I> Agreement by the tenant to pay attorney's fees or other legal costs even if the tenant wins in a court proceeding by the owner against the tenant. The tenant, however, may be obligated to pay costs if the tenant loses; and
</P>
<P>(9) <I>Mandatory supportive services.</I> Agreement by the tenant to accept supportive services that are offered.
</P>
<P>(c) <I>Termination of tenancy.</I> An owner may not terminate the tenancy or refuse to renew the lease of a tenant of rental housing assisted with HTF funds, except for serious or repeated violation of the terms and conditions of the lease; for violation of applicable Federal, State, or local law; or for other good cause. Good cause does not include an increase in the tenant's income. To terminate or refuse to renew tenancy, the owner must serve written notice upon the tenant specifying the grounds for the action and providing a specific period for vacating that is consistent with State or local law.
</P>
<P>(d) <I>Tenant selection.</I> An owner of rental housing assisted with HTF funds must comply with the affirmative marketing requirements established by the grantee pursuant to § 93.350. The owner must adopt and follow written tenant selection policies and criteria that:
</P>
<P>(1) Limit the housing to income-eligible families;
</P>
<P>(2) Are reasonably related to the applicants' ability to perform the obligations of the lease (<I>i.e.,</I> to pay the rent, not to damage the housing; not to interfere with the rights and quiet enjoyment of other tenants);
</P>
<P>(3) Limit eligibility or give a preference to a particular segment of the population if permitted in its written agreement with the grantee (and only if the limitation or preference is described in the grantee's consolidated plan).
</P>
<P>(i) Any limitation or preference must not violate nondiscrimination requirements in § 93.350. A limitation or preference does not violate nondiscrimination requirements if the housing also receives funding from a Federal program that limits eligibility to a particular segment of the population (<I>e.g.,</I> the Housing Opportunity for Persons With AIDS program under 24 CFR part 574), and the limit or preference is tailored to serve that segment of the population.
</P>
<P>(ii) If a project does not receive funding from a Federal program that limits eligibility to a particular segment of the population, the project may have a limitation or preference for persons with disabilities who need services offered at a project only if:
</P>
<P>(A) The limitation or preference is limited to the population of families (including individuals) with disabilities that significantly interfere with their ability to obtain and maintain housing;
</P>
<P>(B) Such families will not be able to obtain or maintain themselves in housing without appropriate supportive services; and
</P>
<P>(C) Such services cannot be provided in a nonsegregated setting. The families must not be required to accept the services offered at the project. In advertising the project, the owner may advertise the project as offering services for a particular type of disability; however, the project must be open to all otherwise eligible persons with disabilities who may benefit from the services provided in the project.
</P>
<P>(4) Do not exclude an applicant with a voucher under the Section 8 Tenant-Based Assistance: Housing Choice Voucher program (24 CFR part 982) or an applicant participating in a HOME tenant-based rental assistance program (24 CFR part 92) because of the status of the prospective tenant as a holder of such voucher or comparable HOME tenant-based assistance document.
</P>
<P>(5) Provide for the selection of tenants from a written waiting list in the chronological order of their application, insofar as is practicable; 
</P>
<P>(6) Give prompt written notification to any rejected applicant of the grounds for any rejection; and
</P>
<P>(7) Comply with the VAWA requirements prescribed in § 93.356.
</P>
<CITA TYPE="N">[80 FR 5220, Jan. 30, 2015, as amended at 81 FR 80805, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 93.304" NODE="24:1.1.1.1.42.7.67.5" TYPE="SECTION">
<HEAD>§ 93.304   Qualification as affordable housing: Homeownership.</HEAD>
<P>(a) <I>Homeownership activities.</I> Housing that is for purchase by a first-time homebuyer must meet the affordability requirements of this section.
</P>
<P>(b) <I>Single family housing.</I> The housing must be single-family housing, as defined at § 93.2.
</P>
<P>(c) <I>Modest housing.</I> The housing must be modest housing, in accordance with § 93.305.
</P>
<P>(d) <I>First-time homebuyer and income requirements.</I> The housing must be acquired by a first-time homebuyer whose family qualifies as an income-eligible family in accordance with § 93.251 and the housing must be the principal residence of the family throughout the period described in paragraph (e) of this section. In determining the income eligibility of the family, the grantee must include the income of all persons living in the housing. Before purchasing the housing, the family must have completed a program of independent financial education and homeownership counseling from an eligible organization that has been certified in accordance with section 106(e) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x (e)).
</P>
<P>(e) <I>Period of affordability.</I> The HTF-assisted housing must meet the affordability requirements for not less than 30 years.
</P>
<P>(f) <I>Resale or recapture requirements.</I> The grantee must establish the resale or recapture requirements that comply with the standards of § 93.305 and set forth the requirements in its consolidated plan. HUD must determine that they are appropriate and must specifically approve them in writing.
</P>
<P>(g) <I>Special considerations for single family properties with more than one unit.</I> (1) If the HTF funds are used only to assist an income-eligible homebuyer in acquiring one unit in a single family property containing more than one unit and the assisted unit will be the principal residence of the homebuyer, the affordability requirements of this section apply only to the assisted unit.
</P>
<P>(2) If HTF funds are also used to assist the income-eligible homebuyer in acquiring one or more of the rental units in the single family property, the affordability requirements of § 93.302 apply to assisted rental units, except that the grantee must impose resale restrictions on all assisted units (owner-occupied and rental units) in the single-family housing. The affordability requirements on all assisted units continue for the period of affordability. If HTF funds are used to assist only the rental units in such a property, then the requirements of § 93.302 would apply and the owner-occupied unit would not be subject to the income targeting or affordability provisions of this section.
</P>
<P>(h) <I>Lease-purchase.</I> (1) HTF funds may be used to assist homebuyers through lease-purchase programs for existing housing and for housing to be constructed. The housing must be purchased by an eligible homebuyer within 36 months of signing the lease-purchase agreement. The homebuyer must qualify as an income-eligible family at the time the lease-purchase agreement is signed.
</P>
<P>(2) If HTF funds are used to acquire housing that will be resold to a homebuyer through a lease-purchase program, the HTF affordability requirements for rental housing in § 93.302 shall apply if the housing is not transferred to an eligible homebuyer within 42 months after project completion.
</P>
<P>(i) <I>Contract to purchase.</I> If HTF funds are used to assist a homebuyer who has entered into a contract to purchase housing to be constructed, the homebuyer must qualify as an income-eligible family at the time the contract is signed.
</P>
<P>(j) If there is no ratified sales contract with an eligible homebuyer for the housing within 9 months of the date of completion of construction or rehabilitation, the housing must be rented to an eligible tenant in accordance with § 93.301.
</P>
<P>(k) <I>Preserving affordability.</I> (1) To preserve the affordability of housing that was previously assisted with HTF funds and subject to the requirements of this section, a grantee may use additional HTF funds to acquire the housing through a purchase option, right of first refusal, or other preemptive right before foreclosure, or to acquire the housing at the foreclosure sale, undertake any necessary rehabilitation, and provide assistance to another first-time homebuyer. The housing must be sold to a new eligible homebuyer in accordance with the requirements of this section. Additional HTF funds may not be used if the mortgage in default was funded with HTF funds.
</P>
<P>(2) The total amount of original and additional HTF assistance may not exceed the maximum per-unit development subsidy amount established pursuant to § 93.300. As an alternative to charging the cost to the HTF program under § 93.201, the grantee may charge the cost to the HTF program under § 93.302 as a reasonable administrative cost of its HTF program, so that the additional HTF funds for the housing are not subject to the maximum per-unit subsidy amount.
</P>
<P>(l) <I>Agreements with lending institutions.</I> (1) The grantee may provide homeownership assistance through written agreements with for-profit or nonprofit lending institutions that are providing the first mortgage loan to a family. The grantee must independently verify that the family is income-eligible and meets the definition of “first-time homebuyer,” and must inspect the housing for compliance with the applicable property standards.
</P>
<P>(2) No fees may be charged to the family for the HTF homeownership assistance (<I>e.g.,</I> origination fees or points, processing fees, inspection fees). The grantee must determine that the fees and other amounts charged to the family by the lender for the first mortgage financing are reasonable. Reasonable administrative costs of the HTF homeownership assistance can be charged to the HTF program as a project cost. If the grantee requires lenders to pay a fee to participate in the HTF program, the fee is program income to the HTF program.
</P>
<P>(m) <I>Written policies.</I> The grantee must have and follow written policies for:
</P>
<P>(1) Underwriting standards for homeownership assistance that examine the family's housing debt, overall debt, income, and ability to maintain the housing;
</P>
<P>(2) Anti-predatory lending; and
</P>
<P>(3) Refinancing loans to which HTF loans are subordinated to ensure that the terms of the new loan are reasonable.


</P>
</DIV8>


<DIV8 N="§ 93.305" NODE="24:1.1.1.1.42.7.67.6" TYPE="SECTION">
<HEAD>§ 93.305   Qualification as affordable housing: modest housing requirements for homeownership; resale or recapture requirements.</HEAD>
<P>(a) Housing that is for acquisition by a family pursuant to § 93.304 must be modest housing.
</P>
<P>(1) The housing must be modest housing as follows: The housing has a purchase price for the type of single family housing that does not exceed 95 percent of the median purchase price for the area for newly constructed or standard housing. The grantee must use the HTF affordable homeownership limits provided by HUD for newly constructed housing and for existing housing. HUD will provide limits for affordable newly constructed housing based on 95 percent of the median purchase price for the area using Federal Housing Administration (FHA) single family mortgage program data for newly constructed housing, with a minimum limit based on 95 percent of the U.S. median purchase price for new construction for nonmetropolitan areas. HUD will provide limits for affordable existing housing based on 95 percent of the median purchase price for the area using FHA single family mortgage program data for existing housing data and other appropriate data that are available nation-wide for sales of existing housing, with a minimum limit based on 95 percent of the state-wide nonmetropolitan area median purchase price using these data. For States with no non-metropolitan areas, the minimum purchase price is defined as the lesser of the State non-metro or the United States non-metro median.
</P>
<P>(2) In lieu of the limits provided by HUD, the grantee may determine 95 percent of the median area purchase price for single family housing in the jurisdiction annually, as follows: The grantee must set forth the price for different types of single family housing for the jurisdiction. The grantee may determine separate limits for existing housing and newly constructed housing. For housing located outside of metropolitan areas, a grantee may aggregate sales data from more than one county, if the counties are contiguous and similarly situated. The following information must be included in the annual action plan of the consolidated plan submitted to HUD for review and updated in each action plan:
</P>
<P>(i) The 95 percent of median area purchase price must be established in accordance with a market analysis that ensured that a sufficient number of recent housing sales are included in the survey.
</P>
<P>(ii) Sales must cover the requisite number of months based on volume: For 500 or more sales per month, a one- month reporting period; for 250 through 499 sales per month, a 2-month reporting period; for less than 250 sales per month, at least a 3-month reporting period. The data must be listed in ascending order of sales price.
</P>
<P>(iii) The address of the listed properties must include the location within the grantee. Lot, square, and subdivision data may be substituted for the street address.
</P>
<P>(iv) The housing sales data must reflect all, or nearly all, of the one- family house sales in the entire area.
</P>
<P>(v) To determine the median, take the middle sale on the list if an odd number of sales, and if an even number, take the higher of the middle numbers and consider it the median. After identifying the median sales price, the amount should be multiplied by 0.95 to determine 95 percent of the median area purchase price.
</P>
<P>(b) <I>Resale or recapture requirements.</I> The grantee must establish the resale or recapture requirements that comply with the standards of this section and set forth the requirements in its consolidated plan. The HTF-assisted housing must meet the affordability requirements for not less than 30 years if resale restrictions are used. If recapture restrictions are used, the affordability periods are based on the amount of HTF funds per unit as follows:
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Homeownership
<br/>assistance HTF amount per-unit
</TH><TH class="gpotbl_colhed" scope="col">Minimum period of affordability in years
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Under $30,000</TD><TD align="right" class="gpotbl_cell">10
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">$30,000-$50,000</TD><TD align="right" class="gpotbl_cell">20
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Over $50,000</TD><TD align="right" class="gpotbl_cell">30</TD></TR></TABLE></DIV></DIV>
<P>(1) <I>Resale.</I> Resale requirements must ensure, if the housing does not continue to be the principal residence of the family for the duration of the period of affordability, that the housing is made available for subsequent purchase only to a buyer whose family qualifies as a very low-income family and will use the property as the family's principal residence. The resale requirement must also ensure that the price at resale provides the original HTF-assisted owner a fair return on investment (including the homeowner's investment and any capital improvement) and ensure that the housing will remain affordable to a reasonable range of income-eligible homebuyers. The grantee must specifically define “fair return on investment” and “affordability to a reasonable range of very low-income homebuyers,” and specifically address how it will make the housing affordable to an income eligible homebuyer in the event that the resale price necessary to provide fair return is not affordable to the subsequent buyer. Deed restrictions, covenants running with the land, or other mechanisms approved by HUD must be used as the mechanism to impose the resale requirements. The affordability restrictions may terminate upon occurrence of any of the following termination events: foreclosure, transfer in lieu of foreclosure, or assignment of an FHA insured mortgage to HUD. The grantee may use purchase options, rights of first refusal or other preemptive rights to purchase the housing before foreclosure to preserve affordability. The affordability restrictions shall be revived according to the original terms if, during the original affordability period, the owner of record before the termination event, obtains an ownership interest in the housing.
</P>
<P>(2) <I>Recapture.</I> (i) Recapture provisions must ensure that the grantee recoups all or a portion of the HTF assistance to the homebuyers, if the housing does not continue to be the principal residence of the family for the duration of the period of affordability. The grantee may structure its recapture provisions based on its program design and market conditions. Recapture provisions may permit the subsequent homebuyer to assume the HTF assistance (subject to the HTF requirements for the remainder of the period of affordability) if the subsequent homebuyer is income-eligible, and no additional HTF assistance is provided.
</P>
<P>(ii) The following options for recapture requirements are acceptable to HUD. The grantee may adopt, modify, or develop its own recapture requirements for HUD approval. In establishing its recapture requirements, the grantee is subject to the limitation that, when the recapture requirement is triggered by a sale (voluntary or involuntary) of the housing unit, the amount recaptured cannot exceed the net proceeds, if any. The net proceeds are the sales price minus superior loan repayment (other than HTF funds) and any closing costs.
</P>
<P>(A) <I>Recapture entire amount.</I> The grantee may recapture the entire amount of the HTF assistance from the homeowner.
</P>
<P>(B) <I>Reduction during affordability period.</I> The grantee may reduce the HTF assistance amount to be recaptured on a prorata basis for the time the homeowner has owned and occupied the housing measured against the required affordability period.
</P>
<P>(C) <I>Shared net proceeds.</I> If the net proceeds are not sufficient to recapture the full HTF assistance (or a reduced amount as provided for in this section) plus enable the homeowner to recover the amount of the homeowner's downpayment and any capital improvement investment made by the owner since purchase, the grantee may share the net proceeds. The net proceeds are the sales price minus loan repayment (other than HTF funds) and closing costs. The net proceeds may be divided proportionally as set forth in the following mathematical formulas:
</P>
<img src="/graphics/er30ja15.010.gif"/>
<P>(D) <I>Owner investment returned first.</I> The grantee may permit the homebuyer to recover the homebuyer's entire investment (downpayment and capital improvements made by the owner since purchase) before recapturing the HTF assistance.
</P>
<P>(E) <I>Amount subject to recapture.</I> The HTF assistance that is subject to recapture is based on the amount of HTF assistance that enabled the homebuyer to buy the dwelling unit. This includes any HTF assistance that reduced the purchase price from fair market value to an affordable price, but excludes the amount between the cost of producing the unit and the market value of the property (<I>i.e.,</I> the development subsidy). The recaptured funds must be used to carry out HTF-eligible activities in accordance with the requirements of this part. If the HTF assistance is only used for the development subsidy and therefore not subject to recapture, the resale option must be used.


</P>
</DIV8>

</DIV6>


<DIV6 N="H" NODE="24:1.1.1.1.42.8" TYPE="SUBPART">
<HEAD>Subpart H—Other Federal Requirements</HEAD>


<DIV8 N="§ 93.350" NODE="24:1.1.1.1.42.8.67.1" TYPE="SECTION">
<HEAD>§ 93.350   Other federal requirements and nondiscrimination; affirmative marketing.</HEAD>
<P>(a) <I>General.</I> The Federal requirements set forth in 24 CFR part 5, subpart A, are applicable to participants in the HTF program. The requirements of this subpart include: nondiscrimination and equal opportunity; disclosure requirements; debarred, suspended, or ineligible contractors; drug-free work; and housing counseling.
</P>
<P>(b) <I>Affirmative marketing.</I> (1) Each grantee must adopt and follow affirmative marketing procedures and requirements for rental projects containing five or more HTF-assisted housing units and for homeownership assistance programs. Affirmative marketing steps consist of actions to provide information and otherwise attract eligible persons in the housing market area to the available housing without regard to race, color, national origin, sex, religion, familial status, or disability. If a grantee's written agreement with the project owner permits the rental housing project to limit tenant eligibility or to have a tenant preference in accordance with § 93.303(d)(3), the grantee must have affirmative marketing procedures and requirements that apply in the context of the limited/preferred tenant eligibility for the project.
</P>
<P>(2) The affirmative marketing requirements and procedures adopted must include:
</P>
<P>(i) Methods for informing the public, owners, and potential tenants about Federal fair housing laws and the grantee's affirmative marketing policy (<I>e.g.,</I> the use of the Equal Housing Opportunity logotype or slogan in press releases and solicitations for owners, and written communication to fair housing and other groups);
</P>
<P>(ii) Requirements and practices the grantee and owner must adhere to in order to carry out the grantee's affirmative marketing procedures and requirements (<I>e.g.,</I> use of commercial media, use of community contacts, use of the Equal Housing Opportunity logotype or slogan, and display of fair housing poster);
</P>
<P>(iii) Procedures to be used by the grantee and owners to inform and solicit applications from persons in the housing market area who are not likely to apply for the rental housing or homeownership assistance program without special outreach (<I>e.g.,</I> through the use of community organizations, places of worship, employment centers, fair housing groups, or housing counseling agencies);
</P>
<P>(iv) Records that will be kept describing actions taken by the grantee and owners to affirmatively market rental housing units and homeownership assistance program and records to assess the results of these actions; and
</P>
<P>(v) A description of how the grantee will annually assess the success of affirmative marketing actions and what corrective actions will be taken where affirmative marketing requirements are not met.
</P>
<P>(3) A grantee that subgrants HTF funds to subgrantees must require each subgrantee to either follow the grantee's procedures and requirements or adopt its own affirmative marketing procedures and requirements that meet this section.
</P>
<CITA TYPE="N">[80 FR 5220, Jan. 30, 2015, as amended at 81 FR 90657, Dec. 14, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 93.351" NODE="24:1.1.1.1.42.8.67.2" TYPE="SECTION">
<HEAD>§ 93.351   Lead-based paint.</HEAD>
<P>Housing assisted with HTF funds is subject to the regulations at 24 CFR part 35, subparts A, B, J, K, and R.


</P>
</DIV8>


<DIV8 N="§ 93.352" NODE="24:1.1.1.1.42.8.67.3" TYPE="SECTION">
<HEAD>§ 93.352   Displacement, relocation, and acquisition.</HEAD>
<P>(a) <I>Minimizing displacement.</I> Consistent with the other goals and objectives of this part, the grantee must ensure that it has taken all reasonable steps to minimize the displacement of persons (families, individuals, businesses, nonprofit organizations, and farms) as a result of a project assisted with HTF funds. To the extent feasible, displaced residential tenants must be provided a reasonable opportunity to lease and occupy a suitable, decent, safe, sanitary, and affordable dwelling unit in the building/complex upon completion of the project.
</P>
<P>(b) <I>Temporary relocation.</I> The following policies cover residential tenants who will not be required to move permanently but who must relocate temporarily for the project. Such tenants must be provided:
</P>
<P>(1) Reimbursement for all reasonable out-of-pocket expenses incurred in connection with the temporary relocation, including the cost of moving to and from the temporarily occupied housing and any increase in monthly rent/utility costs.
</P>
<P>(2) Appropriate advisory services, including reasonable advance written notice of:
</P>
<P>(i) The date and approximate duration of the temporary relocation;
</P>
<P>(ii) The location of the suitable, decent, safe, and sanitary dwelling to be made available for the temporary period;
</P>
<P>(iii) The terms and conditions under which the tenant may lease and occupy a suitable, decent, safe, and sanitary dwelling in the building/complex upon completion of the project; and
</P>
<P>(iv) The provisions of paragraph (b)(1) of this section.
</P>
<P>(c) <I>Relocation assistance for displaced persons</I>—(1) <I>General.</I> A displaced person (defined in paragraph (c)(2) of this section) must be provided relocation assistance at the levels described in, and in accordance with the requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA) (42 U.S.C. 4201-4655) and 49 CFR part 24. A “displaced person” must be advised of his or her rights under the Fair Housing Act and, if the comparable replacement dwelling used to establish the amount of the replacement housing payment to be provided to a minority person is located in an area of minority concentration, the minority person also must be given, if possible, referrals to comparable and suitable, decent, safe, and sanitary replacement dwellings not located in such areas.
</P>
<P>(2) <I>Displaced person.</I> (i) For purposes of this paragraph (c), the term “displaced person” means a person (family individual, business, nonprofit organization, or farm, including any corporation, partnership or association) that moves from real property or moves personal property from real property, permanently, as a direct result of acquisition, rehabilitation, or demolition for a project assisted with HTF funds. This includes any permanent, involuntary move for an assisted project, including any permanent move from the real property that is made:
</P>
<P>(A) After notice by the owner to move permanently from the property, if the move occurs on or after:
</P>
<P>(<I>1</I>) The date of the submission of an application to the grantee or HUD, if the applicant has site control and the application is later approved; or
</P>
<P>(<I>2</I>) The date the grantee approves the applicable site, if the applicant does not have site control at the time of the application; or
</P>
<P>(B) Before the date described in paragraph (c)(2)(i)(A) of this section, if the grantee or HUD determines that the displacement resulted directly from acquisition, rehabilitation, or demolition for the project; or
</P>
<P>(C) By a tenant-occupant of a dwelling unit, if any one of the following three situations occurs:
</P>
<P>(<I>1</I>) The tenant moves after execution of the agreement covering the acquisition, rehabilitation, or demolition and the move occurs before the tenant is provided written notice offering the tenant the opportunity to lease and occupy a suitable, decent, safe, and sanitary dwelling in the same building/complex upon completion of the project under reasonable terms and conditions. Such reasonable terms and conditions must include a term of at least one year at a monthly rent and estimated average monthly utility costs that do not exceed the greater of:
</P>
<P>(<I>i</I>) The tenant's monthly rent before such agreement and estimated average monthly utility costs; or
</P>
<P>(<I>ii</I>) The total tenant payment, as determined under 24 CFR 5.628, if the tenant is low-income, or 30 percent of gross household income, if the tenant is not low-income;
</P>
<P>(<I>2</I>) The tenant is required to relocate temporarily, does not return to the building/complex, and either:
</P>
<P>(<I>i</I>) The tenant is not offered payment for all reasonable out-of-pocket expenses incurred in connection with the temporary relocation; or
</P>
<P>(<I>ii</I>) Other conditions of the temporary relocation are not reasonable; or
</P>
<P>(<I>3</I>) The tenant is required to move to another dwelling unit in the same building/complex but is not offered reimbursement for all reasonable out-of-pocket expenses incurred in connection with the move, or other conditions of the move are not reasonable.
</P>
<P>(ii) Notwithstanding paragraph (c)(2)(i) of this section, a person does not qualify as a “displaced person” if:
</P>
<P>(A) The person has been evicted for cause based upon a serious or repeated violation of the terms and conditions of the lease or occupancy agreement, violation of applicable Federal, State or local law, or other good cause, and the grantee determines that the eviction was not undertaken for the purpose of evading the obligation to provide relocation assistance. The effective date of any termination or refusal to renew must be preceded by at least 30 calendar days advance written notice to the tenant specifying the grounds for the action.
</P>
<P>(B) The person moved into the property after the submission of the application, but before signing a lease and commencing occupancy, was provided written notice of the project, its possible impact on the person (<I>e.g.,</I> the person may be displaced, temporarily relocated, incur a rent increase), and the fact that the person would not qualify as a “displaced person” (or for any assistance under this section) as a result of the project;
</P>
<P>(C) The person is ineligible under 49 CFR 24.2(g)(2); or
</P>
<P>(D) HUD determines that the person was not displaced as a direct result of acquisition, rehabilitation, or demolition for the project.
</P>
<P>(iii) The grantee may, at any time, ask HUD to determine whether a displacement is or would be covered by this rule.
</P>
<P>(3) <I>Initiation of negotiations.</I> For purposes of determining the formula for computing replacement housing assistance to be provided under this paragraph (c) to a tenant displaced from a dwelling as a direct result of private-owner rehabilitation, demolition, or acquisition of the real property, the term “initiation of negotiations” means the execution of the agreement covering the acquisition, rehabilitation, or demolition.
</P>
<P>(d) <I>Optional relocation assistance.</I> The grantee may provide relocation payments and other relocation assistance to families, individuals, businesses, nonprofit organizations, and farms displaced by a project assisted with HTF funds where the displacement is not subject to paragraph (c) of this section. The grantee may also provide relocation assistance to persons covered under paragraph (c) of this section beyond that required. For any such assistance that is not required by State or local law, the grantee must adopt a written policy available to the public that describes the optional relocation assistance that it has elected to furnish and provides for equal relocation assistance within each class of displaced persons.
</P>
<P>(e) <I>Real property acquisition requirements.</I> The acquisition of real property for a project is subject to the URA and the requirements of 49 CFR part 24, subpart B.
</P>
<P>(f) <I>Appeals.</I> A person who disagrees with the grantee's determination concerning whether the person qualifies as a displaced person, or the amount of relocation assistance for which the person may be eligible, may file a written appeal of that determination with the grantee.


</P>
</DIV8>


<DIV8 N="§ 93.353" NODE="24:1.1.1.1.42.8.67.4" TYPE="SECTION">
<HEAD>§ 93.353   Conflict of interest.</HEAD>
<P>(a) <I>Applicability of 2 CFR 200.318.</I> In the procurement of property and services by grantees and subgrantees, the conflict of interest provisions in 2 CFR 200.318 apply. In all cases not governed by 2 CFR 200.318, the provisions of this section apply.
</P>
<P>(b) <I>Conflicts prohibited.</I> No persons described in paragraph (c) of this section who exercise or have exercised any functions or responsibilities with respect to activities assisted with HTF funds or who are in a position to participate in a decision-making process or gain inside information with regard to these activities may obtain a financial interest or financial benefit from a HTF-assisted activity, or have a financial interest in any contract, subcontract, or agreement with respect to the HTF-assisted activity, or the proceeds from such activity, either for themselves or those with whom they have business or immediate family ties, during their tenure or for one year thereafter. Immediate family ties include (whether by blood, marriage, or adoption) the spouse, parent (including a stepparent), child (including a stepchild), brother, sister (including a stepbrother or stepsister), grandparent, grandchild, and in-laws of a covered person.
</P>
<P>(c) <I>Persons covered.</I> The conflict of interest provisions of paragraph (b) of this section apply to any person who is an employee, agent, consultant, officer, or elected official or appointed official of the grantee or subgrantee.
</P>
<P>(d) <I>Exceptions: Threshold requirements.</I> Upon the written request of the grantee, HUD may grant an exception to the provisions of paragraph (b) of this section on a case-by-case basis when it determines that the exception will serve to further the purposes of the HTF and the effective and efficient administration of the grantee's program or project. An exception may be considered only after the grantee has provided the following:
</P>
<P>(1) A disclosure of the nature of the conflict, accompanied by an assurance that there has been public disclosure of the conflict and a description of how the public disclosure was made; and
</P>
<P>(2) An opinion of the grantee's attorney that the interest for which the exception is sought would not violate State or local law.
</P>
<P>(e) <I>Factors to be considered for exceptions.</I> In determining whether to grant a requested exception after the grantee has satisfactorily met the requirements of paragraph (d) of this section, HUD will consider the cumulative effect of the following factors, where applicable:
</P>
<P>(1) Whether the exception would provide a significant cost benefit or an essential degree of expertise to the program or project which would otherwise not be available;
</P>
<P>(2) Whether the person affected is a member of a group or class of income eligible persons intended to be the beneficiaries of the assisted activity, and the exception will permit such person to receive generally the same interests or benefits as are being made available or provided to the group or class;
</P>
<P>(3) Whether the affected person has withdrawn from his or her functions or responsibilities, or the decisionmaking process with respect to the specific assisted activity in question;
</P>
<P>(4) Whether the interest or benefit was present before the affected person was in a position as described in paragraph (c) of this section;
</P>
<P>(5) Whether undue hardship will result either to the grantee or the person affected when weighed against the public interest served by avoiding the prohibited conflict; and
</P>
<P>(6) Any other relevant considerations.
</P>
<P>(f) <I>Recipient</I>—(1) <I>General</I>. No recipient assisted with HTF funds (or officer, employee, agent, elected or appointed official, or consultant of recipient or immediate family member or immediate family member of an officer, employee, agent, elected or appointed official, or consultant of a recipient) whether private, for-profit or nonprofit, may occupy a HTF-assisted affordable housing unit in a project during the required period of affordability specified in § 93.302(e) or § 93.304. This provision does not apply to an employee or agent of the recipient who occupies a housing unit as the project manager or maintenance worker.
</P>
<P>(2) <I>Exceptions.</I> Upon written request of a recipient, the grantee (or subgrantee, if authorized by the grantee) may grant an exception to the provisions of paragraph (f)(1) of this section on a case-by-case basis when it determines that the exception will serve to further the purposes of the HTF program and the effective and efficient administration of the recipient's HTF-assisted project. In determining whether to grant a requested exception, the grantee shall consider the following factors:
</P>
<P>(i) Whether the person receiving the benefit is a member of a group or class of low-income persons intended to be the beneficiaries of the assisted housing, and the exception will permit such person to receive generally the same interests or benefits as are being made available or provided to the group or class;
</P>
<P>(ii) Whether the person has withdrawn from his or her functions or responsibilities, or the decisionmaking process with respect to the specific assisted housing in question;
</P>
<P>(iii) Whether the tenant protection requirements of § 93.303 are being observed;
</P>
<P>(iv) Whether the affirmative marketing requirements of § 93.350 are being observed and followed; and
</P>
<P>(v) Any other factor relevant to the grantee's determination, including the timing of the requested exception.


</P>
</DIV8>


<DIV8 N="§ 93.354" NODE="24:1.1.1.1.42.8.67.5" TYPE="SECTION">
<HEAD>§ 93.354   Funding Accountability and Transparency Act.</HEAD>
<P>The HTF grant to the grantee and all assistance provided to subgrantees and recipients shall be considered a Federal award for purposes of the Federal Funding Accountability and Transparency Act of 2006 (31 U.S.C. 6101 note).


</P>
</DIV8>


<DIV8 N="§ 93.355" NODE="24:1.1.1.1.42.8.67.6" TYPE="SECTION">
<HEAD>§ 93.355   Eminent domain.</HEAD>
<P>No HTF funds may be used in conjunction with property taken by eminent domain, unless eminent domain is employed only for a public use, except that, public use shall not be construed to include economic development that primarily benefits any private entity.


</P>
</DIV8>


<DIV8 N="§ 93.356" NODE="24:1.1.1.1.42.8.67.7" TYPE="SECTION">
<HEAD>§ 93.356   VAWA requirements.</HEAD>
<P>(a) <I>General.</I> (1) The Violence Against Women Act (VAWA) requirements set forth in 24 CFR part 5, subpart L, apply to all rental housing assisted with HTF funds, as provided in this section.
</P>
<P>(2) For the HTF program, the “covered housing provider,” as this term is used in HUD's regulations in 24 CFR part 5, subpart L, refers to:
</P>
<P>(i) The owner of HTF-assisted rental housing for the purposes of 24 CFR 5.2005(d)(1), (2), (3), and (4) and 5.2009(a); and
</P>
<P>(ii) The owner and the grantee for purposes of 24 CFR 5.2005(e) and 5.2007, except as otherwise provided in paragraph (f) of this section.
</P>
<P>(b) <I>Notification requirements.</I> The grantee must provide a notice and certification form that meet the requirements of 24 CFR 5.2005(a) to the owner of HTF-assisted rental housing. The owner of HTF-assisted rental housing must provide the notice and certification form described in 24 CFR 5.2005(a) to the applicant for a HTF-assisted unit at the time the applicant is admitted to an HTF-assisted unit, or denied admission to a HTF-assisted unit based on the owner's tenant selection policies and criteria. The owner of HTF-assisted rental housing must also provide the notice and certification form described in 24 CFR 5.2005 with any notification of eviction from a HTF-assisted unit.
</P>
<P>(c) <I>Bifurcation of lease requirements.</I> For purposes of this part, the requirements of 24 CFR 5.2009(b) do not apply. If a family who lives in a HTF-assisted rental unit separates under 24 CFR 5.2009(a), the remaining tenant(s) may remain in the HTF-assisted unit.
</P>
<P>(d) <I>VAWA lease term/addendum.</I> The grantee must develop a VAWA lease term/addendum to incorporate all requirements that apply to the owner or lease of HTF-assisted rental housing under 24 CFR part 5, subpart L, and this section, including the prohibited bases for eviction and restrictions on construing lease terms under 24 CFR 5.2005(b) and (c). This VAWA lease term/addendum must also provide that the tenant may terminate the lease without penalty if the grantee determines that the tenant has met the conditions for an emergency transfer under 24 CFR 5.2005(e).
</P>
<P>(e) <I>Period of applicability.</I> The requirements of this section shall apply to the owner of the HTF-assisted rental housing for the duration of the affordability period.
</P>
<P>(f) <I>Emergency transfer plan.</I> The grantee must develop and implement an emergency transfer plan and must make the determination of whether a tenant qualifies for an emergency transfer under the plan. The plan must meet the requirements in 24 CFR 5.2005(e), where, for the purposes of § 5.2005(e)(7), the required policies must specify that for tenants who qualify for an emergency transfer and who wish to make an external emergency transfer when a safe unit is not immediately available, the grantee must provide a list of properties in the jurisdiction that include HTF-assisted units. The list must include the following information for each property: The property's address, contact information, the unit sizes (number of bedrooms) for the HTF-assisted units, and, to the extent known, any tenant preferences or eligibility restrictions for the HTF-assisted units. In addition, the grantee may:
</P>
<P>(1) Establish a preference under the grantee's HTF program for tenants who qualify for emergency transfers under 24 CFR 5.2005(e); and
</P>
<P>(2) Coordinate with victim service providers and advocates to develop the emergency transfer plan, make referrals, and facilitate emergency transfers to safe and available units.
</P>
<CITA TYPE="N">[81 FR 80805, Nov. 16, 2016]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="I" NODE="24:1.1.1.1.42.9" TYPE="SUBPART">
<HEAD>Subpart I—Program Administration</HEAD>


<DIV8 N="§ 93.400" NODE="24:1.1.1.1.42.9.67.1" TYPE="SECTION">
<HEAD>§ 93.400   Housing Trust Fund (HTF) accounts.</HEAD>
<P>(a) <I>General.</I> HUD will establish an HTF United States Treasury account (HTF Treasury account) for each grantee. Each grantee may use either a separate HTF local account or a subsidiary account within its general fund (or other appropriate fund) as the HTF local account.
</P>
<P>(b) <I>HTF Treasury account.</I> The HTF Treasury account includes the annual grant and funds reallocated to the State by formula.
</P>
<P>(c) <I>HTF local account.</I> (1) The HTF local account includes deposits of HTF funds disbursed from the HTF Treasury account, any program income, and any repayments as required by § 93.403.
</P>
<P>(2) The HTF local account must be interest-bearing.
</P>
<P>(d) <I>Reductions.</I> HUD will reduce or recapture funds in the HTF account by the amount of:
</P>
<P>(1) Any fiscal year grant funds in the HTF Treasury account that are not committed within 24 months after the date of HUD's execution of the HTF grant agreement;
</P>
<P>(2) Any fiscal year grant funds in the HTF local account that are not expended within 5 years after the date of HUD's execution of the HTF grant agreement;
</P>
<P>(3) Any amounts pursuant to § 93.453; and
</P>
<P>(4) Amounts that the grantee fails to obtain and that were required to be reimbursed or returned under § 93.450.


</P>
</DIV8>


<DIV8 N="§ 93.401" NODE="24:1.1.1.1.42.9.67.2" TYPE="SECTION">
<HEAD>§ 93.401   HTF grant agreement.</HEAD>
<P>Allocated and reallocated funds will be made available pursuant to an HTF grant agreement.


</P>
</DIV8>


<DIV8 N="§ 93.402" NODE="24:1.1.1.1.42.9.67.3" TYPE="SECTION">
<HEAD>§ 93.402   Program disbursement and information system.</HEAD>
<P>(a) <I>General.</I> The HTF Treasury account is managed through a computerized disbursement and information system established by HUD. The system disburses HTF funds that are allocated or reallocated, and collects and reports information on the use of funds in the HTF Treasury account. The grantee must report on the receipt and use of all program income in HUD's computerized disbursement and information system. The grantee must develop and maintain a system to ensure that each recipient and subgrantee uses HTF funds in accordance with the requirements of this part and that any requirements or conditions under which the HTF funds were provided.
</P>
<P>(b) <I>Project set-up.</I> (1) After the grantee executes the HTF grant agreement, submits the applicable banking and security documents, and commits funds to a specific local project, the grantee shall identify (set up) specific activities (<I>i.e.,</I> projects) in the disbursement and information system. Investments that require the set-up of projects in the system are the acquisition, new construction, or rehabilitation of housing, operating cost assistance, and operating cost assistance reserves. The grantee is required to enter complete project set-up information at the time of project set-up.
</P>
<P>(2) If the project set-up information is not completed within 20 calendar days of the date of the initial project set-up, the project may be canceled by the system. In addition, a project that has been committed in the system for 12 months without an initial disbursement of funds may be canceled by the system.
</P>
<P>(c) <I>Disbursement of HTF Funds.</I> (1) After complete project set-up information is entered into the disbursement and information system, HTF funds for the project may be drawn down from the HTF Treasury account by the grantee by electronic funds transfer. Any drawdown of funds in the HTF Treasury account is conditioned upon the provision of satisfactory information by the grantee about the project and compliance with other procedures, as specified by HUD.
</P>
<P>(2) Funds drawn from the HTF Treasury account are subject to the Intergovernmental Cooperation Act (31 U.S.C. 6501 <I>et seq.</I>) and regulations at 31 CFR part 205.
</P>
<P>(3) Funds in the HTF local account must be disbursed before requests are made for funds in the HTF Treasury account.
</P>
<P>(d) <I>Project completion.</I> (1) Complete project completion information must be entered into the disbursement and information system, or otherwise provided, within 120 calendar days of the date of the final project drawdown. If satisfactory project completion information is not provided, HUD may suspend further project set-ups or take other corrective actions.
</P>
<P>(2) Additional HTF funds for development-related costs may be committed to a project up to one year after project completion, but the amount of HTF funds in the project may not exceed the maximum per-unit development subsidy amount established pursuant to § 93.300.
</P>
<P>(e) <I>Access by other participants.</I> Access to the disbursement and information system by other entities participating in the HTF program will be governed by procedures established by HUD.


</P>
</DIV8>


<DIV8 N="§ 93.403" NODE="24:1.1.1.1.42.9.67.4" TYPE="SECTION">
<HEAD>§ 93.403   Program income and repayments.</HEAD>
<P>(a) <I>Program income.</I> Program income must be treated as HTF funds and must be used in accordance with the requirements of this part. Program income must be deposited in the grantee's HTF local account unless the grantee permits a subgrantee to retain the program income for additional HTF projects pursuant to the written agreement required by § 93.404(b). The grantee must report the program income received as well as the use of the program income in the disbursement and information system that HUD designates for the HTF.
</P>
<P>(b) <I>Repayments.</I> (1) Any HTF funds invested in housing that does not meet the affordability requirements for the period specified in § 93.302 or § 93.304, as applicable, must be repaid by the grantee in accordance with paragraph (b)(3) of this section.
</P>
<P>(2) Any HTF funds invested in a project that is terminated before completion, either voluntarily or otherwise, must be repaid by the grantee, in accordance with paragraph (b)(3) of this section.
</P>
<P>(3) HUD will instruct the grantee to either repay the funds to the HTF Treasury account or the local account. Generally, if the HTF funds were disbursed from the grantee's HTF Treasury account, they must be repaid to the HTF Treasury account. If the HTF funds were disbursed from the grantee's HTF local account, they must be repaid to the local account.
</P>
<P>(4) If the grantee is no longer a grantee in the HTF program when the repayment is made, the funds must be remitted to HUD and reallocated in accordance with § 93.54 of this part.


</P>
</DIV8>


<DIV8 N="§ 93.404" NODE="24:1.1.1.1.42.9.67.5" TYPE="SECTION">
<HEAD>§ 93.404   Grantee responsibilities; written agreements; onsite inspections; financial oversight.</HEAD>
<P>(a) <I>Responsibilities.</I> The grantee is responsible for managing the day-to-day operations of its HTF program, ensuring that HTF funds are used in accordance with all program requirements and written agreements, and taking appropriate action when performance problems arise. The use of subgrantees or contractors does not relieve the grantee of this responsibility. The performance and compliance of each contractor and subgrantee must be reviewed at least annually. The grantee must have and follow written policies, procedures, and systems, including a system for assessing risk of activities and projects and a system for monitoring entities consistent with this section, to ensure that the requirements of this part are met.
</P>
<P>(b) <I>Executing a written agreement.</I> Before disbursing any HTF funds to any entity, the grantee must enter into a written agreement with that entity. The written agreement must ensure compliance with the requirements of this part.
</P>
<P>(c) <I>Provisions in written agreements.</I> The contents of the agreement may vary depending upon the role the entity is asked to assume or the type of project undertaken. This section details basic requirements by role and the minimum provisions that must be included in a written agreement.
</P>
<P>(1) <I>Subgrantee.</I> The agreement must require the subgrantee to comply with the requirements applicable to the grantee under this part. The agreement between the grantee and the subgrantee must include:
</P>
<P>(i) <I>Use of the HTF funds.</I> An HTF subgrantee that is a unit of general local government must have a consolidated plan under 24 CFR part 91, and the written agreement must require that an HTF allocation plan to be part of the subgrantee's consolidated plan (see 24 CFR 91.220(l)(5)). The HTF allocation plan of an HTF subgrantee that is a State agency is included in the grantee's HTF allocation plan. The grantee may impose restrictions on the use of funds by the subgrantee, <I>e.g.,</I> limit to rental projects. The written agreement must require that the selection of projects by eligible recipients will be in accordance with the HTF allocation plan. The agreement must describe the tasks to be performed, a schedule for completing the tasks (including a schedule for committing funds to projects), a budget, and the period of the agreement. These items must be in sufficient detail to provide a sound basis for the grantee to effectively monitor performance under the agreement.
</P>
<P>(ii) <I>Deadlines.</I> The agreement must state the time requirements for the commitment and expenditure of HTF funds and specify that remaining funds will be reduced or recaptured by the grantee so that the grantee can meet its commitment and expenditure deadlines in § 93.400.
</P>
<P>(iii) <I>Audit.</I> The agreement must state that an audit of the subgrantee must be conducted at least annually, in accordance with § 93.406.
</P>
<P>(iv) <I>Program income.</I> The agreement must state if program income is to be remitted to the grantee or to be retained by the subgrantee for additional HTF eligible activities.
</P>
<P>(v) <I>Uniform administrative requirements.</I> The agreement must require the subgrantee to comply with the requirements of 2 CFR part 200, as described in § 93.405. The agreement must include the information in 2 CFR 200.331.
</P>
<P>(vi) <I>Other program requirements.</I> The agreement must require the subgrantee to carry out each project in compliance with all Federal laws and regulations described in §§ 93.350 through 93.356. The agreement must set forth all obligations the grantee imposes on the subgrantee in order to meet the VAWA requirements under § 93.356, including notice obligations and obligations under the emergency transfer plan.
</P>
<P>(vii) <I>Affirmative marketing.</I> The agreement must specify the subgrantee's affirmative marketing responsibilities, in accordance with § 93.350.
</P>
<P>(viii) <I>Requests for disbursement of funds.</I> The agreement must specify that the subgrantee may not request disbursement of funds under the agreement until the funds are needed for payment of eligible costs. The amount of each request must be limited to the amount needed. Program income must be disbursed before the subgrantee requests grant funds from the grantee.
</P>
<P>(ix) <I>Reversion of assets.</I> The agreement must specify that upon closeout of the subgrant agreement, the subgrantee must transfer to the grantee any HTF funds on hand and any accounts receivable attributable to the use of HTF funds.
</P>
<P>(x) <I>Records and reports.</I> The agreement must specify the particular records that must be maintained and the information or reports that must be submitted in order to assist the grantee in meeting its recordkeeping and reporting requirements.
</P>
<P>(xi) <I>Enforcement of the agreement.</I> The agreement must specify remedies for breach of the provisions of the agreement. The agreement must specify that, in accordance with 2 CFR 200.338, suspension or termination may occur if the subgrantee materially fails to comply with any term of the agreement. The grantee may permit the agreement to be terminated in whole or in part, in accordance with 2 CFR 200.339.
</P>
<P>(xii) <I>Written agreement.</I> The agreement must require that before the subgrantee provides HTF funds to eligible recipients, first-time homebuyers, or contractors, the subgrantee must have a written agreement that meets the requirements of this section.
</P>
<P>(xiii) <I>Duration of the agreement.</I> The agreement must specify the period of performance of the agreement.
</P>
<P>(xiv) <I>Fees.</I> The agreement must prohibit the subgrantee from charging servicing, origination, or other fees for the costs of administering the HTF program, except that:
</P>
<P>(A) The subgrantee may charge owners of rental projects reasonable annual fees for compliance monitoring during the period of affordability. The fees must be based upon the average actual cost of performing the monitoring of HTF-assisted rental projects. The basis for determining the amount of the fee amount must be documented and the fee must be included in the costs of the project as part of the project underwriting;
</P>
<P>(B) The subgrantee may charge nominal application fees (although these fees are not an eligible HTF cost) to discourage frivolous applications. The amount of application fees must be appropriate to the type of application and may not create an undue impediment to an income-eligible family's, or other potential recipient's participation in the HTF program; and
</P>
<P>(C) The subgrantee may charge homebuyers a fee for housing counseling.
</P>
<P>(2) <I>Eligible recipient.</I> The agreement between the grantee and the eligible recipient selected for funding must include:
</P>
<P>(i) <I>Use of the HTF funds.</I> The agreement must describe the use of the HTF funds for the project, including the tasks to be performed, a schedule for completing the tasks and project (including the expenditure deadline), and a project budget. These items must be in sufficient detail to provide a sound basis for the grantee to effectively monitor performance under the agreement. If the grantee is providing operating cost assistance, the written agreement must include the provisions required by § 93.201.
</P>
<P>(ii) <I>Deadlines.</I> The agreement must state the time requirements for the commitment and expenditure of HTF funds and specify that remaining funds will be reduced or recaptured.
</P>
<P>(iii) <I>Audit.</I> The agreement must specify that the recipient will submit to the grantee a cost certification performed by a certified public accountant for each project assisted with HTF funds. The agreement must specify that the recipient will submit to the grantee an annual audit performed on each project assisted with HTF funds, beginning the first year following the cost certification and with the final annual audit occurring the last year of the affordability period.
</P>
<P>(iv) <I>Affordability.</I> The agreement must specify the affordability period, require housing assisted with HTF funds to meet the affordability requirements of § 93.302 or § 93.304, as applicable, and must require repayment of the funds if the housing does not meet the affordability requirements for the specified time period. If the recipient is undertaking a rental project, the agreement must establish the initial rents and the procedures for rent increases, the number of HTF units, the size of the HTF units, the designation of the HTF units as fixed or floating, and the requirement to provide the address (<I>e.g.,</I> street address and apartment number) of each HTF unit no later than the time of project completion. If the recipient is undertaking homeownership projects for sale to first-time homebuyers, in accordance with § 93.304, the agreement must establish the resale or recapture requirements that must be imposed on the housing, the sales price or the basis upon which the sales price will be determined, and the disposition of the sales proceeds.
</P>
<P>(v) <I>Project requirements.</I> The agreement must require the housing to meet the property standards in § 93.301 of this part, as applicable, and in accordance with the type of project assisted upon project completion. The agreement must also require owners of rental housing assisted with HTF funds to maintain the housing in compliance with § 93.301 of this part for the duration of the affordability period, and to comply with the requirements of § 93.303. The agreement may permit the recipient to limit eligibility or give a preference to a particular segment of the population, only if the grantee has described any such limited eligibility or preference in its consolidated plan; provided, however, that any limitation or preference cannot violate nondiscrimination requirements in § 93.350.
</P>
<P>(vi) <I>Other program requirements.</I> The agreement must require the eligible recipient to carry out each project in compliance with all Federal laws and regulations described in §§ 93.350 through 93.356. The agreement must set forth all obligations the grantee imposes on the recipient in order to meet the VAWA requirements under § 93.356, including notice obligations and obligations under the emergency transfer plan.
</P>
<P>(vii) <I>Affirmative marketing.</I> The agreement must specify the recipient's affirmative marketing responsibilities, as enumerated by the grantee in accordance with § 93.350.
</P>
<P>(viii) <I>Requests for disbursement of funds.</I> The agreement must specify that the recipient may not request disbursement of funds under the agreement until the funds are needed for payment of eligible costs. The amount of each request must be limited to the amount needed.
</P>
<P>(ix) <I>Records and reports.</I> The agreement must specify the particular records that must be maintained and the information or reports that must be submitted to assist the grantee in meeting its recordkeeping and reporting requirements. The owner of rental housing must annually provide the grantee with information on rents and occupancy of HTF-assisted units to demonstrate compliance with § 93.302. If the rental housing project has floating HTF units, the owner must provide the grantee with information regarding unit substitution and filling vacancies so that the project remains in compliance with HTF rental occupancy requirements. The agreement must specify the reporting requirements (including copies of financial statements) to enable the grantee to determine the financial condition (and continued financial viability) of the rental project.
</P>
<P>(x) <I>Enforcement of the agreement.</I> The agreement must provide for a means of enforcement of the affordable housing requirements by the grantee and the intended beneficiaries. This means of enforcement and the affordability requirements in § 93.302 must be imposed by deed restrictions, covenants running with the land, use restrictions, or other mechanisms approved by HUD under which the grantee and beneficiaries may require specific performance. In addition, the agreement must specify remedies for breach of the provisions of the agreement.
</P>
<P>(xi) <I>Duration of the agreement.</I> The agreement must specify the duration of the agreement. If the housing assisted under this agreement is rental housing, the agreement must be in effect through the affordability period required by the grantee under § 93.302. If the housing assisted under this agreement is homeownership housing, the agreement must be in effect at least until completion of the project and ownership by the first-time homebuyer.
</P>
<P>(xii) <I>Fees.</I> The agreement must prohibit project owners from charging origination fees, parking fees, laundry room access fees, and other fees; however, rental project owners may charge reasonable application fees to prospective tenants.
</P>
<P>(3) <I>First-time homebuyer.</I> When a grantee provides assistance to a homebuyer, the written agreement must include as a minimum:
</P>
<P>(i) <I>Use of the HTF funds.</I> The agreement must conform to the requirements in § 93.304, including the limitations on the value of the property, principal residence requirement, lease-purchase terms, if applicable, and the resale or recapture provisions. The agreement must specify the amount of HTF funds, the form of assistance (<I>e.g.,</I> grant, amortizing loan, deferred payment loan), the use of the funds (<I>e.g.,</I> downpayment, closing costs), and the time by which the housing must be acquired.
</P>
<P>(ii) <I>Resale or recapture restrictions.</I> The agreement must specify the resale or recapture restrictions established under § 93.304 for the specified time period.
</P>
<P>(iii) <I>Enforcement of the agreement.</I> The agreement must provide for a means of enforcement of the affordable housing requirements by the grantee. The means of enforcement and the affordability requirements in § 93.304 for resale restrictions must be imposed by deed restrictions, covenants running with the land, use restrictions, or other mechanisms approved by HUD under which the grantee may require specific performance. In addition, the agreement must specify remedies for breach of the provisions of the agreement.
</P>
<P>(d) <I>Onsite inspections</I>—(1) <I>Project completion.</I> The grantee must perform an onsite inspection of each HTF-assisted project at project completion to determine that the housing meets the property standards of § 93.301. The inspections must be in accordance with the inspection procedures that the grantee establishes to meet the inspection requirements of § 93.301.
</P>
<P>(2) <I>Period of affordability.</I> (i) During the period of affordability, the grantee must perform onsite inspections of HTF-assisted rental housing buildings to determine compliance with the ongoing property standards of § 93.301 and to verify the information submitted by the owners in accordance with the requirements of § 93.302. The inspections must be in accordance with the inspection procedures that the grantee establishes to meet the inspection requirements of § 93.301.
</P>
<P>(ii) The onsite inspections must occur 12 months after project completion and at least once every 3 years thereafter during the period of affordability.
</P>
<P>(iii) If there are observed deficiencies for any of the inspectable items established by the grantee, in accordance with the inspection requirements of § 93.301, a follow-up onsite inspection must occur within 12 months, or within a reasonable time frame established by the grantee depending on the severity of the deficiency, to verify that all observed deficiencies have been corrected. The grantee may establish a list of non-hazardous deficiencies for which correction can be verified by third party documentation rather than reinspection. The grantee must adopt a more frequent inspection schedule for properties that have been found to have health and safety violations. Life-threatening health and safety deficiencies must be corrected immediately, in accordance with § 93.301.
</P>
<P>(iv) The property owner must annually certify to the grantee that each building in the project is suitable for occupancy, taking into account State and local health, safety, and other applicable codes, ordinances, and requirements, and the ongoing property standards established by the grantee to meet the requirements of § 93.301.
</P>
<P>(v) Inspections must be based on a statistically valid sample of units appropriate for the size of the HTF-assisted project, as set forth by HUD through notification published in the <E T="04">Federal Register.</E> For projects with one to four HTF-assisted units, the HTF grantee must inspect all of the HTF-assisted units and all inspectable areas for each building housing HTF-assisted units.
</P>
<P>(e) <I>Financial oversight.</I> During the period of affordability, the grantee must examine regularly (at least annually) the financial condition of HTF-assisted rental projects with 10 or more HTF-assisted units to determine the continued financial viability of the housing and must take actions to correct problems.
</P>
<CITA TYPE="N">[80 FR 5220, Jan. 30, 2015, as amended at 81 FR 80805, Nov. 16, 2016; 88 FR 30497, May 11, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 93.405" NODE="24:1.1.1.1.42.9.67.6" TYPE="SECTION">
<HEAD>§ 93.405   Applicability of uniform administrative requirements, cost principles, and audits.</HEAD>
<P>The requirements of 2 CFR part 200 apply to the grantees and subgrantees receiving HTF funds, except for the following provisions: §§ 200.307, 200.311, 300.328(b), 200.329, and 200.333. If there is a conflict between the definitions in 2 CFR part 200 and 24 CFR part 93, the definitions in part 93 govern.


</P>
</DIV8>


<DIV8 N="§ 93.406" NODE="24:1.1.1.1.42.9.67.7" TYPE="SECTION">
<HEAD>§ 93.406   Audits.</HEAD>
<P>(a) Audits of the grantee and subgrantees must be conducted in accordance with 2 CFR part 200, subpart F. The use of HTF grant funds by the grantee must be audited not less than annually to ensure compliance with this part. Any financial statement submitted by the grantee to HUD must be reviewed by an independent certified public accountant, in accordance with Statements on Standards for Accounting and Review Services, which is issued by the American Institute of Certified Public Accountants.
</P>
<P>(b) The written agreement providing HTF assistance to the recipient must specify that the recipient will submit to the grantee a cost certification performed by a certified public accountant for each project assisted with HTF funds. The agreement must specify that the recipient will submit to the grantee an annual audit performed on each project assisted with HTF funds, beginning the first year following the cost certification and with the final annual audit occurring the last year of the affordability period.


</P>
</DIV8>


<DIV8 N="§ 93.407" NODE="24:1.1.1.1.42.9.67.8" TYPE="SECTION">
<HEAD>§ 93.407   Recordkeeping.</HEAD>
<P>(a) <I>General.</I> Each grantee must establish and maintain sufficient records to enable HUD to determine whether the grantee has met the requirements of this part. At a minimum, the following records are needed:
</P>
<P>(1) <I>Program records.</I> (i) The forms of HTF assistance used in the program.
</P>
<P>(ii) The subsidy layering guidelines adopted in accordance with § 93.300.
</P>
<P>(iii) If HTF funds are used for housing for first-time homebuyers, the procedures used for establishing 95 percent of the median purchase price for the area in accordance with § 93.305, as set forth in the consolidated plan.
</P>
<P>(iv) If HTF funds are used for acquisition of housing for homeownership, the resale guidelines established in accordance with § 93.304, as set forth in the consolidated plan.
</P>
<P>(v) Records documenting compliance with the 24-month commitment deadline of § 93.400(d)(l).
</P>
<P>(vi) Records documenting compliance with the 10 percent limitation on administrative and planning costs in accordance with § 93.202.
</P>
<P>(2) <I>Project records.</I> (i) A full description of each project assisted with HTF funds, including the location (address of each unit), form of HTF assistance, and the units assisted with HTF funds.
</P>
<P>(ii) The source and application of funds for each project, including supporting documentation, in accordance with 2 CFR 200.333 through 200.337, and records to document the eligibility and allowability of the project costs, including the documentation of the actual HTF-eligible development costs of each HTF-assisted unit (through allocation of costs, if permissible under § 93.200(c)) where HTF funds are used to assist less than all of the units in a multi-unit project.
</P>
<P>(iii) Records demonstrating that each rental housing or homeownership project meets the maximum per-unit subsidy amount established pursuant to § 93.300(a), and the subsidy layering and underwriting evaluation in accordance with § 93.300.
</P>
<P>(iv) Records (<I>e.g.,</I> inspection reports) demonstrating that each project meets the property standards of § 93.301 of this part at project completion. In addition, during the period of affordability, records for rental projects demonstrating compliance with the property standards, and financial reviews and actions pursuant to § 93.404(a).
</P>
<P>(v) Records demonstrating that each family is income-eligible.
</P>
<P>(vi) Records demonstrating that each rental housing project meets the affordability and income targeting requirements of § 93.302 for the required period. Records must be kept for each family assisted.
</P>
<P>(vii) Records demonstrating that each lease for an assisted rental housing unit complies with the tenant and participant protections of § 93.303. Records must be kept for each family assisted.
</P>
<P>(viii) Records demonstrating that the purchase price for each housing unit for a first-time homebuyer does not exceed 95 percent of the median purchase price for the area, in accordance with § 93.305.
</P>
<P>(ix) Records demonstrating that each housing unit for a first-time homebuyer meets the affordability requirements of § 93.304 for the required period.
</P>
<P>(x) Records demonstrating that a site and neighborhood standards review was conducted for each project that included new construction of rental housing assisted under this part, to determine that the site meets the requirements of § 93.150.
</P>
<P>(xi) Records (written agreements) demonstrating compliance with the written agreements requirements in § 93.404.
</P>
<P>(3) <I>Financial records.</I> (i) Records identifying the source and application of funds for each fiscal year, including the annual grant and any reallocation (identified by federal fiscal year).
</P>
<P>(ii) Records concerning the HTF Treasury account and local account required to be established and maintained by § 93.400, including deposits, disbursements, balances, supporting documentation, and any other information required by the program disbursement and information system established by HUD.
</P>
<P>(iii) Records identifying the source and application of program income and repayments.
</P>
<P>(iv) Records demonstrating adequate budget control, in accordance with 2 CFR part 200, including evidence of periodic account reconciliations.
</P>
<P>(4) <I>Program administration records.</I> (i) Written policies, procedures, and systems, including a system for assessing risk of activities and projects, and a system for monitoring entities consistent with this section, to ensure that the requirements of this part are met.
</P>
<P>(ii) Records demonstrating compliance with the applicable uniform administrative requirements required by § 93.405.
</P>
<P>(iii) Records documenting required inspections, monitoring reviews and audits, and the resolution of any findings or concerns.
</P>
<P>(5) <I>Records concerning other Federal requirements.</I> (i) Equal opportunity and fair housing records, as required under 24 CFR part 121.
</P>
<P>(ii) Data on the extent to which each racial and ethnic group and single-headed households (by gender of household head) have applied for, participated in, or benefited from, any program or activity funded in whole or in part with HTF funds.
</P>
<P>(iii) Records demonstrating compliance with the affirmative marketing procedures and requirements of § 93.350.
</P>
<P>(iv) Records demonstrating compliance with the lead-based paint requirements of 24 CFR part 35, subparts A, B, J, K, M, and R.
</P>
<P>(v) Records demonstrating compliance with requirements of § 93.352 regarding displacement, relocation, and real property acquisition.
</P>
<P>(vi) Records supporting exceptions to the conflict-of-interest prohibition pursuant to § 93.353.
</P>
<P>(vii) Debarment and suspension certifications required by 24 CFR5.105(c) and 2 CFR part 2424.
</P>
<P>(viii) Records demonstrating compliance with § 93.354.
</P>
<P>(ix) Records demonstrating compliance with 2 CFR 200.321 regarding the grantee's activities related to minority business enterprise (MBE) and women's business enterprise (WBE).
</P>
<P>(x) Documentation on emergency transfers requested under 24 CFR 5.2005(e) and § 93.356 pertaining to victims of domestic violence, dating violence, sexual assault, or stalking, including data on the outcomes of such requests.
</P>
<P>(xi) Documentation of actions undertaken to meet the requirements of 24 CFR part 75, which implements section 3 of the Housing and Urban Development Act of 1968, as amended (12 U.S.C. 1701u).
</P>
<P>(b) <I>Period of record retention.</I> All records pertaining to each fiscal year of HTF funds must be retained in a secure location for the most recent 5-year period, except as provided below.
</P>
<P>(1) For rental housing projects, records may be retained for 5 years after the project completion date, except that records of individual tenant income verifications, project rents, and project inspections must be retained for the most recent 5-year period, until 5 years after the affordability period terminates.
</P>
<P>(2) For homeownership housing projects, records may be retained for 5 years after the project completion date, except for documents imposing resale or recapture restrictions that must be retained for 5 years after the affordability period terminates.
</P>
<P>(3) Written agreements must be retained for 5 years after the agreement terminates.
</P>
<P>(4) Records covering displacements and acquisitions must be retained for 5 years after the date by which all persons displaced from the property and all persons whose property is acquired for the project have received the final payment to which they are entitled, in accordance with § 93.352.
</P>
<P>(5) If any litigation, claim, negotiation, audit, monitoring, inspection, or other action has been started before the expiration of the required record retention period, records must be retained until completion of the action and resolution of all issues that arise from it, or until the end of the required period, whichever is later.
</P>
<P>(c) <I>Access to records.</I> (1) The grantee must provide citizens, public agencies, and other interested parties with reasonable access to records, consistent with applicable State and local laws regarding privacy and obligations of confidentiality.
</P>
<P>(2) HUD and the Comptroller General of the United States, and any of their representatives, have the right of access to any pertinent books, documents, papers, or other records of the grantee, subgrantees, and recipients, to make audits, examinations, excerpts, and transcripts.
</P>
<CITA TYPE="N">[80 FR 5220, Jan. 30, 2015, as amended at 81 FR 80805, Nov. 16, 2016; 85 FR 61567, Sept. 29, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 93.408" NODE="24:1.1.1.1.42.9.67.9" TYPE="SECTION">
<HEAD>§ 93.408   Performance reports.</HEAD>
<P>Each grantee must develop and maintain a system to track the use of its HTF funds, and submit annual performance and management reports on its HTF program in accordance with 24 CFR 91.520. HUD will make the performance and management reports publicly available.


</P>
</DIV8>

</DIV6>


<DIV6 N="J" NODE="24:1.1.1.1.42.10" TYPE="SUBPART">
<HEAD>Subpart J—Performance Reviews and Sanctions</HEAD>


<DIV8 N="§ 93.450" NODE="24:1.1.1.1.42.10.67.1" TYPE="SECTION">
<HEAD>§ 93.450   Accountability of recipients.</HEAD>
<P>The grantee shall review each recipient to determine compliance with the requirements of this part and the terms of the written agreement in accordance with the grantee's policies, procedures, and systems established pursuant to § 93.404(a).
</P>
<P>(a) <I>Misuse of funds</I>—(1) <I>Reimbursement requirement.</I> If a recipient of HTF assistance is determined to have used HTF funds in a manner that is materially in violation of the requirements of this part or any requirements or conditions under which the funds were provided, the grantee must require that, within 12 months after the determination of such misuse, the recipient reimburse the grantee for such misused amounts and return to the grantee any such amounts that remain unused or uncommitted for use. The reimbursement is in addition to any other remedies that may be available under law.
</P>
<P>(2) <I>Determination.</I> The grantee or HUD may make the determination, provided that:
</P>
<P>(i) The grantee provides notification and opportunity for discretionary review to HUD; and
</P>
<P>(ii) HUD does not subsequently reverse the determination.
</P>
<P>(b) <I>Reduction for failure to obtain return of misused funds.</I> (1) If, in any year, a grantee fails to obtain reimbursement or return of the full amount required to be reimbursed or returned to the grantee during the year, the amount of the grant for the grantee for the succeeding year will be reduced by the amount by which the amounts required to be reimbursed or returned exceed the amount actually reimbursed or returned.
</P>
<P>(2) In any case in which a failure to obtain reimbursement or return occurs during a year immediately preceding a year in which HTF grants will not be made, the grantee shall pay to HUD, for reallocation among the other grantees, an amount equal to the amount of the reduction for the entity that would otherwise apply.


</P>
</DIV8>


<DIV8 N="§ 93.451" NODE="24:1.1.1.1.42.10.67.2" TYPE="SECTION">
<HEAD>§ 93.451   Performance reviews.</HEAD>
<P>(a) <I>General.</I> HUD will review the performance of each grantee in carrying out its responsibilities under this part whenever determined necessary by HUD, but at least annually. In conducting performance reviews, HUD will rely primarily on information obtained from the grantee's records and reports, findings from onsite monitoring, audit reports, and information generated from the disbursement and information system established by HUD. Where applicable, HUD may also consider relevant information pertaining to a grantee's performance gained from other sources, including citizen comments, complaint determinations, and litigation. Reviews to determine compliance with specific requirements of this part will be conducted as necessary, with or without prior notice to the grantee. Onsite comprehensive performance reviews under the standards in paragraph (b) of this section will be conducted after prior notice to the grantee.
</P>
<P>(b) <I>Standards for comprehensive performance review.</I> A grantee's performance will be comprehensively reviewed periodically, as prescribed by HUD, to determine whether the grantee has committed and expended the HTF funds as required by § 93.400; has met the requirements of this part, particularly eligible activities, income targeting, affordability, and property standards; has awarded the funds in accordance with its HTF allocation plan and requirements of this part; has reviewed its subgrantees and recipients to determine whether they have satisfied the requirements of this part and the terms of their written agreements; and has met its performance measures in its consolidated plan.


</P>
</DIV8>


<DIV8 N="§ 93.452" NODE="24:1.1.1.1.42.10.67.3" TYPE="SECTION">
<HEAD>§ 93.452   Corrective and remedial actions.</HEAD>
<P>(a) <I>General.</I> HUD will use the procedures in this section in conducting the performance review as provided in § 93.451 and in taking corrective and remedial actions.
</P>
<P>(b) <I>Performance review.</I> (1) If HUD determines preliminarily that the grantee has not met a requirement of this part, the grantee will be given notice of this determination and an opportunity to demonstrate, within the time prescribed by HUD (not to exceed 30 calendar days) and on the basis of substantial facts and data, that it has done so.
</P>
<P>(2) If the grantee fails to demonstrate to HUD's satisfaction that it has met the requirement, HUD will take corrective or remedial action in accordance with this section or § 93.453.
</P>
<P>(c) <I>Corrective and remedial actions.</I> Corrective or remedial actions for a performance deficiency (failure to meet a provision of this part) will be designed to prevent a continuation of the deficiency; mitigate, to the extent possible, its adverse effects or consequences; and prevent its recurrence.
</P>
<P>(1) HUD may instruct the grantee to submit and comply with proposals for action to correct, mitigate, and prevent a performance deficiency, including:
</P>
<P>(i) Preparing and following a schedule of actions for carrying out the affected activities, consisting of schedules, timetables, and milestones necessary to implement the affected activities;
</P>
<P>(ii) Establishing and following a management plan that assigns responsibilities for carrying out the remedial actions;
</P>
<P>(iii) Canceling or revising activities likely to be affected by the performance deficiency, before expending HTF funds for the activities;
</P>
<P>(iv) Reprogramming HTF funds that have not yet been expended from affected activities to other eligible activities;
</P>
<P>(v) Reimbursing its HTF account in any amount not used in accordance with the requirements of this part;
</P>
<P>(vi) Suspending disbursement of HTF funds for affected activities; and
</P>
<P>(vii) Establishing procedures to ensure compliance with HTF requirements;
</P>
<P>(2) HUD may also change the method of payment from an advance to reimbursement basis and may require supporting documentation to be submitted for HUD review for each payment request before payment is made; determine the grantee to be high risk and impose special conditions or restrictions on the allocation in accordance with 2 CFR 200.207 or 200.338; and take other remedies that may be legally available.


</P>
</DIV8>


<DIV8 N="§ 93.453" NODE="24:1.1.1.1.42.10.67.4" TYPE="SECTION">
<HEAD>§ 93.453   Notice and opportunity for hearing; sanctions.</HEAD>
<P>(a) If HUD finds after reasonable notice and opportunity for hearing that a grantee has substantially failed to comply with any provision of this part, and until HUD is satisfied that there is no longer any such failure to comply:
</P>
<P>(1) HUD shall reduce the funds in the grantee's HTF account by the amount of any expenditures that were not in accordance with the requirements of this part or require the grantee to repay to HUD any amount of the HTF grant that was not used in accordance with the requirements of this part; and
</P>
<P>(2) HUD may do one or more of the following:
</P>
<P>(i) Prevent withdrawals from the grantee's HTF account for activities affected by the failure to comply;
</P>
<P>(ii) Restrict the grantee's activities under this part to activities or recipients not affected by the failure to comply;
</P>
<P>(iii) Remove the State from participation in allocations or reallocations of funds made available under §§ 93.50 through 93.54 of this part; or
</P>
<P>(iv) Terminate any HTF assistance to the grantee. HUD may, on due notice, suspend payments at any time after the issuance of a notice of opportunity for hearing pursuant to paragraph (a) of this section, pending such hearing and a final decision, to the extent that HUD determines such action to be necessary to preclude the further expenditure of funds for activities affected by the failure to comply.
</P>
<P>(b) <I>Proceedings.</I> When HUD proposes to take action pursuant to this section, the respondent in the proceedings will be the grantee. Proceedings will be conducted in accordance with 24 CFR part 26.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="94-99" NODE="24:1.1.1.1.43" TYPE="PART">
<HEAD>PARTS 94-99 [RESERVED]
</HEAD>
</DIV5>


<DIV5 N="" NODE="24:1.1.1.1.44" TYPE="PART">
<HEAD> 


</HEAD>

<DIV9 N="" NODE="24:1.1.1.1.44.0.67.1.10" TYPE="APPENDIX">
<HEAD>Appendixes A-C to Subtitle A [Reserved]


</HEAD>
</DIV9>

</DIV5>

</DIV2>

<DIV2 N="Subtitle B" NODE="24:1.2" TYPE="SUBTITLE">
<HEAD>Subtitle B—Regulations Relating to Housing and Urban Development 


</HEAD>

<DIV3 N="I" NODE="24:1.2.1" TYPE="CHAPTER">

<HEAD> CHAPTER I—OFFICE OF ASSISTANT SECRETARY FOR EQUAL OPPORTUNITY, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT</HEAD>

<DIV5 N="100" NODE="24:1.2.1.1.1" TYPE="PART">
<HEAD>PART 100—DISCRIMINATORY CONDUCT UNDER THE FAIR HOUSING ACT 


</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d), 3600-3620. 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>54 FR 3283, Jan. 23, 1989, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:1.2.1.1.1.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 100.1" NODE="24:1.2.1.1.1.1.67.1" TYPE="SECTION">
<HEAD>§ 100.1   Authority.</HEAD>
<P>This regulation is issued under the authority of the Secretary of Housing and Urban Development to administer and enforce title VIII of the Civil Rights Act of 1968, as amended by the Fair Housing Amendments Act of 1988 (the Fair Housing Act). 


</P>
</DIV8>


<DIV8 N="§ 100.5" NODE="24:1.2.1.1.1.1.67.2" TYPE="SECTION">
<HEAD>§ 100.5   Scope.</HEAD>
<P>(a) It is the policy of the United States to provide, within constitutional limitations, for fair housing throughout the United States. No person shall be subjected to discrimination because of race, color, religion, sex, handicap, familial status, or national origin in the sale, rental, or advertising of dwellings, in the provision of brokerage services, or in the availability of residential real estate-related transactions. 


</P>
<P>(b) This part provides the Department's interpretation of the coverage of the Fair Housing Act regarding discrimination related to the sale or rental of dwellings, the provision of services in connection therewith, and the availability of residential real estate-related transactions. The illustrations of unlawful housing discrimination in this part may be established by a practice's discriminatory effect, even if not motivated by discriminatory intent, consistent with the standards outlined in §  100.500.
</P>
<P>(c) Nothing in this part relieves persons participating in a Federal or Federally-assisted program or activity from other requirements applicable to buildings and dwellings. 
</P>
<CITA TYPE="N">[54 FR 3283, Jan. 23, 1989, as amended at 78 FR 11481, Feb. 15, 2013; 85 FR 60332, Sept. 24, 2020; 88 FR 19500, Mar. 31, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 100.7" NODE="24:1.2.1.1.1.1.67.3" TYPE="SECTION">
<HEAD>§ 100.7   Liability for discriminatory housing practices.</HEAD>
<P>(a) <I>Direct liability.</I> (1) A person is directly liable for:
</P>
<P>(i) The person's own conduct that results in a discriminatory housing practice.
</P>
<P>(ii) Failing to take prompt action to correct and end a discriminatory housing practice by that person's employee or agent, where the person knew or should have known of the discriminatory conduct.
</P>
<P>(iii) Failing to take prompt action to correct and end a discriminatory housing practice by a third-party, where the person knew or should have known of the discriminatory conduct and had the power to correct it. The power to take prompt action to correct and end a discriminatory housing practice by a third-party depends upon the extent of the person's control or any other legal responsibility the person may have with respect to the conduct of such third-party.
</P>
<P>(2) For purposes of determining liability under paragraphs (a)(1)(ii) and (iii) of this section, prompt action to correct and end the discriminatory housing practice may not include any action that penalizes or harms the aggrieved person, such as eviction of the aggrieved person.
</P>
<P>(b) <I>Vicarious liability.</I> A person is vicariously liable for a discriminatory housing practice by the person's agent or employee, regardless of whether the person knew or should have known of the conduct that resulted in a discriminatory housing practice, consistent with agency law.
</P>
<CITA TYPE="N">[81 FR 63074, Sept. 14, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 100.10" NODE="24:1.2.1.1.1.1.67.4" TYPE="SECTION">
<HEAD>§ 100.10   Exemptions.</HEAD>
<P>(a) This part does not: 
</P>
<P>(1) Prohibit a religious organization, association, or society, or any nonprofit institution or organization operated, supervised or controlled by or in conjunction with a religious organization, association, or society, from limiting the sale, rental or occupancy of dwellings which it owns or operates for other than a commercial purpose to persons of the same religion, or from giving preference to such persons, unless membership in such religion is restricted because of race, color, or national origin; 
</P>
<P>(2) Prohibit a private club, not in fact open to the public, which, incident to its primary purpose or purposes, provides lodgings which it owns or operates for other than a commercial purpose, from limiting the rental or occupancy of such lodgings to its members or from giving preference to its members; 
</P>
<P>(3) Limit the applicability of any reasonable local, State or Federal restrictions regarding the maximum number of occupants permitted to occupy a dwelling; or 
</P>
<P>(4) Prohibit conduct against a person because such person has been convicted by any court of competent jurisdiction of the illegal manufacture or distribution of a controlled substance as defined in section 102 of the Controlled Substances Act (21 U.S.C. 802). 
</P>
<P>(b) Nothing in this part regarding discrimination based on familial status applies with respect to housing for older persons as defined in subpart E of this part. 
</P>
<P>(c) Nothing in this part, other than the prohibitions against discriminatory advertising, applies to: 
</P>
<P>(1) The sale or rental of any single family house by an owner, provided the following conditions are met: 
</P>
<P>(i) The owner does not own or have any interest in more than three single family houses at any one time. 
</P>
<P>(ii) The house is sold or rented without the use of a real estate broker, agent or salesperson or the facilities of any person in the business of selling or renting dwellings. If the owner selling the house does not reside in it at the time of the sale or was not the most recent resident of the house prior to such sale, the exemption in this paragraph (c)(1) of this section applies to only one such sale in any 24-month period. 
</P>
<P>(2) Rooms or units in dwellings containing living quarters occupied or intended to be occupied by no more than four families living independently of each other, if the owner actually maintains and occupies one of such living quarters as his or her residence. 


</P>
</DIV8>


<DIV8 N="§ 100.20" NODE="24:1.2.1.1.1.1.67.5" TYPE="SECTION">
<HEAD>§ 100.20   Definitions.</HEAD>
<P>The terms Department, Fair Housing Act, and Secretary are defined in 24 CFR part 5. 
</P>
<P><I>Aggrieved person</I> includes any person who— 
</P>
<P>(a) Claims to have been injured by a discriminatory housing practice; or 
</P>
<P>(b) Believes that such person will be injured by a discriminatory housing practice that is about to occur. 
</P>
<P><I>Broker</I> or <I>Agent</I> includes any person authorized to perform an action on behalf of another person regarding any matter related to the sale or rental of dwellings, including offers, solicitations or contracts and the administration of matters regarding such offers, solicitations or contracts or any residential real estate-related transactions. 
</P>
<P><I>Discriminatory housing practice</I> means an act that is unlawful under section 804, 805, 806, or 818 of the Fair Housing Act.
</P>
<P><I>Dwelling</I> means any building, structure or portion thereof which is occupied as, or designed or intended for occupancy as, a residence by one or more families, and any vacant land which is offered for sale or lease for the construction or location thereon of any such building, structure or portion thereof. 
</P>
<P><I>Familial status</I> means one or more individuals (who have not attained the age of 18 years) being domiciled with— 
</P>
<P>(a) A parent or another person having legal custody of such individual or individuals; or 
</P>
<P>(b) The designee of such parent or other person having such custody, with the written permission of such parent or other person.
</P>
<FP>The protections afforded against discrimination on the basis of familial status shall apply to any person who is pregnant or is in the process of securing legal custody of any individual who has not attained the age of 18 years.
</FP>
<P><I>Handicap</I> is defined in § 100.201. 
</P>
<P><I>Person</I> includes one or more individuals, corporations, partnerships, associations, labor organizations, legal representatives, mutual companies, joint-stock companies, trusts, unincorporated organizations, trustees, trustees in cases under title 11 U.S.C., receivers, and fiduciaries. 
</P>
<P><I>Person in the business of selling or renting dwellings</I> means any person who: 
</P>
<P>(a) Within the preceding twelve months, has participated as principal in three or more transactions involving the sale or rental of any dwelling or any interest therein; 
</P>
<P>(b) Within the preceding twelve months, has participated as agent, other than in the sale of his or her own personal residence, in providing sales or rental facilities or sales or rental services in two or more transactions involving the sale or rental of any dwelling or any interest therein; or 
</P>
<P>(c) Is the owner of any dwelling designed or intended for occupancy by, or occupied by, five or more families. 
</P>
<P><I>State</I> means any of the several states, the District of Columbia, the Commonwealth of Puerto Rico, or any of the territories and possessions of the United States. 
</P>
<CITA TYPE="N">[54 FR 3283, Jan. 23, 1989, as amended at 61 FR 5205, Feb. 9, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.2.1.1.1.2" TYPE="SUBPART">
<HEAD>Subpart B—Discriminatory Housing Practices</HEAD>


<DIV8 N="§ 100.50" NODE="24:1.2.1.1.1.2.67.1" TYPE="SECTION">
<HEAD>§ 100.50   Real estate practices prohibited.</HEAD>
<P>(a) This subpart provides the Department's interpretation of conduct that is unlawful housing discrimination under section 804 and section 806 of the Fair Housing Act. In general the prohibited actions are set forth under sections of this subpart which are most applicable to the discriminatory conduct described. However, an action illustrated in one section can constitute a violation under sections in the subpart. For example, the conduct described in § 100.60(b)(3) and (4) would constitute a violation of § 100.65(a) as well as § 100.60(a). 
</P>
<P>(b) It shall be unlawful to: 
</P>
<P>(1) Refuse to sell or rent a dwelling after a <I>bona fide</I> offer has been made, or to refuse to negotiate for the sale or rental of a dwelling because of race, color, religion, sex, familial status, or national origin, or to discriminate in the sale or rental of a dwelling because of handicap. 
</P>
<P>(2) Discriminate in the terms, conditions or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection with sales or rentals, because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(3) Engage in any conduct relating to the provision of housing which otherwise makes unavailable or denies dwellings to persons because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(4) Make, print or publish, or cause to be made, printed or published, any notice, statement or advertisement with respect to the sale or rental of a dwelling that indicates any preference, limitation or discrimination because of race, color, religion, sex, handicap, familial status, or national origin, or an intention to make any such preference, limitation or discrimination. 
</P>
<P>(5) Represent to any person because of race, color, religion, sex, handicap, familial status, or national origin that a dwelling is not available for sale or rental when such dwelling is in fact available. 
</P>
<P>(6) Engage in blockbusting practices in connection with the sale or rental of dwellings because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(7) Deny access to or membership or participation in, or to discriminate against any person in his or her access to or membership or participation in, any multiple-listing service, real estate brokers' association, or other service organization or facility relating to the business of selling or renting a dwelling or in the terms or conditions or membership or participation, because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(c) The application of the Fair Housing Act with respect to persons with handicaps is discussed in subpart D of this part. 


</P>
</DIV8>


<DIV8 N="§ 100.60" NODE="24:1.2.1.1.1.2.67.2" TYPE="SECTION">
<HEAD>§ 100.60   Unlawful refusal to sell or rent or to negotiate for the sale or rental.</HEAD>
<P>(a) It shall be unlawful for a person to refuse to sell or rent a dwelling to a person who has made a <I>bona fide</I> offer, because of race, color, religion, sex, familial status, or national origin or to refuse to negotiate with a person for the sale or rental of a dwelling because of race, color, religion, sex, familial status, or national origin, or to discriminate against any person in the sale or rental of a dwelling because of handicap. 
</P>
<P>(b) Prohibited actions under this section include, but are not limited to:
</P>
<P>(1) Failing to accept or consider a <I>bona fide</I> offer because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(2) Refusing to sell or rent a dwelling to, or to negotiate for the sale or rental of a dwelling with, any person because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(3) Imposing different sales prices or rental charges for the sale or rental of a dwelling upon any person because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(4) Using different qualification criteria or applications, or sale or rental standards or procedures, such as income standards, application requirements, application fees, credit analysis or sale or rental approval procedures or other requirements, because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(5) Evicting tenants because of their race, color, religion, sex, handicap, familial status, or national origin or because of the race, color, religion, sex, handicap, familial status, or national origin of a tenant's guest. 
</P>
<P>(6) Conditioning the availability of a dwelling, including the price, qualification criteria, or standards or procedures for securing the dwelling, on a person's response to harassment because of race, color, religion, sex, handicap, familial status, or national origin.
</P>
<P>(7) Subjecting a person to harassment because of race, color, religion, sex, handicap, familial status, or national origin that causes the person to vacate a dwelling or abandon efforts to secure the dwelling.
</P>
<CITA TYPE="N">[54 FR 3283, Jan. 23, 1989, as amended at 81 FR 63074, Sept. 14, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 100.65" NODE="24:1.2.1.1.1.2.67.3" TYPE="SECTION">
<HEAD>§ 100.65   Discrimination in terms, conditions and privileges and in services and facilities.</HEAD>
<P>(a) It shall be unlawful, because of race, color, religion, sex, handicap, familial status, or national origin, to impose different terms, conditions or privileges relating to the sale or rental of a dwelling or to deny or limit services or facilities in connection with the sale or rental of a dwelling. 
</P>
<P>(b) Prohibited actions under this section include, but are not limited to:
</P>
<P>(1) Using different provisions in leases or contracts of sale, such as those relating to rental charges, security deposits and the terms of a lease and those relating to down payment and closing requirements, because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(2) Failing or delaying maintenance or repairs of sale or rental dwellings because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(3) Failing to process an offer for the sale or rental of a dwelling or to communicate an offer accurately because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(4) Limiting the use of privileges, services or facilities associated with a dwelling because of race, color, religion, sex, handicap, familial status, or national origin of an owner, tenant or a person associated with him or her. 
</P>
<P>(5) Denying or limiting services or facilities in connection with the sale or rental of a dwelling, because a person failed or refused to provide sexual favors. 
</P>
<P>(6) Conditioning the terms, conditions, or privileges relating to the sale or rental of a dwelling, or denying or limiting the services or facilities in connection therewith, on a person's response to harassment because of race, color, religion, sex, handicap, familial status, or national origin.
</P>
<P>(7) Subjecting a person to harassment because of race, color, religion, sex, handicap, familial status, or national origin that has the effect of imposing different terms, conditions, or privileges relating to the sale or rental of a dwelling or denying or limiting services or facilities in connection with the sale or rental of a dwelling.
</P>
<CITA TYPE="N">[54 FR 3283, Jan. 23, 1989, as amended at 81 FR 63074, Sept. 14, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 100.70" NODE="24:1.2.1.1.1.2.67.4" TYPE="SECTION">
<HEAD>§ 100.70   Other prohibited sale and rental conduct.</HEAD>
<P>(a) It shall be unlawful, because of race, color, religion, sex, handicap, familial status, or national origin, to restrict or attempt to restrict the choices of a person by word or conduct in connection with seeking, negotiating for, buying or renting a dwelling so as to perpetuate, or tend to perpetuate, segregated housing patterns, or to discourage or obstruct choices in a community, neighborhood or development. 
</P>
<P>(b) It shall be unlawful, because of race, color, religion, sex, handicap, familial status, or national origin, to engage in any conduct relating to the provision of housing or of services and facilities in connection therewith that otherwise makes unavailable or denies dwellings to persons.
</P>
<P>(c) Prohibited actions under paragraph (a) of this section, which are generally referred to as unlawful steering practices, include, but are not limited to:
</P>
<P>(1) Discouraging any person from inspecting, purchasing or renting a dwelling because of race, color, religion, sex, handicap, familial status, or national origin, or because of the race, color, religion, sex, handicap, familial status, or national origin of persons in a community, neighborhood or development. 
</P>
<P>(2) Discouraging the purchase or rental of a dwelling because of race, color, religion, sex, handicap, familial status, or national origin, by exaggerating drawbacks or failing to inform any person of desirable features of a dwelling or of a community, neighborhood, or development. 
</P>
<P>(3) Communicating to any prospective purchaser that he or she would not be comfortable or compatible with existing residents of a community, neighborhood or development because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(4) Assigning any person to a particular section of a community, neighborhood or development, or to a particular floor of a building, because of race, color, religion, sex, handicap, familial status, or national origin.
</P>
<P>(d) Prohibited activities relating to dwellings under paragraph (b) of this section include, but are not limited to: 
</P>
<P>(1) Discharging or taking other adverse action against an employee, broker or agent because he or she refused to participate in a discriminatory housing practice. 
</P>
<P>(2) Employing codes or other devices to segregate or reject applicants, purchasers or renters, refusing to take or to show listings of dwellings in certain areas because of race, color, religion, sex, handicap, familial status, or national origin, or refusing to deal with certain brokers or agents because they or one or more of their clients are of a particular race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(3) Denying or delaying the processing of an application made by a purchaser or renter or refusing to approve such a person for occupancy in a cooperative or condominium dwelling because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(4) Refusing to provide municipal services or property or hazard insurance for dwellings or providing such services or insurance differently because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(5) Enacting or implementing land-use rules, ordinances, procedures, building codes, permitting rules, policies, or requirements that restrict or deny housing opportunities or otherwise make unavailable or deny dwellings to persons because of race, color, religion, sex, handicap, familial status, or national origin.
</P>
<CITA TYPE="N">[54 FR 3283, Jan. 23, 1989, as amended at 78 FR 11481, Feb. 15, 2013; 85 FR 60332, Sept. 24, 2020; 85 FR 64025, Oct. 9, 2020; 88 FR 19500, Mar. 31, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 100.75" NODE="24:1.2.1.1.1.2.67.5" TYPE="SECTION">
<HEAD>§ 100.75   Discriminatory advertisements, statements and notices.</HEAD>
<P>(a) It shall be unlawful to make, print or publish, or cause to be made, printed or published, any notice, statement or advertisement with respect to the sale or rental of a dwelling which indicates any preference, limitation or discrimination because of race, color, religion, sex, handicap, familial status, or national origin, or an intention to make any such preference, limitation or discrimination. 
</P>
<P>(b) The prohibitions in this section shall apply to all written or oral notices or statements by a person engaged in the sale or rental of a dwelling. Written notices and statements include any applications, flyers, brochures, deeds, signs, banners, posters, billboards or any documents used with respect to the sale or rental of a dwelling. 
</P>
<P>(c) Discriminatory notices, statements and advertisements include, but are not limited to: 
</P>
<P>(1) Using words, phrases, photographs, illustrations, symbols or forms which convey that dwellings are available or not available to a particular group of persons because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(2) Expressing to agents, brokers, employees, prospective sellers or renters or any other persons a preference for or limitation on any purchaser or renter because of race, color, religion, sex, handicap, familial status, or national origin of such persons. 
</P>
<P>(3) Selecting media or locations for advertising the sale or rental of dwellings which deny particular segments of the housing market information about housing opportunities because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(4) Refusing to publish advertising for the sale or rental of dwellings or requiring different charges or terms for such advertising because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(d) 24 CFR part 109 provides information to assist persons to advertise dwellings in a nondiscriminatory manner and describes the matters the Department will review in evaluating compliance with the Fair Housing Act and in investigating complaints alleging discriminatory housing practices involving advertising. 


</P>
</DIV8>


<DIV8 N="§ 100.80" NODE="24:1.2.1.1.1.2.67.6" TYPE="SECTION">
<HEAD>§ 100.80   Discriminatory representations on the availability of dwellings.</HEAD>
<P>(a) It shall be unlawful, because of race, color, religion, sex, handicap, familial status, or national origin, to provide inaccurate or untrue information about the availability of dwellings for sale or rental. 
</P>
<P>(b) Prohibited actions under this section include, but are not limited to: 
</P>
<P>(1) Indicating through words or conduct that a dwelling which is available for inspection, sale, or rental has been sold or rented, because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(2) Representing that covenants or other deed, trust or lease provisions which purport to restrict the sale or rental of dwellings because of race, color, religion, sex, handicap, familial status, or national origin preclude the sale of rental of a dwelling to a person. 
</P>
<P>(3) Enforcing covenants or other deed, trust, or lease provisions which preclude the sale or rental of a dwelling to any person because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(4) Limiting information, by word or conduct, regarding suitably priced dwellings available for inspection, sale or rental, because of race, color, religion, sex, handicap, familial status, or national origin.
</P>
<P>(5) Providing false or inaccurate information regarding the availability of a dwelling for sale or rental to any person, including testers, regardless of whether such person is actually seeking housing, because of race, color, religion, sex, handicap, familial status, or national origin.
</P>
<P>(6) Representing to an applicant that a unit is unavailable because of the applicant's response to a request for a sexual favor or other harassment because of race, color, religion, sex, handicap, familial status, or national origin.
</P>
<CITA TYPE="N">[54 FR 3283, Jan. 23, 1989, as amended at 81 FR 63074, Sept. 14, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 100.85" NODE="24:1.2.1.1.1.2.67.7" TYPE="SECTION">
<HEAD>§ 100.85   Blockbusting.</HEAD>
<P>(a) It shall be unlawful, for profit, to induce or attempt to induce a person to sell or rent a dwelling by representations regarding the entry or prospective entry into the neighborhood of a person or persons of a particular race, color, religion, sex, familial status, or national origin or with a handicap.
</P>
<P>(b) In establishing a discriminatory housing practice under this section it is not necessary that there was in fact profit as long as profit was a factor for engaging in the blockbusting activity.
</P>
<P>(c) Prohibited actions under this section include, but are not limited to:
</P>
<P>(1) Engaging, for profit, in conduct (including uninvited solicitations for listings) which conveys to a person that a neighborhood is undergoing or is about to undergo a change in the race, color, religion, sex, handicap, familial status, or national origin of persons residing in it, in order to encourage the person to offer a dwelling for sale or rental.
</P>
<P>(2) Encouraging, for profit, any person to sell or rent a dwelling through assertions that the entry or prospective entry of persons of a particular race, color, religion, sex, familial status, or national origin, or with handicaps, can or will result in undesirable consequences for the project, neighborhood or community, such as a lowering of property values, an increase in criminal or antisocial behavior, or a decline in the quality of schools or other services or facilities.


</P>
</DIV8>


<DIV8 N="§ 100.90" NODE="24:1.2.1.1.1.2.67.8" TYPE="SECTION">
<HEAD>§ 100.90   Discrimination in the provision of brokerage services.</HEAD>
<P>(a) It shall be unlawful to deny any person access to or membership or participation in any multiple listing service, real estate brokers' organization or other service, organization, or facility relating to the business of selling or renting dwellings, or to discriminate against any person in the terms or conditions of such access, membership or participation, because of race, color, religion, sex, handicap, familial status, or national origin.
</P>
<P>(b) Prohibited actions under this section include, but are not limited to:
</P>
<P>(1) Setting different fees for access to or membership in a multiple listing service because of race, color, religion, sex, handicap, familial status, or national origin.
</P>
<P>(2) Denying or limiting benefits accruing to members in a real estate brokers' organization because of race, color, religion, sex, handicap, familial status, or national origin.
</P>
<P>(3) Imposing different standards or criteria for membership in a real estate sales or rental organization because of race, color, religion, sex, handicap, familial status, or national origin.
</P>
<P>(4) Establishing geographic boundaries or office location or residence requirements for access to or membership or participation in any multiple listing service, real estate brokers' organization or other service, organization or facility relating to the business of selling or renting dwellings, because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(5) Conditioning access to brokerage services on a person's response to harassment because of race, color, religion, sex, handicap, familial status, or national origin.
</P>
<P>(6) Subjecting a person to harassment because of race, color, religion, sex, handicap, familial status, or national origin that has the effect of discouraging or denying access to brokerage services.
</P>
<CITA TYPE="N">[54 FR 3283, Jan. 23, 1989, as amended at 81 FR 63074, Sept. 14, 2016]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:1.2.1.1.1.3" TYPE="SUBPART">
<HEAD>Subpart C—Discrimination in Residential Real Estate-Related Transactions</HEAD>


<DIV8 N="§ 100.110" NODE="24:1.2.1.1.1.3.67.1" TYPE="SECTION">
<HEAD>§ 100.110   Discriminatory practices in residential real estate-related transactions.</HEAD>
<P>(a) This subpart provides the Department's interpretation of the conduct that is unlawful housing discrimination under section 805 of the Fair Housing Act.
</P>
<P>(b) It shall be unlawful for any person or other entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race, color, religion, sex, handicap, familial status, or national origin.


</P>
</DIV8>


<DIV8 N="§ 100.115" NODE="24:1.2.1.1.1.3.67.2" TYPE="SECTION">
<HEAD>§ 100.115   Residential real estate-related transactions.</HEAD>
<P>The term residential <I>real estate-related transactions</I> means:
</P>
<P>(a) The making or purchasing of loans or providing other financial assistance—
</P>
<P>(1) For purchasing, constructing, improving, repairing or maintaining a dwelling; or
</P>
<P>(2) Secured by residential real estate; or
</P>
<P>(b) The selling, brokering or appraising of residential real property.


</P>
</DIV8>


<DIV8 N="§ 100.120" NODE="24:1.2.1.1.1.3.67.3" TYPE="SECTION">
<HEAD>§ 100.120   Discrimination in the making of loans and in the provision of other financial assistance.</HEAD>
<P>(a) It shall be unlawful for any person or entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available loans or other financial assistance for a dwelling, or which is or is to be secured by a dwelling, because of race, color, religion, sex, handicap, familial status, or national origin.
</P>
<P>(b) Practices prohibited under this section in connection with a residential real estate-related transaction include, but are not limited to:
</P>
<P>(1) Failing or refusing to provide to any person information regarding the availability of loans or other financial assistance, application requirements, procedures or standards for the review and approval of loans or financial assistance, or providing information which is inaccurate or different from that provided others, because of race, color, religion, sex, handicap, familial status, or national origin.
</P>
<P>(2) Providing, failing to provide, or discouraging the receipt of loans or other financial assistance in a manner that discriminates in their denial rate or otherwise discriminates in their availability because of race, color, religion, sex, handicap, familial status, or national origin.
</P>
<P>(3) Conditioning the availability of a loan or other financial assistance on a person's response to harassment because of race, color, religion, sex, handicap, familial status, or national origin.
</P>
<P>(4) Subjecting a person to harassment because of race, color, religion, sex, handicap, familial status, or national origin that affects the availability of a loan or other financial assistance.
</P>
<CITA TYPE="N">[54 FR 3283, Jan. 23, 1989, as amended at 78 FR 11481, Feb. 15, 2013; 81 FR 63074, Sept. 14, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 100.125" NODE="24:1.2.1.1.1.3.67.4" TYPE="SECTION">
<HEAD>§ 100.125   Discrimination in the purchasing of loans.</HEAD>
<P>(a) It shall be unlawful for any person or entity engaged in the purchasing of loans or other debts or securities which support the purchase, construction, improvement, repair or maintenance of a dwelling, or which are secured by residential real estate, to refuse to purchase such loans, debts, or securities, or to impose different terms or conditions for such purchases, because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(b) Unlawful conduct under this section includes, but is not limited to: 
</P>
<P>(1) Purchasing loans or other debts or securities which relate to, or which are secured by dwellings in certain communities or neighborhoods but not in others because of the race, color, religion, sex, handicap, familial status, or national origin of persons in such neighborhoods or communities. 
</P>
<P>(2) Pooling or packaging loans or other debts or securities which relate to, or which are secured by, dwellings differently because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(3) Imposing or using different terms or conditions on the marketing or sale of securities issued on the basis of loans or other debts or securities which relate to, or which are secured by, dwellings because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(c) This section does not prevent consideration, in the purchasing of loans, of factors justified by business necessity, including requirements of Federal law, relating to a transaction's financial security or to protection against default or reduction of the value of the security. Thus, this provision would not preclude considerations employed in normal and prudent transactions, provided that no such factor may in any way relate to race, color, religion, sex, handicap, familial status or national origin. 


</P>
</DIV8>


<DIV8 N="§ 100.130" NODE="24:1.2.1.1.1.3.67.5" TYPE="SECTION">
<HEAD>§ 100.130   Discrimination in the terms and conditions for making available loans or other financial assistance.</HEAD>
<P>(a) It shall be unlawful for any person or entity engaged in the making of loans or in the provision of other financial assistance relating to the purchase, construction, improvement, repair or maintenance of dwellings or which are secured by residential real estate to impose different terms or conditions for the availability of such loans or other financial assistance because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(b) Unlawful conduct under this section includes, but is not limited to: 
</P>
<P>(1) Using different policies, practices or procedures in evaluating or in determining creditworthiness of any person in connection with the provision of any loan or other financial assistance for a dwelling or for any loan or other financial assistance which is secured by residential real estate because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(2) Determining the type of loan or other financial assistance to be provided with respect to a dwelling, or fixing the amount, interest rate, cost, duration or other terms or conditions for a loan or other financial assistance for a dwelling or which is secured by residential real estate, because of race, color, religion, sex, handicap, familial status, or national origin.
</P>
<P>(3) Servicing of loans or other financial assistance with respect to dwellings in a manner that discriminates, or servicing of loans or other financial assistance which are secured by residential real estate in a manner that discriminates, or providing such loans or financial assistance with other terms or conditions that discriminate, because of race, color, religion, sex, handicap, familial status, or national origin.
</P>
<P>(4) Conditioning an aspect of a loan or other financial assistance to be provided with respect to a dwelling, or the terms or conditions thereof, on a person's response to harassment because of race, color, religion, sex, handicap, familial status, or national origin.
</P>
<P>(5) Subjecting a person to harassment because of race, color, religion, sex, handicap, familial status, or national origin that has the effect of imposing different terms or conditions for the availability of such loans or other financial assistance.
</P>
<CITA TYPE="N">[54 FR 3283, Jan. 23, 1989, as amended at 78 FR 11481, Feb. 15, 2013; 81 FR 63074, Sept. 14, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 100.135" NODE="24:1.2.1.1.1.3.67.6" TYPE="SECTION">
<HEAD>§ 100.135   Unlawful practices in the selling, brokering, or appraising of residential real property.</HEAD>
<P>(a) It shall be unlawful for any person or other entity whose business includes engaging in the selling, brokering or appraising of residential real property to discriminate against any person in making available such services, or in the performance of such services, because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(b) For the purposes of this section, the term appraisal means an estimate or opinion of the value of a specified residential real property made in a business context in connection with the sale, rental, financing or refinancing of a dwelling or in connection with any activity that otherwise affects the availability of a residential real estate-related transaction, whether the appraisal is oral or written, or transmitted formally or informally. The appraisal includes all written comments and other documents submitted as support for the estimate or opinion of value. 
</P>
<P>(c) Nothing in this section prohibits a person engaged in the business of making or furnishing appraisals of residential real property from taking into consideration factors other than race, color, religion, sex, handicap, familial status, or national origin.
</P>
<P>(d) Practices which are unlawful under this section include, but are not limited to:
</P>
<P>(1) Using an appraisal of residential real property in connection with the sale, rental, or financing of any dwelling where the person knows or reasonably should know that the appraisal improperly takes into consideration race, color, religion, sex, handicap, familial status, or national origin.
</P>
<P>(2) Conditioning the terms of an appraisal of residential real property in connection with the sale, rental, or financing of a dwelling on a person's response to harassment because of race, color, religion, sex, handicap, familial status, or national origin.
</P>
<CITA TYPE="N">[54 FR 3283, Jan. 23, 1989, as amended at 81 FR 63074, Sept. 14, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 100.140" NODE="24:1.2.1.1.1.3.67.7" TYPE="SECTION">
<HEAD>§ 100.140   General rules.</HEAD>
<P>(a) <I>Voluntary self-testing and correction.</I> The report or results of a self-test a lender voluntarily conducts or authorizes are privileged as provided in this subpart if the lender has taken or is taking appropriate corrective action to address likely violations identified by the self-test. Data collection required by law or any governmental authority (federal, state, or local) is not voluntary. 
</P>
<P>(b) <I>Other privileges.</I> This subpart does not abrogate any evidentiary privilege otherwise provided by law. 
</P>
<CITA TYPE="N">[62 FR 66432, Dec. 18, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 100.141" NODE="24:1.2.1.1.1.3.67.8" TYPE="SECTION">
<HEAD>§ 100.141   Definitions.</HEAD>
<P>As used in this subpart: 
</P>
<P><I>Lender</I> means a person who engages in a residential real estate-related lending transaction. 
</P>
<P><I>Residential real estate-related lending transaction</I> means the making of a loan: 
</P>
<P>(1) For purchasing, constructing, improving, repairing, or maintaining a dwelling; or 
</P>
<P>(2) Secured by residential real estate. 
</P>
<P><I>Self-test</I> means any program, practice or study a lender voluntarily conducts or authorizes which is designed and used specifically to determine the extent or effectiveness of compliance with the Fair Housing Act. The self-test must create data or factual information that is not available and cannot be derived from loan files, application files, or other residential real estate-related lending transaction records. Self-testing includes, but is not limited to, using fictitious credit applicants (testers) or conducting surveys of applicants or customers, nor is it limited to the pre-application stage of loan processing. 
</P>
<CITA TYPE="N">[62 FR 66432, Dec. 18, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 100.142" NODE="24:1.2.1.1.1.3.67.9" TYPE="SECTION">
<HEAD>§ 100.142   Types of information.</HEAD>
<P>(a) The privilege under this subpart covers: 
</P>
<P>(1) The report or results of the self-test; 
</P>
<P>(2) Data or factual information created by the self-test; 
</P>
<P>(3) Workpapers, draft documents and final documents; 
</P>
<P>(4) Analyses, opinions, and conclusions if they directly result from the self-test report or results. 
</P>
<P>(b) The privilege does not cover: 
</P>
<P>(1) Information about whether a lender conducted a self-test, the methodology used or scope of the self-test, the time period covered by the self-test or the dates it was conducted; 
</P>
<P>(2) Loan files and application files, or other residential real estate-related lending transaction records (e.g., property appraisal reports, loan committee meeting minutes or other documents reflecting the basis for a decision to approve or deny a loan application, loan policies or procedures, underwriting standards, compensation records) and information or data derived from such files and records, even if such data has been aggregated, summarized or reorganized to facilitate analysis.
</P>
<CITA TYPE="N">[62 FR 66432, Dec. 18, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 100.143" NODE="24:1.2.1.1.1.3.67.10" TYPE="SECTION">
<HEAD>§ 100.143   Appropriate corrective action.</HEAD>
<P>(a) The report or results of a self-test are privileged as provided in this subpart if the lender has taken or is taking appropriate corrective action to address likely violations identified by the self-test. Appropriate corrective action is required when a self-test shows it is more likely than not that a violation occurred even though no violation was adjudicated formally.
</P>
<P>(b) A lender must take action reasonably likely to remedy the cause and effect of the likely violation and must:
</P>
<P>(1) Identify the policies or practices that are the likely cause of the violation, such as inadequate or improper lending policies, failure to implement established policies, employee conduct, or other causes; and
</P>
<P>(2) Assess the extent and scope of any likely violation, by determining which areas of operation are likely to be affected by those policies and practices, such as stages of the loan application process, types of loans, or the particular branch where the likely violation has occurred. Generally, the scope of the self-test governs the scope of the appropriate corrective action.
</P>
<P>(c) Appropriate corrective action may include both prospective and remedial relief, except that to establish a privilege under this subpart:
</P>
<P>(1) A lender is not required to provide remedial relief to a tester in a self-test;
</P>
<P>(2) A lender is only required to provide remedial relief to an applicant identified by the self-test as one whose rights were more likely than not violated;
</P>
<P>(3) A lender is not required to provide remedial relief to a particular applicant if the statute of limitations applicable to the violation expired before the lender obtained the results of the self-test or the applicant is otherwise ineligible for such relief.
</P>
<P>(d) Depending on the facts involved, appropriate corrective action may include, but is not limited to, one or more of the following:
</P>
<P>(1) If the self-test identifies individuals whose applications were inappropriately processed, offering to extend credit if the applications were improperly denied; compensating such persons for any damages, both out-of-pocket and compensatory;
</P>
<P>(2) Correcting any institutional policies or procedures that may have contributed to the likely violation, and adopting new policies as appropriate;
</P>
<P>(3) Identifying, and then training and/or disciplining the employees involved;
</P>
<P>(4) Developing outreach programs, marketing strategies, or loan products to serve more effectively the segments of the lender's market that may have been affected by the likely violation; and
</P>
<P>(5) Improving audit and oversight systems to avoid a recurrence of the likely violations.
</P>
<P>(e) Determination of appropriate corrective action is fact-based. Not every corrective measure listed in paragraph (d) of this section need be taken for each likely violation.
</P>
<P>(f) Taking appropriate corrective action is not an admission by a lender that a violation occurred.
</P>
<CITA TYPE="N">[62 FR 66432, Dec. 18, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 100.144" NODE="24:1.2.1.1.1.3.67.11" TYPE="SECTION">
<HEAD>§ 100.144   Scope of privilege.</HEAD>
<P>The report or results of a self-test may not be obtained or used by an aggrieved person, complainant, department or agency in any:
</P>
<P>(a) Proceeding or civil action in which a violation of the Fair Housing Act is alleged; or
</P>
<P>(b) Examination or investigation relating to compliance with the Fair Housing Act.
</P>
<CITA TYPE="N">[62 FR 66432, Dec. 18, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 100.145" NODE="24:1.2.1.1.1.3.67.12" TYPE="SECTION">
<HEAD>§ 100.145   Loss of privilege.</HEAD>
<P>(a) The self-test report or results are not privileged under this subpart if the lender or person with lawful access to the report or results:
</P>
<P>(1) Voluntarily discloses any part of the report or results or any other information privileged under this subpart to any aggrieved person, complainant, department, agency, or to the public; or
</P>
<P>(2) Discloses the report or results or any other information privileged under this subpart as a defense to charges a lender violated the Fair Housing Act; or
</P>
<P>(3) Fails or is unable to produce self-test records or information needed to determine whether the privilege applies.
</P>
<P>(b) Disclosures or other actions undertaken to carry out appropriate corrective action do not cause the lender to lose the privilege.
</P>
<CITA TYPE="N">[62 FR 66432, Dec. 18, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 100.146" NODE="24:1.2.1.1.1.3.67.13" TYPE="SECTION">
<HEAD>§ 100.146   Limited use of privileged information.</HEAD>
<P>Notwithstanding § 100.145, the self-test report or results may be obtained and used by an aggrieved person, applicant, department or agency solely to determine a penalty or remedy after the violation of the Fair Housing Act has been adjudicated or admitted. Disclosures for this limited purpose may be used only for the particular proceeding in which the adjudication or admission is made. Information disclosed under this section remains otherwise privileged under this subpart.
</P>
<CITA TYPE="N">[62 FR 66433, Dec. 18, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 100.147" NODE="24:1.2.1.1.1.3.67.14" TYPE="SECTION">
<HEAD>§ 100.147   Adjudication.</HEAD>
<P>An aggrieved person, complainant, department or agency that challenges a privilege asserted under § 100.144 may seek a determination of the existence and application of that privilege in:
</P>
<P>(a) A court of competent jurisdiction; or
</P>
<P>(b) An administrative law proceeding with appropriate jurisdiction.
</P>
<CITA TYPE="N">[62 FR 66433, Dec. 18, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 100.148" NODE="24:1.2.1.1.1.3.67.15" TYPE="SECTION">
<HEAD>§ 100.148   Effective date.</HEAD>
<P>The privilege under this subpart applies to self-tests conducted both before and after January 30, 1998, except that a self-test conducted before January 30, 1998 is not privileged:
</P>
<P>(a) If there was a court action or administrative proceeding before January 30, 1998, including the filing of a complaint alleging a violation of the Fair Housing Act with the Department or a substantially equivalent state or local agency; or
</P>
<P>(b) If any part of the report or results were disclosed before January 30, 1998 to any aggrieved person, complainant, department or agency, or to the general public.
</P>
<CITA TYPE="N">[62 FR 66433, Dec. 18, 1997]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:1.2.1.1.1.4" TYPE="SUBPART">
<HEAD>Subpart D—Prohibition Against Discrimination Because of Handicap</HEAD>


<DIV8 N="§ 100.200" NODE="24:1.2.1.1.1.4.67.1" TYPE="SECTION">
<HEAD>§ 100.200   Purpose.</HEAD>
<P>The purpose of this subpart is to effectuate sections 6 (a) and (b) and 15 of the Fair Housing Amendments Act of 1988. 


</P>
</DIV8>


<DIV8 N="§ 100.201" NODE="24:1.2.1.1.1.4.67.2" TYPE="SECTION">
<HEAD>§ 100.201   Definitions.</HEAD>
<P>As used in this subpart: 
</P>
<P><I>Accessible</I> when used with respect to the public and common use areas of a building containing covered multifamily dwellings, means that the public or common use areas of the building can be approached, entered, and used by individuals with physical disabilities. The phrase “<I>readily accessible to and usable by</I>” is synonymous with accessible. A public or common use area that complies with the appropriate requirements of ICC A117.1-2009, ICC/ANSI A117.1-2003, ICC/ANSI A117.1-1998, CABO/ANSI A117.1-1992, ANSI A117.1-1986 (all incorporated by reference, see § 100.201a) or a comparable standard is deemed “<I>accessible</I>” within the meaning of this paragraph.
</P>
<P><I>Accessible route</I> means a continuous unobstructed path connecting accessible elements and spaces in a building or within a site that can be negotiated by a person with a severe disability using a wheelchair and that is also safe for and usable by people with other disabilities. Interior accessible routes may include corridors, floors, ramps, elevators, and lifts. Exterior accessible routes may include parking access aisles, curb ramps, walks, ramps, and lifts. A route that complies with the appropriate requirements of ICC A117.1-2009, ICC/ANSI A117.1-2003, ICC/ANSI A117.1-1998, CABO/ANSI A117.1-1992, ANSI A117.1-1986 (all incorporated by reference, see § 100.201a) or a comparable standard is an “<I>accessible route</I>” within the meaning of this paragraph.
</P>
<P><I>Building</I> means a structure, facility or portion thereof that contains or serves one or more dwelling units.
</P>
<P><I>Building entrance on an accessible route</I> means an accessible entrance to a building that is connected by an accessible route to public transportation stops, to accessible parking and passenger loading zones, or to public streets or sidewalks, if available. A building entrance that complies with ICC A117.1-2009, ICC/ANSI A117.1-2003, ICC/ANSI A117.1-1998, CABO/ANSI A117.1-1992, ANSI A117.1-1986 (all incorporated by reference, see § 100.201a) or a comparable standard is a “<I>building entrance on an accessible route</I>” within the meaning of this paragraph.
</P>
<P><I>Common use areas</I> means rooms, spaces or elements inside or outside of a building that are made available for the use of residents of a building or the guests thereof. These areas include hallways, lounges, lobbies, laundry rooms, refuse rooms, mail rooms, recreational areas and passageways among and between buildings. 
</P>
<P><I>Controlled substance</I> means any drug or other substance, or immediate precursor included in the definition in section 102 of the Controlled Substances Act (21 U.S.C. 802). 
</P>
<P><I>Covered multifamily dwellings</I> means buildings consisting of 4 or more dwelling units if such buildings have one or more elevators; and ground floor dwelling units in other buildings consisting of 4 or more dwelling units. 
</P>
<P><I>Dwelling unit</I> means a single unit of residence for a family or one or more persons. Examples of dwelling units include: a single family home; an apartment unit within an apartment building; and in other types of dwellings in which sleeping accommodations are provided but toileting or cooking facilities are shared by occupants of more than one room or portion of the dwelling, rooms in which people sleep. Examples of the latter include dormitory rooms and sleeping accommodations in shelters intended for occupancy as a residence for homeless persons. 
</P>
<P><I>Entrance</I> means any access point to a building or portion of a building used by residents for the purpose of entering. 
</P>
<P><I>Exterior</I> means all areas of the premises outside of an individual dwelling unit. 
</P>
<P><I>First occupancy</I> means a building that has never before been used for any purpose. 
</P>
<P><I>Ground floor</I> means a floor of a building with a building entrance on an accessible route. A building may have more than one ground floor. 
</P>
<P><I>Handicap</I> means, with respect to a person, a physical or mental impairment which substantially limits one or more major life activities; a record of such an impairment; or being regarded as having such an impairment. This term does not include current, illegal use of or addiction to a controlled substance. For purposes of this part, an individual shall not be considered to have a handicap solely because that individual is a transvestite. As used in this definition: 
</P>
<P>(a) <I>Physical or mental impairment</I> includes: 
</P>
<P>(1) Any physiological disorder or condition, cosmetic disfigurement, or anatomical loss affecting one or more of the following body systems: Neurological; musculoskeletal; special sense organs; respiratory, including speech organs; cardiovascular; reproductive; digestive; genito-urinary; hemic and lymphatic; skin; and endocrine; or 
</P>
<P>(2) Any mental or psychological disorder, such as mental retardation, organic brain syndrome, emotional or mental illness, and specific learning disabilities. The term <I>physical or mental impairment</I> includes, but is not limited to, such diseases and conditions as orthopedic, visual, speech and hearing impairments, cerebral palsy, autism, epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart disease, diabetes, Human Immunodeficiency Virus infection, mental retardation, emotional illness, drug addiction (other than addiction caused by current, illegal use of a controlled substance) and alcoholism. 
</P>
<P>(b) <I>Major life activities</I> means functions such as caring for one's self, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning and working. 
</P>
<P>(c) <I>Has a record of such an impairment</I> means has a history of, or has been misclassified as having, a mental or physical impairment that substantially limits one or more major life activities. 
</P>
<P>(d) <I>Is regarded as having an impairment</I> means: 
</P>
<P>(1) Has a physical or mental impairment that does not substantially limit one or more major life activities but that is treated by another person as constituting such a limitation; 
</P>
<P>(2) Has a physical or mental impairment that substantially limits one or more major life activities only as a result of the attitudes of other toward such impairment; or 
</P>
<P>(3) Has none of the impairments defined in paragraph (a) of this definition but is treated by another person as having such an impairment. 
</P>
<P><I>Interior</I> means the spaces, parts, components or elements of an individual dwelling unit. 
</P>
<P><I>Modification</I> means any change to the public or common use areas of a building or any change to a dwelling unit. 
</P>
<P><I>Premises</I> means the interior or exterior spaces, parts, components or elements of a building, including individual dwelling units and the public and common use areas of a building. 
</P>
<P><I>Public use areas</I> means interior or exterior rooms or spaces of a building that are made available to the general public. Public use may be provided at a building that is privately or publicly owned. 
</P>
<P><I>Site</I> means a parcel of land bounded by a property line or a designated portion of a public right or way.
</P>
<CITA TYPE="N">[54 FR 3283, Jan. 23, 1989, as amended at 69 FR 18803, Apr. 9, 2004; 73 FR 63615, Oct. 24, 2008; 85 FR 78962, Dec. 8, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 100.201a" NODE="24:1.2.1.1.1.4.67.3" TYPE="SECTION">
<HEAD>§ 100.201a   Incorporation by reference.</HEAD>
<P>(a) Certain material is incorporated by reference into this part with the approval of the Director of the Federal Register under 5 U.S.C. 552(a) and 1 CFR part 51. All approved material is available for inspection at Department of Housing and Urban Development, 451 Seventh Street SW, Room 5240, Washington, DC 20410-0001, telephone number 202-708-2333, and is available from the sources listed below. It is also available for inspection at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, email <I>fedreg.legal@nara.gov</I> or go to <I>www.archives.gov/federal-register/cfr/ibr-locations.html.</I> The phone numbers included in this section may also be reached by persons who are deaf or hard of hearing, or have speech disabilities, by dialing 711 via teletype (TTY).
</P>
<P>(b) American National Standards Institute (ANSI), 25 West 43rd Street, 4th Floor, New York, NY 10036, 212.642.4900, <I>info@ansi.org. https://webstore.ansi.org.</I>
</P>
<P>(1) ANSI A117.1-1986, American National Standard for Buildings and Facilities: Providing Accessibility and Usability for Physically Handicapped People, 1986 edition, into §§ 100.201 and 100.205.
</P>
<P>(2) [Reserved]
</P>
<P>(c) International Code Council (ICC), 500 New Jersey Avenue NW, 6th Floor, Washington, DC 20001-2070, telephone number 1-888-422-7233, <I>http://www.iccsafe.org/e/category.html.</I>
</P>
<P>(1) CABO/ANSI A117.1-1992, American National Standard: Accessible and Usable Buildings and Facilities, 1992 edition, into §§ 100.201 and 100.205.
</P>
<P>(2) ICC/ANSI A117.1-1998, American National Standard: Accessible and Usable Buildings and Facilities, 1998 edition, into §§ 100.201 and 100.205.
</P>
<P>(3) ICC/ANSI A117.1-2003, American National Standard: Accessible and Usable Buildings and Facilities, 2003 edition, into §§ 100.201 and 100.205.
</P>
<P>(4) ICC A117.1-2009, Accessible and Usable Buildings and Facilities, 2009 edition, approved October 20, 2010, into §§ 100.201 and 100.205.
</P>
<CITA TYPE="N">[85 FR 78962, Dec. 8, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 100.202" NODE="24:1.2.1.1.1.4.67.4" TYPE="SECTION">
<HEAD>§ 100.202   General prohibitions against discrimination because of handicap.</HEAD>
<P>(a) It shall be unlawful to discriminate in the sale or rental, or to otherwise make unavailable or deny, a dwelling to any buyer or renter because of a handicap of— 
</P>
<P>(1) That buyer or renter; 
</P>
<P>(2) A person residing in or intending to reside in that dwelling after it is so sold, rented, or made available; or 
</P>
<P>(3) Any person associated with that person. 
</P>
<P>(b) It shall be unlawful to discriminate against any person in the terms, conditions, or privileges of the sale or rental of a dwelling, or in the provision of services or facilities in connection with such dwelling, because of a handicap of— 
</P>
<P>(1) That buyer or renter;
</P>
<P>(2) A person residing in or intending to reside in that dwelling after it is so sold, rented, or made available; or 
</P>
<P>(3) Any person associated with that person. 
</P>
<P>(c) It shall be unlawful to make an inquiry to determine whether an applicant for a dwelling, a person intending to reside in that dwelling after it is so sold, rented or made available, or any person associated with that person, has a handicap or to make inquiry as to the nature or severity of a handicap of such a person. However, this paragraph does not prohibit the following inquiries, provided these inquiries are made of all applicants, whether or not they have handicaps:
</P>
<P>(1) Inquiry into an applicant's ability to meet the requirements of ownership or tenancy;
</P>
<P>(2) Inquiry to determine whether an applicant is qualified for a dwelling available only to persons with handicaps or to persons with a particular type of handicap;
</P>
<P>(3) Inquiry to determine whether an applicant for a dwelling is qualified for a priority available to persons with handicaps or to persons with a particular type of handicap;
</P>
<P>(4) Inquiring whether an applicant for a dwelling is a current illegal abuser or addict of a controlled substance;
</P>
<P>(5) Inquiring whether an applicant has been convicted of the illegal manufacture or distribution of a controlled substance.
</P>
<P>(d) Nothing in this subpart requires that a dwelling be made available to an individual whose tenancy would constitute a direct threat to the health or safety of other individuals or whose tenancy would result in substantial physical damage to the property of others.


</P>
</DIV8>


<DIV8 N="§ 100.203" NODE="24:1.2.1.1.1.4.67.5" TYPE="SECTION">
<HEAD>§ 100.203   Reasonable modifications of existing premises.</HEAD>
<P>(a) It shall be unlawful for any person to refuse to permit, at the expense of a handicapped person, reasonable modifications of existing premises, occupied or to be occupied by a handicapped person, if the proposed modifications may be necessary to afford the handicapped person full enjoyment of the premises of a dwelling. In the case of a rental, the landlord may, where it is reasonable to do so, condition permission for a modification on the renter agreeing to restore the interior of the premises to the condition that existed before the modification, reasonable wear and tear excepted. The landlord may not increase for handicapped persons any customarily required security deposit. However, where it is necessary in order to ensure with reasonable certainty that funds will be available to pay for the restorations at the end of the tenancy, the landlord may negotiate as part of such a restoration agreement a provision requiring that the tenant pay into an interest bearing escrow account, over a reasonable period, a reasonable amount of money not to exceed the cost of the restorations. The interest in any such account shall accrue to the benefit of the tenant.
</P>
<P>(b) A landlord may condition permission for a modification on the renter providing a reasonable description of the proposed modifications as well as reasonable assurances that the work will be done in a workmanlike manner and that any required building permits will be obtained.
</P>
<P>(c) The application of paragraph (a) of this section may be illustrated by the following examples:
</P>
<EXAMPLE>
<HED>Example (1):</HED><PSPACE>A tenant with a handicap asks his or her landlord for permission to install grab bars in the bathroom at his or her own expense. It is necessary to reinforce the walls with blocking between studs in order to affix the grab bars. It is unlawful for the landlord to refuse to permit the tenant, at the tenant's own expense, from making the modifications necessary to add the grab bars. However, the landlord may condition permission for the modification on the tenant agreeing to restore the bathroom to the condition that existed before the modification, reasonable wear and tear excepted. It would be reasonable for the landlord to require the tenant to remove the grab bars at the end of the tenancy. The landlord may also reasonably require that the wall to which the grab bars are to be attached be repaired and restored to its original condition, reasonable wear and tear excepted. However, it would be unreasonable for the landlord to require the tenant to remove the blocking, since the reinforced walls will not interfere in any way with the landlord's or the next tenant's use and enjoyment of the premises and may be needed by some future tenant.</PSPACE></EXAMPLE>
<EXAMPLE>
<HED>Example (2):</HED><PSPACE>An applicant for rental housing has a child who uses a wheelchair. The bathroom door in the dwelling unit is too narrow to permit the wheelchair to pass. The applicant asks the landlord for permission to widen the doorway at the applicant's own expense. It is unlawful for the landlord to refuse to permit the applicant to make the modification. Further, the landlord may <I>not,</I> in usual circumstances, condition permission for the modification on the applicant paying for the doorway to be narrowed at the end of the lease because a wider doorway will not interfere with the landlord's or the next tenant's use and enjoyment of the premises.</PSPACE></EXAMPLE>
</DIV8>


<DIV8 N="§ 100.204" NODE="24:1.2.1.1.1.4.67.6" TYPE="SECTION">
<HEAD>§ 100.204   Reasonable accommodations.</HEAD>
<P>(a) It shall be unlawful for any person to refuse to make reasonable accommodations in rules, policies, practices, or services, when such accommodations may be necessary to afford a handicapped person equal opportunity to use and enjoy a dwelling unit, including public and common use areas.
</P>
<P>(b) The application of this section may be illustrated by the following examples:
</P>
<EXAMPLE>
<HED>Example (1):</HED><PSPACE>A blind applicant for rental housing wants live in a dwelling unit with a seeing eye dog. The building has a <I>no pets</I> policy. It is a violation of § 100.204 for the owner or manager of the apartment complex to refuse to permit the applicant to live in the apartment with a seeing eye dog because, without the seeing eye dog, the blind person will not have an equal opportunity to use and enjoy a dwelling.</PSPACE></EXAMPLE>
<EXAMPLE>
<HED>Example (2):</HED><PSPACE>Progress Gardens is a 300 unit apartment complex with 450 parking spaces which are available to tenants and guests of Progress Gardens on a <I>first come first served</I> basis. John applies for housing in Progress Gardens. John is mobility impaired and is unable to walk more than a short distance and therefore requests that a parking space near his unit be reserved for him so he will not have to walk very far to get to his apartment. It is a violation of § 100.204 for the owner or manager of Progress Gardens to refuse to make this accommodation. Without a reserved space, John might be unable to live in Progress Gardens at all or, when he has to park in a space far from his unit, might have great difficulty getting from his car to his apartment unit. The accommodation therefore is necessary to afford John an equal opportunity to use and enjoy a dwelling. The accommodation is reasonable because it is feasible and practical under the circumstances.</PSPACE></EXAMPLE>
</DIV8>


<DIV8 N="§ 100.205" NODE="24:1.2.1.1.1.4.67.7" TYPE="SECTION">
<HEAD>§ 100.205   Design and construction requirements.</HEAD>
<P>(a) Covered multifamily dwellings for first occupancy after March 13, 1991 shall be designed and constructed to have at least one building entrance on an accessible route unless it is impractical to do so because of the terrain or unusual characteristics of the site. For purposes of this section, a covered multifamily dwelling shall be deemed to be designed and constructed for first occupancy on or before March 13, 1991, if the dwelling is occupied by that date, or if the last building permit or renewal thereof for the dwelling is issued by a State, County or local government on or before June 15, 1990. The burden of establishing impracticality because of terrain or unusual site characteristics is on the person or persons who designed or constructed the housing facility.
</P>
<P>(b) The application of paragraph (a) of this section may be illustrated by the following examples:
</P>
<EXAMPLE>
<HED>Example (1):</HED><PSPACE>A real estate developer plans to construct six covered multifamily dwelling units on a site with a hilly terrain. Because of the terrain, it will be necessary to climb a long and steep stairway in order to enter the dwellings. Since there is no practical way to provide an accessible route to any of the dwellings, one need not be provided.</PSPACE></EXAMPLE>
<EXAMPLE>
<HED>Example (2):</HED><PSPACE>A real estate developer plans to construct a building consisting of 10 units of multifamily housing on a waterfront site that floods frequently. Because of this unusual characteristic of the site, the builder plans to construct the building on stilts. It is customary for housing in the geographic area where the site is located to be built on stilts. The housing may lawfully be constructed on the proposed site on stilts even though this means that there will be no practical way to provide an accessible route to the building entrance.</PSPACE></EXAMPLE>
<EXAMPLE>
<HED>Example (3):</HED><PSPACE>A real estate developer plans to construct a multifamily housing facility on a particular site. The developer would like the facility to be built on the site to contain as many units as possible. Because of the configuration and terrain of the site, it is possible to construct a building with 105 units on the site provided the site does not have an accessible route leading to the building entrance. It is also possible to construct a building on the site with an accessible route leading to the building entrance. However, such a building would have no more than 100 dwelling units. The building to be constructed on the site must have a building entrance on an accessible route because it is not impractical to provide such an entrance because of the terrain or unusual characteristics of the site.</PSPACE></EXAMPLE>
<P>(c) All covered multifamily dwellings for first occupancy after March 13, 1991 with a building entrance on an accessible route shall be designed and constructed in such a manner that—
</P>
<P>(1) The public and common use areas are readily accessible to and usable by handicapped persons;
</P>
<P>(2) All the doors designed to allow passage into and within all premises are sufficiently wide to allow passage by handicapped persons in wheelchairs; and
</P>
<P>(3) All premises within covered multifamily dwelling units contain the following features of adaptable design:
</P>
<P>(i) An accessible route into and through the covered dwelling unit;
</P>
<P>(ii) Light switches, electrical outlets, thermostats, and other environmental controls in accessible locations;
</P>
<P>(iii) Reinforcements in bathroom walls to allow later installation of grab bars around the toilet, tub, shower, stall and shower seat, where such facilities are provided; and
</P>
<P>(iv) Usable kitchens and bathrooms such that an individual in a wheelchair can maneuver about the space.
</P>
<P>(d) The application of paragraph (c) of this section may be illustrated by the following examples:
</P>
<EXAMPLE>
<HED>Example (1):</HED><PSPACE>A developer plans to construct a 100 unit condominium apartment building with one elevator. In accordance with paragraph (a), the building has at least one accessible route leading to an accessible entrance. All 100 units are covered multifamily dwelling units and they all must be designed and constructed so that they comply with the accessibility requirements of paragraph (c) of this section.</PSPACE></EXAMPLE>
<EXAMPLE>
<HED>Example (2):</HED><PSPACE>A developer plans to construct 30 garden apartments in a three story building. The building will not have an elevator. The building will have one accessible entrance which will be on the first floor. Since the building does not have an elevator, only the <I>ground floor</I> units are covered multifamily units. The <I>ground floor</I> is the first floor because that is the floor that has an accessible entrance. All of the dwelling units on the first floor must meet the accessibility requirements of paragraph (c) of this section and must have access to at least one of each type of public or common use area available for residents in the building.</PSPACE></EXAMPLE>
<P>(e)(1) Compliance with the appropriate requirements of ICC A117.1-2009, ICC/ANSI A117.1-2003, ICC/ANSI A117.1-1998, CABO/ANSI A117.1-1992, or ANSI A117.1-1986 (all incorporated by reference, see § 100.201a), or suffices to satisfy the requirements of paragraph (c)(3) of this section.
</P>
<P>(2) The following also qualify as HUD-recognized safe harbors for compliance with the Fair Housing Act design and construction requirements:
</P>
<P>(i) Fair Housing Accessibility Guidelines, March 6, 1991, in conjunction with the Supplement to Notice of Fair Housing Accessibility Guidelines: Questions and Answers About the Guidelines, June 28, 1994;
</P>
<P>(ii) Fair Housing Act Design Manual, published by HUD in 1996, updated in 1998;
</P>
<P>(iii) 2000 ICC Code Requirements for Housing Accessibility (CRHA), published by the International Code Council (ICC), October 2000 (with corrections contained in ICC-issued errata sheet), if adopted without modification and without waiver of any of the provisions;
</P>
<P>(iv) 2000 International Building Code (IBC), as amended by the 2001 Supplement to the International Building Code (2001 IBC Supplement), if adopted without modification and without waiver of any of the provisions intended to address the Fair Housing Act's design and construction requirements;
</P>
<P>(v) 2003 International Building Code (IBC), if adopted without modification and without waiver of any of the provisions intended to address the Fair Housing Act's design and construction requirements, and conditioned upon the ICC publishing and distributing a statement to jurisdictions and past and future purchasers of the 2003 IBC stating, “ICC interprets Section 1104.1, and specifically, the Exception to Section 1104.1, to be read together with Section 1107.4, and that the Code requires an accessible pedestrian route from site arrival points to accessible building entrances, unless site impracticality applies. Exception 1 to Section 1107.4 is not applicable to site arrival points for any Type B dwelling units because site impracticality is addressed under Section 1107.7.”
</P>
<P>(vi) 2006 International Building Code; published by ICC, January 2006, with the January 31, 2007, erratum to correct the text missing from Section 1107.7.5, if adopted without modification and without waiver of any of the provisions intended to address the Fair Housing Act's design and construction requirements, and interpreted in accordance with the relevant 2006 IBC Commentary;
</P>
<P>(vii) 2009 International Building Code, published by ICC (<I>http://www.iccsafe.org</I>), and interpreted in accordance with the relevant 2009 IBC Commentary;
</P>
<P>(viii) 2012 International Building Code, published by ICC (<I>http://www.iccsafe.org</I>), and interpreted in accordance with the relevant 2012 IBC Commentary;
</P>
<P>(ix) 2015 International Building Code, published by ICC (<I>http://www.iccsafe.org</I>), and interpreted in accordance with the relevant 2015 IBC Commentary; and
</P>
<P>(x) 2018 International Building Code, published by ICC (<I>http://www.iccsafe.org</I>), and interpreted in accordance with the relevant 2018 IBC Commentary.
</P>
<P>(3) HUD may propose safe harbors by <E T="04">Federal Register</E> notification that provides for a minimum of 30 days public comment period. HUD will publish a final notification announcing safe harbors after considering public comments. Compliance with safe harbors established by <E T="04">Federal Register</E> notification will satisfy the requirements of paragraphs (a) and (c) of this section.
</P>
<P>(f) Compliance with a duly enacted law of a State or unit of general local government that includes the requirements of paragraphs (a) and (c) of this section satisfies the requirements of paragraphs (a) and (c) of this section. 
</P>
<P>(g)(1) It is the policy of HUD to encourage States and units of general local government to include, in their existing procedures for the review and approval of newly constructed covered multifamily dwellings, determinations as to whether the design and construction of such dwellings are consistent with paragraphs (a) and (c) of this section. 
</P>
<P>(2) A State or unit of general local government may review and approve newly constructed multifamily dwellings for the purpose of making determinations as to whether the requirements of paragraphs (a) and (c) of this section are met. 
</P>
<P>(h) Determinations of compliance or noncompliance by a State or a unit of general local government under paragraph (f) or (g) of this section are not conclusive in enforcement proceedings under the Fair Housing Amendments Act. 
</P>
<P>(i) This subpart does not invalidate or limit any law of a State or political subdivision of a State that requires dwellings to be designed and constructed in a manner that affords handicapped persons greater access than is required by this subpart.
</P>
<CITA TYPE="N">[54 FR 3283, Jan. 23, 1989, as amended at 56 FR 11665, Mar. 20, 1991; 73 FR 63616, Oct. 24, 2008; 85 FR 78963, Dec. 8, 2020] 


</CITA>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:1.2.1.1.1.5" TYPE="SUBPART">
<HEAD>Subpart E—Housing for Older Persons</HEAD>


<DIV8 N="§ 100.300" NODE="24:1.2.1.1.1.5.67.1" TYPE="SECTION">
<HEAD>§ 100.300   Purpose.</HEAD>
<P>The purpose of this subpart is to effectuate the exemption in the Fair Housing Amendments Act of 1988 that relates to housing for older persons. 


</P>
</DIV8>


<DIV8 N="§ 100.301" NODE="24:1.2.1.1.1.5.67.2" TYPE="SECTION">
<HEAD>§ 100.301   Exemption.</HEAD>
<P>(a) The provisions regarding familial status in this part do not apply to housing which satisfies the requirements of § 100.302, § 100.303 or § 100.304. 
</P>
<P>(b) Nothing in this part limits the applicability of any reasonable local, State, or Federal restrictions regarding the maximum number of occupants permitted to occupy a dwelling. 


</P>
</DIV8>


<DIV8 N="§ 100.302" NODE="24:1.2.1.1.1.5.67.3" TYPE="SECTION">
<HEAD>§ 100.302   State and Federal elderly housing programs.</HEAD>
<P>The provisions regarding familial status in this part shall not apply to housing provided under any Federal or State program that the Secretary determines is specifically designed and operated to assist elderly persons, as defined in the State or Federal program. 


</P>
</DIV8>


<DIV8 N="§ 100.303" NODE="24:1.2.1.1.1.5.67.4" TYPE="SECTION">
<HEAD>§ 100.303   62 or over housing.</HEAD>
<P>(a) The provisions regarding familial status in this part shall not apply to housing intended for, and solely occupied by, persons 62 years of age or older. Housing satisfies the requirements of this section even though: 
</P>
<P>(1) There are persons residing in such housing on September 13, 1988 who are under 62 years of age, provided that all new occupants are persons 62 years of age or older;
</P>
<P>(2) There are unoccupied units, provided that such units are reserved for occupancy by persons 62 years of age or over; 
</P>
<P>(3) There are units occupied by employees of the housing (and family members residing in the same unit) who are under 62 years of age provided they perform substantial duties directly related to the management or maintenance of the housing. 
</P>
<P>(b) The following examples illustrate the application of paragraph (a) of this section: 
</P>
<EXAMPLE>
<HED>Example (1):</HED><PSPACE>John and Mary apply for housing at the Vista Heights apartment complex which is an elderly housing complex operated for persons 62 years of age or older. John is 62 years of age. Mary is 59 years of age. If Vista Heights wishes to retain its “62 or over” exemption it must refuse to rent to John and Mary because Mary is under 62 years of age. However, if Vista Heights does rent to John and Mary, it might qualify for the “55 or over” exemption in § 100.304.</PSPACE></EXAMPLE>
<EXAMPLE>
<HED>Example (2):</HED><PSPACE>The Blueberry Hill retirement community has 100 dwelling units. On September 13, 1988, 15 units were vacant and 35 units were occupied with at least one person who is under 62 years of age. The remaining 50 units were occupied by persons who were all 62 years of age or older. Blueberry Hill can qualify for the “62 or over” exemption as long as all units that were occupied after September 13, 1988 are occupied by persons who were 62 years of age or older. The people under 62 in the 35 units previously described need not be required to leave for Blueberry Hill to qualify for the “62 or over” exemption.</PSPACE></EXAMPLE>
</DIV8>


<DIV8 N="§ 100.304" NODE="24:1.2.1.1.1.5.67.5" TYPE="SECTION">
<HEAD>§ 100.304   Housing for persons who are 55 years of age or older.</HEAD>
<P>(a) The provisions regarding familial status in this part shall not apply to housing intended and operated for persons 55 years of age or older. Housing qualifies for this exemption if:
</P>
<P>(1) The alleged violation occurred before December 28, 1995 and the housing community or facility complied with the HUD regulations in effect at the time of the alleged violation; or
</P>
<P>(2) The alleged violation occurred on or after December 28, 1995 and the housing community or facility complies with:
</P>
<P>(i) Section 807(b)(2)(C) (42 U.S.C. 3607(b)) of the Fair Housing Act as amended; and
</P>
<P>(ii) 24 CFR 100.305, 100.306, and 100.307.
</P>
<P>(b) For purposes of this subpart, <I>housing facility or community</I> means any dwelling or group of dwelling units governed by a common set of rules, regulations or restrictions. A portion or portions of a single building shall not constitute a housing facility or community. Examples of a housing facility or community include, but are not limited to:
</P>
<P>(1) A condominium association;
</P>
<P>(2) A cooperative;
</P>
<P>(3) A property governed by a homeowners' or resident association;
</P>
<P>(4) A municipally zoned area;
</P>
<P>(5) A leased property under common private ownership;
</P>
<P>(6) A mobile home park; and
</P>
<P>(7) A manufactured housing community.
</P>
<P>(c) For purposes of this subpart, <I>older person</I> means a person 55 years of age or older.
</P>
<CITA TYPE="N">[64 FR 16329, Apr. 2, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 100.305" NODE="24:1.2.1.1.1.5.67.6" TYPE="SECTION">
<HEAD>§ 100.305   80 percent occupancy.</HEAD>
<P>(a) In order for a housing facility or community to qualify as housing for older persons under § 100.304, at least 80 percent of its occupied units must be occupied by at least one person 55 years of age or older.
</P>
<P>(b) For purposes of this subpart, <I>occupied unit</I> means:
</P>
<P>(1) A dwelling unit that is actually occupied by one or more persons on the date that the exemption is claimed; or
</P>
<P>(2) A temporarily vacant unit, if the primary occupant has resided in the unit during the past year and intends to return on a periodic basis.
</P>
<P>(c) For purposes of this subpart, <I>occupied by at least one person 55 years of age or older</I> means that on the date the exemption for housing designed for persons who are 55 years of age or older is claimed:
</P>
<P>(1) At least one occupant of the dwelling unit is 55 years of age or older; or
</P>
<P>(2) If the dwelling unit is temporarily vacant, at least one of the occupants immediately prior to the date on which the unit was temporarily vacated was 55 years of age or older.
</P>
<P>(d) Newly constructed housing for first occupancy after March 12, 1989 need not comply with the requirements of this section until at least 25 percent of the units are occupied. For purposes of this section, newly constructed housing includes a facility or community that has been wholly unoccupied for at least 90 days prior to re-occupancy due to renovation or rehabilitation.
</P>
<P>(e) Housing satisfies the requirements of this section even though:
</P>
<P>(1) On September 13, 1988, under 80 percent of the occupied units in the housing facility or community were occupied by at least one person 55 years of age or older, provided that at least 80 percent of the units occupied by new occupants after September 13, 1988 are occupied by at least one person 55 years of age or older.
</P>
<P>(2) There are unoccupied units, provided that at least 80 percent of the occupied units are occupied by at least one person 55 years of age or older.
</P>
<P>(3) There are units occupied by employees of the housing facility or community (and family members residing in the same unit) who are under 55 years of age, provided the employees perform substantial duties related to the management or maintenance of the facility or community.
</P>
<P>(4) There are units occupied by persons who are necessary to provide a reasonable accommodation to disabled residents as required by § 100.204 and who are under the age of 55.
</P>
<P>(5) For a period expiring one year from the effective date of this final regulation, there are insufficient units occupied by at least one person 55 years of age or older, but the housing facility or community, at the time the exemption is asserted:
</P>
<P>(i) Has reserved all unoccupied units for occupancy by at least one person 55 years of age or older until at least 80 percent of the units are occupied by at least one person who is 55 years of age or older; and
</P>
<P>(ii) Meets the requirements of §§ 100.304, 100.306, and 100.307.
</P>
<P>(f) For purposes of the transition provision described in § 100.305(e)(5), a housing facility or community may not evict, refuse to renew leases, or otherwise penalize families with children who reside in the facility or community in order to achieve occupancy of at least 80 percent of the occupied units by at least one person 55 years of age or older.
</P>
<P>(g) Where application of the 80 percent rule results in a fraction of a unit, that unit shall be considered to be included in the units that must be occupied by at least one person 55 years of age or older.
</P>
<P>(h) Each housing facility or community may determine the age restriction, if any, for units that are not occupied by at least one person 55 years of age or older, so long as the housing facility or community complies with the provisions of § 100.306.
</P>
<CITA TYPE="N">[64 FR 16329, Apr. 2, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 100.306" NODE="24:1.2.1.1.1.5.67.7" TYPE="SECTION">
<HEAD>§ 100.306   Intent to operate as housing designed for persons who are 55 years of age or older.</HEAD>
<P>(a) In order for a housing facility or community to qualify as housing designed for persons who are 55 years of age or older, it must publish and adhere to policies and procedures that demonstrate its intent to operate as housing for persons 55 years of age or older. The following factors, among others, are considered relevant in determining whether the housing facility or community has complied with this requirement:
</P>
<P>(1) The manner in which the housing facility or community is described to prospective residents;
</P>
<P>(2) Any advertising designed to attract prospective residents;
</P>
<P>(3) Lease provisions;
</P>
<P>(4) Written rules, regulations, covenants, deed or other restrictions;
</P>
<P>(5) The maintenance and consistent application of relevant procedures;
</P>
<P>(6) Actual practices of the housing facility or community; and
</P>
<P>(7) Public posting in common areas of statements describing the facility or community as housing for persons 55 years of age or older.
</P>
<P>(b) Phrases such as “adult living”, “adult community”, or similar statements in any written advertisement or prospectus are not consistent with the intent that the housing facility or community intends to operate as housing for persons 55 years of age or older.
</P>
<P>(c) If there is language in deed or other community or facility documents which is inconsistent with the intent to provide housing for persons who are 55 years of age or older housing, HUD shall consider documented evidence of a good faith attempt to remove such language in determining whether the housing facility or community complies with the requirements of this section in conjunction with other evidence of intent.
</P>
<P>(d) A housing facility or community may allow occupancy by families with children as long as it meets the requirements of §§ 100.305 and 100.306(a). 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2529-0046)
</APPRO>
<CITA TYPE="N">[64 FR 16330, Apr. 2, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 100.307" NODE="24:1.2.1.1.1.5.67.8" TYPE="SECTION">
<HEAD>§ 100.307   Verification of occupancy.</HEAD>
<P>(a) In order for a housing facility or community to qualify as housing for persons 55 years of age or older, it must be able to produce, in response to a complaint filed under this title, verification of compliance with § 100.305 through reliable surveys and affidavits.
</P>
<P>(b) A facility or community shall, within 180 days of the effective date of this rule, develop procedures for routinely determining the occupancy of each unit, including the identification of whether at least one occupant of each unit is 55 years of age or older. Such procedures may be part of a normal leasing or purchasing arrangement.
</P>
<P>(c) The procedures described in paragraph (b) of this section must provide for regular updates, through surveys or other means, of the initial information supplied by the occupants of the housing facility or community. Such updates must take place at least once every two years. A survey may include information regarding whether any units are occupied by persons described in paragraphs (e)(1), (e)(3), and (e)(4) of § 100.305.
</P>
<P>(d) Any of the following documents are considered reliable documentation of the age of the occupants of the housing facility or community:
</P>
<P>(1) Driver's license;
</P>
<P>(2) Birth certificate;
</P>
<P>(3) Passport;
</P>
<P>(4) Immigration card;
</P>
<P>(5) Military identification;
</P>
<P>(6) Any other state, local, national, or international official documents containing a birth date of comparable reliability; or
</P>
<P>(7) A certification in a lease, application, affidavit, or other document signed by any member of the household age 18 or older asserting that at least one person in the unit is 55 years of age or older.
</P>
<P>(e) A facility or community shall consider any one of the forms of verification identified above as adequate for verification of age, provided that it contains specific information about current age or date of birth.
</P>
<P>(f) The housing facility or community must establish and maintain appropriate policies to require that occupants comply with the age verification procedures required by this section.
</P>
<P>(g) If the occupants of a particular dwelling unit refuse to comply with the age verification procedures, the housing facility or community may, if it has sufficient evidence, consider the unit to be occupied by at least one person 55 years of age or older. Such evidence may include:
</P>
<P>(1) Government records or documents, such as a local household census;
</P>
<P>(2) Prior forms or applications; or
</P>
<P>(3) A statement from an individual who has personal knowledge of the age of the occupants. The individual's statement must set forth the basis for such knowledge and be signed under the penalty of perjury.
</P>
<P>(h) Surveys and verification procedures which comply with the requirements of this section shall be admissible in administrative and judicial proceedings for the purpose of verifying occupancy.
</P>
<P>(i) A summary of occupancy surveys shall be available for inspection upon reasonable notice and request by any person.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2529-0046)
</APPRO>
<CITA TYPE="N">[64 FR 16330, Apr. 2, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 100.308" NODE="24:1.2.1.1.1.5.67.9" TYPE="SECTION">
<HEAD>§ 100.308   Good faith defense against civil money damages.</HEAD>
<P>(a) A person shall not be held personally liable for monetary damages for discriminating on the basis of familial status, if the person acted with the good faith belief that the housing facility or community qualified for a housing for older persons exemption under this subpart.
</P>
<P>(b)(1) A person claiming the good faith belief defense must have actual knowledge that the housing facility or community has, through an authorized representative, asserted in writing that it qualifies for a housing for older persons exemption.
</P>
<P>(2) Before the date on which the discrimination is claimed to have occurred, a community or facility, through its authorized representatives, must certify, in writing and under oath or affirmation, to the person subsequently claiming the defense that it complies with the requirements for such an exemption as housing for persons 55 years of age or older in order for such person to claim the defense.
</P>
<P>(3) For purposes of this section, an authorized representative of a housing facility or community means the individual, committee, management company, owner, or other entity having the responsibility for adherence to the requirements established by this subpart.
</P>
<P>(4) For purposes of this section, a person means a natural person.
</P>
<P>(5) A person shall not be entitled to the good faith defense if the person has actual knowledge that the housing facility or community does not, or will not, qualify as housing for persons 55 years of age or older. Such a person will be ineligible for the good faith defense regardless of whether the person received the written assurance described in paragraph (b) of this section. 
</P>
<CITA TYPE="N">[64 FR 16330, Apr. 2, 1999]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:1.2.1.1.1.6" TYPE="SUBPART">
<HEAD>Subpart F—Interference, Coercion or Intimidation</HEAD>


<DIV8 N="§ 100.400" NODE="24:1.2.1.1.1.6.67.1" TYPE="SECTION">
<HEAD>§ 100.400   Prohibited interference, coercion or intimidation.</HEAD>
<P>(a) This subpart provides the Department's interpretation of the conduct that is unlawful under section 818 of the Fair Housing Act. 
</P>
<P>(b) It shall be unlawful to coerce, intimidate, threaten, or interfere with any person in the exercise or enjoyment of, or on account of that person having exercised or enjoyed, or on account of that person having aided or encouraged any other person in the exercise or enjoyment of, any right granted or protected by this part. 
</P>
<P>(c) Conduct made unlawful under this section includes, but is not limited to, the following: 
</P>
<P>(1) Coercing a person, either orally, in writing, or by other means, to deny or limit the benefits provided that person in connection with the sale or rental of a dwelling or in connection with a residential real estate-related transaction because of race, color, religion, sex, handicap, familial status, or national origin. 
</P>
<P>(2) Threatening, intimidating or interfering with persons in their enjoyment of a dwelling because of the race, color, religion, sex, handicap, familial status, or national origin of such persons, or of visitors or associates of such persons. 
</P>
<P>(3) Threatening an employee or agent with dismissal or an adverse employment action, or taking such adverse employment action, for any effort to assist a person seeking access to the sale or rental of a dwelling or seeking access to any residential real estate-related transaction, because of the race, color, religion, sex, handicap, familial status, or national origin of that person or of any person associated with that person. 
</P>
<P>(4) Intimidating or threatening any person because that person is engaging in activities designed to make other persons aware of, or encouraging such other persons to exercise, rights granted or protected by this part. 
</P>
<P>(5) Retaliating against any person because that person has made a complaint, testified, assisted, or participated in any manner in a proceeding under the Fair Housing Act. 
</P>
<P>(6) Retaliating against any person because that person reported a discriminatory housing practice to a housing provider or other authority.
</P>
<CITA TYPE="N">[54 FR 3283, Jan. 23, 1989, as amended at 81 FR 63075, Sept. 14, 2016]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:1.2.1.1.1.7" TYPE="SUBPART">
<HEAD>Subpart G—Discriminatory Effect</HEAD>


<DIV8 N="§ 100.500" NODE="24:1.2.1.1.1.7.67.1" TYPE="SECTION">
<HEAD>§ 100.500   Discriminatory effect prohibited.</HEAD>
<P>Liability may be established under the Fair Housing Act based on a practice's discriminatory effect, as defined in paragraph (a) of this section, even if the practice was not motivated by a discriminatory intent. The practice may still be lawful if supported by a legally sufficient justification, as defined in paragraph (b) of this section. The burdens of proof for establishing a violation under this subpart are set forth in paragraph (c) of this section.
</P>
<P>(a) <I>Discriminatory effect.</I> A practice has a discriminatory effect where it actually or predictably results in a disparate impact on a group of persons or creates, increases, reinforces, or perpetuates segregated housing patterns because of race, color, religion, sex, handicap, familial status, or national origin.
</P>
<P>(b) <I>Legally sufficient justification.</I> (1) A legally sufficient justification exists where the challenged practice:
</P>
<P>(i) Is necessary to achieve one or more substantial, legitimate, nondiscriminatory interests of the respondent, with respect to claims brought under 42 U.S.C. 3612, or defendant, with respect to claims brought under 42 U.S.C. 3613 or 3614; and
</P>
<P>(ii) Those interests could not be served by another practice that has a less discriminatory effect.
</P>
<P>(2) A legally sufficient justification must be supported by evidence and may not be hypothetical or speculative. The burdens of proof for establishing each of the two elements of a legally sufficient justification are set forth in paragraphs (c)(2) and (3) of this section.
</P>
<P>(c) <I>Burdens of proof in discriminatory effects cases.</I> (1) The charging party, with respect to a claim brought under 42 U.S.C. 3612, or the plaintiff, with respect to a claim brought under 42 U.S.C. 3613 or 3614, has the burden of proving that a challenged practice caused or predictably will cause a discriminatory effect.
</P>
<P>(2) Once the charging party or plaintiff satisfies the burden of proof set forth in paragraph (c)(1) of this section, the respondent or defendant has the burden of proving that the challenged practice is necessary to achieve one or more substantial, legitimate, nondiscriminatory interests of the respondent or defendant.
</P>
<P>(3) If the respondent or defendant satisfies the burden of proof set forth in paragraph (c)(2) of this section, the charging party or plaintiff may still prevail upon proving that the substantial, legitimate, nondiscriminatory interests supporting the challenged practice could be served by another practice that has a less discriminatory effect.
</P>
<P>(d) <I>Relationship to discriminatory intent.</I> A demonstration that a practice is supported by a legally sufficient justification, as defined in paragraph (b) of this section, may not be used as a defense against a claim of intentional discrimination.
</P>
<CITA TYPE="N">[88 FR 19500, Mar. 31, 2023]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="H" NODE="24:1.2.1.1.1.8" TYPE="SUBPART">
<HEAD>Subpart H— Quid Pro Quo and Hostile Environment Harassment</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>81 FR 63075, Sept. 14, 2016, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 100.600" NODE="24:1.2.1.1.1.8.67.1" TYPE="SECTION">
<HEAD>§ 100.600   Quid pro quo and hostile environment harassment.</HEAD>
<P>(a) <I>General.</I> Quid pro quo and hostile environment harassment because of race, color, religion, sex, familial status, national origin or handicap may violate sections 804, 805, 806 or 818 of the Act, depending on the conduct. The same conduct may violate one or more of these provisions.
</P>
<P>(1) <I>Quid pro quo harassment.</I> Quid pro quo harassment refers to an unwelcome request or demand to engage in conduct where submission to the request or demand, either explicitly or implicitly, is made a condition related to: The sale, rental or availability of a dwelling; the terms, conditions, or privileges of the sale or rental, or the provision of services or facilities in connection therewith; or the availability, terms, or conditions of a residential real estate-related transaction. An unwelcome request or demand may constitute quid pro quo harassment even if a person acquiesces in the unwelcome request or demand.
</P>
<P>(2) <I>Hostile environment harassment.</I> Hostile environment harassment refers to unwelcome conduct that is sufficiently severe or pervasive as to interfere with: The availability, sale, rental, or use or enjoyment of a dwelling; the terms, conditions, or privileges of the sale or rental, or the provision or enjoyment of services or facilities in connection therewith; or the availability, terms, or conditions of a residential real estate-related transaction. Hostile environment harassment does not require a change in the economic benefits, terms, or conditions of the dwelling or housing-related services or facilities, or of the residential real-estate transaction.
</P>
<P>(i) <I>Totality of the circumstances.</I> Whether hostile environment harassment exists depends upon the totality of the circumstances.
</P>
<P>(A) Factors to be considered to determine whether hostile environment harassment exists include, but are not limited to, the nature of the conduct, the context in which the incident(s) occurred, the severity, scope, frequency, duration, and location of the conduct, and the relationships of the persons involved.
</P>
<P>(B) Neither psychological nor physical harm must be demonstrated to prove that a hostile environment exists. Evidence of psychological or physical harm may, however, be relevant in determining whether a hostile environment existed and, if so, the amount of damages to which an aggrieved person may be entitled.
</P>
<P>(C) Whether unwelcome conduct is sufficiently severe or pervasive as to create a hostile environment is evaluated from the perspective of a reasonable person in the aggrieved person's position.
</P>
<P>(ii) <I>Title VII affirmative defense.</I> The affirmative defense to an employer's vicarious liability for hostile environment harassment by a supervisor under Title VII of the Civil Rights Act of 1964 does not apply to cases brought pursuant to the Fair Housing Act.
</P>
<P>(b) <I>Type of conduct.</I> Harassment can be written, verbal, or other conduct, and does not require physical contact.
</P>
<P>(c) <I>Number of incidents.</I> A single incident of harassment because of race, color, religion, sex, familial status, national origin, or handicap may constitute a discriminatory housing practice, where the incident is sufficiently severe to create a hostile environment, or evidences a quid pro quo.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="103" NODE="24:1.2.1.1.2" TYPE="PART">
<HEAD>PART 103—FAIR HOUSING—COMPLAINT PROCESSING 


</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d), 3600-3619. 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>54 FR 3292, Jan. 23, 1989, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:1.2.1.1.2.1" TYPE="SUBPART">
<HEAD>Subpart A—Purpose and Definitions</HEAD>


<DIV8 N="§ 103.1" NODE="24:1.2.1.1.2.1.67.1" TYPE="SECTION">
<HEAD>§ 103.1   Purpose and applicability.</HEAD>
<P>(a) This part contains the procedures established by the Department of Housing and Urban Development for the investigation and conciliation of complaints under section 810 of the Fair Housing Act, 42 U.S.C. 3610. 
</P>
<P>(b) This part applies to: 
</P>
<P>(1) Complaints alleging discriminatory housing practices because of race, color, religion, sex or national origin; and
</P>
<P>(2) Complaints alleging discriminatory housing practices on account of handicap or familial status occurring on or after March 12, 1989.
</P>
<P>(c) Part 180 of this chapter governs the administrative proceedings before an administrative law judge adjudicating charges issued under § 103.405.
</P>
<P>(d) The Department will reasonably accommodate persons with disabilities who are participants in complaint processing.
</P>
<CITA TYPE="N">[54 FR 3292, Jan. 23, 1989, as amended at 62 FR 66433, Dec. 18, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 103.5" NODE="24:1.2.1.1.2.1.67.2" TYPE="SECTION">
<HEAD>§ 103.5   Other civil rights authorities.</HEAD>
<P>In addition to the Fair Housing Act, other civil rights authorities may be applicable in a particular case. Thus, where a person charged with a discriminatory housing practice in a complaint filed under section 810 of the Fair Housing Act is also prohibited from engaging in similar practices under title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d-2000d-5), section 109 of the Housing and Community Development Act of 1974 (42 U.S.C. 5309), Executive Order 11063 of November 20, 1962, on Equal Opportunity in Housing (27 FR 11527-11530, November 24, 1962), section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), the Age Discrimination Act (42 U.S.C. 6101) or other applicable law, the person may also be subject to action by HUD or other Federal agencies under the rules, regulations, and procedures prescribed under title VI (24 CFR parts 1 and 2), section 109 (24 CFR 570.602)), Executive Order 11063 (24 CFR part 107), section 504 (24 CFR part 8), or other applicable law.


</P>
</DIV8>


<DIV8 N="§ 103.9" NODE="24:1.2.1.1.2.1.67.3" TYPE="SECTION">
<HEAD>§ 103.9   Definitions.</HEAD>
<P>The terms <I>Fair Housing Act, General Counsel,</I> and <I>HUD</I> are defined in 24 CFR part 5. 
</P>
<P><I>Aggrieved person</I> includes any person who:
</P>
<P>(a) Claims to have been injured by a discriminatory housing practice; or
</P>
<P>(b) Believes that such person will be injured by a discriminatory housing practice that is about to occur.
</P>
<P><I>Assistant Secretary</I> means the Assistant Secretary for Fair Housing and Equal Opportunity in HUD.
</P>
<P><I>Attorney General</I> means the Attorney General of the United States.
</P>
<P><I>Complainant</I> means the person (including the Assistant Secretary) who files a complaint under this part.
</P>
<P><I>Conciliation</I> means the attempted resolution of issues raised by a complaint, or by the investigation of a complaint, through informal negotiations involving the aggrieved person, the respondent, and the Assistant Secretary.
</P>
<P><I>Conciliation agreement</I> means a written agreement setting forth the resolution of the issues in conciliation.
</P>
<P><I>Discriminatory housing practice</I> means an act that is unlawful under section 804, 805, 806 or 818 of the Fair Housing Act, as described in part 100.
</P>
<P><I>Dwelling</I> means any building, structure, or portion thereof which is occupied as, or designed or intended for occupancy as, a residence by one or more families, or any vacant land which is offered for sale or lease for the construction or location thereon of any such building, structure, or portion thereof.
</P>
<P><I>Person</I> includes one or more individuals, corporations, partnerships, associations, labor organizations, legal representatives, mutual companies, joint-stock companies, trusts, unincorporated organizations, trustees, trustee in cases under title 11 U.S.C., receivers and fiduciaries.
</P>
<P><I>Personal service</I> means handing a copy of the document to the person to be served or leaving a copy of the document with a person of suitable age and discretion at the place of business, residence or usual place of abode of the person to be served.
</P>
<P><I>Receipt of notice</I> means the day that personal service is completed by handing or delivering a copy of the document to an appropriate person or the date that a document is delivered by certified mail.
</P>
<P><I>Respondent</I> means:
</P>
<P>(a) The person or other entity accused in a complaint of a discriminatory housing practice; and
</P>
<P>(b) Any other person or entity identified in the course of investigation and notified as required under § 103.50.
</P>
<P><I>State</I> means any of the several States, the District of Columbia, the Commonwealth of Puerto Rico, or any of the territories and possessions of the United States.
</P>
<P><I>Substantially equivalent State or local agency</I> means a State or local agency certified by HUD under 24 CFR part 115 (including agencies certified for interim referrals).
</P>
<P><I>To rent</I> includes to lease, to sublease, to let, and otherwise to grant for consideration the right to occupy premises not owned by the occupant.
</P>
<CITA TYPE="N">[54 FR 3292, Jan. 23, 1989, as amended at 61 FR 5205, Feb. 9, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.2.1.1.2.2" TYPE="SUBPART">
<HEAD>Subpart B—Complaints</HEAD>


<DIV8 N="§ 103.10" NODE="24:1.2.1.1.2.2.67.1" TYPE="SECTION">
<HEAD>§ 103.10   What can I do if I believe someone is discriminating against me in the sale, rental, finance, or advertisement of housing?</HEAD>
<P>You can notify HUD if you believe there has been discrimination against you in any activity related to housing because of race, color, religion, national origin, sex, disability, or the presence of children under the age of 18 in a household.
</P>
<CITA TYPE="N">[64 FR 18540, Apr. 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 103.15" NODE="24:1.2.1.1.2.2.67.2" TYPE="SECTION">
<HEAD>§ 103.15   Can I file a claim if the discrimination has not yet occurred?</HEAD>
<P>Yes, you may file a claim with HUD if you have knowledge that a discriminatory action is about to occur.
</P>
<CITA TYPE="N">[64 FR 18540, Apr. 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 103.20" NODE="24:1.2.1.1.2.2.67.3" TYPE="SECTION">
<HEAD>§ 103.20   Can someone help me with filing a claim?</HEAD>
<P>HUD's Office of Fair Housing and Equal Opportunity can help you in filing a claim, if you contact them directly. You, or anyone who acts for you, may also ask any HUD office or an organization, individual, or attorney to help you.
</P>
<CITA TYPE="N">[64 FR 18540, Apr. 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 103.25" NODE="24:1.2.1.1.2.2.67.4" TYPE="SECTION">
<HEAD>§ 103.25   What information should I provide to HUD?</HEAD>
<P>You should provide us with:
</P>
<P>(a) Your name, address, and telephone numbers where you can be reached;
</P>
<P>(b) The name and address of the persons, businesses, or organizations you believe discriminated against you;
</P>
<P>(c) If there is a specific property involved, you should provide the property's address and physical description, such as apartment, condominium, house, or vacant lot; and
</P>
<P>(d) A brief description of how you were discriminated against in an activity related to housing. You should include in this description the date when the discrimination happened and why you believe the discrimination occurred because of race, color, religion, national origin, sex, disability, or the presence of children under the age of 18 in a household.
</P>
<CITA TYPE="N">[64 FR 18540, Apr. 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 103.30" NODE="24:1.2.1.1.2.2.67.5" TYPE="SECTION">
<HEAD>§ 103.30   How should I bring a claim that I am the victim of discrimination?</HEAD>
<P>(a) You can file a claim by mail or telephone with any of HUD's Offices of Fair Housing and Equal Opportunity or with any State or local agency that HUD has certified to receive complaints.
</P>
<P>(b) You can call or go to any other HUD office for help in filing a claim. These offices will send your claim to HUD's Office of Fair Housing and Equal Opportunity, which will contact you about the filing of your complaint.
</P>
<CITA TYPE="N">[64 FR 18540, Apr. 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 103.35" NODE="24:1.2.1.1.2.2.67.6" TYPE="SECTION">
<HEAD>§ 103.35   Is there a time limit on when I can file?</HEAD>
<P>Yes, you must notify us within one year that you are a victim of discrimination. If you indicate that there is more than one act of discrimination, or that the discrimination is continuing, we must receive your information within one year of the last incident of discrimination.
</P>
<CITA TYPE="N">[64 FR 18540, Apr. 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 103.40" NODE="24:1.2.1.1.2.2.67.7" TYPE="SECTION">
<HEAD>§ 103.40   Can I change my complaint after it is filed?</HEAD>
<P>(a) Yes, you may change your fair housing complaint:
</P>
<P>(1) At any time to add or remove people according to the law and the facts; or
</P>
<P>(2) To correct other items, such as to add additional information found during the investigation of the complaint.
</P>
<P>(b) You must approve any change to your complaint; we will consider the changes made as of the date of your original complaint.
</P>
<CITA TYPE="N">[64 FR 18540, Apr. 14, 1999]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:1.2.1.1.2.3" TYPE="SUBPART">
<HEAD>Subpart C—Referral of Complaints to State and Local Agencies</HEAD>


<DIV8 N="§ 103.100" NODE="24:1.2.1.1.2.3.67.1" TYPE="SECTION">
<HEAD>§ 103.100   Notification and referral to substantially equivalent State or local agencies.</HEAD>
<P>(a) Whenever a complaint alleges a discriminatory housing practice that is within the jurisdiction of a substantially equivalent State or local agency and the agency is certified or may accept interim referrals under 24 CFR part 115 with regard to the alleged discriminatory housing practice, the Assistant Secretary will notify the agency of the filing of the complaint and refer the complaint to the agency for further processing before HUD takes any action with respect to the complaint. The Assistant Secretary will notify the State or local agency of the referral by certified mail.
</P>
<P>(b) The Assistant Secretary will notify the aggrieved person and the respondent, by certified mail or personal service, of the notification and referral under paragraph (a) of this section. The notice will advise the aggrieved person and the respondent of the aggrieved person's right to commence a civil action under section 813 of the Fair Housing Act in an appropriate United States District Court, not later than two years after the occurrence or termination of the alleged discriminatory housing practice. The notice will state that the computation of this two-year period excludes any time during which a proceeding is pending under this part or part 180 with respect to complaint or charge based on the alleged discriminatory housing practice. The notice will also state that the time period includes the time during which an action arising from a breach of a conciliation agreement under section 814(b)(2) of the Fair Housing Act is pending.
</P>
<CITA TYPE="N">[54 FR 3292, Jan. 23, 1989, as amended at 61 FR 52218, Oct. 4, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 103.105" NODE="24:1.2.1.1.2.3.67.2" TYPE="SECTION">
<HEAD>§ 103.105   Cessation of action on referred complaints.</HEAD>
<P>A referral under § 103.100 does not prohibit the Assistant Secretary from taking appropriate action to review or investigate matters in the complaint that raise issues cognizable under other civil rights authorities applicable to departmental programs (see § 103.5).
</P>
<CITA TYPE="N">[54 FR 3292, Jan. 23, 1989, as amended at 61 FR 14379, Apr. 1, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 103.110" NODE="24:1.2.1.1.2.3.67.3" TYPE="SECTION">
<HEAD>§ 103.110   Reactivation of referred complaints.</HEAD>
<P>The Assistant Secretary may reactivate a complaint referred under § 103.100 for processing by HUD if:
</P>
<P>(a) The substantially equivalent State or local agency consents or requests the reactivation;
</P>
<P>(b) The Assistant Secretary determines that, with respect to the alleged discriminatory housing practice, the agency no longer qualifies for certification as a substantially equivalent State or local agency and may not accept interim referrals; or
</P>
<P>(c) The substantially equivalent State or local agency has failed to commence proceedings with respect to the complaint within 30 days of the date that it received the notification and referral of the complaint; or the agency commenced proceedings within this 30-day period, but the Assistant Secretary determines that the agency has failed to carry the proceedings forward with reasonable promptness. 
</P>
<CITA TYPE="N">[54 FR 3292, Jan. 23, 1989, as amended at 61 FR 14379, Apr. 1, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 103.115" NODE="24:1.2.1.1.2.3.67.4" TYPE="SECTION">
<HEAD>§ 103.115   Notification upon reactivation.</HEAD>
<P>(a) Whenever a complaint referred to a State or local fair housing agency under § 103.100 is reactivated under § 103.110, the Assistant Secretary will notify the substantially equivalent State or local agency, the aggrieved person and the respondent of HUD's reactivation. The notification will be made by certified mail or personal service.
</P>
<P>(b) The notification to the respondent and the aggrieved person will:
</P>
<P>(1) Advise the aggrieved person and the respondent of the time limits applicable to complaint processing and the procedural rights and obligations of the aggrieved person and the respondent under this part and part 180.
</P>
<P>(2) State that HUD will process the complaint under the Fair Housing Act and that the State or local agency to which the complaint was referred may continue to process the complaint under State or local law.
</P>
<P>(3) Advise the aggrieved person and the respondent of the aggrieved person's right to commence a civil action under section 813 of the Fair Housing Act in an appropriate United States District Court, not later than two years after the occurrence or termination of the alleged discriminatory housing practice. The notice will state that the computation of this two-year period excludes any time during which a proceeding is pending under this part or part 180 with respect to a complaint or charge based on the alleged discriminatory housing practice under part 180. The notices will also state that the time period includes the time during which an action arising from a breach of conciliation agreement under section 814(b)(2) of the Fair Housing Act is pending.
</P>
<CITA TYPE="N">[54 FR 3292, Jan. 23, 1989, as amended at 61 FR 52218, Oct. 4, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:1.2.1.1.2.4" TYPE="SUBPART">
<HEAD>Subpart D—Investigation Procedures</HEAD>


<DIV8 N="§ 103.200" NODE="24:1.2.1.1.2.4.67.1" TYPE="SECTION">
<HEAD>§ 103.200   Investigations.</HEAD>
<P>(a) Upon the filing of a complaint under § 103.40, the Assistant Secretary will initiate an investigation. The purposes of an investigation are:
</P>
<P>(1) To obtain information concerning the events or transactions that relate to the alleged discriminatory housing practice identified in the complaint.
</P>
<P>(2) To document policies or practices of the respondent involved in the alleged discriminatory housing practice raised in the complaint.
</P>
<P>(3) To develop factual data necessary for the General Counsel to make a determination under § 103.400 whether reasonable cause exists to believe that a discriminatory housing practice has occurred or is about to occur, and for the Assistant Secretary to make a determination under § 103.400 that no reasonable cause exists to believe that a discriminatory housing practice has occurred or is about to occur, and to take other actions provided under this part.
</P>
<P>(b) Upon the written direction of the Assistant Secretary, HUD may initate an investigation of housing practices to determine whether a complaint should be filed under subpart B of this part. Such investigations will be conducted in accordance with the procedures described under this subpart.
</P>
<CITA TYPE="N">[54 FR 3292, Jan. 23, 1989, as amended at 55 FR 53293, Dec. 28, 1990, 57 FR 39116, Aug. 28, 1992]


</CITA>
</DIV8>


<DIV8 N="§ 103.201" NODE="24:1.2.1.1.2.4.67.2" TYPE="SECTION">
<HEAD>§ 103.201   Service of notice on aggrieved person.</HEAD>
<P>Upon the filing of a complaint, the Assistant Secretary will notify, by certified mail or personal service, each aggrieved person on whose behalf the complaint was filed. The notice will:
</P>
<P>(a) Acknowledge the filing of the complaint and state the date that the complaint was accepted for filing.
</P>
<P>(b) Include a copy of the complaint.
</P>
<P>(c) Advise the aggrieved person of the time limits applicable to complaint processing and of the procedural rights and obligations of the aggrieved person under this part and part 180.
</P>
<P>(d) Advise the aggrieved person of his or her right to commence a civil action under section 813 of the Fair Housing Act in an appropriate United States District Court, not later than two years after the occurrence or termination of the alleged discriminatory housing practice. The notice will state that the computation of this two-year period excludes any time during which a proceeding is pending under this part or part 180 with respect to a complaint or charge based on the alleged discriminatory housing practice. The notice will also state that the time period includes the time during which an action arising from a breach of a conciliation agreement under section 814(b)(2) of the Fair Housing Act is pending.
</P>
<P>(e) Advise the aggrieved person that retaliation against any person because he or she made a complaint or testified, assisted, or participated in an investigation or conciliation under this part or an administrative proceeding under part 180, is a discriminatory housing practice that is prohibited under section 818 of the Fair Housing Act.
</P>
<CITA TYPE="N">[54 FR 3292, Jan. 23, 1989, as amended at 61 FR 52218, Oct. 4, 1996. Redesignated at 64 FR 18540, Apr. 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 103.202" NODE="24:1.2.1.1.2.4.67.3" TYPE="SECTION">
<HEAD>§ 103.202   Notification of respondent; joinder of additional or substitute respondents.</HEAD>
<P>(a) Within ten days of the filing of a complaint under § 103.40 or the filing of an amended complaint under § 103.42, the Assistant Secretary will serve a notice on each respondent by certified mail or by personal service. A person who is not named as a respondent in a complaint, but who is identified in the course of the investigation under subpart D of this part as a person who is alleged to be engaged, to have engaged, or to be about to engage in the discriminatory housing practice upon which the complaint is based may be joined as an additional or substitute respondent by service of a notice on the person under this section within ten days of the identification.
</P>
<P>(b) The Assistant Secretary will also serve notice on any person who directs or controls, or who has the right to direct or control, the conduct of another person who is involved in a fair housing complaint.
</P>
<CITA TYPE="N">[54 FR 3292, Jan. 23, 1989, as amended at 61 FR 52218, Oct. 4, 1996. Redesignated and amended at 64 FR 18540, 18541, Apr. 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 103.203" NODE="24:1.2.1.1.2.4.67.4" TYPE="SECTION">
<HEAD>§ 103.203   Answer to complaint.</HEAD>
<P>(a) The respondent may file an answer not later than ten days after receipt of the notice described in § 103.50. The respondent may assert any defense that might be available to a defendant in a court of law. The answer must be signed and affirmed by the respondent. The affirmation must state: “I declare under penalty of perjury that the foregoing is true and correct.”
</P>
<P>(b) An answer may be reasonably and fairly amended at any time with the consent of the Assistant Secretary.
</P>
<CITA TYPE="N">[54 FR 3292, Jan. 23, 1989. Redesignated at 64 FR 18540, Apr. 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 103.204" NODE="24:1.2.1.1.2.4.67.5" TYPE="SECTION">
<HEAD>§ 103.204   HUD complaints and compliance reviews.</HEAD>
<P>(a) The Assistant Secretary may conduct an investigation and file a complaint under this subpart based on information that one or more discriminatory housing practices has occurred, or is about to occur.
</P>
<P>(b) HUD may also initiate compliance reviews under other appropriate civil rights authorities, such as E.O. 11063 on Equal Opportunity in Housing, title VI of the Civil Rights Act of 1964, section 109 of the Housing and Community Development Act of 1974, section 504 of the Rehabilitation Act of 1973 or the Age Discrimination Act of 1975.
</P>
<P>(c) HUD may also make the information you provide available to other Federal, State, or local agencies having an interest in the matter. In making such information available, HUD will take steps to protect the confidentiality of any informant or complainant when desired by the informant or complainant. 
</P>
<CITA TYPE="N">[64 FR 18541, Apr. 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 103.205" NODE="24:1.2.1.1.2.4.67.6" TYPE="SECTION">
<HEAD>§ 103.205   Systemic processing.</HEAD>
<P>Where the Assistant Secretary determines that the alleged discriminatory practices contained in a complaint are pervasive or institutional in nature, or that the processing of the complaint will involve complex issues, novel questions of fact or law, or will affect a large number of persons, the Assistant Secretary may identify the complaint for systemic processing. This determination can be based on the face of the complaint or on information gathered in connection with an investigation. Systemic investigations may focus not only on documenting facts involved in the alleged discriminatory housing practice that is the subject of the complaint but also on review of other policies and procedures related to matters under investigation, to make sure that they also comply with the nondiscrimination requirements of the Fair Housing Act.


</P>
</DIV8>


<DIV8 N="§ 103.215" NODE="24:1.2.1.1.2.4.67.7" TYPE="SECTION">
<HEAD>§ 103.215   Conduct of investigation.</HEAD>
<P>(a) In conducting investigations under this part, the Assistant Secretary will seek the voluntary cooperation of all persons to obtain access to premises, records, documents, individuals, and other possible sources of information; to examine, record, and copy necessary materials; and to take and record testimony or statements of persons reasonably necessary for the furtherance of the investigation.
</P>
<P>(b) The Assistant Secretary may conduct and order discovery in aid of the investigation by the same methods and to the same extent that discovery may be ordered in an administrative proceeding under 24 CFR part 180, except that the Assistant Secretary shall have the power to issue subpoenas described in 24 CFR 180.545 in support of the investigation. Subpoenas issued by the Assistant Secretary must be approved by the General Counsel as to their legality before issuance.
</P>
<CITA TYPE="N">[54 FR 3292, Jan. 23, 1989, as amended at 61 FR 41482, Aug. 8, 1996; 61 FR 52218, Oct. 4, 1996; 62 FR 66433, Dec. 18, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 103.220" NODE="24:1.2.1.1.2.4.67.8" TYPE="SECTION">
<HEAD>§ 103.220   Cooperation of Federal, State and local agencies.</HEAD>
<P>The Assistant Secretary, in processing Fair Housing Act complaints, may seek the cooperation and utilize the services of Federal, State or local agencies, including any agency having regulatory or supervisory authority over financial institutions.


</P>
</DIV8>


<DIV8 N="§ 103.225" NODE="24:1.2.1.1.2.4.67.9" TYPE="SECTION">
<HEAD>§ 103.225   Completion of investigation.</HEAD>
<P>The investigation will remain open until a determination is made under § 103.400, or a conciliation agreement is executed and approved under § 103.310. Unless it is impracticable to do so, the Assistant Secretary will complete the investigation of the alleged discriminatory housing practice within 100 days of the filing of the complaint (or where the Assistant Secretary reactivates the complaint, within 100 days after service of the notice of reactivation under § 103.115). If the Assistant Secretary is unable to complete the investigation within the 100-day period, HUD will notify the aggrieved person and the respondent, by mail, of the reasons for the delay. 
</P>
<CITA TYPE="N">[61 FR 14380, Apr. 1, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 103.230" NODE="24:1.2.1.1.2.4.67.10" TYPE="SECTION">
<HEAD>§ 103.230   Final investigative report.</HEAD>
<P>(a) At the end of each investigation under this part, the Assistant Secretary will prepare a final investigative report. The investigative report will contain:
</P>
<P>(1) The names and dates of contacts with witnesses, except that the report will not disclose the names of witnesses that request anonymity. HUD, however, may be required to disclose the names of such witnesses in the course of an administrative hearing under part 180 of this chapter or a civil action under title VIII of the Fair Housing Act;
</P>
<P>(2) A summary and the dates of correspondence and other contacts with the aggrieved person and the respondent;
</P>
<P>(3) A summary description of other pertinent records;
</P>
<P>(4) A summary of witness statements; and
</P>
<P>(5) Answers to interrogatories.
</P>
<P>(b) A final investigative report may be amended at any time, if additional evidence is discovered.
</P>
<P>(c) Notwithstanding the prohibitions and requirements with respect to disclosure of information contained in § 103.330, the Assistant Secretary will make information derived from an investigation, including the final investigative report, available to the aggrieved person and the respondent. Following the completion of investigation, the Assistant Secretary shall notify the aggrieved person and the respondent that the final investigation report is complete and will be provided upon request.
</P>
<CITA TYPE="N">[54 FR 3292, Jan. 23, 1989, as amended at 62 FR 66433, Dec. 18, 1997]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:1.2.1.1.2.5" TYPE="SUBPART">
<HEAD>Subpart E—Conciliation Procedures</HEAD>


<DIV8 N="§ 103.300" NODE="24:1.2.1.1.2.5.67.1" TYPE="SECTION">
<HEAD>§ 103.300   Conciliation.</HEAD>
<P>(a) During the period beginning with the filing of the complaint and ending with the filing of a charge or the dismissal of the complaint by the General Counsel or the Assistant Secretary, the Assistant Secretary will, to the extent feasible, attempt to conciliate the complaint.
</P>
<P>(b) In conciliating a complaint, HUD will attempt to achieve a just resolution of the complaint and to obtain assurances that the respondent will satisfactorily remedy any violations of the rights of the aggrieved person, and take such action as will assure the elimination of discriminatory housing practices, or the prevention of their occurrence, in the future.
</P>
<P>(c) Generally, officers, employees, and agents of HUD engaged in the investigation of a complaint under this part will not participate or advise in the conciliation of the same complaint or in any factually related complaint. Where the rights of the aggrieved party and the respondent can be protected and the prohibitions with respect to the disclosure of information can be observed, the investigator may suspend fact finding and engage in efforts to resolve the complaint by conciliation.
</P>
<CITA TYPE="N">[54 FR 3292, Jan. 23, 1989, as amended at 55 FR 53294, Dec. 28, 1990]


</CITA>
</DIV8>


<DIV8 N="§ 103.310" NODE="24:1.2.1.1.2.5.67.2" TYPE="SECTION">
<HEAD>§ 103.310   Conciliation agreement.</HEAD>
<P>(a) The terms of a settlement of a complaint will be reduced to a written conciliation agreement. The conciliation agreement shall seek to protect the interests of the aggrieved person, other persons similarly situated, and the public interest. The types of relief that may be sought for the aggrieved person are described in § 103.315. The provisions that may be sought for the vindication of the public interest are described in § 103.320.
</P>
<P>(b)(1) The agreement must be executed by the respondent and the complainant. The agreement is subject to the approval of the Assistant Secretary, who will indicate approval by signing the agreement. The Assistant Secretary will approve an agreement and, if the Assistant Secretary is the complainant, will execute the agreement, only if:
</P>
<P>(i) The complainant and the respondent agree to the relief accorded the aggrieved person;
</P>
<P>(ii) The provisions of the agreement will adequately vindicate the public interest; and 
</P>
<P>(iii) If the Assistant Secretary is the complainant, all aggrieved persons named in the complaint are satisfied with the relief provided to protect their interests.
</P>
<P>(2) The General Counsel may issue a charge under § 103.405 if the aggrieved person and the respondent have executed a conciliation agreement that has not been approved by the Assistant Secretary.


</P>
</DIV8>


<DIV8 N="§ 103.315" NODE="24:1.2.1.1.2.5.67.3" TYPE="SECTION">
<HEAD>§ 103.315   Relief sought for aggrieved persons.</HEAD>
<P>(a) The following types of relief may be sought for aggrieved persons in conciliation:
</P>
<P>(1) Monetary relief in the form of damages, including damages caused by humiliation or embarrassment, and attorney fees;
</P>
<P>(2) Other equitable relief including, but not limited to, access to the dwelling at issue, or to a comparable dwelling, the provision of services or facilities in connection with a dwelling, or other specific relief; or
</P>
<P>(3) Injunctive relief appropriate to the elimination of discriminatory housing practices affecting the aggrieved person or other persons.
</P>
<P>(b) The conciliation agreement may provide for binding arbitration of the dispute arising from the complaint. Arbitration may award appropriate relief as described in paragraph (a) of this section. The aggrieved person and the respondent may, in the conciliation agreement, limit the types of relief that may be awarded under binding arbitration.


</P>
</DIV8>


<DIV8 N="§ 103.320" NODE="24:1.2.1.1.2.5.67.4" TYPE="SECTION">
<HEAD>§ 103.320   Provisions sought for the public interest.</HEAD>
<P>The following are types of provisions may be sought for the vindication of the public interest:
</P>
<P>(a) Elimination of discriminatory housing practices.
</P>
<P>(b) Prevention of future discriminatory housing practices.
</P>
<P>(c) Remedial affirmative activities to overcome discriminatory housing practices.
</P>
<P>(d) Reporting requirements.
</P>
<P>(e) Monitoring and enforcement activities.


</P>
</DIV8>


<DIV8 N="§ 103.325" NODE="24:1.2.1.1.2.5.67.5" TYPE="SECTION">
<HEAD>§ 103.325   Termination of conciliation efforts.</HEAD>
<P>(a) HUD may terminate its efforts to conciliate the complaint if the respondent fails or refuses to confer with HUD; the aggrieved person or the respondent fail to make a good faith effort to resolve any dispute; or HUD finds, for any reason, that voluntary agreement is not likely to result.
</P>
<P>(b) Where the aggrieved person has commenced a civil action under an Act of Congress or a State law seeking relief with respect to the alleged discriminatory housing practice, and the trial in the action has commenced, HUD will terminate conciliation unless the court specifically requests assistance from the Assistant Secretary.


</P>
</DIV8>


<DIV8 N="§ 103.330" NODE="24:1.2.1.1.2.5.67.6" TYPE="SECTION">
<HEAD>§ 103.330   Prohibitions and requirements with respect to disclosure of information obtained during conciliation.</HEAD>
<P>(a) Except as provided in paragraph (b) of this section and § 103.230(c), nothing that is said or done in the course of conciliation under this part may be made public or used as evidence in a subsequent administrative hearing under part 180 or in civil actions under title VIII of the Fair Housing Act, without the written consent of the persons concerned.
</P>
<P>(b) Conciliation agreements shall be made public, unless the aggrieved person and respondent request nondisclosure and the Assistant Secretary determines that disclosure is not required to further the purposes of the Fair Housing Act. Notwithstanding a determination that disclosure of a conciliation agreement is not required, the Assistant Secretary may publish tabulated descriptions of the results of all conciliation efforts.
</P>
<CITA TYPE="N">[54 FR 3292, Jan. 23, 1989, as amended at 61 FR 52218, Oct. 4, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 103.335" NODE="24:1.2.1.1.2.5.67.7" TYPE="SECTION">
<HEAD>§ 103.335   Review of compliance with conciliation agreements.</HEAD>
<P>HUD may, from time to time, review compliance with the terms of any conciliation agreement. Whenever HUD has reasonable cause to believe that a respondent has breached a conciliation agreement, the Assistant Secretary shall refer the matter to the Attorney General with a recommendation for the filing of a civil action under section 814(b)(2) of the Fair Housing Act for the enforcement of the terms of the conciliation agreement.
</P>
<CITA TYPE="N">[54 FR 3292, Jan. 23, 1989, as amended at 59 FR 39956, Aug. 5, 1994]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:1.2.1.1.2.6" TYPE="SUBPART">
<HEAD>Subpart F—Issuance of Charge</HEAD>


<DIV8 N="§ 103.400" NODE="24:1.2.1.1.2.6.67.1" TYPE="SECTION">
<HEAD>§ 103.400   Reasonable cause determination.</HEAD>
<P>(a) If a conciliation agreement under § 103.310 has not been executed by the complainant and the respondent and approved by the Assistant Secretary, the Assistant Secretary shall conduct a review of the factual circumstances revealed as part of HUD's investigation.
</P>
<P>(1) If the Assistant Secretary for Fair Housing and Equal Opportunity determines that, based on the totality of factual circumstances known at the time of the Assistant Secretary's review, no reasonable cause exists to believe that a discriminatory housing practice has occurred or is about to occur, the Assistant Secretary shall: Issue a short and plain written statement of the facts upon which the Assistant Secretary has based the no reasonable cause determination; dismiss the complaint; notify the aggrieved person and the respondent of the dismissal (including the written statement of facts) by mail; and make public disclosure of the dismissal. The respondent may request that no public disclosure be made. Notwithstanding such a request, the fact of dismissal, including the names of the parties, shall be public information available on request. The Assistant Secretary's determination shall be based solely upon the facts concerning the alleged discriminatory housing practice provided by complainant and respondent and otherwise disclosed during the investigation. In making this determination, the Assistant Secretary shall consider whether the facts concerning the alleged discriminatory housing practice are sufficient to warrant the initiation of a civil action in federal court.
</P>
<P>(2) If, based on the totality of the factual circumstances known at the time of the decision, the Assistant Secretary believes that reasonable cause may exist to believe that a discriminatory housing practice has occurred or is about to occur, the Assistant Secretary shall determine that reasonable cause exists to believe that a discriminatory housing practice has occurred or is about to occur, in all cases not involving the legality of local land use laws or ordinances (except as provided in paragraph (b) of this section). The Assistant Secretary's determination shall be based solely on the facts concerning the alleged discriminatory housing practices provided by complainants and respondents and otherwise identified during the investigation in making this determination. In making this determination, the Assistant Secretary shall consider whether the facts concerning the alleged discriminatory housing practice are sufficient to warrant the initiation of a civil action in federal court. 
</P>
<P>(i) If the Assistant Secretary determines that reasonable cause exists, the Assistant Secretary, upon receipt of concurrence of the General Counsel, will issue such determination and direct the issuance of a charge under § 103.405 on behalf of the aggrieved person, and shall notify the complainant and the respondent of this determination by certified mail or personal service.
</P>
<P>(ii) If the Assistant Secretary determines that no reasonable cause exists, the Assistant Secretary shall: Issue a short and plain written statement of the facts upon which the Assistant Secretary has based the no reasonable cause determination; dismiss the complaint; notify the complainant and the respondent of the dismissal (including the written statement of facts) by mail; and make public disclosure of the dismissal. The complainant or respondent may request that no public disclosure be made. Notwithstanding such a request, the fact of dismissal, including the names of the parties, shall be public information available on request. 
</P>
<P>(3) If the Assistant Secretary determines that the matter involves the legality of local zoning or land use laws or ordinances, the Assistant Secretary, in lieu of making a determination regarding reasonable cause, shall refer the investigative material to the Attorney General for appropriate action under section 814(b)(1) of the Fair Housing Act, and shall notify the complainant and the respondent of this action by mail or personal service. 
</P>
<P>(b) The Assistant Secretary may not issue a charge under paragraph (a) of this section regarding an alleged discriminatory housing practice, if an aggrieved person has commenced a civil action under an Act of Congress or a state law seeking relief with respect to the alleged housing practice and the trial in the action has commenced. If a charge may not be issued because of the commencement of such a trial, the Assistant Secretary shall so notify the complainant and the respondent by certified mail or personal service. 
</P>
<P>(c)(1) A determination of reasonable cause or no reasonable cause by the Assistant Secretary shall be made within 100 days after filing of the complaint (or where the Assistant Secretary has reactivated a complaint, within 100 days after service of the notice of reactivation under § 103.115), unless it is impracticable to do so. 
</P>
<P>(2) If the Assistant Secretary is unable to make the determination within the 100-day period specified in paragraph (c)(1) of this section, the Assistant Secretary will notify the complainant and the respondent by mail of the reasons for the delay. 
</P>
<CITA TYPE="N">[55 FR 53294, Dec. 28, 1990, as amended at 57 FR 18398, Apr. 30, 1992; 59 FR 39956, Aug. 5, 1994; 59 FR 46759, Sept. 12, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 103.405" NODE="24:1.2.1.1.2.6.67.2" TYPE="SECTION">
<HEAD>§ 103.405   Issuance of charge.</HEAD>
<P>(a) A charge: 
</P>
<P>(1) Shall consist of a short and plain written statement of the facts upon which the Assistant Secretary has found reasonable cause to believe that a discriminatory housing practice has occurred or is about to occur; 
</P>
<P>(2) Shall be based on the final investigative report; and 
</P>
<P>(3) Need not be limited to facts or grounds that are alleged in the complaint filed under subpart B of this part. If the charge is based on grounds that are not alleged in the complaint, HUD will not issue a charge with regard to the grounds unless the record of investigation demonstrates that the respondent has been given notice and an opportunity to respond to the allegation.
</P>
<P>(b) Within three business days after the issuance of the charge, the General Counsel shall: 
</P>
<P>(1) Obtain a time and place for hearing from the Docket Clerk for the Office of Hearings and Appeals;
</P>
<P>(2) File the charge along with the notifications described in 24 CFR 180.410(b) with the Office of Hearings and Appeals; 
</P>
<P>(3) Serve the charge and notifications in accordance with 24 CFR 180.410(a); and 
</P>
<P>(4) Notify the Assistant Secretary of the filing of the charge. 
</P>
<CITA TYPE="N">[54 FR 3292, Jan. 23, 1989, as amended at 56 FR 55078, Oct. 24, 1991; 59 FR 39956, Aug. 5, 1994; 59 FR 46759, Sept. 12, 1994; 60 FR 58452, Nov. 27, 1995; 62 FR 66433, Dec. 18, 1997; 74 FR 4635, Jan. 26, 2009; 87 FR 8197, Feb. 14, 2022]


</CITA>
</DIV8>


<DIV8 N="§ 103.410" NODE="24:1.2.1.1.2.6.67.3" TYPE="SECTION">
<HEAD>§ 103.410   Election of civil action or provision of administrative proceeding.</HEAD>
<P>(a) If a charge is issued under § 103.405, a complainant (including the Assistant Secretary, if HUD filed the complaint), a respondent, or an aggrieved person on whose behalf the complaint is filed may elect, in lieu of an administrative proceeding under 24 CFR part 180, to have the claims asserted in the charge decided in a civil action under section 812(o) of the Fair Housing Act. 
</P>
<P>(b) The election must be made not later than 20 says after the receipt of service of the charge, or in the case of the Assistant Secretary, not later than 20 days after service. The notice of election must be filed with the Docket Clerk in the Office of Hearings and Appeals and served on the General Counsel, the Assistant Secretary, the respondent, and the aggrieved persons on whose behalf the complaint was filed. The notification will be filed and served in accordance with the procedures established under 24 CFR part 180.
</P>
<P>(c) If an election is not made under this section, the General Counsel will maintain an administrative proceeding based on the charge in accordance with the procedures under 24 CFR part 180. 
</P>
<P>(d) If an election is made under this section, the General Counsel shall immediately notify and authorize the Attorney General to commence and maintain a civil action seeking relief under section 812(o) of the Fair Housing Act on behalf of the aggrieved person in an appropriate United States District Court. Such notification and authorization shall include transmission of the file in the case, including a copy of the final investigative report and the charge, to the Attorney General. 
</P>
<P>(e) The General Counsel shall be available for consultation concerning any legal issues raised by the Attorney General as to how best to proceed in the event that a new court decision or newly discovered evidence is regarded as relevant to the reasonable cause determination. 
</P>
<CITA TYPE="N">[54 FR 3292, Jan. 23, 1989, as amended at 61 FR 52218, Oct. 4, 1996; 74 FR 4635, Jan. 26, 2009; 87 FR 8197, Feb. 14, 2022]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:1.2.1.1.2.7" TYPE="SUBPART">
<HEAD>Subpart G—Prompt Judicial Action</HEAD>


<DIV8 N="§ 103.500" NODE="24:1.2.1.1.2.7.67.1" TYPE="SECTION">
<HEAD>§ 103.500   Prompt judicial action.</HEAD>
<P>(a) If at any time following the filing of a complaint, the General Counsel concludes that prompt judicial action is necessary to carry out the purposes of this part or 24 CFR part 180, the General Counsel may authorize the Attorney General to commence a civil action for appropriate temporary or preliminary relief pending final disposition of the complaint. To ensure the prompt initiation of the civil action, the General Counsel will consult with the Assistant Attorney General for the Civil Rights Division before making the determination that prompt judicial action is necessary. The commencement of a civil action by the Attorney General under this section will not affect the initiation or continuation of proceedings under this part or administrative proceedings under part 180. 
</P>
<P>(b) If the General Counsel has reason to believe that a basis exists for the commencement of proceedings against the respondent under section 814(a) of the Fair Housing Act (Pattern or Practice Cases), proceedings under section 814(c) of the Fair Housing Act (Enforcement of Subpoenas), or proceedings by any governmental licensing or supervisory authorities, the General Counsel shall transmit the information upon which that belief is based to the Attorney General and to other appropriate authorities. 
</P>
<CITA TYPE="N">[54 FR 3292, Jan. 23, 1989, as amended at 61 FR 52218, Oct. 4, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="H" NODE="24:1.2.1.1.2.8" TYPE="SUBPART">
<HEAD>Subpart H—Other Action</HEAD>


<DIV8 N="§ 103.510" NODE="24:1.2.1.1.2.8.67.1" TYPE="SECTION">
<HEAD>§ 103.510   Other action by HUD.</HEAD>
<P>In addition to the actions described in § 103.500, HUD may pursue one or more of the following courses of action: 
</P>
<P>(a) Refer the matter to the Attorney General for appropriate action (e.g., enforcement of criminal penalties under section 811(c) of the Act). 
</P>
<P>(b) Take appropriate steps to initiate proceedings leading to the debarment of the respondent under 2 CFR part 2424, or initiate other actions leading to the imposition of administrative sanctions, where HUD determines that such actions are necessary to the effective operation and administration of federal programs or activities.
</P>
<P>(c) Take appropriate steps to initiate proceedings under: 
</P>
<P>(1) 24 CFR part 1, implementing title VI of the Civil Rights Act of 1964;
</P>
<P>(2) 24 CFR 570.912, implementing section 109 of the Housing and Community Development Act of 1974;
</P>
<P>(3) 24 CFR part 8, implementing section 504 of the Rehabilitation Act of 1973; 
</P>
<P>(4) 24 CFR part 107, implementing Executive Order 11063; or 
</P>
<P>(5) The Age Discrimination Act, 42 U.S.C. 6101. 
</P>
<P>(d) Inform any other Federal, State or local agency with an interest in the enforcement of respondent's obligations with respect to nondiscrimination in housing. 
</P>
<CITA TYPE="N">[54 FR 3292, Jan. 23, 1989, as amended at 72 FR 73493, Dec. 27, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 103.515" NODE="24:1.2.1.1.2.8.67.2" TYPE="SECTION">
<HEAD>§ 103.515   Action by other agencies.</HEAD>
<P>In accordance with section 808 (d) and (e) of the Fair Housing Act and Executive Order No. 12259, other Federal agencies, including any agency having regulatory or supervisory authority over financial institutions, are responsible for ensuring that their programs and activities relating to housing and urban development are administered in a manner affirmatively to further the goal of fair housing, and for cooperating with the Assistant Secretary in furthering the purposes of the Fair Housing Act. 


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="105" NODE="24:1.2.1.1.3" TYPE="PART">
<HEAD>PART 105 [RESERVED]


</HEAD>
</DIV5>


<DIV5 N="107" NODE="24:1.2.1.1.4" TYPE="PART">
<HEAD>PART 107—NONDISCRIMINATION AND EQUAL OPPORTUNITY IN HOUSING UNDER EXECUTIVE ORDER 11063
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d); E.O. 11063, 27 FR 11527, 3 CFR, 1958-1963 Comp., p. 652; E.O. 12892, 59 FR 2939, 3 CFR, 1994 Comp., p. 849. 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>45 FR 59514, Sept. 9, 1980, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 107.10" NODE="24:1.2.1.1.4.0.67.1" TYPE="SECTION">
<HEAD>§ 107.10   Purpose.</HEAD>
<P>These regulations are to carry out the requirements of E.O. 11063 that all action necessary and appropriate be taken to prevent discrimination because of race, color, religion (creed), sex or national origin in the sale, rental, leasing or other disposition of residential property and related facilities or in the use or occupancy thereof where such property or facilities are owned or operated by the Federal Government, or provided with Federal assistance by the Department of Housing and Urban Development and in the lending practices with respect to residential property and related facilities of lending institutions insofar as such practices relate to loans insured, guaranteed or purchased by the Department. These regulations are intended to assure compliance with the established policy of the United States that the benefits under programs and activities of the Department which provide financial assistance, directly or indirectly, for the provision, rehabilitation, or operation of housing and related facilities are made available without discrimination based on race, color, religion (creed), sex or national origin. These regulations are also intended to assure compliance with the policy of this Department to administer its housing programs affirmatively, so as to achieve a condition in which individuals of similar income levels in the same housing market area have a like range of housing choices available to them regardless of their race, color, religion (creed), sex or national origin. 
</P>
<CITA TYPE="N">[45 FR 59514, Sept. 9, 1980, as amended at 50 FR 31360, Aug. 2, 1985]


</CITA>
</DIV8>


<DIV8 N="§ 107.11" NODE="24:1.2.1.1.4.0.67.2" TYPE="SECTION">
<HEAD>§ 107.11   Relation to other authorities.</HEAD>
<P>(a) Where allegations of discrimination on the grounds of race, color, or national origin are made in a program or activity of Federal financial assistance of the Department which does not involve a contract of insurance or guaranty, the provisions of title VI of the Civil Rights Act of 1964 and regulations implementing title VI, Nondiscrimination in Federally Assisted Programs, under part 1 of this title shall apply. Any complaint alleging discrimination on the basis of race, color, religion (creed), sex or national origin in a program or activity of the Department involving a contract of insurance or guaranty will be received and processed according to this part.
</P>
<P>(b) Where a complaint filed pursuant to this part alleges a discriminatory housing practice which is also covered by title VIII of the Civil Rights Act of 1968, the complainant shall be advised of the right to file a complaint pursuant to section 810 of that title and of the availability of Department procedures regarding fair housing complaints under part 105 of this title. The complainant shall also be advised of the right to initiate a civil action in court pursuant to section 812 of the Civil Rights Act of 1968 without first filing a complaint with HUD.
</P>
<CITA TYPE="N">[45 FR 59514, Sept. 9, 1980, as amended at 50 FR 31360, Aug. 2, 1985]


</CITA>
</DIV8>


<DIV8 N="§ 107.15" NODE="24:1.2.1.1.4.0.67.3" TYPE="SECTION">
<HEAD>§ 107.15   Definitions.</HEAD>
<P>(a) <I>Department</I> and <I>Secretary</I> are defined in 24 CFR part 5. 
</P>
<P>(b) <I>State</I> means each of the fifty states, the District of Columbia, the Commonwealths of Puerto Rico and the Northern Marianas, and the territories of the United States.
</P>
<P>(c) <I>Assistance</I> includes (1) grants, loans, contributions, and advances of Federal funds; (2) the grant or donation of Federal property and interests in property; (3) the sale, lease, and rental of, and the permission to use (on other than a casual or transient basis), Federal property or any interest in such property without consideration or at a nominal consideration or at a consideration which is reduced for the purpose of assisting the recipient or in recognition of the public interest to be served by such sale or lease to the recipient, when such order granting permission accompanies the sale, lease, or rental of Federal properties; (4) loans in whole or in part insured, guaranteed, or otherwise secured by the credit of the Federal Government; and (5) any Federal agreement, arrangement, or other contract which has as one of its purposes the provision of assistance.
</P>
<P>(d) <I>Person</I> includes one or more individuals, corporations, partnerships, associations, labor organizations, legal representatives or agents, mutual companies, joint-stock companies, trusts, unincorporated organizations, trustees, trustees in bankruptcy, receivers, fiduciaries and public entities.
</P>
<P>(e) <I>Public entity</I> means a government or governmental subdivision or agency.
</P>
<P>(f) <I>Discriminatory practice</I> means: (1) Any discrimination on the basis of race, color, religion (creed), sex or national origin or the existence or use of a policy or practice, or any arrangement, criterion or other method of administration which has the effect of denying equal housing opportunity or which substantially impairs the ability of persons to apply for or receive the benefits of assistance because of race, color, religion (creed), sex or national origin, in the sale, rental or other disposition of residential property or related facilities (including land to be developed for residential use), or in the use or occupancy thereof, where such property or related facilities are:
</P>
<P>(i) Owned or operated by the Secretary;
</P>
<P>(ii) Provided in whole or in part with the aid of loans, advances, grants, or contributions agreed to be made by the Department after November 20, 1962;
</P>
<P>(iii) Provided in whole or in part by loans insured, guaranteed or otherwise secured by the credit of the Department after November 20, 1962; or
</P>
<P>(iv) Provided by the development or the redevelopment of real property purchased, leased, or otherwise obtained from a State or local public agency or unit of general purpose local government receiving Federal financial assistance from the Department under a loan or grant contract entered into after November 20, 1962.
</P>
<P>(2) Any discrimination on the basis of race, color, religion (creed), sex or national origin or the existence or use of a policy, practice, or any arrangement, criterion or other method of administration which has the effect of denying equal housing opportunity or which substantially impairs the ability of persons to apply for or receive the benefits of assistance because of race, color, religion (creed), sex or national origin in lending practices with respect to residential property and related facilities (including land to be developed for residential use) of lending institutions, insofar as such practices relate to loans, insured or guaranteed, by the Department after November 20, 1962. Examples of discriminatory practices under subsections (1) and (2) include but are not limited to the following when based on race, color, religion (creed), sex or national origin:
</P>
<P>(i) Denial to a person of any housing accommodations, facilities, services, financial aid, financing or other benefit provided under a program or activity;
</P>
<P>(ii) Providing any housing accommodations, facilities, services, financial aid, financing or other benefits to a person which are different, or are provided in a different manner, from those provided to others in a program or activity;
</P>
<P>(iii) Subjecting a person to segregation or separate treatment in any matter related to the receipt of housing, accommodations, facilities, services, financial aid, financing or other benefits under a program or activity;
</P>
<P>(iv) Restricting a person in any way in access to housing, accommodations, facilities, services, financial aid, financing or other benefits, or in the enjoyment of any advantage or privilege enjoyed by others in connection with such housing, accommodations, facilities, services, financial aid, or other benefits under a program or activity;
</P>
<P>(v) Treating persons differently in determining whether they satisfy any occupancy, admission, enrollment, eligibility, membership, or other requirement or condition which persons must meet in order to be provided any housing, accommodations, facilities, services, financial aid, financing or other benefits under a program or activity; and 
</P>
<P>(vi) Denying a person opportunity to participate in a program or activity through the provision of services or otherwise, or affording the person an opportunity to do so which is different from that afforded others in a program or activity.
</P>
<P>(3) Noncompliance with relevant affirmative fair housing marketing requirements contained in Department programs and regulations.
</P>
<P>(4) A formal finding of a violation of title VIII of the Civil Rights Act of 1968 or a state or local fair housing law with respect to activities also covered by E.O. 11063.
</P>
<CITA TYPE="N">[45 FR 59514, Sept. 9, 1980, as amended at 50 FR 31360, Aug. 2, 1985; 61 FR 5205, Feb. 9, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 107.20" NODE="24:1.2.1.1.4.0.67.4" TYPE="SECTION">
<HEAD>§ 107.20   Prohibition against discriminatory practices.</HEAD>
<P>(a) No person receiving assistance from or participating in any program or activity of the Department involving housing and related facilities shall engage in a discriminatory practice.
</P>
<P>(b) Where such person has been found by the Department or any other Federal Department, agency, or court to have previously discriminated against persons on the ground of race, color, religion (creed), sex or national origin, he or she must take affirmative action to overcome the effects of prior discrimination.
</P>
<P>(c) Nothing in this part precludes such person from taking affirmative action to prevent discrimination in housing or related facilities where the purpose of such action is to overcome prior discriminatory practice or usage or to overcome the effects of conditions which resulted in limiting participation by persons of a particular race, color, religion (creed), sex or national origin. 
</P>
<CITA TYPE="N">[45 FR 59514, Sept. 9, 1980, as amended at 50 FR 31360, Aug. 2, 1985]


</CITA>
</DIV8>


<DIV8 N="§ 107.21" NODE="24:1.2.1.1.4.0.67.5" TYPE="SECTION">
<HEAD>§ 107.21   Prevention of discriminatory practices.</HEAD>
<P>All persons receiving assistance from, or participating in any program or activity of the Department involving housing and related facilities shall take all action necessary and proper to prevent discrimination on the basis of race, color, religion (creed), sex or national origin.
</P>
<CITA TYPE="N">[45 FR 59514, Sept. 9, 1980, as amended at 50 FR 31360, Aug. 2, 1985]


</CITA>
</DIV8>


<DIV8 N="§ 107.25" NODE="24:1.2.1.1.4.0.67.6" TYPE="SECTION">
<HEAD>§ 107.25   Provisions in legal instruments.</HEAD>
<P>(a) The following documents shall contain provisions or statements requiring compliance with E.O. 11063 and this part: 
</P>
<P>(1) Contracts, grants and agreements providing Departmental assistance for the provision of housing and related facilities, 
</P>
<P>(2) Contracts, grants and agreements regarding the sale, rental or management of properties owned by the Secretary, 
</P>
<P>(3) Corporate charters and regulatory agreements relating to multifamily and land development projects assisted by the Department, 
</P>
<P>(4) Approvals of financial institutions and other lenders as approved FHA mortgagees, 
</P>
<P>(5) Requests for subdivision reports under home mortgage procedures and for preapplication analysis of multifamily and land development projects, and 
</P>
<P>(6) Contracts and agreements providing for Departmental insurance or guarantee of loans with respect to housing and related facilities. 
</P>
<P>(b) The provision or statement required pursuant to this section shall indicate that the failure or refusal to comply with the requirements of E.O. 11063 or this part shall be a proper basis for the imposition of sanctions provided in § 107.60. 


</P>
</DIV8>


<DIV8 N="§ 107.30" NODE="24:1.2.1.1.4.0.67.7" TYPE="SECTION">
<HEAD>§ 107.30   Recordkeeping requirements.</HEAD>
<P>(a) All persons receiving assistance through any program or activity of the Department involving the provision of housing and related activities subject to Executive Order 11063 shall maintain racial, religious, national origin and sex data required by the Department in connection with its programs and activities. 
</P>
<P>(b) All lenders participating in Departmental mortgage insurance programs, home improvement loan programs, GNMA mortgage purchase programs, or special mortgage assistance programs, shall maintain data regarding the race, religion, national origin and sex of each applicant and joint applicant for assistance with regard to residential property and related facilities. Racial data shall be noted in the following categories: American Indian/Alaskan Native, Asian/Pacific Islander, Black, White, Hispanic. If an applicant or joint applicant refuses to voluntarily provide the information or any part of it, that fact shall be noted and the information shall be obtained, to the extent possible, through observation. Applications shall be retained for a period of at least twenty-five (25) months following the date the record was made.
</P>
<P>(c) If an investigation or compliance review under this part reveals a failure to comply with any of the requirements of paragraph (a) or (b) of this section, the respondent shall have the burden of establishing its compliance with this part and with the equal housing opportunity requirements of the Executive order.
</P>
<CITA TYPE="N">[45 FR 59514, Sept. 9, 1980, as amended at 50 FR 52442, Dec. 24, 1985]


</CITA>
</DIV8>


<DIV8 N="§ 107.35" NODE="24:1.2.1.1.4.0.67.8" TYPE="SECTION">
<HEAD>§ 107.35   Complaints.</HEAD>
<P>(a) The Assistant Secretary for FH&amp;EO, or designee, shall conduct such compliance reviews, investigations, inquiries, and informal meetings as may be necessary to effect compliance with this part. 
</P>
<P>(b) Complaints under this part may be filed by any person and must be filed within one year of date of the alleged act of discrimination unless the time for filing is extended by the Assistant Secretary for FH&amp;EO. Complaints must be signed by the complainant and may be filed with the Assistant Secretary for Fair Housing and Equal Opportunity, Department of Housing and Urban Development, Washington, DC 20410, or any Regional or Area Office of the Department. All complaints shall be forwarded to the Director, Office of Regional Fair Housing and Equal Opportunity in the appropriate Regional Office which has jurisdiction in the area in which the property is located. 
</P>
<P>(c) Upon receipt of a timely complaint, the Director of the Office of Regional FH&amp;EO shall determine whether the complaint indicates a possible violation of the Executive Order or this part. The Director of the Office of Regional FH&amp;EO or a designee within a reasonable period of time shall conduct an investigation into the facts. The complainant shall be notified of the determination.


</P>
</DIV8>


<DIV8 N="§ 107.40" NODE="24:1.2.1.1.4.0.67.9" TYPE="SECTION">
<HEAD>§ 107.40   Compliance meeting.</HEAD>
<P>(a) Where preliminary analysis of a complaint, a compliance review initiated by the Assistant Secretary for FH&amp;EO, or other information indicates a possible violation of E.O. 11063, or this part, the person allegedly in violation (<I>respondent</I>) shall be sent a Notice of Compliance Meeting and requested to attend a compliance meeting. The Notice shall advise the respondent of the matters to be addressed in the Compliance Meeting and the allegations contained in a complaint received pursuant to § 107.35. The purpose of the compliance meeting is to provide the respondent with the opportunity to address matters raised and to remedy such possible violations speedily and informally, to identify possible remedies; and to effect a resolution as provided in § 107.45. 
</P>
<P>(b) The Notice of Compliance Meeting shall be sent to the last known address of the person allegedly in violation, by certified mail, or through personal service. The Notice will advise such person of the right to respond within seven (7) days to the matters and to submit information and relevant data evidencing compliance with E.O. 11063, the Affirmative Fair Housing Marketing Regulations, 24 CFR 200.600, the Fair Housing Poster Regulations, 24 CFR part 110, the Advertising Guidelines for Fair Housing, 37 FR 6700, April 1, 1972, other affirmative marketing requirements applicable to the program or activity and any revisions thereto. Further, the person will be offered an opportunity to be present at the meeting in order to submit any other evidence showing such compliance. The date, place, and time of the scheduled meeting will be included in the Notice. 
</P>
<P>(c) Whenever a compliance meeting is scheduled as a result of a complaint, the complainant shall be sent a copy of the Notice of Compliance Meeting and shall be provided an opportunity to attend the meeting. 
</P>
<P>(d) The Area Office having jurisdiction over the program will prepare a report concerning the status of the respondent's participation in Department programs to be presented to the respondent at the meeting. The Area Manager shall be notified of the meeting and may attend the meeting. 
</P>
<P>(e) At the Compliance Meeting the respondent and the complainant may be represented by counsel and shall have a fair opportunity to present any matters relevant to the complaint. 
</P>
<P>(f) During and pursuant to the Compliance Meeting, the Director of the Office of Regional FH&amp;EO shall consider all evidence relating to the alleged violation, including any action taken by the person allegedly in violation to comply with E.O. 11063. 
</P>
<P>(g) If the evidence shows no violation of the Executive order or this part, the Director of the Office of Regional FH&amp;EO shall so notify the person(s) involved within ten (10) days of the meeting. A copy of this notification shall be sent to the complainant, if any, and shall be submitted to the Assistant Secretary for FH&amp;EO. 
</P>
<P>(h) If the evidence indicates an apparent failure to comply with the Executive order or this part, and the matter cannot be resolved informally pursuant to § 107.45, the Director of the Office of Regional FH&amp;EO shall so notify the respondent and the complainant, if any, no later than ten (10) days after the date on which the compliance meeting is held, in writing by certified mail, return receipt requested, and shall advise the complainant, if any, and the respondent whether the Department will conduct a compliance review pursuant to § 107.50 or, where appropriate, refer the matter to the Assistant Secretary for FH&amp;EO for possible imposition of sanctions. A copy of this notification shall be submitted to the Assistant Secretary for FH&amp;EO. The compliance review shall be conducted to determine whether the respondent has complied with the provisions of E.O. 11063, title VIII of the Civil Rights Act of 1968, Department regulations and the Department's Affirmative Fair Housing Marketing requirements. 
</P>
<P>(i) If the respondent fails to attend a compliance meeting scheduled pursuant to this section, the Director of the Office of Regional FH&amp;EO shall notify the respondent no later than ten (10) days after the date of the scheduled meeting, in writing by certified mail, return receipt requested, as to whether the Department will conduct a compliance review or, where appropriate, refer the matter to the Assistant Secretary for FH&amp;EO for possible imposition of sanctions. A copy of this notification shall be submitted to the Assistant Secretary for FH&amp;EO and sent to the complainant, if any. 


</P>
</DIV8>


<DIV8 N="§ 107.45" NODE="24:1.2.1.1.4.0.67.10" TYPE="SECTION">
<HEAD>§ 107.45   Resolution of matters.</HEAD>
<P>(a) Attempts to resolve and remedy matters found in a complaint investigation or a compliance review shall be made through the methods of conference, conciliation, and persuasion. 
</P>
<P>(b) Resolution of matters pursuant to this section and § 107.40 need not be attempted where similar efforts by another Federal agency have been unsuccessful in ending and remedying the violation found with respect to the same respondent. 
</P>
<P>(c) Efforts to remedy matters shall be directed toward achieving a just resolution of the probable violation and obtaining assurance(s) that the respondent will satisfactorily remedy any violation of E.O. 11063 and will take actions to eliminate the discriminatory practices and prevent reoccurrences. Compensation to individuals from the respondent may also be considered. 
</P>
<P>(d) The terms of settlements shall be reduced to a written agreement, signed by the respondent and the Assistant Secretary for FH&amp;EO or a designee. Such settlements shall seek to protect the interests of the complainant, if any, other persons similarly affected, and the public interest. A written notice of the disposition of matters pursuant to this section and of the terms of settlements shall be given to the Area Manager by the Assistant Secretary for FH&amp;EO or a designee and to the complainant, if any. When the Assistant Secretary or a designee determines that there has been a violation of a settlement agreement, the Assistant Secretary immediately may take action to impose sanctions provided under this part, including the referral of the matter to the Attorney General for appropriate action. 


</P>
</DIV8>


<DIV8 N="§ 107.50" NODE="24:1.2.1.1.4.0.67.11" TYPE="SECTION">
<HEAD>§ 107.50   Compliance reviews.</HEAD>
<P>(a) Compliance reviews shall be conducted by the Director of the Office of Regional FH&amp;EO or a designee. Complaints alleging a violation(s) of this part or information ascertained in the absence of a complaint indicating apparent failure to comply with this part shall be referred immediately to the Director of the Office of Regional FH&amp;EO. The Regional Director of the Office having jurisdiction over the programs involved and the Area Manager shall be notified of all alleged violations of the regulations. A complaint is not a prerequisite for the initiation of compliance review. 
</P>
<P>(b) The purpose of a compliance review is to determine whether the respondent is in compliance with the Executive order and this part. Where allegations may also indicate a violation of the provisions of title VIII of the Civil Rights Act of 1968, HUD regulations issued thereunder and Affirmative Fair Housing Marketing requirements, a review may be undertaken to determine compliance with those requirements. The respondent shall be given at least five (5) days notice of the time set for any compliance review and the place or places for such review. The complainant shall also be notified of the compliance review. 


</P>
</DIV8>


<DIV8 N="§ 107.51" NODE="24:1.2.1.1.4.0.67.12" TYPE="SECTION">
<HEAD>§ 107.51   Findings of noncompliance.</HEAD>
<P>(a) A finding of noncompliance shall be made when the facts disclosed during an investigation or compliance review, or other information, indicate a failure to comply with the provisions of E.O. 11063 or this part. In no event will a finding of noncompliance precede the completion of the compliance meeting procedures set forth in § 107.40. 
</P>
<P>(b) Determinations of noncompliance with E.O. 11063 shall be made in any case in which the facts establish the existence of a discriminatory practice under § 107.15(g) 
</P>
<P>(c) The existence or use of a policy or practice, or any arrangement, criterion or other method of administration which has the effect of denying equal housing opportunity or which substantially impairs the ability of persons, because of race, color, religion (creed), sex or national origin, to apply for or receive the benefits of assistance shall be a basis for finding a discriminatory practice unless the respondent can establish that: 
</P>
<P>(1) The policy or practice is designed to serve a legitimate business necessity or governmental purpose of the respondent; 
</P>
<P>(2) The policy or practice effectively carries out the interest it is designed to serve; and 
</P>
<P>(3) No alternative course of action could be adopted that would enable respondent's interest to be served with a less discriminatory impact. 
</P>
<CITA TYPE="N">[45 FR 59514, Sept. 9, 1980, as amended at 50 FR 31360, Aug. 2, 1985]


</CITA>
</DIV8>


<DIV8 N="§ 107.55" NODE="24:1.2.1.1.4.0.67.13" TYPE="SECTION">
<HEAD>§ 107.55   Compliance report.</HEAD>
<P>(a) Following completion of efforts under this part, the Director of the Office of Regional FH&amp;EO or a designee shall prepare a compliance report promptly and the Assistant Secretary for FH&amp;EO shall make a finding of compliance or noncompliance. If it is found that the respondent is in compliance, all persons concerned shall be notified of the finding. Where a finding of noncompliance is made, the report shall specify the violations found. The Director of the Office of Regional FH&amp;EO shall send a copy of the report to the respondent by certified mail, return receipt requested, together with a Notice that the matter will be forwarded to the Assistant Secretary for FH&amp;EO for a determination as to whether actions will be initiated for the imposition of sanctions. The Regional Director of the Office having jurisdiction over the programs involved and the Area Manager shall also receive a copy of the report and the notice of intention to refer the matter to the Assistant Secretary for FH&amp;EO. 
</P>
<P>(b) The Notice will provide that the respondent shall have seven (7) days to respond to the violations found and resolve and remedy matters in the compliance report. At the expiration of the seven (7) day period the matter shall be referred to the Assistant Secretary for FH&amp;EO. 
</P>
<P>(c) The complainant shall be sent a copy of the findings and compliance report and shall have seven (7) days to comment thereon. 


</P>
</DIV8>


<DIV8 N="§ 107.60" NODE="24:1.2.1.1.4.0.67.14" TYPE="SECTION">
<HEAD>§ 107.60   Sanctions and penalties.</HEAD>
<P>(a) Failure or refusal to comply with E.O. 11063 or the requirements of this part shall be proper basis for applying sanctions. Violations of title VIII of the Civil Rights Act of 1968 or a state or local fair housing law, with respect to activities covered by the Executive order, or of the regulations and requirements under E.O. 11063 of other Federal Departments and agencies may also result in the imposition of sanctions by this Department. 
</P>
<P>(b) Such sanctions as are specified by E.O. 11063, the contract through which federal assistance is provided, and such sanctions as are specified by the rules or regulations of the Department governing the program under which federal assistance to the project is provided shall be applied in accordance with the relevant regulations. Actions that may be taken include: cancellation or termination, in whole or in part, of the contract or agreement; refusal to approve a lender or withdrawal of approval; or a determination of ineligibility, suspension, or debarment from any further assistance or contracts; provided, however, that sanctions of debarment, suspension, and ineligibility are subject to the Department's regulations under 2 CFR part 2424, and, further, that no sanction under section 302 (a), (b), and (c) of Executive Order 11063 shall be applied by the Assistant Secretary for Fair Housing and Equal Opportunity without the concurrence of the Secretary. 
</P>
<P>(c) The Department shall use its good offices in order to promote the abandonment of discriminatory practices with regard to residential property and related facilities provided with assistance prior to the effective date of E.O. 11063 and take appropriate actions permitted by law including the institution of appropriate litigation to provide such equal housing opportunities. 
</P>
<P>(d) In any case involving the failure of a lender to comply with the requirements of the Executive order or this part, the Assistant Secretary for FH&amp;EO shall notify the Federal financial regulatory agency having jurisdiction over the lender of the findings in the case. 
</P>
<CITA TYPE="N">[45 FR 59514, Sept. 9, 1980, as amended at 72 FR 73493, Dec. 27, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 107.65" NODE="24:1.2.1.1.4.0.67.15" TYPE="SECTION">
<HEAD>§ 107.65   Referral to the Attorney General.</HEAD>
<P>If the results of a complaint investigation or a compliance review demonstrate that any person, or specified class of persons, has violated E.O. 11063 or this part, and efforts to resolve the matter(s) by informal means have failed, the Assistant Secretary for FH&amp;EO in appropriate cases shall recommend that the General Counsel refer the case to the Attorney General of the United States for appropriate civil or criminal action under section 303 of E.O. 11063. 


</P>
</DIV8>

</DIV5>


<DIV5 N="108" NODE="24:1.2.1.1.5" TYPE="PART">
<HEAD>PART 108—COMPLIANCE PROCEDURES FOR AFFIRMATIVE FAIR HOUSING MARKETING
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3608, 3535(d); E.O. 11063, 27 FR 11527, 3 CFR, 1958-1963 Comp., p. 652; E.O. 12892, 59 FR 2939, 3 CFR, 1994 Comp., p. 849. 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>44 FR 47013, Aug. 9, 1979, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV8 N="§ 108.1" NODE="24:1.2.1.1.5.0.67.1" TYPE="SECTION">
<HEAD>§ 108.1   Purpose and application.</HEAD>
<P>(a) The primary purpose of this regulation is to establish procedures for determining whether or not an applicant's actions are in compliance with its approved Affirmative Fair Housing Marketing (AFHM) plan, AFHM Regulation (24 CFR 200.600), and AFHM requirements in Departmental programs. 
</P>
<P>(b) These regulations apply to all applicants for participation in subsidized and unsubsidized housing programs administered by the Department of Housing and Urban Development and to all other persons subject to Affirmative Fair Housing Marketing requirements in Department programs. 
</P>
<P>(c) The term <I>applicant</I> includes:
</P>
<P>(1) All persons whose applications are approved for development or rehabilitation of: Subdivisions; multifamily projects; manufactured home parks of five or more lots, units or spaces; or dwelling units, when the applicant's participation in FHA housing programs has exceeded, or would thereby exceed, development of five or more such dwelling units during the year preceding the application, except that there shall not be included in a determination of the number of dwelling units developed or rehabilitated by an applicant, those in which a single family dwelling is constructed or rehabilitated for occupancy by a mortgagor on property owned by the mortgagor and in which the applicant had no interest prior to entering into the contract for construction or rehabilitation. For the purposes of this definition, a person remains an <I>applicant</I> from the date of submission of an application through duration of receipt of assistance pursuant to such application.
</P>
<P>(2) All other persons subject to AFHM requirements in Departmental programs.
</P>
<P>(d) The term <I>person</I> includes one or more individuals, corporations, partnerships, associations, labor organizations, legal representatives or agents, mutual companies, joint-stock companies, trusts, unincorporated organizations, trustees, trustees in bankruptcy, receivers, fiduciaries and public entities. 
</P>
<P>(e) The term monitoring office includes any office within HUD designated by HUD to act as a monitoring office. As necessary, HUD will designate specific offices within HUD to act as monitoring offices through a notice published in the <E T="04">Federal Register.</E>
</P>
<P>(f) The term <I>civil rights/compliance reviewing office</I> includes any office within HUD designated by HUD to act as a civil rights/compliance reviewing office. As necessary, HUD will designate specific offices within HUD to act as civil rights/compliance reviewing offices through a notice published in the <E T="04">Federal Register.</E>
</P>
<CITA TYPE="N">[44 FR 47013, Aug. 9, 1979, as amended at 50 FR 9268, Mar. 7, 1985; 64 FR 44095, Aug. 12, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 108.5" NODE="24:1.2.1.1.5.0.67.2" TYPE="SECTION">
<HEAD>§ 108.5   Authority.</HEAD>
<P>The regulations in this part are issued pursuant to the authority to issue regulations granted to the Secretary by section 7(d) of the Department of Housing and Urban Development Act of 1965, 42 U.S.C. 3535(d). They implement the functions, powers, and duties imposed on the Secretary by Executive Order 11063, 27 FR 11527 and title VIII of the Civil Rights Act of 1968, 42 U.S.C. 3608. 


</P>
</DIV8>


<DIV8 N="§ 108.15" NODE="24:1.2.1.1.5.0.67.3" TYPE="SECTION">
<HEAD>§ 108.15   Pre-occupancy conference.</HEAD>
<P>Applicants shall submit a Notification of Intent to Begin Marketing to the monitoring office no later than 90 days prior to engaging in sales or rental marketing activities. Upon receipt of the Notification of Intent to Begin Marketing from the applicant, the monitoring office shall review any previously approved plan and may schedule a pre-occupancy conference. Such pre-occupancy conference shall be held prior to initiation of sales or rental marketing activities. At this conference, the previously approved AFHM plan shall be reviewed with the applicant to determine if the plan, and/or its proposed implementation, requires modification previous to initiation of marketing in order to achieve the objectives of the AFHM regulation and the plan. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2535-0027)
</APPRO>
<CITA TYPE="N">[44 FR 47013, Aug. 9, 1979, as amended at 48 FR 20903, May 10, 1983; 64 FR 44095, Aug. 12, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 108.20" NODE="24:1.2.1.1.5.0.67.4" TYPE="SECTION">
<HEAD>§ 108.20   Monitoring office responsibility for monitoring plans and reports.</HEAD>
<P>(a) <I>Submission of documentation.</I> Pursuant to initiation of marketing, the applicant shall submit to the monitoring office reports documenting the implementation of the AFHM plan, including sales or rental reports, as required by the Department. Copies of such documentation shall be forwarded to the civil rights/compliance reviewing office by the monitoring office as requested.
</P>
<P>(b) <I>Monitoring of AFHM plan.</I> The monitoring office is responsible for monitoring AFHM plans and providing technical assistance to the applicant in preparation or modification of such plans during the period of development and initial implementation.
</P>
<P>(c) <I>Review of applicant's reports.</I> Each sales or rental report shall be reviewed by the monitoring office as it is received. When sales or rental reports show that 20% of the units covered by the AFHM plan have been sold or rented, or whenever it appears that the plan may not accomplish its intended objective, the monitoring office shall notify the civil rights/compliance reviewing office.
</P>
<P>(d) <I>Failure of applicant to file documentation.</I> If the applicant fails to file required documentation, the applicant shall be sent a written notice indicating that if the delinquent documentation is not submitted to the monitoring office within 10 days from date of receipt of the notice, the matter will be referred to the civil rights/compliance reviewing office by the monitoring office for action which may lead to the imposition of sanctions.
</P>
<CITA TYPE="N">[64 FR 44096, Aug. 12, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 108.21" NODE="24:1.2.1.1.5.0.67.5" TYPE="SECTION">
<HEAD>§ 108.21   Civil rights/compliance reviewing office compliance responsibility.</HEAD>
<P>The civil rights/compliance reviewing office shall be responsible for determining whether an applicant's actions are in apparent compliance with its approved AFHM plan, the AFHM regulations, and this part and for determining changes or modifications necessary in the plan after initiation of marketing.
</P>
<CITA TYPE="N">[64 FR 44096, Aug. 12, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 108.25" NODE="24:1.2.1.1.5.0.67.6" TYPE="SECTION">
<HEAD>§ 108.25   Compliance meeting.</HEAD>
<P>(a) <I>Scheduling meeting.</I> If an applicant fails to comply with requirements under § 108.15 or § 108.20 or it appears that the goals of the AFHM plan may not be achieved, or that the implementation of the Plan should be modified, the civil rights/compliance reviewing office shall schedule a meeting with the applicant. The meeting shall be held at least ten days before the next sales or rental report is due. The purpose of the compliance meeting is to review the applicant's compliance with AFHM requirements and the implementation of the AFHM Plan and to indicate any changes or modifications which may be required in the Plan.
</P>
<P>(b) <I>Notice of Compliance Meeting.</I> A Notice of Compliance Meeting shall be sent to the last known address of the applicant, by certified mail or through personal service. The Notice will advise the applicant of the right to respond within seven (7) days to the matters identified as subjects of the meeting and to submit information and relevant data evidencing compliance with the AFHM regulations, the AFHM Plan, Executive Order 11063 and title VIII of the Civil Rights Act of 1968, when appropriate. If the applicant is a small entity, as defined by the regulations of the Small Business Administration, the Notice shall include notification that the entity may submit comment on HUD's actions to the Small Business and Agriculture Regulatory Enforcement Ombudsman, and shall include the appropriate contact information.
</P>
<P>(c) <I>Applicant data required.</I> The applicant will be requested in writing to provide, prior to or at the compliance meeting, specific documents, records, and other information relevant to compliance, including but not limited to: 
</P>
<P>(1) Copies or scripts of all advertising in the Standard Metropolitan Statistical Area (SMSA) or housing market area, as appropriate, including newspaper, radio and television advertising, and a photograph of any sale or rental sign at the site of construction; 
</P>
<P>(2) Copies of brochures and other printed material used in connection with sales or rentals; 
</P>
<P>(3) Evidence of outreach to community organizations; 
</P>
<P>(4) Any other evidence of affirmative outreach to groups which are not likely to apply for the subject housing; 
</P>
<P>(5) Evidence of instructions to employees with respect to company policy of nondiscrimination in housing; 
</P>
<P>(6) Description of training conducted with sales/rental staff; 
</P>
<P>(7) Evidence of nondiscriminatory hiring and recruiting policies for staff engaged in the sale or rental of properties, and data by race and sex of the composition of the staff; 
</P>
<P>(8) Copies of applications and waiting lists of prospective buyers or renters maintained by applicant; 
</P>
<P>(9) Copies of Sign-in Lists maintained on site for prospective buyers and renters who are shown the facility; 
</P>
<P>(10) Copies of the selection and screening criteria; 
</P>
<P>(11) Copies of relevant lease or sales agreements; 
</P>
<P>(12) Any other information which documents efforts to comply with an approved plan. 
</P>
<P>(d) <I>Preparation for the compliance meeting.</I> The monitoring office will provide information concerning the status of the project or housing involved to be presented to the applicant at the meeting. The monitoring office shall be notified of the meeting and may send representatives to the meeting.
</P>
<P>(e) <I>Resolution of matters.</I> Where matters raised in the compliance meetings are resolved through revision to the plan or its implementation, the terms of the resolution shall be reduced to writing and submitted to the civil rights/compliance reviewing office within 10 days of the date of the compliance meeting.
</P>
<P>(f) <I>Determination of compliance.</I> If the evidence shows no violation of the AFHM regulations and that the applicant is complying with its approved AFHM plan and this part, the civil rights/compliance reviewing office shall so notify the applicant within 10 days of the meeting.
</P>
<P>(g) <I>Determination of possible noncompliance.</I> If the evidence indicates an apparent failure to comply with the AFHM plan or the AFHM regulation, or if the matters raised cannot be resolved, the civil rights/compliance reviewing office shall so notify the applicant no later than ten (10) days after the date the compliance meeting is held, in writing by certified mail, return receipt requested, and shall advise the applicant that the Department will conduct a comprehensive compliance review or refer the matter to the Assistant Secretary for Fair Housing and Equal Opportunity for consideration of action including the imposition of sanctions. The purpose of a compliance review is to determine whether the applicant has complied with the provisions of Executive Order 11063, title VIII of the Civil Rights Act of 1968, and the AFHM regulations in conjunction with the applicant's specific AFHM plan previously approved by HUD.
</P>
<P>(h) <I>Failure of applicant to attend the meeting.</I> If the applicant fails to attend the meeting scheduled pursuant to this section, the civil rights/compliance reviewing office shall so notify the applicant no later than ten (10) days after the date of the scheduled meeting, in writing by certified mail, return receipt requested, and shall advise the applicant as to whether the civil rights/compliance reviewing office will conduct a comprehensive compliance review or refer the matter to the Assistant Secretary for Fair Housing and Equal Opportunity for consideration of action including the imposition of sanctions.
</P>
<CITA TYPE="N">[44 FR 47013, Aug. 9, 1979, as amended at 64 FR 44096, Aug. 12, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 108.35" NODE="24:1.2.1.1.5.0.67.7" TYPE="SECTION">
<HEAD>§ 108.35   Complaints.</HEAD>
<P>Individuals and private and public entities may file complaints alleging violations of the AFHM regulations or an approved AFHM plan with any monitoring office, civil rights/compliance reviewing office, or with the Assistant Secretary for FH&amp;EO. Complaints will be referred to the civil rights/compliance reviewing office. Where there is an allegation of a violation of title VIII the complaint also will be processed under part 105. 
</P>
<CITA TYPE="N">[44 FR 47013, Aug. 9, 1979, as amended at 64 FR 44096, Aug. 12, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 108.40" NODE="24:1.2.1.1.5.0.67.8" TYPE="SECTION">
<HEAD>§ 108.40   Compliance reviews.</HEAD>
<P>(a) <I>General.</I> All compliance reviews shall be conducted by the civil rights/compliance reviewing office. Complaints alleging a violation(s) of the AFHM regulations, or information ascertained in the absence of a complaint indicating an applicant's failure to comply with an AFHM plan, shall be referred immediately to the civil rights/compliance reviewing office. The monitoring office shall be notified as appropriate of all alleged violations of the AFHM regulations or alleged failure to comply with an AFHM plan.
</P>
<P>(b) <I>Initiation of compliance reviews.</I> Even in the absence of a complaint or other information indicating noncompliance pursuant to paragraph (a), the civil rights/compliance reviewing office may conduct periodic compliance reviews throughout the life of the mortgage in the case of multi-family projects and throughout the duration of the Housing Assistance Payments Contract with the Department in the case of housing assisted under section 8 of the United States Housing Act of 1937, as amended, 42 U.S.C. 1437.
</P>
<P>(c) <I>Nature of compliance reviews.</I> The purpose of a compliance review is to determine whether the applicant is in compliance with the Department's AFHM requirements and the applicant's approved AFHM plan. Where allegations under this part may also constitute a violation of the provisions of Executive Order 11063 or title VIII, the review will also determine compliance with the requirements thereof. The applicant shall be given at least five (5) days notice of the time set for any compliance review and the place or places for such review. The compliance review will cover the following areas:
</P>
<P>(1) Applicant's sales and rental practices, including practices in soliciting buyers and tenants, determining eligibility, selecting and rejecting buyers and renters, and in concluding sales and rental transactions.
</P>
<P>(2) Programs to attract minority and majority buyers and renters regardless of sex, including: 
</P>
<P>(i) Use of advertising media, brochures, and pamphlets; 
</P>
<P>(ii) Conformance with both the Department's Fair Housing Poster Regulation (24 CFR part 110) and the Advertising Guidelines for Fair Housing (37 FR 6700) and any revisions thereto.
</P>
<P>(3) Data relating to:
</P>
<P>(i) The size and location of units; 
</P>
<P>(ii) Services provided; 
</P>
<P>(iii) Sales and/or rental price ranges; 
</P>
<P>(iv) The race and sex of buyers and/or renters; 
</P>
<P>(v) Race and sex of staff engaged in sale or rental of dwellings. 
</P>
<P>(4) Other matters relating to the marketing or sales of dwellings under HUD affirmative marketing requirements, the AFMH Plan and this part. 
</P>
<CITA TYPE="N">[44 FR 47013, Aug. 9, 1979, as amended at 64 FR 44096, Aug. 12, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 108.45" NODE="24:1.2.1.1.5.0.67.9" TYPE="SECTION">
<HEAD>§ 108.45   Compliance report.</HEAD>
<P>Following a compliance review, a report shall be prepared promptly and the Assistant Secretary for FH&amp;EO shall make a finding of compliance or noncompliance. If it is found that the applicant is in compliance, all parties concerned shall be notified of the findings. Whenever a finding of noncompliance is made pursuant to this part, the report shall list specifically the violations found. The applicant shall be sent a copy of the report by certified mail, return receipt requested, together with a notice that, if the matter cannot be resolved within ten days of receipt of the Notice, the matter will be referred to the Assistant Secretary for FH&amp;EO to make a determination as to whether actions will be initiated for the imposition of sanctions.
</P>
<CITA TYPE="N">[44 FR 47013, Aug. 9, 1979, as amended at 64 FR 44097, Aug. 12, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 108.50" NODE="24:1.2.1.1.5.0.67.10" TYPE="SECTION">
<HEAD>§ 108.50   Sanctions.</HEAD>
<P>Applicants failing to comply with the requirements of these regulations, the AFHM regulations, or an AFHM plan will make themselves liable to sanctions authorized by law, regulations, agreements, rules, or policies governing the program pursuant to which the application was made, including, but not limited to, denial of further participation in Departmental programs and referral to the Department of Justice for suit by the United States for injunctive or other appropriate relief. 


</P>
</DIV8>

</DIV5>


<DIV5 N="110" NODE="24:1.2.1.1.6" TYPE="PART">
<HEAD>PART 110—FAIR HOUSING POSTER 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d), 3600-3620. 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>37 FR 3429, Feb. 16, 1972, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:1.2.1.1.6.1" TYPE="SUBPART">
<HEAD>Subpart A—Purpose and Definitions</HEAD>


<DIV8 N="§ 110.1" NODE="24:1.2.1.1.6.1.67.1" TYPE="SECTION">
<HEAD>§ 110.1   Purpose.</HEAD>
<P>The regulations set forth in this part contain the procedures established by the Secretary of Housing and Urban Development with respect to the display of a fair housing poster by persons subject to sections 804 through 806 of the Fair Housing Act, 42 U.S.C. 3604-3606.
</P>
<CITA TYPE="N">[54 FR 3310, Jan. 23, 1989]


</CITA>
</DIV8>


<DIV8 N="§ 110.5" NODE="24:1.2.1.1.6.1.67.2" TYPE="SECTION">
<HEAD>§ 110.5   Definitions.</HEAD>
<P>(a) The terms <I>Department</I> and <I>Secretary</I> are defined in 24 CFR part 5. 
</P>
<P>(b) <I>Discriminatory housing practice</I> means an act that is unlawful under section 804, 805, 806, or 818 of the Act. 
</P>
<P>(c) <I>Dwelling</I> means any building, structure, or portion thereof which is occupied as, or designed or intended for occupancy as, a residence by one or more families, and any vacant land which is offered for sale or lease for the construction or location thereon of any such building, structure, or portion thereof. 
</P>
<P>(d) <I>Family</I> includes a single individual. 
</P>
<P>(e) <I>Person</I> includes one or more individuals, corporations, partnerships, associations, labor organizations, legal representatives, mutual companies, joint-stock companies, trusts, unincorporated organizations, trustees, trustees in cases under title 11 U.S.C., receivers and fiduciaries. 
</P>
<P>(f) <I>Fair housing poster</I> means the poster prescribed by the Secretary for display by persons subject to sections 804-806 of the Act.
</P>
<P>(g) <I>The Act</I> means the Fair Housing Act (The Civil Rights Act of 1968, as amended by the Fair Housing Amendments Act of 1988), 42 U.S.C. 3600, <I>et seq.</I>
</P>
<P>(h) <I>Person in the business of selling or renting dwellings</I> means a person as defined in section 803(c) of the Act. 
</P>
<CITA TYPE="N">[37 FR 3429, Feb. 16, 1972, as amended at 54 FR 3311, Jan. 23, 1989; 61 FR 5205, Feb. 9, 1996] 


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.2.1.1.6.2" TYPE="SUBPART">
<HEAD>Subpart B—Requirements for Display of Posters</HEAD>


<DIV8 N="§ 110.10" NODE="24:1.2.1.1.6.2.67.1" TYPE="SECTION">
<HEAD>§ 110.10   Persons subject.</HEAD>
<P>(a) Except to the extent that paragraph (b) of this section applies, all persons subject to section 804 of the Act, Discrimination in the Sale or Rental of Housing and Other Prohibited Practices, shall post and maintain a fair housing poster as follows: 
</P>
<P>(1) With respect to a single-family dwelling (not being offered for sale or rental in conjunction with the sale or rental of other dwellings) offered for sale or rental through a real estate broker, agent, salesman, or person in the business of selling or renting dwellings, such person shall post and maintain a fair housing poster at any place of business where the dwelling is offered for sale or rental. 
</P>
<P>(2) With respect to all other dwellings covered by the Act: 
</P>
<P>(i) A fair housing poster shall be posted and maintained at any place of business where the dwelling is offered for sale or rental, and 
</P>
<P>(ii) A fair housing poster shall be posted and maintained at the dwelling, except that with respect to a single-family dwelling being offered for sale or rental in conjunction with the sale or rental of other dwellings, the fair housing poster may be posted and maintained at the model dwellings instead of at each of the individual dwellings. 
</P>
<P>(3) With respect to those dwellings to which paragraph (a)(2) of this section applies, the fair housing poster must be posted at the beginning of construction and maintained throughout the period of construction and sale or rental. 
</P>
<P>(b) This part shall not require posting and maintaining a fair housing poster: 
</P>
<P>(1) On vacant land, or 
</P>
<P>(2) At any single-family dwelling, unless such dwelling 
</P>
<P>(i) Is being offered for sale or rental in conjunction with the sale or rental of other dwellings in which circumstances a fair housing poster shall be posted and maintained as specified in paragraph (a)(2)(ii) of this section, or 
</P>
<P>(ii) Is being offered for sale or rental through a real estate broker, agent, salesman, or person in the business of selling or renting dwellings in which circumstances a fair housing poster shall be posted and maintained as specified in paragraph (a)(1) of this section, 
</P>
<P>(c) All persons subject to section 805 of the Act, Discrimination In Residential Real Estate-Related Transactions shall post and maintain a fair housing poster at all their places of business which participate in the covered activities. 
</P>
<P>(d) All persons subject to section 806 of the Act, Discrimination in the Provision of Brokerage Services, shall post and maintain a fair housing poster at all their places of business. 
</P>
<CITA TYPE="N">[37 FR 3429, Feb. 16, 1972, as amended at 54 FR 3311, Jan. 23, 1989]


</CITA>
</DIV8>


<DIV8 N="§ 110.15" NODE="24:1.2.1.1.6.2.67.2" TYPE="SECTION">
<HEAD>§ 110.15   Location of posters.</HEAD>
<P>All fair housing posters shall be prominently displayed so as to be readily apparent to all persons seeking housing accommodations or seeking to engage in residential real estate-related transactions or brokerage services as contemplated by sections 804 through 806 of the Act. 
</P>
<CITA TYPE="N">[54 FR 3311, Jan. 23, 1989]


</CITA>
</DIV8>


<DIV8 N="§ 110.20" NODE="24:1.2.1.1.6.2.67.3" TYPE="SECTION">
<HEAD>§ 110.20   Availability of posters.</HEAD>
<P>All persons subject to this part may obtain fair housing posters from the Department's regional and area offices. A facsimile may be used if the poster and the lettering are equivalent in size and legibility to the poster available from the Department. 
</P>
<CITA TYPE="N">[37 FR 3429, Feb. 16, 1972]


</CITA>
</DIV8>


<DIV8 N="§ 110.25" NODE="24:1.2.1.1.6.2.67.4" TYPE="SECTION">
<HEAD>§ 110.25   Description of posters.</HEAD>
<P>(a) The fair housing poster shall be 11 inches by 14 inches and shall bear the following legend: 
</P>
<img src="/graphics/ec12oc91.008.gif"/>
<HD3>EQUAL HOUSING OPPORTUNITY 
</HD3>
<HD3>We do Business in Accordance With the Fair Housing Act 
</HD3>
<EXTRACT>
<FP>(The Civil Rights Act of 1968, as amended by the Fair Housing Amendments Act of 1988) 
</FP>
<HD1>IT IS ILLEGAL TO DISCRIMINATE AGAINST 
</HD1>
<HD1>ANY PERSON BECAUSE OF RACE, COLOR, RELIGION, SEX, HANDICAP, FAMILIAL STATUS (HAVING ONE OR MORE CHILDREN), OR NATIONAL ORIGIN 
</HD1>
<P>• In the sale or rental of housing or residential lots. 
</P>
<P>• In advertising the sale or rental of housing. 
</P>
<P>• In the financing of housing. 
</P>
<P>• In the appraisal of housing. 
</P>
<P>• In the provision of real estate brokerage services. 
</P>
<P>• Blockbusting is also illegal. 
</P>
<P>Anyone who feels he or she has been discriminated against should send a complaint to:
</P>
<FP-1>U.S. Department of Housing and Urban Development, Assistant Secretary for Fair Housing and Equal Opportunity, Washington, DC 20410 
</FP-1>
<FP>  or
</FP>
<FP-1>HUD Region or [Area Office stamp]</FP-1></EXTRACT>
<P>(b) The Assistant Secretary for Equal Opportunity may grant a waiver permitting the substitution of a poster prescribed by a Federal financial regulatory agency for the fair housing poster described in paragraph (a) of this section. While such waiver remains in effect, compliance with the posting requirements of such regulatory agency shall be deemed compliance with the posting requirements of this part. Such waiver shall not affect the applicability of all other provisions of this part. 
</P>
<CITA TYPE="N">[37 FR 3429, Feb. 16, 1972, as amended at 40 FR 20079, May 8, 1975; 54 FR 3311, Jan. 23, 1989]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:1.2.1.1.6.3" TYPE="SUBPART">
<HEAD>Subpart C—Enforcement</HEAD>


<DIV8 N="§ 110.30" NODE="24:1.2.1.1.6.3.67.1" TYPE="SECTION">
<HEAD>§ 110.30   Effect of failure to display poster.</HEAD>
<P>Any person who claims to have been injured by a discriminatory housing practice may file a complaint with the Secretary pursuant to part 105 of this chapter. A failure to display the fair housing poster as required by this part shall be deemed prima facie evidence of a discriminatory housing practice. 
</P>
<CITA TYPE="N">[37 FR 3429, Feb. 16, 1972]


</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="115" NODE="24:1.2.1.1.7" TYPE="PART">
<HEAD>PART 115—CERTIFICATION AND FUNDING OF STATE AND LOCAL FAIR HOUSING ENFORCEMENT AGENCIES 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3601-19; 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>72 FR 19074, Apr. 16, 2007, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:1.2.1.1.7.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 115.100" NODE="24:1.2.1.1.7.1.67.1" TYPE="SECTION">
<HEAD>§ 115.100   Definitions.</HEAD>
<P>(a) The terms “Fair Housing Act,” “HUD,” and “the Department,” as used in this part, are defined in 24 CFR 5.100.
</P>
<P>(b) The terms “aggrieved person,” “complainant,” “conciliation,” “conciliation agreement,” “discriminatory housing practice,” “dwelling,” “handicap,” “person,” “respondent,” “secretary,” and “state,” as used in this part, are defined in Section 802 of the Fair Housing Act (42 U.S.C. 3602).
</P>
<P>(c) <I>Other definitions.</I> The following definitions also apply to this part:
</P>
<P><I>Act</I> means the Fair Housing Act, as defined in 24 CFR 5.100.
</P>
<P><I>Assistant Secretary</I> means the Assistant Secretary for Fair Housing and Equal Opportunity.
</P>
<P><I>Certified agency</I> is an agency that has been granted certification by the Assistant Secretary in accordance with the requirements of this part.
</P>
<P><I>Cooperative agreement</I> is the instrument HUD will use to provide funds. The Cooperative Agreement includes attachments and/or appendices establishing requirements relating to the operation and performance of the agency.
</P>
<P><I>Cooperative agreement officer (CAO)</I> is the administrator of the funds awarded pursuant to this part and is a regional director of the Office of Fair Housing and Equal Opportunity.
</P>
<P><I>Dual-filed complaint</I> means a housing discrimination complaint that has been filed with both HUD and the agency that has been granted interim certification or certification by the Assistant Secretary.
</P>
<P><I>FHAP</I> means the Fair Housing Assistance Program.
</P>
<P><I>FHEO</I> means HUD's Office of Fair Housing and Equal Opportunity.
</P>
<P><I>FHEO regional director</I> means a regional director of the Office of Fair Housing and Equal Opportunity.
</P>
<P><I>Fair housing law</I> or <I>Law</I> refers to both state fair housing laws and local fair housing laws.
</P>
<P><I>Final administrative disposition</I> means an agency's completion of a case following a reasonable cause finding, including, but not limited to, an agency-approved settlement or a final, administrative decision issued by commissioners, hearing officers or administrative law judges. Final administrative disposition does not include dispositions in judicial proceedings resulting from election or appeal.
</P>
<P><I>Government Technical Monitor (GTM)</I> means the HUD staff person who has been designated to provide technical and financial oversight and evaluation of the FHAP grantee's performance.
</P>
<P><I>Government Technical Representative (GTR)</I> means the HUD staff person who is responsible for the technical administration of the FHAP grant, the evaluation of performance under the FHAP grant, the acceptance of technical reports or projects, the approval of payments, and other such specific responsibilities as may be stipulated in the FHAP grant.
</P>
<P><I>Impracticable</I>, as used in this part, is when complaint processing is delayed by circumstances beyond the control of the interim or certified agency. Those situations include, but are not limited to, complaints involving complex issues requiring extensive investigations, complaints involving new and complicated areas of law that need to be analyzed, and where a witness is discovered late in the investigation and needs to be interviewed.
</P>
<P><I>Interim agency</I> is an agency that has been granted interim certification by the Assistant Secretary.
</P>
<P><I>Ordinance</I>, as used in this part, means a law enacted by the legislative body of a municipality.
</P>
<P><I>Statute</I>, as used in this part, means a law enacted by the legislative body of a state.
</P>
<P><I>Testing</I> refers to the use of an individual or individuals (“testers”) who, without a bona fide intent to rent or purchase a house, apartment, or other dwelling, pose as prospective renters or purchasers for the purpose of gathering information that may indicate whether a housing provider is complying with fair housing laws.


</P>
</DIV8>


<DIV8 N="§ 115.101" NODE="24:1.2.1.1.7.1.67.2" TYPE="SECTION">
<HEAD>§ 115.101   Program administration.</HEAD>
<P>(a) <I>Authority and responsibility.</I> The Secretary has delegated the authority and responsibility for administering this part to the Assistant Secretary.
</P>
<P>(b) <I>Delegation of Authority.</I> The Assistant Secretary retains the right to make final decisions concerning the granting and withdrawal of substantial equivalency interim certification and certification. The Assistant Secretary delegates the authority and responsibility for administering the remainder of this part to the FHEO regional director. This includes assessing the performance of interim and certified agencies as described in § 115.206. This also includes the offering of a Performance Improvement Plan (PIP) as described in § 115.210 and the suspension of interim certification or certification due to performance deficiencies as described in § 115.210.


</P>
</DIV8>


<DIV8 N="§ 115.102" NODE="24:1.2.1.1.7.1.67.3" TYPE="SECTION">
<HEAD>§ 115.102   Public notices.</HEAD>
<P>(a) Periodically, the Assistant Secretary will publish the following public notices in the <E T="04">Federal Register</E>:
</P>
<P>(1) A list of all interim and certified agencies; and
</P>
<P>(2) A list of agencies to which a withdrawal of interim certification or certification has been proposed.
</P>
<P>(b) On an annual basis, the Assistant Secretary may publish in the <E T="04">Federal Register</E> a notice that identifies all agencies that have received interim certification during the prior year. The notice will invite the public to comment on the state and local laws of the new interim agencies, as well as on the performance of the agencies in enforcing their laws. All comments will be considered before a final decision on certification is made.


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.2.1.1.7.2" TYPE="SUBPART">
<HEAD>Subpart B—Certification of Substantially Equivalent Agencies</HEAD>


<DIV8 N="§ 115.200" NODE="24:1.2.1.1.7.2.67.1" TYPE="SECTION">
<HEAD>§ 115.200   Purpose.</HEAD>
<P>This subpart implements section 810(f) of the Fair Housing Act. The purpose of this subpart is to set forth:
</P>
<P>(a) The basis for agency interim certification and certification;
</P>
<P>(b) Procedures by which a determination is made to grant interim certification or certification;
</P>
<P>(c) How the Department will evaluate the performance of an interim and certified agency;
</P>
<P>(d) Procedures that the Department will utilize when an interim or certified agency performs deficiently;
</P>
<P>(e) Procedures that the Department will utilize when there are changes limiting the effectiveness of an interim or certified agency's law;
</P>
<P>(f) Procedures for renewal of certification; and
</P>
<P>(g) Procedures when an agency requests interim certification or certification after a withdrawal.


</P>
</DIV8>


<DIV8 N="§ 115.201" NODE="24:1.2.1.1.7.2.67.2" TYPE="SECTION">
<HEAD>§ 115.201   The two phases of substantial equivalency certification.</HEAD>
<P>Substantial equivalency certification is granted if the Department determines that a state or local agency enforces a law that is substantially equivalent to the Fair Housing Act with regard to substantive rights, procedures, remedies, and the availability of judicial review. The Department has developed a two-phase process of substantial equivalency certification.
</P>
<P>(a) <I>Adequacy of Law.</I> In the first phase, the Assistant Secretary will determine whether, on its face, the fair housing law that the agency administers provides rights, procedures, remedies, and the availability of judicial review that are substantially equivalent to those provided in the federal Fair Housing Act. An affirmative conclusion may result in the Department offering the agency interim certification. An agency must obtain interim certification prior to obtaining certification.
</P>
<P>(b) <I>Adequacy of Performance.</I> In the second phase, the Assistant Secretary will determine whether, in operation, the fair housing law that the agency administers provides rights, procedures, remedies, and the availability of judicial review that are substantially equivalent to those provided in the federal Fair Housing Act. An affirmative conclusion will result in the Department offering the agency certification.


</P>
</DIV8>


<DIV8 N="§ 115.202" NODE="24:1.2.1.1.7.2.67.3" TYPE="SECTION">
<HEAD>§ 115.202   Request for interim certification.</HEAD>
<P>(a) A request for interim certification under this subpart shall be filed with the Assistant Secretary by the state or local official having principal responsibility for the administration of the state or local fair housing law. The request shall be supported by the text of the jurisdiction's fair housing law, the law creating and empowering the agency, all laws referenced in the jurisdiction's fair housing law, any regulations and directives issued under the law, and any formal opinions of the State Attorney General or the chief legal officer of the jurisdiction that pertain to the jurisdiction's fair housing law. A request shall also include organizational information of the agency responsible for administering and enforcing the law.
</P>
<P>(b) The request and supporting materials shall be filed with the Assistant Secretary for Fair Housing and Equal Opportunity, Department of Housing and Urban Development, 451 Seventh Street, SW., Washington, DC 20410-2000. The Assistant Secretary shall forward a copy of the request and supporting materials to the appropriate FHEO regional director. A copy of the request and supporting materials will be kept available for public examination and copying at:
</P>
<P>(1) The office of the Assistant Secretary; and
</P>
<P>(2) The office of the state or local agency charged with administration and enforcement of the state or local fair housing law.
</P>
<P>(c) Upon receipt of a request, HUD will analyze the agency's fair housing law to determine whether it meets the criteria identified in § 115.204.
</P>
<P>(d) HUD shall review a request for interim certification from a local agency located in a state with an interim certified or certified substantially equivalent state agency. However, in the request for interim certification, the local agency must certify that the substantially equivalent state law does not prohibit the local agency from administering and enforcing its own fair housing law within the locality.


</P>
</DIV8>


<DIV8 N="§ 115.203" NODE="24:1.2.1.1.7.2.67.4" TYPE="SECTION">
<HEAD>§ 115.203   Interim certification procedures.</HEAD>
<P>(a) Upon receipt of a request for interim certification filed under § 115.202, the Assistant Secretary may request further information necessary for a determination to be made under this section. The Assistant Secretary may consider the relative priority given to fair housing administration, as compared to the agency's other duties and responsibilities, as well as the compatibility or potential conflict of fair housing objectives with these other duties and responsibilities.
</P>
<P>(b) If the Assistant Secretary determines, after application of the criteria set forth in § 115.204, that the state or local law, on its face, provides substantive rights, procedures, remedies, and judicial review procedures for alleged discriminatory housing practices that are substantially equivalent to those provided in the Act, the Assistant Secretary may offer to enter into an Agreement for the Interim Referral of Complaints and Other Utilization of Services (interim agreement). The interim agreement will outline the procedures and authorities upon which the interim certification is based.
</P>
<P>(c) Such interim agreement, after it is signed by all appropriate signatories, will result in the agency receiving interim certification. Appropriate signatories include the Assistant Secretary, the FHEO regional director, and the state or local official having principal responsibility for the administration of the state or local fair housing law.
</P>
<P>(d) Interim agreements shall be for a term of no more than three years.
</P>
<P>(e) All regulations, rules, directives, and/or opinions of the State Attorney General or the jurisdiction's chief legal officer that are necessary for the law to be substantially equivalent on its face must be enacted and effective in order for the Assistant Secretary to offer the agency an interim agreement.
</P>
<P>(f) Interim certification required prior to certification. An agency is required to obtain interim certification prior to obtaining certification.


</P>
</DIV8>


<DIV8 N="§ 115.204" NODE="24:1.2.1.1.7.2.67.5" TYPE="SECTION">
<HEAD>§ 115.204   Criteria for adequacy of law.</HEAD>
<P>(a) In order for a determination to be made that a state or local fair housing agency administers a law, which, on its face, provides rights and remedies for alleged discriminatory housing practices that are substantially equivalent to those provided in the Act, the law must:
</P>
<P>(1) Provide for an administrative enforcement body to receive and process complaints and provide that:
</P>
<P>(i) Complaints must be in writing;
</P>
<P>(ii) Upon the filing of a complaint, the agency shall serve notice upon the complainant acknowledging the filing and advising the complainant of the time limits and choice of forums provided under the law;
</P>
<P>(iii) Upon the filing of a complaint, the agency shall promptly serve notice on the respondent or person charged with the commission of a discriminatory housing practice advising of his or her procedural rights and obligations under the statute or ordinance, together with a copy of the complaint;
</P>
<P>(iv) A respondent may file an answer to a complaint.
</P>
<P>(2) Delegate to the administrative enforcement body comprehensive authority, including subpoena power, to investigate the allegations of complaints, and power to conciliate complaints, and require that:
</P>
<P>(i) The agency commences proceedings with respect to the complaint before the end of the 30th day after receipt of the complaint;
</P>
<P>(ii) The agency investigates the allegations of the complaint and complete the investigation within the timeframe established by section 810(a)(1)(B)(iv) of the Act or comply with the notification requirements of section 810(a)(1)(C) of the Act;
</P>
<P>(iii) The agency make final administrative disposition of a complaint within one year of the date of receipt of a complaint, unless it is impracticable to do so. If the agency is unable to do so, it shall notify the parties, in writing, of the reasons for not doing so;
</P>
<P>(iv) Any conciliation agreement arising out of conciliation efforts by the agency shall be an agreement between the respondent, the complainant, and the agency and shall require the approval of the agency;
</P>
<P>(v) Each conciliation agreement shall be made public, unless the complainant and respondent otherwise agree and the agency determines that disclosure is not required to further the purpose of the law.
</P>
<P>(3) Not place excessive burdens on the aggrieved person that might discourage the filing of complaints, such as:
</P>
<P>(i) A provision that a complaint must be filed within any period of time less than 180 days after an alleged discriminatory practice has occurred or terminated;
</P>
<P>(ii) Anti-testing provisions;
</P>
<P>(iii) Provisions that could subject an aggrieved person to costs, criminal penalties, or fees in connection with the filing of complaints.
</P>
<P>(4) Not contain exemptions that substantially reduce the coverage of housing accommodations as compared to section 803 of the Act.
</P>
<P>(5) Provide the same protections as those afforded by sections 804, 805, 806, and 818 of the Act, consistent with HUD's implementing regulations found at 24 CFR part 100.
</P>
<P>(b) In addition to the factors described in paragraph (a) of this section, the provisions of the state or local law must afford administrative and judicial protection and enforcement of the rights embodied in the law.
</P>
<P>(1) The agency must have the authority to:
</P>
<P>(i) Grant or seek prompt judicial action for appropriate temporary or preliminary relief pending final disposition of a complaint, if such action is necessary to carry out the purposes of the law;
</P>
<P>(ii) Issue and seek enforceable subpoenas;
</P>
<P>(iii) Grant actual damages in an administrative proceeding or provide adjudication in court at agency expense to allow the award of actual damages to an aggrieved person;
</P>
<P>(iv) Grant injunctive or other equitable relief, or be specifically authorized to seek such relief in a court of competent jurisdiction;
</P>
<P>(v) Provide an administrative proceeding in which a civil penalty may be assessed or provide adjudication in court, at agency expense, allowing the assessment of punitive damages against the respondent.
</P>
<P>(2) If an agency's law offers an administrative hearing, the agency must also provide parties an election option substantially equivalent to the election provisions of section 812 of the Act.
</P>
<P>(3) Agency actions must be subject to judicial review upon application by any party aggrieved by a final agency order.
</P>
<P>(4) Judicial review of a final agency order must be in a court with authority to:
</P>
<P>(i) Grant to the petitioner, or to any other party, such temporary relief, restraining order, or other order as the court determines is just and proper;
</P>
<P>(ii) Affirm, modify, or set aside, in whole or in part, the order, or remand the order for further proceeding; and
</P>
<P>(iii) Enforce the order to the extent that the order is affirmed or modified.
</P>
<P>(c) The requirement that the state or local law prohibit discrimination on the basis of familial status does not require that the state or local law limit the applicability of any reasonable local, state, or federal restrictions regarding the maximum number of occupants permitted to occupy a dwelling.
</P>
<P>(d) The state or local law may assure that no prohibition of discrimination because of familial status applies to housing for older persons, as described in 24 CFR part 100, subpart E.
</P>
<P>(e) A determination of the adequacy of a state or local fair housing law “on its face” is intended to focus on the meaning and intent of the text of the law, as distinguished from the effectiveness of its administration. Accordingly, this determination is not limited to an analysis of the literal text of the law. Regulations, directives, rules of procedure, judicial decisions, or interpretations of the fair housing law by competent authorities will be considered in making this determination.
</P>
<P>(f) A law will be found inadequate “on its face” if it permits any of the agency's decision-making authority to be contracted out or delegated to a non-governmental authority. For the purposes of this paragraph, “decision-making authority” includes but is not limited to:
</P>
<P>(1) Acceptance of a complaint;
</P>
<P>(2) Approval of a conciliation agreement;
</P>
<P>(3) Dismissal of a complaint;
</P>
<P>(4) Any action specified in § 115.204(a)(2)(iii) or (b)(1); and
</P>
<P>(5) Any decision-making regarding whether a particular matter will or will not be pursued.
</P>
<P>(g) The state or local law must provide for civil enforcement of the law by an aggrieved person by the commencement of an action in an appropriate court at least one year after the occurrence or termination of an alleged discriminatory housing practice. The court must be empowered to:
</P>
<P>(1) Award the plaintiff actual and punitive damages;
</P>
<P>(2) Grant as relief, as it deems appropriate, any temporary or permanent injunction, temporary restraining order or other order; and
</P>
<P>(3) Allow reasonable attorney's fees and costs.
</P>
<P>(h) If a state or local law is different than the Act in a way that does not diminish coverage of the Act, including, but not limited to, the protection of additional prohibited bases, then the state or local law may still be found substantially equivalent.


</P>
</DIV8>


<DIV8 N="§ 115.205" NODE="24:1.2.1.1.7.2.67.6" TYPE="SECTION">
<HEAD>§ 115.205   Certification procedures.</HEAD>
<P>(a) <I>Certification.</I> (1) If the Assistant Secretary determines, after application of criteria set forth in §§ 115.204, 115.206, and this section, that the state or local law, both “on its face” and “in operation,” provides substantive rights, procedures, remedies, and judicial review procedures for alleged discriminatory housing practices that are substantially equivalent to those provided in the Act, the Assistant Secretary may enter into a Memorandum of Understanding (MOU) with the agency.
</P>
<P>(2) The MOU is a written agreement providing for the referral of complaints to the agency and for communication procedures between the agency and HUD that are adequate to permit the Assistant Secretary to monitor the agency's continuing substantial equivalency certification.
</P>
<P>(3) The MOU, after it is signed by all appropriate signatories, may authorize an agency to be a certified agency for a period of not more than five years. Appropriate signatories include the Assistant Secretary, the FHEO regional director, and the authorized employee(s) of the agency.
</P>
<P>(b) In order to receive certification, during the 60 days prior to the expiration of the agency's interim agreement, the agency must certify to the Assistant Secretary that the state or local fair housing law, “on its face,” continues to be substantially equivalent to the Act (i.e., there have been no amendments to the state or local fair housing law, adoption of rules or procedures concerning the fair housing law, or judicial or other authoritative interpretations of the fair housing law that limit the effectiveness of the agency's fair housing law).


</P>
</DIV8>


<DIV8 N="§ 115.206" NODE="24:1.2.1.1.7.2.67.7" TYPE="SECTION">
<HEAD>§ 115.206   Performance assessments; Performance standards.</HEAD>
<P>(a) <I>Frequency of on-site performance assessment during interim certification.</I> The Assistant Secretary, through the appropriate FHEO regional office, may conduct an on-site performance assessment not later than six months after the execution of the interim agreement. An on-site performance assessment may also be conducted during the six months immediately prior to the expiration of the interim agreement. HUD has the discretion to conduct additional performance assessments during the period of interim certification, as it deems necessary.
</P>
<P>(b) <I>Frequency of on-site performance assessment during certification.</I> During certification, the Assistant Secretary through the FHEO regional office, may conduct on-site performance assessments every 24 months. HUD has the discretion to conduct additional performance assessments during the period of certification, as it deems necessary.
</P>
<P>(c) In conducting the performance assessment, the FHEO regional office shall determine whether the agency engages in timely, comprehensive, and thorough fair housing complaint investigation, conciliation, and enforcement activities. In the performance assessment report, the FHEO regional office may recommend to the Assistant Secretary whether the agency should continue to be interim certified or certified. In conducting the performance assessment, the FHEO regional office shall also determine whether the agency is in compliance with the requirements for participation in the FHAP enumerated in §§ 115.307, 115.308, 115.309, 115.310, and 115.311 of this part. In the performance assessment report, the FHEO regional office shall identify whether the agency meets the requirements of §§ 115.307, 115.308, 115.309, 115.310, and 115.311 of this part, and, therefore, should continue receiving funding under the FHAP.
</P>
<P>(d) At a minimum, the performance assessment will consider the following to determine the effectiveness of an agency's fair housing complaint processing, consistent with such guidance as may be issued by HUD:
</P>
<P>(1) The agency's case processing procedures;
</P>
<P>(2) The thoroughness of the agency's case processing;
</P>
<P>(3) A review of cause and no cause determinations for quality of investigations and consistency with appropriate standards;
</P>
<P>(4) A review of conciliation agreements and other settlements;
</P>
<P>(5) A review of the agency's administrative closures; and
</P>
<P>(6) A review of the agency's enforcement procedures, including administrative hearings and judicial proceedings.
</P>
<P>(e) <I>Performance standards.</I> HUD shall utilize the following performance standards while conducting performance assessments. If an agency does not meet one or more performance standard(s), HUD shall utilize the performance deficiency procedures enumerated in § 115.210.
</P>
<P>(1) <I>Performance Standard 1.</I> Commence complaint proceedings, carry forward such proceedings, complete investigations, issue determinations, and make final administrative dispositions in a timely manner. To meet this standard, the performance assessment will consider the timeliness of the agency's actions with respect to its complaint processing, including, but not limited to:
</P>
<P>(i) Whether the agency began its processing of fair housing complaints within 30 days of receipt;
</P>
<P>(ii) Whether the agency completes the investigative activities with respect to a complaint within 100 days from the date of receipt or, if it is impracticable to do so, notifies the parties in writing of the reason(s) for the delay;
</P>
<P>(iii) Whether the agency makes a determination of reasonable cause or no reasonable cause with respect to a complaint within 100 days from the date of receipt or, if it is impracticable to do so, notifies the parties in writing of the reason(s) for the delay;
</P>
<P>(iv) Whether the agency makes a final administrative disposition of a complaint within one year from the date of receipt or, if it is impracticable to do so, notifies the parties in writing of the reason(s) for the delay; and
</P>
<P>(v) Whether the agency completed the investigation of the complaint and prepared a complete, final investigative report.
</P>
<P>(vi) When an agency is unable to complete investigative activities with respect to a complaint within 100 days, the agency must send written notification to the parties, indicating the reason(s) for the delay, within 110 days of the filing of the complaint.
</P>
<P>(2) <I>Performance Standard 2.</I> Administrative closures are utilized only in limited and appropriate circumstances. Administrative closures should be distinguished from a closure on the merits and may not be used instead of making a recommendation or determination of reasonable or no reasonable cause. HUD will provide further guidance to interim and certified agencies on the appropriate circumstances for administrative closures.
</P>
<P>(3) <I>Performance Standard 3.</I> During the period beginning with the filing of a complaint and ending with filing of a charge or dismissal, the agency will, to the extent feasible, attempt to conciliate the complaint. After a charge has been issued, the agency will, to the extent feasible, continue to attempt settlement until a hearing or a judicial proceeding has begun.
</P>
<P>(4) <I>Performance Standard 4.</I> The agency conducts compliance reviews of settlements, conciliation agreements, and orders resolving discriminatory housing practices. The performance assessment shall include, but not be limited to:
</P>
<P>(i) An assessment of the agency's procedures for conducting compliance reviews; and
</P>
<P>(ii) Terms and conditions of agreements and orders issued.
</P>
<P>(5) <I>Performance Standard 5.</I> The agency must consistently and affirmatively seek and obtain the type of relief designed to prevent recurrences of discriminatory practices. The performance assessment shall include, but not be limited to:
</P>
<P>(i) An assessment of the agency's use of its authority to seek actual damages, as appropriate;
</P>
<P>(ii) An assessment of the agency's use of its authority to seek and assess civil penalties or punitive damages, as appropriate;
</P>
<P>(iii) An assessment of the types of relief sought by the agency with consideration for the inclusion of affirmative provisions designed to protect the public interest;
</P>
<P>(iv) A review of all types of relief obtained;
</P>
<P>(v) A review of the adequacy of the relief sought and obtained in light of the issues raised by the complaint;
</P>
<P>(vi) The number of complaints closed with relief and the number closed without relief;
</P>
<P>(vii) The number of complaints that proceed to administrative hearing and the result; and
</P>
<P>(viii) The number of complaints that proceed to judicial proceedings and the result.
</P>
<P>(6) <I>Performance Standard 6.</I> The agency must consistently and affirmatively seek to eliminate all prohibited practices under its fair housing law. An assessment under this standard will include, but not be limited to, an identification of the education and outreach efforts of the agency.
</P>
<P>(7) <I>Performance Standard 7.</I> The agency must demonstrate that it receives and processes a reasonable number of complaints cognizable under both the federal Fair Housing Act and the agency's fair housing statute or ordinance. The reasonable number will be determined by HUD and based on all relevant circumstances including, but not limited to, the population of the jurisdiction that the agency serves, the length of time that the agency has participated in the FHAP, and the number of complaints that the agency has received and processed in the past. If an agency fails to receive and process a reasonable number of complaints during a year of FHAP participation, given education and outreach efforts conducted and receipts of complaints, then the FHEO regional director may offer the agency a Performance Improvement Plan (PIP), as described in § 115.210(a)(2). The PIP will set forth the number of complaints the agency must process during subsequent years of FHAP participation. After issuing the PIP, the FHEO regional office will provide the agency with technical assistance on ways to increase awareness of fair housing rights and responsibilities in the jurisdiction.
</P>
<P>(8) <I>Performance Standard 8.</I> The agency must report to HUD on the final status of all dual-filed complaints where a determination of reasonable cause was made. The report must identify, at a minimum, how complaints were resolved (e.g., settlement, judicial proceedings, or administrative hearing), when they were resolved, the forum in which they were resolved, and types and amounts of relief obtained.
</P>
<P>(9) <I>Performance Standard 9.</I> The agency must conform its performance to the provisions of any written agreements executed by the agency and the Department related to substantial equivalency certification, including, but not limited to, the interim agreement or MOU.


</P>
</DIV8>


<DIV8 N="§ 115.207" NODE="24:1.2.1.1.7.2.67.8" TYPE="SECTION">
<HEAD>§ 115.207   Consequences of interim certification and certification.</HEAD>
<P>(a) Whenever a complaint received by the Assistant Secretary alleges violations of a fair housing law administered by an agency that has been interim certified or certified as substantially equivalent, the complaint will be referred to the agency, and no further action shall be taken by the Assistant Secretary with respect to such complaint except as provided for by the Act, this part, 24 CFR part 103, subpart C, and any written agreements executed by the Agency and the Assistant Secretary. HUD shall make referrals to interim certified and certified local agencies in accordance with this section even when the local agency is located in a state with an interim certified or certified state agency.
</P>
<P>(b) If HUD determines that a complaint has not been processed in a timely manner in accordance with the performance standards set forth in § 115.206, HUD may reactivate the complaint, conduct its own investigation and conciliation efforts, and make a determination consistent with 24 CFR part 103.
</P>
<P>(c) Notwithstanding paragraph (a) of this section, whenever the Assistant Secretary has reason to believe that a complaint demonstrates a basis for the commencement of proceedings against any respondent under section 814(a) of the Act or for proceedings by any governmental licensing or supervisory authorities, the Assistant Secretary shall transmit the information upon which such belief is based to the Attorney General, federal financial regulatory agencies, other federal agencies, or other appropriate governmental licensing or supervisory authorities.


</P>
</DIV8>


<DIV8 N="§ 115.208" NODE="24:1.2.1.1.7.2.67.9" TYPE="SECTION">
<HEAD>§ 115.208   Procedures for renewal of certification.</HEAD>
<P>(a) If the Assistant Secretary affirmatively concludes that the agency's law and performance have complied with the requirements of this part in each of the five years of certification, the Assistant Secretary may renew the certification of the agency.
</P>
<P>(b) In determining whether to renew the certification of an agency, the Assistant Secretary's review may include, but is not limited to:
</P>
<P>(1) Performance assessments of the agency conducted by the Department during the five years of certification;
</P>
<P>(2) The agency's own certification that the state or local fair housing law continues to be substantially equivalent both “on its face” and “in operation;” (i.e., there have been no amendments to the state or local fair housing law, adoption of rules or procedures concerning the fair housing law, or judicial or other authoritative interpretations of the fair housing law that limit the effectiveness of the agency's fair housing law); and
</P>
<P>(3) Any and all public comments regarding the relevant state and local laws and the performance of the agency in enforcing the law.
</P>
<P>(c) If the Assistant Secretary decides to renew an agency's certification, the Assistant Secretary will offer the agency either a new MOU or an Addendum to the Memorandum of Understanding (addendum). The new MOU or addendum will extend and update the MOU between HUD and the agency.
</P>
<P>(d) The new MOU or addendum, when signed by all appropriate signatories, will result in the agency's certification being renewed for five years from the date on which the previous MOU was to expire. Appropriate signatories include the Assistant Secretary, the FHEO regional director, and the authorized employee(s) of the agency.
</P>
<P>(e) The provisions of this section may be applied to an agency that has an expired MOU or an expired addendum.


</P>
</DIV8>


<DIV8 N="§ 115.209" NODE="24:1.2.1.1.7.2.67.10" TYPE="SECTION">
<HEAD>§ 115.209   Technical assistance.</HEAD>
<P>(a) The Assistant Secretary, through the FHEO regional office, may provide technical assistance to the interim and certified agencies at any time. The agency may request such technical assistance or the FHEO regional office may determine the necessity for technical assistance and require the agency's cooperation and participation.
</P>
<P>(b) The Assistant Secretary, through FHEO headquarters or regional staff, will require that the agency participate in training conferences and seminars that will enhance the agency's ability to process complaints alleging discriminatory housing practices.


</P>
</DIV8>


<DIV8 N="§ 115.210" NODE="24:1.2.1.1.7.2.67.11" TYPE="SECTION">
<HEAD>§ 115.210   Performance deficiency procedures; Suspension; Withdrawal.</HEAD>
<P>(a) HUD may utilize the following performance deficiency procedures if it determines at any time that the agency does not meet one or more of the performance standards enumerated in § 115.206. The performance deficiency procedures may be applied to agencies with either interim certification or certification. If an agency fails to meet performance standard 7, HUD may bypass the technical assistance performance deficiency procedure and proceed to the PIP.
</P>
<P>(1) <I>Technical assistance.</I> After discovering the deficiency, the FHEO regional office should immediately inform the agency and provide the agency with technical assistance.
</P>
<P>(2) <I>Performance improvement plan.</I> If, following technical assistance, the agency does not bring its performance into compliance with § 115.206 within a time period identified by the FHEO regional director, the FHEO regional director may offer the agency a PIP.
</P>
<P>(i) The PIP will outline the agency's performance deficiencies, identify the necessary corrective actions, and include a timetable for completion.
</P>
<P>(ii) If the agency receives a PIP, funding under the FHAP may be suspended for the duration of the PIP.
</P>
<P>(iii) Once the agency has implemented the corrective actions to eliminate the deficiencies, and such corrective actions are accepted by the FHEO regional director, funding may be restored.
</P>
<P>(iv) The FHEO regional office may provide the agency with technical assistance during the period of the PIP, if appropriate.
</P>
<P>(b) <I>Suspension.</I> If the agency does not agree to implement the PIP or does not implement the corrective actions identified in the PIP within the time allotted, then the FHEO regional director may suspend the agency's interim certification or certification.
</P>
<P>(1) The FHEO regional director shall notify the agency in writing of the specific reasons for the suspension and provide the agency with an opportunity to respond within 30 days.
</P>
<P>(2) Suspension shall not exceed 180 days.
</P>
<P>(3) During the period of suspension, HUD will not refer complaints to the agency.
</P>
<P>(4) If an agency is suspended, the FHEO regional office may elect not to provide funding under the FHAP to the agency during the period of suspension, unless and until the Assistant Secretary determines that the agency is fully in compliance with § 115.206.
</P>
<P>(5) HUD may provide the agency with technical assistance during the period of suspension, if appropriate.
</P>
<P>(6) No more than 60 days prior to the end of suspension, the FHEO regional office shall conduct a performance assessment of the agency.
</P>
<P>(c) <I>Withdrawal.</I> If, following the performance assessment conducted at the end of suspension, the Assistant Secretary determines that the agency has not corrected the deficiencies, the Assistant Secretary may propose to withdraw the interim certification or certification of the agency.
</P>
<P>(1) The Assistant Secretary shall proceed with withdrawal, unless the agency provides information or documentation that establishes that the agency's administration of its law meets all of the substantial equivalency certification criteria set forth in 24 CFR part 115.
</P>
<P>(2) The Assistant Secretary shall inform the agency in writing of the reasons for the withdrawal.
</P>
<P>(3) During any period after which the Assistant Secretary proposes withdrawal, until such time as the agency establishes that administration of its law meets all of the substantial equivalency certification criteria set forth in 24 CFR part 115, the agency shall be ineligible for funding under the FHAP.


</P>
</DIV8>


<DIV8 N="§ 115.211" NODE="24:1.2.1.1.7.2.67.12" TYPE="SECTION">
<HEAD>§ 115.211   Changes limiting effectiveness of agency's law; Corrective actions; Suspension; Withdrawal; Consequences of repeal; Changes not limiting effectiveness.</HEAD>
<P>(a) <I>Changes limiting effectiveness of agency's law.</I> (1) If a state or local fair housing law that HUD has previously deemed substantially equivalent to the Act is amended; or rules or procedures concerning the fair housing law are adopted; or judicial or other authoritative interpretations of the fair housing law are issued, the interim-certified or certified agency must inform the Assistant Secretary of such amendment, adoption, or interpretation within 60 days of its discovery.
</P>
<P>(2) The requirements of this section shall apply equally to the amendment, adoption, or interpretation of any related law that bears on any aspect of the effectiveness of the agency's fair housing law.
</P>
<P>(3) The Assistant Secretary may conduct a review to determine if the amendment, adoption, or interpretation limits the effectiveness of the interim agency's fair housing law.
</P>
<P>(b) <I>Corrective actions.</I> (1) If the review indicates that the agency's law no longer meets the criteria identified in § 115.204, the Assistant Secretary will so notify the agency in writing. Following notification, HUD may take appropriate actions, including, but not limited to, any or all of the following:
</P>
<P>(i) Declining to refer some or all complaints to the agency unless and until the fair housing law meets the criteria identified in § 115.204;
</P>
<P>(ii) Electing not to provide payment for complaints processed by the agency unless and until the fair housing law meets the criteria identified in § 115.204;
</P>
<P>(iii) Providing technical assistance and/or guidance to the agency to assist the agency in curing deficiencies in its fair housing law.
</P>
<P>(2) <I>Suspension based on changes in the law.</I> If the corrective actions identified in paragraph (b)(1)(i) through (iii) of this section fail to bring the state or local fair housing law back into compliance with the criteria identified in § 115.204 within the timeframe identified in HUD's notification to the agency, the Assistant Secretary may suspend the agency's interim certification or certification based on changes in the law or a related law.
</P>
<P>(i) The Assistant Secretary will notify the agency in writing of the specific reasons for the suspension and provide the agency with an opportunity to respond within 30 days.
</P>
<P>(ii) During the period of suspension, the Assistant Secretary has the discretion to not refer some or all complaints to the agency unless and until the agency's law meets the criteria identified in § 115.204.
</P>
<P>(iii) During suspension, HUD may elect not to provide payment for complaints processed unless and until the agency's law meets the criteria identified in § 115.204.
</P>
<P>(iv) During the period of suspension, if the fair housing law is brought back into compliance with the criteria identified in § 115.204, and the Assistant Secretary determines that the fair housing law remains substantially equivalent to the Act, the Assistant Secretary will rescind the suspension and reinstate the agency's interim certification or certification.
</P>
<P>(3) <I>Withdrawal based on changes in the law.</I> If the Assistant Secretary determines that the agency has not brought its law back into compliance with the criteria identified in § 115.204 during the period of suspension, the Assistant Secretary may propose to withdraw the agency's interim certification or certification.
</P>
<P>(i) The Assistant Secretary will proceed with withdrawal unless the agency provides information or documentation that establishes that the agency's current law meets the criteria of substantial equivalency certification identified in § 115.204.
</P>
<P>(ii) The Assistant Secretary will inform the agency in writing of the reasons for the withdrawal.
</P>
<P>(c)(1) If, following notification from HUD that its fair housing law no longer meets the criteria identified in § 115.204, an interim-certified or certified agency unequivocally expresses to HUD that its fair housing law will not be brought back into compliance, the Assistant Secretary may forgo suspension and proceed directly to withdrawal of the agency's interim certification or certification.
</P>
<P>(2) During any period after which the Assistant Secretary proposes withdrawal, until such time as the agency establishes that administration of its law meets all of the substantial equivalency certification criteria set forth in 24 CFR part 115, the agency shall be ineligible for funding under the FHAP.
</P>
<P>(d) <I>Consequences of repeal.</I> If a state or local fair housing law that HUD has previously deemed substantially equivalent to the Act is repealed, in whole or in part, or a related law that bears on any aspect of the effectiveness of the agency's fair housing law is repealed, in whole or in part, the Assistant Secretary may immediately withdraw the agency's interim certification or certification.
</P>
<P>(e) <I>Changes not limiting effectiveness.</I> Nothing in this section is meant to limit the Assistant Secretary's authority to determine that a change to a fair housing law does not jeopardize the substantial equivalency interim certification or certification of an agency.
</P>
<P>(1) Under such circumstances, the Assistant Secretary may proceed in maintaining the existing relationship with the agency, as set forth in the interim agreement or MOU.
</P>
<P>(2) Alternatively, the Assistant Secretary may decide not to refer certain types of complaints to the agency. The Assistant Secretary may elect not to provide payment for these complaints and may require the agency to refer such complaints to the Department for investigation, conciliation, and enforcement activities.
</P>
<P>(3) When the Assistant Secretary determines that a change to a fair housing law does not jeopardize an agency's substantial equivalency certification, the Assistant Secretary need not proceed to suspension or withdrawal if the change is not reversed.


</P>
</DIV8>


<DIV8 N="§ 115.212" NODE="24:1.2.1.1.7.2.67.13" TYPE="SECTION">
<HEAD>§ 115.212   Request after withdrawal.</HEAD>
<P>(a) An agency that has had its interim certification or certification withdrawn, either voluntarily or by the Department, may request substantial equivalency interim certification or certification.
</P>
<P>(b) The request shall be filed in accordance with § 115.202.
</P>
<P>(c) The Assistant Secretary shall determine whether the state or local law, on its face, provides substantive rights, procedures, remedies, and judicial review procedures for alleged discriminatory housing practices that are substantially equivalent to those provided in the federal Fair Housing Act. To meet this standard, the state or local law must meet the criteria enumerated in § 115.204.
</P>
<P>(d) Additionally, if the agency had documented performance deficiencies that contributed to the past withdrawal, then the Department shall consider the agency's performance and any steps the agency has taken to correct performance deficiencies and to prevent them from recurring in determining whether to grant interim certification or certification. The review of the agency's performance shall include HUD conducting a performance assessment in accordance with § 115.206.


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:1.2.1.1.7.3" TYPE="SUBPART">
<HEAD>Subpart C—Fair Housing Assistance Program</HEAD>


<DIV8 N="§ 115.300" NODE="24:1.2.1.1.7.3.67.1" TYPE="SECTION">
<HEAD>§ 115.300   Purpose.</HEAD>
<P>The purpose of the Fair Housing Assistance Program (FHAP) is to provide assistance and reimbursement to state and local fair housing enforcement agencies. The intent of this funding program is to build a coordinated intergovernmental enforcement effort to further fair housing and to encourage the agencies to assume a greater share of the responsibility for the administration and enforcement of fair housing laws.
</P>
<P>The financial assistance is designed to provide support for:
</P>
<P>(a) The processing of dual-filed complaints;
</P>
<P>(b) Training under the Fair Housing Act and the agencies' fair housing law;
</P>
<P>(c) The provision of technical assistance;
</P>
<P>(d) The creation and maintenance of data and information systems; and
</P>
<P>(e) The development and enhancement of fair housing education and outreach projects, special fair housing enforcement efforts, fair housing partnership initiatives, and other fair housing projects.


</P>
</DIV8>


<DIV8 N="§ 115.301" NODE="24:1.2.1.1.7.3.67.2" TYPE="SECTION">
<HEAD>§ 115.301   Agency eligibility criteria; Funding availability.</HEAD>
<P>An agency with certification or interim certification under subpart B of this part, and which has entered into a MOU or interim agreement, is eligible to participate in the FHAP. All FHAP funding is subject to congressional appropriation.


</P>
</DIV8>


<DIV8 N="§ 115.302" NODE="24:1.2.1.1.7.3.67.3" TYPE="SECTION">
<HEAD>§ 115.302   Capacity building funds.</HEAD>
<P>(a) Capacity building (CB) funds are funds that HUD may provide to an agency with interim certification.
</P>
<P>(b) CB funds will be provided in a fixed annual amount to be utilized for the eligible activities established pursuant to § 115.303. When the fixed annual amount will not adequately compensate an agency in its first year of participation in the FHAP due to the large number of fair housing complaints that the agency reasonably anticipates processing, HUD may provide the agency with additional funds.
</P>
<P>(c) HUD may provide CB funds during an agency's first three years of participation in the FHAP. However, in the second and third year of the agency's participation in the FHAP, HUD has the option to permit the agency to receive contribution funds under § 115.304, instead of CB funds.
</P>
<P>(d) In order to receive CB funding, agencies must submit a statement of work prior to the signing of the cooperative agreement. The statement of work must identify:
</P>
<P>(1) The objectives and activities to be carried out with the CB funds received;
</P>
<P>(2) A plan for training all of the agency's employees involved in the administration of the agency's fair housing law;
</P>
<P>(3) A statement of the agency's intention to participate in HUD-sponsored training in accordance with the training requirements set out in the cooperative agreement;
</P>
<P>(4) A description of the agency's complaint processing data and information system, or, alternatively, whether the agency plans to use CB funds to purchase and install a data system;
</P>
<P>(5) A description of any other fair housing activities that the agency will undertake with its CB funds. All such activities must address matters affecting fair housing enforcement that are cognizable under the Fair Housing Act. Any activities that do not address the implementation of the agency's fair housing law, and that are therefore not cognizable under the Fair Housing Act, will be disapproved.


</P>
</DIV8>


<DIV8 N="§ 115.303" NODE="24:1.2.1.1.7.3.67.4" TYPE="SECTION">
<HEAD>§ 115.303   Eligible activities for capacity building funds.</HEAD>
<P>The primary purposes of capacity-building funding are to provide for complaint activities and to support activities that produce increased awareness of fair housing rights and remedies. All such activities must support the agency's administration and enforcement of its fair housing law and address matters affecting fair housing that are cognizable under the Fair Housing Act.


</P>
</DIV8>


<DIV8 N="§ 115.304" NODE="24:1.2.1.1.7.3.67.5" TYPE="SECTION">
<HEAD>§ 115.304   Agencies eligible for contributions funds.</HEAD>
<P>(a) An agency that has received CB funds for one to three consecutive years may be eligible for contributions funding. Contributions funding consists of five categories:
</P>
<P>(1) Complaint processing (CP) funds;
</P>
<P>(2) Special enforcement effort (SEE) funds (see § 115.305);
</P>
<P>(3) Training funds (see § 115.306);
</P>
<P>(4) Administrative cost (AC) funds; and
</P>
<P>(5) Partnership (P) funds.
</P>
<P>(b) <I>CP funds.</I> (1) Agencies receiving CP funds will receive such support based solely on the number of complaints processed by the agency and accepted for payment by the FHEO regional director during a consecutive, specifically identified, 12-month period. The 12-month period will be identified in the cooperative agreement between HUD and the agency. The FHEO regional office shall determine whether or not cases are acceptably processed based on requirements enumerated in the cooperative agreement and its attachments/appendices, performance standards set forth in 24 CFR 115.206, and provisions of the interim agreement or MOU.
</P>
<P>(2) The amount of funding to agencies that are new to contributions funding will be based on the number of complaints acceptably processed by the agency during the specifically identified 12-month period preceding the signing of the cooperative agreement.
</P>
<P>(c) <I>AC funds.</I> (1) Agencies that acceptably process 100 or more cases will receive no less than 10 percent of the agency's total FHAP payment amount for the preceding year, in addition to CP funds, contingent on fiscal year appropriations. Agencies that acceptably process fewer than 100 cases will receive a flat rate, contingent on fiscal year appropriations.
</P>
<P>(2) Agencies will be required to provide HUD with a statement of how they intend to use the AC funds. HUD may require that some or all AC funding be directed to activities designed to create, modify, or improve local, regional, or national information systems concerning fair housing matters (including the purchase of state-of-the-art computer systems, obtaining and maintaining Internet access, etc.).
</P>
<P>(d) <I>P funds.</I> The purpose of P funds is for an agency participating in the FHAP to utilize the services of individuals and/or public, private, for-profit, or not-for-profit organizations that have expertise needed to effectively carry out the provisions of the agency's fair housing law. P funds are fixed amounts and shall be allocated based on the FHAP appropriation. Agencies must consult with the CAO and GTR in identifying appropriate usage of P funds for the geographical area that the agency services. Some examples of proper P fund usage include, but are not limited to:
</P>
<P>(1) Contracting with qualified organizations to conduct fair housing testing in appropriate cases;
</P>
<P>(2) Hiring experienced, temporary staff to assist in the investigation of complex or aged cases;
</P>
<P>(3) Partnering with grassroots, faith-based or other community-based organizations to conduct education and outreach to people of different backgrounds on how to live together peacefully in the same housing complex, neighborhood, or community;
</P>
<P>(4) Contracting with individuals outside the agency who have special expertise needed for the investigation of fair housing cases (e.g., architects for design and construction cases or qualified individuals from colleges and universities for the development of data and statistical analyses).


</P>
</DIV8>


<DIV8 N="§ 115.305" NODE="24:1.2.1.1.7.3.67.6" TYPE="SECTION">
<HEAD>§ 115.305   Special enforcement effort (SEE) funds.</HEAD>
<P>(a) SEE funds are funds that HUD may provide to an agency to enhance enforcement activities of the agency's fair housing law. SEE funds will be a maximum of 20 percent of the agency's total FHAP cooperative agreement for the previous contract year, based on approval of eligible activity or activities, and contingent upon the appropriation of funds. All agencies receiving contributions funds are eligible to receive SEE funds if they meet three of the six criteria set out in paragraphs (a)(1) through (a)(6) of this section:
</P>
<P>(1) The agency enforced a subpoena or made use of its prompt judicial action authority within the past year;
</P>
<P>(2) The agency has held at least one administrative hearing or has had at least one case on a court's docket for civil proceedings during the past year;
</P>
<P>(3) At least ten percent of the agency's fair housing caseload resulted in written conciliation agreements providing monetary relief for the complainant as well as remedial action, monitoring, reporting, and public interest relief provisions;
</P>
<P>(4) The agency has had in the most recent three years, or is currently engaged in, at least one major fair housing systemic investigation requiring an exceptional amount of funds expenditure;
</P>
<P>(5) The agency's administration of its fair housing law received meritorious mention for its fair housing complaint processing or other fair housing activities that were innovative. The meritorious mention criterion may be met by an agency's successful fair housing work being identified and/or published by a reputable source. Examples of meritorious mention include, but are not limited to:
</P>
<P>(i) An article in a minority newspaper or a newspaper of general circulation that identifies the agency's role in the successful resolution of a housing discrimination complaint;
</P>
<P>(ii) A letter from a sponsoring organization of a fair housing conference or symposium that identifies the agency's successful participation and presentation at the conference or symposium;
</P>
<P>(iii) A letter of praise, proclamation, or other formal documentation from the mayor, county executive, or governor recognizing the fair housing achievement of the agency.
</P>
<P>(6) The agency has completed the investigation of at least 10 fair housing complaints during the previous funding year.
</P>
<P>(b) Regardless of whether an agency meets the eligibility criteria set forth in paragraph (a) of this section, an agency is ineligible for SEE funds if:
</P>
<P>(1) Twenty percent or more of an agency's fair housing complaints result in administrative closures; or
</P>
<P>(2) The agency is currently on a PIP, or its interim certification or certification has been suspended during the federal fiscal year in which SEE funds are sought.
</P>
<P>(c) SEE funding amounts are subject to the FHAP appropriation by Congress and will be described in writing in the cooperative agreements annually. HUD will periodically publish a list of activities eligible for SEE funding in the <E T="04">Federal Register.</E>


</P>
</DIV8>


<DIV8 N="§ 115.306" NODE="24:1.2.1.1.7.3.67.7" TYPE="SECTION">
<HEAD>§ 115.306   Training funds.</HEAD>
<P>(a) All agencies, including agencies that receive CB funds, are eligible to receive training funds. Training funds are fixed amounts based on the number of agency employees to be trained. Training funds shall be allocated based on the FHAP appropriation. Training funds may be used only for HUD-approved or HUD-sponsored training. Agency-initiated training or other formalized training may be included in this category. However, such training must first be approved by the CAO and the GTR. Specifics on the amount of training funds that an agency will receive and, if applicable, amounts that may be deducted, will be set out in the cooperative agreement each year.
</P>
<P>(b) Each agency must send staff to mandatory FHAP training sponsored by HUD, including, but not necessarily limited to, the National Fair Housing Training Academy and the National Fair Housing Policy Conference. If the agency does not participate in mandatory HUD-approved and HUD-sponsored training, training funds will be deducted from the agency's overall training amount. All staff of the agency responsible for the administration and enforcement of the fair housing law must participate in HUD-approved or HUD-sponsored training each year.


</P>
</DIV8>


<DIV8 N="§ 115.307" NODE="24:1.2.1.1.7.3.67.8" TYPE="SECTION">
<HEAD>§ 115.307   Requirements for participation in the FHAP; Corrective and remedial action for failing to comply with requirements.</HEAD>
<P>(a) Agencies that participate in the FHAP must meet the requirements enumerated in this section. The FHEO regional office shall review the agency's compliance with the requirements of this section when it conducts on-site performance assessments in accordance with § 115.206. The requirements for participation in the FHAP are as follows:
</P>
<P>(1) The agency must conform to all reporting and record maintenance requirements set forth in § 115.308, as well as any additional reporting and record maintenance requirements identified by the Assistant Secretary.
</P>
<P>(2) The agency must agree to on-site technical assistance and guidance and implementation of corrective actions set out by the Department in response to deficiencies found during the technical assistance or performance assessment evaluations of the agency's operations.
</P>
<P>(3) The agency must use the Department's official complaint data information system and must input all relevant data and information into the system in a timely manner.
</P>
<P>(4) The agency must agree to implement and adhere to policies and procedures (as the agency's laws allow) provided to the agency by the Assistant Secretary, including, but not limited to, guidance on investigative techniques, case file preparation and organization, and implementation of data elements for complaint tracking.
</P>
<P>(5) If an agency that participates in the FHAP enforces antidiscrimination laws other than a fair housing law (e.g., administration of a fair employment law), the agency must annually provide a certification to HUD stating that it spends at least 20 percent of its total annual budget on fair housing activities. The term “total annual budget,” as used in this subsection, means the entire budget assigned by the jurisdiction to the agency for enforcing and administering antidiscrimination laws, but does not include FHAP funds.
</P>
<P>(6) The agency may not co-mingle FHAP funds with other funds. FHAP funds must be segregated from the agency's and the state or local government's other funds and must be used for the purpose that HUD provided the funds.
</P>
<P>(7) An agency may not unilaterally reduce the level of financial resources currently committed to fair housing activities (budget and staff reductions or other actions outside the control of the agency will not, alone, result in a negative determination for the agency's participation in the FHAP).
</P>
<P>(8) The agency must comply with the provisions, certifications, and assurances required in any and all written agreements executed by the agency and the Department related to participation in the FHAP, including, but not limited to, the cooperative agreement.
</P>
<P>(9) The agency must draw down its funds in a timely manner.
</P>
<P>(10) The agency must be audited and receive copies of the audit reports in accordance with applicable rules and regulations of the state and local government in which it is located.
</P>
<P>(11) The agency must participate in all required training, as described in § 115.306(b).
</P>
<P>(12) If the agency subcontracts any activity for which the subcontractor will receive FHAP funds, the agency must conform to the subcontracting requirements of § 115.309.
</P>
<P>(13) If the agency receives a complaint that may implicate the First Amendment of the United States Constitution, then the agency must conform to the requirements of § 115.310.
</P>
<P>(14) If the agency utilizes FHAP funds to conduct fair housing testing, then the agency must conform to the requirements of § 115.311.
</P>
<P>(b) <I>Corrective and remedial action for failing to comply with requirements.</I> The agency's refusal to provide information, assist in implementation, or carry out the requirements of this section may result in the denial or interruption of its receipt of FHAP funds. Prior to denying or interrupting an agency's receipt of FHAP funds, HUD will put the agency on notice of its intent to deny or interrupt. HUD will identify its rationale for the denial or interruption and provide the agency with an opportunity to respond within a reasonable period of time. If, within the time period requested, the agency does not provide information or documentation indicating that the requirement(s) enumerated in this section is/are met, HUD may proceed with the denial or interruption of FHAP funds. If, at any time following the denial or interruption, HUD learns that the agency meets the requirements enumerated in this section, HUD may opt to reinstate the agency's receipt of FHAP funds.


</P>
</DIV8>


<DIV8 N="§ 115.308" NODE="24:1.2.1.1.7.3.67.9" TYPE="SECTION">
<HEAD>§ 115.308   Reporting and recordkeeping requirements.</HEAD>
<P>(a) The agency shall establish and maintain records demonstrating:
</P>
<P>(1) Its financial administration of FHAP funds; and
</P>
<P>(2) Its performance under the FHAP.
</P>
<P>(b) The agency will provide to the FHEO regional director reports maintained pursuant to paragraph (a) of this section. The agency will provide reports to the FHEO regional director in accordance with the frequency and content requirements identified in the cooperative agreement. In addition, the agency will provide reports on the final status of complaints following reasonable cause findings, in accordance with Performance Standard 8 identified in § 115.206.
</P>
<P>(c) The agency will permit reasonable public access to its records consistent with the jurisdiction's requirements for release of information. Documents relevant to the agency's participation in the FHAP must be made available at the agency's office during normal working hours (except that documents with respect to ongoing fair housing complaint investigations are exempt from public review consistent with federal and/or state law).
</P>
<P>(d) The Secretary, Inspector General of HUD, and the Comptroller General of the United States or any of their duly authorized representatives shall have access to all pertinent books, accounts, reports, files, and other payments for surveys, audits, examinations, excerpts, and transcripts as they relate to the agency's participation in FHAP.
</P>
<P>(e) All files will be kept in such fashion as to permit audits under 2 CFR part 200, subpart F.
</P>
<CITA TYPE="N">[72 FR 19074, Apr. 16, 2007, as amended at 80 FR 75935, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 115.309" NODE="24:1.2.1.1.7.3.67.10" TYPE="SECTION">
<HEAD>§ 115.309   Subcontracting under the FHAP.</HEAD>
<P>If an agency subcontracts to a public or private organization any activity for which the organization will receive FHAP funds, the agency must ensure and certify in writing that the organization is:
</P>
<P>(a) Using services, facilities, and electronic information technologies that are accessible in accordance with the Americans with Disability Act (ADA) (42 U.S.C. 12101), Section 504 of the 1973 Rehabilitation Act (29 U.S.C. 701), and Section 508(a)(1) of the Rehabilitation Act amendments of 1998;
</P>
<P>(b) Complying with the standards of Section 3 of the Housing and Urban Development Act of 1968 (42 U.S.C. 1441);
</P>
<P>(c) Affirmatively furthering fair housing in the provision of housing and housing-related services; and
</P>
<P>(d) Not presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from covered transactions by any federal debarment or agency.


</P>
</DIV8>


<DIV8 N="§ 115.310" NODE="24:1.2.1.1.7.3.67.11" TYPE="SECTION">
<HEAD>§ 115.310   FHAP and the First Amendment.</HEAD>
<P>None of the funding made available under the FHAP may be used to investigate or prosecute any activity engaged in by one or more persons, including the filing or maintaining of a non-frivolous legal action, that may be protected by the First Amendment of the United States Constitution. HUD guidance is available that sets forth the procedures HUD will follow when it is asked to accept and dual-file a case that may implicate the First Amendment of the United States Constitution.


</P>
</DIV8>


<DIV8 N="§ 115.311" NODE="24:1.2.1.1.7.3.67.12" TYPE="SECTION">
<HEAD>§ 115.311   Testing.</HEAD>
<P>The following requirements apply to testing activities funded under the FHAP:
</P>
<P>(a) The testing must be done in accordance with a HUD-approved testing methodology;
</P>
<P>(b) Testers must receive training or be experienced in testing procedures and techniques.
</P>
<P>(c) Testers and the organizations conducting tests, and the employees and agents of these organizations may not:
</P>
<P>(1) Have an economic interest in the outcome of the test, without prejudice to the right of any person or entity to recover damages for any cognizable injury;
</P>
<P>(2) Be a relative or acquaintance of any party in a case;
</P>
<P>(3) Have had any employment or other affiliation, within five years, with the person or organization to be tested; or
</P>
<P>(4) Be a competitor of the person or organization to be tested in the listing, rental, sale, or financing of real estate.
</P>
<CITA TYPE="N">[72 FR 19074, Apr. 16, 2007, as amended at 89 FR 22942, Apr. 3, 2024]


</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="121" NODE="24:1.2.1.1.8" TYPE="PART">
<HEAD>PART 121—COLLECTION OF DATA
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>Title VIII, Civil Rights Act of 1968 (42 U.S.C. 3600-3620); E.O. 11063, 27 FR 11527; sec. 602, Civil Rights Act of 1964 (42 U.S.C. 2000d-1); sec. 562, Housing and Community Development Act of 1987 (42 U.S.C. 3608a); sec. 2, National Housing Act, 12 U.S.C. 1703; sec. 7(d), Department of Housing and Urban Development Act, 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>54 FR 3317, Jan. 23, 1989, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 121.1" NODE="24:1.2.1.1.8.0.67.1" TYPE="SECTION">
<HEAD>§ 121.1   Purpose.</HEAD>
<P>The purpose of this part is to enable the Secretary of Housing and Urban Development to carry out his or her responsibilities under the Fair Housing Act, Executive Order 11063, dated November 20, 1962, title VI of the Civil Rights Act of 1964, and section 562 of the Housing and Community Development Act of 1987. These authorities prohibit discrimination in housing and in programs receiving financial assistance from the Department of Housing and Urban Development, and they direct the Secretary to administer the Department's housing and urban development programs and activities in a manner affirmatively to further these policies and to collect certain data to assess the extent of compliance with these policies.


</P>
</DIV8>


<DIV8 N="§ 121.2" NODE="24:1.2.1.1.8.0.67.2" TYPE="SECTION">
<HEAD>§ 121.2   Furnishing of data by program participants.</HEAD>
<P>Participants in the programs administered by the Department shall furnish to the Department such data concerning the race, color, religion, sex, national origin, age, handicap, and family characteristics of persons and households who are applicants for, participants in, or beneficiaries or potential beneficiaries of, those programs as the Secretary may determine to be necessary or appropriate to enable him or her to carry out his or her responsibilities under the authorities referred to in § 121.1.


</P>
</DIV8>

</DIV5>


<DIV5 N="125" NODE="24:1.2.1.1.9" TYPE="PART">
<HEAD>PART 125—FAIR HOUSING INITIATIVES PROGRAM
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d), 3616 note. 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>60 FR 58452, Nov. 27, 1995, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 125.103" NODE="24:1.2.1.1.9.0.67.1" TYPE="SECTION">
<HEAD>§ 125.103   Definitions.</HEAD>
<P>In addition to the definitions that appear at section 802 of title VIII (42 U.S.C. 3602), the following definitions apply to this part: 
</P>
<P><I>Assistant Secretary</I> means the Assistant Secretary for Fair Housing and Equal Opportunity in the Department of Housing and Urban Development. 
</P>
<P><I>Expert witness</I> means a person who testifies, or who would have testified but for a resolution of the case before a verdict is entered, and who qualifies as an expert witness under the rules of the court where the litigation funded by this part is brought. 
</P>
<P><I>Fair housing enforcement organization</I> (FHO) means any organization, whether or not it is solely engaged in fair housing enforcement activities, that— 
</P>
<P>(1) Is organized as a private, tax-exempt, nonprofit, charitable organization; 
</P>
<P>(2) Is currently engaged in complaint intake, complaint investigation, testing for fair housing violations and enforcement of meritorious claims; and 
</P>
<P>(3) Upon the receipt of FHIP funds will continue to be engaged in complaint intake, complaint investigation, testing for fair housing violations and enforcement of meritorious claims. 
</P>
<P>The Department may request an organization to submit documentation to support its claimed status as an FHO. 
</P>
<P><I>FHIP</I> means the Fair Housing Initiatives Program authorized by section 561 of the Housing and Community Development Act of 1987 (42 U.S.C. 3616 note). 
</P>
<P><I>Meritorious claims</I> means enforcement activities by an organization that resulted in lawsuits, consent decrees, legal settlements, HUD and/or substantially equivalent agency (under 24 CFR 115.6) conciliations and organization initiated settlements with the outcome of monetary awards for compensatory and/or punitive damages to plaintiffs or complaining parties, or other affirmative relief, including the provision of housing. 
</P>
<P><I>Qualified fair housing enforcement organization</I> (QFHO) means any organization, whether or not it is solely engaged in fair housing enforcement activities, that— 
</P>
<P>(1) Is organized as a private, tax-exempt, nonprofit, charitable organization; 
</P>
<P>(2) Has at least 2 years experience in complaint intake, complaint investigation, testing for fair housing violations and enforcement of meritorious claims; and 
</P>
<P>(3) Is engaged in complaint intake, complaint investigation, testing for fair housing violations and enforcement of meritorious claims at the time of application for FHIP assistance. 
</P>
<P>For the purpose of meeting the 2-year qualification period for the activities included in paragraph (2) of this definition, it is not necessary that the activities were conducted simultaneously, as long as each activity was conducted for 2 years. It is also not necessary for the activities to have been conducted for 2 consecutive or continuous years. An organization may aggregate its experience in each activity over the 3 year period preceding its application to meet the 2-year qualification period requirement.
</P>
<P>The Department may request an organization to submit documentation to support its claimed status as a QFHO. 
</P>
<P><I>Title VIII</I> means title VIII of the Civil Rights Act of 1968, as amended (42 U.S.C. 3600-3620), commonly cited as the Fair Housing Act. 
</P>
<CITA TYPE="N">[60 FR 58452, Nov. 27, 1995, as amended at 61 FR 5206, Feb. 9, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 125.104" NODE="24:1.2.1.1.9.0.67.2" TYPE="SECTION">
<HEAD>§ 125.104   Program administration.</HEAD>
<P>(a) FHIP is administered by the Assistant Secretary. 
</P>
<P>(b) FHIP funding is made available under the following initiatives: 
</P>
<P>(1) The Administrative Enforcement Initiative; 
</P>
<P>(2) The Education and Outreach Initiative; 
</P>
<P>(3) The Private Enforcement Initiative; and 
</P>
<P>(4) The Fair Housing Organizations Initiative. 
</P>
<P>(c) FHIP funding is made available in accordance with the requirements of the authorizing statute (42 U.S.C. 3616 note), the regulation in this part, and Notices of Funding Availability (NOFAs), and is awarded through a grant or other funding instrument. 
</P>
<P>(d) Notices of Funding Availability under this program will be published periodically in the <E T="04">Federal Register.</E> Such notices will announce amounts available for award, eligible applicants, and eligible activities, and may limit funding to one or more of the Initiatives. Notices of Funding Availability will include the specific selection criteria for awards, and will indicate the relative weight of each criterion. The selection criteria announced in Notices of Funding Availability will be designed to permit the Department to target and respond to areas of concern, and to promote the purposes of the FHIP in an equitable and cost efficient manner. 
</P>
<P>(e) All recipients of FHIP funds must conform to reporting and record maintenance requirements determined appropriate by the Assistant Secretary. Each funding instrument will include provisions under which the Department may suspend, terminate or recapture funds if the recipient does not conform to these requirements. 
</P>
<P>(f) Recipients of FHIP funds may not use such funds for the payment of expenses in connection with litigation against the United States. 
</P>
<P>(g) All recipients of funds under this program must conduct audits in accordance with 2 CFR part 200, subpart F. 
</P>
<CITA TYPE="N">[60 FR 58452, Nov. 27, 1995, as amended at 80 FR 75935, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 125.105" NODE="24:1.2.1.1.9.0.67.3" TYPE="SECTION">
<HEAD>§ 125.105   Application requirements.</HEAD>
<P>Each application for funding under the FHIP must contain the following information, which will be assessed against the specific selection criteria set forth in a Notice of Funding Availability. 
</P>
<P>(a) A description of the practice (or practices) that has affected adversely the achievement of the goal of fair housing, and that will be addressed by the applicant's proposed activities. 
</P>
<P>(b) A description of the specific activities proposed to be conducted with FHIP funds including the final product(s) and/or any reports to be produced; the cost of each activity proposed; and a schedule for completion of the proposed activities. 
</P>
<P>(c) A description of the applicant's experience in formulating or carrying out programs to prevent or eliminate discriminatory housing practices. 
</P>
<P>(d) An estimate of public or private resources that may be available to assist the proposed activities. 
</P>
<P>(e) A description of the procedures to be used for monitoring conduct and assessing results of the proposed activities. 
</P>
<P>(f) A description of the benefits that successful completion of the project will produce to enhance fair housing, and the indicators by which these benefits are to be measured. 
</P>
<P>(g) A description of the expected long term viability of project results. 
</P>
<P>(h) Any additional information that may be required by a Notice of Funding Availability published in the <E T="04">Federal Register.</E> 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2529-0033. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection displays a valid control number.)


</APPRO>
</DIV8>


<DIV8 N="§ 125.106" NODE="24:1.2.1.1.9.0.67.4" TYPE="SECTION">
<HEAD>§ 125.106   Waivers.</HEAD>
<P>Upon determination of good cause, the Assistant Secretary may waive, in a published Notice of Funding Availability or other <E T="04">Federal Register</E> notice, any requirement in this part that is not required by statute. 


</P>
</DIV8>


<DIV8 N="§ 125.107" NODE="24:1.2.1.1.9.0.67.5" TYPE="SECTION">
<HEAD>§ 125.107   Testers.</HEAD>
<P>The following requirements apply to testing activities funded under the FHIP: 
</P>
<P>(a) Testers must receive training or be experienced in testing procedures and techniques. 
</P>
<P>(b) Testers and the organizations conducting tests, and the employees and agents of these organizations may not: 
</P>
<P>(1) Have an economic interest in the outcome of the test, without prejudice to the right of any person or entity to recover damages for any cognizable injury; 
</P>
<P>(2) Be a relative of any party in a case; 
</P>
<P>(3) Have had any employment or other affiliation, within one year, with the person or organization to be tested; or 
</P>
<P>(4) Be a licensed competitor of the person or organization to be tested in the listing, rental, sale, or financing of real estate. 
</P>
<CITA TYPE="N">[60 FR 58452, Nov. 27, 1995, as amended at 89 FR 22942, Apr. 3, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 125.201" NODE="24:1.2.1.1.9.0.67.6" TYPE="SECTION">
<HEAD>§ 125.201   Administrative Enforcement Initiative.</HEAD>
<P>The Administrative Enforcement Initiative provides funding to State and local fair housing agencies administering fair housing laws recognized by the Assistant Secretary under § 115.6 of this subchapter as providing rights and remedies which are substantially equivalent to those provided in title VIII. 


</P>
</DIV8>


<DIV8 N="§ 125.301" NODE="24:1.2.1.1.9.0.67.7" TYPE="SECTION">
<HEAD>§ 125.301   Education and Outreach Initiative.</HEAD>
<P>(a) The Education and Outreach Initiative provides funding for the purpose of developing, implementing, carrying out, or coordinating education and outreach programs designed to inform members of the public concerning their rights and obligations under the provisions of fair housing laws. 
</P>
<P>(b) Notices of Funding Availability published for the FHIP may divide Education and Outreach Initiative funding into separate competitions for each of the separate types of programs (i.e., national, regional and/or local, community-based) eligible under this Initiative. 
</P>
<P>(c) National program applications, including those for Fair Housing Month funding, may be eligible to receive, as provided for in Notices of Funding Availability published in the <E T="04">Federal Register,</E> a preference consisting of additional points if they: 
</P>
<P>(1) Demonstrate cooperation with real estate industry organizations; and/or 
</P>
<P>(2) Provide for the dissemination of educational information and technical assistance to support compliance with the housing adaptability and accessibility guidelines contained in the Fair Housing Amendments Act of 1988. 
</P>
<P>(d) Activities that are regional are activities that are implemented in adjoining States or two or more units of general local government within a state. Activities that are local are activities whose implementation is limited to a single unit of general local government, meaning a city, town, township, county, parish, village, or other general purpose political subdivision of a State. Activities that are community-based in scope are those which are primarily focused on a particular neighborhood area within a unit of general local government. 
</P>
<P>(e) Each non-governmental recipient of regional, local, or community-based funding for activities located within the jurisdiction of a State or local enforcement agency or agencies administering a substantially equivalent (under part 115 of this subchapter) fair housing law must consult with the agency or agencies to coordinate activities funded under FHIP. 


</P>
</DIV8>


<DIV8 N="§ 125.401" NODE="24:1.2.1.1.9.0.67.8" TYPE="SECTION">
<HEAD>§ 125.401   Private Enforcement Initiative.</HEAD>
<P>(a) The Private Enforcement Initiative provides funding on a single-year or multi-year basis, to investigate violations and obtain enforcement of the rights granted under the Fair Housing Act or State or local laws that provide rights and remedies for discriminatory housing practices that are substantially equivalent to the rights and remedies provided in the Fair Housing Act. Multi-year funding may be contingent upon annual performance reviews and annual appropriations. 
</P>
<P>(b) Organizations that are eligible to receive assistance under the Private Enforcement Initiative are: 
</P>
<P>(1) Qualified fair housing enforcement organizations. 
</P>
<P>(2) Fair housing enforcement organizations with at least 1 year of experience in complaint intake, complaint investigation, testing for fair housing violations and enforcement of meritorious claims. For the purpose of meeting this 1 year qualification period, it is not necessary that the activities were conducted simultaneously, as long as each activity was conducted for 1 year. It is also not necessary for the activities to have been conducted for a continuous year. An organization may aggregate its experience in each activity over the 2-year period preceding its application to meet this 1 year qualification period requirement. 


</P>
</DIV8>


<DIV8 N="§ 125.501" NODE="24:1.2.1.1.9.0.67.9" TYPE="SECTION">
<HEAD>§ 125.501   Fair Housing Organizations Initiative.</HEAD>
<P>(a) The Fair Housing Organizations Initiative of the FHIP provides funding to develop or expand the ability of existing eligible organizations to provide fair housing enforcement, and to establish, on a single-year or multi-year basis contingent upon annual performance reviews and annual appropriations, new fair housing enforcement organizations. 
</P>
<P>(b) <I>Continued development of existing organizations</I>—(1) <I>Eligible applicants.</I> Eligible for funding under this component of the Fair Housing Organizations Initiative are: 
</P>
<P>(i) Qualified fair housing enforcement organizations; 
</P>
<P>(ii) Fair housing enforcement organizations; and 
</P>
<P>(iii) Nonprofit groups organizing to build their capacity to provide fair housing enforcement. 
</P>
<P>(2) <I>Operating budget limitation.</I> (i) Funding under this component of the Fair Housing Organizations Initiative may not be used to provide more than 50 percent of the operating budget of a recipient organization for any one year. 
</P>
<P>(ii) For purposes of the limitation in this paragraph, <I>operating budget</I> means the applicant's total planned budget expenditures from all sources, including the value of in-kind and monetary contributions, in the year for which funding is sought. 
</P>
<P>(c) <I>Establishing new organizations</I>—(1) <I>Eligible applicants.</I> Eligible for funding under this component of the Fair Housing Organizations Initiative are: 
</P>
<P>(i) Qualified fair housing enforcement organizations; 
</P>
<P>(ii) Fair housing enforcement organizations; and 
</P>
<P>(iii) Organizations with at least three years of experience in complaint intake, complaint investigation, and enforcement of meritorious claims involving the use of testing evidence. 
</P>
<P>(2) <I>Targeted areas.</I> FHIP Notices of Funding Availability may identify target areas of the country that may receive priority for funding under this component of the Fair Housing Organizations Initiative. An applicant may also seek funding to establish a new organization in a locality not identified as a target area, but in such a case, the applicant must submit sufficient evidence to establish the proposed area as being currently underserved by fair housing enforcement organizations or as containing large concentrations of protected classes. 


</P>
</DIV8>

</DIV5>


<DIV5 N="146" NODE="24:1.2.1.1.10" TYPE="PART">
<HEAD>PART 146—NONDISCRIMINATION ON THE BASIS OF AGE IN HUD PROGRAMS OR ACTIVITIES RECEIVING FEDERAL FINANCIAL ASSISTANCE 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d) and 6103. 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>51 FR 45266, Dec. 17, 1986, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:1.2.1.1.10.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 146.1" NODE="24:1.2.1.1.10.1.67.1" TYPE="SECTION">
<HEAD>§ 146.1   Purpose of the Age Discrimination Act of 1975.</HEAD>
<P>The Age Discrimination Act of 1975 (the Act) prohibits discrimination on the basis of age in programs or activities receiving Federal financial assistance. The Act, however, permits federally assisted programs and activities and recipients of Federal funds to continue to use certain age distinctions and factors other than age which meet the requirements of the Act and this part. 


</P>
</DIV8>


<DIV8 N="§ 146.3" NODE="24:1.2.1.1.10.1.67.2" TYPE="SECTION">
<HEAD>§ 146.3   Purpose of HUD's age discrimination regulation.</HEAD>
<P>The purpose of this part is to state HUD's policies and procedures under the Age Discrimination Act of 1975, consistent with the government-wide age discrimination regulation contained at 45 CFR part 90. 


</P>
</DIV8>


<DIV8 N="§ 146.5" NODE="24:1.2.1.1.10.1.67.3" TYPE="SECTION">
<HEAD>§ 146.5   Applicability of part.</HEAD>
<P>This part applies to each program or activity that receives Federal financial assistance provided by HUD. 


</P>
</DIV8>


<DIV8 N="§ 146.7" NODE="24:1.2.1.1.10.1.67.4" TYPE="SECTION">
<HEAD>§ 146.7   Definitions.</HEAD>
<P>The terms <I>HUD</I> and <I>Secretary</I> are defined in 24 CFR part 5. 
</P>
<P><I>Act</I> means the Age Discrimination Act of 1975, 42 U.S.C. 6101-07. 
</P>
<P><I>Action</I> means any act, activity, policy, rule, standard, or method of administration or the use of any policy, rule, standard, or method of administration. 
</P>
<P><I>Age</I> means how old a person is, or the number of elapsed years from the date of a person's birth. 
</P>
<P><I>Age distinction</I> means any action using age or an age-related term. 
</P>
<P><I>Age-related term</I> means a word or words which necessarily imply a particular age or range of ages (for example, <I>children, adult, older persons,</I> but not <I>student</I>). 
</P>
<P><I>Federal financial assistance</I> means any grant, entitlement, loan, cooperative agreement, contract (other than a procurement contract or a contract of insurance or guaranty), or any other arrangement by which HUD provides or otherwise makes available assistance in the form of: 
</P>
<P>(a) Funds; 
</P>
<P>(b) Service of Federal personnel; or 
</P>
<P>(c) Real or personal property or any interest in or use of property, including: 
</P>
<P>(1) Transfers or leases of property for less than fair market value or for reduced consideration; and 
</P>
<P>(2) Proceeds from a subsequent transfer or lease of property if the Federal share of its fair market value is not returned to the Federal government. 
</P>
<P><I>Recipient</I> means any State or its political subdivisions; any instrumentality of a State or its political subdivisions; any public or private agency; any Indian tribe or Alaskan Native Village, institution, organization, or other entity; or any person to which Federal financial assistance is extended, directly or through another recipient. Recipient includes any successor, assignee, or transferee, but does not include the ultimate beneficiary of the assistance. 
</P>
<P><I>Subrecipient</I> means any of the entities in the definition of <I>recipient</I> to which a recipient extends or passes on Federal financial assistance. A subrecipient is regarded as a recipient of Federal financial assistance and has all the duties of a recipient set out in this part. 
</P>
<P><I>United States</I> means the several States, the District of Columbia, Puerto Rico, the Virgin Islands, American Samoa, Guam, Wake Island, the Canal Zone, the Trust Territory of the Pacific Islands, the Northern Marianas, and the territories and possessions of the United States. 
</P>
<CITA TYPE="N">[51 FR 45266, Dec. 17, 1986, as amended at 61 FR 5206, Feb. 9, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.2.1.1.10.2" TYPE="SUBPART">
<HEAD>Subpart B—Standards for Determining Age Discrimination</HEAD>


<DIV8 N="§ 146.11" NODE="24:1.2.1.1.10.2.67.1" TYPE="SECTION">
<HEAD>§ 146.11   Scope of subpart.</HEAD>
<P>This subpart contains the standards that HUD will use to determine whether an age distinction, or a factor other than age that may have a disproportionate effect on persons of different ages, is prohibited. 


</P>
</DIV8>


<DIV8 N="§ 146.13" NODE="24:1.2.1.1.10.2.67.2" TYPE="SECTION">
<HEAD>§ 146.13   Rules against age discrimination.</HEAD>
<P>(a) The rules stated in this paragraph are limited by the exceptions contained in paragraphs (b) and (c) of this section.
</P>
<P>(1) <I>General rule.</I> No person in the United States shall, on the basis of age, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under, any program or activity receiving Federal financial assistance.
</P>
<P>(2) <I>Specific rules.</I> A recipient may not, in any program or activity receiving Federal financial assistance, directly or through contracting, licensing, or other arrangements, use age distinctions or take any other actions that have the effect, on the basis of age, of:
</P>
<P>(i) Excluding individuals from, denying them the benefits of, or subjecting them to discrimination under, a program or activity receiving Federal financial assistance; or
</P>
<P>(ii) Denying or limiting individuals in their opportunity to participate in any program or activity receiving Federal financial assistance.
</P>
<P>(3) The specific forms of age discrimination listed in paragraph (a)(2) of this section do not necessarily constitute a complete list.
</P>
<P>(b) <I>Exceptions for normal operation or statutory objective of any program or activity.</I> A recipient is permitted to take an action otherwise prohibited by paragraph (a) of this section if the action reasonably takes into account age as a factor necessary to the normal operation or the achievement of any statutory objective of a program or activity. An action reasonably takes into account age as a factor necessary to the normal operation or the achievement of any statutory objective of a program or activity, if:
</P>
<P>(1) Age is used as a measure or approximation of one or more other characteristics; and
</P>
<P>(2) The other characteristics must be measured or approximated in order for the normal operation of the program or activity to continue, or to achieve any statutory objective of the program or activity; and
</P>
<P>(3) The other characteristics can be reasonably measured or approximated by the use of age; and
</P>
<P>(4) The other characteristics are impractical to measure directly on an individual basis.
</P>
<P>(c) <I>Exceptions for reasonable factors other than age.</I> A recipient is permitted to take action otherwise prohibited by paragraph (a) of this section if the action is based on a factor other than age, even though that action may have a disproportionate effect on persons of different ages. An action may be based on a factor other than age only if the factor bears a direct and substantial relationship to the normal operation of the program or activity or the achievement of a statutory objective.
</P>
<P>(d) <I>Burden of proof.</I> The burden of proving that an age distinction or other action falls within an exception described in paragraph (b) or (c) of this section is on the recipient of Federal financial assistance.
</P>
<P>(e) For the purposes of paragraphs (b) and (c), <I>normal operation</I> means the operation of a program or activity without significant changes that would impair its ability to meet its statutory objectives. <I>Statutory objectives</I> means any purpose of a program or activity expressly stated in any Federal, State, or local statute adopted by an elected, general purpose legislative body.
</P>
<P>(f) Notwithstanding paragraph (b) of this section, if a recipient operating a program provides special benefits to the elderly or to children, such use of age distinctions shall be presumed to be necessary to the normal operation of the program. 


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:1.2.1.1.10.3" TYPE="SUBPART">
<HEAD>Subpart C—Duties of HUD Recipients</HEAD>


<DIV8 N="§ 146.21" NODE="24:1.2.1.1.10.3.67.1" TYPE="SECTION">
<HEAD>§ 146.21   General responsibilities.</HEAD>
<P>Each recipient has primary responsibility to ensure that its programs and activities that receive Federal financial assistance from HUD comply with the provisions of the Act, the government-wide regulation, and this part, and shall take steps to eliminate violations of the Act. A recipient also has responsibility to maintain records, provide information, and to afford HUD access to its records to the extent HUD finds necessary to determine whether a program or activity receiving Federal financial assistance from HUD is in compliance with the Act and this part.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2529-0030)
</APPRO>
<CITA TYPE="N">[51 FR 45266, Dec. 17, 1986, as amended at 52 FR 7408, Mar. 11, 1987]


</CITA>
</DIV8>


<DIV8 N="§ 146.23" NODE="24:1.2.1.1.10.3.67.2" TYPE="SECTION">
<HEAD>§ 146.23   Notice of subrecipients.</HEAD>
<P>Whenever a recipient passes Federal financial assistance from HUD to subrecipients, the recipient shall provide the subrecipient with written notice of its obligations under this part and the recipient will remain responsible for the subrecipient's compliance with respect to programs and activities receiving Federal financial assistance from HUD.


</P>
</DIV8>


<DIV8 N="§ 146.25" NODE="24:1.2.1.1.10.3.67.3" TYPE="SECTION">
<HEAD>§ 146.25   Assurance of compliance and recipient assessment of age distinctions.</HEAD>
<P>(a) Each recipient of Federal financial assistance from HUD shall sign a written assurance as specified by HUD that it will comply with the Act and this part with respect to programs and activities receiving Federal financial assistance from HUD.
</P>
<P>(b) As part of a compliance review under § 146.31 or an investigation under § 146.37, HUD may require a recipient employing the equivalent of 15 or more employees to complete, in a manner specified by the Secretary or Secretary's designee, a written self-evaluation of any age distinction imposed in its program or activity receiving Federal financial assistance from HUD, so that HUD may have to assess the recipient's compliance with the Act. Whenever an assessment indicates a violation of the Act or this part, the recipient shall take corrective action to remedy the violation.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2529-0030)
</APPRO>
<CITA TYPE="N">[51 FR 45266, Dec. 17, 1986, as amended at 52 FR 7408, Mar. 11, 1987]


</CITA>
</DIV8>


<DIV8 N="§ 146.27" NODE="24:1.2.1.1.10.3.67.4" TYPE="SECTION">
<HEAD>§ 146.27   Information requirements.</HEAD>
<P>In order to make it possible for HUD to determine whether recipients are in compliance with the Act and this part, each recipient shall:
</P>
<P>(a) Keep records in a form and containing information that HUD determines is necessary;
</P>
<P>(b) Make information available to HUD upon request;
</P>
<P>(c) Permit reasonable access by HUD to the books, records, accounts and other recipient facilities and sources of information.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2529-0030)
</APPRO>
<CITA TYPE="N">[51 FR 45266, Dec. 17, 1986, as amended at 52 FR 7408, Mar. 11, 1987]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:1.2.1.1.10.4" TYPE="SUBPART">
<HEAD>Subpart D—Investigation, Settlement, and Enforcement Procedures</HEAD>


<DIV8 N="§ 146.31" NODE="24:1.2.1.1.10.4.67.1" TYPE="SECTION">
<HEAD>§ 146.31   Compliance reviews.</HEAD>
<P>(a) HUD may conduct pre-award reviews to determine whether programs or activities submitted for HUD assistance are consistent with the age distinctions set forth at § 146.13(b).
</P>
<P>(b) If a pre-award review indicates that the proposed programs or activities are not consistent with the age distinctions set forth at § 146.13(b), the application will be returned to the applicant for additional information or clarification or for correction consistent with this part.
</P>
<P>(c) HUD may conduct compliance reviews of recipients that will enable it to investigate and correct violations of this part. HUD may conduct these reviews even in the absence of a complaint against a recipient. The review may be as comprehensive as necessary for HUD to determine whether a violation has occurred.
</P>
<P>(d) If a compliance review indicates a violation, HUD will attempt to achieve voluntary compliance. If voluntary compliance cannot be achieved, HUD may begin enforcement procedures as provided in § 146.39.


</P>
</DIV8>


<DIV8 N="§ 146.33" NODE="24:1.2.1.1.10.4.67.2" TYPE="SECTION">
<HEAD>§ 146.33   Complaints.</HEAD>
<P>(a) Any person, individually or as a member of a class or on behalf of others, may file a complaint with HUD alleging discrimination prohibited by the Act. A complainant shall file a complaint within 180 days from the date the complainant first had knowledge of the alleged act of discrimination. However, for good cause, HUD may extend this time limit. The filing date for a complaint will be the date upon which the complaint is deemed sufficient to be processed.
</P>
<P>(b) HUD shall facilitate the filing of complaints and shall take the following measures:
</P>
<P>(1) Accept as a sufficient complaint any written legible statement which is signed by the complainant and which identifies the parties involved, the date the complainant first had knowledge of the alleged violation, and describes generally the alleged prohibited action or practice;
</P>
<P>(2) Freely permit a complainant to add information to the complaint to meet the requirements of a sufficient complaint;
</P>
<P>(3) Widely disseminate information regarding the obligations of recipients under the Act and this part;
</P>
<P>(4) Notify the complainant and the recipient of their rights under the complaint process, including the right to have a representative at all stages of the complaint process; and
</P>
<P>(5) Notify the complainant and the recipient of their right to contact HUD for information and assistance regarding the complaint resolution process. 
</P>
<P>(c) HUD will return to the complainant any complaint determined to be outside the coverage of this part, and shall state the reasons why it is outside the coverage.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2529-0030)
</APPRO>
<CITA TYPE="N">[51 FR 45266, Dec. 17, 1986, as amended at 52 FR 7408, Mar. 11, 1987]


</CITA>
</DIV8>


<DIV8 N="§ 146.35" NODE="24:1.2.1.1.10.4.67.3" TYPE="SECTION">
<HEAD>§ 146.35   Mediation.</HEAD>
<P>(a) HUD shall refer to the Federal Mediation and Conciliation Service, a mediation agency designated by the Secretary of Health and Human Services, all complaints that:
</P>
<P>(1) Fall within the coverage of this part, unless the age distinction complained of is clearly with an exception; and 
</P>
<P>(2) Contain all information necessary for further processing.
</P>
<P>(b) Both the complainant and the recipient shall participate in the mediation process to the extent necessary to reach an agreement or make an informal judgment that an agreement is not possible. There should be at least one meeting by each party with the mediator during the mediation process. However, the recipient and the complainant need not meet with the mediator at the same time.
</P>
<P>(c) If the complainant and the recipient reach an agreement, the mediator shall prepare a written statement of the agreement and have the complainant and recipient sign it. The mediator shall send a copy of the agreement to HUD. HUD will take no further action on the complaint unless the complainant or the recipient fails to comply with the agreement.
</P>
<P>(d) The mediator shall protect the confidentiality of information obtained in the course of the mediation process. No mediator shall testify in any adjudicative proceeding, produce any document, or otherwise disclose any information obtained in the course of the mediation process without the prior approval of the head of the mediation agency.
</P>
<P>(e) HUD shall use the mediation process for a maximum of 60 days after receiving a complaint. Mediation ends if:
</P>
<P>(1) 60 days elapse from the time HUD receives the complaint; or 
</P>
<P>(2) Before the end of the 60-day period, an agreement is reached; or 
</P>
<P>(3) Before the end of the 60-day period, the mediator determines that an agreement cannot be reached.
</P>
<FP>This 60-day period may be extended by the mediator, with the concurrence of HUD, for not more than an additional 30 days if the mediator determines that it is likely that an agreement will be reached during such extended period.


</FP>
</DIV8>


<DIV8 N="§ 146.37" NODE="24:1.2.1.1.10.4.67.4" TYPE="SECTION">
<HEAD>§ 146.37   Investigation.</HEAD>
<P>(a) <I>Investigation and settlement following mediation.</I> (1) HUD shall investigate complaints that are unresolved after mediation or are reopened because of an alleged violation of a mediation agreement.
</P>
<P>(2) In the investigation of complaints filed under this part, HUD will establish facts through such methods as discussion with the complainant and recipient and the review of documents in the possession of either party. HUD may also seek the assistance of any applicable State agency. Where possible, HUD will settle the complaint on terms that are mutually agreeable to the parties.
</P>
<P>(3) Settlements shall be in writing and signed by the parties and by an authorized HUD official.
</P>
<P>(4) A settlement shall not affect the initiation or continuation of any other enforcement effort of HUD, including compliance reviews or investigation of other complaints involving the recipient.
</P>
<P>(5) A settlement reached under this paragraph (a) of this section is an agreement to resolve an alleged violation of the Act to the satisfaction of the parties involved, and does not constitute a finding of discrimination against the recipient.
</P>
<P>(b) <I>Failure of settlement.</I> If HUD cannot resolve the complaint through settlement, it may make a formal determination that the Act or this part has been violated and begin enforcement procedures, as provided in § 146.39. HUD shall inform the recipient and complainant in writing that the matter cannot be resolved through settlement.


</P>
</DIV8>


<DIV8 N="§ 146.39" NODE="24:1.2.1.1.10.4.67.5" TYPE="SECTION">
<HEAD>§ 146.39   Enforcement procedures.</HEAD>
<P>(a) HUD may enforce the Act this regulation by:
</P>
<P>(1) Termination of a recipient's financial assistance from HUD under the program or activity involved, if the recipient has violated the Act or this part. The determination of the recipient's violation may be made only after a recipient has had an opportunity for a hearing on the record before an Administrative Law Judge. If the financial assistance consists of a Community Development Block Grant, the requirements of section 109(b) of the Housing and Community Development Act of 1974, 42 U.S.C. 5309, must also be satisfied before the termination of financial assistance. Cases settled in mediation or before hearing will not involve termination of a recipient's Federal financial assistance from HUD.
</P>
<P>(2) Any other means authorized by law, including, but not limited to:
</P>
<P>(i) Referral to the Department of Justice for proceedings to enforce any rights of the United States or obligations of the recipient created by the Act or this part;
</P>
<P>(ii) Use of any requirement of, or referral to, any Federal, State or local government agency that will have the effect of correcting a violation of the Act or this part.
</P>
<P>(b) Whenever the Secretary determines that a State or unit of general local government which is a recipient of Federal financial assistance under Title I of the Housing and Community Development Act of 1974, 42 U.S.C. 5301-5317, has failed to comply with requirements of the Age Discrimination Act or this part with respect to a program or activity funded in whole or in part with such assistance, he or she shall notify the Governor of such State or the chief executive officer of such unit of general local government of the noncompliance and shall request the Governor or chief executive officer to secure compliance. If within a reasonable period of time, not to exceed 60 days, the Governor or chief executive officer fails or refuses to secure compliance, the Secretary is authorized to take the action specified in (a) of this section, exercise the powers and functions provided for in section 111(a) of the Housing and Community Act of 1974, 42 U.S.C. 5311(a), or take such other action as may be provided by law.
</P>
<P>(c) HUD shall limit any termination under § 146.35 to the particular recipient and particular program or activity HUD finds to be in violation of this part. HUD shall not base any part of a termination on a finding with respect to any program or activity of the recipient which does not receive Federal financial assistance from HUD. 
</P>
<P>(d) HUD shall take no action under paragraph (a) of this section until:
</P>
<P>(1) The Secretary has advised the recipient of its failure to comply with the Act or this part and has determined that voluntary compliance cannot be achieved. 
</P>
<P>(2) Thirty days have elapsed after the Secretary has submitted a written report of the circumstances and grounds of the action to the committees of the Congress having legislative jurisdiction over the Federal program or activity involved. A report shall be filed whenever any action is taken under paragraph (a) of this section.
</P>
<P>(e)(1) The Secretary may defer the provision of new Federal financial assistance to a recipient when termination proceedings under this section are initiated.
</P>
<P>(2) New financial assistance from HUD includes all assistance for which HUD requires an application, approval, or submissions under the Community Development Block Grant program including renewal or continuation of existing activities, or authorization of new activities, during the deferral period. New financial assistance from HUD does not include increases in funding as a result of changed computation for formula awards or assistance approved before the beginning of a hearing under this section.
</P>
<P>(3) HUD shall not impose a deferral until the recipient has received a notice of an opportunity for a hearing under this section. HUD shall not continue a deferral for more than 60 days unless a hearing has begun within that time or the time for beginning the hearing has been extended by mutual consent of the recipient and the Secretary. HUD shall not continue a deferral for more than 30 days after the close of the hearing, unless the hearing results in a finding that the recipient has violated that Act or this part.


</P>
</DIV8>


<DIV8 N="§ 146.41" NODE="24:1.2.1.1.10.4.67.6" TYPE="SECTION">
<HEAD>§ 146.41   Prohibition against intimidation or retaliation.</HEAD>
<P>A recipient may not engage in acts of intimidation or retaliation against any person who:
</P>
<P>(a) Attempts to assert a right protected by this part; or 
</P>
<P>(b) Cooperates in any mediation, investigation, hearing, or other part of HUD's investigation, settlement, and enforcement process.


</P>
</DIV8>


<DIV8 N="§ 146.43" NODE="24:1.2.1.1.10.4.67.7" TYPE="SECTION">
<HEAD>§ 146.43   Hearings, decisions, post-termination proceedings.</HEAD>
<P>The provisions of 24 CFR part 180 apply to HUD enforcement of this part. 
</P>
<CITA TYPE="N">[61 FR 52218, Oct. 4, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 146.45" NODE="24:1.2.1.1.10.4.67.8" TYPE="SECTION">
<HEAD>§ 146.45   Exhaustion of administrative remedies.</HEAD>
<P>(a) A complainant may file a civil action following the exhaustion of administrative remedies under the Act. Administrative remedies are exhausted if:
</P>
<P>(1) 180 days have elapsed since the complainant filed the complaint and HUD had made no finding with regard to the complaint; or
</P>
<P>(2) HUD issues any finding in favor of the recipient. 
</P>
<P>(b) If HUD fails to make a finding within 180 days or issues a finding in favor of the recipient, HUD shall:
</P>
<P>(1) Promptly advise the complainant of this fact;
</P>
<P>(2) Advise the complainant of his or her right to bring a civil action for injunctive relief; and 
</P>
<P>(3) Inform the complainant:
</P>
<P>(i) That he or she may bring a civil action only in a United States District Court for the district in which the recipient is located or transacts business;
</P>
<P>(ii) That a complainant prevailing in a civil action has the right to be awarded the costs of the action, including reasonable attorney's fees, but that the complainant must demand these costs in the complaint;
</P>
<P>(iii) That before commencing the action, the complainant must give 30 days' notice by registered mail to the Secretary of HUD, the Secretary of Health and Human Services, the Attorney General of the United States, and the recipient;
</P>
<P>(iv) That the notice must state: the alleged violation of the Act, the relief requested, the court in which the complainant is bringing the action, and whether or not attorney's fees are demanded in the event the complainant prevails; and 
</P>
<P>(v) That the complainant may not bring an action if the same alleged violation of the Act by the same recipient is the subject of a pending action in any court of the United States.


</P>
</DIV8>


<DIV8 N="§ 146.47" NODE="24:1.2.1.1.10.4.67.9" TYPE="SECTION">
<HEAD>§ 146.47   Remedial and affirmative action by recipients.</HEAD>
<P>(a) Where the Secretary finds that a recipient has unlawfully discriminated on the basis of age, the recipient shall take any action that the Secretary may require to overcome the effects of the discrimination. If another recipient exercises control over a subrecipient that has unlawfully discriminated, the Secretary may require both recipients to take remedial action.
</P>
<P>(b) Even in the absence of a finding of discrimination, a recipient may take affirmative action to overcome the effects of conditions that resulted in limited participation in the recipient's program or activity on the basis of age.
</P>
<P>(c) If a recipient operating a program which serves the elderly or children in addition to persons of other ages provides special benefits to the elderly or children, the provision of those benefits shall be presumed to be voluntary affirmative action, provided that it does not have the effect of excluding otherwise eligible persons from participation in the program.


</P>
</DIV8>


<DIV8 N="§ 146.49" NODE="24:1.2.1.1.10.4.67.10" TYPE="SECTION">
<HEAD>§ 146.49   Alternate funds disbursal procedure.</HEAD>
<P>(a) Except as otherwise provided in this paragraph and to the extent authorized by law, the Secretary may redisburse funds withheld or terminated under this part directly to an alternate recipient, including any public or non-profit private organization or agency, State or political subdivision of the State. Under title I of the Housing and Community Development Act of 1974, 42 U.S.C. 5301, funds withheld because of a reduction or withdrawal of a recipient's Community Development Block Grant must be reallocated in the succeeding fiscal year, in accordance with the applicable regulations governing that program.
</P>
<P>(b) The Secretary shall require the alternate recipient to demonstrate:
</P>
<P>(1) The ability to comply with the regulations; and
</P>
<P>(2) The ability to achieve the goals of the Federal statute authorizing the program or activity.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="180" NODE="24:1.2.1.1.11" TYPE="PART">
<HEAD>PART 180—CONSOLIDATED HUD HEARING PROCEDURES FOR CIVIL RIGHTS MATTERS


</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>28 U.S.C. 1 note; 29 U.S.C. 794; 42 U.S.C. 2000d-1, 3535(d), 3601-3619, 5301-5320, and 6103.


</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 52218, Oct. 4, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:1.2.1.1.11.1" TYPE="SUBPART">
<HEAD>Subpart A—General Information</HEAD>


<DIV8 N="§ 180.100" NODE="24:1.2.1.1.11.1.67.1" TYPE="SECTION">
<HEAD>§ 180.100   Definitions.</HEAD>
<P>As used in this part: 
</P>
<P>(a) The terms <I>ALJ, Department, Fair Housing Act, General Counsel,</I> and <I>HUD</I> are defined in 24 CFR part 5, subpart A. 
</P>
<P>(b) The terms <I>Aggrieved Person, Assistant Secretary, Attorney General, Discriminatory Housing Practice, Person,</I> and <I>State</I> are defined in 24 CFR part 103, subpart A. 
</P>
<P>(c) Other terms used in this part are defined as follows:
</P>
<P><I>Agency</I> has the same meaning as <I>HUD.</I> 
</P>
<P><I>Applicant</I> and <I>Application</I> have the meanings provided in 24 CFR 1.2 or 24 CFR 8.3, as applicable. 
</P>
<P><I>Charge</I> means the statement of facts issued under 24 CFR 103.405 upon which HUD has found reasonable cause to believe that a discriminatory housing practice has occurred or is about to occur.
</P>
<P><I>Complaint</I> means a complaint filed under the statutes covered by this part. 
</P>
<P><I>Complainant</I> means the person (including the Assistant Secretary) who filed a complaint under the statutes covered by this part. 
</P>
<P><I>Docket Clerk</I> is the docket clerk for HUD's Office of Hearings and Appeals, 451 7th Street, SW., Room B-133, Washington, DC 20410. The telephone number is 202-254-0000 and the facsimile number is 202-619-7304.
</P>
<P><I>Fair Housing Act matters</I> refers to proceedings under this part pursuant to the Fair Housing Act and the implementing regulations at 24 CFR parts 100 and 103. 
</P>
<P><I>Federal financial assistance</I> has the meaning provided in 24 CFR 1.2, 6.3, 8.3, or 146.7, as applicable.
</P>
<P><I>Hearing</I> means a trial-type proceeding that involves the submission of evidence, either by oral presentation or written submission, and briefs and oral arguments on the evidence and applicable law. 
</P>
<P><I>Intervenor</I> is a person entitled by law or permitted by the ALJ to participate as a party. 
</P>
<P><I>Non-Fair Housing Act matters</I> refers to proceedings under this part pursuant to:
</P>
<P>(1) Title VI of the Civil Rights Act of 1964, as amended, (42 U.S.C. 2000d-1) and the implementing regulations at 24 CFR part 1;
</P>
<P>(2) Section 504 of the Rehabilitation Act of 1973, as amended, (29 U.S.C. 794) and the implementing regulations at 24 CFR part 8;
</P>
<P>(3) The Age Discrimination Act of 1975, as amended, (42 U.S.C. 6103) and the implementing regulations at 24 CFR part 146; or
</P>
<P>(4) Section 109 of Title I of the Housing and Community Development Act of 1974, as amended, (42 U.S.C. 5301-5321) and the implementing regulations at 24 CFR part 6.
</P>
<P><I>Notice of Proposed Adverse Action</I> is the statement of facts issued pursuant to a non-Fair Housing Act matter upon which HUD has found reason to terminate or refuse to grant or continue Federal financial assistance. 
</P>
<P><I>Party</I> is a person who has full participation rights in a proceeding under this part. 
</P>
<P><I>Prevailing party</I> has the same meaning as the term has in section 722 of the Revised Statutes of the United States (42 U.S.C. 1988). 
</P>
<P><I>Recipient</I> has the meaning provided in 24 CFR 1.2, 6.3, 8.3, or 146.7, as applicable.
</P>
<P><I>Respondent</I> means the person accused of violating one of the statutes covered by this part, including a recipient. 
</P>
<P><I>Secretary</I> means the Secretary of HUD, or to the extent of any delegation of authority by the Secretary to act under any of the statutory authorities listed in § 180.105(a), any other HUD official to whom the Secretary may hereafter delegate such authority. 
</P>
<CITA TYPE="N">[61 FR 52218, Oct. 4, 1996, as amended at 64 FR 3801, Jan. 25, 1999; 72 FR 53879, Sept. 20, 2007; 74 FR 4635, Jan. 26, 2009]


</CITA>
</DIV8>


<DIV8 N="§ 180.105" NODE="24:1.2.1.1.11.1.67.2" TYPE="SECTION">
<HEAD>§ 180.105   Scope of rules.</HEAD>
<P>(a) This part contains the rules of practice and procedure applicable to administrative proceedings before an ALJ under the following authorities: 
</P>
<P>(1) The Fair Housing Act (42 U.S.C. 3601-3619) and the implementing regulations at 24 CFR parts 100 and 103, where no election to proceed in federal district court has been made; 
</P>
<P>(2) Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d-1), and the implementing regulations at 24 CFR part 1; 
</P>
<P>(3) Section 504 of the Rehabilitation Act of 1973, as amended (29 U.S.C. 794), and the implementing regulations at 24 CFR part 8; 
</P>
<P>(4) The Age Discrimination Act of 1975 (42 U.S.C. 6103), and the implementing regulations at 24 CFR part 146; and 
</P>
<P>(5) Section 109 of title I of the Housing and Community Development Act of 1974 (42 U.S.C. 5301-5321) and implementing regulations at 24 CFR part 6.
</P>
<P>(b) In the absence of a specific provision, the Federal Rules of Civil Procedure shall serve as a general guide. 
</P>
<P>(c) Hearings under this part shall be conducted as expeditiously and inexpensively as possible, consistent with the needs and rights of the parties to obtain a fair hearing and a complete record. 
</P>
<P>(d) Except to the extent that a waiver would otherwise be contrary to law, the ALJ may, after adequate notice to all interested persons, modify or waive any of the rules in this part upon a determination that no person will be prejudiced and that the ends of justice will be served. 
</P>
<P>(e) All pleadings, correspondence, exhibits, transcripts of testimony, exceptions, briefs, decisions, and other documents filed in any proceeding may be inspected in the Docket Clerk's office during regular business hours.
</P>
<CITA TYPE="N">[61 FR 52218, Oct. 4, 1996, as amended at 64 FR 3801, Jan. 25, 1999; 74 FR 4636, Jan. 26, 2009]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:1.2.1.1.11.2" TYPE="SUBPART">
<HEAD>Subpart B—Administrative Law Judge</HEAD>


<DIV8 N="§ 180.200" NODE="24:1.2.1.1.11.2.67.1" TYPE="SECTION">
<HEAD>§ 180.200   Designation.</HEAD>
<P>Proceedings under this part shall be presided over by an ALJ appointed under 5 U.S.C. 3105. 
</P>
<CITA TYPE="N">[61 FR 52218, Oct. 4, 1996, as amended at 73 FR 13723, Mar. 13, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 180.205" NODE="24:1.2.1.1.11.2.67.2" TYPE="SECTION">
<HEAD>§ 180.205   Authority.</HEAD>
<P>The ALJ shall have all powers necessary to conduct fair, expeditious and impartial hearings, including the power to: 
</P>
<P>(a) Administer oaths and affirmations and examine witnesses; 
</P>
<P>(b) Rule on offers of proof and receive evidence; 
</P>
<P>(c) Take depositions or have depositions taken when the ends of justice would be served; 
</P>
<P>(d) Regulate the course of the hearing and the conduct of persons at the hearing; 
</P>
<P>(e) Hold conferences for the settlement or simplification of the issues by consent of the parties; 
</P>
<P>(f) Rule on motions, procedural requests, and similar matters; 
</P>
<P>(g) Make and issue initial decisions; 
</P>
<P>(h) Impose appropriate sanctions against any person failing to obey an order, refusing to adhere to reasonable standards of orderly and ethical conduct, or refusing to act in good faith; 
</P>
<P>(i) Issue subpoenas if authorized by law; and 
</P>
<P>(j) Exercise any other powers necessary and appropriate for the purpose and conduct of the proceeding as authorized by the rules in this part or in conformance with statute, including 5 U.S.C. 551-59. 


</P>
</DIV8>


<DIV8 N="§ 180.210" NODE="24:1.2.1.1.11.2.67.3" TYPE="SECTION">
<HEAD>§ 180.210   Withdrawal or disqualification of ALJ.</HEAD>
<P>(a) <I>Disqualification.</I> If an ALJ finds that there is a basis for his/her disqualification in a proceeding, the ALJ shall withdraw from the proceeding. Withdrawal is accomplished by entering a notice in the record and providing a copy of the notice to the Chief Administrative Law Judge. 
</P>
<P>(b) <I>Motion for recusal.</I> If a party believes that the presiding ALJ should be disqualified for any reason, the party may file a motion to recuse with the ALJ. The motion shall be supported by an affidavit setting forth the alleged grounds for disqualification. The ALJ shall rule on the motion, stating the grounds therefor. 
</P>
<P>(c) <I>Redesignation of ALJ.</I> If an ALJ is disqualified, another ALJ shall be designated to preside over further proceedings.
</P>
<CITA TYPE="N">[61 FR 52218, Oct. 4, 1996, as amended at 73 FR 13723, Mar. 13, 2008; 87 FR 8197, Feb. 14, 2022]


</CITA>
</DIV8>


<DIV8 N="§ 180.215" NODE="24:1.2.1.1.11.2.67.4" TYPE="SECTION">
<HEAD>§ 180.215   Ex parte communications.</HEAD>
<P>(a) An ex parte communication is any direct or indirect communication concerning the merits of a pending proceeding, made by a party in the absence of any other party, to the presiding ALJ, and which was neither on the record nor on reasonable prior notice to all parties. Ex parte communications do not include communications made for the sole purpose of scheduling hearings, requesting extensions of time, or requesting information on the status of cases. 
</P>
<P>(b) Ex parte communications are prohibited. 
</P>
<P>(c) If the ALJ receives an ex parte communication that the ALJ knows or has reason to believe is prohibited, the ALJ shall promptly place the communication, or a written statement of the substance of the communication, in the record and shall furnish copies to all parties. Unauthorized communications shall not be taken into consideration in deciding any matter in issue. Any party making a prohibited ex parte communication may be subject to sanctions including, but not limited to, exclusion from the proceeding and an adverse ruling on the issue that is the subject of the prohibited communication. 


</P>
</DIV8>


<DIV8 N="§ 180.220" NODE="24:1.2.1.1.11.2.67.5" TYPE="SECTION">
<HEAD>§ 180.220   Separation of functions.</HEAD>
<P>No officer, employee, or agent of the Federal Government engaged in the performance of investigative, conciliatory, or prosecutorial functions in connection with the proceeding shall, in that proceeding or any factually related proceeding under this part, participate or advise in the decision of the ALJ, except as a witness or counsel during the proceedings or in its appellate review. 


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:1.2.1.1.11.3" TYPE="SUBPART">
<HEAD>Subpart C—Parties</HEAD>


<DIV8 N="§ 180.300" NODE="24:1.2.1.1.11.3.67.1" TYPE="SECTION">
<HEAD>§ 180.300   Rights of parties.</HEAD>
<P>Each party may appear in person, be represented by counsel, examine or cross-examine witnesses, introduce documentary or other relevant evidence into the record and, in Fair Housing Act matters, request the issuance of subpoenas. 


</P>
</DIV8>


<DIV8 N="§ 180.305" NODE="24:1.2.1.1.11.3.67.2" TYPE="SECTION">
<HEAD>§ 180.305   Representation.</HEAD>
<P>(a) HUD is represented by the General Counsel. 
</P>
<P>(b) Any party may appear on his/her/its own behalf or by an attorney. Each party or attorney shall file a notice of appearance. The notice must identify the matter before the ALJ, the party on whose behalf the appearance is made, and the mailing address and telephone number of the person appearing. Similar notice shall also be given for any withdrawal of appearance. 
</P>
<P>(c) An attorney must be admitted to practice before a Federal Court or the highest court in any State. The attorney's representation that he/she is in good standing before any of these courts is sufficient evidence of the attorney's qualifications under this section, unless otherwise ordered by the ALJ. 


</P>
</DIV8>


<DIV8 N="§ 180.310" NODE="24:1.2.1.1.11.3.67.3" TYPE="SECTION">
<HEAD>§ 180.310   Parties.</HEAD>
<P>(a) Parties to proceedings under this part are HUD, the respondent(s), and any intervenors. Respondents include persons named as such in a charge issued under 24 CFR part 103 and Recipients/applicants named as respondents in hearing notices issued under 24 CFR parts 1, 6, 8 or 146 and notices of proposed adverse action under this part.
</P>
<P>(b) An aggrieved person is not a party but may file a motion to intervene. Requests for intervention shall be filed within 50 days after the filing of the charge; however, the ALJ may allow intervention beyond that time. An intervenor's right to participate as a party may be restricted by order of the ALJ pursuant to statute, the rules in this part or other applicable law. Intervention shall be permitted if the person requesting intervention is 
</P>
<P>(1) The aggrieved person on whose behalf the charge is issued; or 
</P>
<P>(2) An aggrieved person who claims an interest in the property or transaction that is the subject of the charge and the disposition of the charge may, as a practical matter, impair or impede this person's ability to protect that interest, unless the aggrieved person is adequately represented by the existing parties. 
</P>
<P>(c) A complainant in a non-Fair Housing Act matter is not a party but may file a motion to become an amicus curiae. 
</P>
<P>(d) Any person may file a petition to participate in a proceeding under this part as an amicus curiae. An amicus curiae is not a party to the proceeding and may not introduce evidence at the hearing. 
</P>
<P>(1) A petition to participate as amicus curiae shall be filed before the commencement of the hearing, unless the petitioner shows good cause for filing the petition later. The petition may be granted if the ALJ finds that the petitioner has a legitimate interest in the proceedings, and that such participation will not unduly delay the outcome and may contribute materially to the proper disposition thereof. 
</P>
<P>(2) The amicus curiae may submit briefs within time limits set by the ALJ or by the Secretary in the event of an appeal to the Secretary. 
</P>
<P>(3) When all parties have completed their initial examination of a witness, the amicus curiae may request the ALJ to propound specific questions to the witness. Any such request may be granted if the ALJ believes the proposed additional testimony may assist materially in elucidating factual matters at issue between the parties and will not expand the issues. 
</P>
<CITA TYPE="N">[61 FR 52218, Oct. 4, 1996, as amended at 64 FR 3801, Jan. 25, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 180.315" NODE="24:1.2.1.1.11.3.67.4" TYPE="SECTION">
<HEAD>§ 180.315   Standards of conduct.</HEAD>
<P>(a) All persons appearing in proceedings under this part shall act with integrity and in an ethical manner. 
</P>
<P>(b) The ALJ may exclude parties or their representatives for refusal to comply with directions, continued use of dilatory tactics, refusal to adhere to reasonable standards of orderly and ethical conduct, failure to act in good faith, or violations of the prohibitions against ex parte communications. An attorney who is suspended or barred from participation may appeal to another ALJ designated by the Chief Administrative Law Judge. The proceeding will not be delayed or suspended pending disposition on the appeal, except that the ALJ shall suspend the proceeding for a reasonable time to enable the party to obtain another attorney. 
</P>
<CITA TYPE="N">[61 FR 52218, Oct. 4, 1996, as amended at 73 FR 13723, Mar. 13, 2008; 87 FR 8197, Feb. 14, 2022]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:1.2.1.1.11.4" TYPE="SUBPART">
<HEAD>Subpart D—Proceedings Prior to Hearing</HEAD>


<DIV8 N="§ 180.400" NODE="24:1.2.1.1.11.4.67.1" TYPE="SECTION">
<HEAD>§ 180.400   Service and filing.</HEAD>
<P>(a) <I>Service</I>—(1) <I>Service by the Office of Hearings and Appeals.</I> The Office of Hearings and Appeals shall serve all notices, orders, decisions and other such documents by mail to each party and amicus curiae at the last known address. 
</P>
<P>(2) <I>Service by others.</I> A copy of each filed document shall be served on each party and each amicus curiae. Service shall be made upon counsel if a party is represented by counsel. Service on counsel shall constitute service on the party. Service may be made to the last known address by first-class mail or other more expeditious means, such as: 
</P>
<P>(i) Hand delivery to the person to be served or a person of suitable age and discretion at the place of business, residence, or usual place of abode of the person to be served; 
</P>
<P>(ii) Overnight delivery; or 
</P>
<P>(iii) Facsimile transmission or electronic means. The ALJ may place appropriate limits on service by facsimile transmission or electronic means. 
</P>
<P>(3) <I>Certificate of service.</I> Every document served shall be accompanied by a certificate of service containing a statement as to the date of service, the method of service, the parties served and the address at which they were served, which is signed and dated by the person making service. 
</P>
<P>(b) <I>Filing</I>—(1) <I>Method.</I> All documents shall be filed with the Docket Clerk. Filing may be by first class mail, delivery, facsimile transmission, or electronic means; however, the ALJ may place appropriate limits on filing by facsimile transmission or electronic means. 
</P>
<P>(2) <I>Form.</I> Every pleading, motion, brief, or other document shall contain a caption setting forth the title of the proceeding, the docket number assigned by the Office of Hearings and Appeals, and the designation of the type of document (e.g., charge, motion). 
</P>
<P>(3) <I>Signature.</I> Every document filed by a party shall be signed by the party or the party's attorney and must include the signer's address and telephone number. The signature constitutes a certification that: the signer has read the document; to the best of the signer's knowledge, information and belief, the statements made therein are true; and the document is not interposed for delay. 
</P>
<CITA TYPE="N">[61 FR 52218, Oct. 4, 1996, as amended at 74 FR 4636, Jan. 26, 2009; 87 FR 8197, Feb. 14, 2022]


</CITA>
</DIV8>


<DIV8 N="§ 180.405" NODE="24:1.2.1.1.11.4.67.2" TYPE="SECTION">
<HEAD>§ 180.405   Time computations.</HEAD>
<P>(a) In computing time under this part, the time period begins the day following the act, event, or default and includes the last day of the period, unless the last day is a Saturday, Sunday, or legal holiday observed by the Federal Government, in which case the time period includes the next business day. 
</P>
<P>(b) <I>Modification of time periods.</I> Except for time periods required by statute, the ALJ may enlarge or reduce any time period required under this part where necessary to avoid prejudicing the public interest or the rights of the parties. Requests for extension of time should set forth the reasons for the request. 
</P>
<P>(c) <I>Entry of orders.</I> In computing any time period involving the date of the ALJ's issuance of an order or decision, the date of issuance is the date of service by the Docket Clerk.
</P>
<P>(d) <I>Computation of time for delivery by mail.</I> When documents are filed by mail, three days shall be added to the prescribed time period for filing any responsive pleading. Documents are not filed until received by the Docket Clerk.
</P>
<P>(e) <I>Untimely filing.</I> The ALJ may refuse to consider any motion or other document that is not filed in a timely fashion. 
</P>
<CITA TYPE="N">[61 FR 52218, Oct. 4, 1996, as amended at 74 FR 4636, Jan. 26, 2009]


</CITA>
</DIV8>


<DIV8 N="§ 180.410" NODE="24:1.2.1.1.11.4.67.3" TYPE="SECTION">
<HEAD>§ 180.410   Charges under the Fair Housing Act.</HEAD>
<P>(a) <I>Filing and service.</I> Within 3 days after the issuance of a charge, the General Counsel shall file the charge with the Docket Clerk and serve copies (with the additional information required under paragraph (b) of this section) on all respondents and aggrieved persons.
</P>
<P>(b) <I>Contents.</I> The charge shall consist of a short and plain written statement of the facts upon which reasonable cause has been found to believe that a discriminatory housing practice has occurred or is about to occur. A notification shall be served with the charge containing the following information: 
</P>
<P>(1) Any complainant, respondent, or aggrieved person may elect to have the claims asserted in the charge decided in a civil action under 42 U.S.C. 3612(o), in lieu of an administrative proceeding under this part. 
</P>
<P>(2) Such election must be made not later than 20 days after receipt of service of the charge by serving written notice of such on the Docket Clerk, each respondent, each aggrieved person on whose behalf the charge was issued, the Assistant Secretary, and the General Counsel.
</P>
<P>(3) If no person timely elects to have the claims asserted in the charge decided in a civil action under 42 U.S.C. 3612(o), an administrative proceeding will be conducted under this part. 
</P>
<P>(4) If an administrative hearing is conducted: 
</P>
<P>(i) The hearing will be held at a date and place specified. 
</P>
<P>(ii) The respondent will have an opportunity to file an answer to the charge within 30 days after service of the charge. 
</P>
<P>(iii) The aggrieved person may participate as a party to the administrative proceeding by filing a request for intervention within 50 days after service of the charge. 
</P>
<P>(iv) All discovery must be concluded 15 days before the date set for hearing. 
</P>
<P>(v) The rules in this part will govern the proceeding. 
</P>
<P>(5) If, at any time following service of the charge on the respondent, the respondent intends to enter into a contract, sale, encumbrance, or lease with any person regarding the property that is the subject of the charge, the respondent must provide a copy of the charge to such person before the respondent and the person enter into the contract, sale, encumbrance or lease. 
</P>
<P>(c) <I>Election of judicial determination.</I> If the complainant, the respondent, or the aggrieved person on whose behalf a complaint was filed makes a timely election to have the claims asserted in the charge decided in a civil action under 42 U.S.C. 3612(o), the administrative proceeding shall be dismissed.
</P>
<P>(d) <I>Effect of a civil action on administrative proceeding.</I> An ALJ may not continue an administrative proceeding under the Fair Housing Act after the beginning of the trial of a civil action commenced by the aggrieved person under an act of Congress or a State law seeking relief with respect to that discriminatory housing practice. If such a trial is commenced, the ALJ shall dismiss the administrative proceeding. The commencement and maintenance of a civil action for appropriate temporary or preliminary relief under 42 U.S.C. 3610(e) or 42 U.S.C. 3613 does not affect administrative proceedings under this part. 
</P>
<CITA TYPE="N">[61 FR 52218, Oct. 4, 1996, as amended at 73 FR 13723, Mar. 13, 2008; 74 FR 4636, Jan. 26, 2009]


</CITA>
</DIV8>


<DIV8 N="§ 180.415" NODE="24:1.2.1.1.11.4.67.4" TYPE="SECTION">
<HEAD>§ 180.415   Notice of proposed adverse action regarding Federal financial assistance in non-Fair Housing Act matters.</HEAD>
<P>(a) <I>Filing and service.</I> Within 10 days after a recipient/applicant has requested a hearing, as provided for in 24 CFR parts 1, 6, 8, or 146, the General Counsel shall file a notice of proposed adverse action with the Docket Clerk and serve copies (with the additional information required under paragraph (b) of this section) on all respondents and complainants.
</P>
<P>(b) <I>Contents.</I> The notice of proposed adverse action shall consist of a short and plain written statement of the facts and legal authority upon which the proposed action is based. A notification shall be served with the notice containing the following information: 
</P>
<P>(1) That an administrative hearing will be held at a date and place specified. 
</P>
<P>(2) That the respondent will have an opportunity to file an answer to the notice of adverse action within 30 days after its service. 
</P>
<P>(3) That the complainant may participate as an amicus curiae by filing a timely request to do so. 
</P>
<P>(4) That discovery must be concluded by a date specified. 
</P>
<P>(5) That the rules specified in this part shall govern the proceeding. 
</P>
<P>(c) <I>Consolidation.</I> The ALJ may provide for non-Fair Housing Act proceedings at HUD to be joined or consolidated for hearing with proceedings in other Federal departments or agencies, by agreement with such other departments or agencies. All parties to any proceeding consolidated subsequent to service of the notice of proposed adverse action shall be promptly served with notice of such consolidation. 
</P>
<CITA TYPE="N">[61 FR 52218, Oct. 4, 1996, as amended at 64 FR 3802, Jan. 25, 1999; 74 FR 4636, Jan. 26, 2009]


</CITA>
</DIV8>


<DIV8 N="§ 180.420" NODE="24:1.2.1.1.11.4.67.5" TYPE="SECTION">
<HEAD>§ 180.420   Answer.</HEAD>
<P>(a) Within 30 days after service of the charge or notice of proposed adverse action, a respondent may file an answer. The answer shall include: 
</P>
<P>(1) A statement that the respondent admits, denies, or does not have and is unable to obtain sufficient information to admit or deny, each allegation made. A statement of lack of information shall have the effect of a denial. Any allegation that is not denied shall be deemed to be admitted. 
</P>
<P>(2) A statement of each affirmative defense and a statement of facts supporting each affirmative defense. 
</P>
<P>(b) Failure to file an answer within the 30-day period following service of the charge or notice of proposed adverse action shall be deemed an admission of all matters of fact recited therein and may result in the entry of a default decision. 


</P>
</DIV8>


<DIV8 N="§ 180.425" NODE="24:1.2.1.1.11.4.67.6" TYPE="SECTION">
<HEAD>§ 180.425   Amendments to pleadings.</HEAD>
<P>(a) <I>By right.</I> HUD may amend the charge or notice of proposed adverse action once as a matter of right prior to the filing of the answer. 
</P>
<P>(b) <I>By leave.</I> Upon such conditions as are necessary to avoid prejudicing the public interest and the rights of the parties, the ALJ may allow amendments to pleadings upon a motion of a party. 
</P>
<P>(c) <I>Conformance to the evidence.</I> When issues not raised by the pleadings are reasonably within the scope of the original charge or notice of proposed adverse action and have been tried by the express or implied consent of the parties, the issues shall be treated in all respects as if they had been raised in the pleadings, and amendments may be made as necessary to make the pleading conform to evidence. 
</P>
<P>(d) <I>Supplemental pleadings.</I> The ALJ may, upon reasonable notice, permit supplemental pleadings concerning transactions, occurrences or events that have happened or been discovered since the date of the pleadings and which are relevant to any of the issues involved. 


</P>
</DIV8>


<DIV8 N="§ 180.430" NODE="24:1.2.1.1.11.4.67.7" TYPE="SECTION">
<HEAD>§ 180.430   Motions.</HEAD>
<P>(a) <I>Motions.</I> Any application for an order or other request shall be made by a motion which, unless made during an appearance before the ALJ, shall be in writing and shall state the specific relief requested and the basis therefor. Motions made during an appearance before the ALJ shall be stated orally and made a part of the transcript. All parties shall be given a reasonable opportunity to respond to written or oral motions or requests. 
</P>
<P>(b) <I>Responses to written motions.</I> Within seven calendar days after a written motion is served, any party to the proceeding may file a response in support of, or in opposition to, the motion. Unless otherwise ordered by the ALJ, no further responsive documents may be filed. Failure to file a response within the response period constitutes a waiver of any objection to the granting of the motion. 
</P>
<P>(c) <I>Oral argument.</I> The ALJ may order oral argument on any motion. 


</P>
</DIV8>


<DIV8 N="§ 180.435" NODE="24:1.2.1.1.11.4.67.8" TYPE="SECTION">
<HEAD>§ 180.435   Prehearing statements.</HEAD>
<P>(a) Before the commencement of the hearing, the ALJ may direct the parties to file prehearing statements. 
</P>
<P>(b) The prehearing statement must state the name of the party presenting the statement and, unless otherwise directed by the ALJ, briefly set forth the following: 
</P>
<P>(1) The issues involved in the proceeding; 
</P>
<P>(2) The facts stipulated by the parties and a statement that the parties have made a good faith effort to stipulate to the greatest extent possible; 
</P>
<P>(3) The facts in dispute; 
</P>
<P>(4) The witnesses (together with a summary of the testimony expected) and exhibits to be presented at the hearing; 
</P>
<P>(5) A brief statement of applicable law; 
</P>
<P>(6) Conclusions to be drawn; 
</P>
<P>(7) Estimated time required for presentation of the party's case; and 
</P>
<P>(8) Such other information as may assist in the disposition of the proceeding. 


</P>
</DIV8>


<DIV8 N="§ 180.440" NODE="24:1.2.1.1.11.4.67.9" TYPE="SECTION">
<HEAD>§ 180.440   Prehearing conferences.</HEAD>
<P>(a) Before the commencement of or during the course of the hearing, the ALJ may direct the parties to participate in a conference to expedite the hearing. Failure to attend a conference may constitute a waiver of all objections to the agreements reached at the conference and to any order with respect thereto. 
</P>
<P>(b) During the conference, the ALJ may dispose of any procedural matters on which he/she is authorized to rule. At the conference, the following matters may be considered: 
</P>
<P>(1) Pre-trial motions; 
</P>
<P>(2) Identification, simplification and clarification of the issues;
</P>
<P>(3) Necessary amendments to the pleadings; 
</P>
<P>(4) Stipulations of fact and of the authenticity, accuracy, and admissibility of documents; 
</P>
<P>(5) Limitations on the number of witnesses; 
</P>
<P>(6) Negotiation, compromise, or settlement of issues; 
</P>
<P>(7) The exchange of proposed exhibits and witness lists; 
</P>
<P>(8) Matters of which official notice will be requested; 
</P>
<P>(9) Scheduling actions discussed at the conference; and 
</P>
<P>(10) Such other matters as may assist in the disposition of the proceeding. 
</P>
<P>(c) Conferences may be conducted by telephone or in person, but generally shall be conducted by telephone, unless the ALJ determines that this method is inappropriate. The ALJ shall give reasonable notice of the time, place and manner of the conference. 
</P>
<P>(d) <I>Record of conference.</I> Unless otherwise directed by the ALJ, the conference will not be stenographically recorded. The ALJ will reduce the actions taken at the conference to a written order or, if the conference takes place less than seven days before the beginning of the hearing, may make a statement at the hearing and on the record summarizing the actions taken at the conference. 


</P>
</DIV8>


<DIV8 N="§ 180.445" NODE="24:1.2.1.1.11.4.67.10" TYPE="SECTION">
<HEAD>§ 180.445   Settlement negotiations before a settlement judge.</HEAD>
<P>(a) <I>Appointment of settlement judge.</I> The ALJ, upon the motion of a party or upon his or her own motion, may request the Chief Administrative Law Judge to appoint another ALJ to conduct settlement negotiations. The order shall direct the settlement judge to report to the presiding ALJ within specified time periods.
</P>
<P>(b) <I>Duties of settlement judge.</I> (1) The settlement judge shall convene and preside over conferences and settlement negotiations between the parties and assess the practicalities of a potential settlement. 
</P>
<P>(2) The settlement judge shall report to the presiding ALJ describing the status of the settlement negotiations, evaluating settlement prospects, and recommending the termination or continuation of the settlement negotiations. 
</P>
<P>(c) <I>Termination of settlement negotiations.</I> Settlement negotiations shall terminate upon the order of the presiding ALJ issued after consultation with the settlement judge. The conduct of settlement negotiations shall not unduly delay the commencement of the hearing. 
</P>
<CITA TYPE="N">[61 FR 52218, Oct. 4, 1996, as amended at 73 FR 13723, Mar. 13, 2008; 87 FR 8197, Feb. 14, 2022]


</CITA>
</DIV8>


<DIV8 N="§ 180.450" NODE="24:1.2.1.1.11.4.67.11" TYPE="SECTION">
<HEAD>§ 180.450   Resolution of charge or notice of proposed adverse action.</HEAD>
<P>At any time before a final decision is issued, the parties may submit to the ALJ an agreement resolving the charge or notice of proposed adverse action. A charge under the Fair Housing Act can only be resolved with the agreement of the aggrieved person on whose behalf the charge was issued. If the agreement is in the public interest, the ALJ shall accept it by issuing an initial decision and consent order based on the agreement. 


</P>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:1.2.1.1.11.5" TYPE="SUBPART">
<HEAD>Subpart E—Discovery</HEAD>


<DIV8 N="§ 180.500" NODE="24:1.2.1.1.11.5.67.1" TYPE="SECTION">
<HEAD>§ 180.500   Discovery.</HEAD>
<P>(a) <I>In general.</I> This subpart governs discovery in aid of administrative proceedings under this part. Discovery in Fair Housing Act matters shall be completed 15 days before the date scheduled for hearing or at such time as the ALJ shall direct. Discovery in non-Fair Housing Act matters shall be completed as the ALJ directs. 
</P>
<P>(b) <I>Scope.</I> The parties are encouraged to engage in voluntary discovery procedures. Discovery shall be conducted as expeditiously and inexpensively as possible, consistent with the needs of all parties to obtain relevant evidence. Unless otherwise ordered by the ALJ, the parties may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the proceeding, including the existence, description, nature, custody, condition, and location of documents or persons having knowledge of any discoverable matter. It is not grounds for objection that information sought will be inadmissible if the information appears reasonably calculated to lead to the discovery of admissible evidence. 
</P>
<P>(c) <I>Methods.</I> Parties may obtain discovery by one or more of the following methods: 
</P>
<P>(1) Deposition upon oral examination or written questions. 
</P>
<P>(2) Written interrogatories. 
</P>
<P>(3) Requests for the production of documents or other evidence for inspection and other purposes. 
</P>
<P>(4) Requests for admissions. 
</P>
<P>(5) Upon motion of a party, the presiding ALJ may issue an order requiring a physical or mental examination of a party or of a person in the custody or under the legal control of a party. 
</P>
<P>(d) <I>Frequency and sequence.</I> Unless otherwise ordered by the ALJ or restricted by this subpart, the frequency or sequence of these methods is not limited. 
</P>
<P>(e) <I>Non-intervening aggrieved person.</I> For purposes of obtaining discovery from a non-intervening aggrieved person, the term <I>party</I> as used in this subpart includes the aggrieved person. 


</P>
</DIV8>


<DIV8 N="§ 180.505" NODE="24:1.2.1.1.11.5.67.2" TYPE="SECTION">
<HEAD>§ 180.505   Supplementation of responses.</HEAD>
<P>A party is under a duty, in a timely fashion, to: 
</P>
<P>(a) Supplement a response with respect to any question directly addressed to: 
</P>
<P>(1) The identity and location of persons having knowledge of discoverable matters; and 
</P>
<P>(2) The identity of each person expected to be called as an expert witness, the subject matter on which the expert witness is expected to testify, and the substance of the testimony. 
</P>
<P>(b) Amend a response if the party later obtains information upon the basis of which: 
</P>
<P>(1) The party knows the response was incorrect when made, or 
</P>
<P>(2) The party knows the response, though correct when made, is no longer true, and the circumstances are such that a failure to amend the response is, in substance, a knowing concealment. 
</P>
<P>(c) Supplement other responses, as imposed by order of the ALJ or by agreement of the parties. 


</P>
</DIV8>


<DIV8 N="§ 180.510" NODE="24:1.2.1.1.11.5.67.3" TYPE="SECTION">
<HEAD>§ 180.510   Interrogatories.</HEAD>
<P>(a) Any party may serve on any other party written interrogatories to be answered by the party served. If the party served is a public or private corporation, a partnership, an association, or a governmental agency, the interrogatories may be answered by any authorized officer or agent who shall furnish such information as may be available to the party. A party may serve not more than 30 written interrogatories on another party without an order of the ALJ. 
</P>
<P>(b) Each interrogatory shall be answered separately and fully in writing under oath or affirmation, unless it is objected to, in which event, the reasons for the objection shall be stated in lieu of an answer. The answers shall be signed by the person making them, and the objections may be signed by the attorney or other representative making them. The answers and objections shall be served within 15 days after service of the interrogatories. 
</P>
<P>(c) It is a sufficient answer to an interrogatory to specify the records from which the answer may be derived or ascertained if: 
</P>
<P>(1) The answer to the interrogatory may be derived or ascertained from the records of the party on whom the interrogatory has been served or from an examination, audit or inspection of such records, or from a compilation, abstract or summary based thereon, and 
</P>
<P>(2) The burden of deriving or ascertaining the answer is substantially the same for the party serving the interrogatory as the party served. The party serving the interrogatory shall be afforded reasonable opportunity to examine, audit or inspect such records and to make copies, compilations, abstracts or summaries. The specification shall include sufficient detail to permit the interrogating party to locate and identify the individual records from which the answer may be ascertained. 
</P>
<P>(d) Objections to the form of written interrogatories are waived unless served in writing upon the party propounding the interrogatories. 


</P>
</DIV8>


<DIV8 N="§ 180.515" NODE="24:1.2.1.1.11.5.67.4" TYPE="SECTION">
<HEAD>§ 180.515   Depositions.</HEAD>
<P>(a) <I>Notice.</I> Upon written notice to the witness and to all other parties, a party may take the testimony of a witness by deposition and may request the production of specified documents or materials by the witness at the deposition. Notice of the taking of a deposition shall be given not less than five days before the deposition is scheduled. The notice shall state: 
</P>
<P>(1) The purpose and general scope of the deposition; 
</P>
<P>(2) The time and place of the deposition; 
</P>
<P>(3) The name and address of the person before whom the deposition is to be taken; 
</P>
<P>(4) The name and address of the witness; and 
</P>
<P>(5) A specification of the documents and materials that the witness is requested to produce. 
</P>
<P>(b) <I>Deposition of an organization.</I> If the deposition of a public or private corporation, partnership, association, or governmental agency is sought, the organization so named shall designate one or more officers, directors or agents to testify on its behalf, and may set forth, for each person designated, the matters on which he/she will testify. 
</P>
<P>(c) <I>Procedure at deposition.</I> Depositions may be taken before any disinterested person having power to administer oaths in the location where the deposition is to be taken. Each deponent shall be placed under oath or affirmation, and the other parties will have the right to cross-examine. The deponent may have counsel present during the deposition. The questions propounded and all answers and objections thereto shall be reduced to writing, read by or to and subscribed by the witness, and certified by the person before whom the deposition was taken. Non-intervening aggrieved persons may be present at depositions in which they are not the deponent. 
</P>
<P>(d) <I>Motion to terminate or limit examination.</I> During the taking of a deposition, a party or the witness may request suspension of the deposition on the grounds of bad faith in the conduct of the examination, oppression of the witness or party, or improper questioning or conduct. Upon request for suspension, the deposition will be adjourned. The objecting party or witness must immediately move the ALJ for a ruling on the objection. The ALJ may then limit the scope or manner of taking the deposition. 
</P>
<P>(e) <I>Waiver of deposing officer's disqualification.</I> Objection to taking a deposition because of the disqualification of the officer before whom it is taken is waived unless made before the taking of the deposition begins or as soon thereafter as the disqualification becomes known or could have been discovered with reasonable diligence. 
</P>
<P>(f) <I>Payment of costs of deposition.</I> The party requesting the deposition shall bear all costs of the deposition. 


</P>
</DIV8>


<DIV8 N="§ 180.520" NODE="24:1.2.1.1.11.5.67.5" TYPE="SECTION">
<HEAD>§ 180.520   Use of deposition at hearings.</HEAD>
<P>(a) <I>In general.</I> At the hearing, any part or all of a deposition, so far as admissible under the Federal Rules of Evidence, may be used against any party who was present or represented at the taking of the deposition or who had due notice of the taking of the deposition, in accordance with the following provisions: 
</P>
<P>(1) Any deposition may be used by any party for the purpose of contradicting or impeaching the testimony of the deponent as a witness. 
</P>
<P>(2) The deposition of an expert witness may be used by any party for any purpose, unless the ALJ rules that such use is unfair or in violation of due process. 
</P>
<P>(3) The deposition of a party, or of anyone who at the time of the taking of the deposition was an officer, director, or duly authorized agent of a public or private corporation, partnership, or association that is a party, may be used by any other party for any purpose. 
</P>
<P>(4) The deposition of a witness, whether or not a party, may be used by any party for any purpose if the ALJ finds: 
</P>
<P>(i) That the witness is dead; 
</P>
<P>(ii) That the witness is out of the United States or more than 100 miles from the place of hearing, unless it appears that the absence of the witness was procured by the party offering the deposition; 
</P>
<P>(iii) That the witness is unable to attend to testify because of age, sickness, infirmity, or imprisonment; 
</P>
<P>(iv) That the party offering the deposition has been unable to procure the attendance of the witness by subpoena; or 
</P>
<P>(v) Whenever exceptional circumstances exist as to make it desirable, in the interest of justice and with due regard to the importance of presenting the testimony of witnesses orally in open hearing, to allow the deposition to be used. 
</P>
<P>(5) If a part of a deposition is offered in evidence by a party, any other party may require the party to introduce all of the deposition that is relevant to the part introduced. Any party may introduce any other part of the deposition. 
</P>
<P>(6) Substitution of parties does not affect the right to use depositions previously taken. If a proceeding has been dismissed and another proceeding involving the same subject matter is later brought between the same parties or their representatives or successors in interest, all depositions lawfully taken in the former proceeding may be used in the latter proceeding. 
</P>
<P>(b) <I>Objections to admissibility.</I> Except as provided in this paragraph, objection may be made at the hearing to receiving in evidence any deposition or part of a deposition for any reason that would require the exclusion of the evidence if the witness were present and testifying. 
</P>
<P>(1) Objections to the competency of a witness or to the competency, relevancy, or materiality of testimony are not waived by failure to make them before or during the taking of the deposition, unless the basis of the objection is one which might have been obviated or removed if presented at that time. 
</P>
<P>(2) Errors and irregularities occurring at the oral examination in the manner of taking the deposition, in the form of the questions or answers, in the oath or affirmation, or in the conduct of parties, and errors of any kind which might be obviated, removed or cured if promptly presented, are waived unless reasonable objection is made at the taking of the deposition. 


</P>
</DIV8>


<DIV8 N="§ 180.525" NODE="24:1.2.1.1.11.5.67.6" TYPE="SECTION">
<HEAD>§ 180.525   Requests for production of documents or things for inspection or other purposes, including physical and mental examinations.</HEAD>
<P>(a) Any party may serve on any other party a request to: 
</P>
<P>(1) Produce and/or permit the party, or a person acting on the party's behalf, to inspect and copy any designated documents, or to inspect and copy, test, or sample any tangible things that contain or may lead to relevant information and that are in the possession, custody, or control of the party upon whom the request is served. 
</P>
<P>(2) Permit entry upon designated land or other property in the possession or control of the party upon whom the request is served for the purpose of inspection and measuring, photographing, testing, or other purposes stated in paragraph (a)(1) of this section. 
</P>
<P>(b) Each request shall set forth with reasonable particularity the items or categories to be inspected and shall specify a reasonable time, place and manner for making the inspection and performing the related acts. 
</P>
<P>(c) Within 15 days after service of the request, the party upon whom the request is served shall serve a written response on the party submitting the request. The response shall state, with regard to each item or category, that inspection and related activities will be permitted as requested, unless there are objections, in which case the reasons for the objection shall be stated. 
</P>
<P>(d) Upon motion of any party, when the mental or physical condition (including the blood group) of a party or of a person in the custody or under the legal control of a party, is in controversy, the presiding ALJ may order the party to submit to a physical or mental examination by a suitably licensed or certified examiner or to produce for examination the person in the party's custody or legal control. The order may be made only on motion for good cause shown and upon notice to the person to be examined and to all parties and shall specify the time, place, manner, conditions, and scope of the examination and the person or persons by whom it is to be made. A report of the examiner shall be made in accordance with Rule 35(b) of the Federal Rules of Civil Procedure. 


</P>
</DIV8>


<DIV8 N="§ 180.530" NODE="24:1.2.1.1.11.5.67.7" TYPE="SECTION">
<HEAD>§ 180.530   Requests for admissions.</HEAD>
<P>(a) Any party may serve on any other party a written request for the admission of the truth of any matters relevant to the adjudication set forth in the request that relate to statements or opinions of fact or of application of law to fact, including the genuineness and authenticity of any documents described in or attached to the request. 
</P>
<P>(b) Each matter for which an admission is requested is admitted unless, within 15 days after service of the request, or within such time as the ALJ allows, the party to whom the request is directed serves on the requesting party a sworn written answer which: 
</P>
<P>(1) Specifically denies, in whole or in part, the matter for which an admission is requested; 
</P>
<P>(2) Sets forth in detail why the party cannot truthfully admit or deny the matter; or 
</P>
<P>(3) States an objection that the matter is privileged, irrelevant or otherwise improper in whole or in part. 
</P>
<P>(c) An answering party may not give lack of information or knowledge as a reason for failure to admit or deny, unless he/she/it states that he/she/it has made a reasonable inquiry and that the information known to, or readily obtainable by, him/her/it is insufficient to enable the party to admit or deny. 
</P>
<P>(d) The party requesting admissions may move for a determination of the sufficiency of the answers or objections. Unless the ALJ determines that an objection is justified, the ALJ shall order that an answer be served. If the ALJ determines that an answer does not comply with the requirements of this section, the ALJ may order either that the matter is admitted or that an amended answer be served. 
</P>
<P>(e) Any matter admitted under this section is conclusively established unless, upon the motion of a party, the ALJ permits the withdrawal or amendment of the admission. Any admission made under this section is made for the purposes of the pending proceeding only, is not an admission by the party for any other purpose, and may not be used against the party in any other proceeding. 


</P>
</DIV8>


<DIV8 N="§ 180.535" NODE="24:1.2.1.1.11.5.67.8" TYPE="SECTION">
<HEAD>§ 180.535   Protective orders.</HEAD>
<P>(a) Upon motion of a party or a person from whom discovery is sought or in accordance with § 180.540(c), and for good cause shown, the ALJ may make appropriate orders to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense as a result of the requested discovery request. The order may direct that: 
</P>
<P>(1) The discovery may not be had; 
</P>
<P>(2) The discovery may be had only on specified terms and conditions, including at a designated time and place; 
</P>
<P>(3) The discovery may be had by a method of discovery other than that selected by the party seeking discovery; 
</P>
<P>(4) Certain matters may not be the subject of discovery, or the scope of discovery may be limited to certain matters; 
</P>
<P>(5) Discovery may be conducted with no one present other than persons designated by the ALJ; 
</P>
<P>(6) A trade secret or other confidential research, development or commercial information may not be disclosed, or may be disclosed only in a designated way; or 
</P>
<P>(7) The party or other person from whom discovery is sought may file specified documents or information under seal to be opened as directed by the ALJ. 
</P>
<P>(b) The ALJ may permit a party or other person from whom discovery is sought, who is seeking a protective order, to make all or part of the showing of good cause in camera. If such a showing is made, upon motion of the party or other person from whom discovery is sought, an in camera record of the proceedings may be made. If the ALJ enters a protective order, any in camera record of such showing shall be sealed and preserved and made available to the ALJ or, in the event of appeal, to the Secretary or a court. 


</P>
</DIV8>


<DIV8 N="§ 180.540" NODE="24:1.2.1.1.11.5.67.9" TYPE="SECTION">
<HEAD>§ 180.540   Motion to compel discovery.</HEAD>
<P>(a) If a deponent fails to answer a question propounded, or a party upon whom a discovery request has been made fails to respond adequately, objects to a request, or fails to produce documents or other inspection as requested, the discovering party may move the ALJ for an order compelling discovery in accordance with the request. The motion shall: 
</P>
<P>(1) State the nature of the request; 
</P>
<P>(2) Set forth the response or objection of the deponent or party upon whom the request was served; 
</P>
<P>(3) Present arguments supporting the motion; and 
</P>
<P>(4) Attach copies of all relevant discovery requests and responses. 
</P>
<P>(b) For the purposes of this section, an evasive or incomplete answer or response will be treated as a failure to answer or respond. 
</P>
<P>(c) In ruling on a motion under this section, the ALJ may enter an order compelling a response in accordance with the request, may issue sanctions under paragraph (d) of this section, or may enter a protective order under § 180.535. 
</P>
<P>(d) <I>Sanctions.</I> If a party fails to provide or permit discovery, the ALJ may take such action as is just, including but not limited to the following: 
</P>
<P>(1) Inferring that the admission, testimony, document, or other evidence would have been adverse to the party; 
</P>
<P>(2) Ordering that, for purposes of the adjudication, the matters regarding which the order was made or any other designated facts shall be taken to be established in accordance with the claim of the party obtaining the order; 
</P>
<P>(3) Prohibiting the party failing to comply with the order from introducing evidence concerning, or otherwise relying upon, documents or other evidence withheld; 
</P>
<P>(4) Ordering that the party withholding discovery not introduce into evidence, or otherwise use in the hearing, information obtained in discovery; 
</P>
<P>(5) Permitting the requesting party to introduce secondary evidence concerning the information sought; 
</P>
<P>(6) Striking any appropriate part of the pleadings or other submissions of the party failing to comply with such order; or 
</P>
<P>(7) Taking such other action as may be appropriate. 


</P>
</DIV8>


<DIV8 N="§ 180.545" NODE="24:1.2.1.1.11.5.67.10" TYPE="SECTION">
<HEAD>§ 180.545   Subpoenas.</HEAD>
<P>(a) This section governs the issuance of subpoenas in administrative proceedings under the Fair Housing Act. Except for time periods stated in the rules in this section, to the extent that this section conflicts with procedures for the issuance of subpoenas in civil actions in the United States District Court for the District in which the investigation of the discriminatory housing practice took place, the rules of the United States District Court apply. 
</P>
<P>(b) <I>Issuance of subpoena.</I> Upon the written request of a party, the presiding ALJ or other designated ALJ may issue a subpoena requiring the attendance of a witness for the purpose of giving testimony at a deposition or hearing and requiring the production of relevant books, papers, documents or tangible things.
</P>
<P>(c) <I>Time of request.</I> Requests for subpoenas in aid of discovery must be submitted in time to permit the conclusion of discovery 15 days before the date scheduled for the hearing. If a request for subpoenas of a witness for testimony at a hearing is submitted three days or less before the hearing, the subpoena shall be issued at the discretion of the presiding ALJ, or other designated ALJ as appropriate.
</P>
<P>(d) <I>Service.</I> A subpoena may be served by any person who is not a party and is not less than 18 years of age. Service on a person shall be made by delivering a copy of the subpoena to the person and by tendering witness fees and mileage to that person. When the subpoena is issued on behalf of HUD, witness fees and mileage need not be tendered with the subpoena. 
</P>
<P>(e) <I>Amount of witness fees and mileage.</I> A witness summoned by a subpoena issued under this part is entitled to the same witness and mileage fees as a witness in proceedings in United States District Courts. Fees payable to a witness summoned by a subpoena shall be paid by the party requesting the issuance of the subpoena, or where the ALJ determines that a party is unable to pay the fees, the fees shall be paid by HUD. 
</P>
<P>(f) <I>Motion to quash or limit subpoena.</I> Upon a motion by the person served with a subpoena or by a party, made within five days after service of the subpoena (but in any event not less than the time specified in the subpoena for compliance), the ALJ may: 
</P>
<P>(1) Quash or modify the subpoena if it is unreasonable and oppressive or for other good cause shown; or 
</P>
<P>(2) Condition denial of the motion upon the advancement, by the party on whose behalf the subpoena was issued, of the reasonable cost of producing subpoenaed books, papers or documents. Where circumstances require, the ALJ may act upon such a motion at any time after a copy of the motion has been served upon the party on whose behalf the subpoena was issued. 
</P>
<P>(g) <I>Failure to comply with subpoena.</I> If a person fails to comply with a subpoena issued under this section, the party requesting the subpoena may refer the matter to the Attorney General for enforcement in appropriate proceedings under 42 U.S.C. 3614(c). 
</P>
<CITA TYPE="N">[61 FR 52218, Oct. 4, 1996, as amended at 73 FR 13723, Mar. 13, 2008]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:1.2.1.1.11.6" TYPE="SUBPART">
<HEAD>Subpart F—Procedures at Hearing</HEAD>


<DIV8 N="§ 180.600" NODE="24:1.2.1.1.11.6.67.1" TYPE="SECTION">
<HEAD>§ 180.600   Date and place of hearing.</HEAD>
<P>(a) <I>For Fair Housing Act Cases</I>—(1) <I>Time.</I> The hearing shall commence not later than 120 days after the issuance of the charge, unless it is impracticable to do so. If the hearing cannot be commenced within this time period, the ALJ shall notify in writing all parties, aggrieved persons, amici, and the Assistant Secretary of the reasons for the delay. 
</P>
<P>(2) <I>Place.</I> The hearing will be conducted at a place in the vicinity in which the discriminatory housing practice is alleged to have occurred or to be about to occur. 
</P>
<P>(b) <I>For Non-Fair Housing Matters.</I> Hearings shall be held in Washington, DC, unless the ALJ determines that the convenience of the respondent or HUD requires that another place be selected. 
</P>
<P>(c) The ALJ may change the time, date or place of the hearing, or may temporarily adjourn or continue a hearing for good cause shown. 


</P>
</DIV8>


<DIV8 N="§ 180.605" NODE="24:1.2.1.1.11.6.67.2" TYPE="SECTION">
<HEAD>§ 180.605   Conduct of hearings.</HEAD>
<P>The hearing shall be conducted in accordance with the Administrative Procedure Act (5 U.S.C. 551-559). 


</P>
</DIV8>


<DIV8 N="§ 180.610" NODE="24:1.2.1.1.11.6.67.3" TYPE="SECTION">
<HEAD>§ 180.610   Waiver of right to appear.</HEAD>
<P>If all parties waive their right to appear before the ALJ, the ALJ need not conduct an oral hearing. Such waivers shall be in writing and filed with the ALJ. The ALJ shall make a record of the pleadings and relevant written evidence submitted by the parties. These documents may constitute the evidence in the proceeding, and the decision may be based upon this evidence. 


</P>
</DIV8>


<DIV8 N="§ 180.615" NODE="24:1.2.1.1.11.6.67.4" TYPE="SECTION">
<HEAD>§ 180.615   Failure of party to appear.</HEAD>
<P>A default decision may be entered against a party failing to appear at a hearing unless such party shows good cause for such failure. 


</P>
</DIV8>


<DIV8 N="§ 180.620" NODE="24:1.2.1.1.11.6.67.5" TYPE="SECTION">
<HEAD>§ 180.620   Evidence.</HEAD>
<P>The Federal Rules of Evidence apply to the presentation of evidence in hearings under this part. 


</P>
</DIV8>


<DIV8 N="§ 180.625" NODE="24:1.2.1.1.11.6.67.6" TYPE="SECTION">
<HEAD>§ 180.625   Record of hearing.</HEAD>
<P>(a) All oral hearings shall be recorded and transcribed by a reporter designated and supervised by the ALJ. The original transcript shall be a part of the record and shall constitute the sole official transcript. All exhibits introduced as evidence shall be incorporated into the record. The parties and the public may obtain transcripts from the official reporter at rates not to exceed the applicable rates fixed by the contract with the reporter. 
</P>
<P>(b) Corrections to the official transcript will be permitted upon motion of a party. Motions for correction must be submitted within five days after receipt of the transcript. Corrections of the official transcript will be permitted only where errors of substance are involved and upon the ALJ's approval. 


</P>
</DIV8>


<DIV8 N="§ 180.630" NODE="24:1.2.1.1.11.6.67.7" TYPE="SECTION">
<HEAD>§ 180.630   Stipulations.</HEAD>
<P>The parties may stipulate to any pertinent facts by oral agreement at the hearing or by written agreement at any time. Stipulations may be submitted into evidence at any time before the end of the hearing. Once received into evidence, a stipulation is binding on the parties. 


</P>
</DIV8>


<DIV8 N="§ 180.635" NODE="24:1.2.1.1.11.6.67.8" TYPE="SECTION">
<HEAD>§ 180.635   Written testimony.</HEAD>
<P>The ALJ may accept and enter into the record direct testimony of witnesses made by verified written statement rather than by oral presentation at the hearing. Unless the ALJ fixes other time periods, affidavits shall be filed and served on the parties not later than 14 days prior to the hearing. Witnesses whose testimony is presented by affidavit shall be available for cross-examination as may be required. 


</P>
</DIV8>


<DIV8 N="§ 180.640" NODE="24:1.2.1.1.11.6.67.9" TYPE="SECTION">
<HEAD>§ 180.640   In camera and protective orders.</HEAD>
<P>The ALJ may limit discovery or the introduction of evidence, or may issue such protective or other orders necessary to protect privileged communications. If the ALJ determines that information in documents containing privileged matters should be made available to a party, the ALJ may order the preparation of a summary or extract of the nonprivileged matter contained in the original. 


</P>
</DIV8>


<DIV8 N="§ 180.645" NODE="24:1.2.1.1.11.6.67.10" TYPE="SECTION">
<HEAD>§ 180.645   Exhibits.</HEAD>
<P>(a) <I>Identification.</I> All exhibits offered into evidence shall be numbered sequentially and marked with a designation identifying the sponsor. The original of each exhibit offered in evidence or marked for identification shall be filed and retained in the docket of the proceeding, unless the ALJ permits the substitution of a copy for the original. 
</P>
<P>(b) <I>Exchange of exhibits.</I> One copy of each exhibit offered into evidence must be furnished to each of the parties and to the ALJ. If the ALJ does not fix a time for the exchange of exhibits, the parties shall exchange copies of proposed exhibits at the earliest practicable time before the commencement of the hearing. Exhibits submitted as rebuttal evidence are not required to be exchanged before the commencement of the hearing if the submission of such evidence could not reasonably be anticipated at that time. 
</P>
<P>(c) <I>Authenticity.</I> The authenticity of all documents submitted or exchanged as proposed exhibits prior to the hearing shall be admitted unless written objection is filed before the commencement of the hearing, or unless good cause is shown for failing to file such a written objection. 
</P>
<P>(d) The parties are encouraged to stipulate as to the admissibility of exhibits. 


</P>
</DIV8>


<DIV8 N="§ 180.650" NODE="24:1.2.1.1.11.6.67.11" TYPE="SECTION">
<HEAD>§ 180.650   Public document items.</HEAD>
<P>Whenever a public document, such as an official report, decision, opinion, or published scientific or economic statistical data issued by any of the executive departments (or their subdivisions), legislative agencies or committees, or administrative agencies of the Federal Government (including Government-owned corporations), or a similar document issued by a State or its agencies is offered (in whole or in part), and such document (or part thereof) has been shown by the offeror to be reasonably available to the public, such document need not be produced or marked for identification, but may be offered for official notice, as a public document item by specifying the document or relevant part thereof. 


</P>
</DIV8>


<DIV8 N="§ 180.655" NODE="24:1.2.1.1.11.6.67.12" TYPE="SECTION">
<HEAD>§ 180.655   Witnesses.</HEAD>
<P>(a) Witnesses shall testify under oath or affirmation. 
</P>
<P>(b) If a witness fails or refuses to testify, the failure or refusal to answer any question found by the ALJ to be proper may be grounds for striking all or part of the testimony that may have been given by the witness, or for any other action deemed appropriate by the ALJ. 


</P>
</DIV8>


<DIV8 N="§ 180.660" NODE="24:1.2.1.1.11.6.67.13" TYPE="SECTION">
<HEAD>§ 180.660   Closing of record.</HEAD>
<P>(a) <I>Oral hearings.</I> Where there is an oral hearing, the hearing ends on the day of the adjournment of the oral hearing or, where written briefs are permitted, on the date that the written briefs are due. 
</P>
<P>(b) <I>Hearing on written record.</I> Where the parties have waived an oral hearing, the hearing ends on the date set by the ALJ as the final date for the receipt of submissions by the parties. 
</P>
<P>(c) <I>Receipt of evidence following hearing.</I> Following the end of the hearing, no additional evidence may be accepted into the record, except with the permission of the ALJ. The ALJ may receive additional evidence upon a determination that new and material evidence was not readily available before the end of the hearing, the evidence has been timely submitted, and its acceptance will not unduly prejudice the rights of the parties. 


</P>
</DIV8>


<DIV8 N="§ 180.665" NODE="24:1.2.1.1.11.6.67.14" TYPE="SECTION">
<HEAD>§ 180.665   Arguments and briefs.</HEAD>
<P>(a) Following the submission of evidence at an oral hearing, the parties may file a brief, proposed findings of fact and conclusions of law, or both, or, in the ALJ's discretion, make oral arguments. 
</P>
<P>(b) Unless otherwise ordered by the ALJ, briefs and proposed findings of fact and conclusions of law shall be filed simultaneously by all parties. In Fair Housing Act cases, such filings shall be due not later than 45 days after the adjournment of the oral hearing. In other cases, they shall be due as the ALJ orders. 


</P>
</DIV8>


<DIV8 N="§ 180.670" NODE="24:1.2.1.1.11.6.67.15" TYPE="SECTION">
<HEAD>§ 180.670   Initial decision of ALJ.</HEAD>
<P>(a) The ALJ shall issue an initial decision including findings of fact and conclusions of law upon each material issue of fact or law presented on the record. The initial decision of the ALJ shall be based on the whole record of the proceeding. A copy of the initial decision shall be served upon all parties, aggrieved persons, the Assistant Secretary, the Secretary, and amici, if any. 
</P>
<P>(b) <I>Initial decision in Fair Housing Act cases.</I> (1) The ALJ shall issue an initial decision within 60 days after the end of the hearing, unless it is impracticable to do so. If the ALJ is unable to issue the initial decision within this time period (or within any succeeding 60-day period following the initial 60-day period), the ALJ shall notify in writing all parties, the aggrieved person on whose behalf the charge was filed, and the Assistant Secretary, of the reasons for the delay. 
</P>
<P>(2) The initial decision shall state that it will become the final agency decision 30 days after the date of issuance of the initial decision. 
</P>
<P>(3) <I>Findings against respondents.</I> If the ALJ finds that a respondent has engaged, or is about to engage, in a discriminatory housing practice, the ALJ shall issue an initial decision against the respondent and order such relief as may be appropriate. Relief may include, but is not limited to: 
</P>
<P>(i) Ordering the respondent to pay damages to the aggrieved person (including damages caused by humiliation and embarrassment). 
</P>
<P>(ii) Ordering injunctive or such other equitable relief as may be appropriate. No such order may affect any contract, sale, encumbrance or lease consummated before the issuance of the initial decision that involved a bona fide purchaser, encumbrancer or tenant without actual knowledge of the charge. 
</P>
<P>(iii) Assessing a civil penalty against any respondent to vindicate the public interest in accordance with § 180.671.
</P>
<P>(4) <I>Findings in favor of respondents.</I> If the ALJ finds that the charging party has not established that a respondent has engaged in a discriminatory housing practice, the ALJ shall make an initial decision dismissing the charge as against that respondent. 
</P>
<P>(c) <I>Initial Decision in Non-Fair Housing Act matters.</I> The ALJ shall issue the initial decision as soon as possible after the end of the hearing. 
</P>
<P>(1) <I>Findings against Respondents.</I> If the ALJ finds that a respondent has failed to comply substantially with the statutory and regulatory requirements that gave rise to the notice of proposed adverse action, the ALJ shall issue an initial decision against the respondent. 
</P>
<P>(i) The initial decision shall provide for suspension or termination of, or refusal to grant or continue, Federal financial assistance, in whole or in part, to the involved program or activity. 
</P>
<P>(ii) The initial decision may contain such terms, conditions, and other provisions as are consistent with and will effectuate the purposes of the applicable statute and regulations, including provisions designed to assure that no Federal financial assistance will be extended for the program or activity unless and until the respondent corrects its noncompliance and satisfies the Secretary that it will fully comply with the relevant statute and regulations. 
</P>
<P>(iii) The initial decision shall state that it will become final only upon the Secretary's approval. 
</P>
<P>(2) <I>Findings in favor of respondents.</I> If the ALJ finds that a respondent has not failed to comply substantially with the statutory and regulatory requirements that gave rise to the notice of proposed adverse action, the ALJ shall make an initial decision dismissing the notice of proposed adverse action. The initial decision shall state that it will become the final agency decision 30 days after the date of issuance. 
</P>
<CITA TYPE="N">[61 FR 52218, Oct. 4, 1996, as amended at 64 FR 6754, Feb. 10, 1999; 68 FR 12788, Mar. 17, 2003; 72 FR 5588, Feb. 6, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 180.671" NODE="24:1.2.1.1.11.6.67.16" TYPE="SECTION">
<HEAD>§ 180.671   Assessing civil penalties for Fair Housing Act cases.</HEAD>
<P>(a) <I>Amounts.</I> The ALJ may assess a civil penalty against any respondent under § 180.670(b)(3) for each separate and distinct discriminatory housing practice (as defined in paragraph (b) of this section) that the respondent committed, each civil penalty in an amount not to exceed:
</P>
<P>(1) $26,262, if the respondent has not been adjudged in any administrative hearing or civil action permitted under the Fair Housing Act or any State or local fair housing law, or in any licensing or regulatory proceeding conducted by a Federal, State, or local governmental agency, to have committed any prior discriminatory housing practice.
</P>
<P>(2) $65,653, if the respondent has been adjudged in any administrative hearing or civil action permitted under the Fair Housing Act, or under any State or local fair housing law, or in any licensing or regulatory proceeding conducted by a Federal, State, or local government agency, to have committed one other discriminatory housing practice and the adjudication was made during the 5-year period preceding the date of filing of the charge.
</P>
<P>(3) $131,308, if the respondent has been adjudged in any administrative hearings or civil actions permitted under the Fair Housing Act, or under any State or local fair housing law, or in any licensing or regulatory proceeding conducted by a Federal, State, or local government agency, to have committed two or more discriminatory housing practices and the adjudications were made during the 7-year period preceding the date of filing of the charge.
</P>
<P>(b) <I>Definition of separate and distinct discriminatory housing practice.</I> A separate and distinct discriminatory housing practice is a single, continuous uninterrupted transaction or occurrence that violates section 804, 805, 806 or 818 of the Fair Housing Act. Even if such a transaction or occurrence violates more than one provision of the Fair Housing Act, violates a provision more than once, or violates the fair housing rights of more than one person, it constitutes only one separate and distinct discriminatory housing practice.
</P>
<P>(c) <I>Factors for consideration by ALJ.</I> (1) In determining the amount of the civil penalty to be assessed against any respondent for each separate and distinct discriminatory housing practice the respondent committed, the ALJ shall consider the following six (6) factors:
</P>
<P>(i) Whether that respondent has previously been adjudged to have committed unlawful housing discrimination;
</P>
<P>(ii) That respondent's financial resources;
</P>
<P>(iii) The nature and circumstances of the violation;
</P>
<P>(iv) The degree of that respondent's culpability;
</P>
<P>(v) The goal of deterrence; and
</P>
<P>(vi) Other matters as justice may require.
</P>
<P>(2)(i) Where the ALJ finds any respondent to have committed a housing-related hate act, the ALJ shall take this fact into account in favor of imposing a maximum civil penalty under the factors listed in paragraphs (c)(1)(iii), (iv), (v), and (vi) of this section.
</P>
<P>(ii) For purposes of this section, the term <I>housing-related hate act</I> means any act that constitutes a discriminatory housing practice under section 818 of the Fair Housing Act and which constitutes or is accompanied or characterized by actual violence, assault, bodily harm, and/or harm to property; intimidation or coercion that has such elements; or the threat or commission of any action intended to assist or be a part of any such act.
</P>
<P>(iii) Nothing in this paragraph shall be construed to require an ALJ to assess any amount less than a maximum civil penalty in a non-hate act case, where the ALJ finds that the factors listed in paragraphs (c)(1)(i) through (vi) of this section warrant the assessment of a maximum civil penalty.
</P>
<P>(d) <I>Persons previously adjudged to have committed a discriminatory housing practice.</I> If the acts constituting the discriminatory housing practice that is the subject of the charge were committed by the same natural person who has previously been adjudged, in any administrative proceeding or civil action, to have committed acts constituting a discriminatory housing practice, the time periods in paragraphs (a) (2) and (3) of this section do not apply.
</P>
<P>(e) <I>Multiple discriminatory housing practices committed by the same respondent; multiple respondents.</I> (1) In a proceeding where a respondent has been determined to have engaged in, or is about to engage in, more than one separate and distinct discriminatory housing practice, a separate civil penalty may be assessed against the respondent for each separate and distinct discriminatory housing practice.
</P>
<P>(2) In a proceeding involving two or more respondents who have been determined to have engaged in, or are about to engage in, one or more discriminatory housing practices, one or more civil penalties, as provided under this section, may be assessed against each respondent.
</P>
<CITA TYPE="N">[64 FR 6754, Feb. 10, 1999, as amended at 68 FR 12788, Mar. 17, 2003; 72 FR 5588, Feb. 6, 2007; 78 FR 4060, Jan. 18, 2013; 82 FR 24525, May 30, 2017; 83 FR 32793, July 16, 2018; 84 FR 9454, Mar. 15, 2019; 85 FR 13044, Mar. 6, 2020; 86 FR 14373, Mar. 16, 2021; 87 FR 24421, Apr. 26, 2022; 88 FR 9748, Feb. 15, 2023; 89 FR 13617, Feb. 23, 2024; 90 FR 24748, June 12, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 180.675" NODE="24:1.2.1.1.11.6.67.17" TYPE="SECTION">
<HEAD>§ 180.675   Petitions for review.</HEAD>
<P>(a) The Secretary may affirm, modify or set aside, in whole or in part, the initial decision, or remand the initial decision for further proceedings. 
</P>
<P>(b) Any party adversely affected by the ALJ's initial decision may file a motion with the Secretary explaining how and why the initial decision should be modified, set aside, in whole or in part, or remanded for further proceedings. Such petition shall be based only on the following grounds: 
</P>
<P>(1) A finding of material fact is not supported by substantial evidence; 
</P>
<P>(2) A necessary legal conclusion is erroneous; 
</P>
<P>(3) The decision is contrary to law, duly promulgated rules of HUD, or legal precedent; or 
</P>
<P>(4) A prejudicial error of procedure was committed. 
</P>
<P>(c) Each issue shall be plainly and concisely stated and shall be supported by citations to the record when assignments of error are based on the record, statutes, regulations, cases, or other authorities relied upon. Except for good cause shown, no assignment of error by any party shall rely on any question of fact or law not presented to the ALJ. 
</P>
<P>(d) Such petitions must be received by the Secretary within 15 days after issuance of the initial decision. 
</P>
<P>(e) A statement in opposition to the petition for review may be filed. Such opposition must be received by the Secretary within 22 days after issuance of the initial decision. 
</P>
<P>(f) A petition not granted within 30 days after the issuance of the initial decision is deemed denied. 
</P>
<P>(g) If the Secretary remands the decision for further proceedings, the ALJ shall issue an initial decision on remand within 60 days after the date of issuance of the Secretary's decision, unless it is impracticable to do so. If the ALJ is unable to issue the initial decision within this time period (or within any succeeding 60-day period following the initial 60-day period), the ALJ shall notify in writing the parties, the aggrieved person on whose behalf the charge was filed, any amicus curiae and the Assistant Secretary, of the reasons for the delay. 


</P>
</DIV8>


<DIV8 N="§ 180.680" NODE="24:1.2.1.1.11.6.67.18" TYPE="SECTION">
<HEAD>§ 180.680   Final decisions.</HEAD>
<P>(a) <I>Public disclosure.</I> HUD shall make public disclosure of each final decision. 
</P>
<P>(b) <I>Where initial decision does not provide for suspension or termination of, or</I> refusal to grant or continue, Federal financial assistance—(1) <I>Issuance of final decision by Secretary.</I> The Secretary may review any finding of fact, conclusion of law, or order contained in the initial decision of the ALJ and issue a final decision in the proceeding. The Secretary shall serve the final decision on all parties no later than 30 days after the date of issuance of the initial decision. 
</P>
<P>(2) <I>No final decision by Secretary.</I> If the Secretary does not serve a final decision within the time period described in paragraph (b)(1) of this section, the initial decision of the ALJ will become the final agency decision. For the purposes of this part, such a final decision will be considered to have been issued 30 days after the date of issuance of the initial decision. 
</P>
<P>(c) <I>Where initial decision provides for suspension or termination of, or refusal to grant or continue, Federal financial assistance.</I> When the initial decision provides for the suspension or termination of, or the refusal to grant or continue, Federal financial assistance, or the imposition of any other sanction, such decision shall not constitute an order or final agency action until approved by the Secretary. Further, in the case of proceedings under title VI of the Civil Rights Act of 1964, no order suspending, terminating, or refusing to grant or continue Federal financial assistance shall become effective until the requirements of 24 CFR 1.8(c) have been met. 


</P>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:1.2.1.1.11.7" TYPE="SUBPART">
<HEAD>Subpart G—Post-Final Decision in Fair Housing Cases</HEAD>


<DIV8 N="§ 180.700" NODE="24:1.2.1.1.11.7.67.1" TYPE="SECTION">
<HEAD>§ 180.700   Action upon issuance of a final decision in Fair Housing Act cases.</HEAD>
<P>(a) <I>Licensed or regulated businesses.</I> (1) If a final decision includes a finding that a respondent has engaged or is about to engage in a discriminatory housing practice in the course of a business that is subject to licensing or regulation by a Federal, State or local governmental agency, the Assistant Secretary will notify the governmental agency of the decision by: 
</P>
<P>(i) Sending copies of the findings of fact, conclusions of law and final decision to the governmental agency by certified mail; and 
</P>
<P>(ii) Recommending appropriate disciplinary action to the governmental agency, including, where appropriate, the suspension or revocation of the respondent's license. 
</P>
<P>(2) The Assistant Secretary will notify the appropriate governmental agencies within 30 days after the date of issuance of the final decision, unless a petition for judicial review of the final decision as described in § 180.710 of this part has been filed before the issuance of the notification of the agency. If such a petition has been filed, the Assistant Secretary will provide the notification to the governmental agency within 30 days after the date that the final decision is affirmed upon review. If a petition for judicial review is timely filed following the notification of the governmental agency, the Assistant Secretary will promptly notify the governmental agency of the petition and withdraw his or her recommendation. 
</P>
<P>(b) <I>Notification to the Attorney General.</I> If a final decision includes a finding that a respondent has engaged or is about to engage in a discriminatory housing practice and another final decision including such a finding was issued under this part within the five years preceding the date of issuance of the final decision, the General Counsel will notify the Attorney General of the decisions by sending a copy of each final decision. 


</P>
</DIV8>


<DIV8 N="§ 180.705" NODE="24:1.2.1.1.11.7.67.2" TYPE="SECTION">
<HEAD>§ 180.705   Attorney's fees and costs.</HEAD>
<P>Following the issuance of the final decision, any prevailing party, except HUD, may apply for attorney's fees and costs. The ALJ will issue an initial decision awarding or denying such fees and costs. The initial decision will become HUD's final decision unless the Secretary reviews the initial decision and issues a final decision on fees and costs within 30 days. The recovery of reasonable attorney's fees and costs will be permitted as follows: 
</P>
<P>(a) If the respondent is the prevailing party, HUD will be liable for reasonable attorney's fees and costs to the extent provided under the Equal Access to Justice Act (5 U.S.C. 504) and HUD's regulations at 24 CFR part 14, and an intervenor will be liable for reasonable attorney's fees and costs only to the extent that the intervenor's participation in the administrative proceeding was frivolous or vexatious, or was for the purpose of harassment. 
</P>
<P>(b) To the extent that an intervenor is a prevailing party, the respondent will be liable for reasonable attorney's fees unless special circumstances make the recovery of such fees and costs unjust. 


</P>
</DIV8>


<DIV8 N="§ 180.710" NODE="24:1.2.1.1.11.7.67.3" TYPE="SECTION">
<HEAD>§ 180.710   Judicial review of final decision.</HEAD>
<P>(a) Any party adversely affected by a final decision may file a petition in the appropriate United States Court of Appeals for review of the decision under 42 U.S.C. 3612(i). The petition must be filed within 30 days after the date of issuance of the final decision. 
</P>
<P>(b) If no petition for review is filed under paragraph (a) of this section within 45 days after the date of issuance of the final decision, the findings of facts and final decision shall be conclusive in connection with any petition for enforcement. 


</P>
</DIV8>


<DIV8 N="§ 180.715" NODE="24:1.2.1.1.11.7.67.4" TYPE="SECTION">
<HEAD>§ 180.715   Enforcement of final decision.</HEAD>
<P>(a) <I>Enforcement by HUD.</I> Following the issuance of a final decision, the General Counsel may petition the appropriate United States Court of Appeals for the enforcement of the final decision and for appropriate temporary relief or restraining order in accordance with 42 U.S.C. 3612(j). 
</P>
<P>(b) <I>Enforcement by others.</I> If no petition for review has been filed within 60 days after the date of issuance, and the General Counsel has not sought enforcement of the final decision as described in paragraph (a) of this section, any person entitled to relief under the final decision may petition the appropriate United States Court of Appeals for the enforcement of the final decision in accordance with 42 U.S.C. 3612(m). 


</P>
</DIV8>

</DIV6>


<DIV6 N="H" NODE="24:1.2.1.1.11.8" TYPE="SUBPART">
<HEAD>Subpart H—Post-Final Decision in Non-Fair Housing Act Matters</HEAD>


<DIV8 N="§ 180.800" NODE="24:1.2.1.1.11.8.67.1" TYPE="SECTION">
<HEAD>§ 180.800   Post-termination proceedings.</HEAD>
<P>(a) A respondent adversely affected by the order terminating, discontinuing, or refusing Federal financial assistance in consequence of proceedings pursuant to this title may request the Secretary for an order authorizing payment, or permitting resumption, of Federal financial assistance. Such request shall: 
</P>
<P>(1) Be in writing; 
</P>
<P>(2) Affirmatively show that, since entry of the order, the respondent has brought its program or activity into compliance with statutory and regulatory requirements; and 
</P>
<P>(3) Set forth specifically, and in detail, the steps taken to achieve such compliance. 
</P>
<P>(b) If the Secretary denies such request, the respondent may request an expeditious hearing. The request for such a hearing shall be addressed to the Secretary within 30 days after the respondent is informed that the Secretary has refused to authorize payment or permit resumption of Federal financial assistance and shall specify why the Secretary erred in denying the request. 
</P>
<P>(c) The procedures established by this part shall be applicable to any hearing. 


</P>
</DIV8>


<DIV8 N="§ 180.805" NODE="24:1.2.1.1.11.8.67.2" TYPE="SECTION">
<HEAD>§ 180.805   Judicial review of final decision.</HEAD>
<P>A termination of or refusal to grant or to continue Federal financial assistance is subject to judicial review as provided in the applicable statute. 


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="181-199" NODE="24:1.2.1.1.12" TYPE="PART">
<HEAD>PARTS 181-199 [RESERVED]


</HEAD>
</DIV5>

</DIV3>

</DIV2>

</DIV1>

</ECFRBRWS>
<ECFRBRWS>
<AMDDATE>Mar. 13, 2026
</AMDDATE>

<DIV1 N="2" NODE="24:2" TYPE="TITLE">

<HEAD>Title 24—Housing and Urban Development--Volume 2</HEAD>
<CFRTOC>
<SUBTI>
<HED>SUBTITLE B—<E T="04">Regulations Relating to Housing and Urban Development (Continued)</E>
</HED></SUBTI>
<PTHD>Part
</PTHD>
<CHAPTI>
<SUBJECT><E T="04">chapter ii</E>—Office of Assistant Secretary for Housing—Federal Housing Commissioner, Department of Housing and Urban Development
</SUBJECT>
<PG>200
</PG></CHAPTI>
<CHAPTI>
<SUBJECT><E T="04">chapter iii</E>—Government National Mortgage Association, Department of Housing and Urban Development
</SUBJECT>
<PG>300 
</PG></CHAPTI>
<CHAPTI>
<SUBJECT><E T="04">chapter iv</E>—Office of Housing and Office of Multifamily Housing Assistance Restructuring, Department of Housing and Urban Development
</SUBJECT>
<PG>401


</PG></CHAPTI></CFRTOC>
<DIV2 N="Subtitle B" NODE="24:2.1" TYPE="SUBTITLE">
<HEAD>Subtitle B—Regulations Relating to Housing and Urban Development (Continued)


</HEAD>

<DIV3 N="II" NODE="24:2.1.1" TYPE="CHAPTER">

<HEAD> CHAPTER II—OFFICE OF ASSISTANT SECRETARY FOR HOUSING—FEDERAL HOUSING COMMISSIONER, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT</HEAD>

<DIV4 N="A" NODE="24:2.1.1.1" TYPE="SUBCHAP">
<HEAD>SUBCHAPTER A—GENERAL 


</HEAD>

<DIV5 N="200" NODE="24:2.1.1.1.1" TYPE="PART">
<HEAD>PART 200—INTRODUCTION TO FHA PROGRAMS 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1702-1715z-21; 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>36 FR 24467, Dec. 22, 1971, unless otherwise noted.
</PSPACE></SOURCE>
<EDNOTE>
<HED>Editorial Note:</HED><PSPACE>Nomenclature changes to part 200 appear at 69 FR 18803, Apr. 9, 2004.</PSPACE></EDNOTE>

<DIV8 N="§ 200.1" NODE="24:2.1.1.1.1.0.19.1" TYPE="SECTION">
<HEAD>§ 200.1   Purpose.</HEAD>
<P>This part sets forth requirements that are applicable to several of the programs of the Federal Housing Administration, an organizational unit within the Department of Housing and Urban Development. Program requirements applicable to FHA programs and other HUD programs also can be found in 24 CFR part 5. The specific program regulations should be consulted to determine which requirements in this part 200 or 24 CFR part 5 are applicable. 
</P>
<CITA TYPE="N">[61 FR 14398, Apr. 1, 1996]


</CITA>
</DIV8>


<DIV6 N="A" NODE="24:2.1.1.1.1.1" TYPE="SUBPART">
<HEAD>Subpart A—Requirements for Application, Commitment, and Endorsement Generally Applicable to Multifamily and Health Care Facility Mortgage Insurance Programs; and Continuing Eligibility Requirements for Existing Projects</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 14399, Apr. 1, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 200.3" NODE="24:2.1.1.1.1.1.19.1" TYPE="SECTION">
<HEAD>§ 200.3   Definitions.</HEAD>
<P>(a) The definitions “department”, “elderly person”, “family”, “HUD”, and “Secretary”, as used in this subpart A, shall have the meanings given these terms in 24 CFR part 5.
</P>
<P>(b) The terms “<I>first mortgage</I>”, “<I>hospital</I>”, “<I>maturity date</I>”, “<I>mortgage</I>”, “<I>mortgagee</I>”, and “<I>state</I>”, as used in this subpart A shall have the meaning given in the section of the National Housing Act (12 U.S.C. 1701), as amended, under which the project mortgage is insured. 
</P>
<P>(c) As used in this subpart A: 
</P>
<P><I>Act</I> means the National Housing Act, (12 U.S.C. 1701) as amended. 
</P>
<P><I>Commissioner</I> means the Federal Housing Commissioner. 
</P>
<P><I>FHA</I> means the Federal Housing Administration. 
</P>
<P><I>Insured mortgage</I> means a mortgage which has been insured by the endorsement of the credit instrument by the Commissioner, or the Commissioner's duly authorized representative. 
</P>
<P><I>Project</I> means a property consisting of site, improvements and, where permitted, equipment meeting the provisions of the applicable section of the Act, other applicable statutes and regulations, and terms, conditions and standards established by the Commissioner. 
</P>
<CITA TYPE="N">[61 FR 14399, Apr. 1, 1996, as amended at 77 FR 5675, Feb. 3, 2012]


</CITA>
</DIV8>


<DIV7 N="19" NODE="24:2.1.1.1.1.1.19" TYPE="SUBJGRP">
<HEAD>Eligible Mortgagor</HEAD>


<DIV8 N="§ 200.5" NODE="24:2.1.1.1.1.1.19.2" TYPE="SECTION">
<HEAD>§ 200.5   Eligible mortgagor.</HEAD>
<P>(a) Except as provided in paragraph (b) of this section, the mortgagor:
</P>
<P>(1) Shall be a single asset mortgagor entity acceptable to the Commissioner, as limited by the applicable section of the Act, and shall possess the powers necessary and incidental to operating the project, except that the Commissioner may approve a non-single asset mortgagor entity under such circumstances, terms and conditions determined and specified as acceptable to the Commissioner; and
</P>
<P>(2) Shall not be a natural person or tenant in common.
</P>
<P>(b)(1) For multifamily project mortgages for which HUD issued a firm commitment for mortgage insurance before September 1, 2011, and for multifamily project mortgages insured under section 232 of the Act (12 U.S.C. 1715w), the mortgagor shall be a natural person or entity acceptable to the Commissioner, as limited by the applicable section of the Act, and shall possess the powers necessary and incidental to operating the project.
</P>
<P>(2) For multifamily project mortgages for which HUD issued a firm commitment for mortgage insurance on or after September 1, 2011, the regulations of paragraph (a) of this section shall apply, unless the mortgagor demonstrates to the satisfaction of the Commissioner that financial hardship to the mortgagor would result from application of the regulations in paragraph (a) of this section due to the reasonable expectations of the mortgagor that the transaction would close under the regulations in effect prior to September 1, 2011, in which case, the regulations of paragraph (b)(1) shall apply.
</P>
<CITA TYPE="N">[76 FR 24369, May 2, 2011]


</CITA>
</DIV8>


<DIV8 N="§ 200.6" NODE="24:2.1.1.1.1.1.19.3" TYPE="SECTION">
<HEAD>§ 200.6   Employer identification and social security numbers.</HEAD>
<P>The requirements set forth in 24 CFR part 5, regarding the disclosure and verification of social security numbers and employer identification numbers by applicants and participants in assisted mortgage and loan insurance and related programs, apply to these programs. 


</P>
</DIV8>

</DIV7>


<DIV7 N="20" NODE="24:2.1.1.1.1.1.20" TYPE="SUBJGRP">
<HEAD>Eligible Mortgagee</HEAD>


<DIV8 N="§ 200.10" NODE="24:2.1.1.1.1.1.20.4" TYPE="SECTION">
<HEAD>§ 200.10   Lender requirements.</HEAD>
<P>The requirements set forth in part 202 of this chapter regarding approval, recertification, withdrawal of approval, approval for servicing, report requirements and conditions for supervised mortgagees, nonsupervised mortgagees, investing mortgagees, and governmental and similar institutions, apply to these programs.
</P>
<CITA TYPE="N">[62 FR 20081, Apr. 24, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 200.11" NODE="24:2.1.1.1.1.1.20.5" TYPE="SECTION">
<HEAD>§ 200.11   Audit requirements for State and local governments as mortgagees.</HEAD>
<P>Requirements set forth in 2 CFR part 200, subpart F, apply to State and local governments (as defined at 2 CFR 200.90 and 200.64, respectively) that receive mortgage insurance as mortgagees.
</P>
<CITA TYPE="N">[80 FR 75936, Dec. 7, 2015]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="21" NODE="24:2.1.1.1.1.1.21" TYPE="SUBJGRP">
<HEAD>Eligible Mortgage</HEAD>


<DIV8 N="§ 200.15" NODE="24:2.1.1.1.1.1.21.6" TYPE="SECTION">
<HEAD>§ 200.15   Maximum mortgage.</HEAD>
<P>Mortgages must not exceed either the statutory dollar amount or loan ratio limitations established by the section of the Act under which the mortgage is insured, except that the Commissioner may increase the dollar amount limitations:
</P>
<P>(a) By not to exceed 170 percent, in any geographical area, in which the Commissioner finds that cost levels so require; and
</P>
<P>(b) By not to exceed 170 percent, or 215 percent in high-cost areas, where the Commissioner determines it necessary on a project-by-project basis.
</P>
<CITA TYPE="N">[73 FR 17239, Mar. 31, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 200.16" NODE="24:2.1.1.1.1.1.21.7" TYPE="SECTION">
<HEAD>§ 200.16   Project mortgage adjustments and reductions.</HEAD>
<P>The principal amount computed in accordance with the applicable section of the Act for the insured mortgage shall be subject to additional adjustments and reductions in accordance with terms and conditions established by the Commissioner. 


</P>
</DIV8>


<DIV8 N="§ 200.17" NODE="24:2.1.1.1.1.1.21.8" TYPE="SECTION">
<HEAD>§ 200.17   Mortgage coverage.</HEAD>
<P>The mortgage shall cover the entire property included in the project. 


</P>
</DIV8>


<DIV8 N="§ 200.18" NODE="24:2.1.1.1.1.1.21.9" TYPE="SECTION">
<HEAD>§ 200.18   Minimum loan prohibition.</HEAD>
<P>A mortgagee may not require that the mortgage exceed a minimum amount established by the mortgagee, as a condition of providing a loan secured by a mortgage insured under this part. 


</P>
</DIV8>

</DIV7>


<DIV7 N="22" NODE="24:2.1.1.1.1.1.22" TYPE="SUBJGRP">
<HEAD>Miscellaneous Project Mortgage Insurance</HEAD>


<DIV8 N="§ 200.20" NODE="24:2.1.1.1.1.1.22.10" TYPE="SECTION">
<HEAD>§ 200.20   Refinancing insured mortgages.</HEAD>
<P>An existing mortgage insured under the Act, or an existing mortgage held by the Secretary that is subject to a mortgage restructuring and rental assistance sufficiency plan under the Multifamily Assisted Housing Reform and Affordability Act, 42 U.S.C. 1437f note (MAHRA), may be refinanced pursuant to section 223(a)(7) of the Act and such terms and conditions as may be established by the Commissioner. The term of such refinancing in connection with the implementation of an approved restructuring plan under section 401, subpart C of this title, may be up to, but not more than, 30 years.
</P>
<CITA TYPE="N">[72 FR 66037, Nov. 26, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 200.21" NODE="24:2.1.1.1.1.1.22.11" TYPE="SECTION">
<HEAD>§ 200.21   Reinsurance of Commissioner held mortgages.</HEAD>
<P>Any mortgage assigned to the Commissioner in connection with payment under a contract of mortgage insurance, or executed in connection with a sale by the Commissioner of any property acquired under any section or title of the Act, may be insured pursuant to provisions of section 223(c) of the Act and such terms and conditions established by the Commissioner. 


</P>
</DIV8>


<DIV8 N="§ 200.22" NODE="24:2.1.1.1.1.1.22.12" TYPE="SECTION">
<HEAD>§ 200.22   Operating loss loans.</HEAD>
<P>An insured loan to cover the operating losses of a project with an existing Commissioner insured mortgage may be made in accordance with provisions of section 223(d) of the Act and such terms and conditions established by the Commissioner. 


</P>
</DIV8>


<DIV8 N="§ 200.23" NODE="24:2.1.1.1.1.1.22.13" TYPE="SECTION">
<HEAD>§ 200.23   Projects in declining neighborhoods.</HEAD>
<P>A Mortgage financing the repair, rehabilitation or construction of a project located in an older declining urban area shall be eligible for insurance pursuant to provisions of section 223(e) of the Act and such terms and conditions established by the Commissioner. 


</P>
</DIV8>


<DIV8 N="§ 200.24" NODE="24:2.1.1.1.1.1.22.14" TYPE="SECTION">
<HEAD>§ 200.24   Existing projects.</HEAD>
<P>A mortgage financing the purchase or refinance of an existing rental housing project or refinance of the existing debt of an existing cooperative project under section 207 of the Act, or for refinancing the existing debt of an existing nursing home, intermediate care facility, assisted living facility, or board and care home, or any combination thereof, under section 232 of the Act, may be insured pursuant to provisions of section 223(f) of the Act and such terms and conditions established by HUD.
</P>
<CITA TYPE="N">[79 FR 42189, July 21, 2014]


</CITA>
</DIV8>


<DIV8 N="§ 200.25" NODE="24:2.1.1.1.1.1.22.15" TYPE="SECTION">
<HEAD>§ 200.25   Supplemental loans.</HEAD>
<P>A loan, advance of credit or purchase of an obligation representing a loan or advance of credit made for the purpose of financing improvements or additions to a project covered by a mortgage insured under any section of the Act or Commissioner-held mortgage, or equipment for a nursing home, intermediate care facility, board and care home, assisted living facility, or group practices facility, may be insured pursuant to the provisions of section 241 of the Act and such terms and conditions established by HUD.
</P>
<CITA TYPE="N">[72 FR 67545, Nov. 28, 2007]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="23" NODE="24:2.1.1.1.1.1.23" TYPE="SUBJGRP">
<HEAD>Miscellaneous Cross Cutting Regulations</HEAD>


<DIV8 N="§ 200.30" NODE="24:2.1.1.1.1.1.23.16" TYPE="SECTION">
<HEAD>§ 200.30   Nondiscrimination and equal opportunity.</HEAD>
<P>The requirements set forth in 24 CFR part 5, and subparts I, J, and M of this part pertaining to nondiscrimination and equal opportunity, apply to these programs. 


</P>
</DIV8>


<DIV8 N="§ 200.31" NODE="24:2.1.1.1.1.1.23.17" TYPE="SECTION">
<HEAD>§ 200.31   Debarment and suspension.</HEAD>
<P>The requirements set forth in 2 CFR part 2424 apply to these programs.
</P>
<CITA TYPE="N">[72 FR 73494, Dec. 27, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 200.32" NODE="24:2.1.1.1.1.1.23.18" TYPE="SECTION">
<HEAD>§ 200.32   Participation and compliance requirements.</HEAD>
<P>The requirements set forth in 24 CFR part 200, subpart H, apply to these programs. 


</P>
</DIV8>


<DIV8 N="§ 200.33" NODE="24:2.1.1.1.1.1.23.19" TYPE="SECTION">
<HEAD>§ 200.33   Labor standards.</HEAD>
<P>(a) The requirements set forth in 29 CFR parts 1, 3 and 5 for compliance with labor standards laws apply to projects under these programs to the extent that labor standards apply as provided in section 212 of the Act, provided that: 
</P>
<P>(1) The labor standards provisions do not apply to projects insured under sections 207 or 232 pursuant to section 223(f) of the Act; and 
</P>
<P>(2) Supplemental loans under section 241 of the Act are subject to the provisions of section 212 applicable to the section or title pursuant to which the mortgage covering the project is insured or pursuant to which the original mortgage was insured. 
</P>
<P>(b) The requirements set forth in 24 CFR part 70 apply to those programs with respect to which there is a statutory provision allowing HUD waiver of Davis-Bacon prevailing wage rates for volunteers. 
</P>
<P>(c) Project commitments, contracts and agreements, as determined by the Commissioner, and construction contracts and subcontracts, shall include terms, conditions and standards for compliance with applicable requirements set forth in 29 CFR parts 1, 3 and 5 and section 212 of the Act. 
</P>
<P>(d) No advance under a loan or mortgage that is subject to the requirements of section 212 shall be eligible for insurance unless there is filed with the application for the advance a certificate as required by the Commissioner certifying that the laborers and mechanics employed in construction of the project have been paid not less than the wage rates required under section 212. 


</P>
</DIV8>


<DIV8 N="§ 200.34" NODE="24:2.1.1.1.1.1.23.20" TYPE="SECTION">
<HEAD>§ 200.34   Property and mortgage assessment.</HEAD>
<P>The requirements set forth in 24 CFR part 200, subpart E, regarding the mortgagor's responsibility for making those investigations, analysis and inspections it deems necessary for protecting its interests in the property apply to these programs. 


</P>
</DIV8>


<DIV8 N="§ 200.35" NODE="24:2.1.1.1.1.1.23.21" TYPE="SECTION">
<HEAD>§ 200.35   Appraisal standards—nondiscrimination requirements.</HEAD>
<P>(a) <I>Nondiscrimination in the selection of appraiser.</I> In the selection of an appraiser, there shall be no discrimination on the basis of race, color, religion, national origin, sex, age, or disability. 
</P>
<P>(b) <I>Nondiscrimination in appraisal determination.</I> The certification required by the Uniform Standards of Professional Appraisal Practice must include a statement that the racial/ethnic composition of the neighborhood surrounding the property in no way affected the appraisal determination. 


</P>
</DIV8>


<DIV8 N="§ 200.36" NODE="24:2.1.1.1.1.1.23.22" TYPE="SECTION">
<HEAD>§ 200.36   Financial reporting requirements.</HEAD>
<P>The mortgagor must comply with the financial reporting requirements in 24 CFR part 5, subpart H.
</P>
<CITA TYPE="N">[63 FR 46592, Sept. 1, 1998]


</CITA>
</DIV8>


<DIV8 N="§ 200.37" NODE="24:2.1.1.1.1.1.23.23" TYPE="SECTION">
<HEAD>§ 200.37   Preventing crime in federally assisted housing.</HEAD>
<P>See part 5, subparts I and J of this title, for provisions concerning preventing crime in federally assisted housing, including programs administered under section 236 and under sections 221(d)(3) and 221(d)(5) of the National Housing Act.
</P>
<CITA TYPE="N">[66 FR 28797, May 24, 2001]




</CITA>
</DIV8>


<DIV8 N="§ 200.38" NODE="24:2.1.1.1.1.1.23.24" TYPE="SECTION">
<HEAD>§ 200.38   Protections for victims of domestic violence.</HEAD>
<P>(a) The requirements for protection for victims of domestic violence, dating violence, sexual assault, or stalking in 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking) apply to programs administered under section 236 and under sections 221(d)(3) and (d)(5) of the National Housing Act, as follows:
</P>
<P>(1) Multifamily rental housing under section 221(d)(3) of the National Housing Act (12 U.S.C. 17151(d)) with a below-market interest rate (BMIR) pursuant to section 221(d)(5), with implementing regulations at 24 CFR part 221. The Section 221(d)(3) BMIR program insured and subsidized mortgage loans to facilitate new construction or substantial rehabilitation of multifamily rental cooperative housing for low- and moderate-income families. The program is no longer active, but Section 221(d)(3) BMIR properties that remain in existence are covered by VAWA. Coverage of section 221(d)(3) and (d)(5) BMIR housing does not include section 221(d)(3) and (d)(5) BMIR projects that refinance under section 223(a)(7) or 223(f) of the National Housing Act where the interest rate is no longer determined under section 221(d)(5).
</P>
<P>(2) Multifamily rental housing under section 236 of the National Housing Act (12 U.S.C. 1715z-1), with implementing regulations at 24 CFR part 236. Coverage of the section 236 program includes not only those projects with FHA-insured project mortgages under section 236(j), but also non-FHA-insured projects that receive interest reduction payments (“IRP”) under section 236(b) and formerly insured section 236 projects that continue to receive interest reduction payments through a “decoupled” IRP contract under section 236(e)(2). Coverage also includes projects that receive rental assistance payments authorized under section 236(f)(2).
</P>
<P>(b) For the programs administered under paragraph (a) of this section, “covered housing provider” as such term is used in 24 CFR part 5, subpart L, refers to the mortgagor, or owner, as applicable.
</P>
<CITA TYPE="N">[81 FR 80805, Nov. 16, 2016]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="24" NODE="24:2.1.1.1.1.1.24" TYPE="SUBJGRP">
<HEAD>Fees and Charges</HEAD>


<DIV8 N="§ 200.40" NODE="24:2.1.1.1.1.1.24.25" TYPE="SECTION">
<HEAD>§ 200.40   HUD fees.</HEAD>
<P>The following fees apply to mortgages to be insured under this part. 
</P>
<P>(a) <I>Application fee—SAMA letter (for new construction).</I> An application fee of $1 per thousand dollars of the requested mortgage shall accompany the application for a SAMA letter. An additional fee of $1 per thousand dollars of the requested mortgage amount shall be charged for the review of plans and specifications. 
</P>
<P>(b) <I>Application fee—feasibility letter (for substantial rehabilitation).</I> An application fee of $3 per thousand dollars of the requested mortgage amount shall accompany the application for a feasibility letter. 
</P>
<P>(c) <I>Application fee—conditional commitment.</I> For a mortgage being insured under section 223(f) of the Act (12 U.S.C. 1715n), an application-commitment fee of $3 per thousand dollars of the requested mortgage amount shall accompany an application for conditional commitment.
</P>
<P>(d)(1) <I>Application fee—firm commitment: General.</I> An application for firm commitment shall be accompanied by an application-commitment fee in an amount determined by the Secretary, which when added to any prior fees received in connection with the same application, shall not exceed $5.00 per thousand dollars of the requested mortgage amount to be insured. The payment of an application-commitment fee shall not be required in connection with an insured mortgage involving the sale by the government of housing or property acquired, held, or contracted pursuant to the Atomic Energy Community Act of 1955 (42 U.S.C. 2301 <I>et seq.</I>).
</P>
<P>(2) <I>Application fee—Section 232 Programs.</I> For purposes of mortgages insured under HUD's regulations in 24 CFR part 232, subpart C, an application for firm commitment shall be accompanied by an application fee in an amount determined by the Secretary, which shall not exceed $5.00 per thousand dollars of the requested mortgage amount to be insured.
</P>
<P>(e) <I>Inspection fee</I>—(1) <I>In general.</I> The firm commitment may provide for the payment of an inspection fee in an amount not to exceed $5 per thousand dollars of the commitment. If an inspection fee is required, it shall be paid as follows: 
</P>
<P>(i) If the case involves insurance of advances, at the time of initial endorsement; or 
</P>
<P>(ii) If the case involves insurance upon completion, before the date construction is begun. 
</P>
<P>(2) <I>Existing projects.</I> For a mortgage being insured under section 223(f) of the Act, if the application provides for the completion of repairs, replacements and/or improvements (repairs), the Commissioner will charge an inspection fee equal to one percent (1%) of the cost of the repairs. However, where the Commissioner determines the cost of repairs is minimal, the Commissioner may establish a minimum inspection fee that exceeds one percent of the cost of repairs and can periodically increase or decrease this minimum fee. 
</P>
<P>(f) <I>Fees on increases—in general.</I> This section applies to all applications except applications involving hospitals, which are covered in 24 CFR part 242.
</P>
<P>(1) <I>Increase in firm commitment before endorsement.</I> An application, filed before initial endorsement (or before endorsement in a case involving insurance upon completion), for an increase in the amount of an outstanding firm commitment, shall be accompanied by a combined additional application and commitment fee. This combined additional fee shall be in an amount that will aggregate $5 per thousand dollars of the amount of the requested increase. If an inspection fee was required in the original commitment, an additional inspection fee shall be paid in an amount computed at the same dollar rate per thousand dollars of the amount of increase in commitment as was used for the inspection fee required in the original commitment. When insurance of advances is involved, the additional inspection fee shall be paid at the time of initial endorsement. When insurance upon completion is involved, the additional inspection fee shall be paid before the date construction is begun; or, if construction has begun, it shall be paid with the application for increase.
</P>
<P>(2) <I>Increase in mortgage between initial and final endorsement.</I> Upon the filing of an application between initial and final endorsement, for an increase in the amount of the mortgage, either by amendment or by substitution of a new mortgage, a combined additional application and commitment fee shall accompany the application. This combined additional fee shall be in an amount that will aggregate $5 per thousand dollars of the amount of the increase requested. If an inspection fee was required in the original commitment, an additional inspection fee shall accompany the application in an amount not to exceed the $5 per thousand dollars of the amount of the increase requested.
</P>
<P>(3) <I>Loan to cover operating losses.</I> In connection with a loan to cover operating losses (see Sec. 200.22), a combined application and commitment fee of $5 per thousand dollars of the amount of the loan applied for shall be submitted with the application for a firm commitment. No inspection fee shall be required.
</P>
<P>(g) <I>Reopening of expired commitments.</I> An expired commitment may be reopened if a request for reopening is received by the Commissioner within 90 days of the expiration of the commitment. The reopening request shall be accompanied by a fee of 50 cents per thousand dollars of the amount of the expired commitment. If the reopening request is not received by the Commissioner within the required 90-day period, a new application, accompanied by the required application and commitment fee, must be submitted. 
</P>
<P>(h) <I>Transfer fee.</I> Upon application for the approval of a transfer of physical assets or the substitution of mortgagors, a transfer fee of 50 cents per thousand dollars shall be paid on the original face amount of the mortgage in all cases, except that a transfer fee shall not be paid where both parties to the transfer transaction are nonprofit purchasers, or when the transfer of physical assets or the substitution of mortgagors occurs contemporaneously with the restructuring of a mortgage pursuant to a restructuring plan under part 401, subpart C of this title.
</P>
<P>(i) <I>Refund of fees.</I> If the amount of the commitment issued or increase in mortgage granted is less than the amount applied for, the Commissioner shall refund the excess amount of the application and commitment fees submitted by the applicant. If an application is rejected before it is assigned for processing, or in such other instances as the Commissioner may determine, the entire application and commitment fee or any portion thereof may be returned to the applicant. Commitment, inspection and reopening fees may be refunded, in whole or in part, if it is determined by the Commissioner that there is a lack of need for the housing or that the construction or financing of the project has been prevented because of condemnation proceedings or other legal action taken by a governmental body or public agency, or in such other instances as the Commissioner may determine. A transfer fee may be refunded only in such instances as the Commissioner may determine. 
</P>
<P>(j) <I>Fees not required.</I> (1) The payment of an application, commitment, inspection, or reopening fee shall not be required in connection with the insurance of a mortgage involving the sale by the Secretary of any property acquired under any section or title of the Act.
</P>
<P>(2) The payment of an application or commitment fee shall not be required in connection with the insurance of a mortgage used to facilitate a restructuring plan under part 401, subpart C of this title.
</P>
<CITA TYPE="N">[61 FR 14414, Apr. 1, 1996, as amended at 72 FR 66037, Nov. 26, 2007; 72 FR 67545, Nov. 28, 2007; 80 FR 48027, Aug. 11, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 200.41" NODE="24:2.1.1.1.1.1.24.26" TYPE="SECTION">
<HEAD>§ 200.41   Maximum mortgagee fees and charges.</HEAD>
<P>(a) Mortgagee fees and charges included in the mortgage must be for actual required services provided to the mortgagor by the mortgagee, and shall not exceed common market rates for such services as determined by the Commissioner. 
</P>
<P>(b) Mortgagee charges for prepayment of the mortgage and late mortgage payments shall not exceed that determined appropriate by the Commissioner. 


</P>
</DIV8>

</DIV7>


<DIV7 N="25" NODE="24:2.1.1.1.1.1.25" TYPE="SUBJGRP">
<HEAD>Commitment Applications</HEAD>


<DIV8 N="§ 200.45" NODE="24:2.1.1.1.1.1.25.27" TYPE="SECTION">
<HEAD>§ 200.45   Processing of applications.</HEAD>
<P>(a) <I>Preapplication conference.</I> Except for mortgages insured under section 241(f) or 242 of the Act, the local HUD Office will determine whether participation in such a conference is required as a condition to submission of an initial application for either a site appraisal and market analysis (SAMA) letter (for new construction), a feasibility letter (for substantial rehabilitation), or for a firm commitment. The project sponsor may elect (after the preapplication conference if required) to submit an application for a SAMA or a feasibility letter (as appropriate), or for a firm commitment for insurance depending upon the completeness of the drawings, specifications and other required exhibits. An application for a SAMA or feasibility letter may be submitted by the project sponsor. An application for a firm commitment for insurance must be submitted by both the project sponsor and an approved mortgagee. Applications shall be submitted to the local HUD Office on HUD-approved forms. No application will be considered unless accompanied by all exhibits required by the form and program handbooks. At the option of the local HUD Office, the SAMA/Feasibility letter stage of processing can be combined with the firm commitment stage of processing. 
</P>
<P>(b) <I>Firm commitment requirement.</I> An application for a firm commitment must be made by an approved mortgagee for any project for which a mortgagor seeks mortgage insurance under the Act. 
</P>
<P>(c) <I>Staged applications.</I> Staged applications leading to an application for firm commitment shall be made as determined appropriate by the Commissioner, and in accordance with such terms and conditions established by the Commissioner. The intermediate stages to firm commitment may include a site appraisal and market analysis (SAMA) letter stage or a feasibility letter stage and a conditional commitment. The conditional commitment stage applies only to mortgages to be insured pursuant to section 223(f) of the Act. 
</P>
<P>(d) <I>Effect of SAMA letter, feasibility letter, and firm commitment</I>—(1) <I>SAMA letter.</I> (i) The issuance of a SAMA letter indicates completion of the site appraisal and market analysis stage to determine initial acceptability of the site and recognition of a specific market need. The SAMA letter is not a commitment to insure a mortgage for the proposed project and does not bind the Commissioner to issue a firm commitment to insure. The SAMA letter precedes the later submission of acceptable plans and specifications for the proposed project and is limited to advising the applicant as to the following determinations of the Commissioner, which shall not be changed to the detriment of an applicant, if the application for a firm commitment is received before expiration of the SAMA letter: 
</P>
<P>(A) The land value fully improved (with off-site improvements installed); 
</P>
<P>(B) The acceptability of the proposed project site, the proposed composition, number and size of the units and the market for the number of proposed units. Where the application is not acceptable as submitted, but can be made acceptable by a change in the number, size, or composition of the units, the SAMA letter may establish the specific lesser number of units which would be acceptable and any acceptable alternative plan for the composition and size of units; and 
</P>
<P>(C) The acceptability of the unit rents proposed. Where rent levels are unacceptable, the SAMA letter may establish specific rents which are acceptable. 
</P>
<P>(ii) After receiving a SAMA letter, the sponsor shall submit design drawings and specifications in a timeframe prescribed by the Commissioner. The Commissioner will review and comment on design development and the drawings and specifications. The comments will be provided to the sponsor for use in preparing a firm commitment application. 
</P>
<P>(2) <I>Feasibility letter.</I> The issuance of a feasibility letter indicates approval of the preliminary work write-up and outline specifications and completion of technical processing involving the estimated rehabilitation cost of the project, the “as is” value of the site, the detailed estimates of operating expenses and taxes, the specific unit rents, the vacancy allowance, and the estimated mortgage amount. The issuance of a feasibility letter is not a commitment to insure a mortgage for the proposed project and does not bind the Commissioner to issue a firm commitment to insure. Determinations found in a feasibility letter are not to be binding upon the Department and may be changed in whole or in part at any later point in time. The letter may even be unilaterally terminated by the Commissioner if found necessary. 
</P>
<P>(3) <I>Conditional commitment.</I> The issuance of a Section 223(f) conditional commitment indicates completion of technical processing involving the estimated value of the property, the detailed estimates of rents, operating expenses and taxes and an estimated mortgage amount. 
</P>
<P>(e) <I>Term of SAMA letter, feasibility letter, and conditional commitment.</I> A SAMA letter, a feasibility letter, and a conditional commitment shall be effective for whatever term is specified in the respective letter or commitment. 
</P>
<P>(f) <I>Rejection of an application.</I> A significant deviation in an application from the Commissioner's terms or conditions in an earlier stage application commitment or agreement shall be grounds for rejection. The fees paid to such date shall be considered as having been earned notwithstanding such rejection. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0029)
</APPRO>
<CITA TYPE="N">[61 FR 14415, Apr. 1, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 200.46" NODE="24:2.1.1.1.1.1.25.28" TYPE="SECTION">
<HEAD>§ 200.46   Commitment issuance.</HEAD>
<P>Upon approval of an application for insurance, a commitment shall be issued by the Commissioner setting forth the terms and conditions upon which the mortgage will be insured. The commitment term and any extension or reopening of an expired commitment shall be in accordance with standards established by the Commissioner. 


</P>
</DIV8>


<DIV8 N="§ 200.47" NODE="24:2.1.1.1.1.1.25.29" TYPE="SECTION">
<HEAD>§ 200.47   Firm commitments.</HEAD>
<P>A valid firm commitment must be in effect at the time the mortgage instrument is endorsed. 
</P>
<P>(a) <I>Insurance upon completion.</I> The commitment shall provide the terms and conditions for the insurance of the mortgage: 
</P>
<P>(1) After completion of construction or substantial rehabilitation of the project; or 
</P>
<P>(2) Upon completion of required work, except as deferred by the Commissioner in accordance with terms, conditions and standards established by the Commissioner, for an existing project without substantial rehabilitation. 
</P>
<P>(b) <I>Insured advances.</I> The commitment shall provide for insurance of the mortgage as provided in paragraph (a) of this section, and for the insurance of mortgage money advanced in accordance with terms and conditions established by the Commissioner during: construction; substantial rehabilitation; or other work acceptable to the Commissioner. 


</P>
</DIV8>

</DIV7>


<DIV7 N="26" NODE="24:2.1.1.1.1.1.26" TYPE="SUBJGRP">
<HEAD>Requirements Incident to Insured Advances</HEAD>


<DIV8 N="§ 200.50" NODE="24:2.1.1.1.1.1.26.30" TYPE="SECTION">
<HEAD>§ 200.50   Building loan agreement.</HEAD>
<P>The mortgagor and mortgagee must execute a building loan agreement approved by the Commissioner, that sets forth the terms and conditions under which progress payments may be advanced during construction, before initial endorsement of the mortgage for insurance. 


</P>
</DIV8>


<DIV8 N="§ 200.51" NODE="24:2.1.1.1.1.1.26.31" TYPE="SECTION">
<HEAD>§ 200.51   Mortgagee certificate.</HEAD>
<P>The mortgagee shall certify to the Commissioner that it will conform with terms and conditions established by the Commissioner for the mortgagee's control of project funds, and other incidental requirements established by the Commissioner. 


</P>
</DIV8>


<DIV8 N="§ 200.52" NODE="24:2.1.1.1.1.1.26.32" TYPE="SECTION">
<HEAD>§ 200.52   Construction contract.</HEAD>
<P>The form of contract between the mortgagor and builder shall be as prescribed by the Commissioner in accordance with terms and conditions established by the Commissioner. 


</P>
</DIV8>


<DIV8 N="§ 200.53" NODE="24:2.1.1.1.1.1.26.33" TYPE="SECTION">
<HEAD>§ 200.53   Initial operating funds.</HEAD>
<P>The mortgagor shall deposit cash with the mortgagee, or in a depository satisfactory to the mortgagee and under control of the mortgagee, in accordance with terms, conditions and standards established by the Commissioner for: 
</P>
<P>(a) Accruals for taxes, ground rates, mortgage insurance premiums, and property insurance premiums, during the course of construction; 
</P>
<P>(b) Meeting the cost of equipping and renting the project subsequent to its completion in whole or part; and 
</P>
<P>(c) Allocation by the mortgagee for assessments required by the terms of the mortgage in an amount acceptable to the Commissioner. 


</P>
</DIV8>


<DIV8 N="§ 200.54" NODE="24:2.1.1.1.1.1.26.34" TYPE="SECTION">
<HEAD>§ 200.54   Project completion funding.</HEAD>
<P>(a) Except as provided in paragraph (c) of this section, the mortgagor shall deposit with the mortgagee cash deemed by the Commissioner to be sufficient, when added to the proceeds of the insured mortgage, to assure completion of the project and to pay the initial service charge, carrying charges, and legal and organizational expenses incident to the construction of the project. The Commissioner may accept a lesser cash deposit or an alternative to a cash deposit in accordance with terms and conditions established by the Commissioner, where the required funding is to be provided by a grant or loan from a Federal, State, or local government agency or instrumentality.
</P>
<P>(b) An agreement acceptable to the Commissioner shall require that funds provided by the mortgagor under requirements of this section must be disbursed in full for project work, material, and incidental charges and expenses before disbursement of any insured mortgage proceeds, except:
</P>
<P>(1) Low-income housing tax credit syndication proceeds, historic tax-credit syndication proceeds, New Markets Tax Credits proceeds, or funds provided by a grant or loan from a Federal, State, or local governmental agency or instrumentality under requirements of this section need not be fully disbursed before the disbursement of insured mortgage proceeds, where approved by the Commissioner in accordance with terms, conditions, and standards established by the Commissioner; or
</P>
<P>(2) If the mortgagor's deposit required by paragraph (a) of this section is not fully disbursed with the initial advance of the insured mortgage proceeds, the mortgagee may disburse up to one (1) percent of the mortgage amount initially endorsed for insurance before requiring that the funds provided by the mortgagor be disbursed in full. The 1 percent of the initially endorsed mortgage amount may be disbursed in full at the time of initial endorsement or may be disbursed in any amount on a monthly basis, whether consecutive or nonconsecutive, until the funds provided by the mortgagor are fully disbursed.
</P>
<P>(c) In the case of a mortgage insured under any provision of this title executed in connection with the purchase, construction, rehabilitation, or refinancing of a multifamily tax credit project, the Commissioner may not require:
</P>
<P>(1) The escrowing of equity provided by Low-Income Housing Tax Credits for the project pursuant to Title 26, section 42 of the Internal Revenue Code of 1986;
</P>
<P>(2) The escrowing of equity provided by historic rehabilitation tax credits, New Markets Tax Credits, or any other form of security, such as a letter of credit.
</P>
<CITA TYPE="N">[75 FR 51915, Aug. 23, 2010, as amended at 89 FR 100743, Dec. 13, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 200.55" NODE="24:2.1.1.1.1.1.26.35" TYPE="SECTION">
<HEAD>§ 200.55   Financing fees and charges.</HEAD>
<P>Fees and charges approved by the Commissioner in excess of the initial service charge shall be deposited with the mortgagee in cash before initial endorsement, except as otherwise preapproved by the Commissioner. 


</P>
</DIV8>


<DIV8 N="§ 200.56" NODE="24:2.1.1.1.1.1.26.36" TYPE="SECTION">
<HEAD>§ 200.56   Assurance of completion for on-site improvements.</HEAD>
<P>The mortgagor shall furnish assurance of completion of the project in the form and amount provided by terms, conditions and standards established by the Commissioner. 


</P>
</DIV8>

</DIV7>


<DIV7 N="27" NODE="24:2.1.1.1.1.1.27" TYPE="SUBJGRP">
<HEAD>General Requirements</HEAD>


<DIV8 N="§ 200.60" NODE="24:2.1.1.1.1.1.27.37" TYPE="SECTION">
<HEAD>§ 200.60   Assurance of completion for offsite facilities.</HEAD>
<P>An assurance of completion for offsite utilities, streets, and other facilities required for a buildable site shall be provided in an amount and form acceptable to the Commissioner, except where a municipality or other public body has, in a manner acceptable to the Commissioner, agreed to install such improvements without cost to the mortgagor. 


</P>
</DIV8>


<DIV8 N="§ 200.61" NODE="24:2.1.1.1.1.1.27.38" TYPE="SECTION">
<HEAD>§ 200.61   Title.</HEAD>
<P>(a) Marketable title to the project must be vested in the mortgagor as of the date the mortgage is filed for record. 
</P>
<P>(b) Title evidence for the Commissioner's examination shall include a lender's title insurance policy, which title policy provides survey coverage based on a survey acceptable to the title company and the Commissioner; or as the Commissioner may otherwise require, in accordance with terms, conditions and standards established by the Commissioner. 
</P>
<P>(c) Endorsement of the credit instrument for insurance shall evidence the acceptability of title evidence. 


</P>
</DIV8>


<DIV8 N="§ 200.62" NODE="24:2.1.1.1.1.1.27.39" TYPE="SECTION">
<HEAD>§ 200.62   Certifications.</HEAD>
<P>Any agreement, undertaking, statement or certification required by the Commissioner shall specifically state that it has been made, presented, and delivered for the purpose of influencing an official action of the FHA, and of the Commissioner, and may be relied upon by the Commissioner as a true statement of the facts contained therein. 


</P>
</DIV8>


<DIV8 N="§ 200.63" NODE="24:2.1.1.1.1.1.27.40" TYPE="SECTION">
<HEAD>§ 200.63   Required deposits and letters of credit.</HEAD>
<P>(a) <I>Deposits.</I> Where the Commissioner requires the mortgagor to make a deposit of cash or securities, such deposit shall be with the mortgagee or a depository acceptable to the mortgagee. The deposit shall be held by the mortgagee in a special account or by the depository under an appropriate agreement approved by the Commissioner. 
</P>
<P>(b) <I>Letter of credit.</I> Where the use of a letter of credit is acceptable to the Commissioner in lieu of a deposit of cash or securities, the letter of credit shall be issued to the mortgagee by a banking institution and shall be unconditional and irrevocable: 
</P>
<P>(1) The mortgagee of record may not be the issuer of any letter of credit without the prior written consent of the Commissioner. 
</P>
<P>(2) The mortgagee shall be responsible to the Commissioner for collection under the letter of credit. In the event a demand for payment thereunder is not immediately met, the mortgagee shall immediately provide a cash deposit equivalent to the undrawn balance of the letter of credit. 


</P>
</DIV8>

</DIV7>


<DIV7 N="28" NODE="24:2.1.1.1.1.1.28" TYPE="SUBJGRP">
<HEAD>Property Requirements</HEAD>


<DIV8 N="§ 200.70" NODE="24:2.1.1.1.1.1.28.41" TYPE="SECTION">
<HEAD>§ 200.70   Location and fee interest.</HEAD>
<P>The property must be held by an eligible mortgagor, and must conform with requirements pertaining to property location and fee or lease interests of the section of the Act under which the mortgage is insured. 


</P>
</DIV8>


<DIV8 N="§ 200.71" NODE="24:2.1.1.1.1.1.28.42" TYPE="SECTION">
<HEAD>§ 200.71   Liens.</HEAD>
<P>The project must be free and clear of all liens other than the insured mortgage, except that the property may be subject to an inferior lien as provided by terms and conditions established by the Commissioner for an inferior lien: 
</P>
<P>(a) Made or held by a Federal, State or local government instrumentality; 
</P>
<P>(b) Required in connection with: an operating loss loan insured pursuant to a section 223(d) of the Act; a supplemental loan insured pursuant to section 241 of the Act; or a mortgage to purchase or refinance an existing project pursuant to section 223(f) of the Act; or 
</P>
<P>(c) As otherwise provided by the Commissioner. 


</P>
</DIV8>


<DIV8 N="§ 200.72" NODE="24:2.1.1.1.1.1.28.43" TYPE="SECTION">
<HEAD>§ 200.72   Zoning, deed and building restrictions.</HEAD>
<P>The project when completed shall not violate any material zoning or deed restrictions applicable to the project site, and shall comply with all applicable building and other governmental codes, ordinances, regulations and requirements. 


</P>
</DIV8>


<DIV8 N="§ 200.73" NODE="24:2.1.1.1.1.1.28.44" TYPE="SECTION">
<HEAD>§ 200.73   Property development.</HEAD>
<P>(a) The property shall be suitable and principally designed for the intended use, as provided by the applicable section of the Act under which the mortgage is insured, and have long-term marketability. Design, construction, substantial rehabilitation and repairs shall be in accordance with standards established by the Commissioner. 
</P>
<P>(b) A project may include such commercial and community facilities as the Commissioner deems acceptable. 
</P>
<P>(c) The improvements shall constitute a single project. Not less than five rental dwelling units or personal care units, 20 medical care beds, or 50 manufactured home pads, shall be on one site, except that such limitations do not apply to group practice facilities. 


</P>
</DIV8>


<DIV8 N="§ 200.74" NODE="24:2.1.1.1.1.1.28.45" TYPE="SECTION">
<HEAD>§ 200.74   Minimum property standards.</HEAD>
<P>The requirements set forth in subpart S of this part apply to these programs, except for hospitals insured under section 242 of the Act and group practice facilities insured under title XI of the Act. 


</P>
</DIV8>


<DIV8 N="§ 200.75" NODE="24:2.1.1.1.1.1.28.46" TYPE="SECTION">
<HEAD>§ 200.75   Environmental quality determinations and standards.</HEAD>
<P>Requirements set forth in 24 CFR part 50, Protection and Enhancement of Environmental Quality, 24 CFR part 51, Environmental Criteria and Standards, 24 CFR part 55, Implementation of Executive Order 11988, Flood Plain Management, and as otherwise required by the Commissioner apply to these programs. 


</P>
</DIV8>


<DIV8 N="§ 200.76" NODE="24:2.1.1.1.1.1.28.47" TYPE="SECTION">
<HEAD>§ 200.76   Smoke detectors.</HEAD>
<P>Smoke detectors and alarm devices must be installed in accordance with standards and criteria acceptable to the Commissioner for the protection of occupants in any dwelling or facility bedroom or other primary sleeping area. 


</P>
</DIV8>


<DIV8 N="§ 200.77" NODE="24:2.1.1.1.1.1.28.48" TYPE="SECTION">
<HEAD>§ 200.77   Lead-based paint poisoning prevention.</HEAD>
<P>Requirements set forth in 24 CFR part 35 apply to these programs. 


</P>
</DIV8>


<DIV8 N="§ 200.78" NODE="24:2.1.1.1.1.1.28.49" TYPE="SECTION">
<HEAD>§ 200.78   Energy conservation.</HEAD>
<P>Construction, mechanical equipment, and energy and metering selections shall provide cost effective energy conservation in accordance with standards established by the Commissioner. 


</P>
</DIV8>

</DIV7>


<DIV7 N="29" NODE="24:2.1.1.1.1.1.29" TYPE="SUBJGRP">
<HEAD>Mortgage Provisions</HEAD>


<DIV8 N="§ 200.80" NODE="24:2.1.1.1.1.1.29.50" TYPE="SECTION">
<HEAD>§ 200.80   Mortgage form.</HEAD>
<P>The mortgage shall be: 
</P>
<P>(a) Executed on a form approved by the Commissioner for use in the jurisdiction in which the property securing the mortgage is situated, which form shall not be changed without the prior written approval of the Commissioner. 
</P>
<P>(b) Executed by an eligible mortgagor. 
</P>
<P>(c) A first lien on the property securing the mortgage, which property conforms with the property standards prescribed by the Commissioner. 


</P>
</DIV8>


<DIV8 N="§ 200.81" NODE="24:2.1.1.1.1.1.29.51" TYPE="SECTION">
<HEAD>§ 200.81   Disbursement of mortgage proceeds.</HEAD>
<P>The mortgagee shall be obligated, as a part of the mortgage transaction, to disburse the principal amount of the mortgage to the: 
</P>
<P>(a) Mortgagor or mortgagor's account; 
</P>
<P>(b) Mortgagor's creditors for the mortgagor's account, subject to the mortgagor's consent. 


</P>
</DIV8>


<DIV8 N="§ 200.82" NODE="24:2.1.1.1.1.1.29.52" TYPE="SECTION">
<HEAD>§ 200.82   Maturity.</HEAD>
<P>The mortgage shall have a maturity satisfactory to the Commissioner, and shall contain complete amortization or sinking-fund provisions satisfactory to the Commissioner. 
</P>
<P>(a) The maximum mortgage term may not exceed the lesser of: 
</P>
<P>(1) Any limits included under the applicable section of the Act. 
</P>
<P>(2) Thirty-five years for existing projects, except that the mortgage term may be up to 40 years under terms and conditions established by the Commissioner, and 40 years for proposed construction and substantial rehabilitation projects. 
</P>
<P>(3) Seventy-five percent of the estimated remaining economic life of the physical improvements. 
</P>
<P>(b) The minimum mortgage term shall not be less than 10 years. 


</P>
</DIV8>


<DIV8 N="§ 200.83" NODE="24:2.1.1.1.1.1.29.53" TYPE="SECTION">
<HEAD>§ 200.83   Interest rate.</HEAD>
<P>(a) The mortgage shall bear interest at the rate agreed upon by the mortgagee and the mortgagor. 
</P>
<P>(b) Interest shall be payable in monthly installments on the principal amount of the mortgage outstanding on the due date of each installment. 
</P>
<P>(c) The amount of any increase approved by the Commissioner in the mortgage amount between initial and final endorsement in excess of the amount that the Commissioner had committed to insure at initial endorsement shall bear interest at the rate agreed upon by the mortgagee and the mortgagor. 


</P>
</DIV8>


<DIV8 N="§ 200.84" NODE="24:2.1.1.1.1.1.29.54" TYPE="SECTION">
<HEAD>§ 200.84   Payment requirements.</HEAD>
<P>The mortgage shall provide for: 
</P>
<P>(a) A single aggregate payment each month for all payments to be made by the mortgagor to the mortgagee. 
</P>
<P>(b) The mortgagor to pay to the mortgagee: 
</P>
<P>(1) Interest and principal on the first day of each month in accordance with an amortization plan agreed upon by the mortgagor, the mortgagee and the Commissioner. 
</P>
<P>(i) Date of first payment to interest shall be the endorsement date or, where there are insured advances, the initial endorsement date. 
</P>
<P>(ii) Date of first payment to principal. The Commissioner shall estimate the time necessary to complete the project and shall establish the date of the first payment to principal so that the lapse of time between completion of the project and commencement of amortization will not be longer than necessary to obtain sustaining occupancy. 
</P>
<P>(2) An amount on each interest payment date sufficient to accumulate in the hands of the mortgagee one payment period prior to its due date, the next annual mortgage insurance premium payable by the mortgagee to the Commissioner. Such payments shall continue only so long as the contract of insurance shall remain in effect. 
</P>
<P>(3) Equal monthly payments as will amortize the ground rents, if any, and the estimated amount of all taxes, water charges, special assessments, and fire and other hazard insurance premiums, within a period ending one month prior to the dates on which the same become delinquent. 
</P>
<P>(4) The mortgage shall further provide: 
</P>
<P>(i) That such payments shall be held by the mortgagee, for the purpose of paying such items before they become delinquent. 
</P>
<P>(ii) For adjustments in case such estimated amounts shall prove to be more, or less, than the actual amounts so paid therefor by the mortgagor. 
</P>
<P>(c) The mortgagee to apply each mortgagor payment received to the following items in the order set forth: 
</P>
<P>(1) Premium charges under the contract of mortgage insurance. 
</P>
<P>(2) Ground rents, taxes, special assessments, and fire and other hazard insurance premiums. 
</P>
<P>(3) Interest on the mortgage. 
</P>
<P>(4) Amortization of the principal of the mortgage. 


</P>
</DIV8>


<DIV8 N="§ 200.85" NODE="24:2.1.1.1.1.1.29.55" TYPE="SECTION">
<HEAD>§ 200.85   Covenant against liens.</HEAD>
<P>(a) The mortgage shall contain a covenant against the creation by the mortgagor of liens against the property superior or inferior to the lien of the mortgage except for such inferior lien as may be approved by the Commissioner in accordance with provisions of § 200.71; and 
</P>
<P>(b) A covenant against repayment of a Commissioner approved inferior lien from mortgage proceeds other than surplus cash or residual receipts, except in the case of an inferior lien created by an operating loss loan insured pursuant to section 223(d) of the Act, or a supplemental loan insured pursuant to section 241 of the Act. 


</P>
</DIV8>


<DIV8 N="§ 200.86" NODE="24:2.1.1.1.1.1.29.56" TYPE="SECTION">
<HEAD>§ 200.86   Covenant for fire and other hazard insurance.</HEAD>
<P>The mortgage shall contain a covenant binding the mortgagor to maintain fire and extended coverage insurance on the property in accordance with terms and conditions established by the Commissioner. 


</P>
</DIV8>


<DIV8 N="§ 200.87" NODE="24:2.1.1.1.1.1.29.57" TYPE="SECTION">
<HEAD>§ 200.87   Mortgage prepayment.</HEAD>
<P>(a) <I>Prepayment privilege.</I> Except as provided in paragraph (c) of this section or otherwise established by the Commissioner, the mortgage shall contain a provision permitting the mortgagor to prepay the mortgage in whole or in part upon any interest payment date, after giving the mortgagee 30 days' notice in writing in advance of its intention to so prepay. 
</P>
<P>(b) <I>Prepayment charge.</I> The mortgage may contain a provision for such charge, in the event of prepayment of principal, as may be agreed upon between the mortgagor and the mortgagee, subject to the following: 
</P>
<P>(1) The mortgagor shall be permitted to prepay up to 15 percent of the original principal amount of the mortgage in any one calendar year without any such charge. 
</P>
<P>(2) Any reduction in the original principal amount of the mortgage resulting from the certification of cost which the Commissioner may require shall not be construed as a prepayment of the mortgage. 
</P>
<P>(c) <I>Prepayment of bond-financed or GNMA securitized mortgages.</I> Where the mortgage is given to secure GNMA mortgage-backed securities or a loan made by a lender that has obtained the funds for the loan by the issuance and sale of bonds or bond anticipation notes, or both, the mortgage may contain a prepayment restriction and prepayment penalty charge acceptable to the Commissioner as to term, amount, and conditions. 
</P>
<P>(d) <I>HUD override of prepayment restrictions.</I> In the event of a default, the Commissioner may override any lockout, prepayment penalty or combination thereof in order to facilitate a partial or full refinancing of the mortgaged property and avoid a claim. 


</P>
</DIV8>


<DIV8 N="§ 200.88" NODE="24:2.1.1.1.1.1.29.58" TYPE="SECTION">
<HEAD>§ 200.88   Late charge.</HEAD>
<P>(a) The mortgage may provide for the collection by the mortgagee of a late charge in accordance with terms, conditions, and standards of the Commissioner for each dollar of each payment to interest or principal:
</P>
<P>(1) More than 10 days in arrears to cover the expense involved in handling delinquent payments;
</P>
<P>(2) For multifamily project mortgages for which HUD issued a firm commitment for mortgage insurance before September 1, 2011, and for multifamily project mortgages insured under section 232 of the Act (12 U.S.C. 1715w), more than 15 days in arrears to cover the expense involved in handling delinquent payments.
</P>
<P>(b) Late charges shall be separately charged to and collected from the mortgagor and shall not be deducted from any aggregate monthly payment.
</P>
<CITA TYPE="N">[76 FR 24369, May 2, 2011]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="30" NODE="24:2.1.1.1.1.1.30" TYPE="SUBJGRP">
<HEAD>Cost Certification</HEAD>


<DIV8 N="§ 200.95" NODE="24:2.1.1.1.1.1.30.59" TYPE="SECTION">
<HEAD>§ 200.95   Certification of cost requirements.</HEAD>
<P>(a) Before initial endorsement of the mortgage for insurance, the mortgagor, the mortgagee, and the Commissioner shall enter into an agreement in form and content satisfactory to the Commissioner for the purpose of precluding any excess of mortgage proceeds over statutory limitations. Under this agreement, the mortgagor shall disclose its relationship with the builder, including any collateral agreement, and shall agree: 
</P>
<P>(1) To enter into a construction contract, the terms of which shall depend on whether or not there exists an identity of interest between the mortgagor and the builder. 
</P>
<P>(2) To execute a Certificate of Actual Costs, upon completion of all physical improvements on the mortgaged property. 
</P>
<P>(3) To apply in reduction of the outstanding balance of the principal of the mortgage any excess of mortgage proceeds over statutory limitations based on actual cost. 
</P>
<P>(b) The provisions of paragraph (a) of this section relating to disclosure and the requirement for a construction contract shall not apply where the mortgagor is the general contractor. 


</P>
</DIV8>


<DIV8 N="§ 200.96" NODE="24:2.1.1.1.1.1.30.60" TYPE="SECTION">
<HEAD>§ 200.96   Certificates of actual cost.</HEAD>
<P>(a) The mortgagor's certificate of actual cost, in a form prescribed by the Commissioner, shall be submitted upon completion of the physical improvements to the satisfaction of the Commissioner and before final endorsement, except that in the case of an existing project that does not require substantial rehabilitation and where the commitment provides for completion of specified repairs after endorsement, a supplemental certificate of actual cost will be submitted covering the completed costs of any such repairs. The certificate shall show the actual cost to the mortgagor, after deduction of any kickbacks, rebates, trade discounts, or other similar payments to the mortgagor, or to any of its officers, directors, stockholders, partners or other entity member ownership, of construction and other costs, as prescribed by the Commissioner. 
</P>
<P>(b) The Certificate of Actual Cost shall be verified by an independent Certified Public Accountant or independent public accountant in a manner acceptable to the Commissioner. 
</P>
<P>(c) Upon the Commissioner's approval of the mortgagor's certification of actual cost such certification shall be final and incontestable except for fraud or material misrepresentation on the part of the mortgagor. 


</P>
</DIV8>


<DIV8 N="§ 200.97" NODE="24:2.1.1.1.1.1.30.61" TYPE="SECTION">
<HEAD>§ 200.97   Adjustments resulting from cost certification.</HEAD>
<P>(a) <I>Fee simple site.</I> Upon receipt of the mortgagor's certification of actual cost there shall be added to the total amount thereof the Commissioner's estimate of the fair market value of any land included in the mortgage security and owned by the mortgagor in fee, such value being prior to the construction of the improvements. 
</P>
<P>(b) <I>Leasehold site.</I> In the event the land is held under a leasehold or other interest less than a fee, the cost, if any, of acquiring the leasehold or other interest is considered an allowable expense which may be added to actual cost provided that in no event shall such amount be in excess of the fair market value of such leasehold or other interest exclusive of proposed improvements. 
</P>
<P>(c) <I>Adjustment.</I> If the amount calculated in accordance with paragraphs (a) or (b) of this section exceeds the statutory dollar amount limits or loan ratio limits permitted by the section of Act under which the mortgage is to be insured, or program loan ratio limits established by the Commissioner in the absence of statutory limits, the amount must be reduced to the applicable limits before final endorsement. 


</P>
</DIV8>

</DIV7>


<DIV7 N="31" NODE="24:2.1.1.1.1.1.31" TYPE="SUBJGRP">
<HEAD>Endorsement</HEAD>


<DIV8 N="§ 200.100" NODE="24:2.1.1.1.1.1.31.62" TYPE="SECTION">
<HEAD>§ 200.100   Insurance endorsement.</HEAD>
<P>The credit instrument shall be initially and finally endorsed simultaneously for insurance pursuant to a commitment to insure upon completion. Where the advances of construction funds are to be insured pursuant to a commitment for insured advances, initial endorsement of the credit instrument shall occur before any mortgage proceeds are insured and the time of final endorsement shall be as set forth in paragraph (b) of this section. 
</P>
<P>(a) <I>Initial endorsement.</I> The Commissioner shall indicate the insurance of the mortgage by endorsing the original credit instrument and identifying the section of the Act and the regulations under which the mortgage is insured and the date of insurance. 
</P>
<P>(b) <I>Final endorsement.</I> When all advances of mortgage proceeds have been made and all the terms and conditions of the commitment have been met to the Commissioner's satisfaction the Commissioner shall indicate on the original credit instrument the total of all advances approved for insurance and again endorse such instrument. 
</P>
<P>(c) <I>Contract rights and obligations.</I> The Commissioner and the mortgagee or lender shall be bound from the date of initial endorsement, whether the initial and final endorsement occur simultaneously or are split, by the provisions of the Contract Rights and Obligations set forth in the respective regulations for each section of the Act, as follows: Section 207 of the Act (24 CFR part 207); Section 213 of the Act (24 CFR part 213); Section 220 of the Act (24 CFR part 220); Section 221 of the Act (24 CFR part 221); Section 231 of the Act (24 CFR part 231); Section 232 of the Act (24 CFR part 232); Section 234 of the Act (24 CFR part 234); Section 241 of the Act (24 CFR part 241); Section 242 of the Act (24 CFR part 242); title XI of the Act (24 CFR part 244). 


</P>
</DIV8>


<DIV8 N="§ 200.101" NODE="24:2.1.1.1.1.1.31.63" TYPE="SECTION">
<HEAD>§ 200.101   Mortgagor lien certificate.</HEAD>
<P>The mortgagor shall certify at the final endorsement of the mortgage for insurance as to each of the following: 
</P>
<P>(a) That the mortgage is the first lien upon and covers the entire project, including any equipment financed with mortgage proceeds. 
</P>
<P>(b) That the property upon which the improvements have been made or constructed and the equipment financed with mortgage proceeds are free and clear of all liens other than the insured mortgage and such other liens as may be approved by the Commissioner. 
</P>
<P>(c) That the certificate sets forth all unpaid obligations in connection with the mortgage transaction, the purchase of the mortgaged property, the construction or rehabilitation of the project or the purchase of the equipment financed with mortgage proceeds. 


</P>
</DIV8>

</DIV7>


<DIV7 N="32" NODE="24:2.1.1.1.1.1.32" TYPE="SUBJGRP">
<HEAD>Regulation of Mortgagors</HEAD>


<DIV8 N="§ 200.105" NODE="24:2.1.1.1.1.1.32.64" TYPE="SECTION">
<HEAD>§ 200.105   Mortgagor supervision.</HEAD>
<P>(a) As long as the Commissioner is the insurer or holder of the mortgage, the Commissioner shall regulate the mortgagor by means of a regulatory agreement providing terms, conditions and standards established by the Commissioner, or by such other means as the Commissioner may prescribe. 
</P>
<P>(b) The Commissioner may delegate to the mortgagee or other party the Commissioner's authority, in whole or in part, in accordance with the terms, conditions and standards established by the Commissioner in any executed Regulatory Agreement or other instrument granting the Commissioner supervision of the mortgagor.
</P>
<CITA TYPE="N">[61 FR 14399, Apr. 1, 1996, as amended at 65 FR 61074, Oct. 13, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 200.106" NODE="24:2.1.1.1.1.1.32.65" TYPE="SECTION">
<HEAD>§ 200.106   Projects with limited distribution mortgagors and program assistance.</HEAD>
<P>(a) <I>Regulation as limited distribution mortgagors.</I> In addition to regulation under § 200.105, limited distribution mortgagors for projects receiving “assistance within the jurisdiction of the Department” (as defined in § 4.3 of this title) may be regulated by the Commissioner as to additional matters, by regulation or otherwise, including as to the amount of the permissible distribution to the mortgagor. 
</P>
<P>(b) <I>Increased distributions.</I> The Commissioner may permit increased distributions of surplus cash, in excess of the amounts the Commissioner otherwise permits for limited distribution mortgagors, to a limited distribution mortgagor who participates in a HUD-approved initiative or program to preserve housing stock with below-market rents as affordable housing. The increased distribution will be limited to a maximum amount based on market rents and calculated according to HUD instructions. Funds that the mortgagor is authorized to retain under section 236(g)(2) of the National Housing Act are not considered distributions to the mortgagor. 
</P>
<P>(c) <I>Pre-emption.</I> Any State or local law or regulation that restricts distributions to an amount lower than permitted by the Commissioner under authority of this section is preempted to the extent provided in section 524(f) of the Multifamily Assisted Housing Reform and Affordability Act of 1997.
</P>
<CITA TYPE="N">[65 FR 61074, Oct. 13, 2000]


</CITA>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="B" NODE="24:2.1.1.1.1.2" TYPE="SUBPART">
<HEAD>Subpart B—Electronic Submission of Required Data for Mortgage Defaults and Mortgage Insurance Claims for Insured Multifamily Mortgages</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>64 FR 4769, Jan. 29, 1999, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 200.120" NODE="24:2.1.1.1.1.2.33.1" TYPE="SECTION">
<HEAD>§ 200.120   Purpose and applicability.</HEAD>
<P>(a) <I>Purpose.</I> The purpose of this subpart B is to require mortgagees of all multifamily projects whose mortgages are insured or coinsured by HUD to submit electronically information regarding mortgage delinquencies, defaults, reinstatements, elections to assign, and withdrawals of assignment elections, and related information, as that information is required by 24 CFR part 207 and Form HUD-92426 (which is available at the Department of Housing and Urban Development, HUD Customer Service Center, 451 7th Street, SW, Room B-100, Washington, DC 20410; telephone (800) 767-7468).
</P>
<P>(b) <I>Applicability.</I> This subpart applies to all HUD multifamily mortgage insurance and coinsurance programs.


</P>
</DIV8>


<DIV8 N="§ 200.121" NODE="24:2.1.1.1.1.2.33.2" TYPE="SECTION">
<HEAD>§ 200.121   Requirements and effectiveness.</HEAD>
<P>(a) Multifamily mortgagees, which are required by 24 CFR part 207 to report mortgage delinquencies, defaults, reinstatements, assignment elections, withdrawals of assignment elections, and related information, must submit this information electronically, over the Internet, in accordance with the following schedule of effectiveness:
</P>
<P>(1) Mortgagees having 70 or more insured mortgage loans must comply with this section by no later than March 1, 1999;
</P>
<P>(2) Mortgagees having from 26 to 69 insured mortgage loans must comply with this section by no later than January 1, 2000;
</P>
<P>(3) Mortgagees having from 11 to 25 insured mortgage loans must comply with this section by no later than January 1, 2001;
</P>
<P>(4) Mortgagees having 10 or fewer insured mortgage loans must comply with this section by no later than January 1, 2002.
</P>
<P>(b) <I>Exception.</I> On or after January 1, 2002, mortgagees that hold or service fewer than 10 multifamily mortgages may continue to report mortgage delinquencies, defaults, reinstatements, assignment elections, withdrawals of assignment elections, and related information in writing on Form HUD-92426 only with specific HUD approval. HUD will grant such approval, upon application by the mortgagee, for reasons of hardship due to insufficient financial resources to purchase the required hardware and Internet access.
</P>
<P>(c) HUD will not accept reports of information regarding defaults, reinstatements, assignment elections, and related information in a manner that is not in accordance with this section. Failure on the part of mortgagees to report this information as required by 24 CFR part 207 and this section may result in HUD's application of the sanctions and surcharges specified in 24 CFR part 207.


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:2.1.1.1.1.3" TYPE="SUBPART">
<HEAD>Subparts C-D [Reserved]</HEAD>

</DIV6>


<DIV6 N="E" NODE="24:2.1.1.1.1.4" TYPE="SUBPART">
<HEAD>Subpart E—Mortgage Insurance Procedures and Processing</HEAD>


<DIV7 N="33" NODE="24:2.1.1.1.1.4.33" TYPE="SUBJGRP">
<HEAD>Application for Insurance</HEAD>


<DIV8 N="§ 200.145" NODE="24:2.1.1.1.1.4.33.1" TYPE="SECTION">
<HEAD>§ 200.145   Property and mortgage assessment.</HEAD>
<P>(a) The mortgagor is responsible for making those investigations, analyses and inspections it deems necessary for protecting its interests in the property. 
</P>
<P>(b) Any appraisals, inspections, environmental assessments, and technical or financial evaluations conducted by or for the Commissioner are performed to determine the maximum insurable mortgage, and to protect the Commissioner and the FHA insurance funds. Such appraisals, inspections, assessments and evaluations neither create nor imply a duty or obligation from HUD to the mortgagor, or to any other party, and are not to be regarded as a warranty by HUD to the mortgagor, or any other party, of the value or condition of the property. 
</P>
<P>(c) For all new construction as well as structural repairs and/or renovations of existing properties, to the extent that an inspection is required to determine if construction quality of a one- to four-unit property is acceptable as security for an FHA-insured loan, the following requirements apply:
</P>
<P>(1)(i) In areas where local jurisdictions provide building code enforcement and the requisite documentation, the lender shall provide a copy of:
</P>
<P>(A) The building permit, or its equivalent, and a copy of the certificate of occupancy, or its equivalent; or
</P>
<P>(B) A satisfactory inspection notice for work completed, or its equivalent.
</P>
<P>(ii) The documentation provided under paragraph (c)(1)(i) of this section shall be considered satisfactory evidence of completion of the work.
</P>
<P>(2) In jurisdictions that do not provide building code enforcement and requisite documentation, three inspections are required for new construction. For existing construction, only one inspection and certification of work completed for structural repairs and renovations is required. For both new and existing construction, the lender shall, in order to ensure compliance with FHA requirements:
</P>
<P>(i) Select a Residential Combination Inspector (or its successor designation) or a Combination Inspector (or its successor designation) certified by the International Code Council (or its successor organization) who is licensed or certified as a home inspector in accordance with the applicable State and local requirements governing the licensing or certification of those jurisdictions that license or certify such inspectors in the respective jurisdiction. The lender shall provide a certification from such inspector that the new construction and/or structural repair or renovation work is completed satisfactorily and in compliance with any applicable building code.
</P>
<P>(ii) In the absence of such Residential Combination Inspector and Combination Inspector, the lender shall obtain an inspection performed by a third party, who is a registered architect, a professional engineer, or a trades person or contractor, and who has met the licensing and bonding requirements of the State in which the property is located. The lender shall provide a certification from such inspector that the inspector is licensed and bonded under applicable State law, and that the new construction and/or structural repair or renovation work is completed satisfactorily and in compliance with any applicable building code.
</P>
<CITA TYPE="N">[61 FR 14404, Apr. 1, 1996, as amended at 83 FR 31042, July 3, 2018]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="34" NODE="24:2.1.1.1.1.4.34" TYPE="SUBJGRP">
<HEAD>Claims for Losses</HEAD>


<DIV8 N="§ 200.153" NODE="24:2.1.1.1.1.4.34.2" TYPE="SECTION">
<HEAD>§ 200.153   Presentation of claim.</HEAD>
<P>In the event the insured lender is entitled under the contract of mortgage insurance to receive a claim settlement, the mortgagee presents a claim for insurance benefits in accordance with the Secretary's instructions. 
</P>
<CITA TYPE="N">[61 FR 14404, Apr. 1, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 200.156" NODE="24:2.1.1.1.1.4.34.3" TYPE="SECTION">
<HEAD>§ 200.156   Settlement of claims.</HEAD>
<P>Upon the Secretary's approval of a claim, the claim will be settled by issuance of cash, debentures or both, and, in certain cases, by issuance of a certificate of claim. However, in the event a final claim is in a negative amount, the claim will be settled by the mortgagee's payment of cash or surrender of debentures at par plus accrued interest to the Secretary. 
</P>
<CITA TYPE="N">[61 FR 14404, Apr. 1, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 200.157" NODE="24:2.1.1.1.1.4.34.4" TYPE="SECTION">
<HEAD>§ 200.157   Provisions and characteristics of debentures.</HEAD>
<P>(a) <I>Series and fund.</I> Debentures are issued in appropriate series and are the obligation of and issued in the name of the particular mortgage insurance fund under which the mortgage is insured. 
</P>
<P>(b) <I>Registration and denominations.</I> Debentures in certificated form are issued in denominations of $50, $100, $500, $1,000 and $10,000 with the name of the owner inscribed on the face of the certificate. Debentures in book entry form are issued in a minimum amount of one dollar and in increments of one cent with the name of the owner recorded in an account master record on the books of the Treasury. 
</P>
<P>(c) <I>Rate of interest and interchangeability.</I> Debentures carry a rate of interest prescribed by the Commissioner but not in excess of an annual rate determined by the Secretary of the Treasury in accordance with prescribed statutory formula involving yields or prices of outstanding marketable obligations of the United States. Debentures in certificated form of the same series bearing the same interest rate and having the same maturity date shall be freely interchangeable between the various authorized denominations and may be exchanged for similar debentures in book entry form. Debentures in book entry form cannot be exchanged for debentures in certificated form. 
</P>
<P>(d) <I>Negotiability and Redemption.</I> Debentures in certificated form are negotiable and, if in book entry form, are transferable in the manner described in applicable Treasury regulations. Debentures are fully guaranteed as to principal and interest by the United States. Debentures are redeemable on call issued by the Commissioner. 
</P>
<P>(e) <I>Payment of principal and interest.</I> Principal and interest on debentures shall be payable when due at the Department of the Treasury, Washington, DC, or any Government agency or agencies in the United States which the Secretary of the Treasury may from time to time designate for that purpose. The principal and interest shall be payable to the owner whose name shall be inscribed on the debenture in certificated form, to the owner designated as assignee as shown by executed assignments for maturing or called certificated debentures, or to the owner whose name shall be recorded in the account master record of the book entry debentures. 
</P>
<P>(f) <I>Transfer and use</I>—(1) <I>In general.</I> Debentures in certificated form are negotiable and, if in book entry form, are transferable in the manner described in applicable Treasury regulations. They may be used by approved mortgagees in lieu of cash for payment of FHA mortgage insurance premiums. 
</P>
<P>(2) <I>Mutual Mortgage Insurance Fund debentures.</I> Debentures of the Mutual Mortgage Insurance Fund may be used to pay mortgage insurance premiums on mortgages insured under sections 203(b), 203(h), and 203(i), of the National Housing Act. 
</P>
<P>(3) <I>Cooperative Management Housing Insurance Fund debentures.</I> Debentures which are the obligation of the Cooperative Management Housing Insurance Fund may be used to pay premiums on mortgages and loans which are insured under that Fund. Where the insurance of a mortgage or loan is transferred from the General Insurance Fund to the Cooperative Management Housing Insurance Fund, or where a mortgage or loan is endorsed for insurance pursuant to a commitment transferred to the Cooperative Management Housing Insurance Fund, debentures issued in connection with such mortgage or loan may be used to pay insurance premiums of either the Cooperative Management Housing Insurance Fund or the General Insurance Fund. 
</P>
<P>(4) <I>General Insurance Fund and debentures of other funds.</I> Debentures of the General Insurance Fund and those debentures issued as obligations of mortgage insurance funds and accounts in existence prior to the enactment of the Housing and Urban Development Act of 1965 (other than the Mutual Mortgage Insurance Fund) which are transferred by the 1965 Act to the General Insurance Fund may be used to pay mortgage insurance premiums only on the following mortgages and loans: 
</P>
<P>(i) Those which are the obligation of the General Insurance Fund. 
</P>
<P>(ii) Those transferred from the General Insurance Fund to the Cooperative Management Housing Insurance Fund. 
</P>
<P>(iii) Those endorsed for insurance pursuant to commitments transferred to the Cooperative Management Housing Insurance Fund. 
</P>
<CITA TYPE="N">[36 FR 24467, Dec. 22, 1971, as amended at 59 FR 49815, Sept. 30, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 200.158" NODE="24:2.1.1.1.1.4.34.5" TYPE="SECTION">
<HEAD>§ 200.158   Applicability of Treasury regulations to debenture transactions.</HEAD>
<P>The Department of the Treasury acts as fiscal agent for the Commissioner in connection with transactions and operations relating to debentures. Treasury's General Regulations Governing U.S. Securities (31 CFR part 306) and its Supplemental Regulations Governing Federal Housing Administration Debentures (31 CFR part 337) have been and are adopted as revised and amended, to the extent applicable, as the regulations of the Commissioner governing the issuance of, transactions in and redemption of debentures, including the payment of interest thereon with the following exceptions: 
</P>
<P>(a) <I>Payment of final interest on maturing or called debentures.</I> If the notice of maturity or call for redemption shall so provide, the final installment of interest payable on any debentures at maturity or earlier redemption date may be paid with the principal in accordance with the assignments on the debentures instead of by separate check drawn to the order of the registered payee and forwarded to him at his address of record. 
</P>
<P>(b) <I>Closing of transfer books.</I> If the call for redemption shall so provide, the books maintained by the Treasury Department may be closed against transfers and denominational exchanges in debentures for three full months preceding any interest payment date with respect to any debentures called for redemption on such interest payment date. 
</P>
<CITA TYPE="N">[36 FR 24467, Dec. 22, 1971, as amended at 59 FR 49815, Sept. 30, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 200.159" NODE="24:2.1.1.1.1.4.34.6" TYPE="SECTION">
<HEAD>§ 200.159   Relief on account of lost, stolen, destroyed, mutilated or defaced debentures.</HEAD>
<P>The statutes of the United States and the regulations of the Treasury Department governing relief on account of the loss, theft, destruction, mutilation or defacement of United States securities, so far as applicable and as necessarily modified to relate to debentures, are adopted as the regulations of the Commissioner for the issuance of substitute debentures or the payment of lost, stolen, destroyed, mutilated or defaced debentures. 


</P>
</DIV8>


<DIV8 N="§ 200.160" NODE="24:2.1.1.1.1.4.34.7" TYPE="SECTION">
<HEAD>§ 200.160   Redemption of debentures prior to maturity.</HEAD>
<P>Debentures shall, at the option of the Commissioner and with the approval of the Secretary of the Treasury, be redeemable at par plus accrued interest on any semiannual interest payment date on 3 months' notice of redemption given in such manner as the Commissioner shall prescribe. The debenture interest on the debentures called for redemption shall cease on the semiannual interest payment date designated in the call notice. The Commissioner may include with the notice of redemption an offer to purchase the debentures at par plus accrued interest at any time during the period between the notice of redemption and the redemption date. If the debentures are purchased by the Commissioner after such call and prior to the named redemption date, the debenture interest shall cease on the date of purchase. 


</P>
</DIV8>


<DIV8 N="§ 200.161" NODE="24:2.1.1.1.1.4.34.8" TYPE="SECTION">
<HEAD>§ 200.161   Administration of debenture transactions.</HEAD>
<P>The Secretary of the Treasury or the Acting Secretary of the Treasury is authorized and empowered, on behalf of the Commissioner, to administer the regulations governing any transactions and operations in debentures, to do all things necessary to conduct such transactions and operations, and to delegate such authority at his discretion to other officers, employees, and agents of the U.S. Treasury Department. At his discretion the Secretary, the Under Secretary, or any Assistant Secretary of the Treasury acting by direction of the Secretary, is authorized to waive any such regulation on behalf of the Commissioner in any particular case where a similar regulation of the Treasury Department with respect to United States bonds or interest thereon would be waived. 


</P>
</DIV8>


<DIV8 N="§ 200.162" NODE="24:2.1.1.1.1.4.34.9" TYPE="SECTION">
<HEAD>§ 200.162   Certificates of claim.</HEAD>
<P>The certificate of claim issued to the mortgagee at the time debentures are issued constitutes an agreement by the FHA that after the FHA has recovered its investment in a particular property any excess over and above such investment is available for payment on the certificate of claim. Certificates of claim bear interest at the rate of 3 percent per annum. 


</P>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="F" NODE="24:2.1.1.1.1.5" TYPE="SUBPART">
<HEAD>Subpart F—Placement and Removal Procedures for Participation in FHA Programs</HEAD>


<DIV7 N="35" NODE="24:2.1.1.1.1.5.35" TYPE="SUBJGRP">
<HEAD>Section 203(<E T="01">k</E>) Rehabilitation Loan Consultants</HEAD>


<DIV8 N="§ 200.190" NODE="24:2.1.1.1.1.5.35.1" TYPE="SECTION">
<HEAD>§ 200.190   HUD list of qualified 203(k) consultants.</HEAD>
<P>(a) <I>Qualified consultant list.</I> HUD maintains a list of qualified consultants for use in the rehabilitation loan insurance program authorized by section 203(k) of the National Housing Act (12 U.S.C. 1709(k)) (referred to as the “203(k) Program”). 
</P>
<P>(b) <I>Consultant functions.</I> Only a consultant included on the list may be selected by the lender to conduct any consultant function under the 203(k) Program (see § 203.50(l) of this title). 
</P>
<P>(c) <I>Disclaimer.</I> The inclusion of a consultant on the list means only that the consultant has met the qualifications and conditions prescribed by the Secretary for placement on the list of consultants qualified for the 203(k) Program. The inclusion of a consultant on the list does not create or imply a warranty or endorsement by HUD of the consultant, nor does it represent a warranty of any work performed by the consultant. 
</P>
<CITA TYPE="N">[67 FR 52380, Aug. 9, 2002]


</CITA>
</DIV8>


<DIV8 N="§ 200.191" NODE="24:2.1.1.1.1.5.35.2" TYPE="SECTION">
<HEAD>§ 200.191   Placement of 203(k) consultant.</HEAD>
<P>(a) <I>Application.</I> To be considered for placement on the list, a consultant must apply to HUD using an application (or materials) in a form prescribed by HUD. 
</P>
<P>(b) <I>Eligibility.</I> To be eligible for placement on the list: 
</P>
<P>(1) The consultant must demonstrate to HUD that it either: 
</P>
<P>(i) Has at least three years' experience as a remodeling contractor, general contractor or home inspector; or 
</P>
<P>(ii) Is a state-licensed architect or state-licensed engineer; 
</P>
<P>(2) If located in a state that requires the licensing of home inspectors, the consultant must submit proof of such licensing; 
</P>
<P>(3) The consultant must submit a narrative description of the consultant's ability to perform home inspections, prepare architectural drawings, use proper methods of cost estimating and complete draw inspections. 
</P>
<P>(4) The consultant must certify that it has read and fully understands the requirements of the HUD handbook on the 203(k) Program (4240.4) and all HUD Mortgagee Letters and other instructions relating to the 203(k) Program. 
</P>
<P>(5) The consultant must not be listed on: 
</P>
<P>(i) The General Services Administration's Suspension and Debarment List; 
</P>
<P>(ii) HUD's Limited Denial of Participation List; or 
</P>
<P>(iii) HUD's Credit Alert Interactive Voice Response System. 
</P>
<P>(6) The consultant must have passed a comprehensive examination on the 203(k) Program, if HUD has developed such an exam. 
</P>
<P>(c) <I>Delayed effective date of examination requirement for consultants currently on the list.</I> Consultants who are included on the list on the date when the requirement for the examination described in paragraph (b)(6) of this section becomes effective have until 6 months following this date to pass the comprehensive exam. Failure to pass the examination by the deadline date constitutes cause for removal under § 200.192. 
</P>
<CITA TYPE="N">[67 FR 52380, Aug. 9, 2002]


</CITA>
</DIV8>


<DIV8 N="§ 200.192" NODE="24:2.1.1.1.1.5.35.3" TYPE="SECTION">
<HEAD>§ 200.192   Removal of 203(k) consultant.</HEAD>
<P>(a) <I>Cause for removal.</I> HUD may remove a consultant from the list for any cause that HUD determines to be detrimental to HUD or its programs. Cause for removal includes, but is not limited to: 
</P>
<P>(1) Poor performance on a HUD quality control field review; 
</P>
<P>(2) Failure to comply with applicable regulations or other written instructions or standards issued by HUD; 
</P>
<P>(3) Failure to comply with applicable Civil Rights requirements; 
</P>
<P>(4) Being debarred or suspended, or subject to a limited denial of participation; 
</P>
<P>(5) Misrepresentation or fraudulent statements; 
</P>
<P>(6) Failure to retain standing as a state licensed architect or state-licensed engineer (unless the consultant can demonstrate the required three years experience as a home inspector or remodeling contractor); 
</P>
<P>(7) Failure to retain standing as a state licensed home inspector, if the consultant is located in a state that requires such licensing; or 
</P>
<P>(8) Failure to respond within a reasonable time to HUD inquiries or requests for documentation. 
</P>
<P>(b) <I>Procedure for removal.</I> A consultant that is debarred or suspended, or subject to a limited denial of participation will be <I>automatically</I> removed from the list. In all other cases, the following procedure for removal will be followed: 
</P>
<P>(1) HUD will give the consultant written notice of the proposed removal. The notice will state the reasons for, and the duration of, the proposed removal. 
</P>
<P>(2) The consultant will have 20 days from the date of the notice (or longer, if provided in the notice) to submit a written response appealing the proposed removal and to request a conference. A request for a conference must be in writing and must be submitted along with the written response. 
</P>
<P>(3) A HUD official will review the appeal and send a response either affirming, modifying, or canceling the removal. The HUD official will not be someone who was involved in HUD's initial removal decision. HUD will respond with a decision within 30 days of receiving the appeal or, if the consultant has requested a conference, within 30 days after the completion of the conference. HUD may extend the 30-day period by providing written notice to the consultant. 
</P>
<P>(4) If the consultant does not submit a timely written response, the removal will be effective 20 days after the date of HUD's initial removal notice (or after a longer period provided in the notice). If a written response is submitted, and the removal decision is affirmed or modified, the removal will be effective on the date of HUD's notice affirming or modifying the initial removal decision. 
</P>
<P>(c) <I>Placement on the list after removal.</I> A consultant that has been removed from the list may apply for placement on the list (in accordance with § 200.191) after the period of the consultant's removal from the list has expired. An application will be rejected if the period for the consultant's removal from the list has not expired. 
</P>
<P>(d) <I>Other action.</I> Nothing in this section prohibits HUD from taking such other action against a consultant, as provided in 2 CFR part 2424, or from seeking any other remedy against a consultant, available to HUD by statute or otherwise.
</P>
<CITA TYPE="N">[67 FR 52380, Aug. 9, 2002, as amended at 72 FR 73494, Dec. 27, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 200.193" NODE="24:2.1.1.1.1.5.35.4" TYPE="SECTION">
<HEAD>§ 200.193   Responsibilities of 203(k) consultants on the list.</HEAD>
<P>All consultants included on the list are responsible for: 
</P>
<P>(a) Obtaining and reading the HUD handbook on the 203(k) Program (4240.4) and any updates to the handbook. 
</P>
<P>(b) Complying with the HUD handbook on the 203(k) Program (4240.4), and any updates to the handbook, when performing any consultant function under the 203(k) Program. 
</P>
<P>(c) Obtaining and reading all Mortgagee Letters and other instructions issued by HUD relating to the 203(k) Program. 
</P>
<P>(d) Complying with all Mortgagee Letters and other instructions issued by HUD relating to the 203(k) Program, when undertaking any consultant function under the 203(k) Program. 
</P>
<P>(e) Complying with HUD's request for documentation relating to any 203(k) project on which the consultant has worked. 
</P>
<P>(f) Complying with HUD's monitoring requirements relating to the 203(k) Program.
</P>
<CITA TYPE="N">[67 FR 52381, Aug. 9, 2002]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="36" NODE="24:2.1.1.1.1.5.36" TYPE="SUBJGRP">
<HEAD>Nonprofit Organization</HEAD>


<DIV8 N="§ 200.194" NODE="24:2.1.1.1.1.5.36.5" TYPE="SECTION">
<HEAD>§ 200.194   Placement of nonprofit organization on Nonprofit Organization Roster.</HEAD>
<P>(a) <I>Nonprofit Organization Roster.</I> HUD maintains a roster of nonprofit organizations that are qualified to participate in certain specified FHA activities. In order to be recognized as a nonprofit organization for purposes of single family regulations in this chapter, an organization must: 
</P>
<P>(1) Be included in the Roster; and 
</P>
<P>(2) Comply with any requirements stated in a specific applicable provision of the single family regulations in this chapter. 
</P>
<P>(b) <I>Application.</I> To be included in the Roster, a nonprofit organization must apply to HUD using an application (or materials) in a form prescribed by HUD (which may require an affordable housing program narrative for the activities the nonprofit organization proposes to carry out). The nonprofit organization must specify in its application the FHA activities it proposes to carry out. 
</P>
<P>(c) <I>HUD response to application.</I> HUD's review of the application will result in one of the following: 
</P>
<P>(1) Approval of the nonprofit organization to participate in all, or some, of the FHA activities specified in its application and the addition of the nonprofit organization to the Roster. 
</P>
<P>(2) Rejection due to deficiencies in the application. HUD will provide the nonprofit organization with a period to correct these deficiencies. 
</P>
<P>(3) Rejection due to the nonprofit organization's failure to submit a program that complies with applicable single family regulations in this chapter, Mortgagee Letters, or other standards or instructions issued by HUD. 
</P>
<P>(d) <I>Reapplication after two years.</I> The placement of a nonprofit organization on the Roster expires after two years. The nonprofit organization must reapply for placement on the Roster, in accordance with paragraph (b) of this section, before expiration of the two-year period. 
</P>
<CITA TYPE="N">[67 FR 39239, June 6, 2002]


</CITA>
</DIV8>


<DIV8 N="§ 200.195" NODE="24:2.1.1.1.1.5.36.6" TYPE="SECTION">
<HEAD>§ 200.195   Removal of nonprofit organization from Nonprofit Organization Roster.</HEAD>
<P>(a) <I>Cause for removal.</I> HUD may remove a nonprofit organization from the FHA Nonprofit Organization Roster established under § 200.194. Removal may be for any cause that HUD determines to be detrimental to FHA or any of its programs, including but not limited to: 
</P>
<P>(1) Failure to comply with applicable single family regulations in this chapter, Mortgagee Letters or other written instructions or standards issued by HUD; 
</P>
<P>(2) Failure to comply with applicable Civil Rights requirements; 
</P>
<P>(3) Holding a significant number of FHA-insured mortgages that are in default, foreclosure, or claim status (in determining the number considered “significant,” HUD may compare the number of insured mortgages held by the nonprofit organization against the similar holdings of other nonprofit organizations); 
</P>
<P>(4) Being debarred or suspended, subject to a limited denial of participation, or otherwise sanctioned by HUD; 
</P>
<P>(5) Failure to further all objectives described in the affordable housing program narrative; 
</P>
<P>(6) Misrepresentation or fraudulent statements; or 
</P>
<P>(7) Failure to respond within a reasonable time to HUD inquiries, including recertification requests or other requests for further documentation. 
</P>
<P>(b) <I>Procedure for removal.</I> A nonprofit organization that is debarred or suspended or subject to a limited denial of participation will be automatically removed from the FHA Nonprofit Organization Roster. In all other cases, the following procedure for removal applies: 
</P>
<P>(1) HUD will give the nonprofit organization written notice of the proposed removal. The notice will include the reasons for the proposed removal and the duration of the proposed removal. 
</P>
<P>(2) The nonprofit organization will have 20 days from the date of the notice (or longer, if provided in the notice) to submit a written response appealing the proposed removal and to request a conference. A request for a conference must be in writing and must be submitted along with the written response. 
</P>
<P>(3) A HUD official will review the appeal and provide an informal conference if requested. The HUD official will send a response either affirming, modifying, or canceling the removal. The HUD official will not be someone who was involved in HUD's initial removal decision. HUD will respond with a decision within 30 days of receiving the response, or, if the nonprofit organization has requested a conference, within 30 days after the completion of the conference. HUD may extend the 30-day period by providing written notice to the nonprofit organization. 
</P>
<P>(4) If the nonprofit organization does not submit a timely written response, the removal will be effective 20 days after the date of HUD's initial removal notice (or after a longer period provided in the notice). If a written response is submitted, and the initial removal decision is affirmed or modified, the removal will be effective on the date of HUD's notice affirming or modifying the initial removal decision. 
</P>
<P>(c) <I>Placement on the Roster after removal.</I> A nonprofit organization that has been removed from the FHA Nonprofit Organization Roster may apply for placement on the Roster (in accordance with § 200.194) after the nonprofit organization's removal from the Roster has expired. An application will be rejected if the period for the nonprofit organization's removal from the Roster has not expired. 
</P>
<P>(d) <I>Other action.</I> Nothing in this section prohibits HUD from taking such other action against a nonprofit organization, as provided in 2 CFR part 2424, or from seeking any other remedy against a nonprofit organization, available to HUD by statute or otherwise.
</P>
<CITA TYPE="N">[67 FR 39239, June 6, 2002, as amended at 72 FR 73494, Dec. 27, 2007]


</CITA>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="G" NODE="24:2.1.1.1.1.6" TYPE="SUBPART">
<HEAD>Subpart G—Appraiser Roster</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>64 FR 72869, Dec. 28, 1999, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 200.200" NODE="24:2.1.1.1.1.6.37.1" TYPE="SECTION">
<HEAD>§ 200.200   What is the Appraiser Roster?</HEAD>
<P>(a) <I>Appraiser Roster.</I> HUD maintains a list of appraisers. A mortgagee must select only an appraiser from this list for the appraisal of a property that is to be the security for an FHA-insured single family mortgage.
</P>
<P>(b) <I>Disclaimer.</I> Since an appraisal is performed to determine the maximum insurable mortgage and to also protect the FHA insurance funds, the inclusion of an appraiser on the Appraiser Roster does not create or imply a warranty or endorsement to a prospective homebuyer or to any other organization or individual by HUD of the listed appraiser nor does it represent a warranty of any appraisal performed by the listed appraiser. The inclusion of an appraiser on the Appraiser Roster means only that a listed appraiser has met the qualifications and conditions, prescribed by the Secretary, for inclusion on the Appraiser Roster.


</P>
</DIV8>


<DIV8 N="§ 200.202" NODE="24:2.1.1.1.1.6.37.2" TYPE="SECTION">
<HEAD>§ 200.202   How do I apply for placement on the Appraiser Roster?</HEAD>
<P>(a) Application. To apply for placement on the Appraiser Roster, you must submit an application to HUD.
</P>
<P>(b) Eligibility. To be eligible for placement on the Appraiser Roster:
</P>
<P>(1) You must be a state-certified appraiser with credentials that complied with the applicable certification criteria established by the Appraiser Qualification Board (AQB) of the Appraisal Foundation and in effect at the time the certification was awarded by the issuing jurisdiction; and
</P>
<P>(2) You must not be listed on:
</P>
<P>(i) The General Services Administration's Suspension and Debarment List;
</P>
<P>(ii) HUD's Limited Denial of Participation List; or
</P>
<P>(iii) HUD's Credit Alert Verification Reporting System.
</P>
<CITA TYPE="N">[73 FR 1432, Jan. 8, 2008, as amended at 76 FR 72308, Nov. 23, 2011]


</CITA>
</DIV8>


<DIV8 N="§ 200.204" NODE="24:2.1.1.1.1.6.37.3" TYPE="SECTION">
<HEAD>§ 200.204   What actions may HUD take against unsatisfactory appraisers on the Appraiser Roster?</HEAD>
<P>An unsatisfactory appraiser may be subject to removal, education requirements, or other actions, as follows: 
</P>
<P>(a) <I>Removal from the Appraiser Roster.</I> HUD officials, as designated by the Secretary, may at any time remove a listed appraiser from the Appraiser Roster for cause, in accordance with paragraphs (a)(1) through (a)(3) of this section. The provisions of paragraphs (a)(1) through (a)(3) of this section do not apply to removal actions taken under any section in 2 CFR part 2424 or to any other remedy against an appraiser, available to HUD by statute or otherwise. 
</P>
<P>(1) <I>Cause for removal.</I> Cause for removal includes, but is not limited to: 
</P>
<P>(i) Significant deficiencies in appraisals, including non-compliance with Civil Rights requirements regarding appraisals; 
</P>
<P>(ii) Losing standing as a state-certified appraiser due to disciplinary action in any state in which the appraiser is certified;
</P>
<P>(iii) Prosecution for committing, attempting to commit, or conspiring to commit fraud, misrepresentation, or any other offense that may reflect on the appraiser's character or integrity;
</P>
<P>(iv) Failure to perform appraisal functions in accordance with instructions and standards issued by HUD; 
</P>
<P>(v) Failure to comply with any agreement made between the appraiser and HUD or with any certification made by the appraiser; 
</P>
<P>(vi) Being issued a final debarment, suspension, or limited denial of participation; 
</P>
<P>(vii) Failure to maintain eligibility requirements for placement on the Appraiser Roster as set forth under this subpart or any other instructions or standards issued by HUD; or, 
</P>
<P>(viii) Failure to comply with HUD-imposed education requirements under paragraph (d) of this section within the specified period for complying with such education requirements. 
</P>
<P>(2) <I>Procedure for removal.</I> If you are a listed appraiser and HUD decides to remove you for cause from the Appraiser Roster, the following procedure applies to you unless you have been issued a final debarment, suspension, or limited denial of participation, in which case you are subject to paragraph (a)(3) of this section: 
</P>
<P>(i) You will be given written notice of your proposed removal. The notice will include the reasons for your proposed removal and the duration of your proposed removal. 
</P>
<P>(ii) You will have 20 days from the date of your notice of proposed removal to submit a written response appealing the proposed removal and to request a conference. A request for a conference must be in writing and must be submitted along with a written response. 
</P>
<P>(iii) Within 30 days of receiving your written response, or if you have requested a conference, within 30 days after the completion of your conference, a HUD official, designated by the Secretary, will review your appeal and will send you a final decision either affirming, modifying, or canceling your removal from the Appraiser Roster. HUD may extend this time upon giving you notice. The HUD official designated by the Secretary to review your appeal will not be someone involved in HUD's initial removal decision nor will it be someone who reports to a person involved in that initial decision. 
</P>
<P>(iv) If you do not submit a written response, your removal will be effective 20 days after the date of HUD's initial removal notice. If you submit a written response, and the removal decision is affirmed or modified, your removal or modification will be effective on the date of HUD's notice affirming or modifying the initial removal decision. 
</P>
<P>(3) <I>Automatic removal for issuance of final debarment, suspension, or limited denial of participation.</I> If you are a listed appraiser and you have been issued a final debarment, a suspension, or a limited denial of participation, the provisions of paragraph (a)(2) of this section do not apply to you, and you will be automatically removed from the Appraiser Roster. 
</P>
<P>(b) <I>Reinstatement.</I> If an appraiser who has been removed from the Roster wants to be reinstated on the Roster, the appraiser must follow the procedures and requirements contained in this subpart for placement on the Roster. Before an appraiser is eligible to reapply for placement on the Roster, the appraiser shall comply with the terms of any applicable remedial training education requirements, and the time period for the appraiser's removal from the Roster shall have expired. 
</P>
<P>(c) <I>Automatic suspension from Appraiser Roster</I>—(1) <I>Appraisers subject to state disciplinary action.</I> An appraiser whose state certification in any state has been revoked, suspended, or surrendered as a result of a state disciplinary action is automatically suspended from the Appraiser Roster and prohibited from conducting FHA appraisals in any state until HUD receives evidence demonstrating that the state-imposed sanction has been lifted.
</P>
<P>(2) <I>Expirations not due to state disciplinary action.</I> An appraiser whose certification in a state has expired is automatically suspended from the Appraiser Roster in that state and may not conduct FHA appraisals in that state until HUD receives evidence that demonstrates renewal, but may continue to perform FHA appraisals in other states in which the appraiser is certified.
</P>
<P>(d) <I>Education requirements.</I> Where there is evidence that an appraiser is deficient in FHA appraisal requirements, HUD may require an appraiser to undergo professional training.
</P>
<P>(e) <I>Other action.</I> Nothing in this section prohibits HUD from taking any other action against an appraiser, as provided under 2 CFR part 2424, or from seeking any other remedy against an appraiser, available to HUD by statute or otherwise.
</P>
<CITA TYPE="N">[65 FR 17977, Apr. 5, 2000, as amended at 68 FR 26950, May 16, 2003; 72 FR 73494, Dec. 27, 2007; 73 FR 1432, Jan. 8, 2008; 76 FR 72308, Nov. 23, 2011]


</CITA>
</DIV8>


<DIV8 N="§ 200.206" NODE="24:2.1.1.1.1.6.37.4" TYPE="SECTION">
<HEAD>§ 200.206   What are my responsibilities as an appraiser listed on the Appraiser Roster?</HEAD>
<P>All appraisers listed on the Appraiser Roster are responsible for:
</P>
<P>(a) Obtaining and reading the HUD Appraiser Handbook (4150.2) and any updates to the Handbook;
</P>
<P>(b) Complying with the HUD Appraiser Handbook (4150.2), and any updates to the Handbook, when performing all appraisals of properties for HUD single family mortgage insurance purposes; and
</P>
<P>(c) Complying with all other instructions and standards issued by HUD when performing all appraisals of properties for HUD single family mortgage insurance purposes. 








</P>
</DIV8>

</DIV6>


<DIV6 N="H" NODE="24:2.1.1.1.1.7" TYPE="SUBPART">
<HEAD>Subpart H—Participation and Compliance Requirements</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>81 FR 71263, Oct. 14, 2016, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 200.210" NODE="24:2.1.1.1.1.7.37.1" TYPE="SECTION">
<HEAD>§ 200.210   Policy.</HEAD>
<P>(a) <I>Regulations.</I> It is HUD's policy that, in accordance with the intent of the National Housing Act (12 U.S.C. 1701 <I>et seq.</I>), and with other applicable federal statutes, participants in HUD's housing and healthcare programs be responsible individuals and organizations who will honor their legal, financial and contractual obligations. Accordingly, as provided in this subpart, HUD will review the prior participation of Controlling Participants, as defined in § 200.212 and § 200.216, as a prerequisite to participation in HUD's multifamily housing and healthcare programs listed in § 200.214.
</P>
<P>(b) <I>Processing Guide.</I> The regulations in this subpart are supplemented by the Processing Guide for Previous Participation Reviews of Prospective Multifamily Housing and Healthcare Programs' Participants (Guide), which is found on HUD's Web site at <I>www.hud.gov.</I> This Guide elaborates on the basic procedures involved in the previous participation review process. For any significant changes made to this Guide, HUD will provide advance notice and the opportunity to comment, providing a comment period of no less than 30 days.




</P>
</DIV8>


<DIV8 N="§ 200.212" NODE="24:2.1.1.1.1.7.37.2" TYPE="SECTION">
<HEAD>§ 200.212   Definitions.</HEAD>
<P>As used in this subpart:
</P>
<P><I>Commissioner</I> means the Assistant Secretary for Housing-Federal Housing Commissioner, or the Commissioner's delegates and designees.
</P>
<P><I>Controlling Participant</I> means an individual or entity serving in a capacity for a Covered Project that makes the individual or entity subject to Previous Participation review under this subpart, as further described in § 200.216.
</P>
<P><I>Covered Project</I> means a project in which the participation of a Controlling Participant is conditioned on Previous Participation review under this subpart, as further described in § 200.214.
</P>
<P><I>Previous Participation</I> means a Controlling Participant's previous participation in Covered Projects, and, if applicable, other federal, state and local housing programs, in accordance with the definition of Risk.
</P>
<P><I>Risk.</I> In order to determine whether a Controlling Participant's participation in a project would constitute an unacceptable risk, the Commissioner must determine whether the Controlling Participant could be expected to participate in the Covered Project in a manner consistent with furthering the Department's purposes. The Commissioner's review of Previous Participation shall consider compliance with applicable statutes, regulations and program requirements. The Commissioner must consider the Controlling Participant's previous financial and operational performance in Covered Projects that may indicate a financial or operating risk in approving the Controlling Participant's participation in the subject Triggering Event. At the Commissioner's discretion, as necessary to determine financial or operating risk and to the extent the Commissioner determines such information to be reliably available, the Commissioner may consider the Controlling Participant's participation and performance in any federal, state or local government program. The Commissioner may exclude any Previous Participation the Commissioner determines to be of limited value, unreliable or irrelevant in evaluating risk and/or any Previous Participation in which the Controlling Participant did not exercise, actually or constructively, control. Any information collection in connection with review of Previous Participation must follow all applicable requirements for information collection.
</P>
<P><I>Triggering Event</I> means an occurrence in connection with a Covered Project that subjects a Controlling Participant to Previous Participation review under this subpart, as further described in § 200.218.




</P>
</DIV8>


<DIV8 N="§ 200.214" NODE="24:2.1.1.1.1.7.37.3" TYPE="SECTION">
<HEAD>§ 200.214   Covered Projects.</HEAD>
<P>The following types of multifamily and healthcare projects are Covered Projects subject to the requirements of this subpart, provided however that single family projects are excluded from the definition of Covered Projects:
</P>
<P>(a) <I>FHA insured projects.</I> A project financed or which is proposed to be financed with a mortgage insured under the National Housing Act, a project subject to a mortgage held by the Secretary under the National Housing Act, or a project acquired by the Secretary under the National Housing Act.
</P>
<P>(b) <I>Housing for the elderly or persons with disabilities.</I> Housing for the elderly financed or to be financed with direct loans or capital advances under section 202 of the Housing Act of 1959, as amended; and housing for persons with disabilities under section 811 of the Cranston-Gonzalez National Affordable Housing Act.
</P>
<P>(c) <I>Risk Share projects.</I> A project that is insured under section 542(b) or 542(c) of the Housing and Community Development Act of 1992(12 U.S.C. 17107 note).
</P>
<P>(d) <I>Projects subject to continuing HUD requirements.</I> A project that is subject to a use agreement or any other affordability restrictions pursuant to a program administered by HUD's Office of Housing.
</P>
<P>(e) <I>Subsidized Projects.</I> Any project in which 20 percent or more of the units now receive or will receive a subsidy in the form of:
</P>
<P>(1) Interest reduction payments under section 236 of the National Housing Act (12 U.S.C. 1715z-1);
</P>
<P>(2) Rental Assistance Payments under section 236 of the National Housing Act (12 U.S.C. 1715z-1);
</P>
<P>(3) Rent Supplement payments under section 101 of the Housing and Urban Development Act of 1965 (12 U.S.C. 1701s); or
</P>
<P>(4) Project-based housing assistance payment contracts under section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f) administered by HUD's Office of Housing.




</P>
</DIV8>


<DIV8 N="§ 200.216" NODE="24:2.1.1.1.1.7.37.4" TYPE="SECTION">
<HEAD>§ 200.216   Controlling Participants.</HEAD>
<P>(a) <I>Definition.</I> Controlling Participants are those entities and individuals (i) serving as a Specified Capacity with respect to a Covered Project and (ii) the entities and individuals in control of the Specified Capacities. Each of the following capacities for a Covered Project is a “Specified Capacity:”
</P>
<P>(1) An owner of a Covered Project;
</P>
<P>(2) A borrower of a loan financing a Covered Project;
</P>
<P>(3) A management agent;
</P>
<P>(4) An operator (in connection with healthcare projects insured under the following section of the National Housing Act: Section 232 (12 U.S.C. 1715w) and section 242 (12 U.S.C. 1715z-7));
</P>
<P>(5) A master tenant (in connection with any multifamily housing project insured under the National Housing Act (12 U.S.C. 1701 <I>et seq.</I>) and in connection with certain healthcare projects insured under sections 232 or section 242 of the National Housing Act);
</P>
<P>(6) A general contractor; and
</P>
<P>(7) In connection with a hospital project insured under section 242 of the National Housing Act (12 U.S.C. 1715z-7), a construction manager;
</P>
<P>(b) <I>Control of entities.</I> To the extent any Specified Capacity listed in paragraph (a) of this section is an entity, any individual(s) or entities determined by HUD to control the financial or operational decisions of such Specified Capacity shall also be considered Controlling Participants. Without limiting the foregoing and unless otherwise determined by HUD, the following individuals or entities shall be considered Controlling Participants:
</P>
<P>(1) Individuals or entities with the ability to direct the day-to-day operations of a Specified Capacity or a Covered Project;
</P>
<P>(2) Individuals or entities that own at least 25 percent of an entity that is a Specified Capacity;
</P>
<P>(3) Individuals or entities with the ability to direct the entity to enter into agreements relating to the Triggering Event that necessitates review of Previous Participation, including without limitation individuals or entities that own at least 25 percent of entities determined to control an entity that is a Specified Capacity; and
</P>
<P>(4) In connection with a hospital project insured under section 242 of the National Housing Act (12 U.S.C. 1715z-7), members of a hospital Board of Directors (or similar body) and executive management (such as the Chief Executive Officer and Chief Financial Officer) that HUD determines to have control over the finances or operation of a Covered Project.
</P>
<P>(c) <I>Exclusions from definition.</I> The following individuals or entities are not Controlling Participants for purposes of this subpart:
</P>
<P>(1) Passive investors and investor entities with limited liability in Covered Projects benefiting from tax credits, including but not limited to low-income housing tax credits pursuant to section 42 of title 26 of the United States Code, whether such investors are syndicators, direct investors or investors in such syndicators and/or investors;
</P>
<P>(2) Individuals or entities that do not exercise financial or operational control over the Covered Project, a Specified Capacity or another Controlling Participant;
</P>
<P>(3) Unless determined by HUD to exercise day-to-day control over the operations or finances of a Specified Capacity or Covered Project, board members of a non-profit corporation who are not officers or otherwise part of the executive management teams of the non-profit;
</P>
<P>(4) Mortgagees acting in their capacity as such; and
</P>
<P>(5) Public housing agencies (PHAs).




</P>
</DIV8>


<DIV8 N="§ 200.218" NODE="24:2.1.1.1.1.7.37.5" TYPE="SECTION">
<HEAD>§ 200.218   Triggering Events.</HEAD>
<P>(a) Each of the following is a Triggering Event that may subject a Controlling Participant to Previous Participation review under § 200.220:
</P>
<P>(1) An application for FHA mortgage insurance;
</P>
<P>(2) An application for funds provided by HUD pursuant to a program administered by HUD's Office of Housing, such as but not limited to supplemental loans;
</P>
<P>(3) A request to change any Controlling Participant for which HUD consent is required with respect to a Covered Project; or
</P>
<P>(4) A request for consent to an assignment of a housing assistance payment contract under section 8 of the United States Housing Act of 1937 or of another contract pursuant to which a Controlling Participant will receive funds in connection with a Covered Project.
</P>
<P>(b) The Commissioner may also require a review of a potential owner's Previous Participation in connection with a loan sale or other form of property disposition, including foreclosure sale. Notwithstanding anything contained in the regulations in this subpart to the contrary, any such review shall be in accordance with the terms, conditions, provisions and other requirements set forth by the Commissioner in connection with such loan sale or property disposition which may differ, in whole or in part, from the regulations in this subpart.




</P>
</DIV8>


<DIV8 N="§ 200.220" NODE="24:2.1.1.1.1.7.37.6" TYPE="SECTION">
<HEAD>§ 200.220   Previous Participation review.</HEAD>
<P>(a) <I>Scope of review.</I> (1) Upon the occurrence of a Triggering Event, as provided in § 200.218, the Commissioner shall review the Previous Participation of the relevant Controlling Participants in considering whether to approve the participation of the Controlling Participants in connection with the Triggering Event in accordance with the definition of Risk in § 200.212.
</P>
<P>(2) The Commissioner will not review Previous Participation for interests acquired by inheritance or by court decree.
</P>
<P>(3) In connection with the submittal of an application for any Triggering Event, applicants shall identify the Controlling Participants and, to the extent requested by HUD, make available to HUD the Controlling Participant's Previous Participation in Covered Projects.
</P>
<P>(b) <I>Results of review.</I> (1) Based upon the review under paragraph (a) of this section, the Commissioner will approve, disapprove, limit, or otherwise condition the continued participation of the Controlling Participant in the Triggering Event, in accordance with paragraphs (c) and (d) of this section.
</P>
<P>(2) The Commissioner shall provide notice of the determination to the Controlling Participant including the reasons for disapproval or limitation. The Commissioner may provide notice of the determination to other parties as well, such the FHA-approved lender in the transaction.
</P>
<P>(c) <I>Basis for disapproval.</I> (1) The Commissioner must disapprove a Controlling Participant if the Commissioner determines that the Controlling Participant is suspended, debarred or subject to other restriction pursuant to 2 CFR part 180 or 2 CFR part 2424;
</P>
<P>(2) The Commissioner may disapprove a Controlling Participant if the Commissioner determines:
</P>
<P>(i) The Controlling Participant is materially restricted, including voluntarily, from doing business with HUD (other than the restrictions listed in paragraph (c)(1) of this section) or any other governmental department or agency if the Commissioner determines that such restriction demonstrates a significant risk to proceeding with the Triggering Event; or
</P>
<P>(ii) The Controlling Participant's record of Previous Participation reveals significant risk to proceeding with the Triggering Event.
</P>
<P>(d) <I>Alternatives to disapproval.</I> In lieu of disapproval, the Commissioner may:
</P>
<P>(1) Condition or limit the Controlling Participant's participation;
</P>
<P>(2) Temporarily withhold issuing a determination in order to gather more necessary information; or
</P>
<P>(3) Require the Controlling Participant to remedy or mitigate outstanding violations of HUD requirements to the Commissioner's satisfaction in order to participate in the Triggering Event.




</P>
</DIV8>


<DIV8 N="§ 200.222" NODE="24:2.1.1.1.1.7.37.7" TYPE="SECTION">
<HEAD>§ 200.222   Request for reconsideration.</HEAD>
<P>(a) Where participation in a Triggering Event has been disapproved, otherwise limited or conditioned because of Previous Participation review, the Controlling Participant may request reconsideration of such determination by a review committee or reviewing officer as established by the Commissioner. Reconsideration decisions shall not be rendered by the same individual who rendered the initial review.
</P>
<P>(b) The Controlling Participant shall submit requests for such reconsideration in writing within 30 days of receipt of the Commissioner's notice of the determination under § 200.220.
</P>
<P>(c) The review committee or reviewing officer shall schedule a review of such requests for reconsideration. The Controlling Participant shall be provided written notification of such a review; such notice shall provide at least 7 business days advanced notice of the reconsideration. The Controlling Participant shall be provided the opportunity to submit such supporting materials as the Controlling Participant desires or as the review committee or reviewing officer requests.
</P>
<P>(d) Before making its decision, the review committee or reviewing officer will analyze the reasons for the decision(s) for which reconsideration is being requested, as well as the documents and arguments presented by the Controlling Participant. The review committee or reviewing officer may affirm, modify, or reverse the initial decision. Upon making its decision, the review committee or reviewing officer will provide written notice of its determination to the Controlling Participant setting forth the reasons for the determination(s).




</P>
</DIV8>

</DIV6>


<DIV6 N="I" NODE="24:2.1.1.1.1.8" TYPE="SUBPART">
<HEAD>Subpart I—Nondiscrimination and Fair Housing</HEAD>


<DIV8 N="§ 200.300" NODE="24:2.1.1.1.1.8.37.1" TYPE="SECTION">
<HEAD>§ 200.300   Nondiscrimination and fair housing policy.</HEAD>
<P>Federal Housing Administration programs shall be administered in accordance with:
</P>
<P>(a) The nondiscrimination and fair housing requirements set forth in 24 CFR part 5, including the prohibition on inquiries regarding sexual orientation or gender identity set forth in 24 CFR 5.105(a)(2); and
</P>
<P>(b) The affirmative fair housing marketing requirements in 24 CFR part 200, subpart M and 24 CFR part 108.
</P>
<CITA TYPE="N">[77 FR 5675, Feb. 3, 2012]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="J" NODE="24:2.1.1.1.1.9" TYPE="SUBPART">
<HEAD>Subpart J—Equal Employment Opportunity</HEAD>


<DIV8 N="§ 200.400" NODE="24:2.1.1.1.1.9.37.1" TYPE="SECTION">
<HEAD>§ 200.400   Purpose.</HEAD>
<P>The purpose of this subpart is to assist in achieving the aims of part III of Executive Order 11246 and the relevant regulations of the Secretary of Labor and the Secretary of Housing and Urban Development. 


</P>
</DIV8>


<DIV8 N="§ 200.405" NODE="24:2.1.1.1.1.9.37.2" TYPE="SECTION">
<HEAD>§ 200.405   Notice to public.</HEAD>
<P>Participants in insurance programs under the National Housing Act shall be informed, as early as possible upon indicating their interest in any such program, of the established policy of nondiscrimination in employment in construction, repair or rehabilitation work financed with assistance under the Act. 


</P>
</DIV8>


<DIV8 N="§ 200.410" NODE="24:2.1.1.1.1.9.37.3" TYPE="SECTION">
<HEAD>§ 200.410   Definition of term “applicant”.</HEAD>
<P>(a) In any mortgage or loan insurance transaction under this chapter where the Commissioner will control the mortgagor either through the ownership of corporate stock or under the provisions of a regulatory agreement, the term <I>applicant</I> as used in § 200.415 shall mean the mortgagor. 
</P>
<P>(b) In any transaction other than one specified in paragraph (a) of this section, the term <I>applicant</I> as used in § 200.415 shall mean the developer, or the builder, dealer or contractor performing the construction, repair or rehabilitation work for the property owner. 


</P>
</DIV8>


<DIV8 N="§ 200.415" NODE="24:2.1.1.1.1.9.37.4" TYPE="SECTION">
<HEAD>§ 200.415   Agreement of applicant.</HEAD>
<P>An applicant, prior to the Commissioner's issuance of any commitment or other loan approval, shall agree (in a form prescribed by the Commissioner) that there shall be no discrimination against anyone who is employed in carrying out work receiving assistance pursuant to this chapter, or against an applicant for such employment, because of race, color, religion, sex, handicap, age, or national origin. 
</P>
<CITA TYPE="N">[58 FR 41000, July 30, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 200.420" NODE="24:2.1.1.1.1.9.37.5" TYPE="SECTION">
<HEAD>§ 200.420   Equal opportunity clause to be included in contracts and subcontracts.</HEAD>
<P>(a) The equal opportunity clause prescribed by the Commissioner pursuant to the regulations of the Secretary of Labor (41 CFR chapter 60) shall be included in each nonexempt contract and subcontract for work receiving FHA assistance. 
</P>
<P>(b) Subcontracts less than $50,000 may incorporate by reference the equal opportunity clause. 
</P>
<P>(c) The equal opportunity clause shall be deemed to be a part of each nonexempt contract or subcontract whether or not it is physically incorporated in such contract. 


</P>
</DIV8>


<DIV8 N="§ 200.425" NODE="24:2.1.1.1.1.9.37.6" TYPE="SECTION">
<HEAD>§ 200.425   Exemptions.</HEAD>
<P>(a) <I>Transactions of $10,000 or under.</I> Contracts and subcontracts not exceeding $10,000 are exempt from the requirements of the equal opportunity clause. No contractor or subcontractor shall procure supplies or services in less than usual quantities to avoid applicability of the equal opportunity clause. 
</P>
<P>(b) <I>Contracts and subcontracts for indefinite quantities.</I> Contracts and subcontracts for indefinite quantities are exempt from the requirements of the equal opportunity clause if the amount to be ordered in a single year under any such contract will not exceed $10,000. 
</P>
<P>(c) <I>Work outside the United States.</I> Contracts and subcontracts with regard to work performed outside the United States by employees who were not recruited within the United States are exempt from the requirements of the equal opportunity clause. 
</P>
<P>(d) <I>Others.</I> Other exemptions set forth in the regulations of the Secretary of Labor at 41 CFR 60-1.5 apply to transactions under this subpart. 


</P>
</DIV8>


<DIV8 N="§ 200.430" NODE="24:2.1.1.1.1.9.37.7" TYPE="SECTION">
<HEAD>§ 200.430   Sanctions.</HEAD>
<P>Failure or refusal to comply and give satisfactory assurances of future compliance with the requirements of this subpart shall be proper basis for applying sanctions. The sanctions shall be applied in accordance with the provisions of Executive Order 11246 and the relevant regulations of the Secretary of Labor. 


</P>
</DIV8>

</DIV6>


<DIV6 N="K" NODE="24:2.1.1.1.1.10" TYPE="SUBPART">
<HEAD>Subparts K-L [Reserved]</HEAD>

</DIV6>


<DIV6 N="M" NODE="24:2.1.1.1.1.11" TYPE="SUBPART">
<HEAD>Subpart M—Affirmative Fair Housing Marketing Regulations</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>37 FR 75, Jan. 5, 1972, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV8 N="§ 200.600" NODE="24:2.1.1.1.1.11.37.1" TYPE="SECTION">
<HEAD>§ 200.600   Purpose.</HEAD>
<P>The purpose of this subpart is to set forth the Department's equal opportunity regulations for affirmative fair housing marketing under FHA subsidized and unsubsidized housing programs. 


</P>
</DIV8>


<DIV8 N="§ 200.605" NODE="24:2.1.1.1.1.11.37.2" TYPE="SECTION">
<HEAD>§ 200.605   Authority.</HEAD>
<P>The regulations in this subpart are issued pursuant to the authority to issue regulations granted to the Secretary by section 7(d) of the Department of Housing and Urban Development Act of 1965, 42 U.S.C. 3535(d), and implement the functions, powers, and duties imposed on the Secretary by Executive Order 11063, 27 FR 11527, and title VIII of the Civil Rights Act of 1968, as amended, 42 U.S.C. 3608. 
</P>
<CITA TYPE="N">[40 FR 20080, May 8, 1975] 


</CITA>
</DIV8>


<DIV8 N="§ 200.610" NODE="24:2.1.1.1.1.11.37.3" TYPE="SECTION">
<HEAD>§ 200.610   Policy.</HEAD>
<P>It is the policy of the Department to administer its FHA housing programs affirmatively, as to achieve a condition in which individuals of similar income levels in the same housing market area have a like range of housing choices available to them regardless of their race, color, religion, sex, handicap, familial status or national origin. Each applicant for participation in FHA subsidized and unsubsidized housing programs shall pursue affirmative fair housing marketing policies in soliciting buyers and tenants, in determining their eligibility, and in concluding sales and rental transactions. 
</P>
<CITA TYPE="N">[40 FR 20080, May 8, 1975, as amended at 58 FR 41337, Aug. 3, 1993] 


</CITA>
</DIV8>


<DIV8 N="§ 200.615" NODE="24:2.1.1.1.1.11.37.4" TYPE="SECTION">
<HEAD>§ 200.615   Applicability.</HEAD>
<P>The affirmative fair housing marketing requirements, as set forth in paragraphs (a) through (f) of § 200.620, shall apply to all applicants for participation in FHA subsidized and unsubsidized housing programs whose application is hereafter approved for development or rehabilitation of: 
</P>
<P>(a) Multifamily projects and manufactured home parks of five or more lots, units or spaces, and initial submissions by a lender for an application for mortgage insurance on a single family property, where the property is located in a subdivision and the builder or developer intends to sell five or more properties in the subdivision; or
</P>
<P>(b) Dwelling units, when the applicant's participation in FHA housing programs had exceeded or would thereby exceed development of five or more such dwelling units during the year preceding the application, except that there shall not be included in a determination of the number of dwelling units developed by an applicant those in which a single family dwelling is constructed or rehabilitated for occupancy by a mortgagor on property owned by the mortgagor and in which the applicant had no interest prior to entering into the contract for construction or rehabilitation. 
</P>
<CITA TYPE="N">[37 FR 75, Jan. 5, 1972, as amended at 50 FR 9268, Mar. 7, 1985; 58 FR 41337, Aug. 3, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 200.620" NODE="24:2.1.1.1.1.11.37.5" TYPE="SECTION">
<HEAD>§ 200.620   Requirements.</HEAD>
<P>With respect to all FHA subsidized or unsubsidized programs in which the applicant hereafter participates (except for housing for which a conditional commitment has been issued prior to the effective date of these regulations), the applicant shall meet the following requirements or, if he contracts marketing responsibility to another party, be responsible for that party's carrying out the requirements: 
</P>
<P>(a) Carry out an affirmative program to attract buyers or tenants, regardless of sex, handicap or familial status, of all minority and majority groups to the housing for initial sale or rental. An affirmative marketing program shall be in effect for each multifamily project throughout the life of the mortgage. Such a program shall typically involve publicizing to minority persons the availability of housing opportunities regardless of race, color, religion, sex, handicap or familial status or national origin, through the type of media customarily utilized by the applicant, including minority publications or other minority outlets which are available in the housing market area. All advertising shall include either the Department-approved Equal Housing Opportunity logo or slogan or statement and all advertising depicting persons shall depict persons of majority and minority groups, including both sexes. 
</P>
<P>(b) Maintain a nondiscriminatory hiring policy in recruiting from both minority and majority groups, including both sexes and the handicapped, for staff engaged in the sale or rental of properties. 
</P>
<P>(c) Instruct all employees and agents in writing and orally in the policy of nondiscrimination and fair housing. 
</P>
<P>(d) Specifically solicit eligible buyers or tenants reported to the applicant by the Area or Insuring Office. 
</P>
<P>(e) Prominently display in all offices in which sale or rental activity pertaining to the project or subdivision takes place the Department-approved Fair Housing Poster and include in any printed material used in connection with sales or rentals, the Department-approved Equal Housing Opportunity logo or slogan or statement. 
</P>
<P>(f) Post in a conspicuous position on all FHA project sites a sign displaying prominently either the Department-approved Equal Housing Opportunity logo or slogan or statement. 
</P>
<CITA TYPE="N">[37 FR 75, Jan. 5, 1972, as amended at 40 FR 20080, May 8, 1975; 40 FR 53008, Nov. 14, 1975; 58 FR 41337, Aug. 3, 1993] 


</CITA>
</DIV8>


<DIV8 N="§ 200.625" NODE="24:2.1.1.1.1.11.37.6" TYPE="SECTION">
<HEAD>§ 200.625   Affirmative fair housing marketing plan.</HEAD>
<P>Each applicant for participation in FHA housing programs to which these regulations apply shall provide on a form to be supplied by the Department information indicating his affirmative fair housing marketing plan to comply with the requirements set forth in § 200.620. This form, once approved by HUD, will be available for public inspection at the sales or rental offices of the applicant. 


</P>
</DIV8>


<DIV8 N="§ 200.630" NODE="24:2.1.1.1.1.11.37.7" TYPE="SECTION">
<HEAD>§ 200.630   Notice of housing opportunities.</HEAD>
<P>The Director of each Field Office shall prepare monthly a list of all projects covered by this subpart, and of all initial submissions by lenders for single family mortgage insurance where the property is located in a subdivision and the builder or developer intends to sell five or more properties in the subdivision, on which commitments have been issued during the preceding 30 days. The Director shall maintain a roster of interested organizations and individuals (including public agencies responsible for providing relocation assistance and local housing authorities) who have expressed a wish to receive the monthly list, and shall provide the list to these organizations and individuals.
</P>
<CITA TYPE="N">[58 FR 41337, Aug. 3, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 200.635" NODE="24:2.1.1.1.1.11.37.8" TYPE="SECTION">
<HEAD>§ 200.635   Compliance.</HEAD>
<P>Applicants failing to comply with the requirements of this subpart will make themselves liable to sanctions authorized by regulations, rules or policies governing the program pursuant to which the application was made, including but not limited to denial of further participation in departmental programs and referral to the Department of Justice for suit by the United States for injunctive or other appropriate relief. The Department will enforce compliance through the procedures outlined in 24 CFR part 108.
</P>
<CITA TYPE="N">[37 FR 75, Jan. 5, 1972, as amended at 58 FR 41337, Aug. 3, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 200.640" NODE="24:2.1.1.1.1.11.37.9" TYPE="SECTION">
<HEAD>§ 200.640   Effect on other requirements.</HEAD>
<P>The requirement for compliance with this part is in addition to, and not in substitution for, any other requirements imposed by or under Executive Order 11063 or the Fair Housing Act.
</P>
<CITA TYPE="N">[58 FR 41337, Aug. 3, 1993]


</CITA>
</DIV8>


<DIV9 N="Appendix to" NODE="24:2.1.1.1.1.11.37.10.1" TYPE="APPENDIX">
<HEAD>Appendix to Subpart M of Part 200—Equal Housing Opportunity Insignia
</HEAD>
<P>The Equal Housing Opportunity insignia are as follows: 
</P>
<P>Equal Housing Opportunity logo:
</P>
<img src="/graphics/ec05oc91.037.gif"/>
<P>Equal Housing Opportunity statement: “We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. We encourage and support an affirmative advertising and marketing program in which there are no barriers to obtaining housing because of race, color, religion, sex, or national origin.” 
</P>
<P>Equal Housing Opportunity slogan: “Equal Housing Opportunity.”
</P>
<CITA TYPE="N">[37 FR 75, Jan. 5, 1972, as amended at 40 FR 20080, May 8, 1975] 


</CITA>
</DIV9>

</DIV6>


<DIV6 N="N" NODE="24:2.1.1.1.1.12" TYPE="SUBPART">
<HEAD>Subpart N [Reserved]</HEAD>

</DIV6>


<DIV6 N="O" NODE="24:2.1.1.1.1.13" TYPE="SUBPART">
<HEAD>Subpart O—Lead-Based Paint Poisoning Prevention</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>64 FR 50224, Sept. 15, 1999, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 200.800" NODE="24:2.1.1.1.1.13.37.1" TYPE="SECTION">
<HEAD>§ 200.800   Lead-based paint.</HEAD>
<P>The Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and implementing regulations at part 35, subparts A, B, F, G, I, and R of this title, apply to activities under these programs, except for single family mortgage insurance and guarantee programs. Sections 200.805 and 200.810 apply to single family mortgage insurance and guarantee programs administered by HUD.


</P>
</DIV8>


<DIV8 N="§ 200.805" NODE="24:2.1.1.1.1.13.37.2" TYPE="SECTION">
<HEAD>§ 200.805   Definitions.</HEAD>
<P><I>Applicable surface.</I> All intact and nonintact interior and exterior painted surfaces of a residential structure.
</P>
<P><I>Defective paint surface.</I> Paint on applicable surfaces that is cracking, scaling, chipping, peeling or loose.
</P>
<P><I>Lead-based paint surface.</I> A paint surface, whether or not defective, identified as having a lead content greater than or equal to 1 mg/cm
<SU>2</SU>.


</P>
</DIV8>


<DIV8 N="§ 200.810" NODE="24:2.1.1.1.1.13.37.3" TYPE="SECTION">
<HEAD>§ 200.810   Single family insurance and coinsurance.</HEAD>
<P>(a) <I>General.</I> (1) The requirements of this section apply to any one-to four-family dwelling which was constructed before 1978 and is the subject of an application for mortgage insurance under section 203(b) or other sections of the National Housing Act relating to the insurance or coinsurance of mortgages on one-to-four-family dwellings. Such other sections include:
</P>
<P>(i) Section 244 (coinsurance);
</P>
<P>(ii) Section 213 (cooperative housing insurance);
</P>
<P>(iii) Section 220 (rehabilitation and neighborhood conservation housing insurance);
</P>
<P>(iv) Section 221 (housing for moderate income and displaced families);
</P>
<P>(v) Section 222 (mortgagor insurance for servicemen);
</P>
<P>(vi) Section 809 (armed services housing for civilian employees);
</P>
<P>(vii) Section 810 (armed services housing in impacted areas);
</P>
<P>(viii) Section 234 (mortgage insurance for condominiums);
</P>
<P>(ix) Section 235 (mortgage assistance payments for home ownership and project rehabilitation);
</P>
<P>(x) Section 237 (special mortgage insurance for low and moderate income families); and
</P>
<P>(xi) Section 240 (mortgage insurance on loans for purchase of fee simple title from lessors).
</P>
<P>(2) [Reserved] 
</P>
<P>(3) Applications for insurance in connection with a refinancing transaction where an appraisal is not required under the applicable procedures established by the Commissioner are excluded from the coverage of this section. Any housing assisted under the programs set out in this section for which no new activity is applied for or required is not covered by this section.
</P>
<P>(b) <I>Appraisal.</I> The appraiser shall, when appraising a dwelling constructed prior to 1978, inspect the dwelling for defective paint surfaces.
</P>
<P>(c) <I>Treatment of defective paint surfaces.</I> For defective paint surfaces, treatment shall be provided to defective areas. Treatment of hazards shall consist of covering or removing defective paint surfaces. Covering may be accomplished by such means as adding a layer of wallboard to the wall surface. Depending on the wall condition, wallcoverings which are permanently attached may be used. Covering or replacing trim surfaces is also permitted. Paint removal may be accomplished by such methods as scraping, heat treatment (infra-red or coil type heat guns) or chemicals. Machine sanding and use of propane or gasoline torches (open-flame methods) are not permitted. Washing and repainting without thorough removal or covering does not constitute adequate treatment. In the case of defective paint spots, scraping and repainting the defective area is considered adequate treatment. Treatment of a defective paint surface is not required if such a surface is found to not be a lead-based paint surface by a lead-based paint inspector certified pursuant to procedures of the U.S. Environmental Protection Agency at 40 CFR part 745.
</P>
<P>(d) <I>Home equity conversion mortgage insurance.</I> The requirements of this section, as modified by the following sentence, apply to a dwelling which is the subject of an application for mortgage insurance under section 255 of the National Housing Act (home equity conversion insurance) unless the mortgagor provides the certification described in § 206.45(d) of this title. The defective paint surface may be treated after the mortgage is endorsed for insurance, provided that the defective paint surface is treated as expeditiously as possible in accordance with the repair work provisions contained in § 206.47 of this title.
</P>
<CITA TYPE="N">[64 FR 50224, Sept. 15, 1999, as amended at 69 FR 34275, June 21, 2004]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="P" NODE="24:2.1.1.1.1.14" TYPE="SUBPART">
<HEAD>Subpart P—Physical Condition of Multifamily Properties</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>65 FR 77240, Dec. 8, 2000, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 200.850" NODE="24:2.1.1.1.1.14.37.1" TYPE="SECTION">
<HEAD>§ 200.850   Physical condition standards and physical inspection requirements.</HEAD>
<P>The requirements in 24 CFR part 5, subpart G, are applicable to the multifamily properties assisted or insured that are listed in 24 CFR 5.701. 
</P>
<CITA TYPE="N">[88 FR 30498, May 11, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 200.853" NODE="24:2.1.1.1.1.14.37.2" TYPE="SECTION">
<HEAD>§ 200.853   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 200.855" NODE="24:2.1.1.1.1.14.37.3" TYPE="SECTION">
<HEAD>§ 200.855   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 200.857" NODE="24:2.1.1.1.1.14.37.4" TYPE="SECTION">
<HEAD>§ 200.857   [Reserved]</HEAD>
</DIV8>

</DIV6>


<DIV6 N="R" NODE="24:2.1.1.1.1.15" TYPE="SUBPART">
<HEAD>Subpart R [Reserved]</HEAD>

</DIV6>


<DIV6 N="S" NODE="24:2.1.1.1.1.16" TYPE="SUBPART">
<HEAD>Subpart S—Minimum Property Standards</HEAD>


<DIV8 N="§ 200.925" NODE="24:2.1.1.1.1.16.37.1" TYPE="SECTION">
<HEAD>§ 200.925   Applicability of minimum property standards.</HEAD>
<P>All housing constructed under HUD mortgage insurance and low-rent public housing programs shall meet or exceed HUD Minimum Property Standards, except that this requirement shall be applicable to manufactured homes eligible for insurance pursuant to § 203.43f of this chapter only to the extent provided therein. The Minimum Property Standards may be waived to the same extent as the other regulatory requirements for eligibility for insurance under the specific mortgage insurance program involved. 
</P>
<CITA TYPE="N">[58 FR 60248, Nov. 15, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 200.925a" NODE="24:2.1.1.1.1.16.37.2" TYPE="SECTION">
<HEAD>§ 200.925a   Multifamily and care-type minimum property standards.</HEAD>
<P>(a) <I>Construction standards.</I> Multifamily or care-type properties shall comply with the minimum property standards contained in the handbook identified in § 200.929(b)(2). In addition, each such property shall, for the Department's purposes, comply with:
</P>
<P>(1) The applicable State of local building code, if the property is located within a jurisdiction which has a building code accepted by the Secretary under § 200.925a(d); or
</P>
<P>(2)(i) The applicable State or local building code, and
</P>
<P>(ii) Those portions of the codes identified in § 200.295c which are designated by the HUD Field Office serving the jurisdiction in which the property is to be located, if the property is located in a jurisdiction which has a building code partially accepted by the Secretary; or
</P>
<P>(3) The appropriate codes, as identified in § 200.925c(c), if the property is not located within a jurisdiction which has a building code accepted by the Secretary.
</P>
<P>(b) <I>Conflicting standards.</I> The minimum property standards contained in the handbook identified in § 200.929(b)(2) do not preempt state or local standards, nor do they alter or affect a builder's obligation to comply with any state or local requirements. However, a property shall be eligible for benefits only if it complies with all applicable minimum property standards, including referenced standards.
</P>
<P>(c) <I>Standard for evaluating local building codes.</I> The Secretary shall compare the portions of a local or State building code applicable to residential or institutional occupancy, as appropriate, submitted under § 200.925a(d) to the list of construction related areas contained in § 200.925b. 
</P>
<P>(1) A State or local code will be accepted if it regulates each area on the list.
</P>
<P>(2) A State or local building code will be partially accepted if it regulates most of the areas on the list. However, no code may be partially accepted if it fails to regulate the subarea for seismic design (see § 200.925b(c)(5)), or if it fails to regulate subareas in more than one of the following major areas listed in § 200.925b: fire safety, light and ventilation, structural loads and seismic design, foundation systems, materials standards, construction components, glass, mechanical, plumbing, electrical, and elevators. 
</P>
<P>(3) For purposes of this paragraph, a state or local code regulates an area if it establishes a standard concerning that area. However, for earthquake loads (see § 200.925b(c)(5)), ASCE 7-88 is mandatory. 
</P>
<P>(d) <I>Review process and acceptance</I>—(1) <I>Jurisdictions without previously accepted building codes.</I> The following submission requirements apply to developers and other interested parties in jurisdictions without building codes, jurisdictions with building codes which have never been submitted for acceptance, and jurisdictions with building codes which have been submitted for acceptance and neither accepted nor partially accepted by the Secretary.
</P>
<P>(i) Developers or other interested parties must comply with one of the following by the time of application for insurance or other benefits:
</P>
<P>(A) The developer or other interested party may choose to comply with the appropriate codes as identified in § 200.925c. If the developer or other interested party so chooses, then the multifamily or care-type property shall be constructed in accordance with one of the model codes designated in paragraph (c)(1), (2) or (3) of § 200.925c and with any other code or codes identified in the same paragraph. In such instances, the developer or other interested party shall notify the Department of the code or group of codes with which it intends to comply by the time of application for insurance or other benefits; or
</P>
<P>(B) The developer or other interested party may choose to comply with the State or local building code, if such code is acceptable to the Secretary. To obtain the Secretary's acceptance, the developer or other interested party shall submit the material specified in paragraph (d)(1)(ii) of this section to the HUD Field Office serving the jurisdiction in which the property is to be constructed. Such material may be submitted at any time; provided, however, that it must be submitted no later than the time of application for mortgage insurance or other benefits.
</P>
<P>(ii) If, under paragraph (d)(1)(i)(B) of this section, the developer or other interested party chooses to comply with the State or local building code as prescribed in paragraph (a)(1) of this section, it shall submit the following material to the HUD field Office serving the jurisdiction in which the property is to be constructed:
</P>
<P>(A) A copy of the jurisdiction's building code, including all applicable service codes, appendices and referenced standards; and
</P>
<P>(B) A copy of the statute, ordinance, regulation, or order establishing the code, if such statute, ordinance, regulation or order is not contained in the building code itself.
</P>
<FP>However, the developer or other interested party need not submit any document already on file in the Field Office.
</FP>
<P>(2) <I>Jurisdictions with previously accepted or partially accepted building codes.</I> The following submission requirements apply to developers and other interested parties in any jurisdiction with a building code which has been accepted or partially accepted by the Secretary:
</P>
<P>(i) At the time of application for mortgage insurance or other benefits, the developer or other interested party shall submit to the HUD Field Office serving the jurisdiction in which the property is to be constructed.
</P>
<P>(A) A certificate stating that, since its acceptance by the Secretary, the jurisdiction's building code has not been changed; or
</P>
<P>(B)(<I>1</I>) A copy of all changes to the jurisdiction's building code, including all applicable service codes and appendices, which have been made since the date of the code's acceptance by the Secretary. However, the developer or other interested party need not submit any part already in the possession of the Field Office; and
</P>
<P>(<I>2</I>) A copy of the statute, ordinance regulation, or order making such changes in the code.
</P>
<P>(3) <I>Notification of decision.</I> The Secretary shall review the material submitted under paragraphs (d) (1)(ii) and (2)(i). Following that review, the Secretary shall issue a written notice (except in the case of a previously accepted code which hasn't been changed) to the submitting party stating whether the State or local building code has been accepted, partially accepted, or whether the Secretary's previous acceptance or partial acceptance has been continued; the basis for the Secretary's decision; and a notification of the submitting party's right to present its views concerning the denial of acceptance if the code is neither accepted nor partially accepted. The Secretary may, in his discretion, permit either an oral or written presentation of views.
</P>
<P>(i) If a developer or other interested party is notified that a State or local building code has not been accepted, then the multifamily or care-type properties eligible for HUD benefits in that jurisdiction shall be constructed in accordance with the appropriate codes indicated in § 200.925c(c). In such instances, the developer or other interested party shall notify the HUD Field Office of the code or codes with which it chooses to comply, in accordance with § 200.925a(d)(1)(i)(A).
</P>
<P>(ii) If a developer or other interested party is notified that a State or local building code has been partially accepted, then the multifamily or care-type properties eligible for HUD benefits in that jurisdiction shall be constructed in accordance with the applicable State or local building code, plus those additional requirements identified in the written notice issued by the Secretary under § 200.925a(d)(3). The written notice shall identify, in accordance with appendix J of the Handbook identified in § 200.929(b)(2), those portions of the codes listed at § 200.925c(a) with which the property must comply.
</P>
<P>(iii) Each Regional Office will maintain a current list of jurisdictions with accepted building codes and a current list of jurisdictions with partially accepted building codes. The lists will state the most recent date of each code's acceptance or partial acceptance and will be available to any interested party upon request. In addition, the list of jurisdictions whose codes have been partially accepted shall identify those portions of the codes listed at § 200.925c(a) with which the property must comply. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0321)
</APPRO>
<CITA TYPE="N">[49 FR 18695, May 1, 1984, as amended at 51 FR 28699, Aug. 11, 1986; 58 FR 60248, Nov. 15, 1993; 59 FR 36695, July 19, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 200.925b" NODE="24:2.1.1.1.1.16.37.3" TYPE="SECTION">
<HEAD>§ 200.925b   Residential and institutional building code comparison items.</HEAD>
<P>HUD will review each local code submitted under this chapter to determine whether it regulates all of the following areas and subareas:
</P>
<P>(a) <I>Fire safety.</I> (1) Construction types permitted;
</P>
<P>(2) Allowable height and area;
</P>
<P>(3) Fire separations;
</P>
<P>(4) Fire resistance requirements;
</P>
<P>(5) Means of egress (number and distance);
</P>
<P>(6) Individual unit smoke detectors;
</P>
<P>(7) Building alarm systems;
</P>
<P>(8) Highrise criteria;
</P>
<P>(b) <I>Light and ventilation.</I> (1) Habitable rooms;
</P>
<P>(2) Bath and toilet rooms.
</P>
<P>(c) <I>Structural loads and seismic design.</I> (1) Design live loads; 
</P>
<P>(2) Design dead loads; 
</P>
<P>(3) Snow loads; 
</P>
<P>(4) Wind loads. 
</P>
<P>(5) Earthquake loads (in localities identified by ASCE 7-88 (formerly ANSI A58.1-82) as being in seismic zones 1, 2, 3, or 4, and Guam). 
</P>
<P>(6) Special loads, i.e., soil pressure, railings, interior walls etc. 
</P>
<P>(d) <I>Foundation systems.</I> (1) Soil tests; 
</P>
<P>(2) Foundation depths; 
</P>
<P>(3) Footings; 
</P>
<P>(4) Foundation materials criteria; 
</P>
<P>(5) Piles, i.e., materials, allowable stresses, design; 
</P>
<P>(6) Excavation; 
</P>
<P>(e) <I>Materials standards.</I> 
</P>
<P>(f) <I>Construction components.</I> (1) Steel; 
</P>
<P>(2) Masonry; 
</P>
<P>(3) Concrete; 
</P>
<P>(4) Gypsum; 
</P>
<P>(5) Lumber; 
</P>
<P>(6) Roof construction and covering; 
</P>
<P>(7) Chimneys and fireplaces. 
</P>
<P>(g) <I>Glass.</I> (1) Thickness/area requirements; 
</P>
<P>(2) Safety glazing. 
</P>
<P>(h) <I>Mechanical.</I> (1) Heating, cooling and ventilation systems; 
</P>
<P>(2) Boilers and pressure vessels; 
</P>
<P>(3) Gas, liquid and solid fuel piping and equipment; 
</P>
<P>(4) Chimneys and vents; 
</P>
<P>(5) Ventilation (air changes). 
</P>
<P>(i) <I>Plumbing.</I> (1) Materials standards; 
</P>
<P>(2) Sizing and installing drainage systems; 
</P>
<P>(3) Vents and venting; 
</P>
<P>(4) Traps; 
</P>
<P>(5) Cleanouts; 
</P>
<P>(6) Plumbing fixtures; 
</P>
<P>(7) Water supply and distribution; 
</P>
<P>(8) Storm drain systems. 
</P>
<P>(j) <I>Electrical.</I> (1) Wiring design and protection; 
</P>
<P>(2) Wiring methods and materials; 
</P>
<P>(3) Equipment for general use; 
</P>
<P>(4) Special equipment; 
</P>
<P>(5) Special conditions; 
</P>
<P>(6) Communication systems. 
</P>
<P>(k) <I>Elevators.</I> (1) Reference ASME/ANSI Standard A 17.1-1987; and the ASME/ANSI A17.1b-1989 Addenda.
</P>
<P>(2) Acceptance tests and periodic tests.
</P>
<CITA TYPE="N">[49 FR 18696, May 1, 1984, as amended at 51 FR 28699, Aug. 11, 1986; 58 FR 60248, Nov. 15, 1993; 59 FR 36695, July 19, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 200.925c" NODE="24:2.1.1.1.1.16.37.4" TYPE="SECTION">
<HEAD>§ 200.925c   Model codes.</HEAD>
<P>(a) <I>Incorporation by reference.</I> The following publications are incorporated by reference under 5 U.S.C. 552(a) and 1 CFR part 51. The incorporation by reference of these publications has been approved by the Director of the Federal Register. The locations where copies of these publications are available are set forth below. 
</P>
<P>(1) <I>Model Building Codes</I>—(i) <I>The BOCA National Building Code, 1993 Edition, The BOCA National Plumbing Code, 1993 Edition, and the BOCA National Mechanical Code, 1993 Edition,</I> excluding Chapter I, Administration, for the Building, Plumbing and Mechanical Codes and the references to fire retardant treated wood and a distance of 4 feet (1219 mm) from the wall in exception number 1 of paragraph 705.6 and 707.5.2 number 2 (Chapter 7) of the Building Code, but including the Appendices of the Code. Available from Building Officials and Code Administrators International, Inc., 4051 West Flossmoor Road, Country Club Hills, Illinois 60478.
</P>
<P>(ii) <I>Standard Building Code, 1991 Edition, including 1992/1993 revisions. Standard Plumbing Code, 1991 Edition, Standard Mechanical Code, 1991 Edition, including 1992 revisions, and Standard Gas Code, 1991 Edition,</I> including the 1992 revisions, but excluding Chapter I—Administration from each standard code and the phrase “or fire retardant treated wood” in reference note (a) of table 600 (Chapter 6) of the Standard Building Code, but including Appendices A, C, E, J, K, M, and R. Available from the Southern Building Code Congress International, Inc., 900 Montclair Road, Birmingham, Alabama 35213. 
</P>
<P>(iii) <I>Uniform Building Code, 1991 Edition,</I> including the 1993 Accumulative Supplement, but excluding Part I—Administrative, and the reference to fire retardant treated plywood in section 2504(c)3 and to fire retardant treated wood in 1-HR type III and V construction referenced in paragraph 4203.2., but including the Appendix of the Code. <I>Uniform Plumbing Code, 1991 Edition, including the 1992 Code Changes</I> but excluding Part I—Administration, but including the Appendices of the Code. <I>Uniform Mechanical Code, 1991 Edition,</I> including the 1993 Accumulative Supplement but excluding Part I—Administrative, but including the Appendices of the Code. All available from the International Conference of Building Officials, 5360 South Workman Mill Road, Whittier, California 90601.
</P>
<P>(2) <I>National Electrical Code,</I> NFPA 70, 1993 Edition, including appendices. Available from the National Fire Protection Association, Batterymarch Park, Quincy, Massachusetts 02269. 
</P>
<P>(3) <I>National Standard Plumbing Code,</I> 1993 Edition. Available from the National Association of Plumbing-Heating-Cooling Contractors, P.O. Box 6808, Falls Church, Virginia 22046. 
</P>
<P>(b) <I>Model Code Compliance Requirements.</I> (1) When a multifamily or care-type property is to comply with one of the model building codes set forth in paragraph (a)(1) of this section, the following requirements of those model codes shall not apply to those properties:
</P>
<P>(i) Those provisions of the model codes that do not pertain to residential or institutional buildings;
</P>
<P>(ii) Those provisions of the model codes that establish energy requirements for multifamily or care-type structures; and
</P>
<P>(iii) Those provisions of the model codes that require or allow the issuance of permits of any sort.
</P>
<P>(2) Where the model codes set forth in paragraph (a)(1) of this section designate a building, fire, mechanical, plumbing or other official, the Secretary's designee in the HUD Field Office serving the jurisdiction in which the property is to be constructed shall act as such official.
</P>
<P>(c) <I>Designation of Model Codes.</I> When a multifamily or care-type property is to comply with a model code, it shall comply with one of the model codes designated in paragraphs (c)(1), (2), or (3) of this section, and with any other code or codes identified in the same paragraph. However, seismic design is a mandatory requirement. In addition, the property shall comply with all of the standards that are incorporated into the code or codes by reference. By the time of application for insurance or other benefits, the developer or other interested party shall notify the Department of the code or group of codes to which the developer intends to comply. 
</P>
<P>(1) <I>The BOCA National Building Code, The BOCA National Plumbing and The BOCA National Mechanical Code,</I> 1993 Editions. 
</P>
<P>(2) <I>Standard Building Code, Standard Plumbing Code, Standard Mechanical Code and Standard Gas Code,</I> 1991 Editions, including the revisions specified in paragraph (a)(1)(ii) of this section, and the <I>National Electrical Code,</I> 1993 Edition. 
</P>
<P>(3) <I>Uniform Building Code, Uniform Plumbing Code and Uniform Mechanical Code,</I> 1991 Editions, including the 1993 Accumulative Supplements to the Building and Mechanical Codes, and the 1992 Code Changes to the <I>Uniform Plumbing Code,</I> and the <I>National Electrical Code,</I> NFPA 70, 1993 Edition.
</P>
<P>(4) <I>The National Electrical Code,</I> NFPA 70, 1993 Edition. 
</P>
<CITA TYPE="N">[49 FR 18696, May 1, 1984, as amended at 51 FR 28699, Aug. 11, 1986; 58 FR 60248, Nov. 15, 1993; 59 FR 36695, July 19, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 200.926" NODE="24:2.1.1.1.1.16.37.5" TYPE="SECTION">
<HEAD>§ 200.926   Minimum property standards for one and two family dwellings.</HEAD>
<P>(a) <I>Construction standards</I>—(1) <I>Applicable structures.</I> The standards identified or contained in this section, and in §§ 200.926a-200.926e, apply to single family detached homes, duplexes, three-unit homes, and to living units in a structure where the units are located side-by-side in town house fashion. Section 200.926d(c)(4) also applies to four-unit homes.
</P>
<P>(2) <I>Applicability of standards to new construction.</I> The standards referenced in paragraph (a)(1) of this section are applicable to structures which are:
</P>
<P>(i) Approved for insurance or other benefits prior to the start of construction, including approval under the Direct Endorsement process described in § 203.5 of this chapter, or under the Lender Insurance process described in § 203.6 of this chapter;
</P>
<P>(ii) Approved for insurance or other benefits based upon participation in an insured warranty program; or
</P>
<P>(iii) Insured as new construction based upon a Certificate of Reasonable Value issued by the Department of Veterans Affairs.
</P>
<P>(b) <I>Conflicting standards.</I> The requirements contained in § 200.926d do not preempt local or State standards, nor do they alter or affect a builder's obligation to comply with any local or State requirements. However, a property shall be eligible for benefits only if it complies with the requirements of this subpart, including any referenced standards. When any of the requirements identified in § 200.926c are in conflict with a partially accepted local or state code, the conflict will be resolved by the HUD Field Office servicing the jurisdiction in which the property is to be located. 
</P>
<P>(c) <I>Standard for evaluating local or state building codes.</I> The Secretary shall compare a local building code submitted under paragraph (d) of this section or a State code to the list of construction related areas contained in § 200.926a. 
</P>
<P>(1) A local or State code will be accepted if it regulates each area and subarea on the list. 
</P>
<P>(2) A State or local building code will be partially accepted if it regulates most of the areas on the list. However, no code may be partially accepted if it fails to regulate the subarea for seismic design (see § 200.926a(c)(5)), or if it fails to regulate subareas in more than one of the following major areas listed in § 200.926a: fire safety, light and ventilation, structural loads and seismic design, foundation systems, materials standards, construction components, glass, mechanical, plumbing, and electrical. 
</P>
<P>(3) For purposes of this paragraph, a local or State code regulates an area or subarea if it establishes a standard concerning that area or subarea. However, for earthquake loads (see § 200.926a(c)(5)), ASCE 7-88 is mandatory. 
</P>
<P>(d) <I>Code selection.</I> Any materials required to be submitted under this section must be submitted by the time the lender or other interested party applies for mortgage insurance or other benefits. 
</P>
<P>(1) <I>Jurisdictions without previously accepted building codes.</I> The following submission requirements apply to lenders and other interested parties in jurisdictions without building codes, jurisdictions with building codes which have never been submitted for acceptance, and jurisdictions with building codes which previously have been submitted for acceptance and have not been accepted or partially accepted by the Secretary. 
</P>
<P>(i) In jurisdictions without local building codes: 
</P>
<P>(A) If the State building code is acceptable, the lender or other interested party must comply with the State building code and the requirements of § 200.926d; 
</P>
<P>(B) If the State building code is partially acceptable, the lender or other interested party must comply with: 
</P>
<P>(<I>1</I>) The acceptable portions of the partially acceptable code; and 
</P>
<P>(<I>2</I>) Those portions of the CABO One and Two Family Dwelling Code designated by the HUD Field Office in accordance with § 200.926c; and 
</P>
<P>(<I>3</I>) The requirements of § 200.926d.
</P>
<P>(C) If there is no State building code or if the State building code is unacceptable, the lender or other interested party must comply with: 
</P>
<P>(<I>1</I>) The CABO One and Two Family Dwelling Code as identified in § 200.926b(a); and
</P>
<P>(<I>2</I>) The requirements of § 200.926d. 
</P>
<P>(ii) In jurisdictions with local building codes which have never been submitted for review, lenders or other interested parties must: 
</P>
<P>(A) Comply with the requirements of paragraph (d)(1)(i) (A), (B) or (C) of this section, as appropriate; or
</P>
<P>(B) Request the Secretary's acceptance of the local building code in accordance with paragraph (d)(1)(iv) of this section.
</P>
<P>(<I>1</I>) If the Secretary determines that the local building code is unacceptable, then the lender or other interested party must comply with the requirements of paragraph (d)(1)(i) (A), (B) or (C) of this section as appropriate.
</P>
<P>(<I>2</I>) If the Secretary determines that the local code is partially acceptable, then the lender or other interested party must comply with:
</P>
<P>(<I>i</I>) The acceptable portions of the partially acceptable local code; and
</P>
<P>(<I>ii</I>) Those portions of the CABO One and Two Family Dwelling Code designated by the HUD Field Office in accordance with § 200.926c; and 
</P>
<P>(<I>iii</I>) The requirements of § 200.926d.
</P>
<P>(<I>3</I>) If the Secretary determines that the local code is acceptable, then the lender or other interested party must comply with the local building code and the requirements of § 200.926d.
</P>
<P>(iii) In jurisdictions with local building codes which previously have been submitted for review and which have been found unacceptable by the Secretary:
</P>
<P>(A) If the local code has not been changed since the date the code or changes thereto were submitted to the Secretary, the lender or other interested party must comply with the requirements of paragraph (d)(1)(i) (A), (B) or (C) of this section, as appropriate; or 
</P>
<P>(B) If the local code has been changed since the date when the code or changes thereto were submitted to the Secretary, the lender or other interested party must submit a copy of all changes to the local building code, including all applicable service codes and appendices and a copy of the statute, ordinance, regulation or order making such changes in the code, which have been made since the date when the code or other changes thereto were last submitted to the Secretary. However, the lender or other interested party need not submit any part already in the possession of the HUD Field Office. Based upon the Secretary's determination concerning the acceptability of the local code as changed, the lender or other interested party must comply with the requirements of paragraph (d)(1)(ii)(B) (<I>1</I>), (<I>2</I>) or (<I>3</I>) of this section, as appropriate.
</P>
<P>(iv) In order to obtain the Department's approval of a local code, the lender or other interested party must submit the following material to the HUD Field Office serving the jurisdiction in which the property is to be constructed:
</P>
<P>(A) A copy of the jurisdiction's local building code, including all applicable service codes and appendices; and 
</P>
<P>(B) A copy of the statute, ordinance, regulation, or order establishing the code, if such statute, ordinance, regulation or order is not contained in the building code itself.
</P>
<FP>However, the lender or other interested party need not submit any document already on file in the HUD Field Office.
</FP>
<P>(2) <I>Jurisdictions with previously accepted or partially accepted building codes.</I> The following submission requirements apply to lenders or other interested parties in any jurisdiction with a building code which has been accepted or partially accepted by the Secretary:
</P>
<P>(i) The lender or other interested party shall submit to the HUD Field Office serving the jurisdiction in which the property is to be constructed:
</P>
<P>(A) A certificate stating that, since the date when the code or any changes thereto were last submitted to the Secretary, the jurisdiction's local building code has not been changed; or 
</P>
<P>(B)(<I>1</I>) A copy of all changes to the jurisdiction's building code, including all applicable service codes and appendices, which have been made since the date when the code or other changes thereto were last submitted to the Secretary. However, the lender or other interested party need not submit any part already in the possession of the HUD Field Office; and
</P>
<P>(<I>2</I>) A copy of the statute, ordinance, regulation, or order making such changes in the code.
</P>
<P>(ii) If, based upon changes to the local building code, the Secretary determines that it is unacceptable, the lender or other interested party must comply with the requirements of paragraph (d)(1) (i)(A), (B) or (C) of this section, as appropriate.
</P>
<P>(iii) If the local building code was previously found by the Secretary to be partially acceptable and there have been no changes to it or if the local building code was previously found by the Secretary to be partially acceptable and if, based upon changes to it, the Secretary determines that it is still partially acceptable or if the local building code was previously found by the Secretary to be acceptable and if, based upon changes to it, the Secretary determines that it is partially acceptable, then the lender or other interested party must comply with paragraphs (d)(1)(ii)(B)(<I>2</I>) (<I>i</I>), (<I>ii</I>) and (<I>iii</I>) of this section.
</P>
<P>(iv) If the local building code was previously found by the Secretary to be partially acceptable and if, based upon changes to it, the Secretary determines that it is acceptable, or if the local building code was previously found by the Secretary to be acceptable and there have been no changes to the code, or if the local building code was previously found by the Secretary to be acceptable and if, based upon changes to it, the Secretary determines that it is still acceptable, then the lender or other interested party must comply with the local building code and the requirements of § 200.926d.
</P>
<P>(3) <I>Notification of decision.</I> (i) Fire retardant treated plywood, where approved by a State or local building code, shall not be permitted for use in roof construction unless a HUD technical suitability bulletin has been issued by the Department for that product. 
</P>
<P>(ii) The Secretary shall review the material submitted under § 200.926(d). Following that review, the Secretary shall issue a written notice (except where there is a previously accepted or partially accepted code which has not been changed) to the submitting party stating whether the local building code is acceptable, partially acceptable, or not acceptable. Where the local building code is not acceptable, the notice shall also state whether the State code is acceptable, partially acceptable or not acceptable. The notice shall also contain the basis for the Secretary's decision and a notification of the submitting party's right to present its views concerning the denial of acceptance if the code is neither accepted nor partially accepted. The Secretary may, in his or her discretion, permit either an oral or written presentation of views.
</P>
<P>(4) <I>Department's responsibilities.</I> (i) Each Regional and Field Office will maintain a current list of jurisdictions with accepted local or State building codes, a current list of jurisdictions with partially accepted local or State building codes and a current list of jurisdictions with local or State building codes which have not been accepted. For local codes, the lists will state the most recent date when the code or changes thereto were submitted to the Secretary. The lists, which shall be prepared by the Field Offices and submitted to the Regional Offices, will be available to any interested party upon request. In addition, the list of jurisdictions whose codes have been partially accepted shall identify in accordance with § 200.926c those portions of the codes listed at § 200.926b(a) with which the property must comply.
</P>
<P>(ii) The Department is responsible for obtaining copies of the State codes and any changes thereto.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0474)
</APPRO>
<CITA TYPE="N">[50 FR 39592, Sept. 27, 1985, as amended at 57 FR 27927, June 23, 1992; 57 FR 58340, Dec. 9, 1992; 58 FR 13536, Mar. 12, 1993; 58 FR 41337, Aug. 3, 1993; 58 FR 60249, Nov. 15, 1993; 59 FR 36695, July 19, 1994; 62 FR 30225, June 2, 1997; 64 FR 56110, Oct. 15, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 200.926a" NODE="24:2.1.1.1.1.16.37.6" TYPE="SECTION">
<HEAD>§ 200.926a   Residential building code comparison items.</HEAD>
<P>HUD will review each local and State code submitted under this subpart to determine whether it regulates all of the following areas and subareas:
</P>
<P>(a) <I>Fire Safety.</I> (1) Allowable height;
</P>
<P>(2) Fire separations;
</P>
<P>(3) Fire resistance requirements;
</P>
<P>(4) Egress doors and windows;
</P>
<P>(5) Unit smoke detectors;
</P>
<P>(6) Flame spread.
</P>
<P>(b) <I>Light and ventilation.</I> (1) Habitable rooms;
</P>
<P>(2) Bath and toilet rooms.
</P>
<P>(c) <I>Structural loads and seismic design.</I> (1) Design live loads;
</P>
<P>(2) Design dead loads;
</P>
<P>(3) Snow loads (for jurisdictions with snow loading conditions identified in Section 7 of ASCE-7-88 (formerly ANSI A58.1-82); 
</P>
<P>(4) Wind loads;
</P>
<P>(5) Earthquake loads (for jurisdictions in seismic zones 3 or 4, as identified in Section 9 of ASCE-7-88 (formerly ANSI A58.1-82)). 
</P>
<P>(d) <I>Foundation systems.</I> (1) Foundation depths;
</P>
<P>(2) Footings;
</P>
<P>(3) Foundation materials criteria.
</P>
<P>(e) <I>Materials standards.</I> (1) Materials standards.
</P>
<P>(f) <I>Construction components.</I> (1) Steel;
</P>
<P>(2) Masonry;
</P>
<P>(3) Concrete;
</P>
<P>(4) Lumber;
</P>
<P>(5) Roof construction and covering;
</P>
<P>(6) Chimneys and fireplaces.
</P>
<P>(g) <I>Glass.</I> (1) Thickness/area requirements;
</P>
<P>(2) Safety glazing.
</P>
<P>(h) <I>Mechanical.</I> (1) Heating, cooling and ventilation systems;
</P>
<P>(2) Gas, liquid and solid fuel piping and equipment;
</P>
<P>(3) Chimneys and vents;
</P>
<P>(4) Ventilation (air changes).
</P>
<P>(i) <I>Plumbing.</I> (1) Materials standards;
</P>
<P>(2) Sizing and installing drainage systems;
</P>
<P>(3) Vents and venting;
</P>
<P>(4) Traps;
</P>
<P>(5) Cleanouts;
</P>
<P>(6) Plumbing fixtures;
</P>
<P>(7) Water supply and distribution;
</P>
<P>(8) Sewage disposal systems.
</P>
<P>(j) <I>Electrical.</I> (1) Branch circuits;
</P>
<P>(2) Services;
</P>
<P>(3) Grounding;
</P>
<P>(4) Wiring methods;
</P>
<P>(5) Cable;
</P>
<P>(6) Conduit;
</P>
<P>(7) Outlets, switches and junction boxes;
</P>
<P>(8) Panelboards.
</P>
<CITA TYPE="N">[50 FR 39594, Sept. 27, 1985, as amended at 59 FR 36695, July 19, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 200.926b" NODE="24:2.1.1.1.1.16.37.7" TYPE="SECTION">
<HEAD>§ 200.926b   Model codes.</HEAD>
<P>(a) <I>Incorporation by reference.</I> The following model code publications are incorporated by reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. The incorporation by reference of these publications has been approved by the Director of the Federal Register. The locations where copies of these publications are available are set forth below.
</P>
<P>(1) <I>CABO One and Two Family Dwelling Code,</I> 1992 Edition, including the 1993 amendments, but excluding Chapter I—Administrative, and the phrase “or approved fire retardant wood” contained in the exception of paragraph R-218.2.2(2), but including the Appendices A, B, D, and E of the Code. (Available from the Council of American Building Officials, Suite 708, 5203 Leesburg Pike, Falls Church, VA 22041.)
</P>
<P>(2) <I>Electrical Code for One and Two Family Dwellings,</I> NFPA 70A, 1990 Edition, including Tables and Examples. Available from the National Fire Protection Association, Batterymarch Park, Quincy, MA 02269.
</P>
<P>(b) <I>Model code compliance requirements.</I> (1) When a one or two family dwelling is to comply with the model codes set forth in § 200.926b(a), the following requirements of those model codes shall not apply to those properties:
</P>
<P>(i) Those provisions of the model codes that establish energy requirements for one and two family dwellings; and
</P>
<P>(ii) Those provisions of the model codes that require or allow the issuance of permits of any sort.
</P>
<P>(2) Where the model codes set forth in paragraph (a) of this section designate a building, fire, mechanical, plumbing or other official, the Secretary's designee in the HUD Field Office serving the jurisdiction in which the dwelling is to be constructed shall act as such official.
</P>
<P>(c) <I>Designation of Model Codes.</I> When a one or two family dwelling or townhouse is to comply with portions of the model code or the entire model code, the dwelling shall comply with the CABO One and Two Family Dwelling Code 1992 Edition, including the 1993 amendments, or portion thereof as modified by § 200.926e of this part and designated by the HUD Field Office serving a jurisdiction in which a property is located. In addition, the property shall comply with all of the standards which are referenced for any designated portions of the model code, and with the Electrical Code for One and Two Family Dwellings, NFPA 70A/1990.
</P>
<CITA TYPE="N">[50 FR 39594, Sept. 27, 1985, as amended at 58 FR 60249, Nov. 15, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 200.926c" NODE="24:2.1.1.1.1.16.37.8" TYPE="SECTION">
<HEAD>§ 200.926c   Model code provisions for use in partially accepted code jurisdictions.</HEAD>
<P>If a lender or other interested party is notified that a State or local building code has been partially accepted, then the properties eligible for HUD benefits in that jurisdiction shall be constructed in accordance with the applicable State or local building code, plus those additional requirements identified below. Depending upon the major area identified in § 200.926a which is not adequately regulated by the State or local code, the HUD Field Office will designate, in accordance with the schedule below, those portions of one of the model codes with which the property must comply.
</P>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Schedule for Model Code Supplements to Local or State Codes
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Deficient major items from § 200.926a as determined by field office review
</TH><TH class="gpotbl_colhed" scope="col">Portions of the CABO One and Two Family Dwelling Code, 1992 Edition, including the 1993 amendments, with which a property must comply
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">(a) Fire safety</TD><TD align="left" class="gpotbl_cell">Chapters 2, 9; Section R-402.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">(b) Light and ventilation</TD><TD align="left" class="gpotbl_cell">Chapter 2; Section R-309.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">(c) Structural loads and seismic design</TD><TD align="left" class="gpotbl_cell">Chapter 2.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">(d) Foundation systems</TD><TD align="left" class="gpotbl_cell">Chapter 3.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">(e) Materials standards</TD><TD align="left" class="gpotbl_cell">Chapter 26.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">(f) Construction components</TD><TD align="left" class="gpotbl_cell">Part III.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">(g) Glass</TD><TD align="left" class="gpotbl_cell">Chapter 2.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">(h) Mechanical</TD><TD align="left" class="gpotbl_cell">Part IV.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">(i) Plumbing</TD><TD align="left" class="gpotbl_cell">Part V.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">(j) Electrical</TD><TD align="left" class="gpotbl_cell">Electrical code for 1- and 2-family dwellings (NFPA 70A-1990).</TD></TR></TABLE></DIV></DIV>
<CITA TYPE="N">[50 FR 39594, Sept. 27, 1985, as amended at 58 FR 60249, Nov. 15, 1993; 59 FR 36695, July 19, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 200.926d" NODE="24:2.1.1.1.1.16.37.9" TYPE="SECTION">
<HEAD>§ 200.926d   Construction requirements.</HEAD>
<P>(a) <I>Application</I>—(1) <I>General.</I> These standards cover the agency requirements for accessibility to physically handicapped people, variations to standards, real estate entity, trespass and utilities, site conditions, access, site design, streets, dedication of utilities, drainage and flood hazard exposure, special construction and product acceptance, thermal requirements, and water supply systems.
</P>
<P>(2) <I>Requirements for accessibility to physically handicapped people.</I> The HUD Field Office will advise project sponsors as to the extent accessibility will be required for new construction of one- and two-family dwellings on a project-by-project basis.
</P>
<P>(i) <I>Technical standards. See</I> HUD Handbook, 4910.1, Sections 100-1.3b and 100-1.3c.
</P>
<P>(3) <I>Variations to standards</I>—(i) <I>New materials and technologies. See</I> paragraph (d) of this section. Alternatives, nonconventional or innovative methods and materials shall be equivalent to these standards in the areas of structural soundness, durability, economy of maintenance or operation and usability.
</P>
<P>(ii) <I>Variation procedures.</I> Variations from the requirements of any standard with which the Department requires compliance shall be made in the following ways:
</P>
<P>(A) For a particular design or construction method to be used on a single case or project, the decision is the responsibility of the Field Office. Headquarters concurrence is not required.
</P>
<P>(B) Where a variation is intended to be on a repetitive basis, a recommendation for a Local Acceptable Standard, substantiating data, and background information shall be submitted by the Field Office to the Director, Office of Manufactured Housing and Regulatory Functions. 
</P>
<P>(iii) Variances which require individual analysis and decision in each instance are not considered as repetitive variances even though one particular standard is repeatedly the subject of variation. Such variances are covered by paragraph (a)(3)(ii)(A) of this section. 
</P>
<P>(b) <I>General acceptability criteria</I>—(1) <I>Real estate entity.</I> The property shall comprise a single plot except that a primary plot with a secondary plot for an appurtenant garage or for other use contributing to the marketability of the property will be acceptable provided the two plots are in such proximity as to comprise a readily marketable real estate entity. 
</P>
<P>(2) <I>Service and facilities</I>—(i) <I>Trespass.</I> Each living unit shall be one that can be used and maintained individually without trespass upon adjoining properties, except when the windowless wall of a detached dwelling is located on a side lot line. A detached dwelling may be located on a side lot line if: 
</P>
<P>(A) legal provision is made for permanent access for the maintenance of the exterior portion of the lot line wall, and 
</P>
<P>(B) the minimum distances from the dwelling to the dwellings on the abutting properties are not less than the sum of the side yard distances computed as appropriate for the type of opposing walls. (minimum distance 10 ft). 
</P>
<P>(ii) <I>Utilities.</I> Utility services shall be independent for each living unit, except that common services such as water, sewer, gas and electricity may be provided for living units under a single mortgage or ownership. Separate utility service shut-off for each unit shall be provided. For living units under separate ownership, common utility services may be provided from the main to the building line when protected by an easement or covenant and maintenance agreement acceptable to HUD, but shall not pass over, under or through any other living unit. Individual utilities serving a living unit may not pass over, under or through another living unit under the same mortgage unless provision is made for repair and maintenance of utilities without trespass or when protected by an easement or covenant providing permanent access for maintenance and repair of the utilities. Building drain cleanouts shall be accessible from the exterior where a single drain line within the building serves more than one unit. 
</P>
<P>(3) <I>Site conditions.</I> (i) The property shall be free of those foreseeable hazards and adverse conditions which may affect the health and safety of occupants or the structural soundness of the improvements, or which may impair the customary use and enjoyment of the property. The hazards include toxic chemicals, radioactive materials, other pollution, hazardous activities, potential damage from soil or other differential ground movements, ground water, inadequate surface drainage, flood, erosion, or other hazards located on or off site. The site must meet the standards set forth in 24 CFR part 51, and HUD Handbook 4910.1, section 606 for termite and decay protection.
</P>
<P>(ii) When special conditions exist or arise during construction which were unforeseen and which necessitate precautionary or hazard mitigation measures, the HUD Field Office shall require corrective work to mitigate potential adverse effects from the special conditions as necessary. Special conditions include rock formations, unstable soils or slopes, high ground water levels, springs, or other conditions which may adversely affect a property. It shall be the builder's responsibility to ensure proper design, construction and satisfactory performance where these conditions are present.
</P>
<P>(4) <I>Access.</I> (i) Each property shall be provided with vehicular or pedestrian access by a public or private street. Private streets shall be protected by permanent easement.
</P>
<P>(ii) Each living unit shall have a means of access such that it is unnecessary to pass through any other living unit.
</P>
<P>(iii) The rear yard shall be accessible without passing through any other living unit.
</P>
<P>(iv) For a townhouse type dwelling, access to the rear yard may be by means of alley, easement, passage through the dwelling, or other means acceptable to the HUD Field Office.
</P>
<P>(c) <I>Site design</I>—(1) <I>General.</I> (i) A site design shall be provided which includes an arrangement of all site facilities necessary to create a safe, functional, healthful, durable and energy efficient living environment.
</P>
<P>(ii) With the exception of paragraph (c)(4) of this section, these site design standards apply only in communities that have not adopted criteria for site development applicable to one and two family dwellings.
</P>
<P>(iii) Single family detached houses situated on individual lots located on existing streets with utilities need not comply with the requirements of paragraphs (c)(2) and (c)(3) of this section.
</P>
<P>(2) <I>Streets.</I> (i) Existing or proposed streets on the site shall connect to private or public streets and shall provide all-weather access to all buildings for essential and emergency use, including access needed for deliveries, service, maintenance and fire equipment.
</P>
<P>(ii) Streets shall be designed for dedication for public use and maintenance or, when approved by the HUD Field Office, may be retained as private streets where protected by permanent easements.
</P>
<P>(3) <I>Dedication.</I> Utilities shall be located to permit dedication to the local government or appropriate public body.
</P>
<P>(4) <I>Drainage and flood hazard exposure</I>—(i) <I>Residential structures located in Special Flood Hazard Areas.</I> The elevation of the lowest floor (including basements and other permanent enclosures) shall be at least two feet above the base flood elevation (see 24 CFR 55.8(b) for appropriate data sources).
</P>
<P>(ii) <I>Residential structures located in FEMA-designated “coastal high hazard areas.”</I> Where FEMA has determined the base flood level without establishing stillwater elevations, the bottom of the lowest structural member of the lowest floor (excluding pilings and columns) and its horizontal supports shall be at least two feet above the base flood elevation.
</P>
<P>(iii) <I>New construction.</I> (A) In all cases in which a Direct Endorsement (DE) mortgagee or a Lender Insurance (LI) mortgagee seeks to insure a mortgage on a one- to four-family dwelling that is newly constructed (including a newly erected manufactured home) that was processed by the DE or LI mortgagee, the DE or LI mortgagee must determine whether the property improvements (dwelling and related structures/equipment essential to the value of the property and subject to flood damage) are located on a site that is within a Special Flood Hazard Area, as designated on maps of the Federal Emergency Management Agency. If so, the DE mortgagee, before submitting the application for insurance to HUD, or the LI mortgagee, before submitting all the required data regarding the mortgage to HUD, must obtain:
</P>
<P>(<I>1</I>) A final Letter of Map Amendment (LOMA);
</P>
<P>(<I>2</I>) A final Letter of Map Revision (LOMR); or
</P>
<P>(<I>3</I>) A signed Elevation Certificate documenting that the lowest floor (including basements and other permanent enclosures) of the property improvements is at least two feet above the base flood elevation as determined by FEMA's best available information (or documenting that the lowest floor meets HUD's elevation standard for newly erected manufactured housing in 24 CFR 203.43f or 24 CFR part 3285, as applicable).
</P>
<P>(B) Under the DE program, these mortgages are not eligible for insurance unless the DE mortgagee submits the LOMA, LOMR, or Elevation Certificate to HUD with the mortgagee's request for endorsement. 
</P>
<P>(iv) <I>Streets.</I> Streets must be usable during runoff equivalent to a 10-year return frequency. Where drainage outfall is inadequate to prevent runoff equivalent to a 10-year return frequency from ponding over 6 inches deep, streets must be made passable for commonly used emergency vehicles during runoff equivalent to a 25-year return frequency, except where an alternative access street not subject to such ponding is available. 
</P>
<P>(v) <I>Crawl spaces.</I> Crawl spaces must not pond water or be subject to prolonged dampness. 
</P>
<P>(d) <I>Special construction and product acceptance</I>—(1) <I>Structural features of factory produced (modular or panelized) housing or components.</I>
</P>
<P>(i) For factory fabricated systems or components, HUD Handbook 4950.1, “Technical Suitability of Products Program Technical and Processing Procedures” shall apply.
</P>
<P>(ii) The requirements of this part shall apply to structural features, consisting of factory fabricated systems or components assembled either at the factory or at the construction site, if the total construction is covered by these standards and can be inspected on-site for determination of compliance.
</P>
<P>(2) <I>Non-structural or non-standard features.</I> These features include methods of construction, systems, sub-systems, components, materials and processes which are not covered by these requirements. <I>See</I> HUD Handbook 4950.1 for procedures to be followed in order to obtain acceptance of non-structural components or materials. <I>See</I> HUD Handbook 4910.1, appendix F for a list of Use of Materials Bulletins. Products and methods shall conform to the appropriate Use of Materials Bulletin.
</P>
<P>(3) <I>Standard Features.</I> These features include methods of construction, systems, sub-systems, components, materials and processes which are covered by national society or industry standards. For a list of standards and practices to which compliance is required, see HUD Handbook 4910.1, Appendix C and Appendices E and F, available from HUD, 451 Seventh Street, SW., Attention: Mailroom B-133, Washington, DC 20410. 
</P>
<P>(e) <I>Energy efficiency.</I> All detached one- and two-family dwellings and one-family townhouses not more than three stories in height shall comply with the CABO Model Energy Code, 1992 Edition, Residential Buildings, except for Sections 101.3.1, 101.3.2, 104, and 105, but Section 101.3.2.2, Historic Buildings, shall remain, and including the Appendix, and HUD intermediate MPS Supplement 4930.2 Solar Heating and Domestic Hot Water Systems, 1989 edition. 
</P>
<P>(f) <I>Water supply systems</I>—(1) <I>General.</I> (i) Each living unit shall be provided with a continuing and sufficient supply of safe water under adequate pressure and of appropriate quality for all household uses. Newly constructed residential property for which a building permit has been applied for on or after June 19, 1988 from the competent authority with jurisdiction in this matter shall have lead-free water piping. For purposes of these standards, water piping is “lead free” if it uses solders and flux containing not more than 0.2 percent lead and pipes and pipe fittings containing not more than 8.0 percent lead. This system shall not impair the function or durability of the plumbing system or attachments.
</P>
<P>(ii) The chemical and bacteriological standards of the local health authority shall apply. In the absence of such standards, those of the appropriate State agency shall apply. A water analysis may be required by either the health authority or the HUD Field Office.
</P>
<P>(iii) Whenever feasible, connection shall be made to a public water system. When a public system is not available, connection shall be made to a community system which complies with HUD Handbook 4940.2, if feasible.
</P>
<P>(2) <I>Individual water systems.</I> (i) The system should be capable of delivering a flow of 5 gpm over at least a 4 hour period.
</P>
<P>(ii) The chemical and bacteriological standards of the local health authority shall apply. In the absence of such standards, those of the appropriate State agency shall apply. A water analysis may be required by either the health authority or the HUD Field Office. 
</P>
<P>(iii) After installation, the system shall be disinfected in accordance with the recommendations or requirements of the local health authority. In the absence of a health authority, system cleaning and disinfection shall conform to the current EPA Manual of Individual Water Supply Systems.
</P>
<P>(iv) Bacteriological or chemical examination of a water sample collected by a representative of the local or state health authority shall be made when required by that authority or the HUD Field Office.
</P>
<P>(3) <I>Location of wells.</I> (i) A well located within the foundation walls of a dwelling is not acceptable except in arctic or subarctic regions.
</P>
<P>(ii) Water which comes from any soil formation which may be polluted, contaminated, fissured, creviced or less than 20 ft. below the natural ground surface is not acceptable, unless acceptable to the local health authority.
</P>
<P>(iii) Individual water supply systems are not acceptable for individual lots in areas where chemical soil poisoning has been or is practiced if the overburden of soil between the ground surface and the water bearing strata is coarse grained sand, gravel, or porous rock, or is creviced in a manner which will permit the recharge water to carry the toxicants into the zone of saturation.
</P>
<P>(iv) The following table shall be used in establishing the minimum acceptable distances between wells and sources of pollution located on either the same or adjoining lots. These distances may be increased by either the health authority having jurisdiction or the HUD Field Office.
</P>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Distance From Source of Pollution
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Source of pollution 
</TH><TH class="gpotbl_colhed" scope="col">Minimum
<br/>horizontal
<br/>distance (feet) 
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Property Line</TD><TD align="right" class="gpotbl_cell">10 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Septic Tank</TD><TD align="right" class="gpotbl_cell">50 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Absorption Field</TD><TD align="right" class="gpotbl_cell">
<sup>1</sup> 100 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Seepage Pit</TD><TD align="right" class="gpotbl_cell">
<sup>1</sup> 100 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Absorption Bed</TD><TD align="right" class="gpotbl_cell">
<sup>1</sup> 100 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Sewer Lines w/Permanent Watertight Joints</TD><TD align="right" class="gpotbl_cell">10 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Other Sewer Lines</TD><TD align="right" class="gpotbl_cell">50 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Chemically Poisoned Soil</TD><TD align="right" class="gpotbl_cell">
<sup>3</sup> 25 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Dry Well</TD><TD align="right" class="gpotbl_cell">50 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Other</TD><TD align="right" class="gpotbl_cell">(
<sup>2</sup>) 
</TD></TR></TABLE></DIV><DIV class="table_foot"><P class="gpotbl_note">
<sup>1</sup> This clearance may be increased or decreased depending upon soil and rock penetrated by the well and aquifer conditions. The clearance may be increased in creviced limestone and permeable strata of gravel and sand. The clearance may be reduced to 50 ft. only where the ground surface is effectively separated from the water bearing formation by an extensive, continuous and impervious strata of clay, hardpan, or rock. The well shall be constructed so as to prevent the entrance of surface water and contaminants.
</P><P class="gpotbl_note">
<sup>2</sup> The recommendations or requirements of the local health authority shall apply. 
</P><P class="gpotbl_note">
<sup>3</sup> This clearance may be reduced to 15 feet only where the ground surface is effectively separated from the water bearing formation by an extensive, continuous and impervious strata of clay, hardpan, or rock.</P></DIV></DIV>
<P>(4) <I>Well construction.</I> (i) The well shall be constructed so as to allow the pump to be easily placed and to function properly. 
</P>
<P>(ii)(A) All drilled wells shall be provided with a sound, durable and watertight casing capable of sustaining the loads imposed. 
</P>
<P>(B) The casing shall extend from a point several feet below the water level at drawdown or from an impervious strata above the water level to 12 in. above either the ground surface or the pump room floor. The casing shall be sealed at the upper opening to a depth of at least 15 feet. 
</P>
<P>(iii) Bored wells shall be lined with concrete, vitrified clay or equivalent materials. 
</P>
<P>(iv) The space between the casing or liner and the wall of the well hole shall be sealed with cement grout. 
</P>
<P>(v) The well casing shall not be used to convey water except under positive pressure. A separate drop pipe shall be used for the suction line. 
</P>
<P>(vi) When sand or silt is encountered in the water-bearing formation, the well shall either be compacted and gravel packed, or a removable strainer or screen shall be installed. 
</P>
<P>(vii) The surface of the ground above and around the well shall be compacted and graded to drain surface water away from the well. 
</P>
<P>(viii) Openings in the casing, cap, or concrete cover for the entrance of pipes, pumps or manholes shall be watertight. 
</P>
<P>(ix) If a breather is provided, it shall extend above the highest level to which surface water may rise. The breather shall be watertight, and the open end shall be screened and positioned to prevent entry of dust, insects and foreign objects. 
</P>
<P>(5) <I>Pump and equipment.</I> (i) Pumps shall be capable of delivering the volume of water required under normal operating pressure within the living unit. Pump capacity shall not exceed the output of the well. 
</P>
<P>(ii) Pumps and equipment shall be mounted to be free of objectionable noises, vibrations, flooding, pollution, and freezing. 
</P>
<P>(iii) Suction lines shall terminate below maximum drawdown of the water level in the well. 
</P>
<P>(iv) Horizontal segments of suction line shall be placed below the frost line in a sealed casing pipe or in at least 4 in. of concrete. The distance from suction line to sources of pollution shall be not less than shown in the table at paragraph (f)(3)(iv) of this section. 
</P>
<P>(6) <I>Storage tanks.</I> (i) A pressure tank having a minimum capacity of 42 gallons shall be provided. However, prepressured tanks and other pressurizing devices are acceptable provided that delivery between pump cycles equals or exceeds that of a 42 gallon tank. 
</P>
<P>(ii) Tanks shall be equipped with a clean-out plug at the lowest point, and a suitable pressure relief valve. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0474)
</APPRO>
<CITA TYPE="N">[50 FR 39594, Sept. 27, 1985, as amended at 53 FR 11271, Apr. 6, 1988; 56 FR 5350, Feb. 11, 1991; 57 FR 9609, Mar. 19, 1992; 57 FR 27927, June 23, 1992; 58 FR 41337, Aug. 3, 1993; 58 FR 60249, Nov. 15, 1993; 59 FR 19112, Apr. 21, 1994; 62 FR 30225, June 2, 1997; 64 FR 56110, Oct. 15, 1999; 89 FR 30913, Apr. 23, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 200.926e" NODE="24:2.1.1.1.1.16.37.10" TYPE="SECTION">
<HEAD>§ 200.926e   Supplemental information for use with the CABO One and Two Family Dwelling Code.</HEAD>
<P>The following shall be used in Table No. R-202, Climatic and Geographic Design Criteria of the CABO One and Two Family Dwelling Code. 
</P>
<P>(a) <I>Roof live loads.</I>
</P>
<EXTRACT>
<FP-1>Roof slope 3 in 12 or less: 20 psf 
</FP-1>
<FP-1>Roof slope over 3 in 12: 15 psf 
</FP-1>
<FP-1>Roof used as deck: 40 psf</FP-1></EXTRACT>
<P>(b) <I>Roof snow load.</I> The roof snow load shall be in accordance with section 7 of ASCE 7-88. 
</P>
<P>(c) <I>Wind pressures.</I> The minimum Design Wind Pressures (net pressures) set forth below apply to areas designated as experiencing basic wind speeds up to and including 80 mph, as shown in ASCE 7-88, Figure 1, Basic Wind Speed Map. These pressures also apply to buildings not over 30 ft. in height above finish grade, assuming exposure C or defined in ASCE 7-88. 
</P>
<P>(1) <I>Minimum design wind pressure criteria.</I> (i) Buildings (for overturning racking or sliding); p = 20 psf. 
</P>
<P>(ii) Chimneys, p = 30 psf. 
</P>
<P>(iii) Exterior walls, p = 15 psf inward or outward. Local pressure at corners of walls shall be not less than p = 30 psf outward. These local pressures shall not be included with the design pressure when computing overall loads. The pressures shall be applied perpendicularly outward on strips of width equal to 10 percent of the least width of building. 
</P>
<P>(iv) Partitions, p = 10 psf. 
</P>
<P>(v) Windows, p = 20 psf inward or outward. 
</P>
<P>(vi) Roof, p = 20 psf inward or outward. 
</P>
<FP>Roofs with slopes greater than 6 in 12 shall be designed to withstand pressures acting inward normal to the surface, equal to the design wind pressure for exterior walls. Overhanging eaves, cornices, and ridges, 40 psf upward normal to roof surface. These local pressures shall not be included with the design pressure when computing overall loads. The pressures shall be applied perpendicularly outward on strips of width equal to 10 percent of the least width of building. Net uplift on horizontal projection of roof shall not be less than 12 psf.
</FP>
<P>(2) <I>Severe wind design pressures.</I> If the construction is higher than 30 ft., or if it is located in an area experiencing wind speeds greater than 80 mph, higher design wind pressures than shown above are required. Use Section 6 of ASCE 7-88 for higher criteria and for determining where wind speeds greater than 80 mph occur. Pressures are assumed to act horizontally on the gross area of the vertical projection of the structure except as noted for roof design.
</P>
<P>(d) Seismic conditions shall be in accordance with Section 9 of ASCE 7-88.
</P>
<P>(e) <I>Subject to damage from: weathering.</I> A jurisdiction's weathering region shall be as established by the map in ASTM C 62-83.
</P>
<P>(f) <I>Subject to damage from: frost line depth.</I> Exterior wall footings or foundation walls including those of accessory buildings shall extend a minimum of 6 in. below the finished grade and, where applicable, the prevailing frost line.
</P>
<P>(g) <I>Subject to damage from: termites.</I> “Yes” shall be used in locations designated as Regions I, II or III. “No” shall be used in locations designated as Region IV. The map for Termite Infestation Probability in appendix A of CABO, One and Two Family Dwelling Code shall be used to determine the jurisdiction's region.
</P>
<P>(h) <I>Subject to damage from: decay.</I> “Yes” shall be used in locations designated as moderate to severe and slight to moderate. “No” shall be used in locations designated as none to slight. The Decay Probability map in appendix A of CABO, One and Two Family Dwelling Code shall be used to determine the jurisdiction's decay designation.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0338)
</APPRO>
<CITA TYPE="N">[50 FR 39599, Sept. 27, 1985, as amended at 59 FR 36695, July 19, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 200.927" NODE="24:2.1.1.1.1.16.37.11" TYPE="SECTION">
<HEAD>§ 200.927   Incorporation by reference of minimum property standards.</HEAD>
<P>The Minimum Property Standards as contained in the handbooks identified in § 200.929(b) are incorporated by reference into this section as though set forth in full in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. 
</P>
<CITA TYPE="N">[50 FR 39592, Sept. 29, 1985]


</CITA>
</DIV8>


<DIV8 N="§ 200.929" NODE="24:2.1.1.1.1.16.37.12" TYPE="SECTION">
<HEAD>§ 200.929   Description and identification of minimum property standards.</HEAD>
<P>(a) <I>Description.</I> The Minimum Property Standards describe physical standards for housing. They are intended to provide a sound basis for determining the acceptability of housing built under the HUD mortgage insurance and low-rent public housing programs. The Minimum Property Standards refer to material standards developed by industry and accepted by HUD. In addition, under Section 521 of the National Housing Act, HUD adopts its own technical suitability standards for materials and products for which there are no industry standards acceptable to HUD. These standards are contained in Use of Materials Bulletins that apply to products and methods and Materials Releases that apply to specific materials. Use of Materials Bulletins and Materials Releases are addenda to the Minimum Property Standards. Unless otherwise stated, the current edition, issue, or version of each of these documents, as available from its source, is applicable to this subpart S. A list of the Use of Materials Bulletins, Materials Releases, and MPS Appendix listing the applicable referenced Standards may be obtained from the Construction Standards Division, Office of Manufactured Housing and Construction Standards, room 6170 Department of Housing and Urban Development, 451 7th Street, SW, Washington, DC 20410.
</P>
<P>(b) <I>Identification.</I> The Minimum Property Standards have been published as described below: 
</P>
<P>(1) MPS for One and Two Family Dwellings. <I>See</I> §§ 200.926, 200.926 (a) through (e). 
</P>
<P>(2) MPS for Housing 4910.1, 1994 edition. This volume applies to buildings and sites designed and used for normal multifamily occupancy, including both unsubsidized and subsidized insured housing, and to care-type housing insured under the National Housing Act. It also includes, in Appendix K, a reprint of the MPS for One and Two Family Dwellings identified in paragraph (b)(1) of this section.
</P>
<CITA TYPE="N">[39 FR 26895, July 24, 1974, as amended at 42 FR 33890, July 1, 1977; 47 FR 29524, July 7, 1982; 47 FR 35761, Aug. 17, 1982; 49 FR 18695, May 1, 1984; 50 FR 39592, Sept. 29, 1985; 51 FR 28699, Aug. 11, 1986; 58 FR 60250, Nov. 15, 1993; 63 FR 5423, Feb. 2, 1998]


</CITA>
</DIV8>


<DIV8 N="§ 200.929a" NODE="24:2.1.1.1.1.16.37.13" TYPE="SECTION">
<HEAD>§ 200.929a   Fair Housing Accessibility Guidelines.</HEAD>
<P>Builders and developers may use the Department's Fair Housing Accessibility Guideline when designing or constructing covered multifamily dwelling units in order to comply with the Fair Housing Act. The Guidelines may be found in the 24 CFR Chapter I, Subchapter A, Appendix II, titled Fair Housing Accessibility Guidelines—Design Guidelines for Accessible/Adaptable Dwellings.
</P>
<CITA TYPE="N">[58 FR 60250, Nov. 15, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 200.931" NODE="24:2.1.1.1.1.16.37.14" TYPE="SECTION">
<HEAD>§ 200.931   Statement of availability.</HEAD>
<P>(a) Updated copies of the Minimum Property Standards and Use of Materials Bulletins are available for public examination in the Office of Consumer and Regulatory Affairs, Department of Housing and Urban Development, room 9156, 451 Seventh St. SW., Washington, D.C. 20410-8000. In addition, copies of volumes 1, 2, and 3 of the Minimum Property Standards may be purchased from the U.S. Government Printing Office, Washington, D.C. 20402.
</P>
<P>(b) Publications approved by the Director of the Federal Register for incorporation by reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51 are available for inspection at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: <I>http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.</I> 
</P>
<CITA TYPE="N">[63 FR 5423, Feb. 2, 1998]


</CITA>
</DIV8>


<DIV8 N="§ 200.933" NODE="24:2.1.1.1.1.16.37.15" TYPE="SECTION">
<HEAD>§ 200.933   Changes in minimum property standards.</HEAD>
<P>Changes in the Minimum Property Standards will generally be made every three years. Changes will be made in accordance with HUD policy for the adoption of rules and regulations set forth in part 10 of this title. Notice of such changes will be published in the <E T="04">Federal Register.</E> As the changes are made, they will be incorporated into the volumes of the Minimum Property Standards to which they apply. The volumes available for public examination and for purchase will contain all changes up to the date of examination or purchase. An official, historic file of such changes will be available in the office of the Rules Docket Clerk in the HUD Central Office in Washington, DC, and in each HUD Regional, Area, and Insuring Office. A similar copy of the standards will also be maintained in the Office of the Federal Register, Washington, DC.
</P>
<CITA TYPE="N">[39 FR 26895, July 24, 1974, as amended at 58 FR 60250, Nov. 15, 1993] 


</CITA>
</DIV8>


<DIV8 N="§ 200.934" NODE="24:2.1.1.1.1.16.37.16" TYPE="SECTION">
<HEAD>§ 200.934   User fee system for the technical suitability of products program.</HEAD>
<P>(a) <I>General.</I> This section establishes fee requirements for the issuance of Structural Engineering Bulletins (SEBs), Mechanical Engineering Bulletins (MEBs), Truss Connector Bulletins (TCBs), Area Letters of Acceptance (ALAs), Materials Releases (MRs), and review of program administrator applications submitted pursuant to § 200.935 of this title.
</P>
<P>(b) <I>Filing address</I>—(1) <I>Applications containing payment.</I> When applications for or correspondence concerning SEBs, MEBs, TCBs, MRs, or program administrator approval contain payment, such applications or correspondence shall be sent to the following address: 
</P>
<EXTRACT>
<FP-1>U.S. Department of Housing and Urban Development, Technical Suitability of Product Fees, P.O. Box 954199, St. Louis, MO. 63195-4199.</FP-1></EXTRACT>
<P>(2) <I>Other correspondence.</I> All other correspondence concerning SEBs, MEBs, TCBs, MRs, and program administrator acceptance shall be sent to the following address:
</P>
<EXTRACT>
<FP-1>Manufactured Housing and Construction Standards Division, Department of Housing and Urban Development, 451 Seventh Street, SW., Attn: Mail Room B-133, Washington, DC 20410.</FP-1></EXTRACT>
<P>(3) <I>Application for ALAs.</I> Applications for or correspondence concerning ALAs shall be submitted to the Housing Division of the field office having jurisdiction over the area in which the production facility of the system is located, except that applications containing payment shall be addressed to the attention of the Collection Officer for deposit to Account No. 86-09-0300.
</P>
<P>(c) <I>Fees.</I> Applicants for renewal and applicants for acceptance as program administrators under § 200.935 of this title shall include the entire processing fee with the application. All other applicants shall submit one half of the required processing fee with each application. The applicant shall pay the balance when the draft issuance is returned to HUD with the applicant's concurrence signature. The Department will not prepare a final document for printing and distribution until it has received the full processing fee. From time to time, as may be necessary, the Department will establish and amend the fee schedule by publication of a Notice in the <E T="04">Federal Register.</E>
</P>
<P>(d) <I>Initial application and review</I>—(1) <I>Content of applications.</I> Each application shall include only one item. All applications will be promptly processed on receipt by the Department.
</P>
<P>(i) With respect to Mechanical Engineering Bulletins (MEBs), Structural Engineering Bulletins (SEBs), Truss Connector Bulletins (TCBs), and Area Letters of Acceptance (ALAs), each structural design shall constitute a different item.
</P>
<P>(ii) With respect to Materials Releases (MRs), each product or system shall constitute a different item.
</P>
<P>(2) <I>Revisions.</I> A recipient of a technical suitability document issued by the Department may apply for revision of that document at any time. The revision may be in the form of an amendment of or supplement to the document, for which the recipient will be charged the applicable revision fee. However, where the Department determines that a proposed revision constitutes a different item, the schedule of fees for initial applications shall apply.
</P>
<P>(3) <I>Renewals.</I> Each issuance shall be valid for a period of three years from the date of initial issuance or most recent renewal, whichever is later. An applicant shall submit an application for renewal with the entire required fee three months before the expiration of the three-year period. Failure to submit a timely renewal application along with the required fee shall constitute a basis for cancellation of the issuance.
</P>
<P>(4) <I>Initial and revision applications requiring further study or additional data.</I> In its discretion, the Department may request an applicant to submit additional data or to conduct further study to supplement or clarify an initial application or an application for revision of a previously issued technical suitability document. If the applicant fails to comply with the Department's request within ninety days of the date of that request or within such longer time as may be specified by the Secretary, the Department will return the application to the applicant. The Department will not refund any fees paid toward an application returned under this paragraph. The application will be considered further only if it is resubmitted along with payment of the full fee as required by these regulations.
</P>
<P>(5) <I>Ineligible applications.</I> If the Secretary determines that an application or request will not be considered because it is not eligible for issuance of a technical suitability document, the Department will promptly return the application or request, refund any fees paid, and explain why the application or request is ineligible.
</P>
<P>(6) <I>Cancellation of a technical suitability document.</I> If the Department determines that (i) the conditions under which a technical suitability document was issued have so changed as to affect the production of, or to compromise the integrity of, the material, product, or system approved thereby, or (ii) that the producer has changed its organizational form without notifying HUD, or (iii) that the producer is not complying with the responsibilities it assumed as a condition of HUD's acceptance of its material, product or system, the Department will notify the producer or manufacturer that the technical suitability document may be cancelled. However, before cancelling a technical suitability document, the Department will give the manufacturer reasonable notice in writing of the specific reasons therefore and an opportunity to present its views on why the technical suitability document should not be cancelled. No refund of fees will be made on a cancelled document.
</P>
<P>(e) <I>Identification.</I> (1) Applications for issuance of a MEB, SEB, TCB, or MR submitted to HUD Headquarters will be identified with a case number. The applicant will be notified of the case number when receipt of the application is acknowledged. Thereafter, the case number will be used on all correspondence relating to the application. When a final draft of a new document is prepared for publication and distribution, a bulletin or release number will be assigned to the new issuance.
</P>
<P>(2) In the case of an application for an ALA submitted to a field office, the application will be processed in accordance with the identification and processing procedures established by the responsible field office. The field office will notify the applicant of receipt of the application and inform the applicant of the procedures that will be followed with respect to the issuance of an ALA.
</P>
<APPRO TYPE="N">(Information collection requirements in paragraphs (b), (c), (d)(1), (2), (3) and (4) were approved by the Office of Management and Budget under control number 2502-0313)
</APPRO>
<CITA TYPE="N">[49 FR 31856, Aug. 9, 1984, as amended at 58 FR 60250, Nov. 15, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 200.935" NODE="24:2.1.1.1.1.16.37.17" TYPE="SECTION">
<HEAD>§ 200.935   Administrator qualifications and procedures for HUD building products certification programs.</HEAD>
<P>(a) <I>General.</I> This section establishes administrator qualifications and procedures for the HUD Building Products Certification Programs under section 521 of the National Housing Act and the HUD Minimum Property Standards. Under these programs organizations acceptable to HUD validate manufacturers' certifications that certain building products or materials meet applicable standards. HUD may decide to implement a certification program for a particular building product or material for a variety of reasons, such as when deemed necessary by HUD to facilitate the introduction of new and innovative products or materials; or in response to reports of fraud or misrepresentation by manufacturers in advertising that their product or materials comply with a standard. 
</P>
<P>(b) <I>Definitions</I>—(1) <I>Certification program (“program”).</I> The procedure under which accepted administrators validate manufacturers' certifications that particular building products or materials meet applicable HUD standards. A separate program is used to validate certifications for each particular product or material for which HUD requires certifications. 
</P>
<P>(2) <I>Program administrator (“administrator”).</I> An organization which conducts the program validating the manufacturer's certification that a particular building product or material meets applicable HUD standards. 
</P>
<P>(c) <I>Administrator qualifications and application procedures</I>—(1) <I>Qualifications.</I> Each program administrator shall be capable of conducting a certification program with respect to organization, staff and facilities, and have a reputation for adhering to high ethical standards. To be considered acceptable for conducting a certification program, each administrator shall:
</P>
<P>(i) Be a technically qualified organization with past experience in the administration of certification programs. The certification program(s) shall be under the supervision of a qualified professional with six years of experience in interpreting testing standards, test methods, evaluating test reports and quality control programs. Each administrator is responsible for staffing the program with qualified professional personnel with experience in interpreting testing standards, test methods, evaluating test reports and quality control programs. The staff shall be adequate to service all aspects of the program.
</P>
<P>(ii) Have field inspectors trained to make selections of materials for testing from manufacturer's stock or from distributors' establishments and to conduct product compliance inspections. Such inspectors must be trained and experienced in evaluating manufacturer's quality control records to ascertain with a reasonable degree of assurance that continuing production remains in compliance with the applicable standard set forth in the Use of Materials (UM) Bulletin. When inspectors are used to evaluate laboratory operations, they shall be qualified and under the supervision of the administrator. They shall be knowledgeable in such areas as test methods, quality control, testing techniques, and instrument calibration. 
</P>
<P>(iii) Have facilities and capabilities for communications with manufacturers, laboratories, and HUD, including publication of a directory of certified products and a list of accredited laboratories, if required by the program. 
</P>
<P>(iv) Have adequate policies and practices for preserving information entrusted to its care. HUD reserves the right to review all technical records related to the program for the purpose of monitoring. 
</P>
<P>(v) Have a copy of all applicable standards, test methods and related information necessary to carry out the program. 
</P>
<P>(vi) Have a registered or pending certification mark at the United States Patent Office and be willing to license, on a uniform basis, the use of that mark by manufacturers as a validation of the manufacturer's certification that the product complies with the applicable standard. 
</P>
<P>(2) <I>Applications procedures.</I> Any organization desiring HUD acceptance as a qualified administrator to conduct a certification program shall make application in writing to the Director, Office of Architecture and Engineering Standards. The application shall state the particular certification program for which acceptance is requested and include information indicating compliance with each of the qualification requirements by number and subsection. Attached to the application shall be:
</P>
<P>(i) A list of certification programs in which the organization is participating or has participated and the types of participation (sponsor, administrator, testing laboratory, etc.). 
</P>
<P>(ii) A procedural guide used in one of these programs. 
</P>
<P>(iii) A directory or listing used in one of these programs. 
</P>
<P>(iv) A reproduction or facsimile of the organization's registered or pending mark. 
</P>
<P>(v) A proposed procedural guide for the particular certification program. HUD certification program procedures described in paragraph (d) of this section shall be followed. 
</P>
<P>(3) <I>Acceptance.</I> HUD shall review each submission and notify the applicant whether or not they are accepted or rejected. HUD shall be notified immediately of any change(s) in the administrator's submission regarding program procedures and/or major personnel associated with the program. HUD reserves the right to suspend or debar an administrator in accordance with 2 CFR part 2424. 
</P>
<P>(d) <I>HUD building products certification procedures</I>—(1) <I>Certification program development.</I> Certification program development by an administrator shall be based upon the procedures and standards for the specific building product described in a Use of Materials Bulletin or a Materials Release. 
</P>
<P>(2) <I>License agreement.</I> Each administrator shall have a written license agreement with each participating manufacturer binding each to the provisions of the specific program and authorizing the manufacturer to use the administrator's mark, seal, or label on its products. The administrator shall have the right to terminate any agreement prior to an expiration date, for example, if there has been a breach of the requirement of the certification program by the manufacturer. 
</P>
<P>(3) <I>Laboratory approval.</I> The administrator shall review laboratories that apply for participation in this program on the basis of the procedures described in paragraph (e) of this section. A list of approved laboratories shall be maintained by the administrator. When the certification program allows the use of the administrator's testing laboratories, the laboratories shall be reviewed by a qualified party acceptable to HUD. As accreditation procedures are made available through the National Voluntary Laboratory Accreditation Program (NVLAP) for specific products, HUD may require such accreditation. 
</P>
<P>(4) <I>Initial testing and quality control review</I>—(i) <I>Initial testing.</I> Each participating manufacturer shall submit to the appropriate administrator, the product(s) specification and statement(s) that the product complies with the applicable standard. The administrator shall select samples of the product(s), or when HUD specifies as acceptable, a prototype. The particular method of sample selection shall be determined by HUD for each specific product certification program. Other methods of initial sample selection may be used if deemed necessary. If a failure occurs on the initial tests, additional sampling and testing may be done at the manufacturer's request. The administrator's validation of the manufacturer's declaration of certification shall be withheld until a finding of compliance is achieved. 
</P>
<P>(ii) <I>Quality assurance system review.</I> (A) Each administrator shall examine a participating manufacturer's facilities and quality assurance system procedures to determine that they are adequate to assure continuing production of the product that complies with the applicable standard. These quality assurance system procedures shall be documented in the administrator's and the manufacturer's files. If a manufacturer's quality assurance system is not satisfactory to the administrator, validation of the manufacturer's declaration of certification shall be withheld. The following American Society for Quality Control (ASQC) standards, which are incorporated by reference, may be used as guidelines in any quality assurance review:
</P>
<P>(<I>1</I>) ASQC Q9000-1-1994 Quality Management and Quality Assurance Standards Guidelines for Selection and Use;
</P>
<P>(<I>2</I>) ASQC Q9001-1994 Quality Systems—Model for Quality Assurance in Design, Development, Production, Installation, and Servicing;
</P>
<P>(<I>3</I>) ASQC Q9002-1994 Quality Systems—Model for Quality Assurance in Production, Installation, and Servicing;
</P>
<P>(<I>4</I>) ASQC Q9003-1994 Quality Systems—Model for Quality Assurance in Final Inspection and Test;
</P>
<P>(<I>5</I>) ASQC Q9004-1-1994 Quality Management and Quality System Elements-Guidelines.
</P>
<P>(B) These standards have been approved by the Director of the Federal Register for incorporation by reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. They are available from the American Society for Quality Control (ASQC), 611 East Wisconsin Avenue, Milwaukee, WI 53202.
</P>
<P>(5) <I>Notice of validation.</I> When initial testing, quality control review, and evaluation of other technical data are satisfactory to the administrator, a Notice of Validation or Certification shall be issued to the manufacturer. This allows the use of the administrator's registered mark on the product label. 
</P>
<P>(6) <I>Labeling.</I> Each administrator shall issue to the manufacturer labels, tags, marks containing the administrator's validation mark, and the manufacturer's certification of compliance with the applicable standard. The registered administrator's (validator's) mark shall be on the label. A sponsor's (association, testing agencies, society or others) mark may be used in addition to the administrator's mark. The manufacturer's certification of compliance to the standard may be coded. Additional information such as type, grade, class, etc., may also be coded. When coding is used, the code shall be described in the directory or listing. 
</P>
<P>(7) <I>Directory or listing.</I> When required by the program, the administrator shall publish a directory or listing for all certified products. The directory shall list the items described in paragraph (d)(6) of this section. The directly shall also carry a complete list of approved laboratories and shall be updated to reflect additions or deletions of certified products and laboratories. Directories or listings shall be published periodically as described in the specific program. Each administrator shall make a complimentary distribution of the directory or listing to the HUD Field Offices and other government agencies designated by HUD. A subscription fee may be charged to others requesting copies. 
</P>
<P>(8) <I>Periodic tests and quality control inspections.</I> Samples of the certified product or prototype shall be selected periodically from the plant, warehouse inventory or sales points. The samples shall be sent to an administrator-approved laboratory and tested in accordance with the applicable standard. The frequency of testing shall be described in the specific building product program. The administrator shall periodically visit the manufacturer's facility to assure that the initially accepted quality control procedures are being followed. 
</P>
<P>(9) <I>Product decertification.</I> If a failure should occur in any test, the laboratory shall notify the administrator and the manufacturer. The manufacturer shall notify the administrator if a retest if requested. If a retest is not requested, validation shall be withdrawn. If the manufacturer requests a retest, the administrator shall select new samples and submit them to the same or another laboratory at the manufacturer's expense, for retest of only the test requirement(s) in which the failure(s) occurred. If the specified number of specimens pass the retest, the product can continue to be validated and listed. If the designated number of specimens described in the UM Bulletin fail, the administrator shall decertify the product. The manufacturer may request that a new selection be made of the product after correction or modifications and be subjected to the initial acceptance testing procedure or to a program of retesting established by the administrator. The administrator may decertify the product on the basis of inadequate quality control by the manufacturer. The administrator shall notify the manufacturer, HUD headquarters and the HUD Field Offices of any decertification within 7 days. When the product is decertified the manufacturer shall remove labels, tags or marks from all production and inventory in his/her control determined to be in noncompliance. 
</P>
<P>(10) <I>Challenge response.</I> Any person or organization may submit a sample of a manufacturer's certified product to the administrator in substantiation of a claim of noncompliance. Submission shall be made to the administrator that validated the manufacturer's product. The administrator shall notify the manufacturer that its product has been challenged and shall make arrangements to obtain test samples of the challenged product. An estimate of the cost of the special sample selection and testing shall be made to the complainant. The complainant shall pay the estimated cost of the investigation in advance of any testing of the challenged product, unless HUD believes the complaint to be in the public's interest. HUD may conduct its own investigation when deemed necessary based upon a complaint or a product failure. The administrator shall submit the sample of the challenged product to an approved laboratory of the administrator's choice with the request to test compliance of only the challenged requirement(s). If the samples tested prove that the product failed to meet the standard, the product shall be decertified immediately. The manufacturer whose product is decertified shall reimburse the administrator for all costs of the investigation and the administrator shall refund the complainant's advance payment. If the tests prove that the product does comply with the standard, the complainant shall be notified that the tests do not support the complaint and that the advance fee has been used for the cost of testing and investigating the claim. 
</P>
<P>(11) <I>Maintenance of the program.</I> Each administrator shall maintain the program in conformance with administrative letters issued by HUD for the purpose of clarifying procedures and interpreting the applicable standard. These letters may also be used to revise and amend the procedures used in specific programs. Significant changes in any program shall be published in the <E T="04">Federal Register.</E> 
</P>
<P>(e) <I>Laboratory qualifications.</I> The following laboratory qualifications apply to all testing laboratories participating in the program including manufacturer's laboratories and the administrator's own laboratories when designated in the specific program. 
</P>
<P>(1) <I>Organization and personnel.</I> Laboratories wishing to participate in a certification program shall apply to the administrator and shall furnish the following information:
</P>
<P>(i) Name of laboratory, address, telephone number, name and title of official to be contacted for this program.
</P>
<P>(ii) Name and qualifications of person assigned by the laboratory to supervise testing under a specific certification program.
</P>
<P>(iii) Name and qualifications of engineers and other key personnel who shall conduct the testing.
</P>
<P>(iv) Brief review of training program for personnel associated with program to assure the operational efficiency and uniformity of the testing and quality control procedures.
</P>
<FP>Each laboratory shall notify the administrator of any change in its submission regarding procedures and/or major personnel associated with the program. 
</FP>
<P>(2) <I>Equipment and facilities.</I> Each laboratory shall: 
</P>
<P>(i) Describe the test instruments and testing facilities to be used in making the test(s) required by the applicable standard. Information shall include: Item of equipment, manufacturer, type or model, serial number, range, precision, frequency of calibration and dates of calibration. 
</P>
<P>(ii) Provide photographs of the listed equipment. 
</P>
<P>(iii) Provide a description of the applicable standards and calibration equipment being used and the calibration procedures followed, including National Bureau of Standards traceability, when applicable. List outside organizations providing calibration services, if used.
</P>
<P>(iv) Demonstrate that measurements can be made with existing equipment and repeated precision within the limits established by the applicable standards. Administrator may periodically require laboratories to conduct collaborative testing on standard reference materials.
</P>
<P>(v) Provide evidence, when regulated temperatures and humidity are required, that charts are maintained from a continuous recorder registering both wet and dry bulb temperature or relative humidity. The charts are to be properly dated, retained and available for inspection.
</P>
<P>(vi) Provide a list of standards, test methods and other information necessary to carry out the program. 
</P>
<P>(3) <I>Testing methodology.</I> (i) Describe concisely the procedures for conducting the tests required and the specific equipment to be used.
</P>
<P>(ii) Attach a sample test report showing representative test results and accompanied by test data forms for each test required. When approved for program participation, testing laboratories may be required by administrator to report test results on standard summary report forms.
</P>
<P>(4) <I>Subcontractors.</I> If a testing laboratory plans to subcontract any of its testing to other laboratories, only approved laboratories acceptable to the administrator shall be used.
</P>
<P>(5) <I>Laboratory quality control.</I> The laboratory shall develop operating quality control procedures acceptable to the administrator. The procedures of the American Council of Independent Laboratories 
<SU>1</SU>
<FTREF/> may be used as a guideline.
</P>
<FTNT>
<P>
<SU>1</SU> Copies are available from the American Council of Independent Laboratories, Inc., 1725 “K” Street, NW., Washington, DC 20006.</P></FTNT>
<P>(6) <I>Approval of laboratories.</I> Administrators shall develop detailed laboratory approval requirements and conduct periodic inspections to assure each test laboratory's capability. Laboratory approval may be granted for 2 years. Reapproval of the laboratory shall be necessary every 2 years. When a program allows the use of an administrator's own laboratories, these laboratories shall be reviewed by a qualified third party acceptable to HUD. Documentation of acceptance for administrator laboratories shall be maintained by the administrator and HUD. Administrator laboratories shall be subject to reapproval every two years. 
</P>
<P>(7) <I>Withdrawal of approval.</I> Laboratory approval shall be withdrawn or temporarily suspended if it is determined that the laboratory is not complying with the approved requirements. Causes for suspension include, but are not limited to, the following:
</P>
<P>(i) Incompetence.
</P>
<P>(ii) Failure to test in accordance with the test methods described in the standard.
</P>
<P>(iii) Issuance of test reports which fail to comply with the requirements described in the specific product certification program.
</P>
<P>(iv) Falsification of the information reported.
</P>
<P>(v) A statement implying validation of the product using a test report which constitutes only part of the total standard.
</P>
<P>(vi) Deceptively utilizing references in advertising or other promotional activities.
</P>
<P>(vii) Submission of incomplete or inadequate information and documentation called for herein. 
</P>
<CITA TYPE="N">[44 FR 54656, Sept. 20, 1979, as amended at 63 FR 5423, Feb. 2, 1998; 72 FR 73494, Dec. 27, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 200.936" NODE="24:2.1.1.1.1.16.37.18" TYPE="SECTION">
<HEAD>§ 200.936   Supplementary specific procedural requirements under HUD building products certification program for solid fuel type room heaters and fireplace stoves.</HEAD>
<P>(a) <I>Applicable standards.</I> Solid fuel type room heaters and fireplace stoves certified under the HUD Building Products Certification Program shall be designed, assembled and tested in conformance with the following standards, which are incorporated by reference:
</P>
<P>(1) ANSI/UL 737 (1978), for fireplace stoves;
</P>
<P>(2) ANSI/UL 1482 (1979), for solid fuel type room heaters with coal amendments.
</P>
<P>(b) <I>Labelling.</I> (1) Under the procedures set forth in paragraph (d)(6) of § 200.935, concerning labelling of a product, the administrator's validation mark and the manufacturer's certification of compliance with the applicable standards are required to be on the certification label issued by the administrator to the manufacturer. In the case of solid fuel type room heaters and fireplace stoves, the following additional information must be included on the certification label:
</P>
<P>(i) The manufacturer's statement of conformance to the HUD Building Products Certification Program;
</P>
<P>(ii) The manufacturer's name and the identity and location of manufacturing plant;
</P>
<P>(iii) The specification designation and manufacturer series or model number; and
</P>
<P>(iv) The type of fuel to be used.
</P>
<P>(2) The certification label must be permanently affixed to the heater or stove and be readily visible after the heater or stove is installed.
</P>
<P>(c) <I>Periodic tests and quality control inspections.</I> Under the procedures set forth in paragraph (d)(8) of § 200.935, concerning periodic tests and quality control inspections, the frequency of testing for a product must be described in the specific building product certification program. In the case of solid fuel type room heaters and fireplace stoves, testing and inspection shall be conducted as follows:
</P>
<P>(1) Once every four years, beginning with the initial administrator visit, a sample of each certified product shall be selected by the administrator for testing for compliance with the applicable standards in a laboratory which has been accredited under the National Voluntary Laboratory Accreditation Program.
</P>
<P>(2) The administrator shall visit the manufacturer's facility two times a year to assure that the initially accepted quality control procedures are being followed.
</P>
<CITA TYPE="N">[48 FR 1955, Jan. 17, 1983]


</CITA>
</DIV8>


<DIV8 N="§ 200.937" NODE="24:2.1.1.1.1.16.37.19" TYPE="SECTION">
<HEAD>§ 200.937   Supplementary specific procedural requirements under HUD building product standards and certification program for plastic bathtub units, plastic shower receptors and stalls, plastic lavatories, plastic water closet bowls and tanks.</HEAD>
<P>(a) <I>Applicable standards.</I> (1) Plastic bathtub units, plastic shower receptors and stalls, plastic lavatories, and plastic water closet bowls and tanks shall be designed, assembled and tested in compliance with the following standards, which are incorporated by reference:
</P>
<EXTRACT>
<FP-1>ANSI Z124.1—(1980) Plastic Bathtub Units 
</FP-1>
<FP-1>ANSI Z124.2—(1980) Plastic Shower Receptors and Stalls 
</FP-1>
<FP-1>ANSI Z124.3—(1980) Plastic Lavatories 
</FP-1>
<FP-1>ANSI Z124.4—(1983) Plastic Water Closet Bowls and Tanks</FP-1></EXTRACT>
<P>(2) These standards have been approved by the Director of the Federal Register for incorporation by reference. They are available from the American National Standards Institute, Inc., 11 West 42nd Street, New York, NY 10036. The standards are also available for inspection at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: <I>http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.</I> 
</P>
<P>(b) <I>Labeling.</I> (1) Under the procedures set forth in paragraph (d)(6) of § 200.935, concerning labeling of a product, the administrator's validation mark and the manufacturer's certification of compliance with the applicable standards are required to be on the certification label issued by the administrator to the manufacturer. In the case of plastic bathtub units, plastic shower receptors and stalls, plastic lavatories, and plastic water closet bowls and tanks, the following additional information shall be included on the certification label: 
</P>
<P>(i) Manufacturer's statement of conformance to UM 73a; 
</P>
<P>(ii) Manufacturer's name and code identifying the plant location. 
</P>
<P>(2) The certification label shall be affixed to each plastic bathroom fixture. 
</P>
<P>(c) <I>Periodic tests and quality control inspections.</I> Under the procedures set forth in paragraph (d)(8) of § 200.935, concerning periodic tests and quality control inspections, the frequency of testing for a product shall be described in the specific building product certification program. In the case of plastic bathroom fixtures, testing and inspection shall be conducted as follows: 
</P>
<P>(1) At least every six months, the administrator shall visit the manufacturer's facility to select a sample of each certified plastic bathtub unit, plastic shower receptor and stall, plastic water closet bowl and tank for testing in an approved laboratory, in accordance with applicable standards. 
</P>
<P>(2) At least every twelve months, the administrator shall visit the manufacturer's facility to select a sample of each certified plastic lavatory for testing in accordance with applicable standards. 
</P>
<P>(3) The administrator shall also review quality control procedures at each visit to determine that they continue to be followed.
</P>
<CITA TYPE="N">[49 FR 378, Jan. 4, 1984, as amended at 59 FR 36695, July 19, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 200.940" NODE="24:2.1.1.1.1.16.37.20" TYPE="SECTION">
<HEAD>§ 200.940   Supplementary specific requirements under the HUD building product standards and certification program for sealed insulating glass units.</HEAD>
<P>(a) <I>Applicable standards.</I> (1) All sealed insulating glass units shall be designed, manufactured, and tested in compliance with the American Society for Testing and Materials standard: ASTM E-774-92 Standard Specification for Sealed Insulating Glass Units. 
</P>
<P>(2) This standard has been approved by the Director of the Federal Register for incorporation by reference. The standard is available from the American Society for Testing and Materials, 1916 Race Street, Philadelphia, PA 19103. This standard is also available for inspection at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: <I>http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.</I> 
</P>
<P>(b) <I>Labeling.</I> Under the procedures set forth in § 200.935(d)(6) concerning labeling of a product, the administrator's validation mark and the manufacturer's certification of compliance with the applicable standards are issued by the administrator to the manufacturer. Each sealed insulating glass unit shall be marked as conforming to UM 82a. The label shall be located on each sealed insulating unit so that it is available for inspection. The label shall include the manufacturer's name and plant location. 
</P>
<P>(c) <I>Periodic tests and quality assurance inspections.</I> Under the procedures set forth in § 200.935(d)(8) concerning periodic tests and quality assurance inspections, the frequency of testing for a product shall be described in the specific building product certification program. In the case of sealed insulating glass units, testing and inspection shall be conducted as follows: 
</P>
<P>(1) At least once a year, the administrator shall visit the manufacturer's facility to select a sample, of the maximum size commercially available, for testing in a laboratory approved by the administrator. 
</P>
<P>(2) The administrator shall also review the quality assurance procedures twice a year to assure that they are being followed by the manufacturer. 
</P>
<CITA TYPE="N">[58 FR 67674, Dec. 22, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 200.942" NODE="24:2.1.1.1.1.16.37.21" TYPE="SECTION">
<HEAD>§ 200.942   Supplementary specific procedural requirements under HUD building product standards and certification program for carpet and carpet with attached cushion.</HEAD>
<P>(a) <I>Applicable standards.</I> (1) Carpet and carpet with attached cushion certified for this program shall be designed, manufactured and tested in accordance with the following standards:
</P>
<P>(i) AATCC 20A-81—Fiber Analysis: Quantitative;
</P>
<P>(ii) AATCC 16E-82—Colorfastness to Light: Water-Cooled Xenon-Arc Lamp, Continuous Light;
</P>
<P>(iii) AATCC 8-85—Colorfastness to Crocking: AATCC Crockmeter Method;
</P>
<P>(iv) AATCC 24-85—Insect, Resistance to Textiles to;
</P>
<P>(v) ASTM D1335-67 (Reapproved 1972)—Standard Test Method for Tuft Bind of Pile Floor Coverings;
</P>
<P>(vi) ASTM D3676-78 (Reapproved 1983)—Standard Specification for Rubber Cellular Cushion Used for Carpet or Rug Underlay;
</P>
<P>(vii) ASTM E648-78—Standard Test Method for Critical Radiant Flux of Floor-Covering Systems Using a Radiant Heat Energy Source;
</P>
<P>(viii) ASTM D2646-79—Standard Methods of Testing Backing Fabrics;
</P>
<P>(ix) ASTM D3936-80—Standard Test Method for Delamination Strength of Secondary Backing of Pile Floor Coverings;
</P>
<P>(x) ASTM D297-81—Standard Methods for Rubber Products—Chemical Analysis;
</P>
<P>(xi) ASTM D418-82—Standard Methods of Testing Pile Yarn Floor Covering Construction; and
</P>
<P>(xii) National Bureau of Standards DOC FF 1-70. (ASTM D2859-76)—Standard Test Method for Flammability of Finished Textile Floor Covering Materials.
</P>
<P>(2) These standards have been approved by the Director of the Federal Register for incorporation by reference. They are available from the (i) American Association of Textile Chemists and Colorists (AATCC), P.O. Box 12215, Research Triangle Park, NC 27709;
</P>
<P>(ii) American Society for Testing and Materials (ASTM), 1916 Race Street, Philadelphia, PA 19103; and
</P>
<P>(iii) U.S. Department of Commerce, National Bureau of Standards, Washington, DC 20234. 
</P>
<FP>The standards are also available for inspection at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: <I>http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.</I> 
</FP>
<P>(b) <I>Labeling.</I> (1) Under the procedures set forth in § 202.935(d)(6), concerning labeling of a product, the administrator's validation mark and the manufacturer's certification of compliance with the applied standard is required to be on the certification label issued by the administrator to the manufacturer. In the case of carpet and carpet with attached cushion, the following additional information shall be included on the certification label, mark or stamp:
</P>
<P>(i) Manufacturer's name or code identifying the manufacturing plant location; and
</P>
<P>(ii) Manufacturer's statement of compliance with UM 44d.
</P>
<P>(2) The certification mark shall be applied to each carpet at intervals of at least every six feet, not less than one foot from the edge.
</P>
<P>(c) <I>Periodic tests and quality control inspections.</I> (1) Five samples of carpet and carpet with attached cushion shall be tested annually by the administrator or by an administrator-approved laboratory. Three samples of each certified quality shall be taken from the plant annually. Of these, two shall be interim samples (taken every six months) and one an annual sample. In addition, two samples of each certified quality shall be taken annually from sources other than the manufacturer, <I>i.e.,</I> brought in the market place from distributors or stores, not from the factory. The administrator shall select samples for testing, and testing shall be conducted, in accordance with the applicable standards in a laboratory accredited by the National Voluntary Laboratory Accreditation Program (NVLAP) of the National Bureau of Standards, U.S. Department of Commerce.
</P>
<P>(2) The administrator shall visit the manufacturer's facility at least once every six months to assure that the initially accepted quality control procedures continue to be followed.
</P>
<CITA TYPE="N">[51 FR 17928, May 16, 1986]


</CITA>
</DIV8>


<DIV8 N="§ 200.943" NODE="24:2.1.1.1.1.16.37.22" TYPE="SECTION">
<HEAD>§ 200.943   Supplementary specific requirements under the HUD building product standards and certification program for the grademarking of lumber.</HEAD>
<P>(a) <I>Applicable standard.</I> (1) In accordance with UM 38j, lumber shall be grademarked in compliance with the U.S. Department of Commerce Voluntary Product Standard PS 20-94 American Softwood Lumber Standard.
</P>
<P>(2) This standard has been approved by the Director of the Federal Register for incorporation by reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. It is available from the U.S. Department of Commerce, NIST, Office of Voluntary Product Standards, Gaithersburg, MD 20899.
</P>
<P>(b) <I>Labeling.</I> Under the procedures set forth in § 200.935(d)(6) concerning labeling of a product, the administrator's validation mark and the manufacturer's certification of compliance with the applicable standard are required on the certification label issued by the administrator to the manufacturer. However, in the case of grademarking of lumber, the following information shall be included on the certification label or mark:
</P>
<P>(1) The registered symbol which identifies the grading agency;
</P>
<P>(2) Species or species combination;
</P>
<P>(3) Grade;
</P>
<P>(4) Identification of the applicable grading rules when not indicated by the species identification or agency symbol;
</P>
<P>(5) Mill or grader;
</P>
<P>(6) For members which are less than 5 inches in nominal thickness, indication that the lumber was green or dry at the time of dressing;
</P>
<P>(7) Indication that the lumber was finger jointed; and
</P>
<P>(8) The certification mark shall be affixed to each piece of lumber.
</P>
<P>(c) <I>Periodic tests and quality assurance.</I> Periodic tests and quality assurance inspections shall be carried out by the American Lumber Standard Committee as defined in PS 20-94.
</P>
<CITA TYPE="N">[63 FR 5423, Feb. 2, 1998]


</CITA>
</DIV8>


<DIV8 N="§ 200.944" NODE="24:2.1.1.1.1.16.37.23" TYPE="SECTION">
<HEAD>§ 200.944   Supplementary specific requirements under the HUD building product standards and certification program for plywood and other performance rated wood-based structural-use panels.</HEAD>
<P>(a)(1) All plywood made to specifications of Voluntary Product Standard, PS 1-83, “Construction and Industrial Plywood” (published by the U.S. Department of Commerce, National Bureau of Standards (May 1984)) and grade marked as PS 1-83 shall conform to the requirements of PS 1-83, except that all veneers may be D-grade. A copy of PS 1-83 may be obtained from the U.S. Department of Commerce, National Institute for Standards and Technology, Office of Product Standards, Gaithersburg, MD 20899. 
</P>
<P>(2) All plywood panels not meeting the veneer grade requirements of PS 1-83, and all performance rated composite and nonveneer structural-use panels shall comply with the requirements described in the APA PRP-108, “Performance Standards and Policies for Structural-Use panels” (published by the American Plywood Association, June 1988). However, in ASTM D-3043-87, “Standard Methods of Testing Structural Panels in Flexure” (published by the American Society for Testing and Materials, August 28, 1987), Method B may be used in lieu of Method C for measuring the mechanical properties of the panel, provided that the test specimen has a width of at least 12 inches. The impact load shall be 150 ft. lbs. for single-layer floor panels excluding any floor finishes. Copies of the APA Standard may be obtained from the American Plywood Association, P.O. Box 11700, Tacoma, WA 98411-0770. Copies of the ASTM Standard may be obtained from the American Society of Testing and Materials, 1916 Race Street, Philadelphia, PA 19103. 
</P>
<P>(3) Structural-use panels shall be installed in accordance with the manufacturer's installation instructions and Form No. E30K, “APA Design/Construction Guide-Residential and Commercial” (published by the American Plywood Association, January 1989). 
</P>
<P>(4) These standards have been approved by the Director of the Federal Register for incorporation by reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies of the standards are available for inspection at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: <I>http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.</I> 
</P>
<P>(b) <I>Labeling.</I> Under the procedures set forth in § 200.935(d)(6) concerning labeling of a product, the administrator's validation mark and the manufacturer's certification of compliance with the applicable standards are required to be on the certification label issued by the administrator to the manufacturer. Panels that conform to the Performance Standards and Policy for Structural-Use Panels shall be marked as conforming to UM 40c. All panels complying with APA PRP-108 shall be marked with a label formatted in the manner similar to the trademark examples shown in APA PRP-108. All panels will be marked with the mill number. The certification mark shall be stamped on each panel and be located so that it is available for inspection. 
</P>
<P>(c) <I>Periodic tests and qualify control inspections.</I> Under the procedures set forth in § 200.935(d)(8) concerning periodic tests and quality control inspections, the frequency of testing for a product shall be described in the specific building product certification program. In the case of plywood and wood-based structural-use panels, testing and inspection shall be conducted as follows: 
</P>
<P>(1) Testing shall be done in an Administrator's laboratory or an Administrator-approved laboratory every three months. All plywood qualified for conformance with PS 1-83 shall be tested in accordance with PS 1-83. 
</P>
<P>(2) All thickness and lay-ups of structural-use panels in production made in conformance with the Performance Standards shall be tested in accordance with procedures set forth in APA PRP-108 Performance Standards and Policies for Structural-Use Panels (published by the American Plywood Association Standard June 1988). 
</P>
<P>(3) The Administrator shall examine each manufacturer's quality control procedures to assure they are the same as or equivalent to those set forth under the Quality Assurance Policy section 4.2.3 of the publication referenced in paragraph (2) above or PS 1-83 section 3.8.6.6, Reexamination. 
</P>
<P>(4) The Administrator shall inspect the manufacturer's procedures at the plant at least every three months to assure that the initially accepted quality control procedures are being followed.
</P>
<CITA TYPE="N">[55 FR 38785, Sept. 20, 1990] 


</CITA>
</DIV8>


<DIV8 N="§ 200.945" NODE="24:2.1.1.1.1.16.37.24" TYPE="SECTION">
<HEAD>§ 200.945   Supplementary specific requirements under the HUD building product standards and certification program for carpet.</HEAD>
<P>(a) <I>Applicable standards.</I> (1) All carpet shall be designed, manufactured, and tested in compliance with the following standards from the American Society for Testing and Materials and the American Association of Textile Chemists and Colorists: 
</P>
<P>(i) ASTM D418-92—Standard Test Methods for Tuft and Yarn Length of Uncoated Floor Coverings; 
</P>
<P>(ii) ASTM D1335-67—(Reapproved 1972) Standard Test Method for Tuft Bind of Pile Floor Coverings; 
</P>
<P>(iii) ASTM D 2646-87—Standard Test Methods for Backing Fabrics; 
</P>
<P>(iv) ASTM D 3936-80—Standard Test Method for Delamination Strength of Secondary Backing of Pile Floor Coverings; 
</P>
<P>(v) AATCC Test Method 16e-82—Colorfastness to Light: Water-Cooled Xenon-Arc Lamp, Continuous Light;
</P>
<P>(vi) AATCC Test Method 165-86—Colorfastness to Crocking: Carpets—AATCC Crock Meter Method; 
</P>
<P>(vii) ASTM D 3676-78—(Reapproved 1989) Standard Specification for Rubber Cellular Cushion Used for Carpet or Rug Underlay; 
</P>
<P>(viii) ASTM D 3574-91—Standard Test Methods for Flexible Cellular Materials—Slab, Bonded and Molded Urethane Foams. 
</P>
<P>(2) These standards have been approved by the Director of the Federal Register for incorporation by reference. The standards are available from the American Society for Testing and Materials, 1916 Race Street, Philadelphia, PA 19103 and the American Association of Textile Chemists and Colorists, P.O. Box 12215, Research Triangle Park, NC 27709. These standards are also available for inspection at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: <I>http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.</I> 
</P>
<P>(b) <I>Labeling.</I> Under the procedures set forth in § 200.935(d)(6) concerning labeling of a product, the administrator's validation mark and the manufacturer's certification of compliance with UM 44d are required to be on the certification label issued by the Administrator to the manufacturer. The label shall be placed on each carpet every six feet not less than one foot from the edge. 
</P>
<P>(c) <I>Periodic tests and quality assurance inspection.</I> Under the procedure set forth in § 200.935(d)(8), testing and inspection shall be conducted as follows: 
</P>
<P>(1) Every six months, three samples and one annual field sample of carpet shall be submitted to the Administrator for testing in a laboratory accredited by the National Voluntary Laboratory Accreditation Program of the U.S. Department of Commerce. 
</P>
<P>(2) The administrator also shall review the quality assurance procedures every six months to assure that they are being followed by the manufacturer. 
</P>
<CITA TYPE="N">[58 FR 67674, Dec. 22, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 200.946" NODE="24:2.1.1.1.1.16.37.25" TYPE="SECTION">
<HEAD>§ 200.946   Building product standards and certification program for exterior finish and insulation systems, use of Materials Bulletin UM 101.</HEAD>
<P>(a) <I>Applicable standards:</I> (1) All Exterior Finish and Insulation Systems shall be designed, manufactured, and tested in compliance with the following standards: 
</P>
<P>(i) ASCE 7-93, American Society of Civil Engineers—Minimum Design Loads for Buildings and Other Structures. 
</P>
<P>(ii) ASTM C 150-94 Standard Specification for Portland Cement. 
</P>
<P>(iii) ASTM C 920-87 Standard Specification for Elastomeric Joint Sealants. 
</P>
<P>(iv) ASTM C-1186-91 Standard Specification for Flat Non-Asbestos Fiber-Cement Sheets. 
</P>
<P>(v) ASTM D 579-90 Standard Specification for Greige Woven Glass Fabrics. 
</P>
<P>(vi) ASTM D 3273-86—(Reapproved 1991) Standard Test Method for Resistance to Growth of Mold on the Surface of Interior Coatings in an Environmental Chamber. 
</P>
<P>(vii) ASTM E 330-90 Standard Test Method for Structural Performance of Exterior Windows, Curtain Walls, and Doors by Uniform Static Air Pressure Difference. 
</P>
<P>(viii) ASTM E 695-79 (Reapproved 1991), Standard Method of Measuring Relative Resistance of Wall, Floor, and Roof Construction to Impact Loading. 
</P>
<P>(ix) ASTM G 26-93 Standard Practice for Operating Light-Exposure Apparatus (Xenon-Arc Type) With and Without Water for Exposure of Nonmetallic Materials. 
</P>
<P>(x) Council of American Building Officials, Model Energy Code, 1993 Edition. 
</P>
<P>(xi) EIMA Test Method 101.01-95 (modified ASTM C67-91) Standard Test Method for Freeze/Thaw Resistance of Exterior Insulation and Finish Systems (EIFS), Class PB. 
</P>
<P>(xii) EIMA Test Method 101.02-95 (modified ASTM E331-91)—Standard Test Method for Resistance to Water Penetration of Exterior Insulation and Finish Systems (EIFS), Class PB. 
</P>
<P>(xiii) EIMA Test Method 101.03-95 (modified ASTM C297-91)—Standard Test Method for Determining the Tensile Adhesion Strength of an Exterior Insulation and Finish System (EIFS), Class PB. 
</P>
<P>(xiv) EIMA Test Method 105.01-95—Standard Test Method for Alkali Resistance of Glass Fiber Reinforcing Mesh for Use in Exterior Insulation and Finish Systems (EIFS), Class PB. 
</P>
<P>(xv) European Agreement Union Technical Committee—June 88—UEAtc Directives for the Assessment of External Insulation System for Walls (Expanded Polystyrene Insulation Faced with a Thin Rendering) Section 3.3.3.3. 
</P>
<P>(2) These standards have been approved by the Director of the Federal Register for incorporation by reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. They are available from: 
</P>
<P>(i) American Society Civil Engineers (ASCE) 345 East 47th Street, New York, NY 10017. 
</P>
<P>(ii) American Society for Testing and Materials (ASTM), 1916 Race Street, Philadelphia, Pennsylvania 19103; 
</P>
<P>(iii) Council of American Building Officials, 5203 Leesburg Pike, Falls Church, Virginia 22041; 
</P>
<P>(iv) EAUTC Centre Scientifique ET Technique Du Batiment (CSTB), 84 Avenue Jesu Jaures, B.P. 02-77421 Marne-LA-Valee Cedex 2, Paris, France. 
</P>
<P>(v) Exterior Insulation Manufacturers Association (EIMA), 2759 State Road 580, Suite 112, Clearwater, Florida 34621-3350. 
</P>
<P>(3) The standards are available also for inspection at the Office of Manufactured Housing and Regulatory Functions, Standards and Products Branch, Department of Housing and Urban Development, room 3214, L'Enfant Plaza, 490E, Mail Room B-133, Washington, DC 20410-8000, and at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: <I>http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.</I> 
</P>
<P>(b) <I>Labeling.</I> Under the procedures as set forth in § 200.935(d)(6), concerning labeling of a product, the administrator's validation mark and the manufacturer's certification of compliance with the applied standard is required to be on the certification label issued by the administrator to the manufacturers. In the case of exterior wall insulation and finish systems, the certification label containing the administrator's mark shall be permanently affixed on the package or container of base and finish coating materials. Further, additional information shall be included on the certification label or mark: 
</P>
<P>(1) Manufacturer's name. 
</P>
<P>(2) Manufacturer's statement of conformance with UM 101. 
</P>
<P>(c) The Administrator shall visit the manufacturer's or sponsor's facility every 6 months, to assure that the initially accepted quality assurance procedures are being followed. At least every four years, the Administrator also shall have the exterior wall insulation and finish systems tested in an approved laboratory to assure that the original performance is maintained. 
</P>
<P>(d) The administrator's (or administration-accepted inspection agency) inspection of EFIS system installation of 5000 sq. ft. or more, shall be made during and upon completion of the construction. Reports of the inspection shall be made to the owner. These reports shall state: 
</P>
<P>(1) The coverage of the finish coat per square foot for a given volume of finish. 
</P>
<P>(2) The minimum thickness of the base and finish coatings. 
</P>
<P>(3) The fiberglass mesh is installed properly around joints and insulation. All penetrations, including windows, flashing, etc., are sealed; and there is a caulk and sealant continuity evaluation; and 
</P>
<P>(4) There is a caulk and sealant continuity evaluation with special concerns on maintenance. 
</P>
<P>(e) The manufacturer shall warrant their exterior wall insulation and finish system, including any caulks and sealants, for twenty years against faulty performance. The warranty shall include correction of delamination, chipping, denting, peeling, blistering, flaking, bulging, unsightly discoloration, or other serious deterioration of the system such as the intrusion of water through the wall or structural failure of the system's surface materials. Should any of these defects occur, the manufacturer shall make a pro-rata allowance for replacement or pay the owner the amount of the allowance. The manufacturer shall not be liable for damages or defects resulting from misuse, natural catastrophes, or other causes beyond the control of the manufacturer. The contractor shall provide a statement to the owner that the product has been installed in compliance with HUD requirements and that the manufacturer's warranty does not relieve the builder, in any way, of responsibility under the terms of the Builder's Warranty required by the National Housing Act, or under any other housing program.
</P>
<CITA TYPE="N">[60 FR 47841, Sept. 14, 1995]


</CITA>
</DIV8>


<DIV8 N="§ 200.947" NODE="24:2.1.1.1.1.16.37.26" TYPE="SECTION">
<HEAD>§ 200.947   Building product standards and certification program for polystyrene foam insulation board.</HEAD>
<P>(a) <I>Applicable standards.</I> (1) All polystyrene foam insulation board shall be designed, manufactured, and tested in compliance with the American Society for Testing and Materials (ASTM) standard C-578-92, Standard Specification for Rigid, Cellular Polystyrene Thermal Insulation. 
</P>
<P>(2) This standard has been approved by the Director of the Federal Register for incorporation by reference. The standard is available from the American Society for Testing and Materials, 1916 Race Street, Philadelphia, PA 19103. This standard is also available for inspection at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: <I>http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.</I> 
</P>
<P>(b) <I>Labeling.</I> Under the procedures set forth in § 200.935(d)(6) concerning labeling of a product, the administrator's certification of compliance with the applicable standards and the type of board are required to be on the certification label issued by the administrator to the manufacturer. 
</P>
<P>(c) <I>Periodic tests and quality assurance inspection.</I> Under the procedure set forth in § 200.935(d)(8), testing and inspection shall be conducted as follows: 
</P>
<P>(1) At least every six months, the administrator shall visit the manufacturer's facility to select a sample of each certified polystyrene foam insulation board for testing by a laboratory approved by the administrator. 
</P>
<P>(2) The administrator also shall review the quality assurance procedures every six months to assure that they are being followed by the manufacturer. 
</P>
<CITA TYPE="N">[58 FR 67675, Dec. 22, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 200.948" NODE="24:2.1.1.1.1.16.37.27" TYPE="SECTION">
<HEAD>§ 200.948   Building product standards and certification program for carpet cushion.</HEAD>
<P>(a) <I>Applicable standards.</I> (1) All carpet cushion shall be designed, manufactured, and tested in compliance with the following standards from the American Society for Testing and Materials: 
</P>
<P>(i) ASTM D 1667-76—(Reapproved 1990) Standard Specification for Flexible Cellular Materials—Vinyl Chloride Polymers and Copolymers (Closed-Cell Foam); 
</P>
<P>(ii) ASTM D2646-87—Standard Test Methods for Backing Fabrics; 
</P>
<P>(iii) ASTM D629-88—Standard Test Methods for Quantitative Analysis of Textiles; 
</P>
<P>(iv) ASTM D3574-91—Standard Test Methods for Flexible Cellular Materials—Slab, Bonded, and Molded Urethane Foams; 
</P>
<P>(v) ASTM D3676-78—Standard Specification for Rubber Cellular Cushion Used for Carpet or Rug Underlay. 
</P>
<P>(2) These standards have been approved by the Director of the Federal Register for incorporation by reference. The standards are available from the American Society for Testing Materials, 1916 Race Street, Philadelphia, PA 19103. These standards are also available for inspection at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: <I>http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.</I> 
</P>
<P>(b) <I>Labeling.</I> Under the procedures set forth in § 200.935(d)(6) concerning labeling of a product, the administrator's validation mark, the manufacturer's certification of compliance with the applicable standards, and the type and class all are required to be on the certification label issued by the administrator to the manufacturer. 
</P>
<P>(c) <I>Periodic tests and quality assurance inspection.</I> Under the procedure set forth in § 200.935(d)(8), testing and inspection shall be conducted as follows:
</P>
<P>(1) At least every six months, the administrator shall visit the manufacturer's facility to select a sample of each certified carpet cushion for testing by a laboratory approved by the administrator.
</P>
<P>(2) The administrator also shall review the quality assurance procedures every six months to assure that they are being followed by the manufacturer. 
</P>
<CITA TYPE="N">[58 FR 67675, Dec. 22, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 200.949" NODE="24:2.1.1.1.1.16.37.28" TYPE="SECTION">
<HEAD>§ 200.949   Building product standards and certification program for exterior insulated steel door systems.</HEAD>
<P>(a) <I>Applicable standards.</I> (1) All Exterior Insulated Steel Door Systems shall be designed, manufactured, and tested in compliance with the following standards from the American Society for Testing and Materials and Insulated Steel Door Systems Institute: 
</P>
<P>(i) ASTM A591/A591M-89—Standard Specification for Steel Sheet, Electrolytic-Zinc Coated, for Light Coating Mass Applications; 
</P>
<P>(ii) ISDSI-100-90—Door Size Dimensional Standard and Assembly Tolerances for Insulated Steel Door Systems; 
</P>
<P>(iii) ISDSI-101-83—(Reapproved 1989) Air Infiltration Performance Standard for Insulated Steel Door Systems; 
</P>
<P>(iv) ISDSI-102-84—Installation Standard for Insulated Steel Door Systems; 
</P>
<P>(v) ISDSI-104-86—Water Penetration Performance Standard for Insulated Steel Door Systems; 
</P>
<P>(vi) ISDSI-105-80—Test Procedure and Acceptance Criteria for Physical Endurance for Steel Doors and Hardware Reinforcings; 
</P>
<P>(vii) ISDSI-106-80—Test Procedure and Acceptance Criteria for Prime Painted Steel Surfaces for Steel Doors and Frames; 
</P>
<P>(viii) ISDSI-107-80—Thermal Performance Standard for Insulated Steel Door Systems; 
</P>
<P>(ix) ASTM F476-84—(Reapproved 1991) Standard Test Methods for Security of Swinging Door Assemblies. 
</P>
<P>(2) These standards have been approved by the Director of the Federal Register for incorporation by reference. These standards are available from the American Society for Testing and Materials, 1916 Race Street, Philadelphia, PA 19103 or the Insulated Steel Door Institute, 712 Lakewood Center North, 14600 Detroit Avenue, Cleveland, OH 44107. These standards are also available for inspection at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: <I>http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.</I> 
</P>
<P>(b) <I>Labeling.</I> Under the procedures set forth in § 200.935(d)(6) concerning labeling of a product, the administrator's certification of compliance with the applicable standards is required to be on the certification label issued by the administrator to the manufacturer. 
</P>
<P>(c) <I>Periodic tests and quality assurance inspection.</I> Under the procedure set forth in § 200.935(d)(8), testing and inspection shall be conducted as follows: 
</P>
<P>(1) At least every four years, the administrator shall visit the manufacturer's facility to select a sample of each certified exterior insulated steel door system for testing by an approved laboratory in accordance with the applicable standard. 
</P>
<P>(2) The administrator also shall review the quality assurance procedures every year to assure that they are being followed by the manufacturer. 
</P>
<CITA TYPE="N">[58 FR 67675, Dec. 22, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 200.950" NODE="24:2.1.1.1.1.16.37.29" TYPE="SECTION">
<HEAD>§ 200.950   Building product standards and certification program for solar water heating system.</HEAD>
<P>(a) <I>Applicable standards.</I> (1) All solar water heating systems shall be designed, manufactured, and tested in compliance with Solar Rating and Certification Corporation (SRCC) Document OG-300-93, Operating Guidelines and Minimum Standards for Certifying Solar Water Heating Systems: An Optional SWH System Certification and Rating Program. Section 10 of the SRCC standard has been omitted because it was considered proprietary, since it describes an administrative program specifically carried out by SRCC. 
</P>
<P>(2) This standard has been approved by the Director of the Federal Register for incorporation by reference. The standard is available from the Solar Rating and Certification Corporation, 777 North Capitol Street, NE., suite 805, Washington, DC 20002. This standard is also available for inspection at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: <I>http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.</I> 
</P>
<P>(b) <I>Labeling.</I> Under the procedures set forth in § 200.935(d)(6) concerning labeling of a product, the administrator's validation mark and the manufacturer's certification of compliance with the applicable standards are required to be on the certification label issued by the administrator to the manufacturer. Each solar water heating system shall be marked as conforming to UM 100. The label shall include the manufacturer's name and plant location. 
</P>
<P>(c) <I>Periodic tests and quality assurance inspection.</I> Under the procedure set forth in § 200.935(d)(8), testing and inspection shall be conducted as follows: 
</P>
<P>(1) The Administrator shall visit the manufacturer's factory every two years to assure that the initially accepted quality assurance procedures are being followed. 
</P>
<P>(2) At least every four years, the administrator shall visit the manufacturer's facility to select a sample of each certified solar water heating system for testing by a laboratory approved by the administrator. 
</P>
<P>(d) <I>Warranty.</I> The manufacturer shall provide, at no cost, a full five-year warranty against defects in material or workmanship, on the absorber plate, cooling passages, and the collector (excluding any glass), running from the date of installation of the solar water heating system. The warranty also shall include the full costs of field inspection, parts, and labor required to remedy the defects, and will include the cost of replacement at the site if required. This warranty is not required to cover defects resulting from exposure to harmful materials, fire, flood, lightning, hurricane, tornado, hailstorms, earthquakes, or other acts of God, vandalism, explosions, harmful chemicals or other fluids, fumes or vapors. This exclusion will apply to the operation of the collector under excessive pressures or excessive flow rates, misuse, abuse, negligence, accidents, alterations, falling objects or other causes beyond the control of the manufacturer. Following the initial five years, the manufacturer shall provide a limited no-cost five-year warranty for collector parts on a prorata allowance basis. 
</P>
<CITA TYPE="N">[58 FR 67676, Dec. 22, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 200.952" NODE="24:2.1.1.1.1.16.37.30" TYPE="SECTION">
<HEAD>§ 200.952   Supplementary specific requirements under the HUD building product standards and certification program for particleboard interior stair treads.</HEAD>
<P>(a) <I>Applicable standards.</I> (1) All interior particleboard stair treads shall be designed, manufactured, and tested in compliance with ANSI A208.1-1993 Particleboard, Grade M-3.
</P>
<P>(2) This standard has been approved by the Director of the Federal Register for incorporation by reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51, and is available from the American National Standards Institute, Inc., 11 West 42nd Street, New York, NY 10036.
</P>
<P>(b) <I>Labeling.</I> Under the procedures set forth in § 200.935(d)(6) concerning labeling of a product, the administrator's validation mark and the manufacturer's certification of compliance with the applicable standard are required to be on the certification label issued by the administrator to the manufacturer. Each interior particleboard stair tread shall include the manufacturer's statement of conformance to UM 70b, a statement that this product is for interior use only, and the manufacturer's name and plant location.
</P>
<P>(c) <I>Periodic tests and quality assurance.</I> Under the procedures set forth in § 200.935(d)(8) concerning periodic tests and quality assurance inspections, the frequency of testing for a product shall be described in the specific building product certification program. In the case of interior particleboard stair treads, testing and inspection shall be conducted as follows:
</P>
<P>(1) At least once every three months, the administrator shall visit the manufacturer's facility to select a sample for testing in a laboratory approved by the administrator.
</P>
<P>(2) The administrator shall also review the quality assurance procedures twice a year to assure that they are being followed by the manufacturer.
</P>
<CITA TYPE="N">[63 FR 5424, Feb. 2, 1998]


</CITA>
</DIV8>


<DIV8 N="§ 200.954" NODE="24:2.1.1.1.1.16.37.31" TYPE="SECTION">
<HEAD>§ 200.954   Supplementary specific requirements under the HUD building product standard and certification program for construction adhesives for wood floor systems.</HEAD>
<P>(a) <I>Applicable standards.</I> (1) All construction adhesives for field glued wood floor systems shall be designed, manufactured, and tested in compliance with the following American Society for Testing and Materials (ASTM) standard: D 3498-93 Standard Specification for Adhesives for Field-Gluing Plywood to Lumber Framing for Floor Systems except that the mold and bacteria resistance tests shall not be included.
</P>
<P>(2) This standard has been approved by the Director of the Federal Register for incorporation by reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51, and is available from the American Society for Testing &amp; Materials Inc., 100 Barr Harbor Drive, West Conshohocken, PA. 19428.
</P>
<P>(b) <I>Labeling.</I> Under the procedures set forth in § 200.935(d)(6) concerning labeling of a product, the administrator's validation mark and the manufacturer's certification of compliance with the applicable standard are required to be on the certification label issued by the administrator to the manufacturer. Each container shall be marked as being in compliance with UM 60a. The label shall also include the manufacturer's name, plant location, and shelf life.
</P>
<P>(c) <I>Periodic tests and quality assurance.</I> Under the procedures set forth in § 200.935(d)(8) concerning periodic tests and quality assurance inspections, the frequency of testing for a product shall be described in the specific building product certification program. In the case of construction adhesives for field glued wood floor systems, testing and inspection shall be conducted as follows:
</P>
<P>(1) At least every six months, the administrator shall visit the manufacturer's facility to select a sample for testing in a laboratory approved by the administrator.
</P>
<P>(2) The administrator shall also review the quality assurance procedures twice a year to assure that they are being followed by the manufacturer.
</P>
<CITA TYPE="N">[63 FR 5424, Feb. 2, 1998]


</CITA>
</DIV8>


<DIV8 N="§ 200.955" NODE="24:2.1.1.1.1.16.37.32" TYPE="SECTION">
<HEAD>§ 200.955   Supplementary specific requirements under the HUD building product standard and certification program for fenestration products (windows and doors).</HEAD>
<P>(a) <I>Applicable standards.</I> (1) All windows and doors shall be designed, manufactured, and tested in compliance with American Architectural Manufacturers Association (AAMA) standard, AAMA/NWWDA 101/I.S.2-97 Voluntary Specifications for Aluminum, Vinyl (PVC) and Wood Windows and Glass Doors.
</P>
<P>(2) This standard has been approved by the Director of the Federal Register for incorporation by reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51, and is available from the American Architectural Manufacturers Association, 1827 Walden Office Square, Suite 104, Schaumburg, IL 60173.
</P>
<P>(b) <I>Labeling.</I> Under the procedures set forth in § 200.935(d)(6) concerning labeling of a product, the administrator's validation mark and the manufacturer's certification of compliance with the applicable standards are required to be on the certification label issued by the administrator to the manufacturer. Each window or glass door shall include the manufacturer's name, plant location, and statement of compliance with UM 111.
</P>
<P>(c) <I>Periodic tests and quality assurance inspections.</I> Under the procedures set forth in § 200.935(d)(8) concerning periodic tests and quality assurance inspections, the frequency of testing for a product shall be described in the specific building product certification program. In the case of windows and glass doors, testing and inspection shall be conducted as follows:
</P>
<P>(1) At least once every four years, the administrator shall visit the manufacturer's facility to select a commercial sample for testing in a laboratory approved by the administrator.
</P>
<P>(2) The administrator shall also review the quality assurance procedures twice a year to assure that they are being followed by the manufacturer.
</P>
<CITA TYPE="N">[63 FR 5424, Feb. 2, 1998]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="T" NODE="24:2.1.1.1.1.17" TYPE="SUBPART">
<HEAD>Subpart T—Social Security Numbers and Employer Identification Numbers; Assistance Applicants and Participants</HEAD>


<DIV8 N="§ 200.1001" NODE="24:2.1.1.1.1.17.37.1" TYPE="SECTION">
<HEAD>§ 200.1001   Cross-reference.</HEAD>
<P>The provisions in subpart B of part 5 of this title apply to Social Security Numbers and Employer Identification Numbers for assistance applicants and participants. 
</P>
<CITA TYPE="N">[61 FR 11118, Mar. 18, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="U" NODE="24:2.1.1.1.1.18" TYPE="SUBPART">
<HEAD>Subpart U—Social Security Numbers and Employer Identification Numbers; Applicants in Unassisted Programs</HEAD>


<DIV8 N="§ 200.1101" NODE="24:2.1.1.1.1.18.37.1" TYPE="SECTION">
<HEAD>§ 200.1101   Cross-reference.</HEAD>
<P>The provisions in subpart B of part 5 of this title apply to Social Security Numbers and Employer Identification Numbers for applicants in unassisted programs. 
</P>
<CITA TYPE="N">[61 FR 11118, Mar. 18, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="V" NODE="24:2.1.1.1.1.19" TYPE="SUBPART">
<HEAD>Subpart V—Income Information; Assistance Applicants and Participants</HEAD>


<DIV8 N="§ 200.1201" NODE="24:2.1.1.1.1.19.37.1" TYPE="SECTION">
<HEAD>§ 200.1201   Cross-reference.</HEAD>
<P>The provisions in subpart B of part 5 of this title apply to income information for assistance applicants and participants. 
</P>
<CITA TYPE="N">[61 FR 11118, Mar. 18, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="W" NODE="24:2.1.1.1.1.20" TYPE="SUBPART">
<HEAD>Subpart W—Administrative Matters</HEAD>


<DIV8 N="§ 200.1301" NODE="24:2.1.1.1.1.20.37.1" TYPE="SECTION">
<HEAD>§ 200.1301   Expiring programs—Savings clause.</HEAD>
<P>(a) No new loan assistance, additional participation, or new loans are being insured under the programs listed in this section. Existing loan assistance, ongoing participation, or insured loans under the programs shall continue to be governed by regulations in effect as described in this section.
</P>
<P>(b) Any existing loan assistance, ongoing participation, or insured loans under the programs listed in this paragraph will continue to be governed by the regulations in effect as they existed immediately before October 11, 1995 (24 CFR parts 205, 209, 224-228, 240, 277, 278, 1994 edition):
</P>
<P>(1) Part 205, Mortgage Insurance for Land Development (Title X of the National Housing Act, repealed by section 133(a) of the Department of Housing and Urban Development Reform Act of 1989 (Public Law 101-235, approved December 15, 1989).
</P>
<P>(2) Part 209, Individual Homes; War Housing Mortgage Insurance (12 U.S.C. 1736-1743).
</P>
<P>(3) Part 224, Armed Services Housing-Military Personnel (12 U.S.C. 1736-1746a).
</P>
<P>(4) Part 225, Military Housing Insurance (12 U.S.C. 1748b).
</P>
<P>(5) Part 226, Armed Services Housing-Civilian Employees (12 U.S.C. 1748h-1).
</P>
<P>(6) Part 227, Armed Services Housing-Impacted Areas (12 U.S.C. 1478h-2).
</P>
<P>(7) Part 228, Individual Residences; National Defense Housing Mortgage Insurance (12 U.S.C. 1750 as amended by 42 U.S.C. 1591c).
</P>
<P>(8) Part 240, Mortgage Insurance on Loans for Fee Title Purchase (12 U.S.C. 1715z-5).
</P>
<P>(9) Part 277, Loans for Housing for the Elderly or Handicapped (12 U.S.C. 1701q).
</P>
<P>(10) Part 278, Mandatory Meals Program in Multifamily Rental or Cooperative Projects for the Elderly or Handicapped (12 U.S.C. 1701q).
</P>
<P>(c) Any existing loan assistance, ongoing participation, or insured loans under the programs listed in this paragraph will continue to be governed by the regulations in effect as they existed immediately before May 11, 1996 (24 CFR parts 215, 222, and 237, 1995 edition):
</P>
<P>(1) Part 215, Rent Supplement Payments Program (12 U.S.C. 1715f).
</P>
<P>(2) Part 222, Service Person's Mortgage Insurance Program (12 U.S.C. 1715m).
</P>
<P>(3) Part 237, Special Mortgage Insurance for Low and Moderate Income Families (12 U.S.C. 1715z-2).
</P>
<P>(d) Any existing loan assistance, ongoing participation, or insured loans under the program listed in this paragraph will continue to be governed by the regulations in effect as they existed immediately before December 26, 1996 (24 CFR part 233, 1995 edition):
</P>
<P>(1) Part 233, Experimental Housing Mortgage Insurance Program (12 U.S.C. 1715x).
</P>
<P>(2) [Reserved]
</P>
<P>(e) Any existing loan assistance, ongoing participation, or insured loans under the program listed in this paragraph will continue to be governed by the regulations in effect as they existed immediately before August 15, 2014 (24 CFR part 257):
</P>
<P>(1) Part 257, HOPE for Homeowners Program (12 U.S.C. 1701z-22).
</P>
<P>(2) [Reserved]
</P>
<P>(f) No new emergency mortgage assistance, emergency mortgage relief loans, advances of credit or emergency mortgage relief payments, or any other type of assistance permitted under the Emergency Housing Act of 1975, title I of the Emergency Homeowners' Relief Act (12 U.S.C. 2701), as amended by section 1496 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203) is being provided under the programs listed below. Any existing emergency assistance, emergency mortgage relief loans, advances of credit or emergency mortgage relief payments under these programs will continue to be governed by the regulations in effect as they existed immediately before September 8, 2014 (24 CFR part 2700):
</P>
<P>(1) Part 2700, Emergency Homeowners' Loan Program (12 U.S.C. 2701 <I>et seq.</I>)
</P>
<P>(2) [Reserved]
</P>
<P>(g) Any existing loan assistance (including recapture of loan assistance), ongoing participation, or insured loans under the program listed in this paragraph will continue to be governed by the regulations in effect as they existed immediately before May 4, 2015 (24 CFR part 235, 2014 Edition):
</P>
<P>(1) Part 235, Mortgage Insurance and Assistance Payments for Home Ownership and Project Rehabilitation (12 U.S.C. 1715z).
</P>
<P>(2) [Reserved]
</P>
<P>(h) Any existing loan assistance (including recapture of loan assistance), ongoing participation, or insured loans under the program listed in this paragraph will continue to be governed by the regulations in effect as they existed immediately before February 10, 2016 (24 CFR part 280, 2015 Edition):
</P>
<P>(1) Part 280, Mortgage Insurance and Assistance Payments for Home Ownership and Project Rehabilitation (12 U.S.C. 17151).
</P>
<P>(2) [Reserved]
</P>
<CITA TYPE="N">[79 FR 41423, July 16, 2014, as amended at 79 FR 46182, Aug. 7, 2014; 80 FR 18096, Apr. 3, 2015; 81 FR 1121, Jan. 11, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 200.1303" NODE="24:2.1.1.1.1.20.37.2" TYPE="SECTION">
<HEAD>§ 200.1303   Annual income exclusions for the Rent Supplement Program.</HEAD>
<P>(a) The exclusions to annual income described in 24 CFR 5.609(c) apply to those rent supplement contracts governed by the regulations at 24 CFR part 215 in effect immediately before May 1, 1996 (contained in the April 1, 1995 edition of 24 CFR, parts 200 to 219), in lieu of the annual income exclusions described in 24 CFR 215.21(c) (contained in the April 1, 1995 edition of 24 CFR, parts 200 to 219). 
</P>
<P>(b) The mandatory deductions described in 24 CFR 5.611(a) also apply to the rent supplement contracts described in paragraph (a) of this section in lieu of the deductions provided in the definition of “adjusted income” in 24 CFR 215.1 (as contained in the April 1, 1995 edition of 24 CFR, parts 200 to 219). 
</P>
<P>(c) The definition of “persons with disabilities” in paragraph (c) of this section replaces the terms “disabled person” and “handicapped person” used in the regulations in 24 CFR part 215, subpart A (as contained in the April 1, 1995 edition of 24 CFR, parts 200 to 219). <I>Person with disabilities,</I> as used in this part, has the same meaning as provided in 24 CFR 891.305.
</P>
<CITA TYPE="N">[66 FR 6224, Jan. 19, 2001]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="Y" NODE="24:2.1.1.1.1.21" TYPE="SUBPART">
<HEAD>Subpart Y—Multifamily Accelerated Processing (MAP): MAP Lender Quality Assurance Enforcement</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>70 FR 43242, July 26, 2005, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 200.1500" NODE="24:2.1.1.1.1.21.37.1" TYPE="SECTION">
<HEAD>§ 200.1500   Sanctions against a MAP lender.</HEAD>
<P>(a) In addition to any other legal remedy available to HUD, HUD may take the following actions with respect to a MAP lender:
</P>
<P>(1) Warning letter;
</P>
<P>(2) Probation;
</P>
<P>(3) Suspension;
</P>
<P>(4) Termination;
</P>
<P>(5) Limited Denial of Participation (LDP);
</P>
<P>(6) Referral to the Mortgagee Review Board; and
</P>
<P>(7) Referral to the Office of Inspector General.
</P>
<P>(b) The actions listed in paragraphs (a)(1) through (a)(4) of this section are carried out in accordance with the requirements of this subpart. An LDP is a sanction applied in accordance with subpart J of 2 CFR part 2424 to participants in loan transactions other than FHA-insured lenders. The Mortgagee Review Board procedures are found at 24 CFR part 25.
</P>
<CITA TYPE="N">[70 FR 43242, July 26, 2005, as amended at 72 FR 73494, Dec. 27, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 200.1505" NODE="24:2.1.1.1.1.21.37.2" TYPE="SECTION">
<HEAD>§ 200.1505   Warning letter.</HEAD>
<P>(a) <I>In general.</I> HUD may issue a warning letter, which specifies problems or violations identified by HUD, to a MAP lender.
</P>
<P>(b) <I>Effect of warning letter.</I> The warning letter:
</P>
<P>(1) Does not suspend a lender's MAP privileges;
</P>
<P>(2) May impose a higher level of review of the lender's underwriting by HUD;
</P>
<P>(3) May direct the taking of a corrective action; and
</P>
<P>(4) May require a meeting in a designated HUD office with the principal owners or officers, or both, of the MAP lender to discuss the specified problems and violations, and possible corrective actions.
</P>
<P>(c) <I>Relationship to other sanctions.</I> The issuance of a warning letter is not subject to the MAP Lender Review Board procedures in accordance with § 200.1535, and is not a prerequisite to the probation, or suspension, or termination of MAP privileges.


</P>
</DIV8>


<DIV8 N="§ 200.1510" NODE="24:2.1.1.1.1.21.37.3" TYPE="SECTION">
<HEAD>§ 200.1510   Probation.</HEAD>
<P>(a) <I>In general.</I> Only the MAP Lender Review Board (or Board) may place a lender on probation, in accordance with the procedures of § 200.1535.
</P>
<P>(b) <I>Effect of probation.</I> (1) Probation is intended to be corrective in nature and not punitive. As a result, release from probation is conditioned upon the lender meeting a specific requirement or requirements, such as replacement of a staff member. A lender's failure to take prompt corrective action after being placed on probation may be the basis for a recommendation of either suspension or termination. Any such recommendation shall, when possible, go to a MAP Lender Review Board composed of the same members who issued the original probation.
</P>
<P>(2) During the probation period, a MAP lender:
</P>
<P>(i) Shall be removed from the MAP-Approved Lender list posted on HUD's website;
</P>
<P>(ii) May not submit, and HUD may not accept, materials after the close of business of the date of the probation letter for a new application under MAP for multifamily mortgage insurance from HUD; and
</P>
<P>(iii) May continue to process any existing application for multifamily mortgage insurance submitted to a Multifamily Hub or Program Center before the date of the probation letter.
</P>
<P>(3) The MAP Lender Review Board may impose a higher level of review of the lender's underwriting by HUD;
</P>
<P>(4) Probation is nationwide in effect.
</P>
<P>(c) <I>Duration of probation.</I> (1) Probation continues until all specific corrective actions required by the MAP Lender Review Board (for example, exclusion of a specific staff member from work on MAP loans) are taken by the MAP lender. When all corrective actions have been taken, the MAP lender shall notify the Board. Once the Board is satisfied that the corrective actions have occurred, the probation period shall end.
</P>
<P>(2) A false statement that corrective action has been taken constitutes a false certification and may constitute a violation of 18 US.C. 1001.
</P>
<P>(3) When probation is lifted, the lender's name shall be promptly reinstated on the MAP-Approved Lender list posted on HUD's Web site.


</P>
</DIV8>


<DIV8 N="§ 200.1515" NODE="24:2.1.1.1.1.21.37.4" TYPE="SECTION">
<HEAD>§ 200.1515   Suspension of MAP privileges.</HEAD>
<P>(a) <I>In general.</I> Only the MAP Lender Review Board may suspend a lender's eligibility for MAP, in accordance with the procedures of § 200.1535.
</P>
<P>(b) <I>Effect of suspension.</I> (1) A suspension may impose any conditions that may be imposed by probation.
</P>
<P>(2) During the suspension period a MAP lender:
</P>
<P>(i) Shall be removed from the MAP-approved lender list posted on HUD's Web site;
</P>
<P>(ii) May not submit, and the HUD field office may not accept, materials after the close of business of the date of the suspension letter for a new application for multifamily mortgage insurance from HUD; and
</P>
<P>(iii) May continue to process any existing application for multifamily mortgage insurance submitted to a Multifamily Hub or Program Center before the date of the suspension letter.
</P>
<P>(3) The MAP Lender Review Board may impose a higher level of review of the lender's underwriting by HUD;
</P>
<P>(4) Suspension is nationwide in effect.
</P>
<P>(c) <I>Duration of suspension.</I> (1) Suspension may not exceed 12 months, except where conditions are imposed. If both a time period and conditions are imposed, a suspension shall terminate only when:
</P>
<P>(i) The time period of the suspension has expired;
</P>
<P>(ii) The MAP lender has submitted a certification of compliance with those conditions to the Board; and
</P>
<P>(iii) The Board has notified the MAP lender it has received the certification of compliance and is satisfied that the corrective actions have occurred.
</P>
<P>(2) When suspension is lifted, the lender's name shall be promptly reinstated on the MAP-Approved Lender list posted on HUD's Web site.


</P>
</DIV8>


<DIV8 N="§ 200.1520" NODE="24:2.1.1.1.1.21.37.5" TYPE="SECTION">
<HEAD>§ 200.1520   Termination of MAP privileges.</HEAD>
<P>(a) <I>In general.</I> Except as provided in paragraph (b) of this section, only the MAP Lender Review Board may terminate a lender's MAP privileges, in accordance with the procedures of § 200.1535.
</P>
<P>(b) <I>Administrative termination.</I> HUD will notify a lender of immediate termination of MAP privileges when either of the following circumstances is present:
</P>
<P>(1) Failure by the MAP lender to maintain its status as an FHA-approved lender; or
</P>
<P>(2) Failure by the MAP lender to maintain a minimum level of MAP lender activity, as evidenced by failure to submit either a pre-application package or firm commitment application at least once every 12 months.
</P>
<P>(c) <I>Effect of termination.</I> (1) The terminated lender shall be removed from the MAP-Approved Lender list on HUD's Web site.
</P>
<P>(2) A terminated lender may not submit, and the HUD field office may not accept, materials after the close of business of the date of the termination letter for new multifamily mortgage insurance from HUD.
</P>
<P>(3) Any MAP pre-application or MAP application in process may no longer be processed under MAP by the terminated lender. The lender will either:
</P>
<P>(i) Immediately transfer the transaction to the traditional application processing (TAP) procedure. HUD will completely reprocess all stages of the transaction; or
</P>
<P>(ii) Immediately transfer the project to a new MAP lender. The new MAP lender must completely reprocess all stages of the transaction. At no time can the new MAP lender assign the pre-application, the firm application, the mortgage insurance commitment, or the insured construction loan back to the original MAP lender.
</P>
<P>(4) HUD will not endorse any MAP loan processed by the terminated lender unless a firm commitment was issued before the date of termination.
</P>
<P>(i) Firm commitments involving new construction or substantial rehabilitation must be immediately transferred to a new MAP lender. At no time can the new MAP lender assign the firm mortgage insurance commitment, or the insured construction loan, back to the original MAP lender.
</P>
<P>(ii) Firm commitments issued for Section 223(f) projects may be transferred before final endorsement to any approved FHA lender or kept in the lender's portfolio.
</P>
<P>(iii) For those construction loans that have been initially endorsed, the MAP lender will lose its MAP privileges for construction loan administration. HUD will assume all the construction loan administration duties it normally performs for TAP processing.
</P>
<P>(iv) The original lender may service a transferred loan once it is finally endorsed.
</P>
<P>(5) Termination is nationwide in effect.
</P>
<P>(6) When a MAP lender loses its MAP lender status as a result of termination, the lender's status to process transactions using TAP is unaffected, provided that the lender has maintained its status as an FHA-approved multifamily lender.
</P>
<P>(d) <I>Reinstatement.</I> An application for reinstatement of MAP authority may not be made until at least 12 months after the date of termination. The requirements for reinstatement shall be the same as for initial qualification, and the applicant must show that the problems that led to termination have been resolved.


</P>
</DIV8>


<DIV8 N="§ 200.1525" NODE="24:2.1.1.1.1.21.37.6" TYPE="SECTION">
<HEAD>§ 200.1525   Settlement agreements.</HEAD>
<P>(a) HUD staff, as authorized, may negotiate a settlement agreement with a MAP lender before or after the issuance of a warning letter or referral to the MAP Lender Review Board. Once a matter has been referred to the MAP Lender Review Board, only the Board may approve a settlement agreement.
</P>
<P>(b) Settlement agreements may provide for:
</P>
<P>(1) Cessation of any violation;
</P>
<P>(2) Correction or mitigation of the effects of any violation;
</P>
<P>(3) Removal of lender staff from positions involving origination, underwriting, and/or construction loan administration;
</P>
<P>(4) Actions to collect sums of money wrongfully or incorrectly paid by the MAP lender to a third party;
</P>
<P>(5) Implementation or revision of a quality control plan or other corrective measure acceptable to HUD; and
</P>
<P>(6) Modification of the duration or provisions of any administrative sanction deemed to be appropriate by HUD.
</P>
<P>(c) A MAP lender's compliance with a settlement agreement is evidenced by the lender certifying its compliance with the conditions of the agreement, and HUD's determination that the lender is in compliance with the conditions of the agreement.
</P>
<P>(d) Failure by a MAP lender to comply with a settlement agreement may result in a probation, or suspension, or termination of MAP privileges, or referral to the Mortgagee Review Board.


</P>
</DIV8>


<DIV8 N="§ 200.1530" NODE="24:2.1.1.1.1.21.37.7" TYPE="SECTION">
<HEAD>§ 200.1530   Bases for sanctioning a MAP lender.</HEAD>
<P>It is HUD policy that approved MAP lenders are expected to comply at all times with HUD's underwriting and construction loan administration requirements and not to take any action that presents a risk to HUD's insurance funds. A MAP lender's improper underwriting and construction loan administration activities may lead to a warning letter or other sanction from HUD. Examples of such activities include, but are not limited to, the following:
</P>
<P>(a) <I>Minor offenses that may be the basis for a warning letter include:</I>
</P>
<P>(1) Failure to provide required exhibits or the submission of incomplete or inaccurate exhibits. Although the MAP lender will be permitted to correct minor errors or provide additional information, substantial inaccuracies or lack of significant information will result in a return of the application and retention of any fee collected;
</P>
<P>(2) Repeated failure to complete processing to firm commitment unrelated to an underwriting analysis that demonstrates that the process should not proceed to firm commitment;
</P>
<P>(3) Preparation of an underwriting summary that is not supported by the appropriate documentation and analysis;
</P>
<P>(4) Failure to notify the HUD processing office promptly of changes in the mortgage loan application for a firm commitment submitted, such as changes in rents, numbers of units, or gross project area;
</P>
<P>(5) Failure to meet MAP closing requirements or construction loan administration requirements;
</P>
<P>(6) Business practices that do not conform to those generally accepted by prudent lenders or that show irresponsibility; and
</P>
<P>(7) Failure to cooperate with a Lender Qualifications and Monitoring Division review by HUD.
</P>
<P>(b) <I>Serious offenses that might be a basis for a warning letter or probation, suspension, or termination include:</I>
</P>
<P>(1) Receipt of multiple warning letters over any one-year period. In determining which sanction to pursue as a result of prior warning letters, HUD will consider the facts and circumstances surrounding those warning letters and the corrective actions, if any, undertaken by the lender;
</P>
<P>(2) Fraud or material misrepresentation in the lender's participation in FHA multifamily programs;
</P>
<P>(3) Lender collusion with, or influence upon, third party contractors to modify reports affecting the contractor's independent evaluation;
</P>
<P>(4) A violation of MAP procedures by a third party contractor, which the MAP lender knew, or should have known, was occurring and which, if performed by the MAP lender itself, would constitute a ground for a sanction under this chapter;
</P>
<P>(5) Evidence that a lender's inadequate or inaccurate underwriting was a cause for assignment of an FHA-insured mortgage and claim for insurance benefits to HUD;
</P>
<P>(6) Identity-of-interest violations as defined by Chapter 2 of the MAP Guide;
</P>
<P>(7) Payment by, or receipt of a payment by, a MAP lender of any kickback or other consideration, directly or indirectly, which would affect the lender's independent evaluation, or represent a conflict of interest, in connection with any FHA-insured mortgage transaction;
</P>
<P>(8) Failure to comply with any agreement, certification, undertaking, or condition of approval listed in a MAP lender's application for approval;
</P>
<P>(9) Noncompliance with any requirement or directive of the MAP Lender Review Board;
</P>
<P>(10) Violation of the requirements of any contract with HUD, or violation of the requirements in any statute or regulation;
</P>
<P>(11) Submission of false information, or a false certification, to HUD in connection with any MAP mortgage transaction;
</P>
<P>(12) Failure of a MAP lender to respond in a timely manner to inquiries from the MAP Lender Review Board in accordance with this subpart;
</P>
<P>(13) Indictment or conviction of a MAP lender or any of its officers, directors, principals, or employees for an offense that reflects on the responsibility, integrity, or ability of the lender to participate in the MAP initiative;
</P>
<P>(14) Employing or retaining an officer, partner, director, or principal at the time when the person was suspended, debarred, ineligible, or subject to an LDP under 2 CFR part 2424, or otherwise prohibited from participation in HUD programs, when the MAP lender knew or should have known of the prohibition;
</P>
<P>(15) Employing or retaining an employee who is not an officer, partner, director, or principal, and who is or will be working on HUD-FHA program matters, at a time when that person was suspended, debarred, ineligible, or subject to an LDP under 2 CFR part 2424, or otherwise prohibited from participation in HUD programs, when the MAP lender knew or should have known of the prohibition; 
</P>
<P>(16) Failure to cooperate with an audit or investigation by the HUD Office of Inspector General or an inquiry by HUD into the conduct of the MAP lender's FHA-insured loans; and
</P>
<P>(17) Failure to fund MAP mortgage loans or any misuse of mortgage loan proceeds.
</P>
<CITA TYPE="N">[70 FR 43242, July 26, 2005, as amended at 72 FR 73494, Dec. 27, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 200.1535" NODE="24:2.1.1.1.1.21.37.8" TYPE="SECTION">
<HEAD>§ 200.1535   MAP Lender Review Board.</HEAD>
<P>(a) <I>Authority</I>—(1) <I>Sanctions.</I> The MAP Lender Review Board (or Board) is authorized to impose appropriate sanctions on a MAP lender after:
</P>
<P>(i) Conducting an impartial review of all information and documentation submitted to the Board; and
</P>
<P>(ii) Making factual determinations that there has been a violation of MAP requirements.
</P>
<P>(2) <I>Settlement agreements.</I> The Board is authorized to approve settlement agreements in accordance with § 200.1525 of any matter pending before the Board.
</P>
<P>(3) <I>Extensions.</I> The Board is authorized to extend, on its own initiative or for good cause at the written request of a MAP lender, any time limit otherwise applicable under this section. Notice of any such extension shall be timely provided to a MAP lender.
</P>
<P>(b) <I>Notice of violation.</I> Before the Board reviews a matter for consideration of a sanction, the Board's Chairman will issue written notice of violation to the MAP lender's contact person as listed on the Multifamily MAP Web site. The notice is sent by overnight delivery and must be signed for by an employee of the MAP lender upon receipt. The notice:
</P>
<P>(1) Informs the lender that the Board is considering a specific violation;
</P>
<P>(2) States the specific facts alleged concerning the violation, with citation to the HUD requirements that have been violated;
</P>
<P>(3) Includes as attachments copies of all documents evidencing the violation and upon which the Board will rely in reaching a decision;
</P>
<P>(4) Provides the lender with the opportunity to request in writing, within 15 business days after the date of the issuance of the notice, to:
</P>
<P>(i) Meet for an informal conference with the Board in person or by video conference using HUD facilities at Headquarters or one of HUD's field offices; and
</P>
<P>(ii) Present written evidence and any other relevant information at the conference;
</P>
<P>(5) Requires a written response to be submitted to the Board by a date specified within the notice;
</P>
<P>(6) Provides the street address, email address, or facsimile (FAX) number for purposes of receiving the lender's request for an informal conference and written response; and
</P>
<P>(7) Is made part of the administrative record of the Board's decision of the matter.
</P>
<P>(c) <I>Response to notice.</I> (1) The MAP lender's written response required by the notice of violation may not exceed 15 double-spaced typewritten pages and must include an executive summary, a statement of the facts, an argument, and a conclusion. The response and supporting documentation must be submitted in triplicate.
</P>
<P>(2) Failure to respond by the dates specified within the notice may result in a determination by the Board without conducting an informal conference with the MAP lender and without consideration of any written response submitted by the MAP lender.
</P>
<P>(d) <I>Informal conference.</I> (1) The Board will schedule an informal conference and notify the lender of the time and place of the conference, if one is requested.
</P>
<P>(2) At the conference, the Board will meet with the lender or its designees and HUD staff to review documentary evidence and presentations by both sides.
</P>
<P>(3) Oral statements made at the informal meeting will not be considered as part of the administrative record of the Board's determination, except:
</P>
<P>(i) The Board may note for the record and consider voluntary admissions, made by the lender or a representative of the lender, of any element of the violation charged;
</P>
<P>(ii) Statements substantiated by any additional documents or evidence submitted in accordance with paragraphs (e)(1) or (e)(3) of this section; and
</P>
<P>(iii) Transcripts prepared and submitted in accordance with paragraph (e)(2) of this section.
</P>
<P>(e) <I>Post-conference submissions.</I> (1) Any additional documents, evidence, or written arguments relevant to the notice of violation and the informal conference that the lender or HUD staff wish to present to the Board, must be presented within five business days after date of the informal conference.
</P>
<P>(2) No transcript of the informal conference will be made, unless the lender elects to have a transcript made by a certified court reporter at its own expense. If the lender elects to have a transcript made, the lender must provide three copies of the transcript to HUD within five business days after the date of the informal conference. The transcript will not become a part of the administrative record of the Board's decision unless it is submitted within the required five-day period frame.
</P>
<P>(3) Following the receipt of any post-conference submissions, the Board may request or permit additional documents or evidence to be submitted within a period set by the Board for inclusion in the administrative record.
</P>
<P>(f) <I>Board action.</I> (1) The Board will confer to consider the evidence included in the administrative record and make a final decision concerning the matter. Any record of confidential communications between and among Board members at this stage of the proceedings is privileged from disclosure and will not be regarded as a part of the administrative record of any matter.
</P>
<P>(2) In determining what action is appropriate concerning the matter, the Board considers, among other factors:
</P>
<P>(i) The seriousness and the extent of the violation;
</P>
<P>(ii) Any history of prior offenses;
</P>
<P>(iii) Deterrence of future violations;
</P>
<P>(iv) Any inappropriate benefits received by the MAP lender;
</P>
<P>(v) Potential inappropriate benefit to other persons; and
</P>
<P>(vi) Any mitigating factors.
</P>
<P>(3) Board decisions will be determined by majority vote.
</P>
<P>(g) <I>Notice of action.</I> (1) The Board will issue its final decision within 10 business days after the date of the informal conference or the expiration of any period allowed for the submission of documents and evidence, whichever is later.
</P>
<P>(2) The Board will notify the MAP lender of its final decision by overnight delivery of a written notice of the final decision to the MAP lender's contact person as listed on the Multifamily MAP Web site. The Board will also notify HUD field offices of its final decision.
</P>
<P>(3) The final decision finds that a violation either does, or does not, exist. If a violation is found to exist, the final decision:
</P>
<P>(i) States the violation and any factual findings of the Board;
</P>
<P>(ii) States the nature and duration of the sanction;
</P>
<P>(iii) Informs the MAP lender of its right to an appeal conference and identifies the appeals official to be contacted; and
</P>
<P>(iv) May add to or modify the violation as stated in the initial notice of violation.


</P>
</DIV8>


<DIV8 N="§ 200.1540" NODE="24:2.1.1.1.1.21.37.9" TYPE="SECTION">
<HEAD>§ 200.1540   Imminent harm notice of action.</HEAD>
<P>The Board may issue an imminent harm notice of action to terminate a MAP lender, or to place a MAP lender on probation or suspension without advance notice to the MAP lender in those instances where the Board determines there exists a need to protect the financial interest of HUD from imminent harm. In all such instances, the Board shall notify the lender of the Board's decision promptly and give the reasons for the decision in accordance with § 200.1535(g)(2) and (3). The lender shall have the right to submit materials to the Board and to appear before the Board to seek prompt reconsideration of the Board's decision in accordance with the procedures of § 200.1535.


</P>
</DIV8>


<DIV8 N="§ 200.1545" NODE="24:2.1.1.1.1.21.37.10" TYPE="SECTION">
<HEAD>§ 200.1545   Appeals of MAP Lender Review Board decisions.</HEAD>
<P>(a) <I>Request for appeal.</I> Whenever the Board imposes a sanction of probation, suspension, or termination against a MAP lender, the lender may request, in writing, an appeal conference before the appeals official. The MAP lender must deliver the written request for an appeal to the appeals official within 10 business days after the date noted on the notice of action or the right to an appeal is deemed waived. Participation in the appeal process under this section is not a prerequisite to filing an action for judicial review under the Administrative Procedure Act.
</P>
<P>(b) <I>Appeals Official.</I> The appeals official must be an individual who has not been previously involved with the proceedings or settlement discussions at issue.
</P>
<P>(c) <I>Notice of action in effect.</I> The notice of action issued by the Board remains in effect while the appeal is pending.
</P>
<P>(d) <I>Scheduling of appeal.</I> (1) Upon receipt of the request for an appeal, the appeals official will promptly notify the MAP lender of the time and place of the appeal conference. The appeal conference will be held within 10 business days after receipt of the MAP lender's appeal request, except as provided in paragraph (d)(2) of this section.
</P>
<P>(2) A MAP lender may request, and the appeals official may agree, to have an appeal conference held more than 10, but not more than 30 business days after the date of the lender's request for an appeal.
</P>
<P>(e) <I>Scope of appeal.</I> The appeals official may consider information included in the administrative record and any new information presented at the appeal conference that is substantiated in accordance with paragraph (f) of this section. In addition, the appeals official may consider voluntary admissions by the lender or a representative of the lender of any element of the violation charged.
</P>
<P>(f) <I>Additional documents</I>—(1) <I>Transcript.</I> No transcript of the appeal conference will be made, unless the MAP lender elects to have a transcript made by a certified court reporter at its own expense. If the lender elects to have a transcript made, it must provide three copies of the transcript to the appeals official within five business days after the date of the appeal conference.
</P>
<P>(2) <I>Other documents.</I> Any additional, relevant documents or written arguments that the MAP lender wishes to present to the appeals official must be presented within five business days after the date of the appeal conference.
</P>
<P>(g) <I>Determination of appeal.</I> Within 10 business days after the date of the appeal conference or the expiration of the period allowed for the submission of documents and written arguments, whichever is later, the appeals official will make a written determination to confirm, modify, or overturn the Board's decision and notice of action. If the appeals official overturns the Board's decision, the lender shall immediately return to an active status as a MAP lender and the written determination to overturn will be posted on HUD's MAP Web site.


</P>
</DIV8>

</DIV6>


<DIV6 N="0" NODE="24:2.1.1.1.1.22" TYPE="SUBPART">
<HEAD> </HEAD>

</DIV6>


<DIV9 N="Appendix A" NODE="24:2.1.1.1.1.23.37.1.2" TYPE="APPENDIX">
<HEAD>Appendix A to Part 200—Standards Incorporated by Reference in the Minimum Property Standards for Housing (HUD Handbook 4910.1)
</HEAD>
<P>The following publications are incorporated by reference in the HUD Minimum Property Standards (MPS) in 24 CFR part 200. The MPS are available for public inspection and can be obtained for appropriate use at 490 L'Enfant Plaza East, Suite 3214, or at each HUD Regional, Area, and Service Office. Copies are available for inspection at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: <I>http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.</I> The individual standards referenced in the MPS are available at the address contained in the following table. They are also available for public inspection at the HUD, Manufactured Housing and Construction Standards Division, Suite 3214, 490 L'Enfant Plaza East, Washington, DC 20024. 
</P>
<FP-2>Air Conditioning Contractors of America 1513 16th Street, NW., Washington, DC 20036, (202) 483-9370.
</FP-2>
<FP1-2>Load Calculation for Residential Winter and Summer Air Conditioning, Manual J 1986 
</FP1-2>
<FP-2>Aluminum Association, 900 19th Street, NW., Washington, DC 20006, Telephone (202) 862-5100. 
</FP-2>
<FP1-2>AA-ASM 35-80 Specifications for Aluminum Sheet Metal Work in Building Construction 
</FP1-2>
<FP-2>American Architectural Manufacturers Association, 1540 East Dundee Road, Paletine, IL 60067, Telephone (708) 202-1350.
</FP-2>
<FP1-2>AAMA-800-92 Voluntary Specifications and Test Methods for Sealants 
</FP1-2>
<FP1-2>AAMA-1503.1-88 Voluntary Test Method for Thermal Transmittance and Condensation Resistance of Windows, Doors and Glazed Wall Sections 
</FP1-2>
<FP1-2>AAMA 1504-88 Voluntary Standards for Thermal Performance of Windows, Doors and Glazed Wall Sections
</FP1-2>
<FP-2>American Concrete Institute, P. O. Box 19150, Redford Station, Detroit, Michigan 48219, Telephone (313) 532-2600.
</FP-2>
<FP1-2>ACI 211.1-89 Standard Practice for Selecting Proportions for Normal, Heavyweight and Mass Concrete 
</FP1-2>
<FP1-2>ACI 211.2-91 Standard Practice for Selecting Proportions for Structural Lightweight Concrete 
</FP1-2>
<FP1-2>ACI 213R-87 Guide for Structural Lightweight Aggregate Concrete 
</FP1-2>
<FP1-2>ACI 301-89 Specifications for Structural Concrete for Buildings 
</FP1-2>
<FP1-2>ACI 302.1R-80 Guide for Concrete Floor and Slab Construction 
</FP1-2>
<FP1-2>ACI 304R-89 Guide for Measuring, Mixing, Transporting and Placing Concrete 
</FP1-2>
<FP1-2>ACI 305R-77 Hot Weather Concreting (Revised 1989) 
</FP1-2>
<FP1-2>ACI 306R-78 Cold Weather Concreting (Revised 1988) 
</FP1-2>
<FP1-2>ACI 311.4R-80 Guide for Concrete Inspection (Revised 1988) 
</FP1-2>
<FP1-2>ACI 315-80 Guide for Detailing of Concrete Reinforcement 
</FP1-2>
<FP1-2>ACI 318-89 Building Code Requirements for Reinforced Structural Plain Concrete (Revised 1992) 
</FP1-2>
<FP1-2>ACI 322-72 Structural Plain Concrete 
</FP1-2>
<FP1-2>ACI 347-78 Recommended Practice for Concrete Formwork (Reapproved 1984) 
</FP1-2>
<FP1-2>ACI 504R-77 Guide to Joint Sealants for Concrete Structures 
</FP1-2>
<FP1-2>ACI 506-90 Recommended Practice for Shotcreting 
</FP1-2>
<FP1-2>ACI 515.1R-79 A Guide to the Use of Waterproofing, Dampproofing, Protective and Decorative Barrier Systems for Concrete (Revised 1985) 
</FP1-2>
<FP1-2>ACI 533.1R-69 Quality Standards and Tests for Precast Concrete Wall Panels 
</FP1-2>
<FP1-2>ACI 533.2R-69 Selection and Use of Materials for Precast Concrete Wall Panels 
</FP1-2>
<FP1-2>ACI 533.3R-70 Fabrication, Handling and Erection of Precast Concrete Wall Panels 
</FP1-2>
<FP-2>American Forest &amp; Paper Association, (formerly National Forest Products Association), 1250 Connecticut Ave., NW., Washington, DC 20036. National Design Specification for Wood Construction—1991. 
</FP-2>
<FP-2>American National Standards Institute, 11 West 42nd Street, New York, NY 10036, Telephone (212) 642-4900.
</FP-2>
<FP1-2>ANSI A108.1A-92 Specifications for Installation of Ceramic Tile, in the Wet Set Method with Portland Cement Mortar 
</FP1-2>
<FP1-2>ANSI A137.1-1988 Specifications for Ceramic Tile 
</FP1-2>
<FP1-2>ANSI/BHMA A156.2-1989 Standard for Bored and Preassembled Locks and Latches 
</FP1-2>
<FP1-2>ANSI/NKCA A161.1-1985 Recommended Performance and Construction Standards for Kitchen and Vanity Cabinets (Approved March 18, 1986) 
</FP1-2>
<FP1-2>ANSI A208.1-1989 Wood Particleboard 
</FP1-2>
<FP1-2>ANSI/AAMA 101-1988 Voluntary Specifications for Aluminum Prime Windows and Sliding Glass Doors 
</FP1-2>
<FP1-2>ANSI/AAMA 1002.10-1983 Voluntary Specifications for Aluminum Insulating Storm Products for Windows and Sliding Glass Doors 
</FP1-2>
<FP1-2>ANSI/AAMA 1102.7-1989 Voluntary Specifications for Aluminum Storm Doors 
</FP1-2>
<FP1-2>ANSI/AAMA 1402-1986 Standard Specifications for Aluminum Siding, Soffit and Fascia (ANSI Approved 1989) 
</FP1-2>
<FP1-2>ANSI/ACI 214-77 Recommended Practice for Evaluation of Strength Test Results of Concrete (Reapproved 1983) 
</FP1-2>
<FP1-2>ANSI/AHA A135.4-1982 Basic Hardboard (Reaffirmed 1988) 
</FP1-2>
<FP1-2>ANSI/AHA A135.6-1990 Hardboard Siding 
</FP1-2>
<FP1-2>ANSI/AHA A194.1-1985 Cellulosic Fiber Board 
</FP1-2>
<FP1-2>ANSI/APA 1-1984 Mosaic-Parquet Hardboard Slat Flooring 
</FP1-2>
<FP1-2>ANSI/NSPI-1-91 Standard for Public Swimming Pools 
</FP1-2>
<FP1-2>ANSI Z34.1-1987 American National Standard for Certification, Third-Party Certification Program 
</FP1-2>
<FP1-2>ANSI Z124.5-1989 American National Standard for Plastic Toilet Seats (Water Closet Seats)
</FP1-2>
<FP-2>American Society of Civil Engineers, 345 East 47th Street, New York, NY 10017.
</FP-2>
<FP1-2>ASCE 7-88 Minimum Design Loads for Buildings and Other Structures (Formerly ANSI A58.1) 
</FP1-2>
<FP-2>American Society of Mechanical Engineers, 345 E 47th Street, New York, NY 10017.
</FP-2>
<FP1-2>ASME/ANSI A17.1-87 Safety Code for Elevators and Escalators Including the A17.1b-89 Addenda 
</FP1-2>
<FP1-2>ASME A 112.18.1M89 Plumbing Fixture Fittings 
</FP1-2>
<FP-2>American Society for Testing and Materials, 1916 Race Street, Philadelphia, PA 19103, Telephone (215) 299-5400.
</FP-2>
<FP1-2>ASTM C 12-91 Standard Practice for Installing Vitrified Clay Pipe Lines 
</FP1-2>
<FP1-2>ASTM C 208-72 Insulating Board (Cellulosic Fiber), Structural and Decorative (Reapproved 1982) 
</FP1-2>
<FP1-2>ASTM C 209-84 Standard Methods of Testing Insulating Board (Cellulosic Fiber), Structural and Decorative 
</FP1-2>
<FP1-2>ASTM C 216-91c Standard Specification for Facing Brick (Solid Masonry Units Made from Clay or Shale) 
</FP1-2>
<FP1-2>ASTM C 220-91 Standard Specification for Flat Asbestos-Cement Sheets 
</FP1-2>
<FP1-2>ASTM C 221-91 Standard Specification for Corrugated Asbestos-Cement Sheets 
</FP1-2>
<FP1-2>ASTM C 223-91 Standard Specification for Asbestos-Cement Siding 
</FP1-2>
<FP1-2>ASTM C 509-91 Standard Specification for Elastomeric Cellular Preformed Gasket and Sealing Material 
</FP1-2>
<FP1-2>ASTM C 516-80 Standard Specification for Vermiculite Loose Fill Thermal Insulation (Reapproved 1985) 
</FP1-2>
<FP1-2>ASTM C 549-81 Standard Specification for Perlite Loose Fill Insulation (Reapproved 1986) 
</FP1-2>
<FP1-2>ASTM C 578-92 Standard Specification for Rigid, Cellular Polystyrene Thermal Insulation 
</FP1-2>
<FP1-2>ASTM C 640-83 Standard Specification for Insulation Board, Thermal (Cork) 
</FP1-2>
<FP1-2>ASTM C 726-88 Standard Specification for Mineral Fiber and Roof Insulation Board 
</FP1-2>
<FP1-2>ASTM C 739-91 Standard Specification for Cellulosic Fiber (Wood-Based) Loose-Fill Thermal Insulation 
</FP1-2>
<FP1-2>ASTM C 754-88 Standard Specification for Installation of Steel Framing Members to Receive Screw-Attached Gypsum 
</FP1-2>
<FP1-2>ASTM C 834-91 Standard Specification for Latex Sealants 
</FP1-2>
<FP1-2>ASTM C 841-90 Standard Specification for Installation of Interior Lathing and Furring 
</FP1-2>
<FP1-2>ASTM C 842-85 Standard Specification for Application of Interior Gypsum Plaster (Reapproved 1990) 
</FP1-2>
<FP1-2>ASTM C 843-92 Standard Specification for Application of Gypsum Veneer Plaster 
</FP1-2>
<FP1-2>ASTM C 844-85 Standard Specification for Application of Gypsum Base to Receive Gypsum Veneer Plaster 
</FP1-2>
<FP1-2>ASTM C 846-76 Standard Practice for Application of Structural Insulating Board (Fiberboard) Sheathing (Reapproved 1982) 
</FP1-2>
<FP1-2>ASTM C 864-90 Standard Specification for Dense Elastomeric Compression Seal Gaskets, Setting Blocks and Spacers. 
</FP1-2>
<FP1-2>ASTM C 926-90 Standard Specification for Application of Portland Cement-Based Plaster 
</FP1-2>
<FP1-2>ASTM C 1036-91 Standard Specification for Flat Glass 
</FP1-2>
<FP1-2>ASTM D 1037-89 Standard Test Methods for Evaluating the Properties of Wood-Base Fiber and Particle Panel Materials 
</FP1-2>
<FP1-2>ASTM C 1048-91 Standard Specification for Heat-Treated Flat Glass-Kind HS, Kind FT Coated and Uncoated Glass 
</FP1-2>
<FP1-2>ASTM D 1557-91 Test Method for Laboratory Compaction Characteristics of Soil Using the Modified Method (56,000 ft-lbf/ft<E T="52">3</E> (2,700 kN-m/m<E T="52">3</E>)) 
</FP1-2>
<FP1-2>ASTM D 2316-75 Standard Recommended Practice for Installing Bituminized Fiber Drain and Sewer Pipe (Reapproved 1984) 
</FP1-2>
<FP1-2>ASTM D 2321-89 Standard Practice for Underground Installation of Thermoplastic Pipe for Sewers and Other Gravity-Flow Applications 
</FP1-2>
<FP1-2>ASTM D 3656-89 Standard Specifications for Insect Screening and Louver Cloth Woven From Vinyl-Coated Glass Yarns 
</FP1-2>
<FP1-2>ASTM D 3679-92 Standard Specification for Rigid Poly (Vinyl Chloride) (PVC) Siding 
</FP1-2>
<FP1-2>ASTM E 72-80 Standard Methods of Conducting Strength Tests of Panels for Building Construction 
</FP1-2>
<FP1-2>ASTM E 283-91 Standard Test Method for Determining the Rate of Air Leakage Through Exterior Windows, Curtain Walls, and Doors Under Specified Pressure Differences Across the Spectrum 
</FP1-2>
<FP1-2>ASTM E 330-90 Standard Test Method for Structural Performance of Exterior Windows, Curtain Walls, and Doors by Uniform Static Air Pressure Difference 
</FP1-2>
<FP1-2>ASTM E 331-86 Standard Test Method for Water Penetration of Exterior Windows, Curtain Walls, and Doors by Uniform Static Air Pressure Difference 
</FP1-2>
<FP1-2>ASTM E 380-91a Standard Practices for Use of the International Systems of Units (SI) (the Modernized Metric System)
</FP1-2>
<FP-2>American Society of Heating, Refrigerating and Air Conditioning Engineers, 1791 Tullie Circle, NE, Atlanta, GA 30329. ASHRAE Handbook—Fundamentals—1989. ASHRAE Cooling and Heating Load Calculation Manual—GRP 158 1979. ASHRAE Handbook—Equipment—1988. ASHRAE Handbook—HVAC Systems and Applications—1987. 
</FP-2>
<FP-2>American Welding Society, 550 NW Le Jeune Road, P. O. Box 351040, Miami, FL 33126, Telephone (305) 443-9353. ANSI/AWS D1.1-90 Structural Welding Code—Steel. ANSI/AWS D1.4-79 Structural Welding Code-Reinforcing Steel.
</FP-2>
<FP-2>The Asphalt Institute, Asphalt Institute Building, College Park, MD 20740 Telephone (301) 277-4258.
</FP-2>
<FP1-2>MSI-1-81 Thickness Design—Asphalt Pavements for Highways and Streets
</FP1-2>
<FP-2>Asphalt Roofing Manufacturers Association, 6288 Montrose Road, Rockville, MD 20852, Telephone (301) 231-9050. Residential Asphalt Roofing Manual—1988. 
</FP-2>
<FP-2>Carpet and Rug Institute, 310 Holiday Avenue, Box 2048, Dalton, GA 30722-0048, Telephone (404) 278-3176. How to Specify Commercial Carpet Installation, 1984. 
</FP-2>
<FP-2>Council of American Building Officials, Suite 708, 5203 Leesburg Pike, Falls Church, VA 22041, Telephone (703) 931-4533. CABO One and Two Family Dwelling Code 1992 edition with Errata Package and 1993 Amendments. CABO Model Energy Code 1992 edition CABO/ANSI A117.1-92 Accessible and Usable Buildings and Facilities. 
</FP-2>
<FP-2>Department of Agriculture, Publications Division, 14th and Independence Avenue, SW., Washington, DC 20050, Telephone (202) 447-3957.
</FP-2>
<FP1-2>Agriculture Handbook No. 73, Wood Frame House Construction 
</FP1-2>
<FP1-2>Home and Garden Bulletin No. 64. Subterranean Termites—Their Prevention and Control in Buildings, October 1983 
</FP1-2>
<FP1-2>Home and Garden Bulletin No. 73, Wood Decay in Houses, How to Prevent and Control It, May 1986 
</FP1-2>
<FP-2>Department of Commerce, National Institute of Standards and Technology, Gaithersburg, Maryland 20899, Telephone (301) 975-4025. PS 1-83 Product Standard for Construction and Industrial Plywood with Typical APA Trademarks. PS 2-92 Performance Standard for Wood-Based Structural-Use Panels. 
</FP-2>
<P>Commercial Standards: 
</P>
<FP1-2>CS 138-55 Insect Wire Screening 
</FP1-2>
<FP1-2>CS 242-62 1 
<FR>3/4</FR>” Steel Doors &amp; Frames
</FP1-2>
<FP-2>Department of Defense, Naval Publication and Forms Center, 5801 Taber Road, Philadelphia, PA 19120, Telephone (215) 697-2179. 
</FP-2>
<P>Federal Specifications:
</P>
<FP1-2>L-S-125B Screening, Insect, Non-metallic February 3, 1972 
</FP1-2>
<FP1-2>L-F-001641 Floor Covering Translucent or Transparent Vinyl Surface with Backing—1971 and Amendment 2—September 24, 1982 
</FP1-2>
<FP1-2>L-F-00450A Flooring, Vinyl Plastic (GSAFSS)—1970 and Amendment 1, August 5, 1975 
</FP1-2>
<FP1-2>L-F-475A Floor Covering Vinyl, Surface Tile and Roll, with Backing including Amendment 2—February 9, 1971 
</FP1-2>
<FP1-2>HH-I-521F Insulation Blankets, Thermal (Mineral Fiber—for Ambient Temperatures—1980) 
</FP1-2>
<FP1-2>HH-I-526C Insulation Board, Thermal (Mineral Fiber)—1968 
</FP1-2>
<FP1-2>HH-I-529B Insulation Board, Thermal (Mineral Aggregate)—1971 
</FP1-2>
<FP1-2>HH-I-530B Insulation Board, Thermal, Unfaced, Polyurethane or Polyisocyanurate and Interim I—1982 
</FP1-2>
<FP1-2>HH-I-551E Insulation Block and Boards, Thermal (Cellular Glass) Fiber, for Ambient Temperatures, 1974 
</FP1-2>
<FP1-2>HH-I-558B Insulation Blocks, Boards, Blankets, Felts Sleeving (Pipe and Tube Covering), and Pipe Fitting Covering, Thermal (Mineral Fiber, Insulation Type) and Amendment 3—1976 
</FP1-2>
<FP1-2>HH-I-574B Insulation, Thermal (Perlite) and Interim Amendment—1976 
</FP1-2>
<FP1-2>HH-I-585C Insulation, Thermal (Vermiculite) and Interim Amendment 1—1976 
</FP1-2>
<FP1-2>HH-I-1030B Insulation, Thermal (Mineral Fiber, for Pneumatic or Poured Application)—1980 
</FP1-2>
<FP1-2>HH-I-1252B Insulation, Thermal Reflective, (Aluminum Foil) and Interim Amendment 1—1976 
</FP1-2>
<FP1-2>HH-I-1972 Insulation Board, Thermal, Faced, Gen; 1, 2, 3, Polyurethane and Polyisocyanurate and 4, 5 &amp; 6 Amendments—1985 
</FP1-2>
<FP1-2>LLL-I-535B Insulation Board, Thermal, Cellulosic Fiber, 1977 
</FP1-2>
<FP1-2>SS-S-346C Siding (Shingles, Clapboards, and Sheets) 1968 
</FP1-2>
<FP1-2>SS-T-312B Tile, Floor: Asphalt, Rubber, Vinyl-Composition and Interim Amendment—1979 
</FP1-2>
<FP-2>Department of Housing and Urban Development, 451 Seventh Street, SW., Mail Room B-133, Washington, DC 20410, Telephone (202) 755-7440.
</FP-2>
<P>Handbooks:
</P>
<FP1-2>4940.2-1973 Minimum Design Standards for Community Water Supply Systems 
</FP1-2>
<FP1-2>4940.3-1992 Minimum Design Standards for Community Sewerage Systems (Rev. 1-92) 
</FP1-2>
<FP1-2>4950.1-1988 Technical Suitability of Products Program, Technical and Processing Procedures (Rev. 2 which includes revisions and changes through October 24, 1991) 
</FP1-2>
<FP1-2>4930.2-1989 HUD Intermediate MPS Supplement, Solar Heating &amp; Domestic Hot Water Systems
</FP1-2>
<P>Use of Materials Bulletins:
</P>
<FP1-2>25d Power Driven, Mechanically Driven and Manually Driven Fasteners—9/5/73 
</FP1-2>
<FP1-2>38h Grademarking of Lumber—7/31/79 
</FP1-2>
<FP1-2>44c HUD/FHA Standard for Carpet and Carpet Certification Program—2/22/78 (Plus Addendum 1 &amp; 2) 
</FP1-2>
<FP1-2>48 Labels of Independent Programs for Certifying Pressure-Treated Lumber and Plywood (Plus 5 Supplements—11/15/67) 
</FP1-2>
<FP1-2>52a Quality Certification and Labeling for Wood Flush Doors—10/7/75) 
</FP1-2>
<FP1-2>58a Acrylic Plastic Sheets for Glazing—9/2/75 
</FP1-2>
<FP1-2>60 Field Glued Plywood &amp; Wood Frame Structural Floor Systems—12/9/70 
</FP1-2>
<FP1-2>62a Factory-Applied Laminated Roofing Systems Based on Chlorosulfonated Polyethylene (CPSE)—11/16/72 
</FP1-2>
<FP1-2>65 Controlled Density Cellular Concrete Floor Fill—10/11/73 
</FP1-2>
<FP1-2>67 Polycarbonate Plastic Sheets for Glazing—9/3/75 
</FP1-2>
<FP1-2>70a Particleboard Interior Stair Treads and Certification Program—5/19/82 
</FP1-2>
<FP1-2>71 Polystyrene Foam Insulation Sheathing Board—1/10/77 
</FP1-2>
<FP1-2>72 HUD Standard for Carpet Cushion—2/6/80 
</FP1-2>
<FP1-2>76 Chlorinated Poly (Vinyl Chloride) CPVC and Polybutylene (PB) Hot and Cold Water Distribution—4/25/78 
</FP1-2>
<FP1-2>77a Cast Iron Sanitary Drainage System with Hubless Pipe and Fittings—3/28/80 
</FP1-2>
<FP1-2>78 Polyethylene (PE), Acrylonitrile-Butadiene-Styrene (ABS), Poly Vinyl Chloride (PVC) and Polybutylene (PB) Plastic Piping for Domestic Cold Water Service—4/25/78 
</FP1-2>
<FP1-2>79a Acrylonitrile-Butadiene-Styrene (ABS) and Poly (Vinyl Chloride) (PVC) Plastic Drain, Waste and Vent Pipe and Fittings—3/7/82 
</FP1-2>
<FP1-2>80 Spray Applied Cellulosic Thermal Insulation—10/31/79 
</FP1-2>
<FP1-2>101 HUD Building Product Standards and Certification Program for Exterior Wall Insulation and Finish Systems, July 26, 1993 
</FP1-2>
<FP-2>Environmental Protection Agency, Office of Drinking Water, 401 M Street, SW., Washington, DC 20460, Telephone (202) 382-5533.
</FP-2>
<FP1-2>EPA 570/9-82-004 Manual of Individual Water Supply (NTIS-PB 85242279) Systems (October 1982)
</FP1-2>
<FP-2>Flat Glass Marketing Association, White Lakes Professional, Building 3310 Harrison Street, Topeka, KS 66611, Telephone (913) 266-7013. FGMA Glazing Manual—1986. FGMA Sealant Manual—1990. 
</FP-2>
<FP-2>Hardwood Plywood Manufacturers Association, P.O. Box 2789, 1825 Michael Faraday Drive, Reston, VA 22090, Telephone (703) 435-2900. ANSI/HPMA LHF-1987 Laminated Hardwood Flooring. 
</FP-2>
<FP-2>Insect Screening Weavers Assn., 2000 Maple Hill Street, P.O. Box 309, Yorktown Heights, NY 10598. IWS-089 Insect Wire Screening (Wire Fabric). 
</FP-2>
<FP-2>National Academy of Sciences, 2101 Constitution Avenue, NW., Washington, DC 20418. Publication 1571 Criteria for Selection and Design of Residential Slabs-on-Ground, Report #33, Building Research Advisory Board (BRAB), 1968.
</FP-2>
<FP-2>National Association of Home Builders, Research Center, 400 Prince Georges Boulevard, Upper Marlboro, MD 20772, Telephone (301) 249-4000. Insulation Manual, Homes and Apartments—1979. 
</FP-2>
<FP-2>National Association of Plumbing-Heating-Cooling Contractors, P.O. Box 6808, Falls Church, VA 22046, Telephone (703) 237-8100. National Standard Plumbing Code—1993. 
</FP-2>
<FP-2>National Fire Protection Association, Batterymarch Park, Quincy, MA 02269, Telephone 1-800-344-3555.
</FP-2>
<FP1-2>ANSI/NFPA 58-89 Standard for the Storage and Handling of Liquefied Petroleum Gases 
</FP1-2>
<FP1-2>NFPA 54-88 National Fuel Gas Code (ANSI Z223.1-1988) NFPA 70-93 National Electrical Code
</FP1-2>
<FP-2>National Institute of Building Sciences, 1201 L Street, NW., Washington, DC 20005. Metric Guide for Federal Construction—1992. 
</FP-2>
<FP-2>National Oak Flooring Manufacturers Association, 22 North Front Street, Memphis, TN 38103. Official Grading Rules, Oak, Beech, Birch, Hard Maple, Pecan (OFGR/Vol. 1, No. 1/1986 and the 1989 Addendum). Hardwood Flooring Finishing/Refinishing Manual, 1986. Hardwood Flooring Installation Manual, 1986. 
</FP-2>
<FP-2>National Roofing Contractors Association, One O'Hare Centre, 6250 River Road, Rosemont, IL 60018, Telephone (708) 318-6722. NRCA Roofing and Waterproofing Manual, 1989. 
</FP-2>
<FP-2>National Terrazzo and Mosaic Association, 3166 Des Plaines Avenue, Suite 132, Des Plaines, IL 60018, Telephone (708) 635-7744. NTMA Specifications, Details and Technical Data, “Terrazzo Ideas &amp; Design Guide”, 1990.
</FP-2>
<FP-2>National Wood Window and Door Association, 205 West Touhy Avenue, Park Ridge, IL 60018, Telephone (708) 299-5200.
</FP-2>
<FP1-2>ANSI/NWWDA IS 1-87 Industry Standard for Wood Flush Doors 
</FP1-2>
<FP1-2>ANSI/NWWDA IS 2-87 Industry Standard for Wood Windows 
</FP1-2>
<FP1-2>NWWDA IS 3-88 Industry Standard for Wood Sliding Patio Doors 
</FP1-2>
<FP1-2>ANSI/NWWDA IS 6-86 Industry Standard for Wood Stile and Rail Doors
</FP1-2>
<FP-2>Post-tensioning Institute, 301 West Osborn, Suite 3500, Phoenix, AZ 85013, Telephone (602) 870-7540. Design and Construction of Post-tensioned Slabs-on-Ground—1980. 
</FP-2>
<FP-2>Prestressed Concrete Institute, 175 West Jackson Boulevard, Suite 1859, Chicago, IL 60604, Telephone (312) 786-0353.
</FP-2>
<FP1-2>PCI MNL 116 Manual for Quality Control for Plants and Production for Precast Prestressed Concrete Products—1985 PCI MNL 117 Manual for Quality Control for Plants and Production of Architectural Precast Concrete Products—1977
</FP1-2>
<FP-2>Resilient Floor Covering Institute, 966 Hungerford Drive, Suite 12-B, Rockville, MD 20850, Telephone (301) 340-8580. Recommended Installation Specifications for Vinyl Composition, Solid Vinyl and Asphalt Tile Floorings, 1987.
</FP-2>
<FP-2>Safety Glazing Certification Council, c/o ETL Testing Laboratories, Industrial Park, Route 11, Cortland, New York 13045, Telephone (607) 753-6711. Certified Products Directory—1990. 
</FP-2>
<FP-2>Southern California Association of Cabinet Manufacturers, 1933 South Broadway, L. 39, Los Angeles, CA 90007, Telephone (213) 749-4355. Certified Construction Standards and Specifications, Guide for Uniform Cabinet Specifications—1973 (Revised 1985).
</FP-2>
<FP-2>Steel Door Institute, 30200 Detroit Road, Cleveland, OH 44145, Telephone (216) 899-0010. ANSI/SDI A123.1-82 Nomenclature for Steel Doors and Steel Door Frames. 
</FP-2>
<FP-2>Tile Council of America, Inc., Box 326, Princeton, NJ 08542-0326, Telephone (609) 921-7050. Handbook for Ceramic Tile Installation—1993. 
</FP-2>
<FP-2>Underwriters Laboratories, 333 Pfingsten Road, Northbrook, IL 60062, Telephone (708) 272-8800. Electrical Appliance and Utilization Equipment Directory, 1992.
</FP-2>
<FP-2>Water Quality Association, 4151 Naperville Road, Lisle, IL 60532. Telephone (708) 396-1600.
</FP-2>
<FP1-2>WQA S-100 Household Commercial and Portable Exchange Water Softeners—1985 
</FP1-2>
<FP1-2>WQA S-200 Household and Commercial Water Filters—1988 
</FP1-2>
<FP1-2>WQA S-300 Point-of-Use, Low Pressure Reverse Osmosis Drinking Water Systems—1984 
</FP1-2>
<FP1-2>WQA S-400 Point-of-Use Distillation Drinking Water Systems—1986
</FP1-2>
<FP-2>Wood Moulding and Millwork Producers, P.O. Box 25278, Portland, OR 97225, Telephone (503) 292-9288.
</FP-2>
<FP1-2>WM 3-79 Exterior Wood Door Frames 
</FP1-2>
<CITA TYPE="N">[58 FR 60250, Nov. 15, 1993]


</CITA>
</DIV9>

</DIV5>

</DIV4>


<DIV4 N="B" NODE="24:2.1.1.2" TYPE="SUBCHAP">
<HEAD>SUBCHAPTER B—MORTGAGE AND LOAN INSURANCE PROGRAMS UNDER NATIONAL HOUSING ACT AND OTHER AUTHORITIES


</HEAD>

<DIV5 N="201" NODE="24:2.1.1.2.2" TYPE="PART">
<HEAD>PART 201—TITLE I PROPERTY IMPROVEMENT AND MANUFACTURED HOME LOANS
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1703; 15 U.S.C. 1639c; 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>50 FR 43523, Oct. 25, 1985, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:2.1.1.2.2.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 201.1" NODE="24:2.1.1.2.2.1.37.1" TYPE="SECTION">
<HEAD>§ 201.1   Purpose.</HEAD>
<P>These regulations implement the provisions of section 2 of title I of the National Housing Act (12 U.S.C. 1703). They contain the requirements under which an approved financial institution may obtain insurance on loans made for the alteration, repair or improvement of property, for the purchase of a manufactured home and/or the lot on which to place such home, for the purchase and installation of fire safety equipment in existing health care facilities, and for the preservation of historic structures. The insurance granted by the Secretary of Housing and Urban Development shall be available only for loans involving property located within a State, as that term is defined in § 201.2. The insurance can cover up to 10 percent of the amount of all insured Title I loans in the financial institution's portfolio, as reflected in the total amount of insurance coverage contained at any time in an insurance coverage reserve account established by the Secretary, less amounts for insurance claims paid. As limited by the amount of insurance coverage in such a reserve account, the insurance can cover up to 90 percent of the loss of any individual loan.
</P>
<CITA TYPE="N">[50 FR 43523, Oct. 25, 1985, as amended at 61 FR 19795, May 2, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 201.2" NODE="24:2.1.1.2.2.1.37.2" TYPE="SECTION">
<HEAD>§ 201.2   Definitions.</HEAD>
<P>As used in the regulations in this part the term:
</P>
<P><I>Act</I> means the National Housing Act, 12 U.S.C. 1703.
</P>
<P><I>Actuarial method</I> means the method of allocating payments made on a loan between the outstanding balance of the principal amount borrowed and the interest due on a loan obligation, under which a payment is applied first to the accrued interest, and any remainder is subtracted from, or any deficiency is added to, the unpaid balance of the obligation.
</P>
<P><I>Borrower</I> means one who applies for and receives a loan insured under this part. The term may also include any co-maker or co-signer or any assumptor who is obligated for the repayment of a loan obligation insured under this part.
</P>
<P><I>Combination loan</I> means a loan made for the purchase or refinancing in a single transaction of a manufactured home and a manufactured home lot, and may also include a garage, patio, carport, or other comparable appurtenance.
</P>
<P><I>Dealer</I> means, in the case of property improvement loans, a seller, contractor, or supplier of goods or services. In the case of manufactured home loans, <I>dealer</I> means one who engages in the business of manufactured home retail sales.
</P>
<P><I>Dealer loan</I> means a loan where a dealer, having a direct or indirect financial interest in the transaction between the borrower and the lender, assists the borrower in preparing the credit application or otherwise assists the borrower in obtaining the loan from the lender. In the case of a property improvement loan, the lender may disburse the loan proceeds solely to the borrower, or jointly to the borrower and the dealer or other parties to the transaction. In the case of a manufactured home loan, the lender may disburse the loan proceeds solely to the dealer or the borrower, or jointly to the borrower and the dealer or other parties to the transaction.
</P>
<P><I>Debtor</I> means the borrower, any co-maker or co-signer, and any assumptor who is liable for the repayment of a defaulted loan obligation insured under this part. 
</P>
<P><I>Default</I> means a failure by the borrower to make any payment due under the note, when such failure continues for a period of 30 days. For the purpose of these regulations, the “date of default” shall be considered as 30 days after the first failure to make an installment payment on the note which is not covered by subsequent payments, when applied to the overdue installments in the order in which they became due.
</P>
<P><I>Direct loan</I> means a loan for which a borrower makes application directly to a lender without any assistance from a dealer. The credit application, signed by the borrower, may be filled out by the borrower or by a person acting at the direction of the borrower who does not have a financial interest in the loan transaction. The lender may disburse the loan proceeds solely to the borrower or jointly to the borrower and other parties to the transaction. If a dealer takes legal action required by State law in order for the lender to obtain a valid and enforceable lien against the property, such action by the dealer will not convert an otherwise direct loan to a dealer loan. 
</P>
<P><I>Discount points</I> means a fee charged by the lender, separate from interest but part of the total finance charges on the loan, that is part of the lender's total yield on the loan needed to maintain a competitive position with other types of investments. One discount point equals one percent of the principal amount of the loan. As discount points on the loan increase, the interest rate can be expected to decrease in a fairly consistent relationship. 
</P>
<P><I>Existing structure</I> means a dwelling, including a manufactured home, that was completed and occupied at least 90 days prior to an application for a Title I loan, or a nonresidential structure that was a completed building with a distinctive functional use prior to an application for a Title I loan. However, these occupancy and completion requirements shall not apply to:
</P>
<P>(1) Loans having a principal obligation of $1000 or less; or 
</P>
<P>(2) Residential structures which have been damaged by conditions determined by the President to warrant relief under the provisions of title 42, chapter 68, of the United States Code.
</P>
<P><I>Fire safety equipment loan</I> means a loan made to finance the purchase and installation of any device or construction feature which is recognized in the latest edition of the Department of Housing and Urban Development's Minimum Property Standards for Care Type Housing (HUD Handbook 4920.1) or the Fire Safety Code of the National Fire Protection Association, and which is designed to reduce the risk of death, personal injury, or property damage resulting from a fire in a health care facility.
</P>
<P><I>Furniture</I> means movable articles of personal property relating to a home or dwelling, such as beds, chairs, sofas, lamps, tables, rugs, etc.; however, furniture does not include: 
</P>
<P>(1) Items built into the home or dwelling such as wall-to-wall carpeting or heating or cooling equipment; or 
</P>
<P>(2) Large appliances such as refrigerators, ovens, ranges, dishwashers, clothes washers or clothes dryers.
</P>
<P><I>Health care facility</I> means a proprietary facility or facility of a private nonprofit corporation or association, licensed or regulated by the State or by the municipality or other political subdivision in which the facility is located, and operated as one or more of the following: 
</P>
<P>(1) A nursing home for the accommodation of convalescents or other persons who are not acutely ill and not in need of hospital care, but who require skilled nursing care and related medical services performed under the general direction of persons licensed by the law of the State where the facility is located to provide such care or services; 
</P>
<P>(2) An intermediate health care facility for the accommodation of persons who, because of incapacitating infirmities, require minimum but continuous care, but not continuous medical care or nursing services; 
</P>
<P>(3) An extended health care facility for inpatient care for convalescents or chronic disease patients who require skilled nursing care and related medical services; or
</P>
<P>(4) Other comparable health care facility.
</P>
<P><I>Historic preservation loan</I> means a loan to finance the preservation (restoration or rehabilitation) of an historic residential structure which is listed on the National Register of Historic Places or which is certified by the Secretary of the Interior as conforming with National Register criteria.
</P>
<P><I>Lender</I> means a financial institution that:
</P>
<P>(1) Holds a valid Title I contract of insurance and is approved by the Secretary under 24 CFR part 202 to originate, purchase, hold, service, and/or sell loans insured under this part; or
</P>
<P>(2) Is under suspension or holds a Title I contract of insurance that has been terminated, but that remains responsible for servicing or selling Title I loans that it holds and is authorized to file insurance claims on such loans.
</P>
<P><I>Loan</I> means a disbursement of proceeds (funds) or an advance of credit to or for the benefit of a borrower who promises to repay the principal amount of such disbursement or advance, plus interest, if any, at a stated annual rate over time, with the borrower's obligation evidenced by the borrower's execution of a note. <I>Loan</I> also means a purchase by a lender of a note evidencing such obligation, or a refinancing of an existing obligation with or without an additional disbursement of proceeds or advance of credit.
</P>
<P><I>Manufactured home</I> means a transportable structure, comprised of one or more modules, each built on a permanent chassis, with or without a permanent foundation, designed for occupancy as a principal residence by a single family. For purposes of the annual adjustments to loan limits under this part, a manufactured home may be a single-section home comprised of one module or a multi-section home comprised of two or more modules. A new manufactured home shall comply with the minimum property standards prescribed by the Secretary to assure its livability and durability that are published as the Manufactured Home Construction and Safety Standards implementing the National Manufactured Housing Construction and Safety Standards Act of 1974, 42 U.S.C. 5401-5426, at 24 CFR part 3280. To qualify for a manufactured home loan insured under this part, an existing manufactured home must have been constructed in accordance with standards published at 24 CFR part 3280 and must meet standards similar to the minimum property standards applicable to existing homes insured under title II of the Act, as prescribed by the Secretary. 
</P>
<P><I>Manufactured home improvement loan</I> means a loan made to finance the alteration, repair or improvement of an existing manufactured home which is classified as personalty by the State or locality in which the property is located. The proceeds of a manufactured home improvement loan may also be used for improvements to the homesite, as long as the borrower is the owner of the home and the underlying real estate. 
</P>
<P><I>Manufactured home loan</I> means a loan for the purchase or refinancing of a manufactured home and/or the lot on which to place such home. Unless otherwise indicated, the term includes manufactured home purchase loans, manufactured home lot loans, and combination loans.
</P>
<P><I>Manufactured home lot loan</I> means a loan for the purchase or refinancing of a portion of land acceptable to the Secretary as a manufactured home lot. A manufactured home lot may consist of platted or unplatted land, a lot in a recorded or unrecorded subdivision or in an improved area of such subdivision, or a lot in a planned unit development. A manufactured home lot may also consist of an interest in a manufactured home condominium project (including any interest in the common areas) or a share in a cooperative association which owns and operates a manufactured home park.
</P>
<P><I>Manufactured home purchase loan</I> means a loan for the purchase or refinancing of a manufactured home exclusive of any lot or site, and may also include a garage, patio, carport, or other comparable appurtenance.
</P>
<P><I>Manufacturer's invoice</I> means a document issued by a manufacturer and provided with a manufactured home to a retail dealer which separately details the wholesale (base) prices at the factory for specific models or series of manufactured homes and itemized options (large appliances, built-in items and equipment), plus actual itemized charges for freight from the factory to the dealer's lot or the homesite (including any rental of wheels and axles) and for any sales taxes to be paid by the dealer. The invoice may recite such prices and charges on an itemized basis or by stating an aggregate price or charge, as appropriate, for each category. The manufacturer shall certify on the invoice, or on a supplement which is attached to and made a part of the invoice, as follows: 
</P>
<EXTRACT>
<P>The undersigned certifies under applicable criminal and civil penalties for fraud and misrepresentation that: (1) The wholesale (base) prices for the manufactured home and itemized options, the charges for freight and dealer-paid sales taxes, and all other statements in this invoice are true and accurate; (2) all such prices reflect the actual dealer costs at the factory, as quoted in the applicable current manufacturer's wholesale (base) price list; (3) except for any payments of volume incentives or special benefits related to this transaction, all such prices and charges exclude any costs of trade association fees or charges, discounts, bonuses, refunds, rebates, prizes, loan discount points or other financing charges, or anything else of more than nominal value which will inure to the benefit of the dealer and/or home purchaser at any date; and (4) the manufacturer has not made and will not make any payments to or for the benefit of the dealer and/or home purchaser that are not disclosed on this invoice or invoice supplement.</P></EXTRACT>
<P><I>Multifamily property improvement loan</I> means a loan to finance the alteration, repair, improvement, or conversion of an existing structure used or to be used as an apartment house or a dwelling for two or more families. The multifamily structure may not be owned by a corporation, partnership, or trust, unless the prior approval of the Secretary is obtained for an exception to this requirement. 
</P>
<P><I>Nonresidential property improvement loan</I> means a loan made to finance the construction of a new exclusively nonresidential structure or the alteration, repair or improvement of an existing structure that is nonresidential. Such a structure may be temporarily used for residential purposes while the borrower constructs a new dwelling to replace a dwelling previously occupied by the borrower that was destroyed or damaged by conditions determined by the President to warrant relief under the provisions of title 42, chapter 68, of the U.S.C., provided that the credit application is filed within one year from the date of such a determination.
</P>
<P><I>Note</I> means the written instrument evidencing the borrower's signature to a promise to repay the principal indebtedness and to pay any interest due on a loan, whether the instrument is separate from or included within another document, and unless otherwise specified means also any security instrument with respect to that loan obligation.
</P>
<P><I>Owner</I> means a person, including a borrower, who has title in whole or in part to the property which is the subject of a loan transaction.
</P>
<P><I>Principal residence</I> means a home where the borrower expects to live at least nine months of the year.
</P>
<P><I>Property improvement loan</I> means a loan made to finance actions or items that substantially protect or improve the basic livability or utility of a property. Unless otherwise indicated, the term includes single family, multifamily and nonresidential property improvement loans; manufactured home improvement loans where the home is classified as personalty; historic preservation loans; and fire safety equipment loans in existing health care facilities.
</P>
<P><I>Rehabilitation</I> means the process of returning an historic residential structure to a state of utility, through repair or alteration, which makes possible an efficient contemporary use. In rehabilitation, those portions of the property important in illustrating historic, architectural and cultural values are preserved or restored.
</P>
<P><I>Restoration</I> means the process of accurately recovering the form and details of an historic residential structure as it appeared at a particular period of time by removing later work and by replacing missing original work.
</P>
<P><I>Security instrument</I> means a properly recorded chattel mortgage, real estate mortgage or deed of trust, or conditional sales contract.
</P>
<P><I>Single family property improvement loan</I> means a loan to finance alterations, repairs and improvements to or in connection with an existing structure used or to be used as a single family residence, including an existing one-family manufactured home that qualifies as real property in that the home is placed on a permanent foundation, the home and lot are classified as realty by the State or locality in which the property is located, and any loans on the property are secured by mortgages or deeds of trust covering the home and lot.
</P>
<P><I>Solar energy system</I> means any addition, alteration or improvement to an existing structure for single family or multifamily residential use which is designed to utilize wind or solar energy to reduce the energy requirements of that structure from other energy sources, and which complies with standards prescribed by the Secretary.
</P>
<P><I>Special benefits</I> means benefits other than volume incentives for dealers which a home manufacturer funds from general corporate revenues by charging them against corporate overhead and profit without changing the wholesale (base) price of a manufactured home (or series of homes), as reflected in the manufacturer's published wholesale (base) price list, and which are limited to payments by the manufacturer directly to:
</P>
<P>(1) A financial institution to <I>buy down</I> or reduce the interest rate, discount points, or other fees or charges related to a lending agreement for a dealer's manufactured home inventory or <I>floor plan</I> financing needs; or
</P>
<P>(2) One or more advertising media for all or part of the costs of advertising the manufacturer's homes, one or more dealer's services, and related manufactured home materials and products in such media.
</P>
<P><I>State</I> means any State of the United States, Puerto Rico, the District of Columbia, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, or the United States Virgin Islands. 
</P>
<P><I>Volume incentives</I> means specified dollar benefits to dealers under a published marketing and promotional plan, payable by a home manufacturer in cash or in kind in amounts or levels relating to the volume of sales of manufactured homes to dealers, other than benefits of a nominal value of less than $10 per home, which:
</P>
<P>(1) The manufacturer funds from general corporate revenues by including them in the prices quoted in the manufacturer's wholesale (base) price list and charging them against corporate overhead and profit;
</P>
<P>(2) Whether or not available on an optional basis, do not increase or decrease the wholesale (base) prices for the sale of a specific home or options or the charges for freight and dealer-paid sales taxes as detailed in the manufacturer's invoice, for a specific sale to a retail dealer; 
</P>
<P>(3) The manufacturer provides without creating a special product line where the cost of the benefits is the only substantive difference between the special product line and other essentially similar homes; 
</P>
<P>(4) Whether or not also of benefit to the ultimate purchaser, do not increase or decrease the retail price of the home;
</P>
<P>(5) Are available to any dealer in a particular market area doing business with the manufacturer; 
</P>
<P>(6) The manufacturer provides only for volume sales of manufactured homes to dealers over a specified period of time; 
</P>
<P>(7) The plan provides in escalating and different amounts or levels related to either the number of homes (or modules) sold or the dollar value of such sales to a dealer, or some combination of such elements, in a specified period of time; 
</P>
<P>(8) Are structured so that only some of the dealer participants are expected to be paid the maximum benefits under the program, with substantial numbers of participants expected to receive less than the maximum amount or level of benefits; and 
</P>
<P>(9) Accrue for volume sales to a dealer over a specified period of time which is at least quarterly in length, and are paid not more frequently than quarterly.
</P>
<P><I>Wholesale (base) price list</I> means the price list or lists, as periodically amended, which are published and distributed by a home manufacturer to all retail dealers in a given marketing area, quoting the actual wholesale (base) prices at the factory for specific models or series of manufactured homes and itemized options offered for sale to such dealers during a specified period of time. The wholesale (base) prices may include the manufacturer's projected costs of providing volume incentives and special benefits related to sales to dealers during the period. All such wholesale (base) prices shall exclude any costs of trade association fees or charges, discounts, bonuses, refunds, rebates, prizes, loan discount points or other financing charges, or anything else of more than nominal value which will inure to the benefit of a dealer and/or home purchaser at any date. Each price list and amendment shall be retained by the manufacturer for a minimum period of six years from the date of publication so as to be available to HUD and other Federal agencies upon request. 
</P>
<CITA TYPE="N">[50 FR 43523, Oct. 25, 1985, as amended at 54 FR 36263, Aug. 31, 1989; 56 FR 52428, Oct. 18, 1991; 57 FR 6480, Feb. 25, 1992; 57 FR 45246, Sept. 30, 1992; 60 FR 13836, Mar. 14, 1995; 61 FR 5206, Feb. 9, 1996; 61 FR 19795, May 2, 1996; 66 FR 56419, Nov. 7, 2001; 77 FR 51468, Aug. 24, 2012; 89 FR 14587, Feb. 28, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 201.3" NODE="24:2.1.1.2.2.1.37.3" TYPE="SECTION">
<HEAD>§ 201.3   Applicability of the regulations.</HEAD>
<P>The regulations in this part may be amended by the Secretary at any time. Such amendment shall not adversely affect the insurance privileges of a lender on any loan that has been made or for which a loan application has been approved before the effective date of the amendment. 
</P>
<CITA TYPE="N">[61 FR 19796, May 2, 1996]




</CITA>
</DIV8>


<DIV8 N="§ 201.4" NODE="24:2.1.1.2.2.1.37.4" TYPE="SECTION">
<HEAD>§ 201.4   Rules of construction.</HEAD>
<P>As used in this part, and unless the context indicates otherwise, words in the singular include the plural, and words in the plural include the singular. 
</P>
<CITA TYPE="N">[56 FR 52429, Oct. 18, 1991]


</CITA>
</DIV8>


<DIV8 N="§ 201.5" NODE="24:2.1.1.2.2.1.37.5" TYPE="SECTION">
<HEAD>§ 201.5   Waivers.</HEAD>
<P><I>Waiver of lender's noncompliance.</I> The Secretary may waive a lender's noncompliance with any provision of this part, subject to statutory limitations, when it is determined that enforcement of the regulations would impose an injustice upon a lender which has substantially complied with the regulations in good faith and refunded or credited any excess charge made, and when such waiver does not involve an increase in the Secretary's obligation beyond that which would have been involved if the lender was in full compliance with the regulations.
</P>
<CITA TYPE="N">[56 FR 52429, Oct. 18, 1991, as amended at 61 FR 5206, Feb. 9, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 201.6" NODE="24:2.1.1.2.2.1.37.6" TYPE="SECTION">
<HEAD>§ 201.6   Disclosure and verification of Social Security and Employer Identification Numbers.</HEAD>
<P>To be eligible for loan insurance under this part, the borrower must meet the requirements for the disclosure and verification of Social Security and Employer Identification Numbers, as provided by part 200, subpart U, of this chapter.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0059)
</APPRO>
<CITA TYPE="N">[54 FR 39692, Sept. 27, 1989, as amended at 55 FR 420, Jan. 5, 1990] 


</CITA>
</DIV8>


<DIV8 N="§ 201.7" NODE="24:2.1.1.2.2.1.37.7" TYPE="SECTION">
<HEAD>§ 201.7   Qualified mortgage.</HEAD>
<P>(a) <I>Qualified mortgage.</I> A mortgage insured under section 2 of title I of the National Housing Act (12 U.S.C. 1703), except for mortgage transactions exempted under § 203.19(c)(2), is a safe harbor qualified mortgage that meets the ability to repay requirements in 15 U.S.C. 1639c(a).
</P>
<P>(b) <I>Effect of indemnification on qualified mortgage status.</I> An indemnification demand or resolution of a demand that relates to whether the loan satisfied relevant eligibility and underwriting requirements at the time of consummation may result from facts that could allow a change to qualified mortgage status, but the existence of an indemnification does not per se remove qualified mortgage status.
</P>
<CITA TYPE="N">[78 FR 75237, Dec. 11, 2013]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:2.1.1.2.2.2" TYPE="SUBPART">
<HEAD>Subpart B—Loan and Note Provisions</HEAD>


<DIV8 N="§ 201.10" NODE="24:2.1.1.2.2.2.37.1" TYPE="SECTION">
<HEAD>§ 201.10   Loan amounts.</HEAD>
<P>(a) <I>Property improvement loans.</I> (1) The total principal obligation for a property improvement loan shall not exceed the actual cost of the project plus any applicable fees and charges authorized at § 201.25(b), up to the following maximum loan amounts:
</P>
<P>(i) Single family property improvement loans—$25,000, except that a loan for a manufactured home that qualifies as real property shall be limited to $17,500.
</P>
<P>(ii) Multifamily property improvement loans—$60,000 or an average of $12,000 per dwelling unit, whichever is less.
</P>
<P>(iii) Nonresidential property improvement loans—$25,000.
</P>
<P>(iv) Manufactured home improvement loans—$7,500. 
</P>
<P>(v) Historic preservation loans—the lesser of $15,000 per dwelling unit in a residential structure or $45,000 per residential structure.
</P>
<P>(vi) Fire safety equipment loans—$50,000.
</P>
<P>(2) No property improvement loan shall be approved where the total outstanding balance of all title I property improvement loans on the same property exceeds the maximum loan amount prescribed for that type of loan. If more than one type of property improvement loan is involved, the total outstanding balance of such loans on a particular property shall not exceed the maximum loan amount prescribed for the larger type of loan.
</P>
<P>(b) <I>Manufactured home purchase loans.</I> (1) The total principal obligation for a loan to purchase a new manufactured home shall not exceed the sum of the following itemized amounts, up to a maximum set according to an index established by HUD in paragraph (h)(1) of this section and updated through notice which shall establish separate loan limits for single-section homes and multi-section homes:
</P>
<P>(i) 130 percent of the sum of the wholesale (base) prices of the home and any itemized options and the charge for freight, as detailed in the manufacturer's invoice; 
</P>
<P>(ii) The charge for any sales taxes to be paid by the dealer, as detailed in the manufacturer's invoice; 
</P>
<P>(iii) The actual dealer's cost of transportation to the homesite, set-up and anchoring, including the rental of wheels and axles (if not included in the freight charges); 
</P>
<P>(iv) The actual dealer's cost of skirting; 
</P>
<P>(v) The actual dealer's cost of a garage, carport, patio or other comparable appurtenance to the manufactured home, as approved by the Secretary; 
</P>
<P>(vi) The actual dealer's cost of purchasing and installing a central air conditioning system or heat pump, if not installed by the manufacturer; and 
</P>
<P>(vii) Any applicable charges authorized at § 201.25(b). 
</P>
<P>(2) The total principal obligation for a loan to purchase an existing manufactured home shall not exceed the lesser of the following amounts, up to a maximum set according to an index established by HUD in paragraph (h)(1) of this section and updated through notice which shall establish separate loan limits for single-section homes and multi-section homes: 
</P>
<P>(i) 95 percent of the appraised value of the home as equipped and furnished (as determined by a HUD-approved appraisal) and 95 percent of any itemized amounts allowed under paragraphs (b)(1)(iii) through (vii) of this section, if incurred; or 
</P>
<P>(ii) 95 percent of the purchase price of the home. 
</P>
<P>(3) The purchase price of a manufactured home financed with a manufactured home purchase loan shall include the retail cost to the borrower of all items set forth in the purchase contract, including any applicable charges authorized under § 201.25(b). 
</P>
<P>(c) <I>Manufactured home lot loans.</I> The total principal obligation for a loan to purchase and, if necessary, develop a lot suitable for a manufactured home, including on-site water and utility connections, sanitary facilities, site improvements and landscaping, shall not exceed 95 percent of either the appraised value of the developed lot (as determined by a HUD-approved appraisal) or the total of the purchase price and development costs, whichever is less, up to a maximum of $16,200. 
</P>
<P>(d) <I>Combination loans.</I> </P>
<P>(1) The total principal obligation for a loan to purchase a new manufactured home and a lot on which to place the home shall not exceed the sum of the following itemized amounts, up to a maximum set according to an index established by HUD in paragraph (h)(3) of this section and updated through notice which shall establish separate loan limits for single-section homes and multi-section homes:
</P>
<P>(i) 130 percent of the sum of the wholesale (base) prices of the home and any itemized options and the charge for freight, as detailed in the manufacturer's invoice;
</P>
<P>(ii) The charge for any sales taxes to be paid by the dealer, as detailed in the manufacturer's invoice;
</P>
<P>(iii) The actual dealer's cost of transportation to the homesite, set-up and anchoring, including the rental of wheels and axles (if not included in the freight charge);
</P>
<P>(iv) The actual dealer's cost of purchasing and installing a central air conditioning system or heat pump, if not installed by the manufacturer;
</P>
<P>(v) The appraised value of the developed manufactured home lot (as determined by a HUD-approved appraisal, including on-site water and utility connections, sanitary facilities, site improvements and landscaping) or the purchase price, whichever is less;
</P>
<P>(vi) The actual dealer's cost of appurtenances to the home such as a permanent foundation, garage, carport or patio; and
</P>
<P>(vii) Any applicable charges authorized at § 201.25(b).
</P>
<P>(2) The total principal obligation for a Combination Loan, to purchase an existing manufactured home and lot, shall not exceed the lesser of the following amounts, up to a maximum set according to an index established by HUD in paragraph (h)(3) of this section and updated through notice which shall establish separate loan limits for single-section homes and multi-section homes: 
</P>
<P>(i) 95 percent of the total appraised value of the home, the lot, and any appurtenances (as determined by a HUD-approved appraisal), plus 95 percent of any applicable charges authorized at § 201.25(b); or
</P>
<P>(ii) 95 percent of the purchase price of the home, the lot, and any appurtenances.
</P>
<P>(3) The purchase price of a manufactured home and a lot financed with a combination loan shall include the retail cost to the borrower of all items set forth in the purchase contract or contracts, including any applicable charges authorized under § 201.25(b). 
</P>
<P>(e) <I>Manufactured home loan limits in high-cost areas.</I> (1) The maximum loan amounts otherwise applicable under paragraphs (b), (c) and (d) of this section may be increased by an amount not to exceed 40 percent where the manufactured home and/or lot is purchased and located in Alaska, Guam or Hawaii.
</P>
<P>(2) The maximum loan amounts otherwise applicable under paragraphs (c) and (d) of this section may be increased for any geographical area except Alaska, Guam or Hawaii to the extent deemed necessary by the Secretary; however, any increased loan amount may not exceed the lesser of (i) 185 percent of the dollar amounts specified in paragraphs (c) and (d) of this section; or (ii) the dollar amounts specified in paragraphs (c) and (d) of this section, as increased by the same percentage by which 95 percent of the median 1-family house price in the area (as determined by the Secretary for purposes of § 203.18) exceeds $67,500.
</P>
<P>(f) <I>Loan refinancing.</I> (1) The total principal obligation of a loan made to refinance a borrower's existing insured property improvement loan shall not exceed the maximum loan amount permitted under this section for the particular type of loan, provided that any amount in excess of the cost to the borrower of prepaying the existing loan shall be made available only to finance additional property improvements meeting the requirements of this part. 
</P>
<P>(2) The total principal obligation of a loan made to refinance a borrower's existing insured manufactured home loan shall not exceed the lesser of the cost to the borrower of prepaying the existing loan or the maximum loan amount permitted under this section for the particular type of loan.
</P>
<P>(3) The total principal obligation of a loan made to refinance a borrower's existing uninsured manufactured home loan shall not exceed the cost to the borrower of prepaying the existing loan or the appraised value of the property (as determined by a HUD-approved appraisal), whichever is less, up to the maximum loan amount permitted under this section for the particular type of loan. 
</P>
<P>(4) When a borrower's existing manufactured home lot is being refinanced in connection with the purchase of a manufactured home, the total principal obligation of the combination loan shall be determined in accordance with paragraph (d)(1) or (d)(2) of this section. 
</P>
<P>(5) When a borrower's existing manufactured home is being refinanced in connection with the purchase of a manufactured home lot, the total principal obligation of the combination loan shall not exceed the lesser of the following amounts, up to a maximum of $64,800: 
</P>
<P>(i) The cost to the borrower of prepaying any existing loan on the home, plus the purchase price of the lot; or 
</P>
<P>(ii) The appraised value of the home and lot (as determined by a HUD-approved appraisal). 
</P>
<P>(g) <I>Minimum loan amount.</I> A lender may not require, as a condition of providing a loan insured under this part, that the principal amount of the loan exceed a minimum amount established by the lender. 
</P>
<P>(h) <I>Annual Adjustments.</I> HUD shall adjust the following loan limits annually through notice:
</P>
<P>(1) In paragraphs (b)(1) and (2) of this section, the single-section manufactured home loan limit shall be adjusted to reflect changes in single-section manufactured home sales prices and the multi-section manufactured home loan limit shall be increased to reflect changes in double-section manufactured home sales prices, according to data published by the Census Bureau, except that the loan limits shall not be lowered.
</P>
<P>(2) In paragraph (c) of this section, the manufactured home lot loan limit shall be increased to reflect changes in single-family home sales prices according to data published by the Census Bureau, except that the loan limit shall not be lowered.
</P>
<P>(3) In paragraphs (d)(1) and (2) of this section, the combination manufactured home and lot loan limits shall be increased to be the sum of the applicable loan limit for the manufactured home loan in paragraph (b)(1) and the lot loan limit in paragraph (c) of this section, except that the loan limit shall not be lowered.
</P>
<CITA TYPE="N">[50 FR 43523, Oct. 25, 1985, as amended at 52 FR 33406, Sept. 3, 1987; 53 FR 8880, Mar. 18, 1988; 54 FR 10537, Mar. 14, 1989; 54 FR 36264, Aug. 31, 1989; 56 FR 52429, Oct. 18, 1991; 57 FR 45246, Sept. 30, 1992; 58 FR 41001, July 30, 1993; 59 FR 9084, Feb. 25, 1994; 61 FR 19796, May 2, 1996; 62 FR 20082, Apr. 24, 1997; 89 FR 14587, Feb. 28, 2024; 89 FR 26105, Apr. 15, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 201.11" NODE="24:2.1.1.2.2.2.37.2" TYPE="SECTION">
<HEAD>§ 201.11   Loan maturities.</HEAD>
<P>(a) <I>Property improvement loans.</I> The term of a property improvement loan shall be not less than six months and not more than 20 years and 32 days from the date of the loan, except that:
</P>
<P>(1) The maximum term for a single family property improvement loan on a manufactured home that qualifies as real property shall not exceed 15 years and 32 days from the date of the loan; 
</P>
<P>(2) The maximum term for a manufactured home improvement loan shall not exceed 12 years and 32 days from the date of the loan; and 
</P>
<P>(3) The maximum term for an historic preservation loan shall not exceed 15 years and 32 days from the date of the loan. 
</P>
<P>(b) <I>Manufactured home loans.</I> The term of a manufactured home loan shall be not less than six months and not more than 20 years and 32 days from the date of the loan, except that: 
</P>
<P>(1) The maximum term for a manufactured home lot loan shall not exceed 15 years and 32 days from the date of the loan; and
</P>
<P>(2) The maximum term for a multi-module manufactured home and lot in combination shall not exceed 25 years and 32 days from the date of the loan.
</P>
<P>(c) <I>Loan refinancing.</I> A loan to be refinanced under this part may be refinanced for an extended period.
</P>
<P>(1) The term of a loan to refinance a borrower's existing insured property improvement or manufactured home loan shall not exceed the maximum term permitted under paragraph (a) or (b) of this section for the particular type of loan. In addition, the total time period from the date of the original loan to the final maturity of the refinanced loan shall not exceed:
</P>
<P>(i) In the case of a property improvement loan, the maximum term permitted under paragraph (a) of this section plus 9 years and 11 months; and
</P>
<P>(ii) In the case of manufactured home loan, the maximum term permitted under paragraph (b) of this section plus 4 years and 11 months.
</P>
<P>(2) The term of a loan made to refinance a borrower's existing uninsured manufactured home loan shall not exceed the maximum term permitted under paragraph (b) of this section for the particular type of loan. 
</P>
<P>(3) When a borrower's existing manufactured home lot is being refinanced in connection with the purchase of a manufactured home, the term of the combination loan shall not exceed the maximum term permitted under paragraph (b) of this section for the particular type of loan. 
</P>
<P>(4) When a borrower's existing manufactured home is being refinanced in connection with the purchase of a manufactured home lot, the term of the combination loan shall not exceed the maximum term permitted under paragraph (b) of this section for the particular type of loan. 
</P>
<CITA TYPE="N">[50 FR 43523, Oct. 25, 1985, as amended at 52 FR 33406, Sept. 3, 1987; 54 FR 10537, Mar. 14, 1989; 56 FR 52430, Oct. 18, 1991; 57 FR 45246, Sept. 30, 1992; 61 FR 19796, May 2, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 201.12" NODE="24:2.1.1.2.2.2.37.3" TYPE="SECTION">
<HEAD>§ 201.12   Requirements for the note.</HEAD>
<P>The note shall bear the genuine signature of each borrower and of any co-maker or co-signer, be valid and enforceable against the borrower and any co-maker or co-signer, and be complete and regular on its face. The borrower and any co-maker or co-signer shall execute the note for the full amount of the loan obligation. Although the note may be executed by the borrower on an earlier date, the date of the loan shall be the date that the loan proceeds are disbursed by the lender. Such date shall be entered on the note when disbursement occurs. The note shall separately recite the principal amount and any interest at an agreed annual rate that comprises the borrower's payment obligation. The lender shall assure that the note and all other documents evidencing the loan transaction are in compliance with applicable Federal, State, and local laws. If the note is executed on behalf of a corporation, partnership, or trust by an authorized representative, it shall create a binding obligation on such entity. 
</P>
<CITA TYPE="N">[61 FR 19797, May 2, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 201.13" NODE="24:2.1.1.2.2.2.37.4" TYPE="SECTION">
<HEAD>§ 201.13   Interest and discount points.</HEAD>
<P>The interest rate for any loan shall be negotiated and agreed to by the borrower and the lender, and such interest rate shall be fixed for the full term of the loan and recited in the note. Interest on the loan shall accrue from the date of the loan, and shall be calculated on a simple interest basis. The lender and the borrower may negotiate the amount of discount points, if any, to be paid by the borrower as part of the borrower's initial payment. The lender shall not require or allow any party other than the borrower to pay any discount points or other financing charges in connection with the loan transaction. 
</P>
<CITA TYPE="N">[61 FR 19797, May 2, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 201.14" NODE="24:2.1.1.2.2.2.37.5" TYPE="SECTION">
<HEAD>§ 201.14   Payments on the loan.</HEAD>
<P>The note normally shall provide for equal installment payments due weekly, biweekly, semi-monthly or monthly. The note may provide for either or both of the first and final payments to vary in amount but not to exceed 1
<FR>1/2</FR> times the regular installment. Where the borrower has an irregular flow of income, the note may be payable at quarterly or semi-annual intervals corresponding with the borrower's flow of income. The first scheduled payment after the borrower's initial payment shall be due no later than two months from the date of the loan. Multiple payment schedules may not be used in connection with any loan.


</P>
</DIV8>


<DIV8 N="§ 201.15" NODE="24:2.1.1.2.2.2.37.6" TYPE="SECTION">
<HEAD>§ 201.15   Late charges to borrowers.</HEAD>
<P>(a) <I>Imposition of late charge.</I> The note may provide for imposition of a late charge unless precluded by State law. The late charge may be imposed only for installments of principal and interest which are in arrears for the greater of 15 calendar days or the number of days required by applicable State law before such a charge may be imposed. Late charges must be billed to the borrower or reflected in the payment coupon, and evidence of any late charges that have been paid must be in the loan file if an insurance claim is made.
</P>
<P>(b) <I>Amount of late charge.</I> The late charge shall not exceed the lesser of five percent of each installment of principal and interest, up to a maximum of $10 per installment for any property improvement loan and $15 per installment for any manufactured home loan, or the maximum amount permitted by applicable State law.
</P>
<P>(c) <I>Method of payment.</I> Payment of any late charge cannot be deducted from the monthly payment for principal and interest, but must be an additional charge to the borrower.
</P>
<P>(d) <I>Daily interest in lieu of late charges.</I> In lieu of late charges, the note may provide for interest to accrue on installments in arrears on a daily basis at the interest rate in the note.
</P>
<CITA TYPE="N">[54 FR 36264, Aug. 31, 1989]


</CITA>
</DIV8>


<DIV8 N="§ 201.16" NODE="24:2.1.1.2.2.2.37.7" TYPE="SECTION">
<HEAD>§ 201.16   Default provision.</HEAD>
<P>The loan note shall contain a provision for acceleration of maturity, at the option of the holder, upon a default by the borrower.


</P>
</DIV8>


<DIV8 N="§ 201.17" NODE="24:2.1.1.2.2.2.37.8" TYPE="SECTION">
<HEAD>§ 201.17   Prepayment provision.</HEAD>
<P>The note shall contain a provision permitting full or partial prepayment of the loan without penalty, except that the borrower may be assessed reasonable and customary charges for recording a release of the lender's security interest in the property, if permitted by State law. 
</P>
<CITA TYPE="N">[61 FR 19797, May 2, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 201.18" NODE="24:2.1.1.2.2.2.37.9" TYPE="SECTION">
<HEAD>§ 201.18   Modification agreement or repayment plan.</HEAD>
<P>(a) <I>Modification agreement or repayment plan.</I> A written but unrecorded modification agreement acceptable to the lender and executed by the borrower may be used in lieu of refinancing of a delinquent or defaulted loan to reduce or increase the monthly payment, but not to increase the term or the interest rate, so as to assure that the delinquent or defaulted loan is brought current before or by the end of the loan term. A modification agreement may also be used in lieu of refinancing in connection with a loan that is current to effect a reduction in the interest rate, and in the monthly payment, for the remainder of the loan term. When a modification agreement is used, no insurance reporting is required under § 201.30.
</P>
<P>(b) <I>Repayment plan.</I> The lender may elect to negotiate an informal repayment plan with the borrower to enable a temporary delinquency to be cured within a short period of time. The lender may document the terms of the repayment plan by sending a letter to the borrower reciting the terms of their agreement. When a repayment plan is used, no insurance reporting is required under § 201.30.
</P>
<CITA TYPE="N">[52 FR 33406, Sept. 3, 1987, as amended at 54 FR 10537, Mar. 14, 1989]


</CITA>
</DIV8>


<DIV8 N="§ 201.19" NODE="24:2.1.1.2.2.2.37.10" TYPE="SECTION">
<HEAD>§ 201.19   Refinanced and assumed loans.</HEAD>
<P>(a) <I>Conditions on refinancing.</I> (1) An existing insured property improvement loan or manufactured home loan may be refinanced without an advance of funds only under the following conditions:
</P>
<P>(i) A loan that is in default may not be refinanced for an amount greater than the original principal balance of the loan; 
</P>
<P>(ii) The refinancing of a loan for the original borrower shall be subject to all of the requirements of this part, except §§ 201.20(b) and (c), 201.21(b) through (e), 201.22, 201.23, and 201.26;
</P>
<P>(iii) If there are co-makers or co-signers on the original note, the lender shall require the same co-makers or co-signers on the refinanced note, unless the lender obtains the Secretary's approval to release a co-maker or co-signer from liability under the note in accordance with § 201.24(e); and 
</P>
<P>(iv) A loan that was assumed in accordance with paragraph (c) of this section may be refinanced, subject to all of the requirements of this part except §§ 201.20(b) and (c), 201.21(b) through (e), 201.22, 201.23, and 201.26, as long as the original borrower and any intervening assumptors were released from liability for repayment of the loan at the time the loan was assumed. A lender may not refinance a previously assumed loan under any other circumstances, unless the requirements of § 201.22 are also met and the Secretary has approved a release of the original borrower and any intervening assumptors in accordance with § 201.24(e). 
</P>
<P>(2) An existing insured property improvement loan may be refinanced with an advance of funds for additional improvements only under the following conditions:
</P>
<P>(i) The existing insured loan must not be in default; and
</P>
<P>(ii) The refinancing shall be subject to all of the requirements of this part applicable to the particular type of loan and to the additional improvements being financed.
</P>
<P>(3) An existing uninsured manufactured home loan may be refinanced only for the original borrower and only under the following conditions:
</P>
<P>(i) The existing uninsured loan must not be in default;
</P>
<P>(ii) Refinancing of an existing uninsured manufactured home purchase loan or combination loan shall be subject to all the requirements of this part applicable to the particular type of loan except §§ 201.23 and 201.26(b)(4); 
</P>
<P>(iii) Refinancing of an existing uninsured manufactured home lot loan in connection with the purchase of a manufactured home shall be subject to all of the requirements of this part; and 
</P>
<P>(iv) Refinancing of an existing uninsured manufactured home purchase loan in connection with the purchase of a manufactured home lot shall be subject to all of the requirements of this part except § 201.26(b)(4). 
</P>
<P>(b) <I>Note and security requirements for refinanced loans.</I> (1) Refinancing of a loan requires the execution of a new note and cancellation of the old note.
</P>
<P>(2) Refinancing of a loan that was secured when originated, regardless of the principal balance of the note at the time of refinancing, is required to be secured.
</P>
<P>(3) Refinancing of a loan that was not secured when originated is not required to be secured if no additional funds are advanced.
</P>
<P>(4) When a refinanced loan is secured, the lender shall obtain and record a new security instrument in accordance with § 201.24 and shall release the original lien, unless State law permits a renewal and extension of the original lien.
</P>
<P>(5) Copies of all documents pertaining to the original loan must be retained in the loan file for the refinanced loan.
</P>
<P>(c) <I>Assumed loans.</I> (1) At the option of the lender, an existing insured property improvement loan or manufactured home loan may be assumed, subject to the following conditions: 
</P>
<P>(i) A determination by the lender that the assumptor is eligible under § 201.20(a) or 201.21(a) and meets the requirements of § 201.22; and 
</P>
<P>(ii) The execution of an assumption agreement that is satisfactory to the lender and is signed by the assumptor and the original borrower or previous assumptor at the time of assumption. 
</P>
<P>(2) The lender shall not permit an assumption under any circumstances other than those contained in this section, and shall include appropriate provisions in any note or security agreement to enforce this requirement. 
</P>
<P>(3) Prior to the execution of the assumption agreement, the lender shall provide the assumptor with a written notice, to be signed by the assumptor and retained in the loan file, that: 
</P>
<P>(i) States that the loan being assumed is insured by HUD, and describes the actions the Secretary may take to recover the debt if the assumptor defaults on the loan and an insurance claim is paid; and 
</P>
<P>(ii) Constitutes the assumptor's agreement to pay penalties and administrative costs imposed by HUD as authorized by 31 U.S.C. 3717. 
</P>
<P>(4) If the other requirements of paragraph (c) of this section are met, the lender at its option may release the original borrower and any intervening assumptors from liability for the repayment of a loan obligation insured under this part. The prior approval of the Secretary under § 201.24(e) is not required. The lender shall retain documentation of the release in the loan file. 
</P>
<CITA TYPE="N">[52 FR 33406, Sept. 3, 1987, as amended at 56 FR 52430, Oct. 18, 1991]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:2.1.1.2.2.3" TYPE="SUBPART">
<HEAD>Subpart C—Eligibility and Disbursement Requirements</HEAD>


<DIV8 N="§ 201.20" NODE="24:2.1.1.2.2.3.37.1" TYPE="SECTION">
<HEAD>§ 201.20   Property improvement loan eligibility.</HEAD>
<P>(a) <I>Borrower eligibility.</I> (1) To be eligible for a property improvement loan (other than a manufactured home improvement loan), the borrower shall have at least a one-half interest in one of the following:
</P>
<P>(i) Fee simple title to the real property;
</P>
<P>(ii) Lease of the real property for a fixed term which expires not less than six calendar months after the final maturity of the loan; or
</P>
<P>(iii) A properly recorded land installment contract for the purchase of the real property.
</P>
<P>(2) To be eligible for a manufactured home improvement loan, the borrower shall have at least a one-half interest in the manufactured home, and the home must be the principal residence of the borrower. 
</P>
<P>(b) <I>Eligible use of the loan proceeds.</I> (1) The loan proceeds shall be used only for the purposes disclosed in the loan application. If the borrower plans to use a dealer or contractor to carry out the improvement work, the lender shall obtain a copy of a proposal or contract that describes in detail the work to be performed and the estimated or actual cost. If the borrower plans to carry out the improvement work without the services of a dealer or contractor, the borrower shall be required to furnish a detailed written description of the work to be performed, the materials to be furnished, and their estimated cost. 
</P>
<P>(2) The loan proceeds shall be used only to finance property improvements that substantially protect or improve the basic livability or utility of the property. The Secretary will establish a list of items and activities that may not be financed with the proceeds of any property improvement loan. If a lender has any doubt as to the eligibility of any item or activity, it shall request a specific ruling by the Secretary before making a loan. 
</P>
<P>(3) The loan proceeds shall only be used to finance property improvements that are started after loan approval, unless: 
</P>
<P>(i) The prior approval of the Secretary is obtained for an exception to this requirement; or 
</P>
<P>(ii) The property is located in a major disaster area declared by the President, and the lender determines that emergency action is needed to repair damage resulting from the disaster. 
</P>
<P>(c) <I>Special pre-application requirements.</I> (1) Where the proceeds are to be used for an historic preservation loan, the proposed improvements shall be reviewed and approved by the State Historic Preservation Officer (or other person authorized by the Secretary of the Interior to make such reviews) prior to making application for a loan. The purpose of the review is to determine that (i) the structure is an historic residential structure listed on the National Register of Historic Places or certified by the Secretary of the Interior as conforming with National Register criteria, and (ii) the proposed improvements comply with criteria set by the Secretary of the Interior for the preservation of historic structures.
</P>
<P>(2) Where the proceeds are to be used for a fire safety equipment loan, the proposed improvements shall be reviewed and approved by the State or local agency having primary jurisdiction over the fire safety requirements of health care facilities prior to making application for a loan.
</P>
<CITA TYPE="N">[50 FR 43523, Oct. 25, 1985, as amended at 56 FR 52430, Oct. 18, 1991; 61 FR 19797, May 2, 1996; 62 FR 65181, Dec. 10, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 201.21" NODE="24:2.1.1.2.2.3.37.2" TYPE="SECTION">
<HEAD>§ 201.21   Manufactured home loan eligibility.</HEAD>
<P>(a) <I>Borrower eligibility.</I> To be eligible for a manufactured home loan (whether a manufactured home purchase loan, a manufactured home lot loan, or a combination loan), the borrower must become the owner of the particular property which is to be financed with such a loan. Where the loan involves a manufactured home which is classified as realty, ownership of the home must be in fee simple. Where the loan involves a manufactured home lot, ownership of the lot must be in fee simple, except where the lot consists of a share in a cooperative association which owns and operates a manufactured home park.
</P>
<P>(b) <I>Eligible use of loan proceeds.</I> (1) The loan proceeds may be used for the purchase or refinancing of a manufactured home, a suitably developed lot on which to place a manufactured home already owned by the borrower, or a manufactured home and a suitably developed lot for the home in combination. The loan proceeds may also be used to refinance an existing manufactured home already owned by the borrower in connection with the purchase of a manufactured home lot, or to refinance a lot already owned by the borrower in connection with the purchase of a manufactured home. Where the proceeds are for a manufactured home purchase loan or combination loan, the home must be the borrower's principal residence. Where the proceeds are for a manufactured home lot loan, the borrower's manufactured home must be placed on the lot and occupied as the borrower's principal residence within six months after the date of the loan. 
</P>
<P>(2) A manufactured home financed with an insured loan under this part may be either: 
</P>
<P>(i) A new home, which is one that is purchased by the borrower within 18 months after the date of manufacture and has not been previously occupied; or 
</P>
<P>(ii) An existing home, which is one that does not meet the criteria for a new home. In order to be eligible for financing with an insured loan under this part, the manufactured home, its warranty and the site on which the home is placed must meet the requirements of paragraphs (c) through (e) of this section.
</P>
<P>(3) The proceeds of a loan to purchase a new manufactured home or a new manufactured home and lot shall not be used to purchase furniture or wheels and axles, and the cost of these items shall not be included in the total principal obligation calculated under § 201.10 (b)(1) or (d)(1). 
</P>
<P>(4) The proceeds of a manufactured home purchase loan may be used for the purchase, construction or installation of a garage, carport, patio or other comparable appurtenance to the manufactured home, as stated in the retail purchase contract and as approved by the Secretary. The proceeds of a combination loan may be used for the purchase, construction or installation of a permanent foundation, garage, carport, patio or other comparable appurtenance to the manufactured home.
</P>
<P>(5) The Secretary will establish a list of items and activities that may not be financed with the proceeds of any manufactured home loan. If a lender has any doubt as to the eligibility of any item or activity, it shall request a specific ruling by the Secretary before making a loan. 
</P>
<P>(c) <I>Construction, transportation and installation requirements.</I> (1) The manufactured home shall be certified by the manufacturer under applicable criminal and civil penalties for fraud and misrepresentation to have been constructed in compliance with the National Manufactured Housing Construction and Safety Standards Act of 1974, 42 U.S.C. 5401-5426, so as to conform to all applicable Federal construction and safety standards, as evidenced by a label or tag affixed to the manufactured home in accordance with 24 CFR 3280.8.
</P>
<P>(2) During any period of transportation from the factory to the borrower's homesite, the structural integrity of the manufactured home shall be maintained so that it will be livable and durable. 
</P>
<P>(3) The installation or erection of the manufactured home on the homesite shall comply with the manufacturer's requirements for anchoring, support, stability and maintenance. Any permanent foundation shall be constructed in accordance with the current edition of HUD's Permanent Foundations Guide for Manufactured Housing (HUD Handbook 4930.3). 
</P>
<P>(4) For any manufactured home purchase loan or combination loan involving a sale of the manufactured home by a dealer, the dealer shall inspect the manufactured home, as installed or erected on the homesite, for structural damage or other defects resulting from the transportation and installation of the home. The dealer shall also test the performance of the home's plumbing, mechanical and electrical systems to assure that they are fully operational. 
</P>
<P>(d) <I>Manufacturer's warranty requirements.</I> (1) To induce the Secretary to insure a title I loan under this part for the purchase of a new manufactured home and to induce a borrower to purchase such a home, the home manufacturer shall furnish the borrower with a written warranty, duly executed by an authorized representative of the manufacturer on a HUD-approved form. The warranty shall be provided without cost to the borrower. The effective date of the warranty shall be the date of delivery of the manufactured home to the borrower, regardless of when the warranty was executed by the manufacturer or was delivered to the borrower.
</P>
<P>(2) The warranty shall obligate the home manufacturer to take appropriate action to correct any nonconformity with the standards prescribed in paragraph (c)(1) of this section or any defects in materials or workmanship which become evident within one year after the date of delivery. This warranty shall be in addition to, and not in derogation of, all other rights and privileges which the borrower may have under any other law or instrument during such period or thereafter. A copy of the warranty shall be retained in the lender's loan file.
</P>
<P>(3) Prior to making a loan involving a new manufactured home, the lender shall investigate whether the home manufacturer is substantially complying with its warranty obligations on other homes financed by the lender under any program. If the lender knows, because of consumer complaints, dealer comments or other information concerning the manufacturer received in the course of business, that consumers have complained about warranty performance, the lender shall ascertain whether such complaints have been resolved. The lender's findings shall be documented in the loan file. Such documentation may reference information or materials contained in other files of the lender, provided that the file contains a written certification signed by a responsible loan officer under applicable criminal and civil penalties for fraud and misrepresentation that the lender's findings are supported by such other information or materials.
</P>
<P>(4) If the lender concludes under paragraph (d)(3) of this section that a manufacturer may not be honoring its warranties, the lender shall immediately notify the Secretary in writing, with documentation of the facts and circumstances.
</P>
<P>(e) <I>Manufactured homesite standards.</I> (1) To assure the suitability of the homesite, the manufactured home shall be placed on a leased site in a manufactured home park or on an individual manufactured home lot or other site owned or leased by the borrower that meets the following standards. A manufactured home may be placed on a site within Indian trust or otherwise restricted lands if the borrower owns or leases the site, or if the borrower obtains written permission acceptable to the Secretary from the trustee or the tribal authority who controls the use of the site.
</P>
<P>(2) The manufactured homesite shall be served by adequate public or community water and sewerage systems, unless appropriate local officials certify that either or both such systems are unavailable to provide an adequate level of service to the manufactured homesite. If either or both such systems are not available, the manufactured homesite shall comply with local or State minimum lot area requirements for the provision of onsite water supply and/or sewage disposal.
</P>
<P>(3) When the manufactured home is to be placed on a leased site in a manufactured home park, the lender shall obtain certifications from the appropriate State or local government officials that the park complies with minimum standards relating to vehicular access, water supply, sewage disposal, utility connections, and other aspects of park development. Where minimum State and local standards for park development are not established or enforced, the lender shall obtain a certification from a registered civil engineer that the park meets minimum standards for park development prescribed by the Secretary.
</P>
<P>(4) When the manufactured home is to be placed on an individual manufactured home lot or other site owned or leased by the borrower (or on an Indian land site under paragraph (e)(1) of this section), the lender shall obtain certifications from the appropriate local government officials that:
</P>
<P>(i) The site complies with local zoning ordinances and regulations, if any;
</P>
<P>(ii) Adequate vehicular access from a public right-of-way is available to the site;
</P>
<P>(iii) Adequate water supply and sewage disposal facilities are available to or on the site; and
</P>
<P>(iv) Any other minimum local standards and requirements for site suitability are met. Where minimum local standards for water supply and sewage disposal are not established or enforced, the lender shall obtain a certification from a registered civil engineer that the site meets minimum standards for water supply and sewage disposal prescribed by the Secretary.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0328)
</APPRO>
<CITA TYPE="N">[50 FR 43523, Oct. 25, 1985; 51 FR 1496, Jan. 14, 1986, as amended at 54 FR 36264, Aug. 31, 1989; 56 FR 52431, Oct. 18, 1991; 61 FR 19797, May 2, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 201.22" NODE="24:2.1.1.2.2.3.37.3" TYPE="SECTION">
<HEAD>§ 201.22   Credit requirements for borrowers.</HEAD>
<P>(a) <I>Credit application and review.</I> (1) Before making a loan insured under this part, the lender shall exercise prudence and diligence to determine whether the borrower and any co-maker or co-signer is solvent and an acceptable credit risk, with a reasonable ability to make payments on the loan obligation. All documentation supporting this determination and relating to the lender's review of the credit of the borrower and of any co-maker or co-signer shall be retained in the loan file.
</P>
<P>(2) The lender shall obtain a separate dated credit application on a HUD-approved form, executed by the borrower and any co-maker or co-signer under applicable criminal and civil penalties for fraud and misrepresentation, for each loan made. The lender shall verify that the borrower's Social Security Number is valid, through such documentation as may be prescribed by the Secretary. 
</P>
<P>(3) The lender shall conduct a credit investigation based on the credit application, and shall obtain written verification of or otherwise document the current employment and current income of the borrower and any co-maker or co-signer. If the borrower or any co-maker or co-signer has changed employment within the past two years, the lender shall obtain written verification of or otherwise document the person's prior employment and prior income during the two-year period. If the borrower or any co-maker or co-signer was self-employed during any period of the previous two years, the lender shall obtain documentation of the person's income during such period of self-employment. 
</P>
<P>(4) The lender shall also determine the total amount of the borrower's existing and proposed title I loans to ensure that the loan amounts in § 201.10 are not exceeded. 
</P>
<P>(5) As part of its credit investigation, the lender shall obtain a consumer credit report stating the credit accounts and payment history of the borrower and of any co-maker or co-signer. Subject to state or local law, the lender shall check with the inquirers concerning all credit inquiries reported within the previous 90 days to determine whether the borrower or the co-maker or co-signer has incurred debts not listed on the credit application. If a consumer credit report is not available or is incomplete, the loan file shall contain other documentation of the lender's diligent investigation of the credit of the borrower or of the co-maker or co-signer. 
</P>
<P>(6) If the consumer credit report does not contain the necessary information, the lender shall obtain written verification that the borrower is not over 30 days delinquent on any senior mortgages or deeds of trust on the property being improved with a property improvement loan. 
</P>
<P>(7) The lender shall verify, in such manner as the Secretary may prescribe, whether the borrower is in default or a claim has been paid in connection with any loan obligation owed to or insured or guaranteed by the Federal Government. 
</P>
<P>(8) For any loan with a total principal balance in excess of $5,000, the lender shall obtain written verification of the source of all funds of the borrower required for the borrower's initial payment, if such payment will be in excess of five percent of the loan. 
</P>
<P>(9) Before making a final determination on the creditworthiness of the borrower, the lender shall conduct a face-to-face or telephone interview with the borrower and any co-maker or co-signer to resolve any discrepancies in the information on the credit application and to assure that the information is accurate and complete. 
</P>
<P>(10) After a thorough credit investigation and in the absence of information to the contrary, the lender may rely upon all statements of fact made by the borrower or any co-maker or co-signer in a credit application. 
</P>
<P>(b) <I>Income requirements.</I> (1) For any Title I loan, the credit application and review must establish that the borrower's income will be adequate to meet the periodic payments required by the loan, as well as the borrower's other housing expenses and recurring charges. For a borrower's income to be considered adequate, housing expenses and total fixed expenses generally may not exceed maximum percentages of effective gross income established by the Secretary. If these expense-to-income ratios are exceeded, the borrower's income may be considered adequate only if the lender determines and documents in the loan file the existence of compensating factors concerning the borrower's creditworthiness that support approval of the loan. 
</P>
<P>(2) In determining whether the borrower's income is adequate, the following definitions are applicable: 
</P>
<P>(i) <I>Effective gross income</I> is defined as continuing income from all sources that is reasonably expected to be available during the first two years of the loan obligation, without any deduction for income taxes or other items. 
</P>
<P>(ii) <I>Total fixed expenses</I> is the sum of the borrower's housing expenses and other recurring charges. 
</P>
<P>(iii) <I>Housing expenses</I> includes all payments for principal, interest, loan or mortgage insurance charges, ground rent or leasehold charges, real estate taxes, hazard insurance, and homeowners association or condominium fees, but does not include utility costs. 
</P>
<P>(iv) <I>Other recurring charges</I> include all payments on automobile loans, furniture loans, student loans, installment loans, revolving charge accounts, alimony or child support, and any other debt for which the obligation is expected to continue for six months or more. 
</P>
<P>(c) <I>Evidence of delinquency, default or misrepresentation.</I> Except with the prior approval of the Secretary the lender shall not approve a loan if the lender has knowledge of any of the following circumstances: 
</P>
<P>(1) The borrower is past due more than 30 days as to the payment of principal or interest under the original terms of a loan obligation owed to or insured or guaranteed by the Federal Government, unless the debt has since been discharged or satisfied; or 
</P>
<P>(2) The borrower has previously made material misstatements of fact on applications for loans or other assistance.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0328)
</APPRO>
<CITA TYPE="N">[50 FR 43523, Oct. 25, 1985, as amended at 51 FR 32060, Sept. 9, 1986; 54 FR 10537, Mar. 14, 1989; 56 FR 52431, Oct. 18, 1991; 57 FR 6480, Feb. 25, 1992; 61 FR 19797, May 2, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 201.23" NODE="24:2.1.1.2.2.3.37.4" TYPE="SECTION">
<HEAD>§ 201.23   Borrower's initial payment.</HEAD>
<P>(a) <I>General requirement.</I> The borrower shall be responsible for the payment in cash of any costs that will not be paid, or are not eligible to be paid, from the proceeds of the loan. Such costs payable by the borrower may include any required downpayment, any discount points to be paid by the borrower to the lender, any other fees and charges that may not be financed, and any other costs in excess of the loan amount. No part of such costs payable by the borrower may be loaned, advanced, or paid to or for the benefit of the borrower by the dealer, the manufacturer, or any other party to the loan transaction. If the borrower obtains all or any part of such costs through a gift or a loan from some other source, the borrower must disclose the source of such gift or loan on the credit application. Any such loan must be secured by property or collateral owned by the borrower independently of the property securing repayment of the Title I loan, unless the prior approval of the Secretary is obtained for an exception to this requirement. The lender shall consider any such loan obligation in performing the credit investigation. Documentation of any initial payment shall be retained by the lender in the loan file. 
</P>
<P>(b) <I>Manufactured home purchase loans.</I> In the case of a manufactured home purchase loan, the borrower shall make a minimum cash downpayment of at least five percent of the purchase price of the home. The borrower's equity in an existing manufactured home and any movable appurtenances may be traded-in on a new home and accepted in lieu of full or partial cash downpayment, but without any cash payment to the borrower. The existing manufactured home being traded-in shall be clearly identified, and the borrower's equity in the home shall be based upon the retail value of the home and appurtenances (as determined by a HUD-approved appraisal), less the total of all loans outstanding on the home and appurtenances. 
</P>
<P>(c) <I>Manufactured home lot loans.</I> In the case of a manufactured home lot loan, the borrower shall make a minimum cash downpayment of at least five percent of the total of the purchase price and development costs for the lot. 
</P>
<P>(d) <I>Combination loans.</I> In the case of a combination loan, the borrower shall make a minimum cash downpayment of at least five percent of the purchase price of the manufactured home and lot. If the borrower already owns a manufactured home or a lot on which a manufactured home is to be placed, the borrower's equity in such home or lot may be accepted in lieu of full or partial cash downpayment on a combination loan, but without any cash payment to the borrower. 
</P>
<CITA TYPE="N">[61 FR 19798, May 2, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 201.24" NODE="24:2.1.1.2.2.3.37.5" TYPE="SECTION">
<HEAD>§ 201.24   Security requirements.</HEAD>
<P>(a) <I>Property improvement loans</I>—(1) <I>Property improvement loans in excess of $7,500.</I> (i) Any property improvement loan in excess of $7,500 shall be secured by a recorded lien on the improved property. The lien shall be evidenced by a mortgage or deed of trust, executed by the borrower and all other owners in fee simple.
</P>
<P>(ii) If the borrower is a lessee, the borrower and all owners in fee simple must execute the mortgage or deed of trust. If the borrower is purchasing the property under a land installment contract, the borrower, all owners in fee simple, and all intervening contract sellers must execute the mortgage or deed of trust.
</P>
<P>(iii) The lien need not be a first lien on the property; however, the lien securing the Title I loan must hold no less than the second lien position. This requirement shall not apply where the first and second mortgages were made at the same time or the second mortgage was provided by a state or local government agency in conjunction with a downpayment assistance program.
</P>
<P>(2) <I>Property improvement loans of $7,500 or less.</I> Any property improvement loan for $7,500 or less (other than a manufactured home improvement loan) shall be similarly secured if, including any such additional loans, the total amount of all Title I loans on the improved property is more than $7,500.
</P>
<P>(3) <I>Manufactured home improvement loans.</I> Manufactured home improvement loans need not be secured.
</P>
<P>(b) <I>Manufactured home loans.</I> Any manufactured home loan shall be secured by a recorded lien on the home (or lot or home and lot, as appropriate), its furnishings, equipment, accessories, and appurtenances. The lien shall be a first lien, superior to any other lien on that property, and shall be evidenced by a properly recorded financing statement, a properly recorded security instrument executed by the borrower and any other owner of the property, or another acceptable instrument, such as a certificate of title issued by the State and containing a recitation of the lender's lien interest in the manufactured home.
</P>
<P>(c) <I>Recording and perfection of security.</I> The lender shall assure that the legal description of the property as recited in the security instrument is accurate, and that the security instrument creates a valid and enforceable lien on the property in the jurisdiction in which the property is located. The security instrument shall be recorded and perfected in the manner specified by applicable State law in the State where the property is located.
</P>
<P>(d) <I>Substitution or subordination of security.</I> The Secretary may approve substitution or subordination of security where the security value will not be impaired or reduced.
</P>
<P>(e) <I>Release of liability or lien.</I> The lender shall not release the borrower or any co-maker or co-signer from any liability under a note or from any lien securing a loan insured under this part without the prior approval of the Secretary.
</P>
<CITA TYPE="N">[50 FR 43523, Oct. 25, 1985, as amended at 51 FR 32060, Sept. 9, 1986; 54 FR 36265, Aug. 31, 1989; 61 FR 19798, May 2, 1996; 66 FR 56419, Nov. 7, 2001]


</CITA>
</DIV8>


<DIV8 N="§ 201.25" NODE="24:2.1.1.2.2.3.37.6" TYPE="SECTION">
<HEAD>§ 201.25   Charges to borrower to obtain loan.</HEAD>
<P>(a) <I>Fees and charges that may be financed in a property improvement loan.</I> The Secretary will establish a list of fees and charges that may be included in a property improvement loan. Such fees and charges shall have been incurred in connection with the origination of the loan, and their inclusion shall not increase the total principal obligation beyond the maximum loan amounts in § 201.10. 
</P>
<P>(b) <I>Fees and charges that may be financed in a manufactured home loan.</I> The Secretary will establish a list of fees and charges that may be included in a manufactured home loan. Such fees and charges shall have been incurred in connection with the origination of the loan, and their inclusion shall not increase the total principal obligation beyond the maximum loan amounts in § 201.10. 
</P>
<P>(c) <I>Fees and charges that may not be financed.</I> The Secretary will establish a list of fees and charges incurred by the lender that may be collected from the borrower in the initial payment, but may not be included in the loan amount or otherwise financed or advanced by the dealer, the manufacturer, or any other party to the loan transaction. 
</P>
<P>(d) <I>Fees and charges that may not be paid.</I> Neither the lender nor the borrower may pay a referral fee to any dealer, home manufacturer, contractor, supplier, real estate broker, loan broker, or any other party in connection with the origination of a loan insured under this part. 
</P>
<CITA TYPE="N">[61 FR 19798, May 2, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 201.26" NODE="24:2.1.1.2.2.3.37.7" TYPE="SECTION">
<HEAD>§ 201.26   Conditions for loan disbursement.</HEAD>
<P>(a) <I>Property improvement loans.</I> The lender shall comply with the following applicable requirements before disbursing the proceeds of a property improvement loan.
</P>
<P>(1) The lender shall ensure that the following conditions are met:
</P>
<P>(i) The borrower is eligible for a property improvement loan in accordance with § 201.20(a) (1) or (2); and
</P>
<P>(ii) The interest of the borrower in the property is valid, through such title or other evidence as are generally acceptable to prudent lending institutions and leading attorneys in the community in which the property is situated.
</P>
<P>(2) The proposed use of the loan proceeds shall be documented in accordance with the requirements of § 201.20(b)(1). 
</P>
<P>(3) Where the proceeds are to be used for an historic preservation loan, the lender shall ensure that the proposed improvements have been approved by the State Historic Preservation Officer in accordance with § 201.20(c).
</P>
<P>(4) Where the proceeds are to be used for a fire safety equipment loan, the lender shall ensure that the proposed improvements have been approved by the State or local agency having jurisdiction over the fire safety requirements of health care facilities in accordance with § 201.20(c).
</P>
<P>(5) In the case of a dealer loan, the lender shall obtain a completion certificate, on a HUD-approved form and signed by the borrower and the dealer under applicable criminal and civil penalties for fraud and misrepresentation, certifying that 
</P>
<P>(i) the improvements are eligible and have been completed in general accordance with the contract or cost estimate furnished to the lender, and 
</P>
<P>(ii) The borrower has not obtained the benefit of and will not receive any cash payment, rebate, cash bonus, sales commission, or anything of more than nominal value from the dealer as an inducement for the consummation of the transaction. 
</P>
<P>(6) In the case of a dealer loan made on or after December 7, 2001, the lender may disburse the loan proceeds solely to the borrower, or jointly to the borrower and the dealer or other parties to the transaction.
</P>
<P>(7) In the case of a dealer loan, the lender must conduct a telephone interview with the borrower before the disbursement of the loan proceeds. The lender, at minimum, must obtain an oral affirmation from the borrower to release funds to the dealer. The lender shall document the borrower's oral affirmation.
</P>
<P>(8) For any property improvement loan, the lender shall provide the borrower with a written notice, to be signed by the borrower and retained in the loan file, that: 
</P>
<P>(i) States that the loan will be insured by HUD and describes the actions the Secretary may take to recover the debt if the borrower defaults on the loan and an insurance claim is paid; 
</P>
<P>(ii) Constitutes the borrower's agreement to pay penalties and administrative costs imposed by HUD as authorized by 31 U.S.C. 3717; and 
</P>
<P>(iii) In the case of a direct loan, constitutes an acknowledgement of the borrower's postdisbursement obligation to furnish a completion certificate and to permit an on-site inspection by the lender or its agent in accordance with §§ 201.40(b) and (c). 
</P>
<P>(9) The lender shall assure that the loan file is complete and contains the note, security instrument, and copies of all other documents relating to the property improvement loan transaction.
</P>
<P>(b) <I>Manufactured home loans.</I> The lender shall comply with the following applicable requirements before disbursing the proceeds of a manufactured home loan.
</P>
<P>(1) The lender shall ensure that the borrower is eligible for a manufactured home loan in accordance with § 201.21(a).
</P>
<P>(2) The lender shall assure that the loan file is complete, and shall obtain the following documents for retention in the loan file:
</P>
<P>(i) A signed copy of the purchase contract between the borrower and the dealer or seller;
</P>
<P>(ii) A copy of the manufacturer's invoice, where the loan involves the purchase of a new manufactured home;
</P>
<P>(iii) Copies of itemized statements of other costs, fees and charges, whether paid by the borrower or financed with the loan proceeds; and 
</P>
<P>(iv) The note and security instrument and copies of all other documents relating to the loan transaction. 
</P>
<P>(v) The note, security instrument and copies of all other documents relating to the loan transaction.
</P>
<P>(3) The lender shall obtain certifications from the borrower under applicable criminal and civil penalties for fraud and misrepresentation that:
</P>
<P>(i) The manufactured home being financed with a manufactured home purchase loan or combination loan will be occupied as the borrower's principal residence; 
</P>
<P>(ii) Where the proceeds are for a manufactured home lot loan, the borrower's manufactured home will be placed on the lot and will be occupied as the borrower's principal residence within six months after the date of the loan;
</P>
<P>(iii) The initial payment required under § 201.23 was made, and no part of the initial payment was borrowed from or otherwise advanced or paid to or for the benefit of the borrower by the dealer or seller, the manufacturer, or any other party to the transaction, and if any part of the initial payment was obtained through a gift or loan, the source of the gift or loan and the security for any such loan was disclosed on the credit application; 
</P>
<P>(iv) While any portion of the loan obligation on a manufactured home purchase loan is unpaid, the manufactured home may be moved only to a new site in compliance with § 201.21 (c) and (e), and only with the lender's prior approval;
</P>
<P>(v) While any portion of the loan obligation on a combination loan is unpaid, the manufactured home will not be moved to a new site; 
</P>
<P>(vi) The borrower has paid the remaining unpaid balance on any other manufactured home loan secured by a different property, unless the prior approval of the Secretary is obtained for an exception to this requirement; and 
</P>
<P>(vii) The borrower has not obtained the benefit of and will not receive any cash payment, rebate, cash bonus, or anything of more than nominal value from the manufacturer or dealer as an inducement for the consummation of the transaction. 
</P>
<P>(4) For any manufactured home purchase loan or combination loan involving the sale of a manufactured home by a dealer, the lender shall obtain a placement certificate, on a HUD-approved form and signed by the dealer under applicable criminal and civil penalties for fraud and misrepresentation, certifying that: 
</P>
<P>(i) The manufactured homesite meets the requirements of § 201.21(e); 
</P>
<P>(ii) The structural integrity of the manufactured home was maintained during the process of transporting the home to the borrower's homesite; 
</P>
<P>(iii) The manufactured home has been installed or erected on the homesite in accordance with the manufacturer's requirements for anchoring, support, stability and maintenance; 
</P>
<P>(iv) If the manufactured home is placed on a permanent foundation, such foundation has been constructed in accordance with the requirements of § 201.21(c)(3); 
</P>
<P>(v) The dealer has performed the inspection and tests required under § 201.21(c)(4) and has determined that the manufactured home has sustained no structural damage or other defects resulting from its transportation or installation, and all plumbing, mechanical and electrical systems are fully operational; 
</P>
<P>(vi) Any initial payment required under § 201.23 was made by the borrower, and no part of the initial payment was loaned, advanced, or paid to or for the benefit of the borrower by the manufacturer, dealer, or any other party to the loan transaction; and 
</P>
<P>(vii) The borrower has not obtained the benefit of and will not receive any cash payment, rebate, cash bonus, or anything of more than nominal value from the manufacturer or dealer as an inducement for the consummation of the transaction. 
</P>
<P>(5) The lender shall obtain and file the certifications by local officials or a civil engineer which are required under § 201.21(e) to document the suitability of the manufactured homesite.
</P>
<P>(6) For any direct manufactured home purchase loan or combination loan involving the relocation of the manufactured home to a new homesite owned or leased by the borrower, the lender (or an agent of the lender that is not a manufactured home dealer) shall conduct a site-of-placement inspection to verify that: 
</P>
<P>(i) States that the loan will be insured by HUD and describes the actions the Secretary may take to recover the debt if the borrower defaults on the loan and an insurance claim is paid;
</P>
<P>(ii) The manufactured home and any itemized options and appurtenances included in the purchase price of the home or to be financed with the loan proceeds have been delivered and installed; and 
</P>
<P>(iii) The manufactured home has been properly erected or installed on the homesite without any apparent structural damage or other serious defects resulting from its transportation or installation, and all plumbing, mechanical and electrical systems are fully operational. 
</P>
<P>(7) The lender shall provide the borrower with a written notice, to be signed by the borrower and retained in the loan file, that: 
</P>
<P>(i) States that the loan will be insured by the HUD and describes the actions the Secretary may take to recover the debt if the borrower defaults on the loan and an insurance claim is paid; and 
</P>
<P>(ii) Constitutes the borrower's agreement to pay penalties and administrative costs imposed by HUD as authorized by 31 U.S.C. 3717. 
</P>
<P>(8) Where a manufactured home purchase loan involves a manufactured home which is to be located on Indian trust or otherwise restricted lands, the lender shall obtain written permission from the trustee or the tribal authority who controls the site for the lender to repossess the home in the event of default by the borrower and acceleration of the loan.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0328)
</APPRO>
<CITA TYPE="N">[50 FR 43523, Oct. 25, 1985, as amended at 51 FR 32060, Sept. 9, 1986; 54 FR 36265, Aug. 31, 1989; 56 FR 52432, Oct. 18, 1991, 57 FR 6480, Feb. 25, 1992; 61 FR 19798, May 2, 1996; 62 FR 65181, Dec. 10, 1997; 66 FR 56420, Nov. 7, 2001]


</CITA>
</DIV8>


<DIV8 N="§ 201.27" NODE="24:2.1.1.2.2.3.37.8" TYPE="SECTION">
<HEAD>§ 201.27   Requirements for dealer loans.</HEAD>
<P>(a) <I>Dealer approval and supervision.</I> (1) The lender shall approve only those dealers which, on the basis of experience and information, the lender considers to be reliable, financially responsible, and qualified to satisfactorily perform their contractual obligations to borrowers and to comply with the requirements of this part. However, in no case shall the lender approve a dealer that is unable to meet the following minimum qualifications:
</P>
<P>(i) <I>Net worth.</I> All property improvement and manufactured home dealers shall have and maintain a net worth of not less than $32,000 and $63,000, respectively. The required net worth must be maintained in assets acceptable to the Secretary.
</P>
<P>(ii) <I>Business experience.</I> All property improvement loan and manufactured home dealers must have demonstrated business experience as a property improvement contractor or supplier, or in manufactured home retail sales, as applicable.
</P>
<P>(2) The lender's approval of a dealer shall be documented on a HUD-approved form, signed and dated by the dealer and the lender under applicable criminal and civil penalties for fraud and misrepresentation, and containing information supplied by the dealer on its trade name, places of business, type of ownership, type of business, and names and employment history of the owners, principals, officers, and salespersons. The dealer shall furnish a current financial statement prepared by someone who is independent of the dealer and is qualified by education and experience to prepare such statements, together with such other documentation as the lender deems necessary to support its approval of the dealer. The lender shall obtain a commercial credit report on the dealer and consumer credit reports on the owners, principals, and officers of the dealership. 
</P>
<P>(3) The lender shall require each dealer to apply annually for reapproval. The dealer shall furnish the same documentation as is required under paragraph (a)(2) of this section to support its application for reapproval. In no case shall the lender reapprove a dealer that is unable to meet the minimum net worth requirements in paragraph (a)(1) of this section. 
</P>
<P>(4) The lender shall supervise and monitor each approved dealer's activities with respect to loans insured under this part. The lender shall visit each approved dealer's places of business at least once in every six months to review its Title I performance and compliance. The lender shall maintain a file on each approved dealer which contains the executed dealer approval form and supporting documentation required under paragraph (a)(2) of this section, together with information on the lender's experience with Title I loans involving the dealer. Each dealer file shall contain information about borrower defaults on Title I loans over time, records of completion or site-of-placement inspections conducted by the lender or its agent, copies of letters concerning borrower complaints and their resolution, and records of the lender's periodic review visits to the dealer's premises. The lender may also require that the dealer furnish records on individual loan transactions, if needed to enable the lender to review the dealer's Title I performance and compliance. 
</P>
<P>(5) If a dealer does not satisfactorily perform its contractual obligations to borrowers, does not comply with Title I program requirements, or is unresponsive to the lender's supervision and monitoring requirements, the lender shall terminate the dealer's approval and immediately notify the Secretary with written documentation of the facts. A dealer whose approval is terminated under these circumstances shall not be reapproved without prior written approval from the Secretary. The lender may in its discretion terminate the approval of a dealer for other reasons at any time. 
</P>
<P>(6) The lender shall require each approved (or reapproved) dealer to provide written notification of any material change in its trade name(s), place(s) of business, type of ownership, type of business, or principal individuals who control or manage the business. The dealer shall furnish such notification to the lender within 30 days after the date of any material change.
</P>
<P>(7) As a condition of manufactured home dealer approval (or reapproval), the lender may require a manufactured home dealer to execute a written agreement that, if requested by the lender, the dealer will resell any manufactured home repossessed by the lender under a title I insured manufactured home purchase loan approved by the lender as a dealer loan involving that dealer. 
</P>
<P>(b) <I>Provision for full or partial recourse.</I> In the case of a dealer-originated manufactured home purchase loan or combination loan, the lender and the dealer may agree to a provision in the loan documents for partial or full recourse against the dealer, to reduce or eliminate the lender's loss in the event of foreclosure or repossession. Such recourse provision shall specify that, for a default occurring within a period of not more than three years from the date of the loan, the dealer shall reimburse the lender for a fixed percentage of the unpaid amount of the loan obligation, after deducting the proceeds from the sale of the property and any amounts received or retained by the lender after the date of default. However, the extent of the dealer's liability may not exceed 100 percent of the unpaid amount of the loan obligation prior to such deductions. When a claim is filed, the lender shall notify the Secretary if the loan was subject to a recourse agreement and whether the recourse agreement has been honored. If without the lender's approval a dealer has failed to honor its recourse obligation, the lender shall notify the Secretary and shall assign the recourse obligation to the Secretary in filing an insurance claim. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0328)
</APPRO>
<CITA TYPE="N">[50 FR 43523, Oct. 25, 1985, as amended at 56 FR 52433, Oct. 18, 1991; 61 FR 19799, May 2, 1996; 66 FR 56420, Nov. 7, 2001] 


</CITA>
</DIV8>


<DIV8 N="§ 201.28" NODE="24:2.1.1.2.2.3.37.9" TYPE="SECTION">
<HEAD>§ 201.28   Flood and hazard insurance, and Coastal Barriers properties.</HEAD>
<P>(a) <I>Flood insurance.</I> No property improvement loan or manufactured home loan shall be eligible for insurance under this part if the property securing repayment of the loan is located in a special flood hazard area identified by the Federal Emergency Management Agency (FEMA), unless the community in which the area is situated is participating in the National Flood Insurance Program, flood insurance under the National Flood Insurance Program (NFIP) is available with respect to such property improvements, and flood insurance on the property is obtained by the borrower in compliance with section 102 of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4012a). Such insurance shall be in the form of the standard policy issued under the National Flood Insurance Program (NFIP) or private flood insurance, as defined in 24 CFR 203.16a. Such insurance shall be obtained at any time during the term of the loan that the lender determines that the secured property is located in a special flood hazard area identified by FEMA and shall be maintained by the borrower for the remaining term of the loan, or until the lender determines that the property is no longer in a special flood hazard area, or until the property is repossessed or foreclosed upon by the lender. The amount of such insurance shall be at least equal to the unpaid balance of the Title I loan, and the lender shall be named as the loss payee for flood insurance benefits. A lender may determine that a private flood insurance policy meets the definition of private flood insurance, as defined in 24 CFR 203.16a, without further review of the policy, if the compliance aid statement provided in 24 CFR 203.16a(c) is included within the policy or as an endorsement to the policy. 
</P>
<P>(b) <I>Hazard insurance.</I> No manufactured home purchase loan or combination loan shall be eligible for insurance under this part unless hazard insurance on the manufactured home is obtained by the borrower and the lender is named as a loss payee of insurance benefits. Such insurance shall be maintained by the borrower for the full term of the loan or until the property is repossessed or foreclosed by the lender, and in an amount at least equal to the unpaid balance of the loan, except that the amount of insurance coverage shall be not less than the actual cash value of the home where State law precludes a higher amount. If the borrower fails to maintain such insurance, the lender shall obtain it at the borrower's expense. If the home is not insured against hazards and sustains damage which would normally be covered by such insurance during the borrower's ownership, the appraised value of the home for claim purposes will be adjusted in accordance with § 201.51(b)(3). Upon acquiring title to the property through repossession or foreclosure, the lender shall maintain hazard insurance upon the property in the amount prescribed above until its disposition and sale.
</P>
<P>(c) <I>Coastal barriers properties.</I> No title I insurance shall be made available under this part for any property improvement loan or manufactured home loan except pursuant to a loan application approved before October 18, 1982, with respect to any property within the Coastal Barriers Resources System established by the Coastal Barriers Resources Act (16 U.S.C. 3501).
</P>
<CITA TYPE="N">[50 FR 43523, Oct. 25, 1985, as amended at 51 FR 32060, Sept. 9, 1986; 53 FR 10537, Mar. 14, 1989; 54 FR 36265, Aug. 31, 1989; 61 FR 19799, May 2, 1996; 87 FR 70742, Nov. 21, 2022] 


</CITA>
</DIV8>


<DIV8 N="§ 201.29" NODE="24:2.1.1.2.2.3.37.10" TYPE="SECTION">
<HEAD>§ 201.29   Ineligible participants.</HEAD>
<P>No loan may be insured under this part where the lender has been advised in writing by HUD or otherwise knows that any participant in the transaction as a dealer, home manufacturer, contractor, supplier, or broker, or as its agent or representative, has been suspended or debarred, or has otherwise been determined by HUD to be ineligible to participate in the title I program. 


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:2.1.1.2.2.4" TYPE="SUBPART">
<HEAD>Subpart D—Insurance of Loans</HEAD>


<DIV8 N="§ 201.30" NODE="24:2.1.1.2.2.4.37.1" TYPE="SECTION">
<HEAD>§ 201.30   Reporting of loans for insurance.</HEAD>
<P>(a) <I>Date of reports.</I> The lender shall transmit a loan report on each loan reported for insurance within 31 days from the date of the loan's origination or purchase from a dealer or another lender. The loan report must be submitted on the form prescribed by the Secretary, and must contain the data prescribed by HUD. Any loan refinanced under this part shall similarly be reported on the prescribed form within 31 days from the date of refinancing. When a loan insured under this part is transferred to another lender without recourse, guaranty, guarantee, or repurchase agreement, a report on the prescribed form shall be transmitted to the Secretary within 31 days from the date of the transfer. No transfer of loan report is required when a loan insured under this part is transferred with recourse or under a guaranty, guarantee, or repurchase agreement.
</P>
<P>(b) <I>Late reports.</I> The Secretary may accept a late report on a loan where the lender certifies that the obligation is not in default.
</P>
<P>(c) <I>Electronic loan reporting.</I> With the prior approval of the Secretary, the lender may use electronic transmission to report loans for insurance in accordance with paragraph (a) of this section. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0328)
</APPRO>
<CITA TYPE="N">[50 FR 43523, Oct. 25, 1985, as amended at 56 FR 52434, Oct. 18, 1991; 66 FR 56420, Nov. 7, 2001]


</CITA>
</DIV8>


<DIV8 N="§ 201.31" NODE="24:2.1.1.2.2.4.37.2" TYPE="SECTION">
<HEAD>§ 201.31   Insurance charge.</HEAD>
<P>(a) <I>Insurance charge.</I> For each eligible property improvement loan and manufactured home loan reported and acknowledged for insurance, the lender shall pay to the Secretary an insurance charge equal to 1.00 percent of the loan amount, multiplied by the number of years of the loan term. The insurance charge shall be paid in the manner prescribed in paragraph (b) of this section; however, no charge shall be made for a period of 14 days or less, and a charge for a full month shall be made for a period of more than 14 days. There shall be no abatement or refund of an insurance charge except as provided in paragraph (e) of this section.
</P>
<P>(b) <I>Payment of insurance charge.</I> (1) For any loan having a maturity of 25 months or less, payment of the entire insurance charge prescribed in paragraph (a) of this section is due on the 25th calendar day after the date the Secretary acknowledges the loan report.
</P>
<P>(2)(i) For any loan having a maturity in excess of 25 months, payment of the insurance charge shall be made in annual installments, with the first installment due on the 25th calendar day after the date the Secretary acknowledges the loan report, and the second and successive installments due on the 25th calendar day after the date of billing by the Secretary.
</P>
<P>(ii) For any loan having a maturity in excess of 25 months, payment shall be made in annual installments of 1.00 percent of the loan amount until the insurance charge is paid.
</P>
<P>(3) All insurance charges are considered earned when paid.
</P>
<P>(4) The Secretary may require that loan insurance charges be remitted electronically. Instructions implementing this requirement shall be communicated to all affected lenders. 
</P>
<P>(c) <I>Penalty charge and interest.</I> Insurance charges not received from the lender by the due date specified in paragraph (b) of this section shall be assessed a penalty charge of four percent of the amount of the payment. Insurance charges received from the lender more than 30 days after the due date specified in paragraph (b) of this section shall also be assessed daily interest at the current United States Treasury value of funds rate, as published periodically in the <E T="04">Federal Register.</E> However, no penalty charge or daily interest shall be assessed if the Secretary fails to acknowledge receipt of the loan report or fails to issue a proper billing to the lender for the insurance charges.
</P>
<P>(d) <I>Adjustment on notes transferred.</I> Where there is a transfer of loan obligations between lenders and the insurance charges on such obligations have already been paid, any adjustment of such charges shall be made by the lenders involved. Any unpaid installments of the insurance charge shall be paid by the purchasing lender.
</P>
<P>(e) <I>Refund or abatement of insurance charges.</I> A lender shall be entitled to a refund or abatement of insurance charges only in the following instances:
</P>
<P>(1) Where the loan obligation has been refinanced, the unearned portion of the charge on the original obligation shall be credited to the charge on the refinanced loan.
</P>
<P>(2) Where the loan obligation is prepaid in full or an insurance claim is filed, charges falling due after such prepayment or claim shall be abated.
</P>
<P>(3) When a loan (or portion thereof) is found to be ineligible for insurance, charges paid on the ineligible portion shall be refunded, except where the Secretary determines that there was fraud or misrepresentation by the lender in the loan transaction. Such refund shall be made only if a claim is denied by the Secretary or the ineligibility is reported by the lender promptly upon discovery and confirmed by the Secretary. In no event shall a charge be refunded on the basis of loan ineligibility where the application for refund is made after the loan is paid in full. If a loan or claim has been denied and is subsequently resubmitted, the refunded amount of the insurance charge plus any accrued insurance charge shall be repaid.
</P>
<P>(f) <I>Lender passing insurance charge on to borrower.</I> The insurance charge may be passed on to the borrower, provided that such charge is fully disclosed to the borrower.
</P>
<CITA TYPE="N">[50 FR 43523, Oct. 25, 1985, as amended at 54 FR 36265, Aug. 31, 1989; 60 FR 13855, Mar. 14, 1995; 66 FR 56420, Nov. 7, 2001]


</CITA>
</DIV8>


<DIV8 N="§ 201.32" NODE="24:2.1.1.2.2.4.37.3" TYPE="SECTION">
<HEAD>§ 201.32   Insurance coverage reserve account.</HEAD>
<P>(a) <I>Establishment.</I> The Secretary shall establish an insurance coverage reserve account for each lender. The amount of insurance coverage in each reserve account shall equal 10 percent of the amount disbursed, advanced, or expended by the lender in originating or purchasing eligible loans registered for insurance under this part, less the amount of all insurance claims approved for payment in connection with losses on such loans. 
</P>
<P>(b) <I>Transfer of insured loans.</I> The lender shall not sell, assign or otherwise transfer any insured loan or loan reported for insurance to a transferee lender not approved to originate and purchase title I loans under a valid title I contract of insurance. Nothing contained herein shall be construed to prevent the pledging of such a loan as collateral security under a trust agreement, or otherwise, in connection with a bona fide loan transaction.
</P>
<P>(c) <I>Transfer of insurance coverage.</I> Not more than $5,000 in insurance coverage shall be transferred to or from a lender's reserve account during any fiscal year (October 1 through September 30) without the prior approval of the Secretary. Except in cases involving the sale, assignment or transfer of loans sold with recourse or under a guaranty, guarantee or repurchase agreement, the Secretary shall transfer insurance coverage to or from a lender's reserve account to accompany the loan transfers reported by lenders under § 201.30.
</P>
<P>(1) In all cases involving the sale, assignment or transfer of loans sold without recourse, guaranty, guarantee, or repurchase agreement, the Secretary shall transfer insurance coverage to the reserve account established for the transferee lender in an amount equal to 10 percent of the actual purchase price or the net unpaid principal balance, whichever is lesser, but not to exceed the amount of insurance coverage in the transferor lender's reserve account prior to the transfer. Insurance coverage shall be added to the existing amount of insurance coverage in the transferee lender's reserve account. The Secretary may transfer insurance coverage with earmarking when a determination is made that it is in the Secretary's interest to do so. 
</P>
<P>(2) In cases involving the transfer of loans sold with recourse or under a guaranty, guarantee or repurchase agreement, no insurance coverage will be transferred and no reports will be required.
</P>
<P>(3) An existing insured property improvement loan or manufactured home loan may not be refinanced by a lender different from the originating or purchasing lender of record, unless the loan has been sold, assigned, or transferred to the new lender under paragraph (c) of this section and the Secretary has transferred insurance coverage for the loan under the applicable requirements of this paragraph.
</P>
<P>(d) <I>Recovery shall not affect insurance coverage reserve account.</I> Amounts which may be recovered by the Secretary after payment of an insurance claim shall not be added to the amount of insurance coverage remaining in a lender's reserve account.
</P>
<CITA TYPE="N">[50 FR 43523, Oct. 25, 1985, as amended at 52 FR 33407, Sept. 3, 1987; 54 FR 10537, Mar. 14, 1989; 56 FR 52434, Oct. 18, 1991; 61 FR 19799, May 2, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:2.1.1.2.2.5" TYPE="SUBPART">
<HEAD>Subpart E—Loan Administration</HEAD>


<DIV8 N="§ 201.40" NODE="24:2.1.1.2.2.5.37.1" TYPE="SECTION">
<HEAD>§ 201.40   Post-disbursement loan requirements.</HEAD>
<P>(a) <I>Discovery of misstatements of fact.</I> If, after a loan has been made, the lender discovers any material misstatement of fact or that the loan proceeds have been misused by the borrower, dealer or any other party, it shall promptly report this to the Secretary. In such case, the insurance of the loan shall not be affected unless such material misstatement of fact or misuse of loan proceeds was caused by or was knowingly sanctioned by the lender or its employees (see § 201.31(e)(3)), provided that the validity of any lien on the property has not been impaired. 
</P>
<P>(b) <I>Requirements on property improvement loans.</I> (1) After receiving the proceeds of a direct property improvement loan, and after the work is completed to the borrower's satisfaction, the borrower shall submit a completion certificate to the lender, on a HUD-approved form and signed by the borrower under applicable criminal and civil penalties for fraud and misrepresentation, certifying that: 
</P>
<P>(i) The improvements have been completed, 
</P>
<P>(ii) the amount borrowed has been spent on improvements eligible under § 201.20(b) and in accordance with the contract or cost estimate furnished to the lender prior to disbursement of the loan proceeds, and 
</P>
<P>(iii) The borrower has not obtained the benefit of and will not receive any cash payment, rebate, cash bonus, sales commission, or anything of more than nominal value from any contractor or supplier as an inducement for the consummation of the loan transaction. 
</P>
<P>(2) The borrower shall submit the completion certificate promptly upon the work's completion, but not later than six months after the disbursement of the loan proceeds, with one six-month extension if necessary. If the borrower fails to submit the completion certificate within these time limits, an on-site inspection shall be conducted in accordance with paragraph (c) of this section. 
</P>
<P>(3) The borrower is not required to submit a completion certificate when the property improvement loan is made by or on behalf of a State or local government agency or a nonprofit organization, the loan proceeds are held in an escrow account pending completion of the improvements, and the loan proceeds are disbursed from the escrow account in stages, with the written approval of the borrower and based upon the percentage of work completed. 
</P>
<P>(c) <I>Inspection requirement on property improvement loans.</I> The lender or its agent shall conduct an on-site inspection on any property improvement loan where the principal obligation is $7,500 or more, and on any direct property improvement loan where the borrower fails to submit a completion certificate as required under paragraph (b) of this section. On a dealer loan, the inspection shall be completed within 60 days after the date of disbursement. On a direct loan, the inspection shall be completed within 60 days after receipt of the completion certificate, or as soon as the lender determines that the borrower is unwilling to cooperate in submitting the completion certificate. The purpose of the inspection is to verify the eligibility of the improvements and whether the work has been completed. If the borrower will not cooperate in permitting an on-site inspection, the lender shall report this fact to the Secretary. 
</P>
<P>(d) <I>Inspection requirement on dealer manufactured home loans.</I> For any manufactured home purchase loan or combination loan involving the sale of a manufactured home by a dealer, the lender (or an agent of the lender that is not a manufactured home dealer) shall conduct a site-of-placement inspection within 60 days after the date of disbursement to verify that: 
</P>
<P>(1) The terms and conditions of the purchase contract have been met; 
</P>
<P>(2) The manufactured home and any itemized options and appurtenances included in the purchase price of the home or financed with the loan proceeds have been delivered and installed; and 
</P>
<P>(3) The placement certificate executed by the borrower and the dealer is in order. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0328)
</APPRO>
<CITA TYPE="N">[50 FR 43523, Oct. 25, 1985, as amended at 56 FR 52434, Oct. 18, 1991; 61 FR 19799, May 2, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 201.41" NODE="24:2.1.1.2.2.5.37.2" TYPE="SECTION">
<HEAD>§ 201.41   Loan servicing.</HEAD>
<P>(a) <I>Generally.</I> The lender shall service loans in accordance with accepted practices of prudent lending institutions. It shall have adequate facilities for contacting the borrower in the event of default, and shall otherwise exercise diligence in collecting the amount due. The lender shall remain responsible to the Secretary for proper collection efforts, even though actual loan servicing and collection may be performed by an agent of the lender. The lender shall have an organized means of identifying, on a periodic basis, the payment status of delinquent loans to enable collection personnel to initiate and follow-up on collection activities, and shall document its records to reflect its collection activities on delinquent loans. 
</P>
<P>(b) <I>Partial payments.</I> The lender shall accept any partial payment (inclusive of late charges) under an executed modification agreement or an acceptable repayment plan, and either apply it to the borrower's account or hold it in a trust account pending disposition. When partial payments held for disposition aggregate a full monthly installment, they shall be applied to the borrower's account, thus advancing the date of the oldest unpaid installment. If a partial payment is received more than 60 days after the date of default and was not submitted under a repayment plan or a modification agreement, the partial payment may be returned to the borrower, with a letter of explanation.


</P>
</DIV8>


<DIV8 N="§ 201.42" NODE="24:2.1.1.2.2.5.37.3" TYPE="SECTION">
<HEAD>§ 201.42   Bankruptcy, insolvency or death of borrower.</HEAD>
<P>(a) <I>Bankruptcy or insolvency.</I> The lender shall file a proof of claim with the court having jurisdiction when the lender has timely information that a borrower is involved in bankruptcy or insolvency proceedings, except that a proof of claim need not be filed if the court notifies the lender that the borrower has no assets and a proof of claim should not be filed. The notice of bankruptcy and a copy of the proof of claim (or the notice from the court that a proof of claim is not required) shall be retained in the loan file.
</P>
<P>(b) <I>Death of a borrower.</I> The lender shall file a proof of claim with the court having jurisdiction when the lender has timely information that a borrower is deceased, unless the lender determines that there will not be a probate proceeding. A copy of the proof of claim (or documentation as to why a proof of claim was not filed) shall be retained in the loan file.
</P>
<P>(c) <I>Responsibility of the lender after insurance claim is filed.</I> After the Secretary pays an insurance claim, the Secretary will notify the bankruptcy or probate court, as appropriate, that the loan has been assigned to the United States and will request substitution as the party to whom the claim is owed. Until the insurance claim is paid, the lender shall take all steps necessary to protect the interests of the holder of the note in any bankruptcy or probate proceeding.
</P>
<CITA TYPE="N">[54 FR 36266, Aug. 31, 1989]


</CITA>
</DIV8>


<DIV8 N="§ 201.43" NODE="24:2.1.1.2.2.5.37.4" TYPE="SECTION">
<HEAD>§ 201.43   Administrative reports and examinations.</HEAD>
<P>The Secretary may call upon a lender for any reports deemed necessary in connection with the regulations in this part and may inspect the loan files, records, books and accounts of the lender as they pertain to the loans reported for insurance.


</P>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:2.1.1.2.2.6" TYPE="SUBPART">
<HEAD>Subpart F—Default Under the Loan Obligation</HEAD>


<DIV8 N="§ 201.50" NODE="24:2.1.1.2.2.6.37.1" TYPE="SECTION">
<HEAD>§ 201.50   Lender efforts to cure the default.</HEAD>
<P>(a) <I>Personal contact with the borrower before acceleration and foreclosure or repossession.</I> The lender shall undertake foreclosure or repossession of the property securing a Title I loan that is in default only after the lender has serviced the loan in a timely manner and with diligence in accordance with the requirements of this part, and has taken all reasonable and prudent measures to induce the borrower to bring the loan account current. Before taking action to accelerate the maturity of the loan, the lender or its agent shall contact the borrower and any co-maker or co-signer, either in a face-to-face meeting or by telephone, to discuss the reasons for the default and to seek its cure. If the borrower and the co-makers or co-signers cannot be located, will not discuss the default, or will not agree to its cure, the lender may proceed to take action under paragraph (b) of this section. The lender shall document the results of its efforts to contact the borrower and any co-maker or co-signer, and shall place in the loan file a copy of any modification agreement or repayment plan that has been offered. 
</P>
<P>(b) <I>Notice of default and acceleration.</I> Unless the borrower cures the default or agrees to a modification agreement or repayment plan, the lender shall provide the borrower with written notice that the loan is in default and that the loan maturity is to be accelerated. In addition to complying with applicable State or local notice requirements, the notice shall be sent by certified mail and shall contain:
</P>
<P>(1) A description of the obligation or security interest held by the lender;
</P>
<P>(2) A statement of the nature of the default and of the amount due to the lender as unpaid principal and earned interest on the note as of the date 30 days from the date of the notice;
</P>
<P>(3) A demand upon the borrower either to cure the default (by bringing the loan current or by refinancing the loan) or to agree to a modification agreement or a repayment plan, by not later than the date 30 days from the date of the notice;
</P>
<P>(4) A statement that if the borrower fails either to cure the default or to agree to a modification agreement or a repayment plan by the date 30 days from the date of the notice, then, as of the date 30 days from the date of the notice, the maturity of the loan is accelerated and full payment of all amounts due under the loan is required;
</P>
<P>(5) A statement that if the default persists the lender will report the default to an appropriate credit reporting agency; and
</P>
<P>(6) Any other requirements prescribed by the Secretary.
</P>
<P>(c) <I>Reinstatement of the loan.</I> The lender may rescind the acceleration of maturity after full payment is due and reinstate the loan only if the borrower brings the loan current, executes a modification agreement, or agrees to an acceptable repayment plan.
</P>
<P>(d) <I>Notice to credit reporting agency.</I> If the loan maturity is accelerated and the loan is not reinstated, the lender shall report the default to an appropriate credit reporting agency.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0328)
</APPRO>
<CITA TYPE="N">[50 FR 43523, Oct. 25, 1985, as amended at 52 FR 33407, Sept. 3, 1987; 56 FR 52434, Oct. 18, 1991; 57 FR 6480, Feb. 25, 1992]


</CITA>
</DIV8>


<DIV8 N="§ 201.51" NODE="24:2.1.1.2.2.6.37.2" TYPE="SECTION">
<HEAD>§ 201.51   Proceeding against the loan security.</HEAD>
<P>(a) <I>Property improvement loans.</I> (1) After acceleration of maturity on a secured property improvement loan, the lender may either proceed against the loan security under its title I security instrument or make claim under its contract of insurance. If the lender proceeds against the loan security, it may submit an insurance claim only if it complies with the requirements of paragraph (a)(2) of this section. 
</P>
<P>(2) The lender may proceed against the secured property under its Title I security instrument and later submit a claim under its contract of insurance only with the prior approval of the Secretary. The Secretary's decision will be based upon all relevant factors, including but not limited to the appraised value and the amount of all outstanding loan obligations on the property, the estimated costs of foreclosure and disposition, and the anticipated time to dispose of the property. In proceeding against the secured property, the lender shall comply with all applicable State and local laws, and shall take all actions necessary to preserve its rights, if any, to obtain a valid and enforceable deficiency judgment against the borrower. 
</P>
<P>(3) After acceleration of maturity on a defaulted unsecured property improvement loan, the lender may submit a claim under its contract of insurance.
</P>
<P>(b) <I>Manufactured home loans.</I> (1) After acceleration of maturity on a defaulted manufactured home loan, the lender shall proceed against the loan security by foreclosure or repossession, as appropriate, in compliance with all applicable State and local laws, and shall acquire good, marketable title to the property securing the loan. The lender shall also take all actions necessary under State and local law to preserve its rights, if any, to obtain a valid and enforceable deficiency judgment against the borrower.
</P>
<P>(2) Prior to foreclosure or repossession, the lender or its agent shall make a visual inspection of the property and prepare a report on its condition for placement in the loan file. If the lender determines that the property has been abandoned, the lender shall take such steps as are permitted under State or local law to repossess or foreclose upon the property, without waiting for the notice period under § 201.50(b) to run. 
</P>
<P>(3) The lender shall obtain a HUD-approved appraisal of the property as soon after repossession as possible, or earlier with the permission of the borrower. This appraisal shall be performed on the homesite, unless the site owner requires that the home be removed before the appraisal can be performed, and it should reflect the retail value of comparable manufactured homes in similar condition and in the same geographic area where the repossession occurred. When the manufactured home is without hazard insurance and has sustained, at any time prior to the sale or disposition of the home, damage which would normally be covered by such insurance, the lender shall report this situation in submitting an insurance claim, and the appraised value shall be based upon the retail value of comparable homes in good condition and in the same geographic area, without any deduction for such damage. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0328)
</APPRO>
<CITA TYPE="N">[50 FR 43523, Oct. 25, 1985, as amended at 54 FR 10537, Mar. 14, 1989; 54 FR 36266, Aug. 31, 1989; 56 FR 52435, Oct. 18, 1991]


</CITA>
</DIV8>


<DIV8 N="§ 201.52" NODE="24:2.1.1.2.2.6.37.3" TYPE="SECTION">
<HEAD>§ 201.52   Acquisition by voluntary conveyance or surrender.</HEAD>
<P>The lender may accept a voluntary conveyance of title to or ownership of the property securing a manufactured home loan which is in default, provided that (a) the lender accepts the conveyance in full satisfaction of the borrower's obligation, and (b) no claim is submitted under its contract of insurance. The lender may accept voluntary surrender of the property without satisfaction of the borrower's obligation, provided that if the lender intends thereafter to submit a claim under its contract of insurance, the lender shall acquire title to or ownership of the property and then dispose of and sell the property in compliance with State and local law, so as to assure that it can assign a valid and enforceable obligation, including any deficiency against the borrower, to the Secretary when submitting its claim. If the lender accepts a voluntary conveyance of title or a voluntary surrender of the property, the notice of default and acceleration under § 201.50(b) shall not be required. 
</P>
<CITA TYPE="N">[50 FR 43523, Oct. 25, 1985, as amended at 61 FR 19799, May 2, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 201.53" NODE="24:2.1.1.2.2.6.37.4" TYPE="SECTION">
<HEAD>§ 201.53   Disposition of manufactured home loan property.</HEAD>
<P>Where the lender obtains title to property securing a manufactured home loan by repossession or foreclosure, the property shall be sold for the best price obtainable before making an insurance claim. In the case of a combination loan, the manufactured home and lot shall be sold in a single transaction and the manufactured home may not be removed from the lot, unless the prior approval of the Secretary is obtained for a different procedure. The best price obtainable shall be the greater of: 
</P>
<P>(a) The actual sales price of the property, after deducting the cost of repairs, furnishings, and equipment needed to make the property marketable, and after deducting the cost of transportation, set-up, and anchoring if the manufactured home is moved to a new homesite; or 
</P>
<P>(b) The appraised value of the property before repairs (as determined by a HUD-approved appraisal obtained in accordance with § 201.51(b)(3)). 
</P>
<CITA TYPE="N">[50 FR 43523, Oct. 25, 1985, as amended at 61 FR 19799, May 2, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 201.54" NODE="24:2.1.1.2.2.6.37.5" TYPE="SECTION">
<HEAD>§ 201.54   Insurance claim procedure.</HEAD>
<P>(a) <I>Claim application.</I> A claim for reimbursement for loss on any eligible loan shall be made on a HUD-approved form, executed by a duly qualified officer of the lender under applicable criminal and civil penalties for fraud and misrepresentation. The insurance claim shall be fully documented and itemized, and shall be accompanied by all documents and materials required by the Secretary for claim review. The claim submission shall contain original copies of all notes, security instruments, assumption agreements, releases of liability for repayment of the loan, judgments obtained by the lender against the borrower, and any related documents and forms, except where State or local law requires their retention by the lender or a governmental body such as a court. As appropriate, the claim application shall be supported by the following: 
</P>
<P>(1) Documentation of the lender's efforts to effect recourse against any dealer in accordance with any recourse agreement under § 201.27(b) between the lender and the dealer and contained in the loan documents;
</P>
<P>(2) Certification under applicable criminal and civil penalties for fraud and misrepresentation that the lender has complied with all applicable State and local laws in carrying out any foreclosure or repossession, including copies of all notices served upon the borrower or published in connection with such foreclosure or repossession; and
</P>
<P>(3) Where a borrower has declared bankruptcy or insolvency or is deceased, copies of the documentation required to be retained in the loan file under § 201.42. 
</P>
<P>(b) <I>Maximum claim period.</I> (1) An insurance claim shall be filed not later than the following dates: 
</P>
<P>(i) For property improvement loans—nine months after the date of default. 
</P>
<P>(ii) For manufactured home loans—three months after the date of sale of the property securing the loan, but not to exceed 18 months after the date of default. 
</P>
<P>(2) The Secretary may extend the claim filing period in a particular case, but only if the lender shows clear evidence that the delay in claim filing was in the interest of the Secretary or was caused by one of the following: 
</P>
<P>(i) Litigation related to the loan; 
</P>
<P>(ii) Management control of the lender or the Title I loan portfolio was assumed by a Federal or State agency; or 
</P>
<P>(iii) The borrower had experienced a loss of income or other financial difficulties directly attributable to a major disaster declared by the President, and additional time was needed to provide forbearance on a property improvement loan. 
</P>
<P>(3) If a borrower is a “person in military service” as that term is defined in the Soldiers' and Sailors' Civil Relief Act of 1940 and is in default on a loan insured under this part, any period of military service after the date of default shall be excluded in computing the maximum time period for filing an insurance claim. 
</P>
<P>(c) <I>Resubmitted and supplemental claims.</I> (1) Any insurance claim which is resubmitted with an appeal of a claim denial or a request for a waiver of the regulations in accordance with § 201.5(b) shall be filed within six months after the date of the claim denial.
</P>
<P>(2) Any supplemental insurance claim shall be filed within six months after the date of payment on the initial claim. A reprocessing fee, in an amount prescribed by the Secretary, will be charged for any supplemental claim. 
</P>
<P>(d) <I>Assignment of lender's rights to the United States.</I> Upon the filing of the insurance claim, the lender shall assign its entire interest in the loan note (or in a judgment in lieu of the note), in any security held, and in any claim filed in probate, bankruptcy or insolvency proceedings, to the United States of America. The assignment shall be made in the form provided in paragraph (f) of this section, provided that if this form is not valid or generally acceptable in the jurisdiction involved, a form which is valid and generally acceptable in the jurisdiction where the judgment or security was taken shall be used. If the security interest has been assigned to the United States, the assignment shall be recorded in that jurisdiction prior to filing the insurance claim, unless the Secretary determines that recordation by the lender in that jurisdiction is impractical. 
</P>
<P>(e) <I>Valid and enforceable obligation when assigned.</I> The loan obligation evidenced by the note must be both valid and enforceable against the debtor at the time the note is assigned to the United States of America. If the Secretary has reason to believe that the obligation may not be either valid or enforceable against the borrower, the Secretary may either deny the claim and reassign the loan note to the lender, or require the lender to repurchase the paid claim and accept reassignment of the note. The lender will be notified of the reasons for the claim denial or repurchase. If the lender subsequently obtains a valid and enforceable judgment against the borrower for the unpaid balance of the loan, the lender may resubmit the claim with an assignment of the judgment. 
</P>
<P>(f) <I>Form of assignment.</I> A lender shall use the following form of assignment, or one generally acceptable in the jurisdiction involved, properly dated, to assign the lender's entire interest in a loan note, judgment, real estate mortgage, deed of trust, conditional sales contract, chattel mortgage, mechanic's lien, or any security, in making an insurance claim:
</P>
<EXTRACT>
<P>All right, title, and interest of the undersigned is hereby assigned (without warranty, except that the loan qualifies for insurance) to the United States of America (HUD).
</P>
<FP-DASH>(Financial Institution) 
</FP-DASH>
<FP-DASH>By: 
</FP-DASH>
<FP-DASH>Title: 
</FP-DASH>
<FP-DASH>Date:</FP-DASH></EXTRACT>
<FP>If the assignment does not appear on the note or other instrument that is assigned, it shall be duly executed on an allonge which is attached to such note or other instrument.
</FP>
<P>(g) <I>Denial of insurance claim.</I> The Secretary may deny a claim for insurance in whole or in part based upon a violation of these regulations, unless a waiver of compliance with the regulations is granted under § 201.5.
</P>
<P>(h) <I>Incontestability of insurance claim payment.</I> Any insurance claim payment on a title I loan shall be final and incontestable after two years from the date the claim was certified for payment by the Secretary, in the absence of fraud or misrepresentation on the part of the lender, unless a demand for repurchase of the loan obligation is made on behalf of the United States prior to the expiration of the two-year period.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0328)
</APPRO>
<CITA TYPE="N">[50 FR 43523, Oct. 25, 1985; 51 FR 5068, Feb. 11, 1986, as amended at 51 FR 32060, Sept. 9, 1986; 56 FR 52435, Oct. 18, 1991; 57 FR 6480, Feb. 25, 1992; 61 FR 19800, May 2, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 201.55" NODE="24:2.1.1.2.2.6.37.6" TYPE="SECTION">
<HEAD>§ 201.55   Calculation of insurance claim payment.</HEAD>
<P>The lender will be reimbursed in an amount not to exceed 90 percent of its loss on any eligible loan up to the amount of insurance coverage in the lender's insurance coverage reserve account established by the Secretary under § 201.32, if the insurance claim is made in accordance with the requirements of this part. The amount of the insurance claim payment shall be computed as follows:
</P>
<P>(a) <I>Property improvement loans.</I> For property improvement loans, the insurance claim payment shall be 90 percent of the following amounts: 
</P>
<P>(1) The unpaid amount of the loan obligation (net unpaid principal and the uncollected interest earned to the date of default, calculated according to the terms of the note executed for any loan application that is approved prior to the effective date of these regulations, and calculated according to the actuarial method for all loans for which loan applications are approved on or after the effective date of these regulations). Where the lender has proceeded against the secured property under § 201.51(a)(2), the unpaid amount of the loan obligation shall be reduced by the proceeds received from the property's sale or disposition, after deducting the following:
</P>
<P>(i) The balances due on any obligations senior to the Title I loan obligation; and
</P>
<P>(ii) Customary and reasonable expenses for foreclosure and disposition, as determined by the Secretary.
</P>
<P>(2) Interest on the unpaid amount of the loan obligation from the date of default to the date of the claim's initial submission for payment plus 15 calendar days, calculated at the rate of seven percent per annum. However, interest shall not be paid for any period greater than nine months from the date of default. 
</P>
<P>(3) The amount of uncollected court costs, including fees paid for issuing, serving, and filing a summons.
</P>
<P>(4) The amount of attorney's fees on an hourly or other basis for time actually expended and billed, not to exceed $500. 
</P>
<P>(5) The amount of expenses for recording the assignment of the security to the United States.
</P>
<P>(b) <I>Manufactured home loans.</I> For manufactured home loans, the insurance claim payment shall be 90 percent of the sum of the following amounts: 
</P>
<P>(1) The unpaid amount of the loan obligation (net unpaid principal and the uncollected interest earned to the date of default, calculated according to the actuarial method), after deducting the following amounts:
</P>
<P>(i) The best price obtainable for the property after lawful repossession or foreclosure, as determined in accordance with § 201.53;
</P>
<P>(ii) All amounts to which the lender is entitled after the date of default from any source relating to the property, including but not limited to such items as rent, other income, recourse recovery against the dealer, hazard insurance benefits, secured interest protection insurance benefits, and rebates on prepaid insurance premiums; and
</P>
<P>(iii) Amounts retained by the lender after the date of default, including amounts held or deposited to the account of the borrower or to which the lender is entitled under the loan transaction, and which have not been applied in reduction of the borrower's indebtedness.
</P>
<P>(2) Interest on the unpaid amount of the loan obligation from the date of default to the date of the claim's initial submission for payment plus 15 calendar days, calculated at the rate of seven percent per annum. However, interest shall not be paid for any period greater than nine months from the date of default. 
</P>
<P>(3) For manufactured home purchase loans, the amount of costs paid to a dealer or other third party to repossess and preserve the manufactured home and other property securing repayment of the loan (including the costs of site inspection, property appraisal, hazard insurance premiums, personal property taxes, and site rental, as appropriate), plus actual costs not to exceed $1,000 per module for removing and transporting the home to a dealer's lot or other off-site location. 
</P>
<P>(4) The amount of a sales commission paid to a dealer, real estate agent or other third party for the resale of the repossessed or foreclosed manufactured home and/or lot. Where the home is resold on-site, the commission shall not exceed 10 percent of the sales price. Where the home is resold off-site, the commission shall not exceed seven percent of the sales price. 
</P>
<P>(5) For manufactured home lot loans, and for combination loans where both the foreclosed manufactured home and lot are classified as realty, the amount of:
</P>
<P>(i) State or local real estate taxes, ground rents, and municipal water and sewer fees or liens, prorated to the date of disposition of the property;
</P>
<P>(ii) Special assessments which are noted on the loan application or which become liens after the insurance is issued, prorated to the date of disposition of the property; 
</P>
<P>(iii) Premiums for hazard insurance on the manufactured home, prorated to the date of disposition of the property; and
</P>
<P>(iv) Transfer taxes imposed upon any deeds or other instruments by which the property was acquired by the lender.
</P>
<P>(6) The amount of uncollected court costs, including fees paid for issuing, serving, and filing a summons. 
</P>
<P>(7) The amount of attorney's fees on an hourly or other basis for time actually expended and billed, not to exceed $1,000. 
</P>
<P>(8) The amount of expenses for recording the assignment of the security to the United States, and for costs of repossession or foreclosure other than attorney's fees and those incurred under paragraph (b)(3), but not to exceed costs which are customary and reasonable in the jurisdiction where the repossession or foreclosure takes place, as determined by the Secretary. 
</P>
<CITA TYPE="N">[50 FR 43523, Oct. 25, 1985, as amended at 54 FR 10537, Mar. 14, 1989; 54 FR 36266, Aug. 31, 1989; 56 FR 52435, Oct. 18, 1991; 57 FR 30395, July 9, 1992; 61 FR 19800, May 2, 1996] 


</CITA>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:2.1.1.2.2.7" TYPE="SUBPART">
<HEAD>Subpart G—Debts Owed to the United States Under Title I</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>58 FR 47379, Sept. 9, 1993, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 201.60" NODE="24:2.1.1.2.2.7.37.1" TYPE="SECTION">
<HEAD>§ 201.60   General.</HEAD>
<P>(a) <I>Applicability.</I> The provisions in this subpart apply to the collection of debts owed to the United States arising out of the Title I program. These debts include, but are not limited to:
</P>
<P>(1) Amounts owed on loans assigned to the United States by insured lenders as the result of defaults by borrowers;
</P>
<P>(2) Unpaid insurance charges owed by lenders; and
</P>
<P>(3) Unpaid obligations of lenders arising from repurchase demands.
</P>
<P>(b) <I>Departmental debt collection regulations.</I> Except as modified by this subpart, collection of debts arising out of the Title I program is subject to the Department's debt collection regulations in subpart C of 24 CFR part 17.


</P>
</DIV8>


<DIV8 N="§ 201.61" NODE="24:2.1.1.2.2.7.37.2" TYPE="SECTION">
<HEAD>§ 201.61   Claims against debtors—principal amount of debt.</HEAD>
<P>(a) <I>Liability.</I> A debtor is liable to the Secretary for the principal amount of the debt, as described in paragraphs (b), (c), or (d) of this section, as appropriate.
</P>
<P>(b) <I>Property improvement notes.</I> In the case of an assigned note for a property improvement loan, the principal amount of the debt is the unpaid amount of the loan obligation, as defined in § 201.55(a)(1) of this part, plus amounts described in §§ 201.55(a) (3), (4), (5).
</P>
<P>(c) <I>Manufactured home notes.</I> In the case of an assigned note for a manufactured home loan, the principal amount of the debt is the unpaid amount of the loan obligation, as defined in § 201.55(b)(1) of this part, plus amounts described in §§ 201.55(b) (3) through (8).
</P>
<P>(d) <I>Assigned judgments.</I> In the case of a judgment obtained by the lender on a property improvement loan or a manufactured home loan and assigned to the Secretary, the principal amount of the debt is the amount of the judgment.


</P>
</DIV8>


<DIV8 N="§ 201.62" NODE="24:2.1.1.2.2.7.37.3" TYPE="SECTION">
<HEAD>§ 201.62   Claims against debtors—interest, penalties, and administrative costs.</HEAD>
<P>(a) <I>Interest.</I> In addition to the principal amount of the debt, the debtor is liable for the payment of interest. Interest accrues on the principal amount of the debt as of the date of default, as defined in § 201.2(h) of this part, as follows:
</P>
<P>(1) In the case of a debt based upon the assignment of a defaulted note, interest is assessed at the lesser of the rate specified in the note or the United States Treasury's current value of funds rate in effect on the date the Title I insurance claim was paid.
</P>
<P>(2) In the case of a debt based upon the assignment of a judgment, interest is assessed at the lesser of the rate specified in the judgment or the United States Treasury's current value of funds rate in effect on the date the Title I insurance claim was paid. 
</P>
<P>(b) <I>Penalties and administrative costs.</I> The Secretary shall assess reasonable administrative costs and penalties as authorized in 31 U.S.C. 3717, unless there is no provision in the note providing for such charges and the debtor has not otherwise consented to liability for such charges.


</P>
</DIV8>


<DIV8 N="§ 201.63" NODE="24:2.1.1.2.2.7.37.4" TYPE="SECTION">
<HEAD>§ 201.63   Claims against lenders.</HEAD>
<P>Claims against lenders for money owed to the Department, including unpaid insurance charges and unpaid repurchase demands, shall be collected in accordance with 24 CFR part 17, subpart C.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="202" NODE="24:2.1.1.2.3" TYPE="PART">
<HEAD>PART 202—APPROVAL OF LENDING INSTITUTIONS AND MORTGAGEES
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1703, 1709 and 1715b; 42 U.S.C. 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>62 FR 20082, Apr. 24, 1997, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:2.1.1.2.3.1" TYPE="SUBPART">
<HEAD>Subpart A—General Requirements</HEAD>


<DIV8 N="§ 202.1" NODE="24:2.1.1.2.3.1.37.1" TYPE="SECTION">
<HEAD>§ 202.1   Purpose.</HEAD>
<P>This part establishes minimum standards and requirements for approval by the Secretary of lenders and mortgagees to participate in the Title I and Title II programs.


</P>
</DIV8>


<DIV8 N="§ 202.2" NODE="24:2.1.1.2.3.1.37.2" TYPE="SECTION">
<HEAD>§ 202.2   Definitions.</HEAD>
<P><I>Act</I> means the National Housing Act (12 U.S.C. 1702 <I>et seq.</I>).
</P>
<P><I>Claim</I> means a single family insured mortgage for which the Secretary pays an insurance claim within 24 months after the mortgage is insured.
</P>
<P><I>Default</I> means a single family insured mortgage in default for 90 or more days within 24 months after the mortgage is insured.
</P>
<P><I>Lender</I> or <I>Title I lender</I> means a financial institution that:
</P>
<P>(a) Holds a valid Title I Contract of Insurance and is approved by the Secretary under this part as a supervised lender under § 202.6, a nonsupervised lender under § 202.7, an investing lender under § 202.9, or a governmental or similar institution under § 202.10; or
</P>
<P>(b) Is under suspension or held a Title I contract that has been terminated but remains responsible for servicing or selling Title I loans that it holds and is authorized to file insurance claims on such loans.
</P>
<P><I>Loan</I> or <I>Title I loan</I> means a loan authorized for insurance under Title I of the Act.
</P>
<P><I>Mortgage, Title II mortgage or insured mortgage</I> means a mortgage or loan insured under Title II or Title XI of the Act.
</P>
<P><I>Mortgagee</I> or <I>Title II mortgagee</I> means a mortgage lender that is approved to participate in the Title II programs as a supervised mortgagee under § 202.6, a nonsupervised mortgagee under § 202.7, an investing mortgagee under § 202.9, or a governmental or similar institution under 202.10.
</P>
<P><I>Multifamily mortgagee</I> means a mortgagee approved to participate only in multifamily Title II programs, except that for purposes of § 202.8(b)(1) the term also means a mortgagee approved to participate in both single family and multifamily Title II programs.
</P>
<P><I>Normal rate</I> means the rate of defaults and claims on insured mortgages for the geographic area served by a HUD field office, or other area designated by the Secretary, in which a mortgagee originates mortgages.
</P>
<P><I>Origination approval agreement</I> means the Secretary's agreement that a mortgagee is approved to originate single family insured mortgages.
</P>
<P><I>Title I program(s)</I> means an insurance program or programs authorized by Title I of the Act.
</P>
<P><I>Title II program(s)</I> means an insurance program or programs authorized by Title II or Title XI of the Act.
</P>
<CITA TYPE="N">[62 FR 20082, Apr. 24, 1997, as amended at 62 FR 65181, Dec. 10, 1997; 75 FR 20731, Apr. 20, 2010]


</CITA>
</DIV8>


<DIV8 N="§ 202.3" NODE="24:2.1.1.2.3.1.37.3" TYPE="SECTION">
<HEAD>§ 202.3   Approval status for lenders and mortgagees.</HEAD>
<P>(a) <I>Initial approval.</I> A lender or mortgagee may be approved for participation in the Title I or Title II programs upon filing a request for approval on a form prescribed by the Secretary and signed by the applicant. The approval form shall be accompanied by such documentation as may be prescribed by the Secretary.
</P>
<P>(1) Approval is signified by:
</P>
<P>(i) The Secretary's agreement that the lender or mortgagee is considered approved under the Title I or Title II programs, except as otherwise ordered by the Mortgagee Review Board or an officer or subdivision of the Department to which the Mortgagee Review Board has delegated its power, unless the lender or mortgagee voluntarily relinquishes its approval;
</P>
<P>(ii) Consent by the lender or mortgagee to comply at all times with the general approval requirements of § 202.5, and with additional requirements governing the particular class of lender or mortgagee for which it was approved as described under subpart B at §§ 202.6 through 202.10; and
</P>
<P>(iii) Under the Title I program, the issuance of a Contract of Insurance constitutes an agreement between the Secretary and the lender and which governs participation in the Title I program.
</P>
<P>(2) Limitations on approval:
</P>
<P>(i) Separate approval as lender or mortgagee is required for participation in the Title I or Title II programs, respectively. Application must be made, and approval will be granted, on the basis of one or both categories of programs, as is appropriate.
</P>
<P>(ii) Separate approval as mortgagee is required for the Single Family Mortgage Insurance Programs and for the Multifamily Mortgage Insurance Programs. Application must be made, and approval will be granted, on the basis of either or both categories, as is appropriate.
</P>
<P>(iii) In addition to the requirements for approval as a Title II mortgagee, the Secretary may from time to time issue eligibility requirements for participation in specific programs, such as the Direct Endorsement program.
</P>
<P>(iv) A Title II mortgagee may be approved to operate either on a nationwide basis or on a geographically restricted basis in only those areas designated by the Secretary.
</P>
<P>(v) A Title I lender may originate loans or purchase advances of credit only within a geographic lending area approved by the Secretary. Expansion of this lending area shall be subject to a determination by the Secretary that the lender is able to originate loans in compliance with part 201 of this chapter within such expanded area.
</P>
<P>(3) <I>Authorized agents.</I> A mortgagee approved under §§ 202.6, 202.7, or 202.10 as a nonsupervised mortgagee, supervised mortgagee, or governmental or similar institution approved as a Direct Endorsement mortgagee under 24 CFR 203.3 may, with the approval of the Secretary, designate a nonsupervised or supervised mortgagee with Direct Endorsement approval under 24 CFR 203.3 as authorized agent for the purpose of underwriting loans. The application for mortgage insurance may be submitted in the name of the FHA-approved mortgagee or its designated authorized agent under this paragraph.
</P>
<P>(b) <I>Recertification.</I> On each anniversary of the approval of a lender or mortgagee, the Secretary will determine whether recertification, i.e., continued approval, is appropriate. The Secretary will review the yearly verification report required by § 202.5(m) and other pertinent documents, ascertain that all application and annual fees have been paid, and request any further information needed to decide upon recertification.
</P>
<P>(c) <I>Termination</I>—(1) <I>Termination of the Title I Contract of Insurance</I>—(i) <I>Notice.</I> A Contract of Insurance may be terminated in accordance with its terms by the Secretary or by the Secretary's designee upon giving the lender at least 5 days prior written notice.
</P>
<P>(ii) <I>Informal meeting.</I> If requested, and before expiration of the 5-day notice period, a lender shall be entitled to an informal meeting with the Department official taking action to terminate the Contract of Insurance.
</P>
<P>(iii) <I>Effect of termination.</I> Termination of a Contract of Insurance shall not affect:
</P>
<P>(A) The Department's obligation to provide insurance coverage with respect to eligible loans originated before the termination, unless there was fraud or misrepresentation;
</P>
<P>(B) A lender's obligation to continue to pay insurance charges or premiums and meet all other obligations, including servicing, associated with eligible loans originated before termination; or
</P>
<P>(C) A lender's right to apply for and be granted a new Title I Contract of Insurance, provided that the requirements for approval under this part are met.
</P>
<P>(2) <I>Credit Watch Termination</I>—(i) <I>Scope and frequency of review.</I> The Secretary will review, on an ongoing basis, the number of defaults and claims on mortgages originated, underwritten, or both, by each mortgagee in the geographic area served by a HUD field office. HUD will make this rate information available to mortgagees and the public through electronic means and will issue instructions for accessing this information through a Mortgagee Letter. For this purpose, and for all purposes under paragraph (c) of this section, a mortgage is considered to be originated in the same federal fiscal year in which its amortization commences. The Secretary may also review the insured mortgage performance of a mortgagee's branch offices individually and may terminate the authority of the branch or the authority of the mortgagee's overall operation.
</P>
<P>(ii) <I>Credit Watch Status.</I> Mortgagees are responsible for monitoring their default and claim rate performance. A mortgagee is considered to be on Credit Watch Status if, at any time, the mortgagee has a rate of defaults and claims on insured mortgages originated, underwritten, or both, in an area which exceeds 150 percent of the normal rate and its origination approval agreement has not been terminated.
</P>
<P>(iii) <I>Notice of termination</I>—(A) <I>Notice of termination of origination approval agreement.</I> The Secretary may notify a mortgagee that its origination approval agreement will terminate 60 days after notice is given, if the mortgagee had a rate of defaults and claims on insured mortgages originated in an area which exceeded 200 percent of the normal rate and exceeded the national default and claim rate for insured mortgages.
</P>
<P>(B) <I>Notice of termination of direct endorsement approval.</I> The Secretary may notify a mortgagee that its direct endorsement approval under 24 CFR part 203 will terminate 60 days after notice is given, if the mortgagee had a rate of defaults and claims on insured mortgages underwritten in an area which exceeded 200 percent of the normal rate and exceeded the national default and claim rate for insured mortgages. The termination of a mortgagee's direct endorsement approval pursuant to this section is separate and apart from the termination of a mortgagee's direct endorsement approval under 24 CFR part 203.
</P>
<P>(C) <I>No need for prior action by Mortgagee Review Board.</I> The termination notices described in paragraphs (c)(2)(ii)(A) and (B) of this section may be given without prior action by the Mortgagee Review Board.
</P>
<P>(D) <I>Underserved areas.</I> Before the Secretary sends the termination notice, the Secretary shall review the Census tract concentrations of the defaults and claims. If the Secretary determines that the excessive rate is the result of mortgage lending in underserved areas, as defined in 24 CFR 81.2, the Secretary may determine not to terminate the mortgagee's origination approval agreement and/or direct endorsement approval.
</P>
<P>(iv) <I>Request for informal conference.</I> Prior to termination the mortgagee may submit a written request for an informal conference with the Deputy Assistant Secretary for Single Family Housing or that official's designee. HUD must receive the written request no later than 30 calendar days after the date of the proposed termination notice. Unless HUD grants an extension, the informal conference must be held no later than 60 calendar days after the date of the proposed termination notice. After considering relevant reasons and factors beyond the mortgagee's control that contributed to the excessive default and claim rates, the Deputy Assistant Secretary for Single Family Housing or designee may withdraw the termination notice.
</P>
<P>(v) <I>Limitation on the establishment of new branches.</I> Upon receipt of a proposed termination notice of its origination approval agreement, the mortgagee shall not establish a new branch or new branches for the origination of FHA-insured mortgages in the area or areas that are covered by the proposed termination notice. As of January 18, 2005, a mortgagee that is in receipt of a notice of proposed termination may not establish any new branch in the location or locations cited in the proposed termination notice until either:
</P>
<P>(A) The proposed termination notice is withdrawn or
</P>
<P>(B) The Secretary reinstates the mortgagee's origination approval agreement, in accordance with paragraph (e) of this section.
</P>
<P>(vi) <I>Effects of termination</I>—(A) <I>Termination of origination approval agreement.</I> If a mortgagee's origination approval agreement is terminated, it may not originate single family insured mortgages unless the origination approval agreement is reinstated by the Secretary in accordance with paragraph (e) of this section, notwithstanding any other provision of this part except § 202.3(c)(2)(vii)(A).
</P>
<P>(B) <I>Termination of direct endorsement approval.</I> If a mortgagee's direct endorsement approval is terminated, it may not underwrite single family insured mortgages for the area(s) identified in the termination notice, unless the direct endorsement approval is reinstated by the Secretary in accordance with paragraph (e) of this section, notwithstanding any other provision of this part except § 202.3(c)(2)(vii)(A).
</P>
<P>(vii) <I>Rights and obligations in the event of termination.</I> Termination of the origination approval agreement and/or direct endorsement approval shall not affect:
</P>
<P>(A) The eligibility of the mortgage for insurance, absent fraud or misrepresentation, if the mortgagor and all terms and conditions of the mortgage had been approved before the termination by the Direct Endorsement or Lender Insurance mortgagee or were covered by a firm commitment issued by the Secretary; however, no other mortgages originated or underwritten after the date of termination by the mortgagee shall be insured unless the mortgagee's origination approval agreement and/or direct endorsement approval is reinstated by the Secretary;
</P>
<P>(B) The right of a mortgagee whose direct endorsement approval has been terminated to transfer cases to another mortgagee with direct endorsement approval for the area covered by the termination.
</P>
<P>(C) A mortgagee's obligation to continue to pay insurance premiums and meet all other obligations, including servicing, associated with insured mortgages;
</P>
<P>(D) A mortgagee's right to apply for reinstatement of the origination approval agreement and/or direct endorsement approval in accordance with paragraph (e) of this section; or
</P>
<P>(E) A mortgagee's right to purchase insured mortgages or to service its own portfolio or the portfolios of other mortgagees with which it has a servicing contract.
</P>
<P>(d) <I>Withdrawal and suspension of approval.</I> Lender or mortgagee approval may be suspended or withdrawn by the Mortgagee Review Board as provided in part 25 of this title.
</P>
<P>(e) <I>Reinstatement</I>—(1) <I>General.</I> A mortgagee whose origination approval agreement and/or direct endorsement approval has been terminated under paragraph (c) of this section may apply for reinstatement if:
</P>
<P>(i) The origination approval agreement and/or direct endorsement approval for the affected branch or branches has been terminated for at least six months; and
</P>
<P>(ii) The mortgagee continues to be an approved mortgagee meeting the general standards of § 202.5 and the specific requirements of §§ 202.6, 202.7, 202.8 or 202.10, and 202.12.
</P>
<P>(2) <I>Application for reinstatement.</I> The mortgagee's application for reinstatement must:
</P>
<P>(i) Be in a format prescribed by the Secretary and signed by the mortgagee;
</P>
<P>(ii) Be accompanied by an independent analysis of the terminated office's operations and identifying the underlying cause of the mortgagee's unacceptable default and claim rate. The independent analysis must be prepared by an independent Certified Public Accountant (CPA) qualified to perform audits under the government auditing standards issued by the General Accounting Office; and
</P>
<P>(iii) Be accompanied by a corrective action plan addressing each of the issues identified in the independent analysis described in paragraph (e)(2)(ii) of this section, along with evidence demonstrating that the mortgagee has implemented the corrective action plan.
</P>
<P>(3) <I>HUD action on reinstatement application.</I> The Secretary will grant the mortgagee's application for reinstatement if the mortgagee's application is complete and the Secretary determines that the underlying causes for the termination have been satisfactorily remedied.
</P>
<CITA TYPE="N">[62 FR 20082, Apr. 24, 1997, as amended at 62 FR 30225, June 2, 1997; 62 FR 65181, Dec. 10, 1997; 69 FR 75807, Dec. 17, 2004; 75 FR 20731, Apr. 20, 2010; 78 FR 57060, Sept. 17, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 202.4" NODE="24:2.1.1.2.3.1.37.4" TYPE="SECTION">
<HEAD>§ 202.4   Request for determination of compliance.</HEAD>
<P>Pursuant to section 539(a) of the Act, any person may file a request that the Secretary determine whether a lender or mortgagee is in compliance with § 202.12(a) or with provisions of this chapter implementing sections 223(a)(7) and 535 of the Act such as §§ 201.10(g), 203.18d and 203.43(c)(5) of this chapter (only section 535 applies to lenders). The request for determination shall be made to the following address: Department of Housing and Urban Development, Office of Lender Activities and Program Compliance, 451 Seventh Street SW., Washington, DC, 20410. The Secretary shall inform the requestor of the disposition of the request. The Secretary shall publish in the <E T="04">Federal Register</E> the disposition of any case referred by the Secretary to the Mortgagee Review Board.


</P>
</DIV8>


<DIV8 N="§ 202.5" NODE="24:2.1.1.2.3.1.37.5" TYPE="SECTION">
<HEAD>§ 202.5   General approval standards.</HEAD>
<P>To be approved for participation in the Title I or Title II programs, and to maintain approval, a lender or mortgagee shall meet and continue to meet the general requirements of paragraphs (a) through (n) of this section (except as provided in § 202.10(b)) and the requirements for one of the eligible classes of lenders or mortgagees in §§ 202.6 through 202.10.
</P>
<P>(a) <I>Business form.</I> (1) The lender or mortgagee shall be a corporation or other chartered institution, a permanent organization having succession, or a partnership. A partnership must meet the requirements of paragraphs (a)(1)(i) through (iv) of this section.
</P>
<P>(i) Each general partner must be a corporation or other chartered institution consisting of two or more persons.
</P>
<P>(ii) One general partner must be designated as the managing general partner. The managing general partner shall comply with the requirements of paragraphs (b), (c), and (f) of this section. The managing general partner must have as its principal activity the management of one or more partnerships, all of which are mortgage lenders or property improvement or manufactured home lenders, and must have exclusive authority to deal directly with the Secretary on behalf of each partnership. Newly admitted partners must agree to the management of the partnership by the designated managing general partner. If the managing general partner withdraws or is removed from the partnership for any reason, a new managing general partner shall be substituted, and the Secretary shall be immediately notified of the substitution.
</P>
<P>(iii) The partnership agreement shall specify that the partnership shall exist for the minimum term of years required by the Secretary. All insured mortgages and Title I loans held by the partnership shall be transferred to a lender or mortgagee approved under this part prior to the termination of the partnership. The partnership shall be specifically authorized to continue its existence if a partner withdraws.
</P>
<P>(iv) The Secretary must be notified immediately of any amendments to the partnership agreement that would affect the partnership's actions under the Title I or Title II programs.
</P>
<P>(2) <I>Use of business name.</I> The lender or mortgagee must use its HUD-registered business name in all advertisements and promotional materials related to FHA programs. HUD-registered business names include any alias or “doing business as” (DBA) on file with FHA. The lender or mortgagee must keep copies of all print and electronic advertisements and promotional materials for a period of 2 years from the date that the materials are circulated or used to advertise.
</P>
<P>(3) <I>Non-FHA-approved entities.</I> A lender or mortgagee that accepts a loan application from a non-FHA-approved entity must confirm that the entity's legal name and Tax ID number are included in the FHA loan origination system record for the subject loan. The loan to be insured by FHA must be underwritten by the FHA-approved lender or mortgagee.
</P>
<P>(b) <I>Employees.</I> The lender or mortgagee shall employ competent personnel trained to perform their assigned responsibilities in consumer or mortgage lending, including origination, servicing, and collection activities, and shall maintain adequate staff and facilities to originate and service mortgages or Title I loans, in accordance with applicable regulations, to the extent the mortgagee or lender engages in such activities.
</P>
<P>(c) <I>Officers.</I> All employees who will sign applications for mortgage insurance on behalf of the mortgagee or report loans for insurance shall be corporate officers or shall otherwise be authorized to bind the lender or mortgagee in the origination transaction. The lender or mortgagee shall ensure that an authorized person reports all originations, purchases, and sales of Title I loans or Title II mortgages to the Secretary for the purpose of obtaining or transferring insurance coverage.
</P>
<P>(d) <I>Escrows.</I> The lender or mortgagee shall not use escrow funds for any purpose other than that for which they were received. It shall segregate escrow commitment deposits, work completion deposits, and all periodic payments received under loans or insured mortgages on account of ground rents, taxes, assessments, and insurance charges or premiums, and shall deposit such funds with one or more financial institutions in a special account or accounts that are fully insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration, except as otherwise provided in writing by the Secretary.
</P>
<P>(e) <I>Servicing.</I> A lender shall service or arrange for servicing of the loan in accordance with the requirements of 24 CFR part 201. A mortgagee shall service or arrange for servicing of the mortgage in accordance with the servicing responsibilities contained in subpart C of 24 CFR part 203 and in 24 CFR part 207, with all other applicable regulations contained in this title, and with such additional conditions and requirements as the Secretary may impose.
</P>
<P>(f) <I>Business changes.</I> The lender or mortgagee shall provide prompt notification to the Secretary, in such form as prescribed by the Secretary, of:
</P>
<P>(1) All changes in its legal structure, including, but not limited to, mergers, terminations, name, location, control of ownership, and character of business; and
</P>
<P>(2) Any officer, partner, director, principal, manager, supervisor, loan processor, loan underwriter, loan originator, of the lender or mortgagee, or the lender or mortgagee itself, that is subject to one or more of the sanctions in paragraph (j) of this section.
</P>
<P>(g) <I>Financial statements.</I> The lender or mortgagee shall:
</P>
<P>(1) Furnish to the Secretary a copy of its audited financial statements within 90 days of its fiscal year end, except as provided in § 202.6(c);
</P>
<P>(2) Furnish such other information as the Secretary may request; and
</P>
<P>(3) Submit to an examination of that portion of its records that relates to its Title I and/or Title II program activities.
</P>
<P>(h) <I>Quality control plan.</I> Lenders or mortgagees shall implement a written quality control plan, acceptable to the Secretary, that assures compliance with the regulations of this chapter and other issuances of the Secretary regarding loan or mortgage origination and servicing unless the lenders or mortgagees were approved under § 202.9 without servicing authority.
</P>
<P>(i) <I>Fees.</I> The lender or mortgagee, unless approved under § 202.10, shall pay an application fee and annual fees, including additional fees for each branch office that the lender or mortgagee registers with the Department, at such times and in such amounts as the Secretary may require. The Secretary may identify additional classes or groups of lenders or mortgagees that may be exempt from one or more of these fees.
</P>
<P>(j) <I>Ineligibility.</I> For a lender or mortgagee to be eligible for FHA approval, neither the lender or mortgagee, nor any officer, partner, director, principal, manager, supervisor, loan processor, loan underwriter, or loan originator of the lender or mortgagee shall:
</P>
<P>(1) Be suspended, debarred, under a limited denial of participation (LDP), or otherwise restricted under 2 CFR part 2424 or 24 CFR part 25, or under similar procedures of any other federal agency;
</P>
<P>(2) Be indicted for, or have been convicted of, an offense that reflects adversely upon the integrity, competency, or fitness to meet the responsibilities of the lender or mortgagee to participate in the Title I or Title II programs;
</P>
<P>(3) Be subject to unresolved findings as a result of HUD or other governmental audit, investigation, or review;
</P>
<P>(4) Be engaged in business practices that do not conform to generally accepted practices of prudent mortgagees or that demonstrate irresponsibility;
</P>
<P>(5) Be convicted of, or have pled guilty or <I>nolo contendere</I> to, a felony related to participation in the real estate or mortgage loan industry:
</P>
<P>(i) During the 7-year period preceding the date of the application for licensing and registration; or
</P>
<P>(ii) At any time preceding such date of application, if such felony involved an act of fraud, dishonesty, or a breach of trust or money laundering;
</P>
<P>(6) Be in violation of provisions of the Secure and Fair Enforcement (SAFE) Mortgage Licensing Act of 2008 (12 U.S.C. 5101 <I>et seq.</I>) or any applicable provision of state law; or
</P>
<P>(7) Be in violation of any other requirement established by the Secretary.
</P>
<P>(k) <I>Branch offices.</I> A lender or mortgagee may, upon approval by the Secretary, maintain branch offices for the origination of Title I or Title II loans. The lender or mortgagee shall remain fully responsible to the Secretary for the actions of its branch offices.
</P>
<P>(l) <I>Conflict of interest and responsibility.</I> A mortgagee may not pay anything of value, directly or indirectly, in connection with any insured mortgage transaction or transactions to any person or entity if such person or entity has received any other consideration from the mortgagor, seller, builder, or any other person for services related to such transactions or related to the purchase or sale of the mortgaged property, except that consideration, approved by the Secretary, may be paid for services actually performed. The mortgagee shall not pay a referral fee to any person or organization.
</P>
<P>(m) <I>Reports.</I> Each lender and mortgagee must submit an annual certification on a form prescribed by the Secretary. Upon application for approval and with each annual recertification, each lender and mortgagee must submit a certification that it has not been refused a license and has not been sanctioned by any State or States in which it will originate, purchase, hold, sell, or service insured mortgages or Title I loans. In addition, each mortgagee shall file the following:
</P>
<P>(1) An audited or unaudited financial statement, within 30 days of the end of each fiscal quarter in which the mortgagee experiences an operating loss of 20 percent of its net worth, and until the mortgagee demonstrates an operating profit for 2 consecutive quarters or until the next recertification, whichever is the longer period; and
</P>
<P>(2) A statement of net worth within 30 days of the commencement of voluntary or involuntary bankruptcy, conservatorship, receivership, or any transfer of control to a federal or state supervisory agency.
</P>
<P>(n) <I>Net worth</I>—(1) <I>Applicability.</I> The requirements of paragraph (n) of this section apply to approved supervised and nonsupervised lenders and mortgagees under §§ 202.6 and 202.7, and approved investing lenders and investing mortgagees under § 202.9. For ease of reference, these institutions are referred to as “approved lenders or mortgagees” for purposes of paragraph (n) of this section. These requirements also apply to applicants for FHA approval under §§ 202.6, 202.7, and 202.9. For ease of reference, these institutions are referred to as “applicants” for purposes of paragraph (n) of this section.
</P>
<P>(2) <I>Requirements</I>—(i) <I>Single family net worth requirements.</I> Irrespective of size, each applicant and each approved lender or mortgagee for participation solely under the FHA single family programs shall have a net worth of not less than $1 million, plus an additional net worth of one percent of the total volume, in excess of $25 million, of FHA single family insured mortgages originated, underwritten, purchased, or serviced during the prior fiscal year, up to a maximum required net worth of $2.5 million. No less than 20 percent of the applicant's or approved lender's or mortgagee's required net worth must be liquid assets consisting of cash or its equivalent acceptable to the Secretary.
</P>
<P>(ii) <I>Multifamily net worth requirements.</I> Irrespective of size, each applicant for approval and each approved lender or mortgagee for participation solely under the FHA multifamily programs shall have a net worth of not less than $1 million. For those multifamily approved lenders or mortgagees that also engage in mortgage servicing, an additional net worth of one percent of the total volume, in excess of $25 million, of FHA multifamily mortgages originated, purchased, or serviced during the prior fiscal year, up to a maximum required net worth of $2.5 million. For multifamily approved lenders or mortgagees that do not perform mortgage servicing, an additional net worth of one half of one percent of the total volume, in excess of $25 million, of FHA multifamily mortgages originated during the prior fiscal year, up to a maximum required net worth of $2.5 million. No less than 20 percent of the applicant's or approved lender's or mortgagee's required net worth must be liquid assets consisting of cash or its equivalent acceptable to the Secretary.
</P>
<P>(iii) <I>Dual participation net worth requirements.</I> Irrespective of size, each applicant for approval and each approved lender or mortgagee that is a participant in both FHA single family and multifamily programs must meet the net worth requirements as set forth in paragraph (n)(2)(i) of this section.
</P>
<CITA TYPE="N">[75 FR 20732, Apr. 20, 2010; 75 FR 23582, May 4, 2010; 77 FR 51468, Aug. 24, 2012; 78 FR 57060, Sept. 17, 2013; 89 FR 7277, Feb. 2, 2024; 89 FR 30276, Apr. 23, 2024]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:2.1.1.2.3.2" TYPE="SUBPART">
<HEAD>Subpart B—Classes of Lenders and Mortgagees</HEAD>


<DIV8 N="§ 202.6" NODE="24:2.1.1.2.3.2.37.1" TYPE="SECTION">
<HEAD>§ 202.6   Supervised lenders and mortgagees.</HEAD>
<P>(a) <I>Definition.</I> A supervised lender or mortgagee is a financial institution that is a member of the Federal Reserve System or an institution whose accounts are insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration. A supervised mortgagee may submit applications for mortgage insurance. A supervised lender or mortgagee may originate, purchase, hold, service or sell loans or insured mortgages, respectively.
</P>
<P>(b) <I>Additional requirements.</I> In addition to the general approval requirements in § 202.5, a supervised lender or mortgagee shall meet the following requirements:
</P>
<P>(1) <I>Net worth.</I> The net worth requirements appear in § 202.5(n).
</P>
<P>(2) <I>Notification.</I> A lender or mortgagee shall promptly notify the Secretary in the event of termination of its supervision by its supervising agency.
</P>
<P>(3) <I>Fidelity bond.</I> A Title II mortgagee shall have fidelity bond coverage and errors and omissions insurance acceptable to the Secretary and in an amount required by the Secretary, or have alternative insurance coverage, approved by the Secretary, that assures the faithful performance of the responsibilities of the mortgagee.
</P>
<P>(4) <I>Audit report.</I> Except as provided in paragraph (c) of this section, a lender or mortgagee must:
</P>
<P>(i) Comply with the financial reporting requirements in 24 CFR part 5, subpart H. Audit reports shall be based on audits performed by a certified public accountant, or by an independent public accountant licensed by a regulatory authority of a State or other political subdivision of the United States on or before December 31, 1970, and shall include:
</P>
<P>(A) Financial statements in a form acceptable to the Secretary, including a balance sheet and a statement of operations and retained earnings, a statement of cash flows, an analysis of the lender's or mortgagee's net worth adjusted to reflect only assets acceptable to the Secretary, and an analysis of escrow funds; and
</P>
<P>(B) Such other financial information as the Secretary may require to determine the accuracy and validity of the audit report.
</P>
<P>(ii) Submit a report on compliance tests prescribed by the Secretary.
</P>
<P>(c) <I>Financial statement requirements for small supervised lenders and mortgagees</I>—(1) <I>Definitions.</I> For the purposes of this section, the following definitions apply:
</P>
<P>(i) <I>Federal banking agency</I> means the Board of Governors of the Federal Reserve System; the Federal Deposit Insurance Corporation; and the National Credit Union Administration; or any successor agency thereof.
</P>
<P>(ii) <I>Small supervised lender or mortgagee</I> means a supervised lender or mortgagee possessing consolidated assets below the threshold for required audited financial reporting as established by the federal banking agency that is responsible for the oversight of that supervised lender or mortgagee.
</P>
<P>(2) <I>Financial statement requirements.</I> Small supervised lenders and mortgagees shall not be subject to the requirement to submit a copy of an audited financial statement under § 202.5(g) and the audit report requirements under paragraph (b)(4) of this section. Small supervised lenders and mortgagees are required, within 90 days of their fiscal year end, to furnish to the Secretary the unaudited financial regulatory report—a consolidated or fourth quarter Report of Condition and Income (Federal Financial Institutions Examination Council forms 031 and 041, also known as the “Call Report”), a consolidated or fourth quarter Thrift Financial Report, or a consolidated or fourth quarter NCUA Call Report (NCUA Form 5300 or 5310), or such other financial regulatory report as may be required—that aligns with the small supervised lender's or mortgagee's fiscal year end and that the small supervised lender or mortgagee is required to submit to their respective federal banking agency.
</P>
<P>(3) <I>Requirement for audited financial statement and other information based on determination of heightened risk to the FHA insurance fund.</I> If the Secretary determines that a small supervised lender or mortgagee poses a heightened risk to the FHA insurance fund, the lender or mortgagee must provide, upon request, additional financial documentation, up to and including an audited financial statement, and other information as the Secretary determines necessary. The Secretary may determine that a small supervised lender or mortgagee poses a heightened risk to the FHA insurance fund based upon, but not limited to, one or more of the following factors:
</P>
<P>(i) Failing to provide required financial submissions under § 202.6(c)(2) within the required 90-day period following the lender's or mortgagee's fiscal year end;
</P>
<P>(ii) Maintaining insufficient adjusted net worth or unrestricted liquid assets as required by § 202.5(n);
</P>
<P>(iii) Reporting opening cash and equity balances that do not agree with the prior year's reported cash and equity balances;
</P>
<P>(iv) Experiencing an operating loss of 20 percent or greater of the lender's or mortgagee's net worth for the annual reporting period as governed by § 202.5(m)(1);
</P>
<P>(v) Experiencing an increase in loan volume over the prior 12-month period, determined by the Secretary to be significant;
</P>
<P>(vi) Undertaking significant changes to business operations, such as a merger or acquisition; and
</P>
<P>(vii) Other factors that the Secretary considers appropriate in indicating a heightened risk to the FHA insurance fund.
</P>
<CITA TYPE="N">[75 FR 20734, Apr. 20, 2010, as amended by 78 FR 57060, Sept. 17, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 202.7" NODE="24:2.1.1.2.3.2.37.2" TYPE="SECTION">
<HEAD>§ 202.7   Nonsupervised lenders and mortgagees.</HEAD>
<P>(a) <I>Definition.</I> A nonsupervised lender or mortgagee is a lending institution which has as its principal activity the lending or investing of funds in real estate mortgages, consumer installment notes, or similar advances of credit, or the purchase of consumer installment contracts, and which is not approved under any other section of this part. A nonsupervised mortgagee may submit applications for mortgage insurance. A nonsupervised lender or mortgagee may originate, purchase, hold, service or sell insured loans or mortgages, respectively.
</P>
<P>(b) <I>Additional requirements.</I> In addition to the general approval requirements in § 202.5, a nonsupervised lender or mortgagee shall meet the following requirements:
</P>
<P>(1) <I>Net worth and liquid assets.</I> The net worth and liquidity requirements appear in § 202.5(n).
</P>
<P>(2) <I>Credit source</I>—(i) <I>Title I.</I> A lender shall have and maintain a reliable warehouse line of credit or other funding program acceptable to the Secretary of not less than $500,000 for use in originating or purchasing Title I loans.
</P>
<P>(ii) <I>Title II.</I> Except for multifamily mortgagees, a mortgagee shall have a warehouse line of credit or other mortgage funding program acceptable to the Secretary which is adequate to fund the mortgagee's average 60 day origination operations, but in no event shall the warehouse line of credit or funding program be less than $1,000,000.
</P>
<P>(3) <I>Audit report.</I> (i) A lender or mortgagee must comply with the financial reporting requirements in 24 CFR part 5, subpart H. Audit reports shall be based on audits performed by a certified public accountant, or by an independent public accountant licensed by a regulatory authority of a State or other political subdivision of the United States on or before December 31, 1970, and shall include: 
</P>
<P>(A) A financial statement in a form acceptable to the Secretary, including a balance sheet and a statement of operations and retained earnings, a statement of cash flows, an analysis of the mortgagee's net worth adjusted to reflect only assets acceptable to the Secretary, and an analysis of escrow funds; and 
</P>
<P>(B) Such other financial information as the Secretary may require to determine the accuracy and validity of the audit report.
</P>
<P>(ii) A mortgagee must submit a report on compliance tests prescribed by the Secretary.
</P>
<P>(4) <I>Fidelity bond.</I> A Title II mortgagee shall have fidelity bond coverage and errors and omissions insurance acceptable to the Secretary and in an amount required by the Secretary, or alternative insurance coverage approved by the Secretary, that assures the faithful performance of the responsibilities of the mortgagee.
</P>
<CITA TYPE="N">[62 FR 20082, Apr. 24, 1997, as amended at 62 FR 65182, Dec. 10, 1997; 63 FR 9742, Feb. 26, 1998; 63 FR 44361, Aug. 18, 1998; 67 FR 53451, Aug. 15, 2002; 77 FR 51468, Aug. 24, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 202.8" NODE="24:2.1.1.2.3.2.37.3" TYPE="SECTION">
<HEAD>§ 202.8   Sponsored third-party originators.</HEAD>
<P>(a) <I>Definitions</I>—<I>Sponsor.</I> (1) With respect to Title I programs, a sponsor is a lender that holds a valid Title I Contract of Insurance and meets the net worth requirement for the class of lender to which it belongs.
</P>
<P>(2) With respect to Title II programs, a sponsor is a mortgagee that holds a valid origination approval agreement, is approved to participate in the Direct Endorsement program, and meets the net worth requirement for the class of mortgagee to which it belongs.
</P>
<P>(3) Each sponsor shall be responsible to the Secretary for the actions of its sponsored third-party originators or mortgagees in originating loans or mortgages, unless applicable law or regulation requires specific knowledge on the part of the party to be held responsible. If specific knowledge is required, the Secretary will presume that a sponsor has knowledge of the actions of its sponsored third-party originators or mortgagees in originating loans or mortgages and the sponsor is responsible for those actions unless it can rebut the presumption with affirmative evidence.
</P>
<P><I>Sponsored third-party originator.</I> A sponsored third-party originator may hold a Title I Contract of Insurance or Title II Origination Approval Agreement if it is an FHA-approved lender or mortgagee. If the sponsored third-party originator is not an FHA-approved lender or mortgagee, then the sponsored third-party originator may not hold a Title I Contract of Insurance or Title II Origination Approval Agreement. A sponsored third-party originator is authorized to originate Title I direct loans or Title II mortgage loans for sale or transfer to a sponsor or sponsors, as defined in this section, that holds a valid Title I Contract of Insurance or Title II Origination Approval Agreement and is not under suspension, subject to the sponsor determining that the third-party originator has met the eligibility criteria of paragraph (b) of this section.
</P>
<P>(b) <I>Eligibility to originate loans to be insured by FHA.</I> A sponsored third-party originator may originate loans to be insured by FHA, provided that:
</P>
<P>(1) The sponsored third-party originator is working with and through an FHA-approved lender or mortgagee; and
</P>
<P>(2) The sponsored third-party originator or an officer, partner, director, principal, manager, supervisor, loan processor, or loan originator of the sponsored third-party originator has not been subject to the sanctions or administrative actions listed in § 202.5(j), as determined and verified by the FHA-approved lender or mortgagee.
</P>
<CITA TYPE="N">[75 FR 20734, Apr. 20, 2010, as amended at 77 FR 51468, Aug. 24, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 202.9" NODE="24:2.1.1.2.3.2.37.4" TYPE="SECTION">
<HEAD>§ 202.9   Investing lenders and investing mortgagees.</HEAD>
<P>(a) <I>Definition.</I> An investing lender or investing mortgagee is an organization that is not approved as a supervised lender or mortgagee under § 202.6, a nonsupervised lender or mortgagee under § 202.7, or a governmental or similar institution under § 202.10. An investing lender or investing mortgagee may purchase, hold, or sell Title I loans or Title II mortgages, respectively, but may not originate Title I loans or Title II mortgages in its own name or submit applications for the insurance of mortgages. An investing lender or investing mortgagee may not service Title I loans or Title II mortgages without prior approval of the Secretary. 
</P>
<P>(b) <I>Additional requirements.</I> In addition to the general approval requirements in § 202.5, an investing lender or investing mortgagee shall meet the following requirements:
</P>
<P>(1) <I>Funding arrangements.</I> An investing lender or investing mortgagee shall have, or have made arrangements for, funds sufficient to support a projected investment of at least $1,000,000 in property improvement, manufactured home or real estate loans or mortgages.
</P>
<P>(2) <I>Officers and staff.</I> In lieu of the staffing and facilities requirements in § 202.5(b), an investing lender or investing mortgagee shall have officers or employees who are capable of managing its activities in purchasing, holding, and selling Title I loans or Title II mortgages.
</P>
<P>(3) <I>Fidelity bond.</I> An investing lender or investing mortgagee shall maintain fidelity bond coverage and errors and omissions insurance acceptable to the Secretary and in an amount required by the Secretary, or alternative insurance coverage approved by the Secretary, that assures the faithful performance of the responsibilities of the mortgagee.
</P>
<P>(4) <I>Audit report.</I> An investing lender or mortgagee must comply with the financial reporting requirements in24 CFR part 5, subpart H. Audit reports shall be based on audits performed by a certified public accountant, or by an independent public accountant licensed by a regulatory authority of a State or other political subdivision of the United States on or before December 31, 1970. Audit reports shall include:
</P>
<P>(i) A financial statement in a form acceptable to the Secretary, including a balance sheet and a statement of operations and retained earnings, a statement of cash flows, an analysis of the investing lender's or mortgagee's net worth adjusted to reflect only assets acceptable to the Secretary, and an analysis of escrow funds; and
</P>
<P>(ii) Such other financial information as the Secretary may require to determine the accuracy and validity of the audit report.
</P>
<CITA TYPE="N">[62 FR 20082, Apr. 24, 1997, as amended at 63 FR 9742, Feb. 26, 1998; 75 FR 20734, Apr. 20, 2010; 89 FR 30277, Apr. 23, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 202.10" NODE="24:2.1.1.2.3.2.37.5" TYPE="SECTION">
<HEAD>§ 202.10   Governmental institutions, Government-sponsored enterprises, public housing agencies and State housing agencies.</HEAD>
<P>(a) <I>Federal, state, and municipal governmental agencies and Federal Reserve Banks.</I> A Federal, State, or municipal government agency or a Federal Reserve Bank may be an approved lender or mortgagee. A mortgagee approved under this paragraph (a) may submit applications for Title II mortgage insurance. A lender or mortgagee approved under this paragraph (a) may originate, purchase, service, or sell Title I loans and insured mortgages, respectively. A mortgagee or lender approved under this paragraph (a) is not required to meet a net worth requirement. A lender or mortgagee shall maintain fidelity bond coverage and errors and omissions insurance acceptable to the Secretary and in an amount required by the Secretary, or alternative insurance coverage approved by the Secretary, that assures the faithful performance of the responsibilities of the mortgagee. There are no additional requirements beyond the general approval requirements in § 202.5 or as provided under paragraph (c) of this section.
</P>
<P>(b) <I>Government-Sponsored Enterprises.</I> The Government-Sponsored Enterprises are the Federal Home Loan Banks, Federal Home Loan Mortgage Corporation, and Federal National Mortgage Association. A Government-Sponsored Enterprise may be an approved lender or mortgagee. A lender or mortgagee approved under this paragraph (b) may purchase, service, or sell Title I loans and insured mortgages, respectively. A mortgagee or lender approved under this paragraph (b) is not required to meet a net worth requirement. There are no additional requirements beyond the general approval requirements in § 202.5.
</P>
<P>(c) <I>Public housing agencies and State housing agencies.</I> Under such terms and conditions as the Secretary may prescribe and notwithstanding the general requirements of § 202.5 or the requirements of paragraph (a) of this section, a public housing agency or its instrumentality or a State housing agency may be approved as a mortgagee for the purpose of originating and holding multifamily mortgages funded by issuance of tax exempt obligations by the agency.
</P>
<P>(d) <I>Audit requirements.</I> The insuring of loans and mortgages under the Act constitutes “Federal financial assistance” (as defined in 2 CFR 200.1) for purposes of audit requirements set out in 2 CFR part 200, subpart F. Non-Federal entities (as defined in 2 CFR 200.1) that receive insurance as lenders and mortgagees shall conduct audits in accordance with 2 CFR part 200, subpart F.
</P>
<CITA TYPE="N">[62 FR 20082, Apr. 24, 1997, as amended at 80 FR 75936, Dec. 7, 2015; 89 FR 30277, Apr. 23, 2024]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:2.1.1.2.3.3" TYPE="SUBPART">
<HEAD>Subpart C—Title I and Title II Specific Requirements</HEAD>


<DIV8 N="§ 202.11" NODE="24:2.1.1.2.3.3.37.1" TYPE="SECTION">
<HEAD>§ 202.11   Title I.</HEAD>
<P>(a) <I>Types of administrative action.</I> In addition to termination of the Contract of Insurance, certain sanctions may be imposed under the Title I program. The administrative actions that may be applied are set forth in 24 CFR part 25. Civil money penalties may be imposed against Title I lenders and mortgagees pursuant to 24 CFR part 30.
</P>
<P>(b) <I>Grounds for action.</I> Administrative actions shall be based upon both the grounds set forth in 24 CFR part 25 and as follows:
</P>
<P>(1) Failure to properly supervise and monitor dealers under the provisions of part 201 of this title;
</P>
<P>(2) Exhaustion of the general insurance reserve established under part 201 of this title;
</P>
<P>(3) Maintenance of a Title I claims/loan ratio representing an unacceptable risk to the Department; or
</P>
<P>(4) Transfer of a Title I loan to a party that does not have a valid Title I Contract of Insurance.
</P>
<CITA TYPE="N">[75 FR 20734, Apr. 20, 2010]


</CITA>
</DIV8>


<DIV8 N="§ 202.12" NODE="24:2.1.1.2.3.3.37.2" TYPE="SECTION">
<HEAD>§ 202.12   Title II.</HEAD>
<P>(a) <I>Tiered pricing</I>—(1) <I>General requirements</I>—(i) <I>Prohibition against excess variation.</I> The customary lending practices of a mortgagee for its single family insured mortgages shall not provide for a variation in mortgage charge rates that exceed 2 percentage points. A variation is determined as provided in paragraph (a)(6) of this section.
</P>
<P>(ii) <I>Customary lending practices.</I> The customary lending practices of a mortgagee include all single family insured mortgages originated by the mortgagee, including mortgages that were originated by the mortgagee's sponsored third-party originator(s).
</P>
<P>(iii) <I>Basis for permissible variations.</I> Any variations in the mortgage charge rate up to two percentage points under the mortgagee's customary lending practices must be based on actual variations in fees or cost to the mortgagee to make the mortgage loan, which shall be determined after accounting for the value of servicing rights generated by making the loan and other income to the mortgagee related to the loan. Fees or costs must be fully documented for each specific loan.
</P>
<P>(2) <I>Area.</I> For purposes of this section, an area is:
</P>
<P>(i) An area used by HUD for purposes of § 203.18(a) of this chapter to determine the median 1-family house price for an area; or
</P>
<P>(ii) The area served by a HUD field office but excluding any area included in paragraph (a)(2)(i) of this section.
</P>
<P>(3) <I>Mortgage charges.</I> Mortgage charges include any charges under the mortgagee's control and not collected for the benefit of third parties. Examples are interest, discount points and origination fees.
</P>
<P>(4) <I>Interest rate.</I> Whenever a mortgagee offers a particular interest rate for a mortgage type in an area, it may not restrict the availability of the rate in the area on the basis of the principal amount of the mortgage. A mortgagee may not direct mortgage applicants to any specific interest rate category on the basis of mortgage size.
</P>
<P>(5) <I>Mortgage charge rate.</I> The mortgage charge rate is defined as the amount of mortgage charges for a mortgage expressed as a percentage of the initial principal amount of the mortgage.
</P>
<P>(6) <I>Determining excess variations.</I> Variation in mortgage charge rates for a mortgage type is determined by comparing all mortgage charge rates offered by the mortgagee within an area for the mortgage type for a designated day or other time period, including mortgage charge rates for all actual mortgage applications.
</P>
<P>(7) <I>Mortgage type.</I> A mortgage type for purposes of paragraph (a)(6) of this section will include those mortgages that are closely parallel in important characteristics affecting pricing and charges, such as level of risk or processing expenses. The Secretary may develop standards and definitions regarding mortgage types.
</P>
<P>(8) <I>Recordkeeping.</I> Mortgagees are required to maintain records on pricing information, satisfactory to the Secretary, that would allow for reasonable inspection by HUD for a period of at least 2 years. Additionally, many mortgagees are required to maintain racial, ethnic, and gender data under the regulations implementing the Home Mortgage Disclosure Act (12 U.S.C. 2801-2810).
</P>
<P>(b) <I>Servicing.</I> Any mortgagee that services mortgages must be approved by the Secretary under § 202.6, § 202.7 or § 202.10, or be specifically approved for servicing under § 202.9(a).
</P>
<P>(c) <I>Report and corrective plan requirements.</I> If a mortgagee approved for participation in Title II programs is notified by the Secretary that it had a rate of defaults and claims on HUD-insured mortgages during the preceding year, or during recent years, which was higher than the normal rate, it shall submit a report, within 60 days, containing an explanation for the above-normal rate of defaults and claims, and, if required by the Secretary, a plan for corrective action with regard to mortgages in default and its mortgage processing system in general.
</P>
<CITA TYPE="N">[62 FR 20082, Apr. 24, 1997, as amended at 75 FR 20734, Apr. 20, 2010; 77 FR 51469, Aug. 24, 2012]


</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="203" NODE="24:2.1.1.2.4" TYPE="PART">
<HEAD>PART 203—SINGLE FAMILY MORTGAGE INSURANCE 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1707, 1709, 1710, 1715b, 1715z-16, 1715u, and 1715z-21; 15 U.S.C. 1639c; 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>36 FR 24508, Dec. 22, 1971, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:2.1.1.2.4.1" TYPE="SUBPART">
<HEAD>Subpart A—Eligibility Requirements and Underwriting Procedures</HEAD>


<DIV7 N="79" NODE="24:2.1.1.2.4.1.79" TYPE="SUBJGRP">
<HEAD>Direct Endorsement, Lender Insurance, and Commitments</HEAD>


<DIV8 N="§ 203.1" NODE="24:2.1.1.2.4.1.79.1" TYPE="SECTION">
<HEAD>§ 203.1   Underwriting procedures.</HEAD>
<P>The three underwriting procedures for single family mortgages are:
</P>
<P>(a) <I>Direct Endorsement.</I> This procedure, which is described in § 203.5, is available for mortgagees that are eligible under § 203.3.
</P>
<P>(b) <I>Lender insurance.</I> This procedure, which is described in § 203.6, is available for mortgagees that are eligible for the Direct Endorsement program under § 203.5, and that are also approved according to § 203.4.
</P>
<P>(c) <I>Issuing of commitments through HUD offices.</I> Processing through HUD offices as described in § 203.7, with issuance of commitments, is available only for mortgages that are not eligible for Direct Endorsement processing under § 203.5(b) or to the extent required in § 203.3(b)(4), § 203.3(d)(1), or as determined by the Secretary.
</P>
<CITA TYPE="N">[62 FR 30225, June 2, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 203.3" NODE="24:2.1.1.2.4.1.79.2" TYPE="SECTION">
<HEAD>§ 203.3   Approval of mortgagees for Direct Endorsement.</HEAD>
<P>(a) <I>Direct Endorsement approval.</I> To be approved for the Direct Endorsement program set forth in § 203.5, a mortgagee must be an approved mortgagee meeting the requirements of §§ 202.13, 202.14 or 202.17 and this section.
</P>
<P>(b) <I>Special requirements.</I> The mortgagee must establish that it meets the following qualifications.
</P>
<P>(1) The mortgagee has five years of experience in the origination of single family mortgages. The Secretary will approve a mortgagee with less than five years experience in the origination of single family mortgages if a principal officer has had a minimum of five years of managerial experience in the origination of single family mortgages.
</P>
<P>(2) The mortgagee has on its permanent staff an underwriter that is authorized by the mortgagee to bind the mortgagee on matters involving the origination of mortgages through the Direct Endorsement procedure and that is registered with the Secretary and such registration is maintained with the Secretary. The technical staff may be employees of the mortgagee or may be hired on a fee basis from a roster maintained by the Secretary. The mortgagee shall use appraisers permitted by § 203.5(e). 
</P>
<P>(3) [Reserved]
</P>
<P>(4) The mortgagee must submit initially 15 mortgages processed in accordance with §§ 203.5 and 203.255. Separate approval is required to originate mortgages under part 206 of this chapter through the Direct Endorsement program unless at least 50 mortgages closed by the mortgagee have been insured under part 206 of this chapter prior to September 15, 1995. Other mortgagees who have not closed at least 50 mortgages under part 206 of this chapter must submit five (5) Home Equity Conversion Mortgages, processed in accordance with §§ 203.3 and 203.255. The documents required by § 203.255 will be reviewed by the Secretary and, if acceptable, commitments will be issued prior to endorsement of the mortgages for insurance. If the underwriting and processing of these 15 mortgages (or the 5 Home Equity Conversion Mortgages) is satisfactory, then the mortgagee may be approved to close subsequent mortgages and submit them directly for endorsement for insurance in accordance with the process set forth in § 203.255. Unsatisfactory performance by the mortgagee at this stage constitutes grounds for denial of participation in the program, or for continued pre-endorsement review of a mortgagee's submissions. If participation in the program is denied, such denial is effective immediately and may be appealed in accordance with the procedures set forth in paragraph (d)(2) of this section. Unsatisfactory performance solely with respect to mortgages under 24 CFR part 206 may, at the option of the Secretary, be grounds for denial of participation or for continued pre-endorsement review for 24 CFR part 206 mortgages without affecting the mortgagee's processing of mortgages under other parts. 
</P>
<P>(5) The mortgagee shall promptly notify those HUD offices which have granted approval under this section of any changes that affect qualifications under this section.
</P>
<P>(c) [Reserved]
</P>
<P>(d) <I>Mortgagee sanctions.</I> Depending upon the nature and extent of the noncompliance with the requirements applicable to the Direct Endorsement process, as determined by the Secretary, the Secretary may take any of the following actions:
</P>
<P>(1) <I>Probation.</I> The Secretary may place a mortgagee on Direct Endorsement probation for a specified period of time for the purpose of evaluating the mortgagee's compliance with the requirements of the Direct Endorsement procedure. Such probation is distinct from probation imposed by the Mortgagee Review Board under part 25 of this chapter. During the probation period specified by this section, the mortgagee may continue to process Direct Endorsement mortgages, subject to conditions required by the Secretary. The Secretary may require the mortgagee to:
</P>
<P>(i) Process mortgages in accordance with paragraph (b)(4) of this section;
</P>
<P>(ii) Submit to additional training;
</P>
<P>(iii) Make changes in the quality control plan required by § 202.5(h) of this chapter; and
</P>
<P>(iv) Take other actions, which may include, but are not limited to, periodic reporting to the Secretary, and submission to the Secretary of internal audits.
</P>
<P>(2) <I>Termination of Direct Endorsement approval.</I> (i) A mortgagee's approval to participate in the Direct Endorsement program may be terminated in a particular jurisdiction by the local HUD office or on a nationwide basis by HUD Central Office. The HUD office instituting the termination action shall provide the mortgagee with written notice of the grounds for the action and of the right to an informal hearing before the office initiating the termination action. Such hearing shall be expeditiously arranged, and the mortgagee may be represented by counsel. Any termination instituted under this section is distinct from withdrawal of mortgagee approval by the Mortgagee Review Board under part 25 of this title.
</P>
<P>(ii) After consideration of the materials presented, the decision maker shall advise the mortgagee in writing whether the termination is rescinded, modified or affirmed.
</P>
<P>(iii) The mortgagee may appeal such decision to the Deputy Assistant Secretary for Single Family Housing or his or her designee. A decision by the Deputy Assistant Secretary or designee shall constitute final agency action.
</P>
<P>(iv) Termination of an origination approval agreement under part 202 of this chapter for a mortgagee or one or more branch offices automatically terminates Direct Endorsement approval for the mortgagee or the branch office or offices without any further requirement to comply with this paragraph.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0005)
</APPRO>
<CITA TYPE="N">[57 FR 58345, Dec. 9, 1992, as amended at 60 FR 42758, Aug. 16, 1995; 61 FR 2651, Jan. 26, 1996; 62 FR 20088, Apr. 24, 1997; 62 FR 65182, Dec. 10, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 203.4" NODE="24:2.1.1.2.4.1.79.3" TYPE="SECTION">
<HEAD>§ 203.4   Approval of mortgagees for Lender Insurance.</HEAD>
<P>Each mortgagee that chooses to participate in the Lender Insurance program must use the Lender Insurance process to insure all of the mortgages that it underwrites, unless the mortgages are ineligible for the Direct Endorsement program as provided in § 203.5(b), or unless HUD determines that the mortgages are ineligible for the Lender Insurance program.
</P>
<P>(a) <I>Direct Endorsement approval.</I> To be approved for the Lender Insurance program described in § 203.6, a mortgagee must be unconditionally approved for the Direct Endorsement program as provided in § 203.3.
</P>
<P>(b) <I>Performance: Claim and default rate.</I> (1) In addition to being unconditionally approved for the Direct Endorsement program, a mortgagee must have had an acceptable claim and default rate (as described in paragraph (b)(3) of this section) for at least 2 years prior to its application for participation in the Lender Insurance program, and must maintain such a claim and default rate in order to retain Lender Insurance approval.
</P>
<P>(2) HUD may approve a mortgagee that is otherwise eligible for Lender Insurance approval, but has an acceptable claim and default record of less than 2 years, if:
</P>
<P>(i) The mortgagee is an entity created by a merger, acquisition, or reorganization completed less than 2 years prior to the date of the mortgagee's application for Lender Insurance approval;
</P>
<P>(ii) One or more of the entities participating in the merger, acquisition, or reorganization had Lender Insurance approval at the time of the merger, acquisition, or reorganization;
</P>
<P>(iii) All of the lending institutions participating in the merger, acquisition, or reorganization that had Lender Insurance approval at the time of the merger, acquisition, or reorganization had an acceptable claim and default record for the 2 years preceding the mortgagee's application for Lender Insurance approval; and
</P>
<P>(iv) The claim and default record of the mortgagee derived by aggregating the claims and defaults of the entities participating in the merger, acquisition, or reorganization, for the 2-year period prior to the mortgagee's application for Lender Insurance approval, constitutes an acceptable rate of claims and defaults, as defined by this section.
</P>
<P>(3) A mortgagee has an acceptable claim and default rate if its rate of claims and defaults is at or below 150 percent of the average rate for insured mortgages in the state(s) in which the mortgagee operates.
</P>
<P>(c) <I>Reviews.</I> HUD will monitor a mortgagee's eligibility to participate in the Lender Insurance program on an ongoing basis.
</P>
<P>(d) <I>Termination of approval.</I> (1) HUD may immediately terminate the mortgagee's approval to participate in the Lender Insurance program, in accordance with section 256(d) of the National Housing Act (12 U.S.C. 1715z-21(d)), if the mortgagee:
</P>
<P>(i) Violates any of the requirements and procedures established by the Secretary for mortgagees approved to participate in HUD's Lender Insurance program, Direct Endorsement program, or the Title II Single Family mortgage insurance program; or
</P>
<P>(ii) If HUD determines that other good cause exists.
</P>
<P>(2) Such termination will be effective upon receipt of HUD's notice advising of the termination. Within 30 days after receiving HUD's notice of termination, a mortgagee may request an informal conference with the Deputy Assistant Secretary for Single Family Housing or designee. The conference will be conducted within 30 days after HUD receives a timely request for the conference. After the conference, the Deputy Assistant Secretary (or designee) may decide to affirm the termination action or to reinstate the mortgagee's Lender Insurance program approval. The decision will be communicated to the mortgagee in writing, will be deemed a final agency action, and, pursuant to section 256(d) of the National Housing Act (12 U.S.C. 1715z-21(d)), is not subject to judicial review.
</P>
<P>(3) Lender Insurance authority is automatically terminated for a mortgagee whose nationwide Direct Endorsement approval under § 203.3(d)(2) is terminated, without imposing any further requirement on the mortgagee to comply with this paragraph.
</P>
<P>(4) Any termination instituted under this section is distinct from withdrawal of mortgagee approval by the Mortgagee Review Board under 24 CFR part 25.
</P>
<P>(e) <I>Reinstatement.</I> A mortgagee whose Lender Insurance authority is terminated under this section may apply for reinstatement if the Lender Insurance authority for the mortgagee has been terminated for at least 6 months. In addition to addressing the criteria for Lender Insurance approval specified in paragraphs (a) and (b) of this section, the application for reinstatement must be accompanied by a corrective action plan addressing the issues resulting in the termination of the mortgagee's Lender Insurance authority, along with evidence that the mortgagee has implemented the corrective action plan. HUD may grant the mortgagee's application for reinstatement if the mortgagee's application is complete and HUD determines that the underlying causes for the termination have been satisfactorily remedied.
</P>
<CITA TYPE="N">[62 FR 30226, June 2, 1997, as amended at 62 FR 65182, Dec. 10, 1997; 77 FR 3604, Jan. 25, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 203.5" NODE="24:2.1.1.2.4.1.79.4" TYPE="SECTION">
<HEAD>§ 203.5   Direct Endorsement process.</HEAD>
<P>(a) <I>General.</I> Under the Direct Endorsement program, the Secretary does not review applications for mortgage insurance before the mortgage is executed or issue conditional or firm commitments, except to the extent required by § 203.3(b)(4), § 203.3(d)(1), or as determined by the Secretary. Under this program, the mortgagee determines that the proposed mortgage is eligible for insurance under the applicable program regulations, and submits the required documents to the Secretary in accordance with the procedures set forth in § 203.255. This subpart provides that certain functions shall be performed by the Secretary (or Commissioner), but the Secretary may specify that a Direct Endorsement mortgagee shall perform such an action without specific involvement or approval by the Secretary, subject to statutory limitations. In each case, the Direct Endorsement mortgagee's performance is subject to pre-endorsement and post-endorsement review by the Secretary under § 203.255 (c) and (e).
</P>
<P>(b) <I>Eligible programs.</I> (1) All single family mortgages authorized for insurance under the National Housing Act must be originated through the Direct Endorsement program, except the following: 
</P>
<P>(i) Mortgages underwritten for insurance by mortgagees that have applied for participation in, and have been approved for, the Lender Insurance program; 
</P>
<P>(ii) Mortgages authorized under sections 203(n), 203(p), 213(d), 221(h), 221(i), 225, 233, 237, 809, or 810 of the National Housing Act, or any other insurance programs announced by <E T="04">Federal Register</E> notice; or 
</P>
<P>(iii) As provided in § 203.1. 
</P>
<P>(2) The provision contained in § 221.55 of this chapter regarding deferred sales to displaced families is not available in the Direct Endorsement program. 
</P>
<P>(c) <I>Underwriter due diligence.</I> A Direct Endorsement mortgagee shall exercise the same level of care which it would exercise in obtaining and verifying information for a loan in which the mortgagee would be entirely dependent on the property as security to protect its investment. Mortgagee procedures that evidence such due diligence shall be incorporated as part of the quality control plan required under § 202.5(h) of this chapter. The Secretary shall publish guidelines for Direct Endorsement underwriting procedures in a handbook, which shall be provided to all mortgagees approved for the Direct Endorsement procedure. Compliance with these guidelines is deemed to be the minimum standard of due diligence in underwriting mortgages.
</P>
<P>(d) <I>Mortgagor's income.</I> The mortgagee shall evaluate the mortgagor's credit characteristics, adequacy and stability of income to meet the periodic payments under the mortgage and all other obligations, and the adequacy of the mortgagor's available assets to close the transaction, and render an underwriting decision in accordance with applicable regulations, policies and procedures.
</P>
<P>(e) <I>Appraisal.</I> (1) A mortgagee shall have the property appraised in accordance with such standards and requirements as the Secretary may prescribe. A mortgagee must select an appraiser whose name is on the FHA Appraiser Roster, in accordance with 24 CFR part 200, subpart G.
</P>
<P>(2) The mortgagee shall not discriminate on the basis of race, color, religion, national origin, sex, age, or disability in the selection of an appraiser. 
</P>
<P>(3) A mortgagee and an appraiser must ensure that an appraisal and related documentation satisfy FHA appraisal requirements, and both bear responsibility for the quality of the appraisal in satisfying such requirements. A Direct Endorsement Mortgagee that submits, or causes to be submitted, an appraisal or related documentation that does not satisfy FHA requirements is subject to administrative sanction by the Mortgagee Review Board pursuant to parts 25 and 30 of this title.
</P>
<CITA TYPE="N">[57 FR 58346, Dec. 9, 1992; 58 FR 13537, Mar. 12, 1993, as amended at 59 FR 50463, Oct. 3, 1994; 60 FR 42759, Aug. 16, 1995; 61 FR 36263, July 9, 1996; 62 FR 20088, Apr. 24, 1997; 62 FR 30226, June 2, 1997; 69 FR 43509, July 20, 2004; 77 FR 51469, Aug. 24, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 203.6" NODE="24:2.1.1.2.4.1.79.5" TYPE="SECTION">
<HEAD>§ 203.6   Lender Insurance process.</HEAD>
<P>Under the Lender Insurance program, a mortgagee approved for the program conducts its own pre-insurance review, insures the mortgage, and agrees to indemnify HUD in accordance with § 203.255(f). 
</P>
<CITA TYPE="N">[62 FR 30226, June 2, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 203.7" NODE="24:2.1.1.2.4.1.79.6" TYPE="SECTION">
<HEAD>§ 203.7   Commitment process.</HEAD>
<P>For single family mortgage programs that are not eligible for Direct Endorsement processing under § 203.5, or for Lender Insurance processing under § 203.6, the mortgagee must submit an application for mortgage insurance in a form prescribed by the Secretary prior to making the mortgage loan. If: 
</P>
<P>(a) A mortgage for a specified property has been accepted for insurance through issuance of a conditional commitment by the Secretary or a certificate of reasonable value by the Department of Veterans Affairs, and
</P>
<P>(b) A specified mortgagor and all other proposed terms and conditions of the mortgage meet the eligibility requirements for insurance as determined by the Secretary, the Secretary shall approve the application for insurance by issuing a firm commitment setting forth the terms and conditions of insurance.
</P>
<CITA TYPE="N">[57 FR 58346, Dec. 9, 1992; 58 FR 13537, Mar. 12, 1993, as amended at 62 FR 30226, June 2, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 203.8" NODE="24:2.1.1.2.4.1.79.7" TYPE="SECTION">
<HEAD>§ 203.8   Approval of mortgagees for Direct Endorsement Lender Review and Approval Process (DELRAP).</HEAD>
<P>(a) <I>General.</I> Each mortgagee that chooses to participate in the review and approval of Condominium Projects, as set forth in § 203.43b, must be granted authority to participate in the Direct Endorsement Lender Review and Approval Process (DELRAP).
</P>
<P>(b) <I>DELRAP Authority</I>—(1) <I>Eligibility.</I> To be granted DELRAP authority, as described in § 203.43b, a mortgagee must be unconditionally approved for the Direct Endorsement program as provided in § 203.3 and meet the following requirements:
</P>
<P>(i) Have staff with at least one year of experience in underwriting mortgages on condominiums and/or Condominium Project approval;
</P>
<P>(ii) Have originated no fewer than 10 condominium loans in projects approved by the Commissioner;
</P>
<P>(iii) Have an acceptable quality control plan that includes specific provisions related to DELRAP; and
</P>
<P>(iv) Ensure that staff members that participate in the approval of a Condominium Project using DELRAP authority meet the above requirements in paragraph (b)(1)(i) of this section or are supervised by staff that meet such requirements.
</P>
<P>(2) <I>Conditional DELRAP Authority.</I> Mortgagees will be granted conditional DELRAP authority upon provision of notice to the Commissioner of the intent to use DELRAP. Mortgagees with conditional DELRAP authority must submit all recommended Condominium Project approvals, denials, and recertifications to FHA for review. If FHA agrees with the mortgagee's recommendation, it will advise the mortgagee that it may proceed with the recommended decision on the Condominium Project.
</P>
<P>(3) <I>Unconditional DELRAP Authority.</I> Mortgagees will be granted unconditional DELRAP authority after completing at least five (5) DELRAP reviews, or such lower number of DELRAP reviews as HUD may specify, to the satisfaction of HUD, and may then exercise DELRAP authority to approve projects in accordance with requirements of HUD.
</P>
<P>(c) <I>Reviews.</I> HUD will monitor a mortgagee's performance in DELRAP on an ongoing basis.
</P>
<P>(1) If the review shows that there are no material deficiencies, subsequent project approvals, denials, or recertifications may be selected for post-action review based on a percentage as determined by the Commissioner.
</P>
<P>(2) If the review shows that there are material deficiencies in the mortgagee's DELRAP performance, the mortgagee may be returned to conditional DELRAP status.
</P>
<P>(3) If additional reviews continue to show material deficiencies in the mortgagee's DELRAP performance, the mortgagee's authority to participate in DELRAP may be terminated or other action taken against the mortgagee or responsible staff reviewer.
</P>
<P>(d) <I>Termination of DELRAP Authority.</I> (1) HUD may immediately terminate the mortgagee's authority to participate in DELRAP or take any action listed in 24 CFR 203.3(d) if:
</P>
<P>(i) The mortgagee violates any of the requirements and procedures established by the Secretary for mortgagees approved to participate in DELRAP, the Direct Endorsement program, or the Title II Single Family mortgage insurance program; or
</P>
<P>(ii) HUD determines that other good cause exists.
</P>
<P>(2) Such termination will be effective upon the date of receipt of HUD's notice advising of the termination.
</P>
<P>(3) Notwithstanding any provisions of this section, the Commissioner reserves the right to take administrative action, including revocation of DELRAP authority, against any mortgagee and staff reviewer because of unacceptable performance. Any termination instituted under this section is distinct from withdrawal of mortgagee approval by the Mortgagee Review Board under 24 CFR part 25.
</P>
<P>(e) <I>Reinstatement.</I> A mortgagee whose DELRAP authority is terminated under this section may request reinstatement if the mortgagee's DELRAP authority has been terminated for at least 6 months. In addition to addressing the eligibility criteria specified in paragraph (b)(1) of this section, the application for reinstatement must be accompanied by a corrective action plan addressing the issues that led to the termination of the mortgagee's DELRAP authority, along with evidence that the mortgagee has implemented the corrective action plan. The Commissioner may grant conditional DELRAP authority if the mortgagee's application is complete and the Commissioner determines that the underlying causes for the termination have been satisfactorily remedied. The mortgagee will be required to complete successfully at least five DELRAP reviews in accordance with paragraph (b)(2) of this section in order to receive unconditional DELRAP authority as provided in paragraph (b)(3) of this section.
</P>
<CITA TYPE="N">[84 FR 41874, Aug. 15, 2019]




</CITA>
</DIV8>

</DIV7>


<DIV7 N="80" NODE="24:2.1.1.2.4.1.80" TYPE="SUBJGRP">
<HEAD>Miscellaneous Regulations</HEAD>


<DIV8 N="§ 203.9" NODE="24:2.1.1.2.4.1.80.8" TYPE="SECTION">
<HEAD>§ 203.9   Disclosure regarding interest due upon mortgage prepayment.</HEAD>
<P>Each mortgagee with respect to a mortgage under this part shall at or before closing with respect to any such mortgage, provide the mortgagor with written notice in a form prescribed by the Commissioner describing any requirements the mortgagor must fulfill upon prepayment of the principal amount of the mortgage to prevent the accrual of any interest on the principal amount after the date of such prepayment. This paragraph shall apply to any mortgage executed after August 22, 1991, and before January 21, 2015.
</P>
<CITA TYPE="N">[56 FR 18947, Apr. 24, 1991, as amended at 79 FR 50837, Aug. 26, 2014]


</CITA>
</DIV8>


<DIV8 N="§ 203.10" NODE="24:2.1.1.2.4.1.80.9" TYPE="SECTION">
<HEAD>§ 203.10   Informed consumer choice for prospective FHA mortgagors.</HEAD>
<P>(a) <I>Mortgagee to provide disclosure notice.</I> A mortgagee must provide a prospective FHA mortgagor with an informed consumer choice disclosure notice if, in the mortgagees's judgment, the prospective FHA mortgagor may qualify for similar conventional mortgage products offered by the mortgagee. The mortgagee should base this judgment on the mortgagee's initial assessment of the prospective FHA mortgagor's eligibility for a conventional mortgage product. If a mortgagee is unsure about a prospective FHA mortgagor's eligibility for a conventional mortgage product, the mortgagee should provide the prospective FHA mortgagor with an informed consumer choice disclosure notice.
</P>
<P>(b) <I>Informed consumer choice disclosure notice</I>—(1) <I>Contents of notice.</I> The informed consumer choice disclosure notice must:
</P>
<P>(i) Provide a one page generic analysis comparing the mortgage costs of an FHA-insured mortgage with the mortgage costs of similar conventional mortgage products offered by the mortgagee that the prospective FHA mortgagor may qualify for;
</P>
<P>(ii) Provide information about when the requirement to pay FHA mortgage insurance premiums terminates; and
</P>
<P>(iii) Meet the requirements of section 203(b)(2) of the National Housing Act (12 U.S.C. 1709(b)(2)).
</P>
<P>(2) <I>Format of disclosure notice.</I> The informed consumer choice disclosure notice must be provided in a format prescribed by the Commissioner. HUD has prepared a model informed consumer choice disclosure notice that represents this format and that meets the requirements of section 203(b)(2) of the National Housing Act (12 U.S.C. 1709(b)(2)). The model informed consumer choice disclosure notice contains the minimum elements of an informed consumer choice disclosure notice. These elements must be included in a mortgagee's informed consumer choice disclosure notice. A mortgagee, however, may include additional elements in an informed consumer choice disclosure notice to better reflect the mortgagee's products or to provide information that the mortgagee believes is meaningful and helpful to the mortgagee's customers.
</P>
<P>(3) <I>Availability of model disclosure notice.</I> HUD's model informed consumer choice disclosure notice is made available to FHA-approved mortgagees through Mortgagee Letter and is available to the public through the internet at HUD's web site at <I>http://www.hud.gov</I> or by contacting: Home Mortgage Insurance Division, Office of Insured Single Family Housing, U.S. Department of Housing and Urban Development, 451 Seventh Street, SW, Washington, DC 20410-8000; telephone (202) 708-2700 (this is not a toll-free number), or the nearest HUD Homeownership Center (Atlanta, GA (888) 696-4687; Denver, CO (800) 543-9378; Philadelphia, PA (800) 440-8647; or Santa Ana, CA (888) 827-5605). Hearing- or speech-impaired individuals may access these numbers via TTY by calling the toll-free Federal Information Relay Service at (800) 877-8339.
</P>
<P>(c) <I>Timing.</I> When required under paragraph (a) of this section, a mortgagee must provide an informed consumer choice disclosure notice to a prospective FHA mortgagor not later than three business days after the mortgagee receives the prospective FHA mortgagor's application.
</P>
<P>(d) <I>Revision of notice.</I> A mortgagee should revise its informed consumer choice disclosure notice periodically to reflect prevailing market conditions. To ensure that the informed consumer choice disclosure notice reflects prevailing market conditions, a mortgagee must revise its informed consumer choice disclosure notice at least once annually.
</P>
<P>(e) <I>Applicability.</I> This section applies to any application for mortgage insurance authorized under section 203(b) of the National Housing Act (12 U.S.C. 1709) that the mortgagee receives on or after September 2, 1999.
</P>
<P>(f) <I>Definitions.</I> As used in this section:
</P>
<P><I>Application</I> means the submission of financial information in anticipation of a credit decision.
</P>
<P><I>Conventional mortgage</I> means conventional mortgage as used in section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) or section 302(b)(2) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717(b)(2)), as applicable.
</P>
<P><I>Mortgagee</I> means mortgagee as defined in § 202.2 of this chapter.
</P>
<P><I>Prospective FHA mortgagor</I> means a person who submits an application to a mortgagee to obtain mortgage insurance authorized under section 203(b) of the National Housing Act (12 U.S.C. 1709).
</P>
<CITA TYPE="N">[64 FR 29765, June 2, 1999, as amended at 64 FR 34984, June 30, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 203.12" NODE="24:2.1.1.2.4.1.80.10" TYPE="SECTION">
<HEAD>§ 203.12   Mortgage insurance on proposed or new construction.</HEAD>
<P>(a) <I>Applicability.</I> This section applies to an application for insurance of a mortgage on a one-to four-family dwelling, unless the mortgage will be secured by a dwelling that:
</P>
<P>(1) Was completed more than one year before the date of the application for insurance or, under the Direct Endorsement Program, was completed more than one year before the date of the appraisal; or
</P>
<P>(2) Is being sold to a second or subsequent purchaser.
</P>
<P>(b) <I>Procedures.</I> (1) Applications for insurance to which this section applies will be processed in accordance with procedures prescribed by the Secretary. These procedures may only provide for endorsement for insurance of a mortgage covering a dwelling that is:
</P>
<P>(i) Approved under the Direct Endorsement Program or the Lender Insurance Program; or
</P>
<P>(ii) Located in a subdivision approved by the Rural Housing Service.
</P>
<P>(2) The mortgagee must submit a signed Builder's Certification of Plans, Specifications and Site (Builder's Certification). The Builder's Certification must be in a form prescribed by the Secretary and must cover:
</P>
<P>(i) Flood hazards;
</P>
<P>(ii) Noise;
</P>
<P>(iii) Explosive and flammable materials storage hazards;
</P>
<P>(iv) Runway clear zones/clear zones;
</P>
<P>(v) Toxic waste hazards;
</P>
<P>(vi) Other foreseeable hazards or adverse conditions (i.e., rock formations, unstable soils or slopes, high ground water levels, inadequate surface drainage, springs, etc.) that may affect the health and safety of the occupants or the structural soundness of the improvements. The Builder's Certification must be provided to the appraiser for reference before the performance of an appraisal on the property.
</P>
<P>(3) If a builder (or developer) intends to sell five or more properties in a subdivision, an Affirmative Fair Housing Marketing Plan (AFHMP) that meets the requirements of 24 CFR part 200, subpart M must be submitted and approved by HUD no later than the date of the first application for mortgage insurance in that subdivision. Thereafter, applications for insurance on other properties sold by the same builder (or developer) in the same subdivision may make reference to the existing previously approved AFHMP.
</P>
<CITA TYPE="N">[64 FR 56110, Oct. 15, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 203.14" NODE="24:2.1.1.2.4.1.80.11" TYPE="SECTION">
<HEAD>§ 203.14   Builders' warranty.</HEAD>
<P>Applications relating to proposed construction must be accompanied by an agreement in form satisfactory to the Secretary, executed by the seller or builder or such other person as the Secretary may require, and agreeing that in the event of any sale or conveyance of the dwelling, within a period of one year beginning with the date of initial occupancy, the seller, builder, or such other person will at the time of such sale or conveyance deliver to the purchaser or owner of such property a warranty in form satisfactory to the Secretary warranting that the dwelling is constructed in substantial conformity with the plans and specifications (including amendments thereof or changes and variations therein which have been approved in writing by the Secretary) on which the Secretary has based on the valuation of the dwelling. Such agreement must provide that upon the sale or conveyance of the dwelling and delivery of the warranty, the seller, builder or such other person will promptly furnish the Secretary with a conformed copy of the warranty establishing by the purchaser's receipt thereon that the original warranty has been delivered to the purchaser in accordance with this section.
</P>
<CITA TYPE="N">[57 FR 58346, Dec. 9, 1992]


</CITA>
</DIV8>


<DIV8 N="§ 203.15" NODE="24:2.1.1.2.4.1.80.12" TYPE="SECTION">
<HEAD>§ 203.15   Certification of appraisal amount.</HEAD>
<P>An application with respect to insurance of mortgages must be accompanied by an agreement satisfactory to the Commissioner, executed by the seller, builder or such other person as may be required by the Commissioner, whereby the person agrees that before any sale of the dwelling, the person will deliver to the purchaser of the property a written statement, in a form satisfactory to the Commissioner, setting forth the amount of the appraised value of the property as determined by the Commissioner.
</P>
<CITA TYPE="N">[58 FR 41001, July 30, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 203.16" NODE="24:2.1.1.2.4.1.80.13" TYPE="SECTION">
<HEAD>§ 203.16   Certificate and contract regarding use of dwelling for transient or hotel purposes.</HEAD>
<P>Every application filed with respect to insurance of mortgages on a two-, three-, or four-family dwelling, or a single-family dwelling which is one of a group of 5 or more single-family dwellings held by the same mortgagor, must be accompanied by a contract in form satisfactory to the Commissioner, signed by the proposed mortgagor covenanting and agreeing that so long as the proposed mortgage is insured by the Commissioner the mortgagor will not rent the housing or any part thereof covered by the mortgage for transient or hotel purposes, together with the mortgagor's certification under oath that the housing or any part thereof covered by the proposed mortgage will not be rented for transient or hotel purposes. For the purpose of this subchapter rental for transient or hotel purposes shall mean (a) rental for any period less than 30 days or (b) any rental if the occupants of the housing accommodations are provided customary hotel services such as room service for food and beverages, maid service, furnishing and laundering of linen, and bellboy service. 


</P>
</DIV8>


<DIV8 N="§ 203.16a" NODE="24:2.1.1.2.4.1.80.14" TYPE="SECTION">
<HEAD>§ 203.16a   Mortgagor and mortgagee requirement for maintaining flood insurance coverage.</HEAD>
<P>(a) <I>In general.</I> (1) The requirements of this section apply if a mortgage is to cover property improvements that:
</P>
<P>(i) Are located in an area designated by the Federal Emergency Management Agency (FEMA) as a floodplain area having special flood hazards;
</P>
<P>(ii) Are otherwise determined by the Commissioner to be subject to flood hazard; or
</P>
<P>(iii) Are not otherwise covered by the flood insurance standard for condominium projects established under § 203.43b(d)(6)(iii) or (i)(1).
</P>
<P>(2) No mortgage may be insured that covers property improvements located in an area that has been identified by FEMA as an area having special flood hazards unless the community in which the area is situated is participating in the National Flood Insurance Program and flood insurance under the National Flood Insurance Program (NFIP) is available with respect to such property improvements. Such requirement for flood insurance shall be effective one year after the date of notification by FEMA to the chief executive officer of a flood prone community that such community has been identified as having special flood hazards.
</P>
<P>(3) For purposes of this section, property improvement means a dwelling and related structures/equipment essential to the value of the property and subject to flood damage.
</P>
<P>(b) <I>Flood insurance obligation.</I> The mortgagor and mortgagee shall be obligated, by a special condition to be included in the mortgage commitment, to obtain and maintain either NFIP flood insurance or private flood insurance coverage on the property improvements.
</P>
<P>(c) <I>Insurance policy.</I> A mortgagee may accept a flood insurance policy in the form of the standard policy issued under the NFIP or a private flood insurance policy as defined in this section, and the mortgagee shall be named as the loss payee for flood insurance benefits. A mortgagee may determine that a private flood insurance policy meets the definition of private flood insurance in this section, without further review of the policy, if the following statement is included within the policy or as an endorsement to the policy: “This policy meets the definition of private flood insurance contained in 24 CFR 203.16a(e) for FHA-insured mortgages.”
</P>
<P>(d) <I>Duration and amount of coverage.</I> The flood insurance must be maintained during such time as the mortgage is insured in an amount at least equal to the lowest of the following:
</P>
<P>(1) 100 percent replacement cost of the insurable value of the improvements, which consists of the development or project cost less estimated land cost; or
</P>
<P>(2) The maximum amount of NFIP insurance available with respect to the particular type of property; or
</P>
<P>(3) The outstanding principal balance of the loan.
</P>
<P>(e) <I>Private flood insurance defined.</I> The term “private flood insurance” means an insurance policy that:
</P>
<P>(1) Is issued by an insurance company that is:
</P>
<P>(i) Licensed, admitted, or otherwise approved to engage in the business of insurance in the State or jurisdiction in which the insured building is located, by the insurance regulator of that State or jurisdiction; or
</P>
<P>(ii) In the case of a policy of difference in conditions, multiple peril, all risk, or other blanket coverage insuring nonresidential commercial property, is recognized, or not disapproved, as a surplus lines insurer by the insurance regulator of the State or jurisdiction where the property to be insured is located;
</P>
<P>(2) Provides flood insurance coverage that is at least as broad as the coverage provided under a standard flood insurance policy under the National Flood Insurance Program for the same type of property, including when considering deductibles, exclusions, and conditions offered by the insurer. To be at least as broad as the coverage provided under a standard flood insurance policy under the National Flood Insurance Program, the policy must, at a minimum:
</P>
<P>(i) Define the term “flood” to include the events defined as a “flood” in a standard flood insurance policy under the National Flood Insurance Program;
</P>
<P>(ii) Contain the coverage specified in a standard flood insurance policy under the National Flood Insurance Program, including that relating to building property coverage; personal property coverage, if purchased by the insured mortgagor(s); other coverages; and increased cost of compliance coverage;
</P>
<P>(iii) Contain deductibles no higher than the specified maximum, and include similar non-applicability provisions, as under a standard flood insurance policy under the National Flood Insurance Program, for any total policy coverage amount up to the maximum available under the NFIP at the time the policy is provided to the lender;
</P>
<P>(iv) Provide coverage for direct physical loss caused by a flood and may only exclude other causes of loss that are excluded in a standard flood insurance policy under the National Flood Insurance Program. Any exclusions other than those in a standard flood insurance policy under the National Flood Insurance Program may pertain only to coverage that is in addition to the amount and type of coverage that could be provided by a standard flood insurance policy under the National Flood Insurance Program or have the effect of providing broader coverage to the policyholder; and
</P>
<P>(v) Not contain conditions that narrow the coverage provided in a standard flood insurance policy under the National Flood Insurance Program;
</P>
<P>(3) Includes all of the following:
</P>
<P>(i) A requirement for the insurer to give 45 days' written notice of cancellation or non-renewal of flood insurance coverage to:
</P>
<P>(A) The insured;
</P>
<P>(B) The mortgagee, if any; and
</P>
<P>(C) Federal Housing Administration (FHA), in cases where the mortgagee has assigned the loan to FHA in exchange for claim payment;
</P>
<P>(ii) Information about the availability of flood insurance coverage under the National Flood Insurance Program;
</P>
<P>(iii) A mortgage interest clause similar to the clause contained in a standard flood insurance policy under the National Flood Insurance Program; and
</P>
<P>(iv) A provision requiring an insured to file suit not later than 1 year after the date of a written denial of all or part of a claim under the policy; and
</P>
<P>(4) Contains cancellation provisions that are as restrictive as the provisions contained in a standard flood insurance policy under the National Flood Insurance Program.
</P>
<CITA TYPE="N">[87 FR 70742, Nov. 21, 2022] 


</CITA>
</DIV8>

</DIV7>


<DIV7 N="81" NODE="24:2.1.1.2.4.1.81" TYPE="SUBJGRP">
<HEAD>Eligible Mortgages</HEAD>


<DIV8 N="§ 203.17" NODE="24:2.1.1.2.4.1.81.15" TYPE="SECTION">
<HEAD>§ 203.17   Mortgage provisions.</HEAD>
<P>(a) <I>Mortgage form.</I> (1) The term “mortgage” as used in this part, except § 203.43c, shall have the meaning given in Section 201 of the National Housing Act, as amended (12 U.S.C. 1707). 
</P>
<P>(2)(i) The mortgage shall be in a form meeting the requirements of the Commissioner. The Commissioner may prescribe complete mortgage instruments. For each case in which the Commissioner does not prescribe complete mortgage instruments, the Commissioner 
</P>
<P>(A) Shall require specific language in the mortgage which shall be uniform for every mortgage, and 
</P>
<P>(B) May also prescribe the language or substance of additional provisions for all mortgages as well as the language or substance of additional provisions for use only in particular jurisdictions or for particular programs. 
</P>
<P>(ii) Each mortgage shall also contain any provisions necessary to create a valid and enforceable secured debt under the laws of the jurisdiction in which the property is located. 
</P>
<P>(b) <I>Mortgage multiples.</I> A mortgage shall involve a principal obligation in a multiple of $1. 
</P>
<P>(c) <I>Payments.</I> The mortgage shall: 
</P>
<P>(1) Come due on the first of the month. 
</P>
<P>(2) Contain complete amortization provisions satisfactory to the Secretary and an amortization period not in excess of the term of the mortgage.
</P>
<P>(3) Provide for payments to principal and interest to begin not later than the first day of the month following 60 days from the date the mortgage is executed (or the date a construction mortgage is converted to a permanent mortgage, if applicable).
</P>
<P>(d) <I>Maturity.</I> The mortgage shall have a term of not more than 30 years from the date of the beginning of amortization.
</P>
<P>(e) <I>Property Standards.</I> The mortgage must be a first lien upon the property that conforms with property standards prescribed by the Commissioner.
</P>
<P>(f) <I>Disbursement.</I> The entire principal amount of the mortgage must have been disbursed to the mortgagor or to his or her creditors for his or her account and with his or her consent.
</P>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971, as amended at 45 FR 29278, May 2, 1980; 48 FR 28804, June 23, 1983; 49 FR 21319, May 21, 1984; 53 FR 34281, Sept. 6, 1988; 54 FR 39525, Sept. 27, 1989; 57 FR 58347, Dec. 9, 1992; 61 FR 36263, July 9, 1996; 84 FR 41875, Aug. 15, 2019]


</CITA>
</DIV8>


<DIV8 N="§ 203.18" NODE="24:2.1.1.2.4.1.81.16" TYPE="SECTION">
<HEAD>§ 203.18   Maximum mortgage amounts.</HEAD>
<P>(a) <I>Mortgagors of principal or secondary residences.</I> The principal amount of the mortgage must not exceed the lesser of the following amounts that apply:
</P>
<P>(1) The dollar amount limitation that applies for the area under section 203(b)(2)(A) of the National Housing Act including any increase in the dollar limitation under § 203.29, as announced in accordance with § 203.18(h);
</P>
<P>(2)(i) The amount based on appraised value that is permitted by section 203(b)(10) of the National Housing Act, if that provision is in effect and applies to the mortgage; or
</P>
<P>(ii) If section 203(b)(10) is not in effect or otherwise does not apply to the mortgage, the lesser of the amounts based on appraised value that are permitted by section 203(b)(2)(B) of the National Housing Act and paragraph (g) of this section;
</P>
<P>(3) An amount equal to 85 percent of the appraised value if the mortgage covers a dwelling that is to be occupied as a secondary residence (as defined in paragraph (f)(2) of this section).
</P>
<P>(b) <I>Veteran qualifications.</I> The special veteran terms provided in section 203(b)(2) of the National Housing Act shall apply only if the mortgagor submits one of the following certifications:
</P>
<P>(1) A certification issued by the Secretary of Defense establishing that the veteran performed extra hazardous service while serving in the armed forces for a period of less than 90 days; or
</P>
<P>(2) A Certificate of Eligibility from the Department of Veterans Affairs establishing that the person served 90 days or more on active duty in the armed forces (U.S. Army, Navy, Marine Corps, Air Force, Coast Guard, the Army Reserve, the Naval Reserve, the Marine Corps Reserve, the Air Force Reserve, the Coast Guard Reserve, the National Guard of the United States, or the Air National Guard of the United States); that he or she enlisted before September 8, 1980; and that he or she was discharged or released under conditions other than dishonorable (a copy of the veteran's discharge papers or Form DD-214 shall be submitted with the certificate); or
</P>
<P>(3) A Certificate of Eligibility from the Department of Veterans Affairs establishing that the person:
</P>
<P>(i)(A) Originally enlisted in a regular component of the armed forces after September 7, 1980; or entered on active duty after October 16, 1981, and he or she had not previously completed a period of active duty of at least 24 months or been discharged or released from active duty under 10 U.S.C. 1171; and
</P>
<P>(B) Has completed, since enlistment or entering on active duty, either:
</P>
<P>(<I>1</I>) Twenty-four months of continuous active duty, or the full period for which he or she was called or ordered to active duty, whichever is shorter; or
</P>
<P>(<I>2</I>) Any other period of active duty if he or she was discharged or released from duty under 10 U.S.C. 1171 or 1173; was discharged or released from duty for disability incurred or aggravated in the line of duty; or has a disability which the Department of Veterans Affairs has determined to be compensable under 38 U.S.C. chap. 11; and 
</P>
<P>(ii) Was discharged or released under conditions other than dishonorable (a copy of the veteran's discharge papers or Form DD-214 shall be submitted with the certification).
</P>
<P>(c) <I>Eligible non-occupant mortgagors.</I> A mortgage may be executed by an eligible non-occupant mortgagor (as that term is defined in paragraph (f)(3) of this section) for up to an amount authorized for the appropriate loan type in paragraph (a) of this section except where a lesser amount is expressly provided for in this part. 
</P>
<P>(d) <I>Outlying area properties.</I> A mortgage covering a single family residence located in an area in which the Commissioner finds that it is not practicable to obtain conformity with many of the requirements essential to the insurance of mortgages in built-up, urban areas; or a mortgage covering a single family dwelling that is to be used as a farm home on a plot of land that is two and one-half or more acres in size and adjacent to an all-weather public road, may not exceed: 
</P>
<P>(1) In the case of a mortgagor who is to occupy the dwelling as a principal residence (as defined in paragraph (f)(1) of this section): 
</P>
<P>(i) 75 percent of the dollar limitation under (a)(1).
</P>
<P>(ii) 97 percent of the appraised value of the property as of the date the mortgage is accepted for insurance, if: 
</P>
<P>(A) The Commissioner approved the dwelling for insurance before the beginning of construction; or 
</P>
<P>(B) Construction was completed more than one year before the date of the application for insurance; or 
</P>
<P>(C) The Secretary of Veterans Affairs approved the dwelling for guaranty, insurance, or direct loan before the beginning of construction. 
</P>
<P>(iii) If the property does not meet the requirements of paragraph (d)(1)(ii) of this section, 90 percent of the appraised value of the property as of the date the mortgage is accepted for insurance. 
</P>
<P>(2) In the case of a mortgagor who is to occupy the dwelling as a secondary residence (as defined in paragraph (f)(2) of this section): 
</P>
<P>(i) The amount permitted in paragraph (d)(1)(i) of this section, or 
</P>
<P>(ii) 85 percent of the appraised value of the property as of the date the mortgage is accepted for insurance.
</P>
<P>(e) <I>Disaster victims.</I> A mortgage covering a single family dwelling, in an amount not in excess of the maximum dollar limitation specified in paragraph (a)(1) of this section (unless a higher maximum mortgage amount is authorized under § 203.29), and not in excess of the lesser of 100 percent of the appraised value of the property or the cost of acquisition as of the date the mortgage is accepted for insurance, shall be eligible for insurance if:
</P>
<P>(1) The mortgage is executed by a mortgagor who is to occupy the dwelling as a principal residence (as defined in paragraph (f)(1) of this section);
</P>
<P>(2) The mortgagor establishes that the home which he or she previously occupied as owner or tenant was destroyed or damaged to such an extent that reconstruction or replacement is required as a result of a flood, fire, hurricane, earthquake, storm, riot or civil disorder or other catastrophe which the President has determined to be a major disaster; and 
</P>
<P>(3) The application for insurance is filed within one year from the date of such presidential determination, or within such additional period of time as the period of federal assistance with respect to such disaster may be extended.
</P>
<P>(f) <I>Definitions.</I> As used in this section: 
</P>
<P>(1) <I>Principal residence</I> means the dwelling where the mortgagor maintains (or will maintain) his or her permanent place of abode, and typically spends (or will spend) the majority of the calendar year. A person may have only one principal residence at any one time. 
</P>
<P>(2) Secondary residence means a dwelling: (i) Where the mortgagor maintains or will maintain a part-time place of abode and typically spends (or will spend) less than a majority of the calendar year; (ii) which is not a vacation home; and (iii) which the Commissioner has determined to be eligible for insurance in order to avoid undue hardship to the mortgagor. A person may have only one secondary residence at a time.
</P>
<P>(3) <I>Eligible non-occupant mortgagor</I> means a mortgagor (or co-mortgagor, as appropriate) who is not to occupy the dwelling as a principal residence or a secondary residence and who is— 
</P>
<P>(i) A public entity, as provided in section 214 or 247 of the National Housing Act, or any other State or local government or agency thereof; 
</P>
<P>(ii) A private nonprofit or public entity, as provided in section 221(h) or 235(j) of the National Housing Act, or other private nonprofit organization that is exempt from taxation under section 501(c)(3) of the Internal Revenue Code of 1986 and intends to sell or lease the mortgaged property to low or moderate income persons, as determined by the Secretary; 
</P>
<P>(iii) An Indian tribe, as provided in section 248 of the National Housing Act; 
</P>
<P>(iv) A serviceperson who is unable to meet the occupancy requirement because of his or her duty assignment, as provided in section 216 of the National Housing Act or subsection (b)(4) or (f) of section 222 of the National Housing Act; 
</P>
<P>(v) A mortgagor or co-mortgagor under subsection 203(k) of the National Housing Act; or 
</P>
<P>(vi) A mortgagor who, pursuant to § 203.43(c) of this part, is refinancing an existing mortgage insured under the National Housing Act for not more than the outstanding balance of the existing mortgage, if the amount of the monthly payment due under the refinancing mortgage is less than the amount due under the existing mortgage for the month in which the refinancing mortgage is executed. 
</P>
<P>(4) <I>Appraised value</I> means the sum of:
</P>
<P>(i) The lesser of sales price (with any adjustments required by the Secretary) or the amount set forth in the written statement required under § 203.15; and 
</P>
<P>(ii) Borrower-paid closing costs allowed under § 203.27(a)(1)-(3), except that closing costs do not apply if section 203(b)(10) of the National Housing Act is in effect and neither sales price nor closing costs apply for purposes of paragraph (g) of this section.
</P>
<P>(5) <I>Undue hardship</I> means that affordable housing which meets the needs of the mortgagor is not available for lease, or within reasonable commuting distance from the mortgagor's home to his or her work place.
</P>
<P>(6) <I>Vacation home</I> means a dwelling that is used primarily for recreational purposes and enjoyment, and that is not a primary or secondary residence.
</P>
<P>(g) <I>Maximum principal obligation.</I> Except for mortgages meeting the requirements of § 203.18(b), § 203.18(e) or § 203.50(f), and notwithstanding any other provision of this section, a mortgage may not involve a principal obligation in excess of 98.75 percent of the appraised value of the property (97.75 percent, in the case of a mortgage with an appraised value in excess of $50,000), plus the amount of the mortgage insurance premium paid at the time the mortgage is insured.
</P>
<P>(h) <I>Notice of maximum mortgage amount.</I> A maximum mortgage amount based on the 1-family median house price for an area under paragraph (a)(1) of this section may be made effective by:
</P>
<P>(1) Providing direct notice to affected mortgagees through an administrative issuance; or
</P>
<P>(2) Publishing a notice in the <E T="04">Federal Register.</E>
</P>
<P>(i) <I>Energy efficient mortgages.</I> The principal amount of energy efficient mortgages may exceed the maximum amounts determined under paragraph (a)(1) of this section under conditions prescribed by the Secretary in accordance with section 106 of the Energy Policy Act of 1992. 
</P>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971]
</CITA>
<EDNOTE>
<HED>Editorial Note:</HED><PSPACE>For <E T="04">Federal Register</E> citations affecting § 203.18, see the List of CFR Sections Affected, which appears in the Finding Aids section of the printed volume and at <I>www.govinfo.gov.</I></PSPACE></EDNOTE>
</DIV8>


<DIV8 N="§ 203.18a" NODE="24:2.1.1.2.4.1.81.17" TYPE="SECTION">
<HEAD>§ 203.18a   Solar energy system.</HEAD>
<P>(a) The dollar limitation provided in § 203.18(a) may be increased by up to 20 percent if such an increase is necessary to account for the increased cost of the residence due to the installation of a solar energy system. 
</P>
<P>(b) <I>Solar energy system</I> is defined as any addition, alteration, or improvement to an existing or new structure which is designed to utilize wind energy or solar energy either of the active type based on mechanically forced energy transfer or of the passive type based on convective, conductive, or radiant energy transfer or some combination of these types to reduce the energy requirements of that structure from other energy sources and which is in conformity with such criteria and standards as shall be prescribed by the Secretary in consultation with the Secretary of Energy. 
</P>
<CITA TYPE="N">[45 FR 51770, Aug. 5, 1980]


</CITA>
</DIV8>


<DIV8 N="§ 203.18b" NODE="24:2.1.1.2.4.1.81.18" TYPE="SECTION">
<HEAD>§ 203.18b   Increased mortgage amount.</HEAD>
<P>(a) If any party believes that a mortgage limit established by the Secretary under § 203.18(a)(1) does not accurately reflect the median house prices in an area, the party may submit documentation in support of an alternative mortgage limit. For purposes of this section, an area (1) must be at least the size of a county, whether or not the area is located within a metropolitan statistical area, as established by the Office of Management and Budget; and (2) may be an area for which the mortgage limits established under § 203.18(b)(1) apply.
</P>
<P>(b)(1) The documentation referred to in paragraph (a) of this section must consist of sufficient housing sales price data for the entire geographic area for which the request is made to justify an alternative mortgage limit. The documentation should include a listing of actual sales prices in the area for all or nearly all new and existing 1-family homes and condominiums, over a period of time varies with sales volume, as follows:
</P>
<P>(i) For 500 or more sales per month, a one-month reporting period;
</P>
<P>(ii) For 250 through 499 sales per month, a two-month reporting period.
</P>
<P>(iii) For less than 250 sales per month, a three-month reporting period.
</P>
<FP>The listing should contain a brief address for each property, its county location, its sale price, the month and year of its sale, and whether it is new or existing. In areas where the ratio of existing sales to new sales is three-to-one or greater, an increase in the mortgage limit may be based on 95 percent of the average of the new and the existing median sales prices. In these areas, the documentation referred to in this paragraph may also include separate median sales prices for both the new and existing homes.
</FP>
<P>(2) Requests for an increased mortgage limit based upon documentation of median house prices for the area should be sent to the appropriate HUD field office. 
</P>
<P>(c) In the case of an area where the Commissioner determines that the median one-family house price does not reasonably reflect the sales prices of newly constructed homes because of an existing stock whose value is static or declining, the Commissioner may give greater weight to the sales prices of new homes in determining median house price in such area. Without limiting the discretion of the Commissioner in fashioning appropriate methods of implementing the foregoing authority in particular circumstances based upon a demonstration of good cause satisfactory to the Commissioner, in areas where evidence satisfactory to the Commissioner indicates that existing home sales outnumber new home sales by three-to-one or better, the <I>median sales price</I> will be calculated as the greater of (1) the average of the median sales price for new and existing homes, and (2) the composite median price of all sales.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0302)
</APPRO>
<CITA TYPE="N">[45 FR 76377, Nov. 18, 1980, as amended at 47 FR 917, Jan. 7, 1982; 49 FR 12697, Mar. 30, 1984; 49 FR 14338, Apr. 11, 1984; 53 FR 8880, Mar. 18, 1988; 56 FR 18947, Apr. 24, 1991; 58 FR 41002, July 30, 1993; 59 FR 13882, Mar. 24, 1994; 60 FR 16033, Mar. 28, 1995]


</CITA>
</DIV8>


<DIV8 N="§ 203.18c" NODE="24:2.1.1.2.4.1.81.19" TYPE="SECTION">
<HEAD>§ 203.18c   One-time or up-front mortgage insurance premium excluded from limitations on maximum mortgage amounts.</HEAD>
<P>After determining any maximum insurable mortgage amount under the provisions of this subpart, the maximum insurable amount of any mortgage may be increased by the amount of any one-time or up-front mortgage insurance premium that will be financed as part of the mortgage.
</P>
<CITA TYPE="N">[57 FR 15211, Apr. 24, 1992]


</CITA>
</DIV8>


<DIV8 N="§ 203.18d" NODE="24:2.1.1.2.4.1.81.20" TYPE="SECTION">
<HEAD>§ 203.18d   Minimum principal loan amount.</HEAD>
<P>A mortgagee may not require, as a condition of providing a loan secured by a mortgage insured under this part, that the principal amount of the mortgage exceed a minimum amount established by the mortgagee. 
</P>
<CITA TYPE="N">[53 FR 8880, Mar. 18, 1988]


</CITA>
</DIV8>


<DIV8 N="§ 203.19" NODE="24:2.1.1.2.4.1.81.21" TYPE="SECTION">
<HEAD>§ 203.19   Qualified mortgage.</HEAD>
<P>(a) <I>Definitions.</I> As used in this section:
</P>
<P>(1) <I>Average prime offer rate</I> means an annual percentage rate that is derived from average interest rates, points, and other loan pricing terms currently offered to mortgagors by a representative sample of mortgagees for mortgage transactions that have low-risk pricing characteristics as published by the Consumer Financial Protection Bureau (CFPB) from time to time in accordance with the CFPB's regulations at 12 CFR 1026.35, pertaining to prohibited acts or practices in connection with higher-priced mortgage loans.
</P>
<P>(2) <I>Annual percentage rate</I> is the measure of the cost of credit, expressed as a yearly rate, that relates the amount and timing of value received by the mortgagor to the amount and timing of payments made and is the rate required to be disclosed by the mortgagee under 12 CFR 1026.18, pertaining to disclosure of finance charges for mortgages.
</P>
<P>(3) <I>Points and fees</I> has the meaning given to “points and fees” in 12 CFR 1026.32(b)(1) as of January 10, 2014. Any changes made by the CFPB to the points and fees definition may be adopted by HUD through publication of a notice and after providing FHA-approved mortgagees with time, as may be determined necessary, to implement.
</P>
<P>(b) <I>Qualified mortgage</I>—(1) <I>Limit.</I> For a single family mortgage to be insured under title II of the National Housing Act (12 U.S.C. 1701 <I>et seq.</I>), except for mortgages for manufactured housing and mortgages under paragraph (c) of this section, the total points and fees payable in connection with a loan used to secure a dwelling shall not exceed the CFPB's limit on points and fees for qualified mortgage in its regulations at 12 CFR 1026.43(e)(3) as of January 10, 2014. Any changes made by the CFPB to the limit on points and fees may be adopted by HUD through publication of a notice and after providing FHA-approved mortgagees with time, as may be determined necessary, to implement.
</P>
<P>(2) <I>Rebuttable presumption qualified mortgage.</I> (i) A single family mortgage insured under title II of the National Housing Act (12 U.S.C. 1701 <I>et seq.</I>), except for mortgages for manufactured housing and mortgages under paragraph (c) of this section, that has an annual percentage rate that exceeds the average prime offer rate for a comparable mortgage, as of the date the interest rate is set, by more than the combined annual mortgage insurance premium and 1.15 percentage points for a first-lien mortgage is a rebuttable presumption qualified mortgage that is presumed to comply with the ability to repay requirements in 15 U.S.C. 1639c(a).
</P>
<P>(ii) To rebut the presumption of compliance, it must be proven that the mortgage exceeded the points and fees limit in paragraph (b)(1) of this section or that, despite the mortgage having been endorsed for insurance under the National Housing Act, the mortgagee did not make a reasonable and good-faith determination of the mortgagor's repayment ability at the time of consummation, by failing to evaluate the mortgagor's income, credit, and assets in accordance with HUD underwriting requirements.
</P>
<P>(3) <I>Safe harbor qualified mortgage.</I> (i) A mortgage for manufactured housing that is insured under Title II of the National Housing Act (12 U.S.C. 1701 <I>et seq.</I>) is a safe harbor qualified mortgage that meets the ability to repay requirements in 15 U.S.C. 1639c(a); and
</P>
<P>(ii) A single family mortgage insured under title II of the National Housing Act (12 U.S.C. 1701 <I>et seq.</I>), except for mortgages under paragraph (c) of this section, that has an annual percentage rate that does not exceed the average prime offer rate for a comparable mortgage, as of the date the interest rate is set, by more than the combined annual mortgage insurance premium and 1.15 percentage points for a first-lien mortgage is a safe harbor qualified mortgage that meets the ability to repay requirements in 15 U.S.C. 1639c(a).
</P>
<P>(4) <I>Effect of indemnification on qualified mortgage status.</I> An indemnification demand or resolution of a demand that relates to whether the loan satisfied relevant eligibility and underwriting requirements at the time of consummation may result from facts that could allow a change to qualified mortgage status, but the existence of an indemnification does not per se remove qualified mortgage status.
</P>
<P>(c) <I>Exempted transactions.</I> The following transactions are exempted from the requirements in paragraph (b) of this section:
</P>
<P>(1) Home Equity Conversion Mortgages under section 255 of the National Housing Act (12 U.S.C. 1715z-20); and
</P>
<P>(2) Mortgage transactions exempted by the CFPB in its regulations at 12 CFR 1026.43(a)(3) as of January 10, 2014. Any changes made by CFPB to the list of exempted transactions may be adopted by HUD through publication of a notice and after providing FHA-approved mortgagees with time, as may be determined necessary, to implement.
</P>
<P>(d) <I>Ability to make adjustments to this section by notice.</I> The FHA Commissioner may make adjustments to this section, including the calculations of fees or the list of transactions excluded from compliance with the requirements of this section as the Commissioner determines necessary for purposes of meeting FHA's mission, after solicitation and consideration of public comments.
</P>
<CITA TYPE="N">[78 FR 75237, Dec. 11, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 203.20" NODE="24:2.1.1.2.4.1.81.22" TYPE="SECTION">
<HEAD>§ 203.20   Agreed interest rate.</HEAD>
<P>(a) The mortgage shall bear interest at the rate agreed upon by the mortgagee and the mortgagor.
</P>
<P>(b) Interest shall be payable in monthly installments on the principal amount of the mortgage outstanding on the due date of each installment. 
</P>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971, as amended at 49 FR 19457, May 8, 1984] 


</CITA>
</DIV8>


<DIV8 N="§ 203.21" NODE="24:2.1.1.2.4.1.81.23" TYPE="SECTION">
<HEAD>§ 203.21   Amortization provisions.</HEAD>
<P>The mortgage must contain complete amortization provisions satisfactory to the Commissioner, requiring monthly payments by the mortgagor not in excess of his reasonable ability to pay as determined by the Commissioner. The sum of the principal and interest payments in each month shall be substantially the same. 


</P>
</DIV8>


<DIV8 N="§ 203.22" NODE="24:2.1.1.2.4.1.81.24" TYPE="SECTION">
<HEAD>§ 203.22   Payment of insurance premiums or charges; prepayment privilege.</HEAD>
<P>(a) <I>Payment of periodic insurance premiums or charges.</I> Except with respect to mortgages for which a one-time mortgage insurance premium is paid pursuant to § 203.280, the mortgage may provide for monthly payments by the mortgagor to the mortgagee of an amount equal to one-twelfth of the annual mortgage insurance premium payable by the mortgagee to the Commissioner. Such payments continue only so long as the contract of insurance shall remain in effect or for such shorter period as mortgage insurance premiums are payable by the mortgagee to the Commissioner. 
</P>
<P>(b) <I>Prepayment privilege.</I> The mortgage shall contain a provision permitting the mortgagor to prepay the mortgage in whole or in part at any time and in any amount. The mortgage shall not provide for the payment of any charge on account of such prepayment.
</P>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971, as amended at 37 FR 8661, Apr. 29, 1972; 48 FR 28804, June 23, 1983; 50 FR 25914, June 24, 1985; 61 FR 36263, July 9, 1996; 79 FR 50837, Aug. 26, 2014] 


</CITA>
</DIV8>


<DIV8 N="§ 203.23" NODE="24:2.1.1.2.4.1.81.25" TYPE="SECTION">
<HEAD>§ 203.23   Mortgagor's payments to include other charges.</HEAD>
<P>(a) The mortgage shall provide for such equal monthly payments by the mortgagor to the mortgagee as will amortize:
</P>
<P>(1) The ground rents, if any;
</P>
<P>(2) The estimated amount of all taxes;
</P>
<P>(3) Special assessments, if any;
</P>
<P>(4) Flood insurance premiums, if flood insurance is required by the Commissioner; and
</P>
<P>(5) Fire and other hazard insurance premiums, if any. The mortgage shall further provide that such payments shall be held by the mortgagee in a manner satisfactory to the Commissioner for the purpose of paying such ground rents, taxes, assessments, and insurance premiums before the same become delinquent, for the benefit and account of the mortgagor. The mortgage must also make provisions for adjustments in case the estimated amount of such taxes, assessments, and insurance premiums shall prove to be more, or less, than the actual amount thereof so paid by the mortgagor. Such payments shall be held in an escrow subject to § 203.550. 
</P>
<P>(b) The mortgagor shall not be required to pay premiums for fire or other hazard insurance which protects only the interests of the mortgagee, or for life or disability income insurance, or fees charged for obtaining information necessary for the payment of property taxes. The foregoing does not apply to charges made or penalties exacted by the taxing authority, except that a penalty assessed or interest charged by a taxing authority for failure to timely pay taxes or assessments shall not be charged by the mortgagee to the mortgagor if the mortgagee had sufficient funds in escrow for the account of the mortgagor to pay such taxes or assessments prior to the date on which penalty or interest charges are imposed. 
</P>
<P>(c) Mortgages involving a principal obligation not in excess of $9,000 may contain a provision requiring the mortgagor to pay to the mortgagee an annual service charge at such rate as may be agreed upon between the mortgagee and the mortgagor, but in no case shall such service charge exceed one-half of one percent per annum. Any such service charge shall be payable in monthly installments on the principal then outstanding. The provisions of this paragraph shall not apply to mortgages endorsed for insurance pursuant to applications received by the Commissioner on or after July 17, 1961. 
</P>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971, as amended at 37 FR 25231, Nov. 29, 1972; 41 FR 47934, Nov. 10, 1976; 59 FR 53901, Oct. 26, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 203.24" NODE="24:2.1.1.2.4.1.81.26" TYPE="SECTION">
<HEAD>§ 203.24   Application of payments.</HEAD>
<P>(a) All monthly payments to be made by the mortgagor to the mortgagee shall be added together and the aggregate amount thereof shall be paid by the mortgagor each month in a single payment. The mortgagee shall apply the same to the following items in the order set forth: 
</P>
<P>(1) Premium charges under the contract of insurance (other than a one-time or up-front mortgage insurance premium paid in accordance with §§ 203.280, 203.284 and 203.285), charges for ground rents, taxes, special assessments, flood insurance premiums, if required, and fire and other hazard insurance premiums; 
</P>
<P>(2) Interest on the mortgage;
</P>
<P>(3) Amortization of the principal of the mortgage; and
</P>
<P>(4) Late charges, if permitted under the terms of the mortgage and subject to such conditions as the Commissioner may prescribe.
</P>
<P>(b) Any deficiency in the amount of any such aggregate monthly payment shall, unless made good by the mortgagor prior to, or on, the due date of the next such payment, constitute an event of default under the mortgage. 
</P>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971, as amended at 37 FR 25231, Nov. 29, 1972; 50 FR 25914, June 24, 1985; 61 FR 36263, July 9, 1996] 


</CITA>
</DIV8>


<DIV8 N="§ 203.25" NODE="24:2.1.1.2.4.1.81.27" TYPE="SECTION">
<HEAD>§ 203.25   Late charge.</HEAD>
<P>The mortgage may provide for the collection by the mortgagee of a late charge, not to exceed four per cent of the amount of each payment more than 15 days in arrears, to cover servicing and other costs attributable to the receipt of payments from mortgagors after the date upon which payment is due. 
</P>
<CITA TYPE="N">[41 FR 49734, Nov. 10, 1976] 


</CITA>
</DIV8>


<DIV8 N="§ 203.26" NODE="24:2.1.1.2.4.1.81.28" TYPE="SECTION">
<HEAD>§ 203.26   Mortgagor's payments when mortgage is executed.</HEAD>
<P>(a) The mortgagor must pay to the mortgagee, upon execution of the mortgage, a sum that will be sufficient to pay the ground rents, if any, the estimated taxes, special assessments, flood insurance premiums, if required, and fire and other hazard insurance premiums for the period beginning on the last date on which each such charge would have been paid under the normal lending practices of the lender and local custom (if each such date constitutes prudent lending practice), and ending on the due date of the first full installment payment under the mortgage, plus an amount sufficient to pay the mortgage insurance premium from the date of closing the loan to the date of the first monthly payment under the mortgage or, where applicable, the one-time mortgage insurance premium payable pursuant to § 203.280.
</P>
<P>(b) The mortgagee may also collect from the mortgagor a sum not exceeding one-sixth of the estimated total amount of such taxes, special assessments, insurance premiums and other charges to be paid during the ensuing 12-month period. 
</P>
<CITA TYPE="N">[41 FR 49734, Nov. 10, 1976, as amended at 48 FR 28804, June 23, 1983] 


</CITA>
</DIV8>


<DIV8 N="§ 203.27" NODE="24:2.1.1.2.4.1.81.29" TYPE="SECTION">
<HEAD>§ 203.27   Charges, fees or discounts.</HEAD>
<P>(a) The mortgagee may collect from the mortgagor the following charges, fees or discounts: 
</P>
<P>(1) [Reserved]
</P>
<P>(2) A charge to compensate the mortgagee for expenses incurred in originating and closing the loan, <I>provided</I> that the Commissioner may establish limitations on the amount of any such charge.
</P>
<P>(3) Reasonable and customary amounts, but not more than the amount actually paid by the mortgagee, for any of the following items: 
</P>
<P>(i) Recording fees and recording taxes or other charges incident to recordation; 
</P>
<P>(ii) Credit Report; 
</P>
<P>(iii) Survey, if required by mortgagee or mortgagor; 
</P>
<P>(iv) Title examination; title insurance, if any; 
</P>
<P>(v) Fees paid to an appraiser or inspector approved by the Commissioner for the appraisal and inspection, if required, of the property. Notwithstanding any limitations in this paragraph (a)(3) if the mortgagee is permitted by applicable regulations to use the services of staff appraisers and inspectors for processing mortgages, and does so, the mortgagee may collect from the mortgagor the reasonable and customary amounts for such appraisals and inspections.
</P>
<P>(vi) Such other reasonable and customary charges as may be authorized by the Commissioner. 
</P>
<P>(4) Reasonable and customary charges in the nature of discounts.
</P>
<P>(5) Interest from the date of closing or the date on which the mortgagee disburses the mortgage proceeds to the account of the mortgagor or the mortgagor's creditors, whichever is later, to the date of the beginning of amortization. 
</P>
<P>(b)-(c) [Reserved] 
</P>
<P>(d) Before the insurance of any mortgage, the mortgagee shall furnish to the Secretary a signed statement in a form satisfactory to the Secretary listing any charge, fee or discount collected by the mortgagee from the mortgagor. All charges, fees or discounts are subject to review by the Secretary both before and after endorsement under § 203.255.
</P>
<P>(e) Nothing in this section will be construed as prohibiting the mortgagor from dealing through a broker who does not represent the mortgagee, if he prefers to do so, and paying such compensation as is satisfactory to the mortgagor in order to obtain mortgage financing.
</P>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971, as amended at 43 FR 19846, May 9, 1978; 45 FR 30602, May 8, 1980; 45 FR 33966, May 21, 1980; 47 FR 29525, July 7, 1982; 48 FR 11940, Mar. 22, 1983; 48 FR 28804, June 23, 1983; 49 FR 19457, May 8, 1984; 57 FR 58347, Dec. 9, 1992; 58 FR 13537, Mar. 12, 1993; 73 FR 68239, Nov. 17, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 203.28" NODE="24:2.1.1.2.4.1.81.30" TYPE="SECTION">
<HEAD>§ 203.28   Economic soundness of projects.</HEAD>
<P>The mortgage must be executed with respect to a project which, in the opinion of the Commissioner, is economically sound, except that this section shall not apply in each of the following instances: 
</P>
<P>(a) To a mortgage of the character described in § 203.18(d) and with respect to such a mortgage, the Commissioner shall determine that the mortgage is an acceptable risk giving consideration to the need for providing adequate housing for families of low and moderate income, particularly in suburban and outlying areas or small communities. 
</P>
<P>(b) To a mortgage of the character described in § 203.18 (e). 
</P>
<P>(c) To a mortgage of the character described in § 203.43a. 
</P>
<P>(d) To a mortgage in a federally impacted area described in § 203.43e.
</P>
<P>(e) To a rehabilitation loan of the character described in § 203.50. 
</P>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971, as amended at 42 FR 57434, Nov. 2, 1977; 45 FR 33966, May 21, 1980; 53 FR 8880, Mar. 18, 1988] 


</CITA>
</DIV8>


<DIV8 N="§ 203.29" NODE="24:2.1.1.2.4.1.81.31" TYPE="SECTION">
<HEAD>§ 203.29   Eligible mortgages in Alaska, Guam, Hawaii, or the Virgin Islands.</HEAD>
<P>(a) <I>When is an increased mortgage limit permitted for these areas?</I> For Alaska, Guam, Hawaii or the Virgin Islands, the Commissioner may increase the maximum mortgage amount permitted by section 203(b)(2)(A) of the National Housing Act when authorized by section 214 of that Act, through the procedures described in § 203.18(h).
</P>
<P>(b) If a party believes that the otherwise applicable mortgage limit needs to be increased to reflect the extent to which high costs make it infeasible to construct dwellings without sacrificing sound standards of construction, design or livability, the party may submit documentation in support of an alternative mortgage limit. This documentation should include actual or estimated costs of such items as design, construction, materials, and labor. In addition, actual sales prices of new homes may be submitted, together with any other documentation requested by the Commissioner. Requests for alternative mortgage limits, together with supporting documentation should be sent to the appropriate HUD field office. The field office will forward the request and supporting material, with the field office's recommendation, to the Commissioner for determination.
</P>
<P>(c) If the Alaska Housing Authority, or the Government of Guam, Hawaii, or the Virgin Islands or any agency or instrumentality of those entities, is the mortgagor or the mortgagee, or the mortgagor is regulated or restricted as to rents or sales, charges, capital structure, rate of return, and methods of operation to such an extent and in such manner as the Commissioner determines advisable to provide reasonable rental and sales prices and a reasonable return on the investment, any mortgage otherwise eligible for insurance under this subpart may be insured: 
</P>
<P>(1) In any case where the Alaska Housing Authority, or the government of Guam, Hawaii, the Virgin Islands, or any agency or instrumentality of those entities, is the mortgagor, without regard to any requirement that the mortgagor occupy the dwelling as a principal residence or a secondary residence (as these terms are defined in § 203.18(f)), or meet loan-to-value or comparable limitations based on the failure of the mortgagor to meet this occupancy requirement; 
</P>
<P>(2) Without regard to any requirement that the mortgagor has paid on account of the property a prescribed percentage of the appraised value of the property; or 
</P>
<P>(3) Without regard to any requirement that the mortgagor certify that the mortgaged property is free and clear of all liens other than the mortgage offered for insurance and that there will not be any unpaid obligations contracted in connection with the mortgage transaction or the purchase of the mortgaged property. 
</P>
<P>(d) The provisions of § 203.28 requiring economic soundness shall not be applicable to mortgages covering property located in Alaska, in Guam, in Hawaii, or in the Virgin Islands, but the Commissioner shall find that the property or project is an acceptable risk, giving consideration to the acute housing shortage in Alaska, Guam, Hawaii, or the Virgin Islands.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0302)
</APPRO>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971, as amended at 49 FR 14338, Apr. 11, 1984; 55 FR 34804, Aug. 24, 1990; 56 FR 18948, Apr. 24, 1991; 64 FR 14569, Mar. 25, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 203.30" NODE="24:2.1.1.2.4.1.81.32" TYPE="SECTION">
<HEAD>§ 203.30   Certificate of nondiscrimination by the mortgagor.</HEAD>
<P>The mortgagor shall certify to the Commissioner as to each of the following points: 
</P>
<P>(a) That neither he, nor anyone authorized to act for him, will refuse to sell or rent, after the making of a bonafide offer, or refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny the dwelling or property covered by the mortgage to any person because of race, color, religion, national origin, familial status (except as provided by law), or handicap.
</P>
<P>(b) That any restrictive covenant on such property relating to race, color, religion, or national origin is recognized as being illegal and void and is hereby specifically disclaimed. 
</P>
<P>(c) That civil action for preventative relief may be brought by the Attorney General in any appropriate U.S. District Court against any person responsible for a violation of this certification. 
</P>
<P>(d) That buildings having four (4) or more units, which were built for first occupancy after March 13, 1991, were constructed in compliance with the Fair Housing Act new construction requirements in 24 CFR 100.205. 
</P>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971, as amended at 57 FR 58347, Dec. 9, 1992; 61 FR 36264, July 9, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.31" NODE="24:2.1.1.2.4.1.81.33" TYPE="SECTION">
<HEAD>§ 203.31   Mortgagor of a principal residence in military service cases.</HEAD>
<P>(a) A mortgage that is otherwise eligible for insurance under any of the provisions of this part may be insured without regard to any requirement contained in this part that the mortgagor occupy the dwelling as a principal residence (as defined in § 203.18(f)(1)) at the time of insurance, or that the mortgagor meet loan-to-value or comparable limitations based on the failure of the mortgagor to meet an occupancy requirement, if:
</P>
<P>(1) The Commissioner is satisfied that the inability of the mortgagor to meet the occupancy requirement is by reason of his or her entry into military service after the filing of an application for insurance; and 
</P>
<P>(2) The mortgagor expresses an intent (in such form as the Commissioner may prescribe), to meet the occupancy requirement upon his or her discharge from the service. 
</P>
<P>(b) A serviceperson will also be considered to meet the occupancy requirement referred to in paragraph (a) of this section for mortgage insurance purposes, if the following conditions are satisfied: 
</P>
<P>(1) The serviceperson and his or her family expect to meet the occupancy requirement referred to in paragraph (a) of this section for two or more years. The Commissioner may shorten this period to one year, if (i) the serviceperson's family will occupy the property for at least one year and (ii) the serviceperson is assigned to a combat zone or other hazardous duty area where the family cannot accompany him or her; and 
</P>
<P>(2) The property is located in an area in which the prospects of resale are reasonable.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0059)
</APPRO>
<CITA TYPE="N">[55 FR 34804, Aug. 24, 1990]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="82" NODE="24:2.1.1.2.4.1.82" TYPE="SUBJGRP">
<HEAD>Eligible Mortgagors</HEAD>


<DIV8 N="§ 203.32" NODE="24:2.1.1.2.4.1.82.34" TYPE="SECTION">
<HEAD>§ 203.32   Mortgage lien.</HEAD>
<P>(a) Except as otherwise provided in this section, a mortgagor must establish that, after the mortgage offered for insurance has been recorded, the mortgaged property will be free and clear of all liens other than such mortgage, and that there will not be outstanding any other unpaid obligations contracted in connection with the mortgage transaction or the purchase of the mortgaged property, except obligations that are secured by property or collateral owned by the mortgagor independently of the mortgaged property.
</P>
<P>(b) With prior approval of the Secretary, the mortgaged property may be subject to a secondary mortgage or loan made or insured, or other secondary lien held, by a Federal, State, or local government agency or instrumentality, or an entity designated in the homeownership plan submitted by an applicant for an implementation grant under the Homeownership and Opportunity for People Everywhere (HOPE) program, or an eligible nonprofit organization as defined in § 203.41(a)(5) of this part, provided that the required monthly payments under the insured mortgage and the secondary mortgage or lien shall not exceed the mortgagor's reasonable ability to pay as determined by the Secretary.
</P>
<P>(c) With the prior approval of the Secretary, the mortgaged property may be subject to a second mortgage held by a mortgagee not described in paragraph (b) of this section. Unless the mortgage is for the purpose described in paragraph (d) of this section, it shall meet the following requirements:
</P>
<P>(1) The required monthly payments under the insured mortgage and the second mortgage shall not exceed the mortgagor's reasonable ability to pay, as determined by the Commissioner;
</P>
<P>(2) Periodic payments, if any, shall be collected monthly and be substantially the same;
</P>
<P>(3) The sum of the principal amount of the insured mortgage and the second mortgage shall not exceed the loan-to-value limitation applicable to the insured mortgage, and shall not exceed the maximum mortgage limit for the area;
</P>
<P>(4) The repayment terms shall not provide for a balloon payment before ten years, or for such other term as the Commissioner may approve, except that the mortgage may become due and payable on sale or refinancing of the secured property covered by the insured mortgage; and
</P>
<P>(5) The mortgage shall contain a provision permitting the mortgagor to prepay the mortgage in whole or in part at any time, and shall not provide for the payment of any charge on account of such prepayment.
</P>
<P>(d)(1) With the prior approval of the Commissioner, the mortgaged property may be subject to a junior (second or third) mortgage securing the repayment of funds advanced to reduce the mortgagor's monthly payments on the insured mortgage following the date it is insured, if the junior mortgage meets the following requirements:
</P>
<P>(i) The junior mortgage shall not provide for any payment of principal or interest until the property securing the junior mortgage is sold or the insured mortgage is refinanced, at which time the junior mortgage shall become due and payable;
</P>
<P>(ii) The total amount of repayments under the junior mortgage shall not exceed the least of:
</P>
<P>(A) One-half of the mortgagor's equity interest in the property at the time of sale or refinancing;
</P>
<P>(B) Three times the amount of funds advanced to effect the interest rate buy-down; or
</P>
<P>(C) The sum of the original loan amount plus the total accrued interest on the junior mortgage at the time of repayment; and
</P>
<P>(iii) The junior mortgage shall contain a provision permitting the mortgagor to prepay the mortgage in whole or in part at any time, and shall not provide for the payment of any charge on account of such prepayment. Any full or partial prepayment will not be recoverable by the mortgagor if, by application of paragraph (d)(1)(ii) on sale or refinancing of the property, a lesser amount than the amount prepaid would have been due.
</P>
<P>(2) The sum of the principal amount of the insured mortgage, any second mortgage made under paragraph (b) or (c) of this section, and the mortgage securing the repayment of funds advanced to reduce the borrower's monthly payments (whether a second or third mortgage) may exceed the loan-to-value limitation applicable to the insured mortgage, but such sum may not exceed the maximum mortgage limit for the area.
</P>
<CITA TYPE="N">[45 FR 19223, Mar. 25, 1980, as amended at 50 FR 20906, May 21, 1985; 56 FR 4477, Feb. 4, 1991; 58 FR 42647, Aug. 11, 1993] 


</CITA>
</DIV8>


<DIV8 N="§ 203.33" NODE="24:2.1.1.2.4.1.82.35" TYPE="SECTION">
<HEAD>§ 203.33   Relationship of income to mortgage payments.</HEAD>
<P>(a) Adequacy of mortgagor's gross income. A mortgagor must establish, to the satisfaction of the Secretary, that his or her gross income is and will be adequate to meet (1) the periodic payments required by the mortgage submitted for insurance and (2) other long-term obligations. 
</P>
<P>(b) Determinations of adequacy of mortgagor income under this section shall be made in a uniform manner without regard to race, color, religion, sex, national origin, familial status, handicap, marital status, actual or perceived sexual orientation, gender identity, source of income of the mortgagor, or location of the property.
</P>
<CITA TYPE="N">[37 FR 16390, Aug. 12, 1972, as amended at 54 FR 38649, Sept. 20, 1989; 59 FR 59648, Nov. 18, 1994; 77 FR 5675, Feb. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 203.34" NODE="24:2.1.1.2.4.1.82.36" TYPE="SECTION">
<HEAD>§ 203.34   Credit standing.</HEAD>
<P>A mortgagor must have a general credit standing satisfactory to the Commissioner. 


</P>
</DIV8>


<DIV8 N="§ 203.35" NODE="24:2.1.1.2.4.1.82.37" TYPE="SECTION">
<HEAD>§ 203.35   Disclosure and verification of Social Security and Employer Identification Numbers.</HEAD>
<P>To be eligible for mortgage insurance under this part, the mortgagor must meet the requirements for the disclosure and verification of Social Security and Employer Identification Numbers, as provided by part 200, subpart U, of this chapter.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control numbers 2502-0059, 2502-0159, and 2502-0268)
</APPRO>
<CITA TYPE="N">[54 FR 39693, Sept. 27, 1989]


</CITA>
</DIV8>


<DIV8 N="§ 203.36" NODE="24:2.1.1.2.4.1.82.38" TYPE="SECTION">
<HEAD>§ 203.36   [Reserved]</HEAD>
</DIV8>

</DIV7>


<DIV7 N="83" NODE="24:2.1.1.2.4.1.83" TYPE="SUBJGRP">
<HEAD>Eligible Properties</HEAD>


<DIV8 N="§ 203.37" NODE="24:2.1.1.2.4.1.83.39" TYPE="SECTION">
<HEAD>§ 203.37   Nature of title to realty.</HEAD>
<P>A mortgage, to be eligible for insurance, must be on real estate held in fee simple, or on leasehold under a lease for not less than 99 years which is renewable, or under a lease having a period of not less than 10 years to run beyond the maturity date of the mortgage.
</P>
<CITA TYPE="N">[49 FR 21319, May 21, 1984]


</CITA>
</DIV8>


<DIV8 N="§ 203.37a" NODE="24:2.1.1.2.4.1.83.40" TYPE="SECTION">
<HEAD>§ 203.37a   Sale of property.</HEAD>
<P>(a) <I>Sale by owner of record</I>—(1) <I>Owner of record requirement.</I> To be eligible for a mortgage insured by FHA, the property must be purchased from the owner of record and the transaction may not involve any sale or assignment of the sales contract. 
</P>
<P>(2) <I>Supporting documentation.</I> The mortgagee shall obtain documentation verifying that the seller is the owner of record and must submit this documentation to HUD as part of the application for mortgage insurance, in accordance with § 203.255(b)(12). This documentation may include, but is not limited to, a property sales history report, a copy of the recorded deed from the seller, or other documentation (such as a copy of a property tax bill, title commitment, or binder) demonstrating the seller's ownership. 
</P>
<P>(b) <I>Time restrictions on re-sales</I>—(1) <I>General.</I> The eligibility of a property for a mortgage insured by FHA is dependent on the time that has elapsed between the date the seller acquired the property (based upon the date of settlement) and the date of execution of the sales contract that will result in the FHA mortgage insurance (the re-sale date). The mortgagee shall obtain documentation verifying compliance with the time restrictions described in this paragraph and must submit this documentation to HUD as part of the application for mortgage insurance, in accordance with § 203.255(b). 
</P>
<P>(2) <I>Re-sales occurring 90 days or less following acquisition.</I> If the re-sale date is 90 days or less following the date of acquisition by the seller, the property is not eligible for a mortgage to be insured by FHA. 
</P>
<P>(3) <I>Re-sales occurring between 91 days and 180 days following acquisition.</I> (i) If the re-sale date is between 91 days and 180 days following acquisition by the seller, the property is generally eligible for a mortgage insured by FHA. 
</P>
<P>(ii) However, HUD will require that the mortgagee obtain additional documentation if the re-sale price is 100 percent over the purchase price. Such documentation must include an appraisal from another appraiser. The mortgagee may also document its loan file to support the increased value by establishing that the increased value results from the rehabilitation of the property. 
</P>
<P>(iii) HUD may revise the level at which additional documentation is required under § 203.37a(b)(3) at 50 to 150 percent over the original purchase price. HUD will revise this level by <E T="04">Federal Register</E> notice with a 30 day delayed effective date. 
</P>
<P>(4) <I>Authority to address property flipping for re-sales occurring between 91 days and 12 months following acquisition.</I> (i) If the re-sale date is more than 90 days after the date of acquisition by the seller, but before the end of the twelfth month after the date of acquisition, the property is eligible for a mortgage to be insured by FHA. 
</P>
<P>(ii) However, HUD may require that the lender provide additional documentation to support the re-sale value of the property if the re-sale price is 5 percent or greater than the lowest sales price of the property during the preceding 12 months (as evidenced by the contract of sale). At HUD's discretion, such documentation must include, but is not limited to, an appraisal from another appraiser. HUD may exclude re-sales of less than a specific dollar amount from the additional value documentation requirements. 
</P>
<P>(iii) If the additional value documentation supports a value of the property that is more than 5 percent lower than the value supported by the first appraisal, the lower value will be used to calculate the maximum mortgage amount under § 203.18. Otherwise, the value supported by the first appraisal will be used to calculate the maximum mortgage amount. 
</P>
<P>(iv) HUD will announce its determination to require additional value documentation through issuance of a <E T="04">Federal Register</E> notice. The requirement for additional value documentation may be established either on a nationwide or regional basis. Further, the <E T="04">Federal Register</E> notice will specify the percentage increase in the re-sale price that will trigger the need for additional documentation, and will specify the acceptable types of documentation. The <E T="04">Federal Register</E> notice may also exclude re-sales of less than a specific dollar amount from the additional value documentation requirements. Any such <E T="04">Federal Register</E> notice, and any subsequent revisions, will be issued at least thirty days before taking effect. 
</P>
<P>(v) The level at which additional documentation is required under § 203.37a(b)(4) shall supersede that under § 203.37a(b)(3). 
</P>
<P>(5) <I>Re-sales occurring more than 12 months following acquisition.</I> If the re-sale date is more than 12 months following the date of acquisition by the seller, the property is eligible for a mortgage insured by FHA. 
</P>
<P>(c) <I>Exceptions to the time restrictions on sales.</I> The time restrictions on sales described in paragraph (b) of this section do not apply to:
</P>
<P>(1) Sales by HUD of Real Estate-Owned (REO) properties under 24 CFR part 291 and of single family assets in revitalization areas pursuant to section 204 of the National Housing Act (12 U.S.C. 1710);
</P>
<P>(2) Sales by another agency of the United States Government of REO single family properties pursuant to programs operated by these agencies;
</P>
<P>(3) Sales of properties by nonprofit organizations approved to purchase HUD REO single family properties at a discount with resale restrictions;
</P>
<P>(4) Sales of properties that were acquired by the sellers by inheritance;
</P>
<P>(5) Sales of properties purchased by an employer or relocation agency in connection with the relocation of an employee;
</P>
<P>(6) Sales of properties by state- and federally-chartered financial institutions and government-sponsored enterprises (GSEs);
</P>
<P>(7) Sales of properties by local and state government agencies; and
</P>
<P>(8) Only upon announcement by HUD through issuance of a notice, sales of properties located in areas designated by the President as federal disaster areas. The notice will specify how long the exception will be in effect.
</P>
<P>(d) <I>Sanctions and indemnification.</I> Failure of a mortgagee to comply with the requirements of this section may result in HUD requesting indemnification of the mortgage loan, or seeking other appropriate remedies under 24 CFR part 25.
</P>
<CITA TYPE="N">[68 FR 23375, May 1, 2003, as amended at 69 FR 77116, Dec. 23, 2004; 71 FR 33142, June 7, 2006]


</CITA>
</DIV8>


<DIV8 N="§ 203.38" NODE="24:2.1.1.2.4.1.83.41" TYPE="SECTION">
<HEAD>§ 203.38   Location of dwelling.</HEAD>
<P>At the time a mortgage is insured there must be located on the mortgaged property one or more dwellings designed principally for residential use for not more than four families. 
</P>
<CITA TYPE="N">[61 FR 36264, July 9, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.39" NODE="24:2.1.1.2.4.1.83.42" TYPE="SECTION">
<HEAD>§ 203.39   Standards for buildings.</HEAD>
<P>The buildings on the mortgaged property must conform with the standards prescribed by the Commissioner. 


</P>
</DIV8>


<DIV8 N="§ 203.40" NODE="24:2.1.1.2.4.1.83.43" TYPE="SECTION">
<HEAD>§ 203.40   Location of property.</HEAD>
<P>The mortgaged property shall be located within the United States, Puerto Rico, Guam, the Virgin Islands, the Commonwealth of the Northern Mariana Islands, and American Samoa. The mortgaged property, if otherwise acceptable to the Commissioner, may be located in any community where the housing standards meet the requirements of the Commissioner.
</P>
<CITA TYPE="N">[49 FR 12697, Mar. 30, 1984, as amended at 61 FR 36264, July 9, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.41" NODE="24:2.1.1.2.4.1.83.44" TYPE="SECTION">
<HEAD>§ 203.41   Free assumability; exceptions.</HEAD>
<P>(a) <I>Definitions.</I> As used in this section: 
</P>
<P>(1) <I>Low- or moderate-income housing</I> means housing which is designed to be affordable, taking into account available financing, to individuals or families whose household income does not exceed 115 percent of the median income for the area, as determined by the Secretary with adjustments for smaller and larger families. The Secretary may approve a higher percentage up to 140 percent. 
</P>
<P>(2) <I>Eligible governmental or nonprofit program</I> means a program operated pursuant to a program established by Federal law, operated by a State or local government, or operated by an eligible nonprofit organization, if the program is designed to assist the purchase of low-or moderate-income housing including rental housing. 
</P>
<P>(3) <I>Legal restrictions on conveyance</I> means any provision in any legal instrument, law or regulation applicable to the mortgagor or the mortgaged property, including but not limited to a lease, deed, sales contract, declaration of covenants, declaration of condominium, option, right of first refusal, will, or trust agreement, that attempts to cause a conveyance (including a lease) made by the mortgagor to: 
</P>
<P>(i) Be void or voidable by a third party; 
</P>
<P>(ii) Be the basis of contractual liability of the mortgagor for breach of an agreement not to convey, including rights of first refusal, pre-emptive rights or options related to mortgagor efforts to convey; 
</P>
<P>(iii) Terminate or subject to termination all or a part of the interest held by the mortgagor in the mortgaged property if a conveyance is attempted; 
</P>
<P>(iv) Be subject to the consent of a third party; 
</P>
<P>(v) Be subject to limits on the amount of sales proceeds retainable by the seller; or 
</P>
<P>(vi) Be grounds for acceleration of the insured mortgage or increase in the interest rate. 
</P>
<P>(4) <I>Tax-exempt bond financing</I> means financing which is funded in whole or in part by the proceeds of qualified mortgage bonds described in section 143 of the Internal Revenue code of 1986, or any successor section, on which the interest is exempt from Federal income tax. The term does not include financing by qualified veterans' mortgage bonds as defined in section 143(b) of the Code. 
</P>
<P>(5) <I>Eligible nonprofit organization</I> means an organization of the type described in section 501(c)(3) of the Internal Revenue Code of 1986 as an organization exempt under section 501(a) of the Code, which has: 
</P>
<P>(i) Two years experience as a provider of low- or moderate-income housing; 
</P>
<P>(ii) A voluntary board; and 
</P>
<P>(iii) No part of its net earnings inuring to the benefit of any member, founder, contributor or individual. 
</P>
<P>(b) <I>Policy of free assumability with no restrictions.</I> A mortgage shall not be eligible for insurance if the mortgaged property is subject to legal restrictions on conveyance, except as permitted by this part. 
</P>
<P>(c) <I>Exception for eligible governmental or nonprofit programs.</I> Legal restrictions on conveyance are acceptable if: 
</P>
<P>(1) The restrictions are part of an eligible governmental or nonprofit program and are permitted by paragraph (d) of this section; and 
</P>
<P>(2) The restrictions will automatically terminate if title to the mortgaged property is transferred by foreclosure or deed-in-lieu of foreclosure, or if the mortgage is assigned to the Secretary. 
</P>
<P>(d) <I>Exception for eligible governmental or nonprofit programs—specific policies.</I> For purposes of paragraph (c) of this section, restrictions of the following types are permitted for eligible governmental or nonprofit programs, provided that a violation of legal restrictions on conveyance may not be grounds for acceleration of the insured mortgaged or for an increase in the interest rate, or for voiding a conveyance of the mortgagor's interest in the property, terminating the mortgagor's interest in the property, or subjecting the mortgagor to contractual liability other than requiring repayment (at a reasonable rate of interest) of assistance provided to make the property affordable as low- or moderate-income housing: 
</P>
<P>(1) Except as otherwise provided in the HOME Investment Partnerships (HOME) and the Homeownership and Opportunity for People Everywhere (HOPE) programs, the mortgagor may be prohibited from selling the property at a price greater than the price permitted under the program, or the mortgagor may be required to pay a portion of the sales proceeds to a governmental body or an eligible nonprofit organization, as long as the mortgagor is not prohibited from recovering: 
</P>
<P>(i) The sum of the mortgagor's original purchase price, the mortgagor's reasonable costs of sale, the reasonable costs of improvements made by the mortgagor, and any negative amortization on a graduated payment mortgage insured under § 203.45 of this part; and 
</P>
<P>(ii) A reasonable share, as determined by the Secretary, of the appreciation in value which shall be the sales price reduced by the sum determined under paragraph (d)(1)(i) of this section. 
</P>
<P>(2) Legal restrictions on conveyance may extend beyond the term of the mortgage, subject to paragraph (c)(2) of this section and any limitations applicable in the jurisdiction. 
</P>
<P>(3) Except as otherwise required by the HOME and HOPE programs, rights under an option to purchase, pre-emptive rights to purchase or rights of first refusal shall only be held by a governmental body or eligible nonprofit organization, or another individual or organization approved by the Secretary, and shall be exercised by them (or an assignee who will purchase and occupy the property) only within a reasonable time after the event permitting exercise of the rights occurs, not to exceed a period of time determined by the Secretary. The Secretary may approve another individual or organization under the preceding sentence even if the restriction is not part of an eligible governmental or nonprofit program. 
</P>
<P>(4) In addition to the restrictions stated in paragraph (d)(3) of this section, the purchase price under an option may not be less than the sum of the mortgagor's original purchase price, the mortgagor's reasonable costs of sale, the reasonable costs of improvements made by seller, and a reasonable share, as determined by the Secretary, of the appreciation in value.
</P>
<P>(5) The mortgagor may be required to continue to be an owner-occupant.
</P>
<P>(6) The mortgagor may be limited in his or her ability to choose a purchaser for the property, but only to the extent necessary to ensure that the property is preserved as low- or moderate-income housing.
</P>
<P>(7) The mortgagor for a rehabilitation loan insured under § 203.50 of this part may hold title subject to a condition subsequent, provided that the holder of the right of entry for condition broken also executes the mortgage, and that the right is exercisable only for failure by the mortgagor to complete the rehabilitation or occupy the property as agreed by the mortgagor.
</P>
<P>(8) Property may be subject to a legal restriction on conveyance to the extent approved in writing by an authorized representative of the Secretary prior to September 10, 1993.
</P>
<P>(e) <I>Exception for tax-exempt bond financing.</I> A mortgage may be funded through tax-exempt bond financing and may include a due-on-sale provision in a form approved by the Secretary which permits the mortgagee to accelerate a mortgage that no longer meets Federal requirements for tax-exempt bond financing or for other reasons acceptable to the Secretary. Except as provided in this paragraph (e), a mortgage funded through tax-exempt bond financing shall comply with all form requirements prescribed under § 203.17(a) of this part and shall contain no other provisions designed to enforce compliance with Federal or State requirements for tax-exempt bond financing. Other legal restrictions on conveyance are permitted as provided in other paragraphs of this section.
</P>
<P>(f) <I>Exception for protective covenants excluding non-elderly.</I> Mortgaged property may be subject to protective covenants which prohibit or restrict occupancy by, or transfer to, persons who are not elderly if:
</P>
<P>(1) The restrictions do not have an undue effect on marketability; and
</P>
<P>(2) The restrictions do not constitute illegal discrimination and are consistent with the Fair Housing Act and all other applicable nondiscrimination laws.
</P>
<P>(g) <I>Exceptions for specific jurisdictions.</I> Notwithstanding the provisions of paragraph (b) of this section, mortgages insured on certain Indian land or Hawaiian home lands under sections 247 and 248 of the National Housing Act and §§ 203.43h and 203.43i of this part, or on property in the Northern Mariana Islands or American Samoa, shall not be ineligible for insurance under this section solely because applicable law does not permit free alienability of title to all persons.
</P>
<CITA TYPE="N">[58 FR 42648, Aug. 11, 1993; 59 FR 15112, Mar. 31, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 203.42" NODE="24:2.1.1.2.4.1.83.45" TYPE="SECTION">
<HEAD>§ 203.42   Rental properties.</HEAD>
<P>(a) A mortgage on property upon which there is a dwelling to be rented by the mortgagor shall not be eligible for insurance if the property is a part of, or adjacent or contiguous to, a project, or group of similar rental properties, in which the mortgagor has a financial interest in eight or more dwelling units. 
</P>
<P>(b) Paragraph (a) of this section shall not apply where:
</P>
<P>(1) A mortgage qualifies as a rehabilitation loan under § 203.50 of this part;
</P>
<P>(2) The mortgage is to be used for the rehabilitation of property located in a specific area or neighborhood that has been targeted by a State or local government for redevelopment, in accordance with a specific program that involves substantial public or private commitments in support of neighborhood improvement or redevelopment; and
</P>
<P>(3) The State or local government has approved, and has submitted to the Commissioner a plan describing the program of neighborhood redevelopment and revitalization, including the geographic area targeted for redevelopment, and the nature and proportion of public or private commitments that have been made in support of the redevelopment program.
</P>
<P>(c) No two-, three-, or four-family dwelling, and no single-family dwelling, if it is part of a group of five or more single-family dwellings held by the same mortgagor, or any part or unit thereof, shall be rented or offered for rent for transient or hotel purposes, as defined in § 203.16, so long as the dwelling is subject to any insured mortgage.
</P>
<CITA TYPE="N">[56 FR 27692, June 17, 1991, as amended at 61 FR 36264, July 9, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.43" NODE="24:2.1.1.2.4.1.83.46" TYPE="SECTION">
<HEAD>§ 203.43   Eligibility of miscellaneous type mortgages.</HEAD>
<P>(a) A mortgage which meets the requirements of this subpart, except as modified by this section, shall be eligible for insurance under this subpart subject to compliance with the additional requirements of this section. 
</P>
<P>(b) The mortgage may be accepted for insurance if:
</P>
<P>(1) Executed in connection with the sale by the Government, or any agency or official thereof, of any housing acquired or constructed under Public Law 849, Seventy-sixth Congress, as amended; Public Law 781, Seventy-sixth Congress, as amended; or Public Law 9, 73 or 353, Seventy-seventh Congress, as amended (including any property acquired, held or constructed in connection with such housing or to serve the inhabitants thereof); or 
</P>
<P>(2) Executed in connection with the sale by the Public Housing Administration, or by any public housing agency with the approval of the said Administration, or any housing (including any property acquired, held or constructed in connection with such housing or to serve the inhabitants thereof) owned or financially assisted pursuant to the provisions of Public Law 671, Seventy-sixth Congress; or 
</P>
<P>(3) Executed in connection with the sale by the Government, or any agency or official thereof, or any of the so-called Greenbelt towns, or parts thereof, including projects, or parts thereof, known as Greenhills, OH; Greenbelt, MD; and Greendale, WI, developed under the Emergency Relief Appropriation Act of 1935; or of any of the village properties or employee's housing under the jurisdiction of the Tennessee Valley Authority; or of any housing under the jurisdiction of the Department of the Interior located within the town area of Coulee Dam, WA, acquired by the United States for the construction, operation, and maintenance of Grand Coulee Dam and its appurtenant works or of any permanent housing under the jurisdiction of the Department of the Interior constructed under the Boulder Canyon Project Act of December 21, 1928, as amended and supplemented, located within the Boulder City municipal area; or 
</P>
<P>(4) Executed in connection with the sale by the Government, or any agency or official thereof, of any housing (including any property acquired, held, or constructed in connection therewith or to serve the inhabitants thereof) pursuant to the Atomic Energy Community Act of 1955, as amended: <I>Provided,</I> That such insurance shall be issued without regard to any preferences or priorities except those prescribed by the National Housing Act or the Atomic Energy Community Act of 1955, as amended; or 
</P>
<P>(5) Executed in connection with the sale by a State or municipality, or an agency, instrumentality, or political subdivision of either, of a project consisting of any permanent housing (including any property acquired, held or constructed in connection therewith or to serve the inhabitants thereof), constructed by or on behalf of such State, municipality, agency, instrumentality or political subdivision, for the occupancy of veterans (persons who have served in the active military or naval service of the United States at any time on or after September 16, 1940, and prior to July 26, 1947, or on or after June 27, 1950, and prior to February 1, 1955) their families and others: <I>Provided,</I> That the principal obligation of a mortgage referred to in this paragraph shall not exceed 90 percent of the appraised value of the mortgaged property; or
</P>
<P>(6) Executed in connection with the first resale, within two years from the date of its acquisition from the Government, of any portion of a project or property of the character described in paragraphs (b) (1), (2), (3), and (4) of this section. 
</P>
<P>(c) The Commissioner may insure under this part, without regard to any limitation upon eligibility contained in the other provisions of this subpart, any mortgage given to refinance an existing mortgage insured under the National Housing Act. The refinancing mortgage must meet the following special requirements: 
</P>
<P>(1)(i) Except as provided by paragraph (c)(1)(ii) of this section, the refinancing mortgage must be in an amount that does not exceed the least of (A) the original principal amount of the existing mortgage; (B) the sum of the outstanding principal balance of the existing mortgage, plus loan closing charges approved by the Commissioner; or (C) in the case of an eligible non-occupant mortgagor (as defined in § 203.18(f)), the outstanding balance of the existing mortgage. 
</P>
<P>(ii) In the case of graduated payment mortgages insured under section 203 of the Act pursuant to section 245 (a) or (b) of the Act (§ 203.45 or § 203.46 [as in effect immediately before its removal at 52 FR 32754, published August 28, 1987]), the refinancing mortgage must have a principal amount that does not exceed the outstanding balance of the existing mortgage. 
</P>
<P>(iii) If a one-time mortgage insurance premium (MIP) was financed as part of the existing mortgage referred to in paragraphs (c)(1) (i) and (ii) of this section, the amount of the premium refund to which the mortgagor is entitled must be deducted in determining the original principal amount and the unpaid principal balance of the existing mortgage under paragraph (c)(1)(i) of this section and the outstanding balance of the existing mortgage under paragraph (c)(1)(ii) of this section. However, the maximum amount of the refinancing mortgage computed in accordance with this paragraph (c)(1) may be increased by the amount of the one-time MIP (if any) associated with the refinancing mortgage; 
</P>
<P>(2) It must have a term which does not exceed the unexpired term of the existing mortgage, except that in any case where the Commissioner determines that an extension of the term of the mortgage will inure to the benefit of the applicable insurance fund, taking into consideration the outstanding insurance liability under the existing insured mortgage, the term may be extended to the lesser of (i) 30 years or (ii) the unexpired term of the existing mortgage, plus 12 years; 
</P>
<P>(3) The mortgage must result in a reduction in regular monthly payments by the mortgagor, except: 
</P>
<P>(i) When a fixed rate mortgage is given to refinance an adjustable rate mortgage held by a mortgagor who is to occupy the dwelling as a principal residence or secondary residence, as these terms are defined in § 203.18(f); or 
</P>
<P>(ii) When refinancing a mortgage for a shorter term will result in an increase in the mortgagor's regular monthly payments of no more than $50. In the case of a graduated payment mortgage, the reduction in regular monthly payments means a reduction from the payment due under the existing mortgage for the month in which the refinancing mortgage is executed. 
</P>
<P>(4) It must be made by a mortgagor whose record of payment on the existing mortgage meets standards established by the Commissioner; and 
</P>
<P>(5) The mortgagee may not require a minimum principal amount to be outstanding on the loan secured by the existing mortgage. 
</P>
<P>(d)-(f) [Reserved] 
</P>
<P>(g) The provisions of § 203.28 shall not apply to mortgages insured under this section. 
</P>
<P>(h) The provisions of § 203.38 shall not apply to mortgages of the character described in paragraph (b) of this section and at the time any such mortgage is insured there must be located on the mortgaged property a dwelling unit designed principally for residential use for not more than eight families. 
</P>
<P>(i)-(j) [Reserved] 
</P>
<P>(k) The Commissioner may insure under this part, without regard to any limitation upon eligibility contained in this subpart, any mortgage assigned to the Commissioner in connection with payment under a contract of mortgage insurance, or executed in connection with a sale by the Commissioner of any property acquired in the settlement of an insurance claim under any section or title of the National Housing Act. 
</P>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971, as amended at 45 FR 30602, May 8, 1980; 47 FR 29525, July 7, 1982; 52 FR 4139, Feb. 10, 1987; 52 FR 37287, Oct. 6, 1987; 52 FR 44861, Nov. 23, 1987; 53 FR 8880, Mar. 18, 1988; 55 FR 34805, Aug. 24, 1990; 55 FR 38033, Sept. 14, 1990; 61 FR 36264, July 9, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.43a" NODE="24:2.1.1.2.4.1.83.47" TYPE="SECTION">
<HEAD>§ 203.43a   Eligibility of mortgages covering housing in certain neighborhoods.</HEAD>
<P>(a) A mortgage financing the repair, rehabilitation, construction, or purchase of property located in an older declining urban area shall be eligible for insurance under this subpart subject to compliance with the additional requirements of this section. 
</P>
<P>(b) The mortgage shall meet all of the requirements of this subpart, except such requirements as are judged to be not applicable on the basis of the following determinations to be made by the Commissioner: 
</P>
<P>(1) That the conditions of the area in which the property is located prevent the application of certain eligibility requirements of this subpart. 
</P>
<P>(2) That the area is reasonably viable, and there is a need in the area for adequate housing for families of low and moderate income. 
</P>
<P>(3) That the mortgage to be insured is an acceptable risk. 
</P>
<P>(c) Mortgages complying with the requirements of this section shall be insured under this subpart pursuant to section 223(e) of the National Housing Act. Such mortgages shall be insured under and be the obligation of the Special Risk Insurance Fund. 
</P>
<P>(d) For restrictions against approving mortgage insurance for a certain category of newly legalized alien, see 24 CFR part 49.
</P>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971, as amended at 55 FR 18493, May 2, 1990] 


</CITA>
</DIV8>


<DIV8 N="§ 203.43b" NODE="24:2.1.1.2.4.1.83.48" TYPE="SECTION">
<HEAD>§ 203.43b   Eligibility of mortgages on single-family condominium units.</HEAD>
<P>(a) <I>Definitions.</I> As used in this part:
</P>
<P>(1) <I>Condominium Association (Association)</I> means the organization, regardless of its formal legal name that consists of homeowners within a Condominium Project for the purpose of managing the financial and common-area assets.
</P>
<P>(2) <I>Condominium Project</I> means the project in which one-family dwelling units are attached, semi-detached, detached, or manufactured housing units, and in which owners hold an undivided interest in the Common Elements.
</P>
<P>(3) <I>Condominium Unit</I> means real estate consisting of a one-family dwelling unit in a Condominium Project.
</P>
<P>(4) <I>Common Elements</I> means the Condominium Project's common areas and facilities including: Underlying land and buildings, driveways, parking areas, elevators, outside hallways, recreation and landscaped areas, and other elements described in the condominium declaration.
</P>
<P>(5) <I>Rental for Transient or Hotel Purposes</I> shall have the meaning given in section 513(e) of the National Housing Act (12 U.S.C. 1731b(e)).
</P>
<P>(6) <I>Single-Unit Approval</I> means approval of one unit in an unapproved Condominium Project under paragraph (i) of this section.
</P>
<P>(7) <I>Site Condominium</I> means:
</P>
<P>(i) A Condominium Project that consists entirely of single-family detached dwellings that have no shared garages or any other attached buildings; or
</P>
<P>(ii) A Condominium Project that:
</P>
<P>(A) Consists of single family detached or horizontally attached (townhouse) dwellings where the unit consists of the dwelling and land; and
</P>
<P>(B) Is encumbered by a declaration of condominium covenants or condominium form of ownership and does not contain any manufactured housing units.
</P>
<P>(b) <I>Eligibility.</I> A mortgage secured by a Condominium Unit shall be eligible for insurance under section 203 of the National Housing Act if it meets the requirements of this subpart, except as modified by this section.
</P>
<P>(c) <I>Approval required.</I> To be eligible for insurance under this section, a Condominium Unit must be located in a Condominium Project approved by HUD or a DELRAP mortgagee approved under § 203.8, or meet the additional requirements for approval as a Site Condominium or Single-Unit Approval.
</P>
<P>(d) <I>Condominium Project Approval: Eligibility Requirements.</I> To be eligible for Condominium Project approval, the Condominium Project must:
</P>
<P>(1) Be primarily residential in nature and not be intended for rental for Transient or Hotel Purposes;
</P>
<P>(2) Consist of units that are solely one-family units;
</P>
<P>(3) Be in full compliance with all applicable Federal, State, and local laws with respect to zoning, Fair Housing, and accessibility for persons with disabilities, including, but not limited to, the Fair Housing Act, 42 U.S.C. 3601 <I>et seq.,</I> Section 504 of the Rehabilitation Act, 29 U.S.C. 794, and the Americans with Disabilities Act, 42 U.S.C. 12101 <I>et seq.,</I> where relevant;
</P>
<P>(4) Be complete and ready for occupancy, including completion of all the common elements of the project, and not subject to further rehabilitation, construction, phasing, or annexation, except to the extent that approval is sought for legal phasing in compliance with the requirements of paragraph (e) of this section;
</P>
<P>(5) Be reviewed and approved by the local jurisdiction with respect to the condominium plat or similar development plan and any phases; if applicable, the approved plat or development plan must have been recorded in the land records of the jurisdiction; and
</P>
<P>(6) Meet such further approval requirements as provided by the Commissioner through notices with respect to:
</P>
<P>(i) Nature of title to realty or leasehold interests;
</P>
<P>(ii) Control over, and organization of, the Condominium Association;
</P>
<P>(iii) Minimum insurance coverage for the Condominium Project;
</P>
<P>(iv) Planned or actual special assessments;
</P>
<P>(v) Financial condition of the Condominium Project, including, but not limited to, the allowable percentage of units owned by a single owner or group of related owners;
</P>
<P>(vi) Existence of any pending legal action, or physical property condition;
</P>
<P>(vii) Acceptable maximum percentages of commercial/non-residential space, which must be within a range between 25 and 55 percent of the total floor area (which range may be changed following the procedures in paragraph (f) of this section), with the specific maximum and minimum percentages within that range to be established by HUD through notice, provided that such commercial/non-residential space does not negatively impact the residential use of the project or create adverse conditions to the occupants of individual condominium units.
</P>
<P>(viii) Acceptable maximum percentages of units with FHA-insured mortgages, which must be within a range between 25 and 75 percent of the total number of units in the project (which range may be changed following the procedures in paragraph (f) of this section), with the specific maximum percentage of units with FHA-insured mortgages within that range to be established by HUD through notice. HUD may suspend the issuance of new FHA case numbers for a mortgage on a property located in any project where the number of FHA-insured mortgages exceeds the maximum insurance concentration established by HUD.
</P>
<P>(ix) Acceptable minimum level of owner occupancy, which shall include units occupied as a principal or secondary residence or sold to an owner who intends to meet such occupancy requirements. Such acceptable minimum levels shall be within a range between 30 and 75 percent of the total number of units in the project (which range may be changed following the procedures in paragraph (f) of this section), with a specific minimum percentage to be established by HUD through notice. For the sole purpose of calculating the owner-occupancy percentage under this paragraph, any unit that is occupied by the owner as his or her place of abode for any portion of the calendar year other than as a principal residence and that is not rented for a majority of the calendar year shall count towards the total number of secondary residences.
</P>
<P>(x) Reserve requirements, provided the reserve account is funded with at least 10 percent of the monthly unit assessments, unless a lower amount is deemed acceptable by HUD based on a reserve study completed not more than 36 months before a request for a lower amount is received, or such greater amount of time as determined by the Secretary under the HUD review and approval process.
</P>
<P>(xi) Such other matters that may affect the viability or marketability of the project or its units.
</P>
<P>(e) Phases of a project are approvable, provided that only legal phasing is used. Individual phases must be separately sustainable as required by HUD, so that the insurance fund is not put at undue risk. In determining whether to accept legal phasing, HUD will assess the potential risk to the insurance fund and other factors that HUD may publish in notices. Phases must meet HUD's requirements for approval in paragraph (d) of this section and must at a minimum be:
</P>
<P>(1) In a vertical building, contiguous, with all units built out and having a certificate of occupancy; or
</P>
<P>(2) In a detached or semi-detached development, where all homes in the phase are built out and have a certificate of occupancy;
</P>
<P>(f) The Secretary will publish any generally applicable change in the upper and lower limits of the ranges of percentages in paragraphs (d)(6)(vii) through (ix) of this section in a notice published for 30 days of public comment. After considering the comments, the Department will publish a final notice announcing the new overall upper and lower limits of the range of percentages being implemented, and the date on which the new standard becomes effective.
</P>
<P>(g) The Secretary may grant an exception to any specifically prescribed requirements within paragraph (d)(6) of this section on a case-by-case basis in HUD's discretion, provided that:
</P>
<P>(1) In the case of an exception to the approval requirements for the commercial/nonresidential space percentage that HUD establishes under paragraph (d)(6)(vii) of this section, any request for such an exception and the determination of the disposition of such request may be made, at the option of the requester, under the Direct Endorsement Lender Review and Approval process or under the HUD review and approval process through the applicable field office of the Department; and
</P>
<P>(2) In determining whether to allow such an exception, factors relating to the economy for the locality in which the project is located or specific to the project, including the total number of family units in the project, shall be considered. A DELRAP lender, in determining whether to grant a requested exception, shall follow any procedures that HUD may establish.
</P>
<P>(h) <I>Application for Condominium Project approval and Renewal of Approval.</I> (1) In order to become approved, an application for Condominium Project approval, in accordance with the requirements of the Commissioner, must be submitted to either HUD or a DELRAP mortgagee, if consistent with the mortgagee's DELRAP approval.
</P>
<P>(2) The application will be reviewed and if all eligibility criteria have been met, the Condominium Project will be approved and placed on the list of HUD-approved Condominium Projects.
</P>
<P>(3) Unless otherwise specified in writing by HUD, Condominium Projects are approved for a period of 3 years from the date of placement on the list of approved condominiums. HUD may rescind a Condominium Project's approval at any time if the project fails to comply with any requirement for approval.
</P>
<P>(4) Eligible parties may request renewal of the approval of an approved Condominium Project by submitting a request for recertification no earlier than 6 months prior to expiration of the approval or no later than 6 months after expiration of the approval. HUD shall specify the format for the recertification request, which shall allow the request to be supported by updating previously submitted information, rather than resubmission of all information. However, if the request for recertification is not submitted within 6 months after the expiration of the Condominium Project's approval, a complete, new approval application is required.
</P>
<P>(i) <I>Single-Unit Approval</I>—(1) <I>Single-Unit Approvals.</I> Mortgagees must ensure that the Condominium Unit is located in a Condominium Project that meets the eligibility requirements for approval as set forth in paragraph (d) of this section as modified by this paragraph, except that HUD may provide that Single-Unit Approvals may be approved by meeting a subset of these standards, or less stringent standards, as stated by notice. In addition, a unit may be eligible for Single-Unit Approval if it:
</P>
<P>(i) Is not in a Condominium Project that is on the list of FHA-approved Condominium Projects; and
</P>
<P>(ii) Is not in a project that has been identified by HUD as subject to adverse determination for significant issues that affect the viability of the project; and
</P>
<P>(iii) Is in a project that is complete under paragraph (d)(4) of this section;
</P>
<P>(iv) Is not a manufactured home; and
</P>
<P>(v) Is in a project that has at least five (5) dwelling units.
</P>
<P>(2) <I>Limit on Single-Unit Approvals.</I> HUD may suspend the issuance of new FHA case numbers for mortgages in Condominium Projects with Single-Unit Approvals where the number of FHA-insured mortgages exceeds the maximum insurance concentration established by HUD. Such acceptable maximum insurance concentration shall be within a range between 0 to 20 percent of units with FHA-insured mortgages for Condominium Projects with 10 or more units, with the exact percentage within that range to be determined by HUD through notice; or shall not exceed two FHA-insured mortgages for Condominium Projects with fewer than 10 units.
</P>
<P>(j) <I>Site Condominium.</I> Site Condominiums must meet all of the requirements of paragraphs (d)(1) through (d)(5) of this section for approval, except that insurance and maintenance costs of the individual units must be the sole responsibility of the unit owner.
</P>
<CITA TYPE="N">[84 FR 41875, Aug. 15, 2019]


</CITA>
</DIV8>


<DIV8 N="§ 203.43c" NODE="24:2.1.1.2.4.1.83.49" TYPE="SECTION">
<HEAD>§ 203.43c   Eligibility of mortgages involving a dwelling unit in a cooperative housing development.</HEAD>
<P>A mortgage involving a dwelling unit in a cooperative housing development which meets the requirements of this subpart, except as modified by this section, shall be eligible for insurance under section 203(n) of the National Housing Act.
</P>
<P>(a) The provisions of §§ 203.16a, 203.17, 203.18, 203.18a, 203.23, 203.24, 203.26, 203.37, 203.38, 203.43h, 203.43i, 203.43j, 203.44, 203.49, and 203.50 of this part do not apply to mortgages insured under section 203(n) of the National Housing Act.
</P>
<P>(b) As used in connection with the insurance of mortgages under this section and § 203.437 of this part: (1) The term <I>mortgage</I> shall mean a first lien given to secure a loan made to finance the unpaid purchase price of a Corporate Certificate together with the applicable Occupancy Certificate of a cooperative ownership housing corporation in which the permanent occupancy of the dwelling units is restricted to members of such corporation, and may refer both to a security instrument creating a lien, whether called a <I>mortgage, deed of trust, security deed</I> or another term used in a particular jurisdiction, as well as the credit instrument, or note, secured thereby.
</P>
<P>(2) <I>Corporation</I> shall mean an organization which holds title to a cooperative housing development which is covered by a blanket mortgage or mortgages insured by FHA under the National Housing Act.
</P>
<P>(3) <I>Corporate Certificate</I> shall mean such stock certificates, membership certificates, or other instruments which the laws of the jurisdictions in which the cooperative housing development is located require to evidence ownership of a specified interest in the corporation.
</P>
<P>(4) <I>Occupancy Certificate</I> shall mean a written instrument provided by the corporation to each holder of a Corporate Certificate which grants an exclusive right of possession of a specific dwelling unit in the cooperative housing development.
</P>
<P>(5) References in this subpart to a dwelling, residence or property which is sold, conveyed, covered by a mortgage or subject to a lien shall be construed to mean the Corporate Certificate together with the Occupancy Certificate, except that where such references when interpreted in light of section 203(n) of the National Housing Act clearly indicate the intent to be the dwelling unit, such reference shall mean the dwelling unit identified in the Occupancy Certificate. 
</P>
<P>(c) The organizational documents of the cooperative corporation must provide that: (1) Either the Secretary or a mortgagee under a mortgage insured under this section shall be a member of the cooperative corporation for so long as either owns a Corporate Certificate;
</P>
<P>(2) A mortgage insured under this section shall be a first lien upon the property covered by the mortgage;
</P>
<P>(3) The Secretary may exercise the voting rights which are attributable to each Corporate Certificate owned by the Secretary;
</P>
<P>(4) The Secretary may designate as her proxy an agent for the purpose of exercising the voting rights of the Secretary which are attributable to the corporate Certificate or Certificates owned by the Secretary; 
</P>
<P>(5) The Secretary may cease making monthly payments attributable to any dwelling unit for which the Secretary owns a Corporate Certificate six months after the Secretary notifies the corporation to sell the Corporate Certificate or upon default by the corporation on the blanket mortgage covering the dwelling unit;
</P>
<P>(6) The Secretary or a mortgagee shall not be obligated to make payments to the corporation for any amounts unpaid by a mortgagor under a mortgage insured under this section prior to the date the Secretary or the mortgagee becomes the owner of the Corporate Certificate. 
</P>
<P>(d) The corporation shall have entered into an agreement with the Secretary and the mortgagee which: (1) Requires that the corporation shall furnish the Secretary with the most recent annual financial report certified to have been based on generally accepted accounting principles and the most recent monthly or quarterly financial report;
</P>
<P>(2) Waives any option or right of first refusal the corporation may have to purchase any Corporate Certificate covered by a mortgage insured under section 203(n) of the National Housing Act, unless the corporation pays the full amount due under such mortgage or pays the full amount of the Secretary's investment if the Secretary is the owner of the Corporate Certificate, whichever is greater.
</P>
<P>(3) Except with the approval of the Secretary, waives all authority the corporation may have to approve or reject the buyer of a Corporate Certificate owned by the Secretary or the buyer of a Corporate Certificate covered by a mortgage insured under Section 203(n) of the National Housing Act.
</P>
<P>(4) Requires the corporation on notice by the Secretary to act as her agent for a fee to be determined by the Secretary for the limited purposes of:
</P>
<P>(i) Selling all Corporate Certificates of the corporation owned by the Secretary;
</P>
<P>(ii) Renting and collecting rents on any dwelling unit for which the Secretary owns the Corporate Certificate.
</P>
<P>(5) Provides that the Secretary shall not be obligated to make payments to the corporation for outstanding debts of the mortgagor;
</P>
<P>(6) Requires the corporation to furnish to a mortgagee or to the Secretary, on request:
</P>
<P>(i) A statement, certified by the officer charged with maintenance of the Corporate Certificate Transfer Book, that such book currently shows that the mortgagee or the Secretary is the owner of any Corporate Certificate transferred to the mortgagee or the Secretary; and 
</P>
<P>(ii) The Occupancy Certificate in the name of the mortgagee or the Secretary. 
</P>
<P>(7) Requires the corporation to notify the mortgagee, whose name and address has been provided, of any default in corporation fee payments by the mortgagor within 15 days of such default; 
</P>
<P>(8) Requires the mortgagee to notify the corporation of any default in mortgage payments by the mortgagor within 15 days of such default; 
</P>
<P>(9) Requires the corporation upon notice by the Secretary or the mortgagee, when the Secretary or the mortgagee is the owner of the Corporate Certificate, and for a fee to be determined by the Secretary to evict any person or persons from a dwelling unit identified in the Occupancy Certificate. 
</P>
<P>(10) Contains such other provisions as the Secretary may require. 
</P>
<P>(e) The mortgagee shall obtain such security and other undertakings as may be required to establish a first lien on the Corporate Certificate and the Occupancy Certificate under the laws of the State where the Cooperative Housing Development is located. 
</P>
<P>(f) The mortgage involves a one-family dwelling unit in a cooperative housing development which is covered by a blanket mortgage or mortgages insured under the National Housing Act. 
</P>
<P>(g) The mortgage shall not exceed the balance remaining after subtracting, from the amount determined under §§ 203.18(a), 203.18(g) and 203.18a of this part, an amount equal to the portion of the unpaid balance of the blanket mortgage covering the cooperative development which is attributable to the dwelling unit the mortgagor is entitled to occupy as of the date the mortgage is accepted for insurance.
</P>
<P>(h) The mortgage shall be executed upon a form conforming to the applicable provisions of this part and shall: 
</P>
<P>(1) Involve a principal obligation in multiples of $50. 
</P>
<P>(2) Come due on the first of the month. 
</P>
<P>(3) Contain complete amortization provisions satisfactory to the Secretary and an amortization period not in excess of the term of the mortgage.
</P>
<P>(4) Be for a term not to exceed 30 years or the remaining term of the blanket mortgage covering the cooperative development or three-quarters of the remaining economic life of the building improvements, whichever is less. 
</P>
<P>(5) Provide for payments to principal and interest to begin not later than the first day of the month following 60 days from the date the mortgagee's certificate on the commitment was executed. 
</P>
<P>(6) Contain a provision stating that the failure of the mortgagor to pay the mortgagor's share of the common expenses or assessments and charges imposed by the corporation as provided in the instruments establishing the cooperative shall be considered a default. 
</P>
<P>(i) The entire principal amount of the mortgage must have been disbursed to the mortgagor or to his creditors for his account and with his consent. 
</P>
<P>(j) The mortgage must be executed by a mortgagor who intends to be an occupant of the unit.
</P>
<P>(k) The mortgagee shall collect from the mortgagor upon the execution of the mortgage: (1) A sum that will be sufficient to pay the mortgage insurance premium for the period beginning on the date of the closing of the loan and ending on the date of the first monthly payment under the mortgage or (2), where applicable, the one-time mortgage insurance premium payable pursuant to § 203.280.
</P>
<P>(l) The mortgagee shall upon application for a mortgage insurance commitment provide true copies of the following organizational documents of the cooperative corporation for examination and approval by the appropriate HUD Field Office:
</P>
<P>(1) Certificate of Incorporation;
</P>
<P>(2) Regulatory Agreement;
</P>
<P>(3) By-Laws as amended;
</P>
<P>(4) The financial statements required in paragraph (d)(1) of this section;
</P>
<P>(5) Proposed Occupancy Certificate;
</P>
<P>(6) Proposed Corporate Certificate;
</P>
<FP>Provided that one or more of the requirements of this paragraph may be waived by the Secretary if the documents have been approved by the Secretary and the mortgagee submits with the application a statement certified by an officer of the cooperative corporation that no changes have been made in the documents since such approval. 
</FP>
<CITA TYPE="N">[42 FR 40431, Aug. 10, 1977, as amended at 45 FR 29278, May 2, 1980; 45 FR 76377, Nov. 18, 1980; 48 FR 12085, Mar. 23, 1983; 48 FR 28804, June 23, 1983; 49 FR 23584, June 6, 1984; 52 FR 48201, Dec. 21, 1987; 53 FR 8881, Mar. 18, 1988; 53 FR 9869, Mar. 28, 1988; 53 FR 34282, Sept. 6, 1988; 56 FR 24631, May 30, 1991; 58 FR 41002, July 30, 1993] 


</CITA>
</DIV8>


<DIV8 N="§ 203.43d" NODE="24:2.1.1.2.4.1.83.50" TYPE="SECTION">
<HEAD>§ 203.43d   Eligibility of mortgages in certain communities.</HEAD>
<P>Notwithstanding any other requirements of this subpart, a mortgage covering a one- to four-family dwelling occupied by the mortgagor as a principal residence (as defined in § 203.18(f)(1)) is eligible for insurance if the following requirements are met: 
</P>
<P>(a) The property is located in a community where the Secretary determines that:
</P>
<P>(1) Temporary adverse economic conditions exist throughout the community as a direct and primary result of outstanding claims to ownership of land in the community by an American Indian tribe, band, or Nation;
</P>
<P>(2) Such ownership claims are reasonably likely to be settled, by court action or otherwise;
</P>
<P>(3) As a direct result of the community's temporarily impaired economic condition, owners of homes in the community occupied as principal residences (as defined in § 203.18(f)(1)) have been involuntarily unemployed or underemployed and have, thus, incurred substantial reductions in income that significantly impair their ability to continue timely payment of their mortgages; 
</P>
<P>(4) As a result, widespread mortgage foreclosures and distress sales of homes are likely in the community; and 
</P>
<P>(5) Fifty or more individuals were joined as parties defendant or were members of a defendant class prior to December 31, 1976 in litigation involving claims to ownership of land in the community by an American Indian tribe, band or Nation.
</P>
<P>(b) The mortgagor, as a direct result of the community's temporarily impaired economic condition, has been involuntarily unemployed or underemployed and has thus incurred a substantial reduction in income which significantly impairs the owners ability to continue timely payment of the mortgage.
</P>
<P>(c) The mortgagee certifies that the security instrument has been recorded and is a good and valid first lien on the property except for the claims specified in paragraph (a)(1) of this section.
</P>
<P>(d) The mortgagee agrees upon insurance of the mortgage to assign such mortgage to the Secretary within 30 days from the date of the issuance of the insurance certificate and if such assignment does not take place, the contract of insurance is terminated and becomes null and void.
</P>
<P>(e) Any individual, organization, institution or governmental agency shall be considered a mortgagee for the purposes of this section.
</P>
<P>(f) Mortgages complying with the requirements of this section shall be insured under this subpart pursuant to section 203(o) of the National Housing Act. Such mortgages shall be insured under and be the obligation of the Special Risk Insurance Fund.
</P>
<P>(g) The mortgage was executed and filed for record on or before October 12, 1977.
</P>
<CITA TYPE="N">[42 FR 57434, Nov. 2, 1977, as amended at 55 FR 34805, Aug. 24, 1990]


</CITA>
</DIV8>


<DIV8 N="§ 203.43e" NODE="24:2.1.1.2.4.1.83.51" TYPE="SECTION">
<HEAD>§ 203.43e   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 203.43f" NODE="24:2.1.1.2.4.1.83.52" TYPE="SECTION">
<HEAD>§ 203.43f   Eligibility of mortgages covering manufactured homes.</HEAD>
<P>A mortgage covering a one-family manufactured home (as defined in 24 CFR 3280.2(a)(16)) that meets the requirements of this subpart, except as modified by this section, shall be eligible for insurance pursuant to this subpart.
</P>
<P>(a) The manufactured home, when erected on site, shall have floor space area of not less than four hundred square feet and shall have been constructed in conformance with the National Manufactured Home Construction and Safety Standards as evidenced by a certification label affixed thereto in accordance with 24 CFR 3280.8.
</P>
<P>(b) The mortgage shall cover the manufactured home and site, shall constitute a mortgage on a property classified and taxed as real estate, and shall have a term of not more than 30 years from the date of the beginning of amortization. 
</P>
<P>(c) In the case of a manufactured home which has not been permanently erected on a site for more than one year prior to the date of the application for mortgage insurance:
</P>
<P>(i) The manufactured home shall be erected on a site-built permanent foundation that meets or exceeds applicable requirements of the Minimum Property Standards for One- and Two-Family Dwellings, 4900.1 (see 24 CFR 200.929(b)(1)) (MPS) and shall be permanently attached thereto by anchoring devices adequate for all loads identified in the MPS. The towing hitch or running gear, which includes axles, brakes, wheels and other parts of the chassis that operate only during transportation, shall have been removed. The finished grade level beneath the manufactured home shall be at or above the 100-year return frequency flood elevation. The site, site improvements, and all other features of the mortgaged property not addressed by the Manufactured Home Construction and Safety Standards shall meet or exceed applicable requirements of the MPS.
</P>
<P>(ii) The space beneath the manufactured home shall be enclosed by continuous foundation-type construction designed to resist all forces to which it is subject without transmitting forces to the building superstructure. The enclosure shall be adequately secured to the perimeter of the manufactured home and be constructed of materials that conform to MPS requirements for foundations.
</P>
<P>(iii) The manufactured home shall have an overall coefficient of heat transmission (“U<E T="52">o</E>” value) calculated in accordance with the procedures of NFPA 501 BM-1976 (“Mobile Home Heating, Cooling Load Calculations”) that does not exceed the following for all locations within the following climatic zones:
</P>
<LDRWK>
<FL-2>Zone I</FL-2>
<LDRFIG> .145
</LDRFIG>
<FL-2>Zone II</FL-2>
<LDRFIG> .099
</LDRFIG>
<FL-2>Zone III 
<SU>1</SU></FL-2>
<LDRFIG> .087</LDRFIG></LDRWK>
<FP>NFPA
<FTREF/> 501 BM-1976 is incorporated by reference and is issued by and available from the National Fire Protection Association, Batterymarch Park, Quincy, MA 02269.
</FP>
<FTNT>
<P>
<SU>1</SU> Zone III includes Alaska, Montana, Wyoming, North and South Dakota, Minnesota, Wisconsin, Michigan, Maine, New Hampshire, and Vermont.</P></FTNT>
<P>(iv) The manufactured home shall be braced and stiffened before it leaves the factory to resist racking and potential damage during transportation.
</P>
<P>(v) The conditions of § 203.18(a)(2) (i) and (ii) of this subpart shall not apply to construction of the manufactured home but shall be applicable to improvement of the site, including construction of the site-built foundation.
</P>
<P>(vi) Section 203.14 of this subpart is modified to the extent provided in this paragraph. Applications relating to insurance of mortgages under this paragraph (c) must be accompanied by an agreement in form satisfactory to the Commissioner executed by the seller or builder or such other person as the Commissioner may require agreeing that in the event of any sale or conveyance of the dwelling within a period of one year beginning with the date of initial occupancy, the seller, builder, or such other person will at the time of such sale or conveyance deliver to the purchaser or owner of such property the manufacturer's warranty on a form prescribed by the Commissioner, which shall provide that the manufacturer's warranty is in addition to and not in derogation of all other rights and remedies the purchaser or owner may have, and a warranty in form satisfactory to the Commissioner warranting that the manufactured home, the foundation, positioning and anchoring of the manufactured home to its permanent foundation, and all site improvements are constructed in substantial conformity with the plans and specifications (including amendments thereof or changes and variations therein which have been approved in writing by the Commissioner) on which the Commissioner has based his valuation of the dwelling. The warranty shall also include provisions that the manufactured home sustained no hidden damage during transportation, and if the manufactured home is a double-wide, that the sections were properly joined and sealed. Such agreement must provide that upon the sale or conveyance of the dwelling and delivery of the warranty, the seller, builder or such other person will promptly furnish the Commissioner with a conformed copy of the warranty establishing by the purchaser's receipt thereon that the original warranty has been delivered to the purchaser in accordance with this section.
</P>
<P>(d) In the case of a manufactured home which has been permanently erected on a site for more than one year prior to the dae of the application for mortgage insurance:
</P>
<P>(i) The manufactured home shall be permanently anchored to and supported by permanent footings and shall have permanently installed utilities that are protected from freezing. The space beneath the manufactured home shall be a properly enclosed crawl space.
</P>
<P>(ii) The site, site improvements, and all other features of the mortgaged property not addressed by the Manufactured Home Construction and Safety Standards shall meet or exceed applicable requirements of the Requirements for Existing Housing—One to Four Family Living Units (Handbook 4905.1). The finished grade level beneath the manufactured home shall be at or above the 100-year return frequency flood elevation.
</P>
<P>(iii) The manufactured home shall have been occupied only at the location subject to the mortgage sought to be insured.
</P>
<CITA TYPE="N">[48 FR 7735, Feb. 24, 1983, as amended at 61 FR 36264, July 9, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.43g" NODE="24:2.1.1.2.4.1.83.53" TYPE="SECTION">
<HEAD>§ 203.43g   Eligibility of mortgages in certain communities.</HEAD>
<P>(a) A mortgage which meets the requirements of this subpart shall be eligible for insurance without regard to the limitation in this part relating to marketability of title under the following conditions: 
</P>
<P>(1) The mortgagor is to occupy the dwelling as a principal residence (as defined in § 203.18(f)(1)). 
</P>
<P>(2) The defect or potential defect in title is a direct and primary result of outstanding claims to ownership of land in the community by an American Indian tribe, band, group or Nation. 
</P>
<P>(3) Fifty or more individual owners were joined as parties defendant or were members of a defendant class before April 1, 1980 in litigation involving claims to ownership of land in the community in which the property is located by an American Indian tribe, band, group or Nation pursuant to a dispute involving the Articles of Confederation, the Trade and Intercourse Act of 1790 or any similar State or Federal law. 
</P>
<P>(4) Such ownership claims are reasonably likely to be settled by court action or otherwise. 
</P>
<P>(5) Temporary adverse economic conditions exist throughout the community as a direct and primary result of such claims. 
</P>
<P>(b) Mortgages complying with the requirements of this subpart as modified by this section shall be the obligation of the Special Risk Insurance Fund.
</P>
<CITA TYPE="N">[49 FR 21319, May 21, 1984, as amended at 55 FR 34805, Aug. 24, 1990]


</CITA>
</DIV8>


<DIV8 N="§ 203.43h" NODE="24:2.1.1.2.4.1.83.54" TYPE="SECTION">
<HEAD>§ 203.43h   Eligibility of mortgages on Indian land insured pursuant to section 248 of the National Housing Act.</HEAD>
<P>A mortgage covering a one- to four-family residence located on Indian land shall be eligible for insurance pursuant to section 248 of the National Housing Act (12 U.S.C. 1715z-13), notwithstanding otherwise applicable requirements related to marketability of title, if the mortgage meets the requirements of this subpart as modified by this section and is made by an Indian Tribe or on a leasehold estate, by an Indian who will occupy it as a principal residence. Mortgage insurance on cooperative shares is not authorized under this section. 
</P>
<P>(a) <I>Exemptions.</I> (1) The provisions of subparts I, J, and M of part 200, and § 203.30, shall not apply to approval of mortgagors for mortgages insured under this section if the Indian tribe to which the prospective mortgagor belongs is subject to the Indian Civil Rights Act.
</P>
<P>(2) In the case of an Indian tribe which is not subject to the Indian Civil Rights Act, the authorities cited in paragraph (a)(1) of this section shall apply, but any preference in the tribe's approval of the sale or assumption of a lease and mortgage under this section in favor of an eligible Indian over a non-Indian shall not be considered to be a violation of subpart I, J or M.
</P>
<P>(b) <I>Eviction procedures.</I> Before HUD will insure a mortgage on Indian land, the tribe having jurisdiction over such property must certify to the HUD Field Office that it has adopted and will enforce procedures for eviction of defaulted mortgagors where the insured mortgage has been foreclosed. 
</P>
<P>(c) <I>Approval of lease and mortgage.</I> The lease must be on a form prescribed by HUD.
</P>
<P>The mortgage must be on a form which meets the requirements of § 203.17(a)(2). Before HUD will insure any mortgage under this section, the mortgagee must demonstrate that the Bureau of Indian Affairs, U.S. Department of Interior, has approved both the lease and mortgage.
</P>
<P>(d) <I>Construction advances.</I> The Commissioner may issue a commitment for the insurance of advances made during construction and a Direct Endorsement mortgagee may request insurance of a mortgage that will involve the insurance of advances made during construction. The Commissioner will insure advances made by the mortgagee during construction if all of the following conditions are satisfied:
</P>
<P>(1) The mortgage shall be a first lien on the leasehold;
</P>
<P>(2) The mortgagor and the mortgagee execute a building loan agreement, approved by the Commissioner, setting forth the terms and conditions under which advances will be made;
</P>
<P>(3) The advances are made only as provided in the commitment or the approval by the Direct Endorsement underwriter;
</P>
<P>(4) The principal amount of the mortgage is held by the mortgagee in an interest bearing account, trust, or escrow for the benefit of the mortgagor, pending advancement to the mortgagor or to his or her creditors as provided in the loan agreement;
</P>
<P>(5) The mortgage shall bear interest on the amount advanced to the mortgagor or to his or her creditors and on the amount held in an account or trust for the benefit of the mortgagor; and 
</P>
<P>(6) The Secretary had determined that no feasible financing alternative is available.
</P>
<P>(e) <I>Assumption or sale of leasehold.</I> The form of lease must contain a provision requiring tribal consent before any assumption of an existing lease, except where title to the leasehold interest is obtained by the Secretary through foreclosure of the insured mortgage. A mortgagee other than the Secretary must obtain tribal consent before obtaining title through a foreclosure sale. Tribal consent must be obtained on any subsequent transfer from the purchaser, including the Secretary, at foreclosure sale. The lease may not be terminated by the lessor without HUD's approval while the mortgage is insured or held by the Secretary.
</P>
<P>(f) <I>First lien.</I> The first lien requirement under this part is implemented where the mortgage is filed in the State recording system and is a first lien under that system, even though the leasehold interest securing the mortgage is located on Indian land and filed with Bureau of Indian Affairs, U.S. Department of the Interior. Any tribal government whose courts have jurisdiction to hear foreclosures must also:
</P>
<P>(1) Enact a law satisfactory to the Commissioner providing for the satisfaction of FHA-insured and Secretary-held mortgages before other obligations (other than tribal leasehold taxes against the property assessed after the property is mortgaged) are satisfied; or
</P>
<P>(2) Enact a law providing that State law shall determine the priority of liens against the property.
</P>
<P>(g) <I>Definitions.</I> As used in this section and elsewhere in this part, the term:
</P>
<P>(1) <I>Indian</I> means and individual member of any Indian tribe and that member's family.
</P>
<P>(2) <I>Indian land</I> means trust or otherwise restricted land (i) as defined by the Secretary of the Interior, over which an Indian tribe is recognized by the United States as having governmental jurisdiction; (ii) held in trust for the benefit of any Indian tribe or individual or held by any Indian tribe or individual subject to a restriction by the United States against alienation; or (iii) acquired by Alaska natives under the Alaska Native Claims Settlement Act or any other land acquired by Alaska natives pursuant to statute by virtue of their unique status as Alaska natives.
</P>
<P>(3) <I>Indian tribe</I> means any Indian or Alaska native tribe, band, nation, or other organized group or community of Indians or Alaskan natives recognized as eligible for the services provided to Indians or Alaska natives by the Secretary of the Interior because of its status as such an entity, or that is an eligible recipient under chapter 67 of title 31, United States Code. For purposes of engaging in section 248 insured mortgage transactions under this section, an Indian tribe may act through its duly authorized representative. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0340)
</APPRO>
<CITA TYPE="N">[51 FR 21871, June 16, 1986, as amended at 53 FR 34282, Sept. 6, 1988; 57 FR 58347, Dec. 9, 1992; 61 FR 36264, July 9, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.43i" NODE="24:2.1.1.2.4.1.83.55" TYPE="SECTION">
<HEAD>§ 203.43i   Eligibility of mortgages on Hawaiian Home Lands insured pursuant to section 247 of the National Housing Act.</HEAD>
<P>(a) <I>Eligibility.</I> A mortgage on a homestead lease granted by the Department of Hawaiian Home Lands covering a one- to four-family residence located on Hawaiian home lands is eligible for insurance pursuant to section 247 of the National Housing Act (12 U.S.C. 1715z-12) if the mortgagor is a native Hawaiian who will occupy it as a principal residence, and if the mortgage meets the requirements of this subpart as modified by this section. Mortgage insurance on cooperative shares under § 203.43c on homes in federally impacted areas under § 203.43e is not authorized under this section. 
</P>
<P>(b) <I>Exemptions from other regulations.</I> The provisions of subparts I, J, and M of part 200, and § 203.30, to the extent that these provisions would otherwise prohibit preferences in favor of Native Hawaiians in the leasing, sale or other disposition of Hawaiian home lands, do not apply to mortgages insured pursuant to section 247 of the National Housing Act. The first lien requirement contained in § 203.17 also does not apply to mortgages insured pursuant to section 247 of the National Housing Act.
</P>
<P>(c) <I>Definitions.</I> (1) <I>Department of Hawaiian Home Lands</I> (DHHL) is a Department of the State of Hawaii responsible for management of Hawaiian home lands for the benefit of native Hawaiians. 
</P>
<P>(2) Hawaiian home lands means all lands given the status of Hawaiian home lands under section 204 of the Hawaiian Homes Commission Act of 1920 (42 Stat. 110), or under the corresponding provision of the Constitution of the State of Hawaii adopted under section 4 of the Act entitled “An Act to provide for the admission of the State of Hawaii into the Union,” approved March 18, 1959 (73 Stat. 5).
</P>
<P>(3) Native Hawaiian means any descendant of not less than one-half part of the blood of the races inhabiting the Hawaiian islands before January 1, 1778, or, in the case of an individual who is awarded an interest in a lease of Hawaiian home lands through transfer or succession, such lower percentage as may be established for such transfer or succession under section 208 or 209 of the Hawaiian Homes Commission Act of 1920 (42 Stat.111), or under the corresponding provision of the Constitution of the State of Hawaii adopted under section 4 of the Act entitled “An Act to provide for the admission of the State of Hawaii into the Union,” approved March 18, 1959 (73 Stat. 5).
</P>
<P>(d) <I>Conditions for insurance.</I> Mortgages will be eligible for insurance under this section, according to the procedures in §§ 203.5, 203.6, or 203.7 (as applicable), only where the Department of Hawaiian Home Lands: 
</P>
<P>(1) Will be a comortgagor; 
</P>
<P>(2) Guarantees or reimburse the Secretary for any mortgage insurance claim paid in connection with a property on Hawaiian home lands; or 
</P>
<P>(3) Offers other security acceptable to the Secretary. 
</P>
<P>(e) <I>Acceptable security.</I> Any agreement by the Secretary to accept alternative security under paragraph (d)(3) of this section must contain provisions designed to ensure that the insurance of mortgages under this section has a neutral impact on the appropriate insurance funds. These provisions may require the Department of Hawaiian Home Lands to make an initial deposit of funds with HUD and to maintain additional funds in reserve for subsequent deposits with HUD. The initial and subsequent deposits shall be used to pay obligations incurred by HUD in connection with the insurance of mortgages under this section and any associated costs, including refunds of insurance premiums to mortgagors. If the Department of Hawaiian Home Lands agrees to make deposits in amounts acceptable to HUD, then the Secretary may agree to use a portion of the premiums received for insurance of mortgages under this section solely for payment of such obligations and associated costs. 
</P>
<P>(f) <I>Recordation.</I> The mortgagee must certify that the mortgage has been recorded with the Department of Hawaiian Home Lands. 
</P>
<P>(g) <I>Construction advances.</I> Advances made by the mortgagee during construction are eligible for insurance, according to the procedures in §§ 203.5, 203.6, or 203.7 (as applicable), if the Secretary determines that no feasible financing alternative is available and if: 
</P>
<P>(1) The mortgagor and the mortgagee execute a building loan agreement, approved by the Secretary, setting forth the terms and conditions under which advances will be made; 
</P>
<P>(2) The advances are made only as provided in the commitment or the approval by the Direct Endorsement or Lender Insurance underwriter; 
</P>
<P>(3) The principal amount of the mortgage is held by the mortgagee in an interest bearing account, trust, or escrow for the benefit of the mortgagor, pending advancement to the mortgagor or to his or her creditors as provided in the loan agreement; and 
</P>
<P>(4) The mortgage bears interest on the amount advanced to the mortgagor or to his or her creditors and on the amount held in an account or trust for the benefit of the mortgagor.
</P>
<P>(h) <I>Form of lease.</I> The form of lease must be approved by both HUD and the Department of Hawaiian Home Lands (DHHL). The lease may not be terminated by DHHL without the approval of the Secretary while the mortgage is insured or held by the Secretary.
</P>
<P>(i) <I>Eligibility of mortgagor.</I> In addition to the eligibility requirements contained in this subpart, possession of a lease of Hawaiian home lands issued under section 207(a) of the Hawaiian Homes Commission Act of 1920 (42 Stat.110) that has been certified by the Department of Hawaiian Home Lands as being valid, current, and not in default, shall be sufficient to certify eligibility to receive a mortgage to be insured under this section.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0358)
</APPRO>
<CITA TYPE="N">[52 FR 8067, Mar. 16, 1987, and 52 FR 28470, July 30, 1987, as amended at 53 FR 8881, Mar. 18, 1988; 53 FR 34282, Sept. 6, 1988; 57 FR 58347, Dec. 9, 1992; 61 FR 36264, July 9, 1996; 62 FR 30226, June 2, 1997; 69 FR 33525, June 15, 2004]


</CITA>
</DIV8>


<DIV8 N="§ 203.43j" NODE="24:2.1.1.2.4.1.83.56" TYPE="SECTION">
<HEAD>§ 203.43j   Eligibility of mortgages on Allegany Reservation of Seneca Nation of Indians.</HEAD>
<P>A mortgage on a leasehold estate covering a one- to four-family residence located on the Allegany Reservation of the Seneca Nation of Indians in the State of New York is eligible for insurance if the mortgage meets the requirements of this subpart as modified by this section. 
</P>
<P>(a) <I>Title.</I> This section applies only to a mortgage which: 
</P>
<P>(1) Does not meet the requirements of § 203.37; 
</P>
<P>(2) Is on a leasehold under a lease with a termination date in February 1991, which provides for renewal in accordance with the Act of February 19, 1875 (18 Stat. 330) and the Act of September 30, 1890 (26 Stat. 558).
</P>
<FP>A mortgage may not be on a leasehold created by a lease which is executed after the effective date of this section as a renewal or replacement of a lease described in paragraph (a)(2) of this section. A mortgage may not be secured by any other right of occupancy created in lieu of a leasehold after the effective date of this section by agreement of the Seneca Nation, court order, law or any other means. 
</FP>
<P>(b) <I>Provisions of mortgage.</I> The Secretary will prescribe special mortgage provisions in the form of a mortgage rider in order better to secure the mortgagee, including: 
</P>
<P>(1) Authorization for the mortgagee to exercise the option of lease renewal if the mortgagor fails to do so, and to recover from the mortgagor authorized expenses incurred to obtain lease renewal; and 
</P>
<P>(2) Making a mortgagor failure to take steps necessary for less renewal an event of default under the mortgage.
</P>
<P>(c) <I>Secretary agreement with mortgagor.</I> The mortgagor must enter into an agreement with the Secretary and such other parties as the Secretary may require regarding actions to be taken to obtain either a renewal of the lease or a new lease. 
</P>
<P>(d) <I>Certification.</I> The borrower must certify that it has received disclosures, in a form prescribed by the Secretary, explaining the status of the lease and the consequences of nonrenewal. The disclosure shall include a discussion of the fact that a mortgagor who does not obtain a lease renewal and loses the right of occupancy will remain liable for the outstanding balance of the mortgage. 
</P>
<P>(e) <I>Purchase for principal residence.</I> The mortgagor must be a purchaser who intends to occupy the property as a principal residence (as defined in § 203.18(f)(1)), or a current owner-occupant refinancing a mortgage which is now due or which will become due before the lease termination date in February 1991. 
</P>
<P>(f) <I>Relationship of income to housing expense.</I> For purposes of § 203.33(a), the total prospective housing expense shall include the Secretary's estimate of future lease payments during the term of the mortgage rather than lease payments in effect at the time of application. 
</P>
<P>(g) <I>Suspension of commitments.</I> The Secretary may suspend the issuance of commitments to insure mortgages under this section, for the entire period during which commitments could otherwise be issued for insurance under this section (i.e., through February 18, 1991) or for such lesser period as the Secretary may specify, by providing thirty days notice of suspension in the <E T="04">Federal Register.</E> Regardless of its duration, a suspension to be imposed prior to February 19, 1990, will be based on a determination by the Secretary that, for mortgages insured during a specified period, the rate of monetary defaults (as measured by 90 day delinquencies) for mortgages insured under this section exceeds the rate of such monetary defaults for all insured mortgages on one- to four-family properties in the State of New York. A suspension to be imposed after February 18, 1990, will be based on a consideration by the Secretary of the probable costs to the Special Risk Insurance Fund of further commitments to insure under this section, as measured by such factors as the current and projected rate and amount of claims payments, together with other significant current and projected costs as determined by the Secretary, including a review of the actual and projected monetary default rate (as measured by 90 day delinquencies) and the actual and projected rate of lease renewal through negotiation and arbitration. 
</P>
<CITA TYPE="N">[52 FR 48201, Dec. 21, 1987, and 53 FR 9869, Mar. 28, 1988, as amended at 54 FR 32970, Aug. 11, 1989; 55 FR 34805, Aug. 24, 1990]


</CITA>
</DIV8>


<DIV8 N="§ 203.44" NODE="24:2.1.1.2.4.1.83.57" TYPE="SECTION">
<HEAD>§ 203.44   Eligibility of advances.</HEAD>
<P>Mortgagees may not make open-end advances under section 225 of the National Housing Act (12 U.S.C. 1715p) in connection with the mortgages insured under this chapter. 
</P>
<CITA TYPE="N">[61 FR 36264, July 9, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.45" NODE="24:2.1.1.2.4.1.83.58" TYPE="SECTION">
<HEAD>§ 203.45   Eligibility of graduated payment mortgages.</HEAD>
<P>A mortgage containing provisions for varying rates of amortization corresponding to anticipated variations in family income shall be eligible for insurance under this subpart subject to compliance with the additional requirements of this section. 
</P>
<P>(a) The mortgage may provide that any interest which accrues and which is unpaid pursuant to a financing plan approved by the Secretary, shall be added to the principal obligation of the mortgage. 
</P>
<P>(b) The mortgage shall bear interest at the rate agreed upon by the mortgagee and the mortgagor.
</P>
<P>(c) The mortgage amount shall not exceed the lesser of:
</P>
<P>(1) The limits prescribed by §§ 203.18, 203.18a, and 203.29; or,
</P>
<P>(2) An amount which, when added to all accrued mortgage interest which will be unpaid under a financing plan approved by the Secretary, shall not exceed 97 percent of the appraised value of the property covered by the mortgage as of the date the mortgage is accepted for insurance. However, if the mortgagor is a veteran, the mortgage amount, when added to all accrued mortgage interest which will be unpaid under a financing plan approved by the Secretary, shall not exceed the applicable limits prescribed for veterans in § 203.18(a).
</P>
<P>(d) The mortgage must contain complete amortization provisions satisfactory to the Secretary requiring monthly payments by the mortgagor not in excess of his reasonable ability to pay as determined by the Secretary. The sum of the payments to principal and/or interest may increase annually for a period of five years at a rate of 2
<FR>1/2</FR> percent, 5 percent or 7
<FR>1/2</FR> percent or for a period of ten years at a rate of 2 percent or 3 percent. Any required increase in payments shall occur on the anniversary date of the beginning of amortization. On the termination of the period of annual increases of payments, the sum of the payments to principal and interest in each month shall be substantially the same. 
</P>
<P>(e) The mortgagee shall fully explain to the mortgagor the nature of the obligation undertaken and the mortgagor shall certify that he or she fully understands the obligation. 
</P>
<P>(f) Sections 203.21 and 203.44 shall not apply to this section.
</P>
<P>(g) This section applies only to mortgagors who are to occupy the dwelling as a principal residence (as defined in § 203.18(f)(1)). It does not apply to a mortgage that meets the requirements of §§ 203.18(a)(4), 203.18 (c) through (e), 203.43, 203.43a, 203.43j, or 203.49. 
</P>
<P>(h) Mortgages complying with the requirements of this section shall be insured under this subpart pursuant to section 245 of the National Housing Act. 
</P>
<CITA TYPE="N">[41 FR 42949, Sept. 29, 1976, as amended at 45 FR 33966, May 21, 1980; 45 FR 56341, Aug. 24, 1980; 49 FR 19453, 19458, May 8, 1984; 49 FR 23584, June 6, 1984; 52 FR 48201, Dec. 21, 1987; 53 FR 8881, Mar. 18, 1988; 53 FR 9869, Mar. 28, 1988; 55 FR 34805, Aug. 24, 1990; 58 FR 41003, July 30, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 203.47" NODE="24:2.1.1.2.4.1.83.59" TYPE="SECTION">
<HEAD>§ 203.47   Eligibility of growing equity mortgages.</HEAD>
<P>A mortgage containing provisions for accelerated amortization corresponding to anticipated variations in family income shall be eligible for insurance under this subpart, subject to compliance with the additional requirements of this section.
</P>
<P>(a) The mortgage must contain complete amortization provisions, satisfactory to the Secretary, requiring monthly payments by the mortgagor not in excess of the mortgagor's reasonable ability to pay, as determined by the Secretary.
</P>
<P>(b) The mortgage must contain a provision setting forth the payments required for principal and interest in each year of the mortgage.
</P>
<P>(c) The monthly payments for principal and interest for the initial year, or such other initial period as the commissioner may approve, shall be determined on the basis of a 30-year level payment amortization schedule. Subsequent monthly payments for principal and interest may increase annually, biennially or at such other interval that is greater than one year, as the Commissioner may approve. The subsequent periodic increases may be up to five percent above the payments for principal and interest for the previous period.
</P>
<P>(d) No later than at the time that a loan application is offered to a prospective mortgagor, the mortgagee shall explain fully to the mortgagor the nature of the obligation undertaken and the mortgagor shall certify that he or she fully understands the obligation.
</P>
<P>(e) The mortgage amount shall not exceed the limits prescribed by § 203.18, 203.18a, or 203.29.
</P>
<P>(f) Sections 203.21 and 203.44 shall not apply to this section.
</P>
<P>(g) This section shall not apply to a mortgage which meets the requirements of § 203.43, § 203.43a, or § 203.49. 
</P>
<P>(h) Mortgages complying with the requirements of this section shall be insured under this subpart pursuant to section 245(a) of the National Housing Act.
</P>
<CITA TYPE="N">[49 FR 19453, May 8, 1984, as amended at 49 FR 23584, June 6, 1984; 53 FR 8881, Mar. 18, 1988; 58 FR 41003, July 30, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 203.49" NODE="24:2.1.1.2.4.1.83.60" TYPE="SECTION">
<HEAD>§ 203.49   Eligibility of adjustable rate mortgages.</HEAD>
<P>A mortgage containing the provisions for periodic adjustments by the mortgagee in the effective rate of interest charged shall be eligible for insurance under this subpart subject to compliance with the additional requirements of this section. This section shall apply only to mortgage loans described under sections 203(b), 203(h) and 203(k) of the National Housing Act. 
</P>
<P>(a) <I>Types of mortgages insurable.</I> The types of adjustable rate mortgages that are insurable are those for which the interest rate may be adjusted annually by the mortgagee, beginning after one, three, five, seven, or ten years from the date of the mortgagor's first debt service payment.
</P>
<P>(b) <I>Interest-rate index</I>—(1) <I>CMT and SOFR indices.</I> Changes in the interest rate charged on an adjustable rate mortgage must correspond either to changes in the weekly average yield on U.S. Treasury securities, adjusted to a constant maturity of one year (CMT); to the 30-day average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York (or a successor administrator); or to an alternative SOFR tenor approved by the Secretary. The Secretary may publish approved SOFR tenors as alternatives to the 30-day average SOFR tenor through notice.
</P>
<P>(2) <I>Transition for existing mortgages indexed to LIBOR.</I> Mortgages with an existing adjustable interest rate indexed to the London Interbank Offered Rate (LIBOR) must be transitioned to the spread-adjusted SOFR replacement index approved by the Secretary by the next interest rate adjustment date for the mortgage on or after the Replacement Date, which means the first London banking day after June 30, 2023, unless the Board of Governors of the Federal Reserve System determines that any LIBOR tenor will cease to be published or cease to be representative on a different date. In such case, Replacement Date means the first business day following the date announced by the Board of Governors of the Federal Reserve System. Notice of the transition to the SOFR replacement index must be sent to the borrower in accordance with the mortgage documents. The Secretary will publish through Mortgagee Letter any additional requirements for the transition of existing mortgages.
</P>
<P>(3) <I>Changes in the mortgage interest rate.</I> Except as otherwise provided in this section, each change in the mortgage interest rate must correspond to the upward and downward change in the index.
</P>
<P>(c) <I>Amortization provisions.</I> The mortgage must contain amortization provisions satisfactory to the Secretary, allowing for periodic adjustments in the rate of interest charged corresponding to changes in the interest rate index.
</P>
<P>(d) <I>Frequency of interest rate changes.</I> (1) The interest rate adjustments must occur annually, calculated from the date of the mortgagor's first debt service payment, except that, for these types of mortgages, the first adjustment shall be no sooner or later than the following:
</P>
<P>(i) One-year adjustable rate mortgages—no sooner than 12 months or later than 18 months;
</P>
<P>(ii) Three-year adjustable rate mortgages—no sooner than 36 months or later than 42 months;
</P>
<P>(iii) Five-year adjustable rate mortgages—no sooner than 60 months or later than 66 months;
</P>
<P>(iv) Seven-year adjustable rate mortgages—no sooner than 84 months or later than 90 months; and
</P>
<P>(v) Ten-year adjustable rate mortgages—no sooner than 120 months or later than 126 months.
</P>
<P>(2) To set the new interest rate, the mortgagee will determine the change between the initial (<I>i.e.,</I> base) index figure and the current index figure, or will add a specific margin to the current index figure. The initial index figure shall be the most recent figure available before the date of mortgage loan origination. The current index figure shall be the most recent index figure available 30 days before the date of each interest rate adjustment, except that for forward mortgages originated on or after January 10, 2015, 30 days shall mean 45 days.
</P>
<P>(e) <I>Method of rate changes.</I> Interest rate changes may only be implemented through adjustments to the mortgagor's monthly payments. 
</P>
<P>(f) <I>Magnitude of changes.</I> The adjustable rate mortgage initial contract interest rate shall be agreed upon by the mortgagee and the mortgagor. The first adjustment to the contract interest rate shall take place in accordance with the schedule set forth under paragraph (d) of this section. Thereafter, for all adjustable rate mortgages, the adjustment shall be made annually and shall occur on the anniversary date of the first adjustment, subject to the following conditions and limitations:
</P>
<P>(1) For one- and three-year adjustable rate mortgages, no single adjustment to the interest rate shall result in a change in either direction of more than one percentage point from the interest rate in effect for the period immediately preceding that adjustment. Index changes in excess of one percentage point may not be carried over for inclusion in an adjustment for a subsequent year. Adjustments in the effective rate of interest over the entire term of the mortgage may not result in a change in either direction of more than five percentage points from the initial contract interest rate.
</P>
<P>(2) For five-, seven-, and ten-year adjustable rate mortgages, no single adjustment to the interest rate shall result in a change in either direction of more than two percentage points from the interest rate in effect for the period immediately preceding that adjustment. Index changes in excess of two percentage points may not be carried over for inclusion in an adjustment in a subsequent year. Adjustments in the effective rate of interest over the entire term of the mortgage may not result in a change in either direction of more than six percentage points from the initial contract rate.
</P>
<P>(3) At each adjustment date, changes in the index interest rate, whether increases or decreases, must be translated into the adjusted mortgage interest rate, except that the mortgage may provide for minimum interest rate change limitations and for minimum increments of interest rate changes.
</P>
<P>(g) <I>Pre-Loan Disclosure.</I> The mortgagee is required to make available to the mortgagor, at the time of loan application, a written explanation of the features of an adjustable rate mortgage consistent with the disclosure requirements applicable to variable rate mortgages secured by a principal dwelling under the Truth in Lending Act, 15 U.S.C. 1601 <I>et seq.</I>
</P>
<P>(h) <I>Disclosures.</I> The mortgagee of an adjustable rate mortgage shall provide mortgagors with the disclosures in the timing, content, and format required by the regulations implementing the Truth in Lending Act (15 U.S.C. 1601 <I>et seq.</I>) at 12 CFR 1026.20(c) and (d).
</P>
<P>(i) <I>Cross-reference.</I> Sections 203.21 (level payment amortization provisions) and 203.44 (open-end advances) do not apply to this section. This section does not apply to a mortgage that meets the requirements of §§ 203.18(a)(4) (mortgagors of secondary residences), 203.18(c) (eligible non-occupant mortgagors), 203.18(d) (outlying area properties), 203.43 (miscellaneous type mortgages), 203.43c (mortgages involving a dwelling unit in a cooperative housing development), 203.43d (mortgages in certain communities), 203.43e (mortgages covering houses in federally impacted areas), 203.45 (graduated payment mortgages), or 203.47 (growing equity mortgages).
</P>
<P>(j) <I>Aggregate amount of mortgages insured.</I> The aggregate number of adjustable rate mortgages insured pursuant to this section and 24 CFR part 234 in any fiscal year may not exceed 30 percent of the aggregate number of mortgages and loans insured by the Secretary under Title II of the National Housing Act during the preceding fiscal year.
</P>
<P>(k) <I>Insurance authority.</I> Mortgages complying with the requirements of this section shall be insured under this subpart pursuant to section 251 of the National Housing Act.
</P>
<CITA TYPE="N">[49 FR 23584, June 6, 1984, as amended at 53 FR 8881, Mar. 18, 1988; 54 FR 111, Jan. 4, 1989; 55 FR 34805, Aug. 24, 1990; 61 FR 36264, July 9, 1996; 69 FR 11501, Mar. 10, 2004; 70 FR 16082, Mar. 29, 2005; 72 FR 40050, July 20, 2007; 79 FR 50840, Aug. 26, 2014; 88 FR 12828, Mar. 1, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 203.50" NODE="24:2.1.1.2.4.1.83.61" TYPE="SECTION">
<HEAD>§ 203.50   Eligibility of rehabilitation loans.</HEAD>
<P>A rehabilitation loan which meets the requirements of this subpart, except as modified by this section, shall be eligible for insurance under section 203(k) of the National Housing Act. 
</P>
<P>(a) For the purpose of this section:
</P>
<P>(1) The term <I>rehabilitation loan</I> means a loan, advance of credit, or purchase of an obligation representing a loan or advancement of credit, made for the purpose of financing:
</P>
<P>(i) The rehabilitation of an existing one-to-four-unit structure which will be used primarily for residential purposes;
</P>
<P>(ii) The rehabilitation of such a structure and refinancing of the outstanding indebtedness on such structure and the real property on which the structure is located;
</P>
<P>(iii) The rehabilitation of such a structure and the purchase of the structure and the real property on which it is located; or
</P>
<P>(iv) The rehabilitation of the interior space of a condominium unit, as defined in § 203.43b, excluding any areas that are the responsibility of the Association; and 
</P>
<P>(2) The term <I>rehabilitation</I> means the improvement (including improvements designed to meet cost-effective energy conservation standards prescribed by the Secretary and improvements for accessibility to the handicapped) or repair of a structure, or facilities in connection with a structure, and may include the provision of such sanitary or other facilities as are required by applicable codes, a community development plan, or a statewide property insurance plan to be provided by the owner or tenant of the project. 
</P>
<P>(b) The provisions of § 203.18 (except as otherwise provided in paragraphs (f) (1) and (2) of this section) and § 203.43c shall not apply to loans insured under this section. 
</P>
<P>(c) The loan shall cover a dwelling which was completed more than one year preceding the date of the application for mortgage insurance and which was approved for mortgage insurance prior to the beginning of rehabilitation. 
</P>
<P>(d)(1) The buildings on the mortgaged property must, upon completion of rehabilitation, conform with standards prescribed by the Secretary. 
</P>
<P>(2) Improvements or repairs made under this section must be designed to meet cost-effective energy conservation standards prescribed by the Secretary. 
</P>
<P>(e) The loan transaction shall be an acceptable risk as determined by the Commissioner. 
</P>
<P>(f) The loan may not exceed an amount which, when added to any outstanding indebtedness of the borrower that is secured by the property, creates an outstanding indebtedness in excess of the lesser of:
</P>
<P>(1)(i) The limits prescribed in § 203.18(a)(1) and (3) (in the case of a dwelling to be occupied as a principal residence, as defined in § 203.18(f)(1));
</P>
<P>(ii) The limits prescribed in § 203.18(a)(1) and (4) (in the case of a dwelling to be occupied as a secondary residence, as defined in § 203.18(f)(2));
</P>
<P>(iii) Eighty-five (85) percent of the limits prescribed in § 203.18(c), or such higher limit, not to exceed the limits set forth in § 203.18(a)(1) and (3), as the Secretary may prescribe (in the case of an eligible non-occupant mortgagor as defined in § 203.18(f)(3));
</P>
<P>(iv) The limits prescribed in § 203.18a, based upon the sum of the estimated cost of rehabilitation and the Commissioner's estimate of the value of the property before rehabilitation;
</P>
<P>(2) The limits prescribed in the authorities listed in this paragraph (f), based upon 110 percent of the Commissioner's estimate of the value of the property after rehabilitation; or
</P>
<P>(3) For any Condominium Unit that is not a Site Condominium (as defined in § 203.43b), 100 percent of the after-improvement value of the Condominium Unit. 
</P>
<P>(g) The loan limitation prescribed by paragraph (f)(2) of this section shall not be applicable where a unit of local government demonstrates to the satisfaction of the Commissioner that: 
</P>
<P>(1) The property is located within an area which is subject to a community sponsored program of concentrated redevelopment or revitalization, and, 
</P>
<P>(2) The loan limitation prescribed by paragraph (f)(2) of this section, prevents the utilization of the program to accomplish rehabilitation in the subject area, and, 
</P>
<P>(3) The interests of the mortgagor and the Commissioner are adequately protected. 
</P>
<P>(h) Insurance may be available for advances made during rehabilitation or upon completion of rehabilitation, according to the procedures in § 203.5, 203.6, or 203.7 (as applicable). 
</P>
<P>(i) Rehabilitation loans which do not involve the insurance of advances, the refinancing of outstanding indebtedness or the purchase of the property need not be a first lien on the property but shall not be junior to any lien other than a first mortgage. The provisions of §§ 203.15, 203.19, 203.23, 203.24, 203.26, and 203.43j shall not be applicable to such loans. 
</P>
<P>(j) The Commissioner may insure advances made by the mortgagee during rehabilitation if the following conditions are satisfied: 
</P>
<P>(1) The mortgage shall be a first lien on the property. 
</P>
<P>(2) The mortgagor and the mortgagee shall execute a rehabilitation loan agreement, approved by the Commissioner, setting forth the terms and conditions under which advances will be made. 
</P>
<P>(3) The advances shall be made as provided in the reliabilitation loan agreement. 
</P>
<P>(4) The principal amount of the mortgage shall be held by the mortgagee in an interest bearing account, trust, or escrow for the benefit of the mortgagor pending advancement to the mortgagor or his creditors as provided in the rehabilitation loan agreement. 
</P>
<P>(5) The loan shall bear interest at the rate prescribed in § 203.20 on the amount advanced to the mortgagor or its creditors, and the amount held in an account or trust for the benefit of the mortgagor. 
</P>
<P>(6) If paragraph (k) of this section applies, the rehabilitation loan agreement shall restrict advancement to the mortgagor, or to creditors other than the mortgagee, so that any loan proceeds in excess of the 85 percent set forth in paragraph (f)(1)(iii) of this section shall not be advanced until the property is sold to a purchaser described in paragraph (k)(2) of this section. 
</P>
<P>(k) In the case of a dwelling (1) to be occupied neither as a principal residence nor as a secondary residence and (2) where the loan is approved for a limit higher than the 85 percent set forth in paragraph (f)(1)(iii) of this section, the eligible non-occupant mortgagor (as defined in § 203.18(f)(3)) shall certify to the Commissioner that: 
</P>
<P>(1) The mortgagor will not rent (except for a rental term of not less than 30 days and not more than 60 days), sell (except where the insured mortgage is paid in full as an incident of the sale), or occupy the property before a due date approved by the Commissioner, except with the prior written approval of the Commissioner; 
</P>
<P>(2) The mortgagor agrees that, if the property is not sold before a due date approved by the Commissioner to a purchaser, acceptable to the Commissioner, who will occupy the property, assume personal liability, and agree to pay the mortgage indebtedness, any amount held in escrow, trust, or special account under paragraph (j) of this section will be applied in reduction of the outstanding principal amount of the mortgage as of the due date approved by the Commissioner; 
</P>
<P>(3) The mortgagee agrees that any portion of the fund held in escrow, trust, or special account, not applied to the mortgage in accordance with the provisions of this paragraph (k), shall be deducted from the amount of the insurance benefits to which the mortgagee would otherwise be entitled if a claim for insurance benefits is filed. 
</P>
<P>(l) <I>Rehabilitation loan consultants.</I> HUD maintains a list of qualified consultants, in accordance with §§ 200.190 through 200.193 of this title. When the borrower elects to use the services of a consultant, the lender must select a consultant on the list to perform one or more of the following tasks: 
</P>
<P>(1) Conduct a preliminary feasibility analysis before or after the submission of a sales contract; 
</P>
<P>(2) Prepare the cost estimate, work write-up, and architectural exhibits required for the rehabilitation of the property; 
</P>
<P>(3) Conduct a plan review; and 
</P>
<P>(4) Conduct the draw inspections for the release of funds during the construction phase of the project.
</P>
<P>(m) With regard to loans under this section executed on or after December 27, 2005, the Commissioner shall charge an up-front and annual MIP in accordance with 24 CFR 203.284 or 203.285, whichever is applicable.
</P>
<CITA TYPE="N">[45 FR 33966, May 21, 1980, as amended at 45 FR 76378, Nov. 18, 1980; 50 FR 19926, May 13, 1985; 52 FR 48201, Dec. 21, 1987; 53 FR 8881, Mar. 18, 1988; 53 FR 9869, Mar. 28, 1988; 55 FR 34806, Aug. 24, 1990; 57 FR 58347, Dec. 9, 1992; 58 FR 41003, July 30, 1993; 59 FR 13882, Mar. 24, 1994; 62 FR 30226, June 2, 1997; 67 FR 52381, Aug. 9, 2002; 70 FR 37156, June 28, 2005; 83 FR 64272, Dec. 14, 2018; 84 FR 41877, Aug. 15, 2019]


</CITA>
</DIV8>


<DIV8 N="§ 203.51" NODE="24:2.1.1.2.4.1.83.62" TYPE="SECTION">
<HEAD>§ 203.51   Applicability.</HEAD>
<P>The provisions of §§ 203.18 (a), (c), (d), (e)(1), and (f); § 203.29(c); § 203.31; § 203.43(c); 203.43(k); § 203.43c(g); § 203.43d(a), § 203.43g(a)(1); § 203.43j(e); § 203.45(g); § 203.49(h); § 203.50(f); and § 203.50(k) of this subpart apply to mortgages insured: 
</P>
<P>(1) Pursuant to a conditional commitment or master conditional commitment issued on or after September 24, 1990; or 
</P>
<P>(2) In accordance with the Direct Endorsement program, if the underwriter of the mortgagee signs the appraisal report or master appraisal report for the property on or after September 24, 1990; or
</P>
<P>(3) Pursuant to a certificate of reasonable value or master certificate of reasonable value issued by the Department of Veterans Affairs on or after September 24, 1990.
</P>
<CITA TYPE="N">[55 FR 34806, Aug. 24, 1990, as amended at 57 FR 58347, Dec. 9, 1992; 61 FR 36453, July 10, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.52" NODE="24:2.1.1.2.4.1.83.63" TYPE="SECTION">
<HEAD>§ 203.52   Acceptance of individual residential water purification equipment.</HEAD>
<P>If a property otherwise eligible for insurance under this part does not have access to a continuing supply of safe and potable water without the use of a water purification system, the requirements of this section must be complied with as a condition to acceptance of the mortgage for insurance. The mortgagee must provide appropriate documentation with the submission for insurance endorsement to address each of the requirements of this section.
</P>
<P>(a) <I>Equipment.</I> Water purification equipment must be approved by a nationally recognized testing laboratory acceptable to the local or state health authority.
</P>
<P>(b) <I>Certification by local (or state) health authority.</I> A local (or state) health authority certification must be submitted to HUD which certifies that:
</P>
<P>(1) A point-of-entry or point-of-use water purification system is currently in operation on the property. If the system in operation employs point-of-use equipment, the purification system must be employed on each water supply source (faucet) serving the property. Where point-of-entry systems are used, separate water supply systems carrying untreated water for flushing toilets may be constructed.
</P>
<P>(2) The system is sufficient to assure an uninterrupted supply of safe and potable water adequate to meet household needs.
</P>
<P>(3) The water supply, when treated by the equipment, meets the requirements of the local (or state) health authority, and has been determined to meet local or state quality standards for drinking water. If neither state nor local standards are applicable, then quality shall be determined in accordance with standards set by the Environmental Protection Agency (EPA) pursuant to the Safe Drinking Water Act. (EPA standards are prescribed in the National Primary Drinking Water requirements, 40 CFR parts 141 and 142.) 
</P>
<P>(4) There exists a Plan providing for the monitoring, servicing, maintenance, and replacement of the water equipment, which Plan meets the requirements of paragraph (f) of this section.
</P>
<P>(c) <I>Mortgagor notice and certification.</I> (1) The prospective mortgagor must have received written notification, before the mortgagor signed a sales contract, that the property has a hazardous water supply that requires treatment in order to remain safe and acceptable for human consumption. The notification to the mortgagor must identify specific contaminants in the water supply serving the property, and the related health hazard arising from the presence of those contaminants.
</P>
<P>(2) The mortgagor must have received, with the notification described in paragraph (c)(1) of this section, a written good faith estimate of the maintenance and replacement costs of the equipment necessary to assure continuing safe drinking water. 
</P>
<P>(3) A copy of the notification statement (including cost estimates), dated before the date of the sales contract, and signed by the prospective mortgagor to acknowledge its receipt, must accompany the submission for insurance endorsement. If a sales contract is signed in advance of the disclosure required by this paragraph, another sales contract must be executed after the information is provided to the prospective mortgagor and he or she has acknowledged receipt of the disclosure.
</P>
<P>(4) The prospective mortgagor must sign a certification, substantially in the form set out in this paragraph (c)(4), at the time the application for mortgage credit approval is signed. This certification must be submitted to HUD:
</P>
<EXTRACT>
<P>Mortgagor's Certificate. I hereby acknowledge and understand that the home I am purchasing has a water purification system which I am responsible for maintaining.
</P>
<P>I understand that the individual water supply is unsafe for consumption unless the system is operating properly. I am aware that if I do not properly maintain the system, the water supply will not be purified or treated properly, thereby rendering the water supply unsafe for consumption.
</P>
<P>I also understand that the Department of Housing and Urban Development does not warrant the condition of the property, will not give me any money for repairs to the water purification system, and has relied upon the local (or state) health authority to assure that the water supply, when processed by properly maintained equipment, is acceptable for human use and consumption.
</P>
<FP-DASH>
</FP-DASH>
<FP>[Mortgagor's signature and date]</FP></EXTRACT>
<P>(d) <I>Service contract.</I> Before mortgage closing, the mortgagor must enter into a service contract with an organization or individual specifically approved by the local (or state) health authority to carry out the provisions of the required Plan for servicing, maintenance, repair and replacement of the water purification equipment. A copy of the signed service contract must be provided to HUD.
</P>
<P>(e) <I>Escrow for maintenance and replacement.</I> The mortgagee must establish and maintain an escrow account which provides for the accumulation of funds paid with the mortgagor's monthly mortgage payment adequate to assure proper servicing, maintenance, repair and replacement of the water purification equipment. The amount to be collected and escrowed by the mortgagee shall be based upon information provided by the manufacturer for the maintenance and replacement of the water purification equipment and for other charges anticipated by the service contractor. The initial monthly escrow amount shall be stated in the Plan. Disbursements from the account will be limited to costs associated with the normal servicing, maintenance, repair or replacement of the water purification equipment. Disbursements may only be made to the service contractor or its successor, to equipment suppliers, to the local (or state) health authority for the performance of testing or other required services, or to another entity approved by the health authority. So long as water purification remains necessary and the mortgage is insured by HUD, the mortgagee must maintain the escrow account.
</P>
<P>(f) <I>Approved Plan.</I> A Plan, in the form of a contract entered into by the mortgagor and mortgagee and approved by the local (or state) health authority, must set out conditions that must be met by the parties as a condition to insurance of the mortgage by HUD. To be approved by the health authority:
</P>
<P>(1) The Plan must set forth the respective responsibilities to be assumed by the mortgagor and the mortgagee, as well as the other entities who will implement the Plan, i.e., the health authority and the service contractor. In particular:
</P>
<P>(i) The Plan must set out the responsibilities of the health authority for monitoring and enforcing performance of the service contractor, including any successor contractor that the health authority may later have occasion to name. By its approval of the Plan, the health authority documents its acceptance of these responsibilities, and the Plan should so indicate;
</P>
<P>(ii) The Plan must provide for the monitoring of the operation of the water purification equipment, as well as for servicing (including disinfecting), and for repairing and replacing the system, as frequently as necessary, taking into consideration the system's design, anticipated use, and the type and level of contaminants present. Installation, servicing, repair and replacement of the water purification system must be performed by an individual or organization approved for the purpose by the local (or state) health authority and identified in the Plan. In meeting the requirements of paragraph (f)(1)(ii) of this section, the Plan may incorporate by reference specific terms and conditions of the service contract required under paragraph (d) of this section.
</P>
<P>(iii) Under the Plan, responsibility for monitoring the performance of the service contractor and for assuring that the water purification system is properly serviced, repaired, and replaced rests with the local (or state) health authority that has given its approval to the Plan. The Plan must confer on the health authority all powers necessary to effect compliance by the service contractor. The health authority's powers shall include the authority to notify the mortgagor of any noncompliance by the service contractor. The plan must provide that, upon any notification of noncompliance received from the health authority, the mortgagor shall have the right to discharge the service contractor for cause and to appoint a successor organization or individual as service contractor; and
</P>
<P>(iv) The Plan must provide for the mortgagor to make periodic escrow payments necessary for the servicing, maintenance, repair and replacement of the water purification system, and for the mortgagee to disburse funds from the escrow account as required, to the appropriate party or parties.
</P>
<P>(2) The Plan must provide that if the dwelling served by the water purification system is refinanced, or is sold or otherwise transferred with a HUD-insured mortgage, the Plan will:
</P>
<P>(i) Continue in full force and effect;
</P>
<P>(ii) Impose an obligation on the mortgagor to notify any subsequent purchaser or transferee of the necessity for the water purification system and for its proper maintenance, and of the obligation to make escrow payments; and 
</P>
<P>(iii) Require the mortgagor to furnish the purchaser with a copy of the Plan, before any sales contract is signed.
</P>
<P>(g) <I>Periodic analysis.</I> Any Plan developed in accordance with this section must provide that an analysis of the water supply shall be obtained from the local (or state) health authority no less frequently than annually, but more frequently, if determined at any time to be necessary by the health authority or by the service contractor.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0474)
</APPRO>
<CITA TYPE="N">[57 FR 9609, Mar. 19, 1992; 57 FR 27927, June 23, 1992]




</CITA>
</DIV8>

</DIV7>


<DIV7 N="84" NODE="24:2.1.1.2.4.1.84" TYPE="SUBJGRP">
<HEAD>Effective Date</HEAD>


<DIV8 N="§ 203.249" NODE="24:2.1.1.2.4.1.84.64" TYPE="SECTION">
<HEAD>§ 203.249   Effect of amendments.</HEAD>
<P>The regulations in this subpart may be amended by the Secretary at any time and from time to time, in whole or in part, but such amendment will not adversely affect the interests of a mortgagee under the contract of insurance on any mortgage or loan already insured, and will not adversely affect the interest of a mortgagee on any mortgage or loan to be insured for which either the Direct Endorsement or Lender Insurance mortgagee has approved the mortgagor and all terms and conditions of the mortgage or loan, or the Secretary has issued a firm commitment. In addition, such amendment will not adversely affect the eligibility of specific property if such property is covered by a conditional commitment issued by the Secretary, a certificate of reasonable value issued by the Secretary of Veterans Affairs, or an appraisal report approved by a Direct Endorsement or Lender Insurance underwriter. 
</P>
<CITA TYPE="N">[62 FR 30226, June 2, 1997]


</CITA>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="B" NODE="24:2.1.1.2.4.2" TYPE="SUBPART">
<HEAD>Subpart B—Contract Rights and Obligations</HEAD>


<DIV7 N="85" NODE="24:2.1.1.2.4.2.85" TYPE="SUBJGRP">
<HEAD>Definitions</HEAD>


<DIV8 N="§ 203.251" NODE="24:2.1.1.2.4.2.85.1" TYPE="SECTION">
<HEAD>§ 203.251   Definitions.</HEAD>
<P>As used in this subpart, the following terms shall have the meaning indicated: 
</P>
<P>(a) <I>Commissioner</I> means the Federal Housing Commissioner or his authorized representative. 
</P>
<P>(b) <I>Act</I> means the National Housing Act, as amended. 
</P>
<P>(c) <I>FHA</I> means the Federal Housing Administration. 
</P>
<P>(d) <I>Mortgage</I> is defined at § 203.17(a)(1).
</P>
<P>(e) <I>Mortgagor</I> means the original borrower under a mortgage and his heirs, executors, administrators and assigns. 
</P>
<P>(f) <I>Mortgagee</I> means the original lender under a mortgage and its successors and such of its assigns as are approved by the Commissioner. 
</P>
<P>(g)-(h) [Reserved]
</P>
<P>(i) <I>Insured mortgage</I> means a mortgage which has been insured as evidenced by the issuance of a Mortgage Insurance Certificate or by the endorsement of the credit instrument for insurance by the Commissioner. 
</P>
<P>(j) <I>Contract of Insurance</I> means the agreement evidenced by the issuance of a Mortgage Insurance Certificate or by the endorsement of the Commissioner upon the credit instrument given in connection with an insured mortgage, incorporating by reference the regulations in this subpart and the applicable provisions of the Act. 
</P>
<P>(k) <I>MIP</I> means the mortgage insurance premium paid by the mortgagee to the Commissioner in consideration of the contract of insurance. 
</P>
<P>(l)-(m) [Reserved] 
</P>
<P>(n) <I>Open-end advance</I> means an insured advance made by an approved mortgagee in connection with a previously insured mortgage, pursuant to an open-end provision in the mortgage. 
</P>
<P>(o) <I>Open-end insurance charge</I> means the charge paid by the mortgagee to the Commissioner in consideration of the insurance of an open-end advance. 
</P>
<P>(p) <I>Beginning of amortization</I> means the date one month prior to the date of the first monthly payment to principal and interest. 
</P>
<P>(q) <I>Maturity</I> means the date on which the mortgage indebtedness would be extinguished if paid in accordance with periodic payments provided for in the mortgage. 
</P>
<P>(r) <I>Debentures</I> means registered, transferable securities in certificated or book entry form which are valid and binding obligations, issued in the name of the Mutual Mortgage Insurance Fund in accordance with the provisions of this part; such debentures are the primary liability of the Mutual Mortgage Insurance Fund and are unconditionally guaranteed as to principal and interest by the United States. 
</P>
<P>(s) <I>State</I> includes the several States, Puerto Rico, the District of Columbia, Guam, the Commonwealth of the Northern Mariana Islands, American Samoa, and the Virgin Islands. 
</P>
<P>(t) <I>TOTAL</I> is an acronym that stands for “Technology Open to Approved Lenders.” TOTAL is a mortgage scorecard based on a mathematical equation that is to be used within an automated underwriting system (AUS). TOTAL is a tool to assist the mortgagee in managing its workflow and expediting the endorsement process, and is not a substitute for the mortgagee's reasonable consideration of risk and credit worthiness. Direct Endorsement mortgagees using TOTAL remain solely responsible for the underwriting decision.
</P>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971, as amended at 37 FR 8661, Apr. 29, 1972; 41 FR 49734, Nov. 10, 1976; 49 FR 12697, Mar. 30, 1984; 53 FR 34282, Sept. 6, 1988; 59 FR 49815, Sept. 30, 1994; 61 FR 36265, July 9, 1996; 68 FR 65826, Nov. 21, 2003] 


</CITA>
</DIV8>

</DIV7>


<DIV7 N="86" NODE="24:2.1.1.2.4.2.86" TYPE="SUBJGRP">
<HEAD>Endorsement and Contract of Insurance</HEAD>


<DIV8 N="§ 203.255" NODE="24:2.1.1.2.4.2.86.2" TYPE="SECTION">
<HEAD>§ 203.255   Insurance of mortgage.</HEAD>
<P>(a) <I>Mortgages with firm commitments.</I> For applications for insurance involving mortgages not eligible to be originated under the Direct Endorsement program under § 203.5, or under the Lender Insurance program under § 203.6, the Secretary will either endorse the mortgage for insurance by issuing a Mortgage Insurance Certificate, provided that the mortgagee is in compliance with the firm commitment, or will electronically acknowledge that the mortgage has been insured. 
</P>
<P>(b) <I>Endorsement with Direct Endorsement processing.</I> For applications for insurance involving mortgages originated under the Direct Endorsement program under § 203.5, the mortgagee shall submit to the Secretary, within 60 days after the date of closing of the loan or such additional time as permitted by the Secretary, properly completed documentation and certifications as listed in this paragraph (b):
</P>
<P>(1) Property appraisal upon a form meeting the requirements of the Secretary (including, if required, any additional documentation supporting the appraised value of the property under § 203.37a), or a HUD conditional commitment (for proposed construction only), or a Department of Veterans Affairs certificate of reasonable value, and all accompanying documents required by the Secretary; 
</P>
<P>(2) An application for insurance of the mortgage in a form prescribed by the Secretary; 
</P>
<P>(3) A certified copy of the mortgage and note executed upon forms which meet the requirements of the Secretary;
</P>
<P>(4) A warranty of completion, on a form prescribed by the Secretary, for proposed construction cases;
</P>
<P>(5) An underwriter certification, on a form prescribed by the Secretary, stating that the underwriter has personally reviewed the appraisal report and credit application (including the analysis performed on the worksheets) and that the proposed mortgage complies with HUD underwriting requirements, and incorporates each of the underwriter certification items that apply to the mortgage submitted for endorsement, as set forth in the applicable handbook or similar publication that is distributed to all Direct Endorsement mortgagees, except that where the TOTAL Mortgage Scorecard is used by the mortgagee, and the TOTAL Mortgage Scorecard has determined that the application represents an acceptable risk under terms and conditions agreed to by the FHA, a Direct Endorsement underwriter shall not be required to certify that the underwriter has personally reviewed the credit application (including the analysis performed on any worksheets). The following requirements are also applicable to the use of the TOTAL Mortgage Scorecard: 
</P>
<P>(i) Mortgagees and vendors must certify to compliance with these requirements: 
</P>
<P>(A) <I>Permissible users.</I> Only automatic underwriting systems (AUSs) developed, operated, owned, or used by FHA-approved Direct Endorsement mortgagees, Fannie Mae, or Freddie Mac, may access TOTAL, and only FHA-approved mortgagees will be able to obtain risk-assessments using TOTAL;
</P>
<P>(B) <I>Limitation on use.</I> Results from TOTAL must not be used as the basis for rejecting any mortgage applicant. Mortgagees must provide full manual underwriting for mortgage applicants when TOTAL returns a “refer” risk score. 
</P>
<P>(C) <I>Vendor and mortgagee requirements.</I> Both mortgagees and vendors must: 
</P>
<P>(<I>1</I>) Use TOTAL to process FHA and other loan products specified by the FHA Commissioner only and for no other purpose; 
</P>
<P>(<I>2</I>) Implement quality control procedures for TOTAL usage and provide, at FHA's request, reports and loan samples that enable FHA to evaluate program operation; 
</P>
<P>(<I>3</I>) Not use TOTAL to direct mortgagors into other non-FHA product offerings (this requirement does not relieve a mortgagee from its obligations under § 203.10 concerning informed consumer choice for prospective FHA mortgagors); 
</P>
<P>(<I>4</I>) Not disassemble, decompile, reverse engineer, derive or otherwise reproduce any part of the source code or algorithm in TOTAL; 
</P>
<P>(<I>5</I>) Not provide feedback messages that conflict with the Equal Credit Opportunity Act; and 
</P>
<P>(<I>6</I>) Comply with any additional HUD/FHA requirements or procedures that are applicable to the Scorecard and may be issued through handbooks, mortgagee letters, TOTAL User Guides, or TOTAL Developers Guide following appropriate advance notification, where applicable. 
</P>
<P>(ii) <I>Loss of privilege to use TOTAL.</I> Mortgagees and AUS vendors found to violate the requirements applicable to the use of TOTAL may have their access to TOTAL and all associated privileges terminated upon appropriate notice in accordance with the following procedure: 
</P>
<P>(A) <I>Notice.</I> HUD will provide a mortgagee or vendor with a 30-day notice of a violation and loss of privilege. The notice will state the nature of the violation, the effective date of the loss of the privilege, and the duration of the loss of the privilege. The notice will become effective on the date provided in the notice, unless the mortgagee or vendor appeals the violation and loss of privilege in accordance with paragraph (b)(5)(ii)(B) of this section. 
</P>
<P>(B) <I>Appeal.</I> A party receiving a notice of violation may appeal to the Deputy Assistant Secretary for Single Family Housing (DAS-SFH), or his or her designee, before the effective date of the notice by providing evidence to refute the violation. The loss of privilege is stayed until the DAS-SFH, or designee, notifies the party that the loss of privilege has been affirmed, rescinded, or modified.
</P>
<P>(6) Where applicable, a certificate under oath and contract regarding use of the dwelling for transient or hotel purposes;
</P>
<P>(7) Where applicable, a certificate of intent to occupy by military personnel;
</P>
<P>(8) Where a mortgage for an existing property is to be insured under section 221(d)(2) of the National Housing Act, a letter from the appropriate local government official that the property meets applicable code requirements;
</P>
<P>(9) Where an individual water or sewer system is being used, an approval letter from the local health authority indicating approval of the system in accordance with § 200.926d(f) of this chapter;
</P>
<P>(10) For proposed construction if the mortgage (excluding financed mortgage insurance premium) exceeds a 90 percent loan to value ratio, evidence that the mortgagee qualifies for a higher ratio loan under one of the applicable provisions in the appropriate regulations;
</P>
<P>(11) A mortgage certification on a form prescribed by the Secretary, stating that the authorized representative of the mortgagee who is making the certification has personally reviewed the mortgage documents and the application for insurance endorsement, and certifying that the mortgage complies with the requirements of paragraph (b) of this section. The certification shall incorporate each of the mortgagee certification items that apply to the mortgage loan submitted for endorsement, as set forth in the applicable handbook or similar publication that is distributed to all Direct Endorsement mortgagees;
</P>
<P>(12) For a Home Equity Conversion Mortgage under part 206 of this chapter, the additional documents required by § 206.15 of this chapter; and 
</P>
<P>(13) The documentation required under § 203.37a providing that: 
</P>
<P>(i) The seller is the owner of record; and 
</P>
<P>(ii) That more than 90 days elapsed between the date the seller acquired the property (based upon the date of settlement) and the date of execution of the sales contract that will result in the FHA mortgage insurance.
</P>
<P>(14) Such other documents as the Secretary may require.
</P>
<P>(c) <I>Pre-endorsement review for Direct Endorsement.</I> Upon submission by an approved mortgagee of the documents required by paragraph (b) of this section, the Secretary will review the documents and determine that: 
</P>
<P>(1) The mortgage is executed on a form which meets the requirements of the Secretary;
</P>
<P>(2) The mortgage maturity meets the requirements of the applicable program;
</P>
<P>(3) The stated mortgage amount does not exceed the maximum mortgage amount for the area as most recently announced by the Secretary, except for mortgages under 24 CFR part 206; 
</P>
<P>(4) All documents required by paragraph (b) of this section are submitted; 
</P>
<P>(5) All necessary certifications are made in accordance with paragraph (b) of this section; 
</P>
<P>(6) There is no mortgage insurance premium, late charge or interest due to the Secretary; and 
</P>
<P>(7) The mortgage was not in default when submitted for insurance or, if submitted for insurance more than 60 days after closing whether the mortgage shows an acceptable payment history.
</P>
<FP>In addition, the Secretary is authorized to determine if there is any information indicating that any certification or required document is false, misleading, or constitutes fraud or misrepresentation on the part of any party, or that the mortgage fails to meet a statutory or regulatory requirement. If, following this review, the mortgage is determined to be eligible, the Secretary will endorse the mortgage for insurance by issuance of a Mortgage Insurance Certificate. If the mortgage is determined to be ineligible, the Secretary will inform the mortgagee in writing of this determination, and include the reasons for the determination and any corrective actions that may be taken.
</FP>
<P>(d) <I>Submission by mortgagee other than originating mortgagee.</I> If the originating mortgagee assigns the mortgage to another approved mortgagee before pre-endorsement review under paragraph (c) of this section, the assignee may submit the required documents for pre-endorsement review in the name of the originating mortgagee. All certifications must be executed by the originating mortgagee (or its underwriter, if appropriate). The purchasing mortgagee may pay any required mortgage insurance premium, late charge and interest.
</P>
<P>(e) <I>Post-Endorsement review for Direct Endorsement.</I> Following endorsement for insurance, the Secretary may review all documents required by paragraph (b) of this section. If, following this review, the Secretary determines that the mortgage does not satisfy the requirements of the Direct Endorsement program, the Secretary may place the mortgagee on Direct Endorsement probation, or terminate the authority of the mortgagee to participate in the Direct Endorsement program pursuant to § 203.3(d), or refer the matter to the Mortgagee Review Board for action pursuant to part 25 of this title.
</P>
<P>(f) <I>Lender insurance</I>—(1)<I>Pre-insurance review.</I> For applications for insurance involving mortgages originated under the Lender Insurance program under § 203.6, the mortgagee is responsible for performing a pre-insurance review that would otherwise be performed by HUD under § 203.255(c) on the documents that would otherwise be submitted to HUD under § 203.255(b). The mortgagee's staff that performs the pre-insurance review must not be the same staff that originated the mortgage or underwrote the mortgage for insurance.
</P>
<P>(2) <I>Recordkeeping.</I> Mortgagees must maintain records, including origination files, in a manner and for a time period to be prescribed by the Assistant Secretary for Housing—Federal Housing Commissioner, and must make them available to authorized HUD staff upon request. 
</P>
<P>(3) <I>Insuring the mortgage.</I> If, following this review, the mortgage is determined to be eligible, the mortgagee will electronically submit all required data to HUD regarding the mortgage. HUD's electronic system will acknowledge that the mortgage has been insured. HUD's electronic system may also issue a notice to the mortgagee that the mortgage has been selected for post-insurance technical review, and that the HUD case binder must be sent to the identified HUD office.
</P>
<P>(g) <I>Indemnification</I>—(1)<I>General.</I> By insuring the mortgage, a Lender Insurance mortgagee agrees to indemnify HUD, in accordance with this paragraph.
</P>
<P>(2) <I>Definition of origination.</I> For purposes of indemnification under this paragraph, the term “origination” means the process of creating a mortgage, starting with the taking of the initial application, continuing with the processing and underwriting, and ending with the mortgagee endorsing the mortgage note for FHA insurance.
</P>
<P>(3) <I>Serious and material violation.</I> The mortgagee shall indemnify HUD for an FHA insurance claim paid within 5 years of mortgage insurance endorsement, if the mortgagee knew or should have known of a serious and material violation of FHA origination requirements, such that the mortgage loan should not have been approved and endorsed by the mortgagee and irrespective of whether the violation caused the mortgage default. Such a serious and material violation of FHA requirements in the origination of the mortgage may occur if the mortgagee failed to, among other actions:
</P>
<P>(i) Verify the creditworthiness, income, and/or employment of the mortgagor in accordance with FHA requirements;
</P>
<P>(ii) Verify the assets brought by the mortgagor for payment of the required down payment and/or closing costs in accordance with FHA requirements; or
</P>
<P>(iii) Address property deficiencies identified in the appraisal affecting the health and safety of the occupants or the structural integrity of the property in accordance with FHA requirements, or
</P>
<P>(iv) Ensure that the appraisal of the property serving as security for the mortgage loan satisfies FHA appraisal requirements, in accordance with § 203.5(e).
</P>
<P>(4) <I>Fraud or misrepresentation.</I> The mortgagee shall indemnify HUD for an insurance claim if the mortgagee knew or should have known that fraud or misrepresentation was involved in connection with the origination of the mortgage, regardless of whether the fraud or misrepresentation caused the mortgage default and regardless of when an insurance claim is filed.
</P>
<P>(5) <I>Demand for indemnification.</I> The demand for indemnification will be made by either the Secretary or the Mortgagee Review Board. Under indemnification, the Lender Insurance mortgagee agrees to either abstain from filing an insurance claim, or reimburse FHA if a subsequent holder of the mortgage files an insurance claim and FHA suffers a financial loss.
</P>
<CITA TYPE="N">[57 FR 58348, Dec. 9, 1992; 58 FR 13537, Mar. 12, 1993, as amended at 60 FR 42759, Aug. 16, 1995; 61 FR 36265, July 9, 1996; 62 FR 30227, June 2, 1997; 63 FR 29507, May 29, 1998; 68 FR 23376, May 1, 2003; 68 FR 65827, Nov. 21, 2003; 69 FR 5, Jan. 2, 2004; 77 FR 3605, Jan. 25, 2012; 77 FR 51469, Aug. 24, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 203.256" NODE="24:2.1.1.2.4.2.86.3" TYPE="SECTION">
<HEAD>§ 203.256   Insurance of open-end advance.</HEAD>
<P>Insurance on an open-end advance will be evidenced by delivery of a certificate stating the amount of the advance, the date of insurance, and the regulations under which the advance is insured. 


</P>
</DIV8>


<DIV8 N="§ 203.257" NODE="24:2.1.1.2.4.2.86.4" TYPE="SECTION">
<HEAD>§ 203.257   Creation of the contract.</HEAD>
<P>The mortgage shall be an insured mortgage from the date of the issuance of a Mortgage Insurance Certificate, from the date of the endorsement of the credit instrument, or from the date of HUD's electronic acknowledgement to the mortgagee that the mortgage is insured, as applicable. The Commissioner and the mortgagee are thereafter bound by the regulations in this subpart with the same force and to the same extent as if a separate contract had been executed relating to the insured mortgage, including the provisions of the regulations in this subpart and of the Act. 
</P>
<CITA TYPE="N">[62 FR 30227, June 2, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 203.258" NODE="24:2.1.1.2.4.2.86.5" TYPE="SECTION">
<HEAD>§ 203.258   Substitute mortgagors.</HEAD>
<P>(a) <I>Selling mortgagor.</I> Except as provided in paragraph (d) of this section, the mortgagee may effect the release of a mortgagor from personal liability on the mortgage note, only if it obtains the Commissioner's approval of a substitute mortgagor, as provided by this section. 
</P>
<P>(b) <I>Purchasing mortgagor.</I> (1) The Commissioner may approve a substitute mortgagor with respect to any mortgage insured under § 203.43h or § 203.43i only if the mortgagor is to occupy the dwelling as a principal residence (as defined in § 203.18(f)(1)). 
</P>
<P>(2) The Commissioner may approve a substitute mortgagor with respect to any mortgage insured under this part (except a mortgage referred to in paragraph (b)(1) of this section), only if the substitute mortgagor is to occupy the dwelling as a principal residence or as a secondary residence (as these terms are defined in § 203.18(f)) or if the substitute mortgagor is an eligible non-occupant mortgagor (as defined in § 203.18(f)). 
</P>
<P>(3) With respect to any mortgage covering a dwelling to be occupied as a secondary residence, the loan to value ratio may not exceed 85 percent of the greater of: 
</P>
<P>(i) The appraised value of the property at the time the mortgage is accepted for insurance; or 
</P>
<P>(ii) The appraised value of the property at the time approval of a substitute mortgagor is requested. 
</P>
<P>(c) <I>Applicability—current mortgages.</I> Paragraph (b) of this section applies to the Commissioner's approval of a substitute mortgagor only if the mortgage executed by the original mortgagor was insured:
</P>
<P>(1) Pursuant to a conditional commitment or master conditional commitment issued on or after December 15, 1989; or 
</P>
<P>(2) In accordance with the Direct Endorsement program, where the underwriter of the mortgagee signed the appraisal report or master appraisal report for the property on or after December 15, 1989;
</P>
<P>(3) Pursuant to a certificate of reasonable value or master certificate of reasonable value issued by the Department of Veterans Affairs on or after December 15, 1989. 
</P>
<P>(d) <I>Applicability—earlier mortgages.</I> If the mortgage was insured:
</P>
<P>(1) Pursuant to a conditional commitment or master conditional commitment issued on or after February 5, 1988, but before December 15, 1989; or 
</P>
<P>(2) In accordance with the Direct Endorsement program, where the approved underwriter of the mortgagee signed the appraisal report or master appraisal report for the property on or after February 5, 1988, but before December 15, 1989, or
</P>
<P>(3) Pursuant to a certificate of reasonable value or master certificate of reasonable value issued by the Department of Veterans Affairs on or after February 5, 1988, but before December 15, 1989, the Commissioner may approve a substitute mortgagor with respect to the mortgage only if the substitute mortgagor is to occupy the dwelling as a principal residence or a secondary residence (as these terms are defined in § 203.18(f)), or is an eligible non-occupant mortgagor (as defined in the following sentence), or if the mortgage has a principal balance that is not more than 75 percent of the greater of (i) the appraised value of the property at the time the mortgage is accepted for insurance, or (ii) the appraised value of the property at the time approval of a substitute mortgagor is requested. For purposes of this paragraph (d), the term <I>eligible non-occupant mortgagor</I> has the meaning given in § 203.18(f), except that paragraph (d)(3)(ii)(A) and (B) of this section apply in place of § 203.18(f)(3) (i) and (ii). 
</P>
<P>(A) A public entity, as provided in section 214 or 247 of the National Housing Act; and 
</P>
<P>(B) A private nonprofit or public entity, as provided in section 221(h) or 235(j) of the National Housing Act.
</P>
<FP>If neither paragraph (b) nor the preceding portion of this paragraph (d) applies, the Commissioner may approve a substitute mortgagor without regard to whether the mortgagor is to occupy the dwelling. 
</FP>
<P>(e) <I>Direct endorsement.</I> Mortgagees approved for participation in the Direct Endorsement program under § 203.3 may, subject to limitations established by the Commissioner, themselves approve an appropriate substitute mortgagor under this section for mortgages which they own or service, and need not obtain further specific approval from the Commissioner.
</P>
<P>(f) <I>Definition.</I> As used in this section, the term <I>substitute mortgagor</I> includes: 
</P>
<P>(1) Persons who, upon the release by a mortgagee of a previous mortgagor from personal liability on the mortgage note, assume this liability and agree to pay the mortgage debt; and 
</P>
<P>(2) Persons who purchase without assuming liability on the mortgage note or purchase where no release is given by the mortgagee to the previous mortgagor.
</P>
<CITA TYPE="N">[55 FR 34806, Aug. 24, 1990, as amended at 57 FR 58349, Dec. 9, 1992; 58 FR 13537, Mar. 12, 1993; 61 FR 36453, July 10, 1996] 


</CITA>
</DIV8>

</DIV7>


<DIV7 N="87" NODE="24:2.1.1.2.4.2.87" TYPE="SUBJGRP">
<HEAD>Mortgage Insurance Premiums—In General</HEAD>


<DIV8 N="§ 203.259" NODE="24:2.1.1.2.4.2.87.6" TYPE="SECTION">
<HEAD>§ 203.259   Method of payment of MIP.</HEAD>
<P>The payment of any MIP under this subpart shall be made to the Commissioner by the mortgagee either in cash or debentures at par plus accrued interest.
</P>
<CITA TYPE="N">[48 FR 28805, June 23, 1983]


</CITA>
</DIV8>


<DIV8 N="§ 203.259a" NODE="24:2.1.1.2.4.2.87.7" TYPE="SECTION">
<HEAD>§ 203.259a   Scope.</HEAD>
<P>(a) The Commissioner shall charge a one-time MIP pursuant to § 203.280 for mortgages that:
</P>
<P>(1) Are insured pursuant to § 203.43(c) (if the mortgage to be refinanced was executed prior to July 1, 1991 and the new mortgage is executed on or after April 24, 1992); or insured pursuant to § 203.43i; or
</P>
<P>(2)(i) Are obligations of the Mutual Mortgage Insurance Fund under this part (except insured open-end advances as provided by § 203.270);
</P>
<P>(ii) Are insured pursuant to: (A) An application for a conditional commitment received on or after September 1, 1983; or
</P>
<P>(B) An application for mortgage insurance endorsement under the single family Direct Endorsement program as provided in § 203.255, where the property appraisal report is signed by the mortgagee's underwriter on or after September 1, 1983; and
</P>
<P>(iii) Are executed before July 1, 1991.
</P>
<P>(b) Except as provided in § 203.284(h) or § 203.285(d), the Commissioner shall charge an up-front MIP pursuant to § 203.284 or § 203.285 for mortgages executed on or after July 1, 1991 that are obligations of the Mutual Mortgage Insurance Fund. In the cases that the Commissioner deems appropriate, the Commissioner may require, by means of instructions communicated to all affected mortgages, that up-front MIP be remitted electronically. 
</P>
<P>(c) The periodic MIP provision of §§ 203.260 through 203.268 shall not apply to mortgages referred to in paragraph (a) of this section, nor shall they apply to mortgages to which the provision of § 203.284 or § 203.285 apply.
</P>
<CITA TYPE="N">[57 FR 15211, Apr. 24, 1992, as amended at 57 FR 46983, Oct. 14, 1992; 58 FR 12902, Mar. 8, 1993; 58 FR 41003, July 30, 1993; 59 FR 13882, Mar. 24, 1994; 60 FR 34138, June 30, 1995; 61 FR 36453, July 10, 1996]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="88" NODE="24:2.1.1.2.4.2.88" TYPE="SUBJGRP">
<HEAD>Mortgage Insurance Premiums—Periodic Payment</HEAD>


<DIV8 N="§ 203.260" NODE="24:2.1.1.2.4.2.88.8" TYPE="SECTION">
<HEAD>§ 203.260   Amount of mortgage insurance premium (periodic MIP).</HEAD>
<P>The mortgagee shall pay to the Commissioner an initial MIP in an amount equal to one-half of one percent of the average outstanding principal obligation of the mortgage for the first year of amortization. After payment of the initial MIP, the mortgagee shall pay to the Commissioner an amount equal to one-half of one percent of the average outstanding principal obligation of the mortgage for the 12-month period preceding each subsequent anniversary date of the beginning of amortization.
</P>
<CITA TYPE="N">[48 FR 28805, June 23, 1983]


</CITA>
</DIV8>


<DIV8 N="§ 203.261" NODE="24:2.1.1.2.4.2.88.9" TYPE="SECTION">
<HEAD>§ 203.261   Calculation of periodic MIP.</HEAD>
<P>The amount of any periodic MIP shall be calculated in accordance with the original amortization provisions of the mortgage, without taking into account delinquent payments, prepayments, agreements to postpone payments, or agreements to recast the mortgage.
</P>
<CITA TYPE="N">[48 FR 28805, June 23, 1983]


</CITA>
</DIV8>


<DIV8 N="§ 203.262" NODE="24:2.1.1.2.4.2.88.10" TYPE="SECTION">
<HEAD>§ 203.262   Due date of periodic MIP.</HEAD>
<P>The full initial and each annual MIP shall be due and payable to the Commissioner no later than the 10th day after the amortization anniversary date. 
</P>
<CITA TYPE="N">[61 FR 37801, July 19, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.264" NODE="24:2.1.1.2.4.2.88.11" TYPE="SECTION">
<HEAD>§ 203.264   Payment of periodic MIP.</HEAD>
<P>The mortgagee shall pay each MIP in twelve equal monthly installments. Each monthly installment shall be due and payable to the Commissioner no later than the tenth day of each month, beginning in the month in which the mortgagor is required to make the first monthly mortgage payment. This will be effective for amortization beginning on or after September 1, 1996. 
</P>
<CITA TYPE="N">[61 FR 42787, Aug. 19, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.265" NODE="24:2.1.1.2.4.2.88.12" TYPE="SECTION">
<HEAD>§ 203.265   Mortgagee's late charge and interest.</HEAD>
<P>(a) Periodic MIP which are received by the Commissioner after the payment dates prescribed by §§ 203.262 and 203.264 shall include a late charge of four percent of the amount paid. 
</P>
<P>(b) In addition to the late charge provided in paragraph (a) of this section, the mortgagee shall pay interest on any periodic MIP which are remitted to the Commissioner more than 20 days after the payment dates prescribed in § 203.264. Such interest rate shall be paid at a rate set in conformity with the Treasury Financial Manual.
</P>
<CITA TYPE="N">[48 FR 28805, June 23, 1983, as amended at 61 FR 36265, July 9, 1996; 61 FR 37801, July 19, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.266" NODE="24:2.1.1.2.4.2.88.13" TYPE="SECTION">
<HEAD>§ 203.266   Period covered by periodic MIP.</HEAD>
<P>The initial MIP shall cover the period beginning with the date of the issuance of a Mortgage Insurance Certificate and ending on the next anniversary of the beginning of amortization. Subsequent premium payments shall cover the twelve-month period preceding each subsequent anniversary date.
</P>
<CITA TYPE="N">[48 FR 28805, June 23, 1983]


</CITA>
</DIV8>


<DIV8 N="§ 203.267" NODE="24:2.1.1.2.4.2.88.14" TYPE="SECTION">
<HEAD>§ 203.267   Duration of periodic MIP.</HEAD>
<P>The mortgagee shall pay the MIP to the Commissioner until the deed to the Commissioner is filed for record or the contract of insurance is terminated.
</P>
<CITA TYPE="N">[48 FR 28805, June 23, 1983] 


</CITA>
</DIV8>


<DIV8 N="§ 203.268" NODE="24:2.1.1.2.4.2.88.15" TYPE="SECTION">
<HEAD>§ 203.268   Pro rata payment of periodic MIP.</HEAD>
<P>(a) If the insurance contract is terminated before the due date of the initial MIP, the mortgagee shall pay a portion of the MIP prorated from the beginning of amortization, as defined in § 203.251, to the date of termination. 
</P>
<P>(b) If the insurance contract is terminated after the due date of the initial MIP, the mortgagee shall pay a portion of the current annual MIP prorated from the due date of the last annual MIP to the date of termination.
</P>
<P>(c) A pro rata MIP shall not be due or payable where the mortgagee notifies the Commissioner that foreclosure or other action to acquire the property has been completed and that the property will not be conveyed to the Commissioner in exchange for insurance benefits. Any MIP due and paid after the institution of foreclosure or the date the property was otherwise acquired by the mortgagee will be refunded to the mortgagee upon receipt by the Commissioner of the notice from the mortgagee that the property will not be conveyed to the Commissioner.
</P>
<CITA TYPE="N">[48 FR 28805, June 23, 1983, as amended at 61 FR 37801, July 19, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.269" NODE="24:2.1.1.2.4.2.88.16" TYPE="SECTION">
<HEAD>§ 203.269   Method of payment of periodic MIP.</HEAD>
<P>In cases that the Commissioner deems appropriate, the Commissioner may require, by means of instructions communicated to all affected mortgagees, that periodic MIP be remitted electronically. 
</P>
<CITA TYPE="N">[60 FR 34138, June 30, 1995]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="89" NODE="24:2.1.1.2.4.2.89" TYPE="SUBJGRP">
<HEAD>Open-end Insurance Charges—All Mortgages</HEAD>


<DIV8 N="§ 203.270" NODE="24:2.1.1.2.4.2.89.17" TYPE="SECTION">
<HEAD>§ 203.270   Open-end insurance charges.</HEAD>
<P>(a) <I>Required charge.</I> In the case of an insured open-end advance the mortgagee shall pay to the Commissioner an open-end insurance charge.
</P>
<P>(b) <I>Payment of charge for mortgages with periodic MIP.</I> The amount of any insured open-end advance shall be added to the average outstanding principal obligation of the mortgage for the purpose of determining the amount of periodic MIP as provided in §§ 203.260 through 203.268, except that the initial additional charge shall be prorated to cover the period beginning with the first day of the month following the issuance of a certificate evidencing the insurance of the open-end advance and ending on the due date of the next MIP.
</P>
<P>(c) <I>Payment of charge for mortgages with one-time or up-front MIP.</I> In the case of a mortgage with a one-time or up-front MIP pursuant to § 203.280, § 203.284, or § 203.285 of this part, the insurance charge shall be in an amount equal to 
<FR>1/2</FR> percent per annum of the outstanding principal obligation of the open-end advance. Sections 203.260 through 203.268 shall apply to the open-end charge on a mortgage with a one-time or up-front MIP, except that all references to amortization dates shall refer to amortization dates of the open-end advance, references to MIP shall refer to the open-end insurance charge, and references to outstanding principal obligation of the mortgage shall refer to outstanding principal obligation of the open-end advance.
</P>
<P>(d) <I>Method of payment—all mortgages.</I> The payment of any open-end insurance charge under this subpart shall be made to the Commissioner by the mortgagee either in cash or debentures issued by the Mutual Mortgage Insurance Fund at par plus accrued interest.
</P>
<CITA TYPE="N">[48 FR 28806, June 23, 1983, as amended at 56 FR 24624, May 30, 1991; 57 FR 15211, Apr. 24, 1992; 57 FR 46983, Oct. 14, 1992; 58 FR 41003, July 30, 1993]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="90" NODE="24:2.1.1.2.4.2.90" TYPE="SUBJGRP">
<HEAD>Mortgage Insurance Premiums—One-Time Payment</HEAD>


<DIV8 N="§ 203.280" NODE="24:2.1.1.2.4.2.90.18" TYPE="SECTION">
<HEAD>§ 203.280   One-time or Up-front MIP.</HEAD>
<P>For mortgages for which a one-time or up-front MIP is to be charged in accordance with §§ 203.259a, 203.284, or 203.285, the mortgagee shall, as a condition to the endorsement of the mortgage for insurance, pay to the Commissioner for the account of the mortgagor, in a manner prescribed by the Commissioner, a premium representing the total obligation for the insuring of the mortgage by the Commissioner or the up-front portion of the total obligation, as applicable, within 10 calendar days after the date of loan closing or within 10 calendar days after the date of disbursement of the mortgage proceeds, whichever is later.
</P>
<CITA TYPE="N">[70 FR 19669, Apr. 13, 2005]


</CITA>
</DIV8>


<DIV8 N="§ 203.281" NODE="24:2.1.1.2.4.2.90.19" TYPE="SECTION">
<HEAD>§ 203.281   Calculation of one-time MIP.</HEAD>
<P>(a) The applicable premium percentage determined under paragraph (b) of this section assumes, for purposes of calculation, that the entire amount of the one-time MIP is added to the loan amount. The amount of the one-time MIP shall be determined by multiplying the loan amount otherwise insurable under this part by the applicable premium percentage, subject to adjustment for the portion of the MIP, if any, that is not to be included in the insured mortgage.
</P>
<P>(b)(1) The Commissioner shall determine the applicable premium percentage in accordance with sound financial and actuarial practice. 
</P>
<P>(2) Application of the premium percentage determined under paragraph (b)(1) of this section shall not result in a MIP in excess of an amount equivalent to 1 per centum per annum of the amount of the principal obligation of the mortgage outstanding at any time, without taking into account delinquent payments or prepayments.
</P>
<P>(c) The applicable premium percentage will be published by notice at least annually in the <E T="04">Federal Register.</E>
</P>
<CITA TYPE="N">[48 FR 28806, June 23, 1983, as amended at 61 FR 36265, July 9, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.282" NODE="24:2.1.1.2.4.2.90.20" TYPE="SECTION">
<HEAD>§ 203.282   Mortgagee's late charge and interest.</HEAD>
<P>(a) Payment of a one-time or up-front MIP is late if not received by HUD within 10 calendar days after the date of loan closing or within 10 calendar days after the date of disbursement of the mortgage proceeds, whichever is later. Late payments shall include a late charge of four percent of the amount of the MIP.
</P>
<P>(b) If payment of the MIP is not received by HUD within 30 days after the date of loan closing or within 30 calendar days after the date of disbursement of the mortgage proceeds, whichever is later, the mortgagee will be charged additional late fees until payment is received at an interest rate set in conformity with the Treasury Fiscal Requirements Manual.
</P>
<CITA TYPE="N">[70 FR 19669, Apr. 13, 2005]


</CITA>
</DIV8>


<DIV8 N="§ 203.283" NODE="24:2.1.1.2.4.2.90.21" TYPE="SECTION">
<HEAD>§ 203.283   Refund of one-time MIP.</HEAD>
<P>(a) The Commissioner shall provide for the refund to the mortgagor of a portion of the unearned MIP paid pursuant to § 203.280 if the contract of insurance covering the mortgage is terminated: 
</P>
<P>(1) By coveyance to one other than the Commissioner and a claim for the insurance benefits is not presented for payment (§ 203.315), 
</P>
<P>(2) By prepayment of the mortgage (§ 203.316), or 
</P>
<P>(3) By voluntary agreement with the approval of the Commissioner (§ 203.317).
</P>
<P>(b) The Commissioner shall determine the amount of the premium refund by multiplying the amount the premium paid at the time the mortgage was insured by the applicable premium refund percentage for mortgages insured in the year the mortgage was endorsed for insurance. The Commissioner shall determine the applicable premium refund percentage for each year in an equitable manner and in accordance with sound financial and actuarial practice, taking into account: (1) Projected salaries and expenses, (2) prospective losses generated by insurance claims, and (3) expected future payments of premium refunds.
</P>
<CITA TYPE="N">[48 FR 28806, June 23, 1983, as amended at 52 FR 1327, Jan. 13, 1987]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="91" NODE="24:2.1.1.2.4.2.91" TYPE="SUBJGRP">
<HEAD>Calculation of Mortgage Insurance Premium on or After July 1, 1991</HEAD>


<DIV8 N="§ 203.284" NODE="24:2.1.1.2.4.2.91.22" TYPE="SECTION">
<HEAD>§ 203.284   Calculation of up-front and annual MIP on or after July 1, 1991.</HEAD>
<P>Except for insured mortgages with a term of 15 or fewer years executed on or after December 26, 1992, (see § 203.285 of this part), up-front and annual MIP will be calculated in accordance with this section.
</P>
<P>(a) <I>Permanent provisions.</I> Any mortgage executed on or after October 1, 1994, that is an obligation of the Mutual Mortgage Insurance Fund, as well as any mortgage executed after December 27, 2005, which is insured under sections 203(k) or 234(c) of the National Housing Act (12 U.S.C. 1709(k) and 12 U.S.C. 1715y(c)) shall be subject to the following requirements:
</P>
<P>(1) <I>Up-Front.</I> The Commissioner shall establish and collect a single premium payment in an amount not exceeding 2.25 percent of the amount of the original insured principal obligation of the mortgage.
</P>
<P>(2) <I>Annual.</I> In addition to the premium under paragraph (a)(1) of this section, the Commissioner shall establish and collect annual premium payments in an amount not exceeding .50 percent of the remaining insured principal balance (excluding the portion of the remaining balance attributable to the premium collected under paragraph (a)(1) of this section) for the following periods:
</P>
<P>(i) For any mortgage involving an original principal obligation (excluding any premium collected under paragraph (a)(1) of this section) that is less than 90 percent of the appraised value of the property (as of the date of the mortgage is accepted for insurance), for the first 11 years of the mortgage term.
</P>
<P>(ii) For any mortgage involving an original principal obligation (excluding any premium collected under paragraph (a)(1) of this section) that is greater than or equal to 90 percent of the appraised value of the property (as of the date the mortgage is accepted for insurance), for the lesser of the mortgage term or the first 30 years of the mortgage term; except that, for any mortgage involving an original principal obligation (excluding any premium collected under paragraph (a)(1) of this section) that is greater than 95 percent of the appraised value, the annual premium collected during the period determined under this clause shall be in an amount not exceeding 0.55 percent of the remaining insured principal balance (excluding the portion of the remaining balance attributable to the premium collected under paragraph (a)(1) of this section).
</P>
<P>(b) <I>Transition provisions; savings provision.</I> Mortgages that are obligations of the Mutual Mortgage Insurance Fund and that were insured during Fiscal Years 1991-1994, are governed by 24 CFR 203.284(b) as in effect on April 1, 2003, (see 24 CFR parts 200-499 revised as of April 1, 2003).
</P>
<P>(c) <I>Refunds.</I> With respect to any mortgage subject to premiums under this section, the Commissioner shall refund all of the unearned premium charges paid on a mortgage upon termination of insurance by voluntary agreement or upon payment in full of the principal obligation of the mortgage before the maturity date.
</P>
<P>(d)-(e) [Reserved] 
</P>
<P>(f) <I>Applicability of other sections.</I> The provisions of §§ 203.261, 203.262, 203.264, 203.265, 203.266, 203.267, 203.268, 203.269, 203.280, and 203.282 are applicable to mortgages subject to premiums under this section. 
</P>
<P>(g) <I>Definition.</I> As used in this section the term <I>remaining insured principal balance</I> means the average outstanding principal obligation of the mortgage for the first year of amortization, or for a 12-month period preceding a subsequent anniversary date of the beginning of amortization.
</P>
<P>(h) <I>Exception for streamline refinance.</I> This section shall not apply to any mortgage insured pursuant to § 203.43(c) if the mortgage to be refinanced was executed before July 1, 1991 and the new mortgage is executed on or after April 24, 1992. This exception does not have the effect of exempting streamline refinancing mortgages from the requirement that a one-time MIP be paid in accordance with § 203.259a(a).
</P>
<CITA TYPE="N">[57 FR 15211, Apr. 24, 1992, as amended at 57 FR 46983, Oct. 14, 1992; 58 FR 41003, July 30, 1993; 60 FR 34138, June 30, 1995; 61 FR 36265, July 9, 1996; 61 FR 37801, July 19, 1996; 70 FR 37156, June 28, 2005]


</CITA>
</DIV8>


<DIV8 N="§ 203.285" NODE="24:2.1.1.2.4.2.91.23" TYPE="SECTION">
<HEAD>§ 203.285   Fifteen-year mortgages: Calculation of up-front and annual MIP on or after December 26, 1992.</HEAD>
<P>(a) <I>Up-front.</I> Any mortgage for a term of 15 or fewer years executed on or after December 26, 1992, that is an obligation of the Mutual Mortgage Insurance Fund, and any mortgage executed on or after December 27, 2005, to be insured under sections 203(k) and 234(c) of the National Housing Act, shall be subject to a single up-front premium payment established and collected by the Commissioner in an amount not exceeding 2.0 percent of the amount of the original insured principal obligation of the mortgage. Upon termination of insurance by voluntary agreement, or upon payment in full of the principal obligation of the mortgage before the maturity date, the Commissioner shall refund all of the unearned premium charges paid on the mortgage pursuant to this paragraph (a).
</P>
<P>(b) <I>Annual.</I> In addition to the premium under paragraph (a) of this section, the Commissioner shall establish and collect annual premium payments in amounts not exceeding the following percentages of the remaining insured principal balance (excluding the portion of the remaining balance attributable to the premium collected under paragraph (a) of this section) for the following periods:
</P>
<P>(1) For any mortgage involving an original principal obligation (excluding any premium collected under paragraph (a) of this section) that is less than 90 percent of the appraised value of the property (as of the date the mortgage is accepted for insurance), no annual premium will be charged.
</P>
<P>(2) For any mortgage involving an original principal obligation (excluding any premium collected under paragraph (a) of this section) that is greater than or equal to 90 percent of such value, but less than or equal to 95 percent of such value, an annual premium not exceeding .25 percent shall be collected for the first four years of the mortgage term.
</P>
<P>(3) For any mortgage involving an original principal obligation (excluding any premium collected under paragraph (a) of this section) that is greater than 95 percent of such value, an annual premium not exceeding .25 percent shall be collected for the first eight years of the mortgage term.
</P>
<P>(c) <I>Applicability of certain provisions.</I> The provisions of §§ 203.261, 203.262, 203.264, 203.265, 203.266, 203.267, 203.268, 203.269, 203.280, 203.282, 203.284(c), and 203.284(g) are applicable to mortgages subject to premiums under this section. 
</P>
<P>(d) <I>Exception for streamline refinance.</I> This section shall not apply to any mortgage insured pursuant to § 203.43(c) if the mortgage to be refinanced was executed before July 1, 1991 and the new mortgage is executed on or after December 26, 1992.
</P>
<CITA TYPE="N">[58 FR 41004, July 30, 1993, as amended at 60 FR 34138, June 30, 1995; 61 FR 37801, July 19, 1996; 70 FR 37156, June 28, 2005]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="92" NODE="24:2.1.1.2.4.2.92" TYPE="SUBJGRP">
<HEAD>Adjusted Mortgage Insurance Premium</HEAD>


<DIV8 N="§ 203.288" NODE="24:2.1.1.2.4.2.92.24" TYPE="SECTION">
<HEAD>§ 203.288   Discontinuance of adjusted premium charge.</HEAD>
<P>Notwithstanding any provision in the mortgage instrument, there shall be no adjusted mortgage insurance premium due the Commissioner on account of the prepayment of any mortgage on or after May 1, 1972. 
</P>
<CITA TYPE="N">[37 FR 8662, Apr. 29, 1972] 


</CITA>
</DIV8>

</DIV7>


<DIV7 N="93" NODE="24:2.1.1.2.4.2.93" TYPE="SUBJGRP">
<HEAD>Voluntary Termination</HEAD>


<DIV8 N="§ 203.295" NODE="24:2.1.1.2.4.2.93.25" TYPE="SECTION">
<HEAD>§ 203.295   Voluntary termination.</HEAD>
<P>Upon request by the mortgagor and mortgagee the Commissioner may terminate the insurance contract on any mortgage under this part covering a 1-to-4 family residence. The mortgagee shall cancel the insurance endorsement on the mortgage insurance certificate or note upon receipt of notice from the Commissioner that the contract of insurance is terminated. Notwithstanding any provision in a mortgage instrument, there shall be no voluntary termination charge due the Commissioner on account of the voluntary termination of any mortgage insurance contract where the request for termination is received by the Commissioner on or after May 1, 1972. 
</P>
<CITA TYPE="N">[37 FR 8662, Apr. 29, 1972] 


</CITA>
</DIV8>

</DIV7>


<DIV7 N="94" NODE="24:2.1.1.2.4.2.94" TYPE="SUBJGRP">
<HEAD>Termination of Insurance Contract</HEAD>


<DIV8 N="§ 203.315" NODE="24:2.1.1.2.4.2.94.26" TYPE="SECTION">
<HEAD>§ 203.315   Termination by conveyance to other than Commissioner.</HEAD>
<P>(a) For those mortgages to which the provisions of § 203.368 apply, the contract of insurance shall be terminated under the following circumstances:
</P>
<P>(1) The mortgagee notifies the Commissioner that it will not convey title to the Commissioner and will not file a claim for the insurance benefits when: 
</P>
<P>(i) The mortgagee either acquires the property by any means, or 
</P>
<P>(ii) Acquires the property and gives such notice during the redemption period; or
</P>
<P>(2) The mortgagee notifies the Commissioner that it will not file a claim for the insurance benefits when: 
</P>
<P>(i) The property is bid in and acquired at foreclosure by a party other than the mortgagee, or 
</P>
<P>(ii) After foreclosure of the mortgaged property by the mortgagee the property is redeemed.
</P>
<P>(b) For those mortgages to which the provisions as set forth in § 203.368 do not apply, the contract of insurance shall be terminated under the following circumstances:
</P>
<P>(1) The mortgagee acquires the mortgaged property but does not convey it to the Commissioner;
</P>
<P>(2) The property is bid in and acquired at a foreclosure sale by a party other than the mortgagee;
</P>
<P>(3) After foreclosure the property is redeemed;
</P>
<P>(4) After foreclosure and during the redemption period the mortgagee gives notice that it will not tender the property to the Commissioner.
</P>
<CITA TYPE="N">[52 FR 1327, Jan. 13, 1987] 


</CITA>
</DIV8>


<DIV8 N="§ 203.316" NODE="24:2.1.1.2.4.2.94.27" TYPE="SECTION">
<HEAD>§ 203.316   Termination by prepayment of mortgage.</HEAD>
<P>The contract of insurance shall be terminated if the mortgage is paid in full prior to its maturity. 


</P>
</DIV8>


<DIV8 N="§ 203.317" NODE="24:2.1.1.2.4.2.94.28" TYPE="SECTION">
<HEAD>§ 203.317   Termination by voluntary agreement.</HEAD>
<P>The contract of insurance shall be terminated if the mortgagor and mortgagee jointly request termination. 


</P>
</DIV8>


<DIV8 N="§ 203.318" NODE="24:2.1.1.2.4.2.94.29" TYPE="SECTION">
<HEAD>§ 203.318   Notice of termination by mortgagee.</HEAD>
<P>No contract of insurance shall be terminated until the mortgagee has given written notice thereof to the Commissioner within 15 calendar days from the occurrence of one of the approved methods of termination set forth in this subpart.
</P>
<CITA TYPE="N">[45 FR 31716, May 14, 1980]


</CITA>
</DIV8>


<DIV8 N="§ 203.319" NODE="24:2.1.1.2.4.2.94.30" TYPE="SECTION">
<HEAD>§ 203.319   Pro rata payment of premiums and charges.</HEAD>
<P>No contract of insurance shall be terminated until the mortgagee has paid to the Commissioner the pro rata portion of the current annual MIP or open-end insurance charge as set forth in this subpart. 
</P>
<CITA TYPE="N">[37 FR 8662, Apr. 29, 1972] 


</CITA>
</DIV8>


<DIV8 N="§ 203.320" NODE="24:2.1.1.2.4.2.94.31" TYPE="SECTION">
<HEAD>§ 203.320   Notice and date of termination by Commissioner.</HEAD>
<P>The Commissioner shall notify the mortgagee that the contract of insurance has been terminated and the effective termination date. The termination date shall be the last day of the month in which one of the following events has occurred: 
</P>
<P>(a)(1) For those mortgages to which the provisions of § 203.368 apply, the date foreclosure proceedings were instituted by the mortgagee, or the property was otherwise acquired by the mortgagee or a party other than the mortgagee (including the mortgagor or other party as redemptor) if the mortgagee notifies the Commissioner that title will not be conveyed to the Commissioner and a claim for the insurance benefits will not be presented for payment.
</P>
<P>(2) For those mortgages to which the provisions of § 203.368 do not apply, the date foreclosure proceedings were instituted, or the property was otherwise acquired by the mortgagee, if the mortgagee notifies the Commissioner that title will not be conveyed to the Commissioner.
</P>
<P>(b) The date the mortgage was prepaid in full. 
</P>
<P>(c) The date a voluntary termination request is received by the Commissioner. 
</P>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971, as amended at 52 FR 1327, Jan. 13, 1987]


</CITA>
</DIV8>


<DIV8 N="§ 203.321" NODE="24:2.1.1.2.4.2.94.32" TYPE="SECTION">
<HEAD>§ 203.321   Effect of termination.</HEAD>
<P>Upon termination of the contract of insurance, the obligation to pay any subsequent periodic MIP or open-end insurance charge shall cease and all rights of the mortgagor and mortgagee shall be terminated, except as otherwise provided in this part.
</P>
<CITA TYPE="N">[48 FR 28807, June 23, 1983]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="95" NODE="24:2.1.1.2.4.2.95" TYPE="SUBJGRP">
<HEAD>Default Under Mortgage</HEAD>


<DIV8 N="§ 203.330" NODE="24:2.1.1.2.4.2.95.33" TYPE="SECTION">
<HEAD>§ 203.330   Definition of delinquency and requirement for notice of delinquency to HUD.</HEAD>
<P>(a) A mortgage account is delinquent any time a payment is due and not paid.
</P>
<P>(b) Once each month on a day prescribed by HUD, the mortgagee shall report to HUD all mortgages insured under this part that were delinquent on the last day of the month, or that were reported as delinquent the previous month. The report shall be made in a manner prescribed by HUD.
</P>
<CITA TYPE="N">[71 FR 16234, Mar. 31, 2006]


</CITA>
</DIV8>


<DIV8 N="§ 203.331" NODE="24:2.1.1.2.4.2.95.34" TYPE="SECTION">
<HEAD>§ 203.331   Definition of default, date of default, and requirement of notice of default to HUD.</HEAD>
<P>(a) <I>Default.</I> If the mortgagor fails to make any payment or to perform any other obligation under the mortgage, and such failure continues for a period of 30 days, the mortgage shall be considered in default for the purposes of this subpart.
</P>
<P>(b) <I>Date of default.</I> For the purposes of this subpart, the date of default shall be considered as 30 days after:
</P>
<P>(1) The first uncorrected failure to perform any obligation under the mortgage; or
</P>
<P>(2) The first failure to make a monthly payment that subsequent payments by the mortgagor are insufficient to cover when applied to the overdue monthly payments in the order in which they became due.
</P>
<P>(c) <I>Notice of default.</I> Once each month, on a day prescribed by HUD, the mortgagee shall report to HUD all mortgages that were in default on the last day of the month, or that were reported as in default the previous month. The report shall be made in a manner prescribed by HUD.
</P>
<P>(d) <I>Number of days in month.</I> For the purposes of this section, each month shall be considered to have 30 days.
</P>
<CITA TYPE="N">[71 FR 16234, Mar. 31, 2006]


</CITA>
</DIV8>


<DIV8 N="§ 203.332" NODE="24:2.1.1.2.4.2.95.35" TYPE="SECTION">
<HEAD>§ 203.332   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 203.333" NODE="24:2.1.1.2.4.2.95.36" TYPE="SECTION">
<HEAD>§ 203.333   Reinstatement of defaulted mortgage.</HEAD>
<P>If after default and prior to the completion of foreclosure proceedings the mortgagor shall cure the default, the insurance shall continue as if a default had not occurred, provided the mortgagor pays to the mortgagee such expenses as the mortgagee has incurred in connection with the foreclosure proceedings and the mortgagee gives written notice of reinstatement to the Commissioner. 


</P>
</DIV8>

</DIV7>


<DIV7 N="96" NODE="24:2.1.1.2.4.2.96" TYPE="SUBJGRP">
<HEAD>Continuation of Insurance</HEAD>


<DIV8 N="§ 203.340" NODE="24:2.1.1.2.4.2.96.37" TYPE="SECTION">
<HEAD>§ 203.340   Special forbearance.</HEAD>
<P>(a) If the conditions of § 203.614 are met and special forbearance relief is granted pursuant to that section, the contract of insurance shall continue in force except as otherwise provided in this subpart. 
</P>
<P>(b) The contract of insurance shall continue in force, except as otherwise provided in this subpart, when the conditions of this section which were effective prior to January 1, 1977, have been met and special forbearance relief is granted pursuant thereto prior to January 1, 1977. 
</P>
<CITA TYPE="N">[41 FR 49735, Nov. 10, 1976] 


</CITA>
</DIV8>


<DIV8 N="§ 203.341" NODE="24:2.1.1.2.4.2.96.38" TYPE="SECTION">
<HEAD>§ 203.341   Partial claim.</HEAD>
<P>If the conditions of § 203.371 are met and a partial claim is paid pursuant to that section, the contract of insurance shall continue in force, except as otherwise provided in this subpart.
</P>
<CITA TYPE="N">[62 FR 60129, Nov. 6, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 203.342" NODE="24:2.1.1.2.4.2.96.39" TYPE="SECTION">
<HEAD>§ 203.342   Mortgage modification.</HEAD>
<P>If a mortgage is recast pursuant to § 203.616, the principal amount of the mortgage, as modified, shall be considered to be the “original principal balance of the mortgage” as that term is used in § 203.401.
</P>
<CITA TYPE="N">[62 FR 60129, Nov. 6, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 203.343" NODE="24:2.1.1.2.4.2.96.40" TYPE="SECTION">
<HEAD>§ 203.343   Partial release, addition or substitution of security.</HEAD>
<P>(a) Except as provided in § 203.389(n), a mortgagee shall not release the security or any part thereof, while the mortgage is insured, without the prior consent of the Commissioner. 
</P>
<P>(b) A mortgagee may, with the prior consent of the Commissioner, accept an addition to, or substitution of, security for the purpose of removing the dwelling to a new lot under the following conditions: 
</P>
<P>(1) The mortgagee obtains a good and valid first lien on the property to which the dwelling is removed. 
</P>
<P>(2) All damages to the structure are repaired without cost to HUD. 
</P>
<P>(3) The property to which the dwelling is removed is in an area known to be reasonably free from natural hazards or, if in a flood zone, the mortgagor will insure or reinsure under the National Flood Insurance Program or obtain equivalent private flood insurance coverage as defined in § 203.16a. 
</P>
<P>(c) A mortgagee may, without the prior consent of the Commissioner, accept an addition to, or substitution of, security for the purpose of removing the dwelling to a new lot under the following conditions. 
</P>
<P>(1) The dwelling has survived an earthquake or other disaster with little damage, but continued location on the property might be hazardous. 
</P>
<P>(2) The conditions stated in paragraph (b) of this section exist. 
</P>
<P>(3) Immediately following the emergency removal the mortgagee notifies the Commissioner of the reasons for removal. 
</P>
<CITA TYPE="N">[41 FR 49735, Nov. 10, 1976, as amended at 87 FR 70743, Nov. 21, 2022] 


</CITA>
</DIV8>

</DIV7>


<DIV7 N="97" NODE="24:2.1.1.2.4.2.97" TYPE="SUBJGRP">
<HEAD>Forbearance Relief for Military Personnel</HEAD>


<DIV8 N="§ 203.345" NODE="24:2.1.1.2.4.2.97.41" TYPE="SECTION">
<HEAD>§ 203.345   Postponement of principal payments—mortgagors in military service.</HEAD>
<P>In addition to the special forbearance relief afforded by §§ 203.340 through 203.342, if the mortgagor is a person in the military service (as defined in the Soldiers' and Sailors' Civil Relief Act of 1940), the mortgagee may, by written agreement with the mortgagor, postpone for the period of military service and three months thereafter any part of the monthly payment which represents amortization of principal. The agreement shall contain a provision for the resumption of monthly payments after such period in amounts which will completely amortize the mortgage debt within the maturity as provided in the original mortgage. The agreement shall in no way affect the amount of the annual MIP which will continue to be calculated in accordance with the original amortization provisions of the mortgage. 


</P>
</DIV8>


<DIV8 N="§ 203.346" NODE="24:2.1.1.2.4.2.97.42" TYPE="SECTION">
<HEAD>§ 203.346   Postponement of foreclosure—mortgagors in military service.</HEAD>
<P>If at any time during default the mortgagor is a “Person in military service,” as such term is defined in the Soldiers' and Sailors' Civil Relief Act of 1940, the period during which the mortgagor is in such service shall be excluded in computing the period within which the mortgagee shall commence foreclosure or acquire the property by other means as provided in § 203.355 of this subpart. No postponement or delay in the prosecution of foreclosure proceedings during the period the mortgagor is in such military service shall be construed as failure on the part of the mortgagee to exercise reasonable diligence in prosecuting such proceedings to completion as required by this subpart. 
</P>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971, as amended at 61 FR 36265, July 9, 1996]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="98" NODE="24:2.1.1.2.4.2.98" TYPE="SUBJGRP">
<HEAD>Assignment of Mortgage</HEAD>


<DIV8 N="§ 203.350" NODE="24:2.1.1.2.4.2.98.43" TYPE="SECTION">
<HEAD>§ 203.350   Assignment of mortgage.</HEAD>
<P>(a) <I>Assignment of modified mortgages pursuant to section 230, National Housing Act.</I> HUD may accept an assignment of any mortgage covering a one-to-four family residence if the following requirements are met: 
</P>
<P>(1) The mortgage was in default; 
</P>
<P>(2) The mortgagee has modified the mortgage under § 203.616 to cure the default and to provide for mortgage payments within the reasonable ability of the mortgagor to pay, at an interest rate not exceeding current market interest rates; and 
</P>
<P>(3) Such other conditions that HUD may prescribe, which may include the requirement that the mortgagee continue to be responsible for servicing the mortgage. 
</P>
<P>(b) <I>Assignments pursuant to section 248, National Housing Act.</I> Notwithstanding the provisions of paragraph (a), the Commissioner shall, upon application by the mortgagee, approve the assignment to the Commissioner of any mortgage insured pursuant to section 248 of the National Housing Act (see § 203.43h) where the mortgagor has been in default for more than 90 days. The mortgagee may not request the Commissioner to accept an assignment until the mortgagee has submitted documents to the Commissioner showing that the requirements of § 203.604 have been met. HUD shall then notify the mortgagee of its approval of the mortgagee's actions under § 203.604 and that the mortgagee may assign the mortgage to the Secretary, or HUD will specify what further action the mortgagee must take to meet the requirements of § 203.604.
</P>
<P>(c) <I>Assignment of mortgages insured pursuant to section 247, National Housing Act.</I> Notwithstanding the provisions of paragraph (a) of this section, the Secretary will, upon application by the mortgagee, agree to accept an assignment of any mortgage insured pursuant to section 247 of the National Housing Act (§ 203.43i of this part) where the mortgagor has been in default for more than 180 days, provided that the requirements of § 203.665 are satisfied.
</P>
<P>(d) <I>Assignment of mortgages authorized by section 203(q), National Housing Act.</I> Notwithstanding the provisions of paragraph (a) of this section, the Secretary will, upon application by the mortgagee, agree to accept assignment of any mortgage authorized by section 203(q) of the National Housing Act (§ 203.43j of this part) if 
</P>
<P>(1) The mortgagor has been in default for more than 90 days for failure to make a monthly payment, 
</P>
<P>(2) The requirements of § 203.666 are satisfied, and 
</P>
<P>(3) The date of default occurs before the mortgagor and the lessor execute a lease renewal or a new lease with a term of not less than five years beyond the maturity date of the mortgage, or with a term established by an arbitration award. 
</P>
<FP>If the default is non-monetary, the date of default occurs prior to an action described in paragraph (d)(3) of this section, the requirements of § 203.666 are satisfied, and the mortgagor has been in default for more than 30 days, the Secretary may in his or her discretion, upon application by the mortgagee, agree to accept an assignment of the mortgage. If the leasehold estate has terminated before the mortgage has been assigned, or title to the property conveyed, to the Secretary, and the mortgage is in default for any reason for more than 30 days, the Secretary will, upon application by the mortgagee, agree to accept an assignment of the mortgage. 
</FP>
<P>(e) <I>Filing assignment for record.</I> Within 30 days of the Secretary's written agreement to accept assignment of a defaulted mortgage, or within such additional time as the Secretary authorizes in writing, the mortgagee must file the assignment for record.
</P>
<APPRO TYPE="N">(Information collection requirements in paragraph (b) were approved by the Office of Management and Budget under control number 2502-0169)
</APPRO>
<CITA TYPE="N">[51 FR 21872, June 16, 1986, as amended at 52 FR 48202, Dec. 21, 1987; 53 FR 9869, Mar. 28, 1988; 53 FR 13404, Apr. 25, 1988; 55 FR 282, Jan. 4, 1980; 61 FR 35018, July 3, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.351" NODE="24:2.1.1.2.4.2.98.44" TYPE="SECTION">
<HEAD>§ 203.351   Application for insurance benefits and fiscal data.</HEAD>
<P>On the date the assignment of the mortgage is filed for record, the mortgagee shall forward to the Commissioner the prescribed application for insurance benefits and fiscal data pertaining to the mortgage transaction, together with the receipts covering all disbursements, as required by the fiscal data form. In addition, the following requirements shall be met: 
</P>
<P>(a) <I>Items to be included with application.</I> The following items shall be forwarded to the Commissioner with the application: 
</P>
<P>(1) <I>Credit and security instrument.</I> The original credit and security instruments assigned without recourse or warranty, except that no act or omission of the mortgagee shall have impaired the validity and priority of the mortgage. 
</P>
<P>(2) <I>Recorded assignment instrument.</I> The original of the recorded assignment of mortgage. If the original of the assignment is not available, a copy shall be furnished and the original forwarded as soon as possible. 
</P>
<P>(3) <I>Hazard insurance.</I> All hazard insurance policies held in connection with the mortgaged property, together with a copy of the mortgagee's notification to the carrier authorizing the amendment of the loss payable clause substituting the Commissioner as the mortgagee. 
</P>
<P>(4) <I>Rights and interests.</I> An assignment of all rights and interests arising under the mortgage, and all claims of the mortgagee against the mortgagor or others arising out of the mortgage transaction. 
</P>
<P>(5) <I>Property.</I> All property of the mortgagor held by the mortgagee or to which it is entitled (other than the cash items which are to be retained by the mortgagee). 
</P>
<P>(6) <I>Records and accounts.</I> All records, ledger cards, documents, books, papers and accounts relating to the mortgage transaction. 
</P>
<P>(7) <I>Additional information.</I> Any additional information or data which the Commissioner may require. 
</P>
<P>(8) <I>Title evidence.</I> All title evidence held by the mortgagee. It need not be extended to include the recordation of the assignment. If a mortgagee's title policy is furnished, the Commissioner shall be a named insured under such policy. 
</P>
<P>(b) <I>Items to be retained by mortgagee.</I> The mortgagee shall retain all cash amounts held or deposited for the account of the mortgagor or to which it is entitled under the mortgage transaction that have not been applied in reduction of the principal mortgage indebtedness. 
</P>
<P>(c) Title evidence for mortgages insured under § 203.43d as set forth in § 203.385 shall accompany the application for insurance benefits.
</P>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971, as amended at 37 FR 7693, Apr. 10, 1972; 42 FR 57435, Nov. 2, 1977] 


</CITA>
</DIV8>


<DIV8 N="§ 203.353" NODE="24:2.1.1.2.4.2.98.45" TYPE="SECTION">
<HEAD>§ 203.353   Certification by mortgagee.</HEAD>
<P>At the time of assignment of the mortgage, the mortgagee shall certify to the Commissioner that: 
</P>
<P>(a) <I>Priority of mortgage to liens.</I> The mortgage is prior to all mechanics' and materialmen's liens filed of record, regardless of when such liens attach, and prior to all liens and encumbrances, or defects which may arise except such liens or other matters as may have been approved by the Commissioner; 
</P>
<P>(b) <I>Amount due.</I> The amount stated in the instrument of assignment is actually due and owing under the mortgage; 
</P>
<P>(c) <I>Offsets or counterclaims.</I> There are no offsets or counterclaims thereto and the mortgagee has a good right to assign. 


</P>
</DIV8>

</DIV7>


<DIV7 N="99" NODE="24:2.1.1.2.4.2.99" TYPE="SUBJGRP">
<HEAD>Claim Procedure</HEAD>


<DIV8 N="§ 203.355" NODE="24:2.1.1.2.4.2.99.46" TYPE="SECTION">
<HEAD>§ 203.355   Acquisition of property.</HEAD>
<P>(a) <I>In general.</I> Upon default of a mortgage, except as provided in paragraphs (b) through (i) of this section, the mortgagee shall take one of the following actions within nine months from the date of default, or within any additional time approved by the Secretary or authorized by §§ 203.345 or 203.346. For mortgages where the date of default is on or after February 1, 1998, the mortgagee shall take one or a combination of the following actions within six months of the date of default or within such additional time approved by HUD or authorized by §§ 203.345 or 203.346:
</P>
<P>(1) Obtain a deed-in-lieu of foreclosure (see §§ 203.357, 203.389 and 203.402(f) of this part) with title being taken in the name of the mortgagee or the Secretary;
</P>
<P>(2) Commence foreclosure;
</P>
<P>(3) Enter into a special forbearance agreement under § 203.614;
</P>
<P>(4) Complete a modification of the mortgage under § 203.616;
</P>
<P>(5) Complete a refinance of the mortgage under § 203.43(c);
</P>
<P>(6) Complete an assumption under § 203.512;
</P>
<P>(7) File a partial claim under § 203.371; or
</P>
<P>(8) Initiate a pre-foreclosure sale under § 203.370.
</P>
<P>(b) <I>Vacant or abandoned property.</I> With respect to defaulted mortgages on vacant or abandoned property, if the mortgagee discovers, or should have discovered, that the property is vacant or abandoned, the mortgagee must commence foreclosure within the later of 120 days after the date the property became vacant, or 60 days after the date the property is discovered, or should have been discovered, to be vacant or abandoned; but no later than the number of months from the date of default as provided in paragraph (a) of this section. The mortgagee must not delay foreclosure on vacant or abandoned property because of the requirements of § 203.606. 
</P>
<P>(c) <I>Prohibition of foreclosure within time limits.</I> If the laws of the State in which the mortgaged property is located, or Federal bankruptcy law:
</P>
<P>(1) Do not permit the commencement of foreclosure within the time limits described in paragraphs (a), (b), (g), (h) and (i) of this section, the mortgagee must commence foreclosure within 90 days after the expiration of the time during which foreclosure is prohibited; or
</P>
<P>(2) Require the prosecution of a foreclosure to be discontinued, the mortgagee must recommence the foreclosure within 90 days after the expiration of the time during which foreclosure is prohibited.
</P>
<P>(d) <I>Property located on Indian land.</I> Upon default of a mortgage on property located on Indian land insured pursuant to section 248 of the National Housing Act (see § 203.43h of this part), the mortgagee must comply with §§ 203.350(b) and 204.664 of this part.
</P>
<P>(e) <I>Property located on Hawaiian home lands.</I> Upon default of a mortgage on property located on Hawaiian home lands insured pursuant to section 247 of the National Housing Act (see § 203.43i of this part), the mortgagee must comply with §§ 203.350(c) and 203.665 of this part.
</P>
<P>(f) <I>Property located on the Allegany Reservation of the Seneca Nation of Indians.</I> Upon default of a mortgage on property located on the Allegany Reservation of the Seneca Nation of Indians authorized by section 203(q) of the National Housing Act (see § 203.43j of this part), the mortgagee must comply with §§ 203.350(d) and 203.666 of this part, unless the mortgagor and the lessor have executed a lease renewal or a new lease either with a term of not less than five years beyond the maturity date of the mortgage, or with a term established by arbitration award. If a lease renewal or new lease has been executed, the mortgagee must comply with paragraph (a) of this section.
</P>
<P>(g) <I>Pre-foreclosure sale procedure.</I> Within 90 days of the end of a mortgagor's participation in the pre-foreclosure sale procedure, <I>or</I> within the time limit described in paragraph (a) of this section, whichever is later, if no closing of an approved pre-foreclosure sale has occurred, the mortgagee must obtain a deed in lieu of foreclosure, with title being taken in the name of the mortgagee or the Secretary, or undertake one of the actions listed at § 203.355(a). The end-of-participation date is defined as:
</P>
<P>(1) Four months after the date of commencement of participation, if there is no signed Contract of Sale at that time, unless extended by the Commissioner; 
</P>
<P>(2) Six months after the date of commencement of participation, if there is a signed contract but settlement has not occurred by that date, unless extended by the Commissioner; 
</P>
<P>(3) The date the mortgagee is notified of the mortgagor's withdrawal from the Pre-foreclosure Sale procedure; or 
</P>
<P>(4) The date of the letter sent by the mortgagee to the mortgagor prior to the expiration of the customary participation period, terminating the mortgagor's opportunity to participate in the Pre-foreclosure Sale procedure. 
</P>
<P>(h) <I>Special forbearance.</I> If the mortgagor fails to meet the requirements of a special forbearance under § 203.614 and the failure continues for 60 days, the mortgagee must undertake one of the actions listed at § 203.355(a) within the time limit described in paragraph (a) of this section or 90 days after the mortgagor's failure to meet the special forbearance requirements, whichever is later.
</P>
<P>(i) <I>Modification under § 203.616, refinance under § 203.43(c), or assumption under § 203.512.</I> Provided that the mortgagee has established the mortgagor's eligibility within the time frame provided in § 203.355(a), if a mortgagee enters into a loss mitigation relief measure (<I>i.e.,</I> modification under § 203.616, refinance under § 203.43(c), or assumption under § 203.512) and it fails, the six-month period provided in § 203.355(a) is extended by an additional 90 days to allow the mortgagee to try another loss mitigation tool or go to foreclosure.
</P>
<CITA TYPE="N">[57 FR 47970, Oct. 20, 1992, as amended at 59 FR 50143, Sept. 30, 1994; 60 FR 57678, Nov. 16, 1995; 61 FR 35018, July 3, 1996; 62 FR 60129, Nov. 6, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 203.356" NODE="24:2.1.1.2.4.2.99.47" TYPE="SECTION">
<HEAD>§ 203.356   Notice of foreclosure and pre-foreclosure sale; reasonable diligence requirements.</HEAD>
<P>(a) <I>Notice of foreclosure and pre-foreclosure sale.</I> The mortgagee must give notice to the Secretary, in a format prescribed by the Secretary, within 30 days after the institution of foreclosure proceedings. The mortgagee must give notice to the Secretary, in a format prescribed by the Secretary, within the time-frame prescribed by the Secretary, of the acceptance of any mortgagor into the pre-foreclosure sale procedure. 
</P>
<P>(b) <I>Reasonable diligence.</I> The mortgagee must exercise reasonable diligence in prosecuting the foreclosure proceedings to completion and in acquiring title to and possession of the property. A time frame that is determined by the Secretary to constitute “reasonable diligence” for each State is made available to mortgagees. 
</P>
<CITA TYPE="N">[61 FR 36265, July 9, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.357" NODE="24:2.1.1.2.4.2.99.48" TYPE="SECTION">
<HEAD>§ 203.357   Deed in lieu of foreclosure.</HEAD>
<P>(a) <I>Mortgagors owning one property.</I> In lieu of instituting or completing a foreclosure, the mortgagee may acquire property from one other than a corporate mortgagor by voluntary conveyance from the mortgagor who certifies that he does not own any other property subject to a mortgage insured or held by FHA. Conveyance of the property by deed in lieu of foreclosure is approved subject to the following requirements: 
</P>
<P>(1) The mortgage is in default at the time the deed is executed and delivered; 
</P>
<P>(2) The credit instrument is cancelled and surrendered to the mortgagor; 
</P>
<P>(3) The mortgage is satisfied of record as a part of the consideration for such conveyance; 
</P>
<P>(4) The deed from the mortgagor contains a covenant which warrants against the acts of the grantor and all claiming by, through, or under him and conveys good marketable title; 
</P>
<P>(5) The mortgagee transfers to the Commissioner good marketable title accompanied by satisfactory title evidence. 
</P>
<P>(b) <I>Corporate mortgagors.</I> A mortgagee may accept a deed in lieu of foreclosure from a corporate mortgagor in compliance with the requirements of paragraph (a) of this section, if the mortgagee obtains the prior written consent of the Commissioner. 
</P>
<P>(c) <I>Mortgagors owning more than one property.</I> The mortgagee may accept a deed in lieu of foreclosure in compliance with the provisions of paragraph (a) of this section, from an individual who owns more than one property which is subject to a mortgage insured or held by the FHA if the mortgagee obtains the prior written consent of the Commissioner. 


</P>
</DIV8>


<DIV8 N="§ 203.358" NODE="24:2.1.1.2.4.2.99.49" TYPE="SECTION">
<HEAD>§ 203.358   Direct conveyance of property.</HEAD>
<P>In acquiring the property or conveying the property to the Commissioner the mortgagee may arrange for the deed to be made directly to the Commissioner from the mortgagor or other grantor. The mortgagee shall be responsible for determining that such conveyance will comply with all of the provisions of this part conveying good marketable title and satisfactory title evidence. 


</P>
</DIV8>


<DIV8 N="§ 203.359" NODE="24:2.1.1.2.4.2.99.50" TYPE="SECTION">
<HEAD>§ 203.359   Time of conveyance to the Secretary.</HEAD>
<P>(a) <I>For mortgages insured under firm commitments issued prior to November 19, 1992 or under direct endorsement processing where the credit worksheet was signed by the mortgagee's approved underwriter prior to November 19, 1992.</I> After acquiring good marketable title to and possession of the property the mortgagee must transfer the property to the Secretary:
</P>
<P>(1) Within 30 days after acquiring possession of the mortgaged property by foreclosure or other means; or
</P>
<P>(2) Within such further time as may be necessary to complete the title examination and perfect the title.
</P>
<P>(b) <I>For mortgages insured under firm commitments issued on or after November 19, 1992, or under direct endorsement processing where the credit worksheet was signed by the mortgagee's underwriter on or after November 19, 1992</I>—(1) <I>Conveyance by the mortgagee.</I> The mortgagee must acquire good marketable title and transfer the property to the Secretary within 30 days of the later of:
</P>
<P>(i) Filing for record the foreclosure deed;
</P>
<P>(ii) Recording date of deed in lieu of foreclosure;
</P>
<P>(iii) Acquiring possession of the property;
</P>
<P>(iv) Expiration of the redemption period; or
</P>
<P>(v) Such further time as the Secretary may approve in writing.
</P>
<P>(2) <I>Direct conveyance.</I> In cases where the mortgagee arranges for a direct conveyance of the property to the Secretary, the mortgagee must ensure that the property is transferred to the Secretary within 30 days of the reasonable diligence time frame specified in § 203.356 of this part.
</P>
<CITA TYPE="N">[57 FR 47971, Oct. 20, 1992, as amended at 61 FR 36453, July 10, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.360" NODE="24:2.1.1.2.4.2.99.51" TYPE="SECTION">
<HEAD>§ 203.360   Notice of property transfer or pre-foreclosure sale and application for insurance benefits.</HEAD>
<P>(a) On the date the deed is filed for record the mortgagee shall notify the Commissioner on a form prescribed by him of the filing of such conveyance and shall assign, without recourse or warranty any or all claims which the mortgagee has acquired in connection with the mortgage transaction, and as a result of the foreclosure proceedings or other means by which the mortgagee acquired or conveyed such property, except such claims as may have been released with the approval of the Commissioner. 
</P>
<P>(b) Within 30 days of the closing of an approved pre-foreclosure sale, the mortgagee shall notify the Commissioner on a form prescribed by him of the pre-foreclosure sale. 
</P>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971, as amended at 59 FR 50144, Sept. 30, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 203.361" NODE="24:2.1.1.2.4.2.99.52" TYPE="SECTION">
<HEAD>§ 203.361   Acceptance of property by Commissioner.</HEAD>
<P>Upon receipt of notice of property transfer the Commissioner shall accept title to and possession of the property as of the date of the filing for record of the deed to the Commissioner, subject to compliance with the regulations in this part. 


</P>
</DIV8>


<DIV8 N="§ 203.362" NODE="24:2.1.1.2.4.2.99.53" TYPE="SECTION">
<HEAD>§ 203.362   Conditions for withdrawal of application for insurance benefits.</HEAD>
<P>With the consent of the Commissioner, a mortgagee may withdraw an application for insurance benefits if the mortgagee agrees that it will: 
</P>
<P>(a) Accept a reconveyance of the property under a deed which warrants against the acts of the Commissioner and all claiming by, through, or under him; and 
</P>
<P>(b) Promptly file a reconveyance for record; and 
</P>
<P>(c) Accept without continuation the title evidence which it furnished the Commissioner; and 
</P>
<P>(d) Reimburse the Commissioner for property expenditures as set forth in § 203.364. 


</P>
</DIV8>


<DIV8 N="§ 203.363" NODE="24:2.1.1.2.4.2.99.54" TYPE="SECTION">
<HEAD>§ 203.363   Effect of noncompliance with regulations.</HEAD>
<P>(a) <I>For mortgages insured under firm commitments issued prior to November 19, 1992 or under direct endorsement processing where the credit worksheet was signed by the mortgagee's approved underwriter prior to November 19, 1992.</I> If, for any reason, the mortgagee fails to comply with the regulations in this subpart, the Secretary may hold processing of the application for insurance benefits in abeyance for a reasonable time in order to permit the mortgagee to comply, or, in the alternative, the Secretary may reconvey title to the property to the mortgagee, in which event the application for insurance benefits shall be considered as cancelled without prejudice to the rights of the mortgagee to reapply for insurance benefits at a subsequent date.
</P>
<P>(b) <I>For mortgages insured under firm commitments issued on or after November 19, 1992, or under direct endorsement processing where the credit worksheet was signed by the mortgagee's underwriter on or after November 19, 1992.</I> If, for any reason, the mortgagee fails to comply with the regulations in this subpart, the Secretary may hold processing of the application for insurance benefits in abeyance for a reasonable time in order to permit the mortgagee to comply. In the alternative to holding processing in abeyance, the Secretary may reconvey title to the property to the mortgagee, in which event the application for insurance benefits shall be considered as cancelled and the mortgagee shall refund the insurance benefits to the Secretary as well as other funds required by § 203.364 of this part. The mortgagee may reapply for insurance benefits at a subsequent date; provided, however, that the mortgagee may not be reimbursed for any expenses incurred in connection with the property after it has been reconveyed by the Secretary, or paid any debenture interest accrued after the date of initial conveyance or after the date conveyance was required by § 203.359 of this part, whichever is earlier, and there will be deducted from the insurance benefits any reduction in the Secretary's estimate of the value of the property occurring from the time of reconveyance to the time of reapplication.
</P>
<CITA TYPE="N">[57 FR 47971, Oct. 20, 1992, as amended at 61 FR 36453, July 10, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.364" NODE="24:2.1.1.2.4.2.99.55" TYPE="SECTION">
<HEAD>§ 203.364   Mortgagee's liability for property expenditures.</HEAD>
<P>Where the Secretary acquires a property and thereafter it becomes necessary for the Secretary to reconvey the property to the mortgagee due to the mortgagee's noncompliance with these regulations or the application for insurance benefits is withdrawn with the consent of the Secretary, the mortgagee shall reimburse the Secretary for all expenses incurred in connection with such acquisition and reconveyance. The reimbursement shall include interest on the amount of insurance benefits refunded by the mortgagee from the date the insurance benefits were paid to the date of refund at an interest rate set in conformity with the Treasury Fiscal Requirements Manual, and the Secretary's cost of holding the property, accruing on a daily basis, from the date the deed to the Secretary was filed for record to the date of reconveyance. These costs are based on the Secretary's estimate of the taxes, maintenance and operating expenses of the property, and administrative expenses. Appropriate adjustments shall be made by the Secretary on account of any income received from the property.
</P>
<CITA TYPE="N">[57 FR 47971, Oct. 20, 1992]


</CITA>
</DIV8>


<DIV8 N="§ 203.365" NODE="24:2.1.1.2.4.2.99.56" TYPE="SECTION">
<HEAD>§ 203.365   Documents and information to be furnished the Secretary; claims review.</HEAD>
<P>(a) <I>Items to be furnished the Secretary.</I> Within 45 days after the deed is filed for record, in the case of a conveyance claim; or, in the case of a claim arising from a pre-foreclosure sale, within 30 days after the closing of the pre-foreclosure sale, unless extended by the Commissioner, the mortgagee must forward to the Secretary: 
</P>
<P>(1) A copy of the deed to the Secretary that has been filed for record and the title evidence continued so as to include recordation of the deed; or evidence, as prescribed by the Secretary, of the closing of the pre-foreclosure sale. 
</P>
<P>(2) Fiscal data pertaining to the mortgage transaction. 
</P>
<P>(3) Any additional information or data that the Secretary may require. 
</P>
<P>(b) <I>Items to be retained by mortgagee.</I> The mortgagee must retain all cash amounts, held or deposited for the account of the mortgagor or to which it is entitled under the mortgage transaction, that have not been applied in reduction of the principal mortgage indebtedness.
</P>
<P>(c) <I>Claim file to be maintained by mortgagee.</I> (1) The Secretary may verify the accuracy of information regarding the insurance claim either before payment of the claim or after payment by periodic reviews of the mortgagee's records. Mortgagees must reimburse the Secretary for any claim and interest overpaid because of incorrect, unsupported, or inappropriate information provided by the mortgagee, or because of failure to provide correct information.
</P>
<P>(2) Mortgagees must maintain a claim file containing documentation supporting all information submitted for claim payment for at least three years after a claim has been paid. All claim files for claims paid during a period relating to an unresolved or ongoing claim review must be maintained until final resolution of such review. Information to be maintained in the claim file includes receipts covering all disbursements as required by the fiscal data form, ledger cards covering the mortgage transaction, and any additional information or data relevant to the mortgage transaction or insurance claim.
</P>
<P>(3) The Secretary may review any claim file at any time during the three-year period after the claim has been paid. Denial of access to any files will be grounds for withdrawal of the mortgagee's approved lender status, debarment by the Secretary, or immediate suspension of all claim payments.
</P>
<P>(4) Within 24 hours of a request by the Secretary, a mortgagee must make available for review, or forward to the Secretary, hard copies of identified claim files.
</P>
<P>(d) <I>Statistical sampling.</I> HUD may use statistical sampling in selecting claims to be reviewed and in determining the amount due the Secretary because of overpayment.
</P>
<CITA TYPE="N">[57 FR 47972, Oct. 20, 1992, as amended at 59 FR 50144, Sept. 30, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 203.366" NODE="24:2.1.1.2.4.2.99.57" TYPE="SECTION">
<HEAD>§ 203.366   Conveyance of marketable title.</HEAD>
<P>(a) <I>Satisfactory conveyance of title and transfer of possession.</I> The mortgagee shall tender to the Commissioner a satisfactory conveyance of title and transfer of possession of the property. The deed or other instrument of conveyance shall convey good marketable title to the property, which shall be accompanied by title evidence satisfactory to the Commissioner. 
</P>
<P>(b) <I>Conveyance of property without good marketable title.</I> (1) For mortgages insured under firm commitments issued on or after November 19, 1992, or under direct endorsement processing where the credit worksheet was signed by the mortgagee's underwriter on or after November 19, 1992, if the title to the property conveyed by the mortgagee to the Secretary is not good and marketable, the mortgagee must correct any title defect within 60 days after receiving notice from the Secretary, or within such further time as the Secretary may approve in writing. 
</P>
<P>(2) If the defect is not corrected within 60 days, or such further time as the Secretary approves in writing, the mortgagee must reimburse the Secretary for HUD's costs of holding the property, accruing on a daily basis, and interest on the amount of insurance benefits paid to the mortgagee at an interest rate set in conformity with the Treasury Fiscal Requirements Manual from the date of such notice to the date the defect is corrected or until the Secretary reconveys the property to the mortgagee, as described in paragraph (b)(3) of this section. The daily holding costs to be charged a mortgagee shall include the costs specified in § 203.364 of this part.
</P>
<P>(3) If the title defect is not corrected within a reasonable time, as determined by HUD, the Secretary will, after notice, reconvey the property to the mortgagee and the mortgagee must reimburse the Secretary in accordance with §§ 203.363 and 203.364 of this part.
</P>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971, as amended at 57 FR 47972, Oct. 20, 1992; 61 FR 36453, July 10, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.367" NODE="24:2.1.1.2.4.2.99.58" TYPE="SECTION">
<HEAD>§ 203.367   Contents of deed and supporting documents.</HEAD>
<P>The deed and supporting accompanying documents shall be as follows: 
</P>
<P>(a) <I>Deed.</I> A deed conveying the property to the Federal Housing Commissioner. The deed shall: 
</P>
<P>(1) Contain covenants which warrant title against acts of the grantor, and all claiming by, through, or under said grantor, if the grantor is the mortgagee or mortgagor; if the grantor is a party other than the mortgagee or mortgagor, the special warranty covenants may be limited or amended to accord with the law of the particular jurisdiction. 
</P>
<P>(2) Recite nominal consideration, if such recital is adequate under the laws of the State in which the property is located or such other consideration as may be necessary to support the deed. 
</P>
<P>(b) <I>Maps or survey.</I> A map or diagram showing property location with reference to public streets or roads or a survey, if available. When a part of the property has been taken by condemnation proceedings or conveyance in lieu of condemnation, a map or diagram showing the part taken and the property remaining is required. 
</P>
<P>(c) <I>Credit documents.</I> The original credit and security instruments, if available or a deficiency judgment, if any, duly assigned or endorsed by the mortgagee, without recourse, to the Commissioner. 


</P>
</DIV8>


<DIV8 N="§ 203.368" NODE="24:2.1.1.2.4.2.99.59" TYPE="SECTION">
<HEAD>§ 203.368   Claims without conveyance procedure.</HEAD>
<P>(a)(1) The requirements of this section apply to any insured mortgage subject to this subpart which was either insured pursuant to: 
</P>
<P>(i) A conditional commitment issued on or after November 30, 1983 or, as appropriate, 
</P>
<P>(ii) An application for mortgage insurance endorsement under the Single Family Direct Endorsement Program, as provided in § 203.255(b), where the property appraisal report was signed by the mortgagee's underwriter on or after November 30, 1983.
</P>
<P>(2) The requirements of this section shall also apply to any other mortgages subject to this subpart where the mortgagee elects to provide the notice to HUD required by paragraph (d) of this section.
</P>
<P>(b) Notwithstanding the provisions of paragraph (a) of this section, the requirements of this section do not apply if the mortgaged property has been damaged as set out in § 203.378.
</P>
<P>(c) Nothing in this section shall affect any rights or obligations arising under the procedures set forth in subpart C of this part.
</P>
<P>(d) After initiating proceedings to foreclose an insured mortgage within the coverage of paragraph (a)(1) of this section by judicial, statutory, or other means authorized by the mortgage instrument, the mortgagee shall furnish notice of the foreclosure to the Commissioner, containing such information as shall be prescribed by the Commissioner, together with a copy of the notice of sale, on or before the date of first publication, posting, or other notice. The mortgagee foreclosing an insured mortgage subject to this subpart and within the coverage of paragraph (a)(2) of this section may elect to become subject to this section by providing such notices to the Commissioner in accordance with the preceding sentence.
</P>
<P>(e) Where notice of the foreclosure sale is provided pursuant to paragraph (d) of this section, the Commissioner may elect to cause the mortgaged property to be appraised and to give written notice to the mortgagee, not less than five days prior to the date of the foreclosure sale, of the Commissioner's estimate of the fair market value of the mortgaged property, less adjustments as the Commissioner may deem appropriate (which may include, without limitation, the Commissioner's estimate of holding costs and resale costs that would be incurred if title to the mortgaged property were conveyed to the Commissioner). Such amount is referred to hereafter as the “Commissioner's adjusted fair market value.”
</P>
<P>(f) If the Commissioner fails to provide notice of the Commissioner's adjusted fair market value to the mortgagee not less than five days prior to the scheduled date of foreclosure sale, this section shall have no further application and §§ 203.355 through 203.367 shall apply: <I>Provided,</I> that a mortgagee which receives the Commissioner's notice at any time prior to the foreclosure sale may waive late receipt by so notifying the Commissioner, in which case this section shall apply.
</P>
<P>(g) If the Commissioner provides notice of the Commissioner's adjusted fair market value in accordance with paragraph (e) of this section the following shall be applicable:
</P>
<P>(1) The mortgagee shall tender a bid at the foreclosure sale in the amount of the Commissioner's adjusted fair market value.
</P>
<P>(2) If the mortgagee acquires title to the mortgaged property pursuant to a bid at foreclosure sale in an amount equal to the Commissioner's adjusted fair market value, the mortgagee may elect to retain title to the property and to file a claim for the insurance benefits computed as provided in § 203.401(b).
</P>
<P>(3) If a party other than the mortgagee acquires title to the mortgaged property either pursuant to a bid at foreclosure sale or through the redemption of the property in an amount not less than the Commissioner's adjusted fair market value, the mortgagee may file a claim for the insurance benefits computed as provided in § 203.401(b).
</P>
<P>(4) If the mortgagee acquires title to the mortgaged property pursuant to a bid at foreclosure sale in an amount in excess of the Commissioner's adjusted fair market value, the mortgagee is deemed to have elected to retain title to the property and is limited to filing a claim for the insurance benefits computed as provided in § 203.401(b). In the event the mortgagee can show good cause for having bid an amount in excess of the Commissioner's adjusted fair market value, the Commissioner may, at his discretion, waive the provisions of this subparagraph and allow the mortgagee to convey title to the Commissioner and file a claim for the insurance benefits computed as provided in § 203.401(a). A mortgagee which has elected to follow the provisions of this section pursuant to paragraph (a)(2) of this section and bids an amount in excess of the Commissioner's adjusted fair market value shall not be subject to the provisions of this subparagraph, and may elect to retain or convey title in filing a claim for the insurance benefits.
</P>
<P>(5) In any other case, the mortgagee may file a claim for insurance benefits only upon conveyance of title to the mortgaged property to the Commissioner.
</P>
<P>(h) If the Commissioner provides timely notice of the Commissioner's adjusted fair market value in accordance with paragraph (e), the Commissioner may require the mortgagee to advertise the upcoming sale in addition to the standard legal notices which may be required by state law.
</P>
<P>(i) Where a mortgagee files a claim for the insurance benefits without conveying title to the property to the Commissioner, as authorized by this section:
</P>
<P>(1) Sections 203.358 through 203.367 shall not be applicable.
</P>
<P>(2) The mortgagee shall assign to the Commissioner, without recourse or warranty, any or all claims which the mortgagee has acquired in connection with the mortgage transaction and as a result of the foreclosure proceedings or other means by which the mortgagee or party other than the mortgagee acquired such property, except such claims as may have been released with the approval of the Commissioner.
</P>
<P>(3) The mortgagee shall forward to the Commissioner:
</P>
<P>(i) Fiscal data pertaining to the mortgage transaction;
</P>
<P>(ii) The original credit and security instruments, if available, or a deficiency judgment, if any, duly assigned or endorsed by the mortgagee, without recourse, to the Commissioner; and
</P>
<P>(iii) Any additional information or data which the Commissioner may require.
</P>
<P>(4) The mortgagee shall retain all cash amounts held or deposited for the account of the mortgagor or to which the mortgagee is entitled under the mortgage transaction that have not been applied in reduction of the principal mortgage indebtedness. Cash amounts shall be itemized and deducted from the claim pursuant to § 203.403. Receipts for disbursements are to be retained by the mortgagee and are to be made available upon request by the Commissioner.
</P>
<P>(5) The mortgagee shall file its claim:
</P>
<P>(i) Within 30 days after the mortgagee acquired good marketable title to the property; or
</P>
<P>(ii) Within 30 days after a party other than the mortgagee acquired good marketable title to the property; or
</P>
<P>(iii) In redemption States, within 30 days after the mortgagor or another party redeemed the property or the redemption period has expired; or
</P>
<P>(iv) Within such other time as may be determined by the Commissioner.
</P>
<P>(6) In any case in which the insurance benefits paid include, pursuant to § 203.402(c), hazard insurance premiums paid by the mortgagee, the portion of the hazard insurance premium allocable to the period after acquisition of title by the mortgagee or a third party shall be deducted from the mortgage insurance benefits otherwise payable.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0347)
</APPRO>
<CITA TYPE="N">[52 FR 1327, Jan. 13, 1987, as amended at 61 FR 36453, July 10, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.369" NODE="24:2.1.1.2.4.2.99.60" TYPE="SECTION">
<HEAD>§ 203.369   Deficiency judgments.</HEAD>
<P>(a) <I>Mortgages insured on or after March 28, 1988.</I> (1) For mortgages insured pursuant to firm commitments issued on or after March 28, 1988, or pursuant to direct endorsement processing where the credit worksheet was signed by the mortgagee's underwriter on or after March 28, 1988, the Secretary may require the mortgagee diligently to pursue a deficiency judgment in connection with any foreclosure. With respect to claims filed for insurance benefits on such mortgages, any judgment obtained by the mortgagee must be assigned to the Secretary.
</P>
<P>(2) In cases where the Secretary requires the pursuit of a deficiency judgment and provides the mortgagee with the Secretary's estimate of the fair market value of the property, less adjustments, in accordance with § 203.368(e) of this part, the mortgagee must tender a bid at the foreclosure sale in that amount, and must take all other appropriate steps in accordance with State law to obtain a deficiency judgment. 
</P>
<P>(b) <I>Mortgages insured before March 28, 1988.</I> For mortgages insured pursuant to firm commitments issued before March 28, 1988, or pursuant to direct endorsement processing where the credit worksheet was signed by the mortgagee's underwriter before March 28, 1988, the Secretary may request that the mortgage diligently pursue a deficiency judgment in connection with the foreclosure. With respect to claims filed for insurance benefits on such mortgages, any judgment obtained by the mortgagee must be assigned to the Secretary. 
</P>
<P>(c) In cases where pursuit of a deficiency judgment is requested or required under this section, the Commissioner, where the Commissioner determines it appropriate under State law requirements, may extend the otherwise applicable period of time within which a deficiency judgment (and other claims against the mortgagor) and related credit documents must be assigned to the Commissioner under § 203.360, § 203.367 or § 203.368 of this subpart.
</P>
<P>(d) In addition to meeting the requirements of § 203.356, in cases where the Commissioner determines it necessary because of State law requirements, the Commissioner may also require (or request, as the Commissioner may determine) the mortgagee to provide the Commissioner with notice of the mortgagee's intent to institute foreclosure proceedings a reasonable amount of time before proceedings are instituted, in order that the Commissioner may be able effectively to require or request the mortgagee, in appropriate cases, to seek a deficiency judgment.
</P>
<APPRO TYPE="N">(The information collection requirements contained in this section have been approved by the Office of Management and Budget under control number 2535-0093)
</APPRO>
<CITA TYPE="N">[53 FR 4387, Feb. 16, 1988, as amended at 57 FR 47972, Oct. 20, 1992; 61 FR 36453, July 10, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.370" NODE="24:2.1.1.2.4.2.99.61" TYPE="SECTION">
<HEAD>§ 203.370   Pre-foreclosure sales.</HEAD>
<P>(a) <I>General.</I> HUD will pay FHA insurance benefits to mortgagees in cases where, in accordance with all regulations and procedures applicable to pre-foreclosure sales, the mortgaged property is sold by the mortgagor, after default and <I>prior to</I> foreclosure, at its current fair market value (less adjustments as the Commissioner may deem appropriate) but for less than the mortgage loan amount currently outstanding. 
</P>
<P>(b) <I>Notification of mortgagor.</I> The mortgagee shall give notice, according to prescribed procedures, of the opportunity to be considered for the pre-foreclosure sale procedure to each mortgagor in default. All notices to mortgagors must be in an accessible format, if requested, or if required by the person's known disability, as required by 24 CFR part 9. 
</P>
<P>(c) <I>Eligibility for the Pre-foreclosure Sale Procedure.</I> In order to be considered for the pre-foreclosure sale procedure, a mortgagor: 
</P>
<P>(1) Must be an owner occupant in a single family residence that is security for a mortgage insured under this part, unless otherwise prescribed by the Secretary. 
</P>
<P>(2) Must have an account in default, for such period as determined by the Secretary, which default is the result of an adverse and unavoidable financial situation. 
</P>
<P>(3) Must have, at the time application is made to pursue a pre-foreclosure sale, a mortgaged property whose current fair market value, compared to the amount needed to discharge the mortgage, meets the criterion established by the Secretary, unless a variance is granted by the Secretary. 
</P>
<P>(4) Must have received an appropriate disclosure, as prescribed by the Secretary.
</P>
<CITA TYPE="N">[59 FR 50144, Sept. 30, 1994, as amended at 61 FR 35018, July 3, 1996; 72 FR 56161, Oct. 2, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 203.371" NODE="24:2.1.1.2.4.2.99.62" TYPE="SECTION">
<HEAD>§ 203.371   Partial claim.</HEAD>
<P>(a) <I>General.</I> Notwithstanding the conveyance, sale or assignment requirements for payment of a claim elsewhere in this part, HUD will pay partial FHA insurance benefits to mortgagees after a period of forbearance, the maximum length of which HUD will prescribe, and in accordance with this section. 
</P>
<P>(b) <I>Requirements.</I> The following conditions must be met for payment of a partial claim: 
</P>
<P>(1) The mortgagor has been delinquent for at least 4 months or such other time prescribed by HUD;
</P>
<P>(2) The amount of the arrearage has not exceeded the equivalent of 12 monthly mortgage payments; 
</P>
<P>(3) The mortgagor is able to resume making full monthly mortgage payments; 
</P>
<P>(4) The mortgagor is not financially able to make sufficient additional payments to repay the arrearage within a time frame specified by HUD;
</P>
<P>(5) The mortgagor is not financially qualified to support monthly mortgage payments on a modified mortgage or on a refinanced mortgage in which the total arrearage is included; and
</P>
<P>(6) The mortgagor must have made a minimum number of monthly payments as prescribed by the Secretary on a case-by-case basis.
</P>
<P>(c) <I>Repayment of the subordinate lien.</I> The mortgagor must execute a mortgage in favor of HUD with terms and conditions acceptable to HUD for the amount of the partial claim under § 203.414(a). HUD may require the mortgagee to be responsible for servicing the subordinate mortgage on behalf of HUD. 
</P>
<P>(d) <I>Application for insurance benefits.</I> Along with the prescribed application for partial claim insurance benefits, the mortgagee shall provide HUD with the original credit instrument no later than 60 days after execution. The mortgagee shall provide HUD with the original security instrument, required by paragraph (c) of this section, no later than 6 months following the date of execution. If the mortgagee experiences a delay from the recording authority, it may request an extension of time, in writing, from HUD. If the mortgagee does not provide the original of the note and security instrument within the prescribed deadlines, the mortgagee shall be required to reimburse the amount of the claim paid, including the incentive.
</P>
<CITA TYPE="N">[61 FR 35018, July 3, 1996, as amended at 62 FR 60130, Nov. 6, 1997; 72 FR 56161, Oct. 2, 2007]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="100" NODE="24:2.1.1.2.4.2.100" TYPE="SUBJGRP">
<HEAD>Condition of Property</HEAD>


<DIV8 N="§§ 203.375-203.376" NODE="24:2.1.1.2.4.2.100.63" TYPE="SECTION">
<HEAD>§§ 203.375-203.376   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 203.377" NODE="24:2.1.1.2.4.2.100.64" TYPE="SECTION">
<HEAD>§ 203.377   Inspection and preservation of properties.</HEAD>
<P>The mortgagee, upon learning that a property subject to a mortgage insured under this part is vacant or abandoned, shall be responsible for the inspection of such property at least monthly, if the loan thereon is in default. When a mortgage is in default and a payment thereon is not received within 45 days of the due date, and efforts to reach the mortgagor by telephone within that period have been unsuccessful, the mortgagee shall be responsible for a visual inspection of the security property to determine whether the property is vacant. The mortgagee shall take reasonable action to protect and preserve such security property when it is determined or should have been determined to be vacant or abandoned until its conveyance to the Secretary, if such action does not constitute an illegal trespass. “Reasonable action” includes the commencement of foreclosure within the time required by § 203.355(b) of this part.
</P>
<CITA TYPE="N">[57 FR 47972, Oct. 20, 1992]


</CITA>
</DIV8>


<DIV8 N="§ 203.378" NODE="24:2.1.1.2.4.2.100.65" TYPE="SECTION">
<HEAD>§ 203.378   Property condition.</HEAD>
<P>(a) <I>Condition at time of transfer.</I> When the property is transferred, or a mortgage is assigned to the Commissioner, the property shall be undamaged by fire, earthquake, flood, or tornado, except as set forth in this subpart. 
</P>
<P>(b) <I>Damage to property by waste.</I> The mortgagee shall not be liable for damage to the property by waste committed by the mortgagor, its heirs, successors or assigns in connection with mortgage insurance claims paid on or after July 2, 1968. 
</P>
<P>(c) <I>Mortgagee responsibility.</I> The mortgagee shall be responsible for:
</P>
<P>(1) Damage by fire, flood, earthquake, hurricane, or tornado; 
</P>
<P>(2) Damage to or destruction of security properties on which the loans are in default and which properties are vacant or abandoned, when such damage or destruction is due to the mortgagee's failure to take reasonable action to inspect, protect and preserve such properties as required by § 203.377 of this part, as to all mortgages insured on or after January 1, 1977; and 
</P>
<P>(3) As to all mortgages insured under firm commitments issued on or after November 19, 1992, or under direct endorsement processing where the credit worksheet was signed by the mortgagee's underwriter on or after November 19, 1992, any damage of whatsoever nature that the property has sustained while in the possession of the mortgage if the property is conveyed to the Secretary without notice to and approval by the Secretary as required by § 203.379 of this part.
</P>
<P>(d) <I>Limitation.</I> The mortgagee's responsibility for property damage shall not exceed the amount of its insurance claim as to a particular property. 
</P>
<CITA TYPE="N">[36 FR 34508, Dec. 22, 1971. Redesignated and amended at 41 FR 49735, Nov. 10, 1976; 57 FR 47973, Oct. 20, 1992; 58 FR 32057, June 8, 1993; 61 FR 36265, July 9, 1996; 61 FR 36453, July 10, 1996] 


</CITA>
</DIV8>


<DIV8 N="§ 203.379" NODE="24:2.1.1.2.4.2.100.66" TYPE="SECTION">
<HEAD>§ 203.379   Adjustment for damage or neglect.</HEAD>
<P>(a) If the property has been damaged by fire, flood, earthquake, hurricane, or tornado, or, for mortgages insured on or after January 1, 1977, the property has suffered damage because of the mortgagee's failure to take action as required by § 203.377, the damage must be repaired before conveyance of the property or assignment of the mortgage to the Secretary, except under the following conditions: 
</P>
<P>(1) If the prior approval of the Secretary is obtained, there will be deducted from the insurance benefits the Secretary's estimate of the cost of repairing the damage or any insurance recovery received by the mortgagee, whichever is greater. 
</P>
<P>(2) If the property has been damaged by fire and was not covered by fire insurance at the time of the damage, or the amount of insurance coverage was inadequate to repair fully the damage, only the amount of insurance recovery received by the mortgagee, if any, will be deducted from the insurance benefits, provided the mortgagee certifies, at the time that a claim is filed for insurance benefits, that: 
</P>
<P>(i) At the time the mortgage was insured, the property was covered by fire insurance in an amount at least equal to the lesser of 100 percent of the insurable value of the improvements, or the principal loan balance of the mortgage; and 
</P>
<P>(ii) The insurer later cancelled this coverage or refused to renew it for reasons other than nonpayment of premium; and 
</P>
<P>(iii) The mortgagee made diligent though unsuccessful efforts within 30 days of any cancellation or non-renewal of hazard insurance, and at least annually thereafter, to secure other coverage or coverage under a FAIR Plan, in an amount described in paragraph (a)(2)(i) of this section, or if coverage to such an extent was unavailable at a reasonable rate, the greatest extent of coverage that was available at a reasonable rate; and 
</P>
<P>(iv) The extent of coverage obtained by the mortgagee in accordance with paragraph (a)(2)(iii) of this section was the greatest available at a reasonable rate, or if the mortgagee was unable to obtain insurance, none was available at a reasonable rate; and 
</P>
<P>(v) The mortgagee took the actions required by § 203.377 of this part. 
</P>
<P>(3) The certification requirements set out in paragraph (a)(2) of this section apply to any mortgage insured by HUD on or after September 22, 1980, for which a claim has not been filed before September 30, 1986. Any mortgage insured on or after September 22, 1980, for which a claim has been filed before September 30, 1986, but the claim has not been settled before that date, will be governed by § 203.379(b) (1986) Edition as it existed immediately before September 30, 1986. 
</P>
<P>(4)(i) As used in this section, <I>reasonable rate</I> means a rate that is not in excess of the rate or advisory rate set by the principal State-licensed rating organization for essential property insurance in the voluntary market, or if coverage is available under a FAIR Plan, the FAIR Plan rate. 
</P>
<P>(ii) If a State has neither a FAIR Plan nor a State-licensed rating organization for essential property insurance in the voluntary market, the mortgagee must provide to the HUD Field Office having jurisdiction, information concerning the lowest rates available from an insurer for the types of coverage involved, with a request for a determination of whether the rate is reasonable. HUD will determine the rate to be reasonable if it approximates the rate assessed for comparable insurance coverage applicable to similarly situated properties in a State that offers a FAIR Plan or maintains a State-licensed rating organization. 
</P>
<P>(b) For mortgages insured under firm commitments issued on or after November 19, 1992, or under direct endorsement processing where the credit worksheet was signed by the mortgagee's underwriter on or after November 19, 1992, the provisions of paragraph (a) of this section apply and, in addition, if the property has been damaged during the time of the mortgagee's possession by events other than fire, flood, earthquake, hurricane, or tornado, or if it was damaged notwithstanding reasonable action by the mortgagee as required by § 203.377 of this part, the mortgagee must provide notice of such damage to the Secretary and may not convey until directed to do so by the Secretary. The Secretary will either: 
</P>
<P>(1) Allow the mortgagee to convey the property damaged; or 
</P>
<P>(2) Require the mortgagee to repair the damage before conveyance, and the Secretary will reimburse the mortgagee for reasonable payments not in excess of the Secretary's estimate of the cost of repair, less any insurance recovery. 
</P>
<P>(c) In the event the damaged property is conveyed to the Secretary without prior notice or approval as provided in paragraphs (a) or (b) of this section, the Secretary may: 
</P>
<P>(1) After notice, reconvey the property to the mortgagee and the mortgagee must reimburse the Secretary in accordance with §§ 203.363 and 203.364 of this part, or 
</P>
<P>(2) Require the mortgagee to reimburse the Secretary for the greater of the Secretary's estimate of the cost of repair or any insurance recovery. 
</P>
<CITA TYPE="N">[57 FR 47973, Oct. 20, 1992, as amended at 61 FR 36265, July 9, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.380" NODE="24:2.1.1.2.4.2.100.67" TYPE="SECTION">
<HEAD>§ 203.380   Certificate of property condition.</HEAD>
<P>(a) The mortgagee shall either: 
</P>
<P>(1) Certify that as of the date of the filing of deed for record, or assignment of the mortgage to the Secretary, the property was: 
</P>
<P>(i) Undamaged by fire, flood, earthquake, hurricane or tornado; and 
</P>
<P>(ii) As to mortgages insured or for which commitments to insure were issued on or after January 2, 1977, undamaged due to failure of the mortgagee to take action as required by § 203.377; and 
</P>
<P>(iii) As to mortgages insured under firm commitments issued on or after November 19, 1992, or under direct endorsement processing where the credit worksheet was signed by the mortgagee's underwriter on or after November 19, 1992, undamaged while the property was in the possession of the mortgage; or 
</P>
<P>(2) Attach to its claim a copy of the Secretary's authorization to convey the property in damaged condition. 
</P>
<P>(b) In the absence of evidence to the contrary, the mortgagee's certificate or description of the damage shall be accepted by the Secretary as establishing the condition of the property, as of the date of the filing of the deed or assignment of the mortgage.
</P>
<CITA TYPE="N">[57 FR 47973, Oct. 20, 1992, as amended at 61 FR 36265, July 9, 1996; 61 FR 36453, July 10, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.381" NODE="24:2.1.1.2.4.2.100.68" TYPE="SECTION">
<HEAD>§ 203.381   Occupancy of property.</HEAD>
<P>The mortgagee shall certify that the property is vacant and contains no personal property as of the date of filing for record of the deed to the Secretary or that the Secretary has consented to accept the property occupied.
</P>
<CITA TYPE="N">[45 FR 59563, Sept. 10, 1980]


</CITA>
</DIV8>


<DIV8 N="§ 203.382" NODE="24:2.1.1.2.4.2.100.69" TYPE="SECTION">
<HEAD>§ 203.382   Cancellation of hazard insurance.</HEAD>
<P>The mortgagee shall cancel any hazard insurance policy as of the date of the filing for record of the deed to the Commissioner subject to the following conditions: 
</P>
<P>(a) The amount of the return premium due the mortgagee because of such cancellation may be calculated on a “short-rate” basis and reported on fiscal data supporting the application for debentures and the amount shall be deducted from the total amount claimed. 
</P>
<P>(b) If the mortgagee's calculation of the return premium is less than the actual return, the amount of the difference between the actual refund and the calculated amount shall be remitted to the Commissioner, accompanied by the carrier's or agent's statement. 
</P>
<P>(c) If the mortgagee's calculation of the return premium is more than the actual return, the mortgagee may file with the Commissioner a claim, supported by the carrier's or agent's statement of the amount of the refund, whereupon the Commissioner shall issue a check to the mortgagee in settlement of the claim. 


</P>
</DIV8>

</DIV7>


<DIV7 N="101" NODE="24:2.1.1.2.4.2.101" TYPE="SUBJGRP">
<HEAD>Property Title Transfers and Title Waivers</HEAD>


<DIV8 N="§ 203.385" NODE="24:2.1.1.2.4.2.101.70" TYPE="SECTION">
<HEAD>§ 203.385   Types of satisfactory title evidence.</HEAD>
<P>The following types of title evidence shall be satisfactory to the Commissioner: 
</P>
<P>(a) <I>Fee or owner's title policy.</I> A fee or owner's policy of title insurance, a guaranty or guarantee of title, or a certificate of title, issued by a title company, duly authorized by law and qualified by experience to issue such instruments. If an owner's policy of title insurance is furnished, it shall show title in the Commissioner and inure to the benefit of his successors in office. 
</P>
<P>(b) <I>Mortgagee's policy of title insurance.</I> A mortgagee's policy of title insurance supplemented by an Abstract and an Attorney's Certificate of Title covering the period subsequent to the date of the mortgage, the terms of the policy shall be such that the liability of the title company will continue in favor of the Commissioner after title is conveyed to him. The policy may be drawn in favor of the mortgagee and the Federal Housing Commissioner, “as their interests may appear”, with the consent of the title company endorsed thereon; 
</P>
<P>(c) <I>Abstract and legal opinion.</I> An abstract of title prepared by an abstract company or individual engaged in the business of preparing abstracts of title and accompanied by the legal opinion as to the quality of such title signed by an attorney at law experienced in examination of titles. If title evidence consists of an Abstract and an Attorney's Certificate of Title, the search shall extend for at least forty years prior to the date of the Certificate to a well recognized source of good title; 
</P>
<P>(d) <I>Torrens of similar certificate.</I> A Torrens or similar title certificate; or 
</P>
<P>(e) <I>Title standard of U.S. or State government.</I> Evidence of title conforming to the standards of a supervising branch of the Government of the United States or of any State or Territory thereof. 


</P>
</DIV8>


<DIV8 N="§ 203.386" NODE="24:2.1.1.2.4.2.101.71" TYPE="SECTION">
<HEAD>§ 203.386   Coverage of title evidence.</HEAD>
<P>Evidence of title shall be executed as of a date to include the recordation of the deed to the Commissioner. The evidence of title shall show that according to the public records, there are not, at such date, any outstanding prior liens, including any past-due and unpaid ground rents, general taxes or special assessments. 


</P>
</DIV8>


<DIV8 N="§ 203.387" NODE="24:2.1.1.2.4.2.101.72" TYPE="SECTION">
<HEAD>§ 203.387   Acceptability of customary title evidence.</HEAD>
<P>If the title and title evidence are such as to be acceptable to prudent lending institutions and leading attorneys generally in the community in which the property is situated, such title and title evidence shall be satisfactory to the Secretary and shall be considered as good and marketable. In cases of disagreement, the Secretary will make the final decision.
</P>
<CITA TYPE="N">[57 FR 47974, Oct. 20, 1992]


</CITA>
</DIV8>


<DIV8 N="§ 203.389" NODE="24:2.1.1.2.4.2.101.73" TYPE="SECTION">
<HEAD>§ 203.389   Waived title objections.</HEAD>
<P>The Commissioner shall not object to title by reason of the following matters: 
</P>
<P>(a) Violations of a restriction based on race, color or creed, even where such restriction provides for a penalty of reversion or forfeiture of title or a lien for liquidated damage. 
</P>
<P>(b)(1) Aviation easements, which were approved by the Secretary at the time of the origination of the mortgage, and other customary easements for public utilities, party walls, driveways, and other purposes.
</P>
<P>(2) Easements for public utilities along one or more of the property lines and extending not more than 10 feet therefrom and for drainage or irrigation ditches along the rear 10 feet of the property, provided the exercise of the rights thereunder do not interfere with any of the buildings or improvements located on the subject property. 
</P>
<P>(c) Easements for underground conduits which are in place and do not extend under any buildings on the subject property; 
</P>
<P>(d) Mutual easements for joint driveways constructed partly on the subject property and partly on adjoining property, provided the agreements creating such easements are of record; 
</P>
<P>(e) Encroachments on the subject property by improvements on adjoining property where such encroachments do not exceed 1 foot, provided such encroachments do not touch any buildings or interfere with the use of any improvements on the subject property; 
</P>
<P>(f) Encroachments on adjoining property by eaves and overhanging projections attached to improvements on subject property where such encroachments do not exceed 1 foot. 
</P>
<P>(g) Encroachments on adjoining property by hedges, wooden or wire fences belonging to the subject property; 
</P>
<P>(h) Encroachments on adjoining property by driveways belonging to subject property where such encroachments do not exceed 1 foot, provided there exists a clearance of at least 8 feet between the buildings on the subject property and the property line affected by the encroachment; 
</P>
<P>(i) Variations between the length of the subject property lines as shown on the application for insurance and as shown by the record or possession lines, provided such variations do not interfere with the use of any of the improvements on the subject property and do not involve a deficiency of more than 2 percent with respect to the length of the front line or more than 5 percent with respect to the length of any other line; 
</P>
<P>(j) Encroachments by garages or improvements other than those which are attached to or a portion of the main dwelling structure over easements for public utilities, provided such encroachment does not interfere with the use of the easement or the exercise of the rights of repair and maintenance in connection therewith; 
</P>
<P>(k) Violations of cost or set back restrictions which do not provide a penalty of reversion or forfeiture of title, or a lien for liquidated damages which may be superior to the lien of the insured mortgage. Violations of such restrictions which do provide for such penalties, provided such penalty rights have been duly released or subordinated to the lien of the insured mortgage, or provided a policy of title insurance is furnished expressly insuring the Commissioner against loss by reason of such penalties. 
</P>
<P>(l) Customary building and use restrictions which: 
</P>
<P>(1) Are coupled with a reversionary clause, provided there has been no violation prior to the date of the deed to the Commissioner; or 
</P>
<P>(2) Are not coupled with a reversionary clause and have not been violated to a material extent. 
</P>
<P>(m) Outstanding oil, water or mineral rights (or damage caused by the exercise of such rights) which are customarily waived by prudent leading institutions and leading attorneys in the community. 
</P>
<P>(n) The voluntary or involuntary conveyance of a part of the subject property pursuant to condemnation proceedings or in lieu of condemnation proceedings, if: 
</P>
<P>(1) The part conveyed does not exceed 10 percent by area of the property; 
</P>
<P>(2) No damage to existing structures, improvements, or unrepaired damage to sewage, water, or paving has been suffered; 
</P>
<P>(3) All of the payment received as compensation for the taking by condemnation or conveyance in lieu of condemnation has been applied to reduction of the mortgage indebtedness; 
</P>
<P>(4) The conveyance occurred subsequent to insurance of the mortgage; and 
</P>
<P>(5) There is included with the documents and information furnished the Commissioner with the application for insurance benefits, a statement by the mortgagee that the requirements of this paragraph have been met. 
</P>
<P>(o) Federal tax liens and rights of redemption arising therefrom if the following conditions are observed. If the mortgagee acquires the property by foreclosure the mortgagee shall give notice to the Internal Revenue Service (IRS) of the foreclosure action. The Commissioner will not object to an outstanding right of redemption in IRS if: (1) The Federal tax lien was perfected subsequent to the date of the mortgage lien, and (2) The mortgagee has bid an amount sufficient to make the mortgagee whole if the property is in fact redeemed by the IRS. 
</P>
<CITA TYPE="N">[36 FR 34508, Dec. 22, 1971, as amended at 41 FR 49736, Nov. 10, 1976; 72 FR 56161, Oct. 2, 2007] 


</CITA>
</DIV8>


<DIV8 N="§ 203.390" NODE="24:2.1.1.2.4.2.101.74" TYPE="SECTION">
<HEAD>§ 203.390   Waiver of title—mortgages or property formerly held by the Secretary.</HEAD>
<P>(a) <I>Mortgages sold by the Secretary.</I> (1) If the Secretary sells a mortgage and such mortgage is later reassigned to him or the property covered by such mortgage is later conveyed to him, he will not object to title by reason of any lien or other adverse interest that was senior to the mortgage on the date of the original sale of such mortgage. 
</P>
<P>(2) The Secretary will accept an assignment of a mortgage previously sold by him, where the mortgagee is unable to complete foreclosure because of a defect in the mortgage instrument, a defect in the mortgage transaction, or a defect in title which existed at or prior to the time the mortgage assignment was filed for record. In such instances, the Secretary will not object to title by reason of any such defect. 
</P>
<P>(b) <I>Property sold by the Secretary.</I> (1) If a property held by the Secretary is sold by the Secretary who also insures a mortgage financing the sale, and the mortgage is later reassigned to the Secretary or the property covered by the mortgage is later conveyed to the Secretary, the Secretary will not object to title by reason of any lien or other adverse interest that was senior to the mortgage on the date the mortgage was filed for record, except where the lien or other adverse interest arose from a lien or interest that had already been recorded against the mortgagor. 
</P>
<P>(2) The Secretary will accept an assignment of a mortgage executed in connection with the sale of property by the Secretary, where the mortgagee is unable to complete foreclosure because of a defect in the mortgage instrument, a defect in the mortgage transaction, or a defect in title which existed at or prior to the time the mortgage was filed for record, except where the defect arose from a lien or interest that had already been recorded against the mortgagor on the date that the mortgage was filed for record. Except for the case of a lien or interest that had already been recorded against the mortgagor, the Secretary will not object to title by reason of any of the above defects.
</P>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971, as amended at 58 FR 35370, July 1, 1993; 61 FR 36265, July 9, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.391" NODE="24:2.1.1.2.4.2.101.75" TYPE="SECTION">
<HEAD>§ 203.391   Title objection waiver with reduced insurance benefits.</HEAD>
<P>Payment of an insurance claim will not automatically be refused solely because the title evidence reveals a condition of title not taken into consideration in the original appraisal and not covered by the provisions of § 203.389 of this part, or not otherwise waived in writing by the Secretary. In such instances, the Secretary may, at his or her option, approve the payment of a claim if the mortgagee agrees to accept a reduction in insurance benefits considered adequate by the Secretary to compensate for any anticipated loss to the Mutual Mortgage Insurance Fund as a result of the existence of the title condition at the time of claim.
</P>
<CITA TYPE="N">[57 FR 47974, Oct. 20, 1992]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="102" NODE="24:2.1.1.2.4.2.102" TYPE="SUBJGRP">
<HEAD>Payment of Insurance Benefits</HEAD>


<DIV8 N="§ 203.400" NODE="24:2.1.1.2.4.2.102.76" TYPE="SECTION">
<HEAD>§ 203.400   Method of payment.</HEAD>
<P>(a) If the application for insurance benefits is acceptable to the Commissioner, payment of the insurance claim shall be made in cash, in debentures, or in a combination of both, as determined by the Commissioner either at, or prior to, the time of payment.
</P>
<P>(b) An insurance claim paid on a mortgage insured under section 223(e) of the National Housing Act shall be paid in cash from the Special Risk Insurance Fund.
</P>
<CITA TYPE="N">[80 FR 51468, Aug. 25, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 203.401" NODE="24:2.1.1.2.4.2.102.77" TYPE="SECTION">
<HEAD>§ 203.401   Amount of payment—conveyed and non-conveyed properties.</HEAD>
<P>(a) <I>Conveyed properties.</I> Where a claim for the insurance benefits is filed in accordance with this subpart, based on the conveyance of title to the mortgaged property to the Commissioner, the amount of the insurance benefits shall be computed by adding to the original principal balance of the mortgage (as increased by the amount of open-end advances made by the mortgagee and approved by the Commissioner) which was unpaid on the date of the institution of foreclosure proceedings, on the date of the acquisition of the property otherwise after default, or on the date the property was acquired by the Commissioner under a direct conveyance by the mortgagor, the amount of all payments made by the mortgagee and allowances for items set forth in § 203.402, less all applicable items set forth in § 203.403.
</P>
<P>(b) <I>Claims without conveyance of title.</I> (1) If the mortgagee acquires title to the mortgaged property pursuant to a bid amount equal to the Commissioner's adjusted fair market value and the mortgagee elects to retain title as provided in § 203.368(g)(2), or if the mortgagee acquires title pursuant to a bid in excess of the Commissioner's adjusted fair market value (see § 203.368(g)(4)), the amount of the insurance benefits shall be determined by deducting the amount bid at the sale from the original principal balance of the mortgage (as increased by the amount of open-end advances made by the mortgagee and approved by the Commissioner) which was unpaid on the date of institution of the foreclosure proceedings, and adding to the difference, if any, all applicable items set forth in § 203.402 and subtracting therefrom all applicable items set forth in § 203.403; provided however, that appropriate adjustment shall be made for any such items covered by proceeds of the foreclosure sale. 
</P>
<P>(2) If a party other than the mortgagee acquires title to the mortgaged property pursuant to a bid at foreclosure sale not less in amount than the Commissioner's adjusted fair market value, the amount of the insurance benefits shall be determined by deducting the proceeds of the foreclosure sale distributed to the mortgagee from the original principal balance of the mortgage (as increased by the amount of open-end advances made by the mortgagee and approved by the Commissioner) which was unpaid on the date of the foreclosure proceedings, and adding to the difference, if any, all applicable items set forth in § 203.402 and subtracting therefrom all applicable items set forth in § 203.403; provided, however, that appropriate adjustment shall be made for any such items covered by the proceeds of the foreclosure sale.
</P>
<P>(3) If the mortgagee acquires title to the mortgaged property pursuant to a bid not less in amount than the Commissioner's adjusted fair market value, and the mortgagor or another party redeems the property, the amount of the insurance benefits shall be determined by deducting the amount paid to redeem the property and received by the mortgagee from the original principal balance of that mortgage (as increased by the amount of open-end advances made by the mortgagee and approved by the Commissioner) which was unpaid on the date of the institution of foreclosure proceedings, and adding to the difference, if any, all applicable items set forth in § 203.402 and subtracting therefrom all applicable items set forth in § 203.403; provided however, that appropriate adjustments shall be made for any such items covered by that amount paid by the mortgagor or other party to redeem the property.
</P>
<P>(c) <I>Pre-foreclosure Sales.</I> Where a claim for insurance benefits is filed in accordance with this subpart, based on a pre-foreclosure sale approved by or on behalf of the Secretary (under the provisions of § 203.370), the amount of insurance benefits shall be computed by adding to the original principal balance of the mortgage (as increased by the amount of open-end advances made by the mortgagee and approved by the Commissioner) which was unpaid on the date of closing of the pre-foreclosure sale, the amount of all applicable items set forth in § 203.402; provided however that appropriate adjustment shall be made for any such items covered by proceeds of the pre-foreclosure sale. 
</P>
<P>(d) <I>Final Payment.</I> (1) The mortgagee may not file for any additional payments of its mortgage insurance claim after six months from payment by the Commissioner of the final payment except for: 
</P>
<P>(i) Cases where the Commissioner requests or requires a deficiency judgment. 
</P>
<P>(ii) Other cases where the Commissioner determines it appropriate and expressly authorizes an extension of time. 
</P>
<P>(2) For the purpose of this section, the term <I>final payment</I> shall mean, in the case of claims filed for conveyed properties, the payment under subpart B of this part which is made by the Commissioner based upon the submission by the mortgagee of all required documents and information filed pursuant to § 203.365. In the case of claims filed under claims without conveyance of title, <I>final payment</I> shall mean the payment which is made by the Commissioner based upon submission by the mortgagee of all required documents and information filed pursuant to §§ 203.368 and 203.401(b). In the case of claims filed pursuant to pre-foreclosure sales, <I>final payment</I> shall mean the payment which is made by the Commissioner based upon submission by the mortgagee of all required documents and information filed pursuant to §§ 203.370 and 203.401(d). 
</P>
<CITA TYPE="N">[52 FR 1328, Jan. 13, 1987, as amended at 56 FR 3215, Jan. 29, 1991; 59 FR 50144, Sept. 30, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 203.402" NODE="24:2.1.1.2.4.2.102.78" TYPE="SECTION">
<HEAD>§ 203.402   Items included in payment—conveyed and non-conveyed properties.</HEAD>
<P>The insurance benefits paid in connection with foreclosed properties, whether or not conveyed to the Commissioner; and those properties conveyed to the Commissioner as a result of a deed in lieu of foreclosure; and those properties sold under an approved pre-foreclosure sale shall include the following items: 
</P>
<P>(a) Taxes, ground rents, water rates, and utility charges that are liens prior to the mortgage.
</P>
<P>(b) Special assessments, which are noted on the application for insurance or which become liens after the insurance of the mortgage. 
</P>
<P>(c) Hazard insurance premiums on the mortgaged property not in excess of a <I>reasonable rate</I> as defined in § 203.379(a)(4). 
</P>
<P>(d) Periodic MIP or open-end insurance charges;
</P>
<P>(e) Taxes imposed upon any deeds or other instruments by which said property was acquired by the mortgagee and transferred or conveyed to the Commissioner, or was acquired by the mortgagee and retained pursuant to § 203.368; 
</P>
<P>(f) Foreclosure costs or costs of acquiring the property otherwise (including costs of acquiring the property by the mortgagee and of conveying and evidencing title to the property to HUD, but not including any costs borne by the mortgagee to correct title defects) actually paid by the mortgagee and approved by HUD, in an amount not in excess of two-thirds of such costs or $75, whichever is the greater. For mortgages insured on or after February 1, 1998, the Secretary will reimburse a percentage of foreclosure costs or costs of acquiring the property, which percentage shall be determined in accordance with such conditions as the Secretary shall prescribe. Where the foreclosure involves a mortgage sold by the Secretary on or after August 1, 1969, or a mortgage executed in connection with the sale of property by the Secretary on or after such date, the mortgagee shall be reimbursed (in addition to the amount determined under the foregoing) for any extra costs incurred in the foreclosure as a result of a defect in the mortgage instrument, or a defect in the mortgage transaction or a defect in title which existed at or prior to the time the mortgage (or its assignment by the Secretary) was filed for record, if the mortgagee establishes to the satisfaction of the Commissioner that such extra costs are over and above those customarily incurred in the area.
</P>
<P>(g)(1) <I>For mortgages insured under firm commitments issued before November 19, 1992, or under direct endorsement processing where the credit worksheet was signed by the mortgagee's underwriter before November 19, 1992,</I> reasonable payments made by the mortgagee, with the approval of the Secretary, for the purpose of protecting, operating, or preserving the property, or removing debris from the property. 
</P>
<P>(2) <I>For mortgages insured under firm commitments issued on or after November 19, 1992, or under direct endorsement processing where the credit worksheet was signed by the mortgagee's underwriter on or after November 19, 1992,</I> reasonable payments made by the mortgagee, with the approval of the Secretary, for the purpose of protecting, operating, or preserving the property, or removing debris from the property prior to the time of conveyance required by § 203.359 of this part. 
</P>
<P>(3) Reasonable costs for performing the inspections required by § 203.377 of this part and to determine if the property is vacant or abandoned are considered to be costs of protecting, operating or preserving the property. 
</P>
<P>(h) Any uncollected mortgage interest allowed pursuant to an approved forbearance plan;
</P>
<P>(i) An amount which the Commissioner finds to be sufficient to compensate the mortgagee for any loss which it may have sustained on account of interest on debentures and the payment of any MIP and open-end insurance charge by reason of its having postponed the institution of foreclosure proceedings or the acquisition of the property by other means under a mortgage to which the provisions of sections 302 and 306 of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended, apply during any part or all of the period of the mortgagor's military service and three months thereafter;
</P>
<P>(j) Charges for the administration, operation, maintenance, or repair of community-owned property or the maintenance or repair of the mortgaged property, paid by the mortgagee for the purpose of discharging an obligation arising out of a covenant filed for record prior to the issuance of the mortgage; and charges for the repair or maintenance of the mortgaged property required by, and in an amount approved by, the Secretary under § 203.379 of this part.
</P>
<P>(k)(1) Except as provided in paragraphs (k)(1)(i) and (ii) of this section, for properties conveyed to the Secretary and endorsed for insurance on or before January 23, 2004, an amount equivalent to the debenture interest that would have been earned, as of the date such payment is made, on the portion of the insurance benefits paid in cash, if such portion had been paid in debentures, and for properties conveyed to the Secretary and endorsed for insurance after January 23, 2004, debenture interest at the rate specified in § 203.405(b) from the date specified in § 203.410, as applicable, to the date of claim payment, on the portion of the insurance benefits paid in cash.
</P>
<P>(i) When the mortgagee fails to meet any one of the applicable requirements of §§ 203.355, 203.356(b), 203.359, 203.360, 203.365, 203.606(b)(l), or 203.366 within the specified time and in a manner satisfactory to the Secretary (or within such further time as the Secretary may approve in writing), the interest allowance in such cash payment shall be computed only to the date on which the particular required action should have been taken or to which it was extended;
</P>
<P>(ii) When the mortgagee fails to meet the requirements of § 203.356(a) within the specified time and in a manner satisfactory to the Secretary (or within such further time as the Secretary may specify in writing), the interest allowance in such cash payment shall be computed to a date set administratively by the Secretary.
</P>
<P>(2)(i) Where a claim for insurance benefits is being paid without conveyance of title to the Commissioner in accordance with § 203.368 and was endorsed for insurance on or before January 23, 2004, an amount equivalent to the sum of:
</P>
<P>(A) The debenture interest that would have been earned, as of the date the mortgagee or a party other than the mortgagee acquires good marketable title to the mortgaged property, on an amount equal to the amount by which an insurance claim determined in accordance with § 203.401(a) exceeds the amount of the actual claim being paid in debentures; plus
</P>
<P>(B) The debenture interest that would have been earned from the date the mortgagee or a party other than the mortgagee acquires good marketable title to the mortgaged property to the date when payment of the claim is made, on the portion of the insurance benefits paid in cash if such portion had been paid in debentures, except that if the mortgagee fails to meet any of the applicable requirements of §§ 203.355, 203.356, and 203.368(i)(3) and (5) within the specified time and in a manner satisfactory to the Commissioner (or within such further time as the Commissioner may approve in writing), the interest allowance in such cash payment shall be computed only to the date on which the particular required action should have been taken or to which it was extended.
</P>
<P>(ii) Where a claim for insurance benefits is being paid without conveyance of title to the Commissioner in accordance with § 203.368 and was endorsed for insurance after January 23, 2004, an amount equivalent to the sum of:
</P>
<P>(A) Debenture interest at the rate specified in § 203.405(b) from the date specified in § 203.410, as applicable, to the date that the mortgagee or a party other than the mortgagee acquires good marketable title to the mortgaged property, on an amount equal to the amount by which an insurance claim determined in accordance with § 203.401(a) exceeds the amount of the actual claim being paid in debentures; plus
</P>
<P>(B) Debenture interest at the rate specified in § 203.405(b) from the date the mortgagee or a person other than the mortgagee acquires good marketable title to the mortgaged property to the date when payment of the claim is made, on the portion of the insurance benefits paid in cash, except that if the mortgagee fails to meet any of the applicable requirements of §§ 203.355, 203.356, and 203.368(i)(3) and (5) of this chapter within the specified time and in a manner satisfactory to the Commissioner (or within such further time as the Commissioner may approve in writing), the interest allowance in such cash payment shall be computed only to the date on which the particular required action should have been taken or to which it was extended.
</P>
<P>(3)(i) Where a claim for insurance benefits is being paid following a pre-foreclosure sale, without foreclosure or conveyance to the Commissioner in accordance with § 203.370, and the mortgage was endorsed for insurance on or before January 23, 2004, an amount equivalent to the sum of:
</P>
<P>(A) The debenture interest that would have been earned, as of the date of the closing of the pre-foreclosure sale on an amount equal to the amount by which an insurance claim determined in accordance with § 203.401(a) exceeds the amount of the actual claim being paid in debentures; plus
</P>
<P>(B) The debenture interest that would have been earned, from the date of the closing of the pre-foreclosure sale to the date when payment of the claim is made, on the portion of the insurance benefits paid in cash, if such portion had been paid in debentures; except that if the mortgagee fails to meet any of the applicable requirements of § 203.365 within the specified time and in a manner satisfactory to the Commissioner (or within such further time as the Commissioner may approve in writing), the interest allowance in such cash payment shall be computed only to the date on which the particular required action should have been taken or to which it was extended.
</P>
<P>(ii) Where a claim for insurance benefits is being paid following a pre-foreclosure sale, without foreclosure or conveyance to the Commissioner, in accordance with § 203.370, and the mortgage was endorsed for insurance after January 23, 2004, an amount equivalent to the sum of:
</P>
<P>(A) Debenture interest at the rate specified in § 203.405(b) from the date specified in § 203.410, as applicable, to the date of the closing of the pre-foreclosure sale, on an amount equal to the amount by which an insurance claim determined in accordance with § 203.401(a) exceeds the amount of the actual claim being paid in debentures; plus
</P>
<P>(B) Debenture interest at the rate specified in § 203.405(b) from the date of the closing of the pre-foreclosure sale to the date when the payment of the claim is made, on the portion of the insurance benefits paid in cash, except that if the mortgagee fails to meet any of the applicable requirements of § 203.365 within the specified time and in a manner satisfactory to the Commissioner (or within such further time as the Commissioner may approve in writing), the interest allowance in such cash payment shall be computed only to the date on which the particular required action should have been taken or to which it was extended.
</P>
<P>(l) Reasonable costs of appraisal under § 203.368(e) or pursuant to § 203.370; 
</P>
<P>(m) Costs of additional advertising under 203.368(h);
</P>
<P>(n) Costs of foreclosure as computed in paragraph (f) of this section where the acquiring party is one other than the mortgagee, as provided in § 203.368;
</P>
<P>(o) In any case in which the Commissioner, pursuant to § 203.369, requires or requests that the mortgagee seek a deficiency judgment, an amount necessary to reimburse the mortgagee for those additional costs incurred that exceed the costs of foreclosure. In those jurisdictions that require the initiation of a judicial foreclosure action in order to obtain a deficiency judgment, a mortgagee shall receive full reimbursement for the costs of the foreclosure action, where, but for the requested deficiency judgment, judicial foreclosure would not have been necessary.
</P>
<P>(p) An amount approved by HUD and paid to the mortgagor as consideration for the execution of a deed in lieu of foreclosure and, if authorized by HUD, an administrative fee approved by HUD paid to the mortgagee for its role in facilitating a successful deed in lieu of foreclosure, not to be subject to the payment of debenture interest thereon. 
</P>
<P>(q) Reasonable costs incurred in evicting occupants and in removing personal property from acquired properties; 
</P>
<P>(r) Notwithstanding any other provision in this section, the mortgagee will not be reimbursed for any expenses incurred in connection with the property after a reconveyance from the Secretary to the mortgagee as provided in § 203.363(b) of this part. 
</P>
<P>(s) Reasonable costs of the title search ordered by the mortgagee, in accordance with procedures prescribed by HUD, to determine the status of a mortgagor meeting all other criteria for approval to participate in the pre-foreclosure sale procedure, or to determine if a mortgagor meets the criteria for approval of the mortgagee's acceptance of a deed in lieu of foreclosure. 
</P>
<P>(t) The administrative fee as authorized by the Secretary and payable to the mortgagee for its role in facilitating a successful pre-foreclosure sale, said fee not to be subject to the payment of debenture interest thereon. 
</P>
<CITA TYPE="N">[36 FR 34508, Dec. 22, 1971, as amended at 41 FR 49736, Nov. 10, 1976; 45 FR 56801, Aug. 6, 1980; 48 FR 28806, June 23, 1983; 51 FR 28551, Aug. 8, 1986; 52 FR 1329, Feb. 13, 1987; 53 FR 4388, Feb. 16, 1988; 57 FR 47974, Oct. 20, 1992; 59 FR 50145, Sept. 30, 1994; 61 FR 35018, July 3, 1996; 61 FR 36266, July 9, 1996; 61 FR 36453, July 10, 1996; 62 FR 60130, Nov. 6, 1997; 71 FR 35993, June 22, 2006; 72 FR 56161, Oct. 2, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 203.402a" NODE="24:2.1.1.2.4.2.102.79" TYPE="SECTION">
<HEAD>§ 203.402a   Reimbursement for uncollected interest.</HEAD>
<P>The mortgagee shall be entitled to receive an allowance in the insurance settlement for unpaid mortgage interest if the mortgagor fails to meet the requirements of a forbearance agreement entered into pursuant to § 203.614 and this failure continues for a period of 60 days. The interest allowance shall be computed to: 
</P>
<P>(a) The earliest of the applicable following dates, except as provided in paragraph (b) of this section: 
</P>
<P>(1) The date of the initiation of foreclosure; 
</P>
<P>(2) The date of the acquisition of the property by the mortgagee by means other than foreclosure; 
</P>
<P>(3) The date the property was acquired by the Commissioner under a direct conveyance from the mortgagor; 
</P>
<P>(4) Ninety days following the date the mortgagor fails to meet the requirements of the forbearance agreement, or such other date as the Commissioner may approve in writing prior to the expiration of the 90-day period; or 
</P>
<P>(5) The date the mortgagee sends the mortgagor notice of eligibility to participate in the Pre-Foreclosure Sale procedure; or 
</P>
<P>(b) The date foreclosure is initiated or a deed in lieu is obtained, or the date such actions were required by § 203.355(c), whichever is earlier, if the commencement of foreclosure within the time limits described in § 203.355(a), (b), (g), or (h) is precluded by: 
</P>
<P>(1) The laws of the State in which the mortgaged property is located; or 
</P>
<P>(2) Federal bankruptcy law. 
</P>
<CITA TYPE="N">[60 FR 57678, Nov. 16, 1995, as amended at 61 FR 35019, July 3, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.403" NODE="24:2.1.1.2.4.2.102.80" TYPE="SECTION">
<HEAD>§ 203.403   Items deducted from payment—conveyed and non-conveyed properties.</HEAD>
<P>There shall be deducted from the total of the added items in §§ 203.401 and 203.402 the following cash items: 
</P>
<P>(a) All amounts received by the mortgagee on account of the mortgage after the institution of foreclosure proceedings or the acquisition of the property by direct conveyance or otherwise after default. 
</P>
<P>(b) All amounts received by the mortgagee from any source relating to the property on account of rent or other income after deducting reasonable expenses incurred in handling the property. 
</P>
<P>(c) All cash retained by the mortgagee including amounts held or deposited for the account of the mortgagor or to which it is entitled under the mortgage transaction that have not been applied in reduction of the principal mortgage indebtedness. 
</P>
<P>(d) With regard to claims filed pursuant to successful pre-foreclosure sales, all amounts received by the mortgagee relating to the sale of the property.
</P>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971, as amended at 52 FR 1329, Jan. 13, 1987; 59 FR 50145, Sept. 30, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 203.404" NODE="24:2.1.1.2.4.2.102.81" TYPE="SECTION">
<HEAD>§ 203.404   Amount of payment—assigned mortgages.</HEAD>
<P>Upon an acceptable assignment of a mortgage, the Commissioner shall pay to the mortgagee the unpaid principal balance of the loan at the time of assignment and an amount determined by: 
</P>
<P>(a) Adding the following items: 
</P>
<P>(1) Any accrued and unpaid mortgage interest. 
</P>
<P>(2) Any advances made under the mortgage and approved by the Commissioner. 
</P>
<P>(3) Reimbursement for such costs and attorney's fees as HUD finds were properly incurred in connection with the defaulted mortgage and its modification and assignment to HUD. 
</P>
<P>(4) For mortgages endorsed for insurance on or before January 23, 2004, an amount equivalent to the debenture interest that would have been earned on the portion of the insurance benefits paid in cash, as of the date such payment is made, and for mortgages endorsed for insurance after January 23, 2004, debenture interest at the rate specified in § 203.405(b), from the date specified in § 203.410 to the date of claim payment on the portion of the insurance benefits paid in cash, except that when the mortgagee fails to meet any one of the requirements of §§ 203.350(e), 203.351, and 203.353 of this chapter within the specified time and in a manner satisfactory to the Commissioner (or within such further time as the Commissioner may approve in writing), the interest allowance in such cash payment shall be computed only to the date on which the particular required action should have been taken or to which it was extended.
</P>
<P>(5) An administrative fee to the mortgagee for modifying the mortgage. 
</P>
<P>(6) A fee for servicing the mortgage assigned to HUD, if HUD requires such servicing. 
</P>
<P>(b) Deducting all cash retained by the mortgagee, including amounts held or deposited for the account of the mortgagor or to which it is entitled under the mortgage transaction that have not been applied in reduction of the principal mortgage indebtedness. 
</P>
<P>(c) The mortgagee may not file for any additional payments of its mortgage insurance claim after six months from final payment by the Commissioner. For the purpose of this section, the term <I>final payment</I> shall mean the payment which is made by the Commissioner based upon the submission by the mortgagee of all required documents and information pursuant to § 203.351 of this part.
</P>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971, as amended at 55 FR 283, Jan. 4, 1990; 56 FR 3215, Jan. 29, 1991; 61 FR 35019, July 3, 1996; 71 FR 35994, June 22, 2006]


</CITA>
</DIV8>


<DIV8 N="§ 203.405" NODE="24:2.1.1.2.4.2.102.82" TYPE="SECTION">
<HEAD>§ 203.405   Debenture interest rate.</HEAD>
<P>(a) Debentures shall bear interest from the date of issue, payable semiannually on the first day of January and the first day of July of each year at the rate in effect as of the day the commitment was issued, or as of the date the mortgage was endorsed for insurance, whichever rate is higher. For applications involving mortgages originated under the single family Direct Endorsement program, debentures shall bear interest from the date of issue, payable semiannually on the first day of January and on the first day of July of each year at the rate in effect as of the date the mortgage was endorsed for insurance;
</P>
<P>(b) For mortgages endorsed for insurance after January 23, 2004, if an insurance claim is paid in cash, the debenture interest rate for purposes of calculating such a claim shall be the monthly average yield, for the month in which the default on the mortgage occurred, on United States Treasury Securities adjusted to a constant maturity of 10 years.
</P>
<CITA TYPE="N">[71 FR 35994, June 22, 2006]


</CITA>
</DIV8>


<DIV8 N="§ 203.406" NODE="24:2.1.1.2.4.2.102.83" TYPE="SECTION">
<HEAD>§ 203.406   Maturity of debentures.</HEAD>
<P>Debentures shall mature 20 years from the date of issue. 


</P>
</DIV8>


<DIV8 N="§ 203.407" NODE="24:2.1.1.2.4.2.102.84" TYPE="SECTION">
<HEAD>§ 203.407   Registration of debentures.</HEAD>
<P>Debentures shall be registered as to principal and interest. 


</P>
</DIV8>


<DIV8 N="§ 203.408" NODE="24:2.1.1.2.4.2.102.85" TYPE="SECTION">
<HEAD>§ 203.408   Form and amounts of debentures.</HEAD>
<P>Debentures issued under this part shall be in such form and amounts; and shall be subject to such term and conditions; and shall include such provisions for redemption, if any, as may be prescribed by the Secretary, with the approval of the Secretary of the Treasury; and may be in book entry or certificated registered form, or such other form as the Secretary by regulation may prescribe. 
</P>
<CITA TYPE="N">[59 FR 49816, Sept. 30, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 203.409" NODE="24:2.1.1.2.4.2.102.86" TYPE="SECTION">
<HEAD>§ 203.409   Redemption of debentures.</HEAD>
<P>Debentures shall, at the option of the Commissioner and with the approval of the Secretary of the Treasury, be redeemable at par plus accrued interest on any semiannual interest payment date on three months' notice of redemption given in such manner as the Commissioner shall prescribe. The debenture interest on the debentures called for redemption shall cease on the semiannual interest payment date designated in the call notice. The Commissioner may include with the notice of redemption an offer to purchase the debentures at par plus accrued interest at any time during the period between the notice of redemption and the redemption date. If the debentures are purchased by the Commissioner after such call and prior to the named redemption date, the debenture interest shall cease on the date of purchase. 


</P>
</DIV8>


<DIV8 N="§ 203.410" NODE="24:2.1.1.2.4.2.102.87" TYPE="SECTION">
<HEAD>§ 203.410   Issue date of debentures.</HEAD>
<P>(a) <I>Conveyed properties, claims without conveyance, pre-foreclosure sales—</I> Where the property is conveyed to the Commissioner, or the mortgagee or other party acquires title to the property under the claim without conveyance procedure or the pre-foreclosure sale procedure, debenture shall be dated: 
</P>
<P>(1) If issued prior to September 2, 1964, or issued on or after such date and a certificate of claim is also issued, as of one of the dates as follows: 
</P>
<P>(i) The foreclosure proceedings were instituted; 
</P>
<P>(ii) The property was otherwise acquired by the mortgagee after default; 
</P>
<P>(iii) The property was acquired by the Commissioner, if directly conveyed to the Commissioner from the mortgagor; or 
</P>
<P>(iv) The property was acquired after default by a third party under the pre-foreclosure sale procedure. 
</P>
<P>(2) If issued on or after September 2, 1964, and a certificate of claim is not issued, as of the date of default as defined in this part. 
</P>
<P>(3) As of the day after the date to which mortgage interest is computed as specified in § 203.402a, if the insurance settlement includes an allowance for uncollected interest in connection with a special forbearance. 
</P>
<P>(b) <I>Assigned mortgages.</I> Where the mortgage is assigned to the Commissioner, debentures shall be dated as of the date of the assignment. 
</P>
<P>(c) Notwithstanding paragraph (a) of this section, in connection with conveyed properties and claims without conveyance, debentures issued as reimbursement for expenditures made by a mortgagee after the date of default shall be dated as of the date the expenditure is actually made by the mortgagee. 
</P>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971, as amended at 50 FR 3892, Jan. 29, 1985; 52 FR 1329, Jan. 13, 1987; 59 FR 50145, Sept. 30, 1994; 60 FR 57678, Nov. 16, 1995]


</CITA>
</DIV8>


<DIV8 N="§ 203.411" NODE="24:2.1.1.2.4.2.102.88" TYPE="SECTION">
<HEAD>§ 203.411   Cash adjustment.</HEAD>
<P>Any difference of less than $50 between the amount of debentures to be issued to the mortgagee and the total amount of the mortgagee's claim, as approved by the Commissioner, may be adjusted by the issuance of a check in payment thereof. 
</P>
<CITA TYPE="N">[59 FR 49816, Sept. 30, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 203.412" NODE="24:2.1.1.2.4.2.102.89" TYPE="SECTION">
<HEAD>§ 203.412   Payment for foreclosure alternative actions.</HEAD>
<P>Notwithstanding the conveyance, sale, or assignment requirements for payment of a claim elsewhere in this part, HUD may pay the mortgagee, in accordance with procedures prescribed by HUD, for the following foreclosure alternative actions, in such amounts as HUD determines: 
</P>
<P>(a) Assumptions under § 203.512; 
</P>
<P>(b) Special forbearance under §§ 203.471 and 203.614; 
</P>
<P>(c) Recasting or modification of defaulted mortgages under § 203.616, where the mortgagee is not reimbursed under § 203.405(a); 
</P>
<P>(d) Refinancing under § 203.43(c). 
</P>
<CITA TYPE="N">[61 FR 35019, July 3, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.413" NODE="24:2.1.1.2.4.2.102.90" TYPE="SECTION">
<HEAD>§ 203.413   Amount of payment—Single Family Sale assignments.</HEAD>
<P>(a) <I>Time of payment.</I> Upon an assignment of a mortgage insured under this part <I>that is acceptable to the Commissioner, made pursuant to a Single Family Sale and</I> in accordance with § 291.609 or § 291.619 of this chapter, the Commissioner shall pay to the mortgagee the unpaid principal balance of the loan at the time of assignment and an amount calculated in accordance with the Participating Servicer Agreement (PSA), as defined in § 291.601 of this chapter.
</P>
<P>(b) <I>Acceptability criteria.</I> For assignment, the mortgagee must determine and certify the mortgage satisfies the Commissioner's acceptability criteria for the Single Family Sale. Acceptability criteria includes satisfaction of the Single Family Sale loss mitigation eligibility requirements and exclusion of low-value mortgages secured by vacant properties.
</P>
<P>(c) <I>Reduction in claim.</I> The mortgagee's claim for insurance will be reduced for failure to take the required actions within the specified schedule of dates for the Single Family Sale, as specified in the PSA.
</P>
<P>(d) <I>Curtailment of Debenture Interest.</I> HUD will curtail Debenture Interest at the thirtieth (30th) day following the earliest anticipated claim submission date, as identified on the schedule of dates in the PSA, if:
</P>
<P>(1) The mortgagee's claim for insurance is not submitted to HUD; or
</P>
<P>(2) The claim for insurance is in a suspended status.
</P>
<P>(e) <I>Debenture Interest.</I> For purposes of this section, <I>Debenture Interest</I> means interest at the debenture rate as computed by HUD in accordance with its rules and requirements for such calculations, on the unpaid principal balance as of the claim payment date, <I>plus</I> the approved reimbursable expenses identified in the PSA, <I>minus</I> any amount of such interest or expenses that would have been curtailed or for which the Participating Servicer would have been denied reimbursement pursuant to HUD's requirements for servicing defaulted notes and processing claims, including § 203.402(k)(1)(i) and (ii), had the Participating Servicer conveyed title to the property securing the Single Family Loan to the Secretary rather than assigned the Single Family Loan in connection with an insurance claim.
</P>
<P>(f) <I>Rejection of claim.</I> HUD may reject the mortgagee's claim for insurance and exclude the related mortgage from settlement if within the thirty (30)-day period prior to the claim's submission cut-off date, as identified on the schedule of dates in the PSA:
</P>
<P>(1) Any insurance claim is not submitted; or
</P>
<P>(2) Any suspended insurance claim is not resolved. 
</P>
<CITA TYPE="N">[89 FR 99715, Dec. 11, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 203.414" NODE="24:2.1.1.2.4.2.102.91" TYPE="SECTION">
<HEAD>§ 203.414   Amount of payment—partial claims.</HEAD>
<P>(a) <I>Claim amount.</I> Where a claim for partial insurance benefits is filed in accordance with § 203.371, the amount of the insurance benefits shall consist of the arrearage not to exceed an amount equivalent to 12 monthly mortgage payments, and any costs prescribed by HUD related to the default.
</P>
<P>(b) <I>Servicing fee.</I> The claim may also include a payment for activities, such as servicing the subordinate mortgage, which HUD may require. 
</P>
<CITA TYPE="N">[61 FR 35019, July 3, 1996, as amended at 62 FR 60130, Nov. 6, 1997]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="103" NODE="24:2.1.1.2.4.2.103" TYPE="SUBJGRP">
<HEAD>Certificate of Claim</HEAD>


<DIV8 N="§ 203.415" NODE="24:2.1.1.2.4.2.103.92" TYPE="SECTION">
<HEAD>§ 203.415   Delivery of certificate of claim.</HEAD>
<P>(a) If the mortgage was accepted for insurance pursuant to a commitment issued prior to September 2, 1964, the mortgagee may, by filing a written request with the application for debentures, receive in addition to the debentures and the cash adjustment check, a certificate of claim issued in accordance with section 204(e) of the Act. This certificate shall become payable (if at all) as prescribed in section 204(f) of the Act. 
</P>
<P>(b) If the mortgage was accepted for insurance pursuant to a commitment issued on or after September 2, 1964, or under the Direct Endorsement, Lender Insurance, or Coinsurance programs, no certificate of claim will be issued. 
</P>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971, as amended at 57 FR 58349, Dec. 9, 1992; 62 FR 30227, June 2, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 203.416" NODE="24:2.1.1.2.4.2.103.93" TYPE="SECTION">
<HEAD>§ 203.416   Amount and items of certificate of claim.</HEAD>
<P>The certificate shall be for an amount which the Commissioner determines to be sufficient to pay all amounts due under the mortgage and not covered by the amount of debentures and cash adjustment check. The certificate shall include a reasonable amount for necessary expenses incurred by the mortgagee in connection with the foreclosure proceedings or the acquisition of the mortgaged property otherwise and the conveyance thereof to the Commissioner, including reasonable attorneys' fees, unpaid interest, and cost of repairs to the property made by the mortgagee to remedy the waste. 


</P>
</DIV8>


<DIV8 N="§ 203.417" NODE="24:2.1.1.2.4.2.103.94" TYPE="SECTION">
<HEAD>§ 203.417   Rate of interest of certificate of claim.</HEAD>
<P>Each certificate of claim shall provide that there shall accrue to the holder thereof with respect to the face amount of such certificate, an increment at the rate of 3 percent per annum. 


</P>
</DIV8>

</DIV7>


<DIV7 N="104" NODE="24:2.1.1.2.4.2.104" TYPE="SUBJGRP">
<HEAD>Mutual Mortgage Insurance Fund and Distributive Shares</HEAD>


<DIV8 N="§ 203.420" NODE="24:2.1.1.2.4.2.104.95" TYPE="SECTION">
<HEAD>§ 203.420   Nature of Mutual Mortgage Insurance Fund.</HEAD>
<P>The Mutual Mortgage Insurance Fund shall consist of the General Surplus Account and the Participating Reserve Account. 


</P>
</DIV8>


<DIV8 N="§ 203.421" NODE="24:2.1.1.2.4.2.104.96" TYPE="SECTION">
<HEAD>§ 203.421   Allocation of Mutual Mortgage Insurance Fund income or loss.</HEAD>
<P>For any semiannual period in which Mutual Mortgage Insurance operations shall result in a net income, or loss, the Commissioner shall allocate, after taking into account the actuarial status of the entire Mutual Mortgage Insurance Fund, such net income or such loss to the General Surplus Account and/or to the Participating Reserve Account as the Commissioner may determine to be in accord with sound actuarial and accounting practice. In determining net income or loss, the Commissioner shall take into consideration all income received from fees, premiums and earnings on investments of the fund, operating expenses and provision for losses to the fund.
</P>
<CITA TYPE="N">[56 FR 18948, Apr. 24, 1991]


</CITA>
</DIV8>


<DIV8 N="§ 203.422" NODE="24:2.1.1.2.4.2.104.97" TYPE="SECTION">
<HEAD>§ 203.422   Right and liability under Mutual Mortgage Insurance Fund.</HEAD>
<P>No mortgagor or mortgagee shall have any vested right in a credit balance in either the General Surplus Account or the Participating Reserve Account. No mortgagor or mortgagee shall be subject to any liability arising under the mutuality of the Mutual Mortgage Insurance Fund. 


</P>
</DIV8>


<DIV8 N="§ 203.423" NODE="24:2.1.1.2.4.2.104.98" TYPE="SECTION">
<HEAD>§ 203.423   Distribution of distributive shares.</HEAD>
<P>(a) The Commissioner may provide for the distribution to the mortgagor of a share of the participating reserve account if the contract of insurance is terminated by:
</P>
<P>(1) Conveyance to one other than the Commissioner and a claim for the insurance benefits is not presented by the mortgage (§ 203.315), provided, however, in the case of a mortgage insured pursuant to an application for a conditional commitment received on or after May 19, 1988, (or, as appropriate, an application for mortgage insurance endorsement under the Single Family Direct Endorsement program, as provided in § 203.255, where the property appraisal report is signed by the mortgagee's underwriter on or after May 19, 1988, no distribution shall be made if the mortgagee forecloses the mortgage or accepts a deed-in-lieu of foreclosure;
</P>
<P>(2) Prepayment of the mortgage (§ 203.316); or
</P>
<P>(3) Voluntary agreement of the mortgagor and mortgagees (§ 203.317).
</P>
<P>(b) The Commissioner shall determine the amount of the distributive share by multiplying the amount of the premium or premiums paid by the applicable distributive share percentage for mortgages insured in the year the mortgage was endorsed for insurance. The Commissioner shall determine the applicable distributive share percentage in an equitable manner and in accordance with sound financial and actuarial practice, taking into account the cumulative actual financial and actuarial experiences through the end of the most recent calendar year.
</P>
<CITA TYPE="N">[48 FR 28806, June 23, 1983, as amended at 52 FR 1329, Jan. 13, 1987; 53 FR 10530, Apr. 1, 1988; 61 FR 36453, July 10, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.424" NODE="24:2.1.1.2.4.2.104.99" TYPE="SECTION">
<HEAD>§ 203.424   Maximum amount of distributive shares.</HEAD>
<P>In no event shall a distributive share of the Participating Reserve Account exceed the aggregate scheduled annual premiums of the mortgagor to the year of termination of the insurance. 


</P>
</DIV8>


<DIV8 N="§ 203.425" NODE="24:2.1.1.2.4.2.104.100" TYPE="SECTION">
<HEAD>§ 203.425   Finality of determination.</HEAD>
<P>The determination of the Commissioner as to the amount to be paid to any mortgagor from the Mutual Mortgage Insurance Fund shall be final and conclusive. 


</P>
</DIV8>


<DIV8 N="§ 203.426" NODE="24:2.1.1.2.4.2.104.101" TYPE="SECTION">
<HEAD>§ 203.426   Inapplicability to housing in older declining urban areas.</HEAD>
<P>The provisions of §§ 203.420 through 203.425 shall not apply to mortgages financing housing in declining urban areas meeting the requirements of § 203.43a. 


</P>
</DIV8>


<DIV8 N="§ 203.427" NODE="24:2.1.1.2.4.2.104.102" TYPE="SECTION">
<HEAD>§ 203.427   Statute of limitations on payment of distributive shares.</HEAD>
<P>The Commissioner shall not distribute any distributive share to an eligible mortgagor under § 203.423 beginning on the date which is six years after the date the Commissioner first transmitted written notification of eligibility to the last known address of the mortgagor, unless the mortgagor has applied in accordance with procedures prescribed by the Commissioner for payment of the share within the six-year period. The Commissioner shall transfer any amounts no longer eligible for distribution under this section from the Participating Reserve Account to the General Surplus Account. 
</P>
<CITA TYPE="N">[59 FR 49816, Sept. 30, 1994]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="105" NODE="24:2.1.1.2.4.2.105" TYPE="SUBJGRP">
<HEAD>Sale, Assignment and Pledge of Insured Mortgage</HEAD>


<DIV8 N="§ 203.430" NODE="24:2.1.1.2.4.2.105.103" TYPE="SECTION">
<HEAD>§ 203.430   Sale of interests in insured mortgages.</HEAD>
<P>No mortgagee may sell or otherwise dispose of any insured mortgage, or group of insured mortgages, or any partial interest in such mortgage or mortgages by means of any agreement, arrangement or device except pursuant to this subpart. 


</P>
</DIV8>


<DIV8 N="§ 203.431" NODE="24:2.1.1.2.4.2.105.104" TYPE="SECTION">
<HEAD>§ 203.431   Sale of insured mortgage to approved mortgagee.</HEAD>
<P>An insured mortgage may be sold to another approved mortgagee. The seller shall notify HUD of the sale within 15 calendar days, on a form prescribed by HUD and acknowledged by the buyer. 
</P>
<CITA TYPE="N">[45 FR 27929, Apr. 25, 1980]


</CITA>
</DIV8>


<DIV8 N="§ 203.432" NODE="24:2.1.1.2.4.2.105.105" TYPE="SECTION">
<HEAD>§ 203.432   Effect of sale of insured mortgage.</HEAD>
<P>When an insured mortgage is sold to another approved mortgagee, the buyer shall thereupon succeed to all the rights and become bound by all the obligations of the seller under the contract of insurance and the seller shall be released from its obligations under the contract, provided that the seller shall not be relieved of its obligation to pay mortgage insurance premiums until the notice required by § 203.431 is received by HUD. 
</P>
<CITA TYPE="N">[45 FR 27929, Apr. 25, 1980] 


</CITA>
</DIV8>


<DIV8 N="§ 203.433" NODE="24:2.1.1.2.4.2.105.106" TYPE="SECTION">
<HEAD>§ 203.433   Assignments, pledges and transfers by approved mortgagee.</HEAD>
<P>(a) An assignment, pledge, or transfer of an insured mortgage or group of insured mortgages, not constituting a final sale, may be made by an approved mortgagee to another approved mortgagee provided the following requirements are met: 
</P>
<P>(1) The assignor, pledgor or transferor shall remain the mortgagee of record. 
</P>
<P>(2) The Commissioner shall have no obligation to recognize or deal with any party other than the mortgagee of record with respect to the rights, benefits and obligations of the mortgagee under the contract of insurance. 
</P>
<P>(b) An assignment or transfer of an insured mortgage or group of insured mortgages may be made by an approved mortgagee to other than an approved mortgagee provided the requirements under paragraphs (a)(1) and (2) of this section are met and the following additional requirements are met: 
</P>
<P>(1) The assignee or transferee shall be a corporation, trust or organization (including but not limited to any pension trust or profit-sharing plan) which certifies to the approved mortgagee that: 
</P>
<P>(i) It has assets of $100,000 or more; and 
</P>
<P>(ii) It has lawful authority to hold an insured mortgage or group of insured mortgages. 
</P>
<P>(2) The assignment or transfer shall be made pursuant to an agreement under which the transferor or assignor is obligated to take one of the following alternate courses of action within 1 year from the date of the assignment or within such additional period of time as may be approved by the Commissioner: 
</P>
<P>(i) The transferor or assignor shall repurchase and accept a reassignment of such mortgage or group of mortgages. 
</P>
<P>(ii) The transferor or assignor shall obtain a sale and transfer of such mortgage or group of mortgages to an approved mortgagee. 
</P>
<P>(c) Notice to or approval of the Commissioner is not required in connection with assignments, pledges or transfers pursuant to this section. 


</P>
</DIV8>


<DIV8 N="§ 203.434" NODE="24:2.1.1.2.4.2.105.107" TYPE="SECTION">
<HEAD>§ 203.434   Declaration of trust.</HEAD>
<P>A sale of a beneficial interest in a group of insured mortgages, where the interest to be acquired is related to all of the mortgages as an entirety, rather than an interest in a specific mortgage shall be made only pursuant to a declaration of trust, which has been approved by the Commissioner prior to any such sale. 


</P>
</DIV8>


<DIV8 N="§ 203.435" NODE="24:2.1.1.2.4.2.105.108" TYPE="SECTION">
<HEAD>§ 203.435   Transfers of partial interests.</HEAD>
<P>A partial interest in an insured mortgage may be transferred under a participation agreement without obtaining the approval of the Commissioner, if the following conditions are met: 
</P>
<P>(a) <I>Principal mortgagee.</I> The insured mortgage shall be held by an approved mortgagee which, for the purposes of this section, shall be referred to as the <I>principal mortgagee.</I> 
</P>
<P>(b) <I>Interest of principal mortgagee.</I> The principal mortgagee shall retain and hold for its own account a financial interest in the insured mortgage. 
</P>
<P>(c) <I>Qualification for holding partial interest.</I> A partial interest in an insured mortgage shall be issued to and held only by: 
</P>
<P>(1) A mortgagee approved by the Commissioner; or 
</P>
<P>(2) A corporation, trust or organization (including, but not limited to any pension fund, pension trust, or profit-sharing plan) which certifies to the principal mortgagee that: 
</P>
<P>(i) It has assets of $100,000 or more; and 
</P>
<P>(ii) It has lawful authority to acquire a partial interest in an insured mortgage. 
</P>
<P>(d) <I>Participation agreement provisions.</I> The participation agreement shall include provisions that: 
</P>
<P>(1) The principal mortgagee shall retain title to the mortgage and remain the mortgagee of record under the contract of mortgage insurance. 
</P>
<P>(2) The Commissioner shall have no obligation to recognize or deal with anyone other than the principal mortgagee with respect to the rights, benefits and obligations of the mortgagee under the contract of insurance. 
</P>
<P>(3) The mortgage documents shall remain in the custody of the principal mortgagee. 
</P>
<P>(4) The responsibility for servicing the insured mortgages shall remain with the principal mortgagee. 


</P>
</DIV8>

</DIV7>


<DIV7 N="106" NODE="24:2.1.1.2.4.2.106" TYPE="SUBJGRP">
<HEAD>Graduated Payment Mortgages</HEAD>


<DIV8 N="§ 203.436" NODE="24:2.1.1.2.4.2.106.109" TYPE="SECTION">
<HEAD>§ 203.436   Claim procedure—graduated payment mortgages.</HEAD>
<P>All of the provisions of this subpart are applicable to mortgages insured under the provisions of § 203.45 except as provided in this section. 
</P>
<P>(a) <I>Beginning of Amortization</I> means the date one month prior to the date of the first monthly payment to principal or interest. 
</P>
<P>(b) The phrases <I>unpaid principal balance of the loan</I> or <I>principal of the mortgage which was unpaid</I> as used in this subpart, shall be construed to refer to the outstanding mortgage amount as increased by any accrued mortgage interest which was unpaid pursuant to a financing plan approved by the Secretary. 
</P>
<CITA TYPE="N">[41 FR 42949, Sept. 29, 1976] 


</CITA>
</DIV8>

</DIV7>


<DIV7 N="107" NODE="24:2.1.1.2.4.2.107" TYPE="SUBJGRP">
<HEAD>Cooperative Unit Mortgages</HEAD>


<DIV8 N="§ 203.437" NODE="24:2.1.1.2.4.2.107.110" TYPE="SECTION">
<HEAD>§ 203.437   Mortgages involving a dwelling unit in a cooperative housing development.</HEAD>
<P>(a) The provisions of §§ 203.251(d), 203.366 and 203.440 through 203.495 shall not apply to mortgages insured pursuant to section 203(n) of the National Housing Act.
</P>
<P>(b) References in this subpart to the term <I>deed</I> and <I>deed in lieu of foreclosure,</I> or the word <I>property</I> when found in the phrases <I>conveyance of property, acquisition of property,</I> or other phrases indicating transfer of property, shall be construed to mean the assignment of the Corporate Certificate and Occupancy Certificate. However, when the use of such terms, as interpreted in light of section 203(n) of the National Housing Act, clearly indicates that reference to the dwelling unit is intended, such terms shall mean the dwelling unit identified in the Occupancy Certificate.
</P>
<P>(c) In addition to the requirements of § 203.365, the mortgagee shall forward to the Secretary within 45 days after the transfer of the Corporate Certificate:
</P>
<P>(1) A statement certified by the officer of the corporation charged with maintenance of the Corporate Certificate Transfer Book that such book currently shows that the Secretary is the owner of the Corporate Certificate; and,
</P>
<P>(2) The Occupancy Certificate in the name of the Secretary.
</P>
<P>(d) The mortgagee shall tender to the Secretary good and marketable title to the Corporate Certificate and the exclusive right of permanent possession of the dwelling unit.
</P>
<P>(e) In lieu of the types of title evidence provided in § 203.385, the Secretary will accept a legal opinion signed by an attorney at law experienced in the examination of titles that the Secretary has good and marketable title to the Corporate Certificate and the exclusive right of possession of the dwelling unit.
</P>
<P>(f) The Secretary may accept assignment of mortgages insured under this part if it is determined by the Secretary that it is in the Department's interest to do so provided that the blanket mortgage is in default and the holder of such mortgage has announced an intention to foreclose.
</P>
<CITA TYPE="N">[42 FR 40432, Aug. 10, 1977; 42 FR 57435, Nov. 2, 1977]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="108" NODE="24:2.1.1.2.4.2.108" TYPE="SUBJGRP">
<HEAD>Mortgages on Property Located on Indian Land</HEAD>


<DIV8 N="§ 203.438" NODE="24:2.1.1.2.4.2.108.111" TYPE="SECTION">
<HEAD>§ 203.438   Mortgages on Indian land insured pursuant to section 248 of the National Housing Act.</HEAD>
<P>(a) <I>Exemptions.</I> The provisions of § 203.366 shall not apply to mortgages insured pursuant to section 248 of the National Housing Act.
</P>
<P>(b) <I>Claim procedure.</I> In addition to other actions which the mortgagee may take pursuant to this subpart in order to receive insurance benefits, a mortgagee shall be entitled to receive such benefits on a mortgage insured under § 203.43h when (1) the mortgagor is more than 90 days in default; (2) the mortgagee has submitted appropriate documentation to the Secretary in accordance with § 203.350(b); and (3) the Secretary has approved the assignment of the mortgage.
</P>
<P>(c) <I>Foreclosure by HUD.</I> HUD may initiate foreclosure proceedings with respect to any mortgage acquired under this section in a tribal court, a court of competent jurisdiction or Federal district court. If the mortgagor remains on the property following foreclosure, HUD may seek an eviction order from the court hearing the foreclosure action. 
</P>
<CITA TYPE="N">[51 FR 21872, June 16, 1986, as amended at 61 FR 35019, July 3, 1996]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="109" NODE="24:2.1.1.2.4.2.109" TYPE="SUBJGRP">
<HEAD>Mortgages on Property Located on Hawaiian Home Lands</HEAD>


<DIV8 N="§ 203.439" NODE="24:2.1.1.2.4.2.109.112" TYPE="SECTION">
<HEAD>§ 203.439   Mortgages on Hawaiian home lands insured pursuant to section 247 of the National Housing Act.</HEAD>
<P>(a) <I>Exemptions.</I> The provisions of §§ 203.351(a)(8), 203.353(a), and 203.368, do not apply to mortgages insured pursuant to section 247 of the National Housing Act. 
</P>
<P>(b) <I>Claim procedure.</I> Where the mortgage is 180 days or more in default, the mortgagee may assign the mortgage to the Secretary and file its claim for insurance benefits in accordance with the provisions of this subpart. No claim on an insured mortgage will be paid other than through assignment of the mortgage. 
</P>
<P>(c) <I>Notice of delinquency.</I> Once each month on a day prescribed by HUD, the mortgagee shall notify the Department of Hawaiian Home Lands of all mortgages insured pursuant to section 247 of the National Housing Act on leaseholds of Hawaiian home lands that are delinquent on the last day of the month, or that were reported as delinquent the previous month. The notice is in addition to the requirement in §§ 203.330 and 203.331.
</P>
<CITA TYPE="N">[52 FR 8068, Mar. 16, 1987, as amended at 52 FR 9989, Mar. 27, 1987 and 52 FR 28470, July 30, 1987, and amended at 55 FR 283, Jan. 4, 1990; 71 FR 16234, Mar. 31, 2006]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="110" NODE="24:2.1.1.2.4.2.110" TYPE="SUBJGRP">
<HEAD>Mortgages on Property in Allegany Reservation of Seneca Indians</HEAD>


<DIV8 N="§ 203.439a" NODE="24:2.1.1.2.4.2.110.113" TYPE="SECTION">
<HEAD>§ 203.439a   Mortgages on property in Allegany Reservation of Seneca Nation of Indians authorized by section 203(q) of the National Housing Act.</HEAD>
<P>(a) <I>Applicability.</I> This section shall apply to mortgages authorized by section 203(q) of the National Housing Act (§ 203.43j of this part) only when the date of default occurs before the mortgagor and the lessor execute a lease renewal or a new lease either with a term of not less than five years beyond the maturity date of the mortgage, or with a term established by an arbitration award. 
</P>
<P>(b) <I>Claims.</I> In addition to other actions which the mortgagee may take pursuant to this subpart in order to receive insurance benefits, a mortgagee shall be entitled to receive such benefits when the Secretary has agreed to accept assignment of a mortgage in accordance with § 203.350(d) and the mortgagee has complied with §§ 203.351 and 203.353.
</P>
<P>(c) <I>Exceptions.</I> Notwithstanding § 203.366, title to a leasehold estate conveyed to the Commissioner is not required to be marketable as to the term of the lease, provided that the mortgagee has taken any actions required by the Secretary to attempt to obtain a long-term renewal of the lease. Title evidence will be required in a form satisfactory to the Commissioner (see § 203.385) unless the Commissioner agrees to accept title to a leasehold estate without title evidence. 
</P>
<CITA TYPE="N">[52 FR 48202, Dec. 21, 1987, and 53 FR 9869, Mar. 28, 1988]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="111" NODE="24:2.1.1.2.4.2.111" TYPE="SUBJGRP">
<HEAD>Rehabilitation Loans</HEAD>


<DIV8 N="§ 203.440" NODE="24:2.1.1.2.4.2.111.114" TYPE="SECTION">
<HEAD>§ 203.440   Definitions.</HEAD>
<P>All of the definitions contained in § 203.50 of this subchapter shall apply to §§ 203.440 <I>et seq.</I> In addition the following terms shall have the meaning indicated: 
</P>
<P>(a) <I>Insured loan</I> means a loan which has been insured as evidenced by the issuance of an Insurance Certificate or by the endorsement of the note for insurance by the Commissioner. 
</P>
<P>(b) <I>Contract of insurance</I> means the agreement evidenced by the issuance of an Insurance Certificate or by the endorsement of the Commissioner upon the note given in connection with an insured loan, incorporating by reference the regulations in §§ 203.440 <I>et seq.</I> and the applicable provisions of the Act. 
</P>
<P>(c) <I>Insurance premium</I> means the loan insurance premium paid by the financial institution to the Commissioner in consideration of the contract of insurance. 
</P>
<P>(d) <I>Beginning of amortization</I> means the date one month prior to the date of the first monthly payment to principal and interest. 
</P>
<P>(e) <I>Maturity</I> means the date on which the loan indebtedness would be extinguished if paid in accordance with periodic payments provided for in the original note and security instrument. 
</P>
<P>(f) <I>Debentures</I> means registered, transferable securities in book entry or certificated form which are valid and binding obligations, unconditionally guaranteed as to principal and interest by the United States. 
</P>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971, as amended at 59 FR 49816, Sept. 30, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 203.441" NODE="24:2.1.1.2.4.2.111.115" TYPE="SECTION">
<HEAD>§ 203.441   Insurance of loan.</HEAD>
<P>Under compliance with the commitment, or as provided in § 203.255(b) with respect to mortgages processed under the Direct Endorsement program, the Commissioner shall insure the loan evidencing the insurance by the issuance of an insurance certificate which will identify the regulations under which the loan is insured and the date of insurance.
</P>
<CITA TYPE="N">[57 FR 58349, Dec. 9, 1992; 58 FR 13537, Mar. 12, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 203.442" NODE="24:2.1.1.2.4.2.111.116" TYPE="SECTION">
<HEAD>§ 203.442   Contract created by Insurance Certificate or by endorsement.</HEAD>
<P>The loan is insured from the date of the issuance of an Insurance Certificate or from the date of the endorsement of the note. The Commissioner and the lender shall thereafter be bound by the Act and the regulations in §§ 203.440 <I>et seq.</I> with the same force and to the same extent as if a separate contract had been executed relating to the insured loan. 


</P>
</DIV8>


<DIV8 N="§ 203.443" NODE="24:2.1.1.2.4.2.111.117" TYPE="SECTION">
<HEAD>§ 203.443   Insurance premium.</HEAD>
<P>All of the provisions of §§ 203.260 through 203.269 
<SU>1</SU>
<FTREF/> concerning mortgage insurance premiums, apply to loans insured under § 203.50.
</P>
<FTNT>
<P>
<SU>1</SU> Section 203.269 was removed at 48 FR 35089, Aug. 3, 1983.</P></FTNT>
<CITA TYPE="N">[47 FR 30753, July 15, 1982]


</CITA>
</DIV8>


<DIV8 N="§ 203.457" NODE="24:2.1.1.2.4.2.111.118" TYPE="SECTION">
<HEAD>§ 203.457   Voluntary termination of contract.</HEAD>
<P>Upon request by the borrower and lender the Commissioner may terminate the insurance contract on the loan. The lender shall cancel the insurance endorsement on the insurance certificate or note upon receipt of notice from the Commissioner that the contract of insurance is terminated. 
</P>
<CITA TYPE="N">[37 FR 8662, Apr. 29, 1972] 


</CITA>
</DIV8>


<DIV8 N="§ 203.458" NODE="24:2.1.1.2.4.2.111.119" TYPE="SECTION">
<HEAD>§ 203.458   Termination by prepayment of loan.</HEAD>
<P>The contract of insurance shall be terminated if the loan is paid in full prior to its maturity. 


</P>
</DIV8>


<DIV8 N="§ 203.459" NODE="24:2.1.1.2.4.2.111.120" TYPE="SECTION">
<HEAD>§ 203.459   Notice of termination by lender.</HEAD>
<P>No contract of insurance shall be terminated until the lender has given written notice thereof to the Commissioner within 15 calendar days from the occurrence of one of the approved methods of termination set forth in this subpart.
</P>
<CITA TYPE="N">[45 FR 31716, May 14, 1980] 


</CITA>
</DIV8>


<DIV8 N="§ 203.462" NODE="24:2.1.1.2.4.2.111.121" TYPE="SECTION">
<HEAD>§ 203.462   Pro rata payment of premium before termination.</HEAD>
<P>No contract of insurance shall be terminated until the lender has paid to the Commissioner the pro rata portion of the current annual insurance premium. 


</P>
</DIV8>


<DIV8 N="§ 203.463" NODE="24:2.1.1.2.4.2.111.122" TYPE="SECTION">
<HEAD>§ 203.463   Notice and date of termination by Commissioner.</HEAD>
<P>The Commissioner shall notify the lender that the contract of insurance has been terminated and the effective termination. The termination date shall be the last day of the month in which: 
</P>
<P>(a) The loan was prepaid; or 
</P>
<P>(b) A voluntary termination request is received by the Commissioner, or 
</P>
<P>(c) The contract of insurance is otherwise terminated with the consent of the Commissioner. 


</P>
</DIV8>


<DIV8 N="§ 203.464" NODE="24:2.1.1.2.4.2.111.123" TYPE="SECTION">
<HEAD>§ 203.464   Effect of termination.</HEAD>
<P>Upon termination of the contract of insurance, the obligation to pay any subsequent insurance premium shall cease and all rights of the borrower and lender shall be terminated. 


</P>
</DIV8>


<DIV8 N="§ 203.466" NODE="24:2.1.1.2.4.2.111.124" TYPE="SECTION">
<HEAD>§ 203.466   Definition of delinquency and requirement for notice of delinquency to HUD.</HEAD>
<P>(a) A mortgage account is delinquent any time a payment is due and not paid.
</P>
<P>(b) Once each month on a day prescribed by HUD, the mortgagee shall report to HUD all mortgages insured under this part that were delinquent on the last day of the month, or that were reported as delinquent the previous month. The report shall be made in a manner prescribed by HUD.
</P>
<CITA TYPE="N">[71 FR 16234, Mar. 31, 2006]


</CITA>
</DIV8>


<DIV8 N="§ 203.467" NODE="24:2.1.1.2.4.2.111.125" TYPE="SECTION">
<HEAD>§ 203.467   Definition of default, date of default, and requirement of notice of default to HUD.</HEAD>
<P>(a) <I>Default.</I> If the mortgagor fails to make any payment or to perform any other obligation under the mortgage, and such failure continues for a period of 30 days, the mortgage shall be considered in default for the purposes of this subpart.
</P>
<P>(b) <I>Date of default.</I> For the purposes of this subpart, the date of default shall be considered as 30 days after:
</P>
<P>(1) The first uncorrected failure to perform any obligation under the mortgage; or
</P>
<P>(2) The first failure to make a monthly payment that subsequent payments by the borrower are insufficient to cover when applied to the overdue monthly payments in the order in which they became due.
</P>
<P>(c) <I>Notice of default.</I> Once each month, on a day prescribed by HUD, the mortgagee shall report to HUD all mortgages that were in default on the last day of the month, or that were reported as in default the previous month. The report shall be made on a form prescribed by HUD.
</P>
<P>(d) <I>Number of days in month.</I> For the purposes of this section, each month shall be considered to have 30 days.
</P>
<CITA TYPE="N">[71 FR 16234, Mar. 31, 2006]


</CITA>
</DIV8>


<DIV8 N="§ 203.468" NODE="24:2.1.1.2.4.2.111.126" TYPE="SECTION">
<HEAD>§ 203.468   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 203.469" NODE="24:2.1.1.2.4.2.111.127" TYPE="SECTION">
<HEAD>§ 203.469   Reinstatement of defaulted loan.</HEAD>
<P>If after default and prior to assignment by the lender of the loan to the Commissioner, the borrower shall pay to the lender all monthly payments in default, written notice shall be given to the Commissioner within 30 days and the insurance shall continue as if such default had not occurred. 


</P>
</DIV8>


<DIV8 N="§ 203.471" NODE="24:2.1.1.2.4.2.111.128" TYPE="SECTION">
<HEAD>§ 203.471   Special forbearance.</HEAD>
<P>If the mortgagee finds that a default is due to circumstances beyond the mortgagor's control, as defined by the Secretary, the mortgagee may grant special forbearance relief to the mortgagor in accordance with the conditions prescribed by the Secretary. 
</P>
<CITA TYPE="N">[61 FR 35019, July 3, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.472" NODE="24:2.1.1.2.4.2.111.129" TYPE="SECTION">
<HEAD>§ 203.472   Relief for borrower in military service.</HEAD>
<P>If the borrower is a person in military service, as defined in the Soldiers' and Sailors' Civil Relief Act of 1940, the lender may, by written agreement with the borrower, postpone for the period of military service, and 3 months thereafter, any part of the monthly payment, which represents amortization of principal. The agreement shall contain a provision for the resumption of monthly payments thereafter in amounts which will completely amortize the obligation within its original maturity. The agreement shall in no way affect the amount of the annual insurance premium which shall continue to be calculated in accordance with the original amortization provisions of the loan. 


</P>
</DIV8>


<DIV8 N="§ 203.473" NODE="24:2.1.1.2.4.2.111.130" TYPE="SECTION">
<HEAD>§ 203.473   Claim procedure.</HEAD>
<P>(a) A claim for insurance benefits on a loan secured by a first mortgage shall be made, and insurance benefits shall be paid, as provided in §§ 203.350 through 203.414. 
</P>
<P>(b) A claim for insurance benefits on a loan secured by other than a first mortgage shall be made, and insurance benefits shall be paid, as provided in §§ 203.474 through 203.478. However, the lender may not, except with the approval of the Commissioner, proceed against the security and also make claim under the contract of insurance, but shall elect which method it desires to pursue.
</P>
<CITA TYPE="N">[49 FR 21319, May 21, 1984, as amended at 61 FR 35019, July 3, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.474" NODE="24:2.1.1.2.4.2.111.131" TYPE="SECTION">
<HEAD>§ 203.474   Maximum claim period.</HEAD>
<P>A claim for insurance benefits on a loan secured by other than a first mortgage shall be filed within one year from the date of default, or within such additional period of time as may be approved by the Commissioner.
</P>
<CITA TYPE="N">[49 FR 21319, May 21, 1984] 


</CITA>
</DIV8>


<DIV8 N="§ 203.476" NODE="24:2.1.1.2.4.2.111.132" TYPE="SECTION">
<HEAD>§ 203.476   Claim application and items to be filed.</HEAD>
<P>The claim for reimbursement on a loan secured by other than a first mortgage shall be made upon an application form prescribed by the Commissioner. The application shall be accompanied by: 
</P>
<P>(a) The fiscal data pertaining to the loan transaction as required by the fiscal data form; 
</P>
<P>(b) Receipts covering all disbursements as required by the fiscal data form; 
</P>
<P>(c) The original note and the security held, assigned to the Commissioner without recourse of warranty, except that no act or omission of the lender shall have impaired the validity and priority of such security; 
</P>
<P>(d) Any hazard insurance policies held on property serving as security for the loan, together with a copy of the lender's notification to the carrier authorizing the amendment of the loss payable clause substituting the Commissioner as the holder of the security; 
</P>
<P>(e) The assignment to the Commissioner of all rights and interests arising under the loan, and all claims of the lender against the borrower or others arising out of the loan transaction; 
</P>
<P>(f) Any title evidence held by the lender; 
</P>
<P>(g) All property of the borrower held by the lender or to which it is entitled and, if the Commissioner elects to make payments in debentures, all cash held by the lender or to which it is entitled, including deposits made for the account of the borrower and which have not been applied in reduction of the principal loan indebtedness;
</P>
<P>(h) All records, ledger cards, documents, books, papers and accounts relating to the loan transaction; 
</P>
<P>(i) Any additional information or data which the Commissioner may require.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0051)
</APPRO>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971, as amended at 49 FR 21319, May 21, 1984; 80 FR 51468, Aug. 25, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 203.477" NODE="24:2.1.1.2.4.2.111.133" TYPE="SECTION">
<HEAD>§ 203.477   Certificate by lender when loan assigned.</HEAD>
<P>At the time of the assignment of the loan, the lender shall certify to the Commissioner that: 
</P>
<P>(a) The amount stated in the instrument of assignment is actually due and owing on the loan; 
</P>
<P>(b) There are no offsets of counterclaims thereto, and the financial institution has a good right to assign. 
</P>
<P>(c) The mortgage transaction did not involve a first mortgage and the mortgage is prior to all mechanics' and materialmen's liens filed of record, regardless of when such liens attach, and prior to all liens and encumbrances other than a first mortgage, or defects which may arise except such liens or other matters as may have been approved by the Commissioner. 
</P>
<CITA TYPE="N">[36 FR 34508, Dec. 22, 1971, as amended at 45 FR 33967, May 21, 1980; 49 FR 21320, May 21, 1984] 


</CITA>
</DIV8>


<DIV8 N="§ 203.478" NODE="24:2.1.1.2.4.2.111.134" TYPE="SECTION">
<HEAD>§ 203.478   Payment of insurance benefits.</HEAD>
<P>(a) <I>Claim computation, items included.</I> Upon acceptable assignment of the note and security instruments, the Commissioner shall pay the lender an amount equal to the unpaid principal balance of the loan, plus: 
</P>
<P>(1) Any accrued interest due as of the date of execution of the assignment of the loan to the Commissioner. 
</P>
<P>(2) Any advances made previously under the provisions of the loan instrument and approved by the Commissioner. 
</P>
<P>(3) Reimbursement for such reasonable collection costs, court costs and attorney's fees as may be approved by the Commissioner. 
</P>
<P>(4) Reimbursement for premiums paid on any hazard insurance policies held on the property. 
</P>
<P>(5)(i) If payment is made in cash on a mortgage endorsed for insurance on or before January 23, 2004, an amount equivalent to the debenture interest that would have been earned, as of the date insurance settlement occurs, except that where the lender fails to meet any one of the requirements of §§ 203.476 and 203.477 and such failure continues for more than 30 days (or such further time as the Commissioner may approve in writing), the debenture interest shall be computed for 30 days or the extended period;
</P>
<P>(ii) If payment is made in cash on a mortgage endorsed for insurance after January 23, 2004, debenture interest at the rate specified in § 203.479 from the date specified in § 203.486 to the date insurance settlement occurs, except that where the lender fails to meet any one of the requirements of §§ 203.476 and 203.477 and such failure continues for more than 30 days (or such further time as the Commissioner may approve in writing), the debenture interest shall be computed for 30 days or the extended period.
</P>
<P>(b) <I>Claim computation, items deducted.</I> If the lender is to receive cash, there shall be deducted from the total of the added items in paragraph (a) of this section any cash held by the lender or to which it is entitled including deposits made for the account of the borrower and which have not been applied in reduction of the principal loan indebtedness. 
</P>
<P>(c) <I>Method of payment.</I> Payment of an insurance claim shall be made in cash, in debentures, or in a combination of both, as determined by the Commissioner either at, or prior to, the time of payment.
</P>
<P>(d) <I>Special provision—payment in debentures.</I> All of the provisions of §§ 203.479 through 203.487 of this subpart shall be applicable in connection with the payment in debentures of insurance benefits under this subpart. 
</P>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971, as amended at 71 FR 35994, June 22, 2006; 80 FR 51468, Aug. 25, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 203.479" NODE="24:2.1.1.2.4.2.111.135" TYPE="SECTION">
<HEAD>§ 203.479   Debenture interest rate.</HEAD>
<P>(a) Debentures shall bear interest from the date of issue, payable semiannually on the first day of January and on the first day of July every year at the rate in effect as of the date the commitment was issued, or as of the date the loan was endorsed for insurance, whichever rate is higher. The applicable rates of interest will be published twice each year as a notice in the <E T="04">Federal Register.</E>
</P>
<P>(b) For mortgages endorsed for insurance after January 23, 2004, if an insurance claim is paid in cash, the debenture interest rate for purposes of calculating such a claim shall be the monthly average yield, for the month in which the default on the mortgage occurred, on United States Treasury Securities adjusted to a constant maturity of 10 years.
</P>
<CITA TYPE="N">[71 FR 35994, June 22, 2006]


</CITA>
</DIV8>


<DIV8 N="§ 203.481" NODE="24:2.1.1.2.4.2.111.136" TYPE="SECTION">
<HEAD>§ 203.481   Maturity of debentures.</HEAD>
<P>Debentures shall mature 10 years from the date of issue. 


</P>
</DIV8>


<DIV8 N="§ 203.482" NODE="24:2.1.1.2.4.2.111.137" TYPE="SECTION">
<HEAD>§ 203.482   Registration of debentures.</HEAD>
<P>Debentures shall be registered as to principal and interest. 


</P>
</DIV8>


<DIV8 N="§ 203.483" NODE="24:2.1.1.2.4.2.111.138" TYPE="SECTION">
<HEAD>§ 203.483   Forms and amounts of debentures.</HEAD>
<P>Debentures issued under this part shall be in such form and amounts; and shall be subject to such terms and conditions; and shall include such provisions for redemption, if any, as may be prescribed by the Secretary, with the approval of the Secretary of the Treasury; and may be in book entry or certificated registered form, or such other form as the Secretary by regulation may prescribe. 
</P>
<CITA TYPE="N">[59 FR 49816, Sept. 30, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 203.484" NODE="24:2.1.1.2.4.2.111.139" TYPE="SECTION">
<HEAD>§ 203.484   Redemption of debentures.</HEAD>
<P>Debentures shall, at the option of the Commissioner and with the approval of the Secretary of the Treasury, be redeemable at par plus accrued interest on any semiannual interest payment date on 3 months' notice of redemption given in such manner as the Commissioner shall prescribe. The debenture interest on the debentures called for redemption shall cease on the semiannual interest payment date designated in the call notice. The Commissioner may include with the notice of redemption an offer to purchase the debentures at par plus accrued interest at any time during the period between the notice of redemption and the redemption date. If the debentures are purchased by the Commissioner after such call and prior to the named redemption date, the debenture interest shall cease on the date of purchase. 


</P>
</DIV8>


<DIV8 N="§ 203.486" NODE="24:2.1.1.2.4.2.111.140" TYPE="SECTION">
<HEAD>§ 203.486   Issue date of debentures.</HEAD>
<P>The debentures shall be issued as of the date of the execution of the assignment of the loan in accordance with the requirements of § 203.476(c). 


</P>
</DIV8>


<DIV8 N="§ 203.487" NODE="24:2.1.1.2.4.2.111.141" TYPE="SECTION">
<HEAD>§ 203.487   Cash adjustment.</HEAD>
<P>Any difference of less than $50 between the amount of debentures to be issued to the lender and the total amount of the lender's claim, as approved by the Commissioner, may be adjusted by the issuance of a check in payment thereof. 
</P>
<CITA TYPE="N">[59 FR 49816, Sept. 30, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 203.488" NODE="24:2.1.1.2.4.2.111.142" TYPE="SECTION">
<HEAD>§ 203.488   Sale of interests in insured loans.</HEAD>
<P>No lender may sell or otherwise dispose of any insured loan or group of insured loans, or any partial interest in such loan or loans by means of any agreement, arrangement or device except pursuant to this subpart. 


</P>
</DIV8>


<DIV8 N="§ 203.489" NODE="24:2.1.1.2.4.2.111.143" TYPE="SECTION">
<HEAD>§ 203.489   Sale of insured loan to approved lender.</HEAD>
<P>An insured loan may be sold to another approved lender. The seller shall notify HUD of the sale within 15 calendar days, on a form prescribed by HUD and acknowledged by the buyer.
</P>
<CITA TYPE="N">[45 FR 27929, Apr. 25, 1980]


</CITA>
</DIV8>


<DIV8 N="§ 203.491" NODE="24:2.1.1.2.4.2.111.144" TYPE="SECTION">
<HEAD>§ 203.491   Effect of sale of insured loan.</HEAD>
<P>When an insured loan is sold to another approved lender, the buyer shall thereupon succeed to all the rights and become bound by all the obligations of the seller under the contract of insurance and the seller shall be released from its obligations under the contract, provided that the seller shall not be relieved of its obligation to pay insurance premiums until the notice required by § 203.489 is received by HUD.
</P>
<CITA TYPE="N">[45 FR 27929, Apr. 25, 1980]


</CITA>
</DIV8>


<DIV8 N="§ 203.492" NODE="24:2.1.1.2.4.2.111.145" TYPE="SECTION">
<HEAD>§ 203.492   Assignments, pledges and transfers by approved lender.</HEAD>
<P>(a) An assignment, pledge or transfer of an insured loan or group of insured loans, not constituting a final sale, may be made by an approved lender to another approved lender provided the following requirements are met: 
</P>
<P>(1) The assignor, pledgor or transferor shall remain the lender of record. 
</P>
<P>(2) The Commissioner shall have no obligation to recognize or deal with any party other than the lender of record with respect to the rights, benefits and obligations of the lender under the contract of insurance. 
</P>
<P>(b) An assignment or transfer of an insured loan or group of insured loans may be made by an approved lender to other than an approved lender provided the requirements under paragraphs (a) (1) and (2) of this section are met and the following additional requirements are met: 
</P>
<P>(1) The assignee or transferee shall be a corporation, trust or organization (including but not limited to any pension trust or profit-sharing plan) which certifies to the approved lender that: 
</P>
<P>(i) It has assets of $100,000 or more; and 
</P>
<P>(ii) It has lawful authority to hold an insured loan or group of insured loans. 
</P>
<P>(2) The assignment or transfer shall be made pursuant to an agreement under which the transferor or assignor is obligated to take one of the following alternate courses of action within one year from the date of the assignment or within such additional period of time as may be approved by the Commissioner: 
</P>
<P>(i) The transferor or assignor shall repurchase and accept a reassignment of such loan or group of loans. 
</P>
<P>(ii) The transferor or assignor shall obtain a sale and transfer of such loan or group of loans to an approved lender. 
</P>
<P>(c) Notice to or approval of the Commissioner is not required in connection with assignments, pledges or transfers pursuant to this section. 


</P>
</DIV8>


<DIV8 N="§ 203.493" NODE="24:2.1.1.2.4.2.111.146" TYPE="SECTION">
<HEAD>§ 203.493   Declaration of trust.</HEAD>
<P>A sale of a beneficial interest in a group of insured loans, where the interest to be acquired is related to all of the loans as an entirety, rather than an interest in a specific loan, shall be made only pursuant to a declaration of trust, which has been approved by the Commissioner prior to any such sale. 


</P>
</DIV8>


<DIV8 N="§ 203.495" NODE="24:2.1.1.2.4.2.111.147" TYPE="SECTION">
<HEAD>§ 203.495   Transfers of partial interests.</HEAD>
<P>A partial interest in an insured loan may be transferred under a participation agreement without obtaining the approval of the Commissioner, if the following conditions are met: 
</P>
<P>(a) <I>Principal mortgagee.</I> The insured loan shall be held by an approved lender which, for the purposes of this section, shall be referred to as the <I>principal lender.</I> 
</P>
<P>(b) <I>Interest of principal lender.</I> The principal lender shall retain and hold for its own account a financial interest in the insured loan. 
</P>
<P>(c) <I>Qualification for holding partial interest.</I> A partial interest in an insured loan shall be issued to and held only by: 
</P>
<P>(1) A lender approved by the Commissioner; or 
</P>
<P>(2) A corporation, trust or organization (including, but not limited to any pension fund, pension trust, or profit-sharing plan) which certifies to the principal lender that: 
</P>
<P>(i) It has assets of $100,000 or more; and 
</P>
<P>(ii) It has lawful authority to acquire a partial interest in an insured loan. 
</P>
<P>(d) <I>Participation agreement provisions.</I> The participation agreement shall include provisions that: 
</P>
<P>(1) The principal lender shall retain title to the loan and remain the lender of record under the contract of loan insurance. 
</P>
<P>(2) The Commissioner shall have no obligation to recognize or deal with anyone other than the principal lender with respect to the rights, benefits, and obligations of the lender under the contract of insurance. 
</P>
<P>(3) The loan documents shall remain in the custody of the principal lender. 
</P>
<P>(4) The responsibility for servicing the insured loans shall remain with the principal lender. 


</P>
</DIV8>

</DIV7>


<DIV7 N="112" NODE="24:2.1.1.2.4.2.112" TYPE="SUBJGRP">
<HEAD>Extension of Time</HEAD>


<DIV8 N="§ 203.496" NODE="24:2.1.1.2.4.2.112.148" TYPE="SECTION">
<HEAD>§ 203.496   Actions to be taken by mortgagee or lender.</HEAD>
<P>With respect to any action required by the mortgagee or lender within a period of time prescribed by this subpart the Commissioner may extend such period. 


</P>
</DIV8>

</DIV7>


<DIV7 N="113" NODE="24:2.1.1.2.4.2.113" TYPE="SUBJGRP">
<HEAD>Amendments</HEAD>


<DIV8 N="§ 203.499" NODE="24:2.1.1.2.4.2.113.149" TYPE="SECTION">
<HEAD>§ 203.499   Effect of amendments.</HEAD>
<P>The regulations in this subpart may be amended by the Secretary at any time and from time to time, in whole or in part, but such amendment will not adversely affect the interests of a mortgagee under the contract of insurance on any mortgage or loan already insured, and will not adversely affect the interest of a mortgagee on any mortgage or loan to be insured for which either the Direct Endorsement or Lender Insurance mortgagee has approved the mortgagor and all terms and conditions of the mortgage or loan, or the Secretary has issued a firm commitment. In addition, such amendment will not adversely affect the eligibility of specific property if such property is covered by a conditional commitment issued by the Secretary, a certificate of reasonable value issued by the Secretary of Veterans Affairs, or an appraisal report approved by a Direct Endorsement or Lender Insurance underwriter. 
</P>
<CITA TYPE="N">[62 FR 30227, June 2, 1997]


</CITA>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="C" NODE="24:2.1.1.2.4.3" TYPE="SUBPART">
<HEAD>Subpart C—Servicing Responsibilities</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>41 FR 49736, Nov. 10, 1976, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV7 N="114" NODE="24:2.1.1.2.4.3.114" TYPE="SUBJGRP">
<HEAD>General Requirements</HEAD>


<DIV8 N="§ 203.500" NODE="24:2.1.1.2.4.3.114.1" TYPE="SECTION">
<HEAD>§ 203.500   Mortgage servicing generally.</HEAD>
<P>This subpart identifies servicing practices of lending institutions that HUD considers acceptable for mortgages insured by HUD. Failure to comply with this subpart shall not be a basis for denial of insurance benefits, but failure to comply will be cause for imposition of a civil money penalty, including a penalty under § 30.35(c)(2), or withdrawal of HUD's approval of a mortgagee. It is the intent of the Department that no mortgagee shall commence foreclosure or acquire title to a property until the requirements of this subpart have been followed.
</P>
<CITA TYPE="N">[70 FR 21578, Apr. 26, 2005]


</CITA>
</DIV8>


<DIV8 N="§ 203.501" NODE="24:2.1.1.2.4.3.114.2" TYPE="SECTION">
<HEAD>§ 203.501   Loss mitigation.</HEAD>
<P>Mortgagees must consider the comparative effects of their elective servicing actions, and must take those appropriate actions which can reasonably be expected to generate the smallest financial loss to the Department. Such actions include, but are not limited to, deeds in lieu of foreclosure under § 203.357, pre-foreclosure sales under § 203.370, partial claims under § 203.414, assumptions under § 203.512, special forbearance under §§ 203.471 and 203.614, and recasting of mortgages under § 203.616. HUD may prescribe conditions and requirements for the appropriate use of these loss mitigation actions, concerning such matters as owner-occupancy, extent of previous defaults, prior use of loss mitigation, and evaluation of the mortgagor's income, credit and property. 
</P>
<CITA TYPE="N">[59 FR 50145, Sept. 30, 1994, as amended at 61 FR 35019, July 3, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.502" NODE="24:2.1.1.2.4.3.114.3" TYPE="SECTION">
<HEAD>§ 203.502   Responsibility for servicing.</HEAD>
<P>(a) After January 10, 1994, servicing of insured mortgages must be performed by a mortgagee that is approved by HUD to service insured mortgages. The servicer must fully discharge the servicing responsibilities of the mortgagee as outlined in this part. The mortgagee shall remain fully responsible to the Secretary for proper servicing, and the actions of its servicer shall be considered to be the actions of the mortgagee. The servicer also shall be fully responsible to the Secretary for its actions as a servicer.
</P>
<P>(b) Whenever servicing of any mortgage is transferred from one mortgagee or servicer to another, notice of the transfer of service shall be delivered: 
</P>
<P>(1) By the transferor mortgagee or servicer to the mortgagor. The notification shall be delivered not less than 15 days before the effective date of the transfer and shall contain the information required in § 3500.21(e)(2) of this title; and 
</P>
<P>(2) By the transferee mortgagee or servicer: 
</P>
<P>(i) <I>To the mortgagor.</I> The notification shall be delivered not less than 15 days before the effective date of the transfer and shall contain the information required in § 3500.21(e)(2) of this title; and 
</P>
<P>(ii) <I>To the Secretary.</I> This notification shall be delivered within 15 days of the transfer, in a format prescribed by the Secretary. 
</P>
<CITA TYPE="N">[36 FR 24508, Dec. 22, 1971, as amended at 57 FR 47974, Oct. 20, 1992; 57 FR 58349, Dec. 9, 1992; 59 FR 65448, Dec. 19, 1994; 61 FR 36266, July 9, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.508" NODE="24:2.1.1.2.4.3.114.4" TYPE="SECTION">
<HEAD>§ 203.508   Providing information.</HEAD>
<P>(a) Mortgagees shall provide loan information to mortgagors and arrange for individual loan consultation on request. The mortgagee must establish written procedures and controls to assure prompt responses to inquiries. One or more of the following means of making information readily available to mortgagors is required: 
</P>
<P>(1) An office staffed with competent personnel located within 200 miles of the property, capable of providing timely responses to requests for information. Complete records need not be maintained in such an office if the staff is able to secure needed information and pass it on to the mortgagor. 
</P>
<P>(2) Toll-free telephone service at an office capable of providing needed information. 
</P>
<P>(b) All mortgagors must be informed of the system available for obtaining answers to loan inquiries, the office from which needed information may be obtained and reminded of the system at least annually. Toll-free telephone service need not be provided to a mortgagor other than at the office designated to serve the mortgagor nor other than from the immediate vicinity of the security property. 
</P>
<P>(c) Within thirty days after the end of each calendar year, the mortgagee shall furnish to the mortgagor a statement of the interest paid, and of the taxes disbursed from the escrow account during the preceding year. At the mortgagor's request, the mortgagee shall furnish a statement of the escrow account sufficient to enable the mortgagor to reconcile the account.
</P>
<P>(d) Mortgagees must respond to HUD requests for information concerning individual accounts.
</P>
<P>(e) Each servicer of a mortgage shall deliver to the mortgagor a written notice of any assignment, sale, or transfer of the servicing of the mortgage. The notice must be sent in accordance with the provisions of § 3500.21(e)(1) of this title and shall contain the information required by § 3500.21(e)(2) of this title. Servicers must respond to mortgagor inquiries pertaining to the transfer of servicing in accordance with § 3500.21(f) of this title.
</P>
<APPRO TYPE="N">(The information collection requirements contained in paragraph (c) were approved by the Office of Management and Budget under control number 2502-0235)
</APPRO>
<CITA TYPE="N">[41 FR 49736, Nov. 10, 1976, as amended at 48 FR 28986, June 24, 1983; 59 FR 65448, Dec. 19, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 203.510" NODE="24:2.1.1.2.4.3.114.5" TYPE="SECTION">
<HEAD>§ 203.510   Release of personal liability.</HEAD>
<P>(a) <I>Procedures.</I> The mortgagee shall release a selling mortgagor from any personal liability for payment of the mortgage debt, if release is permitted by § 203.258 of this part, in accordance with the following procedures:
</P>
<P>(1) The mortgagee receives a request for a creditworthiness determination for a prospective purchaser of all or part of the mortgaged property;
</P>
<P>(2) The mortgagee or servicer performs a creditworthiness determination under § 203.512(b)(1) of this part if the mortgagee or servicer is approved for participation in the Direct Endorsement program, or the mortgagee requests a creditworthiness determination by the Secretary;
</P>
<P>(3) The prospective purchaser is determined to be creditworthy under the standards applicable when a release of the selling mortgagor is intended;
</P>
<P>(4) The prospective purchaser assumes personal liability by agreeing to pay the mortgage debt; and
</P>
<P>(5) The mortgagee provides the selling mortgagor with a release of personal liability on a form approved by the Secretary.
</P>
<P>(b) <I>Release after 5 years.</I> (1) If a selling mortgagor is not released under the procedures described in paragraph (a) of this section, either because no request for a creditworthiness determination is submitted under paragraph (a)(1) of this section, or because there is no affirmative determination of creditworthiness under paragraph (a)(3) of this section, then the selling mortgagor is automatically released from any personal liability for payment of the mortgage debt because of section 203(r) of the National Housing Act if:
</P>
<P>(i) The purchasing mortgagor has assumed personal liability by agreeing to pay the mortgage debt;
</P>
<P>(ii) Five years have elapsed after the assumption; and
</P>
<P>(iii) The purchasing mortgagor is not in default under the mortgage at the end of the five-year period.
</P>
<P>(2) If the conditions of this paragraph (b) for a release are satisfied, the mortgagee shall provide a written release upon request to the selling mortgagor.
</P>
<P>(3) This paragraph (b) only applies to a mortgage originated pursuant to an application by the mortgagor on or after December 1, 1986 on a form approved by the Secretary.
</P>
<P>(c) <I>Mortgagee to provide notice.</I> A mortgagee shall inform mortgagors (including prospective mortgagors seeking information) about the procedures for release of personal liability by providing a notice approved by the Secretary when required by the Secretary.
</P>
<CITA TYPE="N">[58 FR 42649, Aug. 11, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 203.512" NODE="24:2.1.1.2.4.3.114.6" TYPE="SECTION">
<HEAD>§ 203.512   Free assumability; exceptions.</HEAD>
<P>(a) <I>Policy of free assumability with no restrictions.</I> A mortgagee shall not impose, agree to or enforce legal restrictions on conveyance, as defined in § 203.41(a)(3) of this part, or restrictions on assumption of the insured mortgage, unless specifically permitted by this part or contained in a junior lien granted to the mortgagee after settlement on the insured mortgage.
</P>
<P>(b) <I>Credit review.</I> If approval is required by the mortgage, the mortgagee shall not approve the sale or other transfer of all or part of the mortgaged property, or the sale or transfer of a beneficial interest in a trust owning all or part of the property, whether or not any person acquires personal liability under the mortgage in connection with the sale or other transfer, unless:
</P>
<P>(1) At least one of the persons acquiring ownership is determined to be creditworthy under applicable standards prescribed by the Secretary;
</P>
<P>(2) The selling mortgagor retains an ownership interest in the property; or
</P>
<P>(3) The transfer is by devise or descent.
</P>
<P>(c) <I>Investors and secondary residences.</I> The mortgagee shall not approve the sale of other transfer or mortgaged property to a person who cannot be approved as a substitute mortgagor as provided in § 203.258 of this part because the property will not be a primary residence or a secondary residence permitted by that section.
</P>
<P>(d) <I>Due-on-sale clause.</I> Each mortgage shall contain a due-on-sale clause permitting acceleration, in a form prescribed by the Secretary. If a sale or other transfer occurs without mortgagee approval and a prohibition in paragraphs (b) or (c) of this section applies, a mortgagee shall enforce this section by requesting approval from the Secretary to accelerate the mortgage, provided that acceleration is permitted by applicable law. The mortgagee shall accelerate if approval is granted. This paragraph applies only if the application by the mortgagor on a form approved by the Secretary is dated on or after December 1, 1986.
</P>
<CITA TYPE="N">[58 FR 42649, Aug. 11, 1993; 59 FR 15112, Mar. 31, 1994]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="115" NODE="24:2.1.1.2.4.3.115" TYPE="SUBJGRP">
<HEAD>Payments, Charges and Accounts</HEAD>


<DIV8 N="§ 203.550" NODE="24:2.1.1.2.4.3.115.7" TYPE="SECTION">
<HEAD>§ 203.550   Escrow accounts.</HEAD>
<P>(a) It is the mortgagee's responsibility to make escrow disbursements before bills become delinquent. Mortgagees must establish controls to insure that bills payable from the escrow fund or the information needed to pay such bills is obtained on a timely basis. Penalties for late payments for items payable from the escrow account must not be charged to the mortgagor unless it can be shown that the penalty was the direct result of the mortgagor's error or omission. The mortgagee shall use the procedures set forth in § 3500.17 of this title, implementing Section 10 of the Real Estate Settlement Procedures Act (12 U.S.C. 2609), to compute the amount of the escrow, the methods of collection and accounting, and the payment of the bills for which the money has been escrowed. 
</P>
<P>(b) [Reserved] 
</P>
<P>(c) In the case of escrow accounts created for purposes of § 203.52 or § 234.64 of this chapter, mortgagees may estimate escrow requirements based on the best information available as to probable payments that will be required to be made from the account on a periodic basis throughout the period during which the account is maintained. 
</P>
<P>(d) The mortgagee shall not institute foreclosure when the only default of the mortgagor occupant is a present inability to pay a substantial escrow shortage, resulting from an adjustment pursuant to this section, in a lump sum. 
</P>
<P>(e) When the contract of mortgage insurance is terminated voluntarily or because of prepayment in full, sums in the escrow account to pay the mortgage insurance premiums shall be remitted to HUD with a form approved by the Secretary for reporting the voluntary termination of prepayment. Upon prepayment in full sums held in escrow for taxes and hazard insurance shall be released to the mortgagor promptly. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0474)
</APPRO>
<CITA TYPE="N">[41 FR 49736, Nov. 10, 1976, as amended at 57 FR 9611, Mar. 19, 1992; 57 FR 27927, June 23, 1992; 59 FR 53901, Oct. 26, 1994; 60 FR 8812, Feb. 15, 1995]


</CITA>
</DIV8>


<DIV8 N="§ 203.552" NODE="24:2.1.1.2.4.3.115.8" TYPE="SECTION">
<HEAD>§ 203.552   Fees and charges after endorsement.</HEAD>
<P>(a) The mortgagee may collect reasonable and customary fees and charges from the mortgagor after insurance endorsement only as provided below. The mortgagee may collect these fees or charges from the mortgagor only to the extent that the mortgagee is not reimbursed for such fees by HUD.
</P>
<P>(1) Late charges as set forth in § 203.25; 
</P>
<P>(2) Charges for processing or reprocessing a check returned as uncollectible; (Where bank policy permits, the mortgagee must deposit a check for collection a second time before assessing a bad check charge); 
</P>
<P>(3) Fees for processing a change of ownership of the mortgaged property; 
</P>
<P>(4) Fees and charges for arranging a substitution of liability under the mortgage in connection with the sale or transfer of the property; 
</P>
<P>(5) Charges for processing a request for credit approval of an assumptor or substitute mortgagor; 
</P>
<P>(6) Charges for substitution of a hazard insurance policy at other than the expiration of term of the existing hazard insurance policy; 
</P>
<P>(7) Charges for modification of the mortgage involving a recorded agreement for extension of term or reamortization; 
</P>
<P>(8) Fees and charges for processing a partial release of the mortgaged property; 
</P>
<P>(9) Attorney's and trustee's fees and expenses actually incurred (including the cost of appraisals pursuant to § 203.368(e) and cost of advertising pursuant to § 203.368(h)) when a case has been referred for foreclosure in accordance with the provisions of this part after a firm decision to foreclose if foreclosure is not completed because of a reinstatement of the account. (No attorney's fee may be charged for the services of the mortgagee's or servicer's staff attorney or for the services of a collection attorney other than the attorney handling the foreclosure.) 
</P>
<P>(10) The service charge provided for by § 203.23(c) and escrow charges in accordance with § 203.23(a); 
</P>
<P>(11) A trustee's fee if the security instrument in deed-of-trust states provides for payment of such a fee for execution of a satisfactory, release, or trustee's deed when the deed of trust is paid in full; and 
</P>
<P>(12) Such other reasonable and customary charges as may be authorized by the Secretary. (This shall not include: 
</P>
<P>(i) Charges for servicing activities of the mortgagee or servicer; 
</P>
<P>(ii) Fees charged by independent tax servicer organizations which contract to furnish data and information necessary for the payment of property taxes, 
</P>
<P>(iii) <I>Satisfaction, termination,</I> or <I>reconveyance</I> fees when a mortgage is paid in full (other than as provided in paragraph (a)(11) of this section), or 
</P>
<P>(iv) The fee for recordation of a satisfaction of the mortgage in states where recordation is the responsibility of the mortgagee.) 
</P>
<P>(13) Where permitted by the security instrument, attorney's fees and expenses actually incurred in the defense of any suit or legal proceeding wherein the mortgagee shall be made a party thereto by reason of the mortgage; (No attorney's fee may be charged for the services of the mortgagee's or servicer's staff attorney.) 
</P>
<P>(14) Property preservation expenses incurred pursuant to § 203.377. 
</P>
<P>(b) <I>reasonable and customary</I> fees must be predicated upon the actual cost of the work performed including out-of-pocket expenses. Directors of HUD Area and Insuring Offices are authorized to establish maximum fees and charges which are reasonable and customary in their areas. Except as provided in this part, no fee or charge shall be based on a percentage of either the face amount of the mortgage or the unpaid principal balance due on the mortgage. 
</P>
<CITA TYPE="N">[41 FR 49736, Nov. 10, 1976, as amended at 52 FR 1330, Jan. 13, 1987; 61 FR 35019, July 3, 1996; 62 FR 60130, Nov. 6, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 203.554" NODE="24:2.1.1.2.4.3.115.9" TYPE="SECTION">
<HEAD>§ 203.554   Enforcement of late charges.</HEAD>
<P>(a) A mortgagee shall not commence foreclosure when the only default on the part of the mortgagor is the failure to pay a late charge or charges (§ 203.25), except as provided in § 203.556. 
</P>
<P>(b) A late charge attributable to a particular installment payment due under the mortgage shall not be deducted from that installment. However, if the mortgagee thereafter notifies the mortgagor of his obligation to pay a late charge, such a charge may be deducted from any subsequent payment or payments submitted by the mortgagor or on his behalf if this is not inconsistent with the terms of the mortgage. Partial payments shall be treated as provided in § 203.556. 
</P>
<P>(c) A payment may be returned because of failure to include a late charge only if the mortgagee notifies the mortgagor before imposition of the charge of the amount of the monthly payment, the date when the late charge will be imposed and either the amount of the late charge or the total amount due when the late charge is included.
</P>
<P>(d) During the 60-day period beginning on the effective date of transfer of the servicing of a mortgage, a late charge shall not be imposed on the mortgagor with respect to any payment on the loan. No payment shall be treated as late for any other purpose if the payment is received by the transferor servicer, rather than the transferee servicer that should receive the payment, before the due date (including any applicable grace period allowed under the mortgage documents) applicable to such payment.
</P>
<CITA TYPE="N">[42 FR 15680, Mar. 23, 1977, as amended at 59 FR 65448, Dec. 19, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 203.556" NODE="24:2.1.1.2.4.3.115.10" TYPE="SECTION">
<HEAD>§ 203.556   Return of partial payments.</HEAD>
<P>(a) For the purpose of this section, a partial payment is a payment of any amount less than the full amount due under the terms of the mortgage at the time the payment is tendered, including late charges. 
</P>
<P>(b) Except as provided in this section, the mortgagee shall accept any partial payment and either apply it to the mortgagor's account or identify it with the mortgagor's account and hold it in a trust account pending disposition. When partial payments held for disposition aggregate a full monthly installment they shall be applied to the mortgagor's account, thus advancing the date of the oldest unpaid installment but not the date on which the account first became delinquent. 
</P>
<P>(c) If the mortgage is not in default, a partial payment may be returned to the mortgagor with a letter of explanation. 
</P>
<P>(d) If the mortgage is in default, a partial payment may be returned to the mortgagor with a letter of explanation in any of the following circumstances: 
</P>
<P>(1) When payment aggregates less than 50 percent of the amount then due; 
</P>
<P>(2) The payment is less than the amount agreed to in a forbearance plan, whether or not reduced to writing; 
</P>
<P>(3) The property is occupied by a tenant who is paying rent and the rentals are not being applied to the mortgage payments; 
</P>
<P>(4) Foreclosure has been commenced. (Foreclosure is commenced when the first action required for foreclosure under applicable law is taken.) 
</P>
<P>(e) Under the following circumstances the mortgagee may return any partial payment received more than 14 days after the mortgagee has mailed to the mortgagor a statement of the full amount due, including late charges, and a notice of intention to return any payment less than such amount. 
</P>
<P>(1) Four or more monthly installments are due and unpaid, or 
</P>
<P>(2) A delinquency of any amount has continued for at least six months since the account first became delinquent. 
</P>
<CITA TYPE="N">[42 FR 15680, Mar. 23, 1977] 


</CITA>
</DIV8>


<DIV8 N="§ 203.558" NODE="24:2.1.1.2.4.3.115.11" TYPE="SECTION">
<HEAD>§ 203.558   Handling prepayments.</HEAD>
<P>(a) <I>Handling prepayments for FHA-insured mortgages closed on or after January 21, 2015.</I> With respect to FHA-insured mortgages closed on or after January 21, 2015, notwithstanding the terms of the mortgage, the mortgagee shall accept a prepayment at any time and in any amount. The mortgagee shall not require 30 days' advance notice of prepayment, even if the mortgage instrument purports to require such notice. Monthly interest on the debt must be calculated on the actual unpaid principal balance of the loan as of the date the prepayment is received, and not as of the next installment due date.
</P>
<P>(b) <I>Handling prepayments for FHA-insured mortgages closed before January 21, 2015.</I> (1) With respect to FHA mortgages insured before August 2, 1985, if a prepayment is offered on other than an installment due date, the mortgagee may refuse to accept the prepayment until the first day of the month following expiration of the 30-day notice period as provided in the mortgage, or may require payment of interest to that date, but only if the mortgagee so advises the mortgagor, in a form approved by the Commissioner, in response to the mortgagor's inquiry, request for payoff figures, or tender of prepayment. If the installment due date (the first day of the month) falls on a nonbusiness day, the mortgagor's notice of intention to prepay or the prepayment shall be timely if received on the next business day.
</P>
<P>(2) With respect to FHA mortgages insured on or after August 2, 1985, but closed before January 21, 2015, the mortgagee shall not require 30 days' advance notice of prepayment, even if the mortgage instrument purports to require such notice. If the prepayment is offered on other than an installment due date, the mortgagee may refuse to accept the prepayment until the next installment due date (the first day of the month), or may require payment of interest to that date, but only if the mortgagee so advises the mortgagor, in a form approved by the Commissioner, in response to the mortgagor's inquiry, request for payoff figures, or tender of prepayment.
</P>
<P>(3) If the mortgagee fails to meet the full disclosure requirements of paragraphs (b)(1) and (b)(2) of this section, the mortgagee may be subject to forfeiture of that portion of the interest collected for the period beyond the date that prepayment in full was received and to such other actions as are provided in part 25 of this title.
</P>
<P>(c) <I>Mortgagee annual notice to mortgagors.</I> Each mortgagee, with respect to a mortgage under this part, shall provide to each of its mortgagors not less frequently than annually a written notice, in a form approved by the Commissioner, containing a statement of the amount outstanding for prepayment of the principal amount of the mortgage. With respect to FHA-insured mortgages closed before January 21, 2015, the notice shall describe any requirements the mortgagor must fulfill to prevent the accrual of any interest on the principal amount after the date of any prepayment. This paragraph shall apply to any outstanding mortgage insured on or after August 22, 1991.
</P>
<CITA TYPE="N">[79 FR 50837, Aug. 26, 2014]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="116" NODE="24:2.1.1.2.4.3.116" TYPE="SUBJGRP">
<HEAD>Mortgagee Action and Forbearance</HEAD>


<DIV8 N="§ 203.600" NODE="24:2.1.1.2.4.3.116.12" TYPE="SECTION">
<HEAD>§ 203.600   Mortgage collection action.</HEAD>
<P>Subject to the requirements of this subpart, mortgagees shall take prompt action to collect amounts due from mortgagors to minimize the number of accounts in a delinquent or default status. Collection techniques must be adapted to individual differences in mortgagors and take account of the circumstances peculiar to each mortgagor. 


</P>
</DIV8>


<DIV8 N="§ 203.602" NODE="24:2.1.1.2.4.3.116.13" TYPE="SECTION">
<HEAD>§ 203.602   Delinquency notice to mortgagor.</HEAD>
<P>The mortgagee shall give notice to each mortgagor in default on a form supplied by the Secretary or, if the mortgagee wishes to use its own form, on a form approved by the Secretary, no later than the end of the second month of any delinquency in payments under the mortgage. If an account is reinstated and again becomes delinquent, the delinquency notice shall be sent to the mortgagor again, except that the mortgagee is not required to send a second delinquency notice to the same mortgagor more often than once each six months. The mortgagee may issue additional or more frequent notices of delinquency at its option. 


</P>
</DIV8>


<DIV8 N="§ 203.604" NODE="24:2.1.1.2.4.3.116.14" TYPE="SECTION">
<HEAD>§ 203.604   Contact with the mortgagor.</HEAD>
<P>(a) For mortgages insured pursuant to this part, except those mortgages insured on Indian Land pursuant to section 248 of the National Housing Act:
</P>
<P>(1) The mortgagee must conduct a meeting with the mortgagor, or make a reasonable effort to arrange such a meeting, before three full monthly installments due on the mortgage are unpaid and at least 30 days before foreclosure is commenced, or at least 30 days before assignment is requested if the mortgage is insured on Hawaiian homelands pursuant to section 247 of the National Housing Act. The meeting with the mortgagor must be conducted in a manner as determined by the Secretary.
</P>
<P>(i) If default occurs on a repayment plan, the mortgagee must conduct a meeting with the mortgagor, or make a reasonable effort to arrange such a meeting, no later than 30 days after such default.
</P>
<P>(ii) [Reserved]
</P>
<P>(2) A meeting with the mortgagor is not required if:
</P>
<P>(i) The mortgagor has clearly indicated that they will not cooperate in the meeting;
</P>
<P>(ii) The mortgagor is on a repayment plan to bring the mortgage current, and the mortgagor is meeting the terms of the repayment plan; or
</P>
<P>(iii) A reasonable effort to arrange a meeting with the mortgagor is unsuccessful.
</P>
<P>(3) A reasonable effort to arrange a meeting with the mortgagor shall consist of, at a minimum, two verifiable attempts to contact the mortgagor utilizing methods determined by the Secretary.
</P>
<P>(b) For mortgages insured on Indian Land pursuant to section 248 of the National Housing Act:
</P>
<P>(1) The mortgagee must conduct a face-to-face meeting with the mortgagor, or make a reasonable effort to arrange such a meeting, before three full monthly installments due on the mortgage are unpaid and at least 30 days before assignment is requested.
</P>
<P>(i) If default occurs on a repayment plan arranged other than during a face-to-face meeting, the mortgagee must have a face-to-face meeting with the mortgagor, or make a reasonable effort to arrange such a meeting, within 30 days after default or at least 30 days before assignment is requested.
</P>
<P>(ii) [Reserved]
</P>
<P>(2) A face-to-face meeting is not required if:
</P>
<P>(i) The mortgagor has clearly indicated that they will not cooperate in the meeting;
</P>
<P>(ii) The mortgagor is on a repayment plan to bring the mortgage current, and the mortgagor is meeting the terms of the repayment plan; or
</P>
<P>(iii) A reasonable effort to arrange a meeting with the mortgagor is unsuccessful.
</P>
<P>(3) A reasonable effort to arrange a face-to-face meeting with the mortgagor shall include at a minimum, one letter sent to the mortgagor certified by the Postal Service as having been dispatched and at least one trip to see the mortgagor at the mortgaged property. In addition, the mortgagee must document that it has made at least one telephone call to the mortgagor for the purpose of trying to arrange a face-to-face meeting. The mortgagee may appoint an agent to perform its responsibilities under paragraph (b) of this section.
</P>
<P>(4) The mortgagee must also:
</P>
<P>(i) Inform the mortgagor that HUD will make information regarding the status and payment history of the mortgagor's loan available to credit bureaus and prospective creditors;
</P>
<P>(ii) Inform the mortgagor of other available assistance, if any; and
</P>
<P>(iii) Inform the mortgagor of the names and addresses of HUD officials to whom further communications may be addressed.
</P>
<CITA TYPE="N">[89 FR 63098, Aug. 2, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 203.605" NODE="24:2.1.1.2.4.3.116.15" TYPE="SECTION">
<HEAD>§ 203.605   Loss mitigation performance.</HEAD>
<P>(a) <I>Duty to mitigate.</I> Before four full monthly installments due on the mortgage have become unpaid, the mortgagee shall evaluate on a monthly basis all of the loss mitigation techniques provided at § 203.501 to determine which is appropriate. Based upon such evaluations, the mortgagee shall take the appropriate loss mitigation action. Documentation must be maintained for the initial and all subsequent evaluations and resulting loss mitigation actions. Should a claim for mortgage insurance benefits later be filed, the mortgagee shall maintain this documentation in the claim review file under the requirements of § 203.365(c).
</P>
<P>(b) <I>Assessment of mortgagee's loss mitigation performance.</I> (1) HUD will measure and advise mortgagees of their loss mitigation performance through the Tier Ranking System (TRS). Under the TRS, HUD will analyze each mortgagee's loss mitigation efforts portfolio-wide on a quarterly basis, based on 12 months of performance, by computing ratios involving loss mitigation attempts, defaults, and claims. Based on the ratios, HUD will group mortgagees in four tiers (Tiers 1, 2, 3, and 4), with Tier 1 representing the highest or best ranking mortgagees and Tier 4 representing the lowest or least satisfactory ranking mortgagees. The precise methodology for calculating the TRS ratios and for determining the tier stratification (or cutoff points) will be provided through <E T="04">Federal Register</E> notice. Notice of future TRS methodology or stratification changes will be published in the <E T="04">Federal Register</E> and will provide a 30-day public comment period.
</P>
<P>(2) Before HUD issues each quarterly TRS notice, HUD will review the number of claims paid to the mortgagee. If HUD determines that the lender's low TRS score is the result of a small number of defaults or a small number of foreclosure claims, or both, as defined by notice, HUD may determine not to designate the mortgagee as Tier 3 or Tier 4, and the mortgagee will remain unranked.
</P>
<P>(3) Within 30 calendar days after the date of the TRS notice, a mortgagee that scored in Tier 4 may appeal its ranking to the Deputy Assistant Secretary for Single Family or the Deputy Assistant Secretary's designee and request an informal HUD conference. The only basis for appeal by the Tier 4 mortgagee is disagreement with the data used by HUD to calculate the mortgagee's ranking. If HUD determines that the mortgagee's Tier 4 ranking was based on incorrect or incomplete data, the mortgagee's performance will be recalculated and the mortgagee will receive a corrected tier ranking score.
</P>
<P>(c) <I>Assessment of civil money penalty.</I> A mortgagee that is found to have failed to engage in loss mitigation as required under paragraph (a) of this section shall be liable for a civil money penalty as provided in § 30.35(c) of this title.
</P>
<CITA TYPE="N">[70 FR 21578, Apr. 26, 2005]


</CITA>
</DIV8>


<DIV8 N="§ 203.606" NODE="24:2.1.1.2.4.3.116.16" TYPE="SECTION">
<HEAD>§ 203.606   Pre-foreclosure review.</HEAD>
<P>(a) Before initiating foreclosure, the mortgagee must ensure that all servicing requirements of this subpart have been met. The mortgagee may not commence foreclosure for a monetary default unless at least three full monthly installments due under the mortgage are unpaid after application of any partial payments that may have been accepted but not yet applied to the mortgage account. In addition, prior to initiating any action required by law to foreclose the mortgage, the mortgagee shall notify the mortgagor in a format prescribed by the Secretary that the mortgagor is in default and the mortgagee intends to foreclose unless the mortgagor cures the default. 
</P>
<P>(b) If the mortgagee determines that any of the following conditions has been met, the mortgagee may initiate foreclosure without the delay in foreclosure required by paragraph (a) of this section: 
</P>
<P>(1) The mortgaged property has been abandoned, or has been vacant for more than 60 days. 
</P>
<P>(2) The mortgagor, after being clearly advised of the options available for relief, has clearly stated in writing that he or she has no intention of fulfilling his or her obligation under the mortgage. 
</P>
<P>(3) The mortgaged property is not the mortgagor's principal residence and it is occupied by tenants who are paying rent, but the rental income is not being applied to the mortgage debt. 
</P>
<P>(4) The property is owned by a corporation or partnership. 
</P>
<CITA TYPE="N">[52 FR 6915, Mar. 5, 1987, as amended at 61 FR 35020, July 3, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.608" NODE="24:2.1.1.2.4.3.116.17" TYPE="SECTION">
<HEAD>§ 203.608   Reinstatement.</HEAD>
<P>The mortgagee shall permit reinstatement of a mortgage, even after the institution of foreclosure proceedings, if the mortgagor tenders in a lump sum all amounts required to bring the account current, including foreclosure costs and reasonable attorney's fees and expenses properly associated with the foreclosure action, unless: (a) The mortgagee has accepted reinstatement after the institution of foreclosure proceedings within two years immediately preceding the commencement of the current foreclosure action, (b) reinstatement will preclude foreclosure following a subsequent default, or (c) reinstatement will adversely affect the priority of the mortgage lien. 


</P>
</DIV8>


<DIV8 N="§ 203.610" NODE="24:2.1.1.2.4.3.116.18" TYPE="SECTION">
<HEAD>§ 203.610   Relief for mortgagor in military service.</HEAD>
<P>The mortgagee shall specifically give consideration to affording the mortgagor the benefit of relief authorized by §§ 203.345 and 203.346, if the mortgagor is <I>person in the military service</I> as that term is defined in the Soldiers and Sailors Civil Relief Act of 1940, as amended. 


</P>
</DIV8>


<DIV8 N="§ 203.614" NODE="24:2.1.1.2.4.3.116.19" TYPE="SECTION">
<HEAD>§ 203.614   Special forbearance.</HEAD>
<P>If the mortgagee finds that a default is due to circumstances beyond the mortgagor's control, as defined by HUD, the mortgagee may grant special forbearance relief to the mortgagor in accordance with the conditions prescribed by HUD. 
</P>
<CITA TYPE="N">[61 FR 35020, July 3, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.616" NODE="24:2.1.1.2.4.3.116.20" TYPE="SECTION">
<HEAD>§ 203.616   Mortgage modification.</HEAD>
<P>The mortgagee may modify a mortgage for the purpose of changing the amortization provisions by recasting the total unpaid amount due for a term not exceeding 480 months. The mortgagee must notify HUD of such modification in a format prescribed by HUD within 30 days of the execution of the modification agreement.
</P>
<CITA TYPE="N">[62 FR 60130, Nov. 6, 1997, as amended at 88 FR 14259, Mar. 8, 2023]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="117" NODE="24:2.1.1.2.4.3.117" TYPE="SUBJGRP">
<HEAD>Mortgages in Default on Property Located on Indian Reservations</HEAD>


<DIV8 N="§ 203.664" NODE="24:2.1.1.2.4.3.117.21" TYPE="SECTION">
<HEAD>§ 203.664   Processing defaulted mortgages on property located on Indian land.</HEAD>
<P>Before a mortgagee requests that the Secretary accept assignment under § 203.350(b) of a mortgage insured pursuant to section 248 of the National Housing Act (§ 203.43h), the mortgagee must submit documents showing that the requirements of § 203.604 have been met. 
</P>
<CITA TYPE="N">[61 FR 35020, July 3, 1996]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="118" NODE="24:2.1.1.2.4.3.118" TYPE="SUBJGRP">
<HEAD>Mortgages in Default on Property Located on Hawaiian Home Lands</HEAD>


<DIV8 N="§ 203.665" NODE="24:2.1.1.2.4.3.118.22" TYPE="SECTION">
<HEAD>§ 203.665   Processing defaulted mortgages on property located on Hawaiian home lands.</HEAD>
<P>Before a mortgagee requests the Secretary to accept assignment under § 203.350(c) of a mortgage insured pursuant to section 247 of the National Housing Act (§ 203.43i), the mortgagee must submit documents showing that the requirements of § 203.604 have been met. 
</P>
<CITA TYPE="N">[61 FR 35020, July 3, 1996]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="119" NODE="24:2.1.1.2.4.3.119" TYPE="SUBJGRP">
<HEAD>Assignment and Forbearance—Property in Allegany Reservation of Seneca Indians</HEAD>


<DIV8 N="§ 203.666" NODE="24:2.1.1.2.4.3.119.23" TYPE="SECTION">
<HEAD>§ 203.666   Processing defaulted mortgages on property in Allegany Reservation of Seneca Nation of Indians.</HEAD>
<P>(a) <I>Applicability.</I> This section applies to mortgages authorized by section 203(q) of the National Housing Act (§ 203.43j) only if the default occurred before the mortgagor and the lessee execute a lease renewal or a new lease either with a term of not less than five years beyond the maturity date of the mortgage, or with a term established by an arbitration award. 
</P>
<P>(b) <I>Claims through assignment.</I> Before a mortgagee requests the Secretary to accept assignment under § 203.350(d) the mortgagee must submit documents showing that the requirements of § 203.604 have been met. 
</P>
<CITA TYPE="N">[53 FR 13405, Apr. 25, 1988, as amended at 61 FR 35020, July 3, 1996]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="120" NODE="24:2.1.1.2.4.3.120" TYPE="SUBJGRP">
<HEAD>Occupied Conveyance</HEAD>


<DIV8 N="§ 203.670" NODE="24:2.1.1.2.4.3.120.24" TYPE="SECTION">
<HEAD>§ 203.670   Conveyance of occupied property.</HEAD>
<P>(a) It is HUD's policy to reduce the inventory of acquired properties in a manner that expands homeownership opportunities, strengthens neighborhoods and communities, and ensures a maximum return to the mortgage insurance fund. 
</P>
<P>(b) The Secretary will accept conveyance of an occupied property containing one to four residential units if the Secretary finds that: 
</P>
<P>(1) An individual residing in the property suffers from a temporary, permanent, or long-term illness or injury that would be aggravated by the process of moving from the property, and that the individual meets the eligibility criteria in § 203.674(a);
</P>
<P>(2) State or local law prohibits the mortgagee from evicting a tenant residing in the property who is making regular monthly payments to the mortgagor, or prohibits eviction for other similar reasons beyond the control of the mortgagee; or
</P>
<P>(3) It is in the Secretary's interest to accept conveyance of the property occupied under § 203.671, the property is habitable as defined in § 203.673, and, except for conveyances under § 203.671(d), each occupant who intends to remain in the property after the conveyance meets the eligibility criteria in § 203.674(b).
</P>
<P>(c) HUD consents to accept good marketable title to occupied property where 90 days have elapsed since the mortgagee notified HUD of pending acquisition, the Department has notified the mortgagee that it was considering a request for continued occupancy, and no subsequent notification from HUD has been received by the mortgagee. 
</P>
<CITA TYPE="N">[53 FR 874, Jan. 14, 1988, as amended at 56 FR 46967, Sept. 16, 1991; 58 FR 54246, Oct. 20, 1993; 61 FR 36266, July 9, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.671" NODE="24:2.1.1.2.4.3.120.25" TYPE="SECTION">
<HEAD>§ 203.671   Criteria for determining the Secretary's interest.</HEAD>
<P>It is in the Secretary's interest to accept occupied conveyance when one or more of the following are met:
</P>
<P>(a) Occupancy of the property is essential to protect it from vandalism from time of acquisition to the time of preparation for sale.
</P>
<P>(b) The average time in inventory for HUD's unsold inventory in the residential area in which the property is located exceeds six months.
</P>
<P>(c) With respect to multi-unit properties, the marketability of the property would be improved by retaining occupancy of one or more units. 
</P>
<P>(d) The high cost of eviction or relocation expenses makes eviction impractical.
</P>
<CITA TYPE="N">[45 FR 59563, Sept. 10, 1980, as amended at 56 FR 46967, Sept. 16, 1991; 58 FR 54246, Oct. 20, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 203.672" NODE="24:2.1.1.2.4.3.120.26" TYPE="SECTION">
<HEAD>§ 203.672   Residential areas.</HEAD>
<P>(a) For the purposes of occupied conveyance considerations, a residential area is any area which constitutes a local economic market for the purchase and sale of residential real estate. In making determinations of residential areas, substantial weight shall be given to delineations of such areas commonly used by persons active in the real estate industry in the affected area.
</P>
<P>(b) HUD shall establish such residential areas within six (6) months of the publication of these regulations when HUD's current established patterns of dealing with the disposition of its acquired home property inventory and related recordkeeping does not coincide with paragraph (a) of this section. Under such circumstances the Secretary shall apply such established patterns in defining residential areas until the standards in paragraph (a) of this section are implemented. 
</P>
<CITA TYPE="N">[45 FR 59563, Sept. 10, 1980]


</CITA>
</DIV8>


<DIV8 N="§ 203.673" NODE="24:2.1.1.2.4.3.120.27" TYPE="SECTION">
<HEAD>§ 203.673   Habitability.</HEAD>
<P>(a) For purposes of § 203.670, a property is habitable if it meets the requirements of this section in its present condition, or will meet these requirements with the expenditure of not more than five percent of the fair market value of the property. The cost of hazard reduction or abatement of lead-based paint hazards in the property, as required by the Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), and the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and implementing regulations in part 35 of this title, is excluded from these repair cost limitations.
</P>
<P>(b)(1) Each residential unit must contain: 
</P>
<P>(i) Heating facilities adequate for healthful and comfortable living conditions, taking into consideration the local climate; 
</P>
<P>(ii) Adequate electrical supply for lighting and for equipment used in the residential unit; 
</P>
<P>(iii) Adequate cooking facilities; 
</P>
<P>(iv) A continuing supply of hot and cold water; and 
</P>
<P>(v) Adequate sanitary facilities and a safe method of sewage disposal. 
</P>
<P>(2) The property shall be structurally sound, reasonably durable, and free from hazards that may adversely affect the health and safety of the occupants or may impair the customary use and enjoyment by the occupants. Unacceptable hazards include, but are not limited to, subsidence, erosion, flood, exposure to the elements, exposed or unsafe electrical wiring, or an accumulation of minor hazards, such as broken stairs. 
</P>
<P>(c) If repairs, including lead-based paint hazard reduction or abatement, are to be made while the property is occupied, the occupant must hold the Secretary and the Department harmless against any personal injury or property damage that may occur during the process of making repairs. If temporary relocation of the occupant is necessary during repairs, no reimbursement for relocation expenses will be provided to the occupant.
</P>
<CITA TYPE="N">[53 FR 874, Jan. 14, 1988, as amended at 64 FR 50225, Sept. 15, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 203.674" NODE="24:2.1.1.2.4.3.120.28" TYPE="SECTION">
<HEAD>§ 203.674   Eligibility for continued occupancy.</HEAD>
<P>(a) Occupancy because of temporary, permanent, or long-term illness or injury of an individual residing in the property will be limited to a reasonable time, to be determined by the Secretary on a case-by-case basis, and will be permitted only if all the conditions in this paragraph (a) are met:
</P>
<P>(1) A timely request is made in accordance with § 203.676, including the submittal of documents required in § 203.675(b)(4). 
</P>
<P>(2) The occupant agrees to execute a month-to-month lease, at the time of acquisition of the property by the Secretary and on a form prescribed by HUD, and to pay a fair market rent as determined by the Secretary. The rental rate shall be established on the basis of rents charged for other properties in comparable condition after completion of repairs (if any). 
</P>
<P>(3) The occupant's total housing cost (rent plus utility costs to be paid by the occupant) will not exceed 38 percent of the occupant's net effective income (gross income less Federal income taxes). However, a higher percentage may be permitted if the occupant has been paying at least the required rental amount for the dwelling, or if there are other compensating factors (e.g., where the occupant is able to rely on cash savings or on contributions from family members to cover total housing costs). 
</P>
<P>(4) The occupant agrees to allow access to the property (during normal business hours and upon a minimum of two days advance notice) by HUD Field Office staff or by a HUD representative, so that the property may be inspected and any necessary repairs accomplished, or by a sales broker. 
</P>
<P>(5) The occupant discloses and verifies Social Security Numbers, as provided by part 200, subpart T, of this chapter.
</P>
<P>(b) An occupant who does not meet the illness or injury criteria in paragraph (a) of this section is eligible for continued occupancy only if all the conditions in this paragraph (b) are met:
</P>
<P>(1) A timely request is made in accordance with § 203.676. 
</P>
<P>(2) The occupant agrees to execute a month-to-month lease, at the time of acquisition of the property by the Secretary and on a form prescribed by HUD, to pay fair market rent as determined by the Secretary, and to pay the rent for the first month in advance at the time the lease is executed. The rental rate shall be established on the basis of rents charged for other properties in comparable condition after completion of repairs (if any). 
</P>
<P>(3) The occupant will have been in occupancy at least 90 days before the date the mortgagee acquires title to the property. 
</P>
<P>(4) The occupant's total housing cost (rent plus utility costs to be paid by the occupant) will not exceed 38 percent of the occupant's net effective income (gross income less Federal income taxes). However, a higher percentage may be permitted if the occupant has been paying at least the required rental amount for the dwelling, or if there are other compensating factors (e.g., where the occupant is able to rely on cash savings or on contributions from family members to cover total housing costs). 
</P>
<P>(5) The occupant agrees to allow access to the property (during normal business hours and upon a minimum of two days advance notice) by HUD Field Office staff or by a HUD representative, so that the property may be inspected and any necessary repairs accomplished, or by a sales broker. 
</P>
<P>(6) The occupant discloses and verifies Social Security Number, as provided by part 200, subpart T, of this chapter.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0268)
</APPRO>
<CITA TYPE="N">[53 FR 874, Jan. 14, 1988, and 53 FR 8626, Mar. 16, 1988, as amended at 54 FR 39693, Sept. 27, 1989; 56 FR 46967, Sept. 16, 1991]


</CITA>
</DIV8>


<DIV8 N="§ 203.675" NODE="24:2.1.1.2.4.3.120.29" TYPE="SECTION">
<HEAD>§ 203.675   Notice to occupants of pending acquisition.</HEAD>
<P>(a) At least 60 days, but not more than 90 days, before the date on which the mortgagee reasonably expects to acquire title to the property, the mortgagee shall notify the mortgagor and each head of household who is actually occupying a unit of the property of its potential acquisition by HUD. The mortgagee shall send a copy of this notification to the appropriate HUD Field Office. 
</P>
<P>(b) The notice shall provide a brief summary of the conditions under which continued occupancy is permissible and advise them that: 
</P>
<P>(1) Potential acquisition of the property by the Secretary is pending; 
</P>
<P>(2) The Secretary requires that properties be vacant at the time of conveyance to the Secretary, unless the mortgagor or other occupant can meet the conditions for continued occupancy in § 203.670, the habitability criteria in § 203.673, and the eligibility criteria in § 203.674; 
</P>
<P>(3) An occupant may request permission to remain in occupancy in the event of acquisition of the property by the Secretary by notifying the HUD Field Office in writing, with any required documentation, within 20 days of the date of the mortgagee's notice to the occupant; 
</P>
<P>(4) If an occupant seeks to qualify for continued occupancy under the illness or injury provisions of § 203.674(a), the occupant shall provide to the HUD Field Office, at the time of the occupant's request for permission to remain in occupancy, documentation to support this claim. Documentation shall include an estimate of the time when the patient could be moved without severely aggravating the illness or injury, and a statement by a State-certified physician establishing the validity of the occupant's claim. HUD may require more than one medical opinion or may arrange an examination by a physician approved by HUD; and 
</P>
<P>(5) If an occupant fails to make a timely request, the property must be vacated before the scheduled time of acquisition.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0268)
</APPRO>
<CITA TYPE="N">[53 FR 875, Jan. 14, 1988, and 53 FR 8626, Mar. 16, 1988, as amended at 58 FR 54246, Oct. 20, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 203.676" NODE="24:2.1.1.2.4.3.120.30" TYPE="SECTION">
<HEAD>§ 203.676   Request for continued occupancy.</HEAD>
<P>An occupant may request permission to continue to occupy the property following conveyance to the Secretary by notifying the HUD Field Office in writing, within 20 days after the date of the mortgagee's notice of pending acquisition. Verification of illness or injury as described in § 203.675(b)(4) shall be submitted within this time period if an occupant seeks to qualify for continued occupancy under the provisions of § 203.674(a). The HUD Field Office will notify the mortgagee in writing that an occupied conveyance has been requested.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0268)
</APPRO>
<CITA TYPE="N">[53 FR 875, Jan. 14, 1988, and 53 FR 8626, Mar. 16, 1988, as amended at 58 FR 54246, Oct. 20, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 203.677" NODE="24:2.1.1.2.4.3.120.31" TYPE="SECTION">
<HEAD>§ 203.677   Decision to approve or deny a request.</HEAD>
<P>(a) The HUD Field Office will provide written notification of its decision to an occupant who makes a timely request to continue to occupy the property. The decision of the HUD Field Office on this matter will be made by the Chief, Property Disposition. If the decision is to deny the request, the notice to the occupant will include a statement of the reason or reasons for the decision and of the occupant's right to appeal. The occupant may appeal HUD's decision within 20 days after the date of HUD's notice. The appeal must be addressed to the Field Office Manager and be in writing, and the occupant may provide documentation intended to refute the reasons given for HUD's decision. The occupant may also request an informal conference with a representative of the HUD Field Office Manager. A request for an informal conference must be made in writing within 10 days after the date of HUD's notice. The occupant may be represented at the conference by counsel or by other persons with pertinent expert knowledge or experience. 
</P>
<P>(b) After notification that HUD has denied a request for continued occupancy, the occupant, on his or her request, shall be permitted to review all relevant material in HUD's possession (including a copy of the inspection report if the request is denied because the property is not habitable as defined in § 203.673). Only material in HUD's possession that directly pertains to conditions for continued occupancy under §§ 203.670, 203.673, and 203.674 may be considered material relevant for an occupant's review under this paragraph. This review shall be limited to a review of material for purposes of the informal conference or the appeal of the Department's decision. The information will only be provided after request for an informal conference or appeal has been submitted to HUD. 
</P>
<P>(c) After consideration of an appeal, the HUD Field Office will notify the applicant in writing of HUD's final decision. This final decision will be made by the HUD Field Office Manager or a representative of the Field Office Manager (other than the Chief, Property Disposition). If the decision is to deny the occupant's request, the notice to the occupant will reflect consideration of the issues raised by the occupant. 
</P>
<P>(d) If, after consideration of an appeal, the Field Office Manager denies the request for new or additional reasons, the occupant will be afforded an opportunity to request that the Field Office Manager reconsider its decision under the provisions of paragraph (c) of this section. 
</P>
<CITA TYPE="N">[53 FR 875, Jan. 14, 1988, and 53 FR 8626, Mar. 16, 1988] 


</CITA>
</DIV8>


<DIV8 N="§ 203.678" NODE="24:2.1.1.2.4.3.120.32" TYPE="SECTION">
<HEAD>§ 203.678   Conveyance of vacant property.</HEAD>
<P>(a) HUD will require that the property be conveyed vacant if the occupant fails to request permission to continue to occupy within the time period specified in § 203.676, or fails to request a conference or to appeal a decision to deny occupied conveyance within the time period specified in § 203.677(a). 
</P>
<P>(b) If the mortgagee has not been notified by HUD, within 45 days of the date of the mortgagee's notification of pending acquisition, that a request for continued occupancy is under consideration, the mortgagee shall convey the property vacant, unless otherwise directed by HUD. 
</P>
<CITA TYPE="N">[53 FR 875, Jan. 14, 1988, and 53 FR 8626, Mar. 16, 1988]


</CITA>
</DIV8>


<DIV8 N="§ 203.679" NODE="24:2.1.1.2.4.3.120.33" TYPE="SECTION">
<HEAD>§ 203.679   Continued occupancy after conveyance.</HEAD>
<P>(a) Occupancy of HUD-acquired property is temporary in all cases and is subject to termination when necessary to facilitate preparing the property for sale and completing the sale. 
</P>
<P>(b) HUD will notify the occupant to vacate the property and, if necessary, will take appropriate eviction action in any of the following situations:
</P>
<P>(1) Failure of the occupant to execute the lease required by § 203.674 (a)(2) and (b)(2), or failure to pay the rental amount required, including the initial payment at the time of execution of the lease, or to comply with the terms of the lease;
</P>
<P>(2) Failure of the occupant to allow access to the property upon request in accordance with § 203.674 (a)(4) and (b)(5);
</P>
<P>(3) Necessity to prepare the property for sale; or
</P>
<P>(4) Assignment of the property by the Secretary to a different use or program. 
</P>
<CITA TYPE="N">[53 FR 876, Jan. 14, 1988, and 53 FR 8626, Mar. 16, 1988; 61 FR 36266, July 9, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 203.680" NODE="24:2.1.1.2.4.3.120.34" TYPE="SECTION">
<HEAD>§ 203.680   Approval of occupancy after conveyance.</HEAD>
<P>When an occupied property is conveyed to HUD before HUD has had an opportunity to consider continued occupancy (e.g., where HUD has taken more than 90 days to make a final decision on continued occupancy in accordance with § 203.670(c)), a determination regarding continued occupancy will be made in accordance with the conditions for the initial approval of occupied conveyance. Any such determination shall be in accordance with HUD's obligations under the terms of any month-to-month lease that has been executed.
</P>
<CITA TYPE="N">[53 FR 876, Jan. 14, 1988, and 53 FR 8626, Mar. 16, 1988]


</CITA>
</DIV8>


<DIV8 N="§ 203.681" NODE="24:2.1.1.2.4.3.120.35" TYPE="SECTION">
<HEAD>§ 203.681   Authority of HUD Field Office Managers.</HEAD>
<P>Field Office Managers shall act for the Secretary in all matters relating to assignment and occupied conveyance determinations. The decision of the Field Office Manager under § 203.677 will be final and not be subject to further administrative review.
</P>
<CITA TYPE="N">[53 FR 876, Jan. 14, 1988, and 53 FR 8626, Mar. 16, 1988] 


</CITA>
</DIV8>

</DIV7>

</DIV6>

</DIV5>


<DIV5 N="204" NODE="24:2.1.1.2.5" TYPE="PART">
<HEAD>PART 204—COINSURANCE 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1715z-9; 42 U.S.C. 3535(d).


</PSPACE></AUTH>

<DIV8 N="§ 204.1" NODE="24:2.1.1.2.5.0.121.1" TYPE="SECTION">
<HEAD>§ 204.1   Termination of program.</HEAD>
<P>Effective December 29, 1994, of final rule the authority to coinsure mortgages under this part is terminated, except that the Department will honor legally binding and validly issued borrower approvals issued by lenders before the termination date. This part 204, as it existed immediately before the termination date, will continue to govern the rights and obligations of coinsured lenders, mortgagors, and the Department of Housing and Urban Development with respect to loans coinsured under this part. 
</P>
<CITA TYPE="N">[59 FR 39957, Aug. 5, 1994]


</CITA>
</DIV8>

</DIV5>


<DIV5 N="206" NODE="24:2.1.1.2.6" TYPE="PART">
<HEAD>PART 206—HOME EQUITY CONVERSION MORTGAGE INSURANCE


</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1715b, 1715z-20; 42 U.S.C. 3535(d)
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>82 FR 7117, Jan. 19, 2017, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:2.1.1.2.6.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 206.1" NODE="24:2.1.1.2.6.1.133.1" TYPE="SECTION">
<HEAD>§ 206.1   Purpose.</HEAD>
<P>The purposes of the Home Equity Conversion Mortgage (HECM) Insurance program are set out in section 255(a) of the National Housing Act, Public Law 73-479, 48 Stat. 1246 (12 U.S.C. 1715z-20) (“NHA”).


</P>
</DIV8>


<DIV8 N="§ 206.3" NODE="24:2.1.1.2.6.1.133.2" TYPE="SECTION">
<HEAD>§ 206.3   Definitions.</HEAD>
<P>As used in this part, the following terms shall have the meaning indicated.
</P>
<P><I>Bona fide tenant</I> means a tenant of the property who is not a mortgagor, borrower, a spouse or child of a mortgagor or borrower, or any other member of a mortgagor's or borrower's family.
</P>
<P><I>Borrower</I> means a mortgagor who is an original borrower under the HECM Loan Agreement and Note. The term does not include successors or assigns of a borrower.
</P>
<P><I>Borrower's Advance</I> means the funds advanced to the borrower at the closing of a fixed interest rate HECM in accordance with § 206.25.
</P>
<P><I>CMT Index</I> means the U.S. Constant Maturity Treasury Index.
</P>
<P><I>Commissioner</I> means the Federal Housing Commissioner or the Commissioner's authorized representative.
</P>
<P><I>Contract of insurance</I> means the agreement evidenced by the issuance of a Mortgage Insurance Certificate or by the endorsement of the Commissioner upon the credit instrument given in connection with an insured mortgage, incorporating by reference the regulations in subpart C of this part and the applicable provisions of the National Housing Act.
</P>
<P><I>Day</I> means calendar day, except where the term <I>business day</I> is used.
</P>
<P><I>Deferral Period</I> means the period of time following the death of the last surviving borrower during which the due and payable status of a HECM is deferred for an Eligible Non-Borrowing Spouse provided that the Qualifying Attributes and all other FHA requirements continue to be satisfied.
</P>
<P><I>Eligible Non-Borrowing Spouse</I> means a Non-Borrowing Spouse who meets all Qualifying Attributes for a Deferral Period.
</P>
<P><I>Estate planning service firm</I> means an individual or entity that is not a mortgagee approved under part 202 of this chapter or a participating agency approved under subpart B of 24 CFR part 214 and that charges a fee that is:
</P>
<P>(1) Contingent on the prospective borrower obtaining a mortgage loan under this part, except the origination fee authorized by § 206.31 or a fee specifically authorized by the Commissioner; or
</P>
<P>(2) For information that borrowers and Eligible and Ineligible Non-Borrowing Spouses, if applicable, must receive under § 206.41, except a fee by:
</P>
<P>(i) A participating agency approved under subpart B of 24 CFR part 214; or
</P>
<P>(ii) An individual or company, such as an attorney or accountant, in the <I>bona fide</I> business of generally providing tax or other legal or financial advice; or
</P>
<P>(3) For other services that the provider of the services represents are, in whole or in part, for the purpose of improving a prospective borrower's access to mortgages covered by this part, except where the fee is for services specifically authorized by the Commissioner.
</P>
<P><I>Expected average mortgage interest rate</I> means the interest rate used to calculate the principal limit established at closing.
</P>
<P>(1) For fixed interest rate HECMs, the expected average mortgage interest rate is the same as the fixed mortgage (Note) interest rate and is set simultaneously with the fixed interest (Note) rate.
</P>
<P>(2) For adjustable interest rate HECMs, the expected average mortgage interest rate is the sum of the mortgagee's margin plus the weekly average yield for U.S. Treasury securities (CMT) adjusted to a constant maturity of 10 years or an additional SOFR index as approved by the Secretary. Commingling the index type used to calculate the expected average mortgage interest rate and the index type used to calculate the adjustable mortgage interest (Note) rate and adjustments is only permissible as provided for by the Secretary.
</P>
<P>(3) Mortgagees, with the agreement of the borrower, may simultaneously lock in the expected average mortgage interest rate and the mortgagee's margin prior to the date of mortgage closing or simultaneously establish the expected average mortgage interest rate and the mortgagee's margin on the date of mortgage closing.
</P>
<P><I>First 12-Month Disbursement Period</I> means the period beginning on the day of loan closing and ending on the day before the loan closing anniversary date. When the day before the anniversary date of loan closing falls on a Federally-observed holiday, Saturday, or Sunday, the end period will be on the next business day after the Federally-observed holiday, Saturday or Sunday.
</P>
<P><I>HECM</I> means a Home Equity Conversion Mortgage.
</P>
<P><I>HECM counselor</I> means an independent third party who is currently active on FHA's HECM Counselor Roster and who is not, either directly or indirectly, associated with or compensated by, a party involved in originating, servicing, or funding the HECM, or the sale of annuities, investments, long-term care insurance, or any other type of financial or insurance product who provides statutorily required counseling to prospective borrowers who may be eligible for or interested in obtaining an FHA-insured HECM. This counseling assists elderly prospective borrowers who seek to convert equity in their homes into income that can be used to pay for home improvements, medical costs, living expenses, or other expenses.
</P>
<P><I>Ineligible Non-Borrowing Spouse</I> means a Non-Borrowing Spouse who does not meet all Qualifying Attributes for a Deferral Period.
</P>
<P><I>Initial Disbursement Limit</I> means the maximum amount of funds that can be advanced to a borrower of an adjustable interest rate HECM allowed at loan closing and during the First 12-Month Disbursement Period in accordance with § 206.25.
</P>
<P><I>Insured mortgage</I> means a mortgage which has been insured as evidenced by the issuance of a Mortgage Insurance Certificate.
</P>
<P><I>LIBOR</I> means the London Interbank Offered Rate.
</P>
<P><I>Loan documents</I> mean the credit instrument, or Note, secured by the lien, and the loan agreement.
</P>
<P><I>Mandatory Obligations</I> are fees and charges incurred in connection with the origination of the HECM that are requirements for loan approval and which will be paid at closing or during the First 12-Month Disbursement Period in accordance with § 206.25.
</P>
<P><I>Margin</I> means the amount added to the index value to compute the expected average mortgage interest rate and the initial mortgage interest (Note) rate and periodic adjustments to the mortgage interest (Note) rate.
</P>
<P><I>Maximum claim amount</I> means the lesser of the appraised value of the property, as determined by the appraisal used in underwriting the loan; the sales price of the property being purchased for the sole purpose of being the principal residence; or the national mortgage limit for a one-family residence under subsections 255(g) or (m) of the National Housing Act (as adjusted where applicable under section 214 of the National Housing Act) as of the date of loan closing. The initial mortgage insurance premium must not be taken into account in the calculation of the maximum claim amount. Closing costs must not be taken into account in determining appraised value.
</P>
<P><I>MIP</I> means the mortgage insurance premium paid by the mortgagee to the Commissioner in consideration of the contract of insurance.
</P>
<P><I>Mortgage</I> means a first lien on real estate under the laws of the jurisdiction where the real estate is located. If the dwelling unit is in a condominium, the term <I>mortgage</I> means a first lien covering a fee interest or eligible leasehold interest in a one-family unit in a condominium project, together with an undivided interest in the common areas and facilities serving the project, and such restricted common areas and facilities as may be designated. The term refers to a security instrument creating a lien, whether called a <I>mortgage, deed of trust,</I> <I>security deed,</I> or another term used in a particular jurisdiction.
</P>
<P><I>Mortgagee</I> means original lender under a mortgage and its successors and assigns, as are approved by the Commissioner.
</P>
<P><I>Mortgagor</I> means each original mortgagor under a HECM mortgage and his heirs, executors, administrators, and assigns.
</P>
<P><I>Non-Borrowing Spouse</I> means the spouse, as defined by the law of the state in which the spouse and borrower reside or the state of celebration, of the HECM borrower at the time of closing and who is also not a borrower.
</P>
<P><I>Participating agency</I> means all housing counseling and intermediary organizations participating in HUD's Housing Counseling program, including HUD-approved agencies, and affiliates and branches of HUD-approved intermediaries, HUD-approved multi-state organizations (MSOs), and state housing finance agencies.
</P>
<P><I>Principal limit</I> means the maximum amount calculated, taking into account the age of the youngest borrower or Eligible Non-Borrowing Spouse, the expected average mortgage interest rate, and the maximum claim amount. The principal limit is calculated for the first month that a mortgage could be outstanding using factors provided by the Commissioner. It increases each month thereafter at a rate equal to one-twelfth of the mortgage interest rate in effect at that time, plus one-twelfth of the annual mortgage insurance rate. For an adjustable interest rate HECM, the principal limit increase may be made available to the borrower each month thereafter except that the availability during the First 12-Month Disbursement Period may be restricted. Although the principal limit of a fixed interest rate HECM will continue to increase at the rate provided by the Commissioner, no further funds may be made available for the borrower to draw against after closing. The principal limit may decrease because of insurance or condemnation proceeds applied to the outstanding loan balance under § 206.209(b).
</P>
<P><I>Principal residence</I> means the dwelling where the borrower and, if applicable, Non-Borrowing Spouse, maintain their permanent place of abode, and typically spend the majority of the calendar year. A person may have only one principal residence at any one time. The property shall be considered to be the principal residence of any borrower who is temporarily in a health care institution provided the borrower's residency in a health care institution does not exceed twelve consecutive months. The property shall be considered to be the principal residence of any Non-Borrowing Spouse, who is temporarily in a health care institution, as long as the property is the principal residence of his or her borrower spouse, who physically resides in the property. During a Deferral Period, the property shall continue to be considered to be the principal residence of any Non-Borrowing Spouse, who is temporarily in a health care institution, provided he or she qualified as an Eligible Non-Borrowing Spouse and physically occupied the property immediately prior to entering the health care institution and his or her residency in a health care institution does not exceed twelve consecutive months.
</P>
<P><I>Property charges</I> means, unless otherwise specified, obligations of the borrower that include property taxes, hazard insurance premiums, any applicable flood insurance premiums, ground rents, condominium fees, planned unit development fees, homeowners' association fees, and any other special assessments that may be levied by municipalities or state law.
</P>
<P><I>Qualifying Attributes</I> means the requirements which must be met by a Non-Borrowing Spouse in order to be an Eligible Non-Borrowing Spouse.
</P>
<P><I>Replacement Date</I> means the first London banking day after June 30, 2023, unless the Board of Governors of the Federal Reserve System determines that any LIBOR tenor will cease to be published or cease to be representative on a different date. In such case, Replacement Date means the first business day following the date announced by the Board of Governors of the Federal Reserve System.
</P>
<P><I>SOFR</I> means the Secured Overnight Financing Rate published by the Federal Reserve Bank of New York (or a successor administrator).
</P>
<CITA TYPE="N">[82 FR 7117, Jan. 19, 2017, as amended at 88 FR 12828, Mar. 1, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 206.7" NODE="24:2.1.1.2.6.1.133.3" TYPE="SECTION">
<HEAD>§ 206.7   Effect of amendments.</HEAD>
<P>The regulations in this part may be amended by the Commissioner at any time and from time to time, in whole or in part, but amendments to subparts B and C of this part will not adversely affect the interests of a mortgagee on any mortgage to be insured for which either the Direct Endorsement mortgagee or Lender Insurance mortgagee has approved the borrower and all terms and conditions of the mortgage, or the Commissioner has made a commitment to insure. Such amendments will not adversely affect the interests of a borrower in the case of a default by a mortgagee where the Commissioner makes payments to the borrower.


</P>
</DIV8>


<DIV8 N="§ 206.8" NODE="24:2.1.1.2.6.1.133.4" TYPE="SECTION">
<HEAD>§ 206.8   Preemption.</HEAD>
<P>(a) <I>Lien priority.</I> The full amount secured by the mortgage shall have the same priority over any other liens on the property as if the full amount had been disbursed on the date the initial disbursement was made, regardless of the actual date of any disbursement. The amount secured by the mortgage shall include all direct payments by the mortgagee to the borrower and all other loan advances permitted by the mortgage for any purpose, including loan advances for interest, property charges, mortgage insurance premiums, required repairs, servicing charges, counseling charges, and costs of collection, regardless of when the payments or loan advances were made. The priority provided by this section shall apply notwithstanding any State constitution, law, or regulation.
</P>
<P>(b) <I>Second mortgage.</I> If the Commissioner holds a second mortgage, it shall have a priority subordinate only to the first mortgage (and any senior liens permitted by paragraph (a) of this section).


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:2.1.1.2.6.2" TYPE="SUBPART">
<HEAD>Subpart B—Eligibility; Endorsement</HEAD>


<DIV8 N="§ 206.9" NODE="24:2.1.1.2.6.2.133.1" TYPE="SECTION">
<HEAD>§ 206.9   Eligible mortgagees.</HEAD>
<P>(a) <I>Statutory requirements.</I> See sections (b)(2), (c), and 255(d)(1) of the NHA.
</P>
<P>(b) <I>HUD approved mortgagees.</I> Any mortgagee authorized under paragraph (a) of this section and approved under part 202 of this chapter, except an investing mortgagee approved under § 202.9 of this chapter, is eligible to apply for insurance. A mortgagee approved under §§ 202.6, 202.7, 202.9 or 202.10 of this chapter may purchase, hold and sell mortgages insured under this part without additional approval.


</P>
</DIV8>


<DIV8 N="§ 206.13" NODE="24:2.1.1.2.6.2.133.2" TYPE="SECTION">
<HEAD>§ 206.13   Disclosure of available HECM program options.</HEAD>
<P>At the time of initial contact, the mortgagee shall inform the prospective HECM borrower, in a manner acceptable to the Commissioner, of all products, features, and options of the HECM program that FHA will insure under this part, including: fixed interest rate mortgages with the Single Lump Sum payment option; adjustable interest rate mortgages with tenure, term, and line of credit disbursement options, or a combination of these; any other FHA insurable disbursement options; and initial mortgage insurance premium options, and how those affect the availability of other mortgage and disbursement options.


</P>
</DIV8>


<DIV8 N="§ 206.15" NODE="24:2.1.1.2.6.2.133.3" TYPE="SECTION">
<HEAD>§ 206.15   Insurance.</HEAD>
<P>Mortgages originated under this part must be endorsed through the Direct Endorsement program under § 203.5 of this chapter, except that any references to § 203.255 in § 203.5 shall mean § 206.115. The mortgagee shall submit the information as described in § 206.115(b) for the Direct Endorsement program; the certificate of housing counseling as described in § 206.41; a copy of the title insurance commitment satisfactory to the Commissioner (or other acceptable title evidence if the Commissioner has determined not to require title insurance under § 206.45(a)); the mortgagee's election of either the assignment or shared premium option under § 206.107; and any other documentation required by the Commissioner. If the mortgagee has complied with the requirements of §§ 203.3 and 203.5, except that any reference to § 203.255 in these sections shall mean § 206.115 for purposes of this section, and other requirements of this part, and the mortgage is determined to be eligible, the Commissioner will endorse the mortgage for insurance by issuing a Mortgage Insurance Certificate.


</P>
</DIV8>


<DIV7 N="133" NODE="24:2.1.1.2.6.2.133" TYPE="SUBJGRP">
<HEAD>Eligible Mortgages</HEAD>


<DIV8 N="§ 206.17" NODE="24:2.1.1.2.6.2.133.4" TYPE="SECTION">
<HEAD>§ 206.17   Eligible mortgages: general.</HEAD>
<P>(a) [Reserved]
</P>
<P>(b) <I>Interest rate and payment options.</I> A HECM shall provide for either fixed or adjustable interest rates in accordance with § 206.21.
</P>
<P>(1) Fixed interest rate mortgages shall use the Single Lump Sum payment option (§ 206.19(e)).
</P>
<P>(2) Adjustable interest rate mortgages shall initially provide for the term (§ 206.19(a)), the tenure (§ 206.19(b)), the line of credit (§ 206.19(c)), or a modified term or modified tenure (§ 206.19(d)) payment option, subject to a later change in accordance with § 206.26.
</P>
<P>(c) <I>Shared appreciation.</I> A mortgage may provide for shared appreciation in accordance with § 206.23.


</P>
</DIV8>


<DIV8 N="§ 206.19" NODE="24:2.1.1.2.6.2.133.5" TYPE="SECTION">
<HEAD>§ 206.19   Payment options.</HEAD>
<P>(a) <I>Term payment option.</I> Under the term payment option, equal monthly payments are made by the mortgagee to the borrower for a fixed term of months chosen by the borrower in accordance with this section and § 206.25(e), unless the mortgage is prepaid in full or becomes due and payable earlier under § 206.27(c).
</P>
<P>(b) <I>Tenure payment option.</I> Under the tenure payment option, equal monthly payments are made by the mortgagee to the borrower in accordance with this section and with § 206.25(f), unless the mortgage is prepaid in full or becomes due and payable under § 206.27(c).
</P>
<P>(c) <I>Line of credit payment option.</I> Under the line of credit payment option, payments are made by the mortgagee to the borrower at times and in amounts determined by the borrower as long as the amounts do not exceed the payment amounts permitted by § 206.25.
</P>
<P>(d) <I>Modified term or modified tenure payment option.</I> Under the modified term or modified tenure payment options, equal monthly payments are made by the mortgagee and the mortgagee shall set aside a portion of the principal limit to be drawn down as a line of credit as long as the amounts do not exceed the payment amounts permitted by § 206.25.
</P>
<P>(e) <I>Single Lump Sum payment option.</I> Under the Single Lump Sum payment option, the Borrower's Advance will be made by the mortgagee to the borrower in an amount that does not exceed the payment amount permitted in § 206.25. The Single Lump Sum payment option will be available only for fixed interest rate HECMs. Set asides requiring disbursements after close may be offered in accordance with paragraphs (f)(1) through (3) of this section.
</P>
<P>(f) <I>Principal limit set asides</I>—(1) <I>Repair Set Aside.</I> When repairs required by § 206.47 will be completed after closing, the mortgagee shall set aside a portion of the principal limit equal to 150 percent of the Commissioner's estimated cost of repairs, plus the repair administration fee.
</P>
<P>(2) <I>Property Charge Set Aside</I>—(i) <I>Life Expectancy Set Aside (LESA).</I> When required by § 206.205(b)(1) or selected by the borrower under § 206.205(b)(2)(i)(B), the mortgagee shall set aside a portion of the principal limit, consistent with the requirements of § 206.205, for payment of the following property charges: property taxes including special assessments levied by municipalities or state law, and flood and hazard insurance premiums.
</P>
<P>(ii) <I>Borrower elects to have mortgagee pay property charges</I>—(A) <I>First year property charges.</I> When required by § 206.205(d), the mortgagee shall set aside a portion of the principal limit for payment of the following property charges that must be paid during the First 12-Month Disbursement Period: property taxes including special assessments levied by municipalities or state law, and flood and hazard insurance premiums. The mortgagee's estimate of withholding amount shall be based on the best information available as to probable payments which will be required to be made for property charges in the coming year. The mortgagee may not require the withholding of amounts in excess of the current estimated total annual requirement, unless expressly requested by the borrower. Each month's withholding for property charges shall equal one-twelfth of the annual amounts as reasonably estimated by the mortgagee.
</P>
<P>(B) <I>Property charges for subsequent years.</I> For subsequent year property charges, the mortgagee's estimate of withholding amount shall be based on the best information available as to probable payments which will be required to be made for property charges in the coming year. If actual disbursements during the preceding year are used as the basis, the resulting estimate may deviate from those disbursements by as much as ten percent. The mortgagee may not require the withholding of amounts in excess of the current estimated total annual requirement, unless expressly requested by the borrower. Each month's withholding for property charges shall equal one-twelfth of the annual amounts as reasonably estimated by the mortgagee.
</P>
<P>(3) <I>Servicing Fee Set Aside.</I> When servicing charges will be made as permitted by § 206.207(b), the mortgagee shall set aside a portion of the principal limit sufficient to cover charges through a period equal to the payment term which would be used to calculate tenure payments under § 206.25(f).
</P>
<P>(g) <I>Interest accrual and repayment.</I> The interest charged on the outstanding loan balance shall begin to accrue from the funding date and shall be added to the outstanding loan balance monthly as provided in the mortgage. Under all payment options, repayment of the outstanding loan balance is deferred until the mortgage becomes due and payable under § 206.27(c).
</P>
<P>(h) <I>Disbursement limits.</I> (1) For all HECMs, no disbursements shall be made under any of the payment options, notwithstanding anything to the contrary in this section or in § 206.25, in an amount which shall cause the outstanding loan balance after the payment to exceed any maximum mortgage amount stated in the security instruments or to otherwise exceed the amount secured by a first lien.
</P>
<P>(2) For adjustable interest rate HECMs:
</P>
<P>(i) No disbursements shall be made under any of the payment options during the First 12-Month Disbursement Period in excess of the Initial Disbursement Limit.
</P>
<P>(ii) If the borrower makes a partial prepayment of the outstanding loan balance during the First 12-Month Disbursement Period, the mortgagee shall apply the funds from the partial prepayment in accordance with the Note.
</P>
<P>(3) For fixed interest rate HECMs, if the borrower makes a partial prepayment of the outstanding loan balance any time after loan closing and before the contract of insurance is terminated, the mortgagee shall apply the funds from the partial prepayment in accordance with the Note. Any increase in the available principal limit by the amount applied towards the outstanding loan balance shall not be available for the borrower to draw against.


</P>
</DIV8>


<DIV8 N="§ 206.21" NODE="24:2.1.1.2.6.2.133.6" TYPE="SECTION">
<HEAD>§ 206.21   Interest rate.</HEAD>
<P>(a) <I>Fixed interest rate.</I> A fixed interest rate is agreed upon by the borrower and mortgagee.
</P>
<P>(b) <I>Adjustable interest rate.</I> An initial expected average mortgage interest rate, which defines the mortgagee's margin, is agreed upon by the borrower and mortgagee as of the date of loan closing, or as of the date of rate lock-in, if the expected average mortgage interest rate was locked in prior to closing. The interest rate shall be adjusted in one of two ways depending on the option selected by the borrower, in accordance with paragraphs (b)(1) and (b)(2) of this section. Whenever an interest rate is adjusted, the new interest rate applies to the entire loan balance. The difference between the initial interest rate and the index figure applicable when the firm commitment is issued shall equal the margin used to determine interest rate adjustments. If the expected average mortgage interest rate is locked in prior to closing, the difference between the expected average mortgage interest rate and the value of the appropriate index at the time of rate lock-in shall equal the margin used to determine interest rate adjustments.
</P>
<P>(1) <I>Annual adjustable interest rate HECMs.</I> A mortgagee offering an annual adjustable interest rate shall offer a mortgage with an interest rate cap structure that limits the periodic interest rate increases and decreases as follows:
</P>
<P>(i) <I>Types of mortgages insurable.</I> The types of adjustable interest rate mortgages that are insurable are those for which the interest rate may be adjusted annually by the mortgagee, beginning after one year from the date of the closing.
</P>
<P>(ii) <I>Interest rate index.</I> Changes in the mortgage interest rate charged on an adjustable interest rate mortgage must correspond to changes in the weekly average yield on U.S. Treasury securities (CMT) adjusted to a constant maturity of one year; to the 30-day average Secured Overnight Financing Rate (SOFR); or to an alternative SOFR tenor approved by the Secretary. The Secretary may publish approved SOFR tenors as alternatives to the 30-day average SOFR tenor through notice. The index type used to calculate the initial mortgage interest rate must be the same index type used to calculate the mortgage interest rate adjustments, except as provided in paragraph (b)(3) of this section. Commingling of index types for the mortgage interest rate and adjustments is not otherwise allowed, unless approved by the Secretary. Unless otherwise provided in this section, each periodic adjustment in the mortgage interest rate must correspond to the upward and downward change in the index, except that downward changes in the index will not result in an index figure that is less than zero.
</P>
<P>(iii) <I>Frequency of interest rate changes.</I> (A) The interest rate adjustments must occur annually, calculated from the date of the closing, except that the first adjustment shall be no sooner than 12 months or later than 18 months.
</P>
<P>(B) To set the new interest rate, the mortgagee will determine the change between the initial (<I>i.e.,</I> base) index figure and the current index figure, or will add a specific margin to the current index figure. The initial index figure shall be the most recent figure available before the date of mortgage loan origination. The current index figure shall be the most recent index figure available 30 days before the date of each interest rate adjustment.
</P>
<P>(iv) <I>Magnitude of changes.</I> The adjustable interest rate mortgage initial contract interest rate shall be agreed upon by the mortgagee and the borrower. The first adjustment to the contract interest rate shall take place in accordance with the schedule set forth under paragraph (b)(1)(iii) of this section. Thereafter, for all annual adjustable interest rate mortgages, the adjustment shall be made annually and shall occur on the anniversary date of the first adjustment, subject to the following conditions and limitations:
</P>
<P>(A) For all annual adjustable interest rate HECMs, no single adjustment to the interest rate shall result in a change in either direction of more than two percentage points from the interest rate in effect for the period immediately preceding that adjustment. Index changes in excess of two percentage points may not be carried over for inclusion in an adjustment for a subsequent year. Adjustments in the effective rate of interest over the entire term of the mortgage may not result in a change in either direction of more than five percentage points from the initial contract interest rate.
</P>
<P>(B) At each adjustment date for annual adjustable interest rate HECMs, changes in the index interest rate, whether increases or decreases, must be translated into the adjusted mortgage interest rate, except that the mortgage may provide for minimum interest rate change limitations and for minimum increments of interest rate changes.
</P>
<P>(2) <I>Monthly adjustable interest rate HECMs.</I> If a mortgage meeting the requirements of paragraph (b)(1) of this section is offered, the mortgagee may also offer a mortgage which provides for monthly adjustments to the interest rate subject to the following requirements:
</P>
<P>(i) <I>Interest rate index.</I> Changes in the interest rate charged on an adjustable interest rate mortgage shall correspond to changes in the weekly average yield on U.S. Treasury securities (CMT) adjusted to a constant maturity of one year, to the weekly average yield on CMT adjusted to one-month, or to an alternative SOFR index approved by the Secretary. The index type used to calculate the initial mortgage interest rate must be the same index type used to calculate the mortgage interest rate adjustments, except as provided in paragraph (b)(3) of this section. Commingling of index types for the mortgage interest rate and adjustments is not otherwise allowed, unless approved by the Secretary. Unless otherwise provided in this section, each periodic adjustment in the mortgage interest rate must correspond to the upward and downward change in the index, except that downward changes in the index will not result in an index figure that is less than zero.
</P>
<P>(ii) <I>Frequency of interest rate changes.</I> (A) The interest rate adjustments must occur monthly, calculated from the date of the closing, except that the first adjustment shall be no sooner than 30 days (28 days for February, as applicable) or later than three months from the date of the closing.
</P>
<P>(B) To set the new interest rate, the mortgagee will determine the change between the initial (<I>i.e.,</I> base) index figure and the current index figure, or will add a specific margin to the current index figure. The initial index figure shall be the most recent figure available before the date of mortgage loan origination. The current index figure shall be the most recent index figure available 30 days (28 days for February, as applicable) before the date of each interest rate adjustment.
</P>
<P>(iii) <I>Magnitude of changes.</I> The initial mortgage interest rate shall be agreed upon by the mortgagee and the borrower. Adjustments in the effective rate of interest over the entire term of the mortgage (the lifetime adjustment cap) may result in a change in either direction of no more than ten percentage points from the initial contract interest rate. The Secretary may change this lifetime adjustment cap through notice.
</P>
<P>(3) <I>Transition for existing mortgages indexed to LIBOR.</I> Mortgages with an existing adjustable interest rate indexed to the London Interbank Offered Rate (LIBOR) must be transitioned to the spread-adjusted SOFR replacement index approved by the Secretary by the next interest rate adjustment date for the mortgage on or after the Replacement Date. Notice of the transition to the SOFR replacement index must be sent to the borrower in accordance with the mortgage documents. The Secretary will publish through Mortgagee Letter any additional requirements for the transition of existing mortgages.
</P>
<P>(c) <I>Pre-loan disclosure.</I> (1) At the time the mortgagee provides the borrower with a loan application, a mortgagee shall provide a borrower with a written explanation of all adjustable interest rate features of a mortgage. The explanation must include the following items:
</P>
<P>(i) The circumstances under which the rate may increase;
</P>
<P>(ii) Any limitations on the increase; and
</P>
<P>(iii) The effect of an increase.
</P>
<P>(2) Compliance with pre-loan disclosure provisions of 12 CFR part 1026 (Truth in Lending) shall constitute full compliance with paragraph (c)(1) of this section.
</P>
<P>(d) <I>Post-loan disclosure.</I> At least 25 days before any adjustment to the interest rate may occur, the mortgagee must advise the borrower of the following:
</P>
<P>(1) The current index amount;
</P>
<P>(2) The date of publication of the index; and
</P>
<P>(3) The new interest rate.
</P>
<CITA TYPE="N">[82 FR 7117, Jan. 19, 2017, as amended at 88 FR 12828, Mar. 1, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 206.23" NODE="24:2.1.1.2.6.2.133.7" TYPE="SECTION">
<HEAD>§ 206.23   Shared appreciation.</HEAD>
<P>(a) <I>Additional interest based on net appreciated value.</I> Any mortgage for which the mortgagee has chosen the shared premium option (§ 206.107) may provide for shared appreciation. At the time the mortgage becomes due and payable or is paid in full, whichever occurs first, the borrower shall pay an additional amount of interest equal to a percentage of any net appreciated value of the property during the life of the mortgage. The percentage of net appreciated value to be paid to the mortgagee, referred to as the appreciation margin, shall be no more than twenty-five percent, subject to an effective interest rate cap of no more than twenty percent.
</P>
<P>(b) <I>Computation of mortgagee share.</I> The mortgagee's share of net appreciated value is computed as follows:
</P>
<P>(1) If the outstanding loan balance at the time the mortgagee's share of net appreciated value becomes payable is less than the appraised value of the property at the time of loan origination, the mortgagee's share is calculated by subtracting the appraised value at the time of loan origination from the adjusted sales proceeds (<I>i.e.,</I> sales proceeds less transfer costs and capital improvement costs incurred by the borrower, but excluding any liens) and multiplying by the appreciation margin.
</P>
<P>(2) If the outstanding loan balance is greater than the appraised value at the time of loan origination but less than the adjusted proceeds, the mortgagee's share is calculated by subtracting the outstanding loan balance from the adjusted sales proceeds and multiplying by the appreciation margin.
</P>
<P>(3) If the outstanding loan balance is greater than the adjusted sales proceeds, the net appreciated value is zero.
</P>
<P>(4) If there has been no sale or transfer involving satisfaction of the mortgage at the time the mortgagee's share of net appreciated value becomes payable, <I>sales proceeds</I> for purposes of this section shall be the appraised value as determined in accordance with procedures approved by the Commissioner.
</P>
<P>(c) <I>Effective interest rate.</I> To determine the effective interest rate, the amount of interest which accrued in the twelve months prior to the sale of the property or the prepayment is added to the mortgagee's share of the net appreciated value. The sum of the mortgagee's share of the net appreciated value and the interest, when divided by the sum of the outstanding loan balance at the beginning of the twelve-month period prior to sale or prepayment plus the payments to or on behalf of the borrower (but not including interest) in the twelve months prior to the sale or prepayment, shall not exceed an effective interest rate of twenty percent.
</P>
<P>(d) <I>Disclosure.</I> At the time the mortgagee provides the borrower with a loan application for a mortgage with shared appreciation, the mortgagee shall disclose to the borrower the principal limit, payments and interest rate which are applicable to a comparable mortgage offered by the mortgagee without shared appreciation.


</P>
</DIV8>


<DIV8 N="§ 206.25" NODE="24:2.1.1.2.6.2.133.8" TYPE="SECTION">
<HEAD>§ 206.25   Calculation of disbursements.</HEAD>
<P>(a) <I>Initial disbursements</I>—(1) <I>Initial Disbursement Limit—Adjustable Interest Rate HECMs:</I> for term, tenure, line of credit, modified term, and modified tenure payment options:
</P>
<P>(i) The mortgagee is responsible for determining the maximum Initial Disbursement Limit.
</P>
<P>(ii) The maximum disbursement allowed at closing and during the First 12-Month Disbursement Period is the lesser of:
</P>
<P>(A) The greater of an amount established by the Commissioner through notice which shall not be less than 50 percent of the principal limit; or the sum of Mandatory Obligations and a percentage of the principal limit established by the Commissioner through notice which shall not be less than 10 percent; or
</P>
<P>(B) The principal limit less the sum of the funds in the LESA for payment beyond the First 12-Month Disbursement Period and the Servicing Fee Set Aside.
</P>
<P>(iii) The amount in the First 12-Month Disbursement Period or at any point in time may not exceed the principal limit.
</P>
<P>(iv) Mortgagees shall monitor and track all disbursements that occur at loan closing and during the First 12-Month Disbursement Period; the total amount of disbursements shall not exceed the maximum Initial Disbursement Limit.
</P>
<P>(v) The borrower shall notify the mortgagee at loan closing of the amount of the additional percentage of the principal limit beyond Mandatory Obligations that the borrower will draw or that will remain available to be drawn during the First 12-Month Disbursement Period. The borrower may not increase or decrease this election after closing.
</P>
<P>(2) <I>Borrower's Advance—Fixed Interest Rate HECMs:</I> for the Single Lump Sum payment option:
</P>
<P>(i) The mortgagee is responsible for determining the maximum Borrower's Advance.
</P>
<P>(ii) The disbursement shall only be taken at the time of closing and the maximum disbursement shall not exceed the lesser of:
</P>
<P>(A) The greater of an amount established by the Commissioner through notice which shall not be less than 50 percent of the principal limit; or the sum of Mandatory Obligations and a percentage of the principal limit established by the Commissioner through notice which shall not be less than 10 percent; or
</P>
<P>(B) The principal limit less the sum of the funds in the LESA for payment beyond the First 12-Month Disbursement Period and the Servicing Fee Set Aside.
</P>
<P>(iii) The borrower shall notify the mortgagee at loan closing of the amount of the additional percentage of the principal limit beyond Mandatory Obligations that the borrower will draw. The borrower may not increase or decrease this election after closing.
</P>
<P>(b) Mandatory Obligations for traditional and refinance transactions include:
</P>
<P>(1) Initial MIP under § 206.105(a);
</P>
<P>(2) Loan origination fee;
</P>
<P>(3) HECM counseling fee;
</P>
<P>(4) Reasonable and customary amounts, but not more than the amount actually paid by the mortgagee for any of the following items:
</P>
<P>(i) Recording fees and recording taxes, or other charges incident to the recordation of the insured mortgage;
</P>
<P>(ii) Credit report;
</P>
<P>(iii) Survey, if required by the mortgagee or the borrower;
</P>
<P>(iv) Title examination;
</P>
<P>(v) Mortgagee's title insurance;
</P>
<P>(vi) Fees paid to an appraiser for the initial appraisal of the property; and
</P>
<P>(vii) Flood certifications.
</P>
<P>(5) Repair Set Asides;
</P>
<P>(6) Repair administration fee;
</P>
<P>(7) Delinquent Federal debt;
</P>
<P>(8) Amounts required to discharge any existing liens on the property;
</P>
<P>(9) Customary fees and charges for warranties, inspections, surveys, and engineer certifications;
</P>
<P>(10) Funds to pay contractors who performed repairs as a condition of closing, in accordance with standard FHA requirements for repairs required by the appraiser;
</P>
<P>(11) Property tax and flood and hazard insurance payments required by the mortgagee to be paid at loan closing;
</P>
<P>(12) Property charges not included in paragraph (b)(11) of this section and which are scheduled for payment during the First 12-Month Disbursement Period, as follows:
</P>
<P>(i) <I>Adjustable Interest Rate HECMs.</I> (A) The total amount of property charge payments scheduled for payment from the borrower authorized option under § 206.205(d) during the First 12-Month Disbursement Period;
</P>
<P>(B) The total amount of semi-annual disbursements scheduled to be made during the First 12-Month Disbursement Period to the borrower from a Partially-Funded LESA; or
</P>
<P>(C) The total amount of property charges scheduled for payment during the First 12-Month Disbursement Period from a Fully-Funded LESA.
</P>
<P>(D) Mortgagees shall use the actual insurance premium and actual tax amount; if a new tax bill has not been issued, the mortgagee must use the prior year's amount multiplied by 1.04 or an amount set by the Commissioner through notice.
</P>
<P>(ii) <I>Fixed Interest Rate HECMs.</I> (A) The total amount of property charges scheduled for payment during the First 12-Month Disbursement Period from a Fully-Funded LESA.
</P>
<P>(B) Mortgagees shall use the actual insurance premium and actual tax amount; if a new tax bill has not been issued, the mortgagee must use the prior year's amount multiplied by 1.04 or an amount set by the Commissioner through notice;
</P>
<P>(13) Required pay-off of debt not secured by the property, as defined by the Commissioner through <E T="04">Federal Register</E> notice; and
</P>
<P>(14) Other charges as authorized by the Commissioner through notice.
</P>
<P>(c) Mandatory Obligations for HECM for Purchase transactions include:
</P>
<P>(1) Initial MIP under § 206.105(a);
</P>
<P>(2) Loan origination fee;
</P>
<P>(3) HECM counseling fee:
</P>
<P>(4) Reasonable and customary amounts, but not more than the amount actually paid by the mortgagee for any of the following items:
</P>
<P>(i) Recording fees and recording taxes, or other charges incident to the recordation of the insured mortgage;
</P>
<P>(ii) Credit report;
</P>
<P>(iii) Survey, if required by the mortgagee or the borrower;
</P>
<P>(iv) Title examination;
</P>
<P>(v) Mortgagee's title insurance;
</P>
<P>(vi) Fees paid to an appraiser for the initial appraisal of the property; and
</P>
<P>(vii) Flood certifications.
</P>
<P>(5) Delinquent Federal debt;
</P>
<P>(6) Fees and charges for real estate purchase contracts, warranties, inspections, surveys, and engineer certifications;
</P>
<P>(7) The amount of the principal that is advanced towards the purchase price of the subject property;
</P>
<P>(8) Property tax and flood and hazard insurance payments required by the mortgagee to be paid at loan closing;
</P>
<P>(9) Property charges not included in paragraph (c)(8) of this section and which are scheduled for payment during the First 12-Month Disbursement Period, as follows:
</P>
<P>(i) <I>Adjustable Interest Rate HECMs.</I> (A) The total amount of property charge payments scheduled for payment from the borrower authorized option under § 206.205(d) during the First 12-Month Disbursement Period;
</P>
<P>(B) The total amount of semi-annual disbursements scheduled to be made during the First 12-Month Disbursement Period to the borrower from a Partially-Funded LESA; or
</P>
<P>(C) The total amount of property charges scheduled for payment during the First 12-Month Disbursement Period from a Fully-Funded LESA.
</P>
<P>(D) Mortgagees shall use the actual insurance premium and actual tax amount; if a new tax bill has not been issued, the mortgagee must use the prior year's amount multiplied by 1.04 or an amount set by the Commissioner through notice.
</P>
<P>(ii) <I>Fixed Interest Rate HECMs.</I> (A) The total amount of property charges scheduled for payment during the First 12-Month Disbursement Period from a Fully-Funded LESA.
</P>
<P>(B) Mortgagees shall use the actual insurance premium and actual tax amount; if a new tax bill has not been issued, the mortgagee must use the prior year's amount multiplied by 1.04 or an amount set by the Commissioner through notice;
</P>
<P>(10) Required pay-off of debt not secured by the property, as defined by the Commissioner through <E T="04">Federal Register</E> notice; and
</P>
<P>(11) Other charges as authorized by the Commissioner through notice.
</P>
<P>(d) <I>Timing of disbursements.</I> Mortgage proceeds may not be disbursed until after the expiration of the 3-day rescission period under 12 CFR part 1026, if applicable.
</P>
<P>(e) <I>Monthly disbursements—term option.</I> (1) Using factors provided by the Commissioner, the mortgagee shall calculate the monthly disbursement so that the sum of paragraphs (e)(1)(i) or (e)(1)(ii) of this section added to paragraphs (e)(1)(iii), (e)(1)(iv), and (e)(1)(v) of this section shall be equal to the principal limit at the end of the payment term.
</P>
<P>(i) An initial disbursement under paragraph (a) of this section plus any initial servicing charge set aside under § 206.19(f)(3); or
</P>
<P>(ii) The outstanding loan balance at the time of a change in payment option in accordance with § 206.26, plus any remaining servicing charge set aside under § 206.19(f)(3); and
</P>
<P>(iii) The amount of the principal limit set aside in accordance with § 206.19(f) which is not included in the amount set aside in paragraphs (e)(1)(i) or (e)(1)(ii) of this section;
</P>
<P>(iv) All MIP or monthly charges due to the Commissioner in lieu of mortgage insurance premiums due through the payment term; and
</P>
<P>(v) All interest through the remainder of the payment term. The expected average mortgage interest rate shall be used for this purpose.
</P>
<P>(2) The mortgagee shall make all monthly disbursements through the payment term even if the outstanding loan balance exceeds the principal limit because the actual average mortgage interest rate exceeds the expected average mortgage interest rate unless the HECM becomes due and payable under § 206.27(c). In the event of a deferral of due and payable status in accordance with § 206.27(c)(3), disbursements shall cease immediately upon the death of the borrower and no further disbursements are permissible.
</P>
<P>(3) Mortgagees shall ensure that term monthly disbursements made to the borrower during the First 12-Month Disbursement Period do not exceed the Initial Disbursement Limit. If the sum of disbursements made during the First 12-Month Disbursement Period would exceed the Initial Disbursement Limit for that time period, the mortgagee shall decrease the monthly disbursements during the First 12-Month Disbursement Period to conform with the Initial Disbursement Limit; upon conclusion of the First 12-Month Disbursement Period, the borrower may request a payment plan recalculation.
</P>
<P>(4) If the borrower makes a partial prepayment of the outstanding loan balance during the First 12-Month Disbursement Period, the mortgagee shall apply the funds from the partial prepayment in accordance with the Note.
</P>
<P>(5) If the mortgagee receives repayment from insurance or condemnation proceeds after restoration or repair of the damaged property, the available principal limit and outstanding loan balance shall be reduced by the amount of such payments.
</P>
<P>(f) <I>Monthly disbursements—tenure option.</I> (1) Monthly disbursements under the tenure payment option shall be calculated as if the number of months in the payment term equals 100 minus the lesser of the age of the youngest borrower or 95, multiplied by 12, but payments shall continue until the mortgage becomes due and payable under § 206.27(c), except that in the event that payments would exceed any maximum mortgage amount stated in the security instrument or would otherwise exceed the amount secured by the first lien, in accordance with § 206.19(h) payments will cease immediately; payments may be reinstated only in the event a new Note and mortgage are executed in accordance with § 206.27(b)(10); and in the event of a deferral of due and payable status in accordance with § 206.27(c)(3) payments will cease immediately upon the death of the borrower.
</P>
<P>(2) Mortgagees shall ensure that tenure monthly disbursements made to the borrower during the First 12-Month Disbursement Period do not exceed the Initial Disbursement Limit. If the sum of disbursements made during the First 12-Month Disbursement Period would exceed the Initial Disbursement Limit for that time period, the mortgagee shall decrease the monthly disbursements during the First 12-Month Disbursement Period to conform with the maximum Initial Disbursement Limit; upon conclusion of the First 12-Month Disbursement Period, the borrower may request a payment plan recalculation.
</P>
<P>(3) If the borrower makes a partial prepayment of the outstanding loan balance during the First 12-Month Disbursement Period, the mortgagee shall apply the funds from the partial prepayment in accordance with the Note.
</P>
<P>(4) If the mortgagee receives repayment from insurance or condemnation proceeds after restoration or repair of the damaged property, the available principal limit and outstanding loan balance shall be reduced by the amount of such payments.
</P>
<P>(g) <I>Line of credit separately or with monthly disbursements.</I> If the borrower has a line of credit, separately or combined with the term or tenure payment option, the principal limit is divided into an amount set aside for servicing charges under § 206.19(f)(3), an amount equal to the line of credit (including any portion of the principal limit set aside for repairs or property charges under § 206.19(f)(1) or (2)), and the remaining amount of the principal limit (if any). The line of credit amount increases at the same rate as the total principal limit increases under § 206.3. The sum of disbursements made during the First 12-Month Disbursement Period shall not exceed the Initial Disbursement Limit. If a requested disbursement would exceed the Initial Disbursement Limit, the mortgagee may make a partial disbursement to the borrower for the amount that will not exceed the limit. Upon the conclusion of the First 12-Month Disbursement Period, the borrower may request subsequent disbursements up to the available principal limit.
</P>
<P>(h) <I>Single Lump Sum payment option.</I> (1) Under the Single Lump Sum payment option, the Borrower's Advance shall be made by the mortgagee to the borrower in an amount that does not exceed the maximum allowable Borrower's Advance under paragraph (a)(2) of this section.
</P>
<P>(2) If the borrower makes a partial prepayment of the outstanding loan balance any time after loan closing and before the contract of insurance is terminated, the mortgagee shall apply the funds from the partial prepayment in accordance with the Note.
</P>
<P>(i) <I>Payment of MIP and interest.</I> At the end of each month, including the first month, interest accrued during that month shall be added to the outstanding loan balance. Where the first month is a partial month, a prorated amount of interest shall be added. Monthly MIP, which will accrue from the closing date, shall be added to the outstanding loan balance beginning with the first day of the second month after closing when paid to the Commissioner.
</P>
<P>(j) <I>Mortgagee late charge.</I> The mortgagee shall pay a late charge to the borrower for any late disbursement. If the mortgagee does not mail or electronically transfer a scheduled monthly disbursement to the borrower on the first business day of the month or make a line of credit disbursement within 5 business days of the date the mortgagee received the request, the late charge shall be 10 percent of the entire amount that should have been paid to the borrower for that month or as a result of that request. In no event shall the total late charge exceed five hundred dollars. For each additional day that the borrower does not receive payment, the mortgagee shall pay interest at the mortgage interest rate on the late payment. Any late charge and interest shall be paid from the mortgagee's funds and shall not be added to the outstanding loan balance.
</P>
<P>(k) <I>No minimum payments.</I> A mortgagee shall not require, as a condition of providing a loan secured by a mortgage insured under this part, that the monthly payments under the term or tenure payment option or draws under the line of credit payment option exceed a minimum amount established by the mortgagee.


</P>
</DIV8>


<DIV8 N="§ 206.26" NODE="24:2.1.1.2.6.2.133.9" TYPE="SECTION">
<HEAD>§ 206.26   Change in payment option.</HEAD>
<P>(a) <I>General.</I> The payment option may be changed as provided in this section.
</P>
<P>(b) <I>Borrower request for payment plan change</I>—(1) <I>Adjustable Interest Rate HECMs.</I> (i) During the First 12-Month Disbursement Period, no payment plan change shall cause disbursements to exceed the Initial Disbursement Limit.
</P>
<P>(ii) After the First 12-Month Disbursement Period, as long as the outstanding loan balance is less than the principal limit, a borrower may request a recalculation of the current payment option, a change from any payment option to another available payment option or a disbursement of any amount (not to exceed the difference between the principal limit and the sum of the outstanding loan balance and any set asides for repairs, servicing charges or property charges). A mortgage will continue to bear interest at an adjustable interest rate as agreed between the mortgagee and the borrower at loan origination. The mortgagee shall recalculate any future monthly payments in accordance with § 206.25.
</P>
<P>(iii) <I>Fee for change in payment.</I> The mortgagee may charge a fee, not to exceed an amount determined by the Commissioner, whenever there is a payment plan change or whenever payments are recalculated.
</P>
<P>(iv) <I>Limitations.</I> The Commissioner may, through notice, establish limitations on the frequency of payment plan changes, a minimum notice period that a borrower must provide in order to make a request under paragraph (b)(1)(ii) of this section, or other limitations on payment plan change requests by the borrower.
</P>
<P>(2) <I>Fixed Interest Rate HECMs.</I> Borrowers may not request a change in payment option.
</P>
<P>(c) <I>Change due to initial repairs.</I> When initial repairs after closing under § 206.47 are required using a Repair Set Aside, mortgagees shall comply with the following:
</P>
<P>(1) <I>Adjustable Interest Rate HECMs.</I> (i) If repairs after closing under § 206.47 are completed without using all of the funds set aside for repairs, the mortgagee shall transfer the remaining amount to a line of credit, modified term, or modified tenure payment option and inform the borrower of the sum available to be drawn.
</P>
<P>(ii) If repairs after closing under § 206.47 cannot be completed with the funds set aside for repairs, the mortgagee may advance additional funds to complete repairs from an existing line of credit. If a line of credit is not sufficient to make the advance or if no line of credit exists, future monthly disbursements shall be recalculated for use as a line of credit in accordance with § 206.25.
</P>
<P>(iii) If repairs are not completed when required by the mortgage, the mortgagee shall stop monthly payments and the mortgage shall convert to the line of credit payment option. Until the repairs are completed, the mortgagee shall make no line of credit disbursements except as needed to pay for repairs required by the mortgage.
</P>
<P>(2) <I>Fixed Interest Rate HECMs.</I> No unused set aside funds shall be made available to the borrower, except that a borrower may be reimbursed for the cost of repair materials (not including labor), in accordance with § 206.47, under conditions established by the Commissioner.


</P>
</DIV8>


<DIV8 N="§ 206.27" NODE="24:2.1.1.2.6.2.133.10" TYPE="SECTION">
<HEAD>§ 206.27   Mortgage provisions.</HEAD>
<P>(a) <I>Form.</I> The mortgage shall be in a form meeting the requirements of the Commissioner.
</P>
<P>(b) <I>Provisions.</I> The terms of the mortgage shall contain an explanation of how payments will be made to the borrower, how interest will be charged, and when the mortgage will be due and payable. The mortgage shall include a provision deferring the due and payable status that occurs because of the death of the last surviving borrower for an Eligible Non-Borrowing Spouse. It shall also contain provisions designed to ensure compliance with this part and provisions on the following additional matters:
</P>
<P>(1) Disbursements by the mortgagee under the term or tenure payment options shall be mailed to the borrower or electronically transferred to an account of the borrower on the first business day of each month beginning with the first month after closing. Disbursements under the line of credit payment option shall be mailed to the borrower or electronically transferred to an account of the borrower within five business days after the mortgagee has received a written request for disbursement by the borrower. In accordance with § 206.55, in no event may disbursements continue during a Deferral Period.
</P>
<P>(2) The borrower shall insure all improvements on the property that serves as collateral for the HECM whether in existence at the time of origination or subsequently erected, against any hazards, casualties, and contingencies, including but not limited to fire and flood, for which the mortgagee requires insurance. Such insurance shall be maintained in the amount and for the period of time that is necessary to protect the mortgagee's investment. Whether or not the mortgagee imposes a flood insurance requirement, the borrower shall at a minimum insure all improvements on the property, whether in existence at the time of origination or subsequently erected, against loss by floods to the extent required by the Commissioner. If the mortgagee imposes insurance requirements, all insurance shall be carried with companies acceptable to the mortgagee, and the insurance policies and any renewals shall be held by the mortgagee and shall include loss payable clauses in favor of and in a form acceptable to the mortgagee.
</P>
<P>(3) The borrower shall not participate in a real estate tax deferral program or permit any liens to be recorded against the property, unless such liens are subordinate to the insured mortgage and, if applicable, any second mortgage held by the Commissioner.
</P>
<P>(4) A mortgage may be prepaid in full or in part in accordance with § 206.209.
</P>
<P>(5) The borrower must keep the property in good repair.
</P>
<P>(6) The borrower must provide for the payment of property charges in accordance with § 206.205.
</P>
<P>(7) The payment of monthly MIP may be added to the outstanding principal balance.
</P>
<P>(8) The borrower shall have no personal liability for payment of the outstanding loan balance. The mortgagee shall enforce the debt only through sale of the property. The mortgagee shall not be permitted to obtain a deficiency judgment against the borrower if the mortgage is foreclosed.
</P>
<P>(9) If the mortgage is assigned to the Commissioner under § 206.121(b), the borrower shall not be liable for any difference between the insurance benefits paid to the mortgagee and the outstanding loan balance including accrued interest, owed by the borrower at the time of the assignment.
</P>
<P>(10) If State law limits the first lien status of the mortgage as originally executed and recorded to a maximum amount of debt or a maximum number of years, the borrower shall agree to execute any additional documents required by the mortgagee and approved by the Commissioner to extend the first lien status to an additional amount of debt and an additional number of years and to cause any other liens to be removed or subordinated.
</P>
<P>(c) <I>Date the mortgage comes due and payable.</I> (1) The mortgage shall state that the outstanding loan balance will be due and payable in full if a borrower dies and the property is not the principal residence of at least one surviving borrower, except that the due and payable status shall be deferred in accordance with paragraph (c)(3) of this section if the requirements of the Deferral Period are met; or if a borrower conveys all of his or her title in the property and no other borrower retains title to the property. For purposes of the preceding sentence, a borrower retains title in the property if the borrower continues to hold title to any part of the property in fee simple, as a leasehold interest as set forth in § 206.45(a), or as a life estate.
</P>
<P>(2) The mortgage shall state that the outstanding loan balance shall be due and payable in full, upon approval of the Commissioner, if any of the following occur:
</P>
<P>(i) The property ceases to be the principal residence of a borrower for reasons other than death and the property is not the principal residence of at least one other borrower;
</P>
<P>(ii) For a period of longer than 12 consecutive months, a borrower fails to occupy the property because of physical or mental illness and the property is not the principal residence of at least one other borrower;
</P>
<P>(iii) The borrower does not provide for the payment of property charges in accordance with § 206.205; or
</P>
<P>(iv) An obligation of the borrower under the mortgage is not performed.
</P>
<P>(3) <I>Deferral of due and payable status.</I> The mortgage documents shall contain a provision deferring due and payable status, called the Deferral Period, for an Eligible Non-Borrowing Spouse until the death of the last Eligible Non-Borrowing Spouse or the requirements of the Deferral Period in § 206.55 cease to be met and have not been cured as provided for in § 206.57.
</P>
<P>(d) <I>Second mortgage to Commissioner.</I> Unless otherwise provided by the Commissioner, a second mortgage to secure any payments by the Commissioner as provided in § 206.121(c) must be given to the Commissioner before a Mortgage Insurance Certificate is issued for the mortgage. If the Commissioner does not require a second mortgage to be given to the Commissioner prior to the issuance of a Mortgage Insurance Certificate, the Commissioner may require a second mortgage to be given to the Commissioner at a later day in order to secure payments by the Commissioner as provided in § 206.121(c).


</P>
</DIV8>


<DIV8 N="§ 206.31" NODE="24:2.1.1.2.6.2.133.11" TYPE="SECTION">
<HEAD>§ 206.31   Allowable charges and fees.</HEAD>
<P>(a) <I>Fees at closing.</I> The mortgagee may collect, either in cash at the time of closing or through an initial payment under the mortgage, the following charges and fees incurred in connection with the origination, processing, and closing of the mortgage loan:
</P>
<P>(1) <I>Loan Origination Fee.</I> Mortgagees may charge a loan origination fee and may use such fee to pay for services performed by a sponsored third-party originator. The loan origination fee limit shall be the greater of $2,500 or two percent of the maximum claim amount of $200,000, plus one percent of any portion of the maximum claim amount that is greater than $200,000. Mortgagees may accept a lower origination fee. Mortgagees may pay fees for services performed by a sponsored third-party originator and these fees may be included as part of the loan origination fee. The total amount of the loan origination fee may not exceed $6,000, except that the Commissioner may through notice adjust the maximum limit in accordance with the annual percentage increase in the Consumer Price Index of the Bureau of Labor Statistics of the Department of Labor in increments of $500 only when the percentage increase in such index, when applied to the maximum origination fee, produces dollar increases that exceed $500. The loan origination fee may be fully financed with the mortgage.
</P>
<P>(2) <I>Reasonable and customary amounts.</I> Reasonable and customary amounts, but not more than the amount actually paid by the mortgagee, for any of the following items:
</P>
<P>(i) Recording fees and recording taxes, or other charges incident to the recordation of the insured mortgage;
</P>
<P>(ii) Credit report;
</P>
<P>(iii) Survey, if required by the mortgagee or the borrower;
</P>
<P>(iv) Title examination;
</P>
<P>(v) Mortgagee's title insurance;
</P>
<P>(vi) Fees paid to an appraiser for the initial appraisal of the property;
</P>
<P>(vii) Flood certifications; and
</P>
<P>(viii) Such other charges as may be authorized by the Commissioner.
</P>
<P>(b) <I>Repair administration fee.</I> If the property requires repairs after closing in order to meet FHA requirements, the mortgagee may collect a fee for each occurrence as compensation for administrative duties relating to repair work pursuant to § 206.47(c) and (d), not to exceed the greater of one and one-half percent of the amount advanced for the repairs or fifty dollars. The mortgagee shall collect the repair fee by adding it to the outstanding loan balance.


</P>
</DIV8>


<DIV8 N="§ 206.32" NODE="24:2.1.1.2.6.2.133.12" TYPE="SECTION">
<HEAD>§ 206.32   No outstanding unpaid obligations.</HEAD>
<P>In order for a mortgage to be eligible under this part, a borrower must establish to the satisfaction of the mortgagee that after the initial payment of loan proceeds under § 206.25(a), there will be no outstanding or unpaid obligations incurred by the borrower in connection with the mortgage transaction, except for mortgage servicing charges permitted under § 206.207(b) and any future Repair Set Aside established pursuant to § 206.19(f)(1); and the initial disbursement will not be used for any payment to or on behalf of an estate planning service firm.


</P>
</DIV8>

</DIV7>


<DIV7 N="134" NODE="24:2.1.1.2.6.2.134" TYPE="SUBJGRP">
<HEAD>Eligible Borrowers</HEAD>


<DIV8 N="§ 206.33" NODE="24:2.1.1.2.6.2.134.13" TYPE="SECTION">
<HEAD>§ 206.33   Age of borrower.</HEAD>
<P>The youngest borrower shall be 62 years of age or older at the time of loan closing.


</P>
</DIV8>


<DIV8 N="§ 206.34" NODE="24:2.1.1.2.6.2.134.14" TYPE="SECTION">
<HEAD>§ 206.34   Limitation on number of mortgages.</HEAD>
<P>(a) Once a borrower has obtained an insured mortgage under this part, the borrower is eligible to obtain future insured HECM loan financing if the existing HECM is satisfied prior to or at the closing of the new HECM, or the borrower provides legal documentation, in a manner acceptable to the Commissioner, evidencing release of the borrower's financial obligation to satisfy the existing HECM.
</P>
<P>(b) Current HECM borrowers that plan to sell their existing residence and use the HECM for Purchase program to obtain a new principal residence must pay off the existing FHA-insured mortgage before the HECM for Purchase mortgage can be insured.


</P>
</DIV8>


<DIV8 N="§ 206.35" NODE="24:2.1.1.2.6.2.134.15" TYPE="SECTION">
<HEAD>§ 206.35   Title of property which is security for HECM.</HEAD>
<P>(a) A mortgagor is not required to be a borrower; however, any borrower is required to be on title to the property which serves as collateral for the HECM, and is therefore, by definition, also a mortgagor.
</P>
<P>(b) The mortgagor shall hold title to the entire property which is the security for the mortgage. If there are multiple mortgagors, all the mortgagors must collectively hold title to the entire property which is the security for the mortgage. If one or more mortgagors hold a life estate in the property, for purposes of this section only, the term “mortgagor” shall include each holder of a future interest in the property (remainder or reversion) who has executed the mortgage.
</P>
<P>(c) If Non-Borrowing Spouses and non-borrowing owners of the property will continue to hold title to the property which serves as collateral for the HECM, such Non-Borrowing Spouses and non-borrowing owners must sign the mortgage as mortgagors, evidencing their commitment of the property as security for the mortgage.
</P>
<P>(d) All Non-Borrowing Spouses and non-borrowing owners shall sign a certification that:
</P>
<P>(1) Consents to their spouse or other borrowing owner obtaining the HECM;
</P>
<P>(2) Acknowledges the terms and conditions of the mortgage; and
</P>
<P>(3) Acknowledges that the property will serve as collateral for the HECM as evidenced by mortgage lien(s).


</P>
</DIV8>


<DIV8 N="§ 206.36" NODE="24:2.1.1.2.6.2.134.16" TYPE="SECTION">
<HEAD>§ 206.36   Seasoning requirements for existing non-HECM liens.</HEAD>
<P>(a) The Commissioner may establish, through notice, seasoning requirements for existing non-HECM liens. Such seasoning requirements shall not prohibit the payoff of existing non-HECM liens using HECM proceeds if the liens have been in place for longer than 12 months prior to the HECM closing or if the liens have resulted in cash to the borrower in an amount of $500 or less, whether at closing or through cumulative draws prior to the date of the HECM closing.
</P>
<P>(b) Mortgagees must provide documentation satisfactory to the Commissioner as established by notice that the seasoning requirement was met.
</P>
<P>(c) <I>Home Equity Lines of Credit.</I> The borrower may pay off, at closing, a Home Equity Line of Credit (HELOC) that does not meet seasoning requirements from borrower funds, the HECM funds, or a combination of HECM funds and borrower funds, as long as the draw from HECM funds does not exceed the percentage approved by the Commissioner under the authority of § 206.25(a).


</P>
</DIV8>


<DIV8 N="§ 206.37" NODE="24:2.1.1.2.6.2.134.17" TYPE="SECTION">
<HEAD>§ 206.37   Credit standing.</HEAD>
<P>(a) Each borrower shall have a general credit standing satisfactory to the Commissioner.
</P>
<P>(b) <I>Required Financial Assessment</I>—(1) <I>Requirement for Financial Assessment prior to loan approval.</I> Prior to loan approval, the mortgagee shall assess the financial capacity of the borrower to comply with the terms of the mortgage and evaluate whether the HECM is a sustainable solution for the borrower, in accordance with instructions established by the Commissioner through notice. The Financial Assessment shall consider the borrower's credit history, cash flow and residual income, extenuating circumstances, and compensating factors.
</P>
<P>(i) <I>Credit history.</I> In accordance with FHA guidelines in existence at the time of FHA Case Number assignment, mortgagees shall conduct an in-depth credit history analysis to determine if the borrower has demonstrated the willingness to meet his or her financial obligations.
</P>
<P>(ii) <I>Cash flow and residual income analysis.</I> In accordance with FHA guidelines in existence at the time of FHA Case Number assignment, mortgagees shall conduct a cash flow and residual income analysis to determine the capacity of the borrower to meet his or her documented financial obligations with his or her documented income.
</P>
<P>(iii) <I>Extenuating circumstances.</I> Where the borrower's credit history does not meet the criteria set by the mortgagee based on FHA guidelines in existence at the time of FHA Case Number assignment, mortgagees shall consider and document, as part of the Financial Assessment, extenuating circumstances that led to the credit issues.
</P>
<P>(iv) <I>Compensating factors.</I> The mortgagee shall document and identify in the Financial Assessment any considered compensating factors.
</P>
<P>(2) <I>Completion and approval of Financial Assessment.</I> The Financial Assessment shall be completed and approved by a DE Underwriter registered in HUD's system of record by the underwriting mortgagee.
</P>
<P>(3) <I>Nondiscrimination.</I> (i) The Financial Assessment shall be conducted in a uniform manner that shall not discriminate because of race, color, religion, sex, national origin, familial status, disability, marital status, actual or perceived sexual orientation, gender identity, source of income of the borrower, location of the property, or because the applicant has in good faith exercised any right under the Consumer Credit Protection Act (15 U.S.C. 1601 <I>et seq.</I>).
</P>
<P>(ii) The Financial Assessment shall be conducted in compliance with all applicable laws and regulations, including but not limited to, the following:
</P>
<P>(A) Fair Housing Act (42 U.S.C. 3601 <I>et seq.</I>);
</P>
<P>(B) Fair Credit Reporting Act (15 U.S.C. 1681 <I>et seq.</I>);
</P>
<P>(C) Equal Credit Opportunity Act (15 U.S.C. 1691 <I>et seq.</I>); and
</P>
<P>(D) Regulation B (12 CFR part 1002).


</P>
</DIV8>


<DIV8 N="§ 206.39" NODE="24:2.1.1.2.6.2.134.18" TYPE="SECTION">
<HEAD>§ 206.39   Principal residence.</HEAD>
<P>(a) The property must be the principal residence of each borrower, and if applicable, Eligible Non-Borrowing Spouse, at closing.
</P>
<P>(b) <I>HECM for Purchase.</I> For HECM for Purchase transactions, each borrower, and if applicable, Eligible Non-Borrowing Spouse, must occupy the property within 60 days from the date of closing.


</P>
</DIV8>


<DIV8 N="§ 206.40" NODE="24:2.1.1.2.6.2.134.19" TYPE="SECTION">
<HEAD>§ 206.40   Disclosure, verification and certifications.</HEAD>
<P>(a) <I>Disclosure and certification of Social Security and Employer Identification Numbers</I>—(1) <I>Borrower.</I> The borrower must meet the requirements for the disclosure and verification of Social Security and Employer Identification Numbers, as provided by part 200, subpart U, of this chapter.
</P>
<P>(2) <I>Eligible Non-Borrowing Spouse.</I> The Eligible Non-Borrowing Spouse shall comply with the requirements for disclosure and verification of Social Security and Employer Identification Numbers by borrowers in paragraph (a)(1) of this section.
</P>
<P>(b) <I>Certifications.</I> Each borrower and each Non-Borrowing Spouse shall provide all required certifications to HUD and the mortgagee, as required by the Commissioner.
</P>
<P>(c) <I>Designation of alternate individual.</I> At the time of origination, the mortgagee shall request that the borrower designate an alternate individual for the purpose of communicating with the mortgagee if the mortgagee has not been able to reach the borrower. The designation of the alternate individual is at the discretion of the borrower. If the mortgagee is unable to make contact or communicate with the borrower for any reason, including death or incapacitation, the mortgagee shall communicate with the alternate individual, if one has been designated by the borrower.


</P>
</DIV8>


<DIV8 N="§ 206.41" NODE="24:2.1.1.2.6.2.134.20" TYPE="SECTION">
<HEAD>§ 206.41   Counseling.</HEAD>
<P>(a) <I>List provided.</I> At the time of the initial contact with the prospective borrower, the mortgagee shall give the borrower a list of the names, addresses, and telephone numbers of HECM counselors and their employing agencies, which have been approved by the Commissioner, in accordance with subpart E of this part, as qualified and able to provide the information described in paragraph (b) of this section. The borrower, any Eligible or Ineligible Non-Borrowing Spouse, and any non-borrowing owner must receive counseling.
</P>
<P>(b) <I>Information to be provided.</I> (1) A HECM counselor must discuss with the borrower:
</P>
<P>(i) The information required by section 255(f) of the NHA;
</P>
<P>(ii) Whether the borrower has signed a contract or agreement with an estate planning service firm that requires, or purports to require, the borrower to pay a fee on or after closing that may exceed amounts permitted by the Commissioner or this part;
</P>
<P>(iii) If such a contract has been signed under paragraph (b)(1)(ii) of this section, the extent to which services under the contract may not be needed or may be available at nominal or no cost from other sources, including the mortgagee; and
</P>
<P>(iv) Any other requirements determined by the Commissioner.
</P>
<P>(2) If the HECM borrower has an Eligible Non-Borrowing Spouse, in addition to meeting the requirements of paragraph (b)(1) of this section, a HECM counselor shall discuss with the borrower and Eligible Non-Borrowing Spouse:
</P>
<P>(i) The requirement that the Eligible Non-Borrowing Spouse must obtain ownership of the property or other legal right to remain in the property for life, upon the death of the last surviving borrower;
</P>
<P>(ii) A failure to obtain ownership or other legal right to remain in the property for life will result in the HECM becoming due and payable and the Eligible Non-Borrowing Spouse will not receive the benefit of the Deferral Period;
</P>
<P>(iii) The requirement that the property must be the principal residence of the Eligible Non-Borrowing Spouse prior to and after the death of the borrowing spouse;
</P>
<P>(iv) The requirement that the Eligible Non-Borrowing Spouse fulfills all obligations of the mortgage, including the payment of property charges and upkeep of the property; and
</P>
<P>(v) Any other requirements determined by the Commissioner.
</P>
<P>(3) If the HECM borrower has an Ineligible Non-Borrowing Spouse, in addition to meeting the requirements of paragraph (b)(1) of this section, a HECM counselor shall discuss with the borrower and Ineligible Non-Borrowing Spouse:
</P>
<P>(i) The Deferral Period will not be applicable;
</P>
<P>(ii) The HECM will become due and payable upon the death of the last surviving borrower; and
</P>
<P>(iii) Any other requirements determined by the Commissioner.
</P>
<P>(c) <I>Certificate.</I> The HECM counselor will provide the borrower with a certificate stating that the borrower, Non-Borrowing Spouse, and non-borrowing owner, as applicable, has received counseling. The borrower shall provide the mortgagee with a physical copy of the certificate.


</P>
</DIV8>


<DIV8 N="§ 206.43" NODE="24:2.1.1.2.6.2.134.21" TYPE="SECTION">
<HEAD>§ 206.43   Information to borrower.</HEAD>
<P>(a) <I>Disclosure of costs of obtaining mortgage.</I> The mortgagee shall ensure that the borrower has received full disclosure of all costs of obtaining the mortgage. The mortgagee shall ask the borrower about any costs or other obligations that the borrower has incurred to obtain the mortgage, as defined by the Commissioner, in addition to providing any disclosures required by law. The mortgagee shall clearly state to the borrower which charges are required to obtain the mortgage and which are not required to obtain the mortgage.
</P>
<P>(b) <I>Lump sum disbursement.</I> (1) If the borrower requests that at least 25 percent of the principal limit amount (after deducting amounts excluded in the following sentence) be disbursed at closing to the borrower (or as otherwise permitted by § 206.25), the mortgagee must make sufficient inquiry at closing to confirm that the borrower will not use any part of the amount disbursed for payments to or on behalf of an estate planning service firm, with an explanation of § 206.32 as necessary or appropriate.
</P>
<P>(2) This paragraph does not apply to any part of the principal limit used for the following:
</P>
<P>(i) Initial MIP under § 206.105(a) or fees and charges allowed under § 206.31(a) paid by the mortgagee from mortgage proceeds instead of by the borrower in cash; and
</P>
<P>(ii) Amounts set aside in accordance with § 206.19(f) for repairs under § 206.47, for property charges under § 206.205, or for servicing charges under § 206.207(b).


</P>
</DIV8>


<DIV8 N="§ 206.44" NODE="24:2.1.1.2.6.2.134.22" TYPE="SECTION">
<HEAD>§ 206.44   Monetary investment for HECM for Purchase program.</HEAD>
<P>(a) <I>Monetary investment.</I> At closing, HECM for Purchase borrowers shall provide a monetary investment that will be applied to satisfy the difference between the principal limit and the sale price for the property, plus any HECM loan-related fees that are not financed into the loan, minus the amount of the earnest deposit.
</P>
<P>(b) <I>Funding sources.</I> To satisfy the required monetary investment, borrowers may use:
</P>
<P>(1) Cash on hand;
</P>
<P>(2) Cash from the sale or liquidation of the borrower's assets;
</P>
<P>(3) HECM mortgage proceeds; or
</P>
<P>(4) Other approved funding sources as determined by the Commissioner through notice.
</P>
<P>(c) <I>Interested party contributions.</I> (1) The following interested party contributions are permissible:
</P>
<P>(i) Fees required to be paid by a seller under state or local law;
</P>
<P>(ii) Fees customarily paid by a seller in the subject property locality; and
</P>
<P>(iii) The purchase of the Home Warranty policy by the seller.
</P>
<P>(2) The Commissioner may define additional permissible interested party contributions and impose requirements for permissible interested party contributions through a notice in the <E T="04">Federal Register</E>.


</P>
</DIV8>

</DIV7>


<DIV7 N="135" NODE="24:2.1.1.2.6.2.135" TYPE="SUBJGRP">
<HEAD>Eligible Properties</HEAD>


<DIV8 N="§ 206.45" NODE="24:2.1.1.2.6.2.135.23" TYPE="SECTION">
<HEAD>§ 206.45   Eligible properties.</HEAD>
<P>(a) <I>Title.</I> A mortgage must be on real estate held in fee simple; or on a leasehold that is under a lease with a duration lasting until the later of: 99 years, if such lease is renewable; or the actuarial life expectancy of the mortgagor plus a number of years specified by the Commissioner, which shall not be more than 99 years. The mortgagee shall obtain a title insurance policy satisfactory to the Commissioner. If the Commissioner determines that title insurance for reverse mortgages is not available for reasonable rates in a state, then the Commissioner may specify other acceptable forms of title evidence in lieu of title insurance.
</P>
<P>(b) <I>Type of property.</I> The property shall include a dwelling designed principally as a residence for one family or such additional families as the Commissioner shall determine. A condominium unit designed for one-family occupancy shall also be an eligible property.
</P>
<P>(c) <I>Borrower and mortgagee requirement for maintaining flood insurance coverage</I>—(1) <I>In general.</I> (i) The requirements of this paragraph (c) apply if a mortgage is to cover property improvements that:
</P>
<P>(A) Are located in an area designated by the Federal Emergency Management Agency (FEMA) as a floodplain area having special flood hazards;
</P>
<P>(B) Are otherwise determined by the Commissioner to be subject to a flood hazard; or
</P>
<P>(C) Are not otherwise covered by the flood insurance standard for condominium projects established under 24 CFR 203.43b(d)(6)(iii) or (i)(1).
</P>
<P>(ii) No mortgage may be insured that covers property improvements located in an area that has been identified by FEMA as an area having special flood hazards, unless the community in which the area is situated is participating in the National Flood Insurance Program (NFIP) and flood insurance is obtained by the borrower. Such flood insurance shall be in the form of the standard policy issued under the NFIP or private flood insurance as defined in paragraph (c)(6) of this section. Such requirement for flood insurance shall be effective one year after the date of notification by FEMA to the chief executive officer of a flood prone community that such community has been identified as having special flood hazards.
</P>
<P>(iii) For purposes of this section, property improvement means a dwelling and related structures/equipment essential to the value of the property and subject to flood damage.
</P>
<P>(2) <I>Flood insurance obligation.</I> During such time as the mortgage is insured, the borrower and mortgagee shall be obligated, by a special condition to be included in the mortgage commitment, to obtain and to maintain flood insurance coverage under either the NFIP or equivalent private flood insurance coverage as defined in paragraph (c)(6) of this section on the property improvements. The mortgagee shall be named as the loss payee for flood insurance benefits. A mortgagee may determine that a private flood insurance policy meets the definition of private flood insurance in this section, without further review of the policy, if the compliance aid statement provided in 24 CFR 203.16a(c) is included within the policy or as an endorsement to the policy.
</P>
<P>(3) <I>Duration and amount of coverage.</I> The flood insurance must be maintained during such time as the mortgage is insured in an amount at least equal to the lowest of the following:
</P>
<P>(i) 100 percent replacement cost of the insurable value of the improvements, which consists of the development or project cost less estimated land cost; or
</P>
<P>(ii) The maximum amount of the NFIP insurance available with respect to the particular type of the property; or
</P>
<P>(iii) The outstanding principal balance of the loan.
</P>
<P>(4) <I>Private flood insurance defined.</I> The term “private flood insurance” means an insurance policy that:
</P>
<P>(i) Is issued by an insurance company that is:
</P>
<P>(A) Licensed, admitted, or otherwise approved to engage in the business of insurance in the State or jurisdiction in which the insured building is located, by the insurance regulator of that State or jurisdiction; or
</P>
<P>(B) In the case of a policy of difference in conditions, multiple peril, all risk, or other blanket coverage insuring nonresidential commercial property, is recognized, or not disapproved, as a surplus lines insurer by the insurance regulator of the State or jurisdiction where the property to be insured is located;
</P>
<P>(ii) Provides flood insurance coverage that is at least as broad as the coverage provided under a standard flood insurance policy under the National Flood Insurance Program for the same type of property, including when considering deductibles, exclusions, and conditions offered by the insurer. To be at least as broad as the coverage provided under a standard flood insurance policy under the National Flood Insurance Program, the policy must, at a minimum:
</P>
<P>(A) Define the term “flood” to include the events defined as a “flood” in a standard flood insurance policy under the National Flood Insurance Program;
</P>
<P>(B) Contain the coverage specified in a standard flood insurance policy under the National Flood Insurance Program, including that relating to building property coverage; personal property coverage, if purchased by the insured mortgagor(s); other coverages; and increased cost of compliance coverage;
</P>
<P>(C) Contain deductibles no higher than the specified maximum, and include similar non-applicability provisions, as under a standard flood insurance policy under the National Flood Insurance Program, for any total policy coverage amount up to the maximum available under the NFIP at the time the policy is provided to the lender;
</P>
<P>(D) Provide coverage for direct physical loss caused by a flood and may only exclude other causes of loss that are excluded in a standard flood insurance policy under the National Flood Insurance Program. Any exclusions other than those in a standard flood insurance policy under the National Flood Insurance Program may pertain only to coverage that is in addition to the amount and type of coverage that could be provided by a standard flood insurance policy under the National Flood Insurance Program or have the effect of providing broader coverage to the policyholder; and
</P>
<P>(E) Not contain conditions that narrow the coverage provided in a standard flood insurance policy under the National Flood Insurance Program;
</P>
<P>(iii) Includes all of the following:
</P>
<P>(A) A requirement for the insurer to give 45 days' written notice of cancellation or non-renewal of flood insurance coverage to:
</P>
<P>(<I>1</I>) The insured;
</P>
<P>(<I>2</I>) The mortgagee, if any; and
</P>
<P>(<I>3</I>) Federal Housing Administration (FHA), in cases where the mortgagee has assigned the loan to FHA in exchange for claim payment;
</P>
<P>(B) Information about the availability of flood insurance coverage under the National Flood Insurance Program;
</P>
<P>(C) A mortgage interest clause similar to the clause contained in a standard flood insurance policy under the National Flood Insurance Program; and
</P>
<P>(D) A provision requiring an insured to file suit not later than 1 year after the date of a written denial of all or part of a claim under the policy; and
</P>
<P>(iv) Contains cancellation provisions that are as restrictive as the provisions contained in a standard flood insurance policy under the National Flood Insurance Program.
</P>
<P>(d) <I>Lead-based paint poisoning prevention.</I> If the appraiser of a dwelling constructed prior to 1978 finds defective paint surfaces, 24 CFR 200.810(d) shall apply unless the borrower certifies that no child who is less than six years of age resides or is expected to reside in the dwelling, except that any reference to “mortgagor” in 24 CFR 200.810(d) shall mean “borrower” for purposes of this paragraph.
</P>
<P>(e) <I>Restrictions on conveyance.</I> The property must be freely marketable. Conveyance of the property may only be restricted as permitted under 24 CFR 203.41 or 24 CFR 234.66 and this part, except that a right of first refusal to purchase a unit in a condominium project is permitted if the right is held by the condominium association for the project.
</P>
<P>(f) <I>Location of property.</I> The mortgaged property shall be located within the United States, Puerto Rico, Guam, the Virgin Islands, the Commonwealth of the Northern Mariana Islands, and American Samoa. The mortgaged property, if otherwise acceptable to the Commissioner, may be located in any location where the housing standards meet the requirements of the Commissioner.
</P>
<P>(g) <I>HECM for Purchase.</I> (1) A HECM for Purchase transaction is where title to the property is transferred to the HECM borrower and, at the time of closing, the HECM first and second liens, if applicable, will be the only liens against the property.
</P>
<P>(2) Properties are eligible for FHA insurance under the HECM for Purchase program when construction is completed and the property is habitable, as evidenced by the issuance of a Certificate of Occupancy or its equivalent, by the local jurisdiction.
</P>
<CITA TYPE="N">[82 FR 7117, Jan. 19, 2017, as amended at 87 FR 70743, Nov. 21, 2022]


</CITA>
</DIV8>


<DIV8 N="§ 206.47" NODE="24:2.1.1.2.6.2.135.24" TYPE="SECTION">
<HEAD>§ 206.47   Property standards; repair work.</HEAD>
<P>(a) <I>Need for repairs.</I> Properties must meet the applicable property requirements of the Commissioner in order to be eligible. Properties that do not meet the property requirements must be repaired in order to ensure that the repaired property will serve as adequate security for the insured mortgage.
</P>
<P>(b) <I>Assurance that repairs are made.</I> The mortgage may be closed before the repair work is completed if the Commissioner estimates that the cost of the remaining repair work will not exceed 15 percent of the maximum claim amount and the mortgage contains provisions approved by the Commissioner concerning payment for the repairs.
</P>
<P>(c) <I>Reimbursement to contractor.</I> When repair work is completed after closing by a contractor, the mortgagee shall cause one or more inspections of the property to be made by an inspector or other qualified individual acceptable to the Commissioner in order to ensure that the repair work is satisfactory, and prior to the release of funds from the Repair Set Aside. The mortgagee shall hold back a portion of the contract price attributable to the work done before each interim release of funds, and the total of the hold backs will be released after the final inspection and approval of the release by the mortgagee. The mortgagee shall ensure that all mechanics' and materialmen's liens are released of record.
</P>
<P>(d) <I>Reimbursement to borrower.</I> The mortgagee shall not reimburse the borrower for any labor the borrower performed. The mortgagee may reimburse the borrower for the actual cost of repair materials from the Repair Set Aside, provided that the mortgagee causes one or more inspections of the property by an inspector or other qualified individual acceptable to the Commissioner and meets all reimbursement requirements established by the Commissioner.
</P>
<P>(e) <I>HECM for Purchase.</I> For HECM for Purchase transactions, where major property deficiencies threaten the health and safety of the homeowner or jeopardize the soundness and security of the property, all repairs must be completed by the seller prior to closing. Appraisers shall complete the appraisal report as “Subject To” the completion of the repairs.


</P>
</DIV8>


<DIV8 N="§ 206.51" NODE="24:2.1.1.2.6.2.135.25" TYPE="SECTION">
<HEAD>§ 206.51   Eligibility of mortgages involving a dwelling unit in a condominium.</HEAD>
<P>If the mortgage involves a dwelling unit in a condominium, the project in which the unit is located must be acceptable to the Commissioner as set forth in 24 CFR 203.43b.
</P>
<CITA TYPE="N">[84 FR 41877, Aug. 15, 2019]


</CITA>
</DIV8>


<DIV8 N="§ 206.52" NODE="24:2.1.1.2.6.2.135.26" TYPE="SECTION">
<HEAD>§ 206.52   Eligible sale of property-HECM for Purchase<I>.</I></HEAD>
<P>(a) <I>Sale by owner of record</I>—(1) <I>Owner of record requirement.</I> To be eligible for a mortgage insured by FHA, the property must be purchased from the owner of record and the transaction may not involve any sale or assignment of the sales contract.
</P>
<P>(2) <I>Supporting documentation.</I> The mortgagee shall obtain documentation verifying that the seller is the owner of record and must submit this documentation to FHA as part of the application for mortgage insurance, in accordance with §§ 206.15 and 206.115(b)(9).
</P>
<P>(b) <I>Time restrictions on re-sales</I>—(1) <I>General.</I> The eligibility of a property for a mortgage insured by FHA is dependent on the time that has elapsed between the date the seller acquired the property (based upon the date of settlement) and the date of execution of the sales contract that will result in the FHA mortgage insurance (the re-sale date). The mortgagee shall obtain documentation verifying compliance with the time restrictions described in this paragraph and must submit this documentation to FHA as part of the application for mortgage insurance, in accordance with § 206.115(b).
</P>
<P>(2) <I>Re-sales occurring 90 days or less following acquisition.</I> If the re-sale date is 90 days or less following the date of acquisition by the seller, the property is not eligible for a mortgage to be insured by FHA.
</P>
<P>(3) <I>Re-sales occurring between 91 days and 180 days following acquisition.</I> (i) If the re-sale date is between 91 days and 180 days following acquisition by the seller, the property is generally eligible for a mortgage insured by FHA.
</P>
<P>(ii) However, FHA will require that the mortgagee obtain additional documentation if the re-sale price is 100 percent over the purchase price. Such documentation must include an appraisal from another appraiser. The mortgagee may also document its loan file to support the increased value by establishing that the increased value results from the rehabilitation of the property.
</P>
<P>(iii) FHA may revise the level at which additional documentation is required under paragraph (b)(3) of this section at 50 to 150 percent over the original purchase price. FHA will revise this level by <E T="04">Federal Register</E> notice with a 30 day delayed effective date.
</P>
<P>(4) <I>Authority to address property flipping for re-sales occurring between 91 days and 12 months following acquisition.</I> (i) If the re-sale date is more than 90 days after the date of acquisition by the seller, but before the end of the twelfth month after the date of acquisition, the property is eligible for a mortgage to be insured by FHA.
</P>
<P>(ii) However, FHA may require that the mortgagee provide additional documentation to support the re-sale value of the property if the re-sale price is 5 percent or greater than the lowest sales price of the property during the preceding 12 months (as evidenced by the contract of sale). At FHA's discretion, such documentation must include, but is not limited to, an appraisal from another appraiser. FHA may exclude re-sales of less than a specific dollar amount from the additional value documentation requirements.
</P>
<P>(iii) If the additional value documentation supports a value of the property that is more than 5 percent lower than the value supported by the first appraisal, the lower value will be used to calculate the maximum claim amount. Otherwise, the value supported by the first appraisal will be used to calculate the maximum claim amount.
</P>
<P>(iv) FHA will announce its determination to require additional value documentation through issuance of a <E T="04">Federal Register</E> notice. The requirement for additional value documentation may be established either on a nationwide or regional basis. Further, the <E T="04">Federal Register</E> notice will specify the percentage increase in the re-sale price that will trigger the need for additional documentation, and will specify the acceptable types of documentation. The <E T="04">Federal Register</E> notice may also exclude re-sales of less than a specific dollar amount from the additional value documentation requirements. Any such <E T="04">Federal Register</E> notice, and any subsequent revisions, will be issued at least thirty days before taking effect.
</P>
<P>(v) The level at which additional documentation is required under paragraph (b)(4) of this section shall supersede that under paragraph (b)(3) of this section.
</P>
<P>(5) <I>Re-sales occurring more than 12 months following acquisition.</I> If the re-sale date is more than 12 months following the date of acquisition by the seller, the property is eligible for a mortgage insured by FHA.
</P>
<P>(c) <I>Exceptions to the time restrictions on sales.</I> The time restrictions on sales described in paragraph (b) of this section do not apply to:
</P>
<P>(1) Sales by HUD of Real Estate-Owned (REO) properties under 24 CFR part 291 and of single family assets in revitalization areas pursuant to section 204 of the NHA (12 U.S.C. 1710);
</P>
<P>(2) Sales by another agency of the United States Government of REO single family properties pursuant to programs operated by these agencies;
</P>
<P>(3) Sales of properties by nonprofit organizations approved to purchase HUD REO single family properties at a discount with resale restrictions;
</P>
<P>(4) Sales of properties that were acquired by the sellers by inheritance;
</P>
<P>(5) Sales of properties purchased by an employer or relocation agency in connection with the relocation of an employee;
</P>
<P>(6) Sales of properties by state- and federally-chartered financial institutions and government-sponsored enterprises (GSEs);
</P>
<P>(7) Sales of properties by local and state government agencies; and
</P>
<P>(8) Only upon announcement by FHA through issuance of a notice, sales of properties located in areas designated by the President as federal disaster areas. The notice will specify how long the exception will be in effect.
</P>
<P>(d) <I>Sanctions and indemnification.</I> Failure of a mortgagee to comply with the requirements of this section may result in HUD requesting indemnification of the mortgage loan, or seeking other appropriate remedies under 24 CFR part 25.


</P>
</DIV8>

</DIV7>


<DIV7 N="136" NODE="24:2.1.1.2.6.2.136" TYPE="SUBJGRP">
<HEAD>Refinancing of Existing Home Equity Conversion Mortgages</HEAD>


<DIV8 N="§ 206.53" NODE="24:2.1.1.2.6.2.136.27" TYPE="SECTION">
<HEAD>§ 206.53   Refinancing a HECM loan.</HEAD>
<P>(a) <I>General.</I> Except as otherwise provided in this section, all requirements applicable to the insurance of HECMs under this part apply to the insurance of refinanced HECMs. FHA may, upon application by a mortgagee, insure any mortgage given to refinance an existing HECM insured under this part, including loans assigned to the Commissioner as described in § 206.107(a)(1) and § 206.121(b).
</P>
<P>(b) <I>Definition of “total cost of the refinancing”.</I> For purposes of paragraphs (d) and (e) of this section, the term “total cost of the refinancing” means the sum of the allowable charges and fees permitted under § 206.31 and the initial MIP described in § 206.105(a) and paragraph (c) of this section.
</P>
<P>(c) <I>Initial MIP limit.</I> (1) The initial MIP paid by the mortgagee pursuant to § 206.105(a) shall not exceed the difference between: three percent of the increase in the maximum claim amount for the new HECM, minus the amount of the initial MIP already charged and paid by the borrower for the existing HECM that is being refinanced. No refunds will be given if the initial MIP paid on the existing HECM exceeds the initial MIP due on the new HECM.
</P>
<P>(2) The HECM refinance authority is only applicable when the property that serves as collateral for the FHA-insured mortgage remains the same.
</P>
<P>(3) Existing HECM borrowers refinancing an existing HECM are eligible for a MIP reduction under the conditions of this section, but existing HECM borrowers who participate in a HECM for Purchase transaction are ineligible for a reduction in the initial MIP.
</P>
<P>(d) <I>Anti-churning disclosure</I>—(1) <I>Contents of anti-churning disclosure.</I> In addition to providing the required disclosures under § 206.43, the mortgagee shall provide to the borrower its best estimate of:
</P>
<P>(i) The total cost of the refinancing to the borrower; and
</P>
<P>(ii) The increase in the borrower's principal limit as measured by the estimated initial principal limit on the mortgage to be insured less the current principal limit on the HECM that is being refinanced under this section.
</P>
<P>(2) <I>Timing of anti-churning disclosure.</I> The mortgagee shall provide the anti-churning disclosure concurrently with the disclosures required under § 206.43.
</P>
<P>(e) <I>Waiver of counseling requirement.</I> The borrower and any Non-Borrowing Spouse may elect not to receive counseling under § 206.41, but only if:
</P>
<P>(1) The original HECM was assigned a Case Number on or after August 4, 2014, and the borrower and Non-Borrowing Spouse, if applicable, received counseling required under § 206.41; or where the original HECM was assigned a Case Number prior to August 4, 2014, and there is no applicable Non-Borrowing Spouse.
</P>
<P>(2) The borrower has received the anti-churning disclosure required under paragraph (d) of this section.
</P>
<P>(3) The increase in the borrower's principal limit (as provided in the anti-churning disclosure) exceeds the total cost of the refinancing by an amount established by the Commissioner through <E T="04">Federal Register</E> notice. FHA may periodically update this amount through publication of a notice in the <E T="04">Federal Register.</E> Publication of any such revised amount will occur at least 30 days before the revision becomes effective.
</P>
<P>(4) The time between the date of the closing on the original HECM and the date of the application for refinancing under this section does not exceed five years (even if less than five years have passed since a previous refinancing under this section).


</P>
</DIV8>

</DIV7>


<DIV7 N="137" NODE="24:2.1.1.2.6.2.137" TYPE="SUBJGRP">
<HEAD>Deferral of Due and Payable Status</HEAD>


<DIV8 N="§ 206.55" NODE="24:2.1.1.2.6.2.137.28" TYPE="SECTION">
<HEAD>§ 206.55   Deferral of due and payable status for Eligible Non-Borrowing Spouses.</HEAD>
<P>(a) <I>Deferral Period.</I> If the last surviving borrower predeceases an Eligible Non-Borrowing Spouse, and if the requirements of paragraph (d) of this section are satisfied, the due and payable status will be deferred for as long as the Eligible Non-Borrowing Spouse continues to meet the Qualifying Attributes in paragraph (c) of this section and the requirements of paragraphs (d) and (e) of this section.
</P>
<P>(b) <I>End of Deferral Period.</I> (1) If a Deferral Period ceases or becomes unavailable because a Non-Borrowing Spouse no longer satisfies the Qualifying Attributes and has become an Ineligible Non-Borrowing Spouse, a mortgagee may not provide an opportunity to cure the default, and the HECM will become immediately due and payable as a result of the death of the last surviving borrower.
</P>
<P>(2) If a Deferral Period ceases but the Eligible Non-Borrowing Spouse continues to meet the Qualifying Attributes, the mortgagee must provide an Eligible Non-Borrowing Spouse with 30 days to cure the default, in accordance with § 206.57.
</P>
<P>(c) <I>Qualifying Attributes.</I> (1) In order to qualify as an Eligible Non-Borrowing Spouse, the Non-Borrowing Spouse must:
</P>
<P>(i) Have been the spouse of a HECM borrower at the time of loan closing and remained the spouse of such HECM borrower for the duration of the HECM borrower's lifetime;
</P>
<P>(ii) Have been properly disclosed to the mortgagee at origination and specifically named as an Eligible Non-Borrowing Spouse in the HECM mortgage and loan documents;
</P>
<P>(iii) Have occupied, and continue to occupy, the property securing the HECM as his or her principal residence; and
</P>
<P>(iv) Meet any other requirements as the Commissioner may prescribe by <E T="04">Federal Register</E> notice for comment.
</P>
<P>(2) A Non-Borrowing Spouse who meets the Qualifying Attributes in paragraph (c)(1) of this section at origination is an Eligible Non-Borrowing Spouse and may not elect to be ineligible for the Deferral Period. A Non-Borrowing Spouse that is ineligible for the Deferral Period at the time of loan origination because he or she failed to satisfy the Qualifying Attributes requirements in paragraph (c)(1) of this section is not subsequently eligible for a Deferral Period when the borrowing spouse dies or moves out of the home.
</P>
<P>(3) An Eligible Non-Borrowing Spouse shall become an Ineligible Non-Borrowing Spouse should any of the Qualifying Attributes requirements in paragraph (c)(1) of this section cease to be met.
</P>
<P>(d) <I>Additional requirements for Deferral Period.</I> An Eligible Non-Borrowing Spouse must satisfy and continue to satisfy the following requirements:
</P>
<P>(1) Within 90 days from the death of the last surviving HECM borrower, establish legal ownership or other ongoing legal right to remain for life in the property securing the HECM;
</P>
<P>(2) After the death of the last surviving borrower, ensure all other obligations of the HECM borrower(s) contained in the loan documents continue to be satisfied; and
</P>
<P>(3) After the death of the last surviving borrower, ensure that the HECM does not become eligible to be called due and payable for any other reason.
</P>
<P>(e) <I>Unaffected terms of HECM.</I> All applicable terms and conditions of the mortgage and loan documents, and all FHA requirements, continue to apply and must be satisfied.
</P>
<P>(f) Nothing in this section may be construed as interrupting or interfering with the ability of the borrower's estate or heir(s) to dispose of the property if they are otherwise legally entitled to do so.


</P>
</DIV8>


<DIV8 N="§ 206.57" NODE="24:2.1.1.2.6.2.137.29" TYPE="SECTION">
<HEAD>§ 206.57   Cure provision enabling reinstatement of Deferral Period<I>.</I></HEAD>
<P>(a) When the mortgagee is required by § 206.55(b)(2) to provide an Eligible Non-Borrowing Spouse with 30 days to cure the default, this section shall apply.
</P>
<P>(b) If the default is cured within the 30-day timeframe, the Deferral Period shall be reinstated, unless:
</P>
<P>(1) The mortgagee has reinstated the Deferral Period within the past two years immediately preceding the current notification to the Eligible Non-Borrowing Spouse that the mortgage is due and payable;
</P>
<P>(2) The reinstatement of the Deferral Period will preclude foreclosure if the mortgage becomes due and payable at a later date; or
</P>
<P>(3) The reinstatement of the Deferral Period will adversely affect the priority of the mortgage lien.
</P>
<P>(c) If the default is not cured within the 30-day timeframe, the mortgagee shall proceed in accordance with the established timeframes to initiate foreclosure and reasonable diligence in prosecuting foreclosure.
</P>
<P>(d) Even after a foreclosure proceeding has been initiated, the mortgagee shall permit an Eligible Non-Borrowing Spouse to cure the condition which resulted in the Deferral Period ceasing, consistent with § 206.55(b)(2), and to reinstate the mortgage and Deferral Period, and the mortgage insurance shall continue in effect. The mortgagee may require the Eligible Non-Borrowing Spouse to pay any costs that the mortgagee incurred to reinstate the mortgage, including foreclosure costs and reasonable attorney's fees. Such costs may not be added to the outstanding loan balance and shall be paid from some other source of funds. The mortgagee shall reinstate the Deferral Period unless:
</P>
<P>(1) The mortgagee has reinstated the Deferral Period within the past two years immediately preceding the latest notification to the Eligible Non-Borrowing Spouse that the mortgage is due and payable;
</P>
<P>(2) The reinstatement of the Deferral Period will preclude foreclosure if the mortgage becomes due and payable at a later date; or
</P>
<P>(3) The reinstatement of the Deferral Period will adversely affect the priority of the mortgage lien.


</P>
</DIV8>


<DIV8 N="§ 206.59" NODE="24:2.1.1.2.6.2.137.30" TYPE="SECTION">
<HEAD>§ 206.59   Obligations of mortgagee.</HEAD>
<P>(a) <I>Certifications and disclosures at closing.</I> At closing, the mortgagee shall obtain the appropriate certification from each borrower identified as married as well as from each identified Non-Borrowing Spouse. When a HECM borrower has identified an Ineligible Non-Borrowing Spouse, the mortgagee shall also disclose the amount of mortgage proceeds that would have been available under the HECM if he or she were an Eligible Non-Borrowing Spouse.
</P>
<P>(b) <I>Divorce.</I> In the event of a divorce between the HECM borrower and Eligible Non-Borrowing Spouse, a mortgagee shall obtain a copy of the final divorce decree and shall not require the now Ineligible Non-Borrowing Spouse to fulfill any further requirements.
</P>
<P>(c) <I>Death of borrower.</I> Within 30 days of being notified of the death of the borrower, the mortgagee shall:
</P>
<P>(1) Obtain all certifications, as required by the Commissioner, from the Eligible Non-Borrowing Spouse, and continue to obtain the required certifications no less than annually thereafter for the duration of the Deferral Period; and
</P>
<P>(2) Notify any Eligible Non-Borrowing Spouse that the due and payable status of the loan is in a Deferral Period only for the amount of time that such Eligible Non-Borrowing Spouse continues to meet all requirements established by the Commissioner.
</P>
<P>(d) <I>Non-compliance with requirements.</I> If the Eligible Non-Borrowing Spouse ceases to meet any requirements established by the Commissioner, the mortgagee shall notify the Eligible Non-Borrowing Spouse within 30 days that the Deferral Period has ended and the HECM is immediately due and payable, unless the Deferral Period is reinstated in accordance with § 206.57. The mortgagee shall obtain documentation validating the reason for the cessation of the Deferral Period and, if applicable, the reason for reinstatement of the Deferral Period.


</P>
</DIV8>


<DIV8 N="§ 206.61" NODE="24:2.1.1.2.6.2.137.31" TYPE="SECTION">
<HEAD>§ 206.61   HECM proceeds during a Deferral Period.</HEAD>
<P>(a) The HECM is not assumable. HECM proceeds may not be disbursed to any party during a Deferral Period, except as determined by the Commissioner through notice.
</P>
<P>(b) If a Repair Set Aside was established as a condition of the HECM, funds may be disbursed from the Repair Set Aside during a Deferral Period for the sole purpose of paying the cost of those repairs that were specifically identified prior to origination as necessary to the insurance of the HECM. Repairs under this paragraph shall only be paid for using funds from the Repair Set Aside if the repairs are satisfactorily completed during the time period established in the Repair Rider or such additional time as provided by the Commissioner. Unused funds remaining beyond the established time period shall not be disbursed.


</P>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="C" NODE="24:2.1.1.2.6.3" TYPE="SUBPART">
<HEAD>Subpart C—Contract Rights and Obligations</HEAD>


<DIV7 N="138" NODE="24:2.1.1.2.6.3.138" TYPE="SUBJGRP">
<HEAD>Sale, Assignment and Pledge</HEAD>


<DIV8 N="§ 206.101" NODE="24:2.1.1.2.6.3.138.1" TYPE="SECTION">
<HEAD>§ 206.101   Sale, assignment and pledge of insured mortgages.</HEAD>
<P>(a) <I>Sale of interests in insured mortgages.</I> No mortgagee may sell or otherwise dispose of any mortgage insured under this part, or group of mortgages insured under this part, or any partial interest in such mortgage or mortgages by means of any agreement, arrangement or device except pursuant to this subpart.
</P>
<P>(b) <I>Sale of insured mortgage to approved mortgagee.</I> A mortgage insured under this part may be sold to another approved mortgagee. The seller shall notify the Commissioner of the sale within 15 calendar days, on a form prescribed by the Commissioner and acknowledged by the buyer.
</P>
<P>(c) <I>Effect of sale of insured mortgage.</I> When a mortgage insured under this part is sold to another approved mortgagee, the buyer shall thereupon succeed to all the rights and become bound by all the obligations of the seller under the contract of insurance and the seller shall be released from its obligations under the contract, provided that the seller shall not be relieved of its obligation to pay mortgage insurance premiums until the notice required by § 206.101(b) is received by the Commissioner.
</P>
<P>(d) <I>Assignments, pledges and transfers by approved mortgagee.</I> (1) An assignment, pledge, or transfer of a mortgage or group of mortgages insured under this part, not constituting a final sale, may be made by an approved mortgagee to another approved mortgagee provided the following requirements are met:
</P>
<P>(i) The assignor, pledgor or transferor shall remain the mortgagee of record.
</P>
<P>(ii) The Commissioner shall have no obligation to recognize or deal with any party other than the mortgagee of record with respect to the rights, benefits and obligations of the mortgagee under the contract of insurance.
</P>
<P>(2) An assignment or transfer of an insured mortgage or group of insured mortgages may be made by an approved mortgagee to other than an approved mortgagee provided the requirements under paragraphs (d)(1)(i) and (d)(1)(ii) of this section are met and the following additional requirements are met:
</P>
<P>(i) The assignee or transferee shall be a corporation, trust or organization (including but not limited to any pension trust or profit-sharing plan) which certifies to the approved mortgagee that:
</P>
<P>(A) It has assets of $100,000 or more; and
</P>
<P>(B) It has lawful authority to hold an insured mortgage or group of insured mortgages.
</P>
<P>(ii) The assignment or transfer shall be made pursuant to an agreement under which the transferor or assignor is obligated to take one of the following alternate courses of action within 1 year from the date of the assignment or within such additional period of time as may be approved by the Commissioner:
</P>
<P>(A) The transferor or assignor shall repurchase and accept a reassignment of such mortgage or group of mortgages.
</P>
<P>(B) The transferor or assignor shall obtain a sale and transfer of such mortgage or group of mortgages to an approved mortgagee.
</P>
<P>(3) Notice to or approval of the Commissioner is not required in connection with assignments, pledges or transfers pursuant to this section.
</P>
<P>(e) <I>Declaration of trust.</I> A sale of a beneficial interest in a group of mortgages insured under this part, where the interest to be acquired is related to all of the mortgages as an entirety, rather than an interest in a specific mortgage, shall be made only pursuant to a declaration of trust, which has been approved by the Commissioner prior to any such sale.
</P>
<P>(f) <I>Transfers of partial interests.</I> A partial interest in a mortgage insured under this part may be transferred under a participation agreement without obtaining the approval of the Commissioner, if the following conditions are met:
</P>
<P>(1) <I>Principal mortgagee.</I> The insured mortgage shall be held by an approved mortgagee which, for the purposes of this section, shall be referred to as the <I>principal mortgagee.</I>
</P>
<P>(2) <I>Interest of principal mortgagee.</I> The principal mortgagee shall retain and hold for its own account a financial interest in the insured mortgage.
</P>
<P>(3) <I>Qualification for holding partial interest.</I> A partial interest in an insured mortgage shall be issued to and held only by:
</P>
<P>(i) A mortgagee approved by the Commissioner; or
</P>
<P>(ii) A corporation, trust or organization (including, but not limited to any pension fund, pension trust, or profit-sharing plan) which certifies to the principal mortgagee that:
</P>
<P>(A) It has assets of $100,000 or more; and
</P>
<P>(B) It has lawful authority to acquire a partial interest in an insured mortgage.
</P>
<P>(4) <I>Participation agreement provisions.</I> The participation agreement shall include provisions that:
</P>
<P>(i) The principal mortgagee shall retain title to the mortgage and remain the mortgagee of record under the contract of mortgage insurance.
</P>
<P>(ii) The Commissioner shall have no obligation to recognize or deal with anyone other than the principal mortgagee with respect to the rights, benefits and obligations of the mortgagee under the contract of insurance.
</P>
<P>(iii) The mortgage and loan documents shall remain in the custody of the principal mortgagee.
</P>
<P>(iv) The responsibility for servicing the insured mortgages shall remain with the principal mortgagee.


</P>
</DIV8>


<DIV8 N="§ 206.102" NODE="24:2.1.1.2.6.3.138.2" TYPE="SECTION">
<HEAD>§ 206.102   Insurance Funds.</HEAD>
<P>Loans endorsed for insurance under this part, prior to October 1, 2008, shall be obligations of the General Insurance Fund. Loans endorsed for insurance under this part, on or after October 1, 2008, shall be obligations of the MMIF.


</P>
</DIV8>

</DIV7>


<DIV7 N="139" NODE="24:2.1.1.2.6.3.139" TYPE="SUBJGRP">
<HEAD>Mortgage Insurance Premiums</HEAD>


<DIV8 N="§ 206.103" NODE="24:2.1.1.2.6.3.139.3" TYPE="SECTION">
<HEAD>§ 206.103   Payment of MIP.</HEAD>
<P>(a) The payment of any MIP due under this subpart shall be made to the Commissioner by the mortgagee in cash until an event described in paragraph (b) or (c) of this section occurs.
</P>
<P>(b) <I>Payment of the mortgage.</I> The MIP shall no longer be remitted if the mortgage is paid in full.
</P>
<P>(c) <I>Acquisition of title.</I> (1) If the mortgagee or a party other than the mortgagee acquires title at a foreclosure sale, or the mortgagee acquires title by a deed in lieu of foreclosure, and the mortgagee notifies the Commissioner that a claim for the payment of the insurance benefits will not be presented, the MIP shall no longer be remitted.
</P>
<P>(2) If the mortgagee or a party other than the mortgagee acquires title at a foreclosure sale or the mortgagee acquires title by a deed in lieu of foreclosure, or where the property is sold in accordance with § 206.125(c), and a claim for the payment of the insurance benefits will be presented, the MIP shall no longer be remitted as of the date of the foreclosure sale, the date the deed in lieu of foreclosure is recorded, or the date in which the sale in accordance with § 206.125(c) is completed, as applicable.


</P>
</DIV8>


<DIV8 N="§ 206.105" NODE="24:2.1.1.2.6.3.139.4" TYPE="SECTION">
<HEAD>§ 206.105   Amount of MIP.</HEAD>
<P>(a) <I>Initial MIP.</I> The mortgagee shall pay to the Commissioner an initial MIP that does not exceed three percent of the maximum claim amount.
</P>
<P>(b) <I>Monthly MIP.</I> The Commissioner may establish and collect a monthly MIP, which will accrue daily from the closing date, at a rate not to exceed 1.50 percent of the remaining insured principal balance, or up to 1.55 percent for any mortgage involving an original principal obligation that is greater than 95 percent of appraised value of the property. A mortgagee may only add the monthly MIP to the loan balance when paid to the Commissioner.
</P>
<P>(c) <I>Calculation of the initial MIP.</I> The mortgagee shall calculate the initial MIP based on the amount of funds the borrower has elected to be made available during the First 12-Month Disbursement Period, except that the calculation shall not include any funds set aside in the Servicing Fee Set Aside, if applicable. The initial MIP calculation shall be determined based on the sum of the following amounts:
</P>
<P>(1) For adjustable interest rate HECMs, the amount of Mandatory Obligations, the amount disbursed to the borrower at loan closing, and the amount of the available Initial Disbursement Limit not taken by the borrower at loan closing that the borrower selects to remain available during the First 12-Month Disbursement Period.
</P>
<P>(2) For fixed interest rate HECMs, the amount of Mandatory Obligations and the amount disbursed to the borrower at loan closing.
</P>
<P>(d) <I>Adjustments to initial or monthly MIP.</I> The Commissioner may adjust the amount of any initial or monthly MIP through notice. Such notice shall establish the effective date of any premium adjustment therein.


</P>
</DIV8>


<DIV8 N="§ 206.107" NODE="24:2.1.1.2.6.3.139.5" TYPE="SECTION">
<HEAD>§ 206.107   Mortgagee election of assignment or shared premium option.</HEAD>
<P>(a) <I>Election of option.</I> Before the mortgage is submitted for insurance endorsement, the mortgagee shall elect either the assignment option or the shared premium option.
</P>
<P>(1) Under the assignment option, the mortgagee shall have the option of assigning the mortgage to the Commissioner if the outstanding loan balance is equal to or greater than 98 percent of the maximum claim amount, regardless of the deferral status, or the borrower has requested a payment which exceeds the difference between the maximum claim amount and the outstanding loan balance and:
</P>
<P>(i) The mortgagee is current in making the required payments under the mortgage to the borrower;
</P>
<P>(ii) The mortgagee is current in its payment of the MIP (and late charges and interest on the MIP, if any) to the Commissioner;
</P>
<P>(iii) The mortgage is not due and payable under § 206.27(c)(1), or, if due and payable under § 206.27(c)(1), its due and payable status has been deferred pursuant to a Deferral Period;
</P>
<P>(iv) An event described in § 206.27(c)(2) has not occurred, or the Commissioner has been so informed but has denied approval for the mortgage to be due and payable. At the mortgagee's option, the mortgagee may forgo assignment of the mortgage and file a claim under any of the circumstances described in § 206.123(a)(3)-(5); and
</P>
<P>(v) The mortgage is a first lien of record and title to the property securing the mortgage is good and marketable. The provisions of § 206.136 pertaining to mortgagee certifications also apply.
</P>
<P>(2) Under the shared premium option, the mortgagee may not assign a mortgage to the Commissioner unless the mortgagee fails to make payments and the Commissioner demands assignment (§ 206.123(a)(2)), but the mortgagee shall only be required to remit a reduced monthly MIP to the Commissioner. The mortgagee shall collect from the borrower the full amount of the monthly MIP provided in § 206.105(b) but shall retain a portion of the monthly MIP paid by the borrower as compensation for the default risk assumed by the mortgagee. The portion of the MIP to be retained by a mortgagee shall be determined by the Commissioner as calculated in § 206.109. For a particular mortgage, the applicable portion shall be determined as of the date of the commitment. The mortgagee retains the right to file a claim under any of the circumstances described in § 206.123(a)(2)-(5).
</P>
<P>(b) <I>No election for shared appreciation.</I> Shared appreciation mortgages shall be insured by the Commissioner only under the shared premium option.


</P>
</DIV8>


<DIV8 N="§ 206.109" NODE="24:2.1.1.2.6.3.139.6" TYPE="SECTION">
<HEAD>§ 206.109   Amount of mortgagee share of premium.</HEAD>
<P>Using the factors provided by the Commissioner, the amount of the mortgagee share of the premium shall be determined for each mortgage based upon the age of the youngest borrower or Eligible Non-Borrowing Spouse and the expected average mortgage interest rate.


</P>
</DIV8>


<DIV8 N="§ 206.111" NODE="24:2.1.1.2.6.3.139.7" TYPE="SECTION">
<HEAD>§ 206.111   Due date of MIP.</HEAD>
<P>(a) <I>Initial MIP.</I> The mortgagee shall pay the initial MIP to the Commissioner within fifteen days of closing and as a condition to the endorsement of the mortgage for insurance.
</P>
<P>(b) <I>Monthly MIP.</I> Each monthly MIP shall be due to the Commissioner on the first business day of each month except the month in which the mortgage is closed.


</P>
</DIV8>


<DIV8 N="§ 206.113" NODE="24:2.1.1.2.6.3.139.8" TYPE="SECTION">
<HEAD>§ 206.113   Late charge and interest.</HEAD>
<P>(a) <I>Late charge.</I> Initial MIP remitted to the Commissioner more than 5 days after the payment date in § 206.111(a) and monthly MIP remitted to the Commissioner more than 5 days after the payment date in § 206.111(b) shall include a late charge of four percent of the amount owed.
</P>
<P>(b) <I>Interest.</I> In addition to any late charge provided in paragraph (a) of this section, the mortgagee shall pay interest on any initial MIP remitted to the Commissioner more than 20 days after closing, and interest on any monthly MIP remitted to the Commissioner more than 5 days after the payment date prescribed in § 206.111(b). Such interest rate shall be paid at a rate set in conformity with the Treasury Financial Manual.
</P>
<P>(c) <I>Paid by mortgagee.</I> Any late charge and interest owed may not be added to the outstanding loan balance and must be paid by the mortgagee.


</P>
</DIV8>


<DIV8 N="§ 206.115" NODE="24:2.1.1.2.6.3.139.9" TYPE="SECTION">
<HEAD>§ 206.115   Insurance of mortgage.</HEAD>
<P>(a) <I>Mortgages with firm commitments.</I> For applications for insurance involving mortgages not eligible to be originated under the Direct Endorsement program under § 203.5 (any reference to § 203.255 in § 203.5 shall mean § 206.115 for purposes of this section), the Commissioner will endorse the mortgage for insurance by issuing a Mortgage Insurance Certificate.
</P>
<P>(b) <I>Endorsement with Direct Endorsement processing.</I> For applications for insurance involving mortgages originated under the Direct Endorsement program under § 203.5 (any reference to § 203.255 in § 203.5 shall mean § 206.115 for purposes of this section), the mortgagee shall submit to the Commissioner, within 60 days after the date of closing of the loan or such additional time as permitted by the Commissioner, properly completed documentation and certifications as listed in this paragraph (b):
</P>
<P>(1) Property appraisal upon a form meeting the requirements of the Commissioner (including, if required, any additional documentation supporting the appraised value of the property under § 206.52), and a HUD conditional commitment, or a Lender's Notice of Value issued by the Lender Appraisal Processing Program (LAPP) approved lender when the appraisal was originally completed for use in a VA application, but only if the appraiser was also on the FHA roster as of the effective date of the appraisal, and all accompanying documents required by the Commissioner;
</P>
<P>(2) An application for insurance of the mortgage in a form prescribed by the Commissioner;
</P>
<P>(3) A certified copy of the mortgage and loan documents executed upon forms which meet the requirements of the Commissioner;
</P>
<P>(4) An underwriter certification, on a form prescribed by the Commissioner, stating that the underwriter has personally reviewed the appraisal report and credit application (including the analysis performed on the worksheets) and that the proposed mortgage complies with FHA underwriting requirements, and incorporates each of the underwriter certification items that apply to the mortgage submitted for endorsement, as set forth in the applicable handbook or similar publication that is distributed to all Direct Endorsement mortgagees, except that if FHA makes the TOTAL Mortgage Scorecard available to HECM mortgagees by setting out requirements applicable for the use of the TOTAL Mortgage Scorecard in a <E T="04">Federal Register</E> notice for comment, mortgagees may follow such procedures and meet such requirements in lieu of providing the underwriter certification;
</P>
<P>(5) Where applicable, a certificate under oath and contract regarding use of the dwelling for transient or hotel purposes;
</P>
<P>(6) Where an individual water or sewer system is being used, an approval letter from the local health authority indicating approval of the system in accordance with § 200.926d(f);
</P>
<P>(7) A mortgage certification on a form prescribed by the Commissioner, stating that the authorized representative of the mortgagee who is making the certification has personally reviewed the mortgage documents and the application for insurance endorsement, and certifying that the mortgage complies with the requirements of paragraph (b) of this section. The certification shall incorporate each of the mortgagee certification items that apply to the mortgage loan submitted for endorsement, as set forth in the applicable handbook or similar publication that is distributed to all Direct Endorsement mortgagees;
</P>
<P>(8) Documents required by § 206.15;
</P>
<P>(9) Documentation providing that the seller is the owner of record in accordance with § 206.52(a) and the time restriction requirements of § 206.52(b) are met;
</P>
<P>(10) For HECM for Purchase transactions, a Certificate of Occupancy, or its equivalent, if required for new construction; and
</P>
<P>(11) Such other documents as the Commissioner may require.
</P>
<P>(c) <I>Pre-endorsement review for Direct Endorsement.</I> (1) Upon submission by an approved mortgagee of the documents required by paragraph (b) of this section, the Commissioner will review the documents and determine that:
</P>
<P>(i) The mortgage is executed on a form which meets the requirements of the Commissioner;
</P>
<P>(ii) The mortgage maturity meets the requirements of the applicable program;
</P>
<P>(iii) The stated mortgage amount does not exceed 150 percent of the maximum claim amount;
</P>
<P>(iv) All documents required by paragraph (b) of this section are submitted;
</P>
<P>(v) All necessary certifications are made in accordance with paragraph (b) of this section;
</P>
<P>(vi) There is no mortgage insurance premium, late charge or interest due to the Commissioner; and
</P>
<P>(vii) The mortgage was not in default when submitted for insurance or, if submitted for insurance more than 60 days after closing, the mortgagee certifies that the borrower is current in paying all property charges or is otherwise in compliance with all the terms and conditions of the mortgage documents.
</P>
<P>(2) The Commissioner is authorized to determine if there is any information indicating that any certification or required document is false, misleading, or constitutes fraud or misrepresentation on the part of any party, or that the mortgage fails to meet a statutory or regulatory requirement. If, following this review, the mortgage is determined to be eligible, the Commissioner will endorse the mortgage for insurance by issuance of a Mortgage Insurance Certificate. If the mortgage is determined to be ineligible, the Commissioner will inform the mortgagee in writing of this determination, and include the reasons for the determination and any corrective actions that may be taken.
</P>
<P>(d) <I>Submission by mortgagee other than originating mortgagee.</I> If the originating mortgagee assigns the mortgage to another approved mortgagee before pre-endorsement review under paragraph (c) of this section, the assignee may submit the required documents for pre-endorsement review in the name of the originating mortgagee. All certifications must be executed by the originating mortgagee (or its underwriter, if appropriate). The purchasing mortgagee may pay any required mortgage insurance premium, late charge and interest.
</P>
<P>(e) <I>Post-Endorsement review for Direct Endorsement.</I> Following endorsement for insurance, the Commissioner may review all documents required by paragraph (b) of this section. If, following this review, the Commissioner determines that the mortgage does not satisfy the requirements of the Direct Endorsement program, the Commissioner may place the mortgagee on Direct Endorsement probation, or terminate the authority of the mortgagee to participate in the Direct Endorsement program pursuant to § 206.15, or refer the matter to the Mortgagee Review Board for action pursuant to part 25 of this title.
</P>
<P>(f) <I>Creation of the contract.</I> The mortgage shall be an insured mortgage from the date of the issuance of a Mortgage Insurance Certificate, from the date of the endorsement of the credit instrument, or from the date of FHA's electronic acknowledgement to the mortgagee that the mortgage is insured, as applicable. The Commissioner and the mortgagee are thereafter bound by the regulations in this subpart with the same force and to the same extent as if a separate contract had been executed relating to the insured mortgage, including the provisions of the regulations in this subpart and of the National Housing Act.


</P>
</DIV8>


<DIV8 N="§ 206.116" NODE="24:2.1.1.2.6.3.139.10" TYPE="SECTION">
<HEAD>§ 206.116   Refunds.</HEAD>
<P>No amount of the initial MIP shall be refundable except as authorized by the Commissioner.


</P>
</DIV8>

</DIV7>


<DIV7 N="140" NODE="24:2.1.1.2.6.3.140" TYPE="SUBJGRP">
<HEAD>HUD Responsibility to Borrowers</HEAD>


<DIV8 N="§ 206.117" NODE="24:2.1.1.2.6.3.140.11" TYPE="SECTION">
<HEAD>§ 206.117   General.</HEAD>
<P>The Commissioner is required by statute to take any action necessary to provide a borrower with funds to which the borrower is entitled under the mortgage and which the borrower does not receive because of the default of the mortgagee. The Commissioner may hold a second mortgage to secure repayment by the borrower under § 206.27(d). Where the Commissioner does not hold a second mortgage, but makes a payment to the borrower, and such payment is not reimbursed by the mortgagee, the Commissioner shall accept assignment of the first mortgage.


</P>
</DIV8>


<DIV8 N="§ 206.119" NODE="24:2.1.1.2.6.3.140.12" TYPE="SECTION">
<HEAD>§ 206.119   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 206.121" NODE="24:2.1.1.2.6.3.140.13" TYPE="SECTION">
<HEAD>§ 206.121   Commissioner authorized to make payments.</HEAD>
<P>(a) <I>Investigation.</I> The Commissioner will investigate all complaints by a borrower concerning late payments. If the Commissioner determines that the mortgagee is unable or unwilling to make all payments required under the mortgage, including late charges, the Commissioner shall pay such payments and late charges to the borrower.
</P>
<P>(b) <I>Reimbursement or assignment.</I> The Commissioner may demand that within 30 days from the demand, the mortgagee reimburse the Commissioner, with interest from the date of payment by the Commissioner, or assign the insured mortgage to the Commissioner. Interest shall be paid at a rate set in conformity with the Treasury Financial Manual. If the mortgagee complies with the reimbursement demand, then the contract of insurance shall not be affected. If the mortgagee complies by assigning the mortgage for record within 30 days of the demand, then the Commissioner shall pay an insurance claim as provided in § 206.129(e)(3) and assume all responsibilities of the mortgagee under the first mortgage. If the mortgagee fails to comply with the demand within 30 days, the contract of insurance will terminate as provided in § 206.133(c).
</P>
<P>(c) <I>Second mortgage.</I> If the contract of insurance is terminated as provided in § 206.133(c), all payments to the borrower by the Commissioner will be secured by the second mortgage, unless otherwise provided by the Commissioner. Payments will be due and payable in the same manner as under the insured first mortgage. The liability of the borrower under the first mortgage shall be limited to payments actually made by the mortgagee to or on behalf of the borrower (including prior recoupment of the MIP remitted by the mortgagee and billed to the borrower), and shall exclude accrued interest, whether or not it has been included in the outstanding loan balance, and shared appreciation, if any. Interest will stop accruing on the first mortgage when the Commissioner begins to make payments under the second mortgage. The first mortgage will not be due and payable until the second mortgage is due and payable.


</P>
</DIV8>

</DIV7>


<DIV7 N="141" NODE="24:2.1.1.2.6.3.141" TYPE="SUBJGRP">
<HEAD>Claim Procedure</HEAD>


<DIV8 N="§ 206.123" NODE="24:2.1.1.2.6.3.141.14" TYPE="SECTION">
<HEAD>§ 206.123   Claim procedures in general.</HEAD>
<P>(a) <I>Claims.</I> Mortgagees may submit claims for the payment of the mortgage insurance benefits if:
</P>
<P>(1) The conditions of § 206.107(a)(1) pertaining to the optional assignment of the mortgage by the mortgagee have been met and the mortgagee assigns the mortgage to the Commissioner;
</P>
<P>(2) The mortgagee is unable or unwilling to make the payments under the mortgage and assigns the mortgage to the Commissioner pursuant to the Commissioner's demand, as provided in § 206.121(b);
</P>
<P>(3) The borrower or other permissible party sells the property for less than the outstanding loan balance and the mortgagee releases the mortgage of record to facilitate the sale, as provided in § 206.125(c);
</P>
<P>(4) The mortgagee acquires title to the property by foreclosure or a deed in lieu of foreclosure and sells the property as provided in § 206.125(g) for an amount which does not satisfy the outstanding loan balance or fails to sell the property as provided in § 206.127(a)(2); or
</P>
<P>(5) The mortgagee forecloses and a bidder other than the mortgagee purchases the property for an amount that is not sufficient to satisfy the outstanding loan balance, as provided in § 206.125(e).
</P>
<P>(b) [Reserved]


</P>
</DIV8>


<DIV8 N="§ 206.125" NODE="24:2.1.1.2.6.3.141.15" TYPE="SECTION">
<HEAD>§ 206.125   Acquisition and sale of the property.</HEAD>
<P>(a) <I>Initial action by the mortgagee.</I> (1) The mortgagee shall notify the Commissioner within 60 days of the mortgage becoming due and payable when the conditions stated in the mortgage, as required by § 206.27(c)(1) have occurred or when the Deferral Period ends. The mortgagee shall notify the Commissioner within 30 days when one of the conditions stated in the mortgage, as required by § 206.27(c)(2), has occurred.
</P>
<P>(2) After notifying and receiving approval of the Commissioner when needed, the mortgagee shall notify the borrower, Eligible Non-Borrowing Spouse, borrower's estate, and borrower's heir(s), as applicable, within 30 days of the later of notifying the Commissioner or receiving approval, if needed, that the mortgage is due and payable. The mortgagee shall give the applicable party 30 days from the date of notice to engage in the following actions:
</P>
<P>(i) Pay the outstanding loan balance, including any accrued interest, MIP, and mortgagee advances in full;
</P>
<P>(ii) Sell the property for an amount not to be less than the amount determined by the Commissioner through notice, which shall not exceed 95 percent of the appraised value as determined under § 206.125(b), with the net proceeds of the sale to be applied towards the outstanding loan balance. Closing costs shall not exceed the greater of: 11 percent of the sales price; or a fixed dollar amount as determined by the Commissioner through <E T="04">Federal Register</E> notice. For the purposes of this section, <I>sell</I> includes the transfer of title by operation of law;
</P>
<P>(iii) Provide the mortgagee with a deed in lieu of foreclosure;
</P>
<P>(iv) Correct the condition which resulted in the mortgage coming due and payable for reasons other than the death of the last surviving borrower;
</P>
<P>(v) For an Eligible Non-Borrowing Spouse, correct the condition which resulted in an end to the Deferral Period in accordance with § 206.57; or
</P>
<P>(vi) Such other actions as permitted by the Commissioner through notice.
</P>
<P>(3) For a borrower, even after a foreclosure proceeding is begun, the mortgagee shall permit the borrower to correct the condition which resulted in the mortgage coming due and payable and to reinstate the mortgage, and the mortgage insurance shall continue in effect. The mortgagee may require the borrower to pay any costs that the mortgagee incurred to reinstate the borrower, including foreclosure costs and reasonable attorney's fees. Such costs shall be paid by adding them to the outstanding loan balance. The mortgagee may refuse reinstatement by the borrower if:
</P>
<P>(i) The mortgagee has accepted reinstatement of the mortgage within the past two years immediately preceding the current notification to the borrower that the mortgage is due and payable;
</P>
<P>(ii) Reinstatement will preclude foreclosure if the mortgage becomes due and payable at a later date; or
</P>
<P>(iii) Reinstatement will adversely affect the priority of the mortgage lien.
</P>
<P>(4) For an Eligible Non-Borrowing Spouse, even after a foreclosure proceeding is begun, the mortgagee shall permit the Eligible Non-Borrowing Spouse to cure the condition which resulted in the Deferral Period ceasing, in accordance with § 206.57(d).
</P>
<P>(b) <I>Appraisal.</I> The mortgagee shall have the property appraised by an appraiser on the FHA roster, or other appraiser acceptable to, and identified by, the Commissioner through <E T="04">Federal Register</E> notice, no later than 30 days after receipt of the request by an applicable party in connection with a potential property sale. The property shall be appraised before a foreclosure sale and have an effective appraisal date that is no more than 30 days before such sale. The appraisal shall be at the requesting party's expense unless the mortgage is due and payable. If the mortgage is due and payable, the appraisal shall be at the mortgagee's expense but the mortgagee shall have a right to be reimbursed out of the proceeds of any sale by the borrower or other permissible party. The Commissioner may, through <E T="04">Federal Register</E> notice, identify other acceptable types of valuation for establishing the value of HECMs for the purpose of sale.
</P>
<P>(c) <I>Sale by borrower or other permissible party.</I> Where the HECM is not due and payable, the borrower or an authorized representative of the borrower may sell the property for at least the lesser of the outstanding loan balance or the appraised value. Where the HECM is due and payable at the time the contract for sale is executed, the borrower or other party with legal right to dispose of the property may sell the property in accordance with the amount established by § 206.125(a)(2)(ii). The mortgagee shall satisfy the mortgage of record (and the Commissioner will satisfy any second mortgage required by the Commissioner under § 206.27(d) of record) in order to facilitate the sale, provided that there are no junior liens (except the mortgage to secure payments by the Commissioner if required under § 206.27(d)) and all the net proceeds from the sale are paid to the mortgagee.
</P>
<P>(d) <I>Initiation of foreclosure.</I> (1) The mortgagee shall commence foreclosure of the mortgage within six months of the due date defined in § 206.129(d)(1), or within such additional time as may be approved by the Commissioner.
</P>
<P>(2) If the laws of the State, city, or municipality or other political subdivision in which the mortgaged property is located or if Federal bankruptcy law does not permit the commencement of the foreclosure in accordance with § 206.125(d)(1), the mortgagee shall commence foreclosure within six months after the expiration of the time during which such foreclosure is prohibited by such laws.
</P>
<P>(3) The mortgagee shall give written notice to the Commissioner within 30 days after the initiation of foreclosure proceedings, and shall exercise reasonable diligence in prosecuting the foreclosure proceedings to completion and in acquiring title to and possession of the property. A time frame that is determined by the Commissioner to constitute “reasonable diligence” for each State is made available to mortgagees.
</P>
<P>(4) The mortgagee shall bid at the foreclosure sale an amount at least equal to the lesser of the sum of the outstanding loan balance and any and all other incurred expenses, or the current appraised value of the property. Such a bid by any party other than the mortgagee, for the full loan balance and all associated expenses, will result in a full payoff of the loan and no claim for insurance benefits being presented to FHA.
</P>
<P>(e) <I>Other bidders at foreclosure sale.</I> If a party other than the mortgagee is the successful bidder at the foreclosure sale, the net proceeds of the sale shall be applied to the outstanding loan balance.
</P>
<P>(f) <I>Deed in lieu of foreclosure.</I> (1)(i) In order to avoid delays and additional expense as a result of instituting and completing a foreclosure action, the mortgagee shall accept a deed in lieu of foreclosure from the borrower or other party with legal right to dispose of the property provided it is filed for recording within 9 months of the due date and the mortgagee is able to obtain good and marketable title.
</P>
<P>(ii) <I>Cash for Keys.</I> The Commissioner may provide a financial incentive, in an amount to be determined by the Commissioner, to be paid by the mortgagee and reimbursed through any subsequent claim where a borrower or other party with a legal right to do so deeds the property within 6 months of the due date.
</P>
<P>(2) In exchange for the executed and delivered deed, the mortgagee shall cancel the credit instrument and deliver it to the borrower and satisfy the mortgage of record. If applicable, the mortgagee shall request that the Commissioner cancel the credit instrument and deliver it to the borrower and satisfy the mortgage of record.
</P>
<P>(g) <I>Sale of the acquired property.</I> (1) Upon acquisition of the property by foreclosure or deed in lieu of foreclosure, the mortgagee shall take possession of, preserve, and repair the property and shall make diligent efforts to sell the property within six months from the date the mortgagee acquired the property, or such additional time as provided by the Commissioner. The mortgagee shall sell the property for an amount not less than the appraised value (as provided under paragraph (b) of this section) unless the mortgagee does not file an application for insurance benefits or written permission is obtained from the Commissioner authorizing a sale at a lower price.
</P>
<P>(2) Repairs shall not exceed those required by local law, or the requirements of the Commissioner or the Secretary of Veterans Affairs if the sale of the property is financed with a mortgage insured by the Commissioner or guaranteed, insured, or taken by the Secretary of Veterans Affairs. No other repairs shall be made without the specific advance approval of the Commissioner.
</P>
<P>(3) The mortgagee shall not enter into a contract for the preservation, repair, or sale of the property with any officer, employee, or owner of ten percent or more interest in the mortgagee or with any other person or organization having an identity of interest with the mortgagee or with any relative of such officer, employee, owner, or person.
</P>
<P>(4) The Commissioner may provide financial incentive, in an amount to be determined by the Commissioner, to be paid by the mortgagee and reimbursed through a subsequent claim when a bona fide tenant vacates the property prior to an eviction being initiated by the mortgagee.


</P>
</DIV8>


<DIV8 N="§ 206.127" NODE="24:2.1.1.2.6.3.141.16" TYPE="SECTION">
<HEAD>§ 206.127   Application for insurance benefits.</HEAD>
<P>(a) <I>Mortgagee acquires title.</I> (1) The mortgagee shall apply for the payment of the insurance benefits within 30 days after the sale of the property by the mortgagee or within such additional time as approved by the Commissioner. Application shall be made by notifying the Commissioner of the sale of the property, the sale price, and income and expenses incurred in connection with the acquisition, repair, and sale of the property.
</P>
<P>(2) If the property will not be sold within six months from the foreclosure sale date where the mortgagee is the successful bidder, the mortgagee shall apply for the insurance benefit not later than 30 days after the end of the six-month period, substituting the appraised value, using a valid appraisal, for the sale price. The mortgagee may add the cost of the appraisal to the claim amount.
</P>
<P>(b) <I>Party other than the mortgagee acquires title.</I> The mortgagee shall apply for the payment of the insurance benefits within 30 days after a party other than the mortgagee acquires title to the property. Application shall be made by notifying the Commissioner of the sale of the property and the sale price. Transferring a portfolio that includes REO properties to another entity does not constitute a “sale” under this section.
</P>
<P>(c) <I>Mortgagee assigns the mortgage.</I> The mortgagee shall file its claim for the payment of insurance benefits within 15 days after the date the assignment of the mortgage to the Commissioner is filed for recording. The application for the payment of the insurance benefits shall include the items listed in § 206.135(a) and the certification required under § 206.136.
</P>
<P>(d) <I>Contract of insurance not terminated.</I> Mortgagees may only file an application for insurance benefits provided the contract of insurance has not terminated.


</P>
</DIV8>


<DIV8 N="§ 206.129" NODE="24:2.1.1.2.6.3.141.17" TYPE="SECTION">
<HEAD>§ 206.129   Payment of claim.</HEAD>
<P>(a) <I>General.</I> If the claim for the payment of the insurance benefits is acceptable to the Commissioner, payment shall be made in cash in the amount determined under this section.
</P>
<P>(b) <I>Limit on claim amount.</I> (1) For HECMs assigned Case Numbers prior to September 19, 2017, in no case may the claim paid under this subpart exceed the maximum claim amount. The interest allowance provided in paragraphs (d)(3)(x), (e)(2), and (f)(2)(i) of this section shall not be included in determining the limit on the claim amount.
</P>
<P>(2) For HECMs assigned Case Numbers on or after September 19, 2017, in no case may the claim paid under this subpart exceed the maximum claim amount, as defined in § 206.3. The interest allowance provided in paragraphs (d)(3)(x), (e)(2) and (f)(2)(ii) of this section shall be made in cash in the amount determined under this section and shall be included in determining the limit on the claim amount.
</P>
<P>(c) <I>Shared appreciation mortgages.</I> The terms <I>loan balance</I> and <I>accrued interest</I> as used in this section do not include interest attributable to the mortgagee's share of the appreciated value of the property.
</P>
<P>(d) <I>Amount of payment—mortgagee acquires title or is unsuccessful bidder.</I> This paragraph describes the amount of payment if the mortgagee acquires title by purchase, foreclosure, or deed in lieu of foreclosure, or when a party other than the mortgagee is the successful bidder at the foreclosure sale.
</P>
<P>(1) <I>Due and payable date</I> means the date when the mortgagee notifies or should have notified the Commissioner that the mortgage is due and payable under the conditions stated in the mortgage, as required by § 206.27(c)(1) or the date that the Deferral Period, as provided for in the mortgage by § 206.27(c)(3), ends; or the date the Commissioner approved a due and payable request as provided for in the mortgage by § 206.27(c)(2).
</P>
<P>(2) The amount of the claim shall be computed by:
</P>
<P>(i) Totaling the outstanding loan balance and any accrued interest and servicing fees which have not been added to the outstanding loan balance as of the due and payable date, and allowances for items set forth in paragraph (d)(3) of this section; and
</P>
<P>(ii) Subtracting from that total the amount for which the property was sold (or the appraised value determined under § 206.127(a)(2)) and the items set forth in paragraph (d)(4) of this section.
</P>
<P>(3) The claim shall include items listed in paragraphs (d)(3)(i) through (xiv) of this section. For HECMs with Case Numbers assigned on or after September 19, 2017, the inclusion of items listed in paragraphs (d)(3)(i), (ii), and (iii) of this section shall be limited to two-thirds of advances made by the mortgagee on such expenses.
</P>
<P>(i) Taxes, ground rents, water rates, and utility charges that are liens prior to the mortgage;
</P>
<P>(ii) Special assessments, which are noted on the application for insurance or which become liens after the insurance of the mortgage;
</P>
<P>(iii) Hazard and flood insurance premiums on the mortgaged property not in excess of a <I>reasonable rate;</I>
</P>
<P>(A) For purposes of this section, <I>reasonable rate</I> means a rate that is not in excess of the rate or advisory rate set by the principal State-licensed rating organization for essential property insurance in the voluntary market, or if coverage is available under a FAIR Plan, the FAIR Plan rate;
</P>
<P>(B) If a State has neither a FAIR Plan nor a State-licensed rating organization for essential property insurance in the voluntary market, the mortgagee must provide to the Home Ownership Center (HOC) having jurisdiction, information concerning the lowest rates available from an insurer for the types of coverage involved, with a request for a determination of whether the rate is reasonable. FHA will determine the rate to be reasonable if it approximates the rate assessed for comparable insurance coverage applicable to similarly situated properties in a State that offers a FAIR Plan or maintains a State-licensed rating organization;
</P>
<P>(iv) Taxes imposed upon any deeds or other instruments by which said property was acquired by the mortgagee pursuant to § 206.125;
</P>
<P>(v) Reasonable payments made by the mortgagee, with the approval of the Commissioner, for the purpose of protecting, operating, or preserving the property, or removing debris from the property;
</P>
<P>(vi) Reasonable costs for performing property inspections required by § 206.140 and to determine if the property is vacant or abandoned are considered to be costs of protecting, operating or preserving the property;
</P>
<P>(vii) Charges for the administration, operation, maintenance, or repair of community-owned property or the maintenance or repair of the mortgaged property, paid by the mortgagee for the purpose of discharging an obligation arising out of a covenant filed for record prior to the issuance of the mortgage; and charges for the repair or maintenance of the mortgaged property required by, and in an amount approved by, the Commissioner under § 206.142;
</P>
<P>(viii) Reasonable costs of the title search ordered by the mortgagee, in accordance with procedures prescribed by FHA, to determine if the criteria for approval of the mortgagee's acceptance of a deed in lieu of foreclosure or to determine clear title to complete a pre-foreclosure sale;
</P>
<P>(ix) Foreclosure costs or costs of acquiring the property in accordance with such conditions as the Commissioner shall prescribe;
</P>
<P>(x) An amount equal to the interest allowance which would have been earned, from the due and payable date to the date when payment of the claim is made, if the claim had been paid in debentures, except that when the mortgagee fails to meet any one of the applicable requirements of §§ 206.125 and 206.127 of this subpart within the specified time, and in a manner satisfactory to the Commissioner (or within such further time as the Commissioner may approve in writing), the interest allowance in such cash payment shall be computed only to the date on which the particular required action should have been taken or to which it was extended.
</P>
<P>(A) <I>Debenture interest rate.</I> The debenture interest rate provided for in § 206.146 shall be used.
</P>
<P>(B) <I>Maturity of debentures.</I> Debentures shall mature 20 years from the date of issue.
</P>
<P>(C) <I>Registration of debentures.</I> Debentures shall be registered as to principal and interest.
</P>
<P>(D) <I>Form and amounts of debentures.</I> Debentures issued under this part shall be in such form and amounts; and shall be subject to such terms and conditions; and shall include such provisions for redemption, if any, as may be prescribed by the Commissioner, with the approval of the Secretary of the Treasury; and may be in book entry or certificated registered form, or such other form as the Commissioner by regulation may prescribe.
</P>
<P>(E) <I>Redemption of debentures.</I> Debentures shall, at the option of the Commissioner and with the approval of the Secretary of the Treasury, be redeemable at par plus accrued interest on any semiannual interest payment date on three months' notice of redemption given in such manner as the Commissioner shall prescribe. The debenture interest on the debentures called for redemption shall cease on the semiannual interest payment date designated in the call notice. The Commissioner may include with the notice of redemption an offer to purchase the debentures at par plus accrued interest at any time during the period between the notice of redemption and the redemption date. If the debentures are purchased by the Commissioner after such call and prior to the named redemption date, the debenture interest shall cease on the date of purchase.
</P>
<P>(F) <I>Issue date of debentures.</I> The issue date of debentures is determined by the due and payable date as defined in paragraph (d)(1) of this section.
</P>
<P>(G) <I>Cash adjustment.</I> Any difference of less than $50 between the amount of debentures to be issued to the mortgagee and the total amount of the mortgagee's claim, as approved by the Commissioner, may be adjusted by the issuance of a check in payment thereof;
</P>
<P>(xi) Any amount of incentive paid by the mortgagee in accordance with § 206.125(f)(1)(ii) or § 206.125(g)(4);
</P>
<P>(xii) Costs of any appraisal under §§ 206.125 or 206.127, provided that the property was appraised after the mortgage became due and payable and that the mortgagee is not otherwise reimbursed for such costs;
</P>
<P>(xiii) Reasonable payments made by the mortgagee for:
</P>
<P>(A) Preservation and maintenance of the property;
</P>
<P>(B) Repairs necessary to meet the objectives of the property standards required for mortgages insured by the Commissioner, those required by local law, and such additional repairs as may be specifically approved in advance by the Commissioner; and
</P>
<P>(C) Expenses in connection with the sale of the property including a sales commission at the rate customarily paid in the community and, if the sale to the buyer involves a mortgage insured by the Commissioner or guaranteed by the Secretary of Veterans Affairs, a discount at a rate not to exceed the maximum allowable by the Commissioner, as of the date of execution of the discounted loan. Closing costs shall not exceed the greater of: 11 percent of the sales price; or a fixed dollar amount as determined by the Commissioner through <E T="04">Federal Register</E> notice; and
</P>
<P>(xiv) A certification that the property is undamaged in accordance with § 206.143.
</P>
<P>(4) There shall be deducted from the amount computed in paragraph (d)(2)(i) of this section:
</P>
<P>(i) The items listed in § 206.145; and
</P>
<P>(ii) Any adjustment for damage or neglect to the property pursuant to §§ 206.140, 206.141, and 206.142.
</P>
<P>(e) <I>Amount of payment—assigned mortgages.</I> This paragraph describes the amount of payment if the mortgagee assigns a mortgage to the Commissioner under § 206.107(a)(1) or § 206.121(b).
</P>
<P>(1) When a mortgagee assigns a mortgage which is eligible for assignment under § 206.107(a)(1), the amount of payment shall be computed by subtracting from the outstanding loan balance on the date of assignment all cash retained by the mortgagee, including amounts held or deposited for the account of the borrower or to which it is entitled under the mortgage transaction that have not been applied in reduction of the principal mortgage indebtedness, and any adjustments for damage or neglect to the property pursuant to §§ 206.140, 206.141 and 206.142.
</P>
<P>(2) The claim shall also include:
</P>
<P>(i) Reimbursement for such costs and attorney's fees as the Commissioner finds were properly incurred in connection with the assignment of the mortgage to the Commissioner; and
</P>
<P>(ii) An amount equivalent to the interest allowance which will have been earned from the date the mortgage was assigned to the Commissioner to the date the claim is paid, if the claim had been paid in debentures, except that if the mortgagee fails to meet any of the requirements of § 206.127(c), or § 206.131 if applicable, within the specified time and in a manner satisfactory to the Commissioner (or within such further time as the Commissioner may approve in writing), the interest allowance in the payment of the claim shall be computed only to the date on which the particular required action should have been taken or to which it was extended. The provisions of paragraphs (d)(3)(x)(A)-(G) of this section pertaining to debentures are applicable except that the issue date of the debentures shall be the date the mortgage was assigned to the Commissioner.
</P>
<P>(3) When a mortgagee assigns a mortgage under § 206.121(b) after demand by the Commissioner, the mortgagee will not receive the entire claim payment as contained in paragraphs (e)(1) and (2) of this section. The amount of the claim shall be computed by totaling the payments made by the mortgagee to the borrower or for the benefit of the borrower, and subtracting from the total the cash retained by the mortgagee, including amounts held or deposited for the account of the borrower or to which it is entitled under the mortgage transaction that have not been applied in reduction of the principal mortgage indebtedness, and any adjustments for damage or neglect to the property pursuant to §§ 206.141 and 206.142. The claim shall also be reduced by an amount determined by the Commissioner to reimburse the Commissioner for administrative expenses incurred in assuming the mortgagee's responsibility under the mortgage, which may include expenses for staff time. If more than one mortgage is assigned to the Commissioner, the administrative expenses incurred for all the mortgages assigned shall be allocated among the mortgages as determined by the Commissioner. The claim shall not include accrued interest whether or not it has been included in the loan balance.
</P>
<P>(f) <I>Amount of payment-borrower sells the property.</I> This paragraph describes the amount of payment if the property is sold in accordance with § 206.125(c) to one other than the mortgagee for less than the outstanding loan balance, and the mortgagee releases the mortgage to facilitate the sale.
</P>
<P>(1)(i) <I>For HECMs assigned Case Numbers prior to September 19, 2017,</I> the amount of the claim shall be computed by totaling the outstanding loan balance and any accrued interest and servicing fees which have not been added to the outstanding loan balance on the date the deed is recorded, and an allowance for items set forth in paragraphs (d)(3)(i)-(vii) and (d)(3)(xii) of this section, and subtracting from the total the amount for which the property was sold.
</P>
<P>(ii) <I>For HECMs assigned Case Numbers on or after September 19, 2017, the following provisions apply:</I>
</P>
<P>(A) <I>When the loan is not in due and payable status.</I> The amount of the claim shall be computed by totaling the outstanding loan balance and any accrued interest and servicing fees which have not been added to the outstanding loan balance on the date the deed is recorded, and an allowance for items set forth in paragraph (d)(3)(xiii)(C) of this section, and subtracting from the total the amount for which the property was sold.
</P>
<P>(B) <I>When the loan is in due and payable status.</I> The amount of the claim shall be computed by totaling the outstanding loan balance and any accrued interest and servicing fees which have not been added to the outstanding loan balance as of the due date, the items set forth in paragraph (d)(3) of this section, and subtracting from the total the amount for which the property was sold.
</P>
<P>(2)(i) <I>For HECMs assigned Case Numbers prior to September 19, 2017,</I> the claim shall also include an amount equivalent to the interest allowance which would have been earned from the date the deed is recorded to the date when payment of the claim is made, if the claim had been paid in debentures, and in a manner satisfactory to the Commissioner; the interest allowance in such cash payment shall be computed only to the date on which the particular action should have been taken or to which it was extended. The provisions of paragraphs (d)(3)(x)(A)-(G) of this section pertaining to debentures apply except that the issue date of the debentures is the date the deed is recorded instead of the due date.
</P>
<P>(ii) <I>For HECMs assigned Case Numbers on or after September 19, 2017, the following provisions apply:</I>
</P>
<P>(A) <I>When the loan is not in due and payable status.</I> The claim shall also include an amount equivalent to the interest allowance which would have been earned from the date the deed is recorded to the date when payment of the claim is made, if the claim had been paid in debentures, and in a manner satisfactory to the Commissioner; the interest allowance in such cash payment shall be computed only to the date on which the particular action should have been taken or to which it was extended. The provisions of paragraphs (d)(3)(x)(A)-(G) of this section pertaining to debentures apply except that the issue date of the debentures shall be the date the deed is recorded.
</P>
<P>(B) <I>When the loan is in due and payable status.</I> The claim shall also include an amount equivalent to the interest allowance which would have been earned from the due and payable date to the date when payment of the claim is made, if the claim had been paid in debentures, except that when the mortgagee fails to meet any of the applicable requirements of §§ 206.125 and 206.127 within the specified time determined by the due and payable date, as defined in paragraph (d)(1) of this section (or within such further time as the Commissioner may approve in writing), and in a manner satisfactory to the Commissioner; the interest allowance in such cash payment shall be computed only to the date on which the particular action should have been taken or to which it was extended. The provisions of paragraphs (d)(3)(x)(A)-(G) of this section pertaining to debentures apply.




</P>
</DIV8>


<DIV8 N="§ 206.130" NODE="24:2.1.1.2.6.3.141.18" TYPE="SECTION">
<HEAD>§ 206.130   Amount of payment—HECM Single Family Sale assignments.</HEAD>
<P>(a) <I>Time of payment.</I> Upon an assignment of a mortgage <I>insured under this part that is acceptable to the Commissioner, made pursuant to a HECM Single Family Sale and</I> in accordance with § 291.609 or § 291.619 of this chapter, the Commissioner shall pay to the mortgagee the unpaid principal balance of the loan at the time of assignment and an amount calculated in accordance with the Participating Servicer Agreement (PSA), as defined in § 291.601 of this chapter.
</P>
<P>(b) <I>Acceptability criteria.</I> For assignment, the mortgagee must determine and certify the mortgage satisfies the Commissioner's acceptability criteria for the Single Family Sale.
</P>
<P>(c) <I>Reduction in claim.</I> The mortgagee's claim for insurance will be reduced for failure to take the required actions within the specified schedule of dates for the Single Family Sale, as specified in the PSA.
</P>
<P>(d) <I>Curtailment of debenture interest.</I> HUD will curtail debenture interest at the thirtieth (30th) day following the earliest anticipated claim submission date, as identified on the schedule of dates in the PSA, if:
</P>
<P>(1) The mortgagee's claim for insurance is not submitted to HUD; or
</P>
<P>(2) The claim for insurance is in a suspended status.
</P>
<P>(e) <I>Debenture Interest.</I> For purposes of this section, <I>Debenture Interest</I> means interest at the debenture rate as computed by HUD in accordance with its rules and requirements for such calculations, on the unpaid principal balance as of the claim payment date, <I>plus</I> the approved reimbursable expenses identified in the PSA, <I>minus</I> any amount of such interest or expenses that would have been curtailed or for which the Participating Servicer would have been denied reimbursement pursuant to HUD's requirements for servicing due and payable notes and processing claims, including § 206.129(d)(3)(x), had the Participating Servicer foreclosed or the borrower sold the property in connection with an insurance claim.
</P>
<P>(f) <I>Rejection of the claim.</I> HUD may reject the mortgagee's claim for insurance and exclude the related mortgage from settlement if, within the thirty (30)-day period prior to the claim's submission cut-off date, as identified on the schedule of dates in the PSA:
</P>
<P>(1) An insurance claim is not submitted; or
</P>
<P>(2) Any suspended insurance claim is not yet resolved.
</P>
<CITA TYPE="N">[89 FR 99716, Dec. 11, 2024]




</CITA>
</DIV8>

</DIV7>


<DIV7 N="142" NODE="24:2.1.1.2.6.3.142" TYPE="SUBJGRP">
<HEAD>Condominiums</HEAD>


<DIV8 N="§ 206.131" NODE="24:2.1.1.2.6.3.142.19" TYPE="SECTION">
<HEAD>§ 206.131   Contract rights and obligations for mortgages on individual dwelling units in a condominium.</HEAD>
<P>(a) <I>Additional requirements.</I> The requirements of this subpart shall be applicable to mortgages on individual dwelling units in a condominium, except as modified by this section.
</P>
<P>(b) <I>References.</I> The term <I>property</I> as used in this subpart shall be construed to include the individual dwelling unit and the undivided interest in the common areas and facilities as may be designated.
</P>
<P>(c) <I>Assignment of the mortgage.</I> If the mortgagee assigns the mortgage on the individual dwelling unit to the Commissioner, the mortgagee shall certify:
</P>
<P>(1) To any changes in the plan of apartment ownership including the administration of the property;
</P>
<P>(2) That as of the date the assignment is filed for record, the family unit is assessed and subject to assessment for taxes pertaining only to that unit; and
</P>
<P>(3) To the condition of the property as of the date the assignment is filed for record. For units in projects with mortgages insured under 24 CFR part 234, § 234.275 of this chapter concerning the certification of condition applies.
</P>
<P>(d) <I>Condition of the multifamily structure.</I> In projects with mortgages insured under 24 CFR part 234, the provisions of § 234.270(a) and (b) of this chapter concerning the condition of the multifamily structure in which the property is located shall be applicable to mortgages insured under this part which are assigned to the Commissioner.
</P>
<CITA TYPE="N">[82 FR 7117, Jan. 19, 2017, as amended at 84 FR 41877, Aug. 15, 2019]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="143" NODE="24:2.1.1.2.6.3.143" TYPE="SUBJGRP">
<HEAD>Termination of Insurance Contract</HEAD>


<DIV8 N="§ 206.133" NODE="24:2.1.1.2.6.3.143.20" TYPE="SECTION">
<HEAD>§ 206.133   Termination of insurance contract.</HEAD>
<P>(a) <I>Payment of the mortgage.</I> The contract of insurance shall be terminated if the mortgage is paid in full.
</P>
<P>(b) <I>Acquisition of title.</I> (1) If the mortgagee or a party other than the mortgagee acquires title at a foreclosure sale, or the mortgagee acquires title by a deed in lieu of foreclosure, and the mortgagee notifies the Commissioner that a claim for the payment of the insurance benefits will not be presented, the contract of insurance shall be terminated.
</P>
<P>(2) For HECMs with Case Numbers assigned on or after September 19, 2017, if the mortgagee or a party other than the mortgagee acquires title at a foreclosure sale or the mortgagee acquires title by a deed in lieu of foreclosure and a claim for the payment of the insurance benefits will be presented, the contract of insurance shall be terminated as of claim payment.
</P>
<P>(c) <I>Mortgagee fails to make payments.</I> If the mortgagee fails to make the payments to the borrower as required under the mortgage, and does not reimburse the Commissioner or assign the mortgage to the Commissioner within 30 days from the demand by the Commissioner for reimbursement or assignment, the contract of insurance shall automatically terminate. The Commissioner may later reinstate the contract of insurance, which shall continue in force as if no termination had occurred, upon reimbursement with interest as provided in § 206.121. Upon reinstatement, the mortgagee shall be liable for all MIP which would have been due if no termination had occurred, including late charge and interest as provided in § 206.113.
</P>
<P>(d) <I>Notice of termination.</I> The mortgagee shall give written notice to the Commissioner, or other notice acceptable to the Commissioner, within 15 days of the occurrence of an event under paragraphs (a) and (b) of this section. No contract of insurance shall be terminated under paragraphs (a) or (b) of this section unless such notice is given.
</P>
<P>(e) <I>Voluntary termination.</I> The mortgagor and the mortgagee may jointly request the Commissioner to approve the voluntary termination of the mortgage insurance contract. Prior to approval, the Commissioner shall make certain that the borrower is aware of the consequences which could arise out of the voluntary termination of the contract of insurance. The mortgagee shall cancel the insurance endorsement on the Mortgage Insurance Certificate or Note upon receipt of notice from the Commissioner that the contract of insurance is terminated. Notwithstanding any provision in a mortgage instrument, there shall be no voluntary termination charge due the Commissioner on account of the voluntary termination of any mortgage insurance contract where the request for termination is received by the Commissioner.
</P>
<P>(f) <I>Effect of termination.</I> When the insurance contract is terminated, all rights of the mortgagee shall terminate, including the right to file a claim for insurance benefits. All obligations of the Commissioner shall also cease immediately.


</P>
</DIV8>

</DIV7>


<DIV7 N="144" NODE="24:2.1.1.2.6.3.144" TYPE="SUBJGRP">
<HEAD>Additional Requirements</HEAD>


<DIV8 N="§ 206.134" NODE="24:2.1.1.2.6.3.144.21" TYPE="SECTION">
<HEAD>§ 206.134   Partial release, addition or substitution of security.</HEAD>
<P>(a) A mortgagee shall not release the security or any part thereof, while the mortgage is insured, without the prior consent of the Commissioner.
</P>
<P>(b) A mortgagee may, with the prior consent of the Commissioner, accept an addition to, or substitution of, security for the purpose of removing the dwelling to a new lot or replacing the dwelling with a similar or like kind on the existing lot under the following conditions:
</P>
<P>(1) The mortgagee obtains a good and valid first lien on the property to which the dwelling is removed or the existing lot upon which the dwelling is rebuilt;
</P>
<P>(2) All damages to the structure are repaired or all rebuilding of the structure is completed without cost to FHA; and
</P>
<P>(3) The property to which the dwelling is removed or rebuilt is in an area known to be reasonably free from natural hazards or, if in a flood zone, the borrower will insure or reinsure under the National Flood Insurance Program or obtain equivalent private flood insurance coverage, as defined in § 203.16a of this chapter.
</P>
<P>(c) A mortgagee may, without the prior consent of the Commissioner, accept an addition to, or substitution of, security for the purpose of removing the dwelling to a new lot under the following conditions:
</P>
<P>(1) The dwelling has survived an earthquake or other disaster with little damage, but continued location on the property might be hazardous;
</P>
<P>(2) The conditions stated in paragraph (b) of this section exist; and
</P>
<P>(3) Immediately following the emergency removal the mortgagee notifies the Commissioner of the reasons for removal.
</P>
<CITA TYPE="N">[82 FR 7117, Jan. 19, 2017, as amended at 87 FR 70744, Nov. 21, 2022]


</CITA>
</DIV8>


<DIV8 N="§ 206.135" NODE="24:2.1.1.2.6.3.144.22" TYPE="SECTION">
<HEAD>§ 206.135   Application for insurance benefits and fiscal data.</HEAD>
<P>(a) On the date the application for assignment is filed, the mortgagee shall submit to the Commissioner:
</P>
<P>(1) <I>Credit and security instrument.</I> The original credit and security instruments assigned without recourse or warranty, except that no act or omission of the mortgagee shall have impaired the validity and priority of the mortgage.
</P>
<P>(2) <I>Proposed assignment instrument.</I> A copy of the proposed assignment of mortgage.
</P>
<P>(3) <I>Hazard and flood insurance.</I> All hazard and flood insurance (if applicable) policies held in connection with the mortgaged property, together with a copy of the mortgagee's notification to the carrier authorizing the amendment of the loss payable clause substituting the Commissioner as the mortgagee.
</P>
<P>(4) <I>Rights and interests.</I> An assignment of all rights and interests arising under the mortgage, and all claims of the mortgagee against the borrower or others arising out of the mortgage transaction.
</P>
<P>(5) <I>Property.</I> All property of the borrower held by the mortgagee or to which it is entitled (other than the cash items which are to be retained by the mortgagee).
</P>
<P>(6) <I>Records and accounts.</I> All records, ledger cards, documents, books, papers and accounts relating to the mortgage transaction.
</P>
<P>(7) <I>Additional information.</I> Any additional information or data which the Commissioner may require.
</P>
<P>(8) <I>Title evidence.</I> All title evidence held by the mortgagee. It need not be extended to include the recordation of the assignment. The title insurance policy shall be endorsed from the mortgage insurance company up to the point of assignment. At the point of assignment, the Commissioner shall be named insured under such policy.
</P>
<P>(b) All documents required in paragraph (a) of this section must be submitted and approved before a claim for assignment may be submitted.
</P>
<P>(c) <I>Recorded assignment instrument.</I> The original of the recorded assignment of mortgage shall be forwarded to the Commissioner as soon as received by the mortgagee, but in no case shall it be longer than 12 months after recordation. If the original of the assignment is not available, a copy shall be furnished and the original forwarded as soon as possible.


</P>
</DIV8>


<DIV8 N="§ 206.136" NODE="24:2.1.1.2.6.3.144.23" TYPE="SECTION">
<HEAD>§ 206.136   Conditions for assignment.</HEAD>
<P>(a) In order for a HECM to be eligible for assignment, the following must be met:
</P>
<P>(1) <I>Priority of mortgage to liens.</I> The mortgage is prior to all mechanics' and materialmen's liens, regardless of when such liens attach, and prior to all liens and encumbrances, or defects which may arise based on any act or omission by the mortgagee except such liens or other matters as may have been approved by the Commissioner.
</P>
<P>(2) <I>Amount due.</I> The amount stated in the instrument of assignment is actually due and owing under the mortgage.
</P>
<P>(3) <I>Offsets or counterclaims.</I> There are no offsets or counterclaims thereto and the mortgagee has a good right to assign.
</P>
<P>(b) The mortgagee shall certify that the conditions of paragraph (a) have been met.


</P>
</DIV8>


<DIV8 N="§ 206.137" NODE="24:2.1.1.2.6.3.144.24" TYPE="SECTION">
<HEAD>§ 206.137   Effect of noncompliance with regulations.</HEAD>
<P>If, for any reason, the mortgagee fails to comply with the regulations in this subpart, the Commissioner may hold processing of the application for insurance benefits in abeyance for a reasonable time in order to permit the mortgagee to comply. In the alternative to holding processing in abeyance, the Commissioner may reconvey title to the property or reassign the mortgage to the mortgagee, in which event the application for insurance benefits shall be considered as cancelled and the mortgagee shall refund the insurance benefits to the Commissioner as well as other funds required by § 206.138. The mortgagee may reapply for insurance benefits at a subsequent date; provided, however, that the mortgagee may not be reimbursed for any expenses incurred in connection with the property after it has been reconveyed or the mortgage reassigned by the Commissioner, or paid any debenture interest accrued after the date of initial conveyance, whichever is earlier, and there will be deducted from the insurance benefits any reduction in the Commissioner's estimate of the value of the property occurring from the time of reconveyance or mortgage reassignment to the time of reapplication.


</P>
</DIV8>


<DIV8 N="§ 206.138" NODE="24:2.1.1.2.6.3.144.25" TYPE="SECTION">
<HEAD>§ 206.138   Mortgagee's liability for certain expenditures.</HEAD>
<P>Where the Commissioner accepts an assignment, acquires a property after accepting an assignment of a mortgage, or otherwise pays a claim for insurance benefits and thereafter it becomes necessary for the Commissioner to either reconvey the property or reassign the mortgage to the mortgagee due to the mortgagee's noncompliance with these regulations, the mortgagee shall reimburse the Commissioner for all expenses incurred in connection with such acquisition and reconveyance or reassignment. The reimbursement shall include interest on the amount of insurance benefits refunded by the mortgagee from the date the insurance benefits were paid to the date of refund at an interest rate set in conformity with the Treasury Fiscal Requirements Manual, and the Commissioner's cost of holding the property or servicing the mortgage, accruing on a daily basis, from the date of assignment or claim payment to the date of reconveyance or reassignment. These costs are based on the Commissioner's estimate of the taxes, maintenance and operating expenses of the property, and administrative expenses. Appropriate adjustments shall be made by the Commissioner on account of any income received from the property.


</P>
</DIV8>


<DIV8 N="§ 206.140" NODE="24:2.1.1.2.6.3.144.26" TYPE="SECTION">
<HEAD>§ 206.140   Inspection and preservation of properties.</HEAD>
<P>The mortgagee, upon learning that a property subject to a mortgage insured under this part is vacant or abandoned, shall be responsible for the inspection of such property at least monthly, if the loan is in a due and payable status. When a mortgage is in due and payable status and efforts to reach the borrower or applicable party by telephone within that period have been unsuccessful, the mortgagee shall be responsible for a visual inspection of the security property to determine whether the property is vacant. The mortgagee shall take reasonable action to protect and preserve such security property when it is determined or should have been determined to be vacant or abandoned until assigned to the Commissioner or an application for insurance benefits is filed, if such action does not constitute an illegal trespass. “Reasonable action” includes the commencement of foreclosure within the time required by § 206.125.


</P>
</DIV8>


<DIV8 N="§ 206.141" NODE="24:2.1.1.2.6.3.144.27" TYPE="SECTION">
<HEAD>§ 206.141   Property condition.</HEAD>
<P>(a) <I>Condition at time of transfer.</I> When the mortgage is assigned to the Commissioner or the property is sold by the mortgagee, the property shall be undamaged by fire, earthquake, flood, or tornado, except as set forth in this subpart.
</P>
<P>(b) <I>Damage to property by waste.</I> The mortgagee shall not be liable for damage to the property by waste committed by the borrower, its heirs, successors or assigns in connection with mortgage insurance claims.
</P>
<P>(c) <I>Mortgagee responsibility.</I> The mortgagee shall be responsible for:
</P>
<P>(1) Damage by fire, flood, earthquake, hurricane, or tornado; and
</P>
<P>(2) Damage to or destruction of security properties on which the loans are in default and which properties are vacant or abandoned, when such damage or destruction is due to the mortgagee's failure to take reasonable action to inspect, protect and preserve such properties as required by § 206.140.
</P>
<P>(d) <I>Limitation.</I> The mortgagee's responsibility for property damage shall not exceed the amount of its insurance claim as to a particular property.


</P>
</DIV8>


<DIV8 N="§ 206.142" NODE="24:2.1.1.2.6.3.144.28" TYPE="SECTION">
<HEAD>§ 206.142   Adjustment for damage or neglect.</HEAD>
<P>(a) Except as provided for in paragraphs (a)(1) and (a)(2) of this section: if the property has been damaged by fire, flood, earthquake, hurricane, or tornado, the damage must be repaired before assignment of the mortgage to the Commissioner; if the property has suffered damage because of the mortgagee's failure to take action as required by § 206.140, the damage must be repaired before the mortgagee sells the property.
</P>
<P>(1) If the prior approval of the Commissioner is obtained, there will be deducted from the insurance benefits the Commissioner's estimate of the cost of repairing the damage or any insurance recovery received by the mortgagee, whichever is greater.
</P>
<P>(2) If the property has been damaged by fire and was not covered by fire insurance at the time of the damage, or the amount of insurance coverage was inadequate to repair fully the damage, only the amount of insurance recovery received by the mortgagee, if any, will be deducted from the insurance benefits, provided the mortgagee certifies, at the time that a claim is filed for insurance benefits, that:
</P>
<P>(i) At the time the mortgage was insured, the property was covered by fire insurance in an amount at least equal to the lesser of 100 percent of the insurable value of the improvements, or the principal loan balance of the mortgage;
</P>
<P>(ii) The insurer later cancelled this coverage or refused to renew it for reasons other than nonpayment of premium;
</P>
<P>(iii) The mortgagee made diligent though unsuccessful efforts within 30 days of any cancellation or non-renewal of hazard insurance, and at least annually thereafter, to secure other coverage or coverage under a FAIR Plan, in an amount described in paragraph (a)(2)(i) of this section, or if coverage to such an extent was unavailable at a reasonable rate, the greatest extent of coverage that was available at a reasonable rate;
</P>
<P>(iv) The extent of coverage obtained by the mortgagee in accordance with paragraph (a)(2)(iii) of this section was the greatest available at a reasonable rate, or if the mortgagee was unable to obtain insurance, none was available at a reasonable rate; and
</P>
<P>(v) The mortgagee took the actions required by § 206.140.
</P>
<P>(b) If the property has been damaged during the time of the mortgagee's possession by events other than fire, flood, earthquake, hurricane, or tornado, or if it was damaged notwithstanding reasonable action by the mortgagee as required by § 206.140, the mortgagee must provide notice of such damage to the Commissioner and may not sell the property until directed to do so by the Commissioner. The Commissioner will either:
</P>
<P>(1) Allow the mortgagee to sell the property damaged; or
</P>
<P>(2) Require the mortgagee to repair the damage before sale, and the Commissioner will reimburse the mortgagee for reasonable payments not in excess of the Commissioner's estimate of the cost of repair, less any insurance recovery.


</P>
</DIV8>


<DIV8 N="§ 206.143" NODE="24:2.1.1.2.6.3.144.29" TYPE="SECTION">
<HEAD>§ 206.143   Certificate of property condition.</HEAD>
<P>(a) The mortgagee shall certify that as of the date the mortgagee sold the property in accordance with § 206.125(g) or assignment of the mortgage to the Commissioner, the property was:
</P>
<P>(1) Undamaged by fire, flood, earthquake, hurricane or tornado; and
</P>
<P>(2) Undamaged due to failure of the mortgagee to take action as required by § 206.140; and
</P>
<P>(3) Undamaged while the property was in the possession of the mortgagee.
</P>
<P>(b) In the absence of evidence to the contrary, the mortgagee's certificate or description of the damage shall be accepted by the Commissioner as establishing the condition of the property, as of the date of mortgagee sale or assignment of the mortgage to the Commissioner.


</P>
</DIV8>


<DIV8 N="§ 206.144" NODE="24:2.1.1.2.6.3.144.30" TYPE="SECTION">
<HEAD>§ 206.144   Final payment.</HEAD>
<P>The mortgagee may not file any supplemental claims to its mortgage insurance claim after six months from settlement by the Commissioner of the claim payment except where the Commissioner determines it appropriate and expressly authorizes an extension of time for supplemental claim filings.


</P>
</DIV8>


<DIV8 N="§ 206.145" NODE="24:2.1.1.2.6.3.144.31" TYPE="SECTION">
<HEAD>§ 206.145   Items deducted from payment.</HEAD>
<P>(a) There shall be deducted from the total of the added items in § 206.129 the following cash items:
</P>
<P>(1) All amounts received by the mortgagee on account of the mortgage after the institution of foreclosure proceedings or the acquisition of the property or otherwise after due and payable.
</P>
<P>(2) All amounts received by the mortgagee from any source relating to the property on account of rent or other income after deducting reasonable expenses incurred in handling the property.
</P>
<P>(3) All cash retained by the mortgagee including amounts held or deposited for the account of the borrower or to which it is entitled under the mortgage transaction that have not been applied in reduction of the outstanding loan balance.
</P>
<P>(4) With regard to claims filed pursuant to successful short sales, all amounts received by the mortgagee relating to the sale of the property.
</P>
<P>(b) [Reserved]


</P>
</DIV8>


<DIV8 N="§ 206.146" NODE="24:2.1.1.2.6.3.144.32" TYPE="SECTION">
<HEAD>§ 206.146   Debenture interest rate.</HEAD>
<P>(a) Debentures shall bear interest from the date of issue, payable semiannually on the first day of January and the first day of July of each year at the rate in effect as of the day the commitment was issued, or as of the date the mortgage was endorsed for insurance, whichever rate is higher. For applications involving mortgages originated under the single family Direct Endorsement program, debentures shall bear interest from the date of issue, payable semiannually on the first day of January and on the first day of July of each year at the rate in effect as of the date the mortgage was endorsed for insurance;
</P>
<P>(b) For mortgages endorsed for insurance after January 23, 2004, if an insurance claim is paid in cash, the debenture interest rate for purposes of calculating such a claim shall be the monthly average yield, for the month in which the default on the mortgage occurred, on United States Treasury Securities adjusted to a constant maturity of 10 years.


</P>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="D" NODE="24:2.1.1.2.6.4" TYPE="SUBPART">
<HEAD>Subpart D—Servicing Responsibilities</HEAD>


<DIV8 N="§ 206.201" NODE="24:2.1.1.2.6.4.145.1" TYPE="SECTION">
<HEAD>§ 206.201   Mortgage servicing generally; sanctions.</HEAD>
<P>(a) <I>General.</I> This subpart identifies servicing practices that the Commissioner considers acceptable mortgage servicing practices of lending institutions servicing mortgages insured by the Commissioner. Failure to comply with this subpart shall not be a basis for denial of the insurance benefits, but a pattern of refusal or failure to comply will be cause for withdrawal of FHA mortgagee approval.
</P>
<P>(b) <I>Importance of timely payments.</I> The paramount servicing responsibility is to make timely payments in full as required by the mortgage. Any failure of a mortgagee to make all payments required by the mortgage in a timely manner will be grounds for administrative sanctions authorized by regulations, including 2 CFR part 2424 (Debarment, Suspension, and Limited Denial of Participation), and 24 CFR part 25 (Mortgagee Review Board).
</P>
<P>(c) <I>Responsibility for servicing.</I> (1) Servicing of insured mortgages must be performed by a mortgagee that is approved by FHA to service insured mortgages. The servicer must fully discharge the servicing responsibilities of the mortgagee as outlined in this part. The mortgagee shall remain fully responsible to the Commissioner for proper servicing, and the actions of its servicer shall be considered to be the actions of the mortgagee. The servicer also shall be fully responsible to the Commissioner for its actions as a servicer.
</P>
<P>(2) Whenever servicing of any mortgage is transferred from one mortgagee or servicer to another, notice of the transfer of service shall be delivered:
</P>
<P>(i) By the transferor mortgagee or servicer to the borrower. The notification shall be delivered not less than 15 days before the effective date of the transfer and shall contain the information required in 12 CFR 1024.33(b)(4); and
</P>
<P>(ii) By the transferee mortgagee or servicer:
</P>
<P>(A) <I>To the borrower.</I> The notification shall be delivered not less than 15 days before the effective date of the transfer and shall contain the information required in 12 CFR 1024.33(b)(4); and
</P>
<P>(B) <I>To the Commissioner.</I> This notification shall be delivered within 15 days of the transfer, in a format prescribed by the Commissioner.


</P>
</DIV8>


<DIV8 N="§ 206.203" NODE="24:2.1.1.2.6.4.145.2" TYPE="SECTION">
<HEAD>§ 206.203   Providing information<I>.</I></HEAD>
<P>(a) <I>Statements of account activity.</I> The mortgagee shall provide to the borrower a monthly statement regarding the activity of the mortgage for each month, as well as for the calendar year. The statement shall summarize the total principal amount which has been paid to the borrower under the mortgage during that calendar year, the MIP paid to the Commissioner and charged to the borrower, the total amount of deferred interest added to the outstanding loan balance, the total outstanding loan balance, and the current principal limit. The mortgagee shall include an accounting of all payments for property charges. The statement shall be provided to the borrower monthly until the mortgage is paid in full by the borrower. The mortgagee shall provide the borrower with a new payment plan every time it recalculates monthly payments or the payment option is changed. The statements shall be in a format acceptable to the Commissioner.
</P>
<P>(b) [Reserved]
</P>
<P>(c) <I>Servicing—Providing information.</I> (1) Mortgagees shall provide loan information to borrowers and arrange for individual loan consultation on request. The mortgagee must establish written procedures and controls to assure prompt responses to inquiries. One or more of the following means of making information readily available to borrowers is required:
</P>
<P>(i) A servicing office staffed with competent personnel located within 200 miles of the property, capable of providing timely responses to requests for information. Complete records need not be maintained in such an office if the staff is able to secure needed information and pass it on to the borrower.
</P>
<P>(ii) Toll-free telephone service at an office capable of providing needed information.
</P>
<P>(2)(i) All borrowers must be informed of and reminded annually of the system available for obtaining answers to loan inquiries and the office from which needed information may be obtained. Toll-free telephone service need not be provided to a borrower other than at the office designated to serve the borrower nor other than from the immediate vicinity of the security property.
</P>
<P>(ii) The mortgagee shall provide the borrower with the telephone number where the borrower may speak to employee(s) specifically designated by the mortgagee or its servicer to address inquiries concerning mortgages insured under this part. Such information shall be provided annually and whenever the servicer or the designated employee (or employee group) changes.
</P>
<P>(3) Mortgagees must respond to FHA requests for information concerning individual accounts.


</P>
</DIV8>


<DIV8 N="§ 206.205" NODE="24:2.1.1.2.6.4.145.3" TYPE="SECTION">
<HEAD>§ 206.205   Property charges<I>.</I></HEAD>
<P>(a) <I>General.</I> (1) The borrower shall be responsible for the payment of the following property charges before or on the due date: ground rents, condominium fees, planned unit development fees, and homeowners' association fees.
</P>
<P>(2) Payment of the following property charges are obligations of the borrower and shall be made through the LESA, by the borrower, or by the mortgagee, in accordance with paragraphs (b) through (e) of this section on or before the due date: property taxes, including any special assessments levied by local or State law, hazard insurance premiums, and applicable flood insurance premiums.
</P>
<P>(b) <I>Method of property charge payment</I>—(1) <I>LESA required.</I> For fixed or adjustable interest rate HECMs, based on the results of the Financial Assessment, the mortgagee may require the borrower to have a Fully-Funded LESA for the payment of property charges identified in paragraph (a)(2) of this section. For adjustable interest rate HECMs, based on the results of the Financial Assessment, the mortgagee may require the borrower to have a Partially-Funded LESA for the payment of property charges identified in paragraph (a)(2) of this section.
</P>
<P>(2) <I>LESA not required.</I> (i) If, based on the results of the Financial Assessment, the mortgagee does not require the borrower to have a LESA, the borrower shall elect one of the following at closing, whereby an election of the option in paragraph (b)(2)(i)(B) or (C) of this section cannot be cancelled by the borrower:
</P>
<P>(A) Borrower is responsible for the independent payment of all property charges;
</P>
<P>(B) Borrower elects to have a Fully-Funded LESA for the payment of property charges identified in paragraph (a)(2) of this section; or
</P>
<P>(C) For adjustable interest rate HECMs only, borrower elects to have the mortgagee pay property charges listed in paragraph (a)(2) of this section which would have otherwise been required to be paid by the borrower, in accordance with paragraph (d) of this section.
</P>
<P>(ii) Through <E T="04">Federal Register</E> notice, the Commissioner may establish an incentive for voluntarily electing a LESA under paragraph (b)(2)(i)(B) of this section.
</P>
<P>(c) <I>Life Expectancy Set Aside</I>—(1) <I>General.</I> (i) For a Fully-Funded LESA, the mortgagee shall:
</P>
<P>(A) Make payments for property charges identified in paragraph (a)(2) of this section before bills become delinquent and establish controls to ensure that the information needed to pay such bills is obtained on a timely basis;
</P>
<P>(B) Make early payments to take advantage of a discount whenever it is to the borrower's advantage;
</P>
<P>(C) Not charge the borrower penalties for late payments for property charges unless it can be shown that the penalty was the direct result of the borrower's error or omission;
</P>
<P>(D) Ensure that LESA funds are not held in an escrow account;
</P>
<P>(E) Add payments for property charges to the outstanding loan balance when the mortgagee disburses funds to the taxing authority or insurance carrier; and
</P>
<P>(F) Provide written notification to the borrower and FHA within 30 days of the mortgagee receiving notification that a property charge payment is outstanding when there are no funds or insufficient funds remaining in the LESA, and recommend that the borrower speak with a HUD-Approved Housing Counselor.
</P>
<P>(ii) For a Partially-Funded LESA, the mortgagee shall:
</P>
<P>(A) Ensure that LESA funds are disbursed to the borrower semi-annually;
</P>
<P>(B) Establish controls to ensure the taxing authority, insurance carrier, or both, received the borrower's payment;
</P>
<P>(C) Ensure the LESA funds are not held in an escrow account;
</P>
<P>(D) Add payments disbursed to the borrower for the payment of property charges identified in paragraph (a)(2) to the outstanding loan balance when the mortgagee disburses the funds; and
</P>
<P>(E) Provide written notification to the borrower and FHA within 30 days of the mortgagee receiving notification that a property charge payment is outstanding when there are no funds or insufficient funds remaining in the LESA, and recommend that the borrower speak with a HUD-Approved Housing Counselor.
</P>
<P>(2) <I>Calculation of property charges.</I> (i) The projected cost of property charges that will be required over the life expectancy of the youngest borrower shall be calculated based on a formula established by the Commissioner.
</P>
<P>(ii) The mortgagee shall not require any LESA to be funded in excess of the projected cost of property charges.
</P>
<P>(iii) For a Fully-Funded LESA, the amount withheld from the mortgage proceeds shall equal the projected cost of property charges.
</P>
<P>(iv) For a Partially-Funded LESA, the amount withheld from the mortgage proceeds is based on a calculation of the gap in residual income and may not exceed the projected cost of property charges.
</P>
<P>(v) Mortgagees shall use the <I>HECM Financial Assessment and Property Charge Guide,</I> or subsequent guide issued by the Commissioner, to determine whether a LESA is required; view the formula for calculating the projected costs of property charges; and view the formulas for calculating the Fully- and Partially-Funded LESA amounts.
</P>
<P>(3) <I>Annual analysis of LESA.</I> Mortgagees shall perform an annual analysis of the LESA to determine whether the funds are sufficient to make required distributions for the next year. If funds are exhausted or there is an insufficient balance determination, the mortgagee shall notify the borrower, in writing and within 15 calendar days of the annual analysis of the determination, that LESA funds are exhausted or insufficient and the borrower will be responsible for the payment of property charges.
</P>
<P>(4) <I>Non-payment of property charges</I>—(i) <I>Fully-Funded LESA for an adjustable interest rate HECM with no remaining funds.</I> (A) If the LESA is exhausted and the borrower fails to make property charge payments, the mortgagee shall use any available principal limit to pay the outstanding property charge amount in full and charge the borrower's account.
</P>
<P>(B) The mortgagee shall provide the borrower with a written notification within 30 days of the mortgagee receiving notification that a property charge payment is outstanding. The borrower shall have 30 days to respond to the mortgagee to explain the circumstances which resulted in the non-payment. (C) If there is no available principal limit from which the mortgagee can pay the property charge amount in full, and the borrower fails to pay the property charges, the mortgage will become due and payable under § 206.27(c)(2).
</P>
<P>(ii) <I>Fully-Funded LESA for a fixed interest rate HECM with no remaining funds.</I> If the LESA is exhausted and the borrower fails to make property charge payments, the mortgage will become due and payable under § 206.27(c)(2).

—
</P>
<P>(iii) <I>Partially-Funded LESA with remaining funds.</I> If funds remain in the LESA and the borrower fails to make property charge payments, the mortgagee shall:
</P>
<P>(A) Immediately suspend future semi-annual payments to the borrower from the Partially-Funded LESA, although scheduled and unscheduled payments from the borrower's payment option may continue;
</P>
<P>(B) Disburse funds from the Partially-Funded LESA to pay the full amount owed for the past due property charge; and
</P>
<P>(C) Provide written notification to the borrower, within 30 days of the mortgagee receiving notification that a property charge payment is outstanding, that funds were advanced from the Partially-Funded LESA to pay the outstanding property charge. The borrower shall have 30 days to respond to the mortgagee to explain the circumstances which resulted in the non-payment.
</P>
<P>(iv) <I>Partially-Funded LESA with no remaining funds.</I> (A) If the LESA is exhausted and the borrower fails to make property charge payments when due, the mortgagee shall use any funds available in the principal limit to pay the outstanding property charge amount in full and charge the borrower's account.
</P>
<P>(B) The mortgagee shall provide written notification to the borrower within 30 days of the mortgagee receiving notification that a property charge payment is outstanding. The borrower shall have 30 days to respond to the mortgagee to explain the circumstances which resulted in the non-payment.
</P>
<P>(C) If there is no available principal limit from which the mortgagee can pay the property charge amount in full, and the borrower fails to pay the property charges, the mortgage will become due and payable under § 206.27(c)(2).
</P>
<P>(5) <I>Unused LESA funds.</I> During a Deferral Period or when one of the events listed in § 206.27(c)(1) or (c)(2) have occurred, no unused funds from the LESA shall be disbursed.
</P>
<P>(6) <I>Assignment of mortgage to the Commissioner.</I> If the insured first mortgage is assigned to the Commissioner, or if payments are made through the second mortgage under the Demand Assignment process, the Commissioner is not required to assume the responsibility for property charge payments, but may continue to administer payments for property charges for a borrower with a Fully-Funded LESA or semi-annual disbursements to a borrower with a Partially-Funded LESA to the extent that there are any funds available in the LESA. For adjustable interest rate HECMs, if the LESA has a positive remaining balance but funds are insufficient to pay all property charges due or semi-annual disbursements to the borrower, the Commissioner may provide the remaining funds to the borrower as a line of credit.
</P>
<P>(d) <I>Borrower elects to have mortgagee pay property charges.</I> If, based on the results of the Financial Assessment, the mortgagee does not require the borrower to have a LESA, for adjustable interest rate HECMs, the borrower may elect at closing to require the mortgagee to pay property charges identified in paragraph (a)(2) of this section by withholding funds from monthly payments due to the borrower or by charging such funds to a line of credit. This voluntary election to have funds withheld by the mortgagee to pay property charges cannot be canceled by the borrower at any time. If the sum of the outstanding loan balance and any unused set aside for repairs and servicing charges has reached the principal limit or the HECM proceeds are otherwise insufficient to pay the property charges, the borrower shall pay such property charges, even though the borrower elected payment to be made by the mortgagee. Through <E T="04">Federal Register</E> notice, the Commissioner may expand the borrower's options for property charge payment by the mortgagee.
</P>
<P>(1) <I>Assignment of mortgage to the Commissioner.</I> If the insured first mortgage is assigned to the Commissioner under § 206.107(a)(1) or § 206.121(b), or if payments are made through the second mortgage under § 206.121(c), the Commissioner is not required to assume the mortgagee's responsibility under paragraph (d) of this section, despite the election by the borrower.
</P>
<P>(2) <I>Mortgagee's responsibilities.</I> (i) Funds withheld from payments due to the borrower for property charges under paragraph (d) of this section shall not be paid into an escrow account. When property charges are actually paid, the mortgagee may add the amount paid to the outstanding loan balance.
</P>
<P>(ii) It is the mortgagee's responsibility to make disbursements for property charges before bills become delinquent. Mortgagees shall establish controls to ensure that the information needed to pay such bills is obtained on a timely basis. Penalties for late payments for property charges must not be charged to the borrower unless it can be shown that the penalty was the direct result of the borrower's error or omission. Early payment of a bill to take advantage of a discount should be made whenever it is to the borrower's benefit.
</P>
<P>(iii) Not later than the end of the second loan year the mortgagee shall establish a system for the periodic analysis of the amounts withheld from monthly payments. The analysis shall be performed at least once a year thereafter. The amount shall be adjusted, after analysis, to provide sufficient available funds to make anticipated disbursements during the ensuing year. The borrower shall be given at least ten days' notice of adjustment in the amount of withholding and an adequate explanation of the reasons for any change. When the amount withheld is analyzed in accordance with this paragraph, any surplus shall be paid to the borrower and added to the outstanding loan balance. Any shortage shall be corrected through increasing the monthly withholding as provided in paragraph (d)(2)(iv) of this section. If amounts withheld are insufficient to pay a property charge before it is delinquent, and the borrower could request a payment equal to the shortage under § 206.26(b), then the mortgagee shall pay the full property charge and treat payment of the shortage as a payment requested by the borrower under § 206.26(b).
</P>
<P>(iv) The mortgagee's estimate of withholding amount shall be based on the best information available as to probable payments which will be required to be made for property charges in the coming year. If actual disbursements during the preceding year are used as the basis, the resulting estimate may deviate from those disbursements by as much as ten percent. The mortgagee may not require withholding in excess of the current estimated total annual requirement, unless expressly requested by the borrower. Each monthly withholding for property charges shall equal one-twelfth of the annual amounts as reasonably estimated by the mortgagee.
</P>
<P>(e) <I>Borrower elects to pay property charges.</I> (1) If, based on the results of the Financial Assessment, the mortgagee does not require the borrower to have a LESA, the borrower may elect to be responsible for the independent payment of all property charges and shall pay all property charges in a timely manner and shall provide evidence of payment to the mortgagee as required in the mortgage.
</P>
<P>(2) <I>Failure to pay property charges.</I> If the borrower fails to pay the property charges in a timely manner, and has not elected to have the mortgagee make the payments in accordance with paragraph (d) of this section:
</P>
<P>(i) The mortgagee may make the payment for the borrower and charge the borrower's account if there are available funds from which the mortgagee may make payment. If a pattern of missed payments occurs, the mortgagee may establish procedures to pay the property charges from the borrower's funds as if the borrower elected to have the mortgagee pay the property charges under this section.
</P>
<P>(ii) The mortgagee shall provide a written notification to the borrower and notify the Commissioner that an obligation of the mortgage has not been performed within 30 days of the mortgagee receiving notification of a missed payment when there are no available HECM funds from which the mortgagee may make payment. The borrower shall have 30 days to respond to the mortgagee to explain the circumstances which resulted in the non-payment. The mortgagee may provide any permissible loss mitigation made available by the Commissioner through notice. If the borrower is unable or unwilling to repay the mortgagee for any funds advanced by the mortgagee to pay property charges outside of a LESA, the mortgagee shall submit a due and payable request under the provisions of § 206.27(c)(2).


</P>
</DIV8>


<DIV8 N="§ 206.207" NODE="24:2.1.1.2.6.4.145.4" TYPE="SECTION">
<HEAD>§ 206.207   Allowable charges and fees after endorsement<I>.</I></HEAD>
<P>(a) <I>Reasonable and customary charges.</I> The mortgagee may collect reasonable and customary charges and fees from the borrower after insurance endorsement, only to the extent that the mortgagee is not reimbursed for such fees by FHA, by adding them to the outstanding loan balance, but only for: items listed in paragraph (a)(1) of this section; items authorized by the Commissioner under paragraph (a)(2) of this section, or as provided at § 206.26(b)(1)(iii); or charges and fees related to additional documents described in § 206.27(b)(10) and related title search costs.
</P>
<P>(1)(i) Charges for substitution of a hazard insurance policy at other than the expiration of term of the existing hazard insurance policy;
</P>
<P>(ii) Attorney's and trustee's fees and expenses actually incurred (including the cost of appraisals and cost of advertising) when a case has been referred for foreclosure in accordance with the provisions of this part after a firm decision to foreclose if foreclosure is not completed because of a reinstatement of the account (no attorney's fee may be charged for the services of the mortgagee's or servicer's staff attorney or for the services of a collection attorney other than the attorney handling the foreclosure);
</P>
<P>(iii) A trustee's fee if the security instrument in deed-of-trust states provides for payment of such a fee for execution of a satisfactory, release, or trustee's deed when the deed of trust is paid in full;
</P>
<P>(iv) Where permitted by the security instrument, attorney's fees and expenses actually incurred in the defense of any suit or legal proceeding wherein the mortgagee shall be made a party thereto by reason of the mortgage (no attorney's fee may be charged for the services of the mortgagee's or servicer's staff attorney); and
</P>
<P>(v) Property preservation expenses incurred pursuant to § 206.140.
</P>
<P>(2) Such other reasonable and customary charges as may be authorized by the Commissioner, but which shall not include:
</P>
<P>(i) Charges for servicing activities of the mortgagee or servicer;
</P>
<P>(ii) Fees charged by independent tax service organizations which contract to furnish data and information necessary for the payment of property taxes;
</P>
<P>(iii) <I>Satisfaction, termination,</I> or <I>reconveyance</I> fees when a mortgage is paid in full (other than as provided in paragraph (a)(1)(iii) of this section); or
</P>
<P>(iv) The fee for recordation of a satisfaction of the mortgage in states where recordation is the responsibility of the mortgagee.
</P>
<P>(b) <I>Servicing charges.</I> (1) If the following conditions are met, the mortgagee may include a servicing charge in the mortgage Note rate, starting with the month of loan closing and continuing through the life of the loan, including any applicable Deferral Period:
</P>
<P>(i) The charge is authorized by the Commissioner;
</P>
<P>(ii) The charge is selected by the mortgagee;
</P>
<P>(iii) The charge is within the range established by the Commissioner, which shall be set, through notice, in an amount which shall be between 36 and 150 basis points. The Commissioner may, through a <E T="04">Federal Register</E> notice for comment, extend the range of permissible charges below 36 basis points and above 150 basis points; and
</P>
<P>(iv) The charge is disclosed as required by § 206.43 to the borrower in a manner acceptable to the Commissioner at the time the mortgagee provides the borrower with a loan application; or
</P>
<P>(2) If the following conditions are met, the mortgagee may collect a fixed monthly charge for servicing activities of the mortgagee or servicer, starting with the month of loan closing and continuing through the life of the loan, including any applicable Deferral Period.
</P>
<P>(i) The charge is authorized by the Commissioner;
</P>
<P>(ii) The charge is disclosed as required by § 206.43 to the borrower in a manner acceptable to the Commissioner at the time the mortgagee provides the borrower with a loan application;
</P>
<P>(iii) Amounts to pay the charge are set aside as a portion of the principal limit in accordance with § 206.19(f)(3); and
</P>
<P>(iv) The charge is payable only from the Servicing Fee Set Aside.


</P>
</DIV8>


<DIV8 N="§ 206.209" NODE="24:2.1.1.2.6.4.145.5" TYPE="SECTION">
<HEAD>§ 206.209   Prepayment.</HEAD>
<P>(a) <I>No charge or penalty.</I> The borrower may repay a mortgage in full or prepay a mortgage in part without charge or penalty at any time, regardless of any limitations on repayment or prepayment stated in a mortgage.
</P>
<P>(b) <I>Insurance and condemnation proceeds.</I> If insurance or condemnation proceeds are paid to the mortgagee, the principal limit and the outstanding loan balance shall be reduced by the amount of the proceeds not applied to restoration or repair of the damaged property.
</P>
<P>(c) Funds received from a partial prepayment shall be applied in accordance with the Note.


</P>
</DIV8>


<DIV8 N="§ 206.211" NODE="24:2.1.1.2.6.4.145.6" TYPE="SECTION">
<HEAD>§ 206.211   Determination of principal residence and contact information.</HEAD>
<P>(a) <I>Annual certification.</I> At least once during each calendar year, the mortgagee shall verify the contact information for the borrower(s) and determine whether or not the property is the principal residence of at least one borrower. The mortgagee shall require each borrower to make an annual certification of his or her contact information and principal residence. As part of the annual certification, the borrower may designate an alternate individual as specified in § 206.40 to receive copies of the notifications from the mortgagee, and who the mortgagee shall contact if the borrower is unwilling or unable to reply to requests from the mortgagee. The mortgagee may rely on the certification unless it has information indicating that the certification may be false.
</P>
<P>(b) <I>Requirements when an Eligible Non-Borrowing Spouse exists.</I> Where an Eligible Non-Borrowing Spouse has been identified, the mortgagee shall obtain an additional annual certification from the borrower confirming the Eligible Non-Borrowing Spouse remains his or her spouse and the Eligible Non-Borrowing Spouse continues to reside in the property as his or her principal residence.
</P>
<P>(1) <I>Death of borrower with Eligible Non-Borrowing Spouse.</I> If a borrower with an Eligible Non-Borrowing Spouse has died, the mortgagee shall obtain the annual certification in paragraph (a) of this section from the Eligible Non-Borrowing Spouse. For purposes of this paragraph, the term “Eligible Non-Borrowing Spouse” shall replace the term “borrower” in paragraph (a) of this section.
</P>
<P>(2) <I>Failure of previously Eligible Non-Borrowing Spouse to reside in the property as his or her principal residence.</I> If a Non-Borrowing Spouse fails to reside in the property as his or her principal residence, the Non-Borrowing Spouse becomes an Ineligible Non-Borrowing Spouse and the deferral of due and payable status that would prevent the displacement of an Eligible Non-Borrowing Spouse will no longer be in effect. Once this occurs, the Eligible Non-Borrowing Spouse annual certifications are no longer required to be obtained.


</P>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:2.1.1.2.6.5" TYPE="SUBPART">
<HEAD>Subpart E—HECM Counselor Roster</HEAD>


<DIV8 N="§ 206.300" NODE="24:2.1.1.2.6.5.145.1" TYPE="SECTION">
<HEAD>§ 206.300   General.</HEAD>
<P>This subpart provides for the establishment of the HECM Counselor Roster (Roster) and sets forth the requirements for the operation of the HECM Counselor Roster.


</P>
</DIV8>


<DIV8 N="§ 206.302" NODE="24:2.1.1.2.6.5.145.2" TYPE="SECTION">
<HEAD>§ 206.302   Establishment of the HECM Counselor Roster.</HEAD>
<P>(a) <I>HECM Counselor Roster.</I> FHA maintains a Roster of HECM counselors. Only counselors listed on the Roster and employed by a participating agency are approved to provide HECM counseling. A prospective borrower applying for a HECM loan to be insured by FHA must receive the required HECM counseling from one of the counselors on the Roster.
</P>
<P>(b) <I>Disclaimer.</I> The inclusion of a HECM counselor on the Roster does not create or imply a warranty or endorsement by FHA of the listed counselor to a prospective HECM borrower or to any other organization or individual, nor does it represent a warranty of any counseling provided by the listed HECM counselor. The inclusion of a counselor on the Roster means that a listed counselor has met the FHA-prescribed qualifications and conditions for inclusion on the Roster and that the counselor is approved to provide HECM counseling by telephone or face-to-face.


</P>
</DIV8>


<DIV8 N="§ 206.304" NODE="24:2.1.1.2.6.5.145.3" TYPE="SECTION">
<HEAD>§ 206.304   Eligibility for placement on the HECM Counselor Roster.</HEAD>
<P>(a) <I>Application.</I> To be considered for placement on the Roster, a housing counselor must apply to FHA in a form and in a manner prescribed by the Commissioner.
</P>
<P>(b) <I>Eligibility.</I> FHA will approve an application for placement on the Roster if the application demonstrates that the housing counselor:
</P>
<P>(1) Is employed by a HUD-approved housing counseling agency or an affiliate of a HUD-approved intermediary or State housing finance agency;
</P>
<P>(2) Successfully passed a standardized HECM counseling exam administered by FHA, or a party selected by FHA, within the last 3 years. In order to maintain eligibility, a HECM counselor must successfully pass a standardized HECM counseling exam every 3 years;
</P>
<P>(3) Received training and education related to HECMs within the prior 2 years;
</P>
<P>(4) Has access to and is supported by technology that enables FHA to track the results of the counseling offered to each loan applicant, <I>e.g.,</I> what action(s), if any, did the client take after receiving the HECM counseling; and
</P>
<P>(5) Is not listed on:
</P>
<P>(i) The General Services Administration's Suspension and Debarment List;
</P>
<P>(ii) HUD's Limited Denial of Participation List; or
</P>
<P>(iii) HUD's Credit Alert Interactive Response System.


</P>
</DIV8>


<DIV8 N="§ 206.306" NODE="24:2.1.1.2.6.5.145.4" TYPE="SECTION">
<HEAD>§ 206.306   Removal from the HECM Counselor Roster.</HEAD>
<P>(a) <I>General.</I> FHA reserves the right to remove a HECM counselor from the Roster, in accordance with this section.
</P>
<P>(b) <I>Cause for removal.</I> Cause for removal of a HECM counselor from the Roster includes, but is not limited to:
</P>
<P>(1) Failure to comply with the education and training requirements of § 206.308;
</P>
<P>(2) Failure to respond within a reasonable time to HUD inquiries or requests for documentation;
</P>
<P>(3) Misrepresentation or fraudulent statements;
</P>
<P>(4) Promotion, representation, or recommendation of any specific mortgagee;
</P>
<P>(5) Failure to comply with applicable fair housing and civil rights requirements;
</P>
<P>(6) Failure to comply with applicable statutes and regulations;
</P>
<P>(7) Failure to comply with applicable statutory counseling requirements found at section 255(f) of the National Housing Act, which include, but are not limited to, providing information about: options other than a HECM, the financial implications of entering into a HECM, the tax consequences of a HECM, and any other information that HUD or the applicant may request;
</P>
<P>(8) Failure to maintain any registration, license, or certification requirements of a State or local authority;
</P>
<P>(9) Unsatisfactory performance in providing counseling to HECM loan applicants. FHA may determine that a HECM counselor's performance is unsatisfactory based on a review of counseling files or other monitoring activities, or if the counselor fails to employ the minimum competencies, as measured by the FHA-administered HECM counseling exam; or
</P>
<P>(10) For any other reason HUD determines to be so serious as to justify an administrative sanction.
</P>
<P>(c) <I>Automatic removal from HECM Counselor Roster for failure to maintain required State or local licensure.</I> A HECM counselor who is required to maintain a State or local registration, license, or certification and whose registration or certification is revoked, suspended, or surrendered will be automatically suspended from the Roster until FHA receives evidence demonstrating that the local- or State-imposed sanction has been lifted.
</P>
<P>(d) <I>Removal procedure.</I> Except as provided in paragraph (c) of this section, the following procedures apply to removal of a HECM counselor from the Roster.
</P>
<P>(1) FHA will give the HECM counselor written notice of the proposed removal. The notice will state the reasons for and the duration of the proposed removal.
</P>
<P>(2) The HECM counselor will have 30 days from the date of receipt of the notice (or such time as described in the notice, but in no event less than a period of 30 days) to submit a written appeal of the proposed removal, along with a written request for a conference.
</P>
<P>(3) An FHA official will review the appeal and render a response affirming, modifying, or canceling the removal. The FHA official will not be a person who was involved in FHA's initial removal decision. FHA will respond with a decision within 30 days after the date of receiving the appeal or, if the HECM counselor has requested a conference, within 30 days after the conference was held. FHA may extend the 30-day period by providing written notice to the counselor.
</P>
<P>(4) If the HECM counselor does not submit a timely written response, the removal will be effective 31 days after the date of FHA's initial removal notice (or after the period provided in the notice, if longer than 30 days). If a written response is submitted, and the removal decision is affirmed or modified, the removal will be effective on the date of FHA's notice affirming or modifying the initial removal decision.
</P>
<P>(e) <I>Maximum time period of removal.</I> The maximum time period for removal from the Roster is 12 months from the effective date of removal for all removed counselors. A counselor who has been removed must apply for reinstatement on the Roster.
</P>
<P>(f) <I>Placement on the Roster after removal.</I> A counselor who has been removed from the Roster must apply for reinstatement on the Roster (in accordance with § 206.304) after the period of the counselor's removal from the Roster has expired. FHA may require the counselor to retake and pass the HECM exam for reinstatement when the reason for removal from the Roster was particularly egregious. Typically, the counselor will not be required to take and pass the HECM exam; however, FHA must be ensured by the counselor that the HECM counseling requirements are understood and will be followed. An application from a counselor for reinstatement on the Roster will be rejected if the period of the counselor's removal from the Roster has not expired.
</P>
<P>(g) <I>Voluntary removal.</I> A HECM counselor will be removed from the Roster upon FHA's receipt of a written request from the counselor.
</P>
<P>(h) <I>Other action.</I> Nothing in this section prohibits HUD from taking such other action against a HECM counselor or from seeking any other remedy against a counselor available to HUD by statute or other authority.


</P>
</DIV8>


<DIV8 N="§ 206.308" NODE="24:2.1.1.2.6.5.145.5" TYPE="SECTION">
<HEAD>§ 206.308   Continuing education requirements of counselors listed on the HECM Counselor Roster.</HEAD>
<P>A HECM counselor listed on the Roster must receive, on a continuing basis, training, education, and technical assistance related to HECMs. The HECM counselor must maintain evidence of the successful completion of such continuing education, and such evidence must be made available to FHA upon request. FHA will consider a HECM counselor's successful completion of a HECM course no less than once every 2 years as satisfying the requirements of this section.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="207" NODE="24:2.1.1.2.7" TYPE="PART">
<HEAD>PART 207—MULTIFAMILY HOUSING MORTGAGE INSURANCE 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1701z-11(e), 1709(c)(1), 1713, 1715(b), and 1735d; 42 U.S.C. 3535(d).


</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>36 FR 24537, Dec. 22, 1971, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:2.1.1.2.7.1" TYPE="SUBPART">
<HEAD>Subpart A—Eligibility Requirements</HEAD>


<DIV8 N="§ 207.1" NODE="24:2.1.1.2.7.1.149.1" TYPE="SECTION">
<HEAD>§ 207.1   Eligibility requirements.</HEAD>
<P>The eligibility requirements set forth in 24 CFR part 200, subpart A, apply to multifamily project mortgages insured under section 207 of the National Housing Act (12 U.S.C. 1713), as amended. 
</P>
<CITA TYPE="N">[61 FR 14405, Apr. 1, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:2.1.1.2.7.2" TYPE="SUBPART">
<HEAD>Subpart B—Contract Rights and Obligations</HEAD>


<DIV8 N="§ 207.251" NODE="24:2.1.1.2.7.2.149.1" TYPE="SECTION">
<HEAD>§ 207.251   Definitions.</HEAD>
<P>As used in this subpart: 
</P>
<P>(a) The term <I>Commissioner</I> means the Federal Housing Commissioner. 
</P>
<P>(b) The term <I>act</I> means the National Housing Act, as amended. 
</P>
<P>(c) The term <I>mortgage</I> means such a first lien upon real estate and other property as is commonly given to secure advances on, or the unpaid purchase price of, real estate under the laws of the State, district or territory in which the real estate is located, together with the credit instrument or instruments, if any, secured thereby. In any instance where an operating loss loan is involved, the term shall include both the original mortgage and the instrument securing the operating loss loan. 
</P>
<P>(d) The term <I>insured mortgage</I> means a mortgage which has been insured by the endorsement of the credit instrument by the Commissioner, or his duly authorized representative. 
</P>
<P>(e) The term <I>contract of insurance</I> means the agreement evidenced by such endorsement and includes the terms, conditions and provisions of this part and of the National Housing Act. 
</P>
<P>(f) The term <I>mortgagor</I> means the original borrower under a mortgage and its successors and such of its assigns as are approved by the Commissioner. 
</P>
<P>(g) The term <I>mortgagee</I> means the original lender under a mortgage its successors and such of its assigns as are approved by the Commissioner, and includes the holders of the credit instruments issued under a trust indenture, mortgage or deed of trust pursuant to which such holders act by and through a trustee therein named. 


</P>
</DIV8>


<DIV7 N="149" NODE="24:2.1.1.2.7.2.149" TYPE="SUBJGRP">
<HEAD>Premiums</HEAD>


<DIV8 N="§ 207.252" NODE="24:2.1.1.2.7.2.149.2" TYPE="SECTION">
<HEAD>§ 207.252   First, second and third premiums.</HEAD>
<P>The mortgagee, upon the initial endorsement of the mortgage for insurance, shall pay to the Commissioner a first mortgage insurance premium equal to not less than one-fourth of one percent nor more than one percent as the Secretary shall determine of the original face amount of the mortgage. The specific premium to be charged will be set forth in <E T="04">Federal Register</E> notice. 
</P>
<P>(a) If the date of the first principal payment is more than one year following the date of such initial insurance endorsement, the mortgagee, upon the anniversary of such insurance date, shall pay a second premium equal to not less than one-fourth of one percent nor more than one percent as the Secretary shall determine of the original face amount of the mortgage. On the date of the first principal payment, the mortgagee shall pay a third premium equal to not less than one-fourth of one percent nor more than one percent of the average outstanding principal obligation of the mortgage for the following year which shall be adjusted so as to accord with such date and so that the aggregate of the said three premiums shall equal the sum of: 
</P>
<P>(1) One percent of the average outstanding principal obligation of the mortgage for the year following the date of initial insurance endorsement; and 
</P>
<P>(2) Not less than one-fourth of one percent nor more than one percent per annum as the Secretary shall determine of the average outstanding principal obligation of the mortgage for the period from the first anniversary of the date of initial insurance endorsement to one year following the date of the first principal payment. 
</P>
<P>(b) If the date of the first principal payment is one year, or less than one year following the date of such initial insurance endorsement, the mortgagee, upon such first principal payment date, shall pay a second premium equal to not less than one-fourth of one percent nor more than one percent as the Secretary shall determine of the average outstanding principal obligation of the mortgage for the following year which shall be adjusted so as to accord with such date and so that the aggregate of the said two premiums shall equal the sum of: 
</P>
<P>(1) One percent per annum of the average outstanding principal obligation of the mortgage for the period from the date of initial insurance endorsement to the date of first principal payment; and 
</P>
<P>(2) Not less than one-fourth of one percent nor more than one percent as the Secretary shall determine of the average outstanding principal obligation of the mortgage for the year following the date of the first principal payment. 
</P>
<P>(c) Where the credit instrument is initially and finally endorsed for insurance pursuant to a Commitment to Insure Upon Completion, the mortgagee on the date of the first principal payment shall pay a second premium equal to not less than one-fourth of one percent nor more than one percent as the Secretary shall determine of the average outstanding principal obligation of the mortgage for the year following such first principal payment date which shall be adjusted so as to accord with such date and so that the aggregate of the said two premiums shall equal the sum of not less than one-fourth of one percent nor more than one percent per annum as the Secretary shall determine of the average outstanding principal obligation of the mortgage for the period from the date of the insurance endorsement to one year following the date of the first principal payment. 
</P>
<P>(d) Until the mortgage is paid in full, or until receipt by the Commissioner of an application for insurance benefits, or until the contract of insurance is otherwise terminated with the consent of the Commissioner, the mortgagee, on each anniversary of the date of the first principal payment, shall pay an annual mortgage insurance premium equal to not less than one-fourth of one percent nor more than one percent as the Secretary shall determine of the average outstanding principal obligation of the mortgage for the year following the date on which such premium becomes payable. 
</P>
<P>(e) The premiums payable on and after the date of the first principal payment shall be calculated in accordance with the amortization provisions without taking into account delinquent payments or prepayments. 
</P>
<P>(f) Premiums shall be payable in cash or in debentures at par plus accrued interest. All premiums are payable in advance and no refund can he made of any portion thereof except as hereinafter provided in this subpart. 
</P>
<P>(g) Any change in mortgage insurance premiums pursuant to this section will apply to new commitments issued or reissued on or after August 1, 2001 and any notice setting mortgage insurance premiums issued pursuant to this section.
</P>
<CITA TYPE="N">[66 FR 35072, July 2, 2001]


</CITA>
</DIV8>


<DIV8 N="§ 207.252a" NODE="24:2.1.1.2.7.2.149.3" TYPE="SECTION">
<HEAD>§ 207.252a   Premiums—operating loss loans.</HEAD>
<P>(a) The mortgagee, upon the insurance endorsement of the increase loan credit instrument covering the operating loss loan, shall pay to the Commissioner a first mortgage insurance premium of not less than one-fourth of one percent nor more than one percent as the Secretary shall determine of the original amount of the loan. 
</P>
<P>(b) The provisions of paragraphs (d), (e), (f) and (g) of Sec. 207.252 shall apply to operating loss loans.
</P>
<CITA TYPE="N">[66 FR 35073, July 2, 2001]


</CITA>
</DIV8>


<DIV8 N="§ 207.252b" NODE="24:2.1.1.2.7.2.149.4" TYPE="SECTION">
<HEAD>§ 207.252b   Premiums—mortgages insured pursuant to section 223(f) of the Act.</HEAD>
<P>(a) The mortgagee, upon the initial-final endorsement of the mortgage for insurance pursuant to a Commitment to Insure Upon Completion issued in accordance with § 207.32a, shall pay to the Commissioner a first mortgage insurance premium equal to one percent of the original face amount of the mortgage. 
</P>
<P>(b) The mortgagee, on the date of the first principal payment, shall pay a second premium equal to one percent of the average outstanding principal obligation of the mortgage for the year following such first principal payment date which shall be adjusted as of that date so that the aggregate of the first and second premiums shall equal the sum of one percent per annum of the average outstanding principal obligation of the mortgage for the period from the date of the insurance endorsement to one year following the date of the first principal payment. 
</P>
<P>(c) The provisions of paragraphs (d), (e) and (f) of § 207.252 shall apply to mortgages insured pursuant to section 223(f) of the Act. 
</P>
<CITA TYPE="N">[40 FR 10177, Mar. 5, 1975] 


</CITA>
</DIV8>


<DIV8 N="§ 207.252c" NODE="24:2.1.1.2.7.2.149.5" TYPE="SECTION">
<HEAD>§ 207.252c   Premiums—mortgages insured pursuant to section 238(c) of the Act.</HEAD>
<P>All of the provisions of §§ 207.252 and 207.252a governing mortgage insurance premiums shall apply to mortgages insured under this subpart pursuant to section 238(c) of the Act except that all mortgage insurance premiums due on such mortgages in accordance with §§ 207.252 and 207.252a shall be calculated on the basis of one percent.
</P>
<CITA TYPE="N">[42 FR 59674, Nov. 18, 1977]


</CITA>
</DIV8>


<DIV8 N="§ 207.252d" NODE="24:2.1.1.2.7.2.149.6" TYPE="SECTION">
<HEAD>§ 207.252d   Mortgagee's late charge.</HEAD>
<P>Mortgage insurance premiums which are paid to the Commissioner more than 15 days after the billing date or due date, whichever is later, shall include a late charge of 4 percent of the amount of the payment due, except that no late charge shall be required with respect to any case for which HUD fails to render a proper billing to the mortgagee.
</P>
<CITA TYPE="N">[43 FR 60154, Dec. 26, 1978, as amended at 44 FR 23067, Apr. 18, 1979] 


</CITA>
</DIV8>


<DIV8 N="§ 207.252e" NODE="24:2.1.1.2.7.2.149.7" TYPE="SECTION">
<HEAD>§ 207.252e   Method of payment of mortgage insurance premiums.</HEAD>
<P>In the cases that the Commissioner deems appropriate, the Commissioner may require, by means of instructions communicated to all affected mortgagees, that mortgage insurance premiums be remitted electronically.
</P>
<CITA TYPE="N">[63 FR 1303, Jan. 8, 1998]


</CITA>
</DIV8>


<DIV8 N="§ 207.253" NODE="24:2.1.1.2.7.2.149.8" TYPE="SECTION">
<HEAD>§ 207.253   Termination by prepayment and voluntary termination.</HEAD>
<P>All rights under the insurance contract and all obligations to pay future insurance premiums shall terminate on the following conditions: 
</P>
<P>(a) <I>Termination by prepayment.</I> Notice of the prepayment in full of the mortgage or loan shall be given to the Commissioner, on a form prescribed by the Commissioner, within 30 days from the date of prepayment. The insurance contract shall terminate, effective as of the date of prepayment. No adjusted premium charge shall be due the Commissioner on account of such termination by prepayment. 
</P>
<P>(b) <I>Termination by voluntary agreement.</I> Receipt by the Commissioner of a written request, by the mortgagor and mortgagee or lender for termination of the insurance on the mortgage or loan, on a form prescribed by the Commissioner, accompanied by the original credit instrument for cancellation of the insurance endorsement and the remittance of all sums to which the Commissioner is entitled. The termination shall become effective as of the date these requirements are met. No voluntary termination charge shall be due the Commissioner on account of such termination by voluntary agreement. 
</P>
<P>(c) Upon termination of the mortgage or loan insurance contract by a payment in full or by a voluntary termination, the Commissioner shall refund to the mortgagee or lender for the account of the mortgagor or borrower an amount equal to the pro rata portion of the current annual mortgage insurance premium theretofore paid, which is applicable to the portion of the year subsequent to (1) the date of the prepayment or (2) the effective date of the voluntary termination of the contract of insurance. 
</P>
<P>(d) Notwithstanding any provision in the mortgage instrument, this section shall apply to all mortgage or loan insurance contracts terminated by either prepayment or voluntary termination where: (1) The mortgage is prepaid in full or (2) the Commissioner receives a request for voluntary termination, on or after May 1, 1972. 
</P>
<CITA TYPE="N">[37 FR 8662, Apr. 29, 1972] 


</CITA>
</DIV8>


<DIV8 N="§ 207.253a" NODE="24:2.1.1.2.7.2.149.9" TYPE="SECTION">
<HEAD>§ 207.253a   Termination of insurance contract.</HEAD>
<P>(a) <I>Reason for termination.</I> The happening of any of the following events shall constitute an additional reason for terminating the contract of insurance in cases where the mortgagee has elected to convey the property to the Commissioner: 
</P>
<P>(1) The acquisition by the mortgagee of the mortgaged property without conveying it to the Commissioner. 
</P>
<P>(2) The acquisition of the property at the foreclosure sale by a party other than the mortgagee. 
</P>
<P>(3) The redemption of the property after foreclosure. 
</P>
<P>(4) Notice given by the mortgagee after the foreclosure and during the redemption period that it will not tender the property to the Commissioner. 
</P>
<P>(b) <I>Notice of termination.</I> No contract of insurance shall be terminated until the mortgagee has given written notice thereof to the Commissioner within 30 days from the happening of any one of the events set forth in paragraph (a) of this section. 
</P>
<P>(c) <I>Effective termination date.</I> The Commissioner shall notify the mortgagee that the contract of insurance has been terminated and the effective termination date. The termination shall be effective as of the date any one of the events set forth in paragraph (a) of this section occur. 
</P>
<P>(d) <I>Effect of termination.</I> Upon termination of the contract of insurance the obligation to pay any subsequent MIP shall cease and all rights of the mortgagor and mortgagee shall be terminated. 
</P>
<CITA TYPE="N">[36 FR 24537, Dec. 22, 1971, as amended at 37 FR 8662, Apr. 29, 1972]


</CITA>
</DIV8>


<DIV8 N="§ 207.254" NODE="24:2.1.1.2.7.2.149.10" TYPE="SECTION">
<HEAD>§ 207.254   Changes in premiums; manner of publication.</HEAD>
<P>Notice of future premium changes will be published in the <E T="04">Federal Register.</E> The Department will propose MIP changes for multifamily mortgage insurance programs and provide a 30-day public comment period for the purpose of accepting comments on whether the proposed changes are appropriate. After the comments have been considered, the Department will publish a final notice announcing the premiums for each program and their effective date. The provisions of paragraph (g) of 24 CFR 207.252 shall apply to any notice of future premium changes published pursuant to this section.
</P>
<CITA TYPE="N">[66 FR 35073, July 2, 2001]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="150" NODE="24:2.1.1.2.7.2.150" TYPE="SUBJGRP">
<HEAD>Rights and Duties of Mortgagee Under the Contract of Insurance</HEAD>


<DIV8 N="§ 207.255" NODE="24:2.1.1.2.7.2.150.11" TYPE="SECTION">
<HEAD>§ 207.255   Defaults for purposes of insurance claim.</HEAD>
<P>(a)(1) Except as provided in paragraph (b) of this section, the following shall be considered a default under the terms of a mortgage insured under this subpart:
</P>
<P>(i) Failure of the mortgagor to make any payment due under the mortgage (also referred to as a “Monetary Event of Default” in certain mortgage security instruments); or
</P>
<P>(ii) A material violation of any other covenant under the provisions of the mortgage, if because of such violation, the mortgagee has accelerated the debt, subject to any necessary HUD approval (also referred to as a “Covenant Event of Default” in certain mortgage security instruments).
</P>
<P>(2) For purposes of a mortgagee filing an insurance claim with the Commissioner, the failure of the mortgagor to make any payment due under an operating loss loan or under the original mortgage shall be considered a default under both the operating loss loan and original mortgage.
</P>
<P>(3) If a default as defined in paragraphs (a)(1) and (a)(2) of this section continues for a minimum period of 30 days, the mortgagee shall be entitled to receive the benefits of the insurance provided for the mortgage, subject to the procedures in this subpart.
</P>
<P>(4) For the purposes of paragraph (a) of this section, the date of default shall be:
</P>
<P>(i) The date of the first failure to make a monthly payment that subsequent payments by the mortgagor are insufficient to cover when those subsequent payments are applied by the mortgagee to the overdue monthly payments in the order in which they became due; or
</P>
<P>(ii) The date of the first uncorrected violation of a covenant or obligation for which the mortgagee has accelerated the debt.
</P>
<P>(5) For multifamily project mortgages for which HUD issued a firm commitment for mortgage insurance on or after September 1, 2011, the regulations of paragraph (a) of this section shall apply, unless the mortgagor demonstrates to the satisfaction of the Commissioner that financial hardship to the mortgagor would result from application of the regulations in paragraph (a) of this section due to the reasonable expectations of the mortgagor that the transaction would close under the regulations in effect prior to September 1, 2011, in which case, the regulations of paragraph (b) shall apply.
</P>
<P>(b)(1) For multifamily project mortgages for which HUD issued a firm commitment for mortgage insurance before September 1, 2011, and for multifamily project mortgages insured under section 232 of the Act (12 U.S.C. 1715w), and section 242 of the Act (12 U.S.C. 1715z-7), the following shall be considered a default under the terms of a mortgage insured under this subpart:
</P>
<P>(i) Failure of the mortgagor to make any payment due under the mortgage; or
</P>
<P>(ii) Failure to perform any other covenant under the provisions of the mortgage, if the mortgagee, because of such failure, has accelerated the debt.
</P>
<P>(2) In the case of an operating loss loan, the failure of the mortgagor to make any payment due under such loan or under the original mortgage shall be considered a default under both the loan and original mortgage.
</P>
<P>(3) If such defaults, as defined in paragraph (b) of this section, continue for a period of 30 days the mortgagee shall be entitled to receive the benefits of the insurance hereinafter provided.
</P>
<P>(4) Except for mortgages insured under section 232 of the Act, for the purposes of paragraph (b) of this section, the date of default shall be considered as:
</P>
<P>(i) The date of the first uncorrected failure to perform a covenant or obligation; or
</P>
<P>(ii) The date of the first failure to make a monthly payment which subsequent payments by the mortgagor are insufficient to cover when applied to the overdue monthly payments in the order in which they became due.
</P>
<P>(5) For mortgages insured under section 232 of the Act, for purposes of this section, the date of default shall be considered as:
</P>
<P>(i) The first date on which the borrower has failed to pay the debt when due as a result of the lender's acceleration of the debt because of the borrower's uncorrected failure to perform a covenant or obligation under the regulatory agreement or security instrument; or
</P>
<P>(ii) The date of the first failure to make a monthly payment that subsequent payments by the borrower are insufficient to cover when applied to the overdue monthly payments in the order in which they become due.
</P>
<CITA TYPE="N">[76 FR 24370, May 2, 2011, as amended at 77 FR 55135, Sept. 7, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 207.256" NODE="24:2.1.1.2.7.2.150.12" TYPE="SECTION">
<HEAD>§ 207.256   Notice to the Commissioner of default.</HEAD>
<P>(a) If a default as defined in § 207.255(a) or (b) is not cured within the grace period of 30 days provided under § 207.255(a)(3) or (b)(3), the mortgagee must, within 30 days after the date of the end of the grace period, notify the Commissioner of the default, in the manner prescribed in 24 CFR part 200, subpart B.
</P>
<P>(b) The mortgagee must give notice to the Commissioner, in the manner prescribed in 24 CFR part 200, subpart B, of the mortgagor's violation of any covenant, whether or not the mortgagee has accelerated the debt.
</P>
<CITA TYPE="N">[76 FR 24370, May 2, 2011]


</CITA>
</DIV8>


<DIV8 N="§ 207.256a" NODE="24:2.1.1.2.7.2.150.13" TYPE="SECTION">
<HEAD>§ 207.256a   Reinstatement of defaulted mortgage.</HEAD>
<P>If, after default and prior to the completion of foreclosure proceedings, the mortgagor cures the default, the insurance shall continue on the mortgage as if a default had not occurred, provided the mortgagee gives notice of reinstatement to the Commissioner, in the manner prescribed in 24 CFR part 200, subpart B.
</P>
<CITA TYPE="N">[76 FR 24370, May 2, 2011]


</CITA>
</DIV8>


<DIV8 N="§ 207.256b" NODE="24:2.1.1.2.7.2.150.14" TYPE="SECTION">
<HEAD>§ 207.256b   Modification of mortgage terms.</HEAD>
<P>(a) The mortgagor and the mortgagee may, with the approval of the Commissioner, enter into an agreement that extends the time for curing a default under the mortgage or modifies the payment terms of the mortgage.
</P>
<P>(b)(1) Except as provided in paragraph (b)(2), the Commissioner's approval of the type of agreement specified in paragraph (a) of this section shall not be given, unless the mortgagor agrees in writing that, during such period as the mortgage continues to be in default, and payments by the mortgagor to the mortgagee are less than the amounts required under the terms of the original mortgage, the mortgagor or mortgagee, as may be appropriate in the particular situation, will hold in trust for disposition, as directed by the Commissioner, all rents or other funds derived from the secured property that are not required to meet actual and necessary expenses arising in connection with the operation of such property, including amortization charges, under the mortgage.
</P>
<P>(2) For multifamily project mortgages for which HUD issued a firm commitment for mortgage insurance before September 1, 2011, and for multifamily project mortgages insured under section 232 of the Act (12 U.S.C. 1715w), and section 242 (12 U.S.C. 1715z-7), the Commissioner's approval of the type of agreement specified in paragraph (a) of this section shall not be given unless the mortgagor agrees in writing that, during such period as payments to the mortgagee are less than the amounts required under the terms of the original mortgage, the mortgagor will hold in trust for disposition as directed by the Commissioner all rents or other funds derived from the property which are not required to meet actual and necessary expenses arising in connection with the operation of such property, including amortization charges, under the mortgage.
</P>
<P>(3) For multifamily project mortgages for which HUD issued a firm commitment for mortgage insurance on or after September 1, 2011, the regulations of paragraph (b)(1) of this section shall apply, unless the mortgagor demonstrates to the satisfaction of the Commissioner that financial hardship to the mortgagor would result from application of the regulations in paragraph (b)(1) of this section due to the reasonable expectations of the mortgagor that the transaction would close under the regulations in effect prior to September 1, 2011, in which case, the regulations of paragraph (b)(2) shall apply.
</P>
<P>(c) The Commissioner may exempt a mortgagor from the requirement of paragraph (b) of this section in any case where the Commissioner determines that such exemption does not jeopardize the interests of the United States.
</P>
<CITA TYPE="N">[76 FR 24370, May 2, 2011]


</CITA>
</DIV8>


<DIV8 N="§ 207.257" NODE="24:2.1.1.2.7.2.150.15" TYPE="SECTION">
<HEAD>§ 207.257   Commissioner's right to require acceleration.</HEAD>
<P>Upon receipt of notice of violation of a covenant, as provided for in § 207.256(b), or otherwise being apprised of the violation of a covenant, the Commissioner reserves the right to require the mortgagee to accelerate payment of the outstanding principal balance due in order to protect the interests of the Commissioner.
</P>
<CITA TYPE="N">[76 FR 24371, May 2, 2011]


</CITA>
</DIV8>


<DIV8 N="§ 207.258" NODE="24:2.1.1.2.7.2.150.16" TYPE="SECTION">
<HEAD>§ 207.258   Insurance claim requirements.</HEAD>
<P>(a) <I>Alternative election by mortgagee.</I> (1) When the mortgagee becomes eligible to receive mortgage insurance benefits pursuant to § 207.255(a)(3) or (b)(3), the mortgagee must, within 45 calendar days after the date of eligibility, such period is referred to as the “Eligibility Notice Period” for purposes of this section, give the Commissioner notice of its intention to file an insurance claim and of its election either to assign the mortgage to the Commissioner, as provided in paragraph (b) of this section, or to acquire and convey title to the Commissioner, as provided in paragraph (c) of this section. Notice of this election must be provided to the Commissioner in the manner prescribed in 24 CFR part 200, subpart B. HUD may extend the Eligibility Notice Period at the request of the mortgagee under the following conditions:
</P>
<P>(i) The request must be made to and approved by HUD prior to the 45th day after the date of eligibility; and
</P>
<P>(ii) The approval of an extension shall in no way prejudice the mortgagee's right to file its notice of its intention to file an insurance claim and of its election either to assign the mortgage to the Commissioner or to acquire and convey title to the Commissioner within the 45-day period or any extension prescribed by the Commissioner.
</P>
<P>(2) For mortgages funded with the proceeds of state or local bonds, Ginnie Mae mortgage-backed securities, participation certificates, or other bond obligations specified by the Commissioner (such as an agreement under which the insured mortgagee has obtained the mortgage funds from third-party investors and has agreed in writing to repay such investors at a stated interest rate and in accordance with a fixed repayment schedule), any of which contains a lock-out or prepayment premium, in the event of a default during the term of the prepayment lock-out or prepayment premium, and for any mortgage insured under section 232 of the Act, the mortgagee must:
</P>
<P>(i) Request a 90-day extension of the deadline for filing the notice of the mortgagee's intention to file an insurance claim and the mortgagee's election to assign the mortgage or acquire and convey title in accordance with the mortgagee certificate, which HUD may further extend at the written request of the mortgagee;
</P>
<P>(ii) Assist the mortgagor in arranging refinancing to cure the default and avert an insurance claim, if the Commissioner grants the requested (or a shorter) extension of notice filing deadline;
</P>
<P>(iii) Report to the Commissioner at least monthly on any progress in arranging refinancing;
</P>
<P>(iv) Cooperate with the Commissioner in taking reasonable steps in accordance with prudent business practices to avoid an insurance claim;
</P>
<P>(v) Require successors or assigns to certify in writing that they agree to be bound by these conditions for the remainder of the term of the prepayment lock-out or prepayment premium; and
</P>
<P>(vi) After commencement of amortization of the refinanced mortgage, notify HUD of a delinquency when a payment is not received by the 10th day after the date the payment is due.
</P>
<P>(3) For multifamily project mortgages for which HUD issued a firm commitment for mortgage insurance on or after September 1, 2011, the regulations of paragraph (a)(2) of this section shall apply, unless the mortgagor demonstrates to the satisfaction of the Commissioner that financial hardship to the mortgagor would result from application of the regulations in paragraph (a)(2) of this section due to the reasonable expectations of the mortgagor that the transaction would close under the regulations in effect prior to September 1, 2011, in which case, the regulations of paragraph (a)(2) shall not apply.
</P>
<P>(4) <I>Acknowledgment of election.</I> For mortgages insured pursuant to section 232 of the Act, if the lender provides notice to the Commissioner of its election either to assign the mortgage to the Commissioner or to acquire and convey title to the Commissioner, the Commissioner shall, not later than 90 calendar days after the expiration of the Eligibility Notice Period, as defined in paragraph (a)(1) of this section, as the same may have been extended, acknowledge and accept, or reject for cause, pursuant to program requirements, the lender's election, provided that the Commissioner may, in the Commissioner's discretion, extend such 90-day period by no more than an additional 90 calendar days if the Commissioner determines that such an extension is in HUD's interest.
</P>
<P>(b) <I>Assignment of mortgage to Commissioner—</I> (1) <I>Timeframe; request for extension.</I> (i) If the mortgagee elects to assign the mortgage to the Commissioner, the mortgagee shall, at any time within 30 calendar days after the date HUD acknowledges the notice of election, file its application for insurance benefits and assign to the Commissioner, in such manner as the Commissioner may require, any applicable credit instrument and the realty and chattel security instruments.
</P>
<P>(ii) The Commissioner may extend this 30-day period by written notice that a partial payment of insurance claim under § 207.258b is being considered. A mortgagee may consider failure to receive a notice of an extension approval by the end of the 30-day time period a denial of the request for an extension.
</P>
<P>(iii) The extension shall be for such term, not to exceed 60 days, as the Commissioner prescribes; however, the Commissioner's consideration of a partial payment of claim, or the Commissioner's request that a mortgagee accept partial payment of a claim in accordance with § 207.258b, shall in no way prejudice the mortgagee's right to file its application for full insurance benefits within either the 30-day period or any extension prescribed by the Commissioner.
</P>
<P>(iv) The requirements of paragraphs (b)(2) through (b)(6) of this section shall also be met by the mortgagee.
</P>
<P>(2) <I>Notice of assignment.</I> On the date the assignment of the mortgage is filed for record, the mortgagee must notify the Commissioner, in the manner prescribed in 24 CFR part 200, subpart B, of such assignment, and must also notify the FHA Comptroller by telegram of such recordation.
</P>
<P>(3) <I>Warranty of mortgagee.</I> The assignment shall be made without recourse or warranty, except that the mortgagee shall warrant that: 
</P>
<P>(i) No act or omission of the mortgagee has impaired the validity and priority of the mortgage. 
</P>
<P>(ii) The mortgage is prior to all mechanics' and materialmen's liens filed on record subsequent to the recording of the mortgage, regardless of whether such liens attached prior to the recording date. 
</P>
<P>(iii) The mortgage is prior to all liens and encumbrances which may have attached or defects which may have arisen subsequent to the recording of the mortgage, except such liens or other matters as may be approved by the Commissioner. 
</P>
<P>(iv) The amount stated in the instrument of assignment is actually due under the mortgage and there are no offsets or counterclaims against such amount. 
</P>
<P>(v) The mortgagee has a good right to assign the mortgage. 
</P>
<P>(4) <I>Chattel lien warranty.</I> In assigning its security interest in chattels, including materials, located on the premises covered by the mortgage, or its security interest in building components stored either on-site or off-site at the time of the assignment, the mortgagee shall warrant that: 
</P>
<P>(i) No act or omission of the mortgagee has impaired the validity or priority of the lien created by the chattel security instruments; and 
</P>
<P>(ii) The mortgagee has a good right to assign the security instruments; and 
</P>
<P>(iii) The chattel security instruments are a first lien on the items covered by the instruments except for such other liens or encumbrances as may be approved by the Commissioner. 
</P>
<P>(5) <I>Items delivered by mortgagee.</I> The mortgagee shall deliver to the Commissioner, within 45 days after the assignment is filed for record, the items enumerated below: 
</P>
<P>(i) An assignment of all claims of the mortgagee against the mortgagor or others arising out of the mortgage transaction. 
</P>
<P>(ii) All policies of title or other insurance or surety bonds or other guaranties, and any and all claims thereunder, including evidence satisfactory to the Commissioner that the effective date of the original title coverage has been extended to include the assignment of the mortgage to the Commissioner. 
</P>
<P>(iii) All records, ledger cards, documents, books, papers, and accounts relating to the mortgage transaction. 
</P>
<P>(iv) All property of the mortgagor held by the mortgagee or to which it is entitled (other than the cash items which are to be retained by the mortgagee) pursuant to paragraph (b)(5) of this section.
</P>
<P>(v) Any additional information or data which the Commissioner may require. 
</P>
<P>(6) <I>Disposition of cash items.</I> The following cash items shall either be retained by the mortgagee or delivered to the Commissioner in accordance with instructions to be issued by the Commissioner at the time the insurance claim is filed: 
</P>
<P>(i) Any balance of the mortgage loan not advanced to the mortgagor. 
</P>
<P>(ii) Any cash held by the mortgagee or its agents or to which it is entitled, including deposits made for the account of the mortgagor, and which have not been applied in reduction of the principal of the mortgage indebtedness. 
</P>
<P>(iii) All funds held by the mortgagee for the account of the mortgagor received pursuant to any other agreement. 
</P>
<P>(iv) The amount of any undrawn balance under a letter of credit used in lieu of a cash deposit. 
</P>
<P>(c) <I>Conveyance of title to Commissioner.</I> If the mortgagee elects to acquire and convey title to the Commissioner, the following requirements shall be met: 
</P>
<P>(1) <I>Alternative actions by mortgagee.</I> At any time within a period of 30 days after the date of the notice of such election, the mortgagee shall take one of the alternative actions in paragraph (c) (2) or (3) of this section. 
</P>
<P>(2) <I>Foreclosure of mortgage.</I> The mortgagee may elect to commence foreclosure proceedings. If the laws of the State where the property is located do not permit institution of foreclosure within such 30-day period, foreclosure shall be commenced not less than 30 days after such action can be taken. Under such proceedings, the mortgagee shall take one of the following actions: 
</P>
<P>(i) Obtain possession of the mortgaged property and the income therefrom through the voluntary surrender thereof by the mortgagor. 
</P>
<P>(ii) Institute and prosecute with reasonable diligence, proceedings for the appointment of a receiver to manage the mortgaged property and collect income therefrom. 
</P>
<P>(iii) Proceed to exercise such other rights and remedies as may be available to it for the protection and preservation of the mortgaged property and to obtain the income therefrom under the mortgage and the law of the particular jurisdiction. 
</P>
<P>(iv) With the prior approval of the Commissioner, exercise the power of sale under a deed of trust. 
</P>
<P>(3) <I>Acquisition of title and possession.</I> The mortgagee, with the approval of the Commissioner, may elect to acquire possession of, and title to, the mortgaged property by means other than foreclosure. With the prior approval of the Commissioner, title may be transferred directly to the Commissioner. 
</P>
<P>(4) <I>Notice of foreclosure.</I> The mortgagee shall given written notice to the Commissioner within 30 days after the institution of foreclosure proceedings and shall exercise reasonable diligence in prosecuting such proceedings to completion. Any developments which might delay the consummation of such proceedings shall be promptly reported to the Commissioner. 
</P>
<P>(5) <I>Transfer by mortgagee.</I> After acquiring title to and possession of the property, the mortgagee shall (within 30 days of such acquisition) transfer title and possession of the property to the Commissioner. The transfer shall be made in such manner as the Commissioner may require. On the date the deed is filed for record, the mortgagee shall notify the Commissioner on a form prescribed by him of the filing of such conveyance, and shall also notify the FHA Assistant Commissioner-Comptroller by telegram of such recordation. 
</P>
<P>(6) <I>Filing of deed and application.</I> The mortgagee shall file its application for insurance benefits at the time of filing for record of the deed conveying the property to the Commissioner. 
</P>
<P>(7) <I>Deed covenants and documents.</I> The deed conveying the property to the Commissioner shall contain covenants satisfactory to the Commissioner. The original deed shall be forwarded to the Commissioner as soon as received from the recording authority. The following documents shall be forwarded with the deed: 
</P>
<P>(i) A bill of sale covering any personal property to which the mortgagee is entitled by reason of the mortgage transaction or by the acceptance of a deed in lieu of foreclosure. 
</P>
<P>(ii) An assignment of all claims of the mortgagee against the mortgagor or others arising out of the mortgage transaction and out of the foreclosure proceedings or other means by which the property was acquired. 
</P>
<P>(iii) An assignment of any claims on account of title insurance and fire or other hazard insurance, except claims which have been released with the prior approval of the Commissioner. 
</P>
<P>(8) <I>Title evidence.</I> Evidence of title, satisfactory to the Commissioner and meeting the requirements of § 207.258a shall be furnished to the Commissioner (without expense to him) within 45 days of the filing for record of the deed conveying the property to him. 
</P>
<P>(9) <I>Disposition of cash items.</I> The provisions of paragraph (b)(4) of this section, relating to the retention or delivery of cash items, shall be applicable to cases involving the conveyance of property to the Commissioner.
</P>
<APPRO TYPE="N">(Information collection requirements in paragraph (b) were approved by the Office of Management and Budget under control number 2535-0061)
</APPRO>
<CITA TYPE="N">[36 FR 24537, Dec. 22, 1971, as amended at 44 FR 8195, Feb. 8, 1979; 50 FR 38786, Sept. 25, 1985; 51 FR 27838, Aug. 4, 1986; 64 FR 4770, Jan. 29, 1999; 76 FR 24371, May 2, 2011; 77 FR 55135, Sept. 7, 2012] 


</CITA>
</DIV8>


<DIV8 N="§ 207.258a" NODE="24:2.1.1.2.7.2.150.17" TYPE="SECTION">
<HEAD>§ 207.258a   Title requirements.</HEAD>
<P>(a) <I>Form of title evidence.</I> The title evidence submitted with a conveyance of the property to the Commissioner shall be in the form of an owner's policy of title insurance, except that, if an abstract and attorney's opinion were accepted by the Commissioner at the time of insurance, the title evidence may be in such form. The title evidence shall be effective on or after the date of the recording of the conveyance to the Commissioner. 
</P>
<P>(b) <I>Content of title evidence.</I> To be satisfactory to the Commissioner, the title evidence covering the property conveyed to him shall show the same title vested in the Commissioner as was vested in the mortgagor as of the date of the mortgage was filed for record, with the exception of such liens or other matters affecting the title as may be approved by the Commissioner.


</P>
</DIV8>


<DIV8 N="§ 207.258b" NODE="24:2.1.1.2.7.2.150.18" TYPE="SECTION">
<HEAD>§ 207.258b   Partial payment of claim.</HEAD>
<P>(a) Whenever the Commissioner receives notice under § 207.258 of a mortgagee's intention to file an insurance claim and to assign the mortgage to the Commissioner, the Commissioner may request the mortgagee, in lieu of assignment, to accept partial payment of the claim under the mortgage insurance contract and to recast the mortgage, under such terms and conditions as the Commissioner may determine.
</P>
<P>(b) The Commissioner may request the mortgagee to participate in a partial payment of claim in lieu of assignment only after a determination that partial payment would be less costly to the Federal government than other reasonable alternatives for maintaining the low- and moderate-income character of the project. This determination shall be based upon the findings listed below and such other findings as the Commissioner deems appropriate:
</P>
<P>(1) The mortgagee is entitled, under § 207.255, to assign the mortgage in exchange for the payment of insurance benefits;
</P>
<P>(2) The relief resulting from partial payment, when considered with other resources available to the project, would be sufficient to restore the financial viability of the project;
</P>
<P>(3) The project is, or can at reasonable cost be made, structurally sound;
</P>
<P>(4) The management of the project is satisfactory to the Commissioner; and
</P>
<P>(5) The default under the insured mortgage was beyond the control of the mortgagor.
</P>
<P>(c) Partial payment of a claim under this section shall be made only when:
</P>
<P>(1) The project is, or potentially could serve as, a low- and moderate-income housing resource;
</P>
<P>(2) The property covered by the mortgage is free and clear of all liens other than the insured first mortgage and such other liens as the Commissioner may have approved;
</P>
<P>(3) The mortgagee has voluntarily agreed to accept partial payment of the insurance claim under the mortgage insurance contract and to recast the remaining mortgage amount under terms and conditions prescribed by the Commissioner; and
</P>
<P>(4) The mortgagor has agreed to repay to the Commissioner an amount equal to the partial payment, with the obligation secured by a second mortgage on the project containing terms and conditions prescribed by the Commissioner. The terms of the second mortgage will be determined on a case-by-case basis to assure that the estimated project income will be sufficient to cover estimated operating expenses and debt service on the recast insured mortgage. The Commissioner may provide for postponed amortization of the second mortgage.
</P>
<P>(d) Payment of insurance benefits under this section shall be in cash. The Commissioner shall waive the deduction of one percent of the mortgage funds advanced to the mortgagor, provided for in § 207.259(b)(2)(iv), with respect to a partial payment of a claim under this section. The items referred to in § 207.258(b)(4) shall either be retained by the mortgagee or delivered to the Commissioner in accordance with instructions to be issued by the Commissioner with respect to a partial payment of claim under this section.
</P>
<P>(e) Lenders receiving a partial payment of claim following the Commissioner's endorsement of the Mortgage for full insurance under parts 251, 252, or 255 of this chapter, will pay HUD a fee in an amount set forth through <E T="04">Federal Register</E> notice. HUD, in its discretion, may collect this fee or deduct the fee from any payment it makes in the claim process.
</P>
<CITA TYPE="N">[50 FR 38786, Sept. 25, 1985, as amended at 61 FR 49037, Sept. 17, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 207.259" NODE="24:2.1.1.2.7.2.150.19" TYPE="SECTION">
<HEAD>§ 207.259   Insurance benefits.</HEAD>
<P>(a) <I>Method of payment.</I> (1) Upon either an assignment of the mortgage to the Commissioner or a conveyance of the property to the Commissioner in accordance with requirements in § 207.258, payment of an insurance claim shall be made in cash, in debentures, or in a combination of both, as determined by the Commissioner either at, or prior to, the time of payment.
</P>
<P>(2) An insurance claim paid on a mortgage insured under section 223(e) of the National Housing Act shall be paid in cash from the Special Risk Insurance Fund.
</P>
<P>(b) <I>Amount of payment; assignment of mortgage.</I> If the mortgage is assigned to the Commissioner, the insurance benefits shall be paid in an amount determined as follows:
</P>
<P>(1) By adding to the unpaid principal amount of the mortgage, computed as of the date of default, the following items: 
</P>
<P>(i) The amount of all payments made by the mortgagee for taxes, special assessments and water rates which are liens prior to the mortgage; for insurance on the property; and for any mortgage insurance premiums paid after default. 
</P>
<P>(ii) An allowance for reasonable payments made by the mortgagee, with the approval of the Commissioner, for the completion and preservation of the property. 
</P>
<P>(iii) An amount equivalent to the debenture interest which would have been earned on the portion of the insurance benefits paid in cash, as of the date such cash payment is made, except that when the mortgagee fails to meet any one of the applicable requirements of §§ 207.256 and 207.258 within the specified time and in a manner satisfactory to the Commissioner (or within such further time as the Commissioner may approve in writing), the interest allowance in such cash payment shall be computed only to the date on which the particular required action should have been taken or to which it was extended. 
</P>
<P>(2) By deducting from the total of the items computed under paragraph (b)(1) of this section, the following items: 
</P>
<P>(i) Any amount received by the mortgagee on account of the mortgage after the date of default. 
</P>
<P>(ii) Any net income received by the mortgagee from the property covered by the mortgage after the date of default. 
</P>
<P>(iii) The sum of the cash items retained by the mortgagee pursuant to § 207.258(b)(6), except the balance of the mortgage loan not advanced to the mortgagor.
</P>
<P>(iv) An amount equivalent to 1 percent of the mortgage funds advanced to the mortgagor and not repaid as of the date of default, except that all or part of the 1 percent may be waived by the Commissioner if, at his request and in lieu of foreclosure, the mortgage is assigned to the Secretary. 
</P>
<P>(v) In the case of a lender receiving insurance benefits for the full Mortgage amount upon the Commissioner's endorsement of the Mortgage for full insurance pursuant to 24 CFR parts 251, 252, or 255, the amount of the fee set forth through <E T="04">Federal Register</E> notice. HUD may, in its discretion, collect this fee rather than deducting the fee from the total of the items computed under paragraph (b)(1) of this section.
</P>
<P>(vi) Except for multifamily project mortgages for which HUD issued a firm commitment for mortgage insurance before September 1, 2011, and for multifamily project mortgages insured under section 232 of the Act (12 U.S.C. 1715w) and under section 242 of the Act (12 U.S.C. 1715z-7), when there is a covenant default as defined in § 207.255(a)(1)(ii) and a mortgagee refuses to comply promptly with the Commissioner's request to accelerate payment pursuant to § 207.257, an amount equal to the difference between the project's market value as of the date of the Commissioner's request and the project's market value as of the date the mortgagee makes an election to assign the mortgage, or convey title to the project, as determined by appraisal procedures established by the Commissioner.
</P>
<P>(vii) For multifamily project mortgages for which HUD issued a firm commitment for mortgage insurance on or after September 1, 2011, the regulations of paragraph (b)(2)(vi) of this section shall apply, unless the mortgagor demonstrates to the satisfaction of the Commissioner that financial hardship to the mortgagor would result from application of the regulations in paragraph (b)(2)(vi) of this section due to the reasonable expectations of the mortgagor that the transaction would close under the regulations in effect prior to September 1, 2011, in which case, the regulations of paragraph (b)(2)(vi) shall not apply.
</P>
<P>(c) <I>Amount of payment; conveyance of property.</I> If the property is conveyed to the Commissioner, the insurance benefits shall be paid in an amount determined in accordance with paragraph (b) of this section, except that the item set forth in paragraph (b)(2)(iv) of this section shall not be deducted. 
</P>
<P>(d) <I>Issuance of certificate of claim.</I> In addition to the insurance benefits paid under paragraph (b) or (c) of this section, a certificate of claim shall be issued to the mortgagee. 
</P>
<P>(1) In the case of an assignment of the mortgage, the certificate shall be for an amount which the Commissioner determines to be sufficient, when added to the amount of the insurance benefits to equal the amount the mortgagee would have received if, on the date of assignment to the Commissioner, the mortgagor had paid in full all obligations under the mortgage. Where a conveyance is involved, there shall also be included in the certificate an allowance in a reasonable amount for any necessary expenses incurred by the mortgagee in connection with the foreclosure proceedings or the acquisition of the mortgaged property otherwise and in connection with the conveyance of the property to the Commissioner. 
</P>
<P>(2) The certificate of claim shall provide for an uncompounded annual interest increment of 3 percent to begin as of the date of either assignment or conveyance. 
</P>
<P>(e) <I>Issuance of debentures.</I> Where debentures are issued, they shall meet the following requirements: 
</P>
<P>(1) Be issued as of the date of default. 
</P>
<P>(2) Be registered as to principal and interest. 
</P>
<P>(3) At the option of the Commissioner and with the approval of the Secretary of the Treasury, be redeemable at par plus accrued interest on any semiannual interest payment date on 3 months' notice of redemption given in such manner as the Commissioner shall prescribe. The debenture interest on the debentures called for redemption shall cease on the semiannual interest payment date designated in the call notice. The Commissioner may include with the notice of redemption an offer to purchase the debentures at par plus accrued interest at any time during the period between the notice of redemption and the redemption date. If the debentures are purchased by the Commissioner after such call and prior to the named redemption date, the debenture interest shall cease on the date of purchase. 
</P>
<P>(4) Mature 20 years from the date thereof. 
</P>
<P>(5) Be issued in such forms and amounts; and be subject to such terms and conditions; and include such provisions for redemption, if any, as may be prescribed by the Secretary, with the approval of the Secretary of the Treasury; and may be in book entry or certificated registered form, or such other form as the Secretary by regulation may prescribe. 
</P>
<P>(6) Bear interest from the date of issue, payable semiannually on the first day of January and the first day of July of each year at the rate in effect as of the date the commitment was issued, or as of the date of initial insurance endorsement of the mortgage, whichever rate is higher. The applicable rates of interest will be published twice each year as a notice in the <E T="04">Federal Register.</E>
</P>
<P>(7) Debentures representing the portion of the claim applicable to an operating loss loan shall bear interest at the rate in effect as of the date the commitment to insure such loan was issued, or as of the date of endorsement for insurance of such loan, whichever rate is the higher, although debentures representing the portion of the claim applicable to the original mortgage may bear interest at a different rate. 
</P>
<P>(f) <I>Mortgagee Time Limits for Supplemental Claims for Additional Insurance Benefits.</I> A mortgagee may not file for any additional payments of its mortgage insurance claim more than six months after the date of final settlement of the insurance claim by the Commissioner. For the purpose of this section, the term final settlement shall mean the payment of the insurance claim (in cash or debentures) or billing for any overpayment of a partial claim that is made by the Commissioner. Final settlement is based upon the submission by the mortgagee of all required documents and information pursuant to part 207 of this chapter.
</P>
<CITA TYPE="N">[36 FR 24537, Dec. 22, 1971, as amended at 41 FR 45829, Oct. 18, 1976; 47 FR 26125, June 17, 1982; 49 FR 24654, June 14, 1984; 51 FR 13142, Apr. 17, 1986; 51 FR 27838, Aug. 4, 1986; 57 FR 55112, Nov. 24, 1992; 59 FR 49816, Sept. 30, 1994; 61 FR 49038, Sept. 17, 1996; 71 FR 18153, Apr. 10, 2006; 76 FR 24371, May 2, 2011; 80 FR 51468, Aug. 25, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 207.259a" NODE="24:2.1.1.2.7.2.150.20" TYPE="SECTION">
<HEAD>§ 207.259a   Waiver of title objection; mortgages formerly Commissioner-held.</HEAD>
<P>If the Commissioner sells a mortgage and such mortgage is later reassigned to him in exchange for debentures or the property covered by such mortgage is later conveyed to him in exchange for debentures, the Commissioner will not object to title by reason of any lien or other adverse interest that was senior to the mortgage on the date of the original sale of such mortgage by the Commissioner. 


</P>
</DIV8>


<DIV8 N="§ 207.260" NODE="24:2.1.1.2.7.2.150.21" TYPE="SECTION">
<HEAD>§ 207.260   Maintenance and inspection of property.</HEAD>
<P>As long as the mortgage is insured or held by the Commissioner, the mortgagor must maintain the insured project in accordance with the physical condition requirements in 24 CFR part 5, subpart G; and the mortgagee must inspect the project in accordance with the physical inspection requirements in 24 CFR part 5, subpart G.
</P>
<CITA TYPE="N">[63 FR 46578, Sept. 1, 1998]


</CITA>
</DIV8>


<DIV8 N="§ 207.261" NODE="24:2.1.1.2.7.2.150.22" TYPE="SECTION">
<HEAD>§ 207.261   Capturing excess bond proceeds.</HEAD>
<P>(a) A mortgagee that finances multifamily housing or healthcare facilities insured under Title II of the National Housing Act through the issuance and sale of bonds or bond anticipation notes and uses a project-specific trust indenture agreement, that clearly outlines the project and identifies by project the trust funds established by and administered in accordance with the terms of the trust indenture, shall:
</P>
<P>(1) Include the following clause in the trust indenture: In the event of an assignment or conveyance of the mortgage to the Commissioner, subsequent to the issuance of the bonds, all money remaining in all funds and accounts other than the rebate fund, and any other funds remaining under the trust indenture after payment or provision for payment of debt service on the bonds and the fees and expenses of the credit enhancer, issuer, trustee, and other such parties unrelated to the mortgagor (other than funds originally deposited by the mortgagor or related parties on or before the date of issuance of the bonds) shall be returned to the mortgagee.
</P>
<P>(2) Upon the Commissioner's payment of an FHA mortgage insurance claim under § 207.259, the mortgagee shall take all legally-entitled actions to enforce the clause required by paragraph (a)(1) of this section and pay the Commissioner any trust funds remaining after discharge by the trustee of all obligations of the trust indenture, no later than 6 months after the date of the Commissioner's final settlement of the FHA mortgage insurance claim.
</P>
<P>(b) For purposes of paragraph (a) of this section, the term “rebate fund” means a separate fund established under a contract or agreement for tax-exempt bonds in which amounts (excess interest earnings from the tax-exempt bonds) must be deposited to make rebate payments to the federal government under the Internal Revenue Code.
</P>
<CITA TYPE="N">[79 FR 43933, July 29, 2014]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="151" NODE="24:2.1.1.2.7.2.151" TYPE="SUBJGRP">
<HEAD>Rights in Housing Fund</HEAD>


<DIV8 N="§ 207.263" NODE="24:2.1.1.2.7.2.151.23" TYPE="SECTION">
<HEAD>§ 207.263   Responsibility for servicing.</HEAD>
<P>After January 10, 1994, servicing of insured mortgages must be performed by a mortgagee which is approved by HUD to service insured mortgages.
</P>
<CITA TYPE="N">[57 FR 58350, Dec. 9, 1992]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="152" NODE="24:2.1.1.2.7.2.152" TYPE="SUBJGRP">
<HEAD>Amendments</HEAD>


<DIV8 N="§ 207.499" NODE="24:2.1.1.2.7.2.152.24" TYPE="SECTION">
<HEAD>§ 207.499   Effect of amendments.</HEAD>
<P>The regulations in this subpart may be amended by the Commissioner at any time and from time to time, in whole or in part, but such amendment shall not adversely affect the interests of a mortgagee or lender under the contract of insurance on any mortgage or loan already insured and shall not adversely affect the interests of a mortgagee or lender on any mortgage or loan to be insured on which the Commissioner has made a commitment to insure. 


</P>
</DIV8>

</DIV7>

</DIV6>

</DIV5>


<DIV5 N="208" NODE="24:2.1.1.2.8" TYPE="PART">
<HEAD>PART 208—ELECTRONIC TRANSMISSION OF REQUIRED DATA FOR CERTIFICATION AND RECERTIFICATION AND SUBSIDY BILLING PROCEDURES FOR MULTIFAMILY SUBSIDIZED PROJECTS
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1701s, 1715l, 1715z-1; 42 U.S.C. 1437f and 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>58 FR 61022, Nov. 19, 1993, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 208.101" NODE="24:2.1.1.2.8.0.153.1" TYPE="SECTION">
<HEAD>§ 208.101   Purpose.</HEAD>
<P>The purpose of this part is to require owners of subsidized multifamily projects to electronically submit certain data to HUD for the programs listed in § 208.104. This electronically submitted data is required by HUD Forms, Owner's Certification of Compliance with Tenant's Eligibility and Rent Procedure, Worksheets to Compute Tenant Payment/Rent (Form HUD-50059 and 50059 Worksheets), and the Monthly Subsidy Billing Forms, Housing Owner's Certification and Application for Housing Assistance Payments (HUD-52670), Schedule of Tenant Assistance Payments Due (HUD-52670A, Part 1), Schedule of section 8 Special Claims (HUD-52670A, Part 2), and Special Claims Worksheets, HUD-52671 A through D), as applicable.


</P>
</DIV8>


<DIV8 N="§ 208.104" NODE="24:2.1.1.2.8.0.153.2" TYPE="SECTION">
<HEAD>§ 208.104   Applicability.</HEAD>
<P>(a) This part applies to HUD administered subsidized multifamily projects, either insured or non-insured, under:
</P>
<P>(1) The section 236 Interest Reduction and Rental Assistance Payments program;
</P>
<P>(2) The section 8 Housing Assistance Payments Programs, including, but not limited to, section 8 Housing Assistance Payments Programs for New Construction (24 CFR part 880), section 8 Housing Assistance Payments Program for Substantial Rehabilitation (24 CFR part 881), section 8 Housing Assistance Payments Program, New Construction Set-Aside for section 515 Rural Rental Housing Projects (24 CFR part 884); Loans for Housing for the Elderly or Handicapped (24 CFR part 885) and section 8 Loan Management and Property Disposition Set-aside program (24 CFR part 886);
</P>
<P>(3) The section 221(d)(3) Below Market Interest Rate Housing for Low and Moderate Income Mortgage Insurance program (24 CFR part 221); and
</P>
<P>(4) The section 101 Rent Supplement program (24 CFR part 215).
</P>
<P>(b) This part applies to those multifamily projects having subsidy contracts, either insured or non-insured, where State housing finance and development agencies and other Public Housing Agencies are the subsidy contract administrator under:
</P>
<P>(1) The section 236 Interest Reduction and Rental Assistance Payments program (24 CFR part 236);
</P>
<P>(2) The section 8 Housing Assistance Payments Programs, including, but not limited to, section 8 Housing Assistance Payments Program for New Construction (24 CFR part 880), section 8 Housing Assistance Payments Program for Substantial Rehabilitation (24 CFR part 881), and section 8 Housing Assistance Payments Program, New Construction Set-Aside for section 515 Rural Rental Housing Projects (24 CFR part 884);
</P>
<P>(3) The section 221(d)(3) Below Market Interest Rate Housing for Low and Moderate Income Mortgage Insurance Program (24 CFR part 221); and
</P>
<P>(4) The section 101 Rent Supplement program (24 CFR part 215).
</P>
<P>(c) This part applies to all other subsidized section 202 projects, which include: section 202 projects with rent supplement or loan management set aside, section 202 projects with section 162 assistance, and section 202 Supportive Housing for the Elderly. This part also applies to section 811 Supportive Housing for Persons With Disabilities.
</P>
<P>(d) This part does not apply to the section 8 Existing Housing Program or the Moderate Rehabilitation program.


</P>
</DIV8>


<DIV8 N="§ 208.108" NODE="24:2.1.1.2.8.0.153.3" TYPE="SECTION">
<HEAD>§ 208.108   Requirements.</HEAD>
<P>(a) <I>Projects specified in § 208.104(a) that are automated.</I> Project owners of applicable projects under § 208.104(a) who currently use an automated software package to process certifications and recertifications and to provide subsidy billings to HUD must update their software packages and begin electronic transmission of that data in a HUD specified format by March 21, 1994. These project owners are required to transmit data collected for the 12 months preceding March 21, 1994, as well as data collected on or after this date. Data collected for the 12 months preceding March 21, 1994, is to include only the tenant's most recent “complete certification” (move-in, initial certification, interim recertification, or annual recertification). When the most recent certification for a tenant is a partial certification (gross rent change, unit transfer, or correction), both the complete and partial certifications must be transmitted. 
</P>
<P>(b) <I>Projects specified in § 208.104(a) that are not automated.</I> Nonautomated project owners and agents (those owners and agents that currently prepare the certification, recertification, and subsidy billing forms manually) of applicable projects under § 208.104(a) must:
</P>
<P>(1) Complete the search and either obtain the necessary hardware or software, or sign service contracts;
</P>
<P>(2) Complete their data loading; and
</P>
<P>(3) Begin electronic transmission by May 20, 1994. These project owners are required to transmit data collected for the 12 months preceding May 20, 1994, as well as data collected on or after this date. Data collected for the 12 months preceding May 20, 1994, is to include only the tenant's most recent “complete certification” (move-in, initial certification, interim recertification, or annual recertification). When the most recent certification for a tenant is a partial certification (gross rent change, unit transfer, or correction), both the complete and partial certifications must be transmitted. 
</P>
<P>(c) <I>Projects specified in § 208.104(b)</I>—(1) <I>Project owners.</I> Project owners of applicable projects under § 208.104(b) must electronically transmit data for certification, recertification and subsidy billing procedures in a HUD specified format to the contract administrator. These project owners are required to transmit data collected for the 12 months preceding September 23, 1994, as well as data collected on or after that date. Data collected for the 12 months preceding September 23, 1994 is to include only the tenant's most recent “complete certification” (move-in, initial certification, interim recertification, or annual recertification). When the most recent certification for a tenant is a partial certification (gross rent change, unit transfer, or correction), both the complete and partial certifications must be transmitted. 
</P>
<P>(2) <I>Contract administrators.</I> State housing finance and development agencies and Public Housing Agencies that serve as the subsidy contract administrator must accept the electronic transmission of the HUD forms listed below in § 208.108(e) from the projects they administer, and electronically transmit that data to HUD in a HUD specified format after appropriate review and correction of the data. 
</P>
<P>(d) <I>Projects specified in § 208.104(c).</I> Project owners of applicable projects under § 208.104(c) must electronically transmit data for certification, recertification and subsidy billing procedures to HUD in a HUD specified format. In the case of partially assisted section 202 projects, owners are required to electronically transmit data only for subsidized units. These project owners are required to transmit data collected for the 12 months preceding the effective date of the rule, as well as data collected on or after the effective date of the rule. Data collected for the 12 months preceding September 23, 1994 is to include only the tenant's most recent “complete certification” (move-in, initial certification, interim recertification, or annual recertification). When the most recent certification for a tenant is a partial certification (gross rent change, unit transfer, or correction), both the complete and partial certifications must be transmitted. 
</P>
<P>(e) <I>Data to be transmitted.</I> Electronic transmission consists of data transmitted from the HUD-50059, 50059 worksheets, 52670 and 52670A, Parts 1 and 2 and 52671 A through D correctly formatted in accord with the HUD data requirements and in lieu of the hard copy forms.
</P>
<CITA TYPE="N">[58 FR 61022, Nov. 19, 1993, as amended at 59 FR 43474, Aug. 24, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 208.112" NODE="24:2.1.1.2.8.0.153.4" TYPE="SECTION">
<HEAD>§ 208.112   Cost.</HEAD>
<P>(a) The costs of the electronic transmission of the correctly formatted data, including either the purchase and maintenance of computer hardware or software, or both, the cost of contracting for those services, or the cost of centralizing the electronic transmission function, shall be considered project operating costs to be paid from project income, and considered project operating costs for the purpose of processing and approving requests for HUD approval of rent increases.
</P>
<P>(b) At the owner's option, the cost of the computer software may include service contracts to provide maintenance or training, or both. Regardless of whether an owner obtains service contracts to provide maintenance or training or both, the software must be updated to incorporate changes or revisions in legislation, regulations, handbooks, notices or HUD electronic transmission data format requirements.
</P>
<P>(c) The source of funds for the purchase of hardware or software, or contracting for services for electronic transmission, may include current project operating income; an expense item in processing rent increases; a loan from the Reserve for Replacement Account, or a release from the Residual Receipts Account. 
</P>
<P>(d) A loan from the Reserve for Replacements Account must be repaid within a five year period from the release date.
</P>
<P>(e) Owners of smaller projects or partially assisted projects with few subsidized units and CAs that administer no more than one project that determine that the purchase of hardware and/or software is not cost effective may contract out the electronic data transmission function to organizations that provide such services, including, but not limited to the following organizations: local management agents, local management associations and management agents with centralized facilities. Owners of multiple projects may centralize the electronic transmission function. However, owners that contract out or centralize the electronic transmission function are required to retain the ability to monitor the day-to-day operations of the project at the project site and be able to demonstrate that ability to the relevant HUD field office. 
</P>
<CITA TYPE="N">[58 FR 61022, Nov. 19, 1993, as amended at 59 FR 43475, Aug. 24, 1994]


</CITA>
</DIV8>

</DIV5>


<DIV5 N="213" NODE="24:2.1.1.2.9" TYPE="PART">
<HEAD>PART 213—COOPERATIVE HOUSING MORTGAGE INSURANCE 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1715b, 1715e; 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>36 FR 24553, Dec. 22, 1971, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:2.1.1.2.9.1" TYPE="SUBPART">
<HEAD>Subpart A—Eligibility Requirements—Projects</HEAD>


<DIV8 N="§ 213.1" NODE="24:2.1.1.2.9.1.154.1" TYPE="SECTION">
<HEAD>§ 213.1   Eligibility requirements.</HEAD>
<P>The eligibility requirements set forth in 24 CFR part 200, subpart A, apply to multifamily project mortgages insured under section 213 of the National Housing Act (12 U.S.C. 1715e), as amended. 
</P>
<CITA TYPE="N">[61 FR 14405, Apr. 1, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:2.1.1.2.9.2" TYPE="SUBPART">
<HEAD>Subpart B—Contract Rights and Obligations—Projects</HEAD>


<DIV8 N="§ 213.251" NODE="24:2.1.1.2.9.2.154.1" TYPE="SECTION">
<HEAD>§ 213.251   Cross-reference.</HEAD>
<P>(a) All of the provisions of subpart B, part 207 of this chapter covering mortgages insured under section 207 of the National Housing Act, apply with full force and effect to mortgages insured under section 213 of the National Housing Act, except the following provisions: 
</P>
<EXTRACT>
<FP>Sec. 
</FP>
<FP-2>207.251 Definitions. 
</FP-2>
<FP-2>207.252 First, second, and third premiums. 
</FP-2>
<FP-2>207.254 Form of endorsement.</FP-2></EXTRACT>
<P>(b) For the purposes of this subpart, all references in part 207 of this chapter to section 207 of the National Housing Act shall be deemed to refer to section 213 of the Act, and all references in part 207 of this chapter to the General Insurance Fund shall be deemed to refer to the Cooperative Management Housing Insurance Fund in cases involving mortgages which are the obligation of the Cooperative Management Housing Insurance Fund. 
</P>
<P>(c) The provisions of §§ 207.255, 207.256, 207.257, 207.261, 207.262 and 207.263 of this chapter shall apply to supplementary loans insured under section 213(j) of the Act. In connection with the foregoing provisions the terms <I>mortgagor, mortgagee, mortgage</I> shall be construed to mean <I>borrower, lender,</I> and <I>supplementary loan, including required security instrument.</I> 
</P>
<P>(d) Where the provisions of this subpart are applicable to supplementary loans, the terms <I>mortgagor, mortgagee, mortgage,</I> shall be construed to mean <I>borrower, lender,</I> and <I>supplementary loan, including required security instrument.</I> 
</P>
<P>(e) Where the provisions of this subpart are applicable to operating loss loans, the terms <I>mortgagor, mortgagee</I> and <I>mortgage</I> shall be construed to mean <I>borrower, lender</I> and <I>operating loss loan, including required security instrument,</I> respectively. 
</P>
<CITA TYPE="N">[36 FR 24553, Dec. 22, 1971, as amended at 37 FR 8662, Apr. 29, 1972] 


</CITA>
</DIV8>


<DIV8 N="§ 213.252" NODE="24:2.1.1.2.9.2.154.2" TYPE="SECTION">
<HEAD>§ 213.252   Definitions.</HEAD>
<P>The definitions contained in § 213.1 shall apply to this subpart and in addition the following terms shall have the meaning indicated. 
</P>
<P>(a) <I>Contract of Insurance</I> means the agreement evidenced by endorsement of the credit instrument by the Commissioner or his duly authorized representative and includes the terms, conditions and provisions of this subpart and of the National Housing Act. 
</P>
<P>(b) <I>Insured mortgage</I> means a mortgage which has been insured by the endorsement of the credit instrument by the Commissioner. 
</P>
<P>(c) <I>Mortgage</I> means such a first lien upon real estate and other property as is commonly given to secure advances on, or the unpaid purchase price of, real estate under the laws of the State, district or territory in which the real estate is located, together with the credit instrument or instruments, if any, secured thereby. In any instance where an operating loss loan is involved, the term shall include both the original mortgage and the instrument securing the operating loss loan. 
</P>
<P>(d) <I>Mortgagee</I> means the original lender under a mortgage, its successors and such of its assigns as are approved by the Commissioner, and includes the holders of the credit instruments issued under a trust indenture, mortgage or deed of trust pursuant to which such holders act by and through a trustee therein named. 
</P>
<P>(e) <I>Mortgagor</I> means the original borrower under a mortgage and its successors and such of its assigns as are approved by the Commissioner. 
</P>
<P>(f) <I>Project Mortgage</I> means a blanket mortgage insured under section 213 of the Act, covering a group of not less than five single-family dwellings. 


</P>
</DIV8>


<DIV8 N="§ 213.253" NODE="24:2.1.1.2.9.2.154.3" TYPE="SECTION">
<HEAD>§ 213.253   Premiums upon initial endorsement.</HEAD>
<P>(a) <I>Management and Sales Types and Investor Sponsored Projects.</I> The mortgagee, upon the initial endorsement of the mortgage for insurance, shall pay to the Commissioner a first mortgage insurance premium equal to one-half of one percent of the original face amount of the mortgage. 
</P>
<P>(b) <I>Purchasing cooperatives.</I> The provisions of paragraph (a) of this section do not apply to the mortgage or a purchasing nonprofit cooperative housing corporation or trust where such mortgage is endorsed for insurance pursuant to the sale of an Investor Sponsored Project to such purchasing nonprofit cooperative housing corporation or trust. 
</P>
<P>(c) <I>Existing Construction.</I> The provisions of paragraph (a) of the section shall apply to a mortgage covering Existing Construction which involves insurance of advances for Commissioner approved or required repairs, improvements, alterations and additions. 
</P>
<P>(d) <I>Operating loss loans and supplementary loans.</I> The provisions of paragraph (a) of this section shall apply to any operating loss loan and to any supplementary loan, except a supplementary loan to finance the acquisition of an existing community facility. 


</P>
</DIV8>


<DIV8 N="§ 213.254" NODE="24:2.1.1.2.9.2.154.4" TYPE="SECTION">
<HEAD>§ 213.254   Premiums where first principal payment more than one year after initial endorsement.</HEAD>
<P>(a) <I>Management and Sales Types and Investor Sponsored Projects.</I> (1) If the date of the first principal payment is more than one year following the date of such initial insurance endorsement, the mortgagee, upon the anniversary of such insurance date, shall pay a second premium equal to one-half of one percent of the original face amount of the mortgage. On the date of the first principal payment, the mortgagee shall pay a third premium equal to one-half of one percent of the average outstanding principal obligation of the mortgage for the following year which shall be adjusted so as to accord with such date and so that the aggregate of the first, second and third premiums shall equal the sum of:
</P>
<P>(i) One percent of the average outstanding principal obligation of the mortgage for the year following the date of initial insurance endorsement, and 
</P>
<P>(ii) One-half of one percent per annum of the average outstanding principal obligation of the mortgage for the period from the first anniversary of the date of initial insurance endorsement to one year following the date of the first principal payment. 
</P>
<P>(2) If the date of the first principal payment of a mortgage is more than one year following the date of the initial insurance endorsement and the mortgage is paid in full prior to the date of such first principal payment, the first and second premiums collected shall be adjusted so that the aggregate of the two premiums shall equal the sum of: 
</P>
<P>(i) One percent of the average outstanding principal obligation of the mortgage for the year following the date of the initial insurance endorsement and 
</P>
<P>(ii) One-half of one percent per annum of the average outstanding principal obligation of the mortgage for the period from the first anniversary of the date of initial endorsement to the date the mortgage was paid in full. 
</P>
<P>(b) <I>Purchasing cooperatives.</I> The provisions of paragraph (a) of this section do not apply to the mortgage of a purchasing nonprofit cooperative housing corporation or trust where such mortgage is endorsed for insurance pursuant to the sale of an Investor Sponsored Project to such purchasing nonprofit cooperative housing corporation or trust. 
</P>
<P>(c) <I>Existing Construction.</I> The provisions of paragraph (a) of this section shall apply to a mortgage covering Existing Construction which involves insurance of advances for Commissioner approved or required repairs, improvements, alterations and additions. 
</P>
<P>(d) <I>Supplementary loan; insurance of advances.</I> The provisions of paragraph (a) shall apply to any supplementary loan involving insurance of advances. 


</P>
</DIV8>


<DIV8 N="§ 213.255" NODE="24:2.1.1.2.9.2.154.5" TYPE="SECTION">
<HEAD>§ 213.255   Premiums where first principal payment one year or less after initial endorsement.</HEAD>
<P>(a) <I>Management and Sales Types and Investor Sponsored Projects.</I> (1) If the date of the first principal payment is one year, or less than one year following the date of such initial insurance endorsement, the mortgagee, upon such first principal payment date, shall pay a second premium equal to one-half of one percent of the average outstanding principal obligation of the mortgage for the following year which shall be adjusted so as to accord with such date and so that the aggregate of the first and second premiums shall equal the sum of
</P>
<P>(i) One percent per annum of the average outstanding principal obligation of the mortgage for the period from the date of initial insurance endorsement to the date of first principal payment, and 
</P>
<P>(ii) One-half of one percent of the average outstanding principal obligation of the mortgage for the year following the date of the first principal payment. 
</P>
<P>(2) If the date of the first principal payment of a mortgage is one year or less than one year following the date of the initial insurance endorsement and the mortgage is paid in full prior to the date of such first principal payment, the first and only premium collected shall be adjusted so that the total premium shall equal one percent per annum of the average outstanding principal obligation of the mortgage for the period from the date of initial insurance endorsement to the date the mortgage was paid in full. 
</P>
<P>(b) <I>Purchasing cooperatives.</I> The provisions of paragraph (a) of this section do not apply to the mortgage of a purchasing nonprofit cooperative housing corporation or trust where such mortgage is endorsed for insurance pursuant to the sale of an Investor Sponsored Project to such purchasing nonprofit cooperative housing corporation or trust. 
</P>
<P>(c) <I>Existing Construction.</I> The provisions of paragraph (a) of this section shall apply to a mortgage covering Existing Construction which involves insurance of advances for Commissioner approved or required repairs, improvements, alterations and additions. 
</P>
<P>(d) <I>Supplementary loan; insurance of advances.</I> The provisions of paragraph shall apply to a supplementary loan involving insurance of advances. 


</P>
</DIV8>


<DIV8 N="§ 213.256" NODE="24:2.1.1.2.9.2.154.6" TYPE="SECTION">
<HEAD>§ 213.256   Premiums; insurance upon completion.</HEAD>
<P>(a) <I>Management and Sales Types and Investor Sponsored Projects.</I> (1) Where the mortgage is initially and finally endorsed for insurance pursuant to a Commitment to Insure Upon Completion, the mortgagee on the date of the first principal payment shall pay a second premium equal to one-half of one percent of the average outstanding principal obligation of the mortgage for the year following such first principal payment date which shall be adjusted so as to accord with such date and so that the aggregate of the first and second premiums shall equal the sum of one-half of one percent per annum of the average outstanding principal obligation of the mortgage for the period from the date of the insurance endorsement to one year following the date of the first principal payment. 
</P>
<P>(2) Where the mortgage is initially and finally endorsed for insurance pursuant to a Commitment to Insure Upon Completion and is paid in full prior to the date of the first principal payment, the first and only premium collected shall be adjusted so that the total premium shall equal one-half of one percent per annum of the average outstanding principal obligation of the mortgage for the period from the date of the insurance endorsement to the date the mortgage was paid in full. 
</P>
<P>(b) <I>Purchasing cooperatives.</I> The provisions of paragraph (a) of this section do not apply to the mortgage of a purchasing nonprofit cooperative housing corporation or trust where such mortgage is endorsed for insurance pursuant to the sale of an Investor Sponsored Project to such purchasing nonprofit cooperative housing corporation or trust. 
</P>
<P>(c) <I>Existing Construction.</I> The provisions of paragraph (a) of this section shall apply to Existing Construction not involving insurance of advances but involved Commissioner approved or required repairs, improvements, alterations and additions. 
</P>
<P>(d) <I>Supplementary loans; Commitment to Insure Upon Completion.</I> The provisions of paragraphs (a) and (b) of this section shall apply to a supplementary loan endorsed for insurance pursuant to a Commitment to Insure Upon Completion. 


</P>
</DIV8>


<DIV8 N="§ 213.257" NODE="24:2.1.1.2.9.2.154.7" TYPE="SECTION">
<HEAD>§ 213.257   Premiums; purchasing cooperatives; Existing Construction; supplementary loans to purchase existing community facility.</HEAD>
<P>(a) Where a mortgage is endorsed for insurance pursuant to the sale of an Investor Sponsor Project or covers Existing Construction not involving Commissioner approved or required repairs, improvements, alterations and additions, the mortgagee, on the date of the insurance endorsement, shall pay a first premium equal to one-half of one percent of the principal obligation of the mortgage for the period from the date of the insurance endorsement to one year following the date of the first principal payment. On the anniversary of the first principal payment, this first premium shall be adjusted to equal one-half of one percent of the average outstanding principal obligation of the mortgage for the period from the date of the insurance endorsement to one year following the date of the first principal payment. 
</P>
<P>(b) The premium provisions of paragraph (a) of this section shall apply to a supplementary loan to purchase an existing community facility. 


</P>
</DIV8>


<DIV8 N="§ 213.258" NODE="24:2.1.1.2.9.2.154.8" TYPE="SECTION">
<HEAD>§ 213.258   Subsequent annual premiums.</HEAD>
<P>(a) Until the mortgage is paid in full or until receipt by the Commissioner of an application for insurance benefits, or until the contract of insurance is otherwise terminated with the consent of the Commissioner, the mortgagee, on each anniversary of the date of the first principal payment, shall pay an annual mortgage insurance premium equal to one-half of one percent of the average outstanding principal obligation of the mortgage for the year following the date on which such premium becomes payable. 
</P>
<P>(b) The provisions of paragraph (a) of this section shall apply to operating loss loans and to supplementary loans. 


</P>
</DIV8>


<DIV8 N="§ 213.259" NODE="24:2.1.1.2.9.2.154.9" TYPE="SECTION">
<HEAD>§ 213.259   Computation of subsequent annual premiums.</HEAD>
<P>The premiums payable on and after the date of the first principal payment shall be calculated in accordance with the amortization provisions without taking into account delinquent payments or prepayments.


</P>
</DIV8>


<DIV8 N="§ 213.259a" NODE="24:2.1.1.2.9.2.154.10" TYPE="SECTION">
<HEAD>§ 213.259a   Premiums—mortgages insured pursuant to section 238(c) of the Act.</HEAD>
<P>All of the provisions of §§ 213.253 through 213.259 governing mortgage insurance premiums shall apply to mortgages insured under this subpart pursuant to section 238(c) of the Act, except that all mortgage insurance premiums due on such mortgages in accordance with §§ 213.253 through 213.259 shall be calculated on the basis of one percent.
</P>
<CITA TYPE="N">[42 FR 59675, Nov. 18, 1977] 


</CITA>
</DIV8>


<DIV8 N="§ 213.260" NODE="24:2.1.1.2.9.2.154.11" TYPE="SECTION">
<HEAD>§ 213.260   Allowable methods of premium payment.</HEAD>
<P>Premiums shall be payable in cash or in debentures at par plus accrued interest. All premiums are payable in advance and no refund can be made of any portion thereof except as hereinafter provided in this part. 


</P>
</DIV8>


<DIV8 N="§ 213.265" NODE="24:2.1.1.2.9.2.154.12" TYPE="SECTION">
<HEAD>§ 213.265   Modifications and consolidations.</HEAD>
<P>Where a mortgage covering an investor sponsored project is modified and consolidated with the mortgage of a purchasing nonprofit cooperative housing corporation or trust, it shall be deemed to be paid in full as of the date of such modification and consolidation. 
</P>
<CITA TYPE="N">[37 FR 8662, Apr. 29, 1972] 


</CITA>
</DIV8>


<DIV8 N="§ 213.266" NODE="24:2.1.1.2.9.2.154.13" TYPE="SECTION">
<HEAD>§ 213.266   Initial insurance endorsement.</HEAD>
<P>The Commissioner shall indicate his insurance of the mortgage or supplementary loan by endorsing the original credit instrument and identifying the section of the Act and the regulations under which the mortgage or supplementary loan is insured and the date of insurance. 


</P>
</DIV8>


<DIV8 N="§ 213.266a" NODE="24:2.1.1.2.9.2.154.14" TYPE="SECTION">
<HEAD>§ 213.266a   Insurance fund obligations.</HEAD>
<P>A mortgage endorsed for insurance under section 213 of the Act shall be the obligation either of the Cooperative Management Housing Insurance Fund or of the General Insurance Fund. The determination of the applicable fund shall be governed by the following: 
</P>
<P>(a) A mortgage insured under section 213(a)(1) of the Act or under section 213(a)(3) if the project has been acquired by a cooperative corporation or under section 213 (i) or (j) shall be the obligation of the Cooperative Management Housing Insurance Fund, where it has been insured pursuant to a commitment issued on or after August 10, 1965, or insured pursuant to a commitment issued prior to such date, and transferred to the Cooperative Management Housing Insurance Fund. 
</P>
<P>(b) A mortgage insured under section 213(a)(2) of the Act or under section 213(a)(3) where the project has not been acquired by a cooperative corporation shall be the obligation of the General Insurance Fund. A mortgage insured prior to August 10, 1965, or insured pursuant to a commitment issued prior to such date, where the project has not been transferred to the Cooperative Management Housing Insurance Fund, shall also be the obligation of the General Insurance Fund. 


</P>
</DIV8>


<DIV8 N="§ 213.267" NODE="24:2.1.1.2.9.2.154.15" TYPE="SECTION">
<HEAD>§ 213.267   Effect of insurance endorsement.</HEAD>
<P>From the date of initial endorsement, the Commissioner and the mortgagee or lender shall be bound by the provisions of this subpart to the same extent as if they had executed a contract including the provisions of this subpart and the applicable sections of the Act. 


</P>
</DIV8>


<DIV8 N="§ 213.268" NODE="24:2.1.1.2.9.2.154.16" TYPE="SECTION">
<HEAD>§ 213.268   Final insurance endorsement.</HEAD>
<P>When all advances of mortgage or loan proceeds have been made and all the terms and conditions of the commitment have been complied with to the satisfaction of the Commissioner, he shall indicate on the original credit instrument the total of all advances he has approved for insurance and again endorse such instrument. 


</P>
</DIV8>


<DIV8 N="§ 213.269" NODE="24:2.1.1.2.9.2.154.17" TYPE="SECTION">
<HEAD>§ 213.269   Endorsement of supplementary loans.</HEAD>
<P>The provisions of §§ 213.266, 213.267, and 213.268 shall apply to supplementary loans. 


</P>
</DIV8>


<DIV8 N="§ 213.270" NODE="24:2.1.1.2.9.2.154.18" TYPE="SECTION">
<HEAD>§ 213.270   Supplementary loans; election of action; claims; debentures.</HEAD>
<P>(a) <I>Election of action.</I> Where a real estate mortgage, deed of trust, conditional sales contract, chattel mortgage, lien, judgement, or any other security device has been used to secure the payment of a loan made under the provisions of this section, the lender may not, except with the approval of the Commissioner, both proceed against such security and also make claim under its contract of insurance, but shall elect which method it desires to pursue. 
</P>
<P>(b) <I>Maximum claim period.</I> Notice of intention to file claim on a form prescribed by the Commissioner shall be filed within 45 days after the lender becomes eligible for the benefits of the loan insurance, or within such later time as may be agreed upon by the Commissioner in writing. 
</P>
<P>(c) <I>Items to be filed on submitting claim.</I> Within 30 days after the filing of the notice of intention to file claim, or within such further period as may be agreed upon by the Commissioner in writing, the lender shall file with the Commissioner: 
</P>
<P>(1) The fiscal data pertaining to the loan transaction; 
</P>
<P>(2) Receipts covering all disbursements as required by the fiscal data form; 
</P>
<P>(3) The original note and any security instrument or instruments which shall be assigned to the Commissioner without recourse or warranty, except that the lender must warrant that no act or omission of the lender has impaired the validity and priority of such security instrument or instruments, that the security instrument or instruments, are prior to all mechanics' and materialmen's liens filed of record subsequent to the recording of such security instrument or instruments regardless of whether such liens attached prior to such recording date, and prior to all liens and encumbrances which may have attached or defects which may have arisen subsequent to the recording of such security instrument or instruments, except such liens or other matters as may be approved by the Commissioner, that the amount stated in the instrument of assignment is actually due and owing under the security instrument or instruments, that there are no offsets or counterclaims thereto, and that the lender has a good right to assign such note and security instrument or instruments; 
</P>
<P>(4) All hazard insurance policies held on property serving as security for the loan or other evidence of insurance coverage acceptable to the Commissioner, together with a copy of the lender's notification to the carrier authorizing the amendment of the loss payable clause substituting the Commissioner as the holder of the security instrument; 
</P>
<P>(5) The assignment to the Commissioner of all rights and interests arising under the note and security instrument or instruments so in default, and all claims of the lender against the borrower or others arising out of the loan transaction; 
</P>
<P>(6) All policies of title or other insurance or surety bonds, or other guarantees and any and all claims thereunder; including evidence satisfactory to the Commissioner that the original title coverage has been extended to include the assignment of the note and the security instrument or instruments to the Commissioner; 
</P>
<P>(7) Any balance of the loan not advanced to the borrower; 
</P>
<P>(8) Any cash or property held by the lender or its agents or to which it is entitled; including deposits made for the account of the borrower and which have not been applied in reduction of the principal obligation under the note and security instrument or instruments; 
</P>
<P>(9) All records, ledger cards, documents, books, papers and accounts relating to the loan transaction; 
</P>
<P>(10) Any additional information or data which the Commissioner may require. 
</P>
<P>(d) <I>Claim computation.</I> Upon an acceptable assignment of the note and security instrument, the Commissioner shall pay the claim of the lender in cash, in debentures or in a combination of both, as determined by the Commissioner at the time of payment. The payment shall be in an amount equal to the unpaid principal balance of the supplementary loan plus: 
</P>
<P>(1) Any accrued interest due on the supplementary loan as of the date of execution of its assignment to the Commissioner; 
</P>
<P>(2) Any advance made previously under the provisions of the loan instrument and approved by the Commissioner; 
</P>
<P>(3) Reimbursement for such reasonable collection costs, court costs, and attorney's fees as may be approved by the Commissioner; 
</P>
<P>(4) An amount equivalent to the debenture interest which would have been earned on the portion of the insurance benefits paid in cash, as of the date such cash payment is made, except that when the lender fails to meet any one of the applicable requirements of paragraphs (b) and (c) of this section within the specified time and in a manner satisfactory to the Commissioner (or within such further time as the Commissioner may approve in writing), the interest allowance in such cash payment shall be computed only to the date on which the particular required action should have been taken or to which it was extended. 
</P>
<P>(e) <I>Debenture interest.</I> The debentures shall bear interest as provided in § 207.259(e)(6) of this chapter. 
</P>
<P>(f) <I>Maturity of debentures.</I> Debentures shall mature 20 years from the date of issue. 
</P>
<P>(g) <I>Registration of debentures.</I> Debentures shall be registered as to principal and interest. 
</P>
<P>(h) <I>Denomination of debentures.</I> Debentures shall be issued in multiples of $50 and any difference not in excess of $50 between the amount of debentures to which the lender is otherwise entitled hereunder and the aggregate face value of the debentures issued shall be paid in cash by the Commissioner to the lender. 
</P>
<P>(i) <I>Redemption of debentures.</I> Debentures shall, at the option of the Commissioner and with the approval of the Secretary of the Treasury, be redeemable at par plus accrued interest on any semiannual interest payment date on 3 months' notice of redemption given in such manner as the Commissioner shall prescribe. The debenture interest on the debentures called for redemption shall cease on the semiannual interest payment date designated in the call notice. The Commissioner may include with the notice of redemption an offer to purchase the debentures at par plus accrued interest at any time during the period between the notice of redemption and the redemption date. If the debentures are purchased by the Commissioner after such call and prior to the named redemption date, the debenture interest shall cease on the date of purchase. 
</P>
<P>(j) <I>Issue date of debentures.</I> The debentures shall be issued as of the date of the execution of the assignment of the supplementary loan in accordance with the requirements of paragraph (c)(3) of this section. 


</P>
</DIV8>


<DIV7 N="154" NODE="24:2.1.1.2.9.2.154" TYPE="SUBJGRP">
<HEAD>Cooperative Management Housing Insurance and Distributive Shares</HEAD>


<DIV8 N="§ 213.275" NODE="24:2.1.1.2.9.2.154.19" TYPE="SECTION">
<HEAD>§ 213.275   Nature of the Cooperative Management Housing Insurance Fund.</HEAD>
<P>The Cooperative Management Housing Insurance Fund shall consist of the General Surplus Account and the Participating Reserve Account. 


</P>
</DIV8>


<DIV8 N="§ 213.276" NODE="24:2.1.1.2.9.2.154.20" TYPE="SECTION">
<HEAD>§ 213.276   Allocation of Cooperative Management Housing Insurance Fund income or losses.</HEAD>
<P>For any semiannual period in which Cooperative Management Housing Insurance Fund operations shall result in a net income, or loss, the Commissioner shall allocate such net income or such loss to the General Surplus Account, to the Participating Reserve Account, or to both, as he may determine to be in accordance with sound actuarial and accounting practice. In determining net income or loss, the Commissioner shall take into consideration all income received from fees, premiums, and earnings on investments of the Fund, operating expenses, and provision for losses of the Fund. 


</P>
</DIV8>


<DIV8 N="§ 213.277" NODE="24:2.1.1.2.9.2.154.21" TYPE="SECTION">
<HEAD>§ 213.277   Right and liability under the Cooperative Management Housing Insurance Fund.</HEAD>
<P>No mortgagor or mortgagee shall have any vested right in a credit balance in either the General Surplus Account or the Participating Reserve Account. No mortgagor or mortgagee shall be subject to any liability arising under the mutuality of the Cooperative Management Housing Insurance Fund. 


</P>
</DIV8>


<DIV8 N="§ 213.278" NODE="24:2.1.1.2.9.2.154.22" TYPE="SECTION">
<HEAD>§ 213.278   Distribution of distributive share.</HEAD>
<P>When the contract of insurance is terminated by reason of payment in full of the mortgage or by voluntary termination approved by the Commissioner, and at such time or times prior to such termination as the Commissioner may approve, the Commissioner may distribute to a mortgagor under a mortgage that is the obligation of the Cooperative Management Housing Insurance Fund a share of the Participating Reserve Account in such manner and amount as he shall determine to be equitable and in accordance with sound actuarial and accounting practice. 


</P>
</DIV8>


<DIV8 N="§ 213.279" NODE="24:2.1.1.2.9.2.154.23" TYPE="SECTION">
<HEAD>§ 213.279   Maximum amount of distributive share.</HEAD>
<P>In no event shall a distributive share of the Participating Reserve Account exceed the aggregate paid scheduled annual premiums of the mortgagor paid to the year of termination of the insurance or to the year of payment of the share, if paid prior to termination. 


</P>
</DIV8>


<DIV8 N="§ 213.280" NODE="24:2.1.1.2.9.2.154.24" TYPE="SECTION">
<HEAD>§ 213.280   Finality of determination.</HEAD>
<P>The determination of the Commissioner as to the amount to be paid to any mortgagor from the Cooperative Management Housing Insurance Fund shall be final and conclusive. 


</P>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="C" NODE="24:2.1.1.2.9.3" TYPE="SUBPART">
<HEAD>Subpart C—Individual Properties Released From Project Mortgage; Expiring Program</HEAD>


<DIV8 N="§ 213.501" NODE="24:2.1.1.2.9.3.155.1" TYPE="SECTION">
<HEAD>§ 213.501   Savings clause.</HEAD>
<P>No new loans are being insured under the Cooperative Housing Mortgage Insurance Program for individual properties released from a project mortgage. Any existing insured loans on individual properties released from a project mortgage under this program will continue to be governed by the regulations on eligibility requirements, contract rights and obligations, and servicing responsibilities in effect as they existed immediately before December 26, 1996. 
</P>
<CITA TYPE="N">[61 FR 60160, Nov. 26, 1996]


</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="214" NODE="24:2.1.1.2.10" TYPE="PART">
<HEAD>PART 214—HOUSING COUNSELING PROGRAM 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1701x, 1701x-1; 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>72 FR 55648, Sept. 28, 2007, unless otherwise noted.




</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:2.1.1.2.10.1" TYPE="SUBPART">
<HEAD>Subpart A—General Program Requirements</HEAD>


<DIV8 N="§ 214.1" NODE="24:2.1.1.2.10.1.155.1" TYPE="SECTION">
<HEAD>§ 214.1   Purpose.</HEAD>
<P>This part implements the Housing Counseling Program authorized by section 106 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x). Section 106 authorizes HUD to make grants to, or contract with, public or private organizations to provide a broad range of housing counseling services to homeowners and tenants to assist them in improving their housing conditions and in meeting the responsibilities of tenancy or homeownership. Section 106 also directs HUD to provide housing counseling services only through agencies or individuals that have been certified by HUD as competent to provide such services. The regulations contained in this part prescribe the procedures and requirements by which the Housing Counseling Program will be administered, including the process by which agencies are approved and individuals will be certified to provide the homeownership and rental counseling, as defined by section 106. These regulations apply to all agencies participating in HUD's Housing Counseling Program, and to all organizations or entities that deliver housing counseling, including homeownership counseling or rental housing counseling, required under or provided in connection with HUD programs.
</P>
<CITA TYPE="N">[81 FR 90657, Dec. 14, 2016]




</CITA>
</DIV8>


<DIV8 N="§ 214.3" NODE="24:2.1.1.2.10.1.155.2" TYPE="SECTION">
<HEAD>§ 214.3   Definitions.</HEAD>
<P>The following definitions apply throughout this part:
</P>
<P><I>Action plan.</I> A plan that outlines what the housing counseling agency and the client will do in order to meet the client's housing goals and, when appropriate, addresses the client's housing problem(s).
</P>
<P><I>Affiliate.</I> A nonprofit organization participating in the HUD-related Housing Counseling program of a regional or national intermediary, or state housing finance agency. The affiliate organization is incorporated separately from the regional or national intermediary or state housing finance agency. An affiliate is:
</P>
<P>(1) Duly organized and existing as a tax-exempt nonprofit organization;
</P>
<P>(2) In good standing under the laws of the state of the organization; and
</P>
<P>(3) Authorized to do business in the states where it proposes to provide housing counseling services.
</P>
<P><I>Branch or branch office.</I> An organizational and subordinate unit of a local housing counseling agency, multi-state organization, regional or national intermediary, or state housing finance agency not separately incorporated or organized, that participates in HUD's Housing Counseling program. A branch or branch office must be in good standing under the laws of the state where it proposes to provide housing counseling services. A branch or branch office cannot be a subgrantee or affiliate.
</P>
<P><I>Clients.</I> Individuals or households who seek the assistance of an agency participating in HUD's Housing Counseling program to meet a housing need or resolve a housing problem.
</P>
<P><I>Counseling.</I> Counselor to client assistance that addresses unique financial circumstances or housing issues and focuses on ways of overcoming specific obstacles to achieving a housing goal such as repairing credit, addressing a rental dispute, purchasing a home, locating cash for a down payment, being informed of fair housing and fair lending requirements of the Fair Housing Act, finding units accessible to persons with disabilities, avoiding foreclosure, or resolving a financial crisis. Except for reverse mortgage counseling, all counseling shall involve the creation of an action plan.
</P>
<P><I>Education.</I> Formal classes, with established curriculum and instructional goals provided in a group or classroom setting, covering topics applicable to groups of people such as, but not limited to:
</P>
<P>(1) Renter rights;
</P>
<P>(2) The homebuying process;
</P>
<P>(3) How to maintain a home;
</P>
<P>(4) Budgeting;
</P>
<P>(5) Fair housing;
</P>
<P>(6) Identifying and reporting predatory lending practices;
</P>
<P>(7) Rights for persons with disabilities; and
</P>
<P>(8) The importance of good credit.
</P>
<P><I>Homeownership counseling.</I> See definition at 24 CFR 5.100.
</P>
<P><I>Housing counseling.</I> See definition at 24 CFR 5.100.
</P>
<P><I>Housing counseling grant funds.</I> Grants awarded to participating agencies under section 106 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x).
</P>
<P><I>Housing counseling work plan.</I> A participating agency's plan to provide housing counseling activities and services in a specified geographic area to resolve or mitigate identified community needs and problems. The plan will also describe the objectives of the agency and the resources available to meet those objectives. An intermediary's state housing finance agency's (SHFA) or multistate organization's (MSO) plan includes similar information regarding the services they propose to provide to the network of affiliated agencies or branches participating in their HUD-related Housing Counseling program.
</P>
<P><I>Housing goal.</I> A realistic, short- or long-term objective set by the client, with advice from a housing counselor.
</P>
<P><I>HUD-approved housing counseling agency.</I> Private and public nonprofit organizations that are exempt from taxation under section 501(a), pursuant to section 501(c) of the Internal Revenue Code of 1996, 26 U.S.C. 501(a) and 501(c) and approved by HUD, in accordance with this part and 106(e) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(e)), to provide housing counseling services to clients directly, or through their affiliates or branches, and which meet the requirements set forth in this part.
</P>
<P><I>HUD certified housing counselor.</I> A housing counselor who has passed the HUD Certification examination, works for a participating agency, and is certified by HUD as competent to provide housing counseling services pursuant to this part.
</P>
<P><I>HUD-certified Tribal housing counselor.</I> A housing counselor who has passed the HUD Certification examination as described in subpart F of this part, works for an Indian Tribe, Tribally designated housing entity (TDHE), or other Tribal entity, and is certified by HUD as competent to provide housing counseling services pursuant to subpart F of this part.
</P>
<P><I>Intermediary.</I> A HUD-approved organization that provides housing counseling services indirectly through its branches or affiliates, for whom it exercises control over the quality and type of housing counseling services rendered. The Housing Counseling program recognizes two types of intermediaries, which include:
</P>
<P>(1) <I>National intermediary.</I> A national intermediary provides, in multiple regions of the United States:
</P>
<P>(i) Housing counseling services through its branches or affiliates or both; and
</P>
<P>(ii) Administrative and supportive services to its network of affiliates or branches, including, but not limited to, pass-through funding, training, and technical assistance.
</P>
<P>(2) <I>Regional intermediary.</I> A regional intermediary provides in a generally recognized region within the United States, such as the Southwest, Mid-Atlantic, New England:
</P>
<P>(i) Housing counseling services through its branches or affiliates or both; and
</P>
<P>(ii) Administrative and supportive services to its network of affiliates, or branches, including, but not limited to, pass-through funding, training, and technical assistance.
</P>
<P><I>Local housing counseling agency (LHCA).</I> A housing counseling agency that directly provides housing counseling services. An LHCA may have a main office, and one or more branch offices, in no more than two contiguous states.
</P>
<P><I>Multi-state organization (MSO).</I> A multi-state organization provides housing counseling services through a main office and branches in two or more states.
</P>
<P><I>Nonprofit organization.</I> Shall have the meaning given in section 104(5) of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12704(5)), except that subparagraph (D) of such section shall not apply.
</P>
<P><I>Participating agency.</I> Participating agencies are all housing counseling and intermediary organizations participating in HUD's Housing Counseling program, including HUD-approved agencies, and affiliates and branches of HUD-approved intermediaries, HUD-approved MSOs, and state housing finance agencies.
</P>
<P><I>Rental housing counseling.</I> See definition at 24 CFR 5.100.
</P>
<P><I>Reverse mortgage.</I> A mortgage that pays a homeowner loan proceeds drawn from accumulated home equity and that requires no repayment until a future time.
</P>
<P><I>State.</I> Each of the several States, the Commonwealth of Puerto Rico, the District of Columbia, the Commonwealth of the Northern Mariana Islands, Guam, the Virgin Islands, American Samoa, or any other possession of the United States.
</P>
<P><I>State housing finance agency (SHFA).</I> Any public body, agency, or instrumentality created by a specific act of a state legislature empowered to finance activities designed to provide housing and related facilities through land acquisition, construction, or rehabilitation throughout an entire state. SHFAs may provide direct counseling services or subgrant housing counseling funds, or both, to affiliated housing counseling agencies within the SHFA's state. “State” includes the several states, Puerto Rico, the District of Columbia, Guam, the Commonwealth of the Northern Mariana Islands, American Samoa, and the U.S. Virgin Islands.
</P>
<P><I>Subgrantee.</I> An affiliate of a HUD-approved intermediary or SHFA that receives a subgrant of housing counseling funds provided under a HUD grant.
</P>
<P><I>Tribally designated housing entity.</I> See definition at 25 U.S.C. 4103.
</P>
<P><I>Unit of general local government.</I> Any city, county, parish, town, township, borough, village, or any other general purpose political subdivision of a State.
</P>
<CITA TYPE="N">[72 FR 55648, Sept. 28, 2007, as amended at 81 FR 90658, Dec. 14, 2016; 89 FR 49807, June 12, 2024]




</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:2.1.1.2.10.2" TYPE="SUBPART">
<HEAD>Subpart B—Approval and Disapproval of Housing Counseling Agencies</HEAD>


<DIV8 N="§ 214.100" NODE="24:2.1.1.2.10.2.155.1" TYPE="SECTION">
<HEAD>§ 214.100   General.</HEAD>
<P>An organization may be approved by HUD as a HUD-approved housing counseling agency upon meeting the requirements of § 214.103 and upon completing the application procedures set forth in this subpart B.
</P>
<P>(a) <I>Approval.</I> The approval of a housing counseling agency and the certification of a HUD certified housing counselor does not create or imply a warranty or endorsement by HUD of the approved agency, or its employees, including counselors, to a prospective client or to any other organization or individual, nor does it represent a warranty of any housing counseling provided by the agency or a HUD certified housing counselor working for an agency. Approval means only that the agency has met the qualifications and conditions prescribed by HUD, and a HUD certified housing counselor only means the housing counselor has successfully passed an examination pursuant to these regulations and works for a participating agency.
</P>
<P>(b) <I>Effective date.</I> Agencies approved by HUD on or before October 29, 2007 and agencies that have submitted applications to HUD on or before September 28, 2007 and that are subsequently approved, are required to be in full compliance with the requirements in this part on October 1, 2007. Agencies approved after October 29, 2007 must comply with this part.
</P>
<CITA TYPE="N">[72 FR 55648, Sept. 28, 2007, as amended at 81 FR 90658, Dec. 14, 2016]




</CITA>
</DIV8>


<DIV8 N="§ 214.103" NODE="24:2.1.1.2.10.2.155.2" TYPE="SECTION">
<HEAD>§ 214.103   Approval criteria.</HEAD>
<P>The following criteria for approval apply to all agencies, MSOs, and intermediaries, including all local housing counseling agencies, branches, and affiliates that are included in one application:
</P>
<P>(a) <I>Nonprofit and tax-exempt status.</I> A housing counseling agency must function as a private or public nonprofit organization, or be a unit of local, county, or state government. The agency must submit evidence of nonprofit status and tax-exempt status under section 501(a), pursuant to section 501(c) of the Internal Revenue Code of 1996 (26 U.S.C. 501(a) and (c)). Units of local, county, or state government must submit proof of their authorization to provide housing counseling services.
</P>
<P>(b) <I>Experience.</I> An agency must have successfully administered a Housing Counseling program for at least one year. An intermediary must have operated in an intermediary capacity for at least one year. To be considered part of an LHCA's, MSO's, or intermediary's approval application, and to participate in the HUD-approved portion of the intermediary's, SHFA's, or MSO's Housing Counseling program, affiliates and branches must have successfully administered a Housing Counseling program for at least one year.
</P>
<P>(c) <I>Ineligible participants.</I> An agency, including any of the agency's directors, partners, officers, principals, or employees, must not be:
</P>
<P>(1) Suspended, debarred, or otherwise restricted under the Department's, or any other federal regulations;
</P>
<P>(2) Indicted for, or convicted of, a criminal offense that reflects upon the responsibility, integrity, or ability of the agency to participate in housing counseling activities. These offenses include criminal offenses that can be prosecuted at a local, state, or federal level;
</P>
<P>(3) Subject to unresolved findings as a result of HUD or other government audit or investigations.
</P>
<P>(d) <I>Community base.</I> A housing counseling agency and its HUD Program branches and affiliates must have functioned for at least one year in the geographical area(s) the agency set forth in its housing counseling work plan.
</P>
<P>(e) <I>Recordkeeping and reporting.</I> The agency must have an established system of recordkeeping so that client files, electronic and paper, can be reviewed and annual activity data for the agency can be verified, reported, and analyzed. Client files, both electronic and paper, must be kept confidential, in accordance with § 214.315. This system must meet the requirements of 2 CFR part 200, subpart D, 24 CFR 1.6, and 24 CFR part 121 and can be easily accessible to HUD for all monitoring and audit purposes.
</P>
<P>(f) <I>Client management system.</I> All participating agencies shall utilize an automated housing counseling client management system for the collection and reporting of client-level information, including, but not limited to, financial and demographic data, counseling services provided, and outcomes data. The system used must provide the counseling agency with the tools necessary to track and manage all counseling and educational activities associated with each client. Agencies must utilize a Client Management System that satisfies HUD's requirements and interfaces with HUD's databases.
</P>
<P>(g) <I>Housing counseling resources.</I> The agency must have the following resources sufficient to implement the proposed housing counseling work plan no later than the date of HUD approval:
</P>
<P>(1) <I>Funding.</I> The application for approval must provide evidence of funds immediately available, or written commitment for funds to cover the cost of operating the housing counseling work plan during the initial 12-month period of HUD approval.
</P>
<P>(2) <I>Staff.</I> The agency must employ staff trained in housing counseling. All staff providing housing counseling, including homeownership counseling or rental housing counseling, must be HUD certified housing counselors, and at least half the agency's counselors must have at least 6 months of experience in the job they will perform in the agency's housing counseling program.
</P>
<P>(3) <I>Language skills.</I> The agency must have housing counselor(s) who are fluent in the language of the clients they serve, or the housing counseling agency must use the services of an interpreter, or the agency must refer the client to another agency that can meet the client's needs.
</P>
<P>(h) <I>Knowledge of HUD programs and local housing market.</I> The agency's housing counseling staff must possess a working knowledge of HUD's housing and single-family mortgage insurance programs, other state and local housing programs available in the community, consolidated plans, and the local housing market. The staff should be familiar with housing programs offered by conventional mortgage lenders and other housing or related programs that may assist their clients.
</P>
<P>(i) <I>Contracts or agreements to provide eligible housing counseling services.</I> An agency and its branches or subgrantees or affiliates must deliver all of the housing counseling activities set forth in the agency's housing counseling work plan. It is not permissible to contract out housing counseling services, except:
</P>
<P>(1) In geographic areas where a need for housing counseling services is demonstrated and no HUD-approved housing counseling agency or its branches, affiliates, or subgrantees exists. Under this exception, the contract must delineate the respective Housing Counseling program responsibilities of the contracting parties, the agency providing services (contractor) must meet the HUD approval eligibility standards, and the contracting agency must receive prior written approval from HUD.
</P>
<P>(2) Intermediaries and SHFAs may enter into agreements with affiliates to provide housing counseling services. The agreements with affiliates may be in the form of an exchange of letters that delineate the respective Housing Counseling program responsibilities of the parties. Agreements must be sufficiently detailed to establish accountability and allow for adequate monitoring in accordance with 2 CFR part 200.
</P>
<P>(3) With prior approval from HUD, and at HUD's discretion, intermediary organizations may operate a Housing Counseling program with a network of affiliated counselors, rather than affiliated counseling agencies, if the structure is designed to meet a special housing counseling need identified by HUD.
</P>
<P>(j) <I>Community resources.</I> The housing counseling agency must have established working relationships with private and public community resources to which it can refer clients who need help the agency cannot offer, including agencies offering similar or related services to non-English speaking clients.
</P>
<P>(k) <I>State and local requirements.</I> An agency and its branches and affiliates must meet all state and local requirements for its operation.
</P>
<P>(l) <I>Facilities.</I> All participating agencies must maintain at least one facility. All facilities must meet the following criteria:
</P>
<P>(1) Have a clearly identified space available for the provision of housing counseling services;
</P>
<P>(2) Provide privacy for counseling services and confidentiality of client records; and
</P>
<P>(3) Provide accessibility features or make alternative accommodations for persons with disabilities, in accordance with section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), 24 CFR parts 8 and 9, and the Americans with Disabilities Act (42 U.S.C. 12101 <I>et seq.</I>).
</P>
<P>(m) <I>Housing counseling work plan.</I> (1) The agency must submit a detailed yet concise housing counseling plan that explains: The needs and problems of the target population; how the agency will address one or more of these needs and problems with its available resources; the type of housing counseling services offered; fee structure, if applicable; the geographic service area to be served; and the anticipated results (outcomes) to be achieved within the period of approval.
</P>
<P>(2) The plan must be periodically reviewed and, when changed or amended, the agency must notify and provide a copy to HUD.
</P>
<P>(3) The plan must meet the basic requirements described in § 214.300.
</P>
<P>(4) An agency's housing counseling work plan must also address, if appropriate, alternative settings and formats for the provision of housing counseling services.
</P>
<P>(n) <I>Certification of housing counselors.</I> (1) In order for an agency to participate in HUD's Housing Counseling Program, all individuals who provide counseling, including homeownership and rental housing counseling, must be HUD certified according to requirements in this section.
</P>
<P>(2) For an individual to become a HUD certified counselor, an individual must pass a standardized written examination to demonstrate competency in each of the following areas:
</P>
<P>(i) Financial management;
</P>
<P>(ii) Property maintenance;
</P>
<P>(iii) Responsibilities of homeownership and tenancy;
</P>
<P>(iv) Fair housing laws and requirements;
</P>
<P>(v) Housing affordability; and
</P>
<P>(vi) Avoidance of, and response to, rental or mortgage delinquency and avoidance of eviction or mortgage default.
</P>
<P>(3) HUD will certify an individual housing counselor who has met the requirements of paragraph (n)(1) of this section upon verification that the individual works for a participating agency. 
</P>
<P>(4) Participating agencies and housing counselors must be in compliance with requirements of paragraph (n) of this section as of August 1, 2021.
</P>
<CITA TYPE="N">[72 FR 55648, Sept. 28, 2007, as amended at 80 FR 75936, Dec. 7, 2015; 81 FR 90658, Dec. 14, 2016; 85 FR 47303, Aug. 5, 2020; 89 FR 75501, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 214.105" NODE="24:2.1.1.2.10.2.155.3" TYPE="SECTION">
<HEAD>§ 214.105   Preliminary application process.</HEAD>
<P>(a) <I>Submission.</I> All agencies must complete the forms prescribed by HUD and submit the application and all supporting documentation to HUD. Agencies with branches or affiliates for which the parent entity exercises control over the quality and type of housing counseling services rendered must submit a single application for approval.
</P>
<P>(b) Notwithstanding paragraph (a), SHFAs are not required to submit an application for HUD approval. However, to participate in HUD's Housing Counseling program, SHFAs must either submit a request and provide HUD with a list of affiliates, if applicable, and assure that they meet all program requirements, or submit a request through such other application procedure as HUD may periodically announce in the <E T="04">Federal Register</E> or other informational sources.


</P>
</DIV8>


<DIV8 N="§ 214.107" NODE="24:2.1.1.2.10.2.155.4" TYPE="SECTION">
<HEAD>§ 214.107   Approval by HUD.</HEAD>
<P>(a) <I>Notice of approval.</I> If an application package meets all requirements outlined in § 214.103, HUD will approve an agency for a period of up to 3 years. HUD will advise the agency of its approval in the form of an approval letter to the agency's main office.
</P>
<P>(b) <I>Certificate of Approval.</I> HUD will issue a “Certificate of Approval” to the approved agency. The certificate will show the period of approval.
</P>
<P>(c) <I>Appearance on list of HUD-approved and participating housing counseling agencies.</I> For purposes of client referrals, participating agencies that provide housing counseling services directly to clients must provide HUD with the agency name and contact information, which may appear on HUD's Web site. In addition, names and addresses of all participating agencies that provide housing counseling services directly may be made available to the public through HUD's toll-free housing counseling hotline.


</P>
</DIV8>


<DIV8 N="§ 214.109" NODE="24:2.1.1.2.10.2.155.5" TYPE="SECTION">
<HEAD>§ 214.109   Disapproval by HUD.</HEAD>
<P>If an application package does not meet all requirements in § 214.103, HUD will provide the agency with the reasons for the denial in writing. Within 30 calendar days of the written notice of denial, the agency may submit a revised application, or appeal HUD's decision in writing to HUD, as provided in § 214.205. If an agency decides to submit a revised application, the agency may consult HUD, to determine the specific actions needed to resolve the deficiencies.


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:2.1.1.2.10.3" TYPE="SUBPART">
<HEAD>Subpart C—Inactive Status, Termination, and Appeals</HEAD>


<DIV8 N="§ 214.200" NODE="24:2.1.1.2.10.3.155.1" TYPE="SECTION">
<HEAD>§ 214.200   Inactive status.</HEAD>
<P>(a) HUD may change a participating agency's status to inactive, in lieu of terminations of HUD-approved status or removals from the list of HUD-approved agencies, under certain circumstances that may temporarily impair an agency from complying with its housing counseling plan. An agency's status may be changed to inactive on a case-by-case basis for a period not to exceed 6 months, unless an extension is provided by HUD under paragraph (d) of this section. HUD may change an agency's status through either a request submitted to HUD or as a result of information obtained by the Department. Some of the conditions under which inactive status may be considered include, but are not limited to:
</P>
<P>(1) Loss of counselor(s);
</P>
<P>(2) Damage to facilities by natural disasters that renders the agency unable to function properly;
</P>
<P>(3) Loss of funds;
</P>
<P>(4) Relocation;
</P>
<P>(5) Other circumstances caused by reasons beyond the agency's control; or
</P>
<P>(6) Results of performance review.
</P>
<P>(b) Agencies that seek temporary inactive status must submit a request to HUD in writing. Documentation or evidence of the condition(s) that rendered the agency incapable of carrying out its housing counseling plan must be submitted along with the request, if possible. Upon receipt of the request, HUD will review and notify the agency of approval or rejection, in writing. If approved, the agency's name and contact information will be temporarily removed from the HUD-approved Web list of agencies and the telephone referral system.
</P>
<P>(c) The agency must notify HUD in writing and provide supporting documentation or evidence when it is ready to resume operation, or no later than the end of the inactive period. After review and acceptance by HUD, the agency's contact information may be restored to the Web list of HUD-approved and participating agencies and the telephone referral system.
</P>
<P>(d) At HUD's discretion, if the condition(s) still exists, an extension of the inactive period may be considered or the agency may be terminated or removed from the Housing Counseling program. HUD will notify the agency in writing of its decision.


</P>
</DIV8>


<DIV8 N="§ 214.201" NODE="24:2.1.1.2.10.3.155.2" TYPE="SECTION">
<HEAD>§ 214.201   Termination of HUD-approved status and grant agreements.</HEAD>
<P>(a) <I>Cause for termination by HUD.</I> HUD may terminate an agency's approval; remove an SHFA; remove one or more branches or affiliates from the HUD portion of an intermediary's, MSO's, or SHFA's counseling program; and terminate any grant agreements (if applicable) upon confirmation of any of the following reasons:
</P>
<P>(1) Noncompliance with program requirements;
</P>
<P>(2) Failure to implement in whole or in part the agency's approved housing counseling work plan or failure to notify HUD of changes in the agency's housing counseling work plan;
</P>
<P>(3) Lack of the capacity to deliver the housing counseling activities described in its approved housing counseling work plan;
</P>
<P>(4) Failure to achieve outcomes described in the work plan;
</P>
<P>(5) Misuse of grant funds; or
</P>
<P>(6) HUD determines that there is good cause.
</P>
<P>(b) <I>Agency withdrawal.</I> The participating agency may withdraw from the Housing Counseling program at any time.
</P>
<P>(c) <I>Post-termination, post-withdrawal requirements.</I> All terminations by HUD, or an agency's withdrawal, must be in writing. When a termination or withdrawal occurs, the agency must return to HUD any unexpired “Certificate of Approval.” A terminated or inactive agency cannot continue to display the certificate. If HUD has determined that an agency will be terminated from participating in the Housing Counseling program, and an agency does not voluntarily withdraw, then HUD may follow the provisions found in 24 CFR part 24.


</P>
</DIV8>


<DIV8 N="§ 214.203" NODE="24:2.1.1.2.10.3.155.3" TYPE="SECTION">
<HEAD>§ 214.203   Re-approval or removal as a result of a performance review.</HEAD>
<P>HUD may conduct a periodic performance review for all agencies participating in the Housing Counseling program. The performance review and the terms of re-approval or removal of a participating agency are described in § 214.307 and § 214.309. At the end of the approval period, and upon completion of a successful performance review, if conducted, HUD will reapprove agencies.


</P>
</DIV8>


<DIV8 N="§ 214.205" NODE="24:2.1.1.2.10.3.155.4" TYPE="SECTION">
<HEAD>§ 214.205   Appeals.</HEAD>
<P>An agency making an application for approval, or an approved agency seeking reapproval, shall have the right to appeal any adverse decisions rendered by HUD under this part:
</P>
<P>(a) <I>Appeal must be in writing.</I> An agency may make a formal written appeal to HUD.
</P>
<P>(b) <I>Timeliness.</I> HUD must receive an appeal within 30 days of the date of the HUD decision letter to the applicant agency. HUD is not bound to review appeals received after this 30-calendar day period.
</P>
<P>(c) <I>Other action.</I> Nothing in this section prohibits HUD from taking such other action against an agency as provided in 24 CFR part 24, or from seeking any other remedy against an agency available to HUD by statute or otherwise.


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:2.1.1.2.10.4" TYPE="SUBPART">
<HEAD>Subpart D—Program Administration</HEAD>


<DIV8 N="§ 214.300" NODE="24:2.1.1.2.10.4.155.1" TYPE="SECTION">
<HEAD>§ 214.300   Counseling services.</HEAD>
<P>(a) <I>Basic requirements.</I> (1) Agencies must provide counseling to current and potential homeowners and tenants to assist them in improving their housing conditions and in meeting the responsibilities of homeownership or tenancy.
</P>
<P>(2) Except for reverse mortgage counseling, housing counselors and clients must establish an action plan for each counseling client.
</P>
<P>(3) Counseling may take place at the housing counseling agency facility or at an alternate location, and may be conducted by telephone, or via collaborative online software. Agencies must ensure that any telephonic or collaborative online software, or any form of counseling, is accessible for persons with disabilities, in accordance with section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), 24 CFR parts 8 and 9, and the Americans with Disabilities Act (42 U.S.C. 12101 <I>et seq.</I>). All agencies participating in HUD's Housing Counseling program must, upon a client's request, refer clients to participating agencies that provide in-person counseling services in accordance with § 214.303(e).
</P>
<P>(4) Regardless of setting or format, all participating agencies must continue to meet the requirements of § 214.103(d), 214.103(g), and 214.103(h).
</P>
<P>(5) Regardless of setting or format, counseling activities must be limited to the geographic area specified in the agency's approved housing counseling work plan.
</P>
<P>(6) With prior approval from HUD, a network of affiliated counselors or a HUD roster of counselors, designed to meet a special housing counseling need, may be permitted to provide specified types of counseling nationally.
</P>
<P>(7) All participating agencies that offer group educational sessions must also offer individual counseling on the same topics covered in the group educational sessions.
</P>
<P>(8) All participating agencies that provide homeownership counseling, shall address the entire process of homeownership, including, but not limited to, the decision to purchase a home, the selection and purchase of a home, the home inspection process, issues arising during or affecting the period of ownership of a home (including, but not limited to, financing, refinancing, default, and foreclosure, and other financial decisions), and the sale or other disposition of a home.
</P>
<P>(9) All participating agencies that provide rental housing counseling shall address issues related to the rental of residential property, which may include counseling regarding future homeownership opportunities, the decision to rent, responsibilities of tenancy, affordability of renting, and eviction prevention.
</P>
<P>(10) As part of the homeownership counseling process, participating agencies shall provide clients with such materials as HUD may require regarding the availability and importance of obtaining an independent home inspection.
</P>
<P>(b) <I>Counseling services.</I> For each client, all agencies participating in HUD's Housing Counseling program shall offer the following basic services:
</P>
<P>(1) Housing counseling, on at least one of the topics described in paragraph (d) of this section, that enables a client to make informed and reasonable decisions to achieve his or her housing goal.
</P>
<P>(2) Referrals to local, state, and federal resources.
</P>
<P>(c) <I>Follow-up.</I> Make a reasonable effort to have follow-up communication with the client, when possible, to assure that the client is progressing toward his or her housing goal, to modify or terminate housing counseling, and to learn and report outcomes.
</P>
<P>(d) <I>Agency's housing counseling work plan.</I> (1) A participating agency shall deliver housing counseling services consistent with the agency's housing counseling work plan. The work plan should identify housing counseling services to be provided in response to one or more of the needs in targeted communities and geographic areas where the agency and its branches and affiliates provide their housing counseling services.
</P>
<P>(2) Participating agencies may also conduct marketing and outreach, including, but not limited to, providing general information about housing opportunities, conducting information campaigns, and raising awareness about critical housing topics such as predatory lending and fair housing topics.
</P>
<P>(e) <I>Approved housing counseling, education, and outreach topics.</I> The following are examples of approved housing counseling, education, and outreach topics that participating agencies may provide to and discuss with clients:
</P>
<P>(1) Prepurchase/homebuying, including, but not limited to: Advice regarding readiness and preparation, Federal Housing Administration-insured financing, housing selection and mobility, search assistance, fair housing and predatory lending, budgeting and credit, loan product comparison, purchase procedures, and closing costs;
</P>
<P>(2) Resolving or preventing mortgage delinquency, including, but not limited to: Default and foreclosure, loss mitigation, budgeting, and credit;
</P>
<P>(3) Home maintenance and financial management for homeowners, including, but not limited to: Escrow funds, budgeting, refinancing, home equity, home improvement, utility costs, energy efficiency, rights and responsibilities of home owners, and reverse mortgages;
</P>
<P>(4) Rental topics, including, but not limited to: HUD rental and rent subsidy programs; other federal, state or local assistance; fair housing; housing search assistance; landlord tenant laws; lease terms; rent delinquency; and
</P>
<P>(5) Homeless assistance, including, but not limited to: Information regarding emergency shelter, other emergency services, and transitional housing.
</P>
<CITA TYPE="N">[72 FR 55648, Sept. 28, 2007, as amended at 81 FR 90658, Dec. 14, 2016; 89 FR 75502, Sept. 16, 2024]








</CITA>
</DIV8>


<DIV8 N="§ 214.303" NODE="24:2.1.1.2.10.4.155.2" TYPE="SECTION">
<HEAD>§ 214.303   Performance criteria.</HEAD>
<P>To maintain HUD-approved status, a participating agency must meet the following requirements:
</P>
<P>(a) <I>Approval status.</I> Agencies must continue to comply with approval requirements in § 214.103.
</P>
<P>(b) <I>Workload.</I> During each 12-month period, the participating agency must provide housing counseling to at least 30 clients. Agencies that offer only housing counseling services limited to reverse mortgages, including home equity conversion mortgages (HECMs), are exempt from this requirement.
</P>
<P>(c) <I>Reporting.</I> The agency must submit to HUD complete, accurate, and timely activity reports, as described in § 214.317.
</P>
<P>(d) <I>Agency's housing counseling work plan.</I> The agency must implement the housing counseling work plan and demonstrate reasonable achievement of the outcome objectives approved by HUD, as described in § 214.103(k).
</P>
<P>(e) <I>Client referrals from HUD and other participating agencies.</I> Except as described in this paragraph, all clients who contact the agency as a result of these referrals must be served. In cases where the agency does not offer the unique services requested by the client or does not have sufficient resources, the agency must refer the client to another participating agency, preferably in the area, or, failing the availability of a participating agency, must make a reasonable effort to refer the client to another agency, that can help the client meet his or her needs.
</P>
<P>(f) <I>Conflicts of interest.</I> (1) A director, employee, officer, contractor, or agent of a participating agency shall not engage in activities that create a real or apparent conflict of interest. Such a conflict would arise if the director, employee, officer, contractor, agent, his or her spouse, child, general partner, or organization in which he or she serves as employee (other than with the participating counseling agency), or with whom he or she is negotiating future employment, has a direct interest in the client as a landlord, broker, or creditor, or originates, has a financial interest in, services, or underwrites a mortgage on the client's property, owns or purchases a property that the client seeks to rent or purchase, or serves as a collection agent for the client's mortgage lender, landlord, or creditor.
</P>
<P>(2) A director, employee, officer, contractor, or agent of a participating agency shall not refer clients to mortgage lenders, brokers, builders, or real estate sales agents or brokers in which the officer, employee, director, his or her spouse, child, or general partner has a financial interest, neither may they acquire the client's property from the trustee in bankruptcy or accept a fee or any other consideration for referring a client to mortgage lenders, brokers, builders, or real estate sales agents or brokers.
</P>
<P>(3) A director, employee, officer, contractor, or agent of a participating agency or any member of his or her immediate family shall avoid any action that might result in, or create the appearance of, administering the housing counseling operation for personal or private gain; providing preferential treatment to any organization or person; or undertaking any action that might compromise the agency's ability to ensure compliance with the requirements of this part and to serve the best interests of its clients.
</P>
<P>(4) HUD may investigate agency practices and may take action to inactivate or terminate the agency's approval or participation in the Housing Counseling program.
</P>
<P>(5) Participating agencies must notify HUD of conflicts of interest not later than 15 calendar days after the conflict occurred and report to HUD on the corrective action taken to cure the immediate, and avoid future, conflicts.
</P>
<P>(g) <I>Disclosure requirements.</I> A participating agency must provide to all clients a disclosure statement that explicitly describes the various types of services provided by the agency and any financial relationships between this agency and any other industry partners. The disclosure must clearly state that the client is not obligated to receive any other services offered by the organization or its exclusive partners. Furthermore, the agency must provide information on alternative services, programs, and products.
</P>
<P>(h) <I>Staff and supervision.</I> The agency must employ staff trained in housing counseling, and at least half the counselors must have at least 6 months of experience in the job they will perform in the agency's Housing Counseling program. Supervisors of the housing counselors must periodically monitor the work of the housing counselors by reviewing client files with the housing counselor to determine the adequacy and effectiveness of the housing counseling. The agency must document these monitoring activities and make the documentation available to HUD upon request.
</P>
<P>(i) <I>Funding.</I> The agency must maintain a level of funds that enables it to provide housing counseling to at least the required workload of clients every year, whether or not the agency receives HUD funding.


</P>
</DIV8>


<DIV8 N="§ 214.305" NODE="24:2.1.1.2.10.4.155.3" TYPE="SECTION">
<HEAD>§ 214.305   Agency profile changes.</HEAD>
<P>Participating agencies must notify HUD within 15 days when any of the following occurs:
</P>
<P>(a) The agency loses or changes its tax-exempt, nonprofit status.
</P>
<P>(b) The agency no longer complies with local and state requirements.
</P>
<P>(c) Changes occur in any of the items below:
</P>
<P>(1) Address(es) of the agency's main office and the address(es) of its branches and affiliates;
</P>
<P>(2) Staff personnel responsible for the Housing Counseling program, such as the housing counselors and management staff;
</P>
<P>(3) Telephone numbers of the main office, affiliates, and branches; or
</P>
<P>(4) Any other aspect of the agency's purpose or functions that may impair its ability to comply with these regulations or the applicable grant agreement (e.g., lack of qualified housing counselors).


</P>
</DIV8>


<DIV8 N="§ 214.307" NODE="24:2.1.1.2.10.4.155.4" TYPE="SECTION">
<HEAD>§ 214.307   Performance review.</HEAD>
<P>(a) HUD may conduct periodic on-site or desk performance reviews of all participating agencies.
</P>
<P>(b) The performance review will consist of a review of the participating agency's compliance with all program requirements, including applicable civil rights requirements, and the agency's level of success in delivering counseling services.


</P>
</DIV8>


<DIV8 N="§ 214.309" NODE="24:2.1.1.2.10.4.155.5" TYPE="SECTION">
<HEAD>§ 214.309   Reapproval and disapproval based on performance review.</HEAD>
<P>Based on the performance review, HUD may determine whether to renew the approval unconditionally or conditionally, temporarily change status to inactive, or terminate approval or participation of the agency.
</P>
<P>(a) <I>Unconditional Reapproval.</I> If the agency is in full compliance with the performance criteria of this part, HUD may reapprove the agency unconditionally for up to 3 years.
</P>
<P>(b) <I>Conditional Reapproval.</I> If the agency fails to meet the performance criteria, but the failure does not seriously impair the agency's counseling capability as required in this part, HUD may extend the agency's approval or participation for up to 120 calendar days.
</P>
<P>(c) <I>Inactive status.</I> HUD may temporarily change an agency's status to inactive, as provided in § 214.200.
</P>
<P>(d) <I>Follow-up Review.</I> HUD may conduct a follow-up review to determine if the deficiencies have been corrected.
</P>
<P>(e) <I>Termination of HUD Approval.</I> When HUD determines that the agency's program deficiencies seriously impair the agency's ability to comply with this part, HUD may terminate approval or participation of the agency immediately.
</P>
<P>(f) <I>Appeal.</I> If HUD does not reinstate the approval, or terminates participation, the agency may file an appeal, as prescribed under § 214.205.


</P>
</DIV8>


<DIV8 N="§ 214.311" NODE="24:2.1.1.2.10.4.155.6" TYPE="SECTION">
<HEAD>§ 214.311   Housing counseling grant funds.</HEAD>
<P>(a) <I>HUD housing counseling grant funds.</I> HUD approval or program participation does not guarantee housing counseling grant funding. Funding for the Housing Counseling Program depends on appropriations from Congress, and are awarded competitively under Federal and HUD regulations and policies governing assistance programs, including the Department of Housing and Urban Development Reform Act of 1989 (42 U.S.C. 3545 <I>et seq.</I>). If housing counseling grant funds become available that are to be competitively awarded, HUD will notify the public through a Notice of Funding Availability (NOFA) in the <E T="04">Federal Register</E> and by the Internet or other electronic media.


</P>
<P>(b) <I>Local funding sources.</I> HUD recommends that approved agencies seek and secure funding from funding sources that may include local and state governments, private foundations, and lending or real estate organizations. Agencies must assure that such arrangements do not violate the provisions regarding conflicts of interest described in § 214.303(e).
</P>
<P>(c) <I>Limitation on distribution of funds.</I> No housing counseling funds made available under the Housing Counseling Program shall be distributed to:
</P>
<P>(1)(i) Any organization that has been convicted for a violation under Federal law relating to an election for Federal office or any organization that employs applicable individuals. For the purposes of this section, applicable individual means an individual who is:
</P>
<P>(A) Employed by the organization in a permanent or temporary capacity;
</P>
<P>(B) Contracted or retained by the organization; or
</P>
<P>(C) Acting on behalf of, or with the express or apparent authority of, the organization; and
</P>
<P>(D) Has been convicted for a violation under Federal law relating to an election for Federal office.
</P>
<P>(ii) For the purposes of this paragraph (c)(1), a violation under Federal law relating to an election for Federal office includes, but is not limited to, a violation of one or more of the following statutory provisions related to Federal election fraud, voter intimidation, and voter suppression: 18 U.S.C. 241-242, 245(b)(1)(A), 592-611, and 42 U.S.C. 1973.
</P>
<P>(2) A participating agency that provides housing counseling through housing counselors who are not HUD certified housing counselors in accordance with § 214.103(n).
</P>
<P>(d) <I>Misuse of housing counseling grant funds.</I> If any participating agency that receives housing counseling grant funds under the Housing Counseling Program is determined by HUD to have used those housing counseling grant funds in a manner that constitutes a material violation of applicable statutes and regulations, or any requirements or conditions under which such funds were provided:
</P>
<P>(1) HUD shall require that, within 12 months after the date of the determination of such misuse, the agency shall reimburse HUD for such misused amounts and return to HUD any such amounts that remain unused or unobligated for use; and
</P>
<P>(2) Such agency shall be ineligible, at any time after the date of such determination of material misuse, to apply for or receive further funds under the Housing Counseling Program.
</P>
<P>(3) The remedies under paragraph (d) of this section are in addition to any other remedies that may be available under law.
</P>
<CITA TYPE="N">[72 FR 55648, Sept. 28, 2007, as amended at 81 FR 90658, Dec. 14, 2016]




</CITA>
</DIV8>


<DIV8 N="§ 214.313" NODE="24:2.1.1.2.10.4.155.7" TYPE="SECTION">
<HEAD>§ 214.313   Housing counseling fees.</HEAD>
<P>(a) Participating agencies may charge reasonable and customary fees for housing education and counseling services, as long as the cost does not create a financial hardship for the client. An agency's fee schedule must be posted in a prominent place that is easily viewed by clients, and be available to HUD for review.
</P>
<P>(b) Agencies must inform clients of the fee structure in advance of providing services. Clients cannot be charged for client intake.
</P>
<P>(c) If any agency chooses to charge fees, the agency must conform to the following guidelines:
</P>
<P>(1) Provide counseling without charge to persons who cannot afford the fees;
</P>
<P>(2) Fees must be commensurate with the level of services provided;
</P>
<P>(3) Agencies may not impose fees upon clients for the same portion of or for an entire service that is already funded with HUD grant funds.
</P>
<P>(d) The agency may also be reimbursed from clients for the direct cost of obtaining copies of clients' credit reports from credit reporting bureaus if this does not cause a hardship for the client. In cases where the participating agency receives a discount for the cost of credit reports, this discount must be passed on to the client.
</P>
<P>(e) Lenders may pay agencies for counseling services, through a lump sum or on a case-by-case basis, provided the level of payment does not exceed a level that is commensurate with the services provided, and is reasonable and customary for the area, and does not violate requirements under the Real Estate Settlement Procedures Act (12 U.S.C. 2601 <I>et seq.</I>). These transactions and relationships must be disclosed to the client as required in § 214.303(g).


</P>
</DIV8>


<DIV8 N="§ 214.315" NODE="24:2.1.1.2.10.4.155.8" TYPE="SECTION">
<HEAD>§ 214.315   Recordkeeping.</HEAD>
<P>(a) <I>Recordkeeping system.</I> Each participating housing counseling agency must maintain a recordkeeping system. The system must permit HUD to easily access all information needed for a performance review. This system must meet the requirements of 2 CFR part 200, subpart D, 24 CFR 1.6, and 24 CFR part 121.
</P>
<P>(b) <I>File retention requirements.</I> Financial records, supporting documents, statistical records and all other pertinent records, both electronic and on paper, shall be retained for a period of 3 years from the date the case file was terminated for housing counseling. If the housing counseling agency is a recipient of a HUD housing counseling grant, then the client files for the housing counseling grant year must be retained for 3 years from the date the final grant invoice was paid by HUD.
</P>
<P>(c) <I>Grant activities.</I> Recipients of HUD housing counseling grants are required to report activities under the grant in a format acceptable to HUD and within the designated time frames required by the applicable grant agreement.
</P>
<P>(d) <I>Race, ethnicity, and income data.</I> Participating agencies must maintain current and accurate data on the race, ethnicity, and income of their counseling clients and education participants.
</P>
<P>(e) <I>Client file.</I> The housing counseling agency must maintain a separate confidential file for each counseling client to document the action plan and the services provided to the client, as described in § 214.300. For all counseling, except for HECM counseling, the client file must include an action plan. The client file may be for an individual or household or for a group of clients with the same housing need.
</P>
<P>(f) <I>Group education file.</I> The housing counseling agency must maintain a separate confidential file for each course provided. This file must contain a list of all participants, their race, ethnicity and income data, course title, course outline, instructors, and date of each course.
</P>
<P>(g) <I>Confidentiality.</I> Participating agencies must ensure the confidentiality of each client's personal and financial information, including credit reports, whether the information is received from the client or from another source. Failure to maintain the confidentiality of, or improper use of, credit reports may subject the agency to penalties under the Fair Credit Reporting Act (14 U.S.C. 1681 <I>et seq.</I>).
</P>
<P>(h) <I>Termination of services.</I> The housing counseling agency must document in the client's file termination of housing counseling. Termination occurs or may occur under any of these conditions:
</P>
<P>(1) The client meets his or her housing need or resolves the housing problem;
</P>
<P>(2) The agency determines that further housing counseling will not meet the client's housing need or resolve the client's housing problem;
</P>
<P>(3) The agency attempts to, but is unable to, locate the client;
</P>
<P>(4) The client does not follow the agreed-upon action plan;
</P>
<P>(5) The client otherwise terminates housing counseling; or
</P>
<P>(6) The client fails to appear for housing counseling appointments.
</P>
<CITA TYPE="N">[72 FR 55648, Sept. 28, 2007, as amended at 80 FR 75936, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 214.317" NODE="24:2.1.1.2.10.4.155.9" TYPE="SECTION">
<HEAD>§ 214.317   Reporting.</HEAD>
<P>All participating agencies shall submit to HUD activity reports, which may be required up to quarterly. The reports must be submitted in the format, by the deadline, and in the manner prescribed by HUD. Participating agencies that are also recipients of HUD grants or subgrants may be required to submit additional reports, as described in their grant agreements and prescribed by HUD.


</P>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:2.1.1.2.10.5" TYPE="SUBPART">
<HEAD>Subpart E—Other Federal Requirements</HEAD>


<DIV8 N="§ 214.500" NODE="24:2.1.1.2.10.5.155.1" TYPE="SECTION">
<HEAD>§ 214.500   Audit.</HEAD>
<P>Housing counseling grant recipients and subrecipients shall be subject to the audit requirements contained in 2 CFR part 200, subpart F. HUD must be provided a copy of the audit report within 30 days of completion.
</P>
<CITA TYPE="N">[72 FR 55648, Sept. 28, 2007, as amended at 80 FR 75936, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 214.503" NODE="24:2.1.1.2.10.5.155.2" TYPE="SECTION">
<HEAD>§ 214.503   Other requirements.</HEAD>
<P>In addition to the requirements of this part, the Housing Counseling program is subject to applicable federal requirements in 24 CFR 5.105.




</P>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:2.1.1.2.10.6" TYPE="SUBPART">
<HEAD>Subpart F—Certification of Tribal Housing Counselors</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>89 FR 49807, June 12, 2024, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 214.600" NODE="24:2.1.1.2.10.6.155.1" TYPE="SECTION">
<HEAD>§ 214.600   Tribal housing counselor certification.</HEAD>
<P>(a) This subpart applies only to housing counseling required under or provided in connection with the Indian Housing Block Grant (IHBG) program or the Indian Community Development Block Grant (ICDBG) program. Indian Tribes, tribally designated housing entities (TDHEs), and other tribal entities funding housing counseling required under or provided in connection with IHBG or ICDBG programs shall not be subject to the requirements of this part, except as otherwise provided in this subpart.
</P>
<P>(b) Housing counseling required under or provided in connection with IHBG or ICDBG programs must be provided by a HUD-certified housing counselor or a HUD-certified Tribal housing counselor.
</P>
<P>(c) HUD will certify an individual housing counselor to provide housing counseling required under or provided in connection with IHBG or ICDBG programs upon verification that the person:
</P>
<P>(1) Passes a standardized written examination to demonstrate competency in each of the following areas:
</P>
<P>(i) Financial management;
</P>
<P>(ii) Property maintenance;
</P>
<P>(iii) Responsibilities of homeownership and tenancy;
</P>
<P>(iv) Fair housing laws and requirements;
</P>
<P>(v) Housing affordability; and
</P>
<P>(vi) Avoidance of, and response to, rental or mortgage delinquency and avoidance of eviction or mortgage default; and
</P>
<P>(2) Works for an Indian Tribe, TDHE, or other Tribal entity.
</P>
<P>(d) To provide housing counseling required under or provided in connection with HUD programs other than the IHBG and ICDBG programs, an individual working for an Indian Tribe, TDHE, or other Tribal entity must meet the housing counseling certification requirement under § 214.103(n), including the standardized written examination required under § 214.103(n)(2), and the Indian Tribe, TDHE, or other Tribal entity must be a participating agency).
</P>
<P>(e) Entities and individuals providing housing counseling under this subpart must be certified by the Office of Housing Counseling by 48 months from the effective date of this rule or 30 days after HUD makes the Tribal certification examination available, whichever is later. HUD will publish a document in the <E T="04">Federal Register</E> to announce the start of the testing and certification requirement.




</P>
</DIV8>


<DIV8 N="§ 214.601" NODE="24:2.1.1.2.10.6.155.2" TYPE="SECTION">
<HEAD>§ 214.601   [Reserved]</HEAD>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="219" NODE="24:2.1.1.2.11" TYPE="PART">
<HEAD>PART 219—FLEXIBLE SUBSIDY PROGRAM FOR TROUBLED PROJECTS
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1715z-1a; 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 14405, Apr. 1, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 219.1" NODE="24:2.1.1.2.11.0.155.1" TYPE="SECTION">
<HEAD>§ 219.1   Program operations.</HEAD>
<P>Effective May 1, 1996, the Flexible Subsidy Program for Troubled Projects will be governed and operate under the statutory provisions codified at 12 U.S.C. 1715z-1a, under the administrative policies and procedures contained in any applicable HUD Handbooks, and other administrative bulletins and notices as the Department may issue from time to time. 


</P>
</DIV8>


<DIV8 N="§ 219.2" NODE="24:2.1.1.2.11.0.155.2" TYPE="SECTION">
<HEAD>§ 219.2   Savings provision.</HEAD>
<P>Part 219, as it existed immediately before May 1, 1996, (contained in the April 1, 1995 edition of 24 CFR, parts 200 to 219) will continue to govern the rights and obligations of housing owners, tenants, and the Department of Housing and Urban Development with respect to units and projects assisted under the Flexible Subsidy Program for Troubled Projects prior to May 1, 1996. A list of any amendments to this part published after the CFR revision date is available from the Office of the Rules Docket Clerk, Department of Housing and Urban Development, 451 Seventh Street, SW., Washington, DC 20410.


</P>
</DIV8>

</DIV5>


<DIV5 N="220" NODE="24:2.1.1.2.12" TYPE="PART">
<HEAD>PART 220—MORTGAGE INSURANCE AND INSURED IMPROVEMENT LOANS FOR URBAN RENEWAL AND CONCENTRATED DEVELOPMENT AREAS 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1713, 1715b, 1715k, and 1735d; 42 U.S.C. 3535(d).


</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>36 FR 24573, Dec. 22, 1971, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:2.1.1.2.12.1" TYPE="SUBPART">
<HEAD>Subpart A [Reserved]</HEAD>

</DIV6>


<DIV6 N="B" NODE="24:2.1.1.2.12.2" TYPE="SUBPART">
<HEAD>Subpart B—Contract Rights and Obligations—Homes</HEAD>


<DIV8 N="§ 220.251" NODE="24:2.1.1.2.12.2.158.1" TYPE="SECTION">
<HEAD>§ 220.251   Cross-reference.</HEAD>
<P>(a) All of the provisions of subpart B, part 203 of this chapter covering mortgages insured under section 203 of the National Housing Act apply to mortgages covering 1- to 11-family dwellings insured under section 220 of the National Housing Act, except the following: 
</P>
<EXTRACT>
<FP>Sec. 
</FP>
<FP-2>203.258 Substitute mortgagors.
</FP-2>
<FP-2>203.259 Scope.
</FP-2>
<FP-2>203.280 One-time MIP.
</FP-2>
<FP-2>203.281 Calculation of one-time MIP.
</FP-2>
<FP-2>203.282 Mortgagee's late charge and interest.
</FP-2>
<FP-2>203.283 Refund of one-time MIP.
</FP-2>
<FP-2>203.340 Conditions of special forbearance relief. 
</FP-2>
<FP-2>203.342 Recasting of mortgage. 
</FP-2>
<FP-2>203.343 Partial release, addition or substitution of security. 
</FP-2>
<FP-2>203.350 Assignment of defaulted mortgage—ingeneral. 
</FP-2>
<FP-2>203.350a Assignment of defaulted mortgage.
</FP-2>
<FP-2>203.351 Application for insurance benefits and fiscal data. 
</FP-2>
<FP-2>203.353 Certification by mortgagee. 
</FP-2>
<FP-2>203.400 Method of payment. 
</FP-2>
<FP-2>203.402a Reimbursement for uncollected interest. 
</FP-2>
<FP-2>203.420 Nature of Mutual Mortgage Insurance Fund. 
</FP-2>
<FP-2>203.421 Allocation of Mutual Mortgage Insurance Fund income or loss. 
</FP-2>
<FP-2>203.422 Right and liability under Mutual Mortgage Insurance Fund. 
</FP-2>
<FP-2>203.423 Distribution of distributive shares 
</FP-2>
<FP-2>203.424 Maximum amount of distributive shares. 
</FP-2>
<FP-2>203.425 Finality of determination. 
</FP-2>
<FP-2>203.438 Mortgages on Indian land insured pursuant to section 248 of the National Housing Act.
</FP-2>
<FP-2>203.439 Mortgages on Hawaiian home lands insured pursuant to section 247 of the National Housing Act.
</FP-2>
<FP-2>203.439a Mortgages on property in Allegany Reservation of Seneca Nation of Indians authorized by section 203(q) of the National Housing Act.</FP-2></EXTRACT>
<P>(b) For the purposes of this subpart, all references in part 203 of this chapter to section 203 of the act shall be construed to refer to section 220 of the act, and all references to the Mutual Mortgage Insurance Fund shall be construed to refer to the General Insurance Fund.
</P>
<CITA TYPE="N">[36 FR 24573, Dec. 22, 1971, as amended at 42 FR 29304, June 8, 1977; 48 FR 28807, June 23, 1983; 51 FR 21874, June 16, 1986; 52 FR 8069, Mar. 16, 1987; 52 FR 28470, July 30, 1987; 52 FR 48203, Dec. 21, 1987; 53 FR 9869, Mar. 28, 1988; 55 FR 34808, Aug. 24, 1990]


</CITA>
</DIV8>


<DIV8 N="§ 220.252" NODE="24:2.1.1.2.12.2.158.2" TYPE="SECTION">
<HEAD>§ 220.252   Forbearance of foreclosure and assignment of mortgage.</HEAD>
<P>All of the provisions of §§ 203.340 through 203.342, 203.350, 203.352 and 203.353 of this chapter shall apply to mortgages insured under this subpart, except that the provisions relating to forbearance of foreclosure, recasting of the mortgage and assignment of a defaulted mortgage, shall be applicable only to a mortgage covering a property having not more than four dwelling units. 


</P>
</DIV8>


<DIV8 N="§ 220.253" NODE="24:2.1.1.2.12.2.158.3" TYPE="SECTION">
<HEAD>§ 220.253   Substitute mortgagors.</HEAD>
<P>(a) <I>Selling mortgagor.</I> The mortgagee may effect the release of a mortgagor from personal liability on the mortgage note only if it obtains the Commissioner's approval of a substitute mortgagor, as provided by this section. 
</P>
<P>(b) <I>Purchasing mortgagor.</I> (1) The Commissioner may approve a substitute mortgagor with respect to any mortgage insured under subpart A of this part, if the substitute mortgagor is to occupy the dwelling as a principal residence or a secondary residence (as these terms are defined in § 220.30(d)). 
</P>
<P>(2) The Commissioner may approve as a substitute mortgagor an eligible non-occupant mortgagor (as defined in § 220.30(d)) with respect to any mortgage insured under this part, only if the outstanding balance of the mortgage does not exceed the Commissioner's estimate of: 
</P>
<P>(i) The replacement cost of the property as of the date the mortgage was originally accepted for insurance, or the date the substitute mortgagor is approved by the Commissioner, which ever is greater, in the case of a dwelling described in § 220.30(a) (1) or (2); or 
</P>
<P>(ii) The cost of repair or rehabilitation, plus the Commissioner's estimate of the replacement cost of the property as of either the date the mortgage was originally accepted for insurance, or the date the substitute mortgagor is approved by the Commissioner, whichever is greater, in the case of a dwelling described in § 220.30(a) (3) or (4). 
</P>
<P>(c) <I>Applicability—current mortgagor.</I> Paragraph (b) of this section applies to the Commissioner's approval of a substitute mortgagor, only if the mortgage executed by the original mortgagor met the conditions of § 203.258(c) of this chapter. 
</P>
<P>(d) <I>Applicability—earlier mortgagor.</I> The occupancy and similar requirements set forth in § 203.258(d) of this chapter apply to mortgages insured under subpart A of this part. 
</P>
<P>(e) Mortgagees approved for participation in the Direct Endorsement program under § 203.3 may, subject to limitations established by the Commissioner, themselves approve an appropriate substitute mortgagor under this section for mortgages which they own or service, and need not obtain further specific approval from the Commissioner.
</P>
<P>(f) <I>Definition.</I> As used in this section, the term <I>substitute mortgagor</I> includes: (1) Persons who, upon the release by a mortgagee of a previous mortgagor from personal liability on the mortgage note, assume this liability and agree to pay the mortgage debts; and (2) persons who purchase without assuming liability on the mortgage note, or purchase where no release is given by the mortgagee to the previous mortgagor.
</P>
<CITA TYPE="N">[55 FR 34808, Aug. 24, 1990, as amended at 57 FR 58351, Dec. 9, 1992] 


</CITA>
</DIV8>


<DIV8 N="§ 220.275" NODE="24:2.1.1.2.12.2.158.4" TYPE="SECTION">
<HEAD>§ 220.275   Method of paying insurance benefits.</HEAD>
<P>If the application for insurance benefits is acceptable to the Commissioner, all of the insurance claim shall be paid in cash unless the mortgagee files a written request with the application for payment in debentures. If such a request is made, all of the claim shall be paid by issuing debentures and by making a cash payment adjusting any differences between the total amount of the claim and the amount of the debentures issued. 


</P>
</DIV8>


<DIV7 N="158" NODE="24:2.1.1.2.12.2.158" TYPE="SUBJGRP">
<HEAD>Insured Home Improvement Loans</HEAD>


<DIV8 N="§ 220.350" NODE="24:2.1.1.2.12.2.158.5" TYPE="SECTION">
<HEAD>§ 220.350   Cross-reference.</HEAD>
<P>(a) All of the provisions of §§ 203.440 through 203.495 of this chapter covering insured home improvement loans under section 203(k) of the Act shall apply to home improvement loans on one-to-four family dwellings under section 220(h) of the Act, except as set out in paragraph (b). 
</P>
<P>(b) The provisions of §§ 203.473(a) shall not be applicable to home improvement loans on one-to-four family dwellings under section 220(h) of the Act. 
</P>
<CITA TYPE="N">[52 FR 1330, Jan. 13, 1987]


</CITA>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="C" NODE="24:2.1.1.2.12.3" TYPE="SUBPART">
<HEAD>Subpart C—Eligibility Requirements—Projects</HEAD>


<DIV8 N="§ 220.501" NODE="24:2.1.1.2.12.3.159.1" TYPE="SECTION">
<HEAD>§ 220.501   Eligibility requirements.</HEAD>
<P>The requirements set forth in 24 CFR part 200, subpart A, apply to multifamily project mortgages insured under section 220 of the National Housing Act (12 U.S.C. 1715k), as amended. 
</P>
<CITA TYPE="N">[61 FR 14405, Apr. 1, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:2.1.1.2.12.4" TYPE="SUBPART">
<HEAD>Subpart D—Contract Rights and Obligations—Projects</HEAD>


<DIV7 N="159" NODE="24:2.1.1.2.12.4.159" TYPE="SUBJGRP">
<HEAD>Project Mortgage Insurance</HEAD>


<DIV8 N="§ 220.751" NODE="24:2.1.1.2.12.4.159.1" TYPE="SECTION">
<HEAD>§ 220.751   Cross-reference.</HEAD>
<P>(a) All of the provisions of subpart B, part 207, of this chapter, covering mortgages insured under section 207 of the National Housing Act, apply with full force and effect to multifamily project mortgages insured under section 220 of the National Housing Act, except § 207.256b Modification of mortgage terms.
</P>
<P>(b) For the purposes of the portion of this subpart, covering multifamily project mortgages, all references in part 207 of this chapter to section 207 of the National Housing Act shall be deemed to refer to section 220 of the National Housing Act. 
</P>
<CITA TYPE="N">[36 FR 24573, Dec. 22, 1971, as amended at 80 FR 51468, Aug. 25, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 220.753" NODE="24:2.1.1.2.12.4.159.2" TYPE="SECTION">
<HEAD>§ 220.753   Forbearance relief.</HEAD>
<P>(a) In a case where the mortgage is in default, the mortgagor and the mortgagee may enter into a forbearance agreement for the reduction or suspension of regular mortgage payments for a specified period of time, if the following requirements are met: 
</P>
<P>(1) The mortgage was endorsed for insurance on or after July 7, 1961. 
</P>
<P>(2) The Commissioner determines that the default was due to circumstances beyond the mortgagor's control and that the mortgage probably will be restored to good standing within a reasonable period of time and evidences such determination by written approval of the forbearance agreement. 
</P>
<P>(b) The time specified in § 207.258(a) of this chapter, within which a mortgagee shall give the Commissioner written notice of its intention to file an insurance claim, shall be suspended for the period of time specified in the forbearance agreement as long as the mortgagor complies with the requirements of such agreement. 
</P>
<P>(c) If the mortgagor fails to meet the requirements of a forbearance agreement or to cure the default under the mortgage at the expiration of the forbearance period, and such failure continues for a period of 30 days, the mortgagee shall notify the Commissioner of such failure. Within 45 days thereafter, unless a modification or extension of the forbearance agreement has been approved by the Commissioner, the mortgagee shall notify the Commissioner of its election to file an insurance claim and of its decision to either assign the mortgage to the Commissioner or acquire and convey title to the property to the Commissioner. If the mortgage is assigned to the Commissioner, the special insurance benefits prescribed in § 220.765 shall be applicable. 


</P>
</DIV8>


<DIV8 N="§ 220.765" NODE="24:2.1.1.2.12.4.159.3" TYPE="SECTION">
<HEAD>§ 220.765   Special insurance benefits—forbearance relief cases.</HEAD>
<P>(a) Upon a failure of the mortgagor to meet the requirements of a forbearance agreement or to cure the default under the mortgage at the expiration of the forbearance period, the mortgagee shall be entitled to obtain a special insurance payment in cash, in lieu of the insurance benefits otherwise provided under this subpart. To receive the special insurance payment, the mortgagee shall assign the mortgage to the Commissioner in compliance with the requirements of § 207.258(b) of this chapter. 
</P>
<P>(b) The special insurance benefits to the mortgagee shall be a cash payment computed in accordance with § 207.259(b) of this chapter, except that in lieu of the allowance for debenture interest in § 207.259(b)(1)(iii) of this chapter, the payment shall include the amount of the unpaid accrued mortgage interest computed to the date the assignment of the mortgage to the Commissioner is filed for record. In addition, there shall be included in the cash payment an amount equivalent to the debenture interest which would have been earned from the date the mortgage assignment was filed for record to the date the payment is made; except that when the mortgagee fails to meet any of the applicable requirements of § 207.258(b) of this chapter and § 220.753(c) within the specified times and in a manner satisfactory to the Commissioner (or within such further time as the Commissioner may approve in writing), such debenture interest allowance shall be computed only to the date on which the particular required action should have been taken. 


</P>
</DIV8>

</DIV7>


<DIV7 N="160" NODE="24:2.1.1.2.12.4.160" TYPE="SUBJGRP">
<HEAD>Insured Project Improvement Loans</HEAD>


<DIV8 N="§ 220.800" NODE="24:2.1.1.2.12.4.160.4" TYPE="SECTION">
<HEAD>§ 220.800   Definitions.</HEAD>
<P>All of the definitions contained in § 220.550 shall apply to §§ 220.800 <I>et seq.</I> In addition the following terms shall have the meaning indicated: 
</P>
<P>(a) <I>Contract of insurance</I> means the agreement evidenced by the endorsement of the Commissioner upon the note given in connection with an insured loan, incorporating by reference the regulations in §§ 220.800 <I>et seq.</I> and the applicable provisions of the Act. 
</P>
<P>(b) <I>Maturity</I> means the date on which the loan indebtedness would be extinguished if paid in accordance with periodic payments provided for in the loan. 


</P>
</DIV8>


<DIV8 N="§ 220.801" NODE="24:2.1.1.2.12.4.160.5" TYPE="SECTION">
<HEAD>§ 220.801   Initial insurance endorsement.</HEAD>
<P>The Commissioner shall indicate his insurance of the loan by endorsing the original credit instrument and identifying the section of the Act and the regulations under which the loan is insured and the date of insurance. 


</P>
</DIV8>


<DIV8 N="§ 220.802" NODE="24:2.1.1.2.12.4.160.6" TYPE="SECTION">
<HEAD>§ 220.802   Final insurance endorsement.</HEAD>
<P>When all advances of loan proceeds have been made, and all the terms and conditions of the commitment have been complied with to the satisfaction of the Commissioner, he shall indicate on the original credit instrument the total of advances he has approved for insurance and again endorse such instrument. 


</P>
</DIV8>


<DIV8 N="§ 220.803" NODE="24:2.1.1.2.12.4.160.7" TYPE="SECTION">
<HEAD>§ 220.803   Effect of insurance endorsement.</HEAD>
<P>From the date of initial endorsement, the Commissioner and the lender shall be bound by the provisions of this subpart to the same extent as if they had executed a contract including the provisions of this subpart and the applicable sections of the Act. 


</P>
</DIV8>


<DIV8 N="§ 220.804" NODE="24:2.1.1.2.12.4.160.8" TYPE="SECTION">
<HEAD>§ 220.804   Insurance premiums.</HEAD>
<P>(a) <I>First premium.</I> The lender, upon the initial endorsement of the loan for insurance, shall pay to the Commissioner a first loan insurance premium equal to one-half of one percent of the original face amount of the note. 
</P>
<P>(b) <I>Second premium; first payment more than one year following initial endorsement.</I> If the date of the first principal payment is more than one year following the date of initial insurance endorsement, the lender, upon the anniversary of such insurance date, shall pay a second premium equal to one-half of one percent of the original face amount of the loan. 
</P>
<P>(c) <I>Third premium.</I> On the date of the first principal payment, the lender shall pay a third premium equal to one-half of one percent of the average outstanding principal obligation of the note for the following year which shall be adjusted so as to accord with such date and so that the aggregate of the three premiums shall equal the sum of (1) one percent of the average outstanding principal obligation of the note for the year following the date of initial insurance endorsement and (2) one-half of one percent per annum of the average outstanding principal obligation of the note for the period from the first anniversary of the date of initial insurance endorsement to one year following the date of the first principal payment. 
</P>
<P>(d) <I>Second premium; first payment one year or less following initial endorsement.</I> If the date of the first principal payment is one year, or less than one year following the date of initial insurance endorsement, the lender upon such first principal payment date, shall pay a second premium equal to one-half of one percent of the average outstanding principal obligation of the note for the following year which shall be adjusted so as to accord with such date and so that the aggregate of the said two premiums shall equal the sum of (1) one percent per annum of the average outstanding principal obligation of the note for the period from the date of initial insurance endorsement to the date of first principal payment and (2) one-half of one percent of the average outstanding principal obligation of the note for the year following the date of the first principal payment. 
</P>
<P>(e) <I>Second premium; commitment to insure upon completion.</I> Where the note is initially and finally endorsed for insurance pursuant to a Commitment to Insure Upon Completion, the lender on the date of the first principal payment shall pay a second premium equal to one-half of one percent of the average outstanding principal obligation of the note for the year following such first principal payment date which shall be adjusted so as to accord with such date and so that the aggregate of the said two premiums shall equal the sum of one-half of one percent per annum of the average outstanding principal obligation of the note for the period from the date of the insurance endorsement to one year following the date of the first principal payment. 
</P>
<P>(f) <I>Annual insurance premium.</I> Until the note is paid in full, or until the loan is assigned to the Commissioner, or until the contract of insurance is otherwise terminated with the consent of the Commissioner, the lender, on each anniversary of the date of the first principal payment shall pay an annual loan insurance premium equal to one-half of one percent of the average outstanding principal obligation of the loan for the year following the date on which such premium becomes payable. 
</P>
<P>(g) <I>Method of premium payment.</I> Premiums shall be payable in cash or in debentures at par plus accrued interest. All premiums are payable in advance and no refund can be made of any portion thereof except as hereinafter provided in §§ 220.800 <I>et seq.</I> 
</P>
<P>(h) <I>Calculation of premiums.</I> The premiums payable on and after the date of the first principal payment shall be calculated in accordance with the amortization provisions without taking into account delinquent payments or prepayments.


</P>
</DIV8>


<DIV8 N="§ 220.804a" NODE="24:2.1.1.2.12.4.160.9" TYPE="SECTION">
<HEAD>§ 220.804a   Mortgagee's late charge.</HEAD>
<P>Mortgage insurance premiums which are paid to the Commissioner more than 15 days after the billing date or due date, whichever is later, shall include a late charge of 4 percent of the amount of the payment due, except that no late charge shall be required with respect to any case for which HUD fails to render a proper billing to the mortgagee.
</P>
<CITA TYPE="N">[43 FR 60154, Dec. 26, 1978]


</CITA>
</DIV8>


<DIV8 N="§ 220.805" NODE="24:2.1.1.2.12.4.160.10" TYPE="SECTION">
<HEAD>§ 220.805   Termination of insurance.</HEAD>
<P>(a) <I>Prepayment in full.</I> The contract of insurance shall be terminated if the loan is paid in full prior to its maturity. Notice of the prepayment shall be given to the Commissioner, on a form prescribed by the Commissioner, within 30 days from the date of the prepayment. The insurance termination shall become effective as of the date of the prepayment. 
</P>
<P>(b) <I>Voluntary termination.</I> The contract of insurance shall be voluntarily terminated upon receipt by the Commissioner of a written request, on a form prescribed by the Commissioner, by the borrower and the lender for such termination, accompanied by a submission of the original credit instrument for cancellation of the insurance endorsement and the remittance of all sums to which the Commissioner is entitled. The termination shall become effective as of the date these requirements are met. 


</P>
</DIV8>


<DIV8 N="§ 220.806" NODE="24:2.1.1.2.12.4.160.11" TYPE="SECTION">
<HEAD>§ 220.806   Pro rata refund of insurance premium.</HEAD>
<P>Upon termination of loan insurance contract by a payment in full or by a voluntary termination, the Commissioner shall refund to the lender for the account of the borrower an amount equal to the pro rata portion of the current annual loan insurance premium theretofore paid which is applicable to the portion of the year subsequent to the date of the prepayment or the effective date of the voluntary termination of the contract of insurance. 


</P>
</DIV8>


<DIV8 N="§ 220.810" NODE="24:2.1.1.2.12.4.160.12" TYPE="SECTION">
<HEAD>§ 220.810   Definition of default.</HEAD>
<P>(a) If the borrower fails to make any payments due under or provided to be paid by the terms of the note or security instrument and such default continues for a period of 30 days, the note or security instrument shall be considered in default for the purposes of §§ 220.800 <I>et seq.</I> 
</P>
<P>(b) The failure to perform any other covenant under the note or security instrument shall be considered a default, provided the lender because of such default, has exercised its right under the note or security instrument and accelerated the debt. 
</P>
<P>(c) If such defaults as defined in paragraphs (a) and (b) of this section continue for a period of 30 days, the lender shall be entitled to receive the benefits of insurance hereinafter provided. 


</P>
</DIV8>


<DIV8 N="§ 220.811" NODE="24:2.1.1.2.12.4.160.13" TYPE="SECTION">
<HEAD>§ 220.811   Date of default.</HEAD>
<P>For the purposes of §§ 220.800 <I>et seq.,</I> the date of default shall be considered as: 
</P>
<P>(a) The date of the first uncorrected failure to perform a covenant or obligation under the note or security instrument; or 
</P>
<P>(b) The date of the first failure to make a monthly payment which subsequent payments by the borrower are insufficient to cover when applied to the overdue monthly payments in the order in which they became due. 


</P>
</DIV8>


<DIV8 N="§ 220.812" NODE="24:2.1.1.2.12.4.160.14" TYPE="SECTION">
<HEAD>§ 220.812   Notice of default.</HEAD>
<P>(a) If the default as defined in § 220.810 is not cured within the 30 day grace period, the lender shall, within 30 days thereafter, notify the Commissioner in writing of such default. 
</P>
<P>(b) The lender shall give notice in writing to the Commissioner of the failure of the borrower to comply with any covenant or obligation under the security instrument or note regardless of the fact the lender may not have elected to accelerate the debt. 


</P>
</DIV8>


<DIV8 N="§ 220.813" NODE="24:2.1.1.2.12.4.160.15" TYPE="SECTION">
<HEAD>§ 220.813   Commissioner's right to require acceleration.</HEAD>
<P>Upon receipt of notice of the failure of the borrower to comply with any covenant or obligation under the security instrument or note, or otherwise being apprised thereof, the Commissioner reserves the right to require the lender to accelerate payment of the outstanding principal balance due in order to protect the interests of the Federal Housing Commissioner. 


</P>
</DIV8>


<DIV8 N="§ 220.814" NODE="24:2.1.1.2.12.4.160.16" TYPE="SECTION">
<HEAD>§ 220.814   Election of action.</HEAD>
<P>Where a real estate mortgage, deed of trust, conditional sales contract, chattel mortgage, lien, judgment, or any other security device has been used to secure the payment of a loan made under the provisions of this section, the lender may not, except with the approval of the Commissioner, both proceed against such security and also make claim under its contract of insurance, but shall elect which method it desires to pursue. 


</P>
</DIV8>


<DIV8 N="§ 220.820" NODE="24:2.1.1.2.12.4.160.17" TYPE="SECTION">
<HEAD>§ 220.820   Maximum claim period.</HEAD>
<P>Notice of intention to file claim on a form prescribed by the Commissioner shall be filed within 45 days after the lender becomes eligible for the benefits of the loan insurance, or within such later time as may be agreed upon by the Commissioner in writing. 


</P>
</DIV8>


<DIV8 N="§ 220.821" NODE="24:2.1.1.2.12.4.160.18" TYPE="SECTION">
<HEAD>§ 220.821   Items to be filed on submitting claim.</HEAD>
<P>Within 30 days after the filing of the notice of intention to file claim, or within such further period as may be agreed upon by the Commissioner in writing, the lender shall file with the Commissioner: 
</P>
<P>(a) The fiscal data pertaining to the loan transaction; 
</P>
<P>(b) Receipts covering all disbursements as required by the fiscal data form; 
</P>
<P>(c) The original note and any security instrument or instruments which shall be assigned to the Commissioner without recourse or warranty, except that the lender must warrant that no act or omission of the lender has impaired the validity and priority of such security instrument or instruments, that the security instrument or instruments are prior to all mechanics' and materialmen's liens filed of record subsequent to the recording of such security instrument or instruments regardless of whether such liens attached prior to such recording date, and prior to all liens and encumbrances which may have attached or defects which may have arisen subsequent to the recording of such security instrument or instruments, except such liens or other matters as may be approved by the Commissioner, that the amount stated in the instrument of assignment is actually due and owing under the security instrument or instruments, that there are no offsets or counter claims thereto, and that the lender has a good right to assign such note and security instrument or instruments; 
</P>
<P>(d) All hazard insurance policies held on property serving as security for the loan, together with a copy of the lender's notification to the carrier authorizing the amendment of the loss payable clause substituting the Commissioner as the holder of the security instrument; 
</P>
<P>(e) The assignment to the Commissioner of all rights and interests arising under the note and security instrument or instruments so in default, and all claims of the lender against the borrower or others arising out of the loan transaction; 
</P>
<P>(f) All policies of title or other insurance or surety bonds, or other guarantees and any and all claims thereunder; including evidence satisfactory to the Commissioner that the original title coverage has been extended to include the assignment of the note and security instrument or instruments to the Commissioner. 
</P>
<P>(g) Any property held by the lender or its agents or to which it is entitled and, if payment is requested in debentures, any cash held by the lender or its agents or to which it is entitled, including deposits made for the account of the borrower, and which have not been applied in reduction of the principal of the mortgage indebtedness; 
</P>
<P>(h) All records, ledger cards, documents, books, papers and accounts relating to the loan transaction; 
</P>
<P>(i) Any additional information or data which the Commissioner may require. 


</P>
</DIV8>


<DIV8 N="§ 220.822" NODE="24:2.1.1.2.12.4.160.19" TYPE="SECTION">
<HEAD>§ 220.822   Claim computation; items included.</HEAD>
<P>(a) <I>Assignment of loan.</I> Upon an acceptable assignment of the note and security instrument, the Commissioner shall pay the claim of the lender in an amount equal to the unpaid principal balance of the loan plus: 
</P>
<P>(1) Any accrued interest due as of the date of execution of the assignment of the loan to the Commissioner. 
</P>
<P>(2) Any advances approved by the Commissioner made previously by the lender under the provisions of the note of security instrument or instruments. 
</P>
<P>(3) Reimbursement for such reasonable collection costs, court costs, and attorney's fees as may be approved by the Commissioner. 
</P>
<P>(4) Reimbursement for premiums paid on any hazard insurance policies held on the property. 
</P>
<P>(5) If payment is made in cash, an amount equivalent to the debenture interest which would have been earned as of the date insurance settlement occurs, except that when the lender fails to meet any one of the applicable requirements of §§ 220.812, 220.820, and 220.821 within the specified time (or within such further time as the Commissioner may approve in writing), the debenture interest shall be computed only to the date to which the particular action should have been taken or to which it was extended. 
</P>
<P>(b) [Reserved]
</P>
<CITA TYPE="N">[36 FR 24573, Dec. 22, 1971, as amended at 80 FR 51468, Aug. 25, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 220.823" NODE="24:2.1.1.2.12.4.160.20" TYPE="SECTION">
<HEAD>§ 220.823   Claim computation; items deducted.</HEAD>
<P>If the lender is to receive payment in cash, there shall be deducted from the total of the added items in § 220.822 the following: 
</P>
<P>(a) Any balance of the loan not advanced to the borrower; 
</P>
<P>(b) Any cash held by the lender or its agents or to which it is entitled; including deposits made for the account of the borrower and which have not been applied in reduction of the principal obligation under the note and security instrument or instruments. 


</P>
</DIV8>


<DIV8 N="§ 220.830" NODE="24:2.1.1.2.12.4.160.21" TYPE="SECTION">
<HEAD>§ 220.830   Debenture interest rate.</HEAD>
<P>Debentures shall bear interest from the date of issue, payable semiannually on the first day of January and the first day of July of each year at the rate in effect as of the date the commitment was issued or as of the date the loan was endorsed for insurance, whichever rate is higher. The applicable rates of interest will be published twice each year as a notice in the <E T="04">Federal Register.</E>
</P>
<CITA TYPE="N">[47 FR 26125, June 17, 1982]


</CITA>
</DIV8>


<DIV8 N="§ 220.832" NODE="24:2.1.1.2.12.4.160.22" TYPE="SECTION">
<HEAD>§ 220.832   Maturity of debentures.</HEAD>
<P>Debentures shall mature 10 years from the date of issue. 


</P>
</DIV8>


<DIV8 N="§ 220.834" NODE="24:2.1.1.2.12.4.160.23" TYPE="SECTION">
<HEAD>§ 220.834   Registration of debentures.</HEAD>
<P>Debentures shall be registered as to principal and interest. 


</P>
</DIV8>


<DIV8 N="§ 220.836" NODE="24:2.1.1.2.12.4.160.24" TYPE="SECTION">
<HEAD>§ 220.836   Form and amounts of debentures.</HEAD>
<P>Debentures issued under subpart D of this part shall be in such form and amounts; and shall be subject to such terms and conditions; and shall include such provisions for redemption, if any, as may be prescribed by the Secretary, with the approval of the Secretary of the Treasury; and may be in book entry or certificated registered form, or such other form as the Secretary by regulation may prescribe.
</P>
<CITA TYPE="N">[59 FR 49816, Sept. 30, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 220.838" NODE="24:2.1.1.2.12.4.160.25" TYPE="SECTION">
<HEAD>§ 220.838   Redemption of debentures.</HEAD>
<P>Debentures shall, at the option of the Commissioner and with the approval of the Secretary of the Treasury, be redeemable at par plus accrued interest on any semiannual interest payment date on three months' notice of redemption given in such manner as the Commissioner shall prescribe. The debenture interest on the debentures called for redemption shall cease on the semiannual interest date designated in the call notice. The Commissioner may include with the notice of redemption an offer to purchase the debentures at par plus accrued interest at any time during the period between the notice of redemption and the redemption date. If the debentures are purchased by the Commissioner after such call and prior to the named redemption date, the debenture interest shall cease on the date of purchase. 


</P>
</DIV8>


<DIV8 N="§ 220.840" NODE="24:2.1.1.2.12.4.160.26" TYPE="SECTION">
<HEAD>§ 220.840   Issue date of debentures.</HEAD>
<P>The debentures shall be issued as of the date of the execution of the assignment of the loan to the Commissioner. 


</P>
</DIV8>


<DIV8 N="§ 220.842" NODE="24:2.1.1.2.12.4.160.27" TYPE="SECTION">
<HEAD>§ 220.842   Cash adjustment.</HEAD>
<P>Any difference of less than $50 between the amount of debentures to be issued to the lender and the total amount of the lender's claim, as approved by the Commissioner, may be adjusted by the issuance of a check in payment thereof.
</P>
<CITA TYPE="N">[59 FR 49816, Sept. 30, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 220.850" NODE="24:2.1.1.2.12.4.160.28" TYPE="SECTION">
<HEAD>§ 220.850   Assignment of insured loans.</HEAD>
<P>(a) An insured loan may not be transferred or pledged prior to the full disbursement of the loan, except with the prior written approval of the Commissioner which approval may be subject to such conditions and qualifications as the Commissioner may prescribe. Subsequent to full disbursement such loan may be transferred only to a transferee who is a lender approved by the Commissioner. Upon such transfer and the assumption by the transferee of all obligations under the contract of insurance the transferor shall be released from its obligations under the contract of insurance. 
</P>
<P>(b) The contract of insurance shall terminate with respect to loans described in paragraph (a) of this section upon the happening of either of the following events: 
</P>
<P>(1) The transfer or pledge of the insured loan to any person, firm, or corporation, public or private, other than an approved lender. 
</P>
<P>(2) The disposal by a lender of any partial interest in the insured loan by means of a declaration of trust or by a participation or trust certificate or by any other device, unless with the prior written approval of the Commissioner, which approval may be subject to such conditions and qualifications as the Commissioner in his discretion may prescribe: <I>Provided,</I> That this paragraph shall not be applicable to any loan so long as it is held in a common trust fund maintained by a bank or trust company exclusively for the collective investment and reinvestment of moneys contributed thereto by the bank or trust company in its capacity as a trustee, executor or administrator; and in conformity with the rules and regulations prevailing from time to time of the Board of Governors of the Federal Reserve System, pertaining to the collective investment of trust funds: <I>Provided further,</I> That this paragraph shall not be applicable to any loan so long as it is held in a common trust estate administered by a bank or trust company which is subject to the inspection and supervision of a governmental agency, exclusively for the benefit of other banking institutions which are subject to the inspection and supervision of a governmental agency, and which are authorized by law to acquire beneficial interests in such common trust estate, nor to any loan transferred to such a bank or trust company as trustee exclusively for the benefit of outstanding owners of undivided interest in the trust estate, under the terms of certificates issued and sold more than three years prior to said transfer, by a corporation which is subject to the inspection and supervision of a governmental agency. 


</P>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="E" NODE="24:2.1.1.2.12.5" TYPE="SUBPART">
<HEAD>Subpart E—Servicing Responsibilities—Homes</HEAD>


<DIV8 N="§ 220.900" NODE="24:2.1.1.2.12.5.161.1" TYPE="SECTION">
<HEAD>§ 220.900   Cross-reference.</HEAD>
<P>All of the provisions of subpart C, part 203 of the chapter concerning the responsibilities of servicers of mortgages insured under section 203 of the National Housing Act apply to mortgages covering 1- to 11-family dwellings insured under section 220 of the National Housing Act, except §§ 203.664 through 203.666.
</P>
<CITA TYPE="N">[52 FR 48203, Dec. 21, 1987, and 53 FR 9869, Mar. 28, 1988]


</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="221" NODE="24:2.1.1.2.13" TYPE="PART">
<HEAD>PART 221—LOW COST AND MODERATE INCOME MORTGAGE INSURANCE—SAVINGS CLAUSE
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1715b, 1715l, and 1735d; 42 U.S.C. 3535(d).


</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>36 FR 24587, Dec. 22, 1971, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:2.1.1.2.13.1" TYPE="SUBPART">
<HEAD>Subpart A—Eligibility Requirements—Low Cost Homes—Savings Clause</HEAD>


<DIV8 N="§ 221.1" NODE="24:2.1.1.2.13.1.162.1" TYPE="SECTION">
<HEAD>§ 221.1   Savings clause.</HEAD>
<P>(a) Effective February 20, 2001, the authority to insure mortgages under section 221(d)(2) of the National Housing Act (12 U.S.C. 1715l(d)(2)) for low cost and moderate income mortgage insurance is terminated, except that HUD will endorse for insurance validly processed mortgages under direct endorsement where the credit worksheet was signed by the mortgagee's underwriter before February 20, 2001. 
</P>
<P>(b) Subpart A of this part, as it existed immediately before February 20, 2001, will continue to govern the rights and obligations of insured mortgage lenders, mortgagors, and HUD with respect to section 221(d)(2) single family loans insured before February 20, 2001, or in accordance with paragraph (a) of this section, pursuant to the applicable provisions of this subpart.
</P>
<CITA TYPE="N">[66 FR 5913, Jan. 19, 2001]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:2.1.1.2.13.2" TYPE="SUBPART">
<HEAD>Subpart B—Contract Rights and Obligations—Low Cost Homes</HEAD>


<DIV8 N="§ 221.251" NODE="24:2.1.1.2.13.2.162.1" TYPE="SECTION">
<HEAD>§ 221.251   Cross-reference.</HEAD>
<P>(a) All of the provisions of subpart B, part 203 of this chapter covering mortgages insured under section 203 of the National Housing Act apply to mortgages covering one- to four-family dwellings insured under section 221 of the National Housing Act, except the following provisions:
</P>
<EXTRACT>
<FP>Sec. 
</FP>
<FP-2>203.258 Substitute mortgagors.
</FP-2>
<FP-2>203.259a Scope.
</FP-2>
<FP-2>203.260 Amount of Mortgage Insurance Premium (MIP). 
</FP-2>
<FP-2>203.261 Calculation of MIP. 
</FP-2>
<FP-2>203.262 Due date of MIP. 
</FP-2>
<FP-2>203.264 Payment of MIP. 
</FP-2>
<FP-2>203.266 Period covered by MIP. 
</FP-2>
<FP-2>203.268 Pro rata payment of MIP. 
</FP-2>
<FP-2>203.280 One-time MIP.
</FP-2>
<FP-2>203.281 Calculation of one-time MIP.
</FP-2>
<FP-2>203.282 Mortgagee's late charge and interest.
</FP-2>
<FP-2>203.283 Refund of one-time MIP.
</FP-2>
<FP-2>203.288 Discontinuance of adjusted premium charge.
</FP-2>
<FP-2>203.295 Voluntary termination of insurance. 
</FP-2>
<FP-2>203.389 Waived title objections. 
</FP-2>
<FP-2>203.400 Method of payment. 
</FP-2>
<FP-2>203.420 Nature of Mutual Mortgage Insurance Fund. 
</FP-2>
<FP-2>203.421 Allocation of Mutual Mortgage Insurance Fund income or loss. 
</FP-2>
<FP-2>203.422 Right and liability under Mutual Mortgage Insurance Fund. 
</FP-2>
<FP-2>203.423 Distribution of distributive shares. 
</FP-2>
<FP-2>203.424 Maximum amount of distributive shares. 
</FP-2>
<FP-2>203.425 Finality of determination. 
</FP-2>
<FP-2>203.436 Claim procedure—graduated payment mortgages. 
</FP-2>
<FP-2>203.438 Mortgages on Indian land insured pursuant to section 248 of the National Housing Act.
</FP-2>
<FP-2>203.439 Mortgages on Hawaiian home lands insured pursuant to section 247 of the National Housing Act.
</FP-2>
<FP-2>203.439a Mortgages on property in Allegany Reservation of Seneca Nation of Indians authorized by section 203(q) of the National Housing Act.</FP-2></EXTRACT>
<P>(b) For the purposes of this subpart, all references in part 203 of this chapter to section 203 of the Act shall be construed to refer to section 221 of the Act, and all references to the Mutual Mortgage Insurance Fund shall be construed to refer to the General Insurance Fund. 
</P>
<CITA TYPE="N">[36 FR 24587, Dec. 22, 1971, as amended at 37 FR 8663, Apr. 29, 1972; 41 FR 42949, Sept. 29, 1976; 42 FR 29304, June 8, 1977; 47 FR 30754, July 15, 1982; 48 FR 28807, June 23, 1983; 51 FR 21874, June 16, 1986; 52 FR 8069, Mar. 16, 1987; 52 FR 28470, July 30, 1987; 52 FR 48204, Dec. 21, 1987; 53 FR 9869, Mar. 28, 1988; 55 FR 34810, Aug. 24, 1990; 61 FR 37801, July 19, 1996] 


</CITA>
</DIV8>


<DIV8 N="§ 221.252" NODE="24:2.1.1.2.13.2.162.2" TYPE="SECTION">
<HEAD>§ 221.252   Substitute mortgagors.</HEAD>
<P>(a) <I>Selling mortgagor.</I> The mortgagee may effect the release of a mortgagor from personal liability on the mortgage note only if it obtains the Commissioner's approval of a substitute mortgagor, as provided by this section. 
</P>
<P>(b) <I>Purchasing mortgagor.</I> The Commissioner may approve a substitute mortgagor with respect to any mortgage insured under subpart A of this part, if the substitute mortgagor is to occupy the dwelling as a principal residence or a secondary residence (as these terms are defined in § 221.20(c)) or is a private nonprofit or public entity as provided in section 221(h) of the National Housing Act.
</P>
<P>(c) <I>Applicability—current mortgagor.</I> Paragraph (b) of this section applies to the Commissioner's approval of a substitute mortgagor, only if the mortgage executed by the original mortgagor met the conditions of § 203.258(c) of this chapter.
</P>
<P>(d) <I>Applicability—earlier mortgagor.</I> The occupancy and similar requirements set forth in § 203.258(d) of this chapter apply to mortgages insured under subpart A of this part.
</P>
<P>(e) Mortgagees approved for participation in the Direct Endorsement program under § 203.3 of this chapter may, subject to limitations established by the Commissioner, themselves approve an appropriate substitute mortgagor under the section and need not obtain further specific approval from the Commissioner.
</P>
<P>(f) <I>Definition.</I> As used in this section, the term <I>substitute mortgagor</I> includes:
</P>
<P>(1) Persons who, upon the release by a mortgagee of a previous mortgagor from personal liability on the mortgage note, assume this liability and agree to pay the mortgage debts and 
</P>
<P>(2) Persons who purchase without assuming liability on the mortgage note or purchase where no release is given by the mortgagee to the previous mortgagor.
</P>
<CITA TYPE="N">[55 FR 34810, Aug. 24, 1990, as amended at 57 FR 58351, Dec. 9, 1992]


</CITA>
</DIV8>


<DIV8 N="§ 221.254" NODE="24:2.1.1.2.13.2.162.3" TYPE="SECTION">
<HEAD>§ 221.254   Mortgage insurance premiums.</HEAD>
<P>(a) All of the provisions of §§ 203.260 through 203.295 of this chapter relating to mortgage insurance premiums shall apply to mortgages insured under this subpart, except that as to mortgages meeting the special requirements of § 221.60 or § 221.65, such provisions shall only be applicable under the circumstances prescribed in paragraph (b) of this section. Notwithstanding any provision in the mortgage instrument, there shall be no adjusted mortgage insurance premium or voluntary termination charge due the Commissioner on account of the prepayment of any mortgage or the voluntary termination of any mortgage insurance contract where (1) The mortgage is prepaid in full, or (2) the Commissioner receives a request for voluntary termination on or after May 1, 1972. 
</P>
<P>(b) Whenever the interest rate on a mortgage insured under this part as having met the special requirement of § 221.60 or § 221.65 shall have been increased to the maximum rate in accordance with § 221.60(j), § 221.65(d)(4), or § 221.65(d)(5), the provisions of §§ 203.260 through 203.295 of this chapter relating to mortgage insurance premiums shall apply except that: 
</P>
<P>(1) References to the original principal amount shall be construed as the scheduled unpaid principal balance, without taking into account delinquent payments or prepayments, on the date of the change in interest rate required under the mortgage. 
</P>
<P>(2) References to the date of the issuance of a Mortgage Insurance Certificate or the date of the endorsement of the credit instrument or the date the insurance becomes effective shall be construed as the date of the change in interest required under the mortgage. 
</P>
<P>(3) References to the first year of amortization under the mortgage shall be construed as the period beginning on the date of the change in interest rate required under the mortgage and ending on the next anniversary of the beginning of amortization. 
</P>
<CITA TYPE="N">[36 FR 24587, Dec. 22, 1971, as amended at 37 FR 8663, Apr. 29, 1972] 


</CITA>
</DIV8>


<DIV8 N="§ 221.255" NODE="24:2.1.1.2.13.2.162.4" TYPE="SECTION">
<HEAD>§ 221.255   Assignment option.</HEAD>
<P>(a) A mortgagee holding a mortgage insured pursuant to a conditional or firm commitment issued on or before November 30, 1983 has the option to assign, transfer and deliver to the Commissioner the original credit instrument and the mortgage securing it, provided the mortgage is not in default at the expiration of 20 years from the date of final endorsement of the credit instrument. In processing a mortgagee's claim for insurance benefits under this section, the Commissioner may direct the mortgagee to assign, transfer and deliver the original credit instrument, and the mortgage securing it, directly to the Government National Mortgage Association (GNMA). Upon such assignment, transfer and delivery, either to the Commissioner or to GNMA, as directed, the mortgage insurance contract shall terminate and the mortgagee shall be entitled to receive insurance benefits in accordance with this section.
</P>
<P>(b) The mortgagee may exercise its assignment option within 1 year following the twentieth anniversary of the date the mortgage was endorsed for insurance. 
</P>
<P>(c) Upon the exercise of the assignment option the Commissioner shall issue to the assignor mortgagee debentures having a total face value equal to the amount of the original principal obligation of the mortgage which was unpaid on the date of the assignment, plus accrued interest to such date. 
</P>
<P>(d) The debentures issued pursuant to the exercise of an assignment option shall be dated as of the date the mortgage is assigned to the Commissioner and shall mature 10 years after such date. 
</P>
<P>(e) The debentures issued pursuant to the exercise of an assignment option shall bear interest at the <I>going Federal rate</I> at date of issuance. The <I>going Federal rate</I> means the annual rate of interest specified by the Secretary of the Treasury as applicable to the 6-month period which includes the issuance date of the debentures. The Secretary of the Treasury shall determine this applicable rate by estimating the average yield to maturity, on the basis of daily closing market bid quotations or prices during the month of May or the month of November, as the case may be, next preceding such 6-month period, on all outstanding marketable obligations of the United States having a maturity date of 8 to 12 years from the first day of May or November, as the case may be. If there should be no outstanding marketable obligations of the United States having the 8 to 12 year maturity at the time the Secretary of the Treasury is required to determine the debenture rate involved, the obligation next shorter than 8 years and the obligation next longer than 12 years respectively, shall be used. 
</P>
<P>(f) Debentures shall bear interest from the date of issue, payable semiannually on the first day of January and the first day of July of each year at the rate in effect on the issue date, a date which shall be established as provided in § 203.410 of this chapter. The interest rate shall be established by the Commissioner in an amount not in excess of the annual rate of interest which the Secretary of the Treasury shall specify as applicable to the 6-month period (consisting of January through June, or July through December) which includes the issuance date of such debentures, which applicable rate for each 6-month period shall be determined by the Secretary of the Treasury, at the request of the Commissioner, by estimating the average yield to maturity, on the basis of daily closing market bid quotations or prices during the calendar month next preceding the establishment of such rate of interest, on all outstanding marketable obligations of the United States having a maturity date of 15 years or more from the first day of such next preceding month, and by adjusting such estimated average annual yield to the nearest one-eighth of 1 per centum. 
</P>
<CITA TYPE="N">[36 FR 24587, Dec. 22, 1971, as amended at 49 FR 12697, Mar. 30, 1984]


</CITA>
</DIV8>


<DIV8 N="§ 221.256" NODE="24:2.1.1.2.13.2.162.5" TYPE="SECTION">
<HEAD>§ 221.256   Interest rate increase and payment of mortgage insurance premiums on mortgages under § 221.60 and § 221.65.</HEAD>
<P>(a) Where a mortgage meets the special requirements of § 221.60 or § 221.65, the following procedures are applicable: 
</P>
<P>(1) The mortgagee shall determine, at least biennially, whether the mortgagor has continued to occupy the property securing the mortgage. If the mortgagee determines that the mortgagor is not occupying the property or that the mortgagor has sold the property subject to the mortgage to a purchaser not qualifying under the provisions of § 221.60(h) or § 221.65(d)(4) (as appropriate) for the continuation of a below market interest rate, interest on such mortgage shall be computed by the mortgagee at the highest rate permissible under the mortgage. The computation at the higher rate shall be effective from the first day of the month following the month in which the right to collect interest at the increased rate first accrued, as determined by the mortgagee. 
</P>
<P>(2) The mortgagee shall determine the mortgagor's family income, at least biennially, and shall increase the mortgage interest pursuant to the requirements of §§ 221.60(g) and 221.65(d)(5), as appropriate, to comply with the requirements of such sections. The computation at the higher rate shall be effective from the first day of the month following the month in which the mortgagee determines that the mortgagor's family income was increased. 
</P>
<P>(b) The mortgagee shall notify the Commissioner, on a form prescribed by the Commissioner, within 30 days of making the determination of the right to compute interest at the higher rate, as provided in paragraph (a) of this section, of: 
</P>
<P>(1) The date on which such right first accrued, and 
</P>
<P>(2) The outstanding principal balance of the mortgage on the first day of the month following the date on which such right first accrued. 
</P>
<P>(c) The liability for payment of mortgage insurance premiums shall begin on and be computed from the first day of the month following the date on which the right to compute interest at the higher rate shall have first accrued. 
</P>
<CITA TYPE="N">[36 FR 24587, Dec. 22, 1971, as amended at 37 FR 8663, Apr. 29, 1972] 


</CITA>
</DIV8>


<DIV8 N="§ 221.275" NODE="24:2.1.1.2.13.2.162.6" TYPE="SECTION">
<HEAD>§ 221.275   Method of paying insurance benefits.</HEAD>
<P>If the application for insurance benefits is acceptable to the Commissioner, all of the insurance claim shall be paid in cash unless the mortgagee files a written request with the application for payment in debentures. If such a request is made, all of the claim shall be paid by issuing debentures and by making a cash payment adjusting any differences between the total amount of the claim and the amount of the debentures issued. 


</P>
</DIV8>


<DIV8 N="§ 221.280" NODE="24:2.1.1.2.13.2.162.7" TYPE="SECTION">
<HEAD>§ 221.280   Waived title objections.</HEAD>
<P>(a) <I>General provisions.</I> All of the provisions of § 203.389 of this chapter (relating to the waiver by the Commissioner of objections to title) shall apply to mortgages insured under this subpart, with the exception of mortgages involving condominium units. 
</P>
<P>(b) <I>Provisions applicable to condominium units.</I> Where the mortgage involves a condominium unit, the Commissioner shall not object to title by reason of the following matters: 
</P>
<P>(1) Violations of a restriction based on race, color, or creed, even where such restriction provides for a penalty of reversion or forfeiture of title or a lien for liquidated damage. 
</P>
<P>(2) Easements for public utilities along one or more of the property lines, provided the exercise of the rights thereunder do not interfere with any of the buildings or improvements located on the subject property. 
</P>
<P>(3) Encroachments on the subject property by improvements on adjoining property, provided such encroachments do not interfere with the use of any improvements on the subject property. 
</P>
<P>(4) Variations between the length of the subject property lines as shown on the application for insurance and as shown by the record or possession lines, provided such variations do not interfere with the use of any of the improvements on the subject property. 
</P>
<P>(5) Customary buildings or use restrictions for breach of which there is no reversion and which have not been violated to a material extent. 


</P>
</DIV8>


<DIV7 N="162" NODE="24:2.1.1.2.13.2.162" TYPE="SUBJGRP">
<HEAD>Special Provisions Applicable Only to Mortgages Involving Condominium Units</HEAD>


<DIV8 N="§ 221.300" NODE="24:2.1.1.2.13.2.162.8" TYPE="SECTION">
<HEAD>§ 221.300   Changes in the plan of apartment ownership.</HEAD>
<P>The mortgagee shall notify the Commissioner of any changes in the plan of apartment ownership and in the administration of the property. Such notification shall be given either at the time of the conveyance of the property or at the time of the assignment of the mortgage. Any changes in such plan shall require approval by the Commissioner. 


</P>
</DIV8>


<DIV8 N="§ 221.305" NODE="24:2.1.1.2.13.2.162.9" TYPE="SECTION">
<HEAD>§ 221.305   Condition of the multifamily structure.</HEAD>
<P>(a) When a family unit is conveyed or a mortgage is assigned to the Commissioner, the family unit and the common areas and facilities (including restricted common areas and facilities) designated for the particular unit shall be undamaged by fire, earthquake, tornado, or boiler explosion, except if the property has been damaged, either of the following actions shall be taken: 
</P>
<P>(1) The property may be repaired prior to its conveyance or prior to the assignment of the mortgage to the Commissioner. 
</P>
<P>(2) With the prior approval of the Commissioner, the property may be conveyed or the mortgage assigned to the Commissioner without repairing the damage. In such instances, the Commissioner shall deduct from the insurance benefits either his estimate of the decrease in value of the family unit or the amount of any insurance recovery received by the mortgagee, whichever is the greater. 
</P>
<P>(b) If the property has been damaged by fire and such property was not covered by fire insurance at the time of the damage, the mortgagee may convey the property or assign the mortgage to the Commissioner without deduction from the insurance benefits for any loss occasioned by such fire if the following conditions are met: 
</P>
<P>(1) The property shall have been covered by fire insurance at the time the mortgage was insured. 
</P>
<P>(2) The fire insurance shall have been later cancelled or renewal shall have been refused by the insuring company. 
</P>
<P>(3) The mortgagee shall have notified the Commissioner within 30 days (or within such further time as the Commissioner may approve) of the cancellation of the fire insurance or of the refusal of the insuring company to renew the fire insurance. This notification shall have been accompanied by a certification of the mortgagee that diligent efforts were made, but it was unable to obtain fire insurance coverage at reasonably competitive rates and that it will continue its efforts to obtain adequate fire insurance coverage at competitive rates. 


</P>
</DIV8>


<DIV8 N="§ 221.310" NODE="24:2.1.1.2.13.2.162.10" TYPE="SECTION">
<HEAD>§ 221.310   Assessment of taxes.</HEAD>
<P>When a family unit is conveyed to the Commissioner or a mortgage is assigned to the Commissioner, the unit shall be assessed and subject to assessment for taxes pertaining only to that unit. 


</P>
</DIV8>


<DIV8 N="§ 221.315" NODE="24:2.1.1.2.13.2.162.11" TYPE="SECTION">
<HEAD>§ 221.315   Certificate of tax assessment.</HEAD>
<P>The mortgagee shall certify, as of the date of filing for record of the deed or assignment of the mortgage to the Commissioner, that the family unit is assessed and subject to assessment for taxes pertaining to that unit. 


</P>
</DIV8>


<DIV8 N="§ 221.320" NODE="24:2.1.1.2.13.2.162.12" TYPE="SECTION">
<HEAD>§ 221.320   Certificate or statement of condition.</HEAD>
<P>(a) At the time of the assignment of the mortgage or conveyance of the property to the Commissioner, the mortgagee shall, as of the date of the filing for record of the deed or assignment, 
</P>
<P>(1) Certify that the conditions of § 221.305(a) have been met; or 
</P>
<P>(2) Submit a statement describing any such damage that may still exist. 
</P>
<P>(b) In the absence of evidence to the contrary, the mortgagee's certificate or its statement as to damage shall be accepted by the Commissioner as establishing the condition of the family unit and the common areas and facilities including restricted common areas and facilities designated for the particular unit. 


</P>
</DIV8>


<DIV8 N="§ 221.325" NODE="24:2.1.1.2.13.2.162.13" TYPE="SECTION">
<HEAD>§ 221.325   Cancellation of hazard insurance.</HEAD>
<P>The provisions of § 203.382 of this chapter are incorporated by reference and shall apply to hazard insurance policies carried solely for the family unit. 


</P>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="C" NODE="24:2.1.1.2.13.3" TYPE="SUBPART">
<HEAD>Subpart C—Eligibility Requirements—Moderate Income Projects</HEAD>


<DIV8 N="§ 221.501" NODE="24:2.1.1.2.13.3.163.1" TYPE="SECTION">
<HEAD>§ 221.501   Eligibility requirements.</HEAD>
<P>The requirements set forth in 24 CFR part 200, subpart A, apply to multifamily project mortgages insured under section 221 of the National Housing Act (12 U.S.C. 1715l), as amended. 
</P>
<CITA TYPE="N">[61 FR 14405, Apr. 1, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:2.1.1.2.13.4" TYPE="SUBPART">
<HEAD>Subpart D—Contract Rights and Obligations—Moderate Income Projects</HEAD>


<DIV8 N="§ 221.751" NODE="24:2.1.1.2.13.4.163.1" TYPE="SECTION">
<HEAD>§ 221.751   Cross-reference.</HEAD>
<P>(a) All of the provisions of subpart B, part 207 of this chapter, covering mortgages insured under section 207 of the National Housing Act, apply with full force and effect to multifamily project mortgages insured under section 221 of the National Housing Act, except the following provisions:
</P>
<EXTRACT>
<FP>Sec. 
</FP>
<FP-2>207.252 First, second, and third premium.
</FP-2>
<FP-2>207.252a Premiums—operating loss loans. 
</FP-2>
<FP-2>207.259 Insurance benefits.</FP-2></EXTRACT>
<P>(b) For the purposes of this subpart, all references in part 207 of this chapter to section 207 of the act shall be construed to refer to section 221 of the Act, and all references to part 207 shall be construed to refer to this subpart. 
</P>
<CITA TYPE="N">[36 FR 24587, Dec. 22, 1971, as amended at 37 FR 8663, Apr. 29, 1972; 42 FR 59675, Nov. 18, 1977] 


</CITA>
</DIV8>


<DIV8 N="§ 221.753" NODE="24:2.1.1.2.13.4.163.2" TYPE="SECTION">
<HEAD>§ 221.753   Termination of mortgage insurance.</HEAD>
<P>In addition to the provisions of § 207.253a, the following requirements apply to certain multifamily mortgages insured under section 221 of the National Housing Act:
</P>
<P>(a) For those projects qualifying as eligible low income housing under § 248.201, the contract of insurance may be terminated only as provided in part 248.
</P>
<P>(b) For those projects subject to section 250(a) of the National Housing Act, the contract of insurance may be terminated only if the Commissioner determines that the requirements of section 250(a) are met.
</P>
<CITA TYPE="N">[55 FR 38958, Sept. 21, 1990]


</CITA>
</DIV8>


<DIV8 N="§ 221.755" NODE="24:2.1.1.2.13.4.163.3" TYPE="SECTION">
<HEAD>§ 221.755   Premiums first, second, third and operating loss loans.</HEAD>
<P>All of the provisions of §§ 207.252 and 207.252a of this chapter, relating to mortgage insurance premiums, apply to mortgages insured under this subpart that provide for interest at the market rate prescribed in § 221.518(a) except that as to mortgages insured under this subpart pursuant to section 238(c) of the Act all mortgage insurance premiums due in accordance with §§ 207.252 and 207.252a shall be calculated on the basis of one percent. The provisions of § 207.252. shall not apply to: 
</P>
<P>(a) Mortgages that provide for interest during the construction period at the market rate and for interest subsequent to final endorsement at the below market rate prescribed in § 221.518(b); or 
</P>
<P>(b) Mortgages encumbering a project in which all units are covered by an annual contributions contract issued pursuant to section 10(c) of the Housing Act of 1937.
</P>
<CITA TYPE="N">[36 FR 24587, Dec. 22, 1971, as amended at 42 FR 59675, Nov. 18, 1977] 


</CITA>
</DIV8>


<DIV8 N="§ 221.761" NODE="24:2.1.1.2.13.4.163.4" TYPE="SECTION">
<HEAD>§ 221.761   Forbearance relief.</HEAD>
<P>(a) In a case where the mortgage is in default, the mortgagor and the mortgagee may enter into a forbearance agreement for the reduction or suspension of regular mortgage payments for a specified period of time, if the following requirements are met: 
</P>
<P>(1) The mortgage was endorsed for insurance on or after July 7, 1961. 
</P>
<P>(2) The Commissioner determines that the default was due to circumstances beyond the mortgagor's control and that the mortgage probably will be restored to good standing within a reasonable period of time and evidences such determination by written approval of the forbearance agreement. 
</P>
<P>(b) The time specified in § 207.258(a) of this chapter, within which a mortgagee shall give the Commissioner written notice of its intention to file an insurance claim, shall be suspended for the period of time specified in the forbearance agreement as long as the mortgagor complies with the requirements of such agreement. 
</P>
<P>(c) If the mortgagor fails to meet the requirements of a forbearance agreement or to cure the default under the mortgage at the expiration of the forbearance period, and such failure continues for a period of 30 days, the mortgagee shall notify the Commissioner of such failure. Within 45 days thereafter, unless a modification or extension of the forbearance agreement has been approved by the Commissioner, the mortgagee shall notify the Commissioner of its election to file an insurance claim and of its decision to either assign the mortgage to the Commissioner or to acquire and convey title to the property to the Commissioner. If the mortgage is assigned to the Commissioner, the special insurance benefits prescribed in § 221.763 shall be applicable.
</P>
<CITA TYPE="N">[36 FR 24587, Dec. 22, 1971, as amended at 51 FR 27838, Aug. 4, 1986]


</CITA>
</DIV8>


<DIV8 N="§ 221.762" NODE="24:2.1.1.2.13.4.163.5" TYPE="SECTION">
<HEAD>§ 221.762   Payment of insurance benefits.</HEAD>
<P>All of the provisions of § 207.259 of this chapter relating to insurance benefits apply to multifamily project mortgages insured under this subpart, except as provided in this section: 
</P>
<P>(a) [Reserved]
</P>
<P>(b) <I>Below market interest rate mortgages.</I> Where the mortgage has been finally endorsed and the special below market interest rate provided in § 221.518(b) is applicable as of the date of default, the 1 percent deduction from insurance benefits prescribed in § 207.259(b)(2)(iv) of this chapter shall not be applicable. 
</P>
<P>(c) <I>Mortgages financed with section 11(b) obligations.</I> Where the funds for a mortgage loan are provided by obligations that are tax-exempt under section 11(b) of the United States Housing Act of 1937 (24 CFR part 811), the one percent deduction from insurance benefits prescribed in § 207.259(b)(2)(iv) of this chapter shall not be applicable to claims with respect to multifamily rental housing projects for which a firm commitment for mortgage insurance was issued on or after March 12, 1979. 
</P>
<CITA TYPE="N">[36 FR 24587, Dec. 22, 1971, as amended at 44 FR 40890, July 13, 1979; 80 FR 51468, Aug. 25, 2015] 


</CITA>
</DIV8>


<DIV8 N="§ 221.763" NODE="24:2.1.1.2.13.4.163.6" TYPE="SECTION">
<HEAD>§ 221.763   Special insurance benefits—forbearance relief cases.</HEAD>
<P>(a) In the case of a mortgage that provides for payment of interest at the market rate prescribed in § 221.518(a), if the mortgagor fails to meet the requirements of a forbearance agreement or to cure the default under the mortgage at the expiration of the forbearance agreement, the mortgagee shall be entitled to obtain a special insurance payment in cash, in lieu of the insurance benefits otherwise provided under this subpart. To receive the special insurance payment, the mortgagee shall assign the mortgage to the Commissioner in compliance with the requirements of § 207.258(b) of this chapter. 
</P>
<P>(b) The special insurance benefit to the mortgagee shall be a cash payment computed in accordance with § 207.259(b) of this chapter, except that in lieu of the allowance for debenture interest in § 207.259(b)(1)(iii) of this chapter, the payment shall include the amount of the unpaid accrued mortgage interest computed to the date the assignment of the mortgage to the Commissioner is filed for record. In addition, there shall be included in the cash payment an amount equivalent to the debenture interest which would have been earned from the date the mortgage assignment was filed for record to the date the payment is made; except that when the mortgagee fails to meet any of the applicable requirements of § 207.258(b) of this chapter and § 221.761(c) within the specified times and in a manner satisfactory to the Commissioner (or within such further time as the Commissioner may approve in writing), such debenture interest allowance shall be computed only to the date on which the particular required action should have been taken. 


</P>
</DIV8>


<DIV8 N="§ 221.770" NODE="24:2.1.1.2.13.4.163.7" TYPE="SECTION">
<HEAD>§ 221.770   Assignment option.</HEAD>
<P>A mortgagee holding a conditional or firm commitment issued on or before November 30, 1983 (or, in the Direct Endorsement program, a property appraisal report signed by the mortgagee's approved underwriter on or before November 30, 1983) has the option to assign, transfer and deliver to the Commissioner the original credit instrument and the mortgage securing it, provided that the mortgage is not in default at the expiration of 20 years from the date of final endorsement of the credit instrument. In processing a mortgagee's claim for insurance benefits under this section, the Commissioner may direct the mortgagee to assign, transfer and deliver the original credit instrument, and the mortgage securing it, directly to the Government National Mortgage Association (GNMA). Upon such assignment, transfer and delivery either to the Commissioner or to GNMA, as directed, the mortgage insurance contract shall terminate and the mortgagee shall be entitled to receive insurance benefits in accordance with § 221.780.
</P>
<CITA TYPE="N">[49 FR 12698, Mar. 30, 1984, as amended at 57 FR 58351, Dec. 9, 1992]


</CITA>
</DIV8>


<DIV8 N="§ 221.775" NODE="24:2.1.1.2.13.4.163.8" TYPE="SECTION">
<HEAD>§ 221.775   Option period.</HEAD>
<P>The mortgagee may exercise its option to assign within one year following the twentieth anniversary of the date the mortgage was finally endorsed for insurance. 


</P>
</DIV8>


<DIV8 N="§ 221.780" NODE="24:2.1.1.2.13.4.163.9" TYPE="SECTION">
<HEAD>§ 221.780   Issuance of debentures.</HEAD>
<P>Upon the exercise of the assignment option and the satisfactory performance of the requirements as to assignment set out in § 207.258 of this chapter, the Commissioner shall issue the assignor mortgagee debentures having a total par value equal to the amount of the original principal obligation of the mortgage which was unpaid on the date of the assignment, plus accrued interest to such date.
</P>
<CITA TYPE="N">[59 FR 49816, Sept. 30, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 221.785" NODE="24:2.1.1.2.13.4.163.10" TYPE="SECTION">
<HEAD>§ 221.785   Date of maturity of debentures.</HEAD>
<P>The debentures issues pursuant to the exercise of an assignment option shall be dated as of the date the mortgage is assigned to the Commissioner and shall mature 10 years after such date. 


</P>
</DIV8>


<DIV8 N="§ 221.790" NODE="24:2.1.1.2.13.4.163.11" TYPE="SECTION">
<HEAD>§ 221.790   Debenture interest rate.</HEAD>
<P>The debentures issued pursuant to the exercise of an assignment option shall bear interest at the <I>going Federal rate</I> at date of issuance. The <I>going Federal rate</I> means the annual rate of interest specified by the Secretary of the Treasury as applicable to the 6-month period which includes the issuance date of the debentures. The Secretary of the Treasury shall determine this applicable rate by estimating the average yield to maturity, on the basis of daily closing market bid quotations or prices during the month of May or the month of November, as the case may be, next preceding such 6-month period, on all outstanding marketable obligations of the United States having a maturity date of 8 to 12 years from the first day of May or November, as the case may be. If there should be no outstanding marketable obligations of the United States having the 8 to 12 year maturity at the time the Secretary of the Treasury is required to determine the debenture rate involved, the obligation next shorter than 8 years and the obligation next longer than 12 years respectively shall be used. 


</P>
</DIV8>


<DIV8 N="§ 221.795" NODE="24:2.1.1.2.13.4.163.12" TYPE="SECTION">
<HEAD>§ 221.795   Displacement—below market interest rate mortgages.</HEAD>
<P>(a) <I>Minimizing displacement.</I> Consistent with the other goals and objectives of this part, Owners shall assure that they have taken all reasonable steps to minimize the displacement of persons (households, businesses, nonprofit organizations, and farms) as a result of a project assisted under this part. 
</P>
<P>(b) <I>Temporary relocation.</I> The following policies cover residential tenants who will not be required to move permanently but who must relocate temporarily to permit rehabilitation or other work for the project. Such tenants must be provided: 
</P>
<P>(1) Reimbursement for all reasonable out-of-pocket expenses incurred in connection with the temporary relocation, including the cost of moving to and from the temporarily occupied housing, any increase in monthly rent/utility costs and any incidental expenses. 
</P>
<P>(2) Appropriate advisory services, including reasonable advance written notice of: 
</P>
<P>(i) The date and approximate duration of the temporary relocation; 
</P>
<P>(ii) The location of the suitable, decent, safe, and sanitary dwelling to be made available for the temporary period; 
</P>
<P>(iii) The terms and conditions under which the tenant may lease and occupy a suitable, decent, safe, and sanitary dwelling in the building/complex following completion of the rehabilitation; and 
</P>
<P>(iv) The provisions of paragraph (b)(1) of this section. 
</P>
<P>(c) <I>Relocation assistance for displaced persons.</I> A “displaced person” (defined in paragraph (g) of this section) must be provided relocation assistance at the levels described in, and in accordance with the requirements of, the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (URA) (42 U.S.C. 4201-4655) and implementing regulations at 49 CFR part 24. A “displaced person” shall be advised of his or her rights under the Fair Housing Act (42 U.S.C. 3601-19), and, if the representative comparable replacement dwelling used to establish the amount of the replacement housing payment to be provided to a minority person is located in an area of minority concentration, such person also shall be given, if possible, referrals to comparable and suitable, decent, safe and sanitary replacement dwellings not located in such areas. 
</P>
<P>(d) <I>Real property acquisition requirements.</I> The acquisition of real property for a project is subject to the URA and the requirements described in 49 CFR part 24, subpart B. 
</P>
<P>(e) <I>Appeals.</I> A person who disagrees with the Owner's determination concerning whether the person qualifies as a “displaced person,” or with the amount of relocation assistance for which the person is eligible, may file a written appeal of that determination with the Owner. A person who is dissatisfied with the Owner's determination on his or her appeal may submit a written request for review of that determination to the HUD Field Office. 
</P>
<P>(f) <I>Responsibility of Owner.</I> (1) The Owner shall certify (i.e., provide assurance of compliance as required by 49 CFR part 24) that the Owner will comply with the URA, the regulations at 49 CFR part 24, and the requirements of this section. The Owner shall ensure such compliance notwithstanding any third party's contractual obligation to the Owner to comply with these provisions. 
</P>
<P>(2) The cost of required relocation assistance is an eligible project cost in the same manner and to the same extent as other project costs. Such costs also may be paid with funds available from other sources. 
</P>
<P>(3) The Owner shall maintain records in sufficient detail to demonstrate compliance with these provisions. The Owner shall maintain data on the race, ethnic, gender, and disability status of displaced persons. 
</P>
<P>(g) <I>Definition of displaced person.</I> (1) For purposes of this section, the term <I>displaced person</I> means a person (household, business, nonprofit organization, or farm) that moves from real property, or moves personal property from real property, permanently, as a direct result of acquisition, rehabilitation, or demolition for a project assisted under this part. The term “displaced person” includes, but may not be limited to: 
</P>
<P>(i) A tenant-occupant of a dwelling unit who moves from the building/complex, permanently, after the Owner executes the agreement covering the rehabilitation, demolition or acquisition, if the move occurs before the tenant is provided written notice offering him or her the opportunity to lease and occupy a suitable, decent, safe, and sanitary dwelling in the same building/complex, under reasonable terms and conditions, upon completion of the project. Such reasonable terms and conditions include a monthly rent and estimated average monthly utility costs that do not exceed the amount approved by HUD; 
</P>
<P>(ii) A tenant-occupant of a dwelling who is required to relocate temporarily, but does not return to the building/complex, if either: 
</P>
<P>(A) The tenant is not offered payment for all reasonable out-of-pocket expenses incurred in connection with the temporary relocation, including the cost of moving to and from the temporarily occupied unit, any increased housing costs and incidental expenses; or 
</P>
<P>(B) Other conditions of the temporary relocation are not reasonable; or 
</P>
<P>(iii) A tenant-occupant of a dwelling who moves from the building/complex, permanently, after he or she has been required to move to another dwelling unit in the same building/complex in order to carry out the project, if either: 
</P>
<P>(A) The tenant is not offered reimbursement for all reasonable out-of-pocket expenses incurred in connection with the move; or 
</P>
<P>(B) Other conditions of the move are not reasonable; or 
</P>
<P>(iv) Any person, including a person who moves before the Owner's execution of the agreement covering the rehabilitation, demolition, or acquisition, if the Owner or HUD determines that the displacement resulted directly from rehabilitation, demolition or acquisition for the assisted project. 
</P>
<P>(2) Notwithstanding the provisions of paragraph (g)(1) of this section, a person does not qualify as a “displaced person” (and is not eligible for relocation assistance under the URA or this section), if: 
</P>
<P>(i) The person has been evicted for serious or repeated violation of the terms and conditions of the lease or occupancy agreement, violation of applicable Federal, State or local law, or other good cause, and HUD determines that the eviction was not undertaken for the purpose of evading the obligation to provide relocation assistance; 
</P>
<P>(ii) The person moved into the property after the execution of the agreement covering the rehabilitation, demolition or acquisition and, before signing a lease and commencing occupancy, received written notice of the project, its possible impact on the person (e.g., the person may be displaced, temporarily relocated or suffer a rent increase) and the fact that he or she would not qualify as a “displaced person” (or for any assistance provided under this section) as a result of the project; 
</P>
<P>(iii) The person is ineligible under 49 CFR 24.2(g)(2); or 
</P>
<P>(iv) HUD determines that the person was not displaced as a direct result of acquisition, rehabilitation, or demolition for the project. 
</P>
<P>(3) The Owner may ask HUD, at any time, to determine whether a displacement is or would be covered by this section. 
</P>
<P>(h) <I>Definition of initiation of negotiations.</I> For purposes of determining the formula for computing the replacement housing assistance to be provided to a residential tenant displaced as a direct result of privately undertaken rehabilitation, demolition, or acquisition of the real property, the term <I>initiation of negotiations</I> means the Owner's execution of the agreement covering the rehabilitation, demolition, or acquisition. 
</P>
<APPRO TYPE="N">(Approved by Office of Management and Budget under OMB Control Number 2506-0121)
</APPRO>
<CITA TYPE="N">[59 FR 29330, June 6, 1994]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:2.1.1.2.13.5" TYPE="SUBPART">
<HEAD>Subpart E—Servicing Responsibilities—Low Cost Homes</HEAD>


<DIV8 N="§ 221.800" NODE="24:2.1.1.2.13.5.163.1" TYPE="SECTION">
<HEAD>§ 221.800   Cross-reference.</HEAD>
<P>All of the provisions of subpart C, part 203 of the chapter concerning the responsibilities of servicers of mortgages insured under section 203 of the National Housing Act apply to mortgages covering one- to four-family dwellings to be insured under section 221 of the National Housing Act, except §§ 203.664 through 203.666.
</P>
<CITA TYPE="N">[52 FR 48204, Dec. 21, 1987, and 53 FR 9869, Mar. 28, 1988]


</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="231" NODE="24:2.1.1.2.14" TYPE="PART">
<HEAD>PART 231—HOUSING MORTGAGE INSURANCE FOR THE ELDERLY 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1715b, 1715v; 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>36 FR 24615, Dec. 22, 1971, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:2.1.1.2.14.1" TYPE="SUBPART">
<HEAD>Subpart A—Eligibility Requirements</HEAD>


<DIV8 N="§ 231.1" NODE="24:2.1.1.2.14.1.163.1" TYPE="SECTION">
<HEAD>§ 231.1   Eligibility requirements.</HEAD>
<P>The requirements set forth in 24 CFR part 200, subpart A, apply to multifamily project mortgages insured under section 231 of the National Housing Act (12 U.S.C. 1715v), as amended. 
</P>
<CITA TYPE="N">[61 FR 14406, Apr. 1, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:2.1.1.2.14.2" TYPE="SUBPART">
<HEAD>Subpart B—Contract Rights and Obligations</HEAD>


<DIV8 N="§ 231.251" NODE="24:2.1.1.2.14.2.163.1" TYPE="SECTION">
<HEAD>§ 231.251   Cross-reference.</HEAD>
<P>(a) All of the provisions of part 207, subpart B of this chapter covering mortgages insured under section 207 of the National Housing Act apply to mortgages insured under section 231 of such Act. 
</P>
<P>(b) For the purposes of this subpart all references in part 207 of this chapter to section 207 of the Act shall be construed to refer to section 231 of the Act. 


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="232" NODE="24:2.1.1.2.15" TYPE="PART">
<HEAD>PART 232—MORTGAGE INSURANCE FOR NURSING HOMES, INTERMEDIATE CARE FACILITIES, BOARD AND CARE HOMES, AND ASSISTED LIVING FACILITIES


</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1715b, 1715w, 1735d, and 1735f-19; 42 U.S.C. 3535(d).


</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>36 FR 24618, Dec. 22, 1971, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:2.1.1.2.15.1" TYPE="SUBPART">
<HEAD>Subpart A—Eligibility Requirements</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 14406, Apr. 1, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 232.1" NODE="24:2.1.1.2.15.1.175.1" TYPE="SECTION">
<HEAD>§ 232.1   Eligibility requirements, generally; applicability of certain requirements.</HEAD>
<P>(a) <I>Eligibility, generally.</I> All of the requirements set forth in 24 CFR part 200, subpart A, except for the requirements for “eligible mortgagor” in 24 CFR 200.5, apply to mortgages insured under section 232 of the National Housing Act (12 U.S.C. 1715w), as amended.
</P>
<P>(b) <I>Applicability of certain requirements.</I> As of October 9, 2012 the provisions in 24 CFR 207.255(b)(5), 207.258, 232.3, 232.11, 232.254, 232.903(c) and (d), and subpart F of part 232, excluding §§ 232.1007, 232.1009, and 232.1015 of subpart F are applicable only to transactions for which a firm commitment has been issued under this part on or after July 12, 2013.
</P>
<CITA TYPE="N">[77 FR 55136, Sept. 7, 2012, as amended at 78 FR 25185, Apr. 30, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 232.2" NODE="24:2.1.1.2.15.1.175.2" TYPE="SECTION">
<HEAD>§ 232.2   License.</HEAD>
<P>The Commissioner shall not insure any mortgage under this part unless the facility is regulated by the State, municipality or other political subdivision in which the facility is or is to be located, and the appropriate agency for such jurisdiction provides a license, certificate or other assurances the Commissioner considers necessary, that the facility complies with any applicable State or local standards and requirements for such facility. 


</P>
</DIV8>


<DIV8 N="§ 232.3" NODE="24:2.1.1.2.15.1.175.3" TYPE="SECTION">
<HEAD>§ 232.3   Eligible borrower.</HEAD>
<P>The borrower shall be a single asset entity acceptable to the Commissioner, as may be limited by the applicable section of the Act, and shall possess the powers necessary and incidental to owning the project, except that the Commissioner may approve a non-single asset borrower entity under such circumstances, terms, and conditions determined and specified as acceptable to the Commissioner.
</P>
<CITA TYPE="N">[77 FR 55136, Sept. 7, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 232.7" NODE="24:2.1.1.2.15.1.175.4" TYPE="SECTION">
<HEAD>§ 232.7   Bathroom.</HEAD>
<P>(a) <I>General requirement.</I> For a board and care home or assisted living facility to be eligible for insurance under this part:
</P>
<P>(1) The board and care home or assisted living facility must have no less than one full bathroom provided for every four residents; and
</P>
<P>(2) Bathroom access from any bedroom or sleeping area must not pass through a public corridor or area.
</P>
<P>(b) <I>Exemption for existing projects providing memory care.</I> The following applies to a board and care home or assisted living facility that provides housing for residents in need of memory care, <I>i.e.,</I> care for residents who have cognitive impairments, such as Alzheimer's disease or other dementias:
</P>
<P>(1) Subject to paragraph (b)(2) of this section, a project seeking insurance under subpart E, pursuant to section 223(f) or 223(a)(7) of the National Housing Act, may be eligible for insurance without meeting the general requirement in paragraph (a) of this section, if the project meets the following four requirements:
</P>
<P>(i) Memory care residents are in a separate, secured, and locked area of the board and care home or assisted living facility;
</P>
<P>(ii) Any bathroom access from a memory care resident's bedroom or sleeping area that passes through a public corridor or area is in a separate, secured, and locked area of the board and care home or assisted living facility prescribed in (b)(1)(i) of this section;
</P>
<P>(iii) Memory care residents receive full assistance or supervision while bathing; and
</P>
<P>(iv) Memory care residents reside in wards that contain no more than two beds per unit and have a half-bath in each unit.
</P>
<P>(2) If a facility serving memory care residents also serves residents who are not in a separate, secured, and locked area of the board and care home or assisted living facility, this exemption applies only to the separate, secured, and locked area in which solely memory care residents reside. 
</P>
<CITA TYPE="N">[85 FR 38324, June 26, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 232.11" NODE="24:2.1.1.2.15.1.175.5" TYPE="SECTION">
<HEAD>§ 232.11   Establishment and maintenance of long-term debt service reserve account.</HEAD>
<P>(a) To be eligible for insurance under this part, and except with respect to Supplemental Loans to Finance Purchase and Installation of Fire Safety Equipment (subpart C of this part), if HUD determines the mortgage presents an atypical long-term risk, HUD may require that the borrower establish, at final closing and maintain throughout the term of the mortgage, a long-term debt service reserve account.
</P>
<P>(b) The long-term debt service reserve account, if required, may be financed as part of the initial mortgage amount, provided that the maximum mortgage amount as otherwise calculated is not thereby exceeded.
</P>
<P>(c) The amount required to be initially placed in the long-term debt service reserve account and the minimum long-term balance to be maintained in that account will be determined during underwriting and separately identified in the firm commitment. Although HUD may, when appropriate to avert a mortgage insurance claim, permit the balance to fall below the required minimum long-term balance, the borrower may not take any distribution of mortgaged property except when both the long-term debt service reserve account is funded at the minimal long-term level and such distribution is otherwise permissible.
</P>
<CITA TYPE="N">[77 FR 55136, Sept. 7, 2012]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:2.1.1.2.15.2" TYPE="SUBPART">
<HEAD>Subpart B—Contract Rights and Obligations</HEAD>


<DIV8 N="§ 232.251" NODE="24:2.1.1.2.15.2.175.1" TYPE="SECTION">
<HEAD>§ 232.251   Cross-reference.</HEAD>
<P>(a) All of the provisions, except § 207.258b, of part 207, subpart B of this chapter relating to mortgages insured under section 207 of the National Housing Act, apply to mortgages insured under section 232 of the Act.
</P>
<P>(b) For the purposes of this subpart all references in part 207 of this chapter to section 207 of the Act shall be construed to refer to section 232 of the Act. 
</P>
<CITA TYPE="N">[36 FR 24618, Dec. 22, 1971, as amended at 50 FR 38787, Sept. 25, 1985]


</CITA>
</DIV8>


<DIV8 N="§ 232.252" NODE="24:2.1.1.2.15.2.175.2" TYPE="SECTION">
<HEAD>§ 232.252   Definitions.</HEAD>
<P>All of the definitions contained in § 232.1 shall apply to this subpart. In addition, as used in this part, the following term shall have the meaning indicated: 
</P>
<P>(a) <I>Contract of insurance</I> means the agreement evidenced by the Commissioner's insurance endorsement and includes the provisions of this subpart and of the Act. 


</P>
</DIV8>


<DIV8 N="§ 232.254" NODE="24:2.1.1.2.15.2.175.3" TYPE="SECTION">
<HEAD>§ 232.254   Withdrawal of project funds, including for repayments of advances from the borrower, operator, or management agent.</HEAD>
<P>Borrower may make and take distributions of mortgaged property, as set forth in the mortgage loan transactional documents, to the extent and as permitted by the law of the applicable jurisdiction, provided that, upon each calculation of borrower surplus cash (as defined by HUD), which calculation shall be made no less frequently than semi-annually, borrower must demonstrate positive surplus cash, or to the extent surplus cash is negative, repay any distributions taken during such calculation period within 30 calendar days unless a longer time period is approved by HUD. Borrower shall be deemed to have taken distributions to the extent that surplus cash is negative unless, in conjunction with the calculation of surplus cash, borrower provides to HUD documentation evidencing, to HUD's reasonable satisfaction, a lesser amount of total distributions. To the extent that the provisions of this section are inconsistent with the provisions in a borrower's existing transactional loan documents, including without limitation any HUD-required regulatory agreement, the provisions of the transactional loan documents shall apply.
</P>
<CITA TYPE="N">[77 FR 55136, Sept. 7, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 232.256" NODE="24:2.1.1.2.15.2.175.4" TYPE="SECTION">
<HEAD>§ 232.256   Partial payment of claims.</HEAD>
<P>(a) When a lender for a loan on a healthcare project becomes eligible to file an insurance claim and to assign the mortgage to the Commissioner pursuant to § 207.258, the Commissioner may request the lender, in lieu of assignment, to accept a partial payment of the claim under the mortgage insurance contract and recast the mortgage, under such terms and conditions as the Commissioner may determine.
</P>
<P>(b) The Commissioner may request the lender to participate in a partial payment of claim in lieu of assignment only after a determination that partial payment would be less costly to the Federal Government than other reasonable alternatives for maintaining the project and that would keep the healthcare facility operational to serve community needs. In addition to any findings that may be provided in other guidance, the Commissioner shall base the determination on the findings listed below:
</P>
<P>(1) The lender is entitled, after a default as defined in § 207.255, to assign the mortgage in exchange for the payment of insurance benefits;
</P>
<P>(2) The relief resulting from partial payment, when considered with other resources available to the project, would be sufficient to restore the financial viability of the project;
</P>
<P>(3) The project is or can (at reasonable cost) be made physically sound;
</P>
<P>(4) The current or proposed operator of the facility is satisfactory to the Commissioner, as demonstrated by past experience in operating similar types of healthcare facilities and by state regulatory performance;
</P>
<P>(5) The default under the insured mortgage was beyond the control of the borrower and/or operator, or in the case of a transfer of physical assets (TPA), the proposed borrower or operator, unless the Commissioner determines that any borrower/operator deficiencies giving rise to the default have clearly been addressed; and
</P>
<P>(6) The project is serving as, or potentially could serve as, a needed nursing home, intermediate care facility, board and care home, or assisted living facility.
</P>
<P>(c) Partial payment of a claim under this section shall be made only when:
</P>
<P>(1) The property covered by the mortgage is free and clear of all liens other than the insured first mortgage and such other liens as the Commissioner may have approved;
</P>
<P>(2) The lender has voluntarily agreed to accept a PPC under the mortgage insurance contract and to recast the remaining mortgage amount under terms and conditions prescribed by the Commissioner; and
</P>
<P>(3) The borrower has agreed to repay to the Commissioner an amount equal to the partial payment, with the obligation secured by a second mortgage on the project containing terms and conditions prescribed by the Commissioner. The terms of the second mortgage will be determined on a case-by-case basis to ensure that the estimated project income will be sufficient to cover estimated operating expenses and debt service on the recast insured mortgage. The Commissioner may provide for postponed amortization of the second mortgage.
</P>
<P>(d) Payment of insurance benefits under this section shall be in cash.
</P>
<P>(e) A lender receiving a partial payment of claim, following the Commissioner's endorsement of the mortgage for full insurance under 24 CFR part 252, will pay HUD a fee in an amount set forth through <E T="04">Federal Register</E> notice. HUD, in its discretion, may collect this fee or deduct the fee from any payment it makes in the claim process.
</P>
<CITA TYPE="N">[77 FR 72922, Dec. 7, 2012]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:2.1.1.2.15.3" TYPE="SUBPART">
<HEAD>Subpart C—Eligibility Requirements—Supplemental Loans To Finance Purchase and Installation of Fire Safety Equipment</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>39 FR 28966, Aug. 12, 1974, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV8 N="§ 232.500" NODE="24:2.1.1.2.15.3.175.1" TYPE="SECTION">
<HEAD>§ 232.500   Definitions.</HEAD>
<P>In addition to the definitions contained in subpart A, incorporated herein by reference, the following terms, as used in §§ 232.500 <I>et seq.,</I> shall have the meaning indicated: 
</P>
<P>(a) <I>Insured loan</I> means a loan insured by the endorsement of the credit instrument by the Commissioner. 
</P>
<P>(b) <I>Insurance premium</I> means the loan insurance premium paid by the financial institution to the Commissioner in consideration of the contract of insurance. 
</P>
<P>(c)(1) <I>Fire safety equipment</I> means equipment that is purchased, installed, and maintained in a nursing home, intermediate care facility, assisted living facility, or board and care home and that meets the following standards for the applicable occupancy: 
</P>
<P>(i) The edition of The Life Safety Code of the National Fire Protection Association as accepted by the Department of Health and Human Services in 42 CFR 483.70; or
</P>
<P>(ii) A standard mandated by a State under the provisions of section 1616(e) of the Social Security Act.
</P>
<P>(iii) Any appropriate requirement approved by the Secretary of Health and Human Services for providers of services under title XVIII or title XIX of the Social Security Act.
</P>
<P>(2) In addition to those requirements approved by the Secretary of Health and Human Services as necessary for the appropriate level of occupancy, <I>fire safety equipment</I> may also include fire safety-related improvements that are not mandatory under the requirements of the Secretary of Health and Human Services, but which the Secretary of Health and Human Services considers acceptable and reasonable for protection against the hazards of fire and which the borrower agrees to install.
</P>
<P>(3) For the purposes of this definition, the terms <I>nursing home</I> and <I>intermediate care facility</I> shall include those facilities designated as skilled nursing facilities or intermediate care facilities by the Department of Health and Human Services.
</P>
<P>(d) <I>Fire safety loan</I> means any form of secured or unsecured obligation determined by the Commissioner to be eligible for insurance under this subpart and, in the case of an assisted living facility or a board and care home, made with respect to such a home located in a State which the Secretary has determined is in compliance with the provisions of section 1616(e) of the Social Security Act. 
</P>
<P>(e) <I>Equipment cost</I> means the reasonable cost of fire safety equipment fully installed as determined by the Commissioner.
</P>
<P>(f) <I>Insured loan maturity</I> means the date on which the loan indebtedness would be extinguished if paid in accordance with periodic payments provided for in the loan instrument or instruments. 
</P>
<P>(g) <I>Approved lender</I> means a financial institution or other mortgagee approved by the Commissioner as eligible for insurance under section 2 of the National Housing Act, or a mortgagee approved under section 203(b)(1) of the National Housing Act. 
</P>
<CITA TYPE="N">[39 FR 28966, Aug. 12, 1974, as amended at 50 FR 37522, Sept. 16, 1985; 59 FR 61228, Nov. 29, 1994; 80 FR 48027, Aug. 11, 2015]


</CITA>
</DIV8>


<DIV7 N="175" NODE="24:2.1.1.2.15.3.175" TYPE="SUBJGRP">
<HEAD>Fees and Charges</HEAD>


<DIV8 N="§ 232.505" NODE="24:2.1.1.2.15.3.175.2" TYPE="SECTION">
<HEAD>§ 232.505   Application and application fee.</HEAD>
<P>(a) <I>Filing of application.</I> An application for insurance of a fire safety loan for a nursing home, intermediate care facility, assisted living facility or board and care home shall be submitted on an approved HUD form by an approved lender and by the owners of the project to the HUD office.
</P>
<P>(b) <I>Application fee.</I> See 24 CFR 200.40(d)(2).
</P>
<CITA TYPE="N">[80 FR 48027, Aug. 11, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 232.510" NODE="24:2.1.1.2.15.3.175.3" TYPE="SECTION">
<HEAD>§ 232.510   Commitment and commitment fee.</HEAD>
<P>(a) <I>Issuance of commitment.</I> Upon approval of an application for insurance, a commitment shall be issued by the Commissioner setting forth the terms and conditions upon which the fire safety loan will be insured. 
</P>
<P>(b) <I>Type of commitment.</I> The commitment will provide for the insurance of the loan after satisfactory completion of installation of the fire safety equipment, as determined by the Commissioner.
</P>
<P>(c) <I>Term of commitment.</I> A commitment shall have a term as the Commissioner deems necessary for satisfactory completion of installation.
</P>
<P>(d) <I>Commitment fee.</I> See 24 CFR 200.40(d)(2).
</P>
<P>(e) <I>Increase in commitment prior to endorsement.</I> An application, filed prior to endorsement, for an increase in the amount of an outstanding firm commitment shall be accompanied by an additional application fee. The additional application fee shall be in an amount determined by the Secretary as equal to the amount determined under 24 CFR 200.40(d)(2), which shall not exceed $5.00 per thousand dollars of the amount of the requested increase. If an inspection fee was required in the original commitment, an additional inspection fee shall be paid in an amount computed at the same dollar rate per thousand dollars of the amount of increase in commitment as was used for the inspection fee required in the original commitment. The additional inspection fee shall be paid prior to the date installation of fire safety equipment is begun, or, if installation has begun, it shall be paid with the application for increase.
</P>
<CITA TYPE="N">[39 FR 28966, Aug. 12, 1974, as amended at 80 FR 48027, Aug. 11, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 232.515" NODE="24:2.1.1.2.15.3.175.4" TYPE="SECTION">
<HEAD>§ 232.515   Refund of fees.</HEAD>
<P>If the amount of the commitment issued or an increase in the loan amount prior to endorsement is less than the amount applied for, the Commissioner shall refund the excess amount of the application fee submitted by the applicant. If an application is rejected before it is assigned for processing, or in such other instances as the Commissioner may determine, the entire application fee or any portion thereof may be returned to the applicant.
</P>
<CITA TYPE="N">[80 FR 48027, Aug. 11, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 232.520" NODE="24:2.1.1.2.15.3.175.5" TYPE="SECTION">
<HEAD>§ 232.520   Maximum fees and charges by lender.</HEAD>
<P>See 24 CFR 200.40 titled “HUD fees” and 200.41 titled “Maximum mortgage fees and charges” for maximum fees and charges applicable to mortgages insured under 24 CFR part 232.
</P>
<CITA TYPE="N">[80 FR 48027, Aug. 11, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 232.522" NODE="24:2.1.1.2.15.3.175.6" TYPE="SECTION">
<HEAD>§ 232.522   Inspection fee.</HEAD>
<P>See 24 CFR 200.40 titled “HUD fees” and 200.41 titled “Maximum mortgage fees and charges” for maximum fees and charges applicable to mortgages insured under 24 CFR part 232.
</P>
<CITA TYPE="N">[80 FR 48027, Aug. 11, 2015]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="176" NODE="24:2.1.1.2.15.3.176" TYPE="SUBJGRP">
<HEAD>Eligible Security Instruments</HEAD>


<DIV8 N="§ 232.525" NODE="24:2.1.1.2.15.3.176.7" TYPE="SECTION">
<HEAD>§ 232.525   Note and security form.</HEAD>
<P>The lender shall present for insurance a note and security instrument, if required, on forms approved by the Commissioner for use in the jurisdiction in which the property to be improved is located. 


</P>
</DIV8>


<DIV8 N="§ 232.530" NODE="24:2.1.1.2.15.3.176.8" TYPE="SECTION">
<HEAD>§ 232.530   Disbursement of proceeds.</HEAD>
<P>At the time of endorsement for insurance of the note by the Commissioner, the entire principal amount of the note shall have been disbursed to the borrower or to his creditors for his account and with his consent. 


</P>
</DIV8>


<DIV8 N="§ 232.535" NODE="24:2.1.1.2.15.3.176.9" TYPE="SECTION">
<HEAD>§ 232.535   Loan multiples—minimum principal.</HEAD>
<P>The loan shall involve a principal obligation in multiples of $100, and the minimum principal obligation shall be $10,000. 
</P>
<CITA TYPE="N">[40 FR 4908, Feb. 3, 1975] 


</CITA>
</DIV8>


<DIV8 N="§ 232.540" NODE="24:2.1.1.2.15.3.176.10" TYPE="SECTION">
<HEAD>§ 232.540   Method of loan payment and amortization period.</HEAD>
<P>See 24 CFR 200.82 titled “Maturity” for loan payment and amortization period requirements applicable to mortgages insured under 24 CFR part 232.
</P>
<CITA TYPE="N">[80 FR 48027, Aug. 11, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 232.545" NODE="24:2.1.1.2.15.3.176.11" TYPE="SECTION">
<HEAD>§ 232.545   Covenant against liens.</HEAD>
<P>(a) The security instrument shall contain a covenant against the creation by the borrower of additional liens against the property superior or inferior to the lien of such instrument, except with the prior approval of the Commissioner. 
</P>
<P>(b) The covenant required under paragraph (a) of this section shall not apply where a lien inferior to the lien of the insured mortgage is given in favor of a Federal, State or local governmental agency or instrumentality under such circumstances as may be approved by the Commissioner, provided the source of funds for repayment of the inferior lien is limited to surplus cash or residual receipts.
</P>
<CITA TYPE="N">[36 FR 24641, Dec. 22, 1971, as amended at 48 FR 35393, Aug. 4, 1983; 49 FR 12215, Mar. 29, 1984]


</CITA>
</DIV8>


<DIV8 N="§ 232.550" NODE="24:2.1.1.2.15.3.176.12" TYPE="SECTION">
<HEAD>§ 232.550   Accumulation of next premium.</HEAD>
<P>The security instrument shall provide for payments by the borrower to the lender on each interest payment date of an amount sufficient to accumulate in the hands of the lender one payment period prior to its due date the next annual insurance premium payable by the lender to the Commissioner. 


</P>
</DIV8>


<DIV8 N="§ 232.555" NODE="24:2.1.1.2.15.3.176.13" TYPE="SECTION">
<HEAD>§ 232.555   Security instrument and lien.</HEAD>
<P>The security instrument shall cover the entire property included in the project, shall be a lien on the real property of the project under the laws of the jurisdiction in which the project is located, and may be junior to such prior liens or mortgages indebtedness as the Commissioner may approve. The Commissioner may from time to time require such other security, in lieu of, or in addition to, a lien on real property as he may prescribe.


</P>
</DIV8>


<DIV8 N="§ 232.560" NODE="24:2.1.1.2.15.3.176.14" TYPE="SECTION">
<HEAD>§ 232.560   Interest rate.</HEAD>
<P>(a) The loan shall bear interest at the rate agreed upon by the lender and the borrower.
</P>
<P>(b) Interest shall be payable in monthly installments on the principal amount of the loan outstanding on the due date of each installment. 
</P>
<CITA TYPE="N">[39 FR 28966, Aug. 12, 1974, as amended at 53 FR 3366, Feb. 5, 1988; 53 FR 8885, Mar. 18, 1988]


</CITA>
</DIV8>


<DIV8 N="§ 232.565" NODE="24:2.1.1.2.15.3.176.15" TYPE="SECTION">
<HEAD>§ 232.565   Maximum loan amount.</HEAD>
<P>The principal amount of the loan shall not exceed the lower of the Commissioner's estimate of the cost of the fire safety equipment, including the cost of installation and eligible fees, or the amount supported by ninety percent (90%) of the residual income, which is ninety percent (90%) of the amount of net income remaining after payment of all existing debt service requirements, as determined by the Commissioner. The cost of installation may include the cost of such other work to be performed on the project necessary to meet the requirements of the Secretary of Health and Human Services and the Commissioner to enhance the fire safety of the project, and such costs incidental to installation as may be approved by the Commissioner.
</P>
<CITA TYPE="N">[40 FR 4908, Feb. 3, 1975, as amended at 80 FR 48028, Aug. 11, 2015] 


</CITA>
</DIV8>


<DIV8 N="§ 232.570" NODE="24:2.1.1.2.15.3.176.16" TYPE="SECTION">
<HEAD>§ 232.570   Endorsement of credit instrument.</HEAD>
<P>The Commissioner shall indicate his insurance of the loan by endorsing the credit instrument and identifying the section of the Act and regulations under which the loan is insured and the date of insurance, subject to the presentation and approval by him of the following: 
</P>
<P>(a) Certification of full disbursement of loan proceeds as provided for in § 232.530. 
</P>
<P>(b) Certification of costs as required by § 232.610. 
</P>
<P>(c) Certification that fire safety equipment was installed as required by § 232.500(c).
</P>
<CITA TYPE="N">[39 FR 28966, Aug. 12, 1974, as amended at 80 FR 48028, Aug. 11, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 232.580" NODE="24:2.1.1.2.15.3.176.17" TYPE="SECTION">
<HEAD>§ 232.580   Application of payments.</HEAD>
<P>(a) The security instrument shall provide that all monthly payments to be made by the borrower shall be added together and this aggregate amount shall be paid by the borrower upon each monthly payment date in a single payment. The lender shall apply the payment to the following items in the order set forth: 
</P>
<P>(1) Premium charges under the contract of insurance; 
</P>
<P>(2) Interest on the loan; 
</P>
<P>(3) Amortization of the principal of the loan; 
</P>
<P>(b) Any deficiency in the amount of any monthly payments required under paragraph (a) of this section shall constitute an event of default and the loan shall further provide for a grace period of 30 days within which time the default must be cured. 


</P>
</DIV8>


<DIV8 N="§ 232.585" NODE="24:2.1.1.2.15.3.176.18" TYPE="SECTION">
<HEAD>§ 232.585   Prepayment privilege and prepayment charge.</HEAD>
<P>The security instrument shall contain a provision permitting prepayment of the loan in whole or in part upon any interest payment date after giving to the lender 30 days' advance written notice and it may contain a provision, with the approval of the Commissioner, for a reasonable charge in the event of prepayment. 


</P>
</DIV8>


<DIV8 N="§ 232.586" NODE="24:2.1.1.2.15.3.176.19" TYPE="SECTION">
<HEAD>§ 232.586   Minimum principal loan amount.</HEAD>
<P>A mortgagee may not require, as a condition of providing a loan secured by a mortgage insured under this subpart, that the principal amount of the mortgage exceed a minimum amount established by the mortgagee.
</P>
<CITA TYPE="N">[53 FR 8885, Mar. 18, 1988]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="177" NODE="24:2.1.1.2.15.3.177" TYPE="SUBJGRP">
<HEAD>Property Requirements</HEAD>


<DIV8 N="§ 232.590" NODE="24:2.1.1.2.15.3.177.20" TYPE="SECTION">
<HEAD>§ 232.590   Eligibility of property.</HEAD>
<P>(a) A loan to be eligible for insurance shall be on real estate held: 
</P>
<P>(1) In fee simple; or 
</P>
<P>(2) On the interest of the lessee under a lease for not less than ninety-nine years which is renewable; or 
</P>
<P>(3) Under a lease having a period of not less than “twenty-five” years to run from the date the loan is executed. 
</P>
<P>(b) The property constituting security for the loan transaction must be held by an eligible borrower as herein defined and must at the time the loan is insured be free and clear of all liens other than those specifically approved by the Commissioner. 
</P>
<CITA TYPE="N">[39 FR 28966, Aug. 12, 1974; 39 FR 30349, Aug. 22, 1974] 


</CITA>
</DIV8>


<DIV8 N="§ 232.591" NODE="24:2.1.1.2.15.3.177.21" TYPE="SECTION">
<HEAD>§ 232.591   Smoke detectors.</HEAD>
<P>After October 30, 1992, each occupied room must include at least one battery-operated or hard-wired smoke detector in proper working condition. If the room is occupied by hearing-impaired persons, the smoke detector must have an alarm system designed for hearing-impaired persons, unless the smoke alarm is connected to a central alarm system that is monitored on a 24-hour basis, or otherwise meets industry standards.
</P>
<CITA TYPE="N">[57 FR 33850, July 30, 1992]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="178" NODE="24:2.1.1.2.15.3.178" TYPE="SUBJGRP">
<HEAD>Title</HEAD>


<DIV8 N="§ 232.595" NODE="24:2.1.1.2.15.3.178.22" TYPE="SECTION">
<HEAD>§ 232.595   Eligibility of title.</HEAD>
<P>In order for the property which is to be the security for a loan to be insured under this subpart to be eligible for insurance, the Commissioner shall determine that the title to the property is vested in the borrower as of the date the security instrument is filed for record. The title evidence will be examined by the Commissioner and the endorsement of the credit instrument for insurance shall be evidence of its acceptability. 


</P>
</DIV8>


<DIV8 N="§ 232.600" NODE="24:2.1.1.2.15.3.178.23" TYPE="SECTION">
<HEAD>§ 232.600   Title evidence.</HEAD>
<P>The lender, without expense to the Commissioner, shall furnish to the Commissioner a policy of title insurance, or if the lender is unable to furnish a policy for reasons satisfactory to the Commissioner, the lender, without expense to the Commissioner, shall furnish an abstract of title. The following are the requirements covering the title insurance and abstract of title:
</P>
<P>(a) The policy of title insurance shall be issued by a company, and in a form, satisfactory to the Commissioner. The policy shall name as the insureds the lender and the Secretary of Housing and Urban Development, as their respective interests may appear. The policy shall provide that upon acquisition of title by the lender or the Secretary, the policy of title insurance will continue to provide the same coverage as the original policy, and will run to the lender or the Secretary, as the case may be.
</P>
<P>(b) The abstract of title shall be satisfactory to the Commissioner, prepared by an abstract title company or an individual engaged in the business of preparing abstracts of title, accompanied by a legal opinion satisfactory to the Commissioner, as to the quality of such title, signed by an attorney at law experienced in the examination of titles. 
</P>
<CITA TYPE="N">[39 FR 28966, Aug. 12, 1974, as amended at 58 FR 34216, June 24, 1993]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="179" NODE="24:2.1.1.2.15.3.179" TYPE="SUBJGRP">
<HEAD>Form of Contract</HEAD>


<DIV8 N="§ 232.605" NODE="24:2.1.1.2.15.3.179.24" TYPE="SECTION">
<HEAD>§ 232.605   Contract requirements.</HEAD>
<P>The contract between the mortgagor and the general contractor may be in the form of a lump sum contract, a cost plus contract, or different or alternative forms of contract specified by the Commissioner.
</P>
<CITA TYPE="N">[80 FR 48028, Aug. 11, 2015]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="180" NODE="24:2.1.1.2.15.3.180" TYPE="SUBJGRP">
<HEAD>Cost Certification Requirements</HEAD>


<DIV8 N="§ 232.610" NODE="24:2.1.1.2.15.3.180.25" TYPE="SECTION">
<HEAD>§ 232.610   Certification of cost requirements.</HEAD>
<P>(a) <I>Certificate and adjustment.</I> No loan shall be insured unless a certification of actual cost is made by the contractor.
</P>
<P>(b) <I>Cost computation.</I> The term <I>actual cost of the improvements</I> shall mean the cost to the borrower of the improvements, after deducting the amount of any kickbacks, rebates, or trade discount received in connection with the improvements, and including the amounts paid under any contract for the improvements, labor, materials, and for any other items of expense approved by the Commissioner. 
</P>
<P>(c) <I>Statement of facts.</I> Any agreement, undertaking, statement or certification required in connection with cost certification shall specifically state that it has been made, presented and delivered for the purpose of influencing an official action of the Commissioner and may be relied upon as a true statement of the facts contained therein. 
</P>
<P>(d) <I>Incontestability.</I> Upon the Commissioner's approval of the cost certification, such certification shall be final and incontestable except for fraud or material misrepresentation on the part of the borrower. 
</P>
<P>(e) <I>Records.</I> The borrower shall keep and maintain adequate records of all costs of any construction improvements or other cost items not representing work under the general contract and shall require the builder to keep similar records and, upon request by the Commissioner, shall make available for examination such records, including any collateral agreements. 
</P>
<CITA TYPE="N">[39 FR 28966, Aug. 12, 1974, as amended at 80 FR 48028, Aug. 11, 2015]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="181" NODE="24:2.1.1.2.15.3.181" TYPE="SUBJGRP">
<HEAD>Eligible Borrowers</HEAD>


<DIV8 N="§ 232.615" NODE="24:2.1.1.2.15.3.181.26" TYPE="SECTION">
<HEAD>§ 232.615   Eligible borrowers.</HEAD>
<P>(a) In order to be eligible as a borrower under this subpart the applicant shall be a profit or non-profit entity, which owns a nursing home or intermediate care facility for which the Secretary of Health and Human Services has determined that the installation of fire safety equipment in such facility is necessary to meet the applicable requirements of the Secretary of Health and Human Services for providers of services under Title XVIII and Title XIX of the Social Security Act and that upon completion of the installation of such equipment the nursing home or intermediate care facility will meet the applicable fire safety requirements of HHS. Until the termination of all obligations of the Commissioner under an insurance contract under this subpart and during such further period of time as the Commissioner shall be the owner, holder, or reinsurer of the loan, the borrower shall be regulated or restricted by the Commissioner as to methods of operation including requirements for maintenance of fire safety equipment.
</P>
<P>(b) Also eligible as a borrower shall be a profit or nonprofit entity which owns an assisted living facility or board and care home for which HUD has determined that the installation of fire safety equipment is approvable under the definition contained in § 232.500(c). 
</P>
<CITA TYPE="N">[39 FR 28966, Aug. 12, 1974; 39 FR 30349, Aug. 22, 1974, as amended at 50 FR 37523, Sept. 16, 1985; 59 FR 61228, Nov. 29, 1994; 80 FR 48028, Aug. 11, 2015] 


</CITA>
</DIV8>


<DIV8 N="§ 232.616" NODE="24:2.1.1.2.15.3.181.27" TYPE="SECTION">
<HEAD>§ 232.616   Disclosure and verification of Social Security and Employer Identification Numbers.</HEAD>
<P>To be eligible for mortgage insurance under this subpart, the borrower must meet the requirements for the disclosure and verification of Social Security and Employer Identification Numbers, as provided by part 200, subpart U, of this chapter.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0118)
</APPRO>
<CITA TYPE="N">[54 FR 39695, Sept. 27, 1989]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="182" NODE="24:2.1.1.2.15.3.182" TYPE="SUBJGRP">
<HEAD>Special Requirements</HEAD>


<DIV8 N="§ 232.620" NODE="24:2.1.1.2.15.3.182.28" TYPE="SECTION">
<HEAD>§ 232.620   Determination of compliance with fire safety equipment requirements.</HEAD>
<P>Prior to Endorsement, applicant must provide certification that the installed improvements will meet HHS, as well as all other Federal, state and local requirements for fire safety equipment, if applicable.
</P>
<CITA TYPE="N">[80 FR 48028, Aug. 11, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 232.625" NODE="24:2.1.1.2.15.3.182.29" TYPE="SECTION">
<HEAD>§ 232.625   Discrimination prohibited.</HEAD>
<P>Any contract or subcontract executed for the installation of equipment, or construction of improvements to the project shall provide that there shall be no discrimination against any employee or applicant for employment because of sex, religion, race, color, creed or national origin. 


</P>
</DIV8>


<DIV8 N="§ 232.630" NODE="24:2.1.1.2.15.3.182.30" TYPE="SECTION">
<HEAD>§ 232.630   Assurance of completion.</HEAD>
<P>If the property upon which the fire safety equipment is to be installed is subject to a mortgage insured or held by the Commissioner pursuant to subpart B of this part, the Commissioner may require such assurance of completion of the contract for installation as he may from time to time prescribe. 


</P>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="D" NODE="24:2.1.1.2.15.4" TYPE="SUBPART">
<HEAD>Subpart D—Contract Rights and Obligations</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>39 FR 28970, Aug. 12, 1974, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV8 N="§ 232.800" NODE="24:2.1.1.2.15.4.183.1" TYPE="SECTION">
<HEAD>§ 232.800   Definitions.</HEAD>
<P>All of the definitions contained in § 232.500 shall apply to this subpart. In addition, as used in this subpart, the following term shall have the meaning indicated: 
</P>
<P>(a) <I>Contract of insurance</I> means the agreement evidenced by the endorsement of the Commissioner upon the note given in connection with an insured loan and includes the provisions of this subpart and the applicable provisions of the Act. 
</P>
<P>(b) <I>Maturity</I> means the date on which the loan indebtedness would be extinguished if paid in accordance with periodic payments provided for in the loan. 


</P>
</DIV8>


<DIV7 N="183" NODE="24:2.1.1.2.15.4.183" TYPE="SUBJGRP">
<HEAD>Premiums</HEAD>


<DIV8 N="§ 232.805" NODE="24:2.1.1.2.15.4.183.2" TYPE="SECTION">
<HEAD>§ 232.805   Insurance premiums.</HEAD>
<P>(a) <I>First premium.</I> The lender, upon the endorsement of the loan for insurance, shall pay to the Commissioner a first loan insurance premium equal to one percent of the original face amount of the note. 
</P>
<P>(b) <I>Second premium.</I> The lender, on the date of the first principal payment, shall pay a second premium equal to one percent of the average outstanding principal obligation of the loan for the year following such first principal payment date which shall be adjusted as of that date so that the aggregate of the first and second premiums shall equal the sum of one percent per annum of the average outstanding principal obligation of the loan for the period from the date of the insurance endorsement to one year following the date of the first principal payment. 
</P>
<P>(c) <I>Annual insurance premium.</I> Until the note is paid in full, or until the loan is assigned to the Commissioner, or until the contract of insurance is otherwise terminated with the consent of the Commissioner, the lender, on each anniversary of the date of the first principal payment shall pay an annual loan insurance premium equal to one percent of the average outstanding principal obligation of the loan for the year following the date on which such premium becomes payable. 
</P>
<P>(d) <I>Method of premium payment.</I> Premiums shall be payable in cash or in debentures of the General Insurance Fund at par plus accrued interest. All premiums are payable in advance and no refund can be made of any portion thereof except as provided in § 232.800 <I>et seq.</I> 
</P>
<P>(e) <I>Calculation of premiums.</I> The premiums payable on and after the date of the first principal payment shall be calculated in accordance with the amortization provisions without taking into account delinquent payments or prepayments.


</P>
</DIV8>


<DIV8 N="§ 232.805a" NODE="24:2.1.1.2.15.4.183.3" TYPE="SECTION">
<HEAD>§ 232.805a   Mortgagee's late charge.</HEAD>
<P>Mortgage insurance premiums which are paid to the Commissioner more than 15 days after the billing date or due date, whichever is later, shall include a late charge of 4 percent of the amount of the payment due, except that no late charge shall be required with respect to any case for which HUD fails to render a proper billing to the mortgagee.
</P>
<CITA TYPE="N">[43 FR 60154, Dec. 26, 1978]


</CITA>
</DIV8>


<DIV8 N="§ 232.815" NODE="24:2.1.1.2.15.4.183.4" TYPE="SECTION">
<HEAD>§ 232.815   Termination of insurance.</HEAD>
<P>(a) <I>Prepayment in full.</I> The contract of insurance shall be terminated if the loan is paid in full prior to its maturity. Notice of the prepayment shall be given to the Commissioner, on a form prescribed by the Commissioner, within 30 days from the date of the prepayment. The insurance termination shall become effective as of the date of the prepayment, or 30 days prior to the Commissioner's receipt of the prepayment notice, whichever is later. 
</P>
<P>(b) <I>Voluntary termination.</I> The contract of insurance shall be voluntarily terminated upon receipt by the Commissioner of a written request, on a form prescribed by the Commissioner, by the borrower and the lender for such termination, accompanied by a submission of the original credit instrument for cancellation of the insurance endorsement and the remittance of all sums to which the Commissioner is entitled. The termination shall become effective as of the date these requirements are met. 


</P>
</DIV8>


<DIV8 N="§ 232.825" NODE="24:2.1.1.2.15.4.183.5" TYPE="SECTION">
<HEAD>§ 232.825   Pro rata refund of insurance premium.</HEAD>
<P>Upon termination of a loan insurance contract by a payment in full or by a voluntary termination, the Commissioner shall refund to the lender for the account of the borrower an amount equal to the pro rata portion of the current annual loan insurance premium theretofore paid which is applicable to the portion of the year subsequent to the effective date of the termination. 


</P>
</DIV8>

</DIV7>


<DIV7 N="184" NODE="24:2.1.1.2.15.4.184" TYPE="SUBJGRP">
<HEAD>Rights and Duties of Lender Under the Contract of Insurance</HEAD>


<DIV8 N="§ 232.830" NODE="24:2.1.1.2.15.4.184.6" TYPE="SECTION">
<HEAD>§ 232.830   Definition of default.</HEAD>
<P>(a) If the borrower fails to make any payments due under or provided to be paid by the terms of the note or security instrument, the note shall be considered in default for the purposes of this subpart. 
</P>
<P>(b) The failure to perform any other covenant under the note or security instrument shall be considered a default, provided the lender, because of such default, has exercised its rights under the note or security instrument and accelerated the debt. 
</P>
<P>(c) If such defaults as defined in paragraphs (a) and (b) of this section continue for a period of 30 days, the lender shall be entitled to receive the benefits of insurance hereinafter provided. 


</P>
</DIV8>


<DIV8 N="§ 232.840" NODE="24:2.1.1.2.15.4.184.7" TYPE="SECTION">
<HEAD>§ 232.840   Date of default.</HEAD>
<P>In computing loan insurance benefits, the date of default shall be considered as: 
</P>
<P>(a) The date of the lender's acceleration of the debt because of the borrower's uncorrected failure to perform a covenant or obligation under the note or security instrument; or 
</P>
<P>(b) The date of the first failure to make a monthly payment which subsequent payments by the borrower are insufficient to cover when applied to the overdue monthly payments in the order in which they become due. 


</P>
</DIV8>


<DIV8 N="§ 232.850" NODE="24:2.1.1.2.15.4.184.8" TYPE="SECTION">
<HEAD>§ 232.850   Notice of default.</HEAD>
<P>(a) If the default is not cured within the 30 day grace period, as defined in § 232.830(c), the lender shall, within 30 days thereafter, notify the Commissioner in writing of such default. 
</P>
<P>(b) The lender shall give notice in writing to the Commissioner of the failure of the borrower to comply with any covenant or obligation under the security instrument or note regardless of the fact that the lender may not have elected to accelerate the debt. 


</P>
</DIV8>


<DIV8 N="§ 232.860" NODE="24:2.1.1.2.15.4.184.9" TYPE="SECTION">
<HEAD>§ 232.860   Commissioner's right to require acceleration.</HEAD>
<P>Upon receipt of notice of the failure of the borrower to comply with any covenant or obligation under the security instrument or note, or otherwise being apprised thereof, the Commissioner may require the lender to accelerate payment of the outstanding principal balance due. 


</P>
</DIV8>


<DIV8 N="§ 232.865" NODE="24:2.1.1.2.15.4.184.10" TYPE="SECTION">
<HEAD>§ 232.865   Election by lender.</HEAD>
<P>Where a real estate mortgage, or other security instrument has been used to secure the payment of a loan made under the provisions of this subpart and subpart C of this part, the lender may either elect to assign the loan to the Commissioner in exchange for the payment of insurance benefits or may exercise its rights under the note and security instrument in lieu of making a claim for insurance benefits. If the lender elects the latter course, the Commissioner shall be so notified and the contract of insurance shall be deemed terminated upon the date of receipt of such notification. 


</P>
</DIV8>


<DIV8 N="§ 232.875" NODE="24:2.1.1.2.15.4.184.11" TYPE="SECTION">
<HEAD>§ 232.875   Maximum claim period.</HEAD>
<P>Notice of intention to file claim on a form prescribed by the Commissioner shall be filed within 45 days after the lender becomes eligible for the benefits of the loan insurance, or within such later time as may be agreed upon by the Commissioner in writing. 


</P>
</DIV8>


<DIV8 N="§ 232.880" NODE="24:2.1.1.2.15.4.184.12" TYPE="SECTION">
<HEAD>§ 232.880   Items to be delivered on submitting claim.</HEAD>
<P>Within 30 days after the filing of the notice of intention to file claim, or within such further period as may be agreed upon by the Commission in writing, the lender shall deliver to the Commissioner: 
</P>
<P>(a) The fiscal data pertaining to the loan transactions; 
</P>
<P>(b) Receipts covering all disbursements as required by the fiscal data form; 
</P>
<P>(c) The original note and any security instrument or instruments which shall be assigned to the Commissioner without recourse or warranty, except that the lender must warrant that no act or omission of the lender has impaired the validity and priority of such security instrument or instruments, that the security instrument or instruments are prior to all mechanics' and material-men's liens filed of record subsequent to the recording of such security instrument or instruments regardless of whether such liens attached prior to such recording date, and prior to all liens and encumbrances which may have attached or defects which may have arisen subsequent to the recording of such security instrument or instruments, except such liens or other matters as may be approved by the Commissioner, that the amount stated in the instrument of assignment is actually due and owing under the security instrument or instruments, that there are no offsets or counterclaims thereto, and that the lender has a good right to assign such note and security instrument or instruments; 
</P>
<P>(d) The assignment to the Commissioner of all rights and interests arising under the note and security instrument or instruments so in default and all claims of the lender against the borrower or others arising out of the loan transaction; 
</P>
<P>(e) All policies of title or other insurance or surety bonds, or other guarantees and any and all claims thereunder; including evidence satisfactory to the Commissioner that the original title coverage has been extended to include the assignment of the note and security instrument or instruments to the Commissioner; 
</P>
<P>(f) All records, ledger cards, documents, books, papers and accounts relating to the loan transaction; 
</P>
<P>(g) Any additional information or data which the Commissioner may require; 
</P>
<P>(h) The following cash items, held in connection with the loan insured under this subpart, shall either be retained by the lender or delivered to the Commissioner in accordance with instructions to be issued by the Commissioner at the time the insurance claim is filed. 
</P>
<P>(1) Any cash held by the lender or its agents or to which it is entitled including deposits made for the account of the borrower and which have not been applied in reduction of the principal of the loan indebtedness. 
</P>
<P>(2) All funds held by the lender for the account of the borrower received pursuant to any other agreement. 


</P>
</DIV8>


<DIV8 N="§ 232.885" NODE="24:2.1.1.2.15.4.184.13" TYPE="SECTION">
<HEAD>§ 232.885   Insurance benefits.</HEAD>
<P>(a) <I>Method of payment.</I> Payment of an insurance claim shall be made in cash, in debentures, or in a combination of both, as determined by the Commissioner either at, or prior to, the time of payment.
</P>
<P>(b) <I>Amount of payment.</I> Upon an acceptable assignment of the note and security instrument, the Commissioner shall pay the claim of the lender in an amount equal to the unpaid principal balance of the loan as of the date of default determined as follows: 
</P>
<P>(1) By adding the following items: 
</P>
<P>(i) Any accrued interest due as of the date of execution of the assignment of the loan to the Commissioner. 
</P>
<P>(ii) Any advances approved by the Commissioner made previously by the lender under the provisions of the note or security instrument or instruments. 
</P>
<P>(iii) Reimbursement for such reasonable collection costs, court costs, and attorney's fees as may be approved by the Commissioner. 
</P>
<P>(iv) Any loan insurance premiums paid after default. 
</P>
<P>(v) If payment is made in cash, an amount equivalent to the debenture interest which would have been earned thereon, as of the date such cash payment is made, except when the lender fails to meet any one of the applicable requirements of §§ 232.850, 232.875, and 232.880, within the specified time and in a manner satisfactory to the Commissioner (or within such further time as the Commissioner may approve in writing), the interest allowance in such cash payment shall be computed only to the date on which the particular required action should have been taken or to which it was extended. 
</P>
<P>(2) By deducting from the total of the items computed under paragraph (b)(1) of this section the following items: 
</P>
<P>(i) Any amount received by the lender on account of the loan after the date of default. 
</P>
<P>(ii) Any net income received by the lender from the property covered by the note or security instrument and not applied to prior debts held by that lender. 
</P>
<P>(iii) The sum of the cash items retained by the lender pursuant to § 232.880(h)(i)(ii). 
</P>
<CITA TYPE="N">[39 FR 28970, Aug. 12, 1974, as amended at 80 FR 51468, Aug. 25, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 232.890" NODE="24:2.1.1.2.15.4.184.14" TYPE="SECTION">
<HEAD>§ 232.890   Characteristics of debentures.</HEAD>
<P>Debentures issued in settlement of insurance claims under this subpart shall have the same characteristics and the same requirements for registration and redemption as those issued pursuant to subpart B of this part except that debentures shall bear interest at the rate in effect as of the date the commitment was issued, or as of the date the loan was first endorsed for insurance, whichever rate is higher and shall mature 10 years from the date of issue which date shall be the date of execution of the assignment of the loan to the Commissioner. 


</P>
</DIV8>


<DIV8 N="§ 232.893" NODE="24:2.1.1.2.15.4.184.15" TYPE="SECTION">
<HEAD>§ 232.893   Cash adjustment.</HEAD>
<P>Any difference of less than $50 between the amount of debentures to be issued to the lender and the total amount of the lender's claim, as approved by the Commissioner, may be adjusted by the issuance of a check in payment thereof.
</P>
<CITA TYPE="N">[59 FR 49816, Sept. 30, 1994]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="185" NODE="24:2.1.1.2.15.4.185" TYPE="SUBJGRP">
<HEAD>Assignments</HEAD>


<DIV8 N="§ 232.895" NODE="24:2.1.1.2.15.4.185.16" TYPE="SECTION">
<HEAD>§ 232.895   Assignment of insured loans.</HEAD>
<P>(a) An insured loan may be transferred only to a transferee who is a lender approved by the Commissioner. Upon such transfer and the assumption by the transferee of all obligations under the contract of insurance the transferor shall be released from its obligations under the contract of insurance. 
</P>
<P>(b) The contract of insurance shall terminate with respect to loans described in paragraph (a) of this section upon the happening of either of the following events: 
</P>
<P>(1) The transfer or pledge of the insured loan to any person, firm, or corporation, public or private, other than an approved lender. 
</P>
<P>(2) The disposal by a lender of any partial interest in the insured loan to other than an approved lender. 


</P>
</DIV8>

</DIV7>


<DIV7 N="186" NODE="24:2.1.1.2.15.4.186" TYPE="SUBJGRP">
<HEAD>Extension of Time</HEAD>


<DIV8 N="§ 232.897" NODE="24:2.1.1.2.15.4.186.17" TYPE="SECTION">
<HEAD>§ 232.897   Actions to be taken by lender.</HEAD>
<P>With respect to any action required of the lender within a period of time prescribed by this subpart, the Commissioner may extend such period. 


</P>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="E" NODE="24:2.1.1.2.15.5" TYPE="SUBPART">
<HEAD>Subpart E—Insurance of Mortgages Covering Existing Projects</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>53 FR 33735, Aug. 31, 1988, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 232.901" NODE="24:2.1.1.2.15.5.187.1" TYPE="SECTION">
<HEAD>§ 232.901   Mortgages covering existing projects are eligible for insurance.</HEAD>
<P>A mortgage executed in connection with the purchase or refinancing of an existing project without substantial rehabilitation may be insured under this subpart pursuant to section 223(f) of the Act. A mortgage insured pursuant to this subpart shall meet all other requirements of this part except as expressly modified by this subpart. 
</P>
<CITA TYPE="N">[59 FR 61228, Nov. 29, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 232.902" NODE="24:2.1.1.2.15.5.187.2" TYPE="SECTION">
<HEAD>§ 232.902   Eligible project.</HEAD>
<P>Existing projects (with such repairs and improvements as are determined by the Commissioner to be necessary) are eligible for insurance under this subpart. The project must not require substantial rehabilitation and three years must have elapsed from the date of completion of construction or substantial rehabilitation of the project, or from the beginning of occupancy, whichever is later, to the date of application for insurance. In addition, the project must have attained sustaining occupancy (occupancy that produces income sufficient to pay operating expenses, annual debt service and reserve fund for replacement requirements) as determined by the Commissioner, before endorsement of the project for insurance; alternatively, the borrower must provide an operating deficit fund at the time of endorsement for insurance, in an amount, and under an agreement, approved by the Commissioner. 
</P>
<CITA TYPE="N">[59 FR 61228, Nov. 29, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 232.903" NODE="24:2.1.1.2.15.5.187.3" TYPE="SECTION">
<HEAD>§ 232.903   Maximum mortgage limitations.</HEAD>
<P>Notwithstanding the maximum mortgage limitations set forth in 24 CFR 200.15, a mortgage within the limits set forth in this section shall be eligible for insurance under this subpart.
</P>
<P>(a) <I>Value limit.</I> The mortgage shall involve a principal obligation of not in excess of eighty-five percent (85%) for a profit motivated borrower (ninety percent (90%) for a private nonprofit borrower) of the Commissioner's estimate of the value of the project, including major movable equipment to be used in its operation and any repairs and improvements. The Commissioner's estimate of value shall result from consideration of:
</P>
<P>(1) Estimated market value of the Project by capitalization, 
</P>
<P>(2) Estimated market value of the Project by direct sales comparison, and 
</P>
<P>(3) Total estimated replacement cost of the Project.
</P>
<P>In the event the mortgage is secured by a leasehold estate rather than a fee simple estate, the value of the property described in the mortgage shall be the value of the leasehold estate (as determined by the Commissioner) which shall in all cases be less than the value of the property in fee simple.
</P>
<P>(b) <I>Debt service limit.</I> The insured mortgage shall involve a principal obligation not in excess of the amount that could be amortized by eighty-five percent (85%) for a profit motivated borrower (ninety percent (90%) for a private nonprofit borrower) of the net projected project income available for payment of debt service. Net projected Project income available for debt service shall be determined by reducing the Commissioner's estimated gross income for the Project by a vacancy and collection loss factor and by the cost of all estimated operating expenses, including deposits to the reserve for replacements and taxes.
</P>
<P>(c) <I>Project to be refinanced—additional limit.</I> (1) In addition to meeting the requirements of paragraphs (a) and (b) of this section, if the Project is to be refinanced by the insured mortgage, the maximum mortgage amount must not exceed the cost to refinance the existing indebtedness. For the purposes of this requirement:
</P>
<P>(i) The Project shall not have changed ownership subsequent to the date of application, or
</P>
<P>(ii) The Project shall have been sold to a purchaser who has an identity of interest with the seller (as defined by the Commissioner).
</P>
<P>(2) The cost to refinance the existing indebtedness will consist of the following items, the eligibility and amounts of which must be determined by the Commissioner:
</P>
<P>(i) The amount required to pay off the existing indebtedness;
</P>
<P>(ii) The amount of the initial deposit for the reserve fund for replacements;
</P>
<P>(iii) Reasonable and customary legal, organization, title, and recording expenses, including mortgagee fees under § 200.41;
</P>
<P>(iv) The estimated repair costs, if any;
</P>
<P>(v) Architect's and engineer's fees, municipal inspection fees, and any other required professional or inspection fees; and
</P>
<P>(vi) The amount of any long-term debt service reserve account required by the Commissioner pursuant to § 232.11.
</P>
<P>(d) <I>Project to be acquired—additional limit.</I> In addition to meeting the requirements of paragraphs (a) and (b) of this section, if the project is to be acquired by the borrower and the purchase price is to be financed with the insured mortgage, the maximum amount must not exceed 85 percent for a profit-motivated borrower and 90 percent for a private nonprofit borrower of the cost of acquisition as determined by the Commissioner. The cost of acquisition shall consist of the following items, to the extent that each item (except for paragraph (d)(1) of this section) is paid by the purchaser separately from the purchase price. The eligibility and amounts of these items must be determined in accordance with standards established by the Commissioner.
</P>
<P>(1) Purchase price is indicated in the purchase agreement;
</P>
<P>(2) An amount for the initial deposit to the reserve fund for replacements;
</P>
<P>(3) Reasonable and customary legal, organizational, title, and recording expenses, including mortgagee fees under § 200.41;
</P>
<P>(4) The estimated repair cost, if any;
</P>
<P>(5) Architect's and engineer's fees, municipal inspection fees, and any other required professional or inspection fees; and
</P>
<P>(6) The amount of any long-term debt service reserve account required by the Commissioner pursuant to § 232.11.
</P>
<CITA TYPE="N">[53 FR 33735, Aug. 31, 1988, as amended at 59 FR 61228, Nov. 29, 1994; 77 FR 55136, Sept. 7, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 232.904" NODE="24:2.1.1.2.15.5.187.4" TYPE="SECTION">
<HEAD>§ 232.904   Term of the mortgage.</HEAD>
<P>Notwithstanding the provisions of § 232.27, a mortgage insured under this subpart must have a maturity satisfactory to the Commissioner which is not less than 10 years, nor more than the lesser of 35 years or 75 percent of the estimated remaining economic life of the physical improvements. The term of the mortgage will begin on the first day of the second month following the date of endorsement of the mortgage for insurance. 


</P>
</DIV8>


<DIV8 N="§ 232.905" NODE="24:2.1.1.2.15.5.187.5" TYPE="SECTION">
<HEAD>§ 232.905   Labor standards and prevailing wage requirements.</HEAD>
<P>The provisions of §§ 232.70-232.74 of this part shall not apply to mortgages insured under commitments issued in accordance with this subpart.


</P>
</DIV8>


<DIV8 N="§ 232.906" NODE="24:2.1.1.2.15.5.187.6" TYPE="SECTION">
<HEAD>§ 232.906   Processing of applications and required fees.</HEAD>
<P>(a) <I>Processing of applications.</I> The local HUD Office will determine whether participation in a preapplication conference is required as a condition to submission of an initial application for either a conditional or firm commitment. After the preapplication conference an application for a conditional or firm commitment for insurance of a mortgage on a project shall be submitted by the sponsor and an approved mortgagee. Such application shall be submitted to the local HUD Office on a HUD approved form. An application may, at the option of the applicant, be submitted for a firm commitment omitting the conditional commitment stage. No application shall be considered unless accompanied by all exhibits required by the form and program handbooks. An application may be made for a commitment which provides for the insurance of the mortgage upon completion of any improvements or for a commitment which provides, in accordance with standards established by the Commissioner, for the completing of specified repairs and improvements after endorsement. 
</P>
<P>(b) <I>Application fee—conditional commitment.</I> An application-commitment fee of $3 per thousand dollars of the requested mortgage amount shall accompany an application for conditional commitment. 
</P>
<P>(c) <I>Application fee—firm commitment.</I> An application for firm commitment shall be accompanied by an application-commitment fee of $5 per thousand dollars of the requested mortgage amount to be insured less any amount previously received for a conditional commitment. 
</P>
<P>(d) <I>Inspection fee.</I> Where an application provides for the completion of repairs, replacements and/or improvements (repairs), the Commissioner will charge an inspection fee equal to one percent (1%) of the cost of the repairs. However, where the Commissioner determines the cost of repairs is minimal, the Commissioner may establish a minimum inspection fee that exceeds one percent of the cost of repairs and can periodically increase or decrease this minimum fee. 
</P>
<P>(e) <I>Cross-reference.</I> The provisions of paragraphs (f)(1) (Fee on increases), (g) (Reopening of expired commitments), (h) (Transfer fee), (i) (Refund of fees), and (j) (Fees not required) of § 200.40 of this chapter apply to applications submitted under subpart E of this part. 
</P>
<CITA TYPE="N">[61 FR 14416, Apr. 1, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:2.1.1.2.15.6" TYPE="SUBPART">
<HEAD>Subpart F—Eligible Operators and Facilities and Restrictions on Fund Distributions</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>77 FR 55137, Sept. 7, 2012, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 232.1001" NODE="24:2.1.1.2.15.6.187.1" TYPE="SECTION">
<HEAD>§ 232.1001   Scope.</HEAD>
<P>This subpart establishes requirements applicable to the operators of healthcare facilities and the facilities under this part.


</P>
</DIV8>


<DIV8 N="§ 232.1003" NODE="24:2.1.1.2.15.6.187.2" TYPE="SECTION">
<HEAD>§ 232.1003   Eligible operator.</HEAD>
<P>Operator shall be a single asset entity acceptable to the Commissioner, and shall possess the powers necessary and incidental to operating the healthcare facility, except that the Commissioner may approve a non-single asset entity under such circumstances, terms, and conditions determined and specified as acceptable to the Commissioner. A master tenant under a master lease approved by the Commissioner who has subleased the healthcare facility to an operator is not an Operator.


</P>
</DIV8>


<DIV8 N="§ 232.1005" NODE="24:2.1.1.2.15.6.187.3" TYPE="SECTION">
<HEAD>§ 232.1005   Treatment of project operating accounts.</HEAD>
<P>All accounts deriving from the operation of the property, including operator accounts and including all funds received from any source or derived from the operation of the facility, are project assets subject to control under the insured mortgage loan's transactional documents, including, without limitation, the operator's regulatory agreement. Except as otherwise permitted or approved by HUD, funds generated by the operation of the healthcare facility shall be deposited into a federally insured bank account, provided that an account held in an institution acceptable to Ginnie Mae may have a balance that exceeds the amount to which such insurance is limited. Any of the owner's project-related funds shall be deposited into a federally insured bank account in the name of the borrower provided that an account held in an institution acceptable to Ginnie Mae may have a balance that exceeds the amount to which such insurance is limited.


</P>
</DIV8>


<DIV8 N="§ 232.1007" NODE="24:2.1.1.2.15.6.187.4" TYPE="SECTION">
<HEAD>§ 232.1007   Operating expenses.</HEAD>
<P>Goods and services purchased or acquired in connection with the project shall be reasonable and necessary for the operation or maintenance of the project, and the costs of such goods and services incurred by the borrower or operator shall not exceed amounts normally paid for such goods or services in the area where the services are rendered or the goods are furnished, except as otherwise permitted or approved by HUD.


</P>
</DIV8>


<DIV8 N="§ 232.1009" NODE="24:2.1.1.2.15.6.187.5" TYPE="SECTION">
<HEAD>§ 232.1009   Financial reports.</HEAD>
<P>(a) The borrower must provide HUD and lender an audited annual financial report based on an examination of its books and records, in such form and substance required by HUD in accordance with 24 CFR 5.801 and 24 CFR 200.36.
</P>
<P>(b) Operators must submit financial statements quarterly within 60 calendar days of the date of the end of each fiscal quarter, setting forth both quarterly and fiscal year-to-date information, except that the final fiscal year end quarter must be submitted to HUD within 90 calendar days of the end of the quarter, in accordance with 24 CFR 5.801(c)(4), or within such additional time as may be provided by the Commissioner for good cause shown. HUD may direct that such forms be submitted to the lender or another third party in addition to or in lieu of submission to HUD.
</P>
<CITA TYPE="N">[79 FR 55362, Sept. 16, 2014]


</CITA>
</DIV8>


<DIV8 N="§ 232.1011" NODE="24:2.1.1.2.15.6.187.6" TYPE="SECTION">
<HEAD>§ 232.1011   Management agents.</HEAD>
<P>(a) An operator or borrower may, with the prior written approval of HUD, execute a management agent agreement setting forth the duties and procedures for matters related to the management of the project. The management agent, each initial management agent agreement with that agent, and any amendments to such management agent agreements deemed material by the Commissioner must be acceptable to HUD and approved in writing by HUD.
</P>
<P>(b) An operator or borrower may not enter into any agreement that provides for a management agent to have rights to or claims on funds owed to the operator.


</P>
</DIV8>


<DIV8 N="§ 232.1013" NODE="24:2.1.1.2.15.6.187.7" TYPE="SECTION">
<HEAD>§ 232.1013   Restrictions on deposit, withdrawal, and distribution of funds, and repayment of advances.</HEAD>
<P>(a) <I>Deposit of funds.</I> An operator must deposit all revenue the operator receives directly or indirectly in connection with the operation of the healthcare facility in an account with a financial institution whose deposits are insured by an agency of the Federal Government, <I>provided</I> that an account held in an institution acceptable to Ginnie Mae may have a balance that exceeds the amount to which such insurance is limited.
</P>
<P>(b) <I>Withdrawal of funds.</I> If a quarterly/year-to-date financial statement demonstrates negative working capital as defined by HUD, or if the operator fails to timely submit such statement, then until a current quarterly/year-to-date financial statement demonstrates positive working capital or until otherwise authorized by HUD, the operator may not distribute, advance, or otherwise use funds attributable to that facility for any purpose other than operating that facility.


</P>
</DIV8>


<DIV8 N="§ 232.1015" NODE="24:2.1.1.2.15.6.187.8" TYPE="SECTION">
<HEAD>§ 232.1015   Prompt notification to HUD and mortgagee of circumstances placing the value of the security at risk.</HEAD>
<P>(a) HUD and the mortgagee shall be informed of any notification of any failure to comply with governmental requirements including the following:
</P>
<P>(1) The licensed operator of a project shall promptly provide HUD and the mortgagee with a copy of any notification that has placed the licensure, a provider funding source, and/or the ability to admit new residents at risk, and any responses to those notices, provided that HUD may determine certain information to be exempt from this requirement based upon severity level. With respect to the requirements of this section:
</P>
<P>(i) The operator shall deliver to HUD and the mortgagee electronically, within 2 business days after the date of receipt, unless a longer time period is approved by HUD, copies of any and all notices, reports, surveys, and other correspondence (regardless of form) received by the operator from any governmental authority that includes any statement, finding, or assertion that:
</P>
<P>(A) The operator or the project is or may be in violation of (or default under) any of the permits and approvals or any governmental requirements applicable to the operation of the facility;
</P>
<P>(B) Any of the permits and approvals is to be terminated, limited in any way, or not renewed;
</P>
<P>(C) Any civil money penalty (other than a de minimis amount) is being imposed with respect to the facility; or
</P>
<P>(D) The operator or the project is subject to any governmental investigation or inquiry involving fraud.
</P>
<P>(ii) The operator shall also deliver to HUD and the mortgagee, simultaneously with delivery to any governmental authority, any and all responses given by or on behalf of the operator to any of the foregoing and shall provide to HUD and the mortgagee, promptly upon request, such additional information relating to any of the foregoing as HUD or the mortgagee may request. The receipt by HUD and/or the mortgagee of notices, reports, surveys, correspondence, and other information shall not in any way impose any obligation or liability on HUD, the mortgagee, or their respective agents, representatives, or designees to take (or refrain from taking) any action; and HUD, the mortgagee, and their respective agents, representatives, and designees shall have no liability for any failure to act thereon or as a result thereof.
</P>
<P>(2) The operator shall provide additional and ongoing information as requested by the borrower, mortgagee, or HUD pertaining to matters related to that risk. Controlling documents between or among any of the parties may provide further requirements with respect to such notification and communication.
</P>
<P>(b) This section is applicable to all operators as of October 9, 2012.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="234" NODE="24:2.1.1.2.16" TYPE="PART">
<HEAD>PART 234—CONDOMINIUM OWNERSHIP MORTGAGE INSURANCE 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1715b and 1715y; 42 U.S.C. 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>36 FR 24628, Dec. 22, 1971, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:2.1.1.2.16.1" TYPE="SUBPART">
<HEAD>Subpart A—Eligibility Requirements—Individually Owned Units</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 60161, Nov. 26, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 234.1" NODE="24:2.1.1.2.16.1.187.1" TYPE="SECTION">
<HEAD>§ 234.1   Cross-reference.</HEAD>
<P>(a) All of the provisions of subpart A of part 203 of this chapter concerning eligibility requirements of mortgages covering one- to four-family dwellings under section 203 of the National Housing Act (12 U.S.C. 1709) apply to mortgages on individually owned units insured under section 234 of the National Housing Act (12 U.S.C. 1715y), except the following provisions:
</P>
<EXTRACT>
<FP>Sec.
</FP>
<FP-2>203.12 Mortgage insurance on proposed or new construction.
</FP-2>
<FP-2>203.14 Builders' warranty.
</FP-2>
<FP-2>203.18a Solar energy system.
</FP-2>
<FP-2>203.18c One-time or up-front mortgage insurance premium excluded from limitations on maximum mortgage amounts.
</FP-2>
<FP-2>203.38 Location of dwelling.
</FP-2>
<FP-2>203.42 Rental properties.
</FP-2>
<FP-2>203.43c Eligibility of mortgages involving a dwelling unit in a cooperative housing development.
</FP-2>
<FP-2>203.43d Eligibility of mortgages in certain communities.
</FP-2>
<FP-2>203.43f Eligibility of mortgages covering manufactured homes.
</FP-2>
<FP-2>203.43g Eligibility of mortgages in certain communities.
</FP-2>
<FP-2>203.43h Eligibility of mortgages on Indian land insured pursuant to section 248 of the National Housing Act.
</FP-2>
<FP-2>203.43i Eligibility of mortgages on Hawaiian Home Lands insured pursuant to section 247 of the National Housing Act.
</FP-2>
<FP-2>203.43j Eligibility of mortgages on Allegany Reservation of Seneca Nation of Indians.
</FP-2>
<FP-2>203.50 Eligibility of rehabilitation loans.</FP-2></EXTRACT>
<P>(b) For the purposes of this subpart, all references in part 203 of this chapter to section 203 of the Act shall be construed to refer to section 234 of the Act. 
</P>
<CITA TYPE="N">[61 FR 60161, Nov. 26, 1996, as amended at 64 FR 56111, Oct. 15, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 234.2" NODE="24:2.1.1.2.16.1.187.2" TYPE="SECTION">
<HEAD>§ 234.2   Savings clause.</HEAD>
<P>HUD's regulations at § 203.43b of this chapter govern approval of real estate consisting of a one-family unit in a multifamily project, and an undivided interest in the common areas and facilities which serve the project, except where the project has a blanket mortgage insured under section 234(d) of the National Housing Act, 12 U.S.C. 1715y(d) (section 234(d)). Where the project has a blanket mortgage insured by HUD under section 234(d), this 24 CFR part 234 applies to the approval of a one-family unit in such project.
</P>
<CITA TYPE="N">[84 FR 41877, Aug. 15, 2019]




</CITA>
</DIV8>


<DIV8 N="§ 234.3" NODE="24:2.1.1.2.16.1.187.3" TYPE="SECTION">
<HEAD>§ 234.3   Definitions.</HEAD>
<P>The terms <I>Act, Beginning of amortization, Commissioner, FHA, Insured Mortgage, Mortgage, Mortgagee, Mortgagor,</I> and <I>State,</I> as used in this part, are defined in § 203.251 of this chapter. The following terms, as used in this part, are defined as follows: 
</P>
<P><I>Bona fide tenants' organization</I> means an association of tenants formed by the tenants to promote their interests in a particular project, with membership in the association open to each tenant, and all requirements of the association applying equally to every tenant. 
</P>
<P><I>Common areas and facilities</I> means those areas of the project and of the property upon which it is located that are for the use and enjoyment of the owners of family units located in the project. The areas may include the land, roofs, main walls, elevators, staircases, lobbies, halls, parking space and community and commercial facilities. 
</P>
<P><I>Conversion</I> means the date on which all documents necessary to create a condominium under state law (and under local law, where applicable) have been recorded, except that in the case of the Commonwealth of Puerto Rico, <I>conversion</I> is defined as the date on which the legal documents (which must be in compliance with applicable law) to create a condominium are presented for inscription (<I>i.e.,</I> recordation) to the Commonwealth Office of the Property Registry.
</P>
<P><I>Family unit</I> means a one-family unit including the undivided interest in the common areas and facilities, and such restricted common areas and facilities as may be designated. 
</P>
<P><I>Project</I> means a structure or structures containing four or more family units. 
</P>
<P><I>Project mortgage</I> means a mortgage which is or has been insured under any of the FHA multifamily housing programs, other than sections 213(a)(1) and 213(a)(2) of the Act (12 U.S.C. 1715e). 
</P>
<P><I>Restricted common areas and facilities</I> means those areas and facilities restricted to a particular family unit or number of family units. 
</P>
<P><I>Tenant</I> means the occupant(s) named in the lease or rental agreement of a housing unit in a project as of the date the condominium conversion documents are properly filed for the project, or as of the date on which the occupants are notified by management of intent to convert the project to a condominium, whichever is earlier. 
</P>
<CITA TYPE="N">[61 FR 60161, Nov. 26, 1996, as amended at 68 FR 6597, Feb. 7, 2003]


</CITA>
</DIV8>


<DIV8 N="§ 234.17" NODE="24:2.1.1.2.16.1.187.4" TYPE="SECTION">
<HEAD>§ 234.17   Mortgagor and mortgagee requirements for maintaining flood insurance coverage.</HEAD>
<P>The maintenance of flood insurance coverage on the project by the condominium association will satisfy the requirements of § 203.16a of this chapter if such coverage protects the interest of the mortgagor in the family unit. For this purpose, “the interest of the mortgagor” is defined as insurance coverage equal to the replacement cost of the project less land costs. 


</P>
</DIV8>


<DIV8 N="§ 234.26" NODE="24:2.1.1.2.16.1.187.5" TYPE="SECTION">
<HEAD>§ 234.26   Project requirements.</HEAD>
<P>No mortgage shall be eligible for insurance unless the following requirements are met: 
</P>
<P>(a) <I>Location of family unit.</I> The family unit shall be located in a project that the Commissioner determines to be acceptable. 
</P>
<P>(b) <I>Plan of condominium ownership.</I> The project in which the unit is located shall have been committed to a plan of condominium ownership by a deed, or other recorded instrument, that is acceptable to the Commissioner. In the case of condominium documents in the Commonwealth of Puerto Rico, the Commissioner will accept documents presented for inscription (recordation) to the Commonwealth Office of the Property Registry so long as the mortgagor obtains a title insurance policy that reflects the condominium regime. 
</P>
<P>(c) <I>Releases.</I> The family unit shall have been released from any mortgage covering the project or any part of the project. 
</P>
<P>(d) <I>Certificate by mortgagee.</I> The mortgagee shall certify that: 
</P>
<P>(1) The deed of the family unit and the deed or other recorded instrument committing the project to a plan of condominium ownership must comply with legal requirements of the jurisdiction. In the case of condominium documents in the Commonwealth of Puerto Rico, the Department will accept documents presented for inscription (recordation) to the Commonwealth Office of Property Registry for certification purposes so long as the mortgagor obtains a title insurance policy that reflects the condominium regime. 
</P>
<P>(2) The mortgagor has good marketable title to the family unit, subject only to a mortgage that is a valid first lien on the family unit. 
</P>
<P>(3) The family unit is assessed and subject to assessment for taxes pertaining only to that unit. 
</P>
<P>(e) <I>Conditions and provisions.</I> (1) The Commissioner may require such conditions and provisions as the Commissioner determines are necessary for the protection of consumers and the public interest. 
</P>
<P>(2) An application for mortgage insurance of a unit will not be approved if approval would result in less than 80 percent of the FHA-insured mortgages covering units in the project being occupied by mortgagors or co-mortgagors as a principal residence or a secondary residence (as these terms are defined in § 203.18 of this chapter). 
</P>
<P>(3) In addition to the other requirements of this section, in order for a project to be acceptable to the Secretary, at least 51 percent of all family units (including units not covered by FHA-insured mortgages) must be occupied by the owners as a principal residence or a secondary residence (as these terms are defined in § 203.18 of this chapter), or must have been sold to owners who intend to meet this occupancy requirement. 
</P>
<P>(f) <I>Limitations on conversion of rental housing to condominium use.</I> With respect to a family unit in any project that was converted from rental housing, no insurance will be provided under this section unless: 
</P>
<P>(1) The conversion occurred more than one year before the application for insurance; or 
</P>
<P>(2) The mortgagor or comortgagor was a tenant of a unit in the rental housing project converted to condominium use; or 
</P>
<P>(3) The conversion of the property is sponsored by a bona fide tenants' organization representing a majority of the households in the project. 
</P>
<P>(g) <I>Projects covered by an insured or Secretary-held mortgage.</I> In addition to the requirements contained in paragraphs (a) through (f) of this section, projects which are covered by an FHA-insured project mortgage, or by a mortgage held by the Secretary, must be in compliance with a conversion plan approved by the Commissioner. The conversion plan shall provide for: 
</P>
<P>(1) The termination by payment in full of the mortgage or by voluntary termination of the insurance contract covering any HUD/FHA-insured or Secretary-held mortgage on the project, unless the Commissioner determines that the Commissioner's interests, and those of the individuals purchasing the family units, are best served by not requiring the termination of the insurance or payment in full of the mortgage. 
</P>
<P>(2) On release of a family unit from the project mortgage, payment shall be made on the outstanding balance of the project mortgage in an amount equal to the share of the balance determined by HUD to be attributable to the family unit. 
</P>
<P>(3) The project mortgagee shall certify that, notwithstanding any provisions of the mortgage covering prepayment, no charge is contemplated or has been collected for prepayment in full of the project mortgage. 
</P>
<P>(h) <I>Projects not covered by an insured or Secretary-held mortgage.</I> In addition to the requirements contained in paragraphs (a) through (f) of this section, projects which are not covered by an insured project mortgage or by a Secretary-held mortgage and which have not been approved by the Department of Veterans Affairs for its guaranty, insurance, or direct loan programs shall meet the requirements of this paragraph. Except with the approval of the Commissioner for the purpose of constructing or converting the project in phases or stages, any special right of the declarant (as declarant and not as a unit owner) to do any or all of the following must have expired or must have been waived in a recorded instrument: 
</P>
<P>(1) Add land or units to the condominium; 
</P>
<P>(2) Convert common elements into additional units or limited common elements; 
</P>
<P>(3) Withdraw land from the condominium; 
</P>
<P>(4) Use easements through the common elements for the purpose of making improvements within the condominium or within any adjacent land; or 
</P>
<P>(5) Convert a unit into two or more units, common elements, or into two or more units and common elements. 
</P>
<P>(i) Notwithstanding the requirements of paragraphs (a) through (h) of this section, a loan on a single unit in an unapproved condominium project (spot loan) may qualify for mortgage insurance under this part. 
</P>
<P>(1) The project must meet the following criteria: 
</P>
<P>(i) All units, common elements, and facilities—including those that are part of any master association—must have been completed, and the project cannot be subject to additional phasing or annexation. The project must provide for undivided ownership of common areas by unit owners; 
</P>
<P>(ii) Control of the owners' association must have been turned over to the unit purchasers, and the unit purchasers must have been in control for at least one year; 
</P>
<P>(iii) At least 90 percent of the total units in the project must have been conveyed to the unit purchasers, and at least 51 percent of the total units in the project must have been conveyed to purchasers who are occupying the units as their principal residences or second homes. No single entity (the same individual, investor group, partnership, or corporation) may own more than 10 percent of the total units in the project; 
</P>
<P>(iv) The units in the project must be owned in fee simple or be an eligible leasehold interest, as described in § 234.65, and the unit owners must have sole ownership interest in, and right to the use of, the project's facilities, common elements, and limited common elements including parking, recreational facilities, etc.; 
</P>
<P>(v) The project must be covered by hazard, flood, and liability insurance acceptable to the Commissioner; 
</P>
<P>(vi) For projects with more than 30 units, no more than 10 percent of the total units in the project may be encumbered by FHA-insured mortgages. (If endorsement would result in more than 10 percent of the units in such a project being encumbered by FHA-insured mortgages, the condominium project must be approved under paragraphs (a) through (h) of this section.) For projects with between 5 and 30 units inclusive, no more than 20 percent of the total units may be encumbered by FHA-insured mortgages. For projects with four units, only one unit may be encumbered by an FHA-insured mortgage under the spot loan procedure of this paragraph (i); and 
</P>
<P>(vii) The assumability provisions of § 234.66 must be satisfied. 
</P>
<P>(2) Lenders must perform an underwriting analysis and certify that a project satisfies the eligibility criteria for a spot loan in a condominium project that has not been approved by FHA. Lenders may use information from the appraiser, the owners' association, the management company, the real estate broker, and the project developer, but the lender must ensure the accuracy of the information obtained from these sources. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0513)
</APPRO>
<CITA TYPE="N">[61 FR 60161, Nov. 26, 1996, as amended at 72 FR 16689, Apr. 4, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 234.54" NODE="24:2.1.1.2.16.1.187.6" TYPE="SECTION">
<HEAD>§ 234.54   Eligibility of assigned mortgages and mortgages covering acquired property.</HEAD>
<P>The Commissioner may insure under this part, without regard to any limitation upon eligibility contained in this subpart (except that the property must be located in a condominium project approved under § 234.26), any mortgage assigned to the Commissioner in connection with payment under a contract of mortgage insurance, or executed in connection with a sale by the Commissioner of any property acquired in the settlement of an insurance claim under any section or title of the Act. 


</P>
</DIV8>


<DIV8 N="§ 234.63" NODE="24:2.1.1.2.16.1.187.7" TYPE="SECTION">
<HEAD>§ 234.63   Location of property.</HEAD>
<P>The mortgage, to be eligible for insurance, shall be on property located in a State, as defined in § 203.251 of this chapter, and not located on “Hawaiian home lands,” as that term is defined in section 247(d)(2) of the Act. 


</P>
</DIV8>


<DIV8 N="§ 234.65" NODE="24:2.1.1.2.16.1.187.8" TYPE="SECTION">
<HEAD>§ 234.65   Nature of title.</HEAD>
<P>A mortgage, to be eligible for insurance, shall be on a fee interest in, or on a leasehold interest in, a one-family unit in a project including an undivided interest in the common areas and facilities, and such restricted common areas and facilities as may be designated. To be eligible, a leasehold interest shall be under a lease for not less than 99 years which is renewable, or under a lease having a period of not less than 10 years to run beyond the maturity date of the mortgage. 


</P>
</DIV8>


<DIV8 N="§ 234.66" NODE="24:2.1.1.2.16.1.187.9" TYPE="SECTION">
<HEAD>§ 234.66   Free assumability; exceptions.</HEAD>
<P>For purposes of HUD's policy of free assumability with no restrictions, as provided in § 203.41 of this chapter, the definition of <I>Legal restrictions on conveyance</I> in § 203.41(a)(3) of this chapter does not include rights of first refusal held by a condominium association for a project approved by the Secretary under this subpart prior to September 10, 1993. 


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:2.1.1.2.16.2" TYPE="SUBPART">
<HEAD>Subpart B—Contract Rights and Obligations—Individually Owned Units</HEAD>


<DIV8 N="§ 234.251" NODE="24:2.1.1.2.16.2.187.1" TYPE="SECTION">
<HEAD>§ 234.251   Definitions.</HEAD>
<P>The definitions in § 203.251 of this chapter apply to this subpart. 
</P>
<CITA TYPE="N">[61 FR 60163, Nov. 26, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 234.255" NODE="24:2.1.1.2.16.2.187.2" TYPE="SECTION">
<HEAD>§ 234.255   Cross-reference.</HEAD>
<P>(a) <I>Provisions.</I> All of the provisions of §§ 203.251 through 203.436 of this chapter (part 203, subpart B) covering mortgages insured under section 203 of the National Housing Act shall apply to mortgages insured under section 234(c) of the National Housing Act except the following provisions:
</P>
<EXTRACT>
<FP>Sec. 
</FP>
<FP-2>203.258 Substitute mortgagors.
</FP-2>
<FP-2>203.259a Scope.
</FP-2>
<FP-2>203.280 One-time MIP.
</FP-2>
<FP-2>203.281 Calculation of one-time MIP.
</FP-2>
<FP-2>203.282 Mortgagee's late charge and interest.
</FP-2>
<FP-2>203.283 Refund of one-time MIP.
</FP-2>
<FP-2>203.357 Deed in lieu of foreclosure. 
</FP-2>
<FP-2>203.378 Property condition.
</FP-2>
<FP-2>203.379 Adjustment for damage or neglect. 
</FP-2>
<FP-2>203.380 Certificate of property condition. 
</FP-2>
<FP-2>203.389 Waived title objections. 
</FP-2>
<FP-2>203.420 Nature of Mutual Mortgage Insurance Fund. 
</FP-2>
<FP-2>203.421 Allocation of Mutual Mortgage Insurance Fund income or loss. 
</FP-2>
<FP-2>203.422 Right and liability under Mutual Mortgage Insurance Fund. 
</FP-2>
<FP-2>203.423 Distribution of distributive shares. 
</FP-2>
<FP-2>203.424 Maximum amount of distributive shares. 
</FP-2>
<FP-2>203.425 Finality of determination. 
</FP-2>
<FP-2>203.440 <I>et seq.</I> Insured home improvement loans.</FP-2></EXTRACT>
<P>(b) <I>References.</I> For the purposes of this subpart, all references in §§ 203.251 through 203.436 of this chapter (part 203, subpart B) to section 203 of the Act, one- to four-family, and the Mutual Mortgage Insurance Fund, shall be construed to refer to section 234 of the act, one-family unit, and the General Insurance Fund. The term <I>property</I> or <I>each family dwelling unit</I> as used in §§ 203.251 through 203.436 of this chapter (part 203, subpart B) shall be construed to include “the one-family unit and the undivided interest in the common areas and facilities as may be designated”. 
</P>
<CITA TYPE="N">[36 FR 24628, Dec. 22, 1971, as amended at 41 FR 42949, Sept. 29, 1976; 42 FR 29305, June 8, 1977; 48 FR 28807, June 23, 1983; 55 FR 34814, Aug. 24, 1990] 


</CITA>
</DIV8>


<DIV8 N="§ 234.256" NODE="24:2.1.1.2.16.2.187.3" TYPE="SECTION">
<HEAD>§ 234.256   Substitute mortgagors.</HEAD>
<P>(a) <I>Selling mortgagor.</I> The requirements for the selling mortgagor are set forth in § 203.258(a) of this chapter. 
</P>
<P>(b) <I>Purchasing mortgagor.</I> (1) If the dwelling is a principal or secondary place of residence, the requirements for the purchasing mortgagor are set forth in § 203.258(b)(1) of this chapter.
</P>
<P>(2) [Reserved]
</P>
<P>(c) <I>Applicability—current mortgagor.</I> Paragraph (b) of this section applies to the Commissioner's approval of a substitute mortgagor only if the mortgage executed by the original mortgagor met the conditions of § 203.258(c) of this chapter. 
</P>
<P>(d) <I>Applicability—earlier mortgagor.</I> The occupancy and similar requirements set forth in § 203.258(d) of this chapter apply to mortgages insured under subpart A of this part. 
</P>
<P>(e) <I>Direct endorsement.</I> Requirements for the direct endorsement program are set forth in § 203.258(f) of this chapter. 
</P>
<P>(f) <I>Substitute mortgagor</I> is defined in § 203.258(f) of this chapter. 
</P>
<CITA TYPE="N">[55 FR 34814, Aug. 24, 1990, as amended at 57 FR 38352, Dec. 9, 1992; 61 FR 60163, Nov. 26, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 234.259" NODE="24:2.1.1.2.16.2.187.4" TYPE="SECTION">
<HEAD>§ 234.259   Claim procedure—graduated payment mortgages.</HEAD>
<P>Section 203.436 of this chapter applies to mortgages under this subpart.
</P>
<CITA TYPE="N">[61 FR 60163, Nov. 26, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 234.260" NODE="24:2.1.1.2.16.2.187.5" TYPE="SECTION">
<HEAD>§ 234.260   Assignment of mortgage and certificate by mortgagee.</HEAD>
<P>In addition to the requirements of §§ 203.350 through 203.353 incorporated by reference, the mortgagee shall certify as to any changes in the plan of apartment ownership including the administration of the property. Any changes shall require FHA approval.
</P>
<CITA TYPE="N">[36 FR 24628, Dec. 21, 1971, as amended at 42 FR 29305, June 8, 1977]


</CITA>
</DIV8>


<DIV8 N="§ 234.262" NODE="24:2.1.1.2.16.2.187.6" TYPE="SECTION">
<HEAD>§ 234.262   Exception to deed in lieu of foreclosure.</HEAD>
<P>All of the provisions of § 203.357 of this chapter relating to acceptance of a deed in lieu of foreclosure shall apply to mortgages insured under this part only if the mortgagee establishes to the satisfaction of the Commissioner that there are no unpaid assessments owed the Association or Cooperative of Owners. 


</P>
</DIV8>


<DIV8 N="§ 234.265" NODE="24:2.1.1.2.16.2.187.7" TYPE="SECTION">
<HEAD>§ 234.265   Contents of deed and supporting documents.</HEAD>
<P>In addition to the requirements of § 203.367, incorporated by reference, the deed shall comply with the plan of apartment ownership. Any changes therein, including the administration of the property, shall require FHA approval. 


</P>
</DIV8>


<DIV8 N="§ 234.270" NODE="24:2.1.1.2.16.2.187.8" TYPE="SECTION">
<HEAD>§ 234.270   Condition of the multifamily structure.</HEAD>
<P>(a) When a family unit is conveyed or a mortgage is assigned to the Commissioner, the family unit and the common areas and facilities designated for the particular unit shall be undamaged by fire, flood, earthquake, tornado, or boiler explosion, or, as to mortgages insured on or after January 1, 1977, due to failure of the mortgagee to take action as required by § 203.377. If the property has been damaged, either of the following actions shall be taken: 
</P>
<P>(1) The property may be repaired prior to its conveyance or prior to the assignment of the mortgage to the Commissioner. 
</P>
<P>(2) If the prior approval of the Commissioner is obtained, the damaged property may be conveyed or the mortgage assigned to the Secretary without repairing the damage. In such instances, the Commissioner shall deduct from the insurance benefits either his estimate of the decrease in value of the family unit or the amount of any insurance recovery received by the mortgagee, whichever is the greater. 
</P>
<P>(b) If the property has been damaged by fire and such property was not covered by fire insurance at the time of the damage, the mortgagee may convey the property or assign the mortgage to the Commissioner without deduction from the insurance benefits for any loss occasioned by such fire if the following conditions are met: 
</P>
<P>(1) The property shall have been covered by fire insurance at the time the mortgage was insured. 
</P>
<P>(2) The fire insurance shall have been later cancelled or renewal shall have been refused by the insuring company. 
</P>
<P>(3) The mortgagee shall have notified the Commissioner within 30 days (or within such further time as the Commissioner may approve) of the cancellation of the fire insurance or of the refusal of the insuring company to renew the fire insurance. This notification shall have been accompanied by a certification of the mortgagee that diligent efforts were made, but it was unable to obtain fire insurance coverage at reasonably competitive rates and that it will continue its efforts to obtain adequate fire insurance coverage at competitive rates, including coverage under the FAIR Plan. A <I>reasonable rate</I> is a rate not more than 25 percent in excess of the rate or the advisory rate filed or used by the principal rating organization doing business in the state. If the property is located in a state which has no rate or advisory rate as provided in the preceding sentence, the mortgagee shall consult the Director of the local HUD office as to a reasonable rate. When hazard insurance coverage cannot be obtained in an amount equal to the unpaid principal balance of the loan but insurance can be obtained in a reduced amount from a FAIR Plan or another insurance carrier, the Secretary will accept the reduced coverage without reduction of mortgage, insurance benefits, if the rates do not exceed the guidelines stated herein. If coverage in any amount is only available at rates in excess of a reasonable rate as defined herein, the mortgagor may but shall not be required to purchase such coverage. If coverage is purchased, the amount of any claim for insurance benefits under this part shall be reduced by the amount of any recovery of hazard insurance benefits by the mortgagee.
</P>
<P>(c) The provisions in paragraph (b) of this section shall be applicable with respect to the insurance of all mortgages whether insured prior to May 8, 1968, or insured on or after such date. 
</P>
<P>(d) The mortgagee shall not be liable for damage to the property by waste in connection with mortgage insurance claims paid on or after July 2, 1968. However, the mortgagee shall be responsible for damage to or destruction of security properties on which the loans are in default and which properties are vacant or abandoned due to the mortgagee's failure to take reasonable action to inspect, protect and preserve such properties as required by § 203.377, as to all mortgages insured on or after June 8, 1977, but such responsibility shall not exceed the amount of its insurance claim as to a particular property.
</P>
<CITA TYPE="N">[36 FR 24628, Dec. 22, 1971, as amended at 42 FR 29305, June 8, 1977]


</CITA>
</DIV8>


<DIV8 N="§ 234.273" NODE="24:2.1.1.2.16.2.187.9" TYPE="SECTION">
<HEAD>§ 234.273   Assessment of taxes.</HEAD>
<P>When a family unit is conveyed to the Commissioner or a mortgage is assigned to the Commissioner, the unit shall be assessed and subject to assessment for taxes pertaining only to that unit. 


</P>
</DIV8>


<DIV8 N="§ 234.274" NODE="24:2.1.1.2.16.2.187.10" TYPE="SECTION">
<HEAD>§ 234.274   Certificate of tax assessment.</HEAD>
<P>The mortgagee shall certify, as of the date of filing for record of the deed or assignment of the mortgage to the Commissioner, that the family unit is assessed and subject to assessment for taxes pertaining only to that unit. 


</P>
</DIV8>


<DIV8 N="§ 234.275" NODE="24:2.1.1.2.16.2.187.11" TYPE="SECTION">
<HEAD>§ 234.275   Certificate or statement of condition.</HEAD>
<P>The mortgagee shall either certify that as of the date of the filing of deed for record, or assignment of the mortgage to the Secretary, the property was (a) undamaged by fire, flood, earthquake, tornado or boiler explosion, and (b) as to mortgages insured or for which commitments to insure are issued on or after June 8, 1977, undamaged due to failure of the mortgagee to take action as required by § 203.377, or its claim shall be accompanied by a statement describing any such damage that may still exist together with a copy of the Secretary's authorization to convey the property in damaged condition. In the absence of evidence to the contrary, the mortgagee's certificate or its statement as to damage shall be accepted by the Secretary as establishing the condition of the family unit and the common areas and facilities designated for the particular unit.
</P>
<CITA TYPE="N">[42 FR 29305, June 8, 1977] 


</CITA>
</DIV8>


<DIV8 N="§ 234.280" NODE="24:2.1.1.2.16.2.187.12" TYPE="SECTION">
<HEAD>§ 234.280   Cancellation of hazard insurance.</HEAD>
<P>The provisions of § 203.382 incorporated by reference shall apply to hazard insurance policies carried solely for the family unit. 


</P>
</DIV8>


<DIV8 N="§ 234.285" NODE="24:2.1.1.2.16.2.187.13" TYPE="SECTION">
<HEAD>§ 234.285   Waived title objections.</HEAD>
<P>The Commissioner shall not object to title by reason of the following matters: 
</P>
<P>(a) Violations of a restriction based on race, color or creed, even where such restriction provides for a penalty of reversion or forfeiture of title or a lien for liquidated damage. 
</P>
<P>(b) Easements for public utilities along one or more of the property lines, provided the exercise of the rights thereunder do not interfere with any of the buildings or improvements located on the subject property. 
</P>
<P>(c) Encroachment on the subject property by improvements on adjoining property, provided such encroachments do not interfere with the use of any improvements on the subject property. 
</P>
<P>(d) Variations between the length of the subject property lines as shown on the application for insurance and as shown by the record or possession lines, provided such variations do not interfere with the use of any of the improvements on the subject property. 
</P>
<P>(e) Customary building or use restrictions for breach of which there is no reversion and which have not been violated to a material extent. 
</P>
<P>(f) Federal tax liens and rights of redemption arising therefrom if the following conditions are observed. If the mortgagee acquires the property by foreclosure the mortgagee shall give notice to the Internal Revenue Service (IRS) of the foreclosure action. The Commissioner will not object to an outstanding right of redemption in IRS if: (1) The Federal tax lien was perfected subsequent to the date of the mortgage lien, and (2) the mortgagee has bid an amount sufficient to make the mortgagee whole if the property is in fact redeemed by the IRS.
</P>
<CITA TYPE="N">[36 FR 24628, Dec. 22, 1971, as amended at 42 FR 29305, June 8, 1977] 


</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:2.1.1.2.16.3" TYPE="SUBPART">
<HEAD>Subpart C—Eligibility Requirements—Projects—Conversion Individual Sales Units</HEAD>


<DIV8 N="§ 234.501" NODE="24:2.1.1.2.16.3.187.1" TYPE="SECTION">
<HEAD>§ 234.501   Eligibility requirements.</HEAD>
<P>The requirements set forth in 24 CFR part 200, subpart A, apply to blanket mortgages on condominium projects insured under section 234 of the National Housing Act (12 U.S.C. 1715y), as amended. 
</P>
<CITA TYPE="N">[61 FR 14406, Apr. 1, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:2.1.1.2.16.4" TYPE="SUBPART">
<HEAD>Subpart D—Contract Rights and Obligations—Projects</HEAD>


<DIV8 N="§ 234.751" NODE="24:2.1.1.2.16.4.187.1" TYPE="SECTION">
<HEAD>§ 234.751   Cross-reference.</HEAD>
<P>(a) All of the provisions, except § 207.258(b) of subpart B of this chapter, covering mortgages insured under section 207 of the National Housing Act shall apply to mortgages insured under section 234(d) of such Act.
</P>
<P>(b) For the purposes of this subpart, all references in part 207 of this chapter to section 207 of the National Housing Act shall be construed to refer to section 234(d) of the act. 
</P>
<CITA TYPE="N">[36 FR 24628, Dec. 22, 1971, as amended at 50 FR 38787, Sept. 25, 1985]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:2.1.1.2.16.5" TYPE="SUBPART">
<HEAD>Subpart E—Servicing Responsibilities—Individually Owned Units</HEAD>


<DIV8 N="§ 234.800" NODE="24:2.1.1.2.16.5.187.1" TYPE="SECTION">
<HEAD>§ 234.800   Cross-reference.</HEAD>
<P>All of the provisions of subpart C, part 203 of this chapter covering mortgages insured under section 203 of the National Housing Act apply to mortgages insured under section 234(c) of the National Housing Act.
</P>
<CITA TYPE="N">[42 FR 29306, June 8, 1977] 


</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="236" NODE="24:2.1.1.2.17" TYPE="PART">
<HEAD>PART 236—MORTGAGE INSURANCE AND INTEREST REDUCTION PAYMENT FOR RENTAL PROJECTS 


</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1715b, 1715z-1, and 1735d; 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>36 FR 24643, Dec. 22, 1971, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:2.1.1.2.17.1" TYPE="SUBPART">
<HEAD>Subparts A-D [Reserved]</HEAD>

</DIV6>


<DIV6 N="E" NODE="24:2.1.1.2.17.2" TYPE="SUBPART">
<HEAD>Subpart E—Audits</HEAD>


<DIV8 N="§ 236.901" NODE="24:2.1.1.2.17.2.187.1" TYPE="SECTION">
<HEAD>§ 236.901   Audit.</HEAD>
<P>Where a State or local government receives interest reduction payments under section 236(b) of the National Housing Act or is the mortgagor of a mortgage insured or held by the Commissioner under this part, it shall conduct audits in accordance with HUD audit requirements at 2 CFR part 200, subpart F.
</P>
<CITA TYPE="N">[58 FR 37813, July 13, 1993, as amended at 80 FR 75936]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:2.1.1.2.17.3" TYPE="SUBPART">
<HEAD>Subpart F—Uniform Relocation Assistance</HEAD>


<DIV8 N="§ 236.1001" NODE="24:2.1.1.2.17.3.187.1" TYPE="SECTION">
<HEAD>§ 236.1001   Displacement, relocation, and acquisition.</HEAD>
<P>(a) <I>Minimizing displacement.</I> Consistent with the other goals and objectives of this part, mortgagors shall assure that they have taken all reasonable steps to minimize the displacement of persons (households, businesses, nonprofit organizations, and farms) as a result of a project assisted under this part. 
</P>
<P>(b) <I>Temporary relocation.</I> The following policies cover residential tenants who will not be required to move permanently but who must relocate temporarily to permit rehabilitation or other work for the assisted project. Such tenants must be provided: 
</P>
<P>(1) Reimbursement for all reasonable out-of-pocket expenses incurred in connection with the temporary relocation, including the cost of moving to and from the temporary housing, any increase in monthly rent/utility costs, and any incidental expenses. 
</P>
<P>(2) Appropriate advisory services, including reasonable advance written notice of: 
</P>
<P>(i) The date and approximate duration of the temporary relocation; 
</P>
<P>(ii) The location of the suitable, decent, safe, and sanitary dwelling to be made available for the temporary period; 
</P>
<P>(iii) The terms and conditions under which the tenant may lease and occupy a suitable, decent, safe, and sanitary dwelling in the building/complex following completion of the repairs; and 
</P>
<P>(iv) The provisions of paragraph (b)(1) of this section. 
</P>
<P>(c) <I>Relocation assistance for displaced persons.</I> A “displaced person” (defined in paragraph (g) of this section) must be provided relocation assistance at the levels described in, and in accordance with the requirements of, the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (URA) (42 U.S.C. 4201-4655) and implementing regulations at 49 CFR part 24. A “displaced person” shall be advised of his or her rights under the Fair Housing Act (42 U.S.C. 3601-19), and, if the representative comparable replacement dwelling used to establish the amount of the replacement housing payment to be provided to a minority person is located in an area of minority concentration, such person also shall be given, if possible, referrals to comparable and suitable, decent, safe and sanitary replacement dwellings not located in such areas. 
</P>
<P>(d) <I>Real property acquisition requirements.</I> The acquisition of real property for a project is subject to the URA and the requirements of 49 CFR part 24, subpart B. 
</P>
<P>(e) <I>Appeals.</I> A person who disagrees with the mortgagor's determination concerning whether the person qualifies as a “displaced person,” or with the amount of relocation assistance for which the person is eligible, may file a written appeal of that determination with the mortgagor. A person who is dissatisfied with the mortgagor's determination on his or her appeal may submit a written request for review of the determination to the HUD Field Office. 
</P>
<P>(f) <I>Responsibility of mortgagor.</I> (1) The mortgagor shall certify (i.e., provide assurance of compliance as required by 49 CFR part 24) that it will comply with the URA, the regulations at 49 CFR part 24, and the requirements of this section. The mortgagor shall ensure such compliance notwithstanding any third party's contractual obligation to the mortgagor to comply with these provisions. 
</P>
<P>(2) The cost of required relocation assistance is an eligible project cost in the same manner and to the same extent as other project costs. Such costs may also be paid for with funds available from other sources. 
</P>
<P>(3) The mortgagor shall maintain records in sufficient detail to demonstrate compliance with the provisions of this section. The mortgagor shall maintain data on the race, ethnic, gender, and disability status of displaced persons. 
</P>
<P>(g) <I>Definition of displaced person.</I> (1) For purposes of this section, the term <I>displaced person</I> means any person (household, business, nonprofit organization, or farm) that moves from real property, or moves personal property from real property, permanently, as a direct result of acquisition, rehabilitation, or demolition for a project assisted under this part. The term “displaced person” includes, but may not be limited to: 
</P>
<P>(i) A tenant-occupant of a dwelling unit who moves from the building/complex, permanently, after the mortgagor executes the agreement covering the rehabilitation, demolition or acquisition, if the move occurs before the tenant is provided written notice offering him or her the opportunity to lease and occupy a suitable, decent, safe, and sanitary dwelling in the same building/complex, under reasonable terms and conditions, upon completion of the project. Such reasonable terms and conditions include a monthly rent and estimated average monthly utility costs that do not exceed the amount approved by HUD; 
</P>
<P>(ii) A tenant-occupant of a dwelling who is required to relocate temporarily, but does not return to the building/complex, if either: 
</P>
<P>(A) The tenant is not offered payment for all reasonable out-of-pocket expenses incurred in connection with the temporary relocation, including the cost of moving to and from the temporarily occupied unit, any increased housing costs and incidental expenses; or 
</P>
<P>(B) Other conditions of the temporary relocation are not reasonable; or 
</P>
<P>(iii) A tenant-occupant of a dwelling who moves from the building/complex permanently after he or she has been required to move to another dwelling unit in the same building/complex in order to carry out the project, if either: 
</P>
<P>(A) The tenant is not offered reimbursement for all reasonable out-of-pocket expenses incurred in connection with the move; or 
</P>
<P>(B) Other conditions of the move are not reasonable; or 
</P>
<P>(iv) Any person, including a person who moves before the mortgagor's execution of the agreement covering the rehabilitation, demolition, or acquisition, if the mortgagor or HUD determines that the displacement resulted directly from rehabilitation, demolition or acquisition for the assisted project. 
</P>
<P>(2) Notwithstanding the provisions of paragraph (g)(1) of this section, a person does not qualify as a “displaced person” (and is not eligible for relocation assistance under the URA or this section), if: 
</P>
<P>(i) The person has been evicted for serious or repeated violation of the terms and conditions of the lease or occupancy agreement, violation of applicable Federal, State or local law, or other good cause, and HUD determines that the eviction was not undertaken for the purpose of evading the obligation to provide relocation assistance; 
</P>
<P>(ii) The person moved into the property after the execution of the agreement covering the rehabilitation, demolition or acquisition and, before signing a lease or commencing occupancy, was provided written notice of the project, its possible impact on the person (e.g., the person may be displaced, temporarily relocated or suffer a rent increase) and the fact that the person would not qualify as a “displaced person” (or for any assistance provided under this section) as a result of the project; 
</P>
<P>(iii) The person is ineligible under 49 CFR 24.2(g)(2); or 
</P>
<P>(iv) HUD determines that the person was not displaced as a direct result of acquisition, rehabilitation, or demolition for the project; 
</P>
<P>(3) The mortgagor may request, at any time, HUD's determination of whether a displacement is or would be covered by this section. 
</P>
<P>(h) <I>Definition of initiation of negotiations.</I> For purposes of determining the formula for computing the replacement housing assistance to be provided to a residential tenant displaced as a direct result of privately undertaken rehabilitation, demolition or acquisition of the real property, the term <I>initiation of negotiations</I> means the mortgagor's execution of the agreement covering the rehabilitation, demolition or acquisition.
</P>
<APPRO TYPE="N">(Approved by Office of Management and Budget under OMB Control Number 2506-0121)
</APPRO>
<CITA TYPE="N">[59 FR 29331, June 6, 1994]


</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="241" NODE="24:2.1.1.2.18" TYPE="PART">
<HEAD>PART 241—SUPPLEMENTARY FINANCING FOR INSURED PROJECT MORTGAGES 
</HEAD>
<AUTH>
<HED> Authority:</HED><PSPACE>12 U.S.C. 1715b, 1715z-6, and 1735d; 42 U.S.C. 3535(d).


</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>36 FR 24653, Dec. 22, 1971, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:2.1.1.2.18.1" TYPE="SUBPART">
<HEAD>Subpart A—Eligibility Requirements</HEAD>


<DIV8 N="§ 241.1" NODE="24:2.1.1.2.18.1.199.1" TYPE="SECTION">
<HEAD>§ 241.1   Eligibility requirements.</HEAD>
<P>The requirements set forth in 24 CFR part 200, subpart A, apply to multifamily project mortgages insured under section 241 of the National Housing Act (12 U.S.C. 1715z-6), as amended. 
</P>
<CITA TYPE="N">[61 FR 14407, Apr. 1, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:2.1.1.2.18.2" TYPE="SUBPART">
<HEAD>Subpart B—Contract Rights and Obligations</HEAD>


<DIV8 N="§ 241.251" NODE="24:2.1.1.2.18.2.199.1" TYPE="SECTION">
<HEAD>§ 241.251   Cross-reference.</HEAD>
<P>(a) <I>Projects with a HUD-insured or HUD-held mortgage.</I> All of the provisions of subpart B, part 207 of this chapter, covering mortgages insured under section 207 of the National Housing Act, apply with full force and effect to multifamily project and group practice facility mortgages insured under section 241 of the National Housing Act, except the following provisions:
</P>
<EXTRACT>
<FP>Sec.
</FP>
<FP-2>207.251  Definitions.
</FP-2>
<FP-2>207.253a Termination of insurance contract.
</FP-2>
<FP-2>207.259  Insurance benefits.
</FP-2>
<FP-2>207.260  Protection of mortgage security.
</FP-2>
<FP-2>207.262  No vested right in fund.</FP-2></EXTRACT>
<P>(b) For the purposes of this subpart, the terms <I>mortgagor, mortgagee</I> and <I>mortgage,</I> as used in subpart B, part 207 of this chapter shall be construed to mean <I>borrower, lender</I> and <I>supplementary loan (including the security instrument),</I> respectively. 
</P>
<P>(c) <I>Projects without a HUD-insured or HUD-held mortgage.</I> The provisions of subpart D of this part shall be applicable to a project without a HUD-insured or HUD-held mortgage that is receiving a loan insured under subpart A of this part in connection with a plan of action approved by the Commissioner under part 248 of this chapter.
</P>
<CITA TYPE="N">[36 FR 24653, Dec. 22, 1971, as amended at 37 FR 8664, Apr. 29, 1972; 48 FR 57129, Dec. 28, 1983; 57 FR 12037, Apr. 8, 1992] 


</CITA>
</DIV8>


<DIV8 N="§ 241.260" NODE="24:2.1.1.2.18.2.199.2" TYPE="SECTION">
<HEAD>§ 241.260   Definitions.</HEAD>
<P>All of the definitions contained in § 241.1 shall apply to this subpart. In addition, the term <I>contract of insurance,</I> as used in this subpart, means the agreement evidenced by endorsement of the credit instrument by the Commissioner or his duly authorized representative, and includes the provisions of this subpart and of the National Housing Act. 


</P>
</DIV8>


<DIV8 N="§ 241.261" NODE="24:2.1.1.2.18.2.199.3" TYPE="SECTION">
<HEAD>§ 241.261   Payment of insurance benefits.</HEAD>
<P>All of the provisions of § 207.259 of this chapter relating to insurance benefits shall apply to multifamily loans insured under this subpart.
</P>
<CITA TYPE="N">[80 FR 51469, Aug. 25, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 241.265" NODE="24:2.1.1.2.18.2.199.4" TYPE="SECTION">
<HEAD>§ 241.265   Insurance of property against flood.</HEAD>
<P>The mortgaged property shall be insured against flood as stipulated by the Federal Housing Commissioner. The mortgagee shall obtain such coverage in the event the mortgagor fails to do so. If the mortgagee fails to pay any premiums necessary to keep the mortgaged premises so insured, the contract of mortgage insurance may be terminated at the election of the Commissioner. 
</P>
<CITA TYPE="N">[39 FR 26023, July 16, 1974] 


</CITA>
</DIV8>


<DIV8 N="§ 241.270" NODE="24:2.1.1.2.18.2.199.5" TYPE="SECTION">
<HEAD>§ 241.270   Refund upon termination of insurance.</HEAD>
<P>Upon termination of the insurance contract by payment in full or by voluntary termination, the Commissioner shall refund to the lender for the account of the borrower an amount equal to the pro rata portion of the current annual loan insurance premium theretofore paid, which is applicable to the portion of the year subsequent to (a) the date of the prepayment or (b) the effective date of the voluntary termination of the contract of insurance. 


</P>
</DIV8>


<DIV8 N="§ 241.275" NODE="24:2.1.1.2.18.2.199.6" TYPE="SECTION">
<HEAD>§ 241.275   No vested right in fund.</HEAD>
<P>Neither the lender nor the borrower shall have any vested or other right in the insurance fund under which the loan is insured. 


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:2.1.1.2.18.3" TYPE="SUBPART">
<HEAD>Subpart C—Eligibility Requirements—Supplemental Loans To Finance Purchase and Installation of Energy Conserving Improvements, Solar Energy Systems, and Individual Utility Meters in Multifamily Projects Without a HUD-Insured or HUD-Held Mortgage</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>45 FR 57983, Aug. 29, 1980, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV8 N="§ 241.500" NODE="24:2.1.1.2.18.3.199.1" TYPE="SECTION">
<HEAD>§ 241.500   Definitions.</HEAD>
<P>In addition to the definitions contained in subpart A of this part, incorporated herein by reference, except § 241.1(f), (h) and (i), the following terms, as used in § 241.500 <I>et seq.,</I> shall have the meaning indicated: 
</P>
<P>(a) <I>Approved lender</I> means a financial institution or other mortgagee approved by the Commissioner as eligible for insurance under section 2 of the National Housing Act, or a mortgagee approved under section 203(b)(1) of the National Housing Act, or a state housing agency approved pursuant to 24 CFR 883.102. 
</P>
<P>(b) <I>Borrower</I> means the owner of a project held in fee simple or of a leasehold interest which is not now covered by a mortgage insured or held by the Secretary. 
</P>
<P>(c) <I>Energy saving loan</I> means any form of secured obligation used in connection with the purchase and installation of energy conserving improvements. 
</P>
<P>(d) <I>Multifamily project</I> means a project which consists of not less than five dwelling units on one site, each such unit providing complete living facilities including provisions for cooking, eating, and sanitation within the unit and which is not now covered by a mortgage insured or held by the Secretary. 


</P>
</DIV8>


<DIV7 N="199" NODE="24:2.1.1.2.18.3.199" TYPE="SUBJGRP">
<HEAD>Fees and Charges</HEAD>


<DIV8 N="§ 241.505" NODE="24:2.1.1.2.18.3.199.2" TYPE="SECTION">
<HEAD>§ 241.505   Processing of applications and required fees.</HEAD>
<P>(a) <I>Preapplication conference.</I> The local HUD Office will determine whether participation in a preapplication conference is required as a condition to submission of an initial application for a firm commitment for insurance of an energy savings improvement loan on a project. An application for a firm commitment for insurance must be submitted by both the project sponsor and an approved lender. Applications shall be submitted to the local HUD Office on HUD-approved forms. No application will be considered unless accompanied by all exhibits required by the form and program handbooks. 
</P>
<P>(b) <I>Application for firm commitment.</I> An application for a firm commitment shall be accompanied by the payment of an application fee of $5 per thousand dollars of the requested loan amount to be insured. 
</P>
<P>(c) <I>Cross-reference.</I> The provisions of paragraphs (e) (Inspection fee), (f)(1) (Fee on increases), (g) (Reopening of expired commitments), (i) (Refund of fees), and (j) (Fees not required) of § 200.40 of this chapter apply to applications submitted under subpart E of this part. 
</P>
<CITA TYPE="N">[61 FR 14416, Apr. 1, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 241.510" NODE="24:2.1.1.2.18.3.199.3" TYPE="SECTION">
<HEAD>§ 241.510   Commitments.</HEAD>
<P>(a) <I>Firm commitment.</I> The issuance of a firm commitment indicates the Commissioner's approval of the application for insurance and sets forth the terms and conditions upon which the loan will be insured. 
</P>
<P>(b) <I>Types of firm commitment.</I> (1) Where the amount of the loan is $250,000 or more, the firm commitment may provide for the insurance of advances of loan money made during construction or may provide for the insurance of the loan after completion of the improvements. 
</P>
<P>(2) Where the amount of the loan is less than $250,000, the firm commitment shall provide for insurance of the loan after completion of the improvements. 
</P>
<P>(c) <I>Term of commitment.</I> (1) A firm commitment to insure advances shall be effective for a period of not more than 60 days from the day of issuance. 
</P>
<P>(2) A firm commitment to insure upon completion shall be effective for a designated term within which the borrower is required to begin construction, and if construction is begun as required, the commitment shall be effective for such additional period, estimated by the Commissioner, as will allow for completion of construction. 
</P>
<P>(3) The term of a firm commitment may be extended in such a manner as the Commissioner may prescribe. 
</P>
<CITA TYPE="N">[61 FR 14417, Apr. 1, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 241.515" NODE="24:2.1.1.2.18.3.199.4" TYPE="SECTION">
<HEAD>§ 241.515   Inspection fee.</HEAD>
<P>The firm commitment may provide for the payment of an inspection fee in an amount not to exceed $5 per thousand dollars of the commitment. If an inspection fee is required, it shall be paid as follows: 
</P>
<P>(a) If the case involves the insurance of advances, it shall be paid at the time of initial endorsement. 
</P>
<P>(b) If the case involves insurance upon completion, it shall be paid prior to the date construction is begun. 


</P>
</DIV8>


<DIV8 N="§ 241.520" NODE="24:2.1.1.2.18.3.199.5" TYPE="SECTION">
<HEAD>§ 241.520   Fees on increases.</HEAD>
<P>(a) <I>Increase in firm commitment prior to endorsement.</I> An application filed prior to initial endorsement (or prior to endorsement in a case involving insurance upon completion), for an increase in the amount of an outstanding firm commitment shall be accompanied by a combined additional application and commitment fee. This combined additional fee shall be in an amount which will aggregate $3 per thousand dollars of the amount of the requested increase. if an inspection fee was required in the original commitment, an additional inspection fee shall be paid in an amount computed at the same dollar rate per thousand dollars of the amount of increase in commitment as was used for the inspection fee required in the original commitment. When insurance of advances is involved, the additional inspection fee shall be paid at time of initial endorsement. When insurance upon completion is involved, the additional inspection fee shall be paid prior to the date construction is begun or if construction has begun, it shall be paid with the application for increase. 
</P>
<P>(b) <I>Increase in loan between initial and final endorsement.</I> Upon an application, filed between initial and final endorsement, for an increase in the amount of the loan, either by amendment or by substitution of a new loan, a combined additional application and commitment fee shall accompany the application. This combined additional fee shall be in an amount which will aggregate $3 per thousand dollars of the amount of the increase requested. If an inspection fee was required in the original commitment, an additional inspection fee shall accompany the application in an amount not to exceed $5 per thousand dollars of the amount of the increase requested. 


</P>
</DIV8>


<DIV8 N="§ 241.525" NODE="24:2.1.1.2.18.3.199.6" TYPE="SECTION">
<HEAD>§ 241.525   Refund of fees.</HEAD>
<P>If the amount of the commitment issued or an increase in loan prior to endorsement is less than the amount applied for, the Commissioner shall refund the excess amount of the application and commitment fees submitted by the applicant. If an application is rejected before it is assigned for processing, or in such other instances as the Commissioner may determine, the entire application and commitment fees or any portion thereof may be returned to the applicant. Commitment, inspection, and reopening fees may be refunded, in whole or in part if it is determined by the Commissioner that the installation of energy conserving improvements for the project has been prevented because of condemnation proceedings or other legal action taken by a governmental body or public agency, or in such other instances as the Commissioner may determine. 


</P>
</DIV8>


<DIV8 N="§ 241.530" NODE="24:2.1.1.2.18.3.199.7" TYPE="SECTION">
<HEAD>§ 241.530   Maximum fees and charges by lender.</HEAD>
<P>The lender may collect from the borrower the amount of the fees provided for in this subpart. The lender may also collect from the borrower an initial service charge in an amount not to exceed 2 percent of the original principal amount of the loan to reimburse the lender for the cost of originating and closing the transaction. Any additional charges shall be subject to the prior approval of the Commissioner. 


</P>
</DIV8>

</DIV7>


<DIV7 N="200" NODE="24:2.1.1.2.18.3.200" TYPE="SUBJGRP">
<HEAD>Eligible Security Instruments</HEAD>


<DIV8 N="§ 241.530a" NODE="24:2.1.1.2.18.3.200.8" TYPE="SECTION">
<HEAD>§ 241.530a   Note and security form.</HEAD>
<P>The lender shall present for insurance a note and security instrument, on forms approved by the Commissioner for use in the jurisdiction in which the property to be improved is located. 
</P>
<CITA TYPE="N">[45 FR 57983, Aug. 29, 1980, as amended at 45 FR 80276, Dec. 4, 1980]


</CITA>
</DIV8>


<DIV8 N="§ 241.535" NODE="24:2.1.1.2.18.3.200.9" TYPE="SECTION">
<HEAD>§ 241.535   Loan multiples—minimum principal.</HEAD>
<P>The loan shall involve a principal obligation in multiples of $100, and the minimum principal obligation shall be $10,000. 


</P>
</DIV8>


<DIV8 N="§ 241.540" NODE="24:2.1.1.2.18.3.200.10" TYPE="SECTION">
<HEAD>§ 241.540   Method of loan payment and amortization period.</HEAD>
<P>(a) <I>Monthly payments.</I> The loan shall provide for monthly payments on the first day of each month on account of interest and principal and shall provide for payment in accordance with the amortization plan as agreed upon by the borrower, the lender and the Commissioner. 
</P>
<P>(b) <I>Amortization period.</I> (1) The loan shall have an amortization of either 5, 10, or 15 years by providing for either 60, 120, or 180 monthly amortization payments. No energy saving loan shall have an amortization period in excess of 15 years unless the amount of the loan exceeds $50,000.00, in which event the amortization period may be increased to 20 years, with a provision for 240 monthly amortization payments. 
</P>
<P>(2) In any event, the loan shall have a maturity satisfactory to the Commissioner of not less than 2 or more than 20 years from the date of the beginning of amortization, or the Commissioner's estimate of the remaining economic life of the structure, whichever is the lesser. 
</P>
<P>(3) The Commissioner shall establish the date of the first payment to principal, which shall be no later than the first day of the second month following the date of final endorsement (for projects involving insurance of advances) or endorsement (for projects involving insurance upon completion) of the loan for insurance. 


</P>
</DIV8>


<DIV8 N="§ 241.545" NODE="24:2.1.1.2.18.3.200.11" TYPE="SECTION">
<HEAD>§ 241.545   Covenant against liens.</HEAD>
<P>The security instrument shall contain a covenant against the creation by the borrower of additional liens against the property superior or inferior to the lien of such instrument, except with the prior approval of the Commissioner. 


</P>
</DIV8>


<DIV8 N="§ 241.550" NODE="24:2.1.1.2.18.3.200.12" TYPE="SECTION">
<HEAD>§ 241.550   Accumulation of next premium.</HEAD>
<P>The security instrument shall provide for payments by the borrower to the lender on each interest payment date of an amount sufficient to accumulate in the hands of the lender one payment period prior to its due date, the next annual insurance premium payable by the lender to the Commissioner. 


</P>
</DIV8>


<DIV8 N="§ 241.555" NODE="24:2.1.1.2.18.3.200.13" TYPE="SECTION">
<HEAD>§ 241.555   Security instrument and lien.</HEAD>
<P>(a) The security instrument shall cover the entire property included in the project, shall be a lien on the real property of the project under the laws of the jurisdiction in which the project is located, and may be junior to such prior liens or mortgage indebtedness as the Commissioner may approve. The security instrument shall contain a provision that a default under the first mortgage is a default under the supplementary loan security instrument. 
</P>
<P>(b) For bond-financed projects where the bond resolution contains a provision prohibiting the creation of additional liens, the Commissioner may accept at his/her option: 
</P>
<P>(1) A first lien on another property whose fair market value as determined by the Commissioner equals or exceeds the amount of the loan insured under this part; 
</P>
<P>(2) A Collateral Account in an amount not less than the amount of the loan insured under this part funded with cash or negotiable bonds or securities backed by the full faith and credit of the United States Government; or 
</P>
<P>(3) Other security acceptable to the Commissioner. 


</P>
</DIV8>


<DIV8 N="§ 241.560" NODE="24:2.1.1.2.18.3.200.14" TYPE="SECTION">
<HEAD>§ 241.560   Agreed interest rate.</HEAD>
<P>(a) The mortgage shall bear interest at the rate agreed upon by the lender and the borrower.
</P>
<P>(b) Interest shall be payable in monthly installments on the principal amount of the loan outstanding on the due date of each installment. 
</P>
<CITA TYPE="N">[45 FR 57983, Aug. 29, 1980, as amended at 49 FR 19459, May 8, 1984]


</CITA>
</DIV8>


<DIV8 N="§ 241.565" NODE="24:2.1.1.2.18.3.200.15" TYPE="SECTION">
<HEAD>§ 241.565   Maximum loan amount.</HEAD>
<P>The principal amount of the loan shall in no event exceed the cost of the energy conserving improvements including the purchase thereof, cost of installation, architect's fees, interest during construction and such other miscellaneous fees and charges incident to construction as determined by the Commissioner. Nor shall the principal amount of the loan exceed the lesser of the following: 
</P>
<P>(a) An amount which can be supported by residual income, which is the amount of net income remaining after payment of all existing debt service requirements and deduction of proprietary earnings, as determined by the Commissioner. The computation of net income shall take into account the amount which will be saved in operating costs over the period of repayment of the loan as a result of the installation of the energy conserving improvements. 
</P>
<P>(b) An amount which, when added to the existing outstanding indebtedness, does not exceed the Commissioner's estimate of the value of the project after the energy conserving improvements are installed. 


</P>
</DIV8>


<DIV8 N="§ 241.570" NODE="24:2.1.1.2.18.3.200.16" TYPE="SECTION">
<HEAD>§ 241.570   Insurance endorsement.</HEAD>
<P>(a) <I>Initial endorsement.</I> The Commissioner shall indicate his/her insurance of the mortgage by endorsing the original credit instrument and identifying the section of the Act and the regulations under which the mortgage is insured and the date of insurance. 
</P>
<P>(b) <I>Final endorsement.</I> When all advances of mortgage proceeds have been made and all the terms and conditions of the commitment have been complied with to the satisfaction of the Commissioner, he/she shall indicate on the original credit instrument the total approved for insurance and again endorse such instrument. 
</P>
<P>(c) <I>Effect of endorsement.</I> From the date of initial endorsement, the Commissioner and the mortgagee or lender shall be bound by the provisions of this subpart to the same extent as if they had executed a contract including the provisions of this subpart and the applicable sections of the Act. 
</P>
<P>(d) <I>Insurance upon completion.</I> When all advances of mortgage proceeds have been made and all the terms and conditions of the commitment have been complied with to the satisfaction of the Commissioner, he/she shall indicate the total approved for insurance and endorse the credit instrument, identifying the date of insurance. 


</P>
</DIV8>


<DIV8 N="§ 241.580" NODE="24:2.1.1.2.18.3.200.17" TYPE="SECTION">
<HEAD>§ 241.580   Application of payments.</HEAD>
<P>(a) The security instrument shall provide that all monthly payments to be made by the borrower shall be added together and this aggregate amount shall be paid by the borrower upon each monthly payment date in a single payment. The lender shall apply the payment to the following items in the order set forth: 
</P>
<P>(1) Premium charges under the contract of insurance; 
</P>
<P>(2) Interest on the loan; 
</P>
<P>(3) Amortization of the principal of the loan. 
</P>
<P>(b) Any deficiency in the amount of any monthly payments required under paragraph (a) of this section shall constitute an event of default and the loan shall further provide for a grace period of 30 days within which time the default must be cured. 


</P>
</DIV8>


<DIV8 N="§ 241.585" NODE="24:2.1.1.2.18.3.200.18" TYPE="SECTION">
<HEAD>§ 241.585   Prepayment privileges and prepayment charge.</HEAD>
<P>The security instrument shall contain a provision permitting prepayment of the loan in whole or in part upon any interest payment date after giving to the lender 30 days advance written notice and it may contain a provision, with the approval of the Commissioner, for a reasonable charge in the event of prepayment. The borrower shall be permitted to prepay up to 15 percent of the original principal amount of the loan in any one calendar year without an additional charge. A provision for a charge in the event of prepayment may not be included in a loan of $200,000 or less.


</P>
</DIV8>


<DIV8 N="§ 241.586" NODE="24:2.1.1.2.18.3.200.19" TYPE="SECTION">
<HEAD>§ 241.586   Minimum principal loan amount.</HEAD>
<P>A mortgagee may not require, as a condition of providing a loan insured under this subpart, that the principal amount of the mortgage exceed a minimum amount established by the mortgagee.
</P>
<CITA TYPE="N">[53 FR 8886, Mar. 18, 1988]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="201" NODE="24:2.1.1.2.18.3.201" TYPE="SUBJGRP">
<HEAD>Property Requirements</HEAD>


<DIV8 N="§ 241.590" NODE="24:2.1.1.2.18.3.201.20" TYPE="SECTION">
<HEAD>§ 241.590   Eligibility of property.</HEAD>
<P>(a) A loan to be eligible for insurance shall be on real estate held: 
</P>
<P>(1) In fee simple; or 
</P>
<P>(2) On the interest of the lessee under a lease for not less than seventy-five years which is renewable; or 
</P>
<P>(3) Under a lease having a period of not less than twenty-five years to run from the date the loan is executed. 
</P>
<P>(b) The property constituting security for the loan transaction must be held by an eligible borrower as herein defined and must at the time the loan is insured be free and clear of all liens other than those specifically approved by the Commissioner. 


</P>
</DIV8>

</DIV7>


<DIV7 N="202" NODE="24:2.1.1.2.18.3.202" TYPE="SUBJGRP">
<HEAD>Title</HEAD>


<DIV8 N="§ 241.595" NODE="24:2.1.1.2.18.3.202.21" TYPE="SECTION">
<HEAD>§ 241.595   Eligibility of title.</HEAD>
<P>In order for the property which is to be the security for a loan to be insured under this subpart to be eligible for insurance, the Commissioner shall determine that the title to the property is vested in the borrower as of the date the security instrument is filed for record. The title evidence will be examined by the Commissioner and the endorsement of the credit instrument for insurance shall be evidence of its acceptability. 


</P>
</DIV8>


<DIV8 N="§ 241.600" NODE="24:2.1.1.2.18.3.202.22" TYPE="SECTION">
<HEAD>§ 241.600   Title evidence.</HEAD>
<P>(a) Upon insurance of the loan, the lender shall furnish to the Commissioner a survey, satisfactory to the Commissioner, and a policy of title insurance as provided in paragraph (a)(1) of this section. If the lender is unable to furnish such policy for reasons satisfactory to the Commissioner, the lender shall furnish such evidence of title as provided in paragraph (a) (2), (3), or (4) of this section as the Commissioner may require. Any survey, policy of title insurance, or evidence of title required under this section shall be furnished without expense to the Commissioner. The acceptable types of title evidence are: 
</P>
<P>(1) A policy of title insurance issued by a company and in a form satisfactory to the Commissioner. The policy shall name the lender and the Secretary of Housing and Urban Development, as their respective interests may appear, as the insured. The policy shall provide that upon acquisition of title by the lender or the Secretary, it will continue to provide the same coverage as the original policy, and will run to the lender upon its acquisition of the property in extinguishment of the debt, and to the Secretary upon acquisition of the property pursuant to the loan insurance contract.
</P>
<P>(2) An abstract of title satisfactory to the Commissioner, prepared by an abstract company or individual engaged in the business of preparing abstracts of title, accompanied by a legal opinion satisfactory to the Commissioner, as to the quality of such title, signed by an attorney at law experienced in the examination of titles. 
</P>
<P>(3) A Torrens or similar title certificate. 
</P>
<P>(4) Evidence of title conforming to the standards of a supervising branch of the Government of the United States of America, or of any State or territory thereof. 
</P>
<P>(b) The survey required by paragraph (a) of this section need not be furnished in connection with a project where the loan does not exceed $200,000. 
</P>
<CITA TYPE="N">[45 FR 57983, Aug. 29, 1980, as amended at 58 FR 34217, June 24, 1993]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="203" NODE="24:2.1.1.2.18.3.203" TYPE="SUBJGRP">
<HEAD>Form of Contract</HEAD>


<DIV8 N="§ 241.605" NODE="24:2.1.1.2.18.3.203.23" TYPE="SECTION">
<HEAD>§ 241.605   Contract requirements.</HEAD>
<P>(a) When the principal amount of the loan is $100,000 or less, the form of contract between the borrower and the contractor shall be in accordance with the following: 
</P>
<P>(1) The contract between the borrower and the general contractor may be in the form of either a lump sum contract or a cost plus contract. Either form of contract shall include the cost of the energy conserving improvements, their installation, and such other work to be performed by the contractor as necessary to meet the requirements of the Secretary. A lump sum contract shall provide for the payment of a specified amount. A cost plus contract shall provide for the payment of the contractor's actual cost of compliance with the requirements of the contract, plus such allowances for overhead and profit as may be approved by the Commissioner and shall provide that the total cost under the contract shall not exceed the upset price as approved by the Commissioner. 
</P>
<P>(2) If agreed to by the general contractor and borrower, a lump sum form of contract between the borrower and the general contractor may be used unless the Commissioner determines that a cost plus contract with a maximum upset price is necessary to protect the interest of the borrower or the Commissioner. 
</P>
<P>(b) When the principal amount of the loan is over $100,000, the form of contract between the borrower and the contractor shall be in accordance with the following: 
</P>
<P>(1) <I>Lump sum contract.</I> If the Commissioner determines that there is no identity of interest between the borrower or any of the officers, directors or stockholders of the borrower and the contractor, there may be used a lump sum contract providing for payment of the specified amount. 
</P>
<P>(2) <I>Cost plus fixed fee contract.</I> (i) If the Commissioner determines that there is any identity of interest (financial or otherwise) between the borrower, its officers, directors or stockholders and the contractor, the form of contract shall provide for payment of the actual cost of construction not to exceed an upset price and may provide for payment of a fixed fee not exceeding a reasonable allowance as established by the Commissioner in accordance with customary practices in the area. 
</P>
<P>(ii) In any case where the borrower is a nonprofit entity, a cost plus fixed fee contract shall be used unless it is established to the Commissioner's satisfaction that such form of contract is not required to protect his/her interests and the interests of the borrower, in which case, a lump sum form of contract may be used. 


</P>
</DIV8>


<DIV8 N="§ 241.610" NODE="24:2.1.1.2.18.3.203.24" TYPE="SECTION">
<HEAD>§ 241.610   Assurance of completion.</HEAD>
<P>(a) The borrower shall furnish assurance of completion of the project in the following minimum forms and amounts: 
</P>
<P>(1) Where the estimated cost of construction of the improvements is $500,000 or less, the borrower shall furnish assurance of completion of the project in the form of a personal indemnity agreement executed by the principal officers, directors, stockholders, or partners of the entity acting as general contractor. 
</P>
<P>(2) Where the estimated cost of construction of the improvements is more than $500,000 or where such cost is less than $500,000 and a personal indemnity agreement is not executed, the assurance shall be in the form of corporate surety bonds for payment and performance, each in the minimum amount of 25 percent of the construction contract, or a completion assurance agreement secured by a cash deposit in the minimum amount of 15 percent of the amount of the construction contract. 
</P>
<P>(3) All types of assurance of completion shall be on forms approved by the Commissioner. Any surety company executing a bond and any party executing a personal indemnity agreement must be satisfactory to the Commissioner. 
</P>
<P>(4) A mortgagee may prescribe more stringent requirements for assurance of completion than the minimum requirements of this section. 
</P>
<P>(b) The lender may accept, in lieu of a cash deposit required by paragraph (a) of this section, an unconditional irrevocable letter of credit issued to the lender by a banking institution. In the event a demand under the letter of credit is not immediately met, the lender shall forthwith provide cash equivalent to the undrawn balance thereunder. 


</P>
</DIV8>


<DIV8 N="§ 241.615" NODE="24:2.1.1.2.18.3.203.25" TYPE="SECTION">
<HEAD>§ 241.615   Certification of cost requirements.</HEAD>
<P>(a) <I>Certification agreement.</I> The lender shall submit with the application an agreement on a form prescribed by the Commissioner and executed by the borrower and the lender.
</P>
<P>(b) <I>Certificate and adjustment.</I> No loan shall be insured unless:
</P>
<P>(1) A certification of actual cost is made by the contractor in cases in which a cost plus form of contract is used; and
</P>
<P>(2) The amount of the loan is adjusted to reflect the actual cost to the borrower of the improvements when either a cost plus or lump sum form or contract is used.
</P>
<P>(c) <I>Cost computation.</I> The term <I>actual cost of the improvements</I> shall mean the cost to the borrower of the improvements, after deducting the amount of any kickbacks, rebates or trade discount received in connection with the improvements, and including the amounts paid under any contract for the improvements, labor, materials, and for any other items of expenses approved by the Commissioner.
</P>
<P>(d) <I>Statement of facts.</I> Any agreement, undertaking, statement or certification required in connection with cost certification shall specifically state that it has been made, presented and delivered for the purpose of influencing an official action of the Commissioner and may be relied upon as a true statement of the facts contained therein.
</P>
<P>(e) <I>Incontestability.</I> Upon the Commissioner's approval of the cost certification, such certification shall be final and incontestable except for fraud or material misrepresentation on the part of the borrower.
</P>
<P>(f) <I>Records.</I> The borrower shall keep and maintain adequate records of all costs of any construction improvements or other cost items not representing work under the general contract and shall require the contractor to keep similar records and, upon request by the Commissioner, both shall make available for examination such records, including any collateral agreements.
</P>
<P>(g) <I>Certificate of public accountant.</I> Where required by the Commissioner, each certificate of actual cost shall be supported by a certificate as to accuracy by an independent Certified Public Accountant or independent public accountant licensed by a regulatory authority of a State or other political subdivision of the United States on or prior to December 31, 1970, which shall include a statement that the accounts, records and supporting documents have been examined in accordance with generally accepted auditing standards to the extent deemed necessary to verify the actual costs.


</P>
</DIV8>

</DIV7>


<DIV7 N="204" NODE="24:2.1.1.2.18.3.204" TYPE="SUBJGRP">
<HEAD>Eligible Borrowers</HEAD>


<DIV8 N="§ 241.625" NODE="24:2.1.1.2.18.3.204.26" TYPE="SECTION">
<HEAD>§ 241.625   Eligible borrowers.</HEAD>
<P>In order to be eligible as a borrower under this subpart, the applicant shall be a profit, limited distribution, nonprofit, or cooperative owner of a multifamily housing project which is not covered by a mortgage insured or held by the Secretary and which the Commissioner has determined to be an acceptable risk in that energy conservation or solar energy benefits to be derived outweigh the risks of possible loss of the Federal Government.


</P>
</DIV8>


<DIV8 N="§ 241.626" NODE="24:2.1.1.2.18.3.204.27" TYPE="SECTION">
<HEAD>§ 241.626   Disclosure and verification of Social Security and Employer Identification Numbers.</HEAD>
<P>To be eligible for loan insurance under this subpart, the borrower must meet the requirements for the disclosure and verification of Social Security and Employer Identification Numbers, as provided by part 200, subpart U, of this chapter.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0118)
</APPRO>
<CITA TYPE="N">[54 FR 39696, Sept. 27, 1989]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="205" NODE="24:2.1.1.2.18.3.205" TYPE="SUBJGRP">
<HEAD>Special Requirements</HEAD>


<DIV8 N="§ 241.630" NODE="24:2.1.1.2.18.3.205.28" TYPE="SECTION">
<HEAD>§ 241.630   Maximum insurance against loss.</HEAD>
<P>A loan insured under this subpart shall be insured for 90 percent of any loss incurred by the person holding the note for the loan.


</P>
</DIV8>


<DIV8 N="§ 241.635" NODE="24:2.1.1.2.18.3.205.29" TYPE="SECTION">
<HEAD>§ 241.635   Regulatory agreement.</HEAD>
<P>Any borrower obligated on the note for any loan insured under this subpart shall be regulated or restricted in a manner and on a form prescribed by the Secretary as to rents or sales, charges, capital structure, rate of return and methods of operation of the multifamily project to such an extent and in such manner as to provide reasonable rental to tenants and a reasonable return on the investment until the termination of all obligations of the Secretary under the contract of insurance. 


</P>
</DIV8>


<DIV8 N="§ 241.640" NODE="24:2.1.1.2.18.3.205.30" TYPE="SECTION">
<HEAD>§ 241.640   Employment discrimination prohibited.</HEAD>
<P>Any contract or subcontract executed for the performance of constructing the improvements to the project shall provide that there shall be no discrimination against any employee or applicant for employment because of race, color, religion, sex, familial status, disability, age, or national origin. 
</P>
<CITA TYPE="N">[61 FR 14417, Apr. 1, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 241.645" NODE="24:2.1.1.2.18.3.205.31" TYPE="SECTION">
<HEAD>§ 241.645   Labor standards and prevailing wage requirements.</HEAD>
<P>(a) Any contract, subcontract, or building loan agreement executed for the performance of construction of the project shall comply with all applicable labor standards and provisions of the regulations of the Secretary of Labor set forth in §§ 5.1 through 5.12 of title 29.
</P>
<P>(b) No construction contract shall be entered into with a general contractor or any subcontractor if such contractor or any such subcontractor or any firm, corporation, partnership or association in which such contractor or subcontractor has a substantial interest is included on the ineligible list of contractors or subcontractors established and maintained by the Comptroller General, pursuant to § 5.6(b) of title 29.
</P>
<P>(c) No advance under the mortgage shall be eligible for insurance after notification from the Commissioner that the general contractor or any subcontractor or any firm, corporation, partnership or association in which such contractor or subcontractor has a substantial interest, was on the date the contract or subcontract was executed, on the ineligible list established by the Comptroller General, pursuant to the provision of the Secretary of Labor set forth in §§ 5.1 through 5.12 of title 29.
</P>
<P>(d) No advance under any mortgage shall be eligible for insurance unless there is filed with the application of such advance a certificate or certificates in the form required by the Commissioner, supported by such other information as the Commissioner may prescribe, certifying that the laborers and mechanics employed in the construction of the dwelling or dwellings, or housing project involved, have been paid not less than the wage prevailing in the locality in which the work was performed for the corresponding classes of laborers and mechanics employed on construction of a similar character, as determined by the Secretary of Labor prior to beginning of construction and after the date of filing of the application for insurance. 
</P>
<P>(e) Compliance with the provisions of this subsection shall be evidenced at such time and in such manner as the Commissioner may prescribe.


</P>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="D" NODE="24:2.1.1.2.18.4" TYPE="SUBPART">
<HEAD>Subpart D—Contract Rights and Obligations—Multifamily Projects Without a HUD-Insured or HUD-Held Mortgage</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>45 FR 57987, Aug. 29, 1980, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV8 N="§ 241.800" NODE="24:2.1.1.2.18.4.206.1" TYPE="SECTION">
<HEAD>§ 241.800   Definitions.</HEAD>
<P>All of the definitions contained in § 241.500 shall apply to this subpart. In addition, as used in this subpart, the following terms shall have the meaning indicated:
</P>
<P>(a) <I>Contract of insurance</I> means the agreement evidenced by the endorsement of the Commissioner upon the note given in connection with an insured loan and includes the provisions of this subpart and the applicable provisions of the Act.
</P>
<P>(b) <I>Maturity</I> means the date on which the loan indebtedness would be extinguished if paid in accordance with periodic payments provided for in the loan.


</P>
</DIV8>


<DIV7 N="206" NODE="24:2.1.1.2.18.4.206" TYPE="SUBJGRP">
<HEAD>Premiums</HEAD>


<DIV8 N="§ 241.805" NODE="24:2.1.1.2.18.4.206.2" TYPE="SECTION">
<HEAD>§ 241.805   Insurance premiums.</HEAD>
<P>(a) <I>First premium.</I> The lender, upon the endorsement of the loan for insurance, shall pay to the Commissioner a first loan insurance premium equal to one percent of the original face amount of the note.
</P>
<P>(b) <I>Second premium.</I> The lender, on the date of the first principal payment, shall pay a second premium equal to one percent of the average outstanding principal obligation of the loan for the year following such first principal payment date which shall be adjusted as of that date so that the aggregate of the first and second premiums shall equal the sum of one percent per annum of the average outstanding principal obligation of the loan for the period from the date of the insurance endorsement to one year following the date of the first principal payment.
</P>
<P>(c) <I>Annual insurance premium.</I> Until the note is paid in full, or until the loan is assigned to the Commissioner, or until the contract of insurance is otherwise terminated with the consent of the Commissioner, the lender, on each anniversary of the date of the first principal payment shall pay an annual loan insurance premium equal to one percent of the average outstanding principal obligation of the loan for the year following the date on which such premium becomes payable.
</P>
<P>(d) <I>Method of premium payment.</I> Premiums shall be payable in cash or in debentures of the General Insurance Fund at par plus accrued interest. All premiums are payable in advance and no refund can be made of any portion thereof except as provided in this part.
</P>
<P>(e) <I>Calculation of premiums.</I> The premiums payable on and after the date of the first principal payment shall be calculated in accordance with the amortization provisions without taking into account delinquent payments or prepayments.


</P>
</DIV8>


<DIV8 N="§ 241.805a" NODE="24:2.1.1.2.18.4.206.3" TYPE="SECTION">
<HEAD>§ 241.805a   Mortgagee's late charge.</HEAD>
<P>Mortgage insurance premiums which are paid to the Commissioner more than 15 days after the billing date or due date, whichever is later, shall include a late charge of 4 percent of the amount of the payment due, except that no late charge shall be required with respect to any case for which HUD fails to render a proper billing to the mortgagee.


</P>
</DIV8>


<DIV8 N="§ 241.815" NODE="24:2.1.1.2.18.4.206.4" TYPE="SECTION">
<HEAD>§ 241.815   Termination of insurance.</HEAD>
<P>(a) <I>Prepayment in full.</I> The contract of insurance shall be terminated if the loan is paid in full prior to its maturity. Notice of the prepayment shall be given to the Commissioner, on a form prescribed by the Commissioner, within 30 days from the date of the prepayment. The insurance termination shall become effective as of the date of the prepayment, or 30 days prior to the Commissioner's receipt of the prepayment notice, whichever is later.
</P>
<P>(b) <I>Voluntary termination.</I> The contract of insurance shall be voluntarily terminated upon receipt by the Commissioner of a written request, on a form prescribed by the Commissioner, by the borrower and the lender for such termination, accompanied by a submission of the original credit instrument for cancellation of the insurance endorsement and the remittance of all sums to which the Commissioner is entitled. The termination shall become effective as of the date these requirements are met.


</P>
</DIV8>


<DIV8 N="§ 241.825" NODE="24:2.1.1.2.18.4.206.5" TYPE="SECTION">
<HEAD>§ 241.825   Pro rata refund of insurance premium.</HEAD>
<P>Upon termination of a loan insurance contract by a payment in full or by a voluntary termination, the Commissioner shall refund to the lender for the account of the borrower an amount equal to the pro rata portion of the current annual loan insurance premium theretofore paid which is applicable to the portion of the year subsequent to the effective date of the termination.


</P>
</DIV8>

</DIV7>


<DIV7 N="207" NODE="24:2.1.1.2.18.4.207" TYPE="SUBJGRP">
<HEAD>Rights and Duties of Lender Under the Contract of Insurance</HEAD>


<DIV8 N="§ 241.830" NODE="24:2.1.1.2.18.4.207.6" TYPE="SECTION">
<HEAD>§ 241.830   Definition of default.</HEAD>
<P>(a) If the borrower fails to make any payments due under or provided to be paid by the terms of the note or security instrument, the note shall be considered in default for the purposes of this subpart.
</P>
<P>(b) The failure to perform any other covenant under the note or security instrument shall be considered a default: <I>Provided,</I> The lender, because of such default, has exercised its rights under the note or security instrument and accelerated the debt.
</P>
<P>(c) The failure to make any payment or to perform any covenant under the first conventional note and mortgage by reason of which the holder thereof declares a default as evidenced by formal written declaration of said default to the Commissioner and the lender by the holder of the first note and mortgage, shall be considered a default under the insured loan.
</P>
<P>(d) If such defaults as defined in paragraphs (a), (b), and (c) of this section continue for a period of 30 days, the lender shall be entitled to receive the benefits of insurance hereinafter provided.


</P>
</DIV8>


<DIV8 N="§ 241.840" NODE="24:2.1.1.2.18.4.207.7" TYPE="SECTION">
<HEAD>§ 241.840   Date of default.</HEAD>
<P>In computing loan insurance benefits, the date of default shall be considered as:
</P>
<P>(a) The date of the lender's acceleration of the debt because of the borrower's uncorrected failure to perform a covenant or obligation under the note or security instrument; or
</P>
<P>(b) The date of the first failure to make a monthly payment which subsequent payments by the borrower are insufficient to cover when applied to the overdue monthly payments in the order in which they become due.
</P>
<P>(c) The date of the lender's acceleration of the debt because of the borrower's default under the first conventional note and mortgage.


</P>
</DIV8>


<DIV8 N="§ 241.850" NODE="24:2.1.1.2.18.4.207.8" TYPE="SECTION">
<HEAD>§ 241.850   Notice of default.</HEAD>
<P>(a) If the default is not cured within the 30 day grace period, as defined in § 241.530(d), the lender shall, within 30 days thereafter, notify the Commissioner in writing of such default. 
</P>
<P>(b) The lender shall give notice in writing to the Commissioner of the failure of the borrower to comply with any covenant or obligation under the security instrument or note regardless of the fact that the lender may not have elected to accelerate the debt. 


</P>
</DIV8>


<DIV8 N="§ 241.860" NODE="24:2.1.1.2.18.4.207.9" TYPE="SECTION">
<HEAD>§ 241.860   Commissioner's right to require acceleration.</HEAD>
<P>Upon receipt of notice of the failure of the borrower to comply with any covenant or obligation under the security instrument or note, or under the conventional note and mortgage, the Commissioner may require the lender to accelerate payment of the outstanding principal balance due. 


</P>
</DIV8>


<DIV8 N="§ 241.865" NODE="24:2.1.1.2.18.4.207.10" TYPE="SECTION">
<HEAD>§ 241.865   Election by the lender.</HEAD>
<P>Where a real estate mortgage, or other security instrument has been used to secure the payment of a loan made under the provisions of this subpart and subpart C of this part, the lender may either elect to assign the loan to the Commissioner in exchange for the payment of insurance benefits or may exercise its rights under the note and security instrument in lieu of making a claim for insurance benefits. If the lender elects the latter course, the Commissioner shall be so notified and the contract of insurance shall be deemed terminated upon the date of receipt of such notification. 


</P>
</DIV8>


<DIV8 N="§ 241.875" NODE="24:2.1.1.2.18.4.207.11" TYPE="SECTION">
<HEAD>§ 241.875   Maximum claim period.</HEAD>
<P>Notice of intention to file claim on a form prescribed by the Commissioner shall be filed within 45 days after the lender becomes eligible for the benefits of the loan insurance, or within such later time as may be agreed upon by the Commissioner in writing. 


</P>
</DIV8>


<DIV8 N="§ 241.880" NODE="24:2.1.1.2.18.4.207.12" TYPE="SECTION">
<HEAD>§ 241.880   Items to be delivered on submitting claim.</HEAD>
<P>Within 30 days after the filing of the notice of intention to assign the loan to the Commissioner, or within such further period as may be agreed upon by the Commissioner in writing, the lender shall deliver to the Commissioner: 
</P>
<P>(a) The fiscal data pertaining to the loan transactions; 
</P>
<P>(b) Receipts covering all disbursements as required by the fiscal data form; 
</P>
<P>(c) The original note and any security instrument or instruments which shall be assigned to the Commissioner without recourse or warranty, except that the lender must warrant that no act or omission of the lender has impaired the validity and priority of such security instrument or instruments that the security instrument or instruments are prior to all mechanics' and materialmen's liens filed of record subsequent to the recording of such security instrument or instruments regardless of whether such liens attached prior to such recording date, and prior to all liens and encumbrances which may have attached or defects which may have arisen subsequent to the recording of such security instrument or instruments, except such liens or other matters as may be approved by the Commissioner, that the amount stated in the instrument of assignment is actually due and owing under the security instrument or instruments, that there are no offsets or counterclaims thereto, and that the lender has a good right to assign such note and security instrument or instruments; 
</P>
<P>(d) The assignment to the Commissioner of all rights and interests arising under the note and security instrument or instruments so in default and all claims of the lender against the borrower or others arising out of the loan transaction; 
</P>
<P>(e) All policies of title or other insurance or surety bonds, or other guarantees and any and all claims thereunder; including evidence satisfactory to the Commissioner that the original title coverage has been extended to include the assignment of the note and security instrument or instruments to the Commissioner; 
</P>
<P>(f) All records, ledger cards, documents, books, papers and accounts relating to the loan transaction; 
</P>
<P>(g) Any additional information or data which the Commissioner may require; 
</P>
<P>(h) The following cash items, held in connection with the loan insured under this subpart, shall either be retained by the lender or delivered to the Commissioner at the time the insurance claim is filed. 
</P>
<P>(1) Any cash held by the lender or its agents or to which it is entitled including deposits made for the account of the borrower and which have not been applied in reduction of the principal the loan indebtedness. 
</P>
<P>(2) All funds held by the lender for the account of the borrower received pursuant to any other agreement. 
</P>
<P>(i) On the date the assignment of the note and security instrument or instruments are filed for record, the lender shall notify the Commissioner and the Office of Finance and Accounting by telegram of such recordation. 


</P>
</DIV8>


<DIV8 N="§ 241.885" NODE="24:2.1.1.2.18.4.207.13" TYPE="SECTION">
<HEAD>§ 241.885   Insurance benefits.</HEAD>
<P>(a) <I>Method of payment.</I> Payment of insurance claims shall be made in cash, in debentures, or in a combination of both, as determined by the Commissioner either at, or prior to, the time of payment.
</P>
<P>(b) <I>Amount of payment.</I> Upon acceptable assignment of the note and security instrument to the Commissioner, the insurance benefits shall be paid in an amount equal to 90 percent of the amount determined as follows: 
</P>
<P>(1) By adding to the unpaid principal amount of the loan, computed as of the date of default, the following items: 
</P>
<P>(i) Any accrued interest due as of the date of execution of the assignment of the loan to the Commissioner. 
</P>
<P>(ii) Any advances approved by the Commissioner made previously by the lender under the provisions of the note or security instrument or instruments. 
</P>
<P>(iii) Reimbursements for such reasonable collection costs, court costs, and attorney's fees as may be approved by the Commissioner. 
</P>
<P>(iv) Any loan insurance premiums paid after default.
</P>
<P>(v) If payment is made in cash, an amount equivalent to the debenture interest which would have been earned thereon, as of the date such cash payment is made, except when the lender fails to meet any one of the applicable requirements of §§ 241.850, 241.875, and 241.880, within the specified time and in a manner satisfactory to the Commissioner (or within such further time as the Commissioner may approve in writing), the interest allowance in such cash payment shall be computed only to the date on which the particular required action should have been taken or to which it was extended.
</P>
<P>(2) By deducting from the total of the items computed under paragraph (b)(1) of this section the following items:
</P>
<P>(i) Any amount received by the lender on account of the loan after the date of default.
</P>
<P>(ii) Any net income received by the lender from the property covered by the note or security instrument and not applied to prior debts held by the lender.
</P>
<P>(iii) The sum of the cash items retained by the lender pursuant to § 241.880(h) (1) and (2).
</P>
<CITA TYPE="N">[45 FR 57987, Aug. 29, 1980, as amended at 80 FR 51469, Aug. 25, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 241.890" NODE="24:2.1.1.2.18.4.207.14" TYPE="SECTION">
<HEAD>§ 241.890   Characteristics of debentures.</HEAD>
<P>Debentures issued in settlement of insurance claims under this subpart shall have the same characteristics and the same requirements for registration and redemption as those issued pursuant to subpart B of this part except that debentures shall bear interest at the rate in effect as of the date the commitment was issued, or as of the date the loan was first endorsed for insurance, whichever rate is higher, and shall mature 10 years from the date of issue which date shall be the date of execution of the assignment of the loan to the Commissioner.


</P>
</DIV8>


<DIV8 N="§ 241.893" NODE="24:2.1.1.2.18.4.207.15" TYPE="SECTION">
<HEAD>§ 241.893   Cash adjustment.</HEAD>
<P>Any difference of less than $50 between the amount of debentures to be issued to the lender and the total amount of the lender's claim, as approved by the Commissioner, may be adjusted by the issuance of a check in payment thereof.
</P>
<CITA TYPE="N">[59 FR 49817, Sept. 30, 1994]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="208" NODE="24:2.1.1.2.18.4.208" TYPE="SUBJGRP">
<HEAD>Assignments</HEAD>


<DIV8 N="§ 241.895" NODE="24:2.1.1.2.18.4.208.16" TYPE="SECTION">
<HEAD>§ 241.895   Assignment of insured loans.</HEAD>
<P>(a) An insured loan may be transferred only to a transferee who is a lender approved by the Commissioner. Upon such transfer and the assumption by the transferee of all obligations under the contract of insurance the transferor shall be released from its obligations under the contract of insurance.
</P>
<P>(b) The contract of insurance shall terminate with respect to loans described in paragraph (a) of this section upon the happening of either of the following events:
</P>
<P>(1) The transfer or pledge of the insured loan to any person, firm or corporation, public or private, other than an approved lender.
</P>
<P>(2) The disposal by a lender of any partial interest in the insured loan to other than an approved lender.


</P>
</DIV8>

</DIV7>


<DIV7 N="209" NODE="24:2.1.1.2.18.4.209" TYPE="SUBJGRP">
<HEAD>Extension of Time</HEAD>


<DIV8 N="§ 241.897" NODE="24:2.1.1.2.18.4.209.17" TYPE="SECTION">
<HEAD>§ 241.897   Actions to be taken by lender.</HEAD>
<P>With respect to any action required of the lender within a period of time prescribed by this subpart, the Commissioner may extend such period.


</P>
</DIV8>

</DIV7>


<DIV7 N="210" NODE="24:2.1.1.2.18.4.210" TYPE="SUBJGRP">
<HEAD>Rights in Housing Fund</HEAD>


<DIV8 N="§ 241.900" NODE="24:2.1.1.2.18.4.210.18" TYPE="SECTION">
<HEAD>§ 241.900   No vested right in fund.</HEAD>
<P>Neither the lender nor the borrower shall have any vested or other right in the General Insurance Fund.


</P>
</DIV8>


<DIV8 N="§ 241.905" NODE="24:2.1.1.2.18.4.210.19" TYPE="SECTION">
<HEAD>§ 241.905   Effect of amendments.</HEAD>
<P>The regulations in this subpart may be amended by the Commissioner at any time and from time to time in whole or in part, but such amendment shall not adversely affect the interests of a lender under the contract of insurance on any loan already insured and shall not adversely affect the interests of a lender on any loan to be insured on which the Commissioner has made a commitment to insure. 


</P>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="E" NODE="24:2.1.1.2.18.5" TYPE="SUBPART">
<HEAD>Subpart E—Insurance for Equity Loans and Acquisition Loans—Eligibility Requirements</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>57 FR 12037, Apr. 8, 1992, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 241.1000" NODE="24:2.1.1.2.18.5.211.1" TYPE="SECTION">
<HEAD>§ 241.1000   Purpose and scope.</HEAD>
<P>(a) Section 231 of the Emergency Low Income Housing Preservation Act of 1989 (“ELIHPA”) amended the National Housing Act by adding a new subsection (f) to section 241. This section authorizes the Secretary to provide insurance for an equity loan as a vehicle for the owner of an eligible multifamily project to capture a portion of the project's equity, in connection with a plan of action approved by the Commissioner under ELIHPA. 
</P>
<P>(b) Section 602 of the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (“LIHPRHA”) amended section 241 by expanding its scope to include both equity loans for owners, and acquisition loans for purchasers, under a plan of action approved under the provisions of the 1990 Act, and by making other changes. The provisions of section 241(f) as amended by LIHPRHA are applicable to owners with plans of action being processed under part 248, subpart B of this chapter, which implements LIHPRHA. 
</P>
<P>(c) The provisions of section 241(f) of the Act as they were in effect prior to LIHPRHA remain in effect for owners with plans of action being processed under part 248, subpart C of this chapter, which implements ELIHPA. 
</P>
<P>(d) The insurance of an equity loan or acquisition loan under subpart E of this part may be provided only as a specific element of a plan of action approved by the Commissioner under part 248 of this chapter and is not available under any other departmental program. 
</P>
<P>(e) Unless otherwise indicated, the provisions of subparts E and F of this part are applicable to loans insured in connection with plans of action being processed under either subpart B or C of part 248 of this chapter. 
</P>
<P>(f) An owner or purchaser may obtain both a rehabilitation loan under subpart A of this part and an equity loan or acquisition loan under subpart E of this part.


</P>
</DIV8>


<DIV8 N="§ 241.1005" NODE="24:2.1.1.2.18.5.211.2" TYPE="SECTION">
<HEAD>§ 241.1005   Definitions.</HEAD>
<P>(a) All of the definitions of § 241.1 apply to equity and acquisition loans insured under subpart E of this part except the following definitions:
</P>
<EXTRACT>
<FP-2>§ 241.1(i)—Borrower; 
</FP-2>
<FP-2>§ 241.1(k)—Energy conserving improvements; 
</FP-2>
<FP-2>§ 241.1(1)—Solar energy system.</FP-2></EXTRACT>
<P>(b) As used in subpart E of this part, the following terms have the meaning indicated: 
</P>
<P><I>Acquisition loan</I> means a loan or advance of credit made to a purchaser of eligible low income housing which is made for the purpose of implementing a plan of action approved in accordance with part 248 of this chapter. 
</P>
<P><I>Borrower</I> means the owner or qualified purchaser of an eligible low income housing project, which owner receives and becomes primarily obligated for the repayment of an equity loan. With respect to loans insured in connection with a plan of action under part 248, subpart C of this chapter, the term includes a public entity, a nonprofit organization or a limited equity cooperative, which entity is purchasing an eligible low income housing project by means of an equity loan and is obligated for the payment of the equity loan. 
</P>
<P><I>Eligible low income housing</I> has the same meaning as provided at § 248.101 or § 248.201 of this chapter, with respect to loans insured in connection with plans of action under subparts B or C of part 248 of this chapter. 
</P>
<P><I>Equity</I> means, for purpose of subparts E and F of this part only, the difference between the fair market value of the project as determined by the Commissioner and the outstanding indebtedness relating to the property. 
</P>
<P><I>Equity Loan</I> means a loan or advance of credit to the owner of an eligible low income housing project which is made for the purpose of implementing a plan of action approved in accordance with part 248 of this chapter. 
</P>
<P><I>Extension preservation equity</I> has the same meaning as provided at § 248.101 of this chapter. 
</P>
<P><I>Limited equity cooperative</I> means a tenant cooperative corporation which, in a manner acceptable to the Commissioner, restricts the initial and resale price of the shares of stock in the cooperative corporation so that the shares remain affordable to low-income families and moderate income families.
</P>
<P><I>Low-income families</I> has the same meaning as provided at § 248.101 of this chapter. 
</P>
<P><I>Moderate income families</I> has the same meaning as provided at § 248.101 of this chapter. 
</P>
<P><I>Plan of action</I> has the same meaning as provided at § 248.101 or § 248.201 of this chapter. 
</P>
<P><I>Preservation equity</I> has the same meaning as provided at § 248.101 of this chapter. 
</P>
<P><I>Priority purchaser</I> has the same meaning as provided at § 248.101 of this chapter. 
</P>
<P><I>Qualified Purchaser</I> has the same meaning as provided at § 248.101 of this chapter.


</P>
</DIV8>


<DIV8 N="§ 241.1010" NODE="24:2.1.1.2.18.5.211.3" TYPE="SECTION">
<HEAD>§ 241.1010   Feasibility letter.</HEAD>
<P>(a) <I>Request for study.</I> The owner may request the Commissioner to undertake a feasibility analysis of an equity or acquisition loan, and issue a feasibility letter. At the discretion of the Commissioner the feasibility analysis may be undertaken or denied. 
</P>
<P>(b) <I>Findings.</I> The issuance of a feasibility letter indicates completion of the Commissioner's preliminary analysis for the insurance of an equity or acquisition loan. The feasibility letter shall contain the Commissioner's estimate of the supportable loan amount, based upon the project's equity in the case of an equity loan and based on the project's purchase price in the case of an acquisition loan, but such feasibility letter shall neither constitute a commitment to insure nor bind the Commissioner in any other manner. 
</P>
<P>(c) <I>Fee.</I> The Commissioner shall not charge a fee for undertaking a feasibility analysis or for the issuance of a feasibility letter.


</P>
</DIV8>


<DIV8 N="§ 241.1015" NODE="24:2.1.1.2.18.5.211.4" TYPE="SECTION">
<HEAD>§ 241.1015   Processing of applications and required fees.</HEAD>
<P>(a) <I>Application.</I> An application for the issuance of a firm commitment for insurance of an equity or acquisition loan on a project shall be submitted by an approved lender and by the owner or purchaser of the project to the Commissioner on a form prescribed by the Commissioner. No application shall be considered unless the exhibits called for by such forms are furnished. 
</P>
<P>(b) <I>Commitment fees.</I> An application for a firm commitment shall be accompanied by the payment of an application-commitment fee of $5.00 per thousand dollars of the requested loan amount to be insured. 
</P>
<CITA TYPE="N">[61 FR 14417, Apr. 1, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 241.1020" NODE="24:2.1.1.2.18.5.211.5" TYPE="SECTION">
<HEAD>§ 241.1020   Commitments.</HEAD>
<P>(a) <I>Firm commitment.</I> The issuance of a firm commitment indicates the Commissioner's approval of the application for insurance and sets forth the terms and conditions upon which the equity or acquisition loan will be insured. The firm commitment may provide for the insurance of advances of the equity or acquisition loan immediately upon endorsement of the note. 
</P>
<P>(b) <I>Term of commitment.</I> (1) A firm commitment is effective for whatever term is specified in the text of the commitment. 
</P>
<P>(2) The term of a firm commitment may be extended in such manner as the Commissioner may prescribe. 
</P>
<P>(c) <I>Reopening of expired commitments.</I> An expired firm commitment may be reopened if a request for reopening is received by the Commissioner within 90 days of the expiration of the commitment. The reopening request shall be accompanied by a fee of 50 cents per thousand dollars of the amount of the expired commitment. If the reopening request is not received by the Commissioner within the required 90-day period, a new application, accompanied by the required application and commitment fee, must be submitted.
</P>
<CITA TYPE="N">[61 FR 14417, Apr. 1, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 241.1025" NODE="24:2.1.1.2.18.5.211.6" TYPE="SECTION">
<HEAD>§ 241.1025   Refund of fees.</HEAD>
<P>If the amount of the commitment issued is less than the amount applied for, the Commissioner shall refund the excess amount of the application and commitment fees submitted by the applicant. If an application is rejected before it is assigned for processing, or in such other instances as the Commissioner may determine, the entire application and commitment fees or any portion thereof may be returned to the applicant. Commitment and reopening fees may also be refunded to the applicant, in whole or in part, in such other instances as the Commissioner may determine.


</P>
</DIV8>


<DIV8 N="§ 241.1030" NODE="24:2.1.1.2.18.5.211.7" TYPE="SECTION">
<HEAD>§ 241.1030   Mortgage insurance premiums.</HEAD>
<P>The lender, upon endorsement of the note, shall pay the Commissioner a first mortgage insurance premium equal to 0.5 percent of the original face amount of the equity or acquisition loan. 
</P>
<P>(a) If the date of the first principal payment is more than one year following the date of endorsement, the lender upon each anniversary of such endorsement date, shall pay a premium equal to 0.5 percent of the original face amount of the loan. On the date of the first principal payment, the lender shall pay another premium equal to 0.5 percent of the average outstanding principal obligation of the loan for the following year which shall be adjusted so as to accord with such date and so that the aggregate of said premiums shall equal the sum of: 
</P>
<P>(1) 0.5 percent of the average outstanding principal obligation of the loan for the year following the date of endorsement; and 
</P>
<P>(2) 0.5 percent per annum of the average outstanding principal obligation of the loan for the period from the first anniversary of the date of endorsement to one year following the date of the first principal payment. 
</P>
<P>(b) If the date of the first principal payment is one year or less than one year following the date of endorsement, the lender, upon such first principal payment date, shall pay a second premium equal to 0.5 percent of the average outstanding principal obligation of the loan for the following year which shall be adjusted so as to accord with such date and so that the aggregate of the said two premiums shall equal the sum of: 
</P>
<P>(1) 0.5 percent per annum of the average outstanding principal obligation of the loan for the period from the date of endorsement to the date of the first principal payment; and 
</P>
<P>(2) 0.5 percent of the average outstanding principal obligation of the loan for the year following the date of the first payment following the date of the first principal payment. 
</P>
<P>(c) Until the equity or acquisition loan is paid in full or until receipt by the Commissioner of an application for insurance benefits, or until the contract of insurance is otherwise terminated with the consent of the Commissioner, the lender on each anniversary date of the first principal payment, shall pay an annual insurance premium equal to 0.5 percent of the average outstanding principal obligation of the loan for the year following the date on which such premium becomes payable. 
</P>
<P>(d) The premiums payable on or after the date of the first principal payment shall be calculated in accordance with the amortizing provisions without taking into account delinquent payments or prepayments. 
</P>
<P>(e) Premiums shall be payable in cash or in debentures at par plus accrued interest. All premiums are payable in advance and no refund can be made of any portion thereof except as hereinafter provided in subpart E of this part.


</P>
</DIV8>


<DIV8 N="§ 241.1035" NODE="24:2.1.1.2.18.5.211.8" TYPE="SECTION">
<HEAD>§ 241.1035   Charges by lender.</HEAD>
<P>(a) The lender may collect from the borrower the amount of the fees provided for by subpart E of this part.
</P>
<P>(b) The lender may also collect from the borrower an initial service charge, as reimbursement for the cost of closing the transaction, in an amount not to exceed 2 percent of the original principal amount of the loan. 
</P>
<P>(c) Any charges to be collected by the lender in addition to those prescribed in paragraphs (a) and (b) of this section, shall be subject to the prior approval of the Commissioner.


</P>
</DIV8>


<DIV8 N="§ 241.1040" NODE="24:2.1.1.2.18.5.211.9" TYPE="SECTION">
<HEAD>§ 241.1040   Eligible lenders.</HEAD>
<P>Lenders approved as mortgagees under §§ 202.6, 202.7 or 202.9 of this chapter are eligible for insurance of equity loans under this subpart.
</P>
<CITA TYPE="N">[62 FR 20088, Apr. 24, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 241.1045" NODE="24:2.1.1.2.18.5.211.10" TYPE="SECTION">
<HEAD>§ 241.1045   Note and security form.</HEAD>
<P>The lender shall present for insurance a note and security instrument on forms approved by the Commissioner for use in the jurisdiction in which the property is located, which shall not be changed without the prior approval of the Commissioner. The security instrument shall provide for accelerated repayment at the request of the Commissioner pursuant to § 241.1046(b).


</P>
</DIV8>


<DIV8 N="§ 241.1046" NODE="24:2.1.1.2.18.5.211.11" TYPE="SECTION">
<HEAD>§ 241.1046   Rental assistance.</HEAD>
<P>(a) When underwriting an equity or acquisition loan under subpart E of this part, the Commissioner may assume that the rental assistance provided in accordance with a plan of action approved under subparts B or C of part 248 of this chapter will be extended for the full term of the contract entered into under the plan of action. 
</P>
<P>(b) In the event that rental assistance is not extended under part 248 of this chapter, or the Commissioner is unable to develop a revised package of incentives to the owner comparable to those received under the original approved plan of action, the Commissioner may require the mortgagee to accelerate the debt of the equity or acquisition loan. 
</P>
<P>(c) If the Commissioner is unable to extend the term of rental assistance for the full term of the contract entered into under part 248 of this chapter, the Commissioner is authorized to take such actions as the Commissioner deems appropriate to avoid default, avoid disruption of the sound ownership and management of the property or otherwise minimize the cost to the Federal Government.


</P>
</DIV8>


<DIV8 N="§ 241.1050" NODE="24:2.1.1.2.18.5.211.12" TYPE="SECTION">
<HEAD>§ 241.1050   Method of loan payment.</HEAD>
<P>The loan shall provide for monthly payments on the first day of each month on account of interest and principal and shall provide for payments in accordance with the amortization plan as agreed upon by the borrower, the lender, and the Commissioner.


</P>
</DIV8>


<DIV8 N="§ 241.1055" NODE="24:2.1.1.2.18.5.211.13" TYPE="SECTION">
<HEAD>§ 241.1055   Date of first payment to principal.</HEAD>
<P>The date for first payment to principal shall be established by the Commissioner.


</P>
</DIV8>


<DIV8 N="§ 241.1060" NODE="24:2.1.1.2.18.5.211.14" TYPE="SECTION">
<HEAD>§ 241.1060   Maturity.</HEAD>
<P>(a) Equity loans shall have a term not to exceed 40 years; and
</P>
<P>(b) Acquisition loans shall have a term of 40 years.
</P>
<CITA TYPE="N">[58 FR 37814, July 13, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 241.1065" NODE="24:2.1.1.2.18.5.211.15" TYPE="SECTION">
<HEAD>§ 241.1065   Maximum loan amount—loans insured in connection with a plan of action under subpart C of part 248 of this chapter.</HEAD>
<P>The amount of the equity loan shall not exceed ninety percent of the owner's equity in the project, as determined by the Commissioner. Notwithstanding the above, the equity loan shall not exceed an amount which, when added to the existing indebtedness on the property, can be supported by 90 percent of the projected net operating income of the project, as determined by the Commissioner. The Commissioner, in making a determination regarding the amount of an equity loan and sums available to service said loan, shall take into account the fact that the project's income may increase within the limits established by § 248.233(d) of this chapter.


</P>
</DIV8>


<DIV8 N="§ 241.1067" NODE="24:2.1.1.2.18.5.211.16" TYPE="SECTION">
<HEAD>§ 241.1067   Maximum loan amount—loans insured in connection with a plan of action under subpart B of part 248 of this chapter.</HEAD>
<P>(a) The amount of the equity loan shall not exceed:
</P>
<P>(1) The amount of rehabilitation costs as determined under an approved plan of action and related charges; plus
</P>
<P>(2) The lesser of 70 percent of the extension preservation equity of the project; or
</P>
<P>(3) The amount the Commissioner determines can be supported by the project on the basis of an 8 percent return on extension preservation equity, assuming normal debt service coverage. To the extent practicable, equity loans shall have amortization provisions which will support the maximum loan amount authorized under this section.
</P>
<P>(b) The amount of the acquisition loan shall not exceed:
</P>
<P>(1) The amount of rehabilitation costs as determined under an approved plan of action and related charges; plus
</P>
<P>(2) Ninety-five percent of the transfer preservation equity of the project; and
</P>
<P>(3) If the purchaser is a priority purchaser, the loan may include any expenses associated with the acquisition, loan closing, and implementation of the plan of action, subject to the approval of the Commissioner.
</P>
<CITA TYPE="N">[58 FR 37814, July 13, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 241.1068" NODE="24:2.1.1.2.18.5.211.17" TYPE="SECTION">
<HEAD>§ 241.1068   Renegotiation of an equity loan.</HEAD>
<P>The Commissioner shall renegotiate and modify the terms of an equity loan insured under this subpart at the request of the owner of the project for which a loan closing occurred if—
</P>
<P>(a) The loan closing occurred between September 28, 1992 and January 26, 1993;
</P>
<P>(b) The loan was made pursuant to a plan of action submitted under subpart C of part 248 of this chapter; and
</P>
<P>(c) The plan of action was accepted by the Commissioner for processing in December 1991.
</P>
<CITA TYPE="N">[58 FR 37814, July 13, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 241.1069" NODE="24:2.1.1.2.18.5.211.18" TYPE="SECTION">
<HEAD>§ 241.1069   Escrow requirements.</HEAD>
<P>(a) An equity loan provided in connection with a plan of action under subpart B of part 248 of this chapter shall provide for the lender to deposit, on behalf of the borrower, 10 percent of the loan amount in an escrow account, controlled by the Commissioner or a State housing finance agency approved by the Commissioner, which shall be made available to the borrower upon the expiration of the 5-year period beginning on the date the loan is made, subject to compliance with § 248.147 of this chapter. 
</P>
<P>(b) An equity loan provided in connection with a plan of action under either subpart B or subpart C of part 248 of this chapter shall provide for the lender to phase in advances to reflect project rent levels.


</P>
</DIV8>


<DIV8 N="§ 241.1070" NODE="24:2.1.1.2.18.5.211.19" TYPE="SECTION">
<HEAD>§ 241.1070   Agreed interest rate.</HEAD>
<P>The equity or acquisition loan shall bear interest at the rate agreed upon by the borrower and the lender.


</P>
</DIV8>


<DIV8 N="§ 241.1080" NODE="24:2.1.1.2.18.5.211.20" TYPE="SECTION">
<HEAD>§ 241.1080   Eligibility of title.</HEAD>
<P>In order for the project to be eligible for insurance, the Commissioner shall determine that the title to the property is vested in the borrower as of the date the security instrument is filed for record. The title evidence will be examined by the Commissioner and the endorsement of the credit instrument for insurance shall be evidence of its acceptability.


</P>
</DIV8>


<DIV8 N="§ 241.1085" NODE="24:2.1.1.2.18.5.211.21" TYPE="SECTION">
<HEAD>§ 241.1085   Title evidence.</HEAD>
<P>(a) Upon insurance of the loan, the lender shall furnish to the Commissioner a policy of title insurance as provided in paragraph (a)(1) of this section. If the lender is unable to furnish such policy for reasons satisfactory to the Commissioner, the lender shall furnish such evidence of title as provided in paragraphs (a)(2), (3) or (4) of this section as the Commissioner may require. Any policy of title insurance, or evidence of title required under this section shall be furnished without expense to the Commissioner. The acceptable types of title evidence are: 
</P>
<P>(1) A policy of title insurance issued by a company and in a form satisfactory to the Commissioner. The policy shall name the lender and the Secretary of Housing and Urban Development, as their respective interests may appear, as the insured. The policy shall provide that upon acquisition of title by the lender or the Secretary, it will continue to provide the same coverage as the original policy, and will run to the lender upon its acquisition of the property in extinguishment of the debt, and to the Secretary upon acquisition of the property pursuant to the loan insurance contract.
</P>
<P>(2) An abstract of title satisfactory to the Commissioner, prepared by an abstract company or individual engaged in the business of preparing abstracts of title, accompanied by a legal opinion satisfactory to the Commissioner, as to the quality of such title, signed by an attorney at law experienced in the examination of titles; 
</P>
<P>(3) A Torrens or similar title certification; or 
</P>
<P>(4) Evidence of title conforming to the standards of a supervising branch of the Government of the United States of America, or of any State or territory thereof.
</P>
<CITA TYPE="N">[57 FR 12037, Apr. 8, 1992, as amended at 58 FR 34217, June 24, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 241.1090" NODE="24:2.1.1.2.18.5.211.22" TYPE="SECTION">
<HEAD>§ 241.1090   Accumulation of next premium.</HEAD>
<P>The security instrument shall provide for payments by the borrower to the lender on each interest payment date of an amount sufficient to accumulate in the hands of the lender one payment period prior to its due date the next annual insurance premium payable by the lender to the Commissioner. These payments shall continue only as long as the contract of insurance remains in effect.


</P>
</DIV8>


<DIV8 N="§ 241.1095" NODE="24:2.1.1.2.18.5.211.23" TYPE="SECTION">
<HEAD>§ 241.1095   Application of payments.</HEAD>
<P>(a) The security instrument shall provide that all monthly payments to be made by the borrower shall be added together and the aggregate amount shall be paid by the borrower upon each monthly payment date in a single payment. The lender shall apply the payment in the following order: 
</P>
<P>(1) Premium charges under the contact of insurance; 
</P>
<P>(2) Interest on the loan; and
</P>
<P>(3) Amortization of the principal of the loan. 
</P>
<P>(b) Any deficiency in the amount of any monthly payments required under paragraph (a) of this section shall constitute a default. The security instrument shall provide for a grace period of 30 days within which time the default must be cured.


</P>
</DIV8>


<DIV8 N="§ 241.1100" NODE="24:2.1.1.2.18.5.211.24" TYPE="SECTION">
<HEAD>§ 241.1100   Prepayment privilege and charges.</HEAD>
<P>(a) <I>Prepayment privilege.</I> (1) Except as otherwise provided in paragraph (b) of this section, the security instrument shall contain a provision permitting the borrower to prepay the loan, in whole or in part, upon any interest payment date after giving to the lender 30 days advance notice of its intention to prepay. 
</P>
<P>(2) If the loan exceeds $200,000, the security instrument may contain a provision for an additional charge in the event of prepayment of principal as may be agreed upon between the borrower and lender. These charges shall not be imposed if the loan is accelerated at the request of the Commissioner, pursuant to § 241.1046(b). The borrower shall be permitted to prepay up to 15 percent of the original principal amount of the loan in any one calendar year without any additional charge. A provision for an additional charge in the event of prepayment may not be included in a loan of $200,000 or less.
</P>
<P>(b) <I>Prepayment of bond-financed loan.</I> Where the lender has obtained the funds for the loan by the issuance and sale of bonds or bond anticipation notes, or both, the loan may contain a prepayment restriction and prepayment penalty charges acceptable to the Commissioner as to term, amount, and conditions.


</P>
</DIV8>


<DIV8 N="§ 241.1105" NODE="24:2.1.1.2.18.5.211.25" TYPE="SECTION">
<HEAD>§ 241.1105   Late charges.</HEAD>
<P>The note and security instrument may provide for the lender's collection of a late charge, not to exceed 2 cents for each dollar of each payment to interest or principal more than 15 days in arrears, to cover the expense involved in handling delinquent payments. Late charges shall be separately charged to and collected from the borrower and shall not be deducted from any aggregate monthly payment.


</P>
</DIV8>


<DIV8 N="§ 241.1120" NODE="24:2.1.1.2.18.5.211.26" TYPE="SECTION">
<HEAD>§ 241.1120   Mortgagee's consent.</HEAD>
<P>The holder of an insured mortgage which is recorded prior to the equity or acquisition loan shall not withhold its consent to the equity or acquisition loan (whether or not such equity or acquisition loan is insured by the Commissioner) or the security instrument executed in connection therewith, and may not charge a fee as a condition to its consent to such loan or security instrument.


</P>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:2.1.1.2.18.6" TYPE="SUBPART">
<HEAD>Subpart F—Insurance for Equity Loans and Acquisition Loans—Contract Rights and Obligations</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>57 FR 12040, Apr. 8, 1992, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 241.1200" NODE="24:2.1.1.2.18.6.211.1" TYPE="SECTION">
<HEAD>§ 241.1200   Cross-references.</HEAD>
<P>(a) <I>Projects with a HUD-insured or HUD-held mortgage.</I> (1) All the provisions of part 207, subpart B of this chapter, covering mortgages insured under section 207 of the Act, apply to equity loans or acquisition loans on a project insured under section 241(f) of the Act, except the following provisions:
</P>
<EXTRACT>
<FP>Sec. 
</FP>
<FP-2>207.251 Definitions. 
</FP-2>
<FP-2>207.252 First, second and third premium. 
</FP-2>
<FP-2>207.252a Premiums—operating loss loans. 
</FP-2>
<FP-2>207.252b Premiums—mortgages insured pursuant to section 223(f) of the Act. 
</FP-2>
<FP-2>207.252c Premiums—mortgages insured pursuant to section 238(c) of the Act. 
</FP-2>
<FP-2>207.254 Insurance endorsement.</FP-2></EXTRACT>
<P>(2) For the purposes of subpart F of this part, all references in part 207 of this chapter to section 207 of the Act and to the term “mortgage” shall be construed to refer to section 241(f) of the Act and “equity or acquisition loan,” respectively. 
</P>
<P>(b) <I>Projects without a HUD-insured or HUD-held mortgage.</I> The provisions of subpart D of this part shall be applicable to a project without a HUD-insured or HUD-held mortgage that is receiving an equity loan or acquisition loan under subpart E of this part in connection with a plan of action approved by the Commissioner under part 248 of this chapter. 
</P>
<P>(c) All of the definitions in § 241.1005 apply to subpart F of this part. In addition, as used in subpart F of this part, the term “contract of insurance” means the agreement evidenced by the Commissioner's insurance endorsement and includes the provisions of subpart F of this part and of the Act.


</P>
</DIV8>


<DIV8 N="§ 241.1205" NODE="24:2.1.1.2.18.6.211.2" TYPE="SECTION">
<HEAD>§ 241.1205   Payment of insurance benefits.</HEAD>
<P>All the provisions of § 207.259 of this chapter relating to insurance benefits shall apply to an equity or acquisition loan insured under subpart F of this part.
</P>
<CITA TYPE="N">[80 FR 51469, Aug. 25, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 241.1210" NODE="24:2.1.1.2.18.6.211.3" TYPE="SECTION">
<HEAD>§ 241.1210   Condition for payment of insurance benefits.</HEAD>
<P>(a) All of the provisions of § 207.258 of this chapter apply to subpart F of this part, except that, if the holder of the senior insured mortgage institutes a foreclosure action, the lender shall notify the Commissioner in a timely manner of such action. The Commissioner, at its option, may then direct the lender to assign the equity or acquisition loan to the Commissioner, or bid an amount necessary to acquire the project and convey the project to the Commissioner. 
</P>
<P>(b) If the equity loan or acquisition loan is assigned in accordance with this section, the Commissioner at a foreclosure sale may bid, in addition to amounts otherwise authorized, any sum not in excess of the aggregate unpaid indebtedness secured by the senior insured mortgage and equity or acquisition loan, plus taxes, insurance, foreclosure costs, fees and other expenses.


</P>
</DIV8>


<DIV8 N="§ 241.1215" NODE="24:2.1.1.2.18.6.211.4" TYPE="SECTION">
<HEAD>§ 241.1215   Calculation of insurance benefits.</HEAD>
<P>All of the provisions of § 207.259 of this chapter apply to subpart F of this part, except that if the lender, at the direction of the Commissioner, acquires title to the project at a foreclosure sale instituted by the holder of the senior insured mortgage, the amount of the claim determined under § 207.259(c) of this chapter shall also include an amount bid by the lender to satisfy the senior insured mortgage at the foreclosure sale.


</P>
</DIV8>


<DIV8 N="§ 241.1220" NODE="24:2.1.1.2.18.6.211.5" TYPE="SECTION">
<HEAD>§ 241.1220   Termination of insurance benefits.</HEAD>
<P>All of the provisions of § 207.253a of this chapter apply to subpart F of this part, except that the following shall also constitute grounds for terminating the contract of insurance: 
</P>
<P>(a) The failure of the lender to notify the Commissioner in a timely manner of a foreclosure action initiated by the holder of the senior insured mortgage; and 
</P>
<P>(b) The failure of the lender when directed by the Commissioner to assign the equity or acquisition loan or bid an amount necessary to acquire title to the project and convey the project to the Commissioner, in accordance with § 241.1210.


</P>
</DIV8>


<DIV8 N="§ 241.1230" NODE="24:2.1.1.2.18.6.211.6" TYPE="SECTION">
<HEAD>§ 241.1230   No vested right in fund.</HEAD>
<P>Neither the lender nor the borrower shall have any vested or other right in the insurance fund under which the loan is insured.


</P>
</DIV8>


<DIV8 N="§ 241.1235" NODE="24:2.1.1.2.18.6.211.7" TYPE="SECTION">
<HEAD>§ 241.1235   Cross default.</HEAD>
<P>In the event the borrower commits a default under a prior recorded insured mortgage and the holder thereof initiates a foreclosure proceeding, said default under the prior recorded insured mortgage shall constitute a default under the equity or acquisition loan.


</P>
</DIV8>


<DIV8 N="§ 241.1245" NODE="24:2.1.1.2.18.6.211.8" TYPE="SECTION">
<HEAD>§ 241.1245   Insurance endorsement.</HEAD>
<P>(a) <I>Endorsement.</I> The Commissioner shall indicate his insurance of the equity loan or acquisition loan by endorsing the original credit instrument and identifying the section of the Act and the regulations under which the loan is insured and the date of insurance. 
</P>
<P>(b) <I>Endorsement of phased loan.</I> In the event the loan is phased, the Commissioner shall indicate his insurance of each amount by endorsing the original credit instrument and identifying the section of the Act and the regulations under which such amount is insured and the date of the insurance. 
</P>
<P>(c) <I>Final advance of phased loan.</I> When all advances of a phased loan have been made and the terms and conditions of the commitment have been complied with to the satisfaction of the Commissioner, the Commissioner shall indicate on the original credit instrument the total of all advances the Commissioner has approved for insurance and again endorse such instrument.


</P>
</DIV8>


<DIV8 N="§ 241.1250" NODE="24:2.1.1.2.18.6.211.9" TYPE="SECTION">
<HEAD>§ 241.1250   Effect of endorsement.</HEAD>
<P>From the date that the equity or acquisition loan is endorsed, the Commissioner and the lender shall be bound by the provisions of subpart F of this part to the same extent as if they had executed a contract including the provisions of subpart F of this part and the applicable sections of the Act.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="242" NODE="24:2.1.1.2.19" TYPE="PART">
<HEAD>PART 242—MORTGAGE INSURANCE FOR HOSPITALS 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1709, 1710, 1715b, 1715n(f), and 1715u; 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>72 FR 67546, Nov. 28, 2007, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:2.1.1.2.19.1" TYPE="SUBPART">
<HEAD>Subpart A—General Eligibility Requirements</HEAD>


<DIV8 N="§ 242.1" NODE="24:2.1.1.2.19.1.211.1" TYPE="SECTION">
<HEAD>§ 242.1   Definitions.</HEAD>
<P>As used in this subpart, the following terms shall have the meaning indicated:
</P>
<P><I>Acquisition</I> means the purchase by an eligible mortgagor of an existing hospital facility and ancillary property associated therewith.
</P>
<P><I>Act</I> means the National Housing Act (12 U.S.C. 1701 <I>et seq.</I>).
</P>
<P><I>Affiliate</I> means a person or entity which, directly or indirectly, either controls or has the power to control or exert significant influence on the other, or a person and entity both controlled by a third person or entity, which may be a parent entity. Indicia of control include, but are not limited to: Interlocking management or ownership, identity of interests among family members, shared facilities and equipment, common use of employees, or a business entity organized following the suspension or debarment of a person or entity that has the same or similar management, ownership, or principal employees as the suspended, debarred, ineligible, or voluntarily excluded person or entity or as defined in the Medicare reimbursement regulations.
</P>
<P><I>AMPO</I> (Allowance for Making Project Operational) relates to nonprofit projects and means a fund that is primarily for accruals during the course of construction for mortgage insurance premiums (MIPs), taxes, ground rents, property insurance premiums, and assessments, when funds available for these purposes under the Building Loan Agreement have been exhausted; and also for allocation to such accruals after completion of construction, if the income from the hospital at that time is insufficient to meet such accruals. AMPO may also be used for such other purposes as approved by HUD. Any balance remaining unused in the fund at final endorsement will be treated in accordance with § 242.43.
</P>
<P><I>Applicant</I> means a HUD multifamily-approved lender that would be the mortgagee of record.
</P>
<P><I>Capital debt</I> means the outstanding indebtedness used for the construction, rehabilitation, or acquisition of the physical property and equipment of a hospital, including those financing costs approved by HUD.
</P>
<P><I>Chronic convalescent and rest</I> means skilled nursing services, intermediate care services, respite care services, hospice services, and other services of a similar nature.
</P>
<P><I>Construction</I> means the creation of a new or replacement hospital facility, the substantial rehabilitation of an existing facility, or the limited rehabilitation of an existing facility. The cost of acquiring new or replacement equipment may be included in the cost of construction.
</P>
<P><I>Days of cash on hand</I> means the number of days of operating cash available to the hospital, calculated pursuant to standards determined by HUD.
</P>
<P><I>Debt service coverage ratio</I> is a measure of a hospital's ability to pay interest and principal with cash generated from current operations. Debt service ratio is calculated as follows: Debt Service Coverage Ratio (total debt service coverage on all long-term capital debt) equals the excess of revenues over expenses (not-for-profit) or net income (for-profit) plus interest expense plus depreciation expense plus amortization expense, all divided by current portion of long-term debt (including capital leases) from the previous year's audited financial statement plus interest expense. The calculation can be expressed as:
</P>
<MATH BORDER="NODRAW" DEEP="22" HTYPE="CENTER" POSITION="NOFLOAT" ROTATION="P" SPAN="2" STRIP="YES">
<img src="/graphics/er28no07.052.gif"/></MATH>
<P><I>Hard costs</I> means the costs of the construction and equipment, including construction-related fees such as architect and construction manager fees.
</P>
<P><I>Hospital</I> means a facility that has been proposed for approval or has been approved by HUD under the provisions of this subpart, and:
</P>
<P>(1) That provides community services for inpatient medical care of the sick or injured (including obstetrical care);
</P>
<P>(2) Where not more than 50 percent of the total patient days during any year are customarily assignable to the categories of chronic convalescent and rest, drug and alcoholic, epileptic, mentally deficient, mental, nervous and mental, and tuberculosis, except that the 50 percent patient day restriction does not apply to Critical Access Hospitals (hospitals designated as such under the Medicare Rural Hospital Flexibility Program) between January 28, 2008 and July 31, 2011.
</P>
<P>(3) That is a facility licensed or regulated by the state (or, if there is no such state law providing for such licensing or regulation by the state, by the municipality or other political subdivision in which the facility is located) and is:
</P>
<P>(i) A public facility owned by a state or unit of local government or by an instrumentality thereof, or owned by a public benefit corporation established by a state or unit of local government or by an instrumentality thereof;
</P>
<P>(ii) A proprietary facility; or
</P>
<P>(iii) A facility of a private nonprofit corporation or association.
</P>
<P><I>Identity of interest</I> means a relationship that must be disclosed and may be prohibited pursuant to the requirements of the Regulatory Agreement. Examples of a prohibited Identity of Interest relationship are, but are not limited to, a financial or family relationship between the mortgagor (which includes but is not limited to an officer, director, or partner of the mortgagor) and general contractor, subcontractor, seller of the land or property, any consultants, or other parties to the transaction.
</P>
<P><I>Limited rehabilitation</I> means additions, expansion, remodeling, renovation, modernization, repair, and alteration of existing buildings, including acquisition of new or replacement equipment, in cases where the hard costs of construction and equipment are less than 20 percent of the mortgage amount.
</P>
<P><I>Mortgage</I> means such classes of first liens as are commonly given to secure advances on, or the unpaid purchase price of, real estate under the laws of the state in which the real estate is located, together with any mortgage note secured thereby. The mortgage may be in the form of one or more trust mortgages or mortgage indentures or deeds of trust securing notes, bonds, or other mortgage notes; and, by the same instrument or by a separate instrument, it may create a security interest in the personalty, including, but not limited to, the equipment, whether or not the equipment is attached to the realty, and in the revenues and receivables of the hospital.
</P>
<P><I>Mortgagee or lender</I> means the applicant for insurance or the original lender under a mortgage.
</P>
<P><I>Mortgagor</I> means the original borrower under a mortgage and its successors and assigns.
</P>
<P><I>Mortgage Reserve Fund</I> means a trust account, or an account held by the mortgagee, for and on behalf of the mortgagor, to which the mortgagor contributes and from which withdrawals must be approved by HUD. The purpose of the fund is to provide HUD a means to assist the hospital to avoid mortgage defaults and to preserve the value of the mortgaged property and the hospital's business.
</P>
<P><I>Most recent audited financial statement</I> means the audited financial statement required under the regulatory agreement for the prior fiscal year.
</P>
<P><I>Net income</I> means the net income of a for-profit entity, or, in the case of a nonprofit entity, the excess of revenues less expenses.
</P>
<P><I>Non-operating revenues and expenses</I> are those revenues and expenses not directly related to patient care, hospital-related patient services, or the sale of hospital-related goods. Examples of items classified as non-operating are state and federal income tax, general contributions, gains and losses from investments, unrestricted income from endowment funds, and income from related entities.
</P>
<P>Classification of items as operating or non-operating shall follow written guidance by HUD.
</P>
<P><I>Operating margin is operating income divided by operating revenue, where:</I>
</P>
<P>(1) <I>Operating revenue</I> is the revenue from the core patient care operations of the hospital. It includes revenues from the provision of such items as patient care (including, but not limited to, hospital-based nursing home and physicians' clinics); transfers from temporarily restricted accounts that are used for current operating expenses; and patient-related activities such as the operation of the cafeteria, parking facilities, television services to patients, sale of medical scrap or waste, etc. (Additional sources of revenue, which are classified as non-operating, are excluded from this measure, provided, however, at HUD's discretion, that revenue that has historically been received reliably and is expected to continue to be received may be considered operating revenue for underwriting purposes); and
</P>
<P>(2) <I>Operating income</I> is operating revenue minus operating expenses, where operating expenses are the expenses incurred in providing patient care, including such items as salaries, supplies, and the cost of capital.
</P>
<P><I>Parent</I> means an organization or entity that controls or has a controlling interest in another organization or entity.
</P>
<P><I>Personalty</I> means all furniture, furnishings, equipment, machinery, building materials, appliances, goods, supplies, tools, books, records (whether in written or electronic form), computer equipment (hardware and software) and other tangible or electronically stored personal property (other than fixtures) that are owned or leased by the borrower or the lessee now or in the future in connection with the ownership, management, or operation of the land or the improvements or are located on the land or in the improvements, and any operating agreements relating to the land or the improvements, and any surveys, plans, specifications, and contracts for architectural, engineering, and construction services relating to the land or the improvements, chooses in action and all other intangible property and rights relating to the operation of, or used in connection with, the land or the improvements, including all governmental permits relating to any activities on the land. Personalty also includes all tangible and intangible personal property used for health care (such as major movable equipment and systems), accounts, licenses, bed authorities, certificates of need required to operate the hospital and to receive benefits and reimbursements under provider agreements with Medicaid, Medicare, state and local programs, payments from health care insurers and any other assistance providers (“Receivables”); all permits, instruments, rents, lease and contract rights, and equipment leases relating to the use, operation, maintenance, repair, and improvement of the hospital. Generally, intangibles shall also include all cash and cash escrow funds, such as but not limited to: Depreciation reserve fund or mortgage reserve fund accounts, bank accounts, residual receipt accounts, all contributions, donations, gifts, grants, bequests, and endowment funds by donors, and all other revenues and accounts receivable from whatever source paid or payable. All personalty shall be securitized with appropriate UCC filings and any excluded personalty shall be indicated in the Regulatory Agreement.
</P>
<P><I>Preapplication meeting</I> means a meeting among HUD, a potential mortgagee (applicant), and a potential mortgagor for mortgage insurance where there has been a positive Preliminary Review of the proposed project. The preapplication meeting is an opportunity for the potential mortgagee and mortgagor to summarize the proposed project, for HUD to summarize the application process, and for issues that could affect the eligibility or underwriting of the proposed loan to be identified and discussed.
</P>
<P><I>Preliminary Review Letter</I> means a letter from HUD to a potential applicant communicating the result of the Preliminary Review. The letter may state that an application for mortgage insurance would probably not be successful and provide the reasons for this determination, or state that no factors that would cause an application to be rejected have been identified, and therefore there appears to be no bar to the applicant proceeding to a preapplication meeting.
</P>
<P><I>Project</I> means the construction (which may include replacement of an existing hospital facility), or the substantial or limited rehabilitation of an eligible hospital, including equipment, which has been proposed for approval or has been approved by HUD under the provisions of this subpart, including the financing and refinancing, if any, plus all related activities involved in completing the improvements to the property. However, in particular closing documents, “project” may be used to mean the mortgagor entity, the operation of the mortgagor, the facility, or all of the mortgaged property, depending on the context in which the term “project” is used.
</P>
<P><I>Refinancing</I> means the discharging of the existing capital debt of a hospital through entering into new debt.
</P>
<P><I>Regulatory Agreement</I> means the agreement under which all mortgagors shall be regulated by HUD, as long as HUD is the insurer or holder of the mortgage, in a published format determined by HUD, and such additional covenants and restrictions as may be determined necessary by HUD on a case-by-case basis.
</P>
<P><I>Secretary</I> means the Secretary of Housing and Urban Development or his or her authorized representatives.
</P>
<P><I>Section 242/223(f)</I> refers to a loan insured under Section 242 of the Act pursuant to Section 223(f) of the Act.
</P>
<P><I>Security instrument</I> means a mortgage, deed of trust, and any other security for the indebtedness, and shall be deemed to be the mortgage as defined by the National Housing Act, as amended, implementing regulations, and HUD directives.
</P>
<P><I>Service area</I> means that geographical area, identified by zip codes, from which a substantial majority of a hospital's patients derive.
</P>
<P><I>Soft costs</I> means reasonable and customary legal, organizational, consulting, and such other costs associated with effecting the proposed project and its financing or refinancing, including, but not limited to, interest capitalized during construction; permanent financing fees; initial service charge; tax; title and recording expenses; special tax assessments; AMPO; insurance costs during construction; FHA fees and charges, including application, commitment, and inspection fees; mortgage insurance premium for advances during construction; prepayment penalties associated with retiring the hospital's existing bonds; and termination costs for interest rate protection facilities that are integrated into the original financing, as applicable.
</P>
<P><I>State</I> includes the several states, Puerto Rico, the District of Columbia, Guam, the Trust Territory of the Pacific Islands, American Samoa, and the United States Virgin Islands.
</P>
<P><I>Substantial rehabilitation</I> means additions, expansion, remodeling, renovation, modernization, repair, and alteration of existing buildings, including acquisition of new or replacement equipment, in cases where the hard costs of construction and equipment are equal to or greater than 20 percent of the mortgage amount.
</P>
<P><I>Surplus Cash</I> means any cash remaining after all of the following conditions have been met:
</P>
<P>(1) Final endorsement of the HUD-insured note has occurred;
</P>
<P>(2) Mortgage payments for the preceding 12 months have been made when due, including any grace period;
</P>
<P>(3) The Debt Service Coverage Ratio is greater than or equal to 1.50 in the most recent audited financial statements and as of the date of distribution;
</P>
<P>(4) Days in Accounts Receivable are less than or equal to 80 in the most recent audited financial statements and as of the date of distribution;
</P>
<P>(5) The average payment period is less than or equal to 80 in the most recent audited financial statements and as of the date of distribution;
</P>
<P>(6) The Mortgage Reserve Fund (MRF) is fully funded as of the date of the distribution in conformity with the MRF schedule;
</P>
<P>(7) All income, property, and statutory employer payroll taxes and employee payroll withholding contributions (including penalties and interest, if applicable) have been deposited as of the date of the distribution, as required;
</P>
<P>(8) The Current Ratio is greater than or equal to 1.50 in the most recent audited financial statements and immediately after the distribution;
</P>
<P>(9) Days of cash on hand are greater than or equal to 21 days in the most recent audited financial statements and immediately after the distribution;
</P>
<P>(10) The distribution may not be more than 50 percent of Net Income as reflected in the most recent audited financial statements, unless the Mortgagor has an equity financing ratio equal to or greater than 20 percent in the most recent audited financial statements and immediately after the distribution; and
</P>
<P>(11) The Equity less any assets excluded from the mortgaged property is greater than 0.00 in the most recent audited financial statements and immediately after the distribution is made. As used in this definition:
</P>
<P>“Most recent audited financial statements” refers to the audited financial statement required under section 242.58 for the prior fiscal year;
</P>
<P>“Net Income” means Net Income for for-profit entities; Excess of Revenues over Expenses for not-for-profit entities; and Excess of Revenues over Expenses before Capital Grants, Contributions, and Additions to Permanent Endowment for governmental entities; and
</P>
<P>“Equity financing ratio” means (Equity less any assets excluded from the mortgaged property)/(total assets less any assets excluded from the mortgaged property). Equity is defined as Equity for a for-profit entity, Total Net Assets for not-for-profit entities, and Total Net Assets for governmental entities.
</P>
<CITA TYPE="N">[72 FR 67546, Nov. 28, 2007, as amended at 73 FR 35922, June 25, 2008; 78 FR 8341, Feb. 5, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 242.2" NODE="24:2.1.1.2.19.1.211.2" TYPE="SECTION">
<HEAD>§ 242.2   Program financial self-sufficiency.</HEAD>
<P>The Commissioner shall administer the Section 242 program in such a way as to encourage financial self-sufficiency and actuarial soundness; i.e., to avoid mortgage defaults and claims for insurance benefits in order to protect the mortgage insurance fund.


</P>
</DIV8>


<DIV8 N="§ 242.3" NODE="24:2.1.1.2.19.1.211.3" TYPE="SECTION">
<HEAD>§ 242.3   Encouragement of certain programs.</HEAD>
<P>The activities and functions provided for in this part shall be carried out so as to encourage provision of comprehensive health care, including outpatient and preventive care as well as hospitalization, to a defined population, and in the case of public and certain not-for-profit hospitals, to encourage programs that are undertaken to provide essential health care services to all residents of a community regardless of ability to pay.


</P>
</DIV8>


<DIV8 N="§ 242.4" NODE="24:2.1.1.2.19.1.211.4" TYPE="SECTION">
<HEAD>§ 242.4   Eligible hospitals.</HEAD>
<P>(a) The hospital to be financed with a mortgage insured under this part shall involve the construction of a new hospital, the substantial rehabilitation (or replacement) of an existing hospital, the limited rehabilitation of an existing hospital, the acquisition of an existing hospital, or the refinancing of the capital debt of an existing hospital pursuant to Section 223(a)(7) or Section 223(f).
</P>
<P>(b) This part applies only to applications for FHA mortgage insurance submitted after a pre-application meeting (as defined in § 242.1) with HUD that occurred on and after January 28, 2008. HUD's regulations and practices prior to January 28, 2008 apply to applications for FHA mortgage insurance submitted after a pre-application meeting that occurred before January 28, 2008.
</P>
<CITA TYPE="N">[72 FR 67546, Nov. 28, 2007, as amended at 78 FR 8341, Feb. 5, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 242.5" NODE="24:2.1.1.2.19.1.211.5" TYPE="SECTION">
<HEAD>§ 242.5   Eligible mortgagees/lenders.</HEAD>
<P>The lender requirements set forth in 24 CFR part 202 regarding approval, recertification, withdrawal of approval, approval for servicing, report requirements, and conditions for supervised mortgagees, nonsupervised mortgagees, investing mortgagees, and governmental and similar institutions, apply to these programs.


</P>
</DIV8>


<DIV8 N="§ 242.6" NODE="24:2.1.1.2.19.1.211.6" TYPE="SECTION">
<HEAD>§ 242.6   Property requirements.</HEAD>
<P>The mortgage, to be eligible for insurance, shall be on property located in a state, as defined in § 242.1. The mortgage shall cover real estate in which the mortgagor has one of the following interests:
</P>
<P>(a) A fee simple title;
</P>
<P>(b) A lease for not less than 99 years that is renewable; or
</P>
<P>(c) A lease having a term of not less than 50 years to run from the date the mortgage is executed.


</P>
</DIV8>


<DIV8 N="§ 242.7" NODE="24:2.1.1.2.19.1.211.7" TYPE="SECTION">
<HEAD>§ 242.7   Maximum mortgage amounts.</HEAD>
<P>The mortgage shall involve a principal obligation not in excess of 90 percent of HUD's estimate of the replacement cost of the hospital, including the equipment to be used in its operation when the proposed improvements are completed and the equipment is installed.


</P>
</DIV8>


<DIV8 N="§ 242.8" NODE="24:2.1.1.2.19.1.211.8" TYPE="SECTION">
<HEAD>§ 242.8   Standards for licensure and methods of operation.</HEAD>
<P>The Secretary shall require satisfactory evidence that the hospital will be located in a state or political subdivision of a state with reasonable minimum standards of licensure and methods of operation for hospitals, and satisfactory assurance that such standards will be applied and enforced with respect to the hospital.


</P>
</DIV8>


<DIV8 N="§ 242.9" NODE="24:2.1.1.2.19.1.211.9" TYPE="SECTION">
<HEAD>§ 242.9   Physician ownership.</HEAD>
<P>Ownership of an interest in the mortgagor by physicians or other professionals practicing in the hospital is permitted within limits determined by HUD to avoid insurance risks that may be associated with such ownership. The Commissioner shall determine if the proposed mortgagor will be at low risk for violation of regulations of the U.S. Department of Health and Human Services, other federal regulations, and state regulations governing kickbacks, self-referrals, and other issues that could increase the risk of eventual default. The Commissioner's determination shall be based on an unqualified legal opinion as to compliance with applicable federal law, among other considerations.


</P>
</DIV8>


<DIV8 N="§ 242.10" NODE="24:2.1.1.2.19.1.211.10" TYPE="SECTION">
<HEAD>§ 242.10   Eligible mortgagors.</HEAD>
<P>The mortgagor shall be a public mortgagor (i.e., an owner of a public facility), a private nonprofit corporation or association, or a profit-motivated mortgagor meeting the definition of “hospital” in § 242.1. The mortgagor shall be approved by HUD and, except in those cases where the hospital is leased as permitted in § 242.72, shall possess the powers necessary and incidental to operating a hospital. Eligible proprietary or profit-motivated mortgagors may include for-profit corporations, limited partnerships, and limited liability corporations and companies, but may not include natural persons, joint ventures, and general partnerships. Any proposed mortgagor must demonstrate that it has a continuity of organization commensurate with the term of the mortgage loan being insured. For new organizations, or those whose continuity is necessarily dependent upon an individual or individuals, broad community participation is required.
</P>
<CITA TYPE="N">[72 FR 67546, Nov. 28, 2007, as amended at 73 FR 35922, June 25, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 242.11" NODE="24:2.1.1.2.19.1.211.11" TYPE="SECTION">
<HEAD>§ 242.11   Regulatory compliance required.</HEAD>
<P>An application for insurance of a mortgage under this part shall be considered only in connection with a hospital that is in substantial compliance with regulations of the Department of Health and Human Services and the regulations of the applicable state governing the operation and reimbursement of hospitals. A hospital that is under investigation by any state or federal agency for statutory or regulatory violations is not eligible so long as the investigation is unresolved, unless HUD determines that the investigation is minor in nature; that is, the investigation is unlikely to result in substantial liabilities or to otherwise substantially harm the creditworthiness of the hospital.


</P>
</DIV8>


<DIV8 N="§ 242.13" NODE="24:2.1.1.2.19.1.211.12" TYPE="SECTION">
<HEAD>§ 242.13   Parents and affiliates.</HEAD>
<P>As a condition of issuing a commitment, HUD may require corporate parents, affiliates, or principals of the proposed mortgagor to provide assurances, guarantees, or collateral to protect HUD's interests. The Commissioner may also require financial and operational information on the parent, other businesses owned by the parent, or affiliates of the proposed mortgagor and may also require a parent or affiliate to be regulated by HUD as to certain actions that could impact on the insurance of a mortgage loan for the benefit of the hospital.


</P>
</DIV8>


<DIV8 N="§ 242.14" NODE="24:2.1.1.2.19.1.211.13" TYPE="SECTION">
<HEAD>§ 242.14   Mortgage reserve fund.</HEAD>
<P>As a condition of issuing a commitment, HUD shall require establishment of a Mortgage Reserve Fund (MRF). The mortgagor shall be required to make contributions to the MRF such that, with fund earnings, the MRF will build to one year of debt service at 5 years following commencement of amortization, increasing thereafter to 2 years of debt service on and after 10 years following commencement of amortization according to a schedule established by HUD, unless HUD determines that a different schedule of contributions is appropriate based on the mortgagor's risk profile, reimbursement structure, or other characteristics. In particular, hospitals that receive cost-based reimbursement may be required to have MRFs that build to more than 2 years of debt service. Expenditures from the fund are made at HUD's sole discretion or in accordance with the mortgagor's MRF Schedule. Upon termination of insurance, the balance of the MRF shall be returned to the mortgagor, provided that all obligations to HUD have been met.


</P>
</DIV8>


<DIV8 N="§ 242.15" NODE="24:2.1.1.2.19.1.211.14" TYPE="SECTION">
<HEAD>§ 242.15   Limitation on refinancing existing indebtedness.</HEAD>
<P>(a) Some existing capital debt may be refinanced with the proceeds of a section 242-insured loan; however, the hard costs of construction and equipment must represent at least 20 percent of the total mortgage amount.
</P>
<P>(b) In the case of a loan insured under Section 242/223(f), there is no requirement for hard costs. However, if there are hard costs, such costs must total less than 20 percent of the total mortgage amount.
</P>
<CITA TYPE="N">[78 FR 8341, Feb. 5, 2013]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:2.1.1.2.19.2" TYPE="SUBPART">
<HEAD>Subpart B—Application Procedures and Commitments</HEAD>


<DIV8 N="§ 242.16" NODE="24:2.1.1.2.19.2.211.1" TYPE="SECTION">
<HEAD>§ 242.16   Applications.</HEAD>
<P>(a) <I>Application process</I>—(1) <I>Market need.</I> The approval process entails a determination of the market need of the proposal and stresses, on a market-wide basis, the impact of the proposed facility on, and its relationship to, other health care facilities and services (particularly other hospitals with mortgages insured under this part and hospitals that have a disproportionate share of Medicaid and uninsured patients or provide a substantial amount of charity care); the number and percentage of any excess beds; and demographic projections. Generally, Section 242 insurance may support start-up hospitals or major expansions of existing hospitals only if existing hospital capacity or services are clearly not adequate to meet the needs of the population in the service area.
</P>
<P>(i) If the state has an official procedure for determining need for hospitals, HUD shall require that such procedure be followed before the application for insurance is submitted, and that the application document that need has also been established under that procedure.
</P>
<P>(ii) The following factors are relevant in evaluating market need for the project and should be addressed, as applicable, in the study of market need and feasibility submitted with the application. Because each hospital presents a unique situation, there is no formula or cutoff level that applies to all applications:
</P>
<P>(A) Service area definition;
</P>
<P>(B) Existing or proposed hospital;
</P>
<P>(C) Designation as sole community provider, Critical Access Hospital, or rural referral center;
</P>
<P>(D) Community-wide use rates (discharges and days/1000);
</P>
<P>(E) Statewide use rates (for benchmarking purposes);
</P>
<P>(F) Current population and 5-year projection by age cohort;
</P>
<P>(G) Staffed versus licensed beds;
</P>
<P>(H) Applicant hospital's occupancy rate;
</P>
<P>(I) Competitors' occupancy rates;
</P>
<P>(J) Outpatient volume;
</P>
<P>(K) Availability of emergency services;
</P>
<P>(L) Teaching hospital status;
</P>
<P>(M) Services offered by hospitals in the service area;
</P>
<P>(N) Migration of patients out of the service area;
</P>
<P>(O) Planned construction at other facilities in the region;
</P>
<P>(P) Historical market share by major service category;
</P>
<P>(Q) Disproportionate Share Hospital designation; and
</P>
<P>(R) Distance to other hospitals.
</P>
<P>(2) <I>Operating margin and debt service coverage ratio.</I> (i) Hospitals with an aggregate operating margin of less than 0.00 when calculated from the three most recent annual audited financial statements are not eligible for Section 242 insurance, unless HUD determines, based on the financial data in those statements, that the hospital has achieved a financial turnaround resulting in a positive operating margin in the most recent year, calculated using classifications of items as operating or non-operating in accordance with guidance that shall be provided in written directives by HUD. In any event, HUD shall not issue an insurance commitment for any hospital in a turnaround situation that has not achieved 2 consecutive years of positive operating margin immediately prior to issuance of the commitment.
</P>
<P>(ii) Hospitals with an average debt service coverage ratio of less than 1.25 in the 3 most recent audited years are not eligible for Section 242 insurance, unless HUD determines, based on the audited financial data, that the hospital has achieved a financial turnaround resulting in a debt service coverage ratio of at least 1.4 in the most recent year. In cases of refinancing at a lower interest rate, HUD may authorize the use of the projected debt service requirement in lieu of the historical debt service in calculating the debt service coverage ratios for each of the prior 3 years. In cases where HUD authorizes the use of the projected debt service requirement in lieu of the historical debt service to determine the debt service coverage ratio, hospitals must have an average debt service coverage ratio of 1.4 or greater.
</P>
<P>(3) <I>Threshold requirements—refinancing candidates.</I> For an application to be considered for refinancing pursuant to Section 223(f), a hospital must meet the following requirements in lieu of those described in paragraph (a)(2) of this section:
</P>
<P>(i) The hospital must have an aggregate operating margin and average debt service coverage ratio as follows:
</P>
<P>(A) The hospital must have an aggregate operating margin of at least zero percent, when calculated from the three most recent annual audited financial statements.
</P>
<P>(B) The hospital must have an average debt service coverage ratio of at least 1.4 when calculated from the three most recent annual audited financial statements; or
</P>
<P>(ii) If the requirements of paragraphs (a)(3)(i)(A) and/or (B) of this section are not satisfied, HUD will recast the operating margin and debt service coverage ratio for prior periods by applying its estimate of the projected interest rate at the time the mortgage is expected to close in lieu of the historical interest rate(s).
</P>
<P>(iii) In performing the calculations called for in paragraphs (a)(3)(i)(A) and (B) of this section, if HUD finds that performance in one of the three years was affected by exceptional, one-time events that substantially altered financial performance, HUD may calculate the three-year performance based on the four most recent years with the unusual year omitted.
</P>
<P>(iv) The hospital must document that it provides an essential healthcare service to the community in which it operates and that its financial performance would be materially improved by refinancing its existing capital debt.
</P>
<P>(v) The hospital may show that it provides an essential healthcare service to the community in which it operates by submitting an analysis quantifying how the community in which it presently operates would suffer from inadequate access to an essential healthcare service that the hospital presently provides if the hospital were no longer in operation.
</P>
<P>(vi) The hospital may show that its financial performance would be materially improved by providing documentation of the following:
</P>
<P>(A) There are limited comparable affordable refinancing vehicles available to the hospital; and,
</P>
<P>(B) The hospital meets three of the following seven criteria:
</P>
<P>(<I>1</I>) The proposed refinancing would reduce the hospital's total operating expenses by at least 0.25 percent;
</P>
<P>(<I>2</I>) The interest rate of the proposed refinancing would be at least 0.5 percentage points less than the interest rate on the debt to be refinanced;
</P>
<P>(<I>3</I>) The interest rate on the debt that the hospital proposes to refinance has increased by at least one percentage point at any time since January 1, 2008, or is very likely to increase by at least one percentage within one year of the date of application;
</P>
<P>(<I>4</I>) The hospital's annual total debt service is in excess of 3.4 percent of total operating revenues, based on its most recent audited financial statement;
</P>
<P>(<I>5</I>) The hospital has experienced a withdrawal or expiration of its credit enhancement facility, or the lender providing its credit enhancement facility has been downgraded, or the hospital can demonstrate that one of these events is imminent;
</P>
<P>(<I>6</I>) The hospital is party to bond covenants that are substantially more restrictive than the Section 242 mortgage covenants; and
</P>
<P>(<I>7</I>) There are other circumstances that demonstrate that the hospital's financial performance would be materially improved by refinancing its existing capital debt.
</P>
<P>(4) <I>Financial feasibility.</I> The approval process entails a determination of the financial feasibility of the proposal, i.e., a determination that it is probable that the proposed mortgagor will be able to meet its debt service requirements during the period projected. It includes analysis of the reimbursement structure of the proposed hospital (including patient/payer mix); actions of competitors; and the probable projected impact on the proposed hospital of general health care system trends, such as the development of alternative health care delivery systems and new reimbursement methods. In addition to historical operating margin, determination of financial feasibility includes, but is not limited to, evaluation of the following factors, which the application must address and which HUD will review:
</P>
<P>(i) Current and projected gains from operations and a manageable debt load using reasonable assumptions;
</P>
<P>(ii) Current debt service coverage ratio of 1.25 or higher and projected debt service coverage ratio of 1.40 or higher;
</P>
<P>(iii) Cushion in the balance sheet sufficient to demonstrate the ability to withstand short periods of net operating losses without jeopardizing financial viability;
</P>
<P>(iv) Patient utilization forecasts (including average length of stay, case intensity, discharges, area-wide use rates) that are consistent with the hospital's historical trends, future service mix, market trends, population forecasts, and business climate;
</P>
<P>(v) The hospital's demonstrated ability to position itself to compete in its marketplace;
</P>
<P>(vi) Organizational affiliations or relationships that help optimize financial, clinical, and operational performance;
</P>
<P>(vii) Management's demonstrated ability to operate effectively and efficiently, and to develop effective strategies for addressing problem areas;
</P>
<P>(viii) Systems in place to monitor hospital operations, revenues, and costs accurately and in a timely manner;
</P>
<P>(ix) A Board that is appropriately constituted and provides effective oversight;
</P>
<P>(x) Required licensures and approvals; and
</P>
<P>(xi) Favorable ratings from the Joint Commission on Accreditation of Healthcare Organizations or other organizations acceptable to HUD.
</P>
<P>(5) <I>Preliminary Review.</I> A Preliminary Review is a general overview of the acceptability of a potential mortgagor performed at the request of a hospital, a financial consultant representing a hospital, or a lender, to identify any factors that would likely cause an application to be rejected, should an application be submitted.
</P>
<P>(i) The purpose of the preliminary review is for HUD to identify any obvious factors that would cause an application to be rejected, before the potential mortgagor or mortgagee expends resources to prepare one. The hospital, financial consultant, or lender shall submit a preliminary information package to HUD that provides evidence of statutory eligibility, market need, financial strength, and such other documentation as HUD may require. The scope of the preliminary review does not include approval of any specific site in the community.
</P>
<P>(ii) If HUD identifies factors that would cause an application to be rejected, HUD shall issue a Preliminary Review Letter notifying the potential applicant that an application for mortgage insurance would probably not be successful and providing the reasons for this decision. Also, no further request from the proposed applicant for a Preliminary Review shall be entertained for a period of one year from the date of HUD's notification. HUD may grant an exception to this one-year limitation if, during the year, there is a major change in the circumstances that caused HUD to determine that the project would be rejected. For example, if the sole reason for HUD's determination was the hospital's failure to meet the historical operating margin test, and a new audited annual financial statement contains results that would cause the hospital to meet the test, then the lender may request a new Preliminary Review within one year of HUD's notification.
</P>
<P>(iii) If HUD does not identify any factors that would cause an application to be rejected, HUD shall issue a Preliminary Review Letter advising the potential applicant that there appears to be no bar to the applicant's proceeding to the next step in the application process, provided that if a complete application is not received by HUD within one year following the date of HUD's letter, another Preliminary Review may be required, at HUD's discretion, before the application process may proceed.
</P>
<P>(iv) The Commissioner's determination in the preliminary review phase that no factors have been identified that would cause an application to be rejected shall in no way be construed as an indication that a subsequent application will be approved.
</P>
<P>(6) <I>Preapplication meeting.</I> The next step in the application process is the preapplication meeting (this step is optional, at HUD's discretion, in Section 242/223(f) cases). At HUD's discretion, this meeting may be held at HUD Headquarters in Washington, DC, or at another site agreeable to HUD and the potential applicant. The preapplication meeting is an opportunity for the potential mortgagor to summarize the proposed project and refinancing, if any; for HUD to summarize the application process; and for issues that could affect the eligibility or underwriting of the project to be identified and discussed to the extent possible. Following the meeting, HUD may:
</P>
<P>(i) Advise the potential applicant that there appears to be no bar to submitting an application for mortgage insurance; or
</P>
<P>(ii) Identify issues that must be resolved before a full application should be submitted for processing.
</P>
<P>(b) <I>Application contents.</I> The application for mortgage insurance shall include exhibits that follow such guidance as to content and format that HUD shall provide from time to time. The application shall include:
</P>
<P>(1) A description of the proposed sources and uses of funds;
</P>
<P>(2) A description of the mortgagor entity, its ownership structure, and its directors and managers;
</P>
<P>(3) A description of the project, the business plan of the hospital, and how the project will further that plan, or, for applications pursuant to Section 223(f), a description of any limited rehabilitation to be financed with mortgage proceeds and how that limited rehabilitation will affect the hospital;
</P>
<P>(4) Historical audited financial statements and interim year-to-date financial results (for existing hospitals);
</P>
<P>(5) A study of market need and financial feasibility, addressing the factors listed in paragraphs (a)(1)(ii) and (a)(2), or (a)(3) of this section, (whichever applies), with assumptions and financial forecast clearly presented. The study should be prepared by a certified public accounting firm acceptable to HUD. In the case of an application for Section 242/223(f) mortgage insurance, the study may not be required to address market need and there may be no requirement for involvement of a certified public accounting firm;
</P>
<P>(6) Architectural plans and specifications in sufficient detail to enable a reasonable estimate of cost (not applicable to a Section 242/223(f) application, except when architectural plans and specifications are requested by HUD);
</P>
<P>(7) Evidence that the hospital will be located in a state or political subdivision of a state with reasonable minimum standards of licensure and methods of operation for hospitals and satisfactory assurance that such standards will be applied and enforced with respect to the hospital;
</P>
<P>(8) If the state has an official procedure for determining need for hospitals, evidence that such procedure has been followed and that need has been established under that procedure;
</P>
<P>(9) A Phase I environmental report; and
</P>
<P>(10) Such other exhibits as HUD shall require based upon the facts pertaining to the particular case.
</P>
<P>(c) <I>Fee.</I> An application fee of $1.50 per thousand dollars of the amount of the loan to be insured shall be paid to HUD at the time the application is submitted to HUD for approval.
</P>
<P>(d) <I>Filing of application.</I> An application for insurance of a mortgage on a project shall be submitted on an approved FHA form, by an approved mortgagee and by the sponsors of such project, to FHA.
</P>
<P>(e) <I>Complete application.</I> Only technically complete applications will be processed. Partial applications cannot be processed. Upon determination that an application is complete, HUD shall issue a Completeness Letter to the applicant stating that the application is complete.
</P>
<P>(f) <I>Application review.</I> Upon receipt of a complete application, HUD shall evaluate the application to determine if eligibility, market need, financial feasibility, and compliance with applicable regulations (including but not limited to federal environmental regulations, wage rate regulations, and health care regulations) have been demonstrated, and to evaluate any other factors, including but not limited to risk to the Insurance Fund, that should be considered in determining if the application for mortgage insurance should be approved. As a part of this review, HUD may solicit the advice of private consultants and expert staff in the Department of Health and Human Services and other federal agencies. Based on review of the complete application, HUD may request additional information from the applicant. The timeliness of the applicant's submission of the additional information may affect the approval or disapproval of the application. The Commissioner's decision shall be communicated in the form of a Commitment Letter or a Rejection Letter. HUD will not issue a Commitment Letter until HUD completes the environmental review under 24 CFR 242.79.
</P>
<CITA TYPE="N">[72 FR 67546, Nov. 28, 2007, as amended at 78 FR 8341, Feb. 5, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 242.17" NODE="24:2.1.1.2.19.2.211.2" TYPE="SECTION">
<HEAD>§ 242.17   Commitments.</HEAD>
<P>(a) <I>Issuance of commitment.</I> Upon approval of an application for insurance, a commitment shall be issued by HUD setting forth the terms and conditions under which an insurance endorsement shall be issued for the hospital. The commitment shall include the following:
</P>
<P>(1) A commitment for insurance of advances reflecting the mortgage amount, interest rate, mortgage term, date of commencement of amortization, and other requirements pertaining to the mortgage and construction project;
</P>
<P>(2) In the case of an application for Section 242/223(f) insurance where advances are not needed for funding any limited rehabilitation: a commitment for insurance upon completion, reflecting the mortgage amount, interest rate, mortgage term, date of commencement of amortization, and other requirements pertaining to the mortgage and to any limited rehabilitation; 
</P>
<P>(3) HUD's computation of the replacement cost and maximum insurable mortgage amount;
</P>
<P>(4) Financial requirements for closing;
</P>
<P>(5) Approval covenants, including any special conditions that must be satisfied prior to initial endorsement;
</P>
<P>(6) Mortgage Reserve Fund Agreement.
</P>
<P>(b) <I>Type of commitment.</I> The commitment will provide for the insurance of advances of mortgage funds during construction. In the case of a commitment for Section 242/223(f) insured refinancing or acquisition financing of an existing hospital, the commitment shall provide for insurance upon completion unless insured advances are needed for funding any limited rehabilitation approved by HUD, in which case the commitment shall provide for insurance of advances.
</P>
<P>(c) <I>Term of commitment.</I> (1) The initial commitment shall be issued for a period of 90 days.
</P>
<P>(2) The term of a commitment may be extended in such manner as HUD may prescribe, provided, however, that the combined term of the original commitment and any extensions do not exceed 180 days.
</P>
<P>(d) <I>Commitment fee.</I> A commitment fee that, when added to the application fee, will aggregate $3 per thousand dollars of the amount of the loan set forth in the commitment, shall be paid within 30 days of the date of issuance of the commitment. If such fee is not paid within this 30-day period, the commitment shall automatically terminate.
</P>
<CITA TYPE="N">[72 FR 67546, Nov. 28, 2007, as amended at 78 FR 8342, Feb. 5, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 242.18" NODE="24:2.1.1.2.19.2.211.3" TYPE="SECTION">
<HEAD>§ 242.18   Inspection fee.</HEAD>
<P>(a) The commitment may provide for the payment of an inspection fee in an amount not to exceed $5 per thousand dollars of the commitment. The inspection fee shall be paid no later than the time of initial endorsement.
</P>
<P>(b) In the case of mortgages where the applicant is seeking only refinancing or acquisition, the inspection fee will not exceed 10 basis points on the loan. For applicants seeking a loan for refinancing or acquisition that also involves limited rehabilitation, the commitment shall provide for an inspection fee according to the following schedule:
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Hard cost % of mortgage amount
</TH><TH class="gpotbl_colhed" scope="col">Inspection fee limit
<br/>(basis points)
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Less than 5%</TD><TD align="right" class="gpotbl_cell">10
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">5% or greater but less than 10%</TD><TD align="right" class="gpotbl_cell">20
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">10% or greater but less than 15%</TD><TD align="right" class="gpotbl_cell">30
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">15% or greater but less than 20%</TD><TD align="right" class="gpotbl_cell">40
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">20% or greater</TD><TD align="right" class="gpotbl_cell">50</TD></TR></TABLE></DIV></DIV>
<CITA TYPE="N">[78 FR 8343, Feb. 5, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 242.19" NODE="24:2.1.1.2.19.2.211.4" TYPE="SECTION">
<HEAD>§ 242.19   Fees on increases.</HEAD>
<P>(a) <I>Increase in commitment prior to endorsement.</I> An application, filed prior to initial endorsement, for an increase in the amount of an outstanding commitment, shall be accompanied by an additional application fee of $1.50 per thousand dollars computed on the amount of the increase requested. Any increase in the amount of a commitment shall be subject to the payment of an additional commitment fee which, when added to the additional application fee, will aggregate $3 per thousand dollars of the amount of the increase. The additional commitment fee shall be paid within 30 days after the date of the amended commitment. If the additional commitment fee is not paid within 30 days, the commitment novation providing for the increased amount will automatically terminate and the previous commitment will be reinstated. If an inspection fee was required in the original commitment, an additional inspection fee shall be paid in an amount not to exceed $5 per thousand dollars of the amount of increase in commitment. The additional inspection fee shall be paid at the time of initial endorsement.
</P>
<P>(b) <I>Increase in mortgage between initial and final endorsement.</I> Upon an application, filed between initial and final endorsement, for an increase in the amount of the mortgage, either by amendment, consolidation agreement, or by substitution of a new mortgage, an additional application fee of $1.50 per thousand dollars computed on the amount of the increase requested shall accompany the application. The approval of any increase in the amount of the mortgage shall be subject to the payment of an additional commitment fee which, when added to the additional application fee, will aggregate $3 per thousand dollars of the amount of the increase granted. If an inspection fee was required in the original commitment, an additional inspection fee shall be paid in an amount not to exceed $5 per thousand dollars of the amount of the increase granted. The additional commitment and inspection fees shall be paid within 30 days after the date that the increase is granted.


</P>
</DIV8>


<DIV8 N="§ 242.20" NODE="24:2.1.1.2.19.2.211.5" TYPE="SECTION">
<HEAD>§ 242.20   Reopening of expired commitments.</HEAD>
<P>An expired commitment may be reopened if a request for reopening is received by HUD no later than 90 days after the date of expiration of the commitment. The reopening request shall be accompanied by a fee of 50 cents per thousand dollars of the amount of the expired commitment. A commitment that has expired because of failure to pay the commitment fee may be reopened only upon payment of the commitment fee and the reopening fee. If the reopening request is not received by HUD within the required 90-day period, a new application accompanied by an application fee must be submitted. If a commitment for an increased amount has expired because of failure to pay an additional commitment fee based on the amount of the increase, the reopening fee shall be computed on the basis of the amount of the commitment increase rather than on the amount of the original commitment.


</P>
</DIV8>


<DIV8 N="§ 242.21" NODE="24:2.1.1.2.19.2.211.6" TYPE="SECTION">
<HEAD>§ 242.21   Refund of fees.</HEAD>
<P>Commitment, inspection, and reopening fees (but not application fees) may be refunded, in whole or in part, if HUD determines that the construction or financing of the project has been prevented because of condemnation proceedings or other legal action taken by a government body or public agency, or in such other instances as HUD may determine as being beyond the control of the applicant and resulting from no fault of the applicant. A transfer fee may be refunded only in such instances as HUD may determine. However, the portion of the inspection fee paid in connection with early commencement of work is not refundable.


</P>
</DIV8>


<DIV8 N="§ 242.22" NODE="24:2.1.1.2.19.2.211.7" TYPE="SECTION">
<HEAD>§ 242.22   Maximum fees and charges by mortgagee.</HEAD>
<P>The mortgagee may collect from the mortgagor the amount of the fees provided for in this subpart. The mortgagee may also collect from the mortgagor an initial service charge not to exceed 2 percent of the original principal amount of the mortgage to reimburse the mortgagee for the cost of closing the transaction. A permanent financing fee not to exceed 3.5 percent may be collected from the mortgagor; however, the combined initial service charge and permanent financing fee may not exceed 5.5 percent in bond transactions and 3.5 percent in all other transactions. Any additional charges or fees collected from the mortgagor shall be subject to prior approval of HUD and shall be clearly disclosed in the Mortgagee's Certificate.


</P>
</DIV8>


<DIV8 N="§ 242.23" NODE="24:2.1.1.2.19.2.211.8" TYPE="SECTION">
<HEAD>§ 242.23   Maximum mortgage amounts and cash equity requirements.</HEAD>
<P>(a) <I>Adjusted mortgage amount-rehabilitation projects.</I> A mortgage financing the substantial rehabilitation of an existing hospital shall be subject to the following limitations, in addition to those set forth in § 242.7:
</P>
<P>(1) <I>Property held unencumbered.</I> If the mortgagor is the fee simple owner of the property and the property is not encumbered by an outstanding indebtedness, the mortgage shall not exceed 100 percent of HUD's estimate of the cost of the proposed substantial rehabilitation.
</P>
<P>(2) <I>Property subject to existing mortgage.</I> If the mortgagor owns the property subject to an outstanding indebtedness, which is to be refinanced with part of the insured mortgage, the mortgage shall not exceed the total of the following:
</P>
<P>(i) The Commissioner's estimate of the cost of substantial rehabilitation, plus
</P>
<P>(ii) Such portion of the capital debt as does not exceed 90 percent of HUD's estimate of the fair market value of such land and improvements prior to substantial rehabilitation.
</P>
<P>(3) <I>Property to be acquired.</I> If the property is to be acquired by the mortgagor and the purchase price is to be financed with a part of the insured mortgage, the mortgage shall not exceed 90 percent of the total of the following:
</P>
<P>(i) The Commissioner's estimate of the cost of substantial rehabilitation, plus
</P>
<P>(ii) The actual purchase price of the land and improvements or HUD's estimate (prior to substantial rehabilitation) of the fair market value of such land and improvements, whichever is the lesser.
</P>
<P>(b) <I>Section 242/223(f) refinancing and acquisition—additional limits.</I> (1) In addition to meeting the requirements of § 242.7, if the hospital's existing capital debt is to be refinanced by the insured mortgage (i.e., without a change in ownership or with the hospital sold to a purchaser who has an identity of interest as defined by the Commissioner with the seller), the maximum mortgage amount must not exceed the cost to refinance the existing indebtedness, which will consist of the following items, the eligibility and amounts of which must be determined by the Commissioner:
</P>
<P>(i) The amount required to pay off the existing capital debt;
</P>
<P>(ii) The estimated hard costs, if any, totaling less than 20 percent of the mortgage amount; and
</P>
<P>(iii) Soft costs that would normally be allowable in a Section 242 insured loan.
</P>
<P>(2) In addition to meeting the requirements of § 242.7, if mortgage proceeds are to be used for an acquisition, the maximum mortgage amount must not exceed the cost to acquire the hospital, which will consist of the following items, the eligibility and amounts of which must be determined by the Commissioner:
</P>
<P>(i) The actual purchase price of the land and improvements or HUD's estimate (prior to repairs, renovation, and/or equipment replacement) of the fair market value of such land plus the replacement cost of improvements, whichever is the lesser;
</P>
<P>(ii) The estimated hard costs, if any, totaling less than 20 percent of the mortgage amount; and
</P>
<P>(iii) Soft costs that would normally be allowable in a Section 242 insured loan.
</P>
<P>(c) <I>Reduced mortgage amount—leaseholds.</I> In the event the mortgage is secured by a leasehold estate rather than a fee simple estate, the value or replacement cost of the property described in the mortgage shall be the value or replacement cost of the leasehold estate (as determined by HUD), which shall in all cases be less than the value or replacement cost of the property in fee simple.
</P>
<P>(d) <I>Cash equity.</I> Depending on the financial circumstances of each hospital facility, HUD shall have the discretion to evaluate, on a case-by-case basis, the amount of equity that a mortgagor must supply in addition to the value of plant, property, and equipment and other values recognized as loan security in the commitment process. Exercise of this discretion shall never cause a loan to exceed 90 percent of estimated replacement cost, although it may cause it to be less than 90 percent. The equity contribution may not be made from borrowed funds. A private nonprofit or public mortgagor, but not a proprietary mortgagor, at the mortgagee's option and subject to 24 CFR 242.49, may provide any such required equity in the form of a letter of credit.
</P>
<CITA TYPE="N">[72 FR 67546, Nov. 28, 2007, as amended at 73 FR 35922, June 25, 2008; 78 FR 8343, Feb. 5, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 242.24" NODE="24:2.1.1.2.19.2.211.9" TYPE="SECTION">
<HEAD>§ 242.24   Initial operating costs.</HEAD>
<P>In the case of a new hospital or a hospital expansion, HUD shall establish, on a case-by-case basis, the amount of initial operating capital, if any, that must be deposited in cash or a letter of credit (or combination) to be available to the new hospital upon commencement of operations. Generally, the initial operating capital other than AMPO shall not be borrowed funds unless HUD determines that there are offsetting financial strengths to compensate for the risk associated with borrowing.


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:2.1.1.2.19.3" TYPE="SUBPART">
<HEAD>Subpart C—Mortgage Requirements</HEAD>


<DIV8 N="§ 242.25" NODE="24:2.1.1.2.19.3.211.1" TYPE="SECTION">
<HEAD>§ 242.25   Mortgage form and disbursement of mortgage proceeds.</HEAD>
<P>(a) <I>Mortgage form.</I> The mortgage shall be:
</P>
<P>(1) Executed on a form approved by HUD for use in the jurisdiction in which the property covered by the mortgage is situated; the form shall not be changed without the prior written approval of HUD.
</P>
<P>(2) Executed by an eligible mortgagor.
</P>
<P>(b) <I>Disbursement of mortgage proceeds.</I> The mortgagee shall be obligated, as a part of the mortgage transaction, to disburse the principal amount of the mortgage to (or for the account of) the mortgagor or to his or her creditors for his or her account and with his or her consent.


</P>
</DIV8>


<DIV8 N="§ 242.26" NODE="24:2.1.1.2.19.3.211.2" TYPE="SECTION">
<HEAD>§ 242.26   Agreed interest rate.</HEAD>
<P>(a) The mortgage shall bear interest at the rate or rates agreed upon by the mortgagee and the mortgagor.
</P>
<P>(b) The amount of any increase approved by HUD in the mortgage amount between initial and final endorsement in excess of the amount that HUD had committed to insure at initial endorsement shall bear interest at the rate agreed upon by the mortgagee and the mortgagor.


</P>
</DIV8>


<DIV8 N="§ 242.27" NODE="24:2.1.1.2.19.3.211.3" TYPE="SECTION">
<HEAD>§ 242.27   Maturity.</HEAD>
<P>The mortgage shall have a maturity not to exceed 25 years from the date amortization begins.


</P>
</DIV8>


<DIV8 N="§ 242.28" NODE="24:2.1.1.2.19.3.211.4" TYPE="SECTION">
<HEAD>§ 242.28   Allowable costs for consultants.</HEAD>
<P>Consulting fees for work essential to the development of the project may be included in the insured mortgage. Allowable consulting fees include those for analysis of market demand, expected revenues, and costs; site analysis; architectural and engineering design; and such other fees as HUD may determine to be essential to project development. Fees for work performed more than 2 years prior to application are not allowable. Fees for work performed by any party with an identity of interest with the proposed mortgagor or mortgagee are not allowable.


</P>
</DIV8>


<DIV8 N="§ 242.29" NODE="24:2.1.1.2.19.3.211.5" TYPE="SECTION">
<HEAD>§ 242.29   Payment requirements.</HEAD>
<P>The mortgage shall provide for payments on the first day of each month in accordance with an amortization plan agreed upon by the mortgagor, the mortgagee, and HUD.


</P>
</DIV8>


<DIV8 N="§ 242.30" NODE="24:2.1.1.2.19.3.211.6" TYPE="SECTION">
<HEAD>§ 242.30   Application of payments.</HEAD>
<P>All payments to be made by the mortgagor to the mortgagee shall be added together and the aggregate amount thereof shall be paid by the mortgagor each month in a single payment. The mortgagee shall apply each payment received to the following items in the following order:
</P>
<P>(a) Premium charges under the contract of mortgage insurance;
</P>
<P>(b) Ground rents, taxes, special assessments, and fire and other hazard insurance premiums;
</P>
<P>(c) Interest on the mortgage; and
</P>
<P>(d) Amortization of the principal of the mortgage.


</P>
</DIV8>


<DIV8 N="§ 242.31" NODE="24:2.1.1.2.19.3.211.7" TYPE="SECTION">
<HEAD>§ 242.31   Accumulation of accruals.</HEAD>
<P>(a) The mortgage shall provide for payments by the mortgagor to the mortgagee on each interest payment date of an amount sufficient to accumulate, in the hands of the mortgagee one payment period prior to its due date, the next annual MIP payable by the mortgagee to HUD. Such payments shall continue only so long as the contract of insurance shall remain in effect.
</P>
<P>(b) The mortgage shall provide for such equal monthly payments by the mortgagor to the mortgagee as will amortize the ground rents, if any, and the estimated amount of all taxes, water charges, special assessments, and fire and other hazard insurance premiums, within a period ending one month prior to the dates on which the same become delinquent. The mortgage shall further provide that such payments shall be held by the mortgagee, for the purpose of paying such items before they become delinquent. The mortgage shall also make provision for adjustments in case such estimated amounts shall prove to be more, or less, than the actual amounts so paid therefore by the mortgagor. Notwithstanding the foregoing, in particular circumstances, a mortgagor may purchase required fire and hazard insurance through a consortium of affiliated institutions or related organizations or, in the case of public institutions, through required state purchasing arrangements. In such circumstances, the mortgage accrual requirement may be modified to reflect circumstances in which it is inappropriate for the mortgagee to collect monthly payments and to make payments on behalf of the mortgagor.


</P>
</DIV8>


<DIV8 N="§ 242.32" NODE="24:2.1.1.2.19.3.211.8" TYPE="SECTION">
<HEAD>§ 242.32   Covenant against liens.</HEAD>
<P>The mortgage shall contain a covenant against the creation by the mortgagor of any liens against the property, except for such liens as may be approved by HUD.


</P>
</DIV8>


<DIV8 N="§ 242.33" NODE="24:2.1.1.2.19.3.211.9" TYPE="SECTION">
<HEAD>§ 242.33   Covenant for malpractice, fire, and other hazard insurance.</HEAD>
<P>The mortgage shall contain a covenant binding the mortgagor to maintain adequate liability, fire, and extended coverage insurance on the property. The mortgage shall also contain a covenant binding the mortgagor to maintain adequate malpractice coverage. All coverage shall be acceptable to the mortgagee or HUD.
</P>
<CITA TYPE="N">[73 FR 35923, June 25, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 242.35" NODE="24:2.1.1.2.19.3.211.10" TYPE="SECTION">
<HEAD>§ 242.35   Mortgage lien certifications.</HEAD>
<P>At initial and/or final endorsement of the mortgage note, each of the following requirements must be met:
</P>
<P>(a) The mortgage is the first lien upon and covers all of the property used in the operation of the entire hospital;
</P>
<P>(b) The property upon which the improvements have been made or constructed and the equipment financed with mortgage proceeds are free and clear of all liens other than the insured mortgage and such other secondary liens as may be approved by HUD;
</P>
<P>(c) The Security Agreement and Uniform Commercial Code filings establish a first lien on the personalty of the mortgagor, including but not limited to equipment acquired with mortgage proceeds or otherwise not subject to a prior lien;
</P>
<P>(d) The mortgagor has notified HUD in writing of all unpaid obligations in connection with the mortgage transaction, the purchase of the mortgaged property, the construction, limited rehabilitation, or substantial rehabilitation of the project, or the purchase of the equipment financed with mortgage proceeds.
</P>
<CITA TYPE="N">[72 FR 67546, Nov. 28, 2007, as amended at 73 FR 35923, June 25, 2008; 78 FR 8343, Feb. 5, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 242.37" NODE="24:2.1.1.2.19.3.211.11" TYPE="SECTION">
<HEAD>§ 242.37   Mortgage prepayment.</HEAD>
<P>(a) <I>Prepayment privilege.</I> Except as provided in paragraph (c) of this section or otherwise established by HUD, the mortgage shall contain a provision permitting the mortgagor to prepay the mortgage in whole or in part upon any interest payment date, after giving the mortgagee a 30-day notice in writing in advance of its intention to so prepay. The 30-day notice may be extended with the prior written approval of HUD.
</P>
<P>(b) <I>Prepayment charge.</I> The mortgage may contain a provision for such charge, in the event of prepayment of principal, as may be agreed upon between the mortgagor and the mortgagee, subject to the following:
</P>
<P>(1) The mortgagor shall be permitted to prepay up to 15 percent of the original principal amount of the mortgage in any one calendar year without any such charge.
</P>
<P>(2) Any reduction in the original principal amount of the mortgage resulting from the certification of cost, which HUD may require, shall not be construed as a prepayment of the mortgage.
</P>
<P>(c) <I>Prepayment of bond-financed or GNMA-securitized mortgages.</I> Where the mortgage is given to secure GNMA mortgage-backed securities or a loan made by a lender that has obtained the funds for the loan by the issuance and sale of bonds or bond anticipation notes, or both, the mortgage may contain a prepayment restriction and prepayment penalty charge acceptable to HUD as to term, amount, and conditions.
</P>
<P>(d) <I>HUD override of prepayment restrictions.</I> In the event of a default, HUD may override any lockout, prepayment penalty, or combination of penalties in order to facilitate a partial or full refinancing of the mortgaged property and avoid a claim.


</P>
</DIV8>


<DIV8 N="§ 242.38" NODE="24:2.1.1.2.19.3.211.12" TYPE="SECTION">
<HEAD>§ 242.38   Late charge.</HEAD>
<P>The mortgage may provide for the collection by the mortgagee of a late charge in accordance with terms, conditions, and standards of HUD for each dollar of each payment to interest or principal more than 15 days in arrears, to cover the expense involved in handling delinquent payments. Late charges shall be separately charged to and collected from the mortgagor and shall not be deducted from any aggregate monthly payment.


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:2.1.1.2.19.4" TYPE="SUBPART">
<HEAD>Subpart D—Endorsement for Insurance</HEAD>


<DIV8 N="§ 242.39" NODE="24:2.1.1.2.19.4.211.1" TYPE="SECTION">
<HEAD>§ 242.39   Insurance endorsement.</HEAD>
<P>(a) <I>New construction/substantial rehabilitation.</I> Initial endorsement of the mortgage note shall occur before any mortgage proceeds are insured, and the time of final endorsement shall be as set forth in paragraph (a)(2) of this section.
</P>
<P>(1) <I>Initial endorsement.</I> The Commissioner shall indicate the insurance of the mortgage by endorsing the original mortgage note and identifying the section of the Act and the regulations under which the mortgage is insured and the date of insurance.
</P>
<P>(2) <I>Final endorsement.</I> When all advances of mortgage proceeds have been made and all the terms and conditions of the commitment have been met to HUD's satisfaction, HUD shall indicate on the original mortgage note the total of all advances approved for insurance and again endorse such instrument.
</P>
<P>(b) <I>Section 242/223(f) refinancing/acquisition.</I> (1) In cases that do not involve advances of mortgage proceeds, endorsement shall occur after all relevant terms and conditions have been satisfied, including, if applicable, completion of any limited rehabilitation, or upon assurance acceptable to the Commissioner that all limited rehabilitation will be completed by a date certain following endorsement.
</P>
<P>(2) In cases where advances of mortgage proceeds are used to fund limited rehabilitation, endorsement shall occur as described in paragraph (a) of this section immediately above, for new construction/substantial rehabilitation.
</P>
<P>(c) <I>Contract rights and obligations.</I> The Commissioner and the mortgagee or lender shall be bound from the date of initial endorsement by the provisions of the Contract of Mortgage Insurance stated in subpart B of part 207, which is hereby incorporated by reference into this part.
</P>
<CITA TYPE="N">[78 FR 8343, Feb. 5, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 242.40" NODE="24:2.1.1.2.19.4.211.2" TYPE="SECTION">
<HEAD>§ 242.40   Mortgagee certificate.</HEAD>
<P>At initial endorsement, the mortgagee shall execute a Mortgagee Certificate in a form prescribed by HUD.


</P>
</DIV8>


<DIV8 N="§ 242.41" NODE="24:2.1.1.2.19.4.211.3" TYPE="SECTION">
<HEAD>§ 242.41   Certification of cost requirements.</HEAD>
<P>Before initial endorsement of the mortgage for insurance, the mortgagor, the mortgagee, and HUD shall enter into an agreement in form and content satisfactory to HUD for the purpose of precluding any excess of mortgage proceeds over statutory limitations. Under this agreement, the mortgagor shall disclose its relationship with the builder, including any collateral agreement, and shall agree:
</P>
<P>(a) To execute a Certificate of Actual Costs, upon completion of all physical improvements on the mortgaged property.
</P>
<P>(b) To apply any cost savings in accordance with the provisions below.


</P>
</DIV8>


<DIV8 N="§ 242.42" NODE="24:2.1.1.2.19.4.211.4" TYPE="SECTION">
<HEAD>§ 242.42   Certificates of actual cost.</HEAD>
<P>(a) The mortgagor's certificate of actual cost, in a form prescribed by HUD, shall be submitted upon completion of the physical improvements to the satisfaction of HUD and before final endorsement, except that in the case of an existing hospital that does not require substantial rehabilitation and where the commitment provides for completion of specified repairs after endorsement, a supplemental certificate of actual cost will be submitted covering the completed costs of any such repairs. The certificate shall show the actual cost to the mortgagor, after deduction of any kickbacks, rebates, trade discounts, or other similar payments to the mortgagor, any of its officers, directors, stockholders, partners, or other entity member ownership, of construction and other costs, as prescribed by HUD.
</P>
<P>(b) The Certificate of Actual Cost shall be verified by an independent certified public accountant or independent public accountant in a manner acceptable to HUD.
</P>
<P>(c) Upon HUD's approval of the mortgagor's certification of actual cost, such certification shall be final and incontestable except for fraud or material misrepresentation on the part of the mortgagor.


</P>
</DIV8>


<DIV8 N="§ 242.43" NODE="24:2.1.1.2.19.4.211.5" TYPE="SECTION">
<HEAD>§ 242.43   Application of cost savings.</HEAD>
<P>At the sole discretion of HUD, any cost savings shall be used to:
</P>
<P>(a) Reduce the principal amount of the mortgage and the mortgagor's cash equity contribution proportionally, unless the mortgagor elects to have a greater portion of the savings used to reduce the mortgage; and/or
</P>
<P>(b) Fund any additional construction or substantial rehabilitation approved by HUD.


</P>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:2.1.1.2.19.5" TYPE="SUBPART">
<HEAD>Subpart E—Construction</HEAD>


<DIV8 N="§ 242.44" NODE="24:2.1.1.2.19.5.211.1" TYPE="SECTION">
<HEAD>§ 242.44   Construction standards.</HEAD>
<P>Work designed and performed under this section shall conform to the standards adopted by HUD, which, at a minimum, shall include the “Guidelines for Construction and Equipment of Hospital and Medical Facilities,” which is regularly updated and published by the American Institute of Architects.


</P>
</DIV8>


<DIV8 N="§ 242.45" NODE="24:2.1.1.2.19.5.211.2" TYPE="SECTION">
<HEAD>§ 242.45   Early commencement of work.</HEAD>
<P>(a) <I>Site preparation.</I> Prior to or following the submission of an application, the mortgagor may request for good cause the commencement of certain limited site preparation for the project within legal guidelines and state law. Such work can commence only after the review of the work and concurrence by HUD, including the environmental review under 24 CFR 242.79, previous participation review, and the agreement to certain conditions by the applicant. HUD will not approve such request until it has completed the environmental review under 24 CFR 242.79. The work must meet all requirements and guidelines as if it were approved for mortgage insurance and is to be accomplished at the sole risk of the mortgagor.
</P>
<P>(b) <I>Construction completed prior to application.</I> Structures completed more than 2 years prior to application are eligible to be refinanced with insured mortgage proceeds.
</P>
<P>(c) <I>Pre-commitment work.</I> Subsequent to submission of an application but prior to the issuance of a commitment or denial by HUD, the hospital and lender may request for good cause the commencement of certain necessary early site work and limited construction activity in connection with the improvements, within legal guidelines and state law. This work must be requested by both the hospital and the lender to be approved. Such work may be eligible to be financed with insured mortgage proceeds if the application is approved and the work complies with all specified conditions of HUD as set forth in a written agreement between the hospital and HUD. It is understood that in some cases the application submitted in order for pre-commitment work to begin may not be complete in all respects. However, at a minimum, the application shall include the approved FHA application form, the application fee (based on the amount of the total proposed insured loan), the inspection fee (based on the cost of the pre-commitment work), a project description of the pre-commitment work and its relation to the total project, and plans and specifications for the proposed pre-commitment work in sufficient detail to allow HUD to conduct its architectural and engineering review and obtain the necessary previous participation information and evidence of compliance with federal and state environmental regulations. Such work can commence only after the review of the work and concurrence by the lender and HUD, including previous participation review. HUD will not approve such request until it has completed the environmental review under 24 CFR 242.79. The work must meet all requirements and guidelines as if it were approved for mortgage insurance and is to be accomplished at the sole risk of the hospital. A request shall be accompanied by documentation required by HUD. That documentation shall include:
</P>
<P>(1) A justification explaining the urgent and compelling circumstances that make it necessary to begin construction without waiting for the application process to run its course. The justification must specify the harm the hospital would suffer from waiting.
</P>
<P>(2) A plan detailing how the hospital will finance the limited construction if the application for mortgage insurance is denied.
</P>
<P>(3) A statement that financing the limited construction by means other than a HUD-insured mortgage in the event the application is denied will impose no significant financial hardship on the hospital. The statement shall be accompanied by supporting historical and projected financial data.
</P>
<P>(4) A statement that the hospital recognizes that HUD's agreement to include the cost of the limited construction in a subsequently approved application does not in any way indicate that the application will be approved.
</P>
<P>(5) A resolution of the governing body (or, at HUD's discretion, the executive committee of the governing body) of the mortgagor attesting to paragraphs (c)(1) through (4).
</P>
<P>(d) <I>Early Start.</I> Subsequent to the issuance of a commitment, if the hospital and lender request the commencement of the project, the work may commence after the review and approval of the request by HUD, including the agreement by the hospital and the lender to any conditions that HUD may require. Any work undertaken prior to the initial endorsement shall be at the sole risk of the hospital.
</P>
<P>(e) <I>Prepayment of inspection fee.</I> The hospital shall pay a non-refundable inspection fee to HUD before the work described in paragraph (c) or (d) of this section commences. The fee shall be based on the amount of the pre-commitment and/or early start work requested to be included in the insured mortgage loan.
</P>
<P>(f) <I>No expressed or implied intent.</I> Approval to proceed under paragraphs (c) or (d) of this section shall in no way be construed as indicating any intent, expressed or implied, on the part of HUD to approve, disapprove, or make any undertaking or promise whatsoever with respect to the application or with respect to any commitment for mortgage insurance. Any work under paragraphs (c) or (d) of this section shall be undertaken at the sole risk and responsibility of the hospital.


</P>
</DIV8>


<DIV8 N="§ 242.46" NODE="24:2.1.1.2.19.5.211.3" TYPE="SECTION">
<HEAD>§ 242.46   Insured advances—building loan agreement.</HEAD>
<P>Prior to the initial endorsement of the mortgage for insurance, the mortgagor and mortgagee shall execute a building loan agreement, approved by HUD, setting forth the terms and conditions under which progress payments may be advanced during construction. To be covered by mortgage insurance, or to be included as an eligible cost, each progress payment involving mortgage proceeds and the owner's equity requirement shall be approved by HUD.


</P>
</DIV8>


<DIV8 N="§ 242.47" NODE="24:2.1.1.2.19.5.211.4" TYPE="SECTION">
<HEAD>§ 242.47   Insured advances for building components stored off-site.</HEAD>
<P>(a) Building components. In insured advances for building components stored off-site, the term building component shall mean any manufactured or pre-assembled part of a structure that HUD has specifically identified for incorporation into the property and has designated for off-site storage because it is of such size or weight that:
</P>
<P>(1) Storage of the number of components required for timely construction progress at the construction site is impractical, or
</P>
<P>(2) Weather damage or other adverse conditions prevailing at the construction site would make storage at the site impractical or unduly costly.
</P>
<P>(b) <I>Storage.</I> (1) An insured advance may be made for up to 90 percent of the invoice value (to exclude costs of transportation and storage) of the building components stored off-site, if the components are stored at a location approved by the mortgagee and HUD.
</P>
<P>(2) Each building component shall be adequately marked so as to be readily identifiable in the inventory of the off-site location. Each component shall be kept together with all other building components of the same manufacturer intended for use in the same project for which insured advances have been made and separate and apart from similar units not for use in the project.
</P>
<P>(3) Storage costs, if any, shall be borne by the contractor.
</P>
<P>(c) <I>Responsibility for transportation, storage, and insurance of off-site building components.</I> The general contractor of the insured mortgaged property shall have the responsibility for:
</P>
<P>(1) Insuring the components in the name of the mortgagor while in transit and storage; and
</P>
<P>(2) Delivering or contracting for the delivery of the components to the storage area and to the construction site, including payment of freight.
</P>
<P>(d) <I>Advances.</I> (1) Before an advance for a building component stored off-site is insured: 
</P>
<P>(i) The mortgagor shall:
</P>
<P>(A) Obtain a bill of sale for the component;
</P>
<P>(B) Give the mortgagee a security agreement; and
</P>
<P>(C) File a financing statement in accordance with the Uniform Commercial Code; and
</P>
<P>(ii) The mortgagee shall warrant to HUD that the security instruments are a first lien on the building components covered by the instruments except for such other liens or encumbrances as may be approved by HUD.
</P>
<P>(2) Before each advance for building components stored off-site is insured, the mortgagor's architect shall certify to HUD that the components, in their intended use, comply with HUD-approved contract plans and specifications. Under those circumstances permitted by HUD in which there is no architect, compliance with the HUD-approved contract plans and specifications shall be determined by HUD.
</P>
<P>(3) Advances may be made only for components stored off-site in a quantity required to permit uninterrupted installation at the site.
</P>
<P>(4) At no time shall the invoice value of building components being stored off-site, for which advances have been HUD insured, represent more than 50 percent of the total estimated construction costs for the insured mortgaged project as specified in the construction contract. Notwithstanding the preceding sentence and other regulatory requirements that set bonding requirements, the percentage of total estimated construction costs insured by advances under this section may exceed 25 percent but not 50 percent if the mortgagor furnishes assurance of completion in the form of a corporate surety bond for the payment and performance each in the amount of 100 percent of the amount of the construction contract. In no event will insurance of advances for components stored off-site be made in the absence of a payment and a performance bond.
</P>
<P>(5) No single advance that is to be insured shall be in an amount less than $10,000.


</P>
</DIV8>


<DIV8 N="§ 242.48" NODE="24:2.1.1.2.19.5.211.5" TYPE="SECTION">
<HEAD>§ 242.48   Insured advances for certain equipment and long lead items.</HEAD>
<P>The Commissioner may allow advances for certain pieces of equipment or other construction materials for which a manufacturer, fabricator, or other source requires an interim payment(s) in order to assure the timely manufacture or fabrication and delivery to the project site. Such advances can be made only if a bill of sale or an invoice describes the material or equipment and its completion and delivery dates in no uncertain terms, and that such displayed timetable is necessary to meet the requirements of the overall construction schedule cited in the construction contract.


</P>
</DIV8>


<DIV8 N="§ 242.49" NODE="24:2.1.1.2.19.5.211.6" TYPE="SECTION">
<HEAD>§ 242.49   Funds and finances: deposits and letters of credit.</HEAD>
<P>(a) <I>Deposits.</I> Where HUD requires the mortgagor to make a deposit of cash or securities, such deposit shall be with the mortgagee or a depository acceptable to the mortgagee and HUD. Any such deposit shall be held in a separate account for and on behalf of the mortgagor, and shall be the responsibility of that mortgagee or depository.
</P>
<P>(b) <I>Letter of credit.</I> Where the use of a letter of credit is acceptable to HUD in lieu of a deposit of cash or securities, the letter of credit shall be issued to the mortgagee by a banking institution acceptable to the lender. The mortgagee shall be responsible to HUD for collection under the letter of credit. In the event a demand for payment thereunder is not immediately met, the mortgagee shall forthwith provide a cash deposit equivalent to the undrawn balance of the letter of credit.
</P>
<P>(c) <I>Mortgagee not issuer.</I> The mortgagee of record may not be the issuer of the letter of credit without the prior written consent of HUD.
</P>
<CITA TYPE="N">[72 FR 67546, Nov. 28, 2007, as amended at 78 FR 8343, Feb. 5, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 242.50" NODE="24:2.1.1.2.19.5.211.7" TYPE="SECTION">
<HEAD>§ 242.50   Funds and finances: off-site utilities and streets.</HEAD>
<P>The Commissioner shall require assurance of completion of off-site public utilities and streets in all cases, except where a municipality or other public body has by agreement acceptable to HUD agreed to install such utilities and streets without cost to the mortgagor. Where such assurance is required, it shall be in the form of a cash escrow deposit, a letter of credit, the retention of a specified amount of mortgage proceeds by the mortgagee, or a combination thereof. In any case, the amount of deposit or retained cash (or both) must be sufficient to cover the cost of off-site utilities and streets. If a cash escrow is used, it shall be deposited with the mortgagee or with an acceptable trustee or escrow agent designated by the mortgagee. If mortgage proceeds are used, the mortgagee shall retain under terms approved by HUD, rather than disburse at the initial closing of the mortgage, a sufficient portion of the mortgage proceeds allocated to land in the project analysis. As additional assurance, HUD may also require a surety company bond or bonds.
</P>
<CITA TYPE="N">[72 FR 67546, Nov. 28, 2007, as amended at 73 FR 35923, June 25, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 242.51" NODE="24:2.1.1.2.19.5.211.8" TYPE="SECTION">
<HEAD>§ 242.51   Funds and finances: Insured advances and assurance of completion.</HEAD>
<P>(a) Where the estimated cost of construction or substantial rehabilitation is more than $500,000, the mortgagor shall furnish assurance of completion in the form of corporate surety bonds for payment and performance, each in the minimum amount of 100 percent of the construction contract (or Guaranteed Maximum Price, in the case of construction management) and each satisfactory to HUD.
</P>
<P>(b) All types of assurance of completion shall be on forms approved by HUD. All surety companies executing a bond and all parties executing a personal indemnity agreement must be satisfactory to HUD.
</P>
<P>(c) A mortgagee may prescribe more stringent requirements for assurance of completion than the minimum requirements provided for in this section.


</P>
</DIV8>


<DIV8 N="§ 242.52" NODE="24:2.1.1.2.19.5.211.9" TYPE="SECTION">
<HEAD>§ 242.52   Construction contracts.</HEAD>
<P>(a) <I>Awarding of contract.</I> A contract for the construction or substantial rehabilitation of a hospital shall be entered into by a mortgagor, with a builder selected by a competitive bidding procedure acceptable to HUD.
</P>
<P>(b) <I>Form of contract.</I> The construction contract shall be: A lump sum form providing for payment of a specified amount; a construction management contract with a guaranteed maximum price, the final costs of which are subject to a certification acceptable to HUD; a design-build contract with terms and certification requirements acceptable to HUD; or such other form of contract as may be acceptable to HUD.
</P>
<P>(c) <I>Competitive bidding.</I> A competitive bidding procedure acceptable to HUD must be used in the selection of bidders to perform work or otherwise provide service to the project, the costs of which are included in any form of construction contract cited in paragraph (b) of this section. Fixed equipment not included in the construction contract, and movable equipment, may be purchased by securing quotations or by using competitive bidding procedures.
</P>
<CITA TYPE="N">[72 FR 67546, Nov. 28, 2007, as amended at 73 FR 35923, June 25, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 242.53" NODE="24:2.1.1.2.19.5.211.10" TYPE="SECTION">
<HEAD>§ 242.53   Excluded contractors.</HEAD>
<P>(a) Contracts relating to the construction of the project shall not be made with any person or entity that has been excluded from participation in federal programs, including but not limited to: A general contractor, a subcontractor, or construction manager (or any firm, corporation, partnership, or association in which such contractor, subcontractor, or construction manager has a substantial interest). Before entering into contracts with any such person or entity, owners must consult the government-wide list of excluded parties, and any list of excluded parties maintained by HUD.
</P>
<P>(b) Contracts relating to the construction of the project shall not be made with a general contractor that has an identity of interest, as defined by HUD, with the mortgagor or mortgagee.
</P>
<P>(c) If HUD determines that a contract has been made contrary to the requirements of paragraphs (a) or (b) of this section and so notifies the mortgagee, HUD will require the contractor or construction manager to cost-certify and may require other remedial action in addition to taking enforcement action, as HUD deems appropriate.


</P>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:2.1.1.2.19.6" TYPE="SUBPART">
<HEAD>Subpart F—Nondiscrimination and Wage Rates</HEAD>


<DIV8 N="§ 242.54" NODE="24:2.1.1.2.19.6.211.1" TYPE="SECTION">
<HEAD>§ 242.54   Nondiscrimination.</HEAD>
<P>Hospital facilities financed with mortgages insured under this part must be made available without discrimination as to race, color, religion, sex, age, disability, or national origin. Hospitals must be operated in compliance with all applicable civil rights laws and regulations, including 24 CFR part 200, subpart J (Equal Employment Opportunity), and the Americans with Disabilities Act (42 U.S.C. 12101 <I>et seq.</I>). Racially restrictive covenants are per se illegal and their use is prohibited. The aforesaid provisions regarding age and sex discrimination do not affect the eligibility of hospitals for women and children.


</P>
</DIV8>


<DIV8 N="§ 242.55" NODE="24:2.1.1.2.19.6.211.2" TYPE="SECTION">
<HEAD>§ 242.55   Labor standards.</HEAD>
<P>(a) Projects financed under this part (except under 24 CFR 242.91) must comply with the prevailing wage rates determined under the Davis-Bacon Act (40 U.S.C. 3141 <I>et seq.</I>), and U.S. Department of Labor regulations in 29 CFR parts 1, 3, and 5 for compliance with labor standards laws, in accordance with section 212 of the Act, provided that supplemental loans under section 241 of the Act made in connection with loans insured under this part are subject to labor standards requirements in the same manner and to the same extent as mortgages insured under section 242 of the National Housing Act.
</P>
<P>(b) The requirements stated in 24 CFR part 70 governing HUD waiver of Davis-Bacon prevailing wage rates for volunteers apply to hospitals with mortgages insured under this part.
</P>
<P>(c) Each laborer or mechanic employed on any facility covered by a mortgage insured under this part (except under 24 CFR 242.91), but including a supplemental loan under section 241 of the Act made in connection with a loan insured under this part) shall receive compensation at a rate not less than one and one-half times the basic rate of pay for all hours worked in any workweek in excess of 8 hours in any workday or 40 hours in the workweek.
</P>
<P>(d) Project commitments, contracts, and agreements, as determined by HUD, and construction contracts and subcontracts, shall include terms, conditions, and standards for compliance with applicable requirements set forth in 29 CFR parts 1, 3, and 5 and section 212 of the Act.
</P>
<P>(e) No advance under a loan or mortgage that is subject to the requirements of section 212 shall be eligible for insurance unless there is filed with the application for the advance a certificate as required by HUD certifying that the laborers and mechanics employed in construction of the project have been paid not less than the wage rates required under section 212.
</P>
<CITA TYPE="N">[72 FR 67546, Nov. 28, 2007, as amended at 78 FR 8344, Feb. 5, 2013]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:2.1.1.2.19.7" TYPE="SUBPART">
<HEAD>Subpart G—Regulatory Agreement, Accounting and Reporting, and Financial Requirements</HEAD>


<DIV8 N="§ 242.56" NODE="24:2.1.1.2.19.7.211.1" TYPE="SECTION">
<HEAD>§ 242.56   Form of regulation.</HEAD>
<P>As long as HUD is the insurer or holder of the mortgage, all mortgagors shall be regulated by HUD through the use of a regulatory agreement in a published format determined by HUD and such additional covenants and restrictions as may be determined necessary by HUD on a case-by-case basis. In addition, all mortgagors shall be subject to the provisions of 24 CFR part 24 and such other enforcement provisions as may be applicable. The mortgagor shall be subject to monitoring by HUD and its agents and contractors, on an ongoing basis for the life of the insured mortgage to ensure against the risk of default, and the mortgagor must make its financial records available to HUD and its agents and contractors upon request. In those cases in which the hospital facility is leased as permitted by § 242.72, the provisions of this section also shall apply to the lessee.
</P>
<CITA TYPE="N">[72 FR 67546, Nov. 28, 2007, as amended at 73 FR 35923, June 25, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 242.57" NODE="24:2.1.1.2.19.7.211.2" TYPE="SECTION">
<HEAD>§ 242.57   Maintenance of hospital facility.</HEAD>
<P>The mortgagor shall maintain the hospital's grounds, buildings, and the equipment financed with mortgage proceeds in good repair, and shall promptly complete such repairs and maintenance as HUD considers necessary.


</P>
</DIV8>


<DIV8 N="§ 242.58" NODE="24:2.1.1.2.19.7.211.3" TYPE="SECTION">
<HEAD>§ 242.58   Books, accounts, and financial statements.</HEAD>
<P>(a) <I>Books and accounts.</I> The mortgagor's books and accounts relating to the operation of the physical facilities of the hospital shall be established in a manner satisfactory to HUD, and shall be kept in accordance with the requirements of HUD as long as the mortgage is insured or held by HUD.
</P>
<P>(b) <I>Financial reports.</I> The mortgagor shall file with HUD:
</P>
<P>(i) Annual audited financial statements in accordance with the guidance below;
</P>
<P>(ii) Quarterly unaudited financial reports, within 40 days following the end of each quarter of the mortgagor's fiscal year;
</P>
<P>(iii) If requested by HUD, monthly financial reports within 40 days following the end of each month;
</P>
<P>(iv) Board-certified annual financial results within 120 days following the close of the fiscal year (if the annual audited financial statement has not yet been filed with HUD) and at such other times as HUD may designate on a case-by-case basis; and
</P>
<P>(v) Such other financial and utilization reports as HUD may require.
</P>
<P>(c) <I>Audits.</I> (1) Not-for-profit and state and local governments shall conduct audits in accordance with the Consolidated Audit Guide for Audits of HUD Programs (Handbook 2000.04) and2 CFR part 200, subpart F.
</P>
<P>(2) For-profit organizations shall conduct audits in accordance with the Consolidated Audit Guide for Audits of HUD Programs (Handbook 2000.04).
</P>
<P>(d) <I>Changes in accounting policies.</I> The annual audited financial statements shall identify any changes in accounting policies and their financial effect on the balance sheet and on the income statement.
</P>
<P>(e) <I>Compliance reporting.</I> The mortgagor shall instruct the auditor of the annual financial statement to include in its report an evaluation of the mortgagor's compliance with the Regulatory Agreement.
</P>
<P>(f) <I>Books of management agents.</I> The books and records of management agents, lessees, operators, managers, and affiliates, as they pertain to the operations of the hospital, shall be maintained in accordance with Generally Accepted Accounting Principles (GAAP) or Governmental Accounting Standards and shall be open and available to inspection by HUD, after reasonable prior notice, during normal office hours, at the hospital or other mutually agreeable location. Every contract executed on behalf of the hospital with any of the aforesaid parties shall include the provision that the books and records of such entities shall be properly maintained and open to inspection during normal business hours by HUD at the hospital or other mutually agreeable location.
</P>
<P>(g) <I>Medicare cost reports.</I> Upon request, the mortgagor shall provide to HUD a copy of the Medicare Cost Report most recently submitted to the Centers for Medicare and Medicaid Services (an agency of the Department of Health and Human Services), along with related financial documents.
</P>
<P>(h) In those cases in which the hospital facility is leased as permitted by § 242.72, the requirements pertaining to the mortgagor in § 242.58 (a) through (g) also shall pertain to the lessee.
</P>
<CITA TYPE="N">[72 FR 67546, Nov. 28, 2007, as amended at 73 FR 35923, June 25, 2008; 80 FR 75936, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 242.59" NODE="24:2.1.1.2.19.7.211.4" TYPE="SECTION">
<HEAD>§ 242.59   Inspection of facilities by Commissioner.</HEAD>
<P>The mortgaged property (including buildings and equipment) and the books, records, and documents relating to the operation of the physical facilities of the hospital shall be subject to inspection and examination by HUD or its authorized representative at all reasonable times.


</P>
</DIV8>


<DIV8 N="§ 242.61" NODE="24:2.1.1.2.19.7.211.5" TYPE="SECTION">
<HEAD>§ 242.61   Management.</HEAD>
<P>The mortgagor shall provide for management of the hospital in a manner satisfactory to HUD.
</P>
<P>(a) <I>Contract Management of Hospital.</I> The mortgagor shall not execute a management agreement or any other contract for management of the hospital without HUD's prior written approval. (Management of the hospital, which requires HUD's prior written approval, refers to management of the hospital not management of components within the hospital such as the hospital cafeteria or hospital pharmacy.) Any management agreement or contract for management of the hospital shall contain a provision that it shall be subject to termination without penalty and with or without cause, upon written request by HUD addressed to the mortgagor and management agent.
</P>
<P>(b) <I>Principals.</I> HUD shall have the authority to require that any principals of the mortgagor, including but not limited to board members of a corporate entity, be removed, substituted, or terminated for cause upon written request by HUD addressed to the mortgagor.
</P>
<P>(c) <I>Employees.</I> HUD shall have the authority to require that any key management employees of the mortgagor (as defined and determined solely by HUD) be terminated for cause upon written request by HUD addressed to the mortgagor.
</P>
<P>(d) <I>Procedures upon receipt of request under paragraphs (a) through (c) of this section.</I> Upon receipt of such requests under paragraphs (a) through (c) of this section, the mortgagor shall immediately terminate said management agreement, principals, or employees within the shortest applicable period HUD determines appropriate and shall make arrangements satisfactory to HUD for ongoing proper management of the hospital.
</P>
<CITA TYPE="N">[72 FR 67546, Nov. 28, 2007, as amended at 73 FR 35923, June 25, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 242.62" NODE="24:2.1.1.2.19.7.211.6" TYPE="SECTION">
<HEAD>§ 242.62   Releases of lien.</HEAD>
<P>The mortgagor shall not sell, dispose of, transfer, or permit to be encumbered any security property without the prior approval of the lender and Commissioner, subject to thresholds or such other standards as HUD may establish for the approval requirement. Where there is a partial release of lien, the lender must make a determination, subject to prior review and approval by HUD, that the remaining or replacement property subject to the first lien provides adequate security for the remaining principal indebtedness.


</P>
</DIV8>


<DIV8 N="§ 242.63" NODE="24:2.1.1.2.19.7.211.7" TYPE="SECTION">
<HEAD>§ 242.63   Additional indebtedness and leasing.</HEAD>
<P>The mortgagor shall not enter into any long-term debt, short-term debt (including receivables or line of credit financing), equipment leases, or derivative-type transactions, except in conformance with policies and procedures established by HUD.


</P>
</DIV8>


<DIV8 N="§ 242.64" NODE="24:2.1.1.2.19.7.211.8" TYPE="SECTION">
<HEAD>§ 242.64   Current and future property.</HEAD>
<P>All current or future property (including personalty) of the mortgagor on or off mortgaged real estate (except that specifically restricted by donors or specifically excluded by HUD) will be considered as part of the HUD-insured hospital and subject to all provisions of the HUD regulatory agreement. All equipment acquired by the hospital following initial endorsement and at any time during the term of the loan shall become subject to the lien of the security agreement and any Uniform Commercial Code Financing Statements filed pursuant to the security agreement, unless the mortgagor specifically requests and HUD, for good cause, approves subordination of the lien of the insured mortgagee on specific personalty for specific periods of time. The first lien on the realty (as defined in the regulatory agreement and as identified in the security instrument) cannot be subordinated in whole or in part.


</P>
</DIV8>


<DIV8 N="§ 242.65" NODE="24:2.1.1.2.19.7.211.9" TYPE="SECTION">
<HEAD>§ 242.65   Distribution of assets.</HEAD>
<P>The Commissioner shall establish financial thresholds and procedures for the distribution of surplus cash and other assets. Surplus cash that meets the definition in 24 CFR 242.1, or cash that has been expressly approved for distribution by HUD, may be distributed to other organizations formally affiliated with the mortgagor, a parent organization with which the mortgagor is also affiliated, partners, or stockholders, in accordance with those financial thresholds and procedures set forth in the regulatory agreement. Other assets may be distributed to other organizations formally affiliated with the mortgagor, a parent organization with which the mortgagor is also affiliated, partners, or stockholders, in accordance with those financial thresholds and procedures set forth in the regulatory agreement, and in accordance with the release of lien conditions in 24 CFR 242.62, if applicable.


</P>
</DIV8>


<DIV8 N="§ 242.66" NODE="24:2.1.1.2.19.7.211.10" TYPE="SECTION">
<HEAD>§ 242.66   Affiliate transactions.</HEAD>
<P>Transactions with affiliates that are arms-length are permitted as specified in the Regulatory Agreement. Transactions with affiliates that are not arms-length are not permitted except with the prior written approval of HUD.


</P>
</DIV8>


<DIV8 N="§ 242.67" NODE="24:2.1.1.2.19.7.211.11" TYPE="SECTION">
<HEAD>§ 242.67   New corporations, subsidiaries, affiliations, and mergers.</HEAD>
<P>The mortgagor shall not establish, develop, organize, acquire, become the sole member of, or acquire an interest sufficient to require disclosure on the audited financial statements of the mortgagor, in any corporation, subsidiary, or affiliate organization other than those with which the mortgagor was affiliated as of date of application, without the prior approval of HUD. The mortgagor shall obtain HUD's written approval for all future mergers.


</P>
</DIV8>

</DIV6>


<DIV6 N="H" NODE="24:2.1.1.2.19.8" TYPE="SUBPART">
<HEAD>Subpart H—Miscellaneous Requirements</HEAD>


<DIV8 N="§ 242.68" NODE="24:2.1.1.2.19.8.211.1" TYPE="SECTION">
<HEAD>§ 242.68   Disclosure and verification of Social Security and Employer Identification Numbers.</HEAD>
<P>The requirements set forth in 24 CFR part 5, regarding the disclosure and verification of Social Security Numbers and Employer Identification Numbers, and Employer Identification Numbers by “applicants for and participants in” assisted mortgage and loan insurance and related programs, apply to this program.


</P>
</DIV8>


<DIV8 N="§ 242.69" NODE="24:2.1.1.2.19.8.211.2" TYPE="SECTION">
<HEAD>§ 242.69   Transfer fee.</HEAD>
<P>Upon application for review of a transfer of physical assets or the substitution of mortgagors, a transfer fee of 50 cents per thousand dollars of the outstanding principal balance of the mortgage shall be paid to HUD. A transfer fee is not required if both parties to the transfer transaction are not-for-profit or public organizations.


</P>
</DIV8>


<DIV8 N="§ 242.70" NODE="24:2.1.1.2.19.8.211.3" TYPE="SECTION">
<HEAD>§ 242.70   Fees not required.</HEAD>
<P>The payment of an application, commitment, inspection, or reopening fee shall not be required in connection with the insurance of a mortgage involving the sale by the Secretary of any property acquired under any section or title of the Act.


</P>
</DIV8>


<DIV8 N="§ 242.72" NODE="24:2.1.1.2.19.8.211.4" TYPE="SECTION">
<HEAD>§ 242.72   Leasing of hospital.</HEAD>
<P>Leasing of a hospital in its entirety is prohibited. Notwithstanding this prohibition, any proposal in which leasing of the entire facility is a factor due to state law prohibitions against the mortgaging of health care facilities by state entities shall be considered on a case-by-case basis. Also, leasing of a hospital that has an existing Section 242-insured loan is permitted if HUD determines that leasing is necessary to reduce the risk of default by a financially troubled hospital.


</P>
</DIV8>


<DIV8 N="§ 242.73" NODE="24:2.1.1.2.19.8.211.5" TYPE="SECTION">
<HEAD>§ 242.73   Waiver of eligibility requirements for mortgage insurance.</HEAD>
<P>The Secretary may insure under this part, without regard to any limitation upon eligibility contained in this subpart, any mortgage assigned to him or her in connection with payment under a contract of mortgage insurance, or executed in connection with a sale by him or her of any property previously insured under this part and acquired subsequent to a claim.


</P>
</DIV8>


<DIV8 N="§ 242.74" NODE="24:2.1.1.2.19.8.211.6" TYPE="SECTION">
<HEAD>§ 242.74   Smoke detectors.</HEAD>
<P>Each occupied room must include such smoke detectors as are required by law.


</P>
</DIV8>


<DIV8 N="§ 242.75" NODE="24:2.1.1.2.19.8.211.7" TYPE="SECTION">
<HEAD>§ 242.75   Title requirements.</HEAD>
<P>In order for the mortgaged property to be eligible for insurance, HUD shall determine that marketable title thereto is vested in the mortgagor as of the date the mortgage is filed for record. The title evidence shall be examined by HUD and the endorsement of the mortgage note for insurance shall be evidence of its acceptability.


</P>
</DIV8>


<DIV8 N="§ 242.76" NODE="24:2.1.1.2.19.8.211.8" TYPE="SECTION">
<HEAD>§ 242.76   Title evidence.</HEAD>
<P>Upon insurance of the mortgage, the mortgagee shall furnish to HUD a survey of the mortgage property, satisfactory to HUD, and a policy of title insurance covering the property, as provided in paragraph (a) of this section. If, for reasons HUD considers to be satisfactory, title insurance cannot be furnished, the mortgagee shall furnish such evidence of title in accordance with paragraph (b) or (c) of this section as HUD may require. Any survey, policy of title insurance, or evidence of title required under this section shall be furnished without expense to HUD. The types of title evidence are:
</P>
<P>(a) A policy of title insurance issued by a company and in a form satisfactory to HUD. The policy shall name as the insureds the mortgagee and the Secretary of Housing and Urban Development, and their successors and assigns, as their respective interests may appear. The policy shall provide that upon acquisition of title by the mortgagee or the Secretary, it will continue to provide the same coverage as the original policy, and will run to the mortgagee or the Secretary, as the case may be.
</P>
<P>(b) An abstract of title satisfactory to HUD, prepared by an abstract company or individual engaged in the business of preparing abstracts of title, accompanied by a legal opinion satisfactory to HUD as to the quality of such title, signed by an attorney-at-law experienced in the examination of titles.
</P>
<P>(c) A Torrens or similar title certificate.


</P>
</DIV8>


<DIV8 N="§ 242.77" NODE="24:2.1.1.2.19.8.211.9" TYPE="SECTION">
<HEAD>§ 242.77   Liens.</HEAD>
<P>The hospital must be free and clear of all liens other than the insured mortgage, except that the property may be subject to a lien as provided by terms and conditions established by HUD, as follows:
</P>
<P>(a) An inferior lien made or held by a federal, state, or local government instrumentality;
</P>
<P>(b) An inferior lien required in connection with a supplemental loan insured pursuant to section 241 of the Act;
</P>
<P>(c) An inferior or superior lien on equipment as may be approved in connection with an equipment leasing program approved by HUD;
</P>
<P>(d) An inferior or superior lien on accounts receivable as approved by HUD as collateral for a line of credit or other borrowing by a hospital insured under this part that has extraordinary needs such as cash flow difficulties; or
</P>
<P>(e) Similar liens otherwise approved by HUD.


</P>
</DIV8>


<DIV8 N="§ 242.78" NODE="24:2.1.1.2.19.8.211.10" TYPE="SECTION">
<HEAD>§ 242.78   Zoning, deed, and building restrictions.</HEAD>
<P>The project when completed shall not violate any material zoning or deed restrictions applicable to the project site, and shall comply with all applicable building and other governmental codes, ordinances, regulations, and requirements.


</P>
</DIV8>


<DIV8 N="§ 242.79" NODE="24:2.1.1.2.19.8.211.11" TYPE="SECTION">
<HEAD>§ 242.79   Environmental quality determinations and standards.</HEAD>
<P>Requirements set forth in 24 CFR part 50, “Protection and Enhancement of Environmental Quality,” 24 CFR part 51, “Environmental Criteria and Standards,” and 24 CFR part 55, “Floodplain Management,” governing environmental review responsibilities (as applicable) and any additional environmental standards, reviews, or determinations required by HUD apply to this program.


</P>
</DIV8>


<DIV8 N="§ 242.81" NODE="24:2.1.1.2.19.8.211.12" TYPE="SECTION">
<HEAD>§ 242.81   Lead-based paint poisoning prevention.</HEAD>
<P>Requirements set forth in 24 CFR part 35 apply to this program.


</P>
</DIV8>


<DIV8 N="§ 242.82" NODE="24:2.1.1.2.19.8.211.13" TYPE="SECTION">
<HEAD>§ 242.82   Energy conservation.</HEAD>
<P>Construction, mechanical equipment, and energy and metering selections shall provide cost-effective energy conservation in accordance with standards established by HUD.


</P>
</DIV8>


<DIV8 N="§ 242.83" NODE="24:2.1.1.2.19.8.211.14" TYPE="SECTION">
<HEAD>§ 242.83   Debarment and suspension.</HEAD>
<P>The requirements set forth in 24 CFR part 24 apply to this program.


</P>
</DIV8>


<DIV8 N="§ 242.84" NODE="24:2.1.1.2.19.8.211.15" TYPE="SECTION">
<HEAD>§ 242.84   Previous participation and compliance requirements.</HEAD>
<P>The requirements set forth in 24 CFR part 200, subpart H, apply to this program.


</P>
</DIV8>


<DIV8 N="§ 242.86" NODE="24:2.1.1.2.19.8.211.16" TYPE="SECTION">
<HEAD>§ 242.86   Property and mortgage assessment.</HEAD>
<P>The requirements set forth in 24 CFR part 200, subpart E, regarding the mortgagor's responsibility for making those investigations, analysis, and inspections it deems necessary for protecting its interests in the property apply to these programs.


</P>
</DIV8>


<DIV8 N="§ 242.87" NODE="24:2.1.1.2.19.8.211.17" TYPE="SECTION">
<HEAD>§ 242.87   Certifications.</HEAD>
<P>Any agreement, undertaking, statement, or certification required by HUD shall specifically state that it has been made, presented, and delivered for the purpose of influencing an official action of the FHA, and of HUD, and may be relied upon by HUD as a true statement of the facts contained therein.


</P>
</DIV8>


<DIV8 N="§ 242.89" NODE="24:2.1.1.2.19.8.211.18" TYPE="SECTION">
<HEAD>§ 242.89   Supplemental loans.</HEAD>
<P>A loan, advance of credit, or purchase of an obligation representing a loan or advance of credit made for the purpose of financing improvements or additions (including the refinancing of any indebtedness incurred in connection with the early commencement of work on such improvements or additions, subject to the requirements of §§ 242.15 and 242.45) to a hospital covered by a mortgage insured under this section of the Act or for a Commissioner-held mortgage, or equipment for a hospital, may be insured pursuant to the provisions of section 241 of the Act and under the provisions of this part as applicable and such additional terms and conditions as established by HUD. See subpart B of 24 CFR part 241 with respect to the contract of mortgage insurance for all loans insured under section 241 of the Act. See 24 CFR part 241, subpart C, for energy improvements.


</P>
</DIV8>


<DIV8 N="§ 242.90" NODE="24:2.1.1.2.19.8.211.19" TYPE="SECTION">
<HEAD>§ 242.90   Eligibility of mortgages covering hospitals in certain neighborhoods.</HEAD>
<P>(a) A mortgage financing the repair, substantial rehabilitation, or construction of a hospital located in an older declining urban area shall be eligible for insurance under this subpart, subject to compliance with the additional requirements of this section.
</P>
<P>(b) The mortgage shall meet all of the requirements of this subpart, except such requirements (other than those relating to labor standards and prevailing wages or environmental review) as are judged to be not applicable on the basis of the following determinations to be made by HUD.
</P>
<P>(1) That the conditions of the area in which the property is located prevent the application of certain eligibility requirements of this subpart.
</P>
<P>(2) That the area is reasonably viable, and there is a need in the area for an adequate hospital to serve low and moderate income families.
</P>
<P>(3) That the mortgage to be insured is an acceptable risk.
</P>
<P>(c) Mortgages complying with the requirements of this section shall be insured under this subpart pursuant to section 223(e) of the National Housing Act. Such mortgages shall be insured under and be the obligation of the Special Risk Insurance Fund.
</P>
<CITA TYPE="N">[72 FR 67546, Nov. 28, 2007, as amended at 73 FR 35923, June 25, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 242.91" NODE="24:2.1.1.2.19.8.211.20" TYPE="SECTION">
<HEAD>§ 242.91   Eligibility of refinancing transactions.</HEAD>
<P>(a) <I>Refinancing an FHA-insured mortgage.</I> A mortgage given to refinance an existing insured mortgage under Section 241 or Section 242 of the Act covering a hospital may be insured under this subpart pursuant to Section 223(a)(7) of the Act. Insurance of the new, refinancing mortgage shall be subject to the following limitations:
</P>
<P>(1) <I>Principal amount.</I> The principal amount of the refinancing mortgage shall not exceed the lesser of:
</P>
<P>(i) The original principal amount of the existing insured mortgage; or
</P>
<P>(ii) The unpaid principal amount of the existing insured mortgage, to which may be added loan closing charges associated with the refinancing mortgage, and costs, as determined by HUD, of improvements, upgrading, or additions required to be made to the property.
</P>
<P>(2) <I>Debt service rate.</I> The monthly debt service payment for the refinancing mortgage may not exceed the debt service payment charged for the existing mortgage.
</P>
<P>(3) <I>Mortgage term.</I> The term of the new mortgage shall not exceed the unexpired term of the existing mortgage, except that the new mortgage may have a term of not more than 12 years in excess of the unexpired term of the existing mortgage in any case in which HUD determines that the insurance of the mortgage for an additional term will inure to the benefit of the FHA Insurance Fund, taking into consideration the outstanding insurance liability under the existing insured mortgage, and the remaining economic life of the property.
</P>
<P>(4) <I>Minimum loan amount.</I> The mortgagee may not require a minimum principal amount to be outstanding on the loan secured by the existing mortgage.
</P>
<P>(b) <I>Refinancing capital debt not insured by FHA.</I> A mortgage given to refinance the capital debt of an existing hospital that is not insured under section 241 or section 242 of the Act may be insured under this subpart pursuant to Section 223(f) of the National Housing Act. The mortgage may be executed in connection with the purchase or refinancing of an existing hospital without substantial rehabilitation. A mortgage insured pursuant to this subpart shall meet all other requirements of this part. The FHA Commissioner shall prescribe such terms and conditions as the FHA Commissioner deems necessary to assure that:
</P>
<P>(1) The refinancing is employed to lower the monthly debt service costs (taking into account any fees or charges connected with such refinancing) of such existing hospital;
</P>
<P>(2) The proceeds of any refinancing will be employed only to retire the existing capital debt; pay for limited rehabilitation totaling less than 20 percent of the mortgage amount; and pay the necessary cost of refinancing on such existing hospital;
</P>
<P>(3) Such existing hospital is economically viable; and
</P>
<P>(4) The applicable requirements of Section 242 for certificates, studies, and statements have been met.
</P>
<CITA TYPE="N">[78 FR 8344, Feb. 5, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 242.92" NODE="24:2.1.1.2.19.8.211.21" TYPE="SECTION">
<HEAD>§ 242.92   Minimum principal loan amount.</HEAD>
<P>A mortgagee may not require, as a condition of providing a loan secured by a mortgage insured under this part, that the principal amount of the mortgage exceed a minimum amount established by the mortgagee.


</P>
</DIV8>


<DIV8 N="§ 242.93" NODE="24:2.1.1.2.19.8.211.22" TYPE="SECTION">
<HEAD>§ 242.93   Amendment of regulations.</HEAD>
<P>The regulations in this subpart may be amended by HUD at any time and from time to time, in whole or in part, but such amendment shall not adversely affect the interests of a mortgagee or lender under the insurance on any mortgage or loan already insured, and shall not adversely affect the interests of a mortgagee or lender on any mortgage or loan to be insured on which HUD has issued a commitment to insure.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="244" NODE="24:2.1.1.2.20" TYPE="PART">
<HEAD>PART 244—MORTGAGE INSURANCE FOR GROUP PRACTICE FACILITIES [TITLE XI] 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1715b, 1749aaa-5); 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>36 FR 24663, Dec. 22, 1971, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:2.1.1.2.20.1" TYPE="SUBPART">
<HEAD>Subpart A—Eligibility Requirements</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 14407, Apr. 1, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 244.1" NODE="24:2.1.1.2.20.1.211.1" TYPE="SECTION">
<HEAD>§ 244.1   Eligibility requirements.</HEAD>
<P>The requirements set forth in 24 CFR part 200, subpart A, apply to group practice facilities (title XI) of the National Housing Act (12 U.S.C. 1749aaa), as amended.


</P>
</DIV8>


<DIV8 N="§ 244.2" NODE="24:2.1.1.2.20.1.211.2" TYPE="SECTION">
<HEAD>§ 244.2   License.</HEAD>
<P>The Commissioner shall not insure any mortgage under this part unless the appropriate licensing agency for the State, municipality or other political subdivision in which a project is or is to be located provides such assurances as the Commissioner considers necessary that the facility will comply with any applicable State or local standards and requirements for such facilities.


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:2.1.1.2.20.2" TYPE="SUBPART">
<HEAD>Subpart B—Contract Rights and Obligations</HEAD>


<DIV8 N="§ 244.251" NODE="24:2.1.1.2.20.2.211.1" TYPE="SECTION">
<HEAD>§ 244.251   Cross-reference.</HEAD>
<P>(a) All of the provisions, except § 207.258b, of part 207, subpart B of this chapter relating to mortgages insured under section 207 of the National Housing Act apply to a mortgage covering a group practice facility insured under title XI of the National Housing Act.
</P>
<P>(b) For the purposes of this subpart all references in part 207 of this chapter to section 207 of the Act shall be construed to refer to title XI of the Act. 
</P>
<P>(c) All of the definitions in § 244.1 shall apply to this subpart. In addition as used in this part, the term <I>contract of insurance</I> means the agreement evidenced by the Commissioner's insurance endorsement and includes the provisions of this subpart and of the Act. 
</P>
<CITA TYPE="N">[36 FR 24663, Dec. 22, 1971, as amended at 50 FR 38787, Sept. 25, 1985]


</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="245" NODE="24:2.1.1.2.21" TYPE="PART">
<HEAD>PART 245—TENANT PARTICIPATION IN MULTIFAMILY HOUSING PROJECTS
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1715z-1b; 42 U.S.C. 3535(d).


</PSPACE></AUTH>

<DIV6 N="A" NODE="24:2.1.1.2.21.1" TYPE="SUBPART">
<HEAD>Subpart A—General Provisions</HEAD>


<DIV8 N="§ 245.5" NODE="24:2.1.1.2.21.1.211.1" TYPE="SECTION">
<HEAD>§ 245.5   Purpose.</HEAD>
<P>The purpose of this part is to recognize the importance and benefits of cooperation and participation of tenants in creating a suitable living environment in multifamily housing projects and in contributing to the successful operation of such projects, including their good physical condition, proper maintenance, security, energy efficiency, and control of operating costs.
</P>
<CITA TYPE="N">[50 FR 32402, Aug. 12, 1985]


</CITA>
</DIV8>


<DIV8 N="§ 245.10" NODE="24:2.1.1.2.21.1.211.2" TYPE="SECTION">
<HEAD>§ 245.10   Applicability of part.</HEAD>
<P>(a) Except as otherwise expressly limited in this section, this part applies in its entirety to a mortgagor of any multifamily housing project that meets the following—
</P>
<P>(1) <I>Project subject to HUD insured or held mortgage under the National Housing Act.</I> The project has a mortgage that—
</P>
<P>(i) Has received final endorsement on behalf of the Secretary and is insured or held by the Secretary under the National Housing Act (12 U.S.C. 1701—1715z-20); and 
</P>
<P>(ii) Is assisted under: 
</P>
<P>(A) Section 236 of the National Housing Act (12 U.S.C. 1715z-1); 
</P>
<P>(B) The Section 221(d)(3) BMIR Program; 
</P>
<P>(C) The Rent Supplement Program; 
</P>
<P>(D) The Section 8 Loan Management Set-Aside Program following conversion to such assistance from the Rent Supplement Program assistance; 
</P>
<P>(2) <I>Formerly HUD-owned project.</I> The project—
</P>
<P>(i) Before being acquired by the Secretary, was assisted under: 
</P>
<P>(A) Section 236 of the National Housing Act (12 U.S.C. 1715z-1); 
</P>
<P>(B) The Section 221(d)(3) BMIR Program; 
</P>
<P>(C) The Rent Supplement Program; or 
</P>
<P>(D) The Section 8 LMSA Program following conversion to such assistance from assistance under the Rent Supplement Program; and 
</P>
<P>(ii) Was sold by the Secretary subject to a mortgage insured or held by the Secretary and an agreement to maintain the low- and moderate-income character of the project; 
</P>
<P>(3) <I>State or local housing finance agency project.</I> The project receives assistance under section 236 of the National Housing Act (12 U.S.C. 1715z-1) or the Rent Supplement Program (12 U.S.C. 1701s) administered through a state or local housing finance agency, but does not have a mortgage insured under the National Housing Act or held by the Secretary. Subject to the further limitation in paragraph (b) of this section, only the provisions of subparts A, B and C of this part, and of subpart E of this part for requests for approval of a conversion of a project from project-paid utilities to tenant-paid utilities or of a reduction in tenant utility allowances, apply to a mortgagor of such a project; 
</P>
<P>(4) The project receives project-based assistance under section 8 of the United States Housing Act of 1937 (this regulation does not cover tenant participation in PHAs that administer such project-based assistance); 
</P>
<P>(5) The project receives enhanced vouchers under the Low-Income Housing Preservation and Resident Homeownership Act of 1990, the provisions of the Emergency Low Income Housing Preservation Act of 1987, or the Multifamily Assisted Housing Reform and Affordability Act of 1997, as amended; 
</P>
<P>(6) The project receives assistance under the Section 202 Direct Loan program or the Section 202 Supportive Housing for the Elderly program; or 
</P>
<P>(7) The project receives assistance under the Section 811 Supportive Housing for Persons with Disabilities program.
</P>
<P>(b) <I>Limitation for cooperative mortgagor.</I> Only the provisions of subparts A and C of this part apply to a mortgagor of any multifamily housing project described in paragraph (a) of this section if the mortgagor is a cooperative housing corporation or association. 
</P>
<P>(c) <I>Definitions.</I> <I>Rent Supplement Program</I> means the assistance program authorized by section 101 of the Housing and Urban Development Act of 1965 (12 U.S.C. 1701s). 
</P>
<P><I>Section 8 LMSA Program</I> means the Section 8 Loan Management Set-Aside Program implemented under 24 CFR part 886, subpart A. 
</P>
<P><I>Section 221(d)(3) BMIR Program</I> means the below-market interest rate mortgage insurance program under section 221(d)(3) and the proviso of section 221(d)(5) of the National Housing Act (12 U.S.C. 1715l(d)(3) and 1715l(d)(5)). 
</P>
<CITA TYPE="N">[61 FR 57961, Nov. 8, 1996, as amended at 65 FR 36280, June 7, 2000; 68 FR 20325, Apr. 24, 2003]


</CITA>
</DIV8>


<DIV8 N="§ 245.15" NODE="24:2.1.1.2.21.1.211.3" TYPE="SECTION">
<HEAD>§ 245.15   Notice to tenants.</HEAD>
<P>(a) Whenever a mortgagor is required under subparts D or E of this part to serve notice on the tenants of a project, the notice must be served by delivery, except, for a high-rise project, the notice may be served either by delivery or by posting. If service is made by delivery, a copy of the notice must be delivered directly to each unit in the project or mailed to each tenant. If service is made by posting, the notice must be posted in at least three conspicuous places within each building in which the affected dwelling units are located and, during any prescribed tenant period, in a conspicuous place at the address stated in the notice where the materials in support of the mortgagor's proposed action are to be made available for inspection and copying. Posted notices must be maintained intact and in legible form during any prescribed notice period. 
</P>
<P>(b) For purposes of computing time periods following service of notice, service is effected, in the case of service by delivery, when all notices have been delivered or mailed and, in the case of service by posting, when all notices have been initially posted. 
</P>
<CITA TYPE="N">[50 FR 32402, Aug. 12, 1985, as amended at 61 FR 57961, Nov. 8, 1996] 


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:2.1.1.2.21.2" TYPE="SUBPART">
<HEAD>Subpart B—Tenant Organizations</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>65 FR 36281, June 7, 2000, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 245.100" NODE="24:2.1.1.2.21.2.211.1" TYPE="SECTION">
<HEAD>§ 245.100   Right of tenants to organize.</HEAD>
<P>The tenants of a multifamily housing project covered under § 245.10 have the right to establish and operate a tenant organization for the purpose of addressing issues related to their living environment, which includes the terms and conditions of their tenancy as well as activities related to housing and community development. 


</P>
</DIV8>


<DIV8 N="§ 245.105" NODE="24:2.1.1.2.21.2.211.2" TYPE="SECTION">
<HEAD>§ 245.105   Recognition of tenant organizations.</HEAD>
<P>Owners of multifamily housing projects covered under § 245.10, and their agents, must: 
</P>
<P>(a) Recognize legitimate tenant organizations; and (b) Give reasonable consideration to concerns raised by legitimate tenant organizations. 


</P>
</DIV8>


<DIV8 N="§ 245.110" NODE="24:2.1.1.2.21.2.211.3" TYPE="SECTION">
<HEAD>§ 245.110   Legitimate tenant organizations.</HEAD>
<P>A tenant organization is legitimate if it has been established by the tenants of a multifamily housing project covered under § 245.10 for the purpose described in § 245.100, and meets regularly, operates democratically, is representative of all residents in the development, and is completely independent of owners, management, and their representatives. 


</P>
</DIV8>


<DIV8 N="§ 245.115" NODE="24:2.1.1.2.21.2.211.4" TYPE="SECTION">
<HEAD>§ 245.115   Protected activities.</HEAD>
<P>(a) Owners of multifamily housing projects covered under § 245.10, and their agents, must allow tenants and tenant organizers to conduct the following activities related to the establishment or operation of a tenant organization: 
</P>
<P>(1) Distributing leaflets in lobby areas; 
</P>
<P>(2) Placing leaflets at or under tenants' doors; 
</P>
<P>(3) Distributing leaflets in common areas; 
</P>
<P>(4) Initiating contact with tenants; 
</P>
<P>(5) Conducting door-to-door surveys of tenants to ascertain interest in establishing a tenant organization and to offer information about tenant organizations; 
</P>
<P>(6) Posting information on bulletin boards; 
</P>
<P>(7) Assisting tenants to participate in tenant organization activities; 
</P>
<P>(8) Convening regularly scheduled tenant organization meetings in a space on site and accessible to tenants, in a manner that is fully independent of management representatives. In order to preserve the independence of tenant organizations, management representatives may not attend such meetings unless invited by the tenant organization to specific meetings to discuss a specific issue or issues; and 
</P>
<P>(9) Formulating responses to owner's requests for: 
</P>
<P>(i) Rent increases; 
</P>
<P>(ii) Partial payment of claims; 
</P>
<P>(iii) The conversion from project-based paid utilities to tenant-paid utilities; 
</P>
<P>(iv) A reduction in tenant utility allowances; 
</P>
<P>(v) Converting residential units to non-residential use, cooperative housing, or condominiums; 
</P>
<P>(vi) Major capital additions; and 
</P>
<P>(vii) Prepayment of loans. 
</P>
<P>(b) In addition to the activities listed in paragraph (a) of this section, owners of multifamily housing projects covered under § 245.10, and their agents, must allow tenants and tenant organizers to conduct other reasonable activities related to the establishment or operation of a tenant organization. 
</P>
<P>(c) Owners of multifamily housing projects and their agents shall not require tenants and tenant organizers to obtain prior permission before engaging in the activities permitted under paragraphs (a) and (b) of this section. 


</P>
</DIV8>


<DIV8 N="§ 245.120" NODE="24:2.1.1.2.21.2.211.5" TYPE="SECTION">
<HEAD>§ 245.120   Meeting space.</HEAD>
<P>(a) Owners of multifamily housing projects covered under § 245.10, and their agents, must reasonably make available the use of any community room or other available space appropriate for meetings that is part of the multifamily housing project when requested by: 
</P>
<P>(1) Tenants or a tenant organization and used for activities related to the operation of the tenant organization; or 
</P>
<P>(2) Tenants seeking to establish a tenant organization or collectively address issues related to their living environment. 
</P>
<P>(b) Tenant and tenant organization meetings must be accessible to persons with disabilities, unless this is impractical for reasons beyond the organization's control. If the complex has an accessible common area or areas, it will not be impractical to make organizational meetings accessible to persons with disabilities. 
</P>
<P>(c) <I>Fees.</I> An owner of a multifamily housing project covered under § 245.10 may charge a reasonable, customary and usual fee, approved by the Secretary as may normally be imposed for the use of such facilities in accordance with procedures prescribed by the Secretary, for the use of meeting space. An owner may waive this fee. 


</P>
</DIV8>


<DIV8 N="§ 245.125" NODE="24:2.1.1.2.21.2.211.6" TYPE="SECTION">
<HEAD>§ 245.125   Tenant organizers.</HEAD>
<P>(a) A tenant organizer is a tenant or non-tenant who assists tenants in establishing and operating a tenant organization, and who is not an employee or representative of current or prospective owners, managers, or their agents. 
</P>
<P>(b) Owners of multifamily housing projects covered under § 245.10, and their agents, must allow tenant organizers to assist tenants in establishing and operating tenant organizations. 
</P>
<P>(c) <I>Non-tenant tenant organizers.</I> (1) If a multifamily housing project covered under § 245.10 has a consistently enforced, written policy against canvassing, then a non-tenant tenant organizer must be accompanied by a tenant while on the property of the multifamily housing project, except in the case of recipients of HUD Outreach and Assistance Training Grants (“OTAG”) or other direct HUD grants designed to enable recipients to provide education and outreach to tenants concerning HUD's mark-to-market program (see 24 CFR parts 401 and 402), who are conducting eligible activities as defined in the applicable Notice of Funding Availability for the grant or other effective grant document. 
</P>
<P>(2) If a multifamily housing project covered under § 245.10 has a written policy favoring canvassing, any non-tenant tenant organizer must be afforded the same privileges and rights of access as other uninvited outside parties in the normal course of operations. If the project does not have a consistently enforced, written policy against canvassing, the project shall be treated as if it has a policy favoring canvassing. 


</P>
</DIV8>


<DIV8 N="§ 245.130" NODE="24:2.1.1.2.21.2.211.7" TYPE="SECTION">
<HEAD>§ 245.130   Tenants' rights not to be re-canvassed.</HEAD>
<P>A tenant has the right not to be re-canvassed against his or her wishes regarding participation in a tenant organization. 


</P>
</DIV8>


<DIV8 N="§ 245.135" NODE="24:2.1.1.2.21.2.211.8" TYPE="SECTION">
<HEAD>§ 245.135   Enforcement.</HEAD>
<P>(a) Owners of housing identified in § 245.10, and their agents, as well as any principals thereof (as defined in 2 CFR part 2424), who violate any provision of this subpart so as to interfere with the organizational and participatory rights of tenants, may be liable for sanctions under 2 CFR part 2424. Such sanctions may include:
</P>
<P>(1) <I>Debarment.</I> A person who is debarred is prohibited from future participation in federal programs for a period of time. The specific rules and regulations relating to debarment are found at 2 CFR part 2424.
</P>
<P>(2) <I>Suspension.</I> Suspension is a temporary action with the same effect as debarment, to be taken when there is adequate evidence that a cause for debarment may exist and immediate action is needed to protect the public interest. The specific rules and regulations relating to suspension are found at 2 CFR part 2424.
</P>
<P>(3) <I>Limited Denial of Participation.</I> An LDP generally excludes a person from future participation in the federal program under which the cause arose. The duration of an LDP is generally up to 12 months. The specific rules and regulations relating to LDPs are found at 2 CFR part 2424, subpart J.
</P>
<P>(b) These sanctions may also apply to affiliates (as defined in 2 CFR part 2424) of these persons or entities.
</P>
<P>(c) The procedures in 2 CFR part 2424 shall apply to actions under this subpart.
</P>
<CITA TYPE="N">[72 FR 73495, Dec. 27, 2007]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:2.1.1.2.21.3" TYPE="SUBPART">
<HEAD>Subpart C—Efforts To Obtain Assistance</HEAD>


<DIV8 N="§ 245.205" NODE="24:2.1.1.2.21.3.211.1" TYPE="SECTION">
<HEAD>§ 245.205   Efforts to obtain assistance.</HEAD>
<P>(a) Mortgagors subject to the requirements of this subpart shall not interfere with the efforts of tenants to obtain rent subsidies or other public assistance.
</P>
<P>(b) A mortgagor subject to the requirements of this subpart who is a party to a rent supplement contract under section 101 of the Housing and Urban Development Act of 1965 (12 U.S.C. 1701s), a rental assistance payments contract under part 236, subpart D, of this chapter, or a Housing Assistance Payments Contract under 24 CFR part 886 shall not refuse to make assistance under such contract available to an existing tenant who is eligible therefor, provided that sufficient contract and budget authority and contract units are available under the contract. However, this provision shall not be deemed to require the mortgagor to give priority in the allocation of any such available assistance to an existing tenant instead of an eligible applicant on the mortgagor's waiting list or otherwise to supersede tenant selection procedures which are not otherwise inconsistent with applicable program regulation or instructions.
</P>
<P>(c) Subject to the provisions of any contract made in connection with the purchase of a multifamily housing project owned by the Secretary, this section shall not be deemed to require a mortgagor subject to the requirement of this subpart to enter into a Housing Assistance Payments Contract pursuant to 24 CFR part 982 for the benefit of an existing tenant who obtains a Certificate of Family Participation.
</P>
<CITA TYPE="N">[48 FR 28437, June 22, 1983. Redesignated at 50 FR 32403, Aug. 12, 1985, as amended at 61 FR 57961, Nov. 8, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 245.210" NODE="24:2.1.1.2.21.3.211.2" TYPE="SECTION">
<HEAD>§ 245.210   Availability of information.</HEAD>
<P>A mortgagor subject to the requirements of this subpart shall make available to tenants any information concerning rent subsidies or other public assistance that is prepared and distributed by HUD to the project for the purpose of distribution to tenants.
</P>
<CITA TYPE="N">[48 FR 28437, June 22, 1983. Redesignated at 50 FR 32403, Aug. 12, 1985]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:2.1.1.2.21.4" TYPE="SUBPART">
<HEAD>Subpart D—Procedures for Requesting Approval of an Increase in Maximum Permissible Rents</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>50 FR 32403, Aug. 12, 1985, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 245.305" NODE="24:2.1.1.2.21.4.211.1" TYPE="SECTION">
<HEAD>§ 245.305   Applicability of subpart.</HEAD>
<P>(a) The requirements of this subpart apply to any request by a mortgagor, as provided by § 245.10, for HUD approval of an increase in maximum permissible rents.
</P>
<P>(b) For purposes of this subpart, an increase in utility charges paid directly by the tenant does not constitute an increase in rents.


</P>
</DIV8>


<DIV8 N="§ 245.310" NODE="24:2.1.1.2.21.4.211.2" TYPE="SECTION">
<HEAD>§ 245.310   Notice to tenants.</HEAD>
<P>(a) At least 30 days before submitting a request to HUD for approval of an increase in maximum permissible rents, the mortgagor must notify the tenants of the proposed rent increase. Copies of the notice must be served on the tenants as provided in § 245.15. The notice must contain the following information in the following format or an equivalent format:
</P>
<EXTRACT>
<HD1>Notice to Tenants of Intention To Submit a Request to HUD for Approval of an Increase in Maximum Permissible Rents
</HD1>
<FP-DASH>
</FP-DASH>
<FP>Date of Notice
</FP>
<P>Take notice that on [date] we plan to submit a request for approval of an increase in the maximum permissible rents for [name of apartment complex] to the United States Department of Housing and Urban Development (HUD). The proposed increase is needed for the following reasons:
</P>
<P>1.
</P>
<P>2.
</P>
<P>3.
</P>
<P>The rent increases for which we have requested approval are:
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" rowspan="2" scope="col">Bedrooms
</TH><TH class="gpotbl_colhed" colspan="2" scope="col">Present
<br/>rent 
<sup>1</sup>
</TH><TH class="gpotbl_colhed" colspan="2" scope="col">Proposed
<br/>increase 
<sup>1</sup>
</TH><TH class="gpotbl_colhed" colspan="2" scope="col">Proposed
<br/>rent 
<sup>1</sup>
</TH></TR><TR><TH class="gpotbl_colhed" scope="col">Basic
</TH><TH class="gpotbl_colhed" scope="col">Market
</TH><TH class="gpotbl_colhed" scope="col">Basic
</TH><TH class="gpotbl_colhed" scope="col">Market
</TH><TH class="gpotbl_colhed" scope="col">Basic
</TH><TH class="gpotbl_colhed" scope="col">Market
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">5</TD><TD align="left" class="gpotbl_cell">$</TD><TD align="left" class="gpotbl_cell">$</TD><TD align="left" class="gpotbl_cell">$</TD><TD align="left" class="gpotbl_cell">$</TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell">$
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">0</TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell"></TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1</TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell"></TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">2</TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell"></TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">3</TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell"></TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">4</TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell"></TD></TR></TABLE></DIV><DIV class="table_foot"><P class="gpotbl_note">
<sup>1</sup> Separate columns for basic and market rent should be used only for projects assisted under sec. 236 of the National Housing Act. In addition, in projects with more than 1 type of apartment having the same number of bedroom but different rents, each type should be listed separately.</P></DIV></DIV>
<P>A copy of the materials that we are submitting to HUD in support of our request will be available during normal business hours at [address] for a period of 30 days from the date of service of this notice for inspection and copying by tenants of [name of apartment complex] and, if the tenants wish, by legal or other representatives acting for them individually or as a group.
</P>
<P>During a period of 30 days from the date of service of this notice, tenants of [name of apartment complex] may submit written comments on the proposed rent increase to us at [address]. Tenant representatives may assist tenants in preparing those comments. (If, at HUD's request or otherwise , we make any material change during the comment period in the materials available for inspection and copying, we will notify the tenants of the change or changes, and the tenants will have a period of 15 days from the date of service of this additional notice (or the remainder of any applicable comment period, if longer) in which to inspect and copy the materials as changed and to submit comments on the proposed rent increase). These comments will be transmitted to HUD, along with our evaluation of them and our request for the increase. You may also send a copy of your comments directly to HUD at the following address: United States Department of Housing and Urban Development [address of local HUD field office with jurisdiction over rent increases for the project], Attention: Director, Housing Management Division, Re: Project No. [Name of Apartment Complex]. 
</P>
<P>HUD will approve, adjust upward or downward, or disapprove the proposed rent increase upon reviewing the request and comments. When HUD advises us in writing of its decision on our request, you will be notified. If the request is approved, any allowable increase will be put into effect only after a period of at least 30 days from the date you are served with that notice and in accordance with the terms of existing leases.
</P>
<FP-DASH>
</FP-DASH>
<FP-1>[Name of mortgagor or managing agent]</FP-1></EXTRACT>
<P>(b) The mortgagor must comply with all representations made in the notice. The materials to be made available to tenants for inspection and copying are those specified in § 245.315.


</P>
</DIV8>


<DIV8 N="§ 245.315" NODE="24:2.1.1.2.21.4.211.3" TYPE="SECTION">
<HEAD>§ 245.315   Materials to be submitted to HUD.</HEAD>
<P>When the notice referred to in § 245.310 is served on the tenants, the mortgagor must send to the local HUD office copies of the following documents described in either paragraph (a) or (b) of this section, as specified by the local HUD office:
</P>
<P>(a) Documents to be submitted under profit and loss approach:
</P>
<P>(1) A copy of the notice to tenants;
</P>
<P>(2) An annual Statement of Profit and Loss, Form HUD-92410, covering the project's most recently ended accounting year (this statement must have been audited by an independent public accountant if the project is required by HUD to prepare audited financial statements), and Form HUD-92410 for the intervening period since the date of the last annual statement if more than four months have elapsed since that date;
</P>
<P>(3) A narrative statement of the reasons for the requested increase in maximum permissible rents; and
</P>
<P>(4) An estimate of the reasonably anticipated increases in project operating costs that will occur within twelve months of the date of submission of materials under this section.
</P>
<P>(5) A status report on the project's implementation of its current Energy Conservation Plan.
</P>
<P>(b) Documents to be submitted under the forward-budget approach:
</P>
<P>(1) A cover letter summarizing the reasons a rent increase is needed;
</P>
<P>(2) A copy of the notice to tenants;
</P>
<P>(3) A rent increase worksheet providing an income and expense budget for the 12 months following the anticipated effective date of the proposed rent increase;
</P>
<P>(4) A brief statement explaining the basis for the expense lines on the rent increase worksheet;
</P>
<P>(5) A partially completed Rent Schedule, Form HUD-92458;
</P>
<P>(6) If the tenants receive utility allowances, the mortgagor's recommended utility allowance for each unit type and brief statement explaining the basis for the recommended increase; and
</P>
<P>(7) A status report on the project's implementation of its current Energy Conservation Plan.
</P>
<APPRO TYPE="N">(The information collection requirements in paragraph (a) of this section were approved by the Office of Management and Budget under control number 2502-0310 and the information collection requirements in paragraph (b) were approved under control number 2502-0324)


</APPRO>
</DIV8>


<DIV8 N="§ 245.320" NODE="24:2.1.1.2.21.4.211.4" TYPE="SECTION">
<HEAD>§ 245.320   Request for increase.</HEAD>
<P>Upon expiration of the period for tenant comments required in the notice format in § 245.310 and after review of the comments submitted to the mortgagor, the mortgagor must submit to the local HUD office, in addition to the materials enumerated in § 245.315 and any revisions thereto, the request for an increase in the maximum permissible rents, together with the following:
</P>
<P>(a) Copies of all written comments submitted by the tenants to the mortgagor;
</P>
<P>(b) The mortgagor's evaluation of the tenants' comments with respect to the request;
</P>
<P>(c) A certification by the mortgagor that:
</P>
<P>(1) It has complied with all of the requirements of this subpart;
</P>
<P>(2) The copies of the materials submitted in support of the proposed increase were located in a place reasonably convenient to tenants in the project during normal business hours and that requests by tenants to inspect the materials, as provided for in the notice, were honored;
</P>
<P>(3) All comments received from tenants were considered by the mortgagor in making its evaluation; and
</P>
<P>(4) Under the penalties and provisions of title 18 U.S.C., section 1001, the statements contained in this request and its attachments have been examined by me and, to the best of my knowledge and belief, are true, correct, and complete.


</P>
</DIV8>


<DIV8 N="§ 245.325" NODE="24:2.1.1.2.21.4.211.5" TYPE="SECTION">
<HEAD>§ 245.325   Notification of action on request for increase.</HEAD>
<P>(a) When processing a request for an increase in maximum permissible rents, HUD shall take into consideration reasonably anticipated increases in project operating costs that will occur (1) within 12 months of the date of submission of materials to HUD under § 245.315(a) (profit and loss approach) or (2) within 12 months of the anticipated effective date of the proposed rent increase for submissions under § 245.315(b) (forward-budget approach).
</P>
<P>(b) After HUD has considered the request for an increase in rents, has found that it meets the requirements of § 245.320, and has made its determination to approve, adjust upward or downward, or disapprove the request, it will furnish the mortgagor with a written statement of the reasons for approval, adjustment upward or downward, or disapproval. The mortgagor must make the reasons for approval, adjustment, or disapproval known to the tenants, by service of notice on them as provided in § 245.15.


</P>
</DIV8>


<DIV8 N="§ 245.330" NODE="24:2.1.1.2.21.4.211.6" TYPE="SECTION">
<HEAD>§ 245.330   Non-insured projects.</HEAD>
<P>(a) In the case of a proposed rent increase for a project assisted under section 236 of the National Housing Act or section 101 of the Housing and Urban Development Act of 1965, but which does not have a mortgage insured by HUD or held by the Secretary, the provisions of this section and of §§ 245.305 through 245.320 shall apply to the mortgagor (project owner), except that—
</P>
<P>(1) The notice format prescribed in § 245.310 must be modified to reflect the procedural changes made by this section;
</P>
<P>(2) The material (including tenant comments) required to be submitted to HUD under §§ 245.315 and 245.320 must be submitted to the State or local agency administering the section 236 assistance or rent supplement assistance contracts, rather than to HUD. An equivalent State or local agency form or standard accounting form may be substituted for the Statement of Profit and Loss, Form HUD-92410 required under § 245.315(a)(2), if approved by the local HUD office; and 
</P>
<P>(3) The State or local agency must certify that the mortgagor has complied with the requirements of §§ 245.310, 245.315, 245.320, and 245.325.
</P>
<P>(b) After the State or local agency has considered the request for an increase in maximum permissible rents that meets the requirements of § 245.320 (including consideration of anticipated cost increases, as provided in § 245.325(a)), it must make a determination to approve, adjust upward or downward, or disapprove the request. If the agency determines to approve or adjust the request, it must submit to the appropriate local HUD office the mortgagor's requests for approval of an increase in maximum permissible rents, along with the comments of the tenants and the mortgagor's evaluation of the comments, and must certify to HUD that the mortgagor is in compliance with the requirements of this subpart. HUD shall review the agency's determination and certification and, within 30 days, of their submission to HUD, notify the agency of its approval, adjustment upward or downward, or disapproval of the proposed rent increase. HUD will not unreasonably withhold approval of a rent increase approved by the State or local agency. 
</P>
<P>(c) If the agency determines to disapprove the request, there is no HUD review of the agency's determination.
</P>
<P>(d) The agency must notify the mortgagor of the final disposition of the request, and it must furnish the mortgagor with a written statement of the reasons for its approval, adjustment, or disapproval. The mortgagor must make the reasons for approval, adjustment or disapproval known to the tenants, by service of notice on them as provided in § 245.15.


</P>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:2.1.1.2.21.5" TYPE="SUBPART">
<HEAD>Subpart E—Procedures for Requesting Approval of a Covered Action</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 57962, Nov. 8, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 245.405" NODE="24:2.1.1.2.21.5.211.1" TYPE="SECTION">
<HEAD>§ 245.405   Applicability of subpart.</HEAD>
<P>The requirements of this subpart apply to any request by a mortgagor, as provided by § 245.10, for HUD approval of one or more of the following covered actions: 
</P>
<P>(a) Conversion of a project from project-paid utilities to tenant-paid utilities, or a reduction in tenant utility allowances. 
</P>
<P>(b) Conversion of residential units in a multifamily housing project to a nonresidential use or to condominiums, or the transfer of the project to a cooperative housing mortgagor corporation or association. Conversion of a project to a cooperative or of a portion of a project to nonresidential use does not constitute a change of use requiring mortgagee approval. 
</P>
<P>(c) A partial release of mortgage security. The requirements of this subpart, however, do not apply to any release of property from a mortgage lien with respect to a utility easement or a public taking of such property by condemnation or eminent domain. 
</P>
<P>(d) Making major capital additions to the project. For the purposes of this subpart, the term “major capital additions” includes only those capital improvements that represent a substantial addition to the project. Upgrading or replacing existing capital components of the project does not constitute a major capital addition to the project. 


</P>
</DIV8>


<DIV8 N="§ 245.410" NODE="24:2.1.1.2.21.5.211.2" TYPE="SECTION">
<HEAD>§ 245.410   Notice to tenants.</HEAD>
<P>At least 30 days before submitting a request to HUD for approval of an action described in § 245.405, the mortgagor must serve notice of the proposed covered action on the project tenants, as provided in § 245.15. The notice shall state that—
</P>
<P>(a) The mortgagor intends to submit a request to HUD for approval of the covered action or actions specified in the notice; 
</P>
<P>(b) The tenants have the right to participate as provided in § 245.420, and what those rights are, including the address at which the materials required to be made available for inspection and copying under that section are to be kept; 
</P>
<P>(c) Tenant comments on the proposed covered action may be sent to the mortgagor at a specified address or directly to the local HUD office, and comments sent to the mortgagor will be transmitted to HUD, along with the mortgagor's evaluation of them, when the request for HUD's approval is submitted; 
</P>
<P>(d) HUD will approve or disapprove the proposed action, based upon its review of the information submitted and all tenant comments received. In the case of a proposed reduction in tenant-paid utilities, the notice must also state that HUD may adjust the proposed reduction upward or downward; 
</P>
<P>(e) In the case of a proposed conversion of residential units, partial release of mortgage security, or major capital additions to the project, the proposed action may require the owner to request HUD approval of a rent increase; and 
</P>
<P>(f) The mortgagor will notify the tenants of HUD's decision and it will not begin to effect any approved action (in accordance with the terms of existing leases) until at least 30 days from the date of service of the notification. 


</P>
</DIV8>


<DIV8 N="§ 245.415" NODE="24:2.1.1.2.21.5.211.3" TYPE="SECTION">
<HEAD>§ 245.415   Submission of materials to HUD: Timing of submission.</HEAD>
<P>(a) <I>Initial submission.</I> The mortgagor must submit the materials applicable to the covered action, as specified in §§ 245.416 through 245.419, to the local HUD office when the notice required under § 245.410 is served on the tenants. 
</P>
<P>(b) <I>Subsequent submission.</I> If additional notice under § 245.420(c) is required, the mortgagor must submit to HUD any changes to the materials required under §§ 245.416 through 245.419 when the notice required under § 245.420(c) is served on the tenants. 


</P>
</DIV8>


<DIV8 N="§ 245.416" NODE="24:2.1.1.2.21.5.211.4" TYPE="SECTION">
<HEAD>§ 245.416   Initial submission of materials to HUD: Conversion from project-paid utilities to tenant-paid utilities or a reduction in tenant utility allowances.</HEAD>
<P>In the case of a conversion from project-paid utilities to tenant-paid utilities or a reduction in tenant utility allowances, the mortgagor must submit the following materials to the local HUD office: 
</P>
<P>(a) A copy of the notice to tenants; 
</P>
<P>(b) In the case of a proposed conversion from project-paid utilities to tenant-paid utilities—
</P>
<P>(1) A statement indicating: 
</P>
<P>(i) The type of utility or utilities involved; 
</P>
<P>(ii) The number of units in the project by type and size; 
</P>
<P>(iii) The average utility consumption data by unit type and size for comparable projects, and utility rate information, as obtained from the utility supplier; 
</P>
<P>(iv) The estimated monthly cost of the utilities to be paid by the tenants by unit type and size, based upon the consumption data and rate information described in paragraph (b)(1)(iii) of this section; 
</P>
<P>(v) The monthly cost for the past year of paying for the utility or utilities involved on a project basis (actual cost) and by unit type and size (estimated breakdown); 
</P>
<P>(vi) An estimate of the cost of conversion, as obtained from the utility supplier or from bids from contractors; 
</P>
<P>(vii) The source and terms of financing for the conversion (to the extent known); and 
</P>
<P>(viii) The estimated effect of the conversion on the total housing costs of the tenants by unit type and size, taking into account the estimated cost of conversion (including the cost of its financing), the estimated monthly cost of utilities to be paid by the tenants by unit type and size, the proposed utility allowances, and the estimated change in the rents paid to the mortgagor resulting from the conversion; and 
</P>
<P>(2) A copy of the portion of the project's Energy Conservation Plan which addresses the cost-effectiveness determination associated with converting the project to tenant-paid utilities; and 
</P>
<P>(c) In the case of a proposed reduction in tenant utility allowances, a statement indicating the information described in paragraphs (b)(1)(i), (b)(1)(ii), (b)(1)(iii) and (b)(1)(iv) of this section, the utility allowances proposed for reduction, and a justification of the proposed reduction.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0310)


</APPRO>
</DIV8>


<DIV8 N="§ 245.417" NODE="24:2.1.1.2.21.5.211.5" TYPE="SECTION">
<HEAD>§ 245.417   Initial submission of materials to HUD: Conversion of residential units to a nonresidential use, or to cooperative housing or condominiums.</HEAD>
<P>In the case of a conversion of residential units to a nonresidential use, or to cooperative housing or condominiums, the mortgagor must submit the following materials to the local HUD office in accordance with §§ 245.415 and 245.419: 
</P>
<P>(a) In the case of a proposed conversion of residential rental units to nonresidential use: 
</P>
<P>(1) A statement describing the proposed conversion; 
</P>
<P>(2) A statement describing the estimated effect of the proposed conversion on the value of the project, the project rent schedule, the number of dwelling units in the project, a list of the units to be converted and their occupancy, the amount of subsidy available to the project, and the project income and expenses (including property taxes); 
</P>
<P>(3) A statement assessing the compatibility of the proposed nonresidential use with the residential character of the project; 
</P>
<P>(4) Written approval of the mortgagee if required; 
</P>
<P>(5) An undertaking by the mortgagor to pay all relocation costs that may be required by HUD for tenants required to vacate the project because of the conversion; and 
</P>
<P>(6) A copy of the notice to tenants. 
</P>
<P>(b) In the case of a proposed transfer of the project to a cooperative housing mortgagor corporation or association (conversion of residential rental units to residential cooperative housing), the materials specified in paragraphs (a)(1), (a)(2) and (a)(3) of this section and the following additional materials: 
</P>
<P>(1) An estimate of the demand for cooperative housing, including an estimate of the number of present tenants interested in purchasing cooperative housing; 
</P>
<P>(2) Estimates of downpayments and monthly carrying charges that will be required; and 
</P>
<P>(3) Copies of proposed organizational documents, including By-Laws, Articles of Incorporation, Subscription Agreement, Occupancy Agreement, and Sale Document. 
</P>
<P>(c) In the case of a proposed conversion of residential rental units to condominium units, the materials specified in paragraphs (a)(1), (a)(4), and (a)(6) of this section and the following additional materials: 
</P>
<P>(1) An estimate of the demand for condominium housing, including an estimate of the number of present tenants interested in purchasing units; 
</P>
<P>(2) Estimates of downpayments, monthly mortgage payments and condominium association fees that will be required; and 
</P>
<P>(3) A list of the units to be converted and their occupancy.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0310)


</APPRO>
</DIV8>


<DIV8 N="§ 245.418" NODE="24:2.1.1.2.21.5.211.6" TYPE="SECTION">
<HEAD>§ 245.418   Initial submission of materials to HUD: Partial release of mortgage security.</HEAD>
<P>In the case of a partial release of mortgage security, the mortgagor must submit the following materials to the local HUD office: 
</P>
<P>(a) A statement describing the portion of the property that is proposed to be released and the transaction requiring the release; 
</P>
<P>(b) A statement describing the estimated effect of the proposed release on the value of the project, the number of dwelling units in the project, the project income and expenses (including property taxes), the amount of subsidy available to the project, and the project rent schedule; 
</P>
<P>(c) A statement describing the proposed use of the property to be released and the persons who will have responsibility for the operation and maintenance of that property, and assessing the compatibility of that use with the residential character of the project; 
</P>
<P>(d) A statement describing the proposed use of any proceeds to be received by the mortgagor as a result of the release; and 
</P>
<P>(e) A copy of the notice to tenants.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0310)


</APPRO>
</DIV8>


<DIV8 N="§ 245.419" NODE="24:2.1.1.2.21.5.211.7" TYPE="SECTION">
<HEAD>§ 245.419   Initial submission of materials to HUD: Major capital additions.</HEAD>
<P>In the case of major capital additions, the mortgagor must submit the following materials to the local HUD office: 
</P>
<P>(a) The general plans and sketches of the proposed capital additions; 
</P>
<P>(b) A statement describing the estimated effect of the proposed capital additions on the value of the project, the project income and expenses (including property taxes), and the project rent schedule; 
</P>
<P>(c) A statement describing how the proposed capital additions will be financed and the effect, if any, of that financing on the tenants; 
</P>
<P>(d) A statement assessing the compatibility of the proposed capital additions with the residential character of the project; and 
</P>
<P>(e) A copy of the notice to tenants.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0310)


</APPRO>
</DIV8>


<DIV8 N="§ 245.420" NODE="24:2.1.1.2.21.5.211.8" TYPE="SECTION">
<HEAD>§ 245.420   Rights of tenants to participate.</HEAD>
<P>(a) The tenants (including any legal or other representatives acting for tenants individually or as a group) must have the right to inspect and copy the materials that the mortgagor is required to submit to HUD pursuant to § 245.415, for a period of 30 days from the date on which the notice required under § 245.410 is served on the tenants. During this period, the mortgagor must provide a place (as specified in the notice) reasonably convenient to tenants in the project where tenants and their representatives can inspect and copy these materials during normal business hours. 
</P>
<P>(b) The tenants have the right during this period to submit written comments on the proposed conversion to the mortgagor and to the local HUD office. Tenant representatives may assist tenants in preparing these comments. 
</P>
<P>(c) If the mortgagor, whether at HUD's request or otherwise, makes any material change during a tenant comment period in the materials submitted to HUD pursuant to § 245.415, the mortgagor must notify the tenants of the change, in the manner provided in § 245.15, and make the materials as changed available for inspection and copying at the address specified in the notice for this purpose. The tenants have a period of 15 days from the date of service of this additional notice (or the remainder of any applicable comment period, if longer) in which to inspect and copy the materials as changed and to submit comments on the proposed covered action, before the mortgagor may submit its request to HUD for approval of the covered action. 


</P>
</DIV8>


<DIV8 N="§ 245.425" NODE="24:2.1.1.2.21.5.211.9" TYPE="SECTION">
<HEAD>§ 245.425   Submission of request for approval to HUD.</HEAD>
<P>Upon completion of the tenant comment period, the mortgagor must review the comments submitted by tenants and their representatives and prepare a written evaluation of the comments. The mortgagor must then submit the following materials to the local HUD office: 
</P>
<P>(a) The mortgagor's written request for HUD approval of the covered action; 
</P>
<P>(b) Copies of all written tenant comments; 
</P>
<P>(c) The mortgagor's evaluation of the tenant comments on the proposed conversion or reduction; 
</P>
<P>(d) A certification by the mortgagor that it has complied with all of the requirements of § 245.410, § 245.415, §§ 245.416 through 245.419, as applicable, § 245.420, and this section; and 
</P>
<P>(e) Such additional materials as HUD may have specified in writing.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0310)


</APPRO>
</DIV8>


<DIV8 N="§ 245.430" NODE="24:2.1.1.2.21.5.211.10" TYPE="SECTION">
<HEAD>§ 245.430   Decision on request for approval.</HEAD>
<P>(a) After considering the mortgagor's request for approval and the materials submitted in connection with the request, HUD must notify the mortgagor in writing of its approval or disapproval of the proposed covered action, including, if applicable, its adjustment upward or downward of the proposed reduction in tenant-paid utilities. HUD must provide its reasons for its determination. 
</P>
<P>(b) The mortgagor must notify the tenants of HUD's decision in the manner provided in § 245.15. If HUD has approved the proposed covered action, the notice must state: 
</P>
<P>(1) The effective date of the covered action (which must be at least 30 days from the date of service of the notice and in accordance with the terms of existing leases); 
</P>
<P>(2) In the case of HUD's approval of a conversion from project-paid utilities to tenant-paid utilities or a reduction in tenant utility allowances, the amount of the rent to be paid to the mortgagor and the utility allowance for each unit; and 
</P>
<P>(3) In the case of HUD's approval of a conversion of residential units in a multifamily housing project to a nonresidential use or the transfer of the project to a cooperative housing mortgagor corporation or association, which residential rental units are to be converted and whether the conversion is to nonresidential use or to cooperative or condominium units. 


</P>
</DIV8>


<DIV8 N="§ 245.435" NODE="24:2.1.1.2.21.5.211.11" TYPE="SECTION">
<HEAD>§ 245.435   Non-insured projects: Conversion from project-paid utilities to tenant-paid utilities or a reduction in tenant utility allowances.</HEAD>
<P>(a) In the case of a proposed conversion from project-paid utilities to tenant-paid utilities or a reduction in tenant utility allowances involving a project that is assisted under section 236 of the National Housing Act (12 U.S.C. 1715z-1) or section 101 of the Housing and Urban Development Act of 1965 (12 U.S.C. 1701s) but that does not have a mortgage insured by HUD or held by the Secretary, the provisions of this section and of §§ 245.405 through 245.425 apply to the mortgagor (project owner), except that—
</P>
<P>(1) The notice to tenants required under § 245.410 must be modified to reflect the procedural changes made by this section; 
</P>
<P>(2) The materials (including tenant comments) required to be submitted to HUD under §§ 245.415 and 245.425 must be submitted to the State or local agency administering the Section 236 assistance or rent supplement assistance contracts, rather than to HUD; and 
</P>
<P>(3) The State or local agency must certify that the mortgagor has complied with the requirements of §§ 245.410, 245.415, 245.416, 245.420, and 245.425. 
</P>
<P>(b) After the State or local agency has considered the request for approval of a conversion or reduction that meets the requirements of § 245.425, it must make a determination to approve or disapprove the conversion, or to approve, adjust upward or downward, or disapprove the reduction. If the agency determines to approve the conversion or reduction (as originally proposed or as adjusted), it must submit to the appropriate local HUD office the mortgagor's request for approval of the conversion or reduction, along with the comments of the tenants and the mortgagor's evaluation of the comments, and must certify to HUD that the mortgagor is in compliance with the requirements of this subpart. HUD must review the agency's determination and certification and notify the agency of its approval or disapproval of the proposed conversion or of its approval, adjustment upward or downward, or disapproval of the proposed reduction. HUD will not unreasonably withhold approval of a conversion or reduction approved by the State or local agency. 
</P>
<P>(c) If the agency determines to disapprove the conversion or reduction, there is no HUD review of the agency's determination. 
</P>
<P>(d) The agency must notify the mortgagor of the final disposition of the request, and it must furnish the mortgagor with a written statement of the reasons for its approval or disapproval. The mortgagor must make the reasons for approval or disapproval known to the tenants, by service of notice on them as provided in § 245.15. If the agency has approved the proposed conversion or a reduction, the notice must set forth the information prescribed in § 245.430(b) (1) and (2). 


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="246" NODE="24:2.1.1.2.22" TYPE="PART">
<HEAD>PART 246—LOCAL RENT CONTROL 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1715b; 42 U.S.C. 3535(d).


</PSPACE></AUTH>

<DIV6 N="A" NODE="24:2.1.1.2.22.1" TYPE="SUBPART">
<HEAD>Subpart A—General Provisions</HEAD>


<DIV8 N="§ 246.1" NODE="24:2.1.1.2.22.1.211.1" TYPE="SECTION">
<HEAD>§ 246.1   Scope and effect of regulations.</HEAD>
<P>(a) The regulation of rents for a project coming within the scope of “Subpart B—Unsubsidized Insured Projects” is preempted under these regulations only when the Department determines that the delay or decision of the local rent control board, or other authority regulating rents pursuant to state or local law (hereinafter referred to as board) jeopardizes the Department's economic interest in a project covered by that subpart. The regulation of rents for projects coming within the scope of “Subpart C—Subsidized Insured Projects” is preempted in its entirety by the promulgation of these regulations. The regulation of rents for projects coming within the scope of “Subpart D—HUD-Owned Projects” rests within the exclusive jurisdiction of the Department. 
</P>
<P>(b) Any state or local law, ordinance, or regulation is without force and effect insofar as it purports to regulate rents of: (1) Projects for which a determination of preemption has been made pursuant to subpart B, or (2) projects coming within the scope of subpart C or D. Compliance with such law, ordinance, or regulation shall not be required as a condition of, or prerequisite to, the remedy of eviction, and any law, ordinance, or regulation which purports to require such compliance is similarly without force and effect. 
</P>
<P>(c) It is the purpose of the Department that these regulations shall bar all actions of a board that would in any way frustrate the purpose or effect of these regulations or that would in any way delay, prevent or interfere with the implementation of any increase in rental charges approved by HUD. 
</P>
<P>(d) These regulations may be offered as a defense to a proceeding by whomever initiated, which may be brought or threatened to be brought against any owner, mortgagor or managing agent of a project subject to these regulations who demands, receives or retains, or seeks to demand, receive or retain, rental charges approved by HUD, or as a basis for declaratory, injunctive or other relief against any person or agency, public or private, who attempts to enforce, or threatens to enforce, any state or local law, ordinance, or regulation which is without force and effect by reason of this regulation. 
</P>
<P>(e) This part applies to mortgages insured under the National Housing Act. It does not apply to mortgages insured under section 542(c) of the Housing and Community Development Act of 1992 (12 U.S.C. 1707). 
</P>
<CITA TYPE="N">[40 FR 49318, Oct. 22, 1975. Redesignated at 49 FR 6713, Feb. 23, 1984, and amended at 58 FR 64038, Dec. 3, 1993; 59 FR 62524, Dec. 5, 1994] 


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:2.1.1.2.22.2" TYPE="SUBPART">
<HEAD>Subpart B—Unsubsidized Insured Projects</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>44 FR 58504, Oct. 10, 1979, unless otherwise noted. Redesignated at 49 FR 6713, Feb. 23, 1984. 


</PSPACE></SOURCE>

<DIV8 N="§ 246.4" NODE="24:2.1.1.2.22.2.211.1" TYPE="SECTION">
<HEAD>§ 246.4   Applicability.</HEAD>
<P>This subpart applies to all projects with mortgages insured or held by HUD, except those to which subpart C applies. 
</P>
<CITA TYPE="N">[40 FR 49318, Oct. 22, 1975. Redesignated at 49 FR 6713, Feb. 23, 1984] 


</CITA>
</DIV8>


<DIV8 N="§ 246.5" NODE="24:2.1.1.2.22.2.211.2" TYPE="SECTION">
<HEAD>§ 246.5   Rental charges.</HEAD>
<P>The Department will generally not interfere in the regulation of rents by a rent control board or agency constituted under State or local laws (hereinafter referred to as board) for unsubsidized projects with mortgages insured or held by HUD. However, HUD will preempt the regulation of rents, together with any board regulations which require the mortgagor to offer a lease for a term in excess of one year, under certain conditions. This preemption may occur for such a project when the Department determines that the delay or decision of a board prevents the mortgagor from achieving a level of residential income necessary to maintain and operate adequately the project, which includes sufficient funds to meet the financial obligations under the mortgage.” 


</P>
</DIV8>


<DIV8 N="§ 246.6" NODE="24:2.1.1.2.22.2.211.3" TYPE="SECTION">
<HEAD>§ 246.6   Initiation.</HEAD>
<P>When a mortgagor determines that the permitted increase in rents as prescribed by the board will not provide a rent level necessary to maintain and operate adequately the project, and the mortgagor elects to request preemption under this subpart, it shall: 
</P>
<P>(a) File an application for whatever relief or redetermination is permitted under the State or local law and; 
</P>
<P>(b) Notify: (1) The tenants in accordance with § 246.7 of this subpart, (2) the appropriate HUD office pursuant to § 246.8, and (3) the board of the mortgagor's intention to file a request for preemption of local rent control regulation pursuant to the provisions of regulations in this subpart. This action may be taken if either the board's written decision is unacceptable to the mortgagor or no written decision is received from the board within 30 days of the mortgagor's request under paragraph (a) of this section. 


</P>
</DIV8>


<DIV8 N="§ 246.7" NODE="24:2.1.1.2.22.2.211.4" TYPE="SECTION">
<HEAD>§ 246.7   Notice to tenants.</HEAD>
<P>At least 30 days before filing a formal request to HUD for preemption of local rent control regulations, the mortgagor shall notify the tenants of its intention to so file. Copies of the Notice shall be: 
</P>
<P>(a) Delivered directly or by mail to each tenant; and 
</P>
<P>(b) Posted in at least 3 conspicuous places within each structure or building in which the affected dwelling units are located.
</P>
<FP>The Notice shall contain the addresses where the materials, which constitute a complete submission as required by § 246.8 in support of the proposed preemption request, are to be made available to tenants as well as the required information in the following equivalent format: 
</FP>
<EXTRACT>
<HD1>Notice to Tenants of Intention To File a Request to HUD for Preemption of Local Rent Control Regulations 
</HD1>
<FP-DASH>Date of Notice
</FP-DASH>
<P>Take notice that on (Date) we requested the (Name) board to review our application for redetermination of permitted rents. 
</P>
<P>Take further notice that on (Date), if the (Name) board fails to approve an income level necessary to maintain and operate adequately the project, or to act upon our request, we plan to file a request for preemption of local rent control regulations for (Name of Apartment Complex) with the United States Department of Housing and Urban Development (HUD) which will result in an increase in your rental rate as provided within the terms of your lease. The requested preemption action is supported by the following: 
</P>
<P>(1) HUD approved Gross Potential Income: Year approved, __, $_____. 
</P>
<P>(2) Current Total Residential Rents Allowed by Local Rent Control Board, $_____. 
</P>
<P>(3) Projected Total Annual Residential Rents Allowable Under Local Board Regulations 6 Months After Date of this Notice, $_____. 
</P>
<P>(4) Income Required to Operate Project as Supported by Profit and Loss Statement Being Submitted to HUD, $_____. 
</P>
<P>Copies of the materials that we intend to submit to HUD in support of our request will be available during normal business hours as well as one evening a week after business hours which will be (Day) at (Address) for a period of 30 days from the date of this Notice. The materials may be inspected and copied by tenants of (Name of Apartment Complex and HUD Project No.) and if the tenants wish, by legal or other representatives duly authorized in writing to act for one or more of the tenants. 
</P>
<P>During a period of 30 days from the date of this notice, tenants of (Name of Apartment Complex and HUD Project No.) may submit written comments on the proposed preemption request to us at (Address). Tenant representatives may assist tenants in preparing those comments. The inspection and comment period will be extended as necessary to (a) assure a 30-day comment period on a complete mortgagor's submission and (b) to allow at least 5 days to comment on any written decision made by the board, if the decision is received by the mortgagor on or before the expiration of the thirty-day period and it was not available to the tenants during the first 25 days of the 30-day period. These comments will be transmitted to HUD, along with our evaluation of them and our preemption request. You may also send a copy of your comments directly to HUD at the following address: United States Department of Housing and Urban Development, (address of local HUD field office with jurisdiction over preemption of rents for the project) Attention: Director, Housing Re: (Project No.) and (Name of Apartment Complex). HUD will approve or disapprove the preemption request in whole or in part upon reviewing the materials and comments. When HUD advises us in writing of its decision on our request, you will be notified at least 30 days before any change in the rental structure is put into effect, in accordance with the terms of existing leases.
</P>
<FP-DASH>
</FP-DASH>
<FP>  (Name of mortgagor or managing agent) 
</FP>
<P>The mortgagor shall comply with all representations made in this Notice.</P></EXTRACT>
</DIV8>


<DIV8 N="§ 246.8" NODE="24:2.1.1.2.22.2.211.5" TYPE="SECTION">
<HEAD>§ 246.8   Materials to be submitted to HUD in support of preemption request.</HEAD>
<P>(a) After posting or delivery of the Notice as required by § 246.7, the mortgagor shall immediately send HUD notification of its intention to file a preemption request, to include: 
</P>
<P>(1) The written Notice to the tenants, which will state the date of its posting and distribution. 
</P>
<P>(2) An annual Statement of Profit and Loss, on a form prescribed by the Commissioner, audited by an independent public accountant and covering the most recently ended accounting year, and if more than four months have elapsed since the date of the Profit and Loss Statement, an unaudited accrual Profit and Loss Statement on a form prescribed by the Commissioner for the intervening period since the date of the annual statement, with the mortgagor's certification as to its accuracy. 
</P>
<P>(3) A certified statement which provides a separate breakdown for the percentage of vacancies for the present and previous year. 
</P>
<P>(4) A certified statement which provides a separate breakdown of the actual rent loss due to nonpayment of rent for the past 2 years. 
</P>
<P>(5) A certified statement which provides a separate breakdown of rent loss due to tenant turnover for the past 2 years. 
</P>
<P>(6) A certified statement covering known approved rate or cost increases not yet experienced by the project which can be documented by the following: 
</P>
<P>(i) Tax rates or appraisals, 
</P>
<P>(ii) Utility rates, 
</P>
<P>(iii) Contracts for employees or services, 
</P>
<P>(iv) Insurance, and 
</P>
<P>(7) A certified statement covering known decreases of rates or costs not yet experienced by the project which have been approved and can be documented as follows: 
</P>
<P>(i) Tax rates or appraisals, 
</P>
<P>(ii) Utility rates, 
</P>
<P>(iii) Contracts for employees or services, 
</P>
<P>(iv) Insurance. 
</P>
<FP>If there are none, the mortgagor must so certify. 
</FP>
<P>(8) A copy of the full application to the board with supporting documentation. 
</P>
<P>(b) The local HUD office shall review the mortgagor's submission promptly upon receipt, to ascertain that it is complete as required by paragraph (a) of this section. Should the submission be found to be incomplete, the local HUD office shall notify the mortgagor within 48 hours of the review of its determination that further material is necessary to constitute a complete submission as defined in paragraph (a) of this section. 
</P>
<P>(c) When the submission is complete, the HUD office shall hold the mortgagor's submission as specified in paragraph (a) of this section in abeyance until a preemption request is received pursuant to § 246.9. 
</P>
<P>(d) If the mortgagor subsequently resubmits any change to the submission as described in paragraphs (a) (1) through (7) of this section, it will be required to provide the tenants with an additional 30 days to comment. 


</P>
</DIV8>


<DIV8 N="§ 246.9" NODE="24:2.1.1.2.22.2.211.6" TYPE="SECTION">
<HEAD>§ 246.9   Request for preemption.</HEAD>
<P>(a) Upon expiration of the period for tenant comments required by this rule and after review of the comments submitted to it, the mortgagor may submit its request for preemption. That request must include the following: 
</P>
<P>(1) A certification by the mortgagor following the requirements specified in paragraph (b) of this section; 
</P>
<P>(2) Copies of all written comments submitted by the tenants to the mortgagor; 
</P>
<P>(3) The mortgagor's evaluation of the tenant's comments with respect to the request; and 
</P>
<P>(4) The board's decision or a statement from the mortgagor certifying that a decision from the board has not been received. 
</P>
<P>(b) The certification of the mortgagor as required by paragraph (a)(1) of this section shall include the following: 
</P>
<P>(1) That the Notice required by § 246.7 was given pursuant to the provisions of that section; 
</P>
<P>(2) That the mortgagor has taken reasonable steps to assure that the substance of the Notice has been conveyed to each resident household, and that the mortgagor exercised its best efforts to assure that the posted Notices were maintained intact and in legible form for the specified thirty (30) days; 
</P>
<P>(3) That: (i) The copies of the materials submitted in support of the preemption request were located in a place reasonably convenient to tenants in the project during normal business hours and at least one evening a week after business hours, and (ii) that requests by tenants to inspect such materials, as provided for in the Notice, were honored; 
</P>
<P>(4) That copies of all comments received from the tenants were considered and are being transmitted to HUD together with the certifications; and 
</P>
<P>(5) A statement that “under the penalties and provisions of title 18 U.S.C., section 1001, the statements contained in this application and its attachments have been examined by me and, to the best of my knowledge and belief, are true, correct, and complete.” 
</P>
<P>(c) Should the mortgagor receive a delayed decision from the board after filing its preemption request, HUD shall be informed immediately and furnished with a copy of the board's decision. 


</P>
</DIV8>


<DIV8 N="§ 246.10" NODE="24:2.1.1.2.22.2.211.7" TYPE="SECTION">
<HEAD>§ 246.10   HUD procedures.</HEAD>
<P>(a) The local HUD office will review the information submitted by the mortgagor together with the decision of the board, if any. The local HUD office will, if it finds that the delay or decision of the board fails to provide adequate residential income to protect the Department's economic interest in the projects and the board will not modify its position to the satisfaction of the local HUD office, make a report with appropriate recommendations concerning the actions that should be taken by HUD to the Office of Multifamily Housing Management and Occupancy, Headquarters. The report shall be sent to the Office of Multifamily Housing Management and Occupancy, Headquarters, and shall include appropriate recommendations concerning the action that should be taken by HUD. 
</P>
<P>(b) The Office of Multifamily Housing Management and Occupancy will review the report and will consider whether to preempt the board's regulation. If it finds that the income level permitted by the board is inadequate to maintain the project as described in § 246.5, it shall issue a formal certification to the board that its authority has been preempted as to such rents. Copies of the certification shall be transmitted to the mortgagor, the local HUD office, and the board. 


</P>
</DIV8>


<DIV8 N="§ 246.11" NODE="24:2.1.1.2.22.2.211.8" TYPE="SECTION">
<HEAD>§ 246.11   Notification of action on preemption request.</HEAD>
<P>(a) After HUD has considered the preemption request which meets the requirements of § 246.9 and has made its determination to approve or disapprove the request, it will furnish the mortgagor with a written statement of the reasons for approval or disapproval. The mortgagor shall make known to tenants, by posting or delivery in the manner outlined in § 246.7, the reasons for approval or disapproval. 
</P>
<P>(b) The mortgagor may effect collection of the HUD-approved income level which is set at the time of the preemption determination after the expiration of 30-days notice to the tenants, subject to the terms and rights a tenant may have under the existing lease. 
</P>
<P>(c) Once the project reaches the income level approved under these procedures, the project will be returned to the control of the local rent control board covering both the rents and the terms of prospective leases. 


</P>
</DIV8>


<DIV8 N="§ 246.12" NODE="24:2.1.1.2.22.2.211.9" TYPE="SECTION">
<HEAD>§ 246.12   Preemption of prospective term of lease.</HEAD>
<P>(a) In those instances where it will take more than 60 days (2 months) for the project to reach the new income levels, HUD preemption of prospective lease terms shall be effective for those new or renewed leases which by regulation of a local rent control board would require the mortgagor to offer a lease for a term in excess of one year. 
</P>
<P>(b) As a condition for HUD preemption, the mortgagor must give only one-year leases to tenants whose leases expire during the preemption period. 


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:2.1.1.2.22.3" TYPE="SUBPART">
<HEAD>Subpart C—Subsidized Insured Projects</HEAD>


<DIV8 N="§ 246.20" NODE="24:2.1.1.2.22.3.211.1" TYPE="SECTION">
<HEAD>§ 246.20   Applicability.</HEAD>
<P>This subpart applies to all projects with mortgages insured or held by HUD that receive a subsidy in the form of:
</P>
<P>(a) Interest reduction payments under section 236 of the National Housing Act;
</P>
<P>(b) Below-market interest rates under section 221(d)(3) and (5) of the National Housing Act;
</P>
<P>(c) Direct loans at below-market interest rates under section 202 of the Housing Act of 1959 (as in effect immediately before October 1, 1991);
</P>
<P>(d) Rent supplement payments under section 101 of the Housing and Urban Development Act of 1965;
</P>
<P>(e) Housing assistance payments under 24 CFR part 886, subpart A (Section 8 Loan Management Set Aside), for projects that converted their rent supplement contracts under section 101 of the Housing and Urban Development Act of 1965 to such assistance for the term of the HAP contract; or
</P>
<P>(f) Housing assistance payments pursuant to a contract under section 8 of the United States Housing Act of 1937 or section 23 of that Act (as in effect immediately before January 1, 1975), except that this subpart will only apply with respect to units occupied by tenants receiving housing assistance thereunder if the contract covers fewer than all units in the project.
</P>
<CITA TYPE="N">[63 FR 64803, Nov. 23, 1998]


</CITA>
</DIV8>


<DIV8 N="§ 246.21" NODE="24:2.1.1.2.22.3.211.2" TYPE="SECTION">
<HEAD>§ 246.21   Rental charges.</HEAD>
<P>The Department finds that it is necessary and desirable to minimize defaults by the mortgagor in its financial obligations with regard to projects covered by this subpart, and to assist mortgagors to preserve the continued viability of those projects as a housing resource for low-income families. The Department also finds that it is necessary and desirable to protect the substantial economic interest of the Federal Government in those projects. Therefore, the Department concludes that it is in the national interest to preempt, and it does hereby preempt, the entire field of rent regulation by local rent control boards, (hereinafter referred to as board), or other authority, acting pursuant to state or local law as it affects projects covered by this subpart. 
</P>
<CITA TYPE="N">[40 FR 49318, Oct. 22, 1975. Redesignated at 44 FR 58506, Oct. 10, 1979, and at 49 FR 6713, Feb. 23, 1984] 


</CITA>
</DIV8>


<DIV8 N="§ 246.22" NODE="24:2.1.1.2.22.3.211.3" TYPE="SECTION">
<HEAD>§ 246.22   Procedures.</HEAD>
<P>(a) The mortgagor shall file its application for approval of increases in rental charges with the appropriate local office of HUD. 
</P>
<P>(b) The local HUD office will process the application for increases in rental charges in accordance with HUD's regulations, including part 245 of this chapter, and instructions and procedures, all adopted pursuant to the statutory authority described in § 246.8, and shall notify in writing any board in the area in which the project is located that it is processing the application and, that, pursuant to this subpart, HUD has preempted the entire field of rent regulation by a board acting pursuant to state or local law as it affects the project. 
</P>
<P>(c) The mortgagor may effect collection of the new rents in accordance with the procedures described in part 245, subpart D of this chapter. The mortgagor shall furnish the board a schedule of any new rents approved by HUD within ten (10) days after the approved rents have become effective. Notice to the board of the approved increases in rents does not confer upon the board a right to approve or disapprove the Department's action or to exercise jurisdiction over the implementation of the rent increases by the mortgagor. The sole purpose of the notice is to inform the board of the lawful rents that may be charged for projects covered by this subpart. 
</P>
<CITA TYPE="N">[40 FR 49318, Oct. 22, 1975. Redesignated at 44 FR 58506, Oct. 10, 1979, and at 49 FR 6713, Feb. 23, 1984] 


</CITA>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:2.1.1.2.22.4" TYPE="SUBPART">
<HEAD>Subpart D—HUD-Owned Projects</HEAD>


<DIV8 N="§ 246.30" NODE="24:2.1.1.2.22.4.211.1" TYPE="SECTION">
<HEAD>§ 246.30   Rental charges.</HEAD>
<P>The Department has exclusive jurisdiction over the rents of all projects which it owns, irrespective of the existence, or the provisions, of any State or local rent control law or ordinance. 
</P>
<CITA TYPE="N">[40 FR 49318, Oct. 22, 1975. Redesignated at 44 FR 58506, Oct. 10, 1979, and at 49 FR 6713, Feb. 23, 1984] 


</CITA>
</DIV8>


<DIV8 N="§ 246.31" NODE="24:2.1.1.2.22.4.211.2" TYPE="SECTION">
<HEAD>§ 246.31   Procedures.</HEAD>
<P>(a) The local HUD office will notify in writing any local rent control board (hereinafter referred to as board) in the area in which the project is located that it is considering increasing the rents for a project within the scope of this subpart, and that the increases are expected to become effective after the expiration of thirty (30) days' notice to the tenants, subject to whatever rights a tenant may have under a lease. The local HUD office will also notify the board that, pursuant to this subpart, the Department has exclusive jurisdiction over the rents for the project. 
</P>
<P>(b) After the increases have become effective, the local HUD office will furnish the board a schedule of the new rents that are being charged by HUD. Notice to the board of the increased rents does not confer upon the board a right to approve or disapprove of the Department's action, or to exercise jurisdiction over the implementation of the rent increases by the Department. The sole purpose of the notice is to inform the board of the lawful rents that may be charged for projects covered by this subpart. 
</P>
<CITA TYPE="N">[40 FR 49318, Oct. 22, 1975. Redesignated at 44 FR 58506, Oct. 10, 1979, and at 49 FR 6713, Feb. 23, 1984] 


</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="247" NODE="24:2.1.1.2.23" TYPE="PART">
<HEAD>PART 247—EVICTIONS FROM CERTAIN SUBSIDIZED AND HUD-OWNED PROJECTS 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1701q, 1701s, 1715b, 1715<I>l,</I> and 1715z-1; 42 U.S.C. 1437a, 1437c, 1437f, and 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>41 FR 43330, Sept. 30, 1976, unless otherwise noted. Redesignated at 49 FR 6713, Feb. 23, 1984. 


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:2.1.1.2.23.1" TYPE="SUBPART">
<HEAD>Subpart A—Subsidized Projects</HEAD>


<DIV8 N="§ 247.1" NODE="24:2.1.1.2.23.1.211.1" TYPE="SECTION">
<HEAD>§ 247.1   Applicability.</HEAD>
<P>(a) Except as provided in §§ 247.5 and 247.6(c), the provisions of this subpart shall apply to all decisions by a landlord to terminate the occupancy of a tenant in a subsidized project as defined in § 247.2(e). (Termination of tenancy of a family assisted with tenant-based assistance under the Housing Voucher Program is not subject to this part.) 
</P>
<P>(b) Landlords of subsidized projects that have been assisted under a covered housing program listed in 24 CFR 5.2003 must comply with 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking), as described in § 200.38.
</P>
<CITA TYPE="N">[54 FR 236, Jan. 4, 1989, as amended at 81 FR 80806, Nov. 16, 2016; 89 FR 38290, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 247.2" NODE="24:2.1.1.2.23.1.211.2" TYPE="SECTION">
<HEAD>§ 247.2   Definitions.</HEAD>
<P><I>Drug-related criminal activity</I> means the illegal manufacture, sale, distribution, use or possession with the intent to manufacture, sell, distribute, or use, of a controlled substance as defined in section 102 of the Controlled Substances Act, 21 U.S.C. 802. 
</P>
<P><I>Eviction</I> means the dispossession of the tenant from the leased unit as a result of the termination of the tenancy, including a termination prior to the end of a term or at the end of a term. 
</P>
<P><I>Landlord</I> means either the owner of the property or his representative, or the managing agent or his representative, as shall be designated by the owner. 
</P>
<P><I>Rental agreement</I> means all agreements, written or oral, between the landlord and tenant (and valid rules and regulations adopted by the landlord pursuant to a written agreement) relating to the use and occupancy of a dwelling unit and surrounding premises. 
</P>
<P><I>State landlord and tenant act</I> means any state statute or local ordinance which imposes obligations on a landlord and tenant in connection with the occupancy of a dwelling unit and surrounding premises and which provides that violations of such obligations by the tenant constitute grounds for eviction. 
</P>
<P><I>Subsidized project</I> means a multifamily housing project (with the exception of a project owned by a cooperative housing mortgagor corporation or association) that receives the benefit of subsidy in the form of: below-market interest rates under section 221(d) (3) and (5), interest reduction payments under section 236 of the National Housing Act, or below market interest rate direct loans under section 202 of the Housing Act of 1959. For purposes of this part, <I>subsidized project</I> also includes those units in a housing project that receive the benefit of: 
</P>
<P>(1) Rental subsidy in the form of rent supplement payments under section 101 of the Housing and Urban Development Act of 1965 (12 U.S.C. 1701s); or 
</P>
<P>(2) Housing assistance payments for project-based assistance under Section 8 of the 1937 Act (42 U.S.C. 1437f). However, this part is not applicable to Section 8 project-based assistance under parts 880, 881, 883 and 884 of this title (except as specifically provided in those parts).
</P>
<CITA TYPE="N">[41 FR 43330, Sept. 30, 1976. Redesignated at 49 FR 6713, Feb. 23, 1984, and amended at 53 FR 3368, Feb. 5, 1988; 54 FR 236, Jan. 4, 1989; 61 FR 47381, Sept. 6, 1996; 66 FR 28797, May 24, 2001]


</CITA>
</DIV8>


<DIV8 N="§ 247.3" NODE="24:2.1.1.2.23.1.211.3" TYPE="SECTION">
<HEAD>§ 247.3   Entitlement of tenants to occupancy.</HEAD>
<P>(a) <I>General.</I> The landlord may not terminate any tenancy in a subsidized project except upon the following grounds: 
</P>
<P>(1) Material noncompliance with the rental agreement, 
</P>
<P>(2) Material failure to carry out obligations under any state landlord and tenant act, 
</P>
<P>(3) Criminal activity by a covered person in accordance with sections 5.858 and 5.859, or alcohol abuse by a covered person in accordance with section 5.860. If necessary, criminal records can be obtained for lease enforcement purposes under section 5.903(d)(3).
</P>
<P>(4) Other good cause. 
</P>
<FP>No termination by a landlord under paragraph (a)(1) or (2) of this section shall be valid to the extent it is based upon a rental agreement or a provision of state law permitting termination of a tenancy without good cause. No termination shall be valid unless it is in accordance with the provisions of § 247.4. 
</FP>
<P>(b) <I>Notice of good cause.</I> The conduct of a tenant cannot be deemed other good cause under § 247.3(a)(4) unless the landlord has given the tenant prior notice that said conduct shall henceforth constitute a basis for termination of occupancy. Said notice shall be served on the tenant in the same manner as that provided for termination notices in § 247.4(b). 
</P>
<P>(c) <I>Material noncompliance.</I> The term <I>material noncompliance with the rental agreement</I> includes:
</P>
<P>(1) One or more substantial violations of the rental agreement;
</P>
<P>(2) Repeated minor violations of the rental agreement that:
</P>
<P>(i) Disrupt the livability of the project,
</P>
<P>(ii) Adversely affect the health or safety of any person or the right of any tenant to the quiet enjoyment of the leased premises and related project facilities,
</P>
<P>(iii) Interfere with the management of the project, or
</P>
<P>(iv) Have an adverse financial effect on the project;
</P>
<P>(3) If the tenant: 
</P>
<P>(i) Fails to supply on time all required information on the income and composition, or eligibility factors, of the tenant household, as provided in 24 CFR part 5; or 
</P>
<P>(ii) Knowingly provides incomplete or inaccurate information as required under these provisions; and 
</P>
<P>(4) Non-payment of rent or any other financial obligation due under the rental agreement (including any portion thereof) beyond any grace period permitted under State law, except that the payment of rent or any other financial obligation due under the rental agreement after the due date, but within the grace period permitted under State law, constitutes a minor violation.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0204)
</APPRO>
<CITA TYPE="N">[41 FR 43330, Sept. 30, 1976. Redesignated at 49 FR 6713, Feb. 23, 1984, and amended at 54 FR 39697, Sept. 27, 1989; 56 FR 7531, Feb. 22, 1991; 61 FR 13624, Mar. 27, 1996; 61 FR 47382, Sept. 6, 1996; 66 FR 28797, May 24, 2001]


</CITA>
</DIV8>


<DIV8 N="§ 247.4" NODE="24:2.1.1.2.23.1.211.4" TYPE="SECTION">
<HEAD>§ 247.4   Termination notice.</HEAD>
<XREF ID="20260226" REFID="20">Link to an amendment published at 91 FR 9452, Feb. 26, 2026.</XREF>
<XREF ID="20260313" REFID="2">This amendment was delayed indefinitely at 91 FR 12301, Mar. 13, 2026.</XREF>
<P>(a) <I>Requisites of Termination Notice.</I> The landlord's determination to terminate the tenancy shall be in writing and shall: (1) State that the tenancy is terminated on a date specified therein; (2) state the reasons for the landlord's action with enough specificity so as to enable the tenant to prepare a defense; (3) advise the tenant that if he or she remains in the leased unit on the date specified for termination, the landlord may seek to enforce the termination only by bringing a judicial action, at which time the tenant may present a defense; and (4) be served on the tenant in the manner prescribed by paragraph (b) of this section. 
</P>
<P>(b) <I>Manner of service.</I> The notice provided for in paragraph (a) of this section shall be accomplished by: (1) Sending a letter by first class mail, properly stamped and addressed, to the tenant at his or her address at the project, with a proper return address, and (2) serving a copy of the notice on any adult person answering the door at the leased dwelling unit, or if no adult responds, by placing the notice under or through the door, if possible, or else by affixing the notice to the door. Service shall not be deemed effective until both notices provided for herein have been accomplished. The date on which the notice shall be deemed to be received by the tenant shall be the date on which the first class letter provided for in this paragraph is mailed, or the date on which the notice provided for in this paragraph is properly given, whichever is later. 
</P>
<P>(c) <I>Time of service.</I> When the termination of the tenancy is based on other good cause pursuant to § 247.3(a)(4), the termination notice shall be effective, and the termination notice shall so state, at the end of a term and in accordance with the termination provisions of the rental agreement, but in no case earlier than 30 days after receipt of the tenant of the notice. Where the termination notice is based on material noncompliance with the rental agreement or material failure to carry out obligations under a state landlord and tenant act pursuant to § 247.3(a)(1) or (2), the time of service shall be in accord with the rental agreement and state law. In cases of nonpayment of rent, the termination notice shall be effective no earlier than 30 days after receipt by the tenant of the termination notice. The landlord must not provide tenants with a termination notice prior to the day after the rent is due according to the lease. The landlord also must not proceed with filing an eviction if the tenant pays the alleged amount of rent owed within the 30-day notification period.
</P>
<P>(d) <I>Modification of rental agreement.</I> Notwithstanding any other provision of this subpart, the landlord may with the prior approval of HUD modify the terms and conditions of the rental agreement, effective at the end of the initial term or a successive term, by serving an appropriate notice on the tenant, together with the tender of a revised rental agreement or an addendum revising the existing rental agreement: Any increase in rent shall in all cases be governed by 24 CFR parts 245, 246 and other applicable HUD regulations. This notice and tender shall be served on the tenant in the same manner as provided for in § 247.4(b) and must be received by the tenant at least 30 days prior to the last date on which the tenant has the right to terminate the tenancy without being bound by the codified terms and conditions. The tenant may accept the modified terms and conditions by executing the tendered revised rental agreement or addendum, or may reject the modified terms and conditions by giving the landlord written notice in accordance with the rental agreement that he intends to terminate the tenancy. 
</P>
<P>(e) <I>Notice requirements in rent nonpayment cases.</I> In any case in which termination of tenancy is initiated because of the tenant's failure to pay rent, a notice stating the dollar amount of the balance due on the rent account and the date of such computation shall satisfy the requirement of specificity set forth in paragraph (a)(2) of this section. All termination notices in cases of nonpayment of rent must also include the following:
</P>
<P>(1) Instructions on how the tenant can cure the nonpayment of rent violation, including an itemized amount separated by month of alleged rent owed by the tenant, any other arrearages allowed by HUD and included in the lease separated by month, and the date by which the tenant must pay the amount of rent owed before an eviction for nonpayment of rent can be filed;
</P>
<P>(2) Information on how the tenant can recertify their income and, for tenants residing in projects assisted pursuant to a housing assistance payments contract for project-based assistance under section 8 of the 1937 Act (42 U.S.C. 1437f), information on how the tenant can apply for a hardship exemption pursuant to 24 CFR 5.630(b); and
</P>
<P>(3) In the event of a Presidential declaration of a national emergency, such information to tenants as required by the Secretary.
</P>
<P>(f) <I>Failure of tenant to object.</I> The failure of the tenant to object to the termination notice shall not constitute a waiver of his rights to thereafter contest the landlord's action in any judicial proceeding. 
</P>
<CITA TYPE="N">[41 FR 43330, Sept. 30, 1976, as amended at 48 FR 22915, May 23, 1983. Redesignated at 49 FR 6713, Feb. 23, 1984, as amended at 61 FR 47382, Sept. 6, 1996; 86 FR 55701, Oct. 7, 2021; 89 FR 101302, Dec. 13, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 247.5" NODE="24:2.1.1.2.23.1.211.5" TYPE="SECTION">
<HEAD>§ 247.5   Inapplicability to substantial rehabilitation or demolition.</HEAD>
<P>This subpart shall not apply in any case in which the landlord terminates the occupancy of a tenant as a direct result of a determination, concurred in by HUD, to substantially rehabilitate or demolish the project or to dispose of the project to a purchaser who purchases for the purpose of substantial rehabilitation or demolition. 


</P>
</DIV8>


<DIV8 N="§ 247.6" NODE="24:2.1.1.2.23.1.211.6" TYPE="SECTION">
<HEAD>§ 247.6   Eviction.</HEAD>
<P>(a) <I>General.</I> The landlord shall not evict any tenant except by judicial action pursuant to State or local law and in accordance with the requirements of this subpart. 
</P>
<P>(b) <I>Limitations on allegations of new grounds.</I> In any judicial action instituted to evict the tenant, the landlord must rely on grounds which were set forth in the termination notice served on the tenant under this subpart. The landlord shall not, however, be precluded from relying on grounds about which he or she had no knowledge at the time the termination notice was sent.
</P>
<P>(c) <I>State and local law.</I> A tenant may rely on State or local law governing eviction procedures where such law provides the tenant procedural rights which are in addition to those provided by this subpart, except where such State or local law has been preempted under part 246 of this chapter or by other action of the United States. 
</P>
<CITA TYPE="N">[48 FR 22915, May 23, 1983. Redesignated and amended at 49 FR 6713, 6715, Feb. 23, 1984]


</CITA>
</DIV8>


<DIV8 N="§ 247.7" NODE="24:2.1.1.2.23.1.211.7" TYPE="SECTION">
<HEAD>§ 247.7   Implementation.</HEAD>
<P>Every rental agreement entered into or renewed on and after the date on which this subpart is applicable to such tenant shall contain appropriate provisions implementing this subpart. 


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:2.1.1.2.23.2" TYPE="SUBPART">
<HEAD>Subpart B—HUD-Owned Projects</HEAD>


<DIV8 N="§ 247.8" NODE="24:2.1.1.2.23.2.211.1" TYPE="SECTION">
<HEAD>§ 247.8   Incorporation by reference.</HEAD>
<P>All of the provisions of subpart A of this part covering certain multifamily projects (excepting § 247.5) apply with full force to the property described in § 247.9 and they are hereby incorporated by reference. 


</P>
</DIV8>


<DIV8 N="§ 247.9" NODE="24:2.1.1.2.23.2.211.2" TYPE="SECTION">
<HEAD>§ 247.9   Applicability of procedures.</HEAD>
<FP>The procedures outlined in this subpart apply to all decisions to terminate the occupancy of a tenant by the termination of a lease prior to the end of its term or at the end of a term where the tenant resides in any multifamily project which is presently owned by HUD, regardless of whether said project was a subsidized project prior to the acquisition of title by HUD. 


</FP>
</DIV8>


<DIV8 N="§ 247.10" NODE="24:2.1.1.2.23.2.211.3" TYPE="SECTION">
<HEAD>§ 247.10   Inapplicability to substantial rehabilitation or demolition; right of disposition unimpaired.</HEAD>
<P>This subpart shall not apply in any case in which HUD terminates the occupancy of a tenant as a direct result of a determination by HUD to substantially rehabilitate or demolish the project or to dispose of the project to a purchaser who purchases for the purpose of substantial rehabilitation or demolition. Nothing in this subpart should be construed to affect in any way the right of HUD to exercise its full statutory authority and discretion to dispose of property acquired pursuant to the National Housing Act.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="248" NODE="24:2.1.1.2.24" TYPE="PART">
<HEAD>PART 248—PREPAYMENT OF LOW INCOME HOUSING MORTGAGES
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 17151 note, 4101 note, and 4101-4124; 42 U.S.C. 3535(d).


</PSPACE></AUTH>

<DIV6 N="A" NODE="24:2.1.1.2.24.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>57 FR 12041, Apr. 8, 1992, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 248.1" NODE="24:2.1.1.2.24.1.211.1" TYPE="SECTION">
<HEAD>§ 248.1   Purpose.</HEAD>
<P>The purpose of this part is to—
</P>
<P>(a) Preserve and retain to the maximum extent practicable as housing affordable to low income families or persons those privately owned dwelling units that were produced for such purpose with Federal assistance, without unduly restricting the owners' prepayment rights; 
</P>
<P>(b) Minimize the involuntary displacement of tenants currently residing in such housing; 
</P>
<P>(c) Work in partnership with State and local government and the private sector in the provision and operation of housing that is affordable to very low, low and moderate income families; and 
</P>
<P>(d) Facilitate the sale of housing to residents under a resident homeownership program.


</P>
</DIV8>


<DIV8 N="§ 248.3" NODE="24:2.1.1.2.24.1.211.2" TYPE="SECTION">
<HEAD>§ 248.3   Applicability.</HEAD>
<P>The requirements of subparts B and C of this part apply to any project that is eligible low income housing, as defined in subparts B and C of this part respectively, on or after November 1, 1987, except that such requirements shall not apply to a project which receives assistance under title IV, subtitle B of the Cranston-Gonzalez National Affordable Housing Act in connection with a homeownership program approved by the Commissioner thereunder.


</P>
</DIV8>


<DIV8 N="§ 248.5" NODE="24:2.1.1.2.24.1.211.3" TYPE="SECTION">
<HEAD>§ 248.5   Election to proceed under subpart B or subpart C of this part.</HEAD>
<P>(a) Any owner who has not submitted a notice of intent prior to January 1, 1991, pursuant to either § 248.211 or § 248.105, shall proceed under subpart B of this part. 
</P>
<P>(b) Any owner who has filed a plan of action with the Commissioner on or before October 11, 1990 pursuant to subpart C of this part, regardless of whether or not the Commissioner has approved such plan of action or whether the owner has received incentives thereunder, may proceed under subpart B of this part by submitting a notice of intent to the Commissioner in accordance with § 248.105 within 30 days after publication of revised Appraisal Guidelines or within thirty days after the Commissioner notifies the owner of HUD's final approval of the plan of action, whichever is later. The notice of intent shall state that the owner is exercising its conversion right pursuant to this section. If the owner fails to file a notice of intent within that period, the owner forfeits its right of conversion. In awarding incentives to an owner who elects to proceed under subpart B of this part in accordance with this section, the Commissioner shall take into consideration any incentives which the owner has already received under subpart C of this part. 
</P>
<P>(c) Any owner of housing that becomes eligible low income housing, as defined in subpart B of this part, before January 1, 1991, and who before such date, filed a notice of intent under § 248.211 of subpart C of this part, may, unless a plan of action was submitted after October 11, 1990, elect to proceed under subpart B or under subpart C of this part. An owner must indicate its election by submitting to the Commissioner, within 30 days of the effective date of this part, a notice of election to proceed indicating whether it wishes to proceed under subpart B or subpart C of this part, or proceed under subpart B of this part until completion of the appraisals and then elect either subpart B or subpart C of this part. An owner who chooses to retain its option until after the completion of the appraisals under § 248.111 must submit a new notice of intent to the Commissioner within 30 days after receipt of the information provided by the Commissioner under § 248.131. The notice of intent shall be submitted in accordance with either § 248.105 (for owners electing to proceed under subpart B of this part) or § 248.211 (for owners electing to proceed under subpart C of this part). Any owner who fails to file a notice of intent within the 30-day period may not proceed under subpart C of this part, but may proceed under subpart B of this part by filing a new notice of intent thereafter. If an owner who has filed a notice of intent before January 1, 1991 elects under this paragraph to proceed under subpart C of this part, it may change its election within 30 days after receipt of the information provided by the Commissioner under § 248.131 by filing a new notice of intent under § 248.211. For purposes of calculating any time periods or deadlines under this part for actions following the filing of the notice of intent, the date on which the owner submits the new notice of intent under this paragraph shall be deemed the date of the filing of the notice of intent. Any owner who, exercising its option under paragraph (c) of this section, submits a notice of intent under § 248.211 after the Commissioner has incurred the cost of having an appraisal, or appraisals, performed pursuant to § 248.111 of subpart A of this part, shall reimburse the Commissioner for these expenses within 30 days of receipt of a bill covering these expenses. 
</P>
<P>(d) For an owner who has elected under paragraph (c) of this section to proceed under subpart C of this part, the Commissioner shall provide sufficient assistance to enable a nonprofit organization that has purchased, or will purchase, eligible low income housing to meet project oversight costs, as that term is defined in § 248.201.
</P>
<P>(e) The Commissioner shall not refuse to offer incentives under § 248.231 to any owner who filed a notice of intent under § 248.211 before October 15, 1991, based solely on the date of filing of the plan action.
</P>
<P>(f) An owner who has filed a plan of action after October 11, 1990, pursuant to § 248.213, may not elect to proceed under subpart B of this part.
</P>
<CITA TYPE="N">[57 FR 12041, Apr. 8, 1992, as amended at 58 FR 37814, July 13, 1993]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:2.1.1.2.24.2" TYPE="SUBPART">
<HEAD>Subpart B—Prepayments and Plans of Action Under the Low Income Housing Preservation and Resident Homeownership Act of 1990</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>57 FR 12041, Apr. 8, 1992, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 248.101" NODE="24:2.1.1.2.24.2.211.1" TYPE="SECTION">
<HEAD>§ 248.101   Definitions.</HEAD>
<P><I>Acquisition Loan.</I> A loan or advance of credit made to a qualified purchaser of eligible low income housing and insured by the Commissioner under part 241, subpart E of this chapter. 
</P>
<P><I>Adjusted Income.</I> Annual income, as specified in part 5 of this title, less allowances specified in the definition of “Adjusted Income” in part 5 of this title. 
</P>
<P><I>Aggregate Preservation Rent.</I> The extension preservation rent or transfer preservation rent, as defined under this section. 
</P>
<P><I>Annual Authorized Return.</I> That amount an owner of an eligible low income housing project may receive in distributions from the project each year, plus debt service payments payable each year attributable to the equity take-out portion of any loan approved under the plan of action, expressed as a percentage of the project's extension preservation equity. 
</P>
<P><I>Bona Fide Offer.</I> A certain and unambiguous offer to purchase an eligible low income housing project pursuant to subpart B of this part made in good faith by a qualified purchaser with the intent that such offer result in the execution of an enforceable, valid and binding contract. A bona fide offer shall include, for purposes of subpart B of this part, a contract of sale and an earnest money deposit, as set forth in § 248.157(g). For mandatory sales under § 248.161, the offer must include a contract of sale, an earnest money deposit and also be for a purchase price which equals the transfer preservation value. 
</P>
<P><I>Capital Improvement Loan.</I> A direct loan originated by the Commissioner under part 219, subpart C of this chapter. 
</P>
<P><I>Community-Based Nonprofit Organization.</I> A private nonprofit organization that—
</P>
<P>(1) Is organized under State or local laws; 
</P>
<P>(2) Has no part of its net earnings inuring to the benefit of any member, founder, contributor, or individual; 
</P>
<P>(3) Is neither controlled by, nor under the direction of, individuals or entities seeking to derive profit or gain from the organization.
</P>
<P>(4) Has applied for, or has a tax exemption ruling from the Internal Revenue Service under section 501(c) of the Internal Revenue Code of 1986; 
</P>
<P>(5) Does not include a public body (including the participating jurisdiction) or an instrumentality of a public body. An organization that is State or locally chartered may qualify as a community-based nonprofit organization; however, the State or local government may not have the right to appoint more than one-third of the membership of the organization's governing body and no more than one-third of the board members can be public officials; 
</P>
<P>(6) Has standards of financial accountability that conform to 2 CFR 200.302 and 200.303; 
</P>
<P>(7) Has among its purposes the provision of decent housing that is affordable to low-income and moderate-income persons, as evidenced in its charter, articles of incorporation, resolutions or by-laws; 
</P>
<P>(8) Maintains accountability to low income community residents by—
</P>
<P>(i) Maintaining at least one-third of its governing board's membership for low-income neighborhood residents, other low-income community residents, or elected representatives of low-income neighborhood organizations. For urban areas, “community” may be a neighborhood or neighborhoods, city, county, or metropolitan area; for rural areas, “community” may be a neighborhood or neighborhoods, town, village, county, or multi-county area (but not the entire State); and
</P>
<P>(ii) Providing a formal process for low-income, program beneficiaries to advise the organization on its decisions regarding the acquisition, rehabilitation and management of affordable housing. 
</P>
<P><I>Default.</I> For purposes of § 248.105(a), the failure of the owner to make any payment due under the mortgage (including the full amount of the debt if the mortgagee has accelerated the debt on the basis of a non-monetary default) within 30 days after such payment becomes due. 
</P>
<P><I>Eligible Low Income Housing.</I> Any project that is not subject to a use restriction imposed by the Commissioner that restricts the project to low and moderate income use for a period at least equal to the remaining term of the mortgage, and that is financed by a loan or mortgage—
</P>
<P>(1) That is—
</P>
<P>(i) Insured or held by the Commissioner under section 221(d)(3) of the National Housing Act and assisted under part 886, subpart A of this title because of a conversion from assistance under 215 of this chapter;
</P>
<P>(ii) Insured or held by the Commissioner under part 221 of this chapter and bearing a below market interest rate as provided under § 221.518(b) of this chapter; 
</P>
<P>(iii) Insured, assisted, or held by the Commissioner or a State or State agency under part 236 of this chapter; or 
</P>
<P>(iv) A purchase money mortgage held by the Commissioner with respect to a project which, immediately prior to HUD's acquisition, would have been classified under paragraphs (1)(i), (ii), or (iii) of this definition; and 
</P>
<P>(2) That, under regulation or contract in effect before February 5, 1988, is or will within 24 months become eligible for prepayment without prior approval of the Commissioner. 
</P>
<P><I>Equity Loan.</I> A loan or advance of credit to the owner of eligible low income housing and insured by the Commissioner under part 241, subpart E of this chapter. 
</P>
<P><I>Extension Preservation Equity.</I> The extension preservation equity of a project is: 
</P>
<P>(1) The extension preservation value of the project determined under § 248.111; less 
</P>
<P>(2) The outstanding balance of any debt secured by the property. 
</P>
<P><I>Extension Preservation Rent.</I> The extension preservation rent is the gross potential income for the project that would be required to support: 
</P>
<P>(1) The annual authorized return; 
</P>
<P>(2) Debt service on any rehabilitation loan for the project;
</P>
<P>(3) Debt service on the federally-assisted mortgage(s) for the project; 
</P>
<P>(4) Project operating expenses; and 
</P>
<P>(5) Adequate reserves. 
</P>
<P><I>Extension Preservation Value.</I> The fair market value of the project based on the highest and best use of the project as multifamily market-rate rental housing. 
</P>
<P><I>Fair market rent.</I> The section 8 existing fair market rent published for effect and as defined under § 982.4 of this title, applicable to the jurisdiction in which the project is located, with adjustments, where appropriate, for projects in which tenants pay their own utilities. (No utility adjustments will be made to the fair market rent for purposes of determining the Federal cost limit.) 
</P>
<P><I>Federal Cost Limit.</I> The greater of 120 percent of the section 8 existing fair market rent for the market area in which the project is located or 120 percent of the prevailing rents in the relevant local market area in which the project is located. 
</P>
<P><I>Federally-assisted Mortgage.</I> Any mortgage as defined in this section, any insured operating loss loan secured by the project and any loan insured by the Commissioner under part 241 of this chapter. 
</P>
<P><I>Good Cause.</I> With respect to displacement, the temporary or permanent uninhabitability of the project justifying relocation of all or some of the project's tenants (except where such uninhabitability is caused by the actions or inaction of the owner), or actions of the tenant that, under the terms of the tenant's lease and applicable regulations, constitute a basis for eviction. 
</P>
<P><I>HOME Investment Trust Fund.</I> A public fund established in the general local or State government in which a project is located pursuant to title II of the Cranston-Gonzalez National Affordable Housing Act. 
</P>
<P><I>Homeownership Program.</I> A program developed by a resident council for the sale of an eligible low income housing project to the tenants in accordance with the standards in § 248.173 or § 248.175. 
</P>
<P><I>Interest Reduction Payments.</I> Payments made by the Commissioner pursuant to a contract to reduce the interest costs on a mortgage insured under part 236 of this chapter, as provided under subpart C of part 236 of this chapter. 
</P>
<P><I>Limited Equity Cooperative.</I> A tenant cooperative corporation which, in a manner acceptable to the Secretary, restricts the initial and resale price of the shares of stock in the cooperative corporation so that the shares remain affordable to low income families and moderate income families. 
</P>
<P><I>Low Income Affordability Restrictions.</I> Limits imposed by regulation or regulatory agreement on tenant rents, rent contributions, or income eligibility with respect to eligible low income housing. 
</P>
<P><I>Low Income Families.</I> Families or persons whose incomes do not exceed the levels established for low income families under part 5 of this title. 
</P>
<P><I>Low Vacancy Area.</I> A market area in which the current supply of decent, safe and sanitary, vacant, available rental units, as a proportion of the total overall rental inventory in the area is not sufficient to allow for normal growth and mobility, taking into account the need for vacancies resulting from turnover and to meet growth in renter households. The determination of a low vacancy area, as set forth in § 248.165(h), will be made by the Commissioner, utilizing the most recent available data for the market area on the rental inventory, renter households, rental vacancy rates and other factors as appropriate. 
</P>
<P><I>Moderate Income Families.</I> Families or persons whose incomes are between 80 percent and 95 percent of median area income, as determined by the Commissioner, with adjustments for smaller and larger families. 
</P>
<P><I>Mortgage.</I> The mortgage or deed of trust insured or held by the Commissioner or a State or State agency under parts 221 or 236 of this title or the purchase money mortgage taken back by the Commissioner in connection with the sale of a HUD-owned project and held by the Commissioner, where such mortgage, deed or trust or purchase money mortgage is secured by eligible low income housing.
</P>
<P><I>Nonprofit Organization.</I> Any private, nonprofit organization or association that—
</P>
<P>(1) Is incorporated under State or local law; 
</P>
<P>(2) Has no part of its net earnings inuring to the benefit of any member, founder, contributor, or individual; 
</P>
<P>(3) Complies with standards of financial accountability acceptable to the Commissioner; and 
</P>
<P>(4) Has among its principal purposes significant activities related to the provision of decent housing that is affordable to very low, low, and moderate income families. 
</P>
<P><I>Notice of Intent.</I> An owner's notification to the Commissioner of its intention to terminate the low income affordability restrictions on the project through prepayment of the mortgage or voluntary termination of the insurance contract, to extend the low income affordability restrictions on the project, or to transfer the project to a qualified purchaser. 
</P>
<P><I>Owner.</I> The mortgagor or trustor under the mortgage secured by eligible low income housing. 
</P>
<P><I>Participating Jurisdiction.</I> For purposes of the resident homeownership program established in § 248.173, any State or unit of general local government that has been so designated in accordance with section 216 of the Cranston-Gonzalez National Affordable Housing Act of 1990 (42 U.S.C. 12746).
</P>
<P><I>Plan of Action.</I> A plan providing for the termination of the low income affordability restrictions on the project through prepayment of the mortgage or voluntary termination of the insurance contract, for extension of the low income affordability restrictions on the project, or for the transfer of the project to a qualified purchaser. A homeownership program constitutes a plan of action for purposes of subpart B of this part. 
</P>
<P><I>Prepayment.</I> Prepayment in full of a mortgage, or a partial prepayment or series of partial prepayments that reduces the mortgage term by a least six months, except where the prepayment in full or partial prepayment results from the application of condemnation proceeds. 
</P>
<P><I>Preservation Equity.</I> The extension preservation equity or transfer preservation equity, as defined under this section. 
</P>
<P><I>Preservation Value.</I> The extension preservation value or transfer preservation value, as defined under this section. 
</P>
<P><I>Priority Purchaser.</I> Any entity that is not a related party to the owner and that is either—
</P>
<P>(1) A resident council organized to acquire the project in accordance with a resident homeownership program that meets the requirements of subpart B of this part; or 
</P>
<P>(2) Any nonprofit organization or State or local agency that agrees to maintain low income affordability restrictions for the remaining useful life of the project. A nonprofit organization or State or local agency that is affiliated with a for-profit entity for purposes of purchasing a project under subpart B of this part shall not be considered a priority purchaser. 
</P>
<P><I>Project oversight costs.</I> Reasonable expenses incurred by a priority purchaser in carrying out its ongoing ownership responsibilities under an approved plan of action. Project oversight costs must be directly related to educating the priority purchaser's board of directors or otherwise supporting the board in its decision making. Project oversight costs may include staff, overhead, or third-party contract costs for:
</P>
<P>(1) Ensuring adequate and responsible participation by the board of directors and the membership of the priority purchaser in ownership decisions, including ensuring resident input in these decisions;
</P>
<P>(2) Facilitating long-range planning by the board of directors to ensure the physical, financial and social viability of the project for the entire time the project is maintained as low income housing; and
</P>
<P>(3) Assisting the ownership in complying with regulatory, use, loan and grant agreements.
</P>
<P><I>Proprietary information.</I> That information which cannot be released to the public because it consists of trade secrets, confidential financial information, audits, personal financial information about partners in the ownership entity, or income data on project tenants. Where proprietary information cannot be separated from the rest of a document, the entire document shall be deemed “proprietary information” and shall not be releasable to the public. Where proprietary information can be reasonably segregated from the rest of the document, the proprietary information shall be deleted and the remainder of the document shall be releasable to the public.
</P>
<P><I>Public Housing Agency.</I> A public housing agency, as defined in section 3(b) of the United States Housing Act of 1937 (42 U.S.C. 1437a(b)). 
</P>
<P><I>Qualified Purchaser.</I> Any entity that is not a related party to the owner and that agrees to maintain low income affordability restrictions for the remaining useful life of the project, and includes for-profit entities and priority purchasers. 
</P>
<P><I>Regulatory Agreement.</I> The agreement executed by the owner and the Commissioner or a State agency providing for the regulation of the operation of the project. 
</P>
<P><I>Related Party.</I> An entity that, either directly or indirectly, is wholly or partially owned or controlled by the owner of the project being transferred under subpart B of this part, is under whole or partial common control with such owner, or has any financial interest in such owner or in which such owner has any financial interest. However, this shall not prohibit a nonprofit organization from buying out the interest of its limited dividend or for-profit partners in connection with the sale of eligible low income housing under subpart B of this part, as long as the sale is made on an arm's length basis and the partners who sell their interest completely divest themselves of any input in the continued operation of the project. The purchaser and the owner shall not be deemed related parties on the basis that financing is provided to the purchaser by the seller, or a management company affiliated with the seller, as long as: 
</P>
<P>(1) Only a loan, and not a grant, is provided; 
</P>
<P>(2) The financing is provided for the acquisition of the project, the rehabilitation of the project, or both; 
</P>
<P>(3) In the case of financing for the acquisition of the project, the sum of the principal amount of the loan, plus the amount of the acquisition loan under section 241(f) of the National Housing Act (12 U.S.C. 1715z-6(f)), and any Federal grant to cover acquisition of the project, does not exceed the sum of the sales price and the expenses associated with the acquisition, loan closing and implementation of the plan of action; and in the case of financing for the rehabilitation of the project, the principal amount of the loan does not exceed the equity requirements applicable to the rehabilitation loan or capital improvement loan obtained by the purchaser under part 241 or part 219 of this chapter; 
</P>
<P>(4) The loan is not a condition of accepting a bona fide offer or entering into a sales contract; 
</P>
<P>(5) The seller has no input in the continued operation of the project as a result of the loan; and
</P>
<P>(6) In the case of a loan provided by a management company that is affiliated with the seller, the execution of a management contract between the purchaser and the management company is not a condition of the loan. This rule does not bar an owner, or former owner, from membership on a nonprofit organization's board of directors, as long as the owner, or former owner, participates only in his or her personal capacity, without compensation, and holds a nonvoting membership. The purchaser and the owner shall not be deemed related parties solely by reason of the purchaser's retention of a property management entity of a company that is owned or controlled by the owner or a principal thereof, if retention of the management company is neither a condition of sale nor part of consideration paid for the project and the property management contract is negotiated by the qualified purchaser on an arm's length basis. 
</P>
<P><I>Relevant Local Market.</I> An area geographically smaller than the market area established by the Commissioner for purposes of determining the section 8 existing fair market rent, that is identifiable as a distinct rental market area in which similar projects and units would effectively compete with the subject project, for potential tenants. 
</P>
<P><I>Relocation Expenses.</I> Relocation expenses shall consist of payment for—
</P>
<P>(1) Advisory services, including timely information, counseling (including the provision of information on a resident's rights under the Fair Housing Act (42 U.S.C. 3601-3619)), and referrals to suitable, affordable, decent, safe and sanitary alternative housing; and 
</P>
<P>(2) Payment for actual, reasonable moving expenses. 
</P>
<P><I>Remaining Useful Life.</I> With respect to eligible low income housing, the period during which the physical characteristics of the project remain in a condition suitable for occupancy, assuming normal maintenance and repairs are made and major systems and capital components are replaced as becomes necessary. 
</P>
<P><I>Reserve for Replacements.</I> The escrow fund established under the regulatory agreement for the purpose of ensuring the availability of funds for needed repair and replacement costs. 
</P>
<P><I>Resident Council.</I> Any incorporated nonprofit organization or association in which membership is available to all the tenants, and only the tenants, of a particular project and—
</P>
<P>(1) Is representative of the residents of the project; 
</P>
<P>(2) Adopts written procedures providing for the election of officers on a regular basis; and 
</P>
<P>(3) Has a democratically elected governing board, elected by the residents of the project.
</P>
<P><I>Residual Receipt Fund.</I> The fund established under the regulatory agreement for holding cash remaining after deducting from the surplus cash, as defined by the regulatory agreement, the amount of all allowable distributions. 
</P>
<P><I>Return on Investment.</I> The amount of allowable distributions that a purchaser of a project may receive under a plan of action under § 248.157 or § 248.161. 
</P>
<P><I>Section 8 Assistance.</I> Assistance provided under parts 880 through 887 and 982 and 983 of this title. 
</P>
<P><I>Special Needs Tenants.</I> Those “elderly persons,” 62 years of age or older, “elderly families,” or families that include “disabled persons,” as such terms are defined in part 5 of this title, or large families of five or more persons and requiring units with three or more bedrooms. 
</P>
<P><I>State assisted or subsidized mortgage.</I> A mortgage which is assisted or subsidized by an agency of a State government without any Federal mortgage subsidy. 
</P>
<P><I>Tenant Representative.</I> A designated officer of an organization of the project's tenants, a tenant who has been elected to represent the tenants of the project with respect to subpart B of this part, or a person or organization that has been formally designated or retained by an organization of the project's tenants to represent the tenants with respect to subpart B of this part.
</P>
<P><I>Termination of Low Income Affordability Restrictions.</I> The elimination of low income affordability restrictions under the regulatory agreement through termination of mortgage insurance or prepayment of the mortgage. 
</P>
<P><I>Transfer Preservation Equity.</I> The transfer preservation equity of a project is: 
</P>
<P>(1) The transfer preservation value of the project determined under § 248.111; less 
</P>
<P>(2) The outstanding balance of the federally-assisted mortgage(s) for the project. 
</P>
<P><I>Transfer Preservation Rent.</I> For purposes of receiving incentives pursuant to a sale of the project, transfer preservation rent shall be the gross income for the project that would be required to support: 
</P>
<P>(1) Debt service on the loan for acquisition of the project; 
</P>
<P>(2) Debt service on any rehabilitation loan for the project; 
</P>
<P>(3) Debt service on the federally-assisted mortgage(s) for the housing; 
</P>
<P>(4) Project operating expenses; and 
</P>
<P>(5) Adequate reserves. 
</P>
<P><I>Transfer Preservation Value.</I> The fair market value of the project based on its highest and best use.
</P>
<P><I>Very Low Income Families.</I> Families or persons whose incomes do not exceed the level established for very low income families under part 5 of this title. 
</P>
<P><I>Voluntary Termination of Mortgage Insurance.</I> The termination of all rights under the mortgage insurance contract and of all obligations to pay future insurance premiums.
</P>
<CITA TYPE="N">[57 FR 12041, Apr. 8, 1992, as amended at 57 FR 57314, Dec. 3, 1992; 58 FR 37814, July 13, 1993; 59 FR 14369, Mar. 28, 1994; 64 FR 26639, May 14, 1999; 80 FR 75936, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 248.103" NODE="24:2.1.1.2.24.2.211.2" TYPE="SECTION">
<HEAD>§ 248.103   General prepayment limitation.</HEAD>
<P>(a) <I>Prepayment.</I> An owner of eligible low income housing may prepay, and a mortgagee may accept prepayment of, a mortgage on such project only in accordance with a plan of action approved by the Commissioner. 
</P>
<P>(b) <I>Termination.</I> A mortgage insurance contract with respect to eligible low income housing may be terminated pursuant to § 207.253 of this chapter only in accordance with a plan of action approved by the Commissioner. 
</P>
<P>(c) <I>Foreclosure.</I> A mortgagee of a mortgage insured by the Commissioner may foreclose the mortgage on, or acquire by deed in lieu of foreclosure, any eligible low income housing only if the mortgagee also conveys title to the project to the Commissioner in connection with a claim for insurance benefits. 
</P>
<P>(d) <I>Effect of unauthorized prepayment.</I> A mortgagee's acceptance of a prepayment in violation of paragraph (a) of this section, or the voluntary termination of a mortgage insurance contract in violation of paragraph (b) of this section, shall be null and void and any low income affordability restrictions on the project shall continue to apply to the project. 
</P>
<P>(e) <I>Remedies for unauthorized prepayment.</I> A mortgagee's acceptance of a prepayment in violation of paragraph (a) of this section, or attempt to obtain voluntary termination of a mortgage insurance contract in violation of paragraph (b) of this section, is grounds for administrative action under parts 24 and 25 of this title, in addition to any other remedies available by law, including rescission of the prepayment or reinstatement of the insurance contract.


</P>
</DIV8>


<DIV8 N="§ 248.105" NODE="24:2.1.1.2.24.2.211.3" TYPE="SECTION">
<HEAD>§ 248.105   Notice of intent.</HEAD>
<P>(a) <I>Eligibility for filing.</I> An owner of eligible low income housing intending to prepay the mortgage or voluntarily terminate the mortgage insurance contract pursuant to § 248.141, extend the low income affordability restrictions of the housing in accordance with § 248.153, or transfer the housing to a qualified purchaser under § 248.157, may file a notice of intent unless the mortgage covering the project—
</P>
<P>(1) Continued in default or fell into default on or after the November 28, 1990, and the mortgage has been assigned to the Commissioner as a result of such default; 
</P>
<P>(2) Continued in default or fell into default on or after November 28, 1990, while the mortgage was held by the Commissioner; 
</P>
<P>(3) Fell into default prior to November 28, 1990, if the owner entered into a workout agreement prior to that date, and on or after that date, the owner has defaulted under the workout agreement (and, if the agreement was with an insured mortgagee, the mortgage has been assigned to the Commissioner as a result of the default under the workout agreement); or 
</P>
<P>(4) Fell into default prior to November 28, 1990, but has been current since that date and the owner has not agreed to recompense the appropriate insurance fund for losses sustained by the fund as a result of any work-out or other arrangement agreed to by the Commissioner and the owner with respect to the defaulted mortgage. 
</P>
<P>(b) <I>Filing with the Commissioner.</I> The notice of intent shall be filed with the HUD Field Office in whose jurisdiction the project is located. The notice of intent shall identify the project by name, project number and location. It shall contain a statement indicating whether the owner intends to extend the affordability restrictions on the project by retaining ownership of the project or transferring it to a qualified purchaser, or whether the owner intends to terminate the affordability restrictions on the project through prepayment of the mortgage or termination of the mortgage insurance contract. The notice of intent shall also request the tenants to notify the owner, the Commissioner, and the State or local officer identified in the notice of intent of any individual or organization that has been designated or retained by the tenants to represent the tenants with respect to the actions to be taken under subpart B of this part. 
</P>
<P>(c) <I>Filing with the State or local government and tenants.</I> The owner simultaneously shall file the notice of intent with the chief executive officer of the appropriate State or local government in which the project is located, or any officer designated by executive order or State or local law to receive such information, and with the mortgagee. In addition, the owner shall deliver a copy of the notice of intent to each occupied unit in the project and to any tenant representative, if any, known to the owner, and shall post a copy of the notice of intent in readily accessible locations within each affected building of the project. The copies of the notice of intent delivered to the tenants and the tenant representative shall include a summary of possible outcomes of the filing which shall be furnished by the Commissioner. Upon the request of any non-English speaking tenants residing in the affected project, the owner shall tabulate the number and type of translations needed by the tenants and request the local HUD field office to provide the appropriate translations. The owner shall deliver a copy of the translated notice of intent to all of the tenants who requested such translation. The failure of an owner to comply with any non-federal notice requirements shall not invalidate the notice of intent.


</P>
</DIV8>


<DIV8 N="§ 248.111" NODE="24:2.1.1.2.24.2.211.4" TYPE="SECTION">
<HEAD>§ 248.111   Appraisal and preservation value of eligible low income housing.</HEAD>
<P>(a) <I>Appraisal.</I> Upon receiving a notice of intent indicating an intent to extend the low income affordability restrictions under § 248.153 or transfer the project under § 248.157, the Commissioner shall provide for determination of the preservation values of the project pursuant to this section. 
</P>
<P>(b) <I>Notice.</I> Within 30 days after the filing of a notice of intent to extend the income restrictions or to transfer the project, the Commissioner shall provide the owner with written notice of—
</P>
<P>(1) The need for, and the rules and guidelines governing, an appraisal of the project; 
</P>
<P>(2) The filing deadline for submission of the appraisal; 
</P>
<P>(3) The need for an appraiser retained by the Commissioner to inspect the project and the project's financial records; and 
</P>
<P>(4) Any delegation to an appropriate State agency, if any, by the Commissioner of responsibilities regarding the performance of an appraisal pursuant to this section. 
</P>
<P>(c) <I>Appraisers.</I> The Commissioner and the owner shall each select and compensate an appraiser who shall: 
</P>
<P>(1) Neither be an employee of the Federal Government nor an employee or officer of any entity that is affiliated with the owner or the mortgagee of record; 
</P>
<P>(2) Be certified by the appropriate State agency under the standards established by the Federal Financial Institutions Reform, Recovery and Enforcement Act of 1989 (12 U.S.C. 1451-1459); and 
</P>
<P>(3) Have six years of experience in the appraisal profession and at least three years experience in the practice of appraising multifamily residential properties; 
</P>
<P>(4) Is not the subject of a charge issued following a reasonable cause determination under the Fair Housing Act (42 U.S.C. 3601-3619). 
</P>
<P>(d) <I>Guidelines.</I> The Commissioner shall provide to the owner and the appraiser retained by the Commissioner guidelines for conducting the appraisal. The guidelines established by the Commissioner shall be consistent with customary appraisal standards. The guidelines shall assume repayment of the existing federally-assisted mortgage(s), termination of the existing Federal low income affordability restrictions, simultaneous termination of any Federal rental assistance, and costs of compliance with any State or local laws of general applicability. The guidelines may permit reliance upon assessments of rehabilitation needs and other conversion costs determined by an appropriate State agency, as determined by the Commissioner.
</P>
<P>(e) <I>Operating expenses.</I> For the purpose of determining preservation values, the guidelines shall instruct the appraiser to use the greater of actual project operating expenses at the time of the appraisal, based on the average of the actual project operating expenses during the preceding three years, or projected operating expenses after conversion, as determined by the Commissioner. However, if the current year operating expenses are higher than those of the preceding three years and the Commissioner has made a determination that these costs are unlikely to decrease in the future, the appraiser shall use current year operating expenses rather than operating expenses for the preceding three years for purposes of comparison with projected operating expenses after conversion. Likewise, if the current year operating expenses are lower than those of the preceding years and the Commissioner has made a determination that these costs are unlikely to increase in the future, the appraiser shall use current year operating expenses rather than operating expenses for the preceding three years for purposes of comparison with projected expenses after conversion. Where the highest and best use of a project is not as rental housing, the appraiser shall use projected operating expenses assuming conversion of the project to its highest and best use. 
</P>
<P>(f) <I>Preservation values.</I> The preservation values will be determined on the basis of the appraisals conducted by the owner's and the Commissioner's independent appraisers. Each appraiser will determine both the extension preservation value and the transfer preservation value, regardless of the owner's intentions as indicated in the notice of intent. 
</P>
<P>(g) <I>Highest and best use as residential property.</I> In determining the extension preservation value of the project, the appraiser shall assume conversion of the project to market-rate rental housing. The appraiser shall, in accordance with the guidelines established by the Commissioner, determine the amount of rehabilitation expenditures, if any, that would be necessary to bring the project up to quality standards required to attract and sustain a market-rate tenancy upon conversion and assess other costs that the owner could reasonably be expected to incur if the owner converted the property to market-rate multifamily rental housing. 
</P>
<P>(h) <I>Highest and best use.</I> In determining the transfer preservation value for the project, the appraiser shall assume conversion of the project to highest and best use for the property, and shall, in accordance with the guidelines established by the Commissioner, determine the amount of any rehabilitation expenditures, including demolition, that would be necessary to convert the project to such use and assess other costs that the owner could reasonably be expected to incur if the owner converted the property to its highest and best use. 
</P>
<P>(i) <I>Submission of appraisal.</I> Within four months after the filing of the notice of intent: 
</P>
<P>(1) The owner shall submit to the HUD Field Office in whose jurisdiction the project is located, the appraisal made by the owner's selected appraiser; and 
</P>
<P>(2) The Commissioner's selected appraiser shall conduct and submit an appraisal to the Commissioner. 
</P>
<P>(j) <I>Joint determination of preservation values.</I> No later than one month after the owner and the Commissioner exchange appraisals, the owner and the Commissioner shall, on the basis of the appraisals delivered to them, agree on the preservation values of the project. If no agreement as to preservation values can be reached, the owner and the Commissioner shall jointly select a third appraiser meeting the qualifications set forth in paragraph (c) of this section by the end of six months from the date that the notice of intent was filed. The cost of this third appraisal shall be borne equally by both parties. The third appraiser must comply with the guidelines set forth in paragraph (d) of this section and must conduct the appraisal and submit an appraisal within two months after accepting the assignment. The determination by the third appraiser of the project's preservation values shall be binding on both the owner and the Commissioner. 
</P>
<P>(k) <I>Timeliness of appraisals.</I> The Commissioner may approve a plan of action to receive incentives under §§ 248.153, 248.157 or 248.161 only based upon an appraisal conducted in accordance with this section that is not more than 30 months old, unless the failure of the Commissioner to approve the plan of action within the 30-month period was due to circumstances beyond the control of the owner.
</P>
<CITA TYPE="N">[57 FR 12041, Apr. 8, 1992, as amended at 58 FR 4871, Jan. 15, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 248.121" NODE="24:2.1.1.2.24.2.211.5" TYPE="SECTION">
<HEAD>§ 248.121   Annual authorized return and aggregate preservation rents.</HEAD>
<P>(a) <I>Annual authorized return.</I> For each eligible low income housing project appraised under § 248.111, the Commissioner shall set an annual authorized return on the project equal to 8 percent of the extension preservation equity. 
</P>
<P>(b) <I>Aggregate preservation rents.</I> For each eligible low income housing project appraised under § 248.111, the Commissioner shall also determine the aggregate preservation rents. The aggregate preservation rents shall be used solely for the purposes of comparison with the Federal cost limit under § 248.123. Actual rents received by the owner (or a qualified purchaser) shall be determined pursuant to §§ 248.153, 248.157, and 248.161. 
</P>
<P>(c) <I>Extension preservation rent.</I> The extension preservation rent shall be the gross potential income for the project, as determined by the Commissioner, that would be required to support—
</P>
<P>(1) The annual authorized return determined under paragraph (a) of this section; 
</P>
<P>(2) Debt service on any rehabilitation loan for the project, assuming a market rate of interest and customary terms; 
</P>
<P>(3) Debt service on the federally-assisted mortgage(s) for the project; 
</P>
<P>(4) Project operating expenses as determined by the Commissioner; and 
</P>
<P>(5) Adequate reserves. 
</P>
<P>(d) <I>Transfer preservation rent.</I> The transfer preservation rent shall be the gross potential income for the project, as determined by the Commissioner, that would be required to support—
</P>
<P>(1) Debt service on the loan for acquisition of the project; 
</P>
<P>(2) Debt service on any rehabilitation loan for the project, assuming a market rate of interest and customary terms;
</P>
<P>(3) Debt service on the federally-assisted mortgage(s) for the project; 
</P>
<P>(4) Project operating expenses as determined by the Commissioner; and 
</P>
<P>(5) Adequate reserves. 
</P>
<P>(e) <I>Adequate reserves and operating expenses.</I> For purposes of this section—
</P>
<P>(1) Adequate reserves are the amount of funds which, when added to existing reserves, are sufficient to maintain the project, including needed deferred maintenance, at a level that meets the standards set forth in § 248.147; and 
</P>
<P>(2) Project operating expenses shall be based on operating expenses for the preceding 3 years, adjusted for reasonable reductions in operating costs due to rehabilitation and energy improvements. For purposes of comparison to the gross rents used in determining the Federal cost limit, project operating expenses shall include the cost of utilities paid by the residents. 
</P>
<P>(f) <I>Debt service.</I> For purposes of this section, the amount of debt service for an acquisition loan will be estimated based on the maximum loan to which the purchaser is entitled under § 241.1067 of this chapter. The debt service on any rehabilitation loan will be estimated using costs derived from the appraisals conducted under § 248.111, taking into account any funds provided for rehabilitation by State or local governments and assuming market rate interest rates.


</P>
</DIV8>


<DIV8 N="§ 248.123" NODE="24:2.1.1.2.24.2.211.6" TYPE="SECTION">
<HEAD>§ 248.123   Determination of Federal cost limit.</HEAD>
<P>(a) <I>Initial determination.</I> For each eligible low income housing project appraised under § 248.111, the Commissioner shall determine whether the aggregate preservation rents for the project exceed the amount determined by multiplying the number of dwelling units in the project, according to appropriate unit sizes, by 120 percent of the section 8 existing fair market rent for the appropriate unit sizes. 
</P>
<P>(b) <I>Relevant local markets.</I> If either the extension or transfer preservation rent for a project exceeds the amount determined under paragraph (a) of this section, the Commissioner shall determine whether such extension or transfer preservation rent exceeds the amount determined by multiplying the number of units in the project, according to the appropriate unit sizes, by 120 percent of the prevailing rents in the local market area. The relevant local market, and the prevailing rents in such relevant local market, shall be determined on the basis of the appraisal conducted by the appraiser selected by the Commissioner pursuant to § 248.111 and any other information that the Commissioner determines is appropriate. If there are no comparables in the relevant local market and it is not otherwise possible to determine prevailing rents in that area, the section 8 existing fair market rent shall be the sole measure for determining the Federal cost limit. 
</P>
<P>(c) <I>Effect.</I> The extension or transfer preservation rent for an eligible low income housing project appraised under § 248.111 shall be considered to exceed the Federal cost limit only if the extension or transfer preservation rent exceeds the amount determined under paragraphs (a) and (b) of this section.


</P>
</DIV8>


<DIV8 N="§ 248.127" NODE="24:2.1.1.2.24.2.211.7" TYPE="SECTION">
<HEAD>§ 248.127   Limitations on action pursuant to Federal cost limit.</HEAD>
<P>(a) <I>Retention of the project.</I> With respect to owners who seek to retain the project, the owner may file a plan of action to receive incentives under § 248.153, except that if the extension preservation rent exceeds the Federal cost limit, the amount of the incentives may not exceed an amount that can be supported by a projected income stream equal to the Federal cost limit. 
</P>
<P>(b) <I>Transfer of the project.</I> With respect to owners who seek to transfer the project—
</P>
<P>(1) If the transfer preservation rent does not exceed the Federal cost limit, or if the transfer preservation rent exceeds the Federal cost limit and the owner is willing to transfer the project at a price which will result in project rents that, on an aggregate level, do not exceed the Federal cost limit, the owner may file a second notice of intent indicating an intention to transfer the project under § 248.157; or 
</P>
<P>(2) If the transfer preservation rent exceeds the Federal cost limit, the owner may file a second notice of intent to transfer the project under § 248.161 or, if no bona fide offers are received, to prepay the mortgage or terminate the mortgage insurance.


</P>
</DIV8>


<DIV8 N="§ 248.131" NODE="24:2.1.1.2.24.2.211.8" TYPE="SECTION">
<HEAD>§ 248.131   Information from the Commissioner.</HEAD>
<P>(a) <I>Information to owners terminating affordability restrictions.</I> Within six months after receipt of a notice of intent to terminate the low income affordability restrictions under § 248.141, the Commissioner shall provide the owner with a description of the criteria for such termination and with information that the owner needs to prepare a plan of action. This shall include information concerning the standards under § 248.141 regarding the approval of a plan of action and a list of the Federal incentives authorized under § 248.153 and available to those projects for which a plan of action involving termination of low income affordability restrictions, through prepayment of the mortgage or termination of the mortgage insurance contract, would not be approvable. The Commissioner shall also provide the owner with any other relevant information which the Commissioner may possess. 
</P>
<P>(b) <I>Information to owners extending affordability restrictions.</I> Within nine months of receipt of a notice of intent to extend the low income affordability restrictions under § 248.153 or to transfer the project under § 248.157, the Commissioner shall provide the owner who submitted the notice with—
</P>
<P>(1) A statement of the preservation values of the project as determined under § 248.111; 
</P>
<P>(2) A statement of the aggregate preservation rents for the project as calculated under § 248.121; 
</P>
<P>(3) A statement of the applicable Federal cost limit for the market area (or relevant local market, if applicable) in which the project is located, and an explanation of the limitations under § 248.127 on the amount of assistance the Commissioner may provide based on such cost limits; 
</P>
<P>(4) A statement of whether either of the aggregate preservation rents exceeds the Federal cost limit; and 
</P>
<P>(5) A direction to file a plan of action and the information necessary to file a plan of action; or 
</P>
<P>(6) A direction to submit a second notice of intent under § 248.133. 
</P>
<P>(c) <I>Information to tenants and State or local governments.</I> The Commissioner shall provide any information provided to the owner under paragraphs (a) and (b) of this section to the tenant representative, if any, known to the Commissioner, and shall post a notice in each affected building informing tenants of the name(s), address(es), and telephone number(s) of the tenant representative(s) and appropriate personnel in the local HUD field office, from whom they may obtain this information. The Commissioner shall also provide this information to that officer of State or local government to whom the owner submitted a notice of intent pursuant to § 248.105(c). The Commissioner shall include in the information packet made available to the tenants any other information relating to their rights and opportunities, including—
</P>
<P>(1) The potential opportunity of the tenants to become priority purchasers under §§ 248.157 and 248.161; and 
</P>
<P>(2) The potential opportunity of resident homeownership under §§ 248.173 or 248.175.


</P>
</DIV8>


<DIV8 N="§ 248.133" NODE="24:2.1.1.2.24.2.211.9" TYPE="SECTION">
<HEAD>§ 248.133   Second notice of intent.</HEAD>
<P>(a) <I>Filing.</I> A second notice of intent must be filed by all owners who, after receiving the information provided by the Commissioner in § 248.131, elect to transfer the project under §§ 248.157 or 248.161.
</P>
<P>(b) <I>Timeliness.</I> A second notice of intent must be submitted not later than 30 days after receipt of the information provided by the Commissioner under § 248.131. If an owner who is required to submit a second notice of intent fails to do so within this time period, the original notice of intent submitted under § 248.105 shall be void and ineffective for purposes of subpart B of this part. 
</P>
<P>(c) <I>Filing with the State or local government and tenants.</I> The owner simultaneously shall file the second notice of intent with that officer of State and local government to whom the owner submitted a notice of intent under § 248.105(c) and with the mortgagee. In addition, the owner shall deliver a copy of the second notice of intent to each tenant representative known to the owner, and if none is known, then to each occupied unit in the project.


</P>
</DIV8>


<DIV8 N="§ 248.135" NODE="24:2.1.1.2.24.2.211.10" TYPE="SECTION">
<HEAD>§ 248.135   Plans of action.</HEAD>
<P>(a) <I>Submission.</I> An owner seeking to terminate the low income affordability restrictions through prepayment of the mortgage or voluntary termination under § 248.141, or to extend the low income affordability restrictions on the project under § 248.153, shall submit a plan of action to the Commissioner in the form and manner prescribed in paragraph (d) or (e) of this section respectively, within 6 months after receipt of the information from the Commissioner under § 248.131. 
</P>
<P>(b) <I>Joint Submission.</I> An owner and purchaser seeking a transfer of the project under §§ 248.157 or 248.161 shall jointly submit a plan of action to the Commissioner in the form and manner prescribed in paragraph (e) of this section within six months after the owner's acceptance of a bona fide offer under § 248.157 or the purchaser's making of a bona fide offer under § 248.161. 
</P>
<P>(c) <I>Filing with the State or local government and tenants.</I> The owner shall notify the tenants of the plan of action by posting in each occupied building a summary of the plan of action and by delivery of a copy of the plan of action to the tenant representative, if any. In addition, the summary must indicate that a copy of the plan of action shall be available from the tenant representatives, whose names, addresses and telephone numbers are indicated on the summary, the local HUD field office, and the on-site office for the project, or if one is not available, in the location where rents are collected, for inspection and copying, at a reasonable cost, during normal business hours. Simultaneously with the submission to the Commissioner, the owner shall submit the plan of action to that officer of State or local government to whom the owner submitted a notice of intent under § 248.105(c). The Commissioner shall submit a copy of the plan of action to the chief executive officer of the appropriate agency of such State or local government which shall review the plan of action and advise the tenants of the project of any programs that are available to assist the tenants in carrying out the purposes of this subpart. The summary of the plan of action posted by the owner and the copies of the plan of action submitted to the tenant representative, the officer of State or local government to whom the owner submitted a notice of intent under § 248.105(c) and the chief executive officer of the appropriate State or local government, shall all state that, upon request, the tenants and the State or local government, may obtain from the owner or from the local HUD field office a copy of all documentation supporting the plan of action except for that documentation deemed “proprietary information” under § 248.101.
</P>
<P>(d) <I>Termination of affordability restrictions.</I> If the plan of action proposes to terminate the low income affordability restrictions through prepayment or voluntary termination in accordance with § 248.141, it shall include: 
</P>
<P>(1) A description of any proposed changes in the status or terms of the mortgage or regulatory agreement; 
</P>
<P>(2) A description of any proposed changes in the low income affordability restrictions; 
</P>
<P>(3) A description of any change in ownership that is related to prepayment or voluntary termination; 
</P>
<P>(4) An assessment of the effect of the proposed changes on existing tenants; 
</P>
<P>(5) An analysis of the effect of the proposed changes on the supply of housing affordable to low and very low income families or persons in the community within which the project is located and in the area that the housing could reasonably be expected to serve; 
</P>
<P>(6) A list of any waivers requested by the owner pursuant to § 248.7; and 
</P>
<P>(7) Any other information that the Commissioner determines is necessary to achieve the purposes of subpart B of this part.
</P>
<P>(e) <I>Extension of affordability restrictions.</I> If the plan of action proposes to extend the low income affordability restrictions of the project in accordance with § 248.153 or transfer the project to a qualified purchaser in accordance with §§ 248.157 or 248.161, the plan of action shall include: 
</P>
<P>(1) A description of any proposed changes in the status or terms of the mortgage or regulatory agreement; 
</P>
<P>(2) A description of the Federal incentives requested, including cash flow projections and analyses of how the owner will address any physical or financial deficiencies and maintain the low income affordability restrictions of the project; 
</P>
<P>(3) A description of any assistance from State or local government agencies, including low income housing tax credits that have been offered to the owner or purchaser or for which the owner or purchaser has applied or intends to apply; 
</P>
<P>(4) A description of any transfer of the property, including the identity of the transferee and a copy of any documents of sale; 
</P>
<P>(5) An income profile of the tenants as of the date of submission of the plan of action and as of January 1, 1987 (based on the area median income limits established by the Commissioner in February 1987), or if the January 1, 1987 profile is unavailable, a certification from the owner stating its unavailability and a profile as of January 1, 1988, or, if that is also unavailable, a profile as of January 1, 1989; 
</P>
<P>(6) A transfer of physical assets package, if a transfer is proposed; 
</P>
<P>(7) A list of any waivers requested by the owner pursuant to § 248.7; and 
</P>
<P>(8) Any other information that the Commissioner determines is necessary to achieve the purposes of subpart B of this part. 
</P>
<P>(f) <I>Revisions.</I> The owner or owner and purchaser may from time to time revise and amend the plan of action as may be necessary to obtain approval under subpart B of this part and must amend the plan of action no later than 30 days after a change in any of the information required in paragraphs (d) or (e) of this section. The owner shall submit any revision to the Commissioner, and provide a copy of the revision and all documentation supporting the revision except for that documentation deemed “proprietary information” under § 248.101, to the parties, and in the manner, specified in paragraph (c) of this section.
</P>
<P>(g) <I>Failure to Submit.</I> If the owner fails to submit a plan of action to the Commissioner, when prepayment or termination is sought, within the 6 month period set forth in paragraph (a) of this section or, when a transfer is sought, if the owner and purchaser fail to submit a plan of action within the 6 month time period set forth in paragraph (b) of this section, the notice of intent filed by the owner under § 248.105 shall be ineffective for the purposes of subpart B of this part and the owner shall be barred from submitting another notice of intent under § 248.105 until 6 months after expiration of such period. 
</P>
<P>(h) <I>Comment Period for tenants and State or local governments.</I> Upon submission of the plan of action by the owner, the tenants of the affected project and the State or local government shall have 60 days in which to provide comments on the plan of action to the Commissioner or to the owner, who will then submit the comments to the Commissioner. The Commissioner shall not approve a plan of action under subpart B of this part before the end of this 60-day period and all comments received during this period will be considered by the Commissioner in making its determination to approve or disapprove a plan of action. 
</P>
<P>(i) <I>Notification to tenants and the State or local government of plan of action approval.</I> Upon the Commissioner's approval of the plan of action, the owner shall notify tenants of the terms thereof by posting in each occupied building a summary of the plan of action and by delivery of a copy of the plan of action to the tenant representative, if any. In addition, the summary must indicate that a copy of the plan of action shall be available for inspection and copying during reasonable hours in a location convenient to the tenants.
</P>
<CITA TYPE="N">[57 FR 12041, Apr. 8, 1992, as amended at 58 FR 37814, July 13, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 248.141" NODE="24:2.1.1.2.24.2.211.11" TYPE="SECTION">
<HEAD>§ 248.141   Criteria for approval of a plan of action involving prepayment and voluntary termination.</HEAD>
<P>(a) <I>Approval.</I> The Commissioner may approve a plan of action that provides for the termination of the low income affordability restrictions through prepayment of the mortgage or voluntary termination of the mortgage insurance contract only upon a written finding that—
</P>
<P>(1) Implementation of the plan of action will not—
</P>
<P>(i) Materially increase economic hardship for current tenants, and will not in any event result in a monthly rental payment by any current tenant that exceeds 30 percent of the monthly adjusted income of the tenant or an increase in the monthly rental payment in any year that exceeds 10 percent (whichever is lower); or in the case of a current tenant who already pays more than such percentage, an increase in the monthly rental payment in any year that exceeds the increase in the Consumer Price Index or 10 percent (whichever is lower); or 
</P>
<P>(ii) Involuntarily displace current tenants (except for good cause) where comparable and affordable housing is not readily available, determined without regard to the availability of Federal housing assistance that would address any such hardship or involuntary displacement; and 
</P>
<P>(2) The supply of vacant, comparable housing is sufficient to ensure that such prepayment will not materially affect—
</P>
<P>(i) The availability of decent, safe, and sanitary housing affordable to low income and very low income families or persons in the area that the housing could reasonably be expected to serve; 
</P>
<P>(ii) The ability of low income and very low income families or persons to find affordable, decent, safe, and sanitary housing near employment opportunities; or 
</P>
<P>(iii) The housing opportunities of minorities in the community within which the housing is located. 
</P>
<P>(3) There are no open audit findings, open findings of noncompliance with title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d); the Fair Housing Act (42 U.S.C. 3601-3619); Executive Order 11063 (3 CFR 1959-1963 comp., p. 652); the Age Discrimination Act of 1975 (42 U.S.C. 6101-6107); section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794); and all regulations promulgated under such statutes and authorities (including, but not limited to 24 CFR part 100), or outstanding violations of the regulatory agreement. 
</P>
<P>(b) For purposes of approving a plan of action under this section, the Commissioner shall find that the requirements of paragraph (a)(1) of this section have been met if the owner agrees to execute a use agreement which provides that rents for all tenants residing at the project at the time of plan of action approval will not exceed the limit established in paragraph (a)(1)(i) of this section and that no tenant residing in the project at the time of plan of action approval will be involuntarily displaced without good cause. 
</P>
<P>(c) For purposes of approving a plan of action under this section, the Commissioner shall find that the requirements of paragraph (a)(2) of this section have been met if the project is located in a housing market area which has been determined to have an adequate supply of decent, safe and sanitary rental housing; and it has been determined, based on the specific characteristics of the project, that the prepayment would not materially affect the housing opportunities of low and very-low income families.
</P>
<P>(1) For purposes of this section, a “housing market area” is defined as an area where rental housing units of similar characteristics are in relative competition with each other. If a project is in a non-metropolitan area, the housing market area is the county in which the project is located. If the project is located in a metropolitan area the housing market area is the primary metropolitan statistical area (PMSA), or in the case of very large metropolitan areas, the housing market area may be a portion of the PMSA. 
</P>
<P>(2) For purposes of this section, a housing market area may be determined to have an adequate supply of decent, safe, and sanitary rental housing if the housing market area has a soft rental market. A soft rental market is a housing market area in which the supply of vacant available rental housing significantly exceeds the demand. A soft rental market exists if: 
</P>
<P>(i) There is currently a surplus of rental housing such that the current excess supply of vacant available housing, plus units currently under construction, is expected to exceed demand for at least the next 24 months; or 
</P>
<P>(ii) Within the next 12 months, based on the housing production (units currently under construction or with firm planning commitments), in combination with the current supply of available vacant units, supply is expected to exceed demand for at least 24 months.
</P>
<P>(3) In order to determine whether the housing market area has a soft rental market, the Commissioner shall consider data from the 1990 Decennial Census and the most recent available local data concerning changes in population, households, employment, the housing inventory, residential construction activity, and the current and anticipated supply/demand conditions within the overall rental market, as well as the occupancy and vacancy situation in assisted housing projects in the area, including information on waiting lists and the experience of voucher holders in finding units.
</P>
<P>(4) A determination must also be made on whether the prepayment would materially affect the housing opportunities of low and very-low income families in the area, based on the specific characteristics of the project including unit sizes, the type of tenants, e.g., elderly, handicapped, large families, minorities, the location of the project with respect to its proximity to employment opportunities; and the availability of other assisted housing within the immediate area. The prepayment would be determined to materially affect housing opportunities if:
</P>
<P>(i) The project is needed to assist in preserving low income housing in a neighborhood which is being revitalized;
</P>
<P>(ii) The project represents a rare source or the only source of low-and moderate-income rental housing in the immediate area;
</P>
<P>(iii) There is a shortage of the particular type of rental housing provided by the project such as units suitable for the disabled, single room occupancy, or units for large families;
</P>
<P>(iv) The preservation of the housing would be necessary to avoid adversely affecting the housing opportunities of low and very-low income families to find housing near employment opportunities; or
</P>
<P>(v) The preservation of the housing would be necessary to avoid adversely affecting the housing opportunities of minorities in the community within which the housing is located.
</P>
<P>(d) Once the Commissioner has compiled the necessary data and conducted the analysis under paragraph (c) of this section the Commissioner shall issue a written finding to the owner stating whether the plan of action to terminate the low income affordability restrictions is approved or disapproved. The written finding shall contain a specific determination of whether the market area is a soft rental market and prepayment would materially affect housing opportunities. The written finding shall include:
</P>
<P>(1) A statement as to whether the owner has agreed to execute a use agreement to protect current tenants, in accordance with paragraph (b) of this section;
</P>
<P>(2) A description of the geographic boundaries of the housing market area in which the project is located;
</P>
<P>(3) An analysis of current and anticipated supply/demand conditions in both the overall rental market and the assisted housing inventory; and
</P>
<P>(4) A discussion of whether the prepayment would materially affect the housing opportunities, given the specific characteristics of the project.
</P>
<P>(e) <I>Disapproval.</I> If the Commissioner determines a plan of action to prepay a mortgage or terminate an insurance contract fails to meet the requirements of paragraph (a) of this section, the Commissioner shall disapprove the plan and within a reasonable time, shall inform the owner of the reasons for disapproval and suggest alternatives. In the case of disapproval of the plan of action, except for the failure to meet the requirement of paragraph (a)(3) of this section, the notice of intent filed under § 248.105 shall be rendered ineffective for the purposes of this subtitle, and the owner, in order to receive incentives, must file a new notice of intent under such section. If the plan of action is disapproved because of an outstanding civil rights or audit finding, the finding must be closed before the Commissioner will approve a plan of action under this section.
</P>
<CITA TYPE="N">[57 FR 12041, Apr. 8, 1992, as amended at 58 FR 37815, July 13, 1993; 64 FR 26639, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 248.145" NODE="24:2.1.1.2.24.2.211.12" TYPE="SECTION">
<HEAD>§ 248.145   Criteria for approval of a plan of action involving incentives.</HEAD>
<P>(a) <I>Approval.</I> The Commissioner may approve a plan of action for extension of the low income affordability restrictions on an eligible low income housing project or for transfer of the housing to a qualified purchaser, other than a resident council acquiring the project under a resident homeownership plan, only upon a finding that—
</P>
<P>(1) Due diligence has been given to ensuring that the package of incentives set forth in the plan of action is, for the Federal Government, the least costly alternative that is consistent with the full achievement of the purposes of this subpart.
</P>
<P>(2) The project will be retained as housing affordable for very low, low and moderate income families and persons, as determined under paragraph (a)(8) of this section, for the remaining useful life of the project; 
</P>
<P>(3) Throughout the remaining useful life of the project, adequate expenditures will be made for maintenance and operation of the project and the project meets the housing standards established in § 248.147 as determined by inspections conducted by the Commissioner; 
</P>
<P>(4) Current tenants will not be involuntarily displaced, except for good cause; 
</P>
<P>(5) Any increase in rent contributions for current tenants will be to a level that does not exceed 30 percent of the adjusted income of the tenant or the fair market rent, whichever is lower. However, the rent contributions of any tenants occupying the project at the time of any increase may not be reduced by reason of this paragraph, except with respect to tenants receiving section 8 assistance in accordance with paragraph (a)(7) of this section; 
</P>
<P>(6) Any resulting increase in rents for current tenants (except for increases made necessary by increased operating costs) shall be phased in as follows: 
</P>
<P>(i) If such increase is 30 percent or more, the increase shall be phased in equally over a period of not less than three years, with the first increase occurring upon the effective date of the plan of action, and the subsequent two increases occurring annually thereafter; 
</P>
<P>(ii) If such increase is more than 10 percent but less than 30 percent, it shall be limited to not more than 10 percent per year; 
</P>
<P>(7) Section 8 assistance shall be provided, to the extent appropriations are available, if necessary to mitigate any adverse effect on current very low and low income tenants; 
</P>
<P>(8) Rents for units becoming available to new tenants shall be at levels approved by the Commissioner, taking into account any incentives provided under subpart B of this part, that will ensure, to the extent practicable, that the units will be available and affordable to the same proportions of very low, low and moderate income families and persons, including families and persons whose incomes are 95 percent or more of area median income, as based on the area median income limits established by the Commissioner in February 1987, as resided in the project as of the date of the tenant income profile submitted under § 248.135(e)(5), or the date the plan of action is approved, whichever date results in the highest proportion of very low income families. This limitation shall not prohibit a higher proportion of very low income families and persons from occupying the project; 
</P>
<P>(9) Future rent adjustments shall be—
</P>
<P>(i) Made by applying an annual factor, to be determined by the Commissioner, to the portion of rent attributable to operating expenses for the project, and, where the owner is a priority purchaser, to the portion of rent attributable to project oversight costs, as that term is defined in § 248.101; and
</P>
<P>(ii) Subject to a procedure, established by the Commissioner, for owners to apply for rent increases not adequately compensated by annual adjustment under paragraph (a)(9)(i) of this section, under which the Commissioner may increase rents in excess of the amount determined under paragraph (a)(9)(i) of this section only if the Commissioner determines such increases are necessary to reflect extraordinary necessary expenses of owning and maintaining the project; 
</P>
<P>(10) Any savings from reductions in operating expenses due to management efficiencies shall be deposited in project reserves for replacement and the owner shall have periodic access to such reserves, to the extent the Commissioner determines that the level of the reserves is adequate and that the project is maintained in accordance with the standards established in § 248.147; 
</P>
<P>(11) The mortgage on the project is current; and 
</P>
<P>(12) There are no open audit findings, open findings of noncompliance with title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d); the Fair Housing Act (42 U.S.C. 3601-3619); Executive Order 11063 (3 CFR 1959-1963 comp., p. 652); the Age Discrimination Act of 1975 (42 U.S.C. 6101-6107); section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794); and all regulations promulgated under such statutes and authorities (including, but not limited to, 24 CFR part 100), or outstanding violations of the regulatory agreement. 
</P>
<P>(b) <I>Compliance with housing standards.</I> No incentives under § 248.153 may be provided, other than to qualified purchasers under §§ 248.157 and 245.161, and no distributions may be taken by the owner or purchaser, until the Commissioner determines that the project meets the housing standards set forth in § 248.147, except that incentives designed to correct deficiencies in the project may be provided. 
</P>
<P>(c) <I>Implementation.</I> Any agreement to maintain the low income affordability restrictions for the remaining useful life of the project may be made through execution of a new regulatory agreement, modifications to the existing regulatory agreement or mortgage, or in the case of prepayment of a mortgage or voluntary termination of mortgage insurance, a recorded instrument. 
</P>
<P>(d) <I>Determination of remaining useful life.</I> The Commissioner shall make determinations, on the record and after opportunity for a hearing, as to when the useful life of an eligible low income housing project has expired. Under procedures and standards to be established by the Commissioner, owners of eligible low income housing may petition the Commissioner for a determination that the useful life of such project has expired. Such petition may not be filed before the expiration of the 50-year period beginning upon the approval of a plan of action under subpart B of this part with respect to such project. In making a determination pursuant to a petition under paragraph (d) of this section, the Commissioner shall presume that the useful life of the project has not expired, and the owner shall have the burden of proof in establishing such expiration. The Commissioner may not determine that the useful life of any project has expired if such determination results primarily from failure to make regular and reasonable repairs and replacement, as became necessary. In making a determination regarding the useful life of any project pursuant to a petition submitted under paragraph (d) of this section, the Commissioner shall provide for comment by tenants of the project and interested persons and organizations with respect to the petition. The Commissioner shall also provide the tenants and interested persons and organizations with an opportunity to appeal a determination under paragraph (d) of this section. 
</P>
<P>(e) In the case of any plans of action involving incentives the owner must agree to comply with title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d); the Fair Housing Act (42 U.S.C. 3601-3619); Executive Order 11063 (3 CFR 1959-1963 comp., p. 652); the Age Discrimination Act of 1975 (42 U.S.C. 6101-6107); section 504 of the Rehabilitiation Act of 1973 (29 U.S.C. 794) (including the Department's Accessibility Guidelines (24 CFR chapter I, subchapter A, appendix II) and all regulations issued pursuant to these authorities.
</P>
<CITA TYPE="N">[57 FR 12041, Apr. 8, 1992, as amended at 57 FR 57314, Dec. 3, 1992; 58 FR 37815, July 13, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 248.147" NODE="24:2.1.1.2.24.2.211.13" TYPE="SECTION">
<HEAD>§ 248.147   Housing standards.</HEAD>
<P>(a) <I>Standards.</I> As a condition to receiving incentives under subpart B of this part, the owner shall agree to maintain the project in accordance with local housing codes and the housing quality standards set forth in § 886.307 of this title. Where a housing quality standard conflicts with local housing codes, the owner shall maintain the project in compliance with the standard that is stricter. 
</P>
<P>(b) <I>Annual inspections.</I> The Commissioner shall inspect each project at least annually in order to determine compliance with the housing quality standards. At least 30 days prior to the inspection, the Commissioner shall notify any tenant representatives, or if none exist, the Commissioner shall provide the owner with a notice to be posted in each affected building, stating the time and date of the inspection and advising any interested tenants that they may accompany HUD personnel on the inspection and/or submit any comments they may have on the physical condition of the project. The Commissioner shall notify the owner of any deficiencies within 30 days following the inspection. The owner shall have 90 days from the date of such notification to correct any deficiencies cited by the Commissioner and shall promptly notify the Commissioner when such deficiencies have been corrected. The Commissioner shall reinspect the project upon such notification or, if the owner does not notify the Commissioner, upon the expiration of the 90-day period. 
</P>
<P>(c) <I>Sanctions for noncompliance.</I> If the Commissioner determines, upon reinspection of the project, that the project is still not in compliance with the standards set forth in paragraph (a) of this section, the Commissioner shall take any action appropriate to bring the project into compliance, including—
</P>
<P>(1) Directing the mortgagee, with respect to an equity take-out loan provided under part 241 of this chapter, to withhold the disbursement to the owner of any escrowed loan proceeds and requiring that such proceeds be used for repair of the project; and
</P>
<P>(2) Reduce the amount of the allowable distributions to 4 percent of extension preservation equity or (in the case of a purchaser 4 percent of cash invested, as appropriate, for the period ending upon a determination by the Commissioner that the project is in compliance with the standards and requiring that such amounts be used for repair. 
</P>
<P>(d) <I>Continued compliance.</I> To ensure continued compliance with the standards set forth in paragraph (a) of this section for a project subject to any action under paragraph (c) of this section, the Commissioner may limit access of and use by the owner of such amounts set forth in paragraph (c) of this section, for not more than the 2-year period beginning upon the determination that the project is in compliance with the housing standards. 
</P>
<P>(e) <I>Sanctions for continuous noncompliance.</I> If, upon inspection, the Commissioner determines that any eligible low income housing project has failed to comply with the standards established under this section for two consecutive years, the Commissioner may, upon notification to the owner of the noncompliance, take one or more of the following actions; 
</P>
<P>(1) Subject to the availability of appropriations, provide assistance, other than project-based assistance attached to the project, under part 982 of this title for any tenant eligible for such assistance who desires to terminate occupancy in the project. For each unit in the project vacated pursuant to the provision of assistance under this paragraph, the Commissioner may, notwithstanding any other law or contract for assistance, cancel the provision of project-based assistance attached to the project for one dwelling unit, if the project is receiving such assistance, or convert the project-based assistance allocation for that unit to assistance under part 982 of this title; 
</P>
<P>(2) In the case of projects for which an equity take-out loan has been made under part 241 of this chapter, direct the mortgagee to declare such a loan to be in default and accelerate the maturity date of the loan; 
</P>
<P>(3) Declare, or direct the insured mortgagee to declare, any rehabilitation loan insured or provided by the Commissioner with respect to the project, including loans provided under part 219 of this chapter, to be in default and accelerate the maturity date of the loan; and 
</P>
<P>(4) Suspend payments under or terminate any contract for project-based rental assistance under section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f). 
</P>
<P>(f) <I>Sanctions not exclusive.</I> The Commissioner may take any other action authorized by law or the project regulatory agreement to ensure that the project will be brought into compliance with the standards established under this section or with other requirements pertaining to the condition of the project.
</P>
<CITA TYPE="N">[57 FR 12041, Apr. 8, 1992, as amended at 64 FR 26639, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 248.149" NODE="24:2.1.1.2.24.2.211.14" TYPE="SECTION">
<HEAD>§ 248.149   Timetable for approval of a plan of action.</HEAD>
<P>(a) <I>Notification of deficiencies.</I> Not later than 60 days after receipt of a plan of action, the Commissioner shall notify the owner in writing of any deficiencies that prevent the plan of action from being approved. Such notice shall describe alternative ways in which the plan may be revised to meet the criteria for approval set forth in § 248.145. 
</P>
<P>(b) <I>Notification of approval.</I> Not later than 180 days after receipt of a plan of action, or such longer period as the owner requests, but not more than 365 days, the Commissioner shall notify the owner in writing whether the plan of action, including any revisions, is approved. If approval is withheld, the notice shall describe—
</P>
<P>(1) The reasons for withholding approval; and 
</P>
<P>(2) Suggestions to the owner for meeting the criteria for approval. 
</P>
<P>(c) <I>Opportunity to revise.</I> The Commissioner shall give the owner a reasonable opportunity of not more than 60 days to revise the plan of action when approval is denied. If the owner fails to comply with this time period, it shall not be eligible for relief under paragraph (d) of this section. 
</P>
<P>(d) <I>Delayed approval.</I> If the Commissioner fails to approve a plan of action within the time set forth in paragraph (b) of this section, the Commissioner shall provide incentives and assistance under subpart B of this part, to an owner who is entitled to receive such incentives and assistance, in the amount that the owner would have received if the Commissioner had complied with such time limitations. Paragraph (d) of this section does not apply to plans of action that are not approved because of deficiencies.


</P>
</DIV8>


<DIV8 N="§ 248.153" NODE="24:2.1.1.2.24.2.211.15" TYPE="SECTION">
<HEAD>§ 248.153   Incentives to extend low income use.</HEAD>
<P>(a) <I>Agreements by the Commissioner.</I> After approving a plan of action filed pursuant to § 248.145, from an owner of eligible low income housing that includes the owner's plan to extend the low income affordability restrictions of the project, the Commissioner shall, subject to the availability of appropriations for such purpose, enter into such agreements as are necessary to enable the owner to—
</P>
<P>(1) Receive the annual authorized return for the project as determined under § 248.121 for each year after the approval of the plan of action;
</P>
<P>(2) Pay debt service on the federally-assisted mortgage(s) covering the project;
</P>
<P>(3) Pay debt service on any loan for rehabilitation of the project; 
</P>
<P>(4) Meet project operating expenses; and 
</P>
<P>(5) Establish adequate reserves. 
</P>
<P>(b) <I>Permissible incentives.</I> Such agreements may include one or more of the following incentives, as determined necessary by the Commissioner: 
</P>
<P>(1) Increased access to residual receipts accounts as necessary to enable the owner to realize the annual authorized return; 
</P>
<P>(2) An increase in the rents permitted under an existing project-based section 8 contract; 
</P>
<P>(3) Additional project-based section 8 assistance or an extension of any project-based assistance attached to the housing; 
</P>
<P>(4) An increase in the rents on non-section 8 units occupied by current tenants up to the maximum allowable rents; 
</P>
<P>(5) Financing of capital improvements under part 219 of this chapter; 
</P>
<P>(6) Financing of rehabilitation through provision of insurance for a second mortgage under part 241 of this chapter; 
</P>
<P>(7) Redirection of the Interest Reduction Payment subsidies to a second mortgage for projects which are insured, assisted, or held by the Commissioner or a State or State agency under part 236 of this chapter; 
</P>
<P>(8) Access by the owner to a portion of the preservation equity in the project through provision of insurance for an acquisition or equity loan insured under part 241, subpart E of this chapter or through a non-insured mortgage loan approved by the Commissioner and the mortgagee; 
</P>
<P>(9) An increase in the amount of allowable distributions up to the annual authorized return; and 
</P>
<P>(10) Other incentives authorized in law. 
</P>
<P>(c) <I>Limitation on the provision of permissible incentives.</I> (1) The total amount of incentives provided to a project under paragraphs (b)(2), (3), and (4) of this section shall not result in a projected rental income stream which exceeds the Federal cost limit. 
</P>
<P>(2) The debt service on the loan obtained by the owner under paragraph (b)(8) of this section, when added to the allowable distributions under paragraph (b)(9) of this section, shall not exceed the annual authorized return. 
</P>
<P>(d) <I>Rent phase-in period.</I> To the extent necessary to ensure that owners receive the annual authorized return during the tenant rent phase-in period established in § 248.145(a)(6), the Commissioner shall permit owners to receive the following additional incentives:
</P>
<P>(1) Access to residual receipts accounts;
</P>
<P>(2) Deferred remittance of excess rent payments; and
</P>
<P>(3) Increases in rents, as permitted under an existing Section 8 contract.
</P>
<FP>These incentives shall be provided to owners in the order listed. An owner will not be eligible to receive these additional incentives unless it can demonstrate that it is not receiving the annual authorized return. Once an owner has adequately demonstrated that it is not receiving the annual authorized return, the Commissioner will provide the owner with each incentive in turn during the rent phase-in period, until it has been determined that the owner is receiving the annual authorized return.
</FP>
<P>(e) <I>Interest reduction subsidies.</I> Where Interest Reduction Payment subsidies are sought to be redirected, pursuant to paragraph (b)(7) of this section, the lender may not unreasonably withhold its consent to such redirection.
</P>
<P>(f) <I>Recalculation of section 236 basic rent and market rent.</I> With respect to any project with a mortgage insured or otherwise assisted pursuant to part 236 of this chapter, the basic rent and market rent, as defined in § 236.2 of this chapter, for each unit in such project may be increased to take into account the allowable distributions permitted under this section and the debt service on any equity loan, rehabilitation loan or acquisition loan approved under a plan of action under subpart B of this part.
</P>
<CITA TYPE="N">[57 FR 12041, Apr. 8, 1992, as amended at 58 FR 37815, July 13, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 248.157" NODE="24:2.1.1.2.24.2.211.16" TYPE="SECTION">
<HEAD>§ 248.157   Voluntary sale of housing not in excess of Federal cost limit.</HEAD>
<P>(a) <I>Offer to sell.</I> Where an owner has submitted a second notice of intent under § 248.133 for the purpose of transferring the project to a qualified purchaser, and the transfer preservation rent does not exceed the Federal cost limit, the owner shall offer the housing for transfer as provided in this section. The owner shall not be obligated to accept any offer made under this section, but may instead elect to retain the project and receive incentives under § 248.145. 
</P>
<P>(b) <I>Notification of qualified purchasers.</I> Upon receipt of a second notice of intent to transfer the project to a qualified purchaser, the Commissioner shall notify potential qualified purchasers of the availability of the project for sale, and of the names and addresses of the owner, or of a person representing the owner in the sale of the project, by—
</P>
<P>(1) Mailing notices to non-profit organizations; 
</P>
<P>(2) Placing notices in the major local newspaper(s) in the jurisdiction in which the project is located; 
</P>
<P>(3) Mailing notices to clearinghouse networks; and 
</P>
<P>(4) Using any other means of notification which the Commissioner determines would be effective to notify potential qualified purchasers of the sale of the project. 
</P>
<P>(c) <I>Right of first offer to priority purchasers.</I> (1) For the 6-month period beginning on the date of receipt by the Commissioner of a second notice of intent under § 248.133, the owner may accept a bona fide offer only from: 
</P>
<P>(i) A resident council intending to purchase the project under §§ 248.173 or 248.175, which has met the requirements for tenant support, pursuant to those sections; 
</P>
<P>(ii) A resident council intending to purchase the project and retain it as rental housing, which has the support of a majority of the tenants; or 
</P>
<P>(iii) A community-based nonprofit organization which has the support of a majority of the tenants.
</P>
<P>(2) If no bona fide offer to purchase the project is made and accepted during or at the end of the 6-month period specified in paragraph (c)(1) of this section, the owner may offer to sell the project during the next 6 months to any priority purchasers. 
</P>
<P>(3) If no bona fide offer to purchase the project is made and accepted during or at the end of the 6-month period specified in paragraph (c)(2) of this section, the owner may offer to sell the project during the 3 months immediately following that period only to qualified purchasers. 
</P>
<P>(d) <I>Purchase price.</I> The sale price, including assumption of the debt on the federally-assisted mortgage(s), or the amount of the debt on the federally-assisted mortgage(s) that the project is taken subject to, may not exceed the transfer preservation value of the project. 
</P>
<P>(e) <I>Expression of interest.</I> Any priority purchaser seeking to make an offer during the 6-month periods specified in paragraph (c) of this section shall, and other qualified purchasers may, submit written notice thereof to the Commissioner. Such notice, if made by a priority purchaser seeking to make an offer during either 6-month priority purchaser marketing period, shall contain the following:
</P>
<P>(1) A statement identifying the priority purchaser as a State or local government agency, a nonprofit organization, or a resident council; 
</P>
<P>(2) A copy of its articles of incorporation, charter and list of officers and directors, if the purchaser is a nonprofit organization or a resident council and in the case of a nonprofit organization, proof that the organization is, or has applied to be, a tax exempt organization in accordance with 26 U.S.C. 501(c); and 
</P>
<P>(3) A statement as to whether the purchaser is affiliated with any other entity for purposes of purchasing the project and whether any Low Income Housing Tax Credits may be awarded in connection with the purchase of the project. 
</P>
<P>(f) <I>Information from the Commissioner.</I> Within 30 days of receipt of an expression of interest by a priority purchaser, the Commissioner shall determine the status of the priority purchaser with respect to the categories listed in paragraph (h) of this section, and provide such purchaser with: 
</P>
<P>(1) A list of all possible assistance available from the Federal Government to facilitate a transfer of the project; 
</P>
<P>(2) The appraisal reports for the project as submitted under § 248.111;
</P>
<P>(3) The Commissioner's determination as to the priority status of the purchaser and as to whether the purchaser qualifies as a resident council, community-based nonprofit organization or State or local government entity; 
</P>
<P>(4) A worksheet indicating the level of the earnest money deposit required upon the submission of a bona fide offer; 
</P>
<P>(5) An acknowledgment of the purchaser's right to inspect the project; and 
</P>
<P>(6) Any other relevant financial information that the Commissioner possesses concerning the project, including the information determined under § 248.121.
</P>
<FP>Within the same 30-day period, the Commissioner shall also notify the owner of the purchaser's expression of interest and instruct the owner to provide to the purchaser any information concerning the project that the Commissioner deems relevant to the transfer of the project. 
</FP>
<P>(g) <I>Bona fide offer.</I> A bona fide offer is an offer to purchase eligible low-income housing at a sales price which does not exceed the transfer preservation value of the project. 
</P>
<P>(1) A bona fide offer must include the following: 
</P>
<P>(i) A contract of sale signed by the purchaser, which states that acceptance of the contract is contingent upon approval by the Commissioner;
</P>
<P>(ii) An earnest money deposit from every qualified purchaser equal to the lesser of one percent of the transfer preservation value, $50,000 or $500 per unit, unless the purchaser is a resident council purchasing the project under a resident homeownership plan under § 248.173 or § 248.175, in which case the earnest money deposit shall be equal to $200 per unit from 75% of the occupied units; and 
</P>
<P>(iii) If the purchaser is a resident council intending to purchase the project pursuant to a resident homeownership plan, the information required under § 248.173(b); or 
</P>
<P>(iv) If the purchaser is a resident council intending to retain the project as rental housing, or a community-based nonprofit and the offer is submitted within the marketing period established in paragraph (c)(1) of this section, a resolution of the resident council, or a petition signed by tenants representing a majority of the units indicating their support of the offer. 
</P>
<P>(2) An owner may waive the requirement of an earnest money deposit or agree to accept a smaller deposit for all qualified purchasers, except resident councils who intend to purchase the project pursuant to a resident homeownership plan under § 248.173 or § 248.175. In order to be effective:
</P>
<P>(i) The waiver must be indicated in the second notice of intent submitted under § 248.133 and the waiver must apply equally to all qualified purchasers, except resident councils who intend to purchase the project pursuant to a resident homeownership plan under § 248.173 or § 248.175; or 
</P>
<P>(ii) If the second notice of intent has already been submitted, the owner must submit to the Commissioner, in writing, its decision to waive the earnest money deposit. The Commissioner shall notify all qualified purchasers who have submitted an expression of interest under paragraph (e) of this section that the owner has waived the earnest money deposit requirement. 
</P>
<P>(h) <I>Retention and acceptance of offers.</I> The owner shall accept or reject any bona fide offer within 30 days of receipt of such offer. For an offer to be bona fide, it must meet the requirements of paragraph (g) of this section, as well as be submitted to the owner within the appropriate marketing period under paragraph (c) of this section. If an owner rejects any offer, it must return the earnest money deposit to the offeror at the time of rejection. A bona fide offer which is rejected by the owner will still be considered a bona fide offer for purposes of this section, even after the earnest money deposit has been returned. If an owner decides to accept the offer at a later date, the purchaser may renew the offer by resubmitting the earnest money deposit, if a deposit had originally been required, within 30 days of notification of the owner's acceptance of the offer. 
</P>
<P>(i) <I>Submission of offer to HUD.</I> The purchaser shall submit the offer to the Commissioner. The Commissioner shall review the offer which is preliminarily accepted by the owner to determine whether it meets the requirements of a bona fide offer. The Commissioner shall notify the owner and purchaser, within 30 days after acceptance, whether the offer meets such requirements. The owner's preliminary acceptance of any offer pursuant to this section shall be conditional upon the Commissioner's certification that the offer is bona fide. If the Commissioner determines that the offer is not a bona fide offer, the offer will be considered invalid for the purposes of subpart B of this part. 
</P>
<P>(j) <I>Submission of plan of action.</I> Upon a determination by the Commissioner that the offer is bona fide and final acceptance of such an offer, the owner and purchaser shall jointly submit a plan of action to the Commissioner pursuant to § 248.135. The plan of action shall include any request for assistance from the Commissioner for purposes of transferring the project. 
</P>
<P>(k) <I>Requirements for plan of action approval.</I> If the qualified purchaser of the project is a resident council seeking to purchase the project under a resident homeownership program, the Commissioner may approve a plan of action only if the resident council's proposed resident homeownership program meets the requirements under § 248.173 or § 248.175. For all other qualified purchasers, the Commissioner may approve a plan of action submitted pursuant to this section only if the plan of action meets the criteria listed in § 248.145. 
</P>
<P>(l) <I>Failure to consummate sales transaction.</I> (1) If the owner accepts an offer from a priority purchaser during either of the two 6-month periods specified in paragraph (c) of this section, and before the expiration of the period specified in paragraph (c) of this section, the sales transaction either falls through or does not close within 90 days after the Commissioner's approval of the plan of action, the owner shall: 
</P>
<P>(i) Immediately notify the Commissioner that the sale has fallen through; 
</P>
<P>(ii) Notify any other purchaser that had submitted an offer to purchase the project; and 
</P>
<P>(iii) Resume holding the project open for sale for the remainder of the time periods specified in paragraph (c) of this section. 
</P>
<P>(2) If the owner accepts an offer from a purchaser, and during the 3-month period specified in paragraph (c) of this section, or thereafter, the sales transaction either falls through or does not close within 90 days after the Commissioner's approval of the plan of action, the owner shall take the following steps: 
</P>
<P>(i) Immediately notify the Commissioner that the sale has fallen through; 
</P>
<P>(ii) Contact any other purchaser that had submitted an offer to purchase the project and give such purchaser and any other qualified purchaser 60 days from the date of notification to the Commissioner in which to resubmit an offer to purchase the project. 
</P>
<P>(3) At any time during the 60-day period the owner may accept an offer submitted under paragraph (l)(2) of this section. 
</P>
<P>(4) If an offer submitted during the 60-day period specified in paragraph (l)(2) of this section is made and accepted, but the sale is not consummated within 90 days of the Commissioner's approval of the plan of action for reasons not attributable in whole or in part to the owner, the owner may terminate the low-income affordability restrictions through prepayment or voluntary termination, subject to compliance with the provisions of § 248.165. 
</P>
<P>(m) <I>Assistance.</I> Subject to the availability of amounts approved in appropriation acts, the Commissioner shall, for approvable plans of action, provide assistance sufficient to enable qualified purchasers to:
</P>
<P>(1) Acquire the eligible low income housing project from the current owner for a purchase price not greater than the transfer preservation value of the project; 
</P>
<P>(2) Pay the debt service on the federally-assisted mortgage(s) covering the project; 
</P>
<P>(3) Pay the debt service on any loan for the rehabilitation of the project; 
</P>
<P>(4) Meet project operating expenses and establish adequate reserves for the housing, and in the case of a priority purchaser, meet project oversight costs;
</P>
<P>(5) Receive a distribution equal to an 8 percent annual return on any actual cash investment made to acquire or rehabilitate the project;
</P>
<P>(6) In the case of a priority purchaser, receive reimbursement for all reasonable transaction expenses associated with the acquisition, loan closing and implementation of an approved plan of action; and
</P>
<P>(7) In the case of an approved resident homeownership program, cover the costs of training for the resident council, homeownership counseling and training, the fees for the nonprofit entity or public agency working with the resident council, if such entity or agency is approved by the Commissioner, and costs related to relocation of tenants who elect to move. Assistance for such costs, exclusive of relocation expenses, shall not exceed $500 per unit or $200,000 for the project, whichever is less. 
</P>
<P>(n) <I>Incentives.</I> The Commissioner may provide assistance for all qualified purchasers under this subpart in the form of one or more of the incentives authorized under § 248.153. The incentives provided by the Commissioner to any qualified purchaser may include an acquisition loan under subpart E of part 241 of this chapter.
</P>
<P>(o) <I>Grants to priority purchasers.</I> The Commissioner may provide assistance for priority purchasers under subpart B of this part in the form of a grant for each unit in the project in an amount, as determined by the Commissioner, that does not exceed the present value of the total of the projected fair market rent for the next ten years, or such longer period if additional assistance is necessary to cover the costs set forth in paragraph (m) of this section. 
</P>
<P>(p) <I>Reimbursement of assistance.</I> The Commissioner reserves the right to seek reimbursement from a priority purchaser who, within ten years of approval of a plan of action, becomes affiliated with or transfers the project to any non-priority purchaser. The Commissioner shall be entitled to receive reimbursement for the difference between the assistance provided to the priority purchaser and the assistance that would have been provided in the same circumstances to a non-priority purchaser. 
</P>
<P>(q) <I>Seller financing.</I> In order to finance the acquisition or rehabilitation of a project under this section, a qualified purchaser may receive take-back financing from the owner of the project. If the purpose of the seller financing is to aid acquisition of the project, the principal amount of such financing, together with an acquisition loan provided under part 241 of this chapter, may not exceed the transfer preservation equity of the project, plus, in the case of priority purchasers, any expenses associated with the acquisition, loan closing, and implementation of the plan of action. If the purpose of the seller financing is to fund rehabilitation of the project, the principal amount of such financing may not exceed the equity requirements for a rehabilitation loan under § 241.70 or § 219.305 of this chapter. The seller may not charge interest on any seller financing at a rate in excess of that of the Federal acquisition or rehabilitation loan.
</P>
<CITA TYPE="N">[57 FR 12041, Apr. 8, 1992, as amended at 58 FR 37816, July 13, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 248.161" NODE="24:2.1.1.2.24.2.211.17" TYPE="SECTION">
<HEAD>§ 248.161   Mandatory sale of housing in excess of the Federal cost limit.</HEAD>
<P>(a) <I>In general.</I> With respect to any eligible low income housing for which the transfer preservation rent determined under § 248.121 exceeds the Federal cost limit, the owner shall offer the housing for transfer to qualified purchasers as provided in this section. 
</P>
<P>(b) <I>Applicability of voluntary sale provisions.</I> The provisions of § 248.157, other than paragraphs (a) and (p) of this section thereof, shall be applicable to any sale conducted under this section. If the owner receives an offer to purchase the project for a sale price equal to the transfer preservation value of the project, as determined under § 248.111, the owner shall be obligated to accept the offer upon its receipt and sell the project to the purchaser. If the owner receives an offer to purchase the project for a sale price less than the transfer preservation value of the project, the owner may accept the offer, but is not obligated to do so. Any offer to purchase a project under this section for less than the transfer preservation value must comply with the requirements of a bona fide offer in § 248.101, except for the requirement that the sale price equal the transfer preservation value. At the time of submission of the offer, the potential purchaser must also submit the documentation required in § 248.157(g). 
</P>
<P>(c) <I>Section 8 assistance.</I> Subject to the availability of amounts approved in appropriation acts, the Commissioner shall, for approvable plans of action, provide assistance to qualified purchasers under part 886, subpart A of this title sufficient to produce a gross potential income equal to the amount determined by multiplying 120 percent of the prevailing rents in the relevant local market in which the project is located by the number of units in the project, according to appropriate unit size, and any other incentives authorized under § 248.153 that would have been provided to a qualified purchaser under § 248.157. 
</P>
<P>(d) <I>Grants to qualified purchasers.</I> From amounts made available by Congress, the Commissioner may make grants to assist in the completion of transfers under this section to any qualified purchasers. Any grant made pursuant to paragraph (d) of this section shall be in an amount not exceeding the difference between the amount of assistance provided under paragraph (c) of this section and the amount of assistance specified in § 248.157(m). 
</P>
<P>(e) <I>Securing State and local funding.</I> The Commissioner shall assist any qualified purchaser of a project pursuant to this section in securing funding and other assistance, including tax and assessment reductions from State and local governments to facilitate a transfer under this section.


</P>
</DIV8>


<DIV8 N="§ 248.165" NODE="24:2.1.1.2.24.2.211.18" TYPE="SECTION">
<HEAD>§ 248.165   Assistance for displaced tenants.</HEAD>
<P>(a) <I>Section 8 assistance.</I> Each low income family that is displaced as a result of the prepayment of the mortgage, or voluntary termination of an insurance contract, on eligible low income housing shall, subject to the availability of funds, be offered the opportunity to receive tenant-based assistance under the Housing Choice Voucher Program in accordance with part 982 of this title.
</P>
<P>(b) <I>Notification of Commissioner.</I> The owner of any eligible low income housing project who prepays the mortgage or voluntarily terminates the mortgage insurance contract pursuant to subpart B of this part, shall notify the Commissioner of: 
</P>
<P>(1) The names and addresses of all of the tenants in the project who will be displaced; 
</P>
<P>(2) The size of the unit in which each of the displaced tenants is currently dwelling; and 
</P>
<P>(3) The names of all of the displaced tenants who are special needs tenants, as that term is defined in § 248.101, as well as a statement as to the nature of their special need. 
</P>
<P>The owner shall provide the Commissioner with this information within 30 days of identifying such tenants for displacement, but in no event less than 30 days prior to the date when the tenants must vacate the premises. 
</P>
<P>(c) <I>Relocation of displaced tenants.</I> The Commissioner shall coordinate with public housing agencies to ensure that any very low or low income family displaced from eligible low income housing as the result of prepayment of the mortgage or termination of the mortgage insurance contract on such project is able to acquire a suitable, affordable dwelling unit in the area where the project from which the displaced family is located. The Commissioner, upon receiving information from the owner under paragraph (b) of this section stating that certain tenants will be displaced, shall request from the public housing agencies located in the same area as the affected project, notices of vacancies in other affordable projects which would be suitable for the displaced tenants. The Commissioner shall convey the notices of vacancies to the tenants who will be displaced along with the addresses of the local public housing agencies. 
</P>
<P>(d) <I>Relocation expenses.</I> The Commissioner shall require the owner of eligible low income housing who prepays or terminates the insurance contract resulting in the displacement of tenants to pay 50 percent of the relocation expenses of each family which is relocated, except that the Commissioner shall increase such percentage to the extent that State or local law of general applicability requires a higher payment by the owner. 
</P>
<P>(e) <I>Continued occupancy.</I> Each owner who prepays the mortgage or terminates the mortgage insurance contract on eligible low income housing shall, as provided in paragraph (g) of this section, allow the tenants occupying units in such project on the date of submission of a notice of intent under § 248.105 to remain in the project for a period of three years, commencing on the date of prepayment or contract termination, at rent levels existing at the time of prepayment or termination, except for rent increases made necessary due to increased operating costs. 
</P>
<P>(f) <I>Replacement unit.</I> In any case in which the Commissioner requires an owner to allow tenants to occupy units under paragraph (e) of this section, an owner may fulfill the requirements of such paragraph by providing such assistance necessary for the tenant to rent a decent, safe, and sanitary unit in another project for the same 3-year period and at a rental cost to the tenant not in excess of the rental amount the tenant would have been required to pay to the owner in the owner's project, except that the tenant must freely agree to waive the right to occupy the unit in the owner's project. The provisions of paragraph (d) of this section requiring an owner who prepays or terminates an insurance contract to pay a portion of the relocation expenses incurred by displaced tenants shall also be applicable to tenants who relocate pursuant to this paragraph. 
</P>
<P>(g) <I>Applicability.</I> The provisions of paragraphs (e) and (f) of this section shall apply only to: 
</P>
<P>(1) All tenants in eligible low income housing projects located in a low-vacancy area; and 
</P>
<P>(2) Special needs tenants. 
</P>
<P>(h) <I>Low Vacancy Areas.</I> The Commissioner shall notify the owner, within 30 days of the owner's request to prepay under § 248.169, whether the project is located in a low vacancy area for purposes of paragraph (g) of this section. 
</P>
<P>(i) <I>Required acceptance of section 8 assistance.</I> Any owner who prepays the mortgage or terminates the mortgage insurance contract on eligible low income housing and maintains the project for residential rental occupancy may not refuse to rent, refuse to negotiate for the rental of, or otherwise make unavailable or deny the rental of a dwelling unit in such project to any person, or discriminate against any person in the terms, conditions, or privileges or rental of a unit, or in the provision of services or facilities in connection therewith, because the person receives tenant-based assistance under the Housing Choice Voucher Program. 
</P>
<P>(j) <I>Regional pools.</I> In providing assistance under this section, the Commissioner shall allocate the assistance on a regional basis through the regional offices of the Department of Housing and Urban Development. The Commissioner shall allocate assistance under this section in a manner so that the total number of assisted units in each such region available for occupancy by, and affordable to, low income families and persons does not decrease because of the prepayment of a mortgage on eligible low income housing or the termination of an insurance contract on such project.
</P>
<P>(k) This section shall only apply to prepayments and terminations occurring pursuant to §§ 248.157(l) and 248.169.
</P>
<CITA TYPE="N">[57 FR 12041, Apr. 8, 1992, as amended at 64 FR 26639, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 248.169" NODE="24:2.1.1.2.24.2.211.19" TYPE="SECTION">
<HEAD>§ 248.169   Permissible prepayment or voluntary termination and modification of commitments.</HEAD>
<P>(a) <I>In general.</I> Notwithstanding any limitations on prepayment or voluntary termination under subpart B of this part, an owner may terminate the low income affordability restrictions through prepayment or voluntary termination, subject to compliance with the provisions of § 248.165, under one of the following circumstances: 
</P>
<P>(1) The Commissioner approves a plan of action under § 248.153(a), but does not provide the assistance approved in such plan and contained in an executed use agreement between the Commissioner and the owner, including section 8 assistance or a loan provided under part 219 of this chapter, but not including insurance of a rehabilitation or equity take-out loan under part 241 of this chapter, during the 15-month period beginning on the date of final approval of the plan of action; 
</P>
<P>(2) After the date that the project would have been eligible for prepayment pursuant to the terms of the mortgage, notwithstanding this part, the Commissioner approves a plan of action under § 248.157 or § 248.161, but does not provide the assistance approved in such plan, including section 8 assistance, a loan provided under part 219 of this chapter, a grant provided under § 248.157(o), or a grant under § 248.161(d), before the earlier of: 
</P>
<P>(i) The expiration of the 2-month period beginning on the commencement of the first fiscal year beginning after such final approval; or 
</P>
<P>(ii) The expiration of the 6-month period beginning on the date of final approval. 
</P>
<P>(3) The Commissioner approves a plan of action under §§ 248.157 or 248.161 for any eligible low income housing not covered by paragraph (a)(2) of this section, but does not provide the assistance approved in such plan before the earlier of: 
</P>
<P>(i) The expiration of the 2-month period beginning on the commencement of the first fiscal year beginning after such final approval; or 
</P>
<P>(ii) The expiration of the 9-month period beginning on the date of final approval. 
</P>
<P>(4) An owner who intended to transfer the project to a qualified purchaser under § 248.157 or § 248.161, and fully complied with the provisions of such section, 
</P>
<P>(i) Did not receive any bona fide offers from any qualified purchasers within the applicable time periods; or 
</P>
<P>(ii) Received and accepted a bona fide offer from a qualified purchaser, but the sales transaction fell through for reasons not attributable in whole or in part to the owner, and the owner then complied with the requirements of § 248.157(l) and did not receive another bona fide offer from any qualified purchasers. 
</P>
<P>(b) <I>Section 8 assistance.</I> When providing section 8 assistance, the Commissioner may enter into a contract with an owner, contingent upon the future availability of appropriations, for the purpose of renewing expiring contracts for rental assistance as provided in appropriations acts, to extend the term of such rental assistance for such additional period or periods necessary to carry out an approved plan of action. The contract and approved plan of action shall provide that, if the Commissioner is unable to extend the term of such rental assistance or is unable to develop a revised package of incentives providing benefits to the owner comparable to those received under the original approved plan of action, the Commissioner, upon the request of the owner, shall take the following actions, subject to the limitations under the following paragraphs: 
</P>
<P>(1) Modify the binding commitments made pursuant to § 248.145(a)(2)-(10) that are dependent upon such rental assistance; or 
</P>
<P>(2) If the Commissioner determines that such modification is infeasible, permit the owner to prepay the mortgage and terminate the plan of action and any implementing use agreements or restrictions, but only if the owner agrees in writing to comply with the provisions of § 248.165. 
</P>
<P>(c) <I>Failure to provide section 8 assistance.</I> With regard to paragraph (b) of this section, the Commissioner shall notify the owner of an inability to either extend the term of section 8 rental assistance or to develop a revised package of incentives providing benefits comparable to those received under the original plan of action as soon as practicable upon discovering that fact. The owner shall inform the Commissioner in writing, within 30 days of receipt of the notice that, since the Commissioner is unable to fulfill the terms of the original plan of action, the owner intends to request that the Commissioner take action under paragraphs (b)(1) or (2) of this section. The Commissioner shall, no later than 90 days from receiving the owner's notice, take action to extend the rental assistance contract and to continue the binding commitments under § 248.145(a)(2)-(10).


</P>
</DIV8>


<DIV8 N="§ 248.173" NODE="24:2.1.1.2.24.2.211.20" TYPE="SECTION">
<HEAD>§ 248.173   Resident homeownership program.</HEAD>
<P>(a) <I>Formation of resident council.</I> Tenants seeking to purchase eligible low income housing in accordance with §§ 248.157 and 248.161 shall organize a resident council for the purpose of developing a resident homeownership program in accordance with standards established by the Commissioner. In order to fulfill the purposes of this section, the resident council shall work with a public or private nonprofit organization or a public body, including an agency or instrumentality thereof. Such organization shall have sufficient experience to enable it to help the tenants to consider their options and to develop the capacity necessary to own and manage the project, where appropriate, and shall be approved by the Commissioner. 
</P>
<P>(b) <I>Submission of expression of interest.</I> A resident council shall identify itself as such in an expression of interest submitted pursuant to § 248.157 or § 248.161 and shall state that, it is interested in purchasing the project pursuant to a homeownership program. 
</P>
<P>(c) <I>Bona fide offer.</I> When submitting an offer to purchase the project pursuant to this section, the resident council must simultaneously submit a certified list of project tenants representing at least 75 percent of the occupied units in the project, and representing at least 50 percent of all of the units in the project, who have expressed an interest in participating in the homeownership program developed by the resident council. An offer made without this certified list will not be considered a bona fide offer for the purposes of subpart B of this part. 
</P>
<P>(d) <I>Submission of a homeownership program.</I> (1) The resident council shall prepare a homeownership program acceptable to the Commissioner for giving all residents of the project an opportunity to become homeowners. The plan shall describe the major elements of, and schedules for, the homeownership program and demonstrate how the program complies with all applicable requirements of this section. The plan shall also describe the resident council's current abilities and proposed capacity-building activities to successfully carry out the homeownership program in compliance with this section. The homeownership program shall include, at a minimum, the following information: 
</P>
<P>(i) The amount of grant funds requested from the Commissioner, and the expected amounts and sources of other funding; 
</P>
<P>(ii) The proposed use of the grant funds to be received from HUD and of all other funds, including proceeds from the sale of units to initial purchasers, consistent with paragraph (h) of this section; 
</P>
<P>(iii) A summary of major rehabilitation activities to be carried out, including repairs, replacements and improvements; 
</P>
<P>(iv) The price at which the resident council intends to transfer ownership interests in, or shares representing, units in the project, broken down by unit size and/or type; the factors that will influence the establishment of such price, including, but not limited to, the resident council's acquisition cost, estimated rehabilitation costs, capitalization of reserves and organizational costs; how the price arrived at by the resident council compares to the estimated appraised value of the ownership interests or shares; and the underwriting standard that the resident council plans to use, or reasonably expects a public or private lender to use, for potential tenant purchasers, consistent with paragraph (g)(2) of this section; 
</P>
<P>(v) The expected number of very low, low and moderate income tenants that will be initial owners under the program, consistent with paragraph (g)(1) of this section; 
</P>
<P>(vi) A pro forma analysis which demonstrates the financial feasibility and viability of the homeownership program, based on the required conditions specified in paragraph (g) of this section;
</P>
<P>(vii) The financing arrangements that the tenants are expected to pursue or to be provided, including financing available through the resident council or a State or local governmental entity, and criteria for acceptability of conventional financing; 
</P>
<P>(viii) A description of the estimated costs expected to be paid by the homeowner at closing; 
</P>
<P>(ix) The type of homeownership contemplated, consistent with paragraph (f) of this section; 
</P>
<P>(x) How the marketing of currently vacant units and units occupied by nonpurchasing tenants that become vacant will affect the sales price and occupancy charges to purchasers; 
</P>
<P>(xi) A workable schedule of sale, subject to the limitations of paragraph (o) of this section, based on estimated tenant incomes; 
</P>
<P>(xii) Any restrictions on resale by homeowners over and above those specified in paragraph (i) of this section, and any restrictions on homeowners' equity, over and above those specified in paragraph (k) of this section; 
</P>
<P>(xiii) The qualifications of the resident council or the proposed management entity to manage the project, in compliance with paragraph (n) of this section; 
</P>
<P>(xiv) The expected number of non-purchasing tenants and their eligibility for section 8 rental assistance under paragraph (m)(2) of this section; 
</P>
<P>(xv) Expected scope and expenses of relocation activities, both for any temporary relocation due to rehabilitation as well as relocation assistance for nonpurchasing tenants, consistent with paragraph (m)(4) of this section; 
</P>
<P>(xvi) Expected scope and costs of technical assistance, training and counseling for the resident council, purchasers and non-purchasing tenants; and 
</P>
<P>(xvii) A certification that the resident council shall comply with the provisions of the Fair Housing Act (42 U.S.C. 3601-3619); title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d); Executive Order 11063 (3 CFR 1959-1963 comp., p. 652); section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794); the Age Discrimination Act of 1975 (42 U.S.C. 6101-6107); and all regulations issued pursuant to these statutes and authorities. 
</P>
<P>(2) The Commissioner shall give the resident council a reasonable opportunity to revise the homeownership program if approval is denied. 
</P>
<P>(e) <I>Approval of a homeownership program; assistance provided.</I> (1) When the Commissioner determines that the homeownership program submitted by the resident council meets the requirements of this section, is financially feasible, and is the least costly alternative that is consistent with establishing a viable homeownership program, the Commissioner shall approve the program. 
</P>
<P>(2) In connection with an approved homeownership program the Commissioner shall provide assistance sufficient to pay the following costs: 
</P>
<P>(i) The debt service on the federally-assisted mortgage(s) covering the project, when such mortgage is assumed by the resident council;
</P>
<P>(ii) The purchase price, which shall not exceed the transfer preservation value; 
</P>
<P>(iii) Transaction costs, as provided in § 248.157(m)(6); 
</P>
<P>(iv) Other costs, as provided in § 248.157(m)(7); 
</P>
<P>(v) The costs of rehabilitation;
</P>
<P>(vi) The establishment of an adequate reserve for replacements; and 
</P>
<P>(vii) If necessary, the establishment of operating reserve escrows including contingencies against unexpected increases in expenses or shortfalls in homeowners' payments. 
</P>
<P>(3) Upon approval of the homeownership program, the Commissioner and the resident council shall enter into an agreement, which shall include, among other matters, procedures governing the drawdown of funds and remedies for noncompliance with the requirements of this section. 
</P>
<P>(f) <I>Method of conversion.</I> The Commissioner shall approve the method for converting the project to homeownership, which may involve acquisition of ownership interests in, or shares representing, the units in a project under any arrangement determined by the Commissioner to be appropriate, such as cooperative ownership, and fee simple ownership, including condominium ownership. 
</P>
<P>(g) <I>Required conditions.</I> The Commissioner shall require that the form of homeownership impose appropriate conditions, including conditions to assure that: 
</P>
<P>(1) To the extent practicable, the number of initial owners that are very low, low, and moderate income persons at initial occupancy are of the same proportion of very low, low, and moderate income tenants (including families and persons whose incomes are 95 percent or more of area median income) as resided in the project on January 1, 1987 (or if the January 1, 1987 profile is unavailable, a certification from the owner stating its unavailability and a profile as of January 1, 1988, or, if that is also unavailable, a profile as of January 1, 1989) or as of the date of approval of the plan of action, whichever date results in the higher proportion of very low income families, except that the resident council may, at its option, increase the proportions of very low income and low income initial owners, however, no current tenant may be denied homeownership as a result of this paragraph; 
</P>
<P>(2) Projected debt service payments, occupancy charges and utilities payable by the owners shall not exceed 35 percent of the monthly adjusted gross income of the owners; 
</P>
<P>(3) The aggregate incomes of initial owners and other sources of funds for the project are sufficient to permit occupancy charges to cover the full operating costs of the project and any debt service; and 
</P>
<P>(4) Each initial owner occupies the unit it acquires for at least the initial 15 years of ownership, unless the resident council determines that the initial owner is required to move outside the market area due to a change in employment or an emergency situation. 
</P>
<P>(5) All units which remain as rental units, from the date of approval of the resident homeownership program, until they are purchased by an initial owner under the resident homeownership program, shall be maintained in accordance with § 248.145 (a)(5), (a)(6), (a)(7), (a)(8), and (a)(9).
</P>
<P>(h) <I>Use of proceeds from sales to eligible families.</I> The entity that transfers ownership interests in, or shares representing, units to eligible families, or another entity specified in the approved application, may use 50 percent of the proceeds, if any, from the initial sale for costs of the homeownership program, including improvements to the project, operating and replacement reserves for the project, additional homeownership opportunities in the project, and other project-related activities approved by the Commissioner. The remaining 50 percent of such proceeds shall be returned to the Commissioner for use under §§ 248.157 and 248.161, subject to the availability of appropriations. Such entity shall keep, and make available to the Commissioner, all records necessary to calculate accurately payments due the Commissioner under paragraph (h) of this section. 
</P>
<P>(i) <I>Restrictions on resale by homeowners.</I> Resale of a homeowner's interest in a project with an approved homeownership program may occur subject to any reasonable restrictions placed on such a transfer by the resident council and approved by the Commissioner. 
</P>
<P>(1) <I>Transfer permitted.</I> A homeowner may transfer the homeowner's ownership interest in the unit, subject to the right to purchase under paragraph (i)(2) of this section, the requirement for the purchaser to execute a promissory note, if required under paragraph (i)(3) of this section and the restrictions on retention of sales proceeds in paragraph (k) of this section. An applicant may propose in its application, and HUD may approve, reasonable restrictions on the resale of units under the program. 
</P>
<P>(2) <I>Right to purchase.</I> Where a resident management corporation, resident council, or cooperative has jurisdiction over the unit, it shall have the right to purchase the ownership interest in the unit from the initial homeowner for the amount specified in a firm contract between the homeowner and a prospective buyer. Where a resident management corporation, resident council, or a cooperative exercises a right to purchase, it shall resell the unit to an eligible family within a reasonable period of time. 
</P>
<P>(3) <I>Promissory note required.</I> At closing, the initial homeowner shall execute a nonrecourse promissory note for a term of twenty years, in a form acceptable to HUD, equal to the difference between the fair market value of the unit and the purchase price, payable to the Commissioner, together with a mortgage securing the obligation of the note. 
</P>
<P>(i) With respect to a sale by an initial homeowner, the note shall require payment upon sale by the initial homeowner, to the extent proceeds of the sale remain after paying off other outstanding debt incurred in connection with the purchase of the property, paying any other amounts due in connection with the sale, including closing costs and transfer taxes, and paying the family the amount of its equity in the property, computed in accordance with paragraph (k) of this section. 
</P>
<P>(ii) With respect to a sale by an initial homeowner during the first six years after acquisition, the family may retain only the amount computed under paragraph (k) of this section. Any excess is distributed as provided in paragraph (1) of this section. 
</P>
<P>(iii) With respect to a sale by an initial homeowner six to twenty years after acquisition, the amount payable under the note shall be reduced by 1/168th of the original principal amount of the note for each full month of ownership by the family after the end of the sixth year. The homeowner may retain all other proceeds of the sale. 
</P>
<P>(j) <I>Execution of promissory note by subsequent purchaser.</I> Where a subsequent purchaser during the 20-year period, measured by the term of the initial promissory note, purchases the property for less than the then current fair market value, the purchaser shall also execute at closing such a promissory note and mortgage, for the amount of the discount. The term of the promissory note shall be the period remaining of the original 20-year period. The note shall require payment upon sale by the subsequent homeowner, to the extent proceeds of the sale remain after paying off other outstanding debt incurred in connection with the purchase of the property, and paying any other amounts due in connection with the sale (such as closing costs and transfer taxes). The amount payable on the note shall be reduced by a percentage of the original principal amount of the note for each full month of ownership by the subsequent homeowner. The percentage shall be computed by determining the percentage of the term of the promissory note that the homeowner has owned the property. The remainder may be retained by the subsequent homeowner selling the property. 
</P>
<P>(k) <I>Homeowners' equity.</I> The amount of equity an initial homeowner has in the property is determined by computing the sum of the following: 
</P>
<P>(1) The contribution to equity paid by the family, if any, including any down payment and any amount paid towards principal on a mortgage loan during the period of ownership; 
</P>
<P>(2) The value of any improvements installed at the expense of the family during the family's tenure as owner, as determined by the resident council based on evidence of amounts spent on the improvements, including the cost of material and labor; and
</P>
<P>(3) The appreciated value, determined by applying the Consumer Price Index (urban consumers) against the contribution to equity under paragraphs (k) (1) and (2) of this section, excluding the value of any sweat equity or volunteer labor used to make improvements to the unit. The resident council may, at the time of initial sale, enter into an agreement with the family to set a maximum amount which this appreciation may not exceed.
</P>
<P>(l) <I>Use of recaptured funds.</I> Any net sales proceeds that may not be retained by the homeowner under the homeownership program approved under this section shall be paid to the HOME Investment Trust Fund for the unit of general local government in which the project is located. If the project is located in a unit of general local government that is not a participating jurisdiction, as such term is defined in § 248.101, any such net sales proceeds shall be paid to the HOME Investment Trust Fund for the State in which the project is located. With respect to any proceeds transferred to a HOME Investment Trust Fund under paragraph (1) of this section, the Commissioner shall take such actions as are necessary to ensure that the proceeds shall be immediately available for eligible activities to expand the supply of affordable housing under section 212 of the Cranston-Gonzalez National Affordable Housing Act of 1990 (42 U.S.C. 12742). The Commissioner shall monitor the HOME Investment Trust Fund for each State and unit of local government and shall require maintenance of any records necessary to calculate accurately payments due under this paragraph (1) of this section. 
</P>
<P>(m) <I>Protection of nonpurchasing families.</I> Nonpurchasing families who continue to reside in a project subject to a homeownership program approved under this section shall be protected as follows: 
</P>
<P>(1) <I>Eviction.</I> No tenant residing in an eligible property on the date the Commissioner approves a plan of action may be evicted by reason of a homeownership program approved under this section. This does not preclude evictions for material violation of the terms of occupancy of the unit. 
</P>
<P>(2) <I>Section 8 assistance.</I> If a tenant decides not to purchase a unit, or is not qualified to do so, the Commissioner shall ensure that tenant-based assistance under the Housing Choice Voucher Program in accordance with part 982 of this title is available for use in that or another property by each tenant that meets the eligibility requirements thereunder.
</P>
<P>(3) <I>Rent increases for ineligible tenants.</I> Rents for tenants who do not purchase a unit but are ineligible for assistance under paragraph (m)(2) of this section may be increased to a level that does not exceed 30 percent of the tenant's adjusted income or the section 8 existing fair market rent, whichever is lower. Rent increases shall be phased in in accordance with § 248.145(a)(6). 
</P>
<P>(4) <I>Relocation assistance.</I> The resident council shall also inform each tenant that if the tenant chooses to move, the resident council, as owner of the project, will pay relocation expenses in accordance with the approved homeownership program. The provisions of § 248.165 shall not apply to resident councils who are project owners pursuant to an approved homeownership program under this section. 
</P>
<P>(n) <I>Qualified management.</I> As a condition of approval of a homeownership program under subpart B of this section, the resident council shall have demonstrated its abilities to manage eligible properties by having done so effectively and efficiently for a period of not less than three years or by entering into a contract with a qualified management entity that meets such standards as the Commissioner may prescribe to ensure that the project will be maintained in a decent, safe and sanitary condition. 
</P>
<P>(o) <I>Timely homeownership.</I> The resident council shall acquire ownership of the project no later than 90 days after final approval of a plan of action pursuant to this section. The resident council shall transfer ownership of units in the project (other than units occupied by nonpurchasing tenants) to the tenants within a reasonable time thereafter, but in no event more than 4 years from the date of transfer of the project to the resident council. The Commissioner may seek contractual remedies against any resident council which fails to transfer ownership of all units within the 4-year period. During the interim period when the project continues to be operated and managed as rental housing, the resident council shall utilize written tenant selection policies and criteria that are approved by the Commissioner as consistent with the purpose of providing housing for very low income families. The resident council shall promptly notify in writing any rejected applicant of the grounds for any rejection. 
</P>
<P>(p) <I>Housing standards; inspections.</I> (1) Until the resident council has transferred all units in the project (other than those occupied by nonpurchasing tenants) to the initial purchasers, the project shall be maintained in accordance with the housing standards set forth in § 248.147. 
</P>
<P>(2) The Commissioner shall inspect the project at least annually in order to determine compliance with paragraph (p)(1) of this section. 
</P>
<P>(q) <I>Audits.</I> Each resident council shall be subject to the audit requirements in 2 CFR part 200, subpart F, and shall submit an annual audit to the Commissioner in such form as the Commissioner may prescribe. The resident council shall keep such records as may be reasonably necessary to fully disclose the amount and the disposition by such resident council of the proceeds of assistance received under subpart B of this part, including any proceeds from sales under paragraphs (h) and (l) of this section, the total cost of the homeownership program in connection with which such assistance is given or used, and the amount and nature of that portion of the program supplied by other sources, and such other sources as will facilitate an effective audit.
</P>
<P>The Commissioner or his or her duly authorized representative shall have access for the purpose of audit and examination to any books, documents, papers, and records of the resident council that are pertinent to assistance received under subpart B of this part. The Comptroller General of the United States, or any of the duly authorized representatives of the Comptroller General, shall also have access, for the purpose of audit and examination, to any books, documents, papers, and records of the resident council that are pertinent to assistance received under subpart B of this part.
</P>
<P>(r) <I>Reports.</I> The resident council shall submit reports, as required by the Commissioner, in order to demonstrate continued compliance with the requirements of this section. 
</P>
<P>(s) <I>Assumption of the federally assisted mortgage(s).</I> In connection with a resident homeownership plan, the resident council may assume a mortgage insured, held or assisted by the Commissioner under part 236 of this chapter or under part 221 of this chapter and bearing a below market interest rate as provided under § 221.518(b) of this chapter or may choose to pay off the mortgage. If the resident council decides to assume the mortgage, the project must be sold pursuant to § 248.175 and the project must be operated as a limited equity cooperative.
</P>
<CITA TYPE="N">[57 FR 12041, Apr. 8, 1992, as amended at 58 FR 37816, July 13, 1993; 64 FR 26639, May 14, 1999; 80 FR 75936, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 248.175" NODE="24:2.1.1.2.24.2.211.21" TYPE="SECTION">
<HEAD>§ 248.175   Resident homeownership program—limited equity cooperative.</HEAD>
<P>(a) Tenants may carry out a resident homeownership program through the purchase of eligible low income housing by a limited equity cooperative and the operation of the project as a limited equity cooperative. 
</P>
<P>(b) The purchase of a project by a limited equity cooperative and the operation of the project by the limited equity cooperative shall be carried out in accordance with the provisions of § 248.173 (a), (b), (c), (d), (except that paragraph (d)(1)(i) of this section shall include a statement of the amount and type of incentives requested, rather than only the amount of grant funds requested), (e), (g)(3), (i) (except paragraphs (i)(1) and (3)), (m) and (n).
</P>
<P>(c) The purchase and operation of eligible low income housing by a limited equity cooperative under this section shall be carried out in accordance with all provisions of subpart B of this part otherwise, applicable to the transfer and operation of a project with continued low income affordability restrictions, except as provided in this section.
</P>
<CITA TYPE="N">[57 FR 12041, Apr. 8, 1992, as amended at 58 FR 37816, July 13, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 248.177" NODE="24:2.1.1.2.24.2.211.22" TYPE="SECTION">
<HEAD>§ 248.177   Delegated responsibility to State agencies.</HEAD>
<P>(a) <I>In general.</I> The Commissioner shall delegate some or all responsibility for implementing subpart B of this part to a State housing agency if such agency submits a preservation plan acceptable to the Commissioner. 
</P>
<P>(b) <I>Approval.</I> State preservation plans shall be submitted in such a form and in accordance with such procedures as the Commissioner shall establish. The Commissioner may approve plans that contain: 
</P>
<P>(1) An inventory of low income housing located within the State that is or will be eligible low income housing under subpart B of this part within five years; 
</P>
<P>(2) A description of the agency's experience in the area of multifamily financing and restructuring; 
</P>
<P>(3) A description of the administrative resources that the agency will commit to the processing of plans of action in accordance with subpart B of this part; 
</P>
<P>(4) A description of the administrative resources that the agency will commit to the monitoring of approved plans of action in accordance with subpart B of this part; 
</P>
<P>(5) An independent analysis of the performance of the multifamily housing inventory financed or otherwise monitored by the agency; 
</P>
<P>(6) A certification by the public official responsible for submitting the consolidated plan under 24 CFR part 91 that the proposed activities are consistent with the approved consolidated plan of the State within which the eligible low income housing is located; and 
</P>
<P>(7) Such other certifications or information that the Commissioner determines to be necessary to implement an approved State preservation plan, which may include incentives that are authorized under other provisions of subpart B of this part. 
</P>
<P>(c) <I>Implementation agreements.</I> The Commissioner may enter into any agreements necessary to implement an approved State preservation plan, which may include incentives that are authorized under other provisions of subpart B of this part. 
</P>
<P>(d) <I>Fees.</I> Any State agency with responsibility so delegated under subpart B of this part may not charge any owner of eligible low income housing any fee for accepting notices of intent, processing plans of action or any other process pursuant to approval of a plan of action under subpart B of this part. This prohibition shall not preclude: 
</P>
<P>(1) An owner paying for its appraisal or share of a joint appraisal under the provisions of § 248.111; or 
</P>
<P>(2) A State agency from collecting fees normally associated with providing and processing financing insured under part 241 of this chapter.
</P>
<CITA TYPE="N">[57 FR 12041, Apr. 8, 1994, as amended at 60 FR 16379, Mar. 30, 1995]


</CITA>
</DIV8>


<DIV8 N="§ 248.179" NODE="24:2.1.1.2.24.2.211.23" TYPE="SECTION">
<HEAD>§ 248.179   Consultation with other interested parties.</HEAD>
<P>The Commissioner shall confer with any appropriate State or local government agency to confirm any State or local assistance that is available to achieve the purposes of subpart B of this part and shall give consideration to the views of any such agency when making determinations under subpart B of this part. The Commissioner shall also confer with appropriate interested parties that the Commissioner believes could assist in the development of a plan of action that best achieves the purposes of subpart B of this part.


</P>
</DIV8>


<DIV8 N="§ 248.181" NODE="24:2.1.1.2.24.2.211.24" TYPE="SECTION">
<HEAD>§ 248.181   Notice to tenants.</HEAD>
<P>Except as provided in §§ 248.105 and 248.133, with respect to the first and second notices of intent, with regard to all provisions of subpart B of this part which mandate that information or material be given to the tenants, by the Commissioner, the owner, or a qualified purchaser, or other party, this requirement shall be satisfied where the notifying entity: 
</P>
<P>(a) Posts a copy of the information or material in readily accessible locations within each affected building, or posts notices in each location describing the information or material and specifying a location, as convenient to the tenants as is reasonably practical, where a copy may be examined and copied during reasonable hours; and 
</P>
<P>(b) Supplies a copy of the information or material to a tenant representative, if any. 


</P>
</DIV8>


<DIV8 N="§ 248.183" NODE="24:2.1.1.2.24.2.211.25" TYPE="SECTION">
<HEAD>§ 248.183   Preemption of State and local laws.</HEAD>
<P>(a) <I>In general.</I> No State or political subdivision of a State may establish, continue in effect, or enforce any law or regulation that: 
</P>
<P>(1) Restricts or inhibits the prepayment of any mortgage described in § 248.101 or the voluntary termination of any insurance contract pursuant to § 207.253 of this chapter on eligible low income housing projects; 
</P>
<P>(2) Restricts or inhibits an owner of such projects from receiving the authorized annual return provided under § 248.121; 
</P>
<P>(3) Is inconsistent with any provision of subpart B of this part, including any law, regulation, or other restriction that limits or impairs the ability of any owner of eligible low income housing to receive incentives authorized under subpart B of this part, including authorization to increase rental rates, transfer the project, obtain secondary financing, or use the proceeds of any such incentives; or 
</P>
<P>(4) In its applicability to low income housing is limited only to eligible low income housing for which the owner has prepaid the mortgage or terminated the insurance contract. 
</P>
<P>(b) <I>Effect.</I> Any law, regulation or restriction described in paragraph (a) of this section shall be ineffective and any eligible low income housing exempt from the law, regulation, or restriction, only to the extent that it violates the provisions of this section. 
</P>
<P>(c) <I>Laws of general applicability: contractual restrictions.</I> This section shall not prevent the establishment, continuing in effect, or enforcement of any law or regulation of any State or political subdivision of a State not inconsistent with the provision of this subpart, such as any law or regulation relating to building standards, zoning limitations, health, safety, or habitability standards for housing, rent control, or conversion of rental housing to condominium or cooperative ownership, to the extent such law or regulation is of general applicability to both projects receiving Federal assistance and nonassisted projects. This section shall not preempt, annul or alter any contractual restrictions or obligations existing before November 28, 1990 or voluntarily entered into by an owner of eligible low income housing on or after that date, and that limit or prevent that owner from prepaying the mortgage on the project or terminating the mortgage insurance contract.
</P>
<CITA TYPE="N">[57 FR 12041, Apr. 8, 1992, as amended at 57 FR 57314, Dec. 3, 1992]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:2.1.1.2.24.3" TYPE="SUBPART">
<HEAD>Subpart C—Prepayment and Plans of Action Under the Emergency Low Income Preservation Act of 1987</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>55 FR 38952, Sept. 21, 1990, unless otherwise noted. Redesignated at 57 FR 12041, Apr. 8, 1992. 


</PSPACE></SOURCE>

<DIV8 N="§ 248.201" NODE="24:2.1.1.2.24.3.211.1" TYPE="SECTION">
<HEAD>§ 248.201   Definitions.</HEAD>
<P>The terms <I>Fair Market Rent (FMR)</I> and <I>Section 8</I> are defined in 24 CFR part 5. 
</P>
<P><I>Adjusted Income.</I> Annual income, as specified in § 251.21 of this chapter, less allowances specified in the definition of <I>Adjusted Income</I> in § 215.1 of this chapter.
</P>
<P><I>Allowable Distributions.</I> The amount of cash or other assets that the owner may withdraw from the project under the terms of the regulatory agreement, applicable regulations, and administrative instructions, including the segregation of cash or assets for subsequent withdrawal, and excluding repayment of advances made for reasonable and necessary expenses incident to the operation and maintenance of the project.
</P>
<P><I>Capital Improvement Loan.</I> A direct loan originated by the Commissioner under part 219, subpart C of this chapter.
</P>
<P><I>Eligible Low Income Housing.</I> Any housing financed by a mortgage—
</P>
<P>(a) That is—
</P>
<P>(1) Insured or held by the Commissioner under section 221(d)(3) of the National Housing Act and assisted under part 886, subpart A of this title because of a conversion from assistance under part 215 of this chapter;
</P>
<P>(2) Insured or held by the Commissioner under part 221 of this chapter and bearing a below market interest rate as provided under § 221.518(b) of this chapter;
</P>
<P>(3) Insured, assisted, or held by the Commissioner or a State or State agency under part 236 of this chapter; or
</P>
<P>(4) A purchase money mortgage held by the Commissioner with respect to a project which, immediately prior to HUD's acquisition, would have been classified under paragraph (a) (1), (2), or (3) of this definition; and
</P>
<P>(b) That, under regulation or contract in effect before November 1, 1987, is, or within one year from the date of the notice of intent would become, eligible for prepayment without the prior approval of the Commissioner.
</P>
<P><I>Equity.</I> The Owner's investment in the housing project, as approved or determined by the Commissioner.
</P>
<P><I>Equity Loan.</I> A loan insured by the Commissioner under part 241, subpart E of this chapter.
</P>
<P><I>Flexible Subsidy Assistance.</I> Assistance provided by the Commissioner under part 219 of this chapter, other than a capital improvement loan.
</P>
<P><I>Good Cause.</I> Temporary or permanent uninhabitability of the project justifying relocation of all or some of the project's tenants (except where such uninhabitability is caused by the actions or inaction of the owner), or actions of the tenant that, under the terms of the tenant's lease and applicable regulations, constitute a basis for eviction.
</P>
<P><I>Limited Equity Cooperative.</I> A cooperative housing corporation in which income eligibility of purchasers or appreciation upon resale of membership shares, or both, are restricted in order to maintain the housing as available to and affordable by low and moderate income families and persons.
</P>
<P><I>Low Income Affordability Restrictions.</I> Limits imposed by regulation or regulatory agreement on tenant rents, rent contributions, or income eligibility with respect to eligible low income housing.
</P>
<P><I>Low-Income Families.</I> Families or persons whose incomes do not exceed the levels established for low-income families under part 5 of this title.
</P>
<P><I>Moderate Income Families.</I> Families or persons whose incomes are between 80 percent and 95 percent of median area income, as determined by the Commissioner with adjustments for smaller and larger families.
</P>
<P><I>Mortgage.</I> The mortgage or deed of trust insured or held by the Commissioner or a State or State agency under parts 221 or 236 of this chapter, or the purchase money mortgage taken back by the Commissioner in connection with the sale of a HUD-owned project and held by the Commissioner, where such mortgage, deed of trust or purchase money mortgage is secured by eligible low income housing.
</P>
<P><I>Notice of Intent.</I> An owner's notification of its intent to seek prepayment of its mortgage, termination of the mortgage insurance contract or amendment of the mortgage or regulatory agreement pursuant to this part.
</P>
<P><I>Owner.</I> The mortgagor or trustor under the mortgage secured by eligible low income housing.
</P>
<P><I>Plan of Action.</I> A plan providing for prepayment of the mortgage, termination of the mortgage insurance contract, or continuation of the mortgage in place, and providing for either the termination of low income affordability restrictions, or the continuation of the project's use as low-income housing under modified terms and conditions.
</P>
<P><I>Prepayment.</I> Prepayment in full of a mortgage, or a partial prepayment or series of partial prepayments that reduce the mortgage term by at least six months, except where the prepayment in full or partial prepayment results from the application of condemnation proceeds.
</P>
<P><I>Project oversight costs.</I> Reasonable expenses incurred by a nonprofit purchaser in carrying out its ongoing ownership responsibilities under an approved plan of action. Project oversight costs must be directly related to educating the nonprofit purchaser's board of directors or otherwise supporting the board in its decision making. Project oversight costs may include staff, overhead, or third-party contract costs for:
</P>
<P>(1) Ensuring adequate and responsible participation by the board of directors and the membership of the nonprofit purchaser in ownership decisions, including ensuring resident input in these decisions;
</P>
<P>(2) Facilitating long-range planning by the board of directors to ensure the physical, financial and social viability of the project for the entire time the project is maintained as low income housing; and
</P>
<P>(3) Assisting the ownership in complying with regulatory, use, loan and grant agreements.
</P>
<P><I>Regulatory Agreement.</I> The agreement executed by the owner and the Commissioner or a State agency providing for the Commissioner's regulation of the operation of the project.
</P>
<P><I>Reserve for Replacements.</I> The escrow fund established under the regulatory agreement for the purpose of ensuring the availability of funds for needed repair and replacement costs.
</P>
<P><I>Residual Receipt Fund.</I> The fund established under the regulatory agreement for holding cash remaining after deducting from the surplus cash, as defined by the regulatory agreement, the amount of all allowable distributions.
</P>
<P><I>Return on Investment.</I> The amount of allowable distributions, tax benefits, and other income or benefits received by the owner, as a percentage of the equity.
</P>
<P><I>Termination of Low Income Affordability Restrictions.</I> The elimination of low income affordability restrictions under the regulatory agreement through termination of mortgage insurance or prepayment of the mortgage. 
</P>
<P><I>Use Agreement.</I> An agreement or covenant which is executed and recorded in the appropriate land records in connection with an approved plan of action, has lien priority over other mortgages and liens, is binding upon the owner and its successors and assigns, is enforceable by the Commissioner and by tenants, contains appropriate reporting requirements, and restricts or governs the use and operation of the project with respect to rent levels and increases, relocation, and, where appropriate, tenant eligibility, civil rights and other requirements. All tenants in occupancy at the time that the plan of action is approved will receive a copy of the use agreement. 
</P>
<P><I>Very Low Income Families.</I> Families or persons whose incomes do not exceed the level established for very low income families under section 3(b) of the 1937 Act (42 U.S.C. 1437a(b)).
</P>
<CITA TYPE="N">[55 FR 38952, Sept. 21, 1990. Redesignated at 57 FR 12041, Apr. 8, 1992, and amended at 57 FR 57314, Dec. 3, 1992; 58 FR 37816, July 13, 1993; 61 FR 5207, Feb. 9, 1996; 64 FR 26639, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 248.203" NODE="24:2.1.1.2.24.3.211.2" TYPE="SECTION">
<HEAD>§ 248.203   General prepayment limitation.</HEAD>
<P>(a) An owner of eligible low income housing may prepay, and a mortgagee may accept prepayment of, a mortgage on such housing only in accordance with a plan of action approved by the Commissioner. 
</P>
<P>(b) A mortgage insurance contract with respect to eligible low income housing may be terminated pursuant to section 229 of the National Housing Act only in accordance with a plan of action approved by the Commissioner. 
</P>
<P>(c) A mortgagee's acceptance of a prepayment in violation of paragraph (a) or termination of a mortgage insurance contract in violation of paragraph (b) of this section is grounds for administrative action under parts 24 and 25 of this title, in addition to any other remedies available by law, including rescission of the prepayment or reinstatement on the insurance contract.


</P>
</DIV8>


<DIV8 N="§ 248.211" NODE="24:2.1.1.2.24.3.211.3" TYPE="SECTION">
<HEAD>§ 248.211   Notice of intent to prepay.</HEAD>
<P>(a) An owner of eligible low-income housing seeking to prepay its mortgage or to negotiate changes in the terms of the mortgage or regulatory agreement in accordance with this part, including termination of the insurance contract pursuant to section 229 of the National Housing Act, shall file a notice of intent with the HUD field office in whose jurisdiction the project is located, and shall file a duplicate copy with the HUD Headquarters Office of Multifamily Housing Management, 451-7th Street, SW., Washington, DC 20410. The notice of intent shall identify the project by name, project number and location, briefly describe the owner's plans for the project, including any timetables or deadlines for actions to be taken, and the reason the owner seeks to prepay the mortgage or change the terms of the mortgage or regulatory agreement, and briefly describe any contacts that the owner has made or is making with other governmental agencies or other interested parties in connection with the notice of intent. 
</P>
<P>(b) An owner simultaneously shall file the notice of intent with: 
</P>
<P>(1) The chief executive officer of the appropriate State or local government in which the project is located, or any officer designated by executive order or State or local law to receive such information; 
</P>
<P>(2) Each tenant in the project; and 
</P>
<P>(3) The mortgagee.
</P>
<FP>In addition, the owner shall post a copy of the notice of intent in each occupied building in the project.
</FP>
<P>(c) Upon receipt of a notice of intent, the Commissioner will provide the owner with information that the owner needs to prepare a plan of action. This information shall include information regarding the Commissioner's standards under § 248.221 of this part regarding the approval of a plan of action involving termination of low income affordability restrictions, and any relevant market area and demographic information that the Secretary has custody of and that the owner may use in preparing the plan of action; in addition, it shall include at a minimum a list of the Federal incentives authorized under § 248.231 of this part for those projects for which a plan of action involving termination of low income affordability restrictions would not be approvable. 
</P>
<P>(d) Filing a notice of intent with the Commissioner will lead to one of the following results: 
</P>
<P>(1) Where the project meets the requirements of § 248.221 of this part— 
</P>
<P>(i) The Commissioner will approve the prepayment or the termination of mortgage insurance pursuant to § 248.221 of this part, and all low income affordability restrictions will be terminated with respect to some or all of the units; however, the owner would be responsible for ensuring that displaced current tenants are relocated to affordable housing, if necessary. 
</P>
<P>(ii) The Commissioner will approve the prepayment or termination of mortgage insurance pursuant to § 248.221 of this part, and all low income affordability restrictions will be terminated, except (where necessary because the project is located in a housing market where there is insufficient comparable, decent, safe and sanitary affordable housing to meet the needs of all current tenants) with regard to protection of current very low income, low income and moderate income tenants; 
</P>
<P>(2) Where the plan of action would not be approvable under § 248.221 of this part— 
</P>
<P>(i) The Commissioner will approve prepayment or the termination of mortgage insurance, but the owner will receive assistance under a State, local or other Federal government housing program, and will receive incentives pursuant to § 248.231 of this part from the Federal government in return for agreeing to conditions related to the continued use of the project as low income housing in accordance with § 248.233 of this part. 
</P>
<P>(ii) The Commissioner will not approve prepayment or the termination of mortgage insurance, but will provide incentives to the owner pursuant to § 248.231 of this part in accordance with a plan of action meeting the standards of § 248.233 of this part;
</P>
<P>(iii) The Commissioner will not approve prepayment or the termination of mortgage insurance, but, after failing to reach agreement on a negotiated plan of action, the owner and the Commissioner will agree to a package of incentives and restrictions prescribed by § 248.241 of this part; or
</P>
<P>(iv) The Commissioner will not approve prepayment or the termination of mortgage insurance, and will not offer incentives of any kind.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0378)
</APPRO>
<CITA TYPE="N">[55 FR 38952, Sept. 21, 1990. Redesignated at 57 FR 12041, Apr. 8, 1992, and amended at 58 FR 37816, July 13, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 248.213" NODE="24:2.1.1.2.24.3.211.4" TYPE="SECTION">
<HEAD>§ 248.213   Plan of action.</HEAD>
<P>(a) <I>Preparation and submission.</I> The owner shall submit the plan of action to the Commissioner in such form and manner as the Commissioner shall prescribe. The owner may submit the plan of action simultaneously to any appropriate State or local government agency, which shall, in reviewing the plan, consult with representatives of the tenants of the housing. An owner shall submit the plan of action to the Commissioner in such form and manner as the Commissioner shall prescribe. The owner shall notify the tenants of the plan of action by posting in each occupied building a summary of the plan of action and by delivery of a copy of the plan of action to the tenant representative, if any. In addition, the summary must indicate that a copy of the plan of action shall be available from the tenant representatives, whose names, addresses and telephone numbers are indicated on the summary, the local HUD field office, and the on-site office for the project, or if one is not available, in the location where rents are collected, for inspection and copying, at a reasonable cost, during normal business hours. Simultaneously with the submission to the Commissioner, the owner shall submit the plan of action to that officer of State or local government to whom the owner submitted a notice of intent under § 248.211(b). The summary of the plan of action posted by the owner and the copies of the plan of action submitted to the tenant representative and the officer of State or local government shall all state that, upon request, the tenants and the State or local government, may obtain from the owner or from the local HUD field office a copy of all documentation supporting the plan of action except for that documentation deemed “proprietary information” under § 248.101.
</P>
<P>(b) <I>Contents.</I> The plan of action shall include:
</P>
<P>(1) A description of any proposed changes in the status or terms of the mortgage or regulatory agreement, which may include a request for incentives to extend the low income use of the housing, as authorized under § 248.231 of this part; or may include a request to terminate the insurance contract.
</P>
<P>(2) A description of any assistance that could be provided by State or local government agencies, as determined by prior consultation between the owner and the agencies;
</P>
<P>(3) A description of any proposed changes in the low income affordability restrictions;
</P>
<P>(4) A description of any proposed changes in ownership related to the plan of action, prepayment or termination of mortgage insurance;
</P>
<P>(5) An assessment of the effect of the proposed changes on existing tenants.
</P>
<P>(6) In the case of a plan of action involving incentives, an appraisal using the residential income approach;
</P>
<P>(7) In the case of a plan of action involving the termination of low income affordability restrictions, a statement of the effect, if any, of the proposed changes on the supply of housing affordable to low and very low income families in the community within which the housing is located and in the area that the housing could reasonably be expected to serve; and
</P>
<P>(8) A market study which demonstrates that the project is located in a market area that would enable the Commissioner to make the findings set forth at § 248.221(b)(1); and
</P>
<P>(9) A list of any waivers requested by the owner pursuant to § 248.7 of this part; and 
</P>
<P>(10) Any other information which the owner may choose to submit which would enable the owner to meet the criteria for approval of the proposed plan of action.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0378)
</APPRO>
<CITA TYPE="N">[55 FR 38952, Sept. 21, 1990. Redesignated and amended at 57 FR 12041, 12060, Apr. 8, 1992; 58 FR 37816, July 13, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 248.215" NODE="24:2.1.1.2.24.3.211.5" TYPE="SECTION">
<HEAD>§ 248.215   Notification of deficiencies.</HEAD>
<P>Not later than 60 days after receipt of a plan of action, the Commissioner will notify the owner in writing of any deficiencies that prevent the plan of action from being approved. If deficiencies are found, the notice shall describe ways, if any, in which the plan of action could be revised to meet the criteria for approval. 


</P>
</DIV8>


<DIV8 N="§ 248.217" NODE="24:2.1.1.2.24.3.211.6" TYPE="SECTION">
<HEAD>§ 248.217   Revisions to plan of action.</HEAD>
<P>The owner may from time to time revise the plan of action before its approval as may be necessary to obtain the commissioner's approval thereof. An owner shall submit any revision to the Commissioner, and provide a copy of the revision and all documentation supporting the revision except for that documentation deemed “proprietary information” under § 248.101, to the parties, and in the manner, specified in § 248.213(a).
</P>
<CITA TYPE="N">[58 FR 37817, July 13, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 248.218" NODE="24:2.1.1.2.24.3.211.7" TYPE="SECTION">
<HEAD>§ 248.218   Tenant notice and opportunity to comment.</HEAD>
<P>When the owner and the Commissioner have reached preliminary agreement on the terms of a plan of action, the Commissioner shall prepare a summary of such terms and the anticipated impact of the plan of action on the current tenants. The owner shall send a copy of the summary to each tenant in the project, and shall post a copy of the summary in each occupied building in the project. The summary shall notify tenants that they have sixty calendar days in which to submit any comments to the Commissioner, who shall take any such comments into account before giving final approval to the plan of action.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0378)


</APPRO>
</DIV8>


<DIV8 N="§ 248.219" NODE="24:2.1.1.2.24.3.211.8" TYPE="SECTION">
<HEAD>§ 248.219   Notification of approval.</HEAD>
<P>(a) Not later than 180 days after initial receipt of a plan of action, or within such longer period as the owner requests, the Commissioner shall notify the owner in writing whether the plan of action, including any revisions, is approved. 
</P>
<P>(b) If approval is withheld, the notice will— 
</P>
<P>(1) Describe the reasons for withholding approval, including prolonged delay by the owner in submitting a revised plan of action; 
</P>
<P>(2) Describe the actions that could be taken to meet the criteria for approval; and 
</P>
<P>(3) Afford the owner a reasonable opportunity to revise the plan of action and seek approval. 


</P>
</DIV8>


<DIV8 N="§ 248.221" NODE="24:2.1.1.2.24.3.211.9" TYPE="SECTION">
<HEAD>§ 248.221   Approval of a plan of action that involves termination of low income affordability restrictions.</HEAD>
<P>The Commissioner may approve a plan of action that involves termination of the low income affordability restrictions only upon a written finding that—
</P>
<P>(a) Implementation of the plan of action will not materially increase economic hardship for current tenants (and will not in any event result in: (1) A monthly rental payment by a current tenant that exceeds 30 percent of the monthly adjusted income of the tenant or an increase in the monthly rental payment in any year that exceeds 10 percent, whichever is lower, or (2) in the case of a current tenant who already pays more than such percentage, an increase in the monthly rental payment in any year that exceeds the increase in the Consumer Price Index or 10 percent, whichever is lower) or involuntarily displace current tenants (except for good cause) where comparable and affordable housing is not readily available, determined without regard to the availability of Federal housing assistance that would address any such hardship or involuntary displacement. Notwithstanding this limitation, the Commissioner may provide housing assistance to tenants if such assistance is not essential to the Commissioner's determination that the requirements of this paragraph have been met. The owner will agree to execute and allow the recordation of use agreements, where such agreements are necessary to safeguard current tenants against such adverse effects. Such use agreements will include a requirement that the owner comply with those provisions of part 247 of this chapter which relate to evictions; and 
</P>
<P>(b)(1) The supply of vacant, comparable housing is sufficient to ensure that the prepayment will not materially affect— 
</P>
<P>(i) The availability of decent, safe and sanitary housing affordable to low-income and very low income families in the area that the housing could reasonably be expected to serve; 
</P>
<P>(ii) The ability of low-income and very low income families to find decent, safe and sanitary housing near employment opportunities; or 
</P>
<P>(iii) The housing opportunities of minorities in the community within which the housing is located; or 
</P>
<P>(2) The plan of action has been approved by the appropriate State agency and any appropriate local government agency for the jurisdiction in which the housing is located as being in accordance with a State strategy approved by the Commissioner under § 248.223 of this part.
</P>
<P>(c) There are no open audit findings, open findings of noncompliance with title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d); the Fair Housing Act (42 U.S.C. 3601-3619); Executive Order 11063 (3 CFR 1959-1963 comp., p. 652); the Age Discrimination Act of 1975 (42 U.S.C. 6101-6107); section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794); and all regulations promulgated under such statutes and authorities (including, but not limited to, 24 CFR part 100), or outstanding violations of the regulatory agreement.
</P>
<P>(d) Any plan of action approved under this section shall specify actions that the Commissioner and the owner shall take to ensure that tenants displaced as a result of the termination of low income affordability restrictions are relocated to affordable housing.
</P>
<CITA TYPE="N">[55 FR 38952, Sept. 21, 1990. Redesignated and amended at 57 FR 12041, 12060, Apr. 8, 1992]


</CITA>
</DIV8>


<DIV8 N="§ 248.223" NODE="24:2.1.1.2.24.3.211.10" TYPE="SECTION">
<HEAD>§ 248.223   Alternative State strategy.</HEAD>
<P>(a) The Commissioner may approve a State strategy providing for State approval of plans of action that involve termination of low income affordability restrictions only upon finding that it is a practicable statewide strategy that ensures at a minimum that— 
</P>
<P>(1) Current tenants will not be involuntarily displaced (except for good cause); 
</P>
<P>(2) Housing opportunities for minorities will not be adversely affected in the communities in which the housing is located;
</P>
<P>(3) Any increase in rent for current tenants will be to a level that does not exceed 30 percent of the adjusted income of the tenants or fair market rent, whichever is lower, and any increase not necessitated by increased operating costs shall be phased in equally over not less than 3 years if the increase exceeds 10 percent;
</P>
<P>(4) Housing approved under the State strategy will remain affordable to very low income, low income and moderate income families for not less than the remaining term of the mortgage, if the housing is to be made available for rental use, or for not less than 40 years, if the housing is to be made available for homeownership;
</P>
<P>(5)(i) Not less than 80 percent of all units in eligible low income housing approved under the State strategy will be retained as affordable to families or persons meeting the income eligibility standards for initial occupancy that applied to housing on January 1, 1987; and 
</P>
<P>(ii) Not less than 60 percent of the units in any one project will remain available to and affordable by such families or persons, within which not less than 20 percent of the units will remain available to and affordable by very low income families;
</P>
<P>(6) Expenditures for rehabilitation, maintenance and operation will be at a level necessary to maintain the housing as decent, safe and sanitary and for the period specified in paragraph (a)(4) of this section;
</P>
<P>(7) Not less than 25 percent of new assistance required to maintain the housing as available to and affordable by low income families in accordance with this section shall be provided through State and local actions, such as tax exempt financing, low income tax credits, State or local tax concessions, the provision of funds from housing finance agency reserves or housing trust funds, taxable bonds, and other incentives provided by the State or local governments; and 
</P>
<P>(8) For each unit of eligible low income housing approved under the State strategy that is not retained as affordable housing to families or persons meeting the income eligibility standards for initial occupancy on January 1, 1987, the State will provide, with State funds, one additional unit of comparable housing in the same market area that is available to and affordable by such families and persons. Such units will be provided by conversion of existing units or construction of new units. These units or funds will be made available before the Commissioner approves the State strategy.
</P>
<P>(b) <I>Additional requirements.</I> (1) The State must enter into all agreements necessary to carry out the State strategy before receiving the Commissioner's approval.
</P>
<P>(2) Each State strategy shall include any other provision that the Commissioner determines to be necessary to implement the approved State strategy.


</P>
</DIV8>


<DIV8 N="§ 248.231" NODE="24:2.1.1.2.24.3.211.11" TYPE="SECTION">
<HEAD>§ 248.231   Incentives to extend low income use.</HEAD>
<P>The Commissioner may agree to provide one or more of the following incentives to induce the project owner to extend the low income use of the project, if the Commissioner determines that such incentives are warranted under the standards in § 248.233 of this part:
</P>
<P>(a) An increase in the allowable distribution, or other measures to increase the rate of return;
</P>
<P>(b) Revisions to the method of calculating equity;
</P>
<P>(c) Increased access to residual receipts funds or excess reserve for replacements funds;
</P>
<P>(d) Provision of insurance for an equity loan;
</P>
<P>(e) An increase in the rents permitted under an existing section 8 contract, within statutory and regulatory limits otherwise applicable, or (subject to the availability of amounts provided in appropriations Acts) additional assistance under section 8 or an extension of any project-based assistance attached to the housing;
</P>
<P>(f) Provision of a capital improvement loan;
</P>
<P>(g) Other actions to facilitate a transfer or sale of the housing to a qualified nonprofit organization, limited equity tenant cooperative, public agency, or other entity acceptable to the Commissioner, such as expedited review of a request for approval of a transfer of physical assets;
</P>
<P>(h) Provision of flexible subsidy assistance;
</P>
<P>(i) Termination of HUD's limitations on distributions, and release of residual receipts and reserve for replacements funds, through prepayment of the mortgage; and
</P>
<P>(j) Any other incentives for which the owner is eligible.


</P>
</DIV8>


<DIV8 N="§ 248.233" NODE="24:2.1.1.2.24.3.211.12" TYPE="SECTION">
<HEAD>§ 248.233   Approval of a plan of action that includes incentives.</HEAD>
<P>The Commissioner may approve a plan of action that includes incentives, whether or not the plan of action allows for the prepayment of the mortgage, only upon a finding that—
</P>
<P>(a) After taking into account local market conditions, the incentives are necessary to achieve the purposes of this part;
</P>
<P>(b) The incentives are necessary to provide a fair rate of return to the owner. Incentives will only be provided in cases where the project's current use does not represent its highest and best use;
</P>
<P>(c) The incentives are the least costly alternative for the Federal government to achieve the purposes of this part with respect to the housing;
</P>
<P>(d) Binding commitments have been made to ensure that—
</P>
<P>(1) The housing will be retained as housing affordable for very low income families, low-income families, and moderate income families for the remaining term of the mortgage;
</P>
<P>(2) Throughout the remaining term of the mortgage, adequate expenditures will be made for the proper maintenance and operation of the housing;
</P>
<P>(3) Current tenants will not be involuntarily displaced (except for good cause);
</P>
<P>(4) Any increase in rent contributions for current tenants will be to a level that does not exceed 30 percent of the adjusted income of the tenant or the fair market rent, whichever is lower;
</P>
<P>(5) Any resulting increase in rents for current tenants (except for increases made necessary by increased operating costs) will be phased in equally over a period of not less than 3 years, if the increase is 30 percent or more, and will be limited to not more than 10 percent per year, if the increase is more than 10 percent but less than 30 percent;
</P>
<P>(6) Subject to the availability of funds, the Commissioner shall provide, and the owner shall accept, assistance under section 8 if the Commissioner determines that such assistance is necessary to mitigate any adverse effect of the rent increases on current tenants eligible for section 8 assistance; and
</P>
<P>(7) Rents for units becoming available to new tenants will be at levels approved by the Commissioner that will ensure, to the extent practicable, that the units will be available to and affordable, with 30 percent of adjusted income, by the same proportion of very low income families, low-income families, and moderate income families as resided in the housing as of January 1, 1987 (based on the area median income limits established by the Commissioner in February 1987), or the date the plan of action is approved, whichever date results in the highest proportion of very low income families.
</P>
<P>(i) For purposes of paragraph (d)(7) of this section—
</P>
<P>(A) The percentage of moderate income families in occupancy as of January 1, 1987 shall include families who were admitted to the project as very low income, low income, or moderate income families but whose incomes had increased beyond the limit for moderate income families by January 1, 1987; and 
</P>
<P>(B) The proportions established shall not prohibit a higher proportion of very low income families from occupying the housing.
</P>
<P>(ii) In approving rents under paragraph (d)(7) of this section, the Commissioner will take into account any additional incentives provided under this part and will make provision for annual rent adjustments necessary as a result of future reasonable increases in operating costs. 
</P>
<P>(e) In cases where the owner agrees to maintain only a portion of the project as low income housing, the incentives provided under § 248.231 of this part and the standards imposed under this section shall be adjusted accordingly.
</P>
<P>(f) The Commissioner shall not approve a plan of action under this section if there are open findings of noncompliance with title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d); the Fair Housing Act (42 U.S.C. 3601-3619); Executive Order 11063 (3 CFR 1959-1963 comp., p. 652); the Age Discrimination Act of 1975 (42 U.S.C. 6101-6107); section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794); and all regulations promulgated under such statutes and authorities, or if there are open audit findings with respect to violations of the regulatory agreement.
</P>
<CITA TYPE="N">[55 FR 38952, Sept. 21, 1990. Redesignated and amended at 57 FR 12041, 12060, Apr. 8, 1992] 


</CITA>
</DIV8>


<DIV8 N="§ 248.234" NODE="24:2.1.1.2.24.3.211.13" TYPE="SECTION">
<HEAD>§ 248.234   Section 8 rental assistance.</HEAD>
<P>(a) When providing rental assistance under section 8, the Commissioner may enter into a contract with an owner, contingent upon the future availability of appropriations for the purpose of renewing expiring contracts for rental assistance as provided in appropriations Acts, to extend the term of such rental assistance for such additional period or periods as is necessary to carry out an approved plan of action. 
</P>
<P>(b) The contract and the approved plan of action shall provide that, if the Commissioner is unable to develop a revised package of incentives providing benefits to the owner comparable to those received under the original approved plan of action, the Commissioner, upon the request of the owner, shall take the following actions (subject to the limitations under the following paragraphs): 
</P>
<P>(1) Modification of the binding commitments made pursuant to § 248.233(d) that are dependent on such rental assistance. 
</P>
<P>(2) If action under paragraph (b)(1) is not feasible, release of an owner from the binding commitments made pursuant to § 248.233(d) that are dependent on such rental assistance. 
</P>
<P>(3) If actions under paragraphs (b)(1) and (2) would, in the determination of the Commissioner, result in the default of the insured loan, approval of the revised plan of action, notwithstanding § 248.221, that involves the termination of low-income affordability restrictions. 
</P>
<P>(c) The approved plan of action shall specify actions that the Commissioner and the owner shall take to ensure that any tenants displaced as a result of actions taken under paragraph (b) of this section are relocated to affordable housing. 
</P>
<P>(d) At least 30 days prior to making a request under the preceding sentence, an owner shall notify the Commissioner of the owner's intention to submit the request. The Commissioner shall have a period of 90 days following receipt of such notice to take action to extend the rental assistance contract and to continue the binding commitments under paragraph (b).
</P>
<CITA TYPE="N">[55 FR 38952, Sept. 21, 1990. Redesignated and amended at 57 FR 12041, 12060, Apr. 8, 1992] 


</CITA>
</DIV8>


<DIV8 N="§ 248.241" NODE="24:2.1.1.2.24.3.211.14" TYPE="SECTION">
<HEAD>§ 248.241   Modification of existing regulatory agreements.</HEAD>
<P>(a) If a plan of action is not approved within 300 days after initial submission, the Commissioner may, upon request of the owner and upon making a determination that the project's current use does not represent its highest and best use, modify existing regulatory agreements to— 
</P>
<P>(1) Prevent involuntary displacement of current tenants (except for good cause);
</P>
<P>(2) Ensure that adequate expenditures will be made for maintenance and operation of the housing;
</P>
<P>(3) Extend (subject to the availability of funds) any expiring project-based assistance on the housing for the term of the agreement;
</P>
<P>(4) Permit an increase in the allowable distribution that could be accommodated by an increase in the rents on occupied units to a level no higher than 30 percent of the adjusted income of the tenants, as determined by the Commissioner, except that rents shall not exceed the fair market rent, and any resulting increase in rents for current tenants shall be phased in equally over a period of no less than 3 years, unless such increase is less than 10 percent; and 
</P>
<P>(5) Ensure that units becoming vacant during the term of the agreement are made available in accordance with § 248.233(d)(7) of this part.
</P>
<P>(b) <I>Expiration.</I> Agreements entered into under this section shall expire on February 5, 1992, unless earlier superseded by an agreement implementing a HUD-approved plan of action. Upon such expiration of the agreement on February 5, 1992, the housing covered by the agreement shall be subject to any law then affecting low income affordability restrictions.


</P>
</DIV8>


<DIV8 N="§ 248.251" NODE="24:2.1.1.2.24.3.211.15" TYPE="SECTION">
<HEAD>§ 248.251   Consultation with other interested parties.</HEAD>
<P>The Commissioner will confer with any appropriate State or local government agency to confirm any State or local assistance that is available to achieve the purposes of this part and will give consideration to the views of the State or local agency when making the determinations under §§ 248.221 and 248.233 of this part. The Commissioner also will confer with other interested parties that the Commissioner believes could assist in the development of a plan of action that best achieves the purposes of this part.


</P>
</DIV8>


<DIV8 N="§ 248.261" NODE="24:2.1.1.2.24.3.211.16" TYPE="SECTION">
<HEAD>§ 248.261   Agreements implementing plans of action and State strategies.</HEAD>
<P>The Commissioner is authorized to enter into agreements, including those for the provision of incentives, necessary to implement any plan of action or State strategy approved by the Commissioner under this part. 


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:2.1.1.2.24.4" TYPE="SUBPART">
<HEAD>Subpart D—State Preservation Project Assistance</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>57 FR 12060, Apr. 8, 1992, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 248.300" NODE="24:2.1.1.2.24.4.211.1" TYPE="SECTION">
<HEAD>§ 248.300   General.</HEAD>
<P>Upon application by a State agency or a local public housing agency, the Commissioner may make available assistance for use in preventing the loss of housing affordable for low and moderate income families that is assisted under a State program under the terms of which the owner may prepay a State assisted or subsidized mortgage on such housing. 


</P>
</DIV8>


<DIV8 N="§ 248.301" NODE="24:2.1.1.2.24.4.211.2" TYPE="SECTION">
<HEAD>§ 248.301   Initial application.</HEAD>
<P>A State agency shall make an initial application to the Commissioner which: 
</P>
<P>(a) Describes the manner by which the State housing program provides mortgage assistance or subsidy to private mortgagors to provide housing opportunities for low and moderate income families; 
</P>
<P>(b) Includes copies of the authorizing legislation, any implementing regulations and any administrative guidance provided to owners; 
</P>
<P>(c) Includes a comprehensive description of the terms and conditions under which a private owner may prepay the assisted or subsidized mortgage without the prior consent of the State agency; 
</P>
<P>(d) Includes a complete set of pro forma mortgage and/or regulatory documents which evidence an owner's ability to prepay the assisted or subsidized mortgage without the consent of the State agency; 
</P>
<P>(e) Includes a list of all properties assisted under the State or local housing program whose owners are eligible to prepay the assisted or subsidized mortgages without the consent of the State agency.


</P>
</DIV8>


<DIV8 N="§ 248.303" NODE="24:2.1.1.2.24.4.211.3" TYPE="SECTION">
<HEAD>§ 248.303   Approval of a State agency's initial application.</HEAD>
<P>(a) The Commissioner will evaluate the State agency's application and will notify the State agency within 90 days of receipt that the program and properties qualify under subpart D of this part or that the program and properties do not qualify under subpart D of this part. 
</P>
<P>(b) If the Commissioner determines that the program and projects do not qualify under subpart D of this part, it will state the reasons why the program and properties do not qualify and will give the State agency an opportunity to provide additional information, as the Commissioner determines, which would assist the Commissioner in qualifying the program and properties.


</P>
</DIV8>


<DIV8 N="§ 248.305" NODE="24:2.1.1.2.24.4.211.4" TYPE="SECTION">
<HEAD>§ 248.305   Applicability of subpart B of this part.</HEAD>
<P>The provisions of subpart B of this part shall be applicable to any application of a State agency or local housing authority for assistance under subpart D of this part, except the following provisions:
</P>
<EXTRACT>
<FP>Sec. 
</FP>
<FP-2>248.103 General prepayment limitation. 
</FP-2>
<FP-2>248.105 Notice of intent. 
</FP-2>
<FP-2>248.131 Information from the Commissioner: Only paragraph (a). 
</FP-2>
<FP-2>248.141 Criteria for approval of a plan of action involving prepayment and voluntary termination.
</FP-2>
<FP-2>248.153 Incentives to extend low income use: Only paragraphs (a)(7), (d) and (e). 
</FP-2>
<FP-2>248.165 Assistance for displaced tenants. 
</FP-2>
<FP-2>248.169 Permissible prepayment or voluntary termination and modification of commitments. 
</FP-2>
<FP-2>248.173 Resident homeownership program: Only paragraph (s). 
</FP-2>
<FP-2>248.177 Delegated responsibility to State agencies.</FP-2></EXTRACT>
</DIV8>


<DIV8 N="§ 248.307" NODE="24:2.1.1.2.24.4.211.5" TYPE="SECTION">
<HEAD>§ 248.307   Authority to process and approve notices of intent and plans of action.</HEAD>
<P>(a) <I>Delegation of authority.</I> State agencies which regulate or otherwise supervise owners of projects with State assisted or subsidized mortgages shall have the authority, reserved to the Commissioner under subpart B of this part, to process and approve all notices of intent and plans of action submitted to the State agency or local housing authority under subpart D of this part. State agencies may redelegate such authority to local housing authorities at their discretion. 
</P>
<P>(b) <I>Designation of processing agency.</I> The Executive Director of the State agency whose State assisted or subsidized mortgage program has been approved under § 248.303 shall inform all owners of projects with State assisted or subsidized mortgages that the State agency or a designated local housing authority shall accept and process notices of intent and plans of action.


</P>
</DIV8>


<DIV8 N="§ 248.311" NODE="24:2.1.1.2.24.4.211.6" TYPE="SECTION">
<HEAD>§ 248.311   Notice of intent.</HEAD>
<P>(a) <I>Eligibility for filing.</I> An owner of a project with a State assisted or subsidized mortgage intending to extend the low income affordability restrictions of the housing in accordance with § 248.153 or transfer the housing to a qualified purchaser under § 248.157 may file a notice of intent. 
</P>
<P>(b) <I>Filing with the State agency.</I> The notice of intent shall be filed with the agency specified in § 248.307(b) or the agency which regulates or otherwise supervises the State assisted or subsidized mortgage. The notice of intent shall also request the tenants to notify the owner and the State agency of any individual or organization that has been designated or retained by the tenants to represent the tenants with respect to the actions to be taken under subpart B and subpart D of this part. 
</P>
<P>(c) <I>Filing with HUD, mortgagee and tenants.</I> The owner simultaneously shall file the notice of intent with the local HUD field office having jurisdiction over the area in which the project is located and with the mortgagee, if any. In addition, the owner shall deliver a copy of the notice of intent to each tenant in the project and to any tenant representative, if any, known to the owner, and shall post a copy of the notice of intent in readily accessible locations within each affected building of the project. The copies of the notice of intent delivered to the tenants and the tenant representative shall include a summary of possible outcomes of the filing which shall be furnished by the State agency. Upon the request of any non-English speaking tenants residing in the affected project, the owner shall tabulate the number and type of translations needed by the tenants and request the State agency to provide the appropriate translations. The owner shall deliver a copy of the translated notice of intent to all of the tenants who requested such a translation. The failure of an owner to comply with any non-federal notice requirements shall not invalidate the notice of intent.


</P>
</DIV8>


<DIV8 N="§ 248.315" NODE="24:2.1.1.2.24.4.211.7" TYPE="SECTION">
<HEAD>§ 248.315   Preservation agreements.</HEAD>
<P>(a) <I>Agreements required.</I> Owners of projects with State assisted or subsidized mortgages whose plans of action have been approved under § 248.307 shall enter into agreements, contracts and/or mortgage modifications with the State agency or local housing authority to maintain the housing as affordable to tenants in accordance with § 248.145. Such agreements may provide for the renewal of any assistance made available under § 248.319(c). 
</P>
<P>(b) <I>Term of agreement.</I> Preservation agreements shall be coterminous with the expiration of any assistance provided under § 248.153 and made available in accordance with § 248.319(c).


</P>
</DIV8>


<DIV8 N="§ 248.319" NODE="24:2.1.1.2.24.4.211.8" TYPE="SECTION">
<HEAD>§ 248.319   Application for assistance.</HEAD>
<P>(a) <I>Application for assistance.</I> State agencies or local housing authorities shall submit an application for assistance in a form prescribed by the Commissioner with the local HUD field office having jurisdiction over the project. The application shall include: 
</P>
<P>(1) A copy of the approved plan of action, including all applicable notices of intent; 
</P>
<P>(2) A copy of any worksheet or other document which demonstrates the extension and transfer preservation values of the project, the Federal cost limits (including the determination of relevant local market rents if applicable), and the preservation rents; 
</P>
<P>(3) A request for each incentive required as part of the approved plan of action and the amount thereof; 
</P>
<P>(4) A demonstration and certification by the Executive Director of the State agency or local housing authority that the assistance and incentives requested as part of the approved plan of action do not exceed the level of incentives required for a similarly situated project which is eligible low income housing as defined in subpart B of this part;
</P>
<P>(5) Copies of proposed agreements, contracts and mortgage modifications proposed pursuant to § 248.315. 
</P>
<P>(b) <I>Notification of approval.</I> Not later than 90 days after receipt of the application for assistance, the local HUD field office shall notify the Executive Director of the State agency or local housing authority of the approval or disapproval of the application. If the application is disapproved, the notification shall state the reasons therefor and afford the State agency or local housing authority the opportunity to revise the application to make it approvable. 
</P>
<P>(c) <I>Funding.</I> After approving the State agency's or local housing authority's application for assistance, the HUD field office shall make the assistance in the approved application available to the State agency or local housing authority within the time frames specified in § 248.169. 
</P>
<P>(d) <I>Agreements.</I> The State agency or local housing authority shall provide the local HUD field office with a copy of all agreements entered into with the owner pursuant to § 248.315. 
</P>
<P>(e) <I>Section 8 contract administration.</I> Any contract for Section 8 assistance made pursuant to the approved plan of action, the State agency's or local housing authority's application for assistance and the regulations at 24 CFR 886, subpart A shall be administered by the State agency or local housing authority pursuant to § 886.120 of this title.


</P>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:2.1.1.2.24.5" TYPE="SUBPART">
<HEAD>Subpart E—Technical Assistance and Capacity Building</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>58 FR 37817, July 13, 1993, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 248.401" NODE="24:2.1.1.2.24.5.211.1" TYPE="SECTION">
<HEAD>§ 248.401   Purposes.</HEAD>
<P>The purposes of this subpart are:
</P>
<P>(a) To promote the ability of residents of eligible low income housing to participate meaningfully in the preservation process established by this part and affect decisions about the future of their housing;
</P>
<P>(b) To promote the ability of community-based nonprofit organizations and resident councils to acquire, rehabilitate, and competently own and manage eligible housing as rental or cooperative housing for low and moderate income people; and 
</P>
<P>(c) To assist the Commissioner in discharging the obligation under § 248.157(b) to notify potential qualified purchasers of the availability of projects for sale and to otherwise facilitate the coordination and oversight of the preservation program established under this part.


</P>
</DIV8>


<DIV8 N="§ 248.405" NODE="24:2.1.1.2.24.5.211.2" TYPE="SECTION">
<HEAD>§ 248.405   Grants for building resident capacity and funding predevelopment costs.</HEAD>
<P>(a) <I>General.</I> Assistance made available under this subpart shall be used for direct assistance grants to resident organizations and community-based nonprofit housing developers and resident councils to assist the acquisition of specific projects (including payment of reasonable administrative expense to participating intermediaries.) Assistance made available under subpart E of this part will be distributed on a noncompetitive basis. HUD will publish a Notice in the <E T="04">Federal Register</E> announcing the availability of assistance, as well as the application requirements and procedures and selection criteria that HUD will use in making the assistance available.
</P>
<P>(b) <I>Allocation.</I> Thirty percent of the assistance made available under this subpart shall be used for resident capacity grants in accordance with paragraph (d) of this section. The remainder shall be used for predevelopment grants in connection with specific projects in accordance with paragraph (e) of this section.
</P>
<P>(c) <I>Limitation on grant amounts.</I> A resident capacity grant under paragraph (d) of this section may not exceed $30,000 per project and a grant under paragraph (e) of this section for predevelopment costs may not exceed $200,000 per project, exclusive of any fees paid to a participating intermediary by the Commissioner for administering grants under this subpart.
</P>
<P>(d) <I>Resident Capacity grants</I>—(1) <I>Use.</I> Resident capacity grants under paragraph (d) of this section shall be available to eligible applicants to cover expenses for resident outreach, incorporation of a resident organization or council, conducting democratic elections, training, leadership development, legal and other technical assistance to the board of directors, staff and members of the resident organization or council.
</P>
<P>(2) <I>Eligible housing.</I> Grants under this paragraph (d) of this section may be provided with respect to eligible low income housing for which the owner has filed a notice of intent under subpart B or subpart C of this part.
</P>
<P>(e) <I>Predevelopment grants</I>—(1) <I>Use.</I> Predevelopment grants under paragraph (e) of this section shall be made available to community-based nonprofit housing developers and resident councils to cover the cost of organizing a purchasing entity and pursuing an acquisition, including third party costs for training, development consulting, legal, appraisal, accounting, environmental, architectural and engineering, application fees, and sponsor's staff and overhead costs.
</P>
<P>(2) <I>Eligible housing.</I> These grants may only be made available with respect to any eligible low income housing project for which the owner has filed a notice of intent to transfer the housing to a qualified purchaser in accordance with § 248.105 or § 248.211, or has filed a notice of intent and entered into a binding agreement to sell the housing to a resident organization or nonprofit organization.
</P>
<P>(3) <I>Phase-in of grant payments.</I> Grant payments under paragraph (e) of this section shall be made in phases, based on performance benchmarks established by the Commissioner in consultation with intermediaries selected under § 248,415.
</P>
<P>(f) <I>Grant applications.</I> Grant applications for assistance under paragraphs (d) and (e) of this section shall be received monthly on a rolling basis and approved or rejected on at least a quarterly basis by intermediaries selected under § 248.415(b).
</P>
<P>(g) <I>Appeal.</I> If an application for assistance under paragraphs (d) or (e) of this section is denied, the applicant shall have the right to appeal the denial to the Commissioner and receive a binding determination within 30 days of the appeal.


</P>
</DIV8>


<DIV8 N="§ 248.410" NODE="24:2.1.1.2.24.5.211.3" TYPE="SECTION">
<HEAD>§ 248.410   Grants for other purposes.</HEAD>
<P>The Commissioner may provide grants under this subpart E:
</P>
<P>(a) To resident-controlled or community-based nonprofit organizations with experience in resident education and organizing for the purpose of conducting community, city or countywide outreach and training programs to identify and organize residents of eligible low income housing; and
</P>
<P>(b) To State and local government agencies and nonprofit intermediaries for the purpose of carrying out such activities as the Commissioner deems appropriate to further the purposes of this part.


</P>
</DIV8>


<DIV8 N="§ 248.415" NODE="24:2.1.1.2.24.5.211.4" TYPE="SECTION">
<HEAD>§ 248.415   Delivery of assistance through intermediaries.</HEAD>
<P>(a) <I>General.</I> The Commissioner shall approve and disburse assistance under § 248.405 and § 248.410 through eligible intermediaries selected by the Commissioner under paragraph (b) of this section. If the Commissioner does not receive an acceptable proposal from an intermediary offering to administer assistance under this section in a given State, the Commissioner shall administer the program in such State directly.
</P>
<P>(b) <I>Selection of eligible intermediaries</I>—(1) <I>In General.</I> The Commission shall invite applications from and shall select eligible intermediaries to administer assistance under subpart E of this part through Notices of Funding Availability published in the <E T="04">Federal Register.</E> The process shall include provision for a reasonable administrative fee.
</P>
<P>(2) <I>Priority.</I> With respect to all forms of grants available under § 248.405, the criteria for selecting eligible intermediaries shall give priority to applications from eligible intermediaries with demonstrated expertise under subpart B or subpart C of this part.
</P>
<P>(3) <I>Criteria.</I> The criteria developed under this section shall:
</P>
<P>(i) Not assign any preference or priority to applications from eligible intermediaries based on their previous participation in administering or receiving Federal grants or loans (but may exclude applicants who have failed to perform under prior contracts of a similar nature);
</P>
<P>(ii) Require an applicant to prepare a proposal that demonstrates adequate staffing, qualifications, prior experience, and a plan for participation; and
</P>
<P>(iii) Permit an applicant to serve as the administrator of assistance made available under § 248.405(d) and (e), based on the applicant's suitability and interest.
</P>
<P>(4) <I>Geographic coverage.</I> The Commissioner may select more than one State or regional intermediary for a single State or region. The number of intermediaries chosen for each State or region may be based on the number of eligible low income housing projects in the State or region, provided there is no duplication of geographic coverage by intermediaries in the administration of the direct assistance grant program.
</P>
<P>(5) <I>National nonprofit intermediaries.</I> National nonprofit intermediaries shall be selected to administer the assistance made available under § 248.405 only with respect to State or regions for which no other eligible intermediary, acceptable to the Commissioner, has submitted a proposal to participate.
</P>
<P>(6) <I>Preference.</I> With respect to assistance made available under § 248.410, preference shall be given to eligible regional, State and local intermediaries, over national nonprofit organizations.
</P>
<P>(c) <I>Conflicts of interest.</I> Eligible intermediaries selected under paragraph (b) of this section to disburse assistance under § 248.405 shall certify that they will serve only as delegated program administrators, charged with the responsibility for reviewing and approving grant applications on behalf of the Commissioner. Selected intermediaries shall:
</P>
<P>(1) Establish appropriate procedures for grant administration and fiscal management, pursuant to standards established by the Commissioner; and
</P>
<P>(2) Receive a reasonable administrative fee, except that they may not provide other services to grant recipients with respect to projects that are the subject of the grant application and may not receive payment, directly or indirectly, from the proceeds of grants they have approved.


</P>
</DIV8>


<DIV8 N="§ 248.420" NODE="24:2.1.1.2.24.5.211.5" TYPE="SECTION">
<HEAD>§ 248.420   Definitions.</HEAD>
<P><I>Community-based nonprofit housing developer</I> means a nonprofit community development corporation that:
</P>
<P>(1) Has been classified by the Internal Revenue Service as an exempt organization under section 501(c)(3) of the Internal Revenue Code of 1986;
</P>
<P>(2) Has been in existence for at least two years prior to the date of the grant application;
</P>
<P>(3) Has a record of service to low and moderate income people in the community in which the project is located;
</P>
<P>(4) Is organized at the neighborhood, city, county, or multi-county level; and 
</P>
<P>(5) In the case of a corporation acquiring eligible low income housing under subpart B of this part, agrees to form a purchaser entity that conforms to the definition of a community-based nonprofit organization under such subpart and agrees to use its best efforts to secure majority tenant consent to the acquisition of the project for which grant assistance is requested.
</P>
<P><I>Eligible intermediaries.</I> For purposes of this subpart, the term “eligible intermediary” means a State, regional, or national nonprofit organization (including a quasi-public organization) or a State or local housing agency that:
</P>
<P>(1) Has as a central purpose the preservation of existing affordable housing and the prevention of displacement;
</P>
<P>(2) Does not receive direct Federal appropriations for operating support; 
</P>
<P>(3) In the case of a national nonprofit organization, has been in existence for at least five years prior to the date of application and has been classified by the Internal Revenue Service as an exempt organization under section 501(c)(3) of the Internal Revenue Code of 1986;
</P>
<P>(4) In the case of a regional or State nonprofit organization, has been in existence for at least three years prior to the date of application and has been classified by the Internal Revenue Service as an exempt organization under section 501(c)(3) of the Internal Revenue Code of 1986 or is otherwise a tax-exempt entity;
</P>
<P>(5) Has a record of service to low income individuals or community-based nonprofit housing development in multiple communities and, with respect to intermediaries administering assistance under § 248.405, has experience with the allocation or administration of grant or loan funds; and 
</P>
<P>(6) Meets standards of fiscal responsibility established by the Commissioner.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="251" NODE="24:2.1.1.2.25" TYPE="PART">
<HEAD>PART 251—COINSURANCE FOR THE CONSTRUCTION OR SUBSTANTIAL REHABILITATION OF MULTIFAMILY HOUSING PROJECTS
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1715b, 1715z-9; 42 U.S.C. 3535(d).


</PSPACE></AUTH>

<DIV8 N="§ 251.1" NODE="24:2.1.1.2.25.0.211.1" TYPE="SECTION">
<HEAD>§ 251.1   Termination of program.</HEAD>
<P>(a) Effective on November 12, 1990, the authority to coinsure mortgages under this part is terminated, except that the Department
</P>
<P>(1) Will honor legally binding and validly issued commitments issued before November 12, 1990 and 
</P>
<P>(2) Will accept for review the coinsurance applications described in paragraph (b) of this section.
</P>
<FP>Part 251, as it existed immediately before November 12, 1990, will continue to govern the rights and obligations of coinsured lenders, mortgagors, and the Department of Housing and Urban Development with respect to loans coinsured under this part. 
</FP>
<P>(b) A precommitment review procedure applies to any application for mortgage coinsurance for which a lender has accepted a non-refundable application fee before November 12, 1990 under this part and for which a legally binding Conditional or Firm Commitment is proposed to be issued. This procedure applies to lenders with preliminary as well as full approval to process coinsurance applications and without regard to whether the lender is under probation. For any coinsurance application for which the lender has accepted an application and a non-refundable application fee before November 12, 1990, the lender shall, prior to commitment, submit to HUD headquarters and to the HUD field office with jurisdiction for the proposed project such exhibits and other information as has been specified in administrative instructions of the Commissioner. The lender shall not issue a commitment without written approval from the Commissioner. Field Offices shall not endorse any case covered by this precommitment review requirement unless the lender submits with the endorsement package evidence of the Commissioner's approval of the processing and evidence of compliance with any conditions imposed by the Commissioner.
</P>
<P>(c) Extensions of commitments for projects which had outstanding legally binding commitments as of November 12, 1990 are limited as follows:
</P>
<P>(1) Firm commitments for insurance of advances may be granted two 60-day extensions;
</P>
<P>(2) Conditional commitments may be granted one 60-day extension; 
</P>
<P>(3) Firm commitments for insurance upon completion may not be extended.
</P>
<FP>However, should any underwriting conclusions be altered and reflected in the extension, the project must be submitted for precommitment review in accordance with paragraph (b) of this section. In the event an extension is required beyond those provided for in this paragraph, the case will be subject to the precommitment review process described in paragraph (b) of this section.
</FP>
<P>(d) Reopened expired commitments are subject to precommitment review under paragraph (b) of this section.
</P>
<P>(e) HUD considers a commitment to be <I>legally binding</I> if:
</P>
<P>(1) It conforms to the format prescribed in the appropriate HUD Handbook and contains only such modifications as have been approved by HUD in writing;
</P>
<P>(2) All required underwriting, analyses, reviews and approvals have been accomplished prior to issuance of the commitment; 
</P>
<P>(3) It conforms to HUD requirements pertaining to initial term and extension; 
</P>
<P>(4) It obligates the lender and HUD to proceed to the next stage (<I>i.e.,</I> firm commitment in the case of a conditional commitment, or endorsement in the case of a firm commitment) if the applicant mortgagor complies with all conditions of such commitment; 
</P>
<P>(5) It does not permit the lender to change unilaterally the conditions or terms of the commitment; and 
</P>
<P>(6) It is signed by an official of the coinsuring lender who has been designated and authorized in accordance with HUD requirements.
</P>
<APPRO TYPE="N">(Information collection requirements in paragraph (b) were approved by the Office of Management and Budget under control number 2502-0437)
</APPRO>
<CITA TYPE="N">[55 FR 41318, Oct. 10, 1990]


</CITA>
</DIV8>


<DIV8 N="§ 251.2" NODE="24:2.1.1.2.25.0.211.2" TYPE="SECTION">
<HEAD>§ 251.2   GNMA right to assignment.</HEAD>
<P>If the lender-issuer defaults on its obligations under the GNMA Mortgage-Backed Securities Program, GNMA will have the right to cause all Coinsured Mortgages held in GNMA pools by the defaulting coinsuring lender-issuer to be assigned to another GNMA-approved coinsuring lender-issuer, or to GNMA itself.
</P>
<P>(a) For any Coinsured Mortgage that is not in default and is held by a defaulting lender-issuer, GNMA will have the right to perfect an assignment of the mortgage to itself. However, before exercising this right, GNMA will attempt to have the Mortgage assigned to another eligible coinsuring lender (unless GNMA determines, with the agreement of the Commissioner, that the attempt would prove ineffectual because of market conditions or other factors). This attempt will be undertaken by soliciting offers to assume the defaulting lender-issuer's rights and obligations under the Mortgage from those eligible coinsuring lenders that are also GNMA issuers and that are indicated on a periodically updated listing furnished to GNMA by the Commissioner.
</P>
<P>(b) For any Coinsured Mortgage that is in default and held by a defaulting lender-issuer, GNMA will have the right to perfect an assignment of the Coinsured Mortgage directly to itself before extinguishing the Mortgage by completion of foreclosure action or acquisition of title by deed-in-lieu of foreclosure.
</P>
<P>(c) GNMA, as assignee, will give the Commissioner written notice, within 30 days after taking a Mortgage by assignment in accordance with this section, in order to allow an appropriate endorsement and necessary changes in the Commissioner's records.
</P>
<P>(d) The Commissioner will endorse any Mortgage assigned to GNMA as provided by this section for full insurance, effective as of the date of assignment in accordance with the appropriate provisions of 24 CFR part 221. Any future claim by GNMA, or any assignment of the fully insured Mortgage, will be governed by the appropriate provisions of 24 CFR part 221, except that any payment will be made in cash instead of debentures.
</P>
<CITA TYPE="N">[59 FR 1475, Jan. 11, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 251.3" NODE="24:2.1.1.2.25.0.211.3" TYPE="SECTION">
<HEAD>§ 251.3   Case-by-case conversion to full insurance.</HEAD>
<P>Upon the request of a coinsuring lender, the Commissioner may endorse a coinsured Mortgage for full insurance, effective as of the date of such endorsement, if the Commissioner is satisfied that:
</P>
<P>(a) Continuing the Mortgage under coinsurance could jeopardize the lender's viability and ability to service its remaining portfolio of coinsured Mortgages;
</P>
<P>(b) The lender has made reasonable efforts to work out any Mortgage default consistent under 24 CFR 251.811 (1990), but the remedies available to the lender have not been adequate to reinstate the Mortgage;
</P>
<P>(c) The conversion would be less costly to HUD than if the Mortgage remained coinsured;
</P>
<P>(d) The lender has paid HUD the fee set forth through <E T="04">Federal Register</E> notice; and
</P>
<P>(e) The lender agrees to give the Commissioner written notice under 24 CFR 207.258 of its intent to file an insurance claim upon the Commissioner's endorsement of the Mortgage for full insurance.
</P>
<CITA TYPE="N">[61 FR 49038, Sept. 17, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 251.6" NODE="24:2.1.1.2.25.0.211.4" TYPE="SECTION">
<HEAD>§ 251.6   Method of payment of mortgage insurance premiums.</HEAD>
<P>In the cases that the Commissioner deems appropriate, the Commissioner may require, by means of instructions communicated to all affected lenders, that mortgage insurance premiums be remitted electronically.
</P>
<CITA TYPE="N">[63 FR 1303, Jan. 8, 1998]


</CITA>
</DIV8>

</DIV5>


<DIV5 N="252" NODE="24:2.1.1.2.26" TYPE="PART">
<HEAD>PART 252—COINSURANCE OF MORTGAGES COVERING NURSING HOMES, INTERMEDIATE CARE FACILITIES, AND BOARD AND CARE HOMES
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1715b, 1715z-9; 42 U.S.C. 3535(d).


</PSPACE></AUTH>

<DIV8 N="§ 252.1" NODE="24:2.1.1.2.26.0.211.1" TYPE="SECTION">
<HEAD>§ 252.1   Termination of program.</HEAD>
<P>(a) Effective on November 12, 1990, the authority to coinsure mortgages under this part is terminated, except that the Department
</P>
<P>(1) Will honor legally binding and validly issued commitments issued before November 12, 1990, and 
</P>
<P>(2) Will accept for review the coinsurance applications described in paragraph (b) of this section.
</P>
<FP>Part 252, as it existed immediately before November 12, 1990, will continue to govern the rights and obligations of coinsured lenders, mortgagors, and the Department of Housing and Urban Development with respect to loans coinsured under this part.
</FP>
<P>(b) A precommitment review procedure applies to any application for mortgage coinsurance for which a lender has accepted a non-refundable application fee before November 12, 1990 under this part and for which a legally binding Conditional or Firm Commitment is proposed to be issued. This procedure applies to lenders with preliminary as well as full approval to process coinsurance applications and without regard to whether the lender is under probation. For any coinsurance application for which the lender has accepted an application and a non-refundable application fee before November 12, 1990, the lender shall, prior to commitment, submit to HUD headquarters and to the HUD field office with jurisdiction for the proposed project such exhibits and other information as has been specified in administrative instructions of the Commissioner. The lender shall not issue a commitment without written approval from the Commissioner. Field Offices shall not endorse any case covered by this precommitment review requirement unless the lender submits with the endorsement package evidence of the Commissioner's approval of the processing and evidence of compliance with any conditions imposed by the Commissioner.
</P>
<P>(c) Extensions of commitments for projects which had outstanding legally binding commitments as of November 12, 1990 are limited as follows:
</P>
<P>(1) Firm commitments for insurance of advances may be granted two 60-day extensions; 
</P>
<P>(2) Conditional commitments may be granted one 60-day extension; 
</P>
<P>(3) Firm commitments for insurance upon completion may not be extended.
</P>
<FP>However, should any underwriting conclusions be altered and reflected in the extension, the project must be submitted for precommitment review in accordance with paragraph (b) of this section. In the event an extension is required beyond those provided for in this paragraph, the case will be subject to the precommitment review process described in paragraph (b) of this section.
</FP>
<P>(d) Reopened expired commitments are subject to precommitment review under paragraph (b) of this section.
</P>
<P>(e) HUD considers a commitment to be <I>legally binding</I> if: 
</P>
<P>(1) It conforms to the format prescribed in the appropriate HUD Handbook and contains only such modifications as have been approved by HUD in writing; 
</P>
<P>(2) All required underwriting, analyses, reviews and approvals have been accomplished prior to issuance of the commitment; 
</P>
<P>(3) It conforms to HUD requirements pertaining to initial term and extensions; 
</P>
<P>(4) It obligates the lender and HUD to proceed to the next stage (<I>i.e.,</I> firm commitment in the case of a conditional commitment, or endorsement in the case of a firm commitment) if the applicant mortgagor complies with all conditions of such commitment; 
</P>
<P>(5) It does not permit the lender to change unilaterally the conditions or terms of the commitment; and 
</P>
<P>(6) It is signed by an official of the coinsuring lender who has been designated and authorized in accordance with HUD requirements. 
</P>
<APPRO TYPE="N">(Information collection requirements in paragraph (b) were approved by the Office of Management and Budget under control number 2502-0437)
</APPRO>
<CITA TYPE="N">[55 FR 41319, Oct. 10, 1990] 


</CITA>
</DIV8>


<DIV8 N="§ 252.2" NODE="24:2.1.1.2.26.0.211.2" TYPE="SECTION">
<HEAD>§ 252.2   GNMA right to assignment.</HEAD>
<P>If the lender-issuer defaults on its obligations under the GNMA Mortgage-Backed Securities Program, GNMA will have the right to cause all Coinsured Mortgages held in GNMA pools by the defaulting coinsuring lender-issuer to be assigned to another GNMA-approved coinsuring lender-issuer, or to GNMA itself.
</P>
<P>(a) For any Coinsured Mortgage that is not in default and is held by a defaulting lender-issuer, GNMA will have the right to perfect an assignment of the mortgage to itself. However, before exercising this right, GNMA will attempt to have the Mortgage assigned to another eligible coinsuring lender (unless GNMA determines, with the agreement of the Commissioner, that the attempt would prove ineffectual because of market conditions or other factors). This attempt will be undertaken by soliciting offers to assume the defaulting lender-issuer's rights and obligations under the Mortgage from those eligible coinsuring lenders that are also GNMA issuers and that are indicated on a periodically updated listing furnished to GNMA by the Commissioner.
</P>
<P>(b) For any Coinsured Mortgage that is in default and held by a defaulting lender-issuer, GNMA will have the right to perfect an assignment of the Coinsured Mortgage directly to itself before extinguishing the Mortgage by completion of foreclosure action or acquisition of title by deed-in-lieu of foreclosure.
</P>
<P>(c) GNMA, as assignee, will give the Commissioner written notice, within 30 days after taking a Mortgage by assignment in accordance with this section, in order to allow an appropriate endorsement and necessary changes in the Commissioner's records.
</P>
<P>(d) The Commissioner will endorse any Mortgage assigned to GNMA as provided by this section for full insurance, effective as of the date of assignment in accordance with the appropriate provisions of 24 CFR part 232. Any future claim by GNMA, or any assignment of the fully insured Mortgage, will be governed by the appropriate provisions of 24 CFR part 232, except that any payment will be made in cash instead of debentures.
</P>
<CITA TYPE="N">[59 FR 1475, Jan. 11, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 252.3" NODE="24:2.1.1.2.26.0.211.3" TYPE="SECTION">
<HEAD>§ 252.3   Case-by-case conversion to full insurance.</HEAD>
<CROSSREF>
<HED>Cross Reference:</HED>
<P>The provisions of 24 CFR 251.3 apply to this part.</P></CROSSREF>
<CITA TYPE="N">[61 FR 49038, Sept. 17, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 252.6" NODE="24:2.1.1.2.26.0.211.4" TYPE="SECTION">
<HEAD>§ 252.6   Method of payment of mortgage insurance premiums.</HEAD>
<P>The provisions of 24 CFR 251.6 shall apply to this part.
</P>
<CITA TYPE="N">[63 FR 1303, Jan. 8, 1998]


</CITA>
</DIV8>

</DIV5>


<DIV5 N="255" NODE="24:2.1.1.2.27" TYPE="PART">
<HEAD>PART 255—COINSURANCE FOR THE PURCHASE OR REFINANCING OF EXISTING MULTIFAMILY HOUSING PROJECTS
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1515b, 1715z-9; 42 U.S.C. 3535(d).


</PSPACE></AUTH>

<DIV8 N="§ 255.1" NODE="24:2.1.1.2.27.0.211.1" TYPE="SECTION">
<HEAD>§ 255.1   Termination of program.</HEAD>
<P>(a) Effective on November 12, 1990, the authority to coinsure mortgages under this part is terminated, except that the Department:
</P>
<P>(1) Will honor legally binding and validly issued commitments issued before November 12, 1990 and 
</P>
<P>(2) Will accept for review the coinsurance applications described in paragraph (b) of this section. 
</P>
<FP>Part 255, as it existed immediately before November 12, 1990, will continue to govern the rights and obligations of coinsured lenders, mortgagors, and the Department of Housing and Urban Development with respect to loans coinsured under this part. 
</FP>
<P>(b) A precommitment review procedure applies to any application for mortgage coinsurance for which a lender has accepted a non-refundable application fee before November 12, 1990 under this part and for which a legally binding Conditional or Firm Commitment is proposed to be issued. This procedure applies to lenders with preliminary as well as full approval to process coinsurance applications and without regard to whether the lender is under probation. For any coinsurance application for which the lender has accepted an application and a non-refundable application fee before November 12, 1990, the lender shall, prior to commitment, submit to HUD headquarters and to the HUD field office with jurisdiction for the proposed project such exhibits and other information as has been specified in administrative instructions of the Commissioner. The lender shall not issue a commitment without written approval from the Commissioner. Field Offices shall not endorse any case covered by this precommitment review requirement unless the lender submits with the endorsement package evidence of the Commissioner's approval of the processing and evidence of compliance with any conditions imposed by the Commissioner. 
</P>
<P>(c) Extensions of commitments for projects which had outstanding legally binding commitments as of November 12, 1990 are limited as follows:
</P>
<P>(1) Conditional commitments may be extended not to exceed 180 days from the date of original issuance;
</P>
<P>(2) Firm commitments may be granted two 60-day extensions.
</P>
<FP>However, should any underwriting conclusions be altered and reflected in the extension, the project must be submitted for precommitment review in accordance with paragraph (b) of this section. In the event an extension is required beyond those provided for in this paragraph, the case will be subject to the precommitment review process described in paragraph (b) of this section.
</FP>
<P>(d) Reopened expired commitments are subject to precommitment review under paragraph (b) of this section. 
</P>
<P>(e) HUD considers a commitment to be <I>legally binding</I> if:
</P>
<P>(1) It conforms to the format prescribed in the appropriate HUD Handbook and contains only such modifications as have been approved by HUD in writing; 
</P>
<P>(2) All required underwriting, analyses, reviews and approvals have been accomplished prior to issuance of the commitment; 
</P>
<P>(3) It conforms to HUD requirements pertaining to initial term and extension; 
</P>
<P>(4) It obligates the lender and HUD to proceed to the next stage (<I>i.e.,</I> firm commitment in the case of a conditional commitment, or endorsement in the case of a firm commitment) if the applicant mortgagor complies with all conditions of such commitment; 
</P>
<P>(5) It does not permit the lender to change unilaterally the conditions or terms of the commitment; and 
</P>
<P>(6) It is signed by an official of the coinsuring lender who has been designated and authorized in accordance with HUD requirements. 
</P>
<APPRO TYPE="N">(Information collection requirements in paragraph (b) were approved by the Office of Management and Budget under control number 2502-0437)
</APPRO>
<CITA TYPE="N">[55 FR 41320, Oct. 10, 1990, as amended at 56 FR 14642, Apr. 11, 1991]


</CITA>
</DIV8>


<DIV8 N="§ 255.2" NODE="24:2.1.1.2.27.0.211.2" TYPE="SECTION">
<HEAD>§ 255.2   GNMA right to assignment.</HEAD>
<P>If the lender-issuer defaults on its obligations under the GNMA Mortgage-Backed Securities Program, GNMA will have the right to cause all Coinsured Mortgages held in GNMA pools by the defaulting coinsuring lender-issuer to be assigned to another GNMA-approved coinsuring lender-issuer, or to GNMA itself.
</P>
<P>(a) For any Coinsured Mortgage that is not in default and is held by a defaulting lender-issuer, GNMA will have the right to perfect an assignment of the mortgage to itself. However, before exercising this right, GNMA will attempt to have the Mortgage assigned to another eligible coinsuring lender (unless GNMA determines, with the agreement of the Commissioner, that the attempt would prove ineffectual because of market conditions or other factors). This attempt will be undertaken by soliciting offers to assume the defaulting lender-issuer's rights and obligations under the Mortgage from those eligible coinsuring lenders that are also GNMA issuers and that are indicated on a periodically updated listing furnished to GNMA by the Commissioner.
</P>
<P>(b) For any Coinsured Mortgage that is in default and held by a defaulting lender-issuer, GNMA will have the right to perfect an assignment of the Coinsured Mortgage directly to itself before extinguishing the Mortgage by completion of foreclosure action or acquisition of title by deed-in-lieu of foreclosure.
</P>
<P>(c) GNMA, as assignee, will give the Commissioner written notice, within 30 days after taking a Mortgage by assignment in accordance with this section, in order to allow an appropriate endorsement and necessary changes in the Commissioner's records.
</P>
<P>(d) The Commissioner will endorse any Mortgage assigned to GNMA as provided by this section for full insurance, effective as of the date of assignment in accordance with the appropriate provisions of 24 CFR part 207. Any future claim by GNMA, or any assignment of the fully insured Mortgage, will be governed by the appropriate provisions of 24 CFR part 207, except that any payment will be made in cash instead of debentures.
</P>
<CITA TYPE="N">[59 FR 1475, Jan. 11, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 255.3" NODE="24:2.1.1.2.27.0.211.3" TYPE="SECTION">
<HEAD>§ 255.3   Case-by-case conversion to full insurance.</HEAD>
<CROSSREF>
<HED>Cross Reference:</HED>
<P>The provisions of 24 CFR 251.3 apply to this part.</P></CROSSREF>
<CITA TYPE="N">[61 FR 49038, Sept. 17, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 255.6" NODE="24:2.1.1.2.27.0.211.4" TYPE="SECTION">
<HEAD>§ 255.6   Method of payment of mortgage insurance premiums.</HEAD>
<P>The provisions of 24 CFR 251.6 shall apply to this part.
</P>
<CITA TYPE="N">[63 FR 1303, Jan. 8, 1998]


</CITA>
</DIV8>

</DIV5>


<DIV5 N="266" NODE="24:2.1.1.2.28" TYPE="PART">
<HEAD>PART 266—HOUSING FINANCE AGENCY RISK-SHARING PROGRAM FOR INSURED AFFORDABLE MULTIFAMILY PROJECT LOANS 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1715z-22.; 42 U.S.C. 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>59 FR 62524, Dec. 5, 1994, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:2.1.1.2.28.1" TYPE="SUBPART">
<HEAD>Subpart A—General Provisions</HEAD>


<DIV8 N="§ 266.1" NODE="24:2.1.1.2.28.1.216.1" TYPE="SECTION">
<HEAD>§ 266.1   Purpose and scope.</HEAD>
<P>(a) <I>Authority and scope.</I> (1) Section 542 of the Housing and Community Development Act of 1992 (12 U.S.C. 1715z-22), directs the Secretary of the Department of Housing and Urban Development (HUD), acting through the Federal Housing Administration (FHA), to carry out programs that will provide new forms of Federal credit enhancement for multifamily loans. Section 542, entitled, “Multifamily Mortgage Credit Programs,” provides insurance authority independent from that provided by the National Housing Act.
</P>
<P>(2) Section 542(c) of the Housing and Community Development Act of 1992 specifically directs HUD to carry out a program of risk-sharing with qualified State and local housing finance agencies (HFAs). The qualified HFAs are authorized to underwrite and process loans. HUD provides full mortgage insurance on affordable multifamily housing projects processed by such HFAs under this program. Through risk-sharing agreements with HUD, HFAs contract to reimburse HUD for a portion of the loss from any defaults that occur while HUD insurance is in force.
</P>
<P>(3) The extent to which HUD directs qualified HFAs regarding their underwriting standards, loan terms and conditions, and asset management and servicing procedures is related to the proportion of the risk taken by an HFA.
</P>
<P>(b) <I>Purpose.</I> The primary purpose of this program is to provide credit enhancement for multifamily loans, <I>i.e.,</I> utilization of full insurance by HUD, pursuant to risk-sharing agreements with qualified housing finance agencies, for the development of affordable housing. The utilization of Federal credit enhancements increases access to capital markets and, thereby, increases the supply of affordable multifamily housing. By permitting HFAs to underwrite, process, and service loans and to manage and dispose of properties that fall into default, affordable housing is made available to eligible families and individuals in a timely manner.
</P>
<CITA TYPE="N">[85 FR 83440, Dec. 22, 2020] 


</CITA>
</DIV8>


<DIV8 N="§ 266.5" NODE="24:2.1.1.2.28.1.216.2" TYPE="SECTION">
<HEAD>§ 266.5   Definitions.</HEAD>
<P><I>Act</I> means the Housing and Community Development Act of 1992. 
</P>
<P><I>Affordable housing</I> means a project that meets the requirements for a qualified low-income housing project under section 42(g) of the Internal Revenue Code of 1986 (26 U.S.C. 42(g)). For purposes of this part, the reference to a utility allowance in 26 U.S.C. 42(g) includes charges for the occupancy of a cooperative unit. 
</P>
<P><I>Board and Care/Assisted Living Facility</I> means a residential facility for independent living that is regulated by State or local government that provides continuous protective oversight and assistance with the activities of daily living to frail elderly persons or other persons needing such assistance. Continuous protective oversight may range from as little as awareness on the part of management staff of residents' whereabouts (and the ability to intervene in the event of crisis) to a higher level of services and assistance. Assistance with the activities of daily living may include, but is not limited to, bathing, dressing, eating, getting in and out of bed or chairs, walking, going outdoors, using the toilet, laundry, home management, meal preparation, shopping, supervision of medication, and housework. 
</P>
<P><I>Commissioner</I> means the Federal Housing Commissioner or the Commissioner's authorized representative. 
</P>
<P><I>Contract of insurance</I> means the agreement evidenced by the endorsement of the Commissioner upon the credit instrument given in connection with an insured mortgage, incorporating by reference the regulations in this part and the applicable provisions of the Act. 
</P>
<P><I>Credit subsidy</I> means the cost of a direct loan or loan guarantee under the Federal Credit Reform Act of 1990 (subtitle B of title XIII of the Omnibus Budget Reconciliation Act of 1990, Public Law 101-508, approved Nov. 5, 1990). 
</P>
<P><I>Debenture</I> means the instrument issued by the HFA to HUD upon payment of an insurance claim by HUD. The instrument must be in the standard form of a State or Municipal Debenture issued under the Uniform Commercial Code, where applicable, and must be supported by the full faith and credit of the HFA. The instrument must define the terms and conditions and the risk-sharing portion which the HFA will pay at the end of the term of the Debenture, and must be for the full amount of the claim payment. The term <I>Debenture</I> may include similar instruments, such as promissory notes and bonds, as mutually agreed upon by the Commissioner and the HFA. 
</P>
<P><I>Designated offices</I> means the local HUD offices that are assigned the responsibility for program monitoring, imposing or recommending sanctions for program violations, and conducting informal hearings. 
</P>
<P><I>Firm approval letter</I> means a letter issued by HUD to an HFA upon the positive completion of the HUD-retained reviews described in § 266.210. The letter will apportion units to the project and provide that, so long as the HFA is in good standing and absent fraud or misrepresentation by the HFA, HUD will endorse the project mortgage for insurance upon presentation by the HFA of the required Closing Docket and certifications required by this part and the Commissioner's administrative requirements. 
</P>
<P><I>Housing finance agency</I> or <I>HFA</I> means any public body, agency, or instrumentality created by a specific act of a State legislature or local municipality empowered to finance activities designed to provide housing and related facilities, through land acquisition, construction or rehabilitation. The term State includes the several States, Puerto Rico, the District of Columbia, Guam, the Trust Territory of the Pacific Islands, American Samoa and the Virgin Islands. 
</P>
<P><I>Insured mortgage</I> means a valid single first lien given to secure advances on, or the unpaid purchase price of, real estate, under the laws of the State in which the real estate is located, together with the credit instrument, if any, secured thereby. Any other financing permitting on property insured under this part must be expressly subordinate to the insured mortgage. 
</P>
<P><I>Level I participants</I> means HFAs that elect to take 50 percent or more of the risk of loss in 10 percent increments on mortgages issued under this program. 
</P>
<P><I>Level II participants</I> means HFAs that elect to take 10 or 25 percent of the risk of loss on mortgages issued under this program, dependent on the loan-to-replacement cost or loan-to-value ratio of the project to be insured. 
</P>
<P><I>Mortgage</I> means such a single first lien upon the real estate as is commonly given to secure advances on, or the unpaid purchase price of, real estate under the laws of the jurisdiction where the real estate is situated, together with the credit instruments, if any, secured thereby.
</P>
<P><I>Mortgagee</I> means the original lender under a mortgage and its successors and assigns approved by the Commissioner.
</P>
<P><I>Mortgagor</I> means the original borrower under a mortgage and its successor and assigns.
</P>
<P><I>Multifamily housing</I> means housing accommodations on the mortgaged property that are designed principally for residential use, conform to standards satisfactory to the Commissioner, and consist of not less than 5 rental units (including cooperative units) on 1 site. These units may be detached, semidetached, row house, or multifamily structures.
</P>
<P><I>Qualified HFA</I> means an HFA that meets the requirements described in § 266.100(a).
</P>
<P><I>Risk-Sharing Agreement</I> means a contract between an HFA and the Commissioner that incorporates the terms, obligations, and conditions specified in this part.
</P>
<P><I>Secondary financing</I> means any grant, loan, inferior lien, or other form of indebtedness used during loan origination prior to HUD endorsement to finance a multifamily property insured under this part which is inferior to the insured mortgage as defined above and does not have first priority for payment.
</P>
<P><I>Single Room Occupancy, or SRO, projects</I> means multifamily projects consisting of units that are not required to contain food preparation or sanitary facilities for occupancy by single individuals capable of independent living.
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83440, Dec. 22, 2020]






</CITA>
</DIV8>


<DIV8 N="§ 266.15" NODE="24:2.1.1.2.28.1.216.3" TYPE="SECTION">
<HEAD>§ 266.15   Risk-Sharing Agreement.</HEAD>
<P>Execution of a Risk-Sharing Agreement is a prerequisite to participation in this program. The Risk-Sharing Agreement shall be in a form acceptable to the Commissioner. 
</P>
<CITA TYPE="N">[61 FR 7947, Feb. 29, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 266.20" NODE="24:2.1.1.2.28.1.216.4" TYPE="SECTION">
<HEAD>§ 266.20   Effect of amendments.</HEAD>
<P>The Commissioner may amend the regulations in this part from time to time. Amendments to the regulations will not adversely affect the interest of a lender under a contract of insurance on any mortgage already insured or on any mortgage to be insured on which HUD has already issued its firm approval letter.
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83440, Dec. 22, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 266.25" NODE="24:2.1.1.2.28.1.216.5" TYPE="SECTION">
<HEAD>§ 266.25   Limitation on HUD insurance liability.</HEAD>
<P>The Commissioner shall have no obligation to recognize or deal with anyone other than the HFA in its role as mortgagee of record and as party to a risk-sharing agreement with HUD with respect to the rights, benefits, and obligations of the HFA under the contract of insurance.


</P>
</DIV8>


<DIV8 N="§ 266.30" NODE="24:2.1.1.2.28.1.216.6" TYPE="SECTION">
<HEAD>§ 266.30   Nonapplicability of 24 CFR part 246.</HEAD>
<P>The regulations at 24 CFR part 246, pertaining to local rent control, do not apply to projects that are security for mortgages insured under this part.
</P>
<CITA TYPE="N">[85 FR 83441, Dec. 22, 2020]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:2.1.1.2.28.2" TYPE="SUBPART">
<HEAD>Subpart B—Housing Finance Agency Requirements</HEAD>


<DIV8 N="§ 266.100" NODE="24:2.1.1.2.28.2.216.1" TYPE="SECTION">
<HEAD>§ 266.100   Qualified housing finance agency (HFA).</HEAD>
<P>(a) <I>Qualifications.</I> To participate in the program, an HFA must apply and be specifically approved for the program described in this part, in addition to being approved as a mortgagee under § 202.10 of this part. The HFA must maintain eligibility by continuing to comply with the requirements set forth in the Risk-Sharing Agreement and this part. To qualify for participation in the program described in this part, an HFA must: 
</P>
<P>(1) Carry an issuer credit rating of “A” or better, or an equivalent as evaluated by Standard and Poor's or any other nationally recognized rating agency; or 
</P>
<P>(2) Receive an overall rating of “A” for the HFA for its general obligation bonds from a nationally recognized rating agency; or 
</P>
<P>(3) Otherwise demonstrate its capacity as a sound and experienced HFA based on, but not limited to, experience in financing multifamily housing, fund balances, administrative capabilities, investment policy, internal controls, financial management, portfolio quality, and State or local support; and 
</P>
<P>(4) Be a HUD-approved multifamily mortgagee in good standing; and 
</P>
<P>(5) Have at least five years experience in multifamily underwriting; and 
</P>
<P>(6) Certify that: 
</P>
<P>(i) The Department of Justice has not brought a civil rights suit against the HFA, and no suit is pending; 
</P>
<P>(ii) There has not been an adjudication of a civil rights violation in a civil action brought against the HFA by a private individual, unless the HFA is operating in compliance with a court order, or implementing a HUD-approved compliance agreement designed to correct the areas of noncompliance; 
</P>
<P>(iii) There are no outstanding findings of noncompliance with civil rights statutes, Executive Orders, or regulations as a result of formal administrative proceedings, or the Secretary has not issued a charge against the HFA under the Fair Housing Act, unless the HFA is operating under a compliance agreement designed to correct the areas of noncompliance. 
</P>
<P>(b) <I>Approval levels.</I> Approval levels consist of the following: 
</P>
<P>(1) Level I approval to originate, service, and dispose of multifamily mortgages where the HFA uses its own underwriting standards, loan terms and conditions, and asset management and servicing procedures, and assumes 50 to 90 percent of the risk of loss (in 10 percent increments).
</P>
<P>(2) Level II approval to originate, service, and dispose of multifamily mortgages where the HFA uses underwriting standards, loan terms and conditions, and asset management and servicing procedures approved by HUD, and:
</P>
<P>(i) When the loan-to-replacement cost ratio for new construction and substantial rehabilitation projects or the loan-to-value ratio for existing projects is greater than or equal to 75 percent, the HFA shall assume 25 percent of the risk of loss. 
</P>
<P>(ii) When the loan-to-replacement cost ratio for new construction and substantial rehabilitation or the loan-to-value ratio for existing projects is less than 75 percent, the HFA shall assume 10 percent, or 25 percent at the HFA's option, of the risk of loss. 
</P>
<P>(3) For HFAs who plan to use Level I and Level II processing, the underwriting standards, loan terms and conditions, and asset management and servicing procedures to be used on Level II loans must be approved by HUD.
</P>
<P>(4) Every five years, HUD will review the underwriting standards, loan terms and conditions, and asset management and servicing procedures for HFAs with Level II approval. HUD may require changes to these procedures as a condition for continued Level II approval. 
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 62 FR 20088, Apr. 24, 1997; 85 FR 83441, Dec. 22, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 266.105" NODE="24:2.1.1.2.28.2.216.2" TYPE="SECTION">
<HEAD>§ 266.105   Application requirements.</HEAD>
<P>(a) <I>Applications for approval as a HUD-approved multifamily mortgagee.</I> HFAs that are not HUD-approved mortgagees at the time of their application to participate in the program under this part must submit, concurrently, separate applications for approval to participate in the program and for approval to operate as a HUD-approved mortgagee. Application for approval as a HUD-approved mortgagee must be submitted to HUD in accordance with the applicable HUD requirements. 
</P>
<P>(b) <I>Applications for participation in program.</I> Applications from HFAs for approval to participate in the program under this part may be submitted at any time, and must be submitted in the form and manner established by HUD.
</P>
<CITA TYPE="N">[61 FR 7947, Feb. 29, 1996, as amended at 85 FR 83441, Dec. 22, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 266.110" NODE="24:2.1.1.2.28.2.216.3" TYPE="SECTION">
<HEAD>§ 266.110   Reserve requirements.</HEAD>
<P>(a) <I>HFAs with an issuer credit rating of “A” or better or overall rating of “A” or better on general obligation bonds.</I> An HFA with an issuer credit rating of “A” or better, or an equivalent designation, or an HFA with an overall rating of “A” or better on its general obligation bonds, is not required to have additional reserves so long as the HFA maintains that designation or rating, unless the Commissioner determines that a prescribed level of reserves is necessary. If the designation or rating is lost, the HFA must immediately establish a reserve account funded in accordance with the requirements set forth in paragraph (b) of this section. The reserve account must reflect all loans in the HFA's portfolio endorsed under this part. 
</P>
<P>(b) <I>Other HFAs.</I> (1) For other HFAs, a specifically identified dedicated account consisting entirely of liquid assets (<I>i.e.,</I> cash or cash equivalents or readily marketable securities) must be established and maintained in a financial institution acceptable to HUD. This account may be drawn upon by HUD and may be used by the HFA only with the prior written approval of HUD for the purpose of meeting the HFA's risk-sharing obligations under this part. The account must be established prior to the execution of any risk-sharing agreement under this part in an initial amount of not less than $500,000. Thereafter, the HFA must deposit at each loan closing and thereafter maintain the following additional amounts in the dedicated account: 
</P>
<P>(i) $10.00 per $1,000 of the unpaid principal balance that is equal to or less than $50 million; plus 
</P>
<P>(ii) $7.50 per $1,000 of the unpaid principal balance that is greater than $50 million and less than $150 million; plus 
</P>
<P>(iii) $5.00 per $1,000 of the unpaid principal balance that is greater than $150 million. 
</P>
<P>(2) The Commissioner may determine that higher levels of reserves may be necessary.
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83441, Dec. 22, 2020]

 


</CITA>
</DIV8>


<DIV8 N="§ 266.115" NODE="24:2.1.1.2.28.2.216.4" TYPE="SECTION">
<HEAD>§ 266.115   Program monitoring and evaluation.</HEAD>
<P>(a) <I>HFA certifications.</I> HUD will rely heavily on the certifications required of an HFA under this part and such additional certifications as the Commissioner may require in administrative procedures. An HFA's continued participation in the program is predicated upon compliance with these certifications and its recommending for endorsement only those mortgages that comply with requirements of the program, including the HFA's origination, underwriting and closing procedures incorporated by reference into the Risk-Sharing Agreement. 
</P>
<P>(b) <I>Monitoring and evaluation.</I> Monitoring and evaluation activities will focus on compliance with program requirements and performance of the HFA in meeting program objectives of providing affordable housing. They will enable HUD to evaluate the effectiveness of the program as required by section 542(d)(3) of the Act. 
</P>
<P>(c) <I>Responsibility for monitoring and evaluation.</I> The Commissioner or designee will be responsible for overall program monitoring and evaluation. 
</P>
<P>(d) <I>HFA submissions.</I> (1) For each loan insured under this part, basic underwriting and closing information must be submitted in a format specified by HUD and must accompany the closing docket submitted in accordance with § 266.420(b). Information relative to project management and servicing (including disposition) will be required after endorsement. 
</P>
<P>(2) The HFA must submit semi-annual reports setting forth the original mortgage amounts and outstanding principal balances on mortgages the HFA has underwritten, and the status of all projects insured under this part (e.g., current, in default, acquired, under workout agreement, in bankruptcy). For projects where the mortgagor has declared bankruptcy, the HFA must submit information containing the date the bankruptcy was filed and the date the HFA requested the Court to dismiss the bankruptcy proceedings.
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83441, Dec. 22, 2020] 


</CITA>
</DIV8>


<DIV8 N="§ 266.120" NODE="24:2.1.1.2.28.2.216.5" TYPE="SECTION">
<HEAD>§ 266.120   Actions for which sanctions may be imposed.</HEAD>
<P>Results of monitoring or other reviews may serve as the basis for the Commissioner's imposing sanctions on the HFA. Violations for which sanctions may be imposed include, but are not limited to: 
</P>
<P>(a) Commission of fraud or making a material misrepresentation by the HFA with respect to any mortgage insured or to any other matter under this part. 
</P>
<P>(b) Assignment or transfer of interest in any insured mortgage not in accord with the requirements of this part. 
</P>
<P>(c) Engagement in business practices that do not conform to generally accepted practices of prudent lenders or that demonstrate irresponsibility. 
</P>
<P>(d) Actions or conduct for which sanctions may be imposed against the HFA by HUD's Mortgagee Review Board under 24 CFR 25.9, which pertains to “notice of administrative action”. 
</P>
<P>(e) Failure to: 
</P>
<P>(1) Reveal in its application for participation in the program all the information required by this part; 
</P>
<P>(2) Notify HUD in a timely manner of any pending or actual changes that would adversely affect HFA operations or financial status; 
</P>
<P>(3) Comply with all eligibility requirements for participation in the program; 
</P>
<P>(4) Issue debentures in the event of an initial claim payment by HUD, or to reimburse HUD for payment of a claim; 
</P>
<P>(5) Maintain an issuer credit rating of “A” or better, or an equivalent designation, or overall rating of “A” on general obligation bonds (or if such rating is lost, comply with paragraph (e)(6) of this section); 
</P>
<P>(6) Establish and maintain a dedicated account, if required, or meet other financial obligations under this program; 
</P>
<P>(7) Perform underwriting, insurance of advances, cost certification, management, servicing or property disposition functions in a prudent and acceptable manner based on the standards incorporated by reference into the Risk-sharing Agreement; 
</P>
<P>(8) Submit financial and other reports required by this part; 
</P>
<P>(9) Comply with any regulatory requirement or with the Risk-Sharing Agreement; 
</P>
<P>(10) Maintain any other standards HUD may establish for participation in this program; 
</P>
<P>(11) Enforce the regulatory agreement provisions with respect to individual projects; 
</P>
<P>(12) Maintain a default ratio acceptable to HUD relative to the HFA's own portfolio and the defaults experienced under this part by other program participants; 
</P>
<P>(13) Consider adequately special risk circumstances without compensating for the higher risks of such transactions (<I>e.g.,</I> high loan-to-value ratios in areas with high vacancy or default rates); or 
</P>
<P>(14) Remit mortgage insurance premiums on a timely basis or failure to refund or credit mortgagor's accounts with overpaid mortgage insurance premiums. 
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83441, Dec. 22, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 266.125" NODE="24:2.1.1.2.28.2.216.6" TYPE="SECTION">
<HEAD>§ 266.125   Scope and nature of sanctions.</HEAD>
<P>(a) <I>Actions by Designated Office.</I> Depending on the nature and extent of the noncompliance with the requirements of this part, the Designated Office may take any of the following actions: 
</P>
<P>(1) Require that the HFA execute a trust agreement, establish a trust account in accordance with such agreement, and fund such account which may be drawn upon by HUD for purposes of meeting the HFA's risk-sharing obligations; 
</P>
<P>(2) Require the HFA to assume a higher portion of risk for the subject and future mortgages; 
</P>
<P>(3) Recommend to the Commissioner that the HFA be required to contract its loan servicing or property disposition functions to a third party; 
</P>
<P>(4) Recommend to the Commissioner that the mortgage insurance be terminated in cases of fraud or material misrepresentation by the HFA, or transfer of interest in an insured mortgage or assignment of the mortgage not in accord with the requirements of this part; 
</P>
<P>(5) Recommend to the Commissioner that approval for the HFA to participate in the program be suspended or withdrawn; 
</P>
<P>(6) Recommend to the Commissioner that the HFA's mortgagee approval be withdrawn pursuant to 24 CFR part 25 (regulations of the Mortgagee Review Board) and/or that penalties be imposed pursuant to 24 CFR part 30 (regulations pertaining to Civil Money Penalties; Certain Prohibited Contact); 
</P>
<P>(7) Require additional financial or other reports as may be necessary to monitor the activities of the HFA more closely. 
</P>
<P>(8) Require the HFA to revise any or all of its underwriting, processing, asset management, or servicing policies and procedures as directed by the Commissioner.
</P>
<P>(b) <I>Actions by Headquarters.</I> HUD Headquarters may impose any of the sanctions set forth or recommended in paragraph (a) of this section based upon its responsibilities for monitoring and overall program oversight. 
</P>
<P>(c) <I>Effect of suspension or withdrawal.</I> A suspension or withdrawal action will not affect any mortgage insurance endorsement in effect on the date of the suspension or withdrawal action. 
</P>
<P>(d) <I>HFA right to informal hearing.</I> (1) Any sanction imposed by a designated office in writing will be immediately effective, will state the grounds for the action, and provide for the HFA's right to an informal hearing before the designated office representative or designee in the designated office. The HFA may request an informal hearing within 10 working days of receipt of the suspension or withdrawal action and the Designated Office shall give the HFA an opportunity to be heard within 10 working days of receipt of the HFA's request. The HFA may be represented by counsel. The Designated Office Representative, or his or her designee, will advise the HFA in writing of the decision within 10 working days of the informal hearing, which decision will constitute final HUD action. 
</P>
<P>(2) Sanctions imposed by Headquarters will be handled in a similar manner, except that the informal hearing shall be before the Commissioner or his or her designee. 
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83441, Dec. 22, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 266.130" NODE="24:2.1.1.2.28.2.216.7" TYPE="SECTION">
<HEAD>§ 266.130   Reinsurance.</HEAD>
<P>Reinsurance will be permitted for the portion of the HFA risk, subject to the following requirements: 
</P>
<P>(a) Neither HUD's nor the HFA's position shall be subordinated; 
</P>
<P>(b) The reinsurance may not be used to reduce any reserve or fund balance requirements; and 
</P>
<P>(c) Such reinsurance does not incur an obligation to the Federal Government. 


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:2.1.1.2.28.3" TYPE="SUBPART">
<HEAD>Subpart C—Program Requirements</HEAD>


<DIV8 N="§ 266.200" NODE="24:2.1.1.2.28.3.216.1" TYPE="SECTION">
<HEAD>§ 266.200   Eligible projects.</HEAD>
<P>(a) <I>Minimum project size.</I> Projects insured under this part must consist of five or more rental dwelling units (including cooperative dwelling units) on one site. The site may consist of two or more non-contiguous parcels of land situated so as to comprise a readily marketable real estate entity within an area small enough to allow convenient and efficient management. The units may be detached, semi-detached, row houses, multifamily structures, or mobile home parks (exclusive of the mobile homes). 
</P>
<P>(b) <I>New construction or substantial rehabilitation.</I> Insurance under this part shall be for the purpose of financing the new construction or substantial rehabilitation of projects meeting the other requirements of this part as follows: 
</P>
<P>(1) <I>New construction</I> occurs when all project and construction elements are installed as part of the work. 
</P>
<P>(2) <I>Substantial rehabilitation</I> occurs when the scope of work to improve an existing project exceeds in aggregate cost a sum equal to the base per dwelling unit limit times the applicable high cost factor established by the Commissioner, or when the scope of work involves the replacement of two or more building systems. <I>Replacement</I> is when the cost of replacement work exceeds 50% of the cost of replacing the entire system. The base per dwelling unit limit is $15,933 for 2019, and will be adjusted annually based on the percentage change in the consumer price index.
</P>
<P>(c) <I>Existing projects.</I> Financing of existing properties for acquisition or refinancing without substantial rehabilitation is allowed.
</P>
<P>(1) If the financing will result in the preservation of affordable housing, where the property will be maintained as affordable housing for a period of at least 20 years, regardless of whether the loan is prepaid; and
</P>
<P>(2) Project occupancy is not less than 93 percent (to include consideration of rent in arrears), based on the average occupancy in the project over the most recent 12 months; and
</P>
<P>(3) The loan to be refinanced has not been in default within the 12 months prior to the date of the application for refinancing; and
</P>
<P>(4) A capital needs assessment is performed, and funds escrowed for all necessary repairs and replacement reserves funded for future capital repairs; and
</P>
<P>(5) If the project is subject to a Housing Assistance Payment (HAP) contract, and is not a project financed under section 202 of the Housing Act of 1959 (12 U.S.C. 1701q) by a Level I participant, then:
</P>
<P>(i) The owner of the property agrees to renew the HAP contract for a 20-year term;
</P>
<P>(ii) Existing and post-refinance HAP residual receipts are set aside to be used to reduce future HAP payments; and
</P>
<P>(iii) The HUD-insured mortgage does not exceed an amount supportable by the lower of the unit rents being collected under the rental assistance agreement or the unit rents being collected at unassisted projects in the market area that are similar in amenities and location to the project for which insurance is being requested; and
</P>
<P>(6) For Level II participants only, the HUD-insured mortgage may not exceed the sum of the existing indebtedness, cost of refinancing, or acquisition, the cost of repairs and reasonable transaction costs as determined by the Commissioner. (This paragraph does not apply to Level I participants.)
</P>
<P>(d) <I>Projects receiving section 8 rental subsidies or other rental subsidies.</I> Projects receiving project-based housing assistance payments under section 8 of the U.S. Housing Act of 1937 (42 U.S.C.1437f) or other rental subsidies and meeting the requirements of this part may be insured under this part only if the mortgage does not exceed an amount supportable by the lower of the unit rents being or to be collected under the rental assistance agreement or the unit rents being collected at unassisted projects in the market that are similar in amenities and location to the project for which insurance is being requested. This paragraph does not apply to projects of Level I participants if those projects are financed under section 202 of the Housing Act of 1959 (12 U.S.C. 1701q).
</P>
<P>(e) <I>SRO projects.</I> Single room occupancy (SRO) projects, as defined in § 266.5, are eligible for insurance under this part. Units in SRO projects must be subject to 30-calendar day or longer leases; however, rent payments may be made on a weekly basis in SRO projects. 
</P>
<P>(f) <I>Board and care/assisted living facilities.</I> Board and care projects and assisted living facilities may be insured if the facilities meet the definition of those terms in § 266.5. 
</P>
<P>(g) <I>Elderly projects.</I> Projects or parts of projects specifically designed for the use and occupancy by elderly families. An elderly family means any household where the head or spouse is 62 years of age or older, including children under 18, and also any single person who is 62 years of age or older.
</P>
<P>(h) <I>Housing for older persons.</I> Projects eligible for and in compliance with 42 U.S.C. 3607(b) and 24 CFR part 100, subpart E. 
</P>
<P>(i) <I>Zoning requirements.</I> Projects insured under this part must meet applicable zoning and other State/local government requirements.
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83441, Dec. 22, 2020]

 


</CITA>
</DIV8>


<DIV8 N="§ 266.205" NODE="24:2.1.1.2.28.3.216.2" TYPE="SECTION">
<HEAD>§ 266.205   Ineligible projects.</HEAD>
<P>The following projects and facilities are not eligible for insurance under this part: 
</P>
<P>(a) <I>Transient housing or hotels.</I> Rental for transient or hotel purposes. For purposes of this part, rental for transient or hotel purposes means: 
</P>
<P>(1) Rental for any period less than 30 calendar days, or 
</P>
<P>(2) Any rental, if the occupants of the housing accommodations are provided customary hotel services such as room service for food and beverages, maid service, furnishing and laundering of linens, or valet service. 
</P>
<P>(b) <I>Projects in military impact areas.</I> A project located in a military impact area, as determined by HUD. A military impact area is generally a small or medium size metropolitan housing market area or a remote or isolated nonmetropolitan area where: 
</P>
<P>(1) Military-connected households comprise 25 percent or more of the total households in the market area. Military-connected households include active duty military personnel, civilian employees of the military service (Department of Defense) or other Federal agency at or in support of the installation, and employees of contractors and sub-contractors directly associated with the military installation, and their dependents. Unaccompanied active duty military personnel housed in military-controlled group quarters housing (barracks, BOQ's) are excluded; and 
</P>
<P>(2) There is concern about the continued stability of the current level of military strength and mission at the installation based on public announcements from the U.S. Department of Defense or the military service of impending changes; and 
</P>
<P>(3) The complete reduction of military-connected households living in nonmilitary rental housing over a 5 year period, at an annual average decline of 20 percent, would, taking into account growth in the civilian economy and normal changes in the housing inventory, cause an adverse impact on the private rental market resulting in an increase in the rental vacancy rate in the housing market of 10 percent or more at the end of that period. 
</P>
<P>(c) <I>Retirement service centers.</I> Projects designed for the elderly with extensive services and luxury accommodations that provide for central kitchens and dining rooms with food service or mandatory services. 
</P>
<P>(d) <I>Nursing homes or intermediate care facilities.</I> Nursing homes and intermediate care facilities licensed and regulated by State or local government and providing nursing and medical care. 
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83442, Dec. 22, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 266.210" NODE="24:2.1.1.2.28.3.216.3" TYPE="SECTION">
<HEAD>§ 266.210   HUD-retained review functions.</HEAD>
<P>Certain functions are retained by the Commissioner. The HFA must submit any information or certification required by the Commissioner to permit determination of compliance with requirements concerning: 
</P>
<P>(a) <I>Previous participation of principals.</I> Previous participation of the principals of the mortgagor, general contractor, consultant or management agent in accordance with the Previous Participation and Clearance Review Procedures of 24 CFR 200.210 through 200.218. 


</P>
<P>(b) <I>Intergovernmental review.</I> Intergovernmental review of Federal programs under Executive Order 12372, as implemented in 24 CFR part 52. 
</P>
<P>(c) <I>Subsidy layering.</I> The Commissioner, or Housing Credit Agencies as defined by section 42 of the Internal Revenue Code of 1986 (26 U.S.C. 42), through such delegation as may be in effect by regulation hereafter, shall review all projects receiving tax credits and some form of HUD assistance for any excess subsidy provided to individual projects and reduce subsidy sources in accordance with outstanding guidelines.
</P>
<P>(d) <I>Davis-Bacon Act.</I> The Commissioner shall obtain and provide to the HFA the appropriate U.S. Department of Labor wage rate determinations under the Davis-Bacon Act, where they apply under this part. 
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 60 FR 16573, Mar. 31, 1995; 85 FR 83442, Dec. 22, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 266.215" NODE="24:2.1.1.2.28.3.216.4" TYPE="SECTION">
<HEAD>§ 266.215   Functions delegated by HUD to HFAs.</HEAD>
<P>The following functions are delegated by HUD to the HFAs: 
</P>
<P>(a) <I>Affirmative Fair Housing Marketing Plan (AFHMP).</I> The HFA will perform information collection, reviews and ministerial activities associated with the review and approval of the AFHMP for all projects. (Enforcement of fair housing and equal opportunity laws is the responsibility of HUD.) 
</P>
<P>(b) <I>Labor standards and prevailing wage requirements.</I> The HFA will perform information collection (e.g., payroll review and routine interviews) and other routine administration and enforcement functions regarding labor standards, in accordance with § 266.225(e). (Enforcement of Davis-Bacon prevailing wage requirements and labor standards is the responsibility of HUD.) 
</P>
<P>(c) <I>Insurance of advances.</I> In cases involving insured advances, the HFA will approve periodic advances of mortgage insurance proceeds during construction of the project subject to terms specified by the Commissioner. 
</P>
<P>(d) <I>Cost certification.</I> The HFA will perform cost certification functions on each insured loan subject to terms specified by the Commissioner. 
</P>
<P>(e) <I>Lead-based paint.</I> The HFA will perform functions related to Lead-based paint requirements as set forth in 24 CFR part 35, subparts A, B, G, and R. 
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83442, Dec. 22, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 266.217" NODE="24:2.1.1.2.28.3.216.5" TYPE="SECTION">
<HEAD>§ 266.217   Environmental review requirements.</HEAD>
<P>The responsible entity, as defined in 24 CFR part 58 (Environmental Review Procedures for Entities Assuming HUD Environmental Responsibilities), assumes legal responsibility for compliance with the requirements of the National Environmental Policy Act of 1969 and related laws and authorities. The responsible entity will visit each project site proposed for insurance under this part and prepare the applicable environmental reviews as set forth in 24 CFR part 58. HUD may make a finding in accordance with 24 CFR 58.11, Legal Capacity and Performance, and may perform the environmental review itself under 24 CFR part 50 (Protection and Enhancement of Environmental Quality). In all cases the environmental review must be completed before HUD may issue the firm approval letter.
</P>
<CITA TYPE="N">[85 FR 83442, Dec. 22, 2020]






</CITA>
</DIV8>


<DIV8 N="§ 266.220" NODE="24:2.1.1.2.28.3.216.6" TYPE="SECTION">
<HEAD>§ 266.220   Nondiscrimination in housing and employment.</HEAD>
<P>The mortgagor must certify to the HFA that, so long as the mortgage is insured under this part, the mortgagor will:
</P>
<P>(a) Not use tenant selection procedures that discriminate against families with children, except in the case of a project qualifying for and complying with the requirements of the “housing for older persons” exemption, as defined in section 807(b)(2) of the Fair Housing Act (42 U.S.C. 3607(b)) and further described in 24 CFR part 100, subpart E. Projects receiving Federal financial assistance in which elderly families include minor children may not avail themselves of the housing for older persons exemption;
</P>
<P>(b) Determine eligibility for admission and continued occupancy without regard to actual or perceived sexual orientation, gender identity, or marital status and refrain from inquiries about sexual orientation and gender identity in accordance with 24 CFR 5.105(a)(2);
</P>
<P>(c)(1) Comply with:
</P>
<P>(i) The Fair Housing Act (42 U.S.C. 3601 through 3619), as implemented by 24 CFR part 100;
</P>
<P>(ii) Titles II and III of the Americans with Disabilities Act of 1990 (42 U.S.C. 12101 through 12213), as implemented by 28 CFR part 35;
</P>
<P>(iii) Section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u), as implemented by 24 CFR part 135;
</P>
<P>(iv) The Equal Credit Opportunity Act (15 U.S.C. 1691-1691f), as implemented by 12 CFR part 202;
</P>
<P>(v) Executive Order 11063, as amended by Executive Order 12259 (3 CFR 1958-1963 Comp., p. 652 and 3 CFR 1980 Comp., p. 307), and implemented by 24 CFR part 107;
</P>
<P>(vi) Executive Order 11246 (3 CFR 1964-1965 Comp., p. 339), as implemented by 41 CFR part 60; and
</P>
<P>(vii) Other applicable Federal laws and regulations issued pursuant to these authorities; and applicable State and local fair housing and equal opportunity laws.
</P>
<P>(2) In addition to the authorities listed in paragraph (c)(1) of this section, a mortgagor that receives Federal financial assistance must also certify to the HFA that, so long as the mortgage is insured under this part, it will comply with:
</P>
<P>(i) Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d), as implemented by 24 CFR part 1;
</P>
<P>(ii) The Age Discrimination Act of 1975 (42 U.S.C. 6101 through 6107), as implemented by 24 CFR part 146; and
</P>
<P>(iii) Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), as implemented by 24 CFR part 8. 
</P>
<CITA TYPE="N">[85 FR 83442, Dec. 22, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 266.225" NODE="24:2.1.1.2.28.3.216.7" TYPE="SECTION">
<HEAD>§ 266.225   Labor standards.</HEAD>
<P>(a) <I>Applicability of Davis-Bacon.</I> (1) All laborers and mechanics employed by contractors or subcontractors on a project insured under this part shall be paid not less than the wages prevailing in the locality in which the work was performed for the corresponding classes of laborers and mechanics employed in construction of a similar character, as determined by the Secretary of the U.S. Department of Labor (Secretary of Labor) in accordance with the Davis-Bacon Act, as amended (40 U.S.C. 3141 <I>et seq.</I>), where the project meets all of the following conditions:
</P>
<P>(i) Advances for construction of the project are insured under this part; 
</P>
<P>(ii) The project involves new construction or substantial rehabilitation; and 
</P>
<P>(iii) The project will contain 12 or more dwelling units. 
</P>
<P>(2) Projects that do not meet these conditions are not subject to Davis-Bacon wage rates except to the extent required as a condition of other Federal assistance to the project. 
</P>
<P>(b) <I>Volunteers.</I> The provisions of this section shall not apply to volunteers under the conditions set out in 24 CFR part 70 (Use of Volunteers on Projects Subject to Davis-Bacon and HUD-Determined Wage Rates). In applying 24 CFR part 70, insurance under this part shall be treated as a program for which there is a statutory exemption for volunteers.
</P>
<P>(c) <I>Labor standards.</I> Any contract, subcontract, or building loan agreement executed for a project subject to Davis-Bacon wage rates under paragraph (a) of this section shall comply with all labor standards and provisions of the U.S. Department of Labor regulations in 29 CFR parts 1, 3, and 5 that would be applicable to a mortgage insurance program to which Davis-Bacon wage rates are made applicable by statute, provided, that regulatory provisions relating to investigations and enforcement by the U.S. Department of Labor shall not be applicable, and enforcement of Davis-Bacon labor standards shall be the responsibility of the Commissioner in accordance with paragraph (e) of this section. 
</P>
<P>(d) <I>Advances.</I> (1) No advance under a mortgage on a project subject to Davis-Bacon wage rates under paragraph (a) of this section shall be eligible for insurance under this part unless the HFA determines (in accordance with the Commissioner's administrative procedures) that the general contractor or any subcontractor or any firm, corporation, partnership or association in which the contractor or subcontractor has a substantial interest was not, on the date the contract or subcontract was executed, on the ineligible list established by the Comptroller General of the United States, pursuant to 29 CFR 5.12, issued by the Secretary of Labor. 
</P>
<P>(2) No advance under any mortgage on a project subject to Davis-Bacon wage rates under paragraph (a) of this section shall be insured under this part unless there is filed with the application for the advance, and no such mortgage shall be insured under this part unless there is filed with the HFA after completion of the construction or substantial rehabilitation, a certificate or certificates in the form required by the Commissioner, supported by such other information as the Commissioner may prescribe, certifying that the laborers and mechanics employed in the construction of the project involved have been paid not less than the wages determined by the Secretary of Labor to be prevailing in accordance with paragraph (a) of this section. 
</P>
<P>(e) <I>Responsibility for enforcement and administration.</I> The Commissioner retains responsibility for enforcement of labor standards under this section, but the Commissioner may delegate to the HFA information collection (<I>e.g.,</I> payroll review and routine interviews) and other routine administration and enforcement functions, subject to monitoring by the Commissioner. Where routine administration and enforcement functions are delegated to the HFA, the HFA shall bear financial responsibility for any deficiency in payment of prevailing wages or, where applicable under 29 CFR part 1 (Procedures for Predetermination of Wage Rates), any increase in compensation to a contractor, that is attributable to any failure properly to carry out its delegated functions. For example, failure of an HFA to supply or ensure inclusion of the proper contract clauses or wage determination in a contract or building loan agreement may require the HFA to fund increased compensation to a contractor as the result of increased wages attributable to incorporation of the proper clauses and wage determination. 
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83443, Dec. 22, 2020]




</CITA>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:2.1.1.2.28.4" TYPE="SUBPART">
<HEAD>Subpart D—Processing, Development, and Approval</HEAD>


<DIV8 N="§ 266.300" NODE="24:2.1.1.2.28.4.216.1" TYPE="SECTION">
<HEAD>§ 266.300   HFAs accepting 50 percent or more of risk.</HEAD>
<P>(a) <I>Underwriting standards.</I> An HFA electing to take 50 percent or more of the risk on loans may use its own underwriting standards and loan terms and conditions (as disclosed and submitted with its application) to underwrite and approve loans without further review by HUD. 
</P>
<P>(b) <I>HFA responsibilities.</I> The HFA is responsible for the performance of all functions except those HUD-retained functions specified in §§ 266.210 and 266.225(e). After acceptance of an application for a loan to be insured under this part, the HFA must: 
</P>
<P>(1) Determine that a market for the project exists, taking into consideration any comments from the local HUD office relative to the potential adverse impact the project will have on existing or proposed Federally insured and assisted projects in the area. 
</P>
<P>(2) Establish the maximum insurable mortgage and review plans and specifications for compliance with HFA standards; 
</P>
<P>(3) Arrange for the performance of an environmental review in accordance with § 266.217;
</P>
<P>(4) Determine the acceptability of the proposed mortgagor and management agent; 
</P>
<P>(5) Approve the Affirmative Fair Housing Marketing Plan, required by § 266.215(a); and
</P>
<P>(6) Make any other determinations necessary to ensure acceptability of the proposed project. 
</P>
<P>(c) <I>HUD-retained reviews.</I> After positive completion of the HUD-retained reviews specified in § 266.210(a) and (b) the local HUD office will issue a firm approval letter. 
</P>
<P>(d) <I>Inspections and other reviews.</I> The HFA is responsible for inspections during construction, processing and approving advances of mortgage proceeds during construction, review and approval of cost certification, and closing of the loan. 
</P>
<P>(e) <I>Endorsement of mortgage note for insurance.</I> So long as the HFA is in good standing, and absent fraud or material misrepresentation on the part of the HFA, the Commissioner or designee will endorse the mortgage note for insurance upon presentation by the HFA of the Closing Docket and certifications required in § 266.420(b), subject to HUD's right to adjust under § 266.417. 
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83443, Dec. 22, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 266.305" NODE="24:2.1.1.2.28.4.216.2" TYPE="SECTION">
<HEAD>§ 266.305   HFAs accepting less than 50 percent of risk.</HEAD>
<P>(a) <I>Underwriting standards.</I> The underwriting standards and loan terms and conditions of any HFA electing to take less than 50 percent of the risk on certain projects are subject to review, modification, and approval by HUD in accordance with § 266.100(b). These HFAs may assume 25 percent or 10 percent of the risk depending upon the loan-to-replacement-cost or loan-to-value ratios of the projects to be insured as specified in § 266.100(b)(2)(i) and (ii). Large loans, as defined by HUD for its insured multifamily mortgage programs, require prior approval by the Commissioner. 
</P>
<P>(b) <I>HFA responsibilities.</I> The HFA is responsible for the performance of all functions except those HUD-retained functions specified in § 266.210 and 266.225(e). After acceptance of an application for a loan to be insured under this part, the HFA must: 
</P>
<P>(1) Determine that a market for the project exists, taking into consideration any comments from the local HUD office relative to the potential adverse impact the project will have on existing or proposed Federally insured and assisted projects in the area; 
</P>
<P>(2) Establish the maximum insurable mortgage, and review plans and specifications for compliance with HFA standards as approved by HUD; 
</P>
<P>(3) Arrange for the performance of an environmental review in accordance with § 266.217;
</P>
<P>(4) Determine the acceptability of the proposed mortgagor and management agent; 
</P>
<P>(5) Approve the Affirmative Fair Housing Marketing Plan, required by § 266.215(a); and 
</P>
<P>(6) Make any other determinations necessary to ensure acceptability of the proposed project. 
</P>
<P>(c) <I>HUD-retained reviews.</I> After positive completion of the HUD-retained reviews specified in § 266.210(a) and (b), the local HUD office will issue a firm approval letter. 
</P>
<P>(d) <I>Inspections and other reviews.</I> The HFA is responsible for inspections during construction, processing and approving advances of mortgage proceeds during construction, review and approval of cost certification, and closing of the loan. 
</P>
<P>(e) <I>Endorsement of mortgage note for insurance.</I> So long as the HFA is in good standing, and absent fraud or material misrepresentation on the part of the HFA, the Commissioner or designee will endorse the mortgage note for insurance upon presentation by the HFA of the Closing Docket and certifications required in § 266.420(b), subject to HUD's right to adjust under § 266.417. 
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83443, Dec. 22, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 266.310" NODE="24:2.1.1.2.28.4.216.3" TYPE="SECTION">
<HEAD>§ 266.310   Insurance of advances or insurance upon completion; applicability of requirements.</HEAD>
<P>(a) <I>General.</I> HUD will agree to insure periodic advances of mortgage proceeds or to insure the entire mortgage upon completion of construction for projects involving new construction or substantial rehabilitation. Existing projects without the need for substantial rehabilitation will be considered insurance upon completion cases. In insurance upon completion cases, only the permanent loan is insured and a single endorsement is required after satisfactory completion of construction, substantial rehabilitation or repairs. In periodic advances cases, progress payments approved by the HFA and both an initial and final endorsement on the mortgage are required. 
</P>
<P>(b) <I>Insurance of advances.</I> Periodic advances will be authorized by the HFA subject to terms specified by the Commissioner. 
</P>
<P>(c) <I>Insurance upon completion</I>—(1) <I>New construction and substantial rehabilitation.</I> An HFA may approve a loan that will be insured upon completion of construction of the project. The HFA approval must prescribe a designated period during which the mortgagor must start construction or substantial rehabilitation. If construction or rehabilitation is started as required, the approval will be valid for the period estimated by the HFA for construction and loan closing, including any extension approved by the HFA. 
</P>
<P>(2) <I>Existing projects with no substantial rehabilitation.</I> Existing projects with or without repairs are only insured upon completion, although HFAs may permit noncritical repairs to be completed after endorsement upon establishment of escrows acceptable to the HFA. 
</P>
<P>(d) <I>Requirements applicable to both periodic advances and insurance upon completion cases</I>—(1) <I>Inspections.</I> The HFA must inspect projects under this part at such times during construction, substantial rehabilitation, or repairs as the HFA determines. The inspections must be conducted to assure compliance with plans and specifications, work write-ups, and other contract documents. 
</P>
<P>(2) <I>Approval of advances.</I> At all times, the loan must be kept in balance, and advances approved only if warranted by construction progress evidenced through HFA inspection, as well as in accord with plans, specifications, work write-ups and other contract documents. In approving advances, HFAs must make certain that other mortgageable items are supported with proper bills and/or receipts before funds can be approved and advanced for insurance. 
</P>
<P>(3) <I>Cost certification.</I> In order to ensure that the final amount for insurance is supported by certified costs: 
</P>
<P>(i) The mortgagor (and general contractor, if there is an identity of interest with the mortgagor) must execute a certificate of actual costs, in a form acceptable to the HFA, when all physical improvements are completed to the satisfaction of the HFA and before final endorsement; and 
</P>
<P>(ii) The cost certification provided by the mortgagor must be audited by an independent public accountant. 
</P>
<P>(4) <I>Contestability.</I> Although the HFA has authority to approve the mortgagor's (and general contractor's) certification of cost, the certification will be contestable by the Commissioner during the period up to and including final endorsement of the mortgage. After final endorsement, the certification will be final and incontestable except for fraud or material misrepresentation on the part of the mortgagor (and/or general contractor). 
</P>
<P>(5) <I>Assurance of completion.</I> The mortgagor must furnish assurance of completion of the project in accordance with any requirements of the HFA as to form and amount. 
</P>
<P>(6) <I>Latent defects escrow.</I> The mortgagor must furnish an escrow or other form of assurance required by the HFA to ensure that latent defects can be remedied within the time period required by the HFA. 
</P>
<P>(e) <I>Mortgagee of record.</I> The HFA must remain the mortgagee of record as long as mortgage insurance is in force. 


</P>
</DIV8>


<DIV8 N="§ 266.315" NODE="24:2.1.1.2.28.4.216.4" TYPE="SECTION">
<HEAD>§ 266.315   Recordkeeping requirements.</HEAD>
<P>The mortgagor and the builder, if there is an identity of interest with the mortgagor, shall keep and maintain records of all costs of any construction or other cost items not representing work under the general contract and to make available such records for review by the HFA or HUD, if requested.


</P>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:2.1.1.2.28.5" TYPE="SUBPART">
<HEAD>Subpart E—Mortgage and Closing Requirements; HUD Endorsement</HEAD>


<DIV8 N="§ 266.400" NODE="24:2.1.1.2.28.5.216.1" TYPE="SECTION">
<HEAD>§ 266.400   Property requirements—real estate.</HEAD>
<P>The mortgage must be on real estate held:
</P>
<P>(a) In fee simple; 
</P>
<P>(b) Under a renewable lease of not less than 99 years; or 
</P>
<P>(c) Under a lease executed by a governmental agency, or other lessor approved by the HFA, that has a term at least 10 years beyond the end of the mortgage term.


</P>
</DIV8>


<DIV8 N="§ 266.402" NODE="24:2.1.1.2.28.5.216.2" TYPE="SECTION">
<HEAD>§ 266.402   Recordation.</HEAD>
<P>At the time of initial endorsement in the case of insurance of advances or at the time of final endorsement in the case of insurance upon completion, the HFA shall make certain that the mortgage and the regulatory agreement are recorded.


</P>
</DIV8>


<DIV8 N="§ 266.405" NODE="24:2.1.1.2.28.5.216.3" TYPE="SECTION">
<HEAD>§ 266.405   Title.</HEAD>
<P>(a) <I>Eligibility of title.</I> Marketable title to the mortgaged property must be vested in the mortgagor on the date the mortgage is filed for record. 
</P>
<P>(b) <I>Title evidence.</I> The HFA must receive a title insurance policy that ensures that marketable title is vested in the mortgagor, that a survey acceptable to the HFA has been performed, and that no existing impediments to title concern, or exist on, the property. 


</P>
</DIV8>


<DIV8 N="§ 266.410" NODE="24:2.1.1.2.28.5.216.4" TYPE="SECTION">
<HEAD>§ 266.410   Mortgage provisions.</HEAD>
<P>(a) <I>Form.</I> The mortgage and note must be executed on a form approved by the HFA for use in the jurisdiction in which the property is located. 
</P>
<P>(b) <I>Mortgagor.</I> The mortgage must be executed by a mortgagor determined eligible by the HFA. 
</P>
<P>(c) <I>First lien.</I> The mortgage must be a single first lien on property that has first priority for payment and that conforms with property standards prescribed by the HFA. 
</P>
<P>(d) <I>Single asset mortgagor.</I> The mortgage must require that the mortgagor is a single asset mortgagor. 
</P>
<P>(e) <I>Amortization.</I> The mortgage must provide for complete amortization (<I>i.e.,</I> be regularly amortizing) over the term of the mortgage. The complete amortization requirement does not apply to:
</P>
<P>(1) Construction loans, or
</P>
<P>(2) Level I participants where the loan has a minimum term of 17 years that would amortize over a maximum period of 40 years and the HFA's underwriting standards, loan terms and conditions, and asset management and servicing procedures have been approved by HUD. 
</P>
<P>(f) <I>Use restrictions.</I> The mortgage must contain a covenant prohibiting the use of the property for any purpose other than the purpose intended on the day the mortgage was executed. The conversion of a project from rental to cooperative is not a “change in use” as that term is employed in the mortgage since the property will continue to have a residential use both before and after conversion. 
</P>
<P>(g) <I>Hazard insurance.</I> The mortgage must contain a covenant, acceptable to the HFA, that binds the mortgagor to keep the property insured by one or more standard policies for fire and other hazards stipulated by the HFA. A standard mortgagee clause making loss payable to the HFA must be included in the mortgage. The HFA is responsible for assuring that insurance is maintained in force and in the amount required by this paragraph and the mortgage. The HFA must ensure that the insurance coverage is in an amount that will comply with the coinsurance clause applicable to the location and character of the property, but not less than 80 percent of the actual cash value of the insurable improvements and equipment. If the mortgagor does not obtain the required insurance, the HFA must do so and assess the mortgagor for such costs. These insurance requirements apply as long as the HFA retains an interest in the project and final claim settlement has not been completed or the contract of insurance has not been otherwise terminated.
</P>
<P>(h) <I>Modification of terms.</I> The mortgage must contain a covenant requiring that, in the event that the HFA and owner agree to a modification of the terms of the mortgage (<I>e.g.,</I> to reflect a reduction of the interest rate if reductions are realized in the underlying bond rates for the project), Section 8 rents would be reduced in accordance with HUD guidelines. 
</P>
<P>(i) <I>Regulatory Agreement.</I> The mortgage must contain a provision incorporating the Regulatory Agreement by reference.
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83444, Dec. 22, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 266.415" NODE="24:2.1.1.2.28.5.216.5" TYPE="SECTION">
<HEAD>§ 266.415   Mortgage lien and other obligations.</HEAD>
<P>(a) <I>Liens.</I> At the initial and final closing of the loan, the mortgagor and the HFA must certify, and the HFA must determine, that the property covered by the mortgage is free from all liens other than the lien of the insured mortgage, except that the property may be subject to such inferior lien or liens as approved by the HFA as long as the insured mortgage has first priority for payment.
</P>
<P>(b) <I>Contractual obligations.</I> At the final closing of the loan, the mortgagor and the HFA must certify, and the HFA must determine, that all contractual obligations in connection with the mortgage transaction, including the purchase of the property and the improvements to the property, are paid. An exception is made for obligations that are approved by the HFA and determined by the HFA to be of a lesser priority for payment than the obligation of the insured mortgage.


</P>
</DIV8>


<DIV8 N="§ 266.417" NODE="24:2.1.1.2.28.5.216.6" TYPE="SECTION">
<HEAD>§ 266.417   Authority to adjust mortgage insurance amount.</HEAD>
<P>In order to protect the mortgage insurance funds, the Commissioner has authority in his or her sole discretion, at any time prior to and including final endorsement, to adjust the amount of the mortgage insurance. 


</P>
</DIV8>


<DIV8 N="§ 266.420" NODE="24:2.1.1.2.28.5.216.7" TYPE="SECTION">
<HEAD>§ 266.420   Closing and endorsement by the Commissioner.</HEAD>
<P>(a) <I>Closing.</I> Before disbursement of loan advances in periodic advances cases, and in all cases after completion of construction, repair or substantial rehabilitation, the HFA must hold a closing and submit a closing docket with required documentation to the Commissioner or the Commissioner's authorized Departmental representative for insurance of the mortgage by endorsement of the mortgage note. The note must provide that the mortgage is insured under section 542(c) of the Housing and Community Development Act of 1992 and the regulations set forth in this part that are in effect on the date of endorsement. The note must also specify the date of endorsement, <I>i.e.,</I> the date of HUD endorsement of the project mortgage, and the risk of loss assumed by the HFA and by HUD. 
</P>
<P>(b) <I>Closing docket.</I> The HFA's submission must include a certification that it has obtained written HUD approval of compliance with the requirements referred to in § 266.210, and certifications and information as follows: 
</P>
<P>(1) Information concerning the mortgage amount and term, location, number and type of units, income and expenses, rents, projects and market occupancy percentages, value/replacement cost, interest rate, and similar statistical information in accordance with the Commissioner's administrative procedures. 
</P>
<P>(2) Copies of the amortization schedule, Note and Risk-Sharing Agreement. 
</P>
<P>(3) Certification that the loan has been processed, prudently underwritten (including a determination that a market exists for the project), cost certified (if the project is being submitted for final endorsement) and closed in full compliance with the HFA's standards and requirements (or where the mortgage is insured under Level II, in full compliance with the underwriting standards, loan terms and conditions, and asset management and servicing procedures, as approved by HUD).
</P>
<P>(4) At the time of final endorsement, for periodic advances cases, a certification that the advances were made in accordance with the mortgage pursuant to § 266.310. 
</P>
<P>(5) A copy of the HFA-approved cost certification if the project is submitted for final endorsement. 
</P>
<P>(6) A certification that equal employment requirements are followed. 
</P>
<P>(7) A certification that the HFA has reviewed and approved the Affirmative Fair Housing Marketing Plan, required by § 266.215(a), and found it acceptable. 
</P>
<P>(8) A certification that a dedicated account, if required, has been increased in accordance with § 266.110(b). 
</P>
<P>(9) Certifications required under § 266.415 concerning liens and contractual obligations. 
</P>
<P>(10) Copies of the Hazard Insurance Policy with a clause making the loss payable to the HFA. 
</P>
<P>(11) For projects subject to Davis-Bacon prevailing requirements under § 266.225, the certification and information concerning payment of prevailing wage rates required by § 266.225(d). 
</P>
<P>(12) Certified copies of mortgage (deed of trust) with attached regulatory agreement, and note for HUD files. 
</P>
<P>(13) Certification that housing claiming the housing for older persons exemption is eligible for and complies with 42 U.S.C. 3607(b) and 24 CFR part 100, subpart E.
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83444, Dec. 22, 2020]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:2.1.1.2.28.6" TYPE="SUBPART">
<HEAD>Subpart F—Project Management and Servicing</HEAD>


<DIV8 N="§ 266.500" NODE="24:2.1.1.2.28.6.216.1" TYPE="SECTION">
<HEAD>§ 266.500   General.</HEAD>
<P>(a) <I>HFA responsibility for monitoring project owners.</I> The HFA will have full responsibility for managing and servicing projects insured under this part (in accordance with procedures disclosed and submitted with its application and the requirements of this part). The HFA is responsible for monitoring and determining the compliance of the project owner in accordance with the provisions of this subpart. HUD will monitor the performance of the HFA, not the project owner, to determine its compliance with the provisions covered under this subpart.
</P>
<P>(b) <I>HUD review of procedures for HFAs with Level II approval.</I> Asset management and servicing procedures of any HFA electing to take less than 50 percent of the risk on certain projects are subject to review, modification, and approval by HUD in accordance with § 266.100(b).
</P>
<CITA TYPE="N">[85 FR 83444, Dec. 22, 2020] 


</CITA>
</DIV8>


<DIV8 N="§ 266.505" NODE="24:2.1.1.2.28.6.216.2" TYPE="SECTION">
<HEAD>§ 266.505   Regulatory agreement requirements.</HEAD>
<P>(a) <I>General.</I> (1) The HFA must execute a Regulatory Agreement, in recordable form, between the mortgagor and the HFA to be in force for the duration of the insured mortgage and note or bond. The Regulatory Agreement must include a description of the property. The Regulatory Agreement must be incorporated by reference into the mortgage and recorded with the mortgage. 
</P>
<P>(2) The Regulatory Agreement executed between the HFA and the mortgagor must be binding upon the mortgagor and any of its successors and assigns and upon the HFA and any of its successors for so long as the mortgage is insured by HUD or HUD holds an HFA debenture issued in connection with a claim arising from the insured mortgage. The HFA may not assign the Regulatory Agreement. 
</P>
<P>(3) The HFA will enforce the Regulatory Agreement and take actions against any mortgagors who violate its provisions. Such actions may involve a declaration of default and application to any court for specific performance of the agreement. 
</P>
<P>(b) <I>Requirements.</I> The Regulatory Agreement must require the mortgagor to comply with the provisions of this part and obligate the mortgagor, among other things, to: 
</P>
<P>(1) Make all payments due under the mortgage and note/bond. 
</P>
<P>(2) Where necessary, establish a sinking fund for future capital needs. 
</P>
<P>(3) Maintain the project as affordable housing, as defined in § 266.5. 
</P>
<P>(4) Continue to use dwelling units for their original purposes. 
</P>
<P>(5) Comply with such other requirements as may be established by the HFA and set forth in the Regulatory Agreement. 
</P>
<P>(6) [Reserved]
</P>
<P>(7) Maintain complete books and records established solely for the project.
</P>
<P>(8) Comply with the Affirmative Fair Housing Marketing Plan, required by § 266.215(a), and all other fair housing and equal opportunity requirements. 
</P>
<P>(9) Operate as a single asset mortgagor. 
</P>
<P>(10) Make books and records available for HUD or U.S. Government Accountability Office (GAO) review with appropriate notification. 
</P>
<P>(11) Permit HUD officials or employees to inspect the project upon request by the Commissioner. 
</P>
<P>(c) <I>Enforcement.</I> The Regulatory Agreement shall be enforced by the HFA. 
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 63 FR 46578, 46593, Sept. 1, 1998; 65 FR 16296, Mar. 27, 2000; 85 FR 83444, Dec. 22, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 266.507" NODE="24:2.1.1.2.28.6.216.3" TYPE="SECTION">
<HEAD>§ 266.507   Maintenance requirements.</HEAD>
<P>The mortgagor must maintain the project in accordance with the physical condition standards in 24 CFR part 5, subpart G (Physical Condition Standards and Inspection Requirements).
</P>
<CITA TYPE="N">[85 FR 83444, Dec. 22, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 266.510" NODE="24:2.1.1.2.28.6.216.4" TYPE="SECTION">
<HEAD>§ 266.510   HFA responsibilities.</HEAD>
<P>(a) <I>Inspections.</I> The HFA must perform inspections in accordance with the physical inspection procedures in 24 CFR part 5, subpart G (Physical Condition Standards and Inspection Requirements).
</P>
<P>(b) <I>Annual audits of projects.</I> The HFA must analyze projects' annual audits and provide a copy to HUD along with a summary of unresolved findings and actions planned, with target dates, to correct unresolved findings. 
</P>
<P>(c) <I>HFA's annual financial statement.</I> The HFA must provide HUD with annual audited financial statement in accordance with the requirements of 2 CFR part 200, subpart F. 
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 63 FR 46578, Sept. 1, 1998; 65 FR 16296, Mar. 27, 2000; 80 FR 75936, Dec. 7, 2015; 85 FR 83444, Dec. 22, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 266.515" NODE="24:2.1.1.2.28.6.216.5" TYPE="SECTION">
<HEAD>§ 266.515   Record retention.</HEAD>
<P>(a) <I>Loan origination and servicing.</I> Records pertaining to the mortgage loan origination and servicing of the loan must be maintained for as long as the insurance remains in force. 
</P>
<P>(b) <I>Defaults and claims.</I> Records pertaining to a mortgage default and claim must be retained from the date of default through final settlement of the claim for a period of no less than three years after final settlement. 


</P>
</DIV8>


<DIV8 N="§ 266.520" NODE="24:2.1.1.2.28.6.216.6" TYPE="SECTION">
<HEAD>§ 266.520   Program monitoring and compliance.</HEAD>
<P>HUD will monitor the performance of the HFA in accordance with the provisions covered under this subpart.


</P>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:2.1.1.2.28.7" TYPE="SUBPART">
<HEAD>Subpart G—Contract Rights and Obligations</HEAD>


<DIV7 N="216" NODE="24:2.1.1.2.28.7.216" TYPE="SUBJGRP">
<HEAD>Mortgage Insurance Premiums</HEAD>


<DIV8 N="§ 266.600" NODE="24:2.1.1.2.28.7.216.1" TYPE="SECTION">
<HEAD>§ 266.600   Mortgage insurance premium: Insurance upon completion.</HEAD>
<P>(a) <I>Initial premium.</I> For projects insured upon completion, on the date of the final closing, the HFA shall pay to the Commissioner an initial premium in an amount established by the Commissioner under § 266.604.
</P>
<P>(b) <I>Premium payable with first payment of principal.</I> On the date of the first payment of principal the HFA shall pay a second premium (calculated on a per annum basis) in an amount established by the Commissioner under § 266.604.
</P>
<P>(c) <I>Subsequent premiums.</I> Until one of the conditions is met under § 266.606(a), the HFA on each anniversary of the date of the first principal payment shall pay to the Commissioner an annual mortgage insurance premium in an amount established by the Commissioner under § 266.604, without taking into account delinquent payments, or partial claim payment under § 266.630, or prepayments, for the year following the date on which the premium becomes payable.
</P>
<CITA TYPE="N">[85 FR 83444, Dec. 22, 2020]




</CITA>
</DIV8>


<DIV8 N="§ 266.602" NODE="24:2.1.1.2.28.7.216.2" TYPE="SECTION">
<HEAD>§ 266.602   Mortgage insurance premium: Insured advances.</HEAD>
<P>(a) <I>Initial premium.</I> For projects involving insured advances, on the date of the initial closing, the HFA shall pay to the Commissioner an initial premium equal to an amount established by the Commissioner under § 266.604.
</P>
<P>(b) <I>Interim premium.</I> On each anniversary of the initial closing, the HFA shall pay an interim mortgage insurance premium in an amount established by the Commissioner under § 266.604. The HFA shall continue to pay the interim mortgage insurance premiums until the date of the first principal payment.
</P>
<P>(c) <I>Premium payable with first payment of principal.</I> On the date of the first principal payment, the HFA shall pay a mortgage insurance premium in an amount established by the Commissioner under § 266.604. The HFA shall adjust this payment by deducting an amount equal to the portion of the last premium paid that is attributable to the months after the date of the first payment to principal. Any partial month is to be counted as a whole month. The HFA shall remit the net adjusted mortgage premium to the Commissioner and refund the amount of the adjustment (overpayment) to the mortgagor.
</P>
<P>(d) <I>Subsequent premiums.</I> Until one of the conditions is met under § 266.606(a), the HFA on each anniversary of the date of the first principal payment shall pay to the Commissioner an annual mortgage insurance premium in an amount established by the Commissioner under § 266.604, without taking into account delinquent payments, prepayments, or a partial claim payment under § 266.630, for the year following the date on which the premium becomes payable.
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83444, Dec. 22, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 266.604" NODE="24:2.1.1.2.28.7.216.3" TYPE="SECTION">
<HEAD>§ 266.604   Mortgage insurance premium: Other requirements.</HEAD>
<P>(a) <I>Premium calculations on or after first principal payment.</I> The premiums payable to the Commissioner on and after the first principal payment shall be calculated in accordance with the amortization schedule prepared by the HFA for final closing and an amount established by the Commissioner through a notice published in the <E T="04">Federal Register</E> and providing a 30-day comment period. After the comments have been considered, HUD will publish a final notice announcing the premium and its effective date. The premium shall not take into account delinquent payments or prepayments.
</P>
<P>(b) <I>Future premium changes.</I> Notice of future premium changes will be published in the <E T="04">Federal Register.</E> The Commissioner will propose mortgage insurance premium changes for the Risk-Sharing Program and provide a 30-calendar day public comment period for the purpose of accepting comments on whether the proposed changes are appropriate. After the comments have been considered, HUD will publish a final notice announcing the premium and its effective date.
</P>
<P>(c) <I>Closing information.</I> The HFA shall provide final closing information to the Commissioner within 15 calendar days of the final closing in a format prescribed by the Commissioner. In addition, the HFA shall submit a copy of the amortization schedule. This amortization shall be used to compute and collect all future mortgage insurance premiums subject to § 266.600(c) or § 266.602(d). If the mortgage is modified, the HFA shall submit to the Commissioner a copy of the revised amortization schedule, which shall be used to compute and collect all future mortgage insurance premiums subject to § 266.600(c) or § 266.602(d).
</P>
<P>(d) <I>Due date for premium payments.</I> Mortgage insurance premiums are due on the first day of the month of the anniversary of the first payment to principal. Any premium received by the Commissioner more than 15 calendar days after the due date shall be assessed a late charge of 4 percent of the amount of the premium payment due. Mortgage insurance premiums that are paid to the Commissioner more than 30 calendar days after the due date shall begin to accrue interest at the rate prescribed by the Treasury Fiscal Requirements Manual.
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83444, Dec. 22, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 266.606" NODE="24:2.1.1.2.28.7.216.4" TYPE="SECTION">
<HEAD>§ 266.606   Mortgage insurance premium: Duration and method of paying.</HEAD>
<P>(a) <I>Duration of payments.</I> Mortgage insurance premium payments must continue annually until one of the following occurs: 
</P>
<P>(1) The mortgage is paid in full; 
</P>
<P>(2) A deed to the HFA is filed for record; 
</P>
<P>(3) An application for initial claim payment is received by the Commissioner; or 
</P>
<P>(4) The contract of insurance is otherwise terminated. 
</P>
<P>(b) <I>Method of payment.</I> The HFA shall pay any mortgage insurance premium required by this part in cash. 
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83440, Dec. 22, 2020]




</CITA>
</DIV8>


<DIV8 N="§ 266.608" NODE="24:2.1.1.2.28.7.216.5" TYPE="SECTION">
<HEAD>§ 266.608   Mortgage insurance premium: Pro rata refund.</HEAD>
<P>If the contract of insurance is terminated by payment in full or is terminated by the HFA on a form prescribed by the Commissioner, after the date of the first payment to principal, the Commissioner shall refund any mortgage insurance premium for the period after the effective date of the termination of insurance. The refund shall be mailed to the HFA for credit to the mortgagor's account. In computing the pro rata portion of the annual mortgage insurance premium, the date of termination of insurance shall be the last day of the month in which the mortgage is prepaid or the Commissioner receives a notification of termination, whichever is later. No refund shall be made if the insurance was terminated because of the submission of an application for initial claim payment or if the termination occurs before the date of the first payment to principal. 
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83440, Dec. 22, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 266.610" NODE="24:2.1.1.2.28.7.216.6" TYPE="SECTION">
<HEAD>§ 266.610   Method of payment of mortgage insurance premiums.</HEAD>
<P>In the cases that the Commissioner deems appropriate, the Commissioner may require, by means of instructions communicated to all affected mortgagees, that mortgage insurance premiums be remitted electronically.
</P>
<CITA TYPE="N">[63 FR 1303, Jan. 8, 1998]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="217" NODE="24:2.1.1.2.28.7.217" TYPE="SUBJGRP">
<HEAD>Insurance Endorsement</HEAD>


<DIV8 N="§ 266.612" NODE="24:2.1.1.2.28.7.217.7" TYPE="SECTION">
<HEAD>§ 266.612   Insurance endorsement.</HEAD>
<P>(a) <I>Initial endorsement.</I> The Commissioner shall indicate his or her insurance of the mortgage by endorsing the original credit instrument. 
</P>
<P>(b) <I>Final endorsement.</I> When all advances of mortgage proceeds have been made and all other applicable terms and conditions have been complied with to the satisfaction of the Commissioner, the Commissioner shall indicate on the original credit instrument the total of all advances that have been approved for insurance and again endorse such instrument. 
</P>
<P>(c) <I>Effect of endorsement.</I> From the date of initial endorsement, the Commissioner and the HFA shall be bound by the provisions of this subpart to the same extent as if they had executed a contract including the provisions of this subpart and the applicable sections of the Act. 


</P>
</DIV8>

</DIV7>


<DIV7 N="218" NODE="24:2.1.1.2.28.7.218" TYPE="SUBJGRP">
<HEAD>Assignments</HEAD>


<DIV8 N="§ 266.616" NODE="24:2.1.1.2.28.7.218.8" TYPE="SECTION">
<HEAD>§ 266.616   Transfer of partial interest under participation agreement.</HEAD>
<P>The HFA may not assign the mortgage. However, a partial interest in an insured mortgage or pool of insured mortgages may be transferred under a participation agreement or arrangement (such as a declaration of trust or the issuance of pass-through certificates), without obtaining the approval of the Commissioner, if the following conditions are met: 
</P>
<P>(a) Legal title to the insured mortgage or mortgages shall be held by the HFA; and 
</P>
<P>(b) The participation agreement, declaration of trust or other instrument under which the partial interest is transferred shall provide that: 
</P>
<P>(1) The HFA shall remain mortgagee of record under the contract of mortgage insurance; 
</P>
<P>(2) The Commissioner shall have no obligation to recognize or deal with anyone other than the HFA with respect to the rights, benefits, and obligations of the mortgagee under the contract of insurance; and 
</P>
<P>(3) The mortgagor shall have no obligation to recognize or do business with any one other than the HFA or, if applicable, its servicing agent with respect to rights, benefits, and obligations of the mortgagor or the mortgagee under the mortgage. 


</P>
</DIV8>

</DIV7>


<DIV7 N="219" NODE="24:2.1.1.2.28.7.219" TYPE="SUBJGRP">
<HEAD>Termination</HEAD>


<DIV8 N="§ 266.620" NODE="24:2.1.1.2.28.7.219.9" TYPE="SECTION">
<HEAD>§ 266.620   Termination of contract of insurance and indemnification.</HEAD>
<P>(a) The contract of insurance shall terminate if any of the following occurs: 
</P>
<P>(1) The mortgage is paid in full; 
</P>
<P>(2) The HFA acquires the mortgaged property and notifies the Commissioner that it will not file an insurance claim; 
</P>
<P>(3) A party other than HFA acquires the property at a foreclosure sale; 
</P>
<P>(4) The HFA notifies the Commissioner of Termination of Insurance (voluntary termination); 
</P>
<P>(5) The HFA or its successors commit fraud or make a material misrepresentation to the Commissioner with respect to information culminating in the contract of insurance on the mortgage or while the contract of insurance is in existence; 
</P>
<P>(6) The receipt by the Commissioner of an Application for Final Claims Settlement; 
</P>
<P>(7) If the HFA acquires the mortgaged property and fails to make an initial claim. 
</P>
<P>(b) In lieu of termination of the mortgage insurance contract pursuant to paragraph (a)(5) of this section, the Commissioner may, in his or her full discretion, permit a Level I participant rated “A” or higher to indemnify HUD, or otherwise reimburse HUD in a manner acceptable to the Commissioner, for the full amount of the mortgage claim.
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83440, 83445, Dec. 22, 2020]




</CITA>
</DIV8>


<DIV8 N="§ 266.622" NODE="24:2.1.1.2.28.7.219.10" TYPE="SECTION">
<HEAD>§ 266.622   Notice and date of termination by the Commissioner.</HEAD>
<P>The Commissioner shall notify the HFA that the contract of insurance has been terminated and shall establish the effective date of termination. The termination shall be the last day of the month in which one of the events specified in § 266.620 occurs. 
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83440, Dec. 22, 2020]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="220" NODE="24:2.1.1.2.28.7.220" TYPE="SUBJGRP">
<HEAD>Claim Procedures</HEAD>


<DIV8 N="§ 266.626" NODE="24:2.1.1.2.28.7.220.11" TYPE="SECTION">
<HEAD>§ 266.626   Notice of default and filing an insurance claim.</HEAD>
<P>(a) <I>Definition of default.</I> (1) A monetary default exists when the mortgagor fails to make any payment due under the mortgage. 
</P>
<P>(2) A covenant default exists when the mortgagor fails to perform any other covenant under the provision of the mortgage or the regulatory agreement, which is incorporated by reference in the mortgage. An HFA becomes eligible for insurance benefits on the basis of a covenant default only after the HFA has accelerated the debt and the owner has failed to pay the full amount due, thus converting a covenant default into a monetary default. 
</P>
<P>(b) <I>Date of default.</I> For purposes of this subpart, the date of default is: 
</P>
<P>(1) The date of the first uncorrected failure to perform a mortgage covenant or obligation; or 
</P>
<P>(2) The date of the first failure to make a monthly payment that is not covered by subsequent payments, when such subsequent payments are applied to the overdue monthly payments in the order in which they were due. 
</P>
<P>(c) <I>Notice of default.</I> If a default (as defined in paragraph (a) of this section) continues for a period of 30 calendar days, the HFA must notify the Commissioner within 10 calendar days thereafter, unless the default is cured within the 30-day period. Unless waived by the Commissioner, the HFA must submit this notice monthly, on a form prescribed by the Commissioner, until the default has been cured or the HFA has filed an application for an initial claim payment. In cases of mortgage acceleration, the mortgagee must first give notice of the default. 
</P>
<P>(d) <I>Timing of claim filing.</I> Unless a written extension is granted by HUD, the HFA must file an application for initial claim payment (or, if appropriate, for partial claim payment) within 75 calendar days from the date of default and may do so as early as the first day of the month following the month for which a payment was missed. Upon request of the HFA, HUD may extend, up to 180 calendar days from the date of default, the deadline for filing a claim. In those cases where the HFA certifies that the project owner is in the process of transacting a bond refunder, refinancing the mortgage, or changing the ownership for the purpose of curing the default and bringing the mortgage current, HUD may extend the deadline for filing a claim beyond 180 calendar days, not to exceed 360 calendar days from the date of default.
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83445, Dec. 22, 2020] 


</CITA>
</DIV8>


<DIV8 N="§ 266.628" NODE="24:2.1.1.2.28.7.220.12" TYPE="SECTION">
<HEAD>§ 266.628   Initial claim payments.</HEAD>
<P>(a) <I>Determination of initial claim amount.</I> (1) The initial claim amount is based on the unpaid principal balance of the mortgage note as of the date of default, plus interest at the mortgage note rate from date of default to date of initial claim payment. The mortgage note interest component of the initial claim amount is subject to curtailment as provided in paragraph (b) of this section. 
</P>
<P>(2) HUD shall make an initial claim payment to the HFA that is equal to the initial claim amount, less any delinquent mortgage insurance premiums, late charges and interest, assessed under § 266.604(d). 
</P>
<P>(3) The HFA must use the proceeds of the initial claim payment to retire any bonds or any other financing mechanisms securing the mortgage within 30 calendar days of the initial claim payment. Any excess funds resulting from such retirement or repayment shall be returned to HUD within 30 calendar days of the retirement. 
</P>
<P>(b) <I>Curtailment of interest for late filings.</I> In determining the mortgage note interest component of the initial claim amount, if the HFA fails to meet any of the requirements of this section within the specified time (including any granted extension of time), HUD shall curtail the accrual of mortgage note interest by the number of days by which the required action was late. 
</P>
<P>(c) <I>Method of payment.</I> HUD shall pay the claim in cash. 
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83445, Dec. 22, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 266.630" NODE="24:2.1.1.2.28.7.220.13" TYPE="SECTION">
<HEAD>§ 266.630   Partial payment of claims.</HEAD>
<P>(a) <I>General.</I> When the Commissioner receives a claim for a partial payment under § 266.626(d), the Commissioner may make a partial payment of claim in accordance with the requirements of this section. If the HFA has not previously received a partial claim payment, the HFA may file a claim for a partial claim payment under § 266.630. Otherwise, the HFA must file for an initial claim payment under § 266.628. 
</P>
<P>(b) <I>HFA submission.</I> In addition to any other requirements set forth in administration instructions, the HFA must provide the following information with its application for a partial claim payment: 
</P>
<P>(1) The amount by which the HFA will reduce the principal on the insured mortgage and the amount of delinquent interest on the insured mortgage that the HFA will defer based on the anticipated closing date; and 
</P>
<P>(2) A certification that: 
</P>
<P>(i) The amount of the principal reduction of the insured first mortgage does not exceed 50 percent of the unpaid principal balance; 
</P>
<P>(ii) The relief resulting from the partial claim payment when considered with other resources available to the project are sufficient to restore the financial viability of the project; 
</P>
<P>(iii) The project is or can (at reasonable cost) be made structurally sound; 
</P>
<P>(iv) The management of the project is satisfactory; 
</P>
<P>(v) The default under the insured mortgage was beyond the control of the mortgagor. 
</P>
<P>(c) <I>Claim processing</I>—(1) <I>Acceptable application.</I> If the HFA's application is acceptable, the Commissioner shall notify the HFA to process the partial payment, which will include the modification of the existing mortgage and the execution by the mortgagor of a second mortgage payable to the HFA. When the second mortgage is closed, the HFA shall notify the Commissioner, in a form and manner prescribed in administrative instructions. Upon receipt of notice from the HFA, the Commissioner shall make the partial claim payment. 
</P>
<P>(2) <I>Unacceptable application.</I> If the application is unacceptable, the Commissioner shall either advise the HFA of the information needed to make the application acceptable or return the application for further action. The HFA is granted an extension of 30 calendar days from the date of any notification for further action. 
</P>
<P>(d) <I>Requirements</I>—(1) <I>One partial claim payment.</I> Only one partial claim payment may be made under a contract of insurance.
</P>
<P>(2) <I>Partial claim payment amount.</I> The amount of the partial claim payment is limited to 50% of the amount of relief provided by the HFA in the form of a reduction in principal and a reduction of delinquent interest due on the insured mortgage times the lesser of HUD's percentage of the risk of loss or 50 percent. 
</P>
<P>(3) <I>HFA second mortgage.</I> Repayment of the relief provided by the HFA must be secured by a second mortgage to the HFA. This second mortgage may provide for postponed amortization and may not be assigned by the HFA. This second mortgage is not insured under this part and may not be insured under any other HUD-related insurance program. 
</P>
<P>(4) <I>Partial claim repayment by HFA.</I> The HFA must remit to HUD a percentage of all amounts collected on the HFA's second mortgage within 15 calendar days of receipt by the HFA. The applicable percentage is equal to the percentage used in paragraph (d)(2) of this section to determine the partial claim payment amount. Payments made after the 15th day must include a 5 percent late charge plus accrued interest at the debenture rate. 
</P>
<P>(5) <I>Certified statements of amounts collected.</I> As long as the second mortgage remains of record, the HFA must submit to the Commissioner an annual certified statement of the amounts collected by the HFA. The HFA must submit a final certified statement within 30 calendar days after the second mortgage is paid in full, foreclosed, or otherwise terminated.
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83445, Dec. 22, 2020] 


</CITA>
</DIV8>


<DIV8 N="§ 266.632" NODE="24:2.1.1.2.28.7.220.14" TYPE="SECTION">
<HEAD>§ 266.632   Withdrawal of claim.</HEAD>
<P>In case of a default and subsequent filing of claim, the HFA shall determine the form of workout or modification and will inform HUD of the type of mortgage relief determined to be appropriate. If the default is cured after the claim is made but before the initial claim payment is paid by HUD, the HFA may, in writing, withdraw the claim, and insurance will continue as if the default had not occurred. 


</P>
</DIV8>


<DIV8 N="§ 266.634" NODE="24:2.1.1.2.28.7.220.15" TYPE="SECTION">
<HEAD>§ 266.634   Reinstatement of the contract of insurance.</HEAD>
<P>(a) <I>Conditions for reinstatement.</I> After the initial claim payment, HUD may reinstate the contract of insurance on the following conditions: 
</P>
<P>(1) The HFA has not acquired the project; 
</P>
<P>(2) The mortgagor has cured the default; and 
</P>
<P>(3) The HFA requests that HUD reinstate the contract of insurance. 
</P>
<P>(b) <I>Notification of reinstatement.</I> If reinstatement is acceptable to HUD, HUD shall notify the HFA of the date the contract of insurance will be reinstated and shall advise the HFA of the payment needed to reinstate the contract of insurance. 
</P>
<P>(c) <I>Payment.</I> Within 30 calendar days of the date of the notice under paragraph (b) of this section, the HFA shall pay HUD an amount equal to the initial claim amount, as determined under § 266.628(a)(1), plus an amount equal to the accrued and unpaid interest on the HFA Debenture through the reinstatement date, plus an amount equal to the mortgage insurance premium for the period from the date of reinstatement of the contract of insurance to the next anniversary date for payment of the mortgage insurance premium. 
</P>
<P>(d) <I>Cancellation of debenture.</I> Upon receipt from the HFA of the amount specified in paragraph (c) of this section, HUD shall return the HFA debenture for cancellation. 
</P>
<P>(e) <I>Continuation of contract of insurance.</I> Upon reinstatement, the contract of insurance shall continue as if the default had not occurred. 
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83445, Dec. 22, 2020] 


</CITA>
</DIV8>


<DIV8 N="§ 266.636" NODE="24:2.1.1.2.28.7.220.16" TYPE="SECTION">
<HEAD>§ 266.636   Insuring new loans for defaulted projects.</HEAD>
<P>The HFA may not make another loan that is insured under this part to the same owner in the same project if HUD has paid a claim under this part. 


</P>
</DIV8>


<DIV8 N="§ 266.638" NODE="24:2.1.1.2.28.7.220.17" TYPE="SECTION">
<HEAD>§ 266.638   Issuance of HFA Debenture.</HEAD>
<P>(a) <I>Condition to initial claim payment.</I> The HFA must issue an instrument in the form of a debenture to HUD within 30 calendar days of receiving the initial claim payment. The HFA Debenture shall meet the following requirements and shall be in a form that has been approved by HUD as part of the application approval process. 
</P>
<P>(b) <I>Term of HFA Debenture.</I> The HFA Debenture shall be dated the same date that the initial claim payment is issued. The HFA Debenture shall have a term of 5 years in order to afford the mortgagor ample time to cure the default or the HFA time to foreclose and/or resell the project. HUD may provide a written extension of the 5-year term if the HFA certifies and provides documentation that the project owner has filed bankruptcy and the HFA is taking action to have the project discharged from the bankruptcy. The HFA Debenture shall, during this extended period, continue to bear interest as described below at HUD's published debenture rate at the earlier of initial endorsement or final endorsement. Interest shall be due and payable annually on the anniversary date of the initial claim payment. Interest is due on the full face amount of the HFA Debenture through the term of the HFA Debenture or through the date an application for final claim payment is received by the Commissioner. 
</P>
<P>(c) <I>HFA Debenture amount.</I> (1) The HFA Debenture shall be for the full initial claim amount as determined under § 266.628(a)(1) (minus any excess funds returned to HUD under § 266.628(a)(3)). 
</P>
<P>(2) The full amount of the HFA Debenture shall be payable to HUD upon maturity, unless the HFA Debenture is canceled because of: 
</P>
<P>(i) A reinstatement of the contract of insurance under § 266.634; or 
</P>
<P>(ii) Final claim settlement under § 266.654. 
</P>
<P>(d) <I>HFA Debenture interest rate.</I> The HFA Debenture shall bear interest at HUD's published debenture rate at the earlier of initial endorsement or final endorsement. Interest shall be due and payable annually on the anniversary date of the initial claim payment and on the date of redemption when redeemed or canceled before an anniversary date. Interest shall be computed on the full face amount of the HFA Debenture through the term of the HFA Debenture. 
</P>
<P>(e) <I>Form of HFA Debenture.</I> The HFA Debenture should follow the standard form of a State/Municipal Debenture issued under the Uniform Commercial Code, where applicable, and shall be supported by the full faith and credit of the HFA. For HFAs that operate as departments or divisions of States or units of local government and where such HFAs cannot pledge the full faith and credit of the HFA, such HFAs may collateralize their obligation through a letter of credit, reinsurance, or other forms of credit acceptable to the Commissioner. 
</P>
<P>(f) <I>Debenture registration.</I> Unless otherwise required by law, including State or local laws, or other governing bodies, HUD will not require the HFA Debenture to be “Registered” (with the Securities and Exchange Commission) as it is a direct, or private, placement, and not a public offering, that is supported by the full faith and credit of the HFA. 
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83445, Dec. 22, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 266.640" NODE="24:2.1.1.2.28.7.220.18" TYPE="SECTION">
<HEAD>§ 266.640   Foreclosure and acquisition.</HEAD>
<P>The HFA is not required to foreclose the insured mortgage. It may accept a deed-in-lieu of foreclosure. 


</P>
</DIV8>


<DIV8 N="§ 266.642" NODE="24:2.1.1.2.28.7.220.19" TYPE="SECTION">
<HEAD>§ 266.642   Appraisals.</HEAD>
<P>Where actions taken or caused to be taken by the HFA have the effect of the recovery of less than the face amount of the HFA Debenture held by HUD, an appraisal should be made to determine the value of the project. The appraisal should assume a willing buyer and a willing seller. The appraisal must be done within the 45-calendar-day period immediately preceding the date when the HFA files an application for final claim settlement. If at the time of final claim settlement the HFA has not sold the project, an appraisal should be made to determine the value of the project at its highest and best use. 
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83445, Dec. 22, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 266.644" NODE="24:2.1.1.2.28.7.220.20" TYPE="SECTION">
<HEAD>§ 266.644   Application for final claim settlement.</HEAD>
<P>The HFA shall file an application for final settlement in accordance with the Commissioner's administrative procedures not later than 30 calendar days after any of the following: 
</P>
<P>(a) Sale of the property after foreclosure or after acquisition by deed-in-lieu of foreclosure; or 
</P>
<P>(b) Expiration of the term of the HFA debenture.
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83445, Dec. 22, 2020] 


</CITA>
</DIV8>


<DIV8 N="§ 266.646" NODE="24:2.1.1.2.28.7.220.21" TYPE="SECTION">
<HEAD>§ 266.646   Determining the amount of loss.</HEAD>
<P>The amount of the total loss to be shared by HUD and the HFA is equal to: 
</P>
<P>(a) The amount of the initial claim payment; 
</P>
<P>(b) Plus all items set forth in § 266.648; and 
</P>
<P>(c) Less all items set forth in § 266.650. 


</P>
</DIV8>


<DIV8 N="§ 266.648" NODE="24:2.1.1.2.28.7.220.22" TYPE="SECTION">
<HEAD>§ 266.648   Items included in total loss.</HEAD>
<P>In computing the total loss, the following items are added to the amount described in § 266.646(a): 
</P>
<P>(a) The amount of all payments that the HFA made from its own funds and not from project income for: 
</P>
<P>(1) Taxes, special assessments, and water bills that are liens before the Mortgage; and 
</P>
<P>(2) Fire and hazard insurance on the property. 
</P>
<P>(b) A reasonable amount of acquisition costs actually paid by the HFA. These costs may not include loss or damage resulting from the invalidity or unenforceability of the Mortgage lien or the unmarketability of the Mortgagor's title. 
</P>
<P>(c) Reasonable payments that the HFA made from its own funds and not from project income for: 
</P>
<P>(1) Preservation, operation and maintenance of the property; 
</P>
<P>(2) Repairs necessary to meet the requirements of local laws; 
</P>
<P>(3) Expenses in connection with the sale of property; and 
</P>
<P>(4) Bankruptcy expenses approved by HUD. 
</P>
<P>(d) The amount of HFA Debenture interest paid by the HFA to HUD. 
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83445, Dec. 22, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 266.650" NODE="24:2.1.1.2.28.7.220.23" TYPE="SECTION">
<HEAD>§ 266.650   Items deducted from total loss.</HEAD>
<P>In computing insurance benefits, the following items are deducted from the amounts described in § 266.646(a) and (b): 
</P>
<P>(a) All amounts received by the HFA on account of the mortgage after the date of default, including any partial payment of claim paid by HUD in the event a full claim follows a partial payment of claim; 
</P>
<P>(b) All cash, and/or funds related to the mortgaged property, including deposits and escrows made for the account of the mortgagor that the HFA holds (or to which it is entitled); 
</P>
<P>(c) The amount of any undrawn balance under a letter of credit that the HFA accepted in lieu of a cash deposit for an escrow agreement; 
</P>
<P>(d) Any net income from the mortgaged property/project that the HFA received after the date of default. 
</P>
<P>(e) The proceeds from the sale of the project or the appraised value of the project as provided in § 266.642 as follows: 
</P>
<P>(1) If the HFA disposes of the project through a negotiated sale, the amount deducted shall be the higher of the sales price or the appraised value. 
</P>
<P>(2) If the HFA disposes of the project through a competitive bid procedure approved by the Commissioner, the amount deducted shall be the sales price, even if it is lower than the appraised value. 
</P>
<P>(3) If the HFA has not disposed of the project within 5 years from the date of issuance of the HFA Debentures (unless an extension has been granted pursuant to § 266.638), the amount deducted shall be the appraised value. 
</P>
<P>(f) Any and all claims that the HFA has acquired in connection with the acquisition and sale of the property. Claims include but are not limited to returned premiums from canceled insurance policies, interest on investments of reserve for replacement funds, tax refunds, refunds of deposits left with utility companies, and amounts received as proceeds of a receivership. 
</P>
<P>(g) The amount of daily HFA Debenture interest accrued but not paid from the anniversary date of the last HFA Debenture interest payment to the date an application for final claim payment is received by the Commissioner. 
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83445, Dec. 22, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 266.652" NODE="24:2.1.1.2.28.7.220.24" TYPE="SECTION">
<HEAD>§ 266.652   Determining share of loss.</HEAD>
<P>The total loss computed in § 266.646 shall be shared by HUD and the HFA in accordance with their respective percentage of risk as specified in the note and the addendum to the Risk-Sharing Agreement between HUD and the HFA. 


</P>
</DIV8>


<DIV8 N="§ 266.654" NODE="24:2.1.1.2.28.7.220.25" TYPE="SECTION">
<HEAD>§ 266.654   Final claim settlement and HFA Debenture redemption.</HEAD>
<P>(a) <I>Final claim payment.</I> If the initial claim amount, as determined under § 266.628(a)(1), is less than HUD's share of the loss, HUD shall make a final claim payment to the HFA that is equal to the difference between HUD's share of the loss and the initial claim amount and shall return the HFA Debenture to the HFA for cancellation. 
</P>
<P>(b) <I>HFA reimbursement payment.</I> If the initial claim amount, as determined under § 266.628(a)(1), is more than HUD's share of the loss, the HFA shall, within 30 calendar days of notification by HUD of the amount due, remit to HUD an amount that is equal to the difference between the initial claim amount and HUD's share of the loss. The funds must be remitted in a manner prescribed in the Commissioner's administrative procedures. The HFA Debenture will be considered redeemed upon receipt of the cash payment. A 5 percent penalty will be charged and interest at the debenture rate will begin to accrue if the cash payment is not received within the prescribed period. If an HFA is in default under an existing debenture and files a claim on another project under this part, HUD will charge the HFA's Dedicated Account for the amount owed the Department. In cases of top-tier or A-rated HFA's which are not required to maintain a Dedicated Account, HUD will inform the rating agencies of the HFA's failure to pay on their debt obligation and of its violation of the Risk-Sharing Agreement. 
</P>
<P>(c) <I>Losses.</I> Losses sustained as a consequence of the (sole) negligence of an HFA (<I>e.g.,</I> failure to acquire adequate hazard insurance where such insurance is available) shall be the sole obligation of the HFA, notwithstanding the risk apportionment otherwise agreed to by HUD and the HFA. 
</P>
<P>(d) <I>Supplemental claim.</I> Any supplemental claim must be filed within one year from date of final claim settlement. 
</P>
<CITA TYPE="N">[59 FR 62524, Dec. 5, 1994, as amended at 85 FR 83446, Dec. 22, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 266.656" NODE="24:2.1.1.2.28.7.220.26" TYPE="SECTION">
<HEAD>§ 266.656   Recovery of costs after final claim settlement.</HEAD>
<P>If, after final claim settlement, the HFA recovers additional sums as the result of the sale of the project or otherwise, the total amount of such recovery shall be shared by HUD and the HFA in accordance with the prescribed percentage of shared risk. 


</P>
</DIV8>


<DIV8 N="§ 266.658" NODE="24:2.1.1.2.28.7.220.27" TYPE="SECTION">
<HEAD>§ 266.658   Program monitoring and compliance.</HEAD>
<P>HUD will monitor the performance of the HFA for compliance with the provisions of this subpart.


</P>
</DIV8>

</DIV7>

</DIV6>

</DIV5>


<DIV5 N="267" NODE="24:2.1.1.2.29" TYPE="PART">
<HEAD>PART 267—CREDIT RISK RETENTION
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>15 U.S.C. 78-o-11; 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>79 FR 77740, Dec. 24, 2014, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:2.1.1.2.29.1" TYPE="SUBPART">
<HEAD>Subpart A—Authority, Purpose, Scope and Definitions</HEAD>


<DIV8 N="§ 267.1" NODE="24:2.1.1.2.29.1.221.1" TYPE="SECTION">
<HEAD>§ 267.1   Credit risk retention exceptions and exemptions for HUD programs.</HEAD>
<P>The credit risk retention regulations codified at 12 CFR part 43 (Office of the Comptroller of the Currency); 12 CFR part 244 (Federal Reserve System); 12 CFR part 373 (Federal Deposit Insurance Corporation); 17 CFR part 246 (Securities and Exchange Commission); and 12 CFR part 1234 (Federal Housing Finance Agency) include exceptions and exemptions in subpart D of each of these codified regulations for certain transactions involving programs and entities under the jurisdiction of the Department of Housing and Urban Development.
</P>
<CITA TYPE="N">[79 FR 77766, Dec. 24, 2014]


</CITA>
</DIV8>


<DIV8 N="§ 267.2" NODE="24:2.1.1.2.29.1.221.2" TYPE="SECTION">
<HEAD>§ 267.2   Definitions.</HEAD>
<P>For purposes of this part, the following definitions apply:
</P>
<P><I>ABS interest</I> means:
</P>
<P>(1) Any type of interest or obligation issued by an issuing entity, whether or not in certificated form, including a security, obligation, beneficial interest or residual interest (other than an uncertificated regular interest in a REMIC that is held by another REMIC, where both REMICs are part of the same structure and a single REMIC in that structure issues ABS interests to investors, or a non-economic residual interest issued by a REMIC), payments on which are primarily dependent on the cash flows of the collateral owned or held by the issuing entity; and
</P>
<P>(2) Does not include common or preferred stock, limited liability interests, partnership interests, trust certificates, or similar interests that:
</P>
<P>(i) Are issued primarily to evidence ownership of the issuing entity; and
</P>
<P>(ii) The payments, if any, on which are not primarily dependent on the cash flows of the collateral held by the issuing entity; and
</P>
<P>(3) Does not include the right to receive payments for services provided by the holder of such right, including servicing, trustee services and custodial services.
</P>
<P><I>Affiliate</I> of, or a person <I>affiliated</I> with, a specified person means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.
</P>
<P><I>Appropriate Federal banking agency</I> has the same meaning as in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813).
</P>
<P><I>Asset</I> means a self-liquidating financial asset (including but not limited to a loan, lease, mortgage, or receivable).
</P>
<P><I>Asset-backed security</I> has the same meaning as in section 3(a)(79) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(79)).
</P>
<P><I>Collateral</I> means, with respect to any issuance of ABS interests, the assets that provide the cash flow and the servicing assets that support such cash flow for the ABS interests irrespective of the legal structure of issuance, including security interests in assets or other property of the issuing entity, fractional undivided property interests in the assets or other property of the issuing entity, or any other property interest in or rights to cash flow from such assets and related servicing assets. Assets or other property <I>collateralize</I> an issuance of ABS interests if the assets or property serve as collateral for such issuance.
</P>
<P><I>Commercial real estate loan</I> has the same meaning as in § 267.14.
</P>
<P><I>Commission</I> means the Securities and Exchange Commission.
</P>
<P><I>Control</I> including the terms “controlling,” “controlled by” and “under common control with”:
</P>
<P>(1) Means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.
</P>
<P>(2) Without limiting the foregoing, a person shall be considered to control another person if the first person:
</P>
<P>(i) Owns, controls or holds with power to vote 25 percent or more of any class of voting securities of the other person; or
</P>
<P>(ii) Controls in any manner the election of a majority of the directors, trustees or persons performing similar functions of the other person.
</P>
<P><I>Credit risk</I> means:
</P>
<P>(1) The risk of loss that could result from the failure of the borrower in the case of a securitized asset, or the issuing entity in the case of an ABS interest in the issuing entity, to make required payments of principal or interest on the asset or ABS interest on a timely basis;
</P>
<P>(2) The risk of loss that could result from bankruptcy, insolvency, or a similar proceeding with respect to the borrower or issuing entity, as appropriate; or
</P>
<P>(3) The effect that significant changes in the underlying credit quality of the asset or ABS interest may have on the market value of the asset or ABS interest.
</P>
<P><I>Creditor</I> has the same meaning as in 15 U.S.C. 1602(g).
</P>
<P><I>Depositor</I> means:
</P>
<P>(1) The person that receives or purchases and transfers or sells the securitized assets to the issuing entity;
</P>
<P>(2) The sponsor, in the case of a securitization transaction where there is not an intermediate transfer of the assets from the sponsor to the issuing entity; or
</P>
<P>(3) The person that receives or purchases and transfers or sells the securitized assets to the issuing entity in the case of a securitization transaction where the person transferring or selling the securitized assets directly to the issuing entity is itself a trust.
</P>
<P><I>Eligible horizontal residual interest</I> means, with respect to any securitization transaction, an ABS interest in the issuing entity:
</P>
<P>(1) That is an interest in a single class or multiple classes in the issuing entity, provided that each interest meets, individually or in the aggregate, all of the requirements of this definition;
</P>
<P>(2) With respect to which, on any payment date or allocation date on which the issuing entity has insufficient funds to satisfy its obligation to pay all contractual interest or principal due, any resulting shortfall will reduce amounts payable to the eligible horizontal residual interest prior to any reduction in the amounts payable to any other ABS interest, whether through loss allocation, operation of the priority of payments, or any other governing contractual provision (until the amount of such ABS interest is reduced to zero); and
</P>
<P>(3) That, with the exception of any non-economic REMIC residual interest, has the most subordinated claim to payments of both principal and interest by the issuing entity.
</P>
<P><I>Eligible horizontal cash reserve account</I> means an account meeting the requirements of § 267.4(b).
</P>
<P><I>Eligible vertical interest</I> means, with respect to any securitization transaction, a single vertical security or an interest in each class of ABS interests in the issuing entity issued as part of the securitization transaction that constitutes the same proportion of each such class.
</P>
<P><I>Federal banking agencies</I> means the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation.
</P>
<P><I>GAAP</I> means generally accepted accounting principles as used in the United States.
</P>
<P><I>Issuing entity</I> means, with respect to a securitization transaction, the trust or other entity:
</P>
<P>(1) That owns or holds the pool of assets to be securitized; and
</P>
<P>(2) In whose name the asset-backed securities are issued.
</P>
<P><I>Majority-owned affiliate</I> of a person means an entity (other than the issuing entity) that, directly or indirectly, majority controls, is majority controlled by or is under common majority control with, such person. For purposes of this definition, majority control means ownership of more than 50 percent of the equity of an entity, or ownership of any other controlling financial interest in the entity, as determined under GAAP.
</P>
<P><I>Originator</I> means a person who:
</P>
<P>(1) Through an extension of credit or otherwise, creates an asset that collateralizes an asset-backed security; and
</P>
<P>(2) Sells the asset directly or indirectly to a securitizer or issuing entity.
</P>
<P><I>REMIC</I> has the same meaning as in 26 U.S.C. 860D.
</P>
<P><I>Residential mortgage</I> means:
</P>
<P>(1) A transaction that is a covered transaction as defined in § 1026.43(b) of Regulation Z (12 CFR 1026.43(b)(1));
</P>
<P>(2) Any transaction that is exempt from the definition of “covered transaction” under § 1026.43(a) of Regulation Z (12 CFR 1026.43(a)); and
</P>
<P>(3) Any other loan secured by a residential structure that contains one to four units, whether or not that structure is attached to real property, including an individual condominium or cooperative unit and, if used as a residence, a mobile home or trailer.
</P>
<P><I>Retaining sponsor</I> means, with respect to a securitization transaction, the sponsor that has retained or caused to be retained an economic interest in the credit risk of the securitized assets pursuant to subpart B of this part.
</P>
<P><I>Securitization transaction</I> means a transaction involving the offer and sale of asset-backed securities by an issuing entity.
</P>
<P><I>Securitized asset</I> means an asset that:
</P>
<P>(1) Is transferred, sold, or conveyed to an issuing entity; and
</P>
<P>(2) Collateralizes the ABS interests issued by the issuing entity.
</P>
<P><I>Securitizer</I> means, with respect to a securitization transaction, either:
</P>
<P>(1) The depositor of the asset-backed securities (if the depositor is not the sponsor); or
</P>
<P>(2) The sponsor of the asset-backed securities.
</P>
<P><I>Servicer</I> means any person responsible for the management or collection of the securitized assets or making allocations or distributions to holders of the ABS interests, but does not include a trustee for the issuing entity or the asset-backed securities that makes allocations or distributions to holders of the ABS interests if the trustee receives such allocations or distributions from a servicer and the trustee does not otherwise perform the functions of a servicer.
</P>
<P><I>Servicing assets</I> means rights or other assets designed to assure the servicing or timely distribution of proceeds to ABS interest holders and rights or other assets that are related or incidental to purchasing or otherwise acquiring and holding the issuing entity's securitized assets. Servicing assets include amounts received by the issuing entity as proceeds of securitized assets, including proceeds of rights or other assets, whether as remittances by obligors or as other recoveries.
</P>
<P><I>Single vertical security</I> means, with respect to any securitization transaction, an ABS interest entitling the sponsor to a specified percentage of the amounts paid on each class of ABS interests in the issuing entity (other than such single vertical security).
</P>
<P><I>Sponsor</I> means a person who organizes and initiates a securitization transaction by selling or transferring assets, either directly or indirectly, including through an affiliate, to the issuing entity.
</P>
<P><I>State</I> has the same meaning as in Section 3(a)(16) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(16)).
</P>
<P><I>United States or U.S.</I> means the United States of America, including its territories and possessions, any State of the United States, and the District of Columbia.
</P>
<P><I>Wholly-owned affiliate</I> means a person (other than an issuing entity) that, directly or indirectly, wholly controls, is wholly controlled by, or is wholly under common control with, another person. For purposes of this definition, “wholly controls” means ownership of 100 percent of the equity of an entity.


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:2.1.1.2.29.2" TYPE="SUBPART">
<HEAD>Subpart B—Credit Risk Retention</HEAD>


<DIV8 N="§ 267.3" NODE="24:2.1.1.2.29.2.221.1" TYPE="SECTION">
<HEAD>§ 267.3   Base risk retention requirement.</HEAD>
<P>(a) <I>Base risk retention requirement.</I> Except as otherwise provided in this part, the sponsor of a securitization transaction (or majority-owned affiliate of the sponsor) shall retain an economic interest in the credit risk of the securitized assets in accordance with any one of §§ 267.4 through 267.10. Credit risk in securitized assets required to be retained and held by any person for purposes of compliance with this part, whether a sponsor, an originator, an originator-seller, or a third-party purchaser, except as otherwise provided in this part, may be acquired and held by any of such person's majority-owned affiliates (other than an issuing entity).
</P>
<P>(b) <I>Multiple sponsors.</I> If there is more than one sponsor of a securitization transaction, it shall be the responsibility of each sponsor to ensure that at least one of the sponsors of the securitization transaction (or at least one of their majority-owned or wholly-owned affiliates, as applicable) retains an economic interest in the credit risk of the securitized assets in accordance with any one of §§ 267.4, 267.5, 267.8, 267.9, or 267.10.


</P>
</DIV8>


<DIV8 N="§ 267.4" NODE="24:2.1.1.2.29.2.221.2" TYPE="SECTION">
<HEAD>§ 267.4   Standard risk retention.</HEAD>
<P>(a) <I>General requirement.</I> Except as provided in §§ 267.5 through 267.10, the sponsor of a securitization transaction must retain an eligible vertical interest or eligible horizontal residual interest, or any combination thereof, in accordance with the requirements of this section.
</P>
<P>(1) If the sponsor retains only an eligible vertical interest as its required risk retention, the sponsor must retain an eligible vertical interest in a percentage of not less than 5 percent.
</P>
<P>(2) If the sponsor retains only an eligible horizontal residual interest as its required risk retention, the amount of the interest must equal at least 5 percent of the fair value of all ABS interests in the issuing entity issued as a part of the securitization transaction, determined using a fair value measurement framework under GAAP.
</P>
<P>(3) If the sponsor retains both an eligible vertical interest and an eligible horizontal residual interest as its required risk retention, the percentage of the fair value of the eligible horizontal residual interest and the percentage of the eligible vertical interest must equal at least five.
</P>
<P>(4) The percentage of the eligible vertical interest, eligible horizontal residual interest, or combination thereof retained by the sponsor must be determined as of the closing date of the securitization transaction.
</P>
<P>(b) <I>Option to hold base amount in eligible horizontal cash reserve account.</I> In lieu of retaining all or any part of an eligible horizontal residual interest under paragraph (a) of this section, the sponsor may, at closing of the securitization transaction, cause to be established and funded, in cash, an eligible horizontal cash reserve account in the amount equal to the fair value of such eligible horizontal residual interest or part thereof, provided that the account meets all of the following conditions:
</P>
<P>(1) The account is held by the trustee (or person performing similar functions) in the name and for the benefit of the issuing entity;
</P>
<P>(2) Amounts in the account are invested only in cash and cash equivalents; and
</P>
<P>(3) Until all ABS interests in the issuing entity are paid in full, or the issuing entity is dissolved:
</P>
<P>(i) Amounts in the account shall be released only to:
</P>
<P>(A) Satisfy payments on ABS interests in the issuing entity on any payment date on which the issuing entity has insufficient funds from any source to satisfy an amount due on any ABS interest; or
</P>
<P>(B) Pay critical expenses of the trust unrelated to credit risk on any payment date on which the issuing entity has insufficient funds from any source to pay such expenses and:
</P>
<P>(<I>1</I>) Such expenses, in the absence of available funds in the eligible horizontal cash reserve account, would be paid prior to any payments to holders of ABS interests; and
</P>
<P>(<I>2</I>) Such payments are made to parties that are not affiliated with the sponsor; and
</P>
<P>(ii) Interest (or other earnings) on investments made in accordance with paragraph (b)(2) of this section may be released once received by the account.
</P>
<P>(c) <I>Disclosures.</I> A sponsor relying on this section shall provide, or cause to be provided, to potential investors, under the caption “Credit Risk Retention”, a reasonable period of time prior to the sale of the asset-backed securities in the securitization transaction the following disclosures in written form and within the time frames set forth in this paragraph (c):
</P>
<P>(1) <I>Horizontal interest.</I> With respect to any eligible horizontal residual interest held under paragraph (a) of this section, a sponsor must disclose:
</P>
<P>(i) A reasonable period of time prior to the sale of an asset-backed security issued in the same offering of ABS interests,
</P>
<P>(A) The fair value (expressed as a percentage of the fair value of all of the ABS interests issued in the securitization transaction and dollar amount (or corresponding amount in the foreign currency in which the ABS interests are issued, as applicable)) of the eligible horizontal residual interest that the sponsor expects to retain at the closing of the securitization transaction. If the specific prices, sizes, or rates of interest of each tranche of the securitization are not available, the sponsor must disclose a range of fair values (expressed as a percentage of the fair value of all of the ABS interests issued in the securitization transaction and dollar amount (or corresponding amount in the foreign currency in which the ABS interests are issued, as applicable)) of the eligible horizontal residual interest that the sponsor expects to retain at the close of the securitization transaction based on a range of bona fide estimates or specified prices, sizes, or rates of interest of each tranche of the securitization. A sponsor disclosing a range of fair values based on a range of bona fide estimates or specified prices, sizes or rates of interest of each tranche of the securitization must also disclose the method by which it determined any range of prices, tranche sizes, or rates of interest.
</P>
<P>(B) A description of the material terms of the eligible horizontal residual interest to be retained by the sponsor;
</P>
<P>(C) A description of the valuation methodology used to calculate the fair values or range of fair values of all classes of ABS interests, including any portion of the eligible horizontal residual interest retained by the sponsor;
</P>
<P>(D) All key inputs and assumptions or a comprehensive description of such key inputs and assumptions that were used in measuring the estimated total fair value or range of fair values of all classes of ABS interests, including the eligible horizontal residual interest to be retained by the sponsor.
</P>
<P>(E) To the extent applicable to the valuation methodology used, the disclosure required in paragraph (c)(1)(i)(D) of this section shall include, but should not be limited to, quantitative information about each of the following:
</P>
<P>(<I>1</I>) Discount rates;
</P>
<P>(<I>2</I>) Loss given default (recovery);
</P>
<P>(<I>3</I>) Prepayment rates;
</P>
<P>(<I>4</I>) Default rates;
</P>
<P>(<I>5</I>) Lag time between default and recovery; and
</P>
<P>(<I>6</I>) The basis of forward interest rates used.
</P>
<P>(F) The disclosure required in paragraphs (c)(1)(i)(C) and (D) of this section shall include, at a minimum, descriptions of all inputs and assumptions that either could have a material impact on the fair value calculation or would be material to a prospective investor's ability to evaluate the sponsor's fair value calculations. To the extent the disclosure required in this paragraph (c)(1) includes a description of a curve or curves, the description shall include a description of the methodology that was used to derive each curve and a description of any aspects or features of each curve that could materially impact the fair value calculation or the ability of a prospective investor to evaluate the sponsor's fair value calculation. To the extent a sponsor uses information about the securitized assets in its calculation of fair value, such information shall not be as of a date more than 60 days prior to the date of first use with investors; provided that for a subsequent issuance of ABS interests by the same issuing entity with the same sponsor for which the securitization transaction distributes amounts to investors on a quarterly or less frequent basis, such information shall not be as of a date more than 135 days prior to the date of first use with investors; provided further, that the balance or value (in accordance with the transaction documents) of the securitized assets may be increased or decreased to reflect anticipated additions or removals of assets the sponsor makes or expects to make between the cut-off date or similar date for establishing the composition of the asset pool collateralizing such asset-backed security and the closing date of the securitization.
</P>
<P>(G) A summary description of the reference data set or other historical information used to develop the key inputs and assumptions referenced in paragraph (c)(1)(i)(D) of this section, including loss given default and default rates;
</P>
<P>(ii) A reasonable time after the closing of the securitization transaction:
</P>
<P>(A) The fair value (expressed as a percentage of the fair value of all of the ABS interests issued in the securitization transaction and dollar amount (or corresponding amount in the foreign currency in which the ABS are issued, as applicable)) of the eligible horizontal residual interest the sponsor retained at the closing of the securitization transaction, based on actual sale prices and finalized tranche sizes;
</P>
<P>(B) The fair value (expressed as a percentage of the fair value of all of the ABS interests issued in the securitization transaction and dollar amount (or corresponding amount in the foreign currency in which the ABS are issued, as applicable)) of the eligible horizontal residual interest that the sponsor is required to retain under this section; and
</P>
<P>(C) To the extent the valuation methodology or any of the key inputs and assumptions that were used in calculating the fair value or range of fair values disclosed prior to sale and required under paragraph (c)(1)(i) of this section materially differs from the methodology or key inputs and assumptions used to calculate the fair value at the time of closing, descriptions of those material differences.
</P>
<P>(iii) If the sponsor retains risk through the funding of an eligible horizontal cash reserve account:
</P>
<P>(A) The amount to be placed (or that is placed) by the sponsor in the eligible horizontal cash reserve account at closing, and the fair value (expressed as a percentage of the fair value of all of the ABS interests issued in the securitization transaction and dollar amount (or corresponding amount in the foreign currency in which the ABS interests are issued, as applicable)) of the eligible horizontal residual interest that the sponsor is required to fund through the eligible horizontal cash reserve account in order for such account, together with other retained interests, to satisfy the sponsor's risk retention requirement;
</P>
<P>(B) A description of the material terms of the eligible horizontal cash reserve account; and
</P>
<P>(C) The disclosures required in paragraphs (c)(1)(i) and (ii) of this section.
</P>
<P>(2) <I>Vertical interest.</I> With respect to any eligible vertical interest retained under paragraph (a) of this section, the sponsor must disclose:
</P>
<P>(i) A reasonable period of time prior to the sale of an asset-backed security issued in the same offering of ABS interests,
</P>
<P>(A) The form of the eligible vertical interest;
</P>
<P>(B) The percentage that the sponsor is required to retain as a vertical interest under this section; and
</P>
<P>(C) A description of the material terms of the vertical interest and the amount that the sponsor expects to retain at the closing of the securitization transaction.
</P>
<P>(ii) A reasonable time after the closing of the securitization transaction, the amount of the vertical interest the sponsor retained at closing, if that amount is materially different from the amount disclosed under paragraph (c)(2)(i) of this section.
</P>
<P>(d) <I>Record maintenance.</I> A sponsor must retain the certifications and disclosures required in paragraphs (a) and (c) of this section in its records and must provide the disclosure upon request to the Commission and its appropriate Federal banking agency, if any, until three years after all ABS interests are no longer outstanding.


</P>
</DIV8>


<DIV8 N="§ 267.5" NODE="24:2.1.1.2.29.2.221.3" TYPE="SECTION">
<HEAD>§ 267.5   Revolving pool securitizations.</HEAD>
<P>(a) <I>Definitions.</I> For purposes of this section, the following definitions apply:
</P>
<P><I>Revolving pool securitization</I> means an issuing entity that is established to issue on multiple issuance dates more than one series, class, subclass, or tranche of asset-backed securities that are collateralized by a common pool of securitized assets that will change in composition over time, and that does not monetize excess interest and fees from its securitized assets.
</P>
<P><I>Seller's interest</I> means an ABS interest or ABS interests:
</P>
<P>(1) Collateralized by the securitized assets and servicing assets owned or held by the issuing entity, other than the following that are not considered a component of seller's interest:
</P>
<P>(i) Servicing assets that have been allocated as collateral only for a specific series in connection with administering the revolving pool securitization, such as a principal accumulation or interest reserve account; and
</P>
<P>(ii) Assets that are not eligible under the terms of the securitization transaction to be included when determining whether the revolving pool securitization holds aggregate securitized assets in specified proportions to aggregate outstanding investor ABS interests issued; and
</P>
<P>(2) That is <I>pari passu</I> with each series of investor ABS interests issued, or partially or fully subordinated to one or more series in identical or varying amounts, with respect to the allocation of all distributions and losses with respect to the securitized assets prior to early amortization of the revolving securitization (as specified in the securitization transaction documents); and
</P>
<P>(3) That adjusts for fluctuations in the outstanding principal balance of the securitized assets in the pool.
</P>
<P>(b) <I>General requirement.</I> A sponsor satisfies the risk retention requirements of § 267.3 with respect to a securitization transaction for which the issuing entity is a revolving pool securitization if the sponsor maintains a seller's interest of not less than 5 percent of the aggregate unpaid principal balance of all outstanding investor ABS interests in the issuing entity.
</P>
<P>(c) <I>Measuring the seller's interest.</I> In measuring the seller's interest for purposes of meeting the requirements of paragraph (b) of this section:
</P>
<P>(1) The unpaid principal balance of the securitized assets for the numerator of the 5 percent ratio shall not include assets of the types excluded from the definition of seller's interest in paragraph (a) of this section;
</P>
<P>(2) The aggregate unpaid principal balance of outstanding investor ABS interests in the denominator of the 5 percent ratio may be reduced by the amount of funds held in a segregated principal accumulation account for the repayment of outstanding investor ABS interests, if:
</P>
<P>(i) The terms of the securitization transaction documents prevent funds in the principal accumulation account from being applied for any purpose other than the repayment of the unpaid principal of outstanding investor ABS interests; and
</P>
<P>(ii) Funds in that account are invested only in the types of assets in which funds held in an eligible horizontal cash reserve account pursuant to § 267.4 are permitted to be invested;
</P>
<P>(3) If the terms of the securitization transaction documents set minimum required seller's interest as a proportion of the unpaid principal balance of outstanding investor ABS interests for one or more series issued, rather than as a proportion of the aggregate outstanding investor ABS interests in all outstanding series combined, the percentage of the seller's interest for each such series must, when combined with the percentage of any minimum seller's interest set by reference to the aggregate outstanding investor ABS interests, equal at least 5 percent;
</P>
<P>(4) The 5 percent test must be determined and satisfied at the closing of each issuance of ABS interests to investors by the issuing entity, and
</P>
<P>(i) At least monthly at a seller's interest measurement date specified under the securitization transaction documents, until no ABS interest in the issuing entity is held by any person not a wholly-owned affiliate of the sponsor; or
</P>
<P>(ii) If the revolving pool securitization fails to meet the 5 percent test as of any date described in paragraph (c)(4)(i) of this section, and the securitization transaction documents specify a cure period, the 5 percent test must be determined and satisfied within the earlier of the cure period, or one month after the date described in paragraph (c)(4)(i).
</P>
<P>(d) <I>Measuring outstanding investor ABS interests.</I> In measuring the amount of outstanding investor ABS interests for purposes of this section, ABS interests held for the life of such ABS interests by the sponsor or its wholly-owned affiliates may be excluded.
</P>
<P>(e) <I>Holding and retention of the seller's interest; legacy trusts.</I> (1) Notwithstanding § 267.12(a), the seller's interest, and any offsetting horizontal retention interest retained pursuant to paragraph (g) of this section, must be retained by the sponsor or by one or more wholly-owned affiliates of the sponsor, including one or more depositors of the revolving pool securitization.
</P>
<P>(2) If one revolving pool securitization issues collateral certificates representing a beneficial interest in all or a portion of the securitized assets held by that securitization to another revolving pool securitization, which in turn issues ABS interests for which the collateral certificates are all or a portion of the securitized assets, a sponsor may satisfy the requirements of paragraphs (b) and (c) of this section by retaining the seller's interest for the assets represented by the collateral certificates through either of the revolving pool securitizations, so long as both revolving pool securitizations are retained at the direction of the same sponsor or its wholly-owned affiliates.
</P>
<P>(3) If the sponsor retains the seller's interest associated with the collateral certificates at the level of the revolving pool securitization that issues those collateral certificates, the proportion of the seller's interest required by paragraph (b) of this section retained at that level must equal the proportion that the principal balance of the securitized assets represented by the collateral certificates bears to the principal balance of the securitized assets in the revolving pool securitization that issues the ABS interests, as of each measurement date required by paragraph (c) of this section.
</P>
<P>(f) <I>Offset for pool-level excess funding account.</I> The 5 percent seller's interest required on each measurement date by paragraph (c) of this section may be reduced on a dollar-for-dollar basis by the balance, as of such date, of an excess funding account in the form of a segregated account that:
</P>
<P>(1) Is funded in the event of a failure to meet the minimum seller's interest requirements or other requirement to maintain a minimum balance of securitized assets under the securitization transaction documents by distributions otherwise payable to the holder of the seller's interest;
</P>
<P>(2) Is invested only in the types of assets in which funds held in a horizontal cash reserve account pursuant to § 267.4 are permitted to be invested; and
</P>
<P>(3) In the event of an early amortization, makes payments of amounts held in the account to holders of investor ABS interests in the same manner as payments to holders of investor ABS interests of amounts received on securitized assets.
</P>
<P>(g) <I>Combined seller's interests and horizontal interest retention.</I> The 5 percent seller's interest required on each measurement date by paragraph (c) of this section may be reduced to a percentage lower than 5 percent to the extent that, for all series of investor ABS interests issued after the applicable effective date of this § 267.5, the sponsor, or notwithstanding § 267.12(a) a wholly-owned affiliate of the sponsor, retains, at a minimum, a corresponding percentage of the fair value of ABS interests issued in each series, in the form of one or more of the horizontal residual interests meeting the requirements of paragraphs (h) or (i).
</P>
<P>(h) <I>Residual ABS interests in excess interest and fees.</I> The sponsor may take the offset described in paragraph (g) of this section for a residual ABS interest in excess interest and fees, whether certificated or uncertificated, in a single or multiple classes, subclasses, or tranches, that meets, individually or in the aggregate, the requirements of this paragraph (h);
</P>
<P>(1) Each series of the revolving pool securitization distinguishes between the series' share of the interest and fee cash flows and the series' share of the principal repayment cash flows from the securitized assets collateralizing the revolving pool securitization, which may according to the terms of the securitization transaction documents, include not only the series' ratable share of such cash flows but also excess cash flows available from other series;
</P>
<P>(2) The residual ABS interest's claim to any part of the series' share of the interest and fee cash flows for any interest payment period is subordinated to all accrued and payable interest due on the payment date to more senior ABS interests in the series for that period, and further reduced by the series' share of losses, including defaults on principal of the securitized assets collateralizing the revolving pool securitization (whether incurred in that period or carried over from prior periods) to the extent that such payments would have been included in amounts payable to more senior interests in the series;
</P>
<P>(3) The revolving pool securitization continues to revolve, with one or more series, classes, subclasses, or tranches of asset-backed securities that are collateralized by a common pool of assets that change in composition over time; and
</P>
<P>(4) For purposes of taking the offset described in paragraph (g) of this section, the sponsor determines the fair value of the residual ABS interest in excess interest and fees, and the fair value of the series of outstanding investor ABS interests to which it is subordinated and supports using the fair value measurement framework under GAAP, as of:
</P>
<P>(i) The closing of the securitization transaction issuing the supported ABS interests; and
</P>
<P>(ii) The seller's interest measurement dates described in paragraph (c)(4) of this section, except that for these periodic determinations the sponsor must update the fair value of the residual ABS interest in excess interest and fees for the numerator of the percentage ratio, but may at the sponsor's option continue to use the fair values determined in (h)(4)(i) for the outstanding investor ABS interests in the denominator.
</P>
<P>(i) <I>Offsetting eligible horizontal residual interest.</I> The sponsor may take the offset described in paragraph (g) of this section for ABS interests that would meet the definition of eligible horizontal residual interests in § 267.2 but for the sponsor's simultaneous holding of subordinated seller's interests, residual ABS interests in excess interests and fees, or a combination of the two, if:
</P>
<P>(1) The sponsor complies with all requirements of paragraphs (b) through (e) of this section for its holdings of subordinated seller's interest, and paragraph (h) for its holdings of residual ABS interests in excess interests and fees, as applicable;
</P>
<P>(2) For purposes of taking the offset described in paragraph (g) of this section, the sponsor determines the fair value of the eligible horizontal residual interest as a percentage of the fair value of the outstanding investor ABS interests in the series supported by the eligible horizontal residual interest, determined using the fair value measurement framework under GAAP:
</P>
<P>(i) As of the closing of the securitization transaction issuing the supported ABS interests; and
</P>
<P>(ii) Without including in the numerator of the percentage ratio any fair value based on:
</P>
<P>(A) The subordinated seller's interest or residual ABS interest in excess interest and fees;
</P>
<P>(B) the interest payable to the sponsor on the eligible horizontal residual interest, if the sponsor is including the value of residual ABS interest in excess interest and fees pursuant to paragraph (h) of this section in taking the offset in paragraph (g) of this section; and,
</P>
<P>(C) the principal payable to the sponsor on the eligible horizontal residual interest, if the sponsor is including the value of the seller's interest pursuant to paragraphs (b) through (f) of this section and distributions on that seller's interest are available to reduce charge-offs that would otherwise be allocated to reduce principal payable to the offset eligible horizontal residual interest.
</P>
<P>(j) <I>Specified dates.</I> A sponsor using data about the revolving pool securitization's collateral, or ABS interests previously issued, to determine the closing-date percentage of a seller's interest, residual ABS interest in excess interest and fees, or eligible horizontal residual interest pursuant to this § 267.5 may use such data prepared as of specified dates if:
</P>
<P>(1) The sponsor describes the specified dates in the disclosures required by paragraph (k) of this section; and
</P>
<P>(2) The dates are no more than 60 days prior to the date of first use with investors of disclosures required for the interest by paragraph (k) of this section, or for revolving pool securitizations that make distributions to investors on a quarterly or less frequent basis, no more than 135 days prior to the date of first use with investors of such disclosures.
</P>
<P>(k) <I>Disclosure and record maintenance</I>—(1) <I>Disclosure.</I> A sponsor relying on this section shall provide, or cause to be provided, to potential investors, under the caption “Credit Risk Retention” the following disclosure in written form and within the time frames set forth in this paragraph (k):
</P>
<P>(i) A reasonable period of time prior to the sale of an asset-backed security, a description of the material terms of the seller's interest, and the percentage of the seller's interest that the sponsor expects to retain at the closing of the securitization transaction, measured in accordance with the requirements of this § 267.5, as a percentage of the aggregate unpaid principal balance of all outstanding investor ABS interests issued, or as a percentage of the aggregate unpaid principal balance of outstanding investor ABS interests for one or more series issued, as required by the terms of the securitization transaction;
</P>
<P>(ii) A reasonable time after the closing of the securitization transaction, the amount of seller's interest the sponsor retained at closing, if that amount is materially different from the amount disclosed under paragraph (k)(1)(i) of this section; and
</P>
<P>(iii) A description of the material terms of any horizontal residual interests offsetting the seller's interest in accordance with paragraphs (g), (h), and (i) of this section; and
</P>
<P>(iv) Disclosure of the fair value of those horizontal residual interests retained by the sponsor for the series being offered to investors and described in the disclosures, as a percentage of the fair value of the outstanding investor ABS interests issued, described in the same manner and within the same timeframes required for disclosure of the fair values of eligible horizontal residual interests specified in § 267.4(c).
</P>
<P>(2) <I>Adjusted data.</I> Disclosures required by this paragraph (k) to be made a reasonable period of time prior to the sale of an asset-backed security of the amount of seller's interest, residual ABS interest in excess interest and fees, or eligible horizontal residual interest may include adjustments to the amount of securitized assets for additions or removals the sponsor expects to make before the closing date and adjustments to the amount of outstanding investor ABS interests for expected increases and decreases of those interests under the control of the sponsor.
</P>
<P>(3) <I>Record maintenance.</I> A sponsor must retain the disclosures required in paragraph (k)(1) of this section in its records and must provide the disclosure upon request to the Commission and its appropriate Federal banking agency, if any, until three years after all ABS interests are no longer outstanding.
</P>
<P>(l) <I>Early amortization of all outstanding series.</I> A sponsor that organizes a revolving pool securitization that relies on this § 267.5 to satisfy the risk retention requirements of § 267.3, does not violate the requirements of this part if its seller's interest falls below the level required by § 267. 5 after the revolving pool securitization commences early amortization, pursuant to the terms of the securitization transaction documents, of all series of outstanding investor ABS interests, if:
</P>
<P>(1) The sponsor was in full compliance with the requirements of this section on all measurement dates specified in paragraph (c) of this section prior to the commencement of early amortization;
</P>
<P>(2) The terms of the seller's interest continue to make it <I>pari passu</I> with or subordinate in identical or varying amounts to each series of outstanding investor ABS interests issued with respect to the allocation of all distributions and losses with respect to the securitized assets;
</P>
<P>(3) The terms of any horizontal interest relied upon by the sponsor pursuant to paragraph (g) to offset the minimum seller's interest amount continue to require the interests to absorb losses in accordance with the terms of paragraph (h) or (i) of this section, as applicable; and
</P>
<P>(4) The revolving pool securitization issues no additional ABS interests after early amortization is initiated to any person not a wholly-owned affiliate of the sponsor, either at the time of issuance or during the amortization period.


</P>
</DIV8>


<DIV8 N="§ 267.6" NODE="24:2.1.1.2.29.2.221.4" TYPE="SECTION">
<HEAD>§ 267.6   Eligible ABCP conduits.</HEAD>
<P>(a) <I>Definitions.</I> For purposes of this section, the following additional definitions apply:
</P>
<P><I>100 percent liquidity coverage</I> means an amount equal to the outstanding balance of all ABCP issued by the conduit plus any accrued and unpaid interest without regard to the performance of the ABS interests held by the ABCP conduit and without regard to any credit enhancement.
</P>
<P><I>ABCP</I> means asset-backed commercial paper that has a maturity at the time of issuance not exceeding 397 days, exclusive of days of grace, or any renewal thereof the maturity of which is likewise limited.
</P>
<P><I>ABCP conduit</I> means an issuing entity with respect to ABCP.
</P>
<P><I>Eligible ABCP conduit</I> means an ABCP conduit, <I>provided that:</I>
</P>
<P>(1) The ABCP conduit is bankruptcy remote or otherwise isolated for insolvency purposes from the sponsor of the ABCP conduit and from any intermediate SPV;
</P>
<P>(2) The ABS interests acquired by the ABCP conduit are:
</P>
<P>(i) ABS interests collateralized solely by assets originated by an originator-seller and by servicing assets;
</P>
<P>(ii) Special units of beneficial interest (or similar ABS interests) in a trust or special purpose vehicle that retains legal title to leased property underlying leases originated by an originator-seller that were transferred to an intermediate SPV in connection with a securitization collateralized solely by such leases and by servicing assets;
</P>
<P>(iii) ABS interests in a revolving pool securitization collateralized solely by assets originated by an originator-seller and by servicing assets; or
</P>
<P>(iv) ABS interests described in paragraph (2)(i), (ii), or (iii) of this definition that are collateralized, in whole or in part, by assets acquired by an originator-seller in a business combination that qualifies for business combination accounting under GAAP, and, if collateralized in part, the remainder of such assets are assets described in paragraph (2)(i), (ii), or (iii) of this definition; and
</P>
<P>(v) Acquired by the ABCP conduit in an initial issuance by or on behalf of an intermediate SPV:
</P>
<P>(A) Directly from the intermediate SPV,
</P>
<P>(B) From an underwriter of the ABS interests issued by the intermediate SPV, or
</P>
<P>(C) From another person who acquired the ABS interests directly from the intermediate SPV;
</P>
<P>(3) The ABCP conduit is collateralized solely by ABS interests acquired from intermediate SPVs as described in paragraph (2) of this definition and servicing assets; and
</P>
<P>(4) A regulated liquidity provider has entered into a legally binding commitment to provide 100 percent liquidity coverage (in the form of a lending facility, an asset purchase agreement, a repurchase agreement, or other similar arrangement) to all the ABCP issued by the ABCP conduit by lending to, purchasing ABCP issued by, or purchasing assets from, the ABCP conduit in the event that funds are required to repay maturing ABCP issued by the ABCP conduit. With respect to the 100 percent liquidity coverage, in the event that the ABCP conduit is unable for any reason to repay maturing ABCP issued by the issuing entity, the liquidity provider shall be obligated to pay an amount equal to any shortfall, and the total amount that may be due pursuant to the 100 percent liquidity coverage shall be equal to 100 percent of the amount of the ABCP outstanding at any time plus accrued and unpaid interest (amounts due pursuant to the required liquidity coverage may not be subject to credit performance of the ABS interests held by the ABCP conduit or reduced by the amount of credit support provided to the ABCP conduit and liquidity support that only funds performing loans or receivables or performing ABS interests does not meet the requirements of this section).
</P>
<P><I>Intermediate SPV</I> means a special purpose vehicle that:
</P>
<P>(1) (i) Is a direct or indirect wholly-owned affiliate of the originator-seller; or
</P>
<P>(ii) Has nominal equity owned by a trust or corporate service provider that specializes in providing independent ownership of special purpose vehicles, and such trust or corporate service provider is not affiliated with any other transaction parties;
</P>
<P>(2) Is bankruptcy remote or otherwise isolated for insolvency purposes from the eligible ABCP conduit and from each originator-seller and each majority-owned affiliate in each case that, directly or indirectly, sells or transfers assets to such intermediate SPV;
</P>
<P>(3) Acquires assets from the originator-seller that are originated by the originator-seller or acquired by the originator-seller in the acquisition of a business that qualifies for business combination accounting under GAAP or acquires ABS interests issued by another intermediate SPV of the originator-seller that are collateralized solely by such assets; and
</P>
<P>(4) Issues ABS interests collateralized solely by such assets, as applicable.
</P>
<P><I>Originator-seller</I> means an entity that originates assets and sells or transfers those assets, directly or through a majority-owned affiliate, to an intermediate SPV, and includes (except for the purposes of identifying the sponsorship and affiliation of an intermediate SPV pursuant to this § 267.6) any affiliate of the originator-seller that, directly or indirectly, majority controls, is majority controlled by or is under common majority control with, the originator-seller. For purposes of this definition, majority control means ownership of more than 50 percent of the equity of an entity, or ownership of any other controlling financial interest in the entity, as determined under GAAP.
</P>
<P><I>Regulated liquidity provider</I> means:
</P>
<P>(1) A depository institution (as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813));
</P>
<P>(2) A bank holding company (as defined in 12 U.S.C. 1841), or a subsidiary thereof;
</P>
<P>(3) A savings and loan holding company (as defined in 12 U.S.C. 1467a), provided all or substantially all of the holding company's activities are permissible for a financial holding company under 12 U.S.C. 1843(k), or a subsidiary thereof; or
</P>
<P>(4) A foreign bank whose home country supervisor (as defined in § 211.21 of the Federal Reserve Board's Regulation K (12 CFR 211.21)) has adopted capital standards consistent with the Capital Accord of the Basel Committee on Banking Supervision, as amended, and that is subject to such standards, or a subsidiary thereof.
</P>
<P>(b) <I>In general.</I> An ABCP conduit sponsor satisfies the risk retention requirement of § 267.3 with respect to the issuance of ABCP by an eligible ABCP conduit in a securitization transaction if, for each ABS interest the ABCP conduit acquires from an intermediate SPV:
</P>
<P>(1) An originator-seller of the intermediate SPV retains an economic interest in the credit risk of the assets collateralizing the ABS interest acquired by the eligible ABCP conduit in the amount and manner required under § 267.4 or § 267.5; and
</P>
<P>(2) The ABCP conduit sponsor:
</P>
<P>(i) Approves each originator-seller permitted to sell or transfer assets, directly or indirectly, to an intermediate SPV from which an eligible ABCP conduit acquires ABS interests;
</P>
<P>(ii) Approves each intermediate SPV from which an eligible ABCP conduit is permitted to acquire ABS interests;
</P>
<P>(iii) Establishes criteria governing the ABS interests, and the securitized assets underlying the ABS interests, acquired by the ABCP conduit;
</P>
<P>(iv) Administers the ABCP conduit by monitoring the ABS interests acquired by the ABCP conduit and the assets supporting those ABS interests, arranging for debt placement, compiling monthly reports, and ensuring compliance with the ABCP conduit documents and with the ABCP conduit's credit and investment policy; and
</P>
<P>(v) Maintains and adheres to policies and procedures for ensuring that the requirements in this paragraph (b) of this section have been met.
</P>
<P>(c) <I>Originator-seller compliance with risk retention.</I> The use of the risk retention option provided in this section by an ABCP conduit sponsor does not relieve the originator-seller that sponsors ABS interests acquired by an eligible ABCP conduit from such originator-seller's obligation to comply with its own risk retention obligations under this part.
</P>
<P>(d) <I>Disclosures</I>—(1) <I>Periodic disclosures to investors.</I> An ABCP conduit sponsor relying upon this section shall provide, or cause to be provided, to each purchaser of ABCP, before or contemporaneously with the first sale of ABCP to such purchaser and at least monthly thereafter, to each holder of commercial paper issued by the ABCP conduit, in writing, each of the following items of information, which shall be as of a date not more than 60 days prior to date of first use with investors:
</P>
<P>(i) The name and form of organization of the regulated liquidity provider that provides liquidity coverage to the eligible ABCP conduit, including a description of the material terms of such liquidity coverage, and notice of any failure to fund.
</P>
<P>(ii) With respect to each ABS interest held by the ABCP conduit:
</P>
<P>(A) The asset class or brief description of the underlying securitized assets;
</P>
<P>(B) The standard industrial category code (SIC Code) for the originator-seller that will retain (or has retained) pursuant to this section an interest in the securitization transaction; and
</P>
<P>(C) A description of the percentage amount of risk retention pursuant to the rule by the originator-seller, and whether it is in the form of an eligible horizontal residual interest, vertical interest, or revolving pool securitization seller's interest, as applicable.
</P>
<P>(2) <I>Disclosures to regulators regarding originator-sellers.</I> An ABCP conduit sponsor relying upon this section shall provide, or cause to be provided, upon request, to the Commission and its appropriate Federal banking agency, if any, in writing, all of the information required to be provided to investors in paragraph (d)(1) of this section, and the name and form of organization of each originator-seller that will retain (or has retained) pursuant to this section an interest in the securitization transaction.
</P>
<P>(e) <I>Sale or transfer of ABS interests between eligible ABCP conduits.</I> At any time, an eligible ABCP conduit that acquired an ABS interest in accordance with the requirements set forth in this section may transfer, and another eligible ABCP conduit may acquire, such ABS interest, if the following conditions are satisfied:
</P>
<P>(1) The sponsors of both eligible ABCP conduits are in compliance with this section; and
</P>
<P>(2) The same regulated liquidity provider has entered into one or more legally binding commitments to provide 100 percent liquidity coverage to all the ABCP issued by both eligible ABCP conduits.
</P>
<P>(f) <I>Duty to comply.</I> (1) The ABCP conduit sponsor shall be responsible for compliance with this section.
</P>
<P>(2) An ABCP conduit sponsor relying on this section:
</P>
<P>(i) Shall maintain and adhere to policies and procedures that are reasonably designed to monitor compliance by each originator-seller which is satisfying a risk retention obligation in respect of ABS interests acquired by an eligible ABCP conduit with the requirements of paragraph (b)(1) of this section; and
</P>
<P>(ii) In the event that the ABCP conduit sponsor determines that an originator-seller no longer complies with the requirements of paragraph (b)(1) of this section, shall:
</P>
<P>(A) Promptly notify the holders of the ABCP, and upon request, the Commission and its appropriate Federal banking agency, if any, in writing of:
</P>
<P>(<I>1</I>) The name and form of organization of any originator-seller that fails to retain risk in accordance with paragraph (b)(1) of this section and the amount of ABS interests issued by an intermediate SPV of such originator-seller and held by the ABCP conduit;
</P>
<P>(<I>2</I>) The name and form of organization of any originator-seller that hedges, directly or indirectly through an intermediate SPV, its risk retention in violation of paragraph (b)(1) of this section and the amount of ABS interests issued by an intermediate SPV of such originator-seller and held by the ABCP conduit; and
</P>
<P>(<I>3</I>) Any remedial actions taken by the ABCP conduit sponsor or other party with respect to such ABS interests; and
</P>
<P>(B) Take other appropriate steps pursuant to the requirements of paragraphs (b)(2)(iv) and (v) of this section which may include, as appropriate, curing any breach of the requirements in this section, or removing from the eligible ABCP conduit any ABS interest that does not comply with the requirements in this section.


</P>
</DIV8>


<DIV8 N="§ 267.7" NODE="24:2.1.1.2.29.2.221.5" TYPE="SECTION">
<HEAD>§ 267.7   Commercial mortgage-backed securities.</HEAD>
<P>(a) <I>Definitions.</I> For purposes of this section, the following definition shall apply:
</P>
<P><I>Special servicer</I> means, with respect to any securitization of commercial real estate loans, any servicer that, upon the occurrence of one or more specified conditions in the servicing agreement, has the right to service one or more assets in the transaction.
</P>
<P>(b) <I>Third-party purchaser.</I> A sponsor may satisfy some or all of its risk retention requirements under § 267.3 with respect to a securitization transaction if a third party (or any majority-owned affiliate thereof) purchases and holds for its own account an eligible horizontal residual interest in the issuing entity in the same form, amount, and manner as would be held by the sponsor under § 267.4 and all of the following conditions are met:
</P>
<P>(1) <I>Number of third-party purchasers.</I> At any time, there are no more than two third-party purchasers of an eligible horizontal residual interest. If there are two third-party purchasers, each third-party purchaser's interest must be <I>pari passu</I> with the other third-party purchaser's interest.
</P>
<P>(2) <I>Composition of collateral.</I> The securitization transaction is collateralized solely by commercial real estate loans and servicing assets.
</P>
<P>(3) <I>Source of funds.</I> (i) Each third-party purchaser pays for the eligible horizontal residual interest in cash at the closing of the securitization transaction.
</P>
<P>(ii) No third-party purchaser obtains financing, directly or indirectly, for the purchase of such interest from any other person that is a party to, or an affiliate of a party to, the securitization transaction (including, but not limited to, the sponsor, depositor, or servicer other than a special servicer affiliated with the third-party purchaser), other than a person that is a party to the transaction solely by reason of being an investor.
</P>
<P>(4) <I>Third-party review.</I> Each third-party purchaser conducts an independent review of the credit risk of each securitized asset prior to the sale of the asset-backed securities in the securitization transaction that includes, at a minimum, a review of the underwriting standards, collateral, and expected cash flows of each commercial real estate loan that is collateral for the asset-backed securities.
</P>
<P>(5) <I>Affiliation and control rights.</I> (i) Except as provided in paragraph (b)(5)(ii) of this section, no third-party purchaser is affiliated with any party to the securitization transaction (including, but not limited to, the sponsor, depositor, or servicer) other than investors in the securitization transaction.
</P>
<P>(ii) Notwithstanding paragraph (b)(5)(i) of this section, a third-party purchaser may be affiliated with:
</P>
<P>(A) The special servicer for the securitization transaction; or
</P>
<P>(B) One or more originators of the securitized assets, as long as the assets originated by the affiliated originator or originators collectively comprise less than 10 percent of the unpaid principal balance of the securitized assets included in the securitization transaction at the cut-off date or similar date for establishing the composition of the securitized assets collateralizing the asset-backed securities issued pursuant to the securitization transaction.
</P>
<P>(6) <I>Operating Advisor.</I> The underlying securitization transaction documents shall provide for the following:
</P>
<P>(i) The appointment of an operating advisor (the Operating Advisor) that:
</P>
<P>(A) Is not affiliated with other parties to the securitization transaction;
</P>
<P>(B) Does not directly or indirectly have any financial interest in the securitization transaction other than in fees from its role as Operating Advisor; and
</P>
<P>(C) Is required to act in the best interest of, and for the benefit of, investors as a collective whole;
</P>
<P>(ii) Standards with respect to the Operating Advisor's experience, expertise and financial strength to fulfill its duties and responsibilities under the applicable transaction documents over the life of the securitization transaction;
</P>
<P>(iii) The terms of the Operating Advisor's compensation with respect to the securitization transaction;
</P>
<P>(iv) When the eligible horizontal residual interest has been reduced by principal payments, realized losses, and appraisal reduction amounts (which reduction amounts are determined in accordance with the applicable transaction documents) to a principal balance of 25 percent or less of its initial principal balance, the special servicer for the securitized assets must consult with the Operating Advisor in connection with, and prior to, any material decision in connection with its servicing of the securitized assets, including, without limitation:
</P>
<P>(A) Any material modification of, or waiver with respect to, any provision of a loan agreement (including a mortgage, deed of trust, or other security agreement);
</P>
<P>(B) Foreclosure upon or comparable conversion of the ownership of a property; or
</P>
<P>(C) Any acquisition of a property.
</P>
<P>(v) The Operating Advisor shall have adequate and timely access to information and reports necessary to fulfill its duties under the transaction documents, including all reports made available to holders of ABS interests and third-party purchasers, and shall be responsible for:
</P>
<P>(A) Reviewing the actions of the special servicer;
</P>
<P>(B) Reviewing all reports provided by the special servicer to the issuing entity or any holder of ABS interests;
</P>
<P>(C) Reviewing for accuracy and consistency with the transaction documents calculations made by the special servicer; and
</P>
<P>(D) Issuing a report to investors (including any third-party purchasers) and the issuing entity on a periodic basis concerning:
</P>
<P>(<I>1</I>) Whether the Operating Advisor believes, in its sole discretion exercised in good faith, that the special servicer is operating in compliance with any standard required of the special servicer in the applicable transaction documents; and
</P>
<P>(<I>2</I>) Which, if any, standards the Operating Advisor believes, in its sole discretion exercised in good faith, the special servicer has failed to comply.
</P>
<P>(vi)(A) The Operating Advisor shall have the authority to recommend that the special servicer be replaced by a successor special servicer if the Operating Advisor determines, in its sole discretion exercised in good faith, that:
</P>
<P>(<I>1</I>) The special servicer has failed to comply with a standard required of the special servicer in the applicable transaction documents; and
</P>
<P>(<I>2</I>) Such replacement would be in the best interest of the investors as a collective whole; and
</P>
<P>(B) If a recommendation described in paragraph (b)(6)(vi)(A) of this section is made, the special servicer shall be replaced upon the affirmative vote of a majority of the outstanding principal balance of all ABS interests voting on the matter, with a minimum of a quorum of ABS interests voting on the matter. For purposes of such vote, the applicable transaction documents shall specify the quorum and may not specify a quorum of more than the holders of 20 percent of the outstanding principal balance of all ABS interests in the issuing entity, with such quorum including at least three ABS interest holders that are not affiliated with each other.
</P>
<P>(7) <I>Disclosures.</I> The sponsor provides, or causes to be provided, to potential investors a reasonable period of time prior to the sale of the asset-backed securities as part of the securitization transaction and, upon request, to the Commission and its appropriate Federal banking agency, if any, the following disclosure in written form under the caption “Credit Risk Retention”:
</P>
<P>(i) The name and form of organization of each initial third-party purchaser that acquired an eligible horizontal residual interest at the closing of a securitization transaction;
</P>
<P>(ii) A description of each initial third-party purchaser's experience in investing in commercial mortgage-backed securities;
</P>
<P>(iii) Any other information regarding each initial third-party purchaser or each initial third-party purchaser's retention of the eligible horizontal residual interest that is material to investors in light of the circumstances of the particular securitization transaction;
</P>
<P>(iv) The fair value (expressed as a percentage of the fair value of all of the ABS interests issued in the securitization transaction and dollar amount (or corresponding amount in the foreign currency in which the ABS interests are issued, as applicable)) of the eligible horizontal residual interest that will be retained (or was retained) by each initial third-party purchaser, as well as the amount of the purchase price paid by each initial third-party purchaser for such interest;
</P>
<P>(v) The fair value (expressed as a percentage of the fair value of all of the ABS interests issued in the securitization transaction and dollar amount (or corresponding amount in the foreign currency in which the ABS interests are issued, as applicable)) of the eligible horizontal residual interest in the securitization transaction that the sponsor would have retained pursuant to § 267.4 if the sponsor had relied on retaining an eligible horizontal residual interest in that section to meet the requirements of § 267.3 with respect to the transaction;
</P>
<P>(vi) A description of the material terms of the eligible horizontal residual interest retained by each initial third-party purchaser, including the same information as is required to be disclosed by sponsors retaining horizontal interests pursuant to § 267.4;
</P>
<P>(vii) The material terms of the applicable transaction documents with respect to the Operating Advisor, including without limitation:
</P>
<P>(A) The name and form of organization of the Operating Advisor;
</P>
<P>(B) A description of any material conflict of interest or material potential conflict of interest between the Operating Advisor and any other party to the transaction;
</P>
<P>(C) The standards required by paragraph (b)(6)(ii) of this section and a description of how the Operating Advisor satisfies each of the standards; and
</P>
<P>(D) The terms of the Operating Advisor's compensation under paragraph (b)(6)(iii) of this section; and
</P>
<P>(viii) The representations and warranties concerning the securitized assets, a schedule of any securitized assets that are determined not to comply with such representations and warranties, and what factors were used to make the determination that such securitized assets should be included in the pool notwithstanding that the securitized assets did not comply with such representations and warranties, such as compensating factors or a determination that the exceptions were not material.
</P>
<P>(8) <I>Hedging, transfer and pledging</I>—(i) <I>General rule.</I> Except as set forth in paragraph (b)(8)(ii) of this section, each third-party purchaser and its affiliates must comply with the hedging and other restrictions in § 267.12 as if it were the retaining sponsor with respect to the securitization transaction and had acquired the eligible horizontal residual interest pursuant to § 267.4; provided that, the hedging and other restrictions in § 267.12 shall not apply on or after the date that each CRE loan (as defined in § 267.14) that serves as collateral for outstanding ABS interests has been defeased. For purposes of this section, a loan is deemed to be defeased if:
</P>
<P>(A) cash or cash equivalents of the types permitted for an eligible horizontal cash reserve account pursuant to § 267.4 whose maturity corresponds to the remaining debt service obligations, have been pledged to the issuing entity as collateral for the loan and are in such amounts and payable at such times as necessary to timely generate cash sufficient to make all remaining debt service payments due on such loan; and
</P>
<P>(B) the issuing entity has an obligation to release its lien on the loan.
</P>
<P>(ii) <I>Exceptions</I>—(A) <I>Transfer by initial third-party purchaser or sponsor.</I> An initial third-party purchaser that acquired an eligible horizontal residual interest at the closing of a securitization transaction in accordance with this section, or a sponsor that acquired an eligible horizontal residual interest at the closing of a securitization transaction in accordance with this section, may, on or after the date that is five years after the date of the closing of the securitization transaction, transfer that interest to a subsequent third-party purchaser that complies with paragraph (b)(8)(ii)(C) of this section. The initial third-party purchaser shall provide the sponsor with complete identifying information for the subsequent third-party purchaser.
</P>
<P>(B) <I>Transfer by subsequent third-party purchaser.</I> At any time, a subsequent third-party purchaser that acquired an eligible horizontal residual interest pursuant to this section may transfer its interest to a different third-party purchaser that complies with paragraph (b)(8)(ii)(C) of this section. The transferring third-party purchaser shall provide the sponsor with complete identifying information for the acquiring third-party purchaser.
</P>
<P>(C) <I>Requirements applicable to subsequent third-party purchasers.</I> A subsequent third-party purchaser is subject to all of the requirements of paragraphs (b)(1), (b)(3) through (5), and (b)(8) of this section applicable to third-party purchasers, provided that obligations under paragraphs (b)(1), (b)(3) through (5), and (b)(8) of this section that apply to initial third-party purchasers at or before the time of closing of the securitization transaction shall apply to successor third-party purchasers at or before the time of the transfer of the eligible horizontal residual interest to the successor third-party purchaser.
</P>
<P>(c) <I>Duty to comply.</I> (1) The retaining sponsor shall be responsible for compliance with this section by itself and for compliance by each initial or subsequent third-party purchaser that acquired an eligible horizontal residual interest in the securitization transaction.
</P>
<P>(2) A sponsor relying on this section:
</P>
<P>(i) Shall maintain and adhere to policies and procedures to monitor each third-party purchaser's compliance with the requirements of paragraphs (b)(1), (b)(3) through (5), and (b)(8) of this section; and
</P>
<P>(ii) In the event that the sponsor determines that a third-party purchaser no longer complies with one or more of the requirements of paragraphs (b)(1), (b)(3) through (5), or (b)(8) of this section, shall promptly notify, or cause to be notified, the holders of the ABS interests issued in the securitization transaction of such noncompliance by such third-party purchaser.


</P>
</DIV8>


<DIV8 N="§ 267.8" NODE="24:2.1.1.2.29.2.221.6" TYPE="SECTION">
<HEAD>§ 267.8   Federal National Mortgage Association and Federal Home Loan Mortgage Corporation ABS.</HEAD>
<P>(a) <I>In general.</I> A sponsor satisfies its risk retention requirement under this part if the sponsor fully guarantees the timely payment of principal and interest on all ABS interests issued by the issuing entity in the securitization transaction and is:
</P>
<P>(1) The Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation operating under the conservatorship or receivership of the Federal Housing Finance Agency pursuant to section 1367 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4617) with capital support from the United States; or
</P>
<P>(2) Any limited-life regulated entity succeeding to the charter of either the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation pursuant to section 1367(i) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4617(i)), provided that the entity is operating with capital support from the United States.
</P>
<P>(b) <I>Certain provisions not applicable.</I> The provisions of § 267.12(b), (c), and (d) shall not apply to a sponsor described in paragraph (a)(1) or (2) of this section, its affiliates, or the issuing entity with respect to a securitization transaction for which the sponsor has retained credit risk in accordance with the requirements of this section.
</P>
<P>(c) <I>Disclosure.</I> A sponsor relying on this section shall provide to investors, in written form under the caption “Credit Risk Retention” and, upon request, to the Federal Housing Finance Agency and the Commission, a description of the manner in which it has met the credit risk retention requirements of this part.


</P>
</DIV8>


<DIV8 N="§ 267.9" NODE="24:2.1.1.2.29.2.221.7" TYPE="SECTION">
<HEAD>§ 267.9   Open market CLOs.</HEAD>
<P>(a) <I>Definitions.</I> For purposes of this section, the following definitions shall apply:
</P>
<P><I>CLO</I> means a special purpose entity that:
</P>
<P>(i) Issues debt and equity interests, and
</P>
<P>(ii) Whose assets consist primarily of loans that are securitized assets and servicing assets.
</P>
<P><I>CLO-eligible loan tranche</I> means a term loan of a syndicated facility that meets the criteria set forth in paragraph (c) of this section.
</P>
<P><I>CLO manager</I> means an entity that manages a CLO, which entity is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (15 U.S.C. 80b-1 <I>et seq.</I>), or is an affiliate of such a registered investment adviser and itself is managed by such registered investment adviser.
</P>
<P><I>Commercial borrower</I> means an obligor under a corporate credit obligation (including a loan).
</P>
<P><I>Initial loan syndication transaction</I> means a transaction in which a loan is syndicated to a group of lenders.
</P>
<P><I>Lead arranger</I> means, with respect to a CLO-eligible loan tranche, an institution that:
</P>
<P>(i) Is active in the origination, structuring and syndication of commercial loan transactions (as defined in § 267.14) and has played a primary role in the structuring, underwriting and distribution on the primary market of the CLO-eligible loan tranche.
</P>
<P>(ii) Has taken an allocation of the funded portion of the syndicated credit facility under the terms of the transaction that includes the CLO-eligible loan tranche of at least 20 percent of the aggregate principal balance at origination, and no other member (or members affiliated with each other) of the syndication group that funded at origination has taken a greater allocation; and
</P>
<P>(iii) Is identified in the applicable agreement governing the CLO-eligible loan tranche; represents therein to the holders of the CLO-eligible loan tranche and to any holders of participation interests in such CLO-eligible loan tranche that such lead arranger satisfies the requirements of paragraph (i) of this definition and, at the time of initial funding of the CLO-eligible tranche, will satisfy the requirements of paragraph (ii) of this definition; further represents therein (solely for the purpose of assisting such holders to determine the eligibility of such CLO-eligible loan tranche to be held by an open market CLO) that in the reasonable judgment of such lead arranger, the terms of such CLO-eligible loan tranche are consistent with the requirements of paragraphs (c)(2) and (3) of this section; and covenants therein to such holders that such lead arranger will fulfill the requirements of paragraph (c)(1) of this section.
</P>
<P><I>Open market CLO</I> means a CLO:
</P>
<P>(i) Whose assets consist of senior, secured syndicated loans acquired by such CLO directly from the sellers thereof in open market transactions and of servicing assets,
</P>
<P>(ii) That is managed by a CLO manager, and
</P>
<P>(iii) That holds less than 50 percent of its assets, by aggregate outstanding principal amount, in loans syndicated by lead arrangers that are affiliates of the CLO or the CLO manager or originated by originators that are affiliates of the CLO or the CLO manager.
</P>
<P><I>Open market transaction</I> means:
</P>
<P>(i) Either an initial loan syndication transaction or a secondary market transaction in which a seller offers senior, secured syndicated loans to prospective purchasers in the loan market on market terms on an arm's length basis, which prospective purchasers include, but are not limited to, entities that are not affiliated with the seller, or
</P>
<P>(ii) A reverse inquiry from a prospective purchaser of a senior, secured syndicated loan through a dealer in the loan market to purchase a senior, secured syndicated loan to be sourced by the dealer in the loan market.
</P>
<P><I>Secondary market transaction</I> means a purchase of a senior, secured syndicated loan not in connection with an initial loan syndication transaction but in the secondary market.
</P>
<P><I>Senior, secured syndicated loan</I> means a loan made to a commercial borrower that:
</P>
<P>(i) Is not subordinate in right of payment to any other obligation for borrowed money of the commercial borrower,
</P>
<P>(ii) Is secured by a valid first priority security interest or lien in or on specified collateral securing the commercial borrower's obligations under the loan, and
</P>
<P>(iii) The value of the collateral subject to such first priority security interest or lien, together with other attributes of the obligor (including, without limitation, its general financial condition, ability to generate cash flow available for debt service and other demands for that cash flow), is adequate (in the commercially reasonable judgment of the CLO manager exercised at the time of investment) to repay the loan and to repay all other indebtedness of equal seniority secured by such first priority security interest or lien in or on the same collateral, and the CLO manager certifies, on or prior to each date that it acquires a loan constituting part of a new CLO-eligible tranche, that it has policies and procedures to evaluate the likelihood of repayment of loans acquired by the CLO and it has followed such policies and procedures in evaluating each CLO-eligible loan tranche.
</P>
<P>(b) <I>In general.</I> A sponsor satisfies the risk retention requirements of § 267.3 with respect to an open market CLO transaction if:
</P>
<P>(1) The open market CLO does not acquire or hold any assets other than CLO-eligible loan tranches that meet the requirements of paragraph (c) of this section and servicing assets;
</P>
<P>(2) The governing documents of such open market CLO require that, at all times, the assets of the open market CLO consist of senior, secured syndicated loans that are CLO-eligible loan tranches and servicing assets;
</P>
<P>(3) The open market CLO does not invest in ABS interests or in credit derivatives other than hedging transactions that are servicing assets to hedge risks of the open market CLO;
</P>
<P>(4) All purchases of CLO-eligible loan tranches and other assets by the open market CLO issuing entity or through a warehouse facility used to accumulate the loans prior to the issuance of the CLO's ABS interests are made in open market transactions on an arms-length basis;
</P>
<P>(5) The CLO manager of the open market CLO is not entitled to receive any management fee or gain on sale at the time the open market CLO issues its ABS interests.
</P>
<P>(c) <I>CLO-eligible loan tranche.</I> To qualify as a CLO-eligible loan tranche, a term loan of a syndicated credit facility to a commercial borrower must have the following features:
</P>
<P>(1) A minimum of 5 percent of the face amount of the CLO-eligible loan tranche is retained by the lead arranger thereof until the earliest of the repayment, maturity, involuntary and unscheduled acceleration, payment default, or bankruptcy default of such CLO-eligible loan tranche, provided that such lead arranger complies with limitations on hedging, transferring and pledging in § 267.12 with respect to the interest retained by the lead arranger.
</P>
<P>(2) Lender voting rights within the credit agreement and any intercreditor or other applicable agreements governing such CLO-eligible loan tranche are defined so as to give holders of the CLO-eligible loan tranche consent rights with respect to, at minimum, any material waivers and amendments of such applicable documents, including but not limited to, adverse changes to the calculation or payments of amounts due to the holders of the CLO-eligible tranche, alterations to <I>pro rata</I> provisions, changes to voting provisions, and waivers of conditions precedent; and
</P>
<P>(3) The pro rata provisions, voting provisions, and similar provisions applicable to the security associated with such CLO-eligible loan tranches under the CLO credit agreement and any intercreditor or other applicable agreements governing such CLO-eligible loan tranches are not materially less advantageous to the holder(s) of such CLO-eligible tranche than the terms of other tranches of comparable seniority in the broader syndicated credit facility.
</P>
<P>(d) <I>Disclosures.</I> A sponsor relying on this section shall provide, or cause to be provided, to potential investors a reasonable period of time prior to the sale of the asset-backed securities in the securitization transaction and at least annually with respect to the information required by paragraph (d)(1) of this section and, upon request, to the Commission and its appropriate Federal banking agency, if any, the following disclosure in written form under the caption “Credit Risk Retention”:
</P>
<P>(1) <I>Open market CLOs.</I> A complete list of every asset held by an open market CLO (or before the CLO's closing, in a warehouse facility in anticipation of transfer into the CLO at closing), including the following information:
</P>
<P>(i) The full legal name, Standard Industrial Classification (SIC) category code, and legal entity identifier (LEI) issued by a utility endorsed or otherwise governed by the Global LEI Regulatory Oversight Committee or the Global LEI Foundation (if an LEI has been obtained by the obligor) of the obligor of the loan or asset;
</P>
<P>(ii) The full name of the specific loan tranche held by the CLO;
</P>
<P>(iii) The face amount of the entire loan tranche held by the CLO, and the face amount of the portion thereof held by the CLO;
</P>
<P>(iv) The price at which the loan tranche was acquired by the CLO; and
</P>
<P>(v) For each loan tranche, the full legal name of the lead arranger subject to the sales and hedging restrictions of § 267.12; and
</P>
<P>(2) <I>CLO manager.</I> The full legal name and form of organization of the CLO manager.


</P>
</DIV8>


<DIV8 N="§ 267.10" NODE="24:2.1.1.2.29.2.221.8" TYPE="SECTION">
<HEAD>§ 267.10   Qualified tender option bonds.</HEAD>
<P>(a) <I>Definitions.</I> For purposes of this section, the following definitions shall apply:
</P>
<P><I>Municipal security</I> or <I>municipal securities</I> shall have the same meaning as the term “municipal securities” in Section 3(a)(29) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(29)) and any rules promulgated pursuant to such section.
</P>
<P><I>Qualified tender option bond entity</I> means an issuing entity with respect to tender option bonds for which each of the following applies:
</P>
<P>(i) Such entity is collateralized solely by servicing assets and by municipal securities that have the same municipal issuer and the same underlying obligor or source of payment (determined without regard to any third-party credit enhancement), and such municipal securities are not subject to substitution.
</P>
<P>(ii) Such entity issues no securities other than:
</P>
<P>(A) A single class of tender option bonds with a preferred variable return payable out of capital that meets the requirements of paragraph (b) of this section, and
</P>
<P>(B) One or more residual equity interests that, in the aggregate, are entitled to all remaining income of the issuing entity.
</P>
<P>(C) The types of securities referred to in paragraphs (ii)(A) and (B) of this definition must constitute asset-backed securities.
</P>
<P>(iii) The municipal securities held as assets by such entity are issued in compliance with Section 103 of the Internal Revenue Code of 1986, as amended (the “IRS Code”, 26 U.S.C. 103), such that the interest payments made on those securities are excludable from the gross income of the owners under Section 103 of the IRS Code.
</P>
<P>(iv) The terms of all of the securities issued by the entity are structured so that all holders of such securities who are eligible to exclude interest received on such securities will be able to exclude that interest from gross income pursuant to Section 103 of the IRS Code or as “exempt-interest dividends” pursuant to Section 852(b)(5) of the IRS Code (26 U.S.C. 852(b)(5)) in the case of regulated investment companies under the Investment Company Act of 1940, as amended.
</P>
<P>(v) Such entity has a legally binding commitment from a regulated liquidity provider as defined in § 267.6(a), to provide a 100 percent guarantee or liquidity coverage with respect to all of the issuing entity's outstanding tender option bonds.
</P>
<P>(vi) Such entity qualifies for monthly closing elections pursuant to IRS Revenue Procedure 2003-84, as amended or supplemented from time to time.
</P>
<P><I>Tender option bond</I> means a security which has features which entitle the holders to tender such bonds to the issuing entity for purchase at any time upon no more than 397 days' notice, for a purchase price equal to the approximate amortized cost of the security, plus accrued interest, if any, at the time of tender.
</P>
<P>(b) <I>Risk retention options.</I> Notwithstanding anything in this section, the sponsor with respect to an issuance of tender option bonds may retain an eligible vertical interest or eligible horizontal residual interest, or any combination thereof, in accordance with the requirements of § 267.4. In order to satisfy its risk retention requirements under this section, the sponsor with respect to an issuance of tender option bonds by a qualified tender option bond entity may retain:
</P>
<P>(1) An eligible vertical interest or an eligible horizontal residual interest, or any combination thereof, in accordance with the requirements of § 267.4; or
</P>
<P>(2) An interest that meets the requirements set forth in paragraph (c) of this section; or
</P>
<P>(3) A municipal security that meets the requirements set forth in paragraph (d) of this section; or
</P>
<P>(4) Any combination of interests and securities described in paragraphs (b)(1) through (b)(3) of this section such that the sum of the percentages held in each form equals at least five.
</P>
<P>(c) <I>Tender option termination event.</I> The sponsor with respect to an issuance of tender option bonds by a qualified tender option bond entity may retain an interest that upon issuance meets the requirements of an eligible horizontal residual interest but that upon the occurrence of a “tender option termination event” as defined in Section 4.01(5) of IRS Revenue Procedure 2003-84, as amended or supplemented from time to time will meet the requirements of an eligible vertical interest.
</P>
<P>(d) <I>Retention of a municipal security outside of the qualified tender option bond entity.</I> The sponsor with respect to an issuance of tender option bonds by a qualified tender option bond entity may satisfy its risk retention requirements under this Section by holding municipal securities from the same issuance of municipal securities deposited in the qualified tender option bond entity, the face value of which retained municipal securities is equal to 5 percent of the face value of the municipal securities deposited in the qualified tender option bond entity.
</P>
<P>(e) <I>Disclosures.</I> The sponsor shall provide, or cause to be provided, to potential investors a reasonable period of time prior to the sale of the asset-backed securities as part of the securitization transaction and, upon request, to the Commission and its appropriate Federal banking agency, if any, the following disclosure in written form under the caption “Credit Risk Retention”:
</P>
<P>(1) The name and form of organization of the qualified tender option bond entity;
</P>
<P>(2) A description of the form and subordination features of such retained interest in accordance with the disclosure obligations in § 267.4(c);
</P>
<P>(3) To the extent any portion of the retained interest is claimed by the sponsor as an eligible horizontal residual interest (including any interest held in compliance with § 267.10(c)), the fair value of that interest (expressed as a percentage of the fair value of all of the ABS interests issued in the securitization transaction and as a dollar amount);
</P>
<P>(4) To the extent any portion of the retained interest is claimed by the sponsor as an eligible vertical interest (including any interest held in compliance with § 267.10(c)), the percentage of ABS interests issued represented by the eligible vertical interest; and
</P>
<P>(5) To the extent any portion of the retained interest claimed by the sponsor is a municipal security held outside of the qualified tender option bond entity, the name and form of organization of the qualified tender option bond entity, the identity of the issuer of the municipal securities, the face value of the municipal securities deposited into the qualified tender option bond entity, and the face value of the municipal securities retained by the sponsor or its majority-owned affiliates and subject to the transfer and hedging prohibition.
</P>
<P>(f) <I>Prohibitions on Hedging and Transfer.</I> The prohibitions on transfer and hedging set forth in § 267.12, apply to any interests or municipal securities retained by the sponsor with respect to an issuance of tender option bonds by a qualified tender option bond entity pursuant to of this section.


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:2.1.1.2.29.3" TYPE="SUBPART">
<HEAD>Subpart C—Transfer of Risk Retention</HEAD>


<DIV8 N="§ 267.11" NODE="24:2.1.1.2.29.3.221.1" TYPE="SECTION">
<HEAD>§ 267.11   Allocation of risk retention to an originator.</HEAD>
<P>(a) <I>In general.</I> A sponsor choosing to retain an eligible vertical interest or an eligible horizontal residual interest (including an eligible horizontal cash reserve account), or combination thereof under § 267.4, with respect to a securitization transaction may offset the amount of its risk retention requirements under § 267.4 by the amount of the eligible interests, respectively, acquired by an originator of one or more of the securitized assets if:
</P>
<P>(1) At the closing of the securitization transaction:
</P>
<P>(i) The originator acquires the eligible interest from the sponsor and retains such interest in the same manner and proportion (as between horizontal and vertical interests) as the sponsor under § 267.4, as such interest was held prior to the acquisition by the originator;
</P>
<P>(ii) The ratio of the percentage of eligible interests acquired and retained by the originator to the percentage of eligible interests otherwise required to be retained by the sponsor pursuant to § 267.4, does not exceed the ratio of:
</P>
<P>(A) The unpaid principal balance of all the securitized assets originated by the originator; to
</P>
<P>(B) The unpaid principal balance of all the securitized assets in the securitization transaction;
</P>
<P>(iii) The originator acquires and retains at least 20 percent of the aggregate risk retention amount otherwise required to be retained by the sponsor pursuant to § 267.4; and
</P>
<P>(iv) The originator purchases the eligible interests from the sponsor at a price that is equal, on a dollar-for-dollar basis, to the amount by which the sponsor's required risk retention is reduced in accordance with this section, by payment to the sponsor in the form of:
</P>
<P>(A) Cash; or
</P>
<P>(B) A reduction in the price received by the originator from the sponsor or depositor for the assets sold by the originator to the sponsor or depositor for inclusion in the pool of securitized assets.
</P>
<P>(2) <I>Disclosures.</I> In addition to the disclosures required pursuant to § 267.4(c), the sponsor provides, or causes to be provided, to potential investors a reasonable period of time prior to the sale of the asset-backed securities as part of the securitization transaction and, upon request, to the Commission and its appropriate Federal banking agency, if any, in written form under the caption “Credit Risk Retention”, the name and form of organization of any originator that will acquire and retain (or has acquired and retained) an interest in the transaction pursuant to this section, including a description of the form and amount (expressed as a percentage and dollar amount (or corresponding amount in the foreign currency in which the ABS interests are issued, as applicable)) and nature (<I>e.g.,</I> senior or subordinated) of the interest, as well as the method of payment for such interest under paragraph (a)(1)(iv) of this section.
</P>
<P>(3) <I>Hedging, transferring and pledging.</I> The originator and each of its affiliates complies with the hedging and other restrictions in § 267.12 with respect to the interests retained by the originator pursuant to this section as if it were the retaining sponsor and was required to retain the interest under subpart B of this part.
</P>
<P>(b) <I>Duty to comply.</I> (1) The retaining sponsor shall be responsible for compliance with this section.
</P>
<P>(2) A retaining sponsor relying on this section:
</P>
<P>(i) Shall maintain and adhere to policies and procedures that are reasonably designed to monitor the compliance by each originator that is allocated a portion of the sponsor's risk retention obligations with the requirements in paragraphs (a)(1) and (3) of this section; and
</P>
<P>(ii) In the event the sponsor determines that any such originator no longer complies with any of the requirements in paragraphs (a)(1) and (3) of this section, shall promptly notify, or cause to be notified, the holders of the ABS interests issued in the securitization transaction of such noncompliance by such originator.


</P>
</DIV8>


<DIV8 N="§ 267.12" NODE="24:2.1.1.2.29.3.221.2" TYPE="SECTION">
<HEAD>§ 267.12   Hedging, transfer and financing prohibitions.</HEAD>
<P>(a) <I>Transfer.</I> Except as permitted by § 267.7(b)(8), and subject to § 267.5, a retaining sponsor may not sell or otherwise transfer any interest or assets that the sponsor is required to retain pursuant to subpart B of this part to any person other than an entity that is and remains a majority-owned affiliate of the sponsor and each such majority-owned affiliate shall be subject to the same restrictions.
</P>
<P>(b) <I>Prohibited hedging by sponsor and affiliates.</I> A retaining sponsor and its affiliates may not purchase or sell a security, or other financial instrument, or enter into an agreement, derivative or other position, with any other person if:
</P>
<P>(1) Payments on the security or other financial instrument or under the agreement, derivative, or position are materially related to the credit risk of one or more particular ABS interests that the retaining sponsor (or any of its majority-owned affiliates) is required to retain with respect to a securitization transaction pursuant to subpart B of this part or one or more of the particular securitized assets that collateralize the asset-backed securities issued in the securitization transaction; and
</P>
<P>(2) The security, instrument, agreement, derivative, or position in any way reduces or limits the financial exposure of the sponsor (or any of its majority-owned affiliates) to the credit risk of one or more of the particular ABS interests that the retaining sponsor (or any of its majority-owned affiliates) is required to retain with respect to a securitization transaction pursuant to subpart B of this part or one or more of the particular securitized assets that collateralize the asset-backed securities issued in the securitization transaction.
</P>
<P>(c) <I>Prohibited hedging by issuing entity.</I> The issuing entity in a securitization transaction may not purchase or sell a security or other financial instrument, or enter into an agreement, derivative or position, with any other person if:
</P>
<P>(1) Payments on the security or other financial instrument or under the agreement, derivative or position are materially related to the credit risk of one or more particular ABS interests that the retaining sponsor for the transaction (or any of its majority-owned affiliates) is required to retain with respect to the securitization transaction pursuant to subpart B of this part; and
</P>
<P>(2) The security, instrument, agreement, derivative, or position in any way reduces or limits the financial exposure of the retaining sponsor (or any of its majority-owned affiliates) to the credit risk of one or more of the particular ABS interests that the sponsor (or any of its majority-owned affiliates) is required to retain pursuant to subpart B of this part.
</P>
<P>(d) <I>Permitted hedging activities.</I> The following activities shall not be considered prohibited hedging activities under paragraph (b) or (c) of this section:
</P>
<P>(1) Hedging the interest rate risk (which does not include the specific interest rate risk, known as spread risk, associated with the ABS interest that is otherwise considered part of the credit risk) or foreign exchange risk arising from one or more of the particular ABS interests required to be retained by the sponsor (or any of its majority-owned affiliates) under subpart B of this part or one or more of the particular securitized assets that underlie the asset-backed securities issued in the securitization transaction; or
</P>
<P>(2) Purchasing or selling a security or other financial instrument or entering into an agreement, derivative, or other position with any third party where payments on the security or other financial instrument or under the agreement, derivative, or position are based, directly or indirectly, on an index of instruments that includes asset-backed securities if:
</P>
<P>(i) Any class of ABS interests in the issuing entity that were issued in connection with the securitization transaction and that are included in the index represents no more than 10 percent of the dollar-weighted average (or corresponding weighted average in the currency in which the ABS interests are issued, as applicable) of all instruments included in the index; and
</P>
<P>(ii) All classes of ABS interests in all issuing entities that were issued in connection with any securitization transaction in which the sponsor (or any of its majority-owned affiliates) is required to retain an interest pursuant to subpart B of this part and that are included in the index represent, in the aggregate, no more than 20 percent of the dollar-weighted average (or corresponding weighted average in the currency in which the ABS interests are issued, as applicable) of all instruments included in the index.
</P>
<P>(e) <I>Prohibited non-recourse financing.</I> Neither a retaining sponsor nor any of its affiliates may pledge as collateral for any obligation (including a loan, repurchase agreement, or other financing transaction) any ABS interest that the sponsor is required to retain with respect to a securitization transaction pursuant to subpart B of this part unless such obligation is with full recourse to the sponsor or affiliate, respectively.
</P>
<P>(f) <I>Duration of the hedging and transfer restrictions</I>—(1) <I>General rule.</I> Except as provided in paragraph (f)(2) of this section, the prohibitions on sale and hedging pursuant to paragraphs (a) and (b) of this section shall expire on or after the date that is the latest of:
</P>
<P>(i) The date on which the total unpaid principal balance (if applicable) of the securitized assets that collateralize the securitization transaction has been reduced to 33 percent of the total unpaid principal balance of the securitized assets as of the cut-off date or similar date for establishing the composition of the securitized assets collateralizing the asset-backed securities issued pursuant to the securitization transaction;
</P>
<P>(ii) The date on which the total unpaid principal obligations under the ABS interests issued in the securitization transaction has been reduced to 33 percent of the total unpaid principal obligations of the ABS interests at closing of the securitization transaction; or
</P>
<P>(iii) Two years after the date of the closing of the securitization transaction.
</P>
<P>(2) <I>Securitizations of residential mortgages.</I> (i) If all of the assets that collateralize a securitization transaction subject to risk retention under this part are residential mortgages, the prohibitions on sale and hedging pursuant to paragraphs (a) and (b) of this section shall expire on or after the date that is the later of:
</P>
<P>(A) Five years after the date of the closing of the securitization transaction; or
</P>
<P>(B) The date on which the total unpaid principal balance of the residential mortgages that collateralize the securitization transaction has been reduced to 25 percent of the total unpaid principal balance of such residential mortgages at the cut-off date or similar date for establishing the composition of the securitized assets collateralizing the asset-backed securities issued pursuant to the securitization transaction.
</P>
<P>(ii) Notwithstanding paragraph (f)(2)(i) of this section, the prohibitions on sale and hedging pursuant to paragraphs (a) and (b) of this section shall expire with respect to the sponsor of a securitization transaction described in paragraph (f)(2)(i) of this section on or after the date that is seven years after the date of the closing of the securitization transaction.
</P>
<P>(3) <I>Conservatorship or receivership of sponsor.</I> A conservator or receiver of the sponsor (or any other person holding risk retention pursuant to this part) of a securitization transaction is permitted to sell or hedge any economic interest in the securitization transaction if the conservator or receiver has been appointed pursuant to any provision of federal or State law (or regulation promulgated thereunder) that provides for the appointment of the Federal Deposit Insurance Corporation, or an agency or instrumentality of the United States or of a State as conservator or receiver, including without limitation any of the following authorities:
</P>
<P>(i) 12 U.S.C. 1811;
</P>
<P>(ii) 12 U.S.C. 1787;
</P>
<P>(iii) 12 U.S.C. 4617; or
</P>
<P>(iv) 12 U.S.C. 5382.
</P>
<P>(4) <I>Revolving pool securitizations.</I> The provisions of paragraphs (f)(1) and (2) are not available to sponsors of revolving pool securitizations with respect to the forms of risk retention specified in § 267.5.


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:2.1.1.2.29.4" TYPE="SUBPART">
<HEAD>Subpart D—Exceptions and Exemptions</HEAD>


<DIV8 N="§ 267.13" NODE="24:2.1.1.2.29.4.221.1" TYPE="SECTION">
<HEAD>§ 267.13   Exemption for qualified residential mortgages.</HEAD>
<P>(a) <I>Definitions.</I> For purposes of this section, the following definitions shall apply:
</P>
<P><I>Currently performing</I> means the borrower in the mortgage transaction is not currently thirty (30) days or more past due, in whole or in part, on the mortgage transaction.
</P>
<P><I>Qualified residential mortgage</I> means a “qualified mortgage” as defined in section 129C of the Truth in Lending Act (15 U.S.C.1639c) and regulations issued thereunder, as amended from time to time.
</P>
<P>(b) <I>Exemption.</I> A sponsor shall be exempt from the risk retention requirements in subpart B of this part with respect to any securitization transaction, if:
</P>
<P>(1) All of the assets that collateralize the asset-backed securities are qualified residential mortgages or servicing assets;
</P>
<P>(2) None of the assets that collateralize the asset-backed securities are asset-backed securities;
</P>
<P>(3) As of the cut-off date or similar date for establishing the composition of the securitized assets collateralizing the asset-backed securities issued pursuant to the securitization transaction, each qualified residential mortgage collateralizing the asset-backed securities is currently performing; and
</P>
<P>(4)(i) The depositor with respect to the securitization transaction certifies that it has evaluated the effectiveness of its internal supervisory controls with respect to the process for ensuring that all assets that collateralize the asset-backed security are qualified residential mortgages or servicing assets and has concluded that its internal supervisory controls are effective; and
</P>
<P>(ii) The evaluation of the effectiveness of the depositor's internal supervisory controls must be performed, for each issuance of an asset-backed security in reliance on this section, as of a date within 60 days of the cut-off date or similar date for establishing the composition of the asset pool collateralizing such asset-backed security; and
</P>
<P>(iii) The sponsor provides, or causes to be provided, a copy of the certification described in paragraph (b)(4)(i) of this section to potential investors a reasonable period of time prior to the sale of asset-backed securities in the issuing entity, and, upon request, to the Commission and its appropriate Federal banking agency, if any.
</P>
<P>(c) <I>Repurchase of loans subsequently determined to be non-qualified after closing.</I> A sponsor that has relied on the exemption provided in paragraph (b) of this section with respect to a securitization transaction shall not lose such exemption with respect to such transaction if, after closing of the securitization transaction, it is determined that one or more of the residential mortgage loans collateralizing the asset-backed securities does not meet all of the criteria to be a qualified residential mortgage <I>provided that:</I>
</P>
<P>(1) The depositor complied with the certification requirement set forth in paragraph (b)(4) of this section;
</P>
<P>(2) The sponsor repurchases the loan(s) from the issuing entity at a price at least equal to the remaining aggregate unpaid principal balance and accrued interest on the loan(s) no later than 90 days after the determination that the loans do not satisfy the requirements to be a qualified residential mortgage; and
</P>
<P>(3) The sponsor promptly notifies, or causes to be notified, the holders of the asset-backed securities issued in the securitization transaction of any loan(s) included in such securitization transaction that is (or are) required to be repurchased by the sponsor pursuant to paragraph (c)(2) of this section, including the amount of such repurchased loan(s) and the cause for such repurchase.


</P>
</DIV8>


<DIV8 N="§ 267.14" NODE="24:2.1.1.2.29.4.221.2" TYPE="SECTION">
<HEAD>§ 267.14   Definitions applicable to qualifying commercial loans, qualifying commercial real estate loans, and qualifying automobile loans.</HEAD>
<P>The following definitions apply for purposes of §§ 267.15 through 267.18:
</P>
<P><I>Appraisal Standards Board</I> means the board of the Appraisal Foundation that develops, interprets, and amends the Uniform Standards of Professional Appraisal Practice (USPAP), establishing generally accepted standards for the appraisal profession.
</P>
<P><I>Automobile loan:</I>
</P>
<P>(1) Means any loan to an individual to finance the purchase of, and that is secured by a first lien on, a passenger car or other passenger vehicle, such as a minivan, van, sport-utility vehicle, pickup truck, or similar light truck for personal, family, or household use; and
</P>
<P>(2) Does not include any:
</P>
<P>(i) Loan to finance fleet sales;
</P>
<P>(ii) Personal cash loan secured by a previously purchased automobile;
</P>
<P>(iii) Loan to finance the purchase of a commercial vehicle or farm equipment that is not used for personal, family, or household purposes;
</P>
<P>(iv) Lease financing;
</P>
<P>(v) Loan to finance the purchase of a vehicle with a salvage title; or
</P>
<P>(vi) Loan to finance the purchase of a vehicle intended to be used for scrap or parts.
</P>
<P><I>Combined loan-to-value (CLTV) ratio</I> means, at the time of origination, the sum of the principal balance of a first-lien mortgage loan on the property, plus the principal balance of any junior-lien mortgage loan that, to the creditor's knowledge, would exist at the closing of the transaction and that is secured by the same property, divided by:
</P>
<P>(1) For acquisition funding, the lesser of the purchase price or the estimated market value of the real property based on an appraisal that meets the requirements set forth in § 267.17(a)(2)(ii); or
</P>
<P>(2) For refinancing, the estimated market value of the real property based on an appraisal that meets the requirements set forth in § 267.17(a)(2)(ii).
</P>
<P><I>Commercial loan</I> means a secured or unsecured loan to a company or an individual for business purposes, other than any:
</P>
<P>(1) Loan to purchase or refinance a one-to-four family residential property;
</P>
<P>(2) Commercial real estate loan.
</P>
<P><I>Commercial real estate (CRE) loan</I> means:
</P>
<P>(1) A loan secured by a property with five or more single family units, or by nonfarm nonresidential real property, the primary source (50 percent or more) of repayment for which is expected to be:
</P>
<P>(i) The proceeds of the sale, refinancing, or permanent financing of the property; or
</P>
<P>(ii) Rental income associated with the property;
</P>
<P>(2) Loans secured by improved land if the obligor owns the fee interest in the land and the land is leased to a third party who owns all improvements on the land, and the improvements are nonresidential or residential with five or more single family units; and
</P>
<P>(3) Does not include:
</P>
<P>(i) A land development and construction loan (including 1- to 4-family residential or commercial construction loans);
</P>
<P>(ii) Any other land loan; or
</P>
<P>(iii) An unsecured loan to a developer.
</P>
<P><I>Debt service coverage (DSC) ratio</I> means:
</P>
<P>(1) For qualifying leased CRE loans, qualifying multi-family loans, and other CRE loans:
</P>
<P>(i) The annual NOI less the annual replacement reserve of the CRE property at the time of origination of the CRE loan(s) divided by
</P>
<P>(ii) The sum of the borrower's annual payments for principal and interest (calculated at the fully-indexed rate) on any debt obligation.
</P>
<P>(2) For commercial loans:
</P>
<P>(i) The borrower's EBITDA as of the most recently completed fiscal year divided by
</P>
<P>(ii) The sum of the borrower's annual payments for principal and interest on all debt obligations.
</P>
<P><I>Debt to income (DTI) ratio</I> means the borrower's total debt, including the monthly amount due on the automobile loan, divided by the borrower's monthly income.
</P>
<P><I>Earnings before interest, taxes, depreciation, and amortization (EBITDA)</I> means the annual income of a business before expenses for interest, taxes, depreciation and amortization are deducted, as determined in accordance with GAAP.
</P>
<P><I>Environmental risk assessment</I> means a process for determining whether a property is contaminated or exposed to any condition or substance that could result in contamination that has an adverse effect on the market value of the property or the realization of the collateral value.
</P>
<P><I>First lien</I> means a lien or encumbrance on property that has priority over all other liens or encumbrances on the property.
</P>
<P><I>Junior lien</I> means a lien or encumbrance on property that is lower in priority relative to other liens or encumbrances on the property.
</P>
<P><I>Leverage ratio</I> means the borrower's total debt divided by the borrower's EBITDA.
</P>
<P><I>Loan-to-value (LTV) ratio</I> means, at the time of origination, the principal balance of a first-lien mortgage loan on the property divided by:
</P>
<P>(1) For acquisition funding, the lesser of the purchase price or the estimated market value of the real property based on an appraisal that meets the requirements set forth in § 267.17(a)(2)(ii); or
</P>
<P>(2) For refinancing, the estimated market value of the real property based on an appraisal that meets the requirements set forth in § 267.17(a)(2)(ii).
</P>
<P><I>Model year</I> means the year determined by the manufacturer and reflected on the vehicle's Motor Vehicle Title as part of the vehicle description.
</P>
<P><I>Net operating income (NOI)</I> refers to the income a CRE property generates for the owner after all expenses have been deducted for federal income tax purposes, except for depreciation, debt service expenses, and federal and state income taxes, and excluding any unusual and nonrecurring items of income.
</P>
<P><I>Operating affiliate</I> means an affiliate of a borrower that is a lessor or similar party with respect to the commercial real estate securing the loan.
</P>
<P><I>Payments-in-kind</I> means payments of accrued interest that are not paid in cash when due, and instead are paid by increasing the principal balance of the loan or by providing equity in the borrowing company.
</P>
<P><I>Purchase money security interest</I> means a security interest in property that secures the obligation of the obligor incurred as all or part of the price of the property.
</P>
<P><I>Purchase price</I> means the amount paid by the borrower for the vehicle net of any incentive payments or manufacturer cash rebates.
</P>
<P><I>Qualified tenant</I> means:
</P>
<P>(1) A tenant with a lease who has satisfied all obligations with respect to the property in a timely manner; or
</P>
<P>(2) A tenant who originally had a lease that subsequently expired and currently is leasing the property on a month-to-month basis, has occupied the property for at least three years prior to the date of origination, and has satisfied all obligations with respect to the property in a timely manner.
</P>
<P><I>Qualifying leased CRE loan</I> means a CRE loan secured by commercial nonfarm real property, other than a multi-family property or a hotel, inn, or similar property:
</P>
<P>(1) That is occupied by one or more qualified tenants pursuant to a lease agreement with a term of no less than one (1) month; and
</P>
<P>(2) Where no more than 20 percent of the aggregate gross revenue of the property is payable from one or more tenants who:
</P>
<P>(i) Are subject to a lease that will terminate within six months following the date of origination; or
</P>
<P>(ii) Are not qualified tenants.
</P>
<P><I>Qualifying multi-family loan</I> means a CRE loan secured by any residential property (excluding a hotel, motel, inn, hospital, nursing home, or other similar facility where dwellings are not leased to residents):
</P>
<P>(1) That consists of five or more dwelling units (including apartment buildings, condominiums, cooperatives and other similar structures) primarily for residential use; and
</P>
<P>(2) Where at least 75 percent of the NOI is derived from residential rents and tenant amenities (including income from parking garages, health or swim clubs, and dry cleaning), and not from other commercial uses.
</P>
<P><I>Rental income</I> means:
</P>
<P>(1) Income derived from a lease or other occupancy agreement between the borrower or an operating affiliate of the borrower and a party which is not an affiliate of the borrower for the use of real property or improvements serving as collateral for the applicable loan; and
</P>
<P>(2) Other income derived from hotel, motel, dormitory, nursing home, assisted living, mini-storage warehouse or similar properties that are used primarily by parties that are not affiliates or employees of the borrower or its affiliates.
</P>
<P><I>Replacement reserve</I> means the monthly capital replacement or maintenance amount based on the property type, age, construction and condition of the property that is adequate to maintain the physical condition and NOI of the property.
</P>
<P><I>Salvage title</I> means a form of vehicle title branding, which notes that the vehicle has been severely damaged and/or deemed a total loss and uneconomical to repair by an insurance company that paid a claim on the vehicle.
</P>
<P><I>Total debt,</I> with respect to a borrower, means:
</P>
<P>(1) In the case of an automobile loan, the sum of:
</P>
<P>(i) All monthly housing payments (rent- or mortgage-related, including property taxes, insurance and home owners association fees); and
</P>
<P>(ii) Any of the following that is dependent upon the borrower's income for payment:
</P>
<P>(A) Monthly payments on other debt and lease obligations, such as credit card loans or installment loans, including the monthly amount due on the automobile loan;
</P>
<P>(B) Estimated monthly amortizing payments for any term debt, debts with other than monthly payments and debts not in repayment (such as deferred student loans, interest-only loans); and
</P>
<P>(C) Any required monthly alimony, child support or court-ordered payments; and
</P>
<P>(2) In the case of a commercial loan, the outstanding balance of all long-term debt (obligations that have a remaining maturity of more than one year) and the current portion of all debt that matures in one year or less.
</P>
<P><I>Total liabilities ratio</I> means the borrower's total liabilities divided by the sum of the borrower's total liabilities and equity, less the borrower's intangible assets, with each component determined in accordance with GAAP.
</P>
<P><I>Trade-in allowance</I> means the amount a vehicle purchaser is given as a credit at the purchase of a vehicle for the fair exchange of the borrower's existing vehicle to compensate the dealer for some portion of the vehicle purchase price, not to exceed the highest trade-in value of the existing vehicle, as determined by a nationally recognized automobile pricing agency and based on the manufacturer, year, model, features, mileage, and condition of the vehicle, less the payoff balance of any outstanding debt collateralized by the existing vehicle.
</P>
<P><I>Uniform Standards of Professional Appraisal Practice (USPAP)</I> means generally accepted standards for professional appraisal practice issued by the Appraisal Standards Board of the Appraisal Foundation.


</P>
</DIV8>


<DIV8 N="§ 267.15" NODE="24:2.1.1.2.29.4.221.3" TYPE="SECTION">
<HEAD>§ 267.15   Qualifying commercial loans, commercial real estate loans, and automobile loans.</HEAD>
<P>(a) <I>General exception for qualifying assets.</I> Commercial loans, commercial real estate loans, and automobile loans that are securitized through a securitization transaction shall be subject to a 0 percent risk retention requirement under subpart B, provided that the following conditions are met:
</P>
<P>(1) The assets meet the underwriting standards set forth in §§ 267.16 (qualifying commercial loans), 267.17 (qualifying CRE loans), or 267.18 (qualifying automobile loans) of this part, as applicable;
</P>
<P>(2) The securitization transaction is collateralized solely by loans of the same asset class and by servicing assets;
</P>
<P>(3) The securitization transaction does not permit reinvestment periods; and
</P>
<P>(4) The sponsor provides, or causes to be provided, to potential investors a reasonable period of time prior to the sale of asset-backed securities of the issuing entity, and, upon request, to the Commission, and to its appropriate Federal banking agency, if any, in written form under the caption “Credit Risk Retention”, a description of the manner in which the sponsor determined the aggregate risk retention requirement for the securitization transaction after including qualifying commercial loans, qualifying CRE loans, or qualifying automobile loans with 0 percent risk retention.
</P>
<P>(b) <I>Risk retention requirement.</I> For any securitization transaction described in paragraph (a) of this section, the percentage of risk retention required under § 267.3(a) is reduced by the percentage evidenced by the ratio of the unpaid principal balance of the qualifying commercial loans, qualifying CRE loans, or qualifying automobile loans (as applicable) to the total unpaid principal balance of commercial loans, CRE loans, or automobile loans (as applicable) that are included in the pool of assets collateralizing the asset-backed securities issued pursuant to the securitization transaction (the qualifying asset ratio); provided that:
</P>
<P>(1) The qualifying asset ratio is measured as of the cut-off date or similar date for establishing the composition of the securitized assets collateralizing the asset-backed securities issued pursuant to the securitization transaction;
</P>
<P>(2) If the qualifying asset ratio would exceed 50 percent, the qualifying asset ratio shall be deemed to be 50 percent; and
</P>
<P>(3) The disclosure required by paragraph (a)(4) of this section also includes descriptions of the qualifying commercial loans, qualifying CRE loans, and qualifying automobile loans (qualifying assets) and descriptions of the assets that are not qualifying assets, and the material differences between the group of qualifying assets and the group of assets that are not qualifying assets with respect to the composition of each group's loan balances, loan terms, interest rates, borrower credit information, and characteristics of any loan collateral.
</P>
<P>(c) <I>Exception for securitizations of qualifying assets only.</I> Notwithstanding other provisions of this section, the risk retention requirements of subpart B of this part shall not apply to securitization transactions where the transaction is collateralized solely by servicing assets and either qualifying commercial loans, qualifying CRE loans, or qualifying automobile loans.
</P>
<P>(d) <I>Record maintenance.</I> A sponsor must retain the disclosures required in paragraphs (a) and (b) of this section and the certifications required in §§ 267.16(a)(8), 267.17(a)(10), and 267.18(a)(8), as applicable, in its records until three years after all ABS interests issued in the securitization are no longer outstanding. The sponsor must provide the disclosures and certifications upon request to the Commission and the sponsor's appropriate Federal banking agency, if any.


</P>
</DIV8>


<DIV8 N="§ 267.16" NODE="24:2.1.1.2.29.4.221.4" TYPE="SECTION">
<HEAD>§ 267.16   Underwriting standards for qualifying commercial loans.</HEAD>
<P>(a) <I>Underwriting, product and other standards.</I> (1) Prior to origination of the commercial loan, the originator:
</P>
<P>(i) Verified and documented the financial condition of the borrower:
</P>
<P>(A) As of the end of the borrower's two most recently completed fiscal years; and
</P>
<P>(B) During the period, if any, since the end of its most recently completed fiscal year;
</P>
<P>(ii) Conducted an analysis of the borrower's ability to service its overall debt obligations during the next two years, based on reasonable projections;
</P>
<P>(iii) Determined that, based on the previous two years' actual performance, the borrower had:
</P>
<P>(A) A total liabilities ratio of 50 percent or less;
</P>
<P>(B) A leverage ratio of 3.0 or less; and
</P>
<P>(C) A DSC ratio of 1.5 or greater;
</P>
<P>(iv) Determined that, based on the two years of projections, which include the new debt obligation, following the closing date of the loan, the borrower will have:
</P>
<P>(A) A total liabilities ratio of 50 percent or less;
</P>
<P>(B) A leverage ratio of 3.0 or less; and
</P>
<P>(C) A DSC ratio of 1.5 or greater.
</P>
<P>(2) Prior to, upon or promptly following the inception of the loan, the originator:
</P>
<P>(i) If the loan is originated on a secured basis, obtains a perfected security interest (by filing, title notation or otherwise) or, in the case of real property, a recorded lien, on all of the property pledged to collateralize the loan; and
</P>
<P>(ii) If the loan documents indicate the purpose of the loan is to finance the purchase of tangible or intangible property, or to refinance such a loan, obtains a first lien on the property.
</P>
<P>(3) The loan documentation for the commercial loan includes covenants that:
</P>
<P>(i) Require the borrower to provide to the servicer of the commercial loan the borrower's financial statements and supporting schedules on an ongoing basis, but not less frequently than quarterly;
</P>
<P>(ii) Prohibit the borrower from retaining or entering into a debt arrangement that permits payments-in-kind;
</P>
<P>(iii) Impose limits on:
</P>
<P>(A) The creation or existence of any other security interest or lien with respect to any of the borrower's property that serves as collateral for the loan;
</P>
<P>(B) The transfer of any of the borrower's assets that serve as collateral for the loan; and
</P>
<P>(C) Any change to the name, location or organizational structure of the borrower, or any other party that pledges collateral for the loan;
</P>
<P>(iv) Require the borrower and any other party that pledges collateral for the loan to:
</P>
<P>(A) Maintain insurance that protects against loss on the collateral for the commercial loan at least up to the amount of the loan, and that names the originator or any subsequent holder of the loan as an additional insured or loss payee;
</P>
<P>(B) Pay taxes, charges, fees, and claims, where non-payment might give rise to a lien on any collateral;
</P>
<P>(C) Take any action required to perfect or protect the security interest and first lien (as applicable) of the originator or any subsequent holder of the loan in any collateral for the commercial loan or the priority thereof, and to defend any collateral against claims adverse to the lender's interest;
</P>
<P>(D) Permit the originator or any subsequent holder of the loan, and the servicer of the loan, to inspect any collateral for the commercial loan and the books and records of the borrower; and
</P>
<P>(E) Maintain the physical condition of any collateral for the commercial loan.
</P>
<P>(4) Loan payments required under the loan agreement are:
</P>
<P>(i) Based on level monthly payments of principal and interest (at the fully indexed rate) that fully amortize the debt over a term that does not exceed five years from the date of origination; and
</P>
<P>(ii) To be made no less frequently than quarterly over a term that does not exceed five years.
</P>
<P>(5) The primary source of repayment for the loan is revenue from the business operations of the borrower.
</P>
<P>(6) The loan was funded within the six (6) months prior to the cut-off date or similar date for establishing the composition of the securitized assets collateralizing the asset-backed securities issued pursuant to the securitization transaction.
</P>
<P>(7) At the cut-off date or similar date for establishing the composition of the securitized assets collateralizing the asset-backed securities issued pursuant to the securitization transaction, all payments due on the loan are contractually current.
</P>
<P>(8)(i) The depositor of the asset-backed security certifies that it has evaluated the effectiveness of its internal supervisory controls with respect to the process for ensuring that all qualifying commercial loans that collateralize the asset-backed security and that reduce the sponsor's risk retention requirement under § 267.15 meet all of the requirements set forth in paragraphs (a)(1) through (7) of this section and has concluded that its internal supervisory controls are effective;
</P>
<P>(ii) The evaluation of the effectiveness of the depositor's internal supervisory controls referenced in paragraph (a)(8)(i) of this section shall be performed, for each issuance of an asset-backed security, as of a date within 60 days of the cut-off date or similar date for establishing the composition of the asset pool collateralizing such asset-backed security; and
</P>
<P>(iii) The sponsor provides, or causes to be provided, a copy of the certification described in paragraph (a)(8)(i) of this section to potential investors a reasonable period of time prior to the sale of asset-backed securities in the issuing entity, and, upon request, to its appropriate Federal banking agency, if any.
</P>
<P>(b) <I>Cure or buy-back requirement.</I> If a sponsor has relied on the exception provided in § 267.15 with respect to a qualifying commercial loan and it is subsequently determined that the loan did not meet all of the requirements set forth in paragraphs (a)(1) through (7) of this section, the sponsor shall not lose the benefit of the exception with respect to the commercial loan if the depositor complied with the certification requirement set forth in paragraph (a)(8) of this section and:
</P>
<P>(1) The failure of the loan to meet any of the requirements set forth in paragraphs (a)(1) through (7) of this section is not material; or
</P>
<P>(2) No later than 90 days after the determination that the loan does not meet one or more of the requirements of paragraphs (a)(1) through (7) of this section, the sponsor:
</P>
<P>(i) Effectuates cure, establishing conformity of the loan to the unmet requirements as of the date of cure; or
</P>
<P>(ii) Repurchases the loan(s) from the issuing entity at a price at least equal to the remaining principal balance and accrued interest on the loan(s) as of the date of repurchase.
</P>
<P>(3) If the sponsor cures or repurchases pursuant to paragraph (b)(2) of this section, the sponsor must promptly notify, or cause to be notified, the holders of the asset-backed securities issued in the securitization transaction of any loan(s) included in such securitization transaction that is required to be cured or repurchased by the sponsor pursuant to paragraph (b)(2) of this section, including the principal amount of such loan(s) and the cause for such cure or repurchase.


</P>
</DIV8>


<DIV8 N="§ 267.17" NODE="24:2.1.1.2.29.4.221.5" TYPE="SECTION">
<HEAD>§ 267.17   Underwriting standards for qualifying CRE loans.</HEAD>
<P>(a) <I>Underwriting, product and other standards.</I> (1) The CRE loan must be secured by the following:
</P>
<P>(i) An enforceable first lien, documented and recorded appropriately pursuant to applicable law, on the commercial real estate and improvements;
</P>
<P>(ii)(A) An assignment of:
</P>
<P>(<I>1</I>) Leases and rents and other occupancy agreements related to the commercial real estate or improvements or the operation thereof for which the borrower or an operating affiliate is a lessor or similar party and all payments under such leases and occupancy agreements; and
</P>
<P>(<I>2</I>) All franchise, license and concession agreements related to the commercial real estate or improvements or the operation thereof for which the borrower or an operating affiliate is a lessor, licensor, concession granter or similar party and all payments under such other agreements, whether the assignments described in this paragraph (a)(1)(ii)(A)(<I>2</I>) are absolute or are stated to be made to the extent permitted by the agreements governing the applicable franchise, license or concession agreements;
</P>
<P>(B) An assignment of all other payments due to the borrower or due to any operating affiliate in connection with the operation of the property described in paragraph (a)(1)(i) of this section; and
</P>
<P>(C) The right to enforce the agreements described in paragraph (a)(1)(ii)(A) of this section and the agreements under which payments under paragraph (a)(1)(ii)(B) of this section are due against, and collect amounts due from, each lessee, occupant or other obligor whose payments were assigned pursuant to paragraphs (a)(1)(ii)(A) or (B) of this section upon a breach by the borrower of any of the terms of, or the occurrence of any other event of default (however denominated) under, the loan documents relating to such CRE loan; and
</P>
<P>(iii) A security interest:
</P>
<P>(A) In all interests of the borrower and any applicable operating affiliate in all tangible and intangible personal property of any kind, in or used in the operation of or in connection with, pertaining to, arising from, or constituting, any of the collateral described in paragraphs (a)(1)(i) or (ii) of this section; and
</P>
<P>(B) In the form of a perfected security interest if the security interest in such property can be perfected by the filing of a financing statement, fixture filing, or similar document pursuant to the law governing the perfection of such security interest;
</P>
<P>(2) Prior to origination of the CRE loan, the originator:
</P>
<P>(i) Verified and documented the current financial condition of the borrower and each operating affiliate;
</P>
<P>(ii) Obtained a written appraisal of the real property securing the loan that:
</P>
<P>(A) Had an effective date not more than six months prior to the origination date of the loan by a competent and appropriately State-certified or State-licensed appraiser;
</P>
<P>(B) Conforms to generally accepted appraisal standards as evidenced by the USPAP and the appraisal requirements 
<SU>1</SU>
<FTREF/> of the Federal banking agencies; and
</P>
<FTNT>
<P>
<SU>1</SU> 12 CFR part 34, subpart C (OCC); 12 CFR part 208, subpart E, and 12 CFR part 225, subpart G (Board); and 12 CFR part 323 (FDIC).</P></FTNT>
<P>(C) Provides an “as is” opinion of the market value of the real property, which includes an income approach; 
<SU>2</SU>
<FTREF/>
</P>
<FTNT>
<P>
<SU>2</SU> See USPAP, Standard 1.</P></FTNT>
<P>(iii) Qualified the borrower for the CRE loan based on a monthly payment amount derived from level monthly payments consisting of both principal and interest (at the fully-indexed rate) over the term of the loan, not exceeding 25 years, or 30 years for a qualifying multi-family property;
</P>
<P>(iv) Conducted an environmental risk assessment to gain environmental information about the property securing the loan and took appropriate steps to mitigate any environmental liability determined to exist based on this assessment;
</P>
<P>(v) Conducted an analysis of the borrower's ability to service its overall debt obligations during the next two years, based on reasonable projections (including operating income projections for the property);
</P>
<P>(vi)(A) Determined that based on the two years' actual performance immediately preceding the origination of the loan, the borrower would have had:
</P>
<P>(<I>1</I>) A DSC ratio of 1.5 or greater, if the loan is a qualifying leased CRE loan, net of any income derived from a tenant(s) who is not a qualified tenant(s);
</P>
<P>(<I>2</I>) A DSC ratio of 1.25 or greater, if the loan is a qualifying multi-family property loan; or
</P>
<P>(<I>3</I>) A DSC ratio of 1.7 or greater, if the loan is any other type of CRE loan;
</P>
<P>(B) If the borrower did not own the property for any part of the last two years prior to origination, the calculation of the DSC ratio, for purposes of paragraph (a)(2)(vi)(A) of this section, shall include the property's operating income for any portion of the two-year period during which the borrower did not own the property;
</P>
<P>(vii) Determined that, based on two years of projections, which include the new debt obligation, following the origination date of the loan, the borrower will have:
</P>
<P>(A) A DSC ratio of 1.5 or greater, if the loan is a qualifying leased CRE loan, net of any income derived from a tenant(s) who is not a qualified tenant(s);
</P>
<P>(B) A DSC ratio of 1.25 or greater, if the loan is a qualifying multi-family property loan; or
</P>
<P>(C) A DSC ratio of 1.7 or greater, if the loan is any other type of CRE loan.
</P>
<P>(3) The loan documentation for the CRE loan includes covenants that:
</P>
<P>(i) Require the borrower to provide the borrower's financial statements and supporting schedules to the servicer on an ongoing basis, but not less frequently than quarterly, including information on existing, maturing and new leasing or rent-roll activity for the property securing the loan, as appropriate; and
</P>
<P>(ii) Impose prohibitions on:
</P>
<P>(A) The creation or existence of any other security interest with respect to the collateral for the CRE loan described in paragraphs (a)(1)(i) and (a)(1)(ii)(A) of this section, except as provided in paragraph (a)(4) of this section;
</P>
<P>(B) The transfer of any collateral for the CRE loan described in paragraph (a)(1)(i) or (a)(1)(ii)(A) of this section or of any other collateral consisting of fixtures, furniture, furnishings, machinery or equipment other than any such fixture, furniture, furnishings, machinery or equipment that is obsolete or surplus; and
</P>
<P>(C) Any change to the name, location or organizational structure of any borrower, operating affiliate or other pledgor unless such borrower, operating affiliate or other pledgor shall have given the holder of the loan at least 30 days advance notice and, pursuant to applicable law governing perfection and priority, the holder of the loan is able to take all steps necessary to continue its perfection and priority during such 30-day period.
</P>
<P>(iii) Require each borrower and each operating affiliate to:
</P>
<P>(A) Maintain insurance that protects against loss on collateral for the CRE loan described in paragraph (a)(1)(i) of this section for an amount no less than the replacement cost of the property improvements, and names the originator or any subsequent holder of the loan as an additional insured or lender loss payee;
</P>
<P>(B) Pay taxes, charges, fees, and claims, where non-payment might give rise to a lien on collateral for the CRE loan described in paragraphs (a)(1)(i) and (ii) of this section;
</P>
<P>(C) Take any action required to:
</P>
<P>(<I>1</I>) Protect the security interest and the enforceability and priority thereof in the collateral described in paragraphs (a)(1)(i) and (a)(1)(ii)(A) of this section and defend such collateral against claims adverse to the originator's or any subsequent holder's interest; and
</P>
<P>(<I>2</I>) Perfect the security interest of the originator or any subsequent holder of the loan in any other collateral for the CRE loan to the extent that such security interest is required by this section to be perfected;
</P>
<P>(D) Permit the originator or any subsequent holder of the loan, and the servicer, to inspect any collateral for the CRE loan and the books and records of the borrower or other party relating to any collateral for the CRE loan;
</P>
<P>(E) Maintain the physical condition of collateral for the CRE loan described in paragraph (a)(1)(i) of this section;
</P>
<P>(F) Comply with all environmental, zoning, building code, licensing and other laws, regulations, agreements, covenants, use restrictions, and proffers applicable to collateral for the CRE loan described in paragraph (a)(1)(i) of this section;
</P>
<P>(G) Comply with leases, franchise agreements, condominium declarations, and other documents and agreements relating to the operation of collateral for the CRE loan described in paragraph (a)(1)(i) of this section, and to not modify any material terms and conditions of such agreements over the term of the loan without the consent of the originator or any subsequent holder of the loan, or the servicer; and
</P>
<P>(H) Not materially alter collateral for the CRE loan described in paragraph (a)(1)(i) of this section without the consent of the originator or any subsequent holder of the loan, or the servicer.
</P>
<P>(4) The loan documentation for the CRE loan prohibits the borrower and each operating affiliate from obtaining a loan secured by a junior lien on collateral for the CRE loan described in paragraph (a)(1)(i) or (a)(1)(ii)(A) of this section, unless:
</P>
<P>(i) The sum of the principal amount of such junior lien loan, plus the principal amount of all other loans secured by collateral described in paragraph (a)(1)(i) or (a)(1)(ii)(A) of this section, does not exceed the applicable CLTV ratio in paragraph (a)(5) of this section, based on the appraisal at origination of such junior lien loan; or
</P>
<P>(ii) Such loan is a purchase money obligation that financed the acquisition of machinery or equipment and the borrower or operating affiliate (as applicable) pledges such machinery and equipment as additional collateral for the CRE loan.
</P>
<P>(5) At origination, the applicable loan-to-value ratios for the loan are:
</P>
<P>(i) LTV less than or equal to 65 percent and CLTV less than or equal to 70 percent; or
</P>
<P>(ii) LTV less than or equal to 60 percent and CLTV less than or equal to 65 percent, if an appraisal used to meet the requirements set forth in paragraph (a)(2)(ii) of this section used a direct capitalization rate, and that rate is less than or equal to the sum of:
</P>
<P>(A) The 10-year swap rate, as reported in the Federal Reserve's H.15 Report (or any successor report) as of the date concurrent with the effective date of such appraisal; and
</P>
<P>(B) 300 basis points.
</P>
<P>(iii) If the appraisal required under paragraph (a)(2)(ii) of this section included a direct capitalization method using an overall capitalization rate, that rate must be disclosed to potential investors in the securitization.
</P>
<P>(6) All loan payments required to be made under the loan agreement are:
</P>
<P>(i) Based on level monthly payments of principal and interest (at the fully indexed rate) to fully amortize the debt over a term that does not exceed 25 years, or 30 years for a qualifying multifamily loan; and
</P>
<P>(ii) To be made no less frequently than monthly over a term of at least ten years.
</P>
<P>(7) Under the terms of the loan agreement:
</P>
<P>(i) Any maturity of the note occurs no earlier than ten years following the date of origination;
</P>
<P>(ii) The borrower is not permitted to defer repayment of principal or payment of interest; and
</P>
<P>(iii) The interest rate on the loan is:
</P>
<P>(A) A fixed interest rate;
</P>
<P>(B) An adjustable interest rate and the borrower, prior to or concurrently with origination of the CRE loan, obtained a derivative that effectively results in a fixed interest rate; or
</P>
<P>(C) An adjustable interest rate and the borrower, prior to or concurrently with origination of the CRE loan, obtained a derivative that established a cap on the interest rate for the term of the loan, and the loan meets the underwriting criteria in paragraphs (a)(2)(vi) and (vii) of this section using the maximum interest rate allowable under the interest rate cap.
</P>
<P>(8) The originator does not establish an interest reserve at origination to fund all or part of a payment on the loan.
</P>
<P>(9) At the cut-off date or similar date for establishing the composition of the securitized assets collateralizing the asset-backed securities issued pursuant to the securitization transaction, all payments due on the loan are contractually current.
</P>
<P>(10)(i) The depositor of the asset-backed security certifies that it has evaluated the effectiveness of its internal supervisory controls with respect to the process for ensuring that all qualifying CRE loans that collateralize the asset-backed security and that reduce the sponsor's risk retention requirement under § 267.15 meet all of the requirements set forth in paragraphs (a)(1) through (9) of this section and has concluded that its internal supervisory controls are effective;
</P>
<P>(ii) The evaluation of the effectiveness of the depositor's internal supervisory controls referenced in paragraph (a)(10)(i) of this section shall be performed, for each issuance of an asset-backed security, as of a date within 60 days of the cut-off date or similar date for establishing the composition of the asset pool collateralizing such asset-backed security;
</P>
<P>(iii) The sponsor provides, or causes to be provided, a copy of the certification described in paragraph (a)(10)(i) of this section to potential investors a reasonable period of time prior to the sale of asset-backed securities in the issuing entity, and, upon request, to its appropriate Federal banking agency, if any; and
</P>
<P>(11) Within two weeks of the closing of the CRE loan by its originator or, if sooner, prior to the transfer of such CRE loan to the issuing entity, the originator shall have obtained a UCC lien search from the jurisdiction of organization of the borrower and each operating affiliate, that does not report, as of the time that the security interest of the originator in the property described in paragraph (a)(1)(iii) of this section was perfected, other higher priority liens of record on any property described in paragraph (a)(1)(iii) of this section, other than purchase money security interests.
</P>
<P>(b) <I>Cure or buy-back requirement.</I> If a sponsor has relied on the exception provided in § 267.15 with respect to a qualifying CRE loan and it is subsequently determined that the CRE loan did not meet all of the requirements set forth in paragraphs (a)(1) through (9) and (a)(11) of this section, the sponsor shall not lose the benefit of the exception with respect to the CRE loan if the depositor complied with the certification requirement set forth in paragraph (a)(10) of this section, and:
</P>
<P>(1) The failure of the loan to meet any of the requirements set forth in paragraphs (a)(1) through (9) and (a)(11) of this section is not material; or;
</P>
<P>(2) No later than 90 days after the determination that the loan does not meet one or more of the requirements of paragraphs (a)(1) through (9) or (a)(11) of this section, the sponsor:
</P>
<P>(i) Effectuates cure, restoring conformity of the loan to the unmet requirements as of the date of cure; or
</P>
<P>(ii) Repurchases the loan(s) from the issuing entity at a price at least equal to the remaining principal balance and accrued interest on the loan(s) as of the date of repurchase.
</P>
<P>(3) If the sponsor cures or repurchases pursuant to paragraph (b)(2) of this section, the sponsor must promptly notify, or cause to be notified, the holders of the asset-backed securities issued in the securitization transaction of any loan(s) included in such securitization transaction that is required to be cured or repurchased by the sponsor pursuant to paragraph (b)(2) of this section, including the principal amount of such repurchased loan(s) and the cause for such cure or repurchase.


</P>
</DIV8>


<DIV8 N="§ 267.18" NODE="24:2.1.1.2.29.4.221.6" TYPE="SECTION">
<HEAD>§ 267.18   Underwriting standards for qualifying automobile loans.</HEAD>
<P>(a) <I>Underwriting, product and other standards.</I> (1) Prior to origination of the automobile loan, the originator:
</P>
<P>(i) Verified and documented that within 30 days of the date of origination:
</P>
<P>(A) The borrower was not currently 30 days or more past due, in whole or in part, on any debt obligation;
</P>
<P>(B) Within the previous 24 months, the borrower has not been 60 days or more past due, in whole or in part, on any debt obligation;
</P>
<P>(C) Within the previous 36 months, the borrower has not:
</P>
<P>(<I>1</I>) Been a debtor in a proceeding commenced under Chapter 7 (Liquidation), Chapter 11 (Reorganization), Chapter 12 (Family Farmer or Family Fisherman plan), or Chapter 13 (Individual Debt Adjustment) of the U.S. Bankruptcy Code; or
</P>
<P>(<I>2</I>) Been the subject of any federal or State judicial judgment for the collection of any unpaid debt;
</P>
<P>(D) Within the previous 36 months, no one-to-four family property owned by the borrower has been the subject of any foreclosure, deed in lieu of foreclosure, or short sale; or
</P>
<P>(E) Within the previous 36 months, the borrower has not had any personal property repossessed;
</P>
<P>(ii) Determined and documented that the borrower has at least 24 months of credit history; and
</P>
<P>(iii) Determined and documented that, upon the origination of the loan, the borrower's DTI ratio is less than or equal to 36 percent.
</P>
<P>(A) For the purpose of making the determination under paragraph (a)(1)(iii) of this section, the originator must:
</P>
<P>(<I>1</I>) Verify and document all income of the borrower that the originator includes in the borrower's effective monthly income (using payroll stubs, tax returns, profit and loss statements, or other similar documentation); and
</P>
<P>(<I>2</I>) On or after the date of the borrower's written application and prior to origination, obtain a credit report regarding the borrower from a consumer reporting agency that compiles and maintain files on consumers on a nationwide basis (within the meaning of 15 U.S.C. 1681a(p)) and verify that all outstanding debts reported in the borrower's credit report are incorporated into the calculation of the borrower's DTI ratio under paragraph (a)(1)(iii) of this section;
</P>
<P>(2) An originator will be deemed to have met the requirements of paragraph (a)(1)(i) of this section if:
</P>
<P>(i) The originator, no more than 30 days before the closing of the loan, obtains a credit report regarding the borrower from a consumer reporting agency that compiles and maintains files on consumers on a nationwide basis (within the meaning of 15 U.S.C. 1681a(p));
</P>
<P>(ii) Based on the information in such credit report, the borrower meets all of the requirements of paragraph (a)(1)(i) of this section, and no information in a credit report subsequently obtained by the originator before the closing of the loan contains contrary information; and
</P>
<P>(iii) The originator obtains electronic or hard copies of the credit report.
</P>
<P>(3) At closing of the automobile loan, the borrower makes a down payment from the borrower's personal funds and trade-in allowance, if any, that is at least equal to the sum of:
</P>
<P>(i) The full cost of the vehicle title, tax, and registration fees;
</P>
<P>(ii) Any dealer-imposed fees;
</P>
<P>(iii) The full cost of any additional warranties, insurance or other products purchased in connection with the purchase of the vehicle; and
</P>
<P>(iv) 10 percent of the vehicle purchase price.
</P>
<P>(4) The originator records a first lien securing the loan on the purchased vehicle in accordance with State law.
</P>
<P>(5) The terms of the loan agreement provide a maturity date for the loan that does not exceed the lesser of:
</P>
<P>(i) Six years from the date of origination; or
</P>
<P>(ii) 10 years minus the difference between the current model year and the vehicle's model year.
</P>
<P>(6) The terms of the loan agreement:
</P>
<P>(i) Specify a fixed rate of interest for the life of the loan;
</P>
<P>(ii) Provide for a level monthly payment amount that fully amortizes the amount financed over the loan term;
</P>
<P>(iii) Do not permit the borrower to defer repayment of principal or payment of interest; and
</P>
<P>(iv) Require the borrower to make the first payment on the automobile loan within 45 days of the loan's contract date.
</P>
<P>(7) At the cut-off date or similar date for establishing the composition of the securitized assets collateralizing the asset-backed securities issued pursuant to the securitization transaction, all payments due on the loan are contractually current; and
</P>
<P>(8)(i) The depositor of the asset-backed security certifies that it has evaluated the effectiveness of its internal supervisory controls with respect to the process for ensuring that all qualifying automobile loans that collateralize the asset-backed security and that reduce the sponsor's risk retention requirement under § 267.15 meet all of the requirements set forth in paragraphs (a)(1) through (7) of this section and has concluded that its internal supervisory controls are effective;
</P>
<P>(ii) The evaluation of the effectiveness of the depositor's internal supervisory controls referenced in paragraph (a)(8)(i) of this section shall be performed, for each issuance of an asset-backed security, as of a date within 60 days of the cut-off date or similar date for establishing the composition of the asset pool collateralizing such asset-backed security; and
</P>
<P>(iii) The sponsor provides, or causes to be provided, a copy of the certification described in paragraph (a)(8)(i) of this section to potential investors a reasonable period of time prior to the sale of asset-backed securities in the issuing entity, and, upon request, to its appropriate Federal banking agency, if any.
</P>
<P>(b) <I>Cure or buy-back requirement.</I> If a sponsor has relied on the exception provided in § 267.15 with respect to a qualifying automobile loan and it is subsequently determined that the loan did not meet all of the requirements set forth in paragraphs (a)(1) through (7) of this section, the sponsor shall not lose the benefit of the exception with respect to the automobile loan if the depositor complied with the certification requirement set forth in paragraph (a)(8) of this section, and:
</P>
<P>(1) The failure of the loan to meet any of the requirements set forth in paragraphs (a)(1) through (7) of this section is not material; or
</P>
<P>(2) No later than ninety (90) days after the determination that the loan does not meet one or more of the requirements of paragraphs (a)(1) through (7) of this section, the sponsor:
</P>
<P>(i) Effectuates cure, establishing conformity of the loan to the unmet requirements as of the date of cure; or
</P>
<P>(ii) Repurchases the loan(s) from the issuing entity at a price at least equal to the remaining principal balance and accrued interest on the loan(s) as of the date of repurchase.
</P>
<P>(3) If the sponsor cures or repurchases pursuant to paragraph (b)(2) of this section, the sponsor must promptly notify, or cause to be notified, the holders of the asset-backed securities issued in the securitization transaction of any loan(s) included in such securitization transaction that is required to be cured or repurchased by the sponsor pursuant to paragraph (b)(2) of this section, including the principal amount of such loan(s) and the cause for such cure or repurchase.


</P>
</DIV8>


<DIV8 N="§ 267.19" NODE="24:2.1.1.2.29.4.221.7" TYPE="SECTION">
<HEAD>§ 267.19   General exemptions.</HEAD>
<P>(a) <I>Definitions.</I> For purposes of this section, the following definitions shall apply:
</P>
<P><I>Community-focused residential mortgage</I> means a residential mortgage exempt from the definition of “covered transaction” under § 1026.43(a)(3)(iv) and (v) of the CFPB's Regulation Z (12 CFR 1026.43(a)).
</P>
<P><I>First pay class</I> means a class of ABS interests for which all interests in the class are entitled to the same priority of payment and that, at the time of closing of the transaction, is entitled to repayments of principal and payments of interest prior to or pro-rata with all other classes of securities collateralized by the same pool of first-lien residential mortgages, until such class has no principal or notional balance remaining.
</P>
<P><I>Inverse floater</I> means an ABS interest issued as part of a securitization transaction for which interest or other income is payable to the holder based on a rate or formula that varies inversely to a reference rate of interest.
</P>
<P><I>Qualifying three-to-four unit residential mortgage loan</I> means a mortgage loan that is:
</P>
<P>(i) Secured by a dwelling (as defined in 12 CFR 1026.2(a)(19)) that is owner occupied and contains three-to-four housing units;
</P>
<P>(ii) Is deemed to be for business purposes for purposes of Regulation Z under 12 CFR part 1026, Supplement I, paragraph 3(a)(5)(i); and
</P>
<P>(iii) Otherwise meets all of the requirements to qualify as a qualified mortgage under § 1026.43(e) and (f) of Regulation Z (12 CFR 1026.43(e) and (f)) as if the loan were a covered transaction under that section.
</P>
<P>(b) This part shall not apply to:
</P>
<P>(1) <I>U.S. Government-backed securitizations.</I> Any securitization transaction that:
</P>
<P>(i) Is collateralized solely by residential, multifamily, or health care facility mortgage loan assets that are insured or guaranteed (in whole or in part) as to the payment of principal and interest by the United States or an agency of the United States, and servicing assets; or
</P>
<P>(ii) Involves the issuance of asset-backed securities that:
</P>
<P>(A) Are insured or guaranteed as to the payment of principal and interest by the United States or an agency of the United States; and
</P>
<P>(B) Are collateralized solely by residential, multifamily, or health care facility mortgage loan assets or interests in such assets, and servicing assets.
</P>
<P>(2) <I>Certain agricultural loan securitizations.</I> Any securitization transaction that is collateralized solely by loans or other assets made, insured, guaranteed, or purchased by any institution that is subject to the supervision of the Farm Credit Administration, including the Federal Agricultural Mortgage Corporation, and servicing assets;
</P>
<P>(3) <I>State and municipal securitizations.</I> Any asset-backed security that is a security issued or guaranteed by any State, or by any political subdivision of a State, or by any public instrumentality of a State that is exempt from the registration requirements of the Securities Act of 1933 by reason of section 3(a)(2) of that Act (15 U.S.C. 77c(a)(2)); and
</P>
<P>(4) <I>Qualified scholarship funding bonds.</I> Any asset-backed security that meets the definition of a qualified scholarship funding bond, as set forth in section 150(d)(2) of the Internal Revenue Code of 1986 (26 U.S.C. 150(d)(2)).
</P>
<P>(5) <I>Pass-through resecuritizations.</I> Any securitization transaction that:
</P>
<P>(i) Is collateralized solely by servicing assets, and by asset-backed securities:
</P>
<P>(A) For which credit risk was retained as required under subpart B of this part; or
</P>
<P>(B) That were exempted from the credit risk retention requirements of this part pursuant to subpart D of this part;
</P>
<P>(ii) Is structured so that it involves the issuance of only a single class of ABS interests; and
</P>
<P>(iii) Provides for the pass-through of all principal and interest payments received on the underlying asset-backed securities (net of expenses of the issuing entity) to the holders of such class.
</P>
<P>(6) <I>First-pay-class securitizations.</I> Any securitization transaction that:
</P>
<P>(i) Is collateralized solely by servicing assets, and by first-pay classes of asset-backed securities collateralized by first-lien residential mortgages on properties located in any state:
</P>
<P>(A) For which credit risk was retained as required under subpart B of this part; or
</P>
<P>(B) That were exempted from the credit risk retention requirements of this part pursuant to subpart D of this part;
</P>
<P>(ii) Does not provide for any ABS interest issued in the securitization transaction to share in realized principal losses other than pro rata with all other ABS interests issued in the securitization transaction based on the current unpaid principal balance of such ABS interests at the time the loss is realized;
</P>
<P>(iii) Is structured to reallocate prepayment risk;
</P>
<P>(iv) Does not reallocate credit risk (other than as a consequence of reallocation of prepayment risk); and
</P>
<P>(v) Does not include any inverse floater or similarly structured ABS interest.
</P>
<P>(7) <I>Seasoned loans.</I> (i) Any securitization transaction that is collateralized solely by servicing assets, and by seasoned loans that meet the following requirements:
</P>
<P>(A) The loans have not been modified since origination; and
</P>
<P>(B) None of the loans have been delinquent for 30 days or more.
</P>
<P>(ii) For purposes of this paragraph, a <I>seasoned loan</I> means:
</P>
<P>(A) With respect to asset-backed securities collateralized by residential mortgages, a loan that has been outstanding and performing for the longer of:
</P>
<P>(<I>1</I>) A period of five years; or
</P>
<P>(<I>2</I>) Until the outstanding principal balance of the loan has been reduced to 25 percent of the original principal balance.
</P>
<P>(<I>3</I>) Notwithstanding paragraphs (b)(7)(ii)(A)(<I>1</I>) and (<I>2</I>) of this section, any residential mortgage loan that has been outstanding and performing for a period of at least seven years shall be deemed a seasoned loan.
</P>
<P>(B) With respect to all other classes of asset-backed securities, a loan that has been outstanding and performing for the longer of:
</P>
<P>(<I>1</I>) A period of at least two years; or
</P>
<P>(<I>2</I>) Until the outstanding principal balance of the loan has been reduced to 33 percent of the original principal balance.
</P>
<P>(8) <I>Certain public utility securitizations.</I> (i) Any securitization transaction where the asset-back securities issued in the transaction are secured by the intangible property right to collect charges for the recovery of specified costs and such other assets, if any, of an issuing entity that is wholly owned, directly or indirectly, by an investor owned utility company that is subject to the regulatory authority of a State public utility commission or other appropriate State agency.
</P>
<P>(ii) For purposes of this paragraph:
</P>
<P>(A) <I>Specified cost</I> means any cost identified by a State legislature as appropriate for recovery through securitization pursuant to specified cost recovery legislation; and
</P>
<P>(B) <I>Specified cost recovery legislation</I> means legislation enacted by a State that:
</P>
<P>(<I>1</I>) Authorizes the investor owned utility company to apply for, and authorizes the public utility commission or other appropriate State agency to issue, a financing order determining the amount of specified costs the utility will be allowed to recover;
</P>
<P>(<I>2</I>) Provides that pursuant to a financing order, the utility acquires an intangible property right to charge, collect, and receive amounts necessary to provide for the full recovery of the specified costs determined to be recoverable, and assures that the charges are non-bypassable and will be paid by customers within the utility's historic service territory who receive utility goods or services through the utility's transmission and distribution system, even if those customers elect to purchase these goods or services from a third party; and
</P>
<P>(<I>3</I>) Guarantees that neither the State nor any of its agencies has the authority to rescind or amend the financing order, to revise the amount of specified costs, or in any way to reduce or impair the value of the intangible property right, except as may be contemplated by periodic adjustments authorized by the specified cost recovery legislation.
</P>
<P>(c) <I>Exemption for securitizations of assets issued, insured or guaranteed by the United States.</I> This part shall not apply to any securitization transaction if the asset-backed securities issued in the transaction are:
</P>
<P>(1) Collateralized solely by obligations issued by the United States or an agency of the United States and servicing assets;
</P>
<P>(2) Collateralized solely by assets that are fully insured or guaranteed as to the payment of principal and interest by the United States or an agency of the United States (other than those referred to in paragraph (b)(1)(i) of this section) and servicing assets; or
</P>
<P>(3) Fully guaranteed as to the timely payment of principal and interest by the United States or any agency of the United States;
</P>
<P>(d) <I>Federal Deposit Insurance Corporation securitizations.</I> This part shall not apply to any securitization transaction that is sponsored by the Federal Deposit Insurance Corporation acting as conservator or receiver under any provision of the Federal Deposit Insurance Act or of Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
</P>
<P>(e) <I>Reduced requirement for certain student loan securitizations.</I> The 5 percent risk retention requirement set forth in § 267.4 shall be modified as follows:
</P>
<P>(1) With respect to a securitization transaction that is collateralized solely by student loans made under the Federal Family Education Loan Program (“FFELP loans”) that are guaranteed as to 100 percent of defaulted principal and accrued interest, and servicing assets, the risk retention requirement shall be 0 percent;
</P>
<P>(2) With respect to a securitization transaction that is collateralized solely by FFELP loans that are guaranteed as to at least 98 percent but less than 100 percent of defaulted principal and accrued interest, and servicing assets, the risk retention requirement shall be 2 percent; and
</P>
<P>(3) With respect to any other securitization transaction that is collateralized solely by FFELP loans, and servicing assets, the risk retention requirement shall be 3 percent.
</P>
<P>(f) <I>Community-focused lending securitizations.</I> (1) This part shall not apply to any securitization transaction if the asset-backed securities issued in the transaction are collateralized solely by community-focused residential mortgages and servicing assets.
</P>
<P>(2) For any securitization transaction that includes both community-focused residential mortgages and residential mortgages that are not exempt from risk retention under this part, the percent of risk retention required under § 267.4(a) is reduced by the ratio of the unpaid principal balance of the community-focused residential mortgages to the total unpaid principal balance of residential mortgages that are included in the pool of assets collateralizing the asset-backed securities issued pursuant to the securitization transaction (the community-focused residential mortgage asset ratio); provided that:
</P>
<P>(i) The community-focused residential mortgage asset ratio is measured as of the cut-off date or similar date for establishing the composition of the pool assets collateralizing the asset-backed securities issued pursuant to the securitization transaction; and
</P>
<P>(ii) If the community-focused residential mortgage asset ratio would exceed 50 percent, the community-focused residential mortgage asset ratio shall be deemed to be 50 percent.
</P>
<P>(g) <I>Exemptions for securitizations of certain three-to-four unit mortgage loans.</I> A sponsor shall be exempt from the risk retention requirements in subpart B of this part with respect to any securitization transaction if:
</P>
<P>(1)(i) The asset-backed securities issued in the transaction are collateralized solely by qualifying three-to-four unit residential mortgage loans and servicing assets; or
</P>
<P>(ii) The asset-backed securities issued in the transaction are collateralized solely by qualifying three-to-four unit residential mortgage loans, qualified residential mortgages as defined in § 267.13, and servicing assets.
</P>
<P>(2) The depositor with respect to the securitization provides the certifications set forth in § 267.13(b)(4) with respect to the process for ensuring that all assets that collateralize the asset-backed securities issued in the transaction are qualifying three-to-four unit residential mortgage loans, qualified residential mortgages, or servicing assets; and
</P>
<P>(3) The sponsor of the securitization complies with the repurchase requirements in § 267.13(c) with respect to a loan if, after closing, it is determined that the loan does not meet all of the criteria to be either a qualified residential mortgage or a qualifying three-to-four unit residential mortgage loan, as appropriate.
</P>
<P>(h) <I>Rule of construction.</I> Securitization transactions involving the issuance of asset-backed securities that are either issued, insured, or guaranteed by, or are collateralized by obligations issued by, or loans that are issued, insured, or guaranteed by, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, or a Federal home loan bank shall not on that basis qualify for exemption under this part.


</P>
</DIV8>


<DIV8 N="§ 267.20" NODE="24:2.1.1.2.29.4.221.8" TYPE="SECTION">
<HEAD>§ 267.20   Safe harbor for certain foreign-related transactions.</HEAD>
<P>(a) <I>Definitions.</I> For purposes of this section, the following definition shall apply:
</P>
<P><I>U.S. person</I> means:
</P>
<P>(i) Any of the following:
</P>
<P>(A) Any natural person resident in the United States;
</P>
<P>(B) Any partnership, corporation, limited liability company, or other organization or entity organized or incorporated under the laws of any State or of the United States;
</P>
<P>(C) Any estate of which any executor or administrator is a U.S. person (as defined under any other clause of this definition);
</P>
<P>(D) Any trust of which any trustee is a U.S. person (as defined under any other clause of this definition);
</P>
<P>(E) Any agency or branch of a foreign entity located in the United States;
</P>
<P>(F) Any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person (as defined under any other clause of this definition);
</P>
<P>(G) Any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated, or (if an individual) resident in the United States; and
</P>
<P>(H) Any partnership, corporation, limited liability company, or other organization or entity if:
</P>
<P>(<I>1</I>) Organized or incorporated under the laws of any foreign jurisdiction; and
</P>
<P>(<I>2</I>) Formed by a U.S. person (as defined under any other clause of this definition) principally for the purpose of investing in securities not registered under the Act; and
</P>
<P>(ii) “U.S. person(s)” does not include:
</P>
<P>(A) Any discretionary account or similar account (other than an estate or trust) held for the benefit or account of a person not constituting a U.S. person (as defined in paragraph (i) of this section) by a dealer or other professional fiduciary organized, incorporated, or (if an individual) resident in the United States;
</P>
<P>(B) Any estate of which any professional fiduciary acting as executor or administrator is a U.S. person (as defined in paragraph (i) of this section) if:
</P>
<P>(<I>1</I>) An executor or administrator of the estate who is not a U.S. person (as defined in paragraph (i) of this section) has sole or shared investment discretion with respect to the assets of the estate; and
</P>
<P>(<I>2</I>) The estate is governed by foreign law;
</P>
<P>(C) Any trust of which any professional fiduciary acting as trustee is a U.S. person (as defined in paragraph (i) of this section), if a trustee who is not a U.S. person (as defined in paragraph (i) of this section) has sole or shared investment discretion with respect to the trust assets, and no beneficiary of the trust (and no settlor if the trust is revocable) is a U.S. person (as defined in paragraph (i) of this section);
</P>
<P>(D) An employee benefit plan established and administered in accordance with the law of a country other than the United States and customary practices and documentation of such country;
</P>
<P>(E) Any agency or branch of a U.S. person (as defined in paragraph (i) of this section) located outside the United States if:
</P>
<P>(<I>1</I>) The agency or branch operates for valid business reasons; and
</P>
<P>(<I>2</I>) The agency or branch is engaged in the business of insurance or banking and is subject to substantive insurance or banking regulation, respectively, in the jurisdiction where located;
</P>
<P>(F) The International Monetary Fund, the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank, the African Development Bank, the United Nations, and their agencies, affiliates and pension plans, and any other similar international organizations, their agencies, affiliates and pension plans.
</P>
<P>(b) <I>In general.</I> This part shall not apply to a securitization transaction if all the following conditions are met:
</P>
<P>(1) The securitization transaction is not required to be and is not registered under the Securities Act of 1933 (15 U.S.C. 77a <I>et seq.</I>);
</P>
<P>(2) No more than 10 percent of the dollar value (or equivalent amount in the currency in which the ABS interests are issued, as applicable) of all classes of ABS interests in the securitization transaction are sold or transferred to U.S. persons or for the account or benefit of U.S. persons;
</P>
<P>(3) Neither the sponsor of the securitization transaction nor the issuing entity is:
</P>
<P>(i) Chartered, incorporated, or organized under the laws of the United States or any State;
</P>
<P>(ii) An unincorporated branch or office (wherever located) of an entity chartered, incorporated, or organized under the laws of the United States or any State; or
</P>
<P>(iii) An unincorporated branch or office located in the United States or any State of an entity that is chartered, incorporated, or organized under the laws of a jurisdiction other than the United States or any State; and
</P>
<P>(4) If the sponsor or issuing entity is chartered, incorporated, or organized under the laws of a jurisdiction other than the United States or any State, no more than 25 percent (as determined based on unpaid principal balance) of the assets that collateralize the ABS interests sold in the securitization transaction were acquired by the sponsor or issuing entity, directly or indirectly, from:
</P>
<P>(i) A majority-owned affiliate of the sponsor or issuing entity that is chartered, incorporated, or organized under the laws of the United States or any State; or
</P>
<P>(ii) An unincorporated branch or office of the sponsor or issuing entity that is located in the United States or any State.
</P>
<P>(c) <I>Evasions prohibited.</I> In view of the objective of these rules and the policies underlying Section 15G of the Exchange Act, the safe harbor described in paragraph (b) of this section is not available with respect to any transaction or series of transactions that, although in technical compliance with paragraphs (a) and (b) of this section, is part of a plan or scheme to evade the requirements of section 15G and this part. In such cases, compliance with section 15G and this part is required.


</P>
</DIV8>


<DIV8 N="§ 267.21" NODE="24:2.1.1.2.29.4.221.9" TYPE="SECTION">
<HEAD>§ 267.21   Additional exemptions.</HEAD>
<P>(a) <I>Securitization transactions.</I> The federal agencies with rulewriting authority under section 15G(b) of the Exchange Act (15 U.S.C. 78o-11(b)) with respect to the type of assets involved may jointly provide a total or partial exemption of any securitization transaction as such agencies determine may be appropriate in the public interest and for the protection of investors.
</P>
<P>(b) <I>Exceptions, exemptions, and adjustments.</I> The Federal banking agencies and the Commission, in consultation with the Federal Housing Finance Agency and the Department of Housing and Urban Development, may jointly adopt or issue exemptions, exceptions or adjustments to the requirements of this part, including exemptions, exceptions or adjustments for classes of institutions or assets in accordance with section 15G(e) of the Exchange Act (15 U.S.C. 78o-11(e)).


</P>
</DIV8>


<DIV8 N="§ 267.22" NODE="24:2.1.1.2.29.4.221.10" TYPE="SECTION">
<HEAD>§ 267.22   Periodic review of the QRM definition, exempted three-to-four unit residential mortgage loans, and community-focused residential mortgage exemption.</HEAD>
<P>(a) The Federal banking agencies and the Commission, in consultation with the Federal Housing Finance Agency and the Department of Housing and Urban Development, shall commence a review of the definition of qualified residential mortgage in § 267.13, a review of the community-focused residential mortgage exemption in § 267.19(f), and a review of the exemption for qualifying three-to-four unit residential mortgage loans in § 267.19(g):
</P>
<P>(1) No later than four years after the effective date of the rule (as it relates to securitizers and originators of asset-backed securities collateralized by residential mortgages), five years following the completion of such initial review, and every five years thereafter; and
</P>
<P>(2) At any time, upon the request of any Federal banking agency, the Commission, the Federal Housing Finance Agency or the Department of Housing and Urban Development, specifying the reason for such request, including as a result of any amendment to the definition of qualified mortgage or changes in the residential housing market.
</P>
<P>(b) The Federal banking agencies, the Commission, the Federal Housing Finance Agency and the Department of Housing and Urban Development shall publish in the <E T="04">Federal Register</E> notice of the commencement of a review and, in the case of a review commenced under paragraph (a)(2) of this section, the reason an agency is requesting such review. After completion of any review, but no later than six months after the publication of the notice announcing the review, unless extended by the agencies, the agencies shall jointly publish a notice disclosing the determination of their review. If the agencies determine to amend the definition of qualified residential mortgage, the agencies shall complete any required rulemaking within 12 months of publication in the <E T="04">Federal Register</E> of such notice disclosing the determination of their review, unless extended by the agencies.




</P>
</DIV8>

</DIV6>

</DIV5>

</DIV4>


<DIV4 N="S C" NODE="24:2.1.1.3" TYPE="SUBCHAP">
<HEAD>SUBCHAPTERS C-H [RESERVED] 


</HEAD>
</DIV4>


<DIV4 N="I" NODE="24:2.1.1.4" TYPE="SUBCHAP">
<HEAD>SUBCHAPTER I—HUD-OWNED PROPERTIES 


</HEAD>

<DIV5 N="290" NODE="24:2.1.1.4.30" TYPE="PART">
<HEAD>PART 290—DISPOSITION OF MULTIFAMILY PROJECTS AND SALE OF HUD-HELD MULTIFAMILY MORTGAGES
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1701z-11, 1701z-12, 1713, 1715b, 1715z-1b, 1715z-11a; 42 U.S.C. 3535(d) and 3535(i).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 11685, Mar. 21, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:2.1.1.4.30.1" TYPE="SUBPART">
<HEAD>Subpart A—Disposition of Multifamily Projects</HEAD>


<DIV8 N="§ 290.1" NODE="24:2.1.1.4.30.1.221.1" TYPE="SECTION">
<HEAD>§ 290.1   Applicability.</HEAD>
<P>The requirements of this part supplement the requirements of 12 U.S.C. 1701z-11 for the management and disposition of multifamily housing projects and the sale of HUD-held multifamily mortgages. The goals and objectives of this part are the same as the goals and objectives of 12 U.S.C. 1701z-11, which shall be referred to in this part as “the Statute.” With respect to the disposition of multifamily projects under subpart A, HUD may follow any other method of disposition, as determined by the Secretary.
</P>
<CITA TYPE="N">[64 FR 72412, Dec. 27, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 290.3" NODE="24:2.1.1.4.30.1.221.2" TYPE="SECTION">
<HEAD>§ 290.3   Definitions.</HEAD>
<P>The terms <I>Department</I> and <I>URA</I> are defined in 24 CFR part 5. The following definitions apply to this part: 
</P>
<P><I>Cooperative</I> means a nonprofit, limited equity, or consumer cooperative as defined under 24 CFR part 213. It may include mutual housing associations. 
</P>
<P><I>HUD-owned project</I> means a multifamily project that has been acquired by HUD. 
</P>
<P><I>Market area</I> means the area from which a multifamily housing project may reasonably be expected to draw a substantial number of its tenants, as determined by HUD, taking into consideration the knowledge of the HUD office with jurisdiction over the project of the local real estate market and HUD's project underwriting experience. Submarkets may be used in large, complex metropolitan areas. 
</P>
<P><I>Multifamily housing project</I> means a multifamily project that is or was insured under sections 207, 213, 220, 221(d)(3), 221(d)(4), 223(f), 231, 236, or 608 of the National Housing Act (12 U.S.C. 1713, 1715e, 1715k, 1715l, 1715n, 1715v, 1715z-1, or 1742-1746); or is or was subject to a loan under section 202 of the Housing Act of 1959 (12 U.S.C. 1701q); or was a Real Estate Owned (REO) multifamily project transferred by the Government National Mortgage Association to the Department. Multifamily housing project does not include projects consisting of one to eleven units insured under section 220(d)(3)(A) of the National Housing Act (12 U.S.C. 1715l); or mobile home parks under section 207(m) of that Act (12 U.S.C. 1713); or vacant land; or property covered by a homeownership program approved under the Homeownership and Opportunity for People Everywhere (“HOPE”) program. 
</P>
<P><I>Multifamily project</I> means a project consisting of five or more units that has or had a mortgage (even if subordinate to other mortgages) insured under the National Housing Act or is or was subject to a loan under section 202 of the Housing Act of 1959, or a hospital, intermediate care facility, nursing home, group practice facility, or board and care facility that has or had a mortgage insured, or is or was subject to a loan under, these authorities. Multifamily project does not include projects consisting of one to eleven units insured under section 220(d)(3)(A) of the National Housing Act (12 U.S.C. 1715k), which are classified as single family homes. 
</P>
<P><I>Nonprofit organization</I> means a corporation or association organized for purposes other than making a profit or gain for itself. Stockholders or trustees do not share in profits or losses. Profits are used to accomplish the charitable, humanitarian, or educational purposes of the corporation. 
</P>
<P><I>Preexisting tenant</I> means a family that resides in a unit in a multifamily housing project immediately before the project is acquired under this part by a purchaser other than the Department. 
</P>
<P><I>Subsidized project</I> means a multifamily housing project that is receiving, or immediately before its mortgage was foreclosed by HUD or the project was acquired by HUD, pursuant to this regulation, was receiving any of the following types of assistance: 
</P>
<P>(1) Below market interest rate mortgage insurance under the proviso of section 221(d)(5) of the National Housing Act (12 U.S.C. 1715l) (hereinafter, a BMIR project); 
</P>
<P>(2) Interest reduction payments made in connection with mortgages insured under section 236 of the National Housing Act (hereinafter, a 236 project); 
</P>
<P>(3) Direct loans made under section 202 of the Housing Act of 1959 (hereinafter, a 202 project); 
</P>
<P>(4) Assistance, to more than 50 percent of the units in the project, in the form of: 
</P>
<P>(i) Rent supplement payments under section 101 of the Housing and Urban Development Act of 1965 (12 U.S.C. 1701s) (hereinafter, Rent Supp); 
</P>
<P>(ii) Additional assistance payments under section 236(f)(2) of the National Housing Act (hereinafter, RAP); 
</P>
<P>(iii) Housing assistance payments under section 23 of the United States Housing Act of 1937 (42 U.S.C. 1437 <I>note</I>) (as in effect before January 1, 1975) (hereinafter, Sec. 23); or 
</P>
<P>(iv) Housing assistance payments under Section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f) (excluding payments of tenant-based Section 8 assistance) (hereinafter, project-based Section 8 assistance). 
</P>
<P><I>Sufficient habitable, affordable, rental housing is available</I> means that the HUD office with jurisdiction determines that there is an adequate supply of habitable, affordable housing for low- and very low-income families available in the market area. Submarkets, consisting of portions of units of general local government, may be used in large, complex metropolitan areas. Local housing markets having an adequate supply of standard-quality rental housing would include housing markets in which the supply of rental housing available and in production is adequate to meet the anticipated demand (<I>e.g.,</I> the housing market is balanced), as well as those in which there is an excess supply of rental housing (<I>e.g.,</I> the housing market is soft). Rental markets that do not have an adequate supply (<I>e.g.,</I> tight markets) are characterized by low rental vacancy rates, low levels of production and turnover of rental housing, and, usually, by high levels of rent inflation. HUD will make the determination of whether sufficient habitable, affordable, rental housing is available using established market analysis techniques, and will consider information that demonstrates: 
</P>
<P>(1) The rental housing vacancy rate is at a low level relative to the rate required for a balanced market, typically a four percent vacancy rate; except that a rate lower than four percent may be considered in unusual circumstances if it can be demonstrated that there is an adequate supply of affordable housing for low-income families; 
</P>
<P>(2) The number of rental housing units being produced on an annual basis is not large enough to satisfy demand arising from the increase in households, or, in markets where there is little or no growth, evidence that the number of additional rental units being supplied is not sufficient to meet the demand arising from net losses to the available inventory and the inadequate supply of rental housing has inhibited growth; 
</P>
<P>(3) The shortage of housing is resulting in rent increases that exceed normal increases commensurate with the costs of operating rental housing; 
</P>
<P>(4) A significant number, or proportion, of the households holding Section 8 rental vouchers are unable to find adequate housing because of the shortage of rental housing, including PHA data showing a lower than average percentage of units under lease and a longer than average time required to find units. 
</P>
<P><I>Unsubsidized project</I> means a multifamily housing project that is not a subsidized project. 
</P>
<P><I>Useful life</I> means, generally, twenty years, but it may be more or less, as determined by the Department. 
</P>
<CITA TYPE="N">[61 FR 11685, Mar. 21, 1996, as amended at 89 FR 38290, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 290.7" NODE="24:2.1.1.4.30.1.221.3" TYPE="SECTION">
<HEAD>§ 290.7   Occupancy requirements.</HEAD>
<P>(a) <I>Multifamily housing project that is HUD-owned or for which HUD is mortgagee-in-possession.</I> Occupancy in a multifamily housing project that is HUD-owned or for which HUD is mortgagee-in-possession shall be available on a basis that is comparable to the occupancy requirements that applied to the project immediately before HUD acquired the project or became mortgagee-in-possession, except that preference shall be given to tenants of other HUD-owned multifamily housing projects who are eligible for assistance in accordance with the displacement and relocation provisions at § 290.17. 
</P>
<P>(b) <I>Evictions.</I> Eviction from a HUD-owned multifamily housing project is governed by 24 CFR part 247, subpart B. 
</P>
<P>(c) <I>Threat to health and safety.</I> Whenever HUD determines that there is an immediate threat to the health and safety of the tenants, HUD may require the tenants to vacate the premises and shall provide temporary relocation benefits as provided in § 290.17 to tenants required to vacate the premises. 


</P>
</DIV8>


<DIV8 N="§ 290.9" NODE="24:2.1.1.4.30.1.221.4" TYPE="SECTION">
<HEAD>§ 290.9   Setting rental rates.</HEAD>
<P>Because of the subsidies involved in making multifamily housing projects affordable, the setting of rents involves two steps: first, establishing the rent on a unit that will be paid to the owner, and second, determining the rent that the tenant pays (with the difference made up by a subsidy), using a number of procedures to obtain income verification and notify tenants of changes in rent. These procedures for a property owned by HUD or where HUD is mortgagee-in-possession are explained below. 
</P>
<P>(a) <I>Setting unit rents.</I> Except as modified by this section, for a property where HUD is mortgagee-in-possession (MIP), HUD will set unit rents in accordance with the rent setting requirements of the project's mortgage insurance or direct loan program; or for a property owned by HUD, rents will be set in accordance with the rent setting requirements of the project's mortgage insurance or direct loan program in effect immediately before HUD became the owner of the project. 
</P>
<P>(b) <I>Setting rents payable by tenants</I>—(1) <I>Tenant rent.</I> The rent the tenant pays will be based on the income certification and the rent payment requirements of the project's mortgage insurance or direct loan program in effect while HUD is MIP or immediately before HUD became the owner of the project, as affected by any of the factors in paragraphs (b)(2) through (b)(4) of this section. However, if a tenant does not certify income as required by this section, the tenant must pay the unit rent as determined under the rent setting requirements in paragraph (a) of this section. 
</P>
<P>(2) <I>Utility allowance.</I> For a tenant whose rent is based on a percentage of adjusted income (except for rental voucher holders), if the cost of utilities (except telephone) and other housing services for the unit is the responsibility of the tenant to pay directly to the provider of the utility or service, HUD will deduct from the rent to be paid by the tenant to HUD a utility allowance, which is an amount equal to HUD's estimate of the monthly costs of a reasonable consumption of the utilities and other services for the unit for an energy-conservative household of modest circumstances consistent with the requirement of a safe, sanitary, and healthful living environment. If the utility allowance exceeds the percentage of the tenant's adjusted income payable as rent, HUD will pay the difference between the amount payable as rent and the utility allowance to the tenant or, with the consent of the tenant and the utility company, either jointly to the tenant and the utility company or directly to the utility company. 
</P>
<P>(3) <I>Rent adjustments for project viability.</I> For a HUD-owned project, HUD may adjust the rent provided for in paragraphs (b)(1) or (b)(2) of this section if necessary or desirable to maintain the existing economic mix in the project, prevent undesirable turnover, or increase occupancy. 
</P>
<P>(4) <I>Tenants who are rental voucher holders.</I> Tenants assisted with rental vouchers certify their income to the public housing agency (PHA) administering the assistance, and pay rent pursuant to the policies and procedures governing such assistance. 
</P>
<P>(c) <I>Income verification and rent notification procedures</I>—(1) <I>Income certification by tenants</I>—(i) <I>In subsidized projects.</I> (A) For families residing in subsidized projects, when HUD becomes MIP or owner, HUD will request an income certification from each family as soon as practicable after HUD initially assumes management, unless the family's income has been examined by the owner or by HUD not more than four months before HUD's assumption of management. 
</P>
<P>(B) For each family applying for admission to subsidized projects, HUD will request an income certification to determine the family's eligibility for a subsidized rent, and (if the rent is based on a percentage of adjusted income) the family's subsidized rent, in accordance with part 813 of this title. 
</P>
<P>(ii) <I>In unsubsidized projects.</I> (A) For tenants in occupancy when HUD becomes mortgagee-in-possession or owner of an unsubsidized project, HUD may request an income certification from families who are not paying a subsidized rent. 
</P>
<P>(B) For families applying for admission to such projects, HUD will request sufficient information for income verification to determine the family's ability to pay the unit rent. 
</P>
<P>(2) <I>Notice of increases in the amount of rent payable.</I> Whenever HUD proposes an increase in rents in a HUD-owned multifamily project or a project where HUD is mortgagee-in-possession, HUD will provide tenants 30 days notice of the proposed changes and an opportunity to review and comment on the new rent and supporting documentation. After HUD considers the tenants' comments and has made a decision with respect to its proposed rent change, HUD shall notify the tenants of its decision, with the reasons for the decision. A tenant in occupancy before the effective date of any revised rental rate must be given 30 days notice of the revised rate, and any change in the tenant's rent is subject to the terms of an existing lease. Notices to each tenant must be personally delivered or sent by first class mail. General notices of rent increases to all tenants must be posted in the project office and in appropriate conspicuous and accessible locations around the project. 
</P>
<P>(3) <I>Disclosure and verification of Social Security numbers.</I> Any certifications or reexaminations of the income of tenants or prospective tenants in connection with tenancy under this section are subject to the requirements for the disclosure and verification of Social Security Numbers, as provided by part 200, subpart T, of this title. 
</P>
<P>(4) <I>Signing of consent forms for income verification.</I> Any certifications or reexaminations of the income of tenants or prospective tenants in connection with tenancy under this section are subject to the requirements for the signing and submitting of consent forms for the obtaining of wage and claim information from State Wage Information Collection Agencies, as provided by part 200, subpart V, of this title.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0204)
</APPRO>
<CITA TYPE="N">[61 FR 11685, Mar. 21, 1996, as amended at 89 FR 38291, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 290.11" NODE="24:2.1.1.4.30.1.221.5" TYPE="SECTION">
<HEAD>§ 290.11   Notification requirements.</HEAD>
<P>(a) <I>In general.</I> HUD may combine two or more of the required notifications, as appropriate, to simplify the disposition process. 
</P>
<P>(b) <I>Timing of notifications.</I> Disposition-related notifications (i.e., pre-foreclosure notification to tenants and units of general local government; pre-disposition community and tenant input notification; state and local government right of first refusal notification) will be made, as appropriate: 
</P>
<P>(1) 60 or more days before HUD forecloses on a project; or 
</P>
<P>(2) Before, or not more than 30 days after, HUD acquires a project. 
</P>
<P>(c) <I>Methods of notification</I>—(1) <I>To tenants.</I> Pre-disposition notification will be delivered to each unit in the project, or sent to each unit by first class mail. Where HUD is mortgagee-in-possession or owner of a project, the notice will also be posted in the project office and in appropriate conspicuous and accessible locations around the project. 
</P>
<P>(2) <I>To units of general local government.</I> Pre-disposition notification to a unit of general local government will be sent to the chief executive officer of the unit of general local government by first class mail. For purposes of receiving or sending any notices or information under this part, the unit of general local government is its chief executive officer, or the person designated by the chief executive officer to receive or send the notice or information. 
</P>
<P>(3) <I>To the community or any other party.</I> HUD will consult with tenants and their organizations, officials of units of general local government, and other entities as HUD determines to be appropriate, to identify community recipients of any required notification. Any notice required to be made to any party other than a tenant or a unit of general local government will be sent by first class mail. 
</P>
<P>(d) <I>Content of notifications.</I> Notifications will, as appropriate, identify the project acquired or to be foreclosed by HUD; provide the general terms and conditions concerning the sale, future use, and operation of the project as proposed by HUD; indicate the time by which any offers must be made or any comments must be submitted; and state that the full disposition recommendation and analysis and other supporting information will be available for inspection and copying at the HUD Field Office. 


</P>
</DIV8>


<DIV8 N="§ 290.13" NODE="24:2.1.1.4.30.1.221.6" TYPE="SECTION">
<HEAD>§ 290.13   Negotiated sales.</HEAD>
<P>When HUD conducts a negotiated sale involving the disposition of a project to a person or entity without a public offering, the following provisions apply: 
</P>
<P>(a) HUD may negotiate the sale of any project to an agency of the federal, State, or local government. 
</P>
<P>(b) When HUD determines that a purchaser can demonstrate the capacity to own and operate a project in accordance with standards set by HUD, and/or a competitive offering will not generate offers of equal merit from qualified purchasers, HUD may approve a negotiated sale of a subsidized project to: 
</P>
<P>(1) A resident organization wishing to convert the project to a nonprofit or limited equity cooperative; 
</P>
<P>(2) A cooperative (<I>e.g.,</I> nonprofit limited equity, consumer cooperative, mutual housing organization) with demonstrated experience in the operation of nonprofit (and preferably low-income) housing; 
</P>
<P>(3) A nonprofit entity that will continue to operate the project as low-income housing and whose governing board is composed of project residents; 
</P>
<P>(4) A State or local governmental entity with the demonstrated capacity to acquire, manage, and maintain the project as housing available to and affordable by low-income residents; 
</P>
<P>(5) A State or local governmental or nonprofit entity with the demonstrated capacity to acquire, manage, and maintain the project as a shelter for the homeless or other public purpose, generally when the project is vacant or has minimal occupancy and is not needed in the area for continued use as rental housing for the elderly or families; or 
</P>
<P>(6) Other nonprofit organizations. 


</P>
</DIV8>


<DIV8 N="§ 290.15" NODE="24:2.1.1.4.30.1.221.7" TYPE="SECTION">
<HEAD>§ 290.15   Disposition plan.</HEAD>
<P>(a) <I>In general.</I> Before disposing of a HUD-owned multifamily housing project, HUD will develop an initial and a final disposition plan for the project that specifies the minimum terms and conditions for the disposition of the project, the sales price that is acceptable to HUD, and the assistance that HUD plans to make available to a prospective purchaser. 
</P>
<P>(b) <I>Environmental requirements.</I> HUD will perform, and include in the final disposition plan, the environmental reviews required by 24 CFR part 50. 


</P>
</DIV8>


<DIV8 N="§ 290.17" NODE="24:2.1.1.4.30.1.221.8" TYPE="SECTION">
<HEAD>§ 290.17   Displacement of tenants and relocation assistance.</HEAD>
<P>(a) <I>Scope of section.</I> This section applies to all HUD-owned multifamily housing projects and all multifamily housing projects subject to HUD-held mortgages. When HUD is not the mortgagee-in-possession or owner, the owner of the project shall comply with this section, if HUD has authorized the demolition of, repairs to, or conversion of the use of the multifamily housing project. 
</P>
<P>(b) <I>Minimizing displacement.</I> Consistent with the other goals and objectives of this part, all reasonable steps shall be taken to minimize the displacement of persons (families, individuals, businesses, and nonprofit organizations) from a project covered by this part. If displacement or temporary relocation will occur in connection with the disposition of a project, HUD may require the purchaser of the project to provide assistance in accordance with this section. 
</P>
<P>(c) <I>Relocation assistance at non-URA levels.</I> Whenever the displacement of a residential tenant (family or individual) occurs in connection with the management or disposition of a multifamily housing project, but is not subject to paragraph (d) of this section (<I>e.g.,</I> occurs as a direct result of HUD repair or demolition of all or a part of a HUD-owned multifamily housing project or as a direct result of the foreclosure of a HUD-held mortgage on a multifamily housing project or sale of a HUD-owned project without federal financial assistance), the displaced tenant shall be eligible for the following relocation assistance: 
</P>
<P>(1) Advance written notice of the expected displacement shall be provided at least 60 days before displacement, describe the assistance and the procedures for obtaining the assistance, and contain the name, address and phone number of an official responsible for providing the assistance; 
</P>
<P>(2) Other advisory services, as appropriate, including counseling, referrals to suitable (and where appropriate, accessible), decent, safe, and sanitary replacement housing, and fair housing-related advisory services; 
</P>
<P>(3) Payment for actual reasonable moving expenses, as determined by HUD; and 
</P>
<P>(4) Such other federal, State or local assistance as may be available. 
</P>
<P>(d) <I>Relocation assistance at URA levels</I>—(1) <I>General.</I> The requirements of this paragraph apply to any displacement that results whenever assistance under 24 CFR part 886, subpart C, (or other federal financial assistance, as defined in 49 CFR 24.2(j)) is provided in connection with the purchase, demolition, or rehabilitation of a multifamily property by a third party. A displaced person (defined in paragraph (d)(3) of this section) must be provided relocation assistance at the levels described in, and in accordance with the requirements of, the URA, implementing regulations at 49 CFR part 24, and this section. 
</P>
<P>(2) <I>Definition of “initiation of negotiations”.</I> Under the URA, for purposes of determining the method for computing the replacement housing assistance to be provided to a residential tenant displaced as a direct result of privately undertaken rehabilitation, demolition, or acquisition of the real property, the term “initiation of negotiations” means the transfer of title to the purchaser. 
</P>
<P>(3) <I>Definition of displaced person.</I> The term “displaced person” means any person (family, individual, business, or nonprofit organization) that moves from the real property, or moves personal property from the real property, permanently, as a direct result of acquisition, rehabilitation or demolition for a federally assisted project. However, a person does not qualify as a “displaced person” if: 
</P>
<P>(i) The person is excluded under 49 CFR 24.2(g)(2); 
</P>
<P>(ii) The person has been evicted for a serious or repeated violation of the terms and conditions of the lease or occupancy agreement, violation of applicable federal, State, or local law, or other good cause, and HUD determines that the eviction was not undertaken for the purpose of evading the obligation to provide relocation assistance; 
</P>
<P>(iii) The person moves into the property after transfer of title to the purchaser; or 
</P>
<P>(iv) HUD determines that the person was not displaced as a direct result of acquisition, rehabilitation, or demolition for an assisted project. 
</P>
<P>(e) <I>Temporary relocation (URA and non-URA relocation assistance).</I> Residential tenants, who will not be required to move permanently, but who must relocate temporarily (<I>e.g.,</I> to permit property repairs), shall be provided: 
</P>
<P>(1) Reimbursement for all reasonable out-of-pocket expenses incurred in connection with the temporary relocation, including the cost of moving to and from the temporary housing and any increase in monthly rent or utility costs. The party responsible for this requirement may, at its option, perform the services involved in temporarily relocating the tenants or pay for such services directly; and 
</P>
<P>(2) Appropriate advisory services, including reasonable advance written notice of the date and approximate duration of the temporary relocation; the suitable (and where appropriate, accessible), decent, safe, and sanitary housing to be made available for the temporary period; the terms and conditions under which the tenant may lease and occupy a suitable, decent, safe, and sanitary dwelling in the building/complex following completion of the repairs; and the right to financial assistance provided under paragraph (e)(1) of this section. 
</P>
<P>(f) <I>Appeals.</I> If a person disagrees with the purchaser's determination concerning the person's eligibility for relocation assistance or the amount of the assistance for which the person is eligible, the person may file a written appeal of that determination with the owner or purchaser. A person who is dissatisfied with the purchaser's determination on his or her appeal may submit a written request for review of that decision to the HUD Field Office responsible for administering the URA in the area. 


</P>
</DIV8>


<DIV8 N="§ 290.18" NODE="24:2.1.1.4.30.1.221.9" TYPE="SECTION">
<HEAD>§ 290.18   Restrictions on sale to former mortgagors.</HEAD>
<P>The defaulting mortgagor, or any principal, successor, affiliate, or assignee thereof, on the mortgage on the property at the time of the default resulting in acquisition of the property by HUD shall not be eligible to purchase the property. A “principal” and an “affiliate” are defined as provided at 24 CFR 24.105.
</P>
<CITA TYPE="N">[66 FR 35847, July 9, 2001]


</CITA>
</DIV8>


<DIV8 N="§ 290.19" NODE="24:2.1.1.4.30.1.221.10" TYPE="SECTION">
<HEAD>§ 290.19   Restrictions concerning nondiscrimination against Section 8 voucher holders.</HEAD>
<P>The purchaser of any multifamily housing project shall not refuse unreasonably to lease a dwelling unit offered for rent, offer to sell cooperative stock, or otherwise discriminate in the terms of tenancy or cooperative purchase and sale because any tenant or purchaser is the holder of a Voucher under Section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f), or any successor legislation. The purchaser's agreement to this condition must be contained in any contract of sale and also may be contained in any regulatory agreement, use agreement, or deed entered into in connection with the disposition. 
</P>
<CITA TYPE="N">[61 FR 11685, Mar. 21, 1996, as amended at 89 FR 38291, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 290.21" NODE="24:2.1.1.4.30.1.221.11" TYPE="SECTION">
<HEAD>§ 290.21   Computing annual number of units eligible for substitution of tenant-based assistance or alternative uses.</HEAD>
<P>(a) <I>Substitution of tenant-based Section 8 assistance to low-income families instead of project-based assistance to units.</I> The number of units eligible, as permitted by the Statute, for this form of substitution within the 10 percent limit will be estimated at the beginning of each fiscal year, taking into consideration the aggregate number of subsidized project units disposed of by HUD in the immediately preceding fiscal year and the disposition activity planned for the current fiscal year. 
</P>
<P>(b) <I>Alternate uses.</I> The number of units eligible for alternate uses in any fiscal year, as permitted by the Statute, will be determined at the beginning of the fiscal year as the applicable percentages (<I>i.e.,</I> either 10 percent or 5 percent) of the estimated total number of units to be disposed of in the fiscal year, taking into consideration the total number of units in multifamily housing projects disposed of by the Department in the immediately preceding fiscal year, and the extent of the disposition activity planned in the current fiscal year. 


</P>
</DIV8>


<DIV8 N="§ 290.23" NODE="24:2.1.1.4.30.1.221.12" TYPE="SECTION">
<HEAD>§ 290.23   Rebuilding.</HEAD>
<P>HUD may provide project-based assistance to support the rebuilding of a HUD-owned multifamily housing project only. The required determination that rebuilding the project would be less expensive than substantial rehabilitation means that the costs to HUD for rebuilding are such that the monthly debt service needed to amortize the cost of relocating tenants, demolition, site preparation, rebuilding, operating expenses, and a reasonable return to the purchaser cannot be provided with rents that are within 120 percent of the most recently published Section 8 Fair Market Rents for Existing Housing (24 CFR part 888, subpart A), and would be less expensive than rehabilitation. 


</P>
</DIV8>


<DIV8 N="§ 290.25" NODE="24:2.1.1.4.30.1.221.13" TYPE="SECTION">
<HEAD>§ 290.25   Determination not to preserve a project or a part of a project.</HEAD>
<P>HUD may determine to demolish, or otherwise dispose of, a HUD-owned multifamily housing project, or any portion of such a project, or to foreclose a HUD-held mortgage on a multifamily housing project, without ensuring its continued availability as affordable rental or cooperative housing for low- and very low-income families under appropriate circumstances which may include one or more those listed in paragraphs (a) through (g) of this section. If HUD decides not to preserve an occupied multifamily housing project at a foreclosure sale or sale of a HUD-owned project, tenants must be provided relocation assistance as described in § 290.17. 
</P>
<P>(a) The costs to HUD of rehabilitation are such that the monthly debt service needed to amortize the cost of rehabilitation, operating expenses, and a reasonable return to the purchaser cannot be provided with rents that are, for subsidized and formerly subsidized projects, within 120 percent of the most recently published Section 8 Fair Market Rents for Existing Housing (24 CFR part 888, subpart A) or, for unsubsidized and formerly unsubsidized projects, within rents obtainable in the market. 
</P>
<P>(b) Construction is substantially incomplete. 
</P>
<P>(c) Preservation is not feasible because of environmental factors that cannot be mitigated by HUD or the purchaser. For example, when the project is located on a site that cannot be made to comply with the Section 8 Site and Neighborhood standards in 24 CFR 886.307(k) because of factors that adversely affect the health, safety and general welfare of residents such as air pollution; smoke; mud slides; fire or explosion hazards. Preservation may also be infeasible because of significantly deteriorated surrounding neighborhood conditions with inadequate police or fire protection; high crime rates; drug infestation; or lack of public community services needed to support a safe and healthy living environment for residents. 
</P>
<P>(d) HUD determines the project is unfit for rehabilitation. 
</P>
<P>(e) Rehabilitation would cost more than constructing comparable new housing. 
</P>
<P>(f) A reduction in the number of units in the project will enhance long-term project viability, for example, demolition of a building to provide space for a playground, open space, or combining one-bedroom units to create larger units for families. 
</P>
<P>(g) Continued preservation of the project as rental or cooperative housing is not compatible with State or local land use plans for the area in which the project is located. 


</P>
</DIV8>


<DIV8 N="§ 290.27" NODE="24:2.1.1.4.30.1.221.14" TYPE="SECTION">
<HEAD>§ 290.27   Up-front grants and loans.</HEAD>
<P>(a) <I>General.</I> HUD may provide up-front grants and loans for rehabilitation, demolition, rebuilding and other related development costs as part of the disposition of a multifamily housing project that is HUD-owned, upon making a determination that such a grant or loan, plus any additional project-based assistance made available, would be more cost-effective than the use of the maximum permissible project-based rental assistance alone.
</P>
<P>(b) <I>Eligible projects.</I> An up-front grant or loan can be made available in the sale of a HUD-owned multifamily housing project that meets all of the following requirements:
</P>
<P>(1) Has more than 50% of the units in the project occupied by very low-income residents at the time a disposition plan is approved by HUD, or that HUD determines is essential, as affordable housing, to the revitalization of its community;
</P>
<P>(2) Is located in a housing market or submarket in which there is not sufficient habitable, affordable, rental housing, as defined in § 290.3;
</P>
<P>(3) Will generate, after rehabilitation or rebuilding, sufficient rental income in a competitive market to cover all operating expenses, meet after sale debt service requirements, fund required reserves and throw off positive cash flow;
</P>
<P>(4) Will provide affordable housing for at least 20 years or the term of the loan, whichever is shorter, after the rehabilitation and/or rebuilding is completed; and
</P>
<P>(5) Meets such other requirements, including deed restrictions, loan provisions, and monetary penalties for non-performance, as HUD may determine are appropriate on a case-by-case basis.
</P>
<P>(c) <I>Eligible sales and purchasers</I>—(1) <I>Negotiated sales to governmental entities.</I> A negotiated sale of a project with an up-front grant or loan can only be made to the unit of general local government, which includes public housing agencies, in the area in which the project is located; or a State agency designated by the chief executive officer of the State in which the project is located; or an agency of the Federal government. The governmental entity in such a sale must take title to the project.
</P>
<P>(2) <I>Other sales and purchasers.</I> All sales which provide up-front grants or loans to entities other than those described in paragraph (c)(1) of this section must be conducted through a competitive selection process. All general and limited partnerships or their nominees, joint ventures or other entities assembled for purposes of purchasing the project and which have a governmental entity as a partner or other participant are considered profit motivated purchasers and not governmental entities, whether or not there is a non-profit, public, corporate or individual general partner.
</P>
<P>(d) <I>Up-front grant or loan amount.</I> The maximum that HUD will fund per project in an up-front grant or loan is 50 percent of total development cost (TDC), or $40,000 per affordable, finished unit, whichever amount is less. TDC covers demolition, environmental hazard remediation, construction materials, artisan services, professional services, developers services, and overhead, relocation and operating losses that are incurred to plan, perform and complete repairs or rebuilding. 
</P>
<CITA TYPE="N">[64 FR 72412, Dec. 27, 1999]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:2.1.1.4.30.2" TYPE="SUBPART">
<HEAD>Subpart B—Sale of HUD-Held Multifamily Mortgages</HEAD>


<DIV8 N="§ 290.30" NODE="24:2.1.1.4.30.2.221.1" TYPE="SECTION">
<HEAD>§ 290.30   General.</HEAD>
<P>(a) Except as otherwise provided in § 290.31(a)(2), HUD will sell HUD-held multifamily mortgages on a competitive basis. HUD retains full discretion to offer any qualifying mortgage for sale and to withhold or withdraw any offered mortgage from sale. However, when a qualifying mortgage is offered for sale, the procedures set out in this subpart will govern the sale. 
</P>
<P>(b) References in subpart B of this part to mortgages securing subsidized projects include HUD-held purchase money mortgages on subsidized projects. 
</P>
<CITA TYPE="N">[61 FR 11685, Mar. 21, 1996, as amended at 61 FR 32265, June 21, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 290.31" NODE="24:2.1.1.4.30.2.221.2" TYPE="SECTION">
<HEAD>§ 290.31   Sale of current mortgages securing subsidized projects.</HEAD>
<P>HUD will sell current mortgages securing subsidized projects, as follows: 
</P>
<P>(a) <I>Current mortgages with FHA mortgage insurance</I> will be sold either: 
</P>
<P>(1) On a competitive basis to FHA-approved mortgagees; or 
</P>
<P>(2) On a negotiated basis, to State or local governments, or to a group of investors that includes an agency of a State or local government if, in addition to meeting the requirements of the Statute, the sales price is the best price that HUD can obtain from an agency of a State or local government while maintaining occupancy for the tenant group originally intended to be served by the subsidized housing program. 
</P>
<P>(b) <I>Current mortgages without FHA mortgage insurance</I> will be sold if HUD can offer protections equivalent to those listed for an insured sale in paragraph (a) of this section. 


</P>
</DIV8>


<DIV8 N="§ 290.33" NODE="24:2.1.1.4.30.2.221.3" TYPE="SECTION">
<HEAD>§ 290.33   Sale of delinquent mortgages securing subsidized projects.</HEAD>
<P>Delinquent mortgages securing subsidized projects will be sold only if, as part of the sales transaction: 
</P>
<P>(a) The mortgages are restructured; and 
</P>
<P>(b) Either FHA mortgage insurance or equivalent protections are provided. 


</P>
</DIV8>


<DIV8 N="§ 290.35" NODE="24:2.1.1.4.30.2.221.4" TYPE="SECTION">
<HEAD>§ 290.35   Sale of HUD-held mortgages securing unsubsidized projects.</HEAD>
<P>HUD's policy for selling HUD-held mortgages securing unsubsidized projects is as follows: 
</P>
<P>(a) <I>Current mortgages</I> may be sold with or without FHA mortgage insurance. 
</P>
<P>(b) <I>Delinquent mortgages</I> may be sold without FHA mortgage insurance. However, delinquent mortgages will not be sold if: 
</P>
<P>(1) HUD believes that foreclosure is unavoidable; and 
</P>
<P>(2) The project securing the mortgage is occupied by very low-income tenants who are not receiving housing assistance and would be likely to pay rent in excess of 30 percent of their adjusted monthly income if HUD sold the mortgage. 


</P>
</DIV8>


<DIV8 N="§ 290.37" NODE="24:2.1.1.4.30.2.221.5" TYPE="SECTION">
<HEAD>§ 290.37   Requirements for continuing Federal rental subsidy contracts.</HEAD>
<P>For any mortgage that, at the time HUD offers the mortgage for sale without FHA mortgage insurance, is delinquent and secures a subsidized project or unsubsidized project that receives any of the forms of assistance enumerated in paragraphs (4)(i) to (4)(iv) of the “subsidized project” definition in § 290.3: 
</P>
<P>(a) The mortgage purchaser and its successors and assigns shall require the mortgagor to record a covenant running with the land as part of any loan restructuring or of a final compromise of the mortgage debt and shall include a covenant in any foreclosure deed executed in connection with the mortgage. The covenant shall continue in effect until the last federal project-based rental assistance contract expires by its own terms. The covenant shall provide that, except where otherwise approved by HUD, a project purchaser shall agree to assume the obligations of any outstanding: 
</P>
<P>(1) Project-based federal rental subsidy contract; and 
</P>
<P>(2) Tenant-based Section 8 housing assistance payments contract with a public housing agency and the related lease. 
</P>
<P>(b) In the event of foreclosure of the mortgage sold by HUD, the mortgage purchaser and its successors and assigns:
</P>
<P>(1) Shall foreclose in a manner that does not interfere with any lease related to federal project-based assistance or any lease related to tenant-based, Section 8 housing assistance payments; and
</P>
<P>(2) Shall foreclose in manner that ensures that the right of possession of the purchaser at a foreclosure sale shall be subject to the terms of any residential lease not subject to paragraph (b)(1) of this section for the remaining term of the lease or for one year, whichever period is shorter.
</P>
<CITA TYPE="N">[61 FR 11685, Mar. 21, 1996, as amended at 61 FR 32265, June 21, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 290.39" NODE="24:2.1.1.4.30.2.221.6" TYPE="SECTION">
<HEAD>§ 290.39   Nondiscrimination in admitting certificate and voucher holders.</HEAD>
<P>(a) <I>Nondiscrimination requirement.</I> For any mortgage described in paragraphs (c) or (d) of this section that HUD sells without FHA mortgage insurance, the project owner shall not unreasonably refuse to lease a dwelling unit offered for rent, offer to sell cooperative stock, or otherwise discriminate in the terms of tenancy or cooperative purchase and sale because any tenant or purchaser is a voucher holder under 24 CFR part 982. 
</P>
<P>(b) <I>Inapplicability to current mortgages securing unsubsidized projects that receive no project based-assistance.</I> The nondiscrimination requirements of this section do not apply to any mortgage that is current under the terms of the mortgage at the time HUD offers it for sale, if the mortgage secures an unsubsidized project that does not receive any of the forms of project-based assistance enumerated in paragraphs (4)(i) to (4)(iv) of the “subsidized project” definition in § 290.3. 
</P>
<P>(c) <I>Applicability to mortgages securing unsubsidized projects receiving project-based assistance (partially-assisted projects) or securing subsidized projects.</I> (1) The nondiscrimination requirement in paragraph (a) of this section applies to the project owner upon the sale of a mortgage without FHA mortgage insurance if, at the time HUD offers it for sale, the mortgage secures: 
</P>
<P>(i) An unsubsidized project that receives any of the forms of assistance enumerated in paragraphs (4)(i) to (4)(iv) of the “subsidized project” definition in § 290.5; or 
</P>
<P>(ii) A subsidized project, as defined in § 290.3. 
</P>
<P>(2) This requirement shall continue in effect until the mortgage debt is satisfied.
</P>
<P>(d) <I>Covenant requirement for all delinquent mortgages sold without FHA mortgage insurance.</I> This paragraph (d) applies to the sale of any mortgage that is delinquent at the time HUD offers it for sale without FHA mortgage insurance, without regard to the subsidy status of the project. The mortgage purchaser and its successors and assigns shall require the mortgagor to record a covenant running with the land as part of any loan restructuring or final compromise of the mortgage debt and shall include a covenant in any foreclosure deed executed in connection with the mortgage. The covenant shall set forth the nondiscrimination requirement in paragraph (a) of this section. The covenant shall continue in effect until a date that is the same as the maturity date of the mortgage sold by HUD.
</P>
<CITA TYPE="N">[61 FR 11685, Mar. 21, 1996; 61 FR 19188, May 1, 1996, as amended at 61 FR 32265, June 21, 1996; 89 FR 38291, May 7, 2024]



 
</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="291" NODE="24:2.1.1.4.31" TYPE="PART">
<HEAD>PART 291—DISPOSITION OF HUD-ACQUIRED AND -OWNED SINGLE FAMILY PROPERTY


</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1701 <I>et seq.;</I> 42 U.S.C. 1441, 1441a, 1551a, and 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>56 FR 46956, Sept. 16, 1991, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:2.1.1.4.31.1" TYPE="SUBPART">
<HEAD>Subpart A—General Provisions</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>64 FR 6479, Feb. 9, 1999, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 291.1" NODE="24:2.1.1.4.31.1.221.1" TYPE="SECTION">
<HEAD>§ 291.1   Purpose and general requirements.</HEAD>
<P>(a) <I>Purpose.</I> (1) 

This part governs the acquisition, possession, and disposition of one-to-four family properties acquired by the Federal Housing Administration (FHA) through foreclosure of an insured or Secretary-held mortgage or loan under the National Housing Act, or acquired by HUD under section 204(g) of the National Housing Act (12 U.S.C. 1710(g)). HUD will issue detailed policies and procedures that must be followed in specific areas.




</P>
<P>(2) The purpose of the property disposition program is to dispose of properties in a manner that expands homeownership opportunities, strengthens neighborhoods and communities, and ensures a maximum return to the mortgage insurance funds.
</P>
<P>(b) <I>Nondiscrimination policy.</I> The requirements set forth in 24 CFR parts 5 and 110 apply to the administration of any activity under this part. In addition, in accordance with 24 CFR 9.155(a), HUD must ensure that its policies and practices in conducting the single family property disposition program do not discriminate on the basis of disability.
</P>
<CITA TYPE="N">[64 FR 6479, Feb. 9, 1999, as amended at 81 FR 53002, Aug. 11, 2016]






</CITA>
</DIV8>


<DIV8 N="§ 291.5" NODE="24:2.1.1.4.31.1.221.2" TYPE="SECTION">
<HEAD>§ 291.5   Definitions.</HEAD>
<P>Terms used in this part are defined as follows:
</P>
<P><I>Competitive sale of individual property</I> means a sale of an individual property to an individual bidder through a sealed bid process (or other bid process specifically authorized by the Secretary) in competition with other bidders in which properties have been publicly advertised to all prospective purchasers for bids.
</P>
<P><I>Direct sale</I> means a sale to a selected purchaser to the exclusion of all others without resorting to advertising for bids. Such a sale is available only to approved applicants.
</P>
<P><I>Eligible properties</I> means HUD-acquired properties designated by HUD for property disposition or other housing programs.
</P>
<P><I>HUD</I> means the Department of Housing and Urban Development or its contractor, as appropriate.
</P>
<P><I>Insured mortgage</I> means a mortgage insured under the National Housing Act (12 U.S.C. 1701 <I>et seq.</I>).
</P>
<P><I>Investor purchaser</I> means a purchaser who does not intend to use the property as his or her principal residence.
</P>
<P><I>Owner-occupant purchaser</I> means a purchaser who intends to use the property as his or her principal residence; a State, governmental entity, tribe, or agency thereof; or a private nonprofit organization as defined in this section. Governmental entities include those with general governmental powers (e.g., a city or county), as well as those with limited or special powers (e.g., public housing agencies).
</P>
<P><I>Private nonprofit organization</I> means a secular or religious organization, no part of the net earnings of which may inure to the benefit of any member, founder, contributor, or individual. The organization must:
</P>
<P>(1) Have a voluntary board;
</P>
<P>(2)(i) Have a functioning accounting system that is operated in accordance with generally accepted accounting principles; or
</P>
<P>(ii) Designate an entity that will maintain a functioning accounting system for the organization in accordance with generally accepted accounting principles;
</P>
<P>(3) Practice nondiscrimination in the provision of assistance in accordance with the authorities described in § 291.435(a); and
</P>
<P>(4) Have nonprofit status as demonstrated by approval under section 501(c)(3) of the Internal Revenue Code (26 U.S.C. 501(c)(3)), or demonstrate that an application for such status is currently pending approval.
</P>
<P><I>Secretary</I> is defined in 24 CFR 5.100.
</P>
<P><I>State</I> means any of the several States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, the Northern Mariana Islands, the Trust Territory of the Pacific Islands, and any other territory or possession of the United States.
</P>
<P><I>Tribe</I> has the meaning provided for the term “Indian tribe” in section 102 of the Housing and Community Development Act of 1974 (42 U.S.C. 5302).
</P>
<CITA TYPE="N">[64 FR 6479, Feb. 9, 1999, as amended at 81 FR 53002, Aug. 11, 2016]




</CITA>
</DIV8>


<DIV8 N="§ 291.10" NODE="24:2.1.1.4.31.1.221.3" TYPE="SECTION">
<HEAD>§ 291.10   General policy regarding rental of acquired property.</HEAD>
<P>HUD will lease acquired property to comply with other designated HUD programs, or when the Secretary determines that it is in the interest of HUD. Leases may include an option to purchase in appropriate circumstances.




</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:2.1.1.4.31.2" TYPE="SUBPART">
<HEAD>Subpart B—Disposition by Sale</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>64 FR 6480, Feb. 9, 1999, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 291.90" NODE="24:2.1.1.4.31.2.221.1" TYPE="SECTION">
<HEAD>§ 291.90   Sales methods.</HEAD>
<P>In accordance with section 204(g) of the National Housing Act (12 U.S.C. 1710(g)), HUD will prescribe the terms and conditions for all methods of sale. HUD may dispose of assets using any method that the Secretary deems appropriate, including, but not limited to the following:
</P>
<P>(a) <I>Future REO acquisition method.</I> The Future Real Estate-Owned (REO) acquisition method consists of a property acquisition agreement (or agreements) between HUD and a transferor (or transferors), which shall provide for the right and obligation of the transferor(s) to acquire a future quantity of properties designated by HUD as they become available. HUD will select such transferor(s) through a competitive process, in accordance with all applicable laws and regulations, including the requirements in § 291.200. The transferor(s) shall have the right and obligation to manage and dispose of the properties upon such terms and conditions as are approved by the Secretary;
</P>
<P>(b) <I>Competitive sales of individual properties.</I> This method consists of competitive sales of individual properties to individual buyers, the procedures for which are described in § 291.205;
</P>
<P>(c) <I>Direct sales methods.</I> There are three types of direct sales methods:
</P>
<P>(1) Direct sales of properties without insured mortgages to governmental entities and private nonprofit organizations, the procedures for which are described in § 291.210(a);
</P>
<P>(2) Direct sales to displaced persons, sales of razed lots, or auctions, the procedures for which are described in § 291.210(b);
</P>
<P>(3) Direct sales to other individuals or entities that do not meet any of the categories specified in paragraphs (a) through (d) of this section, under the circumstances and procedures described in § 291.210(c);
</P>
<P>(d) <I>Bulk sales,</I> the procedures for which are described in § 291.210(d); or
</P>
<P>(e) <I>Other sales methods.</I> HUD may select any other methods of sale, as determined by the Secretary.
</P>
<CITA TYPE="N">[64 FR 6480, Feb. 9, 1999, as amended at 81 FR 53002, Aug. 11, 2016]




</CITA>
</DIV8>


<DIV8 N="§ 291.100" NODE="24:2.1.1.4.31.2.221.2" TYPE="SECTION">
<HEAD>§ 291.100   General policy on HUD acquisition, ownership, and disposition of real estate assets.</HEAD>
<P>For all sales, except as otherwise specifically indicated, those sales conducted in accordance with §§ 291.90(a) and 291.200 or with subpart D of this part, the following general policies apply:
</P>
<P>(a) <I>Qualified purchaser.</I> (1) Anyone, including a purchaser from a transferor of a property pursuant to §§ 291.90(a) and 291.200, regardless of race, color, religion, sex, national origin, familial status, age, or disability may offer to buy a HUD-owned property, except that:
</P>
<P>(i) No member of or delegate to Congress is eligible to buy or benefit from a purchase of a HUD-owned property; and
</P>
<P>(ii) No nonoccupant mortgagor (whether an original mortgagor, assumptor, or a person who purchased “subject to”) of an insured mortgage who has defaulted, thereby causing HUD to pay an insurance claim on the mortgage, is eligible to repurchase the same property.
</P>
<P>(2) Neither HUD nor any transferor pursuant to §§ 291.90(a) or 291.200 will offer former mortgagors in occupancy who have defaulted on the mortgage the right of first refusal to repurchase the same property.
</P>
<P>(3) HUD will offer tenants accepted under the occupied conveyance procedures outlined in 24 CFR 203.670 through 203.685 the right of first refusal to purchase the property only if:
</P>
<P>(i) The tenant has a recognized ability to acquire financing and a good rent-paying history, and has made a request to HUD to be offered the right of first refusal; or
</P>
<P>(ii) State or local law requires that tenants be offered the right of first refusal.
</P>
<P>(b) <I>List price.</I> The list price, or “asking price,” assigned to the property is based upon one or more evaluation tools (e.g., appraisal, Broker Price Opinion, Automated Valuation Model). An appraisal, when used, must be conducted by an independent real estate appraiser who meets all of the requirements of 24 CFR part 200, subpart G, and is in good standing on the appraiser roster established under that section. The appraiser must provide an opinion of the “as-is” market value using a valuation method that is commonly employed in the industry and that is consistent with FHA appraisal requirements.
</P>
<P>(c) <I>Insurance.</I> When listing properties, HUD may elect to include information to indicate whether the property is eligible for FHA-insured financing under section 203(B) of the National Housing Act (12 U.S.C. 1709(b)).
</P>
<P>(d) <I>Financing.</I> (1) Subject to underwriting requirements, REO properties that have not been identified as uninsurable in accordance with paragraph (c) of this section can be purchased and financed with a mortgage insured under section 203(b) or 203(k) of the National Housing Act (12 U.S.C. 1709(b), 1709(k)), if supported by an FHA appraisal, in one of the following ways:
</P>
<P>(i) <I>Insured.</I> A property that meets the Minimum Property Standards (MPS), as defined in HUD Handbook 4905.1 or any successor handbook, as determined by the Secretary, for existing dwellings will be offered for sale in “as-is” condition with FHA mortgage insurance available as provided in part 203 of this chapter.
</P>
<P>(ii) <I>Insured with repair escrow.</I> (A) A property that requires no more than $10,000 for repairs to meet the MPS, as defined in HUD Handbook 4905.1 or any successor handbook, as determined by the Secretary, will be offered for sale in “as-is” condition with FHA mortgage insurance available, as provided in part 203 of this chapter, provided the mortgagor establishes a cash escrow to ensure the completion of the required repairs.
</P>
<P>(B) <I>Changes in repair escrow.</I> HUD may adjust the escrow balance required under this paragraph based on changes to the Consumer Price Index by publishing a <E T="04">Federal Register</E> notice that provides for a public comment period of 30 calendar days for the purpose of accepting comments on the amount of the change. After comments have been considered, HUD will publish a final notice announcing the revised escrow amounts.
</P>
<P>(iii) <I>Insured with rehabilitation loan</I> in accordance with section 203(k) of the National Housing Act and pursuant to § 203.50 of this chapter.
</P>
<P>(2) REO properties that have been identified as uninsurable in accordance with paragraph (c) of this section can be purchased and financed with a mortgage insured under section 203(k) of the National Housing Act (12 U.S.C. 1709(k)), subject to underwriting requirements supported by an FHA-specified appraisal and in accordance with 24 CFR 203.50.
</P>
<P>(3) HUD, in its sole discretion and subject to appropriations, may take back Purchase Money Mortgages (PMMs) on property purchased by governmental entities or private nonprofit organizations who buy property for ultimate resale to owner-occupant purchasers with incomes at or below 115 percent of the area median income. When offered by HUD, a PMM will be available in an amount determined by the Secretary to be appropriate, at market rate interest, for a period not to exceed 5 years. Mortgagors must meet FHA mortgage credit standards.
</P>
<P>(i) For purposes of this section, the term “purchase money mortgage,” or PMM means a note secured by a mortgage or trust deed given by a buyer, as mortgagor, to the seller, as mortgagee, as part of the purchase price of the real estate.
</P>
<P>(ii) Except as provided in paragraph (d)(3) of this section, the purchaser is entirely responsible for obtaining financing for purchasing a property.
</P>
<P>(e) <I>Environmental requirements and standards.</I> Sales under this part are subject to the environmental requirements and standards described in 24 CFR part 50, as applicable.
</P>
<P>(f) [Reserved]
</P>
<P>(g) <I>Lead-based paint poisoning prevention.</I> Properties constructed before 1978 are subject to the requirements of the Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and implementing regulations at part 35, subparts A, B, F, and R, of this title.
</P>
<P>(h) Any real estate broker who has agreed to comply with HUD requirements may be eligible to participate in the sales program. Purchasers participating in the competitive sales program, except government entities and nonprofit organizations, must submit bids through a participating broker. In accordance with section 204(g) of the National Housing Act (12 U.S.C. 1710(g)), HUD will prescribe the terms and conditions for all methods of listing properties. HUD may dispose of properties using any method that the Secretary deems appropriate, including, but not limited to the following:
</P>
<P>(1) <I>Open listings.</I> Properties may be sold on an open listing basis with participating real estate brokers.
</P>
<P>(2) <I>Asset management and listing contracts.</I> (i) HUD may invite firms experienced in property management to compete for contracts that provide for an exclusive right to manage and list specified properties in a given area.
</P>
<P>(ii) In areas where a broker has an exclusive right to list properties, a purchaser may use a broker of his or her choice. The purchaser's broker must submit the bid through HUD's designated electronic bid system.
</P>
<P>(i) <I>Disciplinary actions against HUD-qualified real estate brokers</I>—(1) <I>In general.</I> Real estate brokers that are involved in Real Estate Owned (REO) sales will be removed from HUD's qualified selling broker list and will be prohibited from using HUD systems to participate in the sale of HUD-owned single family properties for good cause in accordance with the procedures of this paragraph. Nothing in this section prohibits HUD from taking such other action against a broker as provided in 24 CFR part 24 or from seeking any other available remedy.
</P>
<P>(2) <I>Good cause.</I> Good cause includes, but is not limited to:
</P>
<P>(i) Conviction under 18 U.S.C. 371 or 1010 of a broker or an agent supervised by that broker and acting within the scope of the agent's duties;
</P>
<P>(ii) Any of the following actions by a broker or an agent supervised by that broker and acting within the scope of the agent's duties:
</P>
<P>(A) Falsifying loan documents or aiding or abetting persons in the use of false or misleading information including, but not limited to, forged or fraudulent gift letters and owner occupant certifications;
</P>
<P>(B) Acting in concert with an appraiser to arrive at an artificial appraised value;
</P>
<P>(C) Engaging in fraudulent activities (with or without the assistance of an appraiser) that have led to default and payment of an insurance claim;
</P>
<P>(D) Failing to comply with earnest money collection, management, and disbursement procedures as set forth in this part;
</P>
<P>(E) Failing to maintain a current state license;
</P>
<P>(F) Violating the Real Estate Settlement Procedures Act (RESPA) (12 U.S.C. 2601 <I>et seq.</I>);
</P>
<P>(G) Non-compliance with civil rights requirements regarding the sale of HUD-owned single family properties;
</P>
<P>(H) Involvement in, or knowledge of, any fraudulent activity by any person involved in the REO sales transaction; and
</P>
<P>(I) Any other actions or omissions that evidence a lack of business integrity or non-compliance with the laws, regulations, and rules applicable to housing, lending, or real estate sales.
</P>
<P>(3) <I>Written notice.</I> Once HUD makes an initial finding that there is good cause to remove a broker, HUD will provide the broker with written notice of proposed removal from HUD's qualified selling broker list and deactivation of the broker's access to HUD systems to participate in the sale of HUD-owned properties. The notice will:
</P>
<P>(i) State the reasons that HUD is taking the action;
</P>
<P>(ii) Identify the violations or deficiencies involved;
</P>
<P>(iii) Provide a citation to the relevant regulation, statute, or policy; and
</P>
<P>(iv) State the effective date and duration of the removal and deactivation.
</P>
<P>(4) <I>Effective date and duration of removal.</I> (i) The effective date of the broker's removal will be the 30th day after the date of the notice, unless the broker submits a written response or requests a conference in accordance with paragraph (i)(5) of this section;
</P>
<P>(ii) HUD's determination of the duration of removal and deactivation will be based upon HUD's consideration of the number and seriousness of the broker's violations and deficiencies.
</P>
<P>(5) <I>Response and conference.</I> Real estate brokers will be given 20 days after the date of the notice (or longer, if provided in the notice) to submit a written response to HUD opposing the proposed removal and to request a conference. A request for a conference must be in writing and must be submitted along with the written response. If a conference is requested, it will occur within 15 days after the date of receipt of the request. HUD may extend the 15-day period by providing written notice to the broker. HUD may request additional information at or following a conference and provide additional time to submit such information. If the information is not submitted by the time set by HUD, the conference is completed. If the information is timely submitted, the conference is not completed until HUD has considered the additional information.
</P>
<P>(6) <I>Disposition</I>—(i) <I>No response from real estate broker.</I> If the real estate broker does not submit a written response within the time provided, the removal and deactivation take effect in accordance with the notice.
</P>
<P>(ii) <I>Response from real estate broker.</I> If the real estate broker submits a written response within the time provided, the removal and deactivation are delayed until HUD considers the response and makes a final determination. HUD will consider the sufficiency of any corrective actions taken by a broker with respect to its procedures and, if relevant, its agents, in reaching its decision. Within 20 days after the date of receipt of the written response, or if a conference is requested, within 20 days after the date of completion of the conference, HUD will advise the real estate broker in writing of the decision to rescind, modify, or affirm the removal from HUD's qualified selling broker list and the deactivation of the broker's access to HUD systems to participate in the sale of HUD-owned properties. The written decision by HUD shall constitute final agency action.
</P>
<P>(7) <I>Effect of removal proceeding on bids.</I> All bids submitted and commissions earned by the real estate broker prior to removal will be honored, unless HUD determines they were made under fraudulent circumstances.
</P>
<CITA TYPE="N">[64 FR 6480, Feb. 9, 1999, as amended at 64 FR 50225, Sept. 15, 1999; 71 FR 65325, Nov. 7, 2006; 81 FR 53002, Aug. 11, 2016]




</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:2.1.1.4.31.3" TYPE="SUBPART">
<HEAD>Subpart C—Sales Procedures</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>64 FR 6481, Feb. 9, 1999, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 291.200" NODE="24:2.1.1.4.31.3.221.1" TYPE="SECTION">
<HEAD>§ 291.200   Future REO acquisition method.</HEAD>
<P>(a) Under this method of property disposition, HUD will enter into a property acquisition agreement (or agreements) with a transferor (or transferors), which shall provide for the right and obligation of the transferor(s) to acquire a future quantity of properties designated by HUD as they become available. The transferor(s) will be selected through a competitive process, conducted in accordance with applicable laws. HUD will negotiate the specific terms of the property acquisition agreement(s) with the selected transferor(s). The properties will be available on an “as-is” basis only, without repairs or warranties.
</P>
<P>(b) <I>Eligible entities.</I> An individual, partnership, corporation, or other legal entity will not be eligible to participate in this process if at the time of the sale, that individual or entity is debarred, suspended, or otherwise precluded from doing business with HUD under 2 CFR part 2424.
</P>
<CITA TYPE="N">[64 FR 6481, Feb. 9, 1999, as amended at 72 FR 73495, Dec. 27, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 291.205" NODE="24:2.1.1.4.31.3.221.2" TYPE="SECTION">
<HEAD>§ 291.205   Competitive sales of individual properties.</HEAD>
<P>When HUD conducts competitive sales of individual properties to individual buyers, it will generally sell the properties on an “as-is” basis, without repairs or warranties, and it will follow the sales procedures provided in this section.
</P>
<P>(a) <I>General.</I> (1) Properties that are sold on an individual competitive bid basis are sold through local real estate brokers, except as provided in § 291.100(h).
</P>
<P>(2) For properties being offered with insured mortgages, priority will be given to owner-occupant purchasers, as defined in § 291.5, for a period of up to 30 days, as determined by HUD. For properties offered without insured mortgages, priority will be given to governmental entities and nonprofit organizations prior to other owner-occupant purchasers.
</P>
<P>(b) <I>Net offer.</I> (1) The net offer is calculated by subtracting from the bid price the dollar amounts for the financing and loan closing costs and the broker's sales commission, as described in paragraph (b)(2) of this section.
</P>
<P>(2) If an owner-occupant purchaser of the property requests in the bid, HUD may pay all or a portion of the financing and loan closing costs, not to exceed the percentage of the purchase price determined appropriate by the Secretary for the area. In no event will the total amount for broker's sales commission exceed 6 percent of the purchase price, except for cash bonuses offered to brokers by HUD for the sale of hard-to-sell properties. No assistance for financing and loan closing costs or for the broker's sales commission will be provided to investor purchasers.
</P>
<P>(c) <I>Acceptable bid.</I> HUD will accept the bid producing the greatest net return to HUD and otherwise meeting the terms of HUD's offering of the property, with priority given to owner-occupant purchasers as described in paragraph (a)(2) of this section. The greatest net return is calculated based on the net offer, as described in paragraph (b) of this section.
</P>
<P>(d) <I>Bid period.</I> (1) HUD will establish a bid period for properties available for sale. Generally, the bid period will be 10 days, but may be lengthened or shortened by HUD. After properties are initially advertised, bids may be submitted by all potential purchasers. However, in the case of properties offered with insured mortgages, HUD may give priority to owner-occupant purchasers for a period of up to 30-days, as described in paragraph (a)(2) of this section.
</P>
<P>(2) HUD may treat all bids received during a specified period of time during the bid period to have been received simultaneously. HUD may also choose to review bids on a daily basis, with all bids submitted during each day considered to have been received simultaneously. HUD may use either (or both) of these methods during the bid period, as described in the bid materials accompanying a particular sale.
</P>
<P>(3) Offers received on a property before the bid period begins will be returned. Offers received after the bid period will not be considered at the bid opening, but will be considered during the extended listing period if no acceptable bid was received during the bid period (see paragraph (f) of this section).
</P>
<P>(e) <I>Full price offers.</I> HUD local offices that operate under a “full price offer” program open offers at specified times during the bid period. If an offer for the full list price and otherwise meeting the terms of the offering is received, it will be accepted at the time of the opening and the bid period cancelled.
</P>
<P>(f) <I>Extended listing period.</I> Properties not sold during the bid period will remain available for an extended listing period. All bids received on each day of the extended listing period will be considered as being received simultaneously, and will be opened together at the next scheduled daily bid opening. Properties that fail to sell within 45 days after being offered for competitive bidding will be reanalyzed and made available for sale. If a property's price or terms are changed, it may be subject to another competitive bid period as described in paragraph (d) of this section.
</P>
<P>(g) <I>Bid requirements.</I> (1) All successful bids submitted, whether during the bid period or the extended listing period, must be in a form prescribed by HUD, and must be submitted in accordance with procedures established by HUD. If the purchase is to be an insured sale, a local HUD office may also require that supporting exhibits for mortgage credit analysis accompany the initial submission of the bid. All bids not indicating that the purchaser will occupy the property will be considered as offers from investor purchasers.
</P>
<P>(2) Noncomplying bids will be returned to the broker with an explanation for the noncompliance decision and information about whether the property is still available.
</P>
<P>(h) <I>Earnest money deposits.</I> (1) The amount of earnest money deposit required for a property with a sales price of $50,000 or less is $500, except that for vacant lots the amount is 50 percent of the list price. For a property with a sales price greater than $50,000, the amount of earnest money deposit required in the area is set by the local HUD office, in an amount not less than $500 or more than $2,000. Information on the amount of the required earnest money deposit is available from the local HUD office or participating real estate brokers.
</P>
<P>(2) All bids must be accompanied by earnest money deposits in the form of a cash equivalent as prescribed by the Secretary, or a certification from the real estate broker that the earnest money has been deposited in the broker's escrow account. If a bid is accepted by HUD, the earnest money deposit will be credited to the purchaser at closing; if the bid is rejected, the earnest money deposit will be returned. Earnest money deposits are subject to total or partial forfeiture for failure to close a sale.
</P>
<P>(i) <I>Multiple bids.</I> Real estate brokers may submit unlimited numbers of bids on an individual property provided each bid is from a different prospective purchaser. If a purchaser submits multiple bids on the same property, only the bid producing the highest net return to HUD will be considered. If a prospective owner-occupant purchaser submits a bid on more than one property, the bid that produces the greatest net return to HUD will be accepted and all other bids from that purchaser will be eliminated from consideration. However, if the prospective owner-occupant purchaser has submitted the only acceptable bid on another property, then that bid must be accepted and all other bids from that purchaser on any other properties will be eliminated from consideration.
</P>
<P>(j) <I>Identical bids.</I> In the case of identical bids submitted by an owner-occupant purchaser and an investor purchaser, HUD will select the bid submitted by the owner-occupant purchaser. If identical bids are submitted by two or more owner-occupant purchasers, or by two or more investor purchasers, award will be determined by drawing lots.
</P>
<P>(k) <I>Opening the bids.</I> Unless the Secretary specifically authorizes another bid process:
</P>
<P>(1) The Secretary will make all winning bids available publicly.
</P>
<P>(2) Successful bidders will be notified through their real estate brokers by electronic mail, mail, telephone, or other means. Acceptance of a bid is final and effective only upon HUD's execution of the sales contract, signed by both the submitting real estate broker and the prospective purchaser, and sending a copy of the executed contract by electronic mail to the successful bidder or the bidder's agent.
</P>
<P>(l) <I>Counteroffers.</I> HUD may present counteroffers during competitive bid periods, as it deems appropriate to minimize losses to its insurance fund. “Best and Final” offers requested by HUD are considered counteroffers.
</P>
<CITA TYPE="N">[64 FR 6481, Feb. 9, 1999, as amended at 81 FR 53003, Aug. 11, 2016]




</CITA>
</DIV8>


<DIV8 N="§ 291.210" NODE="24:2.1.1.4.31.3.221.3" TYPE="SECTION">
<HEAD>§ 291.210   Direct sales procedures.</HEAD>
<P>When HUD conducts the sales listed in § 291.90(c), it will sell the properties on an “as-is” basis, without repairs or warranties, and it will follow the applicable sales procedures provided in this section.
</P>
<P>(a) <I>Direct sales of properties without insured mortgages to governmental entities and private nonprofit organizations.</I> (1) State and local governments, public agencies, and qualified private nonprofit organizations that have been preapproved to participate by HUD, according to standards determined by the Secretary, may purchase properties directly from HUD at a discount off the list price determined by the Secretary to be appropriate, but not less than 10 percent, for use in HUD and local housing or homeless programs.
</P>
<P>(2)(i) Purchasers under paragraph (a)(1) of this section must designate geographical areas of interest by ZIP code. Upon request, before those properties without insured mortgages are publicly listed, HUD will assure that governmental entities and nonprofit organizations are notified in writing when eligible properties become available in the areas designated by them. HUD will coordinate the dissemination of the information to ensure that if more than one purchaser designates a specific area, those purchasers receive the list of properties at the same time, based on intervals agreed upon between HUD and the purchasers. A property in this section will be sold to the first eligible purchaser submitting an acceptable contract. All bids received on the same business day will be considered to have been received simultaneously. In the case of identical bids submitted on the same business day, award will be determined by drawing lots.
</P>
<P>(ii) Purchasers under paragraph (a)(1) of this section must notify HUD of preliminary interest in specific properties within 5 days of the notification of available properties (if notification is by mail, the 5 days will begin to run 5 days after mailing). HUD will provide a consideration and inspection period for these purchasers. The consideration and inspection period will usually be for ten days from the date of notification of interest, but may be lengthened or shortened by HUD, as appropriate. Those properties in which purchasers express an interest will be held off the market for the duration of the consideration and inspection period. Other properties on the list will continue to be processed for public sale. HUD may limit the number of properties held off the market for a purchaser at any one time, based upon the purchaser's financial capacity as determined by HUD and upon past performance in HUD programs. At the end of the consideration and inspection period, properties in which no governmental entity or nonprofit organization has expressed a specific intent to purchase will be offered for sale under the competitive bid process. Properties in which a governmental entity or nonprofit organization expressed an intent to purchase, during the consideration and inspection period, will continue to be held off the market pending receipt of the sales contract. If a sales contract is not received within a time period of up to 10 days, as determined by HUD, following expiration of the consideration and inspection period, and no other governmental entity or nonprofit organization has expressed an interest, then the property will be offered for sale under the competitive bid process.
</P>
<P>(3) In order to ensure that properties purchased at a discount are being utilized for expanding affordable housing opportunities, HUD may require, as appropriate, periodic, limited information regarding the purchase and resale of such properties, and certain restrictions on the resale of such properties.
</P>
<P>(b) <I>Direct sales to displaced persons; razed lots; auctions.</I> HUD may seek to dispose of individual properties to individual buyers through methods such as direct sales to displaced persons, sales of razed lots, or auctions. These sales will be upon such terms and conditions as the Secretary may prescribe.
</P>
<P>(c) <I>Direct sales to individuals or entities.</I> HUD may also seek to dispose of properties through direct sales to other individuals or entities that do not meet any of the categories specified in this section, if the Assistant Secretary for Housing-Federal Housing Commissioner (or his or her designee) finds in writing that such sales would further the goals of the National Housing Act (12 U.S.C. 1701 <I>et seq.</I>) and would be in the best interests of the Secretary. These sales will be upon such terms and conditions as the Secretary may prescribe.
</P>
<P>(d) <I>Bulk sales.</I> HUD may seek to dispose of properties through bulk sales. Such sales will be upon such terms and conditions as the Secretary may prescribe.


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:2.1.1.4.31.4" TYPE="SUBPART">
<HEAD>Subpart D [Reserved]</HEAD>

</DIV6>


<DIV6 N="E" NODE="24:2.1.1.4.31.5" TYPE="SUBPART">
<HEAD>Subpart E—Lease and Sale of HUD-Acquired Single Family Properties for the Homeless</HEAD>


<DIV8 N="§ 291.400" NODE="24:2.1.1.4.31.5.221.1" TYPE="SECTION">
<HEAD>§ 291.400   Purpose and scope.</HEAD>
<P>(a) <I>Purpose.</I> HUD seeks to assist individuals and families who are homeless by providing them with transitional housing and appropriate supportive services with the goal of helping them move to independent living. Therefore, HUD will make available, to applicants approved by HUD, certain HUD-acquired single family properties for use by the homeless.
</P>
<P>(b) <I>Applicant preapproval.</I> Before a field office may notify an applicant of eligible properties, the applicant must be preapproved by HUD, according to procedures available from the field office.
</P>
<P>(c) <I>Property available for lease with option to purchase.</I> HUD will make available up to 10 percent of its total inventory of properties, before or after they are listed for sale to the public.
</P>
<P>(d) <I>Property available under a McKinney Act Supportive Housing program lease-option agreement.</I> Eligible properties will be available under a lease-option to purchase agreement to Supportive Housing program applicants for acquisition grants under 24 CFR part 583.
</P>
<P>(e) <I>Properties available for sale.</I> Eligible properties will be available for competitive sale or direct sale for fair market value, less a discount determined appropriate by the Secretary but not less than 10 percent.
</P>
<P>(f) <I>Concentration of properties.</I> To the extent practicable and possible, HUD will avoid excessive concentration in a single neighborhood of properties leased or sold under this subpart.
</P>
<P>(g) <I>Failure to comply with requirements.</I> Failure to comply with this subpart, or a lease issued under this subpart, may result in termination from the program.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under OMB control number 2502-0412)
</APPRO>
<CITA TYPE="N">[61 FR 55714, Oct. 28, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 291.405" NODE="24:2.1.1.4.31.5.221.2" TYPE="SECTION">
<HEAD>§ 291.405   Definitions.</HEAD>
<P>For purposes of this subpart E:
</P>
<P><I>Applicant</I> means a State, metropolitan city, urban county, governmental entity, tribe, or private nonprofit organization that submits a written expression of interest in eligible properties under this subpart E. Governmental entities include those that have general governmental powers (e.g., a city or county), as well as those with limited or special powers (e.g., public housing agencies or State housing finance agencies). In the case of applicants leasing properties while their applications for Supportive Housing assistance are pending, “applicant” is defined in 24 CFR part 583.
</P>
<P><I>Homeless</I> means:
</P>
<P>(1) Individuals or families who lack the resources to obtain housing, whose annual income is not in excess of 50 percent of the median income for the area, as determined by HUD, and who:
</P>
<P>(i) Have a primary nighttime residence that is a public or private place not designed for, or ordinarily used as, a regular sleeping accommodation for human beings;
</P>
<P>(ii) Have a primary nighttime residence that is a supervised publicly or privately operated shelter designed to provide temporary living accommodations (including welfare hotels, congregate shelters, and transitional housing, but excluding prisons or other detention facilities); or
</P>
<P>(iii) Are at imminent risk of homelessness because they face immediate eviction and have been unable to identify a subsequent residence, which would result in emergency shelter placement (except that persons facing eviction on the basis of criminal conduct such as drug trafficking and violations of handgun prohibitions shall not be considered homeless for purposes of this definition); or
</P>
<P>(2) Persons with disabilities who are about to be released from an institution and are at risk of imminent homelessness because no subsequent residences have been identified and because they lack the resources and support networks necessary to obtain access to housing.
</P>
<P><I>Lessee</I> means the applicant, approved by HUD as financially responsible, that executes a lease agreement with HUD for an eligible property.
</P>
<CITA TYPE="N">[64 FR 6482, Feb. 9, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 291.415" NODE="24:2.1.1.4.31.5.221.3" TYPE="SECTION">
<HEAD>§ 291.415   Lease with option to purchase properties for use by the homeless.</HEAD>
<P>(a) <I>Certification.</I> Eligible properties are available for lease to applicants, approved by HUD, that certify that the property will be utilized only for the purpose of providing transitional housing for the homeless during the lease term, and that the intended use of the property will be consistent with all local laws and regulations. The lease agreement will be in a form prescribed by the Secretary. Lessees must execute a sublease with occupants in a form prescribed by the Secretary limiting an occupant's tenancy to no longer than two years.
</P>
<P>(b) <I>Term of lease.</I> (1) A lease of an eligible property may be negotiated for such time as the lessee requires, not to exceed one year. Leases are renewable, at the option of the lessee and with the approval of HUD, at the end of the first lease term for up to four additional one-year terms, on a year-to-year basis, provided the lessee has met the requirements under this program.
</P>
<P>(2) Approvals for lease renewals will be denied if HUD determines that the lessee has not complied with the requirements of this part of the lease.
</P>
<P>(3) A property will not be leased to a lessee for a period longer than five years. At the end of the five-year period, if the lessee has not exercised the option to purchase, HUD will notify the lessee to vacate the property and, if necessary, will take appropriate action under the eviction laws of the jurisdiction in which the property is located. All property returned to HUD must be vacant, and will be placed on the market for sale to the general public.
</P>
<P>(4) Within 30 days of leasing a property from HUD or within 30 days after a property is vacated, a lessee must sublease the property to the homeless, unless a longer period is approved by HUD.
</P>
<P>(c) <I>Rent.</I> (1) The lessee must pay HUD a nominal rent of $1 for each one-year lease period.
</P>
<P>(2) A lessee may charge rent, including utilities, to an occupant at a rate appropriate to the financial means of the occupant. Unless HUD approves after consideration of such factors as the cost of operating housing in the area and the amount of the lessee's contributions to the program, such rent may not exceed the highest of: 
</P>
<P>(i) Thirty percent of the family's monthly adjusted income (adjustment factors include the number of people in the family, age of family members, medical expenses, and child care expenses);
</P>
<P>(ii) Ten percent of the family's monthly income; or 
</P>
<P>(iii) If the family is receiving payments for welfare assistance from a public agency and a part of the payments, adjusted in accordance with the family's actual housing costs, is specifically designated by the agency to meet the family's housing costs, the portion of the payments that is designated.
</P>
<P>(3) In no event may the rent charged an occupant exceed the occupant's pro rata share of the lessee's costs of operating the property.
</P>
<P>(d) <I>Damage to leased properties.</I> Any damage to leased property caused by the intentional or negligent acts of the lessee or occupants must be repaired by the lessee at its own expense. If the lessee does not make the necessary repairs within a reasonable time after the damage occurs, HUD may, at its option, make the repairs and charge the cost to the lessee. Failure by the lessee to make the necessary repairs or to reimburse HUD for the cost of repairs will constitute grounds for termination of the lease and may result in termination from the program.
</P>
<P>(e) <I>Purchase of leased properties.</I> (1) Lessees that desire to purchase leased properties during the lease term will be offered the properties at the lower of the fair market value established at the time of the initiation of the lease or at the time of the sale, less a discount determined appropriate by the Secretary but not less than 10 percent, provided lessees agree to use the properties either to house low-income tenants for a period of not less than 10 years or to resell the properties to low-income buyers. If the lessee does not agree to such conditions, the lessee must purchase the properties at the higher of the fair market value at the time of the initiation of the lease or at the time of the sale, less 10 percent. Any repairs to or rehabilitation of a property done by a lessee during the lease term will not be reflected in the purchase price.
</P>
<P>(2) Sales of leased properties will be on as-is, all-cash basis. HUD will not pay a fee for a selling broker. HUD will pay the closing agent's fee. The purchaser must pay all other closing costs.
</P>
<CITA TYPE="N">[61 FR 55715, Oct. 28, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 291.430" NODE="24:2.1.1.4.31.5.221.4" TYPE="SECTION">
<HEAD>§ 291.430   Elimination of lead-based paint hazards.</HEAD>
<P>The Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and implementing regulations at part 35, subparts A, B, F, and R of this title, apply to activities covered by this subpart.
</P>
<CITA TYPE="N">[64 FR 50225, Sept. 15, 1999, as amended at 69 FR 34275, June 21, 2004]


</CITA>
</DIV8>


<DIV8 N="§ 291.435" NODE="24:2.1.1.4.31.5.221.5" TYPE="SECTION">
<HEAD>§ 291.435   Applicability of other Federal requirements.</HEAD>
<P>In addition to the requirements set forth in 24 CFR part 5, the following Federal requirements apply to lessees and purchasers under this subpart:
</P>
<P>(a) <I>Nondiscrimination and equal opportunity.</I> (1) The nondiscrimination and equal opportunity requirements set forth in 24 CFR part 5 are modified as follows:
</P>
<P>(i) As applicable, lessees and purchasers must also comply with the Americans With Disabilities Act (42 U.S.C. 12131) and implementing regulations in 28 CFR parts 35 and 36.
</P>
<P>(ii) The requirements of section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u), and Executive Order 11246 (30 FR 12319, 12935, 3 CFR, 1946-1965 Comp., p. 339; Executive Order 11625 (36 FR 19967, 3 CFR, 1971-1975 Comp., p. 616); Executive Order 12432 (48 FR 32551, 3 CFR, 1983 Comp., p. 198; and Executive Order 12138 (44 FR 29637, 3 CFR, 1979 Comp., p. 393) do not apply to this subpart.
</P>
<P>(2) Lessees or purchasers that intend to serve designated populations of the homeless must comply, within the designated population, with the requirements for nondiscrimination on the basis of race, color, religion, sex, national origin, age, familial status, and disability.
</P>
<P>(3) If the procedures that the lessee or purchaser intends to use to make known the availability of housing are unlikely to reach persons of any particular race, color, religion, sex, age, national origin, familial status, or disability who may qualify for admission to the housing, the recipient must establish additional procedures that will ensure that interested persons can obtain information concerning the availability of the housing.
</P>
<P>(4) The lessee or purchaser must adopt procedures to make available information on the existence and locations of facilities and services that are accessible to persons with a handicap and maintain evidence of implementation of the procedures.
</P>
<P>(b) <I>Conflicts of interest.</I> No person who is an employee, agent, consultant, officer, or elected or appointed official of the lessee or purchaser of property under this subpart, or who is in a position to participate in a decisionmaking process or gain inside information with regard to the lease or purchase of the property, may obtain a personal or financial interest or benefit from the lease or purchase of the property, or have an interest in any contract, subcontract, or agreement with respect thereto, or the proceeds thereunder, either for himself or herself or for those with whom he or she has family or business ties, during his or her tenure or for one year thereafter.
</P>
<CITA TYPE="N">[61 FR 55715, Oct. 28, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 291.440" NODE="24:2.1.1.4.31.5.221.6" TYPE="SECTION">
<HEAD>§ 291.440   Recordkeeping requirements.</HEAD>
<P>Each lessee must establish and maintain sufficient records to enable the Secretary to determine whether the requirements of this subpart have been met. This includes, where available, racial, ethnic, gender, and disability status data on the applicants for, and beneficiaries of, this homeless initiative.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under OMB control number 2502-0412)
</APPRO>
<CITA TYPE="N">[61 FR 55716, Oct. 28, 1996]




</CITA>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:2.1.1.4.31.6" TYPE="SUBPART">
<HEAD>Subpart F—Good Neighbor Next Door Sales Program</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>71 FR 64426, Nov. 1, 2006, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 291.500" NODE="24:2.1.1.4.31.6.221.1" TYPE="SECTION">
<HEAD>§ 291.500   Purpose.</HEAD>
<P>This subpart describes the policies and procedures governing the Good Neighbor Next Door (GNND) Sales Program. The purpose of the GNND Sales Program is to improve the quality of life in distressed urban communities. This is to be accomplished by encouraging law enforcement officers, teachers, and firefighters/emergency medical technicians to purchase and live in homes that are located in the same communities where they perform their daily responsibilities and duties.
</P>
<CITA TYPE="N">[81 FR 53003, Aug. 11, 2016]




</CITA>
</DIV8>


<DIV8 N="§ 291.505" NODE="24:2.1.1.4.31.6.221.2" TYPE="SECTION">
<HEAD>§ 291.505   Definitions.</HEAD>
<P>For purposes of this subpart:
</P>
<P><I>Locality</I> means the community, neighborhood, or jurisdiction of the unit of general local government, or Indian tribal government;
</P>
<P><I>Unit of general local government</I> means a county or parish, city, town, township, or other political subdivision of a State.
</P>
<CITA TYPE="N">[81 FR 53003, Aug. 11, 2016]




</CITA>
</DIV8>


<DIV8 N="§ 291.510" NODE="24:2.1.1.4.31.6.221.3" TYPE="SECTION">
<HEAD>§ 291.510   Overview of the GNND Sales Program.</HEAD>
<P>(a) <I>General.</I> The GNND Sales Program enables a full-time law enforcement officer, teacher, or firefighter/emergency medical technician to purchase a specifically designated HUD-acquired home located in a HUD-designated revitalization area:
</P>
<P>(1) At a 50 percent discount from the list price; and
</P>
<P>(2) With a downpayment of $100, but only if the law enforcement officer, teacher, or firefighter/emergency medical technician finances the home through a Federal Housing Administration (FHA) insured mortgage.
</P>
<P>(b) <I>Eligible properties.</I> Under the GNND Sales Program, single-unit properties acquired by HUD located in HUD-designated revitalization areas (except occupied properties, those located in Asset Control Areas, or those that HUD has determined will be sold through an alternative sales method) will be made available to interested law enforcement officers, teachers, and firefighters/emergency medical technicians prior to listing the properties for sale to other purchasers.
</P>
<P>(c) <I>Multiple bids.</I> In the event that several bids are received on a single property, HUD will randomly select a winning offer by lottery and will also randomly select two backup bids, to be utilized in the order selected, in the event the winning purchaser is unable to close on the property. If both of the backup purchasers are also unable to close on the property, the property will then be made available for sale to purchasers through other sales methods.
</P>
<P>(d) <I>Real estate brokers.</I> Law enforcement officers, teachers, and firefighters/emergency medical technicians must submit bids through a participating real estate broker. Any real estate broker who has agreed to comply with HUD requirements may participate in the GNND Sales Program. Real estate brokers may submit unlimited numbers of bids on an individual property provided each bid is from a different prospective purchaser.
</P>
<P>(e) <I>Cap on sales.</I> The number of HUD-acquired homes sold under the GNND Sales Program in a fiscal year shall not exceed 5 percent of the number of “Part A” mortgage insurance conveyance claims paid by HUD in the prior fiscal year. The cap shall apply on a national basis, but HUD reserves the right to geographically apportion the cap to address regional or local differences in the number of homes sold through the GNND Sales Program. Additionally, HUD may adjust the percentage of the cap for any fiscal year. Any HUD determination to geographically distribute the cap, change a current geographic distribution, or adjust the percentage of the cap will be announced by HUD through publication of a notice in the <E T="04">Federal Register</E> at least 30 days before the revision takes effect.
</P>
<CITA TYPE="N">[71 FR 64426, Nov. 1, 2006, as amended at 73 FR 1974, Jan. 11, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 291.515" NODE="24:2.1.1.4.31.6.221.4" TYPE="SECTION">
<HEAD>§ 291.515   Purchaser qualifications.</HEAD>
<P>To qualify to purchase a home through the GNND Sales Program:
</P>
<P>(a) The person must be employed as a law enforcement officer (as described in § 291.520), teacher (as described in § 291.525), or firefighter/emergency medical technician (as described in § 291.530) at the time he/she submits a bid to purchase a home through the program and at the time of closing on the purchase of the home;
</P>
<P>(b) The person must certify to his/her good faith intention to continue employment as a law enforcement officer (as described in § 291.520), teacher (as described in § 291.525), or firefighter/emergency medical technician (as described in § 291.530) for at least one year following the date of closing;
</P>
<P>(c) The person must make an earnest money deposit at the time of signing the contract for purchase of the home, as described in § 291.535;
</P>
<P>(d) The person must agree to own, and live in as his/her sole residence, the home for the entire duration of the owner-occupancy term, as described in § 291.540, and to certify to that occupancy, as described in § 291.565;
</P>
<P>(e) The person must agree to execute a second mortgage and note on the home, as described in § 291.550, for the difference between the list price and the discounted selling price;
</P>
<P>(f) Neither the person (nor his/her spouse) may have owned any residential real property during the year prior to the date of submitting a bid on the home being acquired through the GNND Sales Program;
</P>
<P>(g) Neither the person (nor his/her spouse) must ever have purchased another home under the GNND Sales Program or under the predecessor Officer Next Door Sales and Teacher Next Door Sales Programs; and
</P>
<P>(h) Although both spouses, if otherwise eligible, may submit a bid on a single home made available for sale under the GNND Sales Program, HUD will approve a bid from only one spouse.




</P>
</DIV8>


<DIV8 N="§ 291.520" NODE="24:2.1.1.4.31.6.221.5" TYPE="SECTION">
<HEAD>§ 291.520   Eligible law enforcement officers.</HEAD>
<P>A person qualifies as a law enforcement officer for the purposes of the GNND Sales Program if the person is:
</P>
<P>(a) Employed full-time by a law enforcement agency of the federal government, a state, a unit of general local government, or an Indian tribal government; 
</P>
<P>(b) In carrying out such full-time employment, the person is sworn to uphold, and make arrests for violations of, federal, state, tribal, county, township, or municipal laws and
</P>
<P>(c) The full-time employment in paragraph (a) of this section must, in the normal course of business, directly serve the locality in which the home is located.
</P>
<CITA TYPE="N">[71 FR 64426, Nov. 1, 2006, as amended at 81 FR 53003, Aug. 11, 2016]




</CITA>
</DIV8>


<DIV8 N="§ 291.525" NODE="24:2.1.1.4.31.6.221.6" TYPE="SECTION">
<HEAD>§ 291.525   Eligible teachers.</HEAD>
<P>A person qualifies as a teacher for the purposes of the GNND Sales Program if the person is:
</P>
<P>(a) Employed as a full-time teacher by a state-accredited public school or private school that provides direct services to students in grades pre-kindergarten through 12; and
</P>
<P>(b) The full-time employment in paragraph (a) of this section must, in the normal course of business, serve students from the locality where the home is located.
</P>
<CITA TYPE="N">[71 FR 64426, Nov. 1, 2006, as amended at 81 FR 53003, Aug. 11, 2016]




</CITA>
</DIV8>


<DIV8 N="§ 291.530" NODE="24:2.1.1.4.31.6.221.7" TYPE="SECTION">
<HEAD>§ 291.530   Eligible firefighter/emergency medical technicians.</HEAD>
<P>A person qualifies as a firefighter/emergency medical technician for the purposes of the GNND Sales Program if the person is:
</P>
<P>(a) Employed full-time as a firefighter or emergency medical technician by a fire department or emergency medical services responder unit of the Federal Government, a State, unit of general local government, or an Indian tribal government; and
</P>
<P>(b) The full-time employment in paragraph (a) of this section must, in the normal course of business, directly serve the locality where the home is located.
</P>
<CITA TYPE="N">[81 FR 53003, Aug. 11, 2016]




</CITA>
</DIV8>


<DIV8 N="§ 291.535" NODE="24:2.1.1.4.31.6.221.8" TYPE="SECTION">
<HEAD>§ 291.535   Earnest money deposit.</HEAD>
<P>(a) <I>General.</I> The earnest money deposit is the sum of money that must be paid by the law enforcement officer, teacher, or firefighter/emergency medical technician at the time of submitting a bid to purchase a property under the GNND Sales Program. Each bid must be accompanied by a certification from the real estate broker that the earnest money deposit has been deposited in the broker's escrow account.
</P>
<P>(b) <I>Amount of earnest money deposit.</I> The amount of the earnest money deposit required is an amount equal to one percent of the list price, but no less than $500 and no more than $2,000.
</P>
<P>(c) <I>Acceptance or rejection of offer.</I> If an offer is accepted, the earnest money deposit will be credited to the purchaser at closing. If the offer is rejected, the earnest money deposit will be returned. Earnest money deposits are subject to total forfeiture for failure of the participant to close a sale.


</P>
</DIV8>


<DIV8 N="§ 291.540" NODE="24:2.1.1.4.31.6.221.9" TYPE="SECTION">
<HEAD>§ 291.540   Owner-occupancy term.</HEAD>
<P>(a) <I>General.</I> The owner-occupancy term is the number of months a participant in the GNND Sales Program must agree to own, and live in as his/her sole residence, a home purchased through the GNND Sales Program.
</P>
<P>(b) <I>Start of owner-occupancy term.</I> The owner-occupancy term is 36 months, commencing either:
</P>
<P>(1) Thirty days following closing if HUD determines that the home requires no more than $10,000 in repairs prior to occupancy;
</P>
<P>(2) Ninety days following closing if HUD determines that the home requires more than $10,000, but not more than $20,000 in repairs prior to occupancy; or
</P>
<P>(3) One hundred and eighty days following closing if HUD determines that the home requires more than $20,000 in repairs prior to occupancy.
</P>
<P>(c) <I>Interruptions to owner-occupancy term</I>—(1) <I>General.</I> HUD may, at its sole discretion, allow interruptions to the 36-month owner-occupancy term if it determines that the interruption is necessary to prevent hardship, but only if the law enforcement officer, teacher, or firefighter/emergency medical technician submits a written and signed request to HUD containing the following information:
</P>
<P>(i) The reason(s) why the interruption is necessary;
</P>
<P>(ii) The dates of the intended interruption; and
</P>
<P>(iii) A certification from the law enforcement officer, teacher, or firefighter/emergency medical technician that:
</P>
<P>(A) The law enforcement officer, teacher, or firefighter/emergency medical technician is not abandoning the home as his/her permanent residence; and
</P>
<P>(B) The law enforcement officer, teacher, or firefighter/emergency medical technician will resume occupancy of the home upon the conclusion of the interruption and complete the remainder of the 36-month owner-occupancy term.
</P>
<P>(2) <I>Timing of written request to HUD.</I> The written request for approval of an interruption to the owner-occupancy term must be submitted to HUD at least 30 calendar days before the anticipated interruption. Military service members protected by the Servicemembers Civil Relief Act need not submit their written request to HUD 30 days in advance of an anticipated interruption, but should submit their written request as soon as practicable upon learning of a potential interruption, in order to ensure timely processing and approval of the request.


</P>
</DIV8>


<DIV8 N="§ 291.545" NODE="24:2.1.1.4.31.6.221.10" TYPE="SECTION">
<HEAD>§ 291.545   Financing purchase of the home.</HEAD>
<P>(a) <I>Purchase using conventional financing.</I> If the law enforcement officer, teacher, or firefighter/emergency medical technician uses conventional financing to purchase a home under the GNND Sales Program, the amount of the mortgage may not exceed the discounted sales price of the home.
</P>
<P>(b) <I>Purchase with FHA-insured mortgage.</I> (1) A law enforcement officer, teacher, or firefighter/emergency medical technician using an FHA-insured mortgage to finance purchase of the home may finance reasonable and customary closing costs with the FHA-insured mortgage.
</P>
<P>(2) The amount of the FHA-insured mortgage may not exceed the discounted sales price of the home plus:
</P>
<P>(i) The closing costs; and
</P>
<P>(ii) The costs of rehabilitating and/or improving the home, where purchase of the home is being financed with an FHA-insured 203(k) rehabilitation loan (see 24 CFR part 203).
</P>
<P>(c) <I>Closing costs and selling broker's commissions.</I> In no event will HUD pay a buyer's closing costs on the purchase of a property or a selling broker's commission through the GNND Sales Program.


</P>
</DIV8>


<DIV8 N="§ 291.550" NODE="24:2.1.1.4.31.6.221.11" TYPE="SECTION">
<HEAD>§ 291.550   Second mortgage.</HEAD>
<P>(a) <I>General.</I> The second mortgage is a mortgage and note, payable to HUD, on the home purchased through the GNND Sales Program in the amount of the difference between the list price of the home and the discounted selling price.
</P>
<P>(b) <I>Second mortgage term.</I> The term of the second mortgage is equal to the owner-occupancy term (36 months) plus 30, 90, or 180 days, as provided in § 291.540(b). The amount of the second mortgage will be reduced by 1/36th on the last day of each month of occupancy following the occupancy start date. At the end of the 36th month of occupancy, the amount of the second mortgage will be zero.
</P>
<P>(c) <I>Sale or vacancy of home.</I> If the law enforcement officer, teacher, or firefighter/emergency medical technician sells his/her home or stops living in the home as his/her sole residence prior to the expiration of the owner-occupancy term, he/she will owe HUD the amount due on the second mortgage as of the date the property is either sold or vacated.


</P>
</DIV8>


<DIV8 N="§ 291.555" NODE="24:2.1.1.4.31.6.221.12" TYPE="SECTION">
<HEAD>§ 291.555   Refinancing.</HEAD>
<P>(a) <I>General.</I> A law enforcement officer, teacher, or firefighter/emergency medical technician may refinance the mortgage and note used to purchase the home. However, the total of the refinanced mortgage and the remaining principal balance of the second mortgage may not exceed 95 percent of the value of the property, as appraised at the time of the refinancing. Unless HUD permits subordination pursuant to paragraph (b) of this section, the second mortgage described in § 291.550 must hold a superior lien position to the refinanced mortgage.
</P>
<P>(b) <I>Subordination of second mortgage.</I> HUD may permit subordination of the second mortgage to the refinanced mortgage, but only if HUD, at its sole discretion, determines that the refinancing will satisfy one of the following:
</P>
<P>(1) Will result in a lower annual percentage rate (APR) on the first mortgage;
</P>
<P>(2) Will be undertaken pursuant to HUD's Section 203(k) Rehabilitation Loan Insurance Program in order to rehabilitate or repair the home; or
</P>
<P>(3) Is necessary to prevent the law enforcement officer, teacher, or firefighter/emergency medical technician from defaulting on the first mortgage.


</P>
</DIV8>


<DIV8 N="§ 291.560" NODE="24:2.1.1.4.31.6.221.13" TYPE="SECTION">
<HEAD>§ 291.560   Ineligibility of multiple-unit properties.</HEAD>
<P>Only single-unit properties are eligible for the GNND Sales Program.


</P>
</DIV8>


<DIV8 N="§ 291.565" NODE="24:2.1.1.4.31.6.221.14" TYPE="SECTION">
<HEAD>§ 291.565   Continuing obligations after purchase.</HEAD>
<P>To remain in compliance with the GNND Sales Program, the law enforcement officer, teacher, or firefighter/emergency medical technician must, for the entire duration of the owner-occupancy term:
</P>
<P>(a) Continue to own, and live in as his/her sole residence, the home purchased through the GNND Sales Program; and
</P>
<P>(b) Certify initially and once annually thereafter during and at the conclusion of the owner-occupancy term that he/she was at all times fully in compliance with paragraph (a) of this section.




</P>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:2.1.1.4.31.7" TYPE="SUBPART">
<HEAD>Subpart G—Sale of HUD-Held Single Family Mortgage Loans</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>89 FR 99716, Dec. 11, 2024, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 291.601" NODE="24:2.1.1.4.31.7.221.1" TYPE="SECTION">
<HEAD>§ 291.601   Definitions.</HEAD>
<P>For purposes of this subpart, the following definitions apply:
</P>
<P><I>Aggregate Loan Database (ALD)</I> means the electronic data file containing Single Family Loan information available for Qualified Participants to review before a Single Family Sale.
</P>
<P><I>Bidder Information Package (BIP)</I> means the documents prepared for participants in a Single Family Sale, which may include, but are not limited to, the following: an executive summary of the Programs; the Single Family Sale post-sale servicing and reporting requirements published by HUD; due diligence information and reports; Single Family Loan information; the Conveyance, Assignment and Assumption Agreement (CAA); bidding and settlement information; and necessary information and requirements as determined by the Secretary.
</P>
<P><I>Bidder Qualification Statement</I> means HUD Forms 9611 and 9612, or any form approved for similar purpose in the future as prescribed by the Secretary. (OMB number 2502-0576)
</P>
<P><I>Claim Date</I> means, with respect to each Single Family Loan, the date on which the Single Family Sale assignment claim is paid by HUD to the P-Servicer.
</P>
<P><I>Competitive Sale of Single Family Loans</I> means a sale of an individual or group of Single Family Loans to Qualified Participants through a bid process prescribed by the Secretary in competition with other Qualified Participants in accordance with § 291.609.
</P>
<P><I>Confidentiality Agreement</I> means a nondisclosure agreement under which the individual or entity seeking to participate in Single Family Sales agrees that Single Family Loan data and documentation shared with the individual or entity as due diligence will remain confidential in accordance with the terms of the agreement as determined by the Secretary.
</P>
<P><I>Conveyance, Assignment and Assumption Agreement (CAA)</I> means the contract between HUD and a Purchaser, along with all applicable exhibits and riders, that governs the terms of the Single Family Sale as prescribed by the Secretary. The CAA will include any sale-specific post-sale servicing and outcome requirements, representations, repurchase requirements, schedule of dates, and reporting requirements published by the Secretary for the Single Family Sale through a Sale Notice.
</P>
<P><I>Cut-off date</I> or <I>claim submission cut-off date</I> means the last date specified by the Secretary on which the P-Servicer is permitted to submit to HUD a Single Family Sale insurance claim for payment under 24 CFR 203.413 and 206.130.
</P>
<P><I>Desk Guide</I> means the technical manual included in the PSA detailing the P-Servicer's steps for submitting Single Family Loans related to a Single Family Sale, including but not limited to the process for identifying eligible Single Family Loans, uploading due diligence files, and submitting insurance claims.
</P>
<P><I>Direct Sale of Single Family Loans</I> means a sale of an individual or group of Single Family Loans to a Qualified Participant through the process described in § 291.619.
</P>
<P><I>Home Equity Conversion Mortgage (HECM)</I> means reverse mortgages insured in accordance with 24 CFR part 206 under the FHA Home Equity Conversion Mortgage insurance program.
</P>
<P><I>Interim Servicing Agreement (ISA)</I> means the agreement between a Purchaser and P-Servicer that governs the servicing and administration of the purchased loans, including but not limited to transfer of mortgage information and loss mitigation evaluations, during the Interim Servicing Period in accordance with the terms prescribed by the Secretary.
</P>
<P><I>Interim Servicing Period</I> means the period commencing with Claim Date and ending with the Servicing Transfer Date.
</P>
<P><I>Low-value</I> means, in reference to a Mortgage, the value minimum stated in the Participating Servicer Agreement (PSA).
</P>
<P><I>Nonprofit organization</I> means an entity that is tax-exempt under section 501(c)(3) of the Internal Revenue Code of 1954 (26 U.S.C.A. 501(c)(3)) and meets the qualification requirements prescribed by the Secretary for participation in a Single Family Sale.
</P>
<P><I>Participating Servicer (P-Servicer)</I> means a mortgagee that complies with § 291.605 and submits Single Family Loans for a Single Family Sale.
</P>
<P><I>Participating Servicer Agreement (PSA)</I> means the agreement between HUD and a P-Servicer that governs the P-Servicers submission of Single Family Loans to be sold in a Single Family Sale on terms as prescribed by the Secretary.
</P>
<P><I>Purchaser</I> means a Qualified Participant to which HUD has awarded one or more Single Family Loans through a Single Family Sale, as of the date of notification of the award.
</P>
<P><I>Qualified Participant</I> means an individual or entity that satisfies the requirements in § 291.607 for participation in Single Family Sales.
</P>
<P><I>Sale Notice</I> means an announcement published by HUD for an upcoming Single Family Sale and includes any stated mission objectives and additional sale, participant qualification, and loan eligibility requirements; representations; post-sale servicing, outcomes, and reporting requirements; and repurchase requirements for inclusion in the Qualification Statement, PSA, ISA, and CAA as applicable.
</P>
<P><I>Servicing Transfer Date</I> means, with respect to any Single Family Loan, the date on which the actual servicing duties for such Single Family Loan has been or will be transferred from the P-Servicer to the Purchaser's servicer. The latest Servicing Transfer Date will be set forth in a schedule of dates prescribed by the Secretary and included in the PSA, ISA, and CAA.
</P>
<P><I>Single Family Loan</I> means any HUD-selected eligible forward mortgage loan insured under Section 203 of the National Housing Act (12 U.S.C. 1709) that has or will be assigned to HUD and any HUD-selected eligible HECM insured under section 255 of the National Housing Act (12 U.S.C. 1715z-20) that has or will be assigned to HUD, or any other eligible single family mortgage loans owned by the Secretary that will be sold in a Single Family Sale.
</P>
<P><I>Single Family Sale</I> means a Competitive Sale of Single Family Loans or Direct Sale of Single Family Loans conducted by HUD in accordance with this subpart.
</P>
<P><I>Vacant</I> means a mortgaged property is determined to be vacant or abandoned in accordance with the requirements of 24 CFR part 203 and FHA policy.




</P>
</DIV8>


<DIV8 N="§ 291.603" NODE="24:2.1.1.4.31.7.221.2" TYPE="SECTION">
<HEAD>§ 291.603   Purpose, scope, and applicability.</HEAD>
<P>The sale of Single Family Loans is at the discretion of the Secretary. All Single Family Loans will be sold without recourse to HUD and without FHA insurance. HUD may sell individual Single Family Loans or groups of Single Family Loans to Qualified Participants as a Competitive Sale of Single Family Loans, § 291.609, or as a Direct Sale of Single Family Loans, § 291.619. Nothing in this section shall be construed to prevent HUD from grouping Single Family Loans with other types of HUD assets for sale, including grouping any associated HUD-held mortgages subordinate to the respective assets. The procedures set out in this subpart, including any cross-referenced regulations, documentation, and published notices detailed in this subpart, govern the Single Family Sales.




</P>
</DIV8>


<DIV8 N="§ 291.605" NODE="24:2.1.1.4.31.7.221.3" TYPE="SECTION">
<HEAD>§ 291.605   Participating Servicers.</HEAD>
<P>(a) <I>Participation.</I> To participate in a Single Family Sale, a Participating Servicer must:
</P>
<P>(1) Be an FHA-approved Mortgagee contributing eligible Single Family Loans and assigning loans to HUD; and
</P>
<P>(2) Execute a PSA and agree to execute an ISA, as needed.
</P>
<P>(b) <I>Sale.</I> For each Single Family Sale, the Participating Servicer must:
</P>
<P>(1) Identify mortgages that meet the eligibility criteria in accordance with terms of the PSA;
</P>
<P>(2) Conduct all sale activities in accordance with the PSA and ISA;
</P>
<P>(3) Comply with any Single Family Sale and Loan Sale Notification requirements as prescribed by the Secretary through notice; and
</P>
<P>(4) Comply with the terms of the Sale Notice.
</P>
<P>(5) Ensure the Loan Sale Notification is provided to each borrower and any other parties as required by the Secretary and the Loan Sale Notification complies with all applicable law. Loan Sale notification requirements will be announced to the Participating Servicer through notice.
</P>
<P>(c) <I>Claim payment requirements.</I> The Participating Servicer must comply with the claim payment process and requirements for Single Family Sales in accordance with the PSA and processes outlined in §§ 203.413 and 206.130, as applicable.
</P>
<P>(d) <I>Interim servicing.</I> During the Interim Servicing Period, the Participating Servicer must service the purchased Single Family Loans on behalf of the Purchaser in accordance with the ISA.
</P>
<P>(e) <I>Transfer documents and servicing.</I> The Participating Servicer must conduct the servicing transfer of the Single Family Loans in accordance with the requirements of the PSA and ISA and must service the purchased Single Family Loans in accordance with all applicable state and Federal law requirements, including applicable Consumer Finance Protection Bureau (CFPB) requirements.




</P>
</DIV8>


<DIV8 N="§ 291.607" NODE="24:2.1.1.4.31.7.221.4" TYPE="SECTION">
<HEAD>§ 291.607   Qualified participants.</HEAD>
<P>(a) <I>Confidentiality Agreement and Bidder Qualification Statement.</I> Individuals or entities must become a Qualified Participant before they may bid or purchase Single Family Loans in a Single Family Sale. An individual or entity seeking to participate in a Single Family Sale must sign a Confidentiality Agreement and complete a Bidder Qualification Statement. The Secretary will specify which Bidder Qualification Statement form(s) are applicable to a particular Single Family Sale and any additional sale specific qualification criteria through notice. HUD will only provide access to sensitive Single Family Sale materials to Qualified Participants.
</P>
<P>(b) <I>Process for determining Qualified Participant.</I> HUD will qualify any individual or entity seeking to participate in a Single Family Sale if they have met the qualification requirements and executed the applicable Bidder Qualification Statement for the Single Family Sale.




</P>
</DIV8>


<DIV8 N="§ 291.609" NODE="24:2.1.1.4.31.7.221.5" TYPE="SECTION">
<HEAD>§ 291.609   Bidding process.</HEAD>
<P>(a) <I>Sale notice.</I> The Secretary will prescribe requirements for a Single Family Sale through the Sale Notice. For each Single Family Sale, HUD will publish the PSA Addendum, Desk Guide, ISA Addendum, CAA Addendum, and Sale Notices on HUD's public website.
</P>
<P>(b) <I>Submission of bids.</I> All bids by a Qualified Participant must be submitted to HUD in accordance with the Sale Notice and the instructions in the BIP. By submitting a bid, the Qualified Participant is considered to have made an offer to purchase Single Family Loans as presented in the BIP. Submission of a bid constitutes acceptance of the terms and conditions set forth in the BIP. Along with the bid, the Qualified Participant must submit an executed copy of the CAA and ISA, as applicable.
</P>
<P>(c) <I>Bids by brokers or agents.</I> Any bid submitted by a broker or agent for a Qualified Participant must be made in the name of the Qualified Participant and signed by the broker or agent as the attorney-in-fact for the Qualified Participant. All such bid documents must bind the Qualified Participant. Each bid must also include a power of attorney satisfactory to HUD as to form and content.
</P>
<P>(d) <I>Earnest money deposits.</I> The Qualified Participant must submit to HUD, along with its bid, an earnest money deposit, as required in the CAA or Sale Notice. The earnest money deposit is nonrefundable for a Qualified Participant whose bid is selected for award and will be credited toward the purchase price. If a Qualified Participant's bid is not selected for any award, their earnest money will be returned.
</P>
<P>(e) <I>Timing for withdrawal of bids.</I> A Qualified Participant may withdraw a submitted bid in accordance with the instructions in the BIP for a Single Family Sale. However, a previously submitted bid may not be withdrawn once the bidding has closed.
</P>
<P>(f) <I>Termination of Single Family Sale.</I> HUD reserves the right to terminate a Single Family Sale in whole or in part at any time before the bid date.
</P>
<P>(g) <I>Withdrawal of Single Family Loans.</I> HUD reserves the right to withdraw Single Family Loans from a Single Family Sale prior to the settlement date. Any earnest money deposits made by a Purchaser relating to withdrawn Single Family Loans will be retained by the Secretary and credited toward the total purchase price of the remaining Single Family Loans in the pool, in accordance with the CAA and BIP. After the bid date, HUD can withdraw Single Family Loans or not deliver all the Single Family Loans for settlement for any reason, including those set forth in the BIP and CAA.
</P>
<P>(h) <I>Rejection of bids.</I> At HUD's discretion, any bid may be rejected under the following circumstances:
</P>
<P>(1) The bid does not conform with the instructions in the BIP;
</P>
<P>(2) HUD determines that an award based on the bid would not be in the best interests of the Secretary because the award would not further HUD's fiduciary responsibility to the mutual mortgage insurance fund (MMIF) or any stated mission objectives in the Sale Notice; or
</P>
<P>(3) HUD can also issue a conditional rejection that would provide the opportunity for the bid to be amended and resubmitted for acceptance upon fulfillment of HUD's requests.




</P>
</DIV8>


<DIV8 N="§ 291.611" NODE="24:2.1.1.4.31.7.221.6" TYPE="SECTION">
<HEAD>§ 291.611   Post-bid process and HUD's execution of the CAA.</HEAD>
<P>After HUD evaluates conforming bids, HUD may request an adjustment to a bid in accordance with the BIP. After any bid adjustments, HUD will select bids for award and provide notice of award in a manner set forth in the BIP. After selection of a Purchaser, HUD will execute the CAA.




</P>
</DIV8>


<DIV8 N="§ 291.613" NODE="24:2.1.1.4.31.7.221.7" TYPE="SECTION">
<HEAD>§ 291.613   Settlement requirements.</HEAD>
<P>(a) <I>Settlement payment.</I> On the settlement date of a Single Family Sale, the Purchaser must pay to HUD the settlement payment, consisting of the balance of the amount due on the bid price, as adjusted in accordance with the CAA.
</P>
<P>(b) <I>Settlement statement.</I> When the Purchaser delivers to HUD the documents required at settlement and the settlement payment in paragraph (a) of this section, HUD will execute and deliver to the Purchaser a settlement statement and updated Single Family Loan schedule for the CAA to document the Single Family Loans sold to the Purchaser in the Single Family Sale.
</P>
<P>(c) <I>Endorsement and assignment.</I> HUD may grant a temporary Limited Power of Attorney to the Purchaser to effect endorsement and assignment of the Single Family Loans to the Purchaser.
</P>
<P>(d) <I>Purchaser's special purpose entity.</I> HUD may allow a Purchaser to endorse and assign Single Family Loans from HUD to Purchaser's special purpose entity acquisition vehicle on terms permitted in the CAA.




</P>
</DIV8>


<DIV8 N="§ 291.615" NODE="24:2.1.1.4.31.7.221.8" TYPE="SECTION">
<HEAD>§ 291.615   Purchaser servicing requirements.</HEAD>
<P>(a) <I>Purchaser post-sale servicing.</I> The Purchaser and its servicer, and any subsequent transferee of or servicer for the Single Family Loan, must comply with the terms of the CAA and the Sale Notice post-sale loss mitigation and outcome requirements. Post-sale requirements will include a requirement that any Single Family Loan that converts to real estate owned property via foreclosure or deed-in-lieu of foreclosure be offered for sale through a first look program, providing an exclusive listing period for owner occupant, nonprofit organization, governmental entities, and other prospective buyers as permitted by HUD. Post-sale requirements will also include requirements that Purchasers offer borrowers loss mitigation options that are as or more generous than the FHA loss mitigation options, a prohibition on reselling real estate owned property through a contract for deed or similar financing mechanism, a requirement that the Purchaser obtain prior approval from HUD before entering into a lease-purchase agreement with a prospective purchaser, and a prohibition on releasing liens on particular categories of properties, including vacant properties. Purchasers must take all lawful steps to service the Single Family Loans and collect amounts due in accordance with requirements as set forth by the CAA and all state and Federal law requirements, including applicable CFPB requirements.
</P>
<P>(b) <I>Purchaser reporting requirements.</I> Purchasers must report on the post-sale servicing actions and outcomes obtained for each Single Family Loan purchased as prescribed by the CAA. HUD will publish reports for the public on loan and property outcomes and will include a breakdown of outcomes in different geographies. HUD will prescribe the reporting period as a specified period after settlement in the CAA.
</P>
<P>(c) <I>Remedy for performance failures.</I> HUD may pursue appropriate remedies, including, but not limited to, the ability to deny future participation in loan sales, for a Purchaser's failure to comply with Single Family Sale requirements, including CAA obligations.




</P>
</DIV8>


<DIV8 N="§ 291.617" NODE="24:2.1.1.4.31.7.221.9" TYPE="SECTION">
<HEAD>§ 291.617   General policy—Direct Sale of Single Family Loans.</HEAD>
<P>The Secretary may pursue a Direct Sale of Single Family Loans to individuals or entity type the Secretary determines may be eligible to qualify as set forth in the Sale Notice. The Direct Sale of Single Family Loans will be subject to the requirements of this subpart, excluding §§ 291.609 and 291.611. The Secretary will publish in the Sale Notice, sale specific Single Family Loan eligibility criteria.




</P>
</DIV8>


<DIV8 N="§ 291.619" NODE="24:2.1.1.4.31.7.221.10" TYPE="SECTION">
<HEAD>§ 291.619   Direct Sale of Single Family Loans process.</HEAD>
<P>(a) <I>Sale Notice.</I> The Secretary will prescribe requirements for a Direct Sale of Single Family Loans through a Sale Notice.
</P>
<P>(b) <I>Sale feasibility.</I> In all stages of the Direct Sale of Single Family Loans process, HUD may determine whether continuation with the Direct Sale of Single Family Loans is feasible and in HUD's interest, consistent with HUD's fiduciary responsibility to the MMIF and any stated mission objectives.
</P>
<P>(c) <I>Direct Sale of Single Family Loans process.</I> An individual or entity interested in purchasing Single Family Loans through a Direct Sale of Single Family Loans must:
</P>
<P>(1) Meet the Secretary's prescribed requirements for the Direct Sale of Single Family Loans in the Sale Notice;
</P>
<P>(2) Submit a letter of interest to the Secretary that includes, at a minimum:
</P>
<P>(i) The description of the individual or entity and a statement about how it would be able to satisfy the participant eligibility requirements and mission objectives, if any;
</P>
<P>(ii) The geographic area of interest where the party wishes to purchase the loans;
</P>
<P>(iii) The individual or entity's goals and how this purchase would assist in achieving these goals through post-sale outcomes;
</P>
<P>(iv) The approximate timeframe for the purchase;
</P>
<P>(v) The approximate number of loans or, alternatively, the approximate gross sale amount desired; and
</P>
<P>(vi) The organizational documents for an entity including, but not limited to organizational documents, any required authorizing resolutions, and disclosure of all nonprofit organization or private entity partnership interests in the Direct Sale of Single Family Loans transaction.
</P>
<P>(d) <I>HUD determination.</I> Upon receipt of a letter in paragraph (c)(2) of this section, HUD will respond in writing to the submitter to confirm receipt of the letter and, if necessary, request additional information needed for a final determination.
</P>
<P>(e) <I>Secretary's determination to proceed.</I> (1) If the Secretary makes a final determination to proceed, the Secretary will request from the individual or entity, a business plan proposal from the individual or entity that details its ability to meet any stated mission objectives in the Sale Notice along with its goals and how these goals will be achieved with post-sale outcomes. Business plans must be received by HUD within 30 business days of request.
</P>
<P>(2) Upon receipt and review of business plan proposal, HUD will:
</P>
<P>(i) Reject the business plan proposal;
</P>
<P>(ii) Issue a conditional rejection that would provide the opportunity for a business plan proposal to be amended and resubmitted for approval upon fulfillment of HUD's request; or
</P>
<P>(iii) Approve the business plan proposal.
</P>
<P>(3) Upon approval of such business plan proposal, HUD and the individual or entity will begin the Direct Sale of Single Family Loans process that includes:
</P>
<P>(i) An executed Confidentiality Agreement;
</P>
<P>(ii) An executed Bidder Qualification Statement;
</P>
<P>(iii) A P-Servicer executed PSA; and
</P>
<P>(iv) Review of Single Family Loans from P-Servicer(s) or HUD.
</P>
<P>(4) HUD and the individual or entity reviews the ALD and will agree on the Single Family Loan Sale List for the Direct Sale of Single Family Loans.
</P>
<P>(f) <I>Direct Sale of Single Family Loans.</I> After satisfaction of the requirements in paragraph (d) of this section, HUD will conduct its valuation review, and issue a final price determination and a CAA, containing an estimated settlement date, to the individual or entity. If accepted, a final Settlement date is scheduled, and the Single Family Loan List is appended to the CAA.
</P>
<P>(g) <I>Settlement.</I> HUD and the Purchaser will execute the CAA for settlement. The remaining settlement and transfer requirements will follow those in § 291.613.




</P>
</DIV8>


<DIV8 N="§ 291.621" NODE="24:2.1.1.4.31.7.221.11" TYPE="SECTION">
<HEAD>§ 291.621   Disqualifications.</HEAD>
<P>(a) <I>Fraudulent information.</I> If HUD determines there is any information indicating any certification or required document provided by any party participating in a Single Family Sale, including but not limited to P-Servicer, Purchaser, Qualified Participant, or a Purchaser's servicer, is false, misleading, or constitutes fraud or misrepresentation, HUD will not approve that party's participation in the Single Family Sale and will revoke any prior approval. The submission of false information or misrepresentation by an approved lender or mortgagee may result in the referral of the mortgagee to the Mortgagee Review Board.
</P>
<P>(b) <I>Participant ineligibility.</I> An individual or entity is ineligible to participate in a Single Family Sale if, at the time of the Single Family Sale, that individual or entity is suspended, debarred, under a limited denial of participation (LDP), or otherwise restricted under 2 CFR part 180 or 2424, 24 CFR part 25, 48 CFR part 9, subpart 9.4, or under similar procedures of any other Federal agency.
</P>
<P>(c) <I>Future participation.</I> Purchasers that made misrepresentations in the qualification process or failed to meet their contractual obligations under CAAs, including failing to meet post-sale requirements, for previous Single Family Sales in which they participated may be disqualified from participation in one or more future Single Family Sales or for a set period of time at the discretion of the Secretary.






</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="292-299" NODE="24:2.1.1.4.32" TYPE="PART">
<HEAD>PARTS 292-299 [RESERVED]


</HEAD>
</DIV5>

</DIV4>

</DIV3>


<DIV3 N="III" NODE="24:2.1.2" TYPE="CHAPTER">

<HEAD> CHAPTER III—GOVERNMENT NATIONAL MORTGAGE ASSOCIATION, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT</HEAD>

<DIV5 N="300" NODE="24:2.1.2.5.1" TYPE="PART">
<HEAD>PART 300—GENERAL
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1723a, unless otherwise noted, and 42 U.S.C. 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>60 FR 42015, Aug. 14, 1995, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 300.1" NODE="24:2.1.2.5.1.0.221.1" TYPE="SECTION">
<HEAD>§ 300.1   Scope of chapter.</HEAD>
<P>This chapter consists of general information and does not purport to set forth all of the procedures and requirements that apply to the operations of the Association. Complete specific information as to any aspect of such operations may be obtained from the office listed in § 300.9. 


</P>
</DIV8>


<DIV8 N="§ 300.3" NODE="24:2.1.2.5.1.0.221.2" TYPE="SECTION">
<HEAD>§ 300.3   Description.</HEAD>
<P>The Government National Mortgage Association (hereinafter in this chapter called the Association, GNMA or Ginnie Mae) furnishes fiduciary services to itself and other departments and agencies of the Government, and guarantees privately issued securities backed by trusts or pools of mortgages or loans which are insured or guaranteed by the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA) or the Rural Housing Service (RHS) and certain other loans or mortgages guaranteed or insured by the Government. In the course of its business, the Association is referred to as GNMA or Ginnie Mae.
</P>
<CITA TYPE="N">[66 FR 44265, Aug. 22, 2001]


</CITA>
</DIV8>


<DIV8 N="§ 300.5" NODE="24:2.1.2.5.1.0.221.3" TYPE="SECTION">
<HEAD>§ 300.5   Creation and status.</HEAD>
<P>The Association is a Government corporation in the Department of Housing and Urban Development. It is derived from the Federal National Mortgage Association, which was partitioned by the Congress into two corporations effective September 1, 1968, one of which is the Association. The operations of the Association are conducted under its statutory charter contained in title III of the National Housing Act, 12 U.S.C. 1716, <I>et seq.</I> 


</P>
</DIV8>


<DIV8 N="§ 300.7" NODE="24:2.1.2.5.1.0.221.4" TYPE="SECTION">
<HEAD>§ 300.7   Area of operations.</HEAD>
<P>The Association is authorized to conduct its business in any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, and the territories and possessions of the United States. 


</P>
</DIV8>


<DIV8 N="§ 300.9" NODE="24:2.1.2.5.1.0.221.5" TYPE="SECTION">
<HEAD>§ 300.9   Office.</HEAD>
<P>The Association directs its operations from its office located at 451 Seventh Street, SW., Washington DC 20410. 


</P>
</DIV8>


<DIV8 N="§ 300.11" NODE="24:2.1.2.5.1.0.221.6" TYPE="SECTION">
<HEAD>§ 300.11   Authority of officers.</HEAD>
<P>The President, each Vice President, and each Assistant Vice President of the Association are severally expressly empowered in the name of the Association to sign all contracts and other documents, instruments, and writings which call for execution by the Association in the conduct of its business and affairs, and to encumber, mortgage, pledge, convey or otherwise alien any property which the Association may own or in which it may have an estate, right, title or interest. In addition, the President, each Vice President, each Assistant Vice President, the Secretary of the Association, each Assistant Secretary, the Treasurer and the Controller shall have the authority as may be provided in the Bylaws of the Association or as may be delegated to them in a manner not inconsistent with the Bylaws. 


</P>
</DIV8>


<DIV8 N="§ 300.13" NODE="24:2.1.2.5.1.0.221.7" TYPE="SECTION">
<HEAD>§ 300.13   Power of attorney.</HEAD>
<P>In order to efficiently carry out the purposes of the Association, the Association may appoint any person its true and lawful attorney-in-fact by publication in the <E T="04">Federal Register</E> or by appointment from the President of the Association in writing. Any such attorney-in-fact shall have the power outlined in the publication or appointment. 


</P>
</DIV8>


<DIV8 N="§ 300.15" NODE="24:2.1.2.5.1.0.221.8" TYPE="SECTION">
<HEAD>§ 300.15   Exceptions.</HEAD>
<P>In the conduct of its affairs, in individual cases or classes of cases, the Association reserves the right, consistent with law, without prior notice and at any time, to alter or waive any of the requirements contained in this chapter or elsewhere or to impose other and additional requirements; it further reserves the right, without prior notice and at any time, to amend or rescind any or all of the material set forth herein. 


</P>
</DIV8>


<DIV8 N="§ 300.17" NODE="24:2.1.2.5.1.0.221.9" TYPE="SECTION">
<HEAD>§ 300.17   Audits and reports.</HEAD>
<P>The Association and its designees may at any reasonable time audit the books and examine the records of any issuer, mortgage servicer, trustee, agent or other person bearing on compliance with the requirements of the Association's programs, and the Association may require reasonable and necessary reports from such persons. 


</P>
</DIV8>

</DIV5>


<DIV5 N="310" NODE="24:2.1.2.5.2" TYPE="PART">
<HEAD>PART 310—BYLAWS OF THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1723 and 42 U.S.C. 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>60 FR 42015, Aug. 14, 1995, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 310.1" NODE="24:2.1.2.5.2.0.221.1" TYPE="SECTION">
<HEAD>§ 310.1   Bylaws of the Association.</HEAD>
<P>The bylaws of the Association shall be duly adopted by the Secretary of Housing and Urban Development pursuant to section 308 of the National Housing Act (12 U.S.C. 1723) and shall govern the performance of the powers and duties granted to or imposed upon the Association by law. 


</P>
</DIV8>

</DIV5>


<DIV5 N="320" NODE="24:2.1.2.5.3" TYPE="PART">
<HEAD>PART 320—GUARANTY OF MORTGAGE-BACKED SECURITIES 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1721(g) and 1723a(a); and 42 U.S.C. 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>60 FR 42015, Aug. 14, 1995, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:2.1.2.5.3.1" TYPE="SUBPART">
<HEAD>Subpart A—Pass-Through Type Securities</HEAD>


<DIV8 N="§ 320.1" NODE="24:2.1.2.5.3.1.221.1" TYPE="SECTION">
<HEAD>§ 320.1   General.</HEAD>
<P>The Association is authorized by section 306(g) of the National Housing Act (12 U.S.C. 1721(g)) upon such terms and conditions as it may deem appropriate, to guarantee the timely payment of principal of and interest on securities that are based on and backed by a trust or pool composed of mortgages which are insured or guaranteed by FHA, FmHA or VA. The Association's guaranty of mortgage-backed securities is backed by the full faith and credit of the United States. This subpart is limited to “modified pass-through” securities, and does not purport to set forth all the procedures and requirements that apply to the issuance and guaranty of such securities. All such transactions are governed by the specific terms and provisions of the Association's Mortgage-Backed Securities Guides (MBS Guides) and contracts entered into by the parties. 


</P>
</DIV8>


<DIV8 N="§ 320.3" NODE="24:2.1.2.5.3.1.221.2" TYPE="SECTION">
<HEAD>§ 320.3   Eligible issuers of securities.</HEAD>
<P>(a) <I>Eligibility requirements.</I> A mortgage lender, including an instrumentality of a State or local government, to be eligible to issue or service mortgage-backed securities guaranteed by the Association must satisfy all of the following standards: 
</P>
<P>(1) Be in good standing as a mortgagee approved by the FHA; 
</P>
<P>(2) Be in good standing as a mortgage seller or servicer approved by the Federal National Mortgage Association (FNMA), the Federal Home Loan Mortgage Corporation (FHLMC), or the Association. Loss of either FNMA approval or FHLMC approval may cause the issuer to become ineligible to issue and service the Association's mortgage-backed securities and constitute a default under the applicable guaranty or contractual agreement whether or not the issuer qualified for new issuer approval on the basis of FNMA or FHLMC approval; 
</P>
<P>(3) Have management with adequate experience, and access to adequate facilities to issue or service mortgage-backed securities, as determined by the Association; 
</P>
<P>(4) Maintain the applicable minimum net worth discussed in paragraph (c) of this section; and 
</P>
<P>(5) Meet the requirements, conditions, and limitations prescribed by the Association in this part or the applicable MBS Guides. 
</P>
<P>(b) <I>Time of eligibility.</I> The Association shall not commit to guarantee, or guarantee any issue of mortgage-backed securities unless the mortgage lender requesting such commitment or guaranty qualifies as an eligible issuer both at the time of commitment approval and at the time of the issuance of the guaranty. 
</P>
<P>(c) <I>Net worth requirements.</I> Issuers shall maintain at all times a net worth acceptable to the Association of not less than the applicable minimum amount. The applicable minimum amount shall be published in the MBS Guides. 
</P>
<P>(d) <I>Disqualification.</I> A mortgage lender shall not qualify as an eligible issuer at any time in which: 
</P>
<P>(1) The lending policies of the issuer permit any discrimination based on race, religion, color, national origin, age, or sex of a borrower; or 
</P>
<P>(2) The issuer is not in compliance with any rules, regulations, or orders issued under title VI of the Civil Rights Act of 1964; Executive Order 11063, Equal Opportunity in Housing, November 20, 1962; Executive Order 11246, Equal Employment Opportunity, issued on September 24, 1965 and amended on October 13, 1967; title VII of the Civil Rights Act of 1968; title VIII of the Civil Rights Act of 1968 as amended by the Fair Housing Amendments Act of 1988; or by the FHA or VA. 
</P>
<P>(e) <I>Ethics and standards.</I> A mortgage lender shall qualify as an eligible issuer only so long as it conducts its business operations in accordance with accepted mortgage banking practices, ethics, and standards, as determined by the Association, and maintains its books and records in accordance with generally accepted accounting principles. 
</P>
<P>(f) <I>Change in control.</I> Issuers shall notify the Association of any change in issuer control. A change in control occurs whenever a new party obtains significant influence over an issuer, as defined by the Association. In a merger where the surviving party is not the approved issuer and in a consolidation, the surviving party must apply formally for approval as a new issuer prior to the merger or consolidation taking place. In other business combinations, such as a stock sale of an existing issuer, which result in a change in control of issuer, the issuer shall demonstrate that it continues to meet all issuer eligibility requirements prior to the business combination being finalized. 
</P>
<P>(g) <I>Cross-Default.</I> Related issuers, as defined by the Association, shall execute a cross-default agreement, in a form prescribed by the Association, that authorizes the default of one or more related issuers in the event of a default by any one of the related issuers. Issuers may be granted an exemption from this section, provided that they submit a legal opinion, acceptable to the Association, which demonstrates that the execution of a cross-default agreement would be prohibited by the issuer's Federal regulator. 
</P>
<P>(h) <I>Failure to comply.</I> In the event that an issuer subsequently fails to comply with any of the requirements prescribed in this part or the applicable MBS Guide, as determined by the Association, the Association may, among other things, withhold further commitments to guarantee securities until such time as the Association is satisfied that the issuer has resumed business operations in compliance with such requirements.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control numbers 2503-0003, 2503-0004, 2503-0006, 2503-0007, and 2503-0026)


</APPRO>
</DIV8>


<DIV8 N="§ 320.5" NODE="24:2.1.2.5.3.1.221.3" TYPE="SECTION">
<HEAD>§ 320.5   Securities.</HEAD>
<P>(a) <I>Instruments.</I> Securities issued pursuant to the provisions of this subpart must be modified pass-through securities, that provide for payment, whether or not collected, of both specified principal installments and interest on the unpaid principal balance, with all prepayments and other unscheduled recoveries of principal being passed through to the holder. In the case of delinquent mortgages in a pool backing modified pass-through securities, the issuer is required to make advances if necessary to maintain the specified schedule of interest and principal payments to the holders, or at its option, at any time 90 days or more after default of any such mortgage, the issuer may repurchase such mortgage for an amount equal to the unpaid principal balance of the mortgage. The securities, if issued in certificated form, must specify the dates by which payments are to be made to the holders thereof, and must indicate the accounting period for collections on the pool's mortgages relating to each such payment, and the securities, if issued in certificated form, must also specify a date on which the entire principal will have been paid or will be payable.
</P>
<P>(b) <I>Issue amount.</I> Each issue of guaranteed securities must be in a minimum face amount as specified in the applicable MBS Guide. The total face amount of any issue of securities cannot exceed the aggregate unpaid principal balances of the mortgages in the pool. The Association may provide for issuers to submit packages of mortgages that may be consolidated, with other packages of similar types of mortgages, into multiple issuer pools. 
</P>
<P>(c) [Reserved] 
</P>
<P>(d) <I>Transferability.</I> Securities are transferable, but the share of the proceeds collected on account of the pool of mortgages is payable only to the registered holder of a security according to the policies established by the Association. 
</P>
<P>(e) <I>Issue Date.</I> Securities backed by single-family mortgages with issue dates of October 1, 1998, or before, serial notes with issue dates of July 1, 2002, or before, and securities backed by multifamily mortgages with issue dates of February 1, 2002, or before, have been issued in certificated form. Securities issued after these dates will be issued in book-entry form. The Association may approve the issuance of certificated securities for good cause.
</P>
<P>(f) <I>Delivery.</I> Delivery of uncertificated securities occurs when the book-entry depository's nominee is registered as the registered owner of the securities on Ginnie Mae's central registry.
</P>
<P>(g) <I>Registered Ownership.</I> Ownership of mortgage-backed securities issued pursuant to this subpart registered in the name of a Depository shall be conclusively established by registration in the name of the Depository as owner on the Association's central registry and it shall be unnecessary for a Depository to maintain custody of any physical certificates evidencing such ownership.
</P>
<P>(h) <I>Payments on Mortgage-Backed Securities.</I> Issuers must remit all payments due to holders of mortgage-backed securities such that holders will receive their installments as follows:
</P>
<P>(1) <I>Payment to a Depository.</I> (i) For all securities registered in the name of a Depository or the designated nominee for a Depository, issuers are required to make payments in immediately available funds by ACH transaction, Fedwire, or by such other method as directed and/or authorized by the Association pursuant to the MBS Guide, including requiring that issuers maintain funds accounts in institutions that are accessible by debit ACH transactions originated by such Depository or its designee.
</P>
<P>(ii) Payment must be made by the hour specified in the MBS Guide on the calendar day of the month specified in the MBS Guide for payment on such mortgage-backed securities (the “applicable Payment Date”), with adjustments to such time as may be specified in the MBS Guide for Payments Dates that do not fall on business days.
</P>
<P>(2) <I>Payments to other holders.</I> An issuer of mortgage-backed securities that are not registered in the name of a Depository or its nominee may make payments to a security holder by ACH transaction or Fedwire, provided that it obtains the prior written approval of the holder of such mortgage-backed securities. If an issuer begins to make such payments by electronic transfer, it must continue to do so while the securities are registered in the name of that security holder. If an issuer makes payments on mortgage-backed securities by check, the check must be received by the security holder not later than the applicable Payment Date each month.
</P>
<P>(i) <I>Guaranty.</I> The Association's guaranty described in § 320.13 is a guaranty that payment will be made to the registered owner of securities as reflected in the Association's central registry. The Association makes no other guaranty, including any guaranty that a Depository will appropriately credit payments to beneficial owners of such mortgage-backed securities. The Association's guarantee of securities payable to a Depository or its nominee becomes effective when the Depository or its nominee is registered as the registered owner of the securities on the Association's central registry.
</P>
<P>(j) <I>Definition of Depository.</I> As used in this section, Depository means a clearing corporation within the meaning of Article 8 of the Uniform Commercial Code, including any Federal Reserve Bank, that maintains systems by which ownership and transfer of interests in mortgage-backed securities are made through the books of such clearing corporation.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2503-0009)
</APPRO>
<CITA TYPE="N">[60 FR 42015, Aug. 14, 1995, as amended at 63 FR 51251, Sept. 24, 1998; 64 FR 34106, June 24, 1999; 66 FR 44265, Aug. 22, 2001; 70 FR 33652, June 8, 2005; 72 FR 49125, Aug. 27, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 320.7" NODE="24:2.1.2.5.3.1.221.4" TYPE="SECTION">
<HEAD>§ 320.7   Mortgages.</HEAD>
<P>Each issue of guaranteed securities must be backed by a separate pool of mortgages which meet the requirements of the applicable MBS Guide. 


</P>
</DIV8>


<DIV8 N="§ 320.8" NODE="24:2.1.2.5.3.1.221.5" TYPE="SECTION">
<HEAD>§ 320.8   Excess Yield Securities.</HEAD>
<P>(a) <I>Definition.</I> Excess Yield Securities are securities backed by the excess servicing income relating to mortgages underlying previously issued Ginnie Mae mortgage-backed securities.
</P>
<P>(b) <I>GNMA guaranty.</I> The Association guarantees the timely payment of interest as provided by the terms of the security.
</P>
<CITA TYPE="N">[71 FR 32389, June 5, 2006]


</CITA>
</DIV8>


<DIV8 N="§ 320.9" NODE="24:2.1.2.5.3.1.221.6" TYPE="SECTION">
<HEAD>§ 320.9   Pool administration.</HEAD>
<P>The Association will only guarantee securities if the issuer executes a guaranty agreement or contractual agreement in the form prescribed by the Association. Pool administration requirements are set forth in such agreements or the applicable MBS Guide.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control numbers 2503-0003, 2503-0004, 2503-0006, 2503-0007, and 2503-0026)


</APPRO>
</DIV8>


<DIV8 N="§ 320.10" NODE="24:2.1.2.5.3.1.221.7" TYPE="SECTION">
<HEAD>§ 320.10   Financial reporting.</HEAD>
<P>Issuers shall submit to the Association audited annual financial statements within 90 days of their fiscal year end. All financial statements shall include a balance sheet and a statement of operations and cash flows. The audit shall be conducted in accordance with the standards for financial audits of the U.S. Government Accountability Office's <I>Government Auditing Standards,</I> issued by the Comptroller General of the United States.
</P>
<CITA TYPE="N">[72 FR 49125, Aug. 27, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 320.11" NODE="24:2.1.2.5.3.1.221.8" TYPE="SECTION">
<HEAD>§ 320.11   Insurance coverage.</HEAD>
<P>The issuer shall maintain, for the benefit of the Association, insurance, errors and omissions, fidelity bond and other coverage as required by the Association and set forth in the appropriate MBS Guide. 


</P>
</DIV8>


<DIV8 N="§ 320.12" NODE="24:2.1.2.5.3.1.221.9" TYPE="SECTION">
<HEAD>§ 320.12   Integrity.</HEAD>
<P>(a) <I>Background.</I> Issuers shall disclose the background of all individuals serving on their Board of Directors and all individuals acting as authorized signatories. The disclosures shall include any prior convictions, fines or other adverse actions against these individuals by a Federal, state or local agency, or a government-related entity where the action is related to the responsibilities that are commensurate with those of the financial services industry. The term government-related entity includes, but is not limited to, FHA, VA, FmHA, FNMA, FHLMC, Office of Thrift Supervision, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, and National Credit Union Administration. 
</P>
<P>(b) <I>Change in status.</I> Issuers shall disclose material changes in their status with other government-related entities and regulatory agencies, or state or local agencies with similar authority, within 5 business days of their occurrence. The disclosures shall include, but not be limited to, voluntary and non-voluntary terminations, defaults, fines, and material non-compliance with agency rules and policies. Disclosures that are specifically prohibited by an agency are exempted from this section. 


</P>
</DIV8>


<DIV8 N="§ 320.13" NODE="24:2.1.2.5.3.1.221.10" TYPE="SECTION">
<HEAD>§ 320.13   Guaranty.</HEAD>
<P>The Association guarantees the timely payment, whether or not collected, of the interest on the outstanding balance and the specified principal installments on securities that are registered on Ginnie Mae's central registry. The Association's guaranty is backed by the full faith and credit of the United States. 
</P>
<CITA TYPE="N">[64 FR 34107, June 24, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 320.15" NODE="24:2.1.2.5.3.1.221.11" TYPE="SECTION">
<HEAD>§ 320.15   Default.</HEAD>
<P>(a) <I>Issuer default.</I> Any failure or inability of the issuer to make payments as due as well as such other events as may be identified by the Association and included in the applicable guaranty agreement, contractual agreement or MBS Guide, shall constitute a default of the issuer. 
</P>
<P>(b) <I>Action upon default.</I> Upon any default by the issuer, the Association may: 
</P>
<P>(1) Institute a claim against the issuer's insurance, bond or other coverage, as specified in § 320.11; 
</P>
<P>(2) Pursuant to section 306(g) of the National Housing Act (12 U.S.C. 1721(g)), extinguish all the right, title, or other interest of the issuer in the pooled mortgages; and 
</P>
<P>(3) Exercise such other rights and remedies as it may have. 


</P>
</DIV8>


<DIV8 N="§ 320.17" NODE="24:2.1.2.5.3.1.221.12" TYPE="SECTION">
<HEAD>§ 320.17   Fees.</HEAD>
<P>The Association may impose application fees, guaranty fees, securities transfer fees and other fees. 


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:2.1.2.5.3.2" TYPE="SUBPART">
<HEAD>Subpart B—Bond-Type Securities</HEAD>


<DIV8 N="§ 320.21" NODE="24:2.1.2.5.3.2.221.1" TYPE="SECTION">
<HEAD>§ 320.21   General.</HEAD>
<P>In addition to the “pass-through” securities dealt with in subpart A of this part, the Association is authorized by section 306(g) of the National Housing Act, 12 U.S.C. 1721(g), upon such terms and conditions as it may deem appropriate, to guarantee the timely payment of principal of and interest on “bond-type” securities which are based on and backed by a trust or pool composed of mortgages which are insured or guaranteed by FHA, FmHA or the VA. The Association's guaranty of mortgage-backed securities is backed by the full faith and credit of the United States. This subpart deals with such “bond-type” securities and does not purport to set forth all the procedures and requirements that apply to the issuance and guaranty of such securities. All such transactions are governed by the specific terms and provisions of the contracts entered into by the parties and the Bond-Type Securities Guide (the “Bond Guide”). 


</P>
</DIV8>


<DIV8 N="§ 320.23" NODE="24:2.1.2.5.3.2.221.2" TYPE="SECTION">
<HEAD>§ 320.23   Eligible issuers.</HEAD>
<P>Any corporation, trust, partnership, or other entity with a net worth acceptable to the Association as set forth in the Bond Guide, which has the capability to assemble acceptable and eligible mortgages in sufficient quantity to support required minimum issuances of securities and which meets such other requirements as are set forth in the Bond Guide, may be approved to issue and service bond-type securities guaranteed by the Association. Further, the Association reserves the right to limit the number of issuers in the interest of conducting an orderly market of securities of this type. 


</P>
</DIV8>


<DIV8 N="§ 320.25" NODE="24:2.1.2.5.3.2.221.3" TYPE="SECTION">
<HEAD>§ 320.25   Securities.</HEAD>
<P>(a) <I>Instruments.</I> Securities to be issued pursuant to the provisions of this subpart B may be in registered or bearer form. Each security shall have terms acceptable to the Association as provided in the Bond Guide. 
</P>
<P>(b) <I>Issue amount.</I> Each issue of guaranteed securities must be in a minimum face amount as specified in the Bond Guide. The total face amount of any issue of securities cannot exceed the aggregate unpaid principal balances of the mortgages in the pool. 
</P>
<P>(c) <I>Face amount of securities.</I> The face amount of any security cannot be less than $25,000. 
</P>
<P>(d) <I>Transferability.</I> Bearer securities are freely transferrable. Registered securities are transferable only on the books of an agent, as shall be agreed upon by the Association and the issuer. 
</P>
<P>(e) <I>Treasury approval.</I> Issues of $100 million or larger will be subject to approval of the Secretary of the Treasury. 


</P>
</DIV8>


<DIV8 N="§ 320.27" NODE="24:2.1.2.5.3.2.221.4" TYPE="SECTION">
<HEAD>§ 320.27   Mortgages.</HEAD>
<P>Guaranteed securities issued under these provisions must be based on and backed by mortgages pooled under trust arrangements satisfactory to the Association. Such mortgages must meet the requirements of the Bond Guide. 


</P>
</DIV8>


<DIV8 N="§ 320.29" NODE="24:2.1.2.5.3.2.221.5" TYPE="SECTION">
<HEAD>§ 320.29   Guaranty.</HEAD>
<P>With respect to bond-type securities, the Association will guarantee the timely payment of principal of and interest on such securities, subject to the terms and conditions of the securities. The Association's guaranty is backed by the full faith and credit of the United States. 


</P>
</DIV8>


<DIV8 N="§ 320.31" NODE="24:2.1.2.5.3.2.221.6" TYPE="SECTION">
<HEAD>§ 320.31   Default.</HEAD>
<P>Upon default of the issuer, the Association has the right, pursuant to section 306(g) of the National Housing Act (12 U.S.C. 1721(g)), to take title to the mortgages and other assets that are subject to the trust arrangements, and to proceed against other assets of the issuer to the extent necessary to satisfy its own claims and the rights of the holders of securities then outstanding. Such action by the Association shall be taken subject to an accounting to the issuer. 


</P>
</DIV8>


<DIV8 N="§ 320.33" NODE="24:2.1.2.5.3.2.221.7" TYPE="SECTION">
<HEAD>§ 320.33   Fees.</HEAD>
<P>The Association may impose application and guaranty fees, which may vary with relation to the size or risk of the guaranty transaction undertaken. 


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="330" NODE="24:2.1.2.5.4" TYPE="PART">
<HEAD>PART 330—GUARANTY OF MULTICLASS SECURITIES
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1721(g) and 1723a(a); and 42 U.S.C. 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>60 FR 42018, Aug. 14, 1995, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 330.1" NODE="24:2.1.2.5.4.0.221.1" TYPE="SECTION">
<HEAD>§ 330.1   Scope of part.</HEAD>
<P>This part is limited to multiclass securities. It does not purport to set forth all the procedures and requirements that apply to the issuance and guaranty of such securities. All such transactions are governed by the specific terms and provisions of the contracts entered into by the parties and by the GNMA Multiclass Securities Guide (Multiclass Guide). 


</P>
</DIV8>


<DIV8 N="§ 330.5" NODE="24:2.1.2.5.4.0.221.2" TYPE="SECTION">
<HEAD>§ 330.5   Definitions.</HEAD>
<P>As used in this part, the following terms shall have the meanings indicated:
</P>
<P><I>Consolidated securities.</I> A series of multiclass securities, each class of which provides for payments proportionate with payments on the underlying eligible collateral.
</P>
<P><I>Depositor.</I> The entity that deposits, or executes an agreement to deposit, as contained in the Multiclass Guide, eligible collateral into a trust in exchange for consolidated securities.
</P>
<P><I>Depository.</I> A clearing corporation within the meaning of Article 8 of the Uniform Commercial Code, including any Federal Reserve Bank, that maintains systems by which ownership and transfer of interests in Ginnie Mae multiclass securities are made through entries on the books of such clearing corporation.
</P>
<P><I>GNMA electronic bulletin board.</I> An information distribution system established by the Association for the Multiclass Securities program.
</P>
<P><I>GNMA MBS certificates.</I> The guaranteed mortgage-backed securities issued under part 320 of this chapter.
</P>
<P><I>Government mortgages.</I> Mortgages that are eligible under section 306(g) of the National Housing Act (12 U.S.C. 1721(g)) for inclusion in GNMA mortgage-backed securities pools.
</P>
<P><I>Multiclass Registrar.</I> The institution that is specified by the Association as the registrar of the related class and series of multiclass securities.
</P>
<P><I>Participant.</I> For structured securities, the sponsor, co-sponsor, trustee, trust counsel, and accounting firm. For consolidated securities, the depositor. Other entities may be designated as participants in the Multiclass Guide.
</P>
<P><I>Sponsor.</I> With respect to structured securities, the entity that establishes the required trust executing the trust agreement and depositing the eligible collateral in the trust in exchange for the structured securities.
</P>
<P><I>Structured securities.</I> Securities of a series at least one class of which provides for payments of principal or interest disproportionately from payments on the underlying eligible collateral.
</P>
<CITA TYPE="N">[66 FR 44265, Aug. 22, 2001]


</CITA>
</DIV8>


<DIV8 N="§ 330.10" NODE="24:2.1.2.5.4.0.221.3" TYPE="SECTION">
<HEAD>§ 330.10   Eligible collateral.</HEAD>
<P>The Association, in its discretion, shall determine what collateral is eligible for inclusion in the Multiclass Securities program. Eligible collateral may include GNMA MBS certificates, government mortgages, consolidated securities, and other securities approved by the Association. Categories of these GNMA MBS certificates, government mortgages, consolidated securities, and other securities as approved by the Association become eligible collateral when they are published as eligible collateral in the Multiclass Guide or on the GNMA electronic bulletin board. Eligible collateral may differ for various Association guaranteed multiclass securities. 


</P>
</DIV8>


<DIV8 N="§ 330.15" NODE="24:2.1.2.5.4.0.221.4" TYPE="SECTION">
<HEAD>§ 330.15   Participation requirements.</HEAD>
<P>To participate in the Multiclass Securities program, a participant must meet the following criteria: 
</P>
<P>(a) <I>Certification.</I> A participant must submit such certifications and other documents as are required by the Multiclass Guide. 
</P>
<P>(b) <I>Compliance with Multiclass Guide.</I> By completing a multiclass securities transaction, a participant is deemed to have represented and warranted to the Association that it has complied with, and that it agrees to comply with, the Multiclass Guide in effect as of the date that the Association's guaranty is placed on the securities. 
</P>
<P>(c) <I>Material changes in status.</I> A participant must report, as required in the Multiclass Guide, material adverse changes in status including voluntary and non-voluntary termination, defaults, fines and findings of material non-conformance with rules and policies of state and federal agencies and federal government sponsored enterprises. 
</P>
<P>(d) <I>Integrity.</I> The participant must conduct its business operations in accordance with industry practices, ethics and standards, and maintain its books and records in an appropriate manner, as determined by the Association. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2503-0030)


</APPRO>
</DIV8>


<DIV8 N="§ 330.20" NODE="24:2.1.2.5.4.0.221.5" TYPE="SECTION">
<HEAD>§ 330.20   Eligible participants.</HEAD>
<P>In addition to requirements set forth in this part, a participant must meet the following requirements. 
</P>
<P>(a) <I>Structured securities</I>—(1) <I>Description.</I> The Association guarantees the payment of principal and interest on structured securities issued by trusts organized by sponsors in accordance with procedures established and approved by the Association. The structured securities are backed by eligible collateral, as described in this part, held by the trustee. 
</P>
<P>(2) <I>Eligibility requirements for participants</I>—(i) <I>Sponsors.</I> A sponsor must: 
</P>
<P>(A) Apply and be approved by the Association; 
</P>
<P>(B) Demonstrate to the satisfaction of the Association its capacity to accumulate the eligible collateral, as described in this part, needed for a proposed structured securities issuance; 
</P>
<P>(C) Be in good standing with and either have been responsible for at least one structured securities transaction with FNMA or FHLMC, or have demonstrated to the Association's satisfaction its capability to act as sponsor of GNMA guaranteed structured securities; 
</P>
<P>(D) Have the minimum required amount, as set forth in the Multiclass Guide, in shareholders' equity or partners' capital, evidenced by the sponsor's audited financial statements, which must have been issued within the preceding 12-month period; 
</P>
<P>(E) Represent the structural integrity of the issuance under all cash flow scenarios and demonstrate to the Association's satisfaction its ability to indemnify the Association for a breach of this representation; 
</P>
<P>(F) Comply with the Association's policies regarding participation by minority and/or women-owned businesses and take appropriate measures to assure compliance by the other participants as specified in the Multiclass Guide; and 
</P>
<P>(G) Provide the Association with the opinions of trust counsel and accounting firms which are acceptable to the Association and on which the Association may rely. 
</P>
<P>(ii) <I>Co-sponsors.</I> A Co-sponsor must submit to the Association an application and a certification, as set forth in the Multiclass Guide, as to its status as a minority and/or women-owned business. 
</P>
<P>(iii) <I>Trustees.</I> A trustee is selected by the Sponsor from institutions approved by the Association using such procedures as the Association deems appropriate. 
</P>
<P>(b) <I>Consolidated securities</I>—(1) <I>Description.</I> A Depositor delivers, or executes an agreement to deliver, eligible collateral to a trust in exchange for a single Association guaranteed multiclass security, as set forth in the Multiclass Guide. 
</P>
<P>(2) <I>Eligibility requirements for participant.</I> A Depositor must certify that: 
</P>
<P>(i) It is an “accredited investor” within the meaning of 17 CFR 230.501(a)(1), (a)(3) or (a)(7); 
</P>
<P>(ii) It has authority to deliver, and will deliver, the collateral to the trustee and that the collateral is free and clear of all liens and encumbrances; and 
</P>
<P>(iii) The information set forth by the depositor regarding the eligible collateral is true and correct. 
</P>
<P>(c) <I>Other types of Association guaranteed multiclass securities.</I> The Association will set forth the requirements for the guaranty by the Association of other types of multiclass securities, and the eligibility requirements for the appropriate participants, in the Multiclass Guide or on the GNMA electronic bulletin board. 


</P>
</DIV8>


<DIV8 N="§ 330.25" NODE="24:2.1.2.5.4.0.221.6" TYPE="SECTION">
<HEAD>§ 330.25   Fees.</HEAD>
<P>The Association, in its discretion, through publication in the Multiclass Guide or on the GNMA electronic bulletin board, may impose fees for application, guaranty, transfer, change from book entry to certificated form, or other related fees. Fees may vary, at the Association's discretion, depending upon, but not limited to, such factors as size, collateral characteristics, expense or risk of the guaranty transaction undertaken. 


</P>
</DIV8>


<DIV8 N="§ 330.30" NODE="24:2.1.2.5.4.0.221.7" TYPE="SECTION">
<HEAD>§ 330.30   GNMA Guaranty.</HEAD>
<P>(a) <I>Securities held by Depositories.</I> Ownership of multiclass securities registered in the name of a Depository shall be conclusively established by registration in the name of the Depository as owner on the books and records of the Multiclass Registrar, and it shall be unnecessary for a Depository to maintain custody of any physical certificates evidencing such ownership.
</P>
<P>(b) <I>Guaranty.</I> The Association's guaranty is a guaranty that payment will be made to the registered owner of securities as reflected on the books and records of the Multiclass Registrar.
</P>
<P>(1) The Association makes no other guaranty, including any guaranty that a Depository will appropriately credit payments to beneficial owners of GNMA multiclass securities. The Association's guarantee of securities payable to a Depository or its nominee becomes effective when the Depository or its nominee is registered as the registered owner of the securities on the books and records of the Multiclass Registrar.
</P>
<P>(2) The Association guarantees the timely payment of principal and interest as provided by the terms of the multiclass security. The Association's guaranty is backed by the full faith and credit of the United States.
</P>
<CITA TYPE="N">[66 FR 44266, Aug. 22, 2001]


</CITA>
</DIV8>


<DIV8 N="§ 330.35" NODE="24:2.1.2.5.4.0.221.8" TYPE="SECTION">
<HEAD>§ 330.35   Investors.</HEAD>
<P>Association guaranteed multiclass securities may not be suitable investments for all investors. No investor should purchase securities of any class unless the investor understands, and is able to bear, the prepayment, yield, liquidity and market risks associated with the class. The Association assumes no obligation or liability to any person with regard to determining the suitability of such securities for such investor. 


</P>
</DIV8>


<DIV8 N="§ 330.40" NODE="24:2.1.2.5.4.0.221.9" TYPE="SECTION">
<HEAD>§ 330.40   Consultation.</HEAD>
<P>The Association may consult with persons or entities in such manner as the Association deems appropriate to ensure the efficient commencement and operation of the Multiclass Securities program. 


</P>
</DIV8>


<DIV8 N="§ 330.45" NODE="24:2.1.2.5.4.0.221.10" TYPE="SECTION">
<HEAD>§ 330.45   Limitation on GNMA liability.</HEAD>
<P>Except for its guaranty, the Association undertakes no obligation and assumes no liability to any person with regard to or on account of the existence or operation of this part or the conduct of any participants in the Multiclass Securities program. 


</P>
</DIV8>


<DIV8 N="§ 330.50" NODE="24:2.1.2.5.4.0.221.11" TYPE="SECTION">
<HEAD>§ 330.50   Administration of multiclass securities.</HEAD>
<P>The GNMA guaranteed multiclass securities will be administered in accordance with the Association's requirements described in the Multiclass Guide. 


</P>
</DIV8>


<DIV8 N="§ 330.55" NODE="24:2.1.2.5.4.0.221.12" TYPE="SECTION">
<HEAD>§ 330.55   Basis for removal from participation.</HEAD>
<P>A participant may be removed from the Multiclass Securities program if the Association, in its discretion, determines that any of the following exists or has occurred: 
</P>
<P>(a) The participant, at any time, fails to meet any condition for eligibility; 
</P>
<P>(b) The participant fails to comply with any provision of the Multiclass Guide or this part; 
</P>
<P>(c) The participant is unable or fails to truthfully, correctly or fully submit such certifications as are required; and 
</P>
<P>(d) Such further reasons as the Association determines necessary to protect the safety and soundness of the Multiclass Securities program, as set out in the Multiclass Guide. 


</P>
</DIV8>


<DIV8 N="§ 330.60" NODE="24:2.1.2.5.4.0.221.13" TYPE="SECTION">
<HEAD>§ 330.60   Removal procedure.</HEAD>
<P>(a) A participant may be suspended from participation in the Multiclass Securities program upon written notice from the Association, which shall include the reasons for the suspension. The participant shall have the opportunity to submit a written presentation to the President of the Association, or designee, in support of its reinstatement, subject to such limitations as the Association in its discretion may impose as to length, time for submission, or otherwise. A determination by the President of the Association, or designee, shall exhaust the participant's administrative remedies. 
</P>
<P>(b) If a participant is suspended from the Multiclass Securities program, the Association shall have no obligation to complete a pending transaction involving the participant. 
</P>
<P>(c) After a participant has been removed from the Multiclass Securities program, the participant may request reinstatement. Approval of the reinstatement is at the sole discretion of the Association. 


</P>
</DIV8>

</DIV5>


<DIV5 N="340" NODE="24:2.1.2.5.5" TYPE="PART">
<HEAD>PART 340—FIDUCIARY ACTIVITIES
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1723a and 42 U.S.C. 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>60 FR 42019, Aug. 14, 1995, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 340.1" NODE="24:2.1.2.5.5.0.221.1" TYPE="SECTION">
<HEAD>§ 340.1   General.</HEAD>
<P>The Association is authorized by section 302(c) of the National Housing Act (12 U.S.C. 1717(c)) to create, accept, execute, and administer trusts and other fiduciary undertakings appropriate for financing purposes. Under this authority, the Association is authorized to acquire and otherwise deal in any mortgages or other types of obligations in which any department or agency of the United States listed in section 302(c)(2) of such Act may have a financial interest. Under its fiduciary powers, the Association may create, accept, and administer trusts consisting of interests in mortgages and obligations, sell to private investors certificates of beneficial interest, or participations, in the mortgages or obligations or in the interest and principal payments derived therefrom, and provide for payment of interest and principal and for retirement of the participations. The Association, in its ordinary corporate capacity as contrasted to its fiduciary capacity, is expressly authorized to guarantee the participations. 


</P>
</DIV8>


<DIV8 N="§ 340.3" NODE="24:2.1.2.5.5.0.221.2" TYPE="SECTION">
<HEAD>§ 340.3   Appropriations.</HEAD>
<P>There is authority for Congress to appropriate such sums as may be necessary to enable the trustor of any trust (as described in § 340.1) to pay to the Association, as trustee, any insufficiency in aggregate receipts from the obligations subject to the trust to provide for the timely payment by the trustee of all interest or principal on the beneficial interests or participations related to such trust. 


</P>
</DIV8>

</DIV5>


<DIV5 N="341-349" NODE="24:2.1.2.5.6" TYPE="PART">
<HEAD>PARTS 341-349 [RESERVED]


</HEAD>
</DIV5>


<DIV5 N="350" NODE="24:2.1.2.5.7" TYPE="PART">
<HEAD>PART 350—BOOK-ENTRY PROCEDURES
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1721(g) and 1723a(a); 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>66 FR 44266, Aug. 22, 2001, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 350.1" NODE="24:2.1.2.5.7.0.221.1" TYPE="SECTION">
<HEAD>§ 350.1   Purpose.</HEAD>
<P>The purpose of this part is to achieve the efficiencies and fungibility through use of a single system for transferring interests both in Ginnie Mae Securities and other United States Government securities and in mortgage-backed securities issued by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. The Association only guarantees that payments required to be made by issuers of Ginnie Mae Securities will be made to the registered owner of those Ginnie Mae Securities. The Association undertakes no other obligation. Under the Book-entry System, the Federal Reserve Banks will be the registered owner of Book-entry Ginnie Mae Securities, not the agent of the Association, and the Association makes no warranty or guaranty with respect to the maintenance of the Book-entry System by the Federal Reserve Banks.


</P>
</DIV8>


<DIV8 N="§ 350.2" NODE="24:2.1.2.5.7.0.221.2" TYPE="SECTION">
<HEAD>§ 350.2   Definitions.</HEAD>
<P>(a) <I>Specified Terms.</I> As used in this part, the following terms shall have the meanings indicated:
</P>
<P><I>Book-entry Ginnie Mae Security.</I> A Ginnie Mae Security issued or maintained in the Book-entry System. Book-entry Ginnie Mae Security also means the separate interest and principal components of a Book-entry Ginnie Mae Security if such security has been designated by Ginnie Mae as eligible for division into such components and the components are maintained separately on the books of one or more Federal Reserve Banks.
</P>
<P><I>Book-entry System.</I> The automated book-entry system operated by the Federal Reserve Banks acting as Depositories for Ginnie Mae, on which Book-entry Ginnie Mae Securities are recorded, transferred and maintained in book-entry form.
</P>
<P><I>Definitive Ginnie Mae Security.</I> A Ginnie Mae Security in engraved or printed form, or that is otherwise represented by a certificate.
</P>
<P><I>Depository.</I> A clearing corporation within the meaning of Article 8 of the Uniform Commercial Code, including any Federal Reserve Bank, that maintains systems by which ownership and transfer of interests in Book-entry Ginnie Mae Securities are made through entries on the books of such clearing corporation.
</P>
<P><I>Eligible Book-entry Ginnie Mae Security.</I> A Book-entry Ginnie Mae Security issued or maintained in the Book-entry System which by the terms of its Security Documentation is eligible to be converted from book-entry form into definitive form.
</P>
<P><I>Entitlement Holder.</I> A Person to whose account an interest in a Book-entry Ginnie Mae Security is credited on the records of a Securities Intermediary.
</P>
<P><I>Federal Reserve Bank Operating Circular.</I> The publication issued by each Federal Reserve Bank that sets forth the terms and conditions under which the Reserve Bank maintains book-entry securities accounts (including Book-entry Ginnie Mae Securities accounts) and transfers book-entry Securities (including Book-entry Ginnie Mae Securities).
</P>
<P><I>Ginnie Mae Security.</I> Any security or obligation guaranteed as to payment of principal and/or interest by Ginnie Mae under its Charter Act and issued in the form of a Definitive Ginnie Mae Security or a Book-entry Ginnie Mae Security.
</P>
<P><I>Participant.</I> A Person that maintains a Participant's Securities Account with a Federal Reserve Bank.
</P>
<P><I>Person.</I> An individual, corporation, company, governmental entity, association, firm, partnership, trust, estate, representative, and any other similar organization, but such term does not mean or include the United States or a Federal Reserve Bank.
</P>
<P><I>Revised Article 8.</I> The same meaning as in 31 CFR 357.2.
</P>
<P><I>Secretary.</I> The Secretary of Housing and Urban Development and, where appropriate, any person designated by the Secretary to perform a particular function for the Secretary, including any HUD officer, employee, or agent.
</P>
<P><I>Security.</I> Any mortgage participation certificate, note, bond, debenture, evidence of indebtedness, collateral-trust certificate, transferable share, certificate of deposit for a security, or, in general, any interest or instrument commonly known as a security.
</P>
<P><I>Securities Documentation.</I> The applicable statement of terms, trust agreement, trust indenture, securities agreement or other documents establishing the terms of a Book-entry Ginnie Mae Security.
</P>
<P><I>Transfer message.</I> An instruction of a member of a Federal Reserve Bank to effect a transfer of a Book-entry Security (including a Book-entry Ginnie Mae Security) maintained in the Book-entry System, as set forth in Federal Reserve Bank Operating Circulars.
</P>
<P>(b) <I>Other Terms.</I> Unless the context requires otherwise, terms used in this part that are not defined in this part, have the meanings as set forth in 31 CFR 357.2. Definitions and terms used in 31 CFR part 357 should read as though modified to effectuate their application to Ginnie Mae Securities.


</P>
</DIV8>


<DIV8 N="§ 350.3" NODE="24:2.1.2.5.7.0.221.3" TYPE="SECTION">
<HEAD>§ 350.3   Maintenance of Ginnie Mae Securities.</HEAD>
<P>A Ginnie Mae Security may be maintained in the form of a Definitive Ginnie Mae Security or a Book-entry Ginnie Mae Security. A Book-entry Ginnie Mae Security shall be maintained in the Book-entry System.


</P>
</DIV8>


<DIV8 N="§ 350.4" NODE="24:2.1.2.5.7.0.221.4" TYPE="SECTION">
<HEAD>§ 350.4   Law governing rights and obligations of United States, and Federal Reserve Banks as Depositories; Rights of any Person against United States, and Federal Reserve Banks as Depositories; Law Governing Other Interests.</HEAD>
<P>(a) Except as provided in paragraph (b) of this section, the following rights and obligations are governed solely by the book-entry regulations contained in this part, the Securities Documentation, and Federal Reserve Bank Operating Circulars (but not including any choice of law provisions in the Security Documentation to the extent such provisions conflict with the Book-entry regulations contained in this part):
</P>
<P>(1) The rights and obligations of a Federal Reserve Bank as a Depository with respect to:
</P>
<P>(i) A Book-entry Ginnie Mae Security or Security Entitlement; and
</P>
<P>(ii) The operation of a book-entry system operated by a Depository as it applies to Ginnie Mae Securities; and
</P>
<P>(2) The rights of any Person, including a Participant, against the Federal Reserve Banks as Depositories with respect to:
</P>
<P>(i) A Book-entry Ginnie Mae Security or Security Entitlement; and
</P>
<P>(ii) The operation of the book-entry system operated by the Federal Reserve Banks as Depositories as it applies to Ginnie Mae Securities.
</P>
<P>(b) A security interest in a Security Entitlement that is in favor of a Federal Reserve Bank from a Participant and that is not recorded on the books of a Federal Reserve Bank pursuant to § 350.5(c)(1), is governed by the law (not including the conflict-of-law rules) of the jurisdiction where the head office of the Federal Reserve Bank maintaining the Participant's Securities Account is located. A security interest in a Security Entitlement that is in favor of a Federal Reserve Bank from a Person that is not a Participant, and that is not recorded on the books of a Federal Reserve Bank pursuant to § 350.5(c)(1), is governed by the law determined in the manner specified in paragraph (d) of this section.
</P>
<P>(c) If the jurisdiction specified in the first sentence of paragraph (b) of this section is a State that has not adopted Revised Article 8, then the law specified in paragraph (b) of this section shall be the law of that State as though Revised Article 8 had been adopted by that State.
</P>
<P>(d) To the extent not otherwise inconsistent with this part, and notwithstanding any provision in the Security Documentation setting forth a choice of law, the provision set forth in 31 CFR 357.11 regarding law governing other interests apply and shall be read as though modified to effectuate the application of 31 CFR 357.11 to Book-entry Ginnie Mae Securities.


</P>
</DIV8>


<DIV8 N="§ 350.5" NODE="24:2.1.2.5.7.0.221.5" TYPE="SECTION">
<HEAD>§ 350.5   Creation of Participant's Security Entitlement; Security Interests.</HEAD>
<P>(a) A Participant's Security Entitlement is created when a Federal Reserve Bank indicates by book-entry that a Book-entry Ginnie Mae Security has been credited to a Participant's Securities Account.
</P>
<P>(b) A security interest in a Security Entitlement of a Participant in favor of the United States to secure deposits of public money, including without limitation deposits to the Treasury tax and loan accounts, or other security interests in favor of the United States that is required by Federal statute, regulation, or agreement, and that is marked on the books of a Federal Reserve Bank is thereby effected and perfected, and has priority over any other interest in the securities. Where a security interest in favor of the United States in a Security Entitlement of a Participant is marked on the books of a Federal Reserve Bank, such Reserve Bank may rely, and is protected in relying, exclusively on the order of an authorized representative of the United States directing the transfer of the security. For purposes of this paragraph, an “authorized representative of the United States” is the official designated in the applicable regulations or agreement to which a Federal Reserve Bank is a party, governing the security interest. 
</P>
<P>(c)(1) The Federal Reserve Banks as Depositories have no obligation to agree to act on behalf of any Person or to recognize the interest of any transferee of a security interest or other limited interest in favor of any Person except to the extent of any specific requirement of Federal law or regulation or to the extent set forth in any specific agreement with the Federal Reserve Bank on whose books the interest of the Participant is recorded. To the extent required by such law or regulation or set forth in an agreement with a Federal Reserve Bank, or the Federal Reserve Bank Operating Circular, a security interest in a Security Entitlement that is in favor of a Federal Reserve Bank or a Person may be created and perfected by a Federal Reserve Bank as Depository marking its books to record the security interest. Except as provided in paragraph (b) of this section, a security interest in a Security Entitlement marked on the books of a Federal Reserve Bank shall have priority over any other interest in the securities.
</P>
<P>(2) In addition to the method provided in paragraph (c)(1) of this section, a security interest, including a security interest in favor of a Federal Reserve Bank, may be perfected by any method by which a security interest may be perfected under applicable law as described in § 350.4(b) or (d). The perfection, effect of perfection or non-perfection and priority of a security interest are governed by such applicable law. A security interest in favor of a Federal Reserve Bank shall be treated as a security interest in favor of a clearing corporation in all respects under such law, including with respect to the effect of perfection and priority of such security interest. A Federal Reserve Bank Operating Circular shall be treated as a rule adopted by a clearing corporation for such purposes.


</P>
</DIV8>


<DIV8 N="§ 350.6" NODE="24:2.1.2.5.7.0.221.6" TYPE="SECTION">
<HEAD>§ 350.6   Obligations of the Reserve Banks as Depositories; No Adverse Claims.</HEAD>
<P>Except in the case of a security interest in favor of the United States or a Federal Reserve Bank or otherwise as provided in § 350.5(c)(1), for the purposes of this part, the Federal Reserve Banks as Depositories shall treat the Participant to whose Securities Account an interest in a Book-entry Ginnie Mae Security has been credited as the person exclusively entitled to issue a Transfer Message, to receive interest and other payments with respect thereof and otherwise to exercise all the rights and powers with respect to such Security, notwithstanding any information or notice to the contrary. The Federal Reserve Banks as Depositories are not liable to a Person asserting or having an adverse claim to a Security Entitlement or to a Book-entry Ginnie Mae Security in a Participant's Securities Account, including any such claim arising as a result of the transfer or disposition of a Book-entry Ginnie Mae Security by a Federal Reserve Bank pursuant to a Transfer Message that the Federal Reserve Bank reasonably believes to be genuine.


</P>
</DIV8>


<DIV8 N="§ 350.7" NODE="24:2.1.2.5.7.0.221.7" TYPE="SECTION">
<HEAD>§ 350.7   Authority of Federal Reserve Banks as Depositories.</HEAD>
<P>(a) Each Federal Reserve Bank is hereby authorized as Depository for Book-entry Ginnie Mae Securities to perform the following functions with respect to Book-entry Ginnie Mae Securities to which this part applies, in accordance with the Securities Documentation, Federal Reserve Bank Operating Circulars, this part, and procedures established by the Secretary consistent with these authorities:
</P>
<P>(1) To service and maintain Book-entry Ginnie Mae Securities in accounts established for such purposes;
</P>
<P>(2) To make payments with respect to such securities;
</P>
<P>(3) To effect transfer of Book-entry Ginnie Mae Securities between Participants' Securities Accounts as directed by the Participants;
</P>
<P>(4) To effect conversions between Book-entry Ginnie Mae Securities and Definitive Ginnie Mae Securities pursuant to the applicable Securities Documentation; and
</P>
<P>(5) To perform such other duties as the Federal Reserve Banks as Depositories may be requested by Ginnie Mae.
</P>
<P>(b) Each Federal Reserve Bank as Depository may issue Operating Circulars, not inconsistent with this part, governing the details of its handling of Book-entry Ginnie Mae Securities, Security Entitlements, and the operation of the book-entry system under this part.


</P>
</DIV8>


<DIV8 N="§ 350.8" NODE="24:2.1.2.5.7.0.221.8" TYPE="SECTION">
<HEAD>§ 350.8   Withdrawal of Eligible Book-entry Ginnie Mae Securities for Conversion to Definitive Form.</HEAD>
<P>(a) Eligible book-entry Ginnie Mae securities may be withdrawn from the book-entry system after Ginnie Mae has approved a request for the delivery of definitive Ginnie Mae securities in the same amount.
</P>
<P>(b) A Reserve Bank as Depository shall, upon receipt of appropriate instructions to withdraw Eligible Book-entry Ginnie Mae Securities from book-entry in the Book-entry System, facilitate the conversion of such securities into Definitive Ginnie Mae Securities and their delivery in accordance with such instructions. No such conversion shall affect existing interests in such Ginnie Mae Securities.
</P>
<P>(c) All requests for withdrawal of Eligible Book-entry Ginnie Mae Securities must be made prior to the maturity or date of call of the securities.
</P>
<P>(d) Definitive Ginnie Mae Securities that are to be delivered upon withdrawal may be issued in either registered or bearer form, to the extent permitted by the applicable Securities Documentation.
</P>
<CITA TYPE="N">[66 FR 44266, Aug. 22, 2001, as amended at 72 FR 49125, Aug. 27, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 350.9" NODE="24:2.1.2.5.7.0.221.9" TYPE="SECTION">
<HEAD>§ 350.9   Waiver of Regulations.</HEAD>
<P>Ginnie Mae reserves the right in its discretion, to waive any provision(s) of these regulations in any case or class of cases for the convenience of Ginnie Mae or the United States, or in order to relieve any Person(s) of unnecessary hardship, if such action is not inconsistent with law, does not adversely affect any substantial existing rights, and the Association is satisfied that such action will not subject the Association or the United States to any substantial expense or liability.


</P>
</DIV8>


<DIV8 N="§ 350.10" NODE="24:2.1.2.5.7.0.221.10" TYPE="SECTION">
<HEAD>§ 350.10   Liability of Federal Reserve Banks as Depositories.</HEAD>
<P>The Federal Reserve Banks as Depositories may rely on the information provided in a Transfer Message, and are not required to verify the information. The Federal Reserve Banks as Depositories shall not be liable for any action taken in accordance with the information set out in a Transfer Message, or evidence submitted in support thereof.


</P>
</DIV8>


<DIV8 N="§ 350.11" NODE="24:2.1.2.5.7.0.221.11" TYPE="SECTION">
<HEAD>§ 350.11   Notice of Attachment for Ginnie Mae Securities in Book-entry System.</HEAD>
<P>The interest of a debtor in a Security Entitlement may be reached by a creditor only by legal process upon the Securities Intermediary with whom the debtor's securities account is maintained, except where a Security Entitlement is maintained in the name of a secured party, in which case the debtor's interest may be reached by legal process upon the secured party. These regulations do not purport to establish whether a Federal Reserve Bank as Depository is required to honor an order or other notice of attachment in any particular case or class of cases.


</P>
</DIV8>

</DIV5>


<DIV5 N="351-399" NODE="24:2.1.2.5.8" TYPE="PART">
<HEAD>PARTS 351-399 [RESERVED]


</HEAD>
</DIV5>

</DIV3>


<DIV3 N="IV" NODE="24:2.1.3" TYPE="CHAPTER">

<HEAD> CHAPTER IV—OFFICE OF HOUSING AND OFFICE OF MULTIFAMILY HOUSING ASSISTANCE RESTRUCTURING, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT</HEAD>

<DIV5 N="400" NODE="24:2.1.3.5.1" TYPE="PART">
<HEAD>PART 400 [RESERVED]


</HEAD>
</DIV5>


<DIV5 N="401" NODE="24:2.1.3.5.2" TYPE="PART">
<HEAD>PART 401—MULTIFAMILY HOUSING MORTGAGE AND HOUSING ASSISTANCE RESTRUCTURING PROGRAM (MARK-TO-MARKET) 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1715z-1 and 1735f-19(b); 42 U.S.C. 1437(c)(8), 1437f(t), 1437f note, and 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>65 FR 15485, Mar. 22, 2000, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:2.1.3.5.2.1" TYPE="SUBPART">
<HEAD>Subpart A—General Provisions; Eligibility</HEAD>


<DIV8 N="§ 401.1" NODE="24:2.1.3.5.2.1.221.1" TYPE="SECTION">
<HEAD>§ 401.1   What is the purpose of part 401?</HEAD>
<P>This part contains the regulations implementing the authority in the Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRA) for the Mark-to-Market Program. Section 511(b) of MAHRA details the purposes, and section 512(2) details the scope, of the Program. 


</P>
</DIV8>


<DIV8 N="§ 401.2" NODE="24:2.1.3.5.2.1.221.2" TYPE="SECTION">
<HEAD>§ 401.2   What special definitions apply to this part?</HEAD>
<P>(a) <I>MAHRA</I> means the Multifamily Assisted Housing Reform and Affordability Act of 1997, title V of Pub. L. 105-65, 42 U.S.C. 1437f note. 
</P>
<P>(b) <I>Statutory terms.</I> Terms defined in section 512 of MAHRA are used in this part in accordance with their statutory meaning. These terms are: comparable properties, expiring contract, expiration date, fair market rent, mortgage restructuring and rental assistance sufficiency plan, nonprofit organization, qualified mortgagee, portfolio restructuring agreement, participating administrative entity, project-based assistance, renewal, State, tenant-based assistance, and unit of general local government. 
</P>
<P>(c) <I>Other terms.</I> As used in this part, the term— 
</P>
<P><I>Affiliate</I> means an “affiliate of the owner” or an “affiliate of the purchaser”, as such terms are defined in section 516(a) of MAHRA. 
</P>
<P><I>Applicable Federal rate</I> has the meaning given in section 1274(d) of the Internal Revenue Code of 1986, 26 U.S.C. 1274(d). 
</P>
<P><I>Community-based nonprofit organization</I> means a nonprofit organization that maintains at least one-third of its governing board's membership for low-income tenants from the local community, or for elected representatives of community organizations that represent low-income tenants. 
</P>
<P><I>Comparable market rents</I> has the meaning given in § 401.410(b). 
</P>
<P><I>Disabled family</I> has the meaning given in § 5.403(b) of this title. 
</P>
<P><I>Elderly family</I> has the meaning given in § 5.403(b) of this title. 
</P>
<P><I>Eligible project</I> means a project that meets the requirements for eligibility for a Restructuring Plan in § 401.100.
</P>
<P><I>HUD</I> means a HUD official authorized to act under the provisions of MAHRA, and otherwise has the meaning given in § 5.100 of this title.
</P>
<P><I>NHA</I> means the National Housing Act, 12 U.S.C. 1702 <I>et seq.</I>
</P>
<P><I>OAHP</I> means the Office of Affordable Housing Preservation, and any successor office.
</P>
<P><I>Owner</I> means the owner of a project and any purchaser of the project. 
</P>
<P><I>PAE</I> means a participating administrative entity as defined in section 512(10) of MAHRA, or HUD when appropriate in accordance with section 513(b)(4) of MAHRA. 
</P>
<P><I>PCA</I> means a physical condition assessment of a project prepared by a PAE under § 401.451. 
</P>
<P><I>PRA</I> means a portfolio restructuring agreement as defined in section 512(9) of MAHRA. 
</P>
<P><I>Priority purchaser</I> means a purchaser of a project, meeting qualifications established by HUD, that is: 
</P>
<P>(1) A tenant organization; 
</P>
<P>(2) A tenant-endorsed community-based nonprofit organization or public agency; or 
</P>
<P>(3) A limited partnership with a sole general partner that itself is a priority purchaser under this definition. 
</P>
<P><I>Rental Assistance Assessment Plan</I> means the plan described in section 515(c)(2) of MAHRA. 
</P>
<P><I>Restructured rent</I> means the rent determined at the time of restructuring in accordance with section 514(g) of MAHRA. 
</P>
<P><I>Restructuring Plan</I> or <I>Plan</I> means the Mortgage Restructuring and Rental Assistance Sufficiency Plan described in section 514 of MAHRA. 
</P>
<P><I>Section 8</I> means section 8 of the United States Housing Act of 1937, 42 U.S.C. 1437f. 
</P>
<P><I>Section 541(b) claim</I> means a claim paid by HUD under an insurance contract under authority of section 541(b) of the National Housing Act, 12 U.S.C. 1735f-19(b). 
</P>
<P><I>Tenant organization</I> of a project means an organization that meets regularly, whose officers are elected by a majority of heads of households of occupied units in the project, and whose membership is open to all tenants of the project. 
</P>
<P><I>Unit of local government</I> means the smallest unit of general local government in which the project is located. 
</P>
<P><I>Voucher</I> means any tenant-based assistance. 
</P>
<P>(d) <I>Conflicts of interest.</I> Additional definitions applicable to §§ 401.310 through 401.313 appear in § 401.310. 
</P>
<CITA TYPE="N">[65 FR 15485, Mar. 22, 2000, as amended at 65 FR 53900, Sept. 6, 2000; 71 FR 2120, Jan. 12, 2006; 72 FR 66038, Nov. 26, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 401.3" NODE="24:2.1.3.5.2.1.221.3" TYPE="SECTION">
<HEAD>§ 401.3   Who may waive provisions in this part?</HEAD>
<P>The Assistant Secretary for Housing-Federal Housing Commissioner may waive any provision of this part, subject to § 5.110 of this title.
</P>
<CITA TYPE="N">[68 FR 3363, Jan. 23, 2003]


</CITA>
</DIV8>


<DIV8 N="§ 401.99" NODE="24:2.1.3.5.2.1.221.4" TYPE="SECTION">
<HEAD>§ 401.99   How does an owner request a section 8 contract renewal?</HEAD>
<P>(a) <I>Requesting Restructuring Plan.</I> An owner may request a section 8 contract renewal as part of a Restructuring Plan by, at least 3 months before the expiration date of any project-based assistance, certifying to HUD that to the best of the owner's knowledge: 
</P>
<P>(1) Project rents are above comparable market rents; and 
</P>
<P>(2) The owner is not suspended or debarred or has been notified by HUD of any pending suspension or debarment or other enforcement action, or, if so, a voluntary sale or transfer of the property is proposed in accordance with § 401.480. 
</P>
<P>(b) <I>Eligible but not requesting Restructuring Plan.</I> If an owner is eligible for a Restructuring Plan but requests a renewal of project-based assistance without a Plan, in accordance with the applicable requirements in § 402.6 of this chapter, HUD will consider the request in accordance with § 402.4(a)(2) of this chapter. 
</P>
<P>(c) <I>Not eligible for Restructuring Plan.</I> Section 402.5 of this chapter addresses renewal of project-based assistance for a Restructuring Plan. An owner of such a project may also request renewal under § 402.4 of this chapter.
</P>
<CITA TYPE="N">[65 FR 15485, Mar. 22, 2000, as amended at 65 FR 53900, Sept. 6, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 401.100" NODE="24:2.1.3.5.2.1.221.5" TYPE="SECTION">
<HEAD>§ 401.100   Which projects are eligible for a Restructuring Plan under this part?</HEAD>
<P>(a) <I>What are the requirements for eligibility?</I> To be eligible for a Restructuring Plan under this part, a project must:
</P>
<P>(1) Have a mortgage insured or held by HUD;
</P>
<P>(2) Be covered in whole or in part by a contract for project-based assistance under—
</P>
<P>(i) The new construction or substantial rehabilitation program under section 8(b)(2) of the U.S. Housing Act of 1937 as in effect before October 1, 1983;
</P>
<P>(ii) The property disposition program under section 8(b) of the U.S. Housing Act of 1937;
</P>
<P>(iii) The moderate rehabilitation program under section 8(e)(2) of the United States Housing Act of 1937;
</P>
<P>(iv) The loan management assistance program under section 8 of the United States Housing Act of 1937;
</P>
<P>(v) Section 23 of the United States Housing Act of 1937 as in effect before January 1, 1975;
</P>
<P>(vi) The rent supplement program under section 101 of the Housing and Urban Development Act of 1965;
</P>
<P>(vii) Section 8 of the United States Housing Act of 1937, following conversion from assistance under Section 101 of the Housing and Urban Development Act of 1965; or
</P>
<P>(viii) Section 8 of the U.S. Housing Act of 1937 as renewed under section 524 of MAHRA;
</P>
<P>(3) Have current gross potential rent for the project-based assisted units that exceeds the gross potential rent for the project-based assisted units using comparable market rents;
</P>
<P>(4) Have a first mortgage that has not previously been restructured under this part or under HUD's Portfolio Reengineering demonstration authority as defined in § 402.2(c) of this chapter;
</P>
<P>(5) Not be a project that is described in section 514(h) of MAHRA; and
</P>
<P>(6) Otherwise meet the definition of “eligible multifamily housing project” in section 512(2) of MAHRA or meet the following three criteria:
</P>
<P>(i) The project is assisted pursuant to a contract for Section 8 assistance renewed under section 524 of MAHRA;
</P>
<P>(ii) It has an owner that consents for the project to be treated as eligible; and
</P>
<P>(iii) At the time of its initial renewal under section 524, it met the requirements of section 512(2)(A), (B), and (C) of MAHRA.
</P>
<P>(b) <I>When is eligibility determined?</I> Eligibility for a Restructuring Plan under paragraph (a) of this section is determined by the status of a project on the earlier of the termination or expiration date of the project-based assistance contract, which includes a contract renewed under section 524 of MAHRA, or the date of the owner's request to HUD for a Restructuring Plan. Eligibility is not affected by a subsequent change in status, such as contract extension under § 401.600 or part 402 of this chapter.
</P>
<CITA TYPE="N">[71 FR 2121, Jan. 12, 2006]


</CITA>
</DIV8>


<DIV8 N="§ 401.101" NODE="24:2.1.3.5.2.1.221.6" TYPE="SECTION">
<HEAD>§ 401.101   Which owners are ineligible to request Restructuring Plans?</HEAD>
<P>(a) <I>Mandatory rejection.</I> The request of an owner of an eligible project will not be considered for a Restructuring Plan if the owner is debarred or suspended under 2 CFR part 2424.
</P>
<P>(b) <I>Discretion to reject.</I> HUD may also decide not to accept a request for a Restructuring Plan if: 
</P>
<P>(1) An affiliate is debarred or suspended under 2 CFR part 2424; or 
</P>
<P>(2) HUD notifies the owner that HUD is engaged in a pending suspension, debarment or other enforcement action against an owner or affiliate, and the grounds for the pending action are included in § 401.403(b)(2)(ii).
</P>
<P>(c) <I>Exception for sale.</I> This section does not apply if a sale or transfer of the property is proposed in accordance with § 401.480. 
</P>
<P>(d) <I>Notice to tenants.</I> The PAE or HUD will give notice to tenants of a rejection in accordance with §§ 401.500(f)(2), 401.501, and 401.502.
</P>
<CITA TYPE="N">[65 FR 15485, Mar. 22, 2000, as amended at 72 FR 66038, Nov. 26, 2007; 72 FR 73496, Dec. 27, 2007]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:2.1.3.5.2.2" TYPE="SUBPART">
<HEAD>Subpart B—Participating Administrative Entity (PAE) and Portfolio Restructuring Agreement (PRA)</HEAD>


<DIV8 N="§ 401.200" NODE="24:2.1.3.5.2.2.221.1" TYPE="SECTION">
<HEAD>§ 401.200   Who may be a PAE?</HEAD>
<P>A PAE must qualify under the definition in section 512(10) of MAHRA. It must not have any outstanding violations of civil rights laws, determined in accordance with criteria in use by HUD. If the PAE is a private entity, whether nonprofit or for-profit, it must enter into a partnership with a public purpose entity, which may include HUD. A PAE may delegate responsibilities only as agreed in the PRA. 


</P>
</DIV8>


<DIV8 N="§ 401.201" NODE="24:2.1.3.5.2.2.221.2" TYPE="SECTION">
<HEAD>§ 401.201   How does HUD select PAEs?</HEAD>
<P>(a) <I>Selection of PAE.</I> HUD will select qualified PAEs in accordance with the criteria established in 513(b) of MAHRA and criteria established by HUD. The selection method is within HUD's discretion, including but not limited to a request for qualifications. 
</P>
<P>(b) <I>Priority for public agencies.</I> HUD will provide a one-time priority period for State housing finance agencies and local housing agencies to qualify as the PAEs for their jurisdictions. If more than one agency qualifies for the same jurisdiction, HUD will provide an opportunity for the agencies to allocate responsibility for projects in the jurisdiction. If the agencies are unable to agree, HUD will choose a PAE in accordance with section 513(b)(2) of MAHRA. 
</P>
<P>(c) <I>Qualification for PAE by nonprofit and for-profit entities.</I> After the priority period expires, HUD will consider other eligible entities as PAEs for jurisdictions in which no public agency has qualified as the PAE, or for projects that have not been assigned to a qualified public agency. 
</P>
<P>(d) <I>No PAE for project.</I> If HUD does not select a PAE for a project, HUD may perform the functions of the PAE, or contract with other qualified entities to perform those functions. 


</P>
</DIV8>


<DIV8 N="§ 401.300" NODE="24:2.1.3.5.2.2.221.3" TYPE="SECTION">
<HEAD>§ 401.300   What is a PRA?</HEAD>
<P>A PRA is an agreement between HUD and a PAE that delineates rights and responsibilities in connection with development and implementation of a Restructuring Plan. The PRA must contain or incorporate by reference the matters required by section 513(a)(2) of MAHRA and §§ 401.301 through 401.314, as well as other terms and conditions required by HUD. 


</P>
</DIV8>


<DIV8 N="§ 401.301" NODE="24:2.1.3.5.2.2.221.4" TYPE="SECTION">
<HEAD>§ 401.301   Partnership arrangements.</HEAD>
<P>If the PAE is in a partnership, the PRA must specify the following: 
</P>
<P>(a) The responsibilities of each partner regarding the Restructuring Plan; 
</P>
<P>(b) The resources each partner will provide to accomplish its designated responsibilities; and 
</P>
<P>(c) All compensation to each partner, whether direct or indirect. 


</P>
</DIV8>


<DIV8 N="§ 401.302" NODE="24:2.1.3.5.2.2.221.5" TYPE="SECTION">
<HEAD>§ 401.302   PRA administrative requirements.</HEAD>
<P>(a) <I>Inapplicability of certain requirements.</I> Part 200 of 2 CFR and contract procurement requirements do not apply to a PRA. 
</P>
<P>(b) <I>Recordkeeping.</I> The PAE must keep complete and accurate records of all activities related to the PAE's performance under the PRA. The PAE must retain the records for at least 3 years after the PRA terminates. 
</P>
<P>(c) <I>Inspection of records and audit.</I> Upon reasonable notice, the PAE must permit the Comptroller General of the United States and HUD (including representatives of the HUD Office of Inspector General) to inspect, audit, and copy any records required to be retained under this section. 
</P>
<CITA TYPE="N">[65 FR 15485, Mar. 22, 2000, as amended at 80 FR 75936, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 401.303" NODE="24:2.1.3.5.2.2.221.6" TYPE="SECTION">
<HEAD>§ 401.303   PRA indemnity provisions for SHFAs and HAs.</HEAD>
<P>When a PRA requires HUD to indemnify a PAE in accordance with section 513(a)(2)(G) of MAHRA, any payment under this indemnity is contingent upon the availability of funds that are permitted by law to be used for this purpose. 


</P>
</DIV8>


<DIV8 N="§ 401.304" NODE="24:2.1.3.5.2.2.221.7" TYPE="SECTION">
<HEAD>§ 401.304   PRA provisions on PAE compensation.</HEAD>
<P>(a) <I>Base fee.</I> (1) The PRA will provide for base fees to be paid by HUD.
</P>
<P>(2) HUD will establish a substantially uniform baseline for base fees for public entities. The base fee for a PAE will be adjusted, if necessary, after the first term of the PRA.
</P>
<P>(3) Private PAEs will be compensated based on the results of a competitive bid process which evaluates bidders' capability, timeliness, ability to work with tenant and community groups, and cost. 
</P>
<P>(b) <I>Incentives.</I> The PRA may provide for incentives to be paid by HUD. While individual components may vary between PAEs (both public and private), the total amount potentially payable under the incentive package will be uniform. Objectives may include maximizing savings to the Federal Government, timely performance, tenant satisfaction with the PAE's performance, the infusion of public funds from non-HUD sources, and other benchmarks that HUD considers appropriate.
</P>
<P>(c) <I>Expenses.</I> The PRA will identify expenses incurred by the PAE that will qualify for reimbursement by HUD. Limits on these expenses will be established annually by HUD, but HUD may waive the limits for high-cost areas. 
</P>
<P>(d) <I>Other matters.</I> HUD will retain the right of final approval of any fee schedule. HUD will publish the standard form of PRA and the compensation package annually on its Internet Web site.
</P>
<CITA TYPE="N">[65 FR 15485, Mar. 22, 2000, as amended at 72 FR 66038, Nov. 26, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 401.309" NODE="24:2.1.3.5.2.2.221.8" TYPE="SECTION">
<HEAD>§ 401.309   PRA term and termination provisions; other provisions.</HEAD>
<P>(a) <I>1-year term with renewals.</I> The PRA will have a term of 1 year, to be renewed for successive terms of 1 year with the mutual agreement of both parties. The PRA will provide for HUD to pay final compensation to the PAE and to assign responsibility for continuing activities if the PRA is not renewed. 
</P>
<P>(b) <I>Termination for cause or convenience of Federal Government</I>—(1) <I>Termination for cause.</I> HUD may terminate a PRA at any time for cause, with payment required by HUD as provided in the PRA only for matters authorized by the PRA and performed by the PAE to the date of termination. HUD will retain the right of set-off against any payments due as well as such other rights afforded at law and in equity. 
</P>
<P>(2) <I>Termination for convenience of Federal Government.</I> HUD may terminate a PRA, and may remove an eligible property from a PRA, at any time in accordance with the PRA or applicable law, regardless of whether the PAE is in default of any of its obligations under the PRA, if such termination is in the best interests of the Federal Government. The PRA will provide for payment to the PAE of a specified percentage of the base fee authorized by § 401.304(a) and amounts for reimbursement of third-party vendors to the PAE authorized by § 401.304(c).
</P>
<P>(3) <I>Transfer to another PAE; temporary waiver of rights.</I> If a PRA is terminated: 
</P>
<P>(i) HUD may order an immediate transfer of some or all of the PAE's duties to another PAE designated by HUD; and 
</P>
<P>(ii) HUD may temporarily waive its right of immediate termination in order to allow an orderly transfer of duties and responsibilities under a PRA, without waiving the right of termination after the transfer has been completed to HUD's satisfaction. 
</P>
<P>(c) <I>Liability for damages.</I> During the term of a PRA, and notwithstanding any termination of a PRA, HUD may seek its actual, direct, and consequential damages from any PAE for failure to comply with its obligations under PRA.
</P>
<P>(d) <I>Cumulative remedies.</I> The remedies under this section are cumulative and in addition to any other remedies or rights HUD may have under the terms of the PRA, at law, or otherwise. 
</P>
<CITA TYPE="N">[65 FR 15485, Mar. 22, 2000, as amended at 72 FR 66038, Nov. 26, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 401.310" NODE="24:2.1.3.5.2.2.221.9" TYPE="SECTION">
<HEAD>§ 401.310   Conflicts of interest.</HEAD>
<P>(a) <I>Definitions.</I> (1) <I>Conflict of interest</I> means a situation in which a PAE or other restricted person: 
</P>
<P>(i) Has a financial interest, direct or indirect, that prevents or may prevent the PAE or other restricted person from acting at all times in the best interests of HUD; 
</P>
<P>(ii) Has one or more personal, business, or financial interests or relationships that would cause a reasonable person with knowledge of the relevant facts to question the integrity or impartiality of those who are or will be acting under the PRA; or 
</P>
<P>(iii) Is taking an adverse position to HUD or to an owner whose project is covered by a PRA in a lawsuit, administrative proceeding, or other contested matter. 
</P>
<P>(2) <I>Control</I> means the power to vote, directly or indirectly, 25 percent or more of any class of the voting stock of a company; the ability to direct in any manner the election of a majority of a company (or other entity's) directors or trustees; or the ability to exercise a controlling influence over the company or entity's management and policies. For purposes of this definition, a general partner of a limited partnership is presumed to be in control of that partnership. 
</P>
<P>(3) <I>Restricted person</I> means a PAE; any management official of the PAE; any legal entity that is under the control of the PAE, is in control of the PAE, or is under common control with the PAE; or any employee, agent or contractor of the PAE, or employee of such agent or contractor, who will perform or has performed services under a PRA with HUD. 
</P>
<P>(b) <I>General prohibitions.</I> (1) The PAE may not permit conflicts of interest to exist without obtaining a waiver in accordance with this section. 
</P>
<P>(2) The PAE must establish procedures to identify conflicts of interest and to ensure that conflicts of interest do not arise or continue, subject to waiver under paragraph (c) of this section. 
</P>
<P>(3) HUD will not enter into PRAs with potential PAEs who have conflicts of interest associated with a particular project, or permit PAEs to continue performance under existing PRAs when such PAEs have conflicts of interest, unless such conflicts have been eliminated to HUD's satisfaction by the PAE or potential PAE or are waived by HUD. 
</P>
<P>(4) The PAE has a continuing obligation to take all action necessary to identify whether it or any other restricted person has a conflict of interest. 
</P>
<P>(c) <I>Waivers.</I> HUD will waive conflicts of interest only when, in light of all relevant circumstances, the interests of HUD in the PAE's or another restricted persons's participation outweigh the concern that a reasonable person may question the integrity of HUD's operations. 
</P>
<P>(d) <I>Conflicts of interest arising prior to PAE selection</I>—(1) <I>Request for review of conflicts of interest.</I> (i) A potential PAE, with its request to HUD for consideration for selection as a PAE, must identify existing conflicts of interest and may make a written request for a determination as to the existence of a conflict of interest, may request that the conflict of interest, if any, be waived, or may propose how it could eliminate the conflict. 
</P>
<P>(ii) If, after submitting a request but prior to selection, a potential PAE discovers that it has a conflict, it must notify HUD in writing within 10 days of submitting the request or prior to selection, whichever is earlier. Such notification must contain a detailed description of the conflict. The potential PAE may, with its notification, request that the conflict be waived or may propose how it may eliminate the conflict. The potential PAE may also request a determination as to the existence of the conflict. The potential PAE may also request a determination as to the existence of the conflict. 
</P>
<P>(2) <I>Review by HUD.</I> Subject to the restrictions set forth in this section, HUD in its sole discretion may determine whether a conflict of interest exists, may waive the conflict of interest, or may approve in writing a PAE's proposal to eliminate a conflict of interest. 
</P>
<P>(e) <I>Conflicts of interest that arise or are discovered after PAE selection.</I> (1) A PAE must notify HUD in writing within 10 days after discovering that it or another restricted person has a conflict of interest. Such notification must contain a detailed description of the conflict of interest and state how the PAE intends to eliminate the conflict. The PAE may also request a determination as to the existence of a conflict. 
</P>
<P>(2) HUD will, after receipt of such notification or other discovery of the PAE's conflict or potential conflict of interest, take such action as it determines is in its best interests, which may involve proceeding under § 401.313 or as provided in the following sentences. HUD may notify the PAE in writing of its findings as to whether a conflict of interest exists and the basis for such determination, whether or not a waiver will be granted, or whether corrective actions may be taken in order to eliminate the conflict of interest. Corrective action must be completed by the PAE not later than 30 days after notification is mailed by HUD unless HUD, at its sole discretion, determines that it is in its best interests to grant the PAE an extension in which to complete the corrective action. 
</P>
<P>(f) <I>Reconsideration of decisions.</I> Decisions issued pursuant to this section may be reconsidered by HUD upon application by the PAE. Such requests must be in writing and must contain the basis for the request. HUD may, at its discretion and after determining that it is in its best interests, stay any corrective or other actions previously ordered pending reconsideration of a decision. 
</P>
<CITA TYPE="N">[65 FR 15485, Mar. 22, 2000, as amended at 65 FR 53900, Sept. 6, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 401.311" NODE="24:2.1.3.5.2.2.221.10" TYPE="SECTION">
<HEAD>§ 401.311   Standards of conduct.</HEAD>
<P>(a) <I>Minimum ethical standards for PAEs.</I> In connection with the performance of any PRA and during the term of such PRA, a PAE or other restricted person (as defined in § 401.310) may not: 
</P>
<P>(1) Solicit for itself or others favors, gifts, or other items of monetary value from any person who is seeking official action from HUD or the PAE in connection with the PRA or has interests that may be substantially affected by the restricted person's performance or nonperformance of duties to HUD; 
</P>
<P>(2) Use improperly (or allow the improper use of) HUD property or property over which the restricted person has supervision or charge by reason of the PRA; 
</P>
<P>(3) Use its status as PAE for its own benefit, or the financial or business benefit of a third party, except as contemplated by the PRA; or 
</P>
<P>(4) Make any unauthorized promise or commitment on behalf of HUD. 
</P>
<P>(b) <I>18 U.S.C. 201.</I> Pursuant to 18 U.S.C. 201, whoever acts for or on behalf of HUD in connection with the matters covered by this part is deemed to be a public official. Public officials are prohibited from soliciting or accepting anything of value in return for being influenced in the performance of official actions. Violators are subject to criminal sanctions. 
</P>
<P>(c) <I>18 U.S.C. 1001.</I> Pursuant to 18 U.S.C. 1001, whoever knowingly and willingly falsifies a material fact, makes a false statement or utilizes a false writing in connection with a PRA is subject to criminal sanctions. Other Federal civil statutes also apply to making false statements to the United States. 
</P>
<P>(d) <I>18 U.S.C. 207.</I> Former Federal Government employees are subject to the prohibitions in 18 U.S.C. 207. 


</P>
</DIV8>


<DIV8 N="§ 401.312" NODE="24:2.1.3.5.2.2.221.11" TYPE="SECTION">
<HEAD>§ 401.312   Confidentiality of information.</HEAD>
<P>A PAE and every other restricted person (as defined in § 401.310) has a duty to protect confidential information, except as provided in §§ 401.500 through 401.503, and to prevent its use to further a private interest other than as contemplated by the PRA. As used in this section, confidential information means information that a PAE or other restricted person obtains from or on behalf of HUD or a third party in connection with a PRA but does not include information generally available to the public unless the information becomes available to the public as a result of unauthorized disclosure by the PAE or another restricted person. 


</P>
</DIV8>


<DIV8 N="§ 401.313" NODE="24:2.1.3.5.2.2.221.12" TYPE="SECTION">
<HEAD>§ 401.313   Consequences of PAE violations; finality of HUD determination.</HEAD>
<P>(a) <I>Effect on PRA.</I> If a PAE, potential PAE or other restricted person (as defined in § 401.310) violates §§ 401.310, 410.311, or 401.312, HUD may: 
</P>
<P>(1) Find the potential PAE unqualified to enter into a PRA; 
</P>
<P>(2) Find the PAE unqualified to receive additional projects for restructuring under an existing PRA; 
</P>
<P>(3) Find the PAE in default under an existing PRA with the right of termination for cause under § 401.309; or 
</P>
<P>(4) Seek from a PAE or other restricted person HUD's actual, direct, and consequential damages resulting from the violation. 
</P>
<P>(b) <I>Cumulative remedies.</I> The remedies under this section are cumulative and in addition to any other remedies or rights HUD may have under the terms of the PRA, at law, or otherwise. 
</P>
<P>(c) <I>Finality of determination.</I> Any determination made by HUD pursuant to this section is at HUD's sole discretion and is not subject to further administrative review. 


</P>
</DIV8>


<DIV8 N="§ 401.314" NODE="24:2.1.3.5.2.2.221.13" TYPE="SECTION">
<HEAD>§ 401.314   Environmental review responsibilities.</HEAD>
<P>HUD will retain all responsibility for environmental review under part 50 of this title. Compliance with part 50 of this title will be completed before any HUD approval of the Restructuring Commitment under § 401.405. 


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:2.1.3.5.2.3" TYPE="SUBPART">
<HEAD>Subpart C—Restructuring Plan</HEAD>


<DIV8 N="§ 401.400" NODE="24:2.1.3.5.2.3.221.1" TYPE="SECTION">
<HEAD>§ 401.400   Required elements of a Restructuring Plan.</HEAD>
<P>(a) <I>General.</I> A PAE is responsible for the development of a Restructuring Plan for each project included in its PRA. 
</P>
<P>(b) <I>Required elements.</I> The Restructuring Plan must contain a narrative that fully describes the restructuring transaction. The Restructuring Plan must include the elements required by section 514(e) of MAHRA. The Restructuring Plan must describe the use of any restructuring tools listed at sections 517(a) and (b) of MAHRA, and must contain other requirements as determined by HUD. 


</P>
</DIV8>


<DIV8 N="§ 401.401" NODE="24:2.1.3.5.2.3.221.2" TYPE="SECTION">
<HEAD>§ 401.401   Consolidated Restructuring Plans.</HEAD>
<P>A PAE may request HUD to approve a Consolidated Restructuring Plan that presents an overall strategy for more than one project included in the PRA. HUD will consider approval of a Consolidated Restructuring Plan for projects having common ownership, geographic proximity, common mortgagee or servicer, or other factors that contribute to more efficient use of the PAE's resources. Notwithstanding the more efficient use of a PAE's resources, HUD will not approve any Consolidated Restructuring Plans that have a detrimental effect on tenants or the community, or a higher cost to the Federal Government. HUD's decision to approve or disapprove a Consolidated Restructuring Plan will be made on a case-by-case basis.
</P>
<CITA TYPE="N">[65 FR 15485, Mar. 22, 2000, as amended at 72 FR 66038, Nov. 26, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 401.402" NODE="24:2.1.3.5.2.3.221.3" TYPE="SECTION">
<HEAD>§ 401.402   Cooperation with owner and qualified mortgagee in Restructuring Plan development.</HEAD>
<P>A PAE must comply with section 514(a)(2) of MAHRA by using its best efforts to seek the cooperation of the owner and qualified mortgagee or its designee in the development of the Restructuring Plan. If the owner fails to cooperate (as demonstrated by reasonable progress in development of a Restructuring Plan) to the satisfaction of the PAE and HUD agrees, the PAE must notify the owner that the PAE will not develop a Restructuring Plan. This notice will be subject to dispute and administrative appeal under subpart F of this part. If the qualified mortgagee does not cooperate in modifying the mortgage, the PAE and owner may continue to develop a Restructuring Plan to restructure the loan using alternative financing. 


</P>
</DIV8>


<DIV8 N="§ 401.403" NODE="24:2.1.3.5.2.3.221.4" TYPE="SECTION">
<HEAD>§ 401.403   Rejection of a request for a Restructuring Plan because of actions or omissions of owner or affiliate or project condition.</HEAD>
<P>(a) <I>Ongoing determination of owner and project eligibility.</I> Notwithstanding an initial determination to accept the owner's request for a Restructuring Plan, the PAE is responsible for a further more complete and ongoing assessment of the eligibility of the owner and project while the Restructuring Plan is developed. The PAE must advise HUD if at any time any of the grounds for rejection listed in paragraph (b) of this section exist. 
</P>
<P>(b) <I>Grounds for rejection</I>—(1) <I>Suspension or debarment.</I> Neither a PAE nor HUD will continue to develop or consider a Restructuring Plan if, at any time before a closing under § 401.407, the owner is debarred or suspended under 2 CFR part 2424.
</P>
<P>(2) <I>Other grounds.</I> HUD may elect not to permit continued consideration of the Restructuring Plan at any time before closing under § 401.407, if: 
</P>
<P>(i) An affiliate is debarred or suspended under 2 CFR part 2424; 
</P>
<P>(ii) HUD or the PAE determines that the owner or an affiliate has engaged in material adverse financial or managerial actions or omissions as described in section 516(a) of MAHRA, including any outstanding violations of civil rights laws in connection with any project of the owner or affiliate; or 
</P>
<P>(iii) HUD or the PAE determines (under § 401.451(c) or otherwise) that the project does not meet the housing quality standards in § 401.558 and that the poor condition of the project is not likely to be remedied in a cost-effective manner through the Restructuring Plan. 
</P>
<P>(3) <I>Exception for sale.</I> This paragraph does not apply (except (2)(iii)) if a sale or transfer is proposed under § 401.480. 
</P>
<P>(c) <I>Dispute and appeal.</I> An owner may dispute a rejection under this section and seek administrative review under the procedures in subpart F of this part. 
</P>
<CITA TYPE="N">[65 FR 15485, Mar. 22, 2000, as amended at 72 FR 73496, Dec. 27, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 401.404" NODE="24:2.1.3.5.2.3.221.5" TYPE="SECTION">
<HEAD>§ 401.404   Proposed Restructuring Commitment.</HEAD>
<P>A PAE must submit a Restructuring Plan and a proposed Restructuring Commitment to HUD for approval, prior to submitting the Commitment to the owner for execution. The submission may not occur earlier than 10 days after the public meeting required by § 401.500(d). The proposed Restructuring Commitment must be in a form approved by HUD, incorporate the Restructuring Plan, and include the following: 
</P>
<P>(a) The lender, loan amount, interest rate, and term of any mortgages or unsecured financing for the mortgage restructuring and rehabilitation, and any credit enhancement; 
</P>
<P>(b) The amount of any payment of a section 541(b) claim; 
</P>
<P>(c) The type of section 8 assistance and the section 8 restructured rents; 
</P>
<P>(d) The rehabilitation required, the source of the owner contribution, and escrow arrangements; 
</P>
<P>(e) The uses for project accounts; 
</P>
<P>(f) The terms of any sale or transfer of the project; 
</P>
<P>(g) A schedule setting forth all sources and uses of funds to implement the Restructuring Plan, including setting forth the balances of project accounts before and after restructuring; 
</P>
<P>(h) All consideration, direct or indirect, received or to be received by the PAE or a related party, if known, in connection with any matter addressed in the Restructuring Commitment, except amounts paid or to be paid by HUD; and
</P>
<P>(i) Other terms and conditions prescribed by HUD. 


</P>
</DIV8>


<DIV8 N="§ 401.405" NODE="24:2.1.3.5.2.3.221.6" TYPE="SECTION">
<HEAD>§ 401.405   Restructuring Commitment review and approval by HUD.</HEAD>
<P>HUD will either approve the Restructuring Commitment as submitted, require changes as a condition for approval, or reject the Plan. If the Plan is rejected, HUD will inform the PAE of the reasons for rejection, and the PAE will inform the owner. HUD's rejection of the Plan is subject to the dispute and administrative appeal provisions of subpart F of this part. 


</P>
</DIV8>


<DIV8 N="§ 401.406" NODE="24:2.1.3.5.2.3.221.7" TYPE="SECTION">
<HEAD>§ 401.406   Execution of Restructuring Commitment.</HEAD>
<P>When HUD approves the Restructuring Commitment, the PAE will deliver the Restructuring Commitment to the owner for execution. The Restructuring Commitment becomes binding upon execution by the owner. An owner who does not execute the Restructuring Commitment may appeal its terms and seek modification under subpart F of this part. 


</P>
</DIV8>


<DIV8 N="§ 401.407" NODE="24:2.1.3.5.2.3.221.8" TYPE="SECTION">
<HEAD>§ 401.407   Closing conducted by PAE.</HEAD>
<P>After the owner has executed the Restructuring Commitment, the PAE must arrange for a closing to execute all documents necessary for implementation of the Restructuring Plan. The PAE must use standard documents approved by HUD, with modifications only as necessary to comply with applicable State or local laws, or such other modifications as are approved in writing by HUD. 


</P>
</DIV8>


<DIV8 N="§ 401.408" NODE="24:2.1.3.5.2.3.221.9" TYPE="SECTION">
<HEAD>§ 401.408   Affordability and use restrictions required.</HEAD>
<P>(a) <I>General.</I> The Restructuring Plan must provide that the project will be subject to affordability and use restrictions in a Use Agreement acceptable to HUD. The Use Agreement must be recorded and in effect for at least 30 years. It must include at least the provisions required by paragraphs (b) through (j) of this section. 
</P>
<P>(b) <I>Use restriction.</I> The project must continue to be used for residential use with no reduction in the number of residential units without prior HUD approval. 
</P>
<P>(c) <I>Affordability restrictions.</I> Except during a period when at least 20 percent of the units in a project receive project-based assistance: 
</P>
<P>(1) At least 20 percent of the units in the project must be leased to families whose adjusted income does not exceed 50 percent of the area median income as determined by HUD, with adjustments for household size, at rents no greater than 30 percent of 50 percent of the area median income; or 
</P>
<P>(2) At least 40 percent of the units in the project must be leased to families whose adjusted income does not exceed 60 percent of the area median income as determined by HUD, with adjustments for household size, at rents no greater than 30 percent of 60 percent of the area median income. 
</P>
<P>(d) <I>Comparable configuration.</I> The type and size of the units that satisfy the affordability restrictions of paragraph (c) of this section must be comparable to the type and size of the units for the project as a whole. 
</P>
<P>(e) <I>Nondiscrimination against voucher holders.</I> An owner must comply with the nondiscrimination provisions of § 401.556. 
</P>
<P>(f) <I>Enforcement.</I> The Use Agreement must contain remedies for breach of the Use Agreement, including monetary damages for non-compliance with paragraphs (c) and (g) of this section. 
</P>
<P>(g) <I>Compliance with physical condition standards.</I> The Use Agreement must require that the property be maintained in compliance with the requirements of § 401.558. 
</P>
<P>(h) <I>Reporting.</I> The Use Agreement must contain appropriate financial and other reporting requirements for the owner. These reports must comply with the Real Estate Assessment Center protocol or subsequent standards required by HUD. 
</P>
<P>(i) <I>Enforcement and amendment.</I> The Use Agreement will be enforceable by interested parties to be specified in the Agreement, which will include HUD, the PAE, project tenants, organizations representing project tenants, and the unit of local government. The Use Agreement must require the party bringing enforcement action to give the owner notice and a reasonable opportunity to cure any violations. 
</P>
<P>(j) <I>Modifications.</I> HUD will retain the right to approve modifications of the Use Agreement agreed to by the owner without the consent of any other party, including those having the right of enforcement. The owner must post prominently on project property notice of any modifications approved by HUD. 
</P>
<P>(k) <I>Owner obligation to accept project-based assistance.</I> Subject to the availability of appropriated funds, the owner of the project must accept any offer of renewal of project-based assistance if the offer is in accordance with the terms and conditions specified in the Restructuring Plan.
</P>
<CITA TYPE="N">[65 FR 15485, Mar. 22, 2000, as amended at 65 FR 53900, Sept. 6, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 401.410" NODE="24:2.1.3.5.2.3.221.10" TYPE="SECTION">
<HEAD>§ 401.410   Standards for determining comparable market rents.</HEAD>
<P>(a) <I>When are comparable market rents required?</I> The Restructuring Plan must establish restructured rents for project-based assistance at comparable market rents unless the PAE finds that exception rents are necessary under § 401.411. 
</P>
<P>(b) <I>Comparable market rents defined.</I> Comparable market rents are the rents charged for properties that the PAE determines to be comparable properties (as defined in section 512(1) of MAHRA, but also excluding section 202 or section 811 projects assisted under part 891 of this title). For purposes of section 512(1), other relevant characteristics include any applicable rent control and other characteristics determined by the PAE. The PAE may make appropriate adjustments when needed to ensure comparability of properties. 
</P>
<P>(c) <I>Methodology for determining comparable market rents.</I> If the PAE is unable to identify at least three comparable properties within the local market, the PAE may: 
</P>
<P>(1) Use non-comparable housing stock within that market from which adjustments can be made; or 
</P>
<P>(2) If necessary to go outside the market, use comparable properties as far outside the local market as it finds reasonable, from which adjustments can be made. 
</P>
<P>(d) <I>Using FMR as last resort.</I> If the PAE is unable to identify enough properties under paragraph (c) of this section, comparable market rents must be set at 90 percent of the Fair Market Rents for the relevant market area. 


</P>
</DIV8>


<DIV8 N="§ 401.411" NODE="24:2.1.3.5.2.3.221.11" TYPE="SECTION">
<HEAD>§ 401.411   Guidelines for determining exception rents.</HEAD>
<P>(a) <I>When do exception rents apply?</I> (1) The Restructuring Plan may provide for exception rents established under section 514(g)(2) of MAHRA for project-based assistance if the PAE determines that project income under the rent levels established under § 401.410 would be inadequate to meet the costs of operating the project as described in paragraph (b) of this section and that the housing needs of the tenants and the community could not be adequately addressed. 
</P>
<P>(2) In any fiscal year, the PAE may not request HUD to approve Restructuring Plans with exception rents for more than 20 percent of all units covered by the PRA, except that HUD may approve a waiver of this 20 percent limitation based on the PAE's narrative explanation of special need. 
</P>
<P>(b) <I>How are exception rents calculated?</I> (1) Exception rents must be set at a level sufficient to support the costs of operating the project. The PAE must take into account the following cost items: 
</P>
<P>(i) Debt service on the second mortgage under § 401.461(a) or a rehabilitation loan included in the Restructuring Plan; 
</P>
<P>(ii) The operating expenses of the project, as determined by the PAE, including: 
</P>
<P>(A) Contributions to adequate reserves for replacement; 
</P>
<P>(B) The costs of maintenance and necessary rehabilitation; 
</P>
<P>(C) Other eligible costs permitted under the section 8 program; 
</P>
<P>(iii) An adequate allowance for potential operating losses due to vacancies and failure to collect rents, as determined by the PAE; 
</P>
<P>(iv) A return to the owner to the extent permitted by § 401.461(b)(3)(ii)(A); and 
</P>
<P>(v) Other expenses determined by the PAE to be necessary for the operation of the project. 
</P>
<P>(2) The exception rent must not exceed 120 percent of the Fair Market Rent for the market area, except that HUD may approve an exception rent greater than 120 percent of Fair Market Rent, based on a narrative explanation of special need submitted by the PAE, subject to the 5 percent limitation in section 514(g)(2)(A) of MAHRA. 


</P>
</DIV8>


<DIV8 N="§ 401.412" NODE="24:2.1.3.5.2.3.221.12" TYPE="SECTION">
<HEAD>§ 401.412   Adjustment of rents based on operating cost adjustment factor (OCAF) or budget.</HEAD>
<P>(a) <I>OCAF.</I> (1) The Restructuring Plan must provide for annual adjustment of the restructured rents for project-based assistance by an OCAF determined by HUD.
</P>
<P>(2) <I>Application of OCAF.</I> HUD will apply the OCAF to the previous year's contract rent less the portion of that rent paid for debt service. This paragraph applies to renewals of contracts that receive restructured rents under either section 514(g)(1) or (2) of MAHRA.
</P>
<P>(b) <I>Budget-based.</I> Rents will be adjusted to the lesser of budget-based rents or the comparable market rents for the market area instead of OCAF not more often than once every ten years upon request of an owner or purchaser who
</P>
<P>(1) Demonstrates that:
</P>
<P>(i) Project income is insufficient to operate and maintain the project, and no rehabilitation is currently needed, as determined by the Secretary; or
</P>
<P>(ii) The rent adjustment or renewal contract is necessary to support commercially reasonable financing (including any required debt service coverage and replacement reserve) for rehabilitation necessary to ensure the long-term sustainability of the project, as determined by the Secretary, and in the event the owner or purchaser fails to implement the rehabilitation as required by the Secretary, the Secretary may take such action against the owner or purchaser as allowed by law; and
</P>
<P>(2) Agrees to:
</P>
<P>(i) Extend the affordability and use restrictions required under 514(e)(6) for an additional twenty years; and
</P>
<P>(ii) Enter into a binding commitment to continue to renew such contract for and during such extended term, provided that after the affordability and use restrictions required under 514(e)(6) have been maintained for a term of 30 years:
</P>
<P>(A) An owner with a contract for which rent levels were set at the time of its initial renewal under section 514(g)(2) shall request that the Secretary renew such contract under section 524 for and during such extended term; and
</P>
<P>(B) An owner with a contract for which rent levels were set at the time of its initial renewal under section 514(g)(1) may request that the Secretary renew such contract under section 524 for and during such extended term. 
</P>
<CITA TYPE="N">[89 FR 14590, Feb. 28, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 401.420" NODE="24:2.1.3.5.2.3.221.13" TYPE="SECTION">
<HEAD>§ 401.420   When must the Restructuring Plan require project-based assistance?</HEAD>
<P>The Restructuring Plan must provide for the section 8 contract to be renewed as project-based assistance, subject to the availability of funds for this purpose, if: 
</P>
<P>(a) The PAE determines there is a market-wide vacancy rate of 6 percent or less; 
</P>
<P>(b) At least 50 percent of the units in the project are occupied by elderly families, disabled families, or elderly and disabled families; or 
</P>
<P>(c) The project is held by a nonprofit cooperative ownership housing corporation or nonprofit cooperative housing trust. 


</P>
</DIV8>


<DIV8 N="§ 401.421" NODE="24:2.1.3.5.2.3.221.14" TYPE="SECTION">
<HEAD>§ 401.421   Rental Assistance Assessment Plan.</HEAD>
<P>(a) <I>Plan required.</I> For any project not subject to mandatory project-based assistance under § 401.420, the PAE must develop a Rental Assistance Assessment Plan in accordance with section 515(c)(2) of MAHRA to determine whether assistance should be renewed as project-based assistance or whether some or all of the assisted units should be converted to tenant-based assistance. 
</P>
<P>(b) <I>Matters to be assessed.</I> The PAE must include an assessment of the impact of converting to tenant-based assistance and the impact of renewing project-based assistance on: 
</P>
<P>(1) The ability of the tenants to find adequate, available, decent, comparable, and affordable housing in the local market; 
</P>
<P>(2) The types of tenants residing in the project (such as elderly families, disabled families, large families, and cooperative homeowners); 
</P>
<P>(3) The local housing needs identified in the applicable Consolidated Plan developed under part 91 of this title; 
</P>
<P>(4) The cost of providing assistance, comparing the applicable payment standard to the rent levels permitted by §§ 401.410 and 401.411; 
</P>
<P>(5) The long-term financial stability of the project; 
</P>
<P>(6) The ability of residents to make reasonable choices about their individual living situations; 
</P>
<P>(7) The quality of the neighborhood in which the tenants would reside; and
</P>
<P>(8) The project's ability to compete in the marketplace. 
</P>
<P>(c) <I>Conversion may be phased in.</I> Any conversion from project-based assistance to tenant-based assistance may occur over a period of not more than 5 years if the PAE decides the transition period is needed for the financial viability of the project. 
</P>
<P>(d) <I>Reports to HUD.</I> The PAE must report to HUD on the matters specified in section 515(c)(2)(C) of MAHRA at least semi-annually. 
</P>
<CITA TYPE="N">[65 FR 15485, Mar. 22, 2000, as amended at 65 FR 53900, Sept. 6, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 401.450" NODE="24:2.1.3.5.2.3.221.15" TYPE="SECTION">
<HEAD>§ 401.450   Owner evaluation of physical condition.</HEAD>
<P>(a) <I>Initial evaluation.</I> The owner must evaluate the physical condition of the project and provide the following information to the PAE in a form acceptable to the PAE: 
</P>
<P>(1) All work items required to bring the project to the standard in § 401.452, including any work items needed to ensure compliance with applicable requirements of part 8 of this title concerning accessibility to persons with disabilities; 
</P>
<P>(2) The capital repair or replacement items that will be necessary to maintain the long-term physical integrity of the property; 
</P>
<P>(3) A plan for funding the rehabilitation work included in paragraph (a)(1) of this section, which work must be completed in a timely manner after closing the restructuring transaction, that identifies the source of the required owner contribution of non-project funds; and 
</P>
<P>(4) An estimate of the initial deposit, if any, and the estimated monthly deposit to the reserve for replacement account for the next 20 years. 
</P>
<P>(b) <I>Use of CNA.</I> An owner may comply with paragraph (a) of this section by submitting a comprehensive needs assessment in accordance with title IV of the Housing and Community Development Act of 1992 (12 U.S.C. 1715z-1a note) if the CNA:
</P>
<P>(1) Was completed or updated within 1 year; and 
</P>
<P>(2) Contains all of the matters required by paragraph (a) of this section. 
</P>
<P>(c) <I>Reconsideration and modification of evaluation.</I> If the PAE, after its independent review under § 401.451, determines that the owner's evaluation either fails to address specific necessary work items or fails to propose a cost-effective approach to rehabilitation, the owner may modify its evaluation to satisfy the concerns of the PAE. 
</P>
<CITA TYPE="N">[65 FR 15485, Mar. 22, 2000, as amended at 65 FR 53900, Sept. 6, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 401.451" NODE="24:2.1.3.5.2.3.221.16" TYPE="SECTION">
<HEAD>§ 401.451   PAE Physical Condition Analysis (PCA).</HEAD>
<P>(a) <I>Review and certification of owner evaluation.</I> (1) The PAE must independently evaluate the physical condition of the project by means of a PCA. If the PAE finds any immediate threats to health and safety, the owner must complete those work items immediately, or the PAE must evaluate the project's eligibility in accordance with § 401.403(b)(2)(iii). 
</P>
<P>(2) After consultation with the owner and an opportunity for the owner to modify its evaluation performed under § 401.450, the PAE must either certify to the accuracy and completeness of the owner's evaluation performed under § 401.450 for each project covered by the PRA, or state that the evaluation fails to address certain items or does not propose a cost effective approach. 
</P>
<P>(b) <I>Rejection due to inaccurate or incomplete owner evaluation.</I> If the PAE cannot certify to the accuracy and completeness of the owner's evaluation due to its failure to address specific work items or because it does not propose a cost effective approach, the PAE must notify HUD. If HUD agrees with the PAE's determination, the PAE must notify the owner that the request for a Restructuring Plan is rejected. 
</P>
<P>(c) <I>Rejection due to poor condition of the project.</I> Based on the completed PCA, the PAE must determine whether proceeding with a Restructuring Plan with necessary rehabilitation is more cost-effective in terms of Federal resources than rejecting the Request for a Restructuring Plan under § 401.403(b)(2)(iii) and providing tenant-based assistance for displaced tenants under § 401.602. HUD will provide guidance to PAEs for making the determination. If the PAE concludes that a request for a Restructuring Plan should be rejected because of lack of cost-effectiveness due to poor condition of the project, it must also consider the effect on tenants and the community and advise HUD of the effect. HUD will make the final decision after considering the PAE's recommendation. 
</P>
<P>(d) <I>Dispute and appeal of rejection.</I> The dispute and appeal provisions of subpart F of this part apply to rejections under paragraphs (b) and (c) of this section.


</P>
</DIV8>


<DIV8 N="§ 401.452" NODE="24:2.1.3.5.2.3.221.17" TYPE="SECTION">
<HEAD>§ 401.452   Property standards for rehabilitation.</HEAD>
<P>The restructuring plan must provide for the level of rehabilitation needed to restore the property to the non-luxury standard adequate for the rental market for which the project was originally approved. If the standard has changed over time, the rehabilitation may include improvements to meet the current standards. The rehabilitation also may include the addition of significant features, in accordance with § 401.472. The result of the rehabilitation should be a project that can attract non-subsidized tenants, but competes on rent rather than on amenities. When a range of options exists for satisfying the rehabilitation standard, the PAE must choose the least costly option considering both capital and operating costs and taking into account the marketability of the property and the remaining useful life of all building systems. Nothing in this part exempts rehabilitation from the requirements of part 8 of this title concerning accessibility to persons with disabilities.
</P>
<CITA TYPE="N">[72 FR 66038, Nov. 26, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 401.453" NODE="24:2.1.3.5.2.3.221.18" TYPE="SECTION">
<HEAD>§ 401.453   Reserves.</HEAD>
<P>The Restructuring Plan must provide for reserves for capital replacement sufficient to ensure the property's long-term structural integrity so that the property can be maintained as affordable housing in decent, safe, and sanitary condition meeting the standards of § 401.558. 


</P>
</DIV8>


<DIV8 N="§ 401.460" NODE="24:2.1.3.5.2.3.221.19" TYPE="SECTION">
<HEAD>§ 401.460   Modification or refinancing of first mortgage.</HEAD>
<P>(a) <I>Principal amount.</I> As part of the Restructuring Plan, the PAE will determine the size of the restructured first mortgage that will result from the modification or refinancing of the existing FHA-insured or HUD-held first mortgage. The restructured first mortgage must be in the amount that can be supported by net operating income based on the lower of the restructured section 8 rents or the rents allowed by the Use Agreement under § 401.408. Neither the outstanding principal balance of the existing first mortgage, nor the monthly principal and interest payments on that debt, may be increased through modification under the Restructuring Plan. The debt service coverage used by the PAE must be adequate for purposes of the Restructuring Plan and for the requirements of any refinancing. 
</P>
<P>(b) <I>Fully amortizing.</I> The modified or refinanced first mortgage must be fully amortizing through level monthly payments. 
</P>
<P>(c) <I>Rates and other terms.</I> Interest rates and other terms of the modified or refinanced first mortgage must be competitive in the market. 
</P>
<P>(d) <I>Fees.</I> Any fees or costs associated with mortgage modification or refinancing determined by the PAE to be above normal processing fees must be paid by the owner from non-project funds and must not be included in the modified or refinanced first mortgage. 
</P>
<P>(e) <I>Refinancing.</I> (1) The owner must contact the mortgagee to determine the mortgagee's willingness to consider a modification and re-amortization of the existing first mortgage through a Restructuring Plan before considering any other source of first mortgage financing. If the mortgagee does not agree to modify and re-amortize in accordance with the Restructuring Plan, the loan must be refinanced. 
</P>
<P>(2) The refinancing may be either without credit enhancement or with credit enhancement under one of the following: 
</P>
<P>(i) <I>FHA mortgage insurance.</I> If the Restructuring Plan provides for FHA mortgage insurance for the refinanced first mortgage, the insurance will be provided in accordance with all usually applicable FHA legal requirements except that insurance will be documented as provided in section 517(b)(2) of MAHRA. HUD will issue the commitment for mortgage insurance but may adapt its procedures as necessary to facilitate development and implementation of a Restructuring Plan. 
</P>
<P>(ii) <I>Other FHA credit enhancement.</I> If FHA credit enhancement, including risk-sharing, is provided under part 266 of this title, the credit enhancement will be provided in accordance with all usually-applicable FHA legal requirements under part 266 of this title, except that special approval from HUD will be required before the PAE engages in risk-sharing with FHA under part 266 of this title. HUD will approve risk-sharing financing that complies with part 266 whenever required by section 517(b)(3) of MAHRA. 
</P>
<P>(iii) <I>Credit enhancement from non-FHA sources.</I> If credit enhancement is to be provided by a non-FHA source under section 517(b)(4) of MAHRA, HUD will consider waiver of any non-statutory provision in this part only if the waiver will not materially impair achievement of the purposes of MAHRA and if the waiver is essential to meet the legitimate business or legal requirements of the provider of credit enhancement. 


</P>
</DIV8>


<DIV8 N="§ 401.461" NODE="24:2.1.3.5.2.3.221.20" TYPE="SECTION">
<HEAD>§ 401.461   HUD-held second mortgage.</HEAD>
<P>(a) <I>Amount.</I> (1) The Restructuring Plan must provide for a second mortgage to HUD whenever the Plan provides for either payment of a claim under section 541(b) of the National Housing Act (541(b) claim) or the modification or refinancing of a HUD-held first mortgage that results in a first mortgage with a lower principal amount. The term “second mortgage” in this section also includes a new HUD-held first mortgage (not a refinancing mortgage), if a full payment of claim is made under § 401.471 or if a full payment of claim is unnecessary because surplus project accounts are available to facilitate the Restructuring Plan, pursuant to section 517(b)(6) of MAHRA, or if § 401.460(a) does not permit a restructured first mortgage in any amount.
</P>
<P>(2) The second mortgage must be in a principal amount that does not exceed the lesser of: 
</P>
<P>(i) The amount the PAE reasonably expects to be repaid based on objective criteria such as the amount of anticipated net cash flow, trending assumptions, amortization provisions, and expected residual value of the property; and 
</P>
<P>(ii) The greater of:
</P>
<P>(A) The section 541(b) claim (or the difference between the unpaid principal balance on HUD-held mortgage debt immediately before and after the restructuring), plus surplus project accounts from residual receipts accumulated pursuant to 24 CFR 880.205(e), 881.205(e), or 883.306(e) and derived from an expiring Section 8 Housing Assistance Payments contract and not otherwise distributed to the owner and made available to facilitate the Restructuring Plan pursuant to section 517(b)(6) of MAHRA, and
</P>
<P>(B) The difference between the unpaid balance on the first mortgage immediately before and after the restructuring.
</P>
<P>(b) <I>Terms and conditions.</I> (1) The second mortgage must have an interest rate of at least one percent, but not more than the applicable Federal rate.
</P>
<P>(2) The second mortgage must have a term concurrent with the modified or refinanced first mortgage, if any. HUD may provide that if there is no first mortgage, the second mortgage may continue for a term established by HUD. 
</P>
<P>(3)(i) Principal and interest on the second mortgage is payable only out of net cash flow during its term. “Net cash flow” means that portion of project income that remains after the payment of all required debt service payments on the modified or refinanced first mortgage, if any, including payment of any past due principal or interest, and payment of all reasonable and necessary operating expenses (including deposits to the reserve for replacement account) and any other expenditure approved by HUD. 
</P>
<P>(ii) The priority and distribution of net cash flow is as follows: 
</P>
<P>(A) HUD or the PAE may approve the payment to the owner of up to 25 percent of net cash flow based on consideration of relevant conditions and circumstances including, but not limited to, compliance with the management standards prescribed in § 401.560 and the physical condition standards prescribed in § 401.558; and 
</P>
<P>(B) All remaining net cash flow will be applied to the principal and interest on the second mortgage, until paid in full, and then to any additional subordinate mortgage under § 401.461(c). 
</P>
<P>(4) HUD may cause the second mortgage to be immediately due and payable on the grounds provided in section 517(a)(4) of MAHRA, including an assumption of the mortgage in violation of HUD standards for approval of transfers of physical assets (if applicable), or if the owner materially fails to comply with other material HUD requirements after a reasonable opportunity for the owner to cure such failure. A decision by HUD in this regard is subject to the administrative appeals procedure in subpart F of this part, unless HUD acts on the basis of the grounds specified in sections 517(a)(4)(A) or (B) of MAHRA. 
</P>
<P>(5) HUD will consider modification, assignment to the acquiring entity, or forgiveness of all or part of the second mortgage, if: The Secretary holds the second mortgage; and if the project has been sold or transferred to a tenant organization or tenant-endorsed community-based nonprofit or public agency that meets eligibility guidelines determined by HUD; accepts additional affordability requirements acceptable to HUD; and requests such modification, assignment, or forgiveness. A community-based nonprofit group or public agency demonstrates that it is tenant-endorsed in accordance with § 401.480(e).
</P>
<P>(c) <I>Additional mortgage to HUD.</I> (1) A Restructuring Plan shall require the owner to give an additional mortgage on the project to HUD in an amount that:
</P>
<P>(i) For the restructuring of a mortgage insured by HUD, does not exceed the difference between:
</P>
<P>(A) The amount of a section 541(b) claim paid under § 401.471 increased by any residual receipts, pursuant to 24 CFR 880.205(e), 881.205(e), or 883.306(e); and
</P>
<P>(B) The principal amount of the second mortgage; or
</P>
<P>(ii) For the restructuring of a mortgage held by HUD, does not exceed the difference between:
</P>
<P>(A) The principal amount of a restructured HUD-held mortgage and the sum of, as applicable, a restructured HUD-held first mortgage at reduced principal amount, new mortgage funds paid to HUD at closing, and surplus project accounts other than residual receipts, pursuant to 24 CFR 880.205(e), 881.205(e), or 883.306(e); and
</P>
<P>(B) The principal amount of the second mortgage.
</P>
<P>(2) HUD may approve a Plan that does not require an additional mortgage, or provides for less than the full difference to be payable under the additional mortgage, or allows for subsequent modification, assignment, or forgiveness of the additional mortgage under any of the following circumstances:
</P>
<P>(i) The anticipated recovery on the additional mortgage is less than the servicing costs; or
</P>
<P>(ii) HUD has approved modification, assignment, or forgiveness of the second mortgage, pursuant to paragraph (b)(5) of this section.
</P>
<P>(3) With respect to the second mortgage required by paragraph (a) of this section, any additional mortgage must:
</P>
<P>(i) Be junior in priority;
</P>
<P>(ii) Bear interest at the same rate; and
</P>
<P>(iii) Require no payment until the second mortgage is satisfied, at which time it will be payable upon demand of HUD or as otherwise agreed by HUD.
</P>
<CITA TYPE="N">[65 FR 15485, Mar. 22, 2000, as amended at 72 FR 66038, Nov. 26, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 401.471" NODE="24:2.1.3.5.2.3.221.21" TYPE="SECTION">
<HEAD>§ 401.471   HUD payment of a section 541(b) claim.</HEAD>
<P>HUD will pay a section 541(b) claim from the appropriate insurance fund to the insured mortgagee on behalf of the mortgagor. The mortgagee must use the claim payment to prepay the principal balance of the insured mortgage, in whole or in part, as provided in the Restructuring Plan. All section 541(b) claims will be paid in cash. Part 207 of this title and sections 207(g) and 541(a) of the NA do not apply to a section 541(b) claim. 


</P>
</DIV8>


<DIV8 N="§ 401.472" NODE="24:2.1.3.5.2.3.221.22" TYPE="SECTION">
<HEAD>§ 401.472   Rehabilitation funding.</HEAD>
<P>(a) <I>Sources of funds</I>—(1) <I>Project accounts.</I> The Restructuring Plan for funding rehabilitation must include funds from the project's residual receipts account, surplus cash account, replacement reserve account, and other project accounts, to the extent the PAE determines that those accounts will not be needed for the initial deposit to the reserves. 
</P>
<P>(2) <I>Debt restructuring.</I> The Restructuring Plan may provide for funding of rehabilitation through a new first mortgage in conjunction with a payment of a section 541(b) claim. The payment of claim may be in an amount necessary to facilitate the funding of the rehabilitation, by reducing the existing first mortgage debt to make refinancing proceeds available to fund rehabilitation. 
</P>
<P>(3) <I>Section 236(s) rehabilitation grant.</I> The Restructuring Plan may include a direct grant from HUD under section 236(s) of the NA made in accordance with § 401.473, to the extent that HUD has determined that funding is available for such a grant. 
</P>
<P>(4) <I>Section 8 budget authority increase.</I> The Restructuring Plan may include funding of rehabilitation from budget authority provided to HUD for increases in section 8 contracts, to the extent that HUD has determined that funding from this source is available. 
</P>
<P>(b) <I>Statutory restrictions.</I> Any rehabilitation funded from the sources described in paragraph (a) of this section is subject to the requirements in section 517(c) of MAHRA for an owner contribution.
</P>
<P>(1) <I>Addition of significant features.</I> With respect to significant added features, the required owner contribution will be as proposed by the PAE and approved by HUD, and not to exceed 20 percent of the total cost. Significant added features include the addition of air conditioning (including conversions from window air conditioning to central air conditioning), an elevator, or additional community space.
</P>
<P>(2) <I>Cap on owner contribution.</I> If a restructuring plan includes additions other than those specified, and the PAE considers the additions significant, the PAE may propose to make those additions subject to the cap on owner contribution. In general, the owner will contribute 3 percent toward the cost of each significant addition. The PAE may propose a lower or higher owner contribution, not to exceed 20 percent, with respect to significant additions.
</P>
<P>(3) <I>Other rehabilitation.</I> With respect to other rehabilitation, the required owner contribution will be calculated as 20 percent of the total cost of rehabilitation, unless HUD or the PAE determines that a higher percentage is required. The owner contribution must include a reasonable proportion (as determined by HUD) of the total cost of rehabilitation from nongovernmental resources.
</P>
<P>(4) <I>Cooperatives.</I> The PAE may exempt housing cooperatives from the owner contribution requirement.
</P>
<P>(c) <I>Escrow agent.</I> The Restructuring Plan must provide for progress payments for rehabilitation, which must be disbursed by an acceptable escrow agent subject to PAE oversight or as otherwise provided by HUD. 
</P>
<CITA TYPE="N">[65 FR 15485, Mar. 22, 2000, as amended at 72 FR 66039, Nov. 26, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 401.473" NODE="24:2.1.3.5.2.3.221.23" TYPE="SECTION">
<HEAD>§ 401.473   HUD grants for rehabilitation under section 236(s) of NA.</HEAD>
<P>HUD will consider a direct grant for rehabilitation under section 236(s) of the NA only if the owner provides an acceptable work schedule and cost-analysis that is consistent with the owner's evaluation of physical condition under § 401.450, as certified by the PAE. The owner must execute a grant agreement with terms and conditions acceptable to HUD. If the PAE is a State or local government, or an agency or instrumentality of such a government, the PAE and HUD may agree that the PAE will be delegated the responsibility for the administration of any grant made under this section. HUD may make grant funding available for the cost of administration if HUD has determined that such funding is available. 


</P>
</DIV8>


<DIV8 N="§ 401.474" NODE="24:2.1.3.5.2.3.221.24" TYPE="SECTION">
<HEAD>§ 401.474   Project accounts.</HEAD>
<P>(a) <I>Accounts from other projects.</I> The accounts listed in § 401.472(a)(1) may be used for other eligible projects only if: 
</P>
<P>(1) The projects are included in a Consolidated Restructuring Plan under § 401.401; and 
</P>
<P>(2) The funds are used for rehabilitation or to reduce a section 541(b) claim paid by HUD under § 401.471. 
</P>
<P>(b) <I>Distribution to owner.</I> The Restructuring Plan may provide for a one-time distribution to the owner, not to exceed 10 percent of the excess funds in project accounts, to be released after completion of the rehabilitation required by the Restructuring Plan. 


</P>
</DIV8>


<DIV8 N="§ 401.480" NODE="24:2.1.3.5.2.3.221.25" TYPE="SECTION">
<HEAD>§ 401.480   Sale or transfer of project.</HEAD>
<P>(a) <I>May the owner request a Restructuring Plan that includes a sale or transfer of the property?</I> The owner may request a Restructuring Plan that includes a condition that the property be sold or transferred to a purchaser acceptable to HUD in a reasonable period needed to consummate the transaction. The failure to consummate a sale or transfer of the property requested under paragraph (a) of this section will neither adversely affect an owner's eligibility for a Restructuring Plan nor exempt the owner from the requirements of § 401.600. There are no priority purchaser requirements for a voluntary sale or transfer by an owner that is eligible for a Restructuring Plan. 
</P>
<P>(b) <I>When must the restructuring plan include sale or transfer of the property?</I> If the owner is determined to be ineligible pursuant to § 401.101 or § 401.403, or if the property is subject to an approved plan of action under the Emergency Low Income Housing Preservation Act of 1987 or the Low Income Housing Preservation and Resident Homeownership Act of 1990, as described in section 524(e)(3) of MAHRA, the property must be sold or transferred as a condition of implementation of a restructuring plan, which must include a condition that the owner sell or transfer the property to a purchaser acceptable to HUD, in accordance with paragraph (c) of this section. Such sale or transfer shall be a condition to the implementation of the Restructuring Plan.
</P>
<P>(c) <I>Owner's notice of intent to sell or transfer.</I> (1) The owner must provide notice to the PAE affirming the owner's intent to sell or transfer the property. This notice must be received by the PAE no later than 30 days after a notice of rejection under § 401.101 or § 401.403 has become a final determination under subpart F of this part. 
</P>
<P>(2) The owner must cooperate in selling or transferring the property. Failure to do so will result in the PAE's determination to reject the owner's request for a Restructuring Plan. The owner must distribute and publish, in an appropriate publication, a notice to potential purchasers that describes the property, proposed terms of sale, and procedures for submitting a purchase offer. The notice in form and substance must be acceptable to HUD, and must inform potential offerors of a preference for priority purchasers. 
</P>
<P>(3) During a period to be determined by HUD that begins when the owner gives notice of intent to sell or transfer, an owner may accept an offer only from a priority purchaser. 
</P>
<P>(4) No sale or transfer to a non-priority purchaser will be approved without evidence of tenant support. 
</P>
<P>(d) <I>Informing PAE; approval required.</I> The owner must inform the PAE of any offer to purchase the property and the owner must advise the PAE of the substance and on-going status of the owner's discussions with any prospective purchaser. The owner's acceptance of the offer must be subject to PAE approval, and HUD approval of the Restructuring Plan.
</P>
<P>(e) <I>Tenant endorsement procedure for priority purchaser status</I>—(1) <I>Required meeting.</I> (i) A community-based nonprofit or public agency purchaser requesting tenant endorsement to obtain priority purchaser status must conduct an informational meeting with the tenants of the project to disseminate information about both the endorsement request and the purchaser's plans for the project.
</P>
<P>(ii) If the purchaser is acting contemporaneously with the Restructuring Plan, the informational meeting must occur at the second meeting of tenants convened by the PAE to discuss the restructuring plan pursuant to § 401.500(d).
</P>
<P>(iii) A representative of the purchasing entity must attend the informational meeting to present its plans for the acquisition and improvement of the project and to respond to questions about the purchaser's plans for the property.
</P>
<P>(iv) Tenants shall have the opportunity, but are not to be required, to vote for or against the acquisition at the informational meeting.
</P>
<P>(v) For the purpose of obtaining tenant endorsement, a purchaser may conduct additional meetings with tenants in accordance with the notice requirements of paragraphs (e)(2) and (e)(3) of this section.
</P>
<P>(2) <I>Parties who must receive notice.</I> The purchaser must deliver notice of the informational meeting, and any subsequent meeting, to each tenant household in the project and any tenant organization for the project, and post notices of the meeting in the project.
</P>
<P>(3) <I>Notice contents.</I> The notice must identify the place, date, and time of the informational meeting, and any subsequent meeting. Include a brief description of the purpose of the meeting and provide a narrative outlining the purchaser's plans for the project, including any request made to HUD for debt relief under § 401.461(b)(5) of the second and any additional mortgage.
</P>
<P>(4) <I>Tenant endorsement.</I> (i) A purchaser may demonstrate that it is tenant endorsed by submitting documentation to HUD that a majority (51 percent) of the tenant heads of household have given their endorsement in writing. Such documentation may include, but is not limited to, ballots, letters of support, or petitions. The endorsement of tenants who did not attend, or vote at, the informational meeting, or any subsequent meeting, may be sought directly from each of these tenants subsequent to the meeting.
</P>
<P>(ii)(A) If the purchaser has made a reasonable effort to obtain the endorsement of a majority (51 percent) of the tenants and the necessary percentage of votes was not obtained, the purchaser may seek HUD approval to obtain endorsement based on a lower percentage of endorsing tenants.
</P>
<P>(B) The purchaser must deliver notice to each tenant household that the purchaser is seeking HUD approval of a tenant endorsement based on less than 51 percent of tenant approval and provide tenants with at least 10 days from the date of the notice to submit comments to the purchaser on the approval of endorsement.
</P>
<P>(C) The purchaser and/or seller must submit, in writing, to HUD an account of the efforts taken to secure tenant endorsement, the number and percentage of tenants voting for and against endorsement, and any comments received from tenants regarding the approval of endorsement.
</P>
<P>(D) HUD will determine whether or not to approve endorsement on the basis of all the information available to HUD and will promptly notify the purchaser of HUD's determination.
</P>
<CITA TYPE="N">[65 FR 15485, Mar. 22, 2000, as amended at 72 FR 66039, Nov. 26, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 401.481" NODE="24:2.1.3.5.2.3.221.26" TYPE="SECTION">
<HEAD>§ 401.481   Subsidy layering limitations on HUD funds.</HEAD>
<P>(a) <I>PAE subsidy layering certification required for Restructuring Plan.</I> The PAE must certify to HUD that any Restructuring Plan for which it submits a proposed Restructuring Commitment meets the requirements of either paragraph (d) or (e) of this section. 
</P>
<P>(b) <I>Purpose of subsidy layering certification.</I> The purpose of the subsidy layering certification is to ensure that any HUD assistance provided to the owner of a project pursuant to a Restructuring Plan is no more than is necessary to permit the project to continue to house tenants with an income mix comparable to the income mix of the project before the Restructuring Plan is implemented, after taking into account other Government assistance described in section 102(b)(1) of the Department of Housing and Urban Development Reform Act of 1989 (42 U.S.C. 3545(b)(1)). This section does not limit a PAE from presenting for approval a Restructuring Plan that includes project reconfiguration (<I>e.g.,</I> conversion of efficiency units to one-bedroom units) where necessary to meet the needs of the community, provided the conditions of § 401.452 are also met. 
</P>
<P>(c) <I>Relationship to section 102(d) of HUD Reform Act.</I> HUD is not required to perform a separate subsidy layering analysis under section 102(d) of the Department of Housing and Urban Development Reform Act of 1989 (42 U.S.C. 3545(d)), section 911 of the Housing and Community Development Act of 1992 (42 U.S.C. 3545 note), or § 4.13 of this title for any HUD assistance that is included in the Restructuring Plan. HUD will adopt the PAE certification under this section if a HUD certification otherwise would be required under section 102(d). 
</P>
<P>(d) <I>Certification under existing HUD guidelines.</I> If the PAE has delegated authority from HUD to make section 102(d) subsidy layering certifications in accordance with section 911 of the Housing and Community Development Act of 1992, the PAE may comply with this section by using a procedure substantially similar to the procedure described in the Administrative Guidelines published on December 15, 1994 (59 FR 64748), or any subsequent procedure adopted by HUD to implement section 911. 
</P>
<P>(e) <I>Other procedures.</I> If the PAE does not have the delegated authority described in paragraph (d) of this section, the PAE must submit to HUD for approval proposed procedures for making the subsidy layering certification under this section. Any procedures must conform to the procedures described in paragraph (d) of this section to the extent feasible and appropriate. 


</P>
</DIV8>


<DIV8 N="§ 401.500" NODE="24:2.1.3.5.2.3.221.27" TYPE="SECTION">
<HEAD>§ 401.500   Required notices to third parties and meeting with third parties.</HEAD>
<P>(a) <I>General.</I> The PAE must solicit, and document the consideration of, tenant and local community comments. As a minimum, the notices described in paragraphs (b), (c) and (f) of this section, in form and substance acceptable to HUD, must be provided. The PAE may require the owner to give the notices if permitted by HUD. 
</P>
<P>(b) <I>Notice of intent to restructure and consultation meeting.</I> (1) This notice must include at a minimum: 
</P>
<P>(i) The project, including its name and FHA Project Number; 
</P>
<P>(ii) The responsible PAE and contact person, including the address and telephone number; 
</P>
<P>(iii) The owner's notice of intent to restructure through the Mark-to-Market Program; and 
</P>
<P>(iv) The date of expiration of the project-based assistance. 
</P>
<P>(2) This notice must state how comments may be provided to the PAE regarding any of the following: the physical condition of the property, whether the rental assistance should be tenant-based or project-based, any proposed sale or transfer of the property, and other matters regarding the property and its management. The notice must establish the date, time, and place for a public meeting to be held no sooner than 20 days and no later than 40 days following the date of this notice. The public may provide written comments up to the date of the meeting. 
</P>
<P>(c) <I>Access to Restructuring Plan.</I> (1) The PAE must make the Restructuring Plan available to the parties identified in § 401.501 at least 20 days before the PAE submits the Restructuring Plan to HUD (subject to any Federal, State, or local laws restricting access to any information in the Plan or related documents). 
</P>
<P>(2) As soon as the PAE determines that the Restructuring Plan is substantively complete and ready for submission to HUD, notice of the following must be provided: 
</P>
<P>(i) The location of the Plan for inspection and copying; and 
</P>
<P>(ii) The date, time, and place of a public meeting to be held at least 10 days before the PAE submits the Plan to HUD. 
</P>
<P>(3) When the PAE gives notice under this section, it must make the Plan available during normal business hours at the management office of the project, or if there is no such office, at another location specified by the PAE that is convenient to the tenants. 
</P>
<P>(d) <I>Meeting to discuss the Restructuring Plan.</I> After the PAE has given notice under this section and at least 10 days before the PAE submits the Plan to HUD, the PAE must conduct a public meeting to obtain comments on the substantively completed Plan. The PAE must accept written comments through the date of the meeting. 
</P>
<P>(e) <I>Disposition of comments.</I> The PAE must document and provide to HUD with the Restructuring Plan a summary of the disposition of all public comments. 
</P>
<P>(f) <I>Notice of completion of Restructuring Plan.</I> (1) Within 10 days after the owner executes the Restructuring Commitment, notice must be provided that describes the completed Restructuring Plan and Restructuring Commitment. The PAE must make the completed Restructuring Plan and Restructuring Commitment available during normal business hours to the public at a place described in paragraph (c)(3) of this section, subject to Federal, State, or local laws restricting access to any information in any of these documents. 
</P>
<P>(2) Within 10 days after a determination that the Restructuring Plan will not move forward for any reason, HUD or the PAE shall provide notice to affected tenants that describes the reasons for the failure of the Plan to move forward and the availability of tenant-based assistance under § 401.602(c).
</P>
<CITA TYPE="N">[65 FR 15485, Mar. 22, 2000, as amended at 72 FR 66040, Nov. 26, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 401.501" NODE="24:2.1.3.5.2.3.221.28" TYPE="SECTION">
<HEAD>§ 401.501   Delivery of notices and recipients of notices.</HEAD>
<P>(a) <I>Whom must the owner or PAE notify?</I> The PAE must notify, or ensure that the owner notifies, each tenant and any tenant organization for the project, and post a notice in the project, for all notices required by §§ 401.500 and 401.502. 
</P>
<P>(b) <I>Whom must the PAE notify?</I> The PAE must notify: 
</P>
<P>(1) The Chief Executive Officer of the unit of local government and the Executive Director of the Public Housing Authority with jurisdiction over the project location; 
</P>
<P>(2) The recipient of any Outreach and Training Grant (OTAG) or Intermediary Technical Assistance Grant (ITAG) for the project location; and 
</P>
<P>(3) Other appropriate neighborhood representatives and other affected parties. 
</P>
<CITA TYPE="N">[65 FR 15485, Mar. 22, 2000, as amended at 65 FR 53900, Sept. 6, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 401.502" NODE="24:2.1.3.5.2.3.221.29" TYPE="SECTION">
<HEAD>§ 401.502   Notice requirement when debt restructuring will not occur.</HEAD>
<P>(a) <I>PAE responsibility.</I> If an owner of an eligible project requests a renewal of a section 8 contract without a Restructuring Plan under § 402.4 of this chapter, HUD or the PAE must notify, or ensure that the owner notifies, all parties identified in § 401.501 of the request and of: 
</P>
<P>(1) The availability (as provided in § 401.500(c)(3)) of the following information: 
</P>
<P>(i) The owner evaluation of physical condition (OEPC), or a comprehensive needs assessment (CNA) if used instead of an OEPC, as required by § 401.450 and § 402.6(a)(3) of this chapter; 
</P>
<P>(ii) The market analysis required by § 402.6(a)(2) of this chapter, but without addresses (or other specific information indicating location) for comparable properties; and 
</P>
<P>(iii) The items identified in § 401.500(b)(1)(i), (ii), and (iv); and 
</P>
<P>(2) A procedure for submitting public comments regarding this information. 
</P>
<P>(b) <I>Expense and profit/loss information.</I> The PAE should remove project expense, property valuation, and profit and loss information before disclosing any information obtained by the PAE directly from an owner or project manager, unless the owner has given written consent to disclosure with that information included. 
</P>
<P>(c) <I>Consideration of comments.</I> The PAE must consider written public comments on the information listed in paragraph (a) of this section, if the comments are submitted within 30 days after giving notice under paragraph (a), and document the consideration for HUD. No public meeting is required. 
</P>
<CITA TYPE="N">[65 FR 15485, Mar. 22, 2000, as amended at 65 FR 53900, Sept. 6, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 401.503" NODE="24:2.1.3.5.2.3.221.30" TYPE="SECTION">
<HEAD>§ 401.503   Access to information.</HEAD>
<P>(a) <I>PAE responsibilities.</I> The PAE must provide to parties entitled to notice under § 401.501 access to information obtained by the PAE about the project and its management if the PAE determines that such information is reasonably likely to contribute to effective participation by those parties in the restructuring process, or if HUD requires the PAE to provide access to the information. The PAE is not required to make public any information received from the owner or manager that the PAE reasonably characterizes as confidential or proprietary information that would not ordinarily be made public, except: 
</P>
<P>(1) Owner evaluation of physical condition (OEPC), or a comprehensive needs assessment (CA) if used instead of an OEPC, as required by § 401.450; 
</P>
<P>(2) Owner-prepared 1-year project rent analysis; and 
</P>
<P>(3) As directed by HUD. 
</P>
<P>(b) <I>Information on expenses and profit/loss.</I> Before disclosing any information, the PAE must remove any information obtained by the PAE directly from the owner or project manager that is related to project expenses, property valuation, or profit and loss, unless the owner gives written consent to disclosure with that information. 


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:2.1.3.5.2.4" TYPE="SUBPART">
<HEAD>Subpart D—Implementation of the Restructuring Plan After Closing</HEAD>


<DIV8 N="§ 401.550" NODE="24:2.1.3.5.2.4.221.1" TYPE="SECTION">
<HEAD>§ 401.550   Monitoring and compliance agreements.</HEAD>
<P>(a) <I>Compliance agreements.</I> The PAE must ensure long-term compliance by the owner with MAHRA, this part, and the Restructuring Plan. As part of this responsibility, the PAE must require each owner with an approved Restructuring Plan to execute and record a Use Agreement that satisfies the requirements of § 401.408. All provisions of this subpart apply as long as the Use Agreement is in effect. 
</P>
<P>(b) <I>Periodic monitoring and inspection.</I> At least once a year, a PAE must review the status of each project for which it developed an executed restructuring Plan. Monitoring must include on-site inspections. HUD will accept an inspection by a PAE that complies with subpart G of part 5 of this title in lieu of an inspection required by any other party under that subpart. 
</P>
<P>(c) <I>HUD acting instead of PAE.</I> HUD will perform, or contract with other parties to perform, the PAE's functions under this section if: 
</P>
<P>(1) The project is subject to a PRA with a PAE that is not qualified to be a section 8 contract administrator; or 
</P>
<P>(2) The project is not currently subject to a PRA. 
</P>
<P>(d) <I>Regulatory agreement.</I> As long as the Secretary is the holder of a second mortgage or an additional mortgage under § 401.461, HUD will regulate the operations of the mortgagor through a regulatory agreement providing terms, conditions, and standards established by HUD, which may be in addition to any regulatory agreement otherwise required in connection with mortgage insurance programs. The regulatory agreement must contain remedies for breach, including monetary damages in the event of non-compliance. 
</P>
<CITA TYPE="N">[65 FR 15485, Mar. 22, 2000, as amended at 65 FR 53901, Sept. 6, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 401.552" NODE="24:2.1.3.5.2.4.221.2" TYPE="SECTION">
<HEAD>§ 401.552   Servicing of second mortgage.</HEAD>
<P>HUD or its designee will be responsible for servicing the second mortgage, including determining the amounts receivable by the owner under § 401.461(b)(3)(ii)(A). HUD may designate the PAE, with the PAE's consent, as servicer for the second mortgage. 


</P>
</DIV8>


<DIV8 N="§ 401.554" NODE="24:2.1.3.5.2.4.221.3" TYPE="SECTION">
<HEAD>§ 401.554   Contract renewal and administration.</HEAD>
<P>HUD will offer to renew section 8 contracts as provided in each Restructuring Plan, subject to the availability of appropriations and subject to the renewal authority available at the time of each contract expiration. The offer will be made by HUD directly or through a PAE that has contracted with HUD to be a contract administrator for such contracts. HUD will offer to any PAE that is qualified to be the section 8 contract administrator the opportunity to serve as the section 8 contract administrator for a project restructured under a Restructuring Plan developed by the PAE under the Mark-to-Market Program. Qualifications will be determined under both statutory requirements and requirements issued by the appropriate office within HUD, depending on the type of section 8 assistance that is provided. 
</P>
<CITA TYPE="N">[65 FR 15485, Mar. 22, 2000, as amended at 65 FR 53901, Sept. 6, 2000; 89 FR 14590, Feb. 28, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 401.556" NODE="24:2.1.3.5.2.4.221.4" TYPE="SECTION">
<HEAD>§ 401.556   Leasing units to voucher holders.</HEAD>
<P>A Restructuring Plan must prohibit any refusal of the owner to lease a unit solely because of the status of the prospective tenant as a section 8 voucher holder. 


</P>
</DIV8>


<DIV8 N="§ 401.558" NODE="24:2.1.3.5.2.4.221.5" TYPE="SECTION">
<HEAD>§ 401.558   Physical condition standards.</HEAD>
<P>The Restructuring Plan must require the owner to maintain the project in a decent and safe condition that meets the applicable standards under this section. As long as project-based assistance is provided, the applicable standards are the physical conditions standards for HUD housing in § 5.703 of this title. At any other time, the applicable standards are the local housing codes or codes adopted by the public housing agency if such codes meet or exceed the standards in § 5.703 of this title and do not severely restrict housing choice or, if there are no such local housing codes or codes adopted by the public housing agency, the standards in § 5.703 of this title will apply. In addition, any unit in which the tenant receives tenant-based assistance must comply with the housing quality standards of the section 8 tenant-based programs. 
</P>
<CITA TYPE="N">[65 FR 15485, Mar. 22, 2000, as amended at 65 FR 53901, Sept. 6, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 401.560" NODE="24:2.1.3.5.2.4.221.6" TYPE="SECTION">
<HEAD>§ 401.560   Property management standards.</HEAD>
<P>(a) <I>General.</I> Each PAE is required by section 518 of MAHRA to establish management standards consistent with industry standards and HUD guidelines. The management standards must be included or referenced in the Restructuring Plan. 
</P>
<P>(b) <I>HUD guidelines.</I> At a minimum, the PAE's management standards must require the project management to: 
</P>
<P>(1) Protect the physical integrity of the property over the long term through preventative maintenance, repair, or replacement; 
</P>
<P>(2) Ensure that the building and grounds are routinely cleaned; 
</P>
<P>(3) Maintain good relations with the tenants; 
</P>
<P>(4) Protect the financial integrity of the project by operating the property with competitive and reasonable costs and maintaining appropriate property and liability insurance at all times; 
</P>
<P>(5) Take all necessary measures to ensure the tenants' physical safety; and
</P>
<P>(6) Comply with other provisions that are required by HUD, including termination of the management agent for cause. 
</P>
<P>(c) <I>Conflicts of interest.</I> The PAE management standards must also conform to any guidelines established by HUD, and industry standards, governing conflicts of interest between owners, managers, and contractors. 


</P>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:2.1.3.5.2.5" TYPE="SUBPART">
<HEAD>Subpart E—Section 8 Requirements for Restructured Projects</HEAD>


<DIV8 N="§ 401.595" NODE="24:2.1.3.5.2.5.221.1" TYPE="SECTION">
<HEAD>§ 401.595   Contract and regulatory provisions.</HEAD>
<P>The provisions of chapter VIII of this title will apply to renewal of a section 8 project-based assistance contract under this part only to the extent, if any, provided in the contract. Part 983 of this title will not apply. The term of the contract renewals under this part will be determined by the appropriate HUD official.
</P>
<CITA TYPE="N">[65 FR 53901, Sept. 6, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 401.600" NODE="24:2.1.3.5.2.5.221.2" TYPE="SECTION">
<HEAD>§ 401.600   Will a section 8 contract be extended if it would expire while an owner's request for a Restructuring Plan is pending?</HEAD>
<P>(a) If a section 8 contract for an eligible project would expire before a Restructuring Plan is implemented, the contract may be extended at rents not exceeding current rents:
</P>
<P>(1) For up to the earlier of one year or closing on the Restructuring Plan under § 401.407; or
</P>
<P>(2) For such period of time beyond one year as HUD may approve, up to the closing of the Restructuring Plan.
</P>
<P>(b) Any extension of the contract beyond one year for a pending Restructuring Plan, other than an extension approved under this section, must be at comparable market rents or exception rents. An extension at comparable market rents will not affect a project's eligibility for the Mark-to-Market program once it has been established under this part.
</P>
<P>(c) HUD may terminate the contract earlier if the PAE or HUD determines that an owner is not cooperative under § 401.402 or if the owner's request is rejected under § 401.403 or § 401.405.
</P>
<CITA TYPE="N">[71 FR 2121, Jan. 12, 2006]


</CITA>
</DIV8>


<DIV8 N="§ 401.601" NODE="24:2.1.3.5.2.5.221.3" TYPE="SECTION">
<HEAD>§ 401.601   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 401.602" NODE="24:2.1.3.5.2.5.221.4" TYPE="SECTION">
<HEAD>§ 401.602   Tenant protections if an expiring contract is not renewed.</HEAD>
<P>(a) <I>Required notices.</I> (1)(i) The owner of an eligible project who has requested a Restructuring Plan and contract renewal must provide a 12-month notice as provided in section 514(d) if MAHRA, if the owner later decides not to renew an expiring contract (except due to a rejection under §§ 401.101, 401.403, 401.405, or 401.451.) If the owner gives such 12-month notice, the owner is not required to give a separate notice under section 8(c)(8) of the United States Housing Act of 1937. 
</P>
<P>(ii) An owner who gives the 12-month notice required by paragraph (a)(1)(i) of this section and who determines not to renew a contract must give additional notice not less than 120 days before the contract expiration. 
</P>
<P>(2) The owner of an eligible project who has requested a Restructuring Plan but who has been rejected under §§ 401.101, 401.403, 401.405, or 401.451 must provide 12 months advance notice under section 8(c)(8)(A) of the United States Housing Act of 1937, unless project-based assistance is renewed under § 402.4 of this chapter. 
</P>
<P>(3) Notices required by this paragraph must be provided to tenants and to HUD or the contract administrator. HUD will prescribe the form of notices under this paragraph, to the extent that the form is not prescribed by section 8(c)(8) of the United States Housing Act of 1937. 
</P>
<P>(b) <I>If owner does not give notice.</I> If an owner described in paragraph (a)(1) or (a)(2) of this section does not give timely notice of non-renewal or termination, the owner must permit the tenants in assisted units to remain in their units for the required notice period with no increase in the tenant portion of their rent, and with no eviction due to inability to collect an increased tenant portion of rent. 
</P>
<P>(c) <I>Availability of tenant-based assistance.</I> (1) Subject to the availability of amounts provided in advance in appropriations and the eligibility requirements of the tenant-based assistance program regulations, HUD will make tenant-based assistance available under the following circumstances: 
</P>
<P>(i) If the owner of an eligible project does not renew the project-based assistance, any eligible tenant residing in a unit assisted under the expiring contract on the date of expiration will be eligible to receive assistance on the later of the date of expiration or the date the owner's obligations under paragraph (b) of this section expire; and 
</P>
<P>(ii) If a request for a Restructuring Plan is rejected under § 401.101, § 401.403, § 401.405, or 401.451, and project-based assistance is not otherwise renewed, any eligible tenant who is a low-income family or who resides in a project-based assisted unit on the date of Plan rejection will be eligible to receive assistance on the later of the date the Restructuring Plan is rejected, or the date the owner's obligations under paragraph (b) of this section expire. 
</P>
<P>(2) If the tenant was assisted under the expiring contract, assistance under this paragraph will be in the form of enhanced vouchers as provided in section 8(t) of the United States Housing Act of 1937. 
</P>
<CITA TYPE="N">[65 FR 15485, Mar. 22, 2000, as amended at 65 FR 53901, Sept. 6, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 401.605" NODE="24:2.1.3.5.2.5.221.5" TYPE="SECTION">
<HEAD>§ 401.605   Project-based assistance provisions.</HEAD>
<P>The project-based assistance rents for a restructured project must be the restructured rents determined under the Restructuring Plan in accordance with §§ 401.410 or 401.411. 


</P>
</DIV8>


<DIV8 N="§ 401.606" NODE="24:2.1.3.5.2.5.221.6" TYPE="SECTION">
<HEAD>§ 401.606   Tenant-based assistance provisions.</HEAD>
<P>If the Restructuring Plan provides for tenant-based assistance, each assisted family residing in a unit assisted under the expiring project-based assistance contract when the contract terminates will be offered tenant-based assistance if the family meets the eligibility requirements under part 982. Whenever permitted by section 515(c)(4) of MAHRA, the tenant-based assistance will be in the form of enhanced vouchers as provided in section 8(t) of the United States Housing Act of 1937. 


</P>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:2.1.3.5.2.6" TYPE="SUBPART">
<HEAD>Subpart F—Owner Dispute of Rejection and Administrative Appeal</HEAD>


<DIV8 N="§ 401.645" NODE="24:2.1.3.5.2.6.221.1" TYPE="SECTION">
<HEAD>§ 401.645   Owner request to review HUD decision.</HEAD>
<P>(a) <I>HUD notice of decision.</I> (1) HUD will provide notice to the owner of:
</P>
<P>(i) A decision that the owner or project is not eligible for the Mark-to-Market program;
</P>
<P>(ii) A decision not to offer a proposed Restructuring Commitment to the owner; and
</P>
<P>(iii) A decision to offer a proposed Restructuring Commitment. The proposed Restructuring Commitment provided to the owner constitutes the notice of decision for purposes of requesting a review of a HUD decision.
</P>
<P>(2) The notice of decision will include the reasons for the decision.
</P>
<P>(3) The notice of decision will also notify the owner of the right to request a review of the decision or to cure any deficiencies on which the decision was based; the date by which the review request must be submitted or the deficiencies must be cured, which will be at least 30 days after the date of the notice of decision; and the address to which the review request is to be submitted.
</P>
<P>(b) <I>Review request by owner</I>—(1) <I>Written statement.</I> The review request must specify in writing:
</P>
<P>(i) Each item of the decision to which the owner objects;
</P>
<P>(ii) The reasons for the owner's objections; and
</P>
<P>(iii) All information in support of the objections that the owner wants HUD to consider.
</P>
<P>(2) <I>Scope of information submitted.</I> HUD will not consider information first submitted to HUD in conjunction with an owner's request for review except for:
</P>
<P>(i) Information that could not have been submitted previously; and
</P>
<P>(ii) New health and safety information.
</P>
<P>(c) <I>HUD review and final decision.</I> (1) HUD may expand the scope of review beyond the issues raised by the owner and may review and modify any term within the Restructuring Commitment without regard to whether the owner has raised an objection to that term, including adjustments to rents or expenses as underwritten by the PAE. If HUD does expand the scope of review, HUD will notify the owner of such action and provide an additional 30 days for the owner to raise any additional objections and provide additional information.
</P>
<P>(2) Within 30 days of HUD's receipt of the owner's review request and any additional objections and information, HUD will review the request and, using a standard of what is reasonable in light of all of the evidence presented, issue a final decision. The final decision will:
</P>
<P>(i) Affirm the notice of decision; or
</P>
<P>(ii) Modify the notice of decision and, if applicable, modify the Restructuring Commitment, in which event HUD will issue an amended or restated Restructuring Commitment that incorporates the final decision; or
</P>
<P>(iii) Revoke the notice of decision and, if applicable, terminate the Restructuring Commitment and notify the owner that the owner is not eligible for participation in the Mark-to-Market program or that a restructuring of the property is not feasible.
</P>
<CITA TYPE="N">[72 FR 66040, Nov. 26, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 401.650" NODE="24:2.1.3.5.2.6.221.2" TYPE="SECTION">
<HEAD>§ 401.650   When may the owner request an administrative appeal?</HEAD>
<P>(a) <I>No review request by owner.</I> If the owner does not request a review of the notice of decision under § 401.645 or does not execute the proposed Restructuring Commitment within the time provided in the notice of decision, HUD will send a written notice to the owner stating that the notice of decision is HUD's final decision and that the owner has 10 days after receipt of the letter to accept the decision, including a Restructuring Commitment, if applicable, or request an administrative appeal in accordance with § 401.651.
</P>
<P>(b) <I>Upon receipt of final decision.</I> HUD will send the owner a written notice of the final decision under § 401.645 that will also provide the owner with 10 days to request an administrative appeal of the final decision.
</P>
<P>(c) <I>HUD decision to accelerate the second mortgage.</I> Upon receipt of notice from HUD of a decision to accelerate the second mortgage under § 401.461(b)(4), the owner may request an administrative appeal in accordance with § 401.651.
</P>
<CITA TYPE="N">[72 FR 66040, Nov. 26, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 401.651" NODE="24:2.1.3.5.2.6.221.3" TYPE="SECTION">
<HEAD>§ 401.651   Appeal procedures.</HEAD>
<P>(a) <I>How to appeal.</I> An owner may submit a written appeal to HUD, within 10 days of receipt of written notice of the decision described in § 401.650, contesting the decision and requesting a conference with HUD. At the conference, the owner may submit (in person, in writing, or through a representative) its reasons for appealing the decision. The HUD or PAE official who issued the decision under appeal may participate in the conference and submit (in person, in writing, or through a representative) the basis for the decision. 
</P>
<P>(b) <I>Written decision.</I> Within 20 days after the conference, or 20 days after any agreed-upon extension of time for submission of additional materials by or on behalf of the owner, HUD will review the evidence presented for the administrative appeal and, using the standard of whether the determination of the final decision was reasonable, will advise the owner in writing of the decision to terminate, modify, or affirm the original decision. HUD will act, as necessary, to implement the decision, for example, by offering a revised Restructuring Commitment to the owner.
</P>
<P>(c) <I>Who is responsible for reviewing appeals?</I> HUD will designate an official to review any appeal, conduct the conference, and issue the written decision. The official designated must be one who was neither directly involved in, nor reports to another directly involved in, making the decision being appealed.
</P>
<CITA TYPE="N">[65 FR 15485, Mar. 22, 2000, as amended at 72 FR 66040, Nov. 26, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 401.652" NODE="24:2.1.3.5.2.6.221.4" TYPE="SECTION">
<HEAD>§ 401.652   No judicial review.</HEAD>
<P>The reviewing official's decision under § 401.651 is a final determination for purposes of section 516(c) of MAHRA and is not subject to judicial review. 


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="402" NODE="24:2.1.3.5.3" TYPE="PART">
<HEAD>PART 402—SECTION 8 PROJECT-BASED CONTRACT RENEWAL UNDER SECTION 524 OF MAHRA
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437(c)(8), 1437f note, and 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>63 FR 48953, Sept. 11, 1998, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 402.1" NODE="24:2.1.3.5.3.0.221.1" TYPE="SECTION">
<HEAD>§ 402.1   What is the purpose of part 402?</HEAD>
<P>This part sets out the terms and conditions under which HUD will renew project-based assistance contracts under the authority provided in section 524 of MAHRA.
</P>
<CITA TYPE="N">[71 FR 2121, Jan. 12, 2006]


</CITA>
</DIV8>


<DIV8 N="§ 402.2" NODE="24:2.1.3.5.3.0.221.2" TYPE="SECTION">
<HEAD>§ 402.2   Definitions.</HEAD>
<P>(a) <I>Terms defined in part 401.</I> In this part, the following terms have the meanings given in § 401.2 of this chapter: affiliate, disabled family, elderly family, eligible project, HUD, MAHRA, owner, PAE, Restructuring Plan, and section 8.
</P>
<P>(b) <I>Terms defined in MAHRA.</I> In this part, the following terms have the meanings given in section 512 of MAHRA: expiration date, fair market rent, renewal, and tenant-based assistance.
</P>
<P>(c) <I>Other defined terms.</I> In this part, the term—
</P>
<P><I>Comparable market rents</I> means rents determined in accordance with section 524(a)(5) of MAHRA and HUD's instructions.
</P>
<P><I>Large family</I> means a family of five or more persons.
</P>
<P><I>OCAF</I> means an operating cost adjustment factor established by HUD, which may not be negative, that is applied to the existing contract rent (less the portion of that rent paid for debt service).
</P>
<P><I>Portfolio Reengineering demonstration authority</I> means the authority specified in section 524(e)(2)(B) of MAHRA.
</P>
<P><I>Project-based assistance</I> means the types of assistance listed in section 512(2)(B) of MAHRA, or a project-based assistance contract under the Section 8 program renewed under section 524 of MAHRA.
</P>
<P><I>Project eligible for exception rents</I> means a project described in section 524(b) of MAHRA.
</P>
<P><I>SRO contract</I> and <I>SRO project</I> mean, respectively, a project-based assistance contract for single-room occupancy dwellings under section 441 of the Stewart B. McKinney Homeless Assistance Act (42 U.S.C. 11401), and a project with units covered by such a contract.
</P>
<CITA TYPE="N">[71 FR 2121, Jan. 12, 2006]


</CITA>
</DIV8>


<DIV8 N="§ 402.3" NODE="24:2.1.3.5.3.0.221.3" TYPE="SECTION">
<HEAD>§ 402.3   Contract provisions.</HEAD>
<P>The renewal HAP contract shall be construed and administered in accordance with all statutory requirements, and with all HUD regulations and other requirements, including changes in HUD regulations and other requirements during the term of the renewal HAP contract, unless the contract provides otherwise.
</P>
<CITA TYPE="N">[71 FR 2121, Jan. 12, 2006]


</CITA>
</DIV8>


<DIV8 N="§ 402.4" NODE="24:2.1.3.5.3.0.221.4" TYPE="SECTION">
<HEAD>§ 402.4   Contract renewals under section 524(a)(1) of MAHRA.</HEAD>
<P>(a) <I>Initial renewal.</I> (1) HUD may renew any expiring section 8 project-based assistance contract at initial rents that do not exceed comparable market rents. 
</P>
<P>(2) <I>Procedure for projects eligible for Restructuring Plan.</I> (i) If an owner requests renewal of a contract under this section for a project that is eligible for a Restructuring Plan under the Mark-to-Market program under part 401 and that has not been rejected under that part, HUD or a PAE will determine whether renewal under this section, instead of through a Restructuring Plan under part 401 of this chapter, would be sufficient. Renewal without a Restructuring Plan will be considered sufficient if the rents after renewal would be sufficient to maintain both adequate debt service coverage on the HUD-insured or HUD-held mortgage and necessary replacement reserves to ensure the long-term physical integrity of the project, taking into account any comments received under § 401.502(c) of this chapter.
</P>
<P>(ii) If HUD or the PAE determines that renewal under this section would be sufficient, HUD will not require a Restructuring Plan.
</P>
<P>(iii) If HUD or the PAE determines that renewal under this section would not be sufficient, HUD or the PAE may require a Restructuring Plan before the owner's request for contract renewal will be given further consideration. If the owner does not cooperate in the development of an acceptable Restructuring Plan, HUD will pursue whatever administrative actions it considers necessary.
</P>
<P>(b) [Reserved]
</P>
<CITA TYPE="N">[65 FR 15498, Mar. 22, 2000, as amended at 71 FR 2121, Jan. 12, 2006]


</CITA>
</DIV8>


<DIV8 N="§ 402.5" NODE="24:2.1.3.5.3.0.221.5" TYPE="SECTION">
<HEAD>§ 402.5   Contract renewals under section 524(b) or (e) of MAHRA.</HEAD>
<P>(a) <I>Renewal of projects eligible for exception rents at owner's request.</I> HUD will offer to renew project-based assistance for a project eligible for exception rents under section 524(b) of MAHRA at rent levels determined under this section instead of § 402.4, except as provided in § 402.7, but the owner of a project other than a project with assistance under the Section 8 moderate rehabilitation program may request renewal under § 402.4.
</P>
<P>(b) <I>Rent levels for projects eligible for exception rents.</I> HUD will renew the contract with rent levels at the least of:
</P>
<P>(1) Existing rents adjusted by an OCAF;
</P>
<P>(2) A budget-based rent determined in accordance with instructions issued by HUD, subject to a determination by HUD that such a rent level is appropriate; or
</P>
<P>(3) In the case of a contract under the Section 8 moderate rehabilitation program (other than an SRO contract), the lesser of existing rents adjusted by an OCAF, fair market rents (less any amounts for tenant-purchased utilities), or comparable market rents, as provided in section 524(b)(3) of MAHRA.
</P>
<P>(c) <I>Rent adjustments.</I> (1) After rents have been established under this section, rent adjustments will comply with section 524(c) of MAHRA except as otherwise required by paragraph (d)(1) of this section for preservation projects.
</P>
<P>(2) Rent adjustments for projects assisted under the Section 8 moderate rehabilitation program, other than projects assisted under the moderate rehabilitation single-room occupancy program, shall be determined in accordance with section 524(b)(3) of MAHRA.
</P>
<P>(d) <I>Preservation projects and demonstration projects.</I> (1) Notwithstanding any other provision of this part except § 402.7, upon expiration of a section 8 contract for a project subject to an approved plan of action under the Emergency Low-Income Housing Preservation Act of 1987 (ELIHPA) or the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (LIHPRHA), the Secretary will provide benefits that are comparable to those provided under such plan of action. This paragraph (d)(1) applies only to the extent amounts are specifically made available in appropriations acts.
</P>
<P>(2) Notwithstanding any other provision of this part except § 402.7, upon expiration of a Section 8 contract entered into pursuant to a Portfolio Reengineering demonstration authority for which HUD made a determination that debt restructuring is inappropriate, and the owner of the project executed a Portfolio Reengineering Demonstration Program Use Agreement, the Secretary will provide the owner, at the request of the owner, with benefits comparable to those provided under the contract that is expiring. This paragraph (d)(2) applies only to the extent amounts are made available in appropriations acts.
</P>
<CITA TYPE="N">[71 FR 2122, Jan. 12, 2006]


</CITA>
</DIV8>


<DIV8 N="§ 402.6" NODE="24:2.1.3.5.3.0.221.6" TYPE="SECTION">
<HEAD>§ 402.6   What actions must an owner take to request section 8 contract renewal under this part?</HEAD>
<P>(a) <I>In general.</I> An owner requesting contract renewal under this part must submit to HUD or HUD's designee, at least 120 days before the termination or expiration date of any project-based assistance contract, all documents or information prescribed by HUD.
</P>
<P>(b) <I>Subsequent renewals.</I> A contract that was initially renewed under MAHRA will be renewed at the owner's request under any renewal option for which the project is eligible. However, in the case of a project that is eligible for a Restructuring Plan under § 401.100, HUD or a PAE will determine whether renewal with a Restructuring Plan under part 401, or without a Restructuring Plan under this part, is necessary.
</P>
<CITA TYPE="N">[71 FR 2122, Jan. 12, 2006]


</CITA>
</DIV8>


<DIV8 N="§ 402.7" NODE="24:2.1.3.5.3.0.221.7" TYPE="SECTION">
<HEAD>§ 402.7   Refusal to consider an owner's request for a Section 8 contract renewal because of actions or omissions of owner or affiliate.</HEAD>
<P>(a) <I>Determination of eligibility.</I> Notwithstanding 2 CFR part 2424, HUD may elect to not consider a request for renewal of project-based assistance, if at any time before contract renewal:
</P>
<P>(1) The owner or an affiliate is debarred or suspended under part 2 CFR part 2424; 
</P>
<P>(2) HUD determines that the owner or an affiliate has engaged in material adverse financial or managerial actions or omissions as described in section 516 of MAHRA, including any outstanding violations of civil rights laws, or has failed to certify to compliance with the nondiscrimination requirements of 24 CFR 5.105(a), in connection with any project of the owner or an affiliate; or
</P>
<P>(3) The project does not meet the physical condition standards in 24 CFR 5.703 of this title, unless HUD determines that the project will meet the standards within a reasonable time after renewal.
</P>
<P>(b) <I>Dispute and appeal.</I> An owner may dispute a rejection under this section and seek administrative review under the procedures in subpart F of part 401 of this chapter.
</P>
<CITA TYPE="N">[71 FR 2122, Jan. 12, 2006, as amended at 72 FR 73496, Dec. 27, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 402.8" NODE="24:2.1.3.5.3.0.221.8" TYPE="SECTION">
<HEAD>§ 402.8   Tenant protections if a contract is not renewed.</HEAD>
<P>(a) <I>Notice of termination.</I> An owner who is not eligible for a Restructuring Plan under part 401 of this chapter, or who is eligible but does not request restructuring, and who does not renew a contract, must provide one year's notice to tenants, to HUD, and to the contract administrator as provided in section 8(c)(8)(A) of the United States Housing Act of 1937.
</P>
<P>(b) <I>If an owner does not give timely notice.</I> If an owner does not give one year's notice of termination as described in paragraph (a) of this section, the owner must permit the tenants in assisted units to remain in their units at a rental rate no higher than the tenant rent payable for the tenants' last month of assisted occupancy under the terminated HAP contract until one year after notice is given, even if HUD does not continue to make housing assistance payments with respect to such units.
</P>
<P>(c) <I>If an owner opts out or fails to renew.</I> In the case where a contract for Section 8 rental assistance for a project is terminated or expires, an assisted family may elect to remain in the project and, if eligible, receive tenant-based Section 8 assistance under Section 8(t) of the United States Housing Act of 1937.
</P>
<CITA TYPE="N">[71 FR 2122, Jan. 12, 2006]


</CITA>
</DIV8>


<DIV8 N="§ 402.9" NODE="24:2.1.3.5.3.0.221.9" TYPE="SECTION">
<HEAD>§ 402.9   Waivers and delegations of waiver authority.</HEAD>
<P>All waivers of provisions of this part, and delegations of the authority to waive provisions of this part, are governed by § 5.110 of this title.
</P>
<CITA TYPE="N">[71 FR 2123, Jan. 12, 2006]


</CITA>
</DIV8>

</DIV5>


<DIV5 N="403-499" NODE="24:2.1.3.5.4" TYPE="PART">
<HEAD>PARTS 403-499 [RESERVED]


</HEAD>
</DIV5>

</DIV3>

</DIV2>

</DIV1>

</ECFRBRWS>
<ECFRBRWS>
<AMDDATE>May  20, 2026 
</AMDDATE>

<DIV1 N="3" NODE="24:3" TYPE="TITLE">

<HEAD>Title 24—Housing and Urban Development--Volume 3</HEAD>
<CFRTOC>
<SUBTI>
<HED>SUBTITLE B—<E T="04">Regulations Relating to Housing and Urban Development (Continued)</E>
</HED></SUBTI>
<PTHD>Part 
</PTHD>
<CHAPTI>
<SUBJECT><E T="04">chapter v</E>—Office of Assistant Secretary for Community Planning and Development, Department of Housing and Urban Development
</SUBJECT>
<PG>510 


</PG></CHAPTI></CFRTOC>
<DIV2 N="Subtitle B" NODE="24:3.1" TYPE="SUBTITLE">
<HEAD>Subtitle B—Regulations Relating to Housing and Urban Development (Continued)


</HEAD>

<DIV3 N="V" NODE="24:3.1.1" TYPE="CHAPTER">

<HEAD> CHAPTER V—OFFICE OF ASSISTANT SECRETARY FOR COMMUNITY PLANNING AND DEVELOPMENT, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT</HEAD>

<DIV4 N="A" NODE="24:3.1.1.1" TYPE="SUBCHAP">
<HEAD>SUBCHAPTER A—GENERAL


</HEAD>

<DIV5 N="500" NODE="24:3.1.1.1.1" TYPE="PART">
<HEAD>PART 500—EXPIRING PROGRAMS—SAVINGS CLAUSE


</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d).


</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>79 FR 58195, Sept. 2, 2014, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 500.1" NODE="24:3.1.1.1.1.0.1.1" TYPE="SECTION">
<HEAD>§ 500.1   Expiring programs—Savings clause.</HEAD>
<P>No new grants or grant agreements are being made under the programs listed in this section. Existing grants or grant agreements making designation under these programs continue to be governed by the regulations in effect as they existed immediately before October 2, 2014 (see 24 CFR parts 500 to 699, revised as of April 1, 2014):
</P>
<FP-2>24 CFR Part 511 Rental Rehabilitation Grant Program (42 U.S.C. 1437o)
</FP-2>
<FP-2>24 CFR Part 572 HOPE for Homeownership of Single Family Homes (HOPE 3) (42 U.S.C. 12891)
</FP-2>
<FP-2>24 CFR Part 585 Youthbuild (42 U.S.C. 8011)
</FP-2>
<FP-2>24 CFR Part 590 Urban homesteading (12 U.S.C. 1706e)
</FP-2>
<FP-2>24 CFR Part 597 Urban empowerment zones and enterprise communities (Round one designations) (26 U.S.C. 1391)
</FP-2>
<FP-2>24 CFR Part 598 Urban empowerment zones; Round two and three designations (26 U.S.C. 1391)


</FP-2>
</DIV8>

</DIV5>

</DIV4>


<DIV4 N="B" NODE="24:3.1.1.2" TYPE="SUBCHAP">
<HEAD>SUBCHAPTER B—SLUM CLEARANCE AND URBAN RENEWAL


</HEAD>

<DIV5 N="510" NODE="24:3.1.1.2.2" TYPE="PART">
<HEAD>PART 510—SECTION 312 REHABILITATION LOAN PROGRAM
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1452b and 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>79 FR 51895, Sept. 2, 2014, unless otherwise noted. Redesignated at 79 FR 51895, Sept. 2, 2014.


</PSPACE></SOURCE>

<DIV8 N="§ 510.1" NODE="24:3.1.1.2.2.0.1.1" TYPE="SECTION">
<HEAD>§ 510.1   Multi-family property loans.</HEAD>
<P>(a) In cases in which a corporation is a borrower on a section 312 loan, the Assistant Secretary for CPD or his designee may require an officer of the corporation or a principal stockholder to personally guarantee the section 312 loan or to cosign the loan note as a borrower, where necessary to make the finding of acceptable risk required for assumption of the loan. 
</P>
<P>(b) All partners of any partnership which is a borrower on a section 312 loan shall be personally liable for repayment of the section 312 loan. Limited partners shall assume personal liability by co-signing the loan note as a borrower or by personally guaranteeing the loan. 
</P>
<P>(c) Any personal guarantee or endorsement shall not relieve the partnership or corporate borrower from securing the section 312 loan by a mortgage or deed of trust on the property to be rehabilitated. 
</P>
<CITA TYPE="N">[44 FR 21751, Apr. 11, 1979, as amended at 44 FR 47513, Aug. 13, 1979; 44 FR 55562, Sept. 27, 1979. Redesignated and amended at 61 FR 7061, Feb. 23, 1996]


</CITA>
</DIV8>

</DIV5>

</DIV4>


<DIV4 N="C" NODE="24:3.1.1.3" TYPE="SUBCHAP">
<HEAD>SUBCHAPTER C—COMMUNITY FACILITIES 


</HEAD>

<DIV5 N="570" NODE="24:3.1.1.3.3" TYPE="PART">
<HEAD>PART 570—COMMUNITY DEVELOPMENT BLOCK GRANTS 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1701x, 1701 x-1; 42 U.S.C. 3535(d) and 5301-5320.
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>40 FR 24693, June 9, 1975, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:3.1.1.3.3.1" TYPE="SUBPART">
<HEAD>Subpart A—General Provisions</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>53 FR 34437, Sept. 6, 1988, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 570.1" NODE="24:3.1.1.3.3.1.1.1" TYPE="SECTION">
<HEAD>§ 570.1   Purpose and primary objective.</HEAD>
<P>(a) This part describes policies and procedures applicable to the following programs authorized under title I of the Housing and Community Development Act of 1974, as amended:
</P>
<P>(1) Entitlement grants program (subpart D);
</P>
<P>(2) Nonentitlement Funds: HUD-administered Small Cities and Insular Area programs (subpart F); 
</P>
<P>(3) State program: State-administered CDBG nonentitlement funds (subpart I);
</P>
<P>(4) Special Purpose Grants (subpart E); 
</P>
<P>(5) Urban Development Action Grant program (subpart G); and
</P>
<P>(6) Loan Guarantees (subpart M).
</P>
<P>(b) Subparts A, C, J, K, and O apply to all programs in paragraph (a) except as modified or limited under the provisions of these subparts or the applicable program regulations. In the application of the subparts to Special Purpose Grants or the Urban Development Action Grant program, the reference to funds in the form of grants in the term <I>“CDBG funds”,</I> as defined in § 570.3, shall mean the grant funds under those programs. The subparts do not apply to the State program (subpart I) except to the extent expressly referred to.
</P>
<P>(c) The primary objective of the programs authorized under title I of the Housing and Community Development Act of 1974, as amended, is described in section 101(c) of the Act (42 U.S.C. 5301(c)). 
</P>
<CITA TYPE="N">[53 FR 34437, Sept. 6, 1988, as amended at 56 FR 56126, Oct. 31, 1991; 61 FR 11475, Mar. 20, 1996; 69 FR 32778, June 10, 2004]


</CITA>
</DIV8>


<DIV8 N="§ 570.3" NODE="24:3.1.1.3.3.1.1.2" TYPE="SECTION">
<HEAD>§ 570.3   Definitions.</HEAD>
<P>The terms Affirmatively Furthering Fair Housing, HUD, and Secretary are defined in 24 CFR part 5. All of the following definitions in this section that rely on data from the United States Bureau of the Census shall rely upon the data available from the latest decennial census or the American Community Survey.


</P>
<P><I>Act</I> means title I of the Housing and Community Development Act of 1974 as amended (42 U.S.C. 5301 <I>et seq.</I>).
</P>
<P><I>Age of housing</I> means the number of year-round housing units, as further defined in section 102(a)(11) of the Act. 
</P>
<P><I>Applicant</I> means a State or unit of general local government that makes application pursuant to the provisions of subpart E, F, G or M.
</P>
<P><I>Buildings for the general conduct of government</I> shall have the meaning provided in section 102(a)(21) of the Act. 
</P>
<P><I>CDBG funds</I> means Community Development Block Grant funds, including funds received in the form of grants under subpart D, F, or § 570.405 of this part, funds awarded under section 108(q) of the Housing and Community Development Act of 1974, loans guaranteed under subpart M of this part, urban renewal surplus grant funds, and program income as defined in § 570.500(a). 
</P>
<P><I>Chief executive officer</I> of a State or unit of general local government means the elected official or the legally designated official, who has the primary responsibility for the conduct of that entity's governmental affairs. Examples of the “chief executive officer” of a unit of general local government are: the elected mayor of a municipality; the elected county executive of a county; the chairperson of a county commission or board in a county that has no elected county executive; and the official designated pursuant to law by the governing body of a unit of general local government.
</P>
<P><I>City</I> means the following: 
</P>
<P>(1) For purposes of Entitlement Community Development Block Grant and Urban Development Action Grant eligibility: 
</P>
<P>(i) Any unit of general local government that is classified as a municipality by the United States Bureau of the Census, or 
</P>
<P>(ii) Any other unit of general local government that is a town or township and that, in the determination of the Secretary: 
</P>
<P>(A) Possesses powers and performs functions comparable to those associated with municipalities; 
</P>
<P>(B) Is closely settled (except that the Secretary may reduce or waive this requirement on a case by case basis for the purposes of the Action Grant program); and 
</P>
<P>(C) Contains within its boundaries no incorporated places as defined by the United States Bureau of the Census that have not entered into cooperation agreements with the town or township for a period covering at least 3 years to undertake or assist in the undertaking of essential community development and housing assistance activities. The determination of eligibility of a town or township to qualify as a city will be based on information available from the United States Bureau of the Census and information provided by the town or township and its included units of general local government. 
</P>
<P>(2) For purposes of Urban Development Action Grant eligibility only, Guam, the Virgin Islands, American Samoa, the Commonwealth of the Northern Mariana Islands, the counties of Kauai, Maui, and Hawaii in the State of Hawaii, and Indian tribes that are eligible recipients under the State and Local Government Fiscal Assistance Act of 1972 and located on reservations in Oklahoma as determined by the Secretary of the Interior or in Alaskan Native Villages. 
</P>
<P><I>Community Development Financial Institution</I> has the same meaning as used in the Community Development Banking and Financial Institutions Act of 1994 (12 U.S.C. 4701 note). 
</P>
<P><I>Consolidated plan.</I> The plan prepared in accordance with 24 CFR part 91, which describes needs, resources, priorities and proposed activities to be undertaken with respect to HUD programs, including the CDBG program. An approved consolidated plan means a consolidated plan that has been approved by HUD in accordance with 24 CFR part 91. 
</P>
<P><I>Discretionary grant</I> means a grant made from the various Special Purpose Grants in accordance with subpart E of this part. 
</P>
<P><I>Entitlement amount</I> means the amount of funds which a metropolitan city or urban county is entitled to receive under the Entitlement grant program, as determined by formula set forth in section 106 of the Act
</P>
<P><I>Extent of growth lag</I> shall have the meaning provided in section 102(a)(12) of the Act. 
</P>
<P><I>Extent of housing overcrowding</I> shall have the meaning provided in section 102(a)(10) of the Act. 
</P>
<P><I>Extent of poverty</I> means the number of persons whose incomes are below the poverty level based on data compiled and published by the United States Bureau of the Census available from the latest census referable to the same point or period in time and the latest reports from the Office of Management and Budget. For purposes of this part, the Secretary has determined that it is neither feasible nor appropriate to make adjustments at this time in the computations of “extent of poverty” for regional or area variations in income and cost of living.
</P>
<P><I>Family</I> refers to the definition of “family” in 24 CFR 5.403.
</P>
<P><I>Household</I> means all persons occupying a housing unit. The occupants may be a family, as defined in 24 CFR 5.403; two or more families living together; or any other group of related or unrelated persons who share living arrangements, regardless of actual or perceived, sexual orientation, gender identity, or marital status.
</P>
<P><I>Income.</I> For the purpose of determining whether a family or household is low- and moderate-income under subpart C of this part, grantees may select any of the three definitions listed below for each activity, except that integrally related activities of the same type and qualifying under the same paragraph of § 570.208(a) shall use the same definition of income. The option to choose a definition does not apply to activities that qualify under § 570.208(a)(1) (Area benefit activities), except when the recipient carries out a survey under § 570.208(a)(1)(vi). Activities qualifying under § 570.208(a)(1) generally must use the area income data supplied to recipients by HUD. The three definitions are as follows: 
</P>
<P>(1)(i) “Annual income” as defined under the Section 8 Housing Assistance Payments program at 24 CFR 5.609 (except that if the CDBG assistance being provided is homeowner rehabilitation under § 570.202, the value of the homeowner's primary residence may be excluded from any calculation of Net Family Assets); or 
</P>
<P>(ii) Annual income as reported under the Census long-form for the most recent available decennial Census. This definition includes: 
</P>
<P>(A) Wages, salaries, tips, commissions, etc.; 
</P>
<P>(B) Self-employment income from own nonfarm business, including proprietorships and partnerships; 
</P>
<P>(C) Farm self-employment income; 
</P>
<P>(D) Interest, dividends, net rental income, or income from estates or trusts; 
</P>
<P>(E) Social Security or railroad retirement; 
</P>
<P>(F) Supplemental Security Income, Aid to Families with Dependent Children, or other public assistance or public welfare programs; 
</P>
<P>(G) Retirement, survivor, or disability pensions; and 
</P>
<P>(H) Any other sources of income received regularly, including Veterans' (VA) payments, unemployment compensation, and alimony; or 
</P>
<P>(iii) Adjusted gross income as defined for purposes of reporting under Internal Revenue Service (IRS) Form 1040 for individual Federal annual income tax purposes. 
</P>
<P>(2) Estimate the annual income of a family or household by projecting the prevailing rate of income of each person at the time assistance is provided for the individual, family, or household (as applicable). Estimated annual income shall include income from all family or household members, as applicable. Income or asset enhancement derived from the CDBG-assisted activity shall not be considered in calculating estimated annual income. 
</P>
<P><I>Insular area</I> shall have the meaning provided in section 102(a)(24) of the Act.
</P>
<P><I>Low- and moderate-income household</I> means a household having an income equal to or less than the Section 8 low-income limit established by HUD. 
</P>
<P><I>Low- and moderate-income person</I> means a member of a family having an income equal to or less than the Section 8 low-income limit established by HUD. Unrelated individuals will be considered as one-person families for this purpose. 
</P>
<P><I>Low-income household</I> means a household having an income equal to or less than the Section 8 very low-income limit established by HUD. 
</P>
<P><I>Low-income person</I> means a member of a family that has an income equal to or less than the Section 8 very low-income limit established by HUD. Unrelated individuals shall be considered as one-person families for this purpose. 
</P>
<P><I>Metropolitan area</I> shall have the meaning provided in section 102(a)(3) of the Act. 
</P>
<P><I>Metropolitan city</I> shall have the meaning provided in section 102(a)(4) of the Act except that the term “central city” is replaced by “principal city.”
</P>
<P><I>Microenterprise</I> shall have the meaning provided in section 102(a)(22) of the Act. 
</P>
<P><I>Moderate-income household</I> means a household having an income equal to or less than the Section 8 low-income limit and greater than the Section 8 very low-income limit, established by HUD. 
</P>
<P><I>Moderate-income person</I> means a member of a family that has an income equal to or less than the Section 8 low-income limit and greater than the Section 8 very low-income limit, established by HUD. Unrelated individuals shall be considered as one-person families for this purpose. 
</P>
<P><I>Nonentitlement amount</I> means the amount of funds which is allocated for use in a State's nonentitlement areas as determined by formula set forth in section 106 of the Act.
</P>
<P><I>Nonentitlement area</I> shall have the meaning provided in section 102(a)(7) of the Act. 
</P>
<P><I>Origin year</I> means the specific Federal fiscal year during which the annual grant funds were appropriated.
</P>
<P><I>Population</I> means the total resident population based on data compiled and published by the United States Bureau of the Census available from the latest census or which has been upgraded by the Bureau to reflect the changes resulting from the Boundary and Annexation Survey, new incorporations and consolidations of governments pursuant to § 570.4, and which reflects, where applicable, changes resulting from the Bureau's latest population determination through its estimating technique using natural changes (birth and death) and net migration, and is referable to the same point or period in time.
</P>
<P><I>Small business</I> means a business that meets the criteria set forth in section 3(a) of the Small Business Act (15 U.S.C. 631, 636, 637). 
</P>
<P><I>State</I> shall have the meaning provided in section 102(a)(2) of the Act. 
</P>
<P><I>Unit of general local government</I> shall have the meaning provided in section 102(a)(1) of the Act. 
</P>
<P><I>Urban county</I> shall have the meaning provided in section 102(a)(6) of the Act. For the purposes of this definition, HUD will determine whether the county's combined population contains the required percentage of low- and moderate-income persons by identifying the number of persons that resided in applicable areas and units of general local government based on data from the most recent decennial census, and using income limits that would have applied for the year in which that census was taken. 
</P>
<P><I>Urban Development Action Grant</I> (UDAG) means a grant made by the Secretary pursuant to section 119 of the Act and subpart G of this part. 
</P>
<CITA TYPE="N">[53 FR 34437, Sept. 6, 1988; 53 FR 41330, Oct. 21, 1988, as amended at 56 FR 56126, Oct. 31, 1991; 60 FR 1915, 1943, Jan. 5, 1995; 60 FR 56909, Nov. 9, 1995; 61 FR 5209, Feb. 9, 1996; 61 FR 11475, Mar. 20, 1996; 61 FR 18674, Apr. 29, 1996; 68 FR 69582, Dec. 12, 2003; 69 FR 32778, June 10, 2004; 77 FR 5675, Feb. 3, 2012; 80 FR 42366, July 16, 2015; 80 FR 69870, Nov. 12, 2015; 85 FR 47910, Aug. 7, 2020; 88 FR 9665, Feb. 14, 2023] 






</CITA>
</DIV8>


<DIV8 N="§ 570.4" NODE="24:3.1.1.3.3.1.1.3" TYPE="SECTION">
<HEAD>§ 570.4   Allocation of funds.</HEAD>
<P>(a) The determination of eligibility of units of general local government to receive entitlement grants, the entitlement amounts, the allocation of appropriated funds to States for use in nonentitlement areas, the reallocation of funds, the allocation of appropriated funds to insular areas, and the allocation of appropriated funds for discretionary grants under the Secretary's Fund shall be governed by the policies and procedures described in sections 106 and 107 of the Act, as appropriate.
</P>
<P>(b) The definitions in § 570.3 shall govern in applying the policies and procedures described in sections 106 and 107 of the Act. 
</P>
<P>(c) In determining eligibility for entitlement and in allocating funds under section 106 of the Act for any federal fiscal year, HUD will recognize corporate status and geographical boundaries and the status of metropolitan areas and principal cities effective as of July 1 preceding such federal fiscal year, subject to the following limitations:
</P>
<P>(1) With respect to corporate status as certified by the applicable State and available for processing by the Census Bureau as of such date; 
</P>
<P>(2) With respect to boundary changes or annexations, as are used by the Census Bureau in preparing population estimates for all general purpose governmental units and are available for processing by the Census Bureau as of such date, except that any such boundary changes or annexations which result in the population of a unit of general local government reaching or exceeding 50,000 shall be recognized for this purpose whether or not such changes are used by the Census Bureau in preparing such population estimates; and 
</P>
<P>(3) With respect to the status of Metropolitan Statistical Areas and principal cities, as officially designated by the Office of Management and Budget as of such date.
</P>
<P>(d) In determining whether a county qualifies as an urban county, and in computing entitlement amounts for urban counties, the demographic values of population, poverty, housing overcrowding, and age of housing of any Indian tribes located within the county shall be excluded. In allocating amounts to States for use in nonentitlement areas, the demographic values of population, poverty, housing overcrowding and age of housing of all Indian tribes located in all nonentitled areas shall be excluded. It is recognized that all such data on Indian tribes are not generally available from the United States Bureau of the Census and that missing portions of data will have to be estimated. In accomplishing any such estimates the Secretary may use such other related information available from reputable sources as may seem appropriate, regardless of the data's point or period of time and shall use the best judgement possible in adjusting such data to reflect the same point or period of time as the overall data from which the Indian tribes are being deducted, so that such deduction shall not create an imbalance with those overall data. 
</P>
<P>(e) Amounts remaining after closeout of a grant which are required to be returned to HUD under the provisions of § 570.509, Grant closeout procedures, shall be considered as funds available for reallocation unless the appropriation under which the funds were provided to the Department has lapsed.
</P>
<CITA TYPE="N">[53 FR 34437, Sept. 6, 1988, as amended at 68 FR 69582, Dec. 12, 2003; 69 FR 32778, June 10, 2004]


</CITA>
</DIV8>


<DIV8 N="§ 570.5" NODE="24:3.1.1.3.3.1.1.4" TYPE="SECTION">
<HEAD>§ 570.5   Waivers.</HEAD>
<P>HUD's authority for the waiver of regulations and for the suspension of requirements to address damage in a Presidentially declared disaster area is described in 24 CFR part 5 and in section 122 of the Act, respectively. 
</P>
<CITA TYPE="N">[61 FR 11476, Mar. 20, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:3.1.1.3.3.2" TYPE="SUBPART">
<HEAD>Subpart B [Reserved]</HEAD>

</DIV6>


<DIV6 N="C" NODE="24:3.1.1.3.3.3" TYPE="SUBPART">
<HEAD>Subpart C—Eligible Activities</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>53 FR 34439, Sept. 6, 1988, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 570.200" NODE="24:3.1.1.3.3.3.1.1" TYPE="SECTION">
<HEAD>§ 570.200   General policies.</HEAD>
<P>(a) <I>Determination of eligibility.</I> An activity may be assisted in whole or in part with CDBG funds only if all of the following requirements are met:
</P>
<P>(1) <I>Compliance with section 105 of the Act.</I> Each activity must meet the eligibility requirements of section 105 of the Act as further defined in this subpart.
</P>
<P>(2) <I>Compliance with national objectives.</I> Grant recipients under the Entitlement and HUD-administered Small Cities programs and recipients of insular area funds under section 106 of the Act must certify that their projected use of funds has been developed so as to give maximum feasible priority to activities which will carry out one of the national objectives of benefit to low- and moderate-income families or aid in the prevention or elimination of slums or blight. The projected use of funds may also include activities that the recipient certifies are designed to meet other community development needs having a particular urgency because existing conditions pose a serious and immediate threat to the health or welfare of the community where other financial resources are not available to meet such needs. Consistent with the foregoing, each recipient under the Entitlement or HUD-administered Small Cities programs, and each recipient of insular area funds under section 106 of the Act must ensure and maintain evidence that each of its activities assisted with CDBG funds meets one of the three national objectives as contained in its certification. Criteria for determining whether an activity addresses one or more of these objectives are found in § 570.208.
</P>
<P>(3) <I>Compliance with the primary objective.</I> The primary objective of the Act is described in section 101(c) of the Act. Consistent with this objective, entitlement recipients, non-entitlement CDBG grantees in Hawaii, and recipients of insular area funds under section 106 of the Act must ensure that, over a period of time specified in their certification not to exceed three years, not less than 70 percent of the aggregate of CDBG fund expenditures shall be for activities meeting the criteria under § 570.208(a) or under § 570.208(d)(5) or (6) for benefiting low- and moderate-income persons. For grants under section 107 of the Act, insular area recipients must meet this requirement for each separate grant. See § 570.420(d)(3) for additional discussion of the primary objective requirement for insular areas funded under section 106 of the Act. The requirements for the HUD-administered Small Cities program in New York are at § 570.420(d)(2). In determining the percentage of funds expended for such activities: 
</P>
<P>(i) Cost of administration and planning eligible under § 570.205 and § 570.206 will be assumed to benefit low and moderate income persons in the same proportion as the remainder of the CDBG funds and, accordingly shall be excluded from the calculation;
</P>
<P>(ii) Funds deducted by HUD for repayment of urban renewal temporary loans pursuant to § 570.802(b) shall be excluded;
</P>
<P>(iii) Funds expended for the repayment of loans guaranteed under the provisions of subpart M of this part (including repayment of the portion of a loan used to pay any issuance, servicing, underwriting, or other costs as may be incurred under § 570.705(g)) shall also be excluded;
</P>
<P>(iv) Funds expended for the acquisition, new construction or rehabilitation of property for housing that qualifies under § 570.208(a)(3) shall be counted for this purpose but shall be limited to an amount determined by multiplying the total cost (including CDBG and non-CDBG costs) of the acquisition, construction or rehabilitation by the percent of units in such housing to be occupied by low and moderate income persons.
</P>
<P>(v) Funds expended for any other activities qualifying under § 570.208(a) shall be counted for this purpose in their entirety.
</P>
<P>(4) <I>Compliance with environmental review procedures.</I> The environmental review procedures set forth at 24 CFR part 58 must be completed for each activity (or project as defined in 24 CFR part 58), as applicable.
</P>
<P>(5) <I>Cost principles.</I> Costs incurred, whether charged on a direct or an indirect basis, must be in conformance with 2 CFR part 200, subpart E. All items of cost listed in 2 CFR part 200, subpart E, that require prior Federal agency approval are allowable without prior approval of HUD to the extent they comply with the general policies and principles stated in 2 CFR part 200, subpart E and are otherwise eligible under this subpart C, except for the following: 
</P>
<P>(i) Depreciation methods for fixed assets shall not be changed without the approval of the Federal cognizant agency. 
</P>
<P>(ii) Fines penalties, damages, and other settlements are unallowable costs to the CDBG program. 
</P>
<P>(iii) Costs of housing (<I>e.g.,</I> depreciation, maintenance, utilities, furnishings, rent), housing allowances and personal living expenses (goods or services for personal use) regardless of whether reported as taxable income to the employees (2 CFR 200.445);
</P>
<P>(iv) Organization costs (2 CFR 200.455); and
</P>
<P>(v) Pre-award costs are limited to those authorized under paragraph (h) of this section. 
</P>
<P>(b) <I>Special policies governing facilities.</I> The following special policies apply to:
</P>
<P>(1) <I>Facilities containing both eligible and ineligible uses.</I> A public facility otherwise eligible for assistance under the CDBG program may be provided with CDBG funds even if it is part of a multiple use building containing ineligible uses, if:
</P>
<P>(i) The facility which is otherwise eligible and proposed for assistance will occupy a designated and discrete area within the larger facility; and
</P>
<P>(ii) The recipient can determine the costs attributable to the facility proposed for assistance as separate and distinct from the overall costs of the multiple-use building and/or facility.
</P>
<FP>Allowable costs are limited to those attributable to the eligible portion of the building or facility.
</FP>
<P>(2) <I>Fees for use of facilities.</I> Reasonable fees may be charged for the use of the facilities assisted with CDBG funds, but charges such as excessive membership fees, which will have the effect of precluding low and moderate income persons from using the facilities, are not permitted.
</P>
<P>(c) <I>Special assessments under the CDBG program.</I> The following policies relate to special assessments under the CDBG program:
</P>
<P>(1) <I>Definition of special assessment.</I> The term “special assessment” means the recovery of the capital costs of a public improvement, such as streets, water or sewer lines, curbs, and gutters, through a fee or charge levied or filed as a lien against a parcel of real estate as a direct result of benefit derived from the installation of a public improvement, or a one-time charge made as a condition of access to a public improvement. This term does not relate to taxes, or the establishment of the value of real estate for the purpose of levying real estate, property, or ad valorem taxes, and does not include periodic charges based on the use of a public improvement, such as water or sewer user charges, even if such charges include the recovery of all or some portion of the capital costs of the public improvement.
</P>
<P>(2) <I>Special assessments to recover capital costs.</I> Where CDBG funds are used to pay all or part of the cost of a public improvement, special assessments may be imposed as follows:
</P>
<P>(i) Special assessments to recover the CDBG funds may be made only against properties owned and occupied by persons not of low and moderate income. Such assessments constitute program income.
</P>
<P>(ii) Special assessments to recover the non-CDBG portion may be made provided that CDBG funds are used to pay the special assessment in behalf of all properties owned and occupied by low and moderate income persons; except that CDBG funds need not be used to pay the special assessments in behalf of properties owned and occupied by moderate income persons if the grant recipient certifies that it does not have sufficient CDBG funds to pay the assessments in behalf of all of the low and moderate income owner-occupant persons. Funds collected through such special assessments are not program income.
</P>
<P>(3) <I>Public improvements not initially assisted with CDBG funds.</I> The payment of special assessments with CDBG funds constitutes CDBG assistance to the public improvement. Therefore, CDBG funds may be used to pay special assessments provided:
</P>
<P>(i) The installation of the public improvements was carried out in compliance with requirements applicable to activities assisted under this part including environmental, citizen participation and Davis-Bacon requirements;
</P>
<P>(ii) The installation of the public improvement meets a criterion for national objectives in § 570.208(a)(1), (b), or (c); and
</P>
<P>(iii) The requirements of § 570.200(c)(2)(ii) are met.
</P>
<P>(d) <I>Consultant activities.</I> Consulting services are eligible for assistance under this part for professional assistance in program planning, development of community development objectives, and other general professional guidance relating to program execution. The use of consultants is governed by the following:
</P>
<P>(1) <I>Employer-employee type of relationship.</I> No person providing consultant services in an employer-employee type of relationship shall receive more than a reasonable rate of compensation for personal services paid with CDBG funds. In no event, however, shall such compensation exceed the equivalent of the daily rate paid for Level IV of the Executive Schedule. Such services shall be evidenced by written agreements between the parties which detail the responsibilities, standards, and compensation.
</P>
<P>(2) <I>Independent contractor relationship.</I> Consultant services provided under an independent contractor relationship are governed by the procurement requirements in 2 CFR part 200, subpart D, and are not subject to the compensation limitation of Level IV of the Executive Schedule.
</P>
<P>(e) <I>Recipient determinations required as a condition of eligibility.</I> In several instances under this subpart, the eligibility of an activity depends on a special local determination. Recipients shall maintain documentation of all such determinations. A written determination is required for any activity carried out under the authority of §§ 570.201(f), 570.201(i)(2), 570.201(p), 570.201(q), 570.202(b)(3), 570.206(f), 570.209, 570.210, and 570.309.
</P>
<P>(f) <I>Means of carrying out eligible activities.</I> (1) Activities eligible under this subpart, other than those authorized under § 570.204(a), may be undertaken, subject to local law:
</P>
<P>(i) By the recipient through:
</P>
<P>(A) Its employees, or
</P>
<P>(B) Procurement contracts governed by the requirements of 2 CFR part 200, subpart D; or
</P>
<P>(ii) Through loans or grants under agreements with subrecipients, as defined at § 570.500(c); or 
</P>
<P>(iii) By one or more public agencies, including existing local public agencies, that are designated by the chief executive officer of the recipient.
</P>
<P>(2) Activities made eligible under § 570.204(a) may only be undertaken by entities specified in that section.
</P>
<P>(g) <I>Limitation on planning and administrative costs</I>—(1) <I>Origin year grant expenditure test.</I> For origin year 2015 grants and subsequent grants, no more than 20 percent of any origin year grant shall be expended for planning and program administrative costs, as defined in §§ 570.205 and 570.206, respectively. Expenditures of program income for planning and program administrative costs are excluded from this calculation.
</P>
<P>(2) <I>Program year obligation test.</I> For all grants and recipients subject to subpart D, the amount of CDBG funds obligated during each program year for planning plus administrative costs, as defined in §§ 570.205 and 570.206, respectively, shall be limited to an amount no greater than 20 percent of the sum of the grant made for that program year (if any) plus the program income received by the recipient and its subrecipients (if any) during that program year. For origin year 2015 grants and subsequent grants, recipients must apply this test consistent with paragraph (g)(1) of this section.
</P>
<P>(3) Funds from a grant of any origin year may be used to pay planning and program administrative costs associated with any grant of any origin year.
</P>
<P>(h) <I>Reimbursement for pre-award costs.</I> The effective date of the grant agreement is the program year start date or the date that the consolidated plan is received by HUD, whichever is later. For a Section 108 loan guarantee, the effective date of the grant agreement is the date of HUD execution of the grant agreement amendment for the particular loan guarantee commitment. 
</P>
<P>(1) Prior to the effective date of the grant agreement, a recipient may incur costs or may authorize a subrecipient to incur costs, and then after the effective date of the grant agreement pay for those costs using its CDBG funds, provided that: 
</P>
<P>(i) The activity for which the costs are being incurred is included, prior to the costs being incurred, in a consolidated plan action plan, an amended consolidated plan action plan, or an application under subpart M of this part, except that a new entitlement grantee preparing to receive its first allocation of CDBG funds may incur costs necessary to develop its consolidated plan and undertake other administrative actions necessary to receive its first grant, prior to the costs being included in its consolidated plan;
</P>
<P>(ii) Citizens are advised of the extent to which these pre-award costs will affect future grants; 
</P>
<P>(iii) The costs and activities funded are in compliance with the requirements of this part and with the Environmental Review Procedures stated in 24 CFR part 58; 
</P>
<P>(iv) The activity for which payment is being made complies with the statutory and regulatory provisions in effect at the time the costs are paid for with CDBG funds; 
</P>
<P>(v) CDBG payment will be made during a time no longer than the next two program years following the effective date of the grant agreement or amendment in which the activity is first included; and 
</P>
<P>(vi) The total amount of pre-award costs to be paid during any program year pursuant to this provision is no more than the greater of 25 percent of the amount of the grant made for that year or $300,000. 
</P>
<P>(2) Upon the written request of the recipient, HUD may authorize payment of pre-award costs for activities that do not meet the criteria at paragraph (h)(1)(v) or (h)(1)(vi) of this section, if HUD determines, in writing, that there is good cause for granting an exception upon consideration of the following factors, as applicable: 
</P>
<P>(i) Whether granting the authority would result in a significant contribution to the goals and purposes of the CDBG program; 
</P>
<P>(ii) Whether failure to grant the authority would result in undue hardship to the recipient or beneficiaries of the activity; 
</P>
<P>(iii) Whether granting the authority would not result in a violation of a statutory provision or any other regulatory provision; 
</P>
<P>(iv) Whether circumstances are clearly beyond the recipient's control; or 
</P>
<P>(v) Any other relevant considerations. 
</P>
<P>(3) In a Federal fiscal year when an annual appropriation is signed into law less than 90 days before a grant recipient's program year start date, the effective date of the grant agreement will be the earlier of the recipient's program year start date or the date that the Consolidated Plan incorporating the recipient's allocation amount for the Federal fiscal year is received by HUD.
</P>
<P>(i) <I>Urban Development Action Grant.</I> Grant assistance may be provided with Urban Development Action Grant funds, subject to the provisions of subpart G, for:
</P>
<P>(1) Activities eligible for assistance under this subpart; and
</P>
<P>(2) Notwithstanding the provisions of § 570.207, such other activities as the Secretary may determine to be consistent with the purposes of the Urban Development Action Grant program.
</P>
<P>(j) <I>Equal participation of faith-based organizations.</I> The HUD program requirements in § 5.109 of this title apply to the CDBG program, including the requirements regarding disposition and change in use of real property by a faith-based organization.
</P>
<P>(k) Any unexpended CDBG origin year grant funds in the United States Treasury account on September 30 of the fifth Federal fiscal year after the end of the origin year grant's period of availability for obligation by HUD will be canceled. HUD may require an earlier expenditure and draw down deadline under a grant agreement.
</P>
<CITA TYPE="N">[53 FR 34439, Sept. 6, 1988, as amended at 54 FR 47031, Nov. 8, 1989; 57 FR 27119, June 17, 1992; 60 FR 1943, Jan. 5, 1995; 60 FR 17445, Apr. 6, 1995; 60 FR 56910, Nov. 9, 1995; 61 FR 11476, Mar. 20, 1996; 61 FR 18674, Apr. 29, 1996; 65 FR 70215, Nov. 21, 2000; 68 FR 56404, Sept. 30, 2003; 69 FR 32778, June 10, 2004; 70 FR 76369, Dec. 23, 2005; 72 FR 46370, Aug. 17, 2007; 80 FR 67633, Nov. 3, 2015; 80 FR 69870, Nov. 12, 2015; 80 FR 75936, Dec. 7, 2015; 81 FR 19418, Apr. 4, 2016; 90 FR 894, Jan. 6, 2025] 


</CITA>
</DIV8>


<DIV8 N="§ 570.201" NODE="24:3.1.1.3.3.3.1.2" TYPE="SECTION">
<HEAD>§ 570.201   Basic eligible activities.</HEAD>
<P>CDBG funds may be used for the following activities: 
</P>
<P>(a) <I>Acquisition.</I> Acquisition in whole or in part by the recipient, or other public or private nonprofit entity, by purchase, long-term lease, donation, or otherwise, of real property (including air rights, water rights, rights-of-way, easements, and other interests therein) for any public purpose, subject to the limitations of § 570.207. 
</P>
<P>(b) <I>Disposition.</I> Disposition, through sale, lease, donation, or otherwise, of any real property acquired with CDBG funds or its retention for public purposes, including reasonable costs of temporarily managing such property or property acquired under urban renewal, provided that the proceeds from any such disposition shall be program income subject to the requirements set forth in § 570.504. 
</P>
<P>(c) <I>Public facilities and improvements.</I> Acquisition, construction, reconstruction, rehabilitation or installation of public facilities and improvements, except as provided in § 570.207(a), carried out by the recipient or other public or private nonprofit entities. (However, activities under this paragraph may be directed to the removal of material and architectural barriers that restrict the mobility and accessibility of elderly or severely disabled persons to public facilities and improvements, including those provided for in § 570.207(a)(1).) In undertaking such activities, design features and improvements which promote energy efficiency may be included. Such activities may also include the execution of architectural design features, and similar treatments intended to enhance the aesthetic quality of facilities and improvements receiving CDBG assistance, such as decorative pavements, railings, sculptures, pools of water and fountains, and other works of art. Facilities designed for use in providing shelter for persons having special needs are considered public facilities and not subject to the prohibition of new housing construction described in § 570.207(b)(3). Such facilities include shelters for the homeless; convalescent homes; hospitals, nursing homes; battered spouse shelters; halfway houses for run-away children, drug offenders or parolees; group homes for mentally retarded persons and temporary housing for disaster victims. In certain cases, nonprofit entities and subrecipients including those specified in § 570.204 may acquire title to public facilities. When such facilities are owned by nonprofit entities or subrecipients, they shall be operated so as to be open for use by the general public during all normal hours of operation. Public facilities and improvements eligible for assistance under this paragraph are subject to the policies in § 570.200(b). 
</P>
<P>(d) <I>Clearance and remediation activities.</I> Clearance, demolition, and removal of buildings and improvements, including movement of structures to other sites and remediation of known or suspected environmental contamination. Demolition of HUD-assisted or HUD-owned housing units may be undertaken only with the prior approval of HUD. Remediation may include project-specific environmental assessment costs not otherwise eligible under § 570.205.
</P>
<P>(e) <I>Public services.</I> Provision of public services (including labor, supplies, and materials) including but not limited to those concerned with employment, crime prevention, child care, health, drug abuse, education, fair housing counseling, energy conservation, welfare (but excluding the provision of income payments identified under § 570.207(b)(4)), homebuyer downpayment assistance, or recreational needs. If housing counseling, as defined in 24 CFR 5.100, is provided, it must be carried out in accordance with 24 CFR 5.111. To be eligible for CDBG assistance, a public service must be either a new service or a quantifiable increase in the level of an existing service above that which has been provided by or on behalf of the unit of general local government (through funds raised by the unit or received by the unit from the State in which it is located) in the 12 calendar months before the submission of the action plan. (An exception to this requirement may be made if HUD determines that any decrease in the level of a service was the result of events not within the control of the unit of general local government.) The amount of CDBG funds used for public services shall not exceed paragraphs (e) (1) or (2) of this section, as applicable:
</P>
<P>(1) The amount of CDBG funds used for public services shall not exceed 15 percent of each grant, except that for entitlement grants made under subpart D of this part, nonentitlement CDBG grants in Hawaii, and for recipients of insular area funds under section 106 of the Act, the amount shall not exceed 15 percent of the grant plus 15 percent of program income, as defined in § 570.500(a). For entitlement grants under subpart D of this part, nonentitlement CDBG grants in Hawaii, and for recipients of insular area funds under section 106 of the Act, compliance is based on limiting the amount of CDBG funds obligated for public service activities in each program year to an amount no greater than 15 percent of the entitlement grant made for that program year plus 15 percent of the program income received during the grantee's immediately preceding program year.
</P>
<P>(2) A recipient which obligated more CDBG funds for public services than 15 percent of its grant funded from origin year 1982 or 1983 appropriations (excluding program income and any assistance received under Public Law 98-8), may obligate more CDBG funds than allowable under paragraph (e)(1) of this section, so long as the total amount obligated in any program year does not exceed:
</P>
<P>(i) For an entitlement grantee, 15% of the program income it received during the preceding program year; plus 
</P>
<P>(ii) A portion of the grant received for the program year which is the highest of the following amounts:
</P>
<P>(A) The amount determined by applying the percentage of the grant it obligated for public services in the 1982 program year against the grant for its current program year;
</P>
<P>(B) The amount determined by applying the percentage of the grant it obligated for public services in the 1983 program year against the grant for its current program year;
</P>
<P>(C) The amount of funds it obligated for public services in the 1982 program year; or,
</P>
<P>(D) The amount of funds it obligated for public services in the 1983 program year.
</P>
<P>(f) <I>Interim assistance.</I> (1) The following activities may be undertaken on an interim basis in areas exhibiting objectively determinable signs of physical deterioration where the recipient has determined that immediate action is necessary to arrest the deterioration and that permanent improvements will be carried out as soon as practicable:
</P>
<P>(i) The repairing of streets, sidewalks, parks, playgrounds, publicly owned utilities, and public buildings; and
</P>
<P>(ii) The execution of special garbage, trash, and debris removal, including neighborhood cleanup campaigns, but not the regular curbside collection of garbage or trash in an area.
</P>
<P>(2) In order to alleviate emergency conditions threatening the public health and safety in areas where the chief executive officer of the recipient determines that such an emergency condition exists and requires immediate resolution, CDBG funds may be used for:
</P>
<P>(i) The activities specified in paragraph (f)(1) of this section, except for the repair of parks and playgrounds;
</P>
<P>(ii) The clearance of streets, including snow removal and similar activities, and
</P>
<P>(iii) The improvement of private properties.
</P>
<P>(3) All activities authorized under paragraph (f)(2) of this section are limited to the extent necessary to alleviate emergency conditions.
</P>
<P>(g) <I>Payment of non-Federal share.</I> Payment of the non-Federal share required in connection with a Federal grant-in-aid program undertaken as part of CDBG activities, provided, that such payment shall be limited to activities otherwise eligible and in compliance with applicable requirements under this subpart.
</P>
<P>(h) <I>Urban renewal completion.</I> Payment of the cost of completing an urban renewal project funded under title I of the Housing Act of 1949 as amended. Further information regarding the eligibility of such costs is set forth in § 570.801.
</P>
<P>(i) <I>Relocation.</I> Relocation payments and other assistance for permanently and temporarily relocated individuals families, businesses, nonprofit organizations, and farm operations where the assistance is (1) required under the provisions of § 570.606 (b) or (c); or (2) determined by the grantee to be appropriate under the provisions of § 570.606(d). 
</P>
<P>(j) <I>Loss of rental income.</I> Payments to housing owners for losses of rental income incurred in holding, for temporary periods, housing units to be used for the relocation of individuals and families displaced by program activities assisted under this part.
</P>
<P>(k) <I>Housing services.</I> Housing services, as provided in section 105(a)(21) of the Act (42 U.S.C. 5305(a)(21)). If housing counseling, as defined in 24 CFR 5.100, is provided, it must be carried out in accordance with 24 CFR 5.111.
</P>
<P>(l) <I>Privately owned utilities.</I> CDBG funds may be used to acquire, construct, reconstruct, rehabilitate, or install the distribution lines and facilities of privately owned utilities, including the placing underground of new or existing distribution facilities and lines.
</P>
<P>(m) <I>Construction of housing.</I> CDBG funds may be used for the construction of housing assisted under section 17 of the United States Housing Act of 1937.
</P>
<P>(n) <I>Homeownership assistance.</I> CDBG funds may be used to provide direct homeownership assistance to low- or moderate-income households in accordance with section 105(a) of the Act.
</P>
<P>(o)(1) The provision of assistance either through the recipient directly or through public and private organizations, agencies, and other subrecipients (including nonprofit and for-profit subrecipients) to facilitate economic development by: 
</P>
<P>(i) Providing credit, including, but not limited to, grants, loans, loan guarantees, and other forms of financial support, for the establishment, stabilization, and expansion of microenterprises; 
</P>
<P>(ii) Providing technical assistance, advice, and business support services to owners of microenterprises and persons developing microenterprises; and 
</P>
<P>(iii) Providing general support, including, but not limited to, peer support programs, counseling, child care, transportation, and other similar services, to owners of microenterprises and persons developing microenterprises. 
</P>
<P>(2) Services provided this paragraph (o) shall not be subject to the restrictions on public services contained in paragraph (e) of this section. 
</P>
<P>(3) For purposes of this paragraph (o), “persons developing microenterprises” means such persons who have expressed interest and who are, or after an initial screening process are expected to be, actively working toward developing businesses, each of which is expected to be a microenterprise at the time it is formed. 
</P>
<P>(4) Assistance under this paragraph (o) may also include training, technical assistance, or other support services to increase the capacity of the recipient or subrecipient to carry out the activities under this paragraph (o). 
</P>
<P>(p) <I>Technical assistance.</I> Provision of technical assistance to public or nonprofit entities to increase the capacity of such entities to carry out eligible neighborhood revitalization or economic development activities. (The recipient must determine, prior to the provision of the assistance, that the activity for which it is attempting to build capacity would be eligible for assistance under this subpart C, and that the national objective claimed by the grantee for this assistance can reasonably be expected to be met once the entity has received the technical assistance and undertakes the activity.) Capacity building for private or public entities (including grantees) for other purposes may be eligible under § 570.205. 
</P>
<P>(q) <I>Assistance to institutions of higher education.</I> Provision of assistance by the recipient to institutions of higher education when the grantee determines that such an institution has demonstrated a capacity to carry out eligible activities under this subpart C.
</P>
<CITA TYPE="N">[53 FR 34439, Sept. 6, 1988, as amended at 53 FR 31239, Aug. 17, 1988; 55 FR 29308, July 18, 1990; 57 FR 27119, June 17, 1992; 60 FR 1943, Jan. 5, 1995; 60 FR 56911, Nov. 9, 1995; 61 FR 18674, Apr. 29, 1996; 65 FR 70215, Nov. 21, 2000; 67 FR 47213, July 17, 2002; 71 FR 30034, May 24, 2006; 80 FR 69870, Nov. 12, 2015; 81 FR 90659, Dec. 14, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 570.202" NODE="24:3.1.1.3.3.3.1.3" TYPE="SECTION">
<HEAD>§ 570.202   Eligible rehabilitation and preservation activities.</HEAD>
<P>(a) <I>Types of buildings and improvements eligible for rehabilitation assistance.</I> CDBG funds may be used to finance the rehabilitation of:
</P>
<P>(1) Privately owned buildings and improvements for residential purposes; improvements to a single-family residential property which is also used as a place of business, which are required in order to operate the business, need not be considered to be rehabilitation of a commercial or industrial building, if the improvements also provide general benefit to the residential occupants of the building; 
</P>
<P>(2) Low-income public housing and other publicly owned residential buildings and improvements;
</P>
<P>(3) Publicly or privately owned commercial or industrial buildings, except that the rehabilitation of such buildings owned by a private for-profit business is limited to improvement to the exterior of the building, abatement of asbestos hazards, lead-based paint hazard evaluation and reduction, and the correction of code violations;
</P>
<P>(4) Nonprofit-owned nonresidential buildings and improvements not eligible under § 570.201(c); and 
</P>
<P>(5) Manufactured housing when such housing constitutes part of the community's permanent housing stock.
</P>
<P>(b) <I>Types of assistance.</I> CDBG funds may be used to finance the following types of rehabilitation activities, and related costs, either singly, or in combination, through the use of grants, loans, loan guarantees, interest supplements, or other means for buildings and improvements described in paragraph (a) of this section, except that rehabilitation of commercial or industrial buildings is limited as described in paragraph (a)(3) of this section.
</P>
<P>(1) Assistance to private individuals and entities, including profit making and nonprofit organizations, to acquire for the purpose of rehabilitation, and to rehabilitate properties, for use or resale for residential purposes;
</P>
<P>(2) Labor, materials, and other costs of rehabilitation of properties, including repair directed toward an accumulation of deferred maintenance, replacement of principal fixtures and components of existing structures, installation of security devices, including smoke detectors and dead bolt locks, and renovation through alterations, additions to, or enhancement of existing structures and improvements, abatement of asbestos hazards (and other contaminants) in buildings and improvements that may be undertaken singly, or in combination;
</P>
<P>(3) Loans for refinancing existing indebtedness secured by a property being rehabilitated with CDBG funds if such financing is determined by the recipient to be necessary or appropriate to achieve the locality's community development objectives;
</P>
<P>(4) Improvements to increase the efficient use of energy in structures through such means as installation of storm windows and doors, siding, wall and attic insulation, and conversion, modification, or replacement of heating and cooling equipment, including the use of solar energy equipment;
</P>
<P>(5) Improvements to increase the efficient use of water through such means as water savings faucets and shower heads and repair of water leaks;
</P>
<P>(6) Connection of residential structures to water distribution lines or local sewer collection lines;
</P>
<P>(7) For rehabilitation carried out with CDBG funds, costs of:
</P>
<P>(i) Initial homeowner warranty premiums;
</P>
<P>(ii) Hazard insurance premiums, except where assistance is provided in the form of a grant; and
</P>
<P>(iii) Flood insurance premiums for properties covered by the Flood Disaster Protection Act of 1973, pursuant to § 570.605.
</P>
<P>(8) Costs of acquiring tools to be lent to owners, tenants, and others who will use such tools to carry out rehabilitation;
</P>
<P>(9) Rehabilitation services, such as rehabilitation counseling, energy auditing, preparation of work specifications, loan processing, inspections, and other services related to assisting owners, tenants, contractors, and other entities, participating or seeking to participate in rehabilitation activities authorized under this section, under section 312 of the Housing Act of 1964, as amended, under section 810 of the Act, or under section 17 of the United States Housing Act of 1937; 
</P>
<P>(10) Assistance for the rehabilitation of housing under section 17 of the United States Housing Act of 1937; and
</P>
<P>(11) Improvements designed to remove material and architectural barriers that restrict the mobility and accessibility of elderly or severely disabled persons to buildings and improvements eligible for assistance under paragraph (a) of this section. 
</P>
<P>(c) <I>Code enforcement.</I> Costs incurred for inspection for code violations and enforcement of codes (e.g., salaries and related expenses of code enforcement inspectors and legal proceedings, but not including the cost of correcting the violations) in deteriorating or deteriorated areas when such enforcement together with public or private improvements, rehabilitation, or services to be provided may be expected to arrest the decline of the area. 
</P>
<P>(d) <I>Historic preservation.</I> CDBG funds may be used for the rehabilitation, preservation or restoration of historic properties, whether publicly or privately owned. Historic properties are those sites or structures that are either listed in or eligible to be listed in the National Register of Historic Places, listed in a State or local inventory of historic places, or designated as a State or local landmark or historic district by appropriate law or ordinance. Historic preservation, however, is not authorized for buildings for the general conduct of government.
</P>
<P>(e) <I>Renovation of closed buildings.</I> CDBG funds may be used to renovate closed buildings, such as closed school buildings, for use as an eligible public facility or to rehabilitate such buildings for housing.
</P>
<P>(f) <I>Lead-based paint activities.</I> Lead-based paint activities pursuant to § 570.608.
</P>
<P>(g) <I>Broadband infrastructure.</I> Any substantial rehabilitation, as substantial rehabilitation is defined by 24 CFR 5.100, of a building with more than 4 rental units, for which CDBG funds are first obligated by the recipient on or after April 19, 2017, must include installation of broadband infrastructure, as this term is also defined in 24 CFR 5.100, except where the recipient determines and, in accordance with § 570.506, documents the determination that:
</P>
<P>(1) The location of the substantial rehabilitation makes installation of broadband infrastructure infeasible;
</P>
<P>(2) The cost of installing broadband infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden; or
</P>
<P>(3) The structure of the housing to be substantially rehabilitated makes installation of broadband infrastructure infeasible.
</P>
<CITA TYPE="N">[53 FR 34439, Sept. 6, 1988; 53 FR 41330, Oct. 21, 1988, as amended at 60 FR 1944, Jan. 5, 1995; 60 FR 56911, Nov. 9, 1995; 64 FR 50225, Sept. 15, 1999; 71 FR 30035, May 24, 2006; 82 FR 92636, Dec. 20, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 570.203" NODE="24:3.1.1.3.3.3.1.4" TYPE="SECTION">
<HEAD>§ 570.203   Special economic development activities.</HEAD>
<P>A recipient may use CDBG funds for special economic development activities in addition to other activities authorized in this subpart that may be carried out as part of an economic development project. Guidelines for selecting activities to assist under this paragraph are provided at § 570.209. The recipient must ensure that the appropriate level of public benefit will be derived pursuant to those guidelines before obligating funds under this authority. Special activities authorized under this section do not include assistance for the construction of new housing. Activities eligible under this section may include costs associated with project-specific assessment or remediation of known or suspected environmental contamination. Special economic development activities include:
</P>
<P>(a) The acquisition, construction, reconstruction, rehabilitation or installation of commercial or industrial buildings, structures, and other real property equipment and improvements, including railroad spurs or similar extensions. Such activities may be carried out by the recipient or public or private nonprofit subrecipients.
</P>
<P>(b) The provision of assistance to a private for-profit business, including, but not limited to, grants, loans, loan guarantees, interest supplements, technical assistance, and other forms of support, for any activity where the assistance is appropriate to carry out an economic development project, excluding those described as ineligible in § 570.207(a). In selecting businesses to assist under this authority, the recipient shall minimize, to the extent practicable, displacement of existing businesses and jobs in neighborhoods. 
</P>
<P>(c) Economic development services in connection with activities eligible under this section, including, but not limited to, outreach efforts to market available forms of assistance; screening of applicants; reviewing and underwriting applications for assistance; preparation of all necessary agreements; management of assisted activities; and the screening, referral, and placement of applicants for employment opportunities generated by CDBG-eligible economic development activities, including the costs of providing necessary training for persons filling those positions. 
</P>
<CITA TYPE="N">[53 FR 34439, Sept. 6, 1988, as amended at 60 FR 1944, Jan. 5, 1995; 71 FR 30035, May 24, 2006]


</CITA>
</DIV8>


<DIV8 N="§ 570.204" NODE="24:3.1.1.3.3.3.1.5" TYPE="SECTION">
<HEAD>§ 570.204   Special activities by Community-Based Development Organizations (CBDOs).</HEAD>
<P>(a) <I>Eligible activities.</I> The recipient may provide CDBG funds as grants or loans to any CBDO qualified under this section to carry out a neighborhood revitalization, community economic development, or energy conservation project. The funded project activities may include those listed as eligible under this subpart, and, except as described in paragraph (b) of this section, activities not otherwise listed as eligible under this subpart. For purposes of qualifying as a project under paragraphs (a)(1), (a)(2), and (a)(3) of this section, the funded activity or activities may be considered either alone or in concert with other project activities either being carried out or for which funding has been committed. For purposes of this section: 
</P>
<P>(1) Neighborhood revitalization project includes activities of sufficient size and scope to have an impact on the decline of a geographic location within the jurisdiction of a unit of general local government (but not the entire jurisdiction) designated in comprehensive plans, ordinances, or other local documents as a neighborhood, village, or similar geographical designation; or the entire jurisdiction of a unit of general local government which is under 25,000 population; 
</P>
<P>(2) Community economic development project includes activities that increase economic opportunity, principally for persons of low- and moderate-income, or that stimulate or retain businesses or permanent jobs, including projects that include one or more such activities that are clearly needed to address a lack of affordable housing accessible to existing or planned jobs and those activities specified at 24 CFR 91.1(a)(1)(iii); activities under this paragraph may include costs associated with project-specific assessment or remediation of known or suspected environmental contamination;
</P>
<P>(3) Energy conservation project includes activities that address energy conservation, principally for the benefit of the residents of the recipient's jurisdiction; and 
</P>
<P>(4) To carry out a project means that the CBDO undertakes the funded activities directly or through contract with an entity other than the grantee, or through the provision of financial assistance for activities in which it retains a direct and controlling involvement and responsibilities. 
</P>
<P>(5) Any new construction or substantial rehabilitation, as substantial rehabilitation is defined by 24 CFR 5.100, of a building with more than 4 rental units, for which CDBG funds are first obligated by the recipient on or after April 19, 2017, must include installation of broadband infrastructure, as this term is also defined in 24 CFR 5.100, except where the recipient determines and, in accordance with § 570.506, documents the determination that:
</P>
<P>(i) The location of the new construction or substantial rehabilitation makes installation of broadband infrastructure infeasible;
</P>
<P>(ii) The cost of installing broadband infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden; or
</P>
<P>(iii) The structure of the housing to be substantially rehabilitated makes installation of broadband infrastructure infeasible.
</P>
<P>(b) <I>Ineligible activities.</I> Notwithstanding that CBDOs may carry out activities that are not otherwise eligible under this subpart, this section does not authorize: 
</P>
<P>(1) Carrying out an activity described as ineligible in § 570.207(a); 
</P>
<P>(2) Carrying out public services that do not meet the requirements of § 570.201(e), except that: 
</P>
<P>(i) Services carried out under this section that are specifically designed to increase economic opportunities through job training and placement and other employment support services, including, but not limited to, peer support programs, counseling, child care, transportation, and other similar services; and 
</P>
<P>(ii) Services of any type carried out under this section pursuant to a strategy approved by HUD under the provisions of 24 CFR 91.215(e) shall not be subject to the limitations in § 570.201(e)(1) or (2), as applicable; 
</P>
<P>(3) Providing assistance to activities that would otherwise be eligible under § 570.203 that do not meet the requirements of § 570.209; or 
</P>
<P>(4) Carrying out an activity that would otherwise be eligible under § 570.205 or § 570.206, but that would result in the recipient's exceeding the spending limitation in § 570.200(g). 
</P>
<P>(c) <I>Eligible CBDOs.</I> (1) A CBDO qualifying under this section is an organization which has the following characteristics: 
</P>
<P>(i) Is an association or corporation organized under State or local law to engage in community development activities (which may include housing and economic development activities) primarily within an identified geographic area of operation within the jurisdiction of the recipient, or in the case of an urban county, the jurisdiction of the county; and 
</P>
<P>(ii) Has as its primary purpose the improvement of the physical, economic or social environment of its geographic area of operation by addressing one or more critical problems of the area, with particular attention to the needs of persons of low and moderate income; and 
</P>
<P>(iii) May be either non-profit or for-profit, provided any monetary profits to its shareholders or members must be only incidental to its operations; and 
</P>
<P>(iv) Maintains at least 51 percent of its governing body's membership for low- and moderate-income residents of its geographic area of operation, owners or senior officers of private establishments and other institutions located in and serving its geographic area of operation, or representatives of low- and moderate-income neighborhood organizations located in its geographic area of operation; and 
</P>
<P>(v) Is not an agency or instrumentality of the recipient and does not permit more than one-third of the membership of its governing body to be appointed by, or to consist of, elected or other public officials or employees or officials of an ineligible entity (even though such persons may be otherwise qualified under paragraph (c)(1)(iv) of this section); and 
</P>
<P>(vi) Except as otherwise authorized in paragraph (c)(1)(v) of this section, requires the members of its governing body to be nominated and approved by the general membership of the organization, or by its permanent governing body; and 
</P>
<P>(vii) Is not subject to requirements under which its assets revert to the recipient upon dissolution; and 
</P>
<P>(viii) Is free to contract for goods and services from vendors of its own choosing. 
</P>
<P>(2) A CBDO that does not meet the criteria in paragraph (c)(1) of this section may also qualify as an eligible entity under this section if it meets one of the following requirements: 
</P>
<P>(i) Is an entity organized pursuant to section 301(d) of the Small Business Investment Act of 1958 (15 U.S.C. 681(d)), including those which are profit making; or 
</P>
<P>(ii) Is an SBA approved Section 501 State Development Company or Section 502 Local Development Company, or an SBA Certified Section 503 Company under the Small Business Investment Act of 1958, as amended; or 
</P>
<P>(iii) Is a Community Housing Development Organization (CHDO) under 24 CFR 92.2, designated as a CHDO by the HOME Investment Partnerships program participating jurisdiction, with a geographic area of operation of no more than one neighborhood, and has received HOME funds under 24 CFR 92.300 or is expected to receive HOME funds as described in and documented in accordance with 24 CFR 92.300(e). 
</P>
<P>(3) A CBDO that does not qualify under paragraph (c)(1) or (2) of this section may also be determined to qualify as an eligible entity under this section if the recipient demonstrates to the satisfaction of HUD, through the provision of information regarding the organization's charter and by-laws, that the organization is sufficiently similar in purpose, function, and scope to those entities qualifying under paragraph (c)(1) or (2) of this section. 
</P>
<CITA TYPE="N">[60 FR 1944, Jan. 5, 1995, as amended at 71 FR 30035, May 24, 2006; 81 FR 92636, Dec. 20, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 570.205" NODE="24:3.1.1.3.3.3.1.6" TYPE="SECTION">
<HEAD>§ 570.205   Eligible planning, urban environmental design and policy-planning-management-capacity building activities.</HEAD>
<P>(a) Planning activities which consist of all costs of data gathering, studies, analysis, and preparation of plans and the identification of actions that will implement such plans, including, but not limited to:
</P>
<P>(1) Comprehensive plans;
</P>
<P>(2) Community development plans;
</P>
<P>(3) Functional plans, in areas such as:
</P>
<P>(i) Housing, including the development of a consolidated plan;
</P>
<P>(ii) Land use and urban environmental design;
</P>
<P>(iii) Economic development;
</P>
<P>(iv) Open space and recreation;
</P>
<P>(v) Energy use and conservation;
</P>
<P>(vi) Floodplain and wetlands management in accordance with the requirements of Executive Orders 11988 and 11990;
</P>
<P>(vii) Transportation;
</P>
<P>(viii) Utilities; and
</P>
<P>(ix) Historic preservation.
</P>
<P>(4) Other plans and studies such as:
</P>
<P>(i) Small area and neighborhood plans;
</P>
<P>(ii) Capital improvements programs;
</P>
<P>(iii) Individual project plans (but excluding engineering and design costs related to a specific activity which are eligible as part of the cost of such activity under §§ 570.201-570.204);
</P>
<P>(iv) The reasonable costs of general environmental, urban environmental design and historic preservation studies; and general environmental assessment- and remediation-oriented planning related to properties with known or suspected environmental contamination. However, costs necessary to comply with 24 CFR part 58, including project specific environmental assessments and clearances for activities eligible for assistance under this part, are eligible as part of the cost of such activities under §§ 570.201-570.204. Costs for such specific assessments and clearances may also be incurred under this paragraph but would then be considered planning costs for the purposes of § 570.200(g);
</P>
<P>(v) Strategies and action programs to implement plans, including the development of codes, ordinances and regulations;
</P>
<P>(vi) Support of clearinghouse functions, such as those specified in Executive Order 12372; and




</P>
<P>(vii) Developing an inventory of properties with known or suspected environmental contamination.


</P>
<P>(5) [Reserved]
</P>
<P>(6) Policy—planning—management—capacity building activities which will enable the recipient to:
</P>
<P>(1) Determine its needs;
</P>
<P>(2) Set long-term goals and short-term objectives, including those related to urban environmental design;
</P>
<P>(3) Devise programs and activities to meet these goals and objectives;
</P>
<P>(4) Evaluate the progress of such programs and activities in accomplishing these goals and objectives; and
</P>
<P>(5) Carry out management, coordination and monitoring of activities necessary for effective planning implementation, but excluding the costs necessary to implement such plans.
</P>
<CITA TYPE="N">[53 FR 34439, Sept. 6, 1988, as amended at 56 FR 56127, Oct. 31, 1991; 60 FR 1915, Jan. 5, 1995; 71 FR 30035, May 24, 2006; 80 FR 42366, July 16, 2015; 85 FR 47910, Aug. 7, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 570.206" NODE="24:3.1.1.3.3.3.1.7" TYPE="SECTION">
<HEAD>§ 570.206   Program administrative costs.</HEAD>
<P>Payment of reasonable program administrative costs and carrying charges related to the planning and execution of community development activities assisted in whole or in part with funds provided under this part and, where applicable, housing activities (described in paragraph (g) of this section) covered in the recipient's housing assistance plan. This does not include staff and overhead costs directly related to carrying out activities eligible under § 570.201 through § 570.204, since those costs are eligible as part of such activities.
</P>
<P>(a) <I>General management, oversight and coordination.</I> Reasonable costs of overall program management, coordination, monitoring, and evaluation. Such costs include, but are not necessarily limited to, necessary expenditures for the following:
</P>
<P>(1) Salaries, wages, and related costs of the recipient's staff, the staff of local public agencies, or other staff engaged in program administration. In charging costs to this category the recipient may either include the entire salary, wages, and related costs allocable to the program of each person whose <I>primary</I> responsibilities with regard to the program involve program administration assignments, or the pro rata share of the salary, wages, and related costs of each person whose job includes <I>any</I> program administration assignments. The recipient may use only one of these methods during the program year. Program administration includes the following types of assignments:
</P>
<P>(i) Providing local officials and citizens with information about the program;
</P>
<P>(ii) Preparing program budgets and schedules, and amendments thereto;
</P>
<P>(iii) Developing systems for assuring compliance with program requirements;
</P>
<P>(iv) Developing interagency agreements and agreements with subrecipients and contractors to carry out program activities;
</P>
<P>(v) Monitoring program activities for progress and compliance with program requirements; 
</P>
<P>(vi) Preparing reports and other documents related to the program for submission to HUD;
</P>
<P>(vii) Coordinating the resolution of audit and monitoring findings;
</P>
<P>(viii) Evaluating program results against stated objectives; and
</P>
<P>(ix) Managing or supervising persons whose primary responsibilities with regard to the program include such assignments as those described in paragraph (a)(1)(i) through (viii) of this section.
</P>
<P>(2) Travel costs incurred for official business in carrying out the program;
</P>
<P>(3) Administrative services performed under third party contracts or agreements, including such services as general legal services, accounting services, and audit services; and
</P>
<P>(4) Other costs for goods and services required for administration of the program, including such goods and services as rental or purchase of equipment, insurance, utilities, office supplies, and rental and maintenance (but not purchase) of office space.
</P>
<P>(b) <I>Public information.</I> The provisions of information and other resources to residents and citizen organizations participating in the planning, implementation, or assessment of activities being assisted with CDBG funds.
</P>
<P>(c) <I>Fair housing activities.</I> Provision of fair housing services designed to further the fair housing objectives of the Fair Housing Act (42 U.S.C. 3601-20) by making all persons, without regard to race, color, religion, sex, national origin, familial status or handicap, aware of the range of housing opportunities available to them; other fair housing enforcement, education, and outreach activities; and other activities designed to further the housing objective of avoiding undue concentrations of assisted persons in areas containing a high proportion of low and moderate income persons.
</P>
<P>(d) [Reserved]
</P>
<P>(e) <I>Indirect costs.</I> Indirect costs may be charged to the CDBG program under a cost allocation plan prepared in accordance with 2 CFR part 200, subpart E.
</P>
<P>(f) <I>Submission of applications for federal programs.</I> Preparation of documents required for submission to HUD to receive funds under the CDBG and UDAG programs. In addition, CDBG funds may be used to prepare applications for other Federal programs where the recipient determines that such activities are necessary or appropriate to achieve its community development objectives.
</P>
<P>(g) <I>Administrative expenses to facilitate housing.</I> CDBG funds may be used for necessary administrative expenses in planning or obtaining financing for housing as follows: for entitlement recipients, assistance authorized by this paragraph is limited to units which are identified in the recipient's HUD approved housing assistance plan; for HUD-administered small cities recipients, assistance authorized by the paragraph is limited to facilitating the purchase or occupancy of existing units which are to be occupied by low and moderate income households, or the construction of rental or owner units where at least 20 percent of the units in each project will be occupied at affordable rents/costs by low and moderate income persons. Examples of eligible actions are as follows:
</P>
<P>(1) The cost of conducting preliminary surveys and analysis of market needs;
</P>
<P>(2) Site and utility plans, narrative descriptions of the proposed construction, preliminary cost estimates, urban design documentation, and “sketch drawings,” but excluding architectural, engineering, and other details ordinarily required for construction purposes, such as structural, electrical, plumbing, and mechanical details;
</P>
<P>(3) Reasonable costs associated with development of applications for mortgage and insured loan commitments, including commitment fees, and of applications and proposals under the Section 8 Housing Assistance Payments Program pursuant to 24 CFR parts 880-883;
</P>
<P>(4) Fees associated with processing of applications for mortgage or insured loan commitments under programs including those administered by HUD, Farmers Home Administration (FmHA), Federal National Mortgage Association (FNMA), and the Government National Mortgage Association (GNMA);
</P>
<P>(5) The cost of issuance and administration of mortgage revenue bonds used to finance the acquisition, rehabilitation or construction of housing, but excluding costs associated with the payment or guarantee of the principal or interest on such bonds; and
</P>
<P>(6) Special outreach activities which result in greater landlord participation in Section 8 Housing Assistance Payments Program-Existing Housing or similar programs for low and moderate income persons.
</P>
<P>(h) <I>Section 17 of the United States Housing Act of 1937.</I> Reasonable costs equivalent to those described in paragraphs (a), (b), (e) and (f) of this section for overall program management of the Rental Rehabilitation and Housing Development programs authorized under section 17 of the United States Housing Act of 1937, whether or not such activities are otherwise assisted with funds provided under this part.
</P>
<P>(i) Whether or not such activities are otherwise assisted by funds provided under this part, reasonable costs equivalent to those described in paragraphs (a), (b), (e), and (f) of this section for overall program management of: 
</P>
<P>(1) A Federally designated Empowerment Zone or Enterprise Community; and 
</P>
<P>(2) The HOME program under title II of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12701 note). 
</P>
<CITA TYPE="N">[53 FR 34439, Sept. 6, 1988; 53 FR 41330, Oct. 21, 1988, as amended at 54 FR 37411, Sept. 8, 1989; 60 FR 56912, Nov. 9, 1995; 69 FR 32778, June 10, 2004; 80 FR 69870, Nov. 12, 2015; 80 FR 75937, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 570.207" NODE="24:3.1.1.3.3.3.1.8" TYPE="SECTION">
<HEAD>§ 570.207   Ineligible activities.</HEAD>
<P>The general rule is that any activity that is not authorized under the provisions of §§ 570.201-570.206 is ineligible to be assisted with CDBG funds. This section identifies specific activities that are ineligible and provides guidance in determining the eligibility of other activities frequently associated with housing and community development.
</P>
<P>(a) The following activities may not be assisted with CDBG funds:
</P>
<P>(1) <I>Buildings or portions thereof, used for the general conduct of government</I> as defined at § 570.3(d) cannot be assisted with CDBG funds. This does not include, however, the removal of architectural barriers under § 570.201(c) involving any such building. Also, where acquisition of real property includes an existing improvement which is to be used in the provision of a building for the general conduct of government, the portion of the acquisition cost attributable to the land is eligible, provided such acquisition meets a national objective described in § 570.208.
</P>
<P>(2) <I>General government expenses.</I> Except as otherwise specifically authorized in this subpart or under 2 CFR part 200, subpart E, expenses required to carry out the regular responsibilities of the unit of general local government are not eligible for assistance under this part.
</P>
<P>(3) <I>Political activities.</I> CDBG funds shall not be used to finance the use of facilities or equipment for political purposes or to engage in other partisan political activities, such as candidate forums, voter transportation, or voter registration. However, a facility originally assisted with CDBG funds may be used on an incidental basis to hold political meetings, candidate forums, or voter registration campaigns, provided that all parties and organizations have access to the facility on an equal basis, and are assessed equal rent or use charges, if any.
</P>
<P>(b) The following activities may not be assisted with CDBG funds unless authorized under provisions of § 570.203 or as otherwise specifically noted herein or when carried out by an entity under the provisions of § 570.204. 
</P>
<P>(1) <I>Purchase of equipment.</I> The purchase of equipment with CDBG funds is generally ineligible.
</P>
<P>(i) <I>Construction equipment.</I> The purchase of construction equipment is ineligible, but compensation for the use of such equipment through leasing or depreciation pursuant to 2 CFR part 200, subpart E, as applicable for an otherwise eligible activity is an eligible use of CDBG funds. However, the purchase of construction equipment for use as part of a solid waste disposal facility is eligible under § 570.201(c).
</P>
<P>(ii) <I>Fire protection equipment.</I> Fire protection equipment is considered for this purpose to be an integral part of a public facility and thus, purchase of such equipment would be eligible under § 570.201(c). 
</P>
<P>(iii) <I>Furnishings and personal property.</I> The purchase of equipment, fixtures, motor vehicles, furnishings, or other personal property not an integral structural fixture is generally ineligible. CDBG funds may be used, however, to purchase or to pay depreciation in accordance with 2 CFR part 200, subpart E, for such items when necessary for use by a recipient or its subrecipients in the administration of activities assisted with CDBG funds, or when eligible as fire fighting equipment, or when such items constitute all or part of a public service pursuant to § 570.201(e).
</P>
<P>(2) <I>Operating and maintenance expenses.</I> The general rule is that any expense associated with repairing, operating or maintaining public facilities, improvements and services is ineligible. Specific exceptions to this general rule are operating and maintenance expenses associated with public service activities, interim assistance, and office space for program staff employed in carrying out the CDBG program. For example, the use of CDBG funds to pay the allocable costs of operating and maintaining a facility used in providing a public service would be eligible under § 570.201(e), even if no other costs of providing such a service are assisted with such funds. Examples of ineligible operating and maintenance expenses are:
</P>
<P>(i) Maintenance and repair of publicly owned streets, parks, playgrounds, water and sewer facilities, neighborhood facilities, senior centers, centers for persons with a disabilities, parking and other public facilities and improvements. Examples of maintenance and repair activities for which CDBG funds may not be used include the filling of pot holes in streets, repairing of cracks in sidewalks, the mowing of recreational areas, and the replacement of expended street light bulbs; and
</P>
<P>(ii) Payment of salaries for staff, utility costs and similar expenses necessary for the operation of public works and facilities.
</P>
<P>(3) <I>New housing construction.</I> For the purpose of this paragraph, activities in support of the development of low or moderate income housing including clearance, site assemblage, provision of site improvements and provision of public improvements and certain housing pre-construction costs set forth in § 570.206(g), are not considered as activities to subsidize or assist new residential construction. CDBG funds may not be used for the construction of new permanent residential structures or for any program to subsidize or assist such new construction, except:
</P>
<P>(i) As provided under the last resort housing provisions set forth in 24 CFR part 42;
</P>
<P>(ii) As authorized under § 570.201(m) or (n);
</P>
<P>(iii) When carried out by an entity pursuant to § 570.204(a); 
</P>
<P>(4) <I>Income payments.</I> The general rule is that CDBG funds may not be used for income payments. For purposes of the CDBG program, “income payments” means a series of subsistence-type grant payments made to an individual or family for items such as food, clothing, housing (rent or mortgage), or utilities, but excludes emergency grant payments made over a period of up to three consecutive months to the provider of such items or services on behalf of an individual or family. 
</P>
<CITA TYPE="N">[53 FR 34439, Sept. 6, 1988; 53 FR 41330, Oct. 21, 1988, as amended at 60 FR 1945, Jan. 5, 1995; 60 FR 56912, Nov. 9, 1995; 65 FR 70215, Nov. 21, 2000; 80 FR 75937, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 570.208" NODE="24:3.1.1.3.3.3.1.9" TYPE="SECTION">
<HEAD>§ 570.208   Criteria for national objectives.</HEAD>
<P>The following criteria shall be used to determine whether a CDBG-assisted activity complies with one or more of the national objectives as required under § 570.200(a)(2):
</P>
<P>(a) <I>Activities benefiting low- and moderate-income persons.</I> Activities meeting the criteria in paragraph (a) (1), (2), (3), or (4) of this section as applicable, will be considered to benefit low and moderate income persons unless there is substantial evidence to the contrary. In assessing any such evidence, the full range of direct effects of the assisted activity will be considered. (The recipient shall appropriately ensure that activities that meet these criteria do not benefit moderate income persons to the exclusion of low income persons.)
</P>
<P>(1) <I>Area benefit activities.</I> (i) An activity, the benefits of which are available to all the residents in a particular area, where at least 51 percent of the residents are low and moderate income persons. Such an area need not be coterminous with census tracts or other officially recognized boundaries but must be the entire area served by the activity. An activity that serves an area that is not primarily residential in character shall not qualify under this criterion. 
</P>
<P>(ii) For metropolitan cities and urban counties, an activity that would otherwise qualify under § 570.208(a)(1)(i), except that the area served contains less than 51 percent low- and moderate-income residents, will also be considered to meet the objective of benefiting low- and moderate-income persons where the proportion of such persons in the area is within the highest quartile of all areas in the recipient's jurisdiction in terms of the degree of concentration of such persons. This exception is inapplicable to non-entitlement CDBG grants in Hawaii. In applying this exception, HUD will determine the lowest proportion a recipient may use to qualify an area for this purpose, as follows: 
</P>
<P>(A) All census block groups in the recipient's jurisdiction shall be rank ordered from the block group of highest proportion of low and moderate income persons to the block group with the lowest. For urban counties, the rank ordering shall cover the entire area constituting the urban county and shall not be done separately for each participating unit of general local government.
</P>
<P>(B) In any case where the total number of a recipient's block groups does not divide evenly by four, the block group which would be fractionally divided between the highest and second quartiles shall be considered to be part of the highest quartile.
</P>
<P>(C) The proportion of low and moderate income persons in the last census block group in the highest quartile shall be identified. Any service area located within the recipient's jurisdiction and having a proportion of low and moderate income persons at or above this level shall be considered to be within the highest quartile.
</P>
<P>(D) If block group data are not available for the entire jurisdiction, other data acceptable to the Secretary may be used in the above calculations.
</P>
<P>(iii) An activity to develop, establish, and operate for up to two years after the establishment of, a uniform emergency telephone number system serving an area having less than the percentage of low- and moderate-income residents required under paragraph (a)(1)(i) of this section or (as applicable) paragraph (a)(1)(ii) of this section, provided the recipient obtains prior HUD approval. To obtain such approval, the recipient must: 
</P>
<P>(A) Demonstrate that the system will contribute significantly to the safety of the residents of the area. The request for approval must include a list of the emergency services that will participate in the emergency telephone number system; 
</P>
<P>(B) Submit information that serves as a basis for HUD to determine whether at least 51 percent of the use of the system will be by low- and moderate-income persons. As available, the recipient must provide information that identifies the total number of calls actually received over the preceding 12-month period for each of the emergency services to be covered by the emergency telephone number system and relates those calls to the geographic segment (expressed as nearly as possible in terms of census tracts, block numbering areas, block groups, or combinations thereof that are contained within the segment) of the service area from which the calls were generated. In analyzing this data to meet the requirements of this section, HUD will assume that the distribution of income among the callers generally reflects the income characteristics of the general population residing in the same geographic area where the callers reside. If HUD can conclude that the users have primarily consisted of low- and moderate-income persons, no further submission is needed by the recipient. If a recipient plans to make other submissions for this purpose, it may request that HUD review its planned methodology before expending the effort to acquire the information it expects to use to make its case; 
</P>
<P>(C) Demonstrate that other Federal funds received by the recipient are insufficient or unavailable for a uniform emergency telephone number system. For this purpose, the recipient must submit a statement explaining whether the lack of funds is due to the insufficiency of the amount of the available funds, restrictions on the use of such funds, or the prior commitment of funds by the recipient for other purposes; and 
</P>
<P>(D) Demonstrate that the percentage of the total costs of the system paid for by CDBG funds does not exceed the percentage of low- and moderate-income persons in the service area of the system. For this purpose, the recipient must include a description of the boundaries of the service area of the emergency telephone number system, the census divisions that fall within the boundaries of the service area (census tracts or block numbering areas), the total number of persons and the total number of low- and moderate-income persons within each census division, the percentage of low- and moderate-income persons within the service area, and the total cost of the system.
</P>
<P>(iv) An activity for which the assistance to a public improvement that provides benefits to all the residents of an area is limited to paying special assessments (as defined in § 570.200(c)) levied against residential properties owned and occupied by persons of low and moderate income. 
</P>
<P>(v) For purposes of determining qualification under this criterion, activities of the same type that serve different areas will be considered separately on the basis of their individual service area.
</P>
<P>(vi) In determining whether there is a sufficiently large percentage of low- and moderate-income persons residing in the area served by an activity to qualify under paragraph (a)(1) (i), (ii), or (vii) of this section, the most recently available decennial census information must be used to the fullest extent feasible, together with the section 8 income limits that would have applied at the time the income information was collected by the Census Bureau. Recipients that believe that the census data does not reflect current relative income levels in an area, or where census boundaries do not coincide sufficiently well with the service area of an activity, may conduct (or have conducted) a current survey of the residents of the area to determine the percent of such persons that are low and moderate income. HUD will accept information obtained through such surveys, to be used in lieu of the decennial census data, where it determines that the survey was conducted in such a manner that the results meet standards of statistical reliability that are comparable to that of the decennial census data for areas of similar size. Where there is substantial evidence that provides a clear basis to believe that the use of the decennial census data would substantially overstate the proportion of persons residing there that are low and moderate income, HUD may require that the recipient rebut such evidence in order to demonstrate compliance with section 105(c)(2) of the Act.
</P>
<P>(vii) Activities meeting the requirements of paragraph (d)(5)(i) of this section may be considered to qualify under this paragraph, provided that the area covered by the strategy is either a Federally-designated Empowerment Zone or Enterprise Community or primarily residential and contains a percentage of low- and moderate-income residents that is no less than the percentage computed by HUD pursuant to paragraph (a)(1)(ii) of this section or 70 percent, whichever is less, but in no event less than 51 percent. Activities meeting the requirements of paragraph (d)(6)(i) of this section may also be considered to qualify under paragraph (a)(1) of this section. 
</P>
<P>(2) <I>Limited clientele activities.</I> (i) An activity which benefits a limited clientele, at least 51 percent of whom are low- or moderate-income persons. (The following kinds of activities may not qualify under paragraph (a)(2) of this section: activities, the benefits of which are available to all the residents of an area; activities involving the acquisition, construction or rehabilitation of property for housing; or activities where the benefit to low- and moderate-income persons to be considered is the creation or retention of jobs, except as provided in paragraph (a)(2)(iv) of this section.) To qualify under paragraph (a)(2) of this section, the activity must meet one of the following tests: 
</P>
<P>(A) Benefit a clientele who are generally presumed to be principally low and moderate income persons. Activities that exclusively serve a group of persons in any one or a combination of the following categories may be presumed to benefit persons, 51 percent of whom are low- and moderate-income: abused children, battered spouses, elderly persons, adults meeting the Bureau of the Census' Current Population Reports definition of “severely disabled,” homeless persons, illiterate adults, persons living with AIDS, and migrant farm workers; or 
</P>
<P>(B) Require information on family size and income so that it is evident that at least 51 percent of the clientele are persons whose family income does not exceed the low and moderate income limit; or
</P>
<P>(C) Have income eligibility requirements which limit the activity exclusively to low and moderate income persons; or
</P>
<P>(D) Be of such nature and be in such location that it may be concluded that the activity's clientele will primarily be low and moderate income persons.
</P>
<P>(ii) An activity that serves to remove material or architectural barriers to the mobility or accessibility of elderly persons or of adults meeting the Bureau of the Census' Current Population Reports definition of “severely disabled” will be presumed to qualify under this criterion if it is restricted, to the extent practicable, to the removal of such barriers by assisting: 
</P>
<P>(A) The reconstruction of a public facility or improvement, or portion thereof, that does not qualify under paragraph (a)(1) of this section; 
</P>
<P>(B) The rehabilitation of a privately owned nonresidential building or improvement that does not qualify under paragraph (a)(1) or (4) of this section; or 
</P>
<P>(C) The rehabilitation of the common areas of a residential structure that contains more than one dwelling unit and that does not qualify under paragraph (a)(3) of this section. 
</P>
<P>(iii) A microenterprise assistance activity carried out in accordance with the provisions of § 570.201(o) with respect to those owners of microenterprises and persons developing microenterprises assisted under the activity during each program year who are low- and moderate-income persons. For purposes of this paragraph, persons determined to be low and moderate income may be presumed to continue to qualify as such for up to a three-year period. 
</P>
<P>(iv) An activity designed to provide job training and placement and/or other employment support services, including, but not limited to, peer support programs, counseling, child care, transportation, and other similar services, in which the percentage of low- and moderate-income persons assisted is less than 51 percent may qualify under this paragraph in the following limited circumstance: 
</P>
<P>(A) In such cases where such training or provision of supportive services assists business(es), the only use of CDBG assistance for the project is to provide the job training and/or supportive services; and 
</P>
<P>(B) The proportion of the total cost of the project borne by CDBG funds is no greater than the proportion of the total number of persons assisted who are low or moderate income. 
</P>
<P>(3) <I>Housing activities.</I> An eligible activity carried out for the purpose of providing or improving permanent residential structures which, upon completion, will be occupied by low- and moderate-income households. This would include, but not necessarily be limited to, the acquisition or rehabilitation of property by the recipient, a subrecipient, a developer, an individual homebuyer, or an individual homeowner; conversion of nonresidential structures; and new housing construction. If the structure contains two dwelling units, at least one must be so occupied, and if the structure contains more than two dwelling units, at least 51 percent of the units must be so occupied. Where two or more rental buildings being assisted are or will be located on the same or contiguous properties, and the buildings will be under common ownership and management, the grouped buildings may be considered for this purpose as a single structure. Where housing activities being assisted meet the requirements of paragraph § 570.208 (d)(5)(ii) or (d)(6)(ii) of this section, all such housing may also be considered for this purpose as a single structure. For rental housing, occupancy by low and moderate income households must be at affordable rents to qualify under this criterion. The recipient shall adopt and make public its standards for determining “affordable rents” for this purpose. The following shall also qualify under this criterion: 
</P>
<P>(i) When less than 51 percent of the units in a structure will be occupied by low and moderate income households, CDBG assistance may be provided in the following limited circumstances: 
</P>
<P>(A) The assistance is for an eligible activity to reduce the development cost of the new construction of a multifamily, non-elderly rental housing project; 
</P>
<P>(B) Not less than 20 percent of the units will be occupied by low and moderate income households at affordable rents; and 
</P>
<P>(C) The proportion of the total cost of developing the project to be borne by CDBG funds is no greater than the proportion of units in the project that will be occupied by low and moderate income households. 
</P>
<P>(ii) When CDBG funds are used to assist rehabilitation eligible under § 570.202(b)(9) or (10) in direct support of the recipient's Rental Rehabilitation program authorized under 24 CFR part 511, such funds shall be considered to benefit low and moderate income persons where not less than 51 percent of the units assisted, or to be assisted, by the recipient's Rental Rehabilitation program overall are for low and moderate income persons. 
</P>
<P>(iii) When CDBG funds are used for housing services eligible under § 570.201(k), such funds shall be considered to benefit low- and moderate-income persons if the housing units for which the services are provided are HOME-assisted and the requirements at 24 CFR 92.252 or 92.254 are met. 
</P>
<P>(4) <I>Job creation or retention activities.</I> An activity designed to create or retain permanent jobs where at least 51 percent of the jobs, computed on a full time equivalent basis, involve the employment of low- and moderate-income persons. To qualify under this paragraph, the activity must meet the following criteria: 
</P>
<P>(i) For an activity that creates jobs, the recipient must document that at least 51 percent of the jobs will be held by, or will be available to, low- and moderate-income persons. 
</P>
<P>(ii) For an activity that retains jobs, the recipient must document that the jobs would actually be lost without the CDBG assistance and that either or both of the following conditions apply with respect to at least 51 percent of the jobs at the time the CDBG assistance is provided: 
</P>
<P>(A) The job is known to be held by a low- or moderate-income person; or 
</P>
<P>(B) The job can reasonably be expected to turn over within the following two years and that steps will be taken to ensure that it will be filled by, or made available to, a low- or moderate-income person upon turnover. 
</P>
<P>(iii) Jobs that are not held or filled by a low- or moderate-income person may be considered to be available to low- and moderate-income persons for these purposes only if: 
</P>
<P>(A) Special skills that can only be acquired with substantial training or work experience or education beyond high school are not a prerequisite to fill such jobs, or the business agrees to hire unqualified persons and provide training; and 
</P>
<P>(B) The recipient and the assisted business take actions to ensure that low- and moderate-income persons receive first consideration for filling such jobs. 
</P>
<P>(iv) For purposes of determining whether a job is held by or made available to a low- or moderate-income person, the person may be presumed to be a low- or moderate-income person if: 
</P>
<P>(A) He/she resides within a census tract (or block numbering area) that either: 
</P>
<P>(<I>1</I>) Meets the requirements of paragraph (a)(4)(v) of this section; or 
</P>
<P>(<I>2</I>) Has at least 70 percent of its residents who are low- and moderate-income persons; or 
</P>
<P>(B) The assisted business is located within a census tract (or block numbering area) that meets the requirements of paragraph (a)(4)(v) of this section and the job under consideration is to be located within that census tract. 
</P>
<P>(v) A census tract (or block numbering area) qualifies for the presumptions permitted under paragraphs (a)(4)(iv)(A)(<I>1</I>) and (B) of this section if it is either part of a Federally-designated Empowerment Zone or Enterprise Community or meets the following criteria: 
</P>
<P>(A) It has a poverty rate of at least 20 percent as determined by the most recently available decennial census information; 
</P>
<P>(B) It does not include any portion of a central business district, as this term is used in the most recent Census of Retail Trade, unless the tract has a poverty rate of at least 30 percent as determined by the most recently available decennial census information; and 
</P>
<P>(C) It evidences pervasive poverty and general distress by meeting at least one of the following standards: 
</P>
<P>(<I>1</I>) All block groups in the census tract have poverty rates of at least 20 percent; 
</P>
<P>(<I>2</I>) The specific activity being undertaken is located in a block group that has a poverty rate of at least 20 percent; or 
</P>
<P>(<I>3</I>) Upon the written request of the recipient, HUD determines that the census tract exhibits other objectively determinable signs of general distress such as high incidence of crime, narcotics use, homelessness, abandoned housing, and deteriorated infrastructure or substantial population decline. 
</P>
<P>(vi) As a general rule, each assisted business shall be considered to be a separate activity for purposes of determining whether the activity qualifies under this paragraph, except: 
</P>
<P>(A) In certain cases such as where CDBG funds are used to acquire, develop or improve a real property (e.g., a business incubator or an industrial park) the requirement may be met by measuring jobs in the aggregate for all the businesses which locate on the property, provided such businesses are not otherwise assisted by CDBG funds. 
</P>
<P>(B) Where CDBG funds are used to pay for the staff and overhead costs of an entity making loans to businesses exclusively from non-CDBG funds, this requirement may be met by aggregating the jobs created by all of the businesses receiving loans during each program year. 
</P>
<P>(C) Where CDBG funds are used by a recipient or subrecipient to provide technical assistance to businesses, this requirement may be met by aggregating the jobs created or retained by all of the businesses receiving technical assistance during each program year. 
</P>
<P>(D) Where CDBG funds are used for activities meeting the criteria listed at § 570.209(b)(2)(v), this requirement may be met by aggregating the jobs created or retained by all businesses for which CDBG assistance is obligated for such activities during the program year, except as provided at paragraph (d)(7) of this section. 
</P>
<P>(E) Where CDBG funds are used by a Community Development Financial Institution to carry out activities for the purpose of creating or retaining jobs, this requirement may be met by aggregating the jobs created or retained by all businesses for which CDBG assistance is obligated for such activities during the program year, except as provided at paragraph (d)(7) of this section. 
</P>
<P>(F) Where CDBG funds are used for public facilities or improvements which will result in the creation or retention of jobs by more than one business, this requirement may be met by aggregating the jobs created or retained by all such businesses as a result of the public facility or improvement. 
</P>
<P>(<I>1</I>) Where the public facility or improvement is undertaken principally for the benefit of one or more particular businesses, but where other businesses might also benefit from the assisted activity, the requirement may be met by aggregating only the jobs created or retained by those businesses for which the facility/improvement is principally undertaken, provided that the cost (in CDBG funds) for the facility/improvement is less than $10,000 per permanent full-time equivalent job to be created or retained by those businesses. 
</P>
<P>(<I>2</I>) In any case where the cost per job to be created or retained (as determined under paragraph (a)(4)(vi)(F)(<I>1</I>) of this section) is $10,000 or more, the requirement must be met by aggregating the jobs created or retained as a result of the public facility or improvement by all businesses in the service area of the facility/improvement. This aggregation must include businesses which, as a result of the public facility/improvement, locate or expand in the service area of the facility/improvement between the date the recipient identifies the activity in its action plan under part 91 of this title and the date one year after the physical completion of the facility/improvement. In addition, the assisted activity must comply with the public benefit standards at § 570.209(b). 
</P>
<P>(b) <I>Activities which aid in the prevention or elimination of slums or blight.</I> Activities meeting one or more of the following criteria, in the absence of substantial evidence to the contrary, will be considered to aid in the prevention or elimination of slums or blight: 
</P>
<P>(1) <I>Activities to address slums or blight on an area basis.</I> An activity will be considered to address prevention or elimination of slums or blight in an area if:
</P>
<P>(i) The area, delineated by the recipient, meets a definition of a slum, blighted, deteriorated or deteriorating area under State or local law; 
</P>
<P>(ii) The area also meets the conditions in either paragraph (A) or (B):
</P>
<P>(A) At least 25 percent of properties throughout the area experience one or more of the following conditions:
</P>
<P>(<I>1</I>) Physical deterioration of buildings or improvements;
</P>
<P>(<I>2</I>) Abandonment of properties;
</P>
<P>(<I>3</I>) Chronic high occupancy turnover rates or chronic high vacancy rates in commercial or industrial buildings;
</P>
<P>(<I>4</I>) Significant declines in property values or abnormally low property values relative to other areas in the community; or
</P>
<P>(<I>5</I>) Known or suspected environmental contamination.
</P>
<P>(B) The public improvements throughout the area are in a general state of deterioration.
</P>
<P>(iii) Documentation is to be maintained by the recipient on the boundaries of the area and the conditions and standards used that qualified the area at the time of its designation. The recipient shall establish definitions of the conditions listed at § 570.208(b)(1)(ii)(A), and maintain records to substantiate how the area met the slums or blighted criteria. The designation of an area as slum or blighted under this section is required to be redetermined every 10 years for continued qualification. Documentation must be retained pursuant to the recordkeeping requirements contained at § 570.506 (b)(8)(ii).


</P>
<P>(iv) The assisted activity addresses one or more of the conditions which contributed to the deterioration of the area. Rehabilitation of residential buildings carried out in an area meeting the above requirements will be considered to address the area's deterioration only where each building rehabilitated is considered substandard under local definition before rehabilitation, and all deficiencies making a building substandard have been eliminated. At a minimum, the local definition for this purpose must be such that buildings that it would render substandard would also fail to meet the standards for the condition of HUD housing at 24 CFR 5.703.




</P>
<P>(2) <I>Activities to address slums or blight on a spot basis.</I> The following activities may be undertaken on a spot basis to eliminate specific conditions of blight, physical decay, or environmental contamination that are not located in a slum or blighted area: acquisition; clearance; relocation; historic preservation; remediation of environmentally contaminated properties; or rehabilitation of buildings or improvements. However, rehabilitation must be limited to eliminating those conditions that are detrimental to public health and safety. If acquisition or relocation is undertaken, it must be a precursor to another eligible activity (funded with CDBG or other resources) that directly eliminates the specific conditions of blight or physical decay, or environmental contamination.
</P>
<P>(3) <I>Activities to address slums or blight in an urban renewal area.</I> An activity will be considered to address prevention or elimination of slums or blight in an urban renewal area if the activity is: 
</P>
<P>(i) Located within an urban renewal project area or Neighborhood Development Program (NDP) action area; i.e., an area in which funded activities were authorized under an urban renewal Loan and Grant Agreement or an annual NDP Funding Agreement, pursuant to title I of the Housing Act of 1949; and 
</P>
<P>(ii) Necessary to complete the urban renewal plan, as then in effect, including <I>initial</I> land redevelopment permitted by the plan.
</P>
<NOTE>
<HED>Note:</HED>
<P>Despite the restrictions in (b) (1) and (2) of this section, any rehabilitation activity which benefits low and moderate income persons pursuant to paragraph (a)(3) of this section can be undertaken without regard to the area in which it is located or the extent or nature of rehabilitation assisted.</P></NOTE>
<P>(c) <I>Activities designed to meet community development needs having a particular urgency.</I> In the absence of substantial evidence to the contrary, an activity will be considered to address this objective if the recipient certifies that the activity is designed to alleviate existing conditions which pose a serious and immediate threat to the health or welfare of the community which are of recent origin or which recently became urgent, that the recipient is unable to finance the activity on its own, and that other sources of funding are not available. A condition will generally be considered to be of recent origin if it developed or became critical within 18 months preceding the certification by the recipient. 
</P>
<P>(d) <I>Additional criteria.</I> (1) Where the assisted activity is acquisition of real property, a preliminary determination of whether the activity addresses a national objective may be based on the planned use of the property after acquisition. A final determination shall be based on the actual use of the property, excluding any short-term, temporary use. Where the acquisition is for the purpose of clearance which will eliminate specific conditions of blight or physical decay, the clearance activity shall be considered the actual use of the property. However, any subsequent use or disposition of the cleared property shall be treated as a “change of use” under § 570.505. 
</P>
<P>(2) Where the assisted activity is relocation assistance that the recipient is required to provide, such relocation assistance shall be considered to address the same national objective as is addressed by the displacing activity. Where the relocation assistance is voluntary on the part of the grantee the recipient may qualify the assistance either on the basis of the national objective addressed by the displacing activity or on the basis that the recipients of the relocation assistance are low and moderate income persons. 
</P>
<P>(3) In any case where the activity undertaken for the purpose of creating or retaining jobs is a public improvement and the area served is primarily residential, the activity must meet the requirements of paragraph (a)(1) of this section as well as those of paragraph (a)(4) of this section in order to qualify as benefiting low and moderate income persons. 
</P>
<P>(4) CDBG funds expended for planning and administrative costs under § 570.205 and § 570.206 will be considered to address the national objectives.
</P>
<P>(5) Where the grantee has elected to prepare an area revitalization strategy pursuant to the authority of § 91.215(e) of this title and HUD has approved the strategy, the grantee may also elect the following options: 
</P>
<P>(i) Activities undertaken pursuant to the strategy for the purpose of creating or retaining jobs may, at the option of the grantee, be considered to meet the requirements of this paragraph under the criteria at paragraph (a)(1)(vii) of this section in lieu of the criteria at paragraph (a)(4) of this section; and
</P>
<P>(ii) All housing activities in the area for which, pursuant to the strategy, CDBG assistance is obligated during the program year may be considered to be a single structure for purposes of applying the criteria at paragraph (a)(3) of this section. 
</P>
<P>(6) Where CDBG-assisted activities are carried out by a Community Development Financial Institution whose charter limits its investment area to a primarily residential area consisting of at least 51 percent low- and moderate-income persons, the grantee may also elect the following options: 
</P>
<P>(i) Activities carried out by the Community Development Financial Institution for the purpose of creating or retaining jobs may, at the option of the grantee, be considered to meet the requirements of this paragraph under the criteria at paragraph (a)(1)(vii) of this section in lieu of the criteria at paragraph (a)(4) of this section; and 
</P>
<P>(ii) All housing activities for which the Community Development Financial Institution obligates CDBG assistance during the program year may be considered to be a single structure for purposes of applying the criteria at paragraph (a)(3) of this section. 
</P>
<P>(7) Where an activity meeting the criteria at § 570.209(b)(2)(v) may also meet the requirements of either paragraph (d)(5)(i) or (d)(6)(i) of this section, the grantee may elect to qualify the activity under either the area benefit criteria at paragraph (a)(1)(vii) of this section or the job aggregation criteria at paragraph (a)(4)(vi)(D) of this section, but not both. Where an activity may meet the job aggregation criteria at both paragraphs (a)(4)(vi)(D) and (E) of this section, the grantee may elect to qualify the activity under either criterion, but not both. 
</P>
<CITA TYPE="N">[53 FR 34439, Sept. 6, 1988; 53 FR 41330, Oct. 21, 1988, as amended at 60 FR 1945, Jan. 5, 1995; 60 FR 17445, Apr. 6, 1995; 60 FR 56912, Nov. 9, 1995; 61 FR 18674, Apr. 29, 1996; 71 FR 30035, May 24, 2006; 72 FR 46370, Aug. 17, 2007; 88 FR 30498, May 11, 2023] 


</CITA>
</DIV8>


<DIV8 N="§ 570.209" NODE="24:3.1.1.3.3.3.1.10" TYPE="SECTION">
<HEAD>§ 570.209   Guidelines for evaluating and selecting economic development projects.</HEAD>
<P>The following guidelines are provided to assist the recipient to evaluate and select activities to be carried out for economic development purposes. Specifically, these guidelines are applicable to activities that are eligible for CDBG assistance under § 570.203. These guidelines also apply to activities carried out under the authority of § 570.204 that would otherwise be eligible under § 570.203, were it not for the involvement of a Community-Based Development Organization (CBDO). (This would include activities where a CBDO makes loans to for-profit businesses.) These guidelines are composed of two components: guidelines for evaluating project costs and financial requirements; and standards for evaluating public benefit. The standards for evaluating public benefit are <I>mandatory,</I> but the guidelines for evaluating projects costs and financial requirements are not. 
</P>
<P>(a) <I>Guidelines and objectives for evaluating project costs and financial requirements.</I> HUD has developed guidelines that are designed to provide the recipient with a framework for financially underwriting and selecting CDBG-assisted economic development projects which are financially viable and will make the most effective use of the CDBG funds. These guidelines, also referred to as the underwriting guidelines, are published as appendix A to this part. The use of the underwriting guidelines published by HUD is not mandatory. However, grantees electing not to use these guidelines would be expected to conduct basic financial underwriting prior to the provision of CDBG financial assistance to a for-profit business. Where appropriate, HUD's underwriting guidelines recognize that different levels of review are appropriate to take into account differences in the size and scope of a proposed project, and in the case of a microenterprise or other small business to take into account the differences in the capacity and level of sophistication among businesses of differing sizes. Recipients are encouraged, when they develop their own programs and underwriting criteria, to also take these factors into account. The objectives of the underwriting guidelines are to ensure: 
</P>
<P>(1) That project costs are reasonable; 
</P>
<P>(2) That all sources of project financing are committed;
</P>
<P>(3) That to the extent practicable, CDBG funds are not substituted for non-Federal financial support;
</P>
<P>(4) That the project is financially feasible;
</P>
<P>(5) That to the extent practicable, the return on the owner's equity investment will not be unreasonably high; and
</P>
<P>(6) That to the extent practicable, CDBG funds are disbursed on a pro rata basis with other finances provided to the project.
</P>
<P>(b) <I>Standards for evaluating public benefit.</I> The grantee is responsible for making sure that at least a minimum level of public benefit is obtained from the expenditure of CDBG funds under the categories of eligibility governed by these guidelines. The standards set forth below identify the types of public benefit that will be recognized for this purpose and the minimum level of each that must be obtained for the amount of CDBG funds used. Unlike the guidelines for project costs and financial requirements covered under paragraph (a) of this section, the use of the standards for public benefit is mandatory. Certain public facilities and improvements eligible under § 570.201(c) of the regulations, which are undertaken for economic development purposes, are also subject to these standards, as specified in § 570.208(a)(4)(vi)(F)(<I>2</I>).
</P>
<P>(1) <I>Standards for activities in the aggregate.</I> Activities covered by these guidelines must, in the aggregate, either:
</P>
<P>(i) Create or retain at least one full-time equivalent, permanent job per $35,000 of CDBG funds used; or
</P>
<P>(ii) Provide goods or services to residents of an area, such that the number of low- and moderate-income persons residing in the areas served by the assisted businesses amounts to at least one low- and moderate-income person per $350 of CDBG funds used.
</P>
<P>(2) <I>Applying the aggregate standards.</I> (i) A metropolitan city, an urban county, a non-entitlement CDBG grantee in Hawaii, or an Insular Area shall apply the aggregate standards under paragraph (b)(1) of this section to all applicable activities for which CDBG funds are first obligated within each single CDBG program year, without regard to the source year of the funds used for the activities. For Insular Areas, the preceding sentence applies to grants received in program years after Fiscal Year 2004. A grantee under the HUD-administered Small Cities Program, or Insular Areas CDBG grants prior to Fiscal Year 2005, shall apply the aggregate standards under paragraph (b)(1) of this section to all funds obligated for applicable activities from a given grant; program income obligated for applicable activities will, for these purposes, be aggregated with the most recent open grant. For any time period in which a community has no open HUD-administered or Insular Areas grants, the aggregate standards shall be applied to all applicable activities for which program income is obligated during that period.
</P>
<P>(ii) The grantee shall apply the aggregate standards to the number of jobs to be created/retained, or to the number of persons residing in the area served (as applicable), as determined at the time funds are obligated to activities.
</P>
<P>(iii) Where an activity is expected both to create or retain jobs and to provide goods or services to residents of an area, the grantee may elect to count the activity under either the jobs standard or the area residents standard, but not both.
</P>
<P>(iv) Where CDBG assistance for an activity is limited to job training and placement and/or other employment support services, the jobs assisted with CDBG funds shall be considered to be created or retained jobs for the purposes of applying the aggregate standards.
</P>
<P>(v) Any activity subject to these guidelines which meets one or more of the following criteria may, at the grantee's option, be excluded from the aggregate standards described in paragraph (b)(1) of this section:
</P>
<P>(A) Provides jobs exclusively for unemployed persons or participants in one or more of the following programs:
</P>
<P>(<I>1</I>) Jobs Training Partnership Act (JTPA);
</P>
<P>(<I>2</I>) Jobs Opportunities for Basic Skills (JOBS); or
</P>
<P>(<I>3</I>) Aid to Families with Dependent Children (AFDC);
</P>
<P>(B) Provides jobs predominantly for residents of Public and Indian Housing units;
</P>
<P>(C) Provides jobs predominantly for homeless persons;
</P>
<P>(D) Provides jobs predominantly for low-skilled, low- and moderate-income persons, where the business agrees to provide clear opportunities for promotion and economic advancement, such as through the provision of training;
</P>
<P>(E) Provides jobs predominantly for persons residing within a census tract (or block numbering area) that has at least 20 percent of its residents who are in poverty;
</P>
<P>(F) Provides assistance to business(es) that operate(s) within a census tract (or block numbering area) that has at least 20 percent of its residents who are in poverty;
</P>
<P>(G) Stabilizes or revitalizes a neighborhood that has at least 70 percent of its residents who are low- and moderate-income;
</P>
<P>(H) Provides assistance to a Community Development Financial Institution that serve an area that is predominantly low- and moderate-income persons;
</P>
<P>(I) Provides assistance to a Community-Based Development Organization serving a neighborhood that has at least 70 percent of its residents who are low- and moderate-income;
</P>
<P>(J) Provides employment opportunities that are an integral component of a project designed to promote spatial deconcentration of low- and moderate-income and minority persons;
</P>
<P>(K) With prior HUD approval, provides substantial benefit to low-income persons through other innovative approaches;
</P>
<P>(L) Provides services to the residents of an area pursuant to a strategy approved by HUD under the provisions of § 91.215(e) of this title;
</P>
<P>(M) Creates or retains jobs through businesses assisted in an area pursuant to a strategy approved by HUD under the provisions of § 91.215(e) of this title.
</P>
<P>(N) Directly involves the economic development or redevelopment of environmentally contaminated properties.
</P>
<P>(3) <I>Standards for individual activities.</I> Any activity subject to these guidelines which falls into one or more of the following categories will be considered by HUD to provide insufficient public benefit, and therefore may under no circumstances be assisted with CDBG funds:
</P>
<P>(i) The amount of CDBG assistance exceeds either of the following, as applicable:
</P>
<P>(A) $50,000 per full-time equivalent, permanent job created or retained; or
</P>
<P>(B) $1,000 per low- and moderate-income person to which goods or services are provided by the activity.
</P>
<P>(ii) The activity consists of or includes any of the following:
</P>
<P>(A) General promotion of the community as a whole (as opposed to the promotion of specific areas and programs);
</P>
<P>(B) Assistance to professional sports teams;
</P>
<P>(C) Assistance to privately-owned recreational facilities that serve a predominantly higher-income clientele, where the recreational benefit to users or members clearly outweighs employment or other benefits to low- and moderate-income persons;
</P>
<P>(D) Acquisition of land for which the specific proposed use has not yet been identified; and
</P>
<P>(E) Assistance to a for-profit business while that business or any other business owned by the same person(s) or entity(ies) is the subject of unresolved findings of noncompliance relating to previous CDBG assistance provided by the recipient.
</P>
<P>(4) <I>Applying the individual activity standards.</I> (i) Where an activity is expected both to create or retain jobs and to provide goods or services to residents of an area, it will be disqualified only if the amount of CDBG assistance exceeds both of the amounts in paragraph (b)(3)(i) of this section.
</P>
<P>(ii) The individual activity standards in paragraph (b)(3)(i) of this section shall be applied to the number of jobs to be created or retained, or to the number of persons residing in the area served (as applicable), as determined at the time funds are obligated to activities.
</P>
<P>(iii) Where CDBG assistance for an activity is limited to job training and placement and/or other employment support services, the jobs assisted with CDBG funds shall be considered to be created or retained jobs for the purposes of applying the individual activity standards in paragraph (b)(3)(i) of this section.
</P>
<P>(c) <I>Amendments to economic development projects after review determinations.</I> If, after the grantee enters into a contract to provide assistance to a project, the scope or financial elements of the project change to the extent that a significant contract amendment is appropriate, the project should be reevaluated under these and the recipient's guidelines. (This would include, for example, situations where the business requests a change in the amount or terms of assistance being provided, or an extension to the loan payment period required in the contract.) If a reevaluation of the project indicates that the financial elements and public benefit to be derived have also substantially changed, then the recipient should make appropriate adjustments in the amount, type, terms or conditions of CDBG assistance which has been offered, to reflect the impact of the substantial change. (For example, if a change in the project elements results in a substantial reduction of the total project costs, it may be appropriate for the recipient to reduce the amount of total CDBG assistance.) If the amount of CDBG assistance provided to the project is increased, the amended project must still comply with the public benefit standards under paragraph (b) of this section.
</P>
<P>(d) <I>Documentation.</I> The grantee must maintain sufficient records to demonstrate the level of public benefit, based on the above standards, that is actually achieved upon completion of the CDBG-assisted economic development activity(ies) and how that compares to the level of such benefit anticipated when the CDBG assistance was obligated. If the grantee's actual results show a pattern of substantial variation from anticipated results, the grantee is expected to take all actions reasonably within its control to improve the accuracy of its projections. If the actual results demonstrate that the recipient has failed the public benefit standards, HUD may require the recipient to meet more stringent standards in future years as appropriate.
</P>
<CITA TYPE="N">[60 FR 1947, Jan. 5, 1995, as amended at 60 FR 17445, Apr. 6, 1995; 71 FR 30035, May 24, 2006; 72 FR 12535, Mar. 15, 2007; 72 FR 46370, Aug. 17, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 570.210" NODE="24:3.1.1.3.3.3.1.11" TYPE="SECTION">
<HEAD>§ 570.210   Prohibition on use of assistance for employment relocation activities.</HEAD>
<P>(a) <I>Prohibition.</I> CDBG funds may not be used to directly assist a business, including a business expansion, in the relocation of a plant, facility, or operation from one LMA to another LMA if the relocation is likely to result in a significant loss of jobs in the LMA from which the relocation occurs.
</P>
<P>(b) <I>Definitions.</I> The following definitions apply to this section:
</P>
<P>(1) <I>Directly assist.</I> Directly assist means the provision of CDBG funds for activities pursuant to:
</P>
<P>(i) § 570.203(b); or
</P>
<P>(ii) §§ 570.201(a)-(d), 570.201(l), 570.203(a), or § 570.204 when the grantee, subrecipient, or, in the case of an activity carried out pursuant to § 570.204, a Community Based Development Organization (CDBO) enters into an agreement with a business to undertake one or more of these activities as a condition of the business relocating a facility, plant, or operation to the grantee's LMA. Provision of public facilities and indirect assistance that will provide benefit to multiple businesses does not fall under the definition of “directly assist,” unless it includes the provision of infrastructure to aid a specific business that is the subject of an agreement with the specific assisted business.
</P>
<P>(2) <I>Labor market area (LMA).</I> For metropolitan areas, an LMA is an area defined as such by the BLS. An LMA is an economically integrated geographic area within which individuals can live and find employment within a reasonable distance or can readily change employment without changing their place of residence. In addition, LMAs are nonoverlapping and geographically exhaustive. For metropolitan areas, grantees must use employment data, as defined by the BLS, for the LMA in which the affected business is currently located and from which current jobs may be lost. For non-metropolitan areas, an LMA is either an area defined by the BLS as an LMA, or a state may choose to combine non-metropolitan LMAs. States are required to define or reaffirm prior definitions of their LMAs on an annual basis and retain records to substantiate such areas prior to any business relocation that would be impacted by this rule. Metropolitan LMAs cannot be combined, nor can a non-metropolitan LMA be combined with a metropolitan LMA. For the HUD-administered Small Cities Program, each of the three participating counties in Hawaii will be considered to be its own LMA. Recipients of Fiscal Year 1999 Small Cities Program funding in New York will follow the requirements for State CDBG recipients.
</P>
<P>(3) <I>Operation.</I> A business operation includes, but is not limited to, any equipment, employment opportunity, production capacity or product line of the business.
</P>
<P>(4) <I>Significant loss of jobs.</I> (i) A loss of jobs is significant if: The number of jobs to be lost in the LMA in which the affected business is currently located is equal to or greater than one-tenth of one percent of the total number of persons in the labor force of that LMA; or in all cases, a loss of 500 or more jobs. Notwithstanding the aforementioned, a loss of 25 jobs or fewer does not constitute a significant loss of jobs.
</P>
<P>(ii) A job is considered to be lost due to the provision of CDBG assistance if the job is relocated within three years of the provision of assistance to the business; or the time period within which jobs are to be created as specified by the agreement between the business and the recipient if it is longer than three years.
</P>
<P>(c) <I>Written agreement.</I> Before directly assisting a business with CDBG funds, the recipient, subrecipient, or a CDBO (in the case of an activity carried out pursuant to § 570.204) shall sign a written agreement with the assisted business. The written agreement shall include:
</P>
<P>(1) <I>Statement.</I> A statement from the assisted business as to whether the assisted activity will result in the relocation of any industrial or commercial plant, facility, or operation from one LMA to another, and, if so, the number of jobs that will be relocated from each LMA;
</P>
<P>(2) <I>Required information.</I> If the assistance will not result in a relocation covered by this section, a certification from the assisted business that neither it, nor any of its subsidiaries, has plans to relocate jobs at the time the agreement is signed that would result in a significant job loss as defined in this rule; and
</P>
<P>(3) <I>Reimbursement of assistance.</I> The agreement shall provide for reimbursement of any assistance provided to, or expended on behalf of, the business in the event that assistance results in a relocation prohibited under this section.
</P>
<P>(d) <I>Assistance not covered by this section.</I> This section does not apply to:
</P>
<P>(1) <I>Relocation assistance.</I> Relocation assistance required by the Uniform Assistance and Real Property Acquisition Policies Act of 1970, (URA) (42 U.S.C. 4601-4655);
</P>
<P>(2) <I>Microenterprises.</I> Assistance to microenterprises as defined by Section 102(a)(22) of the Housing and Community Development Act of 1974; and
</P>
<P>(3) <I>Arms-length transactions.</I> Assistance to a business that purchases business equipment, inventory, or other physical assets in an arms-length transaction, including the assets of an existing business, provided that the purchase does not result in the relocation of the sellers' business operation (including customer base or list, goodwill, product lines, or trade names) from one LMA to another LMA and does not produce a significant loss of jobs in the LMA from which the relocation occurs.
</P>
<CITA TYPE="N">[70 FR 76369, Dec. 23, 2005]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:3.1.1.3.3.4" TYPE="SUBPART">
<HEAD>Subpart D—Entitlement Grants</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>53 FR 34449, Sept. 6, 1988, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 570.300" NODE="24:3.1.1.3.3.4.1.1" TYPE="SECTION">
<HEAD>§ 570.300   General.</HEAD>
<P>This subpart describes the policies and procedures governing the making of community development block grants to entitlement communities and to non-entitlement counties in the State of Hawaii. The policies and procedures set forth in subparts A, C, J, K, and O of this part also apply to entitlement grantees and to non-entitlement grantees in the State of Hawaii. Sections 570.307 and 570.308 of this subpart do not apply to the Hawaii non-entitlement grantees.
</P>
<CITA TYPE="N">[72 FR 46370, Aug. 17, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 570.301" NODE="24:3.1.1.3.3.4.1.2" TYPE="SECTION">
<HEAD>§ 570.301   Activity locations and float-funding.</HEAD>
<P>The consolidated plan, action plan, and amendment submission requirements referred to in this section are those in 24 CFR part 91. 
</P>
<P>(a) For activities for which the grantee has not yet decided on a specific location, such as when the grantee is allocating an amount of funds to be used for making loans or grants to businesses or for residential rehabilitation, the description in the action plan or any amendment shall identify who may apply for the assistance, the process by which the grantee expects to select who will receive the assistance (including selection criteria), and how much and under what terms the assistance will be provided, or in the case of a planned public facility or improvement, how it expects to determine its location. 
</P>
<P>(b) <I>Float-funded activities and guarantees.</I> A recipient may use undisbursed funds in the line of credit and its CDBG program account that are budgeted in statements or action plans for one or more other activities that do not need the funds immediately, subject to the limitations described below. Such funds shall be referred to as the “float” for purposes of this section and the action plan. Each activity carried out using the float must meet all of the same requirements that apply to CDBG-assisted activities generally, and must be expected to produce program income in an amount at least equal to the amount of the float so used. Whenever the recipient proposes to fund an activity with the float, it must include the activity in its action plan or amend the action plan for the current program year. For purposes of this section, an activity that uses such funds will be called a “float-funded activity.” 
</P>
<P>(1) Each float-funded activity must be individually listed and described as such in the action plan. 
</P>
<P>(2)(i) The expected time period between obligation of assistance for a float-funded activity and receipt of program income in an amount at least equal to the full amount drawn from the float to fund the activity may not exceed 2.5 years. An activity from which program income sufficient to recover the full amount of the float assistance is expected to be generated more than 2.5 years after obligation may not be funded from the float, but may be included in an action plan if it is funded from CDBG funds other than the float (e.g., grant funds or proceeds from an approved Section 108 loan guarantee). 
</P>
<P>(ii) Any extension of the repayment period for a float-funded activity shall be considered to be a new float-funded activity for these purposes and may be implemented by the grantee only if the extension is made subject to the same limitations and requirements as apply to a new float-funded activity.
</P>
<P>(3) Unlike other projected program income, the full amount of income expected to be generated by a float-funded activity must be shown as a source of program income in the action plan containing the activity, whether or not some or all of the income is expected to be received in a future program year (in accordance with 24 CFR 91.220(g)(1)(ii)(D)). 
</P>
<P>(4) The recipient must also clearly declare in the action plan that identifies the float-funded activity the recipient's commitment to undertake one of the following options: 
</P>
<P>(i) Amend or delete activities in an amount equal to any default or failure to produce sufficient income in a timely manner. If the recipient makes this choice, it must include a description of the process it will use to select the activities to be amended or deleted and how it will involve citizens in that process; and it must amend the applicable statement(s) or action plan(s) showing those amendments or deletions promptly upon determining that the float-funded activity will not generate sufficient or timely program income; 
</P>
<P>(ii) Obtain an irrevocable line of credit from a commercial lender for the full amount of the float-funded activity and describe the lender and terms of such line of credit in the action plan that identifies the float-funded activity. To qualify for this purpose, such line of credit must be unconditionally available to the recipient in the amount of any shortfall within 30 days of the date that the float-funded activity fails to generate the projected amount of program income on schedule; 
</P>
<P>(iii) Transfer general local government funds in the full amount of any default or shortfall to the CDBG line of credit within 30 days of the float-funded activity's failure to generate the projected amount of the program income on schedule; or 
</P>
<P>(iv) A method approved in writing by HUD for securing timely return of the amount of the float funding. Such method must ensure that funds are available to meet any default or shortfall within 30 days of the float-funded activity's failure to generate the projected amount of the program income on schedule. 
</P>
<P>(5) When preparing an action plan for a year in which program income is expected to be received from a float-funded activity, and such program income has been shown in a prior statement or action plan, the current action plan shall identify the expected income and explain that the planned use of the income has already been described in prior statements or action plans, and shall identify the statements or action plans in which such descriptions may be found. 
</P>
<CITA TYPE="N">[60 FR 56913, Nov. 9, 1995]


</CITA>
</DIV8>


<DIV8 N="§ 570.302" NODE="24:3.1.1.3.3.4.1.3" TYPE="SECTION">
<HEAD>§ 570.302   Submission requirements.</HEAD>
<P>In order to receive its annual CDBG entitlement grant, a grantee must submit a consolidated plan in accordance with 24 CFR part 91. That part includes requirements for the content of the consolidated plan, for the process of developing the consolidated plan, including citizen participation provisions, for the submission date, for HUD approval, and for the amendment process. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0117)
</APPRO>
<CITA TYPE="N">[60 FR 1915, Jan. 5, 1995]


</CITA>
</DIV8>


<DIV8 N="§ 570.303" NODE="24:3.1.1.3.3.4.1.4" TYPE="SECTION">
<HEAD>§ 570.303   Certifications.</HEAD>
<P>The jurisdiction must make the certifications that are set forth in 24 CFR part 91 as part of the consolidated plan. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0117)
</APPRO>
<CITA TYPE="N">[60 FR 1915, Jan. 5, 1995]


</CITA>
</DIV8>


<DIV8 N="§ 570.304" NODE="24:3.1.1.3.3.4.1.5" TYPE="SECTION">
<HEAD>§ 570.304   Making of grants.</HEAD>
<P>(a) <I>Approval of grant.</I> HUD will approve a grant if the jurisdiction's submissions have been made and approved in accordance with 24 CFR part 91, and the certifications required therein are satisfactory to the Secretary. The certifications will be satisfactory to the Secretary for this purpose unless the Secretary has determined pursuant to subpart O of this part that the grantee has not complied with the requirements of this part, has failed to carry out its consolidated plan as provided under § 570.903, or has determined that there is evidence, not directly involving the grantee's past performance under this program, that tends to challenge in a substantial manner the grantee's certification of future performance. If the Secretary makes any such determination, however, further assurances may be required to be submitted by the grantee as the Secretary may deem warranted or necessary to find the grantee's certification satisfactory. 
</P>
<P>(b) <I>Grant agreement.</I> The grant will be made by means of a grant agreement executed by both HUD and the grantee. 
</P>
<P>(c) <I>Grant amount.</I> The Secretary will make a grant in the full entitlement amount, generally within the last 30 days of the grantee's current program year, unless: 
</P>
<P>(1) Either the consolidated plan is not received by August 16 of the federal fiscal year for which funds are appropriated or the consolidated plan is not approved under 24 CFR part 91, subpart F—in which case, the grantee will forfeit the entire entitlement amount; or 
</P>
<P>(2) The grantee's performance does not meet the performance requirements or criteria prescribed in subpart O and the grant amount is reduced. 
</P>
<CITA TYPE="N">[53 FR 34449, Sept. 6, 1988, as amended at 60 FR 1915, Jan. 5, 1995; 60 FR 16379, Mar. 30, 1995; 60 FR 56913, Nov. 9, 1995]


</CITA>
</DIV8>


<DIV8 N="§ 570.307" NODE="24:3.1.1.3.3.4.1.6" TYPE="SECTION">
<HEAD>§ 570.307   Urban counties.</HEAD>
<P>(a) <I>Determination of qualification.</I> The Secretary will determine the qualifications of counties to receive entitlements as urban counties upon receipt of qualification documentation from counties at such time, and in such manner and form as prescribed by HUD. The Secretary shall determine eligibility and applicable portions of each eligible county for purposes of fund allocation under section 106 of the Act on the basis of information available from the U.S. Bureau of the Census with respect to population and other pertinent demographic characteristics, and based on information provided by the county and its included units of general local government.
</P>
<P>(b) <I>Qualification as an urban county.</I> (1) A county will qualify as an urban county if such county meets the definition at § 570.3(3). As necessitated by this definition, the Secretary shall determine which counties have authority to carry out essential community development and housing assistance activities in their included units of general local government without the consent of the local governing body and which counties must execute cooperation agreements with such units to include them in the urban county for qualification and grant calculation purposes. 
</P>
<P>(2) At the time of urban county qualification, HUD may refuse to recognize the cooperation agreement of a unit of general local government in an urban county where, based on past performance and other available information, there is substantial evidence that such unit does not cooperate in the implementation of the essential community development or housing assistance activities or where legal impediments to such implementation exist, or where participation by a unit of general local government in noncompliance with the applicable law in subpart K would constitute noncompliance by the urban county. In such a case, the unit of general local government will not be permitted to participate in the urban county, and its population or other needs characteristics will not be considered in the determination of whether the county qualifies as an urban county or in determining the amount of funds to which the urban county may be entitled. HUD will not take this action unless the unit of general local government and the county have been given an opportunity to challenge HUD's determination and to informally consult with HUD concerning the proposed action. 
</P>
<P>(c) <I>Essential activities.</I> For purposes of this section, the term “essential community development and housing assistance activities” means community renewal and lower income housing activities, specifically urban renewal and publicly assisted housing. In determining whether a county has the required powers, the Secretary will consider both its authority and, where applicable, the authority of its designated agency or agencies. 
</P>
<P>(d) <I>Period of qualification.</I> (1) The qualification by HUD of an urban county shall remain effective for three successive Federal fiscal years regardless of changes in its population during that period, except as provided under paragraph (f) of this section and except as provided under § 570.3(3) where the period of qualification shall be two successive Federal fiscal years. 
</P>
<P>(2) During the period of qualification, no included unit of general local government may withdraw from nor be removed from the urban county for HUD's grant computation purposes. 
</P>
<P>(3) If some portion of an urban county's unincorporated area becomes incorporated during the urban county qualification period, the newly incorporated unit of general local government shall not be excluded from the urban county nor shall it be eligible for a separate grant under subpart D, F, or I until the end of the urban county's current qualification period, unless the urban county fails to receive a grant for any year during that qualification period. 
</P>
<P>(e) <I>Grant ineligibility of included units of general local government.</I> (1) An included unit of general local government cannot become eligible for an entitlement grant as a metropolitan city during the period of qualification of the urban county (even if it becomes a principal city of a metropolitan area or its population surpasses 50,000 during that period). Rather, such a unit of general local government shall continue to be included as part of the urban county for the remainder of the urban county's qualification period, and no separate grant amount shall be calculated for the included unit. 
</P>
<P>(2) An included unit of general local government which is part of an urban county shall be ineligible to apply for grants under subpart F, or to be a recipient of assistance under subpart I, during the entire period of urban county qualification. 
</P>
<P>(f) <I>Failure of an urban county to receive a grant.</I> Failure of an urban county to receive a grant during any year shall terminate the existing qualification of that urban county, and that county shall requalify as an urban county before receiving an entitlement grant in any successive Federal fiscal year. Such termination shall release units of general local government included in the urban county, in subsequent years, from the prohibition to receive grants under paragraphs (d)(3), (e)(1) and (e)(2) of this section. For this purpose an urban county shall be deemed to have received a grant upon having satisfied the requirements of sections 104 (a), (b), (c), and (d) of the Act, without regard to adjustments which may be made to this grant amount under section 104(e) or 111 of the Act. 
</P>
<P>(g) <I>Notifications of the opportunity to be excluded.</I> Any county seeking to qualify for an entitlement grant as an urban county for any Federal fiscal year shall notify each unit of general local government which is located, in whole or in part, within the county and which would otherwise be included in the urban county, but which is eligible to elect to have its population excluded from that of the urban county, that it has the opportunity to make such an election, and that such an election, or the failure to make such an election, shall be effective for the period for which the county qualifies as an urban county. These notifications shall be made by a date specified by HUD. A unit of general local government which elects to be excluded from participation as a part of the urban county shall notify the county and HUD in writing by a date specified by HUD. Such a unit of government may subsequently elect to participate in the urban county for the remaining one or two year period by notifying HUD and the county, in writing, of such election by a date specified by HUD.
</P>
<CITA TYPE="N">[53 FR 34449, Sept. 6, 1988, as amended at 56 FR 56127, Oct. 31, 1991; 68 FR 69582, Dec. 12, 2003]


</CITA>
</DIV8>


<DIV8 N="§ 570.308" NODE="24:3.1.1.3.3.4.1.7" TYPE="SECTION">
<HEAD>§ 570.308   Joint requests.</HEAD>
<P>(a) <I>Joint requests and cooperation agreements.</I> (1) Any urban county and any metropolitan city located, in whole or in part, within that county may submit a joint request to HUD to approve the inclusion of the metropolitan city as a part of the urban county for purposes of planning and implementing a joint community development and housing program. Such a joint request shall only be considered if submitted at the time the county is seeking a three year qualification or requalification as an urban county. Such a joint request shall, upon approval by HUD, remain effective for the period for which the county is qualified as an urban county. An urban county may be joined by more than one metropolitan city, but a metropolitan city located in more than one urban county may only be included in one urban county for any program year. A joint request shall be deemed approved by HUD unless HUD notifies the city and the county of its disapproval and the reasons therefore within 30 days of receipt of the request by HUD. 
</P>
<P>(2) Each metropolitan city and urban county submitting a joint request shall submit an executed cooperation agreement to undertake or to assist in the undertaking of essential community development and housing assistance activities, as defined in § 570.307(c). 
</P>
<P>(b) <I>Joint grant amount.</I> The grant amount for a joint recipient shall be the sum of the amounts authorized for the individual entitlement grantees, as described in section 106 of the Act. The urban county shall be the grant recipient. 
</P>
<P>(c) <I>Effect of inclusion.</I> Upon urban county qualification and HUD approval of the joint request and cooperation agreement, the metropolitan city shall be considered a part of the urban county for purposes of program planning and implementation for the period of the urban county qualification, and shall be treated the same as any other unit of general local government which is part of the urban county. 
</P>
<P>(d) <I>Submission requirements.</I> In requesting a grant under this part, the urban county shall make a single submission which meets the submission requirements of 24 CFR part 91 and covers all members of the joint recipient. 
</P>
<CITA TYPE="N">[53 FR 34449, Sept. 6, 1988, as amended at 60 FR 1915, Jan. 5, 1995]


</CITA>
</DIV8>


<DIV8 N="§ 570.309" NODE="24:3.1.1.3.3.4.1.8" TYPE="SECTION">
<HEAD>§ 570.309   Restriction on location of activities.</HEAD>
<P>CDBG funds may assist an activity outside the jurisdiction of the grantee only if the grantee determines that such an activity is necessary to further the purposes of the Act and the recipient's community development objectives, and that reasonable benefits from the activity will accrue to residents within the jurisdiction of the grantee. The grantee shall document the basis for such determination prior to providing CDBG funds for the activity. 
</P>
<CITA TYPE="N">[60 FR 56914, Nov. 9, 1995]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:3.1.1.3.3.5" TYPE="SUBPART">
<HEAD>Subpart E—Special Purpose Grants</HEAD>


<DIV8 N="§ 570.400" NODE="24:3.1.1.3.3.5.1.1" TYPE="SECTION">
<HEAD>§ 570.400   General.</HEAD>
<P>(a) <I>Applicability.</I> The policies and procedures set forth in subparts A, C, J, K, and O of this part shall apply to this subpart, except to the extent that they are specifically modified or augmented by the contents of this subpart, including specified exemptions described herein. The HUD Environmental Review Procedures contained in 24 CFR part 58 also apply to this subpart, unless otherwise specifically provided herein.
</P>
<P>(b) <I>Data.</I> Wherever data are used in this subpart for selecting applicants for assistance or for determining grant amounts, the source of such data shall be the most recent information available from the U.S. Bureau of the Census which is referable to the same point or period of time.
</P>
<P>(c) <I>Review of applications for discretionary assistance</I>—(1) <I>Review components.</I> An application for assistance under this subpart shall be reviewed by HUD to ensure that:
</P>
<P>(i) The application is postmarked or received on or before any final date established by HUD; 
</P>
<P>(ii) The application is complete; 
</P>
<P>(iii) Required certifications have been included in the application; and 
</P>
<P>(iv) The application meets the specific program requirements listed in the <E T="04">Federal Register</E> Notice published in connection with a competition for funding, and any other specific requirements listed under this subpart for each of the programs.
</P>
<P>(2) <I>Timing and review.</I> HUD is not required by the Act to review and approve an application for assistance or a contract proposal within any specified time period. However, HUD will attempt to complete its review of any application/proposal within 75 days.
</P>
<P>(3) <I>Notification to applicant/proposer.</I> HUD will notify the applicant/proposer in writing that the applicant/proposal has been approved, partially approved, or disapproved. If an application/proposal is partially approved or disapproved, the applicant/proposer will be informed of the basis for HUD's decision. HUD may make conditional approvals under § 570.304(d).
</P>
<P>(d) <I>Program amendments.</I> (1) Recipients shall request prior written HUD approval for all program amendments involving changes in the scope or the location of approved activities.
</P>
<P>(2) Any program amendments, whether or not they require HUD approval, must be fully documented in the recipient's records.
</P>
<P>(e) <I>Performance reports.</I> Any performance report required of a discretionary assistance recipient shall be submitted in the form specified in this subpart, in the award document, or (if the report relates to a specific competition for an assistance award) in a form specified in a Notice published in the <E T="04">Federal Register.</E>
</P>
<P>(f) <I>Performance reviews and findings.</I> HUD may review the recipient's performance in carrying out the activities for which assistance is provided in a timely manner and in accordance with its approved application, all applicable requirements of this part and the terms of the assistance agreement. Findings of performance deficiencies may be cause for appropriate corrective and remedial actions under § 570.910.
</P>
<P>(g) <I>Funding sanctions.</I> Following notice and opportunity for informal consultation, HUD may withhold, reduce or terminate the assistance where any corrective or remedial actions taken under § 570.910 fail to remedy a recipient's performance deficiencies, and the deficiencies are sufficiently substantial, in the judgment of HUD, to warrant sanctions.
</P>
<P>(h) <I>Publication of availability of funds.</I> HUD will publish by Notice in the <E T="04">Federal Register</E> each year the amount of funds available for the special purpose grants authorized by each section under this subpart.
</P>
<CITA TYPE="N">[50 FR 37525, Sept. 16, 1985, as amended at 56 FR 18968, Apr. 24, 1991]


</CITA>
</DIV8>


<DIV8 N="§ 570.401" NODE="24:3.1.1.3.3.5.1.2" TYPE="SECTION">
<HEAD>§ 570.401   Community adjustment and economic diversification planning assistance.</HEAD>
<P>(a) <I>General</I>—(1) <I>Purpose.</I> The purpose of this program is to assist units of general local government in nonentitlement areas to undertake the planning of community adjustments and economic diversification activities, in response to physical, social, economic or governmental impacts on the communities generated by the actions of the Department of Defense (DoD) defined in paragraph (a)(2) of this section.
</P>
<P>(2) <I>Impacts.</I> Funding under this section is available only to communities affected by one or more of the following DoD-related impacts:
</P>
<P>(i) The proposed or actual establishment, realignment, or closure of a military installation; 
</P>
<P>(ii) The cancellation or termination of a DoD contract or the failure to proceed with an approved major weapon system program; 
</P>
<P>(iii) A publicly announced planned major reduction in DoD spending that would directly and adversely affect a unit of general local government and result in the loss of 1,000 or more full-time DoD and contractor employee positions over a five-year period in the unit of general local government and the surrounding area; or 
</P>
<P>(iv) The Secretary of HUD (in consultation with the Secretary of DoD) determines that an action described in paragraphs (a)(2)(i)-(iii) of this section is likely to have a direct and significant adverse consequence on the unit of general local government. 
</P>
<P>(3) <I>Form of awards.</I> Planning assistance will be awarded in the form of grants. 
</P>
<P>(4) <I>Program administration.</I> HUD will publish in the <E T="04">Federal Register</E> early in each fiscal year the amount of funds to be available for that fiscal year for awards under this section. HUD will accept applications throughout the fiscal year, and will review and consider for funding each application according to the threshold and qualifying factors in paragraphs (f) and (g) of this section.
</P>
<P>(b) <I>Definitions.</I> In addition to the definitions in § 570.3 of this part, the following definitions apply to this section:
</P>
<P>(1) <I>Adjustment planning.</I> Generally, developing plans and proposals in direct response to contraction or expansion of the local economy, or changes in the physical development or the social conditions of the community, resulting from a DoD-generated impact. Typically, this planning includes one or more of the following tasks: Collecting, updating, and analyzing data; identifying problems; formulating solutions; proposing long- and short-term policies; recommending public- and private-sector actions to implement community adjustments and economic diversification activities; securing citizen involvement; and coordinating with Federal, State, and local entities with respect to the DoD-related impacts.
</P>
<P>(2) <I>Community adjustment.</I> Any proposed action to change the physical, economic, or social infrastructure within the jurisdiction or surrounding area, directly and appropriately in response to the DoD-generated impact.
</P>
<P>(3) <I>Contract.</I> (i) Any defense contract in an amount not less than $5 million (without regard to the date on which the contract was awarded); and
</P>
<P>(ii) Any subcontract that is entered into in connection with a contract (without regard to the effective date of the subcontract) and involves not less than $500,000.
</P>
<P>(4) <I>Defense facility.</I> Any private facility producing goods or services pursuant to a defense contract. 
</P>
<P>(5) <I>DoD.</I> The Department of Defense. 
</P>
<P>(6) <I>Economic diversification activities.</I> Any public or private sector actions to change the local mix of industrial, commercial, and service sectors, or the mix of business ventures within a sector, that are intended to mitigate decline in the local economy resulting from DoD-generated impacts or, in the case of expansion of a military installation or a defense facility, that are intended to respond to new economic growth spawned by that expansion.
</P>
<P>(7) <I>Military installation.</I> Any camp, post, station, base, yard, or other jurisdiction of a military department that is located within any of the several States, the District of Columbia, the Commonwealth of Puerto Rico, or Guam.
</P>
<P>(8) <I>Realignment.</I> Any action that both reduces and relocates functions and civilian personnel positions, but does not include a reduction in force resulting from workload adjustments, reduced personnel or funding levels, or skill imbalances.
</P>
<P>(9) <I>Section 107</I> means section 107 of the Housing and Community Development Act of 1974, 42 U.S.C. 5307. Section 107(b)(6) was added by section 801 of the Housing and Community Development Act of 1992 (Pub. L. 102-550, approved October 28, 1992).
</P>
<P>(10) <I>Section 2391(b).</I> The Department of Defense adjustment planning program as set out in 10 U.S.C. 2391(b). 
</P>
<P>(11) <I>Small Cities CDBG Program.</I> The Community Development Block Grant program for nonentitlement areas in which the States have elected not to administer available program funds. The regulations governing this program are set out in subpart F of this part.
</P>
<P>(12) <I>Surrounding area.</I> The labor market area as defined by the Bureau of Labor Statistics that:
</P>
<P>(i) Includes all or part of the applicant's jurisdictions; and 
</P>
<P>(ii) Includes additional areas outside the jurisdiction.
</P>
<P>(c) <I>Eligible applicants.</I> Any unit of general local government, excluding units of general government that are entitlement cities or are included in an urban county, and which does not include Indian Tribes.
</P>
<P>(d) <I>Eligible activities.</I> Activities eligible for adjustment planning assistance include, generally:
</P>
<P>(1) Initial assessments and quick studies of physical, social, economic, and fiscal impacts on the community; 
</P>
<P>(2) Preliminary identification of potential public and private sector actions needed for the community to initiate its response; 
</P>
<P>(3) If timely, modification of the applicant's current comprehensive plan or any functional plan, such as for housing, including shelter for the homeless, or for transportation or other physical infrastructure;
</P>
<P>(4) If timely, modification of the applicant's current economic plans and programs, such as for business development, job training, or industrial or commercial development;
</P>
<P>(5) Preparation for and conduct of initial community outreach activities to begin involving local citizens and the private sector in planning for adjustment and diversification; 
</P>
<P>(6) Environmental reviews related to DoD-related impacts;
</P>
<P>(7) Initial identification of and coordination with Federal, State and local entities that may be expected to assist in the community's adjustment and economic development; and with State-designated enterprise zones, and Federal empowerment zones and enterprise communities when selected and announced.
</P>
<P>(8) Any other planning activity that may enable the community to organize itself, establish a start-up capacity to plan, propose specific plans and programs, coordinate with appropriate public or private entities, or qualify more quickly for the more substantial planning assistance available from DoD.
</P>
<P>(e) <I>Ineligible activities.</I> Activities ineligible for adjustment planning assistance are:
</P>
<P>(1) Base re-use planning. 
</P>
<P>(2) Site planning, architectural and engineering studies, feasibility and cost analyses and similar planning for specific projects to implement community adjustment or economic diversification, unless as last resort funding for those applicants which are unable to obtain planning assistance from other sources.
</P>
<P>(3) Planning by communities which are encroaching on military installations.
</P>
<P>(4) Demonstration planning activities intended to evolve new planning techniques for impacted communities. 
</P>
<P>(5) Any planning activity proposed to supplement or replace planning that has been or is being assisted by the DoD Sec. 2391(b) adjustment planning program.
</P>
<P>(6) Any other planning activity the purpose of which is not demonstrably in direct response to a DOD-related impact triggered by one or more of the four criteria specified in paragraph (a)(2) of this section.
</P>
<P>(f) <I>Threshold requirements.</I> No application will qualify for funding unless it meets the following requirements:
</P>
<P>(1) Verification by HUD that the applicant is a unit of general government in a nonentitlement area.
</P>
<P>(2) Verification by HUD and DoD that a triggering event described in paragraph (a)(2) of this section has occurred or will occur.
</P>
<P>(3) With respect to communities affected by the 49 base closings and 28 realignments listed by the 1991 Base Closure and Realignment Commission, verification by DoD that it has provided no prior funding and that the applicant may benefit from start-up planning assistance from HUD.
</P>
<P>(4) Determination by HUD that the proposed planning activities are eligible.
</P>
<P>(5) Determination by HUD that the submission requirements in paragraph (h) of this section have been satisfied.
</P>
<P>(g) <I>Qualifying factors.</I> HUD will make funding decisions on qualified applications on the basis of the factors listed below, in the order of such applications received, while program funds remain available. HUD will also request and consider advise from DoD's Office of Economic Assistance concerning the relative merits of each application. 
</P>
<P>(1) The adequacy of the applicant's initial assessment of actual or probable impacts on the community and the surrounding area;
</P>
<P>(2) The adequacy and appropriateness of the start-up planning envisioned by the applicant in response to the impacts;
</P>
<P>(3) The type, extent, and adequacy of coordination that the applicant has achieved, or plans to achieve, in order to undertake planning for community adjustment and economic diversification.
</P>
<P>(4) The cost-effectiveness of the proposed budget to carry out the planning work envisioned by the applicant;
</P>
<P>(5) The capability of the organization the applicant proposes to do the planning;
</P>
<P>(6) The credentials and experience of the key staff the applicant proposes to do the planning;
</P>
<P>(7) The presence of significant private sector impact, as measured by the extent to which the DoD-generated impact is projected to decrease or increase the employment base by 10% or more;
</P>
<P>(8) The presence of significant public sector impact, as measured by the extent to which the DoD-generated impact is projected to decrease or increase the applicant's capital and operating budgets for the next fiscal year by 10% or more;
</P>
<P>(9) The degree of urgency, to the extent that a suddenly announced action, e.g. a plant closing, is officially scheduled to occur within a year of the date of application.
</P>
<P>(h) <I>Submission requirements.</I> Applicants may submit applications at any time to: Director, Office of Technical Assistance, room 7214, 451 Seventh Street, SW., Washington, DC 20410. Each application (an original and three copies) shall include the following:
</P>
<P>(1) The Standard Form SF-424 as a face sheet, signed and dated by a person authorized to represent and contractually or otherwise commit the applicant;
</P>
<P>(2) A concise title and brief abstract of the proposed planning work, including the total cost; 
</P>
<P>(3) A narrative that:
</P>
<P>(i) Documents one or more of the triggering events described in paragraph (a)(2) of this section that qualifies the applicant to apply for planning assistance for community adjustments and economic diversification;
</P>
<P>(ii) Provides an initial assessment of actual or probable impacts on the applicant community and the surrounding area;
</P>
<P>(iii) Provides an initial assessment of the type and extent of start-up planning envisioned by the applicant in response to the DoD-generated impact; and
</P>
<P>(iv) Describes the measures by which the applicant has already coordinated, or plans to coordinate, with the DoD Office of Economic Assistance, the Economic Development Administration of the Department of Commerce, the Department of Labor, any military department, or any other appropriate Federal agency; appropriate State agencies, specifically including the agency administering the Small Cities CDBG Program; appropriate State-designated enterprise zones; appropriate Federal empowerment zones and enterprise communities, when selected and announced; appropriate other units of general local government in the nonentitlement area; appropriate businesses, corporations, and defense facilities concerned with impacts on the applicant community; and homeless nonprofit organizations, with respect to title V of the Stewart B. McKinney Act (42 U.S.C. 11411-11412), requiring the Federal property be considered for use in assisting the homeless.
</P>
<P>(4) A Statement of Work describing the specific project tasks proposed to be undertaken in order to plan for community adjustment and economic diversification activities;
</P>
<P>(5) A proposed budget showing the estimated costs and person-days of effort for each task, by cost categories, with supporting documentation of costs and a justification of the person-days of effort;
</P>
<P>(6) A description of the qualifications of the proposed technical staff, including their names and resumes;
</P>
<P>(7) A work plan that describes the schedule for accomplishing the tasks described in the Statement of Work, the time needed to do each task, and the elapsed time needed for all the tasks; and 
</P>
<P>(8) Other materials, as prescribed in the application kit; these materials will include required certifications dealing with: Drug-Free Workplace Requirements; Disclosure Regarding Payments to Influence Certain Federal Transactions; and Prohibition Regarding Excessive Force.
</P>
<P>(i) <I>Approval procedures</I>—(1) <I>Acceptance.</I> HUD's acceptance of an application meeting the threshold requirements of paragraph (f) does not assure a commitment to provide funding or to provide the full amount requested. HUD may elect to negotiate both proposed tasks and budgets in order to promote more cost-effective planning.
</P>
<P>(2) <I>Notification.</I> HUD will provide notification about whether a project will be funded, rejected, or held for further consideration by HUD and DoD. 
</P>
<P>(3) <I>Form of award.</I> HUD will award funds in the form of grants.
</P>
<P>(4) <I>Administration.</I> Project administration will be governed by the terms of individual awards and by the following provisions of this part:
</P>
<P>(i) Subpart A, § 570.5;
</P>
<P>(ii) Subpart E, §§ 570.400(d), (e), (f), and (g);
</P>
<P>(iii) Subpart J, §§ 570.500(c), 570.501, 570.502, 570.503, and 570.509;
</P>
<P>(iv) Subpart K, §§ 570.601, 570.602, 570.609, 570.610, and 570.611.
</P>
<FP>The environmental review requirements of 24 CFR part 58 do not apply.
</FP>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2535-0084)
</APPRO>
<CITA TYPE="N">[59 FR 15016, Mar. 30, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 570.402" NODE="24:3.1.1.3.3.5.1.3" TYPE="SECTION">
<HEAD>§ 570.402   Technical assistance awards.</HEAD>
<P>(a) <I>General.</I> (1) The purpose of the Community Development Technical Assistance Program is to increase the effectiveness with which States, units of general local government, and Indian tribes plan, develop, and administer assistance under title I and section 810 of the Act. Title I programs are the Entitlement Program (24 CFR part 570, subpart D); the section 108 Loan Guarantee Program (24 CFR part 570, subpart M); the Urban Development Action Grant Program (24 CFR part 570, subpart G); the HUD-administered Small Cities Program (24 CFR part 570, subpart F); the State-administered Program for Non-Entitlement Communities (24 CFR part 570, subpart I); the grants for Indian Tribes program (24 CFR part 571); and the Special Purpose Grants for Insular Areas, Community Development Work Study and Historically Black Colleges and Universities (24 CFR part 570, subpart E). 
</P>
<P>(2) Funding under this section is awarded for the provision of technical expertise in planning, managing or carrying out such programs including the activities being or to be assisted thereunder and other actions being or to be undertaken for the purpose of the program, such as increasing the effectiveness of public service and other activities in addressing identified needs, meeting applicable program requirements (e.g., citizen participation, nondiscrimination, 2 CFR part 200, increasing program management or capacity building skills, attracting business or industry to CDBG assisted economic development sites or projects, assisting eligible CDBG subrecipients such as neighborhood nonprofits or small cities in how to obtain CDBG funding from cities and States. The provision of technical expertise in other areas which may have some tangential benefit or effect on a program is insufficient to qualify for funding.
</P>
<P>(3) Awards may be made pursuant to HUD solicitations for assistance applications or procurement contract proposals issued in the form of a publicly available document which invites the submission of applications or proposals within a prescribed period of time. HUD may also enter into agreements with other Federal agencies for awarding the technical assistance funds:
</P>
<P>(i) Where the Secretary determines that such funding procedures will achieve a particular technical assistance objective more effectively and the criteria for making the awards will be consistent with this section, or
</P>
<P>(ii) The transfer of funds to the other Federal agency for use under the terms of the agreement is specifically authorized by law. The Department will not accept or fund unsolicited proposals.
</P>
<P>(b) <I>Definitions.</I> (1) <I>Areawide planning organization</I> (APO) means an organization authorized by law or local agreement to undertake planning and other activities for a metropolitan or non-metropolitan area.
</P>
<P>(2) <I>Technical assistance</I> means the facilitating of skills and knowledge in planning, developing and administering activities under title I and section 810 of the Act in entities that may need but do not possess such skills and knowledge, and includes assessing programs and activities under title I.
</P>
<P>(c) <I>Eligible applicants.</I> Eligible applicants for award of technical assistance funding are:
</P>
<P>(1) States, units of general local government, APOs, and Indian Tribes; and
</P>
<P>(2) Public and private non-profit or for-profit groups, including educational institutions, qualified to provide technical assistance to assist such governmental units to carry out the title I or Urban Homesteading programs. An applicant group must be designated as a technical assistance provider to a unit of government's title I program or Urban Homesteading program by the chief executive officer of each unit to be assisted, unless the assistance is limited to conferences/workshops attended by more than one unit of government.
</P>
<P>(d) <I>Eligible activities.</I> Activities eligible for technical assistance funding include:
</P>
<P>(1) The provision of technical or advisory services;
</P>
<P>(2) The design and operation of training projects, such as workshops, seminars, or conferences;
</P>
<P>(3) The development and distribution of technical materials and information; and
</P>
<P>(4) Other methods of demonstrating and making available skills, information and knowledge to assist States, units of general local government, or Indian Tribes in planning, developing, administering or assessing assistance under title I and Urban Homesteading programs in which they are participating or seeking to participate.
</P>
<P>(e) <I>Ineligible activities.</I> Activities for which costs are ineligible under this section include:
</P>
<P>(1) In the case of technical assistance for States, the cost of carrying out the administration of the State CDBG program for non-entitlement communities;
</P>
<P>(2) The cost of carrying out the activities authorized under the title I and Urban Homesteading programs, such as the provision of public services, construction, rehabilitation, planning and administration, for which the technical assistance is to be provided;
</P>
<P>(3) The cost of acquiring or developing the specialized skills or knowledge to be provided by a group funded under this section;
</P>
<P>(4) Research activities;
</P>
<P>(5) The cost of identifying units of governments needing assistance (except that the cost of selecting recipients of technical assistance under the provisions of paragraph (k) is eligible); or
</P>
<P>(6) Activities designed primarily to benefit HUD, or to assist HUD in carrying out the Department's responsibilities; such as research, policy analysis of proposed legislation, training or travel of HUD staff, or development and review of reports to the Congress. 
</P>
<P>(f) <I>Criteria for competitive selection.</I> In determining whether to fund competitive applications or proposals under this section, the Department will use the following criteria: 
</P>
<P>(1) <I>For solicited assistance applications.</I> The Department will use two types of criteria for reviewing and selecting competitive assistance applications solicited by HUD: 
</P>
<P>(i) Evaluation criteria: These criteria will be used to rank applications according to weights which may vary with each competition: 
</P>
<P>(A) Probable effectiveness of the application in meeting needs of localities and accomplishing project objectives; 
</P>
<P>(B) Soundness and cost-effectiveness of the proposed approach; 
</P>
<P>(C) Capacity of the applicant to carry out the proposed activities in a timely and effective fashion; 
</P>
<P>(D) The extent to which the results may be transferable or applicable to other title I or Urban Homesteading program participants. 
</P>
<P>(ii) Program policy criteria: These factors may be used by the selecting official to select a range of projects that would best serve program objectives for a particular competition: 
</P>
<P>(A) Geographic distribution; 
</P>
<P>(B) Diversity of types and sizes of applicant entities; and 
</P>
<P>(C) Diversity of methods, approaches, or kinds of projects. 
</P>
<FP>The Department will publish a Notice of Fund Availability (NOFA) in the <E T="04">Federal Register</E> for each competition indicating the objective of the technical assistance, the amount of funding available, the application procedures, including the eligible applicants and activities to be funded, any special conditions applicable to the solicitation, including any requirements for a matching share or for commitments for CDBG or other title I funding to carry out eligible activities for which the technical assistance is to be provided, the maximum points to be awarded each evaluation criterion for the purpose of ranking applications, and any special factors to be considered in assigning the points to each evaluation criterion. The Notice will also indicate which program policy factors will be used, the impact of those factors on the selection process, the justification for their use and, if appropriate, the relative priority of each program policy factor. 
</FP>
<P>(2) <I>For competitive procurement contract bids/proposals.</I> The Department's criteria for review and selection of solicited bids/proposals for procurement contracts will be described in its public announcement of the availability of an Invitation for Bids (IFB) or a Request for Proposals (RFP). The public notice, solicitation and award of procurement contracts, when used to acquire technical assistance, shall be procured in accordance with the Federal Acquisition Regulation (48 CFR chapter 1) and the HUD Acquisition Regulation (48 CFR chapter 24). 
</P>
<P>(g) <I>Submission procedures.</I> Solicited assistance applications shall be submitted in accordance with the time and place and content requirements described in the Department's NOFA. Solicited bids/proposals for procurement contracts shall be submitted in accordance with the requirements in the IFB or RFP. 
</P>
<P>(h) <I>Approval procedures</I>—(1) <I>Acceptance.</I> HUD's acceptance of an application or proposal for review does not imply a commitment to provide funding. 
</P>
<P>(2) <I>Notification.</I> HUD will provide notification of whether a project will be funded or rejected. 
</P>
<P>(3) <I>Form of award.</I> (i) HUD will award technical assistance funds as a grant, cooperative agreement or procurement contract, consistent with this section, the Federal Grant and Cooperative Agreement Act of 1977, 31 U.S.C. 6301-6308, the HUD Acquisition Regulation, and the Federal Acquisition Regulation. 
</P>
<P>(ii) When HUD's primary purpose is the transfer of technical assistance to assist the recipients in support of the title I or Section 810 programs, an assistance instrument (grant or cooperative agreement) will be used. A grant instrument will be used when substantial Federal involvement is not anticipated. A cooperative agreement will be used when substantial Federal involvement is anticipated. When a cooperative agreement is selected, the agreement will specify the nature of HUD's anticipated involvement in the project. 
</P>
<P>(iii) A contract will be used when HUD's primary purpose is to obtain a provider of technical assistance to act on the Department's behalf. In such cases the Department will define the specific tasks to be performed. However, nothing in this section shall preclude the Department from awarding a procurement contract in any other case when it is determined to be in the Department's best interests. 
</P>
<P>(4) <I>Administration.</I> Project administration will be governed by the terms of individual awards and relevant regulations. As a general rule, proposals will be funded to operate for one to two years, and periodic and final reports will be required.
</P>
<P>(i) <I>Environmental and intergovernmental review.</I> The requirements for Environmental Reviews and Intergovernmental Reviews do not apply to technical assistance awards. 
</P>
<P>(j) <I>Selection of recipients of technical assistance.</I> Where under the terms of the funding award the recipient of the funding is to select the recipients of the technical assistance to be provided, the funding recipient shall publish, and publicly make available to potential technical assistance recipients, the availability of such assistance and the specific criteria to be used for the selection of the recipients to be assisted. Selected recipients must be entities participating or planning to participate in the title I or Urban Homesteading programs or activities for which the technical assistance is to be provided.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control numbers 2535-0085 and 2535-0084)
</APPRO>
<CITA TYPE="N">[56 FR 41938, Aug. 26, 1991, as amended at 80 FR 75937, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 570.403" NODE="24:3.1.1.3.3.5.1.4" TYPE="SECTION">
<HEAD>§ 570.403   New Communities.</HEAD>
<P>The regulations for New Communities grants in this section, that were effective immediately before April 19, 1996, will continue to govern the rights and obligations of recipients and HUD with respect to grants under the New Communities program. 
</P>
<CITA TYPE="N">[61 FR 11476, Mar. 20, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 570.404" NODE="24:3.1.1.3.3.5.1.5" TYPE="SECTION">
<HEAD>§ 570.404   Historically Black colleges and universities program.</HEAD>
<P>(a) <I>General.</I> Grants under this section will be awarded to historically Black colleges and universities to expand their role and effectiveness in addressing community development needs, including neighborhood revitalization, housing and economic development in their localities, consistent with the purposes of title I of the Housing and Community Development Act of 1974.
</P>
<P>(b) <I>Eligible applicants.</I> Only historically Black colleges and universities (as determined by the Department of Education in accordance with that Department's responsibilities under Executive Order 12677, dated April 28, 1989) are eligible to submit applications.
</P>
<P>(c) <I>Eligible activities.</I> Activities that may be funded under this section are those eligible under §§ 570.201 through 570.207, provided that any activity which is required by State or local law to be carried out by a governmental entity may not be funded under this section. Notwithstanding the provisions of §§ 570.200(g), grants under this section are not subject to the 20 percent limitation on planning and program administration costs, as defined in §§ 570.205 and 570.206, respectively.
</P>
<P>(d) <I>Applications.</I> Applications will only be accepted from eligible applicants in response to a Request for Applications (RFA) which will be issued either concurrently with or after the publication of a Notice of Funding Availability (NOFA) published in the <E T="04">Federal Register.</E> The NOFA will describe any special objectives sought to be achieved by the funding to be provided, including any limitations on the type of activities to be funded to achieve the objectives, points to be awarded to each of the selection criteria listed in paragraph (e) of this section, and any special factors to be evaluated in assigning points under the selection factors to achieve the stated objectives. The NOFA will also state the deadline for the submission of applications, the total funding available for the competition, and the maximum amount of individual grants. The NOFA will include further information and instructions for the submission of acceptable applications to HUD.
</P>
<P>(e) <I>Selection criteria.</I> Each application submitted under this section will be evaluated by HUD using the following criteria:
</P>
<P>(1) The extent to which the applicant addresses the objectives published in the NOFA and the RFA.
</P>
<P>(2) The extent to which the applicant demonstrates to HUD that the proposed activities will have a substantial impact in achieving the stated objectives.
</P>
<P>(3) The special needs of the applicant or locality to be met in carrying out the proposed activities, particularly with respect to benefiting low- and moderate-income persons.
</P>
<P>(4) The feasibility of the proposed activities, <I>i.e.,</I> their technical and financial feasibility, for achieving the stated objectives, including local support for activities proposed to be carried out in the locality and any matching funds proposed to be provided from other sources.
</P>
<P>(5) The capability of the applicant to carry out satisfactorily the proposed activities in a timely fashion, including satisfactory performance in carrying out any previous HUD-assisted projects or activities.
</P>
<P>(6) In the case of proposals/projects of approximately equal merit, HUD retains the right to exercise discretion in selecting projects in a manner that would best serve the program objectives, with consideration given to the needs of localities, types of activities proposed, an equitable geographical distribution, and program balance.
</P>
<P>(f) <I>Certifications.</I> (1) Certifications required to be submitted by applicants shall be as prescribed in the RFA packages.
</P>
<P>(2) In the absence of independent evidence which tends to challenge in a substantial manner the certifications made by the applicant, the required certifications will be accepted by HUD. If independent evidence is available to HUD, however, HUD may require further information or assurances to be submitted in order to determine whether the applicant's certifications are satisfactory.
</P>
<P>(g) <I>Multiyear funding commitments.</I> (1) HUD may make funding commitments of up to five years, subject to the availability of appropriations. In determining the number of years for which a commitment will be made, HUD will consider the nature of the activities proposed, the capability of the recipient to carry out the proposed activities, and year-by-year funding requirements. 
</P>
<P>(2) Awards will be made on the basis of a 12-month period of performance. Once a recipient has been selected for a multi-year award, that recipient would not be required to compete in a competition for the subsequent funding years covered by the multi-year funding commitment. Recipients performing satisfactorily will be invited to submit applications for subsequent funding years in accordance with requirements outlined in the Notice of Funding Availability and Request for Grant Application. Subject to the availability of appropriations, subsequent-year funding will be determined by the following:
</P>
<P>(i) The recipient has submitted all reports required for the previous year or years in a timely, complete and satisfactory manner in accordance with the terms and conditions of the grant.
</P>
<P>(ii) The recipient has submitted sufficient evidence to demonstrate successful completion of the tasks and deliverables of the grant. A determination of satisfactory performance will be made by HUD based upon evidence of task completions provided by the recipient, along with data from client feedback and site evaluations.
</P>
<P>(iii) The recipient has submitted the next annual application.
</P>
<P>(iv) The subsequent year's application is consistent with that described in the original application.
</P>
<P>(3) Recipients participating in multi-year funding projects are not eligible to apply for additional grants for the same project or activity subject area for which they are receiving funds. Recipients are, however, eligible to compete for grants for other project or activity areas.
</P>
<P>(h) <I>Selection and notification.</I> The HUD decision to approve, disapprove or conditionally approve an application shall be communicated in writing to the applicant.
</P>
<P>(i) <I>Environmental and intergovernmental review.</I> The requirements for Intergovernmental Reviews do not apply to HBCU awards. HUD will conduct an environmental review in accordance with 24 CFR part 50 before giving its approval to a proposal.
</P>
<CITA TYPE="N">[56 FR 18968, Apr. 24, 1991] 


</CITA>
</DIV8>


<DIV8 N="§ 570.405" NODE="24:3.1.1.3.3.5.1.6" TYPE="SECTION">
<HEAD>§ 570.405   The insular areas.</HEAD>
<P>(a) <I>Eligible applicants.</I> Eligible applicants are Guam, the Virgin Islands, American Samoa, the Trust Territory of the Pacific Islands, and the Commonwealth of the Northern Mariana Islands.
</P>
<P>(b) <I>Threshold requirements.</I> HUD shall review each grantee's progress on outstanding grants made under this section based on the grantee's performance report, the timeliness of close-outs and compliance with fund management requirements and pertinent regulations, taking into consideration the size of the grant and the degree and complexity of the program. If HUD determines upon such review that the applicant does not have the capacity effectively to administer a new grant, or a portion of a new grant, in addition to grants currently under administration, the applicant shall not be invited to submit an application for the current year's funding.
</P>
<P>(c) <I>Previous audit findings and outstanding monetary obligations.</I> HUD shall not accept for review an application from an applicant that has either an outstanding audit finding for any HUD program, or an outstanding monetary obligation to HUD that is in arrears, or for which a repayment schedule has not been established and agreed to. The Field Office manager may waive this restriction if he or she finds that the applicant has made a good faith effort to clear the audit. In no instance, however, shall a waiver be provided when funds are due HUD, unless a satisfactory arrangement for repayment of the debt has been made and payments are current.
</P>
<P>(d) <I>Criteria for funding.</I> The Secretary shall establish, for each fiscal year, an amount for which eligible applicants may apply. Grant amounts will be based on population of the applicant and its performance in previous years. In determining performance, HUD will consider program achievements and the applicant's effectiveness in using program funds. Effectiveness in using program funds shall be measured by reviewing audit, monitoring and performance reports.
</P>
<P>(e) <I>Application and performance reporting.</I> Application and performance reporting requirements are as follows:
</P>
<P>(1) Applicants must submit applications within 90 days of the notification of the grant amount from HUD.
</P>
<P>(2) Applicants shall prepare and publish or post a proposed application in accordance with the citizen participation requirements of paragraph (h) of this section. 
</P>
<P>(3) Applicants shall submit to HUD a final application containing its community development objectives and activities. This application shall be submitted to the appropriate HUD office, together with the required certifications, in a form prescribed by HUD. 
</P>
<P>(4) Grant recipients must submit to HUD an annual performance report on progress achieved on previously funded grants. Grant recipients must submit the report at a time and in a format determined by HUD. The report should be made available to citizens in accordance with the requirements of paragraph (h)(1)(iv) of this section. 
</P>
<P>(f) <I>Costs incurred by the applicant.</I> (1) Notwithstanding any other provision of this part, HUD will not reimburse or recognize any costs incurred by an applicant before submission of the application to HUD.
</P>
<P>(2) Normally, HUD will not reimburse or recognize costs incurred before HUD approval of the application for funding. However, under unusual circumstances, the Field office manager may consider and conditionally approve written requests to recognize and reimburse costs that will be incurred after submission of the application but before it is approved where failure to do so would impose undue or unreasonable hardship on the applicant. Conditional approvals will be made only before the costs are incurred and where the conditions for release of funds have been met in accordance with 24 CFR 58.22, and with the understanding that HUD has no obligation whatsoever to approve the application or to reimburse the applicant should the application be disapproved.
</P>
<P>(g) <I>Criteria for conditional approval.</I> HUD may approve a grant subject to specified conditions. In any such case, the obligation and utilization of funds may be restricted. The reasons for the conditional approval and the actions necessary to remove the conditions shall be specified. Failure of the applicant to satisfy the conditions may result in a termination of the grant. A conditional approval may be granted under any of the following circumstances: 
</P>
<P>(1) When local environmental reviews under 24 CFR part 58 have not yet been completed;
</P>
<P>(2) To ensure that actual provision of other resources required to complete the proposed activities will be available within a reasonable period of time; 
</P>
<P>(3) To ensure that a project can be completed within its estimated costs;
</P>
<P>(4) Where the grantee is required to satisfy an outstanding debt due to HUD under a payment plan executed between the grantee and the Department;
</P>
<P>(5) Pending resolution of problems related to specific projects or the capability of the grantee to obtain resources needed to carry out, operate or maintain the project; or 
</P>
<P>(6) Pending approval of site and neighborhood standards for proposed housing projects.
</P>
<P>(h) <I>Citizen participation.</I> (1) The applicant shall provide for appropriate citizen participation in the application and amendment process. The applicant must, at least, do each of the following:
</P>
<P>(i) Furnish citizens with information concerning the amount of funds available for community development and housing activities and the range of activities that may be undertaken, including the estimated amount proposed to be used for activities that will benefit persons of low and moderate income, and the plans of the grantee for minimizing displacement of persons as a result of activities assisted with such funds and to assist persons actually displaced;
</P>
<P>(ii) Hold one or more public hearings (scheduled at convenient times and places) to obtain the views of citizens on community development and housing needs;
</P>
<P>(iii) Develop and publish or post the community development statement in such a manner as to afford affected citizens an opportunity to examine its contents and to submit comments;
</P>
<P>(iv) Afford citizens an opportunity to review and comment on the applicant's performance under any community development block grant.
</P>
<P>(2) Before submitting the application to HUD, the applicant shall certify that it has:
</P>
<P>(i) Met the requirements of paragraph (h)(1) of this section;
</P>
<P>(ii) Considered any comments and views expressed by citizens; and
</P>
<P>(iii) If appropriate, modified the application accordingly and made the modified application available to citizens.
</P>
<CITA TYPE="N">[50 FR 37526, Sept. 16, 1985, as amended at 60 FR 56914, Nov. 9, 1995; 61 FR 32269, June 21, 1996]
</CITA>
<EFFDNOT>
<HED>Effective Date Note:</HED><PSPACE>At 61 FR 32269, June 21, 1996, § 570.405(e)(4) was revised. This paragraph contains information collection and recordkeeping requirements and will not become effective until approval has been given by the Office of Management and Budget.</PSPACE></EFFDNOT>
</DIV8>


<DIV8 N="§ 570.406" NODE="24:3.1.1.3.3.5.1.7" TYPE="SECTION">
<HEAD>§ 570.406   Formula miscalculation grants.</HEAD>
<P>(a) <I>General.</I> Grants under this section will be made to States and units of general local government determined by the Secretary to have received insufficient amounts under section 106 of the Act as a result of a miscalculation of its share of funds under such section. 
</P>
<P>(b) <I>Application.</I> Since the grant is to correct a technical error in the formula amount which should have been awarded under section 106, no application is required. 
</P>
<P>(c) <I>Use of funds.</I> The use of funds shall be subject to the requirements, certifications and Final Statement otherwise applicable to the grantee's section 106 grant funds provided for the fiscal year in which the grant under this section is made. 
</P>
<P>(d) <I>Unavailability of funds.</I> If sufficient funds are not available to make the grant in the fiscal year in which the Secretary makes the determination required in paragraph (a) of this section, the grant will be made, subject to the availability of appropriations for this subpart, in the next fiscal year. 
</P>
<CITA TYPE="N">[56 FR 41940, Aug. 26, 1991] 


</CITA>
</DIV8>


<DIV8 N="§ 570.410" NODE="24:3.1.1.3.3.5.1.8" TYPE="SECTION">
<HEAD>§ 570.410   Special Projects Program.</HEAD>
<P>(a) <I>Program objectives.</I> The Community Development Special Projects Program enables HUD to award grants to States and units of general local government, subject to availability of funds, for special projects that address community development activities or techniques consistent with the purposes of title I of the Housing and Community Development Act of 1974, as amended.
</P>
<P>(b) <I>Eligible applicants.</I> Only States and units of general local government (as defined in § 570.3) are eligible to submit proposals or applications for Special Projects grants. Proposals or applications may be submitted by eligible applicants on behalf of themselves, on behalf of other eligible applicants, or jointly by more than one eligible applicant.
</P>
<P>(c) <I>Eligible activities.</I> (1) Project activities that may be funded under this section are those eligible under 24 CFR part 570—Community Development Block Grants, subpart C—Eligible Activities. No more than twenty (20) percent of the funds awarded under this section may be used for overall program administration or planning activities eligible under §§ 570.205 and 570.206.
</P>
<P>(2) The amount of funds awarded to a unit of general local government under this section that may be used for public service activities is limited. The applicant may use whichever of the following methods of calculation yields the highest amount:
</P>
<P>(i) Fifteen percent of the special projects grant;
</P>
<P>(ii) An amount equal to 15 percent of the sum of special project grant funds plus grant funds received for the same origin year under the Entitlement or State program, less the amount of the Entitlement or State program grant funds which will be used for other public service activities; or 
</P>
<P>(iii) In the case of an applicant that is an Entitlement grantee subject to the exception in § 570.201(e)(2), an amount equal to the amount of the Entitlement grant funds received for the same origin year that may be used for public service activities, less the amount of the Entitlement grant funds which will be used for other public service activities.
</P>
<P>(d) <I>Proposals.</I> Eligible applicants may submit unsolicited proposals. HUD may ask proposers to submit additional information if necessary for evaluation. There is no HUD commitment to fund any unsolicited proposal regardless of its merit. If HUD elects to fund a proposal, it will request that the proposer submit a formal application.
</P>
<P>(1) Three (3) copies of a proposal must be sent to the address stated in (3), below. Each proposal submitted pursuant to this section shall be evaluated by HUD using the following criteria:
</P>
<P>(i) The extent to which the proposal satisfies purposes of this title and addresses a special community development need.
</P>
<P>(ii) The eligibility of proposed activities.
</P>
<P>(iii) The feasibility of the project; i.e., its technical and financial feasibility for achieving the goals stated in the proposal.
</P>
<P>(iv) The capacity of the proposer to carry out satisfactorily the proposed project activities.
</P>
<P>(2) If the proposal is submitted jointly by, or on behalf of, more than one eligible applicant, the proposal must:
</P>
<P>(i) Contain a cooperation agreement signed by the Chief Executive Officer of each participating jurisdiction which specifies concurrence with the purpose and intent of the proposal and intent to comply with grant requirements;
</P>
<P>(ii) Address problems faced by all jurisdictions listed in the proposal; and,
</P>
<P>(iii) Be submitted by the lead jurisdiction. The lead jurisdiction shall be responsible for overall coordination and administration of the project.
</P>
<P>(3) Unsolicited proposals may be submitted any time during the year. However, if there are no funds available for such proposals, they will be returned without review. Proposals shall contain a Standard Form 424 signed by the Chief Executive Officer of the State or unit of general local government. They shall be sent to: Department of Housing and Urban Development, Office of Community Planning and Development, 451 Seventh Street, SW., Washington, DC 20410, Attention: Director, Office of Program Policy Development, CPP.
</P>
<P>(e) <I>Applications.</I> Applications are accepted only from eligible applicants in response to letters of solicitations, or to competition announcements published in Notices in the <E T="04">Federal Register.</E> Submission requirements and criteria to be used by HUD to evaluate solicited applications and instructions regarding their submission shall be stated in each Notice or letter.
</P>
<P>(f) <I>Certifications.</I> Applications shall contain the certifications required by 24 CFR 570.303, except that regarding citizen participation: The applicant must certify that citizens likely to be affected by the project, particularly low- and moderate-income persons, have been provided an opportunity to comment on the proposal or application. If the application is submitted jointly, or on behalf of more than one jurisdiction, each jurisdiction shall submit the required certifications.
</P>
<P>(g) <I>Selection and notification.</I> The HUD decision to approve, disapprove or conditionally approve a proposal or application shall be communicated in writing to the applicant.
</P>
<CITA TYPE="N">[47 FR 30054, July 12, 1982, as amended at 54 FR 31672, Aug. 1, 1989; 55 FR 29309, July 18, 1990; 56 FR 56127, Oct. 31, 1991; 80 FR 69870, Nov. 12, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 570.411" NODE="24:3.1.1.3.3.5.1.9" TYPE="SECTION">
<HEAD>§ 570.411   Joint Community Development Program.</HEAD>
<P>(a) <I>General.</I> Grants under this section will be awarded to institutions of higher education or to States and local governments applying jointly with institutions of higher education. Institutions of higher education must demonstrate the capacity to carry out activities under title I of the Housing and Community Development Act of 1974. For ease of reference, this program may be called the Joint CD Program.
</P>
<P>(b) <I>Definitions.</I>
</P>
<P><I>Demonstrated capacity</I> to carry out eligible activities under title I means recent satisfactory activity by the institution of higher education's staff designated to work on the program, including subcontractors and consultants firmly committed to work on the proposed activities, in title I programs or similar programs without the need for oversight by a State or unit of general local government.
</P>
<P><I>Institution of higher education</I> means a college or university granting 4-year degrees and accredited by a national or regional accrediting agency recognized by the U.S. Department of Education.
</P>
<P>(c) <I>Eligible applicants.</I> Institutions of higher education or States and units of general local government jointly with institutions of higher education may apply. Institutions of higher education with demonstrated capacity to carry out eligible activities under title I may apply on their own, without the joint participation of a State or unit of general local government. States or unit of general local governments must file jointly with an institution of higher education. For these approved joint applications, the grant will be made to the State or unit of general local government and the institution of higher education jointly. If an eligible applicant is an institution of higher education, it will not be funded more than once for the same kinds of activities. These grantees may not receive funding under a subsequent NOFA if it has the same program objectives as the one under which the grantee previously received funding. However, a State or unit of general local government is eligible to apply if it files jointly with a different institution of higher education in each NOFA cycle. HUD may further limit the type of eligible applicant to be funded. Any such limitations will be contained in the Notice of Funding Availability described below in paragraph (h) of this section.
</P>
<P>(d) <I>Role of participants in joint applications.</I> An institution of higher education and a State or unit of general local government may carry out eligible activities approved in joint applications. Where there are joint applicants, the grant will be made to both and both will be responsible for oversight, compliance, and performance. The application will have to clearly delineate the role of each applicant in the joint application. Any funding sanctions or other remedial actions by HUD for noncompliance or nonperformance, whether by the State or unit of general local government or by the institution of higher education, shall be taken against both grantees.
</P>
<P>(e) <I>Eligible activities.</I> Activities that may be funded under this section are those eligible under 24 CFR part 570—Community Development Block Grants, subpart C—Eligible Activities. These activities may be designed to assist residents of colonias, as defined in section 916(d) of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 5306 note), to improve living conditions and standards within colonias. HUD may limit the activities to be funded. Any such limitations will be contained in the Notice of Funding Availability described in paragraph (h) of this section.
</P>
<P>(f) <I>Applications.</I> Applications will only be accepted from eligible applicants in response to a publication of a Notice of Funding Availability (NOFA) published by HUD in the <E T="04">Federal Register.</E>
</P>
<P>(g) <I>Local approval.</I> (1) Where an institution of higher education is the applicant, each unit of general local government that is an entitlement jurisdiction where an activity is to take place must approve the activity and certify that the activity is consistent with its Consolidated Plan.
</P>
<P>(2) Where a State is the joint applicant and it proposes to carry out an activity within the jurisdiction of one or more units of general local government, then each such unit must approve the activity and state that the activity is consistent with its Consolidated Plan.
</P>
<P>(3) These approvals and findings must accompany each application and may take the form of a letter by the chief executive officer of each unit of general local government affected or a resolution of the legislative body of each such unit of general local government.
</P>
<P>(h) <I>NOFA contents.</I> The NOFA will describe any special objectives sought to be achieved by the funding to be provided, including any limitations on the type of activities to be funded to achieve the objectives, any limitations on the type of eligible applicants, and points to be awarded to each of the selection criteria and any special factors to be evaluated in assigning points under the selection criteria to achieve the stated objectives. The NOFA will also state the deadline for the submission of applications, the total funding available for the competition, the period of performance and the maximum and minimum amount of individual grants. The NOFA will also state which of the various possible levels of competition HUD will use: national and/or regional or entitlement areas vs. non-entitlement areas; and States or units of general local government vs. institutions of higher education vs. institutions of higher education with a demonstrated capacity. The NOFA will include further information and instructions for the submission of acceptable applications to HUD.
</P>
<P>(i) <I>Selection criteria.</I> Each application submitted under this section will be evaluated by HUD using the following criteria:
</P>
<P>(1) The extent to which the applicant addresses the objectives published in the NOFA and demonstrates how the proposed activities will have a substantial impact in achieving the objectives.
</P>
<P>(2) The extent of the needs to be addressed by the proposed activities, particularly with respect to benefiting low- and moderate-income persons and residents of colonias, where applicable.
</P>
<P>(3) The feasibility of the proposed activities, i.e., their technical and financial feasibility, for achieving the stated objectives.
</P>
<P>(4) The capability of the applicant to carry out satisfactorily the proposed activities in a timely fashion, including satisfactory performance in carrying out any previous HUD-assisted projects or activities.
</P>
<P>(5) The extent of commitment to fair housing and equal opportunity, as indicated by such factors as previous HUD monitoring/compliance activity, actions to promote minority- and women-owned business enterprise, affirmatively furthering fair housing issues, and nondiscriminatory delivery of services.
</P>
<P>(j) <I>Selection discretion.</I> HUD retains the right to exercise discretion in selecting projects in a manner that would best serve the program objectives, with consideration given to the needs of States and units of general local government and institutions of higher education, types of activities proposed, an equitable geographical distribution, and program balance. The NOFA will state whether HUD will use this discretion in any specific competition.
</P>
<P>(k) <I>Certifications.</I> (1) Certifications, including those indicating that applicants have adhered to all civil rights requirements under subpart K of this part and the Americans with Disabilities Act of 1990, required to be submitted by applicants shall be as prescribed in the NOFA.
</P>
<P>(2) In the absence of independent evidence which tends to challenge in a substantial manner the certifications made by the applicant, the required certifications will be accepted by HUD. However, if independent evidence is available, HUD may require further information or assurances to be submitted in order to determine whether the applicant's certifications are satisfactory.
</P>
<P>(l) <I>Consolidated plan.</I> An applicant that proposes any housing activities as part of its application will be required to submit a certification that these activities are consistent with the Consolidated Plan of the jurisdiction to be served.
</P>
<P>(m) <I>Citizen participation.</I> The citizen participation requirements of §§ 570.301, 570.431, 570.485(c) and 570.486(a) are modified to require the following: The applicant must certify that citizens likely to be affected by the project regardless of race, color, creed, sex, national origin, familial status, or handicap, particularly low- and moderate-income persons, have been provided an opportunity to comment on the proposal or application.
</P>
<P>(n) <I>Environmental and Intergovernmental Review.</I> The requirements for Intergovernmental Reviews do not apply to these awards. When required, an environmental review in accordance with 24 CFR part 58 must be carried out by the State or unit of general local government when it is the applicant. HUD will conduct any required environmental review when an institution of higher education is the applicant.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2535-0084)
</APPRO>
<CITA TYPE="N">[60 FR 15837, Mar. 27, 1995]


</CITA>
</DIV8>


<DIV8 N="§ 570.415" NODE="24:3.1.1.3.3.5.1.10" TYPE="SECTION">
<HEAD>§ 570.415   Community Development Work Study Program.</HEAD>
<P>(a) <I>Applicability and objectives.</I> HUD makes grants under CDWSP to institutions of higher education, either directly or through areawide planning organizations or States, for the purpose of providing assistance to economically disadvantaged and minority students who participate in a work study program while enrolled in full-time graduate programs in community and economic development, community planning, and community management. The primary objectives of the program are to attract economically disadvantaged and minority students to careers in community and economic development, community planning, and community management, and to provide a cadre of well-qualified professionals to plan, implement and administer local community development programs. 
</P>
<P>(b) <I>Definitions.</I> The following definitions apply to CDWSP: 
</P>
<P><I>Applicant</I> means an institution of higher education, a State, or an areawide planning organization that submits an application for assistance under CDWSP. 
</P>
<P><I>Areawide planning organization (APO)</I> means an organization authorized by law or by interlocal agreement to undertake planning and other activities for a metropolitan or nonmetropolitan area. For an organization operating in a nonmetropolitan area to be considered an APO, its jurisdiction must cover at least one county. 
</P>
<P><I>CDWSP</I> means the Community Development Work Study Program. 
</P>
<P><I>Community building</I> means community and economic development, community planning, community management, land use and housing activities. 
</P>
<P><I>Community building academic program or academic program</I> means a graduate degree program whose purpose and focus is to educate students in community building. “Community building academic program” or “academic program” includes but is not limited to graduate degree programs in community and economic development, community planning, community management, public administration, public policy, urban economics, urban management, and urban planning. “Community building academic program” or “academic program” excludes social and humanistic fields such as law, economics (except for urban economics), education and history. “Community building academic program” or “academic program” excludes joint degree programs except where both joint degree fields have the purpose and focus of educating students in community building. 
</P>
<P><I>Economically disadvantaged and minority students</I> means students who satisfy all applicable guidelines established at the participating institution of higher education to measure financial need for academic scholarship or loan assistance, including, but not limited to, students who are Black, American Indian/Alaskan Native, Hispanic, or Asian/Pacific Island, and including students with disabilities. 
</P>
<P><I>Institution of higher education</I> means a public or private educational institution that offers a community building academic program and that is accredited by an accrediting agency or association recognized by the Secretary of Education under 34 CFR part 602. 
</P>
<P><I>Recipient</I> means an approved applicant that executes a grant agreement with HUD. 
</P>
<P><I>Student</I> means a student enrolled in an eligible full-time academic program. He/she must be a first-year student in a two-year graduate program. Students enrolled in Ph.D. programs are ineligible. 
</P>
<P><I>Student with disabilities</I> means a student who meets the definition of “person with disabilities” in the Americans with Disabilities Act of 1990. 
</P>
<P>(c) <I>Assistance provided</I>—(1) <I>Types of assistance available.</I> HUD provides funding in the form of grants to recipients who make assistance available to eligible students. Grants are provided to cover the costs of student assistance and for an administrative allowance.
</P>
<P>(i) <I>Student assistance.</I> Grants are made to recipients to cover the costs of assistance provided to eligible students in the form of student stipends, tuition support, and additional support.
</P>
<P>(A) <I>Student stipend.</I> The amount of the student stipend is based upon the prevailing hourly rate for initial entry positions in community building and the number of hours worked by the student at the work placement assignment, except that the hourly rate used should be sufficiently high to allow a student to earn the full stipend without working over 20 hours per week during the school year and 40 hours per week during the summer. The amount of the stipend the student receives may not exceed the actual amount earned, up to $9,000 per year. 
</P>
<P>(B) <I>Tuition support and additional support.</I> The amount of support for tuition, fees, books, and travel related to the academic program, workplace assignment or conferences may not exceed actual costs incurred or $5,000 per year, whichever is higher. The conferences are limited to those dealing with community building, sponsored by professional organizations. 
</P>
<P>(ii) <I>Administrative allowance.</I> HUD provides an allowance to recipients to cover the administrative costs of the program. The administrative allowance is $1,000 per year for each student participating in the program.
</P>
<P>(2) <I>Number of students assisted.</I> The minimum number of students that may be assisted is three students per participating institution of higher education. If an APO or State receives assistance for a program that is conducted by two or more institutions of higher education, each participating institution must have a minimum of three students in the program. The maximum number of students that may be assisted under CDWSP is five students per participating institution of higher education. 
</P>
<P>(d) <I>Recipient eligibility and responsibilities</I>—(1) <I>Recipient eligibility.</I> (i) The following organizations are eligible to apply for assistance under the program:
</P>
<P>(A) <I>Institutions of higher education.</I> Institutions of higher education offering a community building academic program are eligible for assistance under CDWSP. 
</P>
<P>(B) <I>Areawide planning organizations and States.</I> An APO or a State may apply for assistance for a program to be conducted by two or more institutions of higher education. Institutions participating in an APO program must be located within the particular area that is served by the APO and is identified by the State law or interlocal agreement creating the APO. Institutions of higher education participating in a State program must be located within the State. 
</P>
<P>(ii) To be eligible in future funding competitions for CDWSP, recipients are required to maintain a 50-percent rate of graduation from a CDWSP-funded academic program. 
</P>
<P>(iii) If an institution of higher education that submits an individual application is also included in the application of an APO or State, then the separate individual application of the institution of higher education will be disregarded. Additionally, if an institution of higher education is included in the application of both an APO and a State, then the references to the institution in the application of the State will be stricken. The State's application will then be ineligible if fewer than two institutions of higher education remain as participants in the State's application. 
</P>
<P>(2) <I>Recipient responsibilities.</I> (i) The recipient is responsible for the administration of the program, for compliance with all program requirements, and for the coordination of program activities carried out by the work placement agencies and (if the recipient is an APO or State), by the participating institutions of higher education. The recipient must:
</P>
<P>(A) Recruit and select students for participation in CDWSP. The recipient shall establish recruitment procedures that identify economically disadvantaged and minority students pursuing careers in community building, and make such students aware of the availability of assistance opportunities. Students must be selected before the beginning of the semester for which funding has been provided. 
</P>
<P>(B) Recruit and select work placement agencies, and negotiate and execute agreements covering each work placement assignment.
</P>
<P>(C) Refer participating students to work placement agencies and assist students in the selection of work placement assignments.
</P>
<P>(D) Assign sufficient staff to administer and supervise the program on a day-to-day basis, and, where the recipient is an APO or State, to monitor the activities of the work study coordinating committee.
</P>
<P>(E) Encourage participating students to obtain employment for a minimum of two years after graduation with a unit of State or local government, Indian tribe or nonprofit organization engaged in community building. 
</P>
<P>(F) Maintain records by racial and ethnic categories for each economically disadvantaged student enrolled in the CDWSP.
</P>
<P>(G) Keep records and make such reports as HUD may require.
</P>
<P>(H) Comply with all other applicable Federal requirements.
</P>
<P>(ii) If the recipient is an APO or State, the recipient must also:
</P>
<P>(A) Establish a committee to coordinate activities between program participants, to advise the recipient on policy matters, to assist the recipient in ranking and selection of participating students, and to review disputes concerning compliance with program agreements and performance. The committee shall be chaired by a representative of the recipient, and shall include representatives of the participating institutions of higher education, work placement agencies, students, and HUD.
</P>
<P>(B) Allocate the assistance awarded under the program to the participating institutions of higher education. APOs and States may not make fractional awards to institutions. (E.g., awards to institutions must assist a fixed number of students and not, for example, 6.5 students.)
</P>
<P>(e) <I>Institutions of higher education.</I> Institutions of higher education participating in a program are responsible for providing its educational component. Where the recipient is an APO or State, the institution of higher education shall assist the APO or State in the administration and operation of the program. Responsibilities include assisting the recipient in the selection of students by determining the eligibility of students for the academic program, and by making the analysis of students under the financial need guidelines established by the institution. All institutions of higher education must comply with other applicable Federal requirements.
</P>
<P>(f) <I>Work placement agencies eligibility and responsibilities</I>—(1) <I>Eligibility.</I> To be eligible to participate in the CDWSP, the work placement agencies must be involved in community building and must be an agency of a State or unit of local government, an APO, an Indian tribe, or a nonprofit organization. 
</P>
<P>(2) <I>Responsibilities.</I> Work placement agencies must:
</P>
<P>(i) Provide practical experience and training in community building. 
</P>
<P>(ii) Consult with the institution of higher education (and the APO or State, where an APO or State is the recipient) to ensure that the student's work placement assignment provides the requisite experience and training to meet the required number of work hours specified in the student work placement agreement.
</P>
<P>(iii) Provide a sufficient number of work placement assignments to provide participating students with a wide choice of work experience.
</P>
<P>(iv) Require each student to devote 12-20 hours per week during the regular school year, or 35-40 hours a week during the summer, to the work placement assignment. Work placement agencies may provide flexibility in the work period, if such a schedule is consistent with the requirements of the student's academic program. However, a participating student may receive stipend payment only during the period that the student is placed with the work placement agency.
</P>
<P>(v) Comply with all other applicable Federal requirements.
</P>
<P>(vi) Maintain such records as HUD may require.
</P>
<P>(g) <I>Student eligibility and responsibilities.</I> Students apply directly to recipients receiving grants under CDWSP. Students shall be selected in accordance with the following eligibility requirements and selection procedures.
</P>
<P>(1) <I>Eligibility.</I> To be eligible for CDWSP, the student:
</P>
<P>(i) Must satisfy all applicable guidelines established at the participating institution of higher education to measure financial need for academic scholarship or loan assistance.
</P>
<P>(ii) Must be a full-time student enrolled in the first year of graduate study in a community building academic program at the participating institution of higher education. Individuals enrolled in doctoral programs are ineligible. 
</P>
<P>(iii) Must demonstrate an ability to maintain a satisfactory level of performance in the community building academic program and in work placement assignments, and to comply with the professional standards set by the recipient and the work placement agencies. 
</P>
<P>(iv) May not have previously participated in CDWSP.
</P>
<P>(v) Must provide appropriate written evidence that he or she is lawfully admitted for permanent residence in the United States, if the individual is not a citizen.
</P>
<P>(2) <I>Selection.</I> In selecting among eligible students, the recipient must consider the extent to which each student has demonstrated:
</P>
<P>(i) Financial need under the applicable financial need guidelines established at the institution of higher education;
</P>
<P>(ii) An interest in, and commitment to, a professional career in community building; 
</P>
<P>(iii) The ability satisfactorily to complete academic and work placement responsibilities under CDWSP.
</P>
<P>(3) <I>Student responsibilities.</I> Participating students must:
</P>
<P>(i) Enroll in a two-year program. A student's academic and work placement responsibilities include: Full-time enrollment in an approved academic program; maintenance of a satisfactory level of performance in the community building academic program and in work placement assignments; and compliance with the professional conduct standards set by the recipient and the work placement agency. A satisfactory level of academic performance consists of maintaining a B average. A student's participation in CDWSP shall be terminated for failure to meet these responsibilities and standards. If a student's participation is terminated, the student is ineligible for further CDWSP assistance. 
</P>
<P>(ii) Agree to make a good-faith effort to obtain employment in community building with a unit of State or local government, an Indian tribe, or a nonprofit organization. The term of employment should be for at least two consecutive years following graduation from the academic program. If the student does not obtain such employment, the student is not required to repay the assistance received. 
</P>
<P>(h) <I>Notice of fund availability.</I> HUD will solicit grant applications from institutions of higher education, APO's and States by publishing a notice of fund availability in the <E T="04">Federal Register.</E> The notice will:
</P>
<P>(1) Explain how application packages (requests for grant applications) providing specific application requirements and guidance may be obtained;
</P>
<P>(2) Specify the place for filing completed applications, and the date by which the applications must be physically received at that location;
</P>
<P>(3) State the amount of funding available under the notice;
</P>
<P>(4) Provide other appropriate program information and guidance.
</P>
<P>(i) <I>Recipient selection process.</I> The selection process for applications under CDWSP consists of a threshold review, ranking of eligible applications and final selection.
</P>
<P>(1) <I>Threshold.</I> To be eligible for ranking, applicants must meet each of the following threshold requirements:
</P>
<P>(i) The application must be filed in the application form prescribed by HUD, and within the required time periods;
</P>
<P>(ii) The applicant must demonstrate that it is eligible to participate;
</P>
<P>(iii) The applicant must demonstrate that each institution of higher education participating in the program as a recipient has the required academic programs and faculty to carry out its activities under CDWSP. Each work placement agency must have the required staff and community building work study program to carry out its activities under CDWSP. 
</P>
<P>(2) <I>Rating.</I> All applications that meet the threshold requirements for applicant eligibility will be rated based on the following selection criteria: 
</P>
<P>(i) <I>Quality of academic program.</I> The quality of the academic program offered by the institution of higher education, including without limitation the: 
</P>
<P>(A) Quality of course offerings; 
</P>
<P>(B) Appropriateness of course offerings for preparing students for careers in community building; and 
</P>
<P>(C) Qualifications of faculty and percentage of their time devoted to teaching and research in community building. 
</P>
<P>(ii) <I>Rates of graduation.</I> The rates of graduation of students previously enrolled in a community building academic program at the institution of higher education, specifically including (where applicable) graduation rates from any previously funded CDWSP academic programs or similar programs. 
</P>
<P>(iii) <I>Extent of financial commitment.</I> The commitment and ability of the institution of higher education to assure that CDWSP students will receive sufficient financial assistance (including loans, where necessary) above and beyond the CDWSP funding to complete their academic program in a timely manner and without working in excess of 20 hours per week during the school year. 
</P>
<P>(iv) <I>Quality of work placement assignments.</I> The extent to which the participating students will receive a sufficient number and variety of work placement assignments, the assignments will provide practical and useful experience to students participating in the program, and the assignments will further the participating students' preparation for professional careers in community building. 
</P>
<P>(v) <I>Likelihood of fostering students' permanent employment in community building.</I> The extent to which the proposed program will lead participating students directly and immediately to permanent employment in community building, as indicated by, without limitation: 
</P>
<P>(A) The past success of the institution of higher education in placing its graduates (particularly CDWSP-funded and similar program graduates where applicable) in permanent employment in community building; and 
</P>
<P>(B) The amount of faculty and staff time and institutional resources devoted to assisting students (particularly students in CDWSP-funded and similar programs where applicable) in finding permanent employment in community building. 
</P>
<P>(vi) <I>Effectiveness of program administration.</I> The degree to which an applicant will be able effectively to coordinate and administer the program. HUD will allocate the maximum points available under this criterion equally among the following considerations set forth in paragraphs (i)(2)(vi) (A), (B), and (C) of this section, except that the maximum points available under this criterion will be allocated equally between the considerations set forth in paragraphs (i)(2)(vi) (A) and (B) of this section only where the applicant has not previously administered a CDWSP-funded program. 
</P>
<P>(A) The strength and clarity of the applicant's plan for placing CDWSP students on rotating work placement assignments and monitoring CDWSP students' progress both academically and in their work placement assignments; 
</P>
<P>(B) The degree to which the individual who will coordinate and administer the program has clear responsibility, ample available time, and sufficient authority to do so; and 
</P>
<P>(C) The effectiveness of the applicant's prior coordination and administration of a CDWSP-funded program, where applicable (including the timeliness and completeness of the applicant's compliance with CDWSP reporting requirements). 
</P>
<P>(vii) <I>Commitment to meeting economically disadvantaged and minority students' needs.</I> The applicant's commitment to meeting the needs of economically disadvantaged and minority students as demonstrated by policies and plans regarding, and past effort and success in, recruiting, enrolling and financially assisting economically disadvantaged and minority students. If the applicant is an APO or State, then HUD will consider the demonstrated commitment of each institution of higher education on whose behalf the APO or State is applying; HUD will then also consider the demonstrated commitment of the APO or State to recruit and hire economically disadvantaged and minority students. 
</P>
<P>(3) <I>Final selection.</I> Eligible applications will be considered for selection in their rank order. HUD may make awards out of rank order to achieve geographic diversity, and may provide assistance to support a number of students that is less than the number requested under applications in order to provide assistance to as many highly ranked applications as possible.
</P>
<P>(j) <I>Agreements</I>—(1) <I>Grant agreement.</I> The responsibilities of the recipient under CDWSP will be incorporated in a grant agreement executed by HUD and the recipient.
</P>
<P>(2) <I>Student agreement.</I> The recipient and each participating student must execute a written agreement incorporating their mutual responsibilities under CDWSP. The agreement must be executed before the student can be enrolled in the program. A student's participation in CDWSP shall be terminated for failure to meet the responsibilities and standards in the agreement.
</P>
<P>(3) <I>Work placement assignment agreement.</I> The institution of higher education, the APO or state (if an APO or State is the grant recipient), the participating student, and the work placement agency must execute a written agreement covering each work placement assignment. The agreement must address the responsibilities of each of the parties, the educational objectives, the nature of supervision, the standards of evaluation, and the student's time commitments under the work placement assignment.
</P>
<P>(4) <I>APO (or state) and institution of higher education.</I> Where the recipient is an APO (or a State), the recipient and each participating institution of higher education must execute a written agreement incorporating their mutual responsibilities under CDWSP.
</P>
<P>(k) <I>Grant administration</I>—(1) <I>Initial obligation of funds.</I> When HUD selects an application for funding, and notifies the recipient, HUD will obligate funds to cover the amount of the approved grant. The initial obligation of funds will provide for student grants for two years.
</P>
<P>(2) <I>Disbursement.</I> Recipients will receive grant payments by direct deposit on a reimbursement basis. If that is not possible, grant payments will be made by U.S. Treasury checks.
</P>
<P>(3) <I>Deobligation and recipient repayment.</I> (i) HUD may deobligate amounts for grants if proposed activities are not begun or completed within a reasonable time after selection.
</P>
<P>(ii) If a student's participation in CDWSP is terminated before the completion of the two-year term of the student's program, the recipient may substitute another student to complete the two-year term of a student whose participation has terminated. The substituted student must have a sufficient number of academic credits to complete the degree program within the remaining portion of the terminated student's two-year term. With respect to any CDWSP grant, there is no requirement, regardless of the date of grant award, for students who are terminated from the CDWSP to repay tuition and additional assistance or for the grant recipient to repay such funds to HUD. Funds must still be otherwise expended consistent with CDWSP regulations and the grant agreement, or repayment may be required under paragraph (k)(3)(iii) of this section.
</P>
<P>(iii) Consistent with 2 CFR part 200, HUD, in the grant agreement, will set forth in detail other circumstances under which funds may be deobligated, recipients may be liable for repayment, or other sanctions may be imposed.
</P>
<P>(l) <I>Other Federal requirements</I>—(1) <I>Handicap provision.</I> Recipients must provide a statement certifying that no otherwise qualified handicapped person shall, solely by reason of handicap, be excluded from participation in, be denied the benefits of, or otherwise be subjected to discrimination under the CDWSP.
</P>
<P>(2) <I>Nondiscrimination.</I> The recipient must adhere to the following nondiscrimination provisions: The requirements of title VIII of the Civil Rights Act of 1968, 42 U.S.C. 3600-20 (Fair Housing Act) and implementing regulations issued at subchapter A of title 24 of the Code of Federal Regulations; title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d-4) (Nondiscrimination in Federally Assisted Programs) and implementing regulations issued at 24 CFR part 1; section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and implementing regulations at 24 CFR part 8; Executive Order 11063 and implementing regulations at 24 CFR part 107; and the Age Discrimination Act of 1975 and implementing regulations at 24 CFR part 146.
</P>
<CITA TYPE="N">[54 FR 27131, June 27, 1989, as amended at 61 FR 36458, July 10, 1996; 63 FR 31869, June 10, 1998; 80 FR 75937, Dec. 7, 2015] 


</CITA>
</DIV8>


<DIV8 N="§ 570.416" NODE="24:3.1.1.3.3.5.1.11" TYPE="SECTION">
<HEAD>§ 570.416   Hispanic-serving institutions work study program.</HEAD>
<P>(a) <I>Applicability and objectives.</I> HUD makes grants under the Hispanic-serving Institutions Work Study Program (HSI-WSP) to public and private non-profit Hispanic-serving Institutions (HSI's) of higher education for the purpose of providing assistance to economically disadvantaged and minority students who participate in a work study program while enrolled in full-time community college programs in community building, and to provide entry to pre-professional careers in these fields. 
</P>
<P>(b) <I>Definitions.</I> The following definitions apply to HSI-WSP: 
</P>
<P><I>Applicant</I> means a public or private non-profit Hispanic-serving institution of higher education that offers only two-year degree programs, including at least one community building academic degree program, and that applies for funding under HSI-WSP. 
</P>
<P><I>Community building</I> means community and economic development, community planning, community management, public policy, urban economics, urban management, urban planning, land use planning, housing, and related fields. Related fields include, but are not limited to, administration of justice, child development, and human services. 
</P>
<P><I>Community building academic program</I> or <I>academic program</I> means an undergraduate associate degree program whose purpose and focus is to educate students in community building. The terms “community building academic program” or “academic program” refer to the types of academic programs encompassed in the statutory phrase “community or economic development, community planning or community management.” For purposes of HSI-WSP, such programs include, but are not limited to, associate degree programs in community and economic development, community planning, community management, public administration, public policy, urban economics, urban management, urban planning, land use planning, housing, and related fields of study. Related fields of study that promote community building, such as administration of justice, child development, and human services are eligible, while fields such as natural sciences, computer sciences, mathematics, accounting, electronics, engineering, and the humanities (such as English or history) would not be eligible. A transfer program (i.e., one that leads to transfer to a four-year institution of higher education for the student's junior year) in a community building academic discipline is eligible only if the student is required to declare his/her major in this discipline while at the community college. 
</P>
<P><I>Community building field</I> means any of the fields of study eligible under a community building academic program. 
</P>
<P><I>Economically disadvantaged and minority students</I> means students who satisfy all the applicable guidelines established at the participating institution of higher education to measure financial need for academic scholarship or loan assistance, including, but not limited to, students with disabilities and students who are Black, American Indian/Alaska Native, Hispanic, Asian/Pacific Islanders, where such students satisfy the financial needs guidelines defined above. 
</P>
<P><I>Hispanic-serving institution</I> is an institution of higher education that certifies to the satisfaction of the Secretary that it meets the criteria set out at 20 U.S.C. 1059c(b)(1), including the following: An institution that has an enrollment of undergraduate full-time students that is at least 25 percent Hispanic; in which not less than 50 percent of the Hispanic students are low-income individuals (i.e., their families' taxable income for the preceding year did not exceed 150 percent of the poverty level) who are first generation college students; and in which another 25 percent are either low-income individuals or first generation college students.
</P>
<P><I>HSI-WSP</I> or <I>HSI-WSP program</I> means the Hispanic-serving Institutions Work Study program. 
</P>
<P><I>Institution of higher education</I> means a public or private educational institution that offers two-year associate degrees in a community building academic program and that is accredited by an accrediting agency or association recognized by the Secretary of Education. Institutions offering BOTH four-year and two-year degrees are not eligible for HSI-WSP. 
</P>
<P><I>Recipient</I> means an approved applicant that executes a grant agreement with HUD. 
</P>
<P><I>Student</I> means a person attending the institution of higher education on a full-time basis, as defined by that institution and pursuing an eligible community building degree. Students must have attained no more than half of the credits required for their degree at the time they first receive assistance under HSI-WSP. 
</P>
<P><I>Student with disabilities</I> means a student who meets the definition of a “person with disabilities” in the Americans with Disabilities Act of 1990. 
</P>
<P>(c) <I>Assistance provided</I>—(1) <I>Types of assistance available.</I> HUD provides funding in the form of grants to recipients who make assistance available to eligible students. Grants are provided to cover the costs of student assistance and for an administrative allowance. 
</P>
<P>(2) <I>Maximum amount of assistance.</I> The maximum amount that can be provided to a student is $13,200 a year, including $1,000 for an administrative allowance, subject to the 20% limitation described at 570.416(c)(4) below. HUD will not set maximums on how much should be spent to each eligible expenditure, other than for administrative costs. The institution must be able to document that the amounts paid are customary for that institution and that it has actually paid that amount to the students. If a student is receiving a Pell grant, he/she may not receive funding for the same educational support through HSI-WSP. However, HSI-WSP can substitute for all or part of the Pell grant. 
</P>
<P>(3) <I>Student assistance.</I> Grants are provided in the form of student stipends, tuition support, and additional support. 
</P>
<P>(i) <I>Student stipend.</I> The amount of the student stipend should be based on the hourly rate for initial entry positions in the community building field and the number of hours worked by the student at the work placement assignment. The stipend should be sufficiently high to allow the student to earn the full stipend, as determined by the recipient, without working over 20 hours per week during the school year and 40 hours per week during the summer. 
</P>
<P>(ii) <I>Tuition support.</I> The amount of tuition support may not exceed the tuition and required fees charged at the participating institution of higher education. 
</P>
<P>(iii) <I>Additional support.</I> The recipient may provide additional support for books, tutoring, and travel related to the academic program or work placement assignment. Costs associated with reasonable accommodations for students with disabilities including, but not limited to, interpreters for the deaf/hard of hearing, special equipment, and braille materials are eligible under this category. 
</P>
<P>(4) <I>Administrative allowance.</I> HUD provides an allowance to recipients to cover the administrative costs of the program. The administrative allowance is $1,000 per year for each student participating in the program; however, no more than 20 percent of the grant may be used for planning and program administrative costs. 
</P>
<P>(5) <I>Number of students assisted.</I> The minimum number of students that may be assisted is three students per participating institution of higher education. The maximum number of students that may be assisted is ten students per participating institution of higher education; however, a lower maximum or higher minimum may be established for a particular funding round by the NOFA announcing the availability of the funds. 
</P>
<P>(d) <I>Recipient eligibility and responsibilities</I>—(1) <I>Recipient eligibility.</I> Public or private Hispanic-serving institutions of higher education offering only undergraduate two-year degrees, including degrees in at least one community building academic program, are eligible for assistance under HSI-WSP. HSIs that offer BOTH two-year and four-year degrees are not eligible for HSI-WSP assistance. 
</P>
<P>(2) <I>Recipient responsibilities.</I> The recipient is responsible for administering the program, for compliance with all program requirements, and for coordination of program activities carried out by the work placement agencies. The recipient must: 
</P>
<P>(i) Recruit students for participation in HSI-WSP. The recipient shall establish recruitment procedures that identify eligible economically disadvantaged and minority students pursuing careers in community building, and make them aware of the availability of assistance opportunities. While the program is restricted to HSIs, the recipient may neither restrict the program to any particular minority group or groups, nor provide any preferential treatment in the selection process based on race or ethnicity. Only economically disadvantaged students, as defined herein, may be assisted. 
</P>
<P>(ii) Select students for participation in HSI-WSP. In selecting among the eligible students, the recipient must consider the extent to which each student has demonstrated financial need under the applicable guidelines established at the institution of higher education; an interest in, and commitment to, a career in community building; and the ability to satisfactorily complete the academic and work placement responsibilities under HSI-WSP. Students must be selected before the beginning of the semester for which funding is being provided. If a student's participation terminates, the student may not be replaced; the grant will be reduced by the amount of unused funds allotted for that student. 
</P>
<P>(iii) Provide the educational component for participating students. 
</P>
<P>(iv) Recruit and select work placement agencies, and negotiate and execute an agreement covering each work placement assignment. 
</P>
<P>(v) Refer participating students to work placement agencies and assist students in the selection of work placement assignments. 
</P>
<P>(vi) Assign sufficient staff to administer and supervise the program on a day-to-day basis. 
</P>
<P>(vii) Encourage participating students to either: obtain post-graduation employment with a unit of State or local government, an areawide planning organization (APO), Indian tribe or nonprofit organization engaged in community building; or transfer to a four-year institution of higher education to obtain a bachelor's degree in a community building academic discipline. 
</P>
<P>(viii) Maintain records by racial and ethnic categories for each economically disadvantaged and minority student participating in HSI-WSP. 
</P>
<P>(ix) Keep records and make such reports as HUD may require. 
</P>
<P>(x) Comply with all other applicable Federal requirements. 
</P>
<P>(e) <I>Work placement agencies eligibility and responsibilities</I>—(1) <I>Eligibility.</I> To be eligible to participate in HSI-WSP, the work placement agency must be an agency of a State or local government, an APO, an Indian tribe, or a private nonprofit organization involved in community building activities. A work placement site that is part of the institution of higher education (e.g., a child care center) can only be an eligible site if the services provided by that site are offered to people in the broader community outside the institution. 
</P>
<P>(2) <I>Responsibilities.</I> Work placement agencies must: 
</P>
<P>(i) Provide practical experience and training in the community building field to participating students through work placement assignments. 
</P>
<P>(ii) Consult with the institution of higher education to ensure that the student's work placement assignment provides the requisite experience and training to meet the required number of work hours specified in the student work placement agreement. 
</P>
<P>(iii) Provide a sufficient number and variety of work assignments to provide participating students with a wide choice of work experience. 
</P>
<P>(iv) Require each student to devote 12-20 hours per week during the regular school year, and 35-40 hours a week during the summer, to the work placement assignment. Work placement agencies may provide flexibility in the work period, if such a schedule is consistent with the requirements of the student's academic program. However, a participating student may receive a stipend payment only during the period when the student is placed with the work placement agency. 
</P>
<P>(v) Comply with all other applicable Federal requirements. 
</P>
<P>(vi) Maintain such records as HUD may require. 
</P>
<P>(f) <I>Student eligibility and responsibilities.</I> Students apply directly to recipients receiving grants under HSI-WSP. 
</P>
<P>(1) <I>Eligibility.</I> To be eligible for HSI-WSP, the student: 
</P>
<P>(i) Must satisfy all applicable guidelines established at the participating institution of higher education to measure financial need for academic scholarship or loan assistance. 
</P>
<P>(ii) Must be a full-time student enrolled in a community building associate degree program at the participating institution of higher education. The student must have attained no more than 50 percent of the credits required for his/her degree at the time the student first receives assistance under this program. 
</P>
<P>(iii) Must demonstrate an ability to maintain a satisfactory level of performance in community building academic program (i.e., maintain a B average, as defined by the institution) and in work placement assignments, and comply with the professional standards set by the recipient and the work placement agencies. 
</P>
<P>(iv) May not have previously participated in HSI-WSP. 
</P>
<P>(2) <I>Student responsibilities.</I> Participating students must: 
</P>
<P>(i) Enroll or be enrolled in a two-year community building associate degree program. A student's academic and work placement responsibilities include: Full-time enrollment in an approved academic program; maintenance of a satisfactory level of performance in the community building academic program and in work placement assignments; and compliance with the professional conduct standards set by the recipient and by the work placement agency. A satisfactory level of academic performance consists of maintaining a B average, as defined by the institution. A student's participation in HSI-WSP shall be terminated for failure to meet these responsibilities and standards. If the student's participation is terminated, the student is ineligible for further HSI-WSP assistance. 
</P>
<P>(ii) Devote 12-20 hours per week during the regular school year, and 35-40 hours a week during the summer, to the work placement assignment. Work placement agencies may provide flexibility in the work period, if such a schedule is consistent with the requirements of the student's academic program. However, a participating student may receive a stipend payment only during the period when the student is placed with the work placement agency. 
</P>
<P>(iii) Agree to make a good-faith effort to either: obtain employment in community building with a unit of State or local government, an APO, an Indian tribe, or a non-profit organization; or to transfer to a four-year institution of higher education to obtain a bachelor's degree in a community building academic discipline. However, if the student does not obtain such employment or transfer to a four-year institution, the student is not required to repay the assistance received. 
</P>
<P>(g) <I>Notice of funding availability.</I> HUD will solicit grant applications from eligible institutions of higher education by publishing a notice of funding availability in the <E T="04">Federal Register.</E> The notice will: 
</P>
<P>(1) Explain how application kits providing specific application requirements and guidance may be obtained; 
</P>
<P>(2) Specify the place for filing completed applications, and the date by which applications must be physically received at that location; 
</P>
<P>(3) State the amount of funding available under the notice, which may include funds recaptured from previously awarded grants; 
</P>
<P>(4) Provide other appropriate program information and guidance. 
</P>
<P>(h) <I>Agreements</I>—(1) <I>Grant agreement.</I> The responsibilities of the recipient under HSI-WSP will be incorporated in a grant agreement executed by HUD and the recipient. 
</P>
<P>(2) <I>Student agreement.</I> The recipient and each participating student must execute a written agreement incorporating their mutual responsibilities under HSI-WSP. The agreement must be executed before the student can be enrolled in the program. The Recipient shall terminate a student's participation in HSI-WSP for failure to meet the responsibilities and standards in the agreement. 
</P>
<P>(3) <I>Work placement assignment agreement.</I> The recipient, the student, and the work placement agency must execute a written agreement covering each work placement assignment. The agreement must address the responsibilities of each of the parties, the educational objectives, the nature of the supervision, the standards of evaluation, and the student's time commitments under the work placement assignment. 
</P>
<P>(i) <I>Grant administration</I>—(1) <I>Initial obligation of funds.</I> When HUD selects an application for funding, HUD will obligate funds to cover the amount of the approved grant. The term of the award will be for two calendar years, unless subsequently altered by HUD at its discretion for good cause. 
</P>
<P>(2) <I>Disbursement.</I> Recipients will receive grant payments by direct deposit on a reimbursement basis. If that is not possible, grant payments will be made by U.S. Treasury checks. 
</P>
<P>(3) <I>Deobligation.</I> HUD may deobligate amounts for grants if proposed activities are not begun or completed within a reasonable period of time after selection. 
</P>
<P>(j) <I>Other Federal requirements</I>—(1) <I>Applicability of part 570.</I> HSI-WSP shall be subject to the policies and procedures set forth in subparts A, K, and O of 24 CFR part 570, as applicable, except as modified or limited under the provisions of this Notice. The provisions of subparts C and J of part 570 shall not apply to HSI-WSP. 
</P>
<P>(2) <I>Uniform administrative requirements.</I> Recipients under HSI-WSP shall comply with the requirements and standards of 2 CFR part 200, “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.” Audits in accordance with 2 CFR part 200, subpart F, shall be conducted annually.
</P>
<CITA TYPE="N">[62 FR 17493, Apr. 9, 1997, as amended at 63 FR 9683, Feb. 25, 1998; 80 FR 75937, Dec. 7, 2015]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:3.1.1.3.3.6" TYPE="SUBPART">
<HEAD>Subpart F—Small Cities, Non-Entitlement CDBG Grants in Hawaii and Insular Areas Programs</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>62 FR 62914, Nov. 25, 1997, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 570.420" NODE="24:3.1.1.3.3.6.1.1" TYPE="SECTION">
<HEAD>§ 570.420   General.</HEAD>
<P>(a) <I>Administration of Non-entitlement CDBG funds in New York by HUD or Insular Areas</I>—(1) <I>Small cities.</I> The Act permits each state to elect to administer all aspects of the CDBG program annual fund allocation for the non-entitlement areas within its jurisdiction. All states except Hawaii have elected to administer the CDBG program for non-entitlement areas within their jurisdiction. This section is applicable only to active HUD-administered small cities grants in New York. The requirements for the non-entitlement CDBG grants in Hawaii are set forth in § 570.429 of this subpart. States that elected to administer the program after the close of Fiscal Year 1984 cannot return administration of the program to HUD. A decision by a state to discontinue administration of the program would result in the loss of CDBG funds for non-entitlement areas in that state and the reallocation of those funds to all states in the succeeding fiscal year.
</P>
<P>(2) <I>Insular areas.</I> Title V of Public Law 108-186 amended the Act to move the insular areas funding authorization from sections 107(a) and (b) to section 106(a). This revision identified a specific portion of the CDBG allocation for insular areas that is separate from the distribution for special purpose grants, as well as from the Entitlement and State formula distribution. The insular areas of Guam, the Northern Mariana Islands, the Virgin Islands, and American Samoa are permitted to administer all aspects of their Community Development Block Grant (CDBG) program under section 106 of the Act in accordance with their final statement as further described at § 570.440.
</P>
<P>(b) <I>Scope and applicability.</I> (1) This subpart describes the policies and procedures of the Small Cities program that apply to non-entitlement areas in states where HUD administers the CDBG program. HUD currently administers the Small Cities program in only two states—New York (for grants prior to FY 2000) and Hawaii (for non-entitlement CDBG grants in Hawaii). The Small Cities portion of this subpart addresses the requirements for New York Small Cities grants in §§ 570.421, 570.426, 570.427, and 570.431. Section 570.429 identifies special procedures applicable to Hawaii.
</P>
<P>(2) This subpart also describes the policies and procedures governing community development block grants to insular areas under section 106 of the Act. Sections 570.440 and 570.441 identify procedures applicable to the Insular Areas program under section 106 of the Act. Fund reservations for insular areas under section 107 of the Act shall remain governed by the policies and procedures described in section 107(a)(1)(A) of the Act and §§ 570.400 and 570.405 of this part.
</P>
<P>(3) The policies and procedures set forth in the following identified subparts of this part apply to the HUD-administered Small Cities and Insular Areas programs, except as modified or limited under the provisions thereof or this subpart:
</P>
<P>(i) Subpart A—General Provisions;
</P>
<P>(ii) Subpart C—Eligible Activities;
</P>
<P>(iii) Subpart J—Grant Administration;
</P>
<P>(iv) Subpart K—Other Program Requirements;
</P>
<P>(v) Subpart M—Loan Guarantees; and
</P>
<P>(vi) Subpart O—Performance Reviews.
</P>
<P>(c) <I>Abbreviated consolidated plan.</I> Applications for the HUD-administered Small Cities Program and the Insular Areas program under section 106 of the Act that contain housing activities must include a certification that the proposed housing activities are consistent with the applicant's consolidated plan as described at 24 CFR part 91.
</P>
<P>(d) <I>National and primary objectives.</I> (1) Each activity funded through the Small Cities program and the Insular Areas program under section 106 of the Act must meet one of the following national objectives as defined under the criteria in § 570.208:
</P>
<P>(i) Benefit low- and moderate-income families;
</P>
<P>(ii) Aid in the prevention or elimination of slums or blight; or
</P>
<P>(iii) Be an activity that the grantee certifies is designed to meet other community development needs having a particular urgency because existing conditions pose a serious and immediate threat to the health or welfare of the community and other financial resources are not available to meet such needs.
</P>
<P>(2) In addition to the objectives described in paragraph (e)(1) of this section, with respect to grants made through the Small Cities program, not less than 70 percent of the total of grant funds from each grant and Section 108 loan guarantee funds received under subpart M of this part within a fiscal year must be expended for activities which benefit low- and moderate-income persons under the criteria of § 570.208(a) or of § 570.208(d)(5) or (6). In the case of multiyear plans in New York State approved in response to NOFAs published prior to calendar year 1997, not less than 70 percent of the total funding for grants approved pursuant to a multiyear plan for a time period of up to three years must be expended for activities which benefit low- and moderate-income persons. Thus, 70 percent of the grant for year 1 of a multiyear plan approved in response to NOFAs published prior to calendar year 1997 must meet the 70 percent requirement, 70 percent of the combined grants from years 1 and 2 must meet the requirement, and 70 percent of the combined grants from years 1, 2, and 3 must meet the requirement. In determining the percentage of funds expended for such activity, the provisions of § 570.200(a)(3)(i), (iii), (iv), and (v) shall apply.
</P>
<P>(3) In addition to the objectives described in paragraph (e)(1) of this section, grants made through the Insular Areas program shall also comply with the primary objective of 70 percent benefit to low- and moderate-income persons. Insular area recipients must meet this requirement for each separate grant under section 107 of the Act. For grants made under section 106 of the Act, insular area recipients must ensure that over a period of time specified in their certifications not to exceed three years, not less than 70 percent of the aggregate of CDBG fund expenditures shall be for low- and moderate-income activities meeting the criteria under § 570.208(a) or under § 570.208(d)(5) or (6). See also § 570.200(a)(3) for further discussion of the primary objective.
</P>
<P>(e) <I>Allocation of funds</I>—The allocation of appropriated funds for insular areas under section 106 of the Act shall be governed by the policies and procedures described in section 106(a)(2) of the Act and §§ 570.440, 570.441, and 570.442 of this subpart. The annual appropriations described in this section shall be distributed to insular areas on the basis of the ratio of the population of each insular area to the population of all insular areas.
</P>
<CITA TYPE="N">[69 FR 32779, June 10, 2004, as amended at 72 FR 46370, Aug. 17, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 570.421" NODE="24:3.1.1.3.3.6.1.2" TYPE="SECTION">
<HEAD>§ 570.421   New York Small Cities Program design.</HEAD>
<P>(a) <I>Selection system</I>—(1) <I>Competitive applications.</I> Each competitive application will be rated and scored against at least the following factors:
</P>
<P>(i) Need-absolute number of persons in poverty as further explained in the NOFA;
</P>
<P>(ii) Need-percent of persons in poverty as further explained in the NOFA;
</P>
<P>(iii) Program Impact; and
</P>
<P>(iv) Fair Housing and Equal Opportunity, which may include the applicant's Section 3 plan and implementation efforts with respect to actions to affirmatively further fair housing. The NOFA described in paragraph (b) of this section will contain a more detailed description of these factors, and the relative weight that each factor will be given.
</P>
<P>(2) In addition HUD reserves the right to establish minimal thresholds for selection factors and otherwise select grants in accordance with § 570.425 and the applicable NOFA.
</P>
<P>(3) <I>Imminent threats to public health and safety.</I> The criteria for these grants are described in § 570.424.
</P>
<P>(4) <I>Repayment of Section 108 loans.</I> The criteria for these grants are described in § 570.432.
</P>
<P>(5) <I>Economic development grants.</I> HUD intends to use the Section 108 loan guarantee program to the maximum extent feasible to fund economic development projects in the nonentitlement areas of New York. In the event that there are not enough Section 108 loan guarantee funds available to fund viable economic development projects, if a project needs a grant in addition to a loan guarantee to make it viable, or if the project does not meet the requirements of the Section 108 program but is eligible for a grant under this subpart, HUD may fund Economic Development applications as they are determined to be fundable in a specific amount by HUD up to the sum set aside for economic development projects in a notice of funding availability, notwithstanding paragraph (g) of this section. HUD also has the option in a NOFA of funding economic development activities on a competitive basis, as a competitive application as described in paragraph (a)(1) of this section. In order for an applicant to receive Small Cities grant funds on a noncompetitive basis, the field office must determine that the economic development project will have a substantial impact on the needs identified by the applicant.
</P>
<P>(b) <I>Notice of funding availability.</I> HUD will issue one or more Notice(s) of Funding Availability (NOFA) each fiscal year which will indicate the amount of funds available, the annual grant limits per grantee, type of grants available, the application requirements, and the rating factors that will be used for those grants which are competitive. A NOFA may set forth, subject to the requirements of this subpart, additional selection criteria for all grants.
</P>
<P>(c) <I>Eligible applicants.</I> (1) Eligible applicants in New York are units of general local government, excluding: Metropolitan cities, urban counties, units of general local government which are participating in urban counties or metropolitan cities, even if only part of the participating unit of government is located in the urban county or metropolitan city. Indian tribes are also ineligible for assistance under this subpart. An application may be submitted individually or jointly by eligible applicants.
</P>
<P>(2) Counties, cities, towns, and villages may apply and receive funding for separate projects to be done in the same jurisdiction. Only one grant will be made under each funding round for the same type of project to be located within the jurisdiction of a unit of general local government (e.g., both the county and village cannot receive funding for a sewer system to be located in the same village, but the county can receive funding for a sewer system that is located in the same village as a rehabilitation project for which the village receives funding). The NOFA will contain additional information on applicant eligibility.
</P>
<P>(3) Counties may apply on behalf of units of general local government located within their jurisdiction when the unit of general local government has authorized the county to apply. At the time that the county submits its application for funding, it must submit a resolution by the governing body of the unit of local government that authorizes the county to submit an application on behalf of the unit of general local government. The county will be considered the grantee and will be responsible for executing all grant documents. The county is responsible for ensuring compliance with all laws, regulations, and Executive Orders applicable to the CDBG Program. HUD will deal exclusively with the county with respect to issues of program administration and performance, including remedial actions. The unit of general local government will be considered the grantee for the purpose of determining grant limits. The unit of general local government's statistics will be used for purposes of the selection factors referred to in § 570.421(a).
</P>
<P>(d) <I>Public service activities cap.</I> Public service activities may be funded up to a maximum of fifteen (15) percent of a State's nonentitlement allocation for any fiscal year. HUD may award a grant to a unit of general local government for public service activities with up to 100 percent of the funds intended for public service activities. HUD will apply the 15 percent statewide cap to public service activities by funding public service activities in the highest rated applications in each NOFA until the cap is reached.
</P>
<P>(e) <I>Activities outside an applicant's boundaries.</I> An applicant may conduct eligible CDBG activities outside its boundaries. These activities must be demonstrated to be appropriate to meeting the applicant's needs and objectives, and must be consistent with State and local law. This provision includes using funds provided under this subpart in a metropolitan city or an urban county.
</P>
<P>(f) <I>Multiyear plans.</I> HUD will not make any new multiyear commitments for NOFAs published in calendar year 1997 or later. HUD will continue to honor the terms of the multiyear plans that were approved under the provisions of NOFAs published prior to calendar year 1997.
</P>
<P>(g) <I>Maximum grant amount.</I> The maximum grant amount that will be awarded to a single unit of general local government in response to the annual Small Cities NOFA published in calendar year 1997 or later is $400,000, except that counties may apply for up to $600,000 in HUD-administered Small Cities funds. HUD may specify lower grant limits in the NOFA, which may include different limits for different types of grants available or different types of applicants. This paragraph (g) does not apply to multiyear plans that were approved under the provisions of NOFAs published prior to calendar year 1997, nor does it apply to grants awarded in connection with paragraphs (a)(3) through (a)(5) of this section. The maximum limits in this paragraph (g) apply to grants for economic development projects awarded under NOFAs in which there is no set-aside of funds for such projects.


</P>
</DIV8>


<DIV8 N="§§ 570.422-425" NODE="24:3.1.1.3.3.6.1.3" TYPE="SECTION">
<HEAD>§§ 570.422-425   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 570.426" NODE="24:3.1.1.3.3.6.1.4" TYPE="SECTION">
<HEAD>§ 570.426   Program income.</HEAD>
<P>(a) The provisions of § 570.504(b) apply to all program income generated by a specific grant and received prior to grant closeout.
</P>
<P>(b) If the unit of general local government has another ongoing CDBG grant at the time of closeout, the program income will be considered to be program income of the ongoing grant. The grantee can choose which grant to credit the program income to if it has multiple open CDBG grants.
</P>
<P>(c) If the unit of general local government has no open ongoing CDBG grant at the time of closeout, program income of the unit of general local government or its subrecipients which amounts to less than $25,000 per year will not be considered to be program income unless needed to repay a Section 108 guaranteed loan. When more than $25,000 of program income is generated from one or more closed out grants in a year after closeout, the entire amount of the program income is subject to the requirements of this part. This will be a subject of the closeout agreement described in § 570.509(c).


</P>
</DIV8>


<DIV8 N="§ 570.427" NODE="24:3.1.1.3.3.6.1.5" TYPE="SECTION">
<HEAD>§ 570.427   Program amendments.</HEAD>
<P>(a) <I>HUD approval of certain program amendments.</I> Grantees shall request prior HUD approval for all program amendments involving new activities or alteration of existing activities that will significantly change the scope, location, or objectives of the approved activities or beneficiaries. Approval is subject to the amended activities meeting the requirements of this part and being able to be completed promptly.
</P>
<P>(b) <I>Documentation of program amendments.</I> Any program amendments that do not require HUD approval must be fully documented in the grantee's records.
</P>
<P>(c) <I>Citizen participation requirements.</I> Whenever an amendment requires HUD approval, the requirements for citizen participation in § 570.431 must be met.
</P>
<CITA TYPE="N">[62 FR 62914, Nov. 25, 1997, as amended at 72 FR 46370, Aug. 17, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 570.428" NODE="24:3.1.1.3.3.6.1.6" TYPE="SECTION">
<HEAD>§ 570.428   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 570.429" NODE="24:3.1.1.3.3.6.1.7" TYPE="SECTION">
<HEAD>§ 570.429   Hawaii general and grant requirements.</HEAD>
<P>(a) <I>General.</I> This section applies to non-entitlement CDBG grants in Hawaii. The non-entitlement counties in the State of Hawaii will be treated as entitlement grantees except for the calculation of allocations, and the source of their funding, which will be from section 106(d) of the Act.
</P>
<P>(b) <I>Scope and applicability.</I> Except as modified or limited under the provisions thereof or this subpart, the policies and procedures outlined in subparts A, C, D, J, K, and O of this part apply to non-entitlement CDBG grants in Hawaii.
</P>
<P>(c) <I>Grant amounts.</I> (1) For each eligible unit of general local government, a formula grant amount will be determined which bears the same ratio to the total amount available for the nonentitlement area of the State as the weighted average of the ratios between:
</P>
<P>(i) The population of that eligible unit of general local government and the population of all eligible units of general local government in the nonentitlement areas of the State;
</P>
<P>(ii) The extent of poverty in that eligible unit of general local government and the extent of poverty in all the eligible units of general local government in the nonentitlement areas of the State; and
</P>
<P>(iii) The extent of housing overcrowding in that eligible unit of general local government and the extent of housing overcrowding in all the eligible units of general local government in the nonentitlement areas of the State.
</P>
<P>(2) In determining the average of the ratios under this paragraph (c), the ratio involving the extent of poverty shall be counted twice and each of the other ratios shall be counted once. (0.25 + 0.50 + 0.25 = 1.00).
</P>
<P>(d) <I>Reallocation.</I> (1) Any amounts that become available as a result of any reductions under subpart O of this part shall be reallocated in the same or future fiscal year to any remaining eligible applicants on a pro rata basis.
</P>
<P>(2) Any formula grant amounts reserved for an applicant that chooses not to submit an application shall be reallocated to any remaining eligible applicants on a pro rata basis.
</P>
<P>(3) No amounts shall be reallocated under paragraph (d) of this section in any fiscal year to any applicant whose grant amount was reduced under subpart O of this part.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0060)
</APPRO>
<CITA TYPE="N">[62 FR 62914, Nov. 25, 1997, as amended at 72 FR 46371, Aug. 17, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 570.431" NODE="24:3.1.1.3.3.6.1.8" TYPE="SECTION">
<HEAD>§ 570.431   Citizen participation.</HEAD>
<P>(a) <I>General.</I> An applicant that is located in a nonentitlement area of a State that has not elected to distribute funds shall comply with the citizen participation requirements described in this section, including requirements for the preparation of the proposed application and the final application. The requirements for citizen participation do not restrict the responsibility or authority of the applicant for the development and execution of its community development program.
</P>
<P>(b) <I>Citizen participation plan.</I> The applicant must develop and follow a detailed citizen participation plan and must make the plan public. The plan must be completed and available before the application for assistance is submitted to HUD, and the applicant must certify that it is following the plan. The plan must set forth the applicant's policies and procedures for:
</P>
<P>(1) Giving citizens timely notice of local meetings and reasonable and timely access to local meetings, information, and records relating to the grantee's proposed and actual use of CDBG funds including, but not limited to:
</P>
<P>(i) The amount of CDBG funds expected to be made available for the coming year, including the grant and anticipated program income;
</P>
<P>(ii) The range of activities that may be undertaken with those funds;
</P>
<P>(iii) The estimated amount of those funds proposed to be used for activities that will benefit low- and moderate-income persons;
</P>
<P>(iv) The proposed CDBG activities likely to result in displacement and the applicant's plans, consistent with the policies developed under § 570.606(b), for minimizing displacement of persons as a result of its proposed activities; and
</P>
<P>(v) The types and levels of assistance the applicant plans to make available (or to require others to make available) to persons displaced by CDBG-funded activities, even if the applicant expects no displacement to occur;
</P>
<P>(2) Providing technical assistance to groups representative of persons of low- and moderate-income that request assistance in developing proposals. The level and type of assistance to be provided is at the discretion of the applicant. The assistance need not include the provision of funds to the groups;
</P>
<P>(3) Holding a minimum of two public hearings, for the purpose of obtaining citizens' views and formulating or responding to proposals and questions. Each public hearing must be conducted at a different stage of the CDBG program. Together, the hearings must address community development and housing needs, development of proposed activities and review of program performance. There must be reasonable notice of the hearings and the hearings must be held at times and accessible locations convenient to potential or actual beneficiaries, with reasonable accommodations including material in accessible formats for persons with disabilities. The applicant must specify in its plan how it will meet the requirement for hearings at times and locations convenient to potential or actual beneficiaries;
</P>
<P>(4) Meeting the needs of non-English speaking residents in the case of public hearings where a significant number of non-English speaking residents can reasonably be expected to participate;
</P>
<P>(5) Responding to citizen complaints and grievances, including the procedures that citizens must follow when submitting complaints and grievances. The applicant's policies and procedures must provide for timely written answers to written complaints and grievances within 15 working days of the receipt of the complaint, where practicable; and
</P>
<P>(6) Encouraging citizen participation, particularly by low- and moderate-income persons who reside in slum or blighted areas, and in other areas in which CDBG funds are proposed to be used.
</P>
<P>(c) <I>Publication of proposed application.</I> (1) The applicant shall publish a proposed application consisting of the proposed community development activities and community development objectives in order to afford affected citizens an opportunity to:
</P>
<P>(i) Examine the application's contents to determine the degree to which they may be affected;
</P>
<P>(ii) Submit comments on the proposed application; and
</P>
<P>(iii) Submit comments on the performance of the applicant.
</P>
<P>(2) The requirement for publishing in paragraph (c)(1) of this section may be met by publishing a summary of the proposed application in one or more newspapers of general circulation, and by making copies of the proposed application available at libraries, government offices, and public places. The summary must describe the contents and purpose of the proposed application, and must include a list of the locations where copies of the entire proposed application may be examined.
</P>
<P>(d) <I>Preparation of a final application.</I> An applicant must prepare a final application. In the preparation of the final application, the applicant shall consider comments and views received related to the proposed application and may, if appropriate, modify the final application. The final application shall be made available to the public and shall include the community development objectives and projected use of funds, and the community development activities.
</P>
<P>(e) <I>New York grantee amendments.</I> To assure citizen participation on program amendments to final applications that require HUD approval under § 570.427, the grantee shall:
</P>
<P>(1) Furnish citizens information concerning the amendment;
</P>
<P>(2) Hold one or more public hearings to obtain the views of citizens on the proposed amendment;
</P>
<P>(3) Develop and publish the proposed amendment in such a manner as to afford affected citizens an opportunity to examine the contents, and to submit comments on the proposed amendment;
</P>
<P>(4) Consider any comments and views expressed by citizens on the proposed amendment and, if the grantee finds it appropriate, modify the final amendment accordingly; and
</P>
<P>(5) Make the final amendment to the community development program available to the public before its submission to HUD.


</P>
</DIV8>


<DIV8 N="§ 570.440" NODE="24:3.1.1.3.3.6.1.9" TYPE="SECTION">
<HEAD>§ 570.440   Application requirements for insular area grants funded under section 106.</HEAD>
<P>(a) <I>Applicability.</I> The requirements of this section apply to insular grants funded under section 106 of the Act. An insular area jurisdiction may choose to prepare program statements following either:
</P>
<P>(1) The abbreviated consolidated plan procedures described in this subpart and in 24 CFR 91.235; or
</P>
<P>(2) The complete consolidated plan procedures applicable to local governments, discussed at 24 CFR 91.200 through 91.230.
</P>
<P>(b) <I>Proposed statement.</I> An insular area jurisdiction shall prepare and publish a proposed statement and comply with the citizen participation requirements described in § 570.441, if it submits an abbreviated consolidated plan under 24 CFR 91.235. The jurisdiction shall follow the citizen participation requirements of 24 CFR 91.105 and 91.100 (with the exception of § 91.100(a)(4)), if it submits a complete consolidated plan.
</P>
<P>(c) <I>Final statement.</I> The insular area jurisdiction shall submit to HUD a final statement describing its community development objectives and activities. The statement also must include a priority nonhousing community development plan in accordance with 24 CFR 91.235. This final statement shall be submitted, together with the required certifications, to the appropriate field office in a form prescribed by HUD.
</P>
<P>(d) <I>Submission requirement.</I> Each insular area jurisdiction shall submit its final statement to HUD no later than 45 days before the start of its program year. Each jurisdiction may choose the start date for the annual period of its program year that most closely fits its own needs. HUD may grant an extension of the submission deadline for good cause.
</P>
<P>(e) <I>Certifications.</I> The insular area jurisdiction's final statement must be accompanied by appropriate certifications as further described under 24 CFR 91.225. The jurisdiction should submit all general certifications, as well as all program certifications for each program from which it receives funding, if it submits a complete consolidated plan. For insular area jurisdictions receiving CDBG funds under an abbreviated consolidated plan, these certifications shall include at a minimum:
</P>
<P>(1) The following general certifications described at § 91.225(a) of this title: Affirmatively furthering fair housing; anti-displacement and relocation plan; drug-free workplace; anti-lobbying; authority of jurisdiction; consistency with plan; acquisition and relocation; and Section 3.
</P>
<P>(2) The following CDBG certifications described at § 91.225(b) of this title: Citizen participation; community development plan; following a plan; use of funds; excessive force; compliance with anti-discrimination laws; compliance with lead-based paint procedures; and compliance with laws.
</P>
<P>(f) <I>HUD action on final statement.</I> Following the review of the statement, HUD will promptly notify each jurisdiction of the action taken with regard to its statement. HUD will approve a grant if the jurisdiction's submissions have been made and approved in accordance with 24 CFR part 91, and if the certifications required in such submissions are satisfactory to HUD. The certifications will be satisfactory to HUD for this purpose, unless HUD determines pursuant to subpart O of this part that the jurisdiction has not complied with the requirements of this part, has failed to carry out its consolidated plan (or abbreviated consolidated plan) as provided under § 570.903, or has determined that there is evidence, not directly involving the jurisdiction's past performance under this program, that tends to challenge in a substantial manner the jurisdiction's certification of future performance. If HUD makes any such determination, however, further assurances may be required to be submitted by the jurisdiction as HUD may deem warranted or necessary to find the jurisdiction's certification satisfactory.
</P>
<P>(g) <I>Reimbursement for pre-award costs.</I> Insular area jurisdictions may request reimbursement for pre-award costs in accordance with § 570.200(h).
</P>
<P>(h) <I>Float funding.</I> An insular area jurisdiction may use undisbursed funds in the line of credit and its CDBG program account that are budgeted in final statements or action plans for one or more activities that do not need the funds immediately, subject to the limitations described in § 570.301(b).
</P>
<P>(i) <I>Program amendments.</I> (1) The insular area jurisdiction's citizen participation plan (<I>see</I> § 570.441) must specify the criteria the jurisdiction will use for determining what changes in the jurisdiction's planned or actual activities will constitute a substantial amendment to its final statement. It must include changes in the use of CDBG funds from one eligible activity to another among the changes that qualify as a substantial amendment.
</P>
<P>(2) The citizen participation plan must provide citizens with reasonable notice and an opportunity to comment on substantial amendments. The citizen participation plan must state how reasonable notice and an opportunity to comment will be given, as well as provide a period of not less than 30 days to receive comments on the substantial amendment before the amendment is implemented.
</P>
<P>(3) The citizen participation plan shall require the jurisdiction to consider comments or views of citizens received in writing, or orally at public hearings, if any, in preparing the substantial amendment of its statement. A summary of comments or views not accepted and the reasons for non-acceptance shall be attached to the substantial amendment.
</P>
<P>(4) Any program amendment, regardless of whether it is considered to be substantial, must be fully documented in the jurisdiction's records.
</P>
<P>(j) <I>Performance reports.</I> Each insular area jurisdiction must submit annual performance reports in accordance with 24 CFR 91.520.
</P>
<CITA TYPE="N">[69 FR 32780, June 10, 2004]


</CITA>
</DIV8>


<DIV8 N="§ 570.441" NODE="24:3.1.1.3.3.6.1.10" TYPE="SECTION">
<HEAD>§ 570.441   Citizen participation—insular areas.</HEAD>
<P>(a) <I>General.</I> An insular area jurisdiction submitting an abbreviated consolidated plan under 24 CFR 91.235 shall comply with the citizen participation requirements described in this section. An insular area jurisdiction submitting a complete consolidated plan in accordance with 24 CFR 91.200 through 91.230 shall follow the citizen participation requirements of § 91.100 and § 91.105, except for § 91.100(a)(4). For funding under section 106 of the Act, these requirements are applicable to all aspects of the Insular Areas program, including the preparation of the proposed statement and final statements as described in § 570.440. The requirements for citizen participation do not restrict the responsibility or authority of the jurisdiction for the development and execution of its community development program.


</P>
<P>(b) <I>Citizen participation plan.</I> The insular area jurisdiction must develop and follow a detailed citizen participation plan and must make the plan public. The plan must be completed and available before the statement for assistance is submitted to HUD, and the jurisdiction must certify that it is following the plan. The plan must set forth the jurisdiction's policies and procedures for:
</P>
<P>(1) Giving citizens timely notice of local meetings and reasonable and timely access to local meetings consistent with accessibility and reasonable accommodation requirements in accordance with section 504 of the Rehabilitation Act of 1973 and the regulations at 24 CFR part 8, and the Americans with Disabilities Act and the regulations at 28 CFR parts 35 and 36, as applicable, as well as information and records relating to the grantee's proposed and actual use of CDBG funds including, but not limited to:
</P>
<P>(i) The amount of CDBG funds expected to be made available for the coming year, including the grant and anticipated program income;
</P>
<P>(ii) The range of activities that may be undertaken with those funds;
</P>
<P>(iii) The estimated amount of those funds proposed to be used for activities that will benefit low- and moderate-income persons;
</P>
<P>(iv) The proposed CDBG activities likely to result in displacement and the jurisdiction's plans, consistent with the policies developed under § 570.606(b), for minimizing displacement of persons as a result of its proposed activities; and
</P>
<P>(v) The types and levels of assistance the jurisdiction plans to make available (or to require others to make available) to persons displaced by CDBG-funded activities, even if the jurisdiction expects no displacement to occur;


</P>
<P>(2) Providing technical assistance to groups that are representative of persons of low- and moderate-income that request assistance in developing proposals. The level and type of assistance to be provided is at the discretion of the jurisdiction. The assistance need not include the provision of funds to the groups;
</P>
<P>(3) Holding a minimum of two public hearings for the purpose of obtaining residents' views and formulating or responding to proposals and questions. Each public hearing must be conducted at a different stage of the CDBG program year. Together, the hearings must address, community development and housing needs, development of proposed activities, and a review of program performance. There must be reasonable notice of the hearings, and the hearings must be held at times and accessible locations convenient to potential or actual beneficiaries, with reasonable accommodations, including materials in accessible formats, for persons with disabilities. The jurisdiction must specify in its citizen participation plan how it will meet the requirement for hearings at times and accessible locations convenient to potential or actual beneficiaries;


</P>
<P>(4) Assessing its language needs, identifying any need for translation of notices and other vital documents and, in the case of public hearings, meeting the needs of non-English speaking residents where a significant number of non-English speaking residents can reasonably be expected to participate. At a minimum, the citizen participation plan shall require the jurisdiction to make reasonable efforts to provide language assistance to ensure meaningful access to participation by non-English speaking persons;
</P>
<P>(5) Responding to citizen complaints and grievances, including the procedures that citizens must follow when submitting complaints and grievances. The jurisdiction's policies and procedures must provide for timely written answers to written complaints and grievances within 15 working days after the receipt of the complaint, where practicable; and
</P>
<P>(6) Encouraging citizen participation, particularly by low- and moderate-income persons who reside in areas in which CDBG funds are proposed to be used.
</P>
<P>(c) <I>Publication of proposed statement.</I> (1) The insular area jurisdiction shall publish a proposed statement consisting of the proposed community development activities and community development objectives (as applicable) in order to afford affected residents an opportunity to:
</P>
<P>(i) Examine the document's contents to determine the degree to which they may be affected;
</P>
<P>(ii) Submit comments on the proposed document; and
</P>
<P>(iii) Submit comments on the performance of the jurisdiction.
</P>
<P>(2) The requirement for publishing in paragraph (c)(1) of this section may be met by publishing a summary of the proposed document in one or more newspapers of general circulation and by making copies of the proposed document available on the Internet, on the grantee's official government Web site, and as well at libraries, government offices, and public places. The summary must describe the contents and purpose of the proposed document and must include a list of the locations where copies of the entire proposed document may be examined.
</P>
<P>(d) <I>Preparation of the final statement.</I> An insular area jurisdiction must prepare a final statement. In the preparation of the final statement, the jurisdiction shall consider comments and views received relating to the proposed document and may, if appropriate, modify the final document. The final statement shall be made available to the public. The final statement shall include the community development objectives, projected use of funds, and the community development activities.


</P>
<P>(e) <I>Program amendments.</I> To assure citizen participation on program amendments to final statements, the insular area grantee shall:
</P>
<P>(1) Furnish its residents with information concerning the amendment to the consolidated plan;
</P>
<P>(2) Hold one or more public hearings to obtain the views of residents on the proposed amendment to the consolidated plan;
</P>
<P>(3) Develop and publish the proposed amendment to the consolidated plan in such a manner as to afford affected residents an opportunity to examine the contents, and to submit comments on the proposed amendment to the consolidated plan;
</P>
<P>(4) Consider any comments and views expressed by residents on the proposed amendment to the consolidated plan, and, if the grantee finds it appropriate, make modifications accordingly; and
</P>
<P>(5) Make the final amendment to the community development program available to the public before its submission to HUD.


</P>
<P>(f) <I>Performance reports.</I> (1) The citizen participation plan must provide citizens with reasonable notice and an opportunity to comment on performance reports. The citizen participation plan must state how reasonable notice and an opportunity to comment will be given. The citizen participation plan must provide a period of not less than 15 days to receive comments on the performance report before it is to be submitted to HUD.
</P>
<P>(2) The citizen participation plan shall require the jurisdiction to consider comments or views of citizens received in writing or orally at public hearings in preparing the performance report. A summary of these comments or views shall be attached to the performance report.
</P>
<P>(g) <I>Application for loan guarantees.</I> Insular area jurisdictions intending to apply for the Section 108 Loan Guarantee program must ensure that they follow the applicable presubmission and citizen participation requirements of § 570.704.
</P>
<CITA TYPE="N">[69 FR 32780, June 10, 2004, as amended at 80 FR 42366, July 16, 2015; 85 FR 47910, Aug. 7, 2020] 


</CITA>
</DIV8>


<DIV8 N="§ 570.442" NODE="24:3.1.1.3.3.6.1.11" TYPE="SECTION">
<HEAD>§ 570.442   Reallocations-Insular Areas.</HEAD>
<P>(a) Any Insular Area funds that become available as a result of reductions under subpart O of this part, shall be reallocated in the same or future fiscal year to any remaining eligible Insular Area grantees pro rata according to population.
</P>
<P>(b) Any Insular Area grant funds for a fiscal year reserved for an applicant that chooses not to submit a final statement in accordance with § 570.440 to receive such funds, shall be reallocated in the same or future fiscal year to any remaining eligible Insular Area grantees pro rata according to population.
</P>
<P>(c) No amounts shall be reallocated under this section in any fiscal year to any applicant whose grant amount in such fiscal year was reduced under subpart O of this part or who did not submit a final statement in accordance with § 570.440 for that fiscal year.
</P>
<P>(d) Insular Area grantees receiving additional funds under this section will be evaluated for timeliness under § 570.902 based upon the original grant amount plus the additional funds received. Accordingly, references in § 570.902 to an Insular Area's grant amount for its current program year include such additional funds, and references to unexpended or undisbursed funds include such additional funds.
</P>
<CITA TYPE="N">[72 FR 12536, Mar. 15, 2007]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:3.1.1.3.3.7" TYPE="SUBPART">
<HEAD>Subpart G—Urban Development Action Grants</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>47 FR 7983, Feb. 23, 1982, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 570.450" NODE="24:3.1.1.3.3.7.1.1" TYPE="SECTION">
<HEAD>§ 570.450   Purpose.</HEAD>
<P>The purpose of urban development action grants is to assist cities and urban counties that are experiencing severe economic distress to help stimulate economic development activity needed to aid in economic recovery. This subpart G contains those regulations that are essential for the continued operation of this grant program. 
</P>
<CITA TYPE="N">[61 FR 11476, Mar. 20, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 570.456" NODE="24:3.1.1.3.3.7.1.2" TYPE="SECTION">
<HEAD>§ 570.456   Ineligible activities and limitations on eligible activities.</HEAD>
<P>(a) Large cities and urban counties may not use assistance under this subpart for planning the project or developing the application. However, they may use entitlement community development block grant funds for this purpose, provided that the UDAG project meets the eligibility test of this part. Any small city which submits a project application which is selected for preliminary approval and for which legally binding grant agreement and for which a release of funds pursuant to 24 CFR part 58 has been issued may devote up to three (3) percent of the approved amount of its action grant to defray its actual costs in planning the project and preparing its application. 
</P>
<P>(b) Assistance under this subpart may not be used for public services as described in § 570.201(e).
</P>
<P>(c)(1) No assistance may be provided under this subpart for speculative projects intended to facilitate the relocation of industrial or commercial plants or facilities from one area to another. The provisions of this paragraph (c)(1) shall not apply to a relocation of any such plant or facility within a metropolitan area.
</P>
<P>(i) HUD will presume that a proposed project which includes speculative commercial or industrial space is intended to facilitate the relocation of a plant or facility from one area to another, if it is demonstrated to HUD's satisfaction that:
</P>
<P>(A) The proposed project is reasonably proximate (i.e., within 50 miles) to an area from which there has been a significant current pattern of movement, to areas reasonably proximate, of jobs of the category for which such space is appropriate; and
</P>
<P>(B) There is a likelihood of continuation of the pattern, based on measurable comparisons between the area from which the movement has been occurring and the area of the proposed project in terms of tax rates, energy costs, and similar relevant factors.
</P>
<P>(ii) The restrictions established in this paragraph (c)(1) shall not apply if the Secretary determines that the relocation does not significantly and adversely affect the employment or economic base of the area from which the industrial or commercial plant or facility is to be relocated. However, the Secretary will not be required to make a determination whether there is a significant and adverse effect. If such a determination is undertaken, the Secretary will presume that there is a significant and adverse effect where the significant pattern of job movement and the likelihood of continuation of such a pattern has been from a distressed community.
</P>
<P>(iii) The presumptions established in accordance with this paragraph (c)(1) are rebuttable by the applicant. However, the burden of overcoming the presumptions will be on the applicant.
</P>
<P>(iv) The presumptions established in this paragraph (c)(1) will not apply if the speculative space contained in a commercial or industrial plant or facility included in a project constitutes a lesser percentage of the total space contained in that plant or facility than the threshold amounts specified below:
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Size of plant or facility 
</TH><TH class="gpotbl_colhed" scope="col">Amount of speculative space
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">0 to 50,000 sq. ft.</TD><TD align="left" class="gpotbl_cell">10 percent.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">50,001 to 250,000 sq. ft</TD><TD align="left" class="gpotbl_cell">5,000 sq. ft. or 8 percent, whichever is greater.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">250,001 to 1,000,000 sq. ft</TD><TD align="left" class="gpotbl_cell">20,000 sq. ft. or 5 percent, whichever is greater.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1,000,001 or more sq. ft</TD><TD align="left" class="gpotbl_cell">50,000 sq. ft. or 3 percent, whichever is greater.</TD></TR></TABLE></DIV></DIV>
<P>(2) <I>Projects with identified intended occupants.</I> No assistance may be provided or utilized under this subpart for any project with identified intended occupants that is likely to facilitate: 
</P>
<P>(i) A relocation of any operation of an industrial or commercial plant or facility or other business establishment from any UDAG eligible jurisdiction; or 
</P>
<P>(ii) An expansion of any operation of an industrial or commercial plant or facility or other business establishment that results in a substantial reduction of any such operation in any UDAG eligible jurisdiction. The provisions of this paragraph (c)(2) shall not apply to a relocation of an operation or to an expansion of an operation within a metropolitan area. The provisions of this paragraph (c)(2) shall apply only to projects that do not have speculative space, or to projects that include both identified intended occupant space and speculative space. 
</P>
<P>(iii) <I>Significant and adverse effect.</I> The restrictions established in this paragraph (c)(2) shall not apply if the Secretary determines that the relocation or expansion does not significantly and adversely affect the employment or economic base of the UDAG eligible jurisdiction from which the relocation or expansion occurs. However, the Secretary will not be required to make a determination whether there is a significant and adverse effect. If such a determination is undertaken, among the factors which the Secretary will consider are: 
</P>
<P>(A) Whether it is reasonable to anticipate that there will be a significant net loss of jobs in the plant or facility being abandoned; and 
</P>
<P>(B) Whether an equivalent productive use will be made of the plant or facility being abandoned by the relocating or expanding operation, thus creating no deterioration of economic base. 
</P>
<P>(3) Within 90 days following notice of intent to withhold, deny or cancel assistance under paragraph (c) (1) or (2) of this section, the applicant may appeal in writing to the Secretary the withholding, denial or cancellation of assistance. The applicant will be notified and given an opportunity within a prescribed time for an informal consultation regarding the action. 
</P>
<P>(4) <I>Assistance for individuals adversely affected by prohibited relocations.</I> (i) Any amount withdrawn by, recaptured by, or paid to the Secretary because of a violation (or a settlement of an alleged violation) of this section (or any regulation issued or contractual provision entered into to carry out this section) by a project with identified intended occupants will be made available by the Secretary as a grant to the UDAG eligible jurisdiction from which the operation of an industrial or commercial plant or facility or other business establishment was relocated, or in which the operation was reduced. 
</P>
<P>(ii)(A) Any amount made available under this paragraph shall be used by the grantee to assist individuals who were employed by the operation involved before the relocation or reduction and whose employment or terms of employment were adversely affected by the relocation or reduction. The assistance shall include job training, job retraining, and job placement. 
</P>
<P>(B) If any amount made available to a grantee under this paragraph (c)(4) is more than is required to provide the assistance described in paragraph (c)(4)(ii)(A) of this section, the grantee shall use the excess amount to carry out community development activities eligible under section 105(a) of the Housing and Community Development Act of 1974. 
</P>
<P>(iii)(A) The provisions of this paragraph (c)(4) shall be applicable to any amount withdrawn by, recaptured by, or paid to the Secretary under this section, including any amount withdrawn, recaptured, or paid before the effective date of this paragraph.
</P>
<P>(B) Grants may be made under this paragraph (c)(4) only to the extent of amounts provided in appropriation Acts. 
</P>
<P>(5) For purposes of this section, the following definitions apply: 
</P>
<P>(i) “Operation” means any plant, equipment, facility, substantial number of positions, substantial employment opportunities, production capacity, or product line. 
</P>
<P>(ii) “Metropolitan area” means a metropolitan area as defined in § 570.3 and which consists of either a freestanding metropolitan area or a primary metropolitan statistical area where both primary and consolidated areas exist. 
</P>
<P>(iii) “Likely” means probably or reasonably to be expected, as determined by firm evidence such as resolutions of a corporation to close a plant or facility, notifications of closure to collective bargaining units, correspondence and notifications of corporate officials relative to a closure, and supportive evidence, such as newspaper articles and notices to employees regarding closure of a plant or facility. Consultant studies and marketing studies may be submitted as supportive evidence, but by themselves are not firm evidence. 
</P>
<P>(iv) “UDAG eligible jurisdiction” means a distressed community, a Pocket of Poverty, a Pocket of Poverty community, or an identifiable community described in section 119(p) of the Housing and Community Development Act of 1974. 
</P>
<P>(6) Notwithstanding any other provision of this subpart, nothing in this subpart may be construed to permit an inference or conclusion that the policy of the urban development action grant program is to facilitate the relocation of businesses from one area to another. 
</P>
<CITA TYPE="N">[47 FR 7983, Feb. 23, 1982, as amended at 53 FR 33028, Aug. 29, 1988; 54 FR 21169, May 16, 1989; 56 FR 56128, Oct. 31, 1991]


</CITA>
</DIV8>


<DIV8 N="§ 570.457" NODE="24:3.1.1.3.3.7.1.3" TYPE="SECTION">
<HEAD>§ 570.457   Displacement, relocation, acquisition, and replacement of housing.</HEAD>
<P>The displacement, relocation, acquisition, and replacement of housing requirements of § 570.606 apply to applicants under this subpart G. 
</P>
<CITA TYPE="N">[55 FR 29309, July 18, 1990]


</CITA>
</DIV8>


<DIV8 N="§ 570.461" NODE="24:3.1.1.3.3.7.1.4" TYPE="SECTION">
<HEAD>§ 570.461   Post-preliminary approval requirements; lead-based paint.</HEAD>
<P>The recipient may receive preliminary approval prior to the accomplishment of lead-based paint activities conducted pursuant to part 35, subparts A, B, J, K, and R of this title, but no funds will be released until such actions are complete and evidence of compliance is submitted to HUD.
</P>
<CITA TYPE="N">[64 FR 50225, Sept. 15, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 570.463" NODE="24:3.1.1.3.3.7.1.5" TYPE="SECTION">
<HEAD>§ 570.463   Project amendments and revisions.</HEAD>
<P>(a) <I>Pre-approval revisions to the application.</I> Applicants must submit to the HUD Area Office and to Central Office all revisions to the application. A revision is considered significant if it alters the scope, location, or scale of the project or changes the beneficiaries' population.
</P>
<FP>The applicant must hold at least one public hearing prior to making a significant revision to the application. 
</FP>
<P>(b) <I>Post preliminary approval amendments.</I> Applicants receiving preliminary approval must submit to the HUD Central Office, a request for approval of any significant amendment. A copy of the request must also be submitted to the Area Office. A significant amendment involves new activities or alterations thereof which will change the scope, location, scale, or beneficiaries of such activities or which, as a result of a number of smaller changes, add up to an amount that exceeds ten percent of the grant. HUD approval of amendments may be granted to those requests which meet all of the following criteria: 
</P>
<P>(1) New or significantly altered activities must meet the criteria for selection applicable at the time of receipt of the program amendment. 
</P>
<P>(2) The recipient must have complied with all requirements of this subpart. 
</P>
<P>(3) The recipient may make amendments other than those requiring prior HUD approval as defined in paragraph (b) of this section but each recipient must notify both the Area and Central Offices of such changes. 
</P>
<CITA TYPE="N">[47 FR 7983, Feb. 23, 1982, as amended at 61 FR 11476, Mar. 20, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 570.464" NODE="24:3.1.1.3.3.7.1.6" TYPE="SECTION">
<HEAD>§ 570.464   Project closeout.</HEAD>
<P>HUD will advise the recipient to initiate closeout procedures when HUD determines, in consultation with the recipient, that there are not impediments to closeout. Closeout shall be carried out in accordance with § 570.509 and applicable HUD guidelines.
</P>
<CITA TYPE="N">[53 FR 8058, Mar. 11, 1988]


</CITA>
</DIV8>


<DIV8 N="§ 570.465" NODE="24:3.1.1.3.3.7.1.7" TYPE="SECTION">
<HEAD>§ 570.465   Applicability of rules and regulations.</HEAD>
<P>The provisions of subparts A, B, C, J, K, and O of this part 570 shall apply to this subpart except to the extent that they are modified or augmented by this subpart. 


</P>
</DIV8>


<DIV8 N="§ 570.466" NODE="24:3.1.1.3.3.7.1.8" TYPE="SECTION">
<HEAD>§ 570.466   Additional application submission requirements for Pockets of Poverty—employment opportunities.</HEAD>
<P>Applicants for Action Grants under the Pockets of Poverty provision must describe the number and, to the extent possible, the types of new jobs (construction and permanent) that will be provided to the low- and moderate-income residents of the Pocket of Poverty as a direct result of the proposed project. If the application calls for job training programs (such as those related to the CETA program) or job recruiting services for the pocket's residents, then such proposed activities must be clearly and fully explained. HUD requires applicants to ensure that at least 75 percent of whatever permanent jobs initially result from the project are provided to low- and moderate-income persons and that at least 51 percent of whatever permanent jobs initially result from the project are provided to low- and moderate-income residents from the pocket. HUD encourages applicants to ensure that at least 20 percent of all permanent jobs are filled by persons from the pocket qualified to participate in the CETA program on a continuous basis. HUD requires all applicants to continuously use best efforts to ensure that at least 75 percent of all permanent jobs resulting from any Action Grant-assisted project are provided to low- and moderate-income persons and that at least 51 percent of all permanent jobs resulting from any Action Grant-assisted project are provided to low- and moderate-income residents from the pocket. The application should clearly describe how the applicant intends to meet initial and continuous job requirements. Private participating parties must meet these employment requirements in the aggregate. To enable the private participants to do so, lease agreements executed by a private participating party shall include: 
</P>
<P>(a) Provisions requiring lessees to follow hiring practices that the private participating party has determined will enable it to meet these requirements in the aggregate; and 
</P>
<P>(b) Provisions that will enable the private participating party to declare a default under the lease agreement if the lessees do not follow such practices. 
</P>
<CITA TYPE="N">[61 FR 11476, Mar. 20, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="H" NODE="24:3.1.1.3.3.8" TYPE="SUBPART">
<HEAD>Subpart H [Reserved]</HEAD>

</DIV6>


<DIV6 N="I" NODE="24:3.1.1.3.3.9" TYPE="SUBPART">
<HEAD>Subpart I—State Community Development Block Grant Program</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>57 FR 53397, Nov. 9, 1992, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 570.480" NODE="24:3.1.1.3.3.9.1.1" TYPE="SECTION">
<HEAD>§ 570.480   General.</HEAD>
<P>(a) This subpart describes policies and procedures applicable to states that have permanently elected to receive Community Development Block Grant (CDBG) funds for distribution to units of general local government in the state's nonentitlement areas under the Housing and Community Development Act of 1974, as amended (the Act). Other subparts of part 570 are not applicable to the State CDBG program, except as expressly provided otherwise. Regulations of part 570 outside of this subpart that apply to the State CDBG program include §§ 570.200(j) and 570.606.
</P>
<P>(b) HUD's authority for the waiver of regulations and for the suspension of requirements to address damage in a Presidentially-declared disaster area is described in 24 CFR part 5 and in section 122 of the Act, respectively. 
</P>
<P>(c) In exercising the Secretary's obligation and responsibility to review a state's performance, the Secretary will give maximum feasible deference to the state's interpretation of the statutory requirements and the requirements of this regulation, provided that these interpretations are not plainly inconsistent with the Act and the Secretary's obligation to enforce compliance with the intent of the Congress as declared in the Act. The Secretary will not determine that a state has failed to carry out its certifications in compliance with requirements of the Act (and this regulation) unless the Secretary finds that procedures and requirements adopted by the state are insufficient to afford reasonable assurance that activities undertaken by units of general local government were not plainly inappropriate to meeting the primary objectives of the Act, this regulation, and the state's community development objectives.
</P>
<P>(d) Administrative action taken by the Secretary that is not explicitly and fully part of this regulation shall only apply to a specific case or issue at a specific time, and shall not be generally applicable to the state-administered CDBG program.
</P>
<P>(e) Religious organizations are eligible to participate under the State CDBG Program as provided in § 570.200(j).
</P>
<P>(f) In administering the CDBG program, a state may impose additional or more restrictive provisions on units of general local government participating in the state's program, provided that such provisions are not inconsistent with the Act or other statutory or regulatory provisions that are applicable to the State CDBG program.
</P>
<P>(g) States shall make CDBG program grants only to units of general local government. This restriction does not limit a state's authority to make payments to other parties for state administrative expenses and technical assistance activities authorized in section 106(d) of the Act.
</P>
<P>(h) Any unexpended CDBG origin year grant funds in the United States Treasury account on September 30 of the fifth Federal fiscal year after the end of the origin year grant's period of availability for obligation by HUD will be canceled. HUD may require an earlier expenditure and draw down deadline under a grant agreement.
</P>
<CITA TYPE="N">[57 FR 53397, Nov. 9, 1992, as amended at 61 FR 11477, Mar. 20, 1996; 61 FR 54921, Oct. 22, 1996; 69 FR 41718, July 9, 2004; 77 FR 24142, Apr. 23, 2012; 80 FR 69870, Nov. 12, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 570.481" NODE="24:3.1.1.3.3.9.1.2" TYPE="SECTION">
<HEAD>§ 570.481   Definitions.</HEAD>
<P>(a) Except for terms defined in applicable statutes or this subpart, the Secretary will defer to a state's definitions, provided that these definitions are explicit, reasonable and not plainly inconsistent with the Act. As used in this subpart, the following terms shall have the meaning indicated:
</P>
<P>(1) <I>Act</I> means title I of the Housing and Community Development Act of 1974 (42 U.S.C. 5301 <I>et seq.</I>).
</P>
<P>(2) <I>CDBG funds</I> means Community Development Block Grant funds, in the form of grants under this subpart including any reimbursements, program income, and loans guaranteed under section 108 of the Act.
</P>
<P>(3) <I>Origin year</I> means the specific Federal fiscal year during which the annual grant funds were appropriated.
</P>
<P>(b) [Reserved]
</P>
<CITA TYPE="N">[57 FR 53397, Nov. 9, 1992, as amended at 61 FR 5209, Feb. 9, 1996; 74 FR 36389, July 22, 2009; 80 FR 69871, Nov. 12, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 570.482" NODE="24:3.1.1.3.3.9.1.3" TYPE="SECTION">
<HEAD>§ 570.482   Eligible activities.</HEAD>
<P>(a) <I>General.</I> The choice of activities on which block grant funds are expended represents the determination by state and local participants, developed in accordance with the state's program design and procedures, as to which approach or approaches will best serve these interests. The eligible activities are listed at section 105(a) of the Act.
</P>
<P>(b) <I>Special assessments under the CDBG program.</I> The following policies relate to special assessments under the CDBG program:
</P>
<P>(1) <I>Public improvements initially assisted with CDBG funds.</I> Where CDBG funds are used to pay all or part of the cost of a public improvement, special assessments may be imposed as follows:
</P>
<P>(i) Special assessments to recover the <I>CDBG funds</I> may be made only against properties owned and occupied by persons <I>not</I> of low and moderate income. These assessments constitute program income.
</P>
<P>(ii) Special assessments to recover the <I>non-CDBG</I> portion may be made, provided that CDBG funds are used to pay the special assessment in behalf of all properties owned and occupied by low and moderate income persons; except that CDBG funds need not be used to pay the special assessments in behalf of properties owned and occupied by moderate income persons if, when permitted by the state, the unit of general local government certifies that it does not have sufficient CDBG funds to pay the assessments in behalf of all of the low and moderate income owner-occupant persons. Funds collected through such special assessments are not program income.
</P>
<P>(2) <I>Public improvements not initially assisted with CDBG funds.</I> CDBG funds may be used to pay special assessments levied against property when this form of assessment is used to recover the capital cost of eligible public improvements initially financed solely from sources other than CDBG funds. The payment of special assessments with CDBG funds constitutes CDBG assistance to the public improvement. Therefore, CDBG funds may be used to pay special assessments, provided that:
</P>
<P>(i) The installation of the public improvements was carried out in compliance with requirements applicable to activities assisted under this subpart, including labor, environmental and citizen participation requirements;
</P>
<P>(ii) The installation of the public improvement meets a criterion for national objectives. (See § 570.483(b)(1), (c), and (d).)
</P>
<P>(iii) The requirements of § 570.482(b)(1)(ii) are met.
</P>
<P>(c) <I>Special eligibility provisions.</I> (1) Microenterprise development activities eligible under section 105(a)(23) of the Housing and Community Development Act of 1974, as amended (42 U.S.C. 5301 <I>et seq.</I>) (the Act) may be carried out either through the recipient directly or through public and private organizations, agencies, and other subrecipients (including nonprofit and for-profit subrecipients).
</P>
<P>(2) <I>Provision of public services.</I> The following activities shall not be subject to the restrictions on public services under section 105(a)(8) of the Act:
</P>
<P>(i) Support services provided under section 105(a)(23) of the Act, and paragraph (c) of this section;
</P>
<P>(ii) Services carried out under the provisions of section 105(a)(15) of the Act, that are specifically designed to increase economic opportunities through job training and placement and other employment support services, including, but not limited to, peer support programs, counseling, child care, transportation, and other similar services; and
</P>
<P>(iii) Services of any type carried out under the provisions of section 105(a)(15) of the Act pursuant to a strategy approved by a state under the provisions of § 91.315(e)(2) of this title.
</P>
<P>(3) Environmental cleanup and economic development or redevelopment of contaminated properties. Remediation of known or suspected environmental contamination may be undertaken under the authority of section 205 of Public Law 105-276 and section 105(a)(4) of the Act. Economic development activities carried out under sections 105(a)(14), (a)(15), or (a)(17) of the Act may include costs associated with project-specific assessment or remediation of known or suspected environmental contamination.
</P>
<P>(4) Housing counseling, as defined in 24 CFR 5.100, that is funded with or provided in connection with CDBG funds must be carried out in accordance with 24 CFR 5.111.
</P>
<P>(5) <I>Broadband infrastructure in housing.</I> Any new construction or substantial rehabilitation, as substantial rehabilitation is defined by 24 CFR 5.100, of a building with more than 4 rental units, for which CDBG funds are first obligated by the State's grant recipient on or after July 18, 2017, must include installation of broadband infrastructure, as this term is also defined in 24 CFR 5.100, except where the State or the State's grant recipient determines and documents the determination that:
</P>
<P>(i) The location of the new construction or substantial rehabilitation makes installation of broadband infrastructure infeasible;
</P>
<P>(ii) The cost of installing broadband infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden; or
</P>
<P>(iii) The structure of the housing to be substantially rehabilitated makes installation of broadband infrastructure infeasible.
</P>
<P>(d) [Reserved]
</P>
<P>(e) <I>Guidelines and objectives for evaluating project costs and financial requirements</I>—(1) <I>Applicability.</I> The following guidelines, also referred to as the underwriting guidelines, are provided to assist the recipient to evaluate and select activities to be carried out for economic development purposes. Specifically, these guidelines are applicable to activities that are eligible for CDBG assistance under section 105(a)(17) of the Act, economic development activities eligible under section 105(a)(14) of the Act, and activities that are part of a community economic development project eligible under section 105(a)(15) of the Act. The use of the underwriting guidelines published by HUD is not mandatory. However, states electing not to use these guidelines would be expected to ensure that the state or units of general local government conduct basic financial underwriting prior to the provision of CDBG financial assistance to a for-profit business. 
</P>
<P>(2) <I>Objectives.</I> The underwriting guidelines are designed to provide the recipient with a framework for financially underwriting and selecting CDBG-assisted economic development projects which are financially viable and will make the most effective use of the CDBG funds. Where appropriate, HUD's underwriting guidelines recognize that different levels of review are appropriate to take into account differences in the size and scope of a proposed project, and in the case of a microenterprise or other small business to take into account the differences in the capacity and level of sophistication among businesses of differing sizes. Recipients are encouraged, when they develop their own programs and underwriting criteria, to also take these factors into account. These underwriting guidelines are published as appendix A to this part. The objectives of the underwriting guidelines are to ensure: 
</P>
<P>(i) That project costs are reasonable; 
</P>
<P>(ii) That all sources of project financing are committed; 
</P>
<P>(iii) That to the extent practicable, CDBG funds are not substituted for non-Federal financial support; 
</P>
<P>(iv) That the project is financially feasible; 
</P>
<P>(v) That to the extent practicable, the return on the owner's equity investment will not be unreasonably high; and 
</P>
<P>(vi) That to the extent practicable, CDBG funds are disbursed on a pro rata basis with other finances provided to the project. 
</P>
<P>(f) <I>Standards for evaluating public benefit</I>—(1) <I>Purpose and applicability.</I> The grantee is responsible for making sure that at least a minimum level of public benefit is obtained from the expenditure of CDBG funds under the categories of eligibility governed by these standards. The standards set forth below identify the types of public benefit that will be recognized for this purpose and the minimum level of each that must be obtained for the amount of CDBG funds used. These standards are applicable to activities that are eligible for CDBG assistance under section 105(a)(17) of the Act, economic development activities eligible under section 105(a)(14) of the Act, and activities that are part of a community economic development project eligible under section 105(a)(15) of the Act. Certain public facilities and improvements eligible under section 105(a)(2) of the Act, which are undertaken for economic development purposes, are also subject to these standards, as specified in § 570.483(b)(4)(vi)(F)(<I>2</I>). Unlike the guidelines for project costs and financial requirements covered under paragraph (a) of this section, the use of the standards for public benefit is mandatory. 
</P>
<P>(2) <I>Standards for activities in the aggregate.</I> Activities covered by these standards must, in the aggregate, either: 
</P>
<P>(i) Create or retain at least one full-time equivalent, permanent job per $35,000 of CDBG funds used; or 
</P>
<P>(ii) Provide goods or services to residents of an area, such that the number of low- and moderate-income persons residing in the areas served by the assisted businesses amounts to at least one low- and moderate-income person per $350 of CDBG funds used. 
</P>
<P>(3) <I>Applying the aggregate standards.</I> (i) A state shall apply the aggregate standards under paragraph (e)(2) of this section to all funds distributed for applicable activities from each annual grant. This includes the amount of the annual grant, any funds reallocated by HUD to the state, any program income distributed by the state and any guaranteed loan funds made under the provisions of subpart M of this part covered in the method of distribution in the final statement for a given annual grant year. 
</P>
<P>(ii) The grantee shall apply the aggregate standards to the number of jobs to be created/retained, or to the number of persons residing in the area served (as applicable), as determined at the time funds are obligated to activities. 
</P>
<P>(iii) Where an activity is expected both to create or retain jobs and to provide goods or services to residents of an area, the grantee may elect to count the activity under either the jobs standard or the area residents standard, but not both. 
</P>
<P>(iv) Where CDBG assistance for an activity is limited to job training and placement and/or other employment support services, the jobs assisted with CDBG funds shall be considered to be created or retained jobs for the purposes of applying the aggregate standards. 
</P>
<P>(v) Any activity subject to these standards which meets one or more of the following criteria may, at the grantee's option, be excluded from the aggregate standards described in paragraph (f)(2) of this section: 
</P>
<P>(A) Provides jobs exclusively for unemployed persons or participants in one or more of the following programs: 
</P>
<P>(<I>1</I>) Jobs Training Partnership Act (JTPA); 
</P>
<P>(<I>2</I>) Jobs Opportunities for Basic Skills (JOBS); or 
</P>
<P>(<I>3</I>) Aid to Families with Dependent Children (AFDC); 
</P>
<P>(B) Provides jobs predominantly for residents of Public and Indian Housing units; 
</P>
<P>(C) Provides jobs predominantly for homeless persons; 
</P>
<P>(D) Provides jobs predominantly for low-skilled, low- and moderate-income persons, where the business agrees to provide clear opportunities for promotion and economic advancement, such as through the provision of training; 
</P>
<P>(E) Provides jobs predominantly for persons residing within a census tract (or block numbering area) that has at least 20 percent of its residents who are in poverty; 
</P>
<P>(F) Provides assistance to business(es) that operate(s) within a census tract (or block numbering area) that has at least 20 percent of its residents who are in poverty; 
</P>
<P>(G) Stabilizes or revitalizes a neighborhood income that has at least 70 percent of its residents who are low- and moderate-income; 
</P>
<P>(H) Provides assistance to a Community Development Financial Institution (as defined in the Community Development Banking and Financial Institutions Act of 1994, (12 U.S.C. 4701 note)) serving an area that has at least 70 percent of its residents who are low- and moderate-income; 
</P>
<P>(I) Provides assistance to an organization eligible to carry out activities under section 105(a)(15) of the Act serving an area that has at least 70 percent of its residents who are low- and moderate-income; 
</P>
<P>(J) Provides employment opportunities that are an integral component of a project designed to promote spatial deconcentration of low- and moderate-income and minority persons; 
</P>
<P>(K) With prior HUD approval, provides substantial benefit to low-income persons through other innovative approaches; 
</P>
<P>(L) Provides services to the residents of an area pursuant to a strategy approved by the State under the provisions of § 91.315(e)(2) of this title; 
</P>
<P>(M) Creates or retains jobs through businesses assisted in an area pursuant to a strategy approved by the State under the provisions of § 91.315(e)(2) of this title. 
</P>
<P>(N) Directly involves the economic development or redevelopment of environmentally contaminated properties.
</P>
<P>(4) <I>Standards for individual activities.</I> Any activity subject to these standards which falls into one or more of the following categories will be considered by HUD to provide insufficient public benefit, and therefore may under no circumstances be assisted with CDBG funds: 
</P>
<P>(i) The amount of CDBG assistance exceeds either of the following, as applicable: 
</P>
<P>(A) $50,000 per full-time equivalent, permanent job created or retained; or 
</P>
<P>(B) $1,000 per low- and moderate-income person to which goods or services are provided by the activity. 
</P>
<P>(ii) The activity consists of or includes any of the following: 
</P>
<P>(A) General promotion of the community as a whole (as opposed to the promotion of specific areas and programs); 
</P>
<P>(B) Assistance to professional sports teams; 
</P>
<P>(C) Assistance to privately-owned recreational facilities that serve a predominantly higher-income clientele, where the recreational benefit to users or members clearly outweighs employment or other benefits to low- and moderate-income persons; 
</P>
<P>(D) Acquisition of land for which the specific proposed use has not yet been identified; and 
</P>
<P>(E) Assistance to a for-profit business while that business or any other business owned by the same person(s) or entity(ies) is the subject of unresolved findings of noncompliance relating to previous CDBG assistance provided by the recipient. 
</P>
<P>(5) <I>Applying the individual activity standards.</I> (i) Where an activity is expected both to create or retain jobs and to provide goods or services to residents of an area, it will be disqualified only if the amount of CDBG assistance exceeds both of the amounts in paragraph (f)(4)(i) of this section. 
</P>
<P>(ii) The individual activity tests in paragraph (f)(4)(i) of this section shall be applied to the number of jobs to be created or retained, or to the number of persons residing in the area served (as applicable), as determined at the time funds are obligated to activities. 
</P>
<P>(iii) Where CDBG assistance for an activity is limited to job training and placement and/or other employment support services, the jobs assisted with CDBG funds shall be considered to be created or retained jobs for the purposes of applying the individual activity standards in paragraph (f)(4)(i) of this section. 
</P>
<P>(6) <I>Documentation.</I> The state and its grant recipients must maintain sufficient records to demonstrate the level of public benefit, based on the above standards, that is actually achieved upon completion of the CDBG-assisted economic development activity(ies) and how that compares to the level of such benefit anticipated when the CDBG assistance was obligated. If a state grant recipient's actual results show a pattern of substantial variation from anticipated results, the state and its recipient are expected to take those actions reasonably within their respective control to improve the accuracy of the projections. If the actual results demonstrate that the state has failed the public benefit standards, HUD may require the state to meet more stringent standards in future years as appropriate. 
</P>
<P>(g) <I>Amendments to economic development projects after review determinations.</I> If, after the grantee enters into a contract to provide assistance to a project, the scope or financial elements of the project change to the extent that a significant contract amendment is appropriate, the project should be reevaluated under these and the recipient's guidelines. (This would include, for example, situations where the business requests a change in the amount or terms of assistance being provided, or an extension to the loan payment period required in the contract.) If a reevaluation of the project indicates that the financial elements and public benefit to be derived have also substantially changed, then the recipient should make appropriate adjustments in the amount, type, terms or conditions of CDBG assistance which has been offered, to reflect the impact of the substantial change. (For example, if a change in the project elements results in a substantial reduction of the total project costs, it may be appropriate for the recipient to reduce the amount of total CDBG assistance.) If the amount of CDBG assistance provided to the project is increased, the amended project must still comply with the public benefit standards under paragraph (f) of this section. 
</P>
<P>(h) <I>Prohibition on use of assistance for employment relocation activities</I>—(1) <I>Prohibition.</I> CDBG funds may not be used to directly assist a business, including a business expansion, in the relocation of a plant, facility, or operation from one labor market area (LMA) to another LMA if the relocation is likely to result in a significant loss of jobs in the LMA from which the relocation occurs.
</P>
<P>(2) <I>Definitions.</I> The following definitions apply to the section:
</P>
<P>(i) <I>Directly assist.</I> Directly assist means the provision of CDBG funds to a business pursuant to section 105(a)(15) or (17) of the Housing and Community Development Act of 1974 (42 U.S.C. 5301 <I>et seq</I>). Direct assistance also includes assistance under section 105(a)(1), (2), (4), (7), and (14) of the Housing and Community Development Act of 1974, when the state's grantee, subrecipient, or nonprofit entity eligible under section 105(a)(15) enters into an agreement with a business to undertake one or more of these activities as a condition of the business relocating a facility, plant, or operation to the LMA. Provision of public facilities and indirect assistance that will provide benefit to multiple businesses does not fall under the definition of “directly assist,” unless it includes the provision of infrastructure to aid a specific business that is the subject of an agreement with the specific assisted business.
</P>
<P>(ii) <I>Labor market area (LMA).</I> For metropolitan areas, an LMA is an area defined as such by the U.S. Bureau of Labor Statistics (BLS). An LMA is an economically integrated geographic area within which individuals can live and find employment within a reasonable distance or can readily change employment without changing their place of residence. In addition, LMAs are nonoverlapping and geographically exhaustive. For metropolitan areas, grantees must use employment data, as defined by the BLS, for the LMA in which the affected business is currently located and from which current jobs may be lost. For non-metropolitan areas, grantees must use employment data, as defined by the BLS, for the LMA in which the assisted business is currently located and from which current jobs may be lost. For non-metropolitan areas, a LMA is either an area defined by the BLS as an LMA, or a state may choose to combine non-metropolitan LMAs. States are required to define or reaffirm prior definitions of their LMAs on an annual basis and retain records to substantiate such areas prior to any business relocation that would be impacted by this rule. Metropolitan LMAs cannot be combined, nor can a non-metropolitan LMA be combined with a metropolitan LMA. For the Insular Areas, each jurisdiction will be considered to be an LMA. For the HUD-administered Small Cities Program, each of the three participating counties in Hawaii will be considered to be its own LMA. Recipients of Fiscal Year 1999 Small Cities Program funding in New York will follow the requirements for State CDBG recipients.
</P>
<P>(iii) <I>Operation.</I> A business operation includes, but is not limited to, any equipment, employment opportunity, production capacity, or product line of the business.
</P>
<P>(iv) <I>Significant loss of jobs.</I> (A) A loss of jobs is significant if: The number of jobs to be lost in the LMA in which the affected business is currently located is equal to or greater than one-tenth of one percent of the total number of persons in the labor force of that LMA; or in all cases, a loss of 500 or more jobs. Notwithstanding the aforementioned, a loss of 25 jobs or fewer does not constitute a significant loss of jobs.
</P>
<P>(B) A job is considered to be lost due to the provision of CDBG assistance if the job is relocated within three years from the date the assistance is provided to the business or the time period within which jobs are to be created as specified by the agreement among the business, the recipient, and the state (as applicable) if it is longer than three years.
</P>
<P>(3) <I>Written agreement.</I> Before directly assisting a business with CDBG funds, the recipient, subrecipient, or (in the case of any activity carried out pursuant to 105(a)(15)) nonprofit entity shall sign a written agreement with the assisted business. The written agreement shall include:
</P>
<P>(i) <I>Statement.</I> A statement from the assisted business as to whether the assisted activity will result in the relocation of any industrial or commercial plant, facility, or operation from one LMA to another and, if so, the number of jobs that will be relocated from each LMA;
</P>
<P>(ii) <I>Required certification.</I> If the assistance will not result in a relocation covered by this section, a certification from the assisted business that neither it, nor any of its subsidiaries, has plans to relocate jobs at the time the agreement is signed that would result in a significant job loss as defined in this rule; and
</P>
<P>(iii) <I>Reimbursement of assistance.</I> The agreement shall provide for reimbursement to the recipient of any assistance provided to, or expended on behalf of, the business in the event that assistance results in a relocation prohibited under this section.
</P>
<P>(4) <I>Assistance not covered by this paragraph.</I> This paragraph does not apply to:
</P>
<P>(i) <I>Relocation assistance.</I> Relocation assistance required by the Uniform Assistance and Real Property Acquisition Policies Act of 1970 (URA), (42 U.S.C. 4601-4655); optional relocation assistance under section 105(a)(11), as implemented at 570.606(d);
</P>
<P>(ii) <I>Microenterprises.</I> Assistance to microenterprises as defined by section 102(a)(22) of the Housing and Community Development Act of 1974; and
</P>
<P>(iii) <I>Arms-length transactions.</I> Assistance to a business that purchases business equipment, inventory, or other physical assets in an arms-length transaction, including the assets of an existing business, provided that the purchase does not result in the relocation of the sellers' business operation (including customer base or list, goodwill, product lines, or trade names) from one LMA to another LMA and does not produce a significant loss of jobs in the LMA from which the relocation occurs.
</P>
<CITA TYPE="N">[57 FR 53397, Nov. 9, 1992, as amended at 60 FR 1949, Jan. 5, 1995; 61 FR 54921, Oct. 22, 1996; 70 FR 76370, Dec. 23, 2005; 71 FR 30035, May 24, 2006; 81 FR 90659, Dec. 14, 2016; 81 FR 92636,  Dec. 20, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 570.483" NODE="24:3.1.1.3.3.9.1.4" TYPE="SECTION">
<HEAD>§ 570.483   Criteria for national objectives.</HEAD>
<P>(a) <I>General.</I> The following criteria shall be used to determine whether a CDBG assisted activity complies with one or more of the national objectives as required to section 104(b)(3) of the Act. (HUD is willing to consider a waiver of these requirements in accordance with § 570.480(b)). 
</P>
<P>(b) <I>Activities benefiting low and moderate income persons.</I> An activity will be considered to address the objective of benefiting low and moderate income persons if it meets one of the criteria in paragraph (b) of this section, unless there is substantial evidence to the contrary. In assessing any such evidence, the full range of direct effects of the assisted activity will be considered. The activities, when taken as a whole, must not benefit moderate income persons to the exclusion of low income persons: 
</P>
<P>(1) <I>Area benefit activities.</I> (i) An activity, the benefits of which are available to all the residents in a particular area, where at least 51 percent of the residents are low and moderate income persons. Such an area need not be coterminous with census tracts or other officially recognized boundaries but must be the entire area served by the activity. Units of general local government may, at the discretion of the state, use either HUD-provided data comparing census data with appropriate low and moderate income levels or survey data that is methodologically sound. An activity that serves an area that is not primarily residential in character shall not qualify under this criterion. 
</P>
<P>(ii) An activity, where the assistance is to a public improvement that provides benefits to all the residents of an area, that is limited to paying special assessments levied against residential properties owned and occupied by persons of low and moderate income. 
</P>
<P>(iii)(A) An activity to develop, establish and operate (not to exceed two years after establishment), a uniform emergency telephone number system serving an area having less than 51 percent of low and moderate income residents, when the system has not been made operational before the receipt of CDBG funds, provided a prior written determination is obtained from HUD. HUD's determination will be based upon certifications by the State that: 
</P>
<P>(<I>1</I>) The system will contribute significantly to the safety of the residents of the area. The unit of general local government must provide the state a list of jurisdictions and unincorporated areas to be served by the system and a list of the emergency services that will participate in the emergency telephone number system; 
</P>
<P>(<I>2</I>) At least 51 percent of the use of the system will be by low and moderate income persons. The state's certification may be based upon information which identifies the total number of calls actually received over the preceding twelve-month period for each of the emergency services to be covered by the emergency telephone number system and relates those calls to the geographic segment (expressed as nearly as possible in terms of census tracts, enumeration districts, block groups, or combinations thereof that are contained within the segment) of the service area from which the calls were generated. In analyzing this data to meet the requirements of this section, the state will assume that the distribution of income among callers generally reflects the income characteristics of the general population residing in the same geographic area where the callers reside. Alternatively, the state's certification may be based upon other data, agreed to by HUD and the state, which shows that over the preceding twelve-month period the users of all the services to be included in the emergency telephone number system consisted of at least 51 percent low and moderate income persons. 
</P>
<P>(<I>3</I>) Other federal funds received by the unit of general local government are insufficient or unavailable for a uniform emergency telephone number system. The unit of general local government must submit a statement explaining whether the problem is caused by the insufficiency of the amount of such funds, the restrictions on the use of such funds, or the prior commitment of such funds for other purposes by the unit of general local government. 
</P>
<P>(<I>4</I>) The percentage of the total costs of the system paid for by CDBG funds does not exceed the percentage of low and moderate income persons in the service area of the system. The unit of general local government must include a description of the boundaries of the service area of the system; the census tracts or enumeration districts within the boundaries; the total number of persons and the total number of low and moderate income persons in each census tract or enumeration district, and the percentage of low and moderate income persons in the service area; and the total cost of the system. 
</P>
<P>(B) The certifications of the state must be submitted along with a brief statement describing the factual basis upon which the certifications were made. 
</P>
<P>(iv) Activities meeting the requirements of paragraph (e)(4)(i) of this section may be considered to qualify under paragraph (b)(1) of this section. 
</P>
<P>(v) HUD will consider activities meeting the requirements of paragraph (e)(5)(i) of this section to qualify under paragraph (b)(1) of this section, provided that the area covered by the strategy meets one of the following criteria: 
</P>
<P>(A) The area is in a Federally-designated Empowerment Zone or Enterprise Community; 
</P>
<P>(B) The area is primarily residential and contains a percentage of low and moderate income residents that is no less than 70 percent; 
</P>
<P>(C) All of the census tracts (or block numbering areas) in the area have poverty rates of at least 20 percent, at least 90 percent of the census tracts (or block numbering areas) in the area have poverty rates of at least 25 percent, and the area is primarily residential. (If only part of a census tract or block numbering area is included in a strategy area, the poverty rate shall be computed for those block groups (or any part thereof) which are included in the strategy area.) 
</P>
<P>(D) Upon request by the State, HUD may grant exceptions to the 70 percent low and moderate income or 25 percent poverty minimum thresholds on a case-by-case basis. In no case, however, may a strategy area have both a percentage of low and moderate income residents less than 51 percent and a poverty rate less than 20 percent. 
</P>
<P>(2) <I>Limited clientele activities.</I> (i) An activity which benefits a limited clientele, at least 51 percent of whom are low and moderate income persons. The following kinds of activities may not qualify under paragraph (b)(2) of this section: 
</P>
<P>(A) Activities, the benefits of which are available to all the residents of an area; 
</P>
<P>(B) Activities involving the acquisition, construction or rehabilitation of property for housing; or 
</P>
<P>(C) Activities where the benefit to low- and moderate-income persons to be considered is the creation or retention of jobs, except as provided in paragraph (b)(2)(v) of this section.
</P>
<P>(ii) To qualify under paragraph (b)(2) of this section, the activity must meet one or the following tests: 
</P>
<P>(A) It must benefit a clientele who are generally presumed to be principally low and moderate income persons. Activities that exclusively serve a group of persons in any one or a combination of the following categories may be presumed to benefit persons, 51 percent of whom are low and moderate income: abused children, battered spouses, elderly persons, adults meeting the Bureau of the Census' Current Population Reports definition of “severely disabled,” homeless persons, illiterate adults, persons living with AIDS, and migrant farm workers; or 
</P>
<P>(B) It must require information on family size and income so that it is evident that at least 51 percent of the clientele are persons whose family income does not exceed the low and moderate income limit; or 
</P>
<P>(C) It must have income eligibility requirements which limit the activity exclusively to low and moderate income persons; or 
</P>
<P>(D) It must be of such a nature, and be in such a location, that it may be concluded that the activity's clientele will primarily be low and moderate income persons. 
</P>
<P>(iii) An activity that serves to remove material or architectural barriers to the mobility or accessibility of elderly persons or of adults meeting the Bureau of the Census' Current Population Reports definition of “severely disabled” will be presumed to qualify under this criterion if it is restricted, to the extent practicable, to the removal of such barriers by assisting: 
</P>
<P>(A) The reconstruction of a public facility or improvement, or portion thereof, that does not qualify under § 570.483(b)(1); 
</P>
<P>(B) The rehabilitation of a privately owned nonresidential building or improvement that does not qualify under § 570.483(b) (1) or (4); or 
</P>
<P>(C) The rehabilitation of the common areas of a residential structure that contains more than one dwelling unit and that does not qualify under § 570.483(b)(3). 
</P>
<P>(iv) A microenterprise assistance activity (carried out in accordance with the provisions of section 105(a)(23) of the Act or § 570.482(c) and limited to microenterprises) with respect to those owners of microenterprises and persons developing microenterprises assisted under the activity who are low- and moderate-income persons. For purposes of this paragraph, persons determined to be low and moderate income may be presumed to continue to qualify as such for up to a three-year period.
</P>
<P>(v) An activity designed to provide job training and placement and/or other employment support services, including, but not limited to, peer support programs, counseling, child care, transportation, and other similar services, in which the percentage of low- and moderate-income persons assisted is less than 51 percent may qualify under this paragraph in the following limited circumstances:
</P>
<P>(A) In such cases where such training or provision of supportive services is an integrally-related component of a larger project, the only use of CDBG assistance for the project is to provide the job training and/or supportive services; and
</P>
<P>(B) The proportion of the total cost of the project borne by CDBG funds is no greater than the proportion of the total number of persons assisted who are low or moderate income.
</P>
<P>(3) <I>Housing activities.</I> An eligible activity carried out for the purpose of providing or improving permanent residential structures that, upon completion, will be occupied by low and moderate income households. This would include, but not necessarily be limited to, the acquisition or rehabilitation of property by the unit of general local government, a subrecipient, an entity eligible to receive assistance under section 105(a)(15) of the Act, a developer, an individual homebuyer, or an individual homeowner; conversion of nonresidential structures; and new housing construction. If the structure contains two dwelling units, at least one must be so occupied, and if the structure contains more than two dwelling units, at least 51 percent of the units must be so occupied. If two or more rental buildings being assisted are or will be located on the same or contiguous properties, and the buildings will be under common ownership and management, the grouped buildings may be considered for this purpose as a single structure. If housing activities being assisted meet the requirements of paragraph (e)(4)(ii) or (e)(5)(ii) of this section, all such housing may also be considered for this purpose as a single structure. For rental housing, occupancy by low and moderate income households must be at affordable rents to qualify under this criterion. The unit of general local government shall adopt and make public its standards for determining “affordable rents” for this purpose. The following shall also qualify under this criterion: 
</P>
<P>(i) When less than 51 percent of the units in a structure will be occupied by low and moderate income households, CDBG assistance may be provided in the following limited circumstances:
</P>
<P>(A) The assistance is for an eligible activity to reduce the development cost of the new construction of a multifamily, non-elderly rental housing project; and
</P>
<P>(B) Not less than 20 percent of the units will be occupied by low and moderate income households at affordable rents; and
</P>
<P>(C) The proportion of the total cost of developing the project to be borne by CDBG funds is no greater than the proportion of units in the project that will be occupied by low and moderate income households.
</P>
<P>(ii) Where CDBG funds are used to assist rehabilitation delivery services or in direct support of the unit of general local government's Rental Rehabilitation Program authorized under 24 CFR part 511, the funds shall be considered to benefit low and moderate income persons where not less than 51 percent of the units assisted, or to be assisted, by the Rental Rehabilitation Program overall are for low and moderate income persons.
</P>
<P>(iii) When CDBG funds are used for housing services eligible under section 105(a)(21) of the Act, such funds shall be considered to benefit low and moderate income persons if the housing units for which the services are provided are HOME-assisted and the requirements of § 92.252 or § 92.254 of this title are met. 
</P>
<P>(4) <I>Job creation or retention activities.</I> (i) An activity designed to create permanent jobs where at least 51 percent of the jobs, computed on a full time equivalent basis, involve the employment of low and moderate income persons. For an activity that creates jobs, the unit of general local government must document that at least 51 percent of the jobs will be held by, or will be made available to low and moderate income persons.
</P>
<P>(ii) For an activity that retains jobs, the unit of general local government must document that the jobs would actually be lost without the CDBG assistance and that either or both of the following conditions apply with respect to at least 51 percent of the jobs at the time the CDBG assistance is provided: The job is known to be held by a low or moderate income person; or the job can reasonably be expected to turn over within the following two years and that it will be filled by, or that steps will be taken to ensure that it is made available to, a low or moderate income person upon turnover.
</P>
<P>(iii) Jobs will be considered to be available to low and moderate income persons for these purposes only if:
</P>
<P>(A) Special skills that can only be acquired with substantial training or work experience or education beyond high school are not a prerequisite to fill such jobs, or the business agrees to hire unqualified persons and provide training; and
</P>
<P>(B) The unit of general local government and the assisted business take actions to ensure that low and moderate income persons receive first consideration for filling such jobs.
</P>
<P>(iv) For purposes of determining whether a job is held by or made available to a low- or moderate-income person, the person may be presumed to be a low- or moderate-income person if:
</P>
<P>(A) He/she resides within a census tract (or block numbering area) that either:
</P>
<P>(<I>1</I>) Meets the requirements of paragraph (b)(4)(v) of this section; or
</P>
<P>(<I>2</I>) Has at least 70 percent of its residents who are low- and moderate-income persons; or
</P>
<P>(B) The assisted business is located within a census tract (or block numbering area) that meets the requirements of paragraph (b)(4)(v) of this section and the job under consideration is to be located within that census tract.
</P>
<P>(v) A census tract (or block numbering area) qualifies for the presumptions permitted under paragraphs (b)(4)(iv) (A)(<I>1</I>) and (B) of this section if it is either part of a Federally-designated Empowerment Zone or Enterprise Community or meets the following criteria:
</P>
<P>(A) It has a poverty rate of at least 20 percent as determined by the most recently available decennial census information;
</P>
<P>(B) It does not include any portion of a central business district, as this term is used in the most recent Census of Retail Trade, unless the tract has a poverty rate of at least 30 percent as determined by the most recently available decennial census information; and
</P>
<P>(C) It evidences pervasive poverty and general distress by meeting at least one of the following standards:
</P>
<P>(<I>1</I>) All block groups in the census tract have poverty rates of at least 20 percent;
</P>
<P>(<I>2</I>) The specific activity being undertaken is located in a block group that has a poverty rate of at least 20 percent; or
</P>
<P>(<I>3</I>) Upon the written request of the recipient, HUD determines that the census tract exhibits other objectively determinable signs of general distress such as high incidence of crime, narcotics use, homelessness, abandoned housing, and deteriorated infrastructure or substantial population decline.
</P>
<P>(vi) As a general rule, each assisted business shall be considered to be a separate activity for purposes of determining whether the activity qualifies under this paragraph, except:
</P>
<P>(A) In certain cases such as where CDBG funds are used to acquire, develop or improve a real property (e.g., a business incubator or an industrial park) the requirement may be met by measuring jobs in the aggregate for all the businesses that locate on the property, provided the businesses are not otherwise assisted by CDBG funds.
</P>
<P>(B) Where CDBG funds are used to pay for the staff and overhead costs of an entity specified in section 105(a)(15) of the Act making loans to businesses exclusively from non-CDBG funds, this requirement may be met by aggregating the jobs created by all of the businesses receiving loans during any one-year period.
</P>
<P>(C) Where CDBG funds are used by a recipient or subrecipient to provide technical assistance to businesses, this requirement may be met by aggregating the jobs created or retained by all of the businesses receiving technical assistance during any one-year period.
</P>
<P>(D) Where CDBG funds are used for activities meeting the criteria listed at § 570.482(f)(3)(v), this requirement may be met by aggregating the jobs created or retained by all businesses for which CDBG assistance is obligated for such activities during any one-year period, except as provided at paragraph (e)(6) of this section.
</P>
<P>(E) Where CDBG funds are used by a Community Development Financial Institution to carry out activities for the purpose of creating or retaining jobs, this requirement may be met by aggregating the jobs created or retained by all businesses for which CDBG assistance is obligated for such activities during any one-year period, except as provided at paragraph (e)(6) of this section.
</P>
<P>(F) Where CDBG funds are used for public facilities or improvements which will result in the creation or retention of jobs by more than one business, this requirement may be met by aggregating the jobs created or retained by all such businesses as a result of the public facility or improvement.
</P>
<P>(<I>1</I>) Where the public facility or improvement is undertaken principally for the benefit of one or more particular businesses, but where other businesses might also benefit from the assisted activity, the requirement may be met by aggregating only the jobs created or retained by those businesses for which the facility/improvement is principally undertaken, provided that the cost (in CDBG funds) for the facility/improvement is less than $10,000 per permanent full-time equivalent job to be created or retained by those businesses.
</P>
<P>(<I>2</I>) In any case where the cost per job to be created or retained (as determined under paragraph (b)(4)(vi)(F)(<I>1</I>) of this section) is $10,000 or more, the requirement must be met by aggregating the jobs created or retained as a result of the public facility or improvement by all businesses in the service area of the facility/improvement. This aggregation must include businesses which, as a result of the public facility/improvement, locate or expand in the service area of the public facility/improvement between the date the state awards the CDBG funds to the recipient and the date one year after the physical completion of the public facility/improvement. In addition, the assisted activity must comply with the public benefit standards at § 570.482(f).
</P>
<P>(5) <I>Planning-only activities.</I> An activity involving planning (when such activity is the only activity for which the grant to the unit of general local government is given, or if the planning activity is unrelated to any other activity assisted by the grant) if it can be documented that at least 51 percent of the persons who would benefit from implementation of the plan are low and moderate income persons. Any such planning activity for an area or a community composed of persons of whom at least 51 percent are low and moderate income shall be considered to meet this national objective.
</P>
<P>(c) <I>Activities which aid in the prevention or elimination of slums or blight.</I> Activities meeting one or more of the following criteria, in the absence of substantial evidence to the contrary, will be considered to aid in the prevention or elimination of slums or blight:
</P>
<P>(1) <I>Activities to address slums or blight on an area basis.</I> An activity will be considered to address prevention or elimination of slums or blight in an area if the state can determine that:
</P>
<P>(i) The area, delineated by the unit of general local government, meets a definition of a slum, blighted, deteriorated or deteriorating area under state or local law;
</P>
<P>(ii) The area also meets the conditions in either paragraph (c)(1)(ii)(A) or(c)(1)(ii)(B) of this section.
</P>
<P>(A) At least 25 percent of properties throughout the area experience one or more of the following conditions:
</P>
<P>(<I>1</I>) Physical deterioration of buildings or improvements;
</P>
<P>(<I>2</I>) Abandonment of properties;
</P>
<P>(<I>3</I>) Chronic high occupancy turnover rates or chronic high vacancy rates in commercial or industrial buildings;
</P>
<P>(<I>4</I>) Significant declines in property values or abnormally low property values relative to other areas in the community; or
</P>
<P>(<I>5</I>) Known or suspected environmental contamination.
</P>
<P>(B) The public improvements throughout the area are in a general state of deterioration.
</P>
<P>(iii) The assisted activity addresses one or more of the conditions which contributed to the deterioration of the area. Rehabilitation of residential buildings carried out in an area meeting the above requirements will be considered to address the area's deterioration only where each such building rehabilitated is considered substandard before rehabilitation, and all deficiencies making a building substandard have been eliminated if less critical work on the building is also undertaken. The State shall ensure that the unit of general local government has developed minimum standards for building quality which may take into account local conditions.
</P>
<P>(iv) The state keeps records sufficient to document its findings that a project meets the national objective of prevention or elimination of slums and blight. The state must establish definitions of the conditions listed at § 570.483(c)(1)(ii)(A) and maintain records to substantiate how the area met the slums or blighted criteria. The designation of an area as slum or blighted under this section is required to be redetermined every 10 years for continued qualification. Documentation must be retained pursuant to the recordkeeping requirements contained at § 570.490.
</P>
<P>(2) <I>Activities to address slums or blight on a spot basis.</I> The following activities can be undertaken on a spot basis to eliminate specific conditions of blight, physical decay, or environmental contamination that are not located in a slum or blighted area: Acquisition; clearance; relocation; historic preservation; remediation of environmentally contaminated properties; or rehabilitation of buildings or improvements. However, rehabilitation must be limited to eliminating those conditions that are detrimental to public health and safety. If acquisition or relocation is undertaken, it must be a precursor to another eligible activity (funded with CDBG or other resources) that directly eliminates the specific conditions of blight or physical decay, or environmental contamination.
</P>
<P>(3) <I>Planning only activities.</I> An activity involving planning (when the activity is the only activity for which the grant to the unit of general local government is given, or the planning activity is unrelated to any other activity assisted by the grant) if the plans are for a slum or blighted area, or if all elements of the planning are necessary for and related to an activity which, if funded, would meet one of the other criteria of elimination of slums or blight.
</P>
<P>(d) <I>Activities designed to meet community development needs having a particular urgency.</I> In the absence of substantial evidence to the contrary, an activity will be considered to address this objective if the unit of general local government certifies, and the state determines, that the activity is designed to alleviate existing conditions which pose a serious and immediate threat to the health or welfare of the community which are of recent origin or which recently became urgent, that the unit of general local government is unable to finance the activity on its own, and that other sources of funding are not available. A condition will generally be considered to be of recent origin if it developed or became urgent within 18 months preceding the certification by the unit of general local government.
</P>
<P>(e) <I>Additional criteria.</I> (1) In any case where the activity undertaken is a public improvement and the activity is clearly designed to serve a primarily residential area, the activity must meet the requirements of paragraph (b)(1) of this section whether or not the requirements of paragraph (b)(4) of this section are met in order to qualify as benefiting low and moderate income persons.
</P>
<P>(2) Where the assisted activity is acquisition of real property, a preliminary determination of whether the activity addresses a national objective may be based on the planned use of the property after acquisition. A final determination shall be based on the actual use of the property, excluding any short-term, temporary use. Where the acquisition is for the purpose of clearance which will eliminate specific conditions of blight or physical decay, the clearance activity shall be considered the actual use of the property. However, any subsequent use or disposition of the cleared property shall be treated as a “change of use” under § 570.489(j).
</P>
<P>(3) Where the assisted activity is relocation assistance that the unit of general local government is required to provide, the relocation assistance shall be considered to address the same national objective as is addressed by the displacing activity. Where the relocation assistance is voluntary, the unit of general local government may qualify the assistance either on the basis of the national objective addressed by the displacing activity or, if the relocation assistance is to low and moderate income persons, on the basis of the national objective of benefiting low and moderate income persons.
</P>
<P>(4) Where CDBG-assisted activities are carried out by a Community Development Financial Institution whose charter limits its investment area to a primarily residential area consisting of at least 51 percent low- and moderate-income persons, the unit of general local government may also elect the following options:
</P>
<P>(i) Activities carried out by the Community Development Financial Institution for the purpose of creating or retaining jobs may, at the option of the unit of general local government, be considered to meet the requirements of this paragraph under the criteria at paragraph (b)(1)(iv) of this section in lieu of the criteria at paragraph (b)(4) of this section; and
</P>
<P>(ii) All housing activities for which the Community Development Financial Institution obligates CDBG assistance during any one-year period may be considered to be a single structure for purposes of applying the criteria at paragraph (b)(3) of this section.
</P>
<P>(5) If the unit of general local government has elected to prepare a community revitalization strategy pursuant to the authority of § 91.315(e)(2) of this title, and the State has approved the strategy, the unit of general local government may also elect the following options: 
</P>
<P>(i) Activities undertaken pursuant to the strategy for the purpose of creating or retaining jobs may, at the option of the grantee, be considered to meet the requirements of paragraph (b) of this section under the criteria at § 570.483(b)(1)(v) instead of the criteria at § 570.483(b)(4); and 
</P>
<P>(ii) All housing activities in the area undertaken pursuant to the strategy may be considered to be a single structure for purposes of applying the criteria at paragraph (b)(3) of this section. 
</P>
<P>(6) If an activity meeting the criteria in § 570.482(f)(3)(v) also meets the requirements of either paragraph (e)(4)(i) or (e)(5)(i) of this section, the unit of general local government may elect to qualify the activity either under the area benefit criteria at paragraph (b)(1)(iv) or (v) of this section or under the job aggregation criteria at paragraph (b)(4)(vi)(D) of this section, but not under both. Where an activity may meet the job aggregation criteria at both paragraphs (b)(4)(vi)(D) and (E) of this section, the unit of general local government may elect to qualify the activity under either criterion, but not both.
</P>
<P>(f) <I>Planning and administrative costs.</I> CDBG funds expended for eligible planning and administrative costs by units of general local government in conjunction with other CDBG assisted activities will be considered to address the national objectives.
</P>
<CITA TYPE="N">[57 FR 53397, Nov. 9, 1992, as amended at 60 FR 1951, Jan. 5, 1995; 60 FR 17445, Apr. 6, 1995; 61 FR 54921, Oct. 22, 1996; 71 FR 30036, May 24, 2006]


</CITA>
</DIV8>


<DIV8 N="§ 570.484" NODE="24:3.1.1.3.3.9.1.5" TYPE="SECTION">
<HEAD>§ 570.484   Overall benefit to low and moderate income persons.</HEAD>
<P>(a) <I>General.</I> The State must certify that, in the aggregate, not less than 70 percent of the CDBG funds received by the state during a period specified by the state, not to exceed three years, will be used for activities that benefit persons of low and moderate income. The period selected and certified to by the state shall be designated by fiscal year of annual grants, and shall be for one, two or three consecutive annual grants. The period shall be in effect until all included funds are expended. No CDBG funds may be included in more than one period selected, and all CDBG funds received must be included in a selected period.
</P>
<P>(b) <I>Computation of 70 percent benefit.</I> Determination that a state has carried out its certification under paragraph (a) of this section requires evidence that not less than 70 percent of the aggregate of the designated annual grant(s), any funds reallocated by HUD to the state, any distributed program income and any guaranteed loan funds under the provisions of subpart M of this part covered in the method of distribution in the final statement or statements for the designated annual grant year or years have been expended for activities meeting criteria as provided in § 570.483(b) for activities benefiting low and moderate income persons. In calculating the percentage of funds expended for such activities: 
</P>
<P>(1) All CDBG funds included in the period selected and certified to by the state shall be accounted for, except for funds used by the State, or by the units of general local government, for program administration, or for planning activities other than those which must meet a national objective under § 570.483 (b)(5) or (c)(3).
</P>
<P>(2) Any funds expended by a state for the purpose of repayment of loans guaranteed under the provisions of subpart M of this part shall be excepted from inclusion in this calculation.
</P>
<P>(3) Except as provided in paragraph (b)(4) of this section, CDBG funds expended for an eligible activity meeting the criteria for activities benefiting low and moderate income persons shall count in their entirety towards meeting the 70 percent benefit to persons of low and moderate income requirement.
</P>
<P>(4) Funds expended for the acquisition, new construction or rehabilitation of property for housing that qualifies under § 570.483(b)(3) shall be counted for this purpose, but shall be limited to an amount determined by multiplying the total cost (including CDBG and non-CDBG costs) of the acquisition, construction or rehabilitation by the percent of units in such housing to be occupied by low and moderate income persons, except that the amount counted shall not exceed the amount of CDBG funds provided.


</P>
</DIV8>


<DIV8 N="§ 570.485" NODE="24:3.1.1.3.3.9.1.6" TYPE="SECTION">
<HEAD>§ 570.485   Making of grants.</HEAD>
<P>(a) <I>Required submissions.</I> In order to receive its annual CDBG grant under this subpart, a State must submit a consolidated plan in accordance with 24 CFR part 91. That part includes requirements for the content of the consolidated plan, for the process of developing the plan, including citizen participation provisions, for the submission date, for HUD approval, and for the amendment process. 
</P>
<P>(b) <I>Failure to make submission.</I> The state's failure to make the submission required by paragraph (a) of this section within the prescribed deadline constitutes the state's election not to receive and distribute amounts allocated for its nonentitlement areas for the applicable fiscal year. Funds will be either:
</P>
<P>(1) Administered by HUD pursuant to subpart F of this part if the state has not administered the program in any previous fiscal year; or 
</P>
<P>(2) Reallocated to all states in the succeeding fiscal year according to the formula of section 106(d) of the Act, if the state administered the program in any previous year.
</P>
<P>(c) <I>Approval of grant.</I> HUD will approve a grant if the State's submissions have been made and approved in accordance with 24 CFR part 91, and the certifications required therein are satisfactory to the Secretary. The certifications will be satisfactory to the Secretary for this purpose unless the Secretary has determined pursuant to § 570.493 that the State has not complied with the requirements of this subpart, or has determined that there is evidence, not directly involving the State's past performance under this program, that tends to challenge in a substantial manner the State's certification of future performance. If the Secretary makes any such determination, however, the State may be required to submit further assurances as the Secretary may deem warranted or necessary to find the grantee's certification satisfactory. 
</P>
<P>(d) <I>Specific conditions.</I>—HUD may impose additional specific award conditions on States in accordance with 2 CFR 200.207.
</P>
<CITA TYPE="N">[57 FR 53397, Nov. 9, 1992, as amended at 60 FR 1916, Jan. 5, 1995; 61 FR 54922, Oct. 22, 1996; 80 FR 69871, Nov. 12, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 570.486" NODE="24:3.1.1.3.3.9.1.7" TYPE="SECTION">
<HEAD>§ 570.486   Local government requirements.</HEAD>
<P>(a) <I>Citizen participation requirements of a unit of general local government.</I> Each unit of general local government shall meet the following requirements as required by the state at § 91.115(e) of this title.
</P>
<P>(1) Provide for and encourage citizen participation, particularly by low and moderate income persons who reside in slum or blighted areas and areas in which CDBG funds are proposed to be used;
</P>
<P>(2) Ensure that residents will be given reasonable and timely access to local meetings, consistent with accessibility and reasonable accommodation requirements in accordance with section 504 of the Rehabilitation Act of 1973 and the regulations at 24 CFR part 8, and the Americans with Disabilities Act and the regulations at 28 CFR parts 35 and 36, as applicable, as well as information and records relating to the unit of local government's proposed and actual use of CDBG funds;
</P>
<P>(3) Furnish citizens information, including but not limited to:
</P>
<P>(i) The amount of CDBG funds expected to be made available for the current fiscal year (including the grant and anticipated program income);
</P>
<P>(ii) The range of activities that may be undertaken with the CDBG funds;
</P>
<P>(iii) The estimated amount of the CDBG funds proposed to be used for activities that will meet the national objective of benefit to low and moderate income persons; and
</P>
<P>(iv) The proposed CDBG activities likely to result in displacement and the unit of general local government's antidisplacement and relocation plans required under § 570.488.
</P>
<P>(4) Provide technical assistance to groups that are representative of persons of low- and moderate-income that request assistance in developing proposals (including proposed strategies and actions to affirmatively further fair housing) in accordance with the procedures developed by the State. Such assistance need not include providing funds to such groups;
</P>
<P>(5) Provide for a minimum of two public hearings, each at a different stage of the program, for the purpose of obtaining residents' views and responding to proposals and questions. Together the hearings must cover community development and housing needs (including affirmatively furthering fair housing), development of proposed activities, and a review of program performance. The public hearings to cover community development and housing needs must be held before submission of an application to the State. There must be reasonable notice of the hearings and they must be held at times and accessible locations convenient to potential or actual beneficiaries, with accommodations for persons with disabilities. Public hearings shall be conducted in a manner to meet the needs of non-English speaking residents where a significant number of non-English speaking residents can reasonably be expected to participate;
</P>
<P>(6) Provide citizens with reasonable advance notice of, and opportunity to comment on, proposed activities in an application to the state and, for grants already made, activities which are proposed to be added, deleted or substantially changed from the unit of general local government's application to the state. Substantially changed means changes made in terms of purpose, scope, location or beneficiaries as defined by criteria established by the state.
</P>
<P>(7) Provide citizens the address, phone number, and times for submitting complaints and grievances, and provide timely written answers to written complaints and grievances, within 15 working days where practicable.
</P>
<P>(b) <I>Activities serving beneficiaries outside the jurisdiction of the unit of general local government.</I> Any activity carried out by a recipient of State CDBG program funds must significantly benefit residents of the jurisdiction of the grant recipient, and the unit of general local government must determine that the activity is meeting its needs in accordance with section 106(d)(2)(D) of the Act. For an activity to significantly benefit residents of the recipient jurisdiction, the CDBG funds expended by the unit of general local government must not be unreasonably disproportionate to the benefits to its residents.
</P>
<P>(c) <I>Activities located in Entitlement jurisdictions.</I> Any activity carried out by a recipient of State CDBG program funds in entitlement jurisdictions must significantly benefit residents of the jurisdiction of the grant recipient, and the State CDBG recipient must determine that the activity is meeting its needs in accordance with section 106(d)(2)(D) of the Act. For an activity to significantly benefit residents of the recipient jurisdiction, the CDBG funds expended by the unit of general local government must not be unreasonably disproportionate to the benefits to its residents. In addition, the grant cannot be used to provide a significant benefit to the entitlement jurisdiction unless the entitlement grantee provides a meaningful contribution to the project.
</P>
<CITA TYPE="N">[57 FR 53397, Nov. 9, 1992, as amended at 61 FR 54922, Oct. 22, 1996; 77 FR 24143, Apr. 23, 2012; 80 FR 42367, July 16, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 570.487" NODE="24:3.1.1.3.3.9.1.8" TYPE="SECTION">
<HEAD>§ 570.487   Other applicable laws and related program requirements.</HEAD>
<P>(a) <I>General.</I> Certain statutes are expressly made applicable to activities assisted under the Act by the Act itself, while other laws not referred to in the Act may be applicable to such activities by their own terms. Certain statutes or executive orders that may be applicable to activities assisted under the Act by their own terms are administered or enforced by governmental officials, departments or agencies other than HUD. Paragraphs (d) and (c) of this section contain two of the requirements expressly made applicable to CDBG activities by the Act itself.
</P>
<P>(b) <I>Affirmatively furthering fair housing.</I> Each State is required to submit a certification that it will affirmatively further fair housing, consistent with §§ 5.150 and 5.151 of this title. Each unit of general local government is required to submit a certification that it will affirmatively further fair housing, consistent with §§ 5.150 and 5.151 of this title.










</P>
<P>(c) <I>Lead-Based Paint Poisoning Prevention Act.</I> States shall devise, adopt and carry out procedures with respect to CDBG assistance that fulfill the objectives and requirements of the Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and implementing regulations at part 35, subparts A, B, J, K, and R of this title.
</P>
<P>(d) States shall comply with section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) and the implementing regulations in 24 CFR part 75. Section 3 requires that employment and other economic opportunities arising in connection with housing rehabilitation, housing construction, or other public construction projects shall, to the greatest extent feasible, and consistent with existing Federal, State, and local laws and regulations, be given to low- and very low-income persons. 
</P>
<P>(e) <I>Architectural Barriers Act and the Americans with Disabilities Act.</I> The Architectural Barriers Act of 1968 (42 U.S.C. 4151-4157) requires certain Federal and Federally-funded buildings and other facilities to be designed, constructed, or altered in accordance with standards that ensure accessibility to, and use by, physically handicapped people. A building or facility designed, constructed, or altered with funds allocated or reallocated under this subpart after November 21, 1996 and that meets the definition of <I>residential structure</I> as defined in 24 CFR 40.2, or the definition of <I>building</I> as defined in 41 CFR 101-19.602(a), is subject to the requirements of the Architectural Barriers Act of 1968 and shall comply with the Uniform Federal Accessibility Standards. For general type buildings, these standards are in appendix A to 41 CFR part 101-19.6. For residential structures, these standards are available from the Department of Housing and Urban Development, Office of Fair Housing and Equal Opportunity, Disability Rights Division, Room 5240, 451 Seventh Street, SW, Washington, DC 20410; telephone (202) 708-2333 (voice) or (202) 708-1734 (TTY) (these are not toll-free numbers). 
</P>
<CITA TYPE="N">[57 FR 53397, Nov. 9, 1992, as amended at 59 FR 33894, June 30, 1994; 60 FR 1916, Jan. 5, 1995; 61 FR 54922, Oct. 22, 1996; 64 FR 50225, Sept. 15, 1999; 80 FR 42367, July 16, 2015; 85 FR 47911, Aug. 7, 2020; 85 FR 61567, Sept. 29, 2020; 86 FR 30792, June 10, 2021; 90 FR 11024, Mar. 3, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 570.488" NODE="24:3.1.1.3.3.9.1.9" TYPE="SECTION">
<HEAD>§ 570.488   Displacement, relocation, acquisition, and replacement of housing.</HEAD>
<P>The requirements for States and state recipients with regard to the displacement, relocation, acquisition, and replacement of housing are in § 570.606 and 24 CFR part 42. 
</P>
<CITA TYPE="N">[61 FR 11477, Mar. 20, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 570.489" NODE="24:3.1.1.3.3.9.1.10" TYPE="SECTION">
<HEAD>§ 570.489   Program administrative requirements.</HEAD>
<P>(a) <I>Administrative and planning costs.</I>—(1) <I>State administrative and technical assistance costs.</I> (i) The State is responsible for the administration of all CDBG funds. The State may use CDBG funds not to exceed $100,000, plus 50 percent of administrative expenses incurred in excess of $100,000. Amounts of CDBG funds used to pay administrative expenses in excess of $100,000 shall not, subject to paragraph (a)(1)(iii) of this section, exceed the sum of 3 percent of the State's annual grant; 3 percent of program income received by units of general local government during each program year, regardless of the origin year in which the State grant funds that generate the program income were appropriated (whether retained by units of general local government or paid to the State); and 3 percent of funds reallocated by HUD to the State.
</P>
<P>(ii) To pay the costs of providing technical assistance to local governments and nonprofit program recipients, a State may, subject to paragraph (a)(1)(iii) of this section, use CDBG funds received on or after January 23, 2004, in an amount not to exceed the sum of 3 percent of its annual grant; 3 percent of program income received by units of general local government during each program year, regardless of the origin year in which the State grant funds that generate the program income were appropriated (whether retained by units of general local government or paid to the State); and 3 percent of funds reallocated by HUD to the State during each program year.
</P>
<P>(iii) The amount of CDBG funds used to pay the sum of administrative costs in excess of $100,000 paid pursuant to paragraph (a)(1)(i) of this section and technical assistance costs paid pursuant to paragraph (a)(1)(ii) of this section must not exceed the sum of 3 percent of the State's annual grant; 3 percent of program income received by units of general local government during each program year, regardless of the origin year in which the State grant funds that generate the program income were appropriated (whether retained by the unit of general local government or paid to the State); and 3 percent of funds reallocated by HUD to the State.
</P>
<P>(iv) In calculating the amount of CDBG funds that may be used to pay State administrative expenses prior to January 23, 2004, the State may include in the calculation the following elements only to the extent that they are within the following time limitations:
</P>
<P>(A) $100,000 per annual grant beginning with FY 1984 allocations;
</P>
<P>(B) Two percent of the sum of a State's annual grant and funds reallocated by HUD to the State within a program year, without limitation based on when such amounts were received;
</P>
<P>(C) Two percent of program income returned by units of general local government to States after August 21, 1985; and
</P>
<P>(D) Two percent of program income received and retained by units of general local government after February 11, 1991.
</P>
<P>(v) In regard to its administrative costs, for grants before origin year 2015, the State has the option of selecting its approach for demonstrating compliance with the requirements of paragraph (a)(1) of this section. For grants beginning with origin year 2015 grants and subsequent grants, the State must use the approach in paragraph (a)(1)(v)(A) of this section. Any State whose matching cost contributions toward State administrative expense matching requirements are in arrears must bring matching cost contributions up to the level of CDBG funds expended for such costs. A State grant may not be closed out if the State's matching cost contribution is not at least equal to the amount of CDBG funds in excess of $100,000 expended for administration. The two approaches for demonstrating compliance with this paragraph (a)(1) are:
</P>
<P>(A) <I>Year-to-year tracking and limitation on drawdown of funds.</I> The State will calculate the maximum allowable amount of CDBG funds that may be used for State administrative expenses from the sum of each origin year grant, program income received during that associated program year and reallocations by HUD to the State during that associated program year. The State will draw down amounts of those funds only upon its own expenditure of an equal or greater amount of matching funds from its own resources after the expenditure of the initial $100,000 for State administrative expenses. The State will be considered to be in compliance with the applicable requirements if the actual amount of CDBG funds spent on State administrative expenses does not exceed the maximum allowable amount, and if the amount of matching funds that the State has expended for that grant year is equal to or greater than the amount of CDBG funds in excess of $100,000 spent during that same grant year. Under this approach, the State must demonstrate that it has paid from its own funds at least 50 percent of its administrative expenses in excess of $100,000 by the closeout of each grant.
</P>
<P>(B) <I>Cumulative accounting of administrative costs incurred by the State since its assumption of the CDBG program for grants before origin year 2015.</I> Under this approach, the State will identify, for each grant it has received, the CDBG funds eligible to be used for State administrative expenses, as well as the minimum amount of matching funds that the State is required to contribute. The amounts will then be aggregated for all grants received. The State must keep records demonstrating the actual amount of CDBG funds from each grant received that was used for State administrative expenses, as well as matching amounts that were contributed by the State. The State will be considered to be in compliance with the applicable requirements if the aggregate of the actual amounts of CDBG funds spent on State administrative expenses does not exceed the aggregate maximum allowable amount and if the aggregate amount of matching funds that the State has expended is equal to or greater than the aggregate amount of CDBG funds in excess of $100,000 (for each annual grant within the subject period) spent on administrative expenses during its 3- to 5-year Consolidated Planning period. If the State grant for any grant year within the 3- to 5-year period has been closed out, the aggregate amount of CDBG funds spent on State administrative expenses, the aggregate maximum allowable amount, the aggregate matching funds expended, and the aggregate amount of CDBG funds in excess of $100,000 (for each annual grant within the subject period) will be reduced by amounts attributable to the grant year for which the State grant has been closed out.
</P>
<P>(2) The State may not charge fees of any entity for processing or considering any application for CDBG funds, or for carrying out its responsibilities under this subpart.
</P>
<P>(3)(i) Administrative costs are those described at § 570.489(a)(1) for States and, for units of general local government, are those described at sections 105(a)(12) and (a)(13) of the Act.
</P>
<P>(ii) The combined expenditures by the State and its funded units of general local government for planning, management, and administrative costs shall not exceed 20 percent of the aggregate amount of the origin year grant, any origin year grant funds reallocated by HUD to the State, and the amount of any program income received during the program year.
</P>
<P>(iii) For origin year 2015 grants and subsequent grants, no more than 20 percent of any annual grant (excluding program income) shall be expended by the State and its funded units of general local government for planning, management, and administrative costs. In addition, the combined expenditures by the States and its unit of general local government for planning, management, and administrative costs shall not exceed 20 percent of any origin year grant funds reallocated by HUD to the State.
</P>
<P>(iv) Funds from a grant of any origin year may be used to pay planning and program administrative costs associated with any grant of any origin year.
</P>
<P>(b) <I>Reimbursement of pre-agreement costs.</I> The State may permit, in accordance with such procedures as the State may establish, a unit of general local government to incur costs for CDBG activities before the establishment of a formal grant relationship between the State and the unit of general local government and to charge these pre-agreement costs to the grant, provided that the activities are eligible and undertaken in accordance with the requirements of this part and 24 CFR part 58. A State may incur costs prior to entering into a grant agreement with HUD and charge those pre-agreement costs to the grant, provided that the activities are eligible and are undertaken in accordance with the requirements of this part, part 58 of this title, and the citizen participation requirements of part 91 of this title.
</P>
<P>(c) <I>Federal grant payments.</I> The State's requests for payment, and the Federal Government's payments upon such requests, must comply with 31 CFR part 205. The State must use procedures to minimize the time elapsing between the transfer of grant funds and disbursement of funds by the State to units of general local government. States must also have procedures in place, and units of general local government must use these procedures to minimize the time elapsing between the transfer of funds by the State and disbursement for CDBG activities.
</P>
<P>(d) <I>Fiscal controls and accounting procedures.</I> (1) A State shall have fiscal and administrative requirements for expending and accounting for all funds received under this subpart. These requirements must be available for Federal inspection and must:
</P>
<P>(i) Be sufficiently specific to ensure that funds received under this subpart are used in compliance with all applicable statutory and regulatory provisions and the terms and conditions of the award:
</P>
<P>(ii) Ensure that funds received under this subpart are only spent for reasonable and necessary costs of operating programs under this subpart; and 
</P>
<P>(iii) Ensure that funds received under this subpart are not used for general expenses required to carry out other responsibilities of State and local governments. 
</P>
<P>(2) A State may satisfy this requirement by:
</P>
<P>(i) Using fiscal and administrative requirements applicable to the use of its own funds;
</P>
<P>(ii) Adopting new fiscal and administrative requirements; or
</P>
<P>(iii) Applying the provisions in 2 CFR part 200.
</P>
<P>(A) A State that opts to satisfy this requirement for fiscal controls and administrative procedures by applying the provisions of 2 CFR part 200 must comply with the requirements therein.
</P>
<P>(B) A State that opts to satisfy this requirement for fiscal controls and administrative procedures by applying the provisions of 2 CFR part 200 must also ensure that recipients of the State's CDBG funds comply with 2 CFR part 200. 
</P>
<P>(e) <I>Program income.</I> (1) For the purposes of this subpart, “program income” is defined as gross income received by a State, a unit of general local government, or a subgrantee of the unit of general local government that was generated from the use of CDBG funds, regardless of when the CDBG funds were appropriated and whether the activity has been closed out, except as provided in paragraph (e)(2) of this section. When income is generated by an activity that is only partially assisted with CDBG funds, the income must be prorated to reflect the percentage of CDBG funds used (e.g., a single loan supported by CDBG funds and other funds; or a single parcel of land purchased with CDBG funds and other funds). Program income includes, but is not limited to, the following:
</P>
<P>(i) Proceeds from the disposition by sale or long-term lease of real property purchased or improved with CDBG funds, except as provided in paragraph (e)(2)(v) of this section;
</P>
<P>(ii) Proceeds from the disposition of equipment purchased with CDBG funds;
</P>
<P>(iii) Gross income from the use or rental of real or personal property acquired by the unit of general local government or subgrantee of the unit of general local government with CDBG funds, less the costs incidental to the generation of the income;
</P>
<P>(iv) Gross income from the use or rental of real property, owned by the unit of general local government or other entity carrying out a CDBG activity that was constructed or improved with CDBG funds, less the costs incidental to the generation of the income;
</P>
<P>(v) Payments of principal and interest on loans made using CDBG funds, except as provided in paragraph (e)(2)(iii) of this section;
</P>
<P>(vi) Proceeds from the sale of loans made with CDBG funds, less reasonable legal and other costs incurred in the course of such sale that are not otherwise eligible costs under sections 105(a)(13) or 106(d)(3)(A) of the Act;
</P>
<P>(vii) Proceeds from the sale of obligations secured by loans made with CDBG funds, less reasonable legal and other costs incurred in the course of such sale that are not otherwise eligible costs under sections 105(a)(13) or 106(d)(3)(A) of the Act;
</P>
<P>(viii) Interest earned on funds held in a revolving fund account;
</P>
<P>(ix) Interest earned on program income pending disposition of the income;
</P>
<P>(x) Funds collected through special assessments made against nonresidential properties and properties owned and occupied by households not of low and moderate income, if the special assessments are used to recover all or part of the CDBG portion of a public improvement; and
</P>
<P>(xi) Gross income paid to a unit of general local government or subgrantee of the unit of general local government from the ownership interest in a for-profit entity acquired in return for the provision of CDBG assistance.
</P>
<P>(2) “Program income” does not include the following:
</P>
<P>(i) The total amount of funds, which does not exceed $35,000 received in a single year from activities, other than revolving loan funds that is retained by a unit of general local government and its subgrantees (all funds received from revolving loan funds are considered program income, regardless of amount);
</P>
<P>(ii) Amounts generated by activities eligible under section 105(a)(15) of the Act and carried out by an entity under the authority of section 105(a)(15) of the Act;
</P>
<P>(iii) Payments of principal and interest made by a subgrantee carrying out a CDBG activity for a unit of general local government, toward a loan from the local government to the subgrantee, to the extent that program income received by the subgrantee is used for such payments;
</P>
<P>(iv) The following classes of interest, which must be remitted to HUD for transmittal to the Department of the Treasury, and will not be reallocated under section 106(c) or (d) of the Act:
</P>
<P>(A) Interest income from loans or other forms of assistance provided with CDBG funds that are used for activities determined by HUD to be not eligible under § 570.482 or section 105(a) of the Act, to fail to meet a national objective in accordance with the requirements of § 570.483, or to fail substantially to meet any other requirement of this subpart or the Act;
</P>
<P>(B) Interest income from deposits of amounts reimbursed to a State's CDBG program account prior to the state's disbursement of the reimbursed funds for eligible purposes; and
</P>
<P>(C) Interest income received by units of general local government on deposits of grant funds before disbursement of the funds for activities, except that the unit of general local government may keep interest payments of up to $100 per year for administrative expenses otherwise permitted to be paid with CDBG funds.
</P>
<P>(v) Proceeds from the sale of real property purchased or improved with CDBG funds, if the proceeds are received more than 5 years after expiration of the grant agreement between the State and the unit of general local government.
</P>
<P>(3) The State may permit the unit of general local government which receives or will receive program income to retain it, subject to the requirements of paragraph (e)(3)(ii) of this section, or may require the unit of general local government to pay the program income to the State. The State, however, must permit the unit of general local government to retain the program income if it will be used to continue the activity from which it was derived. The State will determine when an activity is being continued.
</P>
<P>(i) <I>Program income paid to the State.</I> Except as described in paragraph (e)(3)(ii)(A) of this section, the State may require the unit of general local government that receives or will receive program income to return the program income to the State. Program income that is paid to the State is treated as additional CDBG funds subject to the requirements of this subpart. Except for program income retained and used by the State for administrative costs or technical assistance under paragraph (a) of this section, program income paid to the State must be distributed to units of general local government in accordance with the method of distribution in the action plan under 24 CFR 91.320(k)(1)(i) that is in effect at the time the program income is distributed. To the maximum extent feasible, the State must distribute program income before it makes additional withdrawals from the United States Treasury, except as provided in paragraph (f) of this section.
</P>
<P>(ii) <I>Program income retained by a unit of general local government.</I> A State may permit a unit of general local government that receives or will receive program income to retain it. Alternatively, a State may require that the unit of general local government pay any such income to the State unless the exception in paragraph (e)(3)(ii)(A) of this section applies.
</P>
<P>(A) A State must permit the unit of general local government to retain the program income if the program income will be used to continue the activity from which it was derived. A State will determine when an activity is being continued. In making such a determination, a State may consider whether the unit of general local government is or will be unable to comply with the requirements of paragraph (e)(3)(ii)(B) of this section or other requirements of this part, and the extent to which the program income is unlikely to be applied to continue the activity within the reasonably near future. When a State determines that the program income will be applied to continue the activity from which it was derived, but the amount of program income held by the unit of general local government exceeds projected cash needs for the reasonably near future, the State may require the local government to return all or part of the program income to the State until such time as it is needed by the unit of general local government. When a State determines that a unit of local government is not likely to apply any significant amount of program income to continue the activity within a reasonable amount of time, or that it is not likely to apply the program income in accordance with applicable requirements, the State may require the unit of general local government to return all of the program income to the State for disbursement to other units of local government. A State that intends to require units of general local government to return program income in accordance with this paragraph must describe its approach in the State's action plan required under 24 CFR 91.320 of this title or in a substantial amendment if the State intends to implement this option after the action plan is submitted to and approved by HUD.
</P>
<P>(B) Program income that is received and retained by the unit of general local government is treated as additional CDBG funds and is subject to all applicable requirements of this subpart, regardless of whether the activity that generated the program income has been closed out. If the grant between the State and the unit of general local government that generated the program income is still open when it is generated, program income permitted to be retained will be considered part of the unit of general local government's grant that generated the program income. If the grant between the State and the unit of general local government is closed out, program income permitted to be retained will be considered to be part of the unit of general local government's most recently awarded open grant. If the unit of general local government has no open grants with the State, the program income retained by the unit of general local government will be counted as part of the State's program year in which the program income was received. A State must employ one or more of the following methods to ensure that units of general local government comply with applicable program income requirements:
</P>
<P>(<I>1</I>) Maintaining contractual relationships with units of general local government for the duration of the existence of the program income;
</P>
<P>(<I>2</I>) Closing out the underlying activity, but requiring as a condition of closeout that the unit of general local government obtain advance State approval of either a unit of general local government's plan for the use of program income or of each use of program income by grant recipients via regularly occurring reports and requests for approval;
</P>
<P>(<I>3</I>) Closing out the underlying activity, but requiring as a condition of closeout that the unit of general local government report to the State when new program income is received; or
</P>
<P>(<I>4</I>) With prior HUD approval, other approaches that demonstrate that the State will ensure compliance with the requirements of this subpart by units of general local government.
</P>
<P>(iii) <I>Transfer of program income to Entitlement program.</I> A unit of general local government that becomes eligible to be an Entitlement grantee may request the State's approval to transfer State CDBG grant-generated program income to the unit of general local government's Entitlement program. A State may approve the transfer, provided that the unit of general local government:
</P>
<P>(A) Has officially elected to participate in the Entitlement grant program;
</P>
<P>(B) Agrees to use such program income in accordance with Entitlement program requirements; and
</P>
<P>(C) Has set up Integrated Disbursement Information System (IDIS) access and agrees to enter receipt of program income into IDIS.
</P>
<P>(iv) <I>Transfer of program income of grantees losing Entitlement status.</I> Upon entry into the State CDBG program, a unit of general local government that has lost or relinquished its Entitlement status must, with respect to program income that a unit of general local government would otherwise be permitted to retain, either:
</P>
<P>(A) Retain program income generated under Entitlement grants and continue to comply with Entitlement program requirements for program income; or
</P>
<P>(B) Retain the program income and transfer it to the State CDBG program, in which case the unit of general local government must comply with the State's rules for program income and the requirements of this paragraph (e).
</P>
<P>(4) The State must report on the receipt and use of all program income (whether retained by units of general local government or paid to the State) in its annual performance and evaluation report.
</P>
<P>(f) <I>Revolving funds.</I> (1) The State may permit units of general local government to establish revolving funds to carry out specific, identified activities. A revolving fund, for this purpose, is a separate fund (with a set of accounts that are independent of other program accounts) established to carry out specific activities which, in turn, generate payments to the fund for use in carrying out such activities. These payments to the revolving fund are program income and must be substantially disbursed from the revolving fund before additional grant funds are drawn from the Treasury for revolving fund activities. Such program income is not required to be disbursed for non-revolving fund activities.
</P>
<P>(2) The State may establish one or more State revolving funds to distribute grants to units of general local government throughout a State or a region of the State to carry out specific, identified activities. A revolving fund, for this purpose, is a separate fund (with a set of accounts that are independent of other program accounts) established to fund grants to units of general local government to carry out specific activities which, in turn, generate payments to the fund for additional grants to units of general local government to carry out such activities. Program income in the revolving fund must be disbursed from the fund before additional grant funds are drawn from the Treasury for payments to units of general local government which could be funded from the revolving fund.
</P>
<P>(3) A revolving fund established by either the State or unit of general local government shall not be directly funded or capitalized with grant funds.
</P>
<P>(g) <I>Procurement.</I> When procuring property or services to be paid for in whole or in part with CDBG funds, the State shall follow its procurement policies and procedures. The State shall establish requirements for procurement policies and procedures for units of general local government, based on full and open competition. Methods of procurement (e.g., small purchase, sealed bids/formal advertising, competitive proposals, and noncompetitive proposals) and their applicability shall be specified by the State. Cost plus a percentage of cost and percentage of construction costs methods of contracting shall not be used. The policies and procedures shall also include standards of conduct governing employees engaged in the award or administration of contracts. (Other conflicts of interest are covered by § 570.489(h).) The State shall ensure that all purchase orders and contracts include any clauses required by Federal statutes, Executive orders, and implementing regulations. The State shall make subrecipient and contractor determinations in accordance with the standards in 2 CFR 200.330.
</P>
<P>(h) <I>Conflict of interest</I>—(1) <I>Applicability.</I> (i) In the procurement of supplies, equipment, construction, and services by the States, units of local general governments, and subrecipients, the conflict of interest provisions in paragraph (g) of this section shall apply.
</P>
<P>(ii) In all cases not governed by paragraph (g) of this section, this paragraph (h) shall apply. Such cases include the acquisition and disposition of real property and the provision of assistance with CDBG funds by the unit of general local government or its subrecipients, to individuals, businesses and other private entities.
</P>
<P>(2) <I>Conflicts prohibited.</I> Except for eligible administrative or personnel costs, the general rule is that no persons described in paragraph (h)(3) of this section who exercise or have exercised any functions or responsibilities with respect to CDBG activities assisted under this subpart or who are in a position to participate in a decisionmaking process or gain inside information with regard to such activities, may obtain a financial interest or benefit from the activity, or have an interest or benefit from the activity, or have an interest in any contract, subcontract or agreement with respect thereto, or the proceeds thereunder, either for themselves or those with whom they have family or business ties, during their tenure or for one year thereafter.
</P>
<P>(3) <I>Persons covered.</I> The conflict of interest provisions for paragraph (h)(2) of this section apply to any person who is an employee, agent, consultant, officer, or elected official or appointed official of the State, or of a unit of general local government, or of any designated public agencies, or subrecipients which are receiving CDBG funds.
</P>
<P>(4) <I>Exceptions: Thresholds requirements.</I> Upon written request by the State, an exception to the provisions of paragraph (h)(2) of this section involving an employee, agent, consultant, officer, or elected official or appointed official of the State may be granted by HUD on a case-by-case basis. In all other cases, the State may grant such an exception upon written request of the unit of general local government provided the State shall fully document its determination in compliance with all requirements of paragraph (h)(4) of this section including the State's position with respect to each factor at paragraph (h)(5) of this section and such documentation shall be available for review by the public and by HUD. An exception may be granted after it is determined that such an exception will serve to further the purpose of the Act and the effective and efficient administration of the program or project of the State or unit of general local government as appropriate. An exception may be considered only after the State or unit of general local government, as appropriate, has provided the following:
</P>
<P>(i) A disclosure of the nature of the conflict, accompanied by an assurance that there has been public disclosure of the conflict and a description of how the public disclosure was made; and
</P>
<P>(ii) An opinion of the attorney for the State or the unit of general local government, as appropriate, that the interest for which the exception is sought would not violate State or local law.
</P>
<P>(5) <I>Factors to be considered for exceptions.</I> In determining whether to grant a requested exception after the requirements of paragraph (h)(4) of this section have been satisfactorily met, the cumulative effect of the following factors, where applicable, shall be considered:
</P>
<P>(i) Whether the exception would provide a significant cost benefit or an essential degree of expertise to the program or project which would otherwise not be available;
</P>
<P>(ii) Whether an opportunity was provided for open competitive bidding or negotiation;
</P>
<P>(iii) Whether the person affected is a member of a group or class of low or moderate income persons intended to be the beneficiaries of the assisted activity, and the exception will permit such person to receive generally the same interests or benefits as are being made available or provided to the group or class;
</P>
<P>(iv) Whether the affected person has withdrawn from his or her functions or responsibilities, or the decisionmaking process with respect to the specific assisted activity in question;
</P>
<P>(v) Whether the interest or benefit was present before the affected person was in a position as described in paragraph (h)(3) of this section;
</P>
<P>(vi) Whether undue hardship will result either to the State or the unit of general local government or the person affected when weighed against the public interest served by avoiding the prohibited conflict; and
</P>
<P>(vii) Any other relevant considerations.
</P>
<P>(i) <I>Closeout of grants to units of general local government.</I> The State shall establish requirements for timely closeout of grants to units of general local government and shall take action to ensure the timely closeout of such grants.
</P>
<P>(j) <I>Change of use of real property.</I> The standards described in this section apply to real property within the unit of general local government's control (including activities undertaken by subrecipients) which was acquired or improved in whole or in part using CDBG funds in excess of the threshold for small purchase procurement (2 CFR 200.88). These standards shall apply from the date CDBG funds are first spent for the property until five years after closeout of the unit of general local government's grant. 
</P>
<P>(1) A unit of general local governments may not change the use or planned use of any such property (including the beneficiaries of such use) from that for which the acquisition or improvement was made, unless the unit of general local government provides affected citizens with reasonable notice of and opportunity to comment on any proposed change, and either: 
</P>
<P>(i) The new use of the property qualifies as meeting one of the national objectives and is not a building for the general conduct of government; or 
</P>
<P>(ii) The requirements in paragraph (j)(2) of this section are met. 
</P>
<P>(2) If the unit of general local government determines, after consultation with affected citizens, that it is appropriate to change the use of the property to a use which does not qualify under paragraph (j)(1) of this section, it may retain or dispose of the property for the changed use if the unit of general local government's CDBG program is reimbursed or the State's CDBG program is reimbursed, at the discretion of the State. The reimbursement shall be in the amount of the current fair market value of the property, less any portion of the value attributable to expenditures of non-CDBG funds for acquisition of, and improvements to, the property, except that if the change in use occurs after grant closeout but within 5 years of such closeout, the unit of general local government shall make the reimbursement to the State's CDBG program account. 
</P>
<P>(3) Following the reimbursement of the CDBG program in accordance with paragraph (j)(2) of this section, the property no longer will be subject to any CDBG requirements. 
</P>
<P>(k) <I>Accountability for real and personal property.</I> The State shall establish and implement requirements, consistent with State law and the purposes and requirements of this subpart (including paragraph (j) of this section) governing the use, management, and disposition of real and personal property acquired with CDBG funds. 
</P>
<P>(l) <I>Debarment and suspension.</I> The requirements in 2 CFR part 2424 are applicable. CDBG funds may not be provided to excluded or disqualified persons.
</P>
<P>(m) <I>Subrecipient monitoring and management.</I> The provisions of 2 CFR 200.330 through 200.332 are applicable.
</P>
<P>(n) <I>Audits.</I> Notwithstanding any other provision of this title, audits of a State and units of general local government shall be conducted in accordance with 2 CFR part 200, subpart F, which implements the Single Audit Act. States shall develop and administer an audits management system to ensure that audits of units of general local government are conducted in accordance with 2 CFR part 200, subpart F.
</P>
<P>(o) <I>Grant Closeout.</I>—HUD will close grants to States in accordance with the grant closeout requirements of 2 CFR 200.343.
</P>
<P>(p) <I>Cost principles and prior approval.</I> A State must ensure that costs incurred by the State and by its recipients are in conformance with 2 CFR part 200, subpart E. All cost items described in 2 CFR part 200, subpart E, that require Federal agency approval are allowable without prior approval of HUD, to the extent that they otherwise comply with the requirements of 2 CFR part 200, subpart E, and are otherwise eligible, except for the following:
</P>
<P>(1) Depreciation methods for fixed assets shall not be changed without the express approval of the cognizant Federal agency (2 CFR 200.436).
</P>
<P>(2) Fines, penalties, damages, and other settlements are unallowable costs to the CDBG program (2 CFR 200.441).
</P>
<P>(3) Costs of housing (<I>e.g.,</I> depreciation, maintenance, utilities, furnishings, rent), housing allowances, and personal living expenses (goods or services for personal use) regardless of whether reported as taxable income to the employees (2 CFR 200.445).
</P>
<P>(4) Organization costs (2 CFR 200.455).
</P>
<CITA TYPE="N">[57 FR 53397, Nov. 9, 1992, as amended at 60 FR 1952, Jan. 5, 1995; 61 FR 54922, Oct. 22, 1996; 67 FR 15112, Mar. 29, 2002; 72 FR 73496, Dec. 27, 2007; 77 FR 24143, Apr. 23, 2012; 80 FR 69871, Nov. 12, 2015; 80 FR 71936, Nov. 18, 2015; 80 FR 75937, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 570.490" NODE="24:3.1.1.3.3.9.1.11" TYPE="SECTION">
<HEAD>§ 570.490   Recordkeeping requirements.</HEAD>
<P>(a) <I>State records.</I> (1) The State shall establish and maintain such records as may be necessary to facilitate review and audit by HUD of the State's administration of CDBG funds under §  570.493. The content of records maintained by the State shall be as jointly agreed upon by HUD and the States and sufficient to enable HUD to make the determinations described at §  570.493. For fair housing and equal opportunity purposes, whereas such data is already being collected and where applicable, such records shall include data on the racial, ethnic, and sex characteristics of persons who are applicants for, participants in, or beneficiaries of the program. The records shall also permit audit of the States in accordance with 24 CFR part 85. 
</P>
<P>(2) The state shall keep records to document its funding decisions reached under the method of distribution described in 24 CFR 91.320(j)(1), including all the criteria used to select applications from local governments for funding and the relative importance of the criteria (if applicable), regardless of the organizational level at which final funding decisions are made, so that they can be reviewed by HUD, the Inspector General, the Government Accountability Office, and citizens pursuant to the requirements of § 570.490(c). 
</P>
<P>(3) <I>Integrated Disbursement and Information System (IDIS).</I> The state shall make entries into IDIS in a form prescribed by HUD to accurately capture the state's accomplishment and funding data, including program income, for each program year. It is recommended that the state enter IDIS data on a quarterly basis and it is required to be entered annually.
</P>
<P>(b) <I>Unit of general local government's record.</I> The State shall establish recordkeeping requirements for units of general local government receiving CDBG funds that are sufficient to facilitate reviews and audits of such units of general local government under §§ 570.492 and 570.493. For fair housing and equal opportunity purposes, whereas such data is already being collected and where applicable, such records shall include data on the racial, ethnic, and sex characteristics of persons who are applicants for, participants in, or beneficiaries of the program.




</P>
<P>(c) <I>Access to records.</I> (1) Representatives of HUD, the Inspector General, and the General Accounting Office shall have access to all books, accounts, records, reports, files, and other papers, or property pertaining to the administration, receipt and use of CDBG funds and necessary to facilitate such reviews and audits. 
</P>
<P>(2) The State shall provide citizens with reasonable access to records regarding the past use of CDBG funds and ensure that units of general local government provide citizens with reasonable access to records regarding the past use of CDBG funds consistent with State or local requirements concerning the privacy of personal records. 
</P>
<P>(d) <I>Record retention.</I> Records of the State and units of general local government, including supporting documentation, shall be retained for the greater of three years from closeout of the grant to the state, or the period required by other applicable laws and regulations as described in § 570.487 and § 570.488. 
</P>
<CITA TYPE="N">[57 FR 53397, Nov. 9, 1992, as amended at 71 FR 6971, Feb. 9, 2006; 77 FR 24146, Apr. 23, 2012; 80 FR 42367, July 16, 2015; 80 FR 75937, Dec. 7, 2015; 85 FR 47911, Aug. 7, 2020; 90 FR 11024, Mar. 3, 2025]




</CITA>
</DIV8>


<DIV8 N="§ 570.491" NODE="24:3.1.1.3.3.9.1.12" TYPE="SECTION">
<HEAD>§ 570.491   Performance and evaluation report.</HEAD>
<P>The annual performance and evaluation report shall be submitted in accordance with 24 CFR part 91. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0117)
</APPRO>
<CITA TYPE="N">[60 FR 1916, Jan. 5, 1995]


</CITA>
</DIV8>


<DIV8 N="§ 570.492" NODE="24:3.1.1.3.3.9.1.13" TYPE="SECTION">
<HEAD>§ 570.492   State's reviews and audits.</HEAD>
<P>(a) The state shall make reviews and audits including on-site reviews, of units of general local government as may be necessary or appropriate to meet the requirements of section 104(e)(2) of the Act.
</P>
<P>(b) In the case of noncompliance with these requirements, the State shall take such actions as may be appropriate to prevent a continuance of the deficiency, mitigate any adverse effects or consequences and prevent a recurrence. The state shall establish remedies for units of general local government noncompliance.


</P>
</DIV8>


<DIV8 N="§ 570.493" NODE="24:3.1.1.3.3.9.1.14" TYPE="SECTION">
<HEAD>§ 570.493   HUD's reviews and audits.</HEAD>
<P>(a) <I>General.</I> At least on an annual basis, HUD shall make such reviews and audits as may be necessary or appropriate to determine:
</P>
<P>(1) Whether the state has distributed CDBG funds to units of general local government in a timely manner in conformance to the method of distribution described in its action plan under part 91 of this title;
</P>
<P>(2) Whether the state has carried out its certifications in compliance with the requirements of the Act and this subpart and other applicable laws; and
</P>
<P>(3) Whether the state has made reviews and audits of the units of general local government required by § 570.492.
</P>
<P>(b) <I>Information considered.</I> In conducting performance reviews and audits, HUD will rely primarily on information obtained from the state's performance report, records maintained by the state, findings from on-site monitoring, audit reports, and the status of the state's unexpended grant funds. HUD may also consider relevant information on the state's performance gained from other sources, including litigation, citizens' comments, and other information provided by the state. A State's failure to maintain records in accordance with § 570.490 may result in a finding that the State has failed to meet the applicable requirement to which the record pertains.
</P>
<CITA TYPE="N">[57 FR 53397, Nov. 9, 1992, as amended at 61 FR 54922, Oct. 22, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 570.494" NODE="24:3.1.1.3.3.9.1.15" TYPE="SECTION">
<HEAD>§ 570.494   Timely distribution of funds by states.</HEAD>
<P>(a) States are encouraged to adopt and achieve a goal of obligating and announcing 95 percent of funds to units of general local government within 12 months of the state signing its grant agreement with HUD.
</P>
<P>(b) HUD will review each state to determine if the state has distributed CDBG funds in a timely manner. The state's distribution of CDBG funds is timely if:
</P>
<P>(1) All of the state's annual grant (excluding state administration) has been obligated and announced to units of general local government within 15 months of the state signing its grant agreement with HUD; and
</P>
<P>(2) Recaptured funds and program income received by the state are expeditiously obligated and announced to units of general local government.
</P>
<P>(c) HUD may collect necessary information from states to determine whether CDBG funds have been distributed in a timely manner.


</P>
</DIV8>


<DIV8 N="§ 570.495" NODE="24:3.1.1.3.3.9.1.16" TYPE="SECTION">
<HEAD>§ 570.495   Reviews and audits response.</HEAD>
<P>(a) If HUD's review and audit under § 570.493 results in a negative determination, or if HUD otherwise determines that a state or unit of general local government has failed to comply with any requirement of this subpart, the state will be given an opportunity to contest the finding and will be requested to submit a plan for corrective action. If the state is unsuccessful in contesting the validity of the finding to the satisfaction of HUD, or if the state's plan for corrective action is not satisfactory to HUD, HUD may take one or more of the following actions to prevent a continuation of the deficiency; mitigate, to the extent possible, the adverse effects or consequence of the deficiency; or prevent a recurrence of the deficiency:
</P>
<P>(1) Issue a letter of warning that advises the State of the deficiency and puts the state on notice that additional action will be taken if the deficiency is not corrected or is repeated;
</P>
<P>(2) Advise the state that additional information or assurances will be required before acceptance of one or more of the certifications required for the succeeding year grant;
</P>
<P>(3) Advise the state to suspend or terminate disbursement of funds for a deficient activity or grant;
</P>
<P>(4) Advise the state to reimburse its grant in any amounts improperly expended;
</P>
<P>(5) Change the method of payment to the state from an advance basis to a reimbursement basis;
</P>
<P>(6) Based on the state's current failure to comply with a requirement of this subpart which will affect the use of the succeeding year grant, condition the use of the succeeding fiscal years grant funds upon appropriate corrective action by the state. When the use of funds is conditioned, HUD shall specify the reasons for the conditions and the actions necessary to satisfy the conditions.
</P>
<P>(b)(1) Whenever HUD determines that a state or unit of general local government which is a recipient of CDBG funds has failed to comply with section 109 of the Act (nondiscrimination requirements), HUD shall notify the governor of the State or chief executive officer of the unit of general local government of the noncompliance and shall request the governor or the chief executive officer to secure compliance. If within a reasonable time, not to exceed sixty days, the governor or chief executive officer fails or refuses to secure compliance, HUD may take the following action:
</P>
<P>(i) Refer the matter to the Attorney General with a recommendation that an appropriate civil action be instituted;
</P>
<P>(ii) Exercise the powers and functions provided by title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d-2000d-7);
</P>
<P>(iii) Exercise the powers and functions provided for in § 570.496; or
</P>
<P>(iv) Take such other action as may be provided by law.
</P>
<P>(2) When a matter is referred to the Attorney General pursuant to paragraph (b)(1)(i) of this section, or whenever HUD has reason to believe that a State or unit of general local government is engaged in a pattern or practice in violation of the provisions of section 109 of the Act, the Attorney General may bring a civil action in any appropriate United States district court for such relief as may be appropriate, including injunctive relief.


</P>
</DIV8>


<DIV8 N="§ 570.496" NODE="24:3.1.1.3.3.9.1.17" TYPE="SECTION">
<HEAD>§ 570.496   Remedies for noncompliance; opportunity for hearing.</HEAD>
<P>(a) <I>General.</I> Action pursuant to this section will be taken only after at least one of the corrective or remedial actions specified in § 570.495 has been taken, and only then if the State or unit of general local government has not made an appropriate or timely response.
</P>
<P>(b) <I>Remedies.</I> (1) If HUD finds after reasonable notice and opportunity for hearing that a State or unit of general local government has failed to comply with any provision of this subpart, until HUD is satisfied that there is no longer failure to comply, HUD shall:
</P>
<P>(i) Terminate payments to the state;
</P>
<P>(ii) Reduce payments for current or future grants to the state by an amount equal to the amount of CDBG funds distributed or used without compliance with the requirements of this subpart;
</P>
<P>(iii) Limit the availability of payments to the state to activities not affected by the failure to comply or to activities designed to overcome the failure to comply;
</P>
<P>(iv) Based on the state's failure to comply with a requirement of this subpart (other than the state's current failure to comply which will affect the use of the succeeding year grant), condition the use of the grant funds upon appropriate corrective action by the state specified by HUD; or
</P>
<P>(v) With respect to a CDBG grant awarded by the state to a unit of general local government, withhold, reduce, or withdraw the grant, require the state to withhold, reduce, or withdraw the grant, or take other action as appropriate, except that CDBG funds expended on eligible activities shall not be recaptured or deducted from future CDBG grants to such unit of general local government.
</P>
<P>(2) HUD may on due notice suspend payments at any time after the issuance of a notice of opportunity for hearing pursuant to paragraph (d) of this section, pending such hearing and a final decision, to the extent HUD determines such action necessary to prevent a continuation of the noncompliance.
</P>
<P>(c) In lieu of, or in addition to, the action authorized by paragraph (b) of this section, if HUD has reason to believe that the state or unit of general local government has failed to comply substantially with any provision of this subpart, HUD may:
</P>
<P>(1) Refer the matter to the Attorney General of the United States with a recommendation that an appropriate civil action be instituted; and
</P>
<P>(2) Upon such a referral, the Attorney General may bring a civil action in any United States district court having venue thereof for such relief as may be appropriate, including an action to recover the amount of the CDBG funds which was not expended in accordance with this subpart, or for mandatory or injunctive relief.
</P>
<P>(d) <I>Proceedings.</I> When HUD proposes to take action pursuant to this section, the respondent in the proceedings will be the state. At the option of HUD, a unit of general local government may also be a respondent. These procedures are to be followed before imposition of a sanction described in paragraph (b)(1) of this section:
</P>
<P>(1) <I>Notice of opportunity for hearing.</I> HUD shall notify the respondent in writing of the proposed action and of the opportunity for a hearing. The notice shall be sent to the respondent by first class mail and shall provide notice:
</P>
<P>(i) In a manner which is adequate to allow the respondent to prepare its response, the basis upon which HUD determined that the respondent failed to comply with a provision of this subpart;
</P>
<P>(ii) That the hearing procedures are governed by these rules;
</P>
<P>(iii) That the respondent has 14 days from receipt of the notice within which to provide a written request for a hearing to the Docket Clerk, Office of Hearings and Appeals, and the address and telephone number of the Docket Clerk;
</P>
<P>(iv) Of the action which HUD proposes to take and that the authority for this action is § 570.496 of this subpart;
</P>
<P>(v) That if the respondent fails to request a hearing within the time specified, HUD's determination that the respondent failed to comply with a provision of this subpart shall be final and HUD may proceed to take the proposed action.
</P>
<P>(2) <I>Initiation of hearing.</I> The respondent shall be allowed 14 days from receipt of the notice within which to notify HUD in writing of its request for a hearing. If no request is received within the time specified, HUD's determination that the respondent failed to comply with a provision of this subpart shall be final and HUD may proceed to take the proposed action.
</P>
<P>(3) <I>Administrative Law Judge.</I> Proceedings conducted under these rules shall be presided over by an Administrative Law Judge (ALJ), appointed as provided by section 11 of the Administrative Procedure Act (5 U.S.C. 3105). The case shall be referred to the ALJ by HUD at the time a hearing is requested. The ALJ shall promptly notify the parties of the time and place at which the hearing will be held. The ALJ shall conduct a fair and impartial hearing and take all action necessary to avoid delay in the disposition of proceedings and to maintain order. The ALJ shall have all powers necessary to those ends, including but not limited to the power:
</P>
<P>(i) To administer oaths and affirmations;
</P>
<P>(ii) To issue subpoenas as authorized by law;
</P>
<P>(iii) To rule upon offers of proof and receive relevant evidence;
</P>
<P>(iv) To order or limit discovery before the hearing as the interests of justice may require;
</P>
<P>(v) To regulate the course of the hearing and the conduct of the parties and their counsel;
</P>
<P>(vi) To hold conferences for the settlement or simplification of the issues by consent of the parties;
</P>
<P>(vii) To consider and rule upon all procedural and other motions appropriate in adjudicative proceedings; and
</P>
<P>(viii) To make and file initial determinations.
</P>
<P>(4) <I>Ex parte communications.</I> An ex parte communication is any communication with an ALJ, direct or indirect, oral or written, concerning the merits or procedures of any pending proceeding which is made by a party in the absence of any other party. Ex parte communications are prohibited except where the purpose and content of the communication have been disclosed in advance or simultaneously to all parties, or the communication is a request for information concerning the status of the case. Any ALJ who receives an ex parte communication which the ALJ knows or has reason to believe is unauthorized shall promptly place the communication, or its substance, in all files and shall furnish copies to all parties. Unauthorized ex parte communications shall not be taken into consideration in deciding any matter in issue.
</P>
<P>(5) <I>The hearing.</I> All parties shall have the right to be represented at the hearing by counsel. The ALJ shall conduct the proceedings in an expeditious manner while allowing the parties to present all oral and written evidence which tends to support their respective positions, but the ALJ shall exclude irrelevant, immaterial or unduly repetitious evidence. HUD has the burden of proof in showing by a preponderance of evidence that the respondent failed to comply with a provision of this subpart. Each party shall be allowed to cross-examine adverse witnesses and to rebut and comment upon evidence presented by the other party. Hearings shall be open to the public. So far as the orderly conduct of the hearing permits, interested persons other than the parties may appear and participate in the hearing.
</P>
<P>(6) <I>Transcripts.</I> Hearings shall be recorded and transcribed only by a reporter under the supervision of the ALJ. The original transcript shall be a part of the record and shall constitute the sole official transcript. Respondents and the public, at their own expense, shall obtain copies of the transcript.
</P>
<P>(7) <I>The ALJ's decisions.</I> At the conclusion of the hearing, the ALJ shall give the parties a reasonable opportunity to submit proposed findings and conclusions and supporting reasons therefor. Generally, within 60 days after the conclusion of the hearing, the ALJ shall prepare a written decision which includes a Statement of findings and conclusions, and the reasons or basis therefor, on all the material issues of fact, law or discretion presented on the record and the appropriate sanction or denial thereof. The decision shall be based on consideration of the whole record or those parts thereof cited by a party and supported by and in accordance with the reliable, probative, and substantial evidence. A copy of the decision shall be furnished to the parties immediately by first class mail and shall include a notice that any requests for review by the Secretary must be made in writing to the Secretary within 30 days of the receipt of the decision.
</P>
<P>(8) <I>Record.</I> The transcript of testimony and exhibits, together with the decision of the ALJ and all papers and requests filed in the proceeding, constitutes the exclusive record for decision and, on payment of its reasonable cost, shall be made available to the parties. After reaching the initial decision, the ALJ shall certify to the complete record and forward the record to the Secretary.
</P>
<P>(9) <I>Review by the Secretary.</I> The decision by the ALJ shall constitute the final decision of HUD unless, within 30 days after the receipt of the decision, either the respondent or the Assistant Secretary for Community Planning and Development files an exception and request for review by the Secretary. The excepting party must transmit simultaneously to the Secretary and the other party the request for review and the bases of the party's exceptions to the findings of the ALJ. The other party shall be allowed 30 days from receipt of the exception to provide the Secretary and the excepting party with a written reply. The Secretary shall then review the record of the case, including the exceptions and the reply. On the basis of such review, the Secretary shall issue a written determination, including a Statement of the rationale therefor, affirming, modifying or revoking the decision of the ALJ. The Secretary's decision shall be made and transmitted to the parties within 60 days after the decision of the ALJ was furnished to the parties.
</P>
<P>(10) <I>Judicial review.</I> The respondent may seek judicial review of HUD's decision pursuant to section 111(c) of the Act. 
</P>
<CITA TYPE="N">[74 FR 4636, Jan. 26, 2009; 87 FR 8197, Feb. 14, 2022]


</CITA>
</DIV8>


<DIV8 N="§ 570.497" NODE="24:3.1.1.3.3.9.1.18" TYPE="SECTION">
<HEAD>§ 570.497   Condition of State election to administer State CDBG Program.</HEAD>
<P>Pursuant to section 106(d)(2)(A)(i) of the Act, a State has the right to elect, in such manner and at such time as the Secretary may prescribe, to administer funds allocated under subpart A of this part for use in nonentitlement areas of the State. After January 26, 1995, any State which elects to administer the allocation of CDBG funds for use in nonentitlement areas of the State in any year must, in addition to all other requirements of this subpart, submit a pledge by the State in accordance with section 108(d)(2) of the Act, and in a form acceptable to HUD, of any future CDBG grants it may receive under subpart A and this subpart. Such pledge shall be for the purpose of assuring repayment of any debt obligations (as defined in § 570.701), in accordance with their terms, that HUD may have guaranteed in the respective State on behalf of any nonentitlement public entity (as defined in § 570.701) or its designated public agency prior to the State's election.
</P>
<CITA TYPE="N">[59 FR 66604, Dec. 27, 1994]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="J" NODE="24:3.1.1.3.3.10" TYPE="SUBPART">
<HEAD>Subpart J—Grant Administration</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>53 FR 8058, Mar. 11, 1988, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 570.500" NODE="24:3.1.1.3.3.10.1.1" TYPE="SECTION">
<HEAD>§ 570.500   Definitions.</HEAD>
<P>For the purposes of this subpart, the following terms shall apply:
</P>
<P>(a) <I>Program income</I> means gross income received by the recipient or a subrecipient directly generated from the use of CDBG funds, except as provided in paragraph (a)(4) of this section.
</P>
<P>(1) Program income includes, but is not limited to, the following:
</P>
<P>(i) Proceeds from the disposition by sale or long-term lease of real property purchased or improved with CDBG funds;
</P>
<P>(ii) Proceeds from the disposition of equipment purchased with CDBG funds;
</P>
<P>(iii) Gross income from the use or rental of real or personal property acquired by the recipient or by a subrecipient with CDBG funds, less costs incidental to generation of the income;
</P>
<P>(iv) Gross income from the use or rental of real property, owned by the recipient or by a subrecipient, that was constructed or improved with CDBG funds, less costs incidental to generation of the income; 
</P>
<P>(v) Payments of principal and interest on loans made using CDBG funds, except as provided in paragraph (a)(3) of this section; 
</P>
<P>(vi) Proceeds from the sale of loans made with CDBG funds;
</P>
<P>(vii) Proceeds from sale of obligations secured by loans made with CDBG funds;
</P>
<P>(viii) [Reserved] 
</P>
<P>(ix) Interest earned on program income pending its disposition; and 
</P>
<P>(x) Funds collected through special assessments made against properties owned and occupied by households <I>not</I> of low and moderate income, where the assessments are used to recover all or part of the CDBG portion of a public improvement. 
</P>
<P>(2) Program income does not include income earned (except for interest described in § 570.513) on grant advances from the U.S. Treasury. The following items of income earned on grant advances must be remitted to HUD for transmittal to the U.S. Treasury, and will not be reallocated under section 106(c) or (d) of the Act: 
</P>
<P>(i) Interest earned from the investment of the initial proceeds of a grant advance by the U.S. Treasury; 
</P>
<P>(ii) Interest earned on loans or other forms of assistance provided with CDBG funds that are used for activities determined by HUD either to be ineligible or to fail to meet a national objective in accordance with the requirements of subpart C of this part, or that fail substantially to meet any other requirement of this part; and 
</P>
<P>(iii) Interest earned on the investment of amounts reimbursed to the CDBG program account prior to the use of the reimbursed funds for eligible purposes. 
</P>
<P>(3) The calculation of the amount of program income for the recipient's CDBG program as a whole (i.e., comprising activities carried out by a grantee and its subrecipients) shall exclude payments made by subrecipients of principal and/or interest on CDBG-funded loans received from grantees if such payments are made using program income received by the subrecipient. (By making such payments, the subrecipient shall be deemed to have transferred program income to the grantee.) The amount of program income derived from this calculation shall be used for reporting purposes, for purposes of applying the requirement under § 570.504(b)(2)(iii), and in determining limitations on planning and administration and public services activities to be paid for with CDBG funds. 
</P>
<P>(4) Program income does not include: 
</P>
<P>(i) Any income received in a single program year by the recipient and all its subrecipients if the total amount of such income does not exceed $25,000; and 
</P>
<P>(ii) Amounts generated by activities that are financed by a loan guaranteed under section 108 of the Act and meet one or more of the public benefit criteria specified at § 570.209(b)(2)(v) or are carried out in conjunction with a grant under section 108(q) in an area determined by HUD to meet the eligibility requirements for designation as an Urban Empowerment Zone pursuant to 24 CFR part 597, subpart B. Such exclusion shall not apply if CDBG funds are used to repay the guaranteed loan. When such a guaranteed loan is partially repaid with CDBG funds, the amount generated shall be prorated to reflect the percentage of CDBG funds used. Amounts generated by activities financed with loans guaranteed under section 108 which are not defined as program income shall be treated as miscellaneous revenue and shall not be subject to any of the requirements of this part, except that the use of such funds shall be limited to activities that are located in a revitalization strategy area and implement a HUD approved area revitalization strategy pursuant to § 91.215(e) of this title. However, such treatment shall not affect the right of the Secretary to require the section 108 borrower to pledge such amounts as security for the guaranteed loan. The determination whether such amounts shall constitute program income shall be governed by the provisions of the contract required at § 570.705(b)(1). 
</P>
<P>(5) Examples of other receipts that are not considered program income are proceeds from fund raising activities carried out by subrecipients receiving CDBG assistance (the costs of fundraising are generally unallowable under the applicable OMB circulars referenced in 24 CFR 84.27), funds collected through special assessments used to recover the non-CDBG portion of a public improvement, and proceeds from the disposition of real property acquired or improved with CDBG funds when the disposition occurs after the applicable time period specified in § 570.503(b)(8) for subrecipient-controlled property, or in § 570.505 for recipient-controlled property. 
</P>
<P>(b) <I>Revolving fund</I> means a separate fund (with a set of accounts that are independent of other program accounts) established for the purpose of carrying out specific activities which, in turn, generate payments to the fund for use in carrying out the same activities. Each revolving loan fund's cash balance must be held in an interest-bearing account, and any interest paid on CDBG funds held in this account shall be considered interest earned on grant advances and must be remitted to HUD for transmittal to the U.S. Treasury no less frequently than annually. (Interest paid by borrowers on eligible loans made from the revolving loan fund shall be program income and treated accordingly.) 
</P>
<P>(c) <I>Subrecipient</I> means a public or private nonprofit agency, authority, or organization, or a for-profit entity authorized under § 570.201(o), receiving CDBG funds from the recipient or another subrecipient to undertake activities eligible for such assistance under subpart C of this part. The term excludes an entity receiving CDBG funds from the recipient under the authority of § 570.204, unless the grantee explicitly designates it as a subrecipient. The term includes a public agency designated by a unit of general local government to receive a loan guarantee under subpart M of this part, but does not include contractors providing supplies, equipment, construction, or services subject to the procurement requirements in 2 CFR part 200, subpart D. 
</P>
<CITA TYPE="N">[53 FR 8058, Mar. 11, 1988, as amended at 57 FR 27120, June 17, 1992; 60 FR 1952, Jan. 5, 1995; 60 FR 17445, Apr. 6, 1995; 60 FR 56914, Nov. 9, 1995; 80 FR 75937, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 570.501" NODE="24:3.1.1.3.3.10.1.2" TYPE="SECTION">
<HEAD>§ 570.501   Responsibility for grant administration.</HEAD>
<P>(a) One or more public agencies, including existing local public agencies, may be designated by the chief executive officer of the recipient to undertake activities assisted by this part. A public agency so designated shall be subject to the same requirements as are applicable to subrecipients. 
</P>
<P>(b) The recipient is responsible for ensuring that CDBG funds are used in accordance with all program requirements. The use of designated public agencies, subrecipients, or contractors does not relieve the recipient of this responsibility. The recipient is also responsible for determining the adequacy of performance under subrecipient agreements and procurement contracts, and for taking appropriate action when performance problems arise, such as the actions described in § 570.910. Where a unit of general local government is participating with, or as part of, an urban county, or as part of a metropolitan city, the recipient is responsible for applying to the unit of general local government the same requirements as are applicable to subrecipients, except that the five-year period identified under § 570.503(b)(8)(i) shall begin with the date that the unit of general local government is no longer considered by HUD to be a part of the metropolitan city or urban county, as applicable, instead of the date that the subrecipient agreement expires.
</P>
<CITA TYPE="N">[53 FR 8058, Mar. 11, 1988, as amended at 57 FR 27120, June 17, 1992]


</CITA>
</DIV8>


<DIV8 N="§ 570.502" NODE="24:3.1.1.3.3.10.1.3" TYPE="SECTION">
<HEAD>§ 570.502   Applicability of uniform administrative requirements.</HEAD>
<P>(a) Grantees and subrecipients shall comply with 2 CFR part 200, “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards”, except that:
</P>
<P>(1) Section 200.305 “Payment” is modified for lump sum drawdown for financing of property rehabilitation activities, in accordance with § 570.513.
</P>
<P>(2) Section 200.306 “Cost sharing or matching” does not apply.
</P>
<P>(3) Section 200.307 “Program income” does not apply. Program income is governed by § 570.504.
</P>
<P>(4) Section 200.308 “Revisions of budget and program plans” does not apply.
</P>
<P>(5) Section 200.311 “Real property” does not apply, except as provided in § 570.200(j). Real property is governed by § 570.505.
</P>
<P>(6) Section 200.313 “Equipment” applies, except that when the equipment is sold, the proceeds shall be program income. Equipment not needed by the subrecipient for CDBG activities shall be transferred to the recipient for the CDBG program or shall be retained after compensating the recipient.
</P>
<P>(7) Section 200.333 “Retention requirements for records” applies except that:
</P>
<P>(i) For recipients:
</P>
<P>(A) The period shall be 4 years from the date of execution of the closeout agreement for a grant, as further described in this part;
</P>
<P>(B) Records for individual activities subject to the reversion of assets provisions at § 570.503(b)(7) or the change of use provisions at § 570.505 must be maintained for 3 years after those provisions no longer apply to the activity;
</P>
<P>(C) Records for individual activities for which there are outstanding loan balances, other receivables, or contingent liabilities must be retained for 3 years after the receivables or liabilities have been satisfied.
</P>
<P>(ii) For subrecipients:
</P>
<P>(A) The retention period for individual CDBG activities shall be the longer of 3 years after the expiration or termination of the subrecipient agreement under § 570.503, or 3 years after the submission of the annual performance and evaluation report, as prescribed in § 91.520 of this title, in which the specific activity is reported on for the final time;
</P>
<P>(B) Records for individual activities subject to the reversion of assets provisions at § 570.503(b)(7) or change of use provisions at § 570.505 must be maintained for as long as those provisions continue to apply to the activity; and
</P>
<P>(C) Records for individual activities for which there are outstanding loan balances, other receivables, or contingent liabilities must be retained until such receivables or liabilities have been satisfied.
</P>
<P>(8) Section 200.343 “Closeout” applies to closeout of subrecipients.
</P>
<P>(b) [Reserved]
</P>
<CITA TYPE="N">[80 FR 75937, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 570.503" NODE="24:3.1.1.3.3.10.1.4" TYPE="SECTION">
<HEAD>§ 570.503   Agreements with subrecipients.</HEAD>
<P>(a) Before disbursing any CDBG funds to a subrecipient, the recipient shall sign a written agreement with the subrecipient. The agreement shall remain in effect during any period that the subrecipient has control over CDBG funds, including program income. 
</P>
<P>(b) At a minimum, the written agreement with the subrecipient shall include provisions concerning the following items:
</P>
<P>(1) <I>Statement of work.</I> The agreement shall include a description of the work to be performed, a schedule for completing the work, and a budget. These items shall be in sufficient detail to provide a sound basis for the recipient effectively to monitor performance under the agreement. 
</P>
<P>(2) <I>Records and reports.</I> The recipient shall specify in the agreement the particular records the subrecipient must maintain and the particular reports the subrecipient must submit in order to assist the recipient in meeting its recordkeeping and reporting requirements. 
</P>
<P>(3) <I>Program income.</I> The agreement shall include the program income requirements set forth in § 570.504(c). The agreement shall also specify that, at the end of the program year, the grantee may require remittance of all or part of any program income balances (including investments thereof) held by the subrecipient (except those needed for immediate cash needs, cash balances of a revolving loan fund, cash balances from a lump sum drawdown, or cash or investments held for section 108 security needs). 
</P>
<P>(4) <I>Uniform requirements.</I> The agreement shall require the subrecipient to comply with applicable uniform requirements, as described in § 570.502. 
</P>
<P>(5) <I>Other program requirements.</I> The agreement shall require the subrecipient to carry out each activity in compliance with all Federal laws and regulations described in subpart K of these regulations, except that: 
</P>
<P>(i) The subrecipient does not assume the recipient's environmental responsibilities described at § 570.604; and 
</P>
<P>(ii) The subrecipient does not assume the recipient's responsibility for initiating the review process under the provisions of 24 CFR part 52. 
</P>
<P>(6) <I>Suspension and termination.</I> The agreement shall set forth remedies for noncompliance and provisions on termination in accordance with 2 CFR part 200, subpart D.
</P>
<P>(7) <I>Reversion of assets.</I> The agreement shall specify that upon its expiration the subrecipient shall transfer to the recipient any CDBG funds on hand at the time of expiration and any accounts receivable attributable to the use of CDBG funds. It shall also include provisions designed to ensure that any real property under the subrecipient's control that was acquired or improved in whole or in part with CDBG funds (including CDBG funds provided to the subrecipient in the form of a loan) in excess of $25,000 is either: 
</P>
<P>(i) Used to meet one of the national objectives in § 570.208 (formerly § 570.901) until five years after expiration of the agreement, or for such longer period of time as determined to be appropriate by the recipient; or 
</P>
<P>(ii) Not used in accordance with paragraph (b)(7)(i) of this section, in which event the subrecipient shall pay to the recipient an amount equal to the current market value of the property less any portion of the value attributable to expenditures of non-CDBG funds for the acquisition of, or improvement to, the property. The payment is program income to the recipient. (No payment is required after the period of time specified in paragraph (b)(7)(i) of this section.)
</P>
<CITA TYPE="N">[53 FR 8058, Mar. 11, 1988, as amended at 53 FR 41331, Oct. 21, 1988; 57 FR 27120, June 17, 1992; 60 FR 56915, Nov. 9, 1995; 68 FR 56405, Sept. 30, 2003; 80 FR 69873, Nov. 12, 2015; 80 FR 75938, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 570.504" NODE="24:3.1.1.3.3.10.1.5" TYPE="SECTION">
<HEAD>§ 570.504   Program income.</HEAD>
<P>(a) <I>Recording program income.</I> The receipt and expenditure of program income as defined in § 570.500(a) shall be recorded as part of the financial transactions of the grant program. 
</P>
<P>(b) <I>Disposition of program income received by recipients.</I> (1) Program income received before grant closeout may be retained by the recipient if the income is treated as additional CDBG funds subject to all applicable requirements governing the use of CDBG funds. 
</P>
<P>(2) If the recipient chooses to retain program income, that program income shall be disposed of as follows: 
</P>
<P>(i) Program income in the form of repayments to, or interest earned on, a revolving fund as defined in § 570.500(b) shall be substantially disbursed from the fund before additional cash withdrawals are made from the U.S. Treasury for the same activity. (This rule does not prevent a lump sum disbursement to finance the rehabilitation of privately owned properties as provided for in § 570.513.) 
</P>
<P>(ii) Substantially all other program income shall be disbursed for eligible activities before additional cash withdrawals are made from the U.S. Treasury. 
</P>
<P>(iii) At the end of each program year, the aggregate amount of program income cash balances and any investment thereof (except those needed for immediate cash needs, cash balances of a revolving loan fund, cash balances from a lump-sum drawdown, or cash or investments held for section 108 loan guarantee security needs) that, as of the last day of the program year, exceeds one-twelfth of the most recent grant made pursuant to § 570.304 shall be remitted to HUD as soon as practicable thereafter, to be placed in the recipient's line of credit. This provision applies to program income cash balances and investments thereof held by the grantee and its subrecipients. (This provision shall be applied for the first time at the end of the program year for which Federal Fiscal Year 1996 funds are provided.) 
</P>
<P>(3) Program income on hand at the time of closeout shall continue to be subject to the eligibility requirements in subpart C and all other applicable provisions of this part until it is expended. 
</P>
<P>(4) Unless otherwise provided in any grant closeout agreement, and subject to the requirements of paragraph (b)(5) of this section, income received after closeout shall not be governed by the provisions of this part, except that, if at the time of closeout the recipient has another ongoing CDBG grant received directly from HUD, funds received after closeout shall be treated as program income of the ongoing grant program. 
</P>
<P>(5) If the recipient does not have another ongoing grant received directly from HUD at the time of closeout, income received after closeout from the disposition of real property or from loans outstanding at the time of closeout shall not be governed by the provisions of this part, except that such income shall be used for activities that meet one of the national objectives in § 570.901 and the eligibility requirements described in section 105 of the Act. 
</P>
<P>(c) <I>Disposition of program income received by subrecipients.</I> The written agreement between the recipient and the subrecipient, as required by § 570.503, shall specify whether program income received is to be returned to the recipient or retained by the subrecipient. Where program income is to be retained by the subrecipient, the agreement shall specify the activities that will be undertaken with the program income and that all provisions of the written agreement shall apply to the specified activities. When the subrecipient retains program income, transfers of grant funds by the recipient to the subrecipient shall be adjusted according to the principles described in paragraphs (b)(2) (i) and (ii) of this section. Any program income on hand when the agreement expires, or received after the agreement's expiration, shall be paid to the recipient as required by § 570.503(b)(8). 
</P>
<P>(d) <I>Disposition of certain program income received by urban counties.</I> Program income derived from urban county program activities undertaken by or within the jurisdiction of a unit of general local government which thereafter terminates its participation in the urban county shall continue to be program income of the urban county. The urban county may transfer the program income to the unit of general local government, upon its termination of urban county participation, provided that the unit of general local government has become an entitlement grantee and agrees to use the program income in its own CDBG entitlement program. 
</P>
<P>(e)(1) <I>Transfer of program income to Entitlement program.</I> A unit of general local government that becomes eligible to be an Entitlement grantee may request the state's approval to transfer State CDBG grant-generated program income to the unit of general local government's Entitlement program. A state may approve the transfer, provided that the unit of general local government:
</P>
<P>(i) Has officially elected to participate in the Entitlement grant program;
</P>
<P>(ii) Agrees to use such program income in accordance with Entitlement program requirements; and
</P>
<P>(iii) Has set up Integrated Disbursement and Information System (IDIS) access and agrees to enter receipt of program income into IDIS.
</P>
<P>(2) <I>Transfer of program income of grantees losing Entitlement status.</I> Upon entry into the State CDBG program, a unit of general local government that has lost or relinquished its Entitlement status must, with respect to program income that a unit of general local government would otherwise be permitted to retain, either:
</P>
<P>(i) Retain the program income generated under Entitlement grants and continue to comply with Entitlement program requirements for program income; or
</P>
<P>(ii) Retain the program income and transfer it to the State CDBG program, in which case the unit of general local government must comply with the state's rules for program income and the requirements of § 570.489(e).
</P>
<CITA TYPE="N">[53 FR 8058, Mar. 11, 1988, as amended at 60 FR 56915, Nov. 9, 1995; 77 FR 24146, Apr. 23, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 570.505" NODE="24:3.1.1.3.3.10.1.6" TYPE="SECTION">
<HEAD>§ 570.505   Use of real property.</HEAD>
<P>The standards described in this section apply to real property within the recipient's control which was acquired or improved in whole or in part using CDBG funds in excess of $25,000. These standards shall apply from the date CDBG funds are first spent for the property until five years after closeout of an entitlement recipient's participation in the entitlement CDBG program or, with respect to other recipients, until five years after the closeout of the grant from which the assistance to the property was provided. 
</P>
<P>(a) A recipient may not change the use or planned use of any such property (including the beneficiaries of such use) from that for which the acquisition or improvement was made unless the recipient provides affected citizens with reasonable notice of, and opportunity to comment on, any proposed change, and either: 
</P>
<P>(1) The new use of such property qualifies as meeting one of the national objectives in § 570.208 (formerly § 570.901) and is not a building for the general conduct of government; or 
</P>
<P>(2) The requirements in paragraph (b) of this section are met. 
</P>
<P>(b) If the recipient determines, after consultation with affected citizens, that it is appropriate to change the use of the property to a use which does not qualify under paragraph (a)(1) of this section, it may retain or dispose of the property for the changed use if the recipient's CDBG program is reimbursed in the amount of the current fair market value of the property, less any portion of the value attributable to expenditures of non-CDBG funds for acquisition of, and improvements to, the property. 
</P>
<P>(c) If the change of use occurs after closeout, the provisions governing income from the disposition of the real property in § 570.504(b)(4) or (5), as applicable, shall apply to the use of funds reimbursed. 
</P>
<P>(d) Following the reimbursement of the CDBG program in accordance with paragraph (b) of this section, the property no longer will be subject to any CDBG requirements.
</P>
<CITA TYPE="N">[53 FR 8058, Mar. 11, 1988, as amended at 53 FR 41331, Oct. 21, 1988]


</CITA>
</DIV8>


<DIV8 N="§ 570.506" NODE="24:3.1.1.3.3.10.1.7" TYPE="SECTION">
<HEAD>§ 570.506   Records to be maintained.</HEAD>
<P>Each recipient shall establish and maintain sufficient records to enable the Secretary to determine whether the recipient has met the requirements of this part. At a minimum, the following records are needed: 
</P>
<P>(a) Records providing a full description of each activity assisted (or being assisted) with CDBG funds, including its location (if the activity has a geographical locus), the amount of CDBG funds budgeted, obligated and expended for the activity, and the provision in subpart C under which it is eligible. 
</P>
<P>(b) Records demonstrating that each activity undertaken meets one of the criteria set forth in § 570.208. (Where information on income by family size is required, the recipient may substitute evidence establishing that the person assisted qualifies under another program having income qualification criteria at least as restrictive as that used in the definitions of “low and moderate income person” and “low and moderate income household” (as applicable) at § 570.3, such as Job Training Partnership Act (JTPA) and welfare programs; or the recipient may substitute evidence that the assisted person is homeless; or the recipient may substitute a copy of a verifiable certification from the assisted person that his or her family income does not exceed the applicable income limit established in accordance with § 570.3; or the recipient may substitute a notice that the assisted person is a referral from a state, county or local employment agency or other entity that agrees to refer individuals it determines to be low and moderate income persons based on HUD's criteria and agrees to maintain documentation supporting these determinations.) Such records shall include the following information: 
</P>
<P>(1) For each activity determined to benefit low and moderate income persons, the income limits applied and the point in time when the benefit was determined. 
</P>
<P>(2) For each activity determined to benefit low and moderate income persons based on the area served by the activity: 
</P>
<P>(i) The boundaries of the service area; 
</P>
<P>(ii) The income characteristics of families and unrelated individuals in the service area; and 
</P>
<P>(iii) If the percent of low and moderate income persons in the service area is less than 51 percent, data showing that the area qualifies under the exception criteria set forth at § 570.208(a)(1)(ii). 
</P>
<P>(3) For each activity determined to benefit low and moderate income persons because the activity involves a facility or service designed for use by a limited clientele consisting exclusively or predominantly of low and moderate income persons: 
</P>
<P>(i) Documentation establishing that the facility or service is designed for the particular needs of or used exclusively by senior citizens, adults meeting the Bureau of the Census' Current Population Reports definition of “severely disabled,” persons living with AIDS, battered spouses, abused children, the homeless, illiterate adults, or migrant farm workers, for which the regulations provide a presumption concerning the extent to which low- and moderate-income persons benefit; or 
</P>
<P>(ii) Documentation describing how the nature and, if applicable, the location of the facility or service establishes that it is used predominantly by low and moderate income persons; or 
</P>
<P>(iii) Data showing the size and annual income of the family of each person receiving the benefit. 
</P>
<P>(4) For each activity carried out for the purpose of providing or improving housing which is determined to benefit low and moderate income persons: 
</P>
<P>(i) A copy of a written agreement with each landlord or developer receiving CDBG assistance indicating the total number of dwelling units in each multifamily structure assisted and the number of those units which will be occupied by low and moderate income households after assistance; 
</P>
<P>(ii) The total cost of the activity, including both CDBG and non-CDBG funds. 
</P>
<P>(iii) For each unit occupied by a low and moderate income household, the size and income of the household;
</P>
<P>(iv) For rental housing only: 
</P>
<P>(A) The rent charged (or to be charged) after assistance for each dwelling unit in each structure assisted; and 
</P>
<P>(B) Such information as necessary to show the affordability of units occupied (or to be occupied) by low and moderate income households pursuant to criteria established and made public by the recipient; 
</P>
<P>(v) For each property acquired on which there are no structures, evidence of commitments ensuring that the criteria in § 570.208(a)(3) will be met when the structures are built; 
</P>
<P>(vi) Where applicable, records demonstrating that the activity qualifies under the special conditions at § 570.208(a)(3)(i); 
</P>
<P>(vii) For any homebuyer assistance activity qualifying under § 570.201(e), 570.201(n), or 570.204, identification of the applicable eligibility paragraph and evidence that the activity meets the eligibility criteria for that provision; for any such activity qualifying under § 570.208(a), the size and income of each homebuyer's household; and 
</P>
<P>(viii) For a § 570.201(k) housing services activity, identification of the HOME project(s) or assistance that the housing services activity supports, and evidence that project(s) or assistance meet the HOME program income targeting requirements at 24 CFR 92.252 or 92.254. 
</P>
<P>(5) For each activity determined to benefit low and moderate income persons based on the creation of jobs, the recipient shall provide the documentation described in either paragraph (b)(5)(i) or (ii) of this section. 
</P>
<P>(i) Where the recipient chooses to document that at least 51 percent of the jobs will be available to low and moderate income persons, documentation for each assisted business shall include: 
</P>
<P>(A) A copy of a written agreement containing: 
</P>
<P>(<I>1</I>) A commitment by the business that it will make at least 51 percent of the jobs available to low and moderate income persons and will provide training for any of those jobs requiring special skills or education; 
</P>
<P>(<I>2</I>) A listing by job title of the permanent jobs to be created indicating which jobs will be available to low and moderate income persons, which jobs require special skills or education, and which jobs are part-time, if any; and 
</P>
<P>(<I>3</I>) A description of actions to be taken by the recipient and business to ensure that low and moderate income persons receive first consideration for those jobs; and 
</P>
<P>(B) A listing by job title of the permanent jobs filled, and which jobs of those were available to low and moderate income persons, and a description of how first consideration was given to such persons for those jobs. The description shall include what hiring process was used; which low and moderate income persons were interviewed for a particular job; and which low and moderate income persons were hired. 
</P>
<P>(ii) Where the recipient chooses to document that at least 51 percent of the jobs will be held by low and moderate income persons, documentation for each assisted business shall include: 
</P>
<P>(A) A copy of a written agreement containing: 
</P>
<P>(<I>1</I>) A commitment by the business that at least 51 percent of the jobs, on a full-time equivalent basis, will be held by low and moderate income persons; and 
</P>
<P>(<I>2</I>) A listing by job title of the permanent jobs to be created, identifying which are part-time, if any; 
</P>
<P>(B) A listing by job title of the permanent jobs filled and which jobs were initially held by low and moderate income persons; and 
</P>
<P>(C) For each such low and moderate income person hired, the size and annual income of the person's family prior to the person being hired for the job. 
</P>
<P>(6) For each activity determined to benefit low and moderate income persons based on the retention of jobs: 
</P>
<P>(i) Evidence that in the absence of CDBG assistance jobs would be lost; 
</P>
<P>(ii) For each business assisted, a listing by job title of permanent jobs retained, indicating which of those jobs are part-time and (where it is known) which are held by low and moderate income persons at the time the CDBG assistance is provided. Where applicable, identification of any of the retained jobs (other than those known to be held by low and moderate income persons) which are projected to become available to low and moderate income persons through job turnover within two years of the time CDBG assistance is provided. Information upon which the job turnover projections were based shall also be included in the record; 
</P>
<P>(iii) For each retained job claimed to be held by a low and moderate income person, information on the size and annual income of the person's family; 
</P>
<P>(iv) For jobs claimed to be available to low and moderate income persons based on job turnover, a description covering the items required for “available to” jobs in paragraph (b)(5) of this section; and 
</P>
<P>(v) Where jobs were claimed to be available to low and moderate income persons through turnover, a listing of each job which has turned over to date, indicating which of those jobs were either taken by, or available to, low and moderate income persons. For jobs made available, a description of how first consideration was given to such persons for those jobs shall also be included in the record.
</P>
<P>(7) For purposes of documenting, pursuant to paragraph (b)(5)(i)(B), (b)(5)(ii)(C), (b)(6)(iii) or (b)(6)(v) of this section, that the person for whom a job was either filled by or made available to a low- or moderate-income person based upon the census tract where the person resides or in which the business is located, the recipient, in lieu of maintaining records showing the person's family size and income, may substitute records showing either the person's address at the time the determination of income status was made or the address of the business providing the job, as applicable, the census tract in which that address was located, the percent of persons residing in that tract who either are in poverty or who are low- and moderate-income, as applicable, the data source used for determining the percentage, and a description of the pervasive poverty and general distress in the census tract in sufficient detail to demonstrate how the census tract met the criteria in § 570.208(a)(4)(v), as applicable. 
</P>
<P>(8) For each activity determined to aid in the prevention or elimination of slums or blight based on addressing one or more of the conditions which qualified an area as a slum or blighted area: 
</P>
<P>(i) The boundaries of the area; and 
</P>
<P>(ii) A description of the conditions which qualified the area at the time of its designation in sufficient detail to demonstrate how the area met the criteria in § 570.208(b)(1). 
</P>
<P>(9) For each residential rehabilitation activity determined to aid in the prevention or elimination of slums or blight in a slum or blighted area: 
</P>
<P>(i) The local definition of “substandard”; 
</P>
<P>(ii) A pre-rehabilitation inspection report describing the deficiencies in each structure to be rehabilitated; and 
</P>
<P>(iii) Details and scope of CDBG assisted rehabilitation, by structure. 
</P>
<P>(10) For each activity determined to aid in the prevention or elimination of slums or blight based on the elimination of specific conditions of blight or physical decay not located in a slum or blighted area: 
</P>
<P>(i) A description of the specific condition of blight or physical decay treated; and 
</P>
<P>(ii) For rehabilitation carried out under this category, a description of the specific conditions detrimental to public health and safety which were identified and the details and scope of the CDBG assisted rehabilitation by structure. 
</P>
<P>(11) For each activity determined to aid in the prevention or elimination of slums or blight based on addressing slums or blight in an urban renewal area, a copy of the Urban Renewal Plan, as in effect at the time the activity is carried out, including maps and supporting documentation. 
</P>
<P>(12) For each activity determined to meet a community development need having a particular urgency: 
</P>
<P>(i) Documentation concerning the nature and degree of seriousness of the condition requiring assistance; 
</P>
<P>(ii) Evidence that the recipient certified that the CDBG activity was designed to address the urgent need; 
</P>
<P>(iii) Information on the timing of the development of the serious condition; and 
</P>
<P>(iv) Evidence confirming that other financial resources to alleviate the need were not available. 
</P>
<P>(c)(1) Records that demonstrate that the recipient has made the determinations required as a condition of eligibility of certain activities, as prescribed in §§ 570.201(f), 570.201(i)(2), 570.201(p), 570.201(q), 570.202(b)(3), 570.206(f), 570.209, 570.210, and 570.309.
</P>
<P>(2) Where applicable, records which either demonstrate compliance with the requirements of § 570.202(g) or § 570.204(a)(5) or document the State's or State's grant recipient's basis for an exception to the requirements of those paragraphs.
</P>
<P>(d) Records which demonstrate compliance with § 570.503(b)(7) or § 570.505 regarding any change of use of real property acquired or improved with CDBG assistance. 
</P>
<P>(e) Records that demonstrate compliance with the citizen participation requirements prescribed in 24 CFR part 91, subpart B, for entitlement recipients, or in 24 CFR part 91, subpart C, for HUD-administered small cities recipients. 
</P>
<P>(f) Records which demonstrate compliance with the requirements in § 570.606 regarding acquisition, displacement, relocation, and replacement housing. 
</P>
<P>(g) Fair housing and equal opportunity records containing: 
</P>
<P>(1) Documentation that the recipient submitted a certification that it will affirmatively further fair housing, consistent with §§ 5.150 and 5.151 of this title.
</P>
<P>(2) Data on the extent to which each racial and ethnic group and single-headed households (by gender of household head) have applied for, participated in, or benefited from, any program or activity funded in whole or in part with CDBG funds. Such information shall be used only as a basis for further investigation as to compliance with nondiscrimination requirements. No recipient is required to attain or maintain any particular statistical measure by race, ethnicity, or gender in covered programs. 
</P>
<P>(3) Data on employment in each of the recipient's operating units funded in whole or in part with CDBG funds, with such data maintained in the categories prescribed on the Equal Employment Opportunity Commission's EEO-4 form; and documentation of any actions undertaken to assure equal employment opportunities to all persons regardless of race, color, national origin, sex or handicap in operating units funded in whole or in part under this part. 
</P>
<P>(4) Data indicating the race and ethnicity of households (and gender of single heads of households) displaced as a result of CDBG funded activities, together with the address and census tract of the housing units to which each displaced household relocated. Such information shall be used only as a basis for further investigation as to compliance with nondiscrimination requirements. No recipient is required to attain or maintain any particular statistical measure by race, ethnicity, or gender in covered programs. 
</P>
<P>(5) Documentation of actions undertaken to meet the requirements of § 570.607(b) which implements section 3 of the Housing Development Act of 1968, as amended (12 U.S.C. 1701U) relative to the hiring and training of low and moderate income persons and the use of local businesses.
</P>
<P>(6) Data indicating the racial/ethnic character of each business entity receiving a contract or subcontract of $25,000 or more paid, or to be paid, with CDBG funds, data indicating which of those entities are women's business enterprises as defined in Executive Order 12138, the amount of the contract or subcontract, and documentation of recipient's affirmative steps to assure that minority business and women's business enterprises have an equal opportunity to obtain or compete for contracts and subcontracts as sources of supplies, equipment, construction and services. Such affirmative steps may include, but are not limited to, technical assistance open to all businesses but designed to enhance opportunities for these enterprises and special outreach efforts to inform them of contract opportunities. Such steps shall not include preferring any business in the award of any contract or subcontract solely or in part on the basis of race or gender. 
</P>
<P>(7) Documentation of the affirmative action measures the recipient has taken to overcome prior discrimination, where the courts or HUD have found that the recipient has previously discriminated against persons on the ground of race, color, national origin or sex in administering a program or activity funded in whole or in part with CDBG funds. 
</P>
<P>(h) Financial records, in accordance with the applicable requirements listed in § 570.502, including source documentation for entities not subject to 2 CFR part 200. Grantees shall maintain evidence to support how the CDBG funds provided to such entities are expended. Such documentation must include, to the extent applicable, invoices, schedules containing comparisons of budgeted amounts and actual expenditures, construction progress schedules signed by appropriate parties (e.g., general contractor and/or a project architect), and/or other documentation appropriate to the nature of the activity. Grantee records pertaining to obligations, expenditures, and drawdowns must be able to relate financial transactions to either a specific origin year grant or to program income received during a specific program year.
</P>
<P>(i) Agreements and other records related to lump sum disbursements to private financial institutions for financing rehabilitation as prescribed in § 570.513; and 
</P>
<P>(j) Records required to be maintained in accordance with other applicable laws and regulations set forth in subpart K of this part.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0077)
</APPRO>
<CITA TYPE="N">[53 FR 34454, Sept. 6, 1988; 53 FR 41330, Oct. 21, 1988, as amended at 60 FR 1916, 1953, Jan. 5, 1995; 60 FR 56915, Nov. 9, 1995; 61 FR 18674, Apr. 29, 1996; 64 FR 38813, July 19, 1999; 70 FR 76370, Dec. 23, 2005; 80 FR 42368, July 16, 2015; 80 FR 69873, Nov. 12, 2015; 81 FR 92637, Dec. 20, 2016; 85 FR 47911, Aug. 7, 2020; 86 FR 30792, June 10, 2021; 90 FR 11024, Mar. 3, 2025] 


</CITA>
</DIV8>


<DIV8 N="§ 570.507" NODE="24:3.1.1.3.3.10.1.8" TYPE="SECTION">
<HEAD>§ 570.507   Reports.</HEAD>
<P>(a) <I>Performance and evaluation report</I>—(1) <I>Entitlement grant recipients and HUD-administered small cities recipients in Hawaii.</I> The annual performance and evaluation report shall be submitted in accordance with 24 CFR part 91. 
</P>
<P>(2) <I>HUD-administered Small Cities recipients in New York, and Hawaii recipients for pre-FY 1995 grants</I>—(i) <I>Content.</I> Each performance and evaluation report must contain completed copies of all forms and narratives prescribed by HUD, including a summary of the citizen comments received on the report. 
</P>
<P>(ii) <I>Timing.</I> The performance and evaluation report on each grant shall be submitted: 
</P>
<P>(A) No later than October 31 for all grants executed before April 1 of the same calendar year. The first report should cover the period from the execution of the grant until September 30. Reports on grants made after March 31 of a calendar year will be due October 31 of the following calendar year, and the reports will cover the period of time from the execution of the grant until September 30 of the calendar year following grant execution. After the initial submission, the performance and evaluation report will be submitted annually on October 31 until completion of the activities funded under the grant; 
</P>
<P>(B) Hawaii grantees will submit their small cities performance and evaluation report for each pre-FY 1995 grant no later than 90 days after the completion of their most recent program year. After the initial submission, the performance and evaluation report will be submitted annually until completion of the activities funded under the grant; and 
</P>
<P>(C) No later than 90 days after the criteria for grant closeout, as described in § 570.509(a), have been met. 
</P>
<P>(iii) <I>Citizen comments on the report.</I> Each recipient shall make copies of the performance and evaluation report available to its citizens in sufficient time to permit the citizens to comment on the report before its submission to HUD. Each recipient may determine the specific manner and times the report will be made available to citizens consistent with the preceding sentence. 
</P>
<P>(b) <I>Equal employment opportunity reports.</I> Recipients of entitlement grants or HUD-administered small cities grants shall submit to HUD each year a report (HUD/EEO-4) on recipient employment containing data as of June 30. 
</P>
<P>(c) <I>Minority business enterprise reports.</I> Recipients of entitlement grants, HUD-administered small cities grants or Urban Development Action Grants shall submit to HUD, by April 30, a report on contracts and subcontract activity during the first half of the fiscal year and by October 31 a report on such activity during the second half of the year. 
</P>
<P>(d) <I>Other reports.</I> Recipients may be required to submit such other reports and information as HUD determines are necessary to carry out its responsibilities under the Act or other applicable laws.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control numbers 2506-0077 for paragraph (a) and 2529-0008 for paragraph (b) and 2506-0066 for paragraph (c))
</APPRO>
<CITA TYPE="N">[53 FR 34456, Sept. 6, 1988, as amended at 60 FR 1916, Jan. 5, 1995; 61 FR 32269, June 21, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 570.508" NODE="24:3.1.1.3.3.10.1.9" TYPE="SECTION">
<HEAD>§ 570.508   Public access to program records.</HEAD>
<P>Notwithstanding 2 CFR 200.337, recipients shall provide citizens with reasonable access to records regarding the past use of CDBG funds, consistent with applicable State and local laws regarding privacy and obligations of confidentiality.
</P>
<CITA TYPE="N">[53 FR 8058, Mar. 11, 1988, as amended at 80 FR 75938, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 570.509" NODE="24:3.1.1.3.3.10.1.10" TYPE="SECTION">
<HEAD>§ 570.509   Grant closeout procedures.</HEAD>
<P>(a) <I>Criteria for closeout.</I> HUD may make grant closeout determinations for individual grants or multiple grants simultaneously. A grant will be closed out when HUD determines, in consultation with the recipient, that the following criteria have been met:
</P>
<P>(1) All costs to be paid with CDBG funds from a given origin year's grant have been expended and drawn down, with the exception of closeout costs (e.g., audit costs) and costs resulting from contingent liabilities described in the closeout agreement pursuant to paragraph (c) of this section. Contingent liabilities include, but are not limited to, third-party claims against the recipient, as well as related administrative costs.
</P>
<P>(2) All activities for which funds were expended from the origin year grant are physically completed, are eligible, have met a national objective under § 570.208, and the grantee has reported on all accomplishments resulting from the activity.
</P>
<P>(3) A final performance and expenditure report for completed activities has been submitted to HUD pursuant to 24 CFR 91.520, and HUD has determined the plan is satisfactory.
</P>
<P>(4) All program income received by the grantee during the grantee program year associated with the origin year grant has been expended, or identified in a more recent program year's Action Plan, pursuant to 24 CFR 91.220(l).
</P>
<P>(5) For origin year 2015 grants and subsequent grants, the grantee has expended no more than 20 percent of the origin year grant for planning and program administrative costs, under § 570.200(g)(1).
</P>
<P>(6) Other responsibilities of the recipient under the grant agreement and applicable laws and regulations appear to have been carried out satisfactorily or there is no further Federal interest in keeping the grant agreement open for the purpose of securing performance.
</P>
<P>(b) <I>Closeout actions.</I>
</P>
<P>(1) Based on the information provided in the performance report and other relevant information, HUD, in consultation with the recipient, will prepare a closeout agreement in accordance with paragraph (c) of this section.
</P>
<P>(2) HUD will cancel any unused portion of the awarded grant, as shown in the signed grant closeout agreement. Any unused grant funds disbursed from the U.S. Treasury which are in the possession of the recipient shall be refunded to HUD. Any funds which have exceeded the statutory time limit on the use of funds will be recaptured by the U.S. Treasury pursuant to 24 CFR 570.200(k).
</P>
<P>(3) Any costs paid with CDBG funds which were not audited previously shall be subject to coverage in the recipient's next single audit performed in accordance with HUD regulations implementing the Single Audit Act requirements at 2 CFR part 200. The recipient may be required to repay HUD any disallowed costs based on the results of the audit, or on additional HUD reviews provided for in the closeout agreement.
</P>
<P>(c) <I>Closeout agreement.</I> Any obligations remaining as of the date of the closeout shall be covered by the terms of a closeout agreement. The agreement shall be prepared by the HUD field office in consultation with the recipient. The agreement shall identify the grant being closed out, and include provisions with respect to the following:
</P>
<P>(1) Identification of any closeout costs or contingent liabilities subject to payment with CDBG funds after the closeout agreement is signed;
</P>
<P>(2) Identification of any unused grant funds to be canceled by HUD;
</P>
<P>(3) Description of the recipient's responsibility after closeout for:
</P>
<P>(i) Compliance with all program requirements, certifications, and assurances in using any remaining CDBG funds available for closeout costs and contingent liabilities;
</P>
<P>(ii) Use of real property assisted with CDBG funds in accordance with the principles described in §§ 570.503(b)(7) and 570.505;
</P>
<P>(iii) Compliance with requirements governing future program income or receivables generated from activities funded from the origin year grant, as described in § 570.504(b)(4) and (5);
</P>
<P>(iv) Ensuring that flood insurance coverage for affected property owners is maintained for the mandatory period; and
</P>
<P>(4) Other provisions appropriate to any special circumstances of the grant closeout, in modification of or in addition to the obligations in paragraphs (c)(1) through (4) of this section. The agreement shall authorize monitoring by HUD, and shall provide that findings of noncompliance may be taken into account by HUD, as unsatisfactory performance of the recipient, in the consideration of any future grant award under this part.
</P>
<P>(d) <I>Status of consolidated plan after closeout.</I> Unless otherwise provided in a closeout agreement, the Consolidated Plan will remain in effect after closeout until the expiration of the program year covered by the last approved consolidated plan.
</P>
<P>(e) <I>Termination of grant for convenience.</I> Grant assistance provided under this part may be terminated for convenience in whole or in part before the completion of the assisted activities, in accordance with the provisions of 2 CFR 200.339. The recipient shall not incur new obligations for the terminated portions after the effective date, and shall cancel as many outstanding obligations as possible. HUD shall allow full credit to the recipient for those portions of obligations which could not be canceled and which had been properly incurred by the recipient in carrying out the activities before the termination. The closeout policies contained in this section shall apply in such cases, except where the approved grant is terminated in its entirety. Responsibility for the environmental review to be performed under 24 CFR part 50 or 24 CFR part 58, as applicable, shall be determined as part of the closeout process.
</P>
<P>(f) <I>Termination for cause.</I> In cases in which the Secretary terminates the recipient's grant under the authority of subpart O of this part, or under the terms of the grant agreement, the closeout policies contained in this section shall apply, except where the approved grant is cancelled in its entirety. The provisions in 2 CFR 200.342) on the effects of termination shall also apply. HUD shall determine whether an environmental assessment or finding of inapplicability is required, and if such review is required, HUD shall perform it in accordance with 24 CFR part 50.
</P>
<CITA TYPE="N">[53 FR 8058, Mar. 11, 1988, as amended at 56 FR 56128, Oct. 31, 1991; 60 FR 1916, Jan. 5, 1995; 60 FR 16379, Mar. 30, 1995; 80 FR 69873, Nov. 12, 2015; 80 FR 75938, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 570.510" NODE="24:3.1.1.3.3.10.1.11" TYPE="SECTION">
<HEAD>§ 570.510   Transferring projects from urban counties to metropolitan cities.</HEAD>
<P>Section 106(c)(3) of the Act authorizes the Secretary to transfer unobligated grant funds from an urban county to a new metropolitan city, provided: the city was an included unit of general local government in the urban county immediately before its qualification as a metropolitan city; the funds to be transferred were received by the county before the qualification of the city as a metropolitan city; the funds to be transferred had been programmed by the urban county for use in the city before such qualification; and the city and county agree to transfer responsibility for the administration of the funds being transferred from the county's letter of credit to the city's letter of credit. The following rules apply to the transfer of responsibility for an activity from an urban county to the new metropolitan city.
</P>
<P>(a) The urban county and the metropolitan city must execute a legally binding agreement which shall specify:
</P>
<P>(1) The amount of funds to be transferred from the urban county's letter of credit to the metropolitan city's letter of credit;
</P>
<P>(2) The activities to be carried out by the city with the funds being transferred;
</P>
<P>(3) The county's responsibility for all expenditures and unliquidated obligations associated with the activities before the time of transfer, including a statement that responsibility for all audit and monitoring findings associated with those expenditures and obligations shall remain with the county;
</P>
<P>(4) The responsibility of the metropolitan city for all other audit and monitoring findings;
</P>
<P>(5) How program income (if any) from the activities specified shall be divided between the metropolitan city and the urban county; and
</P>
<P>(6) Such other provisions as may be required by HUD.
</P>
<P>(b) Upon receipt of a request for the transfer of funds from an urban county to a metropolitan city and a copy of the executed agreement, HUD, in consultation with the Department of the Treasury, shall establish a date upon which the funds shall be transferred from the letter of credit of the urban county to the letter of credit of the metropolitan city, and shall take all necessary actions to effect the requested transfer of funds.
</P>
<P>(c) HUD shall notify the metropolitan city and urban county of any special audit and monitoring rules which apply to the transferred funds when the date of the transfer is communicated to the city and the county.


</P>
</DIV8>


<DIV8 N="§ 570.511" NODE="24:3.1.1.3.3.10.1.12" TYPE="SECTION">
<HEAD>§ 570.511   Use of escrow accounts for rehabilitation of privately owned residential property.</HEAD>
<P>(a) <I>Limitations.</I> A recipient may withdraw funds from its letter of credit for immediate deposit into an escrow account for use in funding loans and grants for the rehabilitation of privately owned residential property under § 570.202(a)(1). The following additional limitations apply to the use of escrow accounts for residential rehabilitation loans and grants closed after September 7, 1990:
</P>
<P>(1) The use of escrow accounts under this section is limited to loans and grants for the rehabilitation of primarily residential properties containing no more than four dwelling units (and accessory neighborhood-scale non-residential space within the same structure, if any, <I>e.g.,</I> a store front below a dwelling unit).
</P>
<P>(2) An escrow account shall not be used unless the contract between the property owner and the contractor selected to do the rehabilitation work specifically provides that payment to the contractor shall be made through an escrow account maintained by the recipient, by a subrecipient as defined in § 570.500(c), by a public agency designated under § 570.501(a), or by an agent under a procurement contact governed by the requirements of 2 CFR part 200, subpart D. No deposit to the escrow account shall be made until after the contract has been executed between the property owner and the rehabilitation contractor.
</P>
<P>(3) All funds withdrawn under this section shall be deposited into one interest earning account with a financial institution. Separate bank accounts shall not be established for individual loans and grants.
</P>
<P>(4) The amount of funds deposited into an escrow account shall be limited to the amount expected to be disbursed within 10 working days from the date of deposit. If the escrow account, for whatever reason, at any time contains funds exceeding 10 days cash needs, the grantee immediately shall transfer the excess funds to its program account. In the program account, the excess funds shall be treated as funds erroneously drawn in accordance with the requirements of U.S. Treasury Financial Manual, paragraph 6-2075.30.
</P>
<P>(5) Funds deposited into an escrow account shall be used only to pay the actual costs of rehabilitation incurred by the owner under the contract with a private contractor. Other eligible costs related to the rehabilitation loan or grant, e.g., the recipient's administrative costs under § 570.206 or rehabilitation services costs under § 570.202(b)(9), are not permissible uses of escrowed funds. Such other eligible rehabilitation costs shall be paid under normal CDBG payment procedures (e.g., from withdrawals of grant funds under the recipient's letter of credit with the Treasury).
</P>
<P>(b) <I>Interest.</I> Interest earned on escrow accounts established in accordance with this section, less any service charges for the account, shall be remitted to HUD at least quarterly but not more frequently than monthly. Interest earned on escrow accounts is not required to be remitted to HUD to the extent the interest is attributable to the investment of program income.
</P>
<P>(c) <I>Remedies for noncompliance.</I> If HUD determines that a recipient has failed to use an escrow account in accordance with this section, HUD may, in addition to imposing any other sanctions provided for under this part, require the recipient to discontinue the use of escrow accounts, in whole or in part.
</P>
<CITA TYPE="N">[55 FR 32369, Aug. 8, 1990, as amended at 80 FR 75938, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 570.512" NODE="24:3.1.1.3.3.10.1.13" TYPE="SECTION">
<HEAD>§ 570.512   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 570.513" NODE="24:3.1.1.3.3.10.1.14" TYPE="SECTION">
<HEAD>§ 570.513   Lump sum drawdown for financing of property rehabilitation activities.</HEAD>
<P>Subject to the conditions prescribed in this section, recipients may draw funds from the letter of credit in a lump sum to establish a rehabilitation fund in one or more private financial institutions for the purpose of financing the rehabilitation of privately owned properties. The fund may be used in conjunction with various rehabilitation financing techniques, including loans, interest subsidies, loan guarantees, loan reserves, or such other uses as may be approved by HUD consistent with the objectives of this section. The fund may also be used for making grants, but only for the purpose of leveraging non-CDBG funds for the rehabilitation of the same property.
</P>
<P>(a) <I>Limitation on drawdown of grant funds.</I> (1) The funds that a recipient deposits to a rehabilitation fund shall not exceed the grant amount that the recipient reasonably expects will be required, together with anticipated program income from interest and loan repayments, for the rehabilitation activities during the period specified in the agreement to undertake activities, based on either:
</P>
<P>(i) Prior level of rehabilitation activity; or
</P>
<P>(ii) Rehabilitation staffing and management capacity during the period specified in the agreement to undertake activities.
</P>
<P>(2) No grant funds may be deposited under this section solely for the purpose of investment, notwithstanding that the interest or other income is to be used for the rehabilitation activities.
</P>
<P>(3) The recipient's rehabilitation program administrative costs and the administrative costs of the financial institution may not be funded through lump sum drawdown. Such costs must be paid from periodic letter of credit withdrawals in accordance with standard procedures or from program income, other than program income generated by the lump sum distribution.
</P>
<P>(b) <I>Standards to be met.</I> The following standards shall apply to all lump sum drawdowns of CDBG funds for rehabilitation:
</P>
<P>(1) <I>Eligible rehabilitation activities.</I> The rehabilitation fund shall be used to finance the rehabilitation of privately owned properties eligible under the general policies in § 570.200 and the specific provisions of either § 570.202, including the acquisition of properties for rehabilitation, or § 570.203.
</P>
<P>(2) <I>Requirements for agreement.</I> The recipient shall execute a written agreement with one or more private financial institutions for the operation of the rehabilitation fund. The agreement shall specify the obligations and responsibilities of the parties, the terms and conditions on which CDBG funds are to be deposited and used or returned, the anticipated level of rehabilitation activities by the financial institution, the rate of interest and other benefits to be provided by the financial institution in return for the lump sum deposit, and such other terms as are necessary for compliance with the provisions of this section. Upon execution of the agreement, a copy must be provided to the HUD field office for its record and use in monitoring. Any modifications made during the term of the agreement must also be provided to HUD. 
</P>
<P>(3) <I>Period to undertake activities.</I> The agreement must provide that the rehabilitation fund may only be used for authorized activities during a period of no more than two years. The lump sum deposit shall be made only after the agreement is fully executed. 
</P>
<P>(4) <I>Time limit on use of deposited funds.</I> Use of the deposited funds for rehabilitation financing assistance must start (e.g., first loan must be made, subsidized or guaranteed) within 45 days of the deposit. In addition, substantial disbursements from the fund must occur within 180 days of the receipt of the deposit. (Where CDBG funds are used as a guarantee, the funds that must be substantially disbursed are the guaranteed funds.) For a recipient with an agreement specifying two years to undertake activities, the disbursement of 25 percent of the fund (deposit plus any interest earned) within 180 days will be regarded as meeting this requirement. If a recipient with an agreement specifying two years to undertake activities determines that it has had substantial disbursement from the fund within the 180 days although it had not met this 25 percent threshold, the justification for the recipient's determination shall be included in the program file. Should use of deposited funds not start within 45 days, or substantial disbursement from such fund not occur within 180 days, the recipient may be required by HUD to return all or part of the deposited funds to the recipient's letter of credit. 
</P>
<P>(5) <I>Program activity.</I> Recipients shall review the level of program activity on a yearly basis. Where activity is substantially below that anticipated, program funds shall be returned to the recipient's letter of credit. 
</P>
<P>(6) <I>Termination of agreement.</I> In the case of substantial failure by a private financial institution to comply with the terms of a lump sum drawdown agreement, the recipient shall terminate its agreement, provide written justification for the action, withdraw all unobligated deposited funds from the private financial institution, and return the funds to the recipient's letter of credit. 
</P>
<P>(7) <I>Return of unused deposits.</I> At the end of the period specified in the agreement for undertaking activities, all unobligated deposited funds shall be returned to the recipient's letter of credit unless the recipient enters into a new agreement conforming to the requirements of this section. Any program income which will be governed by a new agreement must be identified in the current program year Action Plan, pursuant to 24 CFR 91.220(l). In addition, the recipient shall reserve the right to withdraw any unobligated deposited funds required by HUD in the exercise of corrective or remedial actions authorized under § 570.910(b), § 570.911, § 570.912 or § 570.913. 
</P>
<P>(8) <I>Rehabilitation loans made with non-CDBG funds.</I> If the deposited funds or program income derived from deposited funds are used to subsidize or guarantee repayment of rehabilitation loans made with non-CDBG funds, or to provide a supplemental loan or grant to the borrower of the non-CDBG funds, the rehabilitation activities are considered to be CDBG-assisted activities subject to the requirements applicable to such activities, except that repayment of non-CDBG funds shall not be treated as program income. 
</P>
<P>(9) <I>Provision of consideration.</I> In consideration for the lump sum deposit by the recipient in a private financial institution, the deposit must result in appropriate benefits in support of the recipient's local rehabilitation program. Minimum requirements for such benefits are: 
</P>
<P>(i) Grantees shall require the financial institution to pay interest on the lump sum deposit. 
</P>
<P>(A) The interest rate paid by the financial institution shall be no more than three points below the rate on one year Treasury obligations at constant maturity. 
</P>
<P>(B) When an agreement sets a fixed interest rate for the entire term of the agreement, the rate should be based on the rate at the time the agreement is excuted. 
</P>
<P>(C) The agreement may provide for an interest rate that would fluctuate periodically during the term of the agreement, but at no time shall the rate be established at more than three points below the rate on one year Treasury obligations at constant maturity. 
</P>
<P>(ii) In addition to the payment of interest, at least one of the following benefits must be provided by the financial institution: 
</P>
<P>(A) Leverage of the deposited funds so that the financial institution commits private funds for loans in the rehabilitation program in an amount substantially in excess of the amount of the lump sum deposit; 
</P>
<P>(B) Commitment of private funds by the financial institution for rehabilitation loans at below market interest rates, at higher than normal risk, or with longer than normal repayment periods; or 
</P>
<P>(C) Provision of administrative services in support of the rehabilitation program by the participating financial institution at no cost or at lower than actual cost. 
</P>
<P>(c) <I>Program income.</I> Interest earned on lump sum deposits and payments on loans made from such deposits are program income and, during the period of the agreement, shall be used for rehabilitation activities under the provisions of this section. 
</P>
<P>(d) <I>Outstanding findings.</I> Notwithstanding any other provision of this section, no recipient shall enter into a new agreement during any period of time in which an audit or monitoring finding on a previous lump sum drawdown agreement remains unresolved. 
</P>
<P>(e) <I>Prior notification.</I> The recipient shall provide the HUD field office with written notification of the amount of funds to be distributed to a private financial institution before distribution under the provisions of this section. 
</P>
<P>(f) <I>Recordkeeping requirements.</I> The recipient shall maintain in its files a copy of the written agreement and related documents establishing conformance with this section and concerning performance by a financial institution in accordance with the agreement. 
</P>
<CITA TYPE="N">[53 FR 8058, Mar. 11, 1988, as amended at 80 FR 69873, Nov. 12, 2015]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="K" NODE="24:3.1.1.3.3.11" TYPE="SUBPART">
<HEAD>Subpart K—Other Program Requirements</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>53 FR 34456, Sept. 6, 1988, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 570.600" NODE="24:3.1.1.3.3.11.1.1" TYPE="SECTION">
<HEAD>§ 570.600   General.</HEAD>
<P>(a) This subpart K enumerates laws that the Secretary will treat as applicable to grants made under section 106 of the Act, other than grants to states made pursuant to section 106(d) of the Act, for purposes of the Secretary's determinations under section 104(e)(1) of the Act, including statutes expressly made applicable by the Act and certain other statutes and Executive Orders for which the Secretary has enforcement responsibility. This subpart K applies to grants made under the Insular Areas Program in § 570.405 and § 570.440 with the exception of § 570.612. The absence of mention herein of any other statute for which the Secretary does not have direct enforcement responsibility is not intended to be taken as an indication that, in the Secretary's opinion, such statute or Executive Order is not applicable to activities assisted under the Act. For laws that the Secretary will treat as applicable to grants made to states under section 106(d) of the Act for purposes of the determination required to be made by the Secretary pursuant to section 104(e)(2) of the Act, see § 570.487.
</P>
<P>(b) This subpart also sets forth certain additional program requirements which the Secretary has determined to be applicable to grants provided under the Act as a matter of administrative discretion. 
</P>
<P>(c) In addition to grants made pursuant to section 106(b) and 106(d)(2)(B) of the Act (subparts D and F, respectively), the requirements of this subpart K are applicable to grants made pursuant to sections 107 and 119 of the Act (subparts E and G, respectively), and to loans guaranteed pursuant to subpart M. 
</P>
<CITA TYPE="N">[53 FR 34456, Sept. 6, 1988, as amended at 61 FR 11477, Mar. 20, 1996; 72 FR 12536, Mar. 15, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 570.601" NODE="24:3.1.1.3.3.11.1.2" TYPE="SECTION">
<HEAD>§ 570.601   Public Law 88-352 and Public Law 90-284; affirmatively furthering fair housing; Executive Order 11063.</HEAD>
<P>(a) The following requirements apply according to sections 104(b) and 107 of the Act: 
</P>
<P>(1) Public Law 88-352, which is title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d <I>et seq.</I>), and implementing regulations in 24 CFR part 1. 


</P>
<P>(2) Public Law 90-284, which is the Fair Housing Act (42 U.S.C. 3601-3620). In accordance with the Fair Housing Act, the Secretary requires that grantees administer all programs and activities related to housing and urban development in a manner to affirmatively further the policies of the Fair Housing Act. Each community receiving a grant under subpart D of this part, shall submit a certification that it will affirmatively further fair housing, consistent with §§ 5.150 and 5.151 of this title.


</P>
<P>(b) Executive Order 11063, as amended by Executive Order 12259 (3 CFR, 1959-1963 Comp., p. 652; 3 CFR, 1980 Comp., p. 307) (Equal Opportunity in Housing), and implementing regulations in 24 CFR part 107, also apply. 
</P>
<CITA TYPE="N">[61 FR 11477, Mar. 20, 1996, as amended at 80 FR 42368, July 16, 2015; 85 FR 47911, Aug. 7, 2020; 86 FR 30792, June 10, 2021; 90 FR 11024, Mar. 3, 2025]




</CITA>
</DIV8>


<DIV8 N="§ 570.602" NODE="24:3.1.1.3.3.11.1.3" TYPE="SECTION">
<HEAD>§ 570.602   Section 109 of the Act.</HEAD>
<P>Section 109 of the Act requires that no person in the United States shall on the grounds of race, color, national origin, religion, or sex be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance made available pursuant to the Act. Section 109 also directs that the prohibitions against discrimination on the basis of age under the Age Discrimination Act and the prohibitions against discrimination on the basis of disability under Section 504 shall apply to programs or activities receiving Federal financial assistance under Title I programs. The policies and procedures necessary to ensure enforcement of section 109 are codified in 24 CFR part 6.
</P>
<CITA TYPE="N">[64 FR 3802, Jan. 25, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 570.603" NODE="24:3.1.1.3.3.11.1.4" TYPE="SECTION">
<HEAD>§ 570.603   Labor standards.</HEAD>
<P>(a) Section 110(a) of the Act contains labor standards that apply to nonvolunteer labor financed in whole or in part with assistance received under the Act. In accordance with section 110(a) of the Act, the Contract Work Hours and Safety Standards Act (40 U.S.C. 327 <I>et seq.</I>) also applies. However, these requirements apply to the rehabilitation of residential property only if such property contains not less than 8 units. 
</P>
<P>(b) The regulations in 24 CFR part 70 apply to the use of volunteers. 
</P>
<CITA TYPE="N">[61 FR 11477, Mar. 20, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 570.604" NODE="24:3.1.1.3.3.11.1.5" TYPE="SECTION">
<HEAD>§ 570.604   Environmental standards.</HEAD>
<P>For purposes of section 104(g) of the Act, the regulations in 24 CFR part 58 specify the other provisions of law which further the purposes of the National Environmental Policy Act of 1969, and the procedures by which grantees must fulfill their environmental responsibilities. In certain cases, grantees assume these environmental review, decisionmaking, and action responsibilities by execution of grant agreements with the Secretary. 
</P>
<CITA TYPE="N">[61 FR 11477, Mar. 20, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 570.605" NODE="24:3.1.1.3.3.11.1.6" TYPE="SECTION">
<HEAD>§ 570.605   National Flood Insurance Program.</HEAD>
<P>Notwithstanding the date of HUD approval of the recipient's application (or, in the case of grants made under subpart D of this part or HUD-administered small cities recipients in Hawaii, the date of submission of the grantee's consolidated plan, in accordance with 24 CFR part 91), section 202(a) of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4106) and the regulations in 44 CFR parts 59 through 79 apply to funds provided under this part 570. 
</P>
<CITA TYPE="N">[61 FR 11477, Mar. 20, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 570.606" NODE="24:3.1.1.3.3.11.1.7" TYPE="SECTION">
<HEAD>§ 570.606   Displacement, relocation, acquisition, and replacement of housing.</HEAD>
<P>(a) <I>General policy for minimizing displacement.</I> Consistent with the other goals and objectives of this part, grantees (or States or state recipients, as applicable) shall assure that they have taken all reasonable steps to minimize the displacement of persons (families, individuals, businesses, nonprofit organizations, and farms) as a result of activities assisted under this part. 
</P>
<P>(b) <I>Relocation assistance for displaced persons at URA levels.</I> (1) A displaced person shall be provided with relocation assistance at the levels described in, and in accordance with the requirements of 49 CFR part 24, which contains the government-wide regulations implementing the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA) (42 U.S.C. 4601-4655). 
</P>
<P>(2) <I>Displaced person.</I> (i) For purposes of paragraph (b) of this section, the term “<I>displaced person</I>” means any person (family, individual, business, nonprofit organization, or farm) that moves from real property, or moves his or her personal property from real property, permanently and involuntarily, as a direct result of rehabilitation, demolition, or acquisition for an activity assisted under this part. A permanent, involuntary move for an assisted activity includes a permanent move from real property that is made: 
</P>
<P>(A) After notice by the grantee (or the state recipient, if applicable) to move permanently from the property, if the move occurs after the initial official submission to HUD (or the State, as applicable) for grant, loan, or loan guarantee funds under this part that are later provided or granted. 
</P>
<P>(B) After notice by the property owner to move permanently from the property, if the move occurs after the date of the submission of a request for financial assistance by the property owner (or person in control of the site) that is later approved for the requested activity. 
</P>
<P>(C) Before the date described in paragraph (b)(2)(i)(A) or (B) of this section, if either HUD or the grantee (or State, as applicable) determines that the displacement directly resulted from acquisition, rehabilitation, or demolition for the requested activity. 
</P>
<P>(D) After the “initiation of negotiations” if the person is the tenant-occupant of a dwelling unit and any one of the following three situations occurs: 
</P>
<P>(<I>1</I>) The tenant has not been provided with a reasonable opportunity to lease and occupy a suitable decent, safe, and sanitary dwelling in the same building/complex upon the completion of the project, including a monthly rent that does not exceed the greater of the tenant's monthly rent and estimated average utility costs before the initiation of negotiations or 30 percent of the household's average monthly gross income; or 
</P>
<P>(<I>2</I>) The tenant is required to relocate temporarily for the activity but the tenant is not offered payment for all reasonable out-of-pocket expenses incurred in connection with the temporary relocation, including the cost of moving to and from the temporary location and any increased housing costs, or other conditions of the temporary relocation are not reasonable; and the tenant does not return to the building/complex; or 
</P>
<P>(<I>3</I>) The tenant is required to move to another unit in the building/complex, but is not offered reimbursement for all reasonable out-of-pocket expenses incurred in connection with the move. 
</P>
<P>(ii) Notwithstanding the provisions of paragraph (b)(2)(i) of this section, the term “<I>displaced person</I>-” does not include: 
</P>
<P>(A) A person who is evicted for cause based upon serious or repeated violations of material terms of the lease or occupancy agreement. To exclude a person on this basis, the grantee (or State or state recipient, as applicable) must determine that the eviction was not undertaken for the purpose of evading the obligation to provide relocation assistance under this section; 
</P>
<P>(B) A person who moves into the property after the date of the notice described in paragraph (b)(2)(i)(A) or (B) of this section, but who received a written notice of the expected displacement before occupancy. 
</P>
<P>(C) A person who is not displaced as described in 49 CFR 24.2(g)(2). 
</P>
<P>(D) A person who the grantee (or State, as applicable) determines is not displaced as a direct result of the acquisition, rehabilitation, or demolition for an assisted activity. To exclude a person on this basis, HUD must concur in that determination. 
</P>
<P>(iii) A grantee (or State or state recipient, as applicable) may, at any time, request HUD to determine whether a person is a displaced person under this section. 
</P>
<P>(3) <I>Initiation of negotiations.</I> For purposes of determining the type of replacement housing assistance to be provided under paragraph (b) of this section, if the displacement is the direct result of privately undertaken rehabilitation, demolition, or acquisition of real property, the term “<I>initiation of negotiations</I>” means the execution of the grant or loan agreement between the grantee (or State or state recipient, as applicable) and the person owning or controlling the real property. 
</P>
<P>(c) <I>Residential antidisplacement and relocation assistance plan.</I> The grantee shall comply with the requirements of 24 CFR part 42, subpart B.
</P>
<P>(d) <I>Optional relocation assistance.</I> Under section 105(a)(11) of the Act, the grantee may provide (or the State may permit the state recipient to provide, as applicable) relocation payments and other relocation assistance to persons displaced by activities that are not subject to paragraph (b) or (c) of this section. The grantee may also provide (or the State may also permit the state recipient to provide, as applicable) relocation assistance to persons receiving assistance under paragraphs (b) or (c) of this section at levels in excess of those required by these paragraphs. Unless such assistance is provided under State or local law, the grantee (or state recipient, as applicable) shall provide such assistance only upon the basis of a written determination that the assistance is appropriate (see, e.g., 24 CFR 570.201(i), as applicable). The grantee (or state recipient, as applicable) must adopt a written policy available to the public that describes the relocation assistance that the grantee (or state recipient, as applicable) has elected to provide and that provides for equal relocation assistance within each class of displaced persons. 
</P>
<P>(e) <I>Acquisition of real property.</I> The acquisition of real property for an assisted activity is subject to 49 CFR part 24, subpart B. 
</P>
<P>(f) <I>Appeals.</I> If a person disagrees with the determination of the grantee (or the state recipient, as applicable) concerning the person's eligibility for, or the amount of, a relocation payment under this section, the person may file a written appeal of that determination with the grantee (or state recipient, as applicable). The appeal procedures to be followed are described in 49 CFR 24.10. In addition, a low- or moderate-income household that has been displaced from a dwelling may file a written request for review of the grantee's decision to the HUD Field Office. For purposes of the State CDBG program, a low- or moderate-income household may file a written request for review of the state recipient's decision with the State. 
</P>
<P>(g) <I>Responsibility of grantee or State.</I> (1) The grantee (or State, if applicable) is responsible for ensuring compliance with the requirements of this section, notwithstanding any third party's contractual obligation to the grantee to comply with the provisions of this section. For purposes of the State CDBG program, the State shall require state recipients to certify that they will comply with the requirements of this section. 
</P>
<P>(2) The cost of assistance required under this section may be paid from local public funds, funds provided under this part, or funds available from other sources. 
</P>
<P>(3) The grantee (or State and state recipient, as applicable) must maintain records in sufficient detail to demonstrate compliance with the provisions of this section.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under OMB control number 2506-0102)
</APPRO>
<CITA TYPE="N">[61 FR 11477, Mar. 20, 1996, as amended at 61 FR 51760, Oct. 3, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 570.607" NODE="24:3.1.1.3.3.11.1.8" TYPE="SECTION">
<HEAD>§ 570.607   Employment and contracting opportunities.</HEAD>
<P>To the extent that they are otherwise applicable, grantees shall comply with: 
</P>
<P>(a) Executive Order 11246, as amended by Executive Orders 11375, 11478, <I>12086,</I> and 12107 (3 CFR 1964-1965 Comp. p. 339; 3 CFR, 1966-1970 Comp., p. 684; 3 CFR, 1966-1970., p. 803; 3 CFR, 1978 Comp., p. 230; 3 CFR, 1978 Comp., p. 264 (Equal Employment Opportunity), and Executive Order 13279 (Equal Protection of the Laws for Faith-Based and Community Organizations), 67 FR 77141, 3 CFR, 2002 Comp., p. 258; and the implementing regulations at 41 CFR chapter 60; and
</P>
<P>(b) Section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) and implementing regulations at 24 CFR part 75.
</P>
<CITA TYPE="N">[68 FR 56405, Sept. 30, 2003, as amended at 85 FR 61567, Sept. 29, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 570.608" NODE="24:3.1.1.3.3.11.1.9" TYPE="SECTION">
<HEAD>§ 570.608   Lead-based paint.</HEAD>
<P>The Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and implementing regulations at part 35, subparts A, B, J, K, and R of this part apply to activities under this program.
</P>
<CITA TYPE="N">[64 FR 50226, Sept. 15, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 570.609" NODE="24:3.1.1.3.3.11.1.10" TYPE="SECTION">
<HEAD>§ 570.609   Use of debarred, suspended or ineligible contractors or subrecipients.</HEAD>
<P>The requirements set forth in 24 CFR part 5 apply to this program. 
</P>
<CITA TYPE="N">[61 FR 5209, Feb. 9, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 570.610" NODE="24:3.1.1.3.3.11.1.11" TYPE="SECTION">
<HEAD>§ 570.610   Uniform administrative requirements, cost principles, and audit requirements for Federal awards.</HEAD>
<P>The recipient, its agencies or instrumentalities, and subrecipients shall comply with 2 CFR part 200, “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards”, as set forth at § 570.502.
</P>
<CITA TYPE="N">[80 FR 75938, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 570.611" NODE="24:3.1.1.3.3.11.1.12" TYPE="SECTION">
<HEAD>§ 570.611   Conflict of interest.</HEAD>
<P>(a) <I>Applicability.</I> (1) In the procurement of supplies, equipment, construction, and services by recipients and by subrecipients, the conflict of interest provisions in 2 CFR 200.317 and 200.318 shall apply.
</P>
<P>(2) In all cases not governed by 2 CFR 200.317 and 200.318, the provisions of this section shall apply. Such cases include the acquisition and disposition of real property and the provision of assistance by the recipient or by its subrecipients to individuals, businesses, and other private entities under eligible activities that authorize such assistance (e.g., rehabilitation, preservation, and other improvements of private properties or facilities pursuant to § 570.202; or grants, loans, and other assistance to businesses, individuals, and other private entities pursuant to § 570.203, 570.204, 570.455, or 570.703(i)).
</P>
<P>(b) <I>Conflicts prohibited.</I> The general rule is that no persons described in paragraph (c) of this section who exercise or have exercised any functions or responsibilities with respect to CDBG activities assisted under this part, or who are in a position to participate in a decisionmaking process or gain inside information with regard to such activities, may obtain a financial interest or benefit from a CDBG-assisted activity, or have a financial interest in any contract, subcontract, or agreement with respect to a CDBG-assisted activity, or with respect to the proceeds of the CDBG-assisted activity, either for themselves or those with whom they have business or immediate family ties, during their tenure or for one year thereafter. For the UDAG program, the above restrictions shall apply to all activities that are a part of the UDAG project, and shall cover any such financial interest or benefit during, or at any time after, such person's tenure.
</P>
<P>(c) <I>Persons covered.</I> The conflict of interest provisions of paragraph (b) of this section apply to any person who is an employee, agent, consultant, officer, or elected official or appointed official of the recipient, or of any designated public agencies, or of subrecipients that are receiving funds under this part.
</P>
<P>(d) <I>Exceptions.</I> Upon the written request of the recipient, HUD may grant an exception to the provisions of paragraph (b) of this section on a case-by-case basis when it has satisfactorily met the threshold requirements of (d)(1) of this section, taking into account the cumulative effects of paragraph (d)(2) of this section.
</P>
<P>(1) <I>Threshold requirements.</I> HUD will consider an exception only after the recipient has provided the following documentation:
</P>
<P>(i) A disclosure of the nature of the conflict, accompanied by an assurance that there has been public disclosure of the conflict and a description of how the public disclosure was made; and
</P>
<P>(ii) An opinion of the recipient's attorney that the interest for which the exception is sought would not violate State or local law.
</P>
<P>(2) <I>Factors to be considered for exceptions.</I> In determining whether to grant a requested exception after the recipient has satisfactorily met the requirements of paragraph (d)(1) of this section, HUD shall conclude that such an exception will serve to further the purposes of the Act and the effective and efficient administration of the recipient's program or project, taking into account the cumulative effect of the following factors, as applicable:
</P>
<P>(i) Whether the exception would provide a significant cost benefit or an essential degree of expertise to the program or project that would otherwise not be available;
</P>
<P>(ii) Whether an opportunity was provided for open competitive bidding or negotiation;
</P>
<P>(iii) Whether the person affected is a member of a group or class of low- or moderate-income persons intended to be the beneficiaries of the assisted activity, and the exception will permit such person to receive generally the same interests or benefits as are being made available or provided to the group or class;
</P>
<P>(iv) Whether the affected person has withdrawn from his or her functions or responsibilities, or the decisionmaking process with respect to the specific assisted activity in question;
</P>
<P>(v) Whether the interest or benefit was present before the affected person was in a position as described in paragraph (b) of this section;
</P>
<P>(vi) Whether undue hardship will result either to the recipient or the person affected when weighed against the public interest served by avoiding the prohibited conflict; and 
</P>
<P>(vii) Any other relevant considerations. 
</P>
<CITA TYPE="N">[60 FR 56916, Nov. 9, 1995, as amended at 80 FR 75938, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 570.612" NODE="24:3.1.1.3.3.11.1.13" TYPE="SECTION">
<HEAD>§ 570.612   Executive Order 12372.</HEAD>
<P>(a) <I>General.</I> Executive Order 12372, Intergovernmental Review of Federal Programs, and the Department's implementing regulations at 24 CFR part 52, allow each State to establish its own process for review and comment on proposed Federal financial assistance programs. 
</P>
<P>(b) <I>Applicability.</I> Executive Order 12372 applies to the CDBG Entitlement program and the UDAG program. The Executive Order applies to all activities proposed to be assisted under UDAG, but it applies to the Entitlement program only where a grantee proposes to use funds for the planning or construction (reconstruction or installation) of water or sewer facilities. Such facilities include storm sewers as well as all sanitary sewers, but do not include water and sewer lines connecting a structure to the lines in the public right-of-way or easement. It is the responsibility of the grantee to initiate the Executive Order review process if it proposes to use its CDBG or UDAG funds for activities subject to review. 


</P>
</DIV8>


<DIV8 N="§ 570.613" NODE="24:3.1.1.3.3.11.1.14" TYPE="SECTION">
<HEAD>§ 570.613   Eligibility restrictions for certain resident aliens.</HEAD>
<P>(a) <I>Restriction.</I> Certain newly legalized aliens, as described in 24 CFR part 49, are not eligible to apply for benefits under covered activities funded by the programs listed in paragraph (e) of this section. “Benefits” under this section means financial assistance, public services, jobs and access to new or rehabilitated housing and other facilities made available under covered activities funded by programs listed in paragraph (e) of this section. “Benefits” do not include relocation services and payments to which displacees are entitled by law. 
</P>
<P>(b) <I>Covered activities.</I> “Covered activities” under this section means activities meeting the requirements of § 570.208(a) that either: 
</P>
<P>(1) Have income eligibility requirements limiting the benefits exclusively to low and moderate income persons; or 
</P>
<P>(2) Are targeted geographically or otherwise to primarily benefit low and moderate income persons (excluding activities serving the public at large, such as sewers, roads, sidewalks, and parks), and that provide benefits to persons on the basis of an application. 
</P>
<P>(c) <I>Limitation on coverage.</I> The restrictions under this section apply only to applicants for new benefits not being received by covered resident aliens as of the effective date of this section. 
</P>
<P>(d) <I>Compliance.</I> Compliance can be accomplished by obtaining certification as provided in 24 CFR 49.20. 
</P>
<P>(e) <I>Programs affected.</I> (1) The Community Development Block Grant program for small cities, administered under subpart F of part 570 of this title until closeout of the recipient's grant. 
</P>
<P>(2) The Community Development Block Grant program for entitlement grants, administered under subpart D of part 570 of this title. 
</P>
<P>(3) The Community Development Block Grant program for States, administered under subpart I of part 570 of this title until closeout of the unit of general local government's grant by the State.
</P>
<P>(4) The Urban Development Action Grants program, administered under subpart G of part 570 of this title until closeout of the recipient's grant. 
</P>
<CITA TYPE="N">[55 FR 18494, May 2, 1990] 


</CITA>
</DIV8>


<DIV8 N="§ 570.614" NODE="24:3.1.1.3.3.11.1.15" TYPE="SECTION">
<HEAD>§ 570.614   Architectural Barriers Act and the Americans with Disabilities Act.</HEAD>
<P>(a) The Architectural Barriers Act of 1968 (42 U.S.C. 4151-4157) requires certain Federal and Federally funded buildings and other facilities to be designed, constructed, or altered in accordance with standards that insure accessibility to, and use by, physically handicapped people. A building or facility designed, constructed, or altered with funds allocated or reallocated under this part after December 11, 1995, and that meets the definition of “residential structure” as defined in 24 CFR 40.2 or the definition of “building” as defined in 41 CFR 101-19.602(a) is subject to the requirements of the Architectural Barriers Act of 1968 (42 U.S.C. 4151-4157) and shall comply with the Uniform Federal Accessibility Standards (appendix A to 24 CFR part 40 for residential structures, and appendix A to 41 CFR part 101-19, subpart 101-19.6, for general type buildings). 
</P>
<P>(b) The Americans with Disabilities Act (42 U.S.C. 12131; 47 U.S.C. 155, 201, 218 and 225) (ADA) provides comprehensive civil rights to individuals with disabilities in the areas of employment, public accommodations, State and local government services, and telecommunications. It further provides that discrimination includes a failure to design and construct facilities for first occupancy no later than January 26, 1993, that are readily accessible to and usable by individuals with disabilities. Further, the ADA requires the removal of architectural barriers and communication barriers that are structural in nature in existing facilities, where such removal is readily achievable—that is, easily accomplishable and able to be carried out without much difficulty or expense. 
</P>
<CITA TYPE="N">[60 FR 56917, Nov. 9, 1995]




</CITA>
</DIV8>


<DIV8 N="§ 570.615" NODE="24:3.1.1.3.3.11.1.16" TYPE="SECTION">
<HEAD>§ 570.615   Housing counseling.</HEAD>
<P>Housing counseling, as defined in 24 CFR 5.100, that is funded with or provided in connection with CDBG funds must be carried out in accordance with 24 CFR 5.111.
</P>
<CITA TYPE="N">[81 FR 90659, Dec. 14, 2016]




</CITA>
</DIV8>

</DIV6>


<DIV6 N="L" NODE="24:3.1.1.3.3.12" TYPE="SUBPART">
<HEAD>Subpart L [Reserved]</HEAD>

</DIV6>


<DIV6 N="M" NODE="24:3.1.1.3.3.13" TYPE="SUBPART">
<HEAD>Subpart M—Loan Guarantees</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>59 FR 66604, Dec. 27, 1994, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 570.700" NODE="24:3.1.1.3.3.13.1.1" TYPE="SECTION">
<HEAD>§ 570.700   Purpose.</HEAD>
<P>This subpart contains requirements governing the guarantee under section 108 of the Act of debt obligations as defined in § 570.701. 


</P>
</DIV8>


<DIV8 N="§ 570.701" NODE="24:3.1.1.3.3.13.1.2" TYPE="SECTION">
<HEAD>§ 570.701   Definitions.</HEAD>
<P><I>Borrower</I> means the public entity or its designated public agency or the State that issues debt obligations under this subpart.
</P>
<P><I>Credit subsidy cost</I> means the estimated long-term cost to the Federal Government of a Section 108 loan guarantee or a modification thereof, calculated on a net present value basis, excluding administrative costs and any incidental effects on governmental receipts or outlays.
</P>
<P><I>Debt obligation</I> means a promissory note or other obligation issued by a public entity or its designated public agency or by a State and guaranteed by HUD under this subpart, or a trust certificate or other obligation offered by HUD or by a trust or other offeror approved for purposes of this subpart by HUD, which is guaranteed by HUD under this subpart and is based on and backed by a trust or pool composed of notes or other obligations issued by public entities or their designated public agencies or by States and guaranteed or eligible for guarantee by HUD under this subpart.
</P>
<P><I>Designated public agency</I> means a public agency designated by a public entity to issue debt obligations as borrower under this subpart. 
</P>
<P><I>Entitlement public entity</I> means a metropolitan city or an urban county receiving a grant under subpart D of this part. 
</P>
<P><I>Guaranteed loan funds</I> means the proceeds payable to the borrower from the issuance of debt obligations under this subpart and includes funds received by a nonentitlement public entity from a State under § 570.711.
</P>
<P><I>Nonentitlement public entity</I> means any unit of general local government in a nonentitlement area. 
</P>
<P><I>Public entity</I> shall have the meaning provided for the term “<I>Eligible public entity</I>” in section 108(o) of the Act.
</P>
<P><I>State-assisted public entity</I> means a unit of general local government in a nonentitlement area which is assisted by a State as required in § 570.704(b)(9) and § 570.705(b)(2) or pursuant to § 570.711.
</P>
<CITA TYPE="N">[59 FR 66604, Dec. 27, 1994, as amended at 61 FR 11481, Mar. 20, 1996; 74 FR 36389, July 22, 2009; 80 FR 67633, Nov. 3, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 570.702" NODE="24:3.1.1.3.3.13.1.3" TYPE="SECTION">
<HEAD>§ 570.702   Eligible applicants.</HEAD>
<P>The following public entities may apply for loan guarantee assistance under this subpart. 
</P>
<P>(a) Entitlement public entities. 
</P>
<P>(b) Nonentitlement public entities that are assisted in the submission of applications by States that administer the CDBG program (under subpart I of this part). Such assistance shall consist, at a minimum, of the certifications required under § 570.704(b)(9) (and actions pursuant thereto). 
</P>
<P>(c) Nonentitlement public entities eligible to apply for grant assistance under subpart F of this part. 


</P>
</DIV8>


<DIV8 N="§ 570.703" NODE="24:3.1.1.3.3.13.1.4" TYPE="SECTION">
<HEAD>§ 570.703   Eligible activities.</HEAD>
<P>Guaranteed loan funds may be used for the following activities, provided such activities meet the requirements of § 570.200. However, guaranteed loan funds may not be used to reimburse the CDBG program account or line of credit for costs incurred by the public entity or designated public agency and paid with CDBG grant funds or program income. 
</P>
<P>(a) Acquisition of improved or unimproved real property in fee or by long-term lease, including acquisition for economic development purposes. 
</P>
<P>(b) Rehabilitation of real property owned or acquired by the public entity or its designated public agency. 
</P>
<P>(c) Payment of interest on obligations guaranteed under this subpart. 
</P>
<P>(d) Relocation payments and other relocation assistance for individuals, families, businesses, nonprofit organizations, and farm operations who must relocate permanently or temporarily as a result of an activity financed with guaranteed loan funds, where the assistance is: 
</P>
<P>(1) Required under the provisions of § 570.606(b) or (c); or 
</P>
<P>(2) Determined by the public entity to be appropriate under the provisions of § 570.606(d). 
</P>
<P>(e) Clearance, demolition, and removal, including movement of structures to other sites and remediation of properties with known or suspected environmental contamination, of buildings and improvements on real property acquired or rehabilitated pursuant to paragraphs (a) and (b) of this section. Remediation may include project-specific environmental assessment costs not otherwise eligible under § 570.205.
</P>
<P>(f) Site preparation, including construction, reconstruction, installation of public and other site improvements, utilities or facilities (other than buildings), or remediation of properties (remediation can include project-specific environmental assessment costs not otherwise eligible under § 570.205) with known or suspected environmental contamination, which is:
</P>
<P>(1) Related to the redevelopment or use of the real property acquired or rehabilitated pursuant to paragraphs (a) and (b) of this section, or 
</P>
<P>(2) For an economic development purpose. 
</P>
<P>(g) Payment of issuance, underwriting, servicing, trust administration and other costs associated with private sector financing of debt obligations under this subpart. 
</P>
<P>(h) Housing rehabilitation eligible under § 570.202. 
</P>
<P>(i) The following economic development activities: 
</P>
<P>(1) Activities eligible under § 570.203; and 
</P>
<P>(2) Community economic development projects eligible under § 570.204. 
</P>
<P>(j) Construction of housing by non-profit organizations for homeownership under section 17(d) of the United States Housing Act of 1937 (Housing Development Grants Program, 24 CFR part 850).
</P>
<P>(k) A debt service reserve to be used in accordance with requirements specified in the contract entered into pursuant to § 570.705(b)(1). 
</P>
<P>(l) Acquisition, construction, reconstruction, rehabilitation or historic preservation, or installation of public facilities (except for buildings for the general conduct of government) to the extent eligible under § 570.201(c), including public streets, sidewalks, other site improvements and public utilities, and remediation of known or suspected environmental contamination in conjunction with these activities. Remediation may include project-specific environmental assessment costs not otherwise eligible under § 570.205.
</P>
<P>(m) In the case of applications by public entities which are, or which contain, “colonias” as defined in section 916 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 5306 note), as amended by section 810 of the Housing and Community Development Act of 1992, acquisition, construction, reconstruction, rehabilitation or installation of public works and site or other improvements which serve the colonia. 
</P>
<P>(n) Payment of fees charged by HUD pursuant to § 570.712.
</P>
<CITA TYPE="N">[59 FR 66604, Dec. 27, 1994, as amended at 61 FR 11481, Mar. 20, 1996; 71 FR 30036, May 24, 2006; 80 FR 67633, Nov. 3, 2015; 81 FR 1121, Jan. 11, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 570.704" NODE="24:3.1.1.3.3.13.1.5" TYPE="SECTION">
<HEAD>§ 570.704   Application requirements.</HEAD>
<P>(a) <I>Presubmission and citizen participation requirements.</I> (1) Before submission of an application for loan guarantee assistance to HUD, the public entity must: 
</P>
<P>(i) Develop a proposed application that includes the following items: 
</P>
<P>(A) The community development objectives the public entity proposes to pursue with the guaranteed loan funds. 
</P>
<P>(B) The activities the public entity proposes to carry out with the guaranteed loan funds. Each activity must be described in sufficient detail, including the specific provision of § 570.703 under which it is eligible and the national objective to be met, amount of guaranteed loan funds expected to be used, and location, to allow citizens to determine the degree to which they will be affected. The proposed application must indicate which activities are expected to generate program income. The application must also describe where citizens may obtain additional information about proposed activities. 
</P>
<P>(C) A description of the pledge of grants required under § 570.705(b)(2). In the case of applications by State-assisted public entities, the description shall note that pledges of grants will be made by the State and by the public entity. 
</P>
<P>(D) A description of any CDBG funds, including guaranteed loan funds and grant funds, that will be used to pay fees required under § 570.705(g). The description must include an estimate of the amount of CBDG funds that will be used for this purpose. If the applicant will use grant funds to pay required fees, it must include this planned use of grant funds in its consolidated plan.
</P>
<P>(ii) Fulfill the applicable requirements in its citizen participation plan developed in accordance with § 570.704(a)(2). 
</P>
<P>(iii) Publish community-wide its proposed application so as to afford affected citizens an opportunity to examine the application's contents and to provide comments on the proposed application. 
</P>
<P>(iv) Prepare its final application. Once the public entity has held the public hearing and published the proposed application as required by paragraphs (a)(1)(ii) and (iii) of this section, respectively, the public entity must consider any such comments and views received and, if the public entity deems appropriate, modify the proposed application. Upon completion, the public entity must make the final application available to the public. The final application must describe each activity in sufficient detail to permit a clear understanding of the nature of each activity, as well as identify the specific provision of § 570.703 under which it is eligible, the national objective to be met, and the amount of guaranteed loan funds to be used. The final application must also indicate which activities are expected to generate program income. 
</P>
<P>(v) If an application for loan guarantee assistance is to be submitted by an entitlement or nonentitlement public entity simultaneously with the public entity's submission for its grant, the public entity shall include and identify in its proposed and final consolidated plan the activities to be undertaken with the guaranteed loan funds, the national objective to be met by each of these activities, the amount of any program income expected to be received during the program year, and the amount of guaranteed loan funds to be used. The public entity shall also include in the consolidated plan a description of the pledge of grants, as required under § 570.705(b)(2), and the use of grant funds to pay for any fees required under § 570.705(g). In such cases the proposed and final application requirements of paragraphs (a)(1)(i), (iii), and (iv) of this section will be deemed to have been met.
</P>
<P>(2) <I>Citizen participation plan.</I> The public entity must develop and follow a detailed citizen participation plan and make the plan public. The plan must be completed and available before the application is submitted to HUD. The plan may be the citizen plan required for the consolidated plan, modified to include guaranteed loan funds. The public entity is not required to hold a separate public hearing for its consolidated plan and for the guaranteed loan funds to obtain citizens' views on community development and housing needs. The plan must set forth the public entity's policies and procedures for: 
</P>
<P>(i) Giving citizens timely notice of local meetings and reasonable and timely access to local meetings, information, and records relating to the public entity's proposed and actual use of guaranteed loan funds, including, but not limited to: 
</P>
<P>(A) The amount of guaranteed loan funds expected to be made available for the coming year, including program income anticipated to be generated by the activities carried out with guaranteed loan funds; 
</P>
<P>(B) The range of activities that may be undertaken with guaranteed loan funds; 
</P>
<P>(C) The estimated amount of guaranteed loan funds (including program income derived therefrom) proposed to be used for activities that will benefit low and moderate income persons; 
</P>
<P>(D) The proposed activities likely to result in displacement and the public entity's plans, consistent with the policies developed under § 570.606 for minimizing displacement of persons as a result of its proposed activities. 
</P>
<P>(ii) Providing technical assistance to groups representative of persons of low and moderate income that request assistance in developing proposals. The level and type of assistance to be provided is at the discretion of the public entity. Such assistance need not include the provision of funds to such groups. 
</P>
<P>(iii) Holding a minimum of two public hearings, each at a different stage of the public entity's program, for the purpose of obtaining the views of citizens and formulating or responding to proposals and questions. Together the hearings must address community development and housing needs, development of proposed activities and review of program performance. At least one of these hearings must be held before submission of the application to obtain the views of citizens on community development and housing needs. Reasonable notice of the hearing must be provided and the hearing must be held at times and locations convenient to potential or actual beneficiaries, with accommodation for the handicapped. The public entity must specify in its plan how it will meet the requirement for a hearing at times and locations convenient to potential or actual beneficiaries. 
</P>
<P>(iv) Meeting the needs of non-English speaking residents in the case of public hearings where a significant number of non-English speaking residents can reasonably be expected to participate. 
</P>
<P>(v) Providing affected citizens with reasonable advance notice of, and opportunity to comment on, proposed activities not previously included in an application and activities which are proposed to be deleted or substantially changed in terms of purpose, scope, location, or beneficiaries. The criteria the public entity will use to determine what constitutes a substantial change for this purpose must be described in the citizen participation plan. 
</P>
<P>(vi) Responding to citizens' complaints and grievances, including the procedures that citizens must follow when submitting complaints and grievances. The public entity's policies and procedures must provide for timely written answers to written complaints and grievances within 15 working days of the receipt of the complaint, where practicable. 
</P>
<P>(vii) Encouraging citizen participation, particularly by low and moderate income persons who reside in slum or blighted areas, and other areas in which guaranteed loan funds are proposed to be used. 
</P>
<P>(b) <I>Submission requirements.</I> An application for loan guarantee assistance may be submitted at any time. The application (or consolidated plan) shall be submitted to the appropriate HUD Office and shall be accompanied by the following: 
</P>
<P>(1) A description of how each of the activities to be carried out with the guaranteed loan funds meets one of the criteria in § 570.208. 
</P>
<P>(2) A schedule for repayment of the loan which identifies the sources of repayment, together with a statement identifying the entity that will act as borrower and issue the debt obligations. 
</P>
<P>(3) A certification providing assurance that the public entity possesses the legal authority to make the pledge of grants required under § 570.705(b)(2). 
</P>
<P>(4) A certification providing assurance that the public entity has made efforts to obtain financing for activities described in the application without the use of the loan guarantee, the public entity will maintain documentation of such efforts for the term of the loan guarantee, and the public entity cannot complete such financing consistent with the timely execution of the program plans without such guarantee. 
</P>
<P>(5)-(6) [Reserved]
</P>
<P>(7) The anti-lobbying statement required under 24 CFR part 87 (appendix A). 
</P>
<P>(8) Certifications by the public entity that: 
</P>
<P>(i) It possesses the legal authority to submit the application for assistance under this subpart and to use the guaranteed loan funds in accordance with the requirements of this subpart. 
</P>
<P>(ii) Its governing body has duly adopted or passed as an official act a resolution, motion or similar official action: 
</P>
<P>(A) Authorizing the person identified as the official representative of the public entity to submit the application and amendments thereto and all understandings and assurances contained therein, and directing and authorizing the person identified as the official representative of the public entity to act in connection with the application to provide such additional information as may be required; and 
</P>
<P>(B) Authorizing such official representative to execute such documents as may be required in order to implement the application and issue debt obligations pursuant thereto (provided that the authorization required by this paragraph (B) may be given by the local governing body after submission of the application but prior to execution of the contract required by § 570.705(b); 
</P>
<P>(iii) Before submission of its application to HUD, the public entity has: 
</P>
<P>(A) Furnished citizens with information required by § 570.704(a)(2)(i); 
</P>
<P>(B) Held at least one public hearing to obtain the views of citizens on community development and housing needs; and 
</P>
<P>(C) Prepared its application in accordance with § 570.704(a)(1)(iv) and made the application available to the public. 
</P>
<P>(iv) It is following a detailed citizen participation plan which meets the requirements described in § 570.704(a)(2). 
</P>
<P>(v) The public entity will affirmatively further fair housing, and the guaranteed loan funds will be administered in compliance with: 
</P>
<P>(A) Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d <I>et seq.</I>); and 
</P>
<P>(B) The Fair Housing Act (42 U.S.C. 3601-3619). 
</P>
<P>(vi)(A) (For entitlement public entities only.) In the aggregate, at least 70 percent of all CDBG funds, as defined at § 570.3, to be expended during the one, two, or three consecutive years specified by the public entity for its CDBG program will be for activities which benefit low and moderate income persons, as described in criteria at § 570.208(a). 
</P>
<P>(B) (For nonentitlement public entities eligible under subpart F of this part only.) It will comply with primary and national objectives requirements, as applicable under subpart F of this part. 
</P>
<P>(vii) It will comply with the requirements governing displacement, relocation, real property acquisition, and the replacement of low and moderate income housing described in § 570.606. 
</P>
<P>(viii) It will comply with the requirements of § 570.200(c)(2) with regard to the use of special assessments to recover the capital costs of activities assisted with guaranteed loan funds. 
</P>
<P>(ix) (Where applicable, the public entity may also include the following additional certification.) It lacks sufficient resources from funds provided under this subpart or program income to allow it to comply with the provisions of § 570.200(c)(2), and it must therefore assess properties owned and occupied by moderate income persons, to recover the guaranteed loan funded portion of the capital cost without paying such assessments in their behalf from guaranteed loan funds. 
</P>
<P>(x) It will comply with the other provisions of the Act and with other applicable laws. 
</P>
<P>(9) In the case of an application submitted by a State-assisted public entity, certifications by the State that: 
</P>
<P>(i) It agrees to make the pledge of grants required under § 570.705(b)(2). 
</P>
<P>(ii) It possesses the legal authority to make such pledge. 
</P>
<P>(iii) At least 70 percent of the aggregate use of CDBG grant funds received by the State, guaranteed loan funds, and program income during the one, two, or three consecutive years specified by the State for its CDBG program will be for activities that benefit low and moderate income persons. 
</P>
<P>(iv) It agrees to assume the responsibilities described in § 570.710. 
</P>
<P>(c) <I>HUD review and approval of applications.</I> (1) HUD will normally accept the certifications submitted with the application. HUD may, however, consider relevant information which challenges the certifications and require additional information or assurances from the public entity or State as warranted by such information. 
</P>
<P>(2) [Reserved]
</P>
<P>(3) HUD may disapprove an application, or may approve loan guarantee assistance for an amount less than requested, for any of the following reasons: 
</P>
<P>(i) HUD determines that the guarantee constitutes an unacceptable financial risk. Factors that will be considered in assessing financial risk shall include, but not be limited to, the following: 
</P>
<P>(A) The length of the proposed repayment period; 
</P>
<P>(B) The ratio of expected annual debt service requirements to expected annual grant amount; 
</P>
<P>(C) The likelihood that the public entity or State will continue to receive grant assistance under this part during the proposed repayment period; 
</P>
<P>(D) The public entity's or State's ability to furnish adequate security pursuant to § 570.705(b), and
</P>
<P>(E) The amount of program income the proposed activities are reasonably estimated to contribute toward repayment of the guaranteed loan. 
</P>
<P>(ii) The requested loan amount exceeds any of the limitations specified under § 570.705(a). 
</P>
<P>(iii) Funds are not available in the amount requested. 
</P>
<P>(iv) The performance of the public entity, its designated public agency or State under this part is unacceptable. 
</P>
<P>(v) Activities to be undertaken with the guaranteed loan funds are not eligible under § 570.703. 
</P>
<P>(vi) Activities to be undertaken with the guaranteed loan funds do not meet the criteria in § 570.208 for compliance with one of the national objectives of the Act. 
</P>
<P>(4) HUD will notify the public entity or State in writing that the loan guarantee request has either been approved, reduced, or disapproved. If the request is reduced or disapproved, the public entity or State shall be informed of the specific reasons for reduction or disapproval. If the request is reduced or disapproved, the public entity shall be informed of the specific reasons for reduction or disapproval. If the request is approved, HUD shall issue an offer of commitment to guarantee debt obligations of the borrower identified in the application subject to compliance with this part, including the requirements under § 570.705(b), (d), (g) and (h) for securing and issuing debt obligations, the conditions for release of funds described in paragraph (d) of this section, and such other conditions as HUD may specify in the commitment documents in a particular case. 
</P>
<P>(5) <I>Amendments.</I> If the public entity or State wishes to carry out or assist in an activity not previously described in its application or to substantially change the purpose, scope, location, or beneficiaries of an activity, the amendment must be approved by HUD. Amendments by State-assisted public entities must also be approved by the State. The public entity shall follow the citizen participation requirements for amendments in § 570.704(a)(2).
</P>
<P>(d) <I>Environmental review.</I> The public entity shall comply with HUD environmental review procedures (24 CFR part 58) for the release of funds for each project carried out with loan guarantee assistance. These procedures set forth the regulations, policies, responsibilities and procedures governing the carrying out of environmental review responsibilities of public entities. All public entities, including nonentitlement public entities, shall submit the request for release of funds and related certification for each project to be assisted with guaranteed loan funds to the appropriate HUD Field Office. 
</P>
<P>(e) <I>Displacement, relocation, acquisition, and replacement of housing.</I> The public entity (or the designated public agency) shall comply with the displacement, relocation, acquisition, and replacement of low/moderate-income housing requirements in § 570.606 in connection with any activity financed in whole or in part with guaranteed loan funds. 
</P>
<CITA TYPE="N">[59 FR 66604, Dec. 27, 1994, as amended at 60 FR 1917, Jan. 5, 1995; 61 FR 11481, Mar. 20, 1996; 69 FR 32781, June 10, 2004; 72 FR 73496, Dec. 27, 2008; 74 FR 36389, July 22, 2009; 80 FR 67633, Nov. 3, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 570.705" NODE="24:3.1.1.3.3.13.1.6" TYPE="SECTION">
<HEAD>§ 570.705   Loan requirements.</HEAD>
<P>(a) <I>Limitations on commitments.</I> (1) If loan guarantee commitments have been issued in any fiscal year in an aggregate amount equal to 50 percent of the amount approved in an appropriation act for that fiscal year, HUD may limit the amount of commitments any one public entity may receive during such fiscal year as follows (except that HUD will not decrease commitments already issued): 
</P>
<P>(i) The amount any one entitlement public entity may receive may be limited to $35,000,000. 
</P>
<P>(ii) The amount any one nonentitlement public entity may receive may be limited to $7,000,000. 
</P>
<P>(iii) The amount any one public entity may receive may be limited to such amount as is necessary to allow HUD to give priority to applications containing activities to be carried out in areas designated as empowerment zones/enterprise communities by the Federal Government or by any State. 
</P>
<P>(2) In addition to the limitations specified in paragraph (a)(1) of this section, the following limitations shall apply. 
</P>
<P>(i) <I>Entitlement public entities.</I> No commitment to guarantee shall be made if the total unpaid balance of debt obligations guaranteed under this subpart (excluding any amount defeased under the contract entered into under § 570.705(b)(1)) on behalf of the public entity would thereby exceed an amount equal to five times the amount of the most recent grant made pursuant to § 570.304 to the public entity. 
</P>
<P>(ii) <I>States and State-assisted public entities.</I> No commitment to guarantee shall be made if the total unpaid balance of debt obligations guaranteed under this subpart (excluding any amount defeased under the contract entered into under § 570.705(b)(1)) on behalf of the State and all State-assisted public entities in the State would thereby exceed an amount equal to five times the amount of the most recent grant received by such State under subpart I.
</P>
<P>(iii) <I>Nonentitlement public entities eligible under subpart F of this part.</I> No commitment to guarantee shall be made with respect to a nonentitlement public entity in an insular area or the State of Hawaii if the total unpaid balance of debt obligations guaranteed under this subpart (excluding any amount defeased under the contract entered into under § 570.705(b)(1)) on behalf of the public entity would thereby exceed an amount equal to five times the amount of the most recent grant made pursuant to § 570.429 or § 570.440 (as applicable) to the public entity.
</P>
<P>(A) The most recent grant approved for the public entity pursuant to subpart F of this part, 
</P>
<P>(B) The average of the most recent three grants approved for the public entity pursuant to subpart F of this part, excluding any grant in the same fiscal year as the commitment, or 
</P>
<P>(C) The average amount of grants made under subpart F of this part to units of general local government in New York State in the previous fiscal year. 
</P>
<P>(b) <I>Security requirements.</I> To assure the repayment of debt obligations and the charges incurred under paragraph (g) of this section and as a condition for receiving loan guarantee assistance, the public entity (and State and designated public agency, as applicable) shall: 
</P>
<P>(1) Enter into a contract for loan guarantee assistance with HUD, in a form acceptable to HUD, including provisions for repayment of debt obligations guaranteed hereunder; 
</P>
<P>(2) Pledge all grants made or for which the public entity or State may become eligible under this part; and 
</P>
<P>(3) Furnish, at the discretion of HUD, such other security as may be deemed appropriate by HUD in making such guarantees. Other security shall be required for all loans with repayment periods of ten years or longer. Such other security shall be specified in the contract entered into pursuant to § 570.705(b)(1). Examples of other security HUD may require are: 
</P>
<P>(i) Program income as defined in § 570.500(a); 
</P>
<P>(ii) Liens on real and personal property; 
</P>
<P>(iii) Debt service reserves; and 
</P>
<P>(iv) Increments in local tax receipts generated by activities carried out with the guaranteed loan funds. 
</P>
<P>(c) <I>Use of grants for loan repayment, issuance, underwriting, servicing, and other costs.</I> Notwithstanding any other provision of this part: 
</P>
<P>(1) Community Development Block Grants allocated pursuant to section 106 of the Act (including program income derived therefrom) may be used for: 
</P>
<P>(i) Paying principal and interest due (including such issuance, servicing, underwriting, or other costs as may be incurred under paragraph (g) of this section) on the debt obligations guaranteed under this subpart; 
</P>
<P>(ii) Defeasing such debt obligations; and 
</P>
<P>(iii) Establishing debt service reserves as additional security pursuant to paragraph (b)(3) of this section. 
</P>
<P>(2) HUD may apply grants pledged pursuant to paragraph (b)(2) of this section to any amounts due under the debt obligations, the payment of costs incurred under paragraph (g) of this section, or to the purchase or defeasance of such debt obligations, in accordance with the terms of the contract required by paragraph (b)(l) of this section. 
</P>
<P>(d) <I>Debt obligations.</I> Debt obligations guaranteed under this subpart shall be in the form and denominations prescribed by HUD. Such debt obligations may be issued and sold only under such terms and conditions as may be prescribed by HUD. HUD may prescribe the terms and conditions of debt obligations, or of their issuance and sale, by regulation or by contractual arrangements authorized by section 108(r)(4) of the Act and paragraph (h) of this section. Unless specifically provided otherwise in the contract for loan guarantee assistance required under paragraph (b) of this section, debt obligations shall not constitute general obligations of any public entity or State secured by its full faith and credit. 
</P>
<P>(e) <I>Taxable obligations.</I> Interest earned on debt obligations under this subpart shall be subject to Federal taxation as provided in section 108(j) of the Act. 
</P>
<P>(f) <I>Loan repayment period.</I> The term of debt obligations under this subpart shall not exceed twenty years. 
</P>
<P>(g) <I>Issuance, underwriting, servicing, and other costs.</I> (1) Each public entity or its designated public agency and each State issuing debt obligations under this subpart must pay the issuance, underwriting, servicing, trust administration, and other costs associated with the private sector financing of the debt obligations.
</P>
<P>(2) Each public entity or its designated public agency and each state issuing debt obligations under this subpart must pay any and all fees charged by HUD pursuant to § 570.712.
</P>
<P>(h) <I>Contracting with respect to issuance and sale of debt obligations; effect of other laws.</I> No State or local law, and no Federal law, shall preclude or limit HUD's exercise of: 
</P>
<P>(1) The power to contract with respect to public offerings and other sales of debt obligations under this subpart upon such terms and conditions as HUD deems appropriate; 
</P>
<P>(2) The right to enforce any such contract by any means deemed appropriate by HUD; 
</P>
<P>(3) Any ownership rights of HUD, as applicable, in debt obligations under this subpart.
</P>
<CITA TYPE="N">[59 FR 66604, Dec. 27, 1994, as amended at 69 FR 32782, June 10, 2004; 74 FR 36389, July 22, 2009; 80 FR 67633, Nov. 3, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 570.706" NODE="24:3.1.1.3.3.13.1.7" TYPE="SECTION">
<HEAD>§ 570.706   Federal guarantee; subrogation.</HEAD>
<P>Section 108(f) of the Act provides for the incontestability of guarantees by HUD under subpart M of this part in the hands of a holder of such guaranteed obligations. If HUD pays a claim under a guarantee made under section 108 of the Act, HUD shall be fully subrogated for all the rights of the holder of the guaranteed debt obligation with respect to such obligation. 
</P>
<CITA TYPE="N">[61 FR 11481, Mar. 20, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 570.707" NODE="24:3.1.1.3.3.13.1.8" TYPE="SECTION">
<HEAD>§ 570.707   Applicability of rules and regulations.</HEAD>
<P>(a) <I>Entitlement public entities.</I> The provisions of subparts A, C, J, K and O of this part applicable to entitlement grants shall apply equally to guaranteed loan funds and other CDBG funds, except to the extent they are specifically modified or augmented by the provisions of this subpart.
</P>
<P>(b) <I>State-assisted public entities.</I> The provisions of subpart I of this part, and the requirements the State imposes on units of general local government receiving Community Development Block Grants or program income to the extent applicable, shall apply equally to guaranteed loan funds and Community Development Block Grants (including program income derived therefrom) administered by the State under the CDBG program, except to the extent they are specifically modified or augmented by the provisions of this subpart.
</P>
<P>(c) <I>Nonentitlement public entities eligible under subpart F of this part.</I> The provisions of subpart F of this part shall apply equally to guaranteed loan funds and other CDBG funds, except to the extent they are specifically modified or augmented by the provisions of this subpart.


</P>
</DIV8>


<DIV8 N="§ 570.708" NODE="24:3.1.1.3.3.13.1.9" TYPE="SECTION">
<HEAD>§ 570.708   Sanctions.</HEAD>
<P>(a) <I>Non-State assisted public entities.</I> The performance review procedures described in subpart O of this part apply to all public entities receiving guaranteed loan funds other than State-assisted public entities. Performance deficiencies in the use of guaranteed loan funds made available to such public entities (or program income derived therefrom) or violations of the contract entered into pursuant to § 570.705(b)(1) may result in the imposition of a sanction authorized pursuant to § 570.900(b)(7) against pledged CDBG grants. In addition, upon a finding by HUD that the public entity has failed to comply substantially with any provision of the Act with respect to either the pledged grants or the guaranteed loan funds or program income, HUD may take action against the pledged grants as provided in § 570.913 and/or may take action as provided in the contract for loan guarantee assistance.
</P>
<P>(b) <I>State-assisted public entities.</I> Performance deficiencies in the use of guaranteed loan funds (or program income derived therefrom) or violations of the contract entered into pursuant to § 570.705(b)(1) may result in an action authorized pursuant to § 570.495 or § 570.496. In addition, upon a finding by HUD that the State or public entity has failed to comply substantially with any provision of the Act with respect to the pledged CDBG nonentitlement funds, the guaranteed loan funds, or program income, HUD may take action against the pledged funds as provided in § 570.496 and/or may take action as provided in the contract.


</P>
</DIV8>


<DIV8 N="§ 570.709" NODE="24:3.1.1.3.3.13.1.10" TYPE="SECTION">
<HEAD>§ 570.709   Allocation of loan guarantee assistance.</HEAD>
<P>Of the amount approved in any appropriation act for guarantees under this subpart in any fiscal year, 70 percent shall be allocated for entitlement public entities and 30 percent shall be allocated for States and nonentitlement public entities. HUD need not comply with these percentage requirements in any fiscal year to the extent that there is an absence of applications approvable under this subpart from entitlement public entities or from States and nonentitlement public entities.
</P>
<CITA TYPE="N">[74 FR 36389, July 22, 2009]


</CITA>
</DIV8>


<DIV8 N="§ 570.710" NODE="24:3.1.1.3.3.13.1.11" TYPE="SECTION">
<HEAD>§ 570.710   State responsibilities.</HEAD>
<P>The State is responsible for choosing public entities that it will assist under this subpart. States are free to develop procedures and requirements for determining which activities will be assisted, subject to the requirements of this subpart. Upon approval by HUD of an application from a State or a State-assisted public entity, the State will be principally responsible, subject to HUD oversight under subpart I of this part, for ensuring compliance with all applicable requirements governing the use of the guaranteed loan funds. Notwithstanding the State's responsibilities described in this section, HUD may take any action necessary for ensuring compliance with requirements affecting the security interests of HUD with respect to the guaranteed loan.
</P>
<CITA TYPE="N">[59 FR 66604, Dec. 27, 1994, as amended at 74 FR 36389, July 22, 2009]


</CITA>
</DIV8>


<DIV8 N="§ 570.711" NODE="24:3.1.1.3.3.13.1.12" TYPE="SECTION">
<HEAD>§ 570.711   State borrowers; additional requirements and application procedures.</HEAD>
<P>This section contains additional requirements and alternative application procedures for guarantees of debt obligations under section 108 of the Act pursuant to the additional authority provided in paragraph (a) of section 222 of the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act, 2009, Public Law 111-8; 123 Stat. 524 at 976 (Division I of the Omnibus Appropriations Act, 2009) (“section 222” and the “2009 Appropriations Act”). If any other federal law or laws are enacted after March 11, 2009, the effect of which with respect to loan guarantee authority provided in an appropriations act is equivalent to the effect of section 222 with respect to the loan guarantee authority provided in the 2009 Appropriations Act, the additional requirements and alternative application procedures in this section shall also apply to guarantees of debt obligations under section 108 of the act, pursuant to the additional authority provided in such other federal law or laws.
</P>
<P>(a) <I>Applications by States.</I> Notwithstanding § 570.702 and § 570.704, states that administer the CDBG program (under subpart I of this part) may apply for loan guarantee assistance under this subpart, and such application shall consist of the following:
</P>
<P>(1) A copy of the State's CDBG method of distribution in the action plan most recently submitted or amended pursuant to 24 CFR part 91. In addition to the requirements of 24 CFR part 91, such method of distribution must note the approximate amount of section 108 guaranteed obligations issued by the State and all nonentitlement public entities that are outstanding at the time of such submission or amendment, identify the maximum amount of guaranteed loan funds for which the State will apply during the period covered by the action plan, describe the pledge of grants required under § 570.705(b)(2), and identify the nonentitlement public entities in the State that may be assisted with such guaranteed loan funds (to satisfy this requirement, the method of distribution may identify one or more specific nonentitlement public entities that may be assisted, or may indicate that all or a specified subset of the nonentitlement public entities in the State may be assisted and describe how applications will be selected for assistance).
</P>
<P>(2) Either:
</P>
<P>(i) A description of each activity to be carried out with the guaranteed loan funds, including the specific provision of § 570.703 under which the activity is eligible and how the activity meets one of the criteria in § 570.208; or
</P>
<P>(ii) An indication of the type or types of activities to be assisted, the provisions of § 570.703 under which such activities are eligible, and the criteria in § 570.208 intended to be met, in which case HUD shall require that the description referred to in paragraph (a)(2)(i) of this section be submitted to and approved by HUD before the State disburses guaranteed loan funds to a public entity for the activity.
</P>
<P>(3) A schedule for repayment of the loan which identifies the sources of repayment.
</P>
<P>(b) <I>Distribution to Local Governments.</I> Proceeds payable to a State from the issuance of debt obligations under this subpart may be used only for:
</P>
<P>(1) Loans and grants to the nonentitlement public entities identified in the State's approved application for activities eligible under § 570.703; and
</P>
<P>(2) The uses specified in paragraphs (c), (g), and (k) of § 570.703.
</P>
<P>(c) <I>Certification of need.</I> Prior to approving a nonentitlement public entity's application for assistance, the State shall obtain a certification from such public entity conforming to § 570.704(b)(4).
</P>
<P>(d) <I>Local government citizen participation requirements.</I> The presubmission and citizen participation requirements in § 570.704(a) and the third sentence of § 570.704(c)(5) shall not apply with respect to nonentitlement public entities' applications to a State for assistance under this section. Nonentitlement public entities shall comply with the provisions of § 570.486(a) with respect to such applications and such assistance.
</P>
<P>(e) <I>Environmental review; displacement, relocation, acquisition, and replacement of housing.</I> Nonentitlement public entities assisted by a State under this section shall comply with § 570.704(d) and (e).
</P>
<CITA TYPE="N">[74 FR 36389, July 22, 2009]


</CITA>
</DIV8>


<DIV8 N="§ 570.712" NODE="24:3.1.1.3.3.13.1.13" TYPE="SECTION">
<HEAD>§ 570.712   Collection of fees; procedure to determine amount of the fee.</HEAD>
<P>This section contains additional procedures for guarantees of debt obligations under section 108 when HUD is required or authorized to collect fees to pay the credit subsidy costs of the loan guarantee program.
</P>
<P>(a) <I>Collection of fees.</I> HUD may collect fees from borrowers for the purpose of paying the credit subsidy cost of the loan guarantee. Each public entity or its designated public agency and each State issuing debt obligations under this subpart is responsible for the payment of any and all fees charged pursuant to this section. The fees are payable from the grant allocated to the issuer pursuant to the Act (including program income derived therefrom) or from other sources, but are only payable from guaranteed loan funds if the fee is deducted from the disbursement of guaranteed loan funds.
</P>
<P>(b) <I>Amount and determination of fee.</I> (1) HUD shall calculate the amount of the fee as a percentage of the principal amount of the guaranteed loan as provided by this section, based on a determination that the fees when collected will reduce the credit subsidy cost to the amount established by applicable appropriation acts. The amount of the fee payable by the public entity or State shall be based on the date of the loan guarantee commitment and shall be determined by applying the percentages announced by <E T="04">Federal Register</E> notice to guaranteed loan disbursements as they occur or periodically to outstanding principal balances, or both.
</P>
<P>(2) HUD shall publish in the <E T="04">Federal Register</E> the fees required under paragraph (a) of this section, announcing the fee to be applied, the effective date of the fee, and any other necessary information regarding payment of the fee and, if necessary, provide a 30-day public comment period for the purpose of inviting comment on the proposed fee before adopting changes to the assumptions underlying the fee calculation or if the fee structure itself raises new considerations for Borrowers. HUD will publish a second <E T="04">Federal Register</E> notice, if necessary, after consideration of public comments.
</P>
<CITA TYPE="N">[80 FR 67633, Nov. 3, 2015]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="N" NODE="24:3.1.1.3.3.14" TYPE="SUBPART">
<HEAD>Subpart N—Urban Renewal Provisions</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>41 FR 20524, May 18, 1976, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV8 N="§ 570.800" NODE="24:3.1.1.3.3.14.1.1" TYPE="SECTION">
<HEAD>§ 570.800   Urban renewal regulations.</HEAD>
<P>The regulations governing urban renewal projects and neighborhood development programs in subpart N of this part, that were effective immediately before April 19, 1996, will continue to govern the rights and obligations of recipients and HUD with respect to such projects and programs. 
</P>
<CITA TYPE="N">[61 FR 11481, Mar. 20, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="O" NODE="24:3.1.1.3.3.15" TYPE="SUBPART">
<HEAD>Subpart O—Performance Reviews</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>53 FR 34466, Sept. 6, 1988, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 570.900" NODE="24:3.1.1.3.3.15.1.1" TYPE="SECTION">
<HEAD>§ 570.900   General.</HEAD>
<P>(a) <I>Performance review authorities</I>—(1) <I>Entitlement, Insular Areas, and HUD-administered Small Cities performance reviews.</I> Section 104(e)(1) of the Act requires that the Secretary shall, at least on an annual basis, make such reviews and audits as may be necessary or appropriate to determine whether the recipient has carried out its activities in a timely manner, whether the recipient has carried out those activities and its certifications in accordance with the requirements and the primary objectives of the Act and with other applicable laws, and whether the recipient has a continuing capacity to carry out those activities in a timely manner. 
</P>
<P>(2) <I>Urban Development Action Grant (UDAG) performance reviews.</I> Section 119(g) of the Act requires the Secretary, at least on an annual basis, to make such reviews and audits of recipients of Urban Development Action Grants as necessary to determine whether the recipient's progress in carrying out the approved activities is substantially in accordance with the recipient's approved plans and timetables.
</P>
<P>(b) <I>Performance review procedures.</I> This paragraph describes the review procedures the Department will use in conducting the performance reviews required by sections 104(e) and 119(g) of the Act:
</P>
<P>(1) The Department will determine the performance of each entitlement, Insular Areas, and HUD-administered small cities recipient in accordance with section 104(e)(1) of the Act by reviewing for compliance with the requirements described in § 570.901 and by applying the performance criteria described in §§ 570.902 and 570.903 relative to carrying out activities in a timely manner. The review criteria in § 570.904 will be used to assist in determining if the recipient's program is being carried out in compliance with civil rights requirements.
</P>
<P>(2) The Department will review UDAG projects and activities to determine whether such projects and activities are being carried out substantially in accordance with the recipient's approved plans and schedules. The Department will also review to determine if the recipient has carried out its UDAG program in accordance with all other requirements of the Grant Agreement and with all applicable requirements of this part.
</P>
<P>(3) In conducting performance reviews, HUD will primarily rely on information obtained from the recipient's performance report, records maintained, findings from monitoring, grantee and subrecipient audits, audits and surveys conducted by the HUD Inspector General, and financial data regarding the amount of funds remaining in the line of credit plus program income. HUD may also consider relevant information pertaining to a recipient's performance gained from other sources, including litigation, citizen comments, and other information provided by or concerning the recipient. A recipient's failure to maintain records in the prescribed manner may result in a finding that the recipient has failed to meet the applicable requirement to which the record pertains. 
</P>
<P>(4) If HUD determines that a recipient has not met a civil rights review criterion in § 570.904, the recipient will be provided an opportunity to demonstrate that it has nonetheless met the applicable civil rights requirement.
</P>
<P>(5) If HUD finds that a recipient has failed to comply with a program requirement or has failed to meet a performance criterion in § 570.902 or § 570.903, HUD will give the recipient an opportunity to provide additional information concerning the finding. 
</P>
<P>(6) If, after considering any additional information submitted by a recipient, HUD determines to uphold the finding, HUD may advise the recipient to undertake appropriate corrective or remedial actions as specified in § 570.910. HUD will consider the recipient's capacity as described in § 570.905 prior to selecting the corrective or remedial actions. 
</P>
<P>(7) If the recipient fails to undertake appropriate corrective or remedial actions which resolve the deficiency to the satisfaction of the Secretary, the Secretary may impose a sanction pursuant to § 570.911, 570,912, or 570.913, as applicable.
</P>
<CITA TYPE="N">[53 FR 34466, Sept. 6, 1988, as amended at 60 FR 56917, Nov. 9, 1995; 72 FR 12536, Mar. 15, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 570.901" NODE="24:3.1.1.3.3.15.1.2" TYPE="SECTION">
<HEAD>§ 570.901   Review for compliance with the primary and national objectives and other program requirements.</HEAD>
<P>HUD will review each entitlement, Insular Areas, and HUD-administered small cities recipient's program to determine if the recipient has carried out its activities and certifications in compliance with:
</P>
<P>(a) The requirement described at § 570.200(a)(3) that, consistent with the primary objective of the Act, not less than 70 percent of the aggregate amount of CDBG funds received by the recipient shall be used over the period specified in its certification for activities that benefit low and moderate income persons;
</P>
<P>(b) The requirement described at § 570.200(a)(2) that each CDBG assisted activity meets the criteria for one or more of the national objectives described at § 570.208;
</P>
<P>(c) All other activity eligibility requirements defined in subpart C of this part;
</P>
<P>(d) For entitlement grants and non-entitlement CDBG grants in Hawaii, the submission requirements of 24 CFR part 91 and the displacement policy requirements at § 570.606;
</P>
<P>(e) For HUD-administered Small Cities grants in New York, the citizen participation requirements at § 570.431, the amendment requirements at § 570.427, and the displacement policy requirements of § 570.606;
</P>
<P>(f) For Insular Areas Program grants only, the application and amendment requirements at § 570.440, the citizen participation requirements at § 570.441, the displacement policy requirements of § 570.606, and the lead-based paint requirements of 24 CFR 35.940;
</P>
<P>(g) The grant administration requirements described in subpart J;
</P>
<P>(h) Other applicable laws and program requirements described in subpart K; and
</P>
<P>(i) Where applicable, the requirements pertaining to loan guarantees (subpart M) and urban renewal completions (subpart N).
</P>
<CITA TYPE="N">[53 FR 34466, Sept. 6, 1988, as amended at 60 FR 1917, Jan. 5, 1995; 60 FR 56917, Nov. 9, 1995; 72 FR 12536, Mar. 15, 2007; 72 FR 46371, Aug. 17, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 570.902" NODE="24:3.1.1.3.3.15.1.3" TYPE="SECTION">
<HEAD>§ 570.902   Review to determine if CDBG-funded activities are being carried out in a timely manner.</HEAD>
<P>HUD will review the performance of each entitlement, HUD-administered small cities, and Insular Areas recipient to determine whether each recipient is carrying out its CDBG-assisted activities in a timely manner. 
</P>
<P>(a) <I>Entitlement recipients and Non-entitlement CDBG grantees in Hawaii.</I> (1) Before the funding of the next annual grant and absent contrary evidence satisfactory to HUD, HUD will consider an entitlement recipient or a non-entitlement CDBG grantee in Hawaii to be failing to carry out its CDBG activities in a timely manner if: 
</P>
<P>(i) Sixty days prior to the end of the grantee's current program year, the amount of entitlement grant funds available to the recipient under grant agreements but undisbursed by the U.S. Treasury is more than 1.5 times the entitlement grant amount for its current program year; and 
</P>
<P>(ii) The grantee fails to demonstrate to HUD's satisfaction that the lack of timeliness has resulted from factors beyond the grantee's reasonable control. 
</P>
<P>(2) Notwithstanding that the amount of funds in the line of credit indicates that the recipient is carrying out its activities in a timely manner pursuant to paragraph (a)(1) of this section, HUD may determine that the recipient is not carrying out its activities in a timely manner if: 
</P>
<P>(i) The amount of CDBG program income the recipient has on hand 60 days prior to the end of its current program year, together with the amount of funds in its CDBG line of credit, exceeds 1.5 times the entitlement grant amount for its current program year; and 
</P>
<P>(ii) The grantee fails to demonstrate to HUD's satisfaction that the lack of timeliness has resulted from factors beyond the grantee's reasonable control. 
</P>
<P>(3) In determining the appropriate corrective action to take with respect to a HUD determination that a recipient is not carrying out its activities in a timely manner pursuant to paragraphs (a)(1) or (a)(2) of this section, HUD will consider the likelihood that the recipient will expend a sufficient amount of funds over the next program year to reduce the amount of unexpended funds to a level that will fall within the standard described in paragraph (a)(1) of this section when HUD next measures the grantee's timeliness performance. For these purposes, HUD will take into account the extent to which funds on hand have been obligated by the recipient and its subrecipients for specific activities at the time the finding is made and other relevant information. 
</P>
<P>(b) <I>HUD-administered Small Cities program in New York.</I> The Department will, absent substantial evidence to the contrary, deem a HUD-administered Small Cities recipient in New York to be carrying out its CDBG-funded activities in a timely manner if the schedule for carrying out its activities, as contained in the approved application (including any subsequent amendment(s)), is being substantially met.
</P>
<P>(c) <I>Insular Areas recipients.</I> (1) Before the funding of the next annual grant and absent contrary evidence satisfactory to HUD, HUD will consider an Insular Areas recipient to be failing to carry out its CDBG activities in a timely manner if:
</P>
<P>(i) Sixty days prior to the end of the grantee's current program year, the amount of Insular Area grant funds available to the recipient under grant agreements but undisbursed by the U.S. Treasury is more than 2.0 times the Insular Area's grant amount for its current program year; and
</P>
<P>(ii) The grantee fails to demonstrate to HUD's satisfaction that the lack of timeliness has resulted from factors beyond the grantee's reasonable control.
</P>
<P>(2) Notwithstanding that the amount of funds in the line of credit indicates that the Insular Area recipient is carrying out its activities in a timely manner pursuant to paragraph (c)(1) of this section, HUD may determine that the recipient is not carrying out its activities in a timely manner if:
</P>
<P>(i) The amount of CDBG program income the recipient has on hand 60 days prior to the end of its current program year, together with the amount of funds in its CDBG line of credit, exceeds 2.0 times the Insular Area's grant amount for its current program year; and
</P>
<P>(ii) The grantee fails to demonstrate to HUD's satisfaction that the lack of timeliness has resulted from factors beyond the grantee's reasonable control.
</P>
<P>(3) In determining the appropriate corrective action to take with respect to a HUD determination that a recipient is not carrying out its activities in a timely manner pursuant to paragraphs (c)(1) or (c)(2) of this section, HUD will consider the likelihood that the recipient will expend a sufficient amount of funds over the next program year to reduce the amount of unexpended funds to a level that will fall within the standards described in paragraphs (c)(1) and (2) of this section when HUD next measures the grantee's timeliness performance. For these purposes, HUD will take into account the extent to which funds on hand have been obligated by the recipient and its sub-recipients for specific activities at the time the finding is made and other relevant information.
</P>
<P>(4) If a recipient is determined to be untimely pursuant to paragraphs (c)(1) or (c)(2) of this section in one year, and the recipient is again determined to be untimely in the following year, HUD may reduce the recipient's next grant by 100 percent of the amount in excess of twice the Insular Area's most recent CDBG grant, unless HUD determines that the untimeliness resulted from factors outside of the grantee's reasonable control.
</P>
<P>(5) The first review under paragraphs (c)(1) and (c)(2) of this section will take place 60 days prior to the conclusion of the Fiscal Year 2006 program year.
</P>
<CITA TYPE="N">[53 FR 34466, Sept. 6, 1988, as amended at 60 FR 56917, Nov. 9, 1995; 72 FR 12536, Mar. 15, 2007; 72 FR 46371, Aug. 17, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 570.903" NODE="24:3.1.1.3.3.15.1.4" TYPE="SECTION">
<HEAD>§ 570.903   Review to determine if the recipient is meeting its consolidated plan responsibilities.</HEAD>
<P>The consolidated plan, action plan, and amendment submission requirements referred to in this section are in 24 CFR part 91. For the purpose of this section, the term consolidated plan includes an abbreviated consolidated plan that is submitted pursuant to 24 CFR 91.235.
</P>
<P>(a) <I>Review timing and purpose.</I> HUD will review the consolidated plan performance of each entitlement, Insular Areas, and Hawaii HUD-administered Small Cities grant recipient prior to acceptance of a grant recipient's annual certification under 24 CFR 91.225(b)(3) to determine whether the recipient followed its HUD-approved consolidated plan for the most recently completed program year, and whether activities assisted with CDBG funds during that period were consistent with that consolidated plan, except that grantees are not bound by the consolidated plan with respect to the use or distribution of CDBG funds to meet non-housing community development needs. 
</P>
<P>(b) <I>Following a consolidated plan.</I> The recipient will be considered to be following its consolidated plan if it has taken all of the planned actions described in its action plan. This includes, but is not limited to: 
</P>
<P>(1) Pursuing all resources that the grantee indicated it would pursue; 
</P>
<P>(2) Providing certifications of consistency, when requested to do so by applicants for HUD programs for which the grantee indicated that it would support application by other entities, in a fair and impartial manner; and 
</P>
<P>(3) Not hindering implementation of the consolidated plan by action or willful inaction. 
</P>
<P>(c) <I>Disapproval.</I> If HUD determines that a recipient has not met the criteria outlined in paragraph (b) of this section, HUD will notify the recipient and provide the recipient up to 45 days to demonstrate to the satisfaction of the Secretary that it has followed its consolidated plan. HUD will consider all relevant circumstances and the recipient's actions and lack of actions affecting the provision of assistance covered by the consolidated plan within its jurisdiction. Failure to so demonstrate in a timely manner will be cause for HUD to find that the recipient has failed to meet its certification. A complete and specific response by the recipient shall describe: 
</P>
<P>(1) Any factors beyond the control of the recipient that prevented it from following its consolidated plan, and any actions the recipient has taken or plans to take to alleviate such factors; and 
</P>
<P>(2) Actions taken by the recipient, if any, beyond those described in the consolidated plan performance report to facilitate following the consolidated plan, including the effects of such actions. 
</P>
<P>(d) <I>New York HUD-administered Small Cities.</I> New York HUD-administered grantees shall follow the provisions of paragraph (b) of this section for their abbreviated or full consolidated plan to the extent that the provisions of paragraph (b) of this section are applicable. If the grantee does not comply with the requirements of paragraph (b) of this section, and does not provide HUD with an acceptable explanation, HUD may decide, in accordance with the requirements of the notice of fund availability, that the grantee does not meet threshold requirements to apply for a new small cities grant.
</P>
<CITA TYPE="N">[60 FR 56918, Nov. 9, 1995, as amended at 72 FR 12537, Mar. 15, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 570.904" NODE="24:3.1.1.3.3.15.1.5" TYPE="SECTION">
<HEAD>§ 570.904   Equal opportunity and fair housing review criteria.</HEAD>
<P>(a) <I>General.</I> (1) Where the criteria in this section are met, the Department will presume that the recipient has carried out its CDBG-funded program in accordance with civil rights certifications and civil rights requirements of the Act relating to equal employment opportunity, equal opportunity in services, benefits and participation, and is affirmatively furthering fair housing unless:
</P>
<P>(i) There is evidence which shows, or from which it is reasonable to infer, that the recipient, motivated by considerations of race, color, religion where applicable, sex, national origin, age or handicap, has treated some persons less favorably than others, or
</P>
<P>(ii) There is evidence that a policy, practice, standard or method of administration, although neutral on its face, operates to deny or affect adversely in a significantly disparate way the provision of employment or services, benefits or participation to persons of a particular race, color, religion where applicable, sex, national origin, age or handicap, or fair housing to persons of a particular race, color, religion, sex, or national origin, or
</P>
<P>(iii) Where the Secretary required a further assurance pursuant to § 570.304 in order to accept the recipient's prior civil rights certification, the recipient has failed to meet any such assurance. 
</P>
<P>(2) In such instances, or where the review criteria in this section are not met, the recipient will be afforded an opportunity to present evidence that it has not failed to carry out the civil rights certifications and fair housing requirements of the Act. The Secretary's determination of whether there has been compliance with the applicable requirements will be made based on a review of the recipient's performance, evidence submitted by the recipient, and all other available evidence. The Department may also initiate separate compliance reviews under title VI of the Civil Rights Act of 1964 or section 109 of the Act.
</P>
<P>(b) <I>Review for equal opportunity.</I> Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d <I>et seq.</I>), and implementing regulations in 24 CFR part 1, together with section 109 of the Act (see § 570.602), prohibit discrimination in any program or activity funded in whole or in part with funds made available under this part. 
</P>
<P>(1) <I>Review for equal employment opportunity.</I> The Department will presume that a recipient's hiring and employment practices have been carried out in compliance with its equal opportunity certifications and requirements of the Act. This presumption may be rebutted where, based on the totality of circumstances, there has been a deprivation of employment, promotion, or training opportunities by a recipient to any person within the meaning of section 109. The extent to which persons of a particular race, gender, or ethnic background are represented in the workforce may in certain circumstances be considered, together with complaints, performance reviews, and other information.
</P>
<P>(2) <I>Review of equal opportunity in services, benefits and participation.</I> The Department will presume a recipient is carrying out its programs and activities in accordance with the civil rights certifications and requirements of the Act. This presumption may be rebutted where, based on the totality of circumstances, there has been a deprivation of services, benefits, or participation in any program or activity funded in whole or in part with block grant funds by a recipient to any person within the meaning of section 109. The extent to which persons of a particular race, gender, or ethnic background participate in a program or activity may in certain circumstances be considered, together with complaints, performance reviews, and other information. 
</P>
<P>(c) <I>Review for fair housing</I>—(1) <I>General.</I> See the requirements in the Fair Housing Act (42 U.S.C. 3601-20), as well as § 570.601(a).
</P>
<P>(2) <I>Affirmatively furthering fair housing.</I> HUD will review a recipient's performance to determine if it has administered all programs and activities related to housing and urban development in accordance with § 570.601(a)(2), which sets forth the grantee's responsibility to affirmatively further fair housing.
</P>
<P>(d) <I>Actions to use minority and women's business firms.</I> The Department will review a recipient's performance to determine if it has administered its activities funded with assistance under this part in a manner to encourage use of minority and women's business enterprises described in Executive Orders 11625, 12432 and 12138, and 2 CFR 200.321. In making this review, the Department will determine if the grantee has taken actions required under 2 CFR 200.321, and will review the effectiveness of those actions in accomplishing the objectives of 2 CFR 200.321 and the Executive Orders. No recipient is required by this part to attain or maintain any particular statistical level of participation in its contracting activities by race, ethnicity, or gender of the contractor's owners or managers.
</P>
<CITA TYPE="N">[53 FR 34466, Sept. 6, 1988; 53 FR 41330, Oct. 21, 1988, as amended at 54 FR 37411, Sept. 9, 1989; 60 FR 1917, Jan. 5, 1995; 61 FR 11482, Mar. 20, 1996; 80 FR 42368, July 16, 2015; 80 FR 75938, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 570.905" NODE="24:3.1.1.3.3.15.1.6" TYPE="SECTION">
<HEAD>§ 570.905   Review of continuing capacity to carry out CDBG funded activities in a timely manner.</HEAD>
<P>If HUD determines that the recipient has not carried out its CDBG activities and certifications in accordance with the requirements and criteria described in § 570.901 or 570.902, HUD will undertake a further review to determine whether or not the recipient has the continuing capacity to carry out its activities in a timely manner. In making the determination, the Department will consider the nature and extent of the recipient's performance deficiencies, types of corrective actions the recipient has undertaken and the success or likely success of such actions.


</P>
</DIV8>


<DIV8 N="§ 570.906" NODE="24:3.1.1.3.3.15.1.7" TYPE="SECTION">
<HEAD>§ 570.906   Review of urban counties.</HEAD>
<P>In reviewing the performance of an urban county, HUD will hold the county accountable for the actions or failures to act of any of the units of general local government participating in the urban county. Where the Department finds that a participating unit of government has failed to cooperate with the county to undertake or assist in undertaking an essential community development or assisted housing activity and that such failure results, or is likely to result, in a failure of the urban county to meet any requirement of the program or other applicable laws, the Department may prohibit the county's use of funds made available under this part for that unit of government. HUD will also consider any such failure to cooperate in its review of a future cooperation agreement between the county and such included unit of government described at § 570.307(b)(2).


</P>
</DIV8>


<DIV8 N="§§ 570.907-570.909" NODE="24:3.1.1.3.3.15.1.8" TYPE="SECTION">
<HEAD>§§ 570.907-570.909   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 570.910" NODE="24:3.1.1.3.3.15.1.9" TYPE="SECTION">
<HEAD>§ 570.910   Corrective and remedial actions.</HEAD>
<P>(a) <I>General.</I> Consistent with the procedures described in § 570.900(b), the Secretary may take one or more of the actions described in paragraph (b) of this section. Such actions shall be designed to prevent a continuation of the performance deficiency; mitigate, to the extent possible, the adverse effects or consequences of the deficiency; and prevent a recurrence of the deficiency.
</P>
<P>(b) <I>Actions authorized.</I> The following lists the actions that HUD may take in response to a deficiency identified during the review of a recipient's performance:
</P>
<P>(1) Issue a letter of warning advising the recipient of the deficiency and putting the recipient on notice that additional action will be taken if the deficiency is not corrected or is repeated;
</P>
<P>(2) Recommend, or request the recipient to submit, proposals for corrective actions, including the correction or removal of the causes of the deficiency, through such actions as:
</P>
<P>(i) Preparing and following a schedule of actions for carrying out the affected CDBG activities, consisting of schedules, timetables and milestones necessary to implement the affected CDBG activities;
</P>
<P>(ii) Establishing and following a management plan which assigns responsibilities for carrying out the actions identified in paragraph (b)(2)(i) of this section;
</P>
<P>(iii) For entitlement and Insular Areas recipients, canceling or revising affected activities that are no longer feasible to implement due to the deficiency and re-programming funds from such affected activities to other eligible activities (pursuant to the citizen participation requirements in 24 CFR part 91); or 
</P>
<P>(iv) Other actions which will serve to prevent a continuation of the deficiency, mitigate (to the extent possible) the adverse effects or consequences of the deficiency, and prevent a recurrence of the deficiency;
</P>
<P>(3) Advise the recipient that a certification will no longer be acceptable and that additional assurances will be required;
</P>
<P>(4) Advise the recipient to suspend disbursement of funds for the deficient activity;
</P>
<P>(5) Advise the recipient to reimburse its program account or letter of credit in any amounts improperly expended and reprogram the use of the funds in accordance with applicable requirements;
</P>
<P>(6) Change the method of payment to the recipient from a letter of credit basis to a reimbursement basis;
</P>
<P>(7) In the case of claims payable to HUD or the U.S. Treasury, institute collection procedures pursuant to subpart B of 24 CFR part 17; and
</P>
<P>(8) In the case of an entitlement or Insular Areas recipient, condition the use of funds from a succeeding fiscal year's allocation upon appropriate corrective action by the recipient. The failure of the recipient to undertake the actions specified in the condition may result in a reduction, pursuant to § 570.911, of the entitlement or Insular Areas recipient's annual grant by up to the amount conditionally granted.
</P>
<CITA TYPE="N">[53 FR 34466, Sept. 6, 1988, as amended at 60 FR 1917, Jan. 5, 1995; 72 FR 12537, Mar. 15, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 570.911" NODE="24:3.1.1.3.3.15.1.10" TYPE="SECTION">
<HEAD>§ 570.911   Reduction, withdrawal, or adjustment of a grant or other appropriate action.</HEAD>
<P>(a) <I>Opportunity for an informal consultation.</I> Prior to a reduction, withdrawal, or adjustment of a grant or other appropriate action, taken pursuant to paragraph (b), (c), or (d) of this section, the recipient shall be notified of such proposed action and given an opportunity within a prescribed time period for an informal consultation.
</P>
<P>(b) <I>Entitlement grants, Non-entitlement CDBG grants in Hawaii, and Insular Areas grants.</I> Consistent with the procedures described in § 570.900(b), the Secretary may make a reduction in the entitlement, non-entitlement CDBG grants in Hawaii, or Insular Areas grant amount either for the succeeding program year or, if the grant had been conditioned, up to the amount that had been conditioned. The amount of the reduction shall be based on the severity of the deficiency and may be for the entire grant amount.
</P>
<P>(c) <I>HUD-administered small cities grants.</I> Consistent with the procedures described in § 570.900(b), the Secretary may adjust, reduce or withdraw the grant or take other actions as appropriate, except that funds already expended on eligible approved activities shall not be recaptured or deducted from future grants.
</P>
<P>(d) <I>Urban Development Action Grants.</I> Consistent with the procedures described in § 570.900(b), the Secretary may adjust, reduce or withdraw the grant or take other actions as appropriate, except that funds already expended on eligible approved activities shall not be recaptured or deducted from future grants made to the recipient.
</P>
<CITA TYPE="N">[61 FR 11481, Mar. 20, 1996, as amended at 72 FR 12537, Mar. 15, 2007; 72 FR 46371, Aug. 17, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 570.912" NODE="24:3.1.1.3.3.15.1.11" TYPE="SECTION">
<HEAD>§ 570.912   Nondiscrimination compliance.</HEAD>
<P>(a) Whenever the Secretary determines that a unit of general local government which is a recipient of assistance under this part has failed to comply with § 570.602, the Secretary shall notify the governor of such State or chief executive officer of such unit of general local government of the noncompliance and shall request the governor or the chief executive officer to secure compliance. If within a reasonable period of time, not to exceed sixty days, the governor or chief executive officer fails or refuses to secure compliance, the Secretary is authorized to:
</P>
<P>(1) Refer the matter to the Attorney General with a recommendation that an appropriate civil action be instituted;
</P>
<P>(2) Exercise the powers and functions provided by title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d);
</P>
<P>(3) Exercise the powers and functions provided for in § 570.913; or
</P>
<P>(4) Take such other action as may be provided by law.
</P>
<P>(b) When a matter is referred to the Attorney General pursuant to paragraph (a)(1) of this section, or whenever the Secretary has reason to believe that a State or a unit of general local government is engaged in a pattern or practice in violation of the provisions of § 570.602, the Attorney General may bring a civil action in any appropriate United States district court for such relief as may be appropriate, including injunctive relief.


</P>
</DIV8>


<DIV8 N="§ 570.913" NODE="24:3.1.1.3.3.15.1.12" TYPE="SECTION">
<HEAD>§ 570.913   Other remedies for noncompliance.</HEAD>
<P>(a) <I>Action to enforce compliance.</I> When the Secretary acts to enforce the civil rights provisions of Section 109, as described in § 570.602 and 24 CFR part 6, the procedures described in 24 CFR parts 6 and 180 apply. If the Secretary finds, after reasonable notice and opportunity for hearing, that a recipient has failed to comply substantially with any other provisions of this part, the provisions of this section apply. The Secretary, until he/she is satisfied that there is no longer any such failure to comply, shall:
</P>
<P>(1) Terminate payments to the recipient;
</P>
<P>(2) Reduce payments to the recipient by an amount equal to the amount of such payments which were not expended in accordance with this part; or
</P>
<P>(3) Limit the availability of payments to programs or activities not affected by such failure to comply.
</P>
<P><I>Provided, however,</I> that the Secretary may on due notice suspend payments at any time after the issuance of a notice of opportunity for hearing pursuant to paragraph (c)(1) of this section, pending such hearing and a final decision, to the extent the Secretary determines such action necessary to preclude the further expenditure of funds for activities affected by such failure to comply.
</P>
<P>(b) In lieu of, or in addition to, any action authorized by paragraph (a) of this section, the Secretary may, if he/she has reason to believe that a recipient has failed to comply substantially with any provision of this part;
</P>
<P>(1) Refer the matter to the Attorney General of the United States with a recommendation that an appropriate civil action be instituted; and
</P>
<P>(2) Upon such a referral, the Attorney General may bring a civil action in any United States district court having venue thereof for such relief as may be appropriate, including an action to recover the amount of the assistance furnished under this part which was not expended in accordance with it, or for mandatory or injunctive relief;
</P>
<P>(c) <I>Proceedings.</I> When the Secretary proposes to take action pursuant to this section, the respondent is the unit of general local government or State receiving assistance under this part. These procedures are to be followed prior to imposition of a sanction described in paragraph (a) of this section:
</P>
<P>(1) <I>Notice of opportunity for hearing:</I> The Secretary shall notify the respondent in writing of the proposed action and of the opportunity for a hearing. The notice shall:
</P>
<P>(i) Specify, in a manner which is adequate to allow the respondent to prepare its response, allegations with respect to a failure to comply substantially with a provision of this part;
</P>
<P>(ii) State that the hearing procedures are governed by these rules;
</P>
<P>(iii) State that a hearing may be requested within 10 days from receipt of the notice and the name, address and telephone number of the person to whom any request for hearing is to be addressed:
</P>
<P>(iv) Specify the action which the Secretary proposes to take and that the authority for this action is section 111(a) of the Act;
</P>
<P>(v) State that if the respondent fails to request a hearing within the time specified a decision by default will be rendered against the respondent; and
</P>
<P>(vi) Be sent to the respondent by certified mail, return receipt requested.
</P>
<P>(2) <I>Initiation of hearing.</I> The respondent shall be allowed at least 10 days from receipt of the notice within which to notify HUD of its request for a hearing. If no request is received within the time specified, the Secretary may proceed to make a finding on the issue of compliance with this part and to take the proposed action.
</P>
<P>(3) <I>Administrative Law Judge.</I> Proceedings conducted under these rules shall be presided over by an Administrative Law Judge (ALJ), appointed as provided by section 11 of the Administrative Procedures Act (5 U.S.C. 3105). The case shall be referred to the ALJ by the Secretary at the time a hearing is requested. The ALJ shall promptly notify the parties of the time and place at which the hearing will be held. The ALJ shall conduct a fair and impartial hearing and take all action necessary to avoid delay in the disposition of proceedings and to maintain order. The ALJ shall have all powers necessary to those ends, including but not limited to the power to:
</P>
<P>(i) Administer oaths and affirmations;
</P>
<P>(ii) Issue subpoenas as authorized by law;
</P>
<P>(iii) Rule upon offers of proof and receive relevant evidence;
</P>
<P>(iv) Order or limit discovery prior to the hearing as the interests of justice may require;
</P>
<P>(v) Regulate the course of the hearing and the conduct of the parties and their counsel;
</P>
<P>(vi) Hold conferences for the settlement or simplification of the issues by consent of the parties;
</P>
<P>(vii) Consider and rule upon all procedural and other motions appropriate in adjudicative proceedings; and
</P>
<P>(viii) Make and file initial determinations.
</P>
<P>(4) <I>Ex parte communications.</I> An ex parte communication is any communication with an ALJ, direct or indirect, oral or written, concerning the merits or procedures of any pending proceeding which is made by a party in the absence of any other party. Ex parte communications are prohibited except where the purpose and content of the communication have been disclosed in advance or simultaneously to all parties, or the communication is a request for information concerning the status of the case. Any ALJ who receives an ex parte communication which the ALJ knows or has reason to believe is unauthorized shall promptly place the communication, or its substance, in all files and shall furnish copies to all parties. Unauthorized ex parte communications shall not be taken into consideration in deciding any matter in issue.
</P>
<P>(5) <I>The hearing.</I> All parties shall have the right to be represented at the hearing by counsel. The ALJ shall conduct the proceedings in an expeditious manner while allowing the parties to present all oral and written evidence which tends to support their respective positions, but the ALJ shall exclude irrelevant, immaterial or unduly repetitious evidence. The Department has the burden of proof in showing by a preponderance of the evidence that the respondent failed to comply substantially with a provision of this part. Each party shall be allowed to cross-examine adverse witnesses and to rebut and comment upon evidence presented by the other party. Hearings shall be open to the public. So far as the orderly conduct of the hearing permits, interested persons other than the parties may appear and participate in the hearing.
</P>
<P>(6) <I>Transcripts.</I> Hearing shall be recorded and transcribed only by a reporter under the supervision of the ALJ. The orginal transcript shall be a part of the record and shall constitute the sole official transcript. Respondents and the public, at their own expense, may obtain copies of the transcript.
</P>
<P>(7) <I>The ALJ's decision.</I> At the conclusion of the hearing, the ALJ shall give the parties a reasonable opportunity to submit proposed findings and conclusions and supporting reasons therefor. Within 25 days after the conclusion of the hearing, the ALJ shall prepare a written decision which includes a statement of findings and conclusions, and the reasons or basis therefor, on all the material issues of fact, law or discretion presented on the record and the appropriate sanction or denial thereof. The decision shall be based on consideration of the whole record or those parts thereof cited by a party and supported by and in accordance with the reliable, probative, and substantial evidence. A copy of the decision shall be furnished to the parties immediately by certified mail, return receipt requested, and shall include a notice that any requests for review by the Secretary must be made in writing to the Secretary within 30 days of the receipt of the decision. 
</P>
<P>(8) <I>The record.</I> The transcript of testimony and exhibits, together with the decision of the ALJ and all papers and requests filed in the proceeding, constitutes the exclusive record for decision and, on payment of its reasonable cost, shall be made available to the parties. After reaching his/her initial decision, the ALJ shall certify to the complete record and forward the record to the Secretary. 
</P>
<P>(9) <I>Review by the Secretary.</I> The decision by the ALJ shall constitute the final decision of the Secretary unless, within 30 days after the receipt of the decision, either the respondent or the Assistant Secretary for Community Planning and Development files an exception and request for review by the Secretary. The excepting party must transmit simultaneously to the Secretary and the other party the request for review and the basis of the party's exceptions to the findings of the ALJ. The other party shall be allowed 30 days from receipt of the exception to provide the Secretary and the excepting party with a written reply. The Secretary shall then review the record of the case, including the exceptions and the reply. On the basis of such review, the Secretary shall issue a written determination, including a statement of the reasons or basis therefor, affirming, modifying or revoking the decision of the ALJ. The Secretary's decision shall be made and transmitted to the parties within 80 days after the decision of the ALJ was furnished to the parties. 
</P>
<P>(10) <I>Judicial review.</I> The respondent may seek judicial review of the Secretary's decision pursuant to section 111(c) of the Act. 
</P>
<CITA TYPE="N">[53 FR 34466, Sept. 6, 1988, as amended at 64 FR 3802, Jan. 25, 1999]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="0" NODE="24:3.1.1.3.3.16" TYPE="SUBPART">
<HEAD> </HEAD>

</DIV6>


<DIV9 N="Appendix A" NODE="24:3.1.1.3.3.17.1.1.1" TYPE="APPENDIX">
<HEAD>Appendix A to Part 570—Guidelines and Objectives for Evaluating Project Costs and Financial Requirements
</HEAD>
<P>I. <I>Guidelines and Objectives for Evaluating Project Costs and Financial Requirements.</I> HUD has developed the following guidelines that are designed to provide the recipient with a framework for financially underwriting and selecting CDBG-assisted economic development projects which are financially viable and will make the most effective use of the CDBG funds. <I>The use of these underwriting guidelines as published by HUD is not mandatory.</I> However, grantees electing not to use these underwriting guidelines would be expected to conduct basic financial underwriting prior to the provision of CDBG financial assistance to a for-profit business. States electing not to use these underwriting guidelines would be expected to ensure that the state or units of general local government conduct basic financial underwriting prior to the provision of CDBG financial assistance to a for-profit business. 
</P>
<P>II. Where appropriate, HUD's underwriting guidelines recognize that different levels of review are appropriate to take into account differences in the size and scope of a proposed project, and in the case of a microenterprise or other small business to take into account the differences in the capacity and level of sophistication among businesses of differing sizes. 
</P>
<P>III. Recipients are encouraged, when they develop their own programs and underwriting criteria, to also take these factors into account. For example, a recipient administering a program providing only technical assistance to small businesses might choose to apply underwriting guidelines to the technical assistance program as a whole, rather than to each instance of assistance to a business. Given the nature and dollar value of such a program, a recipient might choose to limit its evaluation to factors such as the extent of need for this type of assistance by the target group of businesses and the extent to which this type of assistance is already available. 
</P>
<P>IV. The objectives of the underwriting guidelines are to ensure: 
</P>
<P>(1) that project costs are reasonable; 
</P>
<P>(2) that all sources of project financing are committed; 
</P>
<P>(3) that to the extent practicable, CDBG funds are not substituted for non-Federal financial support; 
</P>
<P>(4) that the project is financially feasible; 
</P>
<P>(5) that to the extent practicable, the return on the owner's equity investment will not be unreasonably high; and 
</P>
<P>(6) that to the extent practicable, CDBG funds are disbursed on a pro rata basis with other finances provided to the project. 
</P>
<P><I>i. Project costs are reasonable.</I> i. Reviewing costs for reasonableness is important. It will help the recipient avoid providing either too much or too little CDBG assistance for the proposed project. Therefore, it is suggested that the grantee obtain a breakdown of all project costs and that each cost element making up the project be reviewed for reasonableness. The amount of time and resources the recipient expends evaluating the reasonableness of a cost element should be commensurate with its cost. For example, it would be appropriate for an experienced reviewer looking at a cost element of less than $10,000 to judge the reasonableness of that cost based upon his or her knowledge and common sense. For a cost element in excess of $10,000, it would be more appropriate for the reviewer to compare the cost element with a third-party, fair-market price quotation for that cost element. Third-party price quotations may also be used by a reviewer to help determine the reasonableness of cost elements below $10,000 when the reviewer evaluates projects infrequently or if the reviewer is less experienced in cost estimations. If a recipient does not use third-party price quotations to verify cost elements, then the recipient would need to conduct its own cost analysis using appropriate cost estimating manuals or services. 
</P>
<P>ii. The recipient should pay particular attention to any cost element of the project that will be carried out through a non-arms-length transaction. A non-arms-length transaction occurs when the entity implementing the CDBG assisted activity procures goods or services from itself or from another party with whom there is a financial interest or family relationship. If abused, non-arms-length transactions misrepresent the true cost of the project. 
</P>
<P>2. <I>Commitment of all project sources of financing.</I> The recipient should review all projected sources of financing necessary to carry out the economic development project. This is to ensure that time and effort is not wasted on assessing a proposal that is not able to proceed. To the extent practicable, prior to the commitment of CDBG funds to the project, the recipient should verify that: sufficient sources of funds have been identified to finance the project; all participating parties providing those funds have affirmed their intention to make the funds available; and the participating parties have the financial capacity to provide the funds. 
</P>
<P>3. <I>Avoid substitution of CDBG funds for non-Federal financial support.</I> i. The recipient should review the economic development project to ensure that, to the extent practicable, CDBG funds will not be used to substantially reduce the amount of non-Federal financial support for the activity. This will help the recipient to make the most efficient use of its CDBG funds for economic development. To reach this determination, the recipient's reviewer would conduct a financial underwriting analysis of the project, including reviews of appropriate projections of revenues, expenses, debt service and returns on equity investments in the project. The extent of this review should be appropriate for the size and complexity of the project and should use industry standards for similar projects, taking into account the unique factors of the project such as risk and location. 
</P>
<P>ii. Because of the high cost of underwriting and processing loans, many private financial lenders do not finance commercial projects that are less than $100,000. A recipient should familiarize itself with the lending practices of the financial institutions in its community. If the project's total cost is one that would normally fall within the range that financial institutions participate, then the recipient should normally determine the following: 
</P>
<P>A. <I>Private debt financing</I>—whether or not the participating private, for-profit business (or other entity having an equity interest) has applied for private debt financing from a commercial lending institution and whether that institution has completed all of its financial underwriting and loan approval actions resulting in either a firm commitment of its funds or a decision not to participate in the project; and 
</P>
<P>B. <I>Equity participation</I>—whether or not the degree of equity participation is reasonable given general industry standards for rates of return on equity for similar projects with similar risks and given the financial capacity of the entrepreneur(s) to make additional financial investments. 
</P>
<P>iii. If the recipient is assisting a microenterprise owned by a low- or moderate-income person(s), in conducting its review under this paragraph, the recipient might only need to determine that non-Federal sources of financing are not available (at terms appropriate for such financing) in the community to serve the low- or moderate-income entrepreneur. 
</P>
<P>4. <I>Financial feasibility of the project.</I> i. The public benefit a grantee expects to derive from the CDBG assisted project (the subject of separate regulatory standards) will not materialize if the project is not financially feasible. To determine if there is a reasonable chance for the project's success, the recipient should evaluate the financial viability of the project. A project would be considered financially viable if all of the assumptions about the project's market share, sales levels, growth potential, projections of revenue, project expenses and debt service (including repayment of the CDBG assistance if appropriate) were determined to be realistic and met the project's break-even point (which is generally the point at which all revenues are equal to all expenses). Generally speaking, an economic development project that does not reach this break-even point over time is not financially feasible. The following should be noted in this regard: 
</P>
<P>A. some projects make provisions for a negative cash flow in the early years of the project while space is being leased up or sales volume built up, but the project's projections should take these factors into account and provide sources of financing for such negative cash flow; and 
</P>
<P>B. it is expected that a financially viable project will also project sufficient revenues to provide a reasonable return on equity investment. The recipient should carefully examine any project that is not economically able to provide a reasonable return on equity investment. Under such circumstances, a business may be overstating its real equity investment (actual costs of the project may be overstated as well), or it may be overstating some of the project's operating expenses in the expectation that the difference will be taken out as profits, or the business may be overly pessimistic in its market share and revenue projections and has downplayed its profits. 
</P>
<P>ii. In addition to the financial underwriting reviews carried out earlier, the recipient should evaluate the experience and capacity of the assisted business owners to manage an assisted business to achieve the projections. Based upon its analysis of these factors, the recipient should identify those elements, if any, that pose the greatest risks contributing to the project's lack of financial feasibility. 
</P>
<P>5. <I>Return on equity investment.</I> To the extent practicable, the CDBG assisted activity should provide not more than a reasonable return on investment to the owner of the assisted activity. This will help ensure that the grantee is able to maximize the use of its CDBG funds for its economic development objectives. However, care should also be taken to avoid the situation where the owner is likely to receive too small a return on his/her investment, so that his/her motivation remains high to pursue the business with vigor. The amount, type and terms of the CDBG assistance should be adjusted to allow the owner a reasonable return on his/her investment given industry rates of return for that investment, local conditions and the risk of the project. 
</P>
<P>6. <I>Disbursement of CDBG funds on a pro rata basis.</I> To the extent practicable, CDBG funds used to finance economic development activities should be disbursed on a pro rata basis with other funding sources. Recipients should be guided by the principle of not placing CDBG funds at significantly greater risk than non-CDBG funds. This will help avoid the situation where it is learned that a problem has developed that will block the completion of the project, even though all or most of the CDBG funds going in to the project have already been expended. When this happens, a recipient may be put in a position of having to provide additional financing to complete the project or watch the potential loss of its funds if the project is not able to be completed. When the recipient determines that it is not practicable to disburse CDBG funds on a pro rata basis, the recipient should consider taking other steps to safeguard CDBG funds in the event of a default, such as insisting on securitizing assets of the project.
</P>
<CITA TYPE="N">[60 FR 1953, Jan. 5, 1995] 


</CITA>
</DIV9>

</DIV5>


<DIV5 N="573" NODE="24:3.1.1.3.4" TYPE="PART">
<HEAD>PART 573—LOAN GUARANTEE RECOVERY FUND
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>Pub. L. 104-155, 110 Stat. 1392, 18 U.S.C. 241 note; 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 47405, Sept. 6, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 573.1" NODE="24:3.1.1.3.4.0.1.1" TYPE="SECTION">
<HEAD>§ 573.1   Authority and purpose.</HEAD>
<P>Section 4 of the Church Arson Prevention Act of 1996 (Pub. L. 104-155, approved July 3, 1996) authorizes HUD to guarantee loans made by financial institutions to certain nonprofit organizations to finance activities designed to remedy the damage and destruction to real and personal property caused by acts of arson or terrorism. This part establishes the general procedures and requirements that apply to HUD's guarantee of these loans.


</P>
</DIV8>


<DIV8 N="§ 573.2" NODE="24:3.1.1.3.4.0.1.2" TYPE="SECTION">
<HEAD>§ 573.2   Definitions.</HEAD>
<P>The following definitions are only applicable to loan guarantees under this part, and are not criminal definitions.
</P>
<P><I>Act</I> means “The Church Arson Prevention Act of 1996” (Pub. L. 104-155, approved July 3, 1996).
</P>
<P><I>Arson</I> means a fire or explosion causing damage to (or destruction of) real or personal property that a Qualified Certification Official determines, or reasonably believes, to be deliberately set.
</P>
<P><I>Borrower</I> means an organization described in section 501(c)(3) of the Internal Revenue Code of 1986, as amended, whose property has been damaged or destroyed as a result of an act of arson or terrorism and that incurs a debt obligation to a financial institution for the purpose of carrying out activities eligible under his part.
</P>
<P><I>Financial Institution</I> means a lender which may be a bank, trust company, savings and loan association, credit union, mortgage company, or other issuer regulated by the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, the Credit Union Administration, or the U.S. Comptroller of the Currency. A Financial Institution may also be a Pension Fund.
</P>
<P><I>Guarantee</I> means an obligation of the United States Government guaranteeing payment of the outstanding principal loan amount, in whole or in part, plus interest thereon, on a debt obligation of the Borrower to a Financial Institution upon failure of the Borrower to repay the debt.
</P>
<P><I>Guaranteed Loan Funds</I> means funds received by the borrower from the Financial Institution to finance eligible activities under this part, the repayment of which is guaranteed by HUD.
</P>
<P><I>Loan Guarantee Agreement</I> means an agreement between a Financial Institution and the Secretary detailing the rights, responsibilities, procedures, terms, and conditions under which a loan provided by a Financial Institution to a Borrower may be guaranteed under section 4 of the Act.
</P>
<P><I>Qualified Certification Official (QCO)</I>—(1) <I>For the purpose of certifying an act of arson.</I> A State or local official authorized to investigate possible acts of arson. For the purposes of this definition, such an official is authorized to execute an Official Incident Report or its equivalent and may be an official or employee of such agencies as the local fire department, the local police department, or the State Fire Marshall Office or its equivalent. The term “Qualified Certification Official” also includes HUD, which will consult with the Bureau of Alcohol, Tobacco, and Firearms of the Department of the Treasury in making its determinations.
</P>
<P>(2) <I>For the purpose of certifying an act of terrorism.</I> The Secretary or his designee, in consultation with the Federal Bureau of Investigation, shall determine whether an act of violence is a terrorist act or is reasonably believed to be a terrorist act.
</P>
<P><I>Section 4 Guaranteed Loan</I> means a HUD guaranteed loan made by a Financial Institution to a Borrower for the purpose of carrying out eligible activities to address damage or destruction caused by acts of arson or terrorism.
</P>
<P><I>Terrorism</I> means an act of violence causing damage to (or destruction of) real or personal property that the Secretary or his designee, in consultation with the Federal Bureau of Investigation, determines to be, or reasonably believes to be, a terrorist act, as defined by applicable Federal law or guidelines.


</P>
</DIV8>


<DIV8 N="§ 573.3" NODE="24:3.1.1.3.4.0.1.3" TYPE="SECTION">
<HEAD>§ 573.3   Eligible activities.</HEAD>
<P>Guaranteed Loan Funds may be used by a Borrower for the following activities when it is certified in accordance with § 573.6(e) that the activity is necessary to address damage caused by an act or acts of arson or terrorism as certified in accordance with § 573.6(f):
</P>
<P>(a) Acquisition of improved or unimproved real property in fee or under long term lease.
</P>
<P>(b) Acquisition and installation of personal property.
</P>
<P>(c) Rehabilitation of real property owner, acquired, or leased by the Borrower.
</P>
<P>(d) Construction, reconstruction, or replacement of real property improvement.
</P>
<P>(e) Clearance, demolition, and removal, including movement of structures to other sites, of buildings, fixtures and improvements on real property.
</P>
<P>(f) Site preparation, including construction, reconstruction, or installation of site improvements, utilities, or facilities, which is related to the activities described in paragraph (a), (c), or (d) of this section.
</P>
<P>(g) Architectural, engineering, and similar services necessary to develop plans in connection with activities financed under paragraph (a), (b), (c), or (d) of this section.
</P>
<P>(h) Acquisition, installation and restoration of security systems. 
</P>
<P>(i) Loans for refinancing existing indebtedness secured by a property which has been or will be acquired, constructed, rehabilitated or reconstructed, if such financing is determined to be appropriate to achieve the objectives of the Act and this part. 
</P>
<P>(j) Other necessary project costs such as insurance, bonding, legal fees, appraisals, surveys, relocation, closing costs, etc., paid or incurred by the Borrower in connection with the completion of the above activities.
</P>
<CITA TYPE="N">[61 FR 47405, Sept. 6, 1996, as amended at 62 FR 24574, May 6, 1997]


</CITA>
</DIV8>


<DIV8 N="§ 573.4" NODE="24:3.1.1.3.4.0.1.4" TYPE="SECTION">
<HEAD>§ 573.4   Loan term.</HEAD>
<P>The term of the loan to be guaranteed by HUD under this part may not exceed 20 years.


</P>
</DIV8>


<DIV8 N="§ 573.5" NODE="24:3.1.1.3.4.0.1.5" TYPE="SECTION">
<HEAD>§ 573.5   Underwriting standards and availability of loan guarantee assistance.</HEAD>
<P>(a) HUD may, in its discretion, accept the underwriting standards of the Financial Institution making a loan to a Borrower.
</P>
<P>(b) HUD will not make the loan guarantee unless it determines that the guaranteed loan is an acceptable financial risk under HUD's generally applicable loan underwriting standards based on the following:
</P>
<P>(1) The Borrower's ability to pay debt service; and 
</P>
<P>(2) The value of the collateral assigned or pledged as security for the repayment of the loan.
</P>
<P>(c) The provision of a loan guarantee to a Financial Institution and the amount of the guarantee do not depend in any way on the purpose, function, or identity of the organization to which the Financial Institution has made, or intends to make, a Section 4 Guaranteed Loan.
</P>
<P>(d) HUD may disapprove a request for loan guarantee assistance based on the availability of funding.
</P>
<P>(e) HUD may decline any Financial Institution's participation if its underwriting criteria are insufficient to make the guarantee an acceptable financial risk, or if the proposed interest rates or fees are unacceptable. HUD expects the proposed interest rates to take into account the value of the Federal guarantee.
</P>
<P>(f) HUD may limit the availability of Guaranteed Loan Funds to geographic areas having the greatest need, as determined by a needs analysis of the most current available date conducted by HUD.
</P>
<P>(g) Other requirements associated with the underwriting standards and guidelines shall be contained in the Loan Guarantee Agreement.


</P>
</DIV8>


<DIV8 N="§ 573.6" NODE="24:3.1.1.3.4.0.1.6" TYPE="SECTION">
<HEAD>§ 573.6   Submission requirements.</HEAD>
<P>A Financial Institution seeking a Section 4 Guaranteed Loan must submit to HUD the following documentation:
</P>
<P>(a) A statement that the institution is a Financial Institution as defined at § 573.2.
</P>
<P>(b) A statement that the Borrower is eligible as defined at § 573.2.
</P>
<P>(c) A description of each eligible activity for which the loan is requested.
</P>
<P>(d) A statement of other available funds to be used to finance the eligible activities (e.g., insurance proceeds).
</P>
<P>(e) A certification by the Borrower that the activities to be assisted resulted from an act of arson or terrorism which is the subject of the certification described in paragraph (f) of this section.
</P>
<P>(f) A certification by a QCO that the damage or destruction to be remedied by the use of the Guaranteed Loan Funds resulted from an act of arson or terrorism.
</P>
<P>(g) The environmental documentation required by § 573.8.
</P>
<P>(h) A narrative of the institution's underwriting standards used in reviewing the Borrower's loan request.
</P>
<P>(i) The interest rate on the loan and fees the lender intends to use in connection with the loan; and
</P>
<P>(j) The percentage of the loan for which a guarantee is requested.


</P>
</DIV8>


<DIV8 N="§ 573.7" NODE="24:3.1.1.3.4.0.1.7" TYPE="SECTION">
<HEAD>§ 573.7   Loan guarantee agreement.</HEAD>
<P>(a) The rights and responsibilities with respect to the guaranteed loan shall be substantially described in an agreement entered into between the Financial Institution, as the lender, and the Secretary, as the guarantor, which agreement shall provide that:
</P>
<P>(1) The lender has submitted or will submit a request for loan guarantee assistance that is accompanied by the Borrower's request for a loan to carry out eligible activities described in § 573.3;
</P>
<P>(2) The lender will require the Borrower to execute a promissory note promising to repay the guaranteed loan in accordance with the terms thereof; 
</P>
<P>(3) The lender will require the Borrower to provide collateral security, to an extent and in a form, acceptable to HUD; 
</P>
<P>(4) HUD reserves the right to limit loan guarantees to loans financing the replacement of damaged property with comparable new property;
</P>
<P>(5) The lender will follow certain claim procedures to be specified by HUD in connection with any defaults, including appropriate notification of default as required by HUD;
</P>
<P>(6) The lender will follow procedures for payment under the guarantee whereby the lender will be paid (up to the amount of guarantee) the amount owed to the lender less any amount recovered from the underlying collateral security for the loan; and
</P>
<P>(7) The lender will act as the fiscal agent for the loan, servicing the guaranteed loan, maintaining loan documents, and receiving the Borrower's payments of principal and interest. The Borrower and the lender may be required to execute a fiscal agency agreement.
</P>
<P>(b) In addition, the agreement shall contain other requirements, terms, and conditions required or approved by HUD.


</P>
</DIV8>


<DIV8 N="§ 573.8" NODE="24:3.1.1.3.4.0.1.8" TYPE="SECTION">
<HEAD>§ 573.8   Environmental procedures and standards.</HEAD>
<P>The environmental review requirements at 24 CFR part 50 are applicable to this part.
</P>
<P>(a) <I>Environmental procedures.</I> Before any lender's submission requesting a loan guarantee for the acquisition, rehabilitation, or construction of real property can be selected for a loan guarantee, HUD shall determine whether any environmental thresholds are exceeded in accordance with 24 CFR part 50, which implements the National Environmental Policy Act (NEPA) and the related Federal environmental laws and authorities listed under 24 CFR 50.4. To assist in complying with environmental requirements, Borrowers are encouraged to select sites that are free of environmental hazards and are to provide HUD with environmental data needed to make a determination of compliance. For successful Borrowers, the costs for preparing the environmental data are eligible as project costs.
</P>
<P>(1) If HUD determines that one or more of the thresholds are exceeded, HUD shall conduct a compliance review of the issue and, if appropriate, establish mitigating measures that the applicant shall carry out for the property.
</P>
<P>(2) The lender's submissions under § 573.6 shall provide HUD with:
</P>
<P>(i) Documentation for environmental threshold review; and
</P>
<P>(ii) Any previously issued environmental reviews prepared by local, State, or other Federal agencies for the proposed property.
</P>
<P>(3) In providing the above information, the Borrower is encouraged to contact the local community development agency to obtain any previously issued environmental reviews for the proposed property as well as for other relevant information that can be used in the applicant documentation for the environmental threshold review.
</P>
<P>(4) HUD reserves the right to disqualify any request where one or more environmental thresholds are exceeded if HUD determines that the compliance review cannot be satisfactorily completed.
</P>
<P>(5) If Guaranteed Loan Funds are requested for acquisition, rehabilitation, or construction, Borrowers and Financial Institutions are prohibited from committing or expending State, local, or other funds to undertake property acquisition, rehabilitation or construction under this part until HUD issues a letter of commitment notifying the lender of HUD approval of the loan guarantee.
</P>
<P>(b) <I>Environmental thresholds.</I> HUD shall determine whether a NEPA environmental assessment is required. Also, HUD shall determine whether the proposed property triggers thresholds for the applicable Federal environmental laws and authorities listed under 24 CFR 50.4 as follows:
</P>
<P>(1) For minor rehabilitation of a building and acquisition of any property, Federal environmental laws and authorities may apply when the property is:
</P>
<P>(i) Located within designated coastal barrier resources;
</P>
<P>(ii) Contaminated by toxic chemicals or radioactive materials;
</P>
<P>(iii) Located within a floodplain;
</P>
<P>(iv) A building for which flood insurance protection is required;
</P>
<P>(v) Located within a runway clear zone at a civil airport or within a clear zone or accident potential zone at a military airfield; or
</P>
<P>(vi) Listed on, or eligible for listing on, the National Register of Historic Places; located within, or adjacent to, an historic district, or is a property whose area of potential effects includes a historic district or property.
</P>
<P>(2) For major rehabilitation of a building or for new construction or rebuilding, and environmental assessment under NEPA is required and, in addition to paragraph (b)(1)(i) through (vi) of this section, other Federal environmental laws and authorities may apply when the property:
</P>
<P>(i) Affects coastal zone management;
</P>
<P>(ii) Is located near hazardous industrial operations handling fuels or chemicals of an explosive or flammable nature;
</P>
<P>(iii) Affects a sole source aquifer;
</P>
<P>(iv) Affects endangered species;
</P>
<P>(v) Is located within a designated wetland; or
</P>
<P>(vi) Is located in a high noise area.
</P>
<P>(c) <I>Qualified data sources.</I> The environmental threshold information provided by applicants mut be from qualified data sources. A qualified data source means any Federal, State, or local agency with expertise or experience in environmental protection (e.g., the local community development agency; the local planning agency; the State environmental protection agency; or the State Historic Preservation Officer) or any other source qualified to provide reliable information on the particular property.
</P>
<P>(d) <I>Definition.</I> Minor rehabilitation means proposed fixing and repairs:
</P>
<P>(1) Whose estimated cost is less than 75 percent of the estimated cost of replacement after completion;
</P>
<P>(2) That does not involve changes in land use from residential to nonresidential, or from nonresidential to residential; and
</P>
<P>(3) In the case of residential properties, that does not increase density more than 20 percent.
</P>
<P>(e) <I>Project consultants.</I> In achieving compliance with these procedures, Borrower's architectural and engineering consultants shall consider these environmental factors and provide information in their plan narratives as to how their construction plans conform with the above environmental factors. To facilitate HUD's compliance with part 50, the Borrower is required to submit the consultant's information and plan narrative discussing the pertinent environmental factors under this section. 


</P>
</DIV8>


<DIV8 N="§ 573.9" NODE="24:3.1.1.3.4.0.1.9" TYPE="SECTION">
<HEAD>§ 573.9   Other requirements.</HEAD>
<P>(a) <I>Nondiscrimination and equal opportunity.</I> The nondiscrimination and equal opportunity requirements described in 24 CFR part 5, subpart A apply to this part.
</P>
<P>(b) <I>2 CFR part 200.</I> The provisions of 2 CFR part 200 apply to guaranteed loans under this part.
</P>
<P>(c) <I>Lead-based paint.</I> Housing assisted under this part is subject to the lead-based paint requirements described in part 35, subparts A, B, E, G, and R of this title.
</P>
<P>(d) <I>Labor standards</I>—(1) <I>Davis-Bacon.</I> All laborers and mechanics employed by contractors or subcontractors in the performance of construction work financed in whole or in part with Guaranteed Loan Funds under this part shall be paid wages at rates not less than those prevailing on similar construction in the locality as determined by the Secretary of Labor in accordance with the Davis-Bacon Act, as amended (40 U.S.C. 276a-276a-5). This paragraph shall apply to the rehabilitation of residential property only if such property contains not less than 8 units.
</P>
<P>(2) <I>Volunteers.</I> The provisions of paragraph (d)(1) of this section shall not apply to volunteers under the conditions set forth in 24 CFR part 70. In applying part 70, loan guarantees under this part shall be treated as a program for which there is a statutory exemption for volunteers.
</P>
<P>(3) <I>Labor standards.</I> Any contract, subcontract, or building loan agreement executed for a project subject to Davis-Bacon wage rates under paragraph (d)(1) of this section shall comply with all labor standards and provisions of 29 CFR parts 1, 3 and 5 that would be applicable to a loan guarantee program to which Davis-Bacon wage rates are made applicable by statute.
</P>
<CITA TYPE="N">[61 FR 47405, Sept. 6, 1996, as amended at 64 FR 50226, Sept. 15, 1999; 80 FR 75938, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 573.10" NODE="24:3.1.1.3.4.0.1.10" TYPE="SECTION">
<HEAD>§ 573.10   Fees for guaranteed loans.</HEAD>
<P>(a) No fees will be assessed by HUD for its guaranty of a loan under this part.
</P>
<P>(b) The lender may assess the Borrower loan origination fees or other charges provided that such fees and charges are those charged by the lender to its other customers for similar transactions, and are no higher than those charged by the lender for similar transactions.


</P>
</DIV8>


<DIV8 N="§ 573.11" NODE="24:3.1.1.3.4.0.1.11" TYPE="SECTION">
<HEAD>§ 573.11   Record access and recordkeeping.</HEAD>
<P>Records pertaining to the loans made by the Financial Institution shall be held for the life of the loan. A lender with a Section 4 Guaranteed Loan shall allow HUD, the Comptroller General of the United States, and their authorized representatives access from time to time to any documents, papers or files which are pertinent to the guaranteed loan, and to inspect and make copies of such records which relate to any Section 4 Loan. Any inspection will be made during the lender's regular business hours or any other mutually convenient time.


</P>
</DIV8>

</DIV5>


<DIV5 N="574" NODE="24:3.1.1.3.5" TYPE="PART">
<HEAD>PART 574—HOUSING OPPORTUNITIES FOR PERSONS WITH AIDS
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1701x, 1701 x-1; 42 U.S.C. 3535(d) and 5301-5320.
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>57 FR 61740, Dec. 28, 1992, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:3.1.1.3.5.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 574.3" NODE="24:3.1.1.3.5.1.1.1" TYPE="SECTION">
<HEAD>§ 574.3   Definitions.</HEAD>
<P>The terms <I>Grantee</I> and <I>Secretary</I> are defined in 24 CFR part 5. 
</P>
<P><I>Acquired immunodeficiency syndrome (AIDS) or related diseases</I> means the disease of acquired immunodeficiency syndrome or any conditions arising from the etiologic agent for acquired immunodeficiency syndrome, including infection with the human immunodeficiency virus (HIV).
</P>
<P><I>Administrative costs</I> mean costs for general management, oversight, coordination, evaluation, and reporting on eligible activities. Such costs do not include costs directly related to carrying out eligible activities, since those costs are eligible as part of the activity delivery costs of such activities. 
</P>
<P><I>Applicant</I> means a State or city applying for a formula allocation as described under § 574.100 or a State, unit of general local government, or a nonprofit organization applying for a competitive grant as described under § 574.210.
</P>
<P><I>City</I> has the meaning given it in section 102(a) of the Housing and Community Development Act of 1974 (42 U.S.C. 5302). 
</P>
<P><I>Eligible Metropolitan Statistical Area (EMSA)</I> means a metropolitan statistical area that has a population of more than 500,000 and has more than 1,500 cumulative cases of AIDS. 
</P>
<P><I>Eligible person</I> means a person with acquired immunodeficiency syndrome or related diseases who is a low-income individual, as defined in this section, and the person's family. A person with AIDS or related diseases or a family member regardless of income is eligible to receive housing information services, as described in § 574.300(b)(1). Any person living in proximity to a community residence is eligible to participate in that residence's community outreach and educational activities regarding AIDS or related diseases, as provided in § 574.300(b)(9). 
</P>
<P><I>Eligible State</I> means a State that has: 
</P>
<P>(1) More than 1,500 cumulative cases of AIDS in those areas of the State outside of eligible metropolitan statistical areas that are eligible to be funded through a qualifying city; and 
</P>
<P>(2) A consolidated plan prepared, submitted, and approved in accordance with 24 CFR part 91 that covers the assistance to be provided under this part. (A State may carry out activities anywhere in the State, including within an EMSA.) 
</P>
<P><I>Family</I> is defined in 24 CFR 5.403 and includes one or more eligible persons living with another person or persons, regardless of actual or perceived sexual orientation, gender identity, or marital status, who are determined to be important to the eligible person or person's care or well-being, and the surviving member or members of any family described in this definition who were living in a unit assisted under the HOPWA program with the person with AIDS at the time of his or her death.
</P>
<P><I>Low-income individual</I> has the meaning given it in section 853(3) of the AIDS Housing Opportunity Act (42 U.S.C. 12902). 
</P>
<P><I>Metropolitan statistical area</I> has the meaning given it in section 853(5) of the AIDS Housing Opportunity Act (42.U.S.C. 12902). 
</P>
<P><I>Nonprofit organization</I> means any nonprofit organization (including a State or locally chartered, nonprofit organization) that:
</P>
<P>(1) Is organized under State or local laws;
</P>
<P>(2) Has no part of its net earnings inuring to the benefit of any member, founder, contributor, or individual;
</P>
<P>(3) Has a functioning accounting system that is operated in accordance with generally accepted accounting principles, or has designated an entity that will maintain such an accounting system; and
</P>
<P>(4) Has among its purposes significant activities related to providing services or housing to persons with acquired immunodeficiency syndrome or related diseases.
</P>
<P><I>Non-substantial rehabilitation</I> means rehabilitation that involves costs that are less than or equal to 75 percent of the value of the building after rehabilitation. 
</P>
<P><I>Population</I> means total resident population based on data compiled by the U.S. Census and referable to the same point in time.
</P>
<P><I>Project sponsor</I> means any nonprofit organization or governmental housing agency that receives funds under a contract with the grantee to carry out eligible activities under this part. The selection of project sponsors is not subject to the procurement requirements of 2 CFR part 200, subpart D. 
</P>
<P><I>Qualifying city</I> means a city that is the most populous unit of general local government in an eligible metropolitan statistical area (EMSA) and that has a consolidated plan prepared, submitted, and approved in accordance with 24 CFR part 91 that covers the assistance to be provided under this part. 
</P>
<P><I>Rehabilitation</I> means the improvement or repair of an existing structure, or an addition to an existing structure that does not increase the floor area by more than 100 percent.
</P>
<P><I>State</I> has the meaning given it in section 853(9) of the AIDS Housing Opportunity Act (42 U.S.C. 12902). 
</P>
<P><I>Substantial rehabilitation</I> means rehabilitation that involves costs in excess of 75 percent of the value of the building after rehabilitation.
</P>
<P><I>Unit of general local government</I> means any city, town, township, parish, county, village, or other general purpose political subdivision of a State; Guam, the Northern Mariana Islands, the Virgin Islands, American Samoa, the Federated States of Micronesia and Palau, the Marshall Islands, or a general purpose political subdivision thereof; and any agency or instrumentality thereof that is established pursuant to legislation and designated by the chief executive to act on behalf of the jurisdiction with regard to provisions of the National Affordable Housing Act.
</P>
<CITA TYPE="N">[57 FR 61740, Dec. 28, 1992, as amended at 59 FR 17199, Apr. 11, 1994; 60 FR 1917, Jan. 5, 1995; 61 FR 5209, Feb. 9, 1996; 61 FR 7963, Feb. 29, 1996; 77 FR 5675, Feb. 3, 2012; 80 FR 75938, Dec. 7, 2015]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:3.1.1.3.5.2" TYPE="SUBPART">
<HEAD>Subpart B—Formula Entitlements</HEAD>


<DIV8 N="§ 574.100" NODE="24:3.1.1.3.5.2.1.1" TYPE="SECTION">
<HEAD>§ 574.100   Eligible applicants.</HEAD>
<P>(a) Eligible States and qualifying cities, as defined in § 574.3, qualify for formula allocations under HOPWA.
</P>
<P>(b) HUD will notify eligible States and qualifying cities of their formula eligibility and allocation amounts and EMSA service areas annually. 
</P>
<CITA TYPE="N">[57 FR 61740, Dec. 28, 1992, as amended at 59 FR 17199, Apr. 11, 1994; 60 FR 1917, Jan. 5, 1995]


</CITA>
</DIV8>


<DIV8 N="§ 574.110" NODE="24:3.1.1.3.5.2.1.2" TYPE="SECTION">
<HEAD>§ 574.110   Overview of formula allocations.</HEAD>
<P>The formula grants are awarded upon submission and approval of a consolidated plan, pursuant to 24 CFR part 91, that covers the assistance to be provided under this part. Certain states and cities that are the most populous unit of general local government in eligible metropolitan statistical areas will receive formula allocations based on their State or metropolitan population and proportionate number of cases of persons with AIDS. They will receive funds under this part (providing they comply with 24 CFR part 91) for eligible activities that address the housing needs of persons with AIDS or related diseases and their families (see § 574.130(b)). 
</P>
<CITA TYPE="N">[61 FR 7963, Feb. 29, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 574.120" NODE="24:3.1.1.3.5.2.1.3" TYPE="SECTION">
<HEAD>§ 574.120   Responsibility of applicant to serve EMSA.</HEAD>
<P>The EMSA's applicant shall serve eligible persons who live anywhere within the EMSA, except that housing assistance shall be provided only in localities within the EMSA that have a consolidated plan prepared, submitted, and approved in accordance with 24 CFR part 91 that covers the assistance to be provided under this part. In allocating grant amounts among eligible activities, the EMSA's applicant shall address needs of eligible persons who reside within the metropolitan statistical area, including those not within the jurisdiction of the applicant. 
</P>
<CITA TYPE="N">[60 FR 1917, Jan. 5, 1995]


</CITA>
</DIV8>


<DIV8 N="§ 574.130" NODE="24:3.1.1.3.5.2.1.4" TYPE="SECTION">
<HEAD>§ 574.130   Formula allocations.</HEAD>
<P>(a) <I>Data sources.</I> HUD will allocate funds based on the number of cases of acquired immunodeficiency syndrome reported to and confirmed by the Director of the Centers for Disease Control, and on population data provided by the U.S. Census. The number of cases of acquired immunodeficiency syndrome used for this purpose shall be the number reported as of March 31 of the fiscal year immediately preceding the fiscal year for which the amounts are appropriated and allocated.
</P>
<P>(b) <I>Distribution of appropriated funds for entitlement awards.</I> (1) Seventy-five percent of the funds allocated under the formula is distributed to qualifying cities and eligible States, as described in § 574.100, based on each metropolitan statistical area's or State's proportionate share of the cumulative number of AIDS cases in all eligible metropolitan statistical areas and eligible States.
</P>
<P>(2) The remaining twenty-five percent is allocated among qualifying cities, but not States, where the per capita incidence of AIDS for the year, April 1 through March 31, preceding the fiscal year of the appropriation is higher than the average for all metropolitan statistical areas with more than 500,000 population. Each qualifying city's allocation reflects its EMSA's proportionate share of the high incidence factor among EMSA's with higher than average per capita incidence of AIDS. The high incidence factor is computed by multiplying the population of the metropolitan statistical area by the difference between its twelve-month-per-capita-incidence rate and the average rate for all metropolitan statistical areas with more than 500,000 population. The EMSA's proportionate share is determined by dividing its high incidence factor by the sum of the high incidence factors for all EMSA's with higher than average per capita incidence of AIDS.
</P>
<P>(c) <I>Minimum grant.</I> No grant awarded under paragraph (b) of this section shall be less than $200,000. Therefore, if the calculations under paragraph (b) of this section would result in any eligible metropolitan statistical area or eligible State receiving less than $200,000, the amount allocated to that entity is increased to $200,000 and allocations to entities in excess of $200,000 are proportionately reduced by the amount of the increase.


</P>
</DIV8>


<DIV8 N="§ 574.190" NODE="24:3.1.1.3.5.2.1.5" TYPE="SECTION">
<HEAD>§ 574.190   Reallocation of grant amounts.</HEAD>
<P>If an eligible State or qualifying city does not submit a consolidated plan in a timely fashion, in accordance with 24 CFR part 91, that provides for use of its allocation of funding under this part, the funds allocated to that jurisdiction will be added to the funds available for formula allocations to other jurisdictions in the current fiscal year. Any formula funds that become available as a result of deobligations or the imposition of sanctions as provided for in § 574.540 will be added to the funds available for formula allocations in the next fiscal year.
</P>
<CITA TYPE="N">[57 FR 61740, Dec. 28, 1992, as amended at 60 FR 1918, Jan. 5, 1995]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:3.1.1.3.5.3" TYPE="SUBPART">
<HEAD>Subpart C—Competitive Grants</HEAD>


<DIV8 N="§ 574.200" NODE="24:3.1.1.3.5.3.1.1" TYPE="SECTION">
<HEAD>§ 574.200   Amounts available for competitive grants.</HEAD>
<P>(a) The Department will set aside 10 percent of the amounts appropriated under this program to fund on a competitive basis:
</P>
<P>(1) Special projects of national significance; and
</P>
<P>(2) Other projects submitted by States and localities that do not qualify for formula grants.
</P>
<P>(b) Any competitively awarded funds that become available as a result of deobligations or the imposition of sanctions, as provided in § 574.540, will be added to the funds available for competitive grants in the next fiscal year.
</P>
<P>(c) The competitive grants are awarded based on applications, as described in subpart C of this part, submitted in response to a Notice of Funding Availability published in the <E T="04">Federal Register.</E> All States and units of general local government and nonprofit organizations are eligible to apply for competitive grants to fund projects of national significance. Only those States and units of general local government that do not qualify for formula allocations are eligible to apply for competitive grants to fund other projects. 
</P>
<P>(d) If HUD makes a procedural error in a funding competition that, when corrected, would warrant funding of an otherwise eligible application, HUD will select that application for potential funding when sufficient funds become available. 
</P>
<CITA TYPE="N">[57 FR 61740, Dec. 28, 1992, as amended at 61 FR 7963, Feb. 29, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 574.210" NODE="24:3.1.1.3.5.3.1.2" TYPE="SECTION">
<HEAD>§ 574.210   Eligible applicants.</HEAD>
<P>(a) All States, units of general local government, and nonprofit organizations, may apply for grants for projects of national significance.
</P>
<P>(b) Only those States and units of general local government that do not qualify for formula grants, as described in § 574.100; may apply for grants for other projects as described in § 574.200(a)(2).
</P>
<P>(c) Except for grants for projects of national significance, nonprofit organizations are not eligible to apply directly to HUD for a grant but may receive funding as a project sponsor under contract with a grantee.


</P>
</DIV8>


<DIV8 N="§ 574.240" NODE="24:3.1.1.3.5.3.1.3" TYPE="SECTION">
<HEAD>§ 574.240   Application requirements.</HEAD>
<P>Applications must comply with the provisions of the Department's Notice of Funding Availability (NOFA) for the fiscal year published in the <E T="04">Federal Register</E> in accordance with 24 CFR part 12. The rating criteria, including the point value for each, are described in the NOFA, including criteria determined by the Secretary. 
</P>
<CITA TYPE="N">[61 FR 7963, Feb. 29, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 574.260" NODE="24:3.1.1.3.5.3.1.4" TYPE="SECTION">
<HEAD>§ 574.260   Amendments.</HEAD>
<P>(a) After an application has been selected for funding, any change that will significantly alter the scope, location, service area, or objectives of an activity or the number of eligible persons served must be justified to HUD and approved by HUD. Whenever any other amendment to the application is made, the grantee must provide a copy to HUD. 
</P>
<P>(b) Each amendment request must contain a description of the revised proposed use of funds. Funds may not be expended for the revised proposed use of funds until:
</P>
<P>(1) HUD accepts the revised proposed use; and
</P>
<P>(2) For amendments to acquire, rehabilitate, convert, lease, repair or construct properties to provide housing, an environmental review of the revised proposed use of funds has been completed in accordance with § 574.510.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0133)


</APPRO>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:3.1.1.3.5.4" TYPE="SUBPART">
<HEAD>Subpart D—Uses of Grant Funds</HEAD>


<DIV8 N="§ 574.300" NODE="24:3.1.1.3.5.4.1.1" TYPE="SECTION">
<HEAD>§ 574.300   Eligible activities.</HEAD>
<P>(a) <I>General.</I> Subject to applicable requirements described in §§ 574.310, 574.320, 574.330, and 574.340, HOPWA funds may be used to assist all forms of housing designed to prevent homelessness including emergency housing, shared housing arrangements, apartments, single room occupancy (SRO) dwellings, and community residences. Appropriate supportive services, as required by § 574.310(a), must be provided as part of any HOPWA assisted housing, but HOPWA funds may also be used to provide services independently of any housing activity.
</P>
<P>(b) <I>Activities.</I> The following activities may be carried out with HOPWA funds:
</P>
<P>(1) Housing information services including, but not limited to, counseling, information, and referral services to assist an eligible person to locate, acquire, finance, and maintain housing. This may also include fair housing guidance for eligible persons who may encounter discrimination on the basis of race, color, religion, sex, age, national origin, familial status, or handicap. Housing counseling, as defined in § 5.100, that is funded with or provided in connection with HOPWA funds must be carried out in accordance with § 5.111. When grantees provide housing services to eligible persons (including persons undergoing relocation) that are incidental to a larger set of holistic case management services, these services do not meet the definition of Housing counseling, as defined in § 5.100, and therefore are not required to be carried out in accordance with the certification requirements of § 5.111;
</P>
<P>(2) Resource identification to establish, coordinate and develop housing assistance resources for eligible persons (including conducting preliminary research and making expenditures necessary to determine the feasibility of specific housing-related initiatives);
</P>
<P>(3) Acquisition, rehabilitation, conversion, lease, and repair of facilities to provide housing and services;
</P>
<P>(4) New construction (for single room occupancy (SRO) dwellings and community residences only).
</P>
<P>(5) Project- or tenant-based rental assistance, including assistance for shared housing arrangements;
</P>
<P>(6) Short-term rent, mortgage, and utility payments to prevent the homelessness of the tenant or mortgagor of a dwelling;
</P>
<P>(7) Supportive services including, but not limited to, health, mental health, assessment, permanent housing placement, drug and alcohol abuse treatment and counseling, day care, personal assistance, nutritional services, intensive care when required, and assistance in gaining access to local, State, and Federal government benefits and services, except that health services may only be provided to individuals with acquired immunodeficiency syndrome or related diseases and not to family members of these individuals; 
</P>
<P>(8) Operating costs for housing including maintenance, security, operation, insurance, utilities, furnishings, equipment, supplies, and other incidental costs;
</P>
<P>(9) Technical assistance in establishing and operating a community residence, including planning and other pre-development or pre-construction expenses and including, but not limited to, costs relating to community outreach and educational activities regarding AIDS or related diseases for persons residing in proximity to the community residence;
</P>
<P>(10) Administrative expenses:
</P>
<P>(i) Each grantee may use not more than 3 percent of the grant amount for its own administrative costs relating to administering grant amounts and allocating such amounts to project sponsors; and
</P>
<P>(ii) Each project sponsor receiving amounts from grants made under this program may use not more than 7 percent of the amounts received for administrative costs. 
</P>
<P>(11) For competitive grants only, any other activity proposed by the applicant and approved by HUD.
</P>
<P>(c) <I>Equal participation of faith-based organizations.</I> The HUD program requirements in § 5.109 of this title apply to the HOPWA program, including the requirements regarding disposition and change in use of real property by a faith-based organization.
</P>
<CITA TYPE="N">[57 FR 61740, Dec. 28, 1992, as amended at 59 FR 17200, Apr. 11, 1994; 68 FR 56405, Sept. 30, 2003; 80 FR 75938, Dec. 7, 2015; 81 19418, Apr. 4, 2016; 81 FR 90659, Dec. 14, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 574.310" NODE="24:3.1.1.3.5.4.1.2" TYPE="SECTION">
<HEAD>§ 574.310   General standards for eligible housing activities.</HEAD>
<P>All grantees using grant funds to provide housing must adhere to the following standards:
</P>
<P>(a)(1) <I>General.</I> The grantee shall ensure that qualified service providers in the area make available appropriate supportive services to the individuals assisted with housing under this subpart. Supportive services are described in § 574.300(b)(7). For any individual with acquired immunodeficiency syndrome or a related disease who requires more intensive care than can be provided in housing assisted under this subpart, the grantee shall provide for locating a care provider who can appropriately care for the individual and for referring the individual to the care provider.
</P>
<P>(2) <I>Payments.</I> The grantee shall ensure that grant funds will not be used to make payments for health services for any item or service to the extent that payment has been made, or can reasonably be expected to be made, with respect to that item or service: 
</P>
<P>(i) Under any State compensation program, under an insurance policy, or under any Federal or State health benefits program; or 
</P>
<P>(ii) By an entity that provides health services on a prepaid basis. 


</P>
<P>(b) <I>Housing quality standards.</I>  The following standards apply for all housing for which HOPWA funds are used under § 574.300(b)(3), (4), (5), and (8).


</P>
<P>(1) <I>State and local requirements.</I> Each recipient of assistance under this part must provide safe and sanitary housing that is in compliance with all applicable State and local housing codes, licensing requirements, and any other requirements in the jurisdiction in which the housing is located regarding the condition of the structure and the operation of the housing.


</P>
<P>(2) <I>HUD housing standards.</I> Except for such variations as are proposed by the grantee and approved by HUD, the housing must meet the standards for HUD housing in 24 CFR 5.703, except that:
</P>
<P>(i) As applied to HOPWA, “HUD housing” in 24 CFR 5.703 means the units eligible persons occupy or will occupy, systems equipment that directly services those units, items and components within the primary and secondary means of egress from those units' doors to the public way, and common features related to the residential use of the building (e.g., the laundry room, community room, mail room).
</P>
<P>(ii) Housing that continues to meet the HOPWA housing quality standards that applied when the eligible person(s) moved into that housing shall not be required to meet new or different standards under 24 CFR 5.703.




</P>
<P>(3) The requirements of 24 CFR 5.705 through 5.713 do not apply.


</P>
<P>(c) <I>Minimum use period for structures.</I> (1) Any building or structure assisted with amounts under this part must be maintained as a facility to provide housing or assistance for individuals with acquired immunodeficiency syndrome or related diseases:
</P>
<P>(i) For a period of not less than 10 years, in the case of assistance provided under an activity eligible under § 574.300(b) (3) and (4) involving new construction, substantial rehabilitation or acquisition of a building or structure; or
</P>
<P>(ii) For a period of not less than 3 years in the cases involving non-substantial rehabilitation or repair of a building or structure.


</P>
<P>(2) Waiver of minimum use period. HUD may waive the minimum use period of a building or structure as stipulated in paragraph (c)(1) of this section if the grantee can demonstrate, to the satisfaction of HUD, that:
</P>
<P>(i) The assisted structure is no longer needed to provide supported housing or assistance, or the continued operation of the structure for such purposes is no longer feasible; and
</P>
<P>(ii) The structure will be used to benefit individuals or families whose incomes do not exceed 80 percent of the median income for the area, as determined by HUD with adjustments for smaller and larger families, if the Secretary finds that such variations are necessary because of construction costs or unusually high or low family incomes.
</P>
<P>(d) <I>Resident rent payment.</I> Except for persons in short-term supported housing, each person receiving rental assistance under this program or residing in any rental housing assisted under this program must pay as rent, including utilities, an amount which is the higher of:
</P>
<P>(1) 30 percent of the family's monthly adjusted income;
</P>
<P>(2) Ten percent of the family's monthly income; or




</P>
<P>(3) If the family is receiving payments for welfare assistance from a public agency and a part of the payments, adjusted in accordance with the family's actual housing costs, is specifically designated by the agency to meet the family's housing costs, the portion of the payment that is designated for housing costs. 


</P>
<P>(e) <I>Calculating income to determine resident rent payment</I>—(1) <I>In general.</I> When determining resident rent payments, the family's monthly income and monthly adjusted income must be calculated as provided by §§ 5.609 and 5.611 of this title, respectively, except that:
</P>
<P>(i) As with the references to “grantee” and “grantees” in paragraphs (e), (f), and (h) of this section, the references to “PHA” and “responsible entity” in §§ 5.609 and 5.611 of this title refer to the “grantee” or “project sponsor” that is determining income;
</P>
<P>(ii) References in § 5.609(c) of this title to an interim reexamination of family income under §§ 5.657(c), 960.257(b), or 982.516(c) of this title refer to an interim reexamination provided under paragraph (e)(4) of this section;
</P>
<P>(iii) References in § 5.609(c) of this title to a streamlined income determination under §§ 5.657(d), 960.257(c), or 982.516(b) of this title refer to a streamlined income determination provided under paragraph (e)(5) of this section;
</P>
<P>(iv) Section 5.611(b) of this title does not apply;
</P>
<P>(v) The grantee may choose to grant financial hardship exemptions in accordance with the process described in §§ 5.611(c) through (e);
</P>
<P>(vi) During the period that § 5.617 of this title remains in effect, the calculation of monthly adjusted income must also include the disallowance of earned income as provided by § 5.617 of this title.
</P>
<P>(2) <I>Annual reexaminations.</I> For purposes of determining resident rent payments, grantees will conduct a reexamination and redetermination of family income and family composition every year.
</P>
<P>(3) <I>Third-party verification.</I> (i) Except as provided in paragraph (e)(3)(ii) of this section, the grantee must obtain and document in the tenant file third-party verification of the following factors, or must document in the tenant file why third-party verification was not available:
</P>
<P>(A) Reported family annual income;
</P>
<P>(B) The value of assets;
</P>
<P>(C) Expenses related to deductions from annual income; and
</P>
<P>(D) Other factors that affect the determination of adjusted income.
</P>
<P>(ii) For a family with net family assets (as the term is defined in paragraph (f) of this section) equal to or less than $50,000, which amount will be adjusted annually in accordance with the Consumer Price Index for Urban Wage Earners and Clerical Worker, the grantee may accept, for purposes of recertification of income, a family's declaration under § 5.618(b) of this title, except that the grantee must obtain third-party verification of all family assets every 3 years.
</P>
<P>(iii) The grantee must establish procedures that are appropriate and necessary to require that income data provided by applicant or participant families is complete and accurate.
</P>
<P>(4) <I>Interim reexaminations</I>—(i) <I>Generally.</I> A family may request an interim reexamination of family income or composition because of any changes since the last determination. The grantee must make any interim reexamination within a reasonable period of time after the family's request or when the grantee becomes aware of an increase in family adjusted income under paragraph (e)(4)(iii) of this section. What qualifies as a “reasonable time” may vary based on the amount of time it takes to verify information, but generally should not exceed 30 days from the date a family reports changes in income to a grantee.
</P>
<P>(ii) <I>Decreases in the family's annual adjusted income.</I> Grantees may decline to conduct an interim reexamination of family income if the grantee estimates that the family's adjusted income will decrease by an amount that is less than ten percent of the family's annual adjusted income (or a lower amount established by HUD through notice), or a lower threshold established by the grantee.
</P>
<P>(iii) <I>Increases in the family's annual adjusted income.</I> Grantees must conduct the interim reexamination of family income when the grantee becomes aware that the family's adjusted income has changed by an amount that the grantee estimates will result in an increase of ten percent or more in annual adjusted income or such other amount established by HUD through notice, except:
</P>
<P>(A) The grantee may not consider any increase in the earned income of the family when estimating or calculating whether the family's adjusted income has increased unless the family has previously received an interim reduction under paragraph (e)(4)(i) of this section during the certification period; and
</P>
<P>(B) The grantee may choose not to conduct an interim reexamination in the last three months of a certification period.
</P>
<P>(iv) <I>Policies on reporting changes in family income or composition.</I> The grantee must adopt policies consistent with this section prescribing when and under what conditions the family must report a change in family income or composition.
</P>
<P>(v) <I>Effective date of rent changes.</I> (A) If the family has reported a change in family income or composition in a timely manner according to the grantee's policies, the grantee must provide the family with 30 days advance notice of any rent increase, and such rent increase will be effective the first day of the month beginning after the end of that 30-day period. Rent decreases will be effective on the first day of the first month after the date of the actual change leading to the interim reexamination of family income.
</P>
<P>(B) If the family has failed to report a change in family income or composition in a timely manner according to the grantee's policies, grantees must implement any resulting rent increases retroactively to the first of the month following the date of the change leading to the interim reexamination of family income. Any resulting rent decrease must be implemented no later than the first rent period following completion of the reexamination. However, rent decreases may be applied retroactively at the discretion of the grantee, in accordance with the grantee's conditions as established in written policy, and subject to paragraph (e)(4)(v)(C) of this section.
</P>
<P>(C) A retroactive rent decrease may not be applied by the grantee prior to the later of the first of the month following:
</P>
<P>(<I>1</I>) The date of the change leading to the interim reexamination of family income; or
</P>
<P>(<I>2</I>) The effective date of the family's most recent previous interim or annual reexamination (or initial examination if that was the family's last examination).
</P>
<P>(5) <I>Streamlined income determinations</I>—(i) <I>Generally.</I> A grantee may elect to apply a streamlined income determination to families receiving fixed income as described in paragraph (e)(5)(iii) of this section.
</P>
<P>(ii) <I>Definition of fixed income.</I> For purposes of this section, “fixed income” means periodic payments at reasonably predictable levels from one or more of the following sources:
</P>
<P>(A) Social Security, Supplemental Security Income, Supplemental Disability Insurance.
</P>
<P>(B) Federal, state, local, or private pension plans.
</P>
<P>(C) Annuities or other retirement benefit programs, insurance policies, disability or death benefits, or other similar types of periodic receipts.
</P>
<P>(D) Any other source of income subject to adjustment by a verifiable Cost-of-Living Adjustment (COLA) or current rate of interest.
</P>
<P>(iii) <I>Method of streamlined income determination.</I> Grantees using the streamlined income determination must adjust a family's income according to the percentage of a family's unadjusted income that is from fixed income.
</P>
<P>(A) When 90 percent or more of a family's unadjusted income consists of fixed income, grantees using streamlined income determinations must apply a COLA or COLAs to the family's fixed-income sources, provided that the family certifies both that 90 percent or more of their unadjusted income is fixed income and that their sources of fixed income have not changed from the previous year. For non-fixed income, grantees may choose, but are not required, to make appropriate adjustments pursuant to paragraph (e)(2) of this section.
</P>
<P>(B) When less than 90 percent of a family's unadjusted income consists of fixed income, grantees using streamlined income determinations must apply a COLA to each of the family's sources of fixed income. Grantees must determine all other income pursuant to paragraph (e)(2) of this section.
</P>
<P>(iv) <I>COLA rate applied by grantees.</I> Grantees using streamlined income determinations must adjust a family's fixed income using a COLA or current interest rate that applies to each specific source of fixed income and is available from a public source or through tenant-provided, third-party-generated documentation. If no public verification or tenant-provided documentation is available, then the grantee must obtain third-party verification of the income amounts in order to calculate the change in income for the source.
</P>
<P>(v) <I>Triennial verification.</I> For any income determined pursuant to a streamlined income determination, a grantee must obtain third-party verification of all income amounts every 3 years.




</P>
<P>(f) <I>Net family assets and restriction on assistance to families based on assets.</I> The “net family assets” definition in § 5.603 of this section applies for purposes of calculating resident rent payments under this section and applying the asset-based restrictions in §§ 5.618(a) through (d) this title. The “net family assets” definition in § 5.603 of this section may also apply where a grantee elects to apply § 5.609 of this title alone or in combination with § 5.611(a) of this title for other purposes under this part; however, the value of real property a family owns and occupies as its primary residence must be excluded from the calculation of “net family assets” for purposes of assistance for which homeowners are eligible under this part. The asset-based restrictions in §§ 5.618(a) through (d) of this title apply only to housing activities subject to the resident rent payment requirements in this section. References to “PHA” in §§ 5.618(a) through (d) of this title refer to the grantee or project sponsor that is determining the asset-based restrictions.


</P>
<P>(g) <I>Termination of assistance</I>—(1) <I>Surviving family members.</I> With respect to the surviving member or members of a family who were living in a unit assisted under the HOPWA program with the person with AIDS at the time of his or her death, housing assistance and supportive services under the HOPWA program shall continue for a grace period following the death of the person with AIDS. The grantee or project sponsor shall establish a reasonable grace period for continued participation by a surviving family member, but that period may not exceed one year from the death of the family member with AIDS. The grantee or project sponsor shall notify the family of the duration of their grace period and may assist the family with information on other available housing programs and with moving expenses. 
</P>
<P>(2) <I>Violation of requirements</I>— (i) <I>Basis.</I> Assistance to participants who reside in housing programs assisted under this part may be terminated if the participant violates program requirements or conditions of occupancy, subject to the VAWA protections in 24 CFR 5.2005(b) and 24 CFR 5.2005(c). Grantees must ensure that supportive services are provided, so that a participant's assistance is terminated only in the most severe cases. 


</P>
<P>(ii) <I>Procedure.</I> In terminating assistance to any program participant for violation of requirements, grantees must provide a formal process that recognizes the rights of individuals receiving assistance to due process of law. This process at minimum, must consist of: 
</P>
<P>(A) Serving the participant with a written notice containing a clear statement of the reasons for termination; 
</P>
<P>(B) Permitting the participant to have a review of the decision, in which the participant is given the opportunity to confront opposing witnesses, present written objections, and be represented by their own counsel, before a person other than the person (or a subordinate of that person) who made or approved the termination decision; and 
</P>
<P>(C) Providing prompt written notification of the final decision to the participant. 
</P>
<P>(h) <I>De minimis errors.</I> The grantee will not be considered out of compliance with the requirements in paragraphs (e)(2), (e)(4), or (e)(5) of this section due solely to de minimis errors in calculating family income but is still obligated to correct errors once the grantee becomes aware of the errors. A de minimis error is an error where the grantee's determination of family income varies from the correct income determination by no more than $30 per month in monthly adjusted income ($360 in annual adjusted income) per family.
</P>
<P>(1) The grantee must take any corrective action necessary to credit or repay a family if the family has been overcharged for their resident rent payment as a result of the de minimis error in the income determination. Families will not be required to repay the grantee in instances where the grantee has miscalculated income resulting in a family being undercharged for their resident rent payment.
</P>
<P>(2) HUD may revise the amount of de minimis error in this paragraph (h) through a rulemaking published in the <E T="04">Federal Register</E> for public comment.


</P>
<APPRO TYPE="N">(Paragraph (c) approved by the Office of Management and Budget under control number 2506-0133)
</APPRO>
<CITA TYPE="N">[57 FR 61740, Dec. 28, 1992, as amended at 59 FR 17200, Apr. 11, 1994; 61 FR 7963, Feb. 29, 1996; 66 FR 6225, Jan. 19, 2001; 81 FR 80806, Nov. 16, 2016; 88 FR 30498, May 11, 2023; 88 FR 9665, Feb. 14, 2023]










</CITA>
</DIV8>


<DIV8 N="§ 574.320" NODE="24:3.1.1.3.5.4.1.3" TYPE="SECTION">
<HEAD>§ 574.320   Additional standards for rental assistance.</HEAD>
<P>(a) If grant funds are used to provide rental assistance, the following additional standards apply:
</P>
<P>(1) <I>Maximum subsidy.</I> The amount of grant funds used to pay monthly assistance for an eligible person may not exceed the difference between:
</P>
<P>(i) The lower of the rent standard or reasonable rent for the unit; and
</P>
<P>(ii) The resident's rent payment calculated under § 574.310(d).
</P>
<P>(2) <I>Rent standard.</I> The rent standard shall be established by the grantee and shall be no more than the published section 8 fair market rent (FMR) or the HUD-approved community-wide exception rent for the unit size. However, on a unit by unit basis, the grantee may increase that amount by up to 10 percent for up to 20 percent of the units assisted.
</P>
<P>(3) <I>Rent reasonableness.</I> The rent charged for a unit must be reasonable in relation to rents currently being charged for comparable units in the private unassisted market and must not be in excess of rents currently being charged by the owner for comparable unassisted units.
</P>
<P>(b) With respect to shared housing arrangements, the rent charged for an assisted family or individual shall be in relation to the size of the private space for that assisted family or individual in comparison to other private space in the shared unit, excluding common space. An assisted family or individual may be assigned a pro rata portion based on the ratio derived by dividing the number of bedrooms in their private space by the number of bedrooms in the unit. Participation in shared housing arrangements shall be voluntary. 
</P>
<CITA TYPE="N">[57 FR 61740, Dec. 28, 1992, as amended at 61 FR 7963, Feb. 29, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 574.330" NODE="24:3.1.1.3.5.4.1.4" TYPE="SECTION">
<HEAD>§ 574.330   Additional standards for short-term supported housing.</HEAD>
<P>Short-term supported housing includes facilities to provide temporary shelter to eligible individuals as well as rent, mortgage, and utilities payments to enable eligible individuals to remain in their own dwellings. If grant funds are used to provide such short-term supported housing assistance, the following additional standards apply:
</P>
<P>(a) <I>Time limits.</I> (1) A short-term supported housing facility may not provide residence to any individual for more than 60 days during any six month period. Rent, mortgage, and utilities payments to prevent the homelessness of the tenant or mortgagor of a dwelling may not be provided to such an individual for these costs accruing over a period of more than 21 weeks in any 52 week period. These limitations do not apply to rental assistance provided under § 574.300(b)(5).
</P>
<P>(2) <I>Waiver of time limitations.</I> HUD may waive, as it determines appropriate, the limitations of paragraph (a)(1) and will favorably consider a waiver based on the good faith effort of a project sponsor to provide permanent housing under subsection (c).
</P>
<P>(b) <I>Residency limitations</I>—(1) <I>Residency.</I> A short-term supported facility may not provide shelter or housing at any single time for more than 50 families or individuals;
</P>
<P>(2) <I>Waiver of residency limitations.</I> HUD may waive, as it determines appropriate, the limitations of paragraph (b)(1) of this section.
</P>
<P>(c) <I>Placement.</I> A short-term supported housing facility assisted under this part must, to the maximum extent practicable, provide each individual living in such housing the opportunity for placement in permanent housing or in a living environment appropriate to his or her health and social needs.
</P>
<P>(d) <I>Assistance to continue independent living.</I> In addition to the supportive services provided when an individual is relocated to a short-term supported housing facility, supportive services may be provided to individuals when they remain in their residence because the residence is appropriate to the needs of the individual. In the latter case, a rent, mortgage and utilities payments program assisted under this part shall provide, when reasonable, supportive services specifically designed to maintain the individual in such residence.
</P>
<P>(e) <I>Case management services.</I> A program assisted under this section shall provide each assisted individual with an opportunity, if eligible, to receive case management services from the appropriate social service agencies.
</P>
<APPRO TYPE="N">(Paragraph (b) approved by the Office of Management and Budget under control number 2506-0133)
</APPRO>
<CITA TYPE="N">[57 FR 61740, Dec. 28, 1992, as amended at 59 FR 17200, Apr. 11, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 574.340" NODE="24:3.1.1.3.5.4.1.5" TYPE="SECTION">
<HEAD>§ 574.340   Additional standards for community residences.</HEAD>
<P>(a) A community residence is a multiunit residence designed for eligible persons to provide a lower cost residential alternative to institutional care; to prevent or delay the need for such care; to provide a permanent or transitional residential setting with appropriate services to enhance the quality of life for those who are unable to live independently; and to enable such persons to participate as fully as possible in community life.
</P>
<P>(b) If grant funds are used to provide a community residence, except for planning and other expenses preliminary to construction or other physical improvement for a community residence, the grantee must, prior to the expenditure of such funds, obtain and keep on file the following certifications: 
</P>
<P>(1) <I>A services agreement.</I> (i) A certification that the grantee will itself provide services as required by § 574.310(a) to eligible persons assisted by the community residence; or 
</P>
<P>(ii) A certification that the grantee has entered into a written agreement with a project sponsor or contracted service provider to provide services as required by § 574.310(a) to eligible persons assisted by the community residence; 
</P>
<P>(2) <I>The adequacy of funding.</I> (i) A certification that the grantee has acquired sufficient funding for these services; or 
</P>
<P>(ii) A certification that the grantee has on file an analysis of the service level needed for each community residence, a statement of which grantee agency, project sponsor, or service provider will provide the needed services, and a statement of how the services will be funded; and 
</P>
<P>(3) <I>Capability.</I> (i) A certification that the grantee is qualified to provide the services; or 
</P>
<P>(ii) A certification that the project sponsor or the service provider is qualified to provide the services. 
</P>
<CITA TYPE="N">[57 FR 61740, Dec. 28, 1992, as amended at 59 FR 17200, Apr. 11, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 574.350" NODE="24:3.1.1.3.5.4.1.6" TYPE="SECTION">
<HEAD>§ 574.350   Additional standards for broadband infrastructure.</HEAD>
<P>Any new construction or substantial rehabilitation, as substantial rehabilitation is defined by 24 CFR 574.3, of a building with more than 4 rental units, for which HOPWA funds are first obligated by the grantee or project sponsor on or after January 19, 2017 must include installation of broadband infrastructure, as this term is defined in 24 CFR 5.100, except where the grantee or project sponsor determines and, in accordance with § 574.530, documents the determination that:
</P>
<P>(a) The location of the new construction or substantial rehabilitation makes installation of broadband infrastructure infeasible;
</P>
<P>(b) The cost of installing broadband infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden; or
</P>
<P>(c) The structure of the housing to be substantially rehabilitated makes installation of broadband infrastructure infeasible.
</P>
<CITA TYPE="N">[81 FR 92637, Dec. 20, 2016]










</CITA>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:3.1.1.3.5.5" TYPE="SUBPART">
<HEAD>Subpart E—Special Responsibilities of Grantees and Project Sponsors</HEAD>


<DIV8 N="§ 574.400" NODE="24:3.1.1.3.5.5.1.1" TYPE="SECTION">
<HEAD>§ 574.400   Prohibition of substitution of funds.</HEAD>
<P>Amounts received from grants under this part may not be used to replace other amounts made available or designated by State or local governments through appropriations for use for the purposes of this part.


</P>
</DIV8>


<DIV8 N="§ 574.410" NODE="24:3.1.1.3.5.5.1.2" TYPE="SECTION">
<HEAD>§ 574.410   Capacity.</HEAD>
<P>The grantee shall ensure that any project sponsor with which the grantee contracts to carry out an activity under this part has the capacity and capability to effectively administer the activity.


</P>
</DIV8>


<DIV8 N="§ 574.420" NODE="24:3.1.1.3.5.5.1.3" TYPE="SECTION">
<HEAD>§ 574.420   Cooperation.</HEAD>
<P>(a) The grantee shall agree, and shall ensure that each project sponsor agrees, to cooperate and coordinate in providing assistance under this part with the agencies of the relevant State and local governments responsible for services in the area served by the grantee for eligible persons and other public and private organizations and agencies providing services for such eligible persons.
</P>
<P>(b) A grantee that is a State shall obtain the approval of the unit of general local government in which a project is to be located before entering into a contract with a project sponsor to carry out an activity authorized under this part.
</P>
<P>(c) A grantee that is a city receiving a formula allocation for an EMSA shall coordinate with other units of general local government located within the metropolitan statistical area to address needs within that area.


</P>
</DIV8>


<DIV8 N="§ 574.430" NODE="24:3.1.1.3.5.5.1.4" TYPE="SECTION">
<HEAD>§ 574.430   Fee prohibitions.</HEAD>
<P>The grantee shall agree, and shall ensure that each project sponsor agrees, that no fee, except rent, will be charged of any eligible person for any housing or services provided with amounts from a grant under this part.


</P>
</DIV8>


<DIV8 N="§ 574.440" NODE="24:3.1.1.3.5.5.1.5" TYPE="SECTION">
<HEAD>§ 574.440   Confidentiality.</HEAD>
<P>The grantee shall agree, and shall ensure that each project sponsor agrees, to ensure the confidentiality of the name of any individual assisted under this part and any other information regarding individuals receiving assistance.


</P>
</DIV8>


<DIV8 N="§ 574.450" NODE="24:3.1.1.3.5.5.1.6" TYPE="SECTION">
<HEAD>§ 574.450   Financial records.</HEAD>
<P>The grantee shall agree, and shall ensure that each project sponsor agrees, to maintain and make available to HUD for inspection financial records sufficient, in HUD's determination, to ensure proper accounting and disbursing of amounts received from a grant under this part.




</P>
</DIV8>


<DIV8 N="§ 574.460" NODE="24:3.1.1.3.5.5.1.7" TYPE="SECTION">
<HEAD>§ 574.460   Remaining participants following bifurcation of a lease or eviction as a result of domestic violence, dating violence, sexual assault, or stalking.</HEAD>
<P>When a covered housing provider exercises the option to bifurcate a lease, as provided in 24 CFR 5.2009(a), in order to evict, remove, terminate occupancy rights, or terminate assistance to a person with AIDS or related diseases that receives rental assistance or resides in rental housing assisted under the HOPWA program for engaging in criminal activity directly relating to domestic violence, dating violence, sexual assault or stalking, the covered housing provider shall provide the remaining persons residing in the unit a reasonable grace period to establish eligibility to receive HOPWA assistance or find alternative housing. The grantee or project sponsor shall set the reasonable grace period, which shall be no less than 90 calendar days, and not more than one year, from the date of the bifurcation of the lease. Housing assistance and supportive services under the HOPWA program shall continue for the remaining persons residing in the unit during the grace period. The grantee or project sponsor shall notify the remaining persons residing in the unit of the duration of the reasonable grace period and may assist them with information on other available housing programs and with moving expenses.
</P>
<CITA TYPE="N">[81 FR 80806, Nov. 16, 2016]




</CITA>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:3.1.1.3.5.6" TYPE="SUBPART">
<HEAD>Subpart F—Grant Administration</HEAD>


<DIV8 N="§ 574.500" NODE="24:3.1.1.3.5.6.1.1" TYPE="SECTION">
<HEAD>§ 574.500   Responsibility for grant administration.</HEAD>
<P>(a) <I>General.</I> Grantees are responsible for ensuring that grants are administered in accordance with the requirements of this part and other applicable laws. Grantees are responsible for ensuring that their respective project sponsors carry out activities in compliance with all applicable requirements.
</P>
<P>(b) <I>Grant agreement.</I> The grant agreement will provide that the grantee agrees, and will ensure that each project sponsor agrees, to:
</P>
<P>(1) Operate the program in accordance with the provisions of these regulations and other applicable HUD regulations;
</P>
<P>(2) Conduct an ongoing assessment of the housing assistance and supportive services required by the participants in the program;
</P>
<P>(3) Assure the adequate provision of supportive services to the participants in the program; and
</P>
<P>(4) Comply with such other terms and conditions, including recordkeeping and reports (which must include racial and ethnic data on participants) for program monitoring and evaluation purposes, as HUD may establish for purposes of carrying out the program in an effective and efficient manner.
</P>
<P>(c) <I>Enforcement.</I> HUD will enforce the obligations in the grant agreement in accordance with the provisions of 2 CFR part 200, subpart D. A grantee will be provided an opportunity for informal consultation before HUD will exercise any remedies authorized in 2 CFR 200.338.
</P>
<CITA TYPE="N">[57 FR 61740, Dec. 28, 1992, as amended at 80 FR 75938, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 574.510" NODE="24:3.1.1.3.5.6.1.2" TYPE="SECTION">
<HEAD>§ 574.510   Environmental procedures and standards.</HEAD>
<P>(a) Activities under this part are subject to HUD environmental regulations in part 58 of this title, except that HUD will perform an environmental review in accordance with part 50 of this title for any competitive grant for Fiscal Year 2000. 
</P>
<P>(b) The recipient, its project partners and their contractors may not acquire, rehabilitate, convert, lease, repair, dispose of, demolish, or construct property for a project under this part, or commit or expend HUD or local funds for such eligible activities under this part, until the responsible entity (as defined in § 58.2 of this title) has completed the environmental review procedures required by part 58 and the environmental certification and RROF have been approved (or HUD has performed an environmental review and the recipient has received HUD approval of the property). HUD will not release grant funds if the recipient or any other party commits grant funds (<I>i.e.,</I> incurs any costs or expenditures to be paid or reimbursed with such funds) before the recipient submits and HUD approves its RROF (where such submission is required).
</P>
<P>(c) For activities under a grant to a nonprofit entity that would generally be subject to review under part 58, HUD may make a finding in accordance with § 58.11(d) and may itself perform the environmental review under the provisions of part 50 of this title if the recipient nonprofit entity objects in writing to the responsible entity's performing the review under part 58. Irrespective of whether the responsible entity in accord with part 58 (or HUD in accord with part 50) performs the environmental review, the recipient shall supply all available, relevant information necessary for the responsible entity (or HUD, if applicable) to perform for each property any environmental review required by this part. The recipient also shall carry out mitigating measures required by the responsible entity (or HUD, if applicable) or select alternate eligible property.
</P>
<CITA TYPE="N">[68 FR 56130, Sept. 29, 2003]


</CITA>
</DIV8>


<DIV8 N="§ 574.520" NODE="24:3.1.1.3.5.6.1.3" TYPE="SECTION">
<HEAD>§ 574.520   Performance reports.</HEAD>
<P>(a) <I>Formula grants.</I> For a formula grant recipient, the performance reporting requirements are specified in 24 CFR part 91. 
</P>
<P>(b) <I>Competitive grants.</I> A grantee shall submit to HUD annually a report describing the use of the amounts received, including the number of individuals assisted, the types of assistance provided, data on emergency transfers requested under 24 CFR 5.2005(e), pertaining to victims of domestic violence, dating violence, sexual assault, or stalking, including data on the outcomes of such requests, and any other information that HUD may require. Annual reports are required until all grant funds are expended.


</P>
<CITA TYPE="N">[60 FR 1918, Jan. 5, 1995, as amended at 81 FR 80806, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 574.530" NODE="24:3.1.1.3.5.6.1.4" TYPE="SECTION">
<HEAD>§ 574.530   Recordkeeping.</HEAD>
<P>Each grantee must ensure that records are maintained for a 4-year period to document compliance with the provisions of this part. Grantees must maintain the following:
</P>
<P>(a) Current and accurate data on the race and ethnicity of program participants.
</P>
<P>(b) Documentation that the grantee submitted a certification that it will affirmatively further fair housing, consistent with §§ 5.150 and 5.151 of this title.
</P>
<P>(c) Data on emergency transfers requested under 24 CFR 5.2005(e), pertaining to victims of domestic violence, dating violence, sexual assault, or stalking, including data on the outcomes of such requests.


</P>
<CITA TYPE="N">[80 FR 42368, July 16, 2015, as amended at 81 FR 80806, Nov. 16, 2016; 85 FR 47911, Aug. 7, 2020; 86 FR 30792, June 10, 2021; 90 FR 11024, Mar. 3, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 574.540" NODE="24:3.1.1.3.5.6.1.5" TYPE="SECTION">
<HEAD>§ 574.540   Deobligation of funds.</HEAD>
<P>HUD may deobligate all or a portion of the amounts approved for eligible activities if such amounts are not expended in a timely manner, or the proposed activity for which funding was approved is not provided in accordance with the approved application or action plan and the requirements of this regulation. HUD may deobligate any amount of grant funds that have not been expended within a three-year period from the date of the signing of the grant agreement. The grant agreement may set forth other circumstances under which funds may be deobligated or sanctions imposed. 
</P>
<CITA TYPE="N">[61 FR 7963, Feb. 29, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:3.1.1.3.5.7" TYPE="SUBPART">
<HEAD>Subpart G—Other Federal Requirements</HEAD>


<DIV8 N="§ 574.600" NODE="24:3.1.1.3.5.7.1.1" TYPE="SECTION">
<HEAD>§ 574.600   Cross-reference.</HEAD>
<P>The Federal requirements set forth in 24 CFR part 5 and part 75 apply to this program as specified in this subpart. 
</P>
<CITA TYPE="N">[61 FR 5209, Feb. 9, 1996, as amended at 85 FR 61567, Sept. 29, 2020]




</CITA>
</DIV8>


<DIV8 N="§ 574.603" NODE="24:3.1.1.3.5.7.1.2" TYPE="SECTION">
<HEAD>§ 574.603   Nondiscrimination and equal opportunity.</HEAD>
<P>Within the population eligible for this program, the nondiscrimination and equal opportunity requirements set forth in 24 CFR part 5 and the following requirements apply: 
</P>
<P>(a) <I>Fair housing requirements.</I> (1) Grantees and project sponsors shall comply with the applicable provisions of the Americans with Disabilities Act (42 U.S.C. 12101-12213) and implementing regulations at 28 CFR part 35 (States and local government grantees) and part 36 (public accommodations and requirements for certain types of short-term housing assistance). 
</P>
<P>(2) Executive Order 11246, as amended by Executive Orders 11375, 11478, 12086, and 12107 (3 CFR, 1964-1965 Comp., p. 339; 3 CFR, 1966-1970 Comp., p. 684; 3 CFR, 1966-1970 Comp., p. 803; 3 CFR 1978 Comp., p. 230; and 3 CFR, 1978 Comp., p. 264) (Equal Employment Opportunity) does not apply to this program. 
</P>
<P>(b) <I>Affirmative outreach.</I> A grantee or project sponsor must adopt procedures to ensure that all persons who qualify for the assistance, regardless of their race, color, religion, sex, age, national origin, familial status, or handicap, know of the availability of the HOPWA program, including facilities and services accessible to persons with a handicap, and maintain evidence of implementation of the procedures.
</P>
<CITA TYPE="N">[57 FR 61740, Dec. 28, 1992, as amended at 59 FR 33894, June 30, 1994. Redesignated and amended at 61 FR 5209, Feb. 9, 1996; 61 FR 7964, Feb. 29, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 574.604" NODE="24:3.1.1.3.5.7.1.3" TYPE="SECTION">
<HEAD>§ 574.604   Protections for victims of domestic violence, dating violence, sexual assault, and stalking.</HEAD>
<P>(a) <I>General</I>—(1) <I>Applicability of VAWA requirements.</I> Except as provided in paragraph (a)(2) of this section, the Violence Against Women Act (VAWA) requirements set forth in 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking), apply to housing assisted with HOPWA grant funds for acquisition, rehabilitation, conversion, lease, and repair of facilities to provide housing; new construction; and operating costs, as provided in § 574.300. The requirements set forth in 24 CFR part 5, subpart L, also apply to project-based and tenant-based rental assistance, as provided in §§ 574.300 and 574.320, and community residences, as provided in § 574.340.
</P>
<P>(2) Limited applicability of VAWA requirements. The VAWA requirements set forth in 24 CFR part 5, subpart L do not apply to short-term supported housing, as provided in § 574.330, except that no individual may be denied admission to or removed from the short-term supported housing on the basis or as a direct result of the fact that the individual is or has been a victim of domestic violence, dating violence, sexual assault, or stalking, if the individual otherwise qualifies for admission or occupancy.
</P>
<P>(3) The terms “affiliated individual,” “dating violence,” “domestic violence,” “sexual assault,” and “stalking” are defined in 24 CFR 5.2003.
</P>
<P>(b) <I>Covered housing provider.</I> As used in this part, the term, “covered housing provider,” which is defined in 24 CFR 5.2003, refers to the HOPWA grantee, project sponsor, or housing or facility owner, or manager, as described in this section.
</P>
<P>(1)(i) For housing assisted with HOPWA grant funds for acquisition, rehabilitation, conversion, lease, and repair of facilities to provide housing; new construction; operating costs; community residences; and project-based rental assistance, the HOPWA grantee is responsible for ensuring that each project sponsor undertakes the following actions (or, if administering the HOPWA assistance directly, the grantee shall undertake the following actions):
</P>
<P>(A) Sets a policy for determining the “reasonable grace period” for remaining persons residing in the unit to establish eligibility for HOPWA assistance or find alternative housing, which period shall be no less than 90 calendar days nor more than one year from the date of bifurcation of a lease, consistent with 24 CFR 574.460;
</P>
<P>(B) Provides notice of occupancy rights and the certification form at the times listed in paragraph (d) of this section;
</P>
<P>(C) Adopts and administers an emergency transfer plan, as developed by the grantee in accordance with 24 CFR 5.2005(e) of this section, and facilitates emergency transfers; and
</P>
<P>(D) Maintains the confidentiality of documentation submitted by tenants requesting emergency transfers and of each tenant's housing location consistent with § 574.440 and 24 CFR 5.2007(c).
</P>
<P>(ii)(A) If a tenant seeks VAWA protections, set forth in 24 CFR part 5, subpart L, the tenant must submit such request through the project sponsor (or the grantee if the grantee is directly administering HOPWA assistance). Grantees and project sponsors will work with the housing or facility owner or manager to facilitate protections on the tenant's behalf. Project sponsors must follow the documentation specifications in 24 CFR 5.2007, including the confidentiality requirements in 24 CFR 5.2007(c).
</P>
<P>(B) The grantee or project sponsor is responsible for ensuring that the housing or facility owner or manager develops and uses a HOPWA lease addendum with VAWA protections and is made aware of the option to bifurcate a lease in accordance with § 574.460 and 24 CFR 5.2009.
</P>
<P>(2)(i) For tenant-based rental assistance, the HOPWA grantee is responsible for ensuring that each project sponsor providing tenant-based rental assistance undertakes the following actions (or, if administering the HOPWA assistance directly, the grantee shall undertake the following actions):
</P>
<P>(A) Sets policy for determining the “reasonable grace period” for remaining persons residing in the unit to establish eligibility for HOPWA assistance or find alternative housing, which period shall be no less than 90 calendar days and no more than one year from the date of bifurcation of a lease, consistent with 24 CFR 574.460;
</P>
<P>(B) Provides notice of occupancy rights and the certification form at the times listed in paragraph (d) of this section;
</P>
<P>(C) Adopts and administers an emergency transfer plan, as developed by the grantee in accordance with 24 CFR 5.2005(e) of this section, and facilitates emergency transfers; and
</P>
<P>(D) Maintains the confidentiality of documentation submitted by tenants requesting emergency transfers and of each tenant's housing location consistent with § 574.440 and 24 CFR 5.2007(c).
</P>
<P>(ii)(A) If a tenant seeks VAWA protections set forth in 24 CFR part 5, subpart L, the tenant must submit such request through the project sponsor (or the grantee if the grantee is directly administering HOPWA assistance). The project sponsor will work with the housing owner or manager to facilitate protections on the tenant's behalf. Project sponsors must follow the documentation specifications in 24 CFR 5.2007, including the confidentiality requirements in 24 CFR 5.2007(c). The project sponsor (or the grantee if the grantee is directly administering HOPWA assistance) is also responsible for determining on a case-by-case basis whether to provide new tenant-based rental assistance to a remaining tenant if lease bifurcation or an emergency transfer results in division of the household.
</P>
<P>(B) The grantee or project sponsor is responsible for ensuring that the housing owner or manager develops and uses a HOPWA lease addendum with VAWA protections and is made aware of the option to bifurcate a lease in accordance with § 574.460 and 24 CFR 5.2009.
</P>
<P>(c) <I>Effective date.</I> The core statutory protections of VAWA that prohibit denial or termination of assistance or eviction because an applicant or tenant is a victim of domestic violence, dating violence, sexual assault, or stalking applied upon enactment of VAWA 2013 on March 7, 2013. For formula grants, compliance with the VAWA regulatory requirements under this section and 24 CFR part 5, subpart L, are required for any project covered under § 574.604(a) for which the date of the HOPWA funding commitment is made on or after <I>December 16, 2016.</I> For competitive grants, compliance with the VAWA regulatory requirements under this section and 24 CFR part 5, subpart L, are required for awards made on or after <I>December 16, 2016.</I>
</P>
<P>(d) <I>Notification requirements.</I> (1) As provided in paragraph (b) of this section, the grantee is responsible for ensuring that the notice of occupancy rights and certification form described in 24 CFR 5.2005(a) is provided to each person receiving project-based or tenant-based rental assistance under HOPWA or residing in rental housing assisted under the eligible activities described in § 574.604(a) at the following times:
</P>
<P>(i) At the time the person is denied rental assistance or admission to a HOPWA-assisted unit;
</P>
<P>(ii) At the time the person is admitted to a HOPWA-assisted unit or is provided rental assistance;
</P>
<P>(iii) With any notification of eviction from the HOPWA-assisted unit or notification of termination of rental assistance; and
</P>
<P>(iv) During the 12-month period following December 16, 2016, either during annual recertification or lease renewal, whichever is applicable, or, if there will be no recertification or lease renewal for a tenant during the first year after the rule takes effect, through other means.
</P>
<P>(2) The grantee is responsible for ensuring that, for each tenant receiving HOPWA tenant-based rental assistance, the owner or manager of the tenant's housing unit commits to provide the notice of occupancy rights and certification form described in 24 CFR 5.2005 with any notification of eviction that the owner or manager provides to the tenant during the period for which the tenant is receiving HOPWA tenant-based rental assistance. This commitment, as well as the confidentiality requirements under 24 CFR 5.2007(c), must be set forth in the VAWA lease term/addendum required under paragraph (f) of this section.
</P>
<P>(e) <I>Definition of reasonable time.</I> For the purpose of 24 CFR 5.2009(b), the reasonable time to establish eligibility or find alternative housing following bifurcation of a lease is the reasonable grace period described in § 574.460.
</P>
<P>(f) <I>VAWA lease term/addendum.</I> As provided in paragraph (b) of this section, the grantee or project sponsor is responsible for ensuring that the housing or facility owner or manager, as applicable, develops and uses a VAWA lease term/addendum to incorporate all requirements that apply to the housing or facility owner or manager under 24 CFR part 5, subpart L, and this section, including the prohibited bases for eviction under 24 CFR 5.2005(b), the provisions regarding construction of lease terms and terms of assistance under 24 CFR 5.2005(c), and the confidentiality of documentation submitted by tenants requesting emergency transfers and of each tenant's housing location consistent with 24 CFR 5.2007(c). The VAWA lease term/addendum must also provide that the tenant may terminate the lease without penalty if a determination is made that the tenant has met the conditions for an emergency transfer under 24 CFR 5.2005(e). The grantee or project sponsor is responsible for ensuring that the housing or facility owner, or manager, as applicable, adds the VAWA lease term/addendum to the leases for all HOPWA-assisted units and the leases for all eligible persons receiving HOPWA tenant-based rental assistance.
</P>
<CITA TYPE="N">[81 FR 80806, Nov. 16, 2016]






</CITA>
</DIV8>


<DIV8 N="§ 574.605" NODE="24:3.1.1.3.5.7.1.4" TYPE="SECTION">
<HEAD>§ 574.605   Applicability of uniform administrative requirements, cost principles, and audit requirements for Federal awards.</HEAD>
<P>The provisions of 2 CFR part 200, “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards”, apply to HOPWA grants.
</P>
<CITA TYPE="N">[80 FR 75938, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 574.625" NODE="24:3.1.1.3.5.7.1.5" TYPE="SECTION">
<HEAD>§ 574.625   Conflict of interest.</HEAD>
<P>(a) In addition to the conflict of interest requirements in 2 CFR 200.317 (for recipients and subrecipients that are States) and 2 CFR 200.318 (for recipients and subrecipients that are not States), no person who is an employee, agent, consultant, officer, or elected or appointed official of the grantee or project sponsor and who exercises or has exercised any functions or responsibilities with respect to assisted activities, or who is in a position to participate in a decision making process or gain inside information with regard to such activities, may obtain a financial interest or benefit from the activity, or have an interest in any contract, subcontract, or agreement with respect thereto, or the proceeds thereunder, either for himself or herself or for those with whom he or she has family or business ties, during his or her tenure or for one year thereafter.
</P>
<P>(b) <I>Exceptions: Threshold requirements.</I> Upon the written request of the recipient, HUD may grant an exception to the provisions of paragraph (a) of this section when it determines that the exception will serve to further the purposes of the HOPWA program and the effective and efficient administration of the recipient's program or project. An exception may be considered only after the recipient has provided the following:
</P>
<P>(1) A disclosure of the nature of the conflict, accompanied by an assurance that there has been public disclosure of the conflict and a description of how the public disclosure was made; and
</P>
<P>(2) An opinion of the recipient's attorney that the interest for which the exception is sought would not violate State or local law.
</P>
<P>(c) <I>Factors to be considered for exceptions.</I> In determining whether to grant a requested exception after the recipient has satisfactorily met the requirements of paragraph (b) of this section, HUD will consider the cumulative effect of the following factors, where applicable:
</P>
<P>(1) Whether the exception would provide a significant cost benefit or an essential degree of expertise to the program or project that would otherwise not be available;
</P>
<P>(2) Whether the person affected is a member of a group or class of eligible persons and the exception will permit such person to receive generally the same interests or benefits as are being made available or provided to the group or class;
</P>
<P>(3) Whether the affected person has withdrawn from his or her functions or responsibilities, or the decisionmaking process with respect to the specific assisted activity in question;
</P>
<P>(4) Whether the interest or benefit was present before the affected person was in a position as described in paragraph (a) of this section;
</P>
<P>(5) Whether undue hardship will result either to the recipient or the person affected when weighed against the public interest served by avoiding the prohibited conflict; and
</P>
<P>(6) Any other relevant considerations.
</P>
<CITA TYPE="N">[57 FR 61740, Dec. 28, 1992, as amended at 80 FR 75938, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 574.630" NODE="24:3.1.1.3.5.7.1.6" TYPE="SECTION">
<HEAD>§ 574.630   Displacement, relocation and real property acquisition.</HEAD>
<P>(a) <I>Minimizing displacement.</I> Consistent with the other goals and objectives of this part, grantees and project sponsors must assure that they have taken all reasonable steps to minimize the displacement of persons (families, individuals, businesses, nonprofit organizations, and farms) as a result of a project assisted under this part.
</P>
<P>(b) <I>Relocation assistance for displaced persons.</I> A displaced person (defined in paragraph (f) of this section) must be provided relocation assistance at the levels described in, and in accordance with the requirements of, the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA) (42 U.S.C. 4601-4655) and implementing regulations at 49 CFR part 24.
</P>
<P>(c) <I>Real property acquisition requirements.</I> The acquisition of real property for a project is subject to the URA and the requirements described in 49 CFR part 24, subpart B.
</P>
<P>(d) <I>Appeals.</I> A person who disagrees with the grantee's or project sponsor's determination concerning whether the person qualifies as a “displaced person,” or the amount of relocation assistance for which the person is eligible, may file a written appeal of that determination with the grantee. A low-income person who is dissatisfied with the grantee's determination on his or her appeal may submit a written request for review of that determination to the HUD Field Office.
</P>
<P>(e) <I>Responsibility of grantee.</I> (1) Each grantee shall certify (i.e., provide assurance of compliance as required by 49 CFR part 24) that it will comply with the URA, the regulations at 49 CFR part 24, and the requirements of this section, and shall ensure such compliance notwithstanding any third party's contractual obligation to the grantee to comply with these provisions.
</P>
<P>(2) The cost of required relocation assistance is an eligible project cost in the same manner and to the same extent as other project costs. Such costs also may be paid for with funds available from other sources.
</P>
<P>(3) The grantee shall maintain records in sufficient detail to demonstrate compliance with these provisions.
</P>
<P>(f) <I>Definition of displaced person.</I> (1) For purposes of this section, the term “displaced person” means a person (family, individual, business, nonprofit organization, or farm) that moves from real property, or moves personal property from real property, permanently, as a direct result of acquisition, rehabilitation, or demolition for a project assisted under this part. This includes any permanent, involuntary move for an assisted project including any permanent move for an assisted project, including any permanent move from the real property that is made:
</P>
<P>(i) After notice by the grantee, project sponsor, or property owner to move permanently from the property, if the move occurs on or after the date that the grantee submits to HUD an application for assistance that is later approved and funded;
</P>
<P>(ii) Before the submission of the application to HUD, if the grantee, project sponsor, or HUD determines that the displacement resulted directly from acquisition, rehabilitation, or demolition for the assisted project; or
</P>
<P>(iii) By a tenant-occupant of a dwelling unit, if any one of the following three situations occurs:
</P>
<P>(A) The tenant moves after the “initiation of negotiations” and the move occurs before the tenant has been provided written notice offering him or her the opportunity to lease and occupy a suitable, decent, safe and sanitary dwelling in the same building/complex, under reasonable terms and conditions, upon completion of the project. Such reasonable terms and conditions include a monthly rent and estimated average monthly utility costs that do not exceed the greater of:
</P>
<P>(<I>1</I>) The tenant's monthly rent before the initiation of negotiations and estimated average utility costs, or 
</P>
<P>(<I>2</I>) 30 percent of gross household income; or
</P>
<P>(B) The tenant is required to relocate temporarily, does not return to the building/complex and either:
</P>
<P>(<I>1</I>) The tenant is not offered payment for all reasonable out-of-pocket expenses incurred in connection with the temporary relocation, or 
</P>
<P>(<I>2</I>) Other conditions of the temporary relocation are not reasonable; or 
</P>
<P>(C) The tenant is required to move to another unit in the same building/complex but is not offered reimbursement for all reasonable out-of-pocket expenses incurred in connection with the move, or other conditions of the move are not reasonable.
</P>
<P>(2) Notwithstanding the provisions of paragraph (f)(1) of this section, a person does not qualify as a “displaced person” (and is not eligible for relocation assistance under the URA or this section), if:
</P>
<P>(i) The person has been evicted for serious or repeated violation of the terms and conditions of the lease or occupancy agreement, violation or applicable Federal, State or local law, or other good cause, and HUD determines that the eviction was not undertaken for the purposes of evading the obligation to provide relocation assistance;
</P>
<P>(ii) The person moved into the property after the submission of the application and, before signing a lease and commencing occupancy, was provided written notice of the project, its possible impact on the person (e.g., the person may be displaced, temporarily relocated, or suffer a rent increase) and the fact that the person would not qualify as a “displaced person” (or for any assistance provided under this section), if the project is approved;
</P>
<P>(iii) The person is ineligible under 49 CFR 24.2(g)(2); or 
</P>
<P>(iv) HUD determines that the person was not displaced as a direct result of acquisition, rehabilitation, or demolition for the project.
</P>
<P>(3) The grantee or project sponsor may request, at any time, HUD's determination of whether a displacement is or would be covered under this section.
</P>
<P>(g) <I>Definition of initiation of negotiations.</I> For purposes of determining the formula for computing the replacement housing assistance to be provided to a residential tenant displaced as a direct result of privately undertaken rehabilitation, demolition, or acquisition of the real property, the term “initiation of negotiations” means the execution of the agreement between the grantee and the project sponsor.


</P>
</DIV8>


<DIV8 N="§ 574.635" NODE="24:3.1.1.3.5.7.1.7" TYPE="SECTION">
<HEAD>§ 574.635   Lead-based paint.</HEAD>
<P>The Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and implementing regulations at part 35, subparts A, B, H, J, K, M, and R of this part apply to activities under this program.
</P>
<CITA TYPE="N">[64 FR 50226, Sept. 15, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 574.640" NODE="24:3.1.1.3.5.7.1.8" TYPE="SECTION">
<HEAD>§ 574.640   Flood insurance protection.</HEAD>
<P>No property to be assisted under this part may be located in an area that has been identified by the Federal Emergency Management Agency (FEMA) as having special flood hazards, unless:
</P>
<P>(a)(1) The community in which the area is situated is participating in the National Flood Insurance Program and the regulations thereunder (44 CFR parts 59 through 79); or
</P>
<P>(2) Less than a year has passed since FEMA notification regarding such hazards; and
</P>
<P>(b) The grantee will ensure that flood insurance on the structure is obtained in compliance with section 102(a) of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4001 <I>et seq.</I>).


</P>
</DIV8>


<DIV8 N="§ 574.645" NODE="24:3.1.1.3.5.7.1.9" TYPE="SECTION">
<HEAD>§ 574.645   Coastal barriers.</HEAD>
<P>In accordance with the Coastal Barrier Resources Act, 16 U.S.C. 3501, no financial assistance under this part may be made available within the Coastal Barrier Resources System.


</P>
</DIV8>


<DIV8 N="§ 574.650" NODE="24:3.1.1.3.5.7.1.10" TYPE="SECTION">
<HEAD>§ 574.650   Audit.</HEAD>
<P>Grantees and project sponsors are subject to the audit requirements set forth in 2 CFR part 200, subpart F.
</P>
<CITA TYPE="N">[80 FR 75938, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 574.655" NODE="24:3.1.1.3.5.7.1.11" TYPE="SECTION">
<HEAD>§ 574.655   Wage rates.</HEAD>
<P>The provisions of the Davis-Bacon Act (40 U.S.C. 276a-276a-5) do not apply to this program, except where funds received under this part are combined with funds from other Federal programs that are subject to the Act. 
</P>
<CITA TYPE="N">[59 FR 17201, Apr. 11, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 574.660" NODE="24:3.1.1.3.5.7.1.12" TYPE="SECTION">
<HEAD>§ 574.660   Housing counseling.</HEAD>
<P>Housing counseling, as defined in § 5.100, that is funded with or provided in connection with HOPWA funds must be carried out in accordance with § 5.111. When grantees provide housing services to eligible persons (including persons undergoing relocation) that are incidental to a larger set of holistic case management services, these services do not meet the definition of housing counseling, as defined in § 5.100, and therefore are not required to be carried out in accordance with the certification requirements of § 5.111.
</P>
<CITA TYPE="N">[81 FR 90659, Dec. 14, 2016, as amended at 82 FR 8811, Jan. 31, 2017]






</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="576" NODE="24:3.1.1.3.6" TYPE="PART">
<HEAD>PART 576—EMERGENCY SOLUTIONS GRANTS PROGRAM
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1701x, 1701 x-1; 42 U.S.C. 11371 <I>et seq.,</I> 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>76 FR 75974, Dec. 5, 2011, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:3.1.1.3.6.1" TYPE="SUBPART">
<HEAD>Subpart A—General Provisions</HEAD>


<DIV8 N="§ 576.1" NODE="24:3.1.1.3.6.1.1.1" TYPE="SECTION">
<HEAD>§ 576.1   Applicability and purpose.</HEAD>
<P>This part implements the Emergency Solutions Grants (ESG) program authorized by subtitle B of title IV of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11371-11378). The program authorizes the Department of Housing and Urban Development (HUD) to make grants to States, units of general purpose local government, and territories for the rehabilitation or conversion of buildings for use as emergency shelter for the homeless, for the payment of certain expenses related to operating emergency shelters, for essential services related to emergency shelters and street outreach for the homeless, and for homelessness prevention and rapid re-housing assistance.


</P>
</DIV8>


<DIV8 N="§ 576.2" NODE="24:3.1.1.3.6.1.1.2" TYPE="SECTION">
<HEAD>§ 576.2   Definitions.</HEAD>
<P><I>At risk of homelessness</I> means: (1) An individual or family who:
</P>
<P>(i) Has an annual income below 30 percent of median family income for the area, as determined by HUD;
</P>
<P>(ii) Does not have sufficient resources or support networks, <I>e.g.,</I> family, friends, faith-based or other social networks, immediately available to prevent them from moving to an emergency shelter or another place described in paragraph (1) of the “homeless” definition in this section; and
</P>
<P>(iii) Meets one of the following conditions:
</P>
<P>(A) Has moved because of economic reasons two or more times during the 60 days immediately preceding the application for homelessness prevention assistance;
</P>
<P>(B) Is living in the home of another because of economic hardship;
</P>
<P>(C) Has been notified in writing that their right to occupy their current housing or living situation will be terminated within 21 days after the date of application for assistance;
</P>
<P>(D) Lives in a hotel or motel and the cost of the hotel or motel stay is not paid by charitable organizations or by Federal, State, or local government programs for low-income individuals;
</P>
<P>(E) Lives in a single-room occupancy or efficiency apartment unit in which there reside more than two persons or lives in a larger housing unit in which there reside more than 1.5 persons reside per room, as defined by the U.S. Census Bureau;
</P>
<P>(F) Is exiting a publicly funded institution, or system of care (such as a health-care facility, a mental health facility, foster care or other youth facility, or correction program or institution); or
</P>
<P>(G) Otherwise lives in housing that has characteristics associated with instability and an increased risk of homelessness, as identified in the recipient's approved consolidated plan;
</P>
<P>(2) A child or youth who does not qualify as “homeless” under this section, but qualifies as “homeless” under section 387(3) of the Runaway and Homeless Youth Act (42 U.S.C. 5732a(3)), section 637(11) of the Head Start Act (42 U.S.C. 9832(11)), section 41403(6) of the Violence Against Women Act of 1994 (42 U.S.C. 14043e-2(6)), section 330(h)(5)(A) of the Public Health Service Act (42 U.S.C. 254b(h)(5)(A)), section 3(m) of the Food and Nutrition Act of 2008 (7 U.S.C. 2012(m)), or section 17(b)(15) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(b)(15)); or
</P>
<P>(3) A child or youth who does not qualify as “homeless” under this section, but qualifies as “homeless” under section 725(2) of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11434a(2)), and the parent(s) or guardian(s) of that child or youth if living with her or him.
</P>
<P><I>Consolidated plan</I> means a plan prepared in accordance with 24 CFR part 91. An <I>approved consolidated</I> plan means a consolidated plan that has been approved by HUD in accordance with 24 CFR part 91.
</P>
<P><I>Continuum of Care</I> means the group composed of representatives of relevant organizations, which generally includes nonprofit homeless providers; victim service providers; faith-based organizations; governments; businesses; advocates; public housing agencies; school districts; social service providers; mental health agencies; hospitals; universities; affordable housing developers; law enforcement; organizations that serve homeless and formerly homeless veterans, and homeless and formerly homeless persons that are organized to plan for and provide, as necessary, a system of outreach, engagement, and assessment; emergency shelter; rapid re-housing; transitional housing; permanent housing; and prevention strategies to address the various needs of homeless persons and persons at risk of homelessness for a specific geographic area.
</P>
<P><I>Emergency shelter</I> means any facility, the primary purpose of which is to provide a temporary shelter for the homeless in general or for specific populations of the homeless and which does not require occupants to sign leases or occupancy agreements. Any project funded as an emergency shelter under a Fiscal Year 2010 Emergency Solutions grant may continue to be funded under ESG.
</P>
<P><I>Homeless</I> means:
</P>
<P>(1) An individual or family who lacks a fixed, regular, and adequate nighttime residence, meaning:
</P>
<P>(i) An individual or family with a primary nighttime residence that is a public or private place not designed for or ordinarily used as a regular sleeping accommodation for human beings, including a car, park, abandoned building, bus or train station, airport, or camping ground;
</P>
<P>(ii) An individual or family living in a supervised publicly or privately operated shelter designated to provide temporary living arrangements (including congregate shelters, transitional housing, and hotels and motels paid for by charitable organizations or by federal, state, or local government programs for low-income individuals); or
</P>
<P>(iii) An individual who is exiting an institution where he or she resided for 90 days or less and who resided in an emergency shelter or place not meant for human habitation immediately before entering that institution;
</P>
<P>(2) An individual or family who will imminently lose their primary nighttime residence, provided that:
</P>
<P>(i) The primary nighttime residence will be lost within 14 days of the date of application for homeless assistance;
</P>
<P>(ii) No subsequent residence has been identified; and
</P>
<P>(iii) The individual or family lacks the resources or support networks, <I>e.g.,</I> family, friends, faith-based or other social networks, needed to obtain other permanent housing;
</P>
<P>(3) Unaccompanied youth under 25 years of age, or families with children and youth, who do not otherwise qualify as homeless under this definition, but who:
</P>
<P>(i) Are defined as homeless under section 387 of the Runaway and Homeless Youth Act (42 U.S.C. 5732a), section 637 of the Head Start Act (42 U.S.C. 9832), section 41403 of the Violence Against Women Act of 1994 (42 U.S.C. 14043e-2), section 330(h) of the Public Health Service Act (42 U.S.C. 254b(h)), section 3 of the Food and Nutrition Act of 2008 (7 U.S.C. 2012), section 17(b) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(b)) or section 725 of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11434a);
</P>
<P>(ii) Have not had a lease, ownership interest, or occupancy agreement in permanent housing at any time during the 60 days immediately preceding the date of application for homeless assistance;
</P>
<P>(iii) Have experienced persistent instability as measured by two moves or more during the 60-day period immediately preceding the date of applying for homeless assistance; and
</P>
<P>(iv) Can be expected to continue in such status for an extended period of time because of chronic disabilities, chronic physical health or mental health conditions, substance addiction, histories of domestic violence or childhood abuse (including neglect), the presence of a child or youth with a disability, or two or more barriers to employment, which include the lack of a high school degree or General Education Development (GED), illiteracy, low English proficiency, a history of incarceration or detention for criminal activity, and a history of unstable employment; or
</P>
<P>(4) Any individual or family who:
</P>
<P>(i) Is fleeing, or is attempting to flee, domestic violence, dating violence, sexual assault, stalking, or other dangerous or life-threatening conditions that relate to violence against the individual or a family member, including a child, that has either taken place within the individual's or family's primary nighttime residence or has made the individual or family afraid to return to their primary nighttime residence;
</P>
<P>(ii) Has no other residence; and
</P>
<P>(iii) Lacks the resources or support networks, <I>e.g.,</I> family, friends, faith-based or other social networks, to obtain other permanent housing.
</P>
<P><I>Homeless Management Information System (HMIS)</I> means the information system designated by the Continuum of Care to comply with the HUD's data collection, management, and reporting standards and used to collect client-level data and data on the provision of housing and services to homeless individuals and families and persons at-risk of homelessness.
</P>
<P><I>Metropolitan city</I> means a city that was classified as a metropolitan city under 42 U.S.C. 5302(a) for the fiscal year immediately preceding the fiscal year for which ESG funds are made available. This term includes the District of Columbia.
</P>
<P><I>Private nonprofit organization</I> means a private nonprofit organization that is a secular or religious organization described in section 501(c) of the Internal Revenue Code of 1986 and which is exempt from taxation under subtitle A of the Code, has an accounting system and a voluntary board, and practices nondiscrimination in the provision of assistance. A private nonprofit organization does not include a governmental organization, such as a public housing agency or housing finance agency.
</P>
<P><I>Program income</I> shall have the meaning provided in 2 CFR 200.80. Program income includes any amount of a security or utility deposit returned to the recipient or subrecipient.
</P>
<P><I>Program participant</I> means an individual or family who is assisted under ESG program.
</P>
<P><I>Program year</I> means the consolidated program year established by the recipient under 24 CFR part 91.
</P>
<P><I>Recipient</I> means any State, territory, metropolitan city, or urban county, or in the case of reallocation, any unit of general purpose local government that is approved by HUD to assume financial responsibility and enters into a grant agreement with HUD to administer assistance under this part.
</P>
<P><I>State</I> means each of the several States and the Commonwealth of Puerto Rico.
</P>
<P><I>Subrecipient</I> means a unit of general purpose local government or private nonprofit organization to which a recipient makes available ESG funds.
</P>
<P><I>Territory</I> means each of the following: the Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands.
</P>
<P><I>Unit of general purpose local government</I> means any city, county, town, township, parish, village, or other general purpose political subdivision of a State.
</P>
<P><I>Urban county</I> means a county that was classified as an urban county under 42 U.S.C. 5302(a) for the fiscal year immediately preceding the fiscal year for which ESG funds are made available.
</P>
<P><I>Victim service provider</I> means a private nonprofit organization whose primary mission is to provide services to victims of domestic violence, dating violence, sexual assault, or stalking. This term includes rape crisis centers, battered women's shelters, domestic violence transitional housing programs, and other programs.
</P>
<CITA TYPE="N">[76 FR 75974, Dec. 5, 2011, as amended at 80 FR 75939, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 576.3" NODE="24:3.1.1.3.6.1.1.3" TYPE="SECTION">
<HEAD>§ 576.3   Allocation of funding.</HEAD>
<P>(a) <I>Territories.</I> HUD will set aside for allocation to the territories up to 0.2 percent, but not less than 0.1 percent, of the total amount of each appropriation under this part in any fiscal year. HUD will allocate this set-aside amount to each territory based on its proportionate share of the total population of all territories and its rate of compliance with the most recent expenditure deadline under § 576.203.
</P>
<P>(b) <I>States, metropolitan cities, and urban counties.</I> HUD will allocate the amounts that remain after the set-aside to territories under paragraph (a) of this section to States, metropolitan cities, and urban counties, as follows:
</P>
<P>(1) HUD will provide that the percentage of the total amount available for allocation to each State, metropolitan city, or urban county is equal to the percentage of the total amount available under section 106 of the Housing and Community Development Act of 1974 for the prior fiscal year that was allocated to that State, metropolitan city, or urban county.
</P>
<P>(2) Except as otherwise provided by law, if the amount a metropolitan city or urban county would be allocated under paragraph (b)(1) is less than 0.05 percent of the total fiscal year appropriation for ESG, that amount will be added to the allocation for the State in which the city or county is located.
</P>
<P>(c) <I>Notification of allocation amount.</I> HUD will notify each State, metropolitan city, urban county, and territory that is eligible to receive an allocation under this section of the amount of its allocation.


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:3.1.1.3.6.2" TYPE="SUBPART">
<HEAD>Subpart B—Program Components and Eligible Activities</HEAD>


<DIV8 N="§ 576.100" NODE="24:3.1.1.3.6.2.1.1" TYPE="SECTION">
<HEAD>§ 576.100   General provisions and expenditure limits.</HEAD>
<P>(a) ESG funds may be used for five program components: street outreach, emergency shelter, homelessness prevention, rapid re-housing assistance, and HMIS; as well as administrative activities. The five program components and the eligible activities that may be funded under each are set forth in § 576.101 through § 576.107. Eligible administrative activities are set forth in § 576.108.
</P>
<P>(b) The total amount of the recipient's fiscal year grant that may be used for street outreach and emergency shelter activities cannot exceed the greater of:
</P>
<P>(1) 60 percent of the recipient's fiscal year grant; or
</P>
<P>(2) The amount of Fiscal Year 2010 grant funds committed for homeless assistance activities.
</P>
<P>(c) The total amount of ESG funds that may be used for administrative activities cannot exceed 7.5 percent of the recipient's fiscal year grant.
</P>
<P>(d) Subject to the cost principles in 2 CFR part 200, subpart E, and other requirements in this part, employee compensation and other overhead costs directly related to carrying out street outreach, emergency shelter, homelessness prevention, rapid re-housing, and HMIS are eligible costs of those program components. These costs are not subject to the expenditure limit in paragraph (c) of this section.
</P>
<CITA TYPE="N">[76 FR 75974, Dec. 5, 2011, as amended at 80 FR 75939, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 576.101" NODE="24:3.1.1.3.6.2.1.2" TYPE="SECTION">
<HEAD>§ 576.101   Street outreach component.</HEAD>
<P>(a) <I>Eligible costs.</I> Subject to the expenditure limit in § 576.100(b), ESG funds may be used for costs of providing essential services necessary to reach out to unsheltered homeless people; connect them with emergency shelter, housing, or critical services; and provide urgent, nonfacility-based care to unsheltered homeless people who are unwilling or unable to access emergency shelter, housing, or an appropriate health facility. For the purposes of this section, the term “unsheltered homeless people” means individuals and families who qualify as homeless under paragraph (1)(i) of the “homeless” definition under § 576.2. The eligible costs and requirements for essential services consist of:
</P>
<P>(1) <I>Engagement.</I> The costs of activities to locate, identify, and build relationships with unsheltered homeless people and engage them for the purpose of providing immediate support, intervention, and connections with homeless assistance programs and/or mainstream social services and housing programs. These activities consist of making an initial assessment of needs and eligibility; providing crisis counseling; addressing urgent physical needs, such as providing meals, blankets, clothes, or toiletries; and actively connecting and providing information and referrals to programs targeted to homeless people and mainstream social services and housing programs, including emergency shelter, transitional housing, community-based services, permanent supportive housing, and rapid re-housing programs. Eligible costs include the cell phone costs of outreach workers during the performance of these activities.
</P>
<P>(2) <I>Case management.</I> The cost of assessing housing and service needs, arranging, coordinating, and monitoring the delivery of individualized services to meet the needs of the program participant. Eligible services and activities are as follows: using the centralized or coordinated assessment system as required under § 576.400(d); conducting the initial evaluation required under § 576.401(a), including verifying and documenting eligibility; counseling; developing, securing and coordinating services; obtaining Federal, State, and local benefits; monitoring and evaluating program participant progress; providing information and referrals to other providers; and developing an individualized housing and service plan, including planning a path to permanent housing stability.
</P>
<P>(3) <I>Emergency health services.</I> (i) Eligible costs are for the direct outpatient treatment of medical conditions and are provided by licensed medical professionals operating in community-based settings, including streets, parks, and other places where unsheltered homeless people are living.
</P>
<P>(ii) ESG funds may be used only for these services to the extent that other appropriate health services are inaccessible or unavailable within the area.
</P>
<P>(iii) Eligible treatment consists of assessing a program participant's health problems and developing a treatment plan; assisting program participants to understand their health needs; providing directly or assisting program participants to obtain appropriate emergency medical treatment; and providing medication and follow-up services.
</P>
<P>(4) <I>Emergency mental health services.</I> (i) Eligible costs are the direct outpatient treatment by licensed professionals of mental health conditions operating in community-based settings, including streets, parks, and other places where unsheltered people are living.
</P>
<P>(ii) ESG funds may be used only for these services to the extent that other appropriate mental health services are inaccessible or unavailable within the community.
</P>
<P>(iii) Mental health services are the application of therapeutic processes to personal, family, situational, or occupational problems in order to bring about positive resolution of the problem or improved individual or family functioning or circumstances.
</P>
<P>(iv) Eligible treatment consists of crisis interventions, the prescription of psychotropic medications, explanation about the use and management of medications, and combinations of therapeutic approaches to address multiple problems.
</P>
<P>(5) <I>Transportation.</I> The transportation costs of travel by outreach workers, social workers, medical professionals, or other service providers are eligible, provided that this travel takes place during the provision of services eligible under this section. The costs of transporting unsheltered people to emergency shelters or other service facilities are also eligible. These costs include the following:
</P>
<P>(i) The cost of a program participant's travel on public transportation;
</P>
<P>(ii) If service workers use their own vehicles, mileage allowance for service workers to visit program participants;
</P>
<P>(iii) The cost of purchasing or leasing a vehicle for the recipient or subrecipient in which staff transports program participants and/or staff serving program participants, and the cost of gas, insurance, taxes and maintenance for the vehicle; and
</P>
<P>(iv) The travel costs of recipient or subrecipient staff to accompany or assist program participants to use public transportation.
</P>
<P>(6) <I>Services for special populations.</I> ESG funds may be used to provide services for homeless youth, victim services, and services for people living with HIV/AIDS, so long as the costs of providing these services are eligible under paragraphs (a)(1) through (a)(5) of this section. The term <I>victim services</I> means services that assist program participants who are victims of domestic violence, dating violence, sexual assault, or stalking, including services offered by rape crisis centers and domestic violence shelters, and other organizations with a documented history of effective work concerning domestic violence, dating violence, sexual assault, or stalking.
</P>
<P>(b) <I>Minimum period of use.</I> The recipient or subrecipient must provide services to homeless individuals and families for at least the period during which ESG funds are provided.
</P>
<P>(c) <I>Maintenance of effort.</I> (1) If the recipient or subrecipient is a unit of general purpose local government, its ESG funds cannot be used to replace funds the local government provided for street outreach and emergency shelter services during the immediately preceding 12-month period, unless HUD determines that the unit of general purpose local government is in a severe financial deficit.
</P>
<P>(2) Upon the recipient's request, HUD will determine whether the unit of general purpose local government is in a severe financial deficit, based on the recipient's demonstration of each of the following:
</P>
<P>(i) The average poverty rate in the unit of general purpose local government's jurisdiction was equal to or greater than 125 percent of the average national poverty rate, during the calendar year for which the most recent data are available, as determined according to information from the U.S. Census Bureau.
</P>
<P>(ii) The average per-capita income in the unit of general purpose local government's jurisdiction was less than 75 percent of the average national per-capita income, during the calendar year for which the most recent data are available, as determined according to information from the Census Bureau.
</P>
<P>(iii) The unit of general purpose local government has a current annual budget deficit that requires a reduction in funding for services for homeless people.
</P>
<P>(iv) The unit of general purpose local government has taken all reasonable steps to prevent a reduction in funding of services for homeless people. Reasonable steps may include steps to increase revenue generation, steps to maximize cost savings, or steps to reduce expenditures in areas other than services for homeless people.


</P>
</DIV8>


<DIV8 N="§ 576.102" NODE="24:3.1.1.3.6.2.1.3" TYPE="SECTION">
<HEAD>§ 576.102   Emergency shelter component.</HEAD>
<P>(a) <I>General.</I> Subject to the expenditure limit in § 576.100(b), ESG funds may be used for costs of providing essential services to homeless families and individuals in emergency shelters, renovating buildings to be used as emergency shelter for homeless families and individuals, and operating emergency shelters.
</P>
<P>(1) <I>Essential services.</I> ESG funds may be used to provide essential services to individuals and families who are in an emergency shelter, as follows:
</P>
<P>(i) <I>Case management.</I> The cost of assessing, arranging, coordinating, and monitoring the delivery of individualized services to meet the needs of the program participant is eligible. Component services and activities consist of:
</P>
<P>(A) Using the centralized or coordinated assessment system as required under § 576.400(d);
</P>
<P>(B) Conducting the initial evaluation required under § 576.401(a), including verifying and documenting eligibility;
</P>
<P>(C) Counseling;
</P>
<P>(D) Developing, securing, and coordinating services and obtaining Federal, State, and local benefits;
</P>
<P>(E) Monitoring and evaluating program participant progress;
</P>
<P>(F) Providing information and referrals to other providers;
</P>
<P>(G) Providing ongoing risk assessment and safety planning with victims of domestic violence, dating violence, sexual assault, and stalking; and
</P>
<P>(H) Developing an individualized housing and service plan, including planning a path to permanent housing stability.
</P>
<P>(ii) <I>Child care.</I> The costs of child care for program participants, including providing meals and snacks, and comprehensive and coordinated sets of appropriate developmental activities, are eligible. The children must be under the age of 13, unless they are disabled. Disabled children must be under the age of 18. The child-care center must be licensed by the jurisdiction in which it operates in order for its costs to be eligible.
</P>
<P>(iii) <I>Education services.</I> When necessary for the program participant to obtain and maintain housing, the costs of improving knowledge and basic educational skills are eligible. Services include instruction or training in consumer education, health education, substance abuse prevention, literacy, English as a Second Language, and General Educational Development (GED). Component services or activities are screening, assessment and testing; individual or group instruction; tutoring; provision of books, supplies and instructional material; counseling; and referral to community resources.
</P>
<P>(iv) <I>Employment assistance and job training.</I> The costs of employment assistance and job training programs are eligible, including classroom, online, and/or computer instruction; on-the-job instruction; and services that assist individuals in securing employment, acquiring learning skills, and/or increasing earning potential. The cost of providing reasonable stipends to program participants in employment assistance and job training programs is an eligible cost. Learning skills include those skills that can be used to secure and retain a job, including the acquisition of vocational licenses and/or certificates. Services that assist individuals in securing employment consist of employment screening, assessment, or testing; structured job skills and job-seeking skills; special training and tutoring, including literacy training and prevocational training; books and instructional material; counseling or job coaching; and referral to community resources.
</P>
<P>(v) <I>Outpatient health services.</I> Eligible costs are for the direct outpatient treatment of medical conditions and are provided by licensed medical professionals. Emergency Solutions Grant (ESG) funds may be used only for these services to the extent that other appropriate health services are unavailable within the community. Eligible treatment consists of assessing a program participant's health problems and developing a treatment plan; assisting program participants to understand their health needs; providing directly or assisting program participants to obtain appropriate medical treatment, preventive medical care, and health maintenance services, including emergency medical services; providing medication and follow-up services; and providing preventive and noncosmetic dental care.
</P>
<P>(vi) <I>Legal services.</I> (A) Eligible costs are the hourly fees for legal advice and representation by attorneys licensed and in good standing with the bar association of the State in which the services are provided, and by person(s) under the supervision of the licensed attorney, regarding matters that interfere with the program participant's ability to obtain and retain housing.
</P>
<P>(B) Emergency Solutions Grant (ESG) funds may be used only for these services to the extent that other appropriate legal services are unavailable or inaccessible within the community.
</P>
<P>(C) Eligible subject matters are child support, guardianship, paternity, emancipation, and legal separation, orders of protection and other civil remedies for victims of domestic violence, dating violence, sexual assault, and stalking, appeal of veterans and public benefit claim denials, and the resolution of outstanding criminal warrants.
</P>
<P>(D) Component services or activities may include client intake, preparation of cases for trial, provision of legal advice, representation at hearings, and counseling.
</P>
<P>(E) Fees based on the actual service performed (<I>i.e.,</I> fee for service) are also eligible, but only if the cost would be less than the cost of hourly fees. Filing fees and other necessary court costs are also eligible. If the subrecipient is a legal services provider and performs the services itself, the eligible costs are the subrecipient's employees' salaries and other costs necessary to perform the services.
</P>
<P>(F) Legal services for immigration and citizenship matters and issues relating to mortgages are ineligible costs. Retainer fee arrangements and contingency fee arrangements are ineligible costs.
</P>
<P>(vii) <I>Life skills training.</I> The costs of teaching critical life management skills that may never have been learned or have been lost during the course of physical or mental illness, domestic violence, substance use, and homelessness are eligible costs. These services must be necessary to assist the program participant to function independently in the community. Component life skills training are budgeting resources, managing money, managing a household, resolving conflict, shopping for food and needed items, improving nutrition, using public transportation, and parenting.
</P>
<P>(viii) <I>Mental health services.</I> (A) Eligible costs are the direct outpatient treatment by licensed professionals of mental health conditions.
</P>
<P>(B) ESG funds may only be used for these services to the extent that other appropriate mental health services are unavailable or inaccessible within the community.
</P>
<P>(C) Mental health services are the application of therapeutic processes to personal, family, situational, or occupational problems in order to bring about positive resolution of the problem or improved individual or family functioning or circumstances. Problem areas may include family and marital relationships, parent-child problems, or symptom management.
</P>
<P>(D) Eligible treatment consists of crisis interventions; individual, family, or group therapy sessions; the prescription of psychotropic medications or explanations about the use and management of medications; and combinations of therapeutic approaches to address multiple problems.
</P>
<P>(ix) <I>Substance abuse treatment services.</I> (A) Eligible substance abuse treatment services are designed to prevent, reduce, eliminate, or deter relapse of substance abuse or addictive behaviors and are provided by licensed or certified professionals.
</P>
<P>(B) ESG funds may only be used for these services to the extent that other appropriate substance abuse treatment services are unavailable or inaccessible within the community.
</P>
<P>(C) Eligible treatment consists of client intake and assessment, and outpatient treatment for up to 30 days. Group and individual counseling and drug testing are eligible costs. Inpatient detoxification and other inpatient drug or alcohol treatment are not eligible costs.
</P>
<P>(x) <I>Transportation.</I> Eligible costs consist of the transportation costs of a program participant's travel to and from medical care, employment, child care, or other eligible essential services facilities. These costs include the following:
</P>
<P>(A) The cost of a program participant's travel on public transportation;
</P>
<P>(B) If service workers use their own vehicles, mileage allowance for service workers to visit program participants;
</P>
<P>(C) The cost of purchasing or leasing a vehicle for the recipient or subrecipient in which staff transports program participants and/or staff serving program participants, and the cost of gas, insurance, taxes, and maintenance for the vehicle; and
</P>
<P>(D) The travel costs of recipient or subrecipient staff to accompany or assist program participants to use public transportation.
</P>
<P>(xi) <I>Services for special populations.</I> ESG funds may be used to provide services for homeless youth, victim services, and services for people living with HIV/AIDS, so long as the costs of providing these services are eligible under paragraphs (a)(1)(i) through (a)(1)(x) of this section. The term <I>victim services</I> means services that assist program participants who are victims of domestic violence, dating violence, sexual assault, or stalking, including services offered by rape crisis centers and domestic violence shelters, and other organizations with a documented history of effective work concerning domestic violence, dating violence, sexual assault, or stalking.
</P>
<P>(2) <I>Renovation.</I> Eligible costs include labor, materials, tools, and other costs for renovation (including major rehabilitation of an emergency shelter or conversion of a building into an emergency shelter). The emergency shelter must be owned by a government entity or private nonprofit organization.
</P>
<P>(3) <I>Shelter operations.</I> Eligible costs are the costs of maintenance (including minor or routine repairs), rent, security, fuel, equipment, insurance, utilities, food, furnishings, and supplies necessary for the operation of the emergency shelter. Where no appropriate emergency shelter is available for a homeless family or individual, eligible costs may also include a hotel or motel voucher for that family or individual.
</P>
<P>(4) <I>Assistance required under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA).</I> Eligible costs are the costs of providing URA assistance under § 576.408, including relocation payments and other assistance to persons displaced by a project assisted with ESG funds. Persons that receive URA assistance are not considered “program participants” for the purposes of this part, and relocation payments and other URA assistance are not considered “rental assistance” or “housing relocation and stabilization services” for the purposes of this part.
</P>
<P>(b) <I>Prohibition against involuntary family separation.</I> The age, of a child under age 18 must not be used as a basis for denying any family's admission to an emergency shelter that uses Emergency Solutions Grant (ESG) funding or services and provides shelter to families with children under age 18.
</P>
<P>(c) <I>Minimum period of use.</I> (1) <I>Renovated buildings.</I> Each building renovated with ESG funds must be maintained as a shelter for homeless individuals and families for not less than a period of 3 or 10 years, depending on the type of renovation and the value of the building. The “value of the building” is the reasonable monetary value assigned to the building, such as the value assigned by an independent real estate appraiser. The minimum use period must begin on the date the building is first occupied by a homeless individual or family after the completed renovation. A minimum period of use of 10 years, required for major rehabilitation and conversion, must be enforced by a recorded deed or use restriction.
</P>
<P>(i) <I>Major rehabilitation.</I> If the rehabilitation cost of an emergency shelter exceeds 75 percent of the value of the building before rehabilitation, the minimum period of use is 10 years.
</P>
<P>(ii) <I>Conversion.</I> If the cost to convert a building into an emergency shelter exceeds 75 percent of the value of the building after conversion, the minimum period of use is 10 years.
</P>
<P>(iii) <I>Renovation other than major rehabilitation or conversion.</I> In all other cases where ESG funds are used for renovation, the minimum period of use is 3 years.
</P>
<P>(2) <I>Essential services and shelter operations.</I> Where the recipient or subrecipient uses ESG funds solely for essential services or shelter operations, the recipient or subrecipient must provide services or shelter to homeless individuals and families at least for the period during which the ESG funds are provided. The recipient or subrecipient does not need to limit these services or shelter to a particular site or structure, so long as the site or structure serves the same type of persons originally served with the assistance (<I>e.g.,</I> families with children, unaccompanied youth, disabled individuals, or victims of domestic violence) or serves homeless persons in the same area where the recipient or subrecipient originally provided the services or shelter.
</P>
<P>(d) <I>Maintenance of effort.</I> The maintenance of effort requirements under § 576.101(c), which apply to the use of ESG funds for essential services related to street outreach, also apply for the use of such funds for essential services related to emergency shelter.


</P>
</DIV8>


<DIV8 N="§ 576.103" NODE="24:3.1.1.3.6.2.1.4" TYPE="SECTION">
<HEAD>§ 576.103   Homelessness prevention component.</HEAD>
<P>ESG funds may be used to provide housing relocation and stabilization services and short- and/or medium-term rental assistance necessary to prevent an individual or family from moving into an emergency shelter or another place described in paragraph (1) of the “homeless” definition in § 576.2. This assistance, referred to as homelessness prevention, may be provided to individuals and families who meet the criteria under the “at risk of homelessness” definition, or who meet the criteria in paragraph (2), (3), or (4) of the “homeless” definition in § 576.2 and have an annual income below 30 percent of median family income for the area, as determined by HUD. The costs of homelessness prevention are only eligible to the extent that the assistance is necessary to help the program participant regain stability in the program participant's current permanent housing or move into other permanent housing and achieve stability in that housing. Homelessness prevention must be provided in accordance with the housing relocation and stabilization services requirements in § 576.105, the short-term and medium-term rental assistance requirements in § 576.106, and the written standards and procedures established under § 576.400.


</P>
</DIV8>


<DIV8 N="§ 576.104" NODE="24:3.1.1.3.6.2.1.5" TYPE="SECTION">
<HEAD>§ 576.104   Rapid re-housing assistance component.</HEAD>
<P>ESG funds may be used to provide housing relocation and stabilization services and short- and/or medium-term rental assistance as necessary to help a homeless individual or family move as quickly as possible into permanent housing and achieve stability in that housing. This assistance, referred to as rapid re-housing assistance, may be provided to program participants who meet the criteria under paragraph (1) of the “homeless” definition in § 576.2 or who meet the criteria under paragraph (4) of the “homeless” definition and live in an emergency shelter or other place described in paragraph (1) of the “homeless” definition. The rapid re-housing assistance must be provided in accordance with the housing relocation and stabilization services requirements in § 576.105, the short- and medium-term rental assistance requirements in § 576.106, and the written standards and procedures established under § 576.400.


</P>
</DIV8>


<DIV8 N="§ 576.105" NODE="24:3.1.1.3.6.2.1.6" TYPE="SECTION">
<HEAD>§ 576.105   Housing relocation and stabilization services.</HEAD>
<P>(a) <I>Financial assistance costs.</I> Subject to the general conditions under § 576.103 and § 576.104, ESG funds may be used to pay housing owners, utility companies, and other third parties for the following costs:
</P>
<P>(1) <I>Rental application fees.</I> ESG funds may pay for the rental housing application fee that is charged by the owner to all applicants.
</P>
<P>(2) <I>Security deposits.</I> ESG funds may pay for a security deposit that is equal to no more than 2 months' rent.
</P>
<P>(3) <I>Last month's rent.</I> If necessary to obtain housing for a program participant, the last month's rent may be paid from ESG funds to the owner of that housing at the time the owner is paid the security deposit and the first month's rent. This assistance must not exceed one month's rent and must be included in calculating the program participant's total rental assistance, which cannot exceed 24 months during any 3-year period.
</P>
<P>(4) <I>Utility deposits.</I> ESG funds may pay for a standard utility deposit required by the utility company for all customers for the utilities listed in paragraph (5) of this section.
</P>
<P>(5) <I>Utility payments.</I> ESG funds may pay for up to 24 months of utility payments per program participant, per service, including up to 6 months of utility payments in arrears, per service. A partial payment of a utility bill counts as one month. This assistance may only be provided if the program participant or a member of the same household has an account in his or her name with a utility company or proof of responsibility to make utility payments. Eligible utility services are gas, electric, water, and sewage. No program participant shall receive more than 24 months of utility assistance within any 3-year period.
</P>
<P>(6) <I>Moving costs.</I> ESG funds may pay for moving costs, such as truck rental or hiring a moving company. This assistance may include payment of temporary storage fees for up to 3 months, provided that the fees are accrued after the date the program participant begins receiving assistance under paragraph (b) of this section and before the program participant moves into permanent housing. Payment of temporary storage fees in arrears is not eligible.
</P>
<P>(7) If a program participant receiving short- or medium-term rental assistance under § 576.106 meets the conditions for an emergency transfer under 24 CFR 5.2005(e), ESG funds may be used to pay amounts owed for breaking a lease to effect an emergency transfer. These costs are not subject to the 24-month limit on rental assistance under § 576.106.
</P>
<P>(b) <I>Services costs.</I> Subject to the general restrictions under § 576.103 and § 576.104, ESG funds may be used to pay the costs of providing the following services:
</P>
<P>(1) <I>Housing search and placement.</I> Services or activities necessary to assist program participants in locating, obtaining, and retaining suitable permanent housing, include the following:
</P>
<P>(i) Assessment of housing barriers, needs, and preferences;
</P>
<P>(ii) Development of an action plan for locating housing;
</P>
<P>(iii) Housing search;
</P>
<P>(iv) Outreach to and negotiation with owners;
</P>
<P>(v) Assistance with submitting rental applications and understanding leases;
</P>
<P>(vi) Assessment of housing for compliance with Emergency Solutions Grant (ESG) requirements for habitability, lead-based paint, and rent reasonableness;
</P>
<P>(vii) Assistance with obtaining utilities and making moving arrangements; and
</P>
<P>(viii) Tenant counseling.
</P>
<P>(2) <I>Housing stability case management.</I> ESG funds may be used to pay cost of assessing, arranging, coordinating, and monitoring the delivery of individualized services to facilitate housing stability for a program participant who resides in permanent housing or to assist a program participant in overcoming immediate barriers to obtaining housing. This assistance cannot exceed 30 days during the period the program participant is seeking permanent housing and cannot exceed 24 months during the period the program participant is living in permanent housing. Component services and activities consist of:
</P>
<P>(A) Using the centralized or coordinated assessment system as required under § 576.400(d), to evaluate individuals and families applying for or receiving homelessness prevention or rapid re-housing assistance;
</P>
<P>(B) Conducting the initial evaluation required under § 576.401(a), including verifying and documenting eligibility, for individuals and families applying for homelessness prevention or rapid re-housing assistance;
</P>
<P>(C) Counseling;
</P>
<P>(D) Developing, securing, and coordinating services and obtaining Federal, State, and local benefits;
</P>
<P>(E) Monitoring and evaluating program participant progress;
</P>
<P>(F) Providing information and referrals to other providers;
</P>
<P>(G) Developing an individualized housing and service plan, including planning a path to permanent housing stability; and
</P>
<P>(H) Conducting re-evaluations required under § 576.401(b).
</P>
<P>(3) <I>Mediation.</I> ESG funds may pay for mediation between the program participant and the owner or person(s) with whom the program participant is living, provided that the mediation is necessary to prevent the program participant from losing permanent housing in which the program participant currently resides.
</P>
<P>(4) <I>Legal services.</I> ESG funds may pay for legal services, as set forth in § 576.102(a)(1)(vi), except that the eligible subject matters also include landlord/tenant matters, and the services must be necessary to resolve a legal problem that prohibits the program participant from obtaining permanent housing or will likely result in the program participant losing the permanent housing in which the program participant currently resides.
</P>
<P>(5) <I>Credit repair.</I> ESG funds may pay for credit counseling and other services necessary to assist program participants with critical skills related to household budgeting, managing money, accessing a free personal credit report, and resolving personal credit problems. This assistance does not include the payment or modification of a debt.
</P>
<P>(c) <I>Maximum amounts and periods of assistance.</I> The recipient may set a maximum dollar amount that a program participant may receive for each type of financial assistance under paragraph (a) of this section. The recipient may also set a maximum period for which a program participant may receive any of the types of assistance or services under this section. However, except for housing stability case management, the total period for which any program participant may receive the services under paragraph (b) of this section must not exceed 24 months during any 3-year period. The limits on the assistance under this section apply to the total assistance an individual receives, either as an individual or as part of a family.
</P>
<P>(d) <I>Use with other subsidies.</I> Financial assistance under paragraph (a) of this section cannot be provided to a program participant who is receiving the same type of assistance through other public sources or to a program participant who has been provided with replacement housing payments under the URA, during the period of time covered by the URA payments.




</P>
<P>(e) <I>Housing counseling.</I> Housing counseling, as defined in § 5.100, that is funded with or provided in connection with ESG funds must be carried out in accordance with § 5.111. When recipients or subrecipients provide housing services to eligible persons that are incidental to a larger set of holistic case management services, these services do not meet the definition of housing counseling, as defined in § 5.100, and therefore are not required to be carried out in accordance with the certification requirements of § 5.111


</P>
<CITA TYPE="N">[76 FR 75974, Dec. 5, 2011,, as amended at 81 FR 80808, Nov. 16, 2016; 81 FR 90659, Dec. 14, 2016]




</CITA>
</DIV8>


<DIV8 N="§ 576.106" NODE="24:3.1.1.3.6.2.1.7" TYPE="SECTION">
<HEAD>§ 576.106   Short-term and medium-term rental assistance.</HEAD>
<P>(a) <I>General provisions.</I> Subject to the general conditions under § 576.103 and § 576.104, the recipient or subrecipient may provide a program participant with up to 24 months of rental assistance during any 3-year period. This assistance may be short-term rental assistance, medium-term rental assistance, payment of rental arrears, or any combination of this assistance.
</P>
<P>(1) Short-term rental assistance is assistance for up to 3 months of rent.
</P>
<P>(2) Medium-term rental assistance is assistance for more than 3 months but not more than 24 months of rent.
</P>
<P>(3) Payment of rental arrears consists of a one-time payment for up to 6 months of rent in arrears, including any late fees on those arrears.
</P>
<P>(4) Rental assistance may be tenant-based or project-based, as set forth in paragraphs (h) and (i) of this section.
</P>
<P>(b) <I>Discretion to set caps and conditions.</I> Subject to the requirements of this section, the recipient may set a maximum amount or percentage of rental assistance that a program participant may receive, a maximum number of months that a program participant may receive rental assistance, or a maximum number of times that a program participant may receive rental assistance. The recipient may also require program participants to share in the costs of rent.
</P>
<P>(c) <I>Use with other subsidies.</I> Except for a one-time payment of rental arrears on the tenant's portion of the rental payment, rental assistance cannot be provided to a program participant who is receiving tenant-based rental assistance, or living in a housing unit receiving project-based rental assistance or operating assistance, through other public sources. Rental assistance may not be provided to a program participant who has been provided with replacement housing payments under the URA during the period of time covered by the URA payments.
</P>
<P>(d) <I>Rent restrictions.</I> (1) Rental assistance cannot be provided unless the rent does not exceed the Fair Market Rent established by HUD, as provided under 24 CFR part 888, and complies with HUD's standard of rent reasonableness, as established under 24 CFR 982.507.
</P>
<P>(2) For purposes of calculating rent under this section, the rent shall equal the sum of the total monthly rent for the unit, any fees required for occupancy under the lease (other than late fees and pet fees) and, if the tenant pays separately for utilities, the monthly allowance for utilities (excluding telephone) established by the public housing authority for the area in which the housing is located.
</P>
<P>(e) <I>Rental assistance agreement.</I> The recipient or subrecipient may make rental assistance payments only to an owner with whom the recipient or subrecipient has entered into a rental assistance agreement. The rental assistance agreement must set forth the terms under which rental assistance will be provided, including the requirements that apply under this section. The rental assistance agreement must provide that, during the term of the agreement, the owner must give the recipient or subrecipient a copy of any notice to the program participant to vacate the housing unit or any complaint used under State or local law to commence an eviction action against the program participant. Each rental assistance agreement that is executed or renewed on or after <I>December 16, 2016</I> must include all protections that apply to tenants and applicants under 24 CFR part 5, subpart L, as supplemented by § 576.409, except for the emergency transfer plan requirements under 24 CFR 5.2005(e) and 576.409(d). If the housing is not assisted under another “covered housing program”, as defined in 24 CFR 5.2003, the agreement may provide that the owner's obligations under 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking), expire at the end of the rental assistance period.


</P>
<P>(f) <I>Late payments.</I> The recipient or subrecipient must make timely payments to each owner in accordance with the rental assistance agreement. The rental assistance agreement must contain the same payment due date, grace period, and late payment penalty requirements as the program participant's lease. The recipient or subrecipient is solely responsible for paying late payment penalties that it incurs with non-ESG funds.
</P>
<P>(g) <I>Lease.</I> Each program participant receiving rental assistance must have a legally binding, written lease for the rental unit, unless the assistance is solely for rental arrears. The lease must be between the owner and the program participant. Where the assistance is solely for rental arrears, an oral agreement may be accepted in place of a written lease, if the agreement gives the program participant an enforceable leasehold interest under state law and the agreement and rent owed are sufficiently documented by the owner's financial records, rent ledgers, or canceled checks. For program participants living in housing with project-based rental assistance under paragraph (i) of this section, the lease must have an initial term of 1 year. Each lease executed on or after <I>December 16, 2016</I> must include a lease provision or incorporate a lease addendum that includes all requirements that apply to tenants, the owner or lease under 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking), as supplemented by 24 CFR 576.409, including the prohibited bases for eviction and restrictions on construing lease terms under 24 CFR 5.2005(b) and (c). If the housing is not assisted under another “covered housing program,” as defined in 24 CFR 5.2003, the lease provision or lease addendum may be written to expire at the end of the rental assistance period.
</P>
<P>(h) <I>Tenant-based rental assistance.</I> (1) A program participant who receives tenant-based rental assistance may select a housing unit in which to live and may move to another unit or building and continue to receive rental assistance, as long as the program participant continues to meet the program requirements.
</P>
<P>(2) The recipient may require that all program participants live within a particular area for the period in which the rental assistance is provided.
</P>
<P>(3) The rental assistance agreement with the owner must terminate and no further rental assistance payments under that agreement may be made if:
</P>
<P>(i) The program participant moves out of the housing unit for which the program participant has a lease;
</P>
<P>(ii) The lease terminates and is not renewed; or
</P>
<P>(iii) The program participant becomes ineligible to receive ESG rental assistance.
</P>
<P>(i) <I>Project-based rental assistance.</I> If the recipient or subrecipient identifies a permanent housing unit that meets ESG requirements and becomes available before a program participant is identified to lease the unit, the recipient or subrecipient may enter into a rental assistance agreement with the owner to reserve the unit and subsidize its rent in accordance with the following requirements:
</P>
<P>(1) The rental assistance agreement may cover one or more permanent housing units in the same building. Each unit covered by the rental assistance agreement (“assisted unit”) may only be occupied by program participants, except as provided under paragraph (i)(4) of this section.
</P>
<P>(2) The recipient or subrecipient may pay up to 100 percent of the first month's rent, provided that a program participant signs a lease and moves into the unit before the end of the month for which the first month's rent is paid. The rent paid before a program participant moves into the unit must not exceed the rent to be charged under the program participant's lease and must be included when determining that program participant's total rental assistance.
</P>
<P>(3) The recipient or subrecipient may make monthly rental assistance payments only for each whole or partial month an assisted unit is leased to a program participant. When a program participant moves out of an assisted unit, the recipient or subrecipient may pay the next month's rent, <I>i.e.,</I> the first month's rent for a new program participant, as provided in paragraph (i)(2) of this section.
</P>
<P>(4) The program participant's lease must not condition the term of occupancy to the provision of rental assistance payments. If the program participant is determined ineligible or reaches the maximum number of months over which rental assistance can be provided, the recipient or subrecipient must suspend or terminate the rental assistance payments for the unit. If the payments are suspended, the individual or family may remain in the assisted unit as permitted under the lease, and the recipient or subrecipient may resume payments if the individual or family again becomes eligible and needs further rental assistance. If the payments are terminated, the rental assistance may be transferred to another available unit in the same building, provided that the other unit meets all ESG requirements.
</P>
<P>(5) The rental assistance agreement must have an initial term of one year. When a new program participant moves into an assisted unit, the term of the rental assistance agreement may be extended to cover the initial term of the program participant's lease. If the program participant's lease is renewed, the rental assistance agreement may be renewed or extended, as needed, up to the maximum number of months for which the program participant remains eligible. However, under no circumstances may the recipient or subrecipient commit ESG funds to be expended beyond the expenditure deadline in § 576.203 or commit funds for a future ESG grant before the grant is awarded.
</P>
<P>(j) <I>Changes in household composition.</I> The limits on the assistance under this section apply to the total assistance an individual receives, either as an individual or as part of a family.
</P>
<CITA TYPE="N">[76 FR 75974, Dec. 5, 2011,, as amended at 81 FR 80808, Nov. 16, 2016]






</CITA>
</DIV8>


<DIV8 N="§ 576.107" NODE="24:3.1.1.3.6.2.1.8" TYPE="SECTION">
<HEAD>§ 576.107   HMIS component.</HEAD>
<P>(a) <I>Eligible costs.</I> (1) The recipient or subrecipient may use ESG funds to pay the costs of contributing data to the HMIS designated by the Continuum of Care for the area, including the costs of:
</P>
<P>(i) Purchasing or leasing computer hardware;
</P>
<P>(ii) Purchasing software or software licenses;
</P>
<P>(iii) Purchasing or leasing equipment, including telephones, fax machines, and furniture;
</P>
<P>(iv) Obtaining technical support;
</P>
<P>(v) Leasing office space;
</P>
<P>(vi) Paying charges for electricity, gas, water, phone service, and high-speed data transmission necessary to operate or contribute data to the HMIS;
</P>
<P>(vii) Paying salaries for operating HMIS, including:
</P>
<P>(A) Completing data entry;
</P>
<P>(B) Monitoring and reviewing data quality;
</P>
<P>(C) Completing data analysis;
</P>
<P>(D) Reporting to the HMIS Lead;
</P>
<P>(F) Training staff on using the HMIS or comparable database; and
</P>
<P>(G) Implementing and complying with HMIS requirements;
</P>
<P>(viii) Paying costs of staff to travel to and attend HUD-sponsored and HUD-approved training on HMIS and programs authorized by Title IV of the McKinney-Vento Homeless Assistance Act;
</P>
<P>(ix) Paying staff travel costs to conduct intake; and
</P>
<P>(x) Paying participation fees charged by the HMIS Lead, if the recipient or subrecipient is not the HMIS Lead. The HMIS Lead is the entity designated by the Continuum of Care to operate the area's HMIS.
</P>
<P>(2) If the recipient is the HMIS lead agency, as designated by the Continuum of Care in the most recent fiscal year Continuum of Care Homeless Assistance Grants Competition, it may also use ESG funds to pay the costs of:
</P>
<P>(i) Hosting and maintaining HMIS software or data;
</P>
<P>(ii) Backing up, recovering, or repairing HMIS software or data;
</P>
<P>(iii) Upgrading, customizing, and enhancing the HMIS;
</P>
<P>(iv) Integrating and warehousing data, including development of a data warehouse for use in aggregating data from subrecipients using multiple software systems;
</P>
<P>(v) Administering the system;
</P>
<P>(vi) Reporting to providers, the Continuum of Care, and HUD; and
</P>
<P>(vii) Conducting training on using the system or a comparable database, including traveling to the training.
</P>
<P>(3) If the subrecipient is a victim services provider or a legal services provider, it may use ESG funds to establish and operate a comparable database that collects client-level data over time (<I>i.e.,</I> longitudinal data) and generates unduplicated aggregate reports based on the data. Information entered into a comparable database must not be entered directly into or provided to an HMIS.
</P>
<P>(b) <I>General restrictions.</I> Activities funded under this section must comply with HUD's standards on participation, data collection, and reporting under a local HMIS.


</P>
</DIV8>


<DIV8 N="§ 576.108" NODE="24:3.1.1.3.6.2.1.9" TYPE="SECTION">
<HEAD>§ 576.108   Administrative activities.</HEAD>
<P>(a) <I>Eligible costs.</I> The recipient may use up to 7.5 percent of its ESG grant for the payment of administrative costs related to the planning and execution of ESG activities. This does not include staff and overhead costs directly related to carrying out activities eligible under § 576.101 through § 576.107, because those costs are eligible as part of those activities. Eligible administrative costs include:
</P>
<P>(1) <I>General management, oversight and coordination.</I> Costs of overall program management, coordination, monitoring, and evaluation. These costs include, but are not limited to, necessary expenditures for the following:
</P>
<P>(i) Salaries, wages, and related costs of the recipient's staff, the staff of subrecipients, or other staff engaged in program administration. In charging costs to this category, the recipient may either include the entire salary, wages, and related costs allocable to the program of each person whose <I>primary</I> responsibilities with regard to the program involve program administration assignments, or the pro rata share of the salary, wages, and related costs of each person whose job includes <I>any</I> program administration assignments. The recipient may use only one of these methods for each fiscal year grant. Program administration assignments include the following:
</P>
<P>(A) Preparing program budgets and schedules, and amendments to those budgets and schedules;
</P>
<P>(B) Developing systems for assuring compliance with program requirements;
</P>
<P>(C) Developing interagency agreements and agreements with subrecipients and contractors to carry out program activities;
</P>
<P>(D) Monitoring program activities for progress and compliance with program requirements;
</P>
<P>(E) Preparing reports and other documents directly related to the program for submission to HUD;
</P>
<P>(F) Coordinating the resolution of audit and monitoring findings;
</P>
<P>(G) Evaluating program results against stated objectives; and
</P>
<P>(H) Managing or supervising persons whose primary responsibilities with regard to the program include such assignments as those described in paragraph (a)(1)(i)(A) through (G) of this section.
</P>
<P>(ii) Travel costs incurred for monitoring of subrecipients;
</P>
<P>(iii) Administrative services performed under third-party contracts or agreements, including general legal services, accounting services, and audit services; and
</P>
<P>(iv) Other costs for goods and services required for administration of the program, including rental or purchase of equipment, insurance, utilities, office supplies, and rental and maintenance (but not purchase) of office space.
</P>
<P>(2) <I>Training on ESG requirements.</I> Costs of providing training on ESG requirements and attending HUD-sponsored ESG trainings.
</P>
<P>(3) <I>Consolidated plan.</I> Costs of preparing and amending the ESG and homelessness-related sections of the consolidated plan in accordance with ESG requirements and 24 CFR part 91.
</P>
<P>(4) <I>Environmental review.</I> Costs of carrying out the environmental review responsibilities under § 576.407.
</P>
<P>(b) <I>Sharing requirement.</I> (1) <I>States.</I> If the recipient is a State, the recipient must share its funds for administrative costs with its subrecipients that are units of general purpose local government. The amount shared must be reasonable under the circumstances. The recipient may share its funds for administrative costs with its subrecipients that are private nonprofit organizations.
</P>
<P>(2) <I>Territories, metropolitan cities, and urban counties.</I> If the recipient is a territory, metropolitan city, or urban county, the recipient may share its funds for administrative costs with its subrecipients.


</P>
</DIV8>


<DIV8 N="§ 576.109" NODE="24:3.1.1.3.6.2.1.10" TYPE="SECTION">
<HEAD>§ 576.109   Indirect costs.</HEAD>
<P>(a) <I>In general.</I> ESG grant funds may be used to pay indirect costs in accordance with 2 CFR part 200, subpart E.
</P>
<P>(b) <I>Allocation.</I> Indirect costs may be allocated to each eligible activity under § 576.101 through § 576.108, so long as that allocation is consistent with 2 CFR part 200, subpart E.
</P>
<P>(c) <I>Expenditure limits.</I> The indirect costs charged to an activity subject to an expenditure limit under § 576.100 must be added to the direct costs charged for that activity when determining the total costs subject to the expenditure limit.
</P>
<CITA TYPE="N">[76 FR 75974, Dec. 5, 2011, as amended at 80 FR 75939, Dec. 7, 2015]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:3.1.1.3.6.3" TYPE="SUBPART">
<HEAD>Subpart C—Award and Use of Funds</HEAD>


<DIV8 N="§ 576.200" NODE="24:3.1.1.3.6.3.1.1" TYPE="SECTION">
<HEAD>§ 576.200   Submission requirements and grant approval.</HEAD>
<P>(a) <I>Application submission and approval.</I> In addition to meeting the application submission requirements in 24 CFR part 5, subpart K, each State, urban county, or metropolitan city must submit and obtain HUD approval of a consolidated plan in accordance with the requirements in 24 CFR part 91, and each territory must submit and obtain HUD approval of a consolidated plan in accordance with the requirements that apply to local governments under 24 CFR part 91. As provided under 2 CFR 200.207, HUD may impose special conditions or restrictions on a grant, if the recipient is determined to be high risk.
</P>
<P>(b) <I>Amendments.</I> The recipient must amend its approved consolidated plan in order to make a change in its allocation priorities; make a change in its method of distributing funds; carry out an activity not previously described in the plan; or change the purpose, scope, location, or beneficiaries of an activity. The amendment must be completed and submitted to HUD in accordance with the requirements under 24 CFR 91.505.
</P>
<CITA TYPE="N">[76 FR 75974, Dec. 5, 2011, as amended at 80 FR 75939, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 576.201" NODE="24:3.1.1.3.6.3.1.2" TYPE="SECTION">
<HEAD>§ 576.201   Matching requirement.</HEAD>
<P>(a) The recipient must make matching contributions to supplement the recipient's ESG program in an amount that equals the recipient's fiscal year grant for ESG. This amount may include contributions to any project under the recipient's ESG program, including any subrecipient's ESG project, if the requirements in this section are met. The first $100,000 of a State's fiscal year grant is not required to be matched, but the benefit of this exception must pass to the state's subrecipients that are least capable of providing matching contributions. The match requirements under this section do not apply if the recipient is a territory.
</P>
<P>(b) To be recognized as match for ESG, each contribution must meet the requirements under 2 CFR 200.306, except that:
</P>
<P>(1) Notwithstanding 2 CFR 200.306(b)(4), matching contributions are not subject to the expenditure limits in § 576.100; and
</P>
<P>(2) Notwithstanding 2 CFR 200.306(b)(5), the recipient may use funds from another Federal program as match for ESG, unless doing so would violate a specific statutory prohibition or the recipient or subrecipient counts ESG funds as match for that program.
</P>
<P>(c) The recipient may count as match the value specified in 2 CFR 200.306(d) for any building the recipient or subrecipient donates for long-term use in the recipient's ESG program, provided that depreciation on the building is not counted as match or charged to any Federal award. If a third party donates a building to the recipient or subrecipient, the recipient may count as match either depreciation of the building and fair rental charges for the land for each year the building is used for the recipient's ESG program or, if the building is donated for long-term use in the recipient's ESG program, the fair market value of the capital assets, as specified in 2 CFR 200.306(h)(2), (i), and (j). To qualify as a donation for long-term use, the donation must be evidenced by a recorded deed or use restriction that is effective for at least 10 years after the donation date. If the donated building is renovated with ESG funds, the minimum period of use under § 576.102(c) may increase the period for which the building must be used in the recipient's ESG program.
</P>
<P>(d) <I>Eligible types of matching contributions.</I> The matching requirement may be met by one or both of the following:
</P>
<P>(1) <I>Cash contributions.</I> Cash expended for allowable costs, as defined in OMB Circulars A-87 (2 CFR part 225) and A-122 (2 CFR part 230), of the recipient or subrecipient.
</P>
<P>(2) <I>Noncash contributions.</I> The value of any real property, equipment, goods, or services contributed to the recipient's or subrecipient's ESG program, provided that if the recipient or subrecipient had to pay for them with grant funds, the costs would have been allowable. Noncash contributions may also include the purchase value of any donated building.
</P>
<P>(e) <I>Calculating the amount of noncash contributions.</I> (1) To determine the value of any donated material or building, or of any lease, the recipient must use a method reasonably calculated to establish the fair market value.
</P>
<P>(2) Services provided by individuals must be valued at rates consistent with those ordinarily paid for similar work in the recipient's or subrecipient's organization. If the recipient or subrecipient does not have employees performing similar work, the rates must be consistent with those ordinarily paid by other employers for similar work in the same labor market.
</P>
<P>(3) Some noncash contributions are real property, equipment, goods, or services that, if the recipient or subrecipient had to pay for them with grant funds, the payments would have been indirect costs. Matching credit for these contributions must be given only if the recipient or subrecipient has established, along with its regular indirect cost rate, a special rate for allocating to individual projects or programs the value of those contributions.
</P>
<P>(f) <I>Costs paid by program income.</I> Costs paid by program income shall count toward meeting the recipient's matching requirements, provided the costs are eligible ESG costs that supplement the recipient's ESG program.
</P>
<CITA TYPE="N">[76 FR 75974, Dec. 5, 2011, as amended at 80 FR 75939, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 576.202" NODE="24:3.1.1.3.6.3.1.3" TYPE="SECTION">
<HEAD>§ 576.202   Means of carrying out grant activities.</HEAD>
<P>(a) <I>States.</I> If the recipient is a State, the recipient may use an amount consistent with the restrictions in § 576.100 and § 576.108 to carry out administrative activities through its employees or procurement contracts. If the recipient is a State, and has been identified as the HMIS lead by the Continuum of Care, the State may use funds to carry out HMIS activities set forth in § 576.107(a)(2). The recipient must subgrant the remaining funds in its fiscal year grant to:
</P>
<P>(1) Units of general purpose local government in the State, which may include metropolitan cities and urban counties that receive ESG funds directly from HUD; or
</P>
<P>(2) Private nonprofit organizations, provided that for emergency shelter activities the recipient obtains a certification of approval from the unit of general purpose local government for the geographic area in which those activities are to be carried out.
</P>
<P>(b) <I>Recipients other than States; subrecipients.</I> The recipient, if it is not a State, and all subrecipients may carry out all eligible activities through their employees, procurement contracts, or subgrants to private nonprofit organizations. If the recipient is an urban county, it may carry out activities through any of its member governments, so long as the county applies to its members the same requirements that are applicable to local government subrecipients under this part.


</P>
</DIV8>


<DIV8 N="§ 576.203" NODE="24:3.1.1.3.6.3.1.4" TYPE="SECTION">
<HEAD>§ 576.203   Obligation, expenditure, and payment requirements.</HEAD>
<P>(a) <I>Obligation of funds.</I> (1) <I>Funds allocated to States.</I> (i) Within 60 days from the date that HUD signs the grant agreement with the State (or grant amendment for reallocated funds), the recipient must obligate the entire grant, except the amount for its administrative costs. This requirement is met by a subgrant agreement with, or a letter of award requiring payment from the grant to, a subrecipient.
</P>
<P>(ii) Within 120 days after the date that the State obligates its funds to a unit of general purpose local government, the subrecipient must obligate all of those funds by a subgrant agreement with, or a letter of award requiring payment to, a private nonprofit organization; a procurement contract; or the written designation of a department within the government of the subrecipient to directly carry out an eligible activity.
</P>
<P>(2) <I>Funds allocated to metropolitan cities, urban counties, and territories.</I> Within 180 days after the date that HUD signs the grant agreement (or a grant amendment for reallocation of funds) with the metropolitan city, urban county, or territory, the recipient must obligate all the grant amount, except the amount for its administrative costs. This requirement is met by an agreement with, or a letter of award requiring payment to, a subrecipient; a procurement contract; or a written designation of a department within the government of the recipient to directly carry out an eligible activity. If the recipient is an urban county, this requirement may also be met with an agreement with, or letter of award requiring payment to, a member government, which has designated a department to directly carry out an eligible activity.
</P>
<P>(b) <I>Expenditures.</I> The recipient must draw down and expend funds from each year's grant not less than once during each quarter of the recipient's program year. All of the recipient's grant must be expended for eligible activity costs within 24 months after the date HUD signs the grant agreement with the recipient. For the purposes of this paragraph, expenditure means either an actual cash disbursement for a direct charge for a good or service or an indirect cost or the accrual of a direct charge for a good or service or an indirect cost.
</P>
<P>(c) <I>Payments to subrecipients.</I> The recipient must pay each subrecipient for allowable costs within 30 days after receiving the subrecipient's complete payment request. This requirement also applies to each subrecipient that is a unit of general purpose local government.


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:3.1.1.3.6.4" TYPE="SUBPART">
<HEAD>Subpart D—Reallocations</HEAD>


<DIV8 N="§ 576.300" NODE="24:3.1.1.3.6.4.1.1" TYPE="SECTION">
<HEAD>§ 576.300   In general.</HEAD>
<P>(1) Funds not awarded by HUD due to failure by the recipient to submit and obtain HUD approval of a consolidated plan will be reallocated in accordance with §§ 576.301 through 576.303.
</P>
<P>(2) Recaptured funds will be awarded by formula. In October and April each year, HUD will determine if the amount of recaptured funds is at least 30 percent of the most recent fiscal year appropriation. If so, HUD will amend all existing grants and reallocate the funds. If the amount is less than 30 percent of the most recent fiscal year appropriation, the funds will be reallocated in conjunction with the next fiscal year's allocation of funding.


</P>
</DIV8>


<DIV8 N="§ 576.301" NODE="24:3.1.1.3.6.4.1.2" TYPE="SECTION">
<HEAD>§ 576.301   Metropolitan cities and urban counties.</HEAD>
<P>Grant funds returned by a metropolitan city or urban county will be reallocated as follows:
</P>
<P>(a) <I>Eligible recipient.</I> HUD will make the funds available to the State in which the city or county is located.
</P>
<P>(b) <I>Notification of availability.</I> HUD will promptly notify the State of the availability of the amounts to be reallocated.
</P>
<P>(c) <I>Application requirement.</I> Within 45 days after the date of notification, the State must submit to HUD a substantial amendment to its consolidated plan in accordance with 24 CFR part 91.
</P>
<P>(d) <I>Restrictions that apply to reallocated amounts.</I> The same requirements that apply to grant funds allocated under § 576.3 apply to grant funds reallocated under this section, except that the State must distribute the reallocated funds:
</P>
<P>(1) To private nonprofit organizations and units of general purpose local government in the geographic area in which the metropolitan city or urban county is located;
</P>
<P>(2) If funds remain, to private nonprofit organizations and units of general purpose local government located throughout the State.


</P>
</DIV8>


<DIV8 N="§ 576.302" NODE="24:3.1.1.3.6.4.1.3" TYPE="SECTION">
<HEAD>§ 576.302   States.</HEAD>
<P>Grant funds returned by a State will be reallocated as follows:
</P>
<P>(a) <I>Eligible recipients.</I> HUD will make the funds available:
</P>
<P>(1) To metropolitan cities and urban counties in the State that were not allocated funds under § 576.3 because the amount they would have been allocated did not meet the minimum requirement under § 576.3(b)(2);
</P>
<P>(2) If funds remain, to county governments in the State other than urban counties;
</P>
<P>(3) Then, if funds remain, to metropolitan cities and urban counties in the State that were allocated funds under § 576.3.
</P>
<P>(b) <I>Notification of availability.</I> HUD will notify eligible recipients of the availability of the funds by a notification letter or <E T="04">Federal Register</E> notice, which will specify how the awards of funds will be made.
</P>
<P>(c) <I>Application requirements.</I> Within 45 days after the date of notification, the eligible recipient must submit to HUD:
</P>
<P>(1) A substantial amendment to its approved consolidated plan in accordance with 24 CFR part 91; or
</P>
<P>(2) If the eligible recipient does not have an approved consolidated plan, an abbreviated consolidated plan that meets the requirements in the <E T="04">Federal Register</E> notice or notification letter from HUD.
</P>
<P>(d) <I>Restrictions that apply to reallocated amounts.</I> The same requirements that apply to grant funds allocated under § 576.3 apply to grant funds reallocated under this section.


</P>
</DIV8>


<DIV8 N="§ 576.303" NODE="24:3.1.1.3.6.4.1.4" TYPE="SECTION">
<HEAD>§ 576.303   Territories.</HEAD>
<P>(a) <I>General.</I> Grant funds returned by a territory will be reallocated to other territories, then if funds remain, to States.
</P>
<P>(b) <I>Allocation method.</I> The funds will be allocated as follows:
</P>
<P>(1) For territories, the funds will be allocated among the territories in direct proportion with each territory's share of the total population of all of the eligible territories. If HUD determines that a territory failed to spend its funds in accordance with ESG requirements, then HUD may exclude the territory from the allocation of reallocation amounts under this section.
</P>
<P>(2) For States, the funds will be allocated to each State in direct proportion with each State's share of the total amount of funds allocated to States under § 576.3.
</P>
<P>(c) <I>Notification of availability.</I> HUD will notify eligible recipients of the availability of the fund by a letter or <E T="04">Federal Register</E> notice, which will specify how the awards of funds will be made.
</P>
<P>(d) <I>Application requirements.</I> Within 45 days after the date of notification, the eligible recipient must submit to HUD a substantial amendment to its consolidated plan in accordance with 24 CFR part 91.
</P>
<P>(e) <I>Restrictions that apply to reallocated amounts.</I> The same requirements that apply to grant funds allocated under § 576.3 apply to grant funds reallocated under this section.


</P>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:3.1.1.3.6.5" TYPE="SUBPART">
<HEAD>Subpart E—Program Requirements</HEAD>


<DIV8 N="§ 576.400" NODE="24:3.1.1.3.6.5.1.1" TYPE="SECTION">
<HEAD>§ 576.400   Area-wide systems coordination requirements.</HEAD>
<P>(a) <I>Consultation with Continuums of Care.</I> The recipient must consult with each Continuum of Care that serves the recipient's jurisdiction in determining how to allocate ESG funds each program year; developing the performance standards for, and evaluating the outcomes of, projects and activities assisted by ESG funds; and developing funding, policies, and procedures for the administration and operation of the HMIS.
</P>
<P>(b) <I>Coordination with other targeted homeless services.</I> The recipient and its subrecipients must coordinate and integrate, to the maximum extent practicable, ESG-funded activities with other programs targeted to homeless people in the area covered by the Continuum of Care or area over which the services are coordinated to provide a strategic, community-wide system to prevent and end homelessness for that area. These programs include:
</P>
<P>(1) Shelter Plus Care Program (24 CFR part 582);
</P>
<P>(2) Supportive Housing Program (24 CFR part 583);
</P>
<P>(3) Section 8 Moderate Rehabilitation Program for Single Room Occupancy Program for Homeless Individuals (24 CFR part 882);
</P>
<P>(4) HUD—Veterans Affairs Supportive Housing (HUD-VASH) (division K, title II, Consolidated Appropriations Act, 2008, Pub. L. 110-161 (2007), 73 FR 25026 (May 6, 2008));
</P>
<P>(5) Education for Homeless Children and Youth Grants for State and Local Activities (title VII-B of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 <I>et seq.</I>));
</P>
<P>(6) Grants for the Benefit of Homeless Individuals (section 506 of the Public Health Services Act (42 U.S.C. 290aa-5));
</P>
<P>(7) Healthcare for the Homeless (42 CFR part 51c);
</P>
<P>(8) Programs for Runaway and Homeless Youth (Runaway and Homeless Youth Act (42 U.S.C. 5701 <I>et seq.</I>));
</P>
<P>(9) Projects for Assistance in Transition from Homelessness (part C of title V of the Public Health Service Act (42 U.S.C. 290cc-21 <I>et seq.</I>));
</P>
<P>(10) Services in Supportive Housing Grants (section 520A of the Public Health Service Act);
</P>
<P>(11) Emergency Food and Shelter Program (title III of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11331 <I>et seq.</I>));
</P>
<P>(12) Transitional Housing Assistance Grants for Victims of Sexual Assault, Domestic Violence, Dating Violence, and Stalking Program (section 40299 of the Violent Crime Control and Law Enforcement Act (42 U.S.C. 13975));
</P>
<P>(13) Homeless Veterans Reintegration Program (section 5(a)(1)) of the Homeless Veterans Comprehensive Assistance Act (38 U.S.C. 2021);
</P>
<P>(14) Domiciliary Care for Homeless Veterans Program (38 U.S.C. 2043);
</P>
<P>(15) VA Homeless Providers Grant and Per Diem Program (38 CFR part 61);
</P>
<P>(16) Health Care for Homeless Veterans Program (38 U.S.C. 2031);
</P>
<P>(17) Homeless Veterans Dental Program (38 U.S.C. 2062);
</P>
<P>(18) Supportive Services for Veteran Families Program (38 CFR part 62); and
</P>
<P>(19) Veteran Justice Outreach Initiative (38 U.S.C. 2031).
</P>
<P>(c) <I>System and program coordination with mainstream resources.</I> The recipient and its subrecipients must coordinate and integrate, to the maximum extent practicable, ESG-funded activities with mainstream housing, health, social services, employment, education, and youth programs for which families and individuals at risk of homelessness and homeless individuals and families may be eligible. Examples of these programs include:
</P>
<P>(1) Public housing programs assisted under section 9 of the U.S. Housing Act of 1937 (42 U.S.C. 1437g) (24 CFR parts 905, 968, and 990);
</P>
<P>(2) Housing programs receiving tenant-based or project-based assistance under section 8 of the U.S. Housing Act of 1937 (42 U.S.C. 1437f) (respectively 24 CFR parts 982 and 983);
</P>
<P>(3) Supportive Housing for Persons with Disabilities (Section 811) (24 CFR part 891);
</P>
<P>(4) HOME Investment Partnerships Program (24 CFR part 92);
</P>
<P>(5) Temporary Assistance for Needy Families (TANF) (45 CFR parts 260-265);
</P>
<P>(6) Health Center Program (42 CFR part 51c);
</P>
<P>(7) State Children's Health Insurance Program (42 CFR part 457):
</P>
<P>(8) Head Start (45 CFR chapter XIII, subchapter B);
</P>
<P>(9) Mental Health and Substance Abuse Block Grants (45 CFR part 96); and
</P>
<P>(10) Services funded under the Workforce Investment Act (29 U.S.C. 2801 <I>et seq.</I>).
</P>
<P>(d) <I>Centralized or coordinated assessment.</I> Once the Continuum of Care has developed a centralized assessment system or a coordinated assessment system in accordance with requirements to be established by HUD, each ESG-funded program or project within the Continuum of Care's area must use that assessment system. The recipient and subrecipient must work with the Continuum of Care to ensure the screening, assessment and referral of program participants are consistent with the written standards required by paragraph (e) of this section. A victim service provider may choose not to use the Continuum of Care's centralized or coordinated assessment system.
</P>
<P>(e) <I>Written standards for providing ESG assistance.</I> (1) If the recipient is a metropolitan city, urban county, or territory, the recipient must have written standards for providing Emergency Solutions Grant (ESG) assistance and must consistently apply those standards for all program participants. The recipient must describe these standards in its consolidated plan.
</P>
<P>(2) If the recipient is a state:
</P>
<P>(i) The recipient must establish and consistently apply, or require that its subrecipients establish and consistently apply, written standards for providing ESG assistance. If the written standards are established by the subrecipients, the recipient may require these written standards to be:
</P>
<P>(A) Established for each area covered by a Continuum of Care or area over which the services are coordinated and followed by each subrecipient providing assistance in that area; or
</P>
<P>(B) Established by each subrecipient and applied consistently within the subrecipient's program.
</P>
<P>(ii) Written standards developed by the state must be included in the state's Consolidated Plan. If the written standards are developed by its subrecipients, the recipient must describe its requirements for the establishment and implementation of these standards in the state's Consolidated Plan.
</P>
<P>(3) At a minimum these written standards must include:
</P>
<P>(i) Standard policies and procedures for evaluating individuals' and families' eligibility for assistance under Emergency Solutions Grant (ESG);
</P>
<P>(ii) Standards for targeting and providing essential services related to street outreach;
</P>
<P>(iii) Policies and procedures for admission, diversion, referral, and discharge by emergency shelters assisted under ESG, including standards regarding length of stay, if any, and safeguards to meet the safety and shelter needs of special populations, <I>e.g.,</I> victims of domestic violence, dating violence, sexual assault, and stalking; and individuals and families who have the highest barriers to housing and are likely to be homeless the longest;
</P>
<P>(iv) Policies and procedures for assessing, prioritizing, and reassessing individuals' and families' needs for essential services related to emergency shelter;
</P>
<P>(v) Policies and procedures for coordination among emergency shelter providers, essential services providers, homelessness prevention, and rapid re-housing assistance providers; other homeless assistance providers; and mainstream service and housing providers (see § 576.400(b) and (c) for a list of programs with which ESG-funded activities must be coordinated and integrated to the maximum extent practicable);
</P>
<P>(vi) Policies and procedures for determining and prioritizing which eligible families and individuals will receive homelessness prevention assistance and which eligible families and individuals will receive rapid re-housing assistance (these policies must include the emergency transfer priority required under § 576.409);
</P>
<P>(vii) Standards for determining what percentage or amount of rent and utilities costs each program participant must pay while receiving homelessness prevention or rapid re-housing assistance;
</P>
<P>(viii) Standards for determining how long a particular program participant will be provided with rental assistance and whether and how the amount of that assistance will be adjusted over time; and
</P>
<P>(ix) Standards for determining the type, amount, and duration of housing stabilization and/or relocation services to provide to a program participant, including the limits, if any, on the homelessness prevention or rapid re-housing assistance that each program participant may receive, such as the maximum amount of assistance, maximum number of months the program participant receive assistance; or the maximum number of times the program participant may receive assistance.
</P>
<P>(f) <I>Participation in HMIS.</I> The recipient must ensure that data on all persons served and all activities assisted under ESG are entered into the applicable community-wide HMIS in the area in which those persons and activities are located, or a comparable database, in accordance with HUD's standards on participation, data collection, and reporting under a local HMIS. If the subrecipient is a victim service provider or a legal services provider, it may use a comparable database that collects client-level data over time (<I>i.e.,</I> longitudinal data) and generates unduplicated aggregate reports based on the data. Information entered into a comparable database must not be entered directly into or provided to an HMIS.
</P>
<CITA TYPE="N">[76 FR 75974, Dec. 5, 2011, as amended at 81 FR 80808, Nov. 16, 2016]




</CITA>
</DIV8>


<DIV8 N="§ 576.401" NODE="24:3.1.1.3.6.5.1.2" TYPE="SECTION">
<HEAD>§ 576.401   Evaluation of program participant eligibility and needs.</HEAD>
<P>(a) <I>Evaluations.</I> The recipient or its subrecipient must conduct an initial evaluation to determine the eligibility of each individual or family's eligibility for ESG assistance and the amount and types of assistance the individual or family needs to regain stability in permanent housing. These evaluations must be conducted in accordance with the centralized or coordinated assessment requirements set forth under § 576.400(d) and the written standards established under § 576.400(e).
</P>
<P>(b) <I>Re-evaluations for homelessness prevention and rapid re-housing assistance.</I> (1) The recipient or subrecipient must re-evaluate the program participant's eligibility and the types and amounts of assistance the program participant needs not less than once every 3 months for program participants receiving homelessness prevention assistance, and not less than once annually for program participants receiving rapid re-housing assistance. At a minimum, each re-evaluation of eligibility must establish that:
</P>
<P>(i) The program participant does not have an annual income that exceeds 30 percent of median family income for the area, as determined by HUD; and
</P>
<P>(ii) The program participant lacks sufficient resources and support networks necessary to retain housing without ESG assistance.
</P>
<P>(2) The recipient or subrecipient may require each program participant receiving homelessness prevention or rapid re-housing assistance to notify the recipient or subrecipient regarding changes in the program participant's income or other circumstances (<I>e.g.,</I> changes in household composition) that affect the program participant's need for assistance under ESG. When notified of a relevant change, the recipient or subrecipient must re-evaluate the program participant's eligibility and the amount and types of assistance the program participant needs.
</P>
<P>(c) <I>Annual income.</I> When determining the annual income of an individual or family, the recipient or subrecipient must use the standard for calculating annual income under 24 CFR 5.609.
</P>
<P>(d) <I>Connecting program participants to mainstream and other resources.</I> The recipient and its subrecipients must assist each program participant, as needed, to obtain:
</P>
<P>(1) Appropriate supportive services, including assistance in obtaining permanent housing, medical health treatment, mental health treatment, counseling, supervision, and other services essential for achieving independent living; and
</P>
<P>(2) Other Federal, State, local, and private assistance available to assist the program participant in obtaining housing stability, including:
</P>
<P>(i) Medicaid (42 CFR chapter IV, subchapter C):
</P>
<P>(ii) Supplemental Nutrition Assistance Program (7 CFR parts 271-283);
</P>
<P>(iii) Women, Infants and Children (WIC) (7 CFR part 246);
</P>
<P>(iv) Federal-State Unemployment Insurance Program (20 CFR parts 601-603, 606, 609, 614-617, 625, 640, 650);
</P>
<P>(v) Social Security Disability Insurance (SSDI) (20 CFR part 404);
</P>
<P>(vi) Supplemental Security Income (SSI) (20 CFR part 416);
</P>
<P>(vii) Child and Adult Care Food Program (42 U.S.C. 1766(t) (7 CFR part 226));
</P>
<P>(viii) Other assistance available under the programs listed in § 576.400(c).
</P>
<P>(e) <I>Housing stability case management.</I> (1) While providing homelessness prevention or rapid re-housing assistance to a program participant, the recipient or subrecipient must:
</P>
<P>(i) Require the program participant to meet with a case manager not less than once per month to assist the program participant in ensuring long-term housing stability; and
</P>
<P>(ii) Develop a plan to assist the program participant to retain permanent housing after the ESG assistance ends, taking into account all relevant considerations, such as the program participant's current or expected income and expenses; other public or private assistance for which the program participant will be eligible and likely to receive; and the relative affordability of available housing in the area.
</P>
<P>(2) The recipient or subrecipient is exempt from the requirement under paragraph (e)(1)(i) of this section if the Violence Against Women Act of 1994 (42 U.S.C. 13701 <I>et seq.</I>) or the Family Violence Prevention and Services Act (42 U.S.C. 10401 <I>et seq.</I>) prohibits that recipient or subrecipient from making its shelter or housing conditional on the participant's acceptance of services.


</P>
</DIV8>


<DIV8 N="§ 576.402" NODE="24:3.1.1.3.6.5.1.3" TYPE="SECTION">
<HEAD>§ 576.402   Terminating assistance.</HEAD>
<P>(a) <I>In general.</I> If a program participant violates program requirements, the recipient or subrecipient may terminate the assistance in accordance with a formal process established by the recipient or subrecipient that recognizes the rights of individuals affected. The recipient or subrecipient must exercise judgment and examine all extenuating circumstances in determining when violations warrant termination so that a program participant's assistance is terminated only in the most severe cases.
</P>
<P>(b) <I>Program participants receiving rental assistance or housing relocation and stabilization services.</I> To terminate rental assistance or housing relocation and stabilization services to a program participant, the required formal process, at a minimum, must consist of:
</P>
<P>(1) Written notice to the program participant containing a clear statement of the reasons for termination;
</P>
<P>(2) A review of the decision, in which the program participant is given the opportunity to present written or oral objections before a person other than the person (or a subordinate of that person) who made or approved the termination decision; and
</P>
<P>(3) Prompt written notice of the final decision to the program participant.
</P>
<P>(c) <I>Ability to provide further assistance.</I> Termination under this section does not bar the recipient or subrecipient from providing further assistance at a later date to the same family or individual.


</P>
</DIV8>


<DIV8 N="§ 576.403" NODE="24:3.1.1.3.6.5.1.4" TYPE="SECTION">
<HEAD>§ 576.403   Shelter and housing standards.</HEAD>
<P>(a) <I>Lead-based paint remediation and disclosure.</I> The Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and implementing regulations in 24 CFR part 35, subparts A, B, H, J, K, M, and R apply to all shelters assisted under ESG program and all housing occupied by program participants.
</P>
<P>(b) <I>Minimum standards for emergency shelters.</I> Any building for which Emergency Solutions Grant (ESG) funds are used for conversion, major rehabilitation, or other renovation, must meet state or local government safety and sanitation standards, as applicable, and the following minimum safety, sanitation, and privacy standards. Any emergency shelter that receives assistance for shelter operations must also meet the following minimum safety, sanitation, and privacy standards. The recipient may also establish standards that exceed or add to these minimum standards.
</P>
<P>(1) <I>Structure and materials.</I> The shelter building must be structurally sound to protect residents from the elements and not pose any threat to health and safety of the residents. Any renovation (including major rehabilitation and conversion) carried out with ESG assistance must use Energy Star and WaterSense products and appliances.
</P>
<P>(2) <I>Access.</I> The shelter must be accessible in accordance with Section 504 of the Rehabilitation Act (29 U.S.C. 794) and implementing regulations at 24 CFR part 8; the Fair Housing Act (42 U.S.C. 3601 <I>et seq.</I>) and implementing regulations at 24 CFR part 100; and Title II of the Americans with Disabilities Act (42 U.S.C. 12131 <I>et seq.</I>) and 28 CFR part 35; where applicable.
</P>
<P>(3) <I>Space and security.</I> Except where the shelter is intended for day use only, the shelter must provide each program participant in the shelter with an acceptable place to sleep and adequate space and security for themselves and their belongings.
</P>
<P>(4) <I>Interior air quality.</I> Each room or space within the shelter must have a natural or mechanical means of ventilation. The interior air must be free of pollutants at a level that might threaten or harm the health of residents.
</P>
<P>(5) <I>Water supply.</I> The shelter's water supply must be free of contamination.
</P>
<P>(6) <I>Sanitary facilities.</I> Each program participant in the shelter must have access to sanitary facilities that are in proper operating condition, are private, and are adequate for personal cleanliness and the disposal of human waste.
</P>
<P>(7) <I>Thermal environment.</I> The shelter must have any necessary heating/cooling facilities in proper operating condition.
</P>
<P>(8) <I>Illumination and electricity.</I> The shelter must have adequate natural or artificial illumination to permit normal indoor activities and support health and safety. There must be sufficient electrical sources to permit the safe use of electrical appliances in the shelter.
</P>
<P>(9) <I>Food preparation.</I> Food preparation areas, if any, must contain suitable space and equipment to store, prepare, and serve food in a safe and sanitary manner.
</P>
<P>(10) <I>Sanitary conditions.</I> The shelter must be maintained in a sanitary condition.
</P>
<P>(11) <I>Fire safety.</I> There must be at least one working smoke detector in each occupied unit of the shelter. Where possible, smoke detectors must be located near sleeping areas. The fire alarm system must be designed for hearing-impaired residents. All public areas of the shelter must have at least one working smoke detector. There must also be a second means of exiting the building in the event of fire or other emergency.
</P>
<P>(c) <I>Minimum standards for permanent housing.</I> When ESG funds are used for permanent housing under 24 CFR 576.105 or 576.106, the minimum standards in 24 CFR 5.703 apply, except that:
</P>
<P>(1) <I>Definition of HUD housing.</I> For the purposes of ESG, “HUD housing” in 24 CFR 5.703 means the program participant's unit, systems equipment that directly services those units, items and components within the primary and secondary means of egress from those units' doors to the public way, and common features related to the program participant's use of the building (e.g., the laundry room, community room, mail room).
</P>
<P>(2) <I>Housing inspections.</I> For the first 30 days in which a program participant receives homelessness prevention assistance, the recipient or subrecipient may provide services under 24 CFR 576.105(b) to help the program participant remain in their unit without inspecting the unit to determine whether it meets the minimum standards identified in this paragraph (c), except that the recipient or subrecipient must still comply with the requirements under 24 CFR part 35. Before otherwise using ESG funds under 24 CFR 576.105 or 576.106 to help a program participant remain in or move into specific housing, however, the recipient or subrecipient must inspect that housing to confirm that it meets the requirements in this section. In addition, recipient or subrecipient must inspect the housing at least once every 12 months during the period of assistance to confirm the housing continues to meet the minimum standards in this paragraph (c).
</P>
<P>(3) <I>Correction of deficiencies.</I> If an inspection reveals one or more deficiencies that prevent the housing from meeting the requirements in this section, ESG funds must not be used under 24 CFR 576.105 or 576.106 with respect to that housing unless the owner corrects the deficiencies within 30 days from the date of the initial inspection and the recipient or subrecipient verifies that all deficiencies have been corrected.
</P>
<P>(4) <I>Rental arrears.</I> Housing for which rental arrears are paid is only subject to the requirements in this section, if a program participant is seeking to stay in that housing.
</P>
<P>(5) <I>Additional standards.</I> The recipient may also add standards that exceed these minimum standards.
</P>
<P>(6) <I>Other exemptions from 24 CFR part 5, subpart G.</I> The requirements in 24 CFR 5.703(b)(2) and (d)(6) and 5.705 through 5.713 do not apply.




</P>
<CITA TYPE="N">[76 FR 75974, Dec. 5, 2011, as amended at 88 FR 30498, May 11, 2023]






</CITA>
</DIV8>


<DIV8 N="§ 576.404" NODE="24:3.1.1.3.6.5.1.5" TYPE="SECTION">
<HEAD>§ 576.404   Conflicts of interest.</HEAD>
<P>(a) <I>Organizational conflicts of interest.</I> The provision of any type or amount of ESG assistance may not be conditioned on an individual's or family's acceptance or occupancy of emergency shelter or housing owned by the recipient, the subrecipient, or a parent or subsidiary of the subrecipient. No subrecipient may, with respect to individuals or families occupying housing owned by the subrecipient, or any parent or subsidiary of the subrecipient, carry out the initial evaluation required under § 576.401 or administer homelessness prevention assistance under § 576.103. Recipients and subrecipients must also maintain written standards of conduct covering organizational conflicts of interest required under 2 CFR 200.318.
</P>
<P>(b) <I>Individual conflicts of interest.</I> For the procurement of goods and services, the recipient and its subrecipients must comply with 2 CFR 200.317 and 200.318. For all other transactions and activities, the following restrictions apply:
</P>
<P>(1) <I>Conflicts prohibited.</I> No person described in paragraph (b)(2) of this section who exercises or has exercised any functions or responsibilities with respect to activities assisted under the ESG program, or who is in a position to participate in a decision-making process or gain inside information with regard to activities assisted under the program, may obtain a financial interest or benefit from an assisted activity; have a financial interest in any contract, subcontract, or agreement with respect to an assisted activity; or have a financial interest in the proceeds derived from an assisted activity, either for him or herself or for those with whom he or she has family or business ties, during his or her tenure or during the one-year period following his or her tenure.
</P>
<P>(2) <I>Persons covered.</I> The conflict-of- interest provisions of paragraph (b)(1) of this section apply to any person who is an employee, agent, consultant, officer, or elected or appointed official of the recipient or its subrecipients.
</P>
<P>(3) <I>Exceptions.</I> Upon the written request of the recipient, HUD may grant an exception to the provisions of this subsection on a case-by-case basis, taking into account the cumulative effects of the criteria in paragraph (b)(3)(ii) of this section, provided that the recipient has satisfactorily met the threshold requirements of paragraph (b)(3)(i) of this section.
</P>
<P>(i) <I>Threshold requirements.</I> HUD will consider an exception only after the recipient has provided the following documentation:
</P>
<P>(A) If the recipient or subrecipient is a government, disclosure of the nature of the conflict, accompanied by an assurance that there has been public disclosure of the conflict and a description of how the public disclosure was made; and
</P>
<P>(B) An opinion of the recipient's attorney that the interest for which the exception is sought would not violate state or local law.
</P>
<P>(ii) <I>Factors to be considered for exceptions.</I> In determining whether to grant a requested exception after the recipient has satisfactorily met the threshold requirements under paragraph (b)(3)(i) of this section, HUD must conclude that the exception will serve to further the purposes of the ESG program and the effective and efficient administration of the recipient's or subrecipient's program or project, taking into account the cumulative effect of the following factors, as applicable:
</P>
<P>(A) Whether the exception would provide a significant cost benefit or an essential degree of expertise to the program or project that would otherwise not be available;
</P>
<P>(B) Whether an opportunity was provided for open competitive bidding or negotiation;
</P>
<P>(C) Whether the affected person has withdrawn from his or her functions, responsibilities or the decision-making process with respect to the specific activity in question;
</P>
<P>(D) Whether the interest or benefit was present before the affected person was in the position described in paragraph (b)(1) of this section;
</P>
<P>(E) Whether undue hardship results to the recipient, the subrecipient, or the person affected, when weighed against the public interest served by avoiding the prohibited conflict; and
</P>
<P>(F) Any other relevant considerations.
</P>
<P>(c) <I>Contractors.</I> All contractors of the recipient or subrecipient must comply with the same requirements that apply to subrecipients under this section.
</P>
<CITA TYPE="N">[76 FR 75974, Dec. 5, 2011, as amended at 80 FR 75939, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 576.405" NODE="24:3.1.1.3.6.5.1.6" TYPE="SECTION">
<HEAD>§ 576.405   Homeless participation.</HEAD>
<P>(a) Unless the recipient is a State, the recipient must provide for the participation of not less than one homeless individual or formerly homeless individual on the board of directors or other equivalent policy-making entity of the recipient, to the extent that the entity considers and makes policies and decisions regarding any facilities, services, or other assistance that receive funding under Emergency Solutions Grant (ESG).
</P>
<P>(b) If the recipient is unable to meet requirement under paragraph (a), it must instead develop and implement a plan to consult with homeless or formerly homeless individuals in considering and making policies and decisions regarding any facilities, services, or other assistance that receive funding under Emergency Solutions Grant (ESG). The plan must be included in the annual action plan required under 24 CFR 91.220.
</P>
<P>(c) To the maximum extent practicable, the recipient or subrecipient must involve homeless individuals and families in constructing, renovating, maintaining, and operating facilities assisted under ESG, in providing services assisted under ESG, and in providing services for occupants of facilities assisted under ESG. This involvement may include employment or volunteer services.


</P>
</DIV8>


<DIV8 N="§ 576.406" NODE="24:3.1.1.3.6.5.1.7" TYPE="SECTION">
<HEAD>§ 576.406   Equal participation of faith-based organizations.</HEAD>
<P>The HUD program requirements in § 5.109 of this title apply to the ESG program, including the requirements regarding disposition and change in use of real property by a faith-based organization.
</P>
<CITA TYPE="N">[81 FR 19418, Apr. 4, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 576.407" NODE="24:3.1.1.3.6.5.1.8" TYPE="SECTION">
<HEAD>§ 576.407   Other Federal requirements.</HEAD>
<P>(a) <I>General.</I> The requirements in 24 CFR part 5, subpart A are applicable, including the nondiscrimination and equal opportunity requirements at 24 CFR 5.105(a) and the housing counseling requirements at 24 CFR 5.111. Section 3 of the Housing and Urban Development Act of 1968, 12 U.S.C. 1701u, and implementing regulations at 24 CFR part 75apply, except that homeless individuals have priority over other Section 3 residents in accordance with § 576.405(c).
</P>
<P>(b) <I>Affirmative outreach.</I> The recipient or subrecipient must make known that use of the facilities, assistance, and services are available to all on a nondiscriminatory basis. If it is unlikely that the procedures that the recipient or subrecipient intends to use to make known the availability of the facilities, assistance, and services will to reach persons of any particular race, color, religion, sex, age, national origin, familial status, or disability who may qualify for those facilities and services, the recipient or subrecipient must establish additional procedures that ensure that those persons are made aware of the facilities, assistance, and services. The recipient and its subrecipients must take appropriate steps to ensure effective communication with persons with disabilities including, but not limited to, adopting procedures that will make available to interested persons information concerning the location of assistance, services, and facilities that are accessible to persons with disabilities. Consistent with Title VI and Executive Order 13166, recipients and subrecipients are also required to take reasonable steps to ensure meaningful access to programs and activities for limited English proficiency (LEP) persons.
</P>
<P>(c) <I>Uniform requirements.</I> The requirements of 2 CFR part 200 apply to the recipient and subrecipients, and:
</P>
<P>(1) Program income may be used as matching contributions, subject to the requirements in § 576.201;
</P>
<P>(2) The disposition of real property for which ESG funds are used for major rehabilitation, conversion, or other renovation under § 576.102 is governed by the minimum period of use requirements under § 576.102(c).
</P>
<P>(d) <I>Environmental review responsibilities.</I> (1) Activities under this part are subject to environmental review by HUD under 24 CFR part 50. The recipient shall supply all available, relevant information necessary for HUD to perform for each property any environmental review required by 24 CFR part 50. The recipient also shall carry out mitigating measures required by HUD or select alternate eligible property. HUD may eliminate from consideration any application that would require an Environmental Impact Statement (EIS).
</P>
<P>(2) The recipient or subrecipient, or any contractor of the recipient or subrecipient, may not acquire, rehabilitate, convert, lease, repair, dispose of, demolish, or construct property for a project under this part, or commit or expend HUD or local funds for eligible activities under this part, until HUD has performed an environmental review under 24 CFR part 50 and the recipient has received HUD approval of the property.
</P>
<P>(e) <I>Davis-Bacon Act.</I> The provisions of the Davis-Bacon Act (40 U.S.C. 276a to 276a-5) do not apply to the ESG program.
</P>
<P>(f) <I>Procurement of Recovered Materials.</I> The recipient and its contractors must comply with Section 6002 of the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act. The requirements of Section 6002 include procuring only items designated in guidelines of the Environmental Protection Agency (EPA) at 40 CFR part 247 that contain the highest percentage of recovered materials practicable, consistent with maintaining a satisfactory level of competition, where the purchase price of the item exceeds $10,000 or the value of the quantity acquired by the preceding fiscal year exceeded $10,000; procuring solid waste management services in a manner that maximizes energy and resource recovery; and establishing an affirmative procurement program for procurement of recovered materials identified in the EPA guidelines.
</P>
<CITA TYPE="N">[76 FR 75974, Dec. 5, 2011, as amended at 80 FR 75939, Dec. 7, 2015; 81 FR 90660, Dec. 14, 2016; 85 FR 61568, Sept. 29, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 576.408" NODE="24:3.1.1.3.6.5.1.9" TYPE="SECTION">
<HEAD>§ 576.408   Displacement, relocation, and acquisition.</HEAD>
<P>(a) <I>Minimizing displacement.</I> Consistent with the other goals and objectives of Emergency Solutions Grant (ESG), the recipient and its subrecipients must assure that they have taken all reasonable steps to minimize the displacement of persons (families, individuals, businesses, nonprofit organizations, and farms) as a result of a project assisted under Emergency Solutions Grant (ESG).
</P>
<P>(b) <I>Temporary relocation not permitted.</I> No tenant-occupant of housing (a dwelling unit) that is converted into an emergency shelter may be required to relocate temporarily for a project assisted with ESG funds, or be required to move to another unit in the same building/complex. When a tenant moves for a project assisted with ESG funds under conditions that trigger the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA), 42 U.S.C. 4601-4655, as described in paragraph (c) of this section, the tenant should be treated as permanently displaced and offered relocation assistance and payments consistent with that paragraph.
</P>
<P>(c) <I>Relocation assistance for displaced persons.</I> (1) <I>In general.</I> A displaced person (defined in paragraph (c)(2) of this section) must be provided relocation assistance at the levels described in, and in accordance with, the URA and 49 CFR part 24. A displaced person must be advised of his or her rights under the Fair Housing Act (42 U.S.C. 3601 <I>et seq.</I>). Whenever possible, minority persons shall be given reasonable opportunities to relocate to comparable and suitable decent, safe, and sanitary replacement dwellings, not located in an area of minority concentration, that are within their financial means. This policy, however, does not require providing a person a larger payment than is necessary to enable a person to relocate to a comparable replacement dwelling. (See 49 CFR 24.205(c)(2)(ii)(D).) As required by Section 504 of the Rehabilitation Act (29 U.S.C. 794) and 49 CFR part 24, replacement dwellings must also contain the accessibility features needed by displaced persons with disabilities.
</P>
<P>(2) <I>Displaced Person.</I> (i) For purposes of paragraph (c) of this section, the term “displaced person” means any person (family, individual, business, nonprofit organization, or farm, including any corporation, partnership, or association) that moves from real property, or moves personal property from real property, permanently, as a direct result of acquisition, rehabilitation, or demolition for a project assisted under the ESG program. This includes any permanent, involuntary move for an assisted project, including any permanent move from the real property that is made:
</P>
<P>(A) After the owner (or person in control of the site) issues a notice to move permanently from the property or refuses to renew an expiring lease, if the move occurs on or after:
</P>
<P>(I) The date of the submission by the recipient (or subrecipient, as applicable) of an application for assistance to HUD (or the recipient, as applicable) that is later approved and funded if the recipient (or subrecipient, as applicable) has site control as evidenced by a deed, sales contract, or option contract to acquire the property; or
</P>
<P>(II) The date on which the recipient (or subrecipient, as applicable) selects the applicable site, if the recipient (or subrecipient, as applicable) does not have site control at the time of the application, provided that the recipient (or subrecipient, as applicable) eventually obtains control over the site;
</P>
<P>(B) Before the date described in paragraph (c)(2)(i)(A) of this section, if the recipient or HUD determines that the displacement resulted directly from acquisition, rehabilitation, or demolition for the project; or
</P>
<P>(C) By a tenant-occupant of a dwelling unit and the tenant moves after execution of the agreement covering the acquisition, rehabilitation, or demolition of the property for the project.
</P>
<P>(ii) Notwithstanding paragraph (c)(2)(i) of this section, a person does not qualify as a displaced person if:
</P>
<P>(A) The person has been evicted for cause based upon a serious or repeated violation of the terms and conditions of the lease or occupancy agreement; violation of applicable Federal, State or local law, or other good cause; and the recipient determines that the eviction was not undertaken for the purpose of evading the obligation to provide relocation assistance.
</P>
<P>(B) The person moved into the property after the submission of the application but, before signing a lease and commencing occupancy, was provided written notice of the project, its possible impact on the person (<I>e.g.,</I> the person may be displaced), and the fact that the person would not qualify as a “displaced person” (or for any assistance under this section) as a result of the project;
</P>
<P>(C) The person is ineligible under 49 CFR 24.2(a)(9)(ii); or
</P>
<P>(D) HUD determines that the person was not displaced as a direct result of acquisition, rehabilitation, or demolition for the project.
</P>
<P>(iii) The recipient or subrecipient may, at any time, request that HUD to determine whether a displacement is or would be covered by this rule.
</P>
<P>(3) <I>Initiation of negotiations.</I> For purposes of determining the type of replacement housing payment assistance to be provided to a displaced person pursuant to this section:
</P>
<P>(i) If the displacement is the direct result of privately undertaken rehabilitation, demolition, or acquisition of the real property, “initiation of negotiations” means the execution of the agreement between the recipient and the subrecipient or the agreement between the recipient (or subrecipient, as applicable) and the person owning or controlling the property;
</P>
<P>(ii) If site control is only evidenced by an option contract to acquire the property, the “initiation of negotiations” does not become effective until the execution of a written agreement that creates a legally enforceable commitment to proceed with the purchase, such as a sales contract.
</P>
<P>(d) <I>Real property acquisition requirements.</I> The acquisition of real property, whether funded privately or publicly, for a project assisted with Emergency Solutions Grant (ESG) funds is subject to the URA and Federal governmentwide regulations at 49 CFR part 24, subpart B.
</P>
<P>(e) <I>Appeals.</I> A person who disagrees with the recipient's (or subrecipient's, if applicable) determination concerning whether the person qualifies as a displaced person, or the amount of relocation assistance for which the person may be eligible, may file a written appeal of that determination with the recipient under 49 CFR 24.10. A low-income person who disagrees with the recipient's determination may submit a written request for review of that determination by the appropriate HUD field office.


</P>
</DIV8>


<DIV8 N="§ 576.409" NODE="24:3.1.1.3.6.5.1.10" TYPE="SECTION">
<HEAD>§ 576.409   Protection for victims of domestic violence, dating violence, sexual assault, or stalking.</HEAD>
<P>(a) <I>Applicability of VAWA protections.</I> The core statutory protections of VAWA that prohibit denial or termination of assistance or eviction solely because an applicant or tenant is a victim of domestic violence, dating violence, sexual assault, or stalking applied upon enactment of VAWA 2013 on March 7, 2013. The VAWA regulatory requirements under 24 CFR part 5, subpart L, as supplemented by this section, apply to all eligibility and termination decisions that are made with respect to ESG rental assistance on or after <I>December 16, 2016.</I> The recipient must ensure that the requirements under 24 CFR part 5, subpart L, are included or incorporated into rental assistance agreements and leases as provided in § 576.106(e) and (g).
</P>
<P>(b) <I>Covered housing provider.</I> For the ESG program, “covered housing provider,” as such term is used in HUD's regulations in 24 CFR part 5, subpart L, refers to:
</P>
<P>(1) The recipient or subrecipient that administers the rental assistance for the purposes of 24 CFR 5.2005(e);
</P>
<P>(2) The housing owner for the purposes of 24 CFR 5.2005(d)(1), (d)(3), and (d)(4) and 5.2009(a);
</P>
<P>(3) The housing owner and the recipient or subrecipient that administers the rental assistance for the purposes of 24 CFR 5.2005(d)(2); and
</P>
<P>(4) The housing owner and the recipient or subrecipient that administers the rental assistance for the purposes of 24 CFR 5.2007. However, the recipient or subrecipient may limit documentation requests under 24 CFR 5.2007 to only the recipient or subrecipient, provided that:
</P>
<P>(i) This limitation is made clear in both the notice described under 24 CFR 5.2005(a)(1) and the rental assistance agreement;
</P>
<P>(ii) The entity designated to receive documentation requests determines whether the program participant is entitled to protection under VAWA and immediately advise the program participant of the determination; and
</P>
<P>(iii) If the program participant is entitled to protection, the entity designated to receive documentation requests must notify the owner in writing that the program participant is entitled to protection under VAWA and work with the owner on the program participant's behalf. Any further sharing or disclosure of the program participant's information will be subject to the requirements in 24 CFR 5.2007.
</P>
<P>(c) <I>Notification.</I> As provided under 24 CFR 5.2005(a) each recipient or subrecipient that determines eligibility for or administers ESG rental assistance is responsible for ensuring that the notice and certification form described under 24 CFR 5.2005(a)(1) is provided to each applicant for ESG rental assistance and each program participant receiving ESG rental assistance at each of the following times:
</P>
<P>(1) When an individual or family is denied ESG rental assistance;
</P>
<P>(2) When an individual or family's application for a unit receiving project-based rental assistance is denied;
</P>
<P>(3) When a program participant begins receiving ESG rental assistance;
</P>
<P>(4) When a program participant is notified of termination of ESG rental assistance; and
</P>
<P>(5) When a program participant receives notification of eviction.
</P>
<P>(d) <I>Emergency transfer plan.</I> (1) The recipient must develop the emergency transfer plan under 24 CFR 5.2005(e) or, if the recipient is a state, require its subrecipients that administer ESG rental assistance to develop the emergency transfer plan(s) required under 24 CFR 5.2005(e). If the state's subrecipients are required to develop the plan(s), the recipient must specify whether an emergency transfer plan is to be developed for:
</P>
<P>(i) The state as a whole;
</P>
<P>(ii) Each area within the state that is covered by a Continuum of Care; or
</P>
<P>(iii) Each subrecipient that administers ESG rental assistance.
</P>
<P>(2) Once the applicable plan is developed in accordance with this section, the recipient and each subrecipient that administers ESG rental assistance must implement the plan in accordance with 24 CFR 5.2005(e).
</P>
<P>(3) Each emergency transfer plan must meet the requirements in 24 CFR 5.2005(e) and include the following program requirements:
</P>
<P>(i) For families living in units receiving project-based rental assistance (assisted units), the required policies must provide that if a program participant qualifies for an emergency transfer, but a safe unit is not immediately available for an internal emergency transfer, that program participant shall have priority over all other applicants for tenant-based rental assistance, utility assistance, and units for which project-based rental assistance is provided.
</P>
<P>(ii) For families receiving tenant-based rental assistance, the required policies must specify what will happen with respect to the non-transferring family member(s), if the family separates in order to effect an emergency transfer.
</P>
<P>(e) <I>Bifurcation.</I> For the purposes of this part, the following requirements shall apply in place of the requirements at 24 CFR 5.2009(b):
</P>
<P>(1) When a family receiving tenant-based rental assistance separates under 24 CFR 5.2009(a), the family's tenant-based rental assistance and utility assistance, if any, shall continue for the family member(s) who are not evicted or removed.
</P>
<P>(2) If a family living in a unit receiving project-based rental assistance separates under 24 CFR 5.2009(a), the family member(s) who are not evicted or removed can remain in the assisted unit without interruption to the rental assistance or utility assistance provided for the unit.
</P>
<P>(f) <I>Emergency shelters.</I> The following requirements apply to emergency shelters funded under § 576.102:
</P>
<P>(1) No individual or family may be denied admission to or removed from the emergency shelter on the basis or as a direct result of the fact that the individual or family is or has been a victim of domestic violence, dating violence, sexual assault, or stalking, if the individual or family otherwise qualifies for admission or occupancy.
</P>
<P>(2) The terms “affiliated individual,” “dating violence,” “domestic violence,” “sexual assault,” and “stalking” are defined in 24 CFR 5.2003.


</P>
<CITA TYPE="N">[81 FR 80808, Nov. 16, 2016]






</CITA>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:3.1.1.3.6.6" TYPE="SUBPART">
<HEAD>Subpart F—Grant Administration</HEAD>


<DIV8 N="§ 576.500" NODE="24:3.1.1.3.6.6.1.1" TYPE="SECTION">
<HEAD>§ 576.500   Recordkeeping and reporting requirements.</HEAD>
<P>(a) <I>In general.</I> The recipient must have policies and procedures to ensure the requirements of this part are met, including those required by 2 CFR part 200. The policies and procedures must be established in writing and implemented by the recipient and its subrecipients to ensure that ESG funds are used in accordance with the requirements. In addition, sufficient records must be established and maintained to enable the recipient and HUD to determine whether ESG requirements are being met.
</P>
<P>(b) <I>Homeless status.</I> The recipient must maintain and follow written intake procedures to ensure compliance with the homeless definition in § 576.2. The procedures must require documentation at intake of the evidence relied upon to establish and verify homeless status. The procedures must establish the order of priority for obtaining evidence as third-party documentation first, intake worker observations second, and certification from the person seeking assistance third. However, lack of third-party documentation must not prevent an individual or family from being immediately admitted to emergency shelter, receiving street outreach services, or being immediately admitted to shelter or receiving services provided by a victim service provider. Records contained in an HMIS or comparable database used by victim service or legal service providers are acceptable evidence of third-party documentation and intake worker observations if the HMIS retains an auditable history of all entries, including the person who entered the data, the date of entry, and the change made; and if the HMIS prevents overrides or changes of the dates on which entries are made.
</P>
<P>(1) If the individual or family qualifies as homeless under paragraph (1)(i) or (ii) of the homeless definition in § 576.2, acceptable evidence includes a written observation by an outreach worker of the conditions where the individual or family was living, a written referral by another housing or service provider, or a certification by the individual or head of household seeking assistance.
</P>
<P>(2) If the individual qualifies as homeless under paragraph (1)(iii) of the homeless definition in § 576.2, because he or she resided in an emergency shelter or place not meant for human habitation and is exiting an institution where he or she resided for 90 days or less, acceptable evidence includes the evidence described in paragraph (b)(1) of this section and one of the following:
</P>
<P>(i) Discharge paperwork or a written or oral referral from a social worker, case manager, or other appropriate official of the institution, stating the beginning and end dates of the time residing in the institution. All oral statements must be recorded by the intake worker; or
</P>
<P>(ii) Where the evidence in paragraph (b)(2)(i) of this section is not obtainable, a written record of the intake worker's due diligence in attempting to obtain the evidence described in paragraph (b)(2)(i) and a certification by the individual seeking assistance that states he or she is exiting or has just exited an institution where he or she resided for 90 days or less.
</P>
<P>(3) If the individual or family qualifies as homeless under paragraph (2) of the homeless definition in § 576.2, because the individual or family will imminently lose their housing, the evidence must include:
</P>
<P>(i)(A) A court order resulting from an eviction action that requires the individual or family to leave their residence within 14 days after the date of their application for homeless assistance; or the equivalent notice under applicable state law, a Notice to Quit, or a Notice to Terminate issued under state law;
</P>
<P>(B) For individuals and families whose primary nighttime residence is a hotel or motel room not paid for by charitable organizations or federal, state, or local government programs for low-income individuals, evidence that the individual or family lacks the resources necessary to reside there for more than 14 days after the date of application for homeless assistance; or
</P>
<P>(C) An oral statement by the individual or head of household that the owner or renter of the housing in which they currently reside will not allow them to stay for more than 14 days after the date of application for homeless assistance. The intake worker must record the statement and certify that it was found credible. To be found credible, the oral statement must either: (I) be verified by the owner or renter of the housing in which the individual or family resides at the time of application for homeless assistance and documented by a written certification by the owner or renter or by the intake worker's recording of the owner or renter's oral statement; or (II) if the intake worker is unable to contact the owner or renter, be documented by a written certification by the intake worker of his or her due diligence in attempting to obtain the owner or renter's verification and the written certification by the individual or head of household seeking assistance that his or her statement was true and complete;
</P>
<P>(ii) Certification by the individual or head of household that no subsequent residence has been identified; and
</P>
<P>(iii) Certification or other written documentation that the individual or family lacks the resources and support networks needed to obtain other permanent housing.
</P>
<P>(4) If the individual or family qualifies as homeless under paragraph (3) of the homeless definition in § 576.2, because the individual or family does not otherwise qualify as homeless under the homeless definition but is an unaccompanied youth under 25 years of age, or homeless family with one or more children or youth, and is defined as homeless under another Federal statute or section 725(2) of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11434a(2)), the evidence must include:
</P>
<P>(i) For paragraph (3)(i) of the homeless definition in § 576.2, certification of homeless status by the local private nonprofit organization or state or local governmental entity responsible for administering assistance under the Runaway and Homeless Youth Act (42 U.S.C. 5701 <I>et seq.</I>), the Head Start Act (42 U.S.C. 9831 <I>et seq.</I>), subtitle N of the Violence Against Women Act of 1994 (42 U.S.C. 14043e <I>et seq.</I>), section 330 of the Public Health Service Act (42 U.S.C. 254b), the Food and Nutrition Act of 2008 (7 U.S.C. 2011 <I>et seq.</I>), section 17 of the Child Nutrition Act of 1966 (42 U.S.C. 1786), or subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 <I>et seq.</I>), as applicable;
</P>
<P>(ii) For paragraph (3)(ii) of the homeless definition in § 576.2, referral by a housing or service provider, written observation by an outreach worker, or certification by the homeless individual or head of household seeking assistance;
</P>
<P>(iii) For paragraph (3)(iii) of the homeless definition in § 576.2, certification by the individual or head of household and any available supporting documentation that the individual or family moved two or more times during the 60-day period immediately preceding the date of application for homeless assistance, including: recorded statements or records obtained from each owner or renter of housing, provider of shelter or housing, or social worker, case worker, or other appropriate official of a hospital or institution in which the individual or family resided; or, where these statements or records are unobtainable, a written record of the intake worker's due diligence in attempting to obtain these statements or records. Where a move was due to the individual or family fleeing domestic violence, dating violence, sexual assault, or stalking, then the intake worker may alternatively obtain a written certification from the individual or head of household seeking assistance that they were fleeing that situation and that they resided at that address; and
</P>
<P>(iv) For paragraph (3)(iv) of the homeless definition in § 576.2, written diagnosis from a professional who is licensed by the state to diagnose and treat that condition (or intake staff-recorded observation of disability that within 45 days of date of the application for assistance is confirmed by a professional who is licensed by the state to diagnose and treat that condition); employment records; department of corrections records; literacy, English proficiency tests; or other reasonable documentation of the conditions required under paragraph (3)(iv) of the homeless definition.
</P>
<P>(5) If the individual or family qualifies under paragraph (4) of the homeless definition in § 576.2, because the individual or family is fleeing domestic violence, dating violence, sexual assault, stalking, or other dangerous or life-threatening conditions related to violence, then acceptable evidence includes an oral statement by the individual or head of household seeking assistance that they are fleeing that situation, that no subsequent residence has been identified and that they lack the resources or support networks, <I>e.g.,</I> family, friends, faith-based or other social networks, needed to obtain other housing. If the individual or family is receiving shelter or services provided by a victim service provider, the oral statement must be documented by either a certification by the individual or head of household; or a certification by the intake worker. Otherwise, the oral statement that the individual or head of household seeking assistance has not identified a subsequent residence and lacks the resources or support networks, <I>e.g.,</I> family, friends, faith-based or other social networks, needed to obtain housing must be documented by a certification by the individual or head of household that the oral statement is true and complete, and, where the safety of the individual or family would not be jeopardized, the domestic violence, dating violence, sexual assault, stalking, or other dangerous or life-threatening condition must be verified by a written observation by the intake worker or a written referral by a housing or service provider, social worker, legal assistance provider, health-care provider, law enforcement agency, legal assistance provider, pastoral counselor, or any other organization from whom the individual or head of household has sought assistance for domestic violence, dating violence, sexual assault, or stalking. The written referral or observation need only include the minimum amount of information necessary to document that the individual or family is fleeing, or attempting to flee domestic violence, dating violence, sexual assault, and stalking.
</P>
<P>(c) <I>At risk of homelessness status.</I> For each individual or family who receives Emergency Solutions Grant (ESG) homelessness prevention assistance, the records must include the evidence relied upon to establish and verify the individual or family's “at risk of homelessness” status. This evidence must include an intake and certification form that meets HUD specifications and is completed by the recipient or subrecipient. The evidence must also include:
</P>
<P>(1) If the program participant meets the criteria under paragraph (1) of the “at risk of homelessness” definition in § 576.2:
</P>
<P>(i) The documentation specified under this section for determining annual income;
</P>
<P>(ii) The program participant's certification on a form specified by HUD that the program participant has insufficient financial resources and support networks; <I>e.g.,</I> family, friends, faith-based or other social networks, immediately available to attain housing stability and meets one or more of the conditions under paragraph (1)(iii) of the definition of “at risk of homelessness” in § 576.2;
</P>
<P>(iii) The most reliable evidence available to show that the program participant does not have sufficient resources or support networks; <I>e.g.,</I> family, friends, faith-based or other social networks, immediately available to prevent them from moving to an emergency shelter or another place described in paragraph (1) of the “homeless” definition. Acceptable evidence includes:
</P>
<P>(A) Source documents (<I>e.g.,</I> notice of termination from employment, unemployment compensation statement, bank statement, health-care bill showing arrears, utility bill showing arrears);
</P>
<P>(B) To the extent that source documents are unobtainable, a written statement by the relevant third party (<I>e.g.,</I> former employer, public administrator, relative) or the written certification by the recipient's or subrecipient's intake staff of the oral verification by the relevant third party that the applicant meets one or both of the criteria under paragraph (1)(ii) of the definition of “at risk of homelessness” in § 576.2; or
</P>
<P>(C) To the extent that source documents and third-party verification are unobtainable, a written statement by the recipient's or subrecipient's intake staff describing the efforts taken to obtain the required evidence; and
</P>
<P>(iv) The most reliable evidence available to show that the program participant meets one or more of the conditions under paragraph (1)(iii) of the definition of “at risk of homelessness” in § 576.2. Acceptable evidence includes:
</P>
<P>(A) Source documents that evidence one or more of the conditions under paragraph (1)(iii) of the definition (<I>e.g.,</I> eviction notice, notice of termination from employment, bank statement);
</P>
<P>(B) To the extent that source documents are unobtainable, a written statement by the relevant third party (<I>e.g.,</I> former employer, owner, primary leaseholder, public administrator, hotel or motel manager) or the written certification by the recipient's or subrecipient's intake staff of the oral verification by the relevant third party that the applicant meets one or more of the criteria under paragraph (1)(iii) of the definition of “at risk of homelessness”; or
</P>
<P>(C) To the extent that source documents and third-party verification are unobtainable, a written statement by the recipient's or subrecipient's intake staff that the staff person has visited the applicant's residence and determined that the applicant meets one or more of the criteria under paragraph (1)(iii) of the definition or, if a visit is not practicable or relevant to the determination, a written statement by the recipient's or subrecipient's intake staff describing the efforts taken to obtain the required evidence; or
</P>
<P>(2) If the program participant meets the criteria under paragraph (2) or (3) of the “at risk of homelessness” definition in § 576.2, certification of the child or youth's homeless status by the agency or organization responsible for administering assistance under the Runaway and Homeless Youth Act (42 U.S.C. 5701 <I>et seq.</I>), the Head Start Act (42 U.S.C. 9831 <I>et seq.</I>), subtitle N of the Violence Against Women Act of 1994 (42 U.S.C. 14043e <I>et seq.</I>), section 330 of the Public Health Service Act (42 U.S.C. 254b), the Food and Nutrition Act of 2008 (7 U.S.C. 2011 <I>et seq.</I>), section 17 of the Child Nutrition Act of 1966 (42 U.S.C. 1786) or subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11431 <I>et seq.</I>), as applicable.
</P>
<P>(d) <I>Determinations of ineligibility.</I> For each individual and family determined ineligible to receive Emergency Solutions Grant (ESG) assistance, the record must include documentation of the reason for that determination.
</P>
<P>(e) <I>Annual income.</I> For each program participant who receives homelessness prevention assistance, or who receives rapid re-housing assistance longer than one year, the following documentation of annual income must be maintained:
</P>
<P>(1) Income evaluation form containing the minimum requirements specified by HUD and completed by the recipient or subrecipient; and
</P>
<P>(2) Source documents for the assets held by the program participant and income received over the most recent period for which representative data is available before the date of the evaluation (<I>e.g.,</I> wage statement, unemployment compensation statement, public benefits statement, bank statement);
</P>
<P>(3) To the extent that source documents are unobtainable, a written statement by the relevant third party (<I>e.g.,</I> employer, government benefits administrator) or the written certification by the recipient's or subrecipient's intake staff of the oral verification by the relevant third party of the income the program participant received over the most recent period for which representative data is available; or
</P>
<P>(4) To the extent that source documents and third party verification are unobtainable, the written certification by the program participant of the amount of income the program participant received for the most recent period representative of the income that the program participant is reasonably expected to receive over the 3-month period following the evaluation.
</P>
<P>(f) <I>Program participant records.</I> In addition to evidence of homeless status or “at risk of homelessness” status, as applicable, records must be kept for each program participant that document:
</P>
<P>(1) The services and assistance provided to that program participant, including, as applicable, the security deposit, rental assistance, and utility payments made on behalf of the program participant;
</P>
<P>(2) Compliance with the applicable requirements for providing services and assistance to that program participant under the program components and eligible activities provisions at § 576.101 through § 576.106, the provision on determining eligibility and amount and type of assistance at § 576.401(a) and (b), and the provision on using appropriate assistance and services at § 576.401(d) and (e); and
</P>
<P>(3) Where applicable, compliance with the termination of assistance requirement in § 576.402.
</P>
<P>(g) <I>Centralized or coordinated assessment systems and procedures.</I> The recipient and its subrecipients must keep documentation evidencing the use of, and written intake procedures for, the centralized or coordinated assessment system(s) developed by the Continuum of Care(s) in accordance with the requirements established by HUD.
</P>
<P>(h) <I>Rental assistance agreements and payments.</I> The records must include copies of all leases and rental assistance agreements for the provision of rental assistance, documentation of payments made to owners for the provision of rental assistance, and supporting documentation for these payments, including dates of occupancy by program participants.
</P>
<P>(i) <I>Utility allowance.</I> The records must document the monthly allowance for utilities (excluding telephone) used to determine compliance with the rent restriction.
</P>
<P>(j) <I>Shelter and housing standards.</I> The records must include documentation of compliance with the shelter and housing standards in § 576.403, including inspection reports.
</P>
<P>(k) <I>Emergency shelter facilities.</I> The recipient must keep records of the emergency shelters assisted under the ESG program, including the amount and type of assistance provided to each emergency shelter. As applicable, the recipient's records must also include documentation of the value of the building before the rehabilitation of an existing emergency shelter or after the conversion of a building into an emergency shelter and copies of the recorded deed or use restrictions.
</P>
<P>(l) <I>Services and assistance provided.</I> The recipient must keep records of the types of essential services, rental assistance, and housing stabilization and relocation services provided under the recipient's program and the amounts spent on these services and assistance. The recipient and its subrecipients that are units of general purpose local government must keep records to demonstrate compliance with the maintenance of effort requirement, including records of the unit of the general purpose local government's annual budgets and sources of funding for street outreach and emergency shelter services.
</P>
<P>(m) <I>Coordination with Continuum(s) of Care and other programs.</I> The recipient and its subrecipients must document their compliance with the requirements of § 576.400 for consulting with the Continuum(s) of Care and coordinating and integrating ESG assistance with programs targeted toward homeless people and mainstream service and assistance programs.
</P>
<P>(n) <I>HMIS.</I> The recipient must keep records of the participation in HMIS or a comparable database by all projects of the recipient and its subrecipients.
</P>
<P>(o) <I>Matching.</I> The recipient must keep records of the source and use of contributions made to satisfy the matching requirement in § 576.201. The records must indicate the particular fiscal year grant for which each matching contribution is counted. The records must show how the value placed on third-party, noncash contributions was derived. To the extent feasible, volunteer services must be supported by the same methods that the organization uses to support the allocation of regular personnel costs.
</P>
<P>(p) <I>Conflicts of interest.</I> The recipient and its subrecipients must keep records to show compliance with the organizational conflicts-of-interest requirements in § 576.404(a), a copy of the personal conflicts of interest policy or codes of conduct developed and implemented to comply with the requirements in § 576.404(b), and records supporting exceptions to the personal conflicts of interest prohibitions.
</P>
<P>(q) <I>Homeless participation.</I> The recipient must document its compliance with the homeless participation requirements under § 576.405.
</P>
<P>(r) <I>Faith-based activities.</I> The recipient and its subrecipients must document their compliance with the faith-based activities requirements under § 576.406.
</P>
<P>(s) <I>Other Federal requirements.</I> The recipient and its subrecipients must document their compliance with the Federal requirements in § 576.407 and § 576.409, as applicable, including:
</P>
<P>(1) Records demonstrating compliance with the nondiscrimination and equal opportunity requirements under § 576.407(a) and the affirmative outreach requirements in § 576.407(b), including:


</P>
<P>(i) Data concerning race, ethnicity, disability status, sex, and family characteristics of persons and households who are applicants for, or program participants in, any program or activity funded in whole or in part with ESG funds; and
</P>
<P>(ii) Documentation that the recipient submitted a certification that it will affirmatively further fair housing, consistent with §§ 5.150 and 5.151 of this title.
</P>
<P>(2) Records demonstrating compliance with the uniform administrative requirements in 2 CFR part 200.
</P>
<P>(3) Records demonstrating compliance with the environmental review requirements, including flood insurance requirements.
</P>
<P>(4) Certifications and disclosure forms required under the lobbying and disclosure requirements in 24 CFR part 87.
</P>
<P>(5) Data on emergency transfers requested under § 576.409, pertaining to victims of domestic violence, dating violence, sexual assault, or stalking, including data on the outcomes of such requests.
</P>
<P>(t) <I>Relocation.</I> The records must include documentation of compliance with the displacement, relocation, and acquisition requirements in § 576.408.
</P>
<P>(u) <I>Financial records.</I> (1) The recipient must retain supporting documentation for all costs charged to the ESG grant.
</P>
<P>(2) The recipient and its subrecipients must keep documentation showing that ESG grant funds were spent on allowable costs in accordance with the requirements for eligible activities under “§§ 576.101 through 576.109, financial management in 2 CFR 200.302, and the cost principles in 2 CFR part 200, subpart E.
</P>
<P>(3) The recipient and its subrecipients must retain records of the receipt and use of program income.
</P>
<P>(4) The recipient must keep documentation of compliance with the expenditure limits in § 576.100 and the expenditure deadline in § 576.203.
</P>
<P>(v) <I>Subrecipients and contractors.</I> (1) The recipient must retain copies of all solicitations of and agreements with subrecipients, records of all payment requests by and dates of payments made to subrecipients, and documentation of all monitoring and sanctions of subrecipients, as applicable. If the recipient is a State, the recipient must keep records of each recapture and distribution of recaptured funds under § 576.501.
</P>
<P>(2) The recipient and its subrecipients must retain copies of all procurement contracts and documentation of compliance with the procurement requirements in 2 CFR part 200, subpart D.
</P>
<P>(3) The recipient must ensure that its subrecipients comply with the recordkeeping requirements specified by the recipient and HUD notice or regulations.
</P>
<P>(w) <I>Other records specified by HUD.</I> The recipient must keep other records specified by HUD.
</P>
<P>(x) <I>Confidentiality.</I> (1) The recipient and its subrecipients must develop and implement written procedures to ensure:
</P>
<P>(i) All records containing personally identifying information (as defined in HUD's standards for participation, data collection, and reporting in a local HMIS) of any individual or family who applies for and/or receives ESG assistance will be kept secure and confidential;
</P>
<P>(ii) The address or location of any domestic violence, dating violence, sexual assault, or stalking shelter project assisted under the ESG will not be made public, except with written authorization of the person responsible for the operation of the shelter; and
</P>
<P>(iii) The address or location of any housing of a program participant will not be made public, except as provided under a preexisting privacy policy of the recipient or subrecipient and consistent with state and local laws regarding privacy and obligations of confidentiality.
</P>
<P>(2) The confidentiality procedures of the recipient and its subrecipients must be in writing and must be maintained in accordance with this section.
</P>
<P>(y) <I>Period of record retention.</I> All records pertaining to each fiscal year of ESG funds must be retained for the greater of 5 years or the period specified below. Copies made by microfilming, photocopying, or similar methods may be substituted for the original records.
</P>
<P>(1) Documentation of each program participant's qualification as a family or individual at risk of homelessness or as a homeless family or individual and other program participant records must be retained for 5 years after the expenditure of all funds from the grant under which the program participant was served;
</P>
<P>(2) Where ESG funds are used for the renovation of an emergency shelter involves costs charged to the ESG grant that exceed 75 percent of the value of the building before renovation, records must be retained until 10 years after the date that ESG funds are first obligated for the renovation; and
</P>
<P>(3) Where ESG funds are used to convert a building into an emergency shelter and the costs charged to the ESG grant for the conversion exceed 75 percent of the value of the building after conversion, records must be retained until 10 years after the date that ESG funds are first obligated for the conversion.
</P>
<P>(z) <I>Access to records.</I> (1) <I>Federal Government rights.</I> Notwithstanding the confidentiality procedures established under paragraph (x) of this section, the recipient and its subrecipients must comply with the requirements for access to records in 2 CFR 200.336. 
</P>
<P>(2) <I>Public rights.</I> The recipient must provide citizens, public agencies, and other interested parties with reasonable access (consistent with state and local laws regarding privacy and obligations of confidentiality and the confidentiality requirements in this part) to records regarding any uses of ESG funds the recipient received during the preceding 5 years.
</P>
<P>(aa) <I>Reports.</I> The recipient must collect and report data on its use of ESG funds in the Integrated Disbursement and Information System (IDIS) and other reporting systems, as specified by HUD. The recipient must also comply with the reporting requirements in 2 CFR part 200 and 24 CFR part 91 and the reporting requirements under the Federal Funding Accountability and Transparency Act of 2006, (31 U.S.C. 6101 note), which are set forth in appendix A to 2 CFR part 170.
</P>
<CITA TYPE="N">[76 FR 75974, Dec. 5, 2011, as amended at 80 FR 42368, July 16, 2015; 80 FR 75939, Dec. 7, 2015; 81 FR 80809, Nov. 16, 2016; 85 FR 47911, Aug. 7, 2020; 86 FR 30792, June 10, 2021; 90 FR 11024, Mar. 3, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 576.501" NODE="24:3.1.1.3.6.6.1.2" TYPE="SECTION">
<HEAD>§ 576.501   Enforcement.</HEAD>
<P>(a) <I>Performance reviews.</I> (1) HUD will review the performance of each recipient in carrying out its responsibilities under this part whenever determined necessary by HUD, but at least annually. In conducting performance reviews, HUD will rely primarily on information obtained from the records and reports from the recipient and, when appropriate, its subrecipients, as well as information from onsite monitoring, audit reports, and information from IDIS and HMIS. Where applicable, HUD may also consider relevant information pertaining to the recipient's performance gained from other sources, including citizen comments, complaint determinations, and litigation. Reviews to determine compliance with specific requirements of this part will be conducted as necessary, with or without prior notice to the recipient.
</P>
<P>(2) If HUD determines preliminarily that the recipient or one of its subrecipients has not complied with an ESG program requirement, HUD will give the recipient notice of this determination and an opportunity to demonstrate, within the time prescribed by HUD and on the basis of substantial facts and data, that the recipient has complied with Emergency Solutions Grant (ESG) requirements. HUD may change the method of payment to require the recipient to obtain HUD's prior approval each time the recipient draws down Emergency Solutions Grant (ESG) funds. To obtain prior approval, the recipient may be required to manually submit its payment requests and supporting documentation to HUD in order to show that the funds to be drawn down will be expended on eligible activities in accordance with all ESG program requirements.
</P>
<P>(3) If the recipient fails to demonstrate to HUD's satisfaction that the activities were carried out in compliance with ESG program requirements, HUD will take one or more of the remedial actions or sanctions specified in paragraph (b) of this section.
</P>
<P>(b) <I>Remedial actions and sanctions.</I> Remedial actions and sanctions for a failure to meet an ESG program requirement will be designed to prevent a continuation of the deficiency; mitigate, to the extent possible, its adverse effects or consequences; and prevent its recurrence.
</P>
<P>(1) HUD may instruct the recipient to submit and comply with proposals for action to correct, mitigate, and prevent noncompliance with ESG requirements, including:
</P>
<P>(i) Preparing and following a schedule of actions for carrying out activities affected by the noncompliance, including schedules, timetables, and milestones necessary to implement the affected activities;
</P>
<P>(ii) Establishing and following a management plan that assigns responsibilities for carrying out the remedial actions;
</P>
<P>(iii) Canceling or revising activities likely to be affected by the noncompliance, before expending ESG funds for the activities;
</P>
<P>(iv) Reprogramming ESG funds that have not yet been expended from affected activities to other eligible activities;
</P>
<P>(v) Suspending disbursement of ESG funds for some or all activities;
</P>
<P>(vi) Reducing or terminating the remaining grant of a subrecipient and reallocating those funds to other subrecipients; and
</P>
<P>(vii) Making matching contributions before or as draws are made from the recipient's ESG grant.
</P>
<P>(2) HUD may change the method of payment to a reimbursement basis.
</P>
<P>(3) HUD may suspend payments to the extent HUD deems it necessary to preclude the further expenditure of funds for affected activities.
</P>
<P>(4) HUD may remove the recipient from participation in reallocations of funds under subpart D of this part.
</P>
<P>(5) HUD may deny matching credit for all or part of the cost of the affected activities and require the recipient to make further matching contributions to make up for the contribution determined to be ineligible.
</P>
<P>(6) HUD may require the recipient to reimburse its line of credit in an amount equal to the funds used for the affected activities.
</P>
<P>(7) HUD may reduce or terminate the remaining grant of a recipient and reallocate those funds to other recipients in accordance with subpart D of this part.
</P>
<P>(8) HUD may condition a future grant.
</P>
<P>(9) HUD may take other remedies that are legally available.
</P>
<P>(c) <I>Recipient sanctions.</I> If the recipient determines that a subrecipient is not complying with an ESG program requirement or its subgrant agreement, the recipient must take appropriate actions, as prescribed for HUD in paragraphs (a) and (b) of this section. If the recipient is a State and funds become available as a result of an action under this section, the recipient must reallocate those funds to other subrecipients as soon as practicable. If the recipient is a unit of general purpose local government of territory, it must either reallocate those funds to other subrecipients or reprogram the funds for other activities to be carried out by the recipient as soon as practicable. The recipient must amend its Consolidated Plan in accordance with its citizenship participation plan if funds become available and are reallocated or reprogrammed under this section. The reallocated or reprogrammed funds must be used by the expenditure deadline in § 576.203.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="578" NODE="24:3.1.1.3.7" TYPE="PART">
<HEAD>PART 578—CONTINUUM OF CARE PROGRAM
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1701x, 1701 x-1; 42 U.S.C. 11381 <I>et seq.,</I> 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>77 FR 45442, July 31, 2012, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:3.1.1.3.7.1" TYPE="SUBPART">
<HEAD>Subpart A—General Provisions</HEAD>


<DIV8 N="§ 578.1" NODE="24:3.1.1.3.7.1.1.1" TYPE="SECTION">
<HEAD>§ 578.1   Purpose and scope.</HEAD>
<P>(a) The Continuum of Care program is authorized by subtitle C of title IV of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11381-11389).
</P>
<P>(b) The program is designed to:
</P>
<P>(1) Promote communitywide commitment to the goal of ending homelessness;
</P>
<P>(2) Provide funding for efforts by nonprofit providers, States, and local governments to quickly rehouse homeless individuals (including unaccompanied youth) and families, while minimizing the trauma and dislocation caused to homeless individuals, families, and communities by homelessness;
</P>
<P>(3) Promote access to and effective utilization of mainstream programs by homeless individuals and families; and
</P>
<P>(4) Optimize self-sufficiency among individuals and families experiencing homelessness.


</P>
</DIV8>


<DIV8 N="§ 578.3" NODE="24:3.1.1.3.7.1.1.2" TYPE="SECTION">
<HEAD>§ 578.3   Definitions.</HEAD>
<P>As used in this part:
</P>
<P><I>Act</I> means the McKinney-Vento Homeless Assistance Act as amended (42 U.S.C. 11371 <I>et seq.</I>).
</P>
<P><I>Annual renewal amount</I> means the amount that a grant can be awarded on an annual basis when renewed. It includes funds only for those eligible activities (operating, supportive services, leasing, rental assistance, HMIS, and administration) that were funded in the original grant (or the original grant as amended), less the unrenewable activities (acquisition, new construction, rehabilitation, and any administrative costs related to these activities).
</P>
<P><I>Applicant</I> means an eligible applicant that has been designated by the Continuum of Care to apply for assistance under this part on behalf of that Continuum.
</P>
<P><I>At risk of homelessness.</I> (1) An individual or family who:
</P>
<P>(i) Has an annual income below 30 percent of median family income for the area, as determined by HUD;
</P>
<P>(ii) Does not have sufficient resources or support networks, <I>e.g.,</I> family, friends, faith-based or other social networks, immediately available to prevent them from moving to an emergency shelter or another place described in paragraph (1) of the “Homeless” definition in this section; and
</P>
<P>(iii) Meets one of the following conditions:
</P>
<P>(A) Has moved because of economic reasons two or more times during the 60 days immediately preceding the application for homelessness prevention assistance;
</P>
<P>(B) Is living in the home of another because of economic hardship;
</P>
<P>(C) Has been notified in writing that their right to occupy their current housing or living situation will be terminated within 21 days of the date of application for assistance;
</P>
<P>(D) Lives in a hotel or motel and the cost of the hotel or motel stay is not paid
</P>
<FP>by charitable organizations or by federal, State, or local government programs for low-income individuals;
</FP>
<P>(E) Lives in a single-room occupancy or efficiency apartment unit in which there reside more than two persons, or lives in a larger housing unit in which there reside more than 1.5 people per room, as defined by the U.S. Census Bureau;
</P>
<P>(F) Is exiting a publicly funded institution, or system of care (such as a health-care facility, a mental health facility, foster care or other youth facility, or correction program or institution); or
</P>
<P>(G) Otherwise lives in housing that has characteristics associated with instability and an increased risk of homelessness, as identified in the recipient's approved consolidated plan;
</P>
<P>(2) A child or youth who does not qualify as “homeless” under this section, but qualifies as “homeless” under section 387(3) of the Runaway and Homeless Youth Act (42 U.S.C. 5732a(3)), section 637(11) of the Head Start Act (42 U.S.C. 9832(11)), section 41403(6) of the Violence Against Women Act of 1994 (42 U.S.C. 14043e-2(6)), section 330(h)(5)(A) of the Public Health Service Act (42 U.S.C. 254b(h)(5)(A)), section 3(m) of the Food and Nutrition Act of 2008 (7 U.S.C. 2012(m)), or section 17(b)(15) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(b)(15)); or
</P>
<P>(3) A child or youth who does not qualify as “homeless” under this section, but qualifies as “homeless” under section 725(2) of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11434a(2)), and the parent(s) or guardian(s) of that child or youth if living with her or him.
</P>
<P><I>Centralized or coordinated assessment system</I> means a centralized or coordinated process designed to coordinate program participant intake assessment and provision of referrals. A centralized or coordinated assessment system covers the geographic area, is easily accessed by individuals and families seeking housing or services, is well advertized, and includes a comprehensive and standardized assessment tool.
</P>
<P><I>Chronically homeless</I> means:
</P>
<P>(1) A “homeless individual with a disability,” as defined in section 401(9) of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11360(9)), who:
</P>
<P>(i) Lives in a place not meant for human habitation, a safe haven, or in an emergency shelter; and
</P>
<P>(ii) Has been homeless and living as described in paragraph (1)(i) of this definition continuously for at least 12 months or on at least 4 separate occasions in the last 3 years, as long as the combined occasions equal at least 12 months and each break in homelessness separating the occasions included at least 7 consecutive nights of not living as described in paragraph (1)(i). Stays in institutional care facilities for fewer than 90 days will not constitute as a break in homelessness, but rather such stays are included in the 12-month total, as long as the individual was living or residing in a place not meant for human habitation, a safe haven, or an emergency shelter immediately before entering the institutional care facility;
</P>
<P>(2) An individual who has been residing in an institutional care facility, including a jail, substance abuse or mental health treatment facility, hospital, or other similar facility, for fewer than 90 days and met all of the criteria in paragraph (1) of this definition, before entering that facility; or
</P>
<P>(3) A family with an adult head of household (or if there is no adult in the family, a minor head of household) who meets all of the criteria in paragraph (1) or (2) of this definition, including a family whose composition has fluctuated while the head of household has been homeless.
</P>
<P><I>Collaborative applicant</I> means the eligible applicant that has been designated by the Continuum of Care to apply for a grant for Continuum of Care planning funds under this part on behalf of the Continuum.
</P>
<P><I>Consolidated plan</I> means the HUD-approved plan developed in accordance with 24 CFR 91.
</P>
<P><I>Continuum of Care and Continuum</I> means the group organized to carry out the responsibilities required under this part and that is composed of representatives of organizations, including nonprofit homeless providers, victim service providers, faith-based organizations, governments, businesses, advocates, public housing agencies, school districts, social service providers, mental health agencies, hospitals, universities, affordable housing developers, law enforcement, organizations that serve homeless and formerly homeless veterans, and homeless and formerly homeless persons to the extent these groups are represented within the geographic area and are available to participate.
</P>
<P><I>Developmental disability</I> means, as defined in section 102 of the Developmental Disabilities Assistance and Bill of Rights Act of 2000 (42 U.S.C. 15002):
</P>
<P>(1) A severe, chronic disability of an individual that—
</P>
<P>(i) Is attributable to a mental or physical impairment or combination of mental and physical impairments;
</P>
<P>(ii) Is manifested before the individual attains age 22;
</P>
<P>(iii) Is likely to continue indefinitely;
</P>
<P>(iv) Results in substantial functional limitations in three or more of the following areas of major life activity:
</P>
<P>(A) Self-care;
</P>
<P>(B) Receptive and expressive language;
</P>
<P>(C) Learning;
</P>
<P>(D) Mobility;
</P>
<P>(E) Self-direction;
</P>
<P>(F) Capacity for independent living;
</P>
<P>(G) Economic self-sufficiency.
</P>
<P>(v) Reflects the individual's need for a combination and sequence of special, interdisciplinary, or generic services, individualized supports, or other forms of assistance that are of lifelong or extended duration and are individually planned and coordinated.
</P>
<P>(2) An individual from birth to age 9, inclusive, who has a substantial developmental delay or specific congenital or acquired condition, may be considered to have a developmental disability without meeting three or more of the criteria described in paragraphs (1)(i) through (v) of the definition of “developmental disability” in this section if the individual, without services and supports, has a high probability of meeting these criteria later in life.
</P>
<P><I>Eligible applicant</I> means a private nonprofit organization, State, local government, or instrumentality of State and local government.
</P>
<P><I>Emergency shelter</I> is defined in 24 CFR part 576.
</P>
<P><I>Emergency Solutions Grants (ESG)</I> means the grants provided under 24 CFR part 576.
</P>
<P><I>Fair Market Rent (FMR)</I> means the Fair Market Rents published in the <E T="04">Federal Register</E> annually by HUD.
</P>
<P><I>High-performing community (HPC)</I> means a Continuum of Care that meets the standards in subpart E of this part and has been designated as a high-performing community by HUD.
</P>
<P><I>Homeless</I> means:
</P>
<P>(1) An individual or family who lacks a fixed, regular, and adequate nighttime residence, meaning:
</P>
<P>(i) An individual or family with a primary nighttime residence that is a public or private place not designed for or ordinarily used as a regular sleeping accommodation for human beings, including a car, park, abandoned building, bus or train station, airport, or camping ground;
</P>
<P>(ii) An individual or family living in a supervised publicly or privately operated shelter designated to provide temporary living arrangements (including congregate shelters, transitional housing, and hotels and motels paid for by charitable organizations or by federal, State, or local government programs for low-income individuals); or
</P>
<P>(iii) An individual who is exiting an institution where he or she resided for 90 days or less and who resided in an emergency shelter or place not meant for human habitation immediately before entering that institution;
</P>
<P>(2) An individual or family who will imminently lose their primary nighttime residence, provided that:
</P>
<P>(i) The primary nighttime residence will be lost within 14 days of the date of application for homeless assistance;
</P>
<P>(ii) No subsequent residence has been identified; and
</P>
<P>(iii) The individual or family lacks the resources or support networks, <I>e.g.,</I> family, friends, faith-based or other social networks, needed to obtain other permanent housing;
</P>
<P>(3) Unaccompanied youth under 25 years of age, or families with children and youth, who do not otherwise qualify as homeless under this definition, but who:
</P>
<P>(i) Are defined as homeless under section 387 of the Runaway and Homeless Youth Act (42 U.S.C. 5732a), section 637 of the Head Start Act (42 U.S.C. 9832), section 41403 of the Violence Against Women Act of 1994 (42 U.S.C. 14043e-2), section 330(h) of the Public Health Service Act (42 U.S.C. 254b(h)), section 3 of the Food and Nutrition Act of 2008 (7 U.S.C. 2012), section 17(b) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(b)), or section 725 of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11434a);
</P>
<P>(ii) Have not had a lease, ownership interest, or occupancy agreement in permanent housing at any time during the 60 days immediately preceding the date of application for homeless assistance;
</P>
<P>(iii) Have experienced persistent instability as measured by two moves or more during the 60-day period immediately preceding the date of applying for homeless assistance; and
</P>
<P>(iv) Can be expected to continue in such status for an extended period of time because of chronic disabilities; chronic physical health or mental health conditions; substance addiction; histories of domestic violence or childhood abuse (including neglect); the presence of a child or youth with a disability; or two or more barriers to employment, which include the lack of a high school degree or General Education Development (GED), illiteracy, low English proficiency, a history of incarceration or detention for criminal activity, and a history of unstable employment; or
</P>
<P>(4) Any individual or family who:
</P>
<P>(i) Is fleeing, or is attempting to flee, domestic violence, dating violence, sexual assault, stalking, or other dangerous or life-threatening conditions that relate to violence against the individual or a family member, including a child, that has either taken place within the individual's or family's primary nighttime residence or has made the individual or family afraid to return to their primary nighttime residence;
</P>
<P>(ii) Has no other residence; and
</P>
<P>(iii) Lacks the resources or support networks, <I>e.g.,</I> family, friends, and faith-based or other social networks, to obtain other permanent housing.
</P>
<P><I>Homeless Management Information System (HMIS)</I> means the information system designated by the Continuum of Care to comply with the HMIS requirements prescribed by HUD.
</P>
<P><I>HMIS Lead</I> means the entity designated by the Continuum of Care in accordance with this part to operate the Continuum's HMIS on its behalf.
</P>
<P><I>Permanent housing</I> means community-based housing without a designated length of stay, and includes both permanent supportive housing and rapid rehousing. To be permanent housing, the program participant must be the tenant on a lease for a term of at least one year, which is renewable for terms that are a minimum of one month long, and is terminable only for cause.
</P>
<P><I>Permanent supportive housing</I> means permanent housing in which supportive services are provided to assist homeless persons with a disability to live independently.
</P>
<P><I>Point-in-time count</I> means a count of sheltered and unsheltered homeless persons carried out on one night in the last 10 calendar days of January or at such other time as required by HUD.
</P>
<P><I>Private nonprofit organization</I> means an organization:
</P>
<P>(1) No part of the net earnings of which inure to the benefit of any member, founder, contributor, or individual;
</P>
<P>(2) That has a voluntary board;
</P>
<P>(3) That has a functioning accounting system that is operated in accordance with generally accepted accounting principles, or has designated a fiscal agent that will maintain a functioning accounting system for the organization in accordance with generally accepted accounting principles; and
</P>
<P>(4) That practices nondiscrimination in the provision of assistance.
</P>
<P>A private nonprofit organization does not include governmental organizations, such as public housing agencies.
</P>
<P><I>Program participant</I> means an individual (including an unaccompanied youth) or family who is assisted with Continuum of Care program funds.
</P>
<P><I>Project</I> means a group of eligible activities, such as HMIS costs, identified as a project in an application to HUD for Continuum of Care funds and includes a structure (or structures) that is (are) acquired, rehabilitated, constructed, or leased with assistance provided under this part or with respect to which HUD provides rental assistance or annual payments for operating costs, or supportive services under this subtitle.
</P>
<P><I>Recipient</I> means an applicant that signs a grant agreement with HUD.
</P>
<P><I>Safe haven</I> means, for the purpose of defining chronically homeless, supportive housing that meets the following:
</P>
<P>(1) Serves hard to reach homeless persons with severe mental illness who came from the streets and have been unwilling or unable to participate in supportive services;
</P>
<P>(2) Provides 24-hour residence for eligible persons for an unspecified period;
</P>
<P>(3) Has an overnight capacity limited to 25 or fewer persons; and
</P>
<P>(4) Provides low-demand services and referrals for the residents.
</P>
<P><I>State</I> means each of the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, American Samoa, Guam, the Commonwealth of the Northern Marianas, and the Virgin Islands.
</P>
<P><I>Subrecipient</I> means a private nonprofit organization, State, local government, or instrumentality of State or local government that receives a subgrant from the recipient to carry out a project.
</P>
<P><I>Transitional housing</I> means housing, where all program participants have signed a lease or occupancy agreement, the purpose of which is to facilitate the movement of homeless individuals and families into permanent housing within 24 months or such longer period as HUD determines necessary. The program participant must have a lease or occupancy agreement for a term of at least one month that ends in 24 months and cannot be extended.
</P>
<P><I>Unified Funding Agency</I> (UFA) means an eligible applicant selected by the Continuum of Care to apply for a grant for the entire Continuum, which has the capacity to carry out the duties in § 578.11(b), which is approved by HUD and to which HUD awards a grant.
</P>
<P><I>Victim service provider</I> means a private nonprofit organization whose primary mission is to provide services to victims of domestic violence, dating violence, sexual assault, or stalking. This term includes rape crisis centers, battered women's shelters, domestic violence transitional housing programs, and other programs.


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:3.1.1.3.7.2" TYPE="SUBPART">
<HEAD>Subpart B—Establishing and Operating a Continuum of Care</HEAD>


<DIV8 N="§ 578.5" NODE="24:3.1.1.3.7.2.1.1" TYPE="SECTION">
<HEAD>§ 578.5   Establishing the Continuum of Care.</HEAD>
<P>(a) <I>The Continuum of Care.</I> Representatives from relevant organizations within a geographic area shall establish a Continuum of Care for the geographic area to carry out the duties of this part. Relevant organizations include nonprofit homeless assistance providers, victim service providers, faith-based organizations, governments, businesses, advocates, public housing agencies, school districts, social service providers, mental health agencies, hospitals, universities, affordable housing developers, law enforcement, and organizations that serve veterans and homeless and formerly homeless individuals.
</P>
<P>(b) <I>The board.</I> The Continuum of Care must establish a board to act on behalf of the Continuum using the process established as a requirement by § 578.7(a)(3) and must comply with the conflict-of-interest requirements at § 578.95(b). The board must:
</P>
<P>(1) Be representative of the relevant organizations and of projects serving homeless subpopulations; and
</P>
<P>(2) Include at least one homeless or formerly homeless individual.
</P>
<P>(c) <I>Transition.</I> Continuums of Care shall have 2 years after August 30, 2012 to comply with the requirements of paragraph (b) of this section.


</P>
</DIV8>


<DIV8 N="§ 578.7" NODE="24:3.1.1.3.7.2.1.2" TYPE="SECTION">
<HEAD>§ 578.7   Responsibilities of the Continuum of Care.</HEAD>
<P>(a) <I>Operate the Continuum of Care.</I> The Continuum of Care must:
</P>
<P>(1) Hold meetings of the full membership, with published agendas, at least semi-annually;
</P>
<P>(2) Make an invitation for new members to join publicly available within the geographic at least annually;
</P>
<P>(3) Adopt and follow a written process to select a board to act on behalf of the Continuum of Care. The process must be reviewed, updated, and approved by the Continuum at least once every 5 years;
</P>
<P>(4) Appoint additional committees, subcommittees, or workgroups;
</P>
<P>(5) In consultation with the collaborative applicant and the HMIS Lead, develop, follow, and update annually a governance charter, which will include all procedures and policies needed to comply with subpart B of this part and with HMIS requirements as prescribed by HUD; and a code of conduct and recusal process for the board, its chair(s), and any person acting on behalf of the board;
</P>
<P>(6) Consult with recipients and subrecipients to establish performance targets appropriate for population and program type, monitor recipient and subrecipient performance, evaluate outcomes, and take action against poor performers;
</P>
<P>(7) Evaluate outcomes of projects funded under the Emergency Solutions Grants program and the Continuum of Care program, and report to HUD;
</P>
<P>(8) In consultation with recipients of Emergency Solutions Grants program funds within the geographic area, establish and operate either a centralized or coordinated assessment system that provides an initial, comprehensive assessment of the needs of individuals and families for housing and services. The Continuum must develop a specific policy to guide the operation of the centralized or coordinated assessment system on how its system will address the needs of individuals and families who are fleeing, or attempting to flee, domestic violence, dating violence, sexual assault, or stalking, but who are seeking shelter or services from nonvictim service providers. This system must comply with any requirements established by HUD by Notice.
</P>
<P>(9) In consultation with recipients of Emergency Solutions Grants program funds within the geographic area, establish and consistently follow written standards for providing Continuum of Care assistance. At a minimum, these written standards must include:
</P>
<P>(i) Policies and procedures for evaluating individuals' and families' eligibility for assistance under this part;
</P>
<P>(ii) Policies and procedures for determining and prioritizing which eligible individuals and families will receive transitional housing assistance (these policies must include the emergency transfer priority required under § 578.99(j)(8));
</P>
<P>(iii) Policies and procedures for determining and prioritizing which eligible individuals and families will receive rapid rehousing assistance (these policies must include the emergency transfer priority required under § 578.99(j)(8));
</P>
<P>(iv) Standards for determining what percentage or amount of rent each program participant must pay while receiving rapid rehousing assistance;
</P>
<P>(v) Policies and procedures for determining and prioritizing which eligible individuals and families will receive permanent supportive housing assistance (these policies must include the emergency transfer priority required under § 578.99(j)(8)); and
</P>
<P>(vi) Where the Continuum is designated a high-performing community, as described in subpart G of this part, policies and procedures set forth in 24 CFR 576.400(e)(3)(vi), (e)(3)(vii), (e)(3)(viii), and (e)(3)(ix).
</P>
<P>(b) <I>Designating and operating an HMIS.</I> The Continuum of Care must:
</P>
<P>(1) Designate a single Homeless Management Information System (HMIS) for the geographic area;
</P>
<P>(2) Designate an eligible applicant to manage the Continuum's HMIS, which will be known as the HMIS Lead;
</P>
<P>(3) Review, revise, and approve a privacy plan, security plan, and data quality plan for the HMIS.
</P>
<P>(4) Ensure consistent participation of recipients and subrecipients in the HMIS; and
</P>
<P>(5) Ensure the HMIS is administered in compliance with requirements prescribed by HUD.
</P>
<P>(c) <I>Continuum of Care planning.</I> The Continuum must develop a plan that includes:
</P>
<P>(1) Coordinating the implementation of a housing and service system within its geographic area that meets the needs of the homeless individuals (including unaccompanied youth) and families. At a minimum, such system encompasses the following:
</P>
<P>(i) Outreach, engagement, and assessment;
</P>
<P>(ii) Shelter, housing, and supportive services;
</P>
<P>(iii) Prevention strategies.
</P>
<P>(2) Planning for and conducting, at least biennially, a point-in-time count of homeless persons within the geographic area that meets the following requirements:
</P>
<P>(i) Homeless persons who are living in a place not designed or ordinarily used as a regular sleeping accommodation for humans must be counted as unsheltered homeless persons.
</P>
<P>(ii) Persons living in emergency shelters and transitional housing projects must be counted as sheltered homeless persons.
</P>
<P>(iii) Other requirements established by HUD by Notice.
</P>
<P>(3) Conducting an annual gaps analysis of the homeless needs and services available within the geographic area;
</P>
<P>(4) Providing information required to complete the Consolidated Plan(s) within the Continuum's geographic area;
</P>
<P>(5) Consulting with State and local government Emergency Solutions Grants program recipients within the Continuum's geographic area on the plan for allocating Emergency Solutions Grants program funds and reporting on and evaluating the performance of Emergency Solutions Grants program recipients and subrecipients.
</P>
<P>(d) <I>VAWA emergency transfer plan.</I> The Continuum of Care must develop the emergency transfer plan for the Continuum of Care that meets the requirements under § 578.99(j)(8).


</P>
<CITA TYPE="N">[77 FR 45442, July 31, 2012,as amended at 81 FR 80809, Nov. 16, 2016]




</CITA>
</DIV8>


<DIV8 N="§ 578.9" NODE="24:3.1.1.3.7.2.1.3" TYPE="SECTION">
<HEAD>§ 578.9   Preparing an application for funds.</HEAD>
<P>(a) The Continuum must:
</P>
<P>(1) Design, operate, and follow a collaborative process for the development of applications and approve the submission of applications in response to a NOFA published by HUD under § 578.19 of this subpart;
</P>
<P>(2) Establish priorities for funding projects in the geographic area;
</P>
<P>(3) Determine if one application for funding will be submitted for all projects within the geographic area or if more than one application will be submitted for the projects within the geographic area;
</P>
<P>(i) If more than one application will be submitted, designate an eligible applicant to be the collaborative applicant that will collect and combine the required application information from all applicants and for all projects within the geographic area that the Continuum has selected funding. The collaborative applicant will also apply for Continuum of Care planning activities. If the Continuum is an eligible applicant, it may designate itself;
</P>
<P>(ii) If only one application will be submitted, that applicant will be the collaborative applicant and will collect and combine the required application information from all projects within the geographic area that the Continuum has selected for funding and apply for Continuum of Care planning activities;
</P>
<P>(b) The Continuum retains all of its responsibilities, even if it designates one or more eligible applicants other than itself to apply for funds on behalf of the Continuum. This includes approving the Continuum of Care application.


</P>
</DIV8>


<DIV8 N="§ 578.11" NODE="24:3.1.1.3.7.2.1.4" TYPE="SECTION">
<HEAD>§ 578.11   Unified Funding Agency.</HEAD>
<P>(a) <I>Becoming a Unified Funding Agency.</I> To become designated as the Unified Funding Agency (UFA) for a Continuum, a collaborative applicant must be selected by the Continuum to apply to HUD to be designated as the UFA for the Continuum.
</P>
<P>(b) <I>Criteria for designating a UFA.</I> HUD will consider these criteria when deciding whether to designate a collaborative applicant a UFA:
</P>
<P>(1) The Continuum of Care it represents meets the requirements in § 578.7;
</P>
<P>(2) The collaborative applicant has financial management systems that meet the standards set forth in 2 CFR 200.302;
</P>
<P>(3) The collaborative applicant demonstrates the ability to monitor subrecipients; and
</P>
<P>(4) Such other criteria as HUD may establish by NOFA.
</P>
<P>(c) <I>Requirements.</I> HUD-designated UFAs shall:
</P>
<P>(1) Apply to HUD for funding for all of the projects within the geographic area and enter into a grant agreement with HUD for the entire geographic area.
</P>
<P>(2) Enter into legally binding agreements with subrecipients, and receive and distribute funds to subrecipients for all projects within the geographic area.
</P>
<P>(3) Require subrecipients to establish fiscal control and accounting procedures as necessary to assure the proper disbursal of and accounting for federal funds in accordance with the requirements of 2 CFR part 200, subpart D.
</P>
<P>(4) Obtain approval of any proposed grant agreement amendments by the Continuum of Care before submitting a request for an amendment to HUD.
</P>
<CITA TYPE="N">[77 FR 45442, July 31, 2012, as amended at 80 FR 75939, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 578.13" NODE="24:3.1.1.3.7.2.1.5" TYPE="SECTION">
<HEAD>§ 578.13   Remedial action.</HEAD>
<P>(a) If HUD finds that the Continuum of Care for a geographic area does not meet the requirements of the Act or its implementing regulations, or that there is no Continuum for a geographic area, HUD may take remedial action to ensure fair distribution of grant funds within the geographic area. Such measures may include:
</P>
<P>(1) Designating a replacement Continuum of Care for the geographic area;
</P>
<P>(2) Designating a replacement collaborative applicant for the Continuum's geographic area; and
</P>
<P>(3) Accepting applications from other eligible applicants within the Continuum's geographic area.
</P>
<P>(b) HUD must provide a 30-day prior written notice to the Continuum and its collaborative applicant and give them an opportunity to respond.


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:3.1.1.3.7.3" TYPE="SUBPART">
<HEAD>Subpart C—Application and Grant Award Process</HEAD>


<DIV8 N="§ 578.15" NODE="24:3.1.1.3.7.3.1.1" TYPE="SECTION">
<HEAD>§ 578.15   Eligible applicants.</HEAD>
<P>(a) <I>Who may apply.</I> Nonprofit organizations, States, local governments, and instrumentalities of State or local governments are eligible to apply for grants.
</P>
<P>(b) <I>Designation by the Continuum of Care.</I> Eligible applicant(s) must have been designated by the Continuum of Care to submit an application for grant funds under this part. The designation must state whether the Continuum is designating more than one applicant to apply for funds and, if it is, which applicant is being designated as the collaborative applicant. If the Continuum is designating only one applicant to apply for funds, the Continuum must designate that applicant to be the collaborative applicant.
</P>
<P>(c) <I>Exclusion.</I> For-profit entities are not eligible to apply for grants or to be subrecipients of grant funds.


</P>
</DIV8>


<DIV8 N="§ 578.17" NODE="24:3.1.1.3.7.3.1.2" TYPE="SECTION">
<HEAD>§ 578.17   Overview of application and grant award process.</HEAD>
<P>(a) <I>Formula.</I> (1) After enactment of the annual appropriations act for each fiscal year, and issuance of the NOFA, HUD will publish, on its Web site, the Preliminary Pro Rata Need (PPRN) assigned to metropolitan cities, urban counties, and all other counties.
</P>
<P>(2) HUD will apply the formula used to determine PPRN established in paragraph (a)(3) of this section, to the amount of funds being made available under the NOFA. That amount is calculated by:
</P>
<P>(i) Determining the total amount for the Continuum of Care competition in accordance with section 413 of the Act or as otherwise directed by the annual appropriations act;
</P>
<P>(ii) From the amount in paragraph (a)(2)(i) of this section, deducting the amount published in the NOFA as being set aside to provide a bonus to geographic areas for activities that have proven to be effective in reducing homelessness generally or for specific subpopulations listed in the NOFA or achieving homeless prevention and independent living goals established in the NOFA and to meet policy priorities set in the NOFA; and
</P>
<P>(iii) Deducting the amount of funding necessary for Continuum of Care planning activities and UFA costs.
</P>
<P>(3) PPRN is calculated on the amount determined under paragraph (a)(2) of this section by using the following formula:
</P>
<P>(i) Two percent will be allocated among the four insular areas (American Samoa, Guam, the Commonwealth of the Northern Marianas, and the Virgin Islands) on the basis of the ratio of the population of each insular area to the population of all insular areas.
</P>
<P>(ii) Seventy-five percent of the remaining amount will be allocated, using the Community Development Block Grant (CDBG) formula, to metropolitan cities and urban counties that have been funded under either the Emergency Shelter Grants or Emergency Solutions Grants programs in any one year since 2004.
</P>
<P>(iii) The amount remaining after the allocation under paragraphs (a)(1) and (2) of this section will be allocated, using the CDBG formula, to metropolitan cities and urban counties that have not been funded under the Emergency Solutions Grants program in any year since 2004 and all other counties in the United States and Puerto Rico.
</P>
<P>(4) If the calculation in paragraph (a)(2) of this section results in an amount less than the amount required to renew all projects eligible for renewal in that year for at least one year, after making adjustments proportional to increases in fair market rents for the geographic area for leasing, operating, and rental assistance for permanent housing, HUD will reduce, proportionately, the total amount required to renew all projects eligible for renewal in that year for at least one year, for each Continuum of Care. HUD will publish, via the NOFA, the total dollar amount that every Continuum will be required to deduct from renewal projects Continuum-wide.
</P>
<P>(b) <I>Calculating a Continuum of Care's maximum award amount.</I> (1) <I>Establish the PPRN amount.</I> First, HUD will total the PPRN amounts for each metropolitan city, urban county, other county, and insular area claimed by the Continuum as part of its geographic area, excluding any counties applying for or receiving funding from the Rural Housing Stability Assistance program under 24 CFR part 579.
</P>
<P>(2) <I>Establishing renewal demand.</I> Next, HUD will determine the renewal demand within the Continuum's geographic area. Renewal demand is the sum of the annual renewal amounts of all projects within the Continuum eligible to apply for renewal in that fiscal year's competition, before any adjustments to rental assistance, leasing, and operating line items based on FMR changes.
</P>
<P>(3) <I>Establishing FPRN.</I> The higher of PPRN or renewal demand for the Continuum of Care is the FPRN, which is the base for the maximum award amount for the Continuum.
</P>
<P>(4) <I>Establishing the maximum award amount.</I> The maximum award amount for the Continuum is the FPRN amount plus any additional eligible amounts for Continuum planning; UFA costs; adjustments to leasing, operating and rental assistance line items based on changes to FMR; and available bonuses.


</P>
</DIV8>


<DIV8 N="§ 578.19" NODE="24:3.1.1.3.7.3.1.3" TYPE="SECTION">
<HEAD>§ 578.19   Application process.</HEAD>
<P>(a) <I>Notice of Funding Availability.</I> After enactment of the annual appropriations act for the fiscal year, HUD will issue a NOFA in accordance with the requirements of 24 CFR part 4.
</P>
<P>(b) <I>Applications.</I> All applications to HUD, including applications for grant funds and requests for designation as a UFA or HPC, must be submitted at such time and in such manner as HUD may require, and contain such information as HUD determines necessary. At a minimum, an application for grant funds must contain a list of the projects for which it is applying for funds; a description of the projects; a list of the projects that will be carried out by subrecipients and the names of the subrecipients; a description of the subpopulations of homeless or at risk of homelessness to be served by projects; the number of units to be provided and/or the number of persons to be served by each project; a budget request by project; and reasonable assurances that the applicant, or the subrecipient, will own or have control of a site for the proposed project not later than the expiration of the 12-month period beginning upon notification of an award for grant assistance.


</P>
</DIV8>


<DIV8 N="§ 578.21" NODE="24:3.1.1.3.7.3.1.4" TYPE="SECTION">
<HEAD>§ 578.21   Awarding funds.</HEAD>
<P>(a) <I>Selection.</I> HUD will review applications in accordance with the guidelines and procedures provided in the NOFA and will award funds to recipients through a national competition based on selection criteria as defined in section 427 of the Act.
</P>
<P>(b) <I>Announcement of awards.</I> HUD will announce awards and notify selected applicants of any conditions imposed on awards. Conditions must be satisfied before HUD will execute a grant agreement with the applicant.
</P>
<P>(c) <I>Satisfying conditions.</I> HUD will withdraw an award if the applicant does not satisfy all conditions imposed on it. Correcting all issues and conditions attached to an award must be completed within the time frame established in the NOFA. Proof of site control, match, environmental review, and the documentation of financial feasibility must be completed within 12 months of the announcement of the award, or 24 months in the case of funds for acquisition, rehabilitation, or new construction. The 12-month deadline may be extended by HUD for up to 12 additional months upon a showing of compelling reasons for delay due to factors beyond the control of the recipient or subrecipient.


</P>
</DIV8>


<DIV8 N="§ 578.23" NODE="24:3.1.1.3.7.3.1.5" TYPE="SECTION">
<HEAD>§ 578.23   Executing grant agreements.</HEAD>
<P>(a) <I>Deadline.</I> No later than 45 days from the date when all conditions are satisfied, the recipient and HUD must execute the grant agreement.
</P>
<P>(b) <I>Grant agreements.</I> (1) <I>Multiple applicants for one Continuum.</I> If a Continuum designates more than one applicant for the geographic area, HUD will enter into a grant agreement with each designated applicant for which an award is announced.
</P>
<P>(2) <I>One applicant for a Continuum.</I> If a Continuum designates only one applicant for the geographic area, after awarding funds, HUD may enter into a grant agreement with that applicant for new awards, if any, and one grant agreement for renewals, Continuum of Care planning, and UFA costs, if any. These two grants will cover the entire geographic area. A default by the recipient under one of those grant agreements will also be a default under the other.
</P>
<P>(3) <I>Unified Funding Agencies.</I> If a Continuum is a UFA that HUD has approved, then HUD will enter into one grant agreement with the UFA for new awards, if any, and one grant agreement for renewals, Continuum of Care planning and UFA costs, if any. These two grants will cover the entire geographic area. A default by the UFA under one of those grant agreements will also be a default under the other.
</P>
<P>(c) <I>Required agreements.</I> Recipients will be required to sign a grant agreement in which the recipient agrees:
</P>
<P>(1) To ensure the operation of the project(s) in accordance with the provisions of the McKinney-Veto Act and all requirements under 24 CFR part 578;
</P>
<P>(2) To monitor and report the progress of the project(s) to the Continuum of Care and HUD;
</P>
<P>(3) To ensure, to the maximum extent practicable, that individuals and families experiencing homelessness are involved, through employment, provision of volunteer services, or otherwise, in constructing, rehabilitating, maintaining, and operating facilities for the project and in providing supportive services for the project;
</P>
<P>(4) To require certification from all subrecipients that:
</P>
<P>(i) Subrecipients will maintain the confidentiality of records pertaining to any individual or family that was provided family violence prevention or treatment services through the project;
</P>
<P>(ii) The address or location of any family violence project assisted under this part will not be made public, except with written authorization of the person responsible for the operation of such project;
</P>
<P>(iii) Subrecipients will establish policies and practices that are consistent with, and do not restrict, the exercise of rights provided by subtitle B of title VII of the Act and other laws relating to the provision of educational and related services to individuals and families experiencing homelessness;
</P>
<P>(iv) In the case of projects that provide housing or services to families, that subrecipients will designate a staff person to be responsible for ensuring that children being served in the program are enrolled in school and connected to appropriate services in the community, including early childhood programs such as Head Start, part C of the Individuals with Disabilities Education Act, and programs authorized under subtitle B of title VII of the Act;
</P>
<P>(v) The subrecipient, its officers, and employees are not debarred or suspended from doing business with the Federal Government; and
</P>
<P>(vi) Subrecipients will provide information, such as data and reports, as required by HUD; and
</P>
<P>(5) To establish such fiscal control and accounting procedures as may be necessary to assure the proper disbursal of, and accounting for grant funds in order to ensure that all financial transactions are conducted, and records maintained in accordance with generally accepted accounting principles, if the recipient is a UFA;
</P>
<P>(6) To monitor subrecipient match and report on match to HUD;
</P>
<P>(7) To take the educational needs of children into account when families are placed in housing and will, to the maximum extent practicable, place families with children as close as possible to their school of origin so as not to disrupt such children's education;
</P>
<P>(8) To monitor subrecipients at least annually;
</P>
<P>(9) To use the centralized or coordinated assessment system established by the Continuum of Care as set forth in § 578.7(a)(8). A victim service provider may choose not to use the Continuum of Care's centralized or coordinated assessment system, provided that victim service providers in the area use a centralized or coordinated assessment system that meets HUD's minimum requirements and the victim service provider uses that system instead;
</P>
<P>(10) To follow the written standards for providing Continuum of Care assistance developed by the Continuum of Care, including the minimum requirements set forth in § 578.7(a)(9);
</P>
<P>(11) Enter into subrecipient agreements requiring subrecipients to operate the project(s) in accordance with the provisions of this Act and all requirements under 24 CFR part 578; and
</P>
<P>(12) To comply with such other terms and conditions as HUD may establish by NOFA.


</P>
</DIV8>


<DIV8 N="§ 578.25" NODE="24:3.1.1.3.7.3.1.6" TYPE="SECTION">
<HEAD>§ 578.25   Site control.</HEAD>
<P>(a) <I>In general.</I> When grant funds will be used for acquisition, rehabilitation, new construction, operating costs, or to provide supportive services, the recipient or subrecipient must demonstrate that it has site control within the time frame established in section § 578.21 before HUD will execute a grant agreement. This requirement does not apply to funds used for housing that will eventually be owned or controlled by the individuals or families served or for supportive services provided at sites not operated by the recipient or subrecipient.
</P>
<P>(b) <I>Evidence.</I> Acceptable evidence of site control is a deed or lease. If grant funds will be used for acquisition, acceptable evidence of site control will be a purchase agreement. The owner, lessee, and purchaser shown on these documents must be the selected applicant or intended subrecipient identified in the application for assistance.
</P>
<P>(c) <I>Tax credit projects.</I> (1) Applicants that plan to use the low-income housing tax credit authorized under 26 U.S.C. 42 to finance a project must prove to HUD's satisfaction that the applicant or subrecipient identified in the application is in control of the limited partnership or limited liability corporation that has a deed or lease for the project site.
</P>
<P>(i) To have control of the limited partnership, the applicant or subrecipient must be the general partner of the limited partnership or have a 51 percent controlling interest in that general partner.
</P>
<P>(ii) To have control of the limited liability company, the applicant or subrecipient must be the sole managing member.
</P>
<P>(2) If grant funds are to be used for acquisition, rehabilitation, or new construction, the recipient or subrecipient must maintain control of the partnership or corporation and must ensure that the project is operated in compliance with law and regulation for 15 years from the date of initial occupancy or initial service provision. The partnership or corporation must own the project site throughout the 15-year period. If grant funds were not used for acquisition, rehabilitation, or new construction, then the recipient or subrecipient must maintain control for the term of the grant agreement and any renewals thereof.


</P>
</DIV8>


<DIV8 N="§ 578.27" NODE="24:3.1.1.3.7.3.1.7" TYPE="SECTION">
<HEAD>§ 578.27   Consolidated plan.</HEAD>
<P>(a) <I>States or units of general local government.</I> An applicant that is a State or a unit of general local government must have a HUD-approved, complete or abbreviated, consolidated plan in accordance with 24 CFR part 91. The applicant must submit a certification that the application for funding is consistent with the HUD-approved consolidated plan(s) for the jurisdiction(s) in which the proposed project will be located. Funded applicants must certify in a grant agreement that they are following the HUD-approved consolidated plan.
</P>
<P>(b) <I>Other applicants.</I> Applicants that are not States or units of general local government must submit a certification by the jurisdiction(s) in which the proposed project will be located that the applicant's application for funding is consistent with the jurisdiction's HUD-approved consolidated plan. The certification must be made by the unit of general local government or the State, in accordance with the consistency certification provisions under 24 CFR part 91, subpart F. If the jurisdiction refuses to provide a certification of consistency, the applicant may appeal to HUD under § 578.35.
</P>
<P>(c) <I>Timing of consolidated plan certification submissions.</I> The required certification that the application for funding is consistent with the HUD-approved consolidated plan must be submitted by the funding application submission deadline announced in the NOFA.


</P>
</DIV8>


<DIV8 N="§ 578.29" NODE="24:3.1.1.3.7.3.1.8" TYPE="SECTION">
<HEAD>§ 578.29   Subsidy layering.</HEAD>
<P>HUD may provide assistance under this program only in accordance with HUD subsidy layering requirements in section 102 of the Housing and Urban Development Reform Act of 1989 (42 U.S.C. 3545) and 24 CFR part 4, subpart A. An applicant must submit information in its application on other sources of governmental assistance that the applicant has received, or reasonably expects to receive, for a proposed project or activities. HUD's review of this information is intended to prevent excessive public assistance for proposed project or activities by combining (layering) assistance under this program with other governmental housing assistance from federal, State, or local agencies, including assistance such as tax concessions or tax credits.


</P>
</DIV8>


<DIV8 N="§ 578.31" NODE="24:3.1.1.3.7.3.1.9" TYPE="SECTION">
<HEAD>§ 578.31   Environmental review.</HEAD>
<P>(a) Activities under this part are subject to environmental review by HUD under 24 CFR part 50. The recipient or subrecipient shall supply all available, relevant information necessary for HUD to perform, for each property, any environmental review required by 24 CFR part 50. The recipient or subrecipient must carry out mitigating measures required by HUD or select an alternate eligible property. HUD may eliminate from consideration any application that would require an Environmental Impact Statement.
</P>
<P>(b) The recipient or subrecipient, its project partners, and their contractors may not acquire, rehabilitate, convert, lease, repair, dispose of, demolish, or construct property for a project under this part, or commit or expend HUD or local funds for such eligible activities under this part, until HUD has performed an environmental review under 24 CFR part 50 and the recipient or subrecipient has received HUD approval of the property.


</P>
</DIV8>


<DIV8 N="§ 578.33" NODE="24:3.1.1.3.7.3.1.10" TYPE="SECTION">
<HEAD>§ 578.33   Renewals.</HEAD>
<P>(a) <I>In general.</I> Awards made under this part and title IV of the Act, as in effect before August 30, 2012 (the Supportive Housing Program and the Shelter Plus Care program), may be renewed to continue ongoing leasing, operations, supportive services, rental assistance, HMIS, and administration beyond the initial funding period. To be considered for funding, recipients must submit a request in a form specified by HUD, must meet the requirements of this part, and must submit the request within the time frame established by HUD.
</P>
<P>(b) <I>Length of renewal.</I> HUD may award up to 3 years of funds for supportive services, leasing, HMIS, and operating costs. Renewals of tenant-based and sponsor-based rental assistance may be for up to one year of rental assistance. Renewals of project-based rental assistance may be for up to 15 years of rental assistance, subject to availability of annual appropriations.
</P>
<P>(c) <I>Assistance available.</I> (1) Assistance during each year of a renewal period may be for:
</P>
<P>(i) Up to 100 percent of the amount for supportive services and HMIS costs in the final year of the prior funding period;
</P>
<P>(ii) Up to 100 percent of the amount for leasing and operating in the final year of the prior funding period adjusted in proportion to changes in the FMR for the geographic area; and
</P>
<P>(iii) For rental assistance, up to 100 percent of the result of multiplying the number and unit size(s) in the grant agreement by the number of months in the renewal grant term and the applicable FMR.
</P>
<P>(d) <I>Review criteria.</I> (1) Awards made under title IV of the Act, as in effect before August 30, 2012 are eligible for renewal in the Continuum of Care program even if the awardees would not be eligible for a new grant under the program, so long as they continue to serve the same population and the same number of persons or units in the same type of housing as identified in their most recently amended grant agreement signed before August 30, 2012. Grants will be renewed if HUD receives a certification from the Continuum that there is a demonstrated need for the project, and HUD finds that the project complied with program requirements applicable before August 30, 2012.
</P>
<P>(2) <I>Renewal of awards made after August 30, 2012.</I> Review criteria for competitively awarded renewals made after August 30, 2012 will be described in the NOFA.
</P>
<P>(e) <I>Unsuccessful projects.</I> HUD may renew a project that was eligible for renewal in the competition and was part of an application that was not funded despite having been submitted on time, in the manner required by HUD, and containing the information required by HUD, upon a finding that the project meets the purposes of the Continuum of Care program. The renewal will not exceed more than one year and will be under such conditions as HUD deems appropriate.
</P>
<P>(f) <I>Annual Performance Report condition.</I> HUD may terminate the renewal of any grant and require the recipient to repay the renewal grant if:
</P>
<P>(1) The recipient fails to timely submit a HUD Annual Performance Report (APR) for the grant year immediately prior to renewal; or
</P>
<P>(2) The recipient submits an APR that HUD deems unacceptable or shows noncompliance with the requirements of the grant and this part.


</P>
<CITA TYPE="N">[77 FR 45442, July 31, 2012, as amended at 91 FR 20899, Apr. 20, 2026]


</CITA>
</DIV8>


<DIV8 N="§ 578.35" NODE="24:3.1.1.3.7.3.1.11" TYPE="SECTION">
<HEAD>§ 578.35   Appeal.</HEAD>
<P>(a) <I>In general.</I> Failure to follow the procedures or meet the deadlines established in this section will result in denial of the appeal.
</P>
<P>(b) <I>Solo applicants.</I> (1) <I>Who may appeal.</I> Nonprofits, States, and local governments, and instrumentalities of State or local governments that attempted to participate in the Continuum of Care planning process in the geographic area in which they operate, that believe they were denied the right to participate in a reasonable manner, and that submitted a solo application for funding by the application deadline established in the NOFA, may appeal the decision of the Continuum to HUD.
</P>
<P>(2) <I>Notice of intent to appeal.</I> The solo applicant must submit a written notice of intent to appeal, with a copy to the Continuum, with their funding application.
</P>
<P>(3) <I>Deadline for submitting proof.</I> No later than 30 days after the date that HUD announces the awards, the solo applicant shall submit in writing, with a copy to the Continuum, all relevant evidence supporting its claim, in such manner as HUD may require by Notice.
</P>
<P>(4) <I>Response from the Continuum of Care.</I> The Continuum shall have 30 days from the date of its receipt of the solo applicant's evidence to respond to HUD in writing and in such manner as HUD may require, with a copy to the solo applicant.
</P>
<P>(5) <I>Decision.</I> HUD will notify the solo applicant and the Continuum of its decision within 60 days of receipt of the Continuum's response.
</P>
<P>(6) <I>Funding.</I> If HUD finds that the solo applicant was not permitted to participate in the Continuum of Care planning process in a reasonable manner, then HUD may award a grant to the solo applicant when funds next become available and may direct the Continuum of Care to take remedial steps to ensure reasonable participation in the future. HUD may also reduce the award to the Continuum's applicant(s).
</P>
<P>(c) <I>Denied or decreased funding.</I> (1) <I>Who may appeal.</I> Eligible applicants that are denied funds by HUD, or that requested more funds than HUD awarded to them, may appeal the award by filing a written appeal, in such form and manner as HUD may require by Notice, within 45 days of the date of HUD's announcement of the award.
</P>
<P>(2) <I>Decision.</I> HUD will notify the applicant of its decision on the appeal within 60 days of HUD's receipt of the written appeal. HUD will reverse a decision only when the applicant can show that HUD error caused the denial or decrease.
</P>
<P>(3) <I>Funding.</I> Awards and increases to awards made upon appeal will be made from next available funds.
</P>
<P>(d) <I>Competing Continuums of Care.</I> (1) <I>In general.</I> If more than one Continuum of Care claims the same geographic area, HUD will award funds to the Continuum applicant(s) whose application(s) has the highest total score. No projects will be funded from the lower scoring Continuum. No projects that are submitted in two or more competing Continuum of Care applications will be funded.
</P>
<P>(2) <I>Who may appeal.</I> The designated applicant(s) for the lower scoring Continuum may appeal HUD's decision to fund the application(s) from the competing Continuum by filing a written appeal, in such form and manner as HUD may require by Notice, within 45 days of the date of HUD's announcement of the award.
</P>
<P>(3) <I>Decision.</I> HUD will notify the applicant(s) of its decision on the appeal within 60 days of the date of HUD's receipt of the written appeal. HUD will reverse a decision only upon a showing by the applicant that HUD error caused the denial.
</P>
<P>(e) <I>Consolidated plan certification.</I> (1) <I>In general.</I> An applicant may appeal to HUD a jurisdiction's refusal to provide a certification of consistency with the Consolidated Plan.
</P>
<P>(2) <I>Procedure.</I> The applicant must submit a written appeal with its application to HUD and send a copy of the appeal to the jurisdiction that denied the certification of consistency. The appeal must include, at a minimum:
</P>
<P>(i) A copy of the applicant's request to the jurisdiction for the certification of consistency with the Consolidated Plan;
</P>
<P>(ii) A copy of the jurisdiction's response stating the reasons for denial, including the reasons the proposed project is not consistent with the jurisdiction's Consolidated Plan in accordance with 24 CFR 91.500(c); and
</P>
<P>(iii) A statement of the reasons why the applicant believes its project is consistent with the jurisdiction's Consolidated Plan.
</P>
<P>(3) <I>Jurisdiction response.</I> The jurisdiction that refused to provide the certification of consistency with the jurisdiction's Consolidated Plan shall have 10 days after receipt of a copy of the appeal to submit a written explanation of the reasons originally given for refusing to provide the certification and a written rebuttal to any claims made by the applicant in the appeal.
</P>
<P>(4) <I>HUD review.</I> (i) HUD will issue its decision within 45 days of the date of HUD's receipt of the jurisdiction's response. As part of its review, HUD will consider:
</P>
<P>(A) Whether the applicant submitted the request to the appropriate political jurisdiction; and
</P>
<P>(B) The reasonableness of the jurisdiction's refusal to provide the certificate.
</P>
<P>(ii) If the jurisdiction did not provide written reasons for refusal, including the reasons why the project is not consistent with the jurisdiction's Consolidated Plan in its initial response to the applicant's request for a certification, HUD will find for the applicant without further inquiry or response from the political jurisdiction.


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:3.1.1.3.7.4" TYPE="SUBPART">
<HEAD>Subpart D—Program Components and Eligible Costs</HEAD>


<DIV8 N="§ 578.37" NODE="24:3.1.1.3.7.4.1.1" TYPE="SECTION">
<HEAD>§ 578.37   Program components and uses of assistance.</HEAD>
<P>(a) Continuum of Care funds may be used to pay for the eligible costs listed in § 578.39 through § 578.63 when used to establish and operate projects under five program components: permanent housing; transitional housing; supportive services only; HMIS; and, in some cases, homelessness prevention. Although grant funds may be used by recipients and subrecipients in all components for the eligible costs of contributing data to the HMIS designated by the Continuum of Care, only HMIS Leads may use grant funds for an HMIS component. Administrative costs are eligible for all components. All components are subject to the restrictions on combining funds for certain eligible activities in a single project found in § 578.87(c). The eligible program components are:
</P>
<P>(1) <I>Permanent housing (PH).</I> Permanent housing is community-based housing, the purpose of which is to provide housing without a designated length of stay. Grant funds may be used for acquisition, rehabilitation, new construction, leasing, rental assistance, operating costs, and supportive services. PH includes:
</P>
<P>(i) <I>Permanent supportive housing for persons with disabilities (PSH).</I> PSH can only provide assistance to individuals with disabilities and families in which one adult or child has a disability. Supportive services designed to meet the needs of the program participants must be made available to the program participants.
</P>
<P>(ii) <I>Rapid rehousing.</I> Continuum of Care funds may provide supportive services, as set forth in § 578.53, and/or short-term (up to 3 months) and/or medium-term (for 3 to 24 months) tenant-based rental assistance, as set forth in § 578.51(c), as necessary to help a homeless individual or family, with or without disabilities, move as quickly as possible into permanent housing and achieve stability in that housing. When providing short-term and/or medium-term rental assistance to program participants, the rental assistance is subject to § 578.51(a)(1), but not § 578.51(a)(1)(i) and (ii); (a)(2); (c) and (f) through (i); and (l)(1). These projects:
</P>
<P>(A) Must follow the written policies and procedures established by the Continuum of Care for determining and prioritizing which eligible families and individuals will receive rapid rehousing assistance, as well as the amount or percentage of rent that each program participant must pay.
</P>
<P>(B) May set a maximum amount or percentage of rental assistance that a program participant may receive, a maximum number of months that a program participant may receive rental assistance, and/or a maximum number of times that a program participant may receive rental assistance. The recipient or subrecipient may also require program participants to share in the costs of rent. For the purposes of calculating rent for rapid rehousing, the rent shall equal the sum of the total monthly rent for the unit and, if the tenant pays separately for utilities, the monthly allowance for utilities (excluding telephone) established by the public housing authority for the area in which the housing is located.
</P>
<P>(C) Limit rental assistance to no more than 24 months to a household.
</P>
<P>(D) May provide supportive services for no longer than 6 months after rental assistance stops.
</P>
<P>(E) Must re-evaluate, not less than once annually, that the program participant lacks sufficient resources and support networks necessary to retain housing without Continuum of Care assistance and the types and amounts of assistance that the program participant needs to retain housing. The recipient or subrecipient may require each program participant receiving assistance to notify the recipient or subrecipient of changes in the program participant's income or other circumstances (<I>e.g.,</I> changes in household composition) that affect the program participant's need for assistance. When notified of a relevant change, the recipient or subrecipient must reevaluate the program participant's eligibility and the amount and types of assistance that the program participant needs.
</P>
<P>(F) Require the program participant to meet with a case manager not less than once per month to assist the program participant in ensuring long-term housing stability. The project is exempt from this requirement if the Violence Against Women Act of 1994 (42 U.S.C. 13925 <I>et seq.</I>) or the Family Violence Prevention and Services Act (42 U.S.C. 10401 <I>et seq.</I>) prohibits the recipient carrying out the project from making its housing conditional on the participant's acceptance of services.
</P>
<P>(2) <I>Transitional Housing (TH).</I> Transitional housing facilitates the movement of homeless individuals and families to PH within 24 months of entering TH. Grant funds may be used for acquisition, rehabilitation, new construction, leasing, rental assistance, operating costs, and supportive services.
</P>
<P>(3) <I>Supportive Service Only (SSO).</I> Funds may be used for acquisition, rehabilitation, relocation costs, or leasing of a facility from which supportive services will be provided, and supportive services in order to provide supportive services to unsheltered and sheltered homeless persons for whom the recipient or subrecipient is not providing housing or housing assistance. SSO includes street outreach.
</P>
<P>(4) <I>HMIS.</I> Funds may be used by HMIS Leads to lease a structure in which the HMIS is operated or as operating funds to operate a structure in which the HMIS is operated, and for other costs eligible in § 578.57.
</P>
<P>(5) <I>Homelessness prevention.</I> Funds may be used by recipients in Continuums of Care-designated high-performing communities for housing relocation and stabilization services, and short- and/or medium-term rental assistance, as described in 24 CFR 576.105 and 24 CFR 576.106, that are necessary to prevent an individual or family from becoming homeless.
</P>
<P>(b) <I>Uses of assistance.</I> Funds are available to pay for the eligible costs listed in § 578.39 through § 578.63 when used to:
</P>
<P>(1) Establish new housing or new facilities to provide supportive services;
</P>
<P>(2) Expand existing housing and facilities in order to increase the number of homeless persons served;
</P>
<P>(3) Bring existing housing and facilities into compliance with State and local government health and safety standards, as described in § 578.87;
</P>
<P>(4) Preserve existing permanent housing and facilities that provide supportive services;
</P>
<P>(5) Provide supportive services for residents of supportive housing or for homeless persons not residing in supportive housing;
</P>
<P>(6) Continue funding permanent housing when the recipient has received funding under this part for leasing, supportive services, operating costs, or rental assistance;
</P>
<P>(7) Establish and operate an HMIS or comparable database; and
</P>
<P>(8) Establish and carry out a Continuum of Care planning process and operate a Continuum of Care.
</P>
<P>(c) <I>Multiple purposes.</I> Structures used to provide housing, supportive housing, supportive services, or as a facility for HMIS activities may also be used for other purposes. However, assistance under this part will be available only in proportion to the use of the structure for supportive housing or supportive services. If eligible and ineligible activities are carried out in separate portions of the same structure or in separate structures, grant funds may not be used to pay for more than the actual cost of acquisition, construction, or rehabilitation of the portion of the structure or structures used for eligible activities. If eligible and ineligible activities are carried out in the same structure, the costs will be prorated based on the amount of time that the space is used for eligible versus ineligible activities.


</P>
</DIV8>


<DIV8 N="§ 578.39" NODE="24:3.1.1.3.7.4.1.2" TYPE="SECTION">
<HEAD>§ 578.39   Continuum of Care planning activities.</HEAD>
<P>(a) <I>In general.</I> Collaborative applicants may use up to 3 percent of their FPRN, or a maximum amount to be established by the NOFA, for costs of:
</P>
<P>(1) Designing and carrying out a collaborative process for the development of an application to HUD;
</P>
<P>(2) Evaluating the outcomes of projects for which funds are awarded in the geographic area under the Continuum of Care and the Emergency Solutions Grants programs; and
</P>
<P>(3) Participating in the consolidated plan(s) for the geographic area(s).
</P>
<P>(b) <I>Continuum of Care planning activities.</I> Eligible planning costs include the costs of:
</P>
<P>(1) Developing a communitywide or regionwide process involving the coordination of nonprofit homeless providers, victim service providers, faith-based organizations, governments, businesses, advocates, public housing agencies, school districts, social service providers, mental health agencies, hospitals, universities, affordable housing developers, law enforcement, organizations that serve veterans, and homeless and formerly homeless individuals;
</P>
<P>(2) Determining the geographic area that the Continuum of Care will serve;
</P>
<P>(3) Developing a Continuum of Care system;
</P>
<P>(4) Evaluating the outcomes of projects for which funds are awarded in the geographic area, including the Emergency Solutions Grants program;
</P>
<P>(5) Participating in the consolidated plan(s) of the jurisdiction(s) in the geographic area; and
</P>
<P>(6) Preparing and submitting an application to HUD on behalf of the entire Continuum of Care membership, including conducting a sheltered and unsheltered point-in-time count and other data collection as required by HUD.
</P>
<P>(c) <I>Monitoring costs.</I> The costs of monitoring recipients and subrecipients and enforcing compliance with program requirements are eligible.


</P>
</DIV8>


<DIV8 N="§ 578.41" NODE="24:3.1.1.3.7.4.1.3" TYPE="SECTION">
<HEAD>§ 578.41   Unified Funding Agency costs.</HEAD>
<P>(a) <I>In general.</I> UFAs may use up to 3 percent of their FPRN, or a maximum amount to be established by the NOFA, whichever is less, for fiscal control and accounting costs necessary to assure the proper disbursal of, and accounting for, federal funds awarded to subrecipients under the Continuum of Care program.
</P>
<P>(b) <I>UFA costs.</I> UFA costs include costs of ensuring that all financial transactions carried out under the Continuum of Care program are conducted and records are maintained in accordance with generally accepted accounting principles, including arranging for an annual survey, audit, or evaluation of the financial records of each project carried out by a subrecipient funded by a grant received through the Continuum of Care program.
</P>
<P>(c) <I>Monitoring costs.</I> The costs of monitoring subrecipients and enforcing compliance with program requirements are eligible for costs.


</P>
</DIV8>


<DIV8 N="§ 578.43" NODE="24:3.1.1.3.7.4.1.4" TYPE="SECTION">
<HEAD>§ 578.43   Acquisition.</HEAD>
<P>Grant funds may be used to pay up to 100 percent of the cost of acquisition of real property selected by the recipient or subrecipient for use in the provision of housing or supportive services for homeless persons.


</P>
</DIV8>


<DIV8 N="§ 578.45" NODE="24:3.1.1.3.7.4.1.5" TYPE="SECTION">
<HEAD>§ 578.45   Rehabilitation.</HEAD>
<P>(a) <I>Use.</I> Grant funds may be used to pay up to 100 percent of the cost of rehabilitation of structures to provide housing or supportive services to homeless persons.
</P>
<P>(b) <I>Eligible costs.</I> Eligible rehabilitation costs include installing cost-effective energy measures, and bringing an existing structure to State and local government health and safety standards.
</P>
<P>(c) <I>Ineligible costs.</I> Grant funds may not be used for rehabilitation of leased property.
</P>
<P>(d) <I>Broadband infrastructure.</I> Any substantial rehabilitation, as defined by 24 CFR 5.100, of a building with more than 4 rental units and funded by a grant awarded after January 19, 2017 must include installation of broadband infrastructure, as this term is also defined in 24 CFR 5.100, except where the grantee determines and, in accordance with § 578.103, documents the determination that:
</P>
<P>(1) The location of the substantial rehabilitation makes installation of broadband infrastructure infeasible;
</P>
<P>(2) The cost of installing broadband infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden; or
</P>
<P>(3) The structure of the housing to be substantially rehabilitated makes installation of broadband infrastructure infeasible.
</P>
<CITA TYPE="N">[77 FR 45442, July 31, 2012, as amended at 81 FR 92637, Dec. 20, 2016]




</CITA>
</DIV8>


<DIV8 N="§ 578.47" NODE="24:3.1.1.3.7.4.1.6" TYPE="SECTION">
<HEAD>§ 578.47   New construction.</HEAD>
<P>(a) <I>Use.</I> Grant funds may be used to:
</P>
<P>(1) Pay up to 100 percent of the cost of new construction, including the building of a new structure or building an addition to an existing structure that increases the floor area by 100 percent or more, and the cost of land associated with that construction, for use as housing.
</P>
<P>(2) If grant funds are used for new construction, the applicant must demonstrate that the costs of new construction are substantially less than the costs of rehabilitation or that there is a lack of available appropriate units that could be rehabilitated at a cost less than new construction. For purposes of this cost comparison, costs of rehabilitation or new construction may include the cost of real property acquisition.
</P>
<P>(b) <I>Ineligible costs.</I> Grant funds may not be used for new construction on leased property.
</P>
<P>(c) <I>Broadband infrastructure.</I> Any new construction of a building with more than 4 rental units and funded by a grant awarded after January 19, 2017 must include installation of broadband infrastructure, as this term is defined in 24 CFR 5.100, except where the grantee determines and, in accordance with § 578.103, documents the determination that:
</P>
<P>(1) The location of the new construction makes installation of broadband infrastructure infeasible; or
</P>
<P>(2) The cost of installing broadband infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden.
</P>
<CITA TYPE="N">[77 FR 45442, July 31, 2012, as amended at 81 FR 92637, Dec. 20, 2016]




</CITA>
</DIV8>


<DIV8 N="§ 578.49" NODE="24:3.1.1.3.7.4.1.7" TYPE="SECTION">
<HEAD>§ 578.49   Leasing.</HEAD>
<P>(a) <I>Use.</I> (1) Where the recipient or subrecipient is leasing the structure, or portions thereof, grant funds may be used to pay for 100 percent of the costs of leasing a structure or structures, or portions thereof, to provide housing or supportive services to homeless persons for up to 3 years. Leasing funds may not be used to lease units or structures owned by the recipient, subrecipient, their parent organization(s), any other related organization(s), or organizations that are members of a partnership, where the partnership owns the structure, unless HUD authorized an exception for good cause.
</P>
<P>(2) Any request for an exception must include the following:
</P>
<P>(i) A description of how leasing these structures is in the best interest of the program;
</P>
<P>(ii) Supporting documentation showing that the leasing charges paid with grant funds are reasonable for the market; and
</P>
<P>(iii) A copy of the written policy for resolving disputes between the landlord and tenant, including a recusal for officers, agents, and staff who work for both the landlord and tenant.
</P>
<P>(b) <I>Requirements.</I> (1) <I>Leasing structures.</I> When grants are used to pay rent for all or part of a structure or structures, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent paid may not exceed rents currently being charged by the same owner for comparable unassisted space.
</P>
<P>(2) <I>Leasing individual units.</I> When grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units, taking into account the location, size, type, quality, amenities, facilities, and management services. In addition, the rents may not exceed rents currently being charged for comparable units, and the rent paid may not exceed HUD-determined fair market rents.
</P>
<P>(3) <I>Utilities.</I> If electricity, gas, and water are included in the rent, these utilities may be paid from leasing funds. If utilities are not provided by the landlord, these utility costs are an operating cost, except for supportive service facilities. If the structure is being used as a supportive service facility, then these utility costs are a supportive service cost.
</P>
<P>(4) <I>Security deposits and first and last month's rent.</I> Recipients and subrecipients may use grant funds to pay security deposits, in an amount not to exceed 2 months of actual rent. An advance payment of the last month's rent may be provided to the landlord in addition to the security deposit and payment of the first month's rent.
</P>
<P>(5) <I>Occupancy agreements and subleases.</I> Occupancy agreements and subleases are required as specified in § 578.77(a).
</P>
<P>(6) <I>Calculation of occupancy charges and rent.</I> Occupancy charges and rent from program participants must be calculated as provided in § 578.77.
</P>
<P>(7) <I>Program income.</I> Occupancy charges and rent collected from program participants are program income and may be used as provided under § 578.97.
</P>
<P>(8) <I>Transition.</I> Beginning in the first year awards are made under the Continuum of Care program, renewals of grants for leasing funds entered into under the authority of title IV, subtitle D of the Act as it existed before May 20, 2009, will be renewed either as grants for leasing or as rental assistance, depending on the characteristics of the project. Leasing funds will be renewed as rental assistance if the funds are used to pay rent on units where the lease is between the program participant and the landowner or sublessor. Projects requesting leasing funds will be renewed as leasing if the funds were used to lease a unit or structure and the lease is between the recipient or subrecipient and the landowner.


</P>
</DIV8>


<DIV8 N="§ 578.51" NODE="24:3.1.1.3.7.4.1.8" TYPE="SECTION">
<HEAD>§ 578.51   Rental assistance.</HEAD>
<P>(a) <I>Use.</I> (1) Grant funds may be used for rental assistance for homeless individuals and families. Rental assistance cannot be provided to a program participant who is already receiving rental assistance, or living in a housing unit receiving rental assistance or operating assistance through other federal, State, or local sources.
</P>
<P>(i) The rental assistance may be short-term, up to 3 months of rent; medium-term, for 3 to 24 months of rent; or long-term, for longer than 24 months of rent and must be administered in accordance with the policies and procedures established by the Continuum as set forth in § 578.7(a)(9) and this section.
</P>
<P>(ii) The rental assistance may be tenant-based, project-based, or sponsor-based, and may be for transitional or permanent housing.
</P>
<P>(2) Grant funds may be used for security deposits in an amount not to exceed 2 months of rent. An advance payment of the last month's rent may be provided to the landlord, in addition to the security deposit and payment of first month's rent.
</P>
<P>(b) <I>Rental assistance administrator.</I> Rental assistance must be administered by a State, unit of general local government, or a public housing agency.
</P>
<P>(c) <I>Tenant-based rental assistance.</I> Tenant-based rental assistance is rental assistance in which program participants choose housing of an appropriate size in which to reside. Up to 5 years' worth of rental assistance may be awarded to a project in one competition.
</P>
<P>(1) When necessary to facilitate the coordination of supportive services, recipients and subrecipients may require program participants to live in a specific area for their entire period of participation, or in a specific structure for the first year and in a specific area for the remainder of their period of participation. Program participants who are receiving rental assistance in transitional housing may be required to live in a specific structure for their entire period of participation in transitional housing.
</P>
<P>(2) Program participants who have complied with all program requirements during their residence retain the rental assistance if they move.
</P>
<P>(3) Program participants who have complied with all program requirements during their residence, who have been a victim of domestic violence, dating violence, sexual assault, or stalking, who reasonably believe they are imminently threatened by harm from further domestic violence, dating violence, sexual assault, or stalking (which would include threats from a third party, such as a friend or family member of the perpetrator of the violence) if they remain in the assisted unit, and who are able to document the violence and basis for their belief, may retain the rental assistance and move to a different Continuum of Care geographic area if they move out of the assisted unit to protect their health and safety. These program participants may move to a different Continuum of Care's geographic service area even if the recipient or subrecipient cannot meet all regulatory requirements of this part in the new geographic area where the unit is located. The recipient or subrecipient, however, must be able to meet all statutory requirements of the Continuum of Care program either directly or through a third-party contract or agreement.
</P>
<P>(4) Program participants other than those described in paragraph (c)(3) of this section may choose housing outside of the Continuum of Care's geographic area if the recipient or subrecipient, through its employees or contractors, is able to meet all requirements of this part in the geographic area where the program participant chooses housing. If the recipient or subrecipient is unable to meet the requirements of this part, either directly or through a third-party contract or agreement, the recipient or subrecipient may refuse to permit the program participant to retain the tenant-based rental assistance if the program participant chooses to move outside of the Continuum of Care's geographic area.
</P>
<P>(d) <I>Sponsor-based rental assistance.</I> Sponsor-based rental assistance is provided through contracts between the recipient and sponsor organization. A sponsor may be a private, nonprofit organization, or a community mental health agency established as a public nonprofit organization. Program participants must reside in housing owned or leased by the sponsor. Up to 5 years worth of rental assistance may be awarded to a project in one competition.
</P>
<P>(e) <I>Project-based rental assistance.</I> Project-based rental assistance is provided through a contract with the owner of an existing structure, where the owner agrees to lease the subsidized units to program participants. Program participants will not retain rental assistance if they move. Up to 15 years of rental assistance may be awarded in one competition.
</P>
<P>(f) <I>Grant amount.</I> The amount of rental assistance in each project will be based on the number and size of units proposed by the applicant to be assisted over the grant period. The amount of rental assistance in each project will be calculated by multiplying the number and size of units proposed by the FMR of each unit on the date the application is submitted to HUD, by the term of the grant.
</P>
<P>(g) <I>Rent reasonableness.</I> HUD will only provide rental assistance for a unit if the rent is reasonable. The recipient or subrecipient must determine whether the rent charged for the unit receiving rental assistance is reasonable in relation to rents being charged for comparable unassisted units, taking into account the location, size, type, quality, amenities, facilities, and management and maintenance of each unit. Reasonable rent must not exceed rents currently being charged by the same owner for comparable unassisted units.
</P>
<P>(h) <I>Payment of grant.</I> (1) The amount of rental assistance in each project will be reserved for rental assistance over the grant period. An applicant's request for rental assistance in each grant is an estimate of the amount needed for rental assistance. Recipients will make draws from the grant funds to pay the actual costs of rental assistance for program participants.
</P>
<P>(2) For tenant-based rental assistance, on demonstration of need:
</P>
<P>(i) Up to 25 percent of the total rental assistance awarded may be spent in any year of a 5-year grant term; or
</P>
<P>(ii) A higher percentage if approved in advance by HUD, if the recipient provides evidence satisfactory to HUD that it is financially committed to providing the housing assistance described in the application for the full 5-year period.
</P>
<P>(3) A recipient must serve at least as many program participants as shown in its application for assistance.
</P>
<P>(4) If the amount in each grant reserved for rental assistance over the grant period exceeds the amount that will be needed to pay the actual costs of rental assistance, due to such factors as contract rents being lower than FMRs and program participants being able to pay a portion of the rent, recipients or subrecipients may use the excess funds for covering the costs of rent increases, or for serving a greater number of program participants.
</P>
<P>(i) <I>Vacancies.</I> If a unit assisted under this section is vacated before the expiration of the lease, the assistance for the unit may continue for a maximum of 30 days from the end of the month in which the unit was vacated, unless occupied by another eligible person. No additional assistance will be paid until the unit is occupied by another eligible person. Brief periods of stays in institutions, not to exceed 90 days for each occurrence, are not considered vacancies.
</P>
<P>(j) <I>Property damage.</I> Recipients and subrecipients may use grant funds in an amount not to exceed one month's rent to pay for any damage to housing due to the action of a program participant. This shall be a one-time cost per participant, incurred at the time a participant exits a housing unit.
</P>
<P>(k) <I>Resident rent.</I> Rent must be calculated as provided in § 578.77. Rents collected from program participants are program income and may be used as provided under § 578.97.
</P>
<P>(l) <I>Leases.</I> (1) <I>Initial lease.</I> For project-based, sponsor-based, or tenant-based rental assistance, program participants must enter into a lease agreement for a term of at least one year, which is terminable for cause. The leases must be automatically renewable upon expiration for terms that are a minimum of one month long, except on prior notice by either party.
</P>
<P>(2) <I>Initial lease for transitional housing.</I> Program participants in transitional housing must enter into a lease agreement for a term of at least one month. The lease must be automatically renewable upon expiration, except on prior notice by either party, up to a maximum term of 24 months.
</P>
<P>(m) <I>VAWA emergency transfer plan costs.</I> Recipients and subrecipients of grants for tenant-based rental assistance may use grant funds to pay amounts owed for breaking the lease if the family qualifies for an emergency transfer under the emergency transfer plan established under § 578.99(j)(8).
</P>
<CITA TYPE="N">[77 FR 45442, July 31, 2012, as amended at 81 FR 38584, June 14, 2016; 81 FR 80810, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 578.53" NODE="24:3.1.1.3.7.4.1.9" TYPE="SECTION">
<HEAD>§ 578.53   Supportive services.</HEAD>
<P>(a) <I>In general.</I> Grant funds may be used to pay the eligible costs of supportive services that address the special needs of the program participants. If the supportive services are provided in a supportive service facility not contained in a housing structure, the costs of day-to-day operation of the supportive service facility, including maintenance, repair, building security, furniture, utilities, and equipment are eligible as a supportive service.
</P>
<P>(1) Supportive services must be necessary to assist program participants obtain and maintain housing.
</P>
<P>(2) Recipients and subrecipients shall conduct an annual assessment of the service needs of the program participants and should adjust services accordingly.
</P>
<P>(b) <I>Duration.</I> (1) For a transitional housing project, supportive services must be made available to residents throughout the duration of their residence in the project.
</P>
<P>(2) Permanent supportive housing projects must provide supportive services for the residents to enable them to live as independently as is practicable throughout the duration of their residence in the project.
</P>
<P>(3) Services may also be provided to former residents of transitional housing and current residents of permanent housing who were homeless in the prior 6 months, for no more than 6 months after leaving transitional housing or homelessness, respectively, to assist their adjustment to independent living.
</P>
<P>(4) Rapid rehousing projects must require the program participant to meet with a case manager not less than once per month as set forth in § 578.37(a)(1)(ii)(F), to assist the program participant in maintaining long-term housing stability.
</P>
<P>(c) <I>Special populations.</I> All eligible costs are eligible to the same extent for program participants who are unaccompanied homeless youth; persons living with HIV/AIDS; and victims of domestic violence, dating violence, sexual assault, or stalking.
</P>
<P>(d) <I>Ineligible costs.</I> Any cost that is not described as an eligible cost under this section is not an eligible cost of providing supportive services using Continuum of Care program funds. Staff training and the costs of obtaining professional licenses or certifications needed to provide supportive services are not eligible costs.
</P>
<P>(e) <I>Eligible costs.</I> (1) <I>Annual Assessment of Service Needs.</I> The costs of the assessment required by § 578.53(a)(2) are eligible costs.
</P>
<P>(2) <I>Assistance with moving costs.</I> Reasonable one-time moving costs are eligible and include truck rental and hiring a moving company.
</P>
<P>(3) <I>Case management.</I> The costs of assessing, arranging, coordinating, and monitoring the delivery of individualized services to meet the needs of the program participant(s) are eligible costs. Component services and activities consist of:
</P>
<P>(i) Counseling;
</P>
<P>(ii) Developing, securing, and coordinating services;
</P>
<P>(iii) Using the centralized or coordinated assessment system as required under § 578.23(c)(9).
</P>
<P>(iv) Obtaining federal, State, and local benefits;
</P>
<P>(v) Monitoring and evaluating program participant progress;
</P>
<P>(vi) Providing information and referrals to other providers;
</P>
<P>(vii) Providing ongoing risk assessment and safety planning with victims of domestic violence, dating violence, sexual assault, and stalking; and
</P>
<P>(viii) Developing an individualized housing and service plan, including planning a path to permanent housing stability.
</P>
<P>(4) <I>Child care.</I> The costs of establishing and operating child care, and providing child-care vouchers, for children from families experiencing homelessness, including providing meals and snacks, and comprehensive and coordinated developmental activities, are eligible.
</P>
<P>(i) The children must be under the age of 13, unless they are disabled children.
</P>
<P>(ii) Disabled children must be under the age of 18.
</P>
<P>(iii) The child-care center must be licensed by the jurisdiction in which it operates in order for its costs to be eligible.
</P>
<P>(5) <I>Education services.</I> The costs of improving knowledge and basic educational skills are eligible.
</P>
<P>(i) Services include instruction or training in consumer education, health education, substance abuse prevention, literacy, English as a Second Language, and General Educational Development (GED).
</P>
<P>(ii) Component services or activities are screening, assessment and testing; individual or group instruction; tutoring; provision of books, supplies, and instructional material; counseling; and referral to community resources.
</P>
<P>(6) <I>Employment assistance and job training.</I> The costs of establishing and operating employment assistance and job training programs are eligible, including classroom, online and/or computer instruction, on-the-job instruction, services that assist individuals in securing employment, acquiring learning skills, and/or increasing earning potential. The cost of providing reasonable stipends to program participants in employment assistance and job training programs is also an eligible cost.
</P>
<P>(i) Learning skills include those skills that can be used to secure and retain a job, including the acquisition of vocational licenses and/or certificates.
</P>
<P>(ii) Services that assist individuals in securing employment consist of:
</P>
<P>(A) Employment screening, assessment, or testing;
</P>
<P>(B) Structured job skills and job-seeking skills;
</P>
<P>(C) Special training and tutoring, including literacy training and pre-vocational training;
</P>
<P>(D) Books and instructional material;
</P>
<P>(E) Counseling or job coaching; and
</P>
<P>(F) Referral to community resources.
</P>
<P>(7) <I>Food.</I> The cost of providing meals or groceries to program participants is eligible.
</P>
<P>(8) <I>Housing search and counseling services.</I> Costs of assisting eligible program participants to locate, obtain, and retain suitable housing are eligible.
</P>
<P>(i) Component services or activities are tenant counseling; assisting individuals and families to understand leases; securing utilities; and making moving arrangements.
</P>
<P>(ii) Other eligible costs are:
</P>
<P>(A) Mediation with property owners and landlords on behalf of eligible program participants;
</P>
<P>(B) Credit counseling, accessing a free personal credit report, and resolving personal credit issues; and
</P>
<P>(C) The payment of rental application fees.
</P>
<P>(iii) Housing counseling, as defined in § 5.100, that is funded with or provided in connection with grant funds must be carried out in accordance with § 5.111. When recipients or subrecipients provide housing services to eligible persons that are incidental to a larger set of holistic case management services, these services do not meet the definition of Housing counseling, as defined in § 5.100, and therefore are not required to be carried out in accordance with the certification requirements of § 5.111.
</P>
<P>(9) <I>Legal services.</I> Eligible costs are the fees charged by licensed attorneys and by person(s) under the supervision of licensed attorneys, for advice and representation in matters that interfere with the homeless individual or family's ability to obtain and retain housing.
</P>
<P>(i) Eligible subject matters are child support; guardianship; paternity; emancipation; legal separation; orders of protection and other civil remedies for victims of domestic violence, dating violence, sexual assault, and stalking; appeal of veterans and public benefit claim denials; landlord tenant disputes; and the resolution of outstanding criminal warrants.
</P>
<P>(ii) Component services or activities may include receiving and preparing cases for trial, provision of legal advice, representation at hearings, and counseling.
</P>
<P>(iii) Fees based on the actual service performed (i.e., fee for service) are also eligible, but only if the cost would be less than the cost of hourly fees. Filing fees and other necessary court costs are also eligible. If the subrecipient is a legal services provider and performs the services itself, the eligible costs are the subrecipient's employees' salaries and other costs necessary to perform the services.
</P>
<P>(iv) Legal services for immigration and citizenship matters and issues related to mortgages and homeownership are ineligible. Retainer fee arrangements and contingency fee arrangements are ineligible.
</P>
<P>(10) <I>Life skills training.</I> The costs of teaching critical life management skills that may never have been learned or have been lost during the course of physical or mental illness, domestic violence, substance abuse, and homelessness are eligible. These services must be necessary to assist the program participant to function independently in the community. Component life skills training are the budgeting of resources and money management, household management, conflict management, shopping for food and other needed items, nutrition, the use of public transportation, and parent training.
</P>
<P>(11) <I>Mental health services.</I> Eligible costs are the direct outpatient treatment of mental health conditions that are provided by licensed professionals. Component services are crisis interventions; counseling; individual, family, or group therapy sessions; the prescription of psychotropic medications or explanations about the use and management of medications; and combinations of therapeutic approaches to address multiple problems.
</P>
<P>(12) <I>Outpatient health services.</I> Eligible costs are the direct outpatient treatment of medical conditions when provided by licensed medical professionals including:
</P>
<P>(i) Providing an analysis or assessment of an individual's health problems and the development of a treatment plan;
</P>
<P>(ii) Assisting individuals to understand their health needs;
</P>
<P>(iii) Providing directly or assisting individuals to obtain and utilize appropriate medical treatment;
</P>
<P>(iv) Preventive medical care and health maintenance services, including in-home health services and emergency medical services;
</P>
<P>(v) Provision of appropriate medication;
</P>
<P>(vi) Providing follow-up services; and
</P>
<P>(vii) Preventive and noncosmetic dental care.
</P>
<P>(13) <I>Outreach services.</I> The costs of activities to engage persons for the purpose of providing immediate support and intervention, as well as identifying potential program participants, are eligible.
</P>
<P>(i) Eligible costs include the outreach worker's transportation costs and a cell phone to be used by the individual performing the outreach.
</P>
<P>(ii) Component activities and services consist of: initial assessment; crisis counseling; addressing urgent physical needs, such as providing meals, blankets, clothes, or toiletries; actively connecting and providing people with information and referrals to homeless and mainstream programs; and publicizing the availability of the housing and/or services provided within the geographic area covered by the Continuum of Care.
</P>
<P>(14) <I>Substance abuse treatment services.</I> The costs of program participant intake and assessment, outpatient treatment, group and individual counseling, and drug testing are eligible. Inpatient detoxification and other inpatient drug or alcohol treatment are ineligible.
</P>
<P>(15) <I>Transportation.</I> Eligible costs are:
</P>
<P>(i) The costs of program participant's travel on public transportation or in a vehicle provided by the recipient or subrecipient to and from medical care, employment, child care, or other services eligible under this section.
</P>
<P>(ii) Mileage allowance for service workers to visit program participants and to carry out housing quality inspections;
</P>
<P>(iii) The cost of purchasing or leasing a vehicle in which staff transports program participants and/or staff serving program participants;
</P>
<P>(iv) The cost of gas, insurance, taxes, and maintenance for the vehicle;
</P>
<P>(v) The costs of recipient or subrecipient staff to accompany or assist program participants to utilize public transportation; and
</P>
<P>(vi) If public transportation options are not sufficient within the area, the recipient may make a one-time payment on behalf of a program participant needing car repairs or maintenance required to operate a personal vehicle, subject to the following:
</P>
<P>(A) Payments for car repairs or maintenance on behalf of the program participant may not exceed 10 percent of the Blue Book value of the vehicle (Blue Book refers to the guidebook that compiles and quotes prices for new and used automobiles and other vehicles of all makes, models, and types);
</P>
<P>(B) Payments for car repairs or maintenance must be paid by the recipient or subrecipient directly to the third party that repairs or maintains the car; and
</P>
<P>(C) The recipients or subrecipients may require program participants to share in the cost of car repairs or maintenance as a condition of receiving assistance with car repairs or maintenance.
</P>
<P>(16) <I>Utility deposits.</I> This form of assistance consists of paying for utility deposits. Utility deposits must be a one-time fee, paid to utility companies.
</P>
<P>(17) <I>Direct provision of services.</I> If the service described in paragraphs (e)(1) through (e)(16) of this section is being directly delivered by the recipient or subrecipient, eligible costs for those services also include:
</P>
<P>(i) The costs of labor or supplies, and materials incurred by the recipient or subrecipient in directly providing supportive services to program participants; and
</P>
<P>(ii) The salary and benefit packages of the recipient and subrecipient staff who directly deliver the services.
</P>
<CITA TYPE="N">[77 FR 45442, July 31, 2012, as amended at 81 FR 90660, Dec. 14, 2016]




</CITA>
</DIV8>


<DIV8 N="§ 578.55" NODE="24:3.1.1.3.7.4.1.10" TYPE="SECTION">
<HEAD>§ 578.55   Operating costs.</HEAD>
<P>(a) <I>Use.</I> Grant funds may be used to pay the costs of the day-to-day operation of transitional and permanent housing in a single structure or individual housing units.
</P>
<P>(b) <I>Eligible costs.</I> (1) The maintenance and repair of housing;
</P>
<P>(2) Property taxes and insurance;
</P>
<P>(3) Scheduled payments to a reserve for replacement of major systems of the housing (provided that the payments must be based on the useful life of the system and expected replacement cost);
</P>
<P>(4) Building security for a structure where more than 50 percent of the units or area is paid for with grant funds;
</P>
<P>(5) Electricity, gas, and water;
</P>
<P>(6) Furniture; and
</P>
<P>(7) Equipment.
</P>
<P>(c) <I>Ineligible costs.</I> Program funds may not be used for rental assistance and operating costs in the same project. Program funds may not be used for the operating costs of emergency shelter- and supportive service-only facilities. Program funds may not be used for the maintenance and repair of housing where the costs of maintaining and repairing the housing are included in the lease.


</P>
</DIV8>


<DIV8 N="§ 578.57" NODE="24:3.1.1.3.7.4.1.11" TYPE="SECTION">
<HEAD>§ 578.57   Homeless Management Information System.</HEAD>
<P>(a) <I>Eligible costs.</I> (1) The recipient or subrecipient may use Continuum of Care program funds to pay the costs of contributing data to the HMIS designated by the Continuum of Care, including the costs of:
</P>
<P>(i) Purchasing or leasing computer hardware;
</P>
<P>(ii) Purchasing software or software licenses;
</P>
<P>(iii) Purchasing or leasing equipment, including telephones, fax machines, and furniture;
</P>
<P>(iv) Obtaining technical support;
</P>
<P>(v) Leasing office space;
</P>
<P>(vi) Paying charges for electricity, gas, water, phone service, and high-speed data transmission necessary to operate or contribute data to the HMIS;
</P>
<P>(vii) Paying salaries for operating HMIS, including:
</P>
<P>(A) Completing data entry;
</P>
<P>(B) Monitoring and reviewing data quality;
</P>
<P>(C) Completing data analysis;
</P>
<P>(D) Reporting to the HMIS Lead;
</P>
<P>(E) Training staff on using the HMIS; and
</P>
<P>(F) Implementing and complying with HMIS requirements;
</P>
<P>(viii) Paying costs of staff to travel to and attend HUD-sponsored and HUD-approved training on HMIS and programs authorized by Title IV of the McKinney-Vento Homeless Assistance Act;
</P>
<P>(ix) Paying staff travel costs to conduct intake; and
</P>
<P>(x) Paying participation fees charged by the HMIS Lead, as authorized by HUD, if the recipient or subrecipient is not the HMIS Lead.
</P>
<P>(2) If the recipient or subrecipient is the HMIS Lead, it may also use Continuum of Care funds to pay the costs of:
</P>
<P>(i) Hosting and maintaining HMIS software or data;
</P>
<P>(ii) Backing up, recovering, or repairing HMIS software or data;
</P>
<P>(iii) Upgrading, customizing, and enhancing the HMIS;
</P>
<P>(iv) Integrating and warehousing data, including development of a data warehouse for use in aggregating data from subrecipients using multiple software systems;
</P>
<P>(v) Administering the system;
</P>
<P>(vi) Reporting to providers, the Continuum of Care, and HUD; and
</P>
<P>(vii) Conducting training on using the system, including traveling to the training.
</P>
<P>(3) If the recipient or subrecipient is a victim services provider, or a legal services provider, it may use Continuum of Care funds to establish and operate a comparable database that complies with HUD's HMIS requirements.
</P>
<P>(b) <I>General restrictions.</I> Activities funded under this section must comply with the HMIS requirements.


</P>
</DIV8>


<DIV8 N="§ 578.59" NODE="24:3.1.1.3.7.4.1.12" TYPE="SECTION">
<HEAD>§ 578.59   Project administrative costs.</HEAD>
<P>(a) <I>Eligible costs.</I> The recipient or subrecipient may use up to 10 percent of any grant awarded under this part, excluding the amount for Continuum of Care Planning Activities and UFA costs, for the payment of project administrative costs related to the planning and execution of Continuum of Care activities. This does not include staff and overhead costs directly related to carrying out activities eligible under § 578.43 through § 578.57, because those costs are eligible as part of those activities. Eligible administrative costs include:
</P>
<P>(1) <I>General management, oversight, and coordination.</I> Costs of overall program management, coordination, monitoring, and evaluation. These costs include, but are not limited to, necessary expenditures for the following:
</P>
<P>(i) Salaries, wages, and related costs of the recipient's staff, the staff of subrecipients, or other staff engaged in program administration. In charging costs to this category, the recipient may include the entire salary, wages, and related costs allocable to the program of each person whose primary responsibilities with regard to the program involve program administration assignments, or the pro rata share of the salary, wages, and related costs of each person whose job includes any program administration assignments. The recipient may use only one of these methods for each fiscal year grant. Program administration assignments include the following:
</P>
<P>(A) Preparing program budgets and schedules, and amendments to those budgets and schedules;
</P>
<P>(B) Developing systems for assuring compliance with program requirements;
</P>
<P>(C) Developing agreements with subrecipients and contractors to carry out program activities;
</P>
<P>(D) Monitoring program activities for progress and compliance with program requirements;
</P>
<P>(E) Preparing reports and other documents directly related to the program for submission to HUD;
</P>
<P>(F) Coordinating the resolution of audit and monitoring findings;
</P>
<P>(G) Evaluating program results against stated objectives; and
</P>
<P>(H) Managing or supervising persons whose primary responsibilities with regard to the program include such assignments as those described in paragraph (a)(1)(i)(A) through (G) of this section.
</P>
<P>(ii) Travel costs incurred for monitoring of subrecipients;
</P>
<P>(iii) Administrative services performed under third-party contracts or agreements, including general legal services, accounting services, and audit services; and
</P>
<P>(iv) Other costs for goods and services required for administration of the program, including rental or purchase of equipment, insurance, utilities, office supplies, and rental and maintenance (but not purchase) of office space.
</P>
<P>(2) <I>Training on Continuum of Care requirements.</I> Costs of providing training on Continuum of Care requirements and attending HUD-sponsored Continuum of Care trainings.
</P>
<P>(3) <I>Environmental review.</I> Costs of carrying out the environmental review responsibilities under § 578.31.
</P>
<P>(b) <I>Sharing requirement.</I> (1) <I>UFAs.</I> If the recipient is a UFA that carries out a project, it may use up to 10 percent of the grant amount awarded for the project on project administrative costs. The UFA must share the remaining project administrative funds with its subrecipients.
</P>
<P>(2) <I>Recipients that are not UFAs.</I> If the recipient is not a UFA, it must share at least 50 percent of project administrative funds with its subrecipients.


</P>
</DIV8>


<DIV8 N="§ 578.61" NODE="24:3.1.1.3.7.4.1.13" TYPE="SECTION">
<HEAD>§ 578.61   Relocation costs.</HEAD>
<P>(a) <I>In general.</I> Relocation costs under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 are eligible.
</P>
<P>(b) <I>Eligible relocation costs.</I> Eligible costs are costs to provide relocation payments and other assistance to persons displaced by a project assisted with grant funds in accordance with § 578.83.


</P>
</DIV8>


<DIV8 N="§ 578.63" NODE="24:3.1.1.3.7.4.1.14" TYPE="SECTION">
<HEAD>§ 578.63   Indirect costs.</HEAD>
<P>(a) <I>In general.</I> Continuum of Care funds may be used to pay indirect costs in accordance with 2 CFR part 200, subpart E.
</P>
<P>(b) <I>Allocation.</I> Indirect costs may be allocated to each eligible activity as provided in this subpart, so long as that allocation is consistent with an indirect cost rate proposal developed in accordance with 2 CFR part 200, subpart E. 
</P>
<P>(c) <I>Expenditure limits.</I> The indirect costs charged to an activity subject to an expenditure limit under §§ 578.39, 578.41, and 578.59 must be added to the direct costs charged for that activity when determining the total costs subject to the expenditure limits.
</P>
<CITA TYPE="N">[77 FR 45442, July 31, 2012, as amended at 80 FR 75939, Dec. 7, 2015]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:3.1.1.3.7.5" TYPE="SUBPART">
<HEAD>Subpart E—High-Performing Communities</HEAD>


<DIV8 N="§ 578.65" NODE="24:3.1.1.3.7.5.1.1" TYPE="SECTION">
<HEAD>§ 578.65   Standards.</HEAD>
<P>(a) <I>In general.</I> The collaborative applicant for a Continuum may apply to HUD to have the Continuum be designated a high-performing community (HPC). The designation shall be for grants awarded in the same competition in which the designation is applied for and made.
</P>
<P>(b) <I>Applying for HPC designation.</I> The application must be submitted at such time and in such manner as HUD may require, must use HMIS data where required to show the standards for qualifying are met, and must contain such information as HUD requires, including at a minimum:
</P>
<P>(1) A report showing how the Continuum of Care program funds received in the preceding year were expended;
</P>
<P>(2) A specific plan for how grant funds will be expended; and
</P>
<P>(3) Information establishing that the Continuum of Care meets the standards for HPCs.
</P>
<P>(c) <I>Standards for qualifying as an HPC.</I> To qualify as an HPC, a Continuum must demonstrate through:
</P>
<P>(1) Reliable data generated by the Continuum of Care's HMIS that it meets all of the following standards:
</P>
<P>(i) <I>Mean length of homelessness.</I> Either the mean length of episode of homelessness within the Continuum's geographic area is fewer than 20 days, or the mean length of episodes of homelessness for individuals or families in similar circumstances was reduced by at least 10 percent from the preceding federal fiscal year.
</P>
<P>(ii) <I>Reduced recidivism.</I> Of individuals and families who leave homelessness, less than 5 percent become homeless again at any time within the next 2 years; or the percentage of individuals and families in similar circumstances who become homeless again within 2 years after leaving homelessness was decreased by at least 20 percent from the preceding federal fiscal year.
</P>
<P>(iii) <I>HMIS coverage.</I> The Continuum's HMIS must have a bed coverage rate of 80 percent and a service volume coverage rate of 80 percent as calculated in accordance with HUD's HMIS requirements.
</P>
<P>(iv) <I>Serving families and youth.</I> With respect to Continuums that served homeless families and youth defined as homeless under other federal statutes in paragraph (3) of the definition of homeless in § 576.2:
</P>
<P>(A) 95 percent of those families and youth did not become homeless again within a 2-year period following termination of assistance; or
</P>
<P>(B) 85 percent of those families achieved independent living in permanent housing for at least 2 years following termination of assistance.
</P>
<P>(2) Reliable data generated from sources other than the Continuum's HMIS that is provided in a narrative or other form prescribed by HUD that it meets both of the following standards:
</P>
<P>(i) <I>Community action.</I> All the metropolitan cities and counties within the Continuum's geographic area have a comprehensive outreach plan, including specific steps for identifying homeless persons and referring them to appropriate housing and services in that geographic area.
</P>
<P>(ii) <I>Renewing HPC status.</I> If the Continuum was designated an HPC in the previous federal fiscal year and used Continuum of Care grant funds for activities described under § 578.71, that such activities were effective at reducing the number of individuals and families who became homeless in that community.


</P>
</DIV8>


<DIV8 N="§ 578.67" NODE="24:3.1.1.3.7.5.1.2" TYPE="SECTION">
<HEAD>§ 578.67   Publication of application.</HEAD>
<P>HUD will publish the application to be designated an HPC through the HUD Web site, for public comment as to whether the Continuum seeking designation as an HPC meets the standards for being one.


</P>
</DIV8>


<DIV8 N="§ 578.69" NODE="24:3.1.1.3.7.5.1.3" TYPE="SECTION">
<HEAD>§ 578.69   Cooperation among entities.</HEAD>
<P>An HPC must cooperate with HUD in distributing information about its successful efforts to reduce homelessness.


</P>
</DIV8>


<DIV8 N="§ 578.71" NODE="24:3.1.1.3.7.5.1.4" TYPE="SECTION">
<HEAD>§ 578.71   HPC-eligible activities.</HEAD>
<P>In addition to using grant funds for the eligible costs described in subpart D of this part, recipients and subrecipients in Continuums of Care designated as HPCs may also use grant funds to provide housing relocation and stabilization services and short- and/or medium-term rental assistance to individuals and families at risk of homelessness as set forth in 24 CFR 576.103 and 24 CFR 576.104, if necessary to prevent the individual or family from becoming homeless. Activities must be carried out in accordance with the plan submitted in the application. When carrying out housing relocation and stabilization services and short- and/or medium-term rental assistance, the written standards set forth in § 578.7(a)(9)(v) and recordkeeping requirements of 24 CFR 576.500 apply.


</P>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:3.1.1.3.7.6" TYPE="SUBPART">
<HEAD>Subpart F—Program Requirements</HEAD>


<DIV8 N="§ 578.73" NODE="24:3.1.1.3.7.6.1.1" TYPE="SECTION">
<HEAD>§ 578.73   Matching requirements.</HEAD>
<P>(a) <I>In general.</I> The recipient or subrecipient must match all grant funds, except for leasing funds, with no less than 25 percent of funds or in-kind contributions from other sources. For Continuum of Care geographic areas in which there is more than one grant agreement, the 25 percent match must be provided on a grant-by-grant basis. Recipients that are UFAs or are the sole recipient for their Continuum, may provide match on a Continuum-wide basis. Cash match must be used for the costs of activities that are eligible under subpart D of this part, except that HPCs may use such match for the costs of activities that are eligible under § 578.71.
</P>
<P>(b) <I>Cash sources.</I> Notwithstanding 2 CFR 200.306(b)(5), a recipient or subrecipient may use funds from any source, including any other federal sources (excluding Continuum of Care program funds), as well as State, local, and private sources, provided that funds from the source are not statutorily prohibited to be used as a match. The recipient must ensure that any funds used to satisfy the matching requirements of this section are eligible under the laws governing the funds in order to be used as matching funds for a grant awarded under this program.
</P>
<P>(c) <I>In-kind contributions.</I> (1) The recipient or subrecipient may use the value of any real property, equipment, goods, or services contributed to the project as match, provided that if the recipient or subrecipient had to pay for them with grant funds, the costs would have been eligible under Subpart D, or, in the case of HPCs, eligible under § 578.71.
</P>
<P>(2) The requirements of 2 CFR 200.306, with the exception of § 200.306(b)(5) apply.
</P>
<P>(3) Before grant execution, services to be provided by a third party must be documented by a memorandum of understanding (MOU) between the recipient or subrecipient and the third party that will provide the services. Services provided by individuals must be valued at rates consistent with those ordinarily paid for similar work in the recipient's or subrecipient's organization. If the recipient or subrecipient does not have employees performing similar work, the rates must be consistent with those ordinarily paid by other employers for similar work in the same labor market.
</P>
<P>(i) The MOU must establish the unconditional commitment, except for selection to receive a grant, by the third party to provide the services, the specific service to be provided, the profession of the persons providing the service, and the hourly cost of the service to be provided.
</P>
<P>(ii) During the term of the grant, the recipient or subrecipient must keep and make available, for inspection, records documenting the service hours provided.
</P>
<CITA TYPE="N">[77 FR 45442, July 31, 2012, as amended at 80 FR 75940, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 578.75" NODE="24:3.1.1.3.7.6.1.2" TYPE="SECTION">
<HEAD>§ 578.75   General operations.</HEAD>
<P>(a) <I>State and local requirements.</I> (1) Housing and facilities constructed or rehabilitated with assistance under this part must meet State or local building codes, and in the absence of State or local building codes, the International Residential Code or International Building Code (as applicable to the type of structure) of the International Code Council.
</P>
<P>(2) Services provided with assistance under this part must be provided in compliance with all applicable State and local requirements, including licensing requirements.


</P>
<P>(b) <I>Housing standards.</I> Housing leased with Continuum of Care program funds, or for which rental assistance payments are made with Continuum of Care program funds, must meet the applicable standards under 24 CFR 5.703, except that the carbon monoxide detection requirement at 24 CFR 5.703(b)(2) and (d)(6) shall not apply. For housing that is occupied by program participants receiving tenant-based rental assistance, 24 CFR part 35, subparts A, B, M, and R apply. For housing rehabilitated with funds under this part, the lead-based paint requirements in 24 CFR part 35, subparts A, B, J, and R apply. For housing that receives project-based or sponsor-based rental assistance, 24 CFR part 35, subparts A, B, H, and R apply. For residential property for which funds under this part are used for acquisition, leasing, services, or operating costs, 24 CFR part 35, subparts A, B, K, and R apply. Additionally, for tenant-based rental assistance, for leasing of individual units, and for sponsor based rental assistance where not all units in a structure are or will be assisted, the standards apply only to the unit itself, and to the means of ingress and egress from the unit to the public way and to the building's common areas.
</P>
<P>(1) Before any assistance will be provided on behalf of a program participant, the recipient, or subrecipient, must physically inspect each unit to assure that the unit meets 24 CFR 5.703. Assistance will not be provided for units that fail to meet 24 CFR 5.703, unless the owner corrects any deficiencies within 30 days from the date of the initial inspection and the recipient or subrecipient verifies that all deficiencies have been corrected.
</P>
<P>(2) Recipients or subrecipients must inspect all units at least annually during the grant period to ensure that the units continue to meet 24 CFR 5.703.
</P>
<P>(3) The requirements in 24 CFR 5.705 through 5.713 do not apply.




</P>
<P>(c) <I>Suitable dwelling size.</I> The dwelling unit must have at least one bedroom or living/sleeping room for each two persons.
</P>
<P>(1) Children of opposite sex, other than very young children, may not be required to occupy the same bedroom or living/sleeping room.
</P>
<P>(2) If household composition changes during the term of assistance, recipients and subrecipients may relocate the household to a more appropriately sized unit. The household must still have access to appropriate supportive services.
</P>
<P>(d) <I>Meals.</I> Each recipient and subrecipient of assistance under this part who provides supportive housing for homeless persons with disabilities must provide meals or meal preparation facilities for residents.
</P>
<P>(e) <I>Ongoing assessment of supportive services.</I> To the extent practicable, each project must provide supportive services for residents of the project and homeless persons using the project, which may be designed by the recipient or participants. Each recipient and subrecipient of assistance under this part must conduct an ongoing assessment of the supportive services needed by the residents of the project, the availability of such services, and the coordination of services needed to ensure long-term housing stability and must make adjustments, as appropriate.
</P>
<P>(f) <I>Residential supervision.</I> Each recipient and subrecipient of assistance under this part must provide residential supervision as necessary to facilitate the adequate provision of supportive services to the residents of the housing throughout the term of the commitment to operate supportive housing. Residential supervision may include the employment of a full- or part-time residential supervisor with sufficient knowledge to provide or to supervise the provision of supportive services to the residents.
</P>
<P>(g) <I>Participation of homeless individuals.</I> (1) Each recipient and subrecipient must provide for the participation of not less than one homeless individual or formerly homeless individual on the board of directors or other equivalent policymaking entity of the recipient or subrecipient, to the extent that such entity considers and makes policies and decisions regarding any project, supportive services, or assistance provided under this part. This requirement is waived if a recipient or subrecipient is unable to meet such requirement and obtains HUD approval for a plan to otherwise consult with homeless or formerly homeless persons when considering and making policies and decisions.
</P>
<P>(2) Each recipient and subrecipient of assistance under this part must, to the maximum extent practicable, involve homeless individuals and families through employment; volunteer services; or otherwise in constructing, rehabilitating, maintaining, and operating the project, and in providing supportive services for the project.
</P>
<P>(h) <I>Supportive service agreement.</I> Recipients and subrecipients may require the program participants to take part in supportive services that are not disability-related services provided through the project as a condition of continued participation in the program. Examples of disability-related services include, but are not limited to, mental health services, outpatient health services, and provision of medication, which are provided to a person with a disability to address a condition caused by the disability. Notwithstanding this provision, if the purpose of the project is to provide substance abuse treatment services, recipients and subrecipients may require program participants to take part in such services as a condition of continued participation in the program.
</P>
<P>(i) <I>Retention of assistance after death, incarceration, or institutionalization for more than 90 days of qualifying member.</I> For permanent supportive housing projects surviving, members of any household who were living in a unit assisted under this part at the time of the qualifying member's death, long-term incarceration, or long-term institutionalization, have the right to rental assistance under this section until the expiration of the lease in effect at the time of the qualifying member's death, long-term incarceration, or long-term institutionalization.
</P>
<P>(j) <I>Remaining program participants following bifurcation of a lease or eviction as a result of domestic violence.</I> For permanent supportive housing projects, members of any household who were living in a unit assisted under this part at the time of a qualifying member's eviction from the unit because the qualifying member was found to have engaged in criminal activity directly relating to domestic violence, dating violence, sexual assault, or stalking, have the right to rental assistance under this section until the expiration of the lease in effect at the time of the qualifying member's eviction.
</P>
<CITA TYPE="N">[77 FR 45442, July 31, 2012, as amended at 81 FR 80810, Nov. 16, 2016; 88 FR 30499, May 11, 2023]






</CITA>
</DIV8>


<DIV8 N="§ 578.77" NODE="24:3.1.1.3.7.6.1.3" TYPE="SECTION">
<HEAD>§ 578.77   Calculating occupancy charges and rent.</HEAD>
<P>(a) <I>Occupancy agreements and leases.</I> Recipients and subrecipients must have signed occupancy agreements or leases (or subleases) with program participants residing in housing.
</P>
<P>(b) <I>Calculation of occupancy charges.</I> Recipients and subrecipients are not required to impose occupancy charges on program participants as a condition of residing in the housing. However, if occupancy charges are imposed, they may not exceed the highest of:
</P>
<P>(1) 30 percent of the family's monthly adjusted income (adjustment factors include the number of people in the family, age of family members, medical expenses, and child-care expenses);
</P>
<P>(2) 10 percent of the family's monthly income; or
</P>
<P>(3) If the family is receiving payments for welfare assistance from a public agency and a part of the payments (adjusted in accordance with the family's actual housing costs) is specifically designated by the agency to meet the family's housing costs, the portion of the payments that is designated for housing costs.
</P>
<P>(4) <I>Income.</I> Income must be calculated in accordance with 24 CFR 5.609 and 24 CFR 5.611(a). Recipients and subrecipients must examine a program participant's income initially, and if there is a change in family composition (<I>e.g.,</I> birth of a child) or a decrease in the resident's income during the year, the resident may request an interim reexamination, and the occupancy charge will be adjusted accordingly.
</P>
<P>(c) <I>Resident rent.</I> (1) <I>Amount of rent.</I> (i) Each program participant on whose behalf rental assistance payments are made must pay a contribution toward rent in accordance with section 3(a)(1) of the U.S. Housing Act of 1937 (42 U.S.C. 1437a(a)(1)).
</P>
<P>(ii) Income of program participants must be calculated in accordance with 24 CFR 5.609 and 24 CFR 5.611(a).
</P>
<P>(2) <I>Review.</I> Recipients or subrecipients must examine a program participant's income initially, and at least annually thereafter, to determine the amount of the contribution toward rent payable by the program participant. Adjustments to a program participant's contribution toward the rental payment must be made as changes in income are identified.
</P>
<P>(3) <I>Verification.</I> As a condition of participation in the program, each program participant must agree to supply the information or documentation necessary to verify the program participant's income. Program participants must provide the recipient or subrecipient with information at any time regarding changes in income or other circumstances that may result in changes to a program participant's contribution toward the rental payment.


</P>
</DIV8>


<DIV8 N="§ 578.79" NODE="24:3.1.1.3.7.6.1.4" TYPE="SECTION">
<HEAD>§ 578.79   Limitation on transitional housing.</HEAD>
<P>A homeless individual or family may remain in transitional housing for a period longer than 24 months, if permanent housing for the individual or family has not been located or if the individual or family requires additional time to prepare for independent living. However, HUD may discontinue assistance for a transitional housing project if more than half of the homeless individuals or families remain in that project longer than 24 months.


</P>
</DIV8>


<DIV8 N="§ 578.81" NODE="24:3.1.1.3.7.6.1.5" TYPE="SECTION">
<HEAD>§ 578.81   Term of commitment, repayment of grants, and prevention of undue benefits.</HEAD>
<P>(a) <I>In general.</I> All recipients and subrecipients receiving grant funds for acquisition, rehabilitation, or new construction must operate the housing or provide supportive services in accordance with this part, for at least 15 years from the date of initial occupancy or date of initial service provision. Recipient and subrecipients must execute and record a HUD-approved Declaration of Restrictive Covenants before receiving payment of grant funds.
</P>
<P>(b) <I>Conversion.</I> Recipients and subrecipients carrying out a project that provides transitional or permanent housing or supportive services in a structure may submit a request to HUD to convert a project for the direct benefit of very low-income persons. The request must be made while the project is operating as homeless housing or supportive services for homeless individuals and families, must be in writing, and must include an explanation of why the project is no longer needed to provide transitional or permanent housing or supportive services. The primary factor in HUD's decision on the proposed conversion is the unmet need for transitional or permanent housing or supportive services in the Continuum of Care's geographic area.
</P>
<P>(c) <I>Repayment of grant funds.</I> If a project is not operated as transitional or permanent housing for 10 years following the date of initial occupancy, HUD will require repayment of the entire amount of the grant used for acquisition, rehabilitation, or new construction, unless conversion of the project has been authorized under paragraph (b) of this section. If the housing is used for such purposes for more than 10 years, the payment amount will be reduced by 20 percentage points for each year, beyond the 10-year period in which the project is used for transitional or permanent housing.
</P>
<P>(d) <I>Prevention of undue benefits.</I> Except as provided under paragraph (e) of this section, upon any sale or other disposition of a project site that received grant funds for acquisition, rehabilitation, or new construction, occurring before the 15-year period, the recipient must comply with such terms and conditions as HUD may prescribe to prevent the recipient or subrecipient from unduly benefiting from such sale or disposition.
</P>
<P>(e) <I>Exception.</I> A recipient or subrecipient will not be required to comply with the terms and conditions prescribed under paragraphs (c) and (d) of this section if:
</P>
<P>(1) The sale or disposition of the property used for the project results in the use of the property for the direct benefit of very low-income persons;
</P>
<P>(2) All the proceeds are used to provide transitional or permanent housing that meet the requirements of this part;
</P>
<P>(3) Project-based rental assistance or operating cost assistance from any federal program or an equivalent State or local program is no longer made available and the project is meeting applicable performance standards, provided that the portion of the project that had benefitted from such assistance continues to meet the tenant income and rent restrictions for low-income units under section 42(g) of the Internal Revenue Code of 1986; or
</P>
<P>(4) There are no individuals and families in the Continuum of Care geographic area who are homeless, in which case the project may serve individuals and families at risk of homelessness.


</P>
</DIV8>


<DIV8 N="§ 578.83" NODE="24:3.1.1.3.7.6.1.6" TYPE="SECTION">
<HEAD>§ 578.83   Displacement, relocation, and acquisition.</HEAD>
<P>(a) <I>Minimizing displacement.</I> Consistent with the other goals and objectives of this part, recipients and subrecipients must ensure that they have taken all reasonable steps to minimize the displacement of persons (families, individuals, businesses, nonprofit organizations, and farms) as a result of projects assisted under this part. “Project,” as used in this section, means any activity or series of activities assisted with Continuum of Care funds received or anticipated in any phase of an undertaking.
</P>
<P>(b) <I>Temporary relocation.</I> (1) <I>Existing Building Not Assisted under Title IV of the McKinney-Vento Act.</I> No tenant may be required to relocate temporarily for a project if the building in which the project is being undertaken or will be undertaken is not currently assisted under Title IV of the McKinney-Vento Act. The absence of such assistance to the building means the tenants are not homeless and the tenants are therefore not eligible to receive assistance under the Continuum of Care program. When a tenant moves for such a project under conditions that cause the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA), 42 U.S.C. 4601-4655, to apply, the tenant must be treated as permanently displaced and offered relocation assistance and payments consistent with paragraph (c) of this section.
</P>
<P>(2) <I>Existing Transitional Housing or Permanent Housing Projects Assisted Under Title IV of the McKinney-Vento Act.</I> Consistent with paragraph (c)(2)(ii) of this section, no program participant may be required to relocate temporarily for a project if the person cannot be offered a decent, safe, and sanitary unit in the same building or complex upon project completion under reasonable terms and conditions. The length of occupancy requirements in § 578.79 may prevent a program participant from returning to the property upon completion (See paragraph (c)(2)(iii)(D) of this section). Any program participant who has been temporarily relocated for a period beyond one year must be treated as permanently displaced and offered relocation assistance and payments consistent with paragraph (c) of this section. Program participants temporarily relocated in accordance with the policies described in this paragraph must be provided:
</P>
<P>(i) Reimbursement for all reasonable out-of-pocket expenses incurred in connection with the temporary relocation, including the cost of moving to and from the temporarily occupied housing and any increase in monthly rent/occupancy charges and utility costs; and
</P>
<P>(ii) Appropriate advisory services, including reasonable advance written notice of:
</P>
<P>(A) The date and approximate duration of the temporary relocation;
</P>
<P>(B) The location of the suitable, decent, safe, and sanitary dwelling to be made available for the temporary period;
</P>
<P>(C) The reasonable terms and conditions under which the program participant will be able to occupy a suitable, decent, safe, and sanitary dwelling in the building or complex upon completion of the project; and
</P>
<P>(D) The provisions of paragraph (b)(2)(i) of this section.
</P>
<P>(c) <I>Relocation assistance for displaced persons.</I> (1) <I>In general.</I> A displaced person (defined in paragraph (c)(2) of this section) must be provided relocation assistance in accordance with the requirements of the URA and implementing regulations at 49 CFR part 24. A displaced person must be advised of his or her rights under the Fair Housing Act. Whenever possible, minority persons must be given reasonable opportunities to relocate to decent, safe, and sanitary replacement dwellings, not located in an area of minority concentration, that are within their financial means. This policy, however, does not require providing a person a larger payment than is necessary to enable a person to relocate to a comparable replacement dwelling. See 49 CFR 24.205(c)(2)(ii)(D).
</P>
<P>(2) <I>Displaced person.</I> (i) For the purposes of paragraph (c) of this section, the term “displaced person” means any person (family, individual, business, nonprofit organization, or farm) that moves from real property, or moves personal property from real property, permanently, as a direct result of acquisition, rehabilitation, or demolition for a project. This includes any permanent, involuntary move for a project, including any permanent move from the real property that is made:
</P>
<P>(A) After the owner (or person in control of the site) issues a notice to move permanently from the property, or refuses to renew an expiring lease, if the move occurs after the date of the submission by the recipient or subrecipient of an application for assistance to HUD (or the recipient, as applicable) that is later approved and funded and the recipient or subrecipient has site control as evidenced in accordance with § 578.25(b); or
</P>
<P>(B) After the owner (or person in control of the site) issues a notice to move permanently from the property, or refuses to renew an expiring lease, if the move occurs after the date the recipient or subrecipient obtains site control, as evidenced in accordance with § 578.25(b), if that occurs after the application for assistance; or
</P>
<P>(C) Before the date described under paragraph (c)(2)(i)(A) or (B) of this section, if the recipient or HUD determines that the displacement resulted directly from acquisition, rehabilitation, or demolition for the project; or
</P>
<P>(D) By a tenant of a building that is not assisted under Title IV of the McKinney-Vento Act, if the tenant moves after execution of the agreement covering the acquisition, rehabilitation, or demolition of the property for the project; or
</P>
<P>(ii) For the purposes of paragraph (c) of this section, the term “displaced person” means any person (family, individual, business, nonprofit organization, or farm) that moves from real property, or moves personal property from real property, permanently, as a direct result of acquisition, rehabilitation, or demolition for a project. This includes any permanent, involuntary move for a project that is made by a program participant occupying transitional housing or permanent housing assisted under Title IV of the McKinney-Vento Act, if any one of the following three situations occurs:
</P>
<P>(A) The program participant moves after execution of the agreement covering the acquisition, rehabilitation, or demolition of the property for the project and is either not eligible to return upon project completion or the move occurs before the program participant is provided written notice offering the program participant an opportunity to occupy a suitable, decent, safe, and sanitary dwelling in the same building or complex upon project completion under reasonable terms and conditions. Such reasonable terms and conditions must include a lease (or occupancy agreement, as applicable) consistent with Continuum of Care program requirements, including a monthly rent or occupancy charge and monthly utility costs that does not exceed the maximum amounts established in § 578.77; or
</P>
<P>(B) The program participant is required to relocate temporarily, does not return to the building or complex, and any one of the following situations occurs:
</P>
<P>(<I>1</I>) The program participant is not offered payment for all reasonable out-of-pocket expenses incurred in connection with the temporary relocation;
</P>
<P>(<I>2</I>) The program participant is not eligible to return to the building or complex upon project completion; or
</P>
<P>(<I>3</I>) Other conditions of the temporary relocation are not reasonable; or
</P>
<P>(C) The program participant is required to move to another unit in the same building or complex, and any one of the following situations occurs:
</P>
<P>(<I>1</I>) The program participant is not offered reimbursement for all reasonable out-of-pocket expenses incurred in connection with the move;
</P>
<P>(<I>2</I>) The program participant is not eligible to remain in the building or complex upon project completion; or
</P>
<P>(<I>3</I>) Other conditions of the move are not reasonable.
</P>
<P>(iii) Notwithstanding the provisions of paragraph (c)(2)(i) or (ii) of this section, a person does not qualify as a “displaced person” if:
</P>
<P>(A) The person has been evicted for serious or repeated violation of the terms and conditions of the lease or occupancy agreement; the eviction complied with applicable federal, State, or local requirements (see § 578.91); and the recipient or subrecipient determines that the eviction was not undertaken for the purpose of evading the obligation to provide relocation assistance;
</P>
<P>(B) The person moved into the property after the submission of the application but, before signing a lease or occupancy agreement and commencing occupancy, was provided written notice of the project's possible impact on the person (<I>e.g.,</I> the person may be displaced, temporarily relocated, or incur a rent increase) and the fact that the person would not qualify as a “displaced person” (or for any relocation assistance provided under this section), as a result of the project;
</P>
<P>(C) The person is ineligible under 49 CFR 24.2(a)(9)(ii));
</P>
<P>(D) The person is a program participant occupying transitional housing or permanent housing assisted under Title IV of the Act who must move as a direct result of the length-of- occupancy restriction under § 578.79; or
</P>
<P>(E) HUD determines that the person was not displaced as a direct result of acquisition, rehabilitation, or demolition for the project.
</P>
<P>(iv) The recipient may request, at any time, HUD's determination of whether a displacement is or would be covered under this section.
</P>
<P>(3) <I>Initiation of negotiations.</I> For purposes of determining the formula for computing replacement housing payment assistance to be provided to a displaced person pursuant to this section, if the displacement is a direct result of privately undertaken rehabilitation, demolition, or acquisition of the real property, “initiation of negotiations” means the execution of the agreement between the recipient and the subrecipient, or between the recipient (or subrecipient, as applicable) and the person owning or controlling the property. In the case of an option contract to acquire property, the initiation of negotiations does not become effective until execution of a written agreement that creates a legally enforceable commitment to proceed with the purchase, such as a purchase agreement.
</P>
<P>(d) <I>Real property acquisition requirements.</I> Except for acquisitions described in 49 CFR 24.101(b)(1) through (5), the URA and the requirements of 49 CFR part 24, subpart B apply to any acquisition of real property for a project where there are Continuum of Care funds in any part of the project costs.
</P>
<P>(e) <I>Appeals.</I> A person who disagrees with the recipient's (or subrecipient's, if applicable) determination concerning whether the person qualifies as a displaced person, or the amount of relocation assistance for which the person is eligible, may file a written appeal of that determination with the recipient (see 49 CFR 24.10). A low-income person who is dissatisfied with the recipient's determination on his or her appeal may submit a written request for review of that determination to the local HUD field office.


</P>
</DIV8>


<DIV8 N="§ 578.85" NODE="24:3.1.1.3.7.6.1.7" TYPE="SECTION">
<HEAD>§ 578.85   Timeliness standards.</HEAD>
<P>(a) <I>In general.</I> Recipients must initiate approved activities and projects promptly.
</P>
<P>(b) <I>Construction activities.</I> Recipients of funds for rehabilitation or new construction must meet the following standards:
</P>
<P>(1) Construction activities must begin within 9 months of the later of signing of the grant agreement or of signing an addendum to the grant agreement authorizing use of grant funds for the project.
</P>
<P>(2) Construction activities must be completed within 24 months of signing the grant agreement.
</P>
<P>(3) Activities that cannot begin until after construction activities are completed must begin within 3 months of the date that construction activities are completed.
</P>
<P>(c) <I>Distribution.</I> A recipient that receives funds through this part must:
</P>
<P>(1) Distribute the funds to subrecipients (in advance of expenditures by the subrecipients);
</P>
<P>(2) Distribute the appropriate portion of the funds to a subrecipient no later than 45 days after receiving an approvable request for such distribution from the subrecipient; and
</P>
<P>(3) Draw down funds at least once per quarter of the program year, after eligible activities commence.


</P>
</DIV8>


<DIV8 N="§ 578.87" NODE="24:3.1.1.3.7.6.1.8" TYPE="SECTION">
<HEAD>§ 578.87   Limitation on use of funds.</HEAD>
<P>(a) <I>Maintenance of effort.</I> No assistance provided under this part (or any State or local government funds used to supplement this assistance) may be used to replace State or local funds previously used, or designated for use, to assist homeless persons.
</P>
<P>(b) <I>Equal participation of faith-based organizations.</I> The HUD program requirements in § 5.109 apply to the Continuum of Care program, including the requirements regarding disposition and change in use of real property by a faith-based organization.
</P>
<P>(c) <I>Restriction on combining funds.</I> In a single structure or housing unit, the following types of assistance may not be combined:
</P>
<P>(1) Leasing and acquisition, rehabilitation, or new construction;
</P>
<P>(2) Tenant-based rental assistance and acquisition, rehabilitation, or new construction;
</P>
<P>(3) Short- or medium-term rental assistance and acquisition, rehabilitation, or new construction;
</P>
<P>(4) Rental assistance and leasing; or
</P>
<P>(5) Rental assistance and operating.
</P>
<P>(d) <I>Program fees.</I> Recipients and subrecipients may not charge program participants program fees.
</P>
<CITA TYPE="N">[77 FR 45442, July 31, 2012, as amended at 80 FR 75804, Dec. 4, 2015;80 FR 75940, Dec. 7, 2015; 81 FR 19418, Apr. 4, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 578.89" NODE="24:3.1.1.3.7.6.1.9" TYPE="SECTION">
<HEAD>§ 578.89   Limitation on use of grant funds to serve persons defined as homeless under other federal laws.</HEAD>
<P>(a) <I>Application requirement.</I> Applicants that intend to serve unaccompanied youth and families with children and youth defined as homeless under other federal laws in paragraph (3) of the homeless definition in § 576.2 must demonstrate in their application, to HUD's satisfaction, that the use of grant funds to serve such persons is an equal or greater priority than serving persons defined as homeless under paragraphs (1), (2), and (4) of the definition of homeless in § 576.2. To demonstrate that it is of equal or greater priority, applicants must show that it is equally or more cost effective in meeting the overall goals and objectives of the plan submitted under section 427(b)(1)(B) of the Act, especially with respect to children and unaccompanied youth.
</P>
<P>(b) <I>Limit.</I> No more than 10 percent of the funds awarded to recipients within a single Continuum of Care's geographic area may be used to serve such persons.
</P>
<P>(c) <I>Exception.</I> The 10 percent limitation does not apply to Continuums in which the rate of homelessness, as calculated in the most recent point-in-time count, is less than one-tenth of one percent of the total population.


</P>
</DIV8>


<DIV8 N="§ 578.91" NODE="24:3.1.1.3.7.6.1.10" TYPE="SECTION">
<HEAD>§ 578.91   Termination of assistance to program participants.</HEAD>
<P>(a) <I>Termination of assistance.</I> The recipient or subrecipient may terminate assistance to a program participant who violates program requirements or conditions of occupancy. Termination under this section does not bar the recipient or subrecipient from providing further assistance at a later date to the same individual or family.
</P>
<P>(b) <I>Due process.</I> In terminating assistance to a program participant, the recipient or subrecipient must provide a formal process that recognizes the rights of individuals receiving assistance under the due process of law. This process, at a minimum, must consist of:
</P>
<P>(1) Providing the program participant with a written copy of the program rules and the termination process before the participant begins to receive assistance;
</P>
<P>(2) Written notice to the program participant containing a clear statement of the reasons for termination;
</P>
<P>(3) A review of the decision, in which the program participant is given the opportunity to present written or oral objections before a person other than the person (or a subordinate of that person) who made or approved the termination decision; and
</P>
<P>(4) Prompt written notice of the final decision to the program participant.
</P>
<P>(c) <I>Hard-to-house populations.</I> Recipients and subrecipients that are providing permanent supportive housing for hard-to-house populations of homeless persons must exercise judgment and examine all extenuating circumstances in determining when violations are serious enough to warrant termination so that a program participant's assistance is terminated only in the most severe cases.


</P>
</DIV8>


<DIV8 N="§ 578.93" NODE="24:3.1.1.3.7.6.1.11" TYPE="SECTION">
<HEAD>§ 578.93   Fair Housing and Equal Opportunity.</HEAD>
<P>(a) <I>Nondiscrimination and equal opportunity requirements.</I> The nondiscrimination and equal opportunity requirements set forth in 24 CFR 5.105(a) are applicable.
</P>
<P>(b) <I>Housing for specific subpopulations.</I> Recipients and subrecipients may exclusively serve a particular homeless subpopulation in transitional or permanent housing if the housing addresses a need identified by the Continuum of Care for the geographic area and meets one of the following:
</P>
<P>(1) The housing may be limited to one sex where such housing consists of a single structure with shared bedrooms or bathing facilities such that the considerations of personal privacy and the physical limitations of the configuration of the housing make it appropriate for the housing to be limited to one sex;
</P>
<P>(2) The housing may be limited to a specific subpopulation, so long as admission does not discriminate against any protected class under federal nondiscrimination laws in 24 CFR 5.105 (<I>e.g.,</I> the housing may be limited to homeless veterans, victims of domestic violence and their children, or chronically homeless persons and families).
</P>
<P>(3) The housing may be limited to families with children.
</P>
<P>(4) If the housing has in residence at least one family with a child under the age of 18, the housing may exclude registered sex offenders and persons with a criminal record that includes a violent crime from the project so long as the child resides in the housing.
</P>
<P>(5) Sober housing may exclude persons who refuse to sign an occupancy agreement or lease that prohibits program participants from possessing, using, or being under the influence of illegal substances and/or alcohol on the premises.
</P>
<P>(6) If the housing is assisted with funds under a federal program that is limited by federal statute or Executive Order to a specific subpopulation, the housing may be limited to that subpopulation (<I>e.g.,</I> housing also assisted with funding from the Housing Opportunities for Persons with AIDS program under 24 CFR part 574 may be limited to persons with acquired immunodeficiency syndrome or related diseases).
</P>
<P>(7) Recipients may limit admission to or provide a preference for the housing to subpopulations of homeless persons and families who need the specialized supportive services that are provided in the housing (<I>e.g.,</I> substance abuse addiction treatment, domestic violence services, or a high intensity package designed to meet the needs of hard-to-reach homeless persons). While the housing may offer services for a particular type of disability, no otherwise eligible individuals with disabilities or families including an individual with a disability, who may benefit from the services provided may be excluded on the grounds that they do not have a particular disability.
</P>
<P>(c) <I>Affirmatively furthering fair housing.</I> A recipient must implement its programs in a manner that affirmatively furthers fair housing, which means that the recipient must:
</P>
<P>(1) Affirmatively market their housing and supportive services to eligible persons regardless of race, color, national origin, religion, sex, age, familial status, or handicap who are least likely to apply in the absence of special outreach, and maintain records of those marketing activities;
</P>
<P>(2) Where a recipient encounters a condition or action that impedes fair housing choice for current or prospective program participants, provide such information to the jurisdiction that provided the certification of consistency with the Consolidated Plan; and
</P>
<P>(3) Provide program participants with information on rights and remedies available under applicable federal, State and local fair housing and civil rights laws.
</P>
<P>(d) <I>Accessibility and integrative housing and services for persons with disabilities.</I> Recipients and subrecipients must comply with the accessibility requirements of the Fair Housing Act (24 CFR part 100), Section 504 of the Rehabilitation Act of 1973 (24 CFR part 8), and Titles II and III of the Americans with Disabilities Act, as applicable (28 CFR parts 35 and 36). In accordance with the requirements of 24 CFR 8.4(d), recipients must ensure that their program's housing and supportive services are provided in the most integrated setting appropriate to the needs of persons with disabilities.
</P>
<P>(e) <I>Prohibition against involuntary family separation.</I> The age and gender of a child under age 18 must not be used as a basis for denying any family's admission to a project that receives funds under this part.


</P>
</DIV8>


<DIV8 N="§ 578.95" NODE="24:3.1.1.3.7.6.1.12" TYPE="SECTION">
<HEAD>§ 578.95   Conflicts of interest.</HEAD>
<P>(a) <I>Procurement.</I> For the procurement of property (goods, supplies, or equipment) and services, the recipient and its subrecipients must comply with the standards of conduct and conflict-of-interest requirements under 2 CFR 200.317 and 200.318.
</P>
<P>(b) <I>Continuum of Care board members.</I> No Continuum of Care board member may participate in or influence discussions or resulting decisions concerning the award of a grant or other financial benefits to the organization that the member represents.
</P>
<P>(c) <I>Organizational conflict.</I> An organizational conflict of interest arises when, because of activities or relationships with other persons or organizations, the recipient or subrecipient is unable or potentially unable to render impartial assistance in the provision of any type or amount of assistance under this part, or when a covered person's, as in paragraph (d)(1) of this section, objectivity in performing work with respect to any activity assisted under this part is or might be otherwise impaired. Such an organizational conflict would arise when a board member of an applicant participates in decision of the applicant concerning the award of a grant, or provision of other financial benefits, to the organization that such member represents. It would also arise when an employee of a recipient or subrecipient participates in making rent reasonableness determinations under § 578.49(b)(2) and § 578.51(g) and housing quality inspections of property under § 578.75(b) that the recipient, subrecipient, or related entity owns.
</P>
<P>(d) <I>Other conflicts.</I> For all other transactions and activities, the following restrictions apply:
</P>
<P>(1) No covered person, meaning a person who is an employee, agent, consultant, officer, or elected or appointed official of the recipient or its subrecipients and who exercises or has exercised any functions or responsibilities with respect to activities assisted under this part, or who is in a position to participate in a decision-making process or gain inside information with regard to activities assisted under this part, may obtain a financial interest or benefit from an assisted activity, have a financial interest in any contract, subcontract, or agreement with respect to an assisted activity, or have a financial interest in the proceeds derived from an assisted activity, either for him or herself or for those with whom he or she has immediate family or business ties, during his or her tenure or during the one-year period following his or her tenure.
</P>
<P>(2) <I>Exceptions.</I> Upon the written request of the recipient, HUD may grant an exception to the provisions of this section on a case-by-case basis, taking into account the cumulative effects of the criteria in paragraph (d)(2)(ii) of this section, provided that the recipient has satisfactorily met the threshold requirements of paragraph (d)(2)(ii) of this section.
</P>
<P>(i) <I>Threshold requirements.</I> HUD will consider an exception only after the recipient has provided the following documentation:
</P>
<P>(A) Disclosure of the nature of the conflict, accompanied by a written assurance, if the recipient is a government, that there has been public disclosure of the conflict and a description of how the public disclosure was made; and if the recipient is a private nonprofit organization, that the conflict has been disclosed in accordance with their written code of conduct or other conflict-of-interest policy; and
</P>
<P>(B) An opinion of the recipient's attorney that the interest for which the exception is sought would not violate State or local law, or if the subrecipient is a private nonprofit organization, the exception would not violate the organization's internal policies.
</P>
<P>(ii) <I>Factors to be considered for exceptions.</I> In determining whether to grant a requested exception after the recipient has satisfactorily met the threshold requirements under paragraph (c)(3)(i) of this section, HUD must conclude that the exception will serve to further the purposes of the Continuum of Care program and the effective and efficient administration of the recipient's or subrecipient's project, taking into account the cumulative effect of the following factors, as applicable:
</P>
<P>(A) Whether the exception would provide a significant cost benefit or an essential degree of expertise to the program or project that would otherwise not be available;
</P>
<P>(B) Whether an opportunity was provided for open competitive bidding or negotiation;
</P>
<P>(C) Whether the affected person has withdrawn from his or her functions, responsibilities, or the decision-making process with respect to the specific activity in question;
</P>
<P>(D) Whether the interest or benefit was present before the affected person was in the position described in paragraph (c)(1) of this section;
</P>
<P>(E) Whether undue hardship will result to the recipient, the subrecipient, or the person affected, when weighed against the public interest served by avoiding the prohibited conflict;
</P>
<P>(F) Whether the person affected is a member of a group or class of persons intended to be the beneficiaries of the assisted activity, and the exception will permit such person to receive generally the same interests or benefits as are being made available or provided to the group or class; and
</P>
<P>(G) Any other relevant considerations.
</P>
<CITA TYPE="N">[77 FR 45442, July 31, 2012, as amended at 80 FR 75940, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 578.97" NODE="24:3.1.1.3.7.6.1.13" TYPE="SECTION">
<HEAD>§ 578.97   Program income.</HEAD>
<P>(a) <I>Defined.</I> Program income is the income received by the recipient or subrecipient directly generated by a grant-supported activity.
</P>
<P>(b) <I>Use.</I> Program income earned during the grant term shall be retained by the recipient, and added to funds committed to the project by HUD and the recipient, used for eligible activities in accordance with the requirements of this part. Costs incident to the generation of program income may be deducted from gross income to calculate program income, provided that the costs have not been charged to grant funds.
</P>
<P>(c) <I>Rent and occupancy charges.</I> Rents and occupancy charges collected from program participants are program income. In addition, rents and occupancy charges collected from residents of transitional housing may be reserved, in whole or in part, to assist the residents from whom they are collected to move to permanent housing.


</P>
</DIV8>


<DIV8 N="§ 578.99" NODE="24:3.1.1.3.7.6.1.14" TYPE="SECTION">
<HEAD>§ 578.99   Applicability of other Federal requirements.</HEAD>
<P>In addition to the requirements set forth in 24 CFR part 5, use of assistance provided under this part must comply with the following federal requirements:
</P>
<P>(a) <I>Environmental review.</I> Activities under this part are subject to environmental review by HUD under 24 CFR part 50 as noted in § 578.31.
</P>
<P>(b) <I>Section 6002 of the Solid Waste Disposal Act.</I> State agencies and agencies of a political subdivision of a state that are using assistance under this part for procurement, and any person contracting with such an agency with respect to work performed under an assisted contract, must comply with the requirements of Section 6003 of the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act. In accordance with Section 6002, these agencies and persons must:
</P>
<P>(1) Procure items designated in guidelines of the Environmental Protection Agency (EPA) at 40 CFR part 247 that contain the highest percentage of recovered materials practicable, consistent with maintaining a satisfactory level of competition, where the purchase price of the item exceeds $10,000 or the value of the quantity acquired in the preceding fiscal year exceeded $10,000;
</P>
<P>(2) Procure solid waste management services in a manner that maximizes energy and resource recovery; and
</P>
<P>(3) Must have established an affirmative procurement program for the procurement of recovered materials identified in the EPA guidelines.
</P>
<P>(c) <I>Transparency Act Reporting.</I> Section 872 of the Duncan Hunter Defense Appropriations Act of 2009, and additional requirements published by the Office of Management and Budget (OMB), requires recipients to report subawards made either as pass-through awards, subrecipient awards, or vendor awards in the Federal Government Web site <I>www.fsrs.gov</I> or its successor system. The reporting of award and subaward information is in accordance with the requirements of the Federal Financial Assistance Accountability and Transparency Act of 2006, as amended by section 6202 of Public Law 110-252 and in OMB Policy Guidance issued to the federal agencies on September 14, 2010 (75 FR 55669).
</P>
<P>(d) <I>The Coastal Barrier Resources Act of 1982</I> (16 U.S.C. 3501 <I>et seq.</I>) may apply to proposals under this part, depending on the assistance requested.
</P>
<P>(e) <I>Applicability of uniform administrative requirements, cost principles, and audit requirements for Federal awards.</I> The requirements of 2 CFR part 200 apply to recipients and subrecipients, except where inconsistent with the provisions of the McKinney-Vento Act or this part.
</P>
<P>(f) <I>Lead-based paint.</I> The Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and implementing regulations at 24 CFR part 35, subparts A, B, H, J, K, M, and R apply to activities under this program.
</P>
<P>(g) <I>Audit.</I> Recipients and subrecipients must comply with the audit requirements of 2 CFR part 200, subpart F.
</P>
<P>(h) <I>Davis-Bacon Act.</I> The provisions of the Davis-Bacon Act do not apply to this program.
</P>
<P>(i) <I>Section 3 of the Housing and Urban Development Act.</I> Recipients and subrecipients must, as applicable, comply with Section 3 of the Housing and Urban Development Act of 1968 and its implementing regulations at 24 CFR part 75, as applicable.
</P>
<P>(j) <I>Protections for victims of domestic violence, dating violence, sexual assault, or stalking</I>—(1) <I>General.</I> The requirements set forth in 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking), implementing the requirements of VAWA apply to all permanent housing and transitional housing for which Continuum of Care program funds are used for acquisition, rehabilitation, new construction, leasing, rental assistance, or operating costs. The requirements also apply where funds are used for homelessness prevention, but only where the funds are used to provide short- and/or medium-term rental assistance. Safe havens are subject only to the requirements in paragraph (j)(9) of this section.
</P>
<P>(2) <I>Definition of covered housing provider.</I> For the Continuum of Care program, “covered housing provider,” as such term is used in HUD's regulations in 24 CFR part 5, subpart L refers to:
</P>
<P>(i) The owner or landlord, which may be the recipient or subrecipient, for purposes of 24 CFR 5.2005(d)(1) and 5.2009(a);
</P>
<P>(ii) The recipient, subrecipient, and owner or landlord for purposes of 24 CFR 5.2005(d)(2) through (d)(4); and
</P>
<P>(iii) The recipient, subrecipient, and owner or landlord for purposes of 24 CFR 5.2007. However, the recipient or subrecipient may limit documentation requests under § 5.2007 to only the recipient or subrecipient, provided that:
</P>
<P>(A) This limitation is made clear in both the notice described under 24 CFR 5.2005(a)(1) and the rental assistance agreement;
</P>
<P>(B) The entity designated to receive documentation requests determines whether the program participant is entitled to protection under VAWA and immediately advise the program participant of the determination; and
</P>
<P>(C) If the program participant is entitled to protection, the entity designated to receive documentation requests must notify the owner in writing that the program participant is entitled to protection under VAWA and work with the owner on the program participant's behalf. Any further sharing or disclosure of the program participant's information will be subject to the requirements in 24 CFR 5.2007.
</P>
<P>(3) <I>Effective date.</I> The core statutory protections of VAWA that prohibit denial or termination of assistance or eviction solely because an applicant or tenant is a victim of domestic violence, dating violence, sexual assault, or stalking, applied upon enactment of VAWA 2013 on March 7, 2013. Compliance with the VAWA regulatory requirements under this section and at 24 CFR part 5, subpart L, is required for grants awarded pursuant to NOFAs published on or after December 16, 2016.
</P>
<P>(4) <I>Notification requirements.</I> (i) The recipient or subrecipient must provide each individual or family applying for permanent housing and transitional housing and each program participant the notice and the certification form described in 24 CFR 5.2005 at each of the following times:
</P>
<P>(A) When an individual or family is denied permanent housing or transitional housing;
</P>
<P>(B) When a program participant is admitted to permanent housing or transitional housing;
</P>
<P>(C) When a program participant receives notification of eviction; and
</P>
<P>(D) When a program participant is notified of termination of assistance.
</P>
<P>(ii) When grant funds are used for rental assistance, the recipient or subrecipient must ensure that the owner or manager of the housing provides the notice and certification form described in 24 CFR 5.2005(a) to the program participant with any notification of eviction. This commitment and the confidentiality requirements under 24 CFR 5.2007(c) must be set forth in a contract with the owner or landlord.
</P>
<P>(5) <I>Contract, lease, and occupancy agreement provisions.</I> (i) Recipients and subrecipients must include in any contracts and leases between the recipient or subrecipient, and an owner or landlord of the housing:
</P>
<P>(A) The requirement to comply with 24 CFR part 5, subpart L; and
</P>
<P>(B) Where the owner or landlord of the housing will have a lease with a program participant, the requirement to include a lease provision that include all requirements that apply to tenants, the owner or the lease under 24 CFR part 5, subpart L, as supplemented by this part, including the prohibited bases for eviction and restrictions on construing lease terms under 24 CFR 5.2005(b) and (c).
</P>
<P>(ii) The recipient or subrecipient must include in any lease, sublease, and occupancy agreement with the program participant a provision that include all requirements that apply to tenants, the owner or the lease under 24 CFR part 5, subpart L, as supplemented by this part, including the prohibited bases for eviction and restrictions on construing lease terms under 24 CFR 5.2005(b) and (c). The lease, sublease, and occupancy agreement may specify that the protections under 24 CFR part 5, subpart L, apply only during the period of assistance under the Continuum of Care Program. The period of assistance for housing where grant funds were used for acquisition, construction, or rehabilitation is 15 years from the date of initial occupancy or date of initial service provision.
</P>
<P>(iii) Except for tenant-based rental assistance, recipients and subrecipients must require that any lease, sublease, or occupancy agreement with a program participant permits the program participant to terminate the lease, sublease, or occupancy agreement without penalty if the recipient or subrecipient determines that the program participant qualifies for an emergency transfer under the emergency transfer plan established under paragraph (j)(8) of this section.
</P>
<P>(iv) For tenant-based rental assistance, the recipient or subrecipient must enter into a contract with the owner or landlord of the housing that:
</P>
<P>(A) Requires the owner or landlord of the housing to comply with the provisions of 24 CFR part 5, subpart L; and
</P>
<P>(B) Requires the owner or landlord of the housing to include a lease provision that include all requirements that apply to tenants, the owner or the lease under 24 CFR part 5, subpart L, as supplemented by this part, including the prohibited bases for eviction and restrictions on construing lease terms under 24 CFR 5.005(b) and (c). The lease may specify that the protections under 24 CFR part 5, subpart L, only apply while the program participant receives tenant-based rental assistance under the Continuum of Care Program.
</P>
<P>(6) <I>Transition.</I> (i) The recipient or subrecipient must ensure that the requirements set forth in paragraph (j)(5) of this section apply to any contracts, leases, subleases, or occupancy agreements entered into, or renewed, following the expiration of an existing term, on or after the effective date in paragraph (j)(2) of this section. This obligation includes any contracts, leases, subleases, and occupancy agreements that will automatically renew on or after the effective date in paragraph (j)(3) of this section.
</P>
<P>(ii) For leases for tenant-based rental assistance existing prior to the effective date in paragraph (j)(2) of this section, recipients and subrecipients must enter into a contract under paragraph (j)(6)(iv) of this section before the next renewal of the lease.
</P>
<P>(7) <I>Bifurcation.</I> For the purposes of this part, the following requirements shall apply in place of the requirements at 24 CFR 5.2009(b):
</P>
<P>(i) If a family who is receiving tenant-based rental assistance under this part separates under 24 CFR 5.2009(a), the family's tenant-based rental assistance and any utility assistance shall continue for the family member(s) who are not evicted or removed.
</P>
<P>(ii) If a family living in permanent supportive housing separates under 24 CFR 5.2009(a), and the family's eligibility for the housing was based on the evicted individual's disability or chronically homeless status, the remaining tenants may stay in the project as provided under § 578.75(i)(2). Otherwise, if a family living in a project funded under this part separates under 24 CFR 5.2009(a), the remaining tenant(s) will be eligible to remain in the project.
</P>
<P>(8) <I>Emergency transfer plan.</I> The Continuum of Care must develop an emergency transfer plan for the Continuum of Care, and recipients and subrecipients in the Continuum of Care must follow that plan. The plan must comply with 24 CFR 5.2005(e) and include the following program requirements:
</P>
<P>(i) For families receiving tenant-based rental assistance, the plan must specify what will happen with respect to the non-transferring family member(s), if the family separates in order to effect an emergency transfer.
</P>
<P>(ii) For families living in units that are otherwise assisted under this part (assisted units), the required policies must provide that for program participants who qualify for an emergency transfer but a safe unit is not immediately available for an internal emergency transfer, the individual or family shall have priority over all other applicants for rental assistance, transitional housing, and permanent supportive housing projects funded under this part, provided that: The individual or family meets all eligibility criteria required by Federal law or regulation or HUD NOFA; and the individual or family meets any additional criteria or preferences established in accordance with § 578.93(b)(1), (4), (6), or (7). The individual or family shall not be required to meet any other eligibility criteria or preferences for the project. The individual or family shall retain their original homeless or chronically homeless status for the purposes of the transfer.
</P>
<P>(9) <I>Protections with respect to safe havens.</I> The following requirements apply to safe havens funded under this part:
</P>
<P>(i) No individual may be denied admission to or removed from the safe haven on the basis or as a direct result of the fact that the individual is or has been a victim of domestic violence, dating violence, sexual assault, or stalking, if the individual otherwise qualifies for admission or occupancy.
</P>
<P>(iii) The terms “affiliated individual,” “dating violence,” “domestic violence,” “sexual assault,” and “stalking” are defined in 24 CFR 5.2003.
</P>
<CITA TYPE="N">[77 FR 45442, July 31, 2012, as amended at 80 FR 75940, Dec. 7, 2015; 81 FR 80810, Nov. 16, 2016; 81 FR 87812, Dec. 6, 2016; 85 FR 61568, Sept. 29, 2020]




</CITA>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:3.1.1.3.7.7" TYPE="SUBPART">
<HEAD>Subpart G—Grant Administration</HEAD>


<DIV8 N="§ 578.101" NODE="24:3.1.1.3.7.7.1.1" TYPE="SECTION">
<HEAD>§ 578.101   Technical assistance.</HEAD>
<P>(a) <I>Purpose.</I> The purpose of Continuum of Care technical assistance is to increase the effectiveness with which Continuums of Care, eligible applicants, recipients, subrecipients, and UFAs implement and administer their Continuum of Care planning process; improve their capacity to prepare applications; prevent the separation of families in projects funded under the Emergency Solutions Grants, Continuum of Care, and Rural Housing Stability Assistance programs; and adopt and provide best practices in housing and services for persons experiencing homelessness.
</P>
<P>(b) <I>Defined.</I> Technical assistance means the transfer of skills and knowledge to entities that may need, but do not possess, such skills and knowledge. The assistance may include, but is not limited to, written information such as papers, manuals, guides, and brochures; person-to-person exchanges; web-based curriculums, training and Webinars, and their costs.
</P>
<P>(c) <I>Set-aside.</I> HUD may set aside funds annually to provide technical assistance, either directly by HUD staff or indirectly through third-party providers.
</P>
<P>(d) <I>Awards.</I> From time to time, as HUD determines the need, HUD may advertise and competitively select providers to deliver technical assistance. HUD may enter into contracts, grants, or cooperative agreements, when necessary, to implement the technical assistance. HUD may also enter into agreements with other federal agencies for awarding the technical assistance funds.


</P>
</DIV8>


<DIV8 N="§ 578.103" NODE="24:3.1.1.3.7.7.1.2" TYPE="SECTION">
<HEAD>§ 578.103   Recordkeeping requirements.</HEAD>
<P>(a) <I>In general.</I> The recipient and its subrecipients must establish and maintain standard operating procedures for ensuring that Continuum of Care program funds are used in accordance with the requirements of this part and must establish and maintain sufficient records to enable HUD to determine whether the recipient and its subrecipients are meeting the requirements of this part, including:
</P>
<P>(1) <I>Continuum of Care records.</I> Each collaborative applicant must keep the following documentation related to establishing and operating a Continuum of Care:
</P>
<P>(i) Evidence that the Board selected by the Continuum of Care meets the requirements of § 578.5(b);
</P>
<P>(ii) Evidence that the Continuum has been established and operated as set forth in subpart B of this part, including published agendas and meeting minutes, an approved Governance Charter that is reviewed and updated annually, a written process for selecting a board that is reviewed and updated at least once every 5 years, evidence required for designating a single HMIS for the Continuum, and monitoring reports of recipients and subrecipients;
</P>
<P>(iii) Evidence that the Continuum has prepared the application for funds as set forth in § 578.9, including the designation of the eligible applicant to be the collaborative applicant.
</P>
<P>(2) <I>Unified funding agency records.</I> UFAs that requested grant amendments from HUD, as set forth in § 578.105, must keep evidence that the grant amendment was approved by the Continuum. This evidence may include minutes of meetings at which the grant amendment was discussed and approved.
</P>
<P>(3) <I>Homeless status.</I> Acceptable evidence of the homeless as status is set forth in 24 CFR 576.500(b).
</P>
<P>(4) <I>Chronically homeless status.</I> The recipient must maintain and follow written intake procedures to ensure compliance with the chronically homeless definition in § 578.3. The procedures must require documentation at intake of the evidence relied upon to establish and verify chronically homeless status. The procedures must establish the order of priority for obtaining evidence as third-party documentation first, intake worker observations second, and certification from the person seeking assistance third. Records contained in an HMIS, or comparable database used by victim service or legal service providers, are acceptable evidence of third-party documentation and intake worker observations if the HMIS, or comparable database, retains an auditable history of all entries, including the person who entered the data, the date of entry, and the change made, and if the HMIS prevents overrides or changes of the dates on which entries are made.
</P>
<P>(i) For paragraph (1) of the “Chronically homeless” definition in § 578.3, evidence that the individual is a “homeless individual with a disability” as defined in section 401(9) of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11360(9)) must include:
</P>
<P>(A) Evidence of homeless status as set forth in paragraph (a)(3) of this section; and
</P>
<P>(B) Evidence of a disability. In addition to the documentation required under paragraph (a)(4)(i)(A) of this section, the procedures must require documentation at intake of the evidence relied upon to establish and verify the disability of the person applying for homeless assistance. The recipient must keep these records for 5 years after the end of the grant term. Acceptable evidence of the disability includes:
</P>
<P>(<I>1</I>) Written verification of the disability from a professional licensed by the state to diagnose and treat the disability and his or her certification that the disability is expected to be long-continuing or of indefinite duration and substantially impedes the individual's ability to live independently;
</P>
<P>(<I>2</I>) Written verification from the Social Security Administration;
</P>
<P>(<I>3</I>) The receipt of a disability check (<I>e.g.,</I> Social Security Disability Insurance check or Veteran Disability Compensation);
</P>
<P>(<I>4</I>) Intake staff-recorded observation of disability that, no later than 45 days from the application for assistance, is confirmed and accompanied by evidence in paragraph (a)(4)(i)(B)(<I>1</I>), (<I>2</I>), (<I>3</I>), or (<I>5</I>) of this section; or
</P>
<P>(<I>5</I>) Other documentation approved by HUD.
</P>
<P>(ii) For paragraph (1)(i) of the “Chronically homeless” definition in § 578.3, evidence that the individual lives in a place not meant for human habitation, a safe haven, or an emergency shelter, which includes:
</P>
<P>(A) An HMIS record or record from a comparable database;
</P>
<P>(B) A written observation by an outreach worker of the conditions where the individual was living;
</P>
<P>(C) A written referral by another housing or service provider; or
</P>
<P>(D) Where evidence in paragraphs (a)(4)(ii)(A) through (C) of this section cannot be obtained, a certification by the individual seeking assistance, which must be accompanied by the intake worker's documentation of the living situation of the individual or family seeking assistance and the steps taken to obtain evidence in paragraphs (a)(4)(ii)(A) through (C).
</P>
<P>(iii) For paragraph (1)(ii) of the “Chronically homeless” definition in § 578.3, evidence must include a combination of the evidence described in paragraphs (a)(4)(ii)(A) through (D) of this section, subject to the following conditions:
</P>
<P>(A) Third-party documentation of a single encounter with a homeless service provider on a single day within 1 month is sufficient to consider an individual as homeless and living or residing in a place not meant for human habitation, a safe haven, or an emergency shelter for the entire calendar month (e.g., an encounter on May 5, 2015, counts for May 1—May 31, 2015), unless there is evidence that there have been at least 7 consecutive nights not living or residing in a place not meant for human habitation, a safe haven, or an emergency shelter during that month (e.g., evidence in HMIS of a stay in transitional housing);
</P>
<P>(B) Each break in homelessness of at least 7 consecutive nights not living or residing in a place not meant for human habitation, a safe haven, or in an emergency shelter between separate occasions must be documented with the evidence described in paragraphs (a)(4)(ii)(A) through (D) of this section;
</P>
<P>(C) Evidence of stays in institutional care facilities fewer than 90 days included in the total of at least 12 months of living or residing in a place not meant for human habitation, a safe haven, or an emergency shelter must include the evidence in paragraphs (a)(4)(iv)(A) through (B) of this section and evidence described in paragraphs (a)(4)(ii)(A) through (D) of this section that the individual was living or residing in a place not meant for human habitation, a safe haven, or an emergency shelter immediately prior to entering the institutional care facility; and
</P>
<P>(D) For at least 75 percent of the chronically homeless individuals and families assisted by a recipient in a project during an operating year, no more than 3 months of living or residing in a place not meant for human habitation, a safe haven, or an emergency shelter may be documented using the evidence in paragraph (a)(4)(ii)(D) of this section for each assisted chronically homeless individual or family. This limitation does not apply to documentation of breaks in homelessness between separate occasions, which may be documented entirely based on a self-report by the individual seeking assistance.
</P>
<P>(iv) If an individual qualifies as chronically homeless under paragraph (2) of the “Chronically homeless” definition in § 578.3 because he or she has been residing in an institutional care facility for fewer than 90 days and met all of the criteria in paragraph (1) of the definition, before entering that facility, evidence must include the following:
</P>
<P>(A) Discharge paperwork or a written or oral referral from a social worker, case manager, or other appropriate official of the institutional care facility stating the beginning and end dates of the time residing in the institutional care facility. All oral statements must be recorded by the intake worker; or
</P>
<P>(B) Where the evidence in paragraph (a)(4)(iv)(A) of this section is not obtainable, a written record of the intake worker's due diligence in attempting to obtain the evidence described in paragraph (a)(4)(iv)(A) and a certification by the individual seeking assistance that states that he or she is exiting or has just exited an institutional care facility where he or she resided for fewer than 90 days; and
</P>
<P>(C) Evidence as set forth in paragraphs (a)(4)(i) through (iii) of this section that the individual met the criteria in paragraph (1) of the definition for “Chronically homeless” in § 578.3, immediately prior to entry into the institutional care facility.
</P>
<P>(v) If a family qualifies as chronically homeless under paragraph (3) of the “Chronically homeless” definition in § 578.3, evidence must include the evidence as set forth in paragraphs (a)(4)(i) through (iv) of this section that the adult head of household (or if there is no adult in the family, a minor head of household) met all of the criteria in paragraph (1) or (2) of the definition.
</P>
<P>(5) <I>At risk of homelessness status.</I> For those recipients and subrecipients that serve persons at risk of homelessness, the recipient or subrecipient must keep records that establish “at risk of homelessness” status of each individual or family who receives Continuum of Care homelessness prevention assistance. Acceptable evidence is found in 24 CFR 576.500(c).
</P>
<P>(6) <I>Moves for victims of domestic violence, dating violence, sexual assault, and stalking.</I> 
</P>
<P>(i) For each program participant who moved to a different Continuum of Care due to imminent threat of further domestic violence, dating violence, sexual assault, or stalking under § 578.51(c)(3), each recipient or subrecipient of assistance under this part must retain:
</P>
<P>(A) Documentation of the original incidence of domestic violence, dating violence, sexual assault, or stalking, only if the original violence is not already documented in the program participant's case file. This may be written observation of the housing or service provider; a letter or other documentation from a victim service provider, social worker, legal assistance provider, pastoral counselor, mental health provider, or other professional from whom the victim has sought assistance; medical or dental records; court records or law enforcement records; or written certification by the program participant to whom the violence occurred or by the head of household.
</P>
<P>(B) Documentation of the reasonable belief of imminent threat of further domestic violence, dating violence, or sexual assault or stalking, which would include threats from a third-party, such as a friend or family member of the perpetrator of the violence. This may be written observation by the housing or service provider; a letter or other documentation from a victim service provider, social worker, legal assistance provider, pastoral counselor, mental health provider, or other professional from whom the victim has sought assistance; current restraining order; recent court order or other court records; law enforcement report or records; communication records from the perpetrator of the violence or family members or friends of the perpetrator of the violence, including emails, voicemails, text messages, and social media posts; or a written certification by the program participant to whom the violence occurred or the head of household.
</P>
<P>(ii) Data on emergency transfers requested under 24 CFR 5.2005(e) and § 578.99, pertaining to victims of domestic violence, dating violence, sexual assault, or stalking, including data on the outcomes of such requests.


</P>
<P>(7) <I>Annual income.</I> For each program participant who receives housing assistance where rent or an occupancy charge is paid by the program participant, the recipient or subrecipient must keep the following documentation of annual income:
</P>
<P>(i) Income evaluation form specified by HUD and completed by the recipient or subrecipient; and
</P>
<P>(ii) Source documents (<I>e.g.,</I> most recent wage statement, unemployment compensation statement, public benefits statement, bank statement) for the assets held by the program participant and income received before the date of the evaluation;
</P>
<P>(iii) To the extent that source documents are unobtainable, a written statement by the relevant third party (<I>e.g.,</I> employer, government benefits administrator) or the written certification by the recipient's or subrecipient's intake staff of the oral verification by the relevant third party of the income the program participant received over the most recent period; or
</P>
<P>(iv) To the extent that source documents and third-party verification are unobtainable, the written certification by the program participant of the amount of income that the program participant is reasonably expected to receive over the 3-month period following the evaluation.
</P>
<P>(8) <I>Program participant records.</I> In addition to evidence of “homeless” status or “at-risk-of-homelessness” status, as applicable, the recipient or subrecipient must keep records for each program participant that document:
</P>
<P>(i) The services and assistance provided to that program participant, including evidence that the recipient or subrecipient has conducted an annual assessment of services for those program participants that remain in the program for more than a year and adjusted the service package accordingly, and including case management services as provided in § 578.37(a)(1)(ii)(F); and
</P>
<P>(ii) Where applicable, compliance with the termination of assistance requirement in § 578.91.
</P>
<P>(9) <I>Housing standards.</I> The recipient or subrecipient must retain documentation of compliance with the housing standards in § 578.75(b), including inspection reports.
</P>
<P>(10) <I>Services provided.</I> The recipient or subrecipient must document the types of supportive services provided under the recipient's program and the amounts spent on those services. The recipient or subrecipient must keep record that these records were reviewed at least annually and that the service package offered to program participants was adjusted as necessary.
</P>
<P>(11) <I>Match.</I> The recipient must keep records of the source and use of contributions made to satisfy the match requirement in § 578.73. The records must indicate the grant and fiscal year for which each matching contribution is counted. The records must show how the value placed on third party in-kind contributions was derived. To the extent feasible, volunteer services must be supported by the same methods that the organization uses to support the allocation of regular personnel costs.
</P>
<P>(12) <I>Conflicts of interest.</I> The recipient and its subrecipients must keep records to show compliance with the organizational conflict-of-interest requirements in § 578.95(c), the Continuum of Care board conflict-of-interest requirements in § 578.95(b), the other conflict requirements in § 578.95(d), a copy of the personal conflict-of-interest policy developed and implemented to comply with the requirements in § 578.95, and records supporting exceptions to the personal conflict-of-interest prohibitions.
</P>
<P>(13) <I>Homeless participation.</I> The recipient or subrecipient must document its compliance with the homeless participation requirements under § 578.75(g).
</P>
<P>(14) <I>Faith-based activities.</I> The recipient and its subrecipients must document their compliance with the faith-based activities requirements under § 578.87(b).
</P>
<P>(15) <I>Affirmatively Furthering Fair Housing.</I> Recipients and subrecipients must maintain copies of their marketing, outreach, and other materials used to inform eligible persons of the program to document compliance with the requirements in § 578.93(c).
</P>
<P>(16) <I>Other federal requirements.</I> The recipient and its subrecipients must document their compliance with the federal requirements in § 578.99, as applicable.
</P>
<P>(17) <I>Subrecipients and contractors.</I> (i) The recipient must retain copies of all solicitations of and agreements with subrecipients, records of all payment requests by and dates of payments made to subrecipients, and documentation of all monitoring and sanctions of subrecipients, as applicable.
</P>
<P>(ii) The recipient must retain documentation of monitoring subrecipients, including any monitoring findings and corrective actions required.
</P>
<P>(iii) The recipient and its subrecipients must retain copies of all procurement contracts and documentation of compliance with the procurement requirements in 2 CFR part 200, subpart D.
</P>
<P>(18) <I>Other records specified by HUD.</I> The recipient and subrecipients must keep other records specified by HUD.
</P>
<P>(b) <I>Confidentiality.</I> In addition to meeting the specific confidentiality and security requirements for HMIS data, the recipient and its subrecipients must develop and implement written procedures to ensure:
</P>
<P>(1) All records containing protected identifying information of any individual or family who applies for and/or receives Continuum of Care assistance will be kept secure and confidential;
</P>
<P>(2) The address or location of any family violence project assisted with Continuum of Care funds will not be made public, except with written authorization of the person responsible for the operation of the project; and
</P>
<P>(3) The address or location of any housing of a program participant will not be made public, except as provided under a preexisting privacy policy of the recipient or subrecipient and consistent with State and local laws regarding privacy and obligations of confidentiality;
</P>
<P>(c) <I>Period of record retention.</I> All records pertaining to Continuum of Care funds must be retained for the greater of 5 years or the period specified below. Copies made by microfilming, photocopying, or similar methods may be substituted for the original records.
</P>
<P>(1) Documentation of each program participant's qualification as a family or individual at risk of homelessness or as a homeless family or individual and other program participant records must be retained for 5 years after the expenditure of all funds from the grant under which the program participant was served; and
</P>
<P>(2) Where Continuum of Care funds are used for the acquisition, new construction, or rehabilitation of a project site, records must be retained until 15 years after the date that the project site is first occupied, or used, by program participants.
</P>
<P>(d) <I>Access to records.</I> (1) <I>Federal Government rights.</I> Notwithstanding the confidentiality procedures established under paragraph (b) of this section, HUD, the HUD Office of the Inspector General, and the Comptroller General of the United States, or any of their authorized representatives, must have the right of access to all books, documents, papers, or other records of the recipient and its subrecipients that are pertinent to the Continuum of Care grant, in order to make audits, examinations, excerpts, and transcripts. These rights of access are not limited to the required retention period, but last as long as the records are retained.
</P>
<P>(2) <I>Public rights.</I> The recipient must provide citizens, public agencies, and other interested parties with reasonable access to records regarding any uses of Continuum of Care funds the recipient received during the preceding 5 years, consistent with State and local laws regarding privacy and obligations of confidentiality and confidentiality requirements in this part.
</P>
<P>(e) <I>Reports.</I> In addition to the reporting requirements in 2 CFR part 200, subpart D, the recipient must collect and report data on its use of Continuum of Care funds in an Annual Performance Report (APR), as well as in any additional reports as and when required by HUD. Projects receiving grant funds only for acquisition, rehabilitation, or new construction must submit APRs for 15 years from the date of initial occupancy or the date of initial service provision, unless HUD provides an exception under § 578.81(e).
</P>
<CITA TYPE="N">[77 FR 45442, July 31, 2012, as amended at 80 FR 75804, Dec. 4, 2015; 80 FR 75940, Dec. 7, 2015; 80 FR 80258, Dec. 24, 2015; 81 FR 80811, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 578.105" NODE="24:3.1.1.3.7.7.1.3" TYPE="SECTION">
<HEAD>§ 578.105   Grant and project changes.</HEAD>
<P>(a) <I>For Unified Funding Agencies and Continuums having only one recipient.</I> (1) The recipient may not make any significant changes without prior HUD approval, evidenced by a grant amendment signed by HUD and the recipient. Significant grant changes include a change of recipient, a shift in a single year of more than 10 percent of the total amount awarded under the grant for one approved eligible activity category to another activity and a permanent change in the subpopulation served by any one project funded under the grant, as well as a permanent proposed reduction in the total number of units funded under the grant.
</P>
<P>(2) Approval of substitution of the recipient is contingent on the new recipient meeting the capacity criteria in the NOFA under which the grant was awarded, or the most recent NOFA. Approval of shifting funds between activities and changing subpopulations is contingent on the change being necessary to better serve eligible persons within the geographic area and ensuring that the priorities established under the NOFA in which the grant was originally awarded, or the most recent NOFA, are met.
</P>
<P>(b) <I>For Continuums having more than one recipient.</I> (1) The recipients or subrecipients may not make any significant changes to a project without prior HUD approval, evidenced by a grant amendment signed by HUD and the recipient. Significant changes include a change of recipient, a change of project site, additions or deletions in the types of eligible activities approved for a project, a shift of more than 10 percent from one approved eligible activity to another, a reduction in the number of units, and a change in the subpopulation served.
</P>
<P>(2) Approval of substitution of the recipient is contingent on the new recipient meeting the capacity criteria in the NOFA under which the grant was awarded, or the most recent NOFA. Approval of shifting funds between activities and changing subpopulations is contingent on the change being necessary to better serve eligible persons within the geographic area and ensuring that the priorities established under the NOFA in which the grant was originally awarded, or the most recent NOFA, are met.
</P>
<P>(c) <I>Documentation of changes not requiring a grant amendment.</I> Any other changes to an approved grant or project must be fully documented in the recipient's or subrecipient's records.


</P>
</DIV8>


<DIV8 N="§ 578.107" NODE="24:3.1.1.3.7.7.1.4" TYPE="SECTION">
<HEAD>§ 578.107   Sanctions.</HEAD>
<P>(a) <I>Performance reviews.</I> (1) HUD will review the performance of each recipient in carrying out its responsibilities under this part, with or without prior notice to the recipient. In conducting performance reviews, HUD will rely primarily on information obtained from the records and reports from the recipient and subrecipients, as well as information from on-site monitoring, audit reports, and information generated from HUD's financial and reporting systems (<I>e.g.,</I> LOCCS and e-snaps) and HMIS. Where applicable, HUD may also consider relevant information pertaining to the recipient's performance gained from other sources, including citizen comments, complaint determinations, and litigation.
</P>
<P>(2) If HUD determines preliminarily that the recipient or one of its subrecipients has not complied with a program requirement, HUD will give the recipient notice of this determination and an opportunity to demonstrate, within the time prescribed by HUD and on the basis of substantial facts and data that the recipient has complied with the requirements. HUD may change the method of payment to require the recipient to submit documentation before payment and obtain HUD's prior approval each time the recipient draws down funds. To obtain prior approval, the recipient may be required to manually submit its payment requests and supporting documentation to HUD in order to show that the funds to be drawn down will be expended on eligible activities in accordance with all program requirements.
</P>
<P>(3) If the recipient fails to demonstrate to HUD's satisfaction that the activities were carried out in compliance with program requirements, HUD may take one or more of the remedial actions or sanctions specified in paragraph (b) of this section.
</P>
<P>(b) <I>Remedial actions and sanctions.</I> Remedial actions and sanctions for a failure to meet a program requirement will be designed to prevent a continuation of the deficiency; to mitigate, to the extent possible, its adverse effects or consequences; and to prevent its recurrence.
</P>
<P>(1) HUD may instruct the recipient to submit and comply with proposals for action to correct, mitigate, and prevent noncompliance with program requirements, including:
</P>
<P>(i) Preparing and following a schedule of actions for carrying out activities and projects affected by the noncompliance, including schedules, timetables, and milestones necessary to implement the affected activities and projects;
</P>
<P>(ii) Establishing and following a management plan that assigns responsibilities for carrying out the remedial actions;
</P>
<P>(iii) Canceling or revising activities or projects likely to be affected by the noncompliance, before expending grant funds for them;
</P>
<P>(iv) Reprogramming grant funds that have not yet been expended from affected activities or projects to other eligible activities or projects;
</P>
<P>(v) Suspending disbursement of grant funds for some or all activities or projects;
</P>
<P>(vi) Reducing or terminating the remaining grant of a subrecipient and either reallocating those funds to other subrecipients or returning funds to HUD; and
</P>
<P>(vii) Making matching contributions before or as draws are made from the recipient's grant.
</P>
<P>(2) HUD may change the method of payment to a reimbursement basis.
</P>
<P>(3) HUD may suspend payments to the extent HUD determines necessary to preclude the further expenditure of funds for affected activities or projects.
</P>
<P>(4) HUD may continue the grant with a substitute recipient of HUD's choosing.
</P>
<P>(5) HUD may deny matching credit for all or part of the cost of the affected activities and require the recipient to make further matching contributions to make up for the contribution determined to be ineligible.
</P>
<P>(6) HUD may require the recipient to reimburse the recipient's line of credit in an amount equal to the funds used for the affected activities.
</P>
<P>(7) HUD may reduce or terminate the remaining grant of a recipient.
</P>
<P>(8) HUD may condition a future grant.
</P>
<P>(9) HUD may take other remedies that are legally available.
</P>
<P>(c) <I>Recipient sanctions.</I> If the recipient determines that a subrecipient is not complying with a program requirement or its subrecipient agreement, the recipient must take one of the actions listed in paragraphs (a) and (b) of this section.
</P>
<P>(d) <I>Deobligation.</I> HUD may deobligate funds for the following reasons:
</P>
<P>(1) If the timeliness standards in § 578.85 are not met;
</P>
<P>(2) If HUD determines that delays completing construction activities for a project will mean that the funds for other funded activities cannot reasonably be expected to be expended for eligible costs during the remaining term of the grant;
</P>
<P>(3) If the actual total cost of acquisition, rehabilitation, or new construction for a project is less than the total cost agreed to in the grant agreement;
</P>
<P>(4) If the actual annual leasing costs, operating costs, supportive services costs, rental assistance costs, or HMIS costs are less than the total cost agreed to in the grant agreement for a one-year period;
</P>
<P>(5) Program participants have not moved into units within 3 months of the time that the units are available for occupancy; and
</P>
<P>(6) The grant agreement may set forth in detail other circumstances under which funds may be deobligated and other sanctions may be imposed.


</P>
</DIV8>


<DIV8 N="§ 578.109" NODE="24:3.1.1.3.7.7.1.5" TYPE="SECTION">
<HEAD>§ 578.109   Closeout.</HEAD>
<P>(a) <I>In general.</I> Grants will be closed out in accordance with the requirements of 2 CFR part 200, subpart D, and closeout procedures established by HUD.
</P>
<P>(b) <I>Reports.</I> Applicants must submit all reports required by HUD no later than 90 days from the date of the end of the project's grant term.
</P>
<P>(c) <I>Closeout agreement.</I> Any obligations remaining as of the date of the closeout must be covered by the terms of a closeout agreement. The agreement will be prepared by HUD in consultation with the recipient. The agreement must identify the grant being closed out, and include provisions with respect to the following:
</P>
<P>(1) Identification of any closeout costs or contingent liabilities subject to payment with Continuum of Care program funds after the closeout agreement is signed;
</P>
<P>(2) Identification of any unused grant funds to be deobligated by HUD;
</P>
<P>(3) Identification of any program income on deposit in financial institutions at the time the closeout agreement is signed;
</P>
<P>(4) Description of the recipient's responsibility after closeout for:
</P>
<P>(i) Compliance with all program requirements in using program income on deposit at the time the closeout agreement is signed and in using any other remaining Continuum of Care program funds available for closeout costs and contingent liabilities;
</P>
<P>(ii) Use of real property assisted with Continuum of Care program funds in accordance with the terms of commitment and principles;
</P>
<P>(iii) Use of personal property purchased with Continuum of Care program funds; and
</P>
<P>(iv) Compliance with requirements governing program income received subsequent to grant closeout.
</P>
<P>(5) Other provisions appropriate to any special circumstances of the grant closeout, in modification of or in addition to the obligations in paragraphs (c)(1) through (4) of this section.
</P>
<CITA TYPE="N">[77 FR 45442, July 31, 2012, as amended at 80 FR 75940, Dec. 7, 2015]


</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="581" NODE="24:3.1.1.3.8" TYPE="PART">
<HEAD>PART 581—USE OF FEDERAL REAL PROPERTY TO ASSIST THE HOMELESS
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 11411 note; 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>56 FR 23794, 23795, May 24, 1991, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 581.1" NODE="24:3.1.1.3.8.0.1.1" TYPE="SECTION">
<HEAD>§ 581.1   Definitions.</HEAD>
<P><I>Applicant</I> means any eligible organization that has submitted an application to the Department of Health and Human Services to obtain use of a certain suitable property to assist the homeless.
</P>
<P><I>Checklist or property checklist</I> means the form developed by HUD for use by landholding agencies to report the information to be used by HUD in making determinations of suitability. 
</P>
<P><I>Classification</I> means a property's designation as unutilized, underutilized, excess, or surplus. 
</P>
<P><I>Day</I> means one calendar day including weekends and holidays. 


</P>
<P><I>Eligible organization</I> means a State or local government agency, or a private, non-profit organization that provides assistance to the homeless, and that is authorized under the State law in which the property is located to carry out the activity for which it requests property and enter into an agreement with the Federal Government for use of property for the purposes of this part. Eligible organizations that are private, non-profit organizations interested in applying for suitable property must be tax exempt under section 501(c)(3) of the Internal Revenue Code at the time of application and remain tax exempt throughout the time the Federal Government retains a reversionary interest in the property.


</P>
<P><I>Encumbrance</I> means any non-approved use by a transferee or a third party that limits the full utilization of the transferred property, regardless of time period, and includes liens, easements, restrictive covenants, licenses, leases, mortgages, informal agreements, and unaddressed trespass.




</P>
<P><I>Excess property</I> means any property under the control of a Federal executive agency that the head of the agency determines is not required to meet the agency's needs or responsibilities, pursuant to 40 U.S.C. 524.
</P>
<P><I>GSA</I> means the General Services Administration. 
</P>
<P><I>HHS</I> means the Department of Health and Human Services. 
</P>
<P><I>Homeless</I> is defined in 42 U.S.C. 11302. This term is synonymous with “homeless individual” and “homeless person.”




</P>
<P><I>HUD</I> means the Department of Housing and Urban Development. 
</P>
<P><I>HUD website</I> means a website maintained by HUD providing information about HUD, including any successor websites or technologies that are equally accessible and available to the public.



 




</P>
<P><I>Landholding agency</I> means the Federal department or agency with statutory authority to control property. For purposes of this part, the landholding agency is typically the Federal department or agency that had custody and accountability on behalf of the Federal Government, of a certain piece of property at the time that such property was reported to HUD for a suitability determination pursuant to 42 U.S.C. 11411.




</P>
<P><I>Lease</I> means an agreement in writing between either HHS for surplus property or landholding agencies for underutilized and unutilized properties and the applicant giving rise to the relationship of lessor and lessee for the use of Federal property for a term of at least one year under the conditions set forth in the lease document.
</P>
<P><I>Non-profit organization</I> means an organization recognized as a non-profit by the State in which the organization operates, no part of the net earnings of which inures to the benefit of any member, founder, contributor, or individual; that has a voluntary board; that has an accounting system or has designated an entity that will maintain a functioning accounting system for the organization in accordance with generally accepted accounting procedures; and that practices nondiscrimination in the provision of assistance.


</P>
<P><I>Permit</I> means a license granted by a landholding agency to use unutilized or underutilized property for a specific amount of time, usually one year or less, under terms and conditions determined by the landholding agency. A permit does not grant to the recipient an estate in land or any interest in the property.


</P>
<P><I>Property</I> means real property consisting of vacant land or buildings, or a portion thereof, that is excess, surplus, or designated as unutilized or underutilized in surveys by the heads of landholding agencies conducted pursuant to 40 U.S.C. 524.








</P>
<P><I>Related personal property</I> means any personal property that is located on real property and is either an integral part of or useful in the operation of that property or is determined by GSA to be otherwise related to the property.


</P>
<P><I>Representative of the homeless</I> means a State or local government agency, or private nonprofit organization which provides, or proposes to provide, services to the homeless. 
</P>
<P><I>Screen</I> means the process by which GSA surveys Federal executive agencies to determine if they have an interest in using excess Federal property to carry out a particular agency mission, and then surveys State, local, and non-profit entities, to determine if any such entity has an interest in using surplus Federal property to carry out a specific public use.


</P>
<P><I>State</I> means a State of the United States, and includes the District of Columbia, the Commonwealth of Puerto Rico, and the Territories and possessions of the United States.




</P>
<P><I>Suitable property</I> means that HUD has determined that a certain property satisfies the criteria listed in § 581.6.


</P>
<P><I>Surplus property</I> means any excess property not required by any Federal landholding agency for its needs or the discharge of its responsibilities, as determined by GSA.


</P>
<P><I>Transfer document</I> means a lease, deed, or permit transferring surplus, unutilized, or underutilized property.
</P>
<P><I>Transferee</I> means an eligible entity that acquires Federal property by lease, deed, or permit.






</P>
<P><I>Underutilized</I> means an entire property or portion thereof, with or without improvements which is used only at irregular periods or intermittently by the accountable landholding agency for current program purposes of that agency, or which is used for current program purposes that can be satisfied with only a portion of the property. 
</P>
<P><I>Unsuitable property</I> means that HUD has determined that a particular property does not satisfy the criteria in § 581.6. 
</P>
<P><I>Unutilized property</I> means an entire property or portion thereof, with or without improvements, not occupied for current program purposes for the accountable executive agency or occupied in caretaker status only. 


</P>
<CITA TYPE="N">[56 FR 23794, 23795, May 24, 1991, as amended at 89 FR 89880, Nov. 13, 2024]






</CITA>
</DIV8>


<DIV8 N="§ 581.2" NODE="24:3.1.1.3.8.0.1.2" TYPE="SECTION">
<HEAD>§ 581.2   Applicability.</HEAD>
<P>(a) This part applies to Federal property that has been designated by Federal landholding agencies as unutilized, underutilized, excess, or surplus and is therefore subject to the provisions of Title V of the McKinney Act, as amended (42 U.S.C. 11411).
</P>
<P>(b) The following categories of properties are not subject to this part (regardless of whether they may be unutilized or underutilized):
</P>
<P>(1) Buildings and property at military installations that were approved for closure under the Defense Base Closure and Realignment Act of 1990 (part A of title XXIX of Pub. L. 101-510; 10 U.S.C. 2687 note) after October 25, 1994.
</P>
<P>(2) Machinery and equipment not determined to be related personal property by the landholding agency or GSA or determined to be related personal property that the landholding agency or GSA chooses to dispose of separate from real property.
</P>
<P>(3) Government-owned, contractor-operated machinery, equipment, land, and other facilities reported excess for sale only to the using contractor and subject to a continuing military requirement.
</P>
<P>(4) Properties subject to special legislation directing a particular action.
</P>
<P>(5) Properties subject to a court order that is binding on the Federal Government and, for any reason, precludes transfer for use to assist the homeless under the authority of 42 U.S.C. 11411.
</P>
<P>(6) Property not subject to Federal Real Property Council reporting requirements in accordance with 40 U.S.C. 623(i).
</P>
<P>(7) Mineral rights interests independent of surface rights.
</P>
<P>(8) Air space interests independent of surface rights.
</P>
<P>(9) Indian Reservation land subject to 40 U.S.C. 523.
</P>
<P>(10) Property interests subject to reversion.
</P>
<P>(11) Easements.
</P>
<P>(12) Any building or fixture that is excess, or surplus, that is on land under the control of a landholding agency, where the underlying land is not excess or surplus.
</P>
<P>(13) Property purchased in whole or in part with Federal funds if title to the property is not held by a Federal landholding agency as defined in this part.
</P>
<CITA TYPE="N">[89 FR 89881, Nov. 13, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 581.3" NODE="24:3.1.1.3.8.0.1.3" TYPE="SECTION">
<HEAD>§ 581.3   Collecting the information.</HEAD>
<P>(a) <I>Canvass of landholding agencies.</I> On a quarterly basis, HUD will canvass each landholding agency to collect information about property described as unutilized, underutilized, excess or surplus in accordance with 40 U.S.C. 524; however, HUD will accept property information between canvasses. Each canvass will collect information on properties not previously reported, and about property reported previously where the status or classification of the property has changed, or improvements have been made to the property. HUD will request descriptive information on properties sufficient to make a reasonable determination, under the criteria described in this section, of the suitability of a property for use to assist the homeless. Landholding agencies must report property information to HUD using the property checklist developed by HUD for that purpose. Property checklists submitted in response to a canvass must be submitted to HUD within 25 days of receipt of the canvass.
</P>
<P>(b) <I>Agency annual suitable property report.</I> By December 31 of each year, each landholding agency must notify HUD of the current availability status and classification of each property controlled by the agency that:
</P>
<P>(1) Was included in a list of suitable properties published that year by HUD; and
</P>
<P>(2) Remains available for application for use to assist the homeless or has become available for application during that year.
</P>
<P>(c) <I>GSA inventory.</I> HUD will collect information, in the same manner as described in paragraph (a) of this section, from GSA regarding property that is in GSA's current inventory of excess or surplus property.
</P>
<P>(d) <I>Change in status.</I> If the information provided on the property checklist changes subsequent to HUD's determination of suitability, including any improvements or other alterations to the physical condition of the land or the buildings on the property, and the property remains unutilized, underutilized, excess, or surplus, the landholding agency must submit a revised property checklist in response to the next quarterly canvass. HUD will review for suitability and, if it differs from the previous determination, repost the property information on the HUD website. For example, property determined unsuitable due to extensive deterioration may have had improvements, or property determined suitable may subsequently be found to be extensively deteriorated.
</P>
<CITA TYPE="N">[89 FR 89881, Nov. 13, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 581.4" NODE="24:3.1.1.3.8.0.1.4" TYPE="SECTION">
<HEAD>§ 581.4   Suitability determination.</HEAD>
<P>(a) <I>Suitability determination.</I> Within 30 days after the receipt of a completed property checklist from landholding agencies either in response to a quarterly canvass, or between canvasses, HUD will determine, using the criteria set forth in § 581.6 whether a property is suitable for use to assist the homeless and report its determination to the landholding agency. Properties that are under lease, contract, license, or agreement by which a Federal agency retains a real property interest or which are scheduled to become unutilized or underutilized will be reviewed for suitability no earlier than six months prior to the expected date when the property will become unutilized or underutilized.
</P>
<P>(b) <I>Scope of suitability.</I> HUD will determine the suitability of a property for use to assist the homeless without regard to any particular use.
</P>
<P>(c) <I>Environmental information.</I> HUD will evaluate the environmental information contained in property checklists forwarded to HUD by the landholding agencies solely for the purpose of determining suitability of properties under the criteria in § 581.6.
</P>
<P>(d) <I>Record of suitability determination.</I> HUD will assign an identification number to each property reviewed for suitability. HUD will maintain a public record of the following:
</P>
<P>(1) The suitability determination for a particular piece of property, and the reasons for that determination; and
</P>
<P>(2) The landholding agency's response to the determination pursuant to the requirements of § 581.7(a).
</P>
<P>(e) <I>Property determined unsuitable.</I> Property that is reviewed by HUD under this section and that is determined unsuitable for use to assist the homeless may not be made available for any other purpose for 20 days after publication of a notice of unsuitability on the HUD website.
</P>
<P>(f) <I>Procedures for appealing unsuitability determinations.</I> (1) To request review of a determination of unsuitability, a representative of the homeless must contact HUD, in writing, through the U.S. Mail, email, or the HUD website, or such other method as HUD may require, within 20 days of publication of the notice of unsuitability.
</P>
<P>(2) Requests for review of a determination of unsuitability may be made only by representatives of the homeless.
</P>
<P>(3) The request for review must specify the grounds on which it is based, <I>i.e.,</I> HUD has improperly applied the criteria or HUD has relied on incorrect or incomplete information in making the determination (<I>e.g.,</I> that property is in a floodplain but not in a floodway).
</P>
<P>(4) Upon receipt of a request to review a determination of unsuitability, HUD will notify the landholding agency or GSA that such a request has been made. The landholding agency or GSA shall have 20 days from receipt of the notice from HUD, or an extended period agreed to between HUD and the landholding agency or GSA, to provide any information pertinent to the review. The landholding agency or GSA must refrain from initiating disposal procedures until HUD has completed its reconsideration regarding unsuitability. If the landholding agency or GSA fails to meet the deadline, HUD will move forward with the appeal review with the property information it already has and information submitted in the appeal request provided by the representative of the homeless.
</P>
<P>(i) HUD will act on all requests for review within 30 days of receipt of the landholding agency's or GSA's response, or, if the landholding agency or GSA failed to meet the deadline, within 30 days of such deadline, and will notify the representative of the homeless and the landholding agency or GSA in writing of its decision.
</P>
<P>(ii) If a property is determined suitable as a result of the review, HUD will request the landholding agency's or GSA's determination of availability pursuant to § 581.7, upon receipt of which HUD will promptly publish the determination on the HUD website.
</P>
<CITA TYPE="N">[89 FR 89881, Nov. 13, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 581.5" NODE="24:3.1.1.3.8.0.1.5" TYPE="SECTION">
<HEAD>§ 581.5   Real property reported excess to GSA.</HEAD>
<P>(a) Each landholding agency must submit a report to GSA of properties it determines excess. Each landholding agency must also provide a copy of HUD's suitability determination, if any, including HUD's identification number for the property.
</P>
<P>(b) If a landholding agency reports an excess property to GSA that HUD has already determined to be suitable for use to assist the homeless, GSA will screen the property pursuant to paragraph (h) of this section and will advise HUD of the availability of the property for use by the homeless as provided in paragraph (e) of this section. In lieu of the preceding sentence, GSA may submit a new checklist to HUD and follow the procedures in paragraphs (c) through (h) of this section.
</P>
<P>(c) If a landholding agency reports an excess property to GSA that has not been reviewed by HUD for homeless assistance suitability, GSA will complete a property checklist, based on information provided by the landholding agency, and will forward this checklist to HUD for a suitability determination. This checklist will reflect any change in classification, such as from unutilized or underutilized to excess or surplus.
</P>
<P>(d) Within 30 days after GSA's submission, HUD will advise GSA of the suitability determination.
</P>
<P>(e) When GSA receives notification from HUD listing suitable excess properties, GSA will transmit a response to HUD within 45 days regarding the availability of the property. GSA's response will include the following for each identified property:
</P>
<P>(1) A statement that there is no other compelling Federal need for the property and, therefore, the property will be determined surplus; or
</P>
<P>(2) A statement that there is further and compelling Federal need for the property (including a full explanation of such need) and that, therefore, the property is not presently available for use to assist the homeless.
</P>
<P>(f) When GSA submits a checklist to HUD in accordance with paragraphs (b) and (c) of this section, the information regarding the availability of the property, as specified in paragraph (e)(1) and (2) of this section, may be included with the checklist if it is known at the time of submittal.
</P>
<P>(g) When a surplus property is determined as suitable, confirmed as available by GSA, and notice is published on the HUD website, GSA will concurrently notify HHS, State and local government units, and known homeless assistance providers that have expressed interest in the particular property, and other organizations, as appropriate, concerning suitable properties.
</P>
<P>(h) Upon submission of a Report of Excess to GSA, GSA may screen the property for Federal use. In addition, GSA may screen State and local governmental units and eligible non-profit organizations to determine interest in the property in accordance with 41 CFR part 102-75. (See 41 CFR 102-75.1220, 102-75.255, and 102-75.350.)
</P>
<P>(i) The landholding agency will retain custody and accountability and will protect and maintain any property that is reported excess to GSA as provided in 41 CFR 102-75.965.


</P>
<CITA TYPE="N">[89 FR 89881, Nov. 13, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 581.6" NODE="24:3.1.1.3.8.0.1.6" TYPE="SECTION">
<HEAD>§ 581.6   Suitability criteria.</HEAD>
<P>(a) In general, properties will be determined suitable unless a property's characteristics include one or more of the following conditions:
</P>
<P>(1) <I>Flammable or explosive hazards.</I> Property located less than an acceptable separation distance (under the standards in 24 CFR part 51, subpart C, and the HUD Guidebook, “Siting of HUD-Assisted Projects Near Hazardous Facilities” or successor guidebook) from any stationary above-ground container or facility which stores, handles, or processes hazardous substances of an explosive or fire prone nature (excluding containers and facilities that are not hazards as defined in 24 CFR 51.201), unless HUD can determine during the review period based on information provided by the landholding agency that appropriate mitigating measures, as defined in 24 CFR 51.205, are already in place.
</P>
<P>(2) <I>Coastal barriers.</I> Property located in a System Unit, as defined at 16 U.S.C. 3502(7), under the Coastal Barrier Resources Act, as amended (16 U.S.C. 3501 <I>et seq.</I>).
</P>
<P>(3) <I>Site safety conditions.</I> Property with a documented and extensive condition(s) that represents a clear threat to personal physical safety or health. Such conditions may include, but are not limited to, significant contamination from hazardous substances, as defined by 42 U.S.C. 9601, periodic flooding, sinkholes, or landslides.
</P>
<P>(b) In the cases in paragraphs (b)(1) through (4) of this section, properties will be determined unsuitable, unless the landholding agencies provide information to enable HUD to determine the property is suitable:
</P>
<P>(1) <I>Inaccessible.</I> Property that is inaccessible, meaning that the property is not accessible by road (including property on small offshore islands) or is landlocked (<I>e.g.,</I> can be reached only by crossing private property and there is no established right or means of entry).
</P>
<P>(2) <I>National security.</I> Property located in an area to which the general public is denied access in the interest of national security (<I>e.g.,</I> where a special pass or security clearance is a condition of entry to the property), unless there is an alternative method to gain access without compromising national security.
</P>
<P>(3) <I>Runway clear zones.</I> Property located within a runway clear zone or a military airfield clear zone.
</P>
<P>(4) <I>Floodway.</I> Property located in a floodway, unless only an incidental portion of the property is in the floodway and that incidental portion does not affect the use of the remainder of the property to assist the homeless.


</P>
<CITA TYPE="N">[89 FR 89881, Nov. 13, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 581.7" NODE="24:3.1.1.3.8.0.1.7" TYPE="SECTION">
<HEAD>§ 581.7   Determination of availability for suitable properties.</HEAD>
<P>Within 45 days after receipt of notification from HUD pursuant to § 581.4(a) that a property has been determined to be suitable, each landholding agency or GSA must transmit to HUD a statement of one of the following:
</P>
<P>(a) In the case of unutilized or underutilized property—
</P>
<P>(1) An intention to declare the property excess;
</P>
<P>(2) An intention to make the property available for use to assist the homeless; or
</P>
<P>(3) The reasons why the property cannot be declared excess or made available for use to assist the homeless. The reasons given must be different from those listed as suitability criteria in § 581.6.
</P>
<P>(b) In the case of excess property which has been reported to GSA—
</P>
<P>(1) A statement that there is no compelling Federal need for the property, and, therefore, the property will be determined surplus; or
</P>
<P>(2) A statement that there is a further and compelling Federal need for the property (including a full explanation of such need) and therefore, the property is not presently available for use to assist the homeless.
</P>
<CITA TYPE="N">[89 FR 89881, Nov. 13, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 581.8" NODE="24:3.1.1.3.8.0.1.8" TYPE="SECTION">
<HEAD>§ 581.8   Public notice of determination.</HEAD>
<P>(a) No later than 15 days after the most recent 45-day period has elapsed for receiving responses from the landholding agencies or GSA regarding availability, HUD will post on the HUD website a list of all properties reviewed, including a description of the property, its address, and classification. The following designations will be made:
</P>
<P>(1) Properties that are suitable and available.
</P>
<P>(2) Properties that are suitable and unavailable.
</P>
<P>(3) Properties that are suitable and to be declared excess.
</P>
<P>(4) Properties that are unsuitable.
</P>
<P>(b) HUD will establish and maintain a toll-free number for the public to obtain specific information about properties in paragraph (a) of this section.
</P>
<P>(c) No later than 15 days after the most recent 45-day period has elapsed for receiving responses from the landholding agencies or GSA regarding availability, HUD will transmit to the United States Interagency Council on Homelessness (USICH) a copy of the list of all properties in paragraph (a) of this section. The USICH will immediately distribute to all State and regional homeless coordinators area-relevant portions of the list. The USICH will encourage the State and regional homeless coordinators to disseminate this information widely.
</P>
<P>(d) No later than February 15 of each year, HUD will publish in the <E T="04">Federal Register</E> a list of all properties in the agency annual suitable property reports, reported to HUD pursuant to § 581.3(b).
</P>
<P>(e) HUD will publish an annual list of properties determined suitable, but which agencies reported unavailable including the reasons such properties are not available.
</P>
<CITA TYPE="N">[89 FR 89881, Nov. 13, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 581.9" NODE="24:3.1.1.3.8.0.1.9" TYPE="SECTION">
<HEAD>§ 581.9   General policies of HHS.</HEAD>
<P>(a) It is the policy of HHS to foster and assure maximum utilization of surplus property for homeless assistance purposes.
</P>
<P>(b) Transfers may be made only to eligible organizations.
</P>
<P>(c) Property will be requested for assignment only when HUD has made a final determination that the property is suitable for use to assist the homeless, GSA has determined it is available, and HHS has determined it is needed for homeless assistance purposes. The amount of real and related personal property to be transferred shall not exceed normal operating requirements of the applicant. Such property will not be requested for assignment unless it is needed at the time of application for homeless assistance purposes or will be so needed within the immediate or foreseeable future.
</P>
<P>(d) Transfers by deed will be made only after the applicant's financial plan is approved and the applicant provides certification that the proposed program is permissible under all applicable State and local zoning restrictions, building codes, and similar limitations.
</P>
<P>(e) In instances of noncompliance, transferees are provided an opportunity to cure the noncompliance pursuant to 45 CFR 12a.10.
</P>
<CITA TYPE="N">[89 FR 89881, Nov. 13, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 581.10" NODE="24:3.1.1.3.8.0.1.10" TYPE="SECTION">
<HEAD>§ 581.10   Expression of interest process.</HEAD>
<P>(a) Properties published by HUD as suitable and available, pursuant to § 581.8, for application for use to assist the homeless shall not be available for any other purpose for a period of 30 days beginning on the date the list of properties is published on the HUD website. Any eligible organization interested in any underutilized, unutilized, excess, or surplus property for use to assist the homeless must send HHS a written expression of interest in that property within 30 days after the property has been published on the HUD website.
</P>
<P>(b) Although a property may be determined suitable by HUD, HUD's determination does not mean a property is necessarily fit for use for the purpose(s) stated in the application, nor does it guarantee subsequent conveyance or transfer of a property.
</P>
<P>(c) If a written expression of interest to apply for suitable property for use to assist the homeless is received by HHS within the 30-day holding period, such property may not be made available for any other purpose until the date HHS or the appropriate landholding agency has completed action on the application submitted pursuant to that expression of interest.
</P>
<P>(d)(1) The expression of interest should identify the specific property, briefly describe the proposed use, include the name of the organization, and indicate whether it is a public body or a private, non-profit organization. The expression of interest must be sent to HHS by email, <I>rpb@psc.hhs.gov,</I> or by mail at the following address: Department of Health and Human Services, Program Manager, Federal Real Property Assistance Program, Real Estate Logistics and Operations, 5600 Fishers Lane, Rockville, Maryland 20852.
</P>
<P>(2) HHS will notify the landholding agency (for unutilized and underutilized properties) or GSA (for excess and surplus properties) when an expression of interest has been received for a certain property.
</P>
<P>(e) An expression of interest may be sent to and accepted by HHS any time after the 30-day holding period has expired only if the property remains available as determined by GSA or the landholding agency for application to assist the homeless. In such a case, an application submitted pursuant to this expression of interest may be approved for use by the homeless if:
</P>
<P>(1) There are no pending applications or written expressions of interest made under any law for use of the property for any purpose; and
</P>
<P>(2) In the case of excess or surplus property, GSA has not received a bona fide offer to purchase that property or advertised for the sale of the property by public auction.


</P>
<CITA TYPE="N">[89 FR 89881, Nov. 13, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 581.11" NODE="24:3.1.1.3.8.0.1.11" TYPE="SECTION">
<HEAD>§ 581.11   Application process and requirements.</HEAD>
<P>(a) Upon receipt of an expression of interest, HHS will send an application packet to the interested entity. The application packet requires the applicant to provide certain information, including the following—
</P>
<P>(1) <I>Acquisition type.</I> The applicant must state whether it is requesting acquisition of the property by lease, deed, or permit. A lease of one year, extendable at HHS's discretion, with the concurrence of GSA or the landholding agency, may be granted when the applicant's initial application is approved and the applicant's final application outlining the applicant's financial plan is found to be otherwise reasonable based on the criteria in paragraph (a)(7) of this section, but either a change in zoning is required or the financial plan proposes to utilize Low-Income Housing Tax Credits or other funding sources that typically take longer to process than other forms of financing. Applicants that initially apply for transfer by lease or permit and subsequently request transfer by deed will follow the same bifurcated application process, including deadlines, contained in 42 U.S.C. 11411. Should an applicant wish to transition from acquisition by lease to acquisition by deed, HHS will issue a letter of commitment to a lessee indicating that, provided its application meets all application criteria, including securing of all necessary financing that complies with Federal Government requirements, HHS will issue a deed.
</P>
<P>(2) <I>Description of the applicant organization.</I> The applicant must document that it satisfies the definition of an <I>eligible organization</I> as specified in § 581.1.
</P>
<P>(3) <I>Description of the property desired.</I> The applicant must describe the listed property desired, including existing zoning. Applicants must certify that any modification(s) made to and use of the property will conform to all applicable building codes, and local use restrictions, or similar limitations. In accordance with GSA policy, determinations regarding parcelization are made prior to screening. Therefore, expressions of interest and applications for portions of listed properties will not be accepted.
</P>
<P>(4) <I>Description of the proposed program.</I> The applicant must fully describe the proposed program and plan of use, including implementation plans.
</P>
<P>(5) <I>Demonstration of need.</I> The applicant must demonstrate that the property is needed for homeless assistance purposes at the time of application and how the program will address the needs of the homeless population to be assisted. The applicant must demonstrate that it has an immediate need and ability to utilize all of the property for which it is applying.
</P>
<P>(6) <I>Demonstrate that the property is suitable and adaptable for the proposed program and plan of use.</I> The applicant must fully explain why the property is suitable and describe what, if any, modification(s) will be made to the property before the program becomes operational.
</P>
<P>(7) <I>Ability to finance and operate the proposed program.</I> If the applicant's initial application is approved, the applicant must set forth a reasonable plan to finance the approved program within 45 days of the initial approval. To be considered reasonable, the plan must, at a minimum:
</P>
<P>(i) Specifically describe all anticipated costs and sources of funding for the proposed program, including any property modifications;
</P>
<P>(ii) Be accompanied by supporting documentation which demonstrates that the proposed plan is likely to succeed;
</P>
<P>(iii) Demonstrate that the applicant is ready, willing, able, and authorized to assume care, custody, and maintenance of the property;
</P>
<P>(iv) Demonstrate that it has secured the necessary dedicated funds, or will obtain such funds, to carry out the approved proposed program and plan of use for the property, including administrative expenses incident to the transfer by deed, lease, or permit;
</P>
<P>(v) Not diminish the value of the Federal Government's interest in the property nor impair the Federal Government's ability to revert and immediately dispose of the property free of any and all liens, encumbrances, or anything else which renders the property unmarketable. Deed transfers will only be made after an applicant demonstrates its financial plan adequately protects the Federal Government's interest in the property; and
</P>
<P>(vi) Neither subject the Federal Government's interest in the property to foreclosure nor impose obligations (<I>e.g.,</I> extended use agreements) on the Federal Government.
</P>
<P>(8) <I>Compliance with non-discrimination requirements.</I> Each applicant under this part must certify in writing that it will comply with all requirements of Federal law and HHS policy, as amended, relating to non-discrimination, including the following: the Fair Housing Act (42 U.S.C. 3601-3619) and implementing regulations at 24 CFR part 100; and, as applicable, Executive Order 11063 (Equal Opportunity in Housing) and implementing regulations at 24 CFR part 107; Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d to d-4) (Non-discrimination in Federally Assisted Programs) and implementing regulations at 24 CFR part 1; section 1557 of the Affordable Care Act and implementing regulations at 45 CFR part 92; the prohibitions against discrimination on the basis of age under the Age Discrimination Act of 1975 (42 U.S.C. 6101-6107) and implementing regulations at 24 CFR part 146; and the prohibitions against discrimination against otherwise qualified individuals with disabilities under section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and implementing regulations at 24 CFR part 8; and Titles II or III of the Americans with Disabilities Act and implementing regulations at 28 CFR part 35 or 36, as applicable. The applicant must maintain the required records to demonstrate compliance with all applicable Federal laws and HHS policies related to non-discrimination.
</P>
<P>(9) <I>Insurance and indemnification.</I> The applicant must certify that it will insure the property against loss, damage, or destruction to protect the residual financial interest of the United States. The United States shall be named as an additional insured. Applicants must provide proof of insurance annually or upon request. Failure to maintain sufficient insurance may result in adverse action, including reversion of the property, at the discretion of HHS. In the event of a covered loss, the transferee must hold all insurance proceeds in trust and obtain written concurrence from HHS before disbursing the funds. Applicants, and all affiliated parties utilizing the property, as approved by HHS, must indemnify the United States and hold the United States harmless for all actions involving use of the property.
</P>
<P>(10) <I>Historic preservation.</I> Where applicable, the applicant must provide information that will enable HHS to comply with Federal historic preservation requirements.
</P>
<P>(11) <I>Environmental information.</I> The applicant must provide sufficient information to allow HHS to analyze the potential impact of the applicant's proposal on the environment, in accordance with the instructions provided with the application packet. HHS will assist applicants in obtaining any pertinent environmental information in the possession of HUD, GSA, or the landholding agency. However, the burden is on the applicant to submit sufficient documentation for analysis by HHS.
</P>
<P>(12) <I>Local government notification.</I> The applicant must certify that it has notified the applicable unit of general local government responsible for sewer, water, police, and fire services, in writing, of its proposed program for the specific property and submit a copy of that written notification.
</P>
<P>(13) <I>Zoning and local use restrictions.</I> An applicant requesting a deed must certify that it has consulted all State and local governmental entities that will have jurisdiction over the property and that the proposed use will comply with all applicable zoning and local use restrictions, including local building code requirements. An applicant that applies for a lease or permit is not required to comply with local zoning requirements, as long as the Federal Government retains ownership of the property. Deed transfers will only be made after the applicant has provided acceptable written proof that the proposed program is not in conflict with State or local zoning laws and restrictions, building codes, or similar limitations.
</P>
<P>(b) <I>Scope of evaluations.</I> Due to the short time frame imposed by statute for evaluating applications, HHS's evaluation will, generally, be limited to the information contained in the application. It is therefore incumbent on applicants to provide thorough and complete applications.
</P>
<P>(c) <I>Deadline for initial application.</I> An initial application must be received by HHS, at the email address in § 581.10(d)(1) or other address indicated by HHS, within 75 days after an expression of interest is received from a particular applicant for that property. Upon written request from the applicant, HHS may, in its discretion, grant extensions authorized by 42 U.S.C. 11411(e)(2)(A), provided that the appropriate landholding agency or GSA concurs with the extension.
</P>
<P>(d) <I>Evaluation of initial application.</I> (1) Upon receipt of an initial application, HHS will review it for completeness, and, if incomplete and time permits, may, in its discretion, return it or ask the applicant to furnish any missing or additional required information prior to final evaluation of the initial application.
</P>
<P>(2) HHS will evaluate each initial application within 10 days of receipt and will promptly advise the applicant of its decision. All initial applications will be reviewed on the basis of the following elements:
</P>
<P>(i) <I>Services offered.</I> The extent and range of proposed services, such as meals, shelter, job training, and counseling.
</P>
<P>(ii) <I>Need.</I> The demand for the program, the program's ability to satisfy unmet needs of the community, and the degree to which the available property will be fully utilized.
</P>
<P>(iii) <I>Experience.</I> Demonstrated ability to provide the services, such as prior success in operating similar programs and recommendations attesting to that fact by Federal, State, and local authorities.
</P>
<P>(e) <I>Deadline and evaluation of final application.</I> (1) If HHS approves an initial application, HHS will notify the applicant and provide the applicant 45 days in which to provide a final application. The final application shall set forth a reasonable plan to finance, as specified in paragraph (a)(7) of this section, the approved program as set forth in the initial application. Applicants may not modify the approved initial application within its final application proposal.
</P>
<P>(2) Upon receipt of the final application, HHS will make a determination within 15 days and notify the applicant.
</P>
<P>(3) Unlike with initial applications, requests for extensions are not authorized by 42 U.S.C. 11411 and thus will not be considered for final applications.
</P>
<P>(4) Applications are evaluated on a first-come, first-served basis. HHS will notify all organizations that have submitted expressions of interest for a particular property whether an earlier application received for that property has been approved.
</P>
<P>(f) <I>Competing applications.</I> If HHS receives more than one final application simultaneously, HHS will evaluate all applications and make a determination based on each application's merit. HHS will rank approved applications based on the elements listed in paragraph (a) of this section, and notify the landholding agency, or GSA, as appropriate, of the approved applicant.
</P>
<CITA TYPE="N">[89 FR 89881, Nov. 13, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 581.12" NODE="24:3.1.1.3.8.0.1.12" TYPE="SECTION">
<HEAD>§ 581.12   Action on approved applications.</HEAD>
<P>(a) <I>Unutilized and underutilized properties.</I> (1) When HHS approves an application, it will so notify the applicant and forward a copy of the application to the landholding agency. The landholding agency will execute the lease, or permit document, as appropriate, in consultation with the applicant.
</P>
<P>(2) The landholding agency maintains the discretion to decide the following:
</P>
<P>(i) The length of time the property will be available.
</P>
<P>(ii) The terms and conditions of the lease or permit document (except that a landholding agency may not charge any fees or impose any costs).
</P>
<P>(b) <I>Excess and surplus properties.</I> (1) When HHS approves an application, it will so notify the applicant and request that GSA assign the property to HHS for transfer. Requests to GSA for the assignment of surplus property to HHS for homeless assistance purposes will be based on the following conditions:
</P>
<P>(i) HHS has a fully approved application for the property;
</P>
<P>(ii) The applicant is able, willing, and authorized to assume immediate care, custody, and maintenance of the property;
</P>
<P>(iii) The applicant is able, willing and authorized to pay the administrative expenses incident to the transfer; and
</P>
<P>(iv) The applicant has secured the necessary funds, or had demonstrated the ability to obtain such funds, to carry out the approved program of use of the property.
</P>
<P>(2) Upon receipt of an acceptable assignment, HHS will execute the transfer document in accordance with the procedures and requirements set out in this part and any other terms and conditions HHS and GSA determine are appropriate or necessary. Custody and accountability of the property will remain throughout the lease term with the landholding agency (<I>i.e.,</I> the agency which initially reported the property as excess) and throughout the deed term with the transferee.
</P>
<P>(3) Prior to assignment to HHS, GSA may consider other Federal uses and other important national needs in deciding the disposition of surplus property. Priority of consideration will normally be given to uses to assist the homeless. However, both GSA and HHS may consider any competing request for the property made under 40 U.S.C. 550 that is so meritorious and compelling that it outweighs the needs of the homeless.
</P>
<P>(4) Whenever GSA or HHS decides in favor of a competing request over a request for property for homeless assistance, the agency making the decision will transmit to the appropriate committees of Congress an explanatory statement which details the need satisfied by conveyance of the surplus property, and the reasons for determining that such need was so meritorious and compelling as to outweigh the needs of the homeless.


</P>
<CITA TYPE="N">[89 FR 89881, Nov. 13, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 581.13" NODE="24:3.1.1.3.8.0.1.13" TYPE="SECTION">
<HEAD>§ 581.13   Waivers.</HEAD>
<P>The Secretary may waive any requirement of this part that is not required by law, whenever it is determined that undue hardship would result from applying the requirement, or where application of the requirement would adversely affect the purposes of the program. Each waiver will be in writing and will be supported by documentation of the pertinent facts and grounds. The Secretary periodically will publish notice of granted waivers in the <E T="04">Federal Register.</E> 




</P>
</DIV8>


<DIV8 N="§ 581.14" NODE="24:3.1.1.3.8.0.1.14" TYPE="SECTION">
<HEAD>§ 581.14   Surplus property transfer documents.</HEAD>
<P>(a) Surplus property may be conveyed to eligible organizations pursuant to 40 U.S.C. 550(d) and 42 U.S.C. 11411, as amended, by lease or deed, at the applicant's discretion.
</P>
<P>(b) Transfers of surplus property for homeless assistance purposes are in exchange for the transferee's agreement to fully utilize the property for homeless assistance purposes in accordance with the terms specified in the transfer document.
</P>
<P>(c) A transfer of surplus property for homeless assistance purposes is subject to the disapproval of GSA within 30 days after notice is given to GSA of the proposed transfer.
</P>
<P>(d) Surplus property transferred pursuant to this part will be disposed on an “as is, where is” basis without warranty of any kind except as may be stated in the transfer document.
</P>
<P>(e) Unless excepted by GSA in its assignment, the disposal of property includes mineral rights associated with the surface estate.
</P>
<P>(f) Transfers of surplus property under this part will be made with the following general terms and conditions:
</P>
<P>(1) For the period provided in the transfer document, the transferee shall utilize all the surplus property it receives solely and continuously for the approved program and plan of use, in accordance with 42 U.S.C. 11411 and this part, except that:
</P>
<P>(i) The transferee has 12 months from the date of transfer to place the surplus property into use, if HHS did not approve in writing, construction of new facilities or major renovation of the property when it approved the final application;
</P>
<P>(ii) The transferee has 48 months from the date of transfer to place the surplus property into use, if the transferee proposes construction of new facilities or major renovation of the property and HHS approves it in writing at the time it approves the final application;
</P>
<P>(iii) If the applicable time limitation is not met, the transferee shall either commence payments in cash to the Federal Government for each month thereafter during which the proposed use has not been implemented or take such other action as set forth at § 581.18 as is deemed appropriate by HHS. Such monthly payments shall be computed on the basis of the current fair market value of the property, as conveyed, at the time of the first payment and dividing it by 360 months. At HHS's discretion, the payment may be waived if the transferee makes a sufficient showing of continued progress to place the property into use or if an unforeseeable event occurs which prevents the property from being put into use within the applicable timeframe; and
</P>
<P>(iv) HHS may permit use of surplus property at any time during the period of restriction by an entity other than the transferee in accordance with § 581.19.
</P>
<P>(2) The transferee will not be permitted to encumber, or dispose of the property, or impair full utilization thereof, without the prior written authorization of HHS. In the event the property is encumbered, sold, or disposed of, or is used for any purposes other than those set forth in an approved plan without the written consent of HHS, all revenues or the reasonable value of other benefits received by the transferee directly or indirectly from such use, as determined by HHS, will be considered to have been received and held in trust by the transferee for the account of the United States and will be subject to the direction and control of HHS. The provisions of this paragraph (f)(2) shall not impair or affect the rights reserved to the United States in paragraph (f)(8) of this section, or the right of HHS to impose conditions to its consent.
</P>
<P>(3) The transferee will file with HHS such reports on its maintenance and use of the transferred property and any other reports or information deemed necessary by HHS.
</P>
<P>(4) The transferee shall pay all administrative costs incidental to the transfer, including but not limited to—transfer taxes; surveys; appraisals; title searches; the transferee's legal fees; and recordation expenses. Transferee is solely responsible for such costs and may not seek reimbursement from the Federal Government for any reason.
</P>
<P>(5) The transferee shall protect, preserve, maintain, and repair the property to ensure that the property remains in as good a condition as when received.
</P>
<P>(6) The transferee shall protect the residual financial interest of the United States in the surplus property by insurance or such other means as HHS directs.
</P>
<P>(7) The transferee shall abide by all applicable Federal civil rights laws including those specified in the covenants and conditions contained in the transfer document, prohibiting the transferee from discriminating on the basis of, including but not limited to, race, color, national origin, religion, sex, familial status, or disability in the use of the property.
</P>
<P>(8) In the event of noncompliance with any conditions of the deed as determined by HHS, whether caused by the legal or other inability of the transferee, its successors and assigns, to perform any of the obligations of the transfer document, the Federal Government has an immediate right of reentry thereon, and to cause all right, title, and interest in and to the property to revert to the United States, and the transferee shall forfeit all right, title, and interest in and to the property. In such event, transferee shall execute a quitclaim deed and take all other actions necessary to return the property to the United States within ninety (90) days of a written request from the Federal Government, extended only at the discretion of the Federal Government. Transferee shall cooperate with the United States in the event of a reversion and agrees that the United States need not seek judicial intervention before exercising its right to revert, reenter, and reconvey the property.
</P>
<P>(9) In the event title is reverted to the United States for noncompliance or voluntarily reconveyed to the United States, the transferee shall, at the option of HHS, be required to: reimburse the United States for the decrease in value of the property not due to market conditions, reasonable wear and tear, acts of God, or approved alterations completed by the transferee to adapt the property to the homeless use for which the property was transferred; and reimburse the United States for any costs incurred in reverting title to or possession of the property, including reasonable attorneys' fees.
</P>
<P>(10) With respect to leased property, in the event of noncompliance with any of the conditions of the lease, as determined by HHS or the landholding agency, the right of occupancy and possession shall, at the option of HHS or the landholding agency, be terminated. In the event a leasehold is terminated by the United States for noncompliance or is voluntarily surrendered, the lessee shall be required, at the option of HHS, to reimburse the United States for the decrease in value of the property not due to market conditions, reasonable wear and tear, acts of God, or approved alterations completed by the lessee to adapt the property to the homeless use for which the property was leased. With respect to any termination of leasehold resulting from noncompliance, the United States, shall, in addition thereto, be reimbursed for such costs as may be incurred in recovering possession of the property, including reasonable attorneys' fees.
</P>
<P>(11) Any other term or condition that HHS and GSA determine appropriate or necessary.
</P>
<P>(12) With respect to surplus property transferred by deed, the terms and conditions including those in this paragraph (f), apply for a period of three hundred sixty (360) months of use in accordance with a program of use approved in writing by HHS. The three hundred sixty months (360) period may, in HHS's sole discretion, be extended or restarted in the event the property is not fully utilized or is retransferred to a successor entity. Expiration of the terms and conditions in this paragraph (f) does not release the transferee from continuing compliance, as appropriate, with any conditions that may run with the land, <I>e.g.,</I> environmental conditions and/or historic preservation covenants. Such conditions will continue to be the responsibility of the transferee and successors.
</P>
<P>(13) With respect to surplus property transferred by lease, the terms and conditions including those in this paragraph (f), extend for the entire initial lease and for any subsequent renewal periods, unless specifically excluded in writing by HHS.
</P>
<P>(g) Related personal property may be transferred or leased as a part of the realty and in accordance with real property procedures.
</P>
<P>(h) Transferees will be responsible for the protection and maintenance of the property during the time that they possess the property. Upon termination of the lease term or reversion of title to the United States, the transferee will be responsible for removing improvements made to the property if directed to by the United States and, in such event, will be responsible for restoration of the property or the costs associated with restoring the property. If improvements made by the transferee are not voluntarily removed by the transferee and the United States consents, they will become the property of the United States. If the United States does not consent, the transferee shall reimburse the United States for reasonable costs of removal. GSA or the landholding agency, as appropriate, will assume responsibility for protection and maintenance of a property when the lease terminates or title reverts.
</P>
<P>(i) Transferees, by obtaining the written consent of HHS, may abrogate the restrictions set forth in paragraph (f) of this section for all or any portion of the property in accordance with the provisions of § 581.20.
</P>
<CITA TYPE="N">[89 FR 89886, Nov. 13, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 581.15" NODE="24:3.1.1.3.8.0.1.15" TYPE="SECTION">
<HEAD>§ 581.15   Unsuitable properties.</HEAD>
<P>The landholding agency or GSA will defer action to dispose of properties determined unsuitable for homeless assistance for 20 days after the date that notice of a property is posted on the HUD website. HUD will inform landholding agencies or GSA if an appeal of an unsuitability determination is filed by a representative of the homeless pursuant to § 581.4(f). HUD will advise the agency to refrain from initiating disposal procedures until HUD has completed its reconsideration process regarding unsuitability. Thereafter, or if no appeal has been filed after 20 days, GSA or the appropriate landholding agency may proceed with disposal action in accordance with applicable law.
</P>
<CITA TYPE="N">[89 FR 89886, Nov. 13, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 581.16" NODE="24:3.1.1.3.8.0.1.16" TYPE="SECTION">
<HEAD>§ 581.16   Compliance with the National Environmental Policy Act of 1969 and other related Acts (environmental impact).</HEAD>
<P>(a) HHS, prior to making a final decision to convey or lease, or to amend, reform, or grant an approval or release with respect to a previous conveyance or lease of, surplus property for homeless purposes, will act in accordance with applicable provisions of the National Environmental Policy Act of 1969, the National Historic Preservation Act of 1966, the National Archeological Data Preservation Act, and other related acts. No lease to use surplus property shall allow the lessee to make, or cause to be made, any irreversible change in the conditions of said property, and no lease shall be employed for the purpose of delaying or avoiding compliance with the requirements of these Acts, unless approved by the United States.
</P>
<P>(b) Applicants shall be required to provide such information as HHS deems necessary to make an assessment of the impact of the proposed Federal action on the human environment. Materials contained in the applicant's official request, responses to a standard questionnaire prescribed by HHS, as well as other relevant information, will be used by HHS in making said assessment.
</P>
<P>(c) If the assessment reveals:
</P>
<P>(1) That the proposed Federal action involved properties of historical significance which are listed, or eligible for listing, in the National Register of Historic Places; or
</P>
<P>(2) That a more than insignificant impact on the human environment is reasonably foreseeable as a result of the proposed action; or
</P>
<P>(3) That the proposed Federal action could result in irreparable loss or destruction of archeologically significant items or data, HHS will, except as provided for in paragraph (d) of this section, prepare and distribute, or cause to be prepared or distributed, such notices and statements and obtain such approvals as are required by the Acts cited in paragraph (a) of this section.
</P>
<P>(d) If a proposed action involves other Federal agencies in a sequence of actions, or a group of actions, directly related to each other because of their functional interdependence, HHS may enter into and support a lead agency agreement to designate a single lead agency which will assume primary responsibility for coordinating the assessment of environmental effects of proposed Federal actions, preparing and distributing such notices and statements, or obtaining such approvals, as are required by the Acts cited in paragraph (a) of this section. The procedures of the designated lead agency will be utilized in conducting the environmental assessment. In the event of disagreement between HHS and another Federal agency, HHS will reserve the right to abrogate the lead agency agreement with the other Federal agency.
</P>
<CITA TYPE="N">[89 FR 89886, Nov. 13, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 581.17" NODE="24:3.1.1.3.8.0.1.17" TYPE="SECTION">
<HEAD>§ 581.17   No applications approved.</HEAD>
<P>(a) At the end of the 30-day holding period described in § 581.10(a), HHS will notify GSA, or the landholding agency, as appropriate, if an expression of interest has been received for a certain property. Where there is no expression of interest, GSA or the landholding agency, as appropriate, will proceed with disposal in accordance with applicable law.
</P>
<P>(b) Upon notice from HHS that all applications have been disapproved, or if no initial applications have been received within 75 days after an expression of interest, or no final application has been received within 45 days after an approved initial application, disposal may proceed in accordance with applicable law.
</P>
<CITA TYPE="N">[89 FR 89886, Nov. 13, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 581.18" NODE="24:3.1.1.3.8.0.1.18" TYPE="SECTION">
<HEAD>§ 581.18   Utilization and enforcement.</HEAD>
<P>(a) <I>Sanctions.</I> For instances of noncompliance relating to surplus property transfers, HHS may impose, after providing an opportunity to cure to the transferee, any or all of the following sanctions in its sole discretion, as applicable:
</P>
<P>(1) Where property or any portion thereof was not used or is not being used for the purposes for which transferred, or is sold, leased or subleased, encumbered, disposed of, or used for purposes other than those in the approved program and plan of use, without the prior written consent of HHS, HHS may require the transferee to—
</P>
<P>(i) Place the property into immediate use for an approved purpose and extend the period of restriction in the transfer document for an additional term as determined by HHS;
</P>
<P>(ii) Hold in trust all revenues and the reasonable value of other benefits received by the transferee directly or indirectly from that use for the United States subject to the direction and control of HHS;
</P>
<P>(iii) Return title to such property to the United States or to relinquish any leasehold interest therein;
</P>
<P>(iv) Abrogate the conditions and restrictions of the transfer, as set forth in § 581.20;
</P>
<P>(v) Make cash payments to the United States, as directed by HHS, equivalent to the current fair market rental value of the surplus property, as transferred, for each month during which the program and plan of use has not been implemented and continues to not be implemented; or
</P>
<P>(vi) Any other remedy that HHS determines appropriate or necessary.
</P>
<P>(2) Where the transferee desires to place the property into temporary use to assist the homeless other than that for which the property was transferred, written approval from HHS must be obtained, and will be conditioned upon HHS's authority to permit the use and such terms as HHS may impose.
</P>
<P>(3) If HHS or the landholding agency determines that a lessee or sublessee of a transferee is in noncompliance with a term or condition of the lease, or if the lessee voluntarily surrenders the premises, HHS may require termination of the lease and impose sanctions described in paragraph (a)(1) of this section, as appropriate.
</P>
<P>(b) <I>Reversion.</I> When HHS recommends reversion of the property for noncompliance, HHS will seek GSA's concurrence. GSA will respond to HHS's concurrence request within 30 days of its receipt. If GSA concurs, GSA will work with HHS to complete the reversion of the property. If GSA does not concur to the reversion recommendation, GSA will issue, to HHS, a written determination: stating the reason(s) for the disapproval; and acknowledging that HHS has recommended reversion and, therefore, the property is no longer within HHS's Title V program. The Federal Government will implement a response to the noncompliance that is in its best interests.
</P>
<CITA TYPE="N">[89 FR 89886, Nov. 13, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 581.19" NODE="24:3.1.1.3.8.0.1.19" TYPE="SECTION">
<HEAD>§ 581.19   Other uses.</HEAD>
<P>(a) A transferee may permit the use of all or a portion of the surplus property by another eligible entity as described in § 581.1 for homeless assistance purposes, only upon those terms and conditions HHS determines appropriate, if:
</P>
<P>(1) The transferee submits a written request to HHS explaining the purpose of and need for another eligible entity's use of the property, program plan, and other relevant information requested by HHS;
</P>
<P>(2) HHS determines that the proposed use would not substantially limit the program and plan of use by the transferee and that the use will not unduly burden the Federal Government;
</P>
<P>(3) HHS's written consent is obtained by the transferee in advance;
</P>
<P>(4) HHS approves the use instrument in advance and in writing;
</P>
<P>(5) The transferee agrees to lengthen the period of restrictions as determined by HHS; and
</P>
<P>(6) HHS advises GSA and there is no disapproval by GSA within thirty (30) days.
</P>
<P>(b) A transferee that does not follow paragraph (a) of this section will be deemed to be not in compliance with the terms and conditions of the Title V program and subject to enforcement action, including reversion of the property.
</P>
<CITA TYPE="N">[89 FR 89886, Nov. 13, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 581.20" NODE="24:3.1.1.3.8.0.1.20" TYPE="SECTION">
<HEAD>§ 581.20   Abrogation.</HEAD>
<P>(a) HHS may abrogate the conditions and restrictions in the transfer document if:
</P>
<P>(1) The transferee submits to HHS a written request that HHS abrogate the conditions and restrictions in the transfer document as to all or any portion of the surplus property;
</P>
<P>(2) HHS determines the terms and conditions of the proposed abrogation and determines that the proposed abrogation is in the best interest of the United States; and
</P>
<P>(3) HHS transmits the abrogation request to GSA and there is no disapproval by GSA within 30 days after notice is given. If GSA disapproves, GSA will state, in writing, to HHS the reason(s) for the disapproval.
</P>
<P>(b) HHS abrogates the conditions and restrictions in the transfer document only upon receipt of the appropriate consideration, including cash payment, to the United States, as directed by HHS, which is based on the formula contained in the transfer document, and any other terms and conditions HHS deems appropriate to protect the interest of the United States.


</P>
<CITA TYPE="N">[89 FR 89886, Nov. 13, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 581.21" NODE="24:3.1.1.3.8.0.1.21" TYPE="SECTION">
<HEAD>§ 581.21   Compliance inspections and reports.</HEAD>
<P>Transferees are required to allow HHS to conduct compliance inspections and to submit such compliance reports and actions as are deemed necessary by HHS. At a minimum, the transferee will be required to submit an annual utilization report regarding the operation and maintenance of the property, including current images of the entire property and such information as HHS shall require.


</P>
<CITA TYPE="N">[89 FR 89886, Nov. 13, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 581.22" NODE="24:3.1.1.3.8.0.1.22" TYPE="SECTION">
<HEAD>§ 581.22   No right of administrative review for agency decisions.</HEAD>
<P>There is no right to administrative review within HHS, including requests for reconsideration or appeal, of agency decisions on applications and other discretionary decisions.
</P>
<CITA TYPE="N">[89 FR 89886, Nov. 13, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 581.23" NODE="24:3.1.1.3.8.0.1.23" TYPE="SECTION">
<HEAD>§ 581.23   Severability.</HEAD>
<P>Any provision of this part held to be invalid or unenforceable with respect to certain parties or circumstances shall be construed so as to continue to give the maximum effect to the provision permitted by law unless such holding is that the provision of this part is invalid and unenforceable in all circumstances, in which event the provision shall be severable from the remainder of this part and shall not affect the remainder thereof.
</P>
<CITA TYPE="N">[89 FR 89886, Nov. 13, 2024]
















</CITA>
</DIV8>

</DIV5>


<DIV5 N="586" NODE="24:3.1.1.3.9" TYPE="PART">
<HEAD>PART 586—REVITALIZING BASE CLOSURE COMMUNITIES AND COMMUNITY ASSISTANCE—COMMUNITY REDEVELOPMENT AND HOMELESS ASSISTANCE 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>10 U.S.C. 2687 <I>note;</I> 42 U.S.C. 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>62 FR 37479, July 11, 1997, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 586.1" NODE="24:3.1.1.3.9.0.1.1" TYPE="SECTION">
<HEAD>§ 586.1   Purpose.</HEAD>
<P>This part implements the Base Closure Community Redevelopment and Homeless Assistance Act, as amended (10 U.S.C. 2687 <I>note</I>), which instituted a new community-based process for addressing the needs of the homeless at base closure and realignment sites. In this process, Local Redevelopment Authorities (LRAs) identify interest from homeless providers in installation property and develop a redevelopment plan for the installation that balances the economic redevelopment and other development needs of the communities in the vicinity of the installation with the needs of the homeless in those communities. The Department of Housing and Urban Development (HUD) reviews the LRA's plan to see that an appropriate balance is achieved. This part also implements the process for identifying interest from State and local entities for property under a public benefit transfer. The LRA is responsible for concurrently identifying interest from homeless providers and State and local entities interested in property under a public benefit transfer. 


</P>
</DIV8>


<DIV8 N="§ 586.5" NODE="24:3.1.1.3.9.0.1.2" TYPE="SECTION">
<HEAD>§ 586.5   Definitions.</HEAD>
<P>As used in this part: 
</P>
<P><I>CERCLA.</I> Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. 9601 <I>et seq.</I>). 
</P>
<P><I>Communities in the vicinity of the installation.</I> The communities that constitute the political jurisdictions (other than the State in which the installation is located) that comprise the LRA for the installation. If no LRA is formed at the local level, and the State is serving in that capacity, the communities in the vicinity of the installation are deemed to be those political jurisdiction(s) (other than the State) in which the installation is located. 
</P>
<P><I>Consolidated Plan.</I> The plan prepared in accordance with the requirements of 24 CFR part 91. 
</P>
<P><I>Continuum of care system.</I> 
</P>
<P>(1) A comprehensive homeless assistance system that includes: 
</P>
<P>(i) A system of outreach and assessment for determining the needs and condition of an individual or family who is homeless, or whether assistance is necessary to prevent an individual or family from becoming homeless; 
</P>
<P>(ii) Emergency shelters with appropriate supportive services to help ensure that homeless individuals and families receive adequate emergency shelter and referral to necessary service providers or housing finders; 
</P>
<P>(iii) Transitional housing with appropriate supportive services to help those homeless individuals and families who are not prepared to make the transition to independent living; 
</P>
<P>(iv) Housing with or without supportive services that has no established limitation on the amount of time of residence to help meet long-term needs of homeless individuals and families; and 
</P>
<P>(v) Any other activity that clearly meets an identified need of the homeless and fills a gap in the continuum of care. 
</P>
<P>(2) Supportive services are services that enable homeless persons and families to move through the continuum of care toward independent living. These services include, but are not limited to, case management, housing counseling, job training and placement, primary health care, mental health services, substance abuse treatment, child care, transportation, emergency food and clothing, family violence services, education services, moving services, assistance in obtaining entitlements, and referral to veterans services and legal services. 
</P>
<P><I>Day.</I> One calendar day including weekends and holidays. 
</P>
<P><I>DoD.</I> Department of Defense. 
</P>
<P><I>HHS.</I> Department of Health and Human Services. 
</P>
<P><I>Homeless person.</I> (1) An individual or family who lacks a fixed, regular, and adequate nighttime residence; and 
</P>
<P>(2) An individual or family who has a primary nighttime residence that is: 
</P>
<P>(i) A supervised publicly or privately operated shelter designed to provide temporary living accommodations (including welfare hotels, congregate shelters and transitional housing for the mentally ill); 
</P>
<P>(ii) An institution that provides a temporary residence for individuals intended to be institutionalized; or 
</P>
<P>(iii) A public or private place not designed for, or ordinarily used as, a regular sleeping accommodation for human beings. 
</P>
<P>(3) This term does not include any individual imprisoned or otherwise detained under an Act of the Congress or a State law. 
</P>
<P>HUD. Department of Housing and Urban Development. 
</P>
<P><I>Installation.</I> A base, camp, post, station, yard, center, homeport facility for any ship or other activity under the jurisdiction of DoD, including any leased facility, that is approved for closure or realignment under the Base Closure and Realignment Act of 1988 (Pub. L. 100-526), as amended, or the Defense Base Closure and Realignment Act of 1990 (Pub. L. 101-510), as amended (both at 10 U.S.C. 2687, <I>note</I>). 
</P>
<P><I>Local redevelopment authority (LRA).</I> Any authority or instrumentality established by State or local government and recognized by the Secretary of Defense, through the Office of Economic Adjustment, as the entity responsible for developing the redevelopment plan with respect to the installation or for directing implementation of the plan. 
</P>
<P><I>NEPA.</I> National Environmental Policy Act of 1969 (42 U.S.C. 4320). 
</P>
<P><I>OEA.</I> Office of Economic Adjustment, Department of Defense. 
</P>
<P><I>Private nonprofit organization.</I> An organization, no part of the net earnings of which inures to the benefit of any member, founder, contributor, or individual; that has a voluntary board; that has an accounting system or has designated an entity that will maintain a functioning accounting system for the organization in accordance with generally accepted accounting procedures; and that practices nondiscrimination in the provision of assistance. 
</P>
<P><I>Public benefit transfer.</I> The transfer of surplus military property for a specified public purpose at up to a 100 percent discount in accordance with 40 U.S.C. 471 <I>et seq.,</I> or 49 U.S.C. 47151-47153. 
</P>
<P><I>Redevelopment plan.</I> A plan that is agreed to by the LRA with respect to the installation and provides for the reuse or redevelopment of the real property and personal property of the installation that is available for such reuse and redevelopment as a result of the closure of the installation. 
</P>
<P><I>Representative(s) of the homeless.</I> A State or local government agency or private nonprofit organization, including a homeless assistance planning board, that provides or proposes to provide services to the homeless. 
</P>
<P><I>Substantially equivalent.</I> Property that is functionally suitable to substitute for property referred to in an approved Title V application. For example, if the representative of the homeless had an approved Title V application for a building that would accommodate 100 homeless persons in an emergency shelter, the replacement facility would also have to accommodate 100 at a comparable cost for renovation. 
</P>
<P><I>Substantially equivalent funding.</I> Sufficient funding to acquire a substantially equivalent facility. 
</P>
<P><I>Surplus property.</I> Any excess property not required for the needs and the discharge of the responsibilities of all Federal Agencies. Authority to make this determination, after screening with all Federal Agencies, rests with the Military Departments. 
</P>
<P><I>Title V.</I> Title V of the Stewart B. McKinney Homeless Assistance Act of 1987 (42 U.S.C 11411) as amended by the National Defense Authorization Act for Fiscal Year 1994 (Pub. L. 103-160). 
</P>
<P><I>Urban county.</I> A county within a metropolitan area as defined at 24 CFR 570.3. 


</P>
</DIV8>


<DIV8 N="§ 586.10" NODE="24:3.1.1.3.9.0.1.3" TYPE="SECTION">
<HEAD>§ 586.10   Applicability.</HEAD>
<P>(a) <I>General.</I> This part applies to all installations that are approved for closure/realignment by the President and Congress under Pub. L. 101-510 after October 25, 1994. 
</P>
<P>(b) <I>Request for inclusion under this process.</I> This part also applies to installations that were approved for closure/realignment under either Public Law 100-526 or Public Law 101-510 prior to October 25, 1994 and for which an LRA submitted a request for inclusion under this part to DoD by December 24, 1994. A list of such requests was published in the <E T="04">Federal Register</E> on May 30, 1995 (60 FR 28089). 
</P>
<P>(1) For installations with Title V applications pending but not approved before October 25, 1994, the LRA shall consider and specifically address any application for use of buildings and property to assist the homeless that were received by HHS prior to October 25, 1994, and were pending with the Secretary of HHS on that date. These pending requests shall be addressed in the LRA's homeless assistance submission. 
</P>
<P>(2) For installations with Title V applications approved before October 25, 1994 where there is an approved Title V application, but property has not been assigned or otherwise disposed of by the Military Department, the LRA must ensure that its homeless assistance submission provides the Title V applicant with: 
</P>
<P>(i) The property requested; 
</P>
<P>(ii) Properties, on or off the installation, that are substantially equivalent to those requested; 
</P>
<P>(iii) Sufficient funding to acquire such substantially equivalent properties; 
</P>
<P>(iv) Services and activities that meet the needs identified in the application; or 
</P>
<P>(v) A combination of the properties, funding, and services and activities described in § 586.10(b)(2)(i) through (iv). 
</P>
<P>(c) <I>Revised Title V process.</I> All other installations approved for closure or realignment under either Public Law 100-526 or Public Law 101-510 prior to October 25, 1994, for which there was no request for consideration under this part, are covered by the process stipulated under Title V. Buildings or property that were transferred or leased for homeless use under Title V prior to October 25, 1994, may not be reconsidered under this part. 


</P>
</DIV8>


<DIV8 N="§ 586.15" NODE="24:3.1.1.3.9.0.1.4" TYPE="SECTION">
<HEAD>§ 586.15   Waivers and extensions of deadlines.</HEAD>
<P>(a) After consultation with the LRA and HUD, and upon a finding that it is in the interest of the communities affected by the closure/realignment of the installation, DoD, through the Director of the Office of Economic Adjustment, may extend or postpone any deadline contained in this part. 
</P>
<P>(b) Upon completion of a determination and finding of good cause, and except for deadlines and actions required on the part of DoD, HUD may waive any provision of §§ 586.20 through 586.45 in any particular case, subject only to statutory limitations. 


</P>
</DIV8>


<DIV8 N="§ 586.20" NODE="24:3.1.1.3.9.0.1.5" TYPE="SECTION">
<HEAD>§ 586.20   Overview of the process.</HEAD>
<P>(a) <I>Recognition of the LRA.</I> As soon as practicable after the list of installations recommended for closure or realignment is approved, DoD, through OEA, will recognize an LRA for the installation. Upon recognition, OEA shall publish the name, address, and point of contact for the LRA in the <E T="04">Federal Register</E> and in a newspaper of general circulation in the communities in the vicinity of the installation. 
</P>
<P>(b) <I>Responsibilities of the Military Department.</I> The Military Department shall make installation properties available to other DoD components and Federal agencies in accordance with the procedures set out at 32 CFR part 175. The Military Department will keep the LRA informed of other Federal interest in the property during this process. Upon completion of this process the Military Department will notify HUD and either the LRA, or the Chief Executive Officer of the State, as appropriate, and publish a list of surplus property on the installation that will be available for reuse in the <E T="04">Federal Register</E> and a newspaper of general circulation in the communities in the vicinity of the installation. 
</P>
<P>(c) <I>Responsibilities of the LRA.</I> The LRA should begin to conduct outreach efforts with respect to the installation as soon as is practicable after the date of approval of closure/realignment of the installation. The local reuse planning process must begin no later than the date of the Military Department's <E T="04">Federal Register</E> publication of available property described at § 586.20(b). For those installations that began the process described in this part prior to August 17, 1995, HUD will, on a case by case basis, determine whether the statutory requirements have been fulfilled and whether any additional requirements listed in this part should be required. Upon the <E T="04">Federal Register</E> publication described in § 586.20(b), the LRA shall: 
</P>
<P>(1) Publish, within 30 days, in a newspaper of general circulation in the communities in the vicinity of the installation, the time period during which the LRA will receive notices of interest from State and local governments, representatives of the homeless, and other interested parties. This publication shall include the name, address, telephone number and the point of contact for the LRA who can provide information on the prescribed form and contents of the notices of interest. The LRA shall notify DoD of the deadline specified for receipt of notices of interest. LRAs are strongly encouraged to make this publication as soon as possible within the permissible 30 day period in order to expedite the closure process. 
</P>
<P>(i) In addition, the LRA has the option to conduct an informal solicitation of notices of interest from public and non-profit entities interested in obtaining property via a public benefit transfer other than a homeless assistance conveyance under either 40 U.S.C. 471 <I>et seq.,</I> or 49 U.S.C. 47151-47153. As part of such a solicitation, the LRA may wish to request that interested entities submit a description of the proposed use to the LRA and the sponsoring Federal agency. 
</P>
<P>(ii) For all installations selected for closure or realignment prior to 1995 that elected to proceed under Public Law 103-421, the LRA shall accept notices of interest for not less than 30 days. 
</P>
<P>(iii) For installations selected for closure or realignment in 1995 or thereafter, notices of interest shall be accepted for a minimum of 90 days and not more than 180 days after the LRA's publication under § 586.20(c)(1). 
</P>
<P>(2) Prescribe the form and contents of notices of interest. 
</P>
<P>(i) The LRA may not release to the public any information regarding the capacity of the representative of the homeless to carry out its program, a description of the organization, or its financial plan for implementing the program, without the consent of the representative of the homeless concerned, unless such release is authorized under Federal law and under the law of the State and communities in which the installation concerned is located. The identity of the representative of the homeless may be disclosed. 
</P>
<P>(ii) The notices of interest from representatives of the homeless must include: 
</P>
<P>(A) A description of the homeless assistance program proposed, including the purposes to which the property or facility will be put, which may include uses such as supportive services, job and skills training, employment programs, shelters, transitional housing or housing with no established limitation on the amount of time of residence, food and clothing banks, treatment facilities, or any other activity which clearly meets an identified need of the homeless and fills a gap in the continuum of care; 
</P>
<P>(B) A description of the need for the program; 
</P>
<P>(C) A description of the extent to which the program is or will be coordinated with other homeless assistance programs in the communities in the vicinity of the installation; 
</P>
<P>(D) Information about the physical requirements necessary to carry out the program including a description of the buildings and property at the installation that are necessary to carry out the program; 
</P>
<P>(E) A description of the financial plan, the organization, and the organizational capacity of the representative of the homeless to carry out the program; and 
</P>
<P>(F) An assessment of the time required to start carrying out the program. 
</P>
<P>(iii) The notices of interest from entities other than representatives of the homeless should specify the name of the entity and specific interest in property or facilities along with a description of the planned use. 
</P>
<P>(3) In addition to the notice required under § 586.20(c)(1), undertake outreach efforts to representatives of the homeless by contacting local government officials and other persons or entities that may be interested in assisting the homeless within the vicinity of the installation. 
</P>
<P>(i) The LRA may invite persons and organizations identified on the HUD list of representatives of the homeless and any other representatives of the homeless with which the LRA is familiar, operating in the vicinity of the installation, to the workshop described in § 586.20(c)(3)(ii). 
</P>
<P>(ii) The LRA, in coordination with the Military Department and HUD, shall conduct at least one workshop where representatives of the homeless have an opportunity to: 
</P>
<P>(A) Learn about the closure/realignment and disposal process; 
</P>
<P>(B) Tour the buildings and properties available either on or off the installation; 
</P>
<P>(C) Learn about the LRA's process and schedule for receiving notices of interest as guided by § 586.20(c)(2); and 
</P>
<P>(D) Learn about any known land use constraints affecting the available property and buildings. 
</P>
<P>(iii) The LRA should meet with representatives of the homeless that express interest in discussing possible uses for these properties to alleviate gaps in the continuum of care. 
</P>
<P>(4) Consider various properties in response to the notices of interest. The LRA may consider property that is located off the installation. 
</P>
<P>(5) Develop an application, including the redevelopment plan and homeless assistance submission, explaining how the LRA proposes to address the needs of the homeless. This application shall consider the notices of interest received from State and local governments, representatives of the homeless, and other interested parties. This shall include, but not be limited to, entities eligible for public benefit transfers under either 40 U.S.C. 471 <I>et seq.,</I> or 49 U.S.C. 47151-47153; representatives of the homeless; commercial, industrial, and residential development interests; and other interests. From the deadline date for receipt of notices of interest described at § 586.20(c)(1), the LRA shall have 270 days to complete and submit the LRA application to the appropriate Military Department and HUD. The application requirements are described at § 586.30. 
</P>
<P>(6) Make the draft application available to the public for review and comment periodically during the process of developing the application. The LRA must conduct at least one public hearing on the application prior to its submission to HUD and the appropriate Military Department. A summary of the public comments received during the process of developing the application shall be included in the application when it is submitted. 
</P>
<P>(d) <I>Public benefit transfer screening.</I> The LRA should, while conducting its outreach efforts, work with the Federal agencies that sponsor public benefit transfers under either 40 U.S.C. 471 <I>et seq.</I> or 49 U.S.C. 47151-47153. Those agencies can provide a list of parties in the vicinity of the installation that might be interested in and eligible for public benefit transfers. The LRA should make a reasonable effort to inform such parties of the availability of the property and incorporate their interests within the planning process. Actual recipients of property are to be determined by the sponsoring Federal agency. The Military Departments shall notify sponsoring Federal agencies about property that is available based on the community redevelopment plan and keep the LRA apprised of any expressions of interest. Such expressions of interest are not required to be incorporated into the redevelopment plan, but must be considered. 


</P>
</DIV8>


<DIV8 N="§ 586.25" NODE="24:3.1.1.3.9.0.1.6" TYPE="SECTION">
<HEAD>§ 586.25   HUD's negotiations and consultations with the LRA.</HEAD>
<P>HUD may negotiate and consult with the LRA before and during the course of preparation of the LRA's application and during HUD's review thereof with a view toward avoiding any preliminary determination that the application does not meet any requirement of this part. LRAs are encouraged to contact HUD for a list of persons and organizations that are representatives of the homeless operating in the vicinity of the installation. 


</P>
</DIV8>


<DIV8 N="§ 586.30" NODE="24:3.1.1.3.9.0.1.7" TYPE="SECTION">
<HEAD>§ 586.30   LRA application.</HEAD>
<P>(a) <I>Redevelopment plan.</I> A copy of the redevelopment plan shall be part of the application. 
</P>
<P>(b) <I>Homeless assistance submission.</I> This component of the application shall include the following: 
</P>
<P>(1) Information about homelessness in the communities in the vicinity of the installation. 
</P>
<P>(i) A list of all the political jurisdictions which comprise the LRA. 
</P>
<P>(ii) A description of the unmet need in the continuum of care system within each political jurisdiction, which should include information about any gaps that exist in the continuum of care for particular homeless subpopulations. The source for this information shall depend upon the size and nature of the political jurisdictions(s) that comprise the LRA. LRAs representing: 
</P>
<P>(A) Political jurisdictions that are required to submit a Consolidated Plan shall include a copy of their Homeless and Special Needs Population Table (table 1), Priority Homeless Needs Assessment Table (table 2), and narrative description thereof from that Consolidated Plan, including the inventory of facilities and services that assist the homeless in the jurisdiction. 
</P>
<P>(B) Political jurisdictions that are part of an urban county that is required to submit a Consolidated Plan shall include a copy of their Homeless and Special Needs Population Table (table 1), Priority Homeless Needs Assessment Table (table 2), and narrative description thereof from that Consolidated Plan, including the inventory of facilities and services that assist the homeless in the jurisdiction. In addition, the LRA shall explain what portion of the homeless population and subpopulations described in the Consolidated Plan are attributable to the political jurisdiction it represents. 
</P>
<P>(C) A political jurisdiction not described by § 586.30(b)(1)(ii)(A) or § 586.30(b)(1)(ii)(B) shall submit a narrative description of what it perceives to be the homeless population within the jurisdiction and a brief inventory of the facilities and services that assist homeless persons and families within the jurisdiction. LRAs that represent these jurisdictions are not required to conduct surveys of the homeless population. 
</P>
<P>(2) Notices of interest proposing assistance to homeless persons and/or families. 
</P>
<P>(i) A description of the proposed activities to be carried out on or off the installation and a discussion of how these activities meet a portion or all of the needs of the homeless by addressing the gaps in the continuum of care. The activities need not be limited to expressions of interest in property, but may also include discussions of how economic redevelopment may benefit the homeless; 
</P>
<P>(ii) A copy of each notice of interest from representatives of the homeless for use of buildings and property and a description of the manner in which the LRA's application addresses the need expressed in each notice of interest. If the LRA determines that a particular notice of interest should not be awarded property, an explanation of why the LRA determined not to support that notice of interest, the reasons for which may include the impact of the program contained in the notice of interest on the community as described in § 586.30(b)(2)(iii); and 
</P>
<P>(iii) A description of the impact that the implemented redevelopment plan will have on the community. This shall include information on how the LRA's redevelopment plan might impact the character of existing neighborhoods adjacent to the properties proposed to be used to assist the homeless and should discuss alternative plans. Impact on schools, social services, transportation, infrastructure, and concentration of minorities and/or low income persons shall also be discussed. 
</P>
<P>(3) Legally binding agreements for buildings, property, funding, and/or services. 
</P>
<P>(i) A copy of the legally binding agreements that the LRA proposes to enter into with the representative(s) of the homeless selected by the LRA to implement homeless programs that fill gaps in the existing continuum of care. The legally binding agreements shall provide for a process for negotiating alternative arrangements in the event that an environmental analysis conducted under § 586.45(b) indicates that any property identified for transfer in the agreement is not suitable for the intended purpose. Where the balance determined in accordance with § 586.30(b)(4) provides for the use of installation property as a homeless assistance facility, legally binding agreements must provide for the reversion or transfer, either to the LRA or to another entity or entities, of the buildings and property in the event they cease to be used for the homeless. In cases where the balance proposed by the LRA does not include the use of buildings or property on the installation, the legally binding agreements need not be tied to the use of specific real property and need not include a reverter clause. Legally binding agreements shall be accompanied by a legal opinion of the chief legal advisor of the LRA or political jurisdiction or jurisdictions which will be executing the legally binding agreements that the legally binding agreements, when executed, will constitute legal, valid, binding, and enforceable obligations on the parties thereto; 
</P>
<P>(ii) A description of how buildings, property, funding, and/or services either on or off the installation will be used to fill some of the gaps in the current continuum of care system and an explanation of the suitability of the buildings and property for that use; and 
</P>
<P>(iii) Information on the availability of general services such as transportation, police, and fire protection, and a discussion of infrastructure such as water, sewer, and electricity in the vicinity of the proposed homeless activity at the installation. 
</P>
<P>(4) An assessment of the balance with economic and other development needs. 
</P>
<P>(i) An assessment of the manner in which the application balances the expressed needs of the homeless and the needs of the communities comprising the LRA for economic redevelopment and other development; and 
</P>
<P>(ii) An explanation of how the LRA's application is consistent with the appropriate Consolidated Plan(s) or any other existing housing, social service, community, economic, or other development plans adopted by the jurisdictions in the vicinity of the installation. 
</P>
<P>(5) A description of the outreach undertaken by the LRA. The LRA shall explain how the outreach requirements described at § 586.20(c)(1) and § 586.20(c)(3) have been fulfilled. This explanation shall include a list of the representatives of the homeless the LRA contacted during the outreach process. 
</P>
<P>(c) <I>Public comments.</I> The LRA application shall include the materials described at § 586.20(c)(6). These materials shall be prefaced with an overview of the citizen participation process observed in preparing the application. 


</P>
</DIV8>


<DIV8 N="§ 586.35" NODE="24:3.1.1.3.9.0.1.8" TYPE="SECTION">
<HEAD>§ 586.35   HUD's review of the application.</HEAD>
<P>(a) <I>Timing.</I> HUD shall complete a review of each application no later than 60 days after its receipt of a completed application. 
</P>
<P>(b) <I>Standards of review.</I> The purpose of the review is to determine whether the application is complete and, with respect to the expressed interest and requests of representatives of the homeless, whether the application: 
</P>
<P>(1) <I>Need.</I> Takes into consideration the size and nature of the homeless population in the communities in the vicinity of the installation, the availability of existing services in such communities to meet the needs of the homeless in such communities, and the suitability of the buildings and property covered by the application for use and needs of the homeless in such communities. HUD will take into consideration the size and nature of the installation in reviewing the needs of the homeless population in the communities in the vicinity of the installation. 
</P>
<P>(2) <I>Impact of notices of interest.</I> Takes into consideration any economic impact of the homeless assistance under the plan on the communities in the vicinity of the installation, including: 
</P>
<P>(i) Whether the plan is feasible in light of demands that would be placed on available social services, police and fire protection, and infrastructure in the community; and, 
</P>
<P>(ii) Whether the selected notices of interest are consistent with the Consolidated Plan(s) or any other existing housing, social service, community, economic, or other development plans adopted by the political jurisdictions in the vicinity of the installation. 
</P>
<P>(3) <I>Legally binding agreements.</I> Specifies the manner in which the buildings, property, funding, and/or services on or off the installation will be made available for homeless assistance purposes. HUD will review each legally binding agreement to verify that: 
</P>
<P>(i) They include all the documents legally required to complete the transactions necessary to realize the homeless use(s) described in the application; 
</P>
<P>(ii) They include all appropriate terms and conditions; 
</P>
<P>(iii) They address the full range of contingencies including those described at § 586.30(b)(3)(i); 
</P>
<P>(iv) They stipulate that the buildings, property, funding, and/or services will be made available to the representatives of the homeless in a timely fashion; and 
</P>
<P>(v) They are accompanied by a legal opinion of the chief legal advisor of the LRA or political jurisdiction or jurisdictions which will be executing the legally binding agreements that the legally binding agreements will, when executed, constitute legal, valid, binding, and enforceable obligations on the parties thereto. 
</P>
<P>(4) <I>Balance.</I> Balances in an appropriate manner a portion or all of the needs of the communities in the vicinity of the installation for economic redevelopment and other development with the needs of the homeless in such communities. 
</P>
<P>(5) <I>Outreach.</I> Was developed in consultation with representatives of the homeless and the homeless assistance planning boards, if any, in the communities in the vicinity of the installation and whether the outreach requirements described at § 586.20(c)(1) and § 586.20(c)(3) have been fulfilled by the LRA. 
</P>
<P>(c) <I>Notice of determination.</I> (1) HUD shall, no later than the 60th day after its receipt of the application, unless such deadline is extended pursuant to § 586.15(a), send written notification both to DoD and the LRA of its preliminary determination that the application meets or fails to meet the requirements of § 586.35(b). If the application fails to meet the requirements, HUD will send the LRA: 
</P>
<P>(i) A summary of the deficiencies in the application; 
</P>
<P>(ii) An explanation of the determination; and 
</P>
<P>(iii) A statement of how the LRA must address the determinations. 
</P>
<P>(2) In the event that no application is submitted and no extension is requested as of the deadline specified in § 586.20(c)(5), and the State does not accept within 30 days a DoD written request to become recognized as the LRA, the absence of such application will trigger an adverse determination by HUD effective on the date of the lapsed deadline. Under these conditions, HUD will follow the process described at § 586.40. 
</P>
<P>(d) <I>Opportunity to cure.</I> (1) The LRA shall have 90 days from its receipt of the notice of preliminary determination under § 586.35(c)(1) within which to submit to HUD and DoD a revised application which addresses the determinations listed in the notice. Failure to submit a revised application shall result in a final determination, effective 90 days from the LRA's receipt of the preliminary determination, that the redevelopment plan fails to meet the requirements of § 586.35(b). 
</P>
<P>(2) HUD shall, within 30 days of its receipt of the LRA's resubmission, send written notification of its final determination of whether the application meets the requirements of § 586.35(b) to both DOD and the LRA. 


</P>
</DIV8>


<DIV8 N="§ 586.40" NODE="24:3.1.1.3.9.0.1.9" TYPE="SECTION">
<HEAD>§ 586.40   Adverse determinations.</HEAD>
<P>(a) <I>Review and consultation.</I> If the resubmission fails to meet the requirements of § 586.35(b), or if no resubmission is received, HUD will review the original application, including the notices of interest submitted by representatives of the homeless. In addition, in such instances or when no original application has been submitted, HUD: 
</P>
<P>(1) Shall consult with the representatives of the homeless, if any, for purposes of evaluating the continuing interest of such representatives in the use of buildings or property at the installation to assist the homeless; 
</P>
<P>(2) May consult with the applicable Military Department regarding the suitability of the buildings and property at the installation for use to assist the homeless; and 
</P>
<P>(3) May consult with representatives of the homeless and other parties as necessary. 
</P>
<P>(b) <I>Notice of decision.</I> (1) Within 90 days of receipt of an LRA's revised application which HUD determines does not meet the requirements of § 586.35(b), HUD shall, based upon its reviews and consultations under § 586.40(a): 
</P>
<P>(i) Notify DoD and the LRA of the buildings and property at the installation that HUD determines are suitable for use to assist the homeless; and 
</P>
<P>(ii) Notify DoD and the LRA of the extent to which the revised redevelopment plan meets the criteria set forth in § 586.35(b). 
</P>
<P>(2) In the event that an LRA does not submit a revised redevelopment plan under § 586.35(d), HUD shall, based upon its reviews and consultations under § 586.40(a), notify DoD and the LRA of the buildings and property at the installation that HUD determines are suitable for use to assist the homeless, either 
</P>
<P>(i) Within 190 days after HUD sends its notice of preliminary adverse determination under § 586.35(c)(1), if an LRA has not submitted a revised redevelopment plan; or 
</P>
<P>(ii) Within 390 days after the Military Department's <E T="04">Federal Register</E> publication of available property under § 586.20(b), if no redevelopment plan has been received and no extension has been approved. 


</P>
</DIV8>


<DIV8 N="§ 586.45" NODE="24:3.1.1.3.9.0.1.10" TYPE="SECTION">
<HEAD>§ 586.45   Disposal of buildings and property.</HEAD>
<P>(a) <I>Public benefit transfer screening.</I> Not later than the LRA's submission of its redevelopment plan to DoD and HUD, the Military Department will conduct an official public benefit transfer screening in accordance with the Federal Property Management Regulations (41 CFR part 101-47.303-2) based upon the uses identified in the redevelopment plan. Federal sponsoring agencies shall notify eligible applicants that any request for property must be consistent with the uses identified in the redevelopment plan. At the request of the LRA, the Military Department may conduct the official State and local public benefit screening at any time after the publication of available property described at § 586.20(b). 
</P>
<P>(b) <I>Environmental analysis.</I> Prior to disposal of any real property, the Military Department shall, consistent with NEPA and section 2905 of the Defense Base Closure and Realignment Act of 1990, as amended (10 U.S.C. 2687 <I>note</I>), complete an environmental impact analysis of all reasonable disposal alternatives. The Military Department shall consult with the LRA throughout the environmental impact analysis process to ensure both that the LRA is provided the most current environmental information available concerning the installation, and that the Military Department receives the most current information available concerning the LRA's redevelopment plans for the installation. 
</P>
<P>(c) <I>Disposal.</I> Upon receipt of a notice of approval of an application from HUD under § 586.35(c)(1) or § 586.35(d)(2), DoD shall dispose of buildings and property in accordance with the record of decision or other decision document prepared under § 586.45(b). Disposal of buildings and property to be used as homeless assistance facilities shall be to either the LRA or directly to the representative(s) of the homeless and shall be without consideration. Upon receipt of a notice from HUD under § 586.40(b), DoD will dispose of the buildings and property at the installation in consultation with HUD and the LRA. 
</P>
<P>(d) <I>LRA's responsibility.</I> The LRA shall be responsible for the implementation of and compliance with legally binding agreements under the application. 
</P>
<P>(e) <I>Reversions to the LRA.</I> If a building or property reverts to the LRA under a legally binding agreement under the application, the LRA shall take appropriate actions to secure, to the maximum extent practicable, the utilization of the building or property by other homeless representatives to assist the homeless. An LRA may not be required to utilize the building or property to assist the homeless. 






</P>
</DIV8>

</DIV5>


<DIV5 N="600-699" NODE="24:3.1.1.3.10" TYPE="PART">
<HEAD>PARTS 600-699 [RESERVED]


</HEAD>
</DIV5>

</DIV4>

</DIV3>

</DIV2>

</DIV1>

</ECFRBRWS>
<ECFRBRWS>
<AMDDATE>Mar. 13, 2026 
</AMDDATE>

<DIV1 N="4" NODE="24:4" TYPE="TITLE">

<HEAD>Title 24—Housing and Urban Development--Volume 4</HEAD>
<CFRTOC>
<SUBTI>
<HED>SUBTITLE B—<E T="04">Regulations Relating to Housing and Urban Development (Continued)</E>
</HED></SUBTI>
<PTHD>Part
</PTHD>
<CHAPTI>
<SUBJECT><E T="04">chapter vii</E>—Office of the Secretary, Department of Housing and Urban Development (Housing Assistance Programs and Public and Indian Housing Programs)
</SUBJECT>
<PG>700
</PG></CHAPTI>
<CHAPTI>
<SUBJECT><E T="04">chapter viii</E>—Office of the Assistant Secretary for Housing-Federal Housing Commissioner, Department of Housing and Urban Development (Section 8 Housing Assistance Programs, Section 202 Direct Loan Program, Section 202 Supportive Housing for the Elderly Program and Section 811 Supportive Housing for Persons With Disabilities Program)
</SUBJECT>
<PG>811
</PG></CHAPTI>
<CHAPTI>
<SUBJECT><E T="04">chapter ix</E>—Office of Assistant Secretary for Public and Indian Housing, Department of Housing and Urban Development
</SUBJECT>
<PG>901


</PG></CHAPTI></CFRTOC>
<DIV2 N="Subtitle B" NODE="24:4.1" TYPE="SUBTITLE">
<HEAD>Subtitle B—Regulations Relating to Housing and Urban Development (Continued)


</HEAD>

<DIV3 N="VII" NODE="24:4.1.1" TYPE="CHAPTER">

<HEAD> CHAPTER VII—OFFICE OF THE SECRETARY, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HOUSING ASSISTANCE PROGRAMS AND PUBLIC AND INDIAN HOUSING PROGRAMS)</HEAD>

<DIV5 N="700" NODE="24:4.1.1.1.1" TYPE="PART">
<HEAD>PART 700—CONGREGATE HOUSING SERVICES PROGRAM
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d) and 8011. 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 42943, 42949, Aug. 19, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 700.100" NODE="24:4.1.1.1.1.0.1.1" TYPE="SECTION">
<HEAD>§ 700.100   Purpose.</HEAD>
<P>The requirements of this part augment the requirements of section 802 of the National Affordable Housing Act of 1990 (approved November 28, 1990, Public Law 101-625) (42 U.S.C. 8011), (hereinafter, section 802), as amended by the Housing and Community Development Act of 1992 (Public Law 102-550, approved October 28, 1992), which authorizes the Congregate Housing Services Program (hereinafter, CHSP or Program). 


</P>
</DIV8>


<DIV8 N="§ 700.105" NODE="24:4.1.1.1.1.0.1.2" TYPE="SECTION">
<HEAD>§ 700.105   Definitions.</HEAD>
<P>In addition to the definitions in section 802(k), the following definitions apply to CHSP:
</P>
<P><I>Activity of Daily Living (ADL)</I> means an activity regularly necessary for personal care. 
</P>
<P>(1) The minimum requirements of ADLs include:
</P>
<P>(i) Eating (may need assistance with cooking, preparing or serving food, but must be able to feed self);
</P>
<P>(ii) Dressing (must be able to dress self, but may need occasional assistance);
</P>
<P>(iii) Bathing (may need assistance in getting in and out of the shower or tub, but must be able to wash self);
</P>
<P>(iv) Grooming (may need assistance in washing hair, but must be able to take care of personal appearance);
</P>
<P>(v) Getting in and out of bed and chairs, walking, going outdoors, using the toilet; and
</P>
<P>(vi) Household management activities (may need assistance in doing housework, grocery shopping or laundry, or getting to and from one location to another for activities such as going to the doctor and shopping, but must be mobile. The mobility requirement does not exclude persons in wheelchairs or those requiring mobility devices.)
</P>
<P>(2) Each of the Activities of Daily Living noted in paragraph (1) of this definition includes a requirement that a person must be able to perform at a specified minimal level (<I>e.g.,</I> to satisfy the eating ADL, the person must be able to feed himself or herself). The determination of whether a person meets this minimal level of performance must include consideration of those services that will be performed by a person's spouse, relatives or other attendants to be provided by the individual. For example, if a person requires assistance with cooking, preparing or serving food plus assistance in feeding himself or herself, the individual would meet the minimal performance level and thus satisfy the eating ADL, if a spouse, relative or attendant provides assistance with feeding the person. Should such assistance become unavailable at any time, the owner is not obligated at any time to provide individualized services beyond those offered to the resident population in general. The Activities of Daily Living analysis is relevant only with regard to determination of a person's eligibility to receive <I>supportive services</I> paid for by CHSP and is not a determination of eligibility for occupancy;
</P>
<P><I>Adjusted income</I> means adjusted income as defined in 24 CFR parts 813 or 913.
</P>
<P><I>Applicant</I> means a State, Indian tribe, unit of general local government, public housing authority (PHA), Indian housing authority (IHA) or local nonprofit housing sponsor. A State, Indian tribe, or unit of general local government may apply on behalf of a local nonprofit housing sponsor or a for-profit owner of eligible housing for the elderly.
</P>
<P><I>Area agency on aging</I> means the single agency designated by the State Agency on Aging to administer the program described in Title III of the Older Americans Act of 1965 (45 CFR chapter 13).
</P>
<P><I>Assistant Secretary</I> means the HUD Assistant Secretary for Housing-Federal Housing Commissioner or the HUD Assistant Secretary for Public and Indian Housing.
</P>
<P><I>Case management</I> means implementing the processes of: establishing linkages with appropriate agencies and service providers in the general community in order to tailor the needed services to the program participant; linking program participants to providers of services that the participant needs; making decisions about the way resources are allocated to an individual on the basis of needs; developing and monitoring of case plans in coordination with a formal assessment of services needed; and educating participants on issues, including, but not limited to, supportive service availability, application procedures and client rights.
</P>
<P><I>Eligible housing for the elderly</I> means any eligible project including any building within a mixed-use project that was designated for occupancy by elderly persons, or persons with disabilities at its inception or, although not so designated, for which the eligible owner or grantee gives preference in tenant selection (with HUD approval) for all units in the eligible project (or for a building within an eligible mixed-use project) to eligible elderly persons, persons with disabilities, or temporarily disabled individuals. For purposes of this part, this term does not include projects assisted under the Low-Rent Housing Homeownership Opportunity program (Turnkey III (24 CFR part 905, subpart G)).
</P>
<P><I>Eligible owner</I> means an owner of an eligible housing project.
</P>
<P><I>Excess residual receipts</I> mean residual receipts of more than $500 per unit in the project which are available and not committed to other uses at the time of application to HUD for CHSP. Such receipts may be used as matching funds and may be spent down to a minimum of $500/unit.
</P>
<P><I>For-profit owner of eligible housing for the elderly</I> means an owner of an eligible housing project in which some part of the project's earnings lawfully inure to the benefit of any private shareholder or individual.
</P>
<P><I>Grantee</I> or <I>Grant recipient</I> means the recipient of funding under CHSP. Grantees under this Program may be states, units of general local government, Indian tribes, PHAs, IHAs, and local nonprofit housing sponsors.
</P>
<P><I>Local nonprofit housing sponsor</I> means an owner or borrower of eligible housing for the elderly; no part of the net earnings of the owning organization shall lawfully inure to the benefit of any shareholder or individual.
</P>
<P><I>Nonprofit</I> includes a public housing agency as that term is defined in section 3(b)(6) of the United States Housing Act of 1937.
</P>
<P><I>Person with disabilities</I> means a household composed of one or more persons, at least one of whom is an adult who has a disability. 
</P>
<P>(1) A person shall be considered to have a disability if such person is determined under regulations issued by the Secretary to have a physical, mental, or emotional impairment which:
</P>
<P>(i) Is expected to be of long-continued and indefinite duration;
</P>
<P>(ii) Substantially impedes his or her ability to live independently; and
</P>
<P>(iii) Is of such a nature that the person's ability could be improved by more suitable housing conditions.
</P>
<P>(2) A person shall also be considered to have a disability if the person has a developmental disability as defined in section 102(5) of the Developmental Disabilities Assistance and Bill of Rights Act (42 U.S.C. 6001-7). Notwithstanding the preceding provisions of this paragraph, the terms “person with disabilities” or “temporarily disabled” include two or more persons with disabilities living together, one or more such persons living with another person who is determined (under regulations prescribed by the Secretary of HUD) to be essential to their care or well-being, and the surviving member or members of any household where at least one or more persons was an adult with a disability who was living, in a unit assisted under this section, with the deceased member of the household at the time of his or her death.
</P>
<P><I>Program participant</I> (participant) means any project resident as defined in section 802(e)(1) who is formally accepted into CHSP, receives CHSP services, and resides in the eligible housing project served by CHSP grant.
</P>
<P><I>Qualifying supportive services</I> means those services described in section 802(k)(16). Under this Program, “health-related services” mean non-medical supervision, wellness programs, preventive health screening, monitoring of medication consistent with state law, and non-medical components of adult day care. The Secretary concerned may also approve other requested supportive services essential for achieving and maintaining independent living.
</P>
<P><I>Rural Housing Service</I> (RHS) means a credit agency for rural housing and rural development in the U.S. Department of Agriculture (USDA).
</P>
<P><I>Secretary concerned</I> means (1) The Secretary of Housing and Urban Development, with respect to eligible federally assisted housing administered by HUD; and
</P>
<P>(2) The Secretary of Agriculture with reference to programs administered by the Administrator of the Rural Housing Service.
</P>
<P><I>Service coordinator</I> means CHSP staff person responsible for coordinating Program services as described in section 700.130.
</P>
<P><I>Service provider</I> means a person or organization licensed or otherwise approved in writing by a State or local agency (<I>e.g.,</I> Department of Health, Department of Human Services or Welfare) to provide supportive services.
</P>
<P><I>State agency</I> means the State or an agency or instrumentality of the State.
</P>
<P><I>State agency on aging</I> means the single agency designated by the Governor to administer the program described in Title III of the Older Americans Act of 1965 (See 45 CFR part 13).


</P>
</DIV8>


<DIV8 N="§ 700.110" NODE="24:4.1.1.1.1.0.1.3" TYPE="SECTION">
<HEAD>§ 700.110   Announcement of fund availability, application process and selection.</HEAD>
<P>(a) <I>Notice of funding availability.</I> A Notice of Funding Availability (NOFA) will be published periodically in the <E T="04">Federal Register</E> by the Secretary concerned containing the amounts of funds available, allocation or distribution of funds available among eligible applicant groups, where to obtain and submit applications, the deadline for submissions, and further explanation of the selection criteria, review and selection process. The Secretary concerned will designate the maximum allowable size for grants.
</P>
<P>(b) <I>Selection criteria</I> are set forth in section 802(h)(1) and shall include additional criteria specified by the Secretary concerned.


</P>
</DIV8>


<DIV8 N="§ 700.115" NODE="24:4.1.1.1.1.0.1.4" TYPE="SECTION">
<HEAD>§ 700.115   Program costs.</HEAD>
<P>(a) <I>Allowable costs.</I> (1) Allowable costs for direct provision of supportive services includes the provision of supportive services and others approved by the Secretary concerned for:
</P>
<P>(i) Direct hiring of staff, including a service coordinator;
</P>
<P>(ii) Supportive service contracts with third parties;
</P>
<P>(iii) Equipment and supplies (including food) necessary to provide services;
</P>
<P>(iv) Operational costs of a transportation service (<I>e.g.,</I> mileage, insurance, gasoline and maintenance, driver wages, taxi or bus vouchers);
</P>
<P>(v) Purchase or leasing of vehicles; 
</P>
<P>(vi) Direct and indirect administrative expenses for administrative costs such as annual fiscal review and audit, telephones, postage, travel, professional education, furniture and equipment, and costs associated with self evaluation or assessment (not to exceed one percent of the total budget for the activities approved); and 
</P>
<P>(vii) States, Indian tribes and units of general local government with more than one project included in the grant may receive up to 1% of the total cost of the grant for monitoring the projects. 
</P>
<P>(2) Allowable costs shall be reasonable, necessary and recognized as expenditures in compliance with 2 CFR part 200, subpart E. 
</P>
<P>(b) <I>Nonallowable costs.</I> (1) CHSP funds may not be used to cover expenses related to any grantee program, service, or activity existing at the time of application to CHSP.
</P>
<P>(2) Examples of nonallowable costs under the program are: 
</P>
<P>(i) Capital funding (such as purchase of buildings, related facilities or land and certain major kitchen items such as stoves, refrigerators, freezers, dishwashers, trash compactors or sinks); 
</P>
<P>(ii) Administrative costs that represent a non-proportional share of costs charged to the Congregate Housing Services Program for rent or lease, utilities, staff time; 
</P>
<P>(iii) Cost of supportive services other than those approved by the Secretary concerned; 
</P>
<P>(iv) Modernization, renovation or new construction of a building or facility, including kitchens; 
</P>
<P>(v) Any costs related to the development of the application and plan of operations before the effective date of CHSP grant award; 
</P>
<P>(vi) Emergency medical services and ongoing and regular care from doctors and nurses, including but not limited to administering medication, purchase of medical supplies, equipment and medications, overnight nursing services, and other institutional forms of service, care or support; 
</P>
<P>(vii) Occupational therapy and vocational rehabilitation services; or 
</P>
<P>(viii) Other items defined as unallowable costs elsewhere in this part, in CHSP grant agreement, and 2 CFR part 200, subpart E. 
</P>
<P>(c) <I>Administrative cost limitation.</I> Grantees are subject to the limitation in section 802(j)(4). 
</P>
<CITA TYPE="N">[61 FR 42943, 42949, Aug. 19, 1996, as amended at 80 FR 75940, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 700.120" NODE="24:4.1.1.1.1.0.1.5" TYPE="SECTION">
<HEAD>§ 700.120   Eligible supportive services.</HEAD>
<P>(a) Supportive services or funding for such services may be provided by state, local, public or private providers and CHSP funds. A CHSP under this section shall provide meal and other qualifying services for program participants (and other residents and nonresidents, as described in § 700.125(a)) that are coordinated on site. 
</P>
<P>(b) Qualifying supportive services are those listed in section 802(k)(16) and in section 700.105. 
</P>
<P>(c) Meal services shall meet the following guidelines: 
</P>
<P>(1) <I>Type of service.</I> At least one meal a day must be served in a group setting for some or all of the participants; if more than one meal a day is provided, a combination of a group setting and carry-out meals may be utilized. 
</P>
<P>(2) <I>Hot meals.</I> At least one meal a day must be hot. A hot meal for the purpose of this program is one in which the principal food item is hot at the time of serving. 
</P>
<P>(3) <I>Special menus.</I> Grantees shall provide special menus as necessary for meeting the dietary needs arising from the health requirements of conditions such as diabetes and hypertension. Grantees should attempt to meet the dietary needs of varying religious and ethnic backgrounds. 
</P>
<P>(4) <I>Meal service standards.</I> Grantees shall plan for and provide meals which are wholesome, nutritious, and each of which meets a minimum of one-third of the minimum daily dietary allowances as established by the Food and Nutrition Board of the National Academy of Sciences-National Research Council (or State or local standards, if these standards are higher). Grantees must have an annual certification, prepared and signed by a registered dietitian, which states that each meal provided under CHSP meets the minimum daily dietary allowances. 
</P>
<P>(5) <I>Food stamps and agricultural commodities.</I> In providing meal services grantees must apply for and use food stamps and agricultural commodities as set forth in section 802(d)(2)(A). 
</P>
<P>(6) <I>Preference for nutrition providers:</I> In contracting for or otherwise providing for meal services grantees must follow the requirements of section 802(d)(2)(B). These requirements do not preclude a grantee or owner from directly preparing and providing meals under its own auspices. 


</P>
</DIV8>


<DIV8 N="§ 700.125" NODE="24:4.1.1.1.1.0.1.6" TYPE="SECTION">
<HEAD>§ 700.125   Eligibility for services.</HEAD>
<P>(a) <I>Participants, other residents, and nonresidents.</I> Such individuals are eligible either to participate in CHSP or to receive CHSP services, if they qualify under section 802(e)(1), (4) and (5). Under this paragraph, temporarily disabled persons are also eligible. 
</P>
<P>(b) <I>Economic need.</I> In providing services under CHSP, grantees shall give priority to very low income individuals, and shall consider their service needs in selecting program participants. 


</P>
</DIV8>


<DIV8 N="§ 700.130" NODE="24:4.1.1.1.1.0.1.7" TYPE="SECTION">
<HEAD>§ 700.130   Service coordinator.</HEAD>
<P>(a) Each grantee must have at least one service coordinator who shall perform the responsibilities listed in section 802(d)(4). 
</P>
<P>(b) The service coordinator shall comply with the qualifications and standards required by the Secretary concerned. The service coordinator shall be trained in the subject areas set forth in section 802(d)(4), and in any other areas required by the Secretary concerned. 
</P>
<P>(c) The service coordinator may be employed directly by the grantee, or employed under a contract with a case management agency on a fee-for-service basis, and may serve less than full-time. The service coordinator or the case management agency providing service coordination shall not provide supportive services under a CHSP grant or have a financial interest in a service provider agency which intends to provide services to the grantee for CHSP. 
</P>
<P>(d) The service coordinator shall: 
</P>
<P>(1) Provide general case management and referral services to all potential participants in CHSP. This involves intake screening, upon referral from the grantee of potential program participants, and preliminary assessment of frailty or disability, using a commonly accepted assessment tool. The service coordinator then will refer to the professional assessment committee (PAC) those individuals who appear eligible for CHSP; 
</P>
<P>(2) Establish professional relationships with all agencies and service providers in the community, and develop a directory of providers for use by program staff and program participants; 
</P>
<P>(3) Refer proposed participants to service providers in the community, or those of the grantee; 
</P>
<P>(4) Serve as staff to the PAC; 
</P>
<P>(5) Complete, for the PAC, all paperwork necessary for the assessment, referral, case monitoring and reassessment processes; 
</P>
<P>(6) Implement any case plan developed by the PAC and agreed to by the program participant; 
</P>
<P>(7) Maintain necessary case files on each program participant, containing such information and kept in such form as HUD and RHS shall require; 
</P>
<P>(8) Provide the necessary case files to PAC members upon request, in connection with PAC duties; 
</P>
<P>(9) Monitor the ongoing provision of services from community agencies and keep the PAC and the agency providing the supportive service informed of the progress of the participant; 
</P>
<P>(10) Educate grant recipient's program participants on such issues as benefits application procedures (e.g. SSI, food stamps, Medicaid), service availability, and program participant options and responsibilities; 
</P>
<P>(11) Establish volunteer support programs with service organizations in the community; 
</P>
<P>(12) Assist the grant recipient in building informal support networks with neighbors, friends and family; and 
</P>
<P>(13) Educate other project management staff on issues related to “aging-in-place” and services coordination, to help them to work with and assist other persons receiving housing assistance through the grantee. 
</P>
<P>(e) The service coordinator shall tailor each participant's case plan to the individual's particular needs. The service coordinator shall work with community agencies, the grantee and third party service providers to ensure that the services are provided on a regular, ongoing, and satisfactory basis, in accordance with the case plan approved by the PAC and the participant. 
</P>
<P>(f) Service coordinators shall not serve as members of the PAC. 


</P>
</DIV8>


<DIV8 N="§ 700.135" NODE="24:4.1.1.1.1.0.1.8" TYPE="SECTION">
<HEAD>§ 700.135   Professional assessment committee.</HEAD>
<P>(a) <I>General.</I> (1) A professional assessment committee (PAC), as described in this section, shall recommend services appropriate to the functional abilities and needs of each eligible project resident. The PAC shall be either a voluntary committee appointed by the project management or an agency in the community which provides assessment services and conforms to section 802(e)(3)(A) and (B). PAC members are subject to the conflict of interest provisions in section 700.175(b). 
</P>
<P>(2) The PAC shall utilize procedures that ensure that the process of determining eligibility of individuals for congregate services affords individuals fair treatment, due process, and a right of appeal of the determination of eligibility, and shall ensure the confidentiality of personal and medical records. 
</P>
<P>(3) The dollar value of PAC members' time spent on regular assessments after initial approval of program participants may be counted as match. If a community agency discharges the duties of the PAC, staff time is counted as its imputed value, and if the members are volunteers, their time is counted as volunteer time, according to sections 700.145(c)(2) (ii) and (iv). 
</P>
<P>(b) <I>Duties of the PAC.</I> The PAC is required to: 
</P>
<P>(1) Perform a formal assessment of each potential elderly program participant to determine if the individual is frail. To qualify as frail, the PAC must determine if the elderly person is deficient in at least three ADLs, as defined in section 700.105. This assessment shall be based upon the screening done by the service coordinator, and shall include a review of the adequacy of the informal support network (<I>i.e.,</I> family and friends available to the potential participant to assist in meeting the ADL needs of that individual), and may include a more in-depth medical evaluation, if necessary; 
</P>
<P>(2) Determine if non-elderly disabled individuals qualify under the definition of person with disabilities under section 700.105. If they do qualify, this is the acceptance criterion for them for CHSP. Persons with disabilities do not require an assessment by the PAC; 
</P>
<P>(3) Perform a regular assessment and updating of the case plan of all participants; 
</P>
<P>(4) Obtain and retain information in participant files, containing such information and maintained in such form, as HUD or RHS shall require; 
</P>
<P>(5) Replace any members of the PAC within 30 days after a member resigns. A PAC shall not do formal assessments if its membership drops below three, or if the qualified medical professional leaves the PAC and has not been replaced. 
</P>
<P>(6) Notify the grantee or eligible owner and the program participants of any proposed modifications to PAC procedures, and provide these parties with a process and reasonable time period in which to review and comment, before adoption of a modification; 
</P>
<P>(7) Provide assurance of nondiscrimination in selection of CHSP participants, with respect to race, religion, color, sex, national origin, familial status or type of disability; 
</P>
<P>(8) Provide complete confidentiality of information related to any individual examined, in accordance with the Privacy Act of 1974; 
</P>
<P>(9) Provide all formal information and reports in writing. 
</P>
<P>(c) <I>Prohibitions relating to the PAC.</I> (1) At least one PAC member shall not have any direct or indirect relationship to the grantee. 
</P>
<P>(2) No PAC member may be affiliated with organizations providing services under the grant. 
</P>
<P>(3) Individuals or staff of third party organizations that act as PAC members may not be paid with CHSP grant funds. 
</P>
<P>(d) <I>Eligibility and admissions.</I> (1) Before selecting potential program participants, each grantee (with PAC assistance) shall develop a CHSP application form. The information in the individual's application is crucial to the PAC's ability to determine the need for further physical or psychological evaluation. 
</P>
<P>(2) The PAC, upon completion of a potential program participant's initial assessment, must make a recommendation to the service coordinator for that individual's acceptance or denial into CHSP. 
</P>
<P>(3) Once a program participant is accepted into CHSP, the PAC must provide a supportive services case plan for each participant. In developing this plan, the PAC must take into consideration the participant's needs and wants. The case plan must provide the minimum supportive services necessary to maintain independence. 
</P>
<P>(e) <I>Transition-out procedures.</I> The grantee or PAC must develop procedures for providing for an individual's transition out of CHSP to another setting. Transition out is based upon the degree of supportive services needed by an individual to continue to live independently. If a program participant leaves the program, but wishes to retain supportive services, he or she may do so, as long as he or she continues to live in an eligible project, pays the full cost of services provided, and management agrees (section 802(e)(4) and (5)). A participant can be moved out of CHSP if he or she: 
</P>
<P>(1) Gains physical and mental health and is able to function without supportive services, even if only for a short time (in which case readmission, based upon reassessment to determine the degree of frailty or the disability, is acceptable); 
</P>
<P>(2) Requires a higher level of care than that which can be provided under CHSP; or 
</P>
<P>(3) Fails to pay services fees. 
</P>
<P>(f) <I>Procedural rights of participants.</I> (1) The PAC must provide an informal process that recognizes the right to due process of individuals receiving assistance. This process, at a minimum, must consist of: 
</P>
<P>(i) Serving the participant with a written notice containing a clear statement of the reasons for termination; 
</P>
<P>(ii) A review of the decision, in which the participant is given the opportunity to present written or oral objections before a person other than the person (or a subordinate of that person) who made or approved the termination decision; and 
</P>
<P>(iii) Prompt written notification of the final decision to the participant. 
</P>
<P>(2) Procedures must ensure that any potential or current program participant, at the time of initial or regular assessment, has the option of refusing offered services and requesting other supportive services as part of the case planning process. 
</P>
<P>(3) In situations where an individual requests additional services, not initially recommended by the PAC, the PAC must make a determination of whether the request is legitimately a needs-based service that can be covered under CHSP subsidy. Individuals can pay for services other than those recommended by the PAC as long as the additional services do not interfere with the efficient operation of the program. 


</P>
</DIV8>


<DIV8 N="§ 700.140" NODE="24:4.1.1.1.1.0.1.9" TYPE="SECTION">
<HEAD>§ 700.140   Participatory agreement.</HEAD>
<P>(a) Before actual acceptance into CHSP, potential participants must work with the PAC and the service coordinator in developing supportive services case plans. A participant has the option of accepting any of the services under the case plan. 
</P>
<P>(b) Once the plan is approved by the PAC and the program participant, the participant must sign a participatory agreement governing the utilization of the plan's supportive services and the payment of supportive services fees. The grantee annually must renegotiate the agreement with the participant. 


</P>
</DIV8>


<DIV8 N="§ 700.145" NODE="24:4.1.1.1.1.0.1.10" TYPE="SECTION">
<HEAD>§ 700.145   Cost distribution.</HEAD>
<P>(a) <I>General.</I> (1) Grantees, the Secretary concerned, and participants shall all contribute to the cost of providing supportive services according to section 802(i)(A)(i). Grantees must contribute at least 50 percent of program cost, participants must contribute fees that in total are at least 10 percent of program cost, and the Secretary concerned will provide funds in an amount not to exceed 40 percent. 
</P>
<P>(2) Section 802(i)(1)(B)(ii) creates a cost-sharing provision between grantee and the Secretary concerned if total participant fees collected over a year are less than 10 percent of total program cost. This provision is subject to availability of appropriated grant funds. If funds are not available, the grantee must assume the funding shortfall. 
</P>
<P>(b) <I>Prohibition on substitution of funds and maintenance of existing supportive services.</I> Grantees shall maintain existing funding for and provision of supportive services prior to the application date, as set forth in section 802(i)(1)(D). The grantee shall ensure that the activities provided to the project under a CHSP grant will be in addition to, and not in substitution for, these previously existing services. The value of these services do not qualify as matching funds. Such services must be maintained either for the time the participant remains in CHSP, or for the duration of CHSP grant. The grantee shall certify compliance with this paragraph to the Secretary concerned. 
</P>
<P>(c) <I>Eligible matching funds.</I> (1) All sources of matching funds must be directly related to the types of supportive services prescribed by the PAC or used for administration of CHSP. 
</P>
<P>(2) Matching funds may include: 
</P>
<P>(i) Cash (which may include funds from Federal, State and local governments, third party contributions, available payments authorized under Medicaid for specific individuals in CHSP, Community Development Block Grants or Community Services Block Grants, Older American Act programs or excess residual funds with the approval of the Secretary concerned), 
</P>
<P>(ii) The imputed dollar value of other agency or third party-provided direct services or staff who will work with or provide services to program participants; these services must be justified in the application to assure that they are the new or expanded services of CHSP necessary to keep the program participants independent. If services are provided by the state, Indian tribe, unit of general local government, or local nonprofit housing sponsor, IHA, PHA, or for-profit or not-for-profit owner, any salary paid to staff from governmental sources to carry out the program of the grantee and any funds paid to residents employed by the Program (other than from amounts under a contract under section 700.155) is allowable match. 
</P>
<P>(iii) In-kind items (these are limited to 10 percent of the 50 percent matching amount), such as the current market value of donated common or office space, utility costs, furniture, material, supplies, equipment and food used in direct provision of services. The applicant must provide an explanation for the estimated donated value of any item listed. 
</P>
<P>(iv) The value of services performed by volunteers to CHSP, at the rate of $5.00 an hour. 
</P>
<P>(d) <I>Limitation.</I> (1) The following are not eligible for use as matching funds: 
</P>
<P>(i) PHA operating funds; 
</P>
<P>(ii) CHSP funds; 
</P>
<P>(iii) Section 8 funds other than excess residual receipts; 
</P>
<P>(iv) Funds under section 14 of the U.S. Housing Act of 1937, unless used for service coordination or case management; and 
</P>
<P>(v) Comprehensive grant funds unless used for service coordination or case management; 
</P>
<P>(2) Local government contributions are limited by section 802(i)(1)(E). 
</P>
<P>(e) <I>Annual review of match.</I> The Secretary concerned will review the infusion of matching funds annually, as part of the program or budget review. If there are insufficient matching funds available to meet program requirements at any point after grant start-up, or at any time during the term of the grant (<I>i.e.,</I> if matching funds from sources other than program participant fees drop below 50 percent of total supportive services cost), the Secretary concerned may decrease the federal grant share of supportive services funds accordingly. 


</P>
</DIV8>


<DIV8 N="§ 700.150" NODE="24:4.1.1.1.1.0.1.11" TYPE="SECTION">
<HEAD>§ 700.150   Program participant fees.</HEAD>
<P>(a) <I>Eligible program participants.</I> The grantee shall establish fees consistent with section 700.145(a). Each program participant shall pay CHSP fees as stated in paragraphs (d) and (e) of this section, up to a maximum of 20 percent of the program participant's adjusted income. Consistent with section 802(d)(7)(A), the Secretary concerned shall provide for the waiver of fees for individuals who are without sufficient income to provide for any payment. 
</P>
<P>(b) <I>Fees shall include:</I> (1) Cash contributions of the program participant; 
</P>
<P>(2) Food Stamps; and 
</P>
<P>(3) Contributions or donations to other eligible programs acceptable as matching funds under section 700.145(c). 
</P>
<P>(c) <I>Older Americans Act programs.</I> No fee may be charged for any meals or supportive services under CHSP if that service is funded under an Older Americans Act Program. 
</P>
<P>(d) <I>Meals fees:</I> (1) For full meal services, the fees for residents receiving more than one meal per day, seven days per week, shall be reasonable and shall equal between 10 and 20 percent of the adjusted income of the project resident, or the cost of providing the services, whichever is less. 
</P>
<P>(2) The fees for residents receiving meal services less frequently than as described in paragraph (d)(1) of this section shall be in an amount equal to 10 percent of the adjusted income of the project resident, or the cost of providing the services, whichever is less. 
</P>
<P>(e) <I>Other service fees.</I> The grantee may also establish fees for other supportive services so that the total fees collected from all participants for meals and other services is at least 10 percent of the total cost of CHSP. However, no program participants may be required to pay more than 20 percent of their adjusted incomes for any combination of services. 
</P>
<P>(f) <I>Other residents and nonresidents.</I> Fees shall be established for residents of eligible housing projects (other than eligible project residents) and for nonresidents who receive meals and other services from CHSP under section 700.125(a). These fees shall be in an amount equal to the cost of providing the services. 


</P>
</DIV8>


<DIV8 N="§ 700.155" NODE="24:4.1.1.1.1.0.1.12" TYPE="SECTION">
<HEAD>§ 700.155   Grant agreement and administration.</HEAD>
<P>(a) <I>General.</I> HUD will enter into grant agreements with grantees, to provide congregate services for program participants in eligible housing projects, in order to meet the purposes of CHSP. 
</P>
<P>(b) <I>Term of grant agreement and reservation of amount.</I> A grant will be for a term of five years and the Secretary concerned shall reserve a sum equal to the total approved grant amount for each grantee. Grants will be renewable at the expiration of a term, subject to the availability of funds and conformance with the regulations in this part, except as otherwise provided in section 700.160. 
</P>
<P>(c) <I>Monitoring of project sites by governmental units.</I> States, Indian tribes, and units of general local government with a grant covering multiple projects shall monitor, review, and evaluate Program performance at each project site for compliance with CHSP regulations and procedures, in such manner as prescribed by HUD or RHS. 
</P>
<P>(d) <I>Reports.</I> Each grantee shall submit program and fiscal reports and program budgets to the Secretary concerned in such form and at such times, as the Secretary concerned requires. 
</P>
<P>(e) <I>Enforcement.</I> The Secretary concerned will enforce the obligations of the grantee under the agreement through such action as may be necessary, including terminating grants, recapturing grant funds, and imposing sanctions.
</P>
<P>(1) These actions may be taken for: 
</P>
<P>(i) A grantee's non-compliance with the grant agreement or HUD or RHS regulations; 
</P>
<P>(ii) Failure of the grantee to provide supportive services within 12 months of execution of the grant agreement. 
</P>
<P>(2) Sanctions include but are not limited to the following: 
</P>
<P>(i) Temporary withholding of reimbursements or extensions or renewals under the grant agreement, pending correction of deficiencies by the grantee; 
</P>
<P>(ii) Setting conditions in the contract; 
</P>
<P>(iii) Termination of the grant; 
</P>
<P>(iv) Substitution of grantee; and 
</P>
<P>(v) Any other action deemed necessary by the Secretary concerned. 
</P>
<P>(f) <I>Renewal of grants.</I> Subject to the availability of funding, satisfactory performance, and compliance with the regulations in this part: 
</P>
<P>(1) Grantees funded initially under this part shall be eligible to receive continued, non-competitive renewals after the initial five-year term of the grant. 
</P>
<P>(2) Grantees will receive priority funding and grants will be renewed within time periods prescribed by the Secretary concerned. 
</P>
<P>(g) <I>Use of Grant Funds.</I> If during any year, grantees use less than the annual amount of CHSP funds provided to them for that year, the excess amount can be carried forward for use in later years. 


</P>
</DIV8>


<DIV8 N="§ 700.160" NODE="24:4.1.1.1.1.0.1.13" TYPE="SECTION">
<HEAD>§ 700.160   Eligibility and priority for 1978 Act recipients.</HEAD>
<P>Grantees funded initially under 42 U.S.C. 8001 shall be eligible to receive continued, non-competitive funding subject to its availability. These grantees will be eligible to receive priority funding under this part if they comply with the regulations in this part and with the requirements of any NOFA issued in a particular fiscal year. 


</P>
</DIV8>


<DIV8 N="§ 700.165" NODE="24:4.1.1.1.1.0.1.14" TYPE="SECTION">
<HEAD>§ 700.165   Evaluation of Congregate Housing Services Programs.</HEAD>
<P>(a) Grantees shall submit annually to the Secretary concerned, a report evaluating the impact and effectiveness of CHSPs at the grant sites, in such form as the Secretary concerned shall require. 
</P>
<P>(b) The Secretaries concerned shall further review and evaluate the performance of CHSPs at these sites and shall evaluate the Program as a whole. 
</P>
<P>(c) Each grantee shall submit a certification with its application, agreeing to cooperate with and to provide requested data to the entity responsible for the Program's evaluation, if requested to do so by the Secretary concerned. 


</P>
</DIV8>


<DIV8 N="§ 700.170" NODE="24:4.1.1.1.1.0.1.15" TYPE="SECTION">
<HEAD>§ 700.170   Reserve for supplemental adjustment.</HEAD>
<P>The Secretary concerned may reserve funds subject to section 802(o). Requests to utilize supplemental funds by the grantee shall be transmitted to the Secretary concerned in such form as may be required. 


</P>
</DIV8>


<DIV8 N="§ 700.175" NODE="24:4.1.1.1.1.0.1.16" TYPE="SECTION">
<HEAD>§ 700.175   Other Federal requirements.</HEAD>
<P>In addition to the Federal Requirements set forth in 24 CFR part 5, the following requirements apply to grant recipient organizations in this program:
</P>
<P>(a) <I>Uniform administrative requirements, cost principles, and audit requirements for Federal awards.</I> The policies, guidelines, and requirements in 2 CFR part 200, including the audit requirements described in subpart F, apply to the acceptance and use of assistance under this program.
</P>
<P>(b) <I>Conflict of interest.</I> In addition to the conflict of interest requirements in 2 CFR 200.112 (for all recipients and subrecipients); 200.317 (for recipients and subrecipients that are States); and 200.318(c) and 200.319(a)(5) (for recipients and subrecipients that are not States), no person who is an employee, agent, consultant, officer, or elected or appointed official of the applicant, and who exercises or has exercised any function or responsibilities with respect to activities assisted with CHSP grant funds, or who is in a position to participate in a decision-making process or gain inside information with regard to such activities, may obtain a personal or financial interest or benefit from the activity, or have an interest in any contract, subcontract, or agreement with respect thereto, or any proceeds thereunder, either for himself or herself or for those with whom he or she has family or business ties during his or her tenure, or for one year thereafter. CHSP employees may receive reasonable salary and benefits. 
</P>
<P>(c) <I>Disclosures required by Reform Act.</I> Section 102(c) of the HUD Reform Act of 1989 (42 U.S.C. 3545(c)) requires disclosure concerning other government assistance to be made available with respect to the Program and parties with a pecuniary interest in CHSP and submission of a report on expected sources and uses of funds to be made available for CHSP. Each applicant shall include information required by 24 CFR part 12 on form HUD-2880 “Applicant/Recipient Disclosure/Update Report,” as required by the <E T="04">Federal Register</E> Notice published on January 16, 1992, at 57 FR 1942. 
</P>
<P>(d) <I>Nondiscrimination and equal opportunity.</I> (1) The fair housing poster regulations (24 CFR part 110) and advertising guidelines (24 CFR part 109); 
</P>
<P>(2) The Affirmative Fair Housing Marketing Program requirements of 24 CFR part 200, subpart M, and the implementing regulations at 24 CFR part 108; and 
</P>
<P>(3) Racial and ethnic collection requirements—Recipients must maintain current data on the race, ethnicity and gender of program applicants and beneficiaries in accordance with section 562 of the Housing and Community Development Act of 1987 and section 808(e)(6) of the Fair Housing Act. 
</P>
<P>(e) <I>Environmental requirements.</I> Support services, including the operating and administrative expenses described in section 700.115(a), are categorically excluded from the requirements of the National Environmental Policy Act (NEPA) of 1969. These actions, however, are not excluded from individual compliance requirements of other environmental statutes, Executive Orders, and agency regulations where appropriate. When the responsible official determines that any action under this part may have an environmental effect because of extraordinary circumstances, the requirements of NEPA shall apply. 
</P>
<CITA TYPE="N">[61 FR 42943, 42949, Aug. 19, 1996, as amended at 80 FR 75940, Dec. 7, 2015]


</CITA>
</DIV8>

</DIV5>


<DIV5 N="701-760" NODE="24:4.1.1.1.2" TYPE="PART">
<HEAD>PARTS 701-760 [RESERVED]


</HEAD>
</DIV5>


<DIV5 N="761" NODE="24:4.1.1.1.3" TYPE="PART">
<HEAD>PART 761—DRUG ELIMINATION PROGRAMS
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d) and 11901 <I>et seq.</I> 
</PSPACE></AUTH>
<EDNOTE>
<HED>Editorial Note:</HED><PSPACE>Nomenclature changes to part 761 appear at 64 FR 49917, Sept. 14, 1999.</PSPACE></EDNOTE>
<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 13987, Mar. 28, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.1.1.3.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 761.1" NODE="24:4.1.1.1.3.1.1.1" TYPE="SECTION">
<HEAD>§ 761.1   Purpose and scope.</HEAD>
<P>This part 761 contains the regulatory requirements for the Assisted Housing Drug Elimination Program (AHDEP) and the Public Housing Drug Elimination Program (PHDEP). The purposes of these programs are to:
</P>
<P>(a) Eliminate drug-related and violent crime and problems associated with it in and around the premises of Federally assisted low-income housing, and public and Indian housing developments; 
</P>
<P>(b) Encourage owners of Federally assisted low-income housing, public housing agencies and Indian housing authorities (collectively referred to as HAs), and resident management corporations to develop a plan that includes initiatives that can be sustained over a period of several years for addressing drug-related and violent crime and problems associated with it in and around the premises of housing proposed for funding under this part; and 
</P>
<P>(c) Make available Federal grants to help owners of Federally assisted low-income housing, HAs, and RMCs carry out their plans. 
</P>
<CITA TYPE="N">[61 FR 13987, Mar. 28, 1996, as amended at 64 FR 49917, Sept. 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 761.5" NODE="24:4.1.1.1.3.1.1.2" TYPE="SECTION">
<HEAD>§ 761.5   Public housing; encouragement of resident participation.</HEAD>
<P>For the purposes of the Public Housing Drug Elimination Program, the elimination of drug-related and violent crime within public housing developments requires the active involvement and commitment of public housing residents and their organizations. To enhance the ability of PHAs to combat drug-related and violent crime within their developments, Resident Councils (RCs), Resident Management Corporations (RMCs), and Resident Organizations (ROs) will be permitted to undertake management functions specified in this part, notwithstanding the otherwise applicable requirements of part 964 of this title.
</P>
<CITA TYPE="N">[64 FR 49917, Sept. 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 761.10" NODE="24:4.1.1.1.3.1.1.3" TYPE="SECTION">
<HEAD>§ 761.10   Definitions.</HEAD>
<P>The definitions <I>Department, HUD,</I> and <I>Public Housing Agency (PHA)</I> are defined in part 5 of this title.
</P>
<P><I>Controlled substance</I> shall have the meaning provided in section 102 of the Controlled Substance Act (21 U.S.C. 802). 
</P>
<P><I>Drug intervention</I> means a process to identify assisted housing or public housing resident drug users, to assist them in modifying their behavior, and/or to refer them to drug treatment to reduce or eliminate drug abuse. 
</P>
<P><I>Drug prevention</I> means a process to provide goods and services designed to alter factors, including activities, environmental influences, risks, and expectations, that lead to drug abuse. 
</P>
<P><I>Drug-related and violent crime</I> shall have the meaning provided in 42 U.S.C. 11905(2). 
</P>
<P><I>Drug treatment</I> means a program for the residents of an applicant's development that strives to end drug abuse and to eliminate its negative effects through rehabilitation and relapse prevention. 
</P>
<P><I>Federally assisted low-income housing,</I> or <I>assisted housing,</I> shall have the meaning provided in 42 U.S.C. 11905(4). However, sections 221(d)(3) and 221(d)(4) market rate projects with tenant-based assistance contracts and section 8 projects with tenant-based assistance are not considered federally assisted low-income housing and are not eligible for funding under this part 761. 
</P>
<P><I>Governmental jurisdiction</I> means the unit of general local government, State, or area of operation of an Indian tribe in which the housing development administered by the applicant is located. 
</P>
<P><I>In and around</I> means within, or adjacent to, the physical boundaries of a housing development. 
</P>
<P><I>Indian tribe</I> means any tribe, band, pueblo, group, community, or nation of Indians, or Alaska Natives. 
</P>
<P><I>Local law enforcement agency</I> means a police department, sheriff's office, or other entity of the governmental jurisdiction that has law enforcement responsibilities for the community at large, including the housing developments owned or administered by the applicant. In Indian jurisdictions, this includes tribal prosecutors that assume law enforcement functions analogous to a police department or the Bureau of Indian Affairs (BIA). More than one law enforcement agency may have these responsibilities for the jurisdiction that includes the applicant's developments. 
</P>
<P><I>Problems associated with drug-related and violent crime</I> means the negative physical, social, educational, and economic impact of drug-related and violent crime on assisted housing residents or public and Indian housing residents, and the deterioration of the assisted housing or public and Indian housing environment because of drug-related and violent crime. 
</P>
<P><I>Program income</I> means gross income received by a grantee and directly generated from the use of program funds. When program income is generated by an activity only partially assisted with program funds, the income shall be prorated to reflect the percentage of program funds used. 
</P>
<P><I>Recipient of assistance under the Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA recipient)</I> shall have the same meaning as <I>recipient</I> provided in section 4 of the Native American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4101 <I>et seq.</I>).
</P>
<P><I>Resident council (RC),</I> for purposes of the Public Housing Program, means an incorporated or unincorporated nonprofit organization or association that meets each of the following requirements: 
</P>
<P>(1) It must be representative of the residents it purports to represent; 
</P>
<P>(2) It may represent residents in more than one development or in all of the developments of a HA, but it must fairly represent residents from each development that it represents; 
</P>
<P>(3) It must adopt written procedures providing for the election of specific officers on a regular basis (but at least once every three years); and 
</P>
<P>(4) It must have a democratically elected governing board. The voting membership of the board must consist of residents of the development or developments that the resident organization or resident council represents. 
</P>
<P><I>Resident Management Corporation (RMC),</I> for purposes of the Public Housing Program, means the entity that proposes to enter into, or that enters into, a management contract with a PHA under part 964 of this title in accordance with the requirements of that part.
</P>
<P><I>State</I> means any of the several States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States, or any agency or instrumentality of a State exclusive of local governments. The term does not include any public or Indian housing agency under the United States Housing Act of 1937 (42 U.S.C. 1437 <I>note</I>). 
</P>
<P><I>Unit of general local government</I> means any city, county, town, municipality, township, parish, village, local public authority (including any public or Indian housing agency under the United States Housing Act of 1937) or other general purpose political subdivision of a State. 
</P>
<CITA TYPE="N">[61 FR 13987, Mar. 28, 1996, as amended at 64 FR 49918, Sept. 14, 1999]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.1.1.3.2" TYPE="SUBPART">
<HEAD>Subpart B—Grant Funding</HEAD>


<DIV8 N="§ 761.13" NODE="24:4.1.1.1.3.2.1.1" TYPE="SECTION">
<HEAD>§ 761.13   Amount of funding.</HEAD>
<P>(a) <I>PHDEP formula funding</I>—(1) <I>Funding share formula</I>—(i) <I>Per unit amount.</I> Subject to the availability of funding, the amount of funding made available each FFY to an applicant that qualifies for funding in accordance with § 761.15(a) is based upon the applicant's share of the total number of units of all applicants that qualify for funding, with a maximum award of $35 million and a minimum award of $25,000, except that qualified applicants with less than 50 units will not receive more than $500 per unit.
</P>
<P>(ii) <I>Calculation of number of units.</I> For purposes of determining the number of units counted for purposes of the PHDEP formula, HUD shall count as one unit each existing rental and Section 23 bond-financed unit under the ACC. Units that are added to a PHA's inventory will be added to the overall unit count so long as the units are under ACC amendment and have reached DOFA by the date HUD establishes for the Federal Fiscal Year in which the PHDEP formula is being run (hereafter called the “reporting date”). Any such increase in units shall result in an adjustment upwards in the number of units under the PHDEP formula. New units reaching DOFA after this date will be counted for PHDEP formula purposes as of the following Federal Fiscal Year. Federalized units that are eligible for operating subsidy will be counted for PHDEP formula purposes based on the unit count reflected on the PHA's most recently approved Operating Budget (Form HUD-52564) and/or subsidy calculation (Form HUD-52723), or successor form submitted for that program. Units approved for demolition/disposition continue to be counted for PHDEP formula funding purposes until actual demolition/disposition of the unit.
</P>
<P>(2) <I>Consortium funding.</I> The amount of funding made available to a consortium will be the total of the amounts that each individual member would otherwise qualify to receive under the PHDEP funding formula in accordance with paragraph (a)(1) of this section.
</P>
<P>(3) <I>Adjustments to funding.</I> The amount of funding made available each FFY to an applicant in accordance with paragraphs (a)(1) and (a)(2) of this section may be adjusted as follows:
</P>
<P>(i) An applicant must submit a PHDEP plan that meets the requirements of § 761.21, as required by § 761.15(a)(5), each FFY year to receive that FFY's funding. An applicant that does not submit a PHDEP plan for a FFY as required will not receive that FFY's funding.
</P>
<P>(ii) Ineligible activities, described at § 761.17(b), are not eligible for funding. Activities proposed for funding in an applicant's PHDEP plan that are determined to be ineligible will not be funded, and the applicant's funding for that FFY may be reduced accordingly.
</P>
<P>(iii) In accordance with § 761.15(a)(6), an applicant that does not meet the performance requirements of § 761.23 will be subject to the sanctions listed in § 761.30(f)(2).
</P>
<P>(iv) Both the amount of and continuing eligibility for funding is subject to the sanctions in § 761.30(f).
</P>
<P>(v) Any amounts that become available because of adjustments to an applicant's funding will be distributed to every other applicant that qualifies for funding in accordance with paragraphs (a)(1) and (a)(2) of this section.
</P>
<P>(b) <I>AHDEP funding.</I> Information concerning funding made available under AHDEP for a given FFY will be contained in Notices of Funding Availability (NOFAs) published in the <E T="04">Federal Register.</E>
</P>
<CITA TYPE="N">[64 FR 49918, Sept. 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 761.15" NODE="24:4.1.1.1.3.2.1.2" TYPE="SECTION">
<HEAD>§ 761.15   Qualifying for funding.</HEAD>
<P>(a) <I>Qualifications for PHDEP funding</I>—(1) <I>Eligible applicants.</I> The following are eligible applicants for PHDEP funding:
</P>
<P>(i) A PHA;
</P>
<P>(ii) An RMC; and
</P>
<P>(iii) A consortium of PHAs.
</P>
<P>(2) <I>Preference PHAs.</I> A PHA that successfully competed for PHDEP funding under at least one of the PHDEP NOFAs for FFY 1996, FFY 1997 or FFY 1998 qualifies to receive PHDEP funding.
</P>
<P>(3) <I>Needs qualification for funding.</I> An eligible applicant that does not qualify to receive PHDEP funding under paragraph (a)(2) of this section must be in one of the following needs categories to qualify for funding:
</P>
<P>(i) The eligible applicant must be in the top 50% of the unit-weighted distribution of an index of a rolling average rate of violent crimes of the community, as computed for each Federal Fiscal Year (FFY). The crime rate used in this needs determination formula is the rate, from the most recent years feasible, of FBI violent crimes per 10,000 residents of the community (or communities). If this information is not available for a particular applicant's community, HUD will use the average of data from recipients of a comparable State and size category of PHA (less than 500 units, 500 to 1249 units, and more than 1250 units). If fewer than five PHAs have data for a given size category within a State, then the average of PHAs for a given size category within the census region will be used; or
</P>
<P>(ii) The eligible applicant must have qualified for PHDEP funding, by receiving an application score of 70 or more points under any one of the PHDEP NOFAs for FFY 1996, FFY 1997 or FFY 1998, but not have received an award because of the unavailability of funds.
</P>
<P>(4) <I>Consortium of eligible applicants.</I> Eligible applicants may join together and form a consortium to apply for funding, whether or not each member would individually qualify for PHDEP funding under paragraphs (a)(2) or (a)(3) of this section. The act of two or more eligible applicants joining together to form a consortium, and identifying related crime problems and eligible activities to address those problems pursuant to a consortium PHDEP plan, qualifies the consortium for PHDEP funding of an amount as determined under § 761.13(a)(2).
</P>
<P>(5) <I>PHDEP plan requirement.</I> (i) <I>PHAs.</I> Except as provided in paragraph (a)(5)(ii), below, of this section, to receive PHDEP funding, a PHA that qualifies to receive PHDEP funding for Federal Fiscal Year 2000 and beyond must include a PHDEP plan that meets the requirements of § 761.21 with its PHA Plan submitted pursuant to part 903 of this title for each Federal Fiscal Year for which it qualifies for funding.
</P>
<P>(ii) To receive PHDEP funding, a PHA that qualifies to receive PHDEP funding and is operating under an executed Moving To Work (MTW) agreement with HUD must submit a PHDEP plan that meets the requirements of § 761.21 with its required MTW plan for each Federal Fiscal Year for which it qualifies for funding.
</P>
<P>(iii) <I>RMCs.</I> To receive PHDEP funding, an RMC operating in an PHA that qualifies to receive PHDEP funding must submit a PHDEP plan for the units managed by the RMC that meets the requirements of § 761.21 to its PHA. Upon agreement between the RMC and PHA, the PHA must submit to HUD, with its PHA Plan submitted pursuant to part 903 of this title, the RMC's PHDEP plan. The RMC will implement its plan as a subrecipient of the PHA.
</P>
<P>(iv) <I>Consortia.</I> To receive PHDEP funding, the consortium members must prepare and submit a consortium PHDEP plan that meets the requirements of § 761.21, including the additional requirements that apply to consortia. Each member must submit the consortium plan with its PHA plan, submitted pursuant to part 903 of this title, or IHP, submitted pursuant to subpart C of part 1000 of this title, as appropriate.
</P>
<P>(6) An otherwise qualified recipient PHA, RMC or consortium may not be funded if HUD determines, on a case-by-case basis, that it does not meet the performance requirements of § 761.23.
</P>
<P>(b) <I>Qualifications for AHDEP funding.</I> Under AHDEP, eligible applicants are owners of federally assisted low-income housing, as the term <I>Federally assisted low-income housing</I> is defined in § 761.10. Notices of Funding Availability (NOFAs) published in the <E T="04">Federal Register</E> will contain specific information concerning funding requirements and eligible and ineligible applicants and activities.
</P>
<CITA TYPE="N">[64 FR 49918, Sept. 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 761.17" NODE="24:4.1.1.1.3.2.1.3" TYPE="SECTION">
<HEAD>§ 761.17   Eligible and ineligible activities for funding.</HEAD>
<P>(a) <I>Eligible activities.</I> One or more of the eligible activities described in 42 U.S.C. 11903 and in this § 761.17(a) are eligible for funding under PHDEP or AHDEP, as further explained or limited in paragraph (b) of this section and, for AHDEP, in separate annual Notices of Funding Availability (NOFAs). All personnel funded by these programs in accordance with an eligible activity must meet, and demonstrate compliance with, all relevant Federal, State, tribal, or local government insurance, licensing, certification, training, bonding, or other similar law enforcement requirements.
</P>
<P>(1) <I>Employment of security personnel,</I> as provided in 42 U.S.C. 11903(a)(1), with the following additional requirements:
</P>
<P>(i) <I>Security guard personnel.</I> (A) Contract security personnel funded by this program must perform services not usually performed by local law enforcement agencies on a routine basis. The applicant must identify the baseline services provided by the local law enforcement agency.
</P>
<P>(B) The applicant, the provider (contractor) of the security personnel and, only if the local law enforcement agency is receiving any PHDEP funds from the applicant, the local law enforcement agency, are required, as a part of the security personnel contract, to enter into and execute a written agreement that describes the following:
</P>
<P>(<I>1</I>) The activities to be performed by the security personnel, their scope of authority, and how they will coordinate their activities with the local law enforcement agency;
</P>
<P>(<I>2</I>) The types of activities that the security personnel are expressly prohibited from undertaking.
</P>
<P>(ii) <I>Employment of HA police.</I> (A) If additional HA police are to be employed for a service that is also provided by a local law enforcement agency, the applicant must undertake and retain a cost analysis that demonstrates the employment of HA police is more cost efficient than obtaining the service from the local law enforcement agency.
</P>
<P>(B) Additional HA police services to be funded under this program must be over and above those that the existing HA police, if any, provides, and the tribal, State or local government is contractually obligated to provide under its Cooperation Agreement with the applying HA (as required by the HA's Annual Contributions Contract). An applicant seeking funding for this activity must first establish a baseline by describing the current level of services provided by both the local law enforcement agency and the HA police, if any (in terms of the kinds of services provided, the number of officers and equipment and the actual percent of their time assigned to the developments proposed for funding), and then demonstrate that the funded activity will represent an increase over this baseline.
</P>
<P>(C) If the local law enforcement agency is receiving any PHDEP funds from the applicant, the applicant and the local law enforcement agency are required to enter into and execute a written agreement that describes the following:
</P>
<P>(<I>1</I>) The activities to be performed by the HA police, their scope of authority, and how they will coordinate their activities with the local law enforcement agency;
</P>
<P>(<I>2</I>) The types of activities that the HA police are expressly prohibited from undertaking.
</P>
<P>(2) <I>Reimbursement of local law enforcement agencies for additional security and protective services,</I> as provided in 42 U.S.C. 11903(a)(2), with the following additional requirements:
</P>
<P>(i) Additional security and protective services to be funded must be over and above those that the tribal, State, or local government is contractually obligated to provide under its Cooperation Agreement with the applying HA (as required by the HA's Annual Contributions Contract). An application seeking funding for this activity must first establish a baseline by describing the current level of services (in terms of the kinds of services provided, the number of officers and equipment, and the actual percent of their time assigned to the developments proposed for funding) and then demonstrate that the funded activity will represent an increase over this baseline.
</P>
<P>(ii) Communications and security equipment to improve the collection, analysis, and use of information about drug-related or violent criminal activities in a public housing community may be eligible items if used exclusively in connection with the establishment of a law enforcement substation on the funded premises or scattered site developments of the applicant. Funds for activities under this section may not be drawn until the grantee has executed a contract for the additional law enforcement services.
</P>
<P>(3) <I>Physical improvements to enhance security,</I> as provided in 42 U.S.C. 11903(a)(3). For purposes of PHDEP, the following provisions in paragraphs (a)(3)(i) through (a)(3)(iv) of this section apply:
</P>
<P>(i) An activity that is funded under any other HUD program shall not also be funded by this program.
</P>
<P>(ii) Funding is not permitted for physical improvements that involve the demolition of any units in a development.
</P>
<P>(iii) Funding is not permitted for any physical improvements that would result in the displacement of persons.
</P>
<P>(iv) Funding is not permitted for the acquisition of real property.
</P>
<P>(4) <I>Employment of investigating individuals,</I> as provided in 42 U.S.C. 11903(a)(4). For purposes of PHDEP, the following provisions in paragraphs (a)(4)(i) and (a)(4)(ii) of this section apply:
</P>
<P>(i) If one or more investigators are to be employed for a service that is also provided by a local law enforcement agency, the applicant must undertake and retain a cost analysis that demonstrates the employment of investigators is more cost efficient than obtaining the service from the local law enforcement agency.
</P>
<P>(ii) The applicant, the investigator(s) and, only if the local law enforcement agency is receiving any PHDEP funds from the applicant, the local law enforcement agency, are required, before any investigators are employed, to enter into and execute a written agreement that describes the following:
</P>
<P>(A) The nature of the activities to be performed by the investigators, their scope of authority, and how they will coordinate their activities with the local law enforcement agency;
</P>
<P>(B) The types of activities that the investigators are expressly prohibited from undertaking.
</P>
<P>(5) <I>Voluntary tenant patrols,</I> as provided in 42 U.S.C. 11903(a)(5). For purposes of PHDEP, the following provisions in paragraphs (a)(5)(i) through (a)(5)(iv) of this section apply:
</P>
<P>(i) The provision of training, communications equipment, and other related equipment (including uniforms), for use by voluntary tenant patrols acting in cooperation with officials of local law enforcement agencies is permitted. Grantees are required to obtain liability insurance to protect themselves and the members of the voluntary tenant patrol against potential liability for the activities of the patrol. The cost of this insurance will be considered an eligible program expense.
</P>
<P>(ii) The applicant, the members of the tenant patrol and, only if the local law enforcement agency is receiving any PHDEP funds from the applicant, the local law enforcement agency, are required, before putting the tenant patrol into effect, to enter into and execute a written agreement that describes the following:
</P>
<P>(A) The nature of the activities to be performed by the tenant patrol, the patrol's scope of authority, and how the patrol will coordinate its activities with the local law enforcement agency;
</P>
<P>(B) The types of activities that a tenant patrol is expressly prohibited from undertaking, to include but not limited to, the carrying or use of firearms or other weapons, nightsticks, clubs, handcuffs, or mace in the course of their duties under this program;
</P>
<P>(C) The type of initial tenant patrol training and continuing training the members receive from the local law enforcement agency (training by the local law enforcement agency is required before putting the tenant patrol into effect).
</P>
<P>(iii) Tenant patrol members must be advised that they may be subject to individual or collective liability for any actions undertaken outside the scope of their authority and that such acts are not covered under a HA's or RMC's liability insurance.
</P>
<P>(iv) Grant funds may not be used for any type of financial compensation for voluntary tenant patrol participants. However, the use of program funds for a grant coordinator for volunteer tenant foot patrols is permitted.
</P>
<P>(6) <I>Drug prevention, intervention, and treatment programs,</I> as provided in 42 U.S.C. 11903(a)(6).
</P>
<P>(7) <I>Funding resident management corporations (RMCs), resident councils (RCs), and resident organizations (ROs).</I> For purposes of the Public Housing Program, funding may be provided for PHAs that receive grants to contract with RMCs and incorporated RCs and ROs to develop security and drug abuse prevention programs involving site residents, as provided in 42 U.S.C. 11903(a)(7).
</P>
<P>(8) <I>Youth sports.</I> Sports programs and sports activities that serve primarily youths from public or other federally assisted low-income housing projects and are operated in conjunction with, or in furtherance of, an organized program or plan designed to reduce or eliminate drugs and drug-related problems in and around such projects, as provided in 42 U.S.C. 11903(a)(8).
</P>
<P>(9) <I>Eliminating drug-related and violent crime in PHA-owned housing,</I> under the Public Housing Program, as provided in 42 U.S.C. 11903(b).
</P>
<P>(b) <I>Ineligible activities.</I> For purposes of PHDEP, funding is not permitted:
</P>
<P>(1) For activities not included under paragraph (a) of this section;
</P>
<P>(2) For costs incurred before the effective date of the grant agreement;
</P>
<P>(3) For the costs related to screening or evicting residents for drug-related crime. However, investigators funded under this program may participate in judicial and administrative proceedings;
</P>
<P>(4) For previously funded activities determined by HUD on a case-by-case basis to be unworthy of continuation.
</P>
<CITA TYPE="N">[64 FR 49919, Sept. 14, 1999]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:4.1.1.1.3.3" TYPE="SUBPART">
<HEAD>Subpart C—Application and Selection</HEAD>


<DIV8 N="§ 761.20" NODE="24:4.1.1.1.3.3.1.1" TYPE="SECTION">
<HEAD>§ 761.20   Selection requirements.</HEAD>
<P>(a) <I>PHDEP selection.</I> Every PHA, RMC and consortium that meets the requirements of § 761.15 in a FFY will be selected for funding in that FFY and, subject to meeting the performance requirements of § 761.23, for four additional FFYs.
</P>
<P>(b) <I>AHDEP selection.</I> HUD will publish specific Notices of Funding Availability (NOFAs) in the <E T="04">Federal Register</E> to inform the public of the availability of AHDEP grant amounts under this part 761. The NOFAs will provide specific guidance with respect to the grant process, including identifying the eligible applicants; deadlines for the submission of grant applications; the limits (if any) on maximum grant amounts; the information that must be submitted to permit HUD to score each of the selection criteria; the maximum number of points to be awarded for each selection criterion; the contents of the plan for addressing drug-related and violent crime that must be included with the application; the listing of any certifications and assurances that must be submitted with the application; and the process for ranking and selecting applicants. NOFAs will also include any additional information, factors, and requirements that HUD has determined to be necessary and appropriate to provide for the implementation and administration of AHDEP under this part 761.
</P>
<CITA TYPE="N">[64 FR 49920, Sept. 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 761.21" NODE="24:4.1.1.1.3.3.1.2" TYPE="SECTION">
<HEAD>§ 761.21   Plan requirement.</HEAD>
<P>(a) <I>General requirement.</I> To receive funding under this part, each PHDEP qualified recipient or AHDEP applicant must submit to HUD, for Federal Fiscal Year (FFY) 2000 and each following FFY, a plan for addressing the problem of drug-related and violent crime in and around the housing covered by the plan. If the plan covers more than one development, it does not have to address each development separately if the same activities will apply to each development. The plan must address each development separately only where program activities will differ from one development to another. The plan must include a description of the planned activity or activities, a description of the role of plan partners and their contributions to carrying out the plan, a budget and timetable for implementation of the activities, and the funding source for each activity, identifying in particular all activities to be funded under this part. In addition, the plan must set measurable performance goals and interim milestones for the PHDEP-supported activities and describe the system for monitoring and evaluating these activities. Measurable goals must be established for each category of funded activities, including drug prevention, drug intervention, drug treatment, tenant patrols, and physical improvements. The plan under this section serves as the application for PHDEP funding, and an otherwise qualified recipient that does not submit a PHDEP plan as required will not be funded. For AHDEP funding, NOFAs published in the <E T="04">Federal Register</E> may provide additional information on plan requirements for purposes of this section. Plans must meet the requirements of this section before grant funds are distributed. HUD will review the submitted plans for a determination of whether they meet the requirements of this section.
</P>
<P>(b) <I>Additional requirements for consortia.</I> In addition to meeting the requirements of paragraph (a) of this section, to receive funding under this part, a consortium's plan must include a copy of the consortium agreement between the PHAs which are participating in the consortium, and a copy of the payment agreement between the consortium and HUD.
</P>
<CITA TYPE="N">[64 FR 49920, Sept. 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 761.23" NODE="24:4.1.1.1.3.3.1.3" TYPE="SECTION">
<HEAD>§ 761.23   Grantee performance requirements.</HEAD>
<P>(a) <I>Basic grantee requirements</I>—(1) <I>Compliance with civil rights requirements.</I> Grantees must be in compliance with all fair housing and civil rights laws, statutes, regulations, and executive orders as enumerated in 24 CFR 5.105(a). Federally recognized Indian tribes must comply with the Age Discrimination Act of 1975 and the Indian Civil Rights Act.
</P>
<P>(2) <I>Adherence to the grant agreement.</I> The grant agreement between HUD and the grantee incorporates the grantee's application and plan for the implementation of grant-funded activities.
</P>
<P>(3) <I>Compliance with “baseline” funding requirement.</I> Grantees may not use grant funds to reimburse law enforcement agencies for “baseline” community safety services. Grantees must adhere to § 761.17(a)(2)(i), reimbursement of local law enforcement agencies for additional security and protective services. In addition, grantees must provide to HUD a description of the baseline of services for the unit of general local government in which the jurisdiction of the agency is located.
</P>
<P>(4) <I>Partnerships.</I> Grantees must provide HUD with evidence of partnerships—in particular, firm commitments by organizations providing funding, services, or other in-kind resources for PHDEP-funded activities (e.g., memorandum of agreement, letter of firm commitment). The partnership agreement must cover the applicable funding period.
</P>
<P>(5) <I>MTCS reporting.</I> Grantees must maintain a level of compliance with MTCS reporting requirements that is satisfactory to HUD.
</P>
<P>(b) <I>Planning and reporting requirements</I>—(1) <I>Planning consistency.</I> PHDEP funded activities must be consistent with the most recent HUD-approved PHA Plan or Indian Housing Plan, as appropriate. AHDEP funded activities must be consistent with the most recent Consolidated Plan under part 91 of this title for the community.
</P>
<P>(2) <I>Demonstration of coordination with other law enforcement efforts.</I> Each grantee must consult with local law enforcement authorities and other local entities in the preparation of its plan for addressing the problem of drug-related and violent crime under § 761.21 and must maintain documentation of such consultation. Furthermore, a grantee must coordinate its grant-funded activities with other anti-crime and anti-drug programs, such as Operation Safe Home, Operation Weed and Seed, and the Safe Neighborhoods Action Program operating in the community, if applicable and maintain documentation of such coordination.
</P>
<P>(3) <I>Compliance with reporting requirements.</I> Grantees must provide periodic reports consistent with this part at such times and in such form as is required by HUD.
</P>
<P>(4) <I>Reporting on drug-related and violent crime.</I> Grantees must report any change or lack of change in crime statistics—especially drug-related crime and violent crime—or other relevant indicators drawn from the applicant's or grantee's evaluation and monitoring plan, IHP or PHA Plan. The grantee must also indicate, if applicable, how it is adequately addressing any recommendations emanating from other anti-crime and anti-drug programs, such as Operation Safe Home, Operation Weed and Seed, and the Safe Neighborhoods Action Program, operating in the community and is taking appropriate actions, in view of available resources, such as post-enforcement measures, to take full advantage of these programs.
</P>
<P>(c) <I>Funding and evaluation requirements</I>—(1) <I>Timely obligation and expenditure of grant funds.</I> The HA must obligate and expend funds in compliance with all funding notifications, regulations, notices, and grant agreements. In addition, the HA must obligate at least 50 percent of funds under a particular grant within 12 months of the execution of the grant agreement, and must expend at least 25 percent of funds under a particular grant within 12 months of the execution of the grant agreement.
</P>
<P>(2) <I>Operational monitoring and evaluation system.</I> The grantee must demonstrate that it has a fully operational system for monitoring and evaluating its grant-funded activities. A monitoring and evaluation system must collect quantitative evidence of the number of persons and units served, including youth served as a separate category, types of services provided, and the impact of such services on the persons served. Also, the monitoring and evaluation system must collect quantitative and qualitative evidence of the impact of grant-funded activities on the public housing or other housing, the community and the surrounding neighborhood.
</P>
<P>(3) <I>Reduction of violent crime and drug use.</I> The grantee must demonstrate that it has established, and is attaining, measurable goals including the overall reduction of violent crime and drug use.
</P>
<P>(d) <I>Other requirements.</I> HUD reserves the right to add additional performance factors consistent with this rule and other related statutes and regulations on a case-by-case basis.
</P>
<P>(e) <I>Sanctions.</I> A grantee that fails to satisfy the performance requirements of this section will be subject to the sanctions listed in § 761.30(f)(2).
</P>
<CITA TYPE="N">[64 FR 49921, Sept. 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 761.25" NODE="24:4.1.1.1.3.3.1.4" TYPE="SECTION">
<HEAD>§ 761.25   Resident comments on grant application.</HEAD>
<P>The applicant must provide the residents of developments proposed for funding under this part 761, as well as any RMCs, RCs, or ROs that represent those residents (including any HA-wide RMC, RC, or RO), if applicable, with a reasonable opportunity to comment on its application for funding under these programs. The applicant must give these comments careful consideration in developing its plan and application, as well as in the implementation of funded programs. Grantees must maintain copies of all written comments submitted for three years.


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:4.1.1.1.3.4" TYPE="SUBPART">
<HEAD>Subpart D—Grant Administration</HEAD>


<DIV8 N="§ 761.30" NODE="24:4.1.1.1.3.4.1.1" TYPE="SECTION">
<HEAD>§ 761.30   Grant administration.</HEAD>
<P>(a) <I>General.</I> Each grantee is responsible for ensuring that grant funds are administered in accordance with the requirements of this part 761, any specific Notices of Funding Availability (NOFAs) issued for these programs, 2 CFR part 200, applicable laws and regulations, applicable OMB circulars, HUD fiscal and audit controls, grant agreements, grant special conditions, the grantee's approved budget (SF-424A), budget narrative, plan, and activity timetable. 
</P>
<P>(b) <I>Grant term extensions</I>—(1) <I>Grant term.</I> Terms of the grant agreement may not exceed 12 months for the Assisted Housing Program, and 24 months for the Public Housing Program, unless an extension is approved by the local HUD Office or local HUD Office of Native American Programs. Any funds not expended at the end of the grant term shall be remitted to HUD. 
</P>
<P>(2) <I>Extension.</I> HUD may grant an extension of the grant term in response to a written request for an extension stating the need for the extension and indicating the additional time required. HUD will not consider requests for retroactive extension of program periods. HUD will permit only one extension. HUD will only consider extensions if the grantee meets the extension criteria of paragraph (b)(5) of this section at the time the grantee submits for approval the request for the extension. 
</P>
<P>(3) <I>Receipt.</I> The request must be received by the local HUD Office or local HUD Office of Native American Programs prior to the termination of the grant, and requires approval by the local HUD Office or local HUD Office of Native American Programs with jurisdiction over the grantee. 
</P>
<P>(4) <I>Term.</I> The maximum extension allowable for any program period is 6 months. 
</P>
<P>(5) <I>Extension criteria.</I> The following criteria must be met by the grantee when submitting a request to extend the expenditure deadline for a program or set of programs. 
</P>
<P>(i) <I>Financial status reports.</I> There must be on file with the local HUD Office or local HUD Office of Native American Programs current and acceptable Financial Status Reports, SF-269As. 
</P>
<P>(ii) <I>Grant agreement special conditions.</I> The grantee must have satisfied all grant agreement special conditions except those conditions that the grantee must fulfill in the remaining period of the grant. This also includes the performance and resolution of audit findings in a timely manner. 
</P>
<P>(iii) <I>Justification.</I> The grantee must submit a narrative justification with the program extension request. The justification must provide complete details, including the circumstances that require the proposed extension, and an explanation of the impact of denying the request. 
</P>
<P>(6) <I>HUD action.</I> The local HUD Office or local HUD Office of Native American Programs will attempt to take action on any proposed extension request within 15 days after receipt of the request. 
</P>
<P>(c) <I>Duplication of funds.</I> To prevent duplicate funding of any activity, the grantee must establish controls to assure that an activity or program that is funded by other HUD programs, or programs of other Federal agencies, shall not also be funded by the Drug Elimination Program. The grantee must establish an auditable system to provide adequate accountability for funds that it has been awarded. The grantee is responsible for ensuring that there is no duplication of funds. 
</P>
<P>(d) <I>Insurance.</I> Each grantee shall obtain adequate insurance coverage to protect itself against any potential liability arising out of the eligible activities under this part. In particular, applicants shall assess their potential liability arising out of the employment or contracting of security personnel, law enforcement personnel, investigators, and drug treatment providers, and the establishment of voluntary tenant patrols; evaluate the qualifications and training of the individuals or firms undertaking these functions; and consider any limitations on liability under tribal, State, or local law. Grantees shall obtain liability insurance to protect the members of the voluntary tenant patrol against potential liability as a result of the patrol's activities under § 761.15(b)(5). Voluntary tenant patrol liability insurance costs are eligible program expenses. Subgrantees shall obtain their own liability insurance. 
</P>
<P>(e) <I>Failure to implement program.</I> If the grant plan, approved budget, and timetable, as described in the approved application, are not operational within 60 days of the grant agreement date, the grantee must report by letter to the local HUD Office or the local HUD Office of Native American Programs the steps being taken to initiate the plan and timetable, the reason for the delay, and the expected starting date. Any timetable revisions that resulted from the delay must be included. The local HUD Office or local HUD Office of Native American Programs will determine if the delay is acceptable, approve/disapprove the revised plan and timetable, and take any additional appropriate action. 
</P>
<P>(f) <I>Sanctions.</I> (1) HUD may impose sanctions if the grantee: 
</P>
<P>(i) Is not complying with the requirements of this part 761, or of other applicable Federal law; 
</P>
<P>(ii) Fails to make satisfactory progress toward its drug elimination goals, as specified in its plan and as reflected in its performance and financial status reports; 
</P>
<P>(iii) Does not establish procedures that will minimize the time elapsing between drawdowns and disbursements; 
</P>
<P>(iv) Does not adhere to grant agreement requirements or special conditions; 
</P>
<P>(v) Proposes substantial plan changes to the extent that, if originally submitted, the applications would not have been selected for funding; 
</P>
<P>(vi) Engages in the improper award or administration of grant subcontracts; 
</P>
<P>(vii) Does not submit reports; or 
</P>
<P>(viii) Files a false certification. 
</P>
<P>(2) HUD may impose the following sanctions: 
</P>
<P>(i) Temporarily withhold cash payments pending correction of the deficiency by the grantee or subgrantee; 
</P>
<P>(ii) Disallow all or part of the cost of the activity or action not in compliance; 
</P>
<P>(iii) Wholly or partly suspend or terminate the current award for the grantee's or subgrantee's program; 
</P>
<P>(iv) Require that some or all of the grant amounts be remitted to HUD; 
</P>
<P>(v) Condition a future grant and elect not to provide future grant funds to the grantee until appropriate actions are taken to ensure compliance; 
</P>
<P>(vi) Withhold further awards for the program; or 
</P>
<P>(vii) Take other remedies that may be legally available. 
</P>
<CITA TYPE="N">[61 FR 13987, Mar. 28, 1996, as amended at 80 FR 75941, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 761.35" NODE="24:4.1.1.1.3.4.1.2" TYPE="SECTION">
<HEAD>§ 761.35   Periodic grantee reports.</HEAD>
<P>Grantees are responsible for managing the day-to-day operations of grant and subgrant supported activities. Grantees must monitor grant and subgrant supported activities to assure compliance with applicable Federal requirements and that performance goals are being achieved. Grantee monitoring must cover each program, function or activity of the grant. 
</P>
<P>(a) <I>Semi-annual (nonconstruction) performance reports.</I> For purposes of the Public Housing Program only, the following provisions in paragraph (a) of this section apply: 
</P>
<P>(1) In accordance with 2 CFR 200.328, grantees are required to provide the local HUD Office or the local HUD Office of Native American Programs with a semi-annual performance report that evaluates the grantee's performance against its plan. These reports shall include (but are not limited to) the following in summary form: 
</P>
<P>(i) Any change or lack of change in crime statistics or other indicators drawn from the applicant's plan assessment and an explanation of any difference; 
</P>
<P>(ii) Successful completion of any of the strategy components identified in the applicant's plan; 
</P>
<P>(iii) A discussion of any problems encountered in implementing the plan and how they were addressed; 
</P>
<P>(iv) An evaluation of whether the rate of progress meets expectations; 
</P>
<P>(v) A discussion of the grantee's efforts in encouraging resident participation; and 
</P>
<P>(vi) A description of any other programs that may have been initiated, expanded, or deleted as a result of the plan, with an identification of the resources and the number of people involved in the programs and their relation to the plan. 
</P>
<P>(2) <I>Reporting period.</I> Semi-annual performance reports (for periods ending June 30 and December 31) are due to the local HUD Office or the local HUD Office of Native American Programs on July 30 and January 31 of each year. If the reports are not received by the local HUD Office or the local HUD Office of Native American Programs on or before the due date, grant funds will not be advanced until the reports are received. 
</P>
<P>(b) <I>Final performance report.</I> For purposes of both the Assisted Housing Program and the Public Housing Program, the following provisions in paragraph (b) of this section apply: 
</P>
<P>(1) <I>Evaluation.</I> Grantees are required to provide the local HUD Office or the local HUD Office of Native American Programs, as applicable, with a final cumulative performance report that evaluates the grantee's overall performance against its plan. This report shall include (but is not limited to) the information listed in paragraphs (a)(1)(i) through (a)(1)(vi) of this section, in summary form. 
</P>
<P>(2) <I>Reporting period.</I> The final performance report shall cover the period from the date of the grant agreement to the termination date of the grant agreement. The report is due to the local HUD Office or the local HUD Office of Native American Programs, as applicable, within 90 days after termination of the grant agreement. 
</P>
<P>(c) <I>Semi-annual financial status reporting requirements.</I> For purposes of both the Assisted Housing Program and the Public Housing Program, the following provisions in paragraph (c) of this section apply, as specified below: 
</P>
<P>(1) <I>Forms.</I> The grantee shall provide a semi-annual financial status report. For purposes of the Public Housing Program, this report shall be in accordance with 2 CFR 200.327. For both the Assisted Housing and Public Housing Programs, the grantee shall use the form SF-269A, Financial Status Report-Long Form, to report the status of funds for nonconstruction programs. The grantee shall use SF-269A, block 12, “Remarks,” to report on the status of programs, functions, or activities within the program. 
</P>
<P>(2) <I>Reporting period.</I> Semi-annual financial status reports (SF-269A) must be submitted as follows: 
</P>
<P>(i) For purposes of the Assisted Housing Program, semi-annual financial status reports covering the first 180 days of funded activities must be submitted to the local HUD Office between 190 and 210 days after the date of the grant agreement. If the SF-269A is not received on or before the due date (210 days after the date of the grant agreement) by the local HUD Office, grant funds will not be advanced until the reports are received. 
</P>
<P>(ii) For purposes of the Public Housing Program, semi-annual financial status reports (for periods ending June 30 and December 31) must be submitted to the local HUD Office or the local Office of Indian Programs, as applicable, by July 30 and January 31 of each year. If the local HUD Office or the local HUD Office of Native American Programs, as applicable, does not receive the SF-269A on or before the due date, the grant funds will not be advanced until the reports are received. 
</P>
<P>(d) <I>Final financial status report (SF-269A).</I> For purposes of both the Assisted Housing Program and the Public Housing Program, the following provisions in paragraph (d) of this section apply: 
</P>
<P>(1) <I>Cumulative summary.</I> The final report will be a cumulative summary of expenditures to date and must indicate the exact balance of unexpended funds. The grantee shall remit all Drug Elimination Program funds owed to HUD, including any unexpended funds, as follows: 
</P>
<P>(i) For purposes of the Assisted Housing Program, the grantee must remit such funds to HUD within 90 days after the termination of the grant agreement. 
</P>
<P>(ii) For purposes of the Public Housing Program, the local HUD Office or the local HUD Office of Native American Programs shall notify the grantee, in writing, of the requirement to remit such funds to HUD. The grantee shall remit such funds prior to or upon receipt of the notice. 
</P>
<P>(2) <I>Reporting period.</I> The final financial status report shall cover the period from the date of the grant agreement to the termination date of the grant agreement. The report is due to the local HUD Office or the local HUD Office of Native American Programs, as applicable, within 90 days after the termination of the grant agreement. 
</P>
<CITA TYPE="N">[61 FR 13987, Mar. 28, 1996, as amended at 80 FR 75941, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 761.40" NODE="24:4.1.1.1.3.4.1.3" TYPE="SECTION">
<HEAD>§ 761.40   Other Federal requirements.</HEAD>
<P>In addition to the nondiscrimination and equal opportunity requirements set forth in 24 CFR part 5, subpart A, use of grant funds requires compliance with the following Federal requirements: 
</P>
<P>(a) <I>Labor standards.</I> (1) When grant funds are used to undertake physical improvements to increase security under § 761.15(b)(3), the following labor standards apply: 
</P>
<P>(i) The grantee and its contractors and subcontractors must pay the following prevailing wage rates, and must comply with all related rules, regulations and requirements: 
</P>
<P>(A) For laborers and mechanics employed in the program, the wage rate determined by the Secretary of Labor pursuant to the Davis-Bacon Act (40 U.S.C. 276a <I>et seq.</I>) to be prevailing in the locality with respect to such trades; 
</P>
<P>(B) For laborers and mechanics employed in carrying out nonroutine maintenance in the program, the HUD-determined prevailing wage rate. As used in paragraph (a) of this section, nonroutine maintenance means work items that ordinarily would be performed on a regular basis in the course of upkeep of a property, but have become substantial in scope because they have been put off, and that involve expenditures that would otherwise materially distort the level trend of maintenance expenses. Nonroutine maintenance may include replacement of equipment and materials rendered unsatisfactory because of normal wear and tear by items of substantially the same kind. Work that constitutes reconstruction, a substantial improvement in the quality or kind of original equipment and materials, or remodeling that alters the nature or type of housing units is not nonroutine maintenance. 
</P>
<P>(ii) The employment of laborers and mechanics is subject to the provisions of the Contract Work Hours and Safety Standards Act (40 U.S.C. 327-333). 
</P>
<P>(2) The provisions of paragraph (a)(1) of this section shall not apply to labor contributed under the following circumstances: 
</P>
<P>(i) Upon the request of any resident management corporation, HUD may, subject to applicable collective bargaining agreements, permit residents (for purposes of the Public Housing Program, residents of a program managed by the resident management corporation) to volunteer a portion of their labor.
</P>
<P>(ii) An individual may volunteer to perform services if: 
</P>
<P>(A) The individual does not receive compensation for the voluntary services, or is paid expenses, reasonable benefits, or a nominal fee for voluntary services; and 
</P>
<P>(B) Is not otherwise employed at any time in the work subject to paragraphs (a)(1)(i)(A) or (a)(1)(i)(B) of this section. 
</P>
<P>(b) <I>Flood insurance.</I> Grants will not be awarded for proposed activities that involve acquisition, construction, reconstruction, repair or improvement of a building or mobile home located in an area that has been identified by the Federal Emergency Management Agency (FEMA) as having special flood hazards unless: 
</P>
<P>(1) The community in which the area is situated is participating in the National Flood Insurance Program in accordance with 44 CFR parts 59 through 79; or 
</P>
<P>(2) Less than a year has passed since FEMA notification to the community regarding such hazards; and 
</P>
<P>(3) Flood insurance on the structure is obtained in accordance with section 102(a) of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4001). 
</P>
<P>(c) <I>Lead-based paint.</I> The Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and implementing regulations at part 35, subparts A, B, H, and R of this title.
</P>
<P>(d) <I>Conflicts of interest.</I> In addition to the conflict of interest requirements in 2 CFR 200.112 (for all recipients and subrecipients), 200.317 (for recipients and subrecipients that are States), and 200.318(c) and 200.319(a)(5) (for recipients and subrecipients that are not States) for the Public Housing Program, no person, as described in paragraphs (d)(1) and (d)(2) of this section, may obtain a personal or financial interest or benefit from an activity funded under these drug elimination programs, or have an interest in any contract, subcontract, or agreement with respect thereto, or the proceeds thereunder, either for him or herself or for those with whom he or she has family or business ties, during his or her tenure, or for one year thereafter: 
</P>
<P>(1) Who is an employee, agent, consultant, officer, or elected or appointed official of the grantee, that receives assistance under the program and who exercises or has exercised any functions or responsibilities with respect to assisted activities; or 
</P>
<P>(2) Who is in a position to participate in a decisionmaking process or gain inside information with regard to such activities. 
</P>
<P>(e) <I>For IHAs,</I> § 950.115 of this title, “Applicability of civil rights requirements,” and § 950.120 of this title, “Compliance with other Federal requirements,” apply and control to the extent they may differ from other requirements of this section; 
</P>
<P>(f) <I>Intergovernmental Review.</I> The requirements of Executive Order 12372 (3 CFR, 1982 Comp., p. 197) and the regulations issued under the Order in part 52 of this title, to the extent provided by <E T="04">Federal Register</E> notice in accordance with 24 CFR 52.3, apply to these programs.
</P>
<P>(g) <I>Environmental review.</I> Certain eligible activities under this part 761 are categorically excluded from review under the National Environmental Policy Act of 1969 (42 U.S.C. 4321) and are not subject to review under related laws, in accordance with 24 CFR 50.19(b)(4), (b)(12), or (b)(13). If the PHDEP plan proposes the use of grant funds to assist any non-exempt activities, HUD will perform an environmental review to the extent required by 24 CFR part 50, prior to grant award.
</P>
<CITA TYPE="N">[61 FR 13987, Mar. 28, 1996, as amended at 64 FR 49921, Sept. 14, 1999; 64 FR 50227, Sept. 15, 1999, 80 FR 75941, Dec. 7, 2015]


</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="762-790" NODE="24:4.1.1.1.4" TYPE="PART">
<HEAD>PARTS 762-790 [RESERVED]


</HEAD>
</DIV5>


<DIV5 N="791" NODE="24:4.1.1.1.5" TYPE="PART">
<HEAD>PART 791—ALLOCATIONS OF HOUSING ASSISTANCE FUNDS
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1439 and 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 10849, Mar. 15, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.1.1.5.1" TYPE="SUBPART">
<HEAD>Subpart A—General Provisions</HEAD>


<DIV8 N="§ 791.101" NODE="24:4.1.1.1.5.1.1.1" TYPE="SECTION">
<HEAD>§ 791.101   Applicability and scope.</HEAD>
<P>This part describes the role and responsibility of HUD in allocation of budget authority (pursuant to section 213 of the Housing and Community Development Act of 1974 (42 U.S.C. 1439)) for housing assistance under the United States Housing Act of 1937 (Section 8 and public housing) and under section 101 of the Housing and Urban Development Act of 1965 (12 U.S.C. 1701s), and of budget authority for housing assistance under section 202 of the Housing Act of 1959 (12 U.S.C. 1710q). This part does not apply to budget authority for the public housing operating fund or capital fund.
</P>
<CITA TYPE="N">[64 FR 26639, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 791.102" NODE="24:4.1.1.1.5.1.1.2" TYPE="SECTION">
<HEAD>§ 791.102   Definitions.</HEAD>
<P><I>Act.</I> The Housing and Community Development Act of 1974 (42 U.S.D. 1437), as amended. 
</P>
<P><I>Allocation area.</I> A municipality, county, or group of municipalities or counties identified by the HUD field office for the purpose of allocating housing assistance. 
</P>
<P><I>Assistant Secretary.</I> The Assistant Secretary for Housing or the Assistant Secretary for Public and Indian Housing, as appropriate to the housing assistance under consideration. 
</P>
<P><I>Budget authority.</I> The maximum amount authorized by the Congress for payments over the term of assistance contracts. 
</P>
<P><I>Fiscal year.</I> The official operating period of the Federal government, beginning on October 1 and ending on September 30. 
</P>
<P><I>Metropolitan area.</I> See MSA. 
</P>
<P><I>MSA.</I> A metropolitan statistical area established by the Office of Management and Budget. The term also includes primary metropolitan statistical areas (PMSAs), which are the component parts of larger urbanized areas designated as consolidated metropolitan statistical areas (CMSAs). Where an MSA is divided among two or more field offices, references to an MSA mean the portion of the MSA within the State/Area Office jurisdiction. 
</P>
<P><I>Public housing agency (PHA).</I> (1) Any State, county, municipality, or other governmental entity or public body which is authorized to administer a program under the 1937 Act (or an agency or instrumentality of such an entity).
</P>
<P>(2) In addition, for purposes of the program of Section 8 tenant-based assistance under part 982 of this title, the term PHA also includes any of the following:
</P>
<P>(i) A consortia of housing agencies, each of which meets the qualifications in paragraph (1) of this definition, that HUD determines has the capacity and capability to efficiently administer the program (in which case, HUD may enter into a consolidated ACC with any legal entity authorized to act as the legal representative of the consortia members);
</P>
<P>(ii) Any other public or private non-profit entity that was administering a Section 8 tenant-based assistance program pursuant to a contract with the contract administrator of such program (HUD or a PHA) in effect on October 21, 1998; or
</P>
<P>(iii) For any area outside the jurisdiction of a PHA that is administering a tenant-based program, or where HUD determines that such PHA is not administering the program effectively, a private non-profit entity or a governmental entity or public body that would otherwise lack jurisdiction to administer the program in such area.
</P>
<CITA TYPE="N">[61 FR 10849, Mar. 15, 1996, as amended at 64 FR 26639, May 14, 1999]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.1.1.5.2" TYPE="SUBPART">
<HEAD>Subparts B-C [Reserved]</HEAD>

</DIV6>


<DIV6 N="D" NODE="24:4.1.1.1.5.3" TYPE="SUBPART">
<HEAD>Subpart D—Allocation of Budget Authority for Housing Assistance</HEAD>


<DIV8 N="§ 791.401" NODE="24:4.1.1.1.5.3.1.1" TYPE="SECTION">
<HEAD>§ 791.401   General.</HEAD>
<P>This subpart D establishes the procedures for allocating budget authority under section 213(d) of the Act for the programs identified in § 791.101. It describes the allocation of budget authority by the appropriate Assistant Secretary to the applicable Program Office Director in the HUD field office, and by the Program Office Director to allocation areas within their jurisdiction. 
</P>
<CITA TYPE="N">[61 FR 10849, Mar. 15, 1996, as amended at 64 FR 26639, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 791.402" NODE="24:4.1.1.1.5.3.1.2" TYPE="SECTION">
<HEAD>§ 791.402   Determination of low-income housing needs.</HEAD>
<P>(a) Before budget authority is allocated, the Assistant Secretary for Policy Development and Research shall determine the relative need for low-income housing assistance in each HUD field office jurisdiction. This determination shall be based upon data from the most recent, available decennial census and, where appropriate, upon more recent data from the Bureau of the Census or other Federal agencies, or from the American Housing Survey. 
</P>
<P>(b) Except for paragraph (c) of this section, the factors used to determine the relative need for assistance shall be based upon the following criteria: 
</P>
<P>(1) <I>Population.</I> The renter population; 
</P>
<P>(2) <I>Poverty.</I> The number of renter households with annual incomes at or below the poverty level, as defined by the Bureau of the Census; 
</P>
<P>(3) <I>Housing overcrowding.</I> The number of renter-occupied housing units with an occupancy ratio of 1.01 or more persons per room; 
</P>
<P>(4) <I>Housing vacancies.</I> The number of renter housing units that would be required to maintain vacancies at levels typical of balanced market conditions; 
</P>
<P>(5) <I>Substandard housing.</I> The number of housing units built before 1940 and occupied by renter households with annual incomes at or below the poverty level, as defined by the Bureau of the Census; and 
</P>
<P>(6) <I>Other objectively measurable conditions.</I> Data indicating potential need for rental housing assistance, such as the number of renter households with incomes below specified levels and paying a gross rent of more than 30 percent of household income. 
</P>
<P>(c) For the section 202 elderly program, the data used shall reflect relevant characteristics of the elderly population. The data shall use the criteria specified in paragraph (b)(1) and (6) of this section, as modified to apply specifically to the needs of the elderly population. 
</P>
<P>(d) Based on the criteria in paragraphs (b) and (c) of this section, the Assistant Secretary for Policy Development and Research shall establish housing needs factors for each county and independent city in the field office jurisdiction, and shall aggregate the factors for such jurisdiction. The field office total for each factor is then divided by the respective national total for that factor. The resulting housing needs ratios under paragraph (b) of this section are then weighted to provide housing needs percentages for each field office, using the following weights: population—20 percent; poverty—20 percent; housing overcrowding—10 percent; housing vacancies—10 percent; substandard housing—20 percent; other objectively measurable conditions—20 percent. For the section 202 elderly program, the two criteria described in paragraph (c) of this section are weighted equally.
</P>
<P>(e) The Assistant Secretary for Policy Development and Research shall adjust the housing needs percentages derived in paragraph (d) of this section to reflect the relative cost of providing housing among the field office jurisdictions. 
</P>
<CITA TYPE="N">[61 FR 10849, Mar. 15, 1996, as amended at 64 FR 26639, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 791.403" NODE="24:4.1.1.1.5.3.1.3" TYPE="SECTION">
<HEAD>§ 791.403   Allocation of housing assistance.</HEAD>
<P>(a) The total budget authority available for any fiscal year shall be determined by adding any available unreserved budget authority from prior fiscal years to any newly appropriated budget authority for each housing program.
</P>
<P>(b) Budget authority available for the fiscal year, except for that retained pursuant to § 791.407, shall be allocated to the field offices as follows: 
</P>
<P>(1) Budget authority shall be allocated as needed for uses that the Secretary determines are incapable of geographic allocation by formula, including—
</P>
<P>(i) Amendments of existing contracts, renewal of assistance contracts, assistance to families that would otherwise lose assistance due to the decision of the project owner to prepay the project mortgage or not to renew the assistance contract, assistance to prevent displacement or to provide replacement housing in connection with the demolition or disposition of public housing, assistance in support of the property disposition and loan management functions of the Secretary;
</P>
<P>(ii) Assistance which is—
</P>
<P>(A) The subject of a line item identification in the HUD appropriations law, or in the table customarily included in the Conference Report on the appropriation for the Fiscal Year in which the funds are to be allocated; 
</P>
<P>(B) Reported in the Operating Plan submitted by HUD to the Committees on Appropriations; or 
</P>
<P>(C) Included in an authorization statute where the nature of the assistance, such as a prescribed set-aside, is, in the determination of the Secretary, incapable of geographic allocation by formula, 
</P>
<P>(iii) Assistance determined by the Secretary to be necessary in carrying out the following programs authorized by the Cranston-Gonzalez National Affordable Housing Act: the Homeownership and Opportunity Through HOPE Act under title IV and HOPE for Elderly Independence under section 803. 
</P>
<P>(2) Budget authority remaining after carrying out allocation steps outlined in paragraph (b)(1) of this section shall be allocated in accordance with the housing needs percentages calculated under paragraphs (b), (c), (d), and (e) of § 791.402. HUD may allocate assistance under this paragraph in such a manner that each State shall receive not less than one-half of one percent of the amount of funds available for each program referred to in § 791.101(a) in each fiscal year. If the budget authority for a particular program is insufficient to fund feasible projects, or to promote meaningful competition, at the field office level, budget authority may be allocated among the ten geographic areas of the country. The funds so allocated will be assigned by Headquarters to the field office(s) with the highest ranked applications within the ten geographic areas. 
</P>
<P>(c) At least annually HUD will publish a notice in the <E T="04">Federal Register</E> informing the public of all allocations under § 791.403(b)(2). 
</P>
<CITA TYPE="N">[61 FR 10849, Mar. 15, 1996, as amended at 64 FR 26640, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 791.404" NODE="24:4.1.1.1.5.3.1.4" TYPE="SECTION">
<HEAD>§ 791.404   Field Office allocation planning.</HEAD>
<P>(a) <I>General objective.</I> The allocation planning process should provide for the equitable distribution of available budget authority, consistent with the relative housing needs of each allocation area within the field office jurisdiction. 
</P>
<P>(b) <I>Establishing allocation areas.</I> Allocation areas, consisting of one or more counties or independent cities, shall be established by the field office in accordance with the following criteria: 
</P>
<P>(1) Each allocation shall be to the smallest practicable area, but of sufficient size so that at least three eligible entities are viable competitors for funds in the allocation area, and so that all applicable statutory requirements can be met. (It is expected that in many instances individual MSAs will be established as metropolitan allocation areas.) For the section 202 program for the elderly, the allocation area must include sufficient units to promote a meaningful competition among disparate types of providers of such housing (e.g., local as well as national sponsors, minority as well as non-minority sponsors). The preceding sentence shall not apply to projects acquired from the Resolution Trust Corporation under section 21A(c) of the Federal Home Loan Bank Act. 
</P>
<P>(2) Each allocation area shall also be of sufficient size, in terms of population and housing need, that the amount of budget authority being allocated to the area will support at least one feasible program or project. 
</P>
<P>(3) In establishing allocation areas, counties and independent cities within MSAs should not be combined with counties that are not in MSAs. 
</P>
<P>(c) <I>Determining the amount of budget authority.</I> Where the field office establishes more than one allocation area, it shall determine the amount of budget authority to be allocated to each allocation area, based upon a housing needs percentage which represents the needs of that area relative to the field office jurisdiction. For each program, a composite housing needs percentage developed under § 791.402 for those counties and independent cities comprising the allocation area shall be aggregated into allocation area totals.
</P>
<P>(d) <I>Planning for the allocation.</I> The field office should develop an allocation plan which reflects the amount of budget authority determined for each allocation area in paragraph (c). The plan should include a map or maps clearly showing the allocation areas within the field office jurisdiction. The relative share of budget authority by individual program type need not be the same for each allocation area, so long as the total amount of budget authority made available to the allocation area is not significantly reduced. 
</P>
<CITA TYPE="N">[61 FR 10849, Mar. 15, 1996, as amended at 64 FR 26640, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 791.405" NODE="24:4.1.1.1.5.3.1.5" TYPE="SECTION">
<HEAD>§ 791.405   Reallocations of budget authority.</HEAD>
<P>(a) The field office shall make every reasonable effort to use the budget authority made available for each allocation area within such area. If the Program Office Director determines that not all of the budget authority allocated for a particular allocation area is likely to be used during the fiscal year, the remaining authority may be allocated to other allocation areas where it is likely to be used during that fiscal year. 
</P>
<P>(b) If the Assistant Secretary determines that not all of the budget authority allocated to a field office is likely to be used during the fiscal year, the remaining authority may be reallocated to another field office where it is likely to be used during that fiscal year. 
</P>
<P>(c) Any reallocations of budget authority among allocation areas or field offices shall be consistent with the assignment of budget authority for the specific program type and established set-asides. 
</P>
<P>(d) Notwithstanding the requirements of paragraphs (a) through (c) of this section, budget authority shall not be reallocated for use in another State unless the Program Office Director or the Assistant Secretary has determined that other allocation areas within the same State cannot use the available authority during the fiscal year. 


</P>
</DIV8>


<DIV8 N="§ 791.406" NODE="24:4.1.1.1.5.3.1.6" TYPE="SECTION">
<HEAD>§ 791.406   Competition.</HEAD>
<P>(a) All budget authority allocated pursuant to § 791.403(b)(2) shall be reserved and obligated pursuant to a competition. Any such competition shall be conducted pursuant to specific criteria for the selection of recipients of assistance. These criteria shall be contained in a regulation promulgated after notice and public comment or, to the extent authorized by law, a notice published in the <E T="04">Federal Register.</E> 
</P>
<P>(b) This section shall not apply to assistance referred to in §§ 791.403(b)(1) and 791.407.


</P>
</DIV8>


<DIV8 N="§ 791.407" NODE="24:4.1.1.1.5.3.1.7" TYPE="SECTION">
<HEAD>§ 791.407   Headquarters Reserve.</HEAD>
<P>(a) A portion of the budget authority available for the housing programs listed in § 791.101(a), not to exceed an amount equal to five percent of the total amount of budget authority available for the fiscal year for programs under the United States Housing Act of 1937 listed in § 791.101(a), may be retained by the Assistant Secretary for subsequent allocation to specific areas and communities, and may only be used for: 
</P>
<P>(1) Unforeseen housing needs resulting from natural and other disasters, including hurricanes, tornadoes, storms, high water, wind driven water, tidal waves, tsunamis, earthquakes, volcanic eruptions, landslides, mudslides, snowstorms, drought, fires, floods, or explosions, which in the determination of the Secretary cause damage of sufficient severity and magnitude to warrant Federal housing assistance; 
</P>
<P>(2) Housing needs resulting from emergencies, as certified by the Secretary, other than disasters described in paragraph (a)(1) of this section. Emergency housing needs that can be certified are only those that result from unpredictable and sudden circumstances causing housing deprivation (such as physical displacement, loss of Federal rental assistance, or substandard housing conditions) or causing an unforeseen and significant increase in low-income housing demand in a housing market (such as influx of refugees or plant closings); 
</P>
<P>(3) Housing needs resulting from the settlement of litigation; and 
</P>
<P>(4) Housing in support of desegregation efforts. 
</P>
<P>(b) Applications for funds retained under paragraph (a) of this section shall be made to the field office, which will make recommendations to Headquarters for approval or rejection of the application. Applications generally will be considered for funding on a first-come, first-served basis. Specific instructions governing access to the Headquarters Reserve shall be published by notice in the <E T="04">Federal Register,</E> as necessary. 
</P>
<P>(c) Any amounts retained in any fiscal year under paragraph (a) of this section that are not reserved by the end of such fiscal year shall remain available for the following fiscal year in the program under § 791.101(a) from which the amount was retained. Such amounts shall be allocated pursuant to § 791.403(b)(2).


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="792" NODE="24:4.1.1.1.6" TYPE="PART">
<HEAD>PART 792—PUBLIC HOUSING AGENCY SECTION 8 FRAUD RECOVERIES 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437f note and 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>59 FR 9409, Feb. 28, 1994, unless otherwise noted.
</PSPACE></SOURCE>
<EDNOTE>
<HED>Editorial Note:</HED><PSPACE>Nomenclature changes to part 792 appear at 64 FR 26640, May 14, 1999.</PSPACE></EDNOTE>

<DIV6 N="A" NODE="24:4.1.1.1.6.1" TYPE="SUBPART">
<HEAD>Subpart A—General Provisions</HEAD>


<DIV8 N="§ 792.101" NODE="24:4.1.1.1.6.1.1.1" TYPE="SECTION">
<HEAD>§ 792.101   Purpose.</HEAD>
<P>The purpose of this part is to encourage public housing agencies (PHAs) to investigate and pursue instances of tenant and owner fraud and abuse in the operation of the Section 8 housing assistance payments programs.
</P>
<CITA TYPE="N">[64 FR 26640, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 792.102" NODE="24:4.1.1.1.6.1.1.2" TYPE="SECTION">
<HEAD>§ 792.102   Applicability.</HEAD>
<P>(a) This part applies to a PHA acting as a contract administrator under an annual contributions contract with HUD in any section 8 housing assistance payments program. To be eligible to retain section 8 tenant or owner fraud recoveries, the PHA must be the principal party initiating or sustaining an action to recover amounts from families. 
</P>
<P>(b) This part applies only to those instances when a tenant or owner committed fraud, and the fraud recoveries are obtained through litigation brought by the PHA (including settlement of the lawsuit), a court-ordered restitution pursuant to a criminal proceeding, or an administrative repayment agreement with the family or owner as a result of a PHA administrative grievance procedure pursuant to, or incorporating the requirements of, § 982.555 of this title. This part does not apply to cases of owner fraud in PHA-owned or controlled units, or where incorrect payments were made or benefits received because of calculation errors instead of willful fraudulent activities. 
</P>
<P>(c) This part applies to all tenant and owner fraud recoveries resulting from litigation brought by the PHA (including settlement of the lawsuit), or a court-ordered restitution pursuant to a criminal proceeding obtained on or after October 8, 1986, and to all tenant and owner fraud recoveries obtained through administrative repayment agreements signed on or after October 28, 1992. 
</P>
<CITA TYPE="N">[59 FR 9409, Feb. 28, 1994, as amended at 64 FR 26640, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 792.103" NODE="24:4.1.1.1.6.1.1.3" TYPE="SECTION">
<HEAD>§ 792.103   Definitions.</HEAD>
<P><I>Fraud and abuse.</I> Fraud and abuse means a single act or pattern of actions: 
</P>
<P>(1) That constitutes false statement, omission, or concealment of a substantive fact, made with intent to deceive or mislead; and 
</P>
<P>(2) That results in payment of section 8 program funds in violation of section 8 program requirements. 
</P>
<P>The terms <I>Public Housing Agency (PHA)</I> and <I>Indian Housing Authority (IHA)</I> are defined in 24 CFR part 5.
</P>
<P><I>Judgment.</I> Judgment means a provision for recovery of section 8 program funds obtained through fraud and abuse, by order of a court in litigation or by a settlement of a claim in litigation, whether or not stated in a court order. 
</P>
<P><I>Litigation.</I> A lawsuit brought by a PHA to recover section 8 program funds obtained as a result of fraud and abuse. 
</P>
<P><I>Principal party in initiating or sustaining an action to recover.</I> Principal party in initiating or sustaining an action to recover means the party that incurs more than half the costs incurred in: 
</P>
<P>(1) Recertifying tenants who fraudulently obtained section 8 rental assistance; 
</P>
<P>(2) Recomputing the correct amounts owed by tenants; and 
</P>
<P>(3) Taking needed actions to recoup the excess benefits received, such as initiating litigation. 
</P>
<P>Costs incurred to detect potential excessive benefits in the routine day-to-day operations of the program are excluded in determining the principal party in initiating or sustaining an action to recover. For example, the cost of income verification during an annual recertification would not be counted in determining the principal party in initiating or sustaining an action to recover. 
</P>
<P><I>Public housing agency (PHA).</I> A public housing agency as defined in § 791.102.
</P>
<P><I>Repayment agreement.</I> Repayment agreement means a formal document signed by a tenant or owner and provided to a PHA in which a tenant or owner acknowledges a debt, in a specific amount, and agrees to repay the amount due at specific time period(s). 
</P>
<CITA TYPE="N">[59 FR 9409, Feb. 28, 1994, as amended at 61 FR 5212, Feb. 9, 1996; 64 FR 26640, May 14, 1999]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.1.1.6.2" TYPE="SUBPART">
<HEAD>Subpart B—Recovery of Section 8 Funds</HEAD>


<DIV8 N="§ 792.201" NODE="24:4.1.1.1.6.2.1.1" TYPE="SECTION">
<HEAD>§ 792.201   Conduct of litigation.</HEAD>
<P>The PHA must obtain HUD approval before initiating litigation in which the PHA is requesting HUD assistance or participation. 


</P>
</DIV8>


<DIV8 N="§ 792.202" NODE="24:4.1.1.1.6.2.1.2" TYPE="SECTION">
<HEAD>§ 792.202   PHA retention of proceeds.</HEAD>
<P>(a) Where the PHA is the principal party initiating or sustaining an action to recover amounts from tenants that are due as a result of fraud and abuse, the PHA may retain, the greater of: 
</P>
<P>(1) Fifty percent of the amount it actually collects from a judgment, litigation (including settlement of lawsuit) or an administrative repayment agreement pursuant to, or incorporating the requirements of, § 982.555 of this title; or 
</P>
<P>(2) Reasonable and necessary costs that the PHA incurs related to the collection from a judgment, litigation (including settlement of lawsuit) or an administrative repayment agreement pursuant to, or incorporating the requirements of, § 982.555 of this title. Reasonable and necessary costs include the costs of the investigation, legal fees and collection agency fees. 
</P>
<P>(b) If HUD incurs costs on behalf of the PHA in obtaining the judgment, these costs must be deducted from the amount to be retained by the PHA. 
</P>
<CITA TYPE="N">[59 FR 9409, Feb. 28, 1994, as amended at 64 FR 26640, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 792.203" NODE="24:4.1.1.1.6.2.1.3" TYPE="SECTION">
<HEAD>§ 792.203   Application of amounts recovered.</HEAD>
<P>(a) The PHA may only use the amount of the recovery it is authorized to retain in support of the section 8 program in which the fraud occurred. 
</P>
<P>(b) The remaining balance of the recovery proceeds (i.e., the portion of recovery the PHA is not authorized to retain) must be applied as directed by HUD. 


</P>
</DIV8>


<DIV8 N="§ 792.204" NODE="24:4.1.1.1.6.2.1.4" TYPE="SECTION">
<HEAD>§ 792.204   Recordkeeping and reporting.</HEAD>
<P>To permit HUD to audit amounts retained under this part, an PHA must maintain all records required by HUD, including: 
</P>
<P>(a) Amounts recovered on any judgment or repayment agreement; 
</P>
<P>(b) The nature of the judgment or repayment agreement; and 
</P>
<P>(c) The amount of the legal fees and expenses incurred in obtaining the judgment or repayment agreement and recovery. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under Control Number 2577-0053)


</APPRO>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="793-799" NODE="24:4.1.1.1.7" TYPE="PART">
<HEAD>PARTS 793-799 [RESERVED]


</HEAD>
</DIV5>

</DIV3>


<DIV3 N="VIII" NODE="24:4.1.2" TYPE="CHAPTER">

<HEAD> CHAPTER VIII—OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (SECTION 8 HOUSING ASSISTANCE PROGRAMS, SECTION 202 DIRECT LOAN PROGRAM, SECTION 202 SUPPORTIVE HOUSING FOR THE ELDERLY PROGRAM AND SECTION 811 SUPPORTIVE HOUSING FOR PERSONS WITH DISABILITIES PROGRAM)</HEAD>

<DIV5 N="800-810" NODE="24:4.1.2.1.1" TYPE="PART">
<HEAD>PARTS 800-810 [RESERVED]


</HEAD>
</DIV5>


<DIV5 N="811" NODE="24:4.1.2.1.2" TYPE="PART">
<HEAD>PART 811—TAX EXEMPTION OF OBLIGATIONS OF PUBLIC HOUSING AGENCIES AND RELATED AMENDMENTS
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>Sec. 7(d), Dept. of HUD Act (42 U.S.C. 3535(d)); secs. 3(6), 5(b), 8, 11(b) of the U.S. Housing Act of 1937 (42 U.S.C. 1437a, 1437c, 1437f, and 1437).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>44 FR 12360, Mar. 6, 1979, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 811.101" NODE="24:4.1.2.1.2.0.1.1" TYPE="SECTION">
<HEAD>§ 811.101   Purpose and scope.</HEAD>
<P>(a) The purpose of this part is to provide a basis for determining tax exemption of obligations issued by public housing agencies pursuant to Section 11(b) of the United States Housing Act of 1937 (42 U.S.C. 1437i) to refund bonds for Section 8 new construction or substantial rehabilitation projects. 
</P>
<P>(b) This part does not apply to tax exemption pursuant to Section 11(b) for low-income housing projects developed pursuant to 24 CFR parts 950 and 941. 
</P>
<CITA TYPE="N">[61 FR 14460, Apr. 1, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 811.102" NODE="24:4.1.2.1.2.0.1.2" TYPE="SECTION">
<HEAD>§ 811.102   Definitions.</HEAD>
<P>The terms <I>HUD</I> and <I>Public Housing Agency (PHA)</I> are defined in 24 CFR part 5.
</P>
<P><I>Act.</I> The United States Housing Act of 1937 (42 U.S.C. 1437, <I>et seq.</I>). 
</P>
<P><I>Agency or Instrumentality PHA.</I> A not-for-profit private or public organization that is authorized to engage in or assist in the development or operation of low-income housing and that has the relationship to a parent entity PHA required by this subpart. 
</P>
<P><I>Agreement.</I> An Agreement to Enter Into Housing Assistance Payments Contract as defined in the applicable Section 8 regulations. The form of agreement for projects financed with tax-exempt obligations shall be amended in accordance with this subpart. 
</P>
<P><I>Annual Contributions Contract (ACC).</I> An Annual Contributions Contract as defined in the applicable Section 8 regulations. The form of ACC for projects financed with tax-exempt obligations shall be amended in accordance with this subpart. 
</P>
<P><I>Applicable Section 8 Regulations.</I> The provisions of 24 CFR parts 880, 881, or 883 that apply to the project. 
</P>
<P><I>Contract.</I> A Housing Assistance Payments Contract as defined in the applicable Section 8 regulations. The form of contract for projects financed with tax-exempt obligations shall be amended in accordance with this subpart. 
</P>
<P><I>Cost of issuance.</I> Ordinary, necessary, and reasonable costs in connection with the issuance of obligations. These costs shall include attorney fees, rating agency fees, trustee fees, printing costs, bond counsel fees, feasibility studies (for non-FHA-insured projects only), consultant fees and other fees or expenses approved by HUD. 
</P>
<P><I>Debt service reserve.</I> A fund maintained by the trustee as a supplemental source of money for the payment of debt service on the obligations. 
</P>
<P><I>Financing Agency.</I> The PHA (parent entity PHA or agency or instrumentality PHA) that issues the tax-exempt obligations for financing of the project. 
</P>
<P><I>Low-income Housing Project.</I> Housing for families and persons of low-income developed, acquired or assisted by a PHA under Section 8 of the Act and the improvement of any such housing.
</P>
<P><I>Obligations.</I> Bonds or other evidence of indebtedness that are issued to provide permanent financing of a low-income housing project. Pursuant to Section 319(b) of the Housing and Community Development Act of 1974, the term obligation shall not include any obligation secured by a mortgage insured under Section 221(d)(3) of the National Housing Act (12 U.S.C. 1715l) and issued by a public agency as mortgagor in connection with the financing of a project assisted under Section 8 of the Act. This exclusion does not apply to a public agency as mortgagee.
</P>
<P><I>Owner.</I> An owner as defined in the applicable Section 8 regulations.
</P>
<P><I>Parent Entity PHA.</I> Any state, county, municipality or other governmental entity or public body that is authorized to engage in or assist in the development or operation of low-income housing and that has the relationship to an agency or instrumentality PHA required by this subpart.
</P>
<P><I>Servicing fees.</I> The annual costs of servicing the obligations 0including any debt service reserve), including trustee fees, mortgage servicing fees, PHA expenses in connection with annual reviews, maintenance of books and accounts, audit expenses, agent fees and other costs of servicing the obligations.
</P>
<P><I>Trust indenture.</I> A contract setting forth the rights and obligations of the issuer, bondholders, owner and trustee in connection with the tax-exempt obligations. The trust indenture may also include provisions regarding the loan to the owner or these may be set forth in a separate mortgage.
</P>
<P><I>Trustee.</I> The entity that has legal responsibility under the trust indenture for disposition of the proceeds of a bond issuance and servicing of the debt represented by the obligations. The trustee must be a bank or other financial institution that is legally qualified and experienced in performing fiduciary responsibilities with respect to the care and investment of funds of a magnitude comparable to those involved in the financing.
</P>
<P><I>Yield.</I> That percentage rate at which the present worth of all payments of principal and interest to be paid on the obligations is equal to the purchase price.
</P>
<CITA TYPE="N">[44 FR 12360, Mar. 6, 1979, as amended at 61 FR 5212, Feb. 9, 1996; 61 FR 14460, Apr. 1, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 811.103" NODE="24:4.1.2.1.2.0.1.3" TYPE="SECTION">
<HEAD>§ 811.103   General.</HEAD>
<P>(a) In order for obligations to be tax-exempt under this subpart the obligations must be issued by a PHA in connection with a low-income housing project approved by HUD under the Act and the applicable Section 8 regulations.
</P>
<P>(1) Except as needed for a resident manager or similar requirement, all dwelling units in a low-income housing project that is to be financed with obligations issued pursuant to this subpart must be Section 8 contract units.
</P>
<P>(2) A low-income housing project that is to be financed with obligations issued pursuant to this subpart may include necessary appurtenances. Such appurtenances may include commercial space not to exceed 10% of the total net rentable area.
</P>
<P>(b) Where the parent entity PHA is not the owner of the project, the parent entity PHA or other PHA approvable under § 811.104 must agree to administer the contract pursuant to an ACC with HUD, and such a PHA must agree that in the event there is a default under the contract it will pursue all available remedies to achieve correction of the default, including operation and possession of the project, if called upon by HUD to do so. If the field office finds that the PHA does not have the capacity to perform these functions, the Assistant Secretary may approve alternative contractual arrangements for performing these functions.


</P>
</DIV8>


<DIV8 N="§ 811.104" NODE="24:4.1.2.1.2.0.1.4" TYPE="SECTION">
<HEAD>§ 811.104   Approval of Public Housing Agencies (other than agency or instrumentality PHAS).</HEAD>
<P>(a)(1) An application to the field office for approval as a Public Housing Agency, other than an agency or instrumentality PHA, for purposes of this subpart shall be supported by evidence satisfactory to HUD to establish that:
</P>
<P>(i) The applicant is a PHA as defined in this subpart, and has the legal authority to meet the requirements of this subpart and applicable Section 8 regulations, as described in its application. This evidence shall be supported by the opinion of counsel for the applicant.
</P>
<P>(ii) The applicant has or will have the administrative capability to carry out the responsibilities described in its application. 
</P>
<P>(2) The evidence shall include any facts or documents relevant to the determinations required by paragraph (a)(1) of this section, including identification of any pending application the applicant has submitted under the Act. In the absence of evidence indicating the applicant may not be qualified, the field office may accept as satisfactory evidence: 
</P>
<P>(i) Identification of any previous HUD approval of the applicant as a PHA pursuant to this section; 
</P>
<P>(ii) Identification of any prior ACC with the applicant under the Act; or 
</P>
<P>(iii) A statement, where applicable, that the applicant is an approved participating agency under 24 CFR Part 883 (State Housing Finance and Development Agencies). 
</P>
<P>(b) The applicant shall receive no compensation in connection with the financing of a project, except for its expenses. Such expenses shall be subject to approval by HUD in determining the development cost, cost of issuance and servicing fee, as appropriate. Should the applicant receive any compensation in excess of such expenses, the excess is to be placed in the debt service reserve. 
</P>
<P>(c) Where the applicant acts as the financing agency, the applicant shall be required to furnish to HUD an audit by an independent public accountant of its books and records in connection with the financing of the project within 90 days after the execution of the contract or final endorsement and at least biennially thereafter. 
</P>
<P>(d) Any subsequent amendments to the documents submitted to HUD pursuant to this section must be approved by HUD. 


</P>
</DIV8>


<DIV8 N="§ 811.105" NODE="24:4.1.2.1.2.0.1.5" TYPE="SECTION">
<HEAD>§ 811.105   Approval of agency or instrumentality PHA.</HEAD>
<P>(a) An application to the field office for approval as an agency or instrumentality PHA for purposes of this subpart shall: 
</P>
<P>(1) Identify the parent entity PHA. 
</P>
<P>(2) Establish by evidence satisfactory to HUD that: 
</P>
<P>(i) The parent entity PHA meets the requirements of § 811.104. 
</P>
<P>(ii) The applicant was properly created pursuant to state law as a not-for-profit entity; is an agency or instrumentality PHA, as defined in this subpart; has the legal authority to meet the requirements of this subpart and applicable Section 8 regulations, as described in its application; and the actions required to establish the legal relationship with the parent entity PHA prescribed by paragraph (c) of this section have been taken and are not prohibited by State law. This evidence shall be supported by the opinion of counsel for the applicant and counsel for the parent entity PHA. 
</P>
<P>(iii) The applicant has, or will have, the administrative capability to carry out the responsibilities described in its application. 
</P>
<P>(b) The charter or other organic document establishing the applicant shall limit the activities to be performed by the applicant, and funds and assets connected therewith, to carrying out or assisting in carrying out Section 8 projects and other low-income housing projects approved by the Secretary. Such organic documents shall provide that the applicant shall receive no compensation in connection with the financing of a project, except for its expenses. Such expenses shall be subject to approval by HUD in determining the development cost, cost of issuance and servicing fee, as appropriate. Should the applicant receive any compensation in excess of such expenses, the excess is to be placed in the debt service reserve. 
</P>
<P>(c) The documents submitted by the applicant shall include the following with respect to the relationship between the parent entity PHA and the agency or instrumentality PHA: 
</P>
<P>(1) Provisions requiring approval by the parent entity PHA of the charter or other organic instrument and of the bylaws of the applicant, which organic instrument and bylaws shall specify that any amendments are subject to approval by the parent entity PHA and by HUD. 
</P>
<P>(2) Provisions requiring approval by the parent entity PHA of each project and of the program and expenditures of the applicant. 
</P>
<P>(3) Provisions requiring approval by the parent entity PHA of each issue of obligations by the applicant not more than 60 days prior to the date of issue and approval of any substantive changes to the terms and conditions of the issuance prior to date of issue. 
</P>
<P>(4) Provisions requiring the applicant to furnish an audit of all its books and records by an independent public accountant to the parent entity PHA within 90 days after execution of the contract or final endorsement and at least bennially thereafter; and provisions requiring the parent entity PHA to perform an annual review of the applicant's performance and to provide HUD with a copy of such review together with any audits performed during the reporting period. 
</P>
<P>(5) Provisions giving the parent entity PHA right of access at any time to all books and records of the applicant. 
</P>
<P>(6) Provisions that upon dissolution of the applicant, title to or other interest in any real or personal property that is owned by such applicant at the time of dissolution shall be transferred to the parent entity PHA or to another PHA or to another not-for-profit entity as determined by the parent entity PHA and approved by HUD, to be used only for purposes approved by HUD.
</P>
<P>(7) Evidence of agreement by the parent entity PHA, or other entity as may be provided for in alternative contractual arrangements pursuant to § 811.103(b), to accept title to any real or personal property pursuant to paragraph (c)(6) of this section.
</P>
<P>(d) Any subsequent amendments to the documents submitted to HUD pursuant to this section must be approved by HUD.
</P>
<P>(e) Members, officers, or employees of the parent entity PHA may be directors or officers of the applicant unless this is contrary to state law.
</P>
<CITA TYPE="N">[44 FR 12360, Mar. 6, 1979, as amended at 61 FR 14461, Apr. 1, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 811.106" NODE="24:4.1.2.1.2.0.1.6" TYPE="SECTION">
<HEAD>§ 811.106   Default under the contract.</HEAD>
<P>If HUD finds there is a default under the Contract, the field office shall so notify the trustee and give the trustee a specified reasonable time to take action to require the owner to correct such default prior to any suspension or termination of payments under the contract. In the event of a default under the contract, HUD may terminate or suspend payments under the contract, may seek specific performance of the contract and may pursue other remedies.
</P>
<CITA TYPE="N">[44 FR 12360, Mar. 6, 1979, as amended at 61 FR 14461, Apr. 1, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 811.107" NODE="24:4.1.2.1.2.0.1.7" TYPE="SECTION">
<HEAD>§ 811.107   Financing documents and data.</HEAD>
<P>(a) The financing agency shall assure that any official statement or prospectus or other disclosure statement prepared in connection with the financing shall state on the first page that: 
</P>
<P>(1) In addition to any security cited in the statement, the bonds may be secured by a pledge of an Annual Contributions Contract and a Housing Assistance Payments Contract, executed by HUD; 
</P>
<P>(2) The faith of the United States is solemnly pledged to the payment of annual contributions pursuant to the Annual Contributions Contact or to the payment of housing assistance payments pursuant to the Housing Assistance Payments Contract, and funds have been obligated by HUD for such payments; 
</P>
<P>(3) Except as provided in any contract of mortgage insurance, the bonds are not insured by HUD; 
</P>
<P>(4) The bonds are not to be construed as a debt or indebtedness of HUD or the United States, and payment of the bonds is not guaranteed by the United States; 
</P>
<P>(5) Nothing in the text of a disclosure statement is to be interpreted to conflict with the above; and 
</P>
<P>(6) HUD has not reviewed or approved and bears no responsibility for the content of disclosure statements. 
</P>
<P>(b) The financing agency shall retain in its files the documentation relating to the financing. A copy of this documentation shall be furnished to HUD upon request.
</P>
<CITA TYPE="N">[61 FR 14461, Apr. 1, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 811.108" NODE="24:4.1.2.1.2.0.1.8" TYPE="SECTION">
<HEAD>§ 811.108   Debt service reserve.</HEAD>
<P>(a) <I>FHA-Insured projects.</I> (1) The debt service reserve shall be invested and the income used to pay principal and interest on that portion of the obligations which is attributable to the funding of the debt service reserve. Any excess investment income shall be added to the debt service reserve. In the event such investment income is insufficient, surplus cash or residual receipts, to the extent approved by the field office, may be used to pay such principal and interest costs. 
</P>
<P>(2) The debt service reserve and its investment income shall be available only for the purpose of paying principal or interest on the obligations. The use of the debt service reserve for this purpose shall not be a cure for any failure by the owner to make required payments. 
</P>
<P>(3) Upon full payment of the principal and interest on the obligations (including that portion of the obligations attributable to the funding of the debt service reserve), any funds remaining in the debt service reserve shall be remitted to HUD. 
</P>
<P>(b) <I>Non-FHA-insured projects.</I> (1) Investment income from the debt service reserve, up to the amount required for debt service on the bonds attributable to the debt service reserve, shall be credited toward the owner's debt service payment. Any excess investment income shall be added to and become part of the debt service reserve. 
</P>
<P>(2) The debt service reserve and investment income thereon shall be available only for the purpose of paying principal or interest on the obligations. The use of the debt service reserve for this purpose shall not be a cure for any failure by the owner to make required payments. 
</P>
<P>(3) Upon full payment of the principal and interest on the obligations (including that portion of the obligations attributable to the funding of the debt service reserve), any funds remaining in the debt service reserve shall be remitted to HUD. 
</P>
<CITA TYPE="N">[61 FR 14461, Apr. 1, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 811.109" NODE="24:4.1.2.1.2.0.1.9" TYPE="SECTION">
<HEAD>§ 811.109   Trust indenture provisions.</HEAD>
<P>Obligations shall be prepaid only under such conditions as HUD shall require, including reduction of contract rents and continued operation of the project for the housing of low-income families. 
</P>
<CITA TYPE="N">[44 FR 12360, Mar. 6, 1979. Redesignated at 61 FR 14461, Apr. 1, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 811.110" NODE="24:4.1.2.1.2.0.1.10" TYPE="SECTION">
<HEAD>§ 811.110   Refunding of obligations issued to finance Section 8 projects.</HEAD>
<P>(a) This section states the terms and conditions under which HUD will approve refunding or defeasance of certain outstanding debt obligations which financed new construction or substantial rehabilitation of Section 8 projects, including fully and partially assisted projects. 
</P>
<P>(b) In the case of bonds issued by State Agencies qualified under 24 CFR part 883 to refund bonds which financed projects assisted pursuant to 24 CFR part 883, HUD requires compliance with the prohibition on duplicative fees contained in 24 CFR part 883 and with paragraphs (f) and (h) of this section, as applicable to the projects to be refunded. 
</P>
<P>(c) No agency shall issue obligations to refund outstanding 11(b) obligations until the Office of the Assistant Secretary for Housing sends the financing agency a Notification of Tax Exemption based on approval of the proposed refunding's terms and conditions as conforming to this part's requirements, including continued operation of the project as housing for low-income families, and where possible, reduction of Section 8 assistance payments through lower contract rents or an equivalent cash rebate to the U.S. Treasury (i.e. Trustee Sweep). The agency shall submit such documentation as HUD determines is necessary for review and approval of the refunding transaction. Upon conclusion of the closing of refunding bonds, written confirmation must be sent to the Office of Multifamily Housing by bond counsel, or other acceptable closing participant, including a schedule of the specific amount of savings in Section 8 assistance where applicable, CUSIP number information, and a final statement of Sources and Uses. 
</P>
<P>(d)(1) HUD approval of the terms and conditions of a Section 8 refunding proposal requires evaluation by HUD's Office of Multifamily Housing of the reasonableness of the terms of the Agency's proposed financing plan, including projected reductions in project debt service where warranted by market conditions and bond yields. This evaluation shall determine that the proposed amount of refunding obligations is the amount needed to: pay off outstanding bonds; fund a debt service reserve to the extent required by credit enhancers or bond rating agencies, or bond underwriters in the case of unrated refunding bonds; pay credit enhancement fees acceptable to HUD; and pay transaction costs as approved by HUD according to a sliding scale ceiling based on par amount of refunding bond principal. Exceptions may be approved by HUD, if consistent with applicable statutes, in the event that an additional issue amount is required for project purposes. 
</P>
<P>(2) The stated maturity of the refunding bonds may not exceed by more than one year the remaining term of the project mortgage, or in the case of an uninsured loan, the later of expiration date of the Housing Assistance Payments Contract (the “HAPC”) or final maturity of the refunded bonds. 
</P>
<P>(3) The bond yield may not exceed by more than 75 basis points the 20 Bond General Obligation Index published by the Daily Bond Buyer for the week immediately preceding the sale of the bonds, except as otherwise approved by HUD. An amount not to exceed one-fourth of one percent annually of the bonds' outstanding principal balance may be allowed for servicing and trustee fees. 
</P>
<P>(e) For projects for which the Agreement to enter into the HAPC was executed between January 1, 1979, and December 31, 1984 (otherwise known as “McKinney Act Projects”), for which a State or local agency initiates a refunding, the Secretary shall make available to an eligible issuing agency 50 percent of the Section 8 savings of a refunding, as determined by HUD on a project-by-project basis, to be used by the agency in accordance with the terms of a Refunding Agreement executed by the Agency and HUD which incorporates the Agency's Housing Plan for use of savings to provide decent, safe, and sanitary housing for very low-income households. In determining the amount of savings recaptured on a project-by-project basis, as authorized by section 1012(b) of the McKinney Act, HUD will take into account the physical condition of the projects participating in the refunding which generate the McKinney Act savings and, if necessary, HUD will finance in refunding bond debt service correction of existing deficiencies which cannot be funded completely by existing project replacement reserves or by a portion of reserves released from the refunded bond's indenture. For McKinney Act refundings of projects which did not receive a Financing Adjustment Factor (“FAF”), HUD will allow up to 50 percent of debt service savings to be allocated to the project account; in which case, the remainder will be shared equally by the Agency and the U.S. Treasury. 
</P>
<P>(f) For refundings of Section 8 projects other than McKinney Act Projects, and for all transactions which substitute collateral for, but do not redeem, outstanding obligations, and for which a HUD approval is needed (such as assignment of a HAPC or insured mortgage note), the Office of Multifamily Housing in consultation with HUD Field Office Counsel will review the HAPC, the Trust Indenture for the outstanding obligations, applicable HUD regulations, and reasonableness of proposed financing terms. In particular, HUD review should be obtained for the release of reserves from the trust indenture of the outstanding 11(b) bonds that are being refunded, defeased, or pre-paid. A proposal to distribute to a non-Federal entity the benefits of a refinancing, such as debt service savings and/or balances in reserves held under the original Trust Indenture, should be referred to the Office of Multifamily Housing for further review. In proposals submitted for HUD approval, HUD will consent to release reserves, as provided by the Trust Indenture, in an amount remaining after correction of project physical deficiencies and/or replenishment of replacement reserves, where needed. In the case of a refunding of 11(b) bonds by a public agency issuer which is the owner of the project and is entitled to reserves held under the Trust Indenture, HUD requires execution by the project owner of a use agreement, and amendment of a regulatory agreement, if applicable, to extend low-income tenant occupancy for ten years after expiration of the original HAPC term. In the case of HAP contracts with renewable 5-year terms, the Use Agreement shall extend for 10 years after the project owners first opt-out date. The Use Agreement may also be required of private entity owners, unless the refunding is incidental to a transfer of project ownership or a transaction which provides a substantial public benefit, as determined by the Office of Multifamily Housing. Proposed use of benefits shall be consistent with applicable appropriations law, the HAPC, and other requirements applicable to the original project financing, and the proposed financing terms must be reasonable in relation to bond market yields and transaction fees, as approved by the HUD Office of Multifamily Housing. 
</P>
<P>(g) Agencies shall have wide latitude in the design of specific delivery vehicles for use of McKinney Act savings, subject to HUD audit of each Agency's performance in serving the targeted income eligible population. Savings may be used for shelter costs of providing housing, rental, or owner-occupied, to very low-income households through new construction, rehabilitation, repairs, and acquisition with or without rehab, including assistance to very low-income units in mixed-income developments. These include programs designed to assist in obtaining shelter, such as rent or homeownership subsidies. Self-sufficiency services in support of very low-income housing are also eligible, and may include, but are not limited to, homeownership counseling, additional security measures in high-crime areas, construction job training for residents' repair of housing units occupied by very low-income families, and empowerment activities designed to support formation and growth of resident entities. Except for the cost of providing third-party program audit reports to HUD, eligible costs exclude consultant fees or reimbursement of Agency staff expenses, but may include fees for professional services required in the Agency's McKinney Act programs of assistance to very low-income families. Unless otherwise specified by HUD in a McKinney Agreement, savings shall be subject to the above use requirements for 10 years from the date of receipt of the savings. 
</P>
<P>(h) Refunding bonds, including interest thereon, approved under this Section shall be exempt from all taxation now or hereafter imposed by the United States, and the notification of approval of tax exemption shall not be subject to revocation by HUD. Whether refunding bonds approved under this section meet the requirements of Section 103 or any other provisions of the Internal Revenue Code is not within the responsibilities of HUD to determine. Such bonds shall be prepaid during the HAPC term only under such conditions as HUD shall require.
</P>
<CITA TYPE="N">[61 FR 14461, Apr. 1, 1996] 


</CITA>
</DIV8>

</DIV5>


<DIV5 N="850" NODE="24:4.1.2.1.3" TYPE="PART">
<HEAD>PART 850—HOUSING DEVELOPMENT GRANTS
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437o, 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>49 FR 24641, June 14, 1984, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.2.1.3.1" TYPE="SUBPART">
<HEAD>Subpart A—General Provisions</HEAD>


<DIV8 N="§ 850.1" NODE="24:4.1.2.1.3.1.1.1" TYPE="SECTION">
<HEAD>§ 850.1   Applicability and savings clause.</HEAD>
<P>(a) <I>Applicability.</I> This part implements the Housing Development Grant Program contained in section 17 of the United States Housing Act of 1937 (42 U.S.C. 1437o). The Program authorized the Secretary to make housing development grants to support the new construction or substantial rehabilitation of real property to be used primarily for residential rental purposes. Section 289(b)(1) of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12839) repealed section 17 effective October 1, 1991. Section 289(a) prohibited new grants under the Housing Development Grant Program except for projects for which binding commitments had been entered into prior to October 1, 1991. 
</P>
<P>(b) <I>Savings clause.</I> Any grant made pursuant to a binding commitment entered into before October 1, 1991 will continue to be governed by subparts A through E of this part in effect immediately before April 1, 1996, and by subpart F of this part as currently in effect. 
</P>
<CITA TYPE="N">[61 FR 7944, Feb. 29, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.2.1.3.2" TYPE="SUBPART">
<HEAD>Subparts B-E [Reserved]</HEAD>

</DIV6>


<DIV6 N="F" NODE="24:4.1.2.1.3.3" TYPE="SUBPART">
<HEAD>Subpart F—Project Management</HEAD>


<DIV8 N="§ 850.151" NODE="24:4.1.2.1.3.3.1.1" TYPE="SECTION">
<HEAD>§ 850.151   Project restrictions.</HEAD>
<P>(a) <I>Owner-grantee agreement.</I> The grantee and the owner must enter into an agreement that requires the owner (including its successors in interest) to carry out the requirements of this section and of the grant agreement, as appropriate. The grantee-owner agreement must require the grantee to monitor (where required) and to take appropriate legal action to enforce compliance with the owner's responsibilities thereunder. The owner's compliance with its obligations under this section must be secured by a mortgage or other security instrument meeting the requirements of § 850.155. Nothing in this section shall preclude enforcement by the Federal government of grant agreement provisions, civil rights statutes, or other provisions of law that apply to the Housing Development Grant Program.
</P>
<P>(b) <I>Restriction on conversion.</I> The owner shall not convert the units in the project to condominium ownership or to a form of cooperative ownership that is not eligible to receive a housing development grant, during the 20-year period from the date on which the units in the project are available for occupancy.
</P>
<P>(c) <I>Tenant selection.</I> The owner shall determine the eligibility of applicants for lower income units in accordance with the requirements of 24 CFR parts 812 and 813, including the provisions of these parts concerning citizenship or eligible immigration status and income limits, and certain assistance to mixed families (families whose members include those with eligible immigration status, and those without eligible immigration status.). The owner shall not, during the 20-year period from the date on which the units in the project are available for occupancy, discriminate against prospective tenants on the basis of their receipt of, or eligibility for, housing assistance under any Federal, State, or local housing assistance program or, except for an elderly housing project, on the basis that they have a minor child or children who will be living with them.
</P>
<P>(d) <I>Restriction on leasing assisted units.</I> The owner shall assure that the percentage of low-income units specified in the grant agreement is occupied, or is available for occupancy, by low-income households during the period beginning on the date on which the units in the project are available for occupancy through 20 years from the date on which 50 percent of the units are occupied. The owner may lease a low-income unit only to a tenant that is a low-income household at the time of its initial occupancy. An owner may continue to lease a low-income unit to a tenant that ceases to qualify as a low-income household only as provided in paragraph (f) of this section.
</P>
<P>(e) <I>Low-income unit rent.</I> (1) Section 17(d)(8)(A) of the U.S. Housing Act of 1937 prohibits the rents for low-income units from exceeding “30 per centum of the adjusted income of a family whose income equals 50 per centum of the median income for the area, as determined by the Secretary with adjustments for smaller and larger families.” This paragraph describes how these maximum rent determinations are made.
</P>
<P>(2) The maximum rents that may be charged for low-income units are based on the size of the unit by number of bedrooms, and are calculated in accordance with the following procedure. For each unit size, HUD will provide the Section 8 very low-income limits. HUD will also provide income adjustments for each unit size, consistent with 24 CFR part 813. An adjusted income amount for each unit size is calculated by the owner or grantee by subtracting the income adjustment from the Section 8 limit. The adjusted income amount is multiplied by 30 percent and divided by 12 to obtain the maximum monthly gross rent for each low-income unit. A monthly allowance for the utilities and services (excluding telephone) to be paid by the tenant is subtracted from the maximum monthly gross rent to obtain the maximum monthly rent that may be charged for low-income units. Information to be provided by HUD will be available from the responsible HUD Field Office.
</P>
<P>(3) The initial monthly allowance for utilities and services to be paid by the tenant must be approved by HUD. Subsequent calculations of this allowance must be approved by the grantee in connection with its review and approval of rent schedules under paragraph (e)(4) of this section. The maximum monthly rent must be recalculated annually, and may change as changes in the Section 8 very low-income limit, the income adjustments, or the monthly allowance for utilities and services warrant.
</P>
<P>(4) The grantee must review and approve any schedule of rents proposed by the owner for low-income units. Any schedule submitted by an owner within the permissible maximum will be deemed approved, unless the grantee informs the owner, within 60 days after receiving the schedule, that it is disapproved.
</P>
<P>(5) Any increase in rents for low-income units is subject to the provisions of outstanding leases, in any event, the owner must provide tenants of those units not less than 30 days prior written notice before implementing any increase in rents.
</P>
<P>(f) <I>Reexamination of tenant income and composition.</I> (1) The owner shall reexamine the income of each tenant household living in low-income units at least once a year. At the first regular reexamination after June 19, 1995 the owner shall follow the requirements of 24 CFR part 812 concerning obtaining and processing evidence of citizenship or eligible immigration status of all family members. Thereafter, at each regular reexamination, the owner shall follow the requirements of 24 CFR part 812 concerning verification of the immigration status of any new family member.
</P>
<P>(2) If this reexamination indicates that the tenant no longer qualifies as a low-income household, the owner must take one of the following actions, as appropriate: (i) If the unit occupied by the tenant must be leased to a low- income household to maintain the percentage of low-income units specified in the grant agreement, the owner must notify the tenant that it must move when the current lease expires or six months after the date of the notification, whichever is later; (ii) If the owner can meet this percentage without the unit occupied by the tenant (for example, by designating another comparable unit as a low-income unit), the owner may continue to lease to that tenant, but is free to renegotiate the rent at the expiration of the current lease.
</P>
<P>(3) For provisions related to termination of assistance for failure to establish citizenship or eligible immigration status, see 24 CFR 812.9, and also 24 CFR 812.10 for provisions related to certain assistance to mixed families (families whose members include those with eligible immigration status, and those without eligible immigration status) in lieu of termination of assistance, and for provisions related to deferral of termination of assistance.
</P>
<P>(g) <I>Affirmative fair housing marketing.</I> Marketing must be done in accordance with the HUD-approved Affirmative Fair Housing Marketing Plan, Form HUD-935.2, and all fair housing and equal opportunity requirements. The purpose of the Plan and the requirements is to provide for affirmative marketing through the provision of information regarding the availability of units in projects assisted. Affirmative marketing steps consist of good faith efforts to provide information and otherwise attract eligible persons from all racial, ethnic and gender groups in the housing market area to the available housing.
</P>
<P>(h) <I>Management and maintenance functions.</I> The owner must perform all management and maintenance functions in compliance with equal opportunity requirements. These functions include selection of tenants, reexamination of family income, evictions and other terminations of tenancy, and all ordinary and extraordinary maintenance and repairs, including replacement of capital items.
</P>
<P>(i) <I>Residency preferences.</I> Local residency requirements are prohibited. Local residency preferences may be applied in selecting tenants only to the extent that they are not inconsistent with affirmative fair housing marketing objectives and the owner's HUD-approved AFHM Plan. With respect to any residency preference, persons expected to reside in the community as a result of current or planned employment will be treated as residents.
</P>
<CITA TYPE="N">[49 FR 24641, June 14, 1984, as amended at 60 FR 14841, Mar. 20, 1995]


</CITA>
</DIV8>


<DIV8 N="§ 850.153" NODE="24:4.1.2.1.3.3.1.2" TYPE="SECTION">
<HEAD>§ 850.153   Rent control.</HEAD>
<P>A project constructed or substantially rehabilitated with a housing development grant is not subject to State or local rent control unless the rent control requirements or agreements (a) (1) were entered into under a State law or local ordinance of general applicability that was enacted and in effect in the jurisdiction before November 30, 1983 and (2) apply generally to rental housing projects not assisted under the Housing Development Grant Program, or (b) are imposed under this subpart. State and local rent controls expressly preempted by this section include, but are not limited to, rent laws or ordinances, rent regulating agreements, rent regulations, occupancy agreements, or financial penalties for failure to achieve certain occupancy or rent projections.


</P>
</DIV8>


<DIV8 N="§ 850.155" NODE="24:4.1.2.1.3.3.1.3" TYPE="SECTION">
<HEAD>§ 850.155   Securing owner's responsibilities.</HEAD>
<P>Assistance provided under this part shall constitute a debt of the owner (including its successors in interest) to the grantee, and shall be secured by a mortgage or other security instrument. The debt shall be repayable in the event of a substantive, uncorrected violation by an owner of the obligations contained in paragraphs (b), (c), (d) and (e) of § 850.151. The instruments securing this debt shall provide for repayment to the grantee in an amount equal to the total amount of housing development grant assistance outstanding, plus interest which is determined by the Secretary by adding two percent to the average yield on outstanding marketable long-term obligations of the United States during the month preceding the date on which assistance was made available. The amount to be repaid shall be reduced by 10 percent for each full year in excess of 10 years that intervened between the beginning of the term of the owner-grantee agreement and the violation. 


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="880" NODE="24:4.1.2.1.4" TYPE="PART">
<HEAD>PART 880—SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM FOR NEW CONSTRUCTION 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437a, 1437c, 1437f, 3535(d), 12701, and 13611-13619.
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>44 FR 59410, Oct. 15, 1979, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.2.1.4.1" TYPE="SUBPART">
<HEAD>Subpart A—Summary and Applicability</HEAD>


<DIV8 N="§ 880.101" NODE="24:4.1.2.1.4.1.1.1" TYPE="SECTION">
<HEAD>§ 880.101   General.</HEAD>
<P>(a) The purpose of the Section 8 program is to provide low-income families with decent, safe and sanitary rental housing through the use of a system of housing assistance payments. This part contains the policies and procedures applicable to the Section 8 new construction program. The assistance may be provided to public housing agency owners or to private owners either directly from HUD or through public housing agencies. 
</P>
<P>(b) This part does not apply to projects developed under other Section 8 program regulations, including 24 CFR parts 881, 882, 883, 884, and 885, except to the extent specifically stated in those parts. Portions of subparts E and F of this part 880 have been cross-referenced in 24 CFR parts 881 and 883. 
</P>
<CITA TYPE="N">[61 FR 13587, Mar. 27, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 880.104" NODE="24:4.1.2.1.4.1.1.2" TYPE="SECTION">
<HEAD>§ 880.104   Applicability of part 880.</HEAD>
<P>(a) Part 880, in effect as of November 5, 1979, applies to all proposals for which a notification of selection was not issued before the November 5, 1979 effective date of part 880. (See 24 CFR part 880, revised as of April 1, 1980.) Where a notification of selection was issued for a proposal before the November 5, 1979 effective date, part 880, in effect as of November 5, 1979, applies if the owner notified HUD within 60 calendar days that the owner wished the provisions of part 880, effective November 5, 1979, to apply and promptly brought the proposal into conformance.
</P>
<P>(b) Subparts E (Housing Assistance Payments Contract) and F (Management) of this part apply to all projects for which an Agreement was not executed before the November 5, 1979, effective date of part 880. Where an Agreement was so executed:
</P>
<P>(1) The owner and HUD may agree to make the revised subpart E of this part applicable and to execute appropriate amendments to the Agreement and/or Contract.
</P>
<P>(2) The owner and HUD may agree to make the revised subpart F of this part applicable (with or without the limitation on distributions) and to execute appropriate amendments to the Agreement and/or Contract.
</P>
<P>(c) Section 880.607 (Termination of tenancy and modification of leases) applies to all families. 
</P>
<P>(d) Notwithstanding the provisions of paragraph (b) of this section, the provisions of 24 CFR part 5 apply to all projects, regardless of when an Agreement was executed.
</P>
<CITA TYPE="N">[61 FR 13587, Mar. 27, 1996, as amended at 65 FR 16722, Mar. 29, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 880.105" NODE="24:4.1.2.1.4.1.1.3" TYPE="SECTION">
<HEAD>§ 880.105   Applicability to proposals and projects under 24 CFR part 811.</HEAD>
<P>Where proposals and projects are financed with tax-exempt obligations under 24 CFR part 811, the provisions of part 811 will be complied with in addition to all requirements of this part. In the event of any conflict between this part and part 811, part 811 will control. 


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.2.1.4.2" TYPE="SUBPART">
<HEAD>Subpart B—Definitions and Other Requirements</HEAD>


<DIV8 N="§ 880.201" NODE="24:4.1.2.1.4.2.1.1" TYPE="SECTION">
<HEAD>§ 880.201   Definitions.</HEAD>
<P><I>Annual Contributions Contract (ACC).</I> As defined in part 5 of this title. 
</P>
<P><I>Agency.</I> As defined in 24 CFR part 883.
</P>
<P><I>Agreement.</I> (Agreement to Enter into Housing Assistance Payments Contract) The Agreement between the owner and the contract administrator which provides that, upon satisfactory completion of the project in accordance with the HUD-approved final proposal, the administrator will enter into the Contract with the owner. 
</P>
<P><I>Annual income.</I> As defined in part 5 of this title. 
</P>
<P><I>Contract.</I> (Housing Assistance Payments Contract) The Contract entered into by the owner and the contract administrator upon satisfactory completion of the project, which sets forth the rights and duties of the parties with respect to the project and the payments under the Contract. 
</P>
<P><I>Contract Administrator.</I> The entity which enters into the Contract with the owner and is responsible for monitoring performance by the owner. The contract administrator is a PHA in the case of private-owner/PHA projects, and HUD in private-owner/HUD and PHA-owner/HUD projects. 
</P>
<P><I>Contract rent.</I> The total amount of rent specified in the contract as payable to the owner for a unit. 
</P>
<P><I>Covered housing provider.</I> For the Section 8 Housing Assistance Payment Program for New Construction, “covered housing provider,” as such term is used in HUD's regulations in 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking), refers to the owner.
</P>
<P><I>Decent, safe, and sanitary.</I> Housing is decent, safe, and sanitary if it meets the physical condition requirements in 24 CFR part 5, subpart G.
</P>
<P><I>Drug-related criminal activity.</I> The illegal manufacture, sale, distribution, use or possession with the intent to manufacture, sell, distribute, or use, of a controlled substance as defined in section 102 of the Controlled Substances Act, 21 U.S.C. 802. 
</P>
<P><I>Elderly family.</I> As defined in part 5 of this title. 
</P>
<P><I>Fair Market Rent (FMR).</I> As defined in part 5 of this title. 
</P>
<P><I>Family.</I> As defined in part 5 of this title. 
</P>
<P><I>Final proposal.</I> The detailed description of a proposed project to be assisted under this part, which an owner submits after selection of the preliminary proposal, except where a preliminary proposal is not required under § 880.303(c). (The final proposal becomes an exhibit to the Agreement and is the standard by which HUD judges acceptable construction of the project.) 
</P>
<P><I>Housing assistance payment.</I> The payment made by the contract administrator to the owner of an assisted unit as provided in the contract. Where the unit is leased to an eligible family, the payment is the difference between the contract rent and the tenant rent. An additional payment is made to the family when the utility allowance is greater than the total tenant payment. A housing assistance payment, known as a “vacancy payment”. may be made to the owner when an assisted unit is vacant, in accordance with the terms of the contract. 
</P>
<P><I>HUD.</I> Department of Housing and Urban Development. 
</P>
<P><I>Independent Public Accountant.</I> A Certified Public Accountant or a licensed or registered public accountant, having no business relationship with the owner except for the performance of audit, systems work and tax preparation. If not certified, the Independent Public Accountant must have been licensed or registered by a regulatory authority of a State or other political subdivision of the United States on or before December 31, 1970. In States that do not regulate the use of the title “public accountant,” only Certified Public Accountants may be used. 
</P>
<P><I>Low income family.</I> As defined in part 5 of this title. 
</P>
<P><I>NOFA.</I> As defined in part 5 of this title. 
</P>
<P><I>Owner.</I> Any private person or entity (including a cooperative) or a public entity which qualifies as a PHA, having the legal right to lease or sublease newly constructed dwelling units assisted under this part. The term owner also includes the person or entity submitting a proposal under this part. 
</P>
<P><I>Partially-assisted Project.</I> A project for non-elderly families under this part which includes more than 50 units of which 20 percent or fewer are assisted. 
</P>
<P><I>PHA-Owner/HUD Project.</I> A project under this part which is owned by a PHA. For this type of project, the Agreement and the Contract are entered into by the PHA, as owner, and HUD, as contract administrator. 
</P>
<P><I>Private-Owner/HUD Project.</I> A project under this part which is owned by a private owner. For this type of project, the Agreement and Contract are entered into by the private owner, as owner, and HUD, as contract administrator. 
</P>
<P><I>Private-Owner/PHA Project.</I> A project under this part which is owned by a private owner. For this type of project, the Agreement and Contract are entered into by the private owner, as owner, and the PHA, as contract administrator, pursuant to an ACC between the PHA and HUD. The term also covers the situation where the ACC is with one PHA and the owner is another PHA. 
</P>
<P><I>Project Account.</I> A specifically identified and segregated account for each project which is established in accordance with § 880.503(b) out of the amounts by which the maximum annual commitment exceeds the amount actually paid out under the Contract or ACC, as applicable, each year. 
</P>
<P><I>Public Housing Agency (PHA).</I> As defined in part 5 of this title. 
</P>
<P><I>Rent.</I> In the case of an assisted unit in a cooperative project, rent means the carrying charges payable to the cooperative with respect to occupancy of the unit. 
</P>
<P><I>Replacement cost.</I> The estimated construction cost of the project when the proposed improvements are completed. The replacement cost may include the land, the physical improvements, utilities within the boundaries of the land, architect's fees, and miscellaneous charges incident to construction as approved by the Assistant Secretary. 
</P>
<P><I>Secretary.</I> The Secretary of Housing and Urban Development (or designee). 
</P>
<P><I>Small Project.</I> A project for non-elderly families under this part which includes a total of 50 or fewer (assisted and unassisted) units.
</P>
<P><I>Tenant rent.</I> As defined in part 5 of this title. 
</P>
<P><I>Total tenant payment.</I> As defined in part 5 of this title. 
</P>
<P><I>Utility allowance.</I> As defined in part 5 of this title. 
</P>
<P><I>Utility reimbursement.</I> As defined in part 5 of this title. 
</P>
<P><I>Vacancy payment.</I> The housing assistance payment made to the owner by the contract administrator for a vacant assisted unit if certain conditions are fulfilled as provided in the Contract. The amount of the vacancy payment varies with the length of the vacancy period and is less after the first 60 days of any vacancy. 
</P>
<P><I>Very low income family.</I> As defined in part 5 of this title. 
</P>
<CITA TYPE="N">[44 FR 59410, Oct. 15, 1979, as amended at 45 FR 18923, Mar. 24, 1980; 48 FR 12703, Mar. 28, 1983; 49 FR 6714, Feb. 23, 1984; 49 FR 17449, Apr. 24, 1984; 49 FR 19943, May 10, 1984; 61 FR 5212, Feb. 9, 1996; 61 FR 13587, Mar. 27, 1996; 61 FR 47382, Sept. 6, 1996; 63 FR 46578, Sept. 1, 1998; 65 FR 16722, Mar. 29, 2000; 81 FR 80811, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 880.205" NODE="24:4.1.2.1.4.2.1.2" TYPE="SECTION">
<HEAD>§ 880.205   Limitation on distributions.</HEAD>
<P>(a) Non-profit owners are not entitled to distributions of project funds. 
</P>
<P>(b) For the life of the Contract, project funds may only be distributed to profit-motivated owners at the end of each fiscal year of project operation following the effective date of the Contract after all project expenses have been paid, or funds have been set aside for payment, and all reserve requirements have been met. The first year's distribution may not be made until cost certification, where applicable, is completed. Distributions may not exceed the following maximum returns: 
</P>
<P>(1) For projects for elderly families, the first year's distribution will be limited to 6 percent on equity. The Assistant Secretary may provide for increases in subsequent years' distributions on an annual or other basis so that the permitted return reflects a 6 percent return on the value in subsequent years, as determined by HUD, of the approved initial equity. Any such adjustment will be made by Notice in the <E T="04">Federal Register.</E> 
</P>
<P>(2) For projects for non-elderly families, the first year's distribution will be limited to 10 percent on equity. The Assistant Secretary may provide for increases in subsequent years' distributions on an annual or other basis so that the permitted return reflects a 10 percent return on the value in subsequent years, as determined by HUD, of the approved initial equity. Any such adjustment will be made by Notice in the <E T="04">Federal Register.</E>
</P>
<P>(c) For the purpose of determining the allowable distribution, an owner's equity investment in a project is deemed to be 10 percent of the replacement cost of the part of the project attributable to dwelling use accepted by HUD at cost certification (see § 880.405) unless the owner justifies a higher equity contribution by cost certification documentation in accordance with HUD mortgage insurance procedures.
</P>
<P>(d) Any short-fall in return may be made up from surplus project funds in future years.
</P>
<P>(e) If HUD determines at any time that project funds are more than the amount needed for project operations, reserve requirements and permitted distribution, HUD may require the excess to be placed in an account to be used to reduce housing assistance payments or for other project purposes. Upon termination of the Contract, any excess funds must be remitted to HUD.
</P>
<P>(f) Owners of small projects or partially-assisted projects are exempt from the limitation on distributions contained in paragraphs (b) through (d) of this section.
</P>
<P>(g) In the case of HUD-insured projects, the provisions of this section will apply instead of the otherwise applicable mortgage insurance program provisions. 
</P>
<P>(h) HUD may permit increased distributions of surplus cash, in excess of the amounts otherwise permitted, to profit-motivated owners who participate in a HUD-approved initiative or program to preserve below-market housing stock. The increased distributions will be limited to a maximum amount based on market rents and calculated according to HUD instructions. Funds that the owner is authorized to retain under section 236(g)(2) of the National Housing Act are not considered distributions to the owner. 
</P>
<P>(i) Any State or local law or regulation that restricts distributions to an amount lower than permitted by this section or permitted by the Commissioner under this paragraph (i) is preempted to the extent provided by section 524(f) of the Multifamily Assisted Housing Reform and Affordability Act of 1997.
</P>
<CITA TYPE="N">[44 FR 59410, Oct. 15, 1979, as amended at 45 FR 18923, Mar. 24, 1980; 49 FR 6714, Feb. 23, 1984; 61 FR 5212, Feb. 9, 1996; 65 FR 61074, Oct. 13, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 880.207" NODE="24:4.1.2.1.4.2.1.3" TYPE="SECTION">
<HEAD>§ 880.207   Property standards.</HEAD>
<P>Projects must comply with:
</P>
<P>(a) [Reserved]
</P>
<P>(b) In the case of manufactured homes, the Federal Manufactured Home Construction and Safety Standards, pursuant to Title VI of the Housing and Community Development Act of 1974, and 24 CFR part 3280;
</P>
<P>(c) In the case of congregate or single room occupant housing, the appropriate HUD guidelines and standards;
</P>
<P>(d) HUD requirements pursuant to section 209 of the Housing and Community Development Act of 1974 for projects for the elderly or handicapped;
</P>
<P>(e) HUD requirements pertaining to noise abatement and control; and
</P>
<P>(f) Applicable State and local laws, codes, ordinances and regulations.
</P>
<P>(g) <I>Smoke detectors</I>—(1) <I>Performance requirement.</I> After October 30, 1992, each dwelling unit must include at least one battery-operated or hard-wired smoke detector, in proper working condition, on each level of the unit. If the unit is occupied by hearing-impaired persons, smoke detectors must have an alarm system, designed for hearing-impaired persons, in each bedroom occupied by a hearing-impaired person.
</P>
<P>(2) <I>Acceptability criteria.</I> The smoke detector must be located, to the extent practicable, in a hallway adjacent to a bedroom, unless the unit is occupied by a hearing-impaired person, in which case each bedroom occupied by a hearing-impaired person must have an alarm system connected to the smoke detector installed in the hallway.
</P>
<CITA TYPE="N">[44 FR 59410, Oct. 15, 1979, as amended at 50 FR 9269, Mar. 7, 1985; 57 FR 33851, July 30, 1992; 63 FR 46578, Sept. 1, 1998]


</CITA>
</DIV8>


<DIV8 N="§ 880.208" NODE="24:4.1.2.1.4.2.1.4" TYPE="SECTION">
<HEAD>§ 880.208   Financing.</HEAD>
<P>(a) <I>Types of financing.</I> Any type of construction financing and long-term financing may be used, including:
</P>
<P>(1) Conventional loans from commercial banks, savings banks, savings and loan associations, pension funds, insurance companies or other financial institutions; 
</P>
<P>(2) Mortgage insurance programs under the National Housing Act; 
</P>
<P>(3) Mortgage and loan programs of the Farmers' Home Administration of the Department of Agriculture compatible with the Section 8 program; and 
</P>
<P>(4) Financing by tax-exempt bonds or other obligations.
</P>
<P>(b) <I>HUD approval.</I> HUD must approve the terms and conditions of the financing to determine consistency with these regulations and to assure they do not purport to pledge or give greater rights or funds to any party than are provided under the Agreement, Contract, and/or ACC. Where the project is financed with tax-exempt obligations, the terms and conditions will be approved in accordance with the following: 
</P>
<P>(1) An issuer of obligations that are tax-exempt under any provision of Federal law or regulation, the proceeds of the sale of which are to be used to purchase GNMA mortgage-backed securities issued by the mortgagee of the Section 8 project, will be subject to 24 CFR part 811, subpart B. 
</P>
<P>(2) Issuers of obligations that are tax-exempt under Section 11(b) of the U.S. Housing Act of 1937 will be subject to 24 CFR part 811, subpart A if paragraph (b)(1) of this section is not applicable. 
</P>
<P>(3) Issuers of obligations that are tax-exempt under any provision of Federal law or regulation other than section 11(b) of the U.S. Housing Act of 1937 will be subject to 24 CFR part 811, subpart A if paragraph (b)(1) of this section is not applicable, except that such issuers that are State Agencies qualified under 24 CFR part 883 are not subject to 24 CFR part 811 subpart A and are subject solely to the requirements of 24 CFR part 883 with regard to the approval of tax-exempt financing. 
</P>
<P>(c) <I>Pledge of Contracts.</I> An owner may pledge, or offer as security for any loan or obligation, an Agreement, Contract or ACC entered into pursuant to this part: <I>Provided, however,</I> That such financing is in connection with a project constructed pursuant to this part and approved by HUD. Any pledge of the Agreement, Contract, or ACC, or payments thereunder, will be limited to the amounts payable under the Contract or ACC in accordance with its terms. If the pledge or other document provides that all payments will be paid directly to the mortgagee or the trustee for bondholders, the mortgagee or trustee will make all payments or deposits required under the mortgage or trust indenture or HUD regulations and remit any excess to the owner.
</P>
<P>(d) <I>Foreclosure and other transfers.</I> In the event of foreclosure, assignment or sale approved by HUD in lieu of foreclosure, or other assignment or sale approved by HUD:
</P>
<P>(1) The Agreement, the Contract and the ACC, if applicable, will continue in effect, and 
</P>
<P>(2) Housing assistance payments will continue in accordance with the terms of the Contract.
</P>
<P>(e) <I>Financing of manufactured home parks.</I> In the case of a newly constructed manufactured home park, the principal amount of any mortgage attributable to the rental spaces in the park may not exceed an amount per space determined in accordance with § 207.33(b) of this title.
</P>
<CITA TYPE="N">[44 FR 59410, Oct. 15, 1979, as amended at 45 FR 62797, Sept. 22, 1980; 48 FR 12704, Mar. 28, 1983; 49 FR 17449, Apr. 24, 1984]


</CITA>
</DIV8>


<DIV8 N="§ 880.211" NODE="24:4.1.2.1.4.2.1.5" TYPE="SECTION">
<HEAD>§ 880.211   Audit.</HEAD>
<P>Where a non-Federal entity (as defined in 2 CFR 200.69) is the eligible owner of a project or a contract administrator under § 880.505 receiving financial assistance under this part, the audit requirements in 2 CFR part 200, subpart F, shall apply.
</P>
<CITA TYPE="N">[80 FR 75941, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 880.212" NODE="24:4.1.2.1.4.2.1.6" TYPE="SECTION">
<HEAD>§ 880.212   Broadband infrastructure.</HEAD>
<P>Any new construction or substantial rehabilitation, as substantial rehabilitation is defined by 24 CFR 5.100, of a building with more than 4 rental units and that is subject to a Housing Assistance Payments contract executed or renewed after January 19, 2017 must include installation of broadband infrastructure, as this term is also defined in 24 CFR 5.100, except where the owner determines and documents the determination that:
</P>
<P>(a) The location of the new construction or substantial rehabilitation makes installation of broadband infrastructure infeasible;
</P>
<P>(b) The cost of installing broadband infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden; or
</P>
<P>(c) The structure of the housing to be substantially rehabilitated makes installation of broadband infrastructure infeasible.
</P>
<CITA TYPE="N">[81 FR 92637, Dec. 20, 2016]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:4.1.2.1.4.3" TYPE="SUBPART">
<HEAD>Subparts C-D [Reserved]</HEAD>

</DIV6>


<DIV6 N="E" NODE="24:4.1.2.1.4.4" TYPE="SUBPART">
<HEAD>Subpart E—Housing Assistance Payments Contract</HEAD>


<DIV8 N="§ 880.501" NODE="24:4.1.2.1.4.4.1.1" TYPE="SECTION">
<HEAD>§ 880.501   The contract.</HEAD>
<P>(a) <I>Contract.</I> The Housing Assistance Payments Contract sets forth rights and duties of the owner and the contract administrator with respect to the project and the housing assistance payments. The owner and contract administrator execute the Contract in the form prescribed by HUD upon satisfactory completion of the project.
</P>
<P>(b) [Reserved]
</P>
<P>(c) <I>Housing Assistance Payments to Owners under the Contract.</I> The housing assistance payments made under the Contract are: 
</P>
<P>(1) Payments to the owner to assist eligible families leasing assisted units, and
</P>
<P>(2) Payments to the owner for vacant assisted units (“vacancy payments”) if the conditions specified in § 880.610 are satisfied.
</P>
<FP>The housing assistance payments are made monthly by the contract administrator upon proper requisition by the owner, except payments for vacancies of more than 60 days, which are made semi-annually by the contract administrator upon requisition by the owner.
</FP>
<P>(d) <I>Amount of Housing Assistance Payments to Owner.</I> (1) The amount of the housing assistance payment made to the owner of a unit being leased by an eligible family is the difference between the contract rent for the unit and the tenant rent payable by the family.
</P>
<P>(2) A housing assistance payment will be made to the owner for a vacant assisted unit in an amount equal to 80 percent of the contract rent for the first 60 days of vacancy, subject to the conditions in § 880.611. If the owner collects any tenant rent or other amount for this period which, when added to this vacancy payment, exceeds the contract rent, the excess must be repaid as HUD directs.
</P>
<P>(3) For a vacancy that exceeds 60 days, a housing assistance payment for the vacant unit will be made, subject to the conditions in § 880.611, in an amount equal to the principal and interest payments required to amortize that portion of the debt attributable to the vacant unit for up to 12 additional months.
</P>
<P>(e) <I>Payment of utility reimbursement.</I> Where applicable, the owner will pay a utility reimbursement in accordance with § 5.632 of this title. HUD will provide funds for the utility reimbursement to the owner in trust solely for the purpose of paying the utility reimbursement. 
</P>
<CITA TYPE="N">[44 FR 59410, Oct. 15, 1979, as amended at 49 FR 19943, May 10, 1984; 61 FR 13587, Mar. 27, 1996; 65 FR 16722, Mar. 29, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 880.502" NODE="24:4.1.2.1.4.4.1.2" TYPE="SECTION">
<HEAD>§ 880.502   Term of contract.</HEAD>
<P>(a) <I>Term (except for Manufactured Home Parks).</I> The term of the contract will be as follows:
</P>
<P>(1) For assisted units in a project financed with the aid of a loan insured or co-insured by the Federal government or a loan made, guaranteed or intended for purchase by the Federal government, the term will be 20 years.
</P>
<P>(2) For assisted units in a project financed other than as described in paragraph (a)(1) of this section, the term will be the lesser of (i) the term of the project's financing (but not less than 20 years), or (ii) 30 years, or 40 years if (A) the project is owned or financed by a loan or loan guarantee from a state or local agency, (B) the project is intended for occupancy by non-elderly families and (C) the project is located in an area designated by HUD as one requiring special financing assistance.
</P>
<P>(b) <I>Term for Manufactured Home Parks.</I> For manufactured home units or spaces in newly constructed manufactured home parks, the term of the Contract will be 20 years.
</P>
<P>(c) <I>Staged Projects.</I> If the project is completed in stages, the term of the Contract must relate separately to the units in each stage. The total Contract term for the units in all stages, beginning with the effective date of the Contract for the first stage, may not exceed the overall maximum term allowable for any one unit under this section, plus two years. 
</P>
<CITA TYPE="N">[44 FR 59410, Oct. 15, 1979, as amended at 45 FR 18924, Mar. 24, 1980; 48 FR 12705, Mar. 28, 1983; 49 FR 17449, Apr. 24, 1984]


</CITA>
</DIV8>


<DIV8 N="§ 880.503" NODE="24:4.1.2.1.4.4.1.3" TYPE="SECTION">
<HEAD>§ 880.503   Maximum annual commitment and project account.</HEAD>
<P>(a) <I>Maximum Annual Commitment.</I> Where HUD is the contract administrator, the maximum annual amount that may be committed under the Contract is the total of the contract rents and utility allowances for all assisted units in the project. Where the PHA is the contract administrator, the maximum annual contribution that may be contracted for in the ACC is the total of the contract rents and utility allowances for all assisted units plus an administrative fee for the PHA as approved by HUD.
</P>
<P>(b) <I>Project Account.</I> (1) A project account will be established and maintained by HUD as a specifically identified and segregated account for each project. The account will be established out of the amounts by which the maximum annual commitment exceeds the amount actually paid out under the Contract or ACC each year. Payments will be made from this account for housing assistance payments (and fees for PHA administration, if appropriate) when needed to cover increases in contract rents or decreases in tenant rents and for other cost specifically approved by the Secretary.
</P>
<P>(2) Whenever a HUD-approved estimate of required annual payments under the Contract or ACC for a fiscal year exceeds the maximum annual commitment and would cause the amount in the project account to be less than 40 percent of the maximum, HUD will, within a reasonable period of time, take such additional steps authorized by Section 8(c)(6) of the U.S. Housing Act of 1937, as may be necessary, to assure that payments under the Contract or ACC will be adequate to cover increases in Contract rents and decreases in tenant rents. 


</P>
</DIV8>


<DIV8 N="§ 880.504" NODE="24:4.1.2.1.4.4.1.4" TYPE="SECTION">
<HEAD>§ 880.504   Leasing to eligible families.</HEAD>
<P>(a) <I>Availability of units for occupancy by Eligible Families.</I> During the term of the Contract, an owner shall make available for occupancy by eligible families the total number of units for which assistance is committed under the Contract. For purposes of this section, making units available for occupancy by eligible families means that the owner: (1) Is conducting marketing in accordance with § 880.601(a); (2) has leased or is making good faith efforts to lease the units to eligible and otherwise acceptable families, including taking all feasible actions to fill vacancies by renting to such families; and (3) has not rejected any such applicant family except for reasons acceptable to the contract administrator. If the owner is temporarily unable to lease all units for which assistance is committed under the Contract to eligible families, one or more units may be leased to ineligible families with the prior approval of the contract administrator in accordance with HUD guidelines. Failure on the part of the owner to comply with these requirements is a violation of the Contract and grounds for all available legal remedies, including specific performance of the Contract, suspension or debarment from HUD programs, and reduction of the number of units under the Contract as set forth in paragraph (b) of this section.
</P>
<P>(b) <I>Reduction of number of units covered by Contract</I>—(1) <I>Part 880 and 24 CFR part 881 projects.</I> HUD (or the PHA at the direction of HUD, as appropriate) may reduce the number of units covered by the Contract to the number of units available for occupancy by eligible families if:
</P>
<P>(i) The owner fails to comply with the requirements of paragraph (a) of this section; or
</P>
<P>(ii) Notwithstanding any prior approval by the contract administrator to lease such units to ineligible families, HUD (or the PHA at the direction of HUD, as appropriate) determines that the inability to lease units to eligible families is not a temporary problem.
</P>
<P>(2) <I>For 24 CFR part 883 projects.</I> HUD and the Agency may reduce the number of units covered by the Contract to the number of units available for occupancy by eligible families if:
</P>
<P>(i) The owner fails to comply with the requirements of paragraph (a) of this section; or
</P>
<P>(ii) Notwithstanding any prior approval by the Agency to lease such units to ineligible families, HUD and the Agency determine that the inability to lease units to eligible families is not a temporary problem.
</P>
<P>(c) <I>Restoration.</I> For this part 880 and 24 CFR part 881 projects, HUD will agree to an amendment of the ACC or the Contract, as appropriate, to provide for subsequent restoration of any reduction made pursuant to paragraph (b) of this section, and for 24 CFR part 883 projects, HUD will agree to an amendment of the ACC and the Agency may agree to an amendment to the Contract to provide for subsequent restoration of any reduction made pursuant to paragraph (b) of this section, if:
</P>
<P>(1) HUD determines (for 24 CFR part 883 projects, HUD and the Agency determine) that the restoration is justified by demand,
</P>
<P>(2) The owner otherwise has a record of compliance with his obligations under the Contract, and 
</P>
<P>(3) Contract and budget authority is available. 
</P>
<P>(d) <I>Applicability.</I> In accordance with section 555 of the Cranston-Gonzalez National Affordable Housing Act of 1990, paragraphs (a) and (b) of this section apply to all Contracts. An owner who had leased an assisted unit to an ineligible family consistent with the regulations in effect at the time will continue to lease the unit to that family. However, the owner must make the unit available for occupancy by an eligible family when the ineligible family vacates the unit. 
</P>
<P>(e) <I>Termination of assistance for failure to submit evidence of citizenship or eligible immigration status.</I> If an owner who is subject to paragraphs (a) and (b) of this section is required to terminate housing assistance payments for the family in accordance with 24 CFR part 5 because the owner determines that the entire family does not have U.S. citizenship or eligible immigration status, the owner may allow continued occupancy of the unit by the family without Section 8 assistance following the termination of assistance, or if the family constitutes a mixed family, as defined in 24 CFR part 5, the owner shall comply with the provisions of 24 CFR part 5 concerning assistance to mixed families, and deferral of termination of assistance.
</P>
<P>(f) <I>Protections for victims of domestic violence, dating violence, sexual assault, or stalking.</I> The regulations of 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking), apply to this section.
</P>
<CITA TYPE="N">[44 FR 59410, Oct. 15, 1979, as amended at 49 FR 31397, Aug. 7, 1984; 51 FR 11224, Apr. 1, 1986; 53 FR 846, Jan. 13, 1988; 53 FR 6601, Mar. 2, 1988; 59 FR 13652, Mar. 23, 1994; 60 FR 14841, Mar. 20, 1995; 61 FR 13587, Mar. 27, 1996; 73 FR 72342, Nov. 28, 2008; 75 FR 66260, Oct. 27, 2010; 81 FR 80811, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 880.505" NODE="24:4.1.2.1.4.4.1.5" TYPE="SECTION">
<HEAD>§ 880.505   Contract administration and conversions.</HEAD>
<P>(a) <I>Contract administration.</I> For private-owner/PHA projects, the PHA is primarily responsible for administration of the Contract, subject to review and audit by HUD. For private-owner/HUD and PHA-owner/HUD projects, HUD is responsible for administration of the Contract. The PHA or HUD may contract with another entity for the performance of some or all of its contract administration functions. 
</P>
<P>(b) <I>PHA fee for Contract administration.</I> A PHA will be entitled to a reasonable fee, determined by HUD, for administering a Contract except under certain circumstances (see 24 CFR part 883) where a state housing finance agency is the PHA and finances the project. 
</P>
<P>(c) <I>Conversion of Projects from one Ownership/Contractual arrangement to another.</I> Any project may be converted from one ownership/contractual arrangement to another (for example, from a private-owner/HUD to a private-owner/PHA project) if: 
</P>
<P>(1) The owner, the PHA and HUD agree, 
</P>
<P>(2) HUD determines that conversion would be in the best interest of the project, and 
</P>
<P>(3) In the case of conversion from a private-owner/HUD to a private-owner/PHA project, contract authority is available to cover the PHA fee for administering the Contract. 


</P>
</DIV8>


<DIV8 N="§ 880.506" NODE="24:4.1.2.1.4.4.1.6" TYPE="SECTION">
<HEAD>§ 880.506   Default by owner (private-owner/HUD and PHA-owner/HUD projects).</HEAD>
<P>The Contract will provide: 
</P>
<P>(a) That if HUD determines that the owner is in default under the Contract, HUD will notify the owner and the lender of the actions required to be taken to cure the default and of the remedies to be applied by HUD including specific performance under the Contract, reduction or suspension of housing assistance payments and recovery of overpayments, where appropriate; and 
</P>
<P>(b) That if the owner fails to cure the default, HUD has the right to terminate the Contract or to take other corrective action. 


</P>
</DIV8>


<DIV8 N="§ 880.507" NODE="24:4.1.2.1.4.4.1.7" TYPE="SECTION">
<HEAD>§ 880.507   Default by PHA and/or owner (private-owner/PHA projects).</HEAD>
<P>(a) <I>Rights of Owner if PHA defaults under Agreement or Contract.</I> The ACC, the Agreement and the Contract will provide that, in the event of failure of the PHA to comply with the Agreement or Contract with the owner, the owner will have the right, if he is not in default, to demand that HUD investigate. HUD will first give the PHA a reasonable opportunity to take corrective action. If HUD determines that a substantial default exists, HUD will assume the PHA's rights and obligations under the Agreement or Contract and meet the obligations of the PHA under the Agreement or Contract including the obligations to enter into the Contract. 
</P>
<P>(b) <I>Rights of HUD if PHA defaults under ACC.</I> The ACC will provide that, if the PHA fails to comply with any of its obligations, HUD may determine that there is a substantial default and require the PHA to assign to HUD all of its rights and interests under the Contract; however, HUD will continue to pay annual contributions in accordance with the terms of the ACC and the Contract. Before determining that a PHA is in substantial default, HUD will give the PHA a reasonable opportunity to take corrective action.
</P>
<P>(c) <I>Rights of PHA and HUD if Owner defaults under Contract.</I> (1) The Contract will provide that if the PHA determines that the owner is in default under the Contract, the PHA will notify the owner and lender, with a copy to HUD, (i) of the actions required to be taken to cure the default, (ii) of the remedies to be applied by the PHA including specific performance under the Contract, abatement of housing assistance payments and recovery of overpayments, where appropriate, and (iii) that if he fails to cure the default, the PHA has the right to terminate the Contract or to take other corrective action, in its discretion or as directed by HUD.
</P>
<P>(2) If the PHA is the lender, the Contract will also provide that HUD has an independent right to determine whether the owner is in default and to take corrective action and apply appropriate remedies, except that HUD will not have the right to terminate the Contract without proceeding in accordance with paragraph (b) of this section. 


</P>
</DIV8>


<DIV8 N="§ 880.508" NODE="24:4.1.2.1.4.4.1.8" TYPE="SECTION">
<HEAD>§ 880.508   Notice upon contract expiration.</HEAD>
<P>(a) The Contract will provide that the owner will notify each assisted family, at least 90 days before the end of the Contract term, of any increase in the amount the family will be required to pay as rent which may occur as a result of its expiration. If the Contract is to be renewed but with a reduction in the number of units covered by it, this notice shall be given to each family who will no longer be assisted under the Contract. 
</P>
<P>(b) The notice provided for in paragraph (a) of this section shall be accomplished by: (1) Sending a letter by first class mail, properly stamped and addressed, to the family at its address at the project, with a proper return address; and (2) serving a copy of the notice on any adult person answering the door at the leased dwelling unit, or if no adult responds, by placing the notice under or through the door, if possible, or else by affixing the notice to the door. Service shall not considered to be effective until both required notices have been accomplished. The date on which the notice shall be considered to be received by the family shall be the date on which the owner mails the first class letter provided for in this paragraph, or the date on which the notice provided for in this paragraph is properly given, whichever is later.
</P>
<P>(c) The notice shall advise each affected family that, after the expiration date of the Contract, the family will be required to bear the entire cost of the rent and that the owner will be free (to the extent the project is not otherwise regulated by HUD) to alter the rent without HUD approval, but subject to any applicable requirements or restrictions under the lease or under State or local law. The notice shall also state: (1) The actual (if known) or the estimated rent which will be charged following the expiration of the Contract; (2) the difference between the rent and the Total Tenant Payment toward rent under the Contract; and (3) the date the Contract will expire.
</P>
<P>(d) The owner shall give HUD a certification that families have been notified in accordance with this section with an example of the text of the notice attached.
</P>
<P>(e) This section applies to all Contracts entered into pursuant to an Agreement executed on or after October 1, 1981, or entered into pursuant to an Agreement executed before October 1, 1981, but renewed or amended on or after October 1, 1984.
</P>
<CITA TYPE="N">[49 FR 31283, Aug. 6, 1984]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:4.1.2.1.4.5" TYPE="SUBPART">
<HEAD>Subpart F—Management</HEAD>


<DIV8 N="§ 880.601" NODE="24:4.1.2.1.4.5.1.1" TYPE="SECTION">
<HEAD>§ 880.601   Responsibilities of owner.</HEAD>
<P>(a) <I>Marketing.</I> (1) The owner must commence diligent marketing activities in accordance with the Agreement not later than 90 days prior to the anticipated date of availability for occupancy of the first unit of the project.
</P>
<P>(2) Marketing must be done in accordance with the HUD-approved Affirmative Fair Housing Marketing Plan and all Fair Housing and Equal Opportunity requirements. The purpose of the Plan and requirements is to assure that eligible families of similar income in the same housing market area have an equal opportunity to apply and be selected for a unit in projects assisted under this part regardless of their race, color, creed, religion, sex or national origin.
</P>
<P>(3) With respect to non-elderly family units, the owner must undertake marketing activities in advance of marketing to other prospective tenants in order to provide opportunities to reside in the project to non-elderly families who are least likely to apply, as determined in the Affirmative Fair Housing Marketing Plan, and to non-elderly families expected to reside in the community by reason of current or planned employment.
</P>
<P>(4) At the time of Contract execution, the owner must submit a list of leased and unleased units, with justification for the unleased units, in order to qualify for vacancy payments for the unleased units.
</P>
<P>(b) <I>Management and maintenance.</I> The owner is responsible for all management functions, including determining eligibility of applicants, selection of tenants, reexamination and verification of family income and composition, determination of family rent (total tenant payment, tenant rent and utility reimbursement), collection of rent, termination of tenancy and eviction, and performance of all repair and maintenance functions (including ordinary and extraordinary maintenance), and replacement of capital items. (See part 5 of this title.) All functions must be performed in accordance with applicable equal opportunity requirements. 
</P>
<P>(c) <I>Contracting for services.</I> (1) For this part 880 and 24 CFR part 881 projects, with HUD approval, the owner may contract with a private or public entity (except the contract administrator) for performance of the services or duties required in paragraphs (a) and (b) of this section.
</P>
<P>(2) For 24 CFR part 883 projects, with approval of the Agency, the owner may contract with a private or public entity (but not with the Agency unless temporarily necessary for the Agency to protect its financial interest and to uphold its program responsibilities where no alternative management agent is immediately available) for performance of the services or duties required in paragraphs (a) and (b) of this section.
</P>
<P>(3) However, such an arrangement does not relieve the owner of responsibility for these services and duties.
</P>
<P>(d) <I>Submission of financial and operating statements.</I> After execution of the Contract, the owner must submit to the contract adminstrator: 
</P>
<P>(1) Financial information in accordance with 24 CFR part 5, subpart H; and
</P>
<P>(2) Other statements as to project operation, financial conditions and occupancy as HUD may require pertinent to administration of the Contract and monitoring of project operations. 
</P>
<P>(e) <I>Use of project funds.</I> (1) Project funds must be used for the benefit of the project, to make required deposits to the replacement reserve in accordance with § 880.602 and to provide distributions to the owner as provided in § 880.205, § 881.205 of this chapter, or § 883.306 of this chapter, as appropriate.
</P>
<P>(2) For this part 880 and 24 CFR part 881 projects:
</P>
<P>(i) Any remaining project funds must be deposited with the mortgagee or other HUD-approved depository in an interest-bearing residual receipts account. Withdrawals from this account will be made only for project purposes and with the approval of HUD.
</P>
<P>(ii) Partially-assisted projects are exempt from the provisions of this section. 
</P>
<P>(iii) In the case of HUD-insured projects, the provisions of this paragraph (e) will apply instead of the otherwise applicable mortgage insurance provisions. 
</P>
<P>(3) For 24 CFR part 883 projects: 
</P>
<P>(i) Any remaining project funds must be deposited with the Agency, other mortgagee or other Agency-approved depository in an interest-bearing account. Withdrawals from this account may be made only for project purposes and with the approval of the Agency. 
</P>
<P>(ii) In the case of HUD-insured projects, the provisions of this paragraph will apply instead of the otherwise applicable mortgage insurance provisions, except in the case of partially-assisted projects which are subject to the applicable mortgage insurance provisions.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0204)
</APPRO>
<CITA TYPE="N">[44 FR 59410, Oct. 15, 1979, as amended at 45 FR 18924, Mar. 24, 1980; 51 FR 11224, Apr. 1, 1986; 53 FR 846, Jan. 13, 1988; 53 FR 1145, Jan. 15, 1988; 53 FR 6601, Mar. 2, 1988; 54 FR 39702, Sept. 27, 1989; 56 FR 7536, Feb. 22, 1991; 60 FR 14841, Mar. 20, 1995; 61 FR 13588, Mar. 27, 1996; 63 FR 46593, Sept. 1, 1998; 65 FR 16722, Mar. 29, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 880.602" NODE="24:4.1.2.1.4.5.1.2" TYPE="SECTION">
<HEAD>§ 880.602   Replacement reserve.</HEAD>
<P>(a) A replacement reserve must be established and maintained in an interest-bearing account to aid in funding extraordinary maintenance and repair and replacement of capital items. 
</P>
<P>(1) <I>Part 880 and 24 CFR part 881 projects.</I> (i) For this part 880 and 24 CFR part 811 projects, an amount equivalent to .006 of the cost of total structures, including main buildings, accessory buildings, garages and other buildings, or any higher rate as required by HUD from time to time, will be deposited in the replacement reserve annually. This amount will be adjusted each year by the amount of the automatic annual adjustment factor. 
</P>
<P>(ii) The reserve must be built up to and maintained at a level determined by HUD to be sufficient to meet projected requirements. Should the reserve achieve that level, the rate of deposit to the reserve may be reduced with the approval of HUD. 
</P>
<P>(iii) All earnings including interest on the reserve must be added to the reserve. 
</P>
<P>(iv) Funds will be held by the mortgagee or trustee for bondholders, and may be drawn from the reserve and used only in accordance with HUD guidelines and with the approval of, or as directed by, HUD. 
</P>
<P>(v) Partially-assisted part 880 and 24 CFR part 881 projects are exempt from the provisions of this section. 
</P>
<P>(2) <I>Part 883 of this chapter projects.</I> (i) For 24 CFR part 883 projects, an amount equivalent to at least .006 of the cost of total structures, including main buildings, accessory buildings, garages and other buildings, or any higher rate as required from time to time by: 
</P>
<P>(A) The Agency, in the case of projects approved under 24 CFR part 883, subpart D; or 
</P>
<P>(B) HUD, in the case of all other projects, will be deposited in the replacement reserve annually. For projects approved under 24 CFR part 883, subpart D, this amount may be adjusted each year by up to the amount of the automatic annual adjustment factor. For all projects not approved under 24 CFR part 883, subpart D, this amount must be adjusted each year by the amount of the automatic annual adjustment factor. 
</P>
<P>(ii) The reserve must be built up to and maintained at a level determined to be sufficient by the Agency to meet projected requirements. Should the reserve achieve that level, the rate of deposit to the reserve may be reduced with the approval of the Agency. 
</P>
<P>(iii) All earnings, including interest on the reserve, must be added to the reserve. 
</P>
<P>(iv) Funds will be held by the Agency, other mortgagee or trustee for bondholders, as determined by the Agency, and may be drawn from the reserve and used only in accordance with Agency guidelines and with the approval of, or as directed by, the Agency. 
</P>
<P>(v) The Agency may exempt partially-assisted projects approved under 24 CFR part 883, subpart D, from the provisions of this section. All partially-assisted projects not approved under the Fast Track Procedures formerly in 24 CFR part 883, subpart D, are exempt from the provisions of this section. 
</P>
<P>(b) In the case of HUD-insured projects, the provisions of this section will apply instead of the otherwise applicable mortgage insurance provisions, except in the case of partially-assisted insured projects which are subject to the applicable mortgage insurance provisions. 
</P>
<CITA TYPE="N">[61 FR 13588, Mar. 27, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 880.603" NODE="24:4.1.2.1.4.5.1.3" TYPE="SECTION">
<HEAD>§ 880.603   Selection and admission of assisted tenants.</HEAD>
<P>(a) <I>Application.</I> The owner must accept applications for admission to the project in the form prescribed by HUD. Both the owner (or designee) and the applicant must complete and sign the application. For this part 880 and 24 CFR part 881 projects, on request, the owner must furnish copies of all applications to HUD and the PHA, if applicable. For 24 CFR part 883 projects, on request, the owner must furnish to the Agency or HUD copies of all applications received. 
</P>
<P>(b) <I>Determination of eligibility and selection of tenants.</I> The owner is responsible for obtaining and verifying information related to income eligibility in accordance with 24 CFR part 5, subpart F, and evidence related to citizenship and eligible immigration status in accordance with 24 CFR part 5, subpart E, to determine whether the applicant is eligible for assistance in accordance with the requirements of 24 CFR part 5, and to select families for admission to the program, which includes giving selection preferences in accordance with 24 CFR part 5, subpart D.
</P>
<P>(1) If the owner determines that the family is eligible and is otherwise acceptable and units are available, the owner will assign the family a unit of the appropriate size in accordance with HUD standards. If no suitable unit is available, the owner will place the family on a waiting list for the project and notify the family of when a suitable unit may become available. If the waiting list is so long that the applicant would not be likely to be admitted for the next 12 months, the owner may advise the applicant that no additional applications are being accepted for that reason, provided the owner complies with the procedures for informing applicants about admission preferences as provided in 24 CFR part 5, subpart D. 
</P>
<P>(2) If the owner determines that an applicant is ineligible on the basis of income or family composition, or because of failure to meet the disclosure and verification requirements for Social Security Numbers (as provided by 24 CFR part 5), or because of failure by an applicant to sign and submit consent forms for the obtaining of wage and claim information from State Wage Information Collection Agencies (as provided by 24 CFR parts 5 and 813), or that the owner is not selecting the applicant for other reasons, the owner will promptly notify the applicant in writing of the determination and its reasons, and that the applicant has the right to meet with the owner or managing agent in accordance with HUD requirements. Where the owner is a PHA, the applicant may request an informal hearing. If the PHA determines that the applicant is not eligible, the PHA will notify the applicant and inform the applicant that he or she has the right to request HUD review of the PHA's determination. The applicant may also exercise other rights if the applicant believes that he or she is being discriminated against on the basis of race, color, creed, religion, sex, or national origin. See 24 CFR part 5 for the informal review provisions for the denial of a Federal preference or the failure to establish citizenship or eligible immigration status and for notice requirements where assistance is terminated, denied, suspended, or reduced based on wage and claim information obtained by HUD from a State Wage Information Collection Agency. 
</P>
<P>(3) Records on applicants and approved eligible families, which provide racial, ethnic, gender and place of previous residency data required by HUD, must be maintained and retained for three years. 
</P>
<P>(c) <I>Reexamination of family income and composition</I>—(1) <I>Regular reexaminations.</I> The owner must reexamine the income and composition of all families at least every 12 months. After consultation with the family and upon verification of the information, the owner must make appropriate adjustments in the Total Tenant Payment in accordance with part 5 of this title and determine whether the family's unit size is still appropriate. The owner must adjust Tenant Rent and the Housing Assistance Payment to reflect any change in Total Tenant Payment and must carry out any unit transfer required by HUD. At the time of the annual reexamination of family income and composition, the owner must require the family to disclose the verify Social Security Numbers, as provided by 24 CFR part 5. For requirements regarding the signing and submitting of consent forms by families for the obtaining of wage and claim information from State Wage Information Collection Agencies, see 24 CFR part 5. At the first regular reexamination after June 19, 1995, the owner shall follow the requirements of 24 CFR part 5 concerning obtaining and processing evidence of citizenship or eligible immigration status of all family members. Thereafter, at each regular reexamination, the owner shall follow the requirements of 24 CFR part 5 and verify the immigration status of any new family member. 
</P>
<P>(2) <I>Interim reexaminations.</I> The family must comply with provisions in its lease regarding interim reporting of changes in income. If the owner receives information concerning a change in the family's income or other circumstances between regularly scheduled reexaminations, the owner must consult with the family and make any adjustments determined to be appropriate. Any change in the family's income or other circumstances that results in an adjustment in the Total Tenant Payment, Tenant Rent and Housing Assistance Payment must be verified. See 24 CFR part 5 for the requirements for the disclosure and verification of Social Security Numbers at interim reexaminations involving new family members. For requirements regarding the signing and submitting of consent forms for the obtaining of wage and claim information from State Wage Information Collection Agencies, see 24 CFR part 5. At any interim reexamination after June 19, 1995, when a new family member has been added, the owner shall follow the requirements of 24 CFR part 5 concerning obtaining and processing evidence of the citizenship or eligible immigration status of any new family member. 
</P>
<P>(3) <I>Continuation of housing assistance payments.</I> A family's eligibility for Housing Assistance Payments continues until the Total Tenant Payment equals the contract rent plus any utility allowance. The termination of eligibility at such point will not affect the family's other rights under its lease, nor will such termination preclude the resumption of payments as a result of later changes in income, rents, or other relevant circumstances during the term of the Contract. However, eligibility also may be terminated in accordance with HUD requirements, for such reasons as failure to submit requested verification information, including failure to meet the disclosure and verification requirements for Social Security Numbers, as provided by 24 CFR part 5, or failure to sign and submit consent forms for the obtaining wage and claim information from State Wage Information Collection Agencies, as provided by 24 CFR part 5. See 24 CFR part 5 for provisions requiring termination of assistance for failure to establish citizenship or eligible immigration status and also for provisions concerning certain assistance for mixed families (families whose members include those with eligible immigration status, and those without eligible immigration status) in lieu of termination of assistance, and for provisions concerning deferral of termination of assistance.
</P>
<P>(4) <I>Streamlined income determination.</I> An owner may elect to follow the provisions of 24 CFR 5.657(d).
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0204)
</APPRO>
<CITA TYPE="N">[61 FR 13589, Mar. 27, 1996, as amended at 65 FR 16722, Mar. 29, 2000; 70 FR 77744, Dec. 30, 2005; 81 FR 12371, Mar. 8, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 880.604" NODE="24:4.1.2.1.4.5.1.4" TYPE="SECTION">
<HEAD>§ 880.604   Tenant rent.</HEAD>
<P>The eligible Family pays the Tenant Rent directly to the Owner.
</P>
<CITA TYPE="N">[49 FR 19943, May 10, 1984]


</CITA>
</DIV8>


<DIV8 N="§ 880.605" NODE="24:4.1.2.1.4.5.1.5" TYPE="SECTION">
<HEAD>§ 880.605   Overcrowded and underoccupied units.</HEAD>
<P>If the contract administrator determines that because of change in family size an assisted unit is smaller than appropriate for the eligible family to which it is leased, or that the unit is larger than appropriate, housing assistance payments with respect to the unit will not be reduced or terminated until the eligible family has been relocated to an appropriate alternative unit. If possible, the owner will, as promptly as possible, offer the family an appropriate unit. The owner may receive vacancy payments for the vacated unit if he complies with the requirements of § 880.611. 






</P>
</DIV8>


<DIV8 N="§ 880.606" NODE="24:4.1.2.1.4.5.1.6" TYPE="SECTION">
<HEAD>§ 880.606   Lease requirements.</HEAD>
<XREF ID="20260226" REFID="21">Link to an amendment published at 91 FR 9453, Feb. 26, 2026.</XREF>
<XREF ID="20260313" REFID="2a">Link to a delay of the above  amendment published at 91 FR 12301, Mar. 13, 2026.</XREF>
<P>(a) <I>Term of Lease.</I> The term of the lease will be for not less than one year. The lease may, or in the case of a lease for a term of more than one year must, contain a provision permitting termination on 30 days advance written notice by the family. 
</P>
<P>(b) <I>Notification for nonpayment of rent.</I> The lease must also contain a provision or addendum that tenants will receive notification at least 30 days before a formal judicial eviction is filed.


</P>
<P>(c) <I>Form</I>—(1) <I>Part 880 and 24 CFR part 881 projects.</I> For this part 880 and 24 CFR part 881 projects, the form of lease must contain all required provisions, and none of the prohibited provisions specified in the developer's packet, and must conform to the form of lease included in the approved final proposal.
</P>
<P>(2) <I>24 CFR part 883 projects.</I> For 24 CFR part 883 projects, the form of lease must contain all required provisions, and none of the prohibited provisions specified below.
</P>
<P>(i) <I>Required provisions (Addendum to lease).</I>
</P>
<EXTRACT>
<HD3>Addendum to Lease
</HD3>
<P>The following additional Lease provisions are incorporated in full in the Lease between ____________________ (Landlord) and ____________________ (Tenant) for the following dwelling unit: __________________. In case of any conflict between these and any other provisions of the Lease, these provisions will prevail.
</P>
<P>a. The total rent will be $________ per month.
</P>
<P>b. Of the total rent, $________ will be payable by the State Agency (Agency) as housing assistance payments on behalf of the Tenant and $__________ will be payable by the Tenant. These amounts will be subject to change by reason of changes in the Tenant's family income, family composition, or extent of exceptional medical or other unusual expenses, in accordance with HUD-established schedules and criteria; or by reason of adjustment by the Agency of any applicable Utility Allowance; or by reasons of changes in program rules. Any such change will be effective as of the date stated in a notification to the Tenant.
</P>
<P>c. The Landlord will not discriminate against the Tenant in the provision of services, or in any other manner, on the grounds of race, color, creed, religion, sex, or national origin.
</P>
<P>d. The Landlord will provide the following services and maintenance: ____________ 
</P>
<P>e. A violation of the Tenant's responsibilities under the Section 8 Program, as determined by the Agency, is also a violation of the lease.
</P>
<FP-DASH>Landlord
</FP-DASH>
<FP-DASH>By
</FP-DASH>
<FP-DASH>Date
</FP-DASH>
<FP-DASH>Tenant
</FP-DASH>
<FP-DASH>Date</FP-DASH></EXTRACT>
<HD3>[End of addendum]
</HD3>
<P>(ii) <I>Prohibited provisions.</I> Lease clauses which fall within the classifications listed below must not be included in any Lease.
</P>
<EXTRACT>
<HD3>Lease Clauses
</HD3>
<P>a. <I>Confession of Judgment.</I> Consent by the tenant to be sued, to admit guilt, or to accept without question any judgment favoring the landlord in a lawsuit brought in connection with the lease.
</P>
<P>b. <I>Seize or Hold Property for Rent or Other Charges.</I> Authorization to the landlord to take property of the tenant and/or hold it until the tenant meets any obligation which the landlord has determined the tenant has failed to perform.
</P>
<P>c. <I>Exculpatory Clause.</I> Prior agreement by the tenant not to hold the landlord or landlord's agents legally responsible for acts done improperly or for failure to act when the landlord or landlord's agent was required to do so.
</P>
<P>d. <I>Waiver of Legal Notice.</I> Agreement by the tenant that the landlord need not give any notices in connection with (1) a lawsuit against the tenant for eviction, money damages, or other purposes, or (2) any other action affecting the tenant's rights under the lease.
</P>
<P>e. <I>Waiver of Legal Proceeding.</I> Agreement by the tenant to allow eviction without a court determination.
</P>
<P>f. <I>Waiver of Jury Trial.</I> Authorization to the landlord's lawyer to give up the tenant's right to trial by jury.
</P>
<P>g. <I>Waiver of Right to Appeal Court Decision.</I> Authorization to the landlord's lawyer to give up the tenant's right to appeal a decision on the ground of judicial error or to give up the tenant's right to sue to prevent a judgment being put into effect.
</P>
<P>h. <I>Tenant Chargeable with Cost of Legal Actions Regardless of Outcome of Lawsuit.</I> Agreement by the tenant to pay lawyer's fees or other legal costs whenever the landlord decides to sue the tenant whether or not the tenant wins. (Omission of such a clause does not mean that the tenant, as a party to a lawsuit, may not have to pay lawyer's fees or other costs if the court so orders.)</P></EXTRACT>
<HD3>[End of clauses]
</HD3>
<CITA TYPE="N">[44 FR 59410, Oct. 15, 1979, as amended at 61 FR 13590, Mar. 27, 1996; 89 FR 101303, Dec. 13, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 880.607" NODE="24:4.1.2.1.4.5.1.7" TYPE="SECTION">
<HEAD>§ 880.607   Termination of tenancy and modification of lease.</HEAD>
<XREF ID="20260226" REFID="22">Link to an amendment published at 91 FR 9453, Feb. 26, 2026.</XREF>
<XREF ID="20260313" REFID="2a">Link to a delay of the above  amendment published at 91 FR 12301, Mar. 13, 2026.</XREF>
<P>(a) <I>Applicability.</I> The provisions of this section apply to all decisions by an owner to terminate the tenancy of a family residing in a unit under Contract during or at the end of the family's lease term. 
</P>
<P>(b) <I>Entitlement of Families to occupancy</I>—(1) <I>Grounds.</I> The owner may not terminate any tenancy except upon the following grounds:
</P>
<P>(i) Material noncompliance with the lease;
</P>
<P>(ii) Material failure to carry out obligations under any State landlord and tenant act; 
</P>
<P>(iii) Criminal activity by a covered person in accordance with sections 5.858 and 5.859, or alcohol abuse by a covered person in accordance with section 5.860. If necessary, criminal records can be obtained for lease enforcement purposes under section 5.903(d)(3). 
</P>
<P>(iv) Other good cause, which may include the refusal of a family to accept an approved modified lease form (see paragraph (d) of this section). No termination by an owner will be valid to the extent it is based upon a lease or a provisions of State law permitting termination of a tenancy solely because of expiration of an initial or subsequent renewal term. All terminations must also be in accordance with the provisions of any State and local landlord tenant law and paragraph (c) of this section.
</P>
<P>(2) <I>Notice of good cause.</I> The conduct of a tenant cannot be deemed “other good cause” under paragraph (b)(1)(iv) of this section unless the owner has given the family prior notice that the grounds constitute a basis for termination of tenancy. The notice must be served on the family in the same manner as that provided for termination notices under paragraph (c) of this section and State and local law. 
</P>
<P>(3) <I>Material noncompliance.</I> (i) Material noncompliance with the lease includes: 
</P>
<P>(A) One or more substantial violations of the lease; or 
</P>
<P>(B) Repeated minor violations of the lease that disrupt the livability of the building; adversely affect the health or safety of any person or the right of any tenant to the quiet enjoyment of the leased premises and related facilities; interfere with the management of the building or have an adverse financial effect on the building.
</P>
<P>(ii) Failure of the family to timely submit all required information on family income and composition, including failure to submit required evidence of citizenship or eligible immigration status (as provided by 24 CFR part 5), failure to disclose and verify Social Security Numbers (as provided by 24 CFR part 5), failure to sign and submit consent forms (as provided by 24 CFR part 5), or knowingly providing incomplete or inaccurate information, shall constitute a substantial violation of the lease.
</P>
<P>(c) <I>Termination notice.</I> (1) The owner must give the family a written notice of any proposed termination of tenancy, stating the grounds and that the tenancy is terminated on a specified date and advising the family that it has an opportunity to respond to the owner. 
</P>
<P>(2) When a termination notice is issued for other good cause (paragraph (b)(1)(iv) of this section), the notice will be effective, and it will so state, at the end of a term and in accordance with the termination provisions of the lease, but in no case earlier than 30 days after receipt by the family of the notice. Where the termination notice is based on material noncompliance with the lease or material failure to carry out obligations under a State landlord and tenant act pursuant to paragraph (b)(1)(i) or (b)(1)(ii) of this section, the time of service must be in accord with the lease and State law. 
</P>
<P>(3) In any judicial action instituted to evict the family, the owner may not rely on any grounds which are different from the reasons set forth in the notice. 
</P>
<P>(4) See 24 CFR part 5 for provisions related to termination of assistance because of failure to establish citizenship or eligible immigration status, including informal hearing procedures and also for provisions concerning certain assistance for mixed families (families whose members include those with eligible immigration status, and those without eligible immigration status) in lieu of termination of assistance, and for provisions concerning deferral of termination of assistance.
</P>
<P>(5) In actions or potential actions to terminate tenancy, the owner shall follow 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking).
</P>
<P>(6) In the case of failure to pay rent, the termination notice shall be effective no earlier than 30 days after receipt by the tenant. All termination notices in cases of failure to pay rent must include the following:
</P>
<P>(i) Instructions on how the tenant can cure the nonpayment of rent violation, including an itemized amount separated by month of alleged rent owed by the tenant, any other arrearages allowed by HUD and included in the lease separated by month, and the date by which the tenant must pay the amount of rent owed before an eviction for nonpayment of rent can be filed;
</P>
<P>(ii) Information on how the tenant can recertify their income and apply for a hardship exemption pursuant to 24 CFR 5.630(b); and
</P>
<P>(iii) In the event of a Presidential declaration of a national emergency, such information as required by the Secretary.
</P>
<P>(7) An owner must not provide tenants with a termination notice prior to the day after the rent is due according to the lease. An owner must not proceed with filing a formal judicial eviction if the tenant pays the alleged amount of rent owed within the 30-day notification period.






</P>
<P>(d) <I>Modification of Lease form.</I> The owner, with the prior approval of HUD or, for a 24 CFR part 883 project, the Agency, may modify the terms and conditions of the lease form effective at the end of the initial term or a successive term, by serving an appropriate notice on the family, together with the offer of a revised lease or an addendum revising the existing lease. This notice and offer must be received by the family at least 30 days prior to the last date on which the family has the right to terminate the tenancy without being bound by the modified terms and conditions. The family may accept the modified terms and conditions by executing the offered revised lease or addendum, or may reject the modified terms and conditions by giving the owner written notice in accordance with the lease that the family intends to terminate the tenancy. Any increase in rent must in all cases be governed by § 880.609 and other applicable HUD regulations.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0204)
</APPRO>
<CITA TYPE="N">[44 FR 59410, Oct. 15, 1979, as amended at 51 FR 11225, Apr. 1, 1986; 53 FR 846, Jan. 13, 1988; 53 FR 6601, Mar. 2, 1988; 54 FR 39703, Sept. 27, 1989; 56 FR 7537, Feb. 22, 1991; 60 FR 14842, Mar. 20, 1995; 61 FR 13590, Mar. 27, 1996; 61 FR 47382, Sept. 6, 1996; 66 FR 28797, May 24, 2001; 73 FR 72342, Nov. 28, 2008; 75 FR 66260, Oct. 27, 2010; 81 FR 80811, Nov. 16, 2016; 86 FR 55701, Oct. 7, 2021; 89 FR 101303, Dec. 13, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 880.608" NODE="24:4.1.2.1.4.5.1.8" TYPE="SECTION">
<HEAD>§ 880.608   Security deposits.</HEAD>
<P>(a) At the time of the initial execution of the lease, the owner will require each family to pay a security deposit in an amount equal to one month's Total Tenant Payment or $50, whichever is greater. The family is expected to pay the security deposit from its own resources and/or other public sources. The owner may collect the security deposit on an installment basis.
</P>
<P>(b) The owner must place the security deposits in a segregated, interest-bearing account. The balance of this account must at all times be equal to the total amount collected from the families then in occupancy, plus any accrued interest. The owner must comply with any applicable State and local laws concerning interest payments on security deposits.
</P>
<P>(c) In order to be considered for the return of the security deposit, a family which vacates its unit will provide the owner with its forwarding address or arrange to pick up the refund.
</P>
<P>(d) The owner, subject to State and local law and the requirements of this paragraph, may use the security deposit, plus any accrued interest, as reimbursement for any unpaid family contribution or other amount which the family owes under the lease. Within 30 days (or shorter time if required by State, or local law) after receiving notification of the family's forwarding address, the owner must:
</P>
<P>(1) Refund to a family owing no rent or other amount under the lease the full amount of the security deposit, plus accrued interest;
</P>
<P>(2) Provide to a family owing rent or other amount under the lease a list itemizing any unpaid rent, damages to the unit, and estimated costs for repair, along with a statement of the family's rights under State and local law. If the amount which the owner claims is owed by the family is less than the amount of the security deposit, plus accrued interest, the owner must refund the unused balance to the family. If the owner fails to provide the list, the family will be entitled to the refund of the full amount of the security deposit plus accrued interest.
</P>
<P>(e) In the event a disagreement arises concerning reimbursement of the security deposit, the family will have the right to present objections to the owner in an informal meeting. The owner must keep a record of any disagreements and meetings in a tenant file for inspection by the contract administrator. The procedures of this paragraph do not preclude the family from exercising its rights under State and local law.
</P>
<P>(f) If the security deposit, including any accrued interest, is insufficient to reimburse the owner for any unpaid tenant rent or other amount which the family owes under the lease, and the owner has provided the family with the list required by paragraph (d)(2) of this section, the owner may claim reimbursement from the contract administrator, as appropriate, for an amount not to exceed the lesser of:
</P>
<P>(1) The amount owed the owner, or
</P>
<P>(2) One month's contract rent, minus the amount of the security deposit plus accrued interest. Any reimbursement under this section will be applied first toward any unpaid tenant rent due under the lease. No reimbursement may be claimed for unpaid rent for the period after termination of the tenancy.
</P>
<CITA TYPE="N">[44 FR 59410, Oct. 15, 1979, as amended at 49 FR 19943, May 10, 1984; 61 FR 13591, Mar. 27, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 880.609" NODE="24:4.1.2.1.4.5.1.9" TYPE="SECTION">
<HEAD>§ 880.609   Adjustment of contract rents.</HEAD>
<P>(a) <I>Automatic annual adjustment of Contract Rents.</I> Upon request from the owner to the contract administrator, contract rents will be adjusted on the anniversary date of the contract in accordance with 24 CFR part 888. 
</P>
<P>(b) <I>Special additional adjustments.</I> For all projects, special additional adjustments will be granted, to the extent determined necessary by HUD (for 24 CFR part 883 projects, by the Agency and HUD), to reflect increases in the actual and necessary expenses of owning and maintaining the assisted units which have resulted from substantial general increases in real property taxes, assessments, utility rates, and utilities not covered by regulated rates, and which are not adequately compensated for by annual adjustments under paragraph (a) of this section. The owner must submit to the contract administrator required supporting data, financial statements and certifications.
</P>
<P>(c) <I>Overall limitation.</I> Any adjustments of contract rents for a unit after Contract execution or cost certification, where applicable, must not result in material differences between the rents charged for assisted units and comparable unassisted units except to the extent that the differences existed with respect to the contract rents set at Contract execution or cost certification, where applicable. 
</P>
<CITA TYPE="N">[44 FR 59410, Oct. 15, 1979, as amended at 59 FR 22755, May 3, 1994; 61 FR 13591, Mar. 27, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 880.610" NODE="24:4.1.2.1.4.5.1.10" TYPE="SECTION">
<HEAD>§ 880.610   Adjustment of utility allowances.</HEAD>
<P>In connection with annual and special adjustments of contract rents, the owner must submit an analysis of the project's Utility Allowances. Such data as changes in utility rates and other facts affecting utility consumption should be provided as part of this analysis to permit appropriate adjustments in the Utility Allowances. In addition, when approval of a utility rate change would result in a cumulative increase of 10 percent or more in the most recently approved Utility Allowances, the project owner must advise the contract administrator and request approval of new Utility Allowances. Whenever a Utility Allowance for a unit is adjusted, the owner will promptly notify affected families and make a corresponding adjustment of the tenant rent and the amount of the housing assistance payment for the unit.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0161)
</APPRO>
<CITA TYPE="N">[50 FR 39097, Sept. 27, 1985]


</CITA>
</DIV8>


<DIV8 N="§ 880.611" NODE="24:4.1.2.1.4.5.1.11" TYPE="SECTION">
<HEAD>§ 880.611   Conditions for receipt of vacancy payments.</HEAD>
<P>(a) <I>General.</I> Vacancy payments under the Contract will not be made unless the conditions for receipt of these housing assistance payments set forth in this section are fulfilled. 
</P>
<P>(b) <I>Vacancies during Rent-up.</I> For each assisted unit that is not leased as of the effective date of the Contract, the owner is entitled to vacancy payments in the amount of 80 percent of the contract rent for the first 60 days of vacancy if the owner: 
</P>
<P>(1) Conducted marketing in accordance with § 880.601(a) and otherwise complied with § 880.601; 
</P>
<P>(2) Has taken and continues to take all feasible actions to fill the vacancy; and 
</P>
<P>(3) Has not rejected any eligible applicant except for good cause acceptable to the contract administrator. 
</P>
<P>(c) <I>Vacancies after Rent-Up.</I> If an eligible family vacates a unit, the owner is entitled to vacancy payments in the amount of 80 percent of the contract rent for the first 60 days of vacancy if the owner: 
</P>
<P>(1) Certifies that he did not cause the vacancy by violating the lease, the Contract or any applicable law; 
</P>
<P>(2) Notified the contract administrator of the vacancy or prospective vacancy and the reasons for the vacancy immediately upon learning of the vacancy or prospective vacancy; 
</P>
<P>(3) Has fulfilled and continues to fulfill the requirements specified in § 880.601(a) (2) and (3) and paragraph (b) (2) and (3) of this section; and 
</P>
<P>(4) For any vacancy resulting from the owner's eviction of an eligible family, certifies that he has complied with § 880.607. 
</P>
<P>(d) <I>Vacancies for longer than 60 days.</I> If an assisted unit continues to be vacant after the 60-day period specified in paragraph (b) or (c) of this section, the owner may apply to receive additional vacancy payments in an amount equal to the principal and interest payments required to amortize that portion of the debt service attributable to the vacant unit for up to 12 additional months for the unit if: 
</P>
<P>(1) The unit was in decent, safe and sanitary condition during the vacancy period for which payments are claimed; 
</P>
<P>(2) The owner has fulfilled and continues to fulfill the requirements specified in paragraph (b) or (c) of this section, as appropriate; and 
</P>
<P>(3) The owner has (for 24 CFR part 883 projects, the owner and the Agency have) demonstrated to the satisfaction of HUD that:
</P>
<P>(i) For the period of vacancy, the project is not providing the owner with revenues at least equal to project expenses (exclusive of depreciation), and the amount of payments requested is not more than the portion of the deficiency attributable to the vacant unit, and 
</P>
<P>(ii) The project can achieve financial soundness within a reasonable time. 
</P>
<P>(e) <I>Prohibition of double compensation for vacancies.</I> The owner is not entitled to vacancy payments for vacant units to the extent he can collect for the vacancy from other sources (such as security deposits, payments under § 880.608(f), and governmental payments under other programs). 
</P>
<CITA TYPE="N">[44 FR 59410, Oct. 15, 1979, as amended at 61 FR 13591, Mar. 27, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 880.612" NODE="24:4.1.2.1.4.5.1.12" TYPE="SECTION">
<HEAD>§ 880.612   Management and occupancy reviews.</HEAD>
<P>(a) The contract administrator will conduct management and occupancy reviews to determine whether the owner is in compliance with the Contract. Such reviews will be conducted in accordance with a schedule set out by the Secretary and published in the <E T="04">Federal Register,</E> following notice and the opportunity to comment. Where a change in ownership or management occurs, a management and occupancy review must be conducted within six months following the change in ownership or management.
</P>
<P>(b) HUD or the Contract Administrator may inspect project operations and units at any time.
</P>
<P>(c) Equal Opportunity reviews may be conducted by HUD at any time.
</P>
<CITA TYPE="N">[87 FR 37997, June 27, 2022]


</CITA>
</DIV8>


<DIV8 N="§ 880.612a" NODE="24:4.1.2.1.4.5.1.13" TYPE="SECTION">
<HEAD>§ 880.612a   Preference for occupancy by elderly families.</HEAD>
<P>(a) <I>Election of preference for occupancy by elderly families</I>—(1) <I>Election by owners of eligible projects.</I> (i) An owner of a project assisted under this part (including a partially assisted project) that was originally designed primarily for occupancy by elderly families (an “eligible project”) may, at any time, elect to give preference to elderly families in selecting tenants for assisted, vacant units in the project, subject to the requirements of this section. 
</P>
<P>(ii) For purposes of this section, a project eligible for the preference provided by this section, and for which the owner makes an election to give preference in occupancy to elderly families is referred to as an “elderly project.” “Elderly families” refers to families whose heads of household, their spouses or sole members are 62 years or older. 
</P>
<P>(iii) An owner who elects to provide a preference to elderly families in accordance with this section is required to notify families on the waiting list who are not elderly that the election has been made and how the election may affect them if: 
</P>
<P>(A) The percentage of disabled families currently residing in the project who are neither elderly nor near-elderly (hereafter, collectively referred to as “non-elderly disabled families”) is equal to or exceeds the minimum required percentage of units established for the elderly project in accordance with paragraph (c)(1) of this section, and therefore non-elderly families on the waiting list (including non-elderly disabled families) may be passed over for covered section 8 units; or 
</P>
<P>(B) The project, after making the calculation set forth in paragraph (c)(1) of this section, will have no units set aside for non-elderly disabled families. 
</P>
<P>(iv) An owner who elects to give a preference for elderly families in accordance with this section shall not remove an applicant from the project's waiting list on the basis of having made the election. 
</P>
<P>(2) <I>HUD approval of election not required.</I> (i) An owner is not required to solicit or obtain the approval of HUD before exercising the election of preference for occupancy provided in paragraph (a)(1) of this section. The owner, however, if challenged on the issue of eligibility of the project for the election provided in paragraph (a)(1) of this section must be able to support the project's eligibility through the production of all relevant documentation in the possession of the owner that pertains to the original design of the project. 
</P>
<P>(ii) The Department reserves the right at any time to review and make determinations regarding the accuracy of the identification of the project as an elderly project. The Department can make such determinations as a result of ongoing monitoring activities, or the conduct of complaint investigations under the Fair Housing Act (42 U.S.C. 3601 through 3619), or compliance reviews and complaint investigations under section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and other applicable statutes. 
</P>
<P>(b) <I>Determining projects eligible for preference for occupancy by elderly families</I>—(1) <I>Evidence supporting project eligibility.</I> Evidence that a project assisted under this part (or portion of a project) was originally designed primarily for occupancy by elderly families, and is therefore eligible for the election of occupancy preference provided by this section, shall consist of at least one item from the sources (“primary” sources) listed in paragraph (b)(1)(i) of this section, or at least two items from the sources (“secondary” sources) listed in paragraph (b)(1)(ii) of this section: 
</P>
<P>(i) <I>Primary sources.</I> Identification of the project (or portion of a project) as serving elderly (seniors) families in at least one primary source such as: The application in response to the notice of funding availability; the terms of the notice of funding availability under which the application was solicited; the regulatory agreement; the loan commitment; the bid invitation; the owner's management plan, or any underwriting or financial document collected at or before loan closing; <I>or</I>
</P>
<P>(ii) <I>Secondary sources.</I> Two or more sources of evidence such as: lease records from the earliest two years of occupancy for which records are available showing that occupancy has been restricted primarily to households where the head, spouse or sole member is 62 years of age or older; evidence that services for elderly persons have been provided, such as services funded by the Older Americans Act, transportation to senior citizen centers, or programs coordinated with the Area Agency on Aging; project unit mix with more than fifty percent of efficiency and one-bedroom units [a secondary source particularly relevant to distinguishing elderly projects under the previous section 3(b) definition (in which disabled families were included in the definition of “elderly families”) from non-elderly projects and which in combination with other factors (such as the number of accessible units) may be useful in distinguishing projects for seniors from those serving the broader definition of “elderly families” which includes disabled families]; or any other relevant type of historical data, unless clearly contradicted by other comparable evidence. 
</P>
<P>(2) <I>Sources in conflict.</I> If a primary source establishes a design contrary to that established by the primary source upon which the owner would base support that the project is an eligible project (as defined in this section), the owner cannot make the election of preferences for elderly families as provided by this section based upon primary sources alone. In any case where primary sources do not provide <I>clear evidence</I> of original design of the project for occupancy primarily by elderly families, including those cases where primary sources conflict, secondary sources may be used to establish the use for which the project was originally designed. 
</P>
<P>(c) <I>Reservation of units in elderly projects for non-elderly disabled families.</I> The owner of an elderly project is required to reserve, at a minimum, the number of units specified in paragraph (c)(1) of this section for occupancy by non-elderly disabled families.
</P>
<P>(1) <I>Minimum number of units to be reserved for non-elderly disabled families.</I> The number of units in an elderly project required to be reserved for occupancy by non-elderly disabled families, shall be, at a minimum, the lesser of: 
</P>
<P>(i) The number of units equivalent to the higher of—
</P>
<P>(A) The percentage of units assisted under this part in the elderly project that were occupied by non-elderly disabled families on October 28, 1992; and 
</P>
<P>(B) The percentage of units assisted under this part in the elderly project that were occupied by non-elderly disabled families upon January 1, 1992; <I>or</I> 
</P>
<P>(ii) 10 percent of the number of units assisted under this part in the eligible project. 
</P>
<P>(2) <I>Option to reserve greater number of units for non-elderly disabled families.</I> The owner, at the owner's option, and at any time, may reserve a greater number of units for non-elderly disabled families than that provided for in paragraph (c)(1) of this section. The option to provide a greater number of units to non-elderly disabled families will not obligate the owner to always provide that greater number to non-elderly disabled families. The number of units required to be provided to non-elderly disabled families at any time in an elderly project is that number determined under paragraph (c)(1) of this section. 
</P>
<P>(d) <I>Secondary preferences.</I> An owner of an elderly project also may elect to establish secondary preferences in accordance with the provisions of paragraph (d) of this section. 
</P>
<P>(1) <I>Preference for near-elderly disabled families in units reserved for elderly families.</I> If the owner of an elderly project determines, in accordance with paragraph (f) of this section, that there are an insufficient number of elderly families who have applied for occupancy to fill all the vacant units in the elderly project reserved for elderly families (that is, all units except those reserved for the non-elderly disabled families as provided in paragraph (c) of this section), the owner may give preference for occupancy of such units to disabled families who are near-elderly families. 
</P>
<P>(2) <I>Preference for near-elderly disabled families in units reserved for non-elderly disabled families.</I> If the owner of an elderly project determines, in accordance with paragraph (f) of this section, that there are an insufficient number of non-elderly disabled families to fill all the vacant units in the elderly project reserved for non-elderly disabled families as provided in paragraph (c) of this section, the owner may give preference for occupancy of these units to disabled families who are near-elderly families. 
</P>
<P>(e) <I>Availability of units to families without regard to preference.</I> An owner shall make vacant units in an elderly project generally available to otherwise eligible families who apply for housing, without regard to the preferences and reservation of units provided in this section if either: 
</P>
<P>(1) The owner has adopted the secondary preferences and there are an insufficient number of families for whom elderly preference, reserve preference, and secondary preference has been given, to fill all the vacant units; or 
</P>
<P>(2) The owner has <I>not</I> adopted the secondary preferences and there are an insufficient number of families for whom elderly preference, and reserve preference has been given to fill all the vacant units. 
</P>
<P>(f) <I>Determination of insufficient number of applicants qualifying for preference.</I> To make a determination that there are an insufficient number of applicants who qualify for the preferences, including secondary preferences, provided by this section, the owner must: 
</P>
<P>(1) Conduct marketing in accordance with § 880.601(a) to attract applicants qualifying for the preferences and reservation of units set forth in this section; and 
</P>
<P>(2) Make a good faith effort to lease to applicants who qualify for the preferences provided in this section, including taking all feasible actions to fill vacancies by renting to such families.
</P>
<P>(g) <I>Prohibition of evictions.</I> An owner may not evict a tenant without good cause, or require that a tenant vacate a unit, in whole or in part because of any reservation or preference provided in this section, or because of any action taken by the Secretary pursuant to subtitle D (sections 651 through 661) of title VI of the Housing and Community Development Act of 1992 (42 U.S.C. 13611 through 13620). 
</P>
<CITA TYPE="N">[59 FR 65850, Dec. 21, 1994, as amended at 61 FR 9046, Mar. 6, 1996; 65 FR 16722, Mar. 29, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 880.613" NODE="24:4.1.2.1.4.5.1.14" TYPE="SECTION">
<HEAD>§ 880.613   Emergency transfers for victims of domestic violence, dating violence, sexual assault, and stalking.</HEAD>
<P>(a) Covered housing providers must develop and implement an emergency transfer plan that meets the requirements in 24 CFR 5.2005(e).
</P>
<P>(b) In order to facilitate emergency transfers for victims of domestic violence, dating violence, sexual assault, and stalking, covered housing providers have discretion to adopt new, and modify any existing, admission preferences or transfer waitlist priorities.
</P>
<P>(c) In addition to following requirements in 24 CFR 5.2005(e), when a safe unit is not immediately available for a victim of domestic violence, dating violence, sexual assault, or stalking who qualifies for an emergency transfer, covered housing providers must:
</P>
<P>(1) Review the covered housing provider's existing inventory of units and determine when the next vacant unit may be available; and
</P>
<P>(2) Provide a listing of nearby HUD subsidized rental properties, with or without preference for persons of domestic violence, dating violence, sexual assault, or stalking, and contact information for the local HUD field office.
</P>
<P>(d) Each year, covered housing providers must submit to HUD data on all emergency transfers requested under 24 CFR 5.2005(e), including data on the outcomes of such requests.
</P>
<CITA TYPE="N">[81 FR 80811, Nov. 16, 2016]


</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="881" NODE="24:4.1.2.1.5" TYPE="PART">
<HEAD>PART 881—SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM FOR SUBSTANTIAL REHABILITATION 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437a, 1437c, 1437f, 3535(d), 12701, and 13611-13619.
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>45 FR 7085, Jan. 31, 1980, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.2.1.5.1" TYPE="SUBPART">
<HEAD>Subpart A—Summary and Applicability</HEAD>


<DIV8 N="§ 881.101" NODE="24:4.1.2.1.5.1.1.1" TYPE="SECTION">
<HEAD>§ 881.101   General.</HEAD>
<P>(a) The purpose of the Section 8 program is to provide low-income families with decent, safe and sanitary rental housing through the use of a system of housing assistance payments. This part contains the policies and procedures applicable to the Section 8 substantial rehabilitation program. The assistance may be provided to public housing agency owners or to private owners either directly from HUD or through public housing agencies.
</P>
<P>(b) This part does not apply to projects developed under other Section 8 program regulations, including 24 CFR parts 880, 882, 883, 884, and 885, except to the extent specifically stated in those parts.
</P>
<CITA TYPE="N">[61 FR 13591, Mar. 27, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 881.104" NODE="24:4.1.2.1.5.1.1.2" TYPE="SECTION">
<HEAD>§ 881.104   Applicability of part 881.</HEAD>
<P>(a) Part 881, in effect as of February 20, 1980, applies to all proposals for which a notification of selection was not issued before the February 20, 1980 effective date of part 881. (See 24 CFR part 881, revised as of April 1, 1980). Where a notification of selection was issued for a proposal before the February 20, 1980, effective date, part 881 in effect as of February 20, 1980 applies if the owner notified HUD within 60 calendar days that the owner wished the provisions of part 881, effective February 20, 1980, to apply and promptly brought the proposal into conformance. 
</P>
<P>(b) Subparts E (Housing Assistance Payments Contract) and F (Management) of this part apply to all projects for which an Agreement was not executed before the February 20, 1980, effective date of part 881. Where an Agreement was so executed: 
</P>
<P>(1) The owner and HUD may agree to make the revised subpart E of this part applicable and to execute appropriate amendments to the Agreement and/or Contract. 
</P>
<P>(2) The owner and HUD may agree to make the revised subpart F of this part applicable (with or without the limitation on distributions) and to execute appropriate amendments to the Agreement and/or Contract. 
</P>
<P>(c) Section 881.607 (Termination of tenancy and modification of leases) applies to all families. 
</P>
<P>(d) Notwithstanding the provisions of paragraph (b) of this section, the provisions of 24 CFR part 5 apply to all projects, regardless of when an Agreement was executed.
</P>
<CITA TYPE="N">[61 FR 13591, Mar. 27, 1996, as amended at 65 FR 16722, Mar. 29, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 881.105" NODE="24:4.1.2.1.5.1.1.3" TYPE="SECTION">
<HEAD>§ 881.105   Applicability to proposals and projects under 24 CFR part 811.</HEAD>
<P>Where proposals and projects are financed with tax-exempt obligations under 24 CFR part 811, the provisions of part 811 will be complied with in addition to all requirements of this part. In the event of any conflict between this part and part 811, part 811 will control. 


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.2.1.5.2" TYPE="SUBPART">
<HEAD>Subpart B—Definitions and Other Requirements</HEAD>


<DIV8 N="§ 881.201" NODE="24:4.1.2.1.5.2.1.1" TYPE="SECTION">
<HEAD>§ 881.201   Definitions.</HEAD>
<P><I>Agreement.</I> (Agreement to Enter into Housing Assistance Payments Contract) The Agreement between the owner and the contract administrator which provides that, upon satisfactory completion of the project in accordance with the HUD-approved final proposal, the administrator will enter into the Contract with the owner. 
</P>
<P><I>Annual Contributions Contract (ACC).</I> As defined in part 5 of this title. 
</P>
<P><I>Annual income.</I> As defined in part 5 of this title. 
</P>
<P><I>Assisted unit.</I> A dwelling unit eligible for assistance under a Contract. 
</P>
<P><I>Contract.</I> (Housing Assistance Payments Contract) The Contract entered into by the owner and the contract administrator upon satisfactory completion of the project, which sets forth the rights and duties of the parties with respect to the project and the payments under the Contract. 
</P>
<P><I>Contract Administrator.</I> The entity which enters into the Contract with the owner and is responsible for monitoring performance by the owner. The contract administrator is a PHA in the case of private-owner/PHA projects, and HUD is private-owner/HUD and PHA-owner/HUD projects. 
</P>
<P><I>Contract rent.</I> The total amount of rent specified in the contract as payable to the owner for a unit. 
</P>
<P><I>Decent, safe, and sanitary.</I> Housing is decent, safe, and sanitary if it meets the physical condition requirements in 24 CFR part 5, subpart G.
</P>
<P><I>Elderly family.</I> As defined in part 5 of this title. 
</P>
<P><I>Fair Market Rent (FMR).</I> As defined in part 5 of this title. 
</P>
<P><I>Family.</I> As defined in part 5 of this title. 
</P>
<P><I>Final proposal.</I> The detailed description of a proposed project to be assisted under this part, which an owner submits after selection of the preliminary proposal, except where a preliminary proposal is not required under § 881.303(c). The final proposal becomes an exhibit to the Agreement and is the standard by which HUD judges acceptable construction of the project. 
</P>
<P><I>Housing assistance payment.</I> The payment made by the contract administrator to the owner of an assisted unit as provided in the contract. Where the unit is leased to an eligible family, the payment is the difference between the contract rent and the tenant rent. An additional payment is made to the family when the utility allowance is greater than the total tenant payment. A housing assistance payment, known as a “vacancy payment”. may be made to the owner when an assisted unit is vacant, in accordance with the terms of the contract. 
</P>
<P><I>HUD.</I> Department of Housing and Urban Development.
</P>
<P><I>Independent Public Accountant.</I> A Certified Public Accountant or a licensed or registered public accountant, having no business relationship with the owner except for the performance of audit, systems work and tax preparation. If not certified, the Independent Public Accountant must have been licensed or registered by a regulatory authority of a State or other political subdivision of the United States on or before December 31, 1970. In States that do not regulate the use of the title “public accountant,” only Certified Public Accountants may be used.
</P>
<P><I>Low income family.</I> As defined in part 5 of this title. 
</P>
<P><I>NOFA.</I> As defined in part 5 of this title. 
</P>
<P><I>Owner.</I> Any private person or entity (including a cooperative) or a public entity which qualifies as a PHA, having the legal right to lease or sublease substantially rehabilitated dwelling units assisted under this part. The term owner also includes the person or entity submitting a proposal under this part.
</P>
<P><I>Partially-assisted Project.</I> A project for non-elderly families under this part which includes more than 50 units of which 20 percent or fewer are assisted.
</P>
<P><I>PHA-Owner/HUD Project.</I> A project under this part which is owned by a PHA. For this type of project, the Agreement and the Contract are entered into by the PHA, as owner, and HUD, as contract administrator.
</P>
<P><I>Private-Owner/HUD Project.</I> A project under this part which is owned by a private owner. For this type of project, the Agreement and Contract are entered into by the private owner, as owner, and HUD, as contract administrator.
</P>
<P><I>Private-Owner/PHA Project.</I> A project under this part which is owned by a private owner. For this type of project, the Agreement and Contract are entered into by the private owner, as owner, and the PHA, as contract administrator, pursuant to an ACC between the PHA and HUD. The term also covers the situation where the ACC is with one PHA and the owner is another PHA.
</P>
<P><I>Project Account.</I> A specifically identified and segregated account for each project which is established in accordance with § 881.503(b) out of the amounts by which the maximum annual commitment exceeds the amount actually paid out under the Contract or ACC, as applicable, each year.
</P>
<P><I>Public Housing Agency (PHA).</I> As defined in part 5 of this title. 
</P>
<P><I>Rent.</I> In the case of an assisted unit in a cooperative project, rent means the carrying charges payable to the cooperative with respect to occupancy of the unit.
</P>
<P><I>Replacement cost.</I> The sum of the “as is” value before rehabilitation of the property as determined by HUD and the estimated cost of rehabilitation, including carrying and finance charges.
</P>
<P><I>Secretary.</I> The Secretary of Housing and Urban Development (or designee).
</P>
<P><I>Single Room Occupancy (SRO) Housing.</I> A unit for occupancy by a single eligible individual capable of independent living, which does not contain food preparation and/or sanitary facilities and is located within a multifamily structure consisting of more than 12 units.
</P>
<P><I>Small project.</I> A project for non-elderly families under this part which includes a total of 50 or fewer (assisted and unassisted) units.
</P>
<P><I>Substantial rehabilitation.</I> (a) The improvement of a property to decent, safe and sanitary condition in accordance with the standards of this part from a condition below those standards. Substantial rehabilitation may vary in degree from gutting and extensive reconstruction to the cure of substantial accumulation of deferred maintenance. Cosmetic improvements alone do not qualify as substantial rehabilitation under this definition.
</P>
<P>(b) Substantial rehabilitation may also include renovation, alteration or remodeling for the conversion or adaptation of structurally sound property to the design and condition required for use under this part or the repair or replacement of major building systems or components in danger of failure.
</P>
<P><I>Tenant rent.</I> As defined in part 5 of this title. 
</P>
<P><I>Total tenant payment.</I> As defined in part 5 of this title. 
</P>
<P><I>Utility allowance.</I> As defined in part 5 of this title. 
</P>
<P><I>Utility reimbursement.</I> As defined in part 5 of this title. 
</P>
<P><I>Vacancy payment.</I> The housing assistance payment made to the owner by the contract administrator for a vacant assisted unit if certain conditions are fulfilled as provided in the Contract. The amount of the vacancy payment varies with the length of the vacancy period and is less after the first 60 days of any vacancy. 
</P>
<P><I>Very low income family.</I> As defined in part 5 of this title. 
</P>
<CITA TYPE="N">[45 FR 7085, Jan. 31, 1980, as amended at 48 FR 12705, Mar. 28, 1983; 49 FR 17449, Apr. 24, 1984; 49 FR 19944, May 10, 1984; 61 FR 5212, Feb. 9, 1996; 61 FR 13591, Mar. 27, 1996; 63 FR 46578, Sept. 1, 1998; 65 FR 16722, Mar. 29, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 881.205" NODE="24:4.1.2.1.5.2.1.2" TYPE="SECTION">
<HEAD>§ 881.205   Limitation on distributions.</HEAD>
<P>(a) Non-profit owners are not entitled to distributions of project funds. 
</P>
<P>(b) For the life of the Contract, project funds may only be distributed to profit-motivated owners at the end of each fiscal year of project operation following the effective date of the Contract after all project expenses have been paid, or funds have been set aside for payment, and all reserve requirements have been met. The first year's distribution may not be made until cost certification, where applicable, is completed. Distributions may not exceed the following maximum returns: 
</P>
<P>(1) For projects for elderly families, the first year's distribution will be limited to 6 percent on equity. The Assistant Secretary may provide for increases in subsequent years' distributions on an annual or other basis so that the permitted return reflects a 6 percent return on the value in subsequent years, as determined by HUD, of the approved initial equity. Any such adjustment will be made by Notice in the <E T="04">Federal Register.</E> 
</P>
<P>(2) For projects for non-elderly families, the first year's distribution will be limited to 10 percent on equity. The Assistant Secretary may provide for increases in subsequent years' distributions on an annual or other basis so that the permitted return reflects a 10 percent return on the value in subsequent years, as determined by HUD, of the approved initial equity. Any such adjustment will be made by Notice in the <E T="04">Federal Register.</E> 
</P>
<P>(c) For the purpose of determining the allowable distribution, an owner's equity investment in a project is deemed to be 10 percent of the replacement cost of the part of the project attributable to dwelling use accepted by HUD at cost certification (see § 881.405), unless the owner justifies a higher equity contribution by cost certification documentation in accordance with HUD mortgage insurance procedures. 
</P>
<P>(d) Any short-fall in return may be made up from surplus project funds in future years. 
</P>
<P>(e) If HUD determines at any time that project funds are more than the amount needed for project operations, reserve requirements and permitted distribution, HUD may require the excess to be placed in an account to be used to reduce housing assistance payments or for other project purposes. Upon termination of the Contract, any excess funds must be remitted to HUD.
</P>
<P>(f) Owners of small projects or partially-assisted projects are exempt from the limitation on distributions contained in paragraphs (b) through (d) of this section.
</P>
<P>(g) In the case of HUD-insured projects, the provisions of this section will apply instead of the otherwise applicable mortgage insurance program provisions.
</P>
<P>(h) HUD may permit increased distributions of surplus cash, in excess of the amounts otherwise permitted, to profit-motivated owners who participate in a HUD-approved initiative or program to preserve below-market housing stock. The increased distributions will be limited to a maximum amount based on market rents and calculated according to HUD instructions. Funds that the owner is authorized to retain under section 236(g)(2) of the National Housing Act are not considered distributions to the owner. 
</P>
<P>(i) Any State or local law or regulation that restricts distributions to an amount lower than permitted by this section or permitted by the Commissioner under this paragraph (i) is preempted to the extent provided by section 524(f) of the Multifamily Assisted Housing Reform and Affordability Act of 1997.
</P>
<CITA TYPE="N">[45 FR 7085, Jan. 31, 1980, as amended at 65 FR 61074, Oct. 13, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 881.207" NODE="24:4.1.2.1.5.2.1.3" TYPE="SECTION">
<HEAD>§ 881.207   Property standards.</HEAD>
<P>Projects must comply with:
</P>
<P>(a) [Reserved]
</P>
<P>(b) In the case of congregate or single room occupant housing, the appropriate HUD guidelines and standards;
</P>
<P>(c) HUD requirements pursuant to section 209 of the Housing and Community Development Act of 1974 for projects for the elderly or handicapped;
</P>
<P>(d) HUD requirements pertaining to noise abatement and control;
</P>
<P>(e) The Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and implementing regulations at part 35, subparts A, B, H, and R of this title; and
</P>
<P>(f) Applicable State and local laws, codes, ordinances and regulations.
</P>
<P>(g) <I>Smoke detectors</I>—(1) <I>Performance requirement.</I> After October 30, 1992, each dwelling unit must include at least one battery-operated or hard-wired smoke detector, in proper working condition, on each level of the unit. If the unit is occupied by hearing-impaired persons, smoke detectors must have an alarm system, designed for hearing-impaired persons, in each bedroom occupied by a hearing-impaired person.
</P>
<P>(2) <I>Acceptability criteria.</I> The smoke detector must be located, to the extent practicable, in a hallway adjacent to a bedroom, unless the unit is occupied by a hearing-impaired person, in which case each bedroom occupied by a hearing-impaired person must have an alarm system connected to the smoke detector installed in the hallway.
</P>
<CITA TYPE="N">[45 FR 7085, Jan. 31, 1980, as amended at 52 FR 1893, Jan. 15, 1987; 57 FR 33851, July 30, 1992; 63 FR 46578, Sept. 1, 1998; 64 FR 50227, Sept. 15, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 881.208" NODE="24:4.1.2.1.5.2.1.4" TYPE="SECTION">
<HEAD>§ 881.208   Financing.</HEAD>
<P>(a) <I>Types of financing.</I> Any type of construction financing and long-term financing may be used, including:
</P>
<P>(1) Conventional loans from commercial banks, savings banks, savings and loan associations, pension funds, insurance companies or other financial institutions;
</P>
<P>(2) Mortgage insurance programs under the National Housing Act; and
</P>
<P>(3) Financing by tax-exmpt bonds or other obligations.
</P>
<P>(b) <I>HUD approval.</I> HUD must approve the terms and conditions of the financing to determine consistency with these regulations and to assure they do not purport to pledge or give greater rights or funds to any party than are provided under the Agreement, Contract, and/or ACC. Where the project is financed with tax-exempt obligations, the terms and conditions will be approved in accordance with the following:
</P>
<P>(1) An issuer of obligations that are tax-exempt under any provision of Federal law or regulation, the proceeds of the sale of which are to be used to purchase GNMA mortgage-backed securities issued by the mortgagee of the Section 8 project, will be subject to 24 CFR part 811, subpart B. 
</P>
<P>(2) Issuers of obligations that are tax-exempt under Section 11(b) of the U.S. Housing Act of 1937 will be subject to 24 CFR part 811, subpart A if paragraph (b)(1) of this section is not applicable. 
</P>
<P>(3) Issuers of obligations that are tax-exempt under any provision of Federal law or regulation other than Section 11(b) of the U.S. Housing Act of 1937 will be subject to 24 CFR 811, subpart A if paragraph (b)(1) of this section is not applicable, except that such issuers that are State Agencies qualified under 24 CFR part 883 are not subject to 24 CFR part 811, subpart A and are subject solely to the requirements of 24 CFR part 883 with regard to the approval of tax-exempt financing. 
</P>
<P>(c) <I>Pledge of contracts.</I> An owner may pledge, or offer as security for any loan or obligation, an Agreement, Contract or ACC entered into pursuant to this part: <I>Provided, however,</I> That such financing is in connection with a project constructed pursuant to this part and approved by HUD. Any pledge of the Agreement, Contract, or ACC, or payments thereunder, will be limited to the amounts payable under the Contract or ACC in accordance with its terms. If the pledge or other document provides that all payments will be paid directly to the mortgagee or the trustee for bondholders, the mortgagee or trustee will make all payments or deposits required under the mortgage, trust indenture of HUD regulations and remit any excess to the owner. 
</P>
<P>(d) <I>Foreclosure and other transfers.</I> In the event of foreclosure, assignment or sale approved by HUD in lieu of foreclosure, or other assignment or sale approved by HUD: 
</P>
<P>(1) The Agreement, the Contract and the ACC, if applicable, will continue in effect, and 
</P>
<P>(2) Housing assistance payments will continue in accordance with the terms of the Contract.
</P>
<P>(e) <I>Financing of manufactured home parks.</I> In the case of a substantially rehabilitated manufactured home park, the principal amount of any mortgage attributable to the rental spaces in the park may not exceed an amount per space determined in accordance with § 207.33(b) of this Title.
</P>
<CITA TYPE="N">[45 FR 7085, Jan. 31, 1980, as amended at 45 FR 62797, Sept. 22, 1980; 48 FR 12706, Mar. 28, 1983; 49 FR 17449, Apr. 24, 1984]


</CITA>
</DIV8>


<DIV8 N="§ 881.211" NODE="24:4.1.2.1.5.2.1.5" TYPE="SECTION">
<HEAD>§ 881.211   Audit.</HEAD>
<P>(a) Where a non-Federal entity (as defined in 2 CFR 200.69) is the eligible owner of a project or a contract administrator under § 881.505 receiving financial assistance under this part, the audit requirements in 2 CFR part 200, subpart F, shall apply.
</P>
<CITA TYPE="N">[80 FR 75941, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 881.212" NODE="24:4.1.2.1.5.2.1.6" TYPE="SECTION">
<HEAD>§ 881.212   Broadband infrastructure.</HEAD>
<P>Any new construction or substantial rehabilitation, as substantial rehabilitation is defined by 24 CFR 5.100, of a building with more than 4 rental units and that is subject to a Housing Assistance Payments contract executed or renewed after January 19, 2017 must include installation of broadband infrastructure, as this term is also defined in 24 CFR 5.100, except where the owner determines and documents the determination that:
</P>
<P>(a) The location of the new construction or substantial rehabilitation makes installation of broadband infrastructure infeasible;
</P>
<P>(b) The cost of installing broadband infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden; or
</P>
<P>(c) The structure of the housing to be substantially rehabilitated makes installation of broadband infrastructure infeasible.
</P>
<CITA TYPE="N">[81 FR 92637, Dec. 20, 2016]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:4.1.2.1.5.3" TYPE="SUBPART">
<HEAD>Subparts C-D [Reserved]</HEAD>

</DIV6>


<DIV6 N="E" NODE="24:4.1.2.1.5.4" TYPE="SUBPART">
<HEAD>Subpart E—Housing Assistance Payments Contract</HEAD>


<DIV8 N="§ 881.501" NODE="24:4.1.2.1.5.4.1.1" TYPE="SECTION">
<HEAD>§ 881.501   The contract.</HEAD>
<P>(a) <I>Contract.</I> The Housing Assistance Payments Contract sets forth rights and duties of the owner and the contract administrator with respect to the project and the housing assistance payments. The owner and contract administrator execute the Contract in the form prescribed by HUD upon satisfactory completion of the project. 
</P>
<P>(b) [Reserved]
</P>
<P>(c) <I>Housing assistance payments to owners under the contract.</I> The housing assistance payments made under the Contract are: 
</P>
<P>(1) Payments to the owner to assist eligible families leasing assisted units, and 
</P>
<P>(2) Payments to the owner for vacant assisted units (“vacancy payments”) if the conditions specified in § 881.611 are satisfied.
</P>
<FP>The housing assistance payments are made monthly by the contract administrator upon proper requisition by the owner, except payments for vacancies of more than 60 days, which are made semi-annually by the contract administrator upon requisition by the owner. 
</FP>
<P>(d) <I>Amount of housing assistance payments to owner.</I> (1) The amount of the housing assistance payment made to the owner of a unit being leased by an eligible family is the difference between the contract rent for the unit and the tenant rent payable by the family. 
</P>
<P>(2) A housing assistance payment will be made to the owner for a vacant assisted unit in an amount equal to 80 percent of the contract rent for the first 60 days of vacancy, subject to the conditions in § 881.611. If the owner collects any tenant rent or other amount for this period which, when added to this vacancy payment, exceeds the contract rent, the excess must be repaid as HUD directs. 
</P>
<P>(3) For a vacancy that exceeds 60 days, a housing assistance payment for the vacant unit will be made, subject to the conditions in § 881.611, in an amount equal to the principal and interest payments required to amortize that portion of the debt attributable to the vacant unit for up to 12 additional months. 
</P>
<P>(e) <I>Payment of utility reimbursement.</I> Where applicable, the Utility Reimbursement will be paid to the Family as an additional Housing Assistance Payment. The Contract will provide that the Owner will make this payment on behalf of the contract administrator. Funds for this purpose will be paid to the Owner in trust solely for the purpose of making the additional payment. If the Family and the utility company consent, the Owner may pay the Utility Reimbursement jointly to the Family and the utility company or directly to the utility company.
</P>
<CITA TYPE="N">[45 FR 7085, Jan. 31, 1980, as amended at 49 FR 19944, May 10, 1984; 61 FR 13591, Mar. 27, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 881.502" NODE="24:4.1.2.1.5.4.1.2" TYPE="SECTION">
<HEAD>§ 881.502   Term of contract.</HEAD>
<P>(a) <I>Term (except for Manufactured Home Parks).</I> The term of the Contract will be as follows:
</P>
<P>(1) Where the estimated cost of the rehabilitation is less than 25 percent of the estimated value of the project after completion of the rehabilitation, the contract will be for a term of 20 years for any dwelling unit.
</P>
<P>(2) Where the estimated cost of rehabilitation is 25 percent or more of the estimated value of the project after completion of rehabilitation, the contract may be for a term which:
</P>
<P>(i) Will cover the longest term, but not less than 20 years, of a single credit instrument covering:
</P>
<P>(A) The cost of rehabilitation, or
</P>
<P>(B) The existing indebtedness, or
</P>
<P>(C) The cost of rehabilitation and the refinancing of the existing indebtedness, or
</P>
<P>(D) The cost of rehabilitation and the acquisition of the property; and
</P>
<P>(ii) For assisted units in a project financed with the aid of a loan insured or co-insured by the Federal government or a loan made, guaranteed or intended for purchase by the Federal government, will be 20 years for any dwelling unit; or
</P>
<P>(iii) For units in a project financed other than as described in paragraph (a)(2)(ii) of this section will not exceed 30 years for any dwelling unit except that this limit will be 40 years if (A) the project is owned or financed by a loan or loan guarantee from a state or local agency, (B) the project is intended for occupancy by non-elderly families and (C) the project is located in an area designated by HUD as one requiring special financing assistance.
</P>
<P>(b) <I>Term for manufactured home parks.</I> For manufactured home units or spaces in substantially rehabilitated manufactured home parks, the term of the Contract will be 20 years.
</P>
<P>(c) <I>Staged projects.</I> If the project is completed in stages, the term of the Contract must relate separately to the units in each stage. The total Contract term for the units in all stages, beginning with the effective date of the Contract for the first stage, may not exceed the overall maximum term allowable for any one unit under this section, plus two years.
</P>
<CITA TYPE="N">[48 FR 12707, Mar. 28, 1983, and 49 FR 17449, Apr. 24, 1984]


</CITA>
</DIV8>


<DIV8 N="§ 881.503" NODE="24:4.1.2.1.5.4.1.3" TYPE="SECTION">
<HEAD>§ 881.503   Cross-reference.</HEAD>
<P>All of the provisions of §§ 880.503, 880.504, 880.505, 880.506, 880.507, and 880.508 of this chapter apply to projects assisted under this part, subject to the requirements of § 881.104.
</P>
<CITA TYPE="N">[61 FR 13592, Mar. 27, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:4.1.2.1.5.5" TYPE="SUBPART">
<HEAD>Subpart F—Management</HEAD>


<DIV8 N="§ 881.601" NODE="24:4.1.2.1.5.5.1.1" TYPE="SECTION">
<HEAD>§ 881.601   Cross-reference.</HEAD>
<P>All of the provisions of part 880, subpart F, of this chapter apply to projects assisted under this part, subject to the requirements of § 881.104.
</P>
<CITA TYPE="N">[61 FR 13592, Mar. 27, 1996]


</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="882" NODE="24:4.1.2.1.6" TYPE="PART">
<HEAD>PART 882—SECTION 8 MODERATE REHABILITATION PROGRAMS
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437f and 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>43 FR 61246, Dec. 29, 1978, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.2.1.6.1" TYPE="SUBPART">
<HEAD>Subpart A—Applicability, Scope and Basic Policies</HEAD>


<DIV8 N="§ 882.101" NODE="24:4.1.2.1.6.1.1.1" TYPE="SECTION">
<HEAD>§ 882.101   Applicability.</HEAD>
<P>(a) The provisions of this part apply to the Section 8 Moderate Rehabilitation program.
</P>
<P>(b) This part states the policies and procedures to be used by a PHA in administering a Section 8 Moderate Rehabilitation program. The purpose of this program is to upgrade substandard rental housing and to provide rental subsidies for low-income families.
</P>
<P>(c) Subpart H of this part only applies to the Section 8 Moderate Rehabilitation Single Room Occupancy Program for Homeless Individuals.
</P>
<CITA TYPE="N">[63 FR 23853, Apr. 30, 1998]


</CITA>
</DIV8>


<DIV8 N="§ 882.102" NODE="24:4.1.2.1.6.1.1.2" TYPE="SECTION">
<HEAD>§ 882.102   Definitions.</HEAD>
<P>(a) <I>Terms found elsewhere.</I> The following terms are defined in part 5, subpart A of this title: <I>1937 Act, covered person, drug, drug-related criminal activity, federally assisted housing, guest, household, HUD, MSA, other person under the tenant's control, public housing agency (PHA), Section 8, and violent criminal activity.</I> 
</P>
<P>(b) In addition, the following definitions apply to this part:
</P>
<P><I>ACC reserve account</I> (or “project account”). The account established and maintained in accordance with § 882.403(b).
</P>
<P><I>Agreement to enter into Housing Assistance Payments Contract (“Agreement”).</I> A written agreement between the Owner and the PHA that, upon satisfactory completion of the rehabilitation in accordance with requirements specified in the Agreement, the PHA will enter into a Housing Assistance Payments Contract with the Owner.
</P>
<P><I>Annual Contributions Contract</I> (“ACC”). The written agreement between HUD and a PHA to provide annual contributions to the PHA to cover housing assistance payments and other expenses pursuant to the 1937 Act.
</P>
<P><I>Assisted lease</I> (or “lease”). A written agreement between an Owner and a Family for the leasing of a unit by the Owner to the Family with housing assistance payments under a Housing Assistance Payments Contract between the Owner and the PHA.
</P>
<P><I>Congregate housing.</I> Housing for elderly persons or persons with disabilities that meets the HQS for congregate housing.
</P>
<P><I>Contract.</I> See definition of Housing Assistance Payments Contract.
</P>
<P><I>Contract rent.</I> The total amount of rent specified in the Housing Assistance Payments Contract as payable to the Owner by the Family and by the PHA to the Owner on the Family's behalf.
</P>
<P><I>Covered housing provider.</I> For the Section 8 Moderate Rehabilitation Programs, as provided in subparts A, D, and E of this part, “covered housing provider,” as such term is used in HUD's regulations in 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking), refers to the PHA or owner, as applicable given the responsibilities of the covered housing provider as set forth in 24 CFR part 5, subpart L. For example, the PHA is the covered housing provider responsible for providing the notice of occupancy rights under VAWA and certification form described at 24 CFR 5.2005(a), though the PHA may provide this notice and form to owners, and charge owners with distributing the notice and form to tenants. In addition, the owner is the covered housing provider that may choose to bifurcate a lease as described at 24 CFR 5.2009(a), while both the PHA and owner are both responsible for ensuring that an emergency transfer plan is in place in accordance with 24 CFR 5.2005(e), and the owner is responsible for implementing the emergency transfer plan when an emergency occurs.
</P>
<P><I>Decent, safe, and sanitary.</I> Housing is decent, safe, and sanitary if it meets the physical condition standards in 24 CFR part 5, subpart G.
</P>
<P><I>Gross rent.</I> The total monthly cost of housing an eligible Family, which is the sum of the Contract Rent and any utility allowance.
</P>
<P><I>Group home.</I> A dwelling unit that is licensed by a State as a group home for the exclusive residential use of two to twelve persons who are elderly or persons with disabilities (including any live-in aide).
</P>
<P><I>Housing Assistance Payment.</I> The payment made by the PHA to the Owner of a unit under lease by an eligible Family, as provided under the Contract. The payment is the difference between the Contract Rent and the tenant rent. An additional payment (the “utility reimbursement”) is made by the PHA when the utility allowance is greater than the total tenant payment.
</P>
<P><I>Housing Assistance Payments Contract</I> (“Contract”). A written contract between a PHA and an Owner for the purpose of providing housing assistance payments to the Owner on behalf of an eligible Family.
</P>
<P><I>Moderate rehabilitation.</I> Rehabilitation involving a minimum expenditure of $1000 for a unit, including its prorated share of work to be accomplished on common areas or systems, to:
</P>
<P>(1) Upgrade to decent, safe and sanitary condition to comply with the Housing Quality Standards or other standards approved by HUD, from a condition below these standards (improvements being of a modest nature and other than routine maintenance); or
</P>
<P>(2) Repair or replace major building systems or components in danger of failure.
</P>
<P><I>Owner.</I> Any person or entity, including a cooperative, having the legal right to lease or sublease existing housing.
</P>
<P><I>Single room occupancy housing</I> (SRO). A unit that contains no sanitary facilities or food preparation facilities, or contains either, but not both, types of facilities.
</P>
<P><I>Statement of Family responsibility.</I> An agreement in the form prescribed by HUD, between the PHA and a Family to be assisted under the Program, stating the obligations and responsibilities of the Family.
</P>
<CITA TYPE="N">[63 FR 23853, Apr. 30, 1998, as amended at 63 FR 46578, Sept. 1, 1998; 66 FR 28797, May 24, 2001; 81 FR 80812, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§§ 882.103-882.122" NODE="24:4.1.2.1.6.1.1.3" TYPE="SECTION">
<HEAD>§§ 882.103-882.122   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 882.123" NODE="24:4.1.2.1.6.1.1.4" TYPE="SECTION">
<HEAD>§ 882.123   Conversion of Section 23 Units to Section 8 and Section 23 monitoring.</HEAD>
<P>(a)-(d) [Reserved]
</P>
<P>(e) <I>Section 23 policies for units planned for conversion on or before September 30, 1981.</I> (1) PHAs shall not enter into new leases with owners for additional units nor shall they renew or extend leases with owners except consistent with the conversion schedules. 
</P>
<P>(2) Subject to the rights of families under existing leases, PHAs may continue to lease units to families under Section 23 only on a month-to-month basis. 
</P>
<P>(3) PHAs shall conduct annual inspections of all units to determine whether the units are decent, safe and sanitary. 
</P>
<P>(4) PHAs shall certify with their requisitions to HUD for payments under the ACC that the units are decent, safe and sanitary, or the PHA shall furnish HUD with a report of the nature of the deficiencies of the units which are not so certified. If an owner's units are not decent, safe and sanitary. 
</P>
<P>(i) Where the owner is responsible under the terms of the lease for correcting the deficiencies, the PHA shall send the owner written notification requiring the owner to take specified corrective action within a specified time. The notification shall also state that, if the owner fails to comply, rent payments will be suspended. If the owner fails to comply with the first notification, he shall be notified by the PHA of the noncompliance and rent payments shall be suspended immediately. In the event of such suspension of rent payments, the PHA shall requisition a correspondingly lower ACC payment. 
</P>
<P>(ii) Where the PHA is responsible under the terms of the lease for correcting the deficiencies, the Field Office shall send written notification requiring the PHA to take specified corrective action within a specified time. The notification shall also state that, if the PHA fails to comply, HUD will make reduced payments to the PHA only in the amount of the rent due the owner. If the PHA fails to comply with the first notification, the PHA shall be notified of the noncompliance, and the PHA shall not receive any fees for performing management functions until the PHA has complied with the Field Office request and has corrected the noted deficiencies. 
</P>
<P>(f) [Reserved]
</P>
<P>(g) <I>Section 23 policies for units not planned to be converted.</I> (1) PHAs shall not enter into new leases with owners for additional units nor shall they renew or extend leases with owners for more than one year. 
</P>
<P>(2) The provisions contained in paragraphs (e) (3) and (4) of this section shall apply. 
</P>
<P>(h) <I>Request for rent increases.</I> An owner may submit to the PHA a request for rent increase because of increases in operating cost, when the rents to the owner, after adjustments based on provisions in the lease, are insufficient to provide decent, safe and sanitary housing. Such a request shall be supported by an audited financial statement, and the data shall clearly show that failure to obtain additional revenue will result in deterioriation of units and loss of decent, safe and sanitary housing for low-income families. The PHA shall inspect the units to determine whether the units are decent, safe and sanitary. Where the need for an adjustment under this paragraph is shown: 
</P>
<P>(1) Subject to available contract authority and prior approval by the HUD Field Office, the PHA may grant an adjustment to the extent documented and justified for those items of expenses (excluding debt service) for which the owner is responsible under the lease. 
</P>
<P>(2) The amount of the adjustment must be reasonable when compared with similar items under the Section 8 Existing Housing program. 
</P>
<P>(3) The adjusted amount for expenses shall not exceed the result of applying the appropriate Section 8 Existing Housing Annual Adjustment Factor (24 CFR part 888) most recently published by HUD in the <E T="04">Federal Register</E> to the appropriate expense base in effect under the lease prior to this adjustment. 
</P>
<P>(4) The adjustment shall not be retroactive to pay for costs that the owner had previously incurred. 
</P>
<P>(5) The adjustment shall be effective for a period not to exceed one year. 
</P>
<CITA TYPE="N">[44 FR 28276, Nov. 14, 1979, as amended at 60 FR 34694, July 3, 1995]


</CITA>
</DIV8>


<DIV8 N="§ 882.124" NODE="24:4.1.2.1.6.1.1.5" TYPE="SECTION">
<HEAD>§ 882.124   Audit.</HEAD>
<P>PHAs receiving financial assistance under this part are subject to audit requirements in 2 CFR part 200, subpart F.
</P>
<CITA TYPE="N">[50 FR 39091, Sept. 27, 1985; 51 FR 30480, Aug. 27, 1986; 80 FR 75941, Dec. 7, 2015]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.2.1.6.2" TYPE="SUBPART">
<HEAD>Subparts B-C [Reserved]</HEAD>

</DIV6>


<DIV6 N="D" NODE="24:4.1.2.1.6.3" TYPE="SUBPART">
<HEAD>Subpart D—Special Procedures for Moderate Rehabilitation—Basic Policies</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>47 FR 34379, Aug. 9, 1982, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 882.401" NODE="24:4.1.2.1.6.3.1.1" TYPE="SECTION">
<HEAD>§ 882.401   Eligible properties.</HEAD>
<P>(a) <I>Eligible properties.</I> Except as provided in paragraph (b) of this section, housing suitable for moderate rehabilitation as defined in § 882.102 is eligible for inclusion under the Moderate Rehabilitation Program. Existing structures of various types may be appropriate for this program, including single-family houses, multi-family structures and group homes.
</P>
<P>(b) <I>Ineligible properties.</I> (1) Nursing homes, units within the grounds of penal, reformatory, medical, mental and similar public or private institutions, and facilities providing continual psychiatric, medical or nursing services are not eligible for assistance under the Moderate Rehabilitation Program.
</P>
<P>(2) Housing owned by a State or unit of general local government is not eligible for assistance under this program.
</P>
<P>(3) High rise elevator projects for families with children may not be utilized unless HUD determines there is no practical alternative. (HUD may make this determination for a locality's Moderate Rehabilitation Program in whole or in part and need not review each building on a case-by-case basis.)
</P>
<P>(4) Single room occupancy (SRO) housing may not be utilized unless:
</P>
<P>(i) The property is located in an area in which there is a significant demand for such units as determined by the HUD Field Office; and
</P>
<P>(ii) The PHA and the unit of general local government in which the property is located approve of such units being utilized for such purpose.
</P>
<P>(5) No Section 8 assistance may be provided with respect to any unit occupied by an Owner; however, cooperatives will be considered as rental housing for purposes of the Moderate Rehabilitation Program.
</P>
<CITA TYPE="N">[63 FR 23854, Apr. 30, 1998, as amended at 64 FR 14832, Mar. 29, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 882.402" NODE="24:4.1.2.1.6.3.1.2" TYPE="SECTION">
<HEAD>§ 882.402   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 882.403" NODE="24:4.1.2.1.6.3.1.3" TYPE="SECTION">
<HEAD>§ 882.403   ACC, housing assistance payments contract, and lease.</HEAD>
<P>(a) <I>Maximum Total ACC Commitments.</I> The maximum total annual contribution that may be contracted for is the total of the Moderate Rehabilitation Fair Market Rents for all the units. The fee for the costs of PHA administration is payable out of the annual contribution.
</P>
<P>(b) <I>Project account.</I> (1) A project account will be established and maintained by HUD as a specifically identified and segregated account for each project. The account will contain the sum of the amounts by which the maximum annual commitment exceeds the amount actually paid out for the project under the ACC each year. Payments will be made from this account when needed to cover increases in Contract Rents or decreases in Gross Family Contributions for (i) housing assistance (including vacancy) payments, (ii) the amount of the fee for PHA costs of administration, and (iii) other costs specifically approved by the Secretary.
</P>
<P>(2) When a HUD-approved estimate of required payments under the ACC for a fiscal year exceeds the maximum annual commitment, and would cause the amount in the project account to be less than 40 percent of the maximum, HUD will, within a reasonable period of time, take such additional steps authorized by Section 8(c)(6) of the U.S. Housing Act of 1937, as may be necessary, to assure that payments under the ACC will be adequate to cover increases in Contract Rents and decreases in Gross Family Contributions.
</P>
<P>(c) <I>Term of Housing Assistance Payments Contract.</I> The Contract for any unit rehabilitated in accordance with the Program must be for a term of 15 years.
</P>
<P>(d) <I>Term of Lease.</I> (1) The initial lease between the family and the Owner must be for at least one year or the term of the HAP contract, whichever is shorter. In cases where there is less than one year remaining on the HAP contract, the owner and the PHA may mutually agree to terminate the unit from the HAP contract instead of leasing the unit to an eligible family.
</P>
<P>(2) Any renewal or extension of the lease term for any unit must in no case extend beyond the remaining term of the HAP contract.
</P>
<CITA TYPE="N">[47 FR 34379, Aug. 9, 1982, as amended at 64 FR 53869, Oct. 4, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 882.404" NODE="24:4.1.2.1.6.3.1.4" TYPE="SECTION">
<HEAD>§ 882.404   Physical condition standards; physical inspection requirements.</HEAD>
<P>(a) <I>Compliance with physical condition standards.</I> Housing in this program must be maintained and inspected in accordance with the requirements in 24 CFR part 5, subpart G.
</P>
<P>(b) <I>Space and security.</I> In addition to the standards in 24 CFR part 5, subpart G, a dwelling unit used in the Section 8 moderate rehabilitation program that is not SRO housing must have a living room, a kitchen area, and a bathroom. Such a dwelling unit must have at least one bedroom or living/sleeping room for each two persons.
</P>
<P>(c) <I>Special housing types.</I> The following provisions in 24 CFR part 982, subpart M (Special Housing Types) apply to the Section 8 moderate rehabilitation program:
</P>
<P>(1) 24 CFR 982.605(b) (for SRO housing). For the Section 8 moderate rehabilitation SRO program under subpart H of this part 882, see also § 882.803(b).
</P>
<P>(2) 24 CFR 982.609(b) (for congregate housing).
</P>
<P>(3) 24 CFR 982.614(c) (for group homes).


</P>
<CITA TYPE="N">[63 FR 46579, Sept. 1, 1998; 64 FR 50227, Sept. 15, 1999; 88 FR 30499, May 11, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 882.405" NODE="24:4.1.2.1.6.3.1.5" TYPE="SECTION">
<HEAD>§ 882.405   Financing.</HEAD>
<P>(a) <I>Types.</I> Any type of public or private financing may be utilized with the exception of the rehabilitation loan program under Section 312 of the Housing Act of 1964.
</P>
<P>(b) <I>Use of Contract as security for financing.</I> An Owner may pledge, or offer as security for any loan or obligation, an Agreement or Contract entered into pursuant to this Program, <I>Provided</I> That (1) such security is in connection with a unit(s) rehabilitated pursuant to this Program and (2) the terms of the financing or any refinancing must be approved by the PHA in accordance with standards provided by HUD. Any pledge of the Agreement or Contract, or payments thereunder, will be limited to the amounts payable under the Contract in accordance with its terms.


</P>
</DIV8>


<DIV8 N="§ 882.406" NODE="24:4.1.2.1.6.3.1.6" TYPE="SECTION">
<HEAD>§ 882.406   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 882.407" NODE="24:4.1.2.1.6.3.1.7" TYPE="SECTION">
<HEAD>§ 882.407   Other Federal requirements.</HEAD>
<P>(a) The moderate rehabilitation program is subject to applicable Federal requirements in 24 CFR 5.105 and to the requirements for protection for victims of domestic violence, dating violence, sexual assault, or stalking in 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking).
</P>
<P>(b) In order to facilitate emergency transfers for victims of domestic violence, dating violence, sexual assault, or stalking, covered housing providers have discretion to adopt and modify any existing admission preferences or transfer waitlist priorities for victims of domestic violence, dating violence, sexual assault, or stalking.
</P>
<P>(c) Covered housing providers must develop and implement an emergency transfer plan that meets the requirements in 24 CFR 5.2005(e), and when a safe unit is not immediately available for a victim of domestic violence, dating violence, sexual assault, and stalking who qualifies for an emergency transfer, covered housing providers must, at a minimum:
</P>
<P>(1) Review the covered housing provider's existing inventory of units and determine when the next vacant unit may be available; and
</P>
<P>(2) Provide a listing of nearby HUD subsidized rental properties, with or without preference for persons of domestic violence, dating violence, sexual assault, or stalking, and contact information for the local HUD field office.
</P>
<P>(d) Each year, the covered housing provider must submit to HUD data on all emergency transfers requested under 24 CFR 5.2005(e), pertaining to victims of domestic violence, dating violence, sexual assault, or stalking, including data on the outcomes of such requests.
</P>
<CITA TYPE="N">[81 FR 80812, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 882.408" NODE="24:4.1.2.1.6.3.1.8" TYPE="SECTION">
<HEAD>§ 882.408   Initial contract rents.</HEAD>
<P>(a) <I>Fair Market Rent limitation.</I> The Fair Market Rent Schedule for Moderate Rehabilitation is 120 percent of the Existing Housing Fair Market Rent Schedule, except that the Fair Market Rent limitation applicable to single room occupancy housing is 75 percent of the Moderate Rehabilitation Fair Market Rent for a 0-bedroom unit. The initial Gross Rent for any Moderate Rehabilitation unit must not exceed the Moderate Rehabilitation Fair Market Rent applicable to the unit on the date that the Agreement is executed except by up to 10 percent as provided in paragraph (b) of this section. Additionally, to the extent provided in paragraph (d) of this section, the PHA may approve changes in the Contract Rent subsequent to execution of the Agreement which result in an initial Gross Rent which exceeds the Moderate Rehabilitation Fair Market Rent applicable to the unit by up to 20 percent.
</P>
<P>(b) <I>Exception rents.</I> With HUD Field Office approval, the PHA may approve initial Gross Rents which exceed the applicable Moderate Rehabilitation Fair Market Rents by up to 10 percent for all units of a given size in specified areas where HUD has determined that the rents for standard units suitable for the Existing Housing Program are more than 10 percent higher than the Existing Housing Fair Market Rents. The PHA must submit documentation demonstrating the necessity for such exception rents in the area to the HUD Field Office. In areas where HUD has approved the use of exception rents for 0-bedroom units, the single room occupancy housing exception rent will be 75 percent of the exception rent applicable to Moderate Rehabilitation 0-bedroom units.
</P>
<P>(c) <I>Determination Initial Contract Rents.</I> (1) The initial Contract Rent and base rent for each unit must be computed in accordance with HUD requirements. These amounts may be determined in accordance with paragraph (c)(2), or in accordance with an alternative method prescribed by HUD. However, the initial Contract Rent may in no event be more than—
</P>
<P>(i) The Moderate Rehabilitation Fair Market Rent or exception rent applicable to the unit on the date that the Agreement is executed, minus
</P>
<P>(ii) Any applicable allowance for utilities and other services attributable to the unit.
</P>
<P>(2) When the initial Contract Rent is computed under this paragraph, the rent will be equal to the base rent plus the monthly cost of a rehabilitation loan (but not more than the maximum stated in paragraph (c)(1)). The base rent must be calculated using the rent charged for the unit or the estimated costs to the Owner of owning, managing and maintaining the rehabilitated unit. The monthly cost of a rehabilitation loan must be calculated using:
</P>
<P>(i) The actual interest rate on the portion of the rehabilitation costs borrowed by the Owner,
</P>
<P>(ii) The HUD-FHA maximum interest rate for multifamily housing (or another rate prescribed by HUD) for rehabilitation costs paid by the Owner out of nonborrowed funds, and
</P>
<P>(iii) At least a 15 year loan term, except that if the total amount of rehabilitation is less than $15,000, the actual loan term will be used for the portion of the rehabilitation costs borrowed by the Owner. (HUD Field Offices may authorize loan terms which differ from the above in accordance with HUD requirements.)
</P>
<P>(d) <I>Changes in Initial Contract Rents during rehabilitation.</I> (1) The initial Contract Rents established pursuant to paragraph (c) of this section will be the Contract Rents on the effective date of the Contract except under the following circumstances:
</P>
<P>(i) When, during rehabilitation, work items (including substantial and necessary design changes) which (A) could not reasonably have been anticipated or are necessitated by a change in local codes or ordinances, and (B) were not listed in the work write-up prepared or approved by the PHA, are subsequently required and approved by the PHA.
</P>
<P>(ii) When the actual cost of the rehabilitation performed is less than that estimated in the calculation of Contract Rents for the Agreement or the actual, certified costs are more than estimated due to unforeseen factors beyond the owner's control (e.g., strikes, weather delays or unexpected delays caused by local governments).
</P>
<P>(iii) When the PHA (or HUD) approves changes in financing.
</P>
<P>(iv) When the actual relocation payments made by the Owner to temporarily relocated Families varies from the cost estimated in the calculation of Contract Rents for the Agreement.
</P>
<P>(v) When necessary to correct errors in computation of the base and Contract Rents to comply with the HUD requirements.
</P>
<P>(2) Should changes occur as specified in paragraph (d)(1) (either an increase or decrease), the PHA will approve any necessary change in work and amendment of the work write-up and cost estimate, recalculate the initial Contract Rents in accordance with paragraph (d)(3) of this section, and amend the Contract or Agreement, as appropriate, to reflect the revised rents.
</P>
<P>(3) In establishing the revised Contract Rents, the PHA must determine that the resulting Gross Rents do not exceed the Moderate Rehabilitation Fair Market Rent or the exception rent in effect at the time of execution of the Agreement. The Fair Market Rent or exception rent, as appropriate, may only be exceeded when the PHA determines in accordance with paragraph (d)(1) of this section that it will be necessary for the revised Gross Rent to exceed the Moderate Rehabilitation Fair Market Rent or exception rent. Should this determination be made, the PHA may not execute a revised Agreement or Contract for Gross Rents exceeding the Fair Market Rents by more than 10 percent until it receives HUD Field Office approval. The HUD Field Office may approve revised Gross Rents which exceed the Fair Market Rents by up to 20 percent for reasons specified in paragraph (d)(1) of this section upon proper justification by the PHA of the necessity for the increase.
</P>
<CITA TYPE="N">[47 FR 34379, Aug. 9, 1982, as amended at 52 FR 19725, May 27, 1987]


</CITA>
</DIV8>


<DIV8 N="§ 882.409" NODE="24:4.1.2.1.6.3.1.9" TYPE="SECTION">
<HEAD>§ 882.409   Contract rents at end of rehabilitation loan term.</HEAD>
<P>For a Contract where the initial Contract Rent was based upon a loan term shorter than 15 years, the Contract must provide for reduction of the Contract Rent effective with the rent for the month following the end of the term of the rehabilitation loan. The amount of the reduction will be the monthly cost of amortization of the rehabilitation loan. This reduction should result in a new Contract Rent equal to the base rent established pursuant to § 882.408(c) plus all subsequent adjustments.


</P>
</DIV8>


<DIV8 N="§ 882.410" NODE="24:4.1.2.1.6.3.1.10" TYPE="SECTION">
<HEAD>§ 882.410   Rent adjustments.</HEAD>
<P>(a) <I>Annual and special adjustments.</I> Contract Rents will be adjusted as provided in paragraphs (a) (1) and (2) of this section upon submittal to the PHA by the Owner of a revised schedule of Contract Rents, provided that the unit is in decent, safe, and sanitary condition and that the Owner is otherwise in compliance with the terms of the Lease and Contract. Subject to the foregoing, adjustments of Contract Rents will be as follows:
</P>
<P>(1) The Annual Adjustment Factors which are published annually by HUD (see Schedule C, 24 CFR part 888) will be utilized. On or after each annual anniversary date of the Contract, the Contract Rents may be adjusted in accordance with HUD procedures, effective for the month following the submittal by the Owner of a revised schedule of Contract Rents. The changes in rent as a result of the adjustment cannot exceed the amount established by multiplying the Annual Adjustment Factor by the base rents. However, if the amounts borrowed to finance the rehabilitation costs or to finance purchase of the property are subject to a variable rate or are otherwise renegotiable, Contract Rents may be adjusted in accordance with other procedures as prescribed by HUD, and specified in the Contract, provided that the adjusted Contract Rents cannot exceed the rents established by multiplying the Annual Adjustment Factor by the Contract Rents. Adjusted Contract Rents must then be examined in accordance with paragraph (b) of this section and may be adjusted accordingly. Contract Rents may be adjusted upward or downward, as may be appropriate.
</P>
<P>(2) <I>Special Adjustments.</I> (i) A special adjustment, to the extent determined by HUD to reflect increases in the actual and necessary expenses of owning and maintaining the unit which have resulted from substantial general increases in real property taxes, assessments, utility rates and utilities not covered by regulated rates, may be recommended by the PHA for approval by HUD. Subject to appropriations, a special adjustment may also be recommended by the PHA for approval by HUD when HUD determines that a project is located in a community where drug-related criminal activity is generally prevalent, and not specific to a particular project, and the project's operating, maintenance, and capital repair expenses have substantially increased primarily as a result of the prevalence of such drug-related activity. HUD may, on a project-by-project basis, provide adjustments to the maximum monthly rents, to a level no greater than 120 percent of the current gross rents for each unit size under a Housing Assistance Payments Contract, to cover the costs of maintenance, security, capital repairs and reserves required for the Owner to carry out a strategy acceptable to HUD for addressing the problem of drug-related criminal activity. Prior to approval of a special adjustment to cover the cost of physical improvements, HUD will perform an environmental review to the extent required by HUD's environmental regulations at 24 CFR part 50, including the applicable related authorities at 24 CFR 50.4. 
</P>
<P>(ii) The aforementioned special rent adjustments will only be approved if and to the extent the Owner clearly demonstrates that these general increases have caused increases in the owners operating costs which are not adequately compensated for by annual adjustments. 
</P>
<P>(iii) The Owner must submit financial information to the PHA which clearly supports the increase. For Contracts of more than twenty units, the Owner must submit audited financial information. 
</P>
<P>(b) <I>Overall limitation.</I> Notwithstanding any other provisions of this part, adjustments as provided in this section must not result in material differences between the rents charged for assisted and comparable unassisted units, as determined by the PHA (and approved by HUD in the case of adjustments under paragraph (a)(2) of this section). However, unless the rents have been adjusted in accordance with § 882.409, this limitation should not be construed to prohibit differences in rents between assisted and comparable unassisted units to the extent that differences existed with respect to the initial Contract Rents.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under OMB approval number 2577-0196) 
</APPRO>
<CITA TYPE="N">[47 FR 34379, Aug. 9, 1982, as amended at 59 FR 47773, Sept. 16, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 882.411" NODE="24:4.1.2.1.6.3.1.11" TYPE="SECTION">
<HEAD>§ 882.411   Payments for vacancies.</HEAD>
<P>(a) <I>Vacancies from execution of Contract to initial occupancy.</I> If a Contract unit which has been rehabilitated in accordance with this Program is not leased within 15 days of the effective date of the Contract, the Owner will be entitled to housing assistance payments in the amount of 80 percent of the Contract Rent for the unit for a vacancy period not exceeding 60 days from the effective date of the Contract, provided that the Owner (1) has complied with §§ 882.506(d) and 882.508(c); (2) has taken and continues to take all feasible actions to fill the vacancy; and (3) has not rejected any eligible applicant except for good cause acceptable to the PHA.
</P>
<P>(b) <I>Vacancies after initial occupancy.</I> (1) If an Eligible Family vacates its unit (other than as a result of action by the Owner which is in violation of the Lease or the Contract or any applicable law), the Owner may receive the housing assistance payments due under the Contract for so much of the month in which the Family vacates the unit as the unit remains vacant. Should the unit continue to remain vacant, the Owner may receive from the PHA a housing assistance payment in the amount of 80 percent of the Contract Rent for a vacancy period not exceeding an additional month. However, if the Owner collects any of the Family's share of the rent for this period, the payment must be reduced to an amount which, when added to the Family's payment, does not exceed 80 percent of the Contract Rent. Any such excess must be reimbursed by the Owner to the PHA. The Owner will not be entitled to any payment under this paragraph (b)(1) of this section unless the Owner:
</P>
<P>(i) Immediately upon learning of the vacancy, has notified the PHA of the vacancy or prospective vacancy, and
</P>
<P>(ii) has taken and continues to take all feasible actions specified in paragraphs (a) (2) and (3) of this section. 
</P>
<P>(2) If the Owner evicts an Eligible Family, the Owner will not be entitled to any payment under paragraph (b)(1) of this section unless the PHA determines that the Owner complied with all requirements of the Contract.
</P>
<P>(c) <I>Prohibition of double compensation for vacancies.</I> The Owner will not be entitled to housing assistance payments with respect to vacant units under this section if the Owner is entitled to payments from other sources (for example, payments for losses of rental income incurred for holding units vacant for relocatees pursuant to Title I of the HCD Act of 1974 or payments for unpaid rent under § 882.414 (Security and Utility Deposits)). 
</P>
<CITA TYPE="N">[47 FR 34379, Aug. 9, 1982, as amended at 63 FR 23855, Apr. 30, 1998]


</CITA>
</DIV8>


<DIV8 N="§ 882.412" NODE="24:4.1.2.1.6.3.1.12" TYPE="SECTION">
<HEAD>§ 882.412   Subcontracting of owner services.</HEAD>
<P>(a) <I>General.</I> Any Owner may contract with any private or public entity to perform for a fee the services required by the Agreement, Contract or Lease, provided that such contract may not shift any of the Owner's responsibilities or obligations. 
</P>
<P>(b) <I>PHA management.</I> If the Owner and a PHA wish to enter into a management contract, they may do so provided that: 
</P>
<P>(1) The Housing Assistance Payments Contract with respect to the housing involved is administered by another PHA, or 
</P>
<P>(2) Should another PHA not be available and willing to administer the Housing Assistance Payments Contract and no other management alternative exists, the HUD Field Office may authorize PHA management of units administered by the PHA in accordance with specified criteria. 
</P>
<P>(3) Notwithstanding the provisions of § 882.408 (b) and (c), a PHA may not approve, without prior HUD approval, rents which exceed the appropriate Moderate Rehabilitation Fair Market Rent for a unit for which it provides the management functions under this section. 


</P>
</DIV8>


<DIV8 N="§ 882.413" NODE="24:4.1.2.1.6.3.1.13" TYPE="SECTION">
<HEAD>§ 882.413   Responsibility of the Family.</HEAD>
<P>(a) A family receiving housing assistance under this Program must fulfill all of its obligations under the Lease and Statement of Family Responsibility.
</P>
<P>(b) No family member may engage in drug-related criminal activity or violent criminal activity. Failure of the Family to meet its responsibilities under the Lease, the Statement of Family Responsibility, or this section shall constitute rounds for termination of assistance by the PHA. Should the PHA determine to terminate assistance to the Family, the provisions of § 882.514(f) must be followed.
</P>
<CITA TYPE="N">[55 FR 28546, July 11, 1990, as amended at 63 FR 23855, Apr. 30, 1998] 


</CITA>
</DIV8>


<DIV8 N="§ 882.414" NODE="24:4.1.2.1.6.3.1.14" TYPE="SECTION">
<HEAD>§ 882.414   Security and utility deposits.</HEAD>
<P>(a) If at the time of the initial execution of the Lease the Owner wishes to collect a security deposit, the maximum amount shall be the greater of one month's Total Tenant Payment or $50. However, this amount shall not exceed the maximum amount allowable under State or local law. For units leased in place, security deposits collected prior to the execution of a Contract which are in excess of this maximum amount do not have to be refunded until the Family vacates the unit subject to the lease terms. The Family is expected to pay security deposits and utility deposits from its resources and/or other public or private sources.
</P>
<P>(b) If a Family vacates the unit, the Owner, subject to State and local law, may use the security deposit as reimbursement for any unpaid Tenant Rent or other amount which the Family owes under the Lease. If a Family vacates the unit owing no rent or other amount under the Lease consistent with State or local law or if such amount is less than the amount of the security deposit, the Owner shall refund the full amount or the unused balance to the Family. 
</P>
<P>(c) In those jurisdictions where interest is payable by the Owner on security deposits, the refunded amount shall include the amount of interest payable. The Owner shall comply with all State and local laws regarding interest payments on security deposits. 
</P>
<P>(d) If the security deposit is insufficient to reimburse the Owner for the unpaid Tenant Rent or other amounts which the Family owes under the Lease, or if the Owner did not collect a security deposit, the Owner may claim reimbursement from the PHA for an amount not to exceed the lesser of:
</P>
<P>(1) The amount owed the Owner, or
</P>
<P>(2) Two month's Contract Rent; minus, in either case, the greater of the security deposit actually collected or the amount of security deposit the Owner could have collected under the program (pursuant to paragraph (a) of this section). Any reimbursement under this section must be applied first toward any unpaid Tenant Rent due under the Lease and then to any other amounts owed. No reimbursement may be claimed for unpaid rent for the period after the Family vacates.
</P>
<CITA TYPE="N">[43 FR 61246, Dec. 29, 1978, as amended at 44 FR 31176, May 31, 1979; 49 FR 19945, May 10, 1984. Redesignated at 63 FR 23854, Apr. 30, 1998] 


</CITA>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:4.1.2.1.6.4" TYPE="SUBPART">
<HEAD>Subpart E—Special Procedures for Moderate Rehabilitation—Program Development and Operation</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>47 FR 34383, Aug. 9, 1982, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§§ 882.501-882.506" NODE="24:4.1.2.1.6.4.1.1" TYPE="SECTION">
<HEAD>§§ 882.501-882.506   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 882.507" NODE="24:4.1.2.1.6.4.1.2" TYPE="SECTION">
<HEAD>§ 882.507   Completion of rehabilitation.</HEAD>
<P>(a) <I>Notification of completion.</I> The Owner must notify the PHA when the work is completed and submit to the PHA the evidence of completion and certifications described in paragraphs (b) and (c) of this section.
</P>
<P>(b) <I>Evidence of completion.</I> Completion of the unit(s) must be evidenced by furnishing the PHA with the following:
</P>
<P>(1) A certificate of occupancy and/or other official approvals as required by the locality.
</P>
<P>(2) A certification by the Owner that:
</P>
<P>(i) The unit(s) has been completed in accordance with the requirements of the Agreement;
</P>
<P>(ii) The unit(s) is in good and tenantable condition;
</P>
<P>(iii) The unit(s) has been rehabilitated in accordance with the applicable zoning, building, housing and other codes, ordinances or regulations, as modified by any waivers obtained from the appropriate officials;
</P>
<P>(iv) The unit(s) are in compliance with part 35, subparts A, B, H, and R of this title.
</P>
<P>(iv) Any unit(s) built prior to 1973 are in compliance with § 882.404(c)(3) and § 882.404(c)(4).
</P>
<P>(v) If applicable, the Owner has complied with the provisions of the Agreement relating to the payment of not less than prevailing wage rates and that to the best of the Owner's knowledge and belief there are no claims of underpayment concerning alleged violations of said provisions of the Agreement. In the event there are any such pending claims to the knowledge of the Owner, PHA or HUD, the Owner will be required to place sufficient amount in escrow, as determined by the PHA or HUD, to assure such payments.
</P>
<P>(c) <I>Actual cost and rehabilitation loan certifications.</I> The Owner must provide the PHA with a certification of the costs incurred for the rehabilitation and any temporary relocation as well as the interest rate and term of any rehabilitation loan. The Owner must certify that these are the actual costs, interest rate, and term.
</P>
<FP>The PHA must review for completeness and accuracy and accept these certifications subject to the right of post audit. The PHA must then establish the Contract Rents as provided in § 882.408 which will be subject to reduction based on a post audit.
</FP>
<P>(d) <I>Review and inspections.</I> The PHA must review the evidence of completion for compliance with paragraph (b) of this section. The PHA also must inspect the unit(s) to be assisted to determine that the unit(s) has been completed in accordance with the Agreement and meets the Housing Quality Standards or other standards approved by HUD for the Program. If the inspection discloses defects or deficiencies, the inspector must report these in detail. 
</P>
<P>(e) <I>Acceptance.</I> (1) If the PHA determines from the review and inspection that the unit(s) has been completed in accordance with the Agreement, the unit(s) will be accepted.
</P>
<P>(2) If there are any items of delayed completion which are minor items or which are incomplete because of weather conditions, and in any case which do not preclude or affect occupancy, and all other requirements of the Agreement have been met, the unit(s) must be accepted. An escrow fund determined by the PHA to be sufficient to assure completion for items of delayed completion must be required, as well as a written agreement between the PHA and the Owner, to be included as an exhibit to the Contract, specifying the schedule for completion. If the items are not completed within the agreed time period, the PHA may terminate the Contract or exercise other rights under the Contract. 
</P>
<P>(3) If other deficiencies exist, the PHA must determine whether and to what extent the deficiencies are correctable, and whether the Contract Rents should be reduced. The Owner must be notified of the PHA's decision. If the corrections required by the PHA are possible, the PHA and the Owner must enter into an agreement for the correction of the deficiencies within a specified time. If the deficiencies are corrected within the agreed period of time, the PHA must accept the unit(s). 
</P>
<P>(4) Otherwise, the unit(s) may not be accepted, and the Owner must be notified with a statement of the reasons for nonacceptance.
</P>
<CITA TYPE="N">[47 FR 34383, Aug. 9, 1982, as amended at 52 FR 1895, Jan. 15, 1987; 64 FR 50227, Sept. 15, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 882.508" NODE="24:4.1.2.1.6.4.1.3" TYPE="SECTION">
<HEAD>§ 882.508   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 882.509" NODE="24:4.1.2.1.6.4.1.4" TYPE="SECTION">
<HEAD>§ 882.509   Overcrowded and under occupied units.</HEAD>
<P>If the PHA determines that a Contract unit is not decent, safe, and sanitary by reason of increase in Family size, or that a Contract unit is larger than appropriate for the size of the Family in occupancy, housing assistance payments with respect to the unit will not be abated; <I>However,</I> the Owner must offer the Family a suitable alternative unit should one be available and the Family will be required to move. If the Owner does not have a suitable available unit, the PHA must assist the Family in locating other standard housing in the locality within the Family's ability to pay and require the Family to move to such a unit as soon as possible. In no case will a Family be forced to move nor will housing assistance payments under the Contract be terminated unless the Family rejects without good reason the offer of a unit which the PHA judges to be acceptable.


</P>
</DIV8>


<DIV8 N="§ 882.510" NODE="24:4.1.2.1.6.4.1.5" TYPE="SECTION">
<HEAD>§ 882.510   Adjustment of utility allowance.</HEAD>
<P>The PHA must determine, at least annually, whether an adjustment is required in the Utility Allowance applicable to the dwelling units in the Program, on grounds of changes in utility rates or other change of general applicability to all units in the Program. The PHA may also establish a separate schedule of allowances for each building of 20 or more assisted units, based upon at least one year's actual utility consumption data following rehabilitation under the Program. If the PHA determines that an adjustment should be made in its Schedule of Allowances or if it establishes a separate schedule for a building which will change the allowance, the PHA must then determine the amounts of adjustments to be made in the amount of rent to be paid by affected Families and the amount of housing assistance payments and must notify the Owners and Families accordingly. Any adjustment to the Allowance must be implemented no later than at the Family's next reexamination or at lease renewal, whichever is earlier.
</P>
<CITA TYPE="N">[47 FR 34383, Aug. 9, 1982, as amended at 49 FR 19946, May 10, 1984]


</CITA>
</DIV8>


<DIV8 N="§ 882.511" NODE="24:4.1.2.1.6.4.1.6" TYPE="SECTION">
<HEAD>§ 882.511   Lease and termination of tenancy.</HEAD>
<XREF ID="20260226" REFID="23">Link to an amendment published at 91 FR 9453, Feb. 26, 2026.</XREF>
<XREF ID="20260313" REFID="2b">Link to a delay of the above  amendment published at 91 FR 12301, Mar. 13, 2026.</XREF>
<P>(a) <I>Lease.</I> (1) The lease must include all provisions required by HUD, and must not include any provisions prohibited by HUD.
</P>
<P>(2) The lease must provide that drug-related criminal activity engaged in on or near the premises by any tenant, household member, or guest, and any such activity engaged in on the premises by any other person under the tenant's control is grounds for the owner to terminate tenancy. In addition, the lease must provide that the owner may terminate the tenancy of a family when the owner determines that a household member is illegally using a drug or when the owner determines that a pattern of illegal use of a drug interferes with the health, safety, or right to peaceful enjoyment of the premises by other residents.
</P>
<P>(b) <I>Applicability.</I> The provisions of this section apply to decisions by an Owner to terminate the tenancy of a Family during or at the end of the Family's lease term.
</P>
<P>(c) <I>Grounds for termination of or refusal to renew the lease.</I> The Owner must not terminate or refuse to renew the lease except upon the following grounds:
</P>
<P>(1) Serious or repeated violation of the terms and conditions of the lease.
</P>
<P>(2) Violation of applicable Federal, State or local law.
</P>
<P>(3) Other good cause.
</P>
<P>(d) <I>Notice of termination of tenancy.</I> (1) The Owner must serve a written notice of termination of tenancy on the Family which states the date the tenancy shall terminate. Such date must be in accordance with the following:
</P>
<P>(i) When termination is based on failure to pay rent, the date of termination must be not less than five working days after the Family's receipt of the notice; or, if the Secretary determines that tenants must be provided with adequate notice to secure Federal funding that is available due to a Presidential declaration of a national emergency, the date of termination must be not less than 30 days after the Family's receipt of the notice.




</P>
<P>(ii) When termination is based on serious or repeated violation of the terms and conditions of the lease or on violation of applicable Federal, State or local law, the date of termination must be in accordance with State and local law.
</P>
<P>(iii) When termination is based on other good cause, the date of termination must be no earlier than 30 days after the notice is served on the Family.
</P>
<P>(2) The notice of termination must:
</P>
<P>(i) State the reasons for such termination with enough specificity to enable the Family to prepare a defense.
</P>
<P>(ii) Advise the Family that if a judicial proceeding for eviction is instituted, the tenant may present a defense in that proceeding.
</P>
<P>(iii) Be served on the Family by sending a prepaid first class properly addressed letter (return receipt requested) to the tenant at the dwelling unit or by delivering a copy of the notice to the dwelling unit.
</P>
<P>(iv) Include such information to tenants during a national emergency, as required by the Secretary.




</P>
<P>(3) <I>Substitution of State and local requirements.</I> In the case of failure to pay rent, a notice of termination which is issued pursuant to State or local law or is common practice in the locality and which satisfies paragraphs (d)(1) and (2) of this section may be substituted for or run concurrently with the notice required herein.
</P>
<P>(e) <I>Eviction.</I> All evictions must be carried out through judical process under State and local law. “Eviction” means the dispossession of the Family from the dwelling unit pursuant to State or local court action.
</P>
<P>(f) <I>Lease.</I> The requirements of this section shall be incorporated into the dwelling lease between the Owner and the Family.
</P>
<P>(g) In actions or potential actions to terminate tenancy, the owner shall follow 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking).
</P>
<CITA TYPE="N">[47 FR 34383, Aug. 9, 1982, as amended at 63 FR 23855, Apr. 30, 1998; 66 FR 28797, May 24, 2001; 73 FR 72342, Nov. 28, 2008; 75 FR 66261, Oct. 27, 2010; 81 FR 80812, Nov. 16, 2016; 86 FR 55701, Oct. 7, 2021]


</CITA>
</DIV8>


<DIV8 N="§ 882.512" NODE="24:4.1.2.1.6.4.1.7" TYPE="SECTION">
<HEAD>§ 882.512   Reduction of number of units covered by contract.</HEAD>
<P>(a) <I>Limitation on leasing to ineligible Families.</I> Owners must lease all assisted units under Contract to Eligible Families. Leasing of vacant, assisted units to ineligible tenants is a violation of the Contract and grounds for all available legal remedies, including suspension or debarment from HUD programs and reduction of the number of units under the Contract, as set forth in paragraph (b) of this section. Once the PHA has determined that a violation exists, the PHA must notify HUD of its determination and the suggested remedies. At the direction of HUD, the PHA must take the appropriate action.
</P>
<P>(b) <I>Reduction for failure to lease to Eligible Families.</I> If, at any time beginning six months after the effective date of the Contract, the Owner fails for a period of six continuous months to have at least 90 percent of the assisted units leased or available for leasing by Eligible Families (because families initially eligible have become ineligible), the PHA may, on at least 30 days' notice, reduce the number of units covered by the Contract. The PHA may reduce the number of units to the number of units actually leased or available for leasing by Eligible Families plus 10 percent (rounded up). If the Owner has only one unit under Contract and if one year has elapsed since the date of the last housing assistance payment, the Contract may be terminated with the consent of the Owner.
</P>
<P>(c) <I>Restoration.</I> The PHA will agree to an amendment of the Contract, to provide for subsequent restoration of any reduction made pursuant to paragraph (b) if:
</P>
<P>(1) The PHA determines that the restoration is justified by demand,
</P>
<P>(2) The Owner otherwise has a record of compliance with obligations under the Contract, and
</P>
<P>(3) Contract authority is available.


</P>
</DIV8>


<DIV8 N="§ 882.513" NODE="24:4.1.2.1.6.4.1.8" TYPE="SECTION">
<HEAD>§ 882.513   Public notice to low-income families; waiting list.</HEAD>
<P>(a) <I>Public notice to low-income Families.</I> (1) If the PHA does not have a waiting list which is sufficient to provide applicants for the units under the Moderate Rehabilitation Program, the PHA must, promptly after receiving the executed ACC, make known to the public the availability of the Program.
</P>
<P>(i) The notice must state that assistance under this Program will be available only in specified units which have been rehabilitated under the Program.
</P>
<P>(ii) The notice must be made in accordance with the PHA's HUD-approved application and with the HUD guidelines for fair housing requiring the use of the equal housing opportunity logotype, statement and slogan.
</P>
<P>(b) <I>Waiting list.</I> The PHA must maintain a waiting list for applicants for the Moderate Rehabilitation Program. This requirement may be met through the use of waiting lists for other subsidized housing programs such as the Existing Housing Program.






</P>
</DIV8>


<DIV8 N="§ 882.514" NODE="24:4.1.2.1.6.4.1.9" TYPE="SECTION">
<HEAD>§ 882.514   Family participation.</HEAD>
<P>(a) <I>Initial determination of family eligibility.</I> (1) The PHA is responsible for receipt and review of applications, and determination of family eligibility for participation in accordance with HUD regulations (see 24 CFR parts 5, 750 and 760). The PHA is responsible for verifying the sources and amount of the family's income and other information necessary for determining income eligibility and the amount of the assistance payments.
</P>
<P>(2) PHA records on applicants and Families selected to participate must be maintained so as to provide HUD with racial, gender, and ethnic data.
</P>
<P>(b) <I>Selection of Families for participation.</I> When vacancies occur, the PHA will refer to the Owner one or more appropriate size Families on its waiting list. The PHA must select Families for participation in accordance with the provisions of the Program and in accordance with the PHA's application, including any PHA requirement or preferences as approved by HUD. The PHA must select Families eligible for housing assistance payments currently residing in units that are designated for rehabilitation under the Program without requiring that these Families be placed on the waiting list. Notwithstanding the fact that the PHA may not be accepting additional applications for participation because of the length of the waiting list, the PHA may not refuse to place an applicant on the waiting list if the applicant is otherwise eligible for partcipation and claims that he or she qualifies for a Federal preference as provided in 24 CFR part 5, unless the PHA determines, on the basis of the number of applicants who are already on the waiting list and who claim a Federal preference, and the anticipated number of admissions under this part, that—
</P>
<P>(1) There is an adequate pool of applicants who are likely to qualify for a Federal preference and
</P>
<P>(2) It is unlikely that, on the basis of the PHA's system for applying the Federal preferences, the preference or preferences that the applicant claims, and the preferences claimed by applicants on the waiting list, the applicant would qualify for assistance before other applicants on the waiting list.
</P>
<P>(c) <I>Owner selection of Families.</I> All vacant units under Contract must be rented to Eligible Families referred by the PHA from its waiting list. However, if the PHA is unable to refer a sufficient number of interested applicants on the waiting list to the Owner within 30 days of the Owner's notification to the PHA of a vacancy, the Owner may advertise or solicit applications from Low-Income Families and refer such Families to the PHA to determine eligibility. Since the Owner is responsible for tenant selection, the Owner may refuse any family, provided that the Owner does not unlawfully discriminate. 

However, the owner must not deny program assistance or admission to an applicant based on the fact that the applicant is or has been a victim of domestic violence, dating violence, sexual assault, or stalking, if the applicant otherwise qualifies for assistance or admission. Should the Owner reject a Family, and should the Family believe that the Owner's rejection was the result of unlawful discrimination, the Family may request the assistance of the PHA in resolving the issue. If the issue cannot be resolved promptly, the Family may file a complaint with HUD, and the PHA may refer the Family to the next available Moderate Rehabilitation unit.
</P>
<P>(d) <I>Briefing of Families.</I> (1) When a Family is initially determined to be eligible for housing assistance payments or is selected for participation in accordance with this section, the PHA must provide the Family with information as to the Tenant Rent and the PHA's schedule of Utility Allowances. Each Family must also, either in group or individual sessions, be provided with a full explanation of the following:
</P>
<P>(i) Family and Owner responsibilities under the Lease and Contract;
</P>
<P>(ii) Significant aspects of the applicable State and local laws;
</P>
<P>(iii) Significant aspects of Federal, State and local fair housing laws;
</P>
<P>(iv) The fact that the subsidy is tied to the unit and the Family must occupy a unit rehabilitated under the Program; 
</P>
<P>(v) The Family's options under the Program should the Family be required to move due to an increase or decrease in Family size; and 
</P>
<P>(vi) The advisability and availability of blood lead level screening for children under 6 years of age and HUD's lead-based paint requirements in part 35, subparts A, B, H, and R of this title.
</P>
<P>(2) For all Families to be temporarily relocated, the briefing must include a discussion of the relocation policies. 
</P>
<P>(e) <I>Continued participation of Family when Contract is terminated.</I> If an Owner evicts an assisted family in violation of the Contract or otherwise breaches the Contract, and the Contract for the unit is terminated, and if the Family was not at fault and is eligible for continued assistance, the Family may continue to receive housing assistance through the conversion of the Moderate Rehabilitation assistance to tenant-based assistance under the Section 8 voucher program. The Family must then be issued a voucher, and treated as any participant in the tenant-based programs under 24 CFR part 982, and must be assisted by the PHA in finding a suitable unit. All requirements of 24 CFR part 982 will be applicable except that the term of any housing assistance payments contract may not extend beyond the term of the initial Moderate Rehabilitation Contract. If the Family is determined ineligible for continued assistance, the voucher may be offered to the next Family on the PHA's waiting list. The unit will remain under the Moderate Rehabilitation ACC which provides for such a conversion of the units; therefore no amendment to the ACC will be necessary to convert to the Section 8 tenant-based assistance programs.
</P>
<P>(f) <I>Families determined by the PHA to be ineligible.</I> If a Family is determined to be ineligible in accordance with the PHA's HUD-approved application, either at the application stage or after assistance has been provided on behalf of the Family, the PHA shall promptly notify the Family by letter of the determination and the reasons for it and the letter shall state that the Family has the right within a reasonable time (specified in the letter) to request an informal hearing. If, after conducting such an informal hearing, the PHA determines, based on a preponderance of the evidence, that the Family is ineligible, it shall notify the Family in writing. The procedures of this paragraph do not preclude the Family from exercising its other rights if it believes it is being discriminated against on the basis of race, color, religion, sex, age, handicap, familial status, or national origin. The informal review provisions for the denial of a Federal selection preference under § 882.517 are contained in paragraph (k) of that section. The informal hearing requirements for denial and termination of assistance on the basis of ineligible immigration status are contained in 24 CFR part 5.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0123)
</APPRO>
<CITA TYPE="N">[47 FR 34383, Aug. 9, 1982]


</CITA>
<EDNOTE>
<HED>Editorial Note:</HED><PSPACE>For <E T="04">Federal Register</E> citations affecting § 882.514, see the List of CFR Sections Affected, which appears in the Finding Aids section of the printed volume and at <I>www.govinfo.gov.</I></PSPACE></EDNOTE>
</DIV8>


<DIV8 N="§ 882.515" NODE="24:4.1.2.1.6.4.1.10" TYPE="SECTION">
<HEAD>§ 882.515   Reexamination of family income and composition.</HEAD>
<P>(a) <I>Regular reexaminations.</I> The PHA must reexamine the income and composition of all families at least once every 12 months. After consultation with the family and upon verification of the information, the PHA must make appropriate adjustments in the Total Tenant Payment in accordance with part 813 of this chapter and determine whether the family's unit size is still appropriate (see § 882.213). The PHA must adjust Tenant Rent and the Housing Assistance Payment to reflect any change in Total Tenant Payment. At the time of the annual reexamination of family income and composition, the PHA must require the family to disclose and verify Social Security Numbers. For requirements regarding the signing and submitting of consent forms by families for the obtaining of wage and claim information from State Wage Information Collection Agencies, see part 5, subpart B, of this title. At the first regular reexamination after June 19, 1995, the PHA shall follow the requirements of 24 CFR part 5 concerning obtaining and processing evidence of citizenship or eligible immigration status of all family members. Thereafter, at each regular reexamination, the PHA shall follow the requirements of 24 CFR part 5 concerning verification of immigration status of any new family member. For a family with net family assets (as the term is defined in § 5.603 of this title) equal to or less than $50,000, which amount will be adjusted annually by HUD in accordance with the Consumer Price Index for Urban Wage Earners and Clerical Workers, a PHA may accept, for purposes of recertification of income, a family's declaration under § 5.618(b) of this title, except that the PHA must obtain third-party verification of all family assets every 3 years.
</P>
<P>(b) <I>Interim reexaminations.</I> (1) A family may request an interim determination of family income or composition because of any changes since the last determination. The PHA must conduct any interim reexamination within a reasonable period of time after the family request or when the PHA becomes aware of an increase in family adjusted income under paragraph (b)(3) of this section. What qualifies as a “reasonable time” may vary based on the amount of time it takes to verify information, but generally should not be longer than 30 days after changes in income are reported.
</P>
<P>(2) The PHA may decline to conduct an interim reexamination of family income if the PHA estimates the family's adjusted income will decrease by an amount that is less than ten percent of the family's annual adjusted income (or a lower amount established by HUD through notice), or a lower threshold established by the PHA.
</P>
<P>(3) The PHA must conduct an interim reexamination of family income when the PHA becomes aware that the family's adjusted income (§ 5.611 of this title) has changed by an amount that the PHA estimates will result in an increase of ten percent or more in annual adjusted income or such other amount established by HUD through notice, except:
</P>
<P>(i) The PHA may not consider any increase in the earned income of the family when estimating or calculating whether the family's adjusted income has increased, unless the family has previously received an interim reduction under paragraph (c)(1) of this section during the certification period; and
</P>
<P>(ii) The PHA may choose not to conduct an interim reexamination in the last three months of a certification period.
</P>
<P>(4)(i) If the family has reported a change in family income or composition in a timely manner according to the PHA's policies, the PHA must provide the family with 30 days advance notice of any increase in the Total Tenant Payment and Tenant Rent, and such increases will be effective the first day of the month beginning after the end of that 30-day period. Total Tenant Payment and Tenant Rent decreases will be effective on the first day of the first month after the date of the actual change leading to the interim reexamination of family income.
</P>
<P>(ii) If the family has failed to report a change in family income or composition in a timely manner according to the PHA's policies, PHAs must implement any resulting Total Tenant Payment and Tenant Rent increases retroactively to the first of the month following the date of the change leading to the interim reexamination of family income. Any resulting Total Tenant Payment and Tenant Rent decrease must be implemented no later than the first rent period following completion of the reexamination. However, a PHA may apply a Total Tenant Payment and Tenant Rent decrease retroactively at the discretion of the PHA, in accordance with the conditions established by the PHA in the administrative plan and subject to paragraph (c)(4)(iii) of this section.
</P>
<P>(iii) A retroactive Total Tenant Payment and Tenant Rent decrease may not be applied prior to the later of the first of the month following:
</P>
<P>(A) The date of the change leading to the interim reexamination of family income; or
</P>
<P>(B) The effective date of the family's most recent previous interim or annual reexamination (or initial examination if that was the family's last examination).
</P>
<P>(5) The PHA must adopt policies consistent with this section prescribing how to determine the effective date of a change in the housing assistance payment resulting from an interim redetermination.

 


</P>
<P>(c) <I>Obligation to supply information.</I> The family must supply such certification, release, information or documentation as the PHA or HUD determine to be necessary, including submission of required evidence of citizenship or eligible immigration status, submission of social security numbers and verifying documentation, submission of signed consent forms for the obtaining of wage and claim information from State Wage Information Collection Agencies, and submissions required for an annual or interim reexamination of family income and composition. See 24 CFR part 5.


</P>
<P>(d) <I>Continuation of housing assistance payments.</I> A family's eligibility for Housing Assistance Payments shall continue until the Total Tenant Payment equals the Gross Rent. The termination of eligibility at such point will not affect the family's other rights under its lease, nor will such termination preclude the resumption of payments as a result of later changes in income, rents or other relevant circumstances during the term of the Contract. However, eligibility also may be terminated in accordance with HUD requirements for such reasons as failure to submit requested verification information, including failure to meet the disclosure and verification requirements for Social Security Numbers, as provided by part 5, subpart B, of this title, failure to sign and submit consent forms for the obtaining of wage and claim information from State Wage Information Collection Agencies, as provided by part 5, subpart B, of this title, or because of the restrictions on net assets and property ownership as provided by § 5.618 of this title. For provisions requiring termination of assistance when the PHA determines that a family member is not a U.S. citizen or does not have eligible immigration status, see 24 CFR parts 5 and 982 for provisions concerning certain assistance for mixed families (families whose members include those with eligible immigration status, and those without eligible immigration status) in lieu of termination of assistance, and for provisions concerning deferral of termination of assistance.
</P>
<P>(e) <I>Family reporting of change.</I> The PHA must adopt policies consistent with this section prescribing when and under what conditions the family must report a change in family income or composition.
</P>
<P>(f) <I>Accuracy of family income data.</I> The PHA must establish procedures that are appropriate and necessary to assure that income data provided by applicant or participant families is complete and accurate. The PHA will not be considered out of compliance with the requirements in this section solely due to de minimis errors in calculating family income but is still obligated to correct errors once the PHA becomes aware of the errors. A de minimis error is an error where the PHA determination of family income deviates from the correct income determination by no more than $30 per month in monthly adjusted income ($360 in annual adjusted income).
</P>
<P>(1) The PHA must take any corrective action necessary to credit or repay a family if the family has been overcharged for their Tenant Rent or Total Tenant Payment as a result of an error (including a de minimis error) in the income determination. Families will not be required to repay the PHA in instances where the PHA has miscalculated income resulting in a family being undercharged for Tenant Rent or Total Tenant Payment.
</P>
<P>(2) HUD may revise the amount of de minimis error in this paragraph (f) through a notice published in the <E T="04">Federal Register</E> for public comment.


</P>
<CITA TYPE="N">[56 FR 7539, Feb. 22, 1991, as amended at 60 FR 14844, Mar. 20, 1995; 61 FR 11118, Mar. 18, 1996; 61 FR 13625, Mar. 27, 1996; 63 FR 23855, Apr. 30, 1998; 88 FR 9667, Feb. 14, 2023]






</CITA>
</DIV8>


<DIV8 N="§ 882.516" NODE="24:4.1.2.1.6.4.1.11" TYPE="SECTION">
<HEAD>§ 882.516   Maintenance, operation, and inspections.</HEAD>
<P>(a) <I>Maintenance and operation.</I> The Owner must provide all the services, maintenance and utilities as agreed to under the Contract, subject to abatement of housing assistance payments or other applicable remedies if the Owner fails to meet these obligations.
</P>
<P>(b) <I>Periodic inspection.</I> In addition to the inspections required prior to execution of the Contract, the PHA must inspect or cause to be inspected the contract units in accordance with the physical inspection requirements under 24 CFR part 5, subpart G, at least annually, and at such other times as may be necessary to assure that the Owner is meeting the obligations to maintain the units so they are compliant with 24 CFR part 5, subpart G, and to provide the agreed upon utilities and other services. The PHA must take into account complaints and any other information coming to its attention in scheduling inspections.
</P>
<P>(c) <I>Units with health and safety hazards.</I> If the PHA notifies the Owner that the unit(s) under Contract are not being maintained in compliance with the standards under 24 CFR part 5, subpart G, and the Owner fails to take corrective action (including corrective action with respect to the Family where the condition of the unit is the fault of the Family) within the time prescribed in the notice, the PHA may exercise any of its rights or remedies under the Contract, including abatement of housing assistance payments (even if the Family continues in occupancy) or termination of the Contract on the affected unit(s) and assistance to the Family in accordance with § 882.514(e).








</P>
<P>(d) <I>PHA management.</I> Where the PHA is managing units on which it is also administering the Housing Assistance Payments Contract pursuant to a management contract approved by HUD in accordance with § 882.412, HUD will make reviews of project operations, including inspections, in addition to required PHA reviews. These HUD reviews will be sufficient to assure that the Owner and the PHA are in full compliance with the terms and conditions of the Contract and the ACC. Should HUD determine that there are deficiencies, it may exercise any rights or remedies specified for the PHA under the Contract or reserved for HUD in the ACC, require termination of the management contract, or take other appropriate action.
</P>
<P>(e) <I>Periodic reviews.</I> Periodic PHA audits must be conducted as required by HUD, in accordance with 2 CFR part 200, subpart F.


</P>
<CITA TYPE="N">[47 FR 34383, Aug. 9, 1982, as amended at 53 FR 8065, Mar. 11, 1988; 80 FR 75941, Dec. 7, 2015; 88 FR 30499, May 11, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 882.517" NODE="24:4.1.2.1.6.4.1.12" TYPE="SECTION">
<HEAD>§ 882.517   HUD review of contract compliance.</HEAD>
<P>HUD will review program operations at such intervals as it deems necessary to ensure that the Owner and the PHA are in full compliance with the terms and conditions of the Contract and the ACC. Equal Opportunity review may be conducted with the scheduled HUD review or at any time deemed appropriate by HUD.
</P>
<CITA TYPE="N">[43 FR 61246, Dec. 29, 1978. Redesignated at 63 FR 23854, Apr. 30, 1998]


</CITA>
</DIV8>


<DIV8 N="§ 882.518" NODE="24:4.1.2.1.6.4.1.13" TYPE="SECTION">
<HEAD>§ 882.518   Denial of admission and termination of assistance for criminals and alcohol abusers.</HEAD>
<P>(a) <I>Requirement to deny admission</I>—(1) <I>Prohibiting admission of drug criminals.</I> (i) The PHA must prohibit admission to the program of an applicant for three years from the date of termination of tenancy if any household member's federally assisted housing tenancy has been terminated for drug-related criminal activity. However, the PHA may admit the household if the PHA determines: 
</P>
<P>(A) The household member who engaged in drug-related criminal activity and whose tenancy was terminated has successfully completed an approved supervised drug rehabilitation program, or 
</P>
<P>(B) The circumstances leading to the termination of tenancy no longer exist (for example, the criminal household member has died or is imprisoned). 
</P>
<P>(ii) The PHA must establish standards that permanently prohibit admission to the program if any household member has ever been convicted of drug-related criminal activity for manufacture or production of methamphetamine on the premises of federally assisted housing. 
</P>
<P>(iii) The PHA must establish standards that prohibit admission of a household to the program if the PHA determines that any household member is currently engaging in illegal use of a drug or that it has reasonable cause to believe that a household member's pattern of illegal use of a drug, as defined in § 5.100 of this title, may threaten the health, safety, or right to peaceful enjoyment of the premises by other residents. 
</P>
<P>(2) <I>Prohibiting admission of sex offenders.</I> The PHA must establish standards that prohibit admission to the program if any member of the household is subject to a lifetime registration requirement under a State sex offender registration program. In this screening of applicants, the PHA must perform criminal history background checks necessary to determine whether any household member is subject to a lifetime sex offender registration requirement in the State where the housing is located and in other States where household members are known to have resided. 
</P>
<P>(b) <I>Authority to deny admission</I>—(1) <I>Prohibiting admission of other criminals.</I> The PHA may prohibit admission of a household to the program under standards established by the PHA if the PHA determines that any household member is currently engaged in or has engaged in during a reasonable time before the admission decision: 
</P>
<P>(i) Drug-related criminal activity; 
</P>
<P>(ii) Violent criminal activity; 
</P>
<P>(iii) Other criminal activity which may threaten the health, safety, or right to peaceful enjoyment of the premises by other residents; 
</P>
<P>(iv) Other criminal activity which may threaten the health or safety of the owner or any employee, contractor, subcontractor or agent of the owner who is involved in the owner's housing operations. 
</P>
<P>(2) <I>Reasonable time.</I> The PHA may establish a period before the admission decision during which an applicant must not have engaged in the activities specified in paragraph (b)(1) of this section “reasonable time”. 
</P>
<P>(3) <I>Sufficient evidence.</I> If the PHA has denied admission to an applicant because a member of the household engaged in criminal activity in accordance with paragraph (b)(1) of this section, the PHA may reconsider the applicant if the PHA has sufficient evidence that the members of the household are not currently engaged in, and have not engaged in criminal activity during a reasonable period, as determined by the PHA, before the admission decision. 
</P>
<P>(i) The PHA would have “<I>sufficient evidence</I>” if the household member submitted a certification that she or he is not currently engaged in and has not engaged in such criminal activity during the specified period and provided supporting information from such sources as a probation officer, a landlord, neighbors, social service agency workers and criminal records, which the PHA verified. 
</P>
<P>(ii) For purposes of this section, a household member is “currently engaged in” criminal activity if the person has engaged in the behavior recently enough to justify a reasonable belief that the behavior is current. 
</P>
<P>(4) <I>Prohibiting admission of alcohol abusers.</I> The PHA must establish standards that prohibit admission to the program if the PHA determines that it has reasonable cause to believe that a household member's abuse or pattern of abuse of alcohol may threaten the health, safety, or right to peaceful enjoyment of the premises by other residents. 
</P>
<P>(c) <I>Terminating assistance</I>—(1) <I>Terminating assistance for drug criminals.</I> (i) The PHA may terminate assistance for drug-related criminal activity engaged in on or near the premises by any tenant, household member, or guest, and any such activity engaged in on the premises by any other person under the tenant's control. In addition, the PHA may terminate assistance if the PHA determines that a household member is illegally using a drug or when the PHA determines that a pattern of illegal use of a drug interferes with the health, safety, or right to peaceful enjoyment of the premises by other residents. 
</P>
<P>(ii) The PHA must immediately terminate assistance for a family under the program if the PHA determines that any member of the household has ever been convicted of drug-related criminal activity for manufacture or production of methamphetamine on the premises of federally assisted housing. 
</P>
<P>(2) <I>Terminating assistance for other criminals.</I> (i) The PHA must establish standards that allow the PHA to terminate assistance for a family if the PHA determines that any household member is engaged in criminal activity that threatens the health, safety, or right of peaceful enjoyment of the premises by other residents or by persons residing in the immediate vicinity of the premises. 
</P>
<P>(ii) The PHA may terminate assistance for a family if the PHA determines that a member of the household is: 
</P>
<P>(A) Fleeing to avoid prosecution, or custody or confinement after conviction, for a crime, or attempt to commit a crime, that is a felony under the laws of the place from which the individual flees, or that, in the case of the State of New Jersey, is a high misdemeanor; or 
</P>
<P>(B) Violating a condition of probation or parole imposed under Federal or State law. 
</P>
<P>(3) <I>Evidence of criminal activity.</I> (i) The PHA may terminate assistance for criminal activity in accordance with this section if the PHA determines, based on a preponderance of the evidence, that a covered person has engaged in the criminal activity, regardless of whether the covered person has been arrested or convicted for such activity. 
</P>
<P>(ii) See part 5, subpart J, of this title for provisions concerning access to criminal records. 
</P>
<P>(4) <I>Terminating assistance for alcohol abusers.</I> The PHA must establish standards that allow termination of assistance for a family if the PHA determines that a household member's abuse or pattern of abuse of alcohol threatens the health, safety, or right to peaceful enjoyment of the premises by other residents.
</P>
<CITA TYPE="N">[66 FR 28797, May 24, 2001]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:4.1.2.1.6.5" TYPE="SUBPART">
<HEAD>Subparts F-G [Reserved]</HEAD>

</DIV6>


<DIV6 N="H" NODE="24:4.1.2.1.6.6" TYPE="SUBPART">
<HEAD>Subpart H—Section 8 Moderate Rehabilitation Single Room Occupancy Program for Homeless Individuals</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 48057, Sept. 11, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 882.801" NODE="24:4.1.2.1.6.6.1.1" TYPE="SECTION">
<HEAD>§ 882.801   Purpose.</HEAD>
<P>The purpose of the Section 8 Moderate Rehabilitation Program for Single Room Occupancy (SRO) Dwellings for Homeless Individuals is to provide rental assistance for homeless individuals in rehabilitated SRO housing. The Section 8 assistance is in the form of rental assistance payments. These payments equal the rent for the unit, including utilities, minus the portion of the rent payable by the tenant under the U.S. Housing Act of 1937 (42 U.S.C. 1437 <I>et seq.</I>). 


</P>
</DIV8>


<DIV8 N="§ 882.802" NODE="24:4.1.2.1.6.6.1.2" TYPE="SECTION">
<HEAD>§ 882.802   Definitions.</HEAD>
<P>In addition to the definitions set forth in 24 CFR part 5 and § 882.102 (except for the definition of “<I>Single Room Occupancy (SRO) Housing</I>” therein) the following will apply: 
</P>
<P><I>Agreement to enter into housing assistance payments contract (Agreement).</I> A written agreement between the owner and the HA that, upon satisfactory completion of the rehabilitation in accordance with requirements specified in the Agreement, the HA will enter into a housing assistance payments contract with the owner. 
</P>
<P><I>Applicant.</I> A public housing agency or Indian housing authority (collectively referred to as HAs), or a private nonprofit organization that applies for assistance under this program. HUD will require private nonprofit applicants to subcontract with public housing agencies to administer their rental assistance. 
</P>
<P><I>Covered housing provider.</I> For the Section 8 Moderate Rehabilitation Single Room Occupancy Program for Homeless Individuals, “covered housing provider,” as such term is used in HUD's regulations in 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking), refers to the owner.
</P>
<P><I>Eligible individual (“individual”).</I> An individual who is capable of independent living and is authorized for admission to assisted housing under 24 CFR part 5.
</P>
<P><I>Homeless individual.</I> An individual as described in section 103 of the McKinney Act (42 U.S.C. 11302). 
</P>
<P><I>McKinney Act.</I> The Stewart B. McKinney Homeless Assistance Act (42 U.S.C. 11301 <I>et seq.</I>). 
</P>
<P><I>Moderate rehabilitation.</I> Rehabilitation involving a minimum expenditure of $3,000 for a unit, including its prorated share of work to be accomplished on common areas or systems, to upgrade to decent, safe, and sanitary condition to comply with the Housing Quality Standards or other standards approved by HUD, from a condition below those standards (improvements being of a modest nature and other than routine maintenance). 
</P>
<P><I>Private nonprofit organization.</I> An organization, no part of the net earnings of which inures to the benefit of any member, founder, contributor, or individual. The organization must: 
</P>
<P>(1) Have a voluntary board; 
</P>
<P>(2) Have a functioning accounting system that is operated in accordance with generally accepted accounting principles, or designate an entity that will maintain a functioning accounting system for the organization in accordance with generally accepted accounting principles; and 
</P>
<P>(3) Practice nondiscrimination in the provision of assistance. 
</P>
<P><I>Single room occupancy (SRO) housing.</I> A unit for occupancy by one person, which need not but may contain food preparation, sanitary facilities, or both. 
</P>
<P><I>Statement of individual responsibility.</I> An agreement, in the form prescribed by HUD, between the HA and an individual to be assisted under the program, stating the obligations and responsibilities of the two parties. 
</P>
<CITA TYPE="N">[61 FR 48057, Sept. 11, 1996, as amended at 63 FR 23855, Apr. 30, 1998; 81 FR 80812, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 882.803" NODE="24:4.1.2.1.6.6.1.3" TYPE="SECTION">
<HEAD>§ 882.803   Project eligibility and other requirements.</HEAD>
<P>(a) <I>Eligible and ineligible properties.</I> (1) Except as otherwise provided in paragraph (a) of this section, housing suitable for moderate rehabilitation is eligible for inclusion under this program. Existing structures of various types may be appropriate for this program, including single family houses and multifamily structures. 
</P>
<P>(2) Housing is not eligible for assistance under this program if it is receiving Federal funding for rental assistance or operating costs under other HUD programs. 
</P>
<P>(3) Nursing homes and related facilities such as intermediate care or board and care homes; units within the grounds of penal, reformatory, medical, mental, and similar public or private institutions; and facilities providing continual psychiatric, medical, or nursing services are not eligible for assistance under this program. 
</P>
<P>(4) No Section 8 assistance may be provided with respect to any unit occupied by an owner. 
</P>
<P>(5) Housing located in the Coastal Barrier Resources System designated under the Coastal Barriers Resources Act is not eligible. 
</P>
<P>(6) Single-sex facilities are allowable under this program, provided that the HA determines that because of the physical limitations or configuration of the facility, considerations of personal privacy require that the facility (or parts of the facility) be available only to members of a single sex. 
</P>
<P>(b)(1) <I>Physical condition standards.</I> Section 882.404 applies to this program.
</P>
<P>(2) <I>Site standards.</I> (i) The site must be adequate in size, exposure, and contour to accommodate the number and type of units proposed; adequate utilities and streets must be available to service the site. (The existence of a private disposal system and private sanitary water supply for the site, approved in accordance with local law, may be considered adequate utilities.)
</P>
<P>(ii) The site must be suitable from the standpoint of facilitating and furthering full compliance with the applicable provisions of title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d-2000d-4), title VIII of the Civil Rights Act of 1968 (42 U.S.C. 3601-19), E.O. 11063 (as amended by E.O. 12259; 3 CFR, 1959-1963 Comp., p. 652 and 3 CFR, 1980 Comp., p. 307), and HUD regulations issued pursuant thereto.
</P>
<P>(iii) The site must be accessible to social, recreational, educational, commercial, and health facilities, and other appropriate municipal facilities and services.
</P>
<P>(c) <I>Financing.</I> Section 882.405 applies to this program. 
</P>
<P>(d) <I>Relocation.</I> Section 882.406 applies to a project assisted under this program. 
</P>
<P>(e) <I>HA-owned housing.</I> (1) A unit that is owned by the HA that administers the assistance under the ACC (including a unit owned by an entity substantially controlled by the HA) may only be assisted if: 
</P>
<P>(i) The unit is not ineligible under § 882.803(a); and 
</P>
<P>(ii) HUD approves the base and contract rent calculations prior to execution of the Agreement and prior to execution of the HAP contract. 
</P>
<P>(2) The HA as owner is subject to the same program requirements that apply to other owners in the program. 
</P>
<CITA TYPE="N">[61 FR 48057, Sept. 11, 1996, as amended at 63 FR 46579, Sept. 1, 1998; 64 FR 50227, Sept. 15, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 882.804" NODE="24:4.1.2.1.6.6.1.4" TYPE="SECTION">
<HEAD>§ 882.804   Other Federal requirements.</HEAD>
<P>(a) Participation in this program requires compliance with the Federal requirements set forth in 24 CFR 5.105, with the Americans with Disabilities Act (42 U.S.C. 12101 <I>et seq.</I>), and with the regulations in 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking).
</P>
<P>(b) In order to facilitate emergency transfers for victims of domestic violence, dating violence, sexual assault, or stalking, covered housing providers have discretion to adopt and modify any existing admission preferences or transfer waitlist priorities for victims of domestic violence, dating violence, sexual assault, or stalking.
</P>
<P>(c) Covered housing providers must develop and implement an emergency transfer plan that meets the requirements in 24 CFR 5.2005(e), and when a safe unit is not immediately available for a victim of domestic violence, dating violence, sexual assault, and stalking who qualifies for an emergency transfer, covered housing providers must, at a minimum:
</P>
<P>(1) Review the covered housing provider's existing inventory of units and determine when the next vacant unit may be available; and
</P>
<P>(2) Provide a listing of nearby HUD subsidized rental properties, with or without preference for persons of domestic violence, dating violence, sexual assault, or stalking, and contact information for the local HUD field office.
</P>
<P>(d) Each year, the covered housing provider must submit to HUD data on all emergency transfers requested under 24 CFR 5.2005(e), pertaining to victims of domestic violence, dating violence, sexual assault, or stalking, including data on the outcomes of such requests.
</P>
<P>(e) For agreements covering nine or more assisted units, the following requirements for labor standards apply: 
</P>
<P>(1) Not less than the wages prevailing in the locality, as determined by the Secretary of Labor under the Davis-Bacon Act (40 U.S.C. 276a through 276a-5), must be paid to all laborers and mechanics employed in the development of the project, other than volunteers under the conditions set out in 24 CFR part 70; 
</P>
<P>(2) The employment of laborers and mechanics is subject to the provisions of the Contract Work Hours and Safety Standards Act (40 U.S.C. 327-333); and 
</P>
<P>(3) HAs, owners, contractors, and subcontractors must comply with all related rules, regulations, and requirements. 
</P>
<P>(f) The environmental review requirements of 24 CFR part 58, implementing the National Environmental Policy Act and related environmental laws and authorities, apply to this program. 
</P>
<CITA TYPE="N">[61 FR 48057, Sept. 11, 1996, as amended at 81 FR 80812, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 882.805" NODE="24:4.1.2.1.6.6.1.5" TYPE="SECTION">
<HEAD>§ 882.805   HA application process, ACC execution, and pre-rehabilitation activities.</HEAD>
<P>(a) <I>Review.</I> When funds are made available for assistance, HUD will publish a notice of funding availability (NOFA) in the <E T="04">Federal Register</E> in accordance with the requirements of 24 CFR part 4. HUD will review and screen applications in accordance with the guidelines, rating criteria, and procedures published in the NOFA. 
</P>
<P>(b) <I>ACC Execution.</I> (1) Before execution of the annual contributions contract (ACC), the HA must submit to the appropriate HUD field office the following: 
</P>
<P>(i) Estimates of Required Annual Contributions, Forms HUD-52672 and HUD-52673; 
</P>
<P>(ii) Administrative Plan, which should include: 
</P>
<P>(A) Procedures for tenant outreach; 
</P>
<P>(B) A policy governing temporary relocation; and 
</P>
<P>(C) A mechanism to monitor the provision of supportive services. 
</P>
<P>(iii) Proposed Schedule of Allowances for Tenant-Furnished Utilities and Other Services, Form HUD-52667, with a justification of the amounts proposed; 
</P>
<P>(iv) If applicable, proposed variations to the acceptability criteria of the Housing Quality Standards (see § 882.803(b)); and 
</P>
<P>(v) The fire and building code applicable to each structure. 
</P>
<P>(2) After HUD has approved the HA's application, the review and comment requirements of 24 CFR part 791 have been complied with, and the HA has submitted (and HUD has approved) the items required by paragraph (b)(1) of this section, HUD and the HA must execute the ACC in the form prescribed by HUD. The initial term of the ACC must be 11 years. This term allows one year to rehabilitate the units and place them under a 10-year HAP contract. The ACC must give HUD the option to renew the ACC for an additional 10 years. 
</P>
<P>(3) Section 882.403(a) (Maximum Total ACC Commitments) applies to this program. 
</P>
<P>(4) Section 882.403(b) (Project account) applies to this program. 
</P>
<P>(c)(1) If an owner is proposing to accomplish at least $3000 per unit of rehabilitation by including work to make the unit(s) accessible to a person with disabilities occupying the unit(s) or expected to occupy the unit(s), the PHA may approve such units not to exceed 5 percent of the units under its Program, provided that accessible units are necessary to meet the requirements of 24 CFR part 8, which implements section 504 of the Rehabilitation Act of 1973. The rehabilitation must make the unit(s), and access and egress to the unit(s), barrier-free with respect to the disability of the individual in residence or expected to be in residence.
</P>
<P>(2) The PHA must take the applications and determine the eligibility of all tenants residing in the approved units who wish to apply for the Program. After eligibility of all the tenants has been determined, the Owner must be informed of any adjustment in the number of units to be assisted. In order to make the most efficient use of housing assistance funds, an Agreement may not be entered into covering any unit occupied by a family which is not eligible to receive housing assistance payments. Therefore, the number of units approved by the PHA for a particular proposal must be adjusted to exclude any unit(s) determined by the PHA to be occupied by a family not eligible to receive housing assistance payments. Eligible Families must also be briefed at this stage as to their rights and responsibilities under the Program.
</P>
<P>(3) Should the Owner agree with the assessment of the PHA as to the work that must be accomplished, the preliminary feasibility of the proposal, and the number of units to be assisted, the Owner, with the assistance of the PHA where necessary, must prepare detailed work write-ups including specifications and plans (where necessary) so that a cost estimate may be prepared. The work write-up will describe how the deficiencies eligible for amortization through the Contract Rents are to be corrected including minimum acceptable levels of workmanship and materials. From this work write-up, the Owner, with the assistance of the PHA, must prepare a cost estimate for the accomplishment of all specified items.
</P>
<P>(4) The owner is responsible for selecting a competent contractor to undertake the rehabilitation. The PHA must propose opportunities for minority contractors to participate in the program.
</P>
<P>(5) The PHA must discuss with the Owner the various financing options available. The terms of the financing must be approved by the PHA in accordance with standards prescribed by HUD.
</P>
<P>(6) Before execution of the Agreement, the HA must:
</P>
<P>(i)(A) Inspect the structure to determine the specific work items that need to be accomplished to bring the units to be assisted up to the Housing Quality Standards (see § 882.803(b)) or other standards approved by HUD;
</P>
<P>(B) Conduct a feasibility analysis, and determine whether cost-effective energy conserving improvements can be added;
</P>
<P>(C) Ensure that the owner prepares the work write-ups and cost estimates required by paragraph (c)(3) of this section;
</P>
<P>(D) Determine initial base rents and contract rents;
</P>
<P>(ii) Assure that the owner has selected a contractor in accordance with paragraph (c)(4) of this section;
</P>
<P>(iii) After the financing and a contractor are obtained, determine whether the costs can be covered by initial contract rents, computed in accordance with paragraph (d) of this section; and, if a structure contains more than 50 units to be assisted, submit the base rent and contract rent calculations to the appropriate HUD field office for review and approval in sufficient time for execution of the Agreement in a timely manner;
</P>
<P>(iv) Obtain firm commitments to provide necessary supportive services;
</P>
<P>(v) Obtain firm commitments for other resources to be provided;
</P>
<P>(vi) Determine that the $3,000 minimum amount of work requirement and other requirements in paragraph (c)(1) of this section are met;
</P>
<P>(vii) Determine eligibility of current tenants, and select the units to be assisted, in accordance with paragraph (c)(2) of this section;
</P>
<P>(viii) Comply with the financing requirements in paragraph (c)(5) of this section;
</P>
<P>(ix) Assure compliance with all other applicable requirements of this subpart; and
</P>
<P>(x) If the HA determines that any structure proposed in its application is infeasible, or the HA proposes to select a different structure for any other reason, the HA must submit information for the proposed alternative structure to HUD for review and approval. HUD will rate the proposed structure in accordance with procedures in the applicable notice of funding availability. The HA may not proceed with processing for the proposed structure or execute an Agreement until HUD notifies the HA that HUD has approved the proposed alternative structure and that all requirements have been met.
</P>
<P>(d) <I>Initial contract rents.</I> Section 882.408 (Initial contract rents), including the establishment of fair market rents for SRO units at 75 percent of the O-bedroom Moderate Rehabilitation Fair Market Rent, applies to this program, except as follows: 
</P>
<P>(1)(i) In determining the monthly cost of a rehabilitation loan, in accordance with § 882.408(c)(2), a loan term of a least 10 years (instead of 15 years) may be used. The exception in § 882.408(c)(2)(iii) for using the actual loan term if the total amount of the rehabilitation is less than $15,000 continues to apply. In addition, the cost of the rehabilitation that may be included for the purpose of calculating the amount of the initial contract rent for any unit must not exceed the lower of: 
</P>
<P>(A) The projected cost of rehabilitation; or 
</P>
<P>(B) The per unit cost limitation that is established by <E T="04">Federal Register</E> notice, plus the cost of the fire and safety improvements required by 24 CFR 982.605(b)(4). HUD may, however, increase the limitation in paragraph (d)(1)(i)(B) of this section by an amount HUD determines is reasonable and necessary to accommodate special local conditions, including high construction costs or stringent fire or building codes. HUD will publish future cost limitation changes in the <E T="04">Federal Register</E> in the Notice of Funding Availability issued each year. 
</P>
<P>(ii) If the Federal Housing Administration (FHA) believes that high construction costs warrant an increase in the per unit cost limitation in paragraph (d)(1)(i)(B) of this section, the HA must demonstrate to HUD's satisfaction that a higher average per unit amount is necessary to conduct this program, and that every appropriate step has been taken to contain the amount of the rehabilitation within the published per unit cost limitation established at that time, plus the cost of the required fire and safety improvements. These higher amounts will be determined as follows: 
</P>
<P>(A) HUD may approve a higher per unit amount up to, but not to exceed, an amount computed by multiplying the HUD-approved High Cost Percentage for Base Cities (used for computing FHA high cost area adjustments) for the area, by the current published cost limitation plus the cost of the required fire and safety improvements. 
</P>
<P>(B) HUD may, on a structure-by-structure basis, increase the level approved in paragraph (d)(1)(i) of this section to up to an amount computed by multiplying 2.4 by the current published cost limitation plus the cost of the required fire and safety improvements. 
</P>
<P>(2) In approving changes to initial contract rents during rehabilitation in accordance with § 882.408(d), the revised initial contract rents may not reflect an average per unit rehabilitation cost that exceeds the limitation specified in paragraph (d)(1) of this section. 
</P>
<P>(3) If the structure contains four or fewer SRO units, the Fair Market Rent for that size structure (the Fair Market Rent for a 1-, 2-, 3-, or 4-bedroom unit, as applicable) must be used to determine the Fair Market Rent limitation instead of using the separate Fair Market Rent for each SRO unit. To determine the Fair Market Rent limitation for each SRO unit, the Fair Market Rent for the structure must be apportioned equally to each SRO unit. 
</P>
<P>(4) Contract rents must not include the costs of providing supportive services, transportation, furniture, or other nonhousing costs, as determined by HUD. SRO program assistance may be used for efficiency units selected for rehabilitation under this program, but the gross rent (contract rent plus any Utility Allowance) for these units will be no higher than for SRO units (i.e., 75 percent of the 0-bedroom Moderate Rehabilitation Fair Market Rent). 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0131)
</APPRO>
<CITA TYPE="N">[61 FR 48057, Sept. 11, 1996, as amended at 63 FR 23855, Apr. 30, 1998]


</CITA>
</DIV8>


<DIV8 N="§ 882.806" NODE="24:4.1.2.1.6.6.1.6" TYPE="SECTION">
<HEAD>§ 882.806   Agreement to enter into housing assistance payments contract.</HEAD>
<P>(a) <I>Rehabilitation period</I>—(1) <I>Agreement.</I> Before the owner begins any rehabilitation, the HA must enter into an Agreement with the owner in the form prescribed by HUD. 
</P>
<P>(2) <I>Timely performance of work.</I> (i) After execution of the Agreement, the Owner must promptly proceed with the rehabilitation work as provided in the Agreement. If the work is not so commenced, diligently continued, or completed, the PHA will have the right to rescind the Agreement, or take other appropriate action.
</P>
<P>(ii) The Agreement must provide that the work must be completed and the contract executed within 12 months of execution of the ACC. HUD may reduce the number of units or the amount of the annual contribution commitment if, in HUD's determination, the HA fails to demonstrate a good faith effort to adhere to this schedule or if other reasons justify reducing the number of units. 
</P>
<P>(3) <I>Inspections.</I> The PHA must inspect, as appropriate, during rehabilitation to ensure that work is proceeding on schedule and is being accomplished in accordance with the terms of the Agreement, particularly that the work meets the acceptable levels of workmanship and materials specified in the work write-up.
</P>
<P>(4) <I>Changes.</I> (i) The Owner must submit to the PHA for approval any changes from the work specified in the Agreement which would alter the design or the quality of the required rehabilitation. The PHA may condition its approval of such changes on a reduction of the Contract Rents. If changes are made without prior PHA approval, the PHA may determine that Contract Rents must be reduced or that the Owner must remedy any deficiency as a condition for acceptance of the unit(s).
</P>
<P>(ii) Contract rents may not be increased except in accordance with §§ 882.408(d) and 882.805(d)(2).
</P>
<P>(b) <I>Completion of rehabilitation</I>—(1) <I>Notification of completion.</I> Section 882.507(a) applies to this program. 
</P>
<P>(2) <I>Evidence of completion.</I> Section 882.507(b) applies to this program, except that § 882.507(b)(2)(iv), concerning lead-based paint requirements, does not apply. 
</P>
<P>(3) <I>Actual cost and rehabilitation loan certifications.</I> Section 882.507(c) applies to this program, except that contract rents must be established in accordance with § 882.805(d). 
</P>
<P>(4) <I>Review and inspections.</I> Section 882.507(d) applies to this program. 
</P>
<P>(5) <I>Acceptance.</I> Section 882.507(e) applies to this program. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0367)
</APPRO>
<CITA TYPE="N">[61 FR 48057, Sept. 11, 1996, as amended at 63 FR 23856, Apr. 30, 1998]


</CITA>
</DIV8>


<DIV8 N="§ 882.807" NODE="24:4.1.2.1.6.6.1.7" TYPE="SECTION">
<HEAD>§ 882.807   Housing assistance payments contract.</HEAD>
<P>(a) <I>Time of execution.</I> Upon PHA acceptance of the unit(s) and certifications pursuant to § 882.507, the Contract will be executed by the Owner and the PHA. The effective date must be no earlier than the PHA inspection which provides the basis for acceptance as specified in § 882.507(e).
</P>
<P>(b) <I>Term of contract.</I> The contract for any unit rehabilitated in accordance with this program must be for a term of 10 years. The contract must give the HA the option to renew the contract for an additional 10 years. 
</P>
<P>(c) <I>Changes in contract rents from agreement.</I> The contract rents may be higher or lower than those specified in the Agreement, in accordance with § 882.805(d). 
</P>
<P>(d) <I>Unleased unit(s).</I> At the time of execution of the Contract, the Owner will be required to submit a list of dwelling unit(s) leased and not leased as of the effective date of the Contract.
</P>
<P>(e) <I>Contract rents at end of rehabilitation loan term.</I> For a contract in which the initial contract rent was based upon a loan term shorter than 10 years, the contract must provide for reduction of the contract rent effective with the rent for the month following the end of the term of the rehabilitation loan. The amount of the reduction will be the monthly cost of amortization of the rehabilitation loan. This reduction should result in a new contract rent equal to the base rent plus all subsequent adjustments. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0367)
</APPRO>
<CITA TYPE="N">[61 FR 48057, Sept. 11, 1996, as amended at 63 FR 23856, Apr. 30, 1998]






</CITA>
</DIV8>


<DIV8 N="§ 882.808" NODE="24:4.1.2.1.6.6.1.8" TYPE="SECTION">
<HEAD>§ 882.808   Management.</HEAD>
<P>(a) <I>Outreach to homeless individuals and appropriate organizations.</I> (1) The HA or the owner must undertake outreach efforts to homeless individuals so that they may be brought into the program. The outreach effort should include notification to emergency shelter providers and other organizations that could provide referrals of homeless individuals. If the owner conducts the outreach effort, the owner must notify the HA so that it may provide referrals of homeless individuals. 
</P>
<P>(2) <I>Additional outreach concerns.</I> If the procedures that the HA or owner intends to use to publicize the availability of this program are unlikely to reach persons of any particular race, color, religion, sex, age, national origin, or mental or physical disability who may qualify for admission to the program, the HA or owner must establish additional procedures that will ensure that such persons are made aware of the availability of the program. The HA or owner must also adopt and implement procedures to ensure that interested persons can obtain information concerning the existence and location of services and facilities that are accessible to persons with disabilities. 
</P>
<P>(3) <I>First priority for homeless individuals.</I> Homeless individuals must have the first priority for occupancy of housing rehabilitated under this program. 
</P>
<P>(b) <I>Individual participation</I>—(1) <I>Initial determination of individual eligibility.</I> Section 882.514(a) applies to this program. 
</P>
<P>(2) <I>Owner selection of individuals.</I> The owner must rent all vacant units under contract to homeless individuals located through HA or owner outreach efforts and determined by the HA to be eligible. The owner is responsible for tenant selection and may refuse any individual, provided the owner does not unlawfully discriminate. If the owner rejects an individual, and the individual believes that the owner's rejection was the result of unlawful discrimination, the individual may request the assistance of the HA in resolving the issue and may also file a complaint with HUD's Office of Fair Housing and Equal Opportunity in accordance with 24 CFR 103.25. If the individual requests the assistance of the HA, and if the HA cannot resolve the complaint promptly, the HA should advise the individual that he or she may file a complaint with HUD, and provide the individual with the address of the nearest HUD Office of Fair Housing and Equal Opportunity. 
</P>
<P>(3) <I>Briefing of individuals.</I> Section 882.514(d) applies to this program, except that § 882.514(d)(1)(vi) does not apply. 
</P>
<P>(4) <I>Continued participation of individual when contract is terminated.</I> Section 882.514(e) applies to this program.
</P>
<P>(5) <I>Individuals determined by the HA to be ineligible.</I> Section 882.514(f) applies to this program. In addition, individuals are not precluded from exercising other rights if they believe they have been discriminated against on the basis of age. 
</P>
<P>(c) <I>Lease.</I> Sections 882.403(d) and 882.511(a) apply to this program. In addition, the lease must limit occupancy to one eligible individual.
</P>
<P>(d) <I>Security and utility deposits.</I> Section 882.414 applies to this program. 
</P>
<P>(e) <I>Rent adjustments.</I> Section 882.410 applies to this program. 
</P>
<P>(f) <I>Payments for vacancies.</I> Section 882.411 applies to this program. 
</P>
<P>(g) <I>Subcontracting of owner services.</I> Section 882.412 applies to this program. 
</P>
<P>(h) <I>Responsibility of the individual.</I> Section 882.413 applies to this program. 
</P>
<P>(i) <I>Reexamination of individual income</I>—(1) <I>Regular reexaminations.</I> The HA must reexamine the income of all individuals at least once every 12 months. After consultation with the individual and upon verification of the information, the HA must make appropriate adjustments in the Total Tenant Payment in accordance with 24 CFR part 5, subpart F, and verify that only one individual is occupying the unit. The HA must adjust Tenant Rent and the Housing Assistance Payment to reflect any change in Total Tenant Payment. At each regular reexamination, the HA must follow the requirements of 24 CFR part 5, subpart E concerning verification of immigration status of any new family member. For an individual with net family assets (as the term is defined in § 5.603 of this title) equal to or less than $50,000, which amount will be adjusted annually by HUD in accordance with the Consumer Price Index for Urban Wage Earners and Clerical Workers, a PHA may accept, for purposes of recertification of income, an individual's declaration under § 5.618(b) of this title, except that the PHA must obtain third-party verification of all family assets every 3 years.






</P>
<P>(2) <I>Interim reexaminations.</I> The individual shall supply such certification, release, information, or documentation as the PHA or HUD determines to be necessary, including submissions required for interim reexaminations of individual income and determinations as to whether only one individual is occupying the unit. In addition § 882.515(b) shall apply.
</P>
<P>(3) <I>Continuation of Housing Assistance Payments.</I> Section 882.515(d) applies to this program.


</P>
<P>(4) <I>Individual reporting of change.</I> The PHA must adopt policies consistent with this section prescribing when and under what conditions the individual must report a change in family income or composition.
</P>
<P>(5) <I>Accuracy of family income data.</I> The PHA must establish procedures that are appropriate and necessary to assure that income data provided by applicant or participant individuals is complete and accurate. The PHA will not be considered out of compliance with the requirements in this section solely due to de minimis errors in calculating family income but is still obligated to correct errors once the PHA becomes aware of the errors. A de minimis error is an error where the PHA determination of family income deviates from the correct income determination by no more than $30 per month in monthly adjusted income ($360 in annual adjusted income).
</P>
<P>(A) The PHA must take any corrective action necessary to credit or repay an individual if the individual has been overcharged for their Tenant Rent or Total Tenant Payment as a result of an error (including a de minimis error) in the income determination. Individuals will not be required to repay the PHA in instances where the PHA has miscalculated income resulting in an individual being undercharged for Tenant Rent or Total Tenant Payment.
</P>
<P>(B) HUD may revise the amount of de minimis error in this paragraph (i)(5) through a rulemaking published in the <E T="04">Federal Register</E> for public comment.

 
</P>
<P>(j) <I>Overcrowded units.</I> If the HA determines that anyone other than, or in addition to, the eligible individual is occupying an SRO unit assisted under this program, the HA must take all necessary action, as soon as reasonably feasible, to ensure that the unit is occupied by only one eligible individual. 
</P>
<P>(k) <I>Adjustment of utility allowance.</I> Section 882.510 applies to this program. 
</P>
<P>(l) <I>Termination of tenancy.</I> Section 882.511 applies to this program. For provisions requiring termination of assistance when the HA determines that a family member is not a U.S. citizen or does not have eligible immigration status, see 24 CFR part 5, subpart E for provisions concerning certain assistance for mixed families (families whose members include those with eligible immigration status, and those without eligible immigration status) in lieu of termination of assistance, or for provisions concerning deferral of termination of assistance. 
</P>
<P>(m) <I>Reduction of number of units covered by contract.</I> Section 882.512 applies to this program. 
</P>
<P>(n) <I>Maintenance, operation, and inspections.</I> Section 882.516 applies to this program. 
</P>
<P>(o) <I>HUD review of contract compliance.</I> Section 882.517 applies to this program. 
</P>
<P>(p) <I>Records and reports.</I> Each recipient of assistance under this subpart must keep any records and make any reports that HUD may require within the timeframe required. 
</P>
<P>(q) <I>Participation of homeless individuals.</I> (1) Each approved applicant receiving assistance under this program, except HAs, must provide for the participation of not less than one homeless individual or formerly homeless individual on the board of directors or other equivalent policymaking entity of such applicant, to the extent that the entity considers and makes policies and decisions regarding the rehabilitation of any housing with assistance under this subpart. This requirement is waived if the applicant is unable to meet this requirement and presents a plan that HUD approves to consult with homeless or formerly homeless individuals in considering and making such policies and decisions. 
</P>
<P>(2) To the maximum extent practicable, each approved applicant must involve homeless individuals and families, through employment, volunteer services, or otherwise, in rehabilitating and operating facilities assisted under this subpart, and in providing services for occupants of such facilities. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2506-0131)
</APPRO>
<CITA TYPE="N">[61 FR 48057, Sept. 11, 1996, as amended at 63 FR 23857, Apr. 30, 1998; 88 FR 9668, Feb. 14, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 882.809" NODE="24:4.1.2.1.6.6.1.9" TYPE="SECTION">
<HEAD>§ 882.809   Waivers.</HEAD>
<P>Section 5.405(b) of this title does not apply to this program. 


</P>
</DIV8>


<DIV8 N="§ 882.810" NODE="24:4.1.2.1.6.6.1.10" TYPE="SECTION">
<HEAD>§ 882.810   Displacement, relocation, and acquisition.</HEAD>
<P>(a) <I>Minimizing displacement.</I> (1) Consistent with the other goals and objectives of this part, owners must assure that they have taken all reasonable steps to minimize the displacement of persons (households, businesses, nonprofit organizations, and farms) as a result of a project assisted under this part. To the extent feasible, residential tenants must be provided a reasonable opportunity to lease and occupy a suitable, decent, safe, sanitary, and affordable dwelling unit in the project upon its completion. 
</P>
<P>(2) Whenever a building/complex is rehabilitated, and some but not all of the rehabilitated units will be assisted upon completion of the rehabilitation, the relocation requirements described in this section apply to the occupants of each rehabilitated unit, whether or not Section 8 assistance will be provided for the unit. 
</P>
<P>(b) <I>Temporary relocation.</I> The following policies cover residential tenants who will not be required to move permanently but who must relocate temporarily for the project. Such tenants must be provided: 
</P>
<P>(1) Reimbursement for all reasonable out-of-pocket expenses incurred in connection with the temporary relocation; 
</P>
<P>(2) Appropriate advisory services, including reasonable advance written notice of: 
</P>
<P>(i) The date and approximate duration of the temporary relocation; 
</P>
<P>(ii) The location of the suitable, decent, safe, and sanitary dwelling to be made available for the temporary period; 
</P>
<P>(iii) The terms and conditions under which the tenant may lease and occupy a suitable, decent, safe, and sanitary dwelling in the project upon completion; and 
</P>
<P>(iv) The assistance required under paragraph (b)(1) of this section. 
</P>
<P>(c) <I>Relocation assistance for displaced persons.</I> A “displaced person” (defined in paragraph (g) of this section) must be provided relocation assistance at the levels described in, and in accordance with the requirements of, the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (URA) (42 U.S.C. 4601-4655) and implementing regulations in 49 CFR part 24. A displaced person must be advised of his or her rights under the Fair Housing Act (42 U.S.C. 3601-19) and, if the comparable replacement dwelling used to establish the amount of the replacement housing payment to be provided to a minority is located in an area of minority concentration, such person also must be given, if possible, referrals to comparable and suitable, decent, safe, and sanitary replacement dwellings not located in such areas. 
</P>
<P>(d) <I>Real property acquisition requirements.</I> The acquisition of real property for a project is subject to the URA and the requirements described in 49 CFR part 24, subpart B. 
</P>
<P>(e) <I>Appeals.</I> A person who disagrees with the HA's determination concerning whether the person qualifies as a displaced person, or the amount of relocation assistance for which the person is eligible, may file a written appeal of that determination with the HA. A person who is dissatisfied with the HA's determination on his or her appeal may submit a written request for review of that determination to the HUD field office. 
</P>
<P>(f) <I>Responsibility of HA.</I> (1) The HA must certify (i.e., provide assurance of compliance as required by 49 CFR part 24) that it will comply with the URA, the regulations in 49 CFR part 24, and the requirements of this section, and must ensure such compliance notwithstanding any third party's contractual obligation to the HA to comply with these provisions. 
</P>
<P>(2) The cost of required relocation assistance is an eligible project cost in the same manner and to the same extent as other project costs. Such costs may be paid for with local public funds or funds available from other sources. The cost of HA advisory services for temporary relocation of tenants to be assisted under the program also may be paid from preliminary administrative funds. 
</P>
<P>(3) The HA must maintain records in sufficient detail to demonstrate compliance with the provisions of this section. The HA must maintain data on the racial, ethnic, gender, and disability status of displaced persons. 
</P>
<P>(g) <I>Definition of displaced person.</I> (1) For purposes of this section, the term <I>displaced person</I> means a person (household, business, nonprofit organization, or farm) that moves from real property, or moves personal property from real property, permanently, as a direct result of acquisition, rehabilitation, or demolition for a project assisted under this part. The term <I>displaced person</I> includes, but may not be limited to: 
</P>
<P>(i) A person who moves permanently from the real property after receiving notice requiring such move, if the move occurs on or after the date the owner submits to the HA the owner proposal that is later approved; 
</P>
<P>(ii) A person, including a person who moves from the property before the date the owner submits the proposal to the HA, if the HA or HUD determines that the displacement resulted directly from acquisition, rehabilitation, or demolition for the assisted project; or 
</P>
<P>(iii) A tenant-occupant of a dwelling unit who moves from the building/complex permanently after the execution of the Agreement between the owner and the HA (or, for projects assisted under subpart H of this part, after the “initiation of negotiations” (see paragraph (h) of this section)), if the move occurs before the tenant is provided a written notice offering him or her the opportunity to lease and occupy a suitable, decent, safe, and sanitary dwelling in the same building/complex, under reasonable terms and conditions, upon its completion. Such reasonable terms and conditions must include a monthly rent and estimated average monthly utility costs that do not exceed the greater of: 
</P>
<P>(A) The tenant's monthly rent before the execution of the agreement and estimated average monthly utility costs; or 
</P>
<P>(B) Thirty percent of gross household income. 
</P>
<P>(C) For projects assisted under subpart H of this part, the amount cannot exceed the greater of the tenant's monthly rent before the “initiation of negotiations” and estimated average monthly utility costs; or (if the tenant is low-income) the total tenant payment, as determined under 24 CFR 5.613, or (if the tenant is not low-income) 30 percent of gross household income; or 
</P>
<P>(iv) A tenant-occupant of a dwelling, who is required to relocate temporarily, but does not return to the building/complex, if either: 
</P>
<P>(A) The tenant is not offered payment for all reasonable out-of-pocket expenses incurred in connection with the temporary relocation; or 
</P>
<P>(B) Other conditions of the temporary relocation are not reasonable; or 
</P>
<P>(v) A tenant-occupant of a dwelling who moves from the building/complex permanently after he or she has been required to move to another dwelling unit in the building/complex, if either: 
</P>
<P>(A) The tenant is not offered reimbursement for all reasonable out-of-pocket expenses incurred in connection with the move; or 
</P>
<P>(B) Other conditions of the move are not reasonable. 
</P>
<P>(2) Notwithstanding the provisions of paragraph (g)(1) of this section, a person does not qualify as a displaced person (and is not eligible for relocation assistance under the URA or this section), if: 
</P>
<P>(i) The person has been evicted for serious or repeated violation of the terms and conditions of the lease or occupancy agreement, violation of applicable Federal, State, or local law, or other good cause, and the HA determines that the eviction was not undertaken for the purpose of evading the obligation to provide relocation assistance; 
</P>
<P>(ii) The person moved into the property after the submission of the preliminary proposal (or application, if there is no preliminary proposal), and before signing a lease and commencing occupancy, received written notice of the project and its possible impact on the person (e.g., the person may be displaced, temporarily relocated, or suffer a rent increase) and the fact that the person would not qualify as a displaced person (or for any assistance provided under this section) as a result of the project; 
</P>
<P>(iii) The person is ineligible under 49 CFR 24.2(g)(2); or 
</P>
<P>(iv) HUD determines that the person was not displaced as a direct result of acquisition, rehabilitation, or demolition for the project. 
</P>
<P>(3) The HA may request, at any time, HUD's determination of whether a displacement is or would be covered by this section. 
</P>
<P>(h) <I>Definition of initiation of negotiations.</I> For purposes of determining the formula for computing the replacement housing assistance to be provided to a residential tenant displaced as a direct result of private-owner rehabilitation or demolition of the real property, the term <I>initiation of negotiations</I> means the execution of the Agreement between the owner and the HA.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under OMB control number 2506-0121)
</APPRO>
<CITA TYPE="N">[61 FR 48056, Sept. 11, 1996. Redesignated and amended at 63 FR 23857, Apr. 30, 1998]




</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="883" NODE="24:4.1.2.1.7" TYPE="PART">
<HEAD>PART 883—SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM—STATE HOUSING AGENCIES 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437a, 1437c, 1437f, 3535(d), and 13611-13619.
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>45 FR 6889, Jan. 30, 1980, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.2.1.7.1" TYPE="SUBPART">
<HEAD>Subpart A—Summary and Guide</HEAD>


<DIV8 N="§ 883.101" NODE="24:4.1.2.1.7.1.1.1" TYPE="SECTION">
<HEAD>§ 883.101   General.</HEAD>
<P>(a) The purpose of the Section 8 program is to provide decent, safe and sanitary housing for low-income families through the use of a system of housing assistance payments. These needs may be met by statewide or special purpose housing agencies established by the various States. 
</P>
<P>(b) The regulations in this part 883 contain the policies and procedures applicable to the Section 8 program for these State agencies.
</P>
<CITA TYPE="N">[61 FR 13592, Mar. 27, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 883.105" NODE="24:4.1.2.1.7.1.1.2" TYPE="SECTION">
<HEAD>§ 883.105   Applicability of part 883 in effect as of February 29, 1980.</HEAD>
<P>(a) Part 883, in effect as of February 29, 1980, applies to projects for which the initial application was submitted on or after the February 29, 1980, effective date. (See 24 CFR part 883, revised as of April 1, 1980.) Projects for which applications or proposals were submitted before the February 29, 1980, effective date of part 883 have been processed under the part 883 regulations and procedures in effect at the date of submission. If, however, the agency notified HUD within 60 calendar days of the February 29, 1980, effective date of the part 883 regulations that they chose to have the provisions of part 883, in effect as of February 29, 1980, apply to a specific case, it must have promptly modified the application(s) and proposal(s) to comply. 
</P>
<P>(b) Subpart F of this part, dealing with the HAP contract and subpart G of this part, dealing with management, apply to all projects for which an Agreement was not executed before the February 29, 1980, effective date of part 883. In cases where an Agreement has been executed: 
</P>
<P>(1) The Agency, owner and HUD may agree to make the revised subpart F of this part applicable and execute appropriate amendments to the Agreement or Contract; 
</P>
<P>(2) The Agency, Owner and HUD may agree to make the revised subpart G of this part applicable (with or without the limitation on distributions) and execute appropriate amendments to the Agreement or Contract. 
</P>
<P>(c) Section 883.708, Termination of Tenancy and Modifications of Leases, applies to new families who begin occupancy or execute a lease on or after 30 days following the February 29, 1980, effective date of part 883. This section also applies to families not covered by the preceding sentence, including families currently under lease, who have a lease in which a renewal becomes effective on or after the 60th day following the February 29, 1980 effective date of part 883. A lease is considered renewed when both the landlord and the family fail to terminate a tenancy under a lease permitting either to terminate. 
</P>
<P>(d) Notwithstanding the provisions of paragraph (b) of this section, the provisions of 24 CFR part 5 (concerning preferences for selection of applicants) apply to all projects, regardless of when am Agreement was executed.
</P>
<CITA TYPE="N">[61 FR 13592, Mar. 27, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 883.106" NODE="24:4.1.2.1.7.1.1.3" TYPE="SECTION">
<HEAD>§ 883.106   Applicability and relationships between HUD and State agencies.</HEAD>
<P>(a) <I>Applicability.</I> This subpart A applies to contract authority set aside for a State Agency. 
</P>
<P>(b) <I>General responsibilities and relationships.</I> Subject to audit and review by HUD to assure compliance with Federal requirements and objectives, Housing Finance Agencies (HFAs) shall assume responsibility for project development and for supervision of the development, management and maintenance functions of owners. 
</P>
<P>(c) <I>Certifications and HUD monitoring.</I> (1) Generally, when reviewing any of the certifications of an HFA required by this part, HUD shall accept the certification as correct. If HUD has substantial reason to question the correctness of any element in a certification, HUD shall promptly bring the matter to the attention of the HFA and ask it to provide documentation supporting the certifications. When the HFA provides such evidence, HUD will act in accordance with the HFA's judgment or evaluation unless HUD determines that the certification is clearly not supported by the documentation. 
</P>
<P>(2) HUD will periodically monitor the activities of HFA's participating under this part only with respect to Section 8 or other HUD programs. This monitoring is intended primarily to ensure that certifications submitted and projects operated under this part reflect appropriate compliance with Federal law and requirements. 
</P>
<CITA TYPE="N">[61 FR 13592, Mar. 27, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.2.1.7.2" TYPE="SUBPART">
<HEAD>Subpart B [Reserved]</HEAD>

</DIV6>


<DIV6 N="C" NODE="24:4.1.2.1.7.3" TYPE="SUBPART">
<HEAD>Subpart C—Definitions and Other Requirements</HEAD>


<DIV8 N="§ 883.301" NODE="24:4.1.2.1.7.3.1.1" TYPE="SECTION">
<HEAD>§ 883.301   Applicability.</HEAD>
<P>The provisions of this subpart are applicable to newly constructed and substantially rehabilitated housing allocated contract authority under subpart B of this part and processed and constructed under the Fast Tract Procedures of subpart D. The definitions contained in § 883.302 and the provisions of § 883.307(b) regarding review and approval of financing documents, however, apply to all of this part.


</P>
</DIV8>


<DIV8 N="§ 883.302" NODE="24:4.1.2.1.7.3.1.2" TYPE="SECTION">
<HEAD>§ 883.302   Definitions.</HEAD>
<P>The terms <I>Fair Market Rent (FMR), HUD,</I> and <I>Public Housing Agency (PHA)</I> are defined in 24 CFR part 5.
</P>
<P><I>ACC (Annual Contributions Contract).</I> The contract between the State Agency and HUD under which HUD commits to provide the Agency with the funds needed to make housing assistance payments to the Owner and to pay the Agency for administrative fees in cases where it is eligible for them.
</P>
<P><I>Agency.</I> See State Agency.
</P>
<P><I>Agreement—(Agreement to enter into Housing Assistance Payments Contract).</I> The agreement between the owner and the State Agency on new construction and substantial rehabilitation projects which provides that, upon satisfactory completion of the project in accordance with the HUD-approved proposal or final proposal, the Agency will enter into a Housing Assistance Payments Contract with the owner.
</P>
<P><I>Annual Income.</I> As defined in part 5 of this title.
</P>
<P><I>Assisted unit.</I> A dwelling unit eligible for assistance under a Contract.
</P>
<P><I>Application.</I> A request, submitted by a State Agency, to assign a portion of its set-aside to a specific jurisdiction or project.
</P>
<P><I>Contract—(Housing Assistance Payments Contract).</I> The Contract entered into by the owner and the State Agency upon satisfactory completion of a new construction or substantial rehabilitation project which sets forth the rights and duties of the parties with respect to the project and the payments under the Contract.
</P>
<P><I>Contract Rent.</I> The total amount of rent specified in the Contract as payable by the Agency and the tenant to the owner for an assisted unit. In the case of the rental of only a manufactured home space, “contract rent” is the total rent specified in the Contract as payable by the Agency and the tenant to the owner for rental of the space, including fees or charges for management and maintenance services with respect to the space, but excluding utility charges for the manufactured home.
</P>
<P><I>Covered housing provider.</I> For the Section 8 Housing Assistance Payments Programs—State Housing Agencies, “covered housing provider,” as such term is used in HUD's regulations in 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking), refers to the HFA or owner, as applicable given the responsibilities of the covered housing provider as set forth in 24 CFR part 5, subpart L. For example, the PHA is the covered housing provider responsible for providing the notice of occupancy rights under VAWA and certification form described at 24 CFR 5.2005(a), though the PHA may provide this notice and form to owners, and charge owners with distributing the notice and form to tenants. In addition, the owner is the covered housing provider that may choose to bifurcate a lease as described at 24 CFR 5.2009(a), while both the PHA and owner are both responsible for ensuring that an emergency transfer plan is in place in accordance with 24 CFR 5.2005(e), and the owner is responsible for implementing the emergency transfer plan when an emergency occurs.
</P>
<P><I>Decent, safe, and sanitary.</I> Housing is decent, safe, and sanitary if it meets the physical condition requirements in 24 CFR part 5, subpart G.
</P>
<P><I>Existing Housing.</I> Housing assisted under a contract entered into pursuant to 24 CFR part 882. (See subpart E of this part.)
</P>
<P><I>Fast Track procedures.</I> The procedures contained in subpart D for processing and construction of new construction and substantial rehabilitation projects. In order to be eligible for these procedures, a State Agency must provide permanent financing without Federal mortgage insurance or a Federal guarantee except coinsurance under Section 244 of the National Housing Act.
</P>
<P><I>Financing Cost Contingency (FCC).</I> The maximum amount of contract authority which may be used to amend the Annual Contributions Contract (ACC) and Housing Assistance Payments Contract (HAP Contract) to provide increased contract rents to cover higher than anticipated debt service on the loan for a new construction or substantial rehabilitation project.
</P>
<P><I>Gross Rent.</I> As defined in part 813 of this chapter.
</P>
<P><I>HFA (Housing Finance Agency).</I> While the Annual Contributions Contract between the State Agency and HUD is in effect, “Housing Finance Agency” and “HFA” means a State Agency that provided permanent financing for newly constructed or substantially rehabilitated housing processed under this part and financed without Federal mortgage insurance or a Federal guarantee except coinsurance under section 244 of the National Housing Act. When the Annual Contributions Contract between the State Agency and HUD is no longer in effect, “Housing Finance Agency” and “HFA,” as used in this part and in the Housing Assistance Payments Contract, means “Contract Administrator,” as defined in 24 CFR 880.201.
</P>
<P><I>Household type.</I> The three household types are (1) elderly and handicapped, (2) family, and (3) large family.
</P>
<P><I>Housing Assistance Payment.</I> The payment made to the Owner of an assisted unit by the State Agency as provided in the Contract. Where the unit is leased to an eligible Family, the payment is the difference between the Contract Rent and the Tenant Rent. An additional payment is made to the Family when the Utility Allowance is greater than Total Tenant Payment. In the case of a Family renting only a manufactured home space as provided in § 883.303(i), the Housing Assistance Payment is the difference between Gross Rent and the Total Tenant Payment, but such payment may not exceed the Contract Rent for the space, and no additional payment is made to the Family. A Housing Assistance Payment, known as a “vacancy payment”, may be made to the Owner when an assisted unit is vacant, as provided in § 883.712.
</P>
<P><I>Housing Assistance Plan (HAP).</I> A housing plan submitted by a unit of general local or State government and approved by HUD as being acceptable under the standards of 24 CFR part 570.
</P>
<P><I>Housing type.</I> The three housing types are new construction, substantial rehabilitation, and existing housing/moderate rehabilitation.










</P>
<P><I>Independent Public Accountant.</I> Certified Public Accountant or a licensed or registered public accountant, none of which has a business relationship with the owner or State Agency except for the performance of audit, systems work and tax preparation. If not certified, the Independent Public Accountant must have been licensed or registered by a regulatory authority of a State or other political subdivision of the United States on or before December 31, 1970. In States that do not regulate the use of the title “public accountant,” only Certified Public Accountants may be used.
</P>
<P><I>Moderate rehabilitation.</I> The improvement of dwelling units in accordance with HUD requirements, under 24 CFR part 882.
</P>
<P><I>New construction.</I> Housing for which construction starts after execution of an Agreement, or housing which is already under construction when the Agreement is executed provided that:
</P>
<P>(a) At the date an application is submitted to HUD, a substantial amount of construction (generally at least 25 percent) remains to be completed;
</P>
<P>(b) At the date of application to HUD, the project cannot be completed and occupied by eligible families without assistance under this part; and
</P>
<P>(c) At the time construction was initiated, all of the parties reasonably expected that the project would be completed without assistance under this part.
</P>
<P><I>Override.</I> The difference between an HFA's cost of borrowing on obligations issued to finance a new construction or substantial rehabilitation project and the lending rate at which they provide permanent financing for the project.
</P>
<P><I>Owner.</I> Any private person or entity (including a cooperative) or a public entity, having the legal right to lease or sublease dwelling units assisted under this part. The term Owner also includes the person or entity submitting a proposal to a State Agency under this part.
</P>
<P><I>Partially-assisted Project.</I> A project for non-elderly families under this part which includes more than 50 units, of which the number of assisted units does not exceed the greater of (a) 20 percent of the units in the project, rounded to the next highest whole number of units, or (b) the minimum percentage required by State law as a condition of HFA permanent financing, if the Assistant Secretary approves such minimum percentage for purposes of applicability of this definition. 
</P>
<P><I>Permanent financing.</I> An Agency is determined to provide permanent financing if HUD determines that (a) the Agency permanently finances a project from its own funds, including the sale of its obligations; or (b) permanent financing for projects developed or administered by the Agency is provided by the State government or by an agency or instrumentality thereof other than the Agency; or (c) the permanent financing (by a public or private entity other than the Agency) is backed by the commitment of the Agency to assume the risks of loss on default or foreclosure of the loan.
</P>
<P><I>Project Account.</I> A specifically identified and segregated account for each project which is established in accordance with § 883.604(b) out of the amounts by which the maximum Annual Contributions Contract commitment exceeds the amount actually paid out under the ACC each year.
</P>
<P><I>Proposal.</I> A proposal for a project that is submitted by an HFA to HUD for Section 8 assistance under this part.
</P>
<P><I>Rent.</I> In the case of an assisted unit in a cooperative project, rent means the carrying charges payable to the cooperative with respect to occupancy of the unit.
</P>
<P><I>Replacement cost</I>—(a) <I>New construction.</I> The estimated construction cost of the project when the proposed improvements are completed. The replacement cost may include the land, the physical improvements, utilities within the boundaries of the land, architect's fees, miscellaneous charges incident to construction as approved by the Assistant Secretary.
</P>
<P>(b) <I>Substantial rehabilitation.</I> The sum of the “as is” value before rehabilitation of the property as determined by the Agency and the estimated cost of rehabilitation, including carrying and finance charges.
</P>
<P><I>Single Room Occupancy (SRO) Housing.</I> A unit for occupancy by a single eligible individual capable of independent living, which does not contain food preparation and/or sanitary facilities and is located within a multifamily structure consisting of more than 12 units. 
</P>
<P><I>Secretary.</I> The Secretary of Housing and Urban Development (or designee).
</P>
<P><I>Small Project.</I> A project for non-elderly families under this part which includes a total of 50 or fewer units (assisted and unassisted).


</P>
<P><I>State Agency (Agency).</I> While the Annual Contributions Contract between the State Agency and HUD is in effect, “State Agency” and “Agency” means an agency that has been notified by HUD that it is authorized to apply for a set-aside and/or to use the Fast Track Procedures of this part. When the Annual Contributions Contract between the State Agency and HUD is no longer in effect, “State Agency” and “Agency,” as used in this part and in the Housing Assistance Payments Contract, mean “Contract Administrator,” as defined in 24 CFR 880.201.






</P>
<P><I>Substantial rehabilitation.</I> (a) The improvement of a property to decent, safe and sanitary condition in accordance with the standards of this part from a condition below these standards. Substantial Rehabilitation may vary in degree from gutting and extensive reconstruction to the cure of substantial accumulation of deferred maintenance. Cosmetic improvements alone do not qualify as Substantial Rehabilitation under this definition.
</P>
<P>(b) Substantial Rehabilitation may also include renovation, alteration or remodeling for the conversion or adaptation of structurally sound property to the design and condition required for use under this part, or the repair or replacement of major building systems or components in danger of failure.
</P>
<P>(c) Housing on which rehabilitation work has already started when the Agreement is executed is eligible for assistance as a Substantial Rehabilitation project under this part provided:
</P>
<P>(1) At the date of application to HUD, a substantial amount of construction (generally at least 25 percent) remains to be completed; 
</P>
<P>(2) At the date of application to HUD, the project cannot be completed and occupied by eligible families without assistance under this part; and
</P>
<P>(3) At the time construction was initiated, all of the parties reasonably expected that the project would be completed without assistance under this part.
</P>
<P><I>Tenant Rent.</I> The monthly amount defined in, and determined in accordance with part 813 of this chapter.
</P>
<P><I>Total Tenant Payment.</I> The monthly amount defined in, and determined in accordance with part 813 of this chapter.
</P>
<P><I>Utility Allowance.</I> As defined in part 813 of this chapter, made or approved by HUD.
</P>
<P><I>Utility reimbursement.</I> As defined in part 813 of this chapter.
</P>
<P><I>Vacancy payments.</I> The housing assistance payment made to the owner by the State Agency for a vacant, assisted unit if certain conditions are fulfilled as provided in the Contract. The amount of vacancy payment varies with the length of the vacancy period and is less after the first 60 days of any vacancy.
</P>
<P><I>Very Low-Income Family.</I> As defined in part 813 of this chapter.
</P>
<CITA TYPE="N">[45 FR 6889, Jan. 30, 1980, as amended at 45 FR 56326, Aug. 22, 1980; 48 FR 12708, Mar. 28, 1983; 49 FR 17449, Apr. 24, 1984; 49 FR 19946, May 10, 1984; 61 FR 5213, Feb. 9, 1996; 61 FR 13592, Mar. 27, 1996; 63 FR 46579, Sept. 1, 1998; 70 FR 77744, Dec. 30, 2005; 81 FR 80813, Nov. 16, 2016; 89 FR 96098, Dec. 4, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 883.306" NODE="24:4.1.2.1.7.3.1.3" TYPE="SECTION">
<HEAD>§ 883.306   Limitation on distributions.</HEAD>
<P>(a) Non-profit owners are not entitled to distributions of project funds. 
</P>
<P>(b) For the life of the Contract, project funds may only be distributed to profit-motivated owners at the end of each fiscal year of project operation following the effective date of the Contract and after all project expenses have been paid, or funds have been set aside for payment, and all reserve requirements have been met. The first year's distribution may not be made until the HFA certification of project costs, (See § 883.411), where applicable, has been submitted to HUD. The HFA must certify that distributions will not exceed the following maximum returns: 
</P>
<P>(1) For projects for elderly families, the first year's distribution will be limited to 6 percent on equity. The Assistant Secretary may provide for increases in subsequent years' distributions on an annual or other basis so that the permitted return reflects a 6 percent return on the value, in subsequent years, as determined in accordance with HUD guidelines, of the approved initial equity. Any such adjustments will be made in accordance with a Notice in the <E T="04">Federal Register.</E> The HFA may approve a lesser increase or no increase in subsequent years' distributions. 
</P>
<P>(2) For projects for non-elderly families the first year's distribution will be limited to 10 percent on equity. The Assistant Secretary may provide for increases in subsequent years' distributions on an annual or other basis so that the permitted return reflects a 10 percent return on the value, in subsequent years, as determined in accordance with HUD guidelines, of the approved initial equity. Any such adjustments will be made in accordance with a Notice in the <E T="04">Federal Register.</E> The HFA may approve a lesser increase or no increase in subsequent years' distributions. 
</P>
<P>(c) For the purpose of determining the allowable distribution, an owner's equity investment in a project is deemed to be 10 percent of the replacement cost of the part of the project attributable to dwelling use accepted by the HFA at cost certification (See § 883.411), or as specified in the Proposal where cost certification is not required, unless the owner justifies a higher equity contribution through cost certification documentation accepted by the HFA. 
</P>
<P>(d) Any short-fall in return may be made up from surplus project funds in future years. 
</P>
<P>(e) If the HFA determines at any time that surplus project funds are more than the amount needed for project operations, reserve requirements and permitted distributions, the HFA may require the excess to be placed in a separate account to be used to reduce housing assistance payments or for other project purposes. Upon termination of the Contract, any excess project funds must be remitted to HUD. Upon termination of the Annual Contributions Contract between HUD and the HFA, the Owner must request withdrawal of any funds that were placed in such an account at the direction of the HFA and immediately deposit such funds into an interest-bearing residual receipts account that complies with the requirements of 24 CFR 880.601(e)(2)(i).





 
</P>
<P>(f) Owners of small projects or partially assisted projects are exempt from the limitation on distributions contained in paragraphs (b) through (d) of this section.
</P>
<P>(g) HUD may permit increased distributions of surplus, in excess of the amounts otherwise permitted, to profit-motivated owners who participate in a HUD-approved initiative or program to preserve below-market housing stock. The increased distributions will be limited to a maximum amount based on market rents and calculated according to HUD instructions. Funds that the owner is authorized to retain under section 236(g)(2) of the National Housing Act are not considered distributions to the owner. 
</P>
<P>(h) Any State or local law or regulation that restricts distributions to an amount lower than permitted by this section or permitted by the Commissioner under this paragraph (h) is preempted as provided by section 524(f) of the Multifamily Assisted Housing Reform and Affordability Act of 1997.
</P>
<CITA TYPE="N">[45 FR 6889, Jan. 30, 1980, as amended at 65 FR 61075, Oct. 13, 2000; 65 FR 68891, Nov. 15, 2000; 89 FR 96098, Dec. 4, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 883.307" NODE="24:4.1.2.1.7.3.1.4" TYPE="SECTION">
<HEAD>§ 883.307   Financing.</HEAD>
<P>(a) <I>Types of financing.</I> A State Agency that used the Fast Track Procedures formerly in this part must provide permanent financing for any new construction or substantial rehabilitation project without Federal mortgage insurance, except coinsurance under section 244 under the National Housing Act (12 U.S.C. 1701 et seq). Obligations issued by the HFA for this purpose may be taxable under section 802 of the Housing and Community Development Act of 1974 (42 U.S.C. 1440) or tax-exempt under section 103 of the Internal Revenue Code (26 U.S.C. 103), 24 CFR part 811 or other Federal Law. 
</P>
<P>(b) <I>HUD approval.</I> (1) A State Agency, prior to receiving HUD approval of its first New Construction or Substantial Rehabilitation Proposal using contract authority under this part, must submit copies of the documents relating to the method of financing Section 8 projects to HUD for review. These documents shall include bond resolutions or indentures, loan agreements, regulatory agreements, notes, mortgages or deeds of trust and other related documents, if any, but does not need to include the “official statement” or copies of the prospectus for individual bond issues. HUD review will be limited to making certain that the documents are not inconsistent with or in violation of these regulations and the administrative procedures used to implement them. After review, HUD must notify the Agency that the documents are acceptable or, if unacceptable, will request clarification or changes. This review and approval will meet the requirements of 24 CFR 811.107(a). 
</P>
<P>(2) When an Agency which has received HUD approval of its financing documents proposes substantive changes in them which affect the Section 8 program, the revised documents must be submitted for review. HUD review will be limited to the areas indicated in paragraph (b)(1) of this section and must be carried out promptly. HUD will notify the Agency that the revised documents are acceptable, or, if unacceptable, will request clarification or changes. 
</P>
<P>(3) The review and approval of financing documents required under 24 CFR part 811 will constitute HUD approval under this section. 
</P>
<P>(4) The Agency must retain in its files, and make available for HUD inspection, the documentation relating to its financing of Section 8 projects, including any relating to the certifications of compliance with applicable Department of Treasury or HUD regulations (24 CFR part 811) regarding tax-exempt financing. 
</P>
<P>(c) <I>Pledge of Contracts.</I> The HFA or owner may pledge, or offer as security for any loan or obligation, an Agreement, Contract, or ACC entered into pursuant this part provided that such security is in connection with a project constructed pursuant to this part. Any pledge of the Agreement, Contract, or ACC, or payments thereunder will be limited to the amounts payable under the Contract or ACC in accordance with its terms. If the pledge or other document provides that all payments will be paid directly to the HFA, other mortgagee or the trustee for bondholders, the HFA, other mortgagee or trustee may make all payments or deposits required under the mortgage or trust indenture and remit any excess to the owner. 
</P>
<P>(d) <I>Foreclosure and other transfers.</I> In the event of assignment, sale, or other disposition of the project or the contracts agreed to by the HFA and approved by HUD (which approval shall not be unreasonably delayed or withheld), foreclosure, or assignment of the mortgage or deed in lieu of foreclosure, 
</P>
<P>(1) The Agreement, the Contract and the ACC will continue in effect, and 
</P>
<P>(2) Housing assistance payments will continue in accordance with the terms of the Contract, unless approval to amend or terminate the Agreement, the Contract or the ACC has been obtained from the Assistant Secretary.
</P>
<P>(e) In the case of a newly constructed or substantially rehabilitated manufactured home park, the principal amount of any mortgage attributable to the rental spaces in the park may not exceed an amount per space determined in accordance with § 207.33(b) of this title.
</P>
<CITA TYPE="N">[45 FR 6889, Jan. 30, 1980, as amended at 45 FR 56327, Aug. 22, 1980; 48 FR 12709, Mar. 28, 1983; 49 FR 17449, Apr. 24, 1984; 61 FR 13592, Mar. 27, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 883.308" NODE="24:4.1.2.1.7.3.1.5" TYPE="SECTION">
<HEAD>§ 883.308   Adjustments to reflect changes in terms of financing.</HEAD>
<P>(a) <I>Certifications of projected financing terms.</I> When an HFA, under this part, provides permanent financing for a project through the issuance of obligations and these are not sold until after the contract rents for a project have been set, the HFA must submit, with the Proposal, a certification of: 
</P>
<P>(1) Its projected rate of borrowing (net interest cost), based on a reasonable evaluation of market conditions, on obligations issued to provide interim and permanent financing for the project, 
</P>
<P>(2) The projected cost of borrowing to the owner on interim financing for the project, 
</P>
<P>(3) The projected loan amount for the project, 
</P>
<P>(4) The projected cost of borrowing and the term of the permanent financing to be provided to the owner for the project, 
</P>
<P>(5) The projected annual debt service for the permanent financing on which the Contract Rents are based, and 
</P>
<P>(6) The override, if any. 
</P>
<P>(b) <I>Revised certifications.</I> If, at any time prior to the execution of the Agreement, the terms and conditions of financing change, other than the HFA's projected cost of borrowing, the HFA must submit revised certifications based upon the new terms. 
</P>
<P>(c) <I>Certifications of actual financing terms.</I> After a project has been permanently financed, the HFA must submit a certification which specifies the actual financing terms. The items that must be included in this certification include: 
</P>
<P>(1) The HFA's actual cost of borrowing (net interest cost) on obligations from which funds were used to permanently finance the project, 
</P>
<P>(2) The override, if any, added to the actual cost of borrowing on obligations in setting the rate of lending to the owner, 
</P>
<P>(3) The annual debt service to the owner for the permanent financing on which contract rents are based; and, 
</P>
<P>(4) The actual loan amount and the term on which the annual debt service is based. 
</P>
<P>(d) <I>Reduction of Contract Rents.</I> If the actual debt service to the owner under the permanent financing is lower than the anticipated debt service on which the Contract Rents were based, the initial Contract Rents, or the Contract Rents currently in effect, must be reduced commensurately, and the amount of the savings credited to the project account. 
</P>
<P>(e) <I>Increase of Contract Rents.</I> This paragraph (e) applies only if the HFA is using its set-aside for the project and it is processed under subpart D. If the actual debt service to the owner under the permanent financing is higher than the anticipated debt service on which the Contract Rents are based, the initial Contract Rents or the Contract Rents currently in effect may, if sufficient contract and budget authority is available, be increased commensurately based on the certification submitted under paragraph (c) of this section. The amount of this increase may not exceed the amount of the Financing Cost Contingency (FCC) authorized but not reserved for the project at the time the proposal is approved. The adjustment must not exceed the amount necessary to reflect an increase in debt service (based on the difference between the projected and actual terms of the permanent financing) resulting from an increase over the projected interest rate of not more than: 
</P>
<P>(1) One and one-half percent if the projected override was three-fourths of one percent or less, or 
</P>
<P>(2) One percent if such projected override was more than three-fourths of one percent but not more than one percent, or 
</P>
<P>(3) One-half of one percent if such projected override was more than one percent. 
</P>
<P>(f) <I>Recoupment of savings in financing costs.</I> In the event that interim financing is continued after the first year of the term of the Contract and the debt service of the interim financing for any period of three months after such first year is less than the anticipated debt service under the permanent financing on which the Contract Rents were based, an appropriate amount reflecting the savings in financing cost will be credited by HUD to the Project Account and withheld from housing assistance payments payable to the owner. If during the course of the same year there is any period of three months in which the debt service is greater than the anticipated debt service under the projected permanent financing, an adjustment will be made so that only the net amount of savings in debt service for the year is credited by HUD to the Project Account and withheld from housing assistance payments to the owner. No increased payments will be made to the owner on account of any net excess for the year of actual interim debt service over the anticipated debt service under the permanent financing. Nothing in this paragraph will be construed as requiring a permanent reduction in the Contract Rents or precluding adjustments of Contract Rents in accordance with paragraphs (d) or (e) of this section. 
</P>
<P>(g) <I>Compliance with other regulations.</I> The HFA must also submit a certification specifying: 
</P>
<P>(1) That the terms of financing, the amount of the obligations issued with respect to the project and the use of the funds will be in compliance with any regulation governing the issuance of the obligations, e.g., Department of the Treasury regulations regarding arbitrage or HUD regulations regarding Tax Exemption of Obligations of Public Housing Agencies (24 CFR part 811), and 
</P>
<P>(2) That the override, if any, on the permanent financing for the project will not be greater than the projected override nor greater than the override allowed for the borrowing as a whole under applicable regulations, e.g., the Department of Treasury regulations regarding arbitrage. The certifications required under 24 CFR 811.107(a)(2) will be sufficient to meet the certification requirements of this paragraph (g). 


</P>
</DIV8>


<DIV8 N="§ 883.310" NODE="24:4.1.2.1.7.3.1.6" TYPE="SECTION">
<HEAD>§ 883.310   Property standards.</HEAD>
<P>(a) <I>New Construction.</I> Projects must comply with: 
</P>
<P>(1) [Reserved]
</P>
<P>(2) In the case of manufactured homes, the Federal Manufactured Home Construction and Safety Standards, pursuant to Title VI of the Housing and Community Development Act of 1974, and 24 CFR part 3280; 
</P>
<P>(3) In the case of congregate or single room occupant housing, the appropriate HUD guidelines and standards, 
</P>
<P>(4) HUD requirements pursuant to Section 209 of the Housing and Community Development Act of 1974 for projects for the elderly or the handicapped; 
</P>
<P>(5) HUD requirements pertaining to noise abatement and control; and 
</P>
<P>(6) Applicable state and local laws, codes, ordinances, and regulations. 
</P>
<P>(b) <I>Substantial Rehabilitation.</I> Projects must comply with: 
</P>
<P>(1) [Reserved]
</P>
<P>(2) In the case of congregate or single room occupant housing, the appropriate HUD guidelines and standards, 
</P>
<P>(3) HUD requirements pursuant to Section 209 of the HCD Act for projects for the elderly or the handicapped; 
</P>
<P>(4) HUD requirements pertaining to noise abatement and control; 
</P>
<P>(5) The Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and implementing regulations at part 35, subparts A, B, H, and R of this title.
</P>
<P>(6) Applicable State and local laws, codes, ordinances, and regulations.
</P>
<P>(c) <I>Smoke detectors</I>—(1) <I>Performance requirement.</I> After October 30, 1992, each dwelling unit must include at least one battery-operated or hard-wired smoke detector, in proper working condition, on each level of the unit. If the unit is occupied by hearing-impaired persons, smoke detectors must have an alarm system, designed for hearing-impaired persons, in each bedroom occupied by a hearing-impaired person.
</P>
<P>(2) <I>Acceptability criteria.</I> The smoke detector must be located, to the extent practicable, in a hallway adjacent to a bedroom, unless the unit is occupied by a hearing-impaired person, in which case each bedroom occupied by a hearing-impaired person must have an alarm system connected to the smoke detector installed in the hallway.
</P>
<CITA TYPE="N">[45 FR 6889, Jan. 30, 1980, as amended at 50 FR 9269, Mar. 7, 1985; 57 FR 33851, July 30, 1992; 63 FR 46579, Sept. 1, 1998; 64 FR 50227, Sept. 15, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 883.313" NODE="24:4.1.2.1.7.3.1.7" TYPE="SECTION">
<HEAD>§ 883.313   Audit.</HEAD>
<P>Where housing assistance under the Section 8 Program is provided for projects developed or owned by non-Federal entities (as defined in 2 CFR 200.69), the audit requirements in 2 CFR part 200, subpart F, shall apply.
</P>
<CITA TYPE="N">[80 FR 75941, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 883.314" NODE="24:4.1.2.1.7.3.1.8" TYPE="SECTION">
<HEAD>§ 883.314   Broadband infrastructure.</HEAD>
<P>Any new construction or substantial rehabilitation, as substantial rehabilitation is defined by 24 CFR 5.100, of a building with more than 4 rental units and that is subject to a Housing Assistance Payments contract executed or renewed after January 19, 2017 must include installation of broadband infrastructure, as this term is also defined in 24 CFR 5.100, except where the owner determines and documents the determination that:
</P>
<P>(a) The location of the new construction or substantial rehabilitation makes installation of broadband infrastructure infeasible;
</P>
<P>(b) The cost of installing broadband infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden; or
</P>
<P>(c) The structure of the housing to be substantially rehabilitated makes installation of broadband infrastructure infeasible.
</P>
<CITA TYPE="N">[81 FR 92638, Dec. 20, 2016]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:4.1.2.1.7.4" TYPE="SUBPART">
<HEAD>Subparts D-E [Reserved]</HEAD>

</DIV6>


<DIV6 N="F" NODE="24:4.1.2.1.7.5" TYPE="SUBPART">
<HEAD>Subpart F—Housing Assistance Payments Contract</HEAD>


<DIV8 N="§ 883.601" NODE="24:4.1.2.1.7.5.1.1" TYPE="SECTION">
<HEAD>§ 883.601   Applicability.</HEAD>
<P>The provisions of this subpart apply to new construction and substantial rehabilitation projects using contract authority allocated under subpart B, Allocation and Assignment of Contract Authority, or processed and constructed under subpart D, Fast Track Procedures. 


</P>
</DIV8>


<DIV8 N="§ 883.602" NODE="24:4.1.2.1.7.5.1.2" TYPE="SECTION">
<HEAD>§ 883.602   The contract.</HEAD>
<P>(a) <I>Contract.</I> The Housing Assistance Payments Contract sets forth rights and duties of the owner and State Agency with respect to the project and the Housing Assistance payments. 
</P>
<P>(b) <I>Housing Assistance Payments to Owners under the Contract.</I> The Housing Assistance Payments made under the Contract are: 
</P>
<P>(1) Payments to the owner to assist eligible families leasing assisted units, and 
</P>
<P>(2) Payments to the owner for vacant assisted units (“vacancy payments”) if the conditions specified in § 880.611 of this chapter are satisfied.
</P>
<FP>The housing assistance payments are made monthly by the State Agency upon proper requisition by the owner, except payments for vacancies of more than 60 days, which are made semi-annually by the Agency upon proper requisition by the owner. 
</FP>
<P>(c) <I>Amount of Housing Assistance Payments to the Owner.</I> (1) The amount of the housing assistance payments made to the owner of a unit being leased by an eligible family is the difference between the contract rent for the unit and the tenant rent payable by the family. 
</P>
<P>(2) A housing assistance payment will be made to the owner for a vacant assisted unit in an amount equal to 80 percent of the contract rent for the first 60 days of vacancy, subject to the conditions in § 880.611 of this chapter. If the owner collects any tenant rent or other amount for this period which, when added to this vacancy payment, exceeds the contract rent, the excess must be repaid as the Agency directs in accordance with HUD guidelines. 
</P>
<P>(3) For a vacancy that exceeds 60 days, a housing assistance payment for the vacant unit will be made, subject to the conditions in § 880.611 of this chapter, in an amount equal to the principal and interest payments required to amortize that portion of the debt attributable to the vacant unit for up to 12 additional months. 
</P>
<P>(d) <I>Payment of utility reimbursement.</I> Where applicable, the Utility Reimbursement will be paid to the Family as an additional Housing Assistance Payment. The Contract will provide that the Owner will make this payment on behalf of the Agency. Funds will be paid to the Owner in trust solely for the purpose of making this additional payment. If the Family and the utility company consent, the Owner may pay the Utility Reimbursement jointly to the Family and the utility company or directly to the utility company.
</P>
<CITA TYPE="N">[45 FR 6889, Jan. 30, 1980, as amended at 49 FR 19946, May 10, 1984; 61 FR 13593, Mar. 27, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 883.603" NODE="24:4.1.2.1.7.5.1.3" TYPE="SECTION">
<HEAD>§ 883.603   Term of contract.</HEAD>
<P>(a) <I>New Construction.</I> The term of the Contract will be governed by the following provisions:
</P>
<P>(1) For assisted units in a project financed with the aid of a loan insured by the Federal government (including coinsurance under Section 244 of the National Housing Act) or a loan made, guaranteed or intended for purchase by the Federal government and for assisted units in newly constructed manufactured home parks, the term of the Contract will be 20 years.
</P>
<P>(2) For assisted units in a project owned by or financed by a loan or loan guarantee from a State or local agency, where the assisted units are intended for occupancy by non-elderly families and where it is located in an area designated by the Assistant Secretary as one requiring special financial assistance, the Contract will be for an initial term of 20 years for any dwelling unit, with provision for renewal for additional terms of not more than 5 years each. The total term of initial and renewal terms will not exceed the lesser of (i) 40 years for any dwelling unit, or (ii) the term of the permanent financing (but not less than 20 years).
</P>
<P>(3) For assisted units in all other projects, the Contract will be for an initial term of 20 years for any dwelling unit, with provision for renewal for additional terms of not more than 5 years each. The total term of initial and renewal terms will not exceed the lesser of (i) 30 years for any dwelling unit, or (ii) the term of the permanent financing (but not less than 20 years).
</P>
<P>(b) <I>Substantial Rehabilitation.</I> The Contract will be for a term which is consistent with paragraph (b)(1) and with paragraph (b) (2), (3), or (4) of this section. 
</P>
<P>(1) The Contract term will cover the longest term, but not less than 20 years, of a single credit instrument covering: 
</P>
<P>(i) The cost of rehabilitation or 
</P>
<P>(ii) The existing indebtedness, or 
</P>
<P>(iii) The cost of rehabilitation and the refinancing of the existing indebtedness, or 
</P>
<P>(iv) The cost of rehabilitation and the acquisition of the property; and 
</P>
<P>(2) For assisted units in a project financed with the aid of a loan (including coinsurance under Section 244 of the National Housing Act), or a loan made, guaranteed or intended for purchase by the Federal Government, and for assisted units in a substantially rehabilitated manufactured home park, the term of the Contract will not exceed 20 years; or
</P>
<P>(3) For assisted units in a project owned or financed by a loan or loan guarantee from a State or local agency where the assisted units are intended for occupancy by non-elderly families and where it is located in an area designated by the Assistant Secretary as one requiring special financial assistance, the Contract will be for an initial term of 20 years for any dwelling unit. There will be a provision for renewal for additional terms of not more than 5 years each. The total of initial and renewal terms will not exceed the lesser of (i) 40 years for any dwelling unit, or (ii) the term of the permanent financing (but not less than 20 years); or
</P>
<P>(4) For assisted units in projects financed other than as described in paragraph (b) (2) or (3) of this section, the Contract will be for an initial term of 20 years for any dwelling unit. There will be a provision for renewal for additional terms of not more than 5 years each. The total of initial and renewal terms will not exceed the lesser of (i) 30 years for any dwelling unit, or (ii) the term of the permanent financing (but not less than 20 years).
</P>
<P>(c) <I>Staged Projects.</I> If a project is completed in stages, the term of the Contract must relate separately to the units in each stage unless the Agency and the owner agree that only the units in the first stage will be assisted for the maximum term of the Contract. The total Contract term, for the units in all stages, beginning with the effective date of the Contract for the first stage, may not exceed the overall maximum term allowable for any one unit under this section, plus two years.
</P>
<CITA TYPE="N">[45 FR 56327, Aug. 22, 1980, as amended at 48 FR 12710, Mar. 28, 1983; 49 FR 17449, Apr. 24, 1984]


</CITA>
</DIV8>


<DIV8 N="§ 883.604" NODE="24:4.1.2.1.7.5.1.4" TYPE="SECTION">
<HEAD>§ 883.604   Maximum annual commitment and project account.</HEAD>
<P>(a) <I>Maximum annual commitment.</I> The maximum annual contribution that may be contracted for in the ACC is the total of the contract rents and utility allowances for all assisted units in the project, plus the HUD-approved fees, if any, for State Agency administration of the Contract. (See § 883.606) 
</P>
<P>(b) <I>Project Account.</I> (1) A project account will be established and maintained by HUD as a specifically identified and segregated account for each project. The account will be established out of the amounts by which the maximum annual commitment exceeds the amount actually paid out under the ACC each year. Payments will be made from this account for housing assistance payments (and fees for Agency admininstration, if appropriate) when needed to cover increases in contract rents or decreases in tenant rents and for other costs specifically approved by the Secretary. 
</P>
<P>(2) Whenever a HUD-approved estimate of required payments under the ACC for a fiscal year exceeds the maximum annual commitment and would cause the amount in the project account to be less than 40 percent of the maximum, HUD will, within a reasonable period of time, take such additional steps authorized by Section 8(c)(6) of the 1937 Act, as may be necessary, to assure that payments under the ACC will be adequate to cover increases in contract rents and decreases in tenant rents.
</P>
<CITA TYPE="N">[45 FR 6889, Jan. 30, 1980, as amended at 61 FR 13593, Mar. 27, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 883.605" NODE="24:4.1.2.1.7.5.1.5" TYPE="SECTION">
<HEAD>§ 883.605   Leasing to eligible families.</HEAD>
<P>The provisions of 24 CFR 880.504 apply to this section, including reference at 24 CFR 880.504(f) to the requirements of 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking), subject to the requirements of § 883.105.
</P>
<CITA TYPE="N">[81 FR 80813, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 883.606" NODE="24:4.1.2.1.7.5.1.6" TYPE="SECTION">
<HEAD>§ 883.606   Administration fee.</HEAD>
<P>(a) The State Agency is responsible for administration of the Contract subject to periodic review and audit by HUD. 
</P>
<P>(b) The Agency is entitled to a reasonable fee, determined by HUD, for administering a Contract on newly constructed or substantially rehabilitated units provided there is no override on the permanent loan granted by the Agency to the owner for a project containing assisted units. 


</P>
</DIV8>


<DIV8 N="§ 883.607" NODE="24:4.1.2.1.7.5.1.7" TYPE="SECTION">
<HEAD>§ 883.607   Default by owner and/or agency.</HEAD>
<P>(a) <I>Rights of Owner if Agency defaults under Agreement or Contract.</I> The ACC, the Agreement and the Contract will provide that, in the event of failure of the Agency to comply with the Agreement or Contract with the owner, the owner will have the right, if he/she is not in default, to demand that HUD investigate. HUD will first give the Agency a reasonable opportunity to take corrective action. If HUD determines that a substantial default exists, HUD will assume the Agency's rights and obligations under the Agreement or Contract and meet the obligations of the Agency under the Agreement or Contract including the obligation to enter into the Contract. 
</P>
<P>(b) <I>Rights of HUD if Agency defaults under ACC.</I> The ACC will provide that, if the Agency fails to comply with any of its obligations, HUD may determine that there is a substantial default and require the Agency to assign to HUD all of its rights and interests under the Contract; however, HUD will continue to pay annual contributions in accordance with the terms of the ACC and the Contract. Before determining that an Agency is in substantial default, HUD will give the Agency a reasonable opportunity to take corrective action. 
</P>
<P>(c) <I>Rights of Agency and HUD if Owner defaults under Contract.</I> (1) The Contract will provide that if the Agency determines that the owner is in default under the Contract, the Agency will notify the owner, and lender, if applicable, with a copy to HUD, 
</P>
<P>(i) Of the actions required to be taken to cure the default, 
</P>
<P>(ii) Of the remedies to be applied by the Agency including specific performance under the Contract, abatement of housing assistance payments and recovery of overpayments, where appropriate; and 
</P>
<P>(iii) That, if he/she fails to cure the default, the Agency has the right to terminate the Contract or to take other corrective action, in its discretion. 
</P>
<P>(2) If the Agency provided the permanent financing, the Contract will also provide that HUD has an independent right to determine whether the owner is in default and to take corrective action and apply appropriate remedies, except that HUD will not have the right to terminate the Contract without proceeding in accordance with paragraph (c) of this section. 


</P>
</DIV8>


<DIV8 N="§ 883.608" NODE="24:4.1.2.1.7.5.1.8" TYPE="SECTION">
<HEAD>§ 883.608   Notice upon contract expiration.</HEAD>
<P>The provisions of § 880.508 of this chapter apply, subject to the requirements of § 883.105.
</P>
<CITA TYPE="N">[61 FR 13593, Mar. 27, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:4.1.2.1.7.6" TYPE="SUBPART">
<HEAD>Subpart G—Management</HEAD>


<DIV8 N="§ 883.701" NODE="24:4.1.2.1.7.6.1.1" TYPE="SECTION">
<HEAD>§ 883.701   Cross-reference.</HEAD>
<P>All of the provisions of part 880, subpart F, of this chapter apply to projects assisted under this part, subject to the requirements of § 883.105. For purposes of this subpart G, all references in part 880, subpart F, of this chapter to “contract administrator” shall be construed to refer to “Agency”  while the Annual Contributions Contract between the State Agency and HUD is in effect. 
</P>
<CITA TYPE="N">[61 FR 13593, Mar. 27, 1996, as amended at 89 FR 96098, Dec. 4, 2024]










</CITA>
</DIV8>


<DIV8 N="§ 883.702" NODE="24:4.1.2.1.7.6.1.2" TYPE="SECTION">
<HEAD>§ 883.702   Replacement reserve.</HEAD>
<P>For projects that are required to maintain a replacement reserve account to fund capital repairs and building system replacements, while the Annual Contributions Contract (ACC) between the State Agency and HUD is in effect, funds in that replacement reserve account may be drawn and used only in accordance with State Agency guidelines and with the approval of, or as directed by, the State Agency. Upon termination of the ACC, the Owner must request withdrawal of any funds in the replacement reserve account and immediately deposit such funds into an interest-bearing replacement reserve account that complies with the requirements of 24 CFR 880.602(a)(1)(iv).
</P>
<CITA TYPE="N">[89 FR 96098, Dec. 4, 2024]




</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="884" NODE="24:4.1.2.1.8" TYPE="PART">
<HEAD>PART 884—SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM, NEW CONSTRUCTION SET-ASIDE FOR SECTION 515 RURAL RENTAL HOUSING PROJECTS 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437a, 1437c, 1437f, 3535(d), and 13611-13619.
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>41 FR 47168, Oct. 27, 1976, unless otherwise noted. Redesignated at 45 FR 6909, Jan. 30, 1980.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.2.1.8.1" TYPE="SUBPART">
<HEAD>Subpart A—Applicability, Scope and Basic Policies</HEAD>


<DIV8 N="§ 884.101" NODE="24:4.1.2.1.8.1.1.1" TYPE="SECTION">
<HEAD>§ 884.101   Applicability and scope.</HEAD>
<P>(a) The policies and procedures in subparts A and B of this part apply to the making of Housing Assistance Payments on behalf of Eligible Families leasing newly constructed housing pursuant to the provisions of section 8 of the 1937 Act. They are applicable only to proposals submitted by the Department of Agriculture/Farmers Home Administration (now the Department of Agriculture/Rural Housing and Community Development Service) that have been charged against the set-aside of section 8 contract authority specifically established for projects to be funded under section 515 of title V of the Housing Act of 1949 (42 U.S.C. 1485). 
</P>
<P>(b) For the purpose of these subparts A and B, “new construction” shall mean newly constructed housing for which, prior to the start of construction, an Agreement to Enter into Housing Assistance Payments Contract is executed between the Owner and HUD or a Public Housing Agency. 
</P>
<CITA TYPE="N">[41 FR 47168, Oct. 27, 1976, as amended at 61 FR 13593, Mar. 27, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 884.102" NODE="24:4.1.2.1.8.1.1.2" TYPE="SECTION">
<HEAD>§ 884.102   Definitions.</HEAD>
<P>The terms <I>Fair Market Rent (FMR), HUD, Public housing agency (PHA),</I> and <I>Secretary</I> are defined in 24 CFR part 5.
</P>
<P><I>Agreement to enter into housing assistance payments contract</I> (<I>“agreement”</I>). (a) In the case of a Private-Owner Project or a PHA-Owner Project, a written agreement between the Owner and HUD that, upon satisfactory completion of the housing in accordance with the HUD-approved Proposal and submission by RHCDS of the required certifications, HUD will enter into a Housing Assistance Payments Contract with the Owner. 
</P>
<P>(b) In the case of a Private-Owner/PHA Project, a written agreement between the private owner and the PHA, approved by HUD, that, upon satisfactory completion of the housing in accordance with the HUD-approved Proposal and submission by RHCDS of the required certifications, the PHA will enter into a Housing Assistance Payments Contract with the Private Owner. 
</P>
<P><I>Annual contributions contract</I> (<I>“ACC”</I>). In the case of a Private-Owner/PHA Project, a written agreement between HUD and the PHA to provide annual contributions to the PHA with respect to the project. 
</P>
<P><I>Annual income.</I> As defined in part 5 of this title. 
</P>
<P><I>Contract.</I> See definition of Housing Assistance Payments Contract. 
</P>
<P><I>Contract rent.</I> The rent payable to the Owner under his Contract including the portion of the rent payable by the Family. In the case of a cooperative, the term “Contract Rent” means charges under the occupancy agreements between the members and the cooperative. 
</P>
<P><I>Covered housing provider.</I> For the Section 8 Housing Assistance Payments Programs, New Construction Set-Aside for Section 515 Rural Rental Housing, “covered housing provider,” as such term is used in HUD's regulations at 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking), refers to the owner.
</P>
<P><I>Decent, safe, and sanitary.</I> Housing is decent, safe, and sanitary if it meets the physical condition requirements in 24 CFR part 5, subpart G.
</P>
<P><I>Drug-related criminal activity.</I> The illegal manufacture, sale, distribution, use or possession with the intent to manufacture, sell, distribute, or use, of a controlled substance as defined in section 102 of the Controlled Substances Act, 21 U.S.C. 802. 
</P>
<P><I>Family.</I> As defined in part 5 of this title. 
</P>
<P><I>HCD Act.</I> The Housing and Community Development Act of 1974. 
</P>
<P><I>Housing Assistance Payment.</I> The payment made by the contract administrator to the Owner of an assisted unit as provided in the Contract. Where the unit is leased to an eligible Family, the payment is the difference between the Contract Rent and Tenant Rent. An additional Housing Assistance Payment is made to the Family when the Utility Allowance is greater than the Total Tenant Payment. A Housing Assistance Payment may be made to the Owner when a unit becomes vacant, in accordance with the terms of the Contract. 
</P>
<P><I>Housing assistance payments contract (“Contract”).</I> (a) In the case of a Private-Owner Project or a PHA-Owner Project, a written contract between the Owner and HUD for the purpose of providing housing assistance payments to the Owner on behalf of Eligible Families. 
</P>
<P>(b) In the case of a Private-Owner/PHA Project, a written contract between the private Owner, and the PHA, approved by HUD, for the purpose of providing housing assistance payments to the Owner on behalf of Eligible Families. 
</P>
<P><I>Income.</I> Income from all sources of each member of the household as determined in accordance with criteria established by HUD and as defined in 24 CFR part 5, subpart F.
</P>
<P><I>Lease.</I> A written agreement between an Owner and an Eligible Family for the leasing of a Decent, Safe, and Sanitary dwelling unit in accordance with the applicable Contract, which agreement is in compliance with the provisions of this part. 
</P>
<P><I>Local housing assistance plan.</I> A housing assistance plan submitted by a unit of general local government and approved by HUD under Section 104 of the HCD Act or, in the case of a unit of general local government not participating under Title I of the HCD Act, a housing plan which contains the elements set forth in Section 104(a)(4) of the HCD Act and which is approved by the Secretary as meeting the requirements of Section 213 of that Act. 
</P>
<P><I>Low-income family.</I> As defined in part 5 of this title. 
</P>
<P><I>Owner.</I> Any private person or entity, including a cooperative or a PHA, having the legal right to lease or sublease newly constructed dwelling units. 
</P>
<P><I>PHA-owner proposal and PHA-owner project.</I> A proposal for a project under this part (and the resulting project) to be owned by a PHA throughout the term of the Agreement and Contract where such Agreement and Contract are to be entered into between the PHA and HUD. 
</P>
<P><I>Private-owner/PHA proposal and private-owner/PHA project.</I> A proposal for a project under this part (and the resulting project) to be owned by a private Owner throughout the term of the Agreement and Contract where such Agreement and Contract are to be entered into between the private Owner and the PHA pursuant to an ACC between the PHA and HUD. The term also covers the situation where the ACC is with one PHA and the Owner is another PHA. 
</P>
<P><I>Private-owner proposal and private-owner project.</I> A proposal for a project under this part (and the resulting project) to be owned by a private Owner throughout the term of the Agreement and Contract where such Agreement and Contract are to be entered into between the private Owner and HUD. 
</P>
<P><I>Project account.</I> The account established and maintained in accordance with § 884.104 or § 884.105. 
</P>
<P><I>Proposal.</I> A proposal for a Private-Owner or PHA-Owner/PHA Project to provide newly constructed housing submitted to HUD by RHCDS on the prescribed RHCDS form. 
</P>
<P><I>RHCDS.</I> The Rural Housing and Community Development Service.
</P>
<P><I>Tenant rent.</I> As defined in part 5 of this title. 
</P>
<P><I>Total tenant payment.</I> As defined in part 5 of this title. 
</P>
<P><I>Utility allowance.</I> As defined in part 5 of this title. 
</P>
<P><I>Utility reimbursement.</I> As defined in part 5 of this title. 
</P>
<P><I>Very low-income family.</I> As defined in part 5 of this title. 
</P>
<CITA TYPE="N">[41 FR 47168, Oct. 27, 1976, as amended at 42 FR 63745, Dec. 19, 1977. Redesignated at 45 FR 6909, Jan. 30, 1980, and amended at 48 FR 12710, Mar. 28, 1983; 49 FR 17449, Apr. 24, 1984; 49 FR 19947, May 10, 1984; 50 FR 38795, Sept. 25, 1985; 61 FR 5213, Feb. 9, 1996; 61 FR 13593, Mar. 27, 1996; 61 FR 47382, Sept. 6, 1996; 63 FR 46579, Sept. 1, 1998; 65 FR 16723, Mar. 29, 2000; 70 FR 77744, Dec. 30, 2005; 81 FR 80813, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 884.104" NODE="24:4.1.2.1.8.1.1.3" TYPE="SECTION">
<HEAD>§ 884.104   Maximum total annual contract commitment and project account (private-owner or PHA-owner projects).</HEAD>
<P>(a) <I>Maximum total annual contract commitment.</I> The maximum total annual housing assistance payments that may be committed under the Contract shall be the total of the Gross Rents for all the Contract units in the project. 
</P>
<P>(b) <I>Project account.</I> In order to assure that housing assistance payments will be increased on a timely basis to cover increases in Contract Rents or decreases in Family Incomes: 
</P>
<P>(1) A Project Account shall be established and maintained in an amount as determined by the Secretary consistent with his responsibilities under Section 8(c)(6) of the Act, out of amounts by which the maximum annual Contract commitment per year exceeds amounts paid under the Contract for any year. This account shall be established and maintained by HUD as a specifically identified and segregated account, and payment shall be made therefrom only for the purposes of (i) housing assistance payments, and (ii) other costs specifically authorized or approved by the Secretary. 
</P>
<P>(2) Whenever a HUD-approved estimate of required housing assistance payments for a fiscal year exceeds the maximum annual Contract commitment, and would cause the amount in the Project Account to be less than an amount equal to 40 percent of such maximum annual Contract commitment, HUD shall, within a reasonable period of time, take such additional steps authorized by Section 8(c)(6) of the Act as may be necessary to carry out this assurance, including (as provided in that section of the Act) “the reservation of annual contributions authority for the purpose of amending housing assistance contracts or the allocation of a portion of new authorizations for the purpose of amending housing assistance contracts.” 


</P>
</DIV8>


<DIV8 N="§ 884.105" NODE="24:4.1.2.1.8.1.1.4" TYPE="SECTION">
<HEAD>§ 884.105   Maximum total ACC commitment and project account (private-owner/PHA projects).</HEAD>
<P>(a) <I>Maximum total ACC commitment.</I> The maximum total annual contribution that may be contracted for in the ACC for a project shall be the total of the Contract Rents plus any utility allowances for all the Contract units in the project, plus a fee for the regular costs of PHA administration. HUD-approved preliminary costs for administration (including administrative costs in connection with PHA activities related to relocation of occupants) shall be payable out of this total. 
</P>
<P>(b) <I>Project account.</I> In order to assure that housing assistance payments will be increased on a timely basis to cover increases in Contract Rents or decreases in Family Incomes: 
</P>
<P>(1) A Project Account shall be established and maintained, in an amount as determined by the Secretary consistent with his responsibilities under Section 8(c)(6) of the 1937 Act, out of amounts by which the maximum ACC commitment per year exceeds amounts paid under the ACC for any year. This account shall be established and maintained by HUD as a specifically identified and segregated account, and payment shall be made therefrom only for the purposes of (i) housing assistance payments and (ii) other costs specifically authorized or approved by the Secretary. 
</P>
<P>(2) Whenever a HUD-approved estimate of required Annual Contribution exceeds the maximum ACC commitment then in effect, and would cause the amount in the Project Account to be less than an amount equal to 40 percent of such maximum ACC commitment, HUD shall, within a reasonable period of time, take such additional steps authorized by Section 8(c)(6) of the 1937 Act as may be necessary to carry out this assurance, including (as provided in that section of the Act) “the reservation of annual contributions authority for the purpose of amending housing assistance contracts or the allocation of a portion of new authorizations for the purpose of amending housing assistance contracts.” 
</P>
<CITA TYPE="N">[41 FR 47168, Oct. 27, 1976, as amended at 61 FR 13593, Mar. 27, 1996; 65 FR 16723, Mar. 29, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 884.106" NODE="24:4.1.2.1.8.1.1.5" TYPE="SECTION">
<HEAD>§ 884.106   Housing assistance payments to owners.</HEAD>
<P>(a) <I>General.</I> Housing Assistance Payments shall be paid to Owners for units under lease by eligible families, in accordance with the Contract and as provided in this section. These Housing Assistance Payments will cover the difference between the Contract Rent and the Tenant Rent. Where applicable, the Utility Reimbursement will be paid to the Family as an additional Housing Assistance Payment. The Contract will provide that the Owner will make this payment on behalf of the contract administrator. Funds will be paid to the Owner in trust solely for the purpose of making this additional payment. If the Family and the utility company consent, the Owner may pay the utility reimbursement jointly to the Family and the utility company or directly to the utility company. No Section 8 assistance may be provided for any unit occupied by an Owner; however, cooperatives are considered rental housing, rather than Owner-occupied housing, for this purpose. 
</P>
<P>(b) <I>Vacancies during rent-up.</I> If a Contract Unit is not leased as of the effective date of the Contract, the Owner shall be entitled to housing assistance payments in the amount of 80 percent of the Contract Rent for the unit for a vacancy period not exceeding 60 days from the effective date of the Contract, in accordance with the procedure set forth in § 884.213(b): <I>Provided,</I> That the Owner: (1) Commenced marketing and otherwise complied with § 884.211(e), (2) has taken and continues to take all feasible actions to fill the vacancy, including, but not limited to, contacting applicants on his waiting list, if any, requesting the PHA and other appropriate sources to refer eligible applicants, and advertising the availability of the unit, and (3) has not rejected any eligible applicant, except for good cause acceptable to HUD or the PHA, as the case may be. 
</P>
<P>(c) <I>Vacancies after rent-up.</I> (1) If an Eligible Family vacates its unit (other than as a result of action by the Owner which is in violation of the Lease or the Contract or any applicable law), the Owner shall receive housing assistance payments in the amount of 80 percent of the Contract Rent for a vacancy period not exceeding 60 days; provided, however, That if the Owner collects any of the Family's share of the rent for this period in an amount which, when added to the 80 percent payments, results in more than the Contract Rent, such excess shall be payable to HUD or as HUD may direct. (See also § 884.115). The Owner shall not be entitled to any payment under this paragraph (c)(1) unless he: (i) Immediately upon learning of the vacancy, has notified HUD or the PHA, as the case may be, of the vacancy or prospective vacancy and the reasons for the vacancy, and (ii) has taken and continues to take the actions specified in paragraphs (b) (2) and (3) of this section. 
</P>
<P>(2) If the Owner evicts an Eligible Family, he shall not be entitled to any payment under paragraph (c)(1) of this section unless the request for such payment is supported by a certification that: (i) He gave such Family a written notice of the proposed eviction, stating the grounds and advising the Family that it had 10 days within which to present its objections to the Owner in writing or in person and (ii) the proposed eviction was not in violation of the Lease or the Contract or any applicable law.
</P>
<P>(d) <I>Debt-service vacancy payments.</I> (1) If a unit continues to be vacant after the 60-day period specified in paragraph (b) or (c) of this section, the owner may submit a claim to receive additional housing assistance payments on a semiannual basis with respect to the vacant unit in an amount equal to the principal and interest payments required to amortize the portion of the debt attributable to that unit for the period of the vacancy, whether the vacancy commenced during rent-up or after rent-up.
</P>
<P>(2) Additional payments under this paragraph (d) for any unit shall not be for more than 12 months for any vacancy period, and shall be made only if:
</P>
<P>(i) The unit was in decent, safe and sanitary condition during the vacancy period for which payments are claimed.
</P>
<P>(ii) The Owner has taken and is continuing to take the actions specified in paragraphs (b) (1), (2) and (3) or paragraphs (c)(1) (i) and (ii) and (c)(2) of this section, as appropriate.
</P>
<P>(iii) The owner has demonstrated, in connection with the semiannual claim on a form and in accordance wih the standards prescribed by HUD with respect to the period of the vacancy, that the project is not providing the owner with revenues at least equal to the project costs incurred by the owner and that the amount of the payments requested is not in excess of the amount needed to make up the deficiency.
</P>
<P>(iv) The owner has submitted to HUD or the PHA, as appropriate, in connection with the semiannual claim, a statement with relevant supporting evidence that there is a reasonable prospect that the project can achieve financial soundness within a reasonable time. The statement shall indicate the causes of the deficiency; the corrective steps that have been and will be taken; and the time by which it is expected that the project revenues will at least equal project costs without the additional payments provided under this paragraph.
</P>
<P>(3) HUD or the PHA, as appropriate, may deny any claim for additional payments or suspend or terminate payments if it determines that, based on the owner's statement and other evidence, there is not a reasonable prospect that the project can achieve financial soundness within a reasonable time.
</P>
<P>(e) <I>Prohibition of double compensation for vacancies.</I> The Owner shall not be entitled to housing assistance payments with respect to vacant units under this section to the extent he is entitled to payments from other sources (for example, payments for losses of rental income incurred for holding units vacant for relocatees pursuant to Title I of the HCD Act or payments under § 884.115). 
</P>
<CITA TYPE="N">[41 FR 47168, Oct. 27, 1976, as amended at 42 FR 12983, Mar. 7, 1977; 43 FR 33880, Aug. 1, 1978. Redesignated at 45 FR 6909, Jan. 30, 1980; 49 FR 19947, May 10, 1984] 


</CITA>
</DIV8>


<DIV8 N="§ 884.108" NODE="24:4.1.2.1.8.1.1.6" TYPE="SECTION">
<HEAD>§ 884.108   Term of housing assistance payments contract.</HEAD>
<P>(a) Except in the case of a Contract described in paragraph (b) of this section, the Contract shall be for an initial term of 20 years: <I>Provided,</I> That at the end of such Contract term and at the request of RHCDS, HUD may, subject to the availability of contract and budget authority, authorize the execution of a new Contract providing for a total Contract term of an additional 20 years.
</P>
<P>(b) In the case of a Contract under which housing assistance payments are made with respect to a project owned by a State or local agency, the total Contract term may be equal to the term of such financing but may not exceed 40 years for any dwelling unit. 
</P>
<P>(c) If the project is completed in stages, the dates for the initial and the renewal terms shall be separately related to the units in each stage: <I>Provided, however,</I> That the total Contract term for the units in all the stages, beginning with the effective date of the Contract with respect to the first stage, may not exceed the overall maximum term allowable for any one unit, plus two years.
</P>
<CITA TYPE="N">[41 FR 47168, Oct. 27, 1976. Redesignated at 45 FR 6909, Jan. 30, 1980, and amended at 48 FR 12710, Mar. 28, 1983; 49 FR 17449, Apr. 24, 1984; 61 FR 13593, Mar. 27, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 884.108a" NODE="24:4.1.2.1.8.1.1.7" TYPE="SECTION">
<HEAD>§ 884.108a   Notice upon contract expiration.</HEAD>
<P>(a) The Contract will provide that the owner will notify each assisted family, at least 90 days before the end of the Contract term, of any increase in the amount the family will be required to pay as rent which may occur as a result of its expiration. If the Contract is to be renewed but with a reduction in the number of units covered by it, this notice shall be given to each family who will no longer be assisted under the Contract.
</P>
<P>(b) The notice provided for in paragraph (a) of this section shall be accomplished by: (1) Sending a letter by first class mail, properly stamped and addressed, to the family at its address at the project, with a proper return address, and (2) serving a copy of the notice on any adult person answering the door at the leased dwelling unit, or if no adult responds, by placing the notice under or through the door, if possible, or else by affixing the notice to the door. Service shall not be considered to be effective until both required notices have been accomplished. The date on which the notice shall be considered to be received by the family shall be the date on which the owner mails the first class letter provided for in this paragraph, or the date on which the notice provided for in this paragraph is properly given, whichever is later.
</P>
<P>(c) The notice shall advise each affected family that, after the expiration date of the Contract, the family will be required to bear the entire cost of the rent and that the owner will be free (to the extent the project is not otherwise regulated by HUD) to alter the rent without HUD approval, but subject to any applicable requirements or restrictions under the lease or under State or local law. The notice shall also state: (1) The actual (if known) or the estimated rent which will be charged following the expiration of the Contract; (2) the difference between the rent and the Total Tenant Payment toward rent under the Contract; and (3) the date the Contract will expire.
</P>
<P>(d) The owner shall give HUD a certification that families have been notified in accordance with this section with an example of the text of the notice attached.
</P>
<P>(e) This section applies to all Contracts entered into pursuant to an Agreement executed on or after October 1, 1981, or entered into pursuant to an Agreement executed before October 1, 1981, but renewed or amended on or after October 1, 1984.
</P>
<CITA TYPE="N">[49 FR 31284, Aug. 6, 1984]


</CITA>
</DIV8>


<DIV8 N="§ 884.109" NODE="24:4.1.2.1.8.1.1.8" TYPE="SECTION">
<HEAD>§ 884.109   Rent adjustments.</HEAD>
<P>(a) <I>Funding of adjustments.</I> Housing assistance payments will be made in increased amounts commensurate with Contract Rent adjustments under this paragraph, up to the maximum amount authorized under the Contract. (See §§ 884.104 and 884.105). 
</P>
<P>(b) <I>Automatic annual adjustments.</I> (1) Automatic Annual Adjustment Factors will be determined by HUD at least annually; interim revisions may be made as market conditions warrant. Such Factors and the basis for their determination will be published in the <E T="04">Federal Register.</E> These published Factors will be reduced appropriately by HUD where utilities are paid directly by Families. 
</P>
<P>(2) On each anniversary date of the Contract, the Contract Rents shall be adjusted by applying the applicable Automatic Annual Adjustment Factor most recently published by HUD. Contract Rents may be adjusted upward or downward, as may be appropriate; however, in no case shall the adjusted rents be less than the Contract Rents on the effective date of the Contract. 
</P>
<P>(c) <I>Special additional adjustments.</I> Special additional adjustments shall be granted, when approved by HUD, to reflect increases in the actual and necessary expenses of owning and maintaining the Contract Units which have resulted from substantial general increases in real property taxes, utility rates, or similar costs (i.e., assessments, and utilities not covered by regulated rates), but only if and to the extent that the Owner clearly demonstrates that such general increases have caused increases in the Owner's operating costs which are not adequately compensated for by automatic annual adjustments. The Owner shall submit to HUD financial statements which clearly support the increase. 
</P>
<P>(d) <I>Overall limitation.</I> Notwithstanding any other provisions of this part, adjustments as provided in this section shall not result in material differences between the rents charged for assisted and comparable unassisted units, as determined by HUD: <I>Provided, however,</I> That this limitation shall not be construed to prohibit differences in rents between assisted and comparable unassisted units to the extent that such differences may have existed with respect to the initial Contract Rents. 


</P>
</DIV8>


<DIV8 N="§ 884.110" NODE="24:4.1.2.1.8.1.1.9" TYPE="SECTION">
<HEAD>§ 884.110   Types of housing and property standards.</HEAD>
<P>(a) Newly constructed single-family houses and multifamily structures may be utilized in this program. Congregate housing may be developed for elderly, disabled, or handicapped Families and individuals. Except in the case of housing predominantly for the elderly, high-rise elevator projects for Families with children may not be utilized unless HUD determines there is no practical alternative. 
</P>
<P>(b) Participation in this program requires compliance with:
</P>
<P>(1) [Reserved]
</P>
<P>(2) In the case of congregate housing, the appropriate HUD guidelines and standards;
</P>
<P>(3) HUD requirements pursuant to section 209 of the HCD Act for projects for the elderly, disabled, or handicapped;
</P>
<P>(4) HUD requirements pertaining to noise abatement and control; and
</P>
<P>(5) Applicable State and local laws, codes, ordinances, and regulations.
</P>
<P>(c) Housing assisted under this part shall be modest in design. Amenities in projects assisted under this part (except partially assisted projects) will be limited to those amenities, as determined by HUD, which are generally provided in unassisted, decent, safe and sanitary housing for low-income families, in the market area. The use of more durable, high-quality materials to control or reduce maintenance, repair and replacement costs will not be considered an excess amenity.
</P>
<P>(d) <I>Smoke detectors</I>—(1) <I>Performance requirement.</I> After October 30, 1992, each dwelling unit must include at least one battery-operated or hard-wired smoke detector, in proper working condition, on each level of the unit. If the unit is occupied by hearing-impaired persons, smoke detectors must have an alarm system, designed for hearing-impaired persons, in each bedroom occupied by a hearing-impaired person.
</P>
<P>(2) <I>Acceptability criteria.</I> The smoke detector must be located, to the extent practicable, in a hallway adjacent to a bedroom, unless the unit is occupied by a hearing-impaired person, in which case each bedroom occupied by a hearing-impaired person must have an alarm system connected to the smoke detector installed in the hallway.
</P>
<CITA TYPE="N">[48 FR 12710, Mar. 28, 1983, as amended at 57 FR 33852, July 30, 1992; 63 FR 46579, Sept. 1, 1998]


</CITA>
</DIV8>


<DIV8 N="§ 884.114" NODE="24:4.1.2.1.8.1.1.10" TYPE="SECTION">
<HEAD>§ 884.114   Financing.</HEAD>
<P>(a) <I>Types.</I> Eligible projects under this program shall be financed under Section 515, Title V of the Housing Act of 1949. 
</P>
<P>(b) <I>Use of contract as security for financing.</I> (1) An Owner may pledge, or offer as security for any loan or obligation, an Agreement or Contract entered into pursuant to this part: <I>Provided, however,</I> That such security is in connection with a project constructed pursuant to this part, and the terms of the financing or any refinancing have been approved by HUD. It is the Owner's responsibility to request such approval in sufficient time before he needs the financing to permit review of the method and terms of the financing and the instrument of pledge, offer or other assignment that HUD is requested to approve. 
</P>
<P>(2) Any pledge of the Agreement, Contract, or ACC, or payments thereunder, shall be limited to the amounts payable under the Contract or ACC in accordance with its terms. 
</P>
<P>(3) In the event of foreclosure and in the event of assignment or sale agreed to by HUD, housing assistance payments shall continue in accordance with the Terms of the Contract. 


</P>
</DIV8>


<DIV8 N="§ 884.115" NODE="24:4.1.2.1.8.1.1.11" TYPE="SECTION">
<HEAD>§ 884.115   Security and utility deposits.</HEAD>
<P>(a) An Owner may require Families to pay a security deposit in an amount equal to one month's Gross Family Contribution. If a Family vacates its unit, the Owner, subject to State and local laws, may utilize the deposit as reimbursement for any unpaid rent or other amount owed under the Lease. If the Family has provided a security deposit, and it is insufficient for such reimbursement, the Owner may claim reimbursement from HUD or the PHA, as appropriate, not to exceed an amount equal to the remainder of one month's Contract Rent. Any reimbursement under this section shall be applied first toward any unpaid rent. If a Family vacates the unit owing no rent or other amount under the Lease or if such amount is less than the amount of the security deposit, the Owner shall refund the full amount or the unused balance, as the case may be, to the Family. 
</P>
<P>(b) In those jurisdictions where interest is payable by the Owner on security deposits, the refunded amount shall include the amount of interest payable. All security deposit funds shall be deposited by the Owner in a segregated bank account, and the balance of this account, at all times, shall be equal to the total amount collected from tenants then in occupancy, plus any accrued interest. The Owner shall comply with all State and local laws regarding interest payments on security deposits. 
</P>
<P>(c) Families shall be expected to obtain the funds to pay security and utility deposits, if required, from their own resources and/or other private or public sources. 


</P>
</DIV8>


<DIV8 N="§ 884.116" NODE="24:4.1.2.1.8.1.1.12" TYPE="SECTION">
<HEAD>§ 884.116   Establishment of income limit schedules; 30 percent occupancy by very-low income families.</HEAD>
<P>(a) HUD will establish schedules of Income limits for determining whether families qualify as Low-Income Families and Very Low-Income Families. 
</P>
<P>(b) In the leasing of units, the Owner shall comply with HUD requirements concerning the permissible income levels of families, as prescribed in part 5 of this title.
</P>
<CITA TYPE="N">[41 FR 47168, Oct. 27, 1976. Redesignated at 45 FR 6909, Jan. 30, 1980, and amended at 49 FR 19947, May 10, 1984; 65 FR 16723, Mar. 29, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 884.117" NODE="24:4.1.2.1.8.1.1.13" TYPE="SECTION">
<HEAD>§ 884.117   Disclosure and verification of Social Security and Employer Identification Numbers by owners.</HEAD>
<P>To be eligible to become an owner of housing assisted under this part, the owner (other than a PHA) must meet the disclosure and verification requirements for Social Security and Employer Identification Numbers, as provided by 24 CFR part 5.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0204)
</APPRO>
<CITA TYPE="N">[54 FR 39707, Sept. 27, 1989, as amended at 61 FR 13593, Mar. 27, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 884.118" NODE="24:4.1.2.1.8.1.1.14" TYPE="SECTION">
<HEAD>§ 884.118   Responsibilities of the owner.</HEAD>
<P>(a) The Owner shall be responsible (subject to post-review or audit by HUD or the PHA, as the case may be) for management and maintenance of the project. These responsibilities shall include but not be limited to: 
</P>
<P>(1) Payment for utilities and services (unless paid directly by the Family), insurance and taxes; 
</P>
<P>(2) Performance of all ordinary and extraordinary maintenance; 
</P>
<P>(3) Performance of all management functions, including the taking of applications; determining eligibility of applicants in accordance with part 5 of this title; selection of families, including verification of income, provision of Federal selection preferences in accordance with 24 CFR part 5, obtaining and verifying Social Security Numbers submitted by applicants (as provided by 24 CFR part 5), obtaining signed consent forms from applicants for the obtaining of wage and claim information from State Wage Information Collection Agencies (as provided in 24 CFR part 5), and other pertinent requirements; and determination of the amount of tenant rent in accordance with HUD established schedules and criteria;
</P>
<P>(4) Collection of Tenant Rents; 
</P>
<P>(5) Termination of tenancies, including evictions; 
</P>
<P>(6) Preparation and furnishing of information required under the Contract; 
</P>
<P>(7) Reexamination of family income and composition; redetermination, as appropriate, of the amount of Tenant Rent and the amount of housing assistance payment in accordance with part 5 of this title; obtaining and verifying Social Security Numbers submitted by participants, as provided by 24 CFR part 5; and obtaining signed consent forms from participants for the obtaining of wage and claim information from State Wage Information Collection Agencies, as provided by 24 CFR part 5;
</P>
<P>(8) Redetermination of amount of Tenant Rent and amount of housing assistance payment in accordance with part 5 of this title as a result of an adjustment by the PHA or HUD, as appropriate, of any applicable Utility Allowance; and 
</P>
<P>(9) Compliance with equal opportunity requirements issued by RHCDS and HUD with respect to project operation. 
</P>
<P>(b) Subject to HUD approval, any Owner may contract with any private or public entity to perform for a fee the services required by paragraph (a) of this section: <I>Provided,</I> That such contract shall not relieve the Owner of his responsibilities or obligations. However, no entity which is responsible for administration of the Contract (for example, a PHA in the case of a Private-Owner/PHA Project) may contract to perform management and maintenance of the project: <I>Provided, however,</I> That this prohibition shall not preclude management by the PHA in the event it takes possession as the result of foreclosure or assignment in lieu of foreclosure. (See, however, § 884.123(b), which permits conversion of a Private-Owner/PHA Project to a Private-Owner Project.)
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0204)
</APPRO>
<CITA TYPE="N">[41 FR 47168, Oct. 27, 1976. Redesignated at 45 FR 6909, Jan. 30, 1980, and amended at 49 FR 19947, May 10, 1984; 51 FR 11227, Apr. 1, 1986; 53 FR 847, Jan. 13, 1988; 53 FR 1162, Jan. 15, 1988; 53 FR 6601, Mar. 2, 1988; 54 FR 39707, Sept. 27, 1989; 56 FR 7540, Feb. 22, 1991; 60 FR 14845, Mar. 20, 1995; 61 FR 13593, Mar. 27, 1996; 65 FR 16723, Mar. 29, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 884.119" NODE="24:4.1.2.1.8.1.1.15" TYPE="SECTION">
<HEAD>§ 884.119   Responsibility for contract administration and defaults (private-owner and PHA-owner projects).</HEAD>
<P>(a) <I>Contract administration.</I> HUD is responsible for administration of the Contract. HUD may contract with another entity for the performance of some or all of its Contract administration functions. 
</P>
<P>(b) <I>Defaults by owner.</I> The Contract shall contain a provision to the effect (1) that if HUD determines that the Owner is in default under the Contract, HUD shall notify the Owner (with a copy to RHCDS) of the actions required to be taken to cure the default and of the remedies to be applied by HUD including abatement of housing assistance payments and recovery of overpayments, where appropriate; and (2) that if he fails to cure the default, HUD has the right to terminate the Contract or to take other corrective action. 
</P>
<CITA TYPE="N">[41 FR 47168, Oct. 27, 1976, as amended at 61 FR 13593, Mar. 27, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 884.120" NODE="24:4.1.2.1.8.1.1.16" TYPE="SECTION">
<HEAD>§ 884.120   Responsibility for contract administration and defaults (private-owner/PHA projects).</HEAD>
<P>(a) <I>Contract administration.</I> The PHA is primarily responsible for administration of the Contract, subject to review and audit by HUD. 
</P>
<P>(b) <I>Defaults by PHA and/or owner.</I> (1) The ACC and the Contract shall contain a provision to the effect that in the event of failure of the PHA to comply with the Contract with the Owner, the Owner shall have the right, if he is not in default, to demand that HUD determine, after notice to the PHA giving it a reasonable opportunity to take corrective action, whether a substantial default exists, and if HUD determines that such a default exists, that HUD assure that the obligations of the PHA to the Owner are carried out. 
</P>
<P>(2) The ACC shall contain a provision to the effect that if the PHA fails to comply with any of its obligations (including specifically failure to enforce its rights under the Contract, in the event of any default by the Owner, to achieve compliance to the satisfaction of HUD or to terminate the Contract in whole or in part, as directed by HUD), HUD may, after notice to the PHA giving it a reasonable opportunity to take corrective action, determine that there is a substantial default and require the PHA to assign to HUD all of the PHA's rights and interests under the Contract. In such case, HUD will continue to pay annual contributions in accordance with the terms of the ACC and the Contract. 
</P>
<P>(3) The Contract shall contain a provision to the effect (i) that if the PHA determines that the Owner is in default under the Contract, the PHA shall notify the Owner, with a copy to HUD and RHCDS, of the actions required to be taken to cure the default and of the remedies to be applied by the PHA including abatement of housing assistance payments and recovery of overpayments, where appropriate; and (ii) that if he fails to cure the default, the PHA has the right to terminate the Contract or to take other corrective action, in its discretion or as directed by HUD. 
</P>
<CITA TYPE="N">[41 FR 47168, Oct. 27, 1976, as amended at 61 FR 13593, Mar. 27, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 884.121" NODE="24:4.1.2.1.8.1.1.17" TYPE="SECTION">
<HEAD>§ 884.121   Rights of owner if PHA defaults under agreement (private-owner/PHA projects).</HEAD>
<P>The ACC and the Agreement shall contain a provision to the effect that in the event of failure of the PHA to comply with the Agreement with the Owner, the Owner shall have the right, if he is not in default, to demand that HUD determine, after notice to the PHA giving it a reasonable opportunity to take corrective action, whether a substantial default exists, and if HUD determines that such a default exists, that HUD assume the PHA's rights and obligations under the Agreement, and carry out the obligations of the PHA under the Agreement, including the obligation to enter into the Contract. 


</P>
</DIV8>


<DIV8 N="§ 884.122" NODE="24:4.1.2.1.8.1.1.18" TYPE="SECTION">
<HEAD>§ 884.122   Separate project requirement.</HEAD>
<P>(a) In the case of a Private-Owner Project or a PHA-Owner Project, each Agreement and Contract shall constitute a separate project. 
</P>
<P>(b) In the case of a Private-Owner/PHA Project such project may not include more than one type of Section 8 assistance, shall be processed with a separate ACC List and ACC Part I and shall be assigned a separate project number. All new construction units to be placed under a single Contract shall comprise a separate project. However, the field office director may designate as a single project the units to be covered by two or more such Contracts for new construction projects where: 
</P>
<P>(1) The units are placed under ACC on the same date; and 
</P>
<P>(2) Such consolidation is necessary in the interest of administrative efficiency. 


</P>
</DIV8>


<DIV8 N="§ 884.123" NODE="24:4.1.2.1.8.1.1.19" TYPE="SECTION">
<HEAD>§ 884.123   Conversions.</HEAD>
<P>(a) <I>Conversion of private-owner project to private-owner/PHA project.</I> HUD may request the Owner of a Private-Owner Project and an appropriate PHA to agree, if they are willing, to a conversion of any such project to a Private-Owner/PHA Project if HUD determines that such conversion would promote efficient project administration. 
</P>
<P>(b) <I>Conversion of private-owner/PHA project to private-owner project.</I> The Private Owner and the PHA, in the case of a Private-Owner/PHA Project, may request HUD to agree to a conversion of any such project to a Private-Owner or PHA-Owner Project. HUD shall agree to such conversion if it determines it to be in the best interest of the project. 


</P>
</DIV8>


<DIV8 N="§ 884.124" NODE="24:4.1.2.1.8.1.1.20" TYPE="SECTION">
<HEAD>§ 884.124   Audit.</HEAD>
<P>Where a non-Federal entity (as defined in 2 CFR 200.69) is the eligible owner of a project, or is a contract administrator under § 884.119 or § 884.120, receiving financial assistance under this part, the audit requirements in 2 CFR part 200, subpart F, shall apply.
</P>
<CITA TYPE="N">[80 FR 75941, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 884.125" NODE="24:4.1.2.1.8.1.1.21" TYPE="SECTION">
<HEAD>§ 884.125   Broadband infrastructure.</HEAD>
<P>Any new construction or substantial rehabilitation, as substantial rehabilitation is defined by 24 CFR 5.100, of a building with more than 4 rental units and that is subject to a Housing Assistance Payments contract executed or renewed after January 19, 2017 must include installation of broadband infrastructure, as this term is also defined in 24 CFR 5.100, except where the owner determines and documents the determination that:
</P>
<P>(a) The location of the new construction or substantial rehabilitation makes installation of broadband infrastructure infeasible;
</P>
<P>(b) The cost of installing broadband infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden; or
</P>
<P>(c) The structure of the housing to be substantially rehabilitated makes installation of broadband infrastructure infeasible.
</P>
<CITA TYPE="N">[81 FR 92638, Dec. 20, 2016]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.2.1.8.2" TYPE="SUBPART">
<HEAD>Subpart B—Project Development and Operation</HEAD>


<DIV8 N="§ 884.212" NODE="24:4.1.2.1.8.2.1.1" TYPE="SECTION">
<HEAD>§ 884.212   Project completion.</HEAD>
<P>(a) <I>FmHA certifications upon completion.</I> Upon completion of the project, FmHA shall inspect the project and, if determined to be acceptable, submit to the HUD field office the following certifications: 
</P>
<P>(1) The project has been completed in accordance with the requirements of the Agreement; 
</P>
<P>(2) The project is in good and tenantable condition; 
</P>
<P>(3) There are no defects or deficiencies in the project other than punchlist items, or incomplete work awaiting seasonal opportunity; 
</P>
<P>(4) There has been no change in management capability. 
</P>
<P>(b) <I>HUD review.</I> HUD shall promptly review the certifications submitted pursuant to paragraphs (a) and (b) of this section (see § 884.203(b)). 
</P>
<P>(c) <I>HUD acceptance.</I> If HUD determines from the review that the certifications are acceptable in accordance with these subparts, the project shall be accepted. 
</P>
<P>(d) <I>Acceptance where defects or deficiencies reported.</I> If the only defects or deficiencies are punchlist items or incomplete items awaiting seasonal opportunity, the project may be accepted and the Contract executed. If the Owner fails to complete the items within a reasonable time to the satisfaction of HUD (and the PHA, if applicable), HUD may, after consultation with FmHA, upon 30 days notice to the Owner (and the PHA, if applicable), terminate the Contract and/or exercise its other rights thereunder or, if the Contract is with a PHA, cancel its approval of the Contract and require its termination and/or exercise its other rights under the Contract and the ACC. 
</P>
<P>(e) <I>Arbitration.</I> In the event the Owner disputes HUD determinations, he may submit the controversy to third-party arbitration at his expense, provided that the arbitration is advisory only. 
</P>
<P>(f) <I>Completion in stages.</I> If the project is to be completed in stages, the procedures of this section shall apply to each stage. 


</P>
</DIV8>


<DIV8 N="§ 884.213" NODE="24:4.1.2.1.8.2.1.2" TYPE="SECTION">
<HEAD>§ 884.213   Execution of housing assistance payments contract.</HEAD>
<P>(a) <I>Time of execution.</I> Upon acceptance of the project by HUD pursuant to § 884.212, the Contract shall be executed first by the Owner and then by HUD, or, in the case of a Private-Owner/PHA Project, executed by the Owner and the PHA and then approved by HUD. 
</P>
<P>(b) <I>Unleased units.</I> At the time of execution of the Contract, HUD (or the PHA, as appropriate) shall examine the lists of dwelling units leased and not leased, referred to in § 884.211(e) and shall determine whether or not the Owner has met his obligations under that section with respect to any unleased units. HUD (or the PHA, as appropriate) shall state in writing its determination with respect to the unleased units and for which of those units it will make housing assistance payments. The Owner shall indicate in writing his concurrence with this determination or his disagreement, reserving his rights to claim housing assistance payments for the unleased units pursuant to the Contract, without prejudice by reason of his signing the Contract. Copies of all documents referred to this paragraph shall be furnished to HUD in the case of a Private-Owner/PHA Project. 


</P>
</DIV8>


<DIV8 N="§ 884.214" NODE="24:4.1.2.1.8.2.1.3" TYPE="SECTION">
<HEAD>§ 884.214   Marketing.</HEAD>
<P>(a) <I>Compliance with equal opportunity requirements.</I> Marketing of units and selection of Families by the Owner shall be in accordance with the Owner's FmHA-approved Affirmative Fair Housing Marketing Plan, if required, and with all regulations relating to fair housing advertising including use of the equal opportunity logotype statement and slogan in all advertising. Projects shall be managed and operated without regard to race, color, creed, religion, sex, or national origin. 
</P>
<P>(b) <I>Eligibility, selection and admission of families.</I> (1) The owner is responsible for determination of eligibility of applicants in accordance with the procedure of 24 CFR part part 5, selection of families from among those determined to be eligible (including provision of Federal selection preferences in accordance with 24 CFR part 5), and computation of the amount of housing assistance payments on behalf of each selected family, in accordance with schedules and criteria established by HUD.
</P>
<P>(2) For every family that applies for admission, the owner and the applicant will complete and sign the form of application prescribed by HUD. However, if there are no vacant units and the owner's waiting list is such that there would be an unreasonable length of time before the applicant could be admitted, the owner may advise the applicant that the owner is not accepting applications for that reason.
</P>
<FP>The owner must retain copies of all completed applications together with any related correspondence for three years. For each family selected for admission, the owner must submit one copy of the completed and signed application to the HUD field office (in the case of private-owner/PHA projects, the owner simultaneously must send a copy of the form to the PHA). Housing assistance payments will not be made on behalf of an admitted family unit after this copy has been received by the HUD field office (or, in the case of private-owner/PHA projects, until the copy has been received by the PHA with a certification by the owner that the owner has sent a copy to HUD).
</FP>
<P>(3) If the Owner determines that the applicant is eligible on the basis of Income and family composition and is otherwise acceptable but the Owner does not have a suitable unit to offer, the Owner shall place such Family on his waiting list and so advise the Family. 
</P>
<P>(4) If the Owner determines that the applicant is eligible on the basis of Income and family composition and is otherwise acceptable and if the Owner has a suitable unit, the Owner and the Family shall enter into a Lease. Such Lease shall be on the form of Lease included in the Owner's approved Final Proposal and shall otherwise be in conformity with the provisions of this part. 
</P>
<P>(5) Records on applicant families and approved Families shall be maintained by the Owner so as to provide HUD with racial, ethnic and gender data and shall be retained by the Owner for three years. 
</P>
<P>(6) In the case of a PHA-Owner project, (i) if the PHA places a Family on its waiting list, it shall notify the Family of the approximate date of availability of a suitable unit insofar as such date can be reasonably determined, and (ii) if the PHA determines that an applicant is ineligible on the basis of income or family composition, or that the PHA is not selecting the applicant for other reasons, the PHA shall promptly send the applicant a letter notifying him of the determination and the reasons and that the applicant has the right within a reasonable time (specified in the letter) to request an informal hearing. If, after conducting such an informal hearing, the PHA determines that the applicant shall not be admitted, the PHA shall so notify the applicant in writing and such notice shall inform the applicant that he has the right to request a review by HUD of the PHA's determination. The procedures of this subparagraph do not preclude the applicant from exercising his other rights if he believes he is being discriminated against on the basis of race, color, creed, religion, sex, or national origin. The PHA shall retain for three years a copy of the application, the letter, the applicant's response if any, the record of any informal hearing, and a statement of final disposition. 
</P>
<P>(7) See 24 CFR part 5 for the informal review provisions for the denial of a Federal selection preference.
</P>
<P>(8) For the informal hearing provisions related to denial of assistance based upon failure to establish citizenship or eligible immigration status, see part 5 of this title for provisions concerning certain assistance for mixed families (families whose members include those with eligible immigration status, and those without eligible immigration status) in lieu of denial of assistance.
</P>
<CITA TYPE="N">[41 FR 47168, Oct. 27, 1976. Redesignated at 45 FR 6909, Jan. 30, 1980, and amended at 53 FR 1162, Jan. 15, 1988; 53 FR 6601, Mar. 2, 1988; 60 FR 14845, Mar. 20, 1995; 61 FR 9047, Mar. 6, 1996; 61 FR 13594, Mar. 27, 1996; 65 FR 16723, Mar. 29, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 884.215" NODE="24:4.1.2.1.8.2.1.4" TYPE="SECTION">
<HEAD>§ 884.215   Lease requirements.</HEAD>
<XREF ID="20260226" REFID="24">Link to an amendment published at 91 FR 9453, Feb. 26, 2026.</XREF>
<XREF ID="20260313" REFID="2c">Link to a delay of the above  amendment published at 91 FR 12301, Mar. 13, 2026.</XREF>
<P>The Lease shall contain all required provisions specified in paragraph (b) of this section and none of the prohibited provisions listed in paragraph (c) of this section. In addition to the provisions specified in paragraph (b), the lease shall also contain a provision or addendum that tenants will receive notification at least 30 days before an eviction for nonpayment of rent is filed.


</P>
<P>(a) <I>Term of lease.</I> The term of the Lease shall be for not less than one year. The Lease may (or, in the case of a Lease for a term of more than one year, shall) contain a provision permitting termination upon 30 days advance written notice by either party. 
</P>
<P>(b) <I>Required provisions.</I> The Lease between the Owner (Lessor) and the Family (Lessee) shall contain the following provisions: 
</P>
<EXTRACT>
<HD1>Addendum to Lease
</HD1>
<P>The following additional Lease provisions are incorporated in full in the Lease between ____________________ (Lessor) and ____________________ (Lessee) for the following dwelling unit: ____________________. In case of any conflict between these and any other provisions of the Lease, these provisions shall prevail. 
</P>
<P>a. The total rent shall be $____________ per month. 
</P>
<P>b. Of the total rent, $____________ shall be payable by or at the direction of the Department of Housing and Urban Development (“HUD”) as housing assistance payments on behalf of the Lessee and $____________ shall be payable by the Lessee. These amounts shall be subject to change by reason of changes in the Lessee's family income, family composition, or extent of exceptional medical or other unusual expenses, in accordance with HUD-established schedules and criteria; or by reason of adjustment by HUD, or the PHA, if appropriate, of any applicable Allowance for Utilities and Other Services. Any such change shall be effective as of the date stated in a notification to the Lessee. 
</P>
<P>c. The Lessor shall not discriminate against the Lessee in the provision of services, or in any other manner, on the grounds of race, color, creed, religion, sex, or national origin. 
</P>
<P>d. The Lessor shall provide the following services and maintenance:
</P>
<FP-DASH>Lessor 
</FP-DASH>
<FP-DASH>By 
</FP-DASH>
<FP-DASH>Date 
</FP-DASH>
<FP-DASH>Lessee 
</FP-DASH>
<FP-DASH>Date</FP-DASH></EXTRACT>
<P>(c) <I>Prohibited provisions.</I> Lease clauses which fall within the classifications listed below shall not be included in any Lease. 
</P>
<P>(1) <I>Confession of judgment.</I> Prior consent by tenant to any lawsuit the landlord may bring against him in connection with the Lease and to a judgment in favor of the landlord. 
</P>
<P>(2) <I>Distraint for rent or other charges.</I> Authorization to the landlord to take property of the tenant and hold it as a pledge until the tenant performs any obligation which the landlord has determined the tenant has failed to perform. 
</P>
<P>(3) <I>Exculpatory clause.</I> Agreement by tenant not to hold the landlord or landlord's agents liable for any acts or omissions whether intentional or negligent on the part of the landlord or the landlord's authorized representative or agents. 
</P>
<P>(4) <I>Waiver of legal notice to tenant prior to actions for eviction or money judgments.</I> Agreement by tenant that the landlord may institute suit without any notice to the tenant that the suit has been filed. 
</P>
<P>(5) <I>Waiver of legal proceedings.</I> Authorization to the landlord to evict the tenant or hold or sell the tenant's possessions whenever the landlord determines that a breach or default has occurred, without notice to the tenant or any determination by a court of the rights and liabilities of the parties. 
</P>
<P>(6) <I>Waiver of jury trial.</I> Authorization to the landlord's lawyer to appear in court for the tenant and to waive the tenant's right to a trial by jury. 
</P>
<P>(7) <I>Waiver of right to appeal judicial error in legal proceedings.</I> Authorization to the landlord's lawyer to waive the tenant's right to appeal on the ground of judicial error in any suit or the tenant's right to file a suit in equity to prevent the execution of a judgment. 
</P>
<P>(8) <I>Tenant chargeable with costs of legal actions regardless of outcome.</I> Agreement by the tenant to pay attorney's fees or other legal costs whenever the landlord decides to take action against the tenant even though the court finds in favor of the tenant. (Omission of such clause does not mean that the tenant as a party to a lawsuit may not be obligated to pay attorney's fee or other costs if he loses the suit.) 
</P>
<CITA TYPE="N">[45 FR 6909, Jan. 30, 1980, as amended at 89 FR 101303, Dec. 13, 2024]








</CITA>
</DIV8>


<DIV8 N="§ 884.216" NODE="24:4.1.2.1.8.2.1.5" TYPE="SECTION">
<HEAD>§ 884.216   Termination of tenancy.</HEAD>
<XREF ID="20260226" REFID="25">Link to an amendment published at 91 FR 9453, Feb. 26, 2026.</XREF>
<XREF ID="20260313" REFID="2c">Link to a delay of the above  amendment published at 91 FR 12301, Mar. 13, 2026.</XREF>
<P>(a) The owner is responsible for termination of tenancies, including evictions. However, conditions for payment of housing assistance payments for any resulting vacancies must be as set forth in § 884.106(c)(1). Failure of the family to sign and submit consent forms for the obtaining of wage and claim information from State Wage Information Collection Agencies, as provided by 24 CFR part 5, shall be grounds for termination of tenancy. For provisions requiring termination of assistance for failure to establish citizenship or eligible immigration status, including the applicable informal requirements, see 24 CFR part 5 and also for provisions concerning assistance for mixed families (families whose members include those with eligible immigration status, and those without eligible immigration status) in lieu of termination of assistance, and for provisions concerning deferral of termination of assistance.
</P>
<P>(b) Termination of tenancy for criminal activity by a covered person is subject to 24 CFR 5.858 and 5.859, and termination of tenancy for alcohol abuse by a covered person is subject to 24 CFR 5.860.
</P>
<P>(c) In actions or potential actions to terminate tenancy, the owner shall follow 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking).
</P>
<P>(d) In the case of failure to pay rent, the owner must provide the tenant with a termination notice at least 30 days before a formal judicial eviction is filed. All termination notices in cases of failure to pay rent must include the following:
</P>
<P>(1) Instructions on how the tenant can cure the nonpayment of rent, including an itemized amount separated by month of alleged rent owed by the tenant, any other arrearages allowed by HUD and included in the lease separated by month, and the date by which the tenant must pay the amount of rent owed before an eviction for nonpayment of rent can be filed;
</P>
<P>(2) Information on how the tenant can recertify their income and apply for a hardship exemption pursuant to 24 CFR 5.630(b); and
</P>
<P>(3) In the event of a Presidential declaration of a national emergency, such information as required by the Secretary.
</P>
<P>(e) An owner must not provide tenants with a termination notice prior to the day after the rent is due according to the lease. An owner must not proceed with filing an eviction if the tenant pays the alleged amount of rent owed within the 30-day notification period.




</P>
<CITA TYPE="N">[56 FR 7541, Feb. 22, 1991, as amended at 60 FR 14845, Mar. 20, 1995; 61 FR 13594, Mar. 27, 1996; 61 FR 47382, Sept. 6, 1996; 66 FR 28798, May 24, 2001; 73 FR 72343, Nov. 28, 2008; 75 FR 66261, Oct. 27, 2010; 81 FR 80813, Nov. 16, 2016; 86 FR 55701, Oct. 7, 2021; 89 FR 101303, Dec. 13, 2024]






</CITA>
</DIV8>


<DIV8 N="§ 884.217" NODE="24:4.1.2.1.8.2.1.6" TYPE="SECTION">
<HEAD>§ 884.217   Maintenance, operation, and inspections.</HEAD>
<P>(a) <I>Maintenance and operation.</I> The Owner shall maintain and operate the project consistent with 24 CFR part 5, subpart G, and shall provide all the services, maintenance, and utilities which the Owner agrees to provide under the Contract, subject to abatement of housing assistance payments or other applicable remedies if the Owner fails to meet these obligations.
</P>
<P>(b) <I>Inspection prior to occupancy.</I> Prior to occupancy of any unit by a Family, the Owner and the Family shall inspect the unit. On forms prescribed by HUD, the Owner and Family shall certify, that they have inspected the unit and the owner shall certify that the unit is compliant with 24 CFR part 5, subpart G, and the criteria provided in the prescribed forms. Copies of these reports shall be kept on file by the Owner for at least 3 years, and may be required to be electronically submitted to HUD.
</P>
<P>(c) <I>Periodic inspections.</I> HUD (or the PHA, as appropriate) will inspect or cause to be inspected the contract units and related facilities in accordance with the physical inspection requirements in 24 CFR part 5, subpart G, and at such other times (including prior to initial occupancy and renting of any unit) as HUD (or the PHA) may determine to be necessary to assure that the Owner is meeting the obligation to maintain the units in accordance with 24 CFR part 5, subpart G, and to provide the agreed upon utilities and other services.
</P>
<P>(d) <I>Units with health and safety hazards.</I> If HUD (or the PHA, as appropriate) notifies the Owner that the Owner has failed to maintain a unit that in accordance with 24 CFR part 5, subpart G, and the Owner fails to take corrective action within the time prescribed by notice, HUD (or the PHA) may exercise any of its rights or remedies under the Contract, including abatement of housing assistance payments, even if the Family continues to occupy the unit. If, however, the Family wishes to be rehoused in another unit with Section 8 assistance and HUD (or the PHA) does not have other Section 8 funds for such purposes, HUD (or the PHA) may use the abated housing assistance payments for the purpose of rehousing the Family in another unit. Where this is done, the Owner shall be notified that the Owner will be entitled to resumption of housing assistance payments for the vacated unit if:
</P>
<P>(1) The unit is restored to in accordance with 24 CFR part 5, subpart G;
</P>
<P>(2) The Family is willing to and does move back to the restored dwelling unit; and
</P>
<P>(3) A deduction is made for the expenses incurred by the Family for both moves.


</P>
<CITA TYPE="N">[88 FR 30499, May 11, 2023]








</CITA>
</DIV8>


<DIV8 N="§ 884.218" NODE="24:4.1.2.1.8.2.1.7" TYPE="SECTION">
<HEAD>§ 884.218   Reexamination of family income and composition.</HEAD>
<P>(a) <I>Regular reexaminations.</I> The owner must reexamine the income and composition of all families at least once each year. Upon verification of the information, the owner must make appropriate adjustments in the Total Tenant Payment in accordance with part 5 of this title and determine whether the family's unit size is still appropriate. The owner must adjust Tenant Rent and the Housing Assistance Payment to reflect any change in Total Tenant Payment and carry out any unit transfer required by HUD. At the time of the annual reexamination of family income and composition, the owner must require the family to disclose and verify Social Security Numbers, as provided by 24 CFR part 5. For requirements regarding the signing and submitting of consent forms by families for the obtaining of wage and claim information from State Wage Information Collection Agencies, see 24 CFR part 5. At the first regular reexamination after June 19, 1995, the owner shall follow the requirements of 24 CFR part 5 concerning obtaining and processing evidence of citizenship or eligible immigration status of all family members. Thereafter, at each regular reexamination, the owner shall follow the requirements of 24 CFR part 5 concerning verification of the immigration status of any new family member.
</P>
<P>(b) <I>Interim reexaminations.</I> The family must comply with provisions of its lease regarding interim reporting of changes in income. If the owner receives information concerning a change in the family's income or other circumstances between regularly scheduled reexaminations, the owner must consult with the family and make any adjustments determined to be appropriate. Any change in the family's income or other circumstances that results in an adjustment in the Total Tenant Payment, Tenant Rent and Housing Assistance Payment must be verified. See 24 CFR 750.10(d)(2)(i) for the requirements for the disclosure and verification of Social Security Numbers at interim reexaminations involving new family members. For requirements regarding the signing and submitting of consent forms by families for the obtaining of wage and claim information from State Wage Information Collection Agencies, see 24 CFR part 5. At any interim reexamination after June 19, 1995 when there is a new family member, the owner shall follow the requirements of 24 CFR part 5 concerning obtaining and processing evidence of citizenship or eligible immigration status of the new family member.
</P>
<P>(c) <I>Continuation of housing assistance payments.</I> A family's eligibility for Housing Assistance Payments continues until the Total Tenant Payment equals the Contract Rent plus any utility allowance, or until the family loses eligibility for continued occupancy under Farmer's Home Administration regulations. However, eligibility also may be terminated in accordance with HUD requirements, for such reasons as failure to submit requested verification information, including failure to meet the disclosure and verification requirements for Social Security Numbers, as provided by 24 CFR part 5, or failure to sign and submit consent forms for the obtaining of wage and claim information from State Wage Information Collection Agencies, as provided by 24 CFR part 5. For provisions requiring termination of assistance for failure to establish citizenship or eligible immigration status, see 24 CFR part 5 and also for provisions concerning certain assistance for mixed families (families whose members include those with eligible immigration status, and those without eligible immigration status) in lieu of termination of 

assistance, and for provisions concerning deferral of termination of assistance.
</P>
<P>(d) <I>Streamlined income determination.</I> An owner may elect to follow the provisions of 24 CFR 5.657(d).
</P>
<CITA TYPE="N">[56 FR 7541, Feb. 22, 1991, as amended at 60 FR 14845, Mar. 20, 1995; 61 FR 13594, Mar. 27, 1996; 65 FR 16723, Mar. 29, 2000; 81 FR 12371, Mar. 8, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 884.219" NODE="24:4.1.2.1.8.2.1.8" TYPE="SECTION">
<HEAD>§ 884.219   Overcrowded and underoccupied units.</HEAD>
<P>If HUD or the PHA, as the case may be, determines that a Contract unit assisted under this part is not Decent, Safe, and Sanitary by reason of increase in Family size, or that a Contract unit is larger than appropriate for the size of the Family in occupancy, housing assistance payments with respect to such unit will not be abated, unless the Owner fails to offer the Family a suitable unit as soon as one becomes vacant and ready for occupancy. In the case of an overcrowded unit, if the Owner does not have any suitable units or if no vacancy of a suitable unit occurs within a reasonable time, HUD (or the PHA) will assist the Family in finding a suitable dwelling unit and require the Family to move to such a unit as soon as possible. The Owner may receive housing assistance payments for the vacated unit if he complies with the requirements of § 884.106(c)(1). 


</P>
</DIV8>


<DIV8 N="§ 884.220" NODE="24:4.1.2.1.8.2.1.9" TYPE="SECTION">
<HEAD>§ 884.220   Adjustment of utility allowances.</HEAD>
<P>In connection with annual and special adjustments of contract rents, the owner must submit an analysis of the project's Utility Allowances. Such data as changes in utility rates and other facts affecting utility consumption should be provided as part of this analysis to permit appropriate adjustments in the Utility Allowances. In addition, when approval of a utility rate change would result in a cumulative increase of 10 percent or more in the most recently approved Utility Allowances, the project owner must advise the Secretary and request approval of new Utility Allowances. Whenever a Utility Allowance for a unit is adjusted, the owner will promptly notify affected families and make a corresponding adjustment of the tenant rent and the amount of the housing assistance payment for the unit.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0161)
</APPRO>
<CITA TYPE="N">[50 FR 39098, Sept. 27, 1985]


</CITA>
</DIV8>


<DIV8 N="§ 884.221" NODE="24:4.1.2.1.8.2.1.10" TYPE="SECTION">
<HEAD>§ 884.221   Continued family participation.</HEAD>
<P>A Family must continue to occupy its approved unit to remain eligible for participation in the Housing Assistance Payments Program except that if the Family (a) wishes to vacate its unit at the end of the Lease term (or prior thereto but in accordance with the provisions of the Lease), or (b) is required to move for reasons other than violation of the Lease on the part of the Family, and if the Family wishes to receive the benefit of housing assistance payments in another approvable unit, the Family should give reasonable notice of the circumstances to HUD or to the PHA, as appropriate, so that HUD or the PHA may have the opportunity to consider the Family's request. 


</P>
</DIV8>


<DIV8 N="§ 884.222" NODE="24:4.1.2.1.8.2.1.11" TYPE="SECTION">
<HEAD>§ 884.222   Inapplicability of low-rent public housing model lease and grievance procedures.</HEAD>
<P>Model lease and grievance procedures established by HUD for PHA-owned low-rent public housing are applicable only to PHA-Owner Projects under the Section 8 Housing Assistance Payments Program. 


</P>
</DIV8>


<DIV8 N="§ 884.223" NODE="24:4.1.2.1.8.2.1.12" TYPE="SECTION">
<HEAD>§ 884.223   Leasing to eligible families.</HEAD>
<P>(a) <I>Availability of units for occupancy by Eligible Families.</I> During the term of the Contract, an owner shall make available for occupancy by eligible families the total number of units for which assistance is committed under the Contract. For purposes of this section, making units available for occupancy by eligible families means that the owner: (1) Is conducting marketing in accordance with § 884.214; (2) has leased or is making good faith efforts to lease the units to eligible and otherwise acceptable families, including taking all feasible actions to fill vacancies by renting to such families; and (3) has not rejected any such applicant family except for reasons acceptable to HUD (or the PHA in accordance with HUD guidelines and at the direction of HUD, as appropriate). If the owner is temporarily unable to lease all units for which assistance is committed under the Contract to eligible families, one or more units may be leased to ineligible families with the prior approval of HUD (or the PHA in accordance with HUD guidelines and at the direction of HUD, as appropriate). Failure on the part of the owner to comply with these requirements is a violation of the Contract and grounds for all available legal remedies, including specific performance of the Contract, suspension or debarment from HUD programs, and reduction of the number of units under the Contract as set forth in paragraph (b) of this section.
</P>
<P>(b) <I>Reduction of number of units covered by Contract.</I> HUD (or the PHA at the direction of HUD, as appropriate), after consultation with the Farmers Home Administration, may reduce the number of units covered by the Contract to the number of units available for occupancy by eligible families if:
</P>
<P>(1) The owner fails to comply with the requirements of paragraph (a) of this section; or
</P>
<P>(2) Notwithstanding any prior approval by HUD (or the PHA at the direction of HUD, as appropriate) to lease such units to ineligible families, HUD (or the PHA at the direction of HUD, as appropriate) determines that the inability to lease units to eligible families is not a temporary problem.
</P>
<P>(c) <I>Restoration.</I> HUD will agree to an amendment of the ACC or the Contract, as appropriate, to provide for subsequent restoration of any reduction made pursuant to paragraph (b) of this section if:
</P>
<P>(1) HUD determines that the restoration is justified by demand;
</P>
<P>(2) The owner otherwise has a record of compliance with his or her obligations under the Contract; and
</P>
<P>(3) Contract and budget authority are available.
</P>
<P>(d) <I>Applicability.</I> In accordance with section 555 of the Cranston-Gonzalez National Affordable Housing Act of 1990, paragraphs (a) and (b) of this section apply to all contracts. An owner who had leased an assisted unit to an ineligible family consistent with the regulations in effect at the time will continue to lease the unit to that family. However, the owner must make the unit available for occupancy by an eligible family when the ineligible family vacates the unit. 
</P>
<P>(e) <I>Termination of assistance for failure to establish citizenship or eligible immigration status.</I> If an owner subject to paragraphs (a) and (b) of this section is required to terminate housing assistance payments for the family in accordance with 24 CFR part 5 because the owner determines that the entire family does not have U.S. citizenship or eligible immigration status, the owner may allow continued occupancy of the unit by the family without Section 8 assistance following the termination of assistance, or if the family constitutes a mixed family, as defined in 24 CFR part 5, the owner shall comply with the provisions of 24 CFR part 5 concerning assistance to mixed families, and deferral of termination of assistance.
</P>
<P>(f) The regulations in 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking) apply to this section.
</P>
<CITA TYPE="N">[49 FR 31398, Aug. 7, 1984, as amended at 53 FR 847, Jan. 13, 1988; 53 FR 6601, Mar. 2, 1988; 59 FR 13653, Mar. 23, 1994; 60 FR 14846, Mar. 20, 1995; 61 FR 13594, Mar. 27, 1996; 73 FR 72343, Nov. 28, 2008; 75 FR 66261, Oct. 27, 2010; 81 FR 80813, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 884.223a" NODE="24:4.1.2.1.8.2.1.13" TYPE="SECTION">
<HEAD>§ 884.223a   Preference for occupancy by elderly families.</HEAD>
<P>(a) <I>Election of preference for occupancy by elderly families</I>—(1) <I>Election by owners of eligible projects.</I> (i) An owner of a project assisted under this part (including a partially assisted project) that was originally designed primarily for occupancy by elderly families (an “eligible project”) may, at any time, elect to give preference to elderly families in selecting tenants for assisted, vacant units in the project, subject to the requirements of this section. 
</P>
<P>(ii) For purposes of this section, a project eligible for the preference provided by this section, and for which the owner makes an election to give preference in occupancy to elderly families is referred to as an “elderly project.” “Elderly families” refers to families whose heads of household, their spouses or sole members are 62 years or older. 
</P>
<P>(iii) An owner who elects to provide a preference to elderly families in accordance with this section is required to notify families on the waiting list who are not elderly that the election has been made and how the election may affect them if: 
</P>
<P>(A) The percentage of disabled families currently residing in the project who are neither elderly nor near-elderly (hereafter, collectively referred to as “non-elderly disabled families”) is equal to or exceeds the minimum required percentage of units established for the elderly project in accordance with paragraph (c)(1) of this section, and therefore non-elderly families on the waiting list (including non-elderly disabled families) may be passed over for covered section 8 units; or 
</P>
<P>(B) The project, after making the calculation set forth in paragraph (c)(1) of this section, will have no units set aside for non-elderly disabled families. 
</P>
<P>(iv) An owner who elects to give a preference for elderly families in accordance with this section shall not remove an applicant from the project's waiting list solely on the basis of having made the election. 
</P>
<P>(2) <I>HUD approval of election not required.</I> (i) An owner is not required to solicit or obtain the approval of HUD before exercising the election of preference for occupancy provided in paragraph (a)(1) of this section. The owner, however, if challenged on the issue of eligibility of the project for the election provided in paragraph (a)(1) of this section must be able to support the project's eligibility through the production of all relevant documentation in the possession of the owner that pertains to the original design of the project. 
</P>
<P>(ii) The Department reserves the right at any time to review and make determinations regarding the accuracy of the identification of the project as an elderly project. The Department can make such determinations as a result of ongoing monitoring activities, or the conduct of complaint investigations under the Fair Housing Act (42 U.S.C. 3601 through 3619), or compliance reviews and complaint investigations under section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and other applicable statutes. 
</P>
<P>(b) <I>Determining projects eligible for preference for occupancy by elderly families</I>—(1) <I>Evidence supporting project eligibility.</I> Evidence that a project assisted under this part (or portion of a project) was originally designed primarily for occupancy by elderly families, and is therefore eligible for the election of occupancy preference provided by this section, shall consist of at least one item from the sources (“primary” sources) listed in paragraph (b)(1)(i) of this section, or at least two items from the sources (“secondary” sources) listed in paragraph (b)(1)(ii) of this section: 
</P>
<P>(i) <I>Primary sources.</I> Identification of the project (or portion of a project) as serving elderly (seniors) families in at least one primary source such as: the application in response to the notice of funding availability; the terms of the notice of funding availability under which the application was solicited; the regulatory agreement; the loan commitment; the bid invitation; the owner's management plan, or any underwriting or financial document collected at or before loan closing; <I>or</I>
</P>
<P>(ii) <I>Secondary sources.</I> Two or more sources of evidence such as: lease records from the earliest two years of occupancy for which records are available showing that occupancy has been restricted primarily to households where the head, spouse or sole member is 62 years of age or older; evidence that services for elderly persons have been provided, such as services funded by the Older Americans Act, transportation to senior citizen centers, or programs coordinated with the Area Agency on Aging; project unit mix with more than fifty percent of efficiency and one-bedroom units [a secondary source particularly relevant to distinguishing elderly projects under the previous section 3(b) definition (in which disabled families were included in the definition of “elderly families”) from non-elderly projects and which in combination with other factors (such as the number of accessible units) may be useful in distinguishing projects for seniors from those serving the broader definition of “elderly families” which includes disabled families]; or any other relevant type of historical data, unless clearly contradicted by other comparable evidence. 
</P>
<P>(2) <I>Sources in conflict.</I> If a primary source establishes a design contrary to that established by the primary source upon which the owner would base support that the project is an eligible project (as defined in this section), the owner cannot make the election of preferences for elderly families as provided by this section based upon primary sources alone. In any case where primary sources do not provide <I>clear evidence</I> of original design of the project for occupancy primarily by elderly families, including those cases where sources documents conflict, secondary sources may be used to establish the use for which the project was originally designed. 
</P>
<P>(c) <I>Reservation of units in elderly projects for non-elderly disabled families.</I> The owner of an elderly project is required to reserve, at a minimum, the number of units specified in paragraph (c)(1) of this section for occupancy by non-elderly disabled families. 
</P>
<P>(1) <I>Minimum number of units to be reserved for non-elderly disabled families.</I> The number of units in an elderly project required to be reserved for occupancy by non-elderly disabled families, shall be, at a minimum, the lesser of: 
</P>
<P>(i) The number of units equivalent to the higher of— 
</P>
<P>(A) The percentage of units assisted under this part in the elderly project that were occupied by non-elderly disabled families on October 28, 1992; and 
</P>
<P>(B) The percentage of units assisted under this part in the elderly project that were occupied by non-elderly disabled families upon January 1, 1992; <I>or</I> 
</P>
<P>(ii) 10 percent of the number of units assisted under this part in the eligible project. 
</P>
<P>(2) <I>Option to reserve greater number of units for non-elderly disabled families.</I> The owner, at the owner's option, and at any time, may reserve a greater number of units for non-elderly disabled families than that provided for in paragraph (c)(1) of this section. The option to provide a greater number of units to non-elderly disabled families will not obligate the owner to always provide that greater number to non-elderly disabled families. The number of units required to be provided to non-elderly disabled families at any time in an elderly project is that number determined under paragraph (c)(1) of this section. 
</P>
<P>(d) <I>Secondary preferences.</I> An owner of an elderly project also may elect to establish secondary preferences in accordance with the provisions of this paragraph (d) of this section. 
</P>
<P>(1) <I>Preference for near-elderly disabled families in units reserved for elderly families.</I> If the owner of an elderly project determines, in accordance with paragraph (f) of this section, that there are an insufficient number of elderly families who have applied for occupancy to fill all the vacant units in the elderly project reserved for elderly families (that is, all units except those reserved for the non-elderly disabled families as provided in paragraph (c) of this section), the owner may give preference for occupancy of such units to disabled families who are near-elderly families. 
</P>
<P>(2) <I>Preference for near-elderly disabled families in units reserved for non-elderly disabled families.</I> If the owner of an elderly project determines, in accordance with paragraph (f) of this section, that there are an insufficient number of non-elderly disabled families to fill all the vacant units in the elderly project reserved for non-elderly disabled families as provided in paragraph (c) of this section, the owner may give preference for occupancy of these units to disabled families who are near-elderly families. 
</P>
<P>(e) <I>Availability of units to families without regard to preference.</I> An owner shall make vacant units in an elderly project generally available to otherwise eligible families who apply for housing, without regard to the preferences and reservation of units provided in this section if either: 
</P>
<P>(1) The owner has adopted the secondary preferences and there are an insufficient number of families for whom elderly preference, reserve preference, and secondary preference has been given, to fill all the vacant units; or 
</P>
<P>(2) The owner has <I>not</I> adopted the secondary preferences and there are an insufficient number of families for whom elderly preference, and reserve preference has been given to fill all the vacant units. 
</P>
<P>(f) <I>Determination of insufficient number of applicants qualifying for preference.</I> To make a determination that there are an insufficient number of applicants who qualify for the preferences, including secondary preferences, provided by this section, the owner must: 
</P>
<P>(1) Conduct marketing in accordance with § 884.214(a) to attract applicants qualifying for the preferences and reservation of units set forth in this section; and 
</P>
<P>(2) Make a good faith effort to lease to applicants who qualify for the preferences provided in this section, including taking all feasible actions to fill vacancies by renting to such families.
</P>
<P>(g) <I>Prohibition of evictions.</I> An owner may not evict a tenant without good cause, or require that a tenant vacate a unit, in whole or in part because of any reservation or preference provided in this section, or because of any action taken by the Secretary pursuant to subtitle D (sections 651 through 661) of title VI of the Housing and Community Development Act of 1992 (42 U.S.C. 13611 through 13620). 
</P>
<CITA TYPE="N">[59 FR 65855, Dec. 21, 1994, as amended at 61 FR 9047, Mar. 6, 1996; 65 FR 16723, Mar. 29, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 884.224" NODE="24:4.1.2.1.8.2.1.14" TYPE="SECTION">
<HEAD>§ 884.224   Management and occupancy reviews.</HEAD>
<P>(a) The contract administrator will conduct management and occupancy reviews to determine whether the owner is in compliance with the Contract. Such reviews will be conducted in accordance with a schedule set out by the Secretary and published in the <E T="04">Federal Register</E><I>,</I> following notice and the opportunity to comment. Where a change in ownership or management occurs, a management and occupancy review must be conducted within six months.
</P>
<P>(b) HUD or the Contract Administrator may inspect project operations and units at any time.
</P>
<P>(c) Equal Opportunity reviews may be conducted by HUD at any time.
</P>
<CITA TYPE="N">[87 FR 37997, June 27, 2022]


</CITA>
</DIV8>


<DIV8 N="§ 884.225" NODE="24:4.1.2.1.8.2.1.15" TYPE="SECTION">
<HEAD>§ 884.225   PHA reporting requirements. [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 884.226" NODE="24:4.1.2.1.8.2.1.16" TYPE="SECTION">
<HEAD>§ 884.226   Emergency transfers for victims of domestic violence, dating violence, sexual assault, and stalking.</HEAD>
<P>(a) Covered housing providers must develop and implement an emergency transfer plan that meets the requirements in 24 CFR 5.2005(e).
</P>
<P>(b) In order to facilitate emergency transfers for victims of domestic violence, dating violence, sexual assault, and stalking, covered housing providers have discretion to adopt new, and modify any existing, admission preferences or transfer waitlist priorities.
</P>
<P>(c) In addition to following requirements in 24 CFR 5.2005(e), when a safe unit is not immediately available for a victim of domestic violence, dating violence, sexual assault, or stalking who qualifies for an emergency transfer, covered housing providers must:
</P>
<P>(1) Review the covered housing provider's existing inventory of units and determine when the next vacant unit may be available; and
</P>
<P>(2) Provide a listing of nearby HUD subsidized rental properties, with or without preference for persons of domestic violence, dating violence, sexual assault, or stalking, and contact information for the local HUD field office.
</P>
<P>(d) Each year, covered housing providers must submit to HUD data on all emergency transfers requested under 24 CFR 5.2005(e), including data on the outcomes of such requests.
</P>
<CITA TYPE="N">[81 FR 80813, Nov. 16, 2016]


</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="886" NODE="24:4.1.2.1.9" TYPE="PART">
<HEAD>PART 886—SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM—SPECIAL ALLOCATIONS 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437a, 1437c, 1437f, 3535(d), and 13611-13619.


</PSPACE></AUTH>

<DIV6 N="A" NODE="24:4.1.2.1.9.1" TYPE="SUBPART">
<HEAD>Subpart A—Additional Assistance Program for Projects With HUD-Insured and HUD-Held Mortgages</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>42 FR 5603, Jan. 28, 1977, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV8 N="§ 886.101" NODE="24:4.1.2.1.9.1.1.1" TYPE="SECTION">
<HEAD>§ 886.101   Applicability.</HEAD>
<P>(a) The policies and procedures of this subpart apply to Housing Assistance Payments under Section 8 of the United States Housing Act of 1937 on behalf of Eligible Families in Eligible Projects (see definitions in § 886.102).
</P>
<P>(b) The primary goal of the Section 8 Loan Management Set-Aside Program is to reduce claims on the Department's insurance fund by aiding those FHA-insured or Secretary-Held projects with immediately or potentially serious financial difficulties. A first priority should be given to projects with presently serious financial problems, which are likely to result in a claim on the insurance fund in the near future. To the extent resources remain available, assistance also may be provided to projects with potentially serious financial problems which, on the basis of financial and/or management analysis, appear to have a high probability of producing a claim on the insurance fund within approximately the next five years. 
</P>
<CITA TYPE="N">[42 FR 5603, Jan. 28, 1977, as amended at 53 FR 3368, Feb. 5, 1988]


</CITA>
</DIV8>


<DIV8 N="§ 886.102" NODE="24:4.1.2.1.9.1.1.2" TYPE="SECTION">
<HEAD>§ 886.102   Definitions.</HEAD>
<P>The terms <I>Fair Market Rent (FMR), HUD, Public Housing Agency (PHA),</I> and <I>Secretary</I> are defined in 24 CFR part 5.
</P>
<P><I>Act.</I> The United States Housing Act of 1937. 
</P>
<P><I>Annual income.</I> As defined in part 5 of this title. 
</P>
<P><I>Contract</I> (See <I>Section 8 Contract</I>). 
</P>
<P><I>Contract Rent.</I> The rent payable to the Owner as required by HUD in connection with its mortgage insurance and/or lending functions, including the portion of the rent payable by the Family, not to exceed the amount stated in the Section 8 Contract as such amount may be adjusted in accordance with § 886.112. In the case of a cooperative, the term “Contract Rent” means charges under the occupancy agreements between the members and the cooperative. 
</P>
<P><I>Covered housing provider.</I> For the Section 8 Housing Assistance Payments Programs—Special Allocations, subpart A of this part, “covered housing provider,” as such term is used in HUD's regulations at 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking) refers to the owner.
</P>
<P><I>Decent, Safe, and Sanitary.</I> Housing is decent, safe, and sanitary if it meets the physical condition requirements in 24 CFR part 5, subpart G.
</P>
<P><I>Eligible Project.</I> Any existing subsidized or unsubsidized multifamily residential project that is subject to a mortgage insured or any section of the National Housing Act; any such project subject to a mortgage that has been assigned to the Secretary; any such project acquired by the Secretary and thereafter sold under a Secretary-held purchase money mortgage; or a project for the elderly financed under section 202 of the Housing Act of 1959 (except projects receiving assistance under 24 CFR part 885).
</P>
<P><I>Family.</I> As defined in part 5 of this title. 
</P>
<P><I>HCD Act.</I> The Housing and Community Development Act of 1974. 
</P>
<P><I>Housing Assistance Payment.</I> The payment made by HUD to the Owner of an assisted unit as provided in the Contract. Where the unit is leased to an eligible Family, the payment is the difference between the Contract Rent and the Tenant Rent. An additional Housing Assistance Payment is made when the Utility Allowance is greater than the Total Tenant Payment. A Housing Assistance Payment may be made to the Owner when a unit is vacant, in accordance with § 886.109. 
</P>
<P><I>Income.</I> Income from all sources of each member of the household as determined in accordance with criteria established by HUD and as defined in part 5 of this title.
</P>
<P><I>Lease.</I> A written agreement between the owner and a family for leasing of a decent, safe and sanitary dwelling unit to the family.
</P>
<P><I>Low-income family.</I> As defined in part 5 of this title. 
</P>
<P><I>Owner.</I> The mortgagor of record under a multifamily project mortgage insured, or held by the Secretary, including purchase money mortgages; the owner of a Section 202 project. 
</P>
<P><I>Project.</I> See § 886.101. 
</P>
<P><I>Project Account.</I> The account established and maintained in accordance with § 886.108. 
</P>
<P><I>Section 8 Contract</I> (<I>“Contract”</I>). A written Contract between the Owner of an Eligible Project and HUD for providing Housing Assistance Payments to the Owner on behalf of Eligible Families pursuant to this part. 
</P>
<P><I>Subsidized Rent.</I> In Section 221(d)(3) BMIR, Section 202, or Section 236 projects, the rent payable to the project, based on the particular circumstances of any assisted tenant in the absence of any Housing Assistance Payment. 
</P>
<P><I>Tenant rent.</I> As defined in part 5 of this title. 
</P>
<P><I>Total tenant payment.</I> As defined in part 5 of this title. 
</P>
<P><I>Utility allowance.</I> As defined in part 5 of this title. 
</P>
<P><I>Utility reimbursement.</I> As defined in part 5 of this title. 
</P>
<P><I>Very low-income family.</I> As defined in part 5 of this title. 
</P>
<CITA TYPE="N">[42 FR 5603, Jan. 28, 1977, as amended at 42 FR 63745, Dec. 19, 1977; 49 FR 19948, May 10, 1984; 50 FR 38795, Sept. 25, 1985; 53 FR 3368, Feb. 5, 1988; 61 FR 5213, Feb. 9, 1996; 63 FR 46579, Sept. 1, 1998; 65 FR 16723, Mar. 29, 2000; 70 FR 77744, Dec. 30, 2005; 81 FR 80813, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 886.103" NODE="24:4.1.2.1.9.1.1.3" TYPE="SECTION">
<HEAD>§ 886.103   Allocation of Section 8 contract authority.</HEAD>
<P>HUD will allocate to field offices contract authority for Section 8 project commitments for metropolitan and nonmetropolitan areas in conformance with Section 213(d) of the HCD Act. 


</P>
</DIV8>


<DIV8 N="§ 886.104" NODE="24:4.1.2.1.9.1.1.4" TYPE="SECTION">
<HEAD>§ 886.104   Invitations to participate.</HEAD>
<P>(a) HUD shall identify Eligible Projects which are most likely to meet the selection criteria set forth in § 886.117, and shall invite the Owners of such projects to make application for Section 8 assistance under this part. 
</P>
<P>(b) An Owner of an Eligible Project who has not been notified pursuant to paragraph (a) of this section may also make application for such assistance. 


</P>
</DIV8>


<DIV8 N="§ 886.105" NODE="24:4.1.2.1.9.1.1.5" TYPE="SECTION">
<HEAD>§ 886.105   Content of application; Disclosure.</HEAD>
<P>Applications shall be in the form and in accordance with the instructions prescribed by HUD, and shall include: 
</P>
<P>(a) Information on Gross Income, family size, and amount of rent paid to the project by Families currently in residence; 
</P>
<P>(b) Information on vacancies and turnover; 
</P>
<P>(c) Estimate of effect of the availability of Section 8 assistance on marketability of units in the project; 
</P>
<P>(d) For projects having a history of financial default, financial difficulties or deferred maintenance, a plan and a schedule for remedying such defaulted or deferred obligations; 
</P>
<P>(e) Total number of units by unit size (by bedroom count) for which Section 8 assistance is requested; and 
</P>
<P>(f) Affirmative Fair Housing Marketing Plan on a HUD-prescribed form. 
</P>
<FP>To be eligible to become an owner of housing assisted under this subpart, the owner must meet the disclosure and verification requirements for Social Security and Employer Identification Numbers, as provided by part 5, subpart B, of this title.
</FP>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0204)
</APPRO>
<CITA TYPE="N">[42 FR 5603, Jan. 28, 1977, as amended at 54 FR 39708, Sept. 27, 1989; 61 FR 11118, Mar. 18, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 886.106" NODE="24:4.1.2.1.9.1.1.6" TYPE="SECTION">
<HEAD>§ 886.106   Notices.</HEAD>
<P>(a) Within 10 days of receipt of each completed application by the HUD field office, the field office shall send to the chief executive officer of the unit of general local government in which the proposed assistance is to be provided, a notification in a form prescribed by HUD for purposes of compliance with Section 213 of the HCD Act. 
</P>
<P>(b) If an application is approved, HUD shall send to the Owner a notice of application approval. If an application can be approved only on certain conditions, HUD shall notify the Owner of the conditions and specify a time limit by which those conditions must be met. If an application is disapproved, HUD shall so notify the Owner by letter indicating the reasons for disapproval. 
</P>
<CITA TYPE="N">[42 FR 5603, Jan. 28, 1977, as amended at 53 FR 3368, Feb. 5, 1988]


</CITA>
</DIV8>


<DIV8 N="§ 886.107" NODE="24:4.1.2.1.9.1.1.7" TYPE="SECTION">
<HEAD>§ 886.107   Approval of applications.</HEAD>
<P>HUD shall approve applications, after considering all pertinent information including comments (if any) received during the comment period from the unit of general local government, based on the following criteria: 
</P>
<P>(a) The Owner's Affirmative Fair Housing Marketing Plan is approvable. 
</P>
<P>(b) The HUD-approved unit rents are approvable within the Fair Market Rent limitations contained in § 886.110. 
</P>
<P>(c) The residential units meet the housing quality standards set forth in § 886.113, except for such variations as HUD may approve. Local climatic or geological conditions or local codes are examples which may justify such variations. 
</P>
<P>(d) A significant number of residents, or potential residents, in the case of projects having a vacancy rate over 10 percent, are eligible for and in need of Section 8 assistance. 
</P>
<P>(e) The infusion of Section 8 assistance into the subject project should not affect other HUD-related multifamily housing within the same neighborhood in a substantially adverse manner. Examples of such adverse effects are (1) substantial move-outs from nearby HUD-related projects precipitated by much lower rents in the subject project, or (2) substantial diversion of prospective applicants from such projects to the subject project. 
</P>
<P>(f) A first priority is given to HUD-Insured or Secretary-Held projects with presently serious financial problems, which are likely to result in a claim on the insurance fund in the near future. To the extent resources remain available, assistance also may be provided to projects with potentially serious financial problems which, on the basis of financial and/or management analysis, appear to have a high probability of producing a claim on the insurance funds within approximately the next five years. 
</P>
<P>(g) The infusion of Section 8 assistance into the subject project solves an identifiable problem, e.g., high vacancies and/or turnover, and provides a reasonable assurance of long-term project viability. A determination of long-term viability shall be based upon the following considerations: 
</P>
<P>(1) The project is not subject to any serious problems that are non-economic in nature. Examples of such problems are poor location, structural deficiencies or disinterested ownership. 
</P>
<P>(2) The Owner is in substantial compliance with the Regulatory Agreement. Owners are not diverting project funds for personal use. No dividends are being paid during any period of financial difficulty. 
</P>
<P>(3) The management agent is in substantial compliance with the management agreement. The current management agreement has been approved by HUD. Financial records are adequately kept. Occupancy requirements are being met. Marketing and maintenance programs are being carried out in an adequate manner, based upon available financial resources. 
</P>
<P>(4) The project's problems are primarily the result of factors beyond the control of the present ownership and management. 
</P>
<P>(5) The major problems are traceable to an inadequate cash flow. 
</P>
<P>(6) The infusion of Section 8 assistance will solve the cash flow problem by: 
</P>
<P>(i) Making it possible to grant needed rent increases; 
</P>
<P>(ii) Reducing turnover, vacancies and collection losses. 
</P>
<P>(7) The Owner's plan for remedying any deferred maintenance, financial problems, or other problems is realistic and achievable. There is positive evidence that the Owner will carry out the plan. Examples of such evidence are the Owner's past performance in correcting problems and, in the case of profit-motivated Owners, any cash contributions made to correct project problems. 
</P>
<P>(h) Any plan submitted pursuant to § 886.105(d) is found by HUD to be adequate. 


</P>
</DIV8>


<DIV8 N="§ 886.108" NODE="24:4.1.2.1.9.1.1.8" TYPE="SECTION">
<HEAD>§ 886.108   Maximum annual contract commitment.</HEAD>
<P>(a) <I>Number of units assisted.</I> Based on analysis of housing assistance needs of families residing or expected to reside in the project, HUD shall determine the number of units to be assisted up to 100 percent of the units in the project. All units currently assisted under section 23 or section 8 shall be converted and included under the Contract pursuant to this subpart, unless the parties to the Lease or Contract object to such conversion. Units assisted under section 101 of the Housing and Urban Development Act of 1965 or under section 236(f)(2) of the National Housing Act shall not be included under the Contract pursuant to this subpart unless the Owner proposes and HUD approves such conversion. 
</P>
<P>(b) <I>Maximum annual Contract commitment.</I> The maximum annual housing assistance payments that may be committed under the Contract shall be that amount which, when paid annually over the term of the Contract, is determined by HUD to be sufficient to provide for all housing assistance payments and fees under the Contract. 
</P>
<P>(c) <I>Project Account.</I> In order to assure that housing assistance payments will be increased on a timely basis to cover increases in Contract Rents or decreases in Family Incomes: 
</P>
<P>(1) A Project Account shall be established and maintained, in an amount as determined by the Secretary consistent with his responsibilities under section 8(c)(6) of the Act, out of amounts by which the maximum annual Contract commitment per year exceeds amounts paid under the Contract for any year. This account shall be established and maintained by HUD for each project as a specifically identified and segregated account, and payment shall be made therefrom only for the purposes of (i) housing assistance payments, and (ii) other costs specifically authorized or approved by the Secretary. 
</P>
<P>(2) Whenever a HUD-approved estimate of required housing assistance payments for a fiscal year exceeds the maximum annual Contract commitment, and would cause the amount in the Project Account to be less than an amount equal to 40 percent of such maximum annual Contract commitment, HUD shall, within a reasonable period of time, take such additional steps authorized by Section 8(c)(6) of the Act as may be necessary to carry out this assurance, including (as provided in that section of the Act) “the allocation of a portion of new authorizations for the purpose of amending housing assistance contracts.” 


</P>
</DIV8>


<DIV8 N="§ 886.109" NODE="24:4.1.2.1.9.1.1.9" TYPE="SECTION">
<HEAD>§ 886.109   Housing assistance payments to owners.</HEAD>
<P>(a) <I>General.</I> Housing Assistance Payments shall be paid to Owners for units under lease by eligible families, in accordance with the Contract and as provided in this section. These Housing Assistance Payments will cover the difference between the Contract Rent and the Tenant Rent. Where applicable, the Utility Reimbursement will be paid to the Family as an additional Housing Assistance Payment. The Contract will provide that the Owner will make this payment on behalf of HUD. Funds will be paid to the Owner in trust solely for the purpose of making this additional payment. If the Family and the utility company consent, the Owner may pay the Utility Reimbursement jointly to the Family and the utility company or directly to the utility company.
</P>
<P>(b) No Section 8 assistance may be provided for any unit occupied by an Owner; cooperatives are considered rental housing. 
</P>
<P>(c) If an Eligible Family vacates its unit (other than as a result of action by the Owner which is in violation of the Lease or the Contract or any applicable law), the Owner shall receive housing assistance payments in the amount of 80 percent of the Contract Rent for a vacancy period not exceeding 60 days: <I>Provided, however,</I> That if the Owner collects any of the Family's share of the rent for this period, or applies security deposits for unpaid rent, in amounts which when added to the 80 percent payments, results in more than the Contract Rent, such excess shall be payable to HUD or as HUD may direct. (See also § 886.116.) The Owner shall not be entitled to any payment under this paragraph unless he: 
</P>
<P>(1) Immediately upon learning of the vacancy, has notified HUD of the vacancy or prospective vacancy and the reasons for the vacancy, and 
</P>
<P>(2) Has taken and continues to take all feasible actions to fill the vacancy including, but not limited to, contacting applicants on his waiting list (if any), and advising them of the availability of the unit, and 
</P>
<P>(3) Has not rejected any eligible applicant except for good cause.
</P>
<CITA TYPE="N">[42 FR 5603, Jan. 28, 1977, as amended at 49 FR 19948, May 10, 1984]


</CITA>
</DIV8>


<DIV8 N="§ 886.110" NODE="24:4.1.2.1.9.1.1.10" TYPE="SECTION">
<HEAD>§ 886.110   Contract rents.</HEAD>
<P>(a) The sum of the Contract Rents plus an Allowance for Utilities and Other Services shall not exceed the published Section 8 Fair Market Rents for Existing Housing, except that they may be exceeded by:
</P>
<P>(1) Up to 10 percent if the Field Office Director determines that special circumstances warrant such higher rents, or
</P>
<P>(2) By up to 20 percent where the Regional Administrator determines that special circumstances warrant such higher rents, and in either case, such higher rents meet the test of reasonableness in paragraph (c) of this section. 
</P>
<P>(b) In the case of any project completed not more than six years prior to the application for assistance under that part, or in the case of units converted to Section 8 which were previously assisted under Section 101 of the Housing and Urban Development Act of 1965 or Section 236(f)(2) of the National Housing Act, contract rents plus any allowance for utilities and other services may be as high as 75 percent of the published Section 8 Fair Market Rents for New Construction, which limitation may be increased: (1) By up to 10 percent if the Field Office Director determines that special circumstances warrant such higher rents, or (2) by up to 20 percent where the Regional Administrator determines that special circumstances warrant such higher rents, and in either case, such higher rents meet the test of reasonableness contained in paragraph (c) of this section. The project shall be converted using the current HUD approved rent level established pursuant to 24 CFR 207.19(e)(2)(i).
</P>
<P>(c) In any case, HUD shall determine and so certify that the Contract Rents for the project do not exceed rents which are reasonable for the location, quality, amenities, facilities, and management and maintenance services in relation to the rents paid for comparable units in the private unassisted market, nor shall the Contract Rents exceed the rents charged by the Owner to unassisted Families for comparable units. HUD shall maintain for three years all certifications and relevant documentation under this paragraph (c).
</P>
<CITA TYPE="N">[42 FR 5603, Jan. 28, 1977, as amended at 48 FR 36103, Aug. 9, 1983; 48 FR 56949, Dec. 27, 1983]


</CITA>
</DIV8>


<DIV8 N="§ 886.111" NODE="24:4.1.2.1.9.1.1.11" TYPE="SECTION">
<HEAD>§ 886.111   Term of contract.</HEAD>
<P>A Contract may be for an initial term of not more than 5 years, renewable for successive 5 year terms by agreement between HUD and the Owner: <I>Provided,</I> That the total Contract term, including renewals, shall not exceed 15 years. 


</P>
</DIV8>


<DIV8 N="§ 886.111a" NODE="24:4.1.2.1.9.1.1.12" TYPE="SECTION">
<HEAD>§ 886.111a   Notice upon contract expiration.</HEAD>
<P>(a) The Contract will provide that the owner will notify each assisted family, at least 90 days before the end of the Contract term, of any increase in the amount the family will be required to pay as rent which may occur as a result of its expiration. If the Contract is to be renewed but with a reduction in the number of units covered by it, this notice shall be given to each family who will not longer be assisted under the Contract.
</P>
<P>(b) The notice provided for in paragraph (a) of this section shall be accomplished by: (1) Sending a letter by first class mail, properly stamped and addressed, to the family at its address at the project, with a proper return address, and (2) serving a copy of the notice on any adult person answering the door at the leased dwelling unit, or if no adult responds, by placing the notice under or through the door, if possible, or else by affixing the notice to the door. Service shall not be considered to be effective until both required notices have been accomplished. The date on which the notice shall be considered to be received by the family shall be the date on which the owner mails the first class letter provided for in this paragraph, or the date on which the notice provided for in this paragraph is properly given, whichever is later.
</P>
<P>(c) The notice shall advise each affected family that, after the expiration date of the Contract, the family will be required to bear the entire cost of the rent and that the owner will be free (to the extent the project is not otherwise regulated by HUD) to alter the rent without HUD approval, but subject to any applicable requirements or restrictions under the lease or under State or local law. The notice shall also state: (1) The actual (if known) or the estimated rent which will be charged following the expiration of the Contract; (2) the difference between the rent and the Total Tenant Payment toward rent under the Contract; and (3) the date the Contract will expire. 
</P>
<P>(d) The owner shall give HUD a certification that families have been notified in accordance with this section with an example of the text of the notice attached. 
</P>
<P>(e) This section applies to all Contracts executed, renewed or amended on or after October 1, 1984.
</P>
<CITA TYPE="N">[49 FR 31285, Aug. 6, 1984]


</CITA>
</DIV8>


<DIV8 N="§ 886.112" NODE="24:4.1.2.1.9.1.1.13" TYPE="SECTION">
<HEAD>§ 886.112   Rent adjustments.</HEAD>
<P>This section applies to adjustments of the dollar amount stated in the Contract as the Maximum Unit Rent. It does not apply to adjustments in rents payable to Owners as required by HUD in connection with its mortgage insurance and/or lending functions.
</P>
<P>(a) <I>Funding of adjustments.</I> Housing Assistance Payments will be made in increased amounts commensurate with Contract Rent adjustments up to the maximum annual amount of housing assistance payments specified in the Contract pursuant to § 886.108(b).
</P>
<P>(b) <I>Annual adjustments.</I> The contract rents may be adjusted annually, or more frequently, at HUD's option, either (1) on the basis of a written request for a rent increase submitted by the owner and properly supported by substantiating evidence, or (2) by applying, on each anniversary date of the contract, the applicable Automatic Annual Adjustment Factor most recently published by HUD in the <E T="04">Federal Register</E> in accordance with 24 CFR part 888, subpart B. Published Automatic Annual Adjustment Factors will be reduced appropriately by HUD where utilities are paid directly by Families. If HUD requires that the owner submit a written request, HUD, within a reasonable time, shall approve a rental schedule that is necessary to compensate for any increase in taxes (other than income taxes) and operating and maintenance costs over which owners have no effective control, or shall deny the increase stating the reasons therefor. Increases in taxes and maintenance and operating costs shall be measured against levels of such expenses in comparable assisted and unassisted housing in the area to ensure that adjustments in the Contract Rents shall not result in material differences between the rents charged for assisted and comparable unassisted units. Contract Rents may be adjusted upward or downward as may be appropriate; however, in no case shall the adjusted rents be less than the contract rents on the effective date of the contract.
</P>
<P>(c) <I>Special additional adjustments.</I> Special additional adjustments shall be granted, when approved by HUD, to reflect increases in the actual and necessary expenses of owning and maintaining the Contract units which have resulted from substantial general increases in real property taxes, utility rates or similar costs (i.e., assessment, and utilities not covered by regulated rates), but only if and to the extent that the Owner clearly demonstrates that such general increases have caused increases in the Owner's operating costs which are not adequately compensated for by automatic annual adjustments. The Owner shall submit to HUD financial statements which clearly support the increase. 
</P>
<P>(d) <I>Overall limitation.</I> Notwithstanding any other provisions of the subpart, adjustments as provided in this section shall not result in material differences between the rents charged for assisted and comparable unassisted units, as determined by HUD. 
</P>
<P>(e) <I>Incorporation of rent adjustments.</I> Any adjustment in Maximum Unit Rents shall be incorporated into the Contract by a dated addendum to the Contract establishing the effective date of the adjustment.
</P>
<CITA TYPE="N">[42 FR 5603, Jan. 28, 1977, as amended at 45 FR 59149, Sept. 8, 1980; 47 FR 24700, June 8, 1982]


</CITA>
</DIV8>


<DIV8 N="§ 886.113" NODE="24:4.1.2.1.9.1.1.14" TYPE="SECTION">
<HEAD>§ 886.113   Physical condition standard; physical inspection requirements.</HEAD>
<P>(a) <I>General.</I> Housing used in this program must be maintained and inspected in accordance with the requirements in 24 CFR part 5, subpart G.


</P>
<P>(b)-(m) [Reserved] 
</P>
<P>(n) <I>Congregate housing.</I> In addition to the foregoing standards, the following standards apply to congregate housing:
</P>
<P>(1) The unit shall contain a refrigerator of appropriate size. 
</P>
<P>(2) The central dining facility (and kitchen facility, if any) shall contain suitable space and equipment to store, prepare and serve food in a sanitary manner, and there shall be adequate facilities and services for the sanitary disposal of food wastes and refuse, including facilities for temporary storage where necessary (e.g., garbage cans). 
</P>
<CITA TYPE="N">[42 FR 5603, Jan. 28, 1977, as amended at 52 FR 1895, Jan. 15, 1987; 52 FR 9828, Mar. 27, 1987; 53 FR 20802, June 6, 1988; 57 FR 33852, July 30, 1992; 63 FR 46579, Sept. 1, 1998; 64 FR 50227, Sept. 15, 1999; 88 FR 30500, May 11, 2023]




</CITA>
</DIV8>


<DIV8 N="§ 886.114" NODE="24:4.1.2.1.9.1.1.15" TYPE="SECTION">
<HEAD>§ 886.114   Equal opportunity requirements.</HEAD>
<P>Participation in the program authorized in this subpart requires compliance with (a) Title VI of the Civil Rights Act of 1964, Title VIII of the Civil Rights Act of 1968, Executive Orders 11063 and 11246, and section 3 of the Housing and Urban Development Act of 1968; and (b) all rules, regulations, and requirements issued pursuant thereto. 


</P>
</DIV8>


<DIV8 N="§ 886.115" NODE="24:4.1.2.1.9.1.1.16" TYPE="SECTION">
<HEAD>§ 886.115   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 886.116" NODE="24:4.1.2.1.9.1.1.17" TYPE="SECTION">
<HEAD>§ 886.116   Security and utility deposits.</HEAD>
<P>(a) An Owner may require Families to pay a security deposit in an amount up to, but not more than, one month's Gross Family Contribution. If a Family vacates its unit, the Owner, subject to State and local laws, may utilize the deposit as reimbursement for any unpaid rent or other amount owed under the Lease. If the Family has provided a security deposit and it is insufficient for such reimbursement, the Owner may claim reimbursement from HUD, not to exceed an amount equal to the remainder of one month's Contract Rent. Any reimbursement under this section shall be applied first toward any unpaid rent. If a Family vacates the unit owing no rent or other amount under the Lease or if such amount is less than the amount of the security deposit, the Owner shall refund the full amount or the unused balance, as the case may be, to the Family. 
</P>
<P>(b) In those jurisdictions where interest is payable by the Owner on security deposits, the refunded amount shall include the amount of interest payable. All security deposit funds shall be deposited by the Owner in a segregated bank account, and the balance of this account, at all times, shall be equal to the total amount collected from tenants then in occupancy, plus any accrued interest. The Owner shall comply with all State and local laws regarding interest payments on security deposits. 
</P>
<P>(c) Families shall be expected to obtain the funds to pay security and utility deposits, if required, from their own resources and/or other private or public sources. 


</P>
</DIV8>


<DIV8 N="§ 886.117" NODE="24:4.1.2.1.9.1.1.18" TYPE="SECTION">
<HEAD>§ 886.117   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 886.118" NODE="24:4.1.2.1.9.1.1.19" TYPE="SECTION">
<HEAD>§ 886.118   Amount of housing assistance payments in projects receiving other HUD assistance.</HEAD>
<P>(a) For any Section 221(d)(3) BMIR, Section 236, or Section 202 project, the Housing Assistance Payment shall be the amount by which the rent payable by the eligible Family under Section 8 is less than the subsidized rent (which subsidy shall not be reduced by reason of any Section 8 assistance). 
</P>
<P>(b) In no event may any tenant benefit from more than one of the following subsidies: Rent Supplements, Section 236 deep subsidies, Section 23 leasing assistance, and Section 8 housing assistance.
</P>
<CITA TYPE="N">[42 FR 5603, Jan. 28, 1977, as amended at 49 FR 19948, May 10, 1984]


</CITA>
</DIV8>


<DIV8 N="§ 886.119" NODE="24:4.1.2.1.9.1.1.20" TYPE="SECTION">
<HEAD>§ 886.119   Responsibilities of the owner.</HEAD>
<P>(a) The Owner shall be responsible for management and maintenance of the project in conformance with requirements of the Regulatory Agreement. These responsibilities shall include but not be limited to: 
</P>
<P>(1) Payment for utilities and services (unless paid directly by the Family), insurance and taxes; 
</P>
<P>(2) Performance of all ordinary and extraordinary maintenance; 
</P>
<P>(3) Performance of all management functions, including the taking of applications; determining eligibility of applicants in accordance with part 5 of this title; selection of families, including verification of income, in accordance with part 5 of this title, obtaining and verifying Social Security Numbers submitted by applicants (as provided by part 5, subpart B, of this title), obtaining signed consent forms from applicants for the obtaining of wage and claim information from State Wage Information Collection Agencies (as provided in part 5, subpart B, of this title), and other pertinent requirements; and determination of the amount of tenant rent in accordance with HUD established schedules and criteria.
</P>
<P>(4) Collection of Tenant Rents; 
</P>
<P>(5) Termination of tenancies, including evictions;
</P>
<P>(6) Preparation and furnishing of information required under the Contract; 
</P>
<P>(7) Reexamination of family income and composition, redetermination, as appropriate, of the amount of Tenant Rent and the amount of housing assistance payment in accordance with part 5 of this title; collection of rent; obtaining and verifying participant Social Security Numbers, as provided by part 5, subpart B, of this title; and obtaining signed consent forms from participants for the obtaining of wage and claim information from State Wage Information Collection Agencies, as provided by part 5, subpart B, of this title.
</P>
<P>(8) Redeterminations of amount of Tenant Rent and amount of Housing Assistance Payment in accordance with part 5 of this title as a result of an adjustment by HUD of any applicable Utility Allowance; and 
</P>
<P>(9) Compliance with equal opportunity requirements. 
</P>
<P>(b) In the event of a financial default under the project mortgage, HUD shall have the right to make subsequent Housing Assistance Payments to the mortgagee until such time as the default is cured, or, at the option of the mortgagee and subject to HUD approval, until some other agreed-upon time. 
</P>
<P>(c) Subject to HUD approval, any Owner may contract with any private or public entity to perform for a fee the services required by paragraph (a) of this section: <I>Provided,</I> That such contract shall not shift any of the Owner's responsibilities or obligations.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0204)
</APPRO>
<CITA TYPE="N">[42 FR 5603, Jan. 28, 1977, as amended at 49 FR 19948, May 10, 1984; 51 FR 11227, Apr. 1, 1986; 53 FR 847, Jan. 13, 1988; 53 FR 1165, Jan. 15, 1988; 53 FR 3368, Feb. 5, 1988; 53 FR 6601, Mar. 2, 1988; 54 FR 39708, Sept. 27, 1989; 56 FR 7542, Feb. 22, 1991; 60 FR 14846, Mar. 20, 1995; 61 FR 9047, Mar. 6, 1996; 61 FR 11119, Mar. 18, 1996; 65 FR 16723, Mar. 29, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 886.120" NODE="24:4.1.2.1.9.1.1.21" TYPE="SECTION">
<HEAD>§ 886.120   Responsibility for contract administration.</HEAD>
<P>(a) HUD is responsible for administration of the Contract. HUD may contract with another entity for the performance of some or all of its Contract administration functions. 
</P>
<P>(b) The Contract shall contain a provision to the effect (1) that if HUD determines that the Owner is not in compliance under the Contract, HUD shall notify the Owner of the actions required to be taken to restore compliance and of the remedies to be applied by HUD including abatement of Housing Assistance Payments and recovery of overpayments, where appropriate; and (2) that if he fails to comply, HUD has the right to terminate the Contract or to take other corrective action. A default under the Regulatory Agreement shall be treated as non-compliance under the Contract. 


</P>
</DIV8>


<DIV8 N="§ 886.121" NODE="24:4.1.2.1.9.1.1.22" TYPE="SECTION">
<HEAD>§ 886.121   Marketing.</HEAD>
<P>(a) Marketing of units and selection of Families by the Owner shall be in accordance with the Owner's HUD-approved Affirmative Fair Housing Marketing Plan, if required, and with all regulations relating to fair housing advertising including use of the equal opportunity logotype, statement, and slogan in all advertising. Projects shall be managed and operated without regard to race, color, creed, religion, sex, or national origin. 
</P>
<P>(b) The Owner shall comply with the applicable provisions of the Contract, this subpart A, and the procedures of part 5 of this title in taking applications, selecting families, and all related determinations. 
</P>
<P>(c) For the informal hearing provisions related to denial of assistance based upon failure to establish citizenship or eligible immigration status, see part 5, subpart E, of this title for provisions concerning certain assistance for mixed families (families whose members include those with eligible immigration status, and those without eligible immigration status) in lieu of denial of assistance. 
</P>
<CITA TYPE="N">[42 FR 5603, Jan. 28, 1977, as amended at 53 FR 1166, Jan. 15, 1988; 53 FR 6601, Mar. 2, 1988; 60 FR 14846, Mar. 20, 1995; 65 FR 16723, Mar. 29, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 886.122" NODE="24:4.1.2.1.9.1.1.23" TYPE="SECTION">
<HEAD>§ 886.122   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 886.123" NODE="24:4.1.2.1.9.1.1.24" TYPE="SECTION">
<HEAD>§ 886.123   Maintenance, operation, and inspections.</HEAD>
<P>(a) <I>Maintenance and operation.</I> The Owner shall maintain and operate the project so as to provide housing that is compliant with 24 CFR part 5, subpart G, and the Owner shall provide all the services, maintenance, and utilities which the Owner agrees to provide under the Contract, subject to abatement of housing assistance payments or other applicable remedies if the Owner fails to meet these obligations.
</P>
<P>(b) <I>Inspection prior to occupancy.</I> Prior to occupancy of any unit by a Family, the Owner and the Family shall inspect the unit. On forms prescribed by HUD, the Owner and Family shall certify that they have inspected the unit, and the owner shall certify that the unit is compliant with 24 CFR part 5, subpart G, and with the criteria provided in the prescribed forms. Copies of these reports shall be kept on file by the Owner for at least three years.
</P>
<P>(c) <I>Periodic inspections.</I> HUD will inspect or cause to be inspected the contract units in accordance with the requirements in 24 CFR part 5, subpart G, and at such other times as may be necessary to assure that the owner is meeting contractual obligations.
</P>
<P>(d) <I>Units not free of health and safety hazards.</I> If HUD notifies the Owner that the Owner has failed to maintain a unit that is compliant with the requirements in 24 CFR part 5, subpart G, and the Owner fails to take corrective action within the time prescribed by notice, HUD may exercise any of its rights or remedies under the Contract, including abatement of housing assistance payments, even if the Family continues to occupy the unit.


</P>
<CITA TYPE="N">[88 FR 30500, May 11, 2023]










</CITA>
</DIV8>


<DIV8 N="§ 886.124" NODE="24:4.1.2.1.9.1.1.25" TYPE="SECTION">
<HEAD>§ 886.124   Reexamination of family income and composition.</HEAD>
<P>(a) <I>Regular reexaminations.</I> The owner must reexamine the income and composition of all families at least once each year. Upon verification of the information, the owner must make appropriate adjustments in the Total Tenant Payment in accordance with part 5 of this title and determine whether the family's unit size is still appropriate. The owner must adjust Tenant Rent and the Housing Assistance Payment to reflect any change in Total Tenant Payment and carry out any unit transfer required by HUD. At the time of the annual reexamination of family income and composition, the owner must require the family to disclose and verify Social Security Numbers. For requirements regarding the signing and submitting of consent forms by families for the obtaining of wage and claim information from State Wage Information Collection Agencies, see part 5, subpart B, of this title. At the first regular reexamination after June 19, 1995, the owner shall follow the requirements of part 5, subpart E, of this title concerning obtaining and processing evidence of citizenship or eligible immigration status of all family members. Thereafter, at each regular reexamination, the owner shall follow the requirements of part 5, subpart E, of this title concerning verification of the immigration status of any new family member. 
</P>
<P>(b) <I>Interim reexaminations.</I> The family must comply with provisions in its lease regarding interim reporting of changes in income. If the owner receives information concerning a change in the family's income or other circumstances between regularly scheduled reexaminations, the owner must consult with the family and make any adjustments determined to be appropriate. Any change in the family's income or other circumstances that results in an adjustment in the Total Tenant Payment, Tenant Rent and Housing Assistance Payment must be verified. See part 5, subpart B, of this title for the requirements for the disclosure and verification of Social Security Numbers at interim reexaminations involving new family members. For requirements regarding the signing and submitting of consent forms by families for the obtaining of wage and claim information from State Wage Information Collection Agencies, see part 5, subpart B, of this title. At any interim reexamination after June 19, 1995, when there is a new family member, the owner shall follow the requirements of part 5, subpart E, of this title concerning obtaining and processing evidence of citizenship or eligible immigration status of the new family member. 
</P>
<P>(c) <I>Continuation of housing assistance payments.</I> A family's eligibility for housing assistance payments will continue until the Total Tenant Payment equals the Gross Rent. The termination of eligibility will not affect the family's other rights under its lease, nor will such termination preclude the resumption of payments as a result of later changes in income, rents, or other relevant circumstances during the term of the Contract. However, eligibility also may be terminated in accordance with program requirements, for such reasons as failure to submit requested verification information, including failure to meet the disclosure and verification requirements for Social Security Numbers, as provided by part 5, subpart B, of this title, or failure to sign and submit consent forms for the obtaining of wage and claim information from State Wage Information Collection Agencies, as provided by part 5, subpart B, of this title. For provisions requiring termination of assistance for failure to establish citizenship or eligible immigration status, see part 5, subpart E, of this title for provisions concerning certain assistance for mixed families (families whose members include those with eligible immigration status, and those without eligible immigration status) in lieu of termination of assistance, and for provisions concerning deferral of termination of assistance.
</P>
<P>(d) <I>Streamlined income determination.</I> An owner may elect to follow the provisions of 24 CFR 5.657(d).
</P>
<CITA TYPE="N">[56 FR 7542, Feb. 22, 1991, as amended at 60 FR 14846, Mar. 20, 1995; 61 FR 11119, Mar. 18, 1996; 65 FR 16723, Mar. 29, 2000; 81 FR 12371, Mar. 8, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 886.125" NODE="24:4.1.2.1.9.1.1.26" TYPE="SECTION">
<HEAD>§ 886.125   Overcrowded and underoccupied units.</HEAD>
<P>If HUD determines that a contract unit assisted under this part is not Decent, Safe, and Sanitary by reason of increase in Family size or that a Contract unit is larger than appropriate for the size of the Family in occupancy, housing assistance payments with respect to such unit will not be abated, unless the Owner fails to offer the Family a suitable unit as soon as one becomes vacant and ready for occupancy. The Owner may receive housing assistance payments for the vacated unit if he complies with the requirements of § 886.109. 


</P>
</DIV8>


<DIV8 N="§ 886.126" NODE="24:4.1.2.1.9.1.1.27" TYPE="SECTION">
<HEAD>§ 886.126   Adjustment of utility allowances.</HEAD>
<P>When the owner requests HUD approval of adjustment in Contract Rents under § 886.112, an analysis of the project's Utility Allowances must be included. Such data as changes in utility rates and other facts affecting utility consumption should be provided as part of this analysis to permit appropriate adjustments in the Utility Allowances. In addition, when approval of a utility rate change would result in a cumulative increase of 10 percent or more in the most recently approved Utility Allowances, the owner must advise the Secretary and request approval of new Utility Allowances.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control numbers 2502-0352 and 2502-0354)
</APPRO>
<CITA TYPE="N">[51 FR 21863, June 16, 1986] 


</CITA>
</DIV8>


<DIV8 N="§ 886.127" NODE="24:4.1.2.1.9.1.1.28" TYPE="SECTION">
<HEAD>§ 886.127   Lease requirements.</HEAD>
<XREF ID="20260226" REFID="26">Link to an amendment published at 91 FR 9453, Feb. 26, 2026.</XREF>
<XREF ID="20260313" REFID="2d">Link to a delay of the above  amendment published at 91 FR 12301, Mar. 13, 2026.</XREF>
<P>(a) <I>Term of lease.</I> (1) The term of a lease, including a new lease or a lease amendment, executed by the owner and the family must be for at least one year, or the remaining term of the contract if the remaining term of the contract is less than one year.
</P>
<P>(2) During the first year of the lease term, the owner may not terminate the tenancy for “other good cause” under 24 CFR 247.3(a)(3), unless the termination is based on family malfeasance or nonfeasance. For example, during the first year of the lease term, the owner may not terminate the tenancy for “other good cause” based on the failure by the family to accept the offer of a new lease.
</P>
<P>(3) The lease may contain a provision permitting the family to terminate the lease on 30 days advance written notice to the owner. In the case of a lease term for more than one year, the lease must contain this provision.
</P>
<P>(b) <I>Required and prohibited provisions.</I> The lease between the owner and the family must comply with HUD regulations and requirements, and must be in the form required by HUD. The lease may not contain any of the following types of prohibited provisions:
</P>
<P>(1) <I>Admission of guilt.</I> Agreement by the family (i) to be sued, (ii) to admit guilt, or (iii) to a judgment in favor of the owner, in a court proceeding against the family in connection with the lease.
</P>
<P>(2) <I>Treatment of family property.</I> Agreement by the family that the owner may take or hold family property, or may sell family property, without notice to the family and a court decision on the rights of the parties.
</P>
<P>(3) <I>Excusing owner from responsibility.</I> Agreement by the family not to hold the owner or the owner's agents responsible for any action or failure to act, whether intentional or negligent.
</P>
<P>(4) <I>Waiver of notice.</I> Agreement by the family that the owner does not need to give notice of a court proceeding against the family in connection with the lease, or does not need to give any notice required by HUD.
</P>
<P>(5) <I>Waiver of court proceeding for eviction.</I> Agreement by the family that the owner may evict the family (i) without instituting a civil court proceeding in which the family has the opportunity to present a defense, or (ii) before a decision by the court on the rights of the parties.
</P>
<P>(6) <I>Waiver of jury trial.</I> Agreement by the family to waive any right to a trial by jury.
</P>
<P>(7) <I>Waiver of appeal.</I> Agreement by the family to waive the right to appeal, or to otherwise challenge in court, a court decision in connection with the lease.
</P>
<P>(8) <I>Family chargeable with legal costs regardless of outcome.</I> Agreement by the family to pay lawyer's fees or other legal costs of the owner, even if the family wins in a court proceeding by the owner against the family. (However, the family may have to pay these fees and costs if the family loses.)
</P>
<P>(c) <I>Notification for nonpayment of rent.</I> The lease must contain a provision or addendum that tenants will receive notification at least 30 days before a formal judicial eviction is filed.
</P>
<CITA TYPE="N">[53 FR 3368, Feb. 5, 1988, as amended at 89 FR 101303, Dec. 13, 2024]






</CITA>
</DIV8>


<DIV8 N="§ 886.128" NODE="24:4.1.2.1.9.1.1.29" TYPE="SECTION">
<HEAD>§ 886.128   Termination of tenancy.</HEAD>
<P>Part 247 of this title (24 CFR part 247) applies to the termination of tenancy and eviction of a family assisted under this subpart. For cases involving termination of tenancy because of a failure to establish citizenship or eligible immigration status, the procedures of 24 CFR parts 247 and 5 shall apply. The provisions of 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking), apply to this section. The provisions of 24 CFR part 5, subpart E, of this title concerning certain assistance for mixed families (families whose members include those with eligible immigration status, and those without eligible immigration status) in lieu of termination of assistance, and concerning deferral of termination of assistance, also shall apply.
</P>
<CITA TYPE="N">[81 FR 80813, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 886.129" NODE="24:4.1.2.1.9.1.1.30" TYPE="SECTION">
<HEAD>§ 886.129   Leasing to eligible families.</HEAD>
<P>(a) <I>Availability of units for occupancy by Eligible Families.</I> During the term of the Contract, an owner shall make available for occupancy by eligible families the total number of units for which assistance is committed under the Contract. For purposes of this section, making units available for occupancy by eligible families means that the owner: (1) Is conducting marketing in accordance with § 886.121; (2) has leased or is making good faith efforts to lease the units to eligible and otherwise acceptable families, including taking all feasible actions to fill vacancies by renting to such families; and (3) has not rejected any such applicant family except for reasons acceptable to HUD. If the owner is temporarily unable to lease all units for which assistance is committed under the Contract to eligible families, one or more units may be leased to ineligible families with the prior approval of HUD. Failure on the part of the owner to comply with these requirements is a violation of the Contract and grounds for all available legal remedies, including specific performance of the Contract, suspension or debarment from HUD programs, and reduction of the number of units under the Contract as set forth in paragraph (b) of this section.
</P>
<P>(b) <I>Reduction of number of units covered by Contract.</I> HUD may reduce the number of units covered by the Contract to the number of units available for occupancy by eligible families if:
</P>
<P>(1) The owner fails to comply with the requirements of paragraph (a) of this section; or
</P>
<P>(2) Notwithstanding any prior approval by HUD to lease such units to ineligible families, HUD determines that the inability to lease units to eligible families is not a temporary problem.
</P>
<P>(c) <I>Restoration.</I> HUD will agree to an amendment of the Contract to provide for subsequent restoration of any reduction made pursuant to paragraph (b) of this section if:
</P>
<P>(1) HUD determines that the restoration is justified by demand;
</P>
<P>(2) The owner otherwise has a record of compliance with his or her obligations under the Contract; and
</P>
<P>(3) Contract and budget authority are available.
</P>
<P>(d) <I>Applicability.</I> Paragraphs (a) and (b) of this section apply to Contracts executed on or after October 3, 1984.
</P>
<P>(e) <I>Termination of assistance for failure to establish citizenship or eligible immigration status.</I> If an owner subject to paragraphs (a) and (b) of this section is required to terminate housing assistance payments for the family in accordance with part 5, subpart E, of this title because the owner determines that the entire family does not have U.S. citizenship or eligible immigration status, the owner may allow continued occupancy of the unit by the family without Section 8 assistance following the termination of assistance, or if the family constitutes a mixed family, as defined in part 5, subpart E, of this title, the owner shall comply with the provisions of part 5, subpart E, of this title concerning assistance to mixed families, and deferral of termination of assistance.
</P>
<CITA TYPE="N">[49 FR 31399, Aug. 7, 1984, as amended at 53 FR 847, Jan. 13, 1988; 53 FR 6601, Mar. 2, 1988; 60 FR 14846, Mar. 20, 1995; 65 FR 16724, Mar. 29, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 886.130" NODE="24:4.1.2.1.9.1.1.31" TYPE="SECTION">
<HEAD>§ 886.130   Management and occupancy reviews.</HEAD>
<P>(a) The contract administrator will conduct management and occupancy reviews to determine whether the owner is in compliance with the Contract. Such reviews will be conducted in accordance with a schedule set out by the Secretary and published in the <E T="04">Federal Register</E><I>,</I> following notice and the opportunity to comment. Where a change in ownership or management occurs, a management and occupancy review must be conducted within six months.
</P>
<P>(b) HUD or the Contract Administrator may inspect project operations and units at any time.
</P>
<P>(c) Equal Opportunity reviews may be conducted by HUD at any time.
</P>
<CITA TYPE="N">[87 FR 37997, June 27, 2022]


</CITA>
</DIV8>


<DIV8 N="§ 886.131" NODE="24:4.1.2.1.9.1.1.32" TYPE="SECTION">
<HEAD>§ 886.131   Audit.</HEAD>
<P>Where a non-Federal entity (as defined in 2 CFR 200.69) is the eligible owner of a project, or is a contract administrator under § 886.120, receiving financial assistance under this part, the audit requirements in 2 CFR part 200, subpart F, shall apply.
</P>
<CITA TYPE="N">[80 FR 75941, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 886.132" NODE="24:4.1.2.1.9.1.1.33" TYPE="SECTION">
<HEAD>§ 886.132   Tenant selection.</HEAD>
<P>Subpart F of 24 CFR part 5 governs selection of tenants and occupancy requirements applicable under this subpart A of part 886. Subpart L of 24 CFR part 5 (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking) applies to this section.
</P>
<CITA TYPE="N">[81 FR 80814, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 886.138" NODE="24:4.1.2.1.9.1.1.34" TYPE="SECTION">
<HEAD>§ 886.138   Displacement, relocation, and acquisition.</HEAD>
<P>(a) <I>Minimizing displacement.</I> Consistent with the other goals and objectives of this part, owners shall assure that they have taken all reasonable steps to minimize the displacement of persons (families, individuals, businesses, nonprofit organization, and farms) as a result of a project assisted under this part.
</P>
<P>(b) <I>Temporary relocation.</I> The following policies cover residential tenants who will not be required to move permanently but who must relocate temporarily for the project. Such tenants must be provided;
</P>
<P>(1) Reimbursement for all reasonable out-of-pocket expenses incurred in connection with the temporary relocation, including the cost of moving to and from the temporary housing and any increase in monthly rent/utility costs; and 
</P>
<P>(2) Appropriate advisory services, including reasonable advance written notice of:
</P>
<P>(i) The date and approximate duration of the temporary relocation;
</P>
<P>(ii) The location of the suitable, decent, safe, and sanitary dwelling to be made available for the temporary period;
</P>
<P>(iii) The terms and conditions under which the tenant may lease and occupy a suitable, decent, safe, and sanitary dwelling in the building/complex following completion of the rehabilitation; and
</P>
<P>(iv) The provisions of paragraph (b)(1) of this section.
</P>
<P>(c) <I>Relocation assistance for displaced persons.</I> A “displaced person” (as defined in paragraph (g) of this section) must be provided relocation assistance at the levels described in, and in accordance with the requirements of, the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA) (42 U.S.C. 4601-4655) and implementing regulations at 49 CFR part 24. A “displaced person” shall be advised of his or her rights under the Fair Housing Act (42 U.S.C. 3601-19), and, if the representative comparable replacement dwelling used to establish the amount of the replacement housing payment to be provided to a minority person is located in an area of minority concentration, such person also shall be given, if possible, referrals to comparable and suitable, decent, safe, and sanitary replacement dwellings not located in such areas.
</P>
<P>(d) <I>Real property acquisition requirements.</I> The acquisition of real property for a project is subject to the URA and the requirements described in 49 CFR part 24, subpart B.
</P>
<P>(e) <I>Appeals.</I> A person who disagrees with the Owner's determination concerning whether the person qualifies as a “displaced person,” or the amount of relocation assistance for which the person is found to be eligible, may file a written appeal of that determination with the owner. A low-income person who is dissatisfied with the owner's determination on such appeal may submit a written request for review of that determination to the HUD Field Office.
</P>
<P>(f) <I>Responsibility of owner.</I> (1) The owner shall certify (i.e., provide assurance of compliance, as required by 49 CFR part 24) that he or she will comply with the URA, the regulations at 49 CFR part 24, and the requirements of this section. The owner is responsible for such compliance notwithstanding and third party's contractual obligation to the owner to comply with these provisions.
</P>
<P>(2) The cost of providing required relocation assistance is an eligible project cost to the same extent and in the same manner as other project costs. Such costs also may be paid for with funds available from other sources.
</P>
<P>(3) The owner shall maintain records in sufficient detail to demonstrate compliance with the provisions of this section. The owner shall maintain data on the race, ethnic, gender, and handicap status of displaced persons.
</P>
<P>(g) <I>Definition of displaced person.</I> (1) for purposes of this section, the term <I>displaced person</I> means a person (family, individual, business, nonprofit organization, or farm) that moves from real property, or moves personal property from real property, permanently, as a direct result of acquisition, rehabilitation, or demolition for a project assisted under this part. This includes any permanent, involuntary move for an assisted project, including any permanent move from the real property that is made:
</P>
<P>(i) After notice by the owner to move permanently from the property, if the move occurs on or after the date of the submission of the application to HUD;
</P>
<P>(ii) Before submission of the application to HUD, if HUD determines that the displacement resulted directly from acquisition, rehabilitation, or demolition for the assisted project; or
</P>
<P>(iii) By a tenant-occupant of a dwelling unit, if any one of the following three situations occurs;
</P>
<P>(A) The tenant moves after execution of the Housing Assistance Payments Contract, and the move occurs before the tenant is provided written notice offering him or her the opportunity to lease and occupy a suitable, decent, safe, and sanitary dwelling in the same building/complex, under reasonable terms and conditions, upon completion of the project. Such reasonable terms and conditions include a monthly rent and estimated average monthly utility costs that do not exceed the greater of:
</P>
<P>(<I>1</I>) The tenant's monthly rent before execution of the Housing Assistance Payments Contract and estimated average monthly utility costs; or
</P>
<P>(<I>2</I>) The total tenant payment, as determined under part 5 of this title, if the tenant is low-income, or 30 percent of gross household income, if the tenant is not low-income;
</P>
<P>(B) The tenant is required to relocate temporarily, does not return to the building/complex, and either:
</P>
<P>(<I>1</I>) The tenant is not offered payment for all reasonable out-of-pocket expenses incurred in connection with the temporary relocation, or
</P>
<P>(<I>2</I>) Other conditions of the temporary relocation are not reasonable; or
</P>
<P>(C) The tenant is required to move to another dwelling unit in the same building/complex but is not offered reimbursement for all reasonable out-of-pocket expenses incurred in connection with the move, or other conditions of the move are not reasonable.
</P>
<P>(2) Notwithstanding the provisions of paragraph (g)(1) of this section, a person does not qualify as a “displaced person” (and is not eligible for relocation assistance under the URA or this section), if:
</P>
<P>(i) The person has been evicted for serious or repeated violation of the terms and conditions of the lease or occupancy agreement, violation of applicable Federal, State or local law, or other good cause, and HUD determines that the eviction was not undertaken for the purpose of evading the obligation to provide relocation assistance;
</P>
<P>(ii) The person moved into the property after the submission of the application and, before signing a lease and commencing occupancy, received written notice of the project, its possible impact on the person (e.g., the person may be displaced, temporarily relocated, or suffer a rent increase) and the fact that he or she would not qualify as a “displaced person” (or for assistance under this section) as a result of the project;
</P>
<P>(iii) The person is ineligible under 49 CFR 24.2(g)(2); or
</P>
<P>(iv) HUD determines that the person was not displaced as a direct result of acquisition, rehabilitation, or demolition for the project.
</P>
<P>(3) The owner may ask HUD, at any time, to determine whether a displacement is or would be covered by this section.
</P>
<P>(h) <I>Definition of initiation of negotiations.</I> For purposes of determining the formula for computing the replacement housing assistance to be provided to a residential tenant displaced as a direct result of private-owner rehabilitation, demolition or acquisition of the real property, the term “initiation of negotiations” means the owner's execution of the Housing Assistance Payments Contract.
</P>
<APPRO TYPE="N">(Approved by Office of Management and Budget under OMB Control Number 2506-0121)
</APPRO>
<CITA TYPE="N">[58 FR 43721, Aug. 17, 1993. Redesignated at 59 FR 36643, July 18, 1994, as amended at 65 FR 16724, Mar. 29, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 886.139" NODE="24:4.1.2.1.9.1.1.35" TYPE="SECTION">
<HEAD>§ 886.139   Emergency transfers for victims of domestic violence, dating violence, sexual assault, and stalking.</HEAD>
<P>(a) Covered housing providers must develop and implement an emergency transfer plan that meets the requirements in 24 CFR 5.2005(e).
</P>
<P>(b) In order to facilitate emergency transfers for victims of domestic violence, dating violence, sexual assault, and stalking, covered housing providers have discretion to adopt new, and modify any existing, admission preferences or transfer waitlist priorities.
</P>
<P>(c) In addition to following requirements in 24 CFR 5.2005(e), when a safe unit is not immediately available for a victim of domestic violence, dating violence, sexual assault, or stalking who qualifies for an emergency transfer, covered housing providers must: (1) Review the covered housing provider's existing inventory of units and determine when the next vacant unit may be available; and
</P>
<P>(2) Provide a listing of nearby HUD subsidized rental properties, with or without preference for persons of domestic violence, dating violence, sexual assault, or stalking, and contact information for the local HUD field office.
</P>
<P>(d) Each year, covered housing providers must submit to HUD data on all emergency transfers requested under 24 CFR 5.2005(e), including data on the outcomes of such requests.
</P>
<CITA TYPE="N">[81 FR 80814, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 886.140" NODE="24:4.1.2.1.9.1.1.36" TYPE="SECTION">
<HEAD>§ 886.140   Broadband infrastructure.</HEAD>
<P>Any new construction or substantial rehabilitation, as substantial rehabilitation is defined by 24 CFR 5.100, of a building with more than 4 rental units and that is subject to a Housing Assistance Payments contract executed or renewed after January 19, 2017 must include installation of broadband infrastructure, as this term is also defined in 24 CFR 5.100, except where the owner determines and documents the determination that:
</P>
<P>(a) The location of the new construction or substantial rehabilitation makes installation of broadband infrastructure infeasible;
</P>
<P>(b) The cost of installing broadband infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden; or
</P>
<P>(c) The structure of the housing to be substantially rehabilitated makes installation of broadband infrastructure infeasible.
</P>
<CITA TYPE="N">[81 FR 92638, Dec. 20, 2016]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.2.1.9.2" TYPE="SUBPART">
<HEAD>Subpart B [Reserved]</HEAD>

</DIV6>


<DIV6 N="C" NODE="24:4.1.2.1.9.3" TYPE="SUBPART">
<HEAD>Subpart C—Section 8 Housing Assistance Program for the Disposition of HUD-Owned Projects</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>44 FR 70365, Dec. 6, 1979, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV8 N="§ 886.301" NODE="24:4.1.2.1.9.3.1.1" TYPE="SECTION">
<HEAD>§ 886.301   Purpose.</HEAD>
<P>The purpose of this subpart is to provide for the use of Section 8 housing assistance in connection with the sale of HUD-owned multifamily rental housing projects and the foreclosure of HUD-held mortgages on rental housing projects (as defined in 24 CFR 290.5).
</P>
<CITA TYPE="N">[58 FR 43722, Aug. 17, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 886.302" NODE="24:4.1.2.1.9.3.1.2" TYPE="SECTION">
<HEAD>§ 886.302   Definitions.</HEAD>
<P>The terms <I>Fair Market Rent (FMR), HUD,</I> and <I>Public Housing Agency (PHA)</I> are defined in 24 CFR part 5.
</P>
<P><I>Act.</I> The United States Housing Act of 1937.
</P>
<P><I>Agreement.</I> An Agreement to Enter into a Housing Assistance Payments Contract. See § 886.332.
</P>
<P><I>Annual income.</I> As defined in part 5 of this title. 
</P>
<P><I>Contract.</I> (See Section 8 contract.)
</P>
<P><I>Contract rent.</I> The rent payable to the owner under the contract, including the portion of the rent payable by the family. In the case of a cooperative, the term “contract rent” means charges under the occupancy agreements between the members and the cooperative.
</P>
<P><I>Covered housing provider.</I> For the Section 8 Housing Assistance Program for the Disposition of HUD-Owned Projects, under subpart C of this part, “covered housing provider,” as such term is used in HUD's regulations at 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking), refers to the owner.
</P>
<P><I>Decent, safe, and sanitary.</I> Housing is decent, safe, and sanitary if it meets the physical condition requirements in 24 CFR part 5, subpart G.
</P>
<P><I>Eligible project or project.</I> A multifamily housing project (see 24 CFR part 290):
</P>
<P>(1) For which the disposition in accordance with the provisions of 24 CFR part 290 involves sale with Section 8 housing assistance to enable the project to be used, in whole or in part, to provide housing for lower income families; and
</P>
<P>(2) The units of which are decent, safe, and sanitary.
</P>
<P><I>Family.</I> As defined in part 5 of this title. 
</P>
<P><I>HCD Act.</I> The Housing and Community Development Act of 1974.
</P>
<P><I>Housing Assistance Payment.</I> The payment made by the contract administrator to the Owner of an assisted unit as provided in the Contract. Where the unit is leased to an eligible Family, the payment is the difference between the Contract Rent and the Tenant Rent. A Housing Assistance Payment may be made to the Owner when a unit is vacant, in accordance with the terms of the Contract. An additional Housing Assistance Payment is made when the Utility Allowance is greater than the Total Tenant Payment.
</P>
<P><I>Lease.</I> A written agreement between the owner and a family for leasing of decent, safe and sanitary dwelling unit to the family. 
</P>
<P><I>Low-income family.</I> As defined in part 5 of this title. 
</P>
<P><I>Owner.</I> The purchaser, including a cooperative entity or an agency of the Federal Government, under this subpart, of a HUD-owned project; or the purchaser, including a cooperative entity or an agency of the Federal Government, through a foreclosure sale of a project that was subject to a HUD-held mortgage.
</P>
<P><I>Project account.</I> The account established and maintained in accordance with § 886.308.
</P>
<P><I>Rehabilitation.</I> The rehabilitation of an eligible project to upgrade the property to decent, safe, and sanitary condition to comply with the Housing Quality Standards described in § 886.307 of this part, or other standards approved by HUD, from a condition below those standards and requiring repairs that may vary in degree from gutting and extensive reconstruction to the cure of deferred maintenance. Rehabilitation may exceed the requirements of § 886.307 of this part.
</P>
<P><I>Section 8 contract (“Contract”).</I> A written contract between the owner of an eligible project and HUD providing housing assistance payments to the owner on behalf of eligible families pursuant to this subpart.
</P>
<P><I>Tenant rent.</I> As defined in part 5 of this title. 
</P>
<P><I>Total tenant payment.</I> As defined in part 5 of this title. 
</P>
<P><I>Utility allowance.</I> As defined in part 5 of this title. 
</P>
<P><I>Utility reimbursement.</I> As defined in part 5 of this title. 
</P>
<P><I>Very low-income family.</I> As defined in part 5 of this title.
</P>
<CITA TYPE="N">[44 FR 70365, Dec. 6, 1979, as amended at 49 FR 19949, May 10, 1984; 50 FR 9269, Mar. 7, 1985; 50 FR 38795, Sept. 25, 1985; 53 FR 3369, Feb. 5, 1988; 58 FR 43722, Aug. 17, 1993; 60 FR 11859, Mar. 2, 1995; 61 FR 5213, Feb. 9, 1996; 63 FR 46580, Sept. 1, 1998; 65 FR 16724, Mar. 29, 2000; 81 FR 80814, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 886.303" NODE="24:4.1.2.1.9.3.1.3" TYPE="SECTION">
<HEAD>§ 886.303   Allocation and reservation of Section 8 contract authority and budget authority.</HEAD>
<P><I>Allocation.</I> The contract authority and budget authority for this program will be provided from the Headquarters reserve authority approved specifically for use in connection with the sale of eligible projects.


</P>
</DIV8>


<DIV8 N="§ 886.304" NODE="24:4.1.2.1.9.3.1.4" TYPE="SECTION">
<HEAD>§ 886.304   Project eligibility criteria.</HEAD>
<P>(a) <I>Selection of projects.</I> HUD shall select projects for sale with assistance under this subpart on the basis of the final disposition programs developed and approved in accordance with part 290 and the requirements of this subpart. In the evaluation of projects, consideration shall be given to whether there are site occupants who would have to be displaced, whether the relocation of site occupants is feasible, and the degree of hardship which displacement might cause.
</P>
<P>(b) <I>Projects needing rehabilitation.</I> A project, which is sold subject to the condition that following sale the project will be rehabilitated by the owner so as to become decent, safe and sanitary, will be sold with an Agreement that Section 8 assistance will be provided after the repairs are completed by the owner and the project is inspected and accepted by HUD. In these projects, Section 8 payments may be made only for project units which are determined to be decent, safe and sanitary.
</P>
<P>(c) <I>High-rise elevator projects.</I> High-rise elevator projects for families with children will not be assisted under this subpart unless the final disposition program, prepared in accordance with 24 CFR part 290 indicates that there is a need for assisted housing for families and there is no other practical alternative for providing the needed housing. 
</P>
<CITA TYPE="N">[44 FR 70365, Dec. 6, 1979, as amended at 58 FR 43722, Aug. 17, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 886.305" NODE="24:4.1.2.1.9.3.1.5" TYPE="SECTION">
<HEAD>§ 886.305   Disclosure and verification of Social Security and Employer Identification Numbers by owners.</HEAD>
<P>To be eligible to become an owner of housing assisted under this subpart, the owner must meet the disclosure and verification requirements for Social Security and Employer Identification Numbers, as provided by part 5, subpart B, of this title.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0204)
</APPRO>
<CITA TYPE="N">[54 FR 39709, Sept. 27, 1989; 55 FR 11905, Mar. 30, 1990, as amended at 61 FR 11119, Mar. 18, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 886.306" NODE="24:4.1.2.1.9.3.1.6" TYPE="SECTION">
<HEAD>§ 886.306   Notices.</HEAD>
<P>Before a project is approved for sale in accordance with this subpart, and as a part of the process of preparing a disposition recommendation in accordance with 24 CFR part 290, the field office manager must notify in writing the chief executive officer of the unit of general local government in which the project is located (or the designee of that officer) of the proposed sale with housing assistance, and must afford the unit of local government an opportunity to review and comment upon the proposed sale in accordance with 24 CFR part 791. Local government review should address consistency with the housing needs and strategy of the community, rather than strict conformance to the limitations on variations from housing assistance plan goals which are contained in part 791. 
</P>
<CITA TYPE="N">[53 FR 3369, Feb. 5, 1988]


</CITA>
</DIV8>


<DIV8 N="§ 886.307" NODE="24:4.1.2.1.9.3.1.7" TYPE="SECTION">
<HEAD>§ 886.307   Physical condition standards; physical inspection requirements.</HEAD>
<P>(a) <I>General.</I> Housing assisted under this part must be maintained and inspected in accordance with the requirements in 24 CFR part 5, subpart G.
</P>
<P>(b)-(m) [Reserved] 
</P>
<P>(n) <I>Independent group residence.</I> In addition to the foregoing standards, the standards in 24 CFR 887.467 (a) through (g) apply to independent group residences.
</P>
<CITA TYPE="N">[44 FR 70365, Dec. 6, 1979, as amended at 50 FR 9269, Mar. 7, 1985; 52 FR 1986, Jan. 15, 1987; 57 FR 33852, July 30, 1992; 58 FR 43722, Aug. 17, 1993; 63 FR 46580, Sept. 1, 1998; 64 FR 50227, Sept. 15, 1999; 88 FR 30500, May 11, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 886.308" NODE="24:4.1.2.1.9.3.1.8" TYPE="SECTION">
<HEAD>§ 886.308   Maximum total annual contract commitment.</HEAD>
<P>(a) <I>Number of units assisted.</I> Based on the final disposition program developed in accordance with 24 CFR part 290, HUD shall determine the number of units to be assisted up to 100 percent of the units in the project. 
</P>
<P>(b) <I>Maximum assistance.</I> The maximum total annual housing assistance payments that may be committed under the contract shall be the total of the gross rents for all the contract units in the project. 
</P>
<P>(c) <I>Changes in contract amounts.</I> In order to assure that housing assistance payments will be increased on a timely basis to cover increases in contract rents, changes in family composition, or decreases in family incomes: 
</P>
<P>(1) A project account shall be established and maintained, in an amount as determined by HUD consistent with section 8(c)(6) of the Act, out of amounts by which the maximum annual contract commitment per year exceeds amounts paid under the contract for any fiscal year. This account shall be established and maintained by HUD as a specifically identified and segregated account, and payment shall be made therefrom only for the purposes of:
</P>
<P>(i) Housing assistance payments, and
</P>
<P>(ii) Other costs specifically authorized or approved by HUD. 
</P>
<P>(2) Whenever a HUD-approved estimate of required housing assistance payments for a fiscal year exceeds the maximum annual contract commitment, causing the amount in the project account to be less than an amount equal to 40 percent of the maximum annual contract commitment, HUD, within a reasonable period of time, shall take such additional steps authorized by Section 8(c)(6) of the Act as may be necessary to carry out this assurance, including (as provided in that section of the Act) “the reservation of annual contributions authority for the purpose of amending housing assistance contracts or the allocation of a portion of new authorizations for the purpose of amending housing assistance contracts.” 


</P>
</DIV8>


<DIV8 N="§ 886.309" NODE="24:4.1.2.1.9.3.1.9" TYPE="SECTION">
<HEAD>§ 886.309   Housing assistance payment to owners.</HEAD>
<P>(a) <I>General.</I> Housing Assistance Payments shall be paid to Owners for units under lease by eligible Families, in accordance with the Contract and as provided in this section. These Housing Assistance Payments will cover the difference between the Contract Rent and the Tenant Rent. Where applicable, the Utility Reimbursement will be paid to the Family as an additional Housing Assistance Payment. The Contract will provide that the Owner will make this payment on behalf of HUD. Funds will be paid to the Owner in trust solely for the purpose of making this additional payment. If the Family and the utility company consent, the Owner may pay the Utility Reimbursement jointly to the Family and the utility company or directly to the utility company.
</P>
<P>(b) <I>No assistance for owners.</I> No Section 8 assistance may be provided for any unit occupied by an owner. However, cooperatives are considered rental housing rather than owner-occupied housing under this subpart. 
</P>
<P>(c) <I>Payments for vacancies from execution of contract to initial occupancy.</I> If a Contract unit which is decent, safe and sanitary and has been accepted by HUD as available as of the effective date of the Contract is not leased within 15 days of the effective date of the Contract, the Owner will be entitled to housing assistance payments in the amount of 80 percent of the Contract Rent for the unit for a vacancy period not exceeding 60 days from the effective date of the Contract provided that the Owner (1) has submitted a list of units leased as of the effective date and a list of the units not so leased; (2) 60 days prior to the completion of the rehabilitation or the date the agreement was executed, whichever is later, had notified the PHA of any units which the owner anticipated would be vacant on the anticipated effective date of the contract; (3) has taken and continues to take all feasible actions to fill the vacancy including, but not limited to: contracting applicants on the Owner's waiting list, if any, requesting the PHA and other appropriate sources to refer eligible applicants, and advertising the availability of the units in a manner specifically designed to reach low-income families; and (4) has not rejected any eligible applicant except for good cause acceptable to HUD. 
</P>
<P>(d) <I>Payments for vacancies after initial occupancy.</I> If an eligible family vacates its unit (other than as a result of action by the Owner which is in violation of the Lease or the Contract or any applicable law), the owner may receive housing assistance payments for so much of the month in which the Family vacates the unit as the unit remains vacant. Should the unit remain vacant, the Owner may receive from HUD a housing assistance payment in the amount of 80 percent of Contract Rent for a vacancy period not exceeding an additional month. However, if the owner collects any of the family's share of the rent for this period, the payment must be reduced to an amount which, when added to the family's payments, does not exceed 80 percent of the Contract Rent. Any such excess shall be reimbursed by the Owner to HUD or as HUD may direct. (See also § 886.315.) The owner shall not be entitled to any payment under this paragraph unless he or she: (1) Immediately upon learning of the vacancy, has notified HUD of the vacancy or prospective vacancy and the reasons for the vacancy, and (2) has made and continues to make a good faith effort to fill the vacancy, including but not limited to, contacting applicants on the waiting list, if any, requesting the PHA and other appropriate sources to refer eligible applicants, and advertising the availability of the unit, and (3) has not rejected any eligible applicant, except for good cause acceptable to HUD. 
</P>
<P>(e) <I>Payments for units where family is evicted.</I> If the owner evicts a family, the owner shall not be entitled to any payments pursuant to paragraph (d) of this section unless the request for such payment is supported by a certification that the provisions of § 886.328 and part 247 of this title have been followed. 
</P>
<P>(f) <I>Prohibition for double compensation for vacancies.</I> The owner shall not be entitled to housing assistance payments with respect to vacant units under this section to the extent he or she is entitled to payments from other sources (for example, payments for losses of rental income incurred for holding units vacant for relocatees pursuant to Title I of the HCD Act or payments under § 886.315). 
</P>
<P>(g) <I>Debt service payments.</I> (1) If a contract unit continues to be vacant after the 60-day period specified in paragraph (c) or (d) of this section, the Owner may submit a claim and receive additional housing assistance payments on a semiannual basis with respect to such a vacant unit in an amount equal to the principal and interest payments required to amortize the portion of the debt attributable to that unit for the period of the vacancy, whether such vacancy commenced during rent-up or after rent-up. 
</P>
<P>(2) Additional payments under this paragraph (g) for any unit shall not be for more than 12 months for any vacancy period, and shall be made only if: 
</P>
<P>(i) The unit is not in a project insured under the National Housing Act except pursuant to section 244 of that Act. 
</P>
<P>(ii) The unit was in decent, safe, and sanitary condition during the vacancy period for which payments are claimed. 
</P>
<P>(iii) The owner has taken and is continuing to take the actions specified in paragraphs (c)(1), (2) and (3) or paragraphs (d)(1) and (2) of this section, as appropriate. 
</P>
<P>(iv) The Owner has demonstrated in connection with the semiannual claim on a form and in accordance with the standards prescribed by HUD with respect to the period of the vacancy, that the project is not providing the Owner with revenues at least equal to the project costs incurred by the Owner, and that the amount of the payments requested is not in excess of that portion of the deficiency which is attributable to the vacant units for the period of the vacancies. 
</P>
<P>(v) The Owner has submitted, in connection with the semiannual claim, a statement with relevant supporting evidence that there is a reasonable prospect that the project can achieve financial soundness within a reasonable time. The statement shall indicate the causes of the deficiency; the corrective steps that have been and will be taken; and the time by which it is expected that the project revenues will at least equal project costs without the additional payments provided under this paragraph. 
</P>
<P>(3) HUD may deny any claim for additional payments or suspend or terminate payments if it determines that based on the Owner's statement and other evidence, there is not a reasonable prospect that the project can achieve financial soundness within a reasonable time.
</P>
<CITA TYPE="N">[44 FR 70365, Dec. 6, 1979, as amended at 49 FR 19949, May 10, 1984; 53 FR 3369, Feb. 5, 1988; 58 FR 43722, Aug. 17, 1993; 87 FR 37997, June 27, 2022]


</CITA>
</DIV8>


<DIV8 N="§ 886.310" NODE="24:4.1.2.1.9.3.1.10" TYPE="SECTION">
<HEAD>§ 886.310   Initial contract rents.</HEAD>
<P>HUD will establish contract rents at levels that, together with other resources available to the purchasers, provide sufficient amounts for the necessary costs of rehabilitating and operating the multifamily housing project and do not exceed 120 percent of the most recently published Section 8 Fair Market Rents for Existing Housing (24 CFR part 888, subpart A).
</P>
<CITA TYPE="N">[60 FR 11859, Mar. 2, 1995]


</CITA>
</DIV8>


<DIV8 N="§ 886.311" NODE="24:4.1.2.1.9.3.1.11" TYPE="SECTION">
<HEAD>§ 886.311   Term of contract.</HEAD>
<P>The contract term for any unit shall not exceed 15 years, except that the term may be less than 15 years as provided under either paragraph (a) or (b) of this section.
</P>
<P>(a) The contract term may be less than 15 years if HUD finds that, based on the rental charges and financing for the multifamily housing project to which the contract relates, the financial viability of the project can be maintained under a contract having a term less than 15 years. Where a contract of less than 15 years is provided under this paragraph, the amount of rent payable by tenants of the project for units assisted under such a contract shall not exceed the amount payable for rent under section 3(a) of the United States Housing Act of 1937 for a period of at least 15 years.
</P>
<P>(b) The contract term may be less than 15 years if the assistance is provided under a contract authorized under section 6 of the HUD Demonstration Act of 1993, and pursuant to a disposition plan under this part for a project that is determined by the HUD to be otherwise in compliance with this part.
</P>
<CITA TYPE="N">[60 FR 11859, Mar. 2, 1995]


</CITA>
</DIV8>


<DIV8 N="§ 886.311a" NODE="24:4.1.2.1.9.3.1.12" TYPE="SECTION">
<HEAD>§ 886.311a   Notice upon contract expiration.</HEAD>
<P>(a) The Contract will provide that the owner will notify each assisted family, at least 90 days before the end of the Contract term, of any increase in the amount the family will be required to pay as rent which may occur as a result of its expiration. If the Contract is to be renewed but with a reduction in the number of units covered by it, this notice shall be given to each family who will no longer be assisted under the Contract. 
</P>
<P>(b) The notice provided for in paragraph (a) of this section shall be accomplished by: (1) Sending a letter by first class mail, properly stamped and addressed, to the family at its address at the project, with a proper return address, and (2) serving a copy of the notice on any adult person answering the door at the leased dwelling unit, or if no adult responds, by placing the notice under or through the door, if possible, or else by affixing the notice to the door. Service shall not be considered to be effective until both required notices have been accomplished. The date on which the notice shall be considered to be received by the family shall be the date on which the owner mails the first class letter provided for in this paragraph, or the date on which the notice provided for in this paragraph is properly given, whichever is later. 
</P>
<P>(c) The notice shall advise each affected family that, after the expiration date of the Contract, the family will be required to bear the entire cost of the rent and that the owner will be free (to the extent the project is not otherwise regulated by HUD) to alter the rent without HUD approval, but subject to any applicable requirements or restrictions under the lease or under State or local law. The notice shall also state:
</P>
<P>(1) The actual (if known) or the estimated rent which will be charged following the expiration of the Contract;
</P>
<P>(2) The difference between the rent and the Total Tenant Payment toward rent under the Contract; and
</P>
<P>(3) The date the Contract will expire.
</P>
<P>(d) The owner shall give HUD a certification that families have been notified in accordance with this section with an example of the text of the notice attached. 
</P>
<P>(e) This section shall apply to (1) Contracts involving Substantial Rehabilitation entered into pursuant to Agreements executed on or after October 1, 1981, or Contracts involving Substantial Rehabilitation entered into pursuant to Agreements executed before October 1, 1981, but renewed or amended on or after October 1, 1984 and (2) all other Contracts executed, renewed or amended on or after October 1, 1984.
</P>
<CITA TYPE="N">[49 FR 31285, Aug. 6, 1984]


</CITA>
</DIV8>


<DIV8 N="§ 886.312" NODE="24:4.1.2.1.9.3.1.13" TYPE="SECTION">
<HEAD>§ 886.312   Rent adjustments.</HEAD>
<P>(a) <I>Limits.</I> Housing assistance payments will be made in amounts commensurate with contract rent adjustments under this paragraph, up to the maximum amount authorized under the contract. (See § 886.308.) 
</P>
<P>(b) <I>Annual adjustments.</I> The contract rents may be adjusted annually, at HUD's option, either (1) on the basis of a written request for a rent increase submitted by the owner and properly supported by substantiating evidence, or (2) by applying, on each anniversary date of the contract, the applicable automatic annual adjustment factor most recently published by HUD in the <E T="04">Federal Register.</E> If HUD requires that the owner submit a written request, HUD within a reasonable time shall approve a rental schedule that is necessary to compensate for any increase occurring since the last approved rental schedule in taxes (other than income taxes) and operating and maintenance costs over which owners have no effective control, or shall deny the increase stating the reasons therefor. Increases in taxes and maintenance and operating costs shall be measured against levels of such expenses in comparable assisted and unassisted housing in the area to ensure that adjustments in the contract rents shall not result in material differences between the rents charged for assisted and comparable unassisted units. Contract rents may be adjusted upward or downward as may be appropriate; however, in no case shall the adjusted rents be less than the contract rents on the effective date of the contract, provided there was no fraud or mistake adverse to the Department's interest in determining the initial contract rent. 
</P>
<P>(c) <I>Special adjustments.</I> Special adjustments in the contract rents shall be requested in writing by the owner and may be authorized by HUD to the extent HUD determines such adjustments are necessary to reflect increases in the actual and necessary expenses of owning and maintaining the contract units which have resulted from substantial general increases in real property taxes, utility rates or similar costs (i.e., assessments and utilities not covered be regulated rates) which are not adequately compensated for by the adjustment authorized by paragraph (b) of this section. 
</P>
<P>(d) <I>Comparability between assisted and unassisted units.</I> Notwithstanding any other provisions of this subpart, adjustments as provided in this section shall not result in material differences between the rents charged for assisted and comparable unassisted units, as determined by HUD: <I>Provided, however,</I> That this limitation shall not be construed to prohibit differences in rents between assisted and comparable unassisted units to the extent that such differences may have existed with respect to the initial contract rents assuming no fraud or mistake adverse to the Department's interest. 
</P>
<P>(e) <I>Addendums to contract and leases.</I> Any adjustment in contract rents shall be incorporated into the contract and leases by dated addendums to the contract and leases establishing the effective date of the adjustment. 


</P>
</DIV8>


<DIV8 N="§ 886.313" NODE="24:4.1.2.1.9.3.1.14" TYPE="SECTION">
<HEAD>§ 886.313   Other Federal requirements.</HEAD>
<P>Participation in this program requires: 
</P>
<P>(a) Compliance with (1) title VI of the Civil Rights Act of 1964, title VIII of the Civil Rights Act of 1968, Executive Orders 11063 and 11246, and Section 3 of the Housing and Urban Development Act of 1968, and (2) all rules, regulations, and requirements issued pursuant thereto. 
</P>
<P>(b) Submission of an approvable Affirmative Fair Housing Marketing Plan. 
</P>
<P>(c) For projects where rehabilitation is to be completed by or at the direction of the owner, compliance with: 
</P>
<P>(1) The Clean Air Act and Federal Water Pollution Control Act; 
</P>
<P>(2) Where the property contains nine or more units to be assisted, the requirement to pay not less than the wage rates prevailing in the locality, as predetermined by the Secretary of Labor under the Davis-Bacon Act (40 U.S.C. 276a-276a-5) to all laborers and mechanics (other than volunteers under the conditions set out in 24 CFR part 70) who are employed in the rehabilitation work, and the labor standards provisions contained in the Contract Work Hours and Safety Standards Act, Copeland Anti-Kickback Act, and implementing regulations of the Department of Labor.
</P>
<P>(3) Section 504 of the Rehabilitation Act of 1973; 
</P>
<P>(4) The National Historic Preservation Act (Pub. L. 89-665); 
</P>
<P>(5) The Archeological and Historic Preservation Act of 1974 (Pub. L. 93-291); 
</P>
<P>(6) Executive Order 11593 on Protection and Enhancement of the Cultural Environment, including the procedures prescribed by the Advisory Council on Historic Preservation at 36 CFR part 800; 
</P>
<P>(7) The National Environmental Policy Act of 1969; 
</P>
<P>(8) The Flood Disaster Protection Act of 1973; 
</P>
<P>(9) Executive Order 11988, Flood Plains Management; 
</P>
<P>(10) Executive Order 11990, Protection of Wetlands. 
</P>
<CITA TYPE="N">[44 FR 70365, Dec. 6, 1979, as amended at 57 FR 14760, Apr. 22, 1992]


</CITA>
</DIV8>


<DIV8 N="§ 886.314" NODE="24:4.1.2.1.9.3.1.15" TYPE="SECTION">
<HEAD>§ 886.314   Financial default.</HEAD>
<P>In the event of a financial default under the project mortgage, HUD shall have the right to make subsequent housing assistance payments to the mortgagee until such time as the default is cured, or until some other time agreeable to the mortgagee and approved by HUD. 


</P>
</DIV8>


<DIV8 N="§ 886.315" NODE="24:4.1.2.1.9.3.1.16" TYPE="SECTION">
<HEAD>§ 886.315   Security and utility deposits.</HEAD>
<P>(a) <I>Amount of deposits.</I> If at the time of the initial execution of the Lease the Owner wishes to collect a security deposit, the maximum amount shall be the greater of one month's Gross Family Contribution or $50. However, this amount shall not exceed the maximum amount allowable under State or local law. For units leased in place, security deposits collected prior to the execution of a Contract which are in excess of this maximum amount do not have to be refunded until the Family is expected to pay security deposits and utility deposits from its resources and/or other public or private sources. 
</P>
<P>(b) <I>When a Family vacates.</I> If a Family vacates the unit, the Owner, subject to State and local law, may use the security deposit as reimbursement for any unpaid Family Contribution or other amount which the Family owes under the Lease. If a Family vacates the unit owing no rent or other amount under the Lease consistent with State or local law or if such amount is less than the amount of the security deposit, the Owner shall refund the full amount or the unused balance to the Family. 
</P>
<P>(c) <I>Interest payable on deposits.</I> In those jurisdictions where interest is payable by the Owner on security deposits, the refunded amount shall include the amount of interest payable. The Owner shall comply with all State and local laws regarding interest payments on security deposits. 
</P>
<P>(d) <I>Insufficient deposits.</I> If the security deposit is insufficient to reimburse the Owner for the unpaid Family Contribution or other amounts which the Family owes under the Lease, or if the Owner did not collect a security deposit, the Owner may claim reimbursement from HUD for an amount not to exceed the lesser of: (1) The amount owed the Owner, (2) two months' Contract Rent, minus, in either case, the greater of the security deposit actually collected or the amount of security deposit the owner could have collected under the program (pursuant to paragraph (a) of this section). Any reimbursement under this section must be applied first toward any unpaid Family Contribution due under the Lease and then to any other amounts owed. No reimbursement shall be claimed for unpaid rent for the period after the family vacates. 


</P>
</DIV8>


<DIV8 N="§§ 886.316-886.317" NODE="24:4.1.2.1.9.3.1.17" TYPE="SECTION">
<HEAD>§§ 886.316-886.317   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 886.318" NODE="24:4.1.2.1.9.3.1.18" TYPE="SECTION">
<HEAD>§ 886.318   Responsibilities of the owner.</HEAD>
<P>(a) <I>Management and maintenance.</I> The owner shall be responsible for the management and maintenance of the project in accordance with requirements established by HUD. These responsibilities shall include but not be limited to: 
</P>
<P>(1) Payment for utilities and services (unless paid directly by the family), insurance and taxes; 
</P>
<P>(2) Performance of all ordinary and extraordinary maintenance; 
</P>
<P>(3) Performance of all management functions, including the taking of applications; determining eligibility of applicants in accordance with 24 CFR part 5 of this title; selection of families, including verification of income, obtaining and verifying Social Security Numbers submitted by applicants (as provided by part 5, subpart B, of this title), obtaining signed consent forms from applicants for the obtaining of wage and claim information from State Wage Information Collection Agencies (as provided in part 5, subpart B, of this title), and other pertinent requirements; and determination of the amount of tenant rent in accordance with HUD established schedules and criteria.
</P>
<P>(4) Collection of Tenant Rents; 
</P>
<P>(5) Preparation and furnishing of information required under the contract; 
</P>
<P>(6) Reexamination of family income, composition, and extent of exceptional medical or other unusual expenses; redeterminations, as appropriate, of the amount of Tenant Rent and amount of housing assistance payment in accordance with part 5 of this title; obtaining and verifying Social Security Numbers submitted by participants, as provided by CFR part 750; and obtaining signed consent forms from participants for the obtaining of wage and claim information from State Wage Information Collection Agencies, as provided by part 5, subpart B, of this title.
</P>
<P>(7) Redeterminations of the amount of Tenant Rent and the amount of housing assistance payment in accordance with part 5 of this title as a result of an adjustment by HUD of any applicable utility allowance; 
</P>
<P>(8) Notifying families in writing when they are determined to be qualified for assistance under this subpart where they have not already been notified by HUD prior to sale; 
</P>
<P>(9) Reviewing at least annually the allowance for utilities and other services; 
</P>
<P>(10) Compliance with equal opportunity requirements; and 
</P>
<P>(11) Compliance with Federal requirements set forth in § 886.313(c). 
</P>
<P>(b) <I>Contracting for Services.</I> Subject to HUD approval, any owner may contract with any private or public entity to perform for a fee the services required by paragraph (a) of this section: <I>Provided,</I> That such contract shall not shift any of the owner's responsibilities or obligations. 
</P>
<P>(c) <I>HUD review.</I> The owner shall permit HUD to review and audit the management and maintenance of the project at any time.
</P>
<P>(d) <I>Submission of financial and operating statements.</I> After execution of the Contract, the owner must submit to HUD:
</P>
<P>(1) Financial information in accordance with 24 CFR part 5, subpart H; and
</P>
<P>(2) Other statements as to project operation, financial conditions and occupancy as HUD may require pertinent to administration of the Contract and monitoring of project operations.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control numbers 2502-0204 and 2505-0052)
</APPRO>
<CITA TYPE="N">[44 FR 70365, Dec. 6, 1979, as amended at 49 FR 19949, May 10, 1984; 53 FR 1169, Jan. 15, 1988; 53 FR 6601, Mar. 2, 1988; 54 FR 39709, Sept. 27, 1989; 56 FR 7542, Feb. 22, 1991; 58 FR 43722, Aug. 17, 1993; 60 FR 14846, Mar. 20, 1995; 61 FR 11119, Mar. 18, 1996; 63 FR 46593, Sept. 1, 1998; 65 FR 16724, Mar. 29, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 886.319" NODE="24:4.1.2.1.9.3.1.19" TYPE="SECTION">
<HEAD>§ 886.319   Responsibility for contract administration.</HEAD>
<P>HUD is responsible for administration of the Contract. HUD may contract with another entity for the performance of some or all of its Contract administration functions.
</P>
<CITA TYPE="N">[60 FR 11860, Mar. 2, 1995]


</CITA>
</DIV8>


<DIV8 N="§ 886.320" NODE="24:4.1.2.1.9.3.1.20" TYPE="SECTION">
<HEAD>§ 886.320   Default under the contract.</HEAD>
<P>The contract shall contain a provision to the effect that if HUD determines that the owner is in default under the contract, HUD shall notify the owner of the actions required to be taken to cure the default and of the remedies to be applied by HUD including recovery of overpayments, where appropriate, and that if the owner fails to cure the default within a reasonable time as determined by HUD, HUD has the right to terminate the contract or to take other corrective action, including recission of the sale. When contract termination is under consideration by HUD, HUD shall give eligible families an opportunity to submit written and other comments. Where the project is sold under the arrangement that involves a regulatory agreement between HUD and the owner, a default under the regulatory agreement shall be treated as default under the contract. 


</P>
</DIV8>


<DIV8 N="§ 886.321" NODE="24:4.1.2.1.9.3.1.21" TYPE="SECTION">
<HEAD>§ 886.321   Marketing.</HEAD>
<P>(a) <I>Marketing in accordance with HUD-Approved Plan.</I> Marketing of units and selection of families by the owner shall be in accordance with the owner's HUD-approved Affirmative Fair Housing Marketing Plan, HUD-approved tenant selection factors and with all regulations relating to fair housing advertising including use of the equal opportunity logotype, statement, and slogan in all advertising. Projects shall be managed and operated without regard to race, color, creed, religion, sex, or national origin.
</P>
<P>(b)(1) HUD will determine the eligibility of assistance of families in occupancy before sales closing. After the sale, the owner shall be responsible for taking applications, selecting families, and all related determinations, in accordance with part 5 of this title. (See especially, 24 CFR part 5, subpart F).
</P>
<P>(2) For every family that applies for admission, the owner and the applicant must complete and sign the form of application prescribed by HUD. When the owner decides no longer to accept applications, the owner must publish a notice to that effect in a publication likely to be read by potential applicants. The notice must state the reasons for the owner's refusal to accept additional applications. When the owner agrees to accept applications again, a notice to this effect must also be published. The owner must retain copies of all completed applications together with any related correspondence for three years. For each family selected for admission, the owner must submit one copy of the completed and signed application to HUD. Housing assistance payments will not be made on behalf of an admitted family until after this copy has been received by HUD. 
</P>
<P>(3) If the owner determines that the applicant is eligible on the basis of income and family composition and is otherwise acceptable but the owner does not have a suitable unit to offer, the owner shall place such family on the waiting list and so advise the family indicating approximately when a unit may be available. 
</P>
<P>(4) If the owner determines that the applicant is eligible on the basis of income and family composition and is otherwise acceptable in accordance with the HUD approved tenant selection factors and if the owner has a suitable unit, the owner and the family shall enter into a lease. The lease shall be on a form approved by HUD and shall otherwise be in conformity with the provisions of this subpart. 
</P>
<P>(5) Records on applicant families and approved families shall be maintained by the owner so as to provide HUD with racial, ethnic, and gender data and shall be retained by the owner for 3 years. 
</P>
<P>(6) If the owner determines that an applicant is not eligible, or, if eligible, not selected, the owner must notify the applicant in writing of the determination, the reasons upon which the determination is made, and inform the applicant that the applicant has the right within a reasonable time (specified in the letter) to request an informal hearing if the applicant believes that the owner's determination is based on erroneous information. The procedures of this paragraph (b)(6) do not preclude an applicant from exercising his or her other rights if the applicant believes that he or she is being discriminated against on the basis of race, color, religion, sex, national origin, age, or handicap. The owner must retain for three years a copy of the application, the letter, the applicant's response, if any, the record of any informal hearing, and a statement of final disposition. The informal review provisions for the denial of a tenant selection preference under § 886.337 are contained in paragraph (k) of that section. 
</P>
<P>(7) For the informal hearing provisions related to denial of assistance based upon failure to establish citizenship or eligible immigration status, see part 5 of this title for provisions concerning certain assistance for mixed families (families whose members include those with eligible immigration status, and those without eligible immigration status) in lieu of denial of assistance.
</P>
<P>(c) <I>Initial occupancy.</I> (1) Where rehabilitation is involved, sixty days prior to the completion of the rehabilitation, or when the rehabilitation is begun, whichever is later, the Owner shall determine whether the tenant population of the project generally reflects the racial/ethnic makeup of the housing market area. Based on this determination, the Owner shall then conduct appropriate marketing activities in accordance with a HUD-approved Affirmative Fair Housing Marketing Plan. Such activities may include special outreach to those groups identified as not ordinarily expected to apply for these units without special outreach; notification to PHA's in the housing market area of any anticipated vacancies; and formulation of waiting lists based on the Owner's HUD-approved tenant selection factors.
</P>
<P>(2) Where a PHA is notified, the PHA shall notify an appropriate size family (families) on its waiting list of the availability of the unit and refer the family (families) to the owner. (Since the Owner is responsible for tenant selection, the owner is not required to lease to a PHA selected family, but the owner must comply with § 886.321(b)(6).)
</P>
<CITA TYPE="N">[44 FR 70365, Dec. 6, 1979, as amended at 53 FR 1169, Jan. 15, 1988; 53 FR 6601, Mar. 2, 1988; 58 FR 43722, Aug. 17, 1993; 60 FR 14846, Mar. 20, 1995; 65 FR 16724, Mar. 29, 2000; 70 FR 77744, Dec. 30, 2005]


</CITA>
</DIV8>


<DIV8 N="§ 886.322" NODE="24:4.1.2.1.9.3.1.22" TYPE="SECTION">
<HEAD>§ 886.322   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 886.323" NODE="24:4.1.2.1.9.3.1.23" TYPE="SECTION">
<HEAD>§ 886.323   Maintenance, operation, and inspections.</HEAD>
<P>(a) <I>Maintain housing free of health and safety hazards.</I> The Owner shall maintain and operate the project so as to be compliant with 24 CFR part 5, subpart G, and the Owner shall provide all the services, maintenance, and utilities which the Owner agrees to provide under the contract and the lease. Failure to do so shall be considered a material default under the contract and Regulatory Agreement, if any.
</P>
<P>(b) <I>HUD inspection.</I> Prior to execution of the contract, HUD shall inspect (or cause to be inspected) each proposed contract unit and related facilities to ensure that they comply with the requirements at 24 CFR part 5, subpart G.
</P>
<P>(c) <I>Owner and family inspection.</I> Prior to occupancy of any vacant unit by a Family, the Owner and the Family shall inspect the unit. The Owner shall certify that they have inspected the unit, and the owner shall certify that the unit is compliant with 24 CFR part 5, subpart G. Copies of these reports shall be kept on file by the owner for at least 3 years.
</P>
<P>(d) <I>Periodic inspections.</I> HUD will inspect the project (or cause it to be inspected) in accordance with the requirements in 24 CFR part 5, subpart G, and at such other times as HUD may determine to be necessary to assure that the owner is meeting the Owner's obligation to maintain the units and the related facilities in accordance with 24 CFR part 5, subpart G, and to provide the agreed-upon utilities and other services.
</P>
<P>(e) <I>Failure to maintain housing.</I> If HUD notifies the Owner that he/she has failed to maintain a unit that is compliant with 24 CFR part 5, subpart G, and the Owner fails to take corrective action within the time prescribed in the notice, HUD may exercise any of its rights or remedies under the Contract, or Regulatory Agreement, if any, including abatement of housing assistance payments (even if the Family continues to occupy the unit) and rescission of the sale. If the Family wishes to be rehoused in another unit, HUD shall provide assistance in finding such a unit for the Family.


</P>
<CITA TYPE="N">[88 FR 30500, May 11, 2023]










</CITA>
</DIV8>


<DIV8 N="§ 886.324" NODE="24:4.1.2.1.9.3.1.24" TYPE="SECTION">
<HEAD>§ 886.324   Reexamination of family income and composition.</HEAD>
<P>(a) <I>Regular reexaminations.</I> The owner must reexamine the income and composition of all families at least once each year. Upon verification of the information, the owner must make appropriate adjustments in the Total Tenant Payment in accordance with part 5 of this title and determine whether the family's unit size is still appropriate. The owner must adjust Tenant Rent and the Housing Assistance Payment to reflect any change in Total Tenant Payment and carry out any unit transfer required by HUD. At the time of the annual reexamination of family income and composition, the owner must require the family to disclose and verify Social Security Numbers, as provided by part 5, subpart B, of this title. For requirements regarding the signing and submitting of consent forms by families for the obtaining of wage and claim information from State Wage Information Collection Agencies, see part 5, subpart B, of this title. At the first regular reexamination after June 19, 1995, the owner shall follow the requirements of part 5 of this title concerning obtaining and processing evidence of citizenship or eligible immigration status of all family members. Thereafter, at each regular reexamination, the owner shall follow the requirements of part 5 of this title concerning verification of the immigration status of any new family member.
</P>
<P>(b) <I>Interim reexaminations.</I> The family must comply with provisions in its lease regarding interim reporting of changes in income. If the owner receives information concerning a change in the family's income or other circumstances between regularly scheduled reexaminations, the owner must consult with the family and make any adjustments determined to be appropriate. Any change in the family's income or other circumstances that results in an adjustment in the Total Tenant Payment, Tenant Rent and Housing Assistance Payment must be verified. See part 5, subpart B, of this title for the requirements for the disclosure and verification of Social Security Numbers at interim reexaminations involving new family members. For requirements regarding the signing and submitting of consent forms by families for the obtaining of wage and claim information from State Wage Information Collection Agencies, see part 5, subpart B, of this title. At any interim reexamination after June 19, 1995 when there is a new family member, the owner shall follow the requirements of part 5 of this title concerning obtaining and processing evidence of citizenship or eligible immigration status of the new family member.
</P>
<P>(c) <I>Continuation of housing assistance payments.</I> A family's eligibility for Housing Assistance Payments will continue until the Total Tenant Payment equals the Contact Rent plus any applicable Utility Allowance. The termination of eligibility at such point will not affect the family's other rights under its lease, nor will such termination preclude the resumption of payments as a result of later changes in income, rents, or other relevant circumstances during the term of the contract. However, eligibility also may be terminated in accordance with HUD requirements, for such reasons as failure to submit requested verification information, including failure to meet the disclosure and verification requirements for Social Security Numbers, as provided by part 5, subpart B, of this title, or failure to sign and submit consent forms for the obtaining of wage and claim information from State Wage Information Collection Agencies, as provided by part 5, subpart B, of this title. For provisions requiring termination of assistance for failure to establish citizenship or eligible immigration status, see part 5, subpart E, of this title for provisions concerning certain assistance for mixed families (families whose members include those with eligible immigration status, and those without eligible immigration status) in lieu of termination of assistance, and for provisions concerning deferral of termination of assistance.
</P>
<P>(d) <I>Streamlined income determination.</I> An owner may elect to follow the provisions of 24 CFR 5.657(d).
</P>
<CITA TYPE="N">[56 FR 7543, Feb. 22, 1991, as amended at 60 FR 14847, Mar. 20, 1995; 61 FR 11119, Mar. 18, 1996; 65 FR 16724, Mar. 29, 2000; 81 FR 12371, Mar. 8, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 886.325" NODE="24:4.1.2.1.9.3.1.25" TYPE="SECTION">
<HEAD>§ 886.325   Overcrowded and underoccupied units.</HEAD>
<P>(a) <I>Change in family composition, family's notification.</I> The family shall notify the owner of a change in family composition and shall transfer to an appropriate size dwelling unit, based on family composition, upon appropriate notice by the owner of HUD that such a dwelling unit is available. Such a family shall have priority over a family on the owner's waiting list seeking the same size unit.
</P>
<P>(b) <I>Change in family composition, owner's responsibilities.</I> Upon receipt by the owner of a notification by the family of a change in the family size, the owner agrees to offer the family a suitable unit as soon as one becomes vacant and ready for occupancy. If the owner does not have any suitable units or if no vacancy of a suitable unit occurs within a reasonable time, HUD may assist the family in finding a suitable dwelling unit and require the family to move to such unit as soon as possible.
</P>
<P>(c) <I>HUD actions if appropriate size unit is not made available.</I> If the owner fails to offer the family a unit appropriate for the size of the family when such unit becomes vacant and ready for occupancy, HUD may abate housing assistance payments to the owner for the unit occupied by the family and assist the family in finding a suitable dwelling unit elsewhere.
</P>
<CITA TYPE="N">[46 FR 19467, Mar. 31, 1981] 


</CITA>
</DIV8>


<DIV8 N="§ 886.326" NODE="24:4.1.2.1.9.3.1.26" TYPE="SECTION">
<HEAD>§ 886.326   Adjustment of utility allowances.</HEAD>
<P>When the owner requests HUD approval of an adjustment in Contract Rents under § 886.312, an analysis of the project's Utility Allowances must be included. Such data as changes in utility rates and other facts affecting utility consumption should be provided as part of this analysis to permit appropriate adjustments in the Utility Allowances. In addition, when approval of a utility rate change would result in a cumulative increase of 10 percent or more in the most recently approved Utility Allowances, the owner must advise the Secretary and request approval of new Utility Allowances.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control numbers 2502-0352 and 2502-0354)
</APPRO>
<CITA TYPE="N">[51 FR 21864, June 16, 1986] 




</CITA>
</DIV8>


<DIV8 N="§ 886.327" NODE="24:4.1.2.1.9.3.1.27" TYPE="SECTION">
<HEAD>§ 886.327   Lease requirements.</HEAD>
<XREF ID="20260226" REFID="27">Link to an amendment published at 91 FR 9453, Feb. 26, 2026.</XREF>
<XREF ID="20260313" REFID="2d">Link to a delay of the above  amendment published at 91 FR 12301, Mar. 13, 2026.</XREF>
<P>(a) <I>Term of lease.</I> (1) The term of a lease, including a new lease or a lease amendment, executed by the owner and the family must be for at least one year, or the remaining term of the contract if the remaining term of the contract is less than one year. 
</P>
<P>(2) During the first year of the lease term, the owner may not terminate the tenancy for “other good cause” under 24 CFR 247.3(a)(3), unless the termination is based on family malfeasance or nonfeasance. For example, during the first year of the lease term, the owner may not terminate the tenancy for “other good cause” based on the failure of the family to accept the offer of a new lease. 
</P>
<P>(3) The lease may contain a provision permitting the family to terminate on 30 days advance written notice to the owner. In this case of a lease term for more than one year, the lease must contain this provision. 
</P>
<P>(b) <I>Required and prohibited provisions.</I> The lease between the owner and the family must comply with HUD regulations and requirements, and must be in the form required by HUD. The lease may not contain any of the following types of prohibited provisions: 
</P>
<P>(1) <I>Admission of guilt.</I> Agreement by the family (i) to be sued, and (ii) to admit guilt, or (iii) to a judgment in favor of the owner, in a court proceeding against the family in connection with the lease. 
</P>
<P>(2) <I>Treatment of family property.</I> Agreement by the family that the owner may take or hold family property, or may sell family property, without notice to the family and a court decision on the rights of the parties. 
</P>
<P>(3) <I>Excusing owner from responsibility.</I> Agreement by the family not to hold the owner or the owner's agents responsible for any action or failure to act, whether intentional or negligent. 
</P>
<P>(4) <I>Waiver of notice.</I> Agreement by the family that the owner does not need to give notice of a court proceeding against the family in connection with the lease, or does not need to give any notice required by HUD. 
</P>
<P>(5) <I>Waiver of court proceeding for eviction.</I> Agreement by the family that the owner may evict the family (i) without instituting a civil court proceeding in which the family has the opportunity to present a defense, or (ii) before a decision by the court on the rights of the parties. 
</P>
<P>(6) <I>Waiver of jury trial.</I> Agreement by the family to waive any right to a trial by jury. 
</P>
<P>(7) <I>Waiver of appeal.</I> Agreement by the family to waive the right to appeal, or to otherwise challenge in court, a court decision in connection with the lease. 
</P>
<P>(8) <I>Family chargeable with legal costs regardless of outcome.</I> Agreement by the family to pay lawyer's fees or other legal costs of the owner, even if the family wins in a court proceeding by the owner against the family. (However, the family may have to pay these fees and costs if the family loses.)
</P>
<P>(c) <I>Notification for nonpayment of rent.</I> The lease must contain a provision or addendum that tenants will receive notification at least 30 days before a formal judicial eviction is filed.

 
</P>
<CITA TYPE="N">[53 FR 3369, Feb. 5, 1988, as amended at 89 FR 101303, Dec. 13, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 886.328" NODE="24:4.1.2.1.9.3.1.28" TYPE="SECTION">
<HEAD>§ 886.328   Termination of tenancy.</HEAD>
<P>Part 247 of this title (24 CFR part 247) applies to the termination of tenancy and eviction of a family assisted under this subpart. For cases involving termination of tenancy because of a failure to establish citizenship or eligible immigration status, the procedures of 24 CFR part 247 and 24 CFR part 5 shall apply. The provisions of 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking) apply to this section. The provisions of 24 CFR part 5, subpart E, concerning certain assistance for mixed families (families whose members include those with eligible immigration status, and those without eligible immigration status) in lieu of termination of assistance, and concerning deferral of termination of assistance, also shall apply.
</P>
<CITA TYPE="N">[81 FR 80814, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 886.329" NODE="24:4.1.2.1.9.3.1.29" TYPE="SECTION">
<HEAD>§ 886.329   Leasing to eligible families.</HEAD>
<P>(a) <I>Availability of units for occupancy by Eligible Families.</I> During the term of the Contract, an owner shall make available for occupancy by eligible families the total number of units for which assistance is committed under the Contract. For purposes of this section, making units available for occupancy by eligible families means that the owner: (1) Is conducting marketing in accordance with § 886.321; (2) has leased or is making good faith efforts to lease the units to eligible and otherwise acceptable families, including taking all feasible actions to fill vacancies by renting to such families; and (3) has not rejected any such applicant family except for reasons acceptable to HUD. If the owner is temporarily unable to lease all units for which assistance is committed under the Contract to eligible families, one or more units may be leased to ineligible families with the prior approval of HUD. Failure on the part of the owner to comply with these requirements is a violation of the Contract and grounds for all available legal remedies, including specific performance of the Contract, suspension or debarment from HUD programs, and reduction of the number of units under the Contract as set forth in paragraph (b) of this section.
</P>
<P>(b) <I>Reduction of number of units covered by Contract.</I> HUD may reduce the number of units covered by the Contract to the number of units available for occupancy by eligible families if:
</P>
<P>(1) The owner fails to comply with the requirements of paragraph (a) of this section; or
</P>
<P>(2) Notwithstanding any prior approval by HUD to lease such units to ineligible families, HUD determines that the inability to lease units to eligible families is not a temporary problem. 
</P>
<P>(c) <I>Restoration.</I> HUD will agree to an amendment of the Contract to provide for subsequent restoration of any reduction made pursuant to paragraph (b) of this section if:
</P>
<P>(1) HUD determines that the restoration is justified by demand;
</P>
<P>(2) The owner otherwise has a record of compliance with his or her obligations under the Contract; and
</P>
<P>(3) Contract and budget authority are available.
</P>
<P>(d) <I>Applicability.</I> In accordance with section 555 of the Cranston-Gonzalez National Affordable Housing Act of 1990, paragraphs (a) and (b) of this section apply to all contracts involving substantial rehabilitation. These paragraphs apply to all other Contracts executed on or after October, 3, 1984. An owner who had leased an assisted unit to an ineligible family consistent with the regulations in effect at the time will continue to lease the unit to that family. However, the Borrower must make the unit available for occupancy by an eligible family when the ineligible family vacates the unit. 
</P>
<P>(e) <I>Termination of assistance for failure to establish citizenship or eligible immigration status.</I> If an owner who is subject to paragraphs (a) and (b) of this section is required to terminate housing assistance payments for the family in accordance with part 5, subpart E, of this title because the owner determines that the entire family does not have U.S. citizenship or eligible immigration status, the owner may allow continued occupancy of the unit by the family without Section 8 assistance following the termination of assistance, or if the family constitutes a mixed family, as defined in part 5, subpart E, of this title, the owner shall comply with the provisions of part 5, subpart E, of this title concerning assistance to mixed families, and deferral of termination of assistance.
</P>
<P>(f) The regulations of 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking) apply to this section.
</P>
<CITA TYPE="N">[49 FR 31399, Aug. 7, 1984, as amended at 53 FR 847, Jan. 13, 1988; 53 FR 6601, Mar. 2, 1988; 58 FR 43722, Aug. 17, 1993; 59 FR 13653, Mar. 23, 1994; 60 FR 14847, Mar. 20, 1995; 65 FR 16724, Mar. 29, 2000; 73 FR 72343, Nov. 28, 2008; 75 FR 66261, Oct. 27, 2010; 81 FR 80814, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 886.329a" NODE="24:4.1.2.1.9.3.1.30" TYPE="SECTION">
<HEAD>§ 886.329a   Preferences for occupancy by elderly families.</HEAD>
<P>(a) <I>Election of preference for occupancy by elderly families</I>—(1) <I>Election by owners of eligible projects.</I> (i) An owner of a project involving substantial rehabilitation and assisted under this part (including a partially assisted project) that was originally designed primarily for occupancy by elderly families (an “eligible project”) may, at any time, elect to give preference to elderly families in selecting tenants for assisted, vacant units in the project, subject to the requirements of this section. 
</P>
<P>(ii) For purposes of this section, a project eligible for the preference provided by this section, and for which the owner makes an election to give preference in occupancy to elderly families is referred to as an “elderly project.” “Elderly families” refers to families whose heads of household, their spouses or sole members are 62 years or older. 
</P>
<P>(iii) An owner who elects to provide a preference to elderly families in accordance with this section is required to notify families on the waiting list who are not elderly that the election has been made and how the election may affect them if: 
</P>
<P>(A) The percentage of disabled families currently residing in the project who are neither elderly nor near-elderly (hereafter, collectively referred to as “non-elderly disabled families”) is equal to or exceeds the minimum required percentage of units established for the elderly project in accordance with paragraph (c)(1) of this section, and therefore non-elderly families on the waiting list (including non-elderly disabled families) may be passed over for covered section 8 units; or 
</P>
<P>(B) The project, after making the calculation set forth in paragraph (c)(1) of this section, will have no units set aside for non-elderly disabled families. 
</P>
<P>(iv) An owner who elects to give a preference for elderly families in accordance with this section shall not remove an applicant from the project's waiting list solely on the basis of having made the election. 
</P>
<P>(2) <I>HUD approval of election not required.</I> (i) An owner is not required to solicit or obtain the approval of HUD before exercising the election of preference for occupancy provided in paragraph (a)(1) of this section. The owner, however, if challenged on the issue of eligibility of the project for the election provided in paragraph (a)(1) of this section must be able to support the project's eligibility through the production of all relevant documentation in the possession of the owner that pertains to the original design of the project. 
</P>
<P>(ii) The Department reserves the right at any time to review and make determinations regarding the accuracy of the identification of the project as an elderly project. The Department can make such determinations as a result of ongoing monitoring activities, or the conduct of complaint investigations under the Fair Housing Act (42 U.S.C. 3601 through 3619), or compliance reviews and complaint investigations under section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and other applicable statutes. 
</P>
<P>(b) <I>Determining projects eligible for preference for occupancy by elderly families</I>—(1) <I>Evidence supporting project eligibility.</I> Evidence that a project assisted under this part (or portion of a project) was originally designed primarily for occupancy by elderly families, and is therefore eligible for the election of occupancy preference provided by this section, shall consist of at least one item from the sources (“primary” sources) listed in paragraph (b)(1)(i), or at least two items from the sources (“secondary” sources) listed in paragraph (b)(1)(ii) of this section: 
</P>
<P>(i) <I>Primary sources.</I> Identification of the project (or portion of a project) as serving elderly (seniors) families in at least one primary source such as: the application in response to the notice of funding availability; the terms of the notice of funding availability under which the application was solicited; the regulatory agreement; the loan commitment; the bid invitation; the owner's management plan, or any underwriting or financial document collected at or before loan closing; <I>or</I> 
</P>
<P>(ii) <I>Secondary sources.</I> Two or more sources of evidence such as: lease records from the earliest two years of occupancy for which records are available showing that occupancy has been restricted primarily to households where the head, spouse or sole member is 62 years of age or older; evidence that services for elderly persons have been provided, such as services funded by the Older Americans Act, transportation to senior citizen centers, or programs coordinated with the Area Agency on Aging; project unit mix with more than fifty percent of efficiency and one-bedroom units [a secondary source particularly relevant to distinguishing elderly projects under the previous section 3(b) definition (in which disabled families were included in the definition of “elderly families”) from non-elderly projects and which in combination with other factors (such as the number of accessible units) may be useful in distinguishing projects for seniors from those serving the broader definition of “elderly families” which includes disabled families]; or any other relevant type of historical data, unless clearly contradicted by other comparable evidence. 
</P>
<P>(2) <I>Sources in conflict.</I> If a primary source establishes a design contrary to that established by the primary source upon which the owner would base support that the project is an eligible project (as defined in this section), the owner cannot make the election of preferences for elderly families as provided by this section based upon primary sources alone. In any case where primary sources do not provide <I>clear evidence</I> of original design of the project for occupancy primarily by elderly families, including those cases where primary sources conflict, secondary sources may be used to establish the use for which the project was originally designed. 
</P>
<P>(c) <I>Reservation of units in elderly projects for non-elderly disabled families.</I> The owner of an elderly project is required to reserve, at a minimum, the number of units specified in paragraph (c)(1) of this section for occupancy by non-elderly disabled families. 
</P>
<P>(1) <I>Minimum number of units to be reserved for non-elderly disabled families.</I> The number of units in an elderly project required to be reserved for occupancy by non-elderly disabled families, shall be, at a minimum, the lesser of: 
</P>
<P>(i) The number of units equivalent to the higher of— 
</P>
<P>(A) The percentage of units assisted under this part in the elderly project that were occupied by non-elderly disabled families on October 28, 1992; and 
</P>
<P>(B) The percentage of units assisted under this part in the elderly project that were occupied by non-elderly disabled families upon January 1, 1992; <I>or</I> 
</P>
<P>(ii) 10 percent of the number of units assisted under this part in the eligible project. 
</P>
<P>(2) <I>Option to reserve greater number of units for non-elderly disabled families.</I> The owner, at the owner's option, and at any time, may reserve a greater number of units for non-elderly disabled families than that provided for in paragraph (c)(1) of this section. The option to provide a greater number of units to non-elderly disabled families will not obligate the owner to always provide that greater number to non-elderly disabled families. The number of units required to be provided to non-elderly disabled families at any time in an elderly project is that number determined under paragraph (c)(1) of this section. 
</P>
<P>(d) <I>Secondary preferences.</I> An owner of an elderly project also may elect to establish secondary preferences in accordance with the provisions of this paragraph (d) of this section. 
</P>
<P>(1) <I>Preference for near-elderly disabled families in units reserved for elderly families.</I> If the owner of an elderly project determines, in accordance with paragraph (f) of this section, that there are an insufficient number of elderly families who have applied for occupancy to fill all the vacant units in the elderly project reserved for elderly families (that is, all units except those reserved for the non-elderly disabled families as provided in paragraph (c) of this section), the owner may give preference for occupancy of such units to disabled families who are near-elderly families. 
</P>
<P>(2) <I>Preference for near-elderly disabled families in units reserved for non-elderly disabled families.</I> If the owner of an elderly project determines, in accordance with paragraph (f) of this section, that there are an insufficient number of non-elderly disabled families to fill all the vacant units in the elderly project reserved for non-elderly disabled families as provided in paragraph (c) of this section, the owner may give preference for occupancy of these units to disabled families who are near-elderly families. 
</P>
<P>(e) <I>Availability of units to families without regard to preference.</I> An owner shall make vacant units in an elderly project generally available to otherwise eligible families who apply for housing, without regard to the preferences and reservation of units provided in this section if either: 
</P>
<P>(1) The owner has adopted the secondary preferences and there are an insufficient number of families for whom elderly preference, reserve preference, and secondary preference has been given, to fill all the vacant units; or 
</P>
<P>(2) The owner has <I>not</I> adopted the secondary preferences and there are an insufficient number of families for whom elderly preference, and reserve preference has been given to fill all the vacant units. 
</P>
<P>(f) <I>Determination of insufficient number of applicants qualifying for preference.</I> To make a determination that there are an insufficient number of applicants who qualify for the preferences, including secondary preferences, provided by this section, the owner must: 
</P>
<P>(1) Conduct marketing in accordance with § 886.321(a) to attract applicants qualifying for the preferences and reservation of units set forth in this section; and 
</P>
<P>(2) Make a good faith effort to lease to applicants who qualify for the preferences provided in this section, including taking all feasible actions to fill vacancies by renting to such families. 
</P>
<P>(g) <I>Prohibition of evictions.</I> An owner may not evict a tenant without good cause, or require that a tenant vacate a unit, in whole or in part because of any reservation or preference provided in this section, or because of any action taken by the Secretary pursuant to subtitle D (sections 651 through 661) of title VI of the Housing and Community Development Act of 1992 (42 U.S.C. 13611 through 13620). 
</P>
<CITA TYPE="N">[59 FR 65857, Dec. 21, 1994, as amended at 65 FR 16724, Mar. 29, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 886.330" NODE="24:4.1.2.1.9.3.1.31" TYPE="SECTION">
<HEAD>§ 886.330   Work write-ups and cost estimates.</HEAD>
<P>(a) <I>HUD preparation of work write-ups.</I> If needed, a work write-up, including plans and specifications, will be made by HUD specifying necessary rehabilitation.
</P>
<P>(b) <I>HUD specifies deficiencies and corrective action.</I> The work write-up will specify deficiencies noted by HUD and describe the manner in which the deficiencies are to be corrected, including minimum acceptable levels of workmanship and materials. 
</P>
<P>(c) <I>HUD preparation of cost estimates.</I> HUD shall perform or cause to be performed a cost estimate to complete rehabilitation. The cost of any necessary relocation, as determined by HUD as being necessary to expedite the rehabilitation and the estimated cost to the owner of maintaining project rents at the Section 8 level, as required by HUD prior to execution of the Contract, plus other costs allowable by HUD will be included in the cost estimate. The work write-up and cost estimate shall become part of the disposition package and will be used in determining the sales price of the project. 
</P>
<CITA TYPE="N">[44 FR 70365, Dec. 6, 1979, as amended at 58 FR 43722, Aug. 17, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 886.331" NODE="24:4.1.2.1.9.3.1.32" TYPE="SECTION">
<HEAD>§ 886.331   Agreement to enter into housing assistance payments contract.</HEAD>
<P>(a) <I>Execution of agreement.</I> At the sales closing and prior to the Owner's commencement of any rehabilitation under this subpart, HUD will enter into an Agreement with the Owner which contains the following: 
</P>
<P>(1) A statement that the Owner agrees to rehabilitate the project unit(s) to make the unit(s) decent, safe, and sanitary in accordance with the work write-up, cost estimates, and this subpart.
</P>
<P>(2) A date by which rehabilitation will have commenced and a deadline date by which the rehabilitated project unit(s) will be completed and ready for occupancy. The Agreement may provide for staged rehabilitation, occupancy, and payments under the contract. 
</P>
<P>(3) The Contract Rent which will be paid to the Owner once rehabilitation is completed, the Contract is executed, and the unit(s) is/are occupied by an eligible family. 
</P>
<P>(4) A date for final inspection of the unit(s) by HUD and the owner shall be specified. This date shall be as soon as possible after the deadline date specified pursuant to paragraph (a)(2) of this section. 
</P>
<P>(5) The term of the contract. 
</P>
<P>(b) <I>Agreement part of sales contract.</I> The Agreement will be prepared by HUD and incorporated into the Contract of Sale and Purchase. The Agreement shall include all required information in paragraph (a) of this section and a statement specifying the Owner's responsibility for making relocation payments to Families temporarily displaced. 
</P>
<CITA TYPE="N">[44 FR 70365, Dec. 6, 1979, as amended at 58 FR 43722, Aug. 17, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 886.332" NODE="24:4.1.2.1.9.3.1.33" TYPE="SECTION">
<HEAD>§ 886.332   Rehabilitation period.</HEAD>
<P>(a) <I>Immediate start of rehabilitation after sales closing.</I> After the execution of the Agreement and the sales closing, the owner shall immediately proceed with the rehabilitation work as provided in the Agreement. In the event the work is not immediately commenced, diligently continued, and/or completed by the deadline date stated on the Agreement, HUD will have the right, upon written notification to the owner, to rescind the Agreement and the sale, or take other appropriate action. 
</P>
<P>(b) <I>Extensions.</I> Although extensions of time may be granted by HUD upon a written request from the owner stating the grounds for the extension, no increases in Contract Rents shall be granted for delays. 
</P>
<P>(c) <I>Changes.</I> (1) The Owner must submit to HUD for approval any changes from the work specified in the Agreement which would materially reduce or alter the Owner's obligations or the quality or amenities of the project. HUD may condition its approval of such changes on a reduction of the Contract Rents. If changes are made without prior HUD approval, HUD will have the right to take action consistent with the purpose of this subpart, including action intended to preclude the owner from benefiting from a change in the work specified without HUD approval. HUD action shall include but is not limited to reducing the Contract Rents, requiring the owner to remedy the deficiency, or rescission of the Contract of Sale with reimbursement to the owner for the HUD determined reasonable cost of work items completed by the Owner and acceptable to HUD. 
</P>
<P>(2) Contract Rents for project units being rehabilitated shall not be increased except in accordance with this subpart. Should an increase in Contract Rents be necessitated by changes in local codes or ordinances or other unanticipated changes in work items which could not have been anticipated by HUD, an increase will only be approved if HUD approval is obtained prior to incorporation of any changes in the project. 
</P>
<CITA TYPE="N">[44 FR 70365, Dec. 6, 1979, as amended at 58 FR 43722, Aug. 17, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 886.333" NODE="24:4.1.2.1.9.3.1.34" TYPE="SECTION">
<HEAD>§ 886.333   Completion of rehabilitation.</HEAD>
<P>(a) <I>Notification of completion.</I> The owner must notify HUD in writing when work is completed and submit to HUD the evidence of completion and cost certifications described in paragraph (b) and (c) of this section. 
</P>
<P>(b) <I>Evidence of completion.</I> Completion of the project must be evidenced by furnishing HUD with the following: 
</P>
<P>(1) A certificate of occupancy and/or other official approvals necessary for occupancy as required by the locality. 
</P>
<P>(2) A certification by the owner that: 
</P>
<P>(i) The project unit(s) has been completed in accordance with the requirements of the Agreement; 
</P>
<P>(ii) The project unit(s) is/are decent, safe, and sanitary; 
</P>
<P>(iii) The project unit(s) has/have been rehabilitated in accordance with the applicable zoning, building, housing and other codes, ordinances or regulations, as modified by any waivers obtained from the appropriate officials; 
</P>
<P>(iv) The project was in compliance with applicable HUD lead-based paint regulations at part 35, subparts A, B, H, and R of this title.
</P>
<P>(v) If applicable, the owner has complied with the provisions of the Agreement relating to the payment of not less than prevailing wage rates and that to the best of the owner's knowledge and belief there are no claims of underpayment in alleged violation of said provisions of the Agreement. In the event there are any such pending claims to the knowledge of the owner of HUD, the owner shall be required to place a sufficient amount in escrow, as determined by HUD, to assure such payments; 
</P>
<P>(vi) There are no defects or deficiencies in the project except for ordinary punchlist items, or incomplete work awaiting seasonal opportunity such as landscaping and heating system test (such excepted items to be specified); and 
</P>
<P>(vii) There has been no change in the evidence of management capability or in the proposed management program (if one was required) specified in the approved purchase proposal other than changes approved in writing by HUD in accordance with the Agreement. 
</P>
<P>(c) <I>Actual cost and interest rate certifications.</I> The Owner must provide HUD with statements of the actual costs, including the interest rate incurred for the rehabilitation, Contract Rent shortfalls, and any relocation approved by HUD. The owner shall certify that these are the actual costs. HUD shall review and approve these costs subject to post audit. 
</P>
<P>(d) <I>Review and inspections.</I> (1) Within fifteen working days of the receipt of the evidence of completion, and the owner's certification of costs, HUD shall review the evidence of completion for compliance with paragraphs (b) and (c) of this section. 
</P>
<P>(2) Within the same time period, a HUD representative shall inspect the units, to determine whether the units meet the Housing Quality Standards, the Agreement to Enter into the HAP, and any applicable work write-up.
</P>
<P>(e) If the inspection discloses defects or deficiencies, the inspector shall report these with sufficient detail and information for purposes of paragraphs (g) (1) and (2) of this section. 
</P>
<P>(f) <I>Acceptance.</I> If HUD determines from the review and inspection that the project has been completed in accordance with the Agreement, the project shall be accepted. 
</P>
<P>(g) <I>Acceptance where defects or deficiencies reported.</I> If the projects unit(s) are not acceptable under paragraph (f) of this section, the following shall apply:
</P>
<P>(1) If the only defects or deficiencies are punchlist items or incomplete items awaiting seasonal opportunity, the project may be accepted and the contract executed. If the owner fails to complete the items within a reasonable time to the satisfaction of HUD, HUD may, upon 30 days notice to the owner terminate the contract and/or exercise its other rights thereunder, including rescission of the sale. 
</P>
<P>(2) If the defects or deficiencies are other than punchlist items or incomplete work awaiting seasonal opportunity, HUD shall determine whether and to what extent the defects or deficiencies can be corrected, what corrections are essential to permit HUD to accept the project, whether and to what extent a reduction of Contract Rents will be required as a condition to acceptance of the project, and the extension of time required for the remaining work to be done. The owner shall be notified of HUD's determinations and, if the owner agrees to comply with the conditions, an addendum to the Agreement shall be entered into, specifying the remaining work, pursuant to which the defects or deficiencies will be corrected and the unit(s) then accepted. If the owner is unwilling to enter into such an addendum or fails to perform under the addendum, the units will not be accepted and appropriate remedies will be sought by HUD. Paragraphs (a) through (g) will apply when the remaining work is completed satisfactorily. 
</P>
<P>(h) <I>Notification of non-acceptance.</I> If HUD determines that, based on the review of the evidence of completion and inspection, the unit(s) cannot be accepted, the Owner must be promptly notified of this decision and the reasons and steps shall be taken immediately to rescind the sale, or such other action deemed appropriate by HUD. 
</P>
<CITA TYPE="N">[44 FR 70365, Dec. 6, 1979, as amended at 52 FR 1896, Jan. 15, 1987; 58 FR 43723, Aug. 17, 1993; 64 FR 50227, Sept. 15, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 886.334" NODE="24:4.1.2.1.9.3.1.35" TYPE="SECTION">
<HEAD>§ 886.334   Execution of housing assistance payments contract.</HEAD>
<P>(a) <I>Time of execution.</I> Upon acceptance of the unit(s) by HUD pursuant to § 886.333(f), the contract will be executed first by the Owner and then by HUD. The effective date must be no earlier than the HUD inspection which provides the basis for unconditional acceptance. 
</P>
<P>(b) <I>Changes in initial contract rents during rehabilitation.</I> (1) The Contract Rents established pursuant to § 886.310 and 24 CFR part 290 will be the Contract Rents on the effective date of the Contract except under the following circumstances: 
</P>
<P>(i) When, during rehabilitation, work items are discovered which could not reasonably have been anticipated by HUD or are necessitated by an unforeseen change in local codes or ordinances; were not listed in the work write-up prepared by HUD but are deemed by HUD, in writing, to be necessary work; and will require additional expenditures which would make the rehabilitations infeasible at the Contract Rents established in the Agreement. Under these circumstances, HUD will:
</P>
<P>(A) Approve a change order to the rehabilitation contract, or amend the work write-up if there is no rehabilitation contract, specifying the additional work to be accomplished and the additional cost for this work,
</P>
<P>(B) Recompute the Contract Rents, within the limits specified in paragraph (b)(4) of this section, based upon the revised cost estimate, and 
</P>
<P>(C) Prepare and execute an amendment to the Agreement stating the additional work required and the revised Contract Rents.
</P>
<P>(ii) When the actual cost of the rehabilitation performed is less than that estimated in the calculation of Contract Rents for the Agreement. 
</P>
<P>(iii) When, due to unforeseen factors, the actual certified relocation payments made by the Owner to temporarily relocated Families varies from the cost estimated by HUD.
</P>
<P>(2) Should changes occur as specified in paragraph (b)(1) (ii) or (iii) (either an increase or decrease), HUD may recalculate the Contract Rents and amend the Contract or Agreement, as appropriate, to reflect the revised rents. The rents shall not be recalculated based on increased costs to maintain rents at the Section 8 level during the rehabilitation period. 
</P>
<P>(3) HUD must review and approve the Owner's certification that the rehabilitation costs and relocation costs are the actual costs incurred. 
</P>
<P>(4) In establishing the revised Contract Rents, HUD must determine that the resulting Contract Rents plus an applicable Utility Allowances do not exceed the Fair Market Rent or the exception rent provided in § 886.310 in effect at the time of execution of the Agreement. 
</P>
<P>(c) <I>Unleased unit(s).</I> At the time the contract is executed, HUD will provide a list of dwelling unit(s) leased as of the effective date of the Contract and a list of the unit(s) not so leased, if any, and shall determine whether or not the owner has met the obligations with respect to any unleased unit(s) and for which of those unit(s) vacancy payments will be made by HUD. The owner must indicate in writing either concurrence with this determination or disagreement reserving all rights to claim vacancy payments for the unleased unit(s) pursuant to the contract, without prejudice by reason of the owner's signing the contract.
</P>
<CITA TYPE="N">[44 FR 70365, Dec. 6, 1979, as amended at 48 FR 12711, Mar. 28, 1983; 49 FR 17449, Apr. 24, 1984; 65 FR 16427, Mar. 29, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 886.335" NODE="24:4.1.2.1.9.3.1.36" TYPE="SECTION">
<HEAD>§ 886.335   Management and occupancy reviews.</HEAD>
<P>(a) The contract administrator will conduct management and occupancy reviews to determine whether the owner is in compliance with the Contract. Such reviews will be conducted in accordance with a schedule set out by the Secretary and published in the <E T="04">Federal Register,</E> following notice and the opportunity to comment. Where a change in ownership or management occurs, a management and occupancy review must be conducted within six months.
</P>
<P>(b) HUD or the Contract Administrator may inspect project operations and units at any time.
</P>
<P>(c) Equal Opportunity reviews may be conducted by HUD at any time.
</P>
<CITA TYPE="N">[87 FR 37997, June 27, 2022]


</CITA>
</DIV8>


<DIV8 N="§ 886.336" NODE="24:4.1.2.1.9.3.1.37" TYPE="SECTION">
<HEAD>§ 886.336   Audit.</HEAD>
<P>Where a non-Federal entity (as defined in 2 CFR 200.69) is the eligible owner of a project receiving financial assistance under this part, the audit requirements in 2 CFR part 200, subpart F, shall apply.
</P>
<CITA TYPE="N">[80 FR 75941, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 886.337" NODE="24:4.1.2.1.9.3.1.38" TYPE="SECTION">
<HEAD>§ 886.337   Selection preferences.</HEAD>
<P>Sections 5.410 through 5.430 govern the use of preferences in the selection of tenants under this subpart.
</P>
<CITA TYPE="N">[59 FR 36647, July 18, 1994, as amended at 61 FR 9047, Mar. 6, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 886.338" NODE="24:4.1.2.1.9.3.1.39" TYPE="SECTION">
<HEAD>§ 886.338   Displacement, relocation, and acquisition.</HEAD>
<P>(a) <I>Minimizing displacement.</I> Consistent with the other goals and objectives of this part, owners shall assure that they have taken all reasonable steps to minimize the displacement of persons (families, individuals, businesses, nonprofit organizations, and farms) as a result of a project assisted under this part.
</P>
<P>(b) <I>Temporary relocation.</I> The following policies cover residential tenants who will not be required to move permanently but who must relocate temporarily for the project. Such tenants must be provided:
</P>
<P>(1) Reimbursement for all reasonable out-of-pocket expenses incurred in connection with the temporary relocation, including the cost of moving to and from the temporary housing and any increase in monthly rent/utility costs; and
</P>
<P>(2) Appropriate advisory services, including reasonable advance written notice of:
</P>
<P>(i) The date and approximate duration of the temporary relocation;
</P>
<P>(ii) The location of the suitable, decent, safe, and sanitary dwelling to be made available for the temporary period;
</P>
<P>(iii) The terms and conditions under which the tenant may lease and occupy a suitable, decent, safe, and sanitary dwelling in the building/complex following completion of the rehabilitation; and
</P>
<P>(iv) The provisions of paragraph (b)(1) of this section.
</P>
<P>(c) <I>Relocation assistance for displaced persons.</I> A “displaced person” (defined in paragraph (g) of this section) must be provided relocation assistance at the levels described in, and in accordance with the requirements of, the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA) (42 U.S.C. 4601-4655) and implementing regulations at 49 CFR part 24. A “displaced person” shall be advised of his or her rights under the Fair Housing Act (42 U.S.C. 3601-19), and, if the representative comparable replacement dwelling used to establish the amount of the replacement housing payment to be provided to a minority person is located in an area of minority concentration, such person also shall be given, if possible, referrals to comparable and suitable, decent, safe, and sanitary replacement dwellings not located in such areas.
</P>
<P>(d) <I>Real property acquisition requirements.</I> The acquisition of real property for a project is subject to the URA and the requirements described in 49 CFR part 24, subpart B. 
</P>
<P>(e) <I>Appeals.</I> A person who disagrees with the owner's determination concerning whether the person qualifies as a “displaced person,” or the amount of relocation assistance for which the person is found to be eligible, may file a written appeal of that determination with the owner. A low-income person who is dissatisfied with the owner's determination on such appeal may submit a written request for review of that determination to the HUD Field Office. 
</P>
<P>(f) <I>Responsibility of owner.</I> (1) The owner shall certify (i.e., provide assurance of compliance, as required by 49 CFR part 24) that he or she will comply with the URA, the regulations at 49 CFR part 24, and the requirements of this section. The owner is responsible for such compliance notwithstanding any third party's contractual obligation to the owner to comply with these provisions. 
</P>
<P>(2) The cost of providing required relocation assistance is an eligible project cost to the same extent and in the same manner as other project costs. Such costs may also be paid for with funds available from other sources. 
</P>
<P>(3) The owner shall maintain records in sufficient detail to demonstrate compliance with the provisions of this section. The owner shall maintain data on the race, ethnic, gender, and handicap status of displaced persons. 
</P>
<P>(g) <I>Definition of displaced person.</I> (1) For purposes of this section, the term <I>displaced person</I> means a person (family, individual, business, nonprofit organization, or farm) that moves from real property, or moves personal property from real property, permanently, as a direct result of acquisition, rehabilitation, or demolition for a project assisted under this part. This includes any permanent, involuntary move for an assisted project, including any permanent move from the real property that is made: 
</P>
<P>(i) After notice by the owner to move permanently from the property, if the move occurs on or after the date of the submission of the application to HUD;
</P>
<P>(ii) Before submission of the application to HUD, if HUD determines that the displacement resulted directly from acquisition, rehabilitation, or demolition for the assisted project; or
</P>
<P>(iii) By a tenant-occupant of a dwelling unit, if any one of the following three situations occurs:
</P>
<P>(A) The tenant moves after the execution of the contract to provide Housing Assistance Payments, and the move occurs before the tenant is provided written notice offering him or her the opportunity to lease and occupy a suitable, decent, safe, and sanitary dwelling in the same building/complex, under reasonable terms and conditions, upon completion of the project. Such reasonable terms and conditions include a monthly rent and estimated average monthly utility costs that do not exceed the greater of:
</P>
<P>(<I>1</I>) The tenant's monthly rent before execution of the Housing Assistance Payments Contract and estimated average monthly utility costs; or
</P>
<P>(<I>2</I>) The total tenant payment, as determined under part 5 of this title, if the tenant is low-income, or 30 percent of gross household income, if the tenant is not low-income; or
</P>
<P>(B) The tenant is required to relocate temporarily, does not return to the building/complex, and either:
</P>
<P>(<I>1</I>) The tenant is not offered payment for all reasonable out-of-pocket expenses incurred in connection with the temporary relocation, or
</P>
<P>(<I>2</I>) Other conditions of the temporary relocation are not reasonable; or 
</P>
<P>(C) The tenant is required to move to another dwelling unit in the same building/complex but is not offered reimbursement for all reasonable out-of-pocket expenses incurred in connection with the move, or other conditions of the move are not reasonable.
</P>
<P>(2) Notwithstanding the provisions of paragraph (g)(1) of this section, a person does not qualify as a “displaced person” (and is not eligible for relocation assistance under the URA or this section), if:
</P>
<P>(i) The person has been evicted for serious or repeated violation of the terms and conditions of the lease or occupancy agreement, violation of applicable Federal, State or local law, or other good cause, and HUD determines that the eviction was not undertaken for the purpose of evading the obligation to provide relocation assistance;
</P>
<P>(ii) The person moved into the property after the submission of the application and, before signing a lease and commencing occupancy, received written notice of the project, its possible impact on the person (e.g., the person may be displaced, temporarily relocated, or suffer a rent increase) and the fact that he or she would not qualify as a “displaced person” (or for assistance under this section) as a result of the project;
</P>
<P>(iii) The person is ineligible under 49 CFR 24.2(g)(2); or
</P>
<P>(iv) HUD determines that the person was not displaced as a direct result of acquisition, rehabilitation, or demolition for the project.
</P>
<P>(3) The owner may ask HUD, at any time, to determine whether a displacement is or would be covered by this section.
</P>
<P>(h) <I>Definition of initiation of negotiations.</I> For purposes of determining the formula for computing the replacement housing assistance to be provided to a residential tenant displaced as a direct result of privately undertaken rehabilitation, demolition, or acquisition of the real property, the term “initiation of negotiations” means the owner's execution of the Housing Assistance Payments Contract.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under OMB Control Number 2506-0121)
</APPRO>
<CITA TYPE="N">[58 FR 43723, Aug. 17, 1993, amended at 65 FR 16724, Mar. 29, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 886.339" NODE="24:4.1.2.1.9.3.1.40" TYPE="SECTION">
<HEAD>§ 886.339   Emergency transfers for victims of domestic violence, dating violence, sexual assault, and stalking.</HEAD>
<P>(a) Covered housing providers must develop and implement an emergency transfer plan that meets the requirements in 24 CFR 5.2005(e).
</P>
<P>(b) In order to facilitate emergency transfers for victims of domestic violence, dating violence, sexual assault, and stalking, covered housing providers have discretion to adopt new, and modify any existing, admission preferences or transfer waitlist priorities.
</P>
<P>(c) In addition to following requirements in 24 CFR 5.2005(e), when a safe unit is not immediately available for a victim of domestic violence, dating violence, sexual assault, or stalking who qualifies for an emergency transfer, covered housing providers must:
</P>
<P>(1) Review the covered housing provider's existing inventory of units and determine when the next vacant unit may be available; and
</P>
<P>(2) Provide a listing of nearby HUD subsidized rental properties, with or without preference for persons of domestic violence, dating violence, sexual assault, or stalking, and contact information for the local HUD field office.
</P>
<P>(d) Each year, covered housing providers must submit to HUD data on all emergency transfers requested under 24 CFR 5.2005(e), including data on the outcomes of such requests.
</P>
<CITA TYPE="N">[81 FR 80814, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 886.340" NODE="24:4.1.2.1.9.3.1.41" TYPE="SECTION">
<HEAD>§ 886.340   Broadband infrastructure.</HEAD>
<P>Any new construction or substantial rehabilitation, as substantial rehabilitation is defined by 24 CFR 5.100, of a building with more than 4 rental units and that is subject to a Housing Assistance Payments contract executed or renewed after January 19, 2017 must include installation of broadband infrastructure, as this term is also defined in 24 CFR 5.100, except where the owner determines and documents the determination that:
</P>
<P>(a) The location of the new construction or substantial rehabilitation makes installation of broadband infrastructure infeasible;
</P>
<P>(b) The cost of installing broadband infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden; or
</P>
<P>(c) The structure of the housing to be substantially rehabilitated makes installation of broadband infrastructure infeasible.
</P>
<CITA TYPE="N">[81 FR 92638, Dec. 20, 2016]


</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="887" NODE="24:4.1.2.1.10" TYPE="PART">
<HEAD>PART 887—SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAMS—FAMILY SELF-SUFFICIENCY PROGRAM
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437u, and 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>87 FR 30046, May 17, 2022, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV8 N="§ 887.101" NODE="24:4.1.2.1.10.0.1.1" TYPE="SECTION">
<HEAD>§ 887.101   Purpose, scope, and applicability.</HEAD>
<P>(a) <I>Purpose.</I> (1) The purpose of the Family Self-Sufficiency (FSS) program is to promote the development of local strategies to coordinate the use of Department of Housing and Urban Development (HUD) assistance with public and private resources, to enable families eligible to receive HUD assistance to achieve economic independence and self-sufficiency.
</P>
<P>(2) The purpose of this part is to implement the policies and procedures applicable to operation of an FSS program under HUD's Section 8 Housing assistance payments programs, as established under section 23 of the 1937 Act (42 U.S.C. 1437u).
</P>
<P>(b) <I>Scope.</I> Each owner may implement an FSS program independently or by way of a Cooperative Agreement with a Public Housing Agency (PHA) or another owner. Each owner that administers an FSS program must do so in accordance with the requirements of this part.
</P>
<P>(c) <I>Applicability.</I> This part applies to owners of multifamily rental housing properties assisted by Section 8 Housing assistance payments programs. See part 984 of this title for program regulations applicable to PHAs.
</P>
<P>(d) <I>Non-participation.</I> Tenant participation in an FSS program is voluntary. Assistance under Section 8 Housing assistance payments programs for a family that elects not to participate in an FSS program shall not be refused, delayed or terminated by reason of such election.




</P>
</DIV8>


<DIV8 N="§ 887.103" NODE="24:4.1.2.1.10.0.1.2" TYPE="SECTION">
<HEAD>§ 887.103   Definitions.</HEAD>
<P>The definitions in § 984.103 of this title apply to this part, except that <I>eligible families</I> means tenant families living in multifamily assisted housing.




</P>
</DIV8>


<DIV8 N="§ 887.105" NODE="24:4.1.2.1.10.0.1.3" TYPE="SECTION">
<HEAD>§ 887.105   Basic requirements of FSS programs.</HEAD>
<P>(a) An FSS program that is voluntarily established under this part by an owner must comply with the following requirements:
</P>
<P>(1) Shall be operated in conformity with the regulations of this part and other Section 8 regulations, codified in 24 CFR parts 5, 402, 880, 881, 883, and 884, respectively, and with FSS program objectives, as described in § 984.102 of this title;
</P>
<P>(2) Shall coordinate supportive services as defined in § 984.103 of this title;
</P>
<P>(3) Shall have an Action Plan approved by HUD, as described in § 984.201 of this title, before operating an FSS program;
</P>
<P>(4) When a Program Coordinating Committee (PCC), as described in § 984.202 of this title, is available, owners shall work with that PCC or shall create their own PCC, either by themselves, or in conjunction with other owners;
</P>
<P>(5) Shall comply with the family selection procedures in § 984.203 of this title;
</P>
<P>(6) May make available and utilize onsite facilities, as described in § 984.204 of this title;
</P>
<P>(7) Shall comply with the FSS funds provision, as described in § 984.302(c) of this title;
</P>
<P>(8) Shall enter into Contracts of Participation with eligible families, as described in § 984.303 of this title;
</P>
<P>(9) Shall establish and manage FSS escrow accounts as described in § 984.305 of this title;
</P>
<P>(10) Shall report information to HUD as described in § 984.401 of this title; and
</P>
<P>(11) Shall be operated in compliance with applicable nondiscrimination and equal opportunity requirements including, but not limited to, those set forth in 24 CFR part 5.
</P>
<P>(b) An owner may employ appropriate staff, including an FSS Program Coordinator, to administer its FSS program, and may contract with an appropriate organization to establish and administer parts of the FSS program.




</P>
</DIV8>


<DIV8 N="§ 887.107" NODE="24:4.1.2.1.10.0.1.4" TYPE="SECTION">
<HEAD>§ 887.107   Cooperative Agreements.</HEAD>
<P>(a) An owner may enter into a Cooperative Agreement with:
</P>
<P>(1) A local PHA that operates an FSS program, pursuant to § 984.106 of this title; or
</P>
<P>(2) Another owner that operates an FSS program, pursuant to this section.
</P>
<P>(b) Owners that enter into a Cooperative Agreement pursuant to this part, must:
</P>
<P>(1) Open any FSS waiting lists to all eligible families residing in the properties covered by the Cooperative Agreement.
</P>
<P>(2) Provide periodic escrow amounts to the FSS Program Coordinator for FSS families covered by the Cooperative Agreement under this part. The Cooperative Agreement must provide that each owner is responsible for managing the escrow accounts of their participating families, including calculating and tracking of escrow in accordance with § 984.305 of this title, and set forth the procedures for the sharing of escrow information between the PHA and the owner.
</P>
<P>(3) The Cooperative Agreement must clearly specify the terms and conditions of such agreement, including the requirements of this section, and it must include a process for PHAs and owners to communicate with each other about changes in their Action Plan.




</P>
</DIV8>


<DIV8 N="§ 887.109" NODE="24:4.1.2.1.10.0.1.5" TYPE="SECTION">
<HEAD>§ 887.109   Housing assistance and total tenant payments and increases in family income.</HEAD>
<P>(a) <I>Housing assistance payment.</I> The housing assistance payment for an eligible family participating in the FSS program under this part is determined in accordance with the regulations set forth in § 5.661(e) of this title.
</P>
<P>(b) <I>Total tenant payment.</I> The total tenant payment for an FSS family participating in the FSS program is determined in accordance with § 5.628 of this title.
</P>
<P>(c) <I>Increases in FSS family income.</I> Any increase in the earned income of an FSS family during its participation in an FSS program may not be considered as income or an asset for purposes of eligibility of the FSS family for other benefits, or amount of benefits payable to the FSS family, under any other program administered by HUD.




</P>
</DIV8>


<DIV8 N="§ 887.111" NODE="24:4.1.2.1.10.0.1.6" TYPE="SECTION">
<HEAD>§ 887.111   FSS award funds formula.</HEAD>
<P>The Secretary may establish a formula by which funds for administration of the FSS program are awarded consistent with 42 U.S.C. 1437u(i).




</P>
</DIV8>


<DIV8 N="§ 887.113" NODE="24:4.1.2.1.10.0.1.7" TYPE="SECTION">
<HEAD>§ 887.113   FSS funds.</HEAD>
<P>Owners may access funding from any residual receipt accounts for the property to cover reasonable costs associated with operation of an FSS program, including hiring an FSS Program Coordinator or coordinators for their FSS program.


</P>
</DIV8>

</DIV5>


<DIV5 N="888" NODE="24:4.1.2.1.11" TYPE="PART">
<HEAD>PART 888—SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM—FAIR MARKET RENTS AND CONTRACT RENT ANNUAL ADJUSTMENT FACTORS
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437f and 3535d. 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>50 FR 38796, Sept. 25, 1985, unless otherwise noted. 
</PSPACE></SOURCE>
<EDNOTE>
<HED>Editorial Note:</HED><PSPACE>For revisions and amendments affecting Schedules A, B, C, and D, issued under part 888, but not carried in the Code of Federal Regulations, see the List of CFR Sections Affected, in the Finding Aids section of the printed volume and at <I>www.govinfo.gov.</I></PSPACE></EDNOTE>

<DIV6 N="A" NODE="24:4.1.2.1.11.1" TYPE="SUBPART">
<HEAD>Subpart A—Fair Market Rents</HEAD>


<DIV8 N="§ 888.111" NODE="24:4.1.2.1.11.1.1.1" TYPE="SECTION">
<HEAD>§ 888.111   Fair market rents for existing housing: Applicability.</HEAD>
<P>(a) The fair market rents (FMRs) for existing housing are determined by HUD and are used in the Section 8 Housing Choice Voucher program (HCV program) (part 982 of this title), Section 8 project-based assistance programs and other programs requiring their use. In the HCV program, the FMRs are used to determine payment standard schedules. In the Section 8 project-based assistance programs, the FMRs are used to determine the maximum initial rent (at the beginning of the term of a housing assistance payments contract).
</P>
<P>(b) Fair market rent means the rent, including the cost of utilities (except telephone), as established by HUD, pursuant to this subpart, for units of varying sizes (by number of bedrooms), that must be paid in the market area to rent privately owned, existing, decent, safe and sanitary rental housing of modest (non-luxury) nature with suitable amenities.
</P>
<CITA TYPE="N">[64 FR 56911, Oct. 21, 1999, as amended at 81 FR 80580, Nov. 16, 2017]




</CITA>
</DIV8>


<DIV8 N="§ 888.113" NODE="24:4.1.2.1.11.1.1.2" TYPE="SECTION">
<HEAD>§ 888.113   Fair market rents for existing housing: Methodology.</HEAD>
<P>(a) <I>Basis for setting fair market rents.</I> Fair Market Rents (FMRs) are estimates of rent plus the cost of utilities, except telephone. FMRs are housing market-wide estimates of rents that provide opportunities to rent standard quality housing throughout the geographic area in which rental housing units are in competition. The level at which FMRs are set is expressed as a percentile point within the rent distribution of standard quality rental housing units in the FMR area. FMRs are set at the 40th percentile rent, the dollar amount below which the rent for 40 percent of standard quality rental housing units fall within the FMR area. The 40th percentile rent is drawn from the distribution of rents of all units within the FMR area that are occupied by recent movers. Adjustments are made to exclude public housing units and substandard units.
</P>
<P>(b) <I>Setting FMRs at the 40th percentile rent.</I> Generally, HUD will set the FMRs at the 40th percentile rent, but no lower than 90 percent of the previous year's FMR for the FMR area.
</P>
<P>(c) <I>Setting Small Area FMRs.</I> (1) HUD will set Small Area FMRs for certain metropolitan FMR areas for use in the administration of tenant-based assistance under the HCV program. HUD will establish the selection values used to determine those metropolitan areas through a <E T="04">Federal Register</E> notice on November 16, 2016 and may update the selection values through a <E T="04">Federal Register</E> notice, subject to public comment. The selection criteria used to determine those metropolitan areas are:
</P>
<P>(i) The number of vouchers under lease in the metropolitan FMR area;
</P>
<P>(ii) The percentage of the standard quality rental stock, within the metropolitan FMR area is in small areas (ZIP codes) where the Small Area FMR is more than 110 percent of the metropolitan FMR area;
</P>
<P>(iii) The percentage of voucher families living in concentrated low income areas;
</P>
<P>(iv) The percentage of voucher families living in concentrated low income areas relative to the percentage of all renters within these areas over the entire metropolitan area; and
</P>
<P>(v) The vacancy rate for the metropolitan area.
</P>
<P>(2) For purposes of determining applicability of Small Area FMRs to a metropolitan area, the term “concentrated low-income areas” means:
</P>
<P>(i) Those census tracts in the metropolitan FMR area with a poverty rate of 25 percent or more; or
</P>
<P>(ii) Any tract in the metropolitan FMR area where at least 50 percent of the households earn less than 60 percent of the area median income and are designated by HUD as Qualified Census Tracts in accordance with section 42 of the Internal Revenue Code (26 U.S.C. 42).
</P>
<P>(3) If a metropolitan area meets the criteria of paragraph (c)(1) of this section, Small Area FMRs will apply to the metropolitan area and all PHAs administering HCV programs in that area will be required to use Small Area FMRs. A PHA administering an HCV program in either a metropolitan area not subject to the application of Small Area FMRs or in a non-metropolitan area for which HUD publishes Small Area FMRs may choose to use Small Area FMRs after notification to HUD. A PHA that exercises this option in one metropolitan area or non-metropolitan county is not required to exercise this option in other metropolitan areas or non-metropolitan counties.
</P>
<P>(4) HUD will designate Small Area FMR areas at the beginning of a Federal fiscal year, such designations will be permanent, and will make new area designations every 5 years thereafter as new data becomes available. HUD may suspend a Small Area FMR designation from a metropolitan area, or may temporarily exempt a PHA in a Small Area FMR metropolitan area from use of the Small Area FMRs, when HUD by notice makes a documented determination that such action is warranted. Actions that may serve as the basis of a suspension of Small Area FMRs are:
</P>
<P>(i) A Presidentially declared disaster area that results in the loss of a substantial number of housing units;
</P>
<P>(ii) A sudden influx of displaced households needing permanent housing; or
</P>
<P>(iii) Other events as determined by the Secretary.
</P>
<P>(5) Small Area FMRs only apply to tenant-based assistance under the HCV program. However, a PHA may elect to apply Small Area FMRs to project-based voucher (PBV) units at 24 CFR part 983 as provided in paragraph (h) of this section.
</P>
<P>(d) <I>FMR areas.</I> FMR areas comprise metropolitan areas and nonmetropolitan counties and Small Area FMR areas as follows:
</P>
<P>(1) Generally, FMR areas are metropolitan areas and nonmetropolitan counties. With several exceptions, the most current Office of Management and Budget (OMB) metropolitan area definitions of Metropolitan Statistical Areas (MSAs) are used because of their generally close correspondence with housing market area definitions. HUD may make exceptions to OMB definitions if the MSAs encompass areas that are larger than housing market areas. The counties deleted from the HUD-defined FMR areas in those cases are established as separate metropolitan county FMR areas. FMRs are established for all areas in the United States, the District of Columbia, and the Insular Areas of the United States.
</P>
<P>(2) Small Area FMR areas are the U.S. Postal Service ZIP code areas within a designated metropolitan area.
</P>
<P>(e) <I>Data sources.</I> (1) HUD uses the most accurate and current data available to develop the FMR estimates and may add other data sources as they are discovered and determined to be statistically valid. The following sources of survey data are used to develop the base-year FMR estimates:
</P>
<P>(i) The most recent American Community Survey conducted by the U.S. Census Bureau, which provides statistically reliable rent data.
</P>
<P>(ii) Locally collected survey data acquired through Address-Based Mail surveys or Random Digit Dialing (RDD) telephone survey data, based on a sampling procedure that uses computers to select statistically random samples of rental housing.
</P>
<P>(iii) Statistically valid information, as determined by HUD, presented to HUD during the public comment and review period.
</P>
<P>(2) Base-year recent mover adjusted FMRs are updated and trended to the midpoint of the program year they are to be effective using Consumer Price Index (CPI) data for rents and for utilities.
</P>
<P>(f) <I>Unit size adjustments.</I> (1) For most areas the ratios developed incorporating the most recent American Community Survey data are applied to the two-bedroom FMR estimates to derive FMRs for other bedroom sizes. Exceptions to this procedure may be made for areas with local bedroom intervals below an acceptable range. To help the largest most difficult-to-house families find units, higher ratios than the actual market ratios may be used for three-bedroom and larger-size units.
</P>
<P>(2) The FMR for single room occupancy housing is 75 percent of the FMR for a zero bedroom unit.
</P>
<P>(g) <I>Manufactured home space rental.</I> The FMR for a manufactured home space rental (for the HCV program under 24 CFR part 982) is 40 percent of the FMR for a two-bedroom unit for the metropolitan area or non-metropolitan county, as applicable. Small Area FMRs under paragraph (c) of this section do not apply to manufactured home space rentals.
</P>
<P>(h) <I>Small Area FMRs and project-based vouchers.</I> Unless one of the following exceptions apply, Small Area FMRs do not apply to project-based vouchers regardless of whether HUD designates the metropolitan area or the PHA notifies HUD and implements the Small Area FMRs under paragraph (c)(3) of this section. (See 24 CFR 983.301(f)(3) for separate requirements regarding the applicability of exception payment standards based on Small Area FMRs to PBV projects.)
</P>
<P>(1) Where the proposal or project selection date under 24 CFR 983.51(g) was on or before the effective dates of either or both the Small Area FMR designation/implementation and the PHA administrative policy, the PHA and owner may mutually agree to apply the Small Area FMR. The application of the Small Area FMRs must be prospective and consistent with the PHA Administrative Plan. The owner and PHA may not subsequently choose to revert back to the use of the metropolitan-wide or county-wide FMRs for the PBV project. If the rent to owner will increase as a result of the mutual agreement to apply the Small Area FMRs to the PBV project, the rent increase shall not be effective until the next annual anniversary of the HAP contract in accordance with 24 CFR 983.302(b).
</P>
<P>(2) Where the proposal or project selection date under 24 CFR 983.51(g) was after the effective dates of both the Small Area FMR designation/implementation and the PHA administrative policy, the Small Area FMRs shall apply to the PBV project if the PHA Administrative Plan provides that Small Area FMRs are used for all future PBV projects. If the PHA chooses to implement this administrative policy, the Small Area FMRs must apply to all future PBV projects located within the same metropolitan area or non-metropolitan county where the Small Area FMRs are in effect for the PHA's HCV program. An owner and the PHA may not subsequently choose to apply the metropolitan area or county FMR to the project, regardless of whether the PHA subsequently changes its Administrative Plan to revert to the use of metropolitan-wide or county-wide FMR for future PBV projects.
</P>
<P>(3) For purposes of this section, the term “effective date of the Small Area FMR designation” means:
</P>
<P>(i) The date that HUD designated a metropolitan area as a Small Area FMR area; or
</P>
<P>(ii) The date that the PHA notified HUD it will use Small Area FMRs for its HCV program, as applicable.
</P>
<P>(4) For purposes of this section, the term “effective date” when used in reference to the PHA administrative policy means the effective date of the policy in the PHA Administrative Plan that has been formally adopted by the PHA Board of Commissioners or other authorized PHA officials in accordance with 24 CFR 982.54(a).


</P>
<P>(i) <I>Transition of metropolitan areas previously subject to 50th percentile FMRs.</I> (1) A metropolitan area designated as 50th percentile FMR areas for which the 3-year period has not expired prior to January 17, 2017 shall transition out of 50th percentile FMRs as follows:
</P>
<P>(i) A 50th percentile FMR area that is designated for Small Area FMRs in accordance with paragraph (c) of this section will transition to the Small Area FMRs upon the effective date of the Small Area FMR designation;
</P>
<P>(ii) A 50th percentile metropolitan FMR area not designated as a Small Area FMRs in accordance with paragraph (c) of this section, will remain a 50th percentile FMR until the expiration of the three-year period, at which time the metropolitan area will revert to the standard FMR based on the 40th percentile rent for the metropolitan area.
</P>
<P>(2) A PHA with jurisdiction in a 50th percentile FMR area that reverts to the standard 40th percentile FMR may request HUD approval of payment standard amounts based on the 50th percentile rent in accordance with 24 CFR 982.503(g).
</P>
<P>(3) HUD will calculate the 50th percentile rents for certain metropolitan areas for this purpose. As is the case for determining 40th percentile rent, the 50th percentile rent is drawn from the distribution of rents of all units that are occupied by recent movers and adjustments are made to exclude public housing units, newly built units and substandard units.
</P>
<CITA TYPE="N">[81 FR 80580, Nov. 16, 2016, as amended at 89 FR 38291, May 7, 2024; 90 FR 56687, Dec. 8, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 888.115" NODE="24:4.1.2.1.11.1.1.3" TYPE="SECTION">
<HEAD>§ 888.115   Fair market rents for existing housing: Manner of publication.</HEAD>
<P>(a) <I>Publication of FMRs.</I> FMRs will be published at least annually by HUD on the World Wide Web, or in any other manner specified by the Secretary. HUD will publish a notice announcing the publication of the FMRs in the <E T="04">Federal Register,</E> to be effective October 1 of each year, and provide for a minimum of 30 days of public comments and requested for reevaluation of the FMRs in a jurisdiction. The FMRs will become effective no earlier than 30 days after the date the notice publishes in the <E T="04">Federal Register</E> (<I>e.g.</I>, if HUD fails to publish FMRs 30 days before October 1, the effective date will be 30 days after publication), except for areas where HUD receives comments during the minimum 30-day comment period requesting reevaluation of the FMRs in a jurisdiction. After HUD reviews a request for reevaluation, HUD will post on the World Wide Web the final FMRs for the areas that have been reevaluated and publish a notice in the <E T="04">Federal Register</E> announcing the publication and the effective date.
</P>
<P>(b) <I>Changes in methodology.</I> HUD will publish for comment in the <E T="04">Federal Register</E> a document proposing material changes in the method for estimating FMRs and shall respond to public comment on the proposed material changes in the subsequent <E T="04">Federal Register</E> document announcing the availability of new FMRs based on the revised method for estimating FMRs.
</P>
<CITA TYPE="N">[81 FR 80581, Nov. 16, 2016]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.2.1.11.2" TYPE="SUBPART">
<HEAD>Subpart B—Contract Rent Annual Adjustment Factors</HEAD>


<DIV8 N="§ 888.201" NODE="24:4.1.2.1.11.2.1.1" TYPE="SECTION">
<HEAD>§ 888.201   Purpose.</HEAD>
<P>Automatic Annual Adjustment Factors are used to adjust rents under the Section 8 Housing Assistance Payments Program.
</P>
<CITA TYPE="N">[44 FR 75383, Dec. 20, 1979]


</CITA>
</DIV8>


<DIV8 N="§ 888.202" NODE="24:4.1.2.1.11.2.1.2" TYPE="SECTION">
<HEAD>§ 888.202   Manner of publication.</HEAD>
<P>Adjustment Factors will be published in the <E T="04">Federal Register</E> at least annually by Notice. Interim revisions may be published as market conditions indicate. In the case of revised factors applicable only to specific areas, the HUD Field Office will publish a notice appropriate to the limited scope of the revised factors (see § 888.204).
</P>
<CITA TYPE="N">[42 FR 60508, Nov. 25, 1977, as amended at 44 FR 75383, Dec. 20, 1979; 47 FR 4252, Jan. 29, 1982]


</CITA>
</DIV8>


<DIV8 N="§ 888.203" NODE="24:4.1.2.1.11.2.1.3" TYPE="SECTION">
<HEAD>§ 888.203   Use of contract rent automatic annual adjustment factors.</HEAD>
<P>(a) To compute an adjustment to a Contract Rent, find the schedule of Automatic Annual Adjustment Factors for the appropriate Census Region or Standard Metropolitan Statistical Area—
</P>
<P>(1) If the Contract Rent includes all utilities, use the factor shown on the basic schedule for the rent bracket within which the particular Contract Rent falls and for the applicable size of unit (by number of bedrooms).
</P>
<P>(2) If the Contract Rent does not include all utilities but does include the highest cost utility, use the appropriate factor shown on the basic schedule.
</P>
<P>(3) If the Contract Rent does not include any utilities or includes some utilities but not the highest cost utility, use the Annual Adjustment Factor for Contract Rent (Excluding Utilities).
</P>
<P>(b) The adjusted monthly amount of the Contract Rent of a dwelling unit shall be determined by multiplying the Contract Rent in effect on the anniversary date of the contract by the applicable Automatic Annual Adjustment Factor (see paragraph (a) of this section) and rounding the result as follows:
</P>
<P>(1) If the result contains a fractional dollar amount ranging from $0.01 to $0.49, round to the next lower whole dollar amount;
</P>
<P>(2) If the result contains a fractional dollar amount ranging from $0.50 to $0.99, round to the next higher whole dollar amount.
</P>
<CITA TYPE="N">[42 FR 60508, Nov. 25, 1977, as amended at 44 FR 21769, Apr. 12, 1979; 47 FR 4252, Jan. 29, 1982; 59 FR 38564, July 29, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 888.204" NODE="24:4.1.2.1.11.2.1.4" TYPE="SECTION">
<HEAD>§ 888.204   Revision to the automatic annual adjustment factors.</HEAD>
<P>If the application of the Annual Adjustment Factors results in rents that are substantially lower than rents charged for comparable units not receiving assistance under the U.S. Housing Act of 1937, in the area for which the factor was published or a portion thereof, and it is shown to HUD that the costs of operating comparable rental housing have increased at a substantially greater rate than the Adjustment Factors, the HUD Field Office will consider establishing separate or revised Automatic Annual Adjustment Factors for that particular area. Any request for revision of the factors must be accompanied by an identification of the area, its boundaries and evidence that the area constitutes the largest contiguous area in which substantially the same rent levels prevail. The HUD Field Office will publish appropriate notice of the establishment of any such revised Automatic Annual Adjustment Factors. These factors will remain in effect until superseded by the subsequent publication of Automatic Annual Adjustment Factors pursuant to § 888.202.
</P>
<CITA TYPE="N">[44 FR 21769, Apr. 12, 1979] 


</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:4.1.2.1.11.3" TYPE="SUBPART">
<HEAD>Subpart C—Retroactive Housing Assistance Payments for New Construction, Substantial Rehabilitation, State Finance Agencies, Section 515 Farmers Home Administration, Section 202 Elderly or Handicapped, and Special Allocations Projects</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>56 FR 20084, May 1, 1991, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 888.301" NODE="24:4.1.2.1.11.3.1.1" TYPE="SECTION">
<HEAD>§ 888.301   Purpose and scope.</HEAD>
<P>(a) <I>Purpose.</I> This subpart describes the basic policies and procedures for the retroactive payment of Housing Assistance Payments to eligible project owners for the period from October 1, 1979 to May 31, 1991 and for one-time Contract Rent determinations for such eligible project owners. 
</P>
<P>(b) <I>Applicability.</I> This subpart applies to all project-based Section 8 Housing Assistance Payments Contracts under New Construction (Part 880); Substantial Rehabilitation (Part 881); State Finance Agencies (Part 883); and Section 515 Farmers Home Administration (Part 884). It also applies to those projects under Section 202 Elderly or Handicapped (Part 885) and Special Allocations (Part 886, Subparts A and C) whose Contract Rents are adjusted by use of the Annual Adjustment Factors (AAFs), as described in subpart B of this part. 
</P>
<P>(c) <I>Eligible project owners.</I> Project owners may be eligible for retroactive payments if, during the period from October 1, 1979 to May 31, 1991: 
</P>
<P>(1) The use of a comparability study by HUD (or the Contract Administrator), which was conducted as an independent limitation on the amount of rent adjustment that would have resulted from use of the applicable AAF, resulted in the reduction of the maximum monthly Contract Rents for units covered by a Housing Assistance Payments (HAP) contract or resulted in less than the maximum increase for those units than would otherwise be permitted by the AAF; or 
</P>
<P>(2) The HAP contract required a project owner to request annual rent adjustments, and the project owner certifies that a request was not made because of an anticipated reduction of the maximum monthly Contract Rents resulting from a comparability study. 


</P>
</DIV8>


<DIV8 N="§ 888.305" NODE="24:4.1.2.1.11.3.1.2" TYPE="SECTION">
<HEAD>§ 888.305   Amount of the retroactive Housing Assistance Payments.</HEAD>
<P>(a) <I>Recalculating the total rent adjustment.</I> To establish the amount of the retroactive HAP payment for which a project owner meeting the criteria in § 888.301(c) is eligible, the total rent adjustment will be recalculated for the period from October 1, 1979 to May 31, 1991. For purposes of establishing the amount of the retroactive payment only, the total rent adjustment will be an amount equal to the Contract Rent, minus the amount of the Contract Rent attributable to debt service, multiplied by the applicable AAF, for each year. 
</P>
<P>(b) <I>Calculating the retroactive payment.</I> HUD (or the Contract Administrator) will pay, as a retroactive Housing Assistance Payment, the amount, if any, by which the total rent adjustment, calculated under paragraph (a) of this section, exceeds the rent adjustments actually approved for the same time period, except that in no event will any payment be an amount less than 30 percent of the aggregate of the full Contract Rent multiplied by the applicable AAF, minus the sum of the rent adjustments actually approved for the same time period, adjusted by the average occupancy rate. 
</P>
<P>(c) <I>Occupancy rates.</I> (1) Retroactive payments will be made only for units that were occupied, based on average occupancy rate, including units qualifying for vacancy payments under 24 CFR 880.611, 881.611, 883.712, 884.106, 885.985, 886.109, or 886.309, during the time period from October 1, 1979 to May 31, 1991. 
</P>
<P>(2) When requesting retroactive payment, a project owner must, if the information is available, submit documentation of occupancy rates, on either an annual or monthly basis, for the same time period. The average occupancy rate will be based on these records. If records are unavailable for the full time period, HUD (or the Contract Administrator) will establish an average occupancy rate, to be used for the entire period, from the occupancy rate for the three years immediately preceding May 31, 1991. 
</P>
<P>(d) <I>Revised AAFs.</I> For any year during the period from October 1, 1979 to May 31, 1991, where a HUD field office published a revised Annual Adjustment Factor that replaced the applicable AAF for a specific locality under 24 CFR 888.204, the revised Annual Adjustment Factor, which applied to all projects in that area, will be used to recalculate the total rent adjustment under paragraph (a) of this section, and to establish the amount of the retroactive payments. 
</P>
<P>(e) <I>Special adjustments.</I> When calculating the total rent adjustments and establishing the amount of the retroactive payments under paragraphs (a) and (b) of this section, any special adjustments granted under 24 CFR 880.609(b), 881,609(b), 883.710(b), 884.109(c), 886.112(c), or 886.312(c) during the time period from October 1, 1979 to May 31, 1991, to reflect substantial general increases in real property taxes, assessments, utility rates, utilities not covered by regulated rates, or for special adjustments for any other purpose authorized by a waiver of the regulations, will be deducted from the Contract Rent before applying the AAF.
</P>
<P>(f) <I>AAFs less than 1.0.</I> For any area where an AAF of less than 1.0 was published, a factor of 1.0 will be used to recalculate the total rent adjustments and to establish the amount of the retroactive payments under paragraphs (a) and (b) of this section. 
</P>
<P>(g) <I>Debt service.</I> (1) For purposes of this section, debt service includes principal, interest, and the mortgage insurance premium, if any. 
</P>
<P>(2) The monthly debt service set forth in the original mortgage documents for a project will be used to compute the debt service portion of the contract rent. The debt service will be compared to the spread of unit sizes included in the original HAP contract, and the amount used in the calculation will be based on the percentage of total rent potential of the various unit types. 
</P>
<P>(3) If, in some cases, HUD or the Contract Administrator cannot determine the debt service for a project, the project owner will be asked to provide documentation of the debt service. The project owner will be notified by the HUD Field Office or the Contract Administrator of the need for documentation of the debt service, and allowed 30 days to respond, or for such longer period as approved by HUD or the Contract Administrator on a case-by-case basis. Where the debt service is not available to HUD or the Contract Administrator and the owner is unable to provide the necessary information, retroactive payments cannot be made. 
</P>
<P>(h) <I>Applicable AAF.</I> The applicable AAF is the factor in effect on the anniversary date of the contract and appropriate for the area, for the size of the unit, and for the treatment of utilities; except where, for any year when AAFs were published after November 8 and made retroactive to November 8, a project owner was given the option to choose the factor in effect on the anniversary date or the retroactive factor, the applicable AAF is the factor chosen by the project owner in that year.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0042)


</APPRO>
</DIV8>


<DIV8 N="§ 888.310" NODE="24:4.1.2.1.11.3.1.3" TYPE="SECTION">
<HEAD>§ 888.310   Notice of eligibility requirements for retroactive payments.</HEAD>
<P>(a) <I>Notice of eligibility requirements.</I> HUD (or the Contract Administrator) will give written notice to all current owners of projects of the eligibility requirements for retroactive payments. Eligible project owners must make a request for payment and a request for a one-time contract determination within 60 days from the date of the notice. 
</P>
<P>(b) <I>Request for payment.</I> (1) Owners eligible for retroactive payments under § 888.301(c) must submit a request for a calculation of the total rent adjustments and the establishment of the amount of the retroactive payment, as described in § 888.301 (a) and (b), and documentation of the occupancy rate for the period from October 1, 1979, to May 31, 1991, if available. 
</P>
<P>(2) Owners whose HAP contract requires a request to be made for annual rent adjustments must certify that a request was not made because of an anticipated reduction in the Contract Rents as a result of a comparability study. The certification must contain the year or years upon which the request for payment is based and a statement of the basis for the belief that rents would have been reduced. 
</P>
<P>(3) Retroactive payments will be made to owners over a three-year period as funds are appropriated for that purpose. When funds are available for payment, HUD will publish a <E T="04">Federal Register</E> notice containing procedures for claiming payments. 
</P>
<P>(c) <I>Request for one-time contract rent determination.</I> When making a request for payment, eligible owners may also request a one-time contract rent determination, as described in § 888.320. Eligible owners may request a one-time contract rent determination even if they choose not to request retroactive payments, provided they are eligible for retroactive payments. 
</P>
<P>(d) <I>Transfer of ownership since October 1, 1979.</I> Eligible owners who request retroactive payments must certify that they are entitled to the entire amount of the payment. Any owner who is unable to certify must present documentation of an agreement between the current and former owners of the proportionate share of the payment for which each is eligible.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0042)


</APPRO>
</DIV8>


<DIV8 N="§ 888.315" NODE="24:4.1.2.1.11.3.1.4" TYPE="SECTION">
<HEAD>§ 888.315   Restrictions on retroactive payments.</HEAD>
<P>(a) <I>Restrictions on distribution of surplus cash.</I> Retroactive payments for HUD-insured projects and other projects subject to limitations on the distribution of surplus cash will be deposited, in the manner of Housing Assistance Payments, into the appropriate project account. The payments will be subject to HUD rules and procedures (or rules and procedures of other agencies, as appropriate), described in the applicable regulations and the HAP contracts, for distribution of surplus cash to project owners. 
</P>
<P>(b) <I>Replacement reserve.</I> Projects required by HUD regulations to maintain a reserve for replacement account and to adjust the annual payment to the account each year by the amount of the annual rent adjustment must deposit into the account the proportionate share of any retroactive payment received, in accordance with HUD regulations and the HAP contract. 
</P>
<P>(c) <I>Physical condition of HUD-insured or State-financed projects.</I> If the most recent physical inspection report of a HUD-insured project, completed by the mortgagee, or by HUD or the Contract Administrator if a mortgagee inspection is not present, shows significant deficiencies that have not been addressed to the satisfaction of HUD by the date the retroactive payment is deposited into the project account, the payment will not be made available for surplus cash distribution until the deficiencies are resolved or a plan for their resolution has been approved by HUD. 


</P>
</DIV8>


<DIV8 N="§ 888.320" NODE="24:4.1.2.1.11.3.1.5" TYPE="SECTION">
<HEAD>§ 888.320   One-time Contract Rent determination.</HEAD>
<P>(a) <I>Determining the amount of the new Contract Rent.</I> Project owners eligible for retroactive payments, as described in § 888.301(c), may request a one-time Contract Rent determination, to be effective as described in paragraph (c) of this section. The request for a one-time rent determination must be made when submitting a request for retroactive payments, as described in § 888.315. If no claim for retroactive payments is made, an owner may submit only the request for a one-time rent determination, provided the owner is eligible for retroactive payments. The new Contract Rent under this provision will be the greater of: 
</P>
<P>(1) The Contract Rent currently approved by HUD (or the Contract Administrator); or 
</P>
<P>(2) An amount equal to the applicable AAF multipled by the Contract Rent minus debt service, calculated for each year from October 1, 1979, to May 31, 1991. 
</P>
<P>(b) <I>Currently approved rent.</I> The Contract Rent currently approved by HUD (or the Contract Administrator) is the Contract Rent stated in the most recent amendment to the HAP Contract signed by both HUD (or the Contract Administrator) and the owner, or as shown on HUD Form 92458 (Rental Schedule) if the most recent amendment to the HAP Contract cannot be located. 
</P>
<P>(c) <I>Effective date of new Contract Rent.</I> The new Contract Rent, determined under paragraph (a) of this section, will be effective on May 31, 1991.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2505-0042)


</APPRO>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:4.1.2.1.11.4" TYPE="SUBPART">
<HEAD>Subpart D—Retroactive Housing Assistance Payments for Moderate Rehabilitation Projects</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>56 FR 20085, May 1, 1991, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 888.401" NODE="24:4.1.2.1.11.4.1.1" TYPE="SECTION">
<HEAD>§ 888.401   Purpose and scope.</HEAD>
<P>(a) <I>Purpose.</I> This subpart describes the basic policies and procedures for the retroactive payment of Housing Assistance Payments to eligible project owners for the period from October 1, 1979 to May 31, 1991 and a one-time Contract Rent determination for such eligible project owners.
</P>
<P>(b) <I>Applicability.</I> This subpart applies to all Moderate Rehabilitation projects under 24 CFR part 882, subparts D, E, and H.
</P>
<P>(c) <I>Eligible project owners.</I> Project owners may be eligible for retroactive payments if, during the period from October 1, 1979 to May 31, 1991:
</P>
<P>(1) The use of a comparability study by the Public Housing Agency (PHA) as contract administrator, which was conducted as an independent limitation on the amount of rent adjustment that would have resulted from use of the applicable AAF, resulted in the reduction of the maximum monthly Contract Rents for units covered by a Housing Assistance Payments (HAP) contract or resulted in less than the maximum increase for those units than would otherwise be permitted by the AAF; or
</P>
<P>(2) The project owner certifies that a request for an annual rent adjustment was not made because of an anticipated reduction of the maximum monthly Contract Rents resulting from a comparability study.


</P>
</DIV8>


<DIV8 N="§ 888.405" NODE="24:4.1.2.1.11.4.1.2" TYPE="SECTION">
<HEAD>§ 888.405   Amount of the retroactive Housing Assistance Payments.</HEAD>
<P>(a) <I>Recalculating the total rent adjustment.</I> To establish the amount of the retroactive HAP payment for which a project owner meeting the criteria in § 888.401(c) is eligible, the total rent adjustment will be recalculated for the period from October 1, 1979 to May 31, 1991. Rents for that period will be recalculated, under the procedures set out in 24 CFR 882.410(a)(1), by applying the AAF for any affected year, and recalculating the rents for the remainder of the period as necessary. For each year thereafter, all rent adjustments made at the request of the owner at the time will be recalculated, under the procedures in 24 CFR 882.410(a)(1), to account for the new adjustments.
</P>
<P>(b) <I>Calculating the retroactive payment.</I> HUD will pay, through the PHA, as a retroactive Housing Assistance Payment the amount, if any, by which the total rent adjustment, calculated under paragraph (a) of this section exceeds the rent adjustments actually approved for the same time period.
</P>
<P>(c) <I>Occupancy rate.</I> (1) Retroactive payments will be made only for units that were occupied, based on average occupancy rate, including units qualifying for vacancy payments under 24 CFR 882.411, during the time period from October 1, 1979 to May 31, 1991.
</P>
<P>(2) When requesting a retroactive payment, a project owner must, if the information is available, submit documentation of occupancy rates, on either an annual or monthly basis, for the same time period. The average occupancy rate will be based on these records. If records are unavailable for the full time period, the PHA will establish an average occupancy rate, to be used for the entire period, from the occupancy rate for the three years immediately preceding May 31, 1991.
</P>
<P>(d) <I>Revised AAFs.</I> For any year during the period from October 1, 1979 to May 31, 1991, where a HUD field office published a revised Annual Adjustment Factor that replaced the applicable AAF for a specific locality under 24 CFR 888.204, the revised Annual Adjustment Factor, which applied to all projects in that area, will be used to recalculate the total rent adjustment under paragraph (a) of this section, and to establish the amount of the retroactive payments.
</P>
<P>(e) <I>Special adjustments.</I> When calculating the total rent adjustments and establishing the amount of the retroactive payments under paragraphs (a) and (b) of this section, any special adjustments granted under 24 CFR 882.410(a)(2) during the period from October 1, 1979 to May 31, 1991, to reflect substantial general increases in real property taxes, assessments, utility rates, utilities not covered by regulated rates, or for special adjustments for any other purpose authorized by a waiver of the regulations, will be deducted from the base rent before applying the AAF.
</P>
<P>(f) <I>AAFs less than 1.0.</I> For any area where an AAF of less than 1.0 was published, a factor of 1.0 will be used to recalculate the total rent adjustments and to establish the amount of the retroactive payments under paragraphs (a) and (b) of this section.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0042)


</APPRO>
</DIV8>


<DIV8 N="§ 888.410" NODE="24:4.1.2.1.11.4.1.3" TYPE="SECTION">
<HEAD>§ 888.410   Notice of eligibility requirements for retroactive payments.</HEAD>
<P>(a) <I>Notice of eligibility requirements.</I> PHAs will give written notice to all current owners of projects, for which they are the Contract Administrators, of the eligibility requirements for retroactive payments. Eligible project owners must make a request for payment or a request for a one-time contract determination within 60 days from the date of the notice.
</P>
<P>(b) <I>Request for payment.</I> (1) Owners eligible for retroactive payments under § 888.401(c) must submit a request for a calculation of the total rent adjustments and the establishment of the amount of the retroactive payment, as described in § 888.401 (a) and (b), and documentation of the occupancy rate for the period from October 1, 1979 to May 31, 1991, if available.
</P>
<P>(2) Owners claiming eligibility under § 888.401(c)(2) must certify that a request was not made because of an anticipated reduction in the Contract Rents as a result of a comparability study. The certification must contain the year or years upon which the request for payment is based and a statement of the basis for the belief that rents would have been reduced.
</P>
<P>(3) Retroactive payments will be made to owners over a three-year period as funds are appropriated for that purpose. When funds are available for payment, HUD will publish a <E T="04">Federal Register</E> Notice containing procedures for claiming payments.
</P>
<P>(c) <I>Request for one-time contract rent determination.</I> When making a request for payment, eligible owners may also request a one-time contract rent determination, as described in § 888.420. Eligible owners may request a one-time contract rent determination even if they choose to forgo receiving retroactive payments, provided they are eligible for retroactive payments.
</P>
<P>(d) <I>Transfer of ownership since October 1, 1979.</I> Eligible owners requesting retroactive payments must certify that they are entitled to the entire amount of the payment. Any owner who is unable to certify must present documentation of an agreement between the current and former owners of the proportionate share of the payment for which each is eligible.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0042)


</APPRO>
</DIV8>


<DIV8 N="§ 888.415" NODE="24:4.1.2.1.11.4.1.4" TYPE="SECTION">
<HEAD>§ 888.415   Restrictions on retroactive payments.</HEAD>
<P>(a) <I>Restrictions.</I> Retroactive payments are subject to all regulations, procedures, or restrictions that apply to Housing Assistance Payments.
</P>
<P>(b) <I>Review of initial rents.</I> Before calculating the amount of any retroactive payment, the PHA, if directed by HUD, will review whether rents were excessive when initially set.
</P>
<P>(c) <I>Physical condition of projects.</I> If the most recent physical inspection report by the PHA shows significant deficiencies that have not been addressed to the satisfaction of the PHA by the date the retroactive payment is deposited into the project account, the payment will not be made available until the deficiencies are resolved or a plan for their resolution has been approved by the PHA.


</P>
</DIV8>


<DIV8 N="§ 888.420" NODE="24:4.1.2.1.11.4.1.5" TYPE="SECTION">
<HEAD>§ 888.420   One-time Contract Rent determination.</HEAD>
<P>(a) <I>Determining the amount of the new Contract Rent.</I> Project owners eligible for retroactive payments, as described in § 888.401(c), may request a one-time Contract Rent determination, to be effective as described in paragraph (c) of this section. The request for a one-time rent determination must be made when submitting a request for retroactive payments, as described in § 888.415. If no claim for retroactive payments is made, an owner may submit only the request for a one-time rent determination, provided the owner is eligible for retroactive payments. The new Contract Rent under this provision will be the greater of:
</P>
<P>(1) The Contract Rent currently approved by the PHA; or
</P>
<P>(2) An amount equal to the Contract Rent as adjusted to May 31, 1991 under § 888.405(a).
</P>
<P>(b) <I>Currently approved rent.</I> The Contract Rent currently approved by the PHA is the Contract Rent stated in the most recent amendment to the HAP Contract signed by both the PHA and the owner.
</P>
<P>(c) <I>Effective date of new Contract Rent.</I> The new Contract Rent, determined under paragraph (a) of this section, will be effective on May 31, 1991.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0042)


</APPRO>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="891" NODE="24:4.1.2.1.12" TYPE="PART">
<HEAD>PART 891—SUPPORTIVE HOUSING FOR THE ELDERLY AND PERSONS WITH DISABILITIES
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1701q; 42 U.S.C. 1437f, 3535(d), and 8013. 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 11956, Mar. 22, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.2.1.12.1" TYPE="SUBPART">
<HEAD>Subpart A—General Program Requirements</HEAD>


<DIV8 N="§ 891.100" NODE="24:4.1.2.1.12.1.3.1" TYPE="SECTION">
<HEAD>§ 891.100   Purpose and policy.</HEAD>
<P>(a) <I>Purpose.</I> The Section 202 Program of Supportive Housing for the Elderly and the Section 811 Program of Supportive Housing for Persons with Disabilities provide Federal capital advances and project rental assistance under section 202 of the Housing Act of 1959 (12 U.S.C. 1701q) (section 202) and section 811 of the National Affordable Housing Act (42 U.S.C. 8013) (section 811), respectively, for housing projects serving elderly households and persons with disabilities. Section 202 projects shall provide a range of services that are tailored to the needs of the residents. Owners of Section 811 projects shall ensure that the residents are provided with any necessary supportive services that address their individual needs. 
</P>
<P>(b) <I>General policy</I>—(1) <I>Supportive Housing for the Elderly.</I> A capital advance and contract for project rental assistance provided under this program shall be used for the purposes described in Section 202 (12 U.S.C. 1701q(b)). 
</P>
<P>(2) <I>Supportive Housing for Persons with Disabilities.</I> A capital advance and contract for project rental assistance provided under this program shall be used for the purposes described in Section 811 (42 U.S.C. 8013(b)). 
</P>
<P>(c) <I>Use of capital advance funds.</I> No part of the funds reserved may be transferred by the Sponsor, except to the Owner caused to be formed by the Sponsor. This action must be accomplished prior to issuance of a commitment for capital advance funding. 
</P>
<P>(d) <I>Amendments.</I> Subject to the availability of funds, HUD may amend the amount of an approved capital advance only after initial closing has occurred. 


</P>
</DIV8>


<DIV8 N="§ 891.105" NODE="24:4.1.2.1.12.1.3.2" TYPE="SECTION">
<HEAD>§ 891.105   Definitions.</HEAD>
<P>The following definitions apply, as appropriate, throughout this part. Other terms with definitions unique to the particular program are defined in §§ 891.205, 891.305, 891.505, and 891.805, as applicable.
</P>
<P><I>Acquisition with or without repair</I> means the purchase of existing housing and related facilities.
</P>
<P><I>Adjusted income</I> as defined in part 5, subpart F of subtitle A of this title. 
</P>
<P><I>Affiliated entities</I> means entities that the field office determines to be related to each other in such a manner that it is appropriate to treat them as a single entity. Such relationship shall include any identity of interest among such entities or their principals and the use by any otherwise unaffiliated entities of a single Sponsor or of Sponsors (or of a single Borrower or of Borrowers, as applicable) that have any identity of interest themselves or their principals. 
</P>
<P><I>Annual income</I> as defined in part 5, subpart F of subtitle A of this title. In the case of an individual residing in an intermediate care facility for the developmentally disabled that is assisted under title XIX of the Social Security Act and this part, the annual income of the individual shall exclude protected personal income as provided under that Act. For purposes of determining the total tenant payment, the income of such individuals shall be imputed to be the amount that the household would receive if assisted under title XVI of the Social Security Act.
</P>
<P><I>Covered housing provider.</I> For the Supportive Housing for the Elderly and Persons with Disabilities Program, “covered housing provider,” as such term is used in HUD's regulations at 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking), refers to the owner (as defined in §§ 891.205 and 891.305).
</P>
<P><I>Family</I> is defined in 24 CFR 5.403.


</P>
<P><I>Gross rent</I> means contract rent plus any utility allowance.


</P>
<P><I>Household (eligible household)</I> means an elderly or disabled household (as defined in §§ 891.205 or 891.305, respectively), as applicable, that meets the project occupancy requirements approved by HUD and, if the household occupies an assisted unit, meets the very low-income requirements described in § 813.102 of this chapter, as modified by the definition of annual income in this section. 
</P>
<P><I>Housing and related facilities</I> means rental housing structures constructed, rehabilitated, or acquired as permanent residences for use by elderly or disabled households, as applicable. The term includes necessary community space. Except for intermediate care facilities for individuals with developmental disabilities, this term does not include nursing homes, hospitals, intermediate care facilities, or transitional care facilities. For the Loans for the Elderly and Persons with Disabilities Program, see § 891.505. 
</P>
<P><I>Low-income families</I> shall have the same meaning provided in section 3(b)(2) of the United States Housing Act of 1937 (42 U.S.C. 1437a). 
</P>
<P><I>National Sponsor</I> means a Sponsor that has one or more Section 202 or one or more Section 811 project(s) under reservation, construction, or management in two or more different HUD geographical regions.


</P>
<P><I>Net family assets</I> is defined in § 5.603 of this title.



 
</P>
<P><I>Operating costs</I> means HUD-approved expenses related to the provision of housing and includes: 
</P>
<P>(1) Administrative expenses, including salary and management expenses related to the provision of shelter and, in the case of the Section 202 Program, the coordination of services; 
</P>
<P>(2) Maintenance expenses, including routine and minor repairs and groundskeeping; 
</P>
<P>(3) Security expenses; 
</P>
<P>(4) Utilities expenses, including gas, oil, electricity, water, sewer, trash removal, and extermination services. The term “<I>operating costs</I>” excludes telephone services for households; 
</P>
<P>(5) Taxes and insurance; 
</P>
<P>(6) Allowances for reserves; and 
</P>
<P>(7) Allowances for services (in the Section 202 Program only). 
</P>
<P><I>Project rental assistance contract (PRAC)</I> means the contract entered into by the Owner and HUD setting forth the rights and duties of the parties with respect to the project and the payments under the PRAC. 
</P>
<P><I>Project rental assistance payment</I> means the payment made by HUD to the Owner for assisted units as provided in the PRAC. The payment is the difference between the total tenant payment and the HUD-approved per unit operating expenses except for expenses related to items not eligible under design and cost provisions. An additional payment is made to a household occupying an assisted unit when the utility allowance is greater than the total tenant payment. A project rental assistance payment, known as a “vacancy payment,” may be made to the Owner when an assisted unit is vacant, in accordance with the terms of the PRAC. 
</P>
<P><I>Rehabilitation</I> means the improvement of the condition of a property from deteriorated or substandard to good condition. Rehabilitation may vary in degree from the gutting and extensive reconstruction to the cure of substantial accumulation of deferred maintenance. Cosmetic improvements alone do not qualify as rehabilitation under this definition. Rehabilitation may also include renovation, alteration, or remodeling for the conversion or adaptation of structurally sound property to the design and condition required for use under this part, or the repair or replacement of major building systems or components in danger of failure. Improvement of an existing structure requires 15 percent or more of the estimated development cost to rehabilitate the project for a useful life of 40 years. The useful life period commences upon execution of a capital advance agreement.
</P>
<P><I>Replacement reserve account</I> means a project account into which funds are deposited, which may be used only with the approval of the Secretary for repairs, replacement, capital improvements to the section 202 or section 811 units, and retrofitting to reduce the number of units as provided by 24 CFR 891.405(d). 
</P>
<P><I>Section 202</I> means section 202 of the Housing Act of 1959 (12 U.S.C. 1701q), as amended, or the Supportive Housing for the Elderly Program authorized by that section. 
</P>
<P><I>Section 811</I> means section 811 of the National Affordable Housing Act (42 U.S.C. 8013), as amended, or the Supportive Housing for Persons with Disabilities Program authorized by that section.
</P>
<P><I>Single-asset entity,</I> for the purpose of this subpart, means an entity in which the mortgaged property is the only asset of the owner, and the entity is the only owner of the property.
</P>
<P><I>Start-up expenses</I> mean necessary costs (to plan a Section 202 or Section 811 project, as applicable) incurred by the Sponsor or Owner prior to initial closing. 
</P>
<P><I>Tenant rent</I> equals total tenant payment less utility allowance, if any.




</P>
<P><I>Total tenant payment</I> means the monthly amount defined in, and determined in accordance with part 5, subpart F of subtitle A of this title. 
</P>
<P><I>Utility allowance</I> is defined in part 5, subpart F of this subtitle A of this title and is determined or approved by HUD.
</P>
<P><I>Very low-income families</I> shall have the same meaning provided in section 3(b)(2) of the United States Housing Act of 1937 (42 U.S.C. 1437a). 
</P>
<CITA TYPE="N">[61 FR 11956, Mar. 22, 1996, as amended at 66 FR 6225, Jan. 19, 2001; 66 FR 8175, Jan. 30, 2001; 68 FR 67320, Dec. 1, 2003; 70 FR 54209, Sept. 13, 2005; 77 FR 5675, Feb. 3, 2012; 78 FR 37112, June 20, 2013; 81 FR 80814, Nov. 16, 2016; 88 FR 9668, Feb. 14, 2023]






</CITA>
</DIV8>


<DIV8 N="§ 891.110" NODE="24:4.1.2.1.12.1.3.3" TYPE="SECTION">
<HEAD>§ 891.110   Allocation of authority.</HEAD>
<P>In accordance with 24 CFR part 791, the Assistant Secretary will separately allocate the amounts available for capital advances for the development of housing for elderly households and for disabled households, less amounts set aside by Congress for specific types of projects, and for amendments of fund reservations made in prior years, for technical assistance, and for other contracted services. 


</P>
</DIV8>


<DIV8 N="§ 891.115" NODE="24:4.1.2.1.12.1.3.4" TYPE="SECTION">
<HEAD>§ 891.115   Notice of funding availability.</HEAD>
<P>Following an allocation of authority under § 891.110, HUD shall publish a separate Notice of Funding Availability (NOFA) for the Section 202 Program of Supportive Housing for the Elderly and for the Section 811 Program of Supportive Housing for Persons with Disabilities in the <E T="04">Federal Register.</E> The NOFAs will contain specific information on how and when to apply for the available capital advance authority, the contents of the application, and the selection process. 


</P>
</DIV8>


<DIV8 N="§ 891.120" NODE="24:4.1.2.1.12.1.3.5" TYPE="SECTION">
<HEAD>§ 891.120   Project design and cost standards.</HEAD>
<P>In addition to the special project standards described in §§ 891.210 and 891.310, as applicable, the following standards apply: 
</P>
<P>(a) <I>Property standards.</I> Projects under this part must comply with HUD Minimum Property Standards as set forth in 24 CFR part 200, subpart S.
</P>
<P>(b) <I>Accessibility requirements.</I> Projects under this part must comply with the Uniform Federal Accessibility Standards (See 24 CFR 40.7 for availability), section 504 of the Rehabilitation Act of 1973 and HUD's implementing regulations (24 CFR part 8), and for new construction multifamily housing projects, the design and construction requirements of the Fair Housing Act and HUD's implementing regulations at 24 CFR part 100. For the Section 811 Program of Supportive Housing for Persons with Disabilities, see additional accessibility requirements in § 891.310(b). 
</P>
<P>(c) <I>Restrictions on amenities.</I> Projects must be modest in design. Amenities not eligible for HUD funding include atriums, bowling alleys, swimming pools, saunas, and jacuzzis. Sponsors may include certain excess amenities, but they must pay for them from sources other than the Section 202 or 811 capital advance. They must also pay for the continuing operating costs associated with any excess amenities from sources other than the Section 202 or 811 project rental assistance contract.
</P>
<P>(d) <I>Smoke detectors.</I> Smoke detectors and alarm devices must be installed in accordance with standards and criteria acceptable to HUD for the protection of occupants in any dwelling or facility bedroom or other primary sleeping area.
</P>
<P>(e) Projects under this part may have on their sites commercial facilities for the benefit of residents of the project and of the community in which the project is located, so long as the commercial facilities are not subsidized with funding under the supportive housing programs for the elderly or persons with disabilities. Such commercial facilities are considered public accommodations under Title III of the Americans with Disabilities Act and must be accessible under the requirements of that Act.
</P>
<P>(f) <I>Broadband infrastructure.</I> Any new construction or substantial rehabilitation, as substantial rehabilitation is defined by 24 CFR 5.100, of a building with more than 4 rental units and funded by a grant awarded after January 19, 2017 must include installation of broadband infrastructure, as this term is also defined in 24 CFR 5.100, except where the owner determines and documents the determination that:
</P>
<P>(1) The location of the new construction or substantial rehabilitation makes installation of broadband infrastructure infeasible;
</P>
<P>(2) The cost of installing broadband infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden; or
</P>
<P>(3) The structure of the housing to be substantially rehabilitated makes installation of broadband infrastructure infeasible.
</P>
<CITA TYPE="N">[61 FR 11956, Mar. 22, 1996, as amended at 68 FR 67320, Dec. 1, 2003; 73 FR 29985, May 23, 2008; 78 FR 37112, June 20, 2013; 81 FR 92638, Dec. 20, 2016; 82 FR 3623, Jan. 12, 2017]






</CITA>
</DIV8>


<DIV8 N="§ 891.125" NODE="24:4.1.2.1.12.1.3.6" TYPE="SECTION">
<HEAD>§ 891.125   Site and neighborhood standards.</HEAD>
<P>All sites must meet the following site and neighborhood requirements: 
</P>
<P>(a) The site must be adequate in size, exposure, and contour to accommodate the number and type of units proposed, and adequate utilities (water, sewer, gas, and electricity) and streets must be available to service the site. 
</P>
<P>(b) The site and neighborhood must be suitable from the standpoint of facilitating and furthering full compliance with the applicable provisions of Title VI of the Civil Rights Act of 1964, the Fair Housing Act, Executive Order 11063 (27 FR 11527, 3 CFR, 1958-1963 Comp., p. 652); as amended by Executive Order 12259, (46 FR 1253, 3 CFR, 1980 Comp., p. 307)); section 504 of the Rehabilitation Act of 1973, and implementing HUD regulations. 


</P>
<P>(c) New construction sites must meet the following site and neighborhood requirements: 
</P>
<P>(1) The site must not be located in an area of minority concentration (or minority elderly concentration under the Section 202 Program) except as permitted under paragraph (c)(2) of this section, and must not be located in a racially mixed area if the project will cause a significant increase in the proportion of minority to nonminority residents (or minority elderly to nonminority elderly residents, under the Section 202 Program) in the area. 
</P>
<P>(2) A project may be located in an area of minority concentration (or minority elderly concentration, under the Section 202 Program) only if: 
</P>
<P>(i) Sufficient, comparable opportunities exist for housing for minority elderly households or minority disabled households, as applicable (or minority families, for projects funded under §§ 891.655 through 891.790), in the income range to be served by the proposed project, outside areas of minority concentration (see paragraph (c)(3) of this section for further guidance on this criterion); or 
</P>
<P>(ii) The project is necessary to meet overriding housing needs that cannot be met in that housing market area (see paragraph (c)(4) of this section for further guidance on this criterion). 
</P>
<P>(3)(i) <I>Sufficient</I> does not require that in every locality there be an equal number of assisted units within and outside of areas of minority concentration. Rather, application of this standard should produce a reasonable distribution of assisted units each year which over a period of several years will approach an appropriate balance of housing opportunities within and outside areas of minority concentration. An appropriate balance in any jurisdiction must be determined in light of local conditions affecting the range of housing choices available for very low-income minority elderly or disabled households, as applicable (or low-income minority families, for projects funded under §§ 891.655 through 891.790), and in relation to the racial mix of the locality's population. 
</P>
<P>(ii) Units may be considered to be <I>comparable opportunities</I> if they have the same household type (elderly or disabled, as applicable) and tenure type (owner/renter); require approximately the same total tenant payment; serve the same income group; are located in the same housing market; and are in standard condition. 
</P>
<P>(iii) Application of this sufficient, comparable opportunities standard involves assessing the overall impact of HUD-assisted housing on the availability of housing choices for very low-income minority elderly or disabled households, as applicable (or low-income minority families, for projects funded under §§ 891.655 through 891.790), in and outside areas of minority concentration, and must take into account the extent to which the following factors are present, along with any other factor relevant to housing choice: 
</P>
<P>(A) A significant number of assisted housing units are available outside areas of minority concentration. 
</P>
<P>(B) There is significant integration of assisted housing projects constructed or rehabilitated in the past ten years, relative to the racial mix of the eligible population. 
</P>
<P>(C) There are racially integrated neighborhoods in the locality. 
</P>
<P>(D) Programs are operated by the locality to assist minority elderly or disabled households, as applicable (or minority families, for projects funded under §§ 891.655 through 891.790), that wish to find housing outside areas of minority concentration. 
</P>
<P>(E) Minority elderly or disabled households, as applicable (or minority families, for projects funded under §§ 891.655 through 891.790), have benefitted from local activities (e.g., acquisition and write-down of sites, tax relief programs for homeowners, acquisitions of units for use as assisted housing units) undertaken to expand choice for minority households (or families) outside of areas of minority concentration. 
</P>
<P>(F) A significant proportion of minority elderly or disabled households, as applicable (or minority households, for projects funded under §§ 891.655 through 891.790), have been successful in finding units in nonminority areas under the Section 8 Housing Voucher programs. 
</P>
<P>(G) Comparable housing opportunities have been made available outside areas of minority concentration through other programs. 
</P>
<P>(4) Application of the <I>overriding housing needs</I> criterion, for example, permits approval of sites that are an integral part of an overall local strategy for the preservation or restoration of the immediate neighborhood and of sites in a neighborhood experiencing significant private investment that is demonstrably changing the economic character of the area (a “revitalizing area”). An <I>overriding housing need,</I> however, may not serve as the basis for determining that a site is acceptable if the only reason the need cannot otherwise be feasibly met is that discrimination on the basis of race, color, creed, sex, or national origin renders sites outside areas of minority concentration unavailable, or if the use of this standard in recent years has had the effect of circumventing the obligation to provide housing choice. 
</P>
<P>(d) The neighborhood must not be one that is seriously detrimental to family life or in which substandard dwellings or other undesirable conditions predominate, unless there is actively in progress a concerted program to remedy the undesirable conditions. 
</P>
<P>(e) The housing must be accessible to social, recreational, educational, commercial, and health facilities and services, and other municipal facilities and services that are at least equivalent to those typically found in neighborhoods consisting largely of unassisted, standard housing of similar market rents. 
</P>
<P>(f) For the Section 811 Program of Supportive Housing for Persons with Disabilities, the additional site and neighborhood requirements in § 891.320 apply. 
</P>
<CITA TYPE="N">[61 FR 11956, Mar. 22, 1996, as amended at 89 FR 38292, May 7, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 891.130" NODE="24:4.1.2.1.12.1.3.7" TYPE="SECTION">
<HEAD>§ 891.130   Prohibited relationships.</HEAD>
<P>This section shall apply to capital advances under the Section 202 Program and the Section 811 Program, as well as to loans financed under §§ 891.655 through 891.790. 
</P>
<P>(a) <I>Conflicts of interest.</I> (1) Officers and Board members of either the Sponsor or the Owner (or Borrower, as applicable) may not have any financial interest in any contract with the Owner or in any firm which has a contract with the Owner. This restriction applies so long as the individual is serving on the Board and for a period of three years following resignation or final closing, whichever occurs later. 
</P>
<P>(2) The following contracts between the Owner (or Borrower, as applicable) and the Sponsor or the Sponsor's nonprofit affiliate will not constitute a conflict of interest if no more than two persons salaried by the Sponsor or management affiliate serve as nonvoting directors on the Owner's board of directors: 
</P>
<P>(i) Management contracts (including associated management fees); 
</P>
<P>(ii) Supportive services contracts (including service fees) under the Supportive Housing for the Elderly Program; 
</P>
<P>(iii) Developer (consultant) contracts; and
</P>
<P>(iv) Contracts for the sale of land.
</P>
<P>(b) <I>Identity of interest.</I> An identity of interest between the Sponsor or Owner (or Borrower, as applicable) and any development team member or between development team members is prohibited until two years after final closing. 
</P>
<CITA TYPE="N">[61 FR 11956, Mar. 22, 1996, as amended at 70 FR 54209, Sept. 13, 2005; 78 FR 37112, June 20, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 891.135" NODE="24:4.1.2.1.12.1.3.8" TYPE="SECTION">
<HEAD>§ 891.135   Amount and terms of capital advances.</HEAD>
<P>(a) <I>Amount of capital advances.</I> The amount of capital advances approved shall be the amount stated in the notification of fund reservation, including any adjustment required by HUD before the final closing. The amount of the capital advance may not exceed the appropriate development cost limit. 
</P>
<P>(b) <I>Estimated development cost.</I> The amount of the capital advance may not exceed the total estimated development cost of the project (as determined by HUD), less the incremental development cost associated with excess amenities and design features to be paid for by the Sponsor under § 891.120. 


</P>
</DIV8>


<DIV8 N="§ 891.140" NODE="24:4.1.2.1.12.1.3.9" TYPE="SECTION">
<HEAD>§ 891.140   Development cost limits.</HEAD>
<P>(a) HUD shall use the development cost limits, established by Notice in the <E T="04">Federal Register</E> and adjusted by locality, to calculate the fund reservation amount of the capital advance to be made available to individual Owners. Owners that incur actual development costs that are less than the amount of the initial fund reservation shall be entitled to retain 50 percent of the savings in a Replacement Reserve Account. Such percentage shall be increased to 75 percent for Owners that add energy efficiency features. 
</P>
<P>(b) The Replacement Reserve Account established under paragraph (a) of this section may only be used for repairs, replacements, and capital improvements to the project. 


</P>
</DIV8>


<DIV8 N="§ 891.145" NODE="24:4.1.2.1.12.1.3.10" TYPE="SECTION">
<HEAD>§ 891.145   Owner deposit (Minimum Capital Investment).</HEAD>
<P>As a Minimum Capital Investment, the Owner must deposit in a special escrow account one-half of one percent (0.5%) of the HUD-approved capital advance, not to exceed $10,000, to assure the Owner's commitment to the housing. Under the Section 202 Program, if an Owner has a National Sponsor or a National Co-Sponsor, the Minimum Capital Investment shall be one-half of one percent (0.5%) of the HUD-approved capital advance, not to exceed $25,000. 


</P>
</DIV8>


<DIV8 N="§ 891.150" NODE="24:4.1.2.1.12.1.3.11" TYPE="SECTION">
<HEAD>§ 891.150   Operating cost standards.</HEAD>
<P>HUD shall establish operating cost standards based on the average annual operating cost of comparable housing for the elderly or for persons with disabilities in each field office, and shall adjust the standard annually based on appropriate indices of increases in housing costs such as the Consumer Price Index. The operating cost standards shall be developed based on the number of units. However, under the Section 811 Program and for projects funded under §§ 891.655 through 891.790, the operating cost standard for group homes shall be based on the number of residents. HUD may adjust the operating cost standard applicable to an approved project to reflect such factors as differences in costs based on location within the field office jurisdiction. The operating cost standard will be used to determine the amount of the project assistance initially reserved for a project. 


</P>
</DIV8>


<DIV8 N="§ 891.155" NODE="24:4.1.2.1.12.1.3.12" TYPE="SECTION">
<HEAD>§ 891.155   Other Federal requirements.</HEAD>
<P>In addition to the requirements set forth in 24 CFR part 5, the following requirements in this § 891.155 apply to the Section 202 and Section 811 Programs, as well as projects funded under §§ 891.655 through 891.790. Other requirements unique to a particular program are described in subparts B and C of this part, as applicable. 
</P>
<P>(a) <I>Affirmative fair housing marketing.</I> (1) The affirmative fair housing marketing requirements of 24 CFR part 200, subpart M and the implementing regulations at 24 CFR part 108; and 
</P>
<P>(2) The fair housing advertising and poster guidelines at 24 CFR parts 109 and 110. 
</P>
<P>(b) <I>Environmental.</I> The National Environmental Policy Act of 1969, HUD's implementing regulations at 24 CFR part 50, including the related authorities described in 24 CFR 50.4. For the purposes of Executive Order No. 11988, Floodplain Management (42 FR 26951, 3 CFR, 1977 Comp., p. 117); as amended by Executive Order 12148 (44 FR 43239, 3 CFR, 1979 Comp., p. 412)), and implementing regulations in 24 CFR part 55, all applications for intermediate care facilities for persons with developmental disabilities shall be treated as critical actions requiring consideration of the 500-year floodplain. 
</P>
<P>(c) <I>Flood insurance.</I> The Flood Disaster Protection Act of 1973 (42 U.S.C. 4001). 
</P>
<P>(d) <I>Labor standards.</I> (1) All laborers and mechanics (other than volunteers under the conditions set out in 24 CFR part 70) employed by contractors and subcontractors in the construction (including rehabilitation) of housing with 12 or more units assisted under this part shall be paid wages at rates not less than those prevailing in the locality, as determined by the Secretary of Labor in accordance with the Davis-Bacon Act (40 U.S.C. 276a-276a-5). A group home for persons with disabilities is not covered by the labor standards. 
</P>
<P>(2) Contracts involving employment of laborers and mechanics shall be subject to the provisions of the Contract Work Hours and Safety Standards Act (40 U.S.C. 327-333). 
</P>
<P>(3) Sponsors, Owners, contractors, and subcontractors must comply with all related rules, regulations, and requirements. 
</P>
<P>(e) <I>Displacement, relocation, and real property acquisition</I>—(1) <I>Minimizing displacement.</I> Consistent with the other goals and objectives of this part, Sponsors and Owners (or Borrowers, if applicable) shall assure that they have taken all reasonable steps to minimize the displacement of persons (families, individuals, businesses, nonprofit organizations, and farms) as a result of a project assisted under this part. 
</P>
<P>(2) <I>Relocation assistance for displaced persons.</I> A displaced person must be provided relocation assistance at the levels described in, and in accordance with the requirements of, the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (URA) (42 U.S.C. 4201-4655), as implemented by 49 CFR part 24. 
</P>
<P>(3) <I>Real property acquisition requirements.</I> The acquisition of real property for a project is subject to the URA and the requirements described in 49 CFR part 24, subpart B. 
</P>
<P>(f) <I>Intergovernmental review.</I> The requirements for intergovernmental review in Executive Order No. 12372 (47 FR 30959, 3 CFR, 1982 Comp., p. 197; as amended by Executive Order No. 12416 (48 FR 15587, 3 CFR, 1983 Comp., p. 186)) and the implementing regulations at 24 CFR part 52 are applicable to this program. 
</P>
<P>(g) <I>Lead-based paint.</I> The requirements of the Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and implementing regulations at part 35, subparts A, B, H, J, and R of this title apply to these programs.
</P>
<CITA TYPE="N">[61 FR 11956, Mar. 22, 1996, as amended at 64 FR 50227, Sept. 15, 1999; 69 FR 34275, June 21, 2004]


</CITA>
</DIV8>


<DIV8 N="§ 891.160" NODE="24:4.1.2.1.12.1.3.13" TYPE="SECTION">
<HEAD>§ 891.160   Audit requirements.</HEAD>
<P>Nonprofit organizations receiving assistance under this part are subject to the audit requirements of 2 CFR part 200, subpart F.
</P>
<CITA TYPE="N">[78 FR 37112, June 20, 2013, as amended at 80 FR 75941, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 891.165" NODE="24:4.1.2.1.12.1.3.14" TYPE="SECTION">
<HEAD>§ 891.165   Duration of capital advance.</HEAD>
<P>(a) The duration of the fund reservation for a capital advance with construction advances is 24 months from the date of issuance of the award letter to the date of initial closing. This duration can be up to 36 months, as approved by HUD on a case-by-case basis.
</P>
<P>(b) The duration of the fund reservation for projects that elect not to receive any capital advance before construction completion is 24 months from the date of issuance of the award letter to the start of construction. This duration can be up to 36 months, as approved by HUD on a case-by-case basis.
</P>
<CITA TYPE="N">[78 FR 37112, June 20, 2013, as amended at 78 FR 49681, Aug. 15, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 891.170" NODE="24:4.1.2.1.12.1.3.15" TYPE="SECTION">
<HEAD>§ 891.170   Repayment of capital advance.</HEAD>
<P>(a) <I>Interest prohibition and repayment.</I> A capital advance provided under this part shall bear no interest and its repayment shall not be required so long as the housing project remains available for very low-income elderly families or persons with disabilities, as applicable, in accordance with this part. The capital advance may not be repaid to extinguish the requirements of this part. To ensure its interest in the capital advance, HUD shall require a note and mortgage, use agreement, capital advance agreement and regulatory agreement from the Owner in a form to be prescribed by HUD. 
</P>
<P>(b) <I>Transfer of assets.</I> The transfer of physical and financial assets of any project under this part is prohibited, unless HUD gives prior written approval. Approval for transfer will not be granted unless HUD determines that the transfer to a private nonprofit corporation, consumer cooperative (under the Section 202 Program), a private nonprofit organization (under the Section 811 Program), or an organization meeting the definition of “mixed-finance owner” in § 891.805, is part of a transaction that will ensure the continued operation of the capital advance units for not less than 40 years (from the date of original closing) in a manner that will provide rental housing for very low-income elderly persons or persons with disabilities, as applicable, on terms at least as advantageous to existing and future tenants as the terms required by the original capital advance.
</P>
<CITA TYPE="N">[61 FR 11956, Mar. 22, 1996, as amended at 70 FR 54209, Sept. 13, 2005; 78 FR 37113, June 20, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 891.175" NODE="24:4.1.2.1.12.1.3.16" TYPE="SECTION">
<HEAD>§ 891.175   Technical assistance.</HEAD>
<P>For purposes of the Section 202 Program and the Section 811 Program, the Secretary shall make available appropriate technical assistance to assure that applicants having limited resources, particularly minority applicants, are able to participate more fully in the programs. 


</P>
</DIV8>


<DIV8 N="§ 891.180" NODE="24:4.1.2.1.12.1.3.17" TYPE="SECTION">
<HEAD>§ 891.180   Physical condition standards; physical inspection requirements.</HEAD>
<P>Housing assisted under this part must be maintained and inspected in accordance with the requirements in 24 CFR part 5, subpart G.
</P>
<CITA TYPE="N">[63 FR 46580, Sept. 1, 1998]


</CITA>
</DIV8>


<DIV8 N="§ 891.185" NODE="24:4.1.2.1.12.1.3.18" TYPE="SECTION">
<HEAD>§ 891.185   Preemption of rent control laws.</HEAD>
<P>The Department finds that it is necessary and desirable to assist project owners to preserve the continued viability of each project assisted under this part (except subpart E) as a housing resource for very low-income elderly persons or persons with disabilities. The Department also finds that it is necessary to protect the substantial economic interest of the Federal Government in those projects. Therefore, the Department concludes that it is in the national interest to preempt, and it does hereby preempt, the entire field of rent regulation by local rent control boards or other authority acting pursuant to state or local law as it affects those projects. Part 246 of this title applies to projects covered by subpart E of this part.
</P>
<CITA TYPE="N">[63 FR 64803, Nov. 23, 1998]


</CITA>
</DIV8>


<DIV8 N="§ 891.190" NODE="24:4.1.2.1.12.1.3.19" TYPE="SECTION">
<HEAD>§ 891.190   Emergency transfers for victims of domestic violence, dating violence, sexual assault, and stalking.</HEAD>
<P>(a) Covered housing providers must develop and implement an emergency transfer plan that meets the requirements in 24 CFR 5.2005(e).
</P>
<P>(b) In order to facilitate emergency transfers for victims of domestic violence, dating violence, sexual assault, and stalking, covered housing providers have discretion to adopt new, and modify any existing, admission preferences or transfer waitlist priorities.
</P>
<P>(c) In addition to following requirements in 24 CFR 5.2005(e), when a safe unit is not immediately available for a victim of domestic violence, dating violence, sexual assault, or stalking who qualifies for an emergency transfer, covered housing providers must:
</P>
<P>(1) Review the covered housing provider's existing inventory of units and determine when the next vacant unit may be available; and
</P>
<P>(2) Provide a listing of nearby HUD subsidized rental properties, with or without preference for persons of domestic violence, dating violence, sexual assault, or stalking, and contact information for the local HUD field office.
</P>
<P>(d) Each year, covered housing providers must submit to HUD data on all emergency transfers requested under 24 CFR 5.2005(e), including data on the outcomes of such requests.
</P>
<CITA TYPE="N">[81 FR 80814, Nov. 16, 2016]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.2.1.12.2" TYPE="SUBPART">
<HEAD>Subpart B—Section 202 Supportive Housing for the Elderly</HEAD>


<DIV8 N="§ 891.200" NODE="24:4.1.2.1.12.2.3.1" TYPE="SECTION">
<HEAD>§ 891.200   Applicability.</HEAD>
<P>The requirements set forth in this subpart B apply to the Section 202 Program of Supportive Housing for the Elderly only, and to applicants, Sponsors, and Owners under that program. 


</P>
</DIV8>


<DIV8 N="§ 891.205" NODE="24:4.1.2.1.12.2.3.2" TYPE="SECTION">
<HEAD>§ 891.205   Definitions.</HEAD>
<P>As used in this part in reference to the Section 202 Program, and in addition to the applicable definitions in § 891.105: 
</P>
<P><I>Acquisition</I> means the purchase of (or otherwise obtaining title to) existing housing and related facilities to be used as supportive housing for the elderly.
</P>
<P><I>Activities of daily living (ADL)</I> means eating, dressing, bathing, grooming, and household management activities, as further described below: 
</P>
<P>(1) <I>Eating</I>—May need assistance with cooking, preparing, or serving food, but must be able to feed self; 
</P>
<P>(2) <I>Bathing</I>—May need assistance in getting in and out of the shower or tub, but must be able to wash self; 
</P>
<P>(3) <I>Grooming</I>—May need assistance in washing hair, but must be able to take care of personal appearance; 
</P>
<P>(4) <I>Dressing</I>—Must be able to dress self, but may need occasional assistance; and 
</P>
<P>(5) <I>Home management activities</I>—May need assistance in doing housework, grocery shopping, laundry, or getting to and from activities such as going to the doctor and shopping, but must be mobile. The mobility requirement does not exclude persons in wheelchairs or those requiring mobility devices. 
</P>
<P><I>Congregate space (hereinafter referred to as community space)</I> shall have the meaning provided in section 202 (12 U.S.C. 1701q(h)(1)). The term “<I>community spaces</I>” excludes offices, halls, mechanical rooms, laundry rooms, parking areas, dwelling units, and lobbies. Community space does not include commercial areas. 
</P>
<P><I>Elderly person</I> means a household composed of one or more persons at least one of whom is 62 years of age or more at the time of initial occupancy. 
</P>
<P><I>Frail elderly</I> means an elderly person who is unable to perform at least three activities of daily living as defined in this section. Owners may establish additional eligibility requirements acceptable to HUD based on the standards in local supportive services programs. 
</P>
<P><I>Owner</I> means a single-asset private nonprofit organization that may be established by the Sponsor that will receive a capital advance and project rental assistance payments to develop and operate supportive housing for the elderly as its legal owner. Owner includes an instrumentality of a public body. The purposes of the Owner must include the promotion of the welfare of the elderly. The Owner may not be controlled by or be under the direction of persons or firms seeking to derive profit or gain therefrom.
</P>
<P><I>Private nonprofit organization</I> means any incorporated private institution or foundation:
</P>
<P>(1) No part of the net earnings of which inures to the benefit of any member, founder, contributor, or individual;
</P>
<P>(2) That has a governing board:
</P>
<P>(i) The membership of which is selected in a manner to assure that there is significant representation of the views of the community in which such housing is located; and
</P>
<P>(ii) Which is responsible for the operation of the housing assisted under this section, except that, in the case of a nonprofit organization that is the sponsoring organization of multiple housing projects assisted under this section, HUD may determine the criteria or conditions under which financial, compliance, and other administrative responsibilities exercised by a single-entity private nonprofit organization that is the owner corporation of an individual housing project may be shared or transferred to the governing board of such sponsoring organization; and
</P>
<P>(3) Which is approved by HUD as to financial responsibility.
</P>
<P><I>Services expenses</I> means those costs needed to provide the necessary services for the elderly tenants, which may include, but are not limited to: health related activities, continuing education, welfare, informational, recreational, homemaking, meal and nutritional services, counseling, and referral services as well as transportation as necessary to facilitate access to these services. 
</P>
<P><I>Sponsor</I> means any private nonprofit entity, including a consumer cooperative: 
</P>
<P>(1) No part of the net earnings of which inures to the benefit of any private shareholder, member, founder, contributor, or individual; 
</P>
<P>(2) That is not controlled by, or under the direction of, persons or firms seeking to derive profit or gain therefrom; and 
</P>
<P>(3) That is approved by the Secretary as to administrative and financial capacity and responsibility. The term Sponsor includes an instrumentality of a public body.
</P>
<CITA TYPE="N">[61 FR 11956, Mar. 22, 1996, as amended at 68 FR 67321, Dec. 1, 2003; 70 FR 54209, Sept. 13, 2005; 78 FR 37113, June 20, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 891.210" NODE="24:4.1.2.1.12.2.3.3" TYPE="SECTION">
<HEAD>§ 891.210   Special project standards.</HEAD>
<P>(a) <I>In general.</I> In addition to the applicable project standards in § 891.120, resident units in Section 202 projects are limited to efficiencies or one-bedroom units, except as specified under paragraph (b) of this section. If a resident manager is proposed for a project, up to two bedrooms could be provided for the resident manager unit.
</P>
<P>(b) <I>Exception.</I> Resident units in Section 202 projects may be two-bedroom units if a portion of the units are financed by other sources. Resident units may be two-bedroom units provided that the square footage in excess of the one-bedroom size limits are treated as excess amenities as specified in § 891.120.
</P>
<CITA TYPE="N">[78 FR 37113, June 20, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 891.215" NODE="24:4.1.2.1.12.2.3.4" TYPE="SECTION">
<HEAD>§ 891.215   Limits on number of units.</HEAD>
<P>(a) HUD may establish, through publication of a notice in the <E T="04">Federal Register,</E> limits on the number of units that can be applied for by a Sponsor or Co-sponsor in a single geographical region and/or nationwide. 
</P>
<P>(b) Affiliated entities that submit separate applications shall be deemed to be a single entity for purposes of these limits. 
</P>
<P>(c) HUD may also establish, through publication of a notice in the <E T="04">Federal Register,</E> the minimum size of a single project. 


</P>
</DIV8>


<DIV8 N="§ 891.220" NODE="24:4.1.2.1.12.2.3.5" TYPE="SECTION">
<HEAD>§ 891.220   Prohibited facilities.</HEAD>
<P>Projects may not include facilities for infirmaries, nursing stations, or spaces for overnight care. 


</P>
</DIV8>


<DIV8 N="§ 891.225" NODE="24:4.1.2.1.12.2.3.6" TYPE="SECTION">
<HEAD>§ 891.225   Provision of services.</HEAD>
<P>(a) In carrying out the provisions of this part, HUD shall ensure that housing assisted under this part provides services as described in section 202 (12 U.S.C. 1701q(g)(1)). 
</P>
<P>(b)(1) HUD shall ensure that Owners have the managerial capacity to perform the coordination of services described in 12 U.S.C. 1701q(g)(2). 
</P>
<P>(2) Any cost associated with this paragraph shall be an eligible cost under the contract for project rental assistance. Any cost associated with the employment of a service coordinator shall also be an eligible cost, except if the project is receiving congregate housing services assistance under section 802 of the National Affordable Housing Act. The HUD-approved service costs will be an eligible expense to be paid from project rental assistance, not to exceed $15 per unit per month. The balance of service costs shall be provided from other sources, which may include co-payment by the tenant receiving the service. Such co-payment shall not be included in the Total Tenant Payment. 




</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:4.1.2.1.12.3" TYPE="SUBPART">
<HEAD>Subpart C—Section 811 Supportive Housing for Persons With Disabilities</HEAD>


<DIV8 N="§ 891.300" NODE="24:4.1.2.1.12.3.3.1" TYPE="SECTION">
<HEAD>§ 891.300   Applicability.</HEAD>
<P>The requirements set forth in this subpart C apply to the Section 811 Program of Supportive Housing for Persons with Disabilities only, and to applicants, Sponsors, and Owners under that program. 


</P>
</DIV8>


<DIV8 N="§ 891.305" NODE="24:4.1.2.1.12.3.3.2" TYPE="SECTION">
<HEAD>§ 891.305   Definitions.</HEAD>
<P>As used in this part in reference to the Section 811 Program, and in addition to the applicable definitions in § 891.105: 
</P>
<P><I>Acquisition</I> means the purchase of (or otherwise obtaining title to) existing housing and related facilities to be used as supportive housing for persons with disabilities. 
</P>
<P><I>Congregate space (hereinafter referred to as community space)</I> means space for multipurpose rooms, common areas, and other space necessary for the provision of supportive services. Community space does not include commercial areas. 
</P>
<P><I>Disabled household</I> means a household composed of: 
</P>
<P>(1) One or more persons at least one of whom is an adult (18 years or older) who has a disability; 
</P>
<P>(2) Two or more persons with disabilities living together, or one or more such persons living with another person who is determined by HUD, based upon a certification from an appropriate professional (e.g., a rehabilitation counselor, social worker, or licensed physician) to be important to their care or well being; or 
</P>
<P>(3) The surviving member or members of any household described in paragraph (1) of this definition who were living in a unit assisted under this part, with the deceased member of the household at the time of his or her death. 
</P>
<P><I>Owner</I> means a single-asset private nonprofit organization established by the Sponsor that will receive a capital advance and project rental assistance payments to develop and operate, as its legal owner, supportive housing for persons with disabilities under this part. The purposes of the Owner must include the promotion of the welfare of persons with disabilities. The Owner may not be controlled by or under the direction of persons or firms seeking to derive profit or gain therefrom. 
</P>
<P><I>Person with disabilities</I> shall have the meaning provided in Section 811 (42 U.S.C. 8013(k)(2)). The term “<I>person with disabilities</I>” shall also include the following: 
</P>
<P>(1) A person who has a developmental disability, as defined in section 102(7) of the Developmental Disabilities Assistance and Bill of Rights Act (42 U.S.C. 6001(5)), i.e., if he or she has a severe chronic disability which: 
</P>
<P>(i) Is attributable to a mental or physical impairment or combination of mental and physical impairments; 
</P>
<P>(ii) Is manifested before the person attains age twenty-two; 
</P>
<P>(iii) Is likely to continue indefinitely; 
</P>
<P>(iv) Results in substantial functional limitation in three or more of the following areas of major life activity: 
</P>
<P>(A) Self-care; 
</P>
<P>(B) Receptive and expressive language; 
</P>
<P>(C) Learning; 
</P>
<P>(D) Mobility; 
</P>
<P>(E) Self-direction; 
</P>
<P>(F) Capacity for independent living; 
</P>
<P>(G) Economic self-sufficiency; and 
</P>
<P>(v) Reflects the person's need for a combination and sequence of special, interdisciplinary, or generic care, treatment, or other services which are of lifelong or extended duration and are individually planned and coordinated. 
</P>
<P>(2) A person with a chronic mental illness, i.e., a severe and persistent mental or emotional impairment that seriously limits his or her ability to live independently, and which impairment could be improved by more suitable housing conditions. 
</P>
<P>(3) A person infected with the human acquired immunodeficiency virus (HIV) and a person who suffers from alcoholism or drug addiction, provided they meet the definition of “<I>person with disabilities</I>” in Section 811 (42 U.S.C. 8013(k)(2)). A person whose sole impairment is a diagnosis of HIV positive or alcoholism or drug addiction (i.e., does not meet the qualifying criteria in section 811 (42 U.S.C. 8013(k)(2)) will not be eligible for occupancy in a section 811 project. 
</P>
<P><I>Private nonprofit organization</I> means any institution or foundation: 
</P>
<P>(1) That has tax-exempt status under section 501(c)(3) of the Internal Revenue Code of 1986 (26 U.S.C. 1 <I>et seq.</I>); 
</P>
<P>(2) No part of the net earnings of which inures to the benefit of any Board member, founder, contributor, or individual; 
</P>
<P>(3) That has a governing board; 
</P>
<P>(i) The membership of which is selected in a manner to assure that there is significant representation of the views of the community in which such housing is located (including persons with disabilities); and 
</P>
<P>(ii) That is responsible for the operation of the housing assisted under this part; and 
</P>
<P>(4) That is approved by HUD as to financial responsibility. 
</P>
<P><I>Sponsor</I> means any nonprofit entity: 
</P>
<P>(1) That has tax-exempt status under section 501(c)(3) of the Internal Revenue Code of 1986 (26 U.S.C. 1 <I>et seq.</I>); 
</P>
<P>(2) No part of the net earnings of which inures to the benefit of any private shareholder, member, founder, contributor or individual; 
</P>
<P>(3) That is not controlled by or under the direction of persons or firms seeking to derive profit or gain therefrom; 
</P>
<P>(4) That has a governing board the membership of which is selected in a manner to assure that there is significant representation of the views of persons with disabilities; and 
</P>
<P>(5) That is approved by HUD as to administrative and financial capacity and responsibility. 
</P>
<CITA TYPE="N">[61 FR 11956, Mar. 22, 1996, as amended at 68 FR 67321, Dec. 1, 2003; 70 FR 54210, Sept. 13, 2005; 78 FR 37113, June 20, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 891.310" NODE="24:4.1.2.1.12.3.3.3" TYPE="SECTION">
<HEAD>§ 891.310   Special project standards.</HEAD>
<P>In addition to the applicable project standards in § 891.120, the following special standards apply to the Section 811 Program and to projects funded under §§ 891.655 through 891.790: 
</P>
<P>(a) <I>Minimum group home standards.</I> Each group home must provide a minimum of 290 square feet of prorated space for each resident, including a minimum area of 80 square feet for each resident in a shared bedroom (with no more than two residents occupying a shared bedroom) and a minimum area of 100 square feet for a single occupant bedroom; at least one full bathroom for every four residents; space for recreation at indoor and outdoor locations on the project site; and sufficient storage for each resident in the bedroom and other storage space necessary for the operation of the home. If the project involves acquisition (with or without rehabilitation), the structure must at least be in compliance with applicable State requirements. In the absence of such requirements, the above standards shall apply. 
</P>
<P>(b) <I>Additional accessibility requirements.</I> In addition to the accessibility requirements in § 891.120(b), the following requirements apply to the Section 811 Program and to projects funded under §§ 891.655 through 891.790: 
</P>
<P>(1) All entrances, common areas, units to be occupied by resident staff, and amenities must be readily accessible to and usable by persons with disabilities. 
</P>
<P>(2) In projects for chronically mentally ill individuals, a minimum of 10 percent of all dwelling units in an independent living facility (or 10 percent of all bedrooms and bathrooms in a group home, but at least one of each such space), must be designed to be accessible or adaptable for persons with disabilities. 
</P>
<P>(3) In projects for developmentally disabled or physically disabled persons, all dwelling units in an independent living facility (or all bedrooms and bathrooms in a group home) must be designed to be accessible or adaptable for persons with physical disabilities. A project involving acquisition and/or rehabilitation may provide a lesser number if: 
</P>
<P>(i) The cost of providing full accessibility makes the project financially infeasible; 
</P>
<P>(ii) Fewer than one-half of the intended occupants have mobility impairments; and 
</P>
<P>(iii) The project complies with the requirements of 24 CFR 8.23. 
</P>
<P>(4) For the purposes of paragraph (b) of this section, the following definitions apply:
</P>
<P>(i) <I>Accessible</I> describes a site, building, facility, or portion thereof that complies with the Uniform Federal Accessibility Standards and that can be approached, entered, and used by physically disabled people;
</P>
<P>(ii) <I>Adaptability</I> means the ability of certain building spaces and elements, such as kitchen counters, sinks, and grab bars, to be added or altered so as to accommodate the needs of either disabled or nondisabled persons, or to accommodate the needs of either disabled or nondisabled persons, or to accommodate the needs of persons with different types or degrees of disability.


</P>
</DIV8>


<DIV8 N="§ 891.315" NODE="24:4.1.2.1.12.3.3.4" TYPE="SECTION">
<HEAD>§ 891.315   Prohibited facilities.</HEAD>
<P>This section shall apply to capital advances under the Section 811 Program, as well as loans financed under subpart E of this part. Project facilities may not include infirmaries, nursing stations, spaces dedicated to the delivery of medical treatment or physical therapy, padded rooms, or space for respite care or sheltered workshops, even if paid for from sources other than the HUD capital advance or loan. Except for office space used by the Owner (or Borrower, if applicable) exclusively for the administration of the project, project facilities may not include office space. 


</P>
</DIV8>


<DIV8 N="§ 891.320" NODE="24:4.1.2.1.12.3.3.5" TYPE="SECTION">
<HEAD>§ 891.320   Site and neighborhood standards.</HEAD>
<P>In addition to the requirements in § 891.125 and § 891.680, if applicable, the following site and neighborhood requirements apply to the Section 811 Program: 
</P>
<P>(a) Travel time and cost via public transportation or private automobile, from the neighborhood to places of employment providing a range of jobs for very low-income workers (or low-income workers, as applicable), must not be excessive. 
</P>
<P>(b) Projects should be located in neighborhoods where other family housing is located. Projects should not be located adjacent to the following facilities, or in areas where such facilities are concentrated: schools or day-care centers for persons with disabilities, workshops, medical facilities, or other housing primarily serving persons with disabilities. Not more than one group home may be located on any one site and no such home may be located on a site contiguous to another site containing such a home. 


</P>
</DIV8>


<DIV8 N="§ 891.325" NODE="24:4.1.2.1.12.3.3.6" TYPE="SECTION">
<HEAD>§ 891.325   Lead-based paint requirements.</HEAD>
<P>The requirements of the Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and implementing regulations at part 35, subparts A, B, H, J, and R of this title apply to the section 811 program and to projects funded under §§ 891.655 through 891.790.
</P>
<CITA TYPE="N">[69 FR 34276, June 21, 2004]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:4.1.2.1.12.4" TYPE="SUBPART">
<HEAD>Subpart D—Project Management</HEAD>


<DIV8 N="§ 891.400" NODE="24:4.1.2.1.12.4.3.1" TYPE="SECTION">
<HEAD>§ 891.400   Responsibilities of owner.</HEAD>
<P>(a) <I>Marketing.</I> (1) The Owner must commence and continue diligent marketing activities not later than 90 days before the anticipated date of availability of the first unit or occupancy of the group home. Market activities shall include the provision of notices of the availability of housing under the program to operators of temporary housing for the homeless in the same housing market. 
</P>
<P>(2) Marketing must be done in accordance with a HUD-approved affirmative fair housing marketing plan and all Federal, State or local fair housing and equal opportunity requirements. The purpose of the plan and requirements is to achieve a condition in which eligible households of similar income levels in the same housing market area have a like range of housing choices available to them regardless of discriminatory considerations such as their race, color, creed, religion, familial status, disability, sex or national origin. 
</P>
<P>(3) At the time of PRAC execution, the Owner must submit to HUD a list of leased and unleased assisted units (or in the case of a group home, leased and unleased residential spaces) with a justification for the unleased units or residential spaces, in order to qualify for vacancy payments for the unleased units or residential spaces. 
</P>
<P>(b) <I>Management and maintenance.</I> The Owner is responsible for all management functions. These functions include selection and admission of tenants, required reexaminations of incomes for households occupying assisted units or residential spaces, collection of tenant payments, termination of tenancy and eviction, and all repair and maintenance functions (including ordinary and extraordinary maintenance and replacement of capital items). All functions must be performed in compliance with equal opportunity requirements. 
</P>
<P>(c) <I>Contracting for services.</I> (1) With HUD approval, the Owner may contract with a private or public entity for performance of the services or duties required in paragraphs (a) and (b) of this section. However, such an arrangement does not relieve the Owner of responsibility for these services and duties. All such contracts are subject to the restrictions governing prohibited contractual relationships described in § 891.130. (These prohibitions do not extend to management contracts entered into by the Owner with the Sponsor or its nonprofit affiliate.)
</P>
<P>(2) Consistent with the objectives of Executive Order No. 11625 (36 FR 19967, 3 CFR, 1971-1975 Comp., p. 616; as amended by Executive Order No. 12007 (42 FR 42839, 3 CFR, 1977 Comp., p. 139)); Executive Order No. 12432 (48 FR 32551, 3 CFR, 1983 Comp., p. 198); and Executive Order No. 12138 (44 FR 29637, 3 CFR, 1979 Comp., p. 393; as amended by Executive Order No. 12608 (52 FR 34617, 3 CFR, 1987 Comp., p. 245)), the Owner will promote awareness and participation of minority and women's business enterprises in contracting and procurement activities. 
</P>
<P>(d) <I>Submission of financial and operating statements.</I> The Owner must submit to HUD: 
</P>
<P>(1) Within 60 days after the end of each fiscal year of project operations, financial statements for the project audited by an independent public accountant and in the form required by HUD; and 
</P>
<P>(2) Other statements regarding project operation, financial conditions and occupancy as HUD may require to administer the PRAC and to monitor project operations. 
</P>
<P>(e) <I>Use of project funds.</I> The Owner shall maintain a separate interest bearing project fund account in a depository or depositories which are members of the Federal Deposit Insurance Corporation or National Credit Union Share Insurance Fund and shall deposit all tenant payments, charges, income and revenues arising from project operation or ownership to this account. All project funds are to be deposited in Federally insured accounts. All balances shall be fully insured at all times, to the maximum extent possible. Project funds must be used for the operation of the project (including required insurance coverage), and to make required deposits to the replacement reserve under § 891.405, in accordance with HUD-approved budget. Any remaining project funds in the project funds account (including earned interest) following the expiration of the fiscal year shall be deposited in a Federally-insured residual receipts account within 60 days following the end of the fiscal year. Withdrawals from this account may be made only for project purposes and with the approval of HUD. If there are funds remaining in the residual receipts account when the mortgage is satisfied, such funds shall be returned to HUD. 
</P>
<P>(f) <I>Reports.</I> The Owner shall submit such reports as HUD may prescribe to demonstrate compliance with applicable civil rights and equal opportunity requirements. See § 891.410(a). 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0470)


</APPRO>
</DIV8>


<DIV8 N="§ 891.405" NODE="24:4.1.2.1.12.4.3.2" TYPE="SECTION">
<HEAD>§ 891.405   Replacement reserve.</HEAD>
<P>(a) <I>Establishment of reserve.</I> The Owner shall establish and maintain a replacement reserve to aid in funding extraordinary maintenance and repair and replacement of capital items. 
</P>
<P>(b) <I>Deposits to reserve.</I> The Owner shall make monthly deposits to the replacement reserve in an amount determined by HUD. 
</P>
<P>(c) <I>Level of reserve.</I> The reserve must be built up to and maintained at a level determined by HUD to be sufficient to meet projected requirements. Should the reserve reach that level, the amount of the deposit to the reserve may be reduced with the approval of HUD. 
</P>
<P>(d) <I>Administration of reserve.</I> Replacement reserve funds must be deposited with HUD or in a Federally-insured depository in an interest-bearing account(s) whose balances(s) are fully insured at all times. All earnings including interest on the reserve must be added to the reserve. Funds may be drawn from the reserve and used only in accordance with HUD guidelines and with the approval of, or as directed by, HUD. With HUD approval, reserves may be used to reduce the number of dwelling units, provided that the purpose for the reduction is the retrofitting of obsolete or unmarketable units.
</P>
<CITA TYPE="N">[61 FR 11956, Mar. 22, 1996, as amended at 68 FR 67321, Dec. 1, 2003]






</CITA>
</DIV8>


<DIV8 N="§ 891.410" NODE="24:4.1.2.1.12.4.3.3" TYPE="SECTION">
<HEAD>§ 891.410   Selection and admission of tenants.</HEAD>
<P>(a) <I>Written procedures.</I> The Owner shall adopt written tenant selection procedures that ensure nondiscrimination in the selection of tenants and that are consistent with the purpose of improving housing opportunities for very low-income elderly persons and persons with disabilities (as applicable); and reasonably related to program eligibility and an applicant's ability to perform the obligations of the lease. Owners shall promptly inform in writing any rejected applicant of the grounds for any rejection. Additionally, Owners shall maintain a written, chronological waiting list showing the name, race, gender, ethnicity, and date of each person applying for the program. 
</P>
<P>(b) <I>Application for admission.</I> The Owner must accept applications for admission to the project in the form prescribed by HUD, and (under the Section 202 Program only) is obligated to confirm all information provided by applicant families on the application. Applicant households applying for assisted units (or residential spaces in a group home) must complete a certification of eligibility as part of the application for admission. Applicant households must meet the disclosure and verification requirements for Social Security Numbers, as provided by 24 CFR part 5, subpart B. Applicant families must sign and submit consent forms for the obtaining of wage and claim information from State Wage Information Collection Agencies, as provided by 24 CFR part 5, subpart B. Both the Owner and the applicant household must complete and sign the application for admission. On request, the Owner must furnish copies of all applications for admission to HUD. 
</P>
<P>(c) <I>Determination of eligibility and selection of tenants.</I> (1) The Owner is responsible for determining whether applicants are eligible for admission and for the selection of households. To be eligible for admission, an applicant must be an elderly person or a person with disabilities, as applicable (as defined in §§ 891.205 and 891.305, respectively); must meet the disclosure and verification requirements for Social Security Numbers, as provided by 24 CFR part 5, subpart B; must sign and submit consent forms for the obtaining of wage and claim information from State Wage Information Collection Agencies, as provided by 24 CFR part 5, subpart B; and must be a very low-income family, as defined in § 891.105. 
</P>
<P>(2) Under the Section 811 Program: 
</P>
<P>(i) In order to be eligible for admission, the applicant must also meet any project occupancy requirements approved by HUD. 
</P>
<P>(ii) Owners shall make selections in a nondiscriminatory manner without regard to considerations such as race, religion, color, sex, national origin, familial status, or disability. An Owner may, with the approval of the Secretary, limit occupancy within housing developed under this part 891 to persons with disabilities who have similar disabilities and require a similar set of supportive services in a supportive housing environment. However, the Owner must permit occupancy by any qualified person with a disability who could benefit from the housing and/or services provided regardless of the person's disability. 
</P>
<P>(d) <I>Unit assignment.</I> If the Owner determines that the household is eligible and is otherwise acceptable and units (or residential spaces in a group home) are available, the Owner will assign the household a unit or residential space in a group home. If the household will occupy an assisted unit, the Owner will assign the household a unit of the appropriate size in accordance with HUD's general occupancy guidelines. If no suitable unit (or residential space in a group home) is available, the Owner will place the household on a waiting list for the project and notify the household when a suitable unit or residential space may become available. If the waiting list is so long that the applicant would not be likely to be admitted for the next 12 months, the Owner may advise the applicant that no additional applications for admission are being considered for that reason. 
</P>
<P>(e) <I>Ineligibility determination.</I> If the Owner determines that an applicant is ineligible for admission or the Owner is not selecting the applicant for other reasons, the Owner will promptly notify the applicant in writing of the determination, the reasons for the determination, and the applicant's right to request a meeting to review the rejection, in accordance with HUD requirements. The review, if requested, may not be conducted by a member of the Owner's staff who made the initial decision to reject the applicant. The applicant may also exercise other rights (e.g., rights granted under Federal, State or local civil rights laws) if the applicant believes he or she is being discriminated against on a prohibited basis. 
</P>
<P>(f) <I>Records.</I> Records on applicants and approved eligible households, which provide racial, ethnic, gender and place of previous residency data required by HUD, must be retained for three years. See § 891.410(a). 
</P>
<P>(g) <I>Reexamination of household family income and composition</I>—(1) <I>Regular reexaminations.</I> The Owner must reexamine the income and composition of the household at least every 12 months. Upon verification of the information, the Owner must make appropriate adjustments in the total tenant payment in accordance with § 5.657 of this title and must adjust the tenant rent. The Owner must also request an appropriate adjustment to the project rental assistance payment. Further, the Owner must determine whether the household's unit size is still appropriate and must carry out any unit transfer in accordance with HUD standards. At the time of reexamination, the Owner must require the household to meet the disclosure and verification requirements for Social Security Numbers, as provided by 24 CFR part 5, subpart B. For requirements regarding the signing and submitting of consent forms by families for obtaining wage and claim information from State Wage Information Collection Agencies, see 24 CFR part 5, subpart B.
</P>
<P>(2) <I>Interim reexaminations.</I> The household must comply with the provisions in § 5.657 of this title regarding interim reporting of changes in income. If the Owner receives information concerning a change in the household's income or other circumstances between regularly scheduled reexaminations, the Owner must consult with the household and make any adjustments determined to be appropriate. See 24 CFR part 5, subpart B, for the requirements for the disclosure and verification of Social Security Number at interim reexaminations involving new household members. For requirements regarding the signing and submitting of consent forms by families for obtaining wage and claim information from State Wage Information Collection Agencies, see 24 CFR part 5, subpart B. Any change in the household's income or other circumstances that result in an adjustment in the total tenant payment, tenant rent, or project rental assistance payment must be verified.













 








</P>
<P>(3) <I>Continuation of project rental assistance payment.</I>  (i) A household shall remain eligible for subsidy until the total tenant payment equals or exceeds the gross rent (or a pro rata share of the gross rent in a group home). The termination of subsidy eligibility will not affect the household's other rights under its lease, nor will the unit or residential space be removed from the PRAC. Project rental assistance payments may be resumed if, as a result of changes in income, rent, or other relevant circumstances during the term of the PRAC, the household meets the income eligibility requirements of § 5.657 of this title (as modified in § 891.105) and project rental assistance is available for the unit or residential space under the terms of the PRAC. The household will not be required to establish its eligibility for admission to the project under the remaining requirements of paragraph (c) of this section.











 
</P>
<P>(ii) A household's eligibility for project rental assistance payment may be terminated in accordance with HUD requirements for such reasons as failure to submit requested verification information, including information related to disclosure and verification of Social Security Numbers, as provided by 24 CFR part 5, subpart B or failure to sign and submit consent forms for the obtaining of wage and claim information from State Wage Information Collection Agencies (as provided by 24 CFR part 5, subpart B).
</P>
<P>(4) <I>Streamlined income determination.</I> An owner may elect to follow the provisions of 24 CFR 5.657(d).
</P>
<CITA TYPE="N">[61 FR 11956, Mar. 22, 1996, as amended at 65 FR 16724, Mar. 29, 2000; 81 FR 12371, Mar. 8, 2016;  88 FR 9668, Feb. 14, 2023]






</CITA>
</DIV8>


<DIV8 N="§ 891.415" NODE="24:4.1.2.1.12.4.3.4" TYPE="SECTION">
<HEAD>§ 891.415   Obligations of the household or family.</HEAD>
<P>This section shall apply to capital advances under the Section 202 Program and the Section 811 Program, as well as loans financed under subpart E of this part. 
</P>
<P>(a) <I>Requirements.</I> The household (or family, as applicable) shall: 
</P>
<P>(1) Pay amounts due under the lease directly to the Owner (or Borrower, as applicable); 


</P>
<P>(2) Supply such certification, release of information, consent, completed forms or documentation as the Owner (or Borrower, as applicable) or HUD determines necessary, including information and documentation relating to the disclosure and verification of Social Security Numbers, as provided by 24 CFR part 5, subpart B; the signing and submission of consent forms for the obtaining of wage and claim information from State Wage Information Collection Agencies, as provided by 24 CFR part 5, subpart B; and any certification of family net assets, as provided by 24 CFR 5.659(e);








</P>
<P>(3) Allow the Owner (or Borrower, as applicable) to inspect the dwelling unit or residential space at reasonable times and after reasonable notice; 
</P>
<P>(4) Notify the Owner (or Borrower, as applicable) before vacating the dwelling unit or residential space; and 
</P>
<P>(5) Use the dwelling unit or residential space solely for residence by the household (or family, as applicable) and as the household's (or family's) principal place of residence. 
</P>
<P>(b) <I>Prohibitions.</I> The household (or family, as applicable) shall not: 
</P>
<P>(1) Assign the lease or transfer the unit or residential space; or 
</P>
<P>(2) Occupy, or receive assistance for the occupancy of, a unit or residential space governed under this part 891 while occupying, or receiving assistance for the occupancy of, another unit assisted under any Federal housing assistance program, including any section 8 program. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0470)


</APPRO>
<CITA TYPE="N">[61 FR 11956, Mar. 22, 1996, as amended at 82 FR 58340, Dec. 12, 2017]






</CITA>
</DIV8>


<DIV8 N="§ 891.420" NODE="24:4.1.2.1.12.4.3.5" TYPE="SECTION">
<HEAD>§ 891.420   Overcrowded and underoccupied units.</HEAD>
<P>If the Owner determines that because of change in household size, an assisted unit is smaller than appropriate for the eligible household to which it is leased, or that the assisted unit is larger than appropriate, project rental assistance payment with respect to the unit will not be reduced or terminated until the eligible household has been relocated to an appropriate alternate unit. If possible, the Owner will, as promptly as possible, offer the household an appropriate alternate unit. The Owner may receive vacancy payments for the vacated unit if the Owner complies with the requirements of § 891.445. 


</P>
</DIV8>


<DIV8 N="§ 891.425" NODE="24:4.1.2.1.12.4.3.6" TYPE="SECTION">
<HEAD>§ 891.425   Lease requirements.</HEAD>
<XREF ID="20260226" REFID="28">Link to an amendment published at 91 FR 9453, Feb. 26, 2026.</XREF>
<XREF ID="20260313" REFID="2e">Link to a delay of the above amendment published at 91 FR 12301, Mar. 13, 2026.</XREF>
<P>This section shall apply to capital advances under the Section 202 Program and the Section 811 Program, as well as loans financed under subpart E of this part. 
</P>
<P>(a) <I>Term of lease.</I> The term of the lease may not be less than one year. Unless the lease has been terminated by appropriate action, upon expiration of the lease term, the household and Owner (or family and Borrower, as applicable) may execute a new lease for a term not less than one year, or may take no action. If no action is taken, the lease will automatically be renewed for successive terms of one month. 
</P>
<P>(b) <I>Termination by the household (or family, as applicable).</I> All leases may contain a provision that permits the household (or family) to terminate the lease upon 30 days advance notice. A lease for a term that exceeds one year must contain such provision. 
</P>
<P>(c) <I>Form.</I> The Owner (or Borrower, as applicable) shall use the lease form prescribed by HUD. In addition to required provisions of the lease form, the Owner (or Borrower) may include a provision in the lease permitting the Owner (or Borrower) to enter the leased premises at any time without advance notice when there is reasonable cause to believe that an emergency exists or that health or safety of a family member is endangered.
</P>
<P>(d) <I>Notification for nonpayment of rent.</I> The lease must contain a provision or addendum that tenants will receive notification at least 30 days before a formal judicial eviction is filed.

 
</P>
<CITA TYPE="N">[61 FR 11956, Mar. 22, 1996, as amended at 89 FR 101303, Dec. 13, 2024]










</CITA>
</DIV8>


<DIV8 N="§ 891.430" NODE="24:4.1.2.1.12.4.3.7" TYPE="SECTION">
<HEAD>§ 891.430   Denial of admission, termination of tenancy, and modification of lease.</HEAD>
<P>(a) The provisions of part 5, subpart I, of this title apply to Section 202 and Section 811 capital advance projects. 
</P>
<P>(b) The provisions of part 247 of this title apply to all decisions by an owner to terminate the tenancy or modify the lease of a household residing in a unit (or residential space in a group home).
</P>
<CITA TYPE="N">[66 FR 28798, May 24, 2001]








</CITA>
</DIV8>


<DIV8 N="§ 891.435" NODE="24:4.1.2.1.12.4.3.8" TYPE="SECTION">
<HEAD>§ 891.435   Security deposits.</HEAD>
<P>This section shall apply to capital advances under the Section 202 Program and the Section 811 Program, as well as loans financed under subpart E of this part. For loans financed under subpart E of this part, the requirements in § 891.635 also apply. 


</P>
<P>(a) <I>Collection of security deposits.</I> At the time of the initial execution of the lease, the Owner (or Borrower, as applicable) will require each household (or family, as applicable) occupying an assisted unit or residential space in a group home to pay a security deposit in an amount equal to one month's tenant rent or $50, whichever is greater. The household (or family) is expected to pay the security deposit from its own resources or other available public or private resources. The Owner (or Borrower) may collect the security deposit on an installment basis.



 
</P>
<P>(b) <I>Security deposit provisions applicable to units</I>—(1) <I>Administration of security deposit.</I> The Owner (or Borrower, as applicable) must place the security deposits in a segregated interest-bearing account. The amount of the segregated, interest-bearing account maintained by the Owner (or Borrower) must at all times equal the total amount collected from the households (or families, as applicable) then in occupancy plus any accrued interest and less allowable administrative cost adjustments. The Owner (or Borrower) must comply with any applicable State and local laws concerning interest payments on security deposits. 
</P>
<P>(2) <I>Household (or family, as applicable) notification requirement.</I> In order to be considered for the refund of the security deposit, a household (or family) must provide the Owner (or Borrower, as applicable) with a forwarding address or arrange to pick up the refund. 
</P>
<P>(3) <I>Use of security deposit.</I> The Owner (or Borrower, as applicable), subject to State and local law and the requirements of paragraphs (b)(1) and (b)(3) of this section, may use the household's (or family's, as applicable) security deposit balance as reimbursement for any unpaid amounts that the household (or family) owes under the lease. Within 30 days (or shorter time if required by State or local law) after receiving notification under paragraph (b)(2) of this section, the Owner (or Borrower) must: 
</P>
<P>(i) Refund to a household (or family) that does not owe any amount under the lease the full amount of the household's (or family's) security deposit balance; 
</P>
<P>(ii) Provide to a household (or family) owing amounts under the lease a list itemizing each amount, along with a statement of the household's (or family's) rights under State and local law. If the amount that the Owner (or Borrower) claims is owed by the household (or family) is less than the amount of the household's (or family's) security deposit balance, the Owner (or Borrower) must refund the excess balance to the household (or family). If the Owner (or Borrower) fails to provide the list, the household (or family) will be entitled to the refund of the full amount of the household's (or family's) security deposit balance. 
</P>
<P>(4) <I>Disagreements.</I> If a disagreement arises concerning reimbursement of the security deposit, the household (or family, if applicable) will have the right to present objections to the Owner (or Borrower, if applicable) in an informal meeting. The Owner (or Borrower) must keep a record of any disagreements and meetings in a tenant file for inspection by HUD. The procedures of this paragraph do not preclude the household (or family) from exercising its rights under State or local law. 
</P>
<P>(5) <I>Decedent's interest in security deposit.</I> Upon the death of a member of a household (or family, as applicable), the decedent's interest, if any, in the security deposit will be governed by State or local law. 


</P>
<P>(c) <I>Reimbursement by HUD for assisted units.</I> If the household's (or family's, if applicable) security deposit balance is insufficient to reimburse the Owner (or Borrower, if applicable) for any amount that the household (or family) owes under the lease for an assisted unit or residential space, and the Owner (or Borrower) has provided the household (or family) with the list required by paragraph (b)(3)(ii) of this section, the Owner (or Borrower) may claim reimbursement from HUD for an amount not to exceed the lesser of: 
</P>
<P>(1) The amount owed the Owner (or Borrower); or 


</P>
<P>(2) One month's per unit operating cost (or contract rent, if applicable), minus the amount of the household's (or family's) security deposit balance. Any reimbursement under this section will be applied first toward any unpaid tenant rent due under the lease. No reimbursement may be claimed for any unpaid tenant rent for the period after termination of the tenancy. The Owner (or Borrower) may be eligible for vacancy payments following a vacancy in accordance with the requirements of § 891.445 (or §§ 891.650 or 891.790, as applicable).


</P>
<CITA TYPE="N">[61 FR 11956, Mar. 22, 1996, as amended at 88 FR 9669, Feb. 14, 2023] 






</CITA>
</DIV8>


<DIV8 N="§ 891.440" NODE="24:4.1.2.1.12.4.3.9" TYPE="SECTION">
<HEAD>§ 891.440   Adjustment of utility allowances.</HEAD>
<P>This section shall apply to projects funded under the Section 202 Program, to independent living complexes funded under Section 811 Program, and to projects financed with loans under subpart E of this part. The Owner (or Borrower, as applicable) must submit an analysis of any utility allowances applicable. Such data as changes in utility rates and other facts affecting utility consumption must be provided as part of this analysis to permit appropriate adjustments in the utility allowances for assisted units. In addition, when utility rate changes would result in a cumulative increase of 10 percent or more in the most recently approved utility allowances, the Owner (or Borrower) must advise HUD and request approval of new utility allowances. Whenever a utility allowance for an assisted unit is adjusted, the Owner (or Borrower) will promptly notify affected households (or families, as applicable) and make a corresponding adjustment of the tenant rent and the amount of the project rental assistance payment (or housing or project assistance payment, as applicable). 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0470)


</APPRO>
<CITA TYPE="N">[61 FR 11956, Mar. 22, 1996, as amended at 88 FR 9669, Feb. 14, 2023]






</CITA>
</DIV8>


<DIV8 N="§ 891.445" NODE="24:4.1.2.1.12.4.3.10" TYPE="SECTION">
<HEAD>§ 891.445   Conditions for receipt of vacancy payments for assisted units.</HEAD>
<P>(a) <I>General.</I> Vacancy payments under the PRAC will not be made unless the conditions for receipt of these project rental assistance payments set forth in this section are fulfilled. 
</P>
<P>(b) <I>Vacancies during rent-up.</I> For each unit (or residential space in a group home) that is not leased as of the effective date of the PRAC, the Owner is entitled to vacancy payments in the amount of 50 percent of the per unit operating cost (or pro rata share of the group home operating cost) for the first 60 days of vacancy, if the Owner: 
</P>
<P>(1) Conducted marketing in accordance with § 891.400(a) and otherwise complied with § 891.400; 
</P>
<P>(2) Has taken and continues to take all feasible actions to fill the vacancy; and 
</P>
<P>(3) Has not rejected any eligible applicant except for good cause acceptable to HUD. 
</P>
<P>(c) <I>Vacancies after rent-up.</I> If an eligible household vacates an assisted unit (or residential space in a group home) the Owner is entitled to vacancy payments in the amount of 50 percent of the approved per unit operating cost (or pro rata share of the group home operating cost) for the first 60 days of vacancy if the Owner: 
</P>
<P>(1) Certifies that it did not cause the vacancy by violating the lease, the PRAC, or any applicable law; 
</P>
<P>(2) Notified HUD of the vacancy or prospective vacancy and the reasons for the vacancy upon learning of the vacancy or prospective vacancy; 
</P>
<P>(3) Has fulfilled and continues to fulfill the requirements specified in § 891.400(a) (2) and (3) and § 891.445(b) (2) and (3); and 
</P>
<P>(4) For any vacancy resulting from the Owner's eviction of an eligible household, certifies that it has complied with § 891.430. 


</P>
<P>(d) <I>Prohibition of double compensation for vacancies.</I> If the Owner collects payments for vacancies from other sources (tenant rent, security deposits, payments under § 891.435(c), or governmental payments under other programs), the Owner shall not be entitled to collect vacancy payments to the extent these collections from other sources plus the vacancy payment exceed the approved per unit operating cost. 


</P>
<CITA TYPE="N">[61 FR 11956, Mar. 22, 1996, as amended at 88 FR 9669, Feb. 14, 2023]










</CITA>
</DIV8>


<DIV8 N="§ 891.450" NODE="24:4.1.2.1.12.4.3.11" TYPE="SECTION">
<HEAD>§ 891.450   HUD review.</HEAD>
<P>HUD shall conduct periodic on-site management reviews of the Owner's compliance with the requirements of this part. 


</P>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:4.1.2.1.12.5" TYPE="SUBPART">
<HEAD>Subpart E—Loans for Housing for the Elderly and Persons with Disabilities</HEAD>


<DIV8 N="§ 891.500" NODE="24:4.1.2.1.12.5.3.1" TYPE="SECTION">
<HEAD>§ 891.500   Purpose and policy.</HEAD>
<P>(a) <I>Purpose.</I> The program under subpart E of this part provides direct Federal loans under section 202 of the Housing Act of 1959 (42 U.S.C. 1701q) for housing projects serving elderly or handicapped families and individuals. The housing projects shall provide the necessary services for the occupants which may include, but are not limited to: Health, continuing education, welfare, informational, recreational, homemaking, meal and nutritional services, counseling, and referral services, as well as transportation where necessary to facilitate access to these services. 
</P>
<P>(b) <I>General policy.</I> A loan made under subpart E of this part shall be used to finance the construction or the substantial rehabilitation of projects for elderly or handicapped families, or for the acquisition with or without moderate rehabilitation of existing housing and related facilities for group homes for nonelderly handicapped individuals. 
</P>
<P>(c) <I>Applicability.</I> Subpart E of this part applies to all fund reservations made before October 1, 1990, except for loans not initially closed that were converted to capital advances. Specifically, § 891.520 through 891.650 of subpart E apply to projects for elderly or handicapped families that received reservations under section 202 of the Housing Act of 1959 (12 U.S.C. 1701q) and housing assistance under section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437 <I>et seq</I>). Sections 891.655 through 891.790 of subpart E apply to projects for nonelderly handicapped families receiving reservations under section 202 and project assistance payments under section 202(h) of the Housing Act of 1959. 


</P>
</DIV8>


<DIV8 N="§ 891.505" NODE="24:4.1.2.1.12.5.3.2" TYPE="SECTION">
<HEAD>§ 891.505   Definitions.</HEAD>
<P>For the purposes of this subpart E: 
</P>
<P><I>Act</I> means section 202 of the Housing Act of 1959, as amended (12 U.S.C. 1701q). 
</P>
<P><I>Borrower</I> means a private nonprofit corporation or a nonprofit consumer cooperative that may be established by the Sponsor, which will obtain a Section 202 loan and execute a mortgage in connection therewith as the legal owner of the project. “<I>Borrower</I>” does not mean a public body or the instrumentality of any public body. The purposes of the Borrower must include the promotion of the welfare of elderly and/or handicapped families. No part of the net earnings of the Borrower may inure to the benefit of any private shareholder, contributor, or individual, and the Borrower may not be controlled by or under the direction of persons or firms seeking to derive profit or gain therefrom. Because of the nonprofit nature of the Section 202 program, no officer or director, or trustee, member, stockholder or authorized representative of the Borrower is permitted to have any financial interest in any contract in connection with the rendition of services, the provision of goods or supplies, project management, procurement of furnishings and equipment, construction of the project, procurement of the site or other matters whatsoever. 
</P>
<P><I>Elderly family</I> means: 
</P>
<P>(1) Families of two or more persons the head of which (or his or her spouse) is 62 years of age or older; 
</P>
<P>(2) The surviving member or members of any family described in paragraph (1) of this definition living in a unit assisted under subpart E of this part with the deceased member of the family at the time of his or her death; 
</P>
<P>(3) A single person who is 62 years of age or older; or 
</P>
<P>(4) Two or more elderly persons living together, or one or more such persons living with another person who is determined by HUD, based upon a licensed physician's certificate provided by the family, to be essential to their care or well being. 
</P>
<P><I>Handicapped family</I> means: 
</P>
<P>(1) Families of two or more persons the head of which (or his or her spouse) is handicapped; 
</P>
<P>(2) The surviving member or members of any family described in paragraph (1) of this definition living in a unit assisted under subpart E of this part with the deceased member of the family at the time of his or her death; 
</P>
<P>(3) A single handicapped person over the age of 18; or 
</P>
<P>(4) Two or more handicapped persons living together, or one or more such persons living with another person who is determined by HUD, based upon a licensed physician's certificate provided by the family, to be essential to their care or well being. 
</P>
<P><I>Handicapped person or individual</I> means: 
</P>
<P>(1) Any adult having a physical, mental, or emotional impairment that is expected to be of long-continued and indefinite duration, substantially impedes his or her ability to live independently, and is of a nature that such ability could be improved by more suitable housing conditions. 
</P>
<P>(2) A person with a developmental disability, as defined in section 102(7) of the Developmental Disabilities Assistance and Bill of Rights Act (42 U.S.C. 6001(5), i.e., a person with a severe chronic disability that: 
</P>
<P>(i) Is attributable to a mental or physical impairment or combination of mental and physical impairments; 
</P>
<P>(ii) Is manifested before the person attains age twenty-two; 
</P>
<P>(iii) Is likely to continue indefinitely; 
</P>
<P>(iv) Results in substantial functional limitation in three or more of the following areas of major life activity: 
</P>
<P>(A) Self-care; 
</P>
<P>(B) Receptive and expressive language; 
</P>
<P>(C) Learning; 
</P>
<P>(D) Mobility; 
</P>
<P>(E) Self-direction; 
</P>
<P>(F) Capacity for independent living; 
</P>
<P>(G) Economic self-sufficiency; and 
</P>
<P>(v) Reflects the person's need for a combination and sequence of special, interdisciplinary, or generic care, treatment, or other services that are of lifelong or extended duration and are individually planned and coordinated. 
</P>
<P>(3) A person with a chronic mental illness, i.e., if he or she has a severe and persistent mental or emotional impairment that seriously limits his or her ability to live independently, and whose impairment could be improved by more suitable housing conditions. 
</P>
<P>(4) Persons infected with the human acquired immunodeficiency virus (HIV) who are disabled as a result of infection with the HIV are eligible for occupancy in section 202 projects designed for the physically disabled, developmentally disabled, or chronically mentally ill depending upon the nature of the person's disability. A person whose sole impairment is alcoholism or drug addition (i.e., who does not have a developmental disability, chronic mental illness, or physical disability that is the disabling condition required for eligibility in a particular project) will not be considered to be disabled for the purposes of the section 202 program. 
</P>
<P><I>Housing and related facilities</I> means rental or cooperative housing structures constructed or substantially rehabilitated as permanent residences for use by elderly or handicapped families, or acquired with or without moderate rehabilitation for use by nonelderly handicapped families as group homes. The term includes structures suitable for use by families residing in the project or in the area, such as cafeterias or dining halls, community rooms, or buildings, or other essential service facilities. In the case of acquisition with or without moderate rehabilitation, at least three years must have elapsed from the later of the date of completion of the project or the beginning of occupancy to the date of the application for a Section 202 fund reservation. Except for intermediate care facilities for the mentally retarded and individuals with related conditions, this term does not include nursing homes, hospitals, intermediate care facilities, or transitional care facilities. 
</P>
<P><I>Nonelderly handicapped family</I> means a handicapped family in which the head of the family (and spouse, if any) is less than 62 years of age at the time of the family's initial occupancy of a project. 
</P>
<P><I>Section 8 Program</I> means the housing assistance payments program that implements section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f note). 


</P>
</DIV8>


<DIV8 N="§ 891.510" NODE="24:4.1.2.1.12.5.3.3" TYPE="SECTION">
<HEAD>§ 891.510   Displacement, relocation, and real property acquisition.</HEAD>
<P>(a) <I>Minimizing displacement.</I> Consistent with the other goals and objectives of subpart E of this part, Sponsors and Borrowers shall assure that they have taken all reasonable steps to minimize the displacement of persons (families, individuals, businesses, nonprofit organizations, and farms) as a result of a project assisted under subpart E of this part. 
</P>
<P>(b) <I>Relocation assistance for displaced persons.</I> A displaced person (defined in paragraph (f) of this section) must be provided relocation assistance at the levels described in, and in accordance with the requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (URA) (42 U.S.C. 4201-4655), as implemented by 49 CFR part 24. A displaced person shall be advised of his or her rights under the Fair Housing Act (42 U.S.C. 3601-3619). If the comparable replacement dwellings are located in areas of minority concentration, minority persons also must be given, if possible, referrals to suitable, decent, safe, and sanitary replacement dwellings not located in such areas. 
</P>
<P>(c) <I>Real property acquisition requirements.</I> The acquisition of real property for a project is subject to the URA and the requirements described in 49 CFR part 24, subpart B. 
</P>
<P>(d) <I>Appeals.</I> A person who disagrees with the Sponsor's/Borrower's determination concerning whether the person qualifies as a <I>“displaced person,”</I> or with the amount of relocation assistance for which the person is eligible, may file a written appeal of that determination with the Sponsor/Borrower. A low-income person who is dissatisfied with the Sponsor's/Borrower's determination on his or her appeal may submit a written request for review of that determination to the HUD field office. 
</P>
<P>(e) <I>Responsibility of Sponsor/Borrower.</I> The Sponsor/Borrower shall certify that it will comply (i.e., provide assurance of compliance, as required by 49 CFR part 24) with the URA, the regulations at 49 CFR part 24, and the requirements of this section, and shall ensure such compliance notwithstanding any third party's contractual obligation to comply with these provisions. The Sponsor/Borrower shall maintain records in sufficient detail to demonstrate compliance with the provisions of this section. The Sponsor/Borrower shall maintain data on the race, ethnic, gender, and handicap status of displaced persons. 
</P>
<P>(f) <I>Definition of a displaced person.</I> (1) For purposes of this section, the term <I>displaced person</I> means a person (family, individual, business, nonprofit organization, or farm) that moves from real property, or moves personal property from real property, permanently, as a direct result of acquisition, rehabilitation, or demolition for a project assisted under this part. This includes any permanent, involuntary move for an assisted project including any permanent move from the real property that is made: 
</P>
<P>(i) After notice by the Sponsor/Borrower to move permanently from the property if the move occurs on or after: 
</P>
<P>(A) The date of the submission of an application to HUD that is later approved, if the Sponsor has control of an appropriate site; or 
</P>
<P>(B) The date that the Sponsor obtains control of an approvable site, if such control is obtained after the submission of an application to HUD: 
</P>
<P>(ii) Before the date described in paragraph (f)(1)(i) of this section, if the Sponsor, Borrower or HUD determines that the displacement resulted directly from acquisition, rehabilitation, or demolition for the project; 


</P>
<P>(iii) By a tenant-occupant of a dwelling unit, if any one of the following three situations occurs; 
</P>
<P>(A) The tenant moves after execution of the Agreement between the Sponsor/Borrower and HUD, and the move occurs before the tenant is provided written notice offering him or her the opportunity to lease and occupy a suitable, decent, safe, and sanitary dwelling in the same building/complex upon completion of the project under reasonable terms and conditions. Such reasonable terms and conditions include a monthly rent and estimated average monthly utility costs that do not exceed the greater of: 
</P>
<P>(<I>1</I>) The tenant's monthly rent and estimated average monthly utility costs before the Agreement; or 




</P>
<P>(<I>2</I>) The total tenant payment, as determined under 24 CFR 5.628, if the tenant is low-income, or 30 percent of gross household income, if the tenant is not low-income; or 




</P>
<P>(B) The tenant is required to relocate temporarily, does not return to the building/complex, and either: 
</P>
<P>(<I>1</I>) The tenant is not offered payment for all reasonable out-of-pocket expenses incurred in connection with the temporary relocation; or 
</P>
<P>(<I>2</I>) Other conditions of the temporary relocation are not reasonable; or 
</P>
<P>(C) The tenant is required to move to another dwelling in the same building/complex but is not offered reimbursement for all reasonable out-of-pocket expenses incurred in connection with the move, or other conditions of the move are not reasonable. 
</P>
<P>(2) Notwithstanding the provisions of paragraph (f)(1) of this section, however, a person does not qualify as a “displaced person” (and is not eligible for relocation assistance at URA levels), if: 
</P>
<P>(i) The person has been evicted for cause based upon a serious or repeated violation of the terms and conditions of the lease or occupancy agreement, violation of applicable Federal, State, or local law, or other good cause, and HUD determines that the eviction was not undertaken for the purpose of evading the obligation to provide relocation assistance. 
</P>
<P>(ii) The person moved into the property after the submission of the application and, before signing a lease and commencing occupancy, was provided written notice of the project, its possible impact on the person (e.g., displacement, temporary relocation or a rent increase) and the fact that he or she will not qualify as a displaced person as a result of the project; 
</P>
<P>(iii) The person is ineligible under 49 CFR 24.2(g)(2); or 
</P>
<P>(iv) HUD determines that the person was not displaced as a direct result of acquisition, rehabilitation, or demolition for the project; 
</P>
<P>(3) The Sponsor/Borrower may request, at any time, a HUD determination of whether a displacement is or would be covered by this section. 


</P>
<CITA TYPE="N">[61 FR 11956, Mar. 22, 1996, as amended at 88 FR 75233, Nov. 2, 2023]






</CITA>
</DIV8>


<DIV8 N="§ 891.515" NODE="24:4.1.2.1.12.5.3.4" TYPE="SECTION">
<HEAD>§ 891.515   Audit requirements.</HEAD>
<P>Nonprofits receiving assistance under this part are subject to the audit requirements in 2 CFR part 200, subpart F. 
</P>
<CITA TYPE="N">[61 FR 11956, Mar. 22, 1996, as amended at 80 FR 75941, Dec. 7, 2015]






</CITA>
</DIV8>


<DIV7 N="3" NODE="24:4.1.2.1.12.5.3" TYPE="SUBJGRP">
<HEAD>Section 202 Projects for the Elderly or Handicapped—Section 8 Assistance</HEAD>


<DIV8 N="§ 891.520" NODE="24:4.1.2.1.12.5.3.5" TYPE="SECTION">
<HEAD>§ 891.520   Definitions applicable to 202/8 projects.</HEAD>
<P>The following definitions apply to projects for eligible families receiving assistance under section 8 of the United States Housing Act of 1937 in addition to reservations under section 202 of the Housing Act of 1959 (202/8 projects): 
</P>
<P><I>Adjusted income</I> as defined in part 5, subpart F of subtitle A of this title.
</P>
<P><I>Assisted unit</I> means a dwelling unit eligible for assistance under a HAP contract. 
</P>
<P><I>Contract rent</I> means the total amount of rent specified in the HAP contract as payable by HUD and the tenant to the Borrower for an assisted unit. 


</P>
<P><I>Family (eligible family)</I> means an elderly or handicapped family that meets the project occupancy requirements approved by HUD and, if the family occupies an assisted unit, meets the requirements described in 24 CFR 5.403. 
</P>
<P><I>HAP contract (housing assistance payments contract)</I> means the contract entered into by the Borrower and HUD setting forth the rights and duties of the parties with respect to the project and the payments under the HAP contract. 
</P>
<P><I>Housing assistance payment</I> means the payment made by HUD to the Borrower for assisted units as provided in the HAP contract. The payment is the difference between the contract rent and the tenant rent. An additional payment is made to a family occupying an assisted unit when the utility allowance is greater than the total tenant payment. A housing assistance payment, known as a “vacancy payment,” may be made to the Borrower when an assisted unit is vacant, in accordance with the terms of the HAP contract. 
</P>
<P><I>Project account</I> means a specifically identified and segregated account for each project that is established in accordance with § 891.570(b) out of the amounts by which the maximum annual commitment exceeds the amount actually paid out under the HAP contract each year. 
</P>
<P><I>Project occupancy requirements</I> means that eligible populations to be served under the Section 202 program are qualified individuals or families whose head of household or spouse is elderly, physically handicapped, developmentally disabled, or chronically mentally ill. Projects are designed to meet the special needs of the particular tenant population that the Borrower was selected to serve. Individuals from one eligible group may not be accepted for occupancy in a project designed for a different tenant group. However, a Sponsor can propose to house eligible tenant groups other than the one it was selected to serve, but must apply to the HUD field office for permission to do so, based on a plan that demonstrates that it can adequately serve the proposed tenant group. Upon review and recommendation by the field office, HUD Headquarters will approve or disapprove the request. 
</P>
<P><I>Rent,</I> in the case of a unit in a cooperative project, means the carrying charges payable to the cooperative with respect to occupancy of the unit. 
</P>
<P><I>Tenant rent</I> means the monthly amount defined in, and determined in accordance with part 5, subpart F of subtitle A of this title. 
</P>
<P><I>Total tenant payment</I> means the monthly amount defined in, and determined in accordance with part 5, subpart F of subtitle A of this title.
</P>
<P><I>Utility allowance</I> is defined in part 5, subpart F of subtitle A of this title and is determined or approved by HUD. 
</P>
<P><I>Utility reimbursement</I> is defined in part 5, subpart F of subtitle A of this title.
</P>
<P><I>Vacancy payment</I> means the housing assistance payment made to the Borrower by HUD for a vacant assisted unit if certain conditions are fulfilled, as provided in the HAP contract. The amount of the vacancy payment varies with the length of the vacancy period and is less after the first 60 days of any vacancy. 
</P>
<CITA TYPE="N">[61 FR 11956, Mar. 22, 1996, as amended at 66 FR 6225, Jan. 19, 2001; 66 FR 8174, Jan. 30, 2001; 88 FR 9669, Feb. 14, 2023; 88 FR 75233, Nov. 2, 2023]






</CITA>
</DIV8>


<DIV8 N="§ 891.525" NODE="24:4.1.2.1.12.5.3.6" TYPE="SECTION">
<HEAD>§ 891.525   Amount and terms of financing.</HEAD>
<P>(a) The amount of financing approved shall be the amount stated in the Notice of Section 202 Fund Reservation, including any increase approved by the field office prior to the final closing of a loan; provided, however, that the amount of financing provided shall not exceed the lesser of: 
</P>
<P>(1) The dollar amounts stated in paragraphs (b) through (f) of this section; or 
</P>
<P>(2) The total development cost of the project as determined by the field office. 
</P>
<P>(b) For such part of the property or project attributable to dwelling use (excluding exterior land improvements, as defined by the Assistant Secretary) the maximum loan amount, depending on the number of bedrooms, may not exceed: 
</P>
<P>(1) $28,032 per family unit without a bedroom. 
</P>
<P>(2) $32,321 per family unit with one bedroom. 
</P>
<P>(3) $38,979 per family unit with two bedrooms. 
</P>
<P>(c) In order to compensate for the higher costs incident to construction of elevator type structures of sound standards of construction and design, the field office may increase the dollar limitations per family unit, as provided in paragraph (b) of this section, to not to exceed: 
</P>
<P>(1) $29,500 per family unit without a bedroom. 
</P>
<P>(2) $33,816 per family unit with one bedroom. 
</P>
<P>(3) $41,120 per family unit with two bedrooms. 
</P>
<P>(d) <I>Reduced loan amount—leaseholds.</I> In the event the loan is secured by a leasehold estate rather than a fee simple estate, the allowable cost of the property upon which the loan amount is based shall be reduced by the value of the leased fee. 
</P>
<P>(e) <I>Adjusted loan amount—rehabilitation projects.</I> A loan amount that involves a project to be rehabilitated shall be subject to the following additional limitations: 
</P>
<P>(1) <I>Property held in fee.</I> If the Borrower is the fee simple owner of the project not encumbered by a mortgage, the maximum loan amount shall not exceed 100 percent of the cost of the proposed rehabilitation. 
</P>
<P>(2) <I>Property subject to existing mortgage.</I> If the Borrower owns the project subject to an outstanding indebtedness, which is to be refinanced with part of the Section 202 loan, the maximum loan amount shall not exceed the cost of rehabilitation plus such portion of the outstanding indebtedness as does not exceed the fair market value of such land and improvements prior to the rehabilitation, as determined by the field office. 
</P>
<P>(3) <I>Property to be acquired.</I> If the project is to be acquired by the Borrower and the purchase price is to be financed with a part of the Section 202 loan, the maximum loan amount shall not exceed the cost of the rehabilitation plus such portion of the purchase price as does not exceed the fair market value of such land and improvements prior to the rehabilitation, as determined by the field office. 
</P>
<P>(f) <I>Increased Mortgage Limits—High Cost Areas.</I> (1)(i) The Assistant Secretary may increase the dollar amount limitations in paragraphs (b) and (c) of this section: 
</P>
<P>(A) By not to exceed 110 percent in any geographical area in which the Assistant Secretary finds that cost levels so require; and 
</P>
<P>(B) By not to exceed 140 percent where the Assistant Secretary determines it necessary on a project-by-project basis. 
</P>
<P>(ii) In no case, however, may any such increase exceed 90 percent, where the Assistant Secretary determines that there is involved a mortgage purchased or to be purchased by the Government National Mortgage Association (GNMA) in implementing its Special Assistance Functions under section 305 of the National Housing Act (as section 305 existed immediately before its repeal on November 30, 1983). 
</P>
<P>(2) If the Assistant Secretary finds that because of high costs in Alaska, Guam, or Hawaii it is not feasible to construct dwellings without the sacrifice of sound standards of construction, design, and livability within the limitations of maximum loan amounts provided in this section, the principal amount of mortgages may be increased by such amounts as may be necessary to compensate for such costs, but not to exceed in any event the maximum, including high cost area increases, if any, otherwise applicable by more than one-half thereof. 
</P>
<P>(g) <I>Loan interest rate.</I> Loans shall bear interest at a rate determined by HUD in accordance with this section. 
</P>
<P>(1) <I>Annual interest rate.</I> Except as provided under paragraph (g)(2), loans shall bear interest at the rate in effect at the time the loan is made. The loan interest rate shall not exceed: 
</P>
<P>(i) The average yield on the most recently issued 30-year marketable obligations of the United States during the 3-month period immediately preceding the fiscal year in which the loan is made (adjusted to the nearest one-eighth of one percent), plus an allowance to cover administrative costs and probable losses under the program; and 
</P>
<P>(ii) Any applicable statutory ceiling on the loan interest rate including the allowance to cover administrative costs and probable losses. 
</P>
<P>(2) <I>Optional interest rate.</I> The Borrower may elect an optional loan interest rate. To elect the optional rate, the Borrower must request that HUD determine the loan interest rate at the time of the Borrower's request for conditional or firm commitment for direct loan financing. 
</P>
<P>(i) If the Borrower elects the optional loan interest rate, the loan interest rate shall not exceed: 
</P>
<P>(A) The average yield on the most recently issued 30-year marketable obligations of the United States during the 3-month period immediately preceding the fiscal year in which the request for commitment is submitted (adjusted to the nearest one-eighth of one percent), plus an allowance to cover administrative costs and probable losses under the program; 
</P>
<P>(B) The average yield on the most recently issued 30-year marketable obligations of the United States during the 1-month period immediately preceding the month in which the request for commitment is submitted (adjusted to the nearest one-eighth of one percent), plus an allowance to cover the administrative costs and probable losses under the program; and (C) Any applicable statutory ceiling on the loan interest rate including an allowance to cover administrative costs and probable losses under the program. 
</P>
<P>(ii) The date of submission of a request for conditional or firm commitment is the date that the Borrower submits the complete and acceptable request to HUD. The date of the submission of a request for commitment will not be affected by any subsequent resubmission of the request by the Borrower or by any reprocessing of the request by HUD. 
</P>
<P>(iii) The Borrower may withdraw its election of the optional interest rate at any time before initial loan closing. If the Borrower elected the optional interest rate with its request for conditional commitment and withdraws its election, the loan will bear interest at the rate determined under paragraph (g)(1) of this section, unless the Borrower elects an optional interest rate with its request for firm commitment. If the Borrower withdraws its election after the date of submission of its request for firm commitment, the loan will bear interest at the rate determined under paragraph (g)(1) of this section. 
</P>
<P>(iv) If initial loan closing has not occurred within 18 months after the Notice of Section 202 Fund Reservation is issued, the Borrower's election of the optional rate will be cancelled and the loan will bear interest at the rate determined under paragraph (g)(1) of this section. 
</P>
<P>(3) <I>Allowance for administrative costs and probable losses.</I> For the purpose of computing the loan interest rate under paragraphs (g) (1) and (2) of this section, the allowance to cover administrative costs and probable losses under the program is one-fourth of one percent (.25%) per annum for both the construction and permanent loan periods. 
</P>
<P>(h) <I>Announcement of interest rates.</I> (1) HUD will annually announce the loan interest rate determination under paragraph (g)(1) of this section by publishing notice of the rate in the <E T="04">Federal Register.</E> The <E T="04">Federal Register</E> notice will include a statement explaining the basis for the interest rate determination. 
</P>
<P>(2) Upon the Borrower's request, HUD will provide available current information concerning the determination of the interest rate under paragraph (g)(2) of this section. 
</P>
<P>(i) The loan shall be secured by a first mortgage on real estate in fee simple or long term leasehold. The mortgage shall be repayable during a term not to exceed 40 years and shall be subject to such terms and conditions as shall be determined by the Assistant Secretary. 
</P>
<P>(j) In order to assure HUD of the Borrower's continued commitment to the development, management, and operation of the project, a minimum capital investment is required of Section 202 Borrowers of one-half of one percent (0.5%) of the mortgage amount committed to be disbursed, not to exceed the amount of $10,000. Section 106(b) loans made pursuant to section 106 of the Housing Act of 1968 may not be utilized to meet the minimum capital investment requirement. Such minimum capital investment shall be placed in escrow at the initial closing of the Section 202 loan and shall be held by HUD or other escrow agent acceptable to the field office for not less than a 3-year period from the date of initial occupancy and may be used for operating expenses or deficits as may be directed by the field office. Any unexpended balance remaining in the minimum capital investment account at the end of the escrow period shall be returned to the Borrower. 


</P>
</DIV8>


<DIV8 N="§ 891.530" NODE="24:4.1.2.1.12.5.3.7" TYPE="SECTION">
<HEAD>§ 891.530   Prepayment privileges.</HEAD>
<P>(a) The prepayment (whether in whole or in part) or the assignment or transfer of physical and financial assets of any Section 202 project is prohibited, unless the Secretary gives prior written approval. 
</P>
<P>(b) The Secretary may not grant approval unless he or she has determined that the prepayment or transfer of the loan is part of a transaction that will ensure the continued operation of the project, until the original maturity date of the loan, in a manner that will provide rental housing for the elderly and handicapped on terms at least as advantageous to existing and future tenants as the terms required by the original Section 202 loan agreement and any other loan agreements entered into under other provisions of law. 


</P>
</DIV8>


<DIV8 N="§ 891.535" NODE="24:4.1.2.1.12.5.3.8" TYPE="SECTION">
<HEAD>§ 891.535   Requirements for awarding construction contracts.</HEAD>
<P>(a) Awards shall be made only to responsible contractors that possess the potential ability to perform successfully under the terms and conditions of a proposed construction contract. Consideration shall be given to such matters as contractor integrity, compliance with public policy, record of past performance, and financial and technical resources. 
</P>
<P>(b) Each Borrower is permitted to use either competitive bidding (formal advertising) in selecting a construction contractor or the negotiated noncompetitive method of contract award under paragraph (c) of this section. In competitive bidding, sealed bids are publicly solicited and a firm, fixed-price contract is awarded (in accordance with the requirements of this paragraph (b)) to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is lowest in price. Regardless of which method a Borrower uses, there should be an opportunity for minority owned and women owned businesses to be awarded a contract. 
</P>
<P>(1) Bids shall be solicited from an adequate number of known contractors a reasonable time prior to the date set forth for opening of bids. In addition, the invitation shall be publicly advertised. 
</P>
<P>(2) The invitation for bids shall specify: 
</P>
<P>(i) The name of the Borrower; 
</P>
<P>(ii) A brief description of the proposed project and the proposed construction contract; 
</P>
<P>(iii) A preliminary estimate of cost; 
</P>
<P>(iv) That bids will be received at a specified place until a specified time at which time and place all bids will be publicly opened; 
</P>
<P>(v) The location where the proposed forms of contract and bid documents, including plans and specifications, are on file and may be obtained on payment of a specified returnable deposit; 
</P>
<P>(vi) That a certified check or bank draft or satisfactory bid bond in the amount of 5 percent of the bid shall be submitted with the bid; 
</P>
<P>(vii) That the successful bidder will be required to provide assurance of completion in the form of a performance and payment bond or cash escrow; and 
</P>
<P>(viii) That the Borrower reserves the right to reject any or all bids and to waive any informality. 
</P>
<P>(3) The bid form, which must be submitted by all bidders, must specify: 
</P>
<P>(i) The name of the project; 
</P>
<P>(ii) The name and address of the bidder; 
</P>
<P>(iii) That the bidder proposes to furnish all labor, materials, equipment and services required to construct and complete the project, as described in the invitation for bids (including the contents of all documents on file), for a specified lump-sum price; 
</P>
<P>(iv) That the security specified in paragraph (b)(2)(vi) of this section accompanies the bid; 
</P>
<P>(v) The period after the bid opening during which the bid shall not be withdrawn without the consent of the Borrower; 
</P>
<P>(vi) That the bidder will, if notified of acceptance of such bid within a specified period after the opening, execute and deliver a contract in the prescribed form and furnish the required bond within ten days thereafter; 
</P>
<P>(vii) That the bidder acknowledges any amendments to the invitation for bids; and 
</P>
<P>(viii) That the bidder certifies that the bid is in strict accordance with all terms of the invitation for bids (including the contents of all documents on file) and that the bid is signed by a person authorized to bind the bidder. 
</P>
<P>(4) Bidding shall be open to all general contractors who furnish the security guaranteeing their bid, as described in paragraph (b)(2)(vi) of this section. 
</P>
<P>(5) All bids shall be opened publicly at the time and place stated in the invitation for bids, in the presence of the HUD Regional Administrator or his designee. 
</P>
<P>(6) A firm, fixed-price contract award shall be made by written notice to the responsible bidder whose bid, conforming to the invitation for bids, is lowest. The contract may provide for an incentive payment to the contractor for an early completion. 
</P>
<P>(c) A Sponsor or Borrower may award a negotiated, noncompetitive construction contract. 


</P>
</DIV8>


<DIV8 N="§ 891.540" NODE="24:4.1.2.1.12.5.3.9" TYPE="SECTION">
<HEAD>§ 891.540   Loan disbursement procedures.</HEAD>
<P>(a) Disbursements of loan proceeds shall be made directly by HUD to or for the account of the Borrower and may be made through an approved lender, mortgage servicer, title insurance company, or other agent satisfactory to the Borrower and HUD. 
</P>
<P>(b) All disbursements to the Borrower shall be made on a periodic basis in an amount not to exceed the HUD-approved cost of portions of construction or rehabilitation work completed and in place (except as modified in paragraph (d) of this section), minus the appropriate holdback, as determined by the field office. 
</P>
<P>(c) Requisitions for loan disbursements shall be submitted by the Borrower on forms to be prescribed by the Assistant Secretary and shall be accompanied by such additional information as the field office may require in order to approve loan disbursements under subpart E of this part, including but not limited to evidence of compliance with the Davis-Bacon Act, Department of Labor regulations, all applicable zoning, building, and other governmental requirements, and such evidence of continued priority of the mortgage of the Borrower as the Assistant Secretary may prescribe. 
</P>
<P>(d) In loan disbursements for building components stored off-site, the term <I>building component</I> shall mean any manufactured or preassembled part of a structure as defined by HUD and that the Assistant Secretary has designated for off-site storage because it is of such size or weight that storage of the components required for timely construction progress at the construction site is impractical, or weather damage or other adverse conditions prevailing at the construction site would make storage at the site impractical or unduly costly. Each building component must be specifically identified for incorporation into the property as provided under paragraph (d)(1)(ii) of this section. 
</P>
<P>(1) <I>Storage.</I> (i) A loan disbursement may be made for up to 90 percent of the invoice value (to exclude costs of transportation and storage) of the building components stored off-site if the components are stored at a location approved by HUD. 
</P>
<P>(ii) Each building component shall be adequately marked so as to be readily identifiable in the inventory of the off-site location. It shall be kept together with all other building components of the same manufacturer intended for use in the same project for which loan disbursements have been made and separate and apart from similar units not for use in the project. 
</P>
<P>(iii) Storage costs, if any, shall be borne the general contractor. 
</P>
<P>(2) <I>Responsibility for transportation, storage and insurance of off-site building components.</I> The general contractor of the project shall have the responsibility for: 
</P>
<P>(i) Insuring the components in the name of the Borrower while in transit and storage; and 
</P>
<P>(ii) Delivering or contracting for the delivery of the components to the storage area and to the construction site, including payment of freight. 
</P>
<P>(3) <I>Loan disbursements.</I> (i) Before a loan disbursement for a building component stored off-site is made, the Borrower shall: 
</P>
<P>(A) Obtain a bill of sale for the component; 
</P>
<P>(B) Provide HUD with a security agreement pledged by a first lien on the building components with the exception of such other liens or encumbrances as may be approved by HUD; and 
</P>
<P>(C) File a financing statement in accordance with the Uniform Commercial Code. 
</P>
<P>(ii) Before each loan disbursement for building components stored off-site is made the manufacturer and the general contractor shall certify to HUD that the components, in their intended use, comply with HUD-approved contract plan and specifications. 
</P>
<P>(iii) Loan disbursements may be made only for components stored off-site in a quantity required to permit uninterrupted installation at the site. 
</P>
<P>(iv) At no time shall the invoice value of building components being stored off-site, for which advances have been insured, represent more than 25 percent of the total estimated construction costs for the insured mortgaged project as specified in the construction contract. Notwithstanding the preceding sentence and other regulatory requirements that set bonding requirements, the percentage of total estimated construction costs insured by advances under this section may exceed 25 percent but not 50 percent if the mortgagor furnishes assurance of completion in the form of a corporate surety bond for the payment and performance each in the amount of 100 percent of the amount of the construction contract. In no event will insurance of components stored off-site be made in the absence of a payment and performance bond. 
</P>
<P>(v) No single loan disbursement which is to be made shall be in an amount less than ten thousand ($10,000) dollars. 


</P>
</DIV8>


<DIV8 N="§ 891.545" NODE="24:4.1.2.1.12.5.3.10" TYPE="SECTION">
<HEAD>§ 891.545   Completion of project, cost certification, and HUD approvals.</HEAD>
<P>(a) The Borrower must satisfy the requirements for completion of construction and substantial rehabilitation and approvals by HUD before submission of a final requisition for disbursement of loan proceeds. 
</P>
<P>(b) The Borrower shall submit to the field office all documentation required for final disbursement of the loan, including: 
</P>
<P>(1) A Borrower's/Mortgagor's Certificate of Actual Cost, showing the actual cost to the mortgagor of the construction contract, architectural, legal, organizational, offsite costs, and all other items of eligible expense. The certificate shall not include as actual cost any kickbacks, rebates, trade discounts, or other similar payments to the mortgagor or to any of its officers, directors, or members. 
</P>
<P>(2) A verification of the Certificate of Actual Cost by an independent Certified Public Accountant or independent public accountant acceptable to the field office. 
</P>
<P>(3) In the case of projects not subject to competitive bidding, a certification of the general contractor (and of such subcontractors, material suppliers, and equipment lessors as the Assistant Secretary or field office may require), on a form prescribed by the Assistant Secretary, as to all actual costs paid for labor, materials, and subcontract work under the general contract exclusive of the builder's fee and kickbacks, rebates, trade discounts, or other similar payments to the general contractor, the mortgagor, or any of its officers, directors, stockholders, partners, or members. 
</P>
<P>(c) In lieu of the requirements set forth in paragraphs (c)(1) and (3) of this section, a simplified form of cost certification prescribed by the Secretary may be completed and submitted by the Borrower for projects with mortgages of $500,000 or less. The simplified cost certification shall be verified by an independent Certified Public Accountant or an independent public accountant in a manner acceptable to the Secretary. 
</P>
<P>(d) If the Borrower's certified costs provided in accordance with paragraph (c) or (d) of this section and as approved by HUD are less than the loan amount, the contract rents will be reduced accordingly. 
</P>
<P>(e) If the contract rents are reduced pursuant to paragraph (e) of this section, the maximum annual HAP Contract commitment will be reduced. If contract rents are reduced based on cost certification after HAP Contract execution, any overpayment after the effective date of the Contract will be recovered from the Borrower by HUD.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0044)


</APPRO>
</DIV8>


<DIV8 N="§ 891.550" NODE="24:4.1.2.1.12.5.3.11" TYPE="SECTION">
<HEAD>§ 891.550   Broadband infrastructure.</HEAD>
<P>Any new construction or substantial rehabilitation, as substantial rehabilitation is defined by 24 CFR 5.100, of a building with more than 4 rental units and funded by a grant awarded after January 19, 2017 must include installation of broadband infrastructure, as this term is also defined in 24 CFR 5.100, except where the owner determines and documents the determination that:
</P>
<P>(a) The location of the new construction or substantial rehabilitation makes installation of broadband infrastructure infeasible;
</P>
<P>(b) The cost of installing broadband infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden; or
</P>
<P>(c) The structure of the housing to be substantially rehabilitated makes installation of broadband infrastructure infeasible.
</P>
<CITA TYPE="N">[81 FR 92638, Dec. 20, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 891.560" NODE="24:4.1.2.1.12.5.3.12" TYPE="SECTION">
<HEAD>§ 891.560   HAP contract.</HEAD>
<P>(a) <I>HAP contract.</I> The housing assistance payments contract sets forth rights and duties of the Borrower and HUD with respect to the project and the housing assistance payments. 
</P>
<P>(b) <I>HAP contract execution.</I> (1) Upon satisfactory completion of the project, the Borrower and HUD shall execute the HAP contract on the form prescribed by HUD. 
</P>
<P>(2) The effective date of the HAP contract may be earlier than the date of execution, but no earlier than the date of HUD's issuance of the permission to occupy. 
</P>
<P>(3) If the project is completed in stages, the procedures of paragraph (b) of this section shall apply to each stage. 
</P>
<P>(c) <I>Housing assistance payments to owners under the HAP contract.</I> The housing assistance payments made under the HAP contract are: 
</P>
<P>(1) <I>Payments to the Borrower to assist eligible families leasing assisted units.</I> The amount of the housing assistance payment made to the Borrower for an assisted unit leased to an eligible family is equal to the difference between the contract rent for the unit and the tenant rent payable by the family. 
</P>
<P>(2) <I>Payments to the Borrower for vacant assisted units (vacancy payments).</I> The amount of and conditions for vacancy payments are described in § 891.650. The housing assistance payments are made monthly by HUD upon proper requisition by the Borrower, except payments for vacancies of more than 60 days, which are made semiannually by HUD upon requisition by the Borrower. 
</P>
<P>(d) <I>Payment of utility reimbursement.</I> As applicable, a utility reimbursement will be paid to a family occupying an assisted unit as an additional housing assistance payment. The HAP contract will provide that the Borrower will make this payment on behalf of HUD. Funds will be paid to the Borrower in trust solely for the purpose of making the additional payment. The Borrower may pay the utility reimbursement jointly to the family and the utility company, or, if the family and utility company consent, directly to the utility company. 


</P>
</DIV8>


<DIV8 N="§ 891.565" NODE="24:4.1.2.1.12.5.3.13" TYPE="SECTION">
<HEAD>§ 891.565   Term of HAP contract.</HEAD>
<P>The term of the HAP contract for assisted units shall be 20 years. If the project is completed in stages, the term of the HAP contract for assisted units in each stage shall be 20 years. The term of the HAP contract for all assisted units in all stages of a project shall not exceed 22 years. 


</P>
</DIV8>


<DIV8 N="§ 891.570" NODE="24:4.1.2.1.12.5.3.14" TYPE="SECTION">
<HEAD>§ 891.570   Maximum annual commitment and project account.</HEAD>
<P>(a) <I>Maximum annual commitment.</I> The maximum annual amount that may be committed under the HAP contract is the total of the contract rents and utility allowances for all assisted units in the project. 
</P>
<P>(b) <I>Project account.</I> (1) HUD will establish and maintain a specifically identified and segregated project account for each project. The project account will be established out of the amounts by which the maximum annual commitment exceeds the amount actually paid out under the HAP contract each year. HUD will make payments from this account for housing assistance payments as needed to cover increases in contract rents or decreases in tenant income and other payments for costs specifically approved by the Secretary. 
</P>
<P>(2) If the HUD-approved estimate of required annual payments under the HAP contract for a fiscal year exceeds the maximum annual commitment for that fiscal year plus the current balance in the project account, HUD will, within a reasonable time, take such steps authorized by section 8(c)(6) of the United States Housing Act of 1937 (42 U.S.C. 1437f note), as may be necessary, to assure that payments under the HAP contract will be adequate to cover increases in contract rents and decreases in tenant income. 


</P>
</DIV8>


<DIV8 N="§ 891.575" NODE="24:4.1.2.1.12.5.3.15" TYPE="SECTION">
<HEAD>§ 891.575   Leasing to eligible families.</HEAD>
<P>(a) <I>Availability of assisted units for occupancy by eligible families.</I> (1) During the term of the HAP contract, a Borrower shall make available for occupancy by eligible families the total number of units for which assistance is committed under the HAP contract. For purposes of this section, making units available for occupancy by eligible families means that the Borrower: 
</P>
<P>(i) Is conducting marketing in accordance with § 891.600(a); 
</P>
<P>(ii) Has leased or is making good faith efforts to lease the units to eligible and otherwise acceptable families, including taking all feasible actions to fill vacancies by renting to such families; 
</P>
<P>(iii) Has not rejected any such applicant family except for reasons acceptable to HUD.

 
</P>
<P>(2) If the Borrower is temporarily unable to lease all units for which assistance is committed under the HAP contract to eligible families, one or more units may, with the prior approval of HUD, be leased to otherwise eligible families that do not meet the income eligibility requirements of 24 CFR 5.653. Failure on the part of the Borrower to comply with these requirements is a violation of the HAP contract and grounds for all available legal remedies, including an action for specific performance of the HAP contract, suspension or debarment from HUD programs, and reduction of the number of units under the HAP contract as set forth in paragraph (b) of this section. 
</P>
<P>(b) <I>Reduction of number of units covered by the HAP contract.</I> HUD may reduce the number of units covered by the HAP contract to the number of units available for occupancy by eligible families if: 
</P>
<P>(1) The Borrower fails to comply with the requirements of paragraph (a) of this section; or 
</P>
<P>(2) Notwithstanding any prior approval by HUD, HUD determines that the inability to lease units to eligible families is not a temporary problem. 
</P>
<P>(c) <I>Restoration.</I> HUD will agree to an amendment of the HAP contract to provide for subsequent restoration of any reduction made under paragraph (b) of this section if: 
</P>
<P>(1) HUD determines that the restoration is justified by demand; 
</P>
<P>(2) The Borrower otherwise has a record of compliance with the Borrower's obligations under the HAP contract; and 
</P>
<P>(3) Contract and budget authority is available. 
</P>
<P>(d) <I>Applicability.</I> In accordance with section 555 of the Cranston-Gonzalez National Affordable Housing Act of 1990, paragraphs (a) and (b) of this section apply to all contracts. An owner who had leased an assisted unit to an ineligible family consistent with the regulations in effect at the time will continue to lease the unit to that family. However, the owner must make the unit available for occupancy by an eligible family when the ineligible family vacates the unit. 
</P>
<P>(e) <I>Occupancy by families that are not elderly or handicapped.</I> HUD may permit units in the project to be leased to other than elderly or handicapped families if: 
</P>
<P>(1) The Borrower has made reasonable efforts to lease assisted and unassisted units to eligible families; 
</P>
<P>(2) The Borrower has been granted HUD approval under paragraph (a) of this section; and 
</P>
<P>(3) The Borrower is temporarily unable to achieve or maintain a level of occupancy sufficient to prevent financial default and foreclosure under the Section 202 loan documents. HUD approval under paragraph (e)(3) of this section will be of limited duration. HUD may impose terms and conditions to this approval that are consistent with program objectives and necessary to protect its interest in the Section 202 loan. 
</P>
<P>(f) The regulations of 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking) apply to this section.
</P>
<CITA TYPE="N">[61 FR 11956, Mar. 22, 1996, as amended at 73 FR 72343, Nov. 28, 2008; 75 FR 66262, Oct. 27, 2010; 81 FR 80815, Nov. 16, 2016; 88 FR 75233, Nov. 2, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 891.580" NODE="24:4.1.2.1.12.5.3.16" TYPE="SECTION">
<HEAD>§ 891.580   HAP contract administration.</HEAD>
<P>HUD is responsible for the administration of the HAP contract. 








</P>
</DIV8>


<DIV8 N="§ 891.582" NODE="24:4.1.2.1.12.5.3.17" TYPE="SECTION">
<HEAD>§ 891.582   Management and occupancy reviews.</HEAD>
<P>(a) The contract administrator will conduct management and occupancy reviews to determine whether the owner is in compliance with the HAP Contract. Such reviews will be conducted in accordance with a schedule set out by the Secretary and published in the <E T="04">Federal Register,</E> following notice and the opportunity to comment. Where a change in ownership or management occurs, a management and occupancy review must be conducted within six months.
</P>
<P>(b) HUD or the Contract Administrator may inspect project operations and units at any time.
</P>
<P>(c) Equal Opportunity reviews may be conducted by HUD at any time.
</P>
<CITA TYPE="N">[87 FR 37997, June 27, 2022]






</CITA>
</DIV8>


<DIV8 N="§ 891.585" NODE="24:4.1.2.1.12.5.3.18" TYPE="SECTION">
<HEAD>§ 891.585   Default by Borrower.</HEAD>
<P>(a) <I>HAP contract provisions.</I> The HAP contract will provide: 
</P>
<P>(1) That if HUD determines that the Borrower is in default under the HAP contract, HUD will notify the Borrower of the actions required to be taken to cure the default and of the remedies to be applied by HUD including an action for specific performance under the HAP contract, reduction or suspension of housing assistance payments and recovery of overpayments, where appropriate; and 
</P>
<P>(2) That if the Borrower fails to cure the default, HUD has the right to terminate the HAP contract or to take other corrective action. 
</P>
<P>(b) <I>Loan provisions.</I> Additional provisions governing default under the section 202 loan are included in the regulatory agreement and other loan documents. 


</P>
</DIV8>


<DIV8 N="§ 891.590" NODE="24:4.1.2.1.12.5.3.19" TYPE="SECTION">
<HEAD>§ 891.590   Notice upon HAP contract expiration.</HEAD>
<P>(a) <I>Notice required.</I> The HAP contract will provide that the Borrower will, at least one year before the end of the HAP contract term, notify each family leasing an assisted unit of any increase in the amount the family will be required to pay as rent as a result of the expiration. 
</P>
<P>(b) <I>Service requirements.</I> The notice under paragraph (a) of this section shall be accomplished by sending a letter by first class mail, properly stamped and addressed, to the family at its address at the project, with a proper return address; and serving a copy of the notice on any adult person answering the door at the leased dwelling unit, or if no adult responds, by placing the notice under or through the door, if possible, or else by affixing the notice to the door. Service shall not be considered to be effective until both required notices have been accomplished. The date on which the notice shall be considered to be received by the family shall be the date on which the Borrower mails the first class letter provided for in paragraph (b) of this section, or the date on which the notice provided for in paragraph (b) of this section is properly given, whichever is later. 
</P>
<P>(c) <I>Contents of notice.</I> The notice shall advise each affected family that, after the expiration date of the HAP contract, the family will be required to bear the entire cost of the rent and that the Borrower may, subject to requirements and restrictions contained in the regulatory agreement, the lease, and State or local law, change the rent. The notice also shall state: 
</P>
<P>(1) The actual (if known) or the estimated rent that will be charged following the expiration of the HAP contract; 
</P>
<P>(2) The difference between the new rent and the total tenant payment toward rent under the HAP contract; and 
</P>
<P>(3) The date the HAP contract will expire. 
</P>
<P>(d) <I>Certification to HUD.</I> The Borrower shall give HUD a certification that families have been notified in accordance with this section and shall attach to the certification an example of the text of the notice. 
</P>
<P>(e) <I>Applicability.</I> This section applies to all HAP contracts entered into under an agreement to enter into a housing assistance payments contract executed on or after October 1, 1981, or entered into under such an agreement executed before October 1, 1981 but renewed or amended after February 9, 1995. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0371)


</APPRO>
</DIV8>


<DIV8 N="§ 891.595" NODE="24:4.1.2.1.12.5.3.20" TYPE="SECTION">
<HEAD>§ 891.595   HAP contract extension or renewal.</HEAD>
<P>Upon expiration of the term of the HAP contract, HUD and the Borrower may agree (subject to available funds) to extend the term of the HAP contract or to renew the HAP contract. The number of assisted units under the extended or renewed HAP contract shall equal the number of assisted units under the original HAP contract, except that: 
</P>
<P>(a) HUD and the Borrower may agree to reduce the number of assisted units by the number of assisted units that are not occupied by eligible families at the time of the extension or renewal; and 
</P>
<P>(b) HUD and the Borrower may agree to permit reductions in the number of assisted units during the term of the extended or renewed HAP contract as assisted units are vacated by eligible families. Nothing in this section shall prohibit HUD from reducing the number of units covered under the extended or renewed HAP contract in accordance with § 891.575(b). 


</P>
</DIV8>


<DIV8 N="§ 891.600" NODE="24:4.1.2.1.12.5.3.21" TYPE="SECTION">
<HEAD>§ 891.600   Responsibilities of Borrower.</HEAD>
<P>(a) <I>Marketing.</I> (1) The Borrower must commence and continue diligent marketing activities not later than 90 days before the anticipated date of availability for occupancy of the first unit of the project. Market activities shall include the provision of notices of availability of housing under the program to operators of temporary housing for the homeless in the same housing market. 
</P>
<P>(2) Marketing must be done in accordance with the HUD-approved affirmative fair housing marketing plan and all Federal, State, or local fair housing and equal opportunity requirements. The purpose of the plan and requirements is to achieve a condition in which eligible families of similar income levels in the same housing market have a like range of housing choices available to them regardless of discriminatory considerations, such as their race, color, creed, religion, familial status, disability, sex or national origin. Marketing must also be done in accordance with the communication and notice requirements of Section 504 at 24 CFR 8.6 and 24 CFR 8.54. 
</P>
<P>(3) At the time of HAP contract execution, the Borrower must submit to HUD a list of leased and unleased assisted units, with a justification for the unleased units, in order to qualify for vacancy payments for the unleased units. 
</P>
<P>(b) <I>Management and maintenance.</I> The Borrower is responsible for all management functions. These functions include selection and admission of tenants, required reexaminations of incomes for families occupying assisted units (or residential spaces, as applicable), collection of rents, termination of tenancy and eviction, and all repair and maintenance functions (including ordinary and extraordinary maintenance and replacement of capital items). All functions must be performed in compliance with equal opportunity requirements. 
</P>
<P>(c) <I>Contracting for services.</I> (1) With HUD approval, the Borrower may contract with a private or public entity for performance of the services or duties required in paragraphs (a) and (b) of this section. However, such an arrangement does not relieve the Borrower of responsibility for these services and duties. All such contracts are subject to the restrictions governing prohibited contractual relationships described in §§ 891.130 and 891.505, if applicable. (These prohibitions do not extend to management contracts entered into by the Borrower with the Sponsor or its nonprofit affiliate). 
</P>
<P>(2) Consistent with the objectives of Executive Order No. 11625 (36 FR 19967, 3 CFR, 1971-1975 Comp., p. 616; as amended by Executive Order No. 12007 (42 FR 42839, 3 CFR, 1977 Comp., p. 139; unless otherwise noted); Executive Order No. 12432 (48 FR 32551, 3 CFR, 1983 Comp., p. 198; unless otherwise noted); and Executive Order No. 12138 (44 FR 29637, 3 CFR, 1979 Comp., p. 393; unless otherwise noted), the Borrower will promote awareness and participation of minority and women's business enterprises in contracting and procurement activities. 
</P>
<P>(d) <I>Submission of financial and operating statements.</I> The Borrower must submit to HUD: 
</P>
<P>(1) Within 60 days after the end of each fiscal year of project operations, financial statements for the project audited by an independent public accountant and in the form required by HUD; and 
</P>
<P>(2) Other statements regarding project operation, financial conditions and occupancy as HUD may require to administer the housing assistance payments contract (HAP contract) or the project assistance contract (PAC), as applicable, and to monitor project operations. 
</P>
<P>(e) <I>Use of project funds.</I> The Borrower shall maintain a separate project fund account in a depository or depositories that are members of the Federal Deposit Insurance Corporation or National Credit Union Share Insurance Fund and shall deposit all rents, charges, income and revenues arising from project operation or ownership to this account. All project funds are to be deposited in Federally-insured accounts. All balances shall be fully insured at all times, to the maximum extent possible. Project funds must be used for the operation of the project (including required insurance coverage), to make required principal and interest payments on the Section 202 loan, and to make required deposits to the replacement reserve under §§ 891.605 and 891.745 (as applicable), in accordance with a HUD-approved budget. Any project funds in the project funds account (including earned interest) following the expiration of the fiscal year shall be deposited in a Federally-insured residual receipts account within 60 days following the end of the fiscal year. Withdrawals from this account may be made only for project purposes and with the approval of HUD. If there are funds remaining in the residual receipts account when the mortgage is satisfied, such funds shall be returned to HUD. 
</P>
<P>(f) <I>Reports.</I> The Borrower shall submit such reports as HUD may prescribe to demonstrate compliance with applicable civil rights and equal opportunity requirements. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0371)


</APPRO>
</DIV8>


<DIV8 N="§ 891.605" NODE="24:4.1.2.1.12.5.3.22" TYPE="SECTION">
<HEAD>§ 891.605   Replacement reserve.</HEAD>
<P>(a) <I>Establishment of reserve.</I> The Borrower shall establish and maintain a replacement reserve to aid in funding extraordinary maintenance, and repair and replacement of capital items. 
</P>
<P>(b) <I>Deposits to reserve.</I> The Borrower shall make monthly deposits to the replacement reserve in an amount determined by HUD. Further requirements regarding the amount of the deposits for projects funded under §§ 891.655 through 891.790 are provided in § 891.745. 
</P>
<P>(c) <I>Level of reserve.</I> The reserve must be built up to and maintained at a level determined by HUD to be sufficient to meet projected requirements. Should the reserve reach that level, the amount of the deposit to the reserve may be reduced with the approval of HUD. 
</P>
<P>(d) <I>Administration of reserve.</I> Replacement reserve funds must be deposited with HUD or in a Federally-insured depository in an interest-bearing account(s) whose balances are fully insured at all times. All earnings including interest on the reserve must be added to the reserve. Funds may be drawn from the reserve and used only in accordance with HUD guidelines and with the approval of, or as directed by, HUD. 








</P>
</DIV8>


<DIV8 N="§ 891.610" NODE="24:4.1.2.1.12.5.3.23" TYPE="SECTION">
<HEAD>§ 891.610   Selection and admission of tenants.</HEAD>
<P>(a) <I>Written procedures.</I> The Owner shall adopt written tenant selection procedures that ensure nondiscrimination in the selection of tenants and that are consistent with the purpose of improving housing opportunities for very low-income elderly or handicapped persons; and reasonably related to program eligibility and an applicant's ability to perform the obligations of the lease. Owners shall promptly notify in writing any rejected applicant of the grounds for any rejection. Additionally, owners shall maintain a written, chronological waiting list showing the name, race, gender, ethnicity and date of each person applying for the program. 
</P>
<P>(b) <I>Application for admission.</I> The Borrower must accept applications for admission to the project in the form prescribed by HUD and is obligated to confirm all information provided by the applicant families on the application. Applicant families must be requested to complete a release of information consent for verification of information. Applicants applying for assisted units must complete a certification of eligibility as part of the application for admission. Applicant families must meet the disclosure and verification requirements for Social Security Numbers, and sign and submit consent forms for the obtaining of wage and claim information from State Wage Information Collection Agencies, as provided by 24 CFR part 5, subpart B. Both the Borrower and the applicant must complete and sign the application for admission. On request, the Borrower must furnish copies of all applications for admission to HUD. 
</P>
<P>(c) <I>Determination of eligibility and selection of tenants.</I> The borrower is responsible for determining whether applicants are eligible for admission and for selection of families. To be eligible for admission, an applicant must be an elderly or handicapped family as defined in § 891.505; meet any project occupancy requirements approved by HUD; meet the disclosure and verification requirement for Social Security numbers and sign and submit consent forms for obtaining wage and claim information from State Wage Information Collection Agencies, as provided by 24 CFR part 5, subpart B; and, if applying for an assisted unit, be eligible for admission under subpart F of 24 CFR part 5, which governs selection of tenants and occupancy requirements. The provisions of 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking) apply to this section.
</P>
<P>(d) <I>Unit assignment.</I> If the Borrower determines that the family is eligible and is otherwise acceptable and units are available, the Borrower will assign the family a unit. The Borrower will assign the family a unit of the appropriate size in accordance with HUD's general occupancy guidelines. If no suitable unit is available, the Borrower will place the family on a waiting list for the project and notify the family of when a suitable unit may become available. If the waiting list is so long that the applicant would not be likely to be admitted within the next 12 months, the Borrower may advise the applicant that no additional applications for admission are being considered for that reason, except that the Borrower may not refuse to place an applicant on the waiting list if the applicant is otherwise eligible for assistance and claims that he or she qualifies for a Federal preference as provided in 24 CFR part 5, subpart D. 


</P>
<P>(e) <I>Ineligibility determination.</I> If the Borrower determines that an applicant is ineligible for admission or the Borrower is not selecting the applicant for other reasons, the Borrower will promptly notify the applicant in writing of the determination, the reasons for the determination, and that the applicant has a right to request a meeting with the Borrower or managing agent to review the rejection, in accordance with HUD requirements. The review, if requested, may not be conducted by a member of the Borrower's staff who made the initial decision to reject the applicant. The applicant may also exercise other rights (<I>e.g.,</I> rights granted under Federal, State, or local civil rights laws) if the applicant believes he or she is being discriminated against on a prohibited basis.


</P>
<P>(f) <I>Records.</I> Records on applicants and approved eligible families, which provide racial, ethnic, gender, handicap status, and place of previous residency data required by HUD, must be retained for three years. 
</P>
<P>(g) <I>Reexamination of family income and composition</I>—(1) <I>Regular reexaminations.</I> The Borrower must reexamine the income and composition of the family at least every 12 months. Upon verification of the information, the Borrower shall make appropriate adjustments in the total tenant payment in accordance with § 5.657 of this title and determine whether the family's unit size is still appropriate. The Borrower must adjust tenant rent and the housing assistance payment and must carry out any unit transfer in accordance with the administrative instructions issued by HUD. At the time of reexamination, the Borrower must require the family to meet the disclosure and verification requirements for Social Security Numbers, as provided by 24 CFR part 5, subpart B.
</P>
<P>(2) <I>Interim reexaminations.</I> The family must comply with the provisions in § 5.657 of this title regarding interim reporting of changes in income. If the Borrower receives information concerning a change in the family's income or other circumstances between regularly scheduled reexaminations, the Borrower must consult with the family and make any adjustments determined to be appropriate. Any change in the family's income or other circumstances that results in an adjustment in the total tenant payment, tenant rent, or housing assistance payment must be verified.










</P>
<P>(3) <I>Continuation of housing assistance payments.</I> (i) A family shall remain eligible for housing assistance payments until the total tenant payment equals or exceeds the gross rent. The termination of subsidy eligibility will not affect the family's other rights under its lease. Housing assistance payments may be resumed if, as a result of changes in income, rent, or other relevant circumstances during the term of the HAP contract, the family meets the income eligibility requirements of § 5.657 of this title and housing assistance is available for the unit under the terms of the HAP contract. The family will not be required to establish its eligibility for admission to the project under the remaining requirements of paragraph (c) of this section. 


</P>
<P>(ii) A family's eligibility for housing assistance payments may be terminated in accordance with HUD requirements for such reasons as failure to submit requested verification information, including information related to disclosure and verification of Social Security Numbers, or failure to sign and submit consent forms for the obtaining of wage and claim information from State wage information collection agencies, as provided by 24 CFR part 5, subpart B.
</P>
<P>(4) <I>Streamlined income determination.</I> An owner may elect to follow the provisions of 24 CFR 5.657(d).


</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0371)
</APPRO>
<CITA TYPE="N">[61 FR 11956, Mar. 22, 1996, as amended at 70 FR 77744, Dec. 30, 2005; 73 FR 72343, Nov. 28, 2008; 75 FR 66262, Oct. 27, 2010; 81 FR 12371, Mar. 8, 2016; 81 FR 80815, Nov. 16, 2016; 88 FR 9669, Feb. 14, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 891.615" NODE="24:4.1.2.1.12.5.3.24" TYPE="SECTION">
<HEAD>§ 891.615   Obligations of the family.</HEAD>
<P>The obligations of the family are provided in § 891.415. 


</P>
</DIV8>


<DIV8 N="§ 891.620" NODE="24:4.1.2.1.12.5.3.25" TYPE="SECTION">
<HEAD>§ 891.620   Overcrowded and underoccupied units.</HEAD>
<P>If the Borrower determines that because of change in family size, an assisted unit is smaller than appropriate for the eligible family to which it is leased, or that the assisted unit is larger than appropriate, housing assistance payments or project assistance payments (as applicable) with respect to the unit will not be reduced or terminated until the eligible family has been relocated to an appropriate alternate unit. If possible, the Borrower will, as promptly as possible, offer the family an appropriate alternate unit. The Borrower may receive vacancy payments for the vacated unit if the Borrower complies with the requirements of § 891.650. 


</P>
</DIV8>


<DIV8 N="§ 891.625" NODE="24:4.1.2.1.12.5.3.26" TYPE="SECTION">
<HEAD>§ 891.625   Lease requirements.</HEAD>
<P>The lease requirements are provided in § 891.425. 


</P>
</DIV8>


<DIV8 N="§ 891.630" NODE="24:4.1.2.1.12.5.3.27" TYPE="SECTION">
<HEAD>§ 891.630   Denial of admission, termination of tenancy, and modification of lease.</HEAD>
<P>(a) The provisions of part 5, subpart I, of this title apply to Section 202 direct loan projects. 
</P>
<P>(b) The provisions of part 247 of this title apply to all decisions by a Borrower to terminate the tenancy or modify the lease of a family residing in a unit.
</P>
<P>(c) In actions or potential actions to terminate tenancy, the owner shall follow 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking).
</P>
<CITA TYPE="N">[66 FR 28798, May 24, 2001, as amended at 73 FR 72343, Nov. 28, 2008; 75 FR 66262, Oct. 27, 2010; 81 FR 80815, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 891.635" NODE="24:4.1.2.1.12.5.3.28" TYPE="SECTION">
<HEAD>§ 891.635   Security deposits.</HEAD>
<P>The general requirements for security deposits on assisted units are provided in § 891.435. For purposes of subpart E of this part, the additional requirements apply: 
</P>
<P>(a) The Borrower may require each family occupying an unassisted unit (or residential space in a group home) to pay a security deposit equal to one month's rent payable by the family. 
</P>
<P>(b) The Borrower shall maintain a record of the amount in the segregated interest-bearing account that is attributable to each family in residence in the project. Annually for all families, and when computing the amount available for disbursement under § 891.435(b)(3), the Borrower shall allocate to the family's balance the interest accrued on the balance during the year. Unless prohibited by State or local law, the Borrower may deduct for the family, from the accrued interest for the year, the administrative cost of computing the allocation to the family's balance. The amount of the administrative cost adjustment shall not exceed the accrued interest allocated to the family's balance for the year. 


</P>
</DIV8>


<DIV8 N="§ 891.640" NODE="24:4.1.2.1.12.5.3.29" TYPE="SECTION">
<HEAD>§ 891.640   Adjustment of rents.</HEAD>
<P>(a) <I>Contract rents</I>—(1) <I>Adjustment based on approved budget.</I> If the HAP contract provides, or has been amended to provide, that contract rents will be adjusted based upon a HUD-approved budget, HUD will calculate contract rent adjustments based on the sum of the project's operating costs and debt service (as calculated by HUD), with adjustments for vacancies, the project's nonrental income, and other factors that HUD deems appropriate. The calculation will be made on the basis of information provided by the Borrower on a form acceptable to the Secretary. The automatic adjustment factor described in part 888 of this chapter is not used to adjust contract rents under paragraph (a)(1) of this section, except to the extent that the amount of the replacement reserve deposit is adjusted under § 880.602 of this chapter. 
</P>
<P>(2) <I>Annual and special adjustments.</I> If the HAP contract provides that contract rents will be adjusted based on the application of an automatic adjustment factor and by special additional adjustments: 
</P>
<P>(i) Consistent with the HAP contract, contract rents may be adjusted in accordance with part 888 of this chapter; 
</P>
<P>(ii) Special additional adjustments will be granted, to the extent determined necessary by HUD, to reflect increases in the actual and necessary expenses of owning and maintaining the assisted units that have resulted from substantial general increases in real property taxes, assessments, utility rates or similar costs (i.e., assessments and utilities not covered by regulated rates), and that are not adequately compensated for by an annual adjustment. The Borrower must submit to HUD required supporting data, financial statements, and certifications for the special additional adjustment. 
</P>
<P>(b) <I>Rent for unassisted units.</I> The rent payable by families occupying units that are not assisted under the HAP contract shall be equal to the contract rent computed under paragraph (a) of this section. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0371)


</APPRO>
</DIV8>


<DIV8 N="§ 891.645" NODE="24:4.1.2.1.12.5.3.30" TYPE="SECTION">
<HEAD>§ 891.645   Adjustment of utility allowances.</HEAD>
<P>In connection with adjustments of contract rents as provided in § 891.640(a), the requirements for the adjustment of utility allowances provided in § 891.440 apply. 


</P>
</DIV8>


<DIV8 N="§ 891.650" NODE="24:4.1.2.1.12.5.3.31" TYPE="SECTION">
<HEAD>§ 891.650   Conditions for receipt of vacancy payments for assisted units.</HEAD>
<P>(a) <I>General.</I> Vacancy payments under the HAP contract will not be made unless the conditions for receipt of these housing assistance payments set forth in this section are fulfilled. 
</P>
<P>(b) <I>Vacancies during rent-up.</I> For each unit that is not leased as of the effective date of the HAP contract, the Borrower is entitled to vacancy payments in the amount of 80 percent of the contract rent for the first 60 days of vacancy, if the Borrower: 
</P>
<P>(1) Complied with § 891.600; 
</P>
<P>(2) Has taken and continues to take all feasible actions to fill the vacancy; and 
</P>
<P>(3) Has not rejected any eligible applicant except for good cause acceptable to HUD. 
</P>
<P>(c) <I>Vacancies after rent-up.</I> If an eligible family vacates a unit, the Borrower is entitled to vacancy payments in the amount of 80 percent of the contract rent for the first 60 days of vacancy if the Borrower: 
</P>
<P>(1) Certifies that it did not cause the vacancy by violating the lease, the HAP contract, or any applicable law; 
</P>
<P>(2) Notified HUD of the vacancy or prospective vacancy and the reasons for the vacancy immediately upon learning of the vacancy or prospective vacancy; 
</P>
<P>(3) Has fulfilled and continues to fulfill the requirements specified in § 891.600(a)(2) and (3), and in paragraphs (b)(2) and (3) of this section; and 
</P>
<P>(4) For any vacancy resulting from the Borrower's eviction of an eligible family, certifies that it has complied with § 891.630. 
</P>
<P>(d) <I>Vacancies for longer than 60 days.</I> If a unit continues to be vacant after the 60-day period specified in paragraph (b) or (c) of this section, the Borrower may apply to receive additional vacancy payments in an amount equal to the principal and interest payments required to amortize that portion of the debt service attributable to the vacant unit for up to 12 additional months for the unit if: 
</P>
<P>(1) The unit was in decent, safe, and sanitary condition during the vacancy period for which payment is claimed; 
</P>
<P>(2) The Borrower has fulfilled and continues to fulfill the requirements specified in paragraph (b) or (c) of this section, as appropriate; and 
</P>
<P>(3) The Borrower has demonstrated to the satisfaction of HUD that: 
</P>
<P>(i) For the period of vacancy, the project is not providing the Borrower with revenues at least equal to project expenses (exclusive of depreciation) and the amount of payments requested is not more than the portion of the deficiency attributable to the vacant unit; and 
</P>
<P>(ii) The project can achieve financial soundness within a reasonable time. 
</P>
<P>(e) <I>Prohibition of double compensation for vacancies.</I> If the Borrower collects payments for vacancies from other sources (tenant rent, security deposits, payments under § 891.435(c), or governmental payments under other programs), the Borrower shall not be entitled to collect vacancy payments to the extent these collections from other sources plus the vacancy payment exceed contract rent. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0371)


</APPRO>
</DIV8>

</DIV7>


<DIV7 N="4" NODE="24:4.1.2.1.12.5.4" TYPE="SUBJGRP">
<HEAD>Section 202 Projects for the Nonelderly Handicapped Families and Individuals—Section 162 Assistance</HEAD>


<DIV8 N="§ 891.655" NODE="24:4.1.2.1.12.5.4.32" TYPE="SECTION">
<HEAD>§ 891.655   Definitions applicable to 202/162 projects.</HEAD>
<P>The following definitions apply to projects for eligible families receiving project assistance payments under section 202(h) of the Housing Act of 1959 in addition to reservations under section 202 (202/162 projects): 


</P>
<P><I>Annual income</I> is defined in part 5, subpart F of this title. In the case of an individual residing in an intermediate care facility for individuals with a developmental disability that is assisted under Title XIX of the Social Security Act and subpart E of this part, the annual income of the individual shall exclude protected personal income as provided under that Act. For purposes of determining the total tenant payment, the income of such individuals shall be imputed to be the amount that the family would receive if assisted under Title XVI of the Social Security Act.




</P>
<P><I>Assisted unit</I> means a dwelling unit that is eligible for assistance under a project assistance contract (PAC). 
</P>
<P><I>Contract rent</I> means the total amount of rent specified in the PAC as payable by HUD and the family to the Borrower for an assisted unit or residential space. 






</P>
<P><I>Family (eligible family) means a</I> family that includes a person with a disability (that meets the definition of a handicapped family in § 891.505) that meets the project occupancy requirements approved by HUD and, if the family occupies an assisted unit, meets the low-income requirements described in 24 CFR 5.603, as modified by the definition of “<I>annual income”</I> in this section.




</P>
<P><I>Group home</I> means a single family residential structure designed or adapted for occupancy by nonelderly handicapped individuals. 
</P>
<P><I>Housing for handicapped families</I> means housing and related facilities occupied by handicapped families that are primarily nonelderly handicapped families. 
</P>
<P><I>Independent living complex</I> means a project designed for occupancy by nonelderly handicapped families in separate dwelling units where each dwelling unit includes a kitchen and a bath. 
</P>
<P><I>Operating costs</I> means expenses related to the provision of housing and excludes expenses related to administering, or managing the provision of, supportive services. Operating costs include: 
</P>
<P>(1) Administrative expenses, including salary and management expenses related to the provision of shelter; 
</P>
<P>(2) Maintenance expenses, including routine and minor repairs and groundskeeping; 
</P>
<P>(3) Security expenses; 
</P>
<P>(4) Utilities expenses, including gas, oil, electricity, water, sewer, trash removal, and extermination services. Operating costs exclude telephone services for families; 
</P>
<P>(5) Taxes and insurance; and 
</P>
<P>(6) Allowances for reserves. 
</P>
<P><I>PAC (project assistance contract)</I> means the contract entered into by the Borrower and HUD setting forth the rights and duties of the parties with respect to the project and the payments under the PAC. 
</P>
<P><I>Project account</I> means a specifically identified and segregated account for each project which is established in accordance with § 891.715(b) out of the amounts by which the maximum annual commitment exceeds the amount actually paid out under the PAC each year. 
</P>
<P><I>Project assistance payment</I> means the payment made by HUD to the Borrower for assisted units as provided in the PAC. The payment is the difference between the contract rent and the tenant rent. An additional payment is made to a family occupying an assisted unit in an independent living complex when the utility allowance is greater than the total tenant payment. A project assistance payment, known as a “vacancy payment,” may be made to the Borrower when an assisted unit (or residential space in a group home) is vacant, in accordance with the terms of the PAC. 











 
</P>
<P><I>Tenant rent</I> equals total tenant payment less utility allowance, if any.
</P>
<P><I>Total tenant payment</I> means the monthly amount defined in, and determined in accordance with part 5, subpart F of this title.
</P>
<P><I>Utility allowance</I> is defined in part 5, subpart F of this title and is determined or approved by HUD.
</P>
<P><I>Utility reimbursement</I> is defined in part 5, subpart F of this title.


</P>
<P><I>Vacancy payment</I> means the project assistance payment made to the Borrower by HUD for a vacant assisted unit (or residential space in a group home) if certain conditions are fulfilled, as provided in the PAC. The amount of the vacancy payment varies with the length of the vacancy period and is less after the first 60 days of any vacancy. 


</P>
<CITA TYPE="N">[61 FR 11956, Mar. 22, 1996, as amended at 88 FR 9669, Feb. 14, 2023; 88 FR 75233, Nov. 2, 2023]










</CITA>
</DIV8>


<DIV8 N="§ 891.660" NODE="24:4.1.2.1.12.5.4.33" TYPE="SECTION">
<HEAD>§ 891.660   Project standards.</HEAD>
<P>(a) <I>Property standards.</I> The property standards for 202/162 projects are provided in § 891.120(a). 
</P>
<P>(b) <I>Minimum group home standards.</I> The minimum group home standards for 202/162 projects are provided in § 891.310(a). 
</P>
<P>(c) <I>Accessibility requirements.</I> The accessibility requirements for 202/162 projects are provided in §§ 891.120(b) and 891.310(b). 
</P>
<P>(d) <I>Smoke detectors.</I> The requirements for smoke detectors for 202/162 projects are provided in § 891.120(d). 


</P>
</DIV8>


<DIV8 N="§ 891.665" NODE="24:4.1.2.1.12.5.4.34" TYPE="SECTION">
<HEAD>§ 891.665   Project size limitations.</HEAD>
<P>(a) <I>Maximum project size.</I> Projects funded under §§ 891.655 through 891.790 are subject to the following project size limitations: 
</P>
<P>(1) Group homes may not be designed to serve more than 15 persons on one site; 
</P>
<P>(2) Independent living complexes for chronically mentally ill individuals may not be designed to serve more than 20 persons on one site; and 
</P>
<P>(3) Independent living complexes for handicapped families in the developmental disability or physically handicapped occupancy categories may not have more than 24 units nor more than 24 households on one site. For the purposes of this section, <I>household</I> has the same meaning as <I>handicapped family,</I> except that unrelated handicapped individuals sharing a unit (other than a handicapped person living with another person who is essential to the handicapped person's well-being) are counted as separate households. For independent living complexes for handicapped families in the developmental disability or physically handicapped occupancy categories, units with three or more bedrooms may only be developed to serve handicapped families of one or two parents with children. 
</P>
<P>(b) <I>Additional limitations.</I> Based on the amount of loan authority appropriated for a fiscal year, HUD may have imposed additional limitations on the number of units or residents that may be proposed under an application for Section 202 loan fund reservation, as published in the annual notice of funding availability or the invitation for Section 202 fund reservation. 
</P>
<P>(c) <I>Exemptions.</I> On a case-by-case basis, HUD may approve independent living complexes that do not comply with the project size limitations prescribed in paragraphs (a)(2), (a)(3), or (b) of this section. HUD may approve such projects if the Sponsor demonstrates: 
</P>
<P>(1) The increased number of units is necessary for the economic feasibility of the project; 
</P>
<P>(2) A project of the size proposed is compatible with other residential development and the population density of the area in which the project is to be located; 
</P>
<P>(3) A project of the size proposed can be successfully integrated into the community; and 
</P>
<P>(4) A project of the size proposed is marketable in the community. 


</P>
</DIV8>


<DIV8 N="§ 891.670" NODE="24:4.1.2.1.12.5.4.35" TYPE="SECTION">
<HEAD>§ 891.670   Cost containment and modest design standards.</HEAD>
<P>(a) <I>Restrictions on amenities.</I> Projects must be modest in design. Except as provided in paragraph (d) of this section, amenities must be limited to those amenities, as determined by HUD, that are generally provided in unassisted decent, safe, and sanitary housing for low-income families in the market area. Amenities not eligible for HUD funding include balconies, atriums, decks, bowling alleys, swimming pools, saunas, and jacuzzis. Dishwashers, trash compactors, and washers and dryers in individual units will not be funded in independent living complexes. The use of durable materials to control or reduce maintenance, repair, and replacement costs is not an excess amenity. 
</P>
<P>(b) <I>Unit sizes.</I> For independent living complexes, HUD will establish limitations on the size of units and number of bathrooms, based on the number of bedrooms that are in the unit. 
</P>
<P>(c) <I>Special spaces and accommodations.</I> (1) The costs of construction of special spaces and accommodations may not exceed 10 percent of the total cost of construction, except as provided in paragraph (d) of this section. Special spaces and accommodations include multipurpose rooms, game rooms, libraries, lounges, and, in independent living complexes, central kitchens and dining rooms. 
</P>
<P>(2) Special spaces and accommodations exclude offices, halls, mechanical rooms, laundry rooms, and parking areas; dwelling units and lobbies in independent living complexes; and bedrooms, living rooms, dining and kitchen areas, shared bathrooms, and resident staff dwelling units in group homes. 
</P>
<P>(d) <I>Exceptions.</I> HUD may approve a project that does not comply with the cost containment and modest design standards of paragraphs (a) through (c) of this section if: 
</P>
<P>(1) The Sponsor demonstrates a willingness and ability to contribute the incremental development cost and continuing operating costs associated with the additional amenities or design features; or 
</P>
<P>(2) The proposed project involves substantial rehabilitation or acquisition with or without moderate rehabilitation, the additional amenities or design features were incorporated into the existing structure before the submission of the application, and the total development cost of the project with the additional amenities or design features does not exceed the cost limits. 


</P>
</DIV8>


<DIV8 N="§ 891.675" NODE="24:4.1.2.1.12.5.4.36" TYPE="SECTION">
<HEAD>§ 891.675   Prohibited facilities.</HEAD>
<P>The requirements for prohibited facilities for 202/162 projects are provided in § 891.315, except that Section 202/162 projects may not include commercial spaces. 


</P>
</DIV8>


<DIV8 N="§ 891.680" NODE="24:4.1.2.1.12.5.4.37" TYPE="SECTION">
<HEAD>§ 891.680   Site and neighborhood standards.</HEAD>
<P>The general requirements for site and neighborhood standards for 202/162 projects are provided in §§ 891.125 and 891.320. In addition to the requirements in §§ 891.125 and 891.320, the following requirements apply to 202/162 projects: 
</P>
<P>(a) The site must promote greater choice of housing opportunities and avoid undue concentration of assisted persons in areas containing a high proportion of low-income persons. 
</P>
<P>(b) Projects must be located in neighborhoods where other family housing is located. Except as provided below, projects may not be located adjacent to the following facilities, or in areas where such facilities are concentrated: schools or day care centers for handicapped persons, workshops, medical facilities, or other housing primarily serving handicapped persons. Projects may be located adjacent to other housing primarily serving handicapped persons if the projects together do not exceed the project size limitations under § 891.665(a). 


</P>
</DIV8>


<DIV8 N="§ 891.685" NODE="24:4.1.2.1.12.5.4.38" TYPE="SECTION">
<HEAD>§ 891.685   Prohibited relationships.</HEAD>
<P>The requirements for prohibited relationships for 202/162 projects are provided in § 891.130. 


</P>
</DIV8>


<DIV8 N="§ 891.690" NODE="24:4.1.2.1.12.5.4.39" TYPE="SECTION">
<HEAD>§ 891.690   Other Federal requirements.</HEAD>
<P>In addition to the Federal requirements set forth in 24 CFR part 5, other Federal requirements for the 202/162 projects are provided in §§ 891.155 and 891.325. 


</P>
</DIV8>


<DIV8 N="§ 891.695" NODE="24:4.1.2.1.12.5.4.40" TYPE="SECTION">
<HEAD>§ 891.695   Operating cost standards.</HEAD>
<P>The requirements for the operating cost standards are provided in § 891.150. 


</P>
</DIV8>


<DIV8 N="§ 891.700" NODE="24:4.1.2.1.12.5.4.41" TYPE="SECTION">
<HEAD>§ 891.700   Prepayment of loans.</HEAD>
<P>(a) <I>Prepayment prohibition.</I> The prepayment (whether in whole or in part) or the assignment or transfer of physical and financial assets of any Section 202 project is prohibited, unless the Assistant Secretary gives prior written approval. 
</P>
<P>(b) <I>HUD-approved prepayment.</I> Approval for prepayment or transfer will not be granted unless HUD determines that the prepayment or transfer of the loan is a part of a transaction that will ensure the continued operation of the project until the original maturity date of the loan in a manner that will provide rental housing for the handicapped families on terms at least as advantageous to existing and future tenants as the terms required by the original Section 202 loan agreement and any other loan agreements entered into under other provisions of law. 


</P>
</DIV8>


<DIV8 N="§ 891.705" NODE="24:4.1.2.1.12.5.4.42" TYPE="SECTION">
<HEAD>§ 891.705   Project assistance contract.</HEAD>
<P>(a) <I>Project assistance contract (PAC).</I> The PAC sets forth rights and duties of the Borrower and HUD with respect to the project and the project assistance payments. 
</P>
<P>(b) <I>PAC execution.</I> (1) Upon satisfactory completion of the project, the Borrower and HUD shall execute the PAC on the form prescribed by HUD. 
</P>
<P>(2) The effective date of the PAC may be earlier than the date of execution, but no earlier than the date of HUD's issuance of the permission to occupy. 
</P>
<P>(3) If the project is completed in stages, the procedures of paragraph (b) of this section shall apply to each stage. 
</P>
<P>(c) <I>Project assistance payments to owners under the PAC.</I> The project assistance payments made under the PAC are: 
</P>
<P>(1) Payments to the Borrower to assist eligible families leasing assisted units. The amount of the project assistance payment made to the Borrower for an assisted unit (or residential space in a group home) that is leased to an eligible family is equal to the difference between the contract rent for the unit (or pro rata share of the contract rent in a group home) and the tenant rent payable by the family. 
</P>
<P>(2) Payments to the Borrower for vacant assisted units (“vacancy payments”). The amount of and conditions for vacancy payments are described in § 891.790. HUD makes the project assistance payments monthly upon proper requisition by the Borrower, except payments for vacancies of more than 60 days, which HUD makes semiannually upon requisition by the Borrower. 
</P>
<P>(d) <I>Payment of utility reimbursement.</I> If applicable, a utility reimbursement will be paid to a family occupying an assisted unit in an independent living complex as an additional project assistance payment. The PAC will provide that the Borrower will make this payment on behalf of HUD. Funds will be paid to the Borrower in trust solely for the purpose of making the additional payment. The Borrower may pay the utility reimbursement jointly to the family and the utility company, or, if the family and utility company consent, directly to the utility company. 


</P>
</DIV8>


<DIV8 N="§ 891.710" NODE="24:4.1.2.1.12.5.4.43" TYPE="SECTION">
<HEAD>§ 891.710   Term of PAC.</HEAD>
<P>The term of the PAC shall be 20 years. If the project is completed in stages, the term of the PAC for each stage shall be 20 years. The term of the PAC for stages of a project shall not exceed 22 years. 


</P>
</DIV8>


<DIV8 N="§ 891.715" NODE="24:4.1.2.1.12.5.4.44" TYPE="SECTION">
<HEAD>§ 891.715   Maximum annual commitment and project account.</HEAD>
<P>(a) <I>Maximum annual commitment.</I> The maximum annual amount that may be committed under the PAC is the total of the initial contract rents and utility allowances for all assisted units in the project. 
</P>
<P>(b) <I>Project account.</I> (1) HUD will establish and maintain a specifically identified and segregated project account for each project. The project account will be established out of the amounts by which the maximum annual commitment exceeds the amount actually paid out under the PAC each year. HUD will make payments from this account for project assistance payments as needed to cover increases in contract rents or decreases in tenant income and other payments for costs specifically approved by the Secretary. 
</P>
<P>(2) If the HUD-approved estimate of required annual payments under the PAC for a fiscal year exceeds the maximum annual commitment for that fiscal year plus the current balance in the project account, HUD will, within a reasonable time, take such steps authorized by section 202(h)(4)(A) of the Housing Act of 1959, as may be necessary, to assure that payments under the PAC will be adequate to cover increases in contract rents and decreases in tenant income. 






</P>
</DIV8>


<DIV8 N="§ 891.720" NODE="24:4.1.2.1.12.5.4.45" TYPE="SECTION">
<HEAD>§ 891.720   Leasing to eligible families.</HEAD>
<P>(a) <I>Availability of assisted units for occupancy by eligible families.</I> During the term of the PAC, a Borrower shall make all units (or residential spaces in a group home) available for eligible families. For purposes of this section, making units or residential spaces available for occupancy by eligible families means that the Borrower: 
</P>
<P>(1) Is conducting marketing in accordance with § 891.740(a); 
</P>
<P>(2) Has leased or is making good faith efforts to lease the units or residential spaces to eligible and otherwise acceptable families, including taking all feasible actions to fill vacancies by renting to such families; and (3) Has not rejected any such applicant family except for reasons acceptable to HUD. If the Borrower is temporarily unable to lease all units or residential spaces to eligible families, one or more units or residential spaces may, with the prior approval of HUD, be leased to otherwise eligible families that do not meet the income requirements of part 813 of this chapter, as modified by § 891.505. Failure on the part of the Borrower to comply with these requirements is a violation of the PAC and grounds for all available legal remedies, including an action for specific performance of the PAC, suspension or debarment from HUD programs, and reduction of the number of units (or in the case of group homes, reduction of the number of residential spaces) under the PAC as set forth in paragraph (b) of this section. 
</P>
<P>(3) Has not rejected any such applicant family except for reasons acceptable to HUD. If the Borrower is temporarily unable to lease all units or residential spaces to eligible families, one or more units or residential spaces may, with the prior approval of HUD, be leased to otherwise eligible families that do not meet the income requirements of part 5, subpart F of this title. Failure on the part of the Borrower to comply with these requirements is a violation of the PAC and grounds for all available legal remedies, including an action for specific performance of the PAC, suspension or debarment from HUD programs, and reduction of the number of units (or in the case of group homes, reduction of the number of residential spaces) under the PAC as set forth in paragraph (b) of this section.








</P>
<P>(b) <I>Reduction of number of units covered by the PAC.</I> HUD may reduce the number of units (or in the case of group homes, the number of residential spaces) covered by the PAC to the number of units or residential spaces available for occupancy by eligible families if: 
</P>
<P>(1) The Borrower fails to comply with the requirements of paragraph (a) of this section; or 
</P>
<P>(2) Notwithstanding any prior approval by HUD, HUD determines that the inability to lease units or residential spaces to eligible families is not a temporary problem. 
</P>
<P>(c) <I>Restoration.</I> HUD will agree to an amendment of the PAC to provide for subsequent restoration of any reduction made under paragraph (b) of this section if: 
</P>
<P>(1) HUD determines that the restoration is justified by demand; 
</P>
<P>(2) The Borrower otherwise has a record of compliance with the Borrower's obligations under the PAC; and 
</P>
<P>(3) Contract and budget authority is available. 
</P>
<P>(d) <I>Occupancy by families that are not handicapped.</I> HUD may relieve the Borrower of the requirement that all units in the project (or residential spaces in a group home) must be leased to handicapped families if: 
</P>
<P>(1) The Borrower has made reasonable efforts to lease to eligible families; 
</P>
<P>(2) The Borrower has been granted HUD approval under paragraph (a) of this section; and 
</P>
<P>(3) The Borrower is temporarily unable to achieve or maintain a level of occupancy sufficient to prevent financial default and foreclosure under the Section 202 loan documents. HUD approval under this paragraph will be of limited duration. HUD may impose terms and conditions to this approval that are consistent with program objectives and necessary to protect its interest in the Section 202 loan. 
</P>
<CITA TYPE="N">[61 FR 11956, Mar. 22, 1996, as amended at 88 FR 75233, Nov. 2, 2023]










</CITA>
</DIV8>


<DIV8 N="§ 891.725" NODE="24:4.1.2.1.12.5.4.46" TYPE="SECTION">
<HEAD>§ 891.725   PAC administration.</HEAD>
<P>HUD is responsible for the administration of the PAC. 


</P>
</DIV8>


<DIV8 N="§ 891.730" NODE="24:4.1.2.1.12.5.4.47" TYPE="SECTION">
<HEAD>§ 891.730   Default by Borrower.</HEAD>
<P>(a) <I>PAC provisions.</I> The PAC will provide: 
</P>
<P>(1) That if HUD determines that the Borrower is in default under the PAC, HUD will notify the Borrower of the actions required to be taken to cure the default and of the remedies to be applied by HUD, including an action for specific performance under the PAC, reduction or suspension of project assistance payment and recovery of overpayments, as appropriate; and 
</P>
<P>(2) That if the Borrower fails to cure the default, HUD has the right to terminate the PAC or to take other corrective action. 
</P>
<P>(b) <I>Loan provisions.</I> Additional provisions governing default under the Section 202 loan are included in the regulatory agreement and other loan documents. 


</P>
</DIV8>


<DIV8 N="§ 891.735" NODE="24:4.1.2.1.12.5.4.48" TYPE="SECTION">
<HEAD>§ 891.735   Notice upon PAC expiration.</HEAD>
<P>The PAC will provide that the Borrower will, at least 90 days before the end of the PAC contract term, notify each family occupying an assisted unit (or residential space in a group home) of any increase in the amount the family will be required to pay as rent as a result of the expiration. The notice of expiration will contain such information and will be served in such manner as HUD may prescribe. 






</P>
</DIV8>


<DIV8 N="§ 891.740" NODE="24:4.1.2.1.12.5.4.49" TYPE="SECTION">
<HEAD>§ 891.740   Responsibilities of Borrower.</HEAD>
<P>(a) <I>Marketing.</I> (1) The Borrower must commence and continue diligent marketing activities not later than 90 days before the anticipated date of availability for occupancy of the group home or the anticipated date of availability of the first unit in an independent living complex. Market activities shall include the provision of notices of the availability of housing under the program to operators of temporary housing for the homeless in the same housing market. 
</P>
<P>(2) Marketing must be done in accordance with the HUD-approved affirmative fair housing marketing plan and all fair housing and equal opportunity requirements. The purpose of the plan and requirements is to achieve a condition in which eligible families of similar income levels in the same housing market have a like range of housing choices available to them regardless of their race, color, religion, sex (including actual or perceived sexual orientation and gender identity), disability, familial status, or national origin.








</P>
<P>(3) At the time of PAC execution, the Borrower must submit to HUD a list of leased and unleased assisted units (or in the case of a group home, leased and unleased residential spaces) with a justification for the unleased units or residential spaces, in order to qualify for vacancy payments for the unleased units or residential spaces. 
</P>
<P>(b) <I>Management and maintenance.</I> The responsibilities of the Borrower with regard to management and maintenance are provided in § 891.600(b). 
</P>
<P>(c) <I>Contracting for services.</I> The responsibilities of the Borrower with regard to contracting for services are provided in § 891.600(c). 
</P>
<P>(d) <I>Submission of financial and operating statements.</I> The responsibilities of the Borrower with regard to the submission of financial and operating statements are provided in § 891.600(d). 
</P>
<P>(e) <I>Use of project funds.</I> The responsibilities of the Borrower with regard to the use of project funds are provided in § 891.600(e). 
</P>
<P>(f) <I>Reports.</I> The responsibilities of the Borrower with regard to reports are provided in § 891.600(f). 
</P>
<CITA TYPE="N">[61 FR 11956, Mar. 22, 1996, as amended at 88 FR 75233, Nov. 2, 2023]






</CITA>
</DIV8>


<DIV8 N="§ 891.745" NODE="24:4.1.2.1.12.5.4.50" TYPE="SECTION">
<HEAD>§ 891.745   Replacement reserve.</HEAD>
<P>The general requirements for the replacement reserve are provided in § 891.605. For projects funded under §§ 891.655 through 891.790, the amount of the deposits for the initial year of operation shall be an amount equal to 0.6 percent of the cost of the total structures (for new construction projects), 0.4 percent of the cost of the initial mortgage amount (for all other projects), or such higher rate as required by HUD. For the purposes of this section, total structures include main buildings, accessory buildings, garages, and other buildings. The amount of the deposits will be adjusted each year by the amount of the annual adjustment factor as described in part 888 of this chapter. 






</P>
</DIV8>


<DIV8 N="§ 891.750" NODE="24:4.1.2.1.12.5.4.51" TYPE="SECTION">
<HEAD>§ 891.750   Selection and admission of tenants.</HEAD>
<P>(a) <I>Application for admission.</I> The Borrower must accept applications for admission to the project in the form prescribed by HUD. Applicant families applying for assisted units (or residential spaces in a group home) must complete a certification of eligibility as part of the application for admission. Applicant families must meet the disclosure and verification requirements for Social Security Numbers, and sign and submit consent forms for the obtaining of wage and claim information from State Wage Information Collection Agencies, as provided by 24 CFR part 5, subpart B. Both the Borrower and the applicant family must complete and sign the application for admission. On request, the Borrower must furnish copies of all applications for admission to HUD. 






</P>
<P>(b) <I>Determination of eligibility and selection of tenants.</I> The Borrower is responsible for determining whether applicants are eligible for admission and for the selection of families. To be eligible for admission, an applicant family must be a family that includes a person with a disability (that meets the definition of “handicapped family” in 24 CFR 891.505); meet any project occupancy requirements approved by HUD; meet the disclosure and verification requirements for Social Security Numbers, as provided by 24 CFR part 5, subpart B; and be a low-income family, as defined in part 5, subpart F of this title, as modified by 24 CFR 891.505. Under certain circumstances, HUD may permit the leasing of units (or residential space in a group home) to ineligible families under § 891.720.






</P>
<P>(1) <I>Local residency requirements are prohibited.</I> Local residency preferences may be applied in selecting tenants only to the extent that they are not inconsistent with affirmative fair housing marketing objectives and the Borrower's HUD-approved affirmative fair housing marketing plan. Preferences may not be based on the length of time the applicant has resided in the jurisdiction. With respect to any residency preference, persons expected to reside in the community as a result of current or planned employment will be treated as residents. 
</P>
<P>(2) If the Borrower determines that the family is eligible and is otherwise acceptable and units (or residential spaces in a group home) are available, the Borrower will assign the family a unit or residential space in a group home. If the family will occupy an assisted unit the Borrower will assign the family a unit of the appropriate size in accordance with HUD standards. If no suitable unit (or residential space in a group home) is available, the Borrower will place the family on a waiting list for the project and notify the family when a suitable unit or residential space may become available. If the waiting list is so long that the applicant would not be likely to be admitted within the next 12 months, the Borrower may advise the applicant that no additional applications for admission are being considered for that reason. 
</P>
<P>(3) If the Borrower determines that an applicant is ineligible for admission or the Borrower is not selecting the applicant for other reasons, the Borrower will promptly notify the applicant in writing of the determination, the reasons for the determination, and that the applicant has a right to request a meeting to review the rejection, in accordance with HUD requirements. The review, if requested, may not be conducted by the member of the Borrower's staff who made the initial decision to reject the applicant. The applicant may also exercise other rights, including filing a complaint with HUD's Office of Fair Housing and Equal Opportunity, if the applicant believes the applicant is being discriminated against on the basis of race, color, religion, sex (including actual or perceived sexual orientation and gender identity), disability, familial status, or national origin.
















</P>
<P>(4) Records on applicants and approved eligible families, which provide racial, ethnic, gender and place of previous residency data required by HUD, must be maintained and retained for three years. 
</P>
<P>(c) <I>Reexamination of family income and composition</I>—(1) <I>Regular reexaminations.</I> If the family occupies an assisted unit (or residential space in a group home), the Borrower must reexamine the income and composition of the family at least every 12 months. Upon verification of the information, the Borrower shall make appropriate adjustments in the total tenant payment in accordance with § 5.657 of this title and must adjust the rent. The Borrower must also request an appropriate adjustment to the project assistance payment. Further, the Borrower must determine whether the family's unit size is still appropriate and must carry out any unit transfer in accordance with HUD standards. At the time of reexamination, the Borrower must require the family to meet the disclosure and verification requirements for Social Security Numbers, as provided by 24 CFR part 5, subpart B. For requirements regarding the signing and submitting of consent forms by families for obtaining wage and claim information from State Wage Information Collection Agencies, see 24 CFR part 5, subpart B.
</P>
<P>(2) <I>Interim reexamination.</I> If the family occupies an assisted unit (or residential space in a group home) the family must comply with the provisions in § 5.657 of this title regarding interim reporting of changes in income. If the Borrower receives information concerning a change in the family's income or other circumstances between regularly scheduled reexaminations, the Borrower must consult with the family and make any adjustments determined to be appropriate. See 24 CFR part 5, subpart B, for the requirements for the disclosure and verification of Social Security Number at interim reexaminations involving new household members. For requirements regarding the signing and submitting of consent forms by families for obtaining wage and claim information from State Wage Information Collection agencies, see 24 CFR part 5, subpart B. Any change in the family's income or other circumstances that result in an adjustment in the total tenant payment, tenant rent, or project assistance payment must be verified.





 
</P>
<P>(3) <I>Continuation of project assistance payment.</I> (i) A family occupying an assisted unit (or residential space in a group home) shall remain eligible for project assistance payments until the total tenant payment equals or exceeds the gross rent (or a pro rata share of the gross rent in a group home). The termination of subsidy eligibility will not affect the family's other rights under its lease. Project assistance payments may be resumed if, as a result of changes in income, rent, or other relevant circumstances during the term of the PAC, the family meets the income eligibility requirements of § 5.657 of this title (as modified in § 891.105) and project assistance is available for the unit or residential space under the terms of the PAC. The family will not be required to establish its eligibility for admission to the project under the remaining requirements of paragraph (b) of this section.




</P>
<P>(ii) A family's eligibility for project assistance payment may also be terminated in accordance with HUD requirements for such reasons as failure to submit requested verification information, including failure to meet the disclosure and verification requirements for Social Security Numbers, or failure to sign and submit consent forms for the obtaining of wage and claim information from State Wage Information Collection Agencies, as provided by 24 CFR part 5, subpart B.
</P>
<P>(4) <I>Streamlined income determination.</I> An owner may elect to follow the provisions of 24 CFR 5.657(d).


</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2502-0204 and 2505-0267)
</APPRO>
<CITA TYPE="N">[61 FR 11956, Mar. 22, 1996, as amended at 81 FR 12371, Mar. 8, 2016; 88 FR 75234, Nov. 2, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 891.755" NODE="24:4.1.2.1.12.5.4.52" TYPE="SECTION">
<HEAD>§ 891.755   Obligations of the family.</HEAD>
<P>The obligations of the family are provided in § 891.415. 


</P>
</DIV8>


<DIV8 N="§ 891.760" NODE="24:4.1.2.1.12.5.4.53" TYPE="SECTION">
<HEAD>§ 891.760   Overcrowded and underoccupied units.</HEAD>
<P>The requirements for overcrowded and underoccupied units are provided in § 891.620. 


</P>
</DIV8>


<DIV8 N="§ 891.765" NODE="24:4.1.2.1.12.5.4.54" TYPE="SECTION">
<HEAD>§ 891.765   Lease requirements.</HEAD>
<P>The lease requirements are provided in § 891.425. 


</P>
</DIV8>


<DIV8 N="§ 891.770" NODE="24:4.1.2.1.12.5.4.55" TYPE="SECTION">
<HEAD>§ 891.770   Denial of admission, termination of tenancy, and modification of lease.</HEAD>
<P>(a) The provisions of part 5, subpart I, of this title apply to Section 202 direct loan projects with Section 162 assistance for disabled families. 
</P>
<P>(b) The provisions of part 247 of this title apply to all decisions by a Borrower to terminate the tenancy or modify the lease of a family residing in a unit (or residential space in a group home).
</P>
<CITA TYPE="N">[66 FR 28798, May 24, 2001]


</CITA>
</DIV8>


<DIV8 N="§ 891.775" NODE="24:4.1.2.1.12.5.4.56" TYPE="SECTION">
<HEAD>§ 891.775   Security deposits.</HEAD>
<P>The general requirements for security deposits on assisted units are provided in § 891.435. For purposes of subpart E of this part, the additional requirements in § 891.635 apply. 


</P>
</DIV8>


<DIV8 N="§ 891.780" NODE="24:4.1.2.1.12.5.4.57" TYPE="SECTION">
<HEAD>§ 891.780   Adjustment of rents.</HEAD>
<P>(a) <I>Contract rents.</I> HUD will calculate contract rent adjustments based on the sum of the project's operating costs and debt service (as calculated by HUD), with adjustments for vacancies, the project's nonrental income, and other factors that HUD deems appropriate. The calculation will be made on the basis of information provided by the Borrower on a form prescribed by HUD. 
</P>
<P>(b) <I>Rent for unassisted units.</I> The rent payable by families occupying units or residential spaces that are not assisted under the PAC shall be equal to the contract rent computed under paragraph (a) of this section. 


</P>
</DIV8>


<DIV8 N="§ 891.785" NODE="24:4.1.2.1.12.5.4.58" TYPE="SECTION">
<HEAD>§ 891.785   Adjustment of utility allowances.</HEAD>
<P>In connection with adjustments of contract rents as provided in § 891.780(a), the requirements for the adjustment of utility allowances provided in § 891.440 apply. 


</P>
</DIV8>


<DIV8 N="§ 891.790" NODE="24:4.1.2.1.12.5.4.59" TYPE="SECTION">
<HEAD>§ 891.790   Conditions for receipt of vacancy payments for assisted units.</HEAD>
<P>(a) <I>General.</I> Vacancy payments under the PAC will not be made unless the conditions for receipt of these project assistance payments set forth in this section are fulfilled. 
</P>
<P>(b) <I>Vacancies during rent-up.</I> For each unit (or residential space in a group home) that is not leased as of the effective date of the PAC, the Borrower is entitled to vacancy payments in the amount of 80 percent of the contract rent (or pro rata share of the contract rent for a group home) for the first 60 days of vacancy, if the Borrower: 
</P>
<P>(1) Complied with § 891.740; 
</P>
<P>(2) Has taken and continues to take all feasible actions to fill the vacancy; and 
</P>
<P>(3) Has not rejected any eligible applicant except for good cause acceptable to HUD. 
</P>
<P>(c) <I>Vacancies after rent-up.</I> If an eligible family vacates an assisted unit (or residential space in a group home) the Borrower is entitled to vacancy payments in the amount of 80 percent of the contract rent (or pro rata share of the contract rent in a group home) for the first 60 days of vacancy if the Borrower: 
</P>
<P>(1) Certifies that it did not cause the vacancy by violating the lease, the PAC, or any applicable law; 
</P>
<P>(2) Notified HUD of the vacancy or prospective vacancy and the reasons for the vacancy immediately upon learning of the vacancy or prospective vacancy; 
</P>
<P>(3) Has fulfilled and continues to fulfill the requirements specified in § 891.740(a)(2) and (3), and in paragraphs (b)(2) and (3) of this section; and 
</P>
<P>(4) For any vacancy resulting from the Borrower's eviction of an eligible family, certifies that it has complied with § 891.770. 
</P>
<P>(d) <I>Vacancies for longer than 60 days.</I> If an assisted unit (or residential space in a group home) continues to be vacant after the 60-day period specified in paragraph (b) or (c) of this section, HUD may approve additional vacancy payments for 60-day periods up to a total of 12 months in an amount equal to the principal and interest payments required to amortize that portion of the debt service attributable to the vacant unit (or, in the case of group homes, the residential space). Such payments may be approved if: 
</P>
<P>(1) The unit was in decent, safe, and sanitary condition during the vacancy period for which payment is claimed; 
</P>
<P>(2) The Borrower has fulfilled and continues to fulfill the requirements specified in paragraph (b) or (c) of this section, as appropriate; and 
</P>
<P>(3) The Borrower has demonstrated to the satisfaction of HUD that: 
</P>
<P>(i) For the period of vacancy, the project is not providing the Borrower with revenues at least equal to project expenses (exclusive of depreciation) and the amount of payments requested is not more than the portion of the deficiency attributable to the vacant unit (or residential space in a group home); and 
</P>
<P>(ii) The project can achieve financial soundness within a reasonable time. 
</P>
<P>(e) <I>Prohibition of double compensation for vacancies.</I> If the Borrower collects payments for vacancies from other sources (tenant rent, security deposits, payments under § 891.435(c), or governmental payments under other programs), the Borrower shall not be entitled to collect vacancy payments to the extent these collections from other sources plus the vacancy payment exceed contract rent.


</P>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="F" NODE="24:4.1.2.1.12.6" TYPE="SUBPART">
<HEAD>Subpart F—For-Profit Limited Partnerships and Mixed-Finance Development for Supportive Housing for the Elderly or Persons with Disabilities</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>70 FR 54210, Sept. 13, 2005, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 891.800" NODE="24:4.1.2.1.12.6.5.1" TYPE="SECTION">
<HEAD>§ 891.800   Purpose.</HEAD>
<P>The purpose of this subpart is to establish rules allowing for, and regulating the participation of, for-profit limited partnerships, of which the sole general partner is a Nonprofit Organization meeting the requirements of 12 U.S.C. 1701q(k)(4) or 42 U.S.C. 8032(k)(6), in the development of housing for the elderly and persons with disabilities using mixed-finance development methods. These rules are intended to develop more supportive housing for the elderly and persons with disabilities by allowing the use of federal assistance, private capital and expertise, and low-income housing tax credits. 


</P>
</DIV8>


<DIV8 N="§ 891.802" NODE="24:4.1.2.1.12.6.5.2" TYPE="SECTION">
<HEAD>§ 891.802   Applicability of other provisions.</HEAD>
<P>The provisions of 24 CFR part 891, subparts A through D, apply to this subpart F unless otherwise stated. 


</P>
</DIV8>


<DIV8 N="§ 891.805" NODE="24:4.1.2.1.12.6.5.3" TYPE="SECTION">
<HEAD>§ 891.805   Definitions.</HEAD>
<P>In addition to the definitions at §§ 891.105, 891.205, and 891.305, the following definitions apply to this subpart:
</P>
<P><I>Mixed-finance owner,</I> for the purpose of the mixed-finance development of housing under this part, means a single-asset, for-profit limited partnership of which a private nonprofit organization is the sole general partner. The purpose of the mixed-finance owner must include the promotion of the welfare of the elderly or persons with disabilities, as appropriate.
</P>
<P><I>Private nonprofit organization,</I> for the purpose of this subpart, means:
</P>
<P>(1) In the case of supportive housing for the elderly:
</P>
<P>(i) An organization that meets the requirements of the definition of “private nonprofit organization” in § 891.205; and
</P>
<P>(ii) A for-profit limited partnership, the sole general partner of which owns at least one-hundredth of one percent of the partnership assets, whereby the sole general partner is either: an organization meeting the requirements of § 891.205 or a for-profit corporation wholly owned and controlled by one or more organizations meeting the requirements of § 891.205 or a limited liability company wholly owned and controlled by one or more organizations meeting the requirements of § 891.205. If the project will include units financed with the use of federal Low-Income Housing Tax Credits and the organization is a limited partnership, the requirements of section 42 of the IRS code, including the requirements of section 42(h)(5), apply. The general partner may also be the sponsor, so long as it meets the requirements of this part for sponsors and general partners.
</P>
<P>(2) In the case of supportive housing for persons with disabilities:
</P>
<P>(i) An organization that meets the requirements of the definition of “private nonprofit organization” in § 891.305; and
</P>
<P>(ii) A for-profit limited partnership, the sole general partner of which owns at least one-hundredth of one percent of the partnership assets, whereby the sole general partner is either: an organization meeting the requirements of § 891.305 or a corporation owned and controlled by an organization meeting the requirements of § 891.305. If the project will include units financed with the use of federal Low-Income Housing Tax Credits and the organization is a limited partnership, the requirements of section 42 of the IRS code, including the requirements of section 42(h)(5), apply. The general partner may also be the sponsor, so long as it meets the requirements of this part for sponsors and general partners.
</P>
<CITA TYPE="N">[78 FR 37113, June 20, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 891.808" NODE="24:4.1.2.1.12.6.5.4" TYPE="SECTION">
<HEAD>§ 891.808   Capital advance funds.</HEAD>
<P>(a) HUD is authorized to provide capital advance funds to expand the supply of supportive housing for the elderly and persons with disabilities in accordance with the rules and regulations of the Section 202 and Section 811 supportive housing programs. For mixed-finance projects, HUD provides a capital advance funds reservation to the sponsor, which transfers the fund reservation to the mixed-finance owner meeting the requirements of this subpart. The sponsor may transfer the fund reservation directly to the owner or to the general partner of the owner, or the sponsor may be the general partner of the mixed-finance owner if the sponsor meets the applicable statutory and regulatory requirements.
</P>
<P>(b) Developments built with mixed-finance funds may combine Section 202 or Section 811 units with other units, which may or may not benefit from federal assistance. The number of Section 202 or Section 811 supportive housing units must not be less than the number specified in the agreement letter for a capital advance. In the case of a Section 811 mixed-finance project, the additional units cannot cause the project to exceed the applicable Section 811 project size limit if they will also house persons with disabilities. 


</P>
</DIV8>


<DIV8 N="§ 891.809" NODE="24:4.1.2.1.12.6.5.5" TYPE="SECTION">
<HEAD>§ 891.809   Limitations on capital advance funds.</HEAD>
<P><I>Capital advances are not available in connection with:</I>
</P>
<P>(a) Acquisition of facilities currently owned and operated by the sponsor as housing for the elderly, except with rehabilitation as defined in 24 CFR 891.105;
</P>
<P>(b) The financing or refinancing of federally assisted or insured projects;
</P>
<P>(c) Facilities currently owned and operated by the sponsor as housing for persons with disabilities, except with rehabilitation as defined in 24 CFR 891.105; or
</P>
<P>(d) Units in Section 202 direct loan projects previously refinanced under the provisions of section 811 of the American Homeownership and Economic Opportunity Act of 2000, 12 U.S.C. 1701q note. 


</P>
</DIV8>


<DIV8 N="§ 891.810" NODE="24:4.1.2.1.12.6.5.6" TYPE="SECTION">
<HEAD>§ 891.810   Project rental assistance.</HEAD>
<P>Project Rental Assistance is defined in § 891.105. Project Rental Assistance is provided for operating costs, not covered by tenant contributions, attributable to the number of units funded by capital advances under the Section 202 and Section 811 supportive housing programs, subject to the provisions of 24 CFR 891.445. The sponsor of a mixed-finance development must obtain the necessary funds from a source other than project rental assistance funds for operating costs related to non-202 or -811 units. 


</P>
</DIV8>


<DIV8 N="§ 891.813" NODE="24:4.1.2.1.12.6.5.7" TYPE="SECTION">
<HEAD>§ 891.813   Eligible uses for assistance provided under this subpart.</HEAD>
<P>(a) Assistance under this subpart may be used to finance the construction, reconstruction, or rehabilitation of a structure or a portion of a structure; or the acquisition of a structure to be used as supportive housing for the elderly; or the acquisition of housing to be used as supportive housing for persons with disabilities. Such assistance may also cover the cost of real property acquisition, site improvement, conversion, demolition, relocation, and other expenses that the Secretary determines are necessary to expand the supply of supportive housing for the elderly and persons with disabilities.
</P>
<P>(b) Assistance under this subpart may not be used for excess amenities, as stated in § 891.120(c), or for Section 202 “prohibited facilities,” as stated in § 891.220. Such amenities or Section 202 prohibited facilities may be included in a mixed-finance development only if:
</P>
<P>(1) The amenities or prohibited facilities are not financed, maintained, or operated with funds provided under the Section 202 or Section 811 program;
</P>
<P>(2) The amenities or prohibited facilities are designed with appropriate safeguards for the residents' health and safety; and
</P>
<P>(3) The assisted residents are not required to use, participate in, or pay a fee for the use or maintenance of the amenities or prohibited facilities, although they are permitted to do so voluntarily. Any fee charged for the use, maintenance, or access to amenities or prohibited facilities by residents must be reasonable and affordable for all residents of the development.
</P>
<P>(c) Notwithstanding any other provision of this section, § 891.315 on “prohibited facilities” shall apply to mixed-finance developments containing units assisted under Section 811.
</P>
<CITA TYPE="N">[70 FR 54210, Sept. 13, 2005, as amended at 78 FR 37114, June 20, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 891.815" NODE="24:4.1.2.1.12.6.5.8" TYPE="SECTION">
<HEAD>§ 891.815   Mixed-finance developer's fee.</HEAD>
<P>(a) <I>Mixed-finance developer's fee.</I> A mixed-finance developer may include, on an up-front or deferral basis, or a combination of both, a fee to cover reasonable profit and overhead costs.
</P>
<P>(b) <I>Mixed-finance developer's fee cap.</I> No mixed-finance developer's fee may be a greater percentage of the total project replacement costs than the percentage allowed by the state housing finance agency or other tax credit allocating agency in the state in which the mixed-finance development is sited. In no event may the mixed-finance developer's fee exceed 15 percent of the total project replacement cost.
</P>
<P>(c) <I>Sources of mixed-finance developer's fee.</I> The mixed-finance developer's fee may be paid from project income or project sources of funding other than Section 202 or 811 capital advances, project rental assistance, or tenant rents. 


</P>
</DIV8>


<DIV8 N="§ 891.818" NODE="24:4.1.2.1.12.6.5.9" TYPE="SECTION">
<HEAD>§ 891.818   Firm commitment application.</HEAD>
<P>The sponsor will submit the firm commitment application including the mixed-finance proposal in a form described by HUD. 


</P>
</DIV8>


<DIV8 N="§ 891.820" NODE="24:4.1.2.1.12.6.5.10" TYPE="SECTION">
<HEAD>§ 891.820   Civil rights requirements.</HEAD>
<P>The mixed-finance development must comply with the following: all fair housing and accessibility requirements, including the design and construction requirements of the Fair Housing Act; the requirements of section 504 of the Rehabilitation Act of 1973; accessibility requirements, project standards, and site and neighborhood standards under 24 CFR 891.120, 891.125, 891.210, 891.310, and 891.320, as applicable; and 24 CFR 8.4(b)(5), which prohibits the selection of a site or location which has the purpose or effect of excluding persons with disabilities from federally assisted programs or activities. 


</P>
</DIV8>


<DIV8 N="§ 891.823" NODE="24:4.1.2.1.12.6.5.11" TYPE="SECTION">
<HEAD>§ 891.823   HUD review and approval.</HEAD>
<P>HUD will review and may approve or disapprove the firm commitment application and mixed finance proposal. 


</P>
</DIV8>


<DIV8 N="§ 891.825" NODE="24:4.1.2.1.12.6.5.12" TYPE="SECTION">
<HEAD>§ 891.825   Mixed-finance closing documents.</HEAD>
<P>The mixed-finance owner must submit the mixed-finance closing documents in the form prescribed by HUD. The materials shall be submitted after the firm commitment has been issued and prior to capital advance closing. 


</P>
</DIV8>


<DIV8 N="§ 891.830" NODE="24:4.1.2.1.12.6.5.13" TYPE="SECTION">
<HEAD>§ 891.830   Drawdown.</HEAD>
<P>(a) Upon its approval of the executed mixed-finance closing documents and other documents submitted and upon determining that such documents are satisfactory, and after the capital advance closing, HUD may approve the drawdown of capital advance funds in accordance with the HUD-approved drawdown schedule.
</P>
<P>(b) Non-capital advance funds may be disbursed before capital advance proceeds or the capital advance funds may be drawn down in an approved ratio to other funds, in accordance with a drawdown schedule approved by HUD.
</P>
<P>(c) Each drawdown of funds constitutes a certification by the mixed-finance owner that:
</P>
<P>(1) All the representations and warranties submitted in accordance with this subpart continue to be valid, true, and in full force and effect;
</P>
<P>(2) All parties are in compliance with their obligations pursuant to this subpart, which, by their terms, are applicable at the time of the drawdown of funds;
</P>
<P>(3) All conditions precedent to the drawdown of the funds by the mixed-finance owner have been satisfied;
</P>
<P>(4) The capital advance funds drawn down will be used only for eligible costs actually incurred in accordance with the provisions of this subpart and the approved mixed-finance project, which include costs stated in 12 U.S.C. 1701q(h) and 42 U.S.C. 8013(h). Capital advance funds may be used for paying off bridge or construction financing, or repaying or collateralizing bonds, but only for the portion of such financing or bonds that was used for capital advance units; and
</P>
<P>(5) The amount of the drawdown is consistent with the ratio of 202 or 811 supportive housing units to other units. 
</P>
<CITA TYPE="N">[70 FR 54210, Sept. 13, 2005, as amended at 78 FR 37114, June 20, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 891.832" NODE="24:4.1.2.1.12.6.5.14" TYPE="SECTION">
<HEAD>§ 891.832   Prohibited relationships.</HEAD>
<P>(a) Paragraph (a) of § 891.130, describing conflicts of interest, applies to mixed finance developments.
</P>
<P>(b) Paragraph (b) of § 891.130, describing identity of interest, does not apply to mixed-finance developments.
</P>
<CITA TYPE="N">[78 FR 37114, June 20, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 891.833" NODE="24:4.1.2.1.12.6.5.15" TYPE="SECTION">
<HEAD>§ 891.833   Monitoring and review.</HEAD>
<P>HUD shall monitor and review the development during the construction and operational phases in accordance with the requirements that HUD prescribes. In order for units assisted under the 202 and 811 programs to continue to receive project rental assistance, they must be operated in accordance with all contractual agreements among the parties and other HUD regulations and requirements. It is the responsibility of the mixed-finance owner and Nonprofit Organization to ensure compliance with the preceding sentence. 


</P>
</DIV8>


<DIV8 N="§ 891.835" NODE="24:4.1.2.1.12.6.5.16" TYPE="SECTION">
<HEAD>§ 891.835   Eligible uses of project rental assistance.</HEAD>
<P>(a) Section 202 or 811 project rental assistance may be used to pay the necessary and reasonable operating costs, as defined in 24 CFR 891.105 and approved by HUD, not met from project income and attributed to Section 202 or 811 supportive housing units. Operating cost standards under 24 CFR 891.150 apply to developments under this part.
</P>
<P>(b) Section 202 or 811 project rental assistance may not be used to pay for:
</P>
<P>(1) Debt service on construction or permanent financing, or any refinancing thereof, for any units in the development, including the 202 or 811 supportive housing units;
</P>
<P>(2) Cash flow distributions to owners; or
</P>
<P>(3) Creation of reserves for non-202 or -811 units.
</P>
<P>(c) HUD-approved operating costs attributable to common areas or to the development as a whole, such as groundskeeping costs and general administrative costs, may be paid from project rental assistance on a pro-rata basis according to the percentage of 202 or 811 supportive housing units as compared to the total number of units. 


</P>
</DIV8>


<DIV8 N="§ 891.840" NODE="24:4.1.2.1.12.6.5.17" TYPE="SECTION">
<HEAD>§ 891.840   Site and neighborhood standards.</HEAD>
<P>For section 202 or 811 mixed-finance developments, the site and neighborhood standards described at § 891.125 and § 891.320 apply to the entire mixed-finance development. 


</P>
</DIV8>


<DIV8 N="§ 891.848" NODE="24:4.1.2.1.12.6.5.18" TYPE="SECTION">
<HEAD>§ 891.848   Project design and cost standards.</HEAD>
<P>(a) The project design and cost standards at § 891.120 apply to mixed-finance developments under this subpart, with the exception of § 891.120(c), subject to the provisions of § 891.813(b).
</P>
<P>(b) For Section 202 mixed-finance developments, the prohibited facilities requirements described at § 891.220 shall apply to only the capital advance-funded portion of the Section 202 mixed-finance developments under this subpart, subject to the provisions of § 891.813(b).
</P>
<P>(c) For Section 811 mixed-finance developments, the prohibited facilities requirements described at § 891.315 shall apply to the entire mixed-finance development.
</P>
<CITA TYPE="N">[78 FR 37114, June 20, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 891.853" NODE="24:4.1.2.1.12.6.5.19" TYPE="SECTION">
<HEAD>§ 891.853   Development cost limits.</HEAD>
<P>The Development Cost Limits for development activities, as established at § 891.140, apply to Section 202 or 811 supportive housing units in mixed-finance developments under this subpart. 


</P>
</DIV8>


<DIV8 N="§ 891.855" NODE="24:4.1.2.1.12.6.5.20" TYPE="SECTION">
<HEAD>§ 891.855   Replacement reserves.</HEAD>
<P>(a) The mixed-finance owner shall establish and maintain a replacement reserve account for Section 202 or 811 supportive housing units. This account must meet all the requirements of 24 CFR 891.405.
</P>
<P>(b) The mixed-finance owner may obtain a disbursement from the reserve only if the funds will be used to pay for capital replacement costs for the Section 202 or 811 supportive housing units in the mixed-finance development and in accordance with the terms of the regulatory and operating agreement. In the case of repairs to common elements, the Section 202/811 replacement reserve can be used on a pro rata basis based on the percentage of Section 202 or 811 units in the building whose common elements are being repaired. In the event of a disposition of the mixed-finance development, or the dissolution of the owner, any Section 202 or 811 funds remaining in the replacement reserve account must remain dedicated to the Section 202 or 811 supportive housing units to ensure their long-term viability, or as otherwise agreed by HUD.
</P>
<P>(c) Subject to HUD's approval, reserves may be used to reduce the number of Section 202 or 811 dwelling units in the development for the purpose of retrofitting units that are obsolete or unmarketable. 


</P>
</DIV8>


<DIV8 N="§ 891.860" NODE="24:4.1.2.1.12.6.5.21" TYPE="SECTION">
<HEAD>§ 891.860   Operating reserves.</HEAD>
<P>(a) The mixed-finance owner shall maintain an operating reserve account in an amount sufficient to cover the operating expenses of the development for at least a three-month period.
</P>
<P>(b) Project income, project rental assistance, tenant rents, and tax credit equity may be used to fund the operating reserve account.
</P>
<P>(c) Amounts derived from Section 202 or 811 (<I>e.g.</I>, project income, project rental assistance, and tenant rents) in operating reserve accounts may only be used for the operating expenses of the 202 or 811 units. 


</P>
</DIV8>


<DIV8 N="§ 891.863" NODE="24:4.1.2.1.12.6.5.22" TYPE="SECTION">
<HEAD>§ 891.863   Maintenance as supportive housing units for elderly persons and persons with disabilities.</HEAD>
<P>(a) The mixed-finance owner must develop and continue to operate the same number of supportive housing units for elderly persons or persons with disabilities, as stated in the use agreement or other document establishing the number of assisted units, for a 40-year period.
</P>
<P>(b) If a mixed-finance development proposal provides that the Section 202 or 811 supportive housing units will be floating units, the mixed-finance owner must operate the HUD-approved percentage of Section 202 or 811 supportive housing units, and maintain the percentage distribution of bedroom sizes of Section 202 or 811 supportive housing units for the entire term of the very low-income use restrictions on the development. Any foreclosure, sale, or other transfer of the development must be subject to a covenant running with the land requiring the continued adherence to the very low-income use restrictions for the Section 202 or 811 supportive housing units.
</P>
<P>(c) The owner must ensure that Section 202 or 811 supportive housing units in the development are and continue to be comparable to unassisted units in terms of location, size, appearance, and amenities. If due to a change in the partnership structure it becomes necessary to establish a new owner partnership or to transfer the supportive housing project, the new or revised owner must be a single-purpose entity and the use restrictions must remain in effect as provided above. 


</P>
</DIV8>


<DIV8 N="§ 891.865" NODE="24:4.1.2.1.12.6.5.23" TYPE="SECTION">
<HEAD>§ 891.865   Sanctions.</HEAD>
<P>In the event that Section 202 or 811 supportive housing units are not developed and operated in accordance with all applicable federal requirements, HUD may impose sanctions on the participating parties and seek legal or equitable relief in enforcing all requirements under Section 202, the Housing Act of 1959, or Section 811 of the National Affordable Housing Act, all implementing regulations and requirements and contractual obligations under the mixed-finance documents.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="892-899" NODE="24:4.1.2.1.13" TYPE="PART">
<HEAD>PARTS 892-899 [RESERVED]


</HEAD>
</DIV5>

</DIV3>


<DIV3 N="IX" NODE="24:4.1.3" TYPE="CHAPTER">

<HEAD> CHAPTER IX—OFFICE OF ASSISTANT SECRETARY FOR PUBLIC AND INDIAN HOUSING, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT</HEAD>

<DIV5 N="900-901" NODE="24:4.1.3.1.1" TYPE="PART">
<HEAD>PARTS 900-901 [RESERVED]


</HEAD>
</DIV5>


<DIV5 N="902" NODE="24:4.1.3.1.2" TYPE="PART">
<HEAD>PART 902—PUBLIC HOUSING ASSESSMENT SYSTEM
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437d(j), 42 U.S.C. 3535(d), 1437z-10.








</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>76 FR 10149, Feb. 23, 2011, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.3.1.2.1" TYPE="SUBPART">
<HEAD>Subpart A—General Provisions</HEAD>


<DIV8 N="§ 902.1" NODE="24:4.1.3.1.2.1.5.1" TYPE="SECTION">
<HEAD>§ 902.1   Purpose, scope, and general matters.</HEAD>
<P>(a) <I>Purpose.</I> The purpose of the Public Housing Assessment System (PHAS) is to improve the delivery of services in public housing and enhance trust in the public housing system among public housing agencies (PHAs), public housing residents, and the general public, by providing a management tool for effectively and fairly measuring the performance of a PHA in essential housing operations of projects, on a program-wide basis and individual project basis, and providing rewards for high performers and remedial requirements for poor performers.
</P>
<P>(b) <I>Scope.</I> PHAS is a strategic measure of the essential housing operations of projects and PHAs. PHAS does not evaluate the compliance of a project or PHA with every HUD-wide or program-specific requirement or objective. Although not specifically evaluated through PHAS, PHAs are responsible for complying with nondiscrimination and equal opportunity requirements, including but not limited to those specified in 24 CFR 5.105, for affirmatively furthering fair housing, requirements under section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), and requirements of other federal programs under which the PHA is receiving assistance. A PHA's adherence to these requirements will be monitored in accordance with the applicable program regulations and the PHA's Annual Contributions Contract (ACC).
</P>
<P>(c) <I>PHAS indicators.</I> HUD will assess and score the performance of projects and PHAs based on the indicators, which are more fully addressed in § 902.9: Physical condition, financial condition, management operations, and the Capital Fund program.
</P>
<P>(d) <I>Assessment tools.</I> HUD will make use of uniform and objective criteria for the physical inspection of projects and PHAs and the financial assessment of projects and PHAs, and will use data from appropriate agency data systems to assess management operations. For the Capital Fund program indicator, HUD will use information provided in the electronic Line of Credit Control System (eLOCCS), the Public Housing Information Center (PIC), or their successor systems. On the basis of this data, HUD will assess and score the results, advise PHAs of their scores, and identify low-scoring and poor-performing projects and PHAs so that these projects and PHAs will receive the appropriate attention and assistance.
</P>
<P>(e) <I>Small PHAs.</I> A PHA with fewer than 250 units that does not convert to asset management will be considered as one project by HUD.
</P>
<P>(f) HUD's s<I>coring procedures</I> will be published from time to time in the <E T="04">Federal Register</E> for public comment.


</P>
</DIV8>


<DIV8 N="§ 902.3" NODE="24:4.1.3.1.2.1.5.2" TYPE="SECTION">
<HEAD>§ 902.3   Definitions.</HEAD>
<P>As used in this part:
</P>
<P><I>Act</I> means the U.S. Housing Act of 1937 (42 U.S.C. 1437 <I>et seq.</I>)
</P>
<P><I>Alternative management entity (AME)</I> is a receiver, private contractor, private manager, or any other entity that is under contract with a PHA, under a management agreement with a PHA, or that is otherwise duly appointed or contracted (for example, by court order or agency action), to manage all or part of a PHA's operations.
</P>
<P><I>Assessed fiscal year</I> is the PHA fiscal year that has been/is being assessed under PHAS.
</P>
<P><I>Assistant Secretary</I> means the Assistant Secretary for Public and Indian Housing.
</P>
<P><I>Capital Fund-troubled</I> refers to a PHA that does not meet the minimum passing score of 5 points or 50 percent under the Capital Fund indicator.
</P>
<P><I>Corrective Action Plan</I> means a plan, as provided in § 902.73(a), that is developed by a PHA that specifies the actions to be taken, including timetables, that shall be required to correct deficiencies identified under any of the PHAS indicators and subindicators, and identified as a result of a PHAS assessment, when a memorandum of agreement (MOA) is not required.






</P>
<P><I>Days</I> mean calendar days, unless otherwise specified.
</P>
<P><I>Decent, safe, sanitary housing and in good repair (DSS/GR)</I> is HUD's standard for acceptable basic housing conditions and the level to which a PHA is required to maintain its public housing.
</P>
<P><I>Deficiency</I> means any finding or determination that requires corrective action, or any score below 60 percent of the available points for the physical condition, financial condition, or management operations indicators, and any score below 50 percent for the Capital Fund indicator. In the context of physical condition and physical inspection in subpart B of this part, “deficiency” means a specific problem, as described in the Dictionary of Deficiency Definitions, such as a hole in a wall or a damaged refrigerator in the kitchen that can be recorded for inspectable items.
</P>
<P><I>Dictionary of Deficiency Definitions</I> means the documents published in the <E T="04">Federal Register</E> that contain the inspection standards and scoring values pursuant to 24 CFR part 5, subpart G.












</P>
<P><I>Direct Funded RMC</I> (DF-RMC) means a Resident Management Corporation to which HUD directly provides operating and capital assistance under the provisions of 24 CFR 964.225(h).




</P>
<P><I>Inspectable areas (</I>or <I>area)</I> mean any of the three major components of public housing that are inspected, which are: inside, outside, and unit.
</P>
<P><I>Inspectable item</I> means the individual parts, such as walls, kitchens, bathrooms, and other things, to be inspected in an inspectable area.












</P>
<P><I>Memorandum of Agreement (MOA)</I> is defined in § 902.75(b).


</P>
<P><I>Resident Management Corporation</I> (RMC) is defined in 24 CFR 964.7.






























</P>
<P><I>Unit-weighted average</I> means the average of the PHA's individual indicator scores, weighted by the number of units in each project, divided by the total number of units in all of the projects of the PHA. In order to compute a unit-weighted average, an individual project score for a particular indicator is multiplied by the number of units in each project to determine a “weighted value.” For example, for a PHA with two projects, one with 200 units and a score of 90, and the other with 100 units and a score of 60, the unit-weighted average score for the indicator would be (200 × 90 + 100 × 60)/300 = 80.


</P>
<CITA TYPE="N">[76 FR 10149, Feb. 23, 2011, as amended at 88 FR 30500, May 11, 2023]




</CITA>
</DIV8>


<DIV8 N="§ 902.5" NODE="24:4.1.3.1.2.1.5.3" TYPE="SECTION">
<HEAD>§ 902.5   Applicability.</HEAD>
<P>(a) <I>PHAs, RMCs, AMEs.</I> This part applies to PHAs, Resident Management Corporations (RMCs), and AMEs. This part is also applicable to RMCs that receive direct funding from HUD in accordance with section 20 of the 1937 Act (DF-RMCs).
</P>
<P>(1) <I>Scoring of RMCs and AMEs.</I> (i) RMCs and DF-RMCs will be assessed and issued their own numeric scores under PHAS based on the public housing or portions of public housing that they manage and the responsibilities they assume that can be scored under PHAS. References in this part to PHAs include RMCs, unless stated otherwise. References in this part to RMCs include DF-RMCs, unless stated otherwise.
</P>
<P>(ii) AMEs are not issued PHAS scores. The performance of the AME contributes to the PHAS score of the project(s)/PHA(s) for which they assumed management responsibilities.
</P>
<P>(2) <I>ACC.</I> The ACC makes a PHA legally responsible for all public housing operations, except where DF-RMC assumes management operations.
</P>
<P>(i) Because the PHA and not the RMC or AME is ultimately responsible to HUD under the ACC, the PHAS score of a PHA will be based on all of the projects covered by the ACC, including those with management operations assumed by an RMC or AME (including a court-ordered or administrative receivership agreement, if applicable).
</P>
<P>(ii) A PHA's PHAS score will not be based on projects managed by a DF-RMC.
</P>
<P>(3) This part does not apply to Moving-to-Work (MTW) agencies that are specifically exempted in their grant agreement.
</P>
<P>(b) <I>Implementation of PHAS.</I> The regulations in this part are applicable to PHAs beginning with the first fiscal year end date after the effective date of this rule, and thereafter.


</P>
</DIV8>


<DIV8 N="§ 902.9" NODE="24:4.1.3.1.2.1.5.4" TYPE="SECTION">
<HEAD>§ 902.9   PHAS scoring.</HEAD>
<P>(a) <I>Indicators and subindicators.</I> Each PHA will receive an overall PHAS score, rounded to the nearest whole number, based on the four indicators: Physical condition, financial condition, management operations, and the Capital Fund program. Each of these indicators contains subindicators, and the scores for the subindicators are used to determine a single score for each of these PHAS indicators. Individual project scores are used to determine a single score for the physical condition, financial condition, and management operations indicators. The Capital Fund program indicator score is entity-wide.
</P>
<P>(b) <I>Overall PHAS score and indicators.</I> The overall PHAS score is derived from a weighted average of score values for the four indicators, as follows:
</P>
<P>(1) The physical condition indicator is weighted 40 percent (40 points) of the overall PHAS score. The score for this indicator is obtained as indicated in subpart B of this part.
</P>
<P>(2) The financial condition indicator is weighted 25 percent (25 points) of the overall PHAS score. The score for this indicator is obtained as indicated in subpart C of this part.
</P>
<P>(3) The management operations indicator is weighted 25 percent (25 points) of the overall PHAS score. The score for this indicator is obtained as indicated in subpart D of this part.
</P>
<P>(4) The Capital Fund program indicator is weighted 10 percent (10 points) of the overall PHAS score for all Capital Fund program grants for which fund balances remain during the assessed fiscal year. The score for this indicator is obtained as indicated in subpart E of this part.


</P>
</DIV8>


<DIV8 N="§ 902.11" NODE="24:4.1.3.1.2.1.5.5" TYPE="SECTION">
<HEAD>§ 902.11   PHAS performance designation.</HEAD>
<P>All PHAs that receive a PHAS assessment shall receive a performance designation. The performance designation is based on the overall PHAS score and the four indicator scores, as set forth below.
</P>
<P>(a) <I>High performer.</I> (1) A PHA that achieves a score of at least 60 percent of the points available under the financial condition, physical condition, and management operations indicators and at least 50 percent of the points available under the Capital Fund indicator, and achieves an overall PHAS score of 90 percent or greater of the total available points under PHAS shall be designated a high performer. A PHA shall not be designated a high performer if it scores below the threshold established for any indicator.
</P>
<P>(2) High performers will be afforded incentives that include relief from reporting and other requirements, as described in § 902.71.
</P>
<P>(b) <I>Standard performer.</I> (1) A PHA that is not a high performer shall be designated a standard performer if the PHA achieves an overall PHAS score of at least 60 percent, and at least 60 percent of the available points for the physical condition, financial condition, and management operations indicators, and at least 50 percent of the available points for the Capital Fund indicator.
</P>
<P>(2) At HUD's discretion, a standard performer may be required by the field office to submit and operate under a Corrective Action Plan.
</P>
<P>(c) <I>Substandard performer.</I> A PHA shall be designated a substandard performer if the PHA achieves a total PHAS score of at least 60 percent and achieves a score of less than 60 percent under one or more of the physical condition, financial condition, or management operations indicators. The PHA shall be designated as substandard physical, substandard financial, or substandard management, respectively. The HUD office with jurisdiction over the PHA shall require a Corrective Action Plan if the deficiencies have not already been addressed in a current Corrective Action Plan.
</P>
<P>(d) <I>Troubled performer.</I> (1) A PHA that achieves an overall PHAS score of less than 60 percent shall be designated as a troubled performer.
</P>
<P>(2) In accordance with section 6(j)(2)(A)(i) of the Act (42 U.S.C. 1437d(j)(2)(A)(i)), a PHA that receives less than 50 percent under the Capital Fund program indicator under subpart E of this part will be designated as a troubled performer and subject to the sanctions provided in section 6(j)(4) of the Act (42 U.S.C. 1437(d)(j)(4)).


</P>
</DIV8>


<DIV8 N="§ 902.13" NODE="24:4.1.3.1.2.1.5.6" TYPE="SECTION">
<HEAD>§ 902.13   Frequency of PHAS assessments.</HEAD>
<P>The frequency of a PHA's PHAS assessments is determined by the size of the PHA's Low-Rent program and its PHAS designation. HUD may, due to unforeseen circumstances or other cause as determined by HUD, extend the time between assessments by direct notice to the PHA and relevant resident organization or resident management entity, and any other general notice that HUD deems appropriate.
</P>
<P>(a) <I>Small PHAs.</I> HUD will assess and score the performance of a PHA with fewer than 250 public housing units, as follows:
</P>
<P>(1) A small PHA that is a high performer may receive a PHAS assessment every 3 years;
</P>
<P>(2) A small PHA that is a standard or substandard performer may receive a PHAS assessment every other year; and
</P>
<P>(3) All other small PHAs may receive a PHAS assessment every year, including a PHA that is designated as troubled or Capital Fund-troubled in accordance with § 902.75.
</P>
<P>(b) <I>Frequency of scoring for PHAs with 250 units or more.</I> (1) All PHAs, other than stated in paragraph (a) of this section, may be assessed on an annual basis.
</P>
<P>(2) The physical condition score for each project will determine the frequency of inspections of each project in accordance with the inspection cycle laid out in 24 CFR 5.705(c). The PHAS physical condition indicator score for an assessment period shall be calculated by taking the unit-weighted average of the most recent physical condition score for each project, except that, starting July 1, 2023, no new physical condition indicator will be issued for a PHA until every project under the PHA has been inspected on or after July 1, 2023.


</P>
<P>(3) If a PHA is designated as a troubled performer, all projects will receive a physical condition inspection regardless of the individual project physical condition score.
</P>
<P>(4) In the baseline year, every PHA will receive an overall PHAS score and in all four of the PHAS indicators: Physical condition; financial condition; management operations; and Capital Fund program. This will allow a baseline for the physical condition inspections and the 3-2-1 inspection schedule, as well as a baseline year for the small deregulated PHAs.
</P>
<P>(c) <I>Financial submissions.</I> HUD shall not issue a PHAS score for the unaudited and audited financial information in the years that a PHA is not being assessed under PHAS. Although HUD shall not issue a PHAS score under such circumstances, a PHA shall comply with the requirements for submission of annual unaudited and audited financial statements in accordance with subpart C of this part and 24 CFR 5.801.
</P>
<CITA TYPE="N">[76 FR 10149, Feb. 23, 2011, as amended at 88 FR 30500, May 11, 2023]








</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.3.1.2.2" TYPE="SUBPART">
<HEAD>Subpart B—Physical Condition Indicator</HEAD>


<DIV8 N="§ 902.20" NODE="24:4.1.3.1.2.2.5.1" TYPE="SECTION">
<HEAD>§ 902.20   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 902.21" NODE="24:4.1.3.1.2.2.5.2" TYPE="SECTION">
<HEAD>§ 902.21   Physical condition standards for public housing.</HEAD>
<P>Public housing must be maintained in a manner that meets the physical condition standards set forth in 24 CFR part 5, subpart G.


</P>
<CITA TYPE="N">[88 FR 30500, May 11, 2023]


















</CITA>
</DIV8>


<DIV8 N="§ 902.22" NODE="24:4.1.3.1.2.2.5.3" TYPE="SECTION">
<HEAD>§ 902.22   Inspection of PHA projects.</HEAD>
<P>The PHA's score for the physical condition indicator is based on an independent inspection of a PHA's project(s) provided by HUD and using the requirements and timelines laid out in 24 CFR part 5, subpart G, to ensure projects meet acceptable basic housing conditions. Mixed-finance projects will be subject to the physical condition inspections.
</P>
<CITA TYPE="N">[88 FR 30501, May 11, 2023]










</CITA>
</DIV8>


<DIV8 N="§ 902.24" NODE="24:4.1.3.1.2.2.5.4" TYPE="SECTION">
<HEAD>§ 902.24   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 902.25" NODE="24:4.1.3.1.2.2.5.5" TYPE="SECTION">
<HEAD>§ 902.25   Physical condition scoring and thresholds.</HEAD>
<P>(a) <I>Scoring.</I> Under the physical condition indicator, a score will be calculated for individual projects, as well as for the overall condition of a PHA's public housing portfolio.
</P>
<P>(b) <I>Overall PHA physical condition indicator score.</I> The overall physical condition indicator score is a unit-weighted average of project scores. The sum of the unit-weighted values is divided by the total number of units in the PHA's portfolio to derive the overall physical condition indicator score.
</P>
<P>(c) <I>Thresholds.</I> (1) The project or projects' 100-point physical condition score is converted to a 40-point basis for the overall physical condition indicator score. The project scores on the 100-point basis are multiplied by .40 in order to derive a 40-point equivalent score to compute the overall physical condition score and overall PHAS score.
</P>
<P>(2) In order to receive a passing score under the physical condition indicator, the PHA must achieve a score of at least 24 points, or 60 percent.
</P>
<P>(3) A PHA that receives fewer than 24 points will be categorized as a substandard physical condition agency.




</P>
</DIV8>


<DIV8 N="§ 902.26" NODE="24:4.1.3.1.2.2.5.6" TYPE="SECTION">
<HEAD>§ 902.26   [Reserved]</HEAD>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:4.1.3.1.2.3" TYPE="SUBPART">
<HEAD>Subpart C—Financial Condition Indicator</HEAD>


<DIV8 N="§ 902.30" NODE="24:4.1.3.1.2.3.5.1" TYPE="SECTION">
<HEAD>§ 902.30   Financial condition assessment.</HEAD>
<P>(a) <I>Objective.</I> The objective of the financial condition indicator is to measure the financial condition of each public housing project within a PHA's public housing portfolio for the purpose of evaluating whether there are sufficient financial resources to support the provision of housing that is DSS/GR. Individual project scores for financial condition, as well as overall financial condition scores, will be issued.
</P>
<P>(b) <I>Financial reporting standards.</I> A PHA's financial condition will be assessed under this indicator by measuring the combined performance of all public housing projects in each of the subindicators listed in § 902.35, on the basis of the annual financial report provided in accordance with § 902.33.
</P>
<P>(c) <I>Exclusions.</I> Mixed-finance projects are excluded from the financial condition indicator.


</P>
</DIV8>


<DIV8 N="§ 902.33" NODE="24:4.1.3.1.2.3.5.2" TYPE="SECTION">
<HEAD>§ 902.33   Financial reporting requirements.</HEAD>
<P>(a) <I>Annual financial report.</I> All PHAs must submit their unaudited and audited financial data to HUD on an annual basis. The financial information must be:
</P>
<P>(1) Prepared in accordance with Generally Accepted Accounting Principles (GAAP), as further defined by HUD in supplementary guidance; and
</P>
<P>(2) Submitted electronically in the format prescribed by HUD using the Financial Data Schedule (FDS).
</P>
<P>(b) <I>Annual unaudited financial information report filing dates.</I> The unaudited financial information to be submitted to HUD in accordance with paragraph (a) of this section must be submitted to HUD annually, no later than 2 months after the PHA's fiscal year end, with no penalty applying until the 16th day of the 3rd month after the PHA's fiscal year end, in accordance with § 902.62.
</P>
<P>(c) <I>Annual audited financial information compliance dates.</I> Audited financial statements will be required no later than 9 months after the PHA's fiscal year end, in accordance with the Single Audit Act and 2 CFR part 200, subpart F.
</P>
<P>(d) <I>Year-end audited financial information.</I> All PHAs that meet the federal assistance threshold stated in the Single Audit Act and 2 CFR part 200, subpart F, must also submit year-end audited financial information.
</P>
<P>(e) <I>Submission of information.</I> In addition to the submission of information required by paragraph (a) of this section, a PHA shall provide one copy of the completed audit report package and the Management Letter issued by the Independent Auditor to the local HUD field office having jurisdiction over the PHA.
</P>
<CITA TYPE="N">[76 FR 10149, Feb. 23, 2011, as amended at 80 FR 75941, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 902.35" NODE="24:4.1.3.1.2.3.5.3" TYPE="SECTION">
<HEAD>§ 902.35   Financial condition scoring and thresholds.</HEAD>
<P>(a) <I>Scoring.</I> (1) Under the financial condition indicator, a score will be calculated for each project based on the values of financial condition subindicators and an overall financial condition score, as well as audit and internal control flags. Each financial condition subindicator has several levels of performance, with different point values for each level.
</P>
<P>(2) The financial condition score for projects will be based on the annual financial condition information submitted to HUD for each project under 24 CFR 990.280 and 990.285. The financial condition score for PHAs will be based on a unit-weighted average of project scores.
</P>
<P>(b) <I>Subindicators of the financial condition indicator.</I> The subindicators of financial condition indicator are:
</P>
<P>(1) <I>Quick Ratio (QR).</I> The QR compares quick assets to current liabilities. Quick assets are cash and assets that are easily convertible to cash and do not include inventory. Current liabilities are those liabilities that are due within the next 12 months. A QR of less than one indicates that the project's ability to make payments on a timely basis may be at risk.
</P>
<P>(2) <I>Months Expendable Net Assets Ratio (MENAR).</I> The MENAR measures a project's ability to operate using its net available, unrestricted resources without relying on additional funding. This ratio compares the adjusted net available unrestricted resources to the average monthly operating expenses. The result of this calculation shows how many months of operating expenses can be covered with currently available, unrestricted resources.
</P>
<P>(3) <I>Debt Service Coverage Ratio (DSCR).</I> The DSCR is the ratio of net operating income available to make debt payments, to the amount of the debt payments. This subindicator is used if the PHA has taken on long-term obligations. A DSCR of less than one would indicate that the project would have difficulty generating sufficient cash flow to cover both its expenses and its debt obligations.
</P>
<P>(c) <I>Overall PHA financial condition indicator score.</I> The overall financial condition indicator score is a unit-weighted average of project scores. The sum of the weighted values is then divided by the total number of units in the PHA's portfolio to derive the overall financial condition indicator score.
</P>
<P>(d) <I>Thresholds.</I> (1) The PHA's financial condition score is based on a maximum of 25 points.
</P>
<P>(2) In order for a PHA to receive a passing score under the financial condition indicator, the PHA must achieve a score of at least 15 points, or 60 percent of the available points under this indicator.
</P>
<P>(3) A PHA that receives fewer than 15 points available under this indicator will be categorized as a substandard financial condition agency.


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:4.1.3.1.2.4" TYPE="SUBPART">
<HEAD>Subpart D—Management Operations Indicator</HEAD>


<DIV8 N="§ 902.40" NODE="24:4.1.3.1.2.4.5.1" TYPE="SECTION">
<HEAD>§ 902.40   Management operations assessment.</HEAD>
<P>(a) <I>Objective.</I> The objective of the management operations indicator is to measure the PHA's performance of management operations through the management performance of each project.
</P>
<P>(b) <I>Exclusions.</I> Mixed-finance projects are excluded from the management operations indicator.


</P>
</DIV8>


<DIV8 N="§ 902.43" NODE="24:4.1.3.1.2.4.5.2" TYPE="SECTION">
<HEAD>§ 902.43   Management operations performance standards.</HEAD>
<P>(a) <I>Management operations subindicators.</I> The following subindicators listed in this section will be used to assess the management operations of projects and PHAs, consistent with section 6(j)(1) of the Act (42 U.S.C. 1437d(j)(1)). Individual project scores for management operations, as well as overall PHA management operations scores, will be issued.
</P>
<P>(1) <I>Occupancy.</I> This subindicator measures the occupancy for the project's fiscal year, adjusted for allowable vacancies.
</P>
<P>(2) <I>Tenant accounts receivable.</I> This subindicator measures the tenant accounts receivable of a project against the tenant charges for the project's fiscal year.
</P>
<P>(3) <I>Accounts payable.</I> This subindicator measures the money that a project owes to vendors at the end of the project's fiscal year for products and services purchased on credit against total operating expenses.
</P>
<P>(b) <I>Assessment under the Management Operations Indicator.</I> Projects will be assessed under this indicator through information that is electronically submitted to HUD through the FDS.


</P>
</DIV8>


<DIV8 N="§ 902.44" NODE="24:4.1.3.1.2.4.5.3" TYPE="SECTION">
<HEAD>§ 902.44   Adjustment for physical condition and neighborhood environment.</HEAD>
<P>(a) <I>General.</I> In accordance with section 6(j)(1)(I)(2) of the Act (42 U.S.C. 1437d(j)(1)(I)(2)), the overall management operations score for a project will be adjusted upward to the extent that negative conditions are caused by situations outside the control of the project. These situations are related to the poor physical condition of the project or the overall depressed condition of the major census tract in which a project is located. The intent of this adjustment is to avoid penalizing such projects, through appropriate application of the adjustment.
</P>
<P>(b) <I>Definitions.</I> Definitions and application of physical condition and neighborhood environment factors are:
</P>
<P>(1) Physical condition adjustment applies to projects at least 28 years old, based on the unit-weighted average Date of Full Availability (DOFA) date.
</P>
<P>(2) Neighborhood environment adjustment applies to projects located in census tracts where at least 40 percent of the families have an income below the poverty rate, as documented by the most recent census data. If a project is located in more than one census tract, the census data for the census tract where the majority of the project's units are located shall be used.
</P>
<P>(c) <I>Adjustment for physical condition and neighborhood environment.</I> HUD will adjust the management operations score of a project, subject to one or both of the physical condition and neighborhood environment conditions. The adjustments will be made to the overall management operations score for each project so as to reflect the difficulty in managing the projects. In each instance where the actual management operations score is rated below the maximum score of 25 points, one point each will be added for physical condition and neighborhood environment, but not to exceed the maximum number of 25 points available for the management operations indicator.
</P>
<P>(d) <I>Application of adjustment.</I> The adjustment for physical condition and neighborhood environment will be calculated by HUD and applied to all eligible projects.


</P>
</DIV8>


<DIV8 N="§ 902.45" NODE="24:4.1.3.1.2.4.5.4" TYPE="SECTION">
<HEAD>§ 902.45   Management operations scoring and thresholds.</HEAD>
<P>(a) <I>Scoring.</I> Under the management operations indicator, HUD will calculate a score for each project, as well as for the overall management operations of a PHA, that reflects weights based on the relative importance of the individual management subindicators.
</P>
<P>(b) <I>Overall PHA management operations indicator score.</I> The overall management operations indicator score is a unit-weighted average of project scores. The sum of the weighted values is divided by the total number of units in the PHA's portfolio to derive the overall management operations indicator score.
</P>
<P>(c) <I>Thresholds.</I> (1) The PHA's management operations score is based on a maximum of 25 points.
</P>
<P>(2) In order to receive a passing score under the management operations indicator, a PHA must achieve a score of at least 15 points or 60 percent.
</P>
<P>(3) A PHA that receives fewer than 15 points will be categorized as a substandard management operations agency.


</P>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:4.1.3.1.2.5" TYPE="SUBPART">
<HEAD>Subpart E—Capital Fund Program Indicator</HEAD>


<DIV8 N="§ 902.50" NODE="24:4.1.3.1.2.5.5.1" TYPE="SECTION">
<HEAD>§ 902.50   Capital Fund program assessment.</HEAD>
<P>(a) <I>Objective.</I> The Capital Fund program indicator examines the period of time taken by a PHA to obligate funds and occupy units in relation to statutory deadlines for obligation for all Capital Fund program grants for which fund balances remain during the assessed fiscal year. Funds from the Capital Fund program under section 9(d) of the Act (42 U.S.C. 1437g(d)) do not include HOPE VI program funds.
</P>
<P>(b) <I>Applicability.</I> This indicator is applicable on a PHA-wide basis, and not to individual projects. This indicator is not applicable to PHAs that choose not to participate in the Capital Fund program under section 9(d) of the Act.
</P>
<P>(c) <I>Capital Fund subindicators.</I> The subindicators pursuant to section 9(d) of the Act are:
</P>
<P>(1) Timeliness of fund obligation. This subindicator examines the period of time it takes for a PHA to obligate funds from the Capital Fund program under section 9(j)(1) of the 1937 Act (42 U.S.C. 1437g(9)(j)).
</P>
<P>(2) Occupancy rate. This subindicator measures the PHA's occupancy rate as of the end of the PHA's fiscal year.
</P>
<P>(d) <I>Method of assessment.</I> The assessment required under the Capital Fund program indicator will be performed through analysis of obligated amounts in HUD's eLOCCS (or its successor) for all Capital Fund program grants that were open during the assessed fiscal year. This subindicator measures a statutory requirement for the Capital Fund program. Other aspects of the Capital Fund program will be monitored by HUD through other types of reviews, and in this indicator through considering occupancy rates.
</P>
<P>(1) PHAs are responsible to ensure that their Capital Fund program information is submitted to eLOCCS by the submission due date.
</P>
<P>(2) A PHA may not appeal its PHAS score, Capital Fund program score, or both, based on the fact that it did not submit its Capital Fund program information to eLOCCS and/or the PIC systems by the submission due date.


</P>
</DIV8>


<DIV8 N="§ 902.53" NODE="24:4.1.3.1.2.5.5.2" TYPE="SECTION">
<HEAD>§ 902.53   Capital Fund program scoring and thresholds.</HEAD>
<P>(a) <I>Scoring.</I> The Capital Fund program indicator score provides an assessment of a PHA's ability to obligate Capital Fund program grants in a timely manner on capital and modernization needs.
</P>
<P>(b) <I>Thresholds.</I> (1) The PHA's Capital Fund program score is based on a maximum of 10 points.
</P>
<P>(2) In order to receive a passing score under the Capital Fund program indicator, a PHA must achieve a score of at least 5 points, or 50 percent.


</P>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:4.1.3.1.2.6" TYPE="SUBPART">
<HEAD>Subpart F—PHAS Scoring</HEAD>


<DIV8 N="§ 902.60" NODE="24:4.1.3.1.2.6.5.1" TYPE="SECTION">
<HEAD>§ 902.60   Data collection.</HEAD>
<P>(a) <I>Fiscal year reporting period—limitation on changes after PHAS effective date.</I> To allow for a period of consistent assessments to refine and make necessary adjustments to PHAS, a PHA is not permitted to change its fiscal year for the first 3 full fiscal years following the effective date of this regulation, unless such change is approved by HUD for good cause.
</P>
<P>(b) <I>Request for extension of time to submit unaudited financial information.</I> In the event of extenuating circumstances, a PHA may request extensions of time to submit its unaudited financial information. To receive an extension, a PHA must ensure that HUD receives the extension request electronically 15 days before the submission due date. The PHA's electronic extension request must include an objectively verifiable justification as to why the PHA cannot submit the information by the submission due date. PHAs shall submit their requests for extensions of time for the submission of unaudited financial information through the FASS-PH Secure Systems Web site. HUD shall forward its determination electronically to the requesting PHA.
</P>
<P>(c) <I>Request for waiver of due date for PHA submission of audited financial information.</I> (1) HUD, for good cause, may grant PHAs a waiver of the due date of the submission of audited financial information to HUD. HUD shall consider written requests from PHAs for a waiver of the report submission due date (established by the Single Audit Act and 2 CFR part 200, subpart F, as no later than 9 months after the end of the fiscal year). The PHA's written request for a waiver of the due date of the submission of audited financial information must include an objectively verifiable justification as to why the PHA cannot submit the information by the submission due date. A PHA shall submit its written request for such a waiver, 30 days prior to the submission due date, to its local field office. HUD shall forward its written determination of the waiver request to the PHA and, if appropriate, establish a new submission due date for the audited financial information.
</P>
<P>(2) A waiver of the due date for the submission of audited financial information to HUD does not relieve a PHA of its responsibility to submit its audited information to OMB's Federal Audit Clearinghouse no later than 9 months after the end of its fiscal year.
</P>
<P>(d) <I>Rejected unaudited financial submissions.</I> When HUD rejects a PHA's year-end unaudited financial information after the due date, a PHA shall have 15 days from the date of the rejection to resubmit the information without a penalty being applied, in accordance with § 902.62.
</P>
<P>(e) <I>Late points and late presumptive failure.</I> Late points and late presumptive failure will only be applied to the financial condition indicator since the management operations information is derived from the financial condition submission.
</P>
<P>(f) <I>Score change.</I> A management operations score can change as a result of the audited submission since the management operations information is derived from the financial condition submission.
</P>
<CITA TYPE="N">[76 FR 10149, Feb. 23, 2011, as amended at 80 FR 75941, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 902.62" NODE="24:4.1.3.1.2.6.5.2" TYPE="SECTION">
<HEAD>§ 902.62   Failure to submit data.</HEAD>
<P>(a) <I>Failure to submit data by due date.</I> (1) If a PHA without a finding of good cause by HUD does not submit its year-end financial information, required by this part, or submits its unaudited year-end financial information more than 15 days past the due date, appropriate sanctions may be imposed, including a reduction of one point in the total PHAS score for each 15-day period past the due date.
</P>
<P>(2) If the unaudited year-end financial information is not received within 3 months past the due date, or extended due date, the PHA will receive a presumptive rating of failure for its unaudited information and shall receive zero points for its unaudited financial information and the final financial condition indicator score. The subsequent timely submission of audited information does not negate the score of zero received for the unaudited year-end financial information submission.
</P>
<P>(3) The PHA's audited financial statement must be received no later than 9 months after the PHA's fiscal year-end, in accordance with the Single Audit Act and 2 CFR part 200, subpart F. If the audited financial statement is not received by that date, the PHA will receive a presumptive rating of failure for the financial condition indicator.
</P>
<P>(b) <I>Verification of information submitted.</I> (1) A PHA's year-end financial information and any supporting documentation are subject to review by an independent auditor, as authorized by section 6(j)(6) of the Act (42 U.S.C. 1437(d)(j)(6)). Appropriate sanctions for intentional false certification will be imposed, including civil penalties, suspension or debarment of the signatories, the loss of high performer designation, a lower score under the financial condition indicator, and a lower overall PHAS score.
</P>
<P>(2) A PHA that cannot provide justifying documentation to HUD for the assessment under any indicator(s) or subindicator(s) shall receive a score of zero for the relevant indicator(s) or subindicator(s) and its overall PHAS score shall be lowered accordingly.
</P>
<P>(c) <I>Failure to submit.</I> If a PHA does not submit its unaudited or audited information, it will receive a zero for management operations.
</P>
<CITA TYPE="N">[76 FR 10149, Feb. 23, 2011, as amended at 80 FR 75941, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 902.64" NODE="24:4.1.3.1.2.6.5.3" TYPE="SECTION">
<HEAD>§ 902.64   PHAS scoring and audit reviews.</HEAD>
<P>(a) <I>Adjustments to PHAS score.</I> (1) Adjustments to the score may be made after a PHA's audit report for the fiscal year being assessed is transmitted to HUD. If significant differences are noted between unaudited and audited results, a PHA's PHAS score will be adjusted in accordance with the audited results.
</P>
<P>(2) A PHA's PHAS score under individual indicators or subindicators, or its overall PHAS score, may be changed by HUD in accordance with data included in the audit report or obtained through such sources as HUD project management and other reviews, investigations by HUD's Office of Fair Housing and Equal Opportunity, investigations or audits by HUD's Office of Inspector General, or reinspection by HUD, as applicable.
</P>
<P>(b) <I>Issuance of a score by HUD.</I> (1) An overall PHAS score will be issued for each PHA after the later of one month after the submission due date for financial data or one month after submission by the PHA of its financial data. The overall PHAS score becomes the PHA's final PHAS score after any adjustments requested by the PHA and determined necessary under the processes provided in §§ 902.25(d), 902.35(a), and 902.68; any adjustments resulting from the appeal process provided in § 902.69; and any adjustments determined necessary as a result of the independent public accountant (IPA) audit.
</P>
<P>(2) Each PHA (or RMC) shall post a notice of its final PHAS score and designation in appropriate conspicuous and accessible locations in its offices within 2 weeks of receipt of its final PHAS score and designation. In addition, HUD will post every PHA's PHAS score and designation on HUD's Internet site.
</P>
<P>(c) <I>Review of audit.</I> (1) <I>Quality control review.</I> HUD may undertake a quality control review of the audit work papers or as part of the Department's ongoing quality assurance process.
</P>
<P>(2) <I>Determination of deficiency.</I> If HUD determines that the PHA's financial statements, electronic financial submission, or audit are deficient, it shall notify the PHA of such determination in writing. The PHA will have 30 days in which to respond to the notice of deficiency and to establish that the determination is erroneous. Following consideration of any PHA response, HUD will issue a final determination in writing to the PHA.
</P>
<P>(i) <I>Deficient financial statements.</I> Deficient financial statements are statements that are not presented, in some material respect, in accordance with accounting principles generally accepted in the United States, as set forth by the Government Accounting Standards Board, or if applicable, the Financial Accounting Standards Board.
</P>
<P>(ii) <I>Deficient electronic submission.</I> A deficient electronic financial submission is a filing that was not made, in some material respect, in accordance with HUD requirements or attested to in accordance with the Standards for Attestation Engagements issued by the American Institute of Certified Public Accountants or Generally Accepted Government Auditing Standards.
</P>
<P>(iii) <I>Deficient audit.</I> A deficient audit is one that was not performed, in some material respect, in compliance with Generally Accepted Government Auditing Standards; Generally Accepted Auditing Standards; the Single Audit Act and 2 CFR part 200, subpart F, when applicable; or HUD requirements.
</P>
<P>(3) <I>HUD actions.</I> If HUD determines that the financial statements, electronic financial submission, or audit are deficient, HUD may adjust the financial indicator score to zero and/or reduce the overall PHAS score in accordance with the provisions of this section. Additionally, if HUD determines that the audit is deficient, HUD may, at its discretion, elect to serve as the audit committee for the PHA for the next fiscal year and select the audit firm that will perform the audit in question.
</P>
<CITA TYPE="N">[76 FR 10149, Feb. 23, 2011, as amended at 80 FR 75942, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 902.66" NODE="24:4.1.3.1.2.6.5.4" TYPE="SECTION">
<HEAD>§ 902.66   Withholding, denying, and rescinding designation.</HEAD>
<P>(a) <I>Withholding designation.</I> In exceptional circumstances, even though a PHA has satisfied all of the PHAS indicators for high performer or standard performer designation, HUD may conduct any review as it may determine necessary, and may deny or rescind incentives or high performer designation or standard performer designation, in the case of a PHA that:
</P>
<P>(1) Is operating under a special agreement with HUD (<I>e.g.,</I> a civil rights compliance agreement);
</P>
<P>(2) Is involved in litigation that bears directly upon the physical, financial, or management performance of a PHA;
</P>
<P>(3) Is operating under a court order;
</P>
<P>(4) Demonstrates substantial evidence of fraud or misconduct, including evidence that the PHA's certifications, submitted in accordance with this part, are not supported by the facts, as evidenced by such sources as a HUD review, routine reports, an Office of Inspector General investigation/audit, an independent auditor's audit, or an investigation by any appropriate legal authority; or
</P>
<P>(5) Demonstrates substantial noncompliance in one or more areas of a PHA's required compliance with applicable laws and regulations, including areas not assessed under PHAS. Areas of substantial noncompliance include, but are not limited to, noncompliance with civil rights, nondiscrimination and fair housing laws and regulations, or the ACC. Substantial noncompliance casts doubt on the capacity of a PHA to preserve and protect its public housing projects and operate them consistent with federal laws and regulations.
</P>
<P>(b) <I>High performer and standard designations.</I> If a high performer designation is denied or rescinded, the PHA shall be designated either a standard performer, substandard performer, or troubled performer, depending on the nature and seriousness of the matter or matters constituting the basis for HUD's action. If a standard performer designation is denied or rescinded, the PHA shall be designated as a substandard performer or troubled performer.
</P>
<P>(c) <I>Effect on score.</I> The denial or rescission of a designation of high performer or standard performer shall not affect the PHA's numerical PHAS score, except where the denial or rescission is under paragraph (a)(4) of this section.






</P>
</DIV8>


<DIV8 N="§ 902.68" NODE="24:4.1.3.1.2.6.5.5" TYPE="SECTION">
<HEAD>§ 902.68   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 902.69" NODE="24:4.1.3.1.2.6.5.6" TYPE="SECTION">
<HEAD>§ 902.69   PHA right of petition and appeal.</HEAD>
<P>(a) <I>Appeal of troubled performer designation and petition for removal of troubled performer designation.</I> A PHA may take any of the following actions:
</P>
<P>(1) Appeal its troubled performer designation (including Capital Fund program troubled performer designation);
</P>
<P>(2) Appeal its final overall PHAS score;
</P>
<P>(3) Petition for removal of troubled performer designation;
</P>
<P>(4) Appeal any refusal of a petition to remove troubled performer designation; and
</P>
<P>(5) Appeal actions under § 902.66.
</P>
<P>(b) <I>Appeal of PHAS score.</I> (1) If a PHA believes that an objectively verifiable and material error(s) exists in any of the scores for its PHAS indicators, which, if corrected, will result in a significant change in the PHA's PHAS score and its designation (i.e., as troubled performer, substandard performer, standard performer, or high performer), the PHA may appeal its PHAS score in accordance with the procedures of paragraphs (c), (d), and (e) of this section. A significant change in a PHAS score is a change that would cause the PHA's PHAS score to increase, resulting in a higher PHAS designation for the PHA (i.e., from troubled performer to substandard performer or standard performer, or from standard performer to high performer).
</P>
<P>(2) A PHA may not appeal its PHAS score, physical condition score, or both, based on the subsequent correction of deficiencies identified as a result of a project's physical inspection or the denial of a technical review request.
</P>
<P>(3) A PHA may not appeal its PHAS score, Capital Fund program score, or both, based on the fact that it did not submit its Capital Fund program information to eLOCCS by the submission due date.
</P>
<P>(c) <I>Appeal and petition procedures.</I> (1) To appeal a troubled performer designation or a final overall PHAS score, a PHA must submit a request in writing to the Deputy Assistant Secretary of the Real Estate Assessment Center, which must be received by HUD no later than 30 days following the issuance of the overall PHAS score to the PHA. To petition the removal of a troubled performer designation, a PHA must submit its request in writing to the Deputy Assistant Secretary of the Real Estate Assessment Center.
</P>
<P>(2) To appeal the denial of a petition to remove a troubled performer designation, a PHA must submit a written request to the Deputy Assistant Secretary of the Real Estate Assessment Center, which must be received by HUD no later than 30 days after HUD's decision to refuse to remove the PHA's troubled performer designation.
</P>
<P>(3) To appeal the petition for the removal of a troubled performer designation, or appeal the denial of a petition to remove a troubled performer designation, a PHA shall submit its request in writing to the Deputy Assistant Secretary of the Real Estate Assessment Center.
</P>
<P>(4) An appeal of a troubled performer designation, the petition for removal of a troubled performer designation, or the appeal of a refusal of a petition to remove a troubled performer designation must include the PHA's supporting documentation and reasons for the appeal or petition. An appeal of a PHAS score must be accompanied by the PHA's evidence that a material error occurred. An appeal or petition submitted to HUD without supporting documentation will not be considered and will be returned to the PHA.
</P>
<P>(d) <I>Denial, withholding, or rescission.</I> A PHA that disagrees with the basis for denial, withholding, or rescission of its designation under § 902.66 may make a written request for reinstatement within 30 days of notification by HUD of the denial or rescission of the designation to the Assistant Secretary, and the request shall include reasons for the reinstatement.
</P>
<P>(e) <I>Consideration of petitions and appeals.</I> (1) Consideration of a petition or the appeal of a final overall PHAS score, of a troubled performer designation, or of a petition to remove troubled performer designation. Upon receipt of such an appeal or a petition from a PHA, HUD will evaluate the appeal and its merits for purposes of determining whether a reassessment of the PHA is warranted. HUD will review the PHA's file and the evidence submitted by the PHA to determine whether an error occurred.
</P>
<P>(2) Consideration of an appeal of refusal to remove a troubled performer designation. Upon receipt of an appeal of refusal to remove a troubled performer designation, HUD will evaluate the appeal and its merits for the purposes of determining whether a reassessment of the PHA is warranted. The HUD staff initially evaluating an appeal of refusal to remove a troubled performer designation will not be the same HUD staff who evaluated the PHA's petition to remove the troubled performer designation. The Assistant Secretary will render the final determination of such an appeal.
</P>
<P>(f) <I>Notice and finality of decisions.</I> (1) If HUD determines that one or more objectively verifiable and material error has occurred, HUD will undertake a new inspection of the project, arrange for audit services, adjust the PHA's score, or perform other reexamination of the financial, management, or Capital Fund program information, as appropriate in light of the nature of the error that occurred. A new score will be issued and an appropriate performance designation made by HUD. HUD's decision on appeal of a PHAS score, issuance of a troubled performer designation, or refusal to remove a troubled performer designation will be final agency action. No reconsideration will be given by HUD of such decisions.
</P>
<P>(2) HUD will issue a written decision on all appeals and petitions made under this section.


</P>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:4.1.3.1.2.7" TYPE="SUBPART">
<HEAD>Subpart G—PHAS Incentives and Remedies</HEAD>


<DIV8 N="§ 902.71" NODE="24:4.1.3.1.2.7.5.1" TYPE="SECTION">
<HEAD>§ 902.71   Incentives for high performers.</HEAD>
<P>(a) <I>Incentives for high performer PHAs.</I> A PHA that is designated a high performer will be eligible for the following incentives, and such other incentives that HUD may determine appropriate and permissible under program statutes or regulations.
</P>
<P>(1) <I>Relief from specific HUD requirements.</I> A PHA that is designated a high performer will be relieved of specific HUD requirements (<I>e.g.,</I> will receive fewer reviews and less monitoring), effective upon notification of a high performer designation.
</P>
<P>(2) <I>Public recognition.</I> High performer PHAs and RMCs that receive a score of at least 60 percent of the points available for the physical condition, financial condition, and management operations indicators, and at least 50 percent of the points available for the Capital Fund indicator, and achieve an overall PHAS score of 90 percent or greater of the total available points under PHAS shall be designated a high performer and will receive a Certificate of Commendation from HUD, as well as special public recognition, as provided by the field office.
</P>
<P>(3) <I>Bonus points in funding competitions.</I> A high performer PHA may be eligible for bonus points in HUD's funding competitions, where such bonus points are not restricted by statute or regulation governing the funding program and are provided in the relevant notice of funding availability.
</P>
<P>(b) <I>Compliance with applicable federal laws and regulations.</I> Relief from any standard procedural requirement that may be provided under this section does not mean that a PHA is relieved from compliance with the provisions of federal law and regulations or other handbook requirements. For example, although a high performer or standard performer may be relieved of requirements for prior HUD approval for certain types of contracts for services, the PHA must still comply with all other federal and state requirements that remain in effect, such as those for competitive bidding or competitive negotiation (see 2 CFR 200.319, as applicable).
</P>
<P>(c) <I>Audits and reviews not relieved by designation.</I> A PHA designated as a high performer or standard performer remains subject to:
</P>
<P>(1) Regular independent auditor audits;
</P>
<P>(2) Office of Inspector General audits or investigations as circumstances may warrant; and
</P>
<P>(3) Reviews identified by the regional or field office in its current Risk Assessment of PHAs and projects.
</P>
<CITA TYPE="N">[76 FR 10149, Feb. 23, 2011, as amended at 80 FR 75942, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 902.73" NODE="24:4.1.3.1.2.7.5.2" TYPE="SECTION">
<HEAD>§ 902.73   PHAs with deficiencies.</HEAD>
<P>(a) <I>Oversight and action.</I> Standard and substandard performers will be referred to the field office for appropriate oversight and action.
</P>
<P>(1) A standard performer that receives a total score of at least 60 percent shall be required to correct the deficiencies in performance within the time period for correction, as stated in § 902.73(c). If the PHA fails to correct the deficiencies, HUD may either require the PHA to enter into a Corrective Action Plan, or HUD may take other action, as appropriate.
</P>
<P>(2) A substandard performer, <I>i.e.,</I> a PHA that achieves a PHAS score of at least 60 percent and achieves a score of less than 60 percent of the total points available under one or more of the physical condition, management operations, or financial condition PHAS indicators, shall be required to correct the deficiencies in performance within the time period for correction. If the PHA fails to correct the deficiencies, HUD may require the PHA to enter into a Corrective Action Plan, or take other action, as appropriate.
</P>
<P>(3) A PHA with a project(s) that receives less than 60 percent of the points available for the physical condition, management operations, or financial condition PHAS indicators, or less than 50 percent of the points available for the capital fund indicator, shall be required to correct the deficiencies in performance within the time period for correction, as stated in § 902.73(b). If the PHA fails to correct the deficiencies within the time period allowed, HUD may either require the PHA to enter into a Corrective Action Plan, or take other action, as appropriate.
</P>
<P>(b) <I>Correction of deficiencies.</I> (1) <I>Time period for correction.</I> After a PHA's (or DF-RMC's) receipt of its final overall PHAS score and designation as: A standard performer, within the range described in § 902.73(a)(1); or substandard performer, within the range described in § 902.73(a)(2), or, in the case of an RMC, after notification of its score from a PHA, a PHA or RMC shall correct any deficiency indicated in its assessment within 90 days, or within such period as provided in the HUD-executed Corrective Action Plan, if required.
</P>
<P>(2) <I>Notification and report to regional or field office.</I> A PHA shall notify the regional or field office of its action to correct a deficiency. A PHA shall also forward to the regional or field office an RMC's report of its action to correct a deficiency. A DF-RMC shall forward directly to the regional or field office its report of its action to correct a deficiency.
</P>
<P>(c) <I>Failure to correct deficiencies.</I> (1) If a PHA (or DF-RMC or RMC) fails to correct deficiencies within the time period noted in paragraph (b) of this section, or to correct deficiencies within the time specified in a Corrective Action Plan, or within such extensions as may be granted by HUD, the field office will notify the PHA of its noncompliance.
</P>
<P>(2) The PHA (or DF-RMC or RMC) will provide the field office with its reasons for lack of progress in negotiating, executing, or carrying out the Corrective Action Plan, within 30 days of the PHA's receipt of the noncompliance notification. HUD will advise the PHA as to the acceptability of its reasons for lack of progress.
</P>
<P>(3) If HUD finds the PHA's (or DF-RMC or RMC's) reasons for lack of progress unacceptable, HUD will notify the PHA (or DF-RMC or RMC) that it will take such actions as it may determine appropriate in accordance with the provisions of the 1937 Act and other statutes, the ACC, this part, and other HUD regulations, including, but not limited to, the remedies available for substantial default.


</P>
</DIV8>


<DIV8 N="§ 902.75" NODE="24:4.1.3.1.2.7.5.3" TYPE="SECTION">
<HEAD>§ 902.75   Troubled performers.</HEAD>
<P>(a) <I>General.</I> Upon a PHA's designation as a troubled performer, in accordance with the requirements of section 6(j)(2)(B) of the Act (42 U.S.C. 1437d(j)(2)(B)) and in accordance with this part, HUD must notify the PHA and shall refer each troubled performer PHA to the PHA's field office, or other designated office(s) at HUD, for remedial action, oversight, and monitoring. The actions to be taken by HUD and the PHA will include statutorily required actions, and such other actions as may be determined appropriate by HUD.
</P>
<P>(b) <I>Memorandum of agreement (MOA).</I> Within 30 days of notification of a PHA's designation as a troubled performer, HUD will initiate activities to negotiate and develop an MOA. An MOA is required for a troubled performer. The final MOA is a binding contractual agreement between HUD and a PHA. The scope of the MOA may vary depending upon the extent of the problems present in the PHA. It shall include, but not be limited to:
</P>
<P>(1) Baseline data, which should be data without adjustments or weighting but may be the PHA's score in each of the PHAS indicators or subindicators identified as a deficiency;
</P>
<P>(2) Performance targets for such periods specified by HUD (<I>e.g.,</I> annual, semiannual, quarterly, monthly), which may be the attainment of a higher score within an indicator or subindicator that is a problem, or the description of a goal to be achieved;
</P>
<P>(3) Strategies to be used by the PHA in achieving the performance targets within the time period of the MOA, including the identification of the party responsible for the completion of each task and for reporting progress;
</P>
<P>(4) Technical assistance to the PHA provided or facilitated by HUD; for example, the training of PHA employees in specific management areas or assistance in the resolution of outstanding HUD monitoring findings;
</P>
<P>(5) The PHA's commitment to take all actions within its control to achieve the targets;
</P>
<P>(6) Incentives for meeting such targets, such as the removal of a troubled performer designation or troubled with respect to the program for assistance from the Capital Fund program under section 9(d) of the Act (42 U.S.C. 1437g(d)) and HUD recognition for the most-improved PHAs;
</P>
<P>(7) The consequences of failing to meet the targets, which include, but are not limited to, the interventions stated in 24 CFR part 907 and in section 6(j)(3) of the Act (42 U.S.C. 1437d(j)(3)); and
</P>
<P>(8) A description of the involvement of local public and private entities, including PHA resident leaders, in carrying out the agreement and rectifying the PHA's problems. A PHA shall have primary responsibility for obtaining active local public and private entity participation, including the involvement of public housing resident leaders, in assisting PHA improvement efforts. Local public and private entity participation should be premised upon the participant's knowledge of the PHA, ability to contribute technical expertise with regard to the PHA's specific problem areas, and authority to make preliminary commitments of support, financial or otherwise.
</P>
<P>(c) <I>PHA review of MOA.</I> The PHA will have 10 days to review the MOA. During this 10-day period, the PHA shall resolve any claimed discrepancies in the MOA with HUD, and discuss any recommended changes and target dates for improvement to be incorporated in the final MOA. Unless the time period is extended by HUD, the MOA is to be executed 15 days following issuance of the draft MOA.
</P>
<P>(d) <I>Maximum recovery period.</I> (1) <I>Expiration of the first-year improvement period.</I> Upon the expiration of the one-year period that started on the date on which the PHA receives initial notice of a troubled performer designation, the PHA shall, by the next PHAS assessment that is at least 12 months after the initial notice of the troubled performer designation, improve its performance by at least 50 percent of the difference between the initial PHAS assessment score that led to the troubled performer status and the score necessary to remove the PHA's designation as a troubled performer.
</P>
<P>(2) <I>Expiration of 2-year recovery period.</I> Upon the expiration of the 2-year period that started on the date on which the PHA received the initial notice of a troubled performer designation, the PHA shall, by the next PHAS assessment that is at least 24 months after the initial notice of the troubled performer designation, improve its performance and achieve an overall PHAS score of at least 60 percent of the total points available.
</P>
<P>(e) <I>Parties to the MOA.</I> An MOA shall be executed by:
</P>
<P>(1) The PHA Board Chairperson (supported by a Board resolution), or a receiver (pursuant to a court-ordered receivership agreement, if applicable) or other AME acting in lieu of the PHA Board;
</P>
<P>(2) The PHA Executive Director, or a designated receiver (pursuant to a court-ordered receivership agreement, if applicable), or other AME-designated Chief Executive Officer; and
</P>
<P>(3) The field office
</P>
<P>(f) <I>Involvement of resident leadership in the MOA.</I> HUD encourages the inclusion of the resident leadership in the execution of the MOA.
</P>
<P>(g) <I>Failure to execute MOA or make substantial improvement under MOA.</I> (1) If a troubled performer PHA fails or refuses to execute an MOA within the period provided in paragraph (c) of this section, or a troubled performer PHA operating under an executed MOA does not show a substantial improvement, as provided in paragraph (d) of this section, toward a passing PHAS score following the issuance of the failing PHAS score by HUD, the field office shall refer the PHA to the Assistant Secretary to determine such remedial actions, consistent with the provisions of the ACC and other HUD regulations, including, but not limited to, remedies available for substantial default.
</P>
<P>(2) For purposes of paragraph (g) of this section, substantial improvement is defined as the improvement required by paragraph (d) of this section. The maximum period of time for remaining in troubled performer status before being referred to the Assistant Secretary is 2 years after the initial notification of the troubled performer designation. Therefore, the PHA must make substantial improvement in each year of this 2-year period.
</P>
<P>(3) The following example illustrates the provisions of paragraph (g)(1) of this section:
</P>
<EXAMPLE>
<HED>Example:</HED><PSPACE>A PHA receives a score of 50 points on the physical condition, management operations, or financial condition PHAS indicators; 60 points is a passing score. Upon the expiration of the one-year period that started on the date on which the PHA received the initial notification of the troubled performer designation, the PHA must achieve at least 55 points (50 percent of the 10 points necessary to achieve a passing score of 60 points) to continue recovery efforts. In the second year, the PHA must achieve a minimum score of 60 points (a passing score). If, in the first year that started on the date on which the PHA received the initial notification of the troubled designation, the PHA fails to achieve the 5-point increase, or if the PHA achieves the 5 point increase within the first year that started on the date on which the PHA received the initial notification of the troubled designation, but fails to achieve the minimum passing score of 60 points after the second year after the initial notification, HUD will notify the PHA that it will take such actions as it may determine appropriate in accordance with the provisions of the ACC and other HUD regulations, including, but not limited to, the remedies available for substantial default.</PSPACE></EXAMPLE>
<P>(h) <I>Audit review.</I> For a PHA designated as a troubled performer, HUD may perform an audit review and may, at its discretion, select the audit firm that will perform the audit of the PHA; and HUD may, at its discretion, serve as the audit committee for the audit in question.
</P>
<P>(i) <I>Continuation of services to residents.</I> To the extent feasible, while a PHA is in a troubled performer status, all services to residents will continue uninterrupted.


</P>
</DIV8>


<DIV8 N="§ 902.79" NODE="24:4.1.3.1.2.7.5.4" TYPE="SECTION">
<HEAD>§ 902.79   Verification and records.</HEAD>
<P>All project and PHA certifications, year-end financial information, and supporting documentation are subject to HUD verification at any time, including review by an independent auditor. All PHAs must retain supporting documents for any certifications and for asset management reviews for at least 3 years. Failure to maintain and provide supporting documentation for a period of 3 years for any indicator(s), subindicator(s), or other methods used to assess performance shall result in a score of zero for the indicator(s) or subindicator(s), and a lower overall PHAS score for the applicable assessment period.


</P>
</DIV8>


<DIV8 N="§ 902.81" NODE="24:4.1.3.1.2.7.5.5" TYPE="SECTION">
<HEAD>§ 902.81   Resident petitions for remedial action.</HEAD>
<P>Residents of a PHA designated as troubled pursuant to section 6(j)(2)(A) of the Act (42 U.S.C. 1437d(j)(2)(A)) may petition HUD in writing to take one or more of the actions referred to in section 6(j)(3)(A) of the Act (42 U.S.C. 1437d(j)(3)(A)). HUD will consider any petition from a group of residents totaling at least 20 percent of the PHA's residents, or from an organization or organizations of residents whose membership equals at least 20 percent of the PHA's residents. HUD shall respond to such petitions in a timely manner with a written description of the actions, if any, HUD plans to take and, where applicable, the reasons why such actions differ from the course proposed by the residents. Nothing in this section shall limit HUD's discretion to determine whether a substantial default has occurred or to select the appropriate intervention upon such determination.


</P>
</DIV8>


<DIV8 N="§ 902.83" NODE="24:4.1.3.1.2.7.5.6" TYPE="SECTION">
<HEAD>§ 902.83   Sanctions for troubled performer PHAs.</HEAD>
<P>(a) If a troubled performer PHA fails to make substantial improvement, as set forth in § 902.75(d), HUD shall:
</P>
<P>(1) In the case of a troubled performer PHA with 1,250 or more units, declare substantial default in accordance with § 907.3(b)(3) of this chapter and petition for the appointment of a receiver pursuant to section 6(j)(3)(A)(ii) of the Act (42 U.S.C. 1437d(j)(3)(A)(ii)); or
</P>
<P>(2) In the case of a troubled performer PHA with fewer than 1,250 units, declare substantial default in accordance with § 907.3(b)(3) of this chapter and either petition for the appointment of a receiver pursuant to section 6(j)(3)(A)(ii) of the Act (42 U.S.C. 1437d(j)(3)(A)(ii)), or take possession of the PHA (including all or part of any project or program of the PHA) pursuant to section 6(j)(3)(A)(iv) of the Act (42 U.S.C. 1437d(j)(3)(A)(iv)), and appoint, on a competitive or noncompetitive basis, an individual or entity as an administrative receiver to assume the responsibilities of HUD for the administration of all or part of the PHA (including all or part of any project or program of the PHA).
</P>
<P>(3) In the case of substantial default by a troubled performer PHA, nothing in this section shall be construed to limit the courses of action available to HUD under this part, 24 CFR part 907, or section 6(j)(3)(A) of the Act (42 U.S.C. 1437d(j)(3)(A)) for any other substantial default by a PHA.
</P>
<P>(b) If a troubled performer PHA fails to execute or meet the requirements of an MOA in accordance with § 902.75, other than as specified in paragraph (a) of this section, the PHA may be deemed to be in substantial default by HUD and any remedy available therefore may be invoked in the discretion of HUD.




</P>
</DIV8>

</DIV6>


<DIV6 N="H" NODE="24:4.1.3.1.2.8" TYPE="SUBPART">
<HEAD>Subpart H—Assessment of Small Rural Public Housing Agencies</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>88 FR 30501, May 11, 2023, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 902.101" NODE="24:4.1.3.1.2.8.5.1" TYPE="SECTION">
<HEAD>§ 902.101   Definition of small rural PHAs.</HEAD>
<P>(a) <I>Definition.</I> A PHA is a small rural PHA if it administers 550 or fewer combined public housing units and vouchers under section 8(o), and either:
</P>
<P>(1) Has a primary administrative building as determined with a physical address in a rural area as described in 12 CFR 1026.35(b)(2)(iv)(A); or
</P>
<P>(2) More than 50 percent of its combined public housing units and voucher units under section 8(o) are in rural areas as described in 12 CFR 1026.35(b)(2)(iv)(A).
</P>
<P>(b) <I>Determination.</I> (1) HUD will make the initial determination of PHAs that qualify as small rural as defined in this section no later than October 30, 2023.
</P>
<P>(2) HUD will determine if a PHA qualifies as a small rural PHA under paragraph (a) of this section every 3 years.
</P>
<P>(c) <I>Appeals.</I> A PHA may challenge HUD's determination concerning whether the PHA qualifies as small rural PHA by presenting an objectively verifiable material error which resulted in the incorrect determination, or by presenting information showing that the status of the PHA has changed to justify a redetermination.




</P>
</DIV8>


<DIV8 N="§ 902.103" NODE="24:4.1.3.1.2.8.5.2" TYPE="SECTION">
<HEAD>§ 902.103   Public housing assessment of small rural PHAs.</HEAD>
<P>(a) <I>Small rural public housing assessment.</I> The public housing program of small rural PHAs as defined in § 902.101 shall be assessed and scored based only on the physical condition of their public housing properties in accordance with 24 CFR part 5, subpart G, except that properties that meet the definition specified in § 902.44(b) of physical condition and neighborhood environment shall receive one additional point for physical condition and neighborhood environment. Such agencies shall not be subject to PHAS except as noted below.
</P>
<P>(b) <I>Triennial assessment.</I> Public housing programs operated by small rural PHAs will be assessed no more than once every three years, except that a small rural PHA shall be subject to annual inspection if it is designated by the Secretary as troubled as defined in § 902.105.
</P>
<P>(c) <I>Initial public housing assessment.</I> (1) For PHAs subject to small PHA deregulation, the first assessment and inspections will be determined based on the PHA's next scheduled PHAS assessment (e.g., a higher performing PHA would receive the first inspection 3 years after the most recent PHAS assessment).
</P>
<P>(2) For PHAs not subject to small PHA deregulation, the first inspection is based on the PHA's overall weighted project physical condition indicator score (e.g., a PHA with a physical condition indicator score of 90 or greater would receive the first inspection three years after most recent PHAS assessment).




</P>
</DIV8>


<DIV8 N="§ 902.105" NODE="24:4.1.3.1.2.8.5.3" TYPE="SECTION">
<HEAD>§ 902.105   Troubled small rural PHAs.</HEAD>
<P>(a) <I>Definition of troubled small rural PHA.</I> A small rural PHA will be determined to be troubled under the public housing program if the weighted average score of all property inspections is below 70 percent of the total available points, or if a small rural PHA has a weighted average score of between 70 and 80 percent of the total available points and has at least one property that receives fewer than 70 percent of the total available points.
</P>
<P>(b) <I>Referral to the local field office.</I> Upon a PHA's designation as a troubled performer HUD must notify the PHA and shall refer the troubled performer PHA to the PHA's field office, or other designated office(s) at HUD, for remedial action, oversight, and monitoring. The actions to be taken by HUD and the PHA will include statutorily required actions, and such other actions as may be determined appropriate by HUD.
</P>
<P>(c) <I>Corrective Action Agreement (CAA).</I> Within 30 days of notification of a PHA's designation as a troubled performer, HUD will initiate activities to negotiate and develop a CAA. A CAA is required for a troubled performer. The final CAA is a binding contractual agreement between HUD and a PHA. The scope of the CAA may vary depending upon the extent of the problems present in the PHA. The term of the CAA will not exceed one year and is subject to renewal at the discretion of HUD if HUD determines that the circumstances requiring the CAA still exist at the expiration of the term of the CAA based on the annual assessment frequency as included in § 902.103. It shall include, but not be limited to:
</P>
<P>(1) Baseline data, which should be data without adjustments or weighting but may be the PHA's score identified as a deficiency;
</P>
<P>(2) Performance targets for such periods specified by HUD (e.g., annual, semiannual, quarterly, monthly), which may be the attainment of a higher score or the description of a goal to be achieved; however, safety, health, and environmental performance targets and deadlines otherwise specified by regulation, including the lead safety regulations at 24 CFR part 35, are not superseded by the CAA performance targets;
</P>
<P>(3) Strategies to be used by the PHA in achieving the performance targets within the time period of the CAA, including the identification of the party responsible for the completion of each task and for reporting progress;
</P>
<P>(4) Technical assistance to the PHA provided or facilitated by HUD;
</P>
<P>(5) The PHA's commitment to take all actions within its control to achieve the targets;
</P>
<P>(6) The consequences of failing to meet the targets; and
</P>
<P>(7) A description of the involvement of local public and private entities, including PHA resident leaders, in carrying out the agreement and rectifying the PHA's problems. A PHA shall have primary responsibility for obtaining active local public and private entity participation, including the involvement of public housing resident leaders, in assisting PHA improvement efforts. Local public and private entity participation should be premised upon the participant's knowledge of the PHA, ability to contribute technical expertise with regard to the PHA's specific problem areas, and authority to make preliminary commitments of support, financial or otherwise.
</P>
<P>(d) <I>PHA review of the CAA.</I> The PHA will have 10 days to review the CAA. During this 10-day period, the PHA shall resolve any claimed discrepancies in the CAA with HUD and discuss any recommended changes and target dates for improvement to be incorporated in the final CAA. Unless the time period is extended by HUD, the CAA is to be executed 30 days following issuance of the draft CAA.
</P>
<P>(e) <I>Maximum recovery period.</I> Upon the expiration of the one-year period that started on the date on which the PHA receives initial notice of a troubled performer designation, the PHA shall improve its performance in order to no longer be considered troubled under the assessment.
</P>
<P>(f) <I>Parties to the CAA.</I> A CAA shall be executed by:
</P>
<P>(1) The PHA Board Chairperson (supported by a Board resolution), or a receiver (pursuant to a court-ordered receivership agreement, if applicable) or other AME acting in lieu of the PHA Board;
</P>
<P>(2) The PHA Executive Director, or a designated receiver (pursuant to a court-ordered receivership agreement, if applicable), or other AME-designated Chief Executive Officer; and
</P>
<P>(3) The field office.
</P>
<P>(g) <I>Involvement of resident leadership in the CAA.</I> HUD encourages the inclusion of the resident leadership in the execution of the CAA.
</P>
<P>(h) <I>Failure to execute CAA or make substantial improvement under CAA.</I> If a troubled performer PHA fails or refuses to execute an CAA within the period provided in paragraph (d) of this section, or a troubled performer PHA operating under an executed CAA does not achieve a passing physical inspection score, as provided in paragraph (e) of this section, the field office shall refer the PHA to the Assistant Secretary to determine such remedial actions, consistent with the provisions of the ACC and other HUD regulations, including, but not limited to, remedies available for substantial default.
</P>
<P>(i) <I>Continuation of services to residents.</I> To the extent feasible, while a PHA is in a troubled performer status, all services to residents will continue uninterrupted.




</P>
</DIV8>


<DIV8 N="§ 902.107" NODE="24:4.1.3.1.2.8.5.4" TYPE="SECTION">
<HEAD>§ 902.107   Withholding, denying, and rescinding troubled designation.</HEAD>
<P>(a) <I>Withholding designation.</I> In exceptional circumstances, even though a PHA has satisfied the requirements for high performer or non-troubled designations, HUD may conduct any review as it may determine necessary, and may deny or rescind incentives or high performer designation or non-troubled performer designation, in the case of a PHA that:
</P>
<P>(1) Is operating under a special agreement with HUD (e.g., a civil rights Conciliation or Voluntary Compliance Agreement);
</P>
<P>(2) Is involved in litigation that bears directly upon the physical performance of a PHA;
</P>
<P>(3) Is operating under a court order;
</P>
<P>(4) Demonstrates substantial evidence of fraud or misconduct, including evidence that the PHA's certifications, submitted in accordance with this part, are not supported by the facts, as evidenced by such sources as a HUD review, routine reports, an Office of Inspector General investigation/audit, an independent auditor's audit, or an investigation by any appropriate legal authority; or
</P>
<P>(5) Demonstrates substantial noncompliance in one or more areas of a PHA's required compliance with applicable laws and regulations, including areas not assessed under the small rural assessment. Areas of substantial noncompliance include, but are not limited to, noncompliance with civil rights, nondiscrimination and fair housing laws and regulations, or the ACC. Substantial noncompliance casts doubt on the capacity of a PHA to preserve and protect its public housing projects and operate them consistent with Federal laws and regulations.
</P>
<P>(b) <I>High performer and standard designations.</I> If a high performer designation is denied or rescinded, the PHA shall be designated either a non-troubled performer, or troubled performer, depending on the nature and seriousness of the matter or matters constituting the basis for HUD's action. If a non-troubled performer designation is denied or rescinded, the PHA shall be designated as a troubled performer.
</P>
<P>(c) <I>Effect on score.</I> The denial or rescission of a designation of high performer or non-troubled performer shall not affect the PHA's numerical small rural assessment score, except where the denial or rescission is under paragraph (a)(4) of this section.




</P>
</DIV8>


<DIV8 N="§ 902.109" NODE="24:4.1.3.1.2.8.5.5" TYPE="SECTION">
<HEAD>§ 902.109   Right to petition and appeal troubled designation.</HEAD>
<P>(a) <I>Appeal of troubled performer designation and petition for removal of troubled performer designation.</I> A PHA may take any of the following actions:
</P>
<P>(1) Appeal its troubled performer designation;
</P>
<P>(2) Petition for removal of troubled performer designation; and
</P>
<P>(3) Appeal any refusal of a petition to remove troubled performer designation.
</P>
<P>(b) <I>Appeal of small rural Assessment score.</I> (1) If a PHA believes that an objectively verifiable and material error(s) exists in its small rural assessment score, which, if corrected, will result in a significant change in the PHA's score and its designation, the PHA may appeal its score in accordance with the procedures of paragraphs (c) through (e) of this section. A significant change in a score is a change that would cause the PHA's score to increase, resulting in a higher designation for the PHA (<I>i.e.,</I> from troubled performer to non-troubled performer, or from non-troubled to high performer).
</P>
<P>(2) A PHA may not appeal its score or designation based on the subsequent correction of deficiencies identified as a result of a project's physical inspection.
</P>
<P>(c) <I>Appeal and petition procedures.</I> (1) To appeal a troubled performer designation or petition for the removal of a troubled performer designation, a PHA must submit a request in writing to the Deputy Assistant Secretary of the Real Estate Assessment Center, which must be received by HUD no later than 30 days following the issuance of the score to the PHA.
</P>
<P>(2) To appeal the denial of a petition to remove a troubled performer designation, a PHA must submit a written request to the Deputy Assistant Secretary of the Real Estate Assessment Center, which must be received by HUD no later than 30 days after HUD's decision to refuse to remove the PHA's troubled performer designation.
</P>
<P>(3) An appeal of a troubled performer designation or an appeal of the denial of a petition for removal of a troubled performer designation must include the PHA's supporting documentation and reasons for the appeal or petition. An appeal of an assessment score must be accompanied by the PHA's evidence that a material error occurred. An appeal or petition submitted to HUD without supporting documentation will not be considered and will be returned to the PHA.
</P>
<P>(d) <I>Denial, withholding, or rescission.</I> A PHA that disagrees with the basis for denial, withholding, or rescission of its designation under § 902.66 may make a written request for reinstatement within 30 days of notification by HUD of the denial or rescission of the designation to the Assistant Secretary, and the request shall include reasons for the reinstatement.
</P>
<P>(e) <I>Consideration of petitions and appeals.</I> (1) Consideration of a petition or the appeal of a final overall assessment score, of a troubled performer designation, or of a petition to remove troubled performer designation. Upon receipt of such an appeal or a petition from a PHA, HUD will evaluate the appeal and its merits for purposes of determining whether a reassessment of the PHA is warranted. HUD will review the PHA's file and the evidence submitted by the PHA to determine whether an error occurred.
</P>
<P>(2) Consideration of an appeal of refusal to remove a troubled performer designation. Upon receipt of an appeal of refusal to remove a troubled performer designation, HUD will evaluate the appeal and its merits for the purposes of determining whether a reassessment of the PHA is warranted. The HUD staff initially evaluating an appeal of refusal to remove a troubled performer designation will not be the same HUD staff who evaluated the PHA's petition to remove the troubled performer designation. The Assistant Secretary will render the final determination of such an appeal.
</P>
<P>(f) <I>Notice and finality of decisions.</I> (1) If HUD determines that one or more objectively verifiable and material error has occurred, HUD will undertake a new inspection of the project, adjust the PHA's score, or perform another reexamination of information, as appropriate in light of the nature of the error that occurred. A new score will be issued and an appropriate performance designation made by HUD. HUD's decision on appeal of an assessment score, issuance of a troubled performer designation, or refusal to remove a troubled performer designation will be final agency action. No reconsideration will be given by HUD of such decisions.
</P>
<P>(2) HUD will issue a written decision on all appeals and petitions made under this section.




</P>
</DIV8>


<DIV8 N="§ 902.111" NODE="24:4.1.3.1.2.8.5.6" TYPE="SECTION">
<HEAD>§ 902.111   Sanctions for troubled small rural PHAs.</HEAD>
<P>The sanctions for small rural PHAs with troubled public housing programs that remain troubled as required by § 902.108 will be the same as those sanctions for PHAs assessed under PHAS as described in § 902.83.




</P>
</DIV8>


<DIV8 N="§ 902.113" NODE="24:4.1.3.1.2.8.5.7" TYPE="SECTION">
<HEAD>§ 902.113   Incentives for small rural PHAs high-performers.</HEAD>
<P>(a) <I>High performer.</I> PHAs with a weighted average score for all inspections of at least 90 percent of all available points will be considered high performers and will be eligible for benefits as described in § 902.113(b) and § 905.400(l) of this chapter.
</P>
<P>(b) <I>Incentives.</I> High performer small rural PHAs under the public housing program will be eligible for the same incentives as high performer PHAs under PHAS as described in § 902.71.






</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="903" NODE="24:4.1.3.1.3" TYPE="PART">
<HEAD>PART 903—PUBLIC HOUSING AGENCY PLANS 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437c; 42 U.S.C. 1437c-1; Pub. L. 110-289; 42 U.S.C. 3535d.
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>65 FR 81222, Dec. 22, 2000, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.3.1.3.1" TYPE="SUBPART">
<HEAD>Subpart A—Deconcentration of Poverty</HEAD>


<DIV8 N="§ 903.1" NODE="24:4.1.3.1.3.1.5.1" TYPE="SECTION">
<HEAD>§ 903.1   What is the purpose of this subpart?</HEAD>
<P>The purpose of this subpart is to specify the process which a Public Housing Agency, as part of its annual planning process and development of an admissions policy, must follow in order to develop and apply a policy that provides for deconcentration of poverty and income mixing in certain public housing developments.
</P>
<CITA TYPE="N">[80 FR 42368, July 16, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 903.2" NODE="24:4.1.3.1.3.1.5.2" TYPE="SECTION">
<HEAD>§ 903.2   With respect to admissions, what must a PHA do to deconcentrate poverty in its developments?</HEAD>
<P>(a) <I>General.</I> The PHA's admission policy includes the PHA's policy designed to promote deconcentration of poverty and income mixing in accordance with section 16(a)(3)(B) of the 1937 Act (42 U.S.C. 1437n), which is submitted to HUD as part of the PHA Annual Plan process. Deconcentration of poverty and income mixing is promoted by a policy that provides for bringing higher income tenants into lower income developments and lower income tenants into higher income developments. 
</P>
<P>(1) The provisions of this section apply to applicants to and residents seeking voluntary transfers within covered public housing developments (“covered developments” as specified in paragraph (b) of this section). 
</P>
<P>(2) The statutory requirement to design a policy to provide for deconcentration and income mixing is not to be construed to impose or require any specific income or racial quotas for any development or developments. 
</P>
<P>(b) <I>Applicability of deconcentration of poverty and income mixing requirements</I>—(1) <I>Developments subject to deconcentration of poverty and income mixing requirements.</I> The deconcentration requirements of this subpart apply to general occupancy, family public housing developments, excluding those developments listed in paragraph (b)(2) of this section. Developments to which this subpart is applicable are referred to as “covered developments”. 
</P>
<P>(2) <I>Developments not subject to deconcentration of poverty and income mixing requirements.</I> This subpart does not apply to the following public housing developments: 
</P>
<P>(i) Public housing developments operated by a PHA with fewer than 100 public housing units; 
</P>
<P>(ii) Public housing developments operated by a PHA which house only elderly persons or persons with disabilities, or both; 
</P>
<P>(iii) Public housing developments operated by a PHA which consist of only one general occupancy, family public housing development; 
</P>
<P>(iv) Public housing developments approved for demolition or for conversion to tenant-based assistance; and 
</P>
<P>(v) Public housing developments which include public housing units operated in accordance with a HUD-approved mixed-finance plan using HOPE VI or public housing funds awarded before the effective date of this rule, provided that the PHA certifies (and includes reasons for the certification) as part of its PHA Plan (which may be accomplished either in the annual Plan submission or as a significant amendment to its PHA Plan) that exemption from the regulation is necessary to honor an existing contractual agreement or be consistent with a mixed finance plan, including provisions regarding the incomes of public housing residents to be admitted to that development, which has been developed in consultation with residents with rights to live at the affected development and other interested persons. 
</P>
<P>(c) <I>Deconcentration of poverty and income mixing</I>—(1) <I>Steps for implementation.</I> To implement the statutory requirement to deconcentrate poverty and provide for income mixing in covered public housing developments, a PHA must comply with the following steps: 
</P>
<P>(i) <I>Step 1.</I> A PHA shall determine the average income of all families residing in all the PHA's covered developments. A PHA may use median income, instead of average income, provided that the PHA includes a written explanation in its PHA Annual Plan justifying use of median income in the PHA's Annual Plan. 
</P>
<P>(ii) <I>Step 2.</I> A PHA shall determine the average income of all families residing in each covered development. In determining average income for each development, a PHA has the option of adjusting its income analysis for unit size in accordance with procedures prescribed by HUD. 
</P>
<P>(iii) <I>Step 3.</I> A PHA shall determine whether each of its covered developments falls above, within or below the Established Income Range. The Established Income Range is from 85 to 115 percent (inclusive) of the average family income (the PHA-wide average income for covered developments as defined in Step 1), except that the upper limit shall never be less than the income at which a family would be defined as an extremely low income family under 24 CFR 5.603(b). 
</P>
<P>(iv) <I>Step 4.</I> A PHA with covered developments having average incomes outside the Established Income Range may explain or justify the income profile for these developments as being consistent with and furthering two sets of goals: the goals of deconcentration of poverty and income mixing as specified by the statute (bringing higher income tenants into lower income developments and vice versa); and the local goals and strategies contained in the PHA Annual Plan. Elements of explanations or justifications that may satisfy these requirements may include, but shall not be limited to the following: 
</P>
<P>(A) The covered development or developments are subject to consent decrees or other resident selection and admission plans mandated by court action; 
</P>
<P>(B) The covered development or developments are part of PHA's programs, strategies or activities specifically authorized by statute, such as mixed-income or mixed-finance developments, homeownership programs, self-sufficiency strategies, or other strategies designed to deconcentrate poverty, promote income mixing in public housing, increase the incomes of public housing residents, or the income mix is otherwise subject to individual review and approval by HUD; 
</P>
<P>(C) The covered development's or developments' size, location, and/or configuration promote income deconcentration, such as scattered site or small developments; 
</P>
<P>(D) The income characteristics of the covered development or developments are sufficiently explained by other circumstances. 
</P>
<P>(v) <I>Step 5.</I> Where the income profile for a covered development is not explained or justified in the PHA Annual Plan submission, the PHA shall include in its admission policy its specific policy to provide for deconcentration of poverty and income mixing in applicable covered developments. Depending on local circumstances, a PHA's deconcentration policy (which may be undertaken in conjunction with other efforts such as efforts to increase self-sufficiency or current residents) may include but is not limited to providing for one or more of the following actions: 
</P>
<P>(A) Providing incentives designed to encourage families with incomes below the Established Income Range to accept units in developments with incomes above the Established Income Range, or vice versa, including rent incentives, affirmative marketing plans, or added amenities; 
</P>
<P>(B) Targeting investment and capital improvements toward developments with an average income below the Established Income Range to encourage applicant families whose income is above the Established Income Range to accept units in those developments; 
</P>
<P>(C) Establishing a preference for admission of working families in developments below the Established Income Range; 
</P>
<P>(D) Skipping a family on the waiting list to reach another family in an effort to further the goals of the PHA's deconcentration policy; 
</P>
<P>(E) Providing such other strategies as permitted by statute and determined by the PHA in consultation with the residents and the community, through the PHA Annual Plan process, to be responsive to the local context and the PHA's strategic objectives. 
</P>
<P>(2) <I>Determination of compliance with deconcentration requirement.</I> HUD shall consider a PHA to be in compliance with this subpart if: 
</P>
<P>(i) The PHA's income analysis shows that the PHA has no general occupancy family developments to which the deconcentration requirements apply; that is, the average incomes of all covered developments are within the Established Income Range; 
</P>
<P>(ii) The PHA has covered developments with average incomes above or below the Established Income Range and the PHA provides a sufficient explanation in its Annual Plan that supports that the income mix of such development or developments is consistent with and furthers the goal of deconcentration of poverty and income mixing and also the locally determined goals of the PHA's Annual and Five Year Plans, and the PHA therefore need not take further action to deconcentrate poverty and mix incomes; or 
</P>
<P>(iii) The PHA's deconcentration policy provides specific strategies the PHA will take that can be expected to promote deconcentration of poverty and income mixing in developments with average incomes outside of the Established Income Range. 
</P>
<P>(3) <I>Right of return.</I> If a PHA has provided that a family that resided in a covered public housing development has a right to admission to a public housing unit in that development after revitalization, the requirements of paragraph (c) of this section do not preclude fulfilling that commitment or a PHA's commitment to return a family to another development after revitalization. 
</P>
<P>(4) <I>Family's discretion to refuse a unit.</I> A family has the sole discretion whether to accept an offer of a unit made under a PHA's deconcentration policy. The PHA may not take any adverse action toward any eligible family for choosing not to accept an offer of a unit under the PHA's deconcentration policy. In accordance with the PHA's established policies, the PHA may uniformly limit the number of offers received by applicants. 
</P>
<P>(5) <I>Relationship to income targeting requirement.</I> Nothing in this section relieves a PHA of the obligation to meet the requirement to admit annually at least 40 percent families whose incomes are below 30 percent of area median income as provided by section 16(a)(2) of the 1937 Act, 42 U.S.C. 1437n(a)(2).
</P>
<P>(d) <I>Relationship between poverty deconcentration and fair housing.</I> The requirements for poverty deconcentration in paragraph (c) of this section and for fair housing in 24 CFR 903.15(d) arise under separate statutory authorities.
</P>
<CITA TYPE="N">[65 FR 81222, Dec. 22, 2000, as amended at 67 FR 51033, Aug. 6, 2002; 80 FR 42368, July 16, 2015]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.3.1.3.2" TYPE="SUBPART">
<HEAD>Subpart B—PHA Plans and Fair Housing Requirements</HEAD>


<DIV8 N="§ 903.3" NODE="24:4.1.3.1.3.2.5.1" TYPE="SECTION">
<HEAD>§ 903.3   What is the purpose of this subpart?</HEAD>
<P>(a) This subpart specifies the requirements for PHA plans, required by section 5A of the United States Housing Act of 1937 (42 U.S.C. 1437c-1) (the Act), as amended.
</P>
<P>(b) The purpose of the plans is to provide a strategic planning framework for PHA management operations and capital planning:
</P>
<P>(1) Local accountability; and
</P>
<P>(2) An easily identifiable source by which public housing residents, participants in the tenant-based and project-based assistance program, and other members of the public may locate basic PHA policies, rules and requirements concerning the PHA's operations, programs and services.
</P>
<P>(c) Title VII of the Housing and Economic Reform Act, Public Law 110-289, section 2702, amends 42 U.S.C. 1437c-1(b) to provide qualified PHAs an exemption from the requirement of section 5A of the Act to submit an annual PHA Plan. The term “qualified PHA” means a public housing agency that meets the following requirements:
</P>
<P>(1) The sum of the number of public housing dwelling units administered by the agency, and the number of vouchers under section 8(o) of the United States Housing Act of 1937 (42 U.S.C. 1437f(o)) administered by the agency, is 550 or fewer; and
</P>
<P>(2) The agency is not designated under section 42 U.S.C. 1437d(j)(2) as a troubled public housing agency, and does not have a failing score under SEMAP during the prior 12 months.
</P>
<CITA TYPE="N">[78 FR 63770, Oct. 24, 2013, as amended at 89 FR 38292, May 7, 22024]




</CITA>
</DIV8>


<DIV8 N="§ 903.4" NODE="24:4.1.3.1.3.2.5.2" TYPE="SECTION">
<HEAD>§ 903.4   What are the public housing agency plans?</HEAD>
<P>(a) <I>Types of plans.</I> There are two public housing agency plans. They are: 
</P>
<P>(1) The 5-Year Plan (the 5-Year Plan) that a public housing agency (PHA) must submit to HUD once every five PHA fiscal years. The 5-Year Plan covers the five PHA fiscal years immediately following the date on which the 5-Year Plan is due to HUD; and 
</P>
<P>(2) The Annual Plan (Annual Plan) that the PHA must submit to HUD for each fiscal year immediately following the date on which the Annual Plan is due to HUD and for which the PHA receives: 
</P>
<P>(i) Section 8 assistance (tenant-based assistance (24 CFR part 982) and project-based assistance (24 CFR part 983) under Section 8(o) of the U.S. Housing Act of 1937, 42 U.S.C. 1437f(o)); or
</P>
<P>(ii) Amounts from the public housing operating fund or capital fund (under section 9 of the U.S. Housing Act of 1937 (42 U.S.C. 1437g) (public housing)). 
</P>
<P>(b) <I>Format.</I> HUD may prescribe the format of submission (including electronic format submission) of the plans. HUD also may prescribe the format of attachments to the plans and documents related to the plan that the PHA does not submit but may be required to make available locally. PHAs will receive appropriate notice of any prescribed format. 
</P>
<P>(c) <I>Applicability.</I> The requirements of this subpart only apply to a PHA that receives the type of assistance described in paragraph (a) of this section. 
</P>
<P>(d) <I>Authority for waivers.</I> In addition to the waiver authority provided in § 5.110 of this title, the Secretary may, subject to statutory limitations, waive any provision of this title on a program-wide basis, and delegate this authority in accordance with section 106 of the Department of Housing and Urban Development Reform Act of 1989 (42 U.S.C. 3535(q)) where the Secretary determines that such waiver is necessary for the effective implementation of this part. 
</P>
<CITA TYPE="N">[65 FR 81222, Dec. 22, 2000, as amended 89 FR 38292, May 7, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 903.5" NODE="24:4.1.3.1.3.2.5.3" TYPE="SECTION">
<HEAD>§ 903.5   When must a PHA submit the plans to HUD?</HEAD>
<P>(a) <I>5-Year Plan.</I> (1) The first PHA fiscal year that is covered by the requirements of this part as amended on December 22, 2000, is the PHA fiscal year that begins October 2001. This 5-Year Plan submitted by a PHA must be submitted for the 5-year period beginning October 1, 2001.
</P>
<P>(2) For all PHAs, the first 5-Year Plans are due 75 days before the commencement of their fiscal year. 
</P>
<P>(3) For all PHAs, after submission of their first 5-Year Plan, all subsequent 5-Year Plans must be submitted once every 5 PHA fiscal years, no later than 75 days before the commencement of the PHA's fiscal year. However, HUD may require that half of all PHAs with less than 250 public housing units submit their 5-Year Plan one fiscal year in advance (in the fourth PHA fiscal year rather than the fifth PHA fiscal year).
</P>
<P>(4) PHAs may choose to update their 5-Year Plans every year as good management practice and must update their 5-Year Plans that were submitted for PHA fiscal years beginning before October 1, 2001, to comply with the requirements of this part as amended on December 22, 2000, at the time they submit their next Annual Plan for fiscal years beginning on or after October 1, 2001. PHAs must explain any substantial deviation from their 5-Year Plans in their Annual Plans. (Substantial deviation is determined by the PHA in accordance with criteria provided by the PHA in its Annual Plan in accordance with § 903.7(r).)
</P>
<P>(b) <I>The Annual Plan.</I> (1) The first PHA fiscal year that is covered by the requirements of this part as amended on December 22, 2000 is the PHA fiscal year that begins October 1, 2001.
</P>
<P>(2) For all PHAs, the first Annual Plans are due 75 days before the commencement of their fiscal year. 
</P>
<P>(3) For all PHAs, after submission of the first Annual Plan, all subsequent Annual Plans will be due no later than 75 days before the commencement of their fiscal year. 
</P>
<CITA TYPE="N">[64 FR 56862, Oct. 21, 1999, as amended at 66 FR 8898, Mar. 7, 2001; 68 FR 37671, June 24, 2003]




</CITA>
</DIV8>


<DIV8 N="§ 903.6" NODE="24:4.1.3.1.3.2.5.4" TYPE="SECTION">
<HEAD>§ 903.6   What information must a PHA provide in the 5-Year Plan?</HEAD>
<P>(a) A PHA must include in its 5-Year Plan a statement of: 
</P>
<P>(1) The PHA's mission for serving the needs of low-income, very low-income and extremely low-income families in the PHA's jurisdiction; and 
</P>
<P>(2) The PHA's goals and objectives that enable the PHA to serve the needs of the families identified in the PHA's Annual Plan. For HUD, the PHA and the public to better measure the success of the PHA in meeting its goals and objectives, the PHA must adopt quantifiable goals and objectives for serving those needs wherever possible. 
</P>
<P>(3) A statement about goals, activities, objectives, policies, or programs that will enable a PHA to serve the needs of child and adult victims of domestic violence, dating violence, sexual assault, or stalking.
</P>
<P>(b) After submitting its first 5-Year Plan, a PHA in its succeeding 5-Year Plans, must address: 
</P>
<P>(1) The PHA's mission, goals and objectives for the next 5 years; and 
</P>
<P>(2) The progress the PHA has made in meeting the goals and objectives described in the PHA's previous 5-Year Plan. 
</P>
<P>(c) If a PHA intends to select one or more projects for project-based assistance without competition in accordance with § 983.51(c), the PHA must include a statement of this intent in its 5-Year Plan (or an amendment to the 5-Year Plan) in order to notify the public prior to making a noncompetitive selection.


</P>
<CITA TYPE="N">[65 FR 81222, Dec. 22, 2000, as amended at 73 FR 72344, Nov. 28, 2008; 75 FR 66262, Oct. 27, 2010; 89 FR 38292, May 7, 2024]










</CITA>
</DIV8>


<DIV8 N="§ 903.7" NODE="24:4.1.3.1.3.2.5.5" TYPE="SECTION">
<HEAD>§ 903.7   What information must a PHA provide in the Annual Plan?</HEAD>
<P>With the exception of the first Annual Plan submitted by a PHA, the Annual Plan must include the information provided in this section. HUD will advise PHAs by separate notice, sufficiently in advance of the first Annual Plan due date, of the information, described in this section that must be part of the first Annual Plan submission, and any additional instructions or directions that may be necessary to prepare and submit the first Annual Plan. The information described in this section applies to public housing, tenant-based assistance, and project-based assistance except where specifically stated otherwise. The information that the PHA must submit for HUD approval under the Annual Plan includes the discretionary policies of the various plan components or elements (for example, rent policies) and not the statutory or regulatory requirements that govern these plan components and that provide no discretion on the part of the PHA in implementation of the requirements. The PHA's Annual Plan must be consistent with the goals and objectives of the PHA's 5-Year Plan. 
</P>
<P>(a) <I>A statement of housing needs.</I> (1) This statement must address the housing needs of the low-income and very low-income families who reside in the jurisdiction served by the PHA, and other families who are on the public housing and Section 8 tenant-based and project-based assistance waiting lists, including:
</P>
<P>(i) Families meeting the definition of extremely low-income families in 24 CFR 5.603.
</P>
<P>(ii) Elderly families;
</P>
<P>(iii) Households with individuals with disabilities and households of various races and ethnic groups residing in the jurisdiction or on the waiting list.
</P>
<P>(2) A PHA must make reasonable efforts to identify the housing needs of each of the groups listed in paragraph (a)(1) of this section based on information provided by the applicable consolidated plan, information provided by HUD, and other generally available data.
</P>
<P>(i) The identification of housing needs must address issues of affordability, supply, quality, accessibility, size of units, and location.
</P>
<P>(ii) The statement of housing needs also must describe the ways in which the PHA intends, to the maximum extent practicable, to address those needs and the PHA's reasons for choosing its strategy.
</P>
<P>(b) <I>A statement of the PHA's deconcentration and other policies that govern eligibility, selection, and admissions.</I> This statement must describe the PHA's policies that govern resident or tenant eligibility, selection and admission. This statement also must describe any PHA admission preferences, and any occupancy policies that pertain to public housing units and housing units assisted under section 8(o) of the 1937 Act, as well as any unit assignment policies for public housing. This statement must include the following information: 
</P>
<P>(1) <I>Deconcentration Policy.</I> The PHA's deconcentration policy applicable to public housing, as described in § 903.2(a). 
</P>
<P>(2) <I>Waiting List Procedures.</I> The PHA's procedures for maintaining waiting lists for admission to the PHA's public housing developments. The statement must address any site-based waiting lists, as authorized by section 6(s) of the 1937 Act (42 U.S.C. 1437d(s)), for public housing. Section 6(s) of the 1937 Act permits PHAs to establish a system of site-based waiting lists for public housing that is consistent with all applicable civil rights and fair housing laws and regulations. Notwithstanding any other regulations, a PHA may adopt site-based waiting lists where: 
</P>
<P>(i) The PHA regularly submits required occupancy data to HUD's Multifamily Tenant Characteristics Systems (MTCS) in an accurate, complete and timely manner; 
</P>
<P>(ii) The system of site-based waiting lists provides for full disclosure to each applicant of any option available to the applicant in the selection of the development in which to reside, including basic information about available sites (location, occupancy, number and size of accessible units, amenities such as day care, security, transportation and training programs) and an estimate of the period of time the applicant would likely have to wait to be admitted to units of different sizes and types (e.g., regular or accessible) at each site; 
</P>
<P>(iii) Adoption of site-based waiting lists would not violate any court order or settlement agreement, or be inconsistent with a pending complaint brought by HUD; 
</P>
<P>(iv) The PHA includes reasonable measures to assure that adoption of site-based waiting lists is consistent with affirmatively furthering fair housing, such as reasonable marketing activities to attract applicants regardless of race or ethnicity; 
</P>
<P>(v) The PHA provides for review of its site-based waiting list policy to determine if the policy is consistent with civil rights laws and certifications through the following steps: 
</P>
<P>(A) As part of the submission of the Annual Plan, the PHA shall assess changes in racial, ethnic or disability-related tenant composition at each PHA site that may have occurred during the implementation of the site-based waiting list, based upon MTCS occupancy data that has been confirmed to be complete and accurate by an independent audit (which may be the annual independent audit) or is otherwise satisfactory to HUD; 
</P>
<P>(B) At least every three years the PHA uses independent testers or other means satisfactory to HUD, to assure that the site-based waiting list is not being implemented in a discriminatory manner, and that no patterns or practices of discrimination exist, and providing the results to HUD; 
</P>
<P>(C) Taking any steps necessary to remedy the problems surfaced during the review; and 
</P>
<P>(D) Taking the steps necessary to affirmatively further fair housing. 
</P>
<P>(3) <I>Other admissions policies.</I> The PHA's admission policies that include any other PHA policies that govern eligibility, selection, and admissions for the public housing (see part 960 of this title), tenant-based assistance (see part 982, subpart E of this title), and project-based assistance (see part 982, subpart E of this title except as provided in § 983.3, and part 983, subpart F) programs. (The information requested on site-based waiting lists and deconcentration is applicable only to public housing.)










</P>
<P>(c) <I>A statement of financial resources.</I> This statement must address the financial resources that are available to the PHA for the support of Federal public housing, tenant-based assistance, and project-based assistance programs administered by the PHA during the plan year. The statement must include a listing, by general categories, of the PHA's anticipated resources, such as PHA operating, capital and other anticipated Federal resources available to the PHA, as well as tenant rents and other income available to support public housing, tenant-based assistance, and project-based assistance. The statement also should include the non-Federal sources of funds supporting each Federal program, and state the planned uses for the resources.
</P>
<P>(d) <I>A statement of the PHA's rent determination policies.</I> This statement must describe the PHA's basic discretionary policies that govern rents charged for public housing units, applicable flat rents, and the rental contributions of families receiving tenant-based assistance and project-based assistance. For tenant-based assistance and project-based assistance, this statement also shall cover any discretionary minimum tenant rents and payment standard policies.
</P>
<P>(e) <I>A statement of the PHA's operation and management.</I> (1) This statement must list the PHA's rules, standards, and policies that govern maintenance and management of housing owned, assisted, or operated by the PHA. 
</P>
<P>(2) The policies listed in this statement must include a description of any measures necessary for the prevention or eradication of pest infestation. Pest infestation includes cockroach infestation. 
</P>
<P>(3) This statement must include a description of PHA management organization, and a listing of the programs administered by the PHA. 
</P>
<P>(4) The information requested on a PHA's rules, standards and policies regarding management and maintenance of housing applies only to public housing. The information requested on PHA program management and listing of administered programs applies to public housing, tenant-based assistance, and project-based assistance.
</P>
<P>(f) <I>A statement of the PHA grievance procedures.</I> This statement describes the grievance and informal hearing and review procedures that the PHA makes available to its residents and applicants. These procedures include public housing grievance procedures, tenant-based assistance, and project-based assistance informal review procedures for applicants and hearing procedures for participants. 
</P>
<P>(g) <I>A statement of capital improvements needed.</I> With respect to public housing only, this statement describes the capital improvements necessary to ensure long-term physical and social viability of the PHA's public housing developments, including the capital improvements to be undertaken in the year in question and their estimated costs, and any other information required for participation in the Capital Fund. PHAs also are required to include 5-Year Plans covering large capital items. 
</P>
<P>(h) <I>A statement of any demolition and/or disposition</I>—(1) <I>Plan for Demolition/Disposition.</I> With respect to public housing only, a description of any public housing development, or portion of a public housing development, owned by the PHA for which the PHA has applied or will apply for demolition and/or disposition approval under section 18 of the 1937 Act (42 U.S.C. 1437p), and the timetable for demolition and/or disposition. The application and approval process for demolition and/or disposition is a separate process. Approval of the PHA Plan does not constitute approval of these activities. 
</P>
<P>(2) <I>Interim Plan for Demolition/Disposition.</I> (i) Before submission of the first Annual Plan, a PHA may submit an interim PHA Annual Plan solely for demolition/disposition. The interim plan must provide: 
</P>
<P>(A) The required description of the action to be taken; 
</P>
<P>(B) A certification of consistency with the Consolidated Plan; 
</P>
<P>(C) A description of how the plan is consistent with the Consolidated Plan; 
</P>
<P>(D) A relocation plan that includes the availability of units in the area and adequate funding; and 
</P>
<P>(E) Confirmation that a public hearing was held on the proposed action and that the resident advisory board was consulted. 
</P>
<P>(ii) Interim plans for demolition/disposition are subject to PHA Plan procedural requirements in this part (see §§ 903.13, 903.15, 903.17, 903.19, 903.21, 903.23, 903.25), with the following exception. If a resident advisory board has not yet been formed, the PHA may seek a waiver of the requirement to consult with the resident advisory board on the grounds that organizations that adequately represent residents for this purpose were consulted. 
</P>
<P>(iii) The actual application for demolition or disposition may be submitted at the same time as submission of the interim plan or at a later date. 
</P>
<P>(i) <I>A statement of the public housing developments designated as housing for elderly families or families with disabilities or elderly families and families with disabilities.</I> (1) With respect to public housing only, this statement identifies any public housing developments owned, assisted, or operated by the PHA, or any portion of these developments, that: 
</P>
<P>(i) The PHA has designated for occupancy by: 
</P>
<P>(A) Only elderly families; 
</P>
<P>(B) Only families with disabilities; or 
</P>
<P>(C) Elderly families and families with disabilities; and 
</P>
<P>(ii) The PHA will apply for designation for occupancy by: 
</P>
<P>(A) Only elderly families; 
</P>
<P>(B) Only families with disabilities; or 
</P>
<P>(C) Elderly families and families with disabilities as provided by section 7 of the 1937 Act (42 U.S.C. 1437e). 
</P>
<P>(2) The designated housing application and approval process is a separate process. Approval of the PHA Plan does not constitute approval of these activities. 
</P>
<P>(j) <I>A statement of the conversion of public housing to tenant-based assistance.</I> (1) This statement describes: 
</P>
<P>(i) Any building or buildings that the PHA is required to convert to tenant-based assistance under section 33 of the 1937 Act (42 U.S.C. 1437z-5); 
</P>
<P>(ii) The status of any building or buildings that the PHA may be required to convert to tenant-based assistance under section 202 of the Fiscal Year 1996 HUD Appropriations Act (42 U.S.C. 14371 note); or 
</P>
<P>(iii) The PHA's plans to voluntarily convert under section 22 of the 1937 Act (42 U.S.C. 1437t). 
</P>
<P>(2) The statement also must include an analysis of the developments or buildings required to be converted under section 33. 
</P>
<P>(3) For both voluntary and required conversions, the statement must include the amount of assistance received commencing in Federal Fiscal Year 1999 to be used for rental assistance or other housing assistance in connection with such conversion. 
</P>
<P>(4) The application and approval processes for required or voluntary conversions are separate approval processes. Approval of the PHA Plan does not constitute approval of these activities. 
</P>
<P>(5) The information required under this paragraph (j) of this section is applicable to public housing and only that tenant-based assistance which is to be included in the conversion plan. 
</P>
<P>(k) <I>A statement of homeownership programs administered by the PHA.</I> (1) This statement describes: 
</P>
<P>(i) Any homeownership programs administered by the PHA under section 8(y) of the 1937 Act (42 U.S.C. 1437f(y)); 
</P>
<P>(ii) Any homeownership programs administered by the PHA under an approved section 5(h) homeownership program (42 U.S.C. 1437c(h)); 
</P>
<P>(iii) An approved HOPE I program (42 U.S.C. 1437aaa); or 
</P>
<P>(iv) Any homeownership programs for which the PHA has applied to administer or will apply to administer under section 5(h), the HOPE I program, or section 32 of the 1937 Act (42 U.S.C. 1437z-4). 
</P>
<P>(2) The application and approval process for homeownership under the programs described in paragraph (k) of this section, with the exception of the section 8(y) homeownership program, are separate processes. Approval of the PHA Plan does not constitute approval of these activities. 


</P>
<P>(l) <I>A statement of the PHA's community service and self-sufficiency programs.</I> (1) This statement describes: 
</P>
<P>(i) Any PHA programs relating to services and amenities coordinated, promoted or provided by the PHA for assisted families, including programs provided or offered as a result of the PHA's partnership with other entities; 
</P>
<P>(ii) Any PHA programs coordinated, promoted or provided by the PHA for the enhancement of the economic and social self-sufficiency of assisted families, including programs provided or offered as a result of the PHA's partnerships with other entities, and activities under section 3 of the Housing and Community Development Act of 1968 and under requirements for the Family Self-Sufficiency Program and others. The description of programs offered shall include the program's size (including required and actual size of the Family Self-Sufficiency program) and means of allocating assistance to households. 
</P>
<P>(iii) How the PHA will comply with the requirements of section 12(c) and (d) of the 1937 Act (42 U.S.C. 1437j(c) and (d)). These statutory provisions relate to community service by public housing residents and treatment of income changes in public housing, tenant-based assistance, and project-based assistance recipients resulting from welfare program requirements. PHAs must address any cooperation agreements, as described in section 12(d)(7) of the 1937 Act (42 U.S.C. 1437j(d)(7)), that the PHA has entered into or plans to enter into.
</P>
<P>(2) The information required by paragraph (l) of this section is applicable to public housing, tenant-based assistance, and project-based assistance, except that the information regarding the PHA's compliance with the community service requirement applies only to public housing.
</P>
<P>(m) <I>A statement of the PHA's safety and crime prevention measures.</I> (1) With respect to public housing only, this statement describes the PHA's plan for safety and crime prevention to ensure the safety of the public housing residents that it serves. The plan for safety and crime prevention must be established in consultation with the police officer or officers in command of the appropriate precinct or police departments. The plan also must provide, on a development-by-development or jurisdiction wide-basis, the measures necessary to ensure the safety of public housing residents. 
</P>
<P>(2) The statement regarding the PHA's safety and crime prevention plan must include the following information: 
</P>
<P>(i) A description of the need for measures to ensure the safety of public housing residents; 
</P>
<P>(ii) A description of any crime prevention activities conducted or to be conducted by the PHA; and 
</P>
<P>(iii) A description of the coordination between the PHA and the appropriate police precincts for carrying out crime prevention measures and activities. 
</P>
<P>(3) If the PHA expects to receive drug elimination program grant funds, the PHA must submit, in addition to the information required by paragraph (m)(1) of this section, the plan required by HUD's Public Housing Drug Elimination Program regulations (see part 761 of this title). 
</P>
<P>(4) If HUD determines at any time that the security needs of a public housing development are not being adequately addressed by the PHA's plan, or that the local police precinct is not assisting the PHA with compliance with its crime prevention measures as described in the Annual Plan, HUD may mediate between the PHA and the local precinct to resolve any issues of conflict. 
</P>
<P>(5) A statement of any domestic violence, dating violence, sexual assault, and stalking prevention programs:
</P>
<P>(i) A description of any activities, services, or programs provided or offered by an agency, either directly or in partnership with other service providers, to child or adult victims of domestic violence, dating violence, sexual assault, or stalking;
</P>
<P>(ii) Any activities, services, or programs provided or offered by a PHA that help child and adult victims of domestic violence, dating violence, sexual assault, or stalking to obtain or maintain housing; and
</P>
<P>(iii) Any activities, services, or programs provided or offered by a PHA to prevent domestic violence, dating violence, sexual assault, or stalking, or to enhance victim safety in assisted families.
</P>
<P>(n) <I>A statement of the PHA's policies and rules regarding ownership of pets in public housing.</I> This statement describes the PHA's policies and requirements pertaining to the ownership of pets in public housing. The policies must be in accordance with section 31 of the 1937 Act (42 U.S.C. 1437a-3). 




</P>
<P>(o) <I>Civil rights certification.</I> (1) The PHA must certify that it will carry out its plan in conformity with title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d—2000d-4), the Fair Housing Act (42 U.S.C. 3601-19), section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), title II of the Americans with Disabilities Act of 1990 (42 U.S.C. 12101 <I>et seq.</I>), and other applicable Federal civil right laws, and that it will affirmatively further fair housing, consistent with §§ 5.150 and 5.151 of this title.
</P>
<P>(2) The certification is applicable to both the 5-Year Plan and the Annual Plan, including any plan incorporated therein.
</P>
<P>(p) <I>Recent results of PHA's fiscal year audit.</I> This statement provides the results of the most recent fiscal year audit of the PHA conducted under section 5(h)(2) of the 1937 Act (42 U.S.C. 1437c(h)). 
</P>
<P>(q) <I>A statement of asset management.</I> To the extent not covered by other components of the PHA Annual Plan, this statement describes how the PHA will carry out its asset management functions with respect to the PHA's public housing inventory, including how the PHA will plan for long-term operating, capital investment, rehabilitation, modernization, disposition, and other needs for such inventory. 
</P>
<P>(r) <I>A statement of participation in the project-based assistance program.</I> If a PHA participates in the project-based assistance program, the PHA's Annual Plan must include a statement of the projected number of project-based units, the general location of the project-based units, and how project-basing would be consistent with its Annual Plan.
</P>
<P>(s) <I>Additional information to be provided.</I> (1) For all Annual Plans following submission of the first Annual Plan, a PHA must include a brief statement of the PHA's progress in meeting the mission and goals described in the 5-Year Plan; 
</P>
<P>(2) A PHA must identify the basic criteria the PHA will use for determining: 
</P>
<P>(i) A substantial deviation from its 5-Year Plan; and 
</P>
<P>(ii) A significant amendment or modification to its 5-Year Plan and Annual Plan. 
</P>
<P>(3) A PHA must include such other information as HUD may request of PHAs, either on an individual or across-the-board basis. HUD will advise the PHA or PHAs of this additional information through advance notice. 
</P>
<CITA TYPE="N">[65 FR 81222, Dec. 22, 2000, as amended at 73 FR 72344, Nov. 28, 2008; 75 FR 66262, Oct. 27, 2010; 80 FR 42368, July 16, 2015; 81 FR 12372, Mar. 8, 2016; 85 FR 47911, Aug. 7, 2020; 86 FR 30792, June 10, 2021; 89 FR 38292, May 7, 2024; 90 FR 11025, Mar. 3, 2025; 90 FR 56687, Dec. 8, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 903.9" NODE="24:4.1.3.1.3.2.5.6" TYPE="SECTION">
<HEAD>§ 903.9   May HUD request additional information in the Annual Plan of a troubled PHA?</HEAD>
<P>HUD may request that a PHA that is at risk of being designated as troubled or is designated as troubled in accordance with section 6(j)(2) of the 1937 Act (42 U.S.C. 1437d(j)(2)), the Public Housing Management Assessment Program (part 901 of this title) or the Public Housing Assessment System (part 902 of this chapter) include its operating budget. The PHA also must include or reference any applicable memorandum of agreement with HUD or any plan to improve performance, and such other material as HUD may prescribe. 




</P>
</DIV8>


<DIV8 N="§ 903.11" NODE="24:4.1.3.1.3.2.5.7" TYPE="SECTION">
<HEAD>§ 903.11   Are certain PHAs eligible to submit a streamlined Annual Plan?</HEAD>
<P>(a) Yes, the following PHAs may submit a streamlined Annual Plan, as described in paragraph (b) of this section: 
</P>
<P>(1) PHAs that are determined to be high performing PHAs as of the last annual or interim assessment of the PHA before the submission of the 5-Year or Annual Plan; 
</P>
<P>(2) PHAs with less than 250 public housing units (small PHAs) and that have not been designated as troubled in accordance with section 6(j)(2) of the 1937 Act; and 
</P>
<P>(3) PHAs that only administer tenant-based assistance and/or project-based assistance and do not own or operate public housing. 
</P>
<P>(b) All streamlined plans must provide information on how the public may reasonably obtain additional information on the PHA policies contained in the standard Annual Plan, but excluded from their streamlined submissions. 
</P>
<P>(c) A streamlined plan must include the information provided in this paragraph (c). The Secretary may reduce the information requirements of streamlined Plans further, with adequate notice. 
</P>
<P>(1) For high performing PHAs, the streamlined Annual Plan must include the information required by § 903.7(a), (b), (c), (d), (g), (h), (k), (m), (n), (o), (p), (r), and (s). The information required by § 903.7(m) must be included only to the extent this information is required for PHA's participation in the public housing drug elimination program and the PHA anticipates participating in this program in the upcoming year. The information required by § 903.7(k) must be included only to the extent that the PHA participates in homeownership programs under section 8(y). 
</P>
<P>(2) For small PHAs that are not designated as troubled (see § 902.67(c)) or that are not at risk of being designated as troubled (see § 902.67(b)(4) of this chapter) under section 6(j)(2) of the 1937 Act, the requirements for streamlined Annual Plans are described in § 903.12. 
</P>
<P>(3) For PHAs that administer only tenant-based assistance and/or project-based assistance, the streamlined Annual Plan must include the information required by § 903.7(a), (b), (c), (d), (e), (f), (k), (l), (o), (p), (r), and (s). 
</P>
<CITA TYPE="N">[65 FR 49484, Aug. 14, 2000, as amended at 65 FR 55161, Sept. 12, 2000; 68 FR 37671, June 24, 2003; 89 FR 38292, May 7, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 903.12" NODE="24:4.1.3.1.3.2.5.8" TYPE="SECTION">
<HEAD>§ 903.12   What are the streamlined Annual Plan requirements for small PHAs?</HEAD>
<P>(a) <I>General.</I> PHAs with less than 250 public housing units (small PHAs) and that have not been designated as troubled (see § 902.67(c) of this chapter) or that are not at risk of being designated as troubled (see § 902.67(b)(4)) under section 6(j) of the 1937 Act may submit streamlined Annual Plans in accordance with this section. 
</P>
<P>(b) <I>Streamlined Annual Plan requirements for fiscal years in which its 5-Year Plan is also due.</I> For the fiscal year in which its 5-Year Plan is also due, the streamlined Annual Plan of the small PHA shall consist of the information required by § 903.7(a), (b), (c), (d), (g), (h), (k), (o) (r), and (s). The information required by § 903.7(a) must be included only to the extent it pertains to the housing needs of families that are on the PHA's public housing and Section 8 tenant-based assistance and project-based assistance waiting lists. The information required by § 903.7(k) must be included only to the extent that the PHA participates in homeownership programs under Section 8(y) of the 1937 Act. The information required in <I>§ 903.7(r)</I> must be included only to the extent that the PHA participates in the project-based assistance program.
</P>
<P>(c) <I>Streamlined Annual Plan requirements for all other fiscal years.</I> For all other fiscal years, the streamlined Annual Plan must include: 
</P>
<P>(1) The information required by § 903.7(g) and (o) and, if applicable, § 903.7(b)(2) with respect to site-based waiting lists, § 903.7(k)(1)(i) with respect to homeownership programs under Section 8(y) of the 1937 Act, and § 903.7(r) with respect to participation in the project-based assistance program;
</P>
<P>(2) A certification from the PHA that lists the policies and programs covered by § 903.7(a), (b), (c), (d), (h), (k), and (s) that the PHA has revised since submission of its last Annual Plan and provides assurance by the PHA that: 
</P>
<P>(i) The Resident Advisory Board had an opportunity to review and comment on the changes to the policies and programs before implementation by the PHA; 
</P>
<P>(ii) The changes were duly approved by the PHA board of directors (or similar governing body); and 
</P>
<P>(iii) The revised policies and programs are available for review and inspection at the principal office of the PHA during normal business hours.
</P>
<CITA TYPE="N">[68 FR 37671, June 24, 2003, as amended at 89 FR 38292, May 7, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 903.13" NODE="24:4.1.3.1.3.2.5.9" TYPE="SECTION">
<HEAD>§ 903.13   What is a Resident Advisory Board and what is its role in development of the Annual Plan?</HEAD>
<P>(a) A Resident Advisory Board refers to a board or boards, as provided in paragraph (b) of this section, whose membership consists of individuals who adequately reflect and represent the residents assisted by the PHA. 
</P>
<P>(1) The role of the Resident Advisory Board (or Resident Advisory Boards) is to assist and make recommendations regarding the development of the PHA plan, and any significant amendment or modification to the PHA plan. 
</P>
<P>(2) The PHA shall allocate reasonable resources to assure the effective functioning of Resident Advisory Boards. Reasonable resources for the Resident Advisory Boards must provide reasonable means for them to become informed on programs covered by the PHA Plan, to communicate in writing and by telephone with assisted families and hold meetings with those families, and to access information regarding covered programs on the internet, taking into account the size and resources of the PHA. 


</P>
<P>(b) Each PHA must establish one or more Resident Advisory Boards, as provided in paragraph (b) of this section. 
</P>
<P>(1) If a jurisdiction-wide resident council exists that complies with the tenant participation regulations in part 964 of this title, the PHA shall appoint the jurisdiction-wide resident council or the council's representatives as the Resident Advisory Board. If the PHA makes such appointment, the members of the jurisdiction-wide resident council or the council's representatives shall be added or another Resident Advisory Board formed to provide for reasonable representation of families receiving tenant-based assistance and/or project-based assistance where such representation is required under paragraph (b)(2) of this section. 
</P>
<P>(2) If a jurisdiction-wide resident council does not exist but resident councils exist that comply with the tenant participation regulations, the PHA shall appoint such resident councils or their representatives to serve on one or more Resident Advisory Boards. If the PHA makes such appointment, the PHA may require that the resident councils choose a limited number of representatives. 
</P>
<P>(3) Where the PHA has a tenant-based assistance and/or project-based assistance program of significant size (where tenant-based assistance and/or project-based assistance is 20% or more of assisted households), the PHA shall assure that the Resident Advisory Board (or Boards) has reasonable representation of families receiving tenant-based assistance and/or project-based assistance and that a reasonable process is undertaken to choose this representation. 
</P>
<P>(4) Where or to the extent that resident councils that comply with the tenant participation regulations do not exist, the PHA shall appoint Resident Advisory Boards or Board members as needed to adequately reflect and represent the interests of residents of such developments; provided that the PHA shall provide reasonable notice to such residents and urge that they form resident councils with the tenant participation regulations. 
</P>
<P>(c) The PHA must consider the recommendations of the Resident Advisory Board or Boards in preparing the final Annual Plan, and any significant amendment or modification to the Annual Plan, as provided in § 903.21 of this title. 
</P>
<P>(1) In submitting the final plan to HUD for approval, or any significant amendment or modification to the plan to HUD for approval, the PHA must include a copy of the recommendations made by the Resident Advisory Board or Boards and a description of the manner in which the PHA addressed these recommendations. 
</P>
<P>(2) Notwithstanding the 75-day limitation on HUD review, in response to a written request from a Resident Advisory Board claiming that the PHA failed to provide adequate notice and opportunity for comment, HUD may make a finding of good cause during the required time period and require the PHA to remedy the failure before final approval of the plan. 


</P>
<CITA TYPE="N">[65 FR 81222, Dec. 22, 2000, as amended at 89 FR 38293, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 903.15" NODE="24:4.1.3.1.3.2.5.10" TYPE="SECTION">
<HEAD>§ 903.15   What is the relationship of the public housing agency plans to the Consolidated Plan and a PHA's Fair Housing Requirements?</HEAD>
<P>(a) The PHA must ensure that the Annual Plan is consistent with any applicable Consolidated Plan for the jurisdiction in which the PHA is located.
</P>
<P>(1) The PHA must submit a certification by the appropriate State or local officials that the Annual Plan is consistent with the Consolidated Plan and include a description of the manner in which the applicable plan contents are consistent with the Consolidated Plans.
</P>
<P>(2) For State agencies that are PHAs, the applicable Consolidated Plan is the State Consolidated Plan.
</P>
<P>(b) A PHA may request to change its fiscal year to better coordinate its planning with the planning done under the Consolidated Plan process, by the State or local officials, as applicable.
</P>
<P>(c) <I>Fair housing requirements.</I> A PHA is obligated to affirmatively further fair housing in its operating policies, procedures, and capital activities. All admission and occupancy policies for public housing and Section 8 tenant-based and project-based housing programs must comply with Fair Housing Act requirements and other civil rights laws and regulations and with a PHA's plans to affirmatively further fair housing. The PHA may not impose any specific income or racial quotas for any development or developments.
</P>
<P>(1) <I>Nondiscrimination.</I> A PHA must carry out its PHA Plan in conformity with the nondiscrimination requirements in Federal civil rights laws, including title VI of the Civil Rights Act of 1964, section 504 of the Rehabilitation Act of 1973, the Americans with Disabilities Act, and the Fair Housing Act. A PHA may not assign housing to persons in a particular section of a community or to a development or building based on race, color, religion, sex, disability, familial status, or national origin for purposes of segregating populations.
</P>
<P>(2) <I>Affirmatively furthering fair housing.</I> A PHA's policies should be designed to reduce the concentration of tenants and other assisted persons by race, national origin, and disability. Any affirmative steps or incentives a PHA plans to take must be stated in the admission policy.
</P>
<P>(i) HUD regulations provide that PHAs must take steps to affirmatively further fair housing. PHA policies should include affirmative steps to overcome the effects of discrimination and the effects of conditions that resulted in limiting participation of persons because of their race, national origin, disability, or other protected class.
</P>
<P>(ii) Such affirmative steps may include, but are not limited to, marketing efforts, use of nondiscriminatory tenant selection and assignment policies that lead to desegregation, additional applicant consultation and information, provision of additional supportive services and amenities to a development (such as supportive services that enable an individual with a disability to transfer from an institutional setting into the community), and engagement in ongoing coordination with state and local disability agencies to provide additional community-based housing opportunities for individuals with disabilities and to connect such individuals with supportive services to enable an individual with a disability to transfer from an institutional setting into the community.
</P>
<P>(3) <I>Validity of certification.</I> (i) A PHA's certification under § 903.7(o) will be subject to challenge by HUD where it appears that a PHA:


</P>
<P>(A) Fails to meet the affirmatively furthering fair housing requirements at 24 CFR 5.150 through 5.151.






</P>
<P>(B) Takes action that is materially inconsistent with its obligation to affirmatively further fair housing; or
</P>
<P>(C) Fails to meet the fair housing, civil rights, and affirmatively furthering fair housing requirements in 24 CFR 903.7(o).
</P>
<P>(ii) If HUD challenges the validity of a PHA's certification, HUD will do so in writing specifying the deficiencies, and will give the PHA an opportunity to respond to the particular challenge in writing. In responding to the specified deficiencies, a PHA must establish, as applicable, that it has complied with fair housing and civil rights laws and regulations, or has remedied violations of fair housing and civil rights laws and regulations, and has adopted policies and undertaken actions to affirmatively further fair housing, including, but not limited to, providing a full range of housing opportunities to applicants and tenants in a nondiscriminatory manner. In responding to the PHA, HUD may accept the PHA's explanation and withdraw the challenge, undertake further investigation, or pursue other remedies available under law. HUD will seek to obtain voluntary corrective action consistent with the specified deficiencies. In determining whether a PHA has complied with its certification, HUD will review the PHA's circumstances relevant to the specified deficiencies, including characteristics of the population served by the PHA; characteristics of the PHA's existing housing stock; and decisions, plans, goals, priorities, strategies, and actions of the PHA, including those designed to affirmatively further fair housing.


</P>
<CITA TYPE="N">[85 FR 47911, Aug. 7, 2020, as amended at 86 FR 30793, June 10, 2021; 89 FR 38293, May 7, 2024; 90 FR 11025, Mar. 3, 2025]




</CITA>
</DIV8>


<DIV8 N="§ 903.17" NODE="24:4.1.3.1.3.2.5.11" TYPE="SECTION">
<HEAD>§ 903.17   What is the process for obtaining public comment on the plans?</HEAD>
<P>(a) The PHA's board of directors or similar governing body must conduct a public hearing to discuss the PHA plan (either the 5-Year Plan and/or Annual Plan, as applicable) and invite public comment on the plan(s). The hearing must be conducted at a location that is convenient to the residents served by the PHA. 
</P>
<P>(b) Not later than 45 days before the public hearing is to take place, the PHA must: 
</P>
<P>(1) Make the proposed PHA plan(s), the required attachments and documents related to the plans, and all information relevant to the public hearing to be conducted, available for inspection by the public at the principal office of the PHA during normal business hours; and 
</P>
<P>(2) Publish a notice informing the public that the information is available for review and inspection, and that a public hearing will take place on the plan, and the date, time and location of the hearing. 
</P>
<P>(c) PHAs shall conduct reasonable outreach activities to encourage broad public participation in the PHA plans. 


</P>
</DIV8>


<DIV8 N="§ 903.19" NODE="24:4.1.3.1.3.2.5.12" TYPE="SECTION">
<HEAD>§ 903.19   When is the 5-Year Plan or Annual Plan ready for submission to HUD?</HEAD>
<P>A PHA may adopt its 5-Year Plan or its Annual Plan and submit the plan to HUD for approval only after: 
</P>
<P>(a) The PHA has conducted the public hearing; 
</P>
<P>(b) The PHA has considered all public comments received on the plan; 
</P>
<P>(c) The PHA has made any changes to the plan, based on comments, after consultation with the Resident Advisory Board or other resident organization. 


</P>
</DIV8>


<DIV8 N="§ 903.21" NODE="24:4.1.3.1.3.2.5.13" TYPE="SECTION">
<HEAD>§ 903.21   May the PHA amend or modify a plan?</HEAD>
<P>(a) A PHA, after submitting its 5-Year Plan or Annual Plan to HUD, may amend or modify any PHA policy, rule, regulation or other aspect of the plan. If the amendment or modification is a significant amendment or modification, as defined in § 903.7(r)(2), the PHA: 
</P>
<P>(1) May not adopt the amendment or modification until the PHA has duly called a meeting of its board of directors (or similar governing body) and the meeting, at which the amendment or modification is adopted, is open to the public; and 
</P>
<P>(2) May not implement the amendment or modification, until notification of the amendment or modification is provided to HUD and approved by HUD in accordance with HUD's plan review procedures, as provided in § 903.23. 
</P>
<P>(b) Each significant amendment or modification to a plan submitted to HUD is subject to the requirements of §§ 903.13, 903.15, and 903.17. 




</P>
</DIV8>


<DIV8 N="§ 903.23" NODE="24:4.1.3.1.3.2.5.14" TYPE="SECTION">
<HEAD>§ 903.23   What is the process by which HUD reviews, approves, or disapproves an Annual Plan?</HEAD>
<P>(a) <I>Review of the plan.</I> When the PHA submits its Annual Plan to HUD, including any significant amendment or modification to the plan, HUD reviews the plan to determine whether: 
</P>
<P>(1) The plan provides all the information that is required to be included in the plan; 
</P>
<P>(2) The plan is consistent with the information and data available to HUD; 
</P>
<P>(3) The plan is consistent with any applicable Consolidated Plan for the jurisdiction in which the PHA is located; and 
</P>
<P>(4) The plan is not prohibited or inconsistent with the 1937 Act or any other applicable Federal law. 
</P>
<P>(b) <I>Scope of HUD review.</I> HUD's review of the Annual Plan (and any significant amendments or modifications to the plan) will be limited to the information required by § 903.7(b), (g), (h), and (o), and any other element of the PHA's Annual Plan that is challenged. 
</P>
<P>(c) <I>Disapproval of the plan.</I> (1) HUD may disapprove a PHA plan, in its entirety or with respect to any part, or disapprove any significant amendment or modification to the plan, only if HUD determines that the plan, or one of its components or elements, or any significant amendment or modification to the plan: 
</P>
<P>(i) Does not provide all the information that is required to be included in the plan; 
</P>
<P>(ii) Is not consistent with the information and data available to HUD; 
</P>
<P>(iii) Is not consistent with any applicable Consolidated Plan for the jurisdiction in which the PHA is located; or 
</P>
<P>(iv) Is not consistent with applicable Federal laws and regulations. 
</P>
<P>(2) Not later than 75 days after the date on which the PHA submits its plan or significant amendment or modification to the plan, HUD will issue written notice to the PHA if the plan or a significant amendment or modification has been disapproved. The notice that HUD issues to the PHA must state with specificity the reasons for the disapproval. HUD may not state as a reason for disapproval the lack of time to review the plan. 
</P>
<P>(3) If HUD fails to issue the notice of disapproval on or before the 75th day after the date on which the PHA submits its plan or significant amendment or modification to the plan, HUD shall be considered to have determined that all elements or components of the plan required to be submitted and that were submitted, and to be reviewed by HUD were in compliance with applicable requirements and the plan has been approved. 
</P>
<P>(4) The provisions of paragraph (b)(3) of this section do not apply to troubled PHAs. The plan of a troubled PHA must be approved or disapproved by HUD through written notice. 
</P>
<P>(d) <I>Designation of due date as submission date for first plan submissions.</I> For purposes of the 75-day period described in paragraph (b) of this section, the first 5-year and Annual Plans submitted by a PHA will be considered to have been submitted no earlier than the due date as provided in § 903.5. 
</P>
<P>(e) <I>Public availability of the approved plan.</I> Once a PHA's plan has been approved, a PHA must make the approved plan and the required attachments and documents related to the plan, available for review and inspection, at the principal office of the PHA during normal business hours. 


</P>
<P>(f) <I>Recordkeeping.</I> PHAs must maintain records reflecting a certification that the PHA will affirmatively further fair housing, consistent with §§ 5.150 and 5.151 of this title.




</P>
<CITA TYPE="N">[65 FR 81222, Dec. 22, 2000, as amended at 68 FR 37671, June 24, 2003; 80 FR 42371, July 16, 2015; 85 FR 47911, Aug. 7, 2020; 86 FR 30793, June 10, 2021; 90 FR 11025, Mar. 3, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 903.25" NODE="24:4.1.3.1.3.2.5.15" TYPE="SECTION">
<HEAD>§ 903.25   How does HUD ensure PHA compliance with its plan?</HEAD>
<P>A PHA must comply with the rules, standards and policies established in the plans. To ensure that a PHA is in compliance with all policies, rules, and standards adopted in the plan approved by HUD, HUD shall, as it deems appropriate, respond to any complaint concerning PHA noncompliance with its plan. If HUD should determine that a PHA is not in compliance with its plan, HUD will take whatever action it deems necessary and appropriate.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="904" NODE="24:4.1.3.1.4" TYPE="PART">
<HEAD>PART 904—LOW RENT HOUSING HOMEOWNERSHIP OPPORTUNITIES
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437-1437ee and 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>39 FR 10966, Mar. 22, 1974, unless otherwise noted. Redesignated at 40 FR 15580, Apr. 7, 1975, and further redesignated at 49 FR 6714, Feb. 23, 1984.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.3.1.4.1" TYPE="SUBPART">
<HEAD>Subpart A—Introduction to Low-Rent Housing Homeownership Opportunity Program [Reserved]</HEAD>

</DIV6>


<DIV6 N="B" NODE="24:4.1.3.1.4.2" TYPE="SUBPART">
<HEAD>Subpart B—Turnkey III Program Description</HEAD>


<DIV8 N="§ 904.101" NODE="24:4.1.3.1.4.2.5.1" TYPE="SECTION">
<HEAD>§ 904.101   Introduction.</HEAD>
<P>(a) <I>Purpose.</I> This subpart sets forth the essential elements of the HUD Homeownership Opportunities Program for Low-Income Families (Turnkey III). 
</P>
<P>(b) <I>Applicability.</I> This subpart is applicable to Turnkey III developments operated by LHA. For Turnkey III developments operated by an Indian Housing Authority, applicable provisions are found at 24 CFR part 905, subpart G.
</P>
<P>(1) With respect to any development to be operated as Turnkey III, the Annual Contributions Contract (ACC) shall contain the “Special Provisions for Turnkey III Homeownership Opportunity Project” as set forth in Appendix I. A Turnkey III development may include only units which are to be operated as such under Homebuyers Ownership Opportunity Agreements. If for any reason it is determined that certain units should be operated as conventional rental units, such units must comprise or be made part of a conventional rental project. 
</P>
<P>(2) With respect to Turnkey III developments pursuant to an executed ACC where no Agreements with Homebuyers have been signed, the ACC shall be amended (i) to include the “Special Provisions” set forth in Appendix I, (ii) to extend its term to 30 years, and (iii) to reduce its Maximum Contribution Percentage to a rate that will amortize the debt in 30 years at the minimum Loan Interest Rate specified in the ACC for the specific Turnkey III project involved. Further development and operation shall be in accordance with this subpart including use of the form of Homebuyers Ownership Opportunity Agreement set forth in Appendix II. 
</P>
<P>(3) With respect to developments where Agreements with homebuyers have been signed, the following steps shall be taken: 
</P>
<P>(i) The ACC shall be amended to include the Special Provisions” set forth in Appendix I; further development and operation of the Project shall be in accordance with this subpart. 
</P>
<P>(ii) The LHA shall offer all qualified homebuyers in the development a new Homebuyers Ownership Opportunity Agreement as set forth in Appendix II with an amendment to section 16a to refer to “the latest approved Development Cost Budget, or Actual Development Cost Certificate if issued,” in lieu of “the Development Cost Budget in effect upon award of the Main Construction Contract or execution of the Contract of Sale,” and, if the ACC for the Project has a term of 25 years, an amendment to section 16(b) to refer to a term of 25 years, instead of 30, for the Purchase Price Schedule. Each Purchase Price Schedule shall commence with the first day of the month following the effective date of the initial Agreement. No other modification in the new Agreement may be made. In the event the homebuyer refuses to accept the new Agreement, no modifications may be made in the old Agreement and the matter shall be referred to HUD. 
</P>
<P>(4) With respect to Projects which were under ACC on the effective date of this subpart, the Total Development Cost Budget shall be revised, if financially feasible, to include the cost of the appraisals which are necessary for computation of the initial purchase prices pursuant to § 904.113. In the event this is not financially feasible, the matter shall be referred to HUD, which may, if necessary, authorize a different method for computation of such initial purchase prices on an equitable basis. 
</P>
<P>(5) With respect to all developments which were completed by the effective date of this subpart, the appraisals which are necessary for computation of the initial purchase prices pursuant to § 904.113 shall be made as of the date of completion of the development.
</P>
<CITA TYPE="N">[39 FR 10966, Mar. 22, 1974. Redesignated at 40 FR 15580, Apr. 7, 1975, and 49 FR 6714, Feb. 23, 1984, and amended at 56 FR 922, Jan. 9, 1991]


</CITA>
</DIV8>


<DIV8 N="§ 904.102" NODE="24:4.1.3.1.4.2.5.2" TYPE="SECTION">
<HEAD>§ 904.102   Definitions.</HEAD>
<P>(a) The term <I>common property</I> means the nondwelling structures and equipment, common areas, community facilities, and in some cases certain component parts of dwelling structures, which are contained in the development: <I>Provided, however,</I> That in the case of a development that is organized as a condominium or a planned unit development (PUD), the term <I>common property</I> shall have the meaning established by the condominium or PUD documents and the State law pursuant to which the condominium or PUD is organized, under the terms <I>common areas, common facilities, common elements, common estate,</I> or other similar terms. 
</P>
<P>(b) The term <I>development</I> means the entire undertaking including all real and personal property, funds and reserves, rights, interests and obligations, and activities related thereto. 
</P>
<P>(c) The term <I>EHPA</I> means the Earned Home Payments Account established and maintained pursuant to § 904.110. 
</P>
<P>(d) The term <I>homebuyer</I> means the member or members of a low-income family who have executed a Homebuyers Ownership Opportunity Agreement with the LHA. 
</P>
<P>(e) The term <I>homebuyers association</I> (HBA) means an organization as defined in § 904.106. 
</P>
<P>(f) The term <I>homeowner</I> means a homebuyer who has acquired title to his home. 
</P>
<P>(g) The term <I>homeowners association</I> means an association comprised of homeowners, including condominium associations, having responsibilities with respect to common property. 
</P>
<P>(h) The term <I>LHA</I> means the local housing authority which acquires or develops a low-rent housing development with financial assistance from HUD, owns the homes until title is transferred to the homebuyers, and is responsible for the management of the homeownership opportunity program. 
</P>
<P>(i) The term <I>NRMR</I> means the Nonroutine Maintenance Reserve established and maintained pursuant to § 904.111. 
</P>
<P>(j) The term <I>Project</I> is used to refer to the development in relation to matters specifically related to the Annual Contributions Contract. 
</P>
<CITA TYPE="N">[39 FR 10966, Mar. 22, 1974, as amended at 61 FR 5214, Feb. 9, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 904.103" NODE="24:4.1.3.1.4.2.5.3" TYPE="SECTION">
<HEAD>§ 904.103   Development.</HEAD>
<P>(a) <I>Financial framework.</I> The LHA shall finance development or acquisition by sale of its notes (bond financing shall not be used) in the amount of the Minimum Development Cost. Payment of the debt service on the notes is assured by the HUD commitment to provide annual contributions. 
</P>
<P>(b) <I>Maximum total development cost.</I> The maximum total development cost stated in the ACC is the maximum amount authorized for development of a project and shall not exceed the amount approved in accordance with § 941.406(a) of this chapter.
</P>
<P>(c) <I>Contractual framework.</I> There are three basic contracts: 
</P>
<P>(1) An Annual Contributions Contract containing “Special Provisions For Turnkey III Homeownership Opportunity Project,” Form HUD-53010C (see Appendix I); 
</P>
<P>(2) A Homebuyers Ownership Opportunity Agreement (see Appendix II) which sets forth the respective rights and obligations of the low-income occupants and the LHA, including conditions for achieving homeownership; and 
</P>
<P>(3) A Recognition Agreement (see Appendix II of Subpart D of this part) between the LHA and the HBA under which the LHA agrees to recognize the HBA as the established representative of the homebuyers. 
</P>
<P>(d) <I>Community Participation Committee</I> (<I>CPC</I>). In the necessary development of citizens' participation in and understanding of the Turnkey III program, the LHA should consider formation and use of a CPC to assist the community and the LHA in the development and support of the Turnkey III program. The CPC shall be a voluntary group comprised of representatives of the low-income population primarily and may also include representatives of community service organizations.
</P>
<CITA TYPE="N">[39 FR 10966, Mar. 22, 1974. Redesignated at 40 FR 15580, Apr. 7, 1975, and amended at 47 FR 39482, Sept. 8, 1982. Redesignated at 49 FR 6714, Feb. 23, 1984, and amended at 53 FR 41598, Oct. 24, 1988]


</CITA>
</DIV8>


<DIV8 N="§ 904.104" NODE="24:4.1.3.1.4.2.5.4" TYPE="SECTION">
<HEAD>§ 904.104   Eligibility and selection of homebuyers.</HEAD>
<P>(a) <I>Announcement of availability of housing; fair housing marketing.</I> (1) The availability of housing under Turnkey III shall be announced to the community at large. Families on the waiting list for LHA conventional rental housing who wish to be considered for Turnkey III must apply specifically for that program (see paragraph (d) of this section). 
</P>
<P>(2) The LHA shall submit to HUD an Affirmative Fair Housing Marketing Plan and shall otherwise comply with the provisions of the Affirmative Fair Housing Marketing Regulations, 24 CFR part 200, subpart M, as if the LHA were an applicant for participation in an FHA housing program. This Plan shall be submitted with the development program, and no development program may be approved without prior approval of the Plan pursuant to HUD procedures under said Affirmative Fair Housing Marketing Regulations. If the development program has been approved, but the Annual Contributions Contract has not been executed, prior to the effective date of this subpart, an Affirmative Fair Housing Marketing Plan must be approved prior to execution of said contract. 
</P>
<P>(b) <I>Eligibility and standards for admission.</I> (1) Homebuyers shall be lower income families that are determined to be eligible for admission in accordance with the provisions of 24 CFR parts 5 and 913, which prescribe income definitions, income limits, and restrictions concerning citizenship or eligible immigration status. The HUD-approved standards for admission to low-rent housing, including the LHA's established priorities and preferences and the requirements for administration of low-rent housing under Title VI of the Civil Rights Act of 1964 (Pub. L. 88-352, 78 Stat. 241, 42 U.S.C. 2000d), shall be applicable except that the procedures used for homebuyer selection under Turnkey III shall be those set forth in this section. In carrying out these procedures the aim shall be to provide for equal housing opportunity in such a way as to prevent segregation or other discrimination on the basis of race, creed, color or national origin in accordance with the Civil Rights Act of 1964 (Pub. L. 88-352, 78 Stat. 241, 42 U.S.C. 2000d) and 1968 (Pub. L. 90-284, 82 Stat. 73, 42 U.S.C. 3601). 
</P>
<P>(2) An LHA may establish income limits for Turnkey III which are different from those for its conventional rental program: <I>Provided</I> That those limits are in accord with all applicable statutory and administrative requirements and are approved by HUD. 
</P>
<P>(c) <I>Determination of eligibility and preparation of list.</I> The LHA, without participation of a recommending committee (see paragraph (e)(1) of this section), must determine the eligibility of each applicant family in respect to the income limits for the development (including the requirement that the applicant family disclose and verify Social Security Numbers, as provided by 24 CFR part 750, and sign and submit consent forms for the obtaining of wage and claim information from State Wage Information Collection Agencies, as provided by 24 CFR part 760), and must then assign each eligible applicant its appropriate place on a waiting list for the development, in sequence based upon the date of the application, suitable type or size of unit, qualification for a Federal preference in accordance with § 904.122, and factors affecting preference or priority established by the LHA's regulations. Notwithstanding the fact that the LHA may not be accepting additional applications because of the length of the waiting list, the LHA may not refuse to place an applicant on the waiting list if the applicant is otherwise eligible for participation and claims that he or she qualifies for a Federal preference as provided in § 904.122(c)(2), unless the LHA determines, on the basis of the number of applicants who are already on the waiting list and who claim a Federal preference, and the anticipated number of admissions to housing under Turnkey III, that—
</P>
<P>(1) There is an adequate pool of applicants who are likely to qualify for a Federal preference, and
</P>
<P>(2) It is unlikely that, on the basis of the LHA's system for applying the Federal preferences, the preference or preferences that the applicant claims, and the preferences claimed by applicants on the waiting list, the applicant would qualify for admission before other applicants on the waiting list.
</P>
<P>(d) <I>List of applicants.</I> A separate list of applicants for Turnkey III shall be maintained, consisting of families who specifically apply and are eligible for admission to such housing. 
</P>
<P>(1) <I>Dating of applications.</I> All applications for Turnkey III shall be dated as received. 
</P>
<P>(2) <I>Effect on applicant status.</I> The filing of an application for Turnkey III by a family which is an applicant for LHA conventional rental housing or is an occupant of such housing shall in no way affect its status with regard to such rental housing. Such an applicant shall not lose his place on the rental housing waiting list until his application is accepted for Turnkey III and shall not receive any different treatment or consideration with respect to conventional rental housing because of having applied for Turnkey III. 
</P>
<P>(e) <I>Determination of potential for homeownership</I>—(1) <I>Recommending committee.</I> The LHA should consider use of a recommending committee to assist in the establishment of objective criteria for the determination of potential for homeownership and in the selection of homebuyers from the families determined to have such potential. If a recommending committee is used, it should be composed of representatives of the CPC (if any), the LHA and the HBA. The LHA shall submit to the committee prompt written justification of any rejection of a committee recommendation, stating grounds, the reasonableness of which shall be in accord with applicable LHA and HUD regulations. Each member of such a committee, at the time of appointment, shall be required to furnish the LHA with a signed statement that the member will (i) follow selection procedures and policies that do not automatically deny admission to a particular class, that insure selection on a nondiscriminatory and nonsegregated basis, and that facilitate achievement of the anticipated results for occupancy stated in the approved Affirmative Fair Housing Marketing Plan, and (ii) maintain strict confidentiality by not divulging any information concerning applicants or the deliberations of the committee to any person except to the LHA as necessary for purposes of the official business of the committee. 
</P>
<P>(2) <I>Potential for homeownership.</I> In order to be considered for selection, a family must be determined to meet at least all of the following standards of potential for homeownership: 
</P>
<P>(i) Income sufficient to result in a required monthly payment which is not less than the sum of the amounts necessary to pay the EHPA, the NRMR, and the estimated average monthly cost of utilities attributable to the home; 
</P>
<P>(ii) Ability to meet all the obligations of a homebuyer under the Homebuyers Ownership Opportunity Agreement; 
</P>
<P>(iii) At least one member gainfully employed, or having an established source of continuing income. 
</P>
<P>(f) <I>Selection of homebuyers.</I> Homebuyers shall be selected from those families determined to have potential for homeownership. Such selection shall be made in sequence from the waiting list established in accordance with this section, provided that the following shall be assured: 
</P>
<P>(1) Selection procedures that do not automatically deny admission to a particular class; that ensure selection on a nondiscriminatory and nonsegregated basis; that give a Federal preference in accordance with § 904.122; and that facilitate achievement of the anticipated results for occupancy stated in the approved Affirmative Fair Housing Marketing Plan. 
</P>
<P>(2) Achievement of an average monthly payment for the Project, including consideration of the availability of the Special Family Subsidy, which is at least 10 percent more than the breakeven amount for the Project (see § 904.108). This standard shall be complied with both in the initial selection of homebuyers and in the subsequent filling of vacancies at all times during the life of the Project. If there is an applicant who has potential for homeownership but whose required monthly payment under the LHA's Rent Schedule would be less than the break-even amount for the suitable size and type of unit, such applicant may be selected as a homebuyer, provided that the incomes of all selected homebuyers shall result in the required average monthly payment of at least 10 percent more than the break-even amount for the Project. Such an average monthly payment for the Project may be achieved by selecting other low-income families who can afford to make required monthly payments substantially above the break-even amounts for their suitable sizes and types of units. 
</P>
<P>(g) <I>Notification to applicants.</I> (1) Once a sufficient number of applicants have been selected to assure that the provisions of paragraph (f)(2) of this section are met, the selected applicant shall be notified of the approximate date of occupancy insofar as such date can reasonably be determined. 
</P>
<P>(2) Applicants who are not selected for a specific Turnkey III development shall be notified in accordance with HUD-approved procedure. The notice shall state:
</P>
<P>(i) The reason for the applicant's rejection (including a nonrecommendation by the recommending committee unless the applicant has previously been so notified by the committee);
</P>
<P>(ii) That the applicant will be given an information hearing on such determination, regardless of the reason for the rejection, if the applicant makes a request for such a hearing within a reasonable time (to be specified in the notice) from the date of the notice; and
</P>
<P>(iii) For denial of assistance for failure to establish citizenship or eligible immigration status, the applicant may request, in addition to the informal hearing, an appeal to the INS, in accordance with 24 CFR part 5.
</P>
<P>(h) <I>Eligibility for continued occupancy.</I> (1) A homebuyer shall cease to be eligible for continued occupancy with the aid of HUD annual contributions when the LHA determines that the homebuyer's adjusted monthly income has reached, and is likely to continue at, a level at which the current amount of the homebuyer's Total Tenant Payment, determined in accordance with part 913 of this chapter, equals or exceeds the monthly housing cost (see paragraph (h)(2) of this section). In such event, if the LHA determines, with HUD approval, that suitable financing is available, the LHA shall notify the homebuyer that he or she must either: (1) Purchase the home or (ii) move from the development. If, however, the LHA determines that, because of special circumstances, the family is unable to find decent, safe, and sanitary housing within the family's financial reach although making every reasonable effort to do so, the family may be permitted to remain for the duration of such a situation if it pays as rent an amount equal to Tenant Rent, as determined in accordance with part 913 of this chapter. Such a monthly payment shall also be payable by the family if it continues in occupancy without purchasing the home because suitable financing is not available.
</P>
<P>(2) The term “monthly housing cost,” as used in this paragraph, means the sum of:
</P>
<P>(i) The monthly debt service amount shown on the Purchase Price Schedule (except where the homebuyer can purchase the home by the method described in § 904.113(c)(1) of this part);
</P>
<P>(ii) One-twelfth of the annual real property taxes which the homebuyer will be required to pay as a homeowner;
</P>
<P>(iii) One-twelfth of the annual premium attributable to fire and extended coverage insurance carried by the LHA with respect to the home;
</P>
<P>(iv) The current monthly per unit amount budgeted for routine maintenance (EHPA), and for routine maintenance-common property; and
</P>
<P>(v) The current LHA and HUD approved monthly allowance for utilities paid for directly by the homebuyer plus the monthly cost of utilities supplied by the LHA.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0083)
</APPRO>
<CITA TYPE="N">[39 FR 10966, Mar. 22, 1974. Redesignated at 40 FR 15580, Apr. 7, 1975, and at 49 FR 6714, Feb. 23, 1984, as amended at 49 FR 21490, May 21, 1984; 53 FR 1172, Jan. 15, 1988; 53 FR 6601, Mar. 2, 1988; 54 FR 39710, Sept. 27, 1989; 56 FR 7544, Feb. 22, 1991; 60 FR 14848, Mar. 20, 1995; 61 FR 13626, Mar. 27, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 904.105" NODE="24:4.1.3.1.4.2.5.5" TYPE="SECTION">
<HEAD>§ 904.105   Counseling of homebuyers.</HEAD>
<P>The LHA shall provide counseling and training as provided in subpart C of this part, with funding as provided in § 904.206 of this part. Applicants for admission shall be advised of the nature of the counseling and training program available to them and the application for admission shall include a statement that the family agrees to participate and cooperate fully in all official pre-occupancy and post-occupancy training and counseling activities. Failure to participate as agreed may result in the family not being selected or retained as a homebuyer. 


</P>
</DIV8>


<DIV8 N="§ 904.106" NODE="24:4.1.3.1.4.2.5.6" TYPE="SECTION">
<HEAD>§ 904.106   Homebuyers Association (HBA).</HEAD>
<P>An HBA is an incorporated organization composed of all the families who are entitled to occupancy pursuant to a Homebuyers Ownership Opportunity Agreement or who are homeowners. It is formed and organized for the purposes set forth in § 904.304 of this part. The HBA shall be funded as provided in § 904.305 of this part. In the absence of a duly organized HBA, the LHA shall be free to act without the HBA action required by this subpart. 


</P>
</DIV8>


<DIV8 N="§ 904.107" NODE="24:4.1.3.1.4.2.5.7" TYPE="SECTION">
<HEAD>§ 904.107   Responsibilities of homebuyer.</HEAD>
<P>(a) <I>Repair, maintenance and use of home.</I> The homebuyer shall be responsible for the routine maintenance of the home to the satisfaction of the HBA and the LHA. This routine maintenance includes the work (labor and materials) of keeping the dwelling structure, grounds and equipment in good repair, condition and appearance so that they may be utilized continually at their designed capacities and at the satisfactory level of efficiency for their intended purposes, and in conformity with the requirements of local housing code and applicable regulations and guidelines of HUD. It includes repairs (labor and materials) to the dwelling structure, plumbing fixtures, dwelling equipment (such as range and refrigerator), shades and screens, water heater, heating equipment and other component parts of the dwelling. It also includes all interior painting and the maintenance of grounds (lot) on which the dwelling is located. It does not include maintenance and replacements provided for by the NRMR described in § 904.111. 
</P>
<P>(b) <I>Repair of damage.</I> In addition to the obligation for routine maintenance, the homebuyer shall be responsible for repair of any damage caused by him, members of his family, or visitors. 
</P>
<P>(c) <I>Care of home.</I> A homebuyer shall keep the home in a sanitary condition; cooperate with the LHA and the HBA in keeping and maintaining the common areas and property, including fixtures and equipment, in good condition and appearance; and follow all rules of the LHA and of the HBA concerning the use and care of the dwellings and the common areas and property. 
</P>
<P>(d) <I>Inspections.</I> A homebuyer shall agree to permit officials, employees, or agents of the LHA and of the HBA to inspect the home at reasonable hours and intervals in accordance with rules established by the LHA and the HBA. 
</P>
<P>(e) <I>Use of home.</I> A homebuyer shall not (1) sublet the home without the prior written approval of the LHA and HUD, (2) use or occupy the home for any unlawful purpose nor for any purpose deemed hazardous by insurance companies on account of fire or other risks, or (3) provide accommodations (unless approved by the HBA and the LHA) to boarders or lodgers. The homebuyer shall agree to use the home only as a place to live for the family (as identified in the initial application or by subsequent amendment with the approval of the LHA), for children thereafter born to or adopted by members of such family, and for aged or widowed parents of the homebuyer or spouse who may join the household. 
</P>
<P>(f) <I>Obligations with respect to other persons and property.</I> Neither the homebuyer nor any member of his family shall interfere with rights of other occupants of the development, or damage the common property or the property of others, or create physical hazards. 
</P>
<P>(g) <I>Structural changes.</I> A homebuyer shall not make any structural changes in or additions to the home unless the LHA has first determined in writing that such change would not (1) impair the value of the unit, the surrounding units, or the development as a whole, or (2) affect the use of the home for residential purposes, or (3) violate HUD requirements as to construction and design. 
</P>
<P>(h) <I>Statements of condition and repair.</I> When each homebuyer moves in, the LHA shall inspect the home and shall give the homebuyer a written statement, to be signed by the LHA and the homebuyer, of the condition of the home and the equipment in it. Should the homebuyer vacate the home, the LHA shall inspect it and give the homebuyer a written statement of the repairs and other work, if any, required to put the home in good condition for the next occupant (see § 904.110(j)(1)). The homebuyer, his representative, and a representative of the HBA may join in any such inspections by the LHA. 
</P>
<P>(i) <I>Maintenance of common property.</I> The homebuyer may participate in nonroutine maintenance of his home and in maintenance of common property as discussed in § 904.110(d) and § 904.111(c). 
</P>
<P>(j) <I>Homebuyer's required monthly payment.</I> (1) The term “required monthly payment” as used herein means the monthly payment the homebuyer is required to pay the LHA on or before the first day of each month. The homebuyer's required monthly payment, which is based upon family income, shall be an amount equal to the Tenant Rent as determined in accordance with part 913 of this chapter. If the Utility Allowance, as defined in part 913 of this chapter, exceeds the Homebuyer's Total Tenant Payment, as determined in accordance with part 913, the LHA will pay a utility reimbursement equal to that excess to the Homebuyer, or as provided in § 913.108 of this chapter.
</P>
<P>(2) For purposes of determining eligibility of an applicant (see 24 CFR parts 5 and 913, as well as this part) and the amount of Homebuyer payments under paragraph (j)(1) of this section, the LHA shall examine the family's income and composition and follow the procedures required by 24 CFR part 5 for determining citizenship or eligible immigration status before initial occupancy. Thereafter, for the purposes stated in this paragraph and to determine whether a Homebuyer is required to purchase the home under § 904.104(h)(1), the LHA shall reexamine the Homebuyer's income and composition regularly, at least once every 12 months, and shall undertake such further determination and verification of citizenship or eligible immigration status as required by 24 CFR part 5. The Homebuyer shall comply with the LHA's policy regarding required interim reporting of changes in the family's income and composition. If the LHA receives information from the family or other source concerning a change in the family income or other circumstances between regularly scheduled reexaminations, the LHA, upon consultation with the family and verification of the information (in accordance with 24 CFR parts 5 and 913 of this chapter) shall promptly make any adjustments determined to be appropriate in the Homebuyer payment amount or take appropriate action concerning the addition of a family member who is not a citizen with eligible immigration status. Any change in the family's income or other circumstances that results in an adjustment in the Total Tenant Payment and Tenant Rent must be verified.
</P>
<P>(3) The LHA shall not refuse to accept monthly payments because of any other charges (other than overdue monthly payments) owed by the homebuyer to the LHA; however, by accepting monthly payments under such circumstances the LHA shall not be deemed to have waived any of its rights and remedies with respect to such other charges.
</P>
<P>(k) <I>Application of monthly payment.</I> The LHA shall apply the homebuyer's monthly payment as follows: 
</P>
<P>(1) To the credit of the homebuyer's EHPA (see § 904.110); 
</P>
<P>(2) To the credit of the homebuyer's NRMR (see § 904.111); and 
</P>
<P>(3) For payment of monthly operating expense including contribution to operating reserve (see § 904.109). 
</P>
<P>(l) <I>Assignment and survivorship.</I> Until such time as the homebuyer obtains title to the home, it shall be used only to house a family of low income. Therefore: 
</P>
<P>(1) A homebuyer shall not assign any right or interest in the home or under the Homebuyers Ownership Opportunity Agreement without the prior written approval of the LHA and HUD; 
</P>
<P>(2) In the event of death, mental incapacity or abandonment of the family by the homebuyer, the person designated as the successor in the Homebuyers Ownership Opportunity Agreement shall succeed to the rights and responsibilities under the Agreement if that person is an occupant of the home at the time of the event and is determined by the LHA to meet all of the standards of potential for homeownership as set forth in § 904.104(e)(2). Such person shall be designated by the homebuyer at the time the Homebuyers Ownership Opportunity Agreement is executed. This designation may be changed by the homebuyer at any time. If there is no such designation or the designee is no longer an occupant of the home or does not meet the standards of potential for homeownership, the LHA may consider as the homebuyer any family member who was an occupant at the time of the event and who meets the standards of potential for homeownership. 
</P>
<P>(3) If there is no qualified successor in accordance with paragraph (l) (2) of this section, the LHA shall terminate the Agreement and another family shall be selected except under the following circumstances: where a minor child or children of the homebuyer family are in occupancy, then in order to protect their continued occupancy and opportunity for acquisition of ownership of the home, the LHA may approve as occupants of the unit, an appropriate adult(s) who has been appointed legal guardian of the children with a duty to perform the obligations of the Homebuyers Ownership Opportunity Agreement in their interest and behalf. 
</P>
<P>(m) <I>Termination by LHA.</I> (1) In the event the homebuyer breaches the Homebuyers Ownership Opportunity Agreement by failure to make the required monthly payment within ten days after its due date, by misrepresenting or withholding of information in applying for admission or in connection with any subsequent reexamination of income and family composition (including the failure to submit any required evidence of citizenship or eligible immigration status, as provided by 24 CFR part 5; the failure to meet the disclosure and verification requirements for Social Security Numbers, as provided by 24 CFR part 5; or the failure to sign and submit consent forms for the obtaining of wage and claim information from State Wage Information Collection Agencies, as provided by 24 CFR part 5), or by failure to comply with any of the other homebuyer obligations under the Agreement, the LHA may terminate the Agreement. No termination under this paragraph may occur less than 30 days after the LHA gives the homebuyer notice of its intention to do so, in accordance with paragraph (m)(3) of this section. For termination of assistance for failure to establish citizenship or eligible immigration status under 24 CFR part 5, the requirements of 24 CFR parts 5 and 966 shall apply.
</P>
<P>(2) Notice of termination by the LHA shall be in writing. Such notice shall state
</P>
<P>(i) The reason for termination, 
</P>
<P>(ii) That the homebuyer may respond to the LHA, in writing or in person, within a specified reasonable period of time regarding the reason for termination, 
</P>
<P>(iii) That in such response he may be represented or accompanied by a person of his choice, including a representative of the HBA,
</P>
<P>(iv) That the LHA will consult the HBA concerning this termination, and
</P>
<P>(v) That unless the LHA rescinds or modifies the notice, the termination shall be effective at the end of the 30-day notice period.
</P>
<P>(n) <I>Termination by the homebuyer.</I> The homebuyer may terminate the Homebuyers Ownership Opportunity Agreement by giving the LHA 30 days notice in writing of this intention to terminate and vacate the home. In the event that the homebuyer vacates the home without notice to the LHA, the Agreement shall be terminated automatically and the LHA may dispose of, in any manner deemed suitable by it, any items of personal property left by the homebuyer in the home. 
</P>
<P>(o) <I>Transfer to rental unit.</I> (1) Inasmuch as the homebuyer was found eligible for admission to the Project on the basis of having the necessary elements of potential for homeownership, continuation of eligibility requires continuation of this potential, subject only to temporary unforeseen changes in circumstances. Accordingly, in the event it should develop that the homebuyer no longer meets one or more of these elements of homeownership potential, the LHA shall investigate the circumstances and provide such counseling and assistance as may be feasible in order to help the family overcome the deficiency as promptly as possible. After a reasonable time, not to exceed 30 days from the date of evaluation of the results of the investigation, the LHA shall make a re-evaluation as to whether the family has regained the potential for homeownership or is likely to do so within a further reasonable time, not to exceed 30 days from the date of the reevaluation. Further extension of time may be granted in exceptional cases, but in any event, a final determination shall be made no later than 90 days from the date of evaluation of the results of the initial investigation. The LHA shall invite the HBA to participate in all investigations and evaluations. 
</P>
<P>(2) If the final determination of the LHA, after considering the views of the HBA, is that the homebuyer should be transferred to a suitable dwelling unit in an LHA rental project, the LHA shall give the homebuyer written notice of the LHA determination of the loss of homeownership potential and of the offer of transfer to a rental unit. The notice shall state that the transfer shall occur as soon as a suitable rental unit is available for occupancy, but no earlier than 30 days from the date of the notice, provided that an eligible successor for the homebuyer unit has been selected by the LHA. The notice shall also state that if the homebuyer should refuse to move under such circumstances, the family may be required to vacate the homebuyer unit, without further notice. The notice shall include a statement (i) that the homebuyer may respond to the LHA in writing or in person, within a specified reasonable time, regarding the reason for the determination and offer of transfer, (ii) that in such response he may be represented or accompanied by a person of his choice including a representative of the HBA, and (iii) that the LHA has consulted the HBA concerning this determination and offer of transfer. 
</P>
<P>(3) When a Homebuyers Ownership Opportunity Agreement is terminated pursuant to this paragraph (o), the amount in the homebuyer's EHPA shall be paid in accordance with the provisions of § 904.110(j).
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0083)
</APPRO>
<CITA TYPE="N">[39 FR 10966, Mar. 22, 1974. Redesignated at 40 FR 15580, Apr. 7, 1975, and at 49 FR 6714, Feb. 23, 1984, as amended at 49 FR 21490, May 21, 1984; 49 FR 26719, June 29, 1984; 54 FR 39710, Sept. 27, 1989; 56 FR 7544, Feb. 22, 1991; 60 FR 14848, Mar. 20, 1995; 60 FR 13626, Mar. 27, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 904.108" NODE="24:4.1.3.1.4.2.5.8" TYPE="SECTION">
<HEAD>§ 904.108   Break-even amount.</HEAD>
<P>(a) <I>Definition.</I> The term “break-even amount” as used herein means the minimum average monthly amount required to provide funds for the items listed in the illustration below. A separate break-even amount shall be established for each size and type of dwelling unit, as well as for the Project as a whole. The break-even amount for EHPA and NRMR will vary by size and type of dwelling unit; similar variations as to other line items may be made if the LHA deems this equitable. 
</P>
<EXAMPLE>
<HED>Illustration.</HED><PSPACE>The following is an illustration of the computation of the break-even amount based upon hypothetical amounts.
</PSPACE>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TD align="left" class="gpotbl_cell" scope="row">(1) Operating Expense (see § 904.109):
</TD><TD align="right" class="gpotbl_cell"/><TD align="right" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row" style="padding-left: 2em">Administration</TD><TD align="right" class="gpotbl_cell">$8.50
</TD><TD align="right" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row" style="padding-left: 2em">Homebuyer services</TD><TD align="right" class="gpotbl_cell">2.00
</TD><TD align="right" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row" style="padding-left: 2em">Project supplied utilities</TD><TD align="right" class="gpotbl_cell">3.00
</TD><TD align="right" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row" style="padding-left: 2em">Routine maintenance—common property</TD><TD align="right" class="gpotbl_cell">3.00
</TD><TD align="right" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row" style="padding-left: 2em">Protective services</TD><TD align="right" class="gpotbl_cell">2.00
</TD><TD align="right" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row" style="padding-left: 2em">General expense</TD><TD align="right" class="gpotbl_cell">6.50
</TD><TD align="right" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row" style="padding-left: 2em">Nonroutine maintenance—common property (Contribution to operating reserve)</TD><TD align="right" class="gpotbl_cell">2.00</TD><TD align="right" class="gpotbl_cell">$27.00
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">(2) Earned Home Payments Account (see § 904.110)</TD><TD align="right" class="gpotbl_cell"></TD><TD align="right" class="gpotbl_cell">12.00
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">(3) Nonroutine Maintenance Reserve (see § 904.111)</TD><TD align="right" class="gpotbl_cell"></TD><TD align="right" class="gpotbl_cell">7.50
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Break-Even Amount</TD><TD align="right" class="gpotbl_cell"></TD><TD align="right" class="gpotbl_cell">46.50</TD></TR></TABLE></DIV></DIV>
<FP>The break-even amount does not include the monthly allowance for utilities which the homebuyer pays for directly, nor does it include any amount for debt service on the Project notes.</FP></EXAMPLE>
<P>(b) <I>Excess over break-even.</I> When the homebuyer's required monthly payment (see § 904.107(j)) exceeds the applicable break-even amount, the excess shall constitute additional Project income and shall be deposited and used in the same manner as other Project income. 
</P>
<P>(c) <I>Deficit in monthly payment.</I> When the homebuyer's required monthly payment is less than the applicable break-even amount, the deficit shall be applied as a reduction of that portion of the monthly payment designated for operating expense (i. e., as a reduction of Project income). In all such cases, the EHPA and the NRMR shall be credited with the amount included in the break-even amount for these accounts. 


</P>
</DIV8>


<DIV8 N="§ 904.109" NODE="24:4.1.3.1.4.2.5.9" TYPE="SECTION">
<HEAD>§ 904.109   Monthly operating expense.</HEAD>
<P>(a) <I>Definition and categories of monthly operating expense.</I> The term “monthly operating expense” means the monthly amount needed for the following purposes: 
</P>
<P>(1) <I>Administration.</I> Administrative salaries, travel, legal expenses, office supplies, postage, telephone and telegraph, etc.; 
</P>
<P>(2) <I>Homebuyer services.</I> LHA expenses in the achievement of social goals, including costs such as salaries, publications, payments to the HBA to assist its operation, contract and other costs; 
</P>
<P>(3) <I>Utilities.</I> Those utilities (such as water), if any, to be furnished by the LHA as part of operating expense; 
</P>
<P>(4) <I>Routine maintenance—common property.</I> For community building, grounds, and other common areas, if any. The amount required for routine maintenance of common property depends upon the type of common property included in the development and the extent of the LHA's responsibility for maintenance (see also § 904.109(c)); 
</P>
<P>(5) <I>Protective services.</I> The cost of supplemental protective services paid by the LHA for the protection of persons and property; 
</P>
<P>(6) <I>General expense.</I> Premiums for fire and other insurance, payments in lieu of taxes to the local taxing body, collection losses, payroll taxes, etc.; 
</P>
<P>(7) <I>Nonroutine maintenance—common property (Contribution to operating reserve).</I> Extraordinary maintenance of equipment applicable to the community building and grounds, and unanticipated items for non-dwelling structures (see § 904.112). 
</P>
<P>(b) <I>Monthly operating expense rate.</I> The monthly operating expense rate for each fiscal year shall be established on the basis of the LHA's HUD-approved operating budget for that fiscal year. The operating budget may be revised during the course of the fiscal year in accordance with HUD requirements. If it is subsequently determined that the actual operating expense for a fiscal year was more or less than the amount provided by the monthly operating expense established for that fiscal year, the rate of monthly operating expenses to be established for the next fiscal year may be adjusted to account for the difference (see § 904.112(b)). Such adjustment may result in a change in the required monthly payment, see § 904.107(j)(3). 
</P>
<P>(c) <I>Provision for common property maintenance.</I> During the period the LHA is responsible for the maintenance of common property, the annual operating budget and the monthly operating expense rate shall include the amount required for routine maintenance of all common property in the development, even though a number of the homes may have been acquired by homebuyers. During such period, this amount shall be computed on the basis of the total number of homes in the development (i. e., the annual amount budgeted for routine maintenance of common property shall be divided by the number of homes in the development, resulting in the annual amount for each home; this figure shall in turn be divided by 12 to determine the monthly amount to be included in the monthly operating expense (and in the break-even amount) for routine maintenance of common property). After the home owners association assumes responsibility for maintenance of common property, the monthly operating expense (and break-even amount) shall include an amount equal to the monthly assessment by the homeowners association for the remaining homes owned by the LHA (see § 904.112(b) for nonroutine maintenance of common property). 
</P>
<P>(d) <I>Posting of monthly operating expense statement.</I> A statement showing the budgeted monthly amount allocated in the current operating budget to each operating expense category shall be provided to the HBA and copies shall be provided to homebuyers upon request. 


</P>
</DIV8>


<DIV8 N="§ 904.110" NODE="24:4.1.3.1.4.2.5.10" TYPE="SECTION">
<HEAD>§ 904.110   Earned Home Payments Account (EHPA)</HEAD>
<P>(a) <I>Credits to the account.</I> The LHA shall establish and maintain a separate EHPA for each homebuyer. Since the homebuyer is responsible for maintaining the home, a portion of his required monthly payment equal to the LHA's estimate, approved by HUD, of the monthly cost for such routine maintenance, taking into consideration the relative type and size of the homebuyer's home, shall be set aside in his EHPA. In addition, this account shall be credited with 
</P>
<P>(1) Any voluntary payments made pursuant to paragraph (f) of this section, and 
</P>
<P>(2) Any amount earned through the performance of maintenance as provided in paragraph (d) of this section and § 904.111(c). 
</P>
<P>(b) <I>Charges to the account.</I> (1) If for any reason the homebuyer is unable or fails to perform any item of required maintenance as described in § 904.107(a), the LHA shall arrange to have the work done in accordance with the procedures established by the LHA and the HBA and the cost thereof shall be charged to the homebuyer's EHPA. Inspections of the home shall be made jointly by the LHA and the HBA. 
</P>
<P>(2) To the extent NRMR expense is attributable to the negligence of the homebuyer as determined by the HBA and approved by the LHA (see § 904.111), the cost thereof shall be charged to the EHPA. 
</P>
<P>(c) <I>Exercise of option; required amount in EHPA.</I> The homebuyer may exercise his option to buy the home, by paying the applicable purchase price pursuant to § 904.113 or § 904.115, only after satisfying the following conditions precedent: 
</P>
<P>(1) Within the first two years of his occupancy, he has achieved a balance in his EHPA equal to 20 times the amount of the monthly EHPA credit as initially determined in accordance with paragraph (a) of this section; 
</P>
<P>(2) He has met, and is continuing to meet, the requirements of the Homebuyers Ownership Opportunity Agreement; 
</P>
<P>(3) He has rendered, and is continuing to render, satisfactory performance of his responsibilities to the HBA. 
</P>
<FP>When the homebuyer has met these conditions precedent, the LHA shall give the homebuyer a certificate to that effect. After achieving the required minimum EHPA balance within the first two years of his occupancy, the homebuyer shall continue to provide the required maintenance, thereby continuing to add to his EHPA. If the homebuyer fails to meet either his obligation to achieve the minimum EHPA balance, as specified, or his obligation thereafter to continue adding to the EHPA, the LHA and the HBA shall investigate and take appropriate corrective action, including termination of the Agreement by the LHA in accordance with § 904.107(m). 
</FP>
<P>(d) <I>Additional equity through maintenance of common property.</I> Homebuyers may earn additional EHPA credits by providing in whole or in part any of the maintenance necessary to the common property of the development. When such maintenance is to be provided by the homebuyer, this may be done and credit earned therefor only pursuant to a prior written agreement between the homebuyer and the LHA (or the home owners association, depending on who has responsibility for maintenance of the property involved), covering the nature and scope of the work and the amount of credit the homebuyer is to receive. In such cases, the agreed amount shall be charged to the appropriate maintenance account and credited to the homebuyer's EHPA upon completion of the work. 
</P>
<P>(e) <I>Investment of excess.</I> (1) When the aggregate amount of all EHPA balances exceeds the estimated reserve requirements for 90 days, the LHA shall notify the HBA and shall invest the excess in federally insured savings accounts, federally insured credit unions, and/or securities approved by HUD and in accordance with any recommendations made by the HBA. If the HBA wishes to participate in the investment program, it should submit periodically to the LHA a list of HUD-approved securities, bonds, or obligations which the association recommends for investment by the LHA of the funds in the EHPAs. Interest earned on the investment of such funds shall be prorated and credited to each homebuyer's EHPA in proportion to the amount in each such reserve account. 
</P>
<P>(2) Periodically, but not less often than semi-annually, the LHA shall prepare a statement showing (i) the aggregate amount of all EHPA balances; (ii) the aggregate amount of investments (savings accounts and/or securities) held for the account of all the homebuyers' EHPAs, and (iii) the aggregate uninvested balance of all the homebuyers' EHPAs. This statement shall be made available to any authorized representative of the HBA. 
</P>
<P>(f) <I>Voluntary payments.</I> To enable the homebuyer to acquire title to his home within a shorter period, he may, either periodically or in a lump sum, voluntarily make payments over and above his required monthly payments. Such voluntary payments shall be deposited to his credit in his EHPA. 
</P>
<P>(g) <I>Delinquent monthly payments.</I> Under exceptional circumstances as determined by the HBA and the LHA, a homebuyer's EHPA may be used to pay his delinquent required monthly payments, provided the amount used for this purpose does not seriously deplete the account and provided that the homebuyer agrees to cooperate in such counseling as may be made available by the LHA or the HBA. 
</P>
<P>(h) <I>Annual statement to homebuyer.</I> The LHA shall provide an annual statement to each homebuyer specifying at least (1) the amount in his EHPA, and (2) the amount in his NRMR. During the year, any maintenance or repair done on the dwelling by the LHA which is chargeable to the EHPA or to the NRMR shall be accounted for through a work order. A homebuyer shall receive a copy of all such work orders for his home. 
</P>
<P>(i) <I>Withdrawal and assignment.</I> The homebuyer shall have no right to assign, withdraw, or in any way dispose of the funds in its EHPA except as provided in this section or in § 904.113 and § 904.115. 
</P>
<P>(j) <I>Application of EHPA upon vacating of dwelling.</I> (1) In the event a Homebuyers Ownership Opportunity Agreement with the LHA is terminated or if the homebuyer vacates the home (see § 904.107 (m), (n) and (o)), the LHA shall charge against the homebuyer's EHPA the amounts required to pay 
</P>
<P>(i) The amount due the LHA, including the monthly payments the homebuyer is obligated to pay up to the date he vacates; 
</P>
<P>(ii) The monthly payment for the period the home is vacant, not to exceed 30 days from the date of notice of intention to vacate, or, if the homebuyer fails to give notice of intention to vacate, 30 days from the date the home is put in good condition for the next occupant in conformity with § 904.107; and 
</P>
<P>(iii) The cost of any routine maintenance, and of any nonroutine maintenance attributable to the negligence of the homebuyer, required to put the home in good condition for the next occupant in conformity with § 904.107. 
</P>
<P>(2) If the EHPA balance is not sufficient to cover all of these charges, the LHA shall require the homebuyer to pay the additional amount due. If the amount in the account exceeds these charges, the excess shall be paid to the homebuyer. 
</P>
<P>(3) Settlement with the homebuyer shall be made promptly after the actual cost of repairs to the dwelling has been determined (see paragraph (j)(1)(iii) of this section), provided that the LHA shall make every effort to make such settlement within 30 days from the date the homebuyer vacates. The homebuyer may obtain a settlement within 7 days of the date he vacates, even though the actual cost of such repair has not yet been determined, if he has given the LHA notice of intention to vacate at least 30 days prior to the date he vacates and if the amount to be charged against his EHPA for such repairs is based on the LHA's estimate of the cost thereof (determined after consultation with the appropriate representative of the HBA). 


</P>
</DIV8>


<DIV8 N="§ 904.111" NODE="24:4.1.3.1.4.2.5.11" TYPE="SECTION">
<HEAD>§ 904.111   Nonroutine Maintenance Reserve (NRMR).</HEAD>
<P>(a) <I>Purpose of reserve.</I> The LHA shall establish and maintain a separate NRMR for each home, using a portion of the homebuyer's monthly payment. The purpose of the NRMR is to provide funds for the nonroutine maintenance of the home, which consists of the infrequent and costly items of maintenance and replacement shown on the Nonroutine Maintenance Schedule for the home (see paragraph (b) of this section). Such maintenance may include the replacement of dwelling equipment (such as range and refrigerator), replacement of roof, exterior painting, major repairs to heating and plumbing systems, etc. The NRMR shall not be used for nonroutine maintenance of common property, or for nonroutine maintenance relating to the home to the extent such maintenance is attributable to the Homebuyer's negligence or to defective materials or workmanship. 
</P>
<P>(b) <I>Amount of reserve.</I> The amount of the monthly payments to be set aside for NRMR shall be determined by the LHA, with the approval of HUD, on the basis of the Nonroutine Maintenance Schedule showing the amount likely to be needed for nonroutine maintenance of the home during the term of the Homebuyers Ownership Opportunity Agreement, taking into consideration the type of construction and dwelling equipment. This Schedule shall (1) list each item of nonroutine maintenance (e.g., range, refrigerator, plumbing, heating system, roofing, tile flooring, exterior painting, etc.), (2) show for each listed item the estimated frequency of maintenance or useful life before replacement, the estimated cost of maintenance or replacement (including installation) for each occasion, and the annual reserve requirement, and (3) show the total reserve requirements for all the listed items, on an annual and a monthly basis. This Schedule shall be prepared by the LHA and approved by HUD as part of the submission required to determine the financial feasibility of the Project. The Schedule shall be revised after approval of the working drawings and specifications, and shall thereafter be reexamined annually in the light of changing economic conditions and experience. 
</P>
<P>(c) <I>Charges to NRMR.</I> (1) The LHA shall provide the nonroutine maintenance necessary for the home and the cost thereof shall be funded as provided in paragraph (c)(2) of this section. Such maintenance may be provided by the homebuyer but only pursuant to a prior written agreement with the LHA covering the nature and scope of the work and the amount of credit the homebuyer is to receive. The amount of any credit shall, upon completion of the work, be credited to the homebuyer's EHPA and charged as provided in paragraph (c)(2) of this section. 
</P>
<P>(2) The cost of nonroutine maintenance shall be charged to the NRMR for the home except that (i) to the extent such maintenance is attributable to the fault or negligence of the homebuyer, the cost shall be charged to the homebuyer's EHPA after consultation with the HBA if the hombuyer disagrees, and (ii) to the extent such maintenance is attributable to defective materials or workmanship not covered by warranty, or even though covered by warranty if not paid for thereunder through no fault or negligence of the homebuyer, the cost shall be charged to the appropriate operating expense account of the Project. 
</P>
<P>(3) In the event the amount charged against the NRMR exceeds the balance therein, the difference (deficit) shall be made up from continuing monthly credits to the NRMR based upon the homebuyer's monthly payments. If there is still a deficit when the homebuyer acquires title, the homebuyer shall pay such deficit at settlement (see paragraph (d)(2) of this section). 
</P>
<P>(d) <I>Transfer of NRMR.</I> (1) In the event the Homebuyer's Ownership Opportunity Agreement is terminated, the homebuyer shall not receive any balance or be required to pay any deficit in the NRMR. When a subsequent homebuyer moves in, the NRMR shall continue to be applicable to the home in the same amount as if the preceding homebuyer had continued in occupancy. 
</P>
<P>(2) In the event the homebuyer purchases the home, and there remains a balance in the NRMR, the LHA shall pay such balance to the homebuyer at settlement. In the event the homebuyer purchases and there is a deficit in the NRMR, the homebuyer shall pay such deficit to the LHA at settlement. 
</P>
<P>(e) <I>Investment of excess.</I> (1) When the aggregate amount of the NRMR balances for all the homes exceeds the estimated reserve requirements for 90 days the LHA shall invest the excess in federally insured savings accounts, federally insured credit unions, and/or securities approved by HUD. Income earned on the investment of such funds shall be prorated and credited to each homebuyer's NRMR in proportion to the amount in each reserve account. 
</P>
<P>(2) Periodically, but not less often than semi-annually, the LHA shall prepare a statement showing (i) the aggregate amount of all NRMR balances, (ii) the aggregate amount of investments (savings accounts and/or securities) held for the account of the NRMRs, and (iii) the aggregate uninvested balance of the NRMRs. A copy of this statement shall be made available to any authorized representative of the HBA. 


</P>
</DIV8>


<DIV8 N="§ 904.112" NODE="24:4.1.3.1.4.2.5.12" TYPE="SECTION">
<HEAD>§ 904.112   Operating reserve.</HEAD>
<P>(a) <I>Purpose of reserve.</I> To the extent that total operating receipts (including subsidies for operations) exceed total operating expenditures of the Project, the LHA shall establish an operating reserve up to the maximum approved by HUD in connection with its approval of the annual operating budgets for the Project. The purpose of this reserve is to provide funds for 
</P>
<P>(1) The infrequent but costly items of nonroutine maintenance and replacements of common property, taking into consideration the types of items which constitute common property, such as nondwelling structures and equipment, and in certain cases, common elements of dwelling structures, 
</P>
<P>(2) Nonroutine maintenance for the homes to the extent such maintenance is attributable to defective materials or workmanship not covered by warranty, 
</P>
<P>(3) Working capital for payment of a deficit in a homebuyer's NRMR, until such deficit is offset by future monthly payments by the homebuyer or at settlement in the event the homebuyer should purchase, and 
</P>
<P>(4) A deficit in the operation of the Project for a fiscal year, including a deficit resulting from monthly payments totaling less than the break-even amount for the Project. 
</P>
<P>(b) <I>Nonroutine maintenance—common property (Contribution to operating reserve).</I> The amount under this heading to be included in operating expense (and in the break-even amount) established for the fiscal year (see § 904.108 and § 904.109) shall be determined by the LHA, with the approval of HUD, on the basis of estimates of the monthly amount needed to accumulate an adequate reserve for the items described in paragraph (a)(1) of this section. This amount shall be subject to revision in the light of experience. This contribution to the operating reserve shall be made only during the period the LHA is responsible for the maintenance of any common property; and during such period, the amount shall be determined on the basis of the requirements of all common property in the development in a manner similar to that explained in § 904.109(c). When the operating reserve reaches the maximum authorized in paragraph (c) of this section, the break-even (monthly operating expense) computations (see §§ 904.108 and 904.109) for the next and succeeding fiscal years need not include a provision for this contribution to the operating reserve unless the balance of the reserve is reduced below the maximum during any such succeeding fiscal year. 
</P>
<P>(c) <I>Maximum operating reserve.</I> The maximum operating reserve that may be retained by the LHA at the end of any fiscal year shall be the sum of (1) one-half of total routine expense included in the operating budget approved for the next fiscal year and (2) one-third of total break-even amounts included in the operating budget approved for the next fiscal year; provided that such maximum may be increased if necessary as determined or approved by HUD. Total routine expense means the sum of the amounts budgeted for administration, homebuyers services, LHA-supplied utilities, routine maintenance of common property, protective services, and general expense or other category of day-to-day routine expense (see § 904.109 above for explanation of various categories of expense). 
</P>
<P>(d) <I>Transfer to homeowners association.</I> The LHA shall be responsible for and shall retain custody of the operating reserve until the homeowners acquire voting control of the homeowners association (see §§ 904.118(c) and 904.119(f). When the homeowners acquire voting control, the homeowners association shall then assume full responsibility for management and maintenance of common property under a plan approved by HUD, and there shall be transferred to the homeowners association a portion of the operating reserve then held by the LHA. The amount of the reserve to be transferred shall be based upon the proportion that one-half of budgeted routine expense (used as a basis for determining the current maximum operating reserve—see paragraph (c) of this section) bears to the approved maximum operating reserve. Specifically, the portion of operating reserve to be transferred shall be computed as follows: Obtain a percentage by dividing one-half of budgeted routine expense by the approved maximum operating reserve; and multiply the actual operating reserve balance by this percentage. 
</P>
<P>(e) <I>Disposition of reserve.</I> If, at the end of a fiscal year, there is an excess over the maximum operating reserve this excess shall be applied to the operating deficit of the Project, if any, and any remainder shall be paid to HUD. Following the end of the fiscal year in which the last home has been conveyed by the LHA, the balance of the operating reserve held by the LHA shall be paid to HUD, provided that the aggregate amount of payments by the LHA under this paragraph shall not exceed the aggregate amount of annual contributions paid by HUD with respect to the Project. 


</P>
</DIV8>


<DIV8 N="§ 904.113" NODE="24:4.1.3.1.4.2.5.13" TYPE="SECTION">
<HEAD>§ 904.113   Achievement of ownership by initial homebuyer.</HEAD>
<P>(a) <I>Determination of initial purchase price.</I> The LHA shall determine the initial purchase price of the home by two basic steps, as follows: 
</P>
<EXTRACT>
<P><I>Step 1:</I> The LHA shall take the Estimated Total Development Cost (including the full amount for contingencies as authorized by HUD) of the development as shown in the Development Cost Budget in effect upon award of the Main Construction Contract or execution of the Contract of Sale, and shall deduct therefrom the amounts, if any, attributed to (1) relocation costs, (2) counseling and training costs, and (3) the cost of any community, administration or management facilities including the land, equipment, and furnishings attributable to such facilities as set forth in the development program for the development. The resulting amount is herein called Estimated Total Development Cost for Homebuyers. 
</P>
<P><I>Step 2:</I> The LHA shall apportion the Estimated Total Development Cost for Homebuyers among all the homes in the development. This apportionment shall be made by obtaining an FHA appraisal of each home and adjusting such appraised values (upward or downward) by the percentage difference between the total of the appraisal for all the Homes and the Estimated Total Development Cost for Homebuyers. The adjusted amount for each home shall be the initial purchase price for that home.</P></EXTRACT>
<P>(b) <I>Purchase price schedule.</I> Each homebuyer shall be provided with a Purchase Price Schedule showing (1) the monthly declining purchase price over a 30-year period, 
<SU>1</SU>
<FTREF/> commencing with the initial purchase price on the first day of the month following the effective date of the Homebuyers Ownership Opportunity Agreement and (2) the monthly debt service amount upon which the Schedule is based. The Schedule and debt service amount shall be computed on the basis of the initial purchase price, a 30-year period, 
<SU>2</SU>
<FTREF/> and a rate of interest equal to the minimum loan interest rate as specified in the Annual Contributions Contract for the Project on the date of HUD approval of the Development Cost Budget, described in paragraph (a) of this section, rounded up, if necessary, to the next multiple of one-fourth of one percent (
<FR>1/4</FR> percent). 
</P>
<FTNT>
<P>
<SU>1</SU> Change to 25-year period where appropriate pursuant to § 904.101(b)(3).</P></FTNT>
<FTNT>
<P>
<SU>2</SU> Under section 234(c) of the National Housing Act, as of the date of publication of this subpart, mortgage insurance for a condominium unit in a multi-family project is generally authorized only if the project is currently or has been covered by a mortgage insured under another section of the National Housing Act. There is, however, a proviso which authorizes mortgage insurance for a condominium unit in a multi-family project even though the project is not or has not been covered by such a project mortgage, if the project involves eleven or less units.</P></FTNT>
<P>(c) <I>Methods of purchase.</I> (1) The homebuyer may achieve ownership when the amount in his EHPA, plus such portion of the NRMR as he wishes to use for the purchase, is equal to the purchase price as shown at that time on his Purchase Price Schedule plus all Incidental Costs (Incidental Costs mean the costs incidental to acquiring ownership, including, but not limited to, the costs for a credit report, field survey, title examination, title insurance, and inspections, the fees for attorneys other than the LHA's attorney, mortgage application and organization, closing and recording, and the transfer taxes and loan discount payment, if any). If for any reason title to the home is not conveyed to the homebuyer during the month in which such circumstances occur, the purchase price shall be fixed at the amount specified for such month and the homebuyer shall be refunded (i) the net additions, if any, credited to his EHPA subsequent to such month, and (ii) such part of the monthly payments made by the homebuyer after the purchase price has been fixed which exceeds the sum of the break-even amount attributable to the unit and the interest portion of the debt service shown in the Purchase Price Schedule. 
</P>
<P>(2) Where the sum of the purchase price and Incidental Costs is greater than the amounts in the homebuyer's EHPA and NRMR as described in paragraph (c)(1) of this section, the homebuyer may achieve ownership by obtaining financing for or otherwise paying the excess amount. The purchase price shall be the amount shown on his Purchase Price Schedule for the month in which the settlement date for the purchase occurs. 
</P>
<P>(d) The maximum period for achieving ownership shall be 30 years, but depending upon increases in the homebuyers income and the amount of credit which the homebuyer can accumulate through maintenance and voluntary payments, the period may be shortened accordingly. 


</P>
</DIV8>


<DIV8 N="§ 904.114" NODE="24:4.1.3.1.4.2.5.14" TYPE="SECTION">
<HEAD>§ 904.114   Payment upon resale at profit.</HEAD>
<P>(a) <I>Promissory note.</I> (1) When a homebuyer achieves ownership (regardless of whether ownership is achieved under § 904.113 or § 904.115), he shall sign a note obligating him to make a payment to the LHA, subject to the provisions of paragraph (a)(2) or this section, in the event he resells his home at a profit within 5 years of actual residence in the home after he becomes a homeowner. If, however, the homeowner should purchase and occupy another home within one year (18 months in case of a newly constructed home) of the resale of the Turnkey III home, the LHA shall refund to the homeowner the amount previously paid by him under the note, less the amount, if any, by which the resale price of the Turnkey III home exceeds the acquisition price of the new home, provided that application for such refund shall be made no later than 30 days after the date of acquisition of the new home. 
</P>
<P>(2) The note to be signed by the homebuyer pursuant to paragraph (a)(1) of this section shall be a non interest-bearing promissory note (see Appendix IV) to the LHA. The note shall be executed at the time the homebuyer becomes a homeowner and shall be secured by a second mortgage. The initial amount of the note shall be computed by taking the appraised value of the home at the time the homebuyer becomes a homeowner and subtracting (i) the homebuyer's purchase price plus the Incidental Costs and (ii) the increase in value of the home, determined by appraisal, caused by improvements paid for by the homebuyer with funds from sources other than the EHPA or NRMR. The note shall provide that this initial amount shall be automatically reduced by 20 percent thereof at the end of each year of residency as a homeowner, with the note terminating at the end of the five-year period of residency, as determined by the LHA. To protect the homeowner, the note shall provide that the amount payable under it shall in no event be more than the net profit on the resale, that is, the amount by which the resale price exceeds the sum of (A) the homebuyer's purchase price plus the Incidental Costs, (B) the costs of the resale, including commissions and mortgage prepayment penalties, if any, and (C) the increase in value of the home, determined by appraisal, due to improvements paid for by him as a homebuyer (with funds from sources other than the EHPA or NRMR) or as a homeowner. 
</P>
<P>(3) Amounts collected by the LHA under such notes shall be retained by the LHA for use in making refunds pursuant to paragraph (a)(1) of this section. After expiration of the period for the filing of claims for such refunds, any remaining amounts shall be applied (i) to reduce the LHA's capital indebtedness on the Project and (ii) after such indebtedness has been paid, for such purposes as may be authorized or approved by HUD under such Annual Contributions Contract as the LHA may then have with HUD. 
</P>
<EXAMPLE>
<HED>Illustration.</HED><PSPACE>If the homeowner's purchase price is $10,000, the Incidental Costs are $500, the value added by improvements is $1,000, and the FHA appraised value at the time he acquires ownership is $17,000, the note computation would be as follows:
</PSPACE>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TD align="left" class="gpotbl_cell" scope="row">FHA appraised value</TD><TD align="right" class="gpotbl_cell"></TD><TD align="right" class="gpotbl_cell">$17,000
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Homeowner's purchase price</TD><TD align="right" class="gpotbl_cell">$10,000</TD><TD align="right" class="gpotbl_cell"></TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Incidental costs</TD><TD align="right" class="gpotbl_cell">500</TD><TD align="right" class="gpotbl_cell"></TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Improvements</TD><TD align="right" class="gpotbl_cell">1,000</TD><TD align="right" class="gpotbl_cell">11,500
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Initial note amount</TD><TD align="right" class="gpotbl_cell"></TD><TD align="right" class="gpotbl_cell">5,500</TD></TR></TABLE></DIV></DIV><PSPACE>In this example, the amount of the note during the first year of residence is $5,500. In the second year, the amount of the note is $4,400, and in the third year, it is $3,300, etc. The note shall terminate at the end of the fifth year. 
</PSPACE><P>If the homeowner in this example resells his home during the first year for a sales price of $17,500, has resale costs of $1,600 (including a sales commission), and has added $1,500 value by further improvements, he would be required to pay the LHA $2,900 rather than the $5,500, as indicated in the following computations:
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TD align="left" class="gpotbl_cell" scope="row">Resale price</TD><TD align="right" class="gpotbl_cell"></TD><TD align="right" class="gpotbl_cell">$17,500
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Resale costs</TD><TD align="right" class="gpotbl_cell">$1,600</TD><TD align="right" class="gpotbl_cell"></TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Purchase price and Incidental costs</TD><TD align="right" class="gpotbl_cell">10,500</TD><TD align="right" class="gpotbl_cell"></TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">All improvements</TD><TD align="right" class="gpotbl_cell">2,500</TD><TD align="right" class="gpotbl_cell">14,600
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Payable to LHA</TD><TD align="right" class="gpotbl_cell"></TD><TD align="right" class="gpotbl_cell">2,900</TD></TR></TABLE></DIV></DIV></EXAMPLE>
<P>(b) <I>Residency requirements.</I> The five-year note period does not end if the homeowner rents or otherwise does not use the home as his principal place of residence for any period within the first five years after he achieves ownership. Only the actual amount of time he is in residence is counted and the note shall be in effect until a total of five years time of residence has elapsed, at which time the homeowner may request the LHA to release him from the note, and the LHA shall do so. 


</P>
</DIV8>


<DIV8 N="§ 904.115" NODE="24:4.1.3.1.4.2.5.15" TYPE="SECTION">
<HEAD>§ 904.115   Achievement of ownership by subsequent homebuyers.</HEAD>
<P>(a) <I>Definition.</I> In the event the initial homebuyer and his family vacate the home before having acquired ownership, a subsequent occupant who enters into a Homebuyer's Ownership Opportunity Agreement and who is not a successor pursuant to § 904.107(l)(2) is herein called a “subsequent homebuyer.” 
</P>
<P>(b) <I>Determination of initial purchase price.</I> The initial purchase price for a subsequent homebuyer shall be an amount equal to (1) the purchase price shown in the initial homebuyer's Purchase Price Schedule as of the date of this Agreement with the subsequent homebuyer plus (2) the amount, if any, by which the appraised fair market value of the home, determined or approved by HUD as of the same date, exceeds the purchase price specified in paragraph (b)(1) of this section. 
</P>
<P>(c) <I>Purchase price schedule.</I> The subsequent homebuyer's Purchase Price Schedule shall be the same as the unexpired portion of the initial homebuyer's Purchase Price Schedule except that where his purchase price includes an additional amount as specified in paragraph (b)(2) of this section, the initial homebuyer's Purchase Price Schedule shall be followed by an Additional Purchase Price Schedule for such additional amount based upon the same monthly debt service and the same interest rate as applied to the initial homebuyer's Purchase Price Schedule. 
</P>
<P>(d) <I>Residual receipts.</I> After payment in full of the LHA's debt, if there are any subsequent homebuyers who have not acquired ownership of their homes, the LHA shall continue to pay to HUD all residual receipts from the operation of the Project, including payments received on account of any Additional Purchase Price Schedules applicable to the homes, provided the aggregate amount of such payments of residual receipts does not exceed the aggregate amount of annual contributions paid by HUD with respect to the Project. 


</P>
</DIV8>


<DIV8 N="§ 904.116" NODE="24:4.1.3.1.4.2.5.16" TYPE="SECTION">
<HEAD>§ 904.116   Transfer of title to homebuyer.</HEAD>
<P>When the homebuyer is to obtain ownership as described in § 904.113 or § 904.115, a closing date shall be mutually agreed upon by the parties. On the closing date the homebuyer shall pay the required amount of money to the LHA, sign the promissory note pursuant to § 904.114, and receive a deed for the home. 


</P>
</DIV8>


<DIV8 N="§ 904.117" NODE="24:4.1.3.1.4.2.5.17" TYPE="SECTION">
<HEAD>§ 904.117   Responsibilities of homebuyer after acquisition of ownership.</HEAD>
<P>After acquisition of ownership, each homeowner shall be required to pay to the LHA or to the homeowners association, as appropriate, a monthly fee for (a) the maintenance and operation of community facilities including utility facilities, if any, (b) the maintenance of grounds and other common areas and, (c) such other purposes as determined by the LHA or the homeowners association, as appropriate, including taxes and a provision for a reserve. This requirement shall be set out in the planned unit development or condominium documents which shall be recorded prior to the date of full availability, or in an LHA-homeowner contract in this regard. 


</P>
</DIV8>


<DIV8 N="§ 904.118" NODE="24:4.1.3.1.4.2.5.18" TYPE="SECTION">
<HEAD>§ 904.118   Homeowners association—planned unit development (PUD).</HEAD>
<P>If the development is organized as a planned unit development: 
</P>
<P>(a) <I>Ownership and maintenance of common property.</I> The common areas, sidewalks, parking lots, and other common property in the development shall be owned and maintained as provided for in the approved planned unit development (PUD) program except that the LHA shall be responsible for maintenance until such time as the homeowners association assumes such responsibility (see § 904.112(d)). 
</P>
<P>(b) <I>Title restrictions.</I> The title ultimately conveyed to each homebuyer shall be subject to restrictions and encumbrances to protect the rights and property of all other owners. The homeowners association shall have the right and obligation to enforce such restrictions and encumbrances and to assess owners for the costs incurred in connection with common areas and property and other responsibilities. 
</P>
<P>(c) <I>Votes in association.</I> There shall be as many votes in the association as there are homes in the development, and, at the outset, all the voting rights shall be held by the LHA. As each home is conveyed to the homebuyer, one vote shall automatically go to the homeowner so that, when all the homes have been conveyed, the LHA shall no longer have any interest in the homeowners association. 
</P>
<P>(d) <I>Voting control.</I> The LHA shall not lose its majority voting interest in the association as soon as a majority of the homes have been conveyed, unless the law of the state requires control to be transferred at a particular time, or the LHA so desires. If permitted by state law, provision shall be made for each home owned by the LHA to carry three votes, while each home owned by a homeowner shall carry one vote. Under this weighted voting plan, the LHA shall continue to have voting control until 75 percent of the homes have been acquired by homeowners. However, at its discretion, the LHA may transfer voting control to the homeowners when at least 50 percent of the homes have been acquired by the homeowners. 


</P>
</DIV8>


<DIV8 N="§ 904.119" NODE="24:4.1.3.1.4.2.5.19" TYPE="SECTION">
<HEAD>§ 904.119   Homeowners association—condominium.</HEAD>
<P>If the development is organized as a condominium: 
</P>
<P>(a) The LHA at the outset shall own each condominium unit and its undivided interest in the common areas; 
</P>
<P>(b) All the land, including that land under the housing units, shall be a part of the common areas; 
</P>
<P>(c) The homeowners association shall own no property but shall maintain and operate the common areas for the individual owners of the condominium units except that the LHA shall be responsible for maintenance until such time as the homeowners association assumes such responsibility (see § 904.112(d)); 
</P>
<P>(d) The percentage of undivided interest attached to each condominium unit shall be based on the ratio of the value of the units to the value of all units and shall be fixed when the development is completed. This percentage shall determine the homeowner's liability for the maintenance of the common areas and facilities; 
</P>
<P>(e) Each homeowner's vote in the homeowners association shall be identical with the percentage of undivided interest attached to his unit; and 
</P>
<P>(f) The LHA shall not lose its majority voting interest in the association as soon as units representing 50 percent of the value of all units have been conveyed, unless the law of the state requires control to be transferred at a particular time or the LHA so desires. For voting purposes, until units representing 75 percent of the value of all units have been acquired by homeowners, the total undivided interest attributable to the homes owned by the LHA shall be multiplied by three, if such weighted voting plan is permitted by state law. Under this plan, the LHA shall continue to maintain voting control until 75 percent of the homes have been acquired by homeowners. However, at its discretion, the LHA may transfer voting control to the homeowners when units representing at least 50 percent of the value of all units have been acquired by the homeowners. 


</P>
</DIV8>


<DIV8 N="§ 904.120" NODE="24:4.1.3.1.4.2.5.20" TYPE="SECTION">
<HEAD>§ 904.120   Relationship of homeowners association to HBA.</HEAD>
<P>The HBA and the LHA may make arrangements to permit homebuyers to participate in homeowners association matters which affect the homebuyers. Such arrangements may include rights to attend meetings and to participate in homeowners association deliberations and decisions. 


</P>
</DIV8>


<DIV8 N="§ 904.121" NODE="24:4.1.3.1.4.2.5.21" TYPE="SECTION">
<HEAD>§ 904.121   Use of appendices.</HEAD>
<P>Use of the following Appendices is mandatory for Projects developed under this subpart: 


</P>
</DIV8>


<DIV8 N="§ 904.122" NODE="24:4.1.3.1.4.2.5.22" TYPE="SECTION">
<HEAD>§ 904.122   Statutory preferences.</HEAD>
<P>In selecting applicants for assistance under this part, the LHA must give preference, in accordance with the authorized preference requirements described in 24 CFR 5.410 through 5.430. Notwithstanding those preferences, the LHA can limit homeownership admission to eligible homeownership candidates.
</P>
<CITA TYPE="N">[59 FR 36651, July 18, 1994, as amended at 61 FR 9048, Mar. 6, 1996]


</CITA>
</DIV8>


<DIV9 N="" NODE="24:4.1.3.1.4.2.5.23.1" TYPE="APPENDIX">
<HEAD>Appendixes I-IV to Subpart B of Part 904
</HEAD>
<FP-1><E T="04">Appendix I—Annual Contributions Contract “Special Provisions for Turnkey III Homeownership Opportunity Project”</E> 
</FP-1>
<FP-1><E T="04">Appendix II—Homebuyers Ownership Opportunity Agreement (Turnkey III)</E> 
</FP-1>
<FP-1><E T="04">Appendix III—Certificate of Achievement of Homebuyer Status</E> 
</FP-1>
<FP-1><E T="04">Appendix IV—Promissory Note for Payment Upon Resale by Homebuyer at Profit</E>
</FP-1>
<FP>No modification may be made in format, content or text of these Appendices except (1) as required under state or local law as determined by HUD or (2) with approval of HUD. 


</FP>
</DIV9>


<DIV9 N="Appendix I" NODE="24:4.1.3.1.4.2.5.23.2" TYPE="APPENDIX">
<HEAD>Appendix I to Subpart B of Part 904—Annual Contributions Contract
</HEAD>
<HD3>(Subpart B)
</HD3>
<P>( ) Special Provisions for Turnkey III Homeownership Opportunity Project No. __________. 
</P>
<P>(1) The Local Authority agrees to operate the Project in accordance with requirements for the Homeownership Opportunity Program for Low-Income Families (Turnkey III) as prescribed by the Government. The Local Authority shall enter into an agreement with the occupant of each dwelling unit in the Project which agreement shall be in the form of the Homebuyers Ownership Opportunity Agreement approved by the Government, which form provides an opportunity for the acquisition of ownership of the dwelling unit by each occupant who has performed all of the obligations and conditions precedent imposed upon him by such agreement. Upon conveyance of any such dwelling unit, the Local Authority's outstanding obligations in respect to the Project shall be reduced by the amount received for such conveyance, and the Government's obligation for payment of annual contributions in respect to the Project shall be reduced by the amount allocable to the initial purchase price of the dwelling unit. The term “initial purchase price” as used in these Special Provisions shall have the same meaning as in the Homebuyers Ownership Opportunity Agreement, and the term “dwelling unit” shall have the same meaning as the term “Home” used in the Homebuyers Ownership Opportunity Agreement. 
</P>
<P>(2) Failure of the Local Authority to enter into such Homebuyers Ownership Opportunity Agreements at the time and in the form as required by the Government, failure to perform any such agreement, and failure to meet any of its obligations under these Special Provisions shall constitute a Substantial Default under this Contract. 
</P>
<P>(3) The books of account and records of the Local Authority shall be maintained to meet the requirements of the Homebuyers Ownership Opportunity Agreement as well as the other provisions of this Contract and in such manner as will at all times show the operating receipts, operating expenditures, reserves, residual receipts, and other required accounts for the Project separate and distinct from all other Projects under this Contract. 
</P>
<P>(4) As of the Date of Full Availability, or at such earlier date as the Government may require, the Local Authority shall determine and submit to the Government for its approval the amount below which the Development Cost of the Project will in no event fall. Upon approval thereof by the Government, such amount shall constitute and be known as the “Minimum Development Cost” of the Project. The Local Authority shall issue its Project Loan Notes, Permanent Notes or Project Notes as the Government may require to finance the Minimum Development Cost. On each Annual Contribution Date the Government shall pay an annual contribution for the Project in an amount equal to the Maximum Contribution Percentage of the latest approved Minimum Development Cost. The first annual contribution shall be paid or made available as of the next Annual Contribution Date following the approval of the Minimum Development Cost of the Project. 
</P>
<P>(5) Notwithstanding section 403(A)(4), the term “Development Cost” shall include interest on that portion of borrowed monies allocable to the Project for the period ending with the Date of Full Availability or such earlier date as may be specifically approved by the Government. 
</P>
<P>(6) (a) During the __ 
<SU>1</SU>
<FTREF/> year Maximum Contribution Period established for the Project, the Local Authority shall, within 60 days after the end of each Fiscal Year, pay to the Government all Residual Receipts of the Project for such Fiscal Year for application to the reduction of Annual Contributions payable by the Government with respect to the Project.
</P>
<FTNT>
<P>
<SU>1</SU> 25 or 30, as applicable.</P></FTNT>
<P>(b) During the period of years immediately following and equal to the Maximum Contribution Period established for the Project, the Local Authority shall, within 60 days after the end of each Fiscal Year, pay to the Government all Residual Receipts of the Project for such Fiscal Year. 
</P>
<P>(c) Following the end of the Fiscal Year in which the last dwelling unit has been conveyed by the Local Authority, the balance of the operating reserve held by the Local Authority shall be paid to the Government, provided that the aggregate amount of payments under (b) and (c) of this paragraph shall not exceed the aggregate amount of annual contributions paid by the Government with respect to the Project. 
</P>
<P>(7) No part of the Funds on deposit in the Debt Service Fund or the Advance Amortization Fund with respect to any other Project under this Contract or the funds available for deposit in such Funds for such other Projects, shall be applied to the retirement of Notes issued for this Project, nor shall any such funds on deposit for this Project be used with respect to any other Project or Projects under this Contract. 
</P>
<P>(8) To the extent that the provisions of this section conflict with other provisions of this Contract, the provisions of this section shall be controlling with respect to the Project. 


</P>
</DIV9>


<DIV9 N="Appendix II" NODE="24:4.1.3.1.4.2.5.23.3" TYPE="APPENDIX">
<HEAD>Appendix II to Subpart B of Part 904—Homebuyers Ownership Opportunity Agreement (Turnkey III) 
</HEAD>
<HD3>(Subpart B) 
</HD3>
<HD1>part i
</HD1>
<P>This Agreement, made and entered into __________________, 19____, by and between __________ (herein called the “Authority”), and __________ (herein called the “Homebuyer”); 
</P>
<HD1>witnesseth: 
</HD1>
<P>In consideration of the agreements and covenants contained in this Agreement and in Homebuyers Ownership Opportunity Agreement Part II, which is hereby incorporated into this Agreement by reference, the Authority leases to the Homebuyer the following described land and improvements thereon together with an undivided interest in all common areas and property (herein called the “Home”) located in the ________ Development (Project No. ____), which Home is identified and located as follows: [Insert address and legal description of location of Home, including rights with respect to common areas and property, and making reference to Book and Page No. in Recorder of Deeds Recorded]. 
</P>
<P>A. <I>Term of Agreement.</I> The term of this Agreement shall commence on __________________, 19____, and shall expire at midnight on the last day of this same calendar month. Said term shall be extended automatically for successive periods of one calendar month for a total term of ____ 
<SU>1</SU>
<FTREF/> years from the first day of the next calendar month unless the Homebuyer acquires title to the home pursuant to section 16 or 17 of Part II, as applicable, or unless this Agreement is terminated pursuant to section 24 of Part II.


</P>
<FTNT>
<P>
<SU>1</SU> Fill in term of years equal to term of Purchase Price Schedule (and Additional Purchase Price Schedule, if applicable) (see Section 16 or 17 of Part II as applicable).</P></FTNT>
<P>B. <I>Monthly Payment.</I> 1. Until changed in accordance with this Agreement, the Homebuyer's Monthly Payment shall be $____ per month, due and payable on or before the first day of each month. If liability for the Monthly Payment shall start on a day other than the first day of a calendar month, or if for any reason the effective date of termination occurs on other than the last day of the month, the Monthly Payment for such month shall be proportionate to the period of occupancy during that month. 
</P>
<P>2. The amount of the Monthly Payment may be increased or decreased only by reason of changes in the Rent Schedule (see section 7c of Part II) or changes in the Homebuyer's family income or other circumstances (see section 7b of Part II). Any change in Monthly Payment shall become effective by written notice from the Authority to the Homebuyer as of the date specified in such notice, and such notice shall be deemed to constitute an Amendment to this Agreement. 
</P>
<P>C. <I>Option to Purchase.</I> In consideration of the covenants contained herein, the Authority grants the Homebuyer an option to purchase the Home for the applicable purchase price, to be exercised in accordance with section 10d of Part II. 
</P>
<P>D. <I>Purchase Price.</I> The Initial Purchase Price of this Home is $______ (this price has been determined in accordance with section 16 or 17 of Part II as applicable); this amount shall be reduced periodically in accordance with the schedule (hereinafter called Purchase Price Schedule) for that amount, which Schedule is hereby furnished the Homebuyer. 
</P>
<P>E. <I>Amount of NRMR.</I> The balance (or deficit) in the NRMR on the date of this Agreement is $______. 
</P>
<P>F. <I>Homebuyers Association.</I> Upon the signing of this Agreement, the Homebuyer's family automatically becomes a member of the Homebuyers Association, as provided in section 5 of Part II.
</P>
<P-DASH>G. <I>Designation of Successor.</I> For the purpose of section 25 of Part II, the designee and his address are:
</P-DASH>
<FP-DASH> 
</FP-DASH>
<FP> First Name   Initial   Last Name
</FP>
<FP-DASH> 
</FP-DASH>
<P2>     Relationship
</P2>
<P>H. <I>Entire Agreement.</I> THIS AGREEMENT (COMPRISING PARTS I AND II, THE PURCHASE PRICE SCHEDULE, THE NONROUTINE MAINTENANCE SCHEDULE, AND THE PROMISSORY NOTE) IS THE ENTIRE AGREEMENT BETWEEN THE AUTHORITY AND THE HOMEBUYER, AND, EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, NO CHANGES SHALL BE MADE OTHER THAN IN WRITING SIGNED BY THE AUTHORITY AND THE HOMEBUYER. 
</P>
<P>THIS AGREEMENT is signed in duplicate, original for all purposes. The Homebuyer hereby acknowledges receipt of one of these signed copies. 
</P>
<FP>WITNESSES: 
</FP>
<FP-DASH>
</FP-DASH>
<FP-DASH>
</FP-DASH>
<FP>The Authority:
</FP>
<FP-DASH>By 
</FP-DASH>
<HD3>(Official Title) 
</HD3>
<FP>The Homebuyer(s): 
</FP>
<FP>Initial 
</FP>
<FP>Subsequent 
</FP>
<FP-DASH>
</FP-DASH>
<FP-DASH>
</FP-DASH>
<HD1>part ii 
</HD1>
<HD1>terms and conditions
</HD1>
<P>1. <I>Introduction</I>—a. <I>The Home.</I> The Home described in Part I of this Agreement is part of a Development, which the Authority has acquired or caused to be constructed. This Development contains a number of dwelling units including related land, and may also include common areas and property as described in Part I for occupancy by low-income families under lease-purchase agreements, each in the form of this Homebuyers Ownership Opportunity Agreement. This Development is financed by sale of the Authority's notes which will be amortized over the period of years specified in the Annual Contributions Contract relating to this Development. 
</P>
<P>b. <I>Annual Contributions Contract.</I> The Authority has entered into an Annual Contributions Contract (“ACC”) with the Department of Housing and Urban Development (“HUD”) under which the Authority will receive Annual Contributions provided by HUD, and will perform certain operational functions, to provide housing for the Homebuyers and assist the Homebuyers in achieving homeownership. 
</P>
<P>c. <I>Management.</I> The Authority may enter into a contract or contracts for management of the Development or for performance of management functions, by the Homebuyers Association (see section 5) or others. 
</P>
<P>d. <I>Definitions.</I> 
</P>
<P>(1) The term “Authority” means the local housing authority which acquires or develops a low-rent housing development with financial assistance from HUD, owns the Homes until title is transferred to the Homebuyers, and is responsible for the management of the homeownership opportunity program. 
</P>
<P>(2) The term “common property” means the nondwelling structures and equipment, common areas, community facilities, and in some cases certain component parts of dwelling structures, which are contained in the Development: <I>Provided, however,</I> That in the case of a Development that is organized as a condominium or a planned unit development (PUD), the term “common property” shall have the meaning established by the condominium or PUD documents and the State law pursuant to which the condominium or PUD is organized, under the terms, “common areas,” “common facilities,” “common elements,” “common estate,” or other similar terms. 
</P>
<P>(3) The term “Development” means the entire undertaking including all real and personal property, funds and reserves, rights, interests and obligations, and activities related thereto. 
</P>
<P>(4) The term “EHPA” means the Earned Home Payments Account established and maintained pursuant to section 10 of the Agreement. 
</P>
<P>(5) The term “Homebuyer” means the member or members of a low-income family who have executed a Homebuyers Ownership Opportunity Agreement with the Authority. 
</P>
<P>(6) The term “Homebuyers Association” (HBA) means an organization as defined in section 5 of this Agreement. 
</P>
<P>(7) The term “Homeowner” means a Homebuyer who has acquired title to his Home. 
</P>
<P>(8) The term “Homeowners Association” means an association comprised of Homeowners, including condominium associations, having responsibilities with respect to common property. 
</P>
<P>(9) The term “HUD” means the Department of Housing and Urban Development which provides the Authority with financial assistance through loans and annual contributions and technical assistance in development and operation. 
</P>
<P>(10) The term “NRMR” means the Nonroutine Maintenance Reserve established and maintained pursuant to section 11 of this Agreement. 
</P>
<P>(11) The term “Project” is used to refer to the Development in relation to matters specifically related to the Annual Contributions Contract. 
</P>
<P>2. <I>The Homebuyers Ownership Opportunity Agreement.</I> Under this Homebuyers Ownership Opportunity Agreement, the Homebuyer may achieve ownership of the home described in Part I by making the required monthly payments and providing maintenance and repairs to build up a credit in his Earned Home Payments Account (hereinafter called “EHPA”). While the Homebuyer is performing his obligations, the purchase price will be reduced in accordance with the Purchase Price Schedule, so that, while this purchase price is being reduced, the Homebuyer is increasing the amount of his EHPA. The Homebuyer may also make voluntary payments to his EHPA which will enable him to acquire ownership more quickly. The Homebuyer may take title to his Home when he is able to finance or pay in full the balance of the purchase price as shown on the Purchase Price Schedule plus the costs incidental to acquiring ownership, as provided in section 16 or 17, as applicable. 
</P>
<P>3. <I>Status of Homebuyer.</I> Until the Homebuyer satisfies the conditions set forth in section 10d precedent to the exercise of his option to purchase the Home for the applicable purchase price, the Homebuyer shall have the status of a lessee of the Authority from month to month with an obligation to build up such balance in his EHPA within the first two years of his occupancy and to continue adding to his EHPA thereafter. For convenience the term “Homebuyer” also refers to the occupant during his status as a lessee. 
</P>
<P>4. <I>Counseling of Homebuyers.</I> The Authority shall provide training and counseling, as required and approved by HUD. The Authority's own staff and resources, existing community resources, a private agency under contract with the Authority, or any combination of the three, shall be utilized to prepare Homebuyers for the rights, responsibilities, and obligations of homeownership including participation in the Homebuyers Association. The Homebuyer agrees to participate in and cooperate fully in all official training and counseling activities. 
</P>
<P>5. <I>Homebuyers Association.</I>
<SU>2</SU>
<FTREF/> Upon the signing of this Agreement, the Homebuyer's family automatically becomes a member of the Homebuyers Association having membership and purposes as set forth in the Articles of Incorporation of said Association. In the absence of a duly organized Homebuyers Association, the Authority shall be free to act without the HBA action required by this Agreement.
</P>
<FTNT>
<P>
<SU>2</SU> There may be cases, such as where the homes are on scattered sites, where there is no Homebuyers Association but an alternative method for homebuyer representation and counseling is provided (see 24 CFR 904.307). In such cases, section 5 and other portions of this Agreement referring to the Homebuyers Association should be modified to reflect the alternative method provided for homebuyer representation and counseling.</P></FTNT>
<P>6. <I>Routine maintenance, repair and use of premises.</I> a. <I>Routine maintenance.</I> The Homebuyer shall be responsible for the routine maintenance of his dwelling and grounds, to the satisfaction of the Homebuyers Association and the Authority. This routine maintenance includes the work (labor and materials) of keeping the dwelling structure, grounds and equipment in good repair, condition and appearance so that they may be utilized continually at their designed capacities and at the satisfactory level of efficiency for their intended purposes, and in conformity with the requirements of local housing codes and applicable regulations and guidelines of HUD. It includes repairs (labor and materials) to the dwelling structure, plumbing fixtures, dwelling equipment (such as range and refrigerator), shades and screens, water heaters, heating equipment and other component parts of the dwelling. It also includes all interior painting and maintenance of the grounds (lot) on which the dwelling is located. It does not include maintenance and replacements provided for by the Nonroutine Maintenance Reserve described in Section 11. 
</P>
<P>b. <I>Repair of damage.</I> In addition to his obligation for routine maintenance, the Homebuyer shall be responsible for repair of any damage caused by the Homebuyer, members of his family, or visitors. 
</P>
<P>c. <I>Care of Home.</I> The Homebuyer agrees to keep his dwelling in a sanitary condition; to cooperate with the Authority and the Homebuyers Association in keeping and maintaining the common area and property, including fixtures and equipment, in good condition and appearance; and to follow all rules of the Authority and of the Homebuyers Association concerning the use and care of the dwellings and the common areas and property. 
</P>
<P>d. <I>Inspections.</I> The Homebuyer agrees to permit officials, employees, or agents of the Authority, and of the Homebuyers Association to inspect his Home at reasonable hours and intervals in accordance with rules established by the Authority and the Homebuyers Association. 
</P>
<P>e. <I>Use of Home.</I> The Homebuyer shall not (1) sublet his Home without the prior written approval of the Authority and HUD, (2) use or occupy his home for any unlawful purpose nor for any purpose deemed hazardous by insurance companies on account of fire and other risks, or (3) provide accommodations (unless approved by the Homebuyers Association and the Authority) to boarders or lodgers. The Homebuyer agrees to use the Home only as a place to live for himself and his family (as identified in his initial application or by subsequent amendment with the approval of the Authority), for children thereafter born to or adopted by members of such family, and for aged or widowed parents of the Homebuyer or spouse who may join the household. 
</P>
<P>f. <I>Obligations with respect to other persons and property.</I> Neither the Homebuyer nor any member of his family shall interfere with rights of other occupants of the Development, or damage the common property or the property of others, or create physical hazards. 
</P>
<P>g. <I>Structural changes.</I> A Homebuyer shall not make any structural changes in or additions to his Home unless the Authority has first determined in writing that such change would not (1) impair the value of the unit, the surrounding units, or the Development as a whole, or (2) affect the use of the Home for residential purposes, or (3) violate HUD requirements as to construction and design. Any changes made in accordance with this paragraph shall be at the Homebuyer's expense, and in the event of termination of this Agreement before the Homebuyer acquires title to the Home, whether by reason of the Homebuyer's default or otherwise, the Homebuyer shall not be entitled to any compensation on account of his having made such changes. 
</P>
<P>h. <I>Statement of condition and repair.</I> When the Homebuyer moves in, the Authority shall inspect the Home and shall give the Homebuyer a written statement, to be signed by the Authority and the Homebuyer, of the condition of the Home and the equipment in it. Should the Homebuyer vacate, the Authority shall inspect the Home and give the Homebuyer a written statement of the repairs and other work, if any, required to put the Home in good condition for the next occupant (see section 10k). The Homebuyer or his representative, or both, may join in any such inspections with the Authority and the Homebuyer Association. 
</P>
<P>7. <I>Monthly payments by Homebuyer</I>—a. <I>Determination of amount.</I> Except as otherwise provided hereinafter, the Homebuyer agrees to pay to the Authority, so long as this Agreement is in effect, a required Monthly Payment as lease rental in an amount determined in accordance with a schedule adopted by the Authority and approved by HUD. Although the total monthly housing cost consists of the sum of the break-even amount (see section 8) and the debt service (payment of principal and interest) on the applicable share of the capital cost of the Development, the Homebuyer, so long as he qualifies as low income, is not required to pay the full amount, but is assisted by HUD annual contributions. The schedule shall provide for payments to be based upon a percentage of the family's adjusted monthly income and shall indicate allowances for those utilities which the Homebuyer will pay for directly. 
</P>
<P>b. <I>Changes in monthly payment due to changes in family income or other circumstances.</I> The required Monthly Payment may be adjusted as a result of the Authority's regularly or specially scheduled reexamination of the Homebuyer's family income and family composition. Interim changes may be made in accordance with the Authority's policy on reexaminations, or under unusual circumstances, at the request of the Homebuyer, if both the Authority and the Homebuyers Association agree that such action is warranted. 
</P>
<P>c. <I>Changes in monthly payment due to changes in rent schedules.</I> The required Monthly Payment may also be adjusted by changes in the required percentage of income to reflect (1) changes in operating expense as described in section 9b and (2) changes in utility allowances. 
</P>
<P>d. <I>Acceptance of monthly payment.</I> The Authority shall not refuse to accept monthly payments because of any other charges (i.e., other than overdue monthly payments) owed by the Homebuyer to the Authority; however, by accepting monthly payments under such circumstances the Authority shall not be deemed to have waived any of its rights and remedies with respect to such other charges. 
</P>
<P>e. <I>Application of monthly payment.</I> The Homebuyer's Monthly Payment shall be applied by the Authority as follows: First, to the credit of the Homebuyer's EHPA pursuant to section 10 below; second, to the credit of the Nonroutine Maintenance Reserve for the Home pursuant to Section 11 below; and third, for payment of Monthly Operating Expense, including contribution to Operating Reserve, as provided in section 9 below. 
</P>
<P>8. <I>Break-even amount</I>—a. <I>Definition.</I> The term “Break-even Amount” means the minimum monthly amount needed to provide funds for: 
</P>
<P>(1) Monthly Operating Expense, including provision for a contribution to Operating Reserve, pursuant to section 9a below; 
</P>
<P>(2) The monthly amount to be credited to the Homebuyer's EHPA pursuant to Section 10 below; and 
</P>
<P>(3) The monthly amount to be credited to the Nonroutine Maintenance Reserve for the Home pursuant to section 11 below. 
</P>
<P>b. <I>Monthly payment in excess of break-even amount.</I> When the Homebuyer's required Monthly Payment exceeds the applicable Break-even Amount, the excess shall constitute additional Project income and shall be deposited and used in the same manner as other Project income. 
</P>
<P>c. <I>Monthly payment below break-even amount.</I> When the Homebuyer's required Monthly Payment is less than the applicable Break-even Amount, the deficit shall be applied as a reduction of that portion of the Monthly Payment designated for Operating Expense (i.e., as a reduction of project income). In all such cases, the EHPA and the NRMR shall be credited with the amount included in the Break-even Amount for these accounts. 
</P>
<P>9. <I>Monthly operating expense</I>—a. <I>Definition and categories of monthly operating expense.</I> The term “monthly operating expense” means the monthly amount needed for the following purposes: 
</P>
<P>(1) <I>Administration.</I> Administrative salaries, travel, legal expenses, office supplies, postage, telephone and telegraph, etc.; 
</P>
<P>(2) <I>Homebuyer services.</I> Authority expenses in the achievement of social goals, including costs such as salaries, publications, payments to the HBA to assist its operation, contract and other costs; 
</P>
<P>(3) <I>Utilities.</I> Those utilities (such as water), if any to be furnished by the Authority as part of operating expense; 
</P>
<P>(4) <I>Routine maintenance—Common property.</I> For community building, grounds, and other common areas, if any. The amount required for routine maintenance of common property depends upon the type of common property included in the Development and the extent of the Authority's responsibility for maintenance (see also section 9c); 
</P>
<P>(5) <I>Protective services.</I> The cost of supplemental protective services paid by the Authority for the protection of persons and property; 
</P>
<P>(6) <I>General expense.</I> Premiums for fire and other insurance, payments in lieu of taxes to the local taxing body, collection losses, payroll taxes, etc.; 
</P>
<P>(7) <I>Nonroutine maintenance—Common property (contribution to operating reserve).</I> Extraordinary maintenance of equipment applicable to the community building and grounds, and unanticipated items for non-dwelling structures (see section 12). 
</P>
<P>b. <I>Monthly operating expense rate.</I> The monthly operating expense rate for each fiscal year shall be established on the basis of the Authority's HUD-approved operating budget for that fiscal year. The operating budget may be revised during the course of the fiscal year in accordance with HUD requirements. If it is subsequently determined that the actual operating expense for a fiscal year was more or less than the amount provided by the monthly operating expense established for that fiscal year, the rate of monthly operating expense to be established for the next fiscal year may be adjusted to account for the difference (see section 12). Such adjustment may result in a change in the required monthly payment (see section 7c). 
</P>
<P>c. <I>Provision for common property maintenance.</I> During the period the Authority is responsible for the maintenance of common property, the annual operating budget and the monthly operating expense rate shall include the amount required for routine maintenance of all common property in the Development, even though a number of the homes may have been acquired by homebuyers. During such period, this amount shall be computed on the basis of the total number of homes in the Development (i.e., the annual amount budgeted for routine maintenance of common property shall be divided by the number of Homes in the Development, resulting in the annual amount for each Home; this figure shall in turn be divided by 12 to determine the monthly amount to be included in the monthly operating expense (and in the break-even amount) for routine maintenance of common property). After the Homeowners Association assumes responsibility for maintenance of common property, the monthly operating expense (and break-even amount) shall include an amount equal to the monthly assessment by the homeowners association for the remaining homes owned by the Authority (see section 11 for nonroutine maintenance of common property). 
</P>
<P>d. <I>Posting of monthly operating expense statement.</I> A statement showing the budgeted monthly amount allocated in the current operating budget to each operating expense category shall be provided to the HBA and a copy shall be provided to the Homebuyer upon request. 
</P>
<P>10. <I>Earned Home Payments Account (EHPA)</I>—a. <I>Credits to the account.</I> The Authority shall establish and maintain a separate EHPA for each Homebuyer. Since the Homebuyer is responsible for maintaining his Home as provided in section 6, a portion of his required Monthly Payment equal to the Authority's estimate, approved by HUD, of the monthly cost for such routine maintenance, taking into consideration the relative type and size of the Home, shall be set aside in his EHPA. In addition, this account shall also be credited with (1) any voluntary payments made pursuant to section 10g and (2) any amount earned through the performance of maintenance pursuant to paragraph e of this section. All amounts received by the Authority for credit to the Homebuyer's account, including credits for performance of maintenance pursuant to paragraph e of this section, shall be held by the Authority for the account of the Homebuyer. 
</P>
<P>b. <I>Use of EHPA funds.</I> The unused balance in the Homebuyer's EHPA may be used toward purchase of the Home as provided in section 16 or 17 as applicable, or shall be payable to the Homebuyer if he leaves the Project as provided in paragraph k of this section. 
</P>
<P>c. <I>Charges to the account.</I> (1) If for any reason the Homebuyer is unable or fails to perform any item of required maintenance as described in section 6, the Authority shall arrange to have the work done in accordance with the procedures established by the Authority and the HBA and the cost thereof shall be charged to the Homebuyer's EHPA. Inspections of the Home shall be made jointly by the Authority and the HBA. 
</P>
<P>(2) To the extent nonroutine maintenance expense is made necessary by the negligence of the Homebuyer as determined by the HBA and the Authority (see section 11), the cost thereof shall be charged to the EHPA. 
</P>
<P>d. <I>Exercise of option; required amount in EHPA.</I> The Homebuyer may exercise his option to buy the Home, by paying the applicable purchase price pursuant to section 16 or 17, only after satisfying the following conditions precedent: 
</P>
<P>(1) Within the first two years of his occupancy, he has achieved a balance in his EHPA equal to 20 times the amount of the monthly EHPA credit as initially determined in accordance with paragraph a of this section; 
</P>
<P>(2) He has met, and is continuing to meet, the requirements of this Agreement; 
</P>
<P>(3) He has rendered, and is continuing to render, satisfactory performance of his responsibilities to the HBA. 
</P>
<P>When the Homebuyer has met these conditions precedent, the Authority shall give the Homebuyer a certificate to that effect. After achieving the required minimum EHPA balance within the first two years of his occupancy, the Homebuyer shall continue to be obligated to provide the required maintenance, thereby continuing to add to his EHPA. If the Homebuyer fails to meet either his obligation to achieve the minimum EHPA balance as specified or his obligation thereafter to continue adding to the EHPA, the Authority and the HBA shall investigate and take appropriate corrective action, including termination of this Agreement by the Authority in accordance with section 24. 
</P>
<P>e. <I>Additional equity through other maintenance.</I> Besides the maintenance which the Homebuyer must provide pursuant to section 6, the Homebuyer may earn additional EHPA credits by providing in whole or in part any of the maintenance necessary to the common property of the Development or maintenance for which the Nonroutine Maintenance Reserve is established (see section 11). Such maintenance may be provided by the Homebuyer and credit earned therefor only pursuant to a prior written agreement between the Homebuyer and the Authority (or the Homeowners Association, depending on who has responsibility for maintenance of the property involved), covering the nature and scope of the work and the amount of credit the Homebuyer is to receive. Upon completion of such work, the agreed amount shall be charged to the appropriate maintenance account and credited to the Homebuyer's EHPA. 
</P>
<P>f. <I>Investment of excess.</I> When the aggregate amount of all EHPA balances exceeds the estimated reserve requirements for 90 days, the Authority shall notify the HBA and shall invest the excess in federally-insured savings accounts, federally insured credit unions, and/or securities approved by HUD and in accordance with any recommendations made by the HBA. If the HBA wishes to participate in the investment program it should submit periodically to the Authority a list of HUD approved securities, bonds, or obligations which the HBA reecommends for investment by the Authority of the funds in the EHPAs. Interest earned on the investment of such funds shall be prorated and credited to each Homebuyer's EHPA in proportion to the amount in each such reserve account. 
</P>
<P>Periodically, but not less often than semi-annually, the Authority shall prepare a statement showing: (1) the aggregate amount of all EHPA balances; (2) the aggregate amount of investments (savings accounts and/or securities) held for the account of all the Homebuyers' EHPAs, and (3) the aggregate uninvested balance of all the Homebuyers' EHPAs. This statement shall be made available to any authorized representative of the HBA. 
</P>
<P>g. <I>Voluntary payments.</I> To enable the Homebuyer to acquire title to the Home within a shorter period, he may either periodically or in a lump sum voluntarily make payments over and above his required monthly payments. Such voluntary payments shall be deposited to his credit in his EHPA. 
</P>
<P>h. <I>Delinquent monthly payments.</I> Under exceptional circumstances as determined by the HBA and the Authority, the Homebuyer's EHPA may be used to pay his delinquent required monthly payments, provided the amount used for this purpose does not seriously deplete the account and provided that the Homebuyer agrees to cooperate in such counseling as may be made available by the Authority or the HBA. 
</P>
<P>i. <I>Annual statement to homebuyer.</I> The Authority shall provide an annual statement to the Homebuyer specifying at least (1) the amount in his EHPA, and (2) the amount in his Nonroutine Maintenance Reserve. During the year, any maintenance or repair done on the dwelling by the Authority which is chargeable to the EHPA or to the Nonroutine Maintenance Reserve, shall be accounted for through a work order. The Homebuyer shall receive a copy of all such work orders for his Home. 
</P>
<P>j. <I>Withdrawal and assignment.</I> The Homebuyer shall have no right to assign, withdraw, or in any way dispose of the funds in his EHPA except as provided in this section or in sections 16 and 17. 
</P>
<P>k. <I>Application of EHPA upon vacating of dwelling.</I> (1) In the event this Agreement is terminated or if the Homebuyer vacates the Home, the Authority shall charge against the Homebuyer's EHPA the amounts required to pay; (i) The amount due the Authority, including the monthly payments the Homebuyer is obligated to pay up to the date he vacates; (ii) the monthly payment for the period the Home is vacant, not to exceed 30 days from the date of notice of intention to vacate, or if the Homebuyer failed to give notice of intention to vacate, 30 days from the date the Home is put in good condition for the next occupant in conformity with section 6; and (iii) the cost of any routine maintenance, and of any nonroutine maintenance attributable to the negligence of the Homebuyer, required to put the Home in good condition for the next occupant in conformity with section 6. 
</P>
<P>(2) If the Homebuyer's EHPA balance is not sufficient to cover all of these charges, the Authority shall require the Homebuyer to pay the additional amount due. If the amount in the EHPA exceeds these charges, the excess shall be paid the Homebuyer. 
</P>
<P>(3) Settlement with the Homebuyer shall be made promptly after the actual cost of repairs to the dwelling has been determined (see paragraph k(1)(iii) of this section), provided that the Authority shall make every effort to make such settlement within 30 days from the date the Homebuyer vacates. The Homebuyer may obtain a settlement within 7 days of the date he vacates, even though the actual cost of such repairs has not yet been determined, if he has given the Authority notice of intention to vacate 30 days prior to the date he vacates and if the amount to be charged against his EHPA for such repairs is based on the Authority's estimate of the cost thereof (determined after consultation with the appropriate representative of the HBA). 
</P>
<P>11. <I>Nonroutine maintenance reserve (NRMR)</I>—a. <I>Purpose of reserve.</I> The Authority shall establish and maintain a separate nonroutine maintenance reserve (NRMR) for the Home, using a portion of the Homebuyer's monthly payment. The purpose of the NRMR is to provide funds for the nonroutine maintenance of the Home, which consists of the infrequent and costly items of maintenance and replacement shown on the Nonroutine Maintenance Schedule for the Home (see paragraph b of this section). Such maintenance may include the replacement of dwelling equipment (such as range and refrigerator), replacement of roof, exterior painting, major repairs to heating and plumbing systems, etc. The NRMR shall not be used for nonroutine maintenance of common property, or for nonroutine maintenance relating to the Home to the extent such maintenance is attributable to the Homebuyer's negligence or to defective materials or workmanship. 
</P>
<P>b. <I>Amount of reserve.</I> The amount of the monthly payments to be set aside for NRMR shall be determined by the Authority, with the approval of HUD, on the basis of the Nonroutine Maintenance Schedule showing the amount estimated to be needed for nonroutine maintenance of the Home during the term of this Agreement, taking into consideration the type of construction and dwelling equipment. This Schedule shall (1) list each item of nonroutine maintenance (e.g., range, refrigerator, plumbing, heating system, roofing, tile flooring, exterior painting, etc.), (2) show for each listed item the estimated frequency of maintenance or useful life before replacement, the estimated cost of maintenance or replacement (including installation) for each occasion, and the annual reserve requirement, and (3) show the total reserve requirements for all the listed items, on an annual and a monthly basis. This Schedule shall be prepared by the Authority and approved by HUD as part of the Submission required to determine the financial feasibility of the Project. The Schedule shall be revised after approval of the working drawings and specifications, and shall thereafter be reexamined annually in the light of changing economic conditions and experience. 
</P>
<P>c. <I>Charges to reserve.</I> (1) The Authority shall provide the nonroutine maintenance necessary for the Home and the cost thereof shall be funded as provided in paragraph c(2) and c(3) of this section. Such maintenance may be provided by the Homebuyer but only pursuant to a prior written agreement with the Authority covering the nature and scope of the work and the amount of credit the Homebuyer is to receive. The amount of any credit shall, upon completion of the work, be credited to the Homebuyer's EHPA and charged as provided in paragraph c(2) of this section. 
</P>
<P>(2) The cost of nonroutine maintenance shall be charged to the NRMR for the Home except that (i) to the extent such maintenance is attributable to the fault or negligence of the Homebuyer, the cost shall be charged to the Homebuyer's EHPA after consultation with the HBA if the Homebuyer disagrees, and (ii) to the extent such maintenance is attributable to defective materials or workmanship not covered by warranty, or even though covered by warranty if not paid for through no fault or negligence of the Homebuyer, the cost shall be charged to the appropriate operating expense account of the Project. 
</P>
<P>(3) In the event the amount charged against the NRMR exceeds the balance therein, the difference (deficit) shall be made up from continuing monthly credits to the NRMR based upon the Homebuyer's monthly payments. If there is still a deficit when the Homebuyer acquires title, the Homebuyer shall pay such deficit at settlement. 
</P>
<P>d. <I>Transfer of NRMR.</I> (1) In the event this Agreement is terminated, the Homebuyer shall not receive any balance or be required to pay any deficit in the NRMR. When a subsequent Homebuyer moves in, the NRMR shall continue to be applicable to the Home in the same amount as if the preceding Homebuyer had continued in occupancy. 
</P>
<P>(2) In the event the Homebuyer purchases the Home, and there remains a balance in the NRMR, the Authority shall pay such balance to the Homebuyer at settlement. In the event the Homebuyer purchases the Home and there is a deficit in the NRMR, the Homebuyer shall pay such deficit to the Authority at settlement. 
</P>
<P>e. <I>Investment of excess.</I> (1) When the aggregate amount of the NRMR balances for all the Homes exceeds the estimated reserve requirements for 90 days, the Authority shall invest the excess in federally insured savings accounts, federally insured credit unions, and/or securities approved by HUD. Income earned on the investment of such funds shall be prorated and credited to each Homebuyer's NRMR in proportion to the amount in each reserve account. 
</P>
<P>(2) Periodically, but not less often that semi-annually, the Authority shall prepare a statement showing (i) the aggregate amount of all NRMR balances, (ii) the aggregate amount of investments (savings accounts and/or securities) held for the account of the NRMR and (iii) the aggregate uninvested balance of the NRMRs. A copy of this statement shall be made available to any authorized representative of the HBA. 
</P>
<P>12. <I>Operating reserve</I>—a. <I>Purpose of reserve.</I> To the extent that total operating receipts (including subsidies for operations) exceeds total operating expenditures of the Project, the LHA shall establish an operating reserve up to the maximum approved by HUD in connection with its approval of the annual operating budgets for the Project. The purpose of this reserve is to provide funds for (1) the infrequent but costly items of nonroutine maintenance and replacements of common property, taking into consideration the types of items which constitute common property, such as nondwelling structures and equipment, and, in certain cases, common elements of dwelling structures, (2) nonroutine maintenance for the Homes to the extent such maintenance is attributable to defective materials or workmanship not covered by warranty, (3) working capital for payment of a deficit in a Homebuyer's NRMR, until such deficit is offset by future monthly payments by the Homebuyer or at settlement in the event the Homebuyer should purchase, and (4) a deficit in the operation of the Project for a fiscal year, including a deficit resulting from monthly payments totaling less than the break-even amount for the Project. 
</P>
<P>b. <I>Nonroutine maintenance</I>—__________ <I>common property (contribution to operating reserve).</I> The amount under this heading to be included in operating expense (and in the break-even amount) established for the fiscal year (see sections 8 and 9) shall be determined by the Authority, with the approval of HUD, on the basis of estimates of the monthly amount needed to accumulate an adequate reserve for the items described in paragraph a(1) of this section. This amount shall be subject to revision in the light of experience. This contribution to the Operating Reserve shall be made only during the period the Authority is responsible for the maintenance of any common property; and during such period, the amount shall be determined on the basis of the requirements of all common property in the Development in a manner similar to that explained in Section 9. When the Operating Reserve reaches the maximum authorized in paragraph c of this Section, the break-even (monthly operating expense) computations (see Sections 8 and 9) for the next and succeeding fiscal years need not include a provision for this contribution to the Operating Reserve unless the balance of the Reserve is reduced below the maximum during any such succeeding fiscal year. 
</P>
<P>c. <I>Maximum operating reserve.</I> The maximum operating reserve that may be retained by the Authority at the end of any fiscal year shall be the sum of (1) one-half of total routine expense included in the operating budget approved for the next fiscal year and (2) one-third of total break-even amounts included in the operating budget approved for the next fiscal year; provided that such maximum may be increased if necessary as determined or approved by HUD. Total routine expense means the sum of the amounts budgeted for administration, homebuyer services. Authority-supplied utilities, routine maintenance of common property, protective services, and general expense or other category of day-to-day routine expense (see section 9 above for explanation of various categories of expense). 
</P>
<P>d. <I>Transfer to Homeowners Association.</I> The Authority shall be responsible for and shall retain custody of the Operating Reserve until the Homeowners acquire voting control of the Homeowners Association (see sections 21c and 22f). When the Homeowners acquire voting control, the Homeowners Association shall then assume full responsibility for management and maintenance of common property under a plan approved by HUD, and there shall be transferred to the Homeowners Association a portion of the Operating Reserve then held by the Authority, as determined by the Authority with the approval of HUD. 
</P>
<P>e. <I>Disposition of reserve.</I> If, at the end of a fiscal year, there is an excess over the maximum Operating Reserve, this excess shall be applied to the operating deficit of the Project, if any, and any remainder shall be paid to HUD. Following the end of the fiscal year in which the last Home has been conveyed by the Authority, the balance of the Operating Reserve held by the Authority shall be paid to HUD, provided that the aggregate amount of payments by the Authority under this paragraph shall not exceed the aggregate amount of annual contributions paid by HUD with respect to the Project. 
</P>
<P>13. <I>Annual statement and copies of work orders to homebuyer.</I> a. The Authority shall maintain books of accounts and provide a statement at least annually to each Homebuyer which will show (i) the amount in his EHPA, and (2) the amount in the NRMR for his Home. 
</P>
<P>b. During the year, any maintenance or repair done on the dwelling by the Authority, which is chargeable to the EHPA or to the NRMR shall be accounted for through a work order. The Homebuyer shall receive a copy of all such work orders for his Home. 
</P>
<P>14. <I>Insurance.</I> a. Until transfer of title to the Homebuyer, the Authority shall carry all insurance prescribed by HUD including fire and extended coverage insurance upon the Home in such form and amount and with such company or companies as it determines. The Authority shall not carry any insurance on the Homebuyer's furniture, clothing, automobile, or any other personal property, or personal liability insurance covering the Homebuyer. 
</P>
<P>b. In the event the Home is damaged or destroyed by fire or other casualty, the Authority shall consult with the Homebuyer as to whether the Home shall be repaired or rebuilt. If the Authority determines that the Home should not be repaired or rebuilt but the Homebuyer disagrees, the matter shall be submitted to HUD for final determination. If the final determination is that the Home should not be repaired or rebuilt, the Authority shall terminate this Agreement upon reasonable notice to the Homebuyer. In such case, the Homebuyer shall be paid the balance in his EHPA and (to assist him in connection with relocation expenses) the balance in his NRMR, less amounts, if any, due from him to the Authority, including Monthly Payments he may be obligated to pay. 
</P>
<P>c. In the event of termination or if the Home must be vacated during the repair period, the Authority will use its best efforts to assist in relocating the Homebuyer. If the Home must be vacated during the repair period, Monthly Payments shall be suspended during the vacancy period. 
</P>
<P>15. <I>Eligibility for continued occupancy.</I> a. The Homebuyer shall cease to be eligible for continued occupancy with the aid of HUD annual contributions when the Authority determines the Homebuyer's adjusted monthly income has reached, and is likely to continue at, a level at which the Homebuyer's total payment equals or exceeds the monthly housing cost (see paragraph b of this section). In such an event, if the Authority determines, with HUD approval, that suitable financing is available, the Authority shall notify the Homebuyer that he or she must either: (1) Purchase the Home; or (2) move from the Development. If, however, the Authority determines that, because of special circumstances, the family is unable to find decent, safe and sanitary housing within the family's financial reach although making every reasonable effort to do so, the family may be permitted to remain for the duration of such a situation if it pays as rent a monthly payment consistent with its adjusted monthly income, in accordance with applicable HUD regulations prescribing rental payments for families in housing assisted under the United States Housing Act of 1937. Such a monthly payment shall also be payable by the family if it continues in occupancy without purchasing the home because suitable financing is not available.
</P>
<P>b. The term “monthly housing cost,” as used in this section means the sum of: (1) The monthly debt service amount shown on the Purchase Price Schedule (except where the Homebuyer can purchase the Home by the method described in section 16 below); (2) one-twelfth of the annual real property taxes which the Homebuyer will be required to pay as a Homeowner; (3) one-twelfth of the annual premium attributable to fire and extended coverage insurance carried by the Authority with respect to the Home; (4) the current monthly per unit amount budgeted for routine maintenance (EHPA) and routine maintenance-common property; and (5) the current Authority and HUD approved monthly allowance for utilities paid for directly by the Homebuyer plus the monthly cost of utilities supplied by the Authority. 
</P>
<P>16. <I>Achievement of ownership by initial homebuyer</I>—a. <I>Determination of initial purchase price.</I> The Authority shall determine the initial purchase prices of the Homes by two basic steps, as follows: 
</P>
<P><I>Step 1.</I> The Authority shall take the Estimated Total Development Cost (including the full amount for contingencies as authorized by HUD) of the Development as shown in the Development Cost Budget in effect upon award of the Main Construction Contract or execution of the Contract of Sale, and shall deduct therefrom the amounts, if any, attributed to (1) relocation costs, (2) counseling and training costs, and (3) the cost of any community, administration or management facilities including the land, equipment and furnishings attributable to such facilities as set forth in the development program for the Development. 
</P>
<P>The resulting amount is herein called Estimated Total Development Cost for Homebuyers. 
</P>
<P><I>Step 2.</I> The Authority shall apportion the Estimated Total Development Cost for Homebuyers among all the Homes in the Development. This apportionment shall be made by obtaining an FHA appraisal of each Home, and adjusting such appraised values (upward or downward) by the percentage difference between the total of the appraisal for all the Homes and the Estimated Total Development Cost for Homebuyers. The adjusted amount for each Home shall be the Initial Purchase Price for that Home. 
</P>
<P>b. <I>Purchase Price Schedule.</I> The Homebuyer shall be provided with a Purchase Price Schedule showing (1) the monthly declining purchase price over a 30-year period, 
<SU>3</SU>
<FTREF/> commencing with the initial purchase price on the first day of the month following the effective date of this Agreement and (2) the monthly debt service amount upon which the Schedule is based. This Schedule and debt service amount shall be computed on the basis of the initial purchase price, a 30-year period, 
<SU>3</SU> and a rate of interest equal to the minimum loan interest rate as specified in the Annual Contributions Contract for the Project on the date of HUD approval of the Development Cost Budget, described in paragraph a of this section, rounded up, if necessary, to the next multiple of one-fourth of one percent (
<FR>1/4</FR> percent).
</P>
<FTNT>
<P>
<SU>3</SU> Change to 25-year period where appropriate pursuant to § 904.101(b)(3) of this subpart.</P></FTNT>
<P>c. <I>Methods of Purchase.</I> (1) The Homebuyer may achieve ownership when the amount in his EHPA, plus such portion of the NRMR as he wishes to use for the purchase, is equal to the purchase price as shown at that time on his Purchase Price Schedule plus all Incidental Costs (“Incidental Costs” means the costs incidental to acquiring ownership, including, but not limited to, the costs for a credit report, field survey title examination, title insurance, and inspections, the fees for attorneys other than the LHA's attorney, mortgage application and organization, closing and recording, and the transfer taxes and loan discount payment if any). If for any reason title to the Home is not conveyed to the Homebuyer during the month in which such circumstances occur, the purchase price shall be fixed at the amount specified for such month and the Homebuyer shall be refunded (i) the net additions, if any, credited to his EHPA subsequent to such month, and (ii) such part of the monthly payments made by the Homebuyer after the purchase price has been fixed which exceeds the sum of the break-even amount attributable to the Home and the interest portion of the debt service shown in the Purchase Price Schedule. 
</P>
<P>(2) Where the sum of the purchase price and Incidental Costs is greater than the amounts in the Homebuyer's EHPA and NRMR, the Homebuyer may achieve ownership by obtaining financing for or otherwise paying the excess amount. The purchase price shall be the amount shown on his Purchase Price Schedule for the month in which the settlement date for the purchase occurs. 
</P>
<P>d. The maximum period for achieving ownership shall be 30 years, but depending upon increases in the Homebuyer's income and the amount of credit which the Homebuyer can accumulate through maintenance and voluntary payments, the period may be shortened accordingly. 
</P>
<P>17. <I>Achievement of Ownership by Subsequent Homebuyer</I>—a. <I>Definition.</I> In the event the initial Homebuyer and his family vacate the Home before having acquired ownership, a subsequent occupant who enters into a Homebuyer's Ownership Opportunity Agreement and who is not a successor pursuant to section 25 is herein called “Subsequent Homebuyer.” 
</P>
<P>b. <I>Determination of Initial Purchase Price.</I> The initial purchase price for a subsequent Homebuyer shall be an amount equal to (1) the purchase price shown in the initial Homebuyer's Purchase Price Schedule as of the date of this Agreement with the subsequent Homebuyer plus (2) the amount, if any, by which the appraised fair market value of the Home determined or approved by HUD as of the same date, exceeds the purchase price specified in (1). In the event such appraised value has not been determined by the date of execution of this Agreement, the amount of the Initial Purchase Price shall be inserted in part I, section D after this determination has been made, with appropriate initialling or signing by the parties. 
</P>
<P>c. <I>Purchase Price Schedule.</I> The Subsequent Homebuyer's Purchase Price Schedule shall be the same as the unexpired portion of the initial Homebuyer's Purchase Price Schedule except that where his purchase price includes an additional amount as specified in paragraph b(2) of this section, the initial Homebuyer's Purchase Price Schedule shall be followed by an Additional Purchase Price Schedule for such additional amount based upon the same monthly debt service and the same interest rate as applied to the initial Homebuyer's Purchase Price Schedule. 
</P>
<P>18. <I>Transfer of Title to Homebuyer.</I> When the Homebuyer is to obtain ownership, a closing date shall be mutually agreed upon by the parties. On the closing date, the Homebuyer shall pay the required amount of money to the Authority, sign the promissory note pursuant to section 19, and receive a deed for the Home. 
</P>
<P>19. <I>Payment Upon Resale at Profit</I>—a. <I>Promissory Note.</I> (1) When a Homebuyer (whether Initial or Subsequent Homebuyer) achieves ownership, he shall sign a note obligating him to make a payment to the Authority, subject to the provisions of paragraph (a)(2) of this section, in the event he resells his Home at a profit within 5 years of actual residence in the Home after he becomes a Homeowner. If, however, the Homeowner should purchase and occupy another Home within one year (18 months in case of a newly constructed home) of the resale of the Turnkey III Home, the Authority shall refund to the Homeowner the amount previously paid by him under the note, less the amount, if any, by which the resale price of the Turnkey III Home exceeds the acquisition price of the new home, provided that application for such refund shall be made no later than 30 days after the date of acquisition of the new home. 
</P>
<P>(2) The note to be signed by the Homebuyer pursuant to paragraph (a)(1) of this section shall be secured by a second mortgage. The initial amount of the note shall be computed by taking the appraised value of the Home at the time the Homebuyer becomes a Homeowner and subtracting (i) the Homebuyer's purchase price plus the Incidental Costs and (ii) the increase in value of the Home, determined by appraisal, caused by improvements paid for by the Homebuyer with funds from sources other than the EHPA or NRMR. The note shall provide that this initial amount shall be automatically reduced by 20 percent thereof at the end of each year of residency as Homeowner, with the note terminating at the end of the five-year period of residency, as determined by the Authority. To protect the Homeowner, the note shall provide that the amount payable under it shall in no event be more than the net profit on the resale, that is, the amount by which the resale price exceeds the sum of (i) the Homebuyer's purchase price plus the Incidental Costs, (ii) the costs of the resale, including commissions and mortgage prepayment penalties, if any, and (iii) the increase in value of the Home, determined by appraisal, resulting from improvements paid for by him as a Homebuyer (with funds other than from the EHPA or NRMR) or as a Homeowner. 
</P>
<P>(b) <I>Residency requirements.</I> The five-year note periods does not end if the Homeowner rents or otherwise does not use the Home as his principal place of residence for any period within the first five years after he achieves ownership. Only the actual amount of time he is in residence is counted and the note shall be in effect until a total of five years time of residence has elapsed, at which time the Homeowner may request the Authority to release him from the note, and the Authority shall do so. 
</P>
<P>20. <I>Responsibilities of Homeowner.</I> After acquisition of ownership, the Homeowner shall pay to the Authority or to the Homeowners Association, as appropriate, a monthly fee for (a) the maintenance and operation of community facilities including utility facilities, if any, (b) the maintenance of grounds and other common areas, and (c) such other purpose as determined by the Authority or the Homeowners Association, as appropriate, including taxes and a provision for a reserve. 
</P>
<P>21. <I>Homeowners Association—Planned Unit Development (PUD)</I> 
<SU>4</SU>
<FTREF/>
</P>
<FTNT>
<P>
<SU>4</SU> If this Home is a Development of scattered sites, delete both sections 21 and 22. If this Home is in a Planned Unit Development, delete section 22. If this Home is in a Condominium, delete section 21.</P></FTNT>
<P>If the Development is organized as a planned unit development: 
</P>
<P>a. The common areas, sidewalks, parking lots and other common property in the Development shall be owned and maintained as provided for in the approved planned unit development (PUD) program, except that the Authority shall be responsible for maintenance until such time as the Homeowners Association assumes such responsibility (see section 12 above). 
</P>
<P>b. The title ultimately conveyed to the Homebuyer shall be subject to restrictions and encumbrances to protect the rights and property of all other Homeowners. The Homeowners Association shall have the right and obligation to enforce such restrictions and encumbrances and to assess Homeowners for the costs incurred in connection with common areas and property and other responsibilities. 
</P>
<P>c. There shall be as many votes in the Association as there are Homes in the Development, and at the outset all the voting rights will be held by the Authority. As each Home is conveyed to a Homebuyer, one vote shall automatically go to that Homebuyer so that when all the Homes have been conveyed, the Authority shall no longer have any interest in the Homeowners Association. 
</P>
<P>d. The Authority shall not lose its majority voting interest in the Association as soon as a majority of the Homes have been conveyed, unless the law of the state requires control to be transferred at a particular time or the Authority so desires. If permitted by state law, provisions shall be made for each Home owned by the Authority to carry three votes while each Home owned by a Homeowner shall carry one vote. Under this weighted voting plan, the Authority will continue to have voting control until 75 percent of the Homes have been acquired by Homeowners. However, at its discretion, the Authority may transfer voting control to the Homeowners when at least 50 percent of the Homes have been acquired by the Homeowners. 
</P>
<P>22. <I>Homeowners Association—Condominium.</I>
<SU>5</SU>
<FTREF/> If the Development is organized as a condominium:


</P>
<FTNT>
<P>
<SU>5</SU> If this Home is a Development of scattered sites, delete both sections 21 and 22. If this Home is in a Planned Unit Development, delete section 22. If this Home is in Condominium, delete section 21.</P></FTNT>
<P>a. The Authority at the outset shall own each condominium unit and the undivided interest of such unit in the common areas. 
</P>
<P>b. All the land, including that land under the housing units, shall be a part of the common areas. 
</P>
<P>c. The Homeowners Association shall own no property and shall merely maintain and operate the common areas for the individual owners of the condominium units, except that the Authority shall be responsible for maintenance until such time as the Homeowners Association assumes such responsibility (see section 12 above). 
</P>
<P>d. The percentage of undivided interest attached to each condominium unit shall be based on the ratio of the value of the unit to the value of all units and shall be fixed when the Development is completed. This percentage shall determine the Homeowner's liability for the maintenance of the common areas and facilities. 
</P>
<P>e. Each Homeowner vote in the Homeowners Association will be identical with the percentage of undivided interest attached to his unit. 
</P>
<P>f. The Authority shall not lose its majority voting interest in the Association as soon as units representing more than 50 percent of the value of all units have been conveyed, unless the law of the state requires control to be transferred at a particular time or the Authority so desires. For voting purposes, until units representing 75 percent of the value of all units have been acquired by Homeowners, the total undivided interest attributable to the Homes owned by the Authority shall be multiplied by three, if such weighted voting plan is permitted by state law. Under this plan, the Authority will continue to have voting control until units representing 75 percent of the value of all units have been acquired by Homeowners. However, at its discretion the Authority may transfer voting control to the Homeowners when units representing at least 50 percent of the value of all units have been acquired by the Homeowners. 
</P>
<P>23. <I>Relationship of Homeowners Association to Homebuyers Association.</I> The Homebuyers Association and the Authority may make arrangements with the Homeowners Association to permit Homebuyers to participate in Homeowners Association matters which affect the Homebuyers. Such arrangements may include rights to attend meetings and to participate in Homeowners Association deliberations and decisions. 
</P>
<P>24. <I>Termination of Agreement</I>—a. <I>Termination by the Authority</I>—(1) In the event the Homebuyer should breach this Agreement by failure to make a required Monthly Payment within 10 days after its due date, by misrepresentation or withholding of information in applying for admission or in connection with any subsequent reexamination of income and family composition, or by failure to comply with any other Homebuyer obligation under this Agreement, the Authority may terminate this Agreement 30 days after giving the Homebuyer notice of its intention to do so in accordance with paragraph (2) of this section. 
</P>
<P>(2) Notice of termination by the Authority shall be in writing. Such notice shall state (i) the reason for termination, (ii) that the Homebuyer may respond to the Authority, in writing or in person, within a specified reasonable period of time regarding the reason for termination, (iii) that in such response he may be represented or accompanied by a person of his choice, including a representative of the HBA, (iv) that the Authority will consult the HBA concerning the termination, and (v) that, unless the Authority rescinds or modifies the notice, the termination will be effective at the end of the 30-day notice period. 
</P>
<P>b. <I>Termination by the Homebuyer.</I> The Homebuyer may terminate this Agreement by giving the Authority 30 days notice in writing of his intention to terminate and to vacate the Home. In the event that the Homebuyer vacates the Home without notice to the Authority, this Agreement shall be terminated automatically and the Authority may dispose of, in any manner deemed suitable by it, any items of personal property left by the Homebuyer in the Home. 
</P>
<P>c. <I>Transfer to rental unit.</I> (1) Inasmuch as the Homebuyer was found eligible for admission to the Project on the basis of having the necessary elements, of potential for Homeownership, continuation of eligibility requires continuation of this potential, subject only to temporary unforeseen changes in circumstances. The standards of potential for Homeownership are the following: 
</P>
<P>(i) Income sufficient to result in a required monthly payment which is not less than the sum of the amounts necessary to pay the EHPA, the NRMR, and the estimated average monthly cost of utilities attributable to the Home; 
</P>
<P>(ii) Ability to meet all the obligations of a Homebuyer under the Homebuyers Ownership Opportunity Agreement; 
</P>
<P>(iii) At least one member gainfully employed, or having an established source of continuing income. 
</P>
<P>(2) Accordingly, in the event it should develop that the Homebuyer no longer meets one or more of these elements of Homeownership potential, the Authority shall investigate the circumstances and provide such counseling and assistance as may be feasible in order to help the family overcome the deficiency as promptly as possible. After a reasonable time, not to exceed 30 days from the date of evaluation of the results of the investigation, the Authority shall make a re-evaluation as to whether the family has regained the potential for Homeownership or is likely to do so within a further reasonable time, not to exceed 30 days from the date of the re-evaluation. Further extension of time may be granted in exceptional cases, but in any event a final determination shall be made no later than 90 days from the date of evaluation of the results of the initial investigation. The Authority shall invite the HBA to participate in all investigations and evaluations. 
</P>
<P>(3) If the final determination of the Authority, after considering the views of the HBA, is that the Homebuyer should be transferred to a suitable dwelling unit in an Authority rental project, the Authority shall give the Homebuyer written notice of the Authority determination of the loss of Homeownership potential and of the offer of transfer to a rental unit. The notice shall state that the transfer shall occur as soon as a suitable rental unit is available for occupancy but no earlier than 30 days from the date of the notice, provided that an eligible successor for the Homebuyer unit has been selected by the Authority. The notice shall also state that if the Homebuyer should refuse to move under such circumstances, the family may be required to vacate the Homebuyer unit, without further notice. The notice shall include a statement (i) that the Homebuyer may respond to the Authority in writing or in person, within a specified reasonable time, regarding the reason for the determination and offer of transfer, (ii) that in such response he may be represented or accompanied by a person of his choice including a representative of the HBA, and (iii) that the Authority has consulted the HBA concerning this determination and offer of transfer. 
</P>
<P>(4) When a Homebuyers Ownership Opportunity Agreement is terminated pursuant to this paragraph 24c, the amount in the Homebuyer's EHPA shall be paid in accordance with the provisions of paragraph 10k of this Agreement. 
</P>
<P>25. <I>Survivorship.</I> (1) In the event of death, mental incapacity or abandonment of the family by the Homebuyer, the person designated as the successor in part I of this Agreement shall succeed to the rights and responsibilities under the Agreement if that person is an occupant of the Home at the time of the event and is determined by the Authority to meet all of the standards of potential for homeownership as set forth in section 24a. This designation may be changed by the Homebuyer at any time. If there is no such designation or the designee is no longer an occupant of the Home or does not meet the standards of potential for homeownership, the Authority may consider as the Homebuyer any family member who was in occupancy at the time of the event and who meets the standards of potential for homeownership. 
</P>
<P>(2) If there is no qualified successor in accordance with the above, the Authority shall terminate the Agreement and another family shall be selected, except under the following circumstances: where a minor child or children of the Homebuyer family are in occupancy, then in order to protect their continued occupancy and opportunity for acquisition of ownership of the Home, the Authority may approve as occupants of the unit, an appropriate adult(s) who has been appointed legal guardian of the children with a duty to perform the obligations of the Homebuyers Ownership Opportunity Agreement in their interest and behalf. 
</P>
<P>26. <I>Nonassignability and Use of Reserves and Accounts</I>—a. <I>Nonassignability.</I> The Homebuyer shall not assign this Agreement, or assign, mortgage or pledge any right or interest in the Home or in this Agreement including any right or interest in any reserve or account, except with the prior written approval of the Authority and HUD. 
</P>
<P>b. <I>Use of Reserves and Accounts.</I> It is understood and agreed that the Homebuyer shall have no right to receive or use the money in any reserve or account created pursuant to this Agreement except for the limited purposes and under the special circumstances set forth by the terms of this Agreement. It is further understood and agreed that both the Authority and HUD have a financial and a governmental interest in the Earned Home Payments Account and other reserves as security for the financial integrity of the Development, as a means of savings in cost to the Government by minimizing the amount and period over which HUD annual contributions must be paid, and as a means of advancing the public interest and welfare by assisting low-income families to achieve homeownership. 
</P>
<P>27. <I>Notices.</I> Any notice required hereunder or by law shall be sufficient if delivered in writing to the Homebuyer personally or to an adult member of his family residing in the dwelling unit or if sent by certified mail, return receipt requested, properly addressed to the Homebuyer, postage prepaid. Notice to the Authority shall be in writing, and either delivered to any Authority employee at the office of the Authority or sent to the Authority by certified mail, properly addressed, postage prepaid. 
</P>
<P>28. <I>Grievance Procedure.</I> All grievances or appeals arising under this Agreement shall be processed and resolved pursuant to the grievance procedure of the Authority, which procedure shall provide for participation of the HBA in the grievance process. This grievance procedure shall be posted in the Authority's Office.
</P>
<CITA TYPE="N">[39 FR 10966, Mar. 22, 1974. Redesignated at 49 FR 15580, Apr. 7, 1975. Redesignated at 49 FR 6714, Feb. 23, 1984, and amended at 49 FR 21490, May 21, 1984]


</CITA>
</DIV9>


<DIV9 N="Appendix III" NODE="24:4.1.3.1.4.2.5.23.4" TYPE="APPENDIX">
<HEAD>Appendix III to Subpart B of Part 904—Certification of Homebuyer Status 
</HEAD>
<HD3>(Subpart B) 
</HD3>
<FP>State of __________ 
</FP>
<FP>County of __________
</FP>
<P-DASH>This is to certify that 
</P-DASH>
<FRP>(Homebuyer)
</FRP>
<FP>of the Home located at ______________: 
</FP>
<P>(1) Has achieved, within the first two years of his occupancy a balance in his Earned Home Payments Account (EHPA) of at least __________ dollars (representing 20 times the amount of the monthly EHPA credit applicable to said Home); 
</P>
<P>(2) Has met and is continuing to meet the requirements of his Homebuyers Ownership Opportunity Agreement; and 
</P>
<P>(3) Has rendered and is continuing to render satisfactory performance of his responsibilities to the Homebuyers Association. 
</P>
<P>Accordingly, said Homebuyer may, upon payment of the purchase price, exercise the option to purchase the Home in accordance with and subject to the provisions of his Homebuyers Ownership Opportunity Agreement.

Housing Authority 
</P>
<FP-DASH>By 
</FP-DASH>
<FP>   (Signature and official title) 
</FP>
<FP>(Date) ____________________
</FP>
<FP-DASH>Homebuyers Association 
</FP-DASH>
<FP-DASH>By 
</FP-DASH>
<FP>   (Signature and official title) 
</FP>
<FP>(Date) ____________________


</FP>
</DIV9>


<DIV9 N="Appendix IV" NODE="24:4.1.3.1.4.2.5.23.5" TYPE="APPENDIX">
<HEAD>Appendix IV to Subpart B of Part 904—Promissory Note for Payment upon Resale by Homebuyer at Profit
</HEAD>
<HD3>(Subpart B)
</HD3>
<P-DASH>FOR VALUE RECEIVED, 
</P-DASH>
<FP-DASH>(Homeowner) promises to pay to 
</FP-DASH>
<FP>(Authority) or order, the principal sum of ____________________ 
<SU>1</SU> Dollars
<FTREF/> ($________), without interest, on the date of resale by the Homeowner of the property conveyed by the Authority to the Homeowner.
</FP>
<FTNT>
<P>
<SU>1</SU> Amount determined in accordance with section 19 of the Homebuyers Ownership Opportunity Agreement.</P></FTNT>
<P>Such principal sum shall be reduced automatically by 20 percent of the initial amount at the end of each year of such residency, as a Homeowner, and this note shall terminate at the end of five years of such residency, as determined by the Authority; Provided, however, that the amount payable under this note shall in no event be more than the net profit on the resale, that is, the amount by which the resale price exceeds the sum of (1) the Homeowner's purchase price, (2) the costs incidental to his acquisition of ownership, (3) the costs of the resale, including commissions and mortgage prepayment penalties, if any, and (4) the increase in value of the Home, determined by appraisal, due to improvements paid for by the Homeowner whether as a Homebuyer (with funds from sources other than his Earned Home Payments Account or his Nonroutine Maintenance Reserve) or as a Homeowner. 
</P>
<P>If the Homeowner shall pay this note at the time and in the manner set forth above, or if, by its provisions, the amount of this note shall be zero, then the note shall terminate and the Authority shall, within thirty (30) days after written demand therefor by the Homeowner, execute a release and satisfaction of this note. The Homeowner hereby waives the benefits of all statutes or laws which require the earlier execution or delivery of such release and satisfaction by the Authority. 
</P>
<P>Presentment, protest, and notice are hereby waived.
</P>
<FP>Dated ________________________, 19____
</FP>
<FP-DASH>Local Housing Authority
</FP-DASH>
<FP>By: ____________________(Homeowner) 
</FP>
<FP>____________________ (Homeowner's Spouse) 


</FP>
</DIV9>

</DIV6>


<DIV6 N="C" NODE="24:4.1.3.1.4.3" TYPE="SUBPART">
<HEAD>Subpart C—Homeownership Counseling and Training</HEAD>


<DIV8 N="§ 904.201" NODE="24:4.1.3.1.4.3.5.1" TYPE="SECTION">
<HEAD>§ 904.201   Purpose.</HEAD>
<P>The purpose of the counseling and training program shall be to assure that the homebuyers, individually and collectively through their homebuyers association (HBA), will be more capable of dealing with situations with which they may be confronted, making decisions related to these situations, and understanding and accepting the responsibility and consequences that accompany those decisions. 


</P>
</DIV8>


<DIV8 N="§ 904.202" NODE="24:4.1.3.1.4.3.5.2" TYPE="SECTION">
<HEAD>§ 904.202   Objectives.</HEAD>
<P>The counseling and training program should seek to achieve the following objectives: 
</P>
<P>(a) Enable the potential homebuyer to have a full understanding of the responsibilities that accompany his participation in the Homeownership Opportunity Program; 
</P>
<P>(b) Enable the potential homebuyer to have an understanding of homeownership tasks with specific training given to individuals as the need and readiness for counseling or training indicates; 
</P>
<P>(c) Assure that the role of the HBA is understood and plans for its organization are initiated at the earliest practical time; 
</P>
<P>(d) Develop an understanding of the role of the LHA and of the need for a cooperative relationship between the homebuyer and the LHA; 
</P>
<P>(e) Encourage the development of self-help by the homebuyer through reducing dependency and increasing independent action; 
</P>
<P>(f) Develop an understanding of mutual assistance and cooperation that will develop a feeling of self-respect, pride and community responsibility; 
</P>
<P>(g) Develop local resources that can be of assistance to the individual and the community on an on-going basis. 


</P>
</DIV8>


<DIV8 N="§ 904.203" NODE="24:4.1.3.1.4.3.5.3" TYPE="SECTION">
<HEAD>§ 904.203   Planning.</HEAD>
<P>(a) The counseling and training program shall be flexible and responsive to the needs of each prospective homebuyer. While many subjects lend themselves to group sessions, consideration shall be given to individual counseling. Individuals should not be required to attend training classes on subject matter they are familiar with unless they can actively participate in the instruction process. 
</P>
<P>(b) The program may be provided by contract with an outside organization, or by the LHA staff, in either case with voluntary involvement and assistance of groups and individuals within the community. It is essential that the training entity be completely knowledgeable and supportive of the entire Homeownership Opportunity Program. It may be recognized that most of the objectives stated require specialized instructional skill and content knowledge. There shall be recognition of the differences in communication and in value systems, and an understanding and respect for past experience of the individual. Maximum possible use shall be made of indigenous trainers to insure good communication and rapport. Special attention shall be directed to the needs of working members of the family for counseling and training sessions to be held where and during the time they can attend. Where the services of outside contractors are utilized, there shall be a close working relationship with the LHA and a program for phasing in LHA staff who will have the on-going responsibility for the program. The value of local agencies, educational institutions, etc., for implementing the program rather than an outside firm shall be carefully considered since the continuing presence of such agencies and institutions in the community can often develop into an on-going resource beyond the contract period. 
</P>
<P>(c) In planning a homeownership counseling and training program, whether self-administered or contracted, the LHA shall consult with HUD for advice and information on programs, qualified contractors, local resources, reasonable costs, and other similar matters. 
</P>
<P>(d) Where the program is to be contracted to an outside group, proposals shall be secured either by public advertising or by sending requests for proposals to a number of competent public or private organizations. 
</P>
<P>(e) In areas where there are large concentrations of homebuyers who do not read, write, or understand English fluently, the native language of the people shall be used. If feasible all instructional materials shall be in both languages. 


</P>
</DIV8>


<DIV8 N="§ 904.204" NODE="24:4.1.3.1.4.3.5.4" TYPE="SECTION">
<HEAD>§ 904.204   General requirements and information.</HEAD>
<P>(a) The counseling and training program shall be designed to meet the needs of the homebuyers and be sufficiently flexible to meet new needs as they arise. The nature of the program suggests four phases of counseling: (1) Pre-occupancy; (2) move-in; (3) post-occupancy; (4) assistance to the HBA. While some elements of the program lend themselves more to one phase than another, the program areas shall be coordinated and interrelated. It is recommended that the entity providing these services work closely with the participants and ensure that policies established are agreeable to both the LHA and the homebuyer. 
</P>
<P>(b) The following is a description of major elements of the program which experience thus far has shown to be relevant. More detailed information is set forth in Appendix I, “Content Guide for Counseling and Training Program.” 
</P>
<P>(1) <I>Pre-occupancy phase.</I> The purpose of this phase is to prepare the selected families to assume the responsibilities of homeownership, and to provide an opportunity for the LHA and each family to reassess the family's potential for successful participation in the homeownership development. 
</P>
<P>(i) An overload of information should be avoided in this phase since many of the subjects will be dealt with in greater depth after the family is in occupancy, and experience has shown that much of the information will be more relevant at that time. 
</P>
<P>(ii) This phase should be completed for each family before the beginning of its occupancy. 
</P>
<P>(2) <I>Move-in phase.</I> During this phase, the counseling and training staff should be available to the homebuyers on an individual basis. Services may include (i) inspecting the units, interior and exterior, with the homebuyers and a representative of the LHA, (ii) testing appliances and equipment, (iii) providing information on the moving process (packing, trucks, etc.), and (iv) assisting homebuyers in making adjustments occasioned by the move, serving as liaison among homebuyers, LHA, builder and other agencies, and assisting homebuyers in meeting new neighbors. 
</P>
<P>(3) <I>Post-occupancy phase.</I> Before this phase begins, a period (possibly one month) should elapse to allow homebuyers an opportunity to adjust to their new surroundings. This is a time when new questions and problems come to light that can be dealt with in further counseling and training. This phase should be designed to cover many of the same basic subjects as the pre-occupancy phase, both by review and refresher where necessary but in much greater depth. 
</P>
<P>(4) <I>Assistance to the HBA.</I> The parties responsible for the counseling and training program shall be responsible for the formation, incorporation, and development of the HBA, including the execution of the Recognition Agreement between the LHA and HBA, as provided in subpart D of this part. 


</P>
</DIV8>


<DIV8 N="§ 904.205" NODE="24:4.1.3.1.4.3.5.5" TYPE="SECTION">
<HEAD>§ 904.205   Training methodology.</HEAD>
<P>Equal in importance to the content of the pre- and post-occupancy training is the training methodology. Because groups vary, there should be adaptability in the communication and learning experience. Methods to be utilized may include group presentations, small discussion groups, special classes, and workshops. Especially important to a successful program are individual family home visits for discussion and instruction on unique problems and operation of equipment. 


</P>
</DIV8>


<DIV8 N="§ 904.206" NODE="24:4.1.3.1.4.3.5.6" TYPE="SECTION">
<HEAD>§ 904.206   Funding.</HEAD>
<P>(a) <I>Source of funds.</I> For purpose of funding counseling and training pursuant to this subpart and for establishing the HBA, the LHA shall include an amount equal to $500 per dwelling unit in the development cost budget. If additional funds should be needed for any of these purposes, the LHA with the assistance of the CPC, if any, shall explore all other possible sources of services and funds. 
</P>
<P>(b) <I>Planned use of $500-per-unit funds.</I> These funds are to be used to pay for: 
</P>
<P>(1) Pre- and post-occupancy counseling and training; 
</P>
<P>(2) Establishment and initial operation of the HBA (for operation in the management phase, see § 904.305). 
</P>
<FP>In planning the use of these funds, the LHA shall recognize that for a number of years after the initial counseling and training there is likely to be some turnover and follow-up counseling and training needs. Therefore, the LHA shall limit the amounts for the counseling and training of the initial homebuyers and shall reserve a reasonable amount for future counseling and training needs during the management phase of the development. 
</FP>
<P>(c) <I>Period of availability of $500-per-unit funds.</I> These funds shall be available during the development phase, and a specific amount shall be set aside, in accordance with paragraph (b) of this section, to be used for ongoing needs after the close of the development period. 
</P>
<P>(d) <I>Budgeting of $500-per-unit funds.</I> (1) The Development Cost Budget submitted with the Development Program shall include an estimated amount for counseling and training program costs. However, such costs shall not be incurred until after HUD approval of the counseling and training program. 
</P>
<P>(2) Upon HUD approval of the counseling and training program, the LHA shall include the approved amount in its Contract Award Development Cost Budget. This amount shall constitute the maximum amount that may be included for such purposes in the project development cost; provided that, if the approved amount is less than $500 per dwelling unit, it may, if necessary, be amended with HUD approval, but not later than the Final Development Cost Budget and subject to the $500-per-unit limitation. 
</P>
<P>(e) <I>Application for approval of counseling and training program.</I> (1) The LHA shall submit an application for approval of a counseling and training program and for approval of funds therefor. This application shall be submitted to HUD at the time of the submission of the development program or as soon thereafter as possible but no later than the submission of the working drawings and specifications. 
</P>
<P>(2) The application shall include a narrative statement outlining the counseling and training program, including any services and funds to be obtained from other sources, together with copies of any proposed contract and other pertinent documents. This statement shall include the following: 
</P>
<P>(i) Indication that the training entity is completely knowledgeable of the Homeownership Opportunity Program and is aware of the needs and problems of prospective homebuyers; 
</P>
<P>(ii) The method and/or instruments to be used to determine individual training and counseling needs; 
</P>
<P>(iii) The scope of the proposed program, including a detailed breakdown of tasks to be performed, products to be produced, and a time schedule, including provision for progress payments for specific tasks; 
</P>
<P>(iv) An outline of the proposed content of the counseling and training to be provided, and the local community resources to be utilized; 
</P>
<P>(v) The methods of counseling and training to be utilized; 
</P>
<P>(vi) The experience and qualifications of the organization and of personnel who will directly provide the counseling and training; 
</P>
<P>(vii) The estimated cost, source of funds, and methods of payment for the tasks and products to be performed or produced, including estimates of costs for each of the following categories: 
</P>
<P>(<I>a</I>) Counseling and training during development phase: 
</P>
<EXTRACT>
<FP-1>Salaries 
</FP-1>
<FP-1>Materials, supplies and expendable equipment 
</FP-1>
<FP-1>Contract costs 
</FP-1>
<FP-1>Other costs</FP-1></EXTRACT>
<P>(<I>b</I>) Establishment and initial operation of HBA 
</P>
<P>(<I>c</I>) Counseling and training during management phase 


</P>
</DIV8>


<DIV8 N="§ 904.207" NODE="24:4.1.3.1.4.3.5.7" TYPE="SECTION">
<HEAD>§ 904.207   Use of appendix.</HEAD>
<P>A Content Guide for Counseling and Training Program (Appendix I) is provided as further detailed information for consideration in designing the counseling and training program. The items set forth therein are not to be considered mandatory. 


</P>
</DIV8>


<DIV9 N="Appendix I" NODE="24:4.1.3.1.4.3.5.8.6" TYPE="APPENDIX">
<HEAD>Appendix I to Subpart C of Part 904—Content Guide for Counseling and Training Program 
</HEAD>
<HD3>(Subpart C)
</HD3>
<P>Inclusion of the following items in the Counseling and Training Program should be considered, keeping in mind that the extent to which they are covered will depend on specific needs of homebuyers in the given development. 
</P>
<HD1>preoccupancy phase 
</HD1>
<P>1. <I>Explanation of program.</I> Includes the background and a full description of the program with special emphasis on the financial and legal responsibilities of the homebuyers, the HBA, and the LHA; and a review for homebuyers of the computation of the monthly payment and of the accumulation and purpose of EHPA and reserves. 
</P>
<P>2. <I>Property care and maintenance.</I> Includes making homebuyers generally familiar with the overall operation of the home, including fixtures, equipment, interior designing, and building and equipment warranties, and the appropriate procedures for obtaining services and repairs to which the homebuyers may be entitled. (This aspect will probably have to be covered in more detail during the Post-Occupancy Phase.) 
</P>
<P>3. <I>Money management.</I> Includes budgeting, consumer education, credit counseling, insurance, utility costs, etc. 
</P>
<P>4. <I>Developing community.</I> Includes a view of the surrounding community, and especially how the homebuyer relates to it as an individual and as a member of the HBA. 
</P>
<P>5. <I>Referrals.</I> Includes information as to community resources and services where assistance can be obtained in relation to individual or family problems beyond the scope of the contract agency. This may include referrals to community services that can upgrade employment skills, provide legal services, offer educational opportunities, care for health and dental needs, care for children of working mothers, provide guidance in marital problems and general family matters, including drugs and alcohol. 
</P>
<HD1>post-occupancy phase 
</HD1>
<P>1. <I>Home maintenance.</I> This should include builder responsibility, identification of minor and major repairs, instructions on do-it-yourself repairs and methods of having major repairs completed. 
</P>
<P>2. <I>Money management.</I> This should involve an in-depth study of the legal and financial aspects of consumer credit, savings and investments, and budget counseling. 
</P>
<P>3. <I>Developing community.</I> This will consist primarily of creating an awareness on the part of the homebuyer of the nature and function of the HBA and the value of his participation in, and working through, the HBA as a responsible member of his community. By this means much will be learned about relationships with neighbors, community cooperation, and the ways in which individual and group problems are solved. 
</P>
<HD1>other items 
</HD1>
<P>In addition to the above, there are other needs and concerns, especially those expressed by the homebuyers, that may be dealt with in special classes or workshops. These may include such topics as child care, selection of furnishings, decorating and furnishing, refinishing of furniture, upholstery, sewing, food and nutrition, care of clothing, etc.


</P>
</DIV9>

</DIV6>


<DIV6 N="D" NODE="24:4.1.3.1.4.4" TYPE="SUBPART">
<HEAD>Subpart D—Homebuyers Association (HBA)</HEAD>


<DIV8 N="§ 904.301" NODE="24:4.1.3.1.4.4.5.1" TYPE="SECTION">
<HEAD>§ 904.301   Purpose.</HEAD>
<P>(a) It is essential that the homebuyers have an organized vehicle for pursuing their common interests, for effectively representing the needs of residents in dealing with the LHA, and for undertaking eventual management responsibility for the development. Although this organization, called the homebuyers association (HBA), shall be representative of the homebuyers and independent of the LHA, it shall be the responsibility of the LHA and the training and counseling staff to assist the homebuyers in their initial efforts at organization. 
</P>
<P>(b) Except as noted in § 904.307, each Turnkey III development shall have an HBA. There shall be a separate HBA for each development or developments where there is a physical and financial community of interest. 


</P>
</DIV8>


<DIV8 N="§ 904.302" NODE="24:4.1.3.1.4.4.5.2" TYPE="SECTION">
<HEAD>§ 904.302   Membership.</HEAD>
<P>Every family entitled to occupancy pursuant to a Homebuyers Ownership Opportunity Agreement and every family which is a homeowner shall automatically be a member of the HBA. 


</P>
</DIV8>


<DIV8 N="§ 904.303" NODE="24:4.1.3.1.4.4.5.3" TYPE="SECTION">
<HEAD>§ 904.303   Organizing the HBA.</HEAD>
<P>(a) The HBA should be organized and incorporated as early in the life of the development as is feasible, in order to allow selected homebuyers an opportunity to meet each other and begin forging a sense of community, but in any case the HBA shall be organized and incorporated no later than the date on which 50 percent of the homebuyers have been selected. Interim officers and directors shall be designated as part of the initial organization of the HBA to serve until full-term officers and directors are elected. Such full-term officers and directors shall be elected when 60 percent of the homebuyers are in occupancy, but, in any event, not later than one year from the date the first home is occupied. 
</P>
<P>(b) The LHA, in cooperation with the CPC, if any, shall be responsible for assuring that competent counseling and training assistance pursuant to Subpart C of this part will be provided in organizing the HBA. These services shall be continued until the HBA is fully operational. 
</P>
<P>(c) The provision of such services shall include at least the following functions: 
</P>
<P>(1) Assembling homebuyers for initial orientation and planning; 
</P>
<P>(2) Explaining to homebuyers the structure and functions of an HBA and the rights and responsibilities of the HBA and the LHA; 
</P>
<P>(3) Aiding in the preparation of charters, by-laws, contracts with the LHA and other appropriate documents; 
</P>
<P>(4) Assisting in the formation of the organization, including such things as the initial designation of interim officers and directors and subsequent election of full-term HBA officers and directors, and the establishment of necessary committees, if any. 
</P>
<P>(d) The LHA and the HBA shall execute an agreement recognizing the HBA as the official representative of the homebuyers, and establishing the functions, rights, and responsibilities of both parties (see Appendix II). This agreement shall be executed as soon as possible after incorporation of the HBA. 


</P>
</DIV8>


<DIV8 N="§ 904.304" NODE="24:4.1.3.1.4.4.5.4" TYPE="SECTION">
<HEAD>§ 904.304   Functions of the HBA.</HEAD>
<P>(a) Subject to possible variations agreed to by the HBA and approved by HUD, the functions of the HBA shall include the following: 
</P>
<P>(1) Representing its members, individually and collectively, with respect to any deficiencies in the development or in the homes and with respect to fulfillment of the construction contract and related warranties; 
</P>
<P>(2) Representing its members, individually and collectively, in their relationships with the LHA and others in regard to financial matters such as monthly payments, credits to and charges against reserves, settlement upon vacating the home, acquisition of ownership, and other matters pertaining to operation and management of the development; 
</P>
<P>(3) Recommending policies and rules to the LHA for operation and management including rules concerning use of the common areas and community facilities; 
</P>
<P>(4) Participating in the operation of official grievance mechanisms; 
</P>
<P>(5) Advising and assisting its members regarding procedures and practices relative to the Earned Home Payments Account and the acquisition of homeownership; 
</P>
<P>(6) Participating with the LHA in periodic maintenance inspections of homes after occupancy, and making recommendations in case of disagreements arising out of maintenance inspections; 
</P>
<P>(7) Participating with the LHA in the selection of subsequent homebuyers; 
</P>
<P>(8) Coordinating, supervising, or managing the operation of credit union, child care, or other supportive services established for the development; 
</P>
<P>(9) Participating with the LHA in the establishment and implementation of policies related to collection of monthly payments, termination of occupancy, and resolution of hardship situations; and 
</P>
<P>(10) Performing management services as specified under contract with the Authority or with the Homeowners Association and participating in other activities pursuant to agreement with the LHA or with the Homeowners Association. 
</P>
<P>(b) In addition, the HBA may offer such special services as the following: 
</P>
<P>(1) The development of self-help such as consumer clubs, furniture and other co-ops, credit unions, transportation pools, and skill pools; 
</P>
<P>(2) Assisting homebuyers in acquiring group insurance; 
</P>
<P>(3) Developing programs and contracting for services such as child care centers to be located in the community facility where such a facility exists; 
</P>
<P>(4) Assisting homebuyers in their employment, especially by participating in skill development and apprenticeship programs in cooperation with local educational organizations; 
</P>
<P>(5) Assisting homebuyers in planning the management role of the HBA and in negotiating any contract for management services with the LHA. 


</P>
</DIV8>


<DIV8 N="§ 904.305" NODE="24:4.1.3.1.4.4.5.5" TYPE="SECTION">
<HEAD>§ 904.305   Funding of HBA.</HEAD>
<P>(a) In addition to providing the HBA with noncash contributions such as office space and duplicating services, the LHA shall make cash contributions for operating expenses of the HBA, in the amount provided for in paragraph (b) of this section. Until the project goes into management, these contributions shall be made from the development funds budgeted for the counseling and training program (see § 904.206). Thereafter, these contributions shall be provided for in the annual operating budgets of the LHA. 
</P>
<P>(b) The cash contributions pursuant to paragraph (a) of this section shall be in the amount provided for in the LHA budget (development cost budget or annual operating budget, as the case may be) and approved by HUD. Such contributions shall be subject to whatever restrictions are applied by HUD to the funding of tenant councils generally, but they shall not exceed $3 per year per dwelling unit; provided that as an incentive to the HBA to provide additional funds from other sources such as homebuyer's dues, contributions, revenues from special projects or activities, etc., the LHA shall, to the extent approved by HUD in the LHA budget, match such additional funds beyond the $3 up to a maximum of $4.50, for a total LHA share of $7.50 where the total funding for the HBA is $12 or more. The HBA shall not be precluded from seeking to achieve total funding in excess of $12 per unit where this can be done with additional funds from sources other than the LHA. Furthermore, funding by the LHA for the normal expenses of the HBA is not to be confused with fees paid pursuant to management services contracts as described in § 904.306. 


</P>
</DIV8>


<DIV8 N="§ 904.306" NODE="24:4.1.3.1.4.4.5.6" TYPE="SECTION">
<HEAD>§ 904.306   Performing management services.</HEAD>
<P>The LHA may also contract with the HBA to perform some or all of the functions of project management for which the HBA may be better suited or located than the LHA. Such functions may include security, maintenance of common property, or collection of monthly payments. For this purpose, the HBA may form a management corporation and the officers of the HBA shall be the directors of such corporation. This corporation and the LHA shall then negotiate a management services contract. Such arrangements are consistent with the objective of providing for maximum participation by residents in the management of their developments. As an alternative, the HBA and the LHA may elect to undertake any other arrangement approved by HUD. 


</P>
</DIV8>


<DIV8 N="§ 904.307" NODE="24:4.1.3.1.4.4.5.7" TYPE="SECTION">
<HEAD>§ 904.307   Alternative to HBA.</HEAD>
<P>Where the homes are on scattered sites (noncontiguous lots throughout a multi-block area, with no common property), or where the number of homes may be too few to support an HBA, and where an alternative method for homebuyer representation and continuing counseling is provided, an HBA shall not be required. For such cases, a modified form of homebuyers association may be called for or a less formal organization may be desirable. This decision shall be made jointly by the LHA and the homebuyers, acting on the recommendation of HUD. 


</P>
</DIV8>


<DIV8 N="§ 904.308" NODE="24:4.1.3.1.4.4.5.8" TYPE="SECTION">
<HEAD>§ 904.308   Relationship with homeowners association.</HEAD>
<P>The HBA and the homeowners association are, in legal terms, separate and distinct organizations with different functions. The homeowners association may hold title to and be responsible for maintenance of common property (see §§ 904.119 and 904.120), while the HBA has more general service and representative functions. While all residents are members of the HBA, only those who have acquired title to their homes are members of the homeowners association. 


</P>
</DIV8>


<DIV8 N="§ 904.309" NODE="24:4.1.3.1.4.4.5.9" TYPE="SECTION">
<HEAD>§ 904.309   Use of appendices.</HEAD>
<P>Use of the Articles of Incorporation (Part I of Appendix I) and the Recognition Agreement between the Local Housing Authority and Homebuyers Association (Appendix II) is mandatory for projects developed under subpart B of this part which have homebuyers associations. No modification may be made in format, content or text of these Appendices except (1) as required under state or local law as determined by HUD or (2) with approval of HUD. The By-Laws of the Homebuyers Association is provided as a guide for such projects and it may be used or modified to the extent required by the HBA and LHA respectively to meet local needs and desires.


</P>
</DIV8>


<DIV9 N="Appendix I" NODE="24:4.1.3.1.4.4.5.10.7" TYPE="APPENDIX">
<HEAD>Appendix I to Subpart D of Part 904—Articles of Incorporation and By-Laws of ______________ Homebuyers Association 
</HEAD>
<HD3>(Subpart D) 
</HD3>
<FP>Part I—<I>Articles of Incorporation</I> 
</FP>
<P-DASH>In compliance with the requirements of 
</P-DASH>
<FP-DASH> 
</FP-DASH>
<FP>(reference to statute under which incorporation is sought) the undesigned, all of whom are natural persons, residents of ____________________, of full age, have this day voluntarily associated themselves together for the purpose of forming a Corporation, not-for-profit, and do hereby certify: 
</FP>
<HD1>Article I—Name
</HD1>
<P-DASH>The name of the corporation is 
</P-DASH>
<FP>______________ Homebuyers Association (hereinafter referred to as the “Association”). 
</FP>
<HD1>Article II—Office
</HD1>
<P>The principal office of the Association is
</P>
<FP-DASH>located at 
</FP-DASH>
<HD1>Article III—Agent
</HD1>
<P>________________________, whose address is ________________________, is hereby appointed the initial registered agent of the Association. 
</P>
<HD1>Article IV—Duration
</HD1>
<P>The period of duration of the Association is perpetual. 
</P>
<HD1>Article V—Membership
</HD1>
<P>Membership in the Association shall be limited to families who are entitled to occupancy of a Home in the Development pursuant to a Homebuyers Ownership Opportunity Agreement and families who are Homeowners in the Development, and all such families shall automatically be members so long as they are in occupancy of a Home. For purposes of these Articles, the term “Development” includes the following described Development or Developments in the Homeownership Opportunity Program of ____________________ (hereinafter referred to as the Authority): 
</P>
<FP-DASH>
</FP-DASH>
<FP-DASH>
</FP-DASH>
<HD1>Article VI—Purposes
</HD1>
<P>The purposes for which this Association is formed shall not result in pecuniary gain or profit to the members thereof. These purposes are to provide organization and representation for its members in their relationships with the Authority in all matters regarding the homeownership opportunity program and, if appropriate, to perform management responsibilities for the Development under contract with the Authority. 
</P>
<P>1. In order to carry out these purposes, the Association shall perform the following functions: 
</P>
<P>a. Represent its members, individually and collectively, with respect to any deficiencies in the Development or in the Homes and with respect to fulfillment of the construction contract and related warranties; 
</P>
<P>b. Represent its members, individually and collectively, in their relationships with the Authority and others in regard to financial matters such as monthly payments, credits to and charges against reserves, settlement upon vacating a Home, and acquisition of ownership, and other matters pertaining to operation and management of the development; 
</P>
<P>c. Recommend policies and rules to the Authority for operation and management including rules concerning use of the common areas and community facilities; 
</P>
<P>d. Participate in the operation of official grievance mechanisms; 
</P>
<P>e. Advise and assist its members regarding procedures and practices relative to their Earned Home Payments Accounts and to their acquisition of homeownership; 
</P>
<P>f. Participate with the Authority in periodic maintenance inspections of the Homes after occupancy and make recommendations in case of disagreement arising out of maintenance inspections; 
</P>
<P>g. Participate with the Authority in the selection of subsequent homebuyers; 
</P>
<P>h. Coordinate, supervise, or manage the operation of credit union, child care, or other supportive services established for the Development; 
</P>
<P>i. Participate with the Authority in the establishment and implementation of policies related to collection of monthly payments, termination of occupancy, and resolution of hardship situations; 
</P>
<P>j. Perform management services as specified under contract with the Authority or with the Homeowners Association and participate in other activities pursuant to agreement with the Authority or with the Homeowners Association. 
</P>
<P>2. The Association may also offer special services such as: 
</P>
<P>a. The development of self-help such as consumer clubs, furniture and other co-ops, credit unions, transportation pools, and skill pools; 
</P>
<P>b. Assisting Homebuyers in acquiring group insurance; 
</P>
<P>c. Developing programs and contracting for services such as child care centers to be located in the community facility, where such a facility exists; 
</P>
<P>d. Assisting Homebuyers in their employment, especially by participating in skill development and apprenticeship programs in cooperation with local educational organizations; and 
</P>
<P>e. Assisting Homebuyers in planning the management role of the Association and in negotiating any contract for management services with the Authority. 
</P>
<HD1>Article VII—Powers
</HD1>
<P>This Association shall have all the powers, privileges, rights and immunities which are necessary or convenient for carrying out its purposes and which are conferred by the provisions of all applicable laws of the State of __________________ pertaining to non-profit corporations. 
</P>
<HD1>Article VIII—Voting
</HD1>
<P>There shall be only one vote per Home regardless of the number of persons in the family that occupies the Home. 
</P>
<HD1>Article IX—Board of Directors and By-laws
</HD1>
<P>The affairs of the Association shall be managed by a Board of Directors, all of whom shall be members of the Association. The number of Directors shall be as provided in the By-Laws of the Association. The following persons shall serve as the first Board of Directors and as the first officers:
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Office
</TH><TH class="gpotbl_colhed" scope="col">Address
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row"></TD><TD align="right" class="gpotbl_cell"></TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"></TD><TD align="right" class="gpotbl_cell"></TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"></TD><TD align="right" class="gpotbl_cell"></TD></TR></TABLE></DIV></DIV>
<FP>This Board shall manage the affairs of the Association until election of their successors by the membership. 
</FP>
<P>Promptly after 60 percent of the Homes are occupied, or one year from the date the first Home is occupied, whichever occurs sooner, the Board shall call the first annual meeting of the Association at which the members shall adopt By-Laws and elect one-third of the Board for a term of one year, one-third for a term of two years, and one-third for a term of three years. At each annual meeting thereafter the members shall elect one-third of the Board for a term of three years. 
</P>
<HD1>Article X—Dissolution
</HD1>
<P>After all members have acquired ownership of their Homes, the Association shall be dissolved with the assent given in writing and signed by not less than two-thirds of the members. The dissolution shall be effective when all of the assets of the Association remaining after payment of its liabilities have been granted, conveyed and assigned in such manner as the Association and Authority may mutually agree. 
</P>
<HD1>Article XI—Amendment
</HD1>
<P>Amendment of these Articles shall require the assent of 75 percent of the entire membership. 
</P>
<P><I>In witness whereof,</I> for the purposes of incorporating this Association under the laws of the State of ______________, we, the undersigned constituting the incorporators of this Association, have executed these Articles of Incorporation this ____________ day of ______________, 19____.
</P>
<FP-DASH>     
</FP-DASH>
<FP-DASH>     
</FP-DASH>
<FP-DASH>     
</FP-DASH>
<FP-1>[Witness, Notary, or Acknowledgment as required by state law] 
</FP-1>
<NOTE>
<HED>Note:</HED>
<P>The following is a suggested form of By-Laws. Different format and content to meet local needs may be used. For example, it may be considered desirable to combine HBA offices, eliminate or change functions of various committees, provide for other committees, etc.</P></NOTE>
<FP>Part II—<I>By-Laws</I> 
</FP>
<P>The members of the __________________ Homebuyers Association (hereinafter referred to as the “Association”) do hereby adopt in accordance with Article IX of the Articles of Incorporation the following By-Laws: 
</P>
<P><E T="05">Section 1.</E> <I>Organization</I>—The affairs of the Association shall be managed by a Board of Directors elected by and from the members of the Association. The Board shall elect officers of the Association, including a President, Vice President, Secretary, and Treasurer, who shall carry out such functions and duties as are prescribed by these By-Laws and the Board. 
</P>
<P><E T="05">Sec. 2.</E> <I>Association meetings</I>—A. <I>Annual meetings.</I> The Association shall have an annual meeting at ______________ (time) on the __________________ (day of week and month) each year for the purpose of transacting such business as may be necessary or appropriate. If the date of the annual meeting is a legal holiday, the meeting shall be held at the same hour on the first day following which is not a legal holiday. 
</P>
<P>B. <I>Quarterly and special meetings.</I> Between annual meetings, quarterly meetings shall be called by the President and be held for the purpose of advising the membership of activities of the Board and enabling the members to bring up matters of common concern. Special meetings may be called at any time (1) by the President with the written concurrence of at least two of the other officers or (2) by a petition filed with the Secretary stating the purpose of the meeting and signed by at least one-fifth of the total number of members in the Association. 
</P>
<P>C. <I>Notice of meetings.</I> Written notice of each annual, quarterly or special meeting of the members shall be given by, or at the direction of, the Secretary by mailing a copy of such notice at least fifteen days before an annual or quarterly meeting or at least seven days before a special meeting, addressed to each member at the member's address shown on the records of the Association. Such notice shall specify the place, date, and hour of the meeting and, in the case of a special meeting, the purpose of such meeting. No business shall be transacted at any special meeting other than that stated in the notice unless by consent of at least one-half of the total number of votes of the Association. 
</P>
<P>D. <I>Quorum.</I> A quorum at any meeting shall consist of members entitled to cast votes which represent at least one-tenth of the votes of the Association. If such a quorum is not present, those present shall have the power to reschedule the meeting from time to time without notice other than an announcement at the meeting until there is a quorum. At any rescheduled meeting at which a quorum is present, the only business which may be transacted is that which might have been transacted at the original meeting. 
</P>
<P>E. <I>Voting.</I> Each family shall designate in writing to the Secretary the family member who is to cast the family vote. That designee may appoint as a proxy for a specific meeting any other member of the Association. A proxy must be in writing and filed with the Secretary not later than the time that meeting is called to order. Every proxy shall be revocable and shall be automatically revoked when the person who appointed the proxy attends the meeting or ceases to have voting privileges in the Association. Votes represented by proxy shall be counted in determining the presence or absence of a quorum at any meeting. 
</P>
<P>F. <I>Agenda.</I> An agenda shall be prepared for every meeting. 
</P>
<P><E T="05">Sec. 3.</E> <I>Board of Directors</I>—A. <I>Number of directors.</I> The affairs of the Association shall be managed by a Board of ______ Directors, all of whom shall be members of the Association. The number of Directors may be changed by amendment of the By-Laws of the Association. 
</P>
<P>B. <I>Term of Office.</I> The Board of Directors shall be elected at the annual meeting of the Association. At the first annual meeting, the members shall elect ______ 
<SU>1</SU>
<FTREF/> Directors for a term of one year, ______ 
<SU>1</SU> Directors for a term of two years, and ______ 
<SU>1</SU> Directors for a term of three years. At each annual meeting thereafter the members shall elect ______ 
<SU>1</SU> Directors for a term of three years.
</P>
<FTNT>
<P>
<SU>1</SU> Each group shall be one-third of the total number of Directors.</P></FTNT>
<P>C. <I>Removal and other vacancies of Directors.</I> Any Director may be removed from the Board, for cause, by a majority of the votes of the Association at any annual or quarterly meeting or any special meeting called for such purpose, provided that the Director has been given an opportunity to be heard at such meeting. In the event of death, resignation or removal of a Director, his successor shall be elected by the remaining members of the Board and shall serve for the unexpired term of his predecessor. 
</P>
<P>D. <I>Chairman of the Board.</I> At the first regular Board meeting after each annual meeting, the Board of Directors shall elect a Chairman from among their number. 
</P>
<P>E. <I>Compensation.</I> No compensation shall be paid to the Board for its services. However, any Director may be reimbursed for his actual expense incurred in the performance of his duties, as long as such expense receives approval of the Board and is within the approved Association budget. 
</P>
<P><E T="05">Sec. 4.</E> <I>Nomination and election of the board</I>—A. <I>Nomination.</I> Nomination for election to the Board of Directors (other than for filling of vacancies under section 3. C.) shall be made by the Nomination Committee; provided, however, that nominations may also be made from the floor at the annual meeting by motion properly made and seconded, or by a petition which states the name of the person nominated, is signed by members representing at least ten votes, and is filed with the Secretary not later than the day prior to the annual meeting. Persons nominated must be members of the Association. 
</P>
<P>B. <I>Election.</I> Election of the Board of Directors shall be in accordance with Section 2.E., and by secret written ballot. The ballots shall be prepared by the Secretary. Cumulative voting is not permitted (that is, a voter who refrains from voting with respect to one or more vacancies may not on that account cast any extra vote or votes with respect to another vacancy). The persons receiving the largest number of votes shall be elected. 
</P>
<P><E T="05">Sec. 5.</E> <I>Meetings of Directors</I>—A. <I>Regular meetings.</I> Regular meetings of the Board of Directors shall be held monthly at such time and hours as may be fixed from time to time by resolution of the Board. Notice of time and place of the meetings shall be mailed to each Director no later than seven days before the meeting. 
</P>
<P>B. <I>Special meetings.</I> Special meetings of the Board of Directors shall be held when called by the President of the Association, the Chairman of the Board or by any two Directors, after not less than three days notice to each Director. 
</P>
<P>C. <I>Quorum.</I> A simple majority of the Board shall constitute a quorum for the transaction of business. Every act or decision done or made by a majority of the Board present at a duly held meeting shall be regarded as an act of the Board. 
</P>
<P>D. <I>Action taken without a meeting.</I> Any action which could be otherwise taken at a Board meeting may be taken in the absence of a meeting, by obtaining the written approval of all Directors. Any action so approved shall have the same effect as though taken at a meeting of the Board. 
</P>
<P><E T="05">Sec. 6.</E> <I>Power and duties of the Board of Directors</I>—A. <I>Power and duties generally.</I> The Board of Directors shall have and exercise all the powers, duties, and authority necessary for the administration of the affairs and to carry out the purposes of the Association, excepting only those acts and things as are required by law, by the Articles of Incorporation, or by these By-Laws to be exercised and done by the members or their officers. 
</P>
<P>B. <I>Powers.</I> The Board shall have the power to: (1) Adopt and publish such rules and regulations as are appropriate in the exercise of its powers and duties, including but not limited to rules and regulations governing the amount and payment of dues, use of common areas and facilities and the conduct of the members and their guests thereon, and the establishment of penalties for violation of such rules and regulations; (2) appoint or designate officers, agents, and employees, and make such delegations of authority as in its judgment are in the best interest of the Association; (3) declare the office of a member of the Board of Directors to be vacant in the event such member shall be absent from at least three consecutive regular meetings of the Board of Directors. 
</P>
<P>C. <I>Duties.</I> It shall be the duty of the Board of Directors to: (1) Cause to be kept a complete record of all its acts and Association affairs, and to present a statement thereof to the members at the annual meeting, or at any special meeting when such statement is requested in writing by members representing at least one-fifth of the votes of the Association; (2) cause to be prepared an annual audit of the Association books to be made at the completion of each fiscal year; (3) cause to be supervised all officers, agents, and employees of the Association, and see that their duties are properly performed; (4) procure and maintain adequate liability and hazard insurance on any property owned by the Association; (5) cause such officers or employees having fiscal responsibilities to be bonded as the Board may deem appropriate; (6) cause to be performed the functions listed in Article V of the Articles of Incorporation. 
</P>
<P><E T="05">Sec. 7.</E> <I>Association officers and their duties</I>—A. <I>Election.</I> The Board of Directors shall elect the following officers of the Association: a President, a Vice President, a Secretary, a Treasurer, and such other special officers as, in the opinion of the Board, the Association may require. The President and Vice President shall be elected from members of the Board. The election of officers shall take place biennially at the first meeting of the Board of Directors following the annual meeting of the members. 
</P>
<P>B. <I>Term.</I> The officers shall hold office for two years unless they shall resign sooner, be removed, or otherwise be disqualified to serve; provided, however, that special officers shall hold office for such period as the Board may determine, but not to exceed one year. 
</P>
<P>C. <I>Removal and resignation.</I> Any officer may be removed from office, for cause, by the Board. Any officer may resign at any time by giving written notice to the Board, the President or the Secretary. Such resignation shall take effect on the date of receipt of such notice or at any later time specified therein; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 
</P>
<P>D. <I>Vacancies.</I> A vacancy in any office may be filled by appointment by the Board. The officer appointed to such vacancy shall serve for the remainder of the term of the officer he replaces. 
</P>
<P>E. <I>Multiple Officers.</I> No person shall simultaneously hold more than one of the offices required by these By-Laws. 
</P>
<P>F. <I>Duties.</I> The duties of the officers are as follows: 
</P>
<P>(1) <I>President.</I> The President shall preside at all Association meetings; shall execute the orders and resolutions of the Board; shall sign all leases, mortgage, deeds, and other written instruments; and shall cosign with the Treasurer all checks and promissory notes. 
</P>
<P>(2) <I>Vice President.</I> The Vice President shall act in place and stead of the President in the event of his absence or disability and shall exercise and discharge such other duties as may be required of him by the Board. 
</P>
<P>(3) <I>Secretary.</I> The Secretary shall record the votes and keep the minutes of all meetings and proceedings of the Board and of the Association; shall keep the corporate seal of the Association and affix it on all papers requiring said seal; shall serve notice of the meetings of the Board and of the Association; shall keep appropriate current records showing the names and addresses of the members of the Association; and shall perform such duties as may be required by the Board. 
</P>
<P>(4) <I>Treasurer.</I> The Treasurer shall receive and deposit in appropriate bank accounts all funds of the Association and shall disburse such funds as directed by resolution of the Board of Directors; shall cosign with the President all checks and promissory notes of the Association; shall keep proper books of account; and shall prepare an annual budget and statement of income and expenditures which shall be approved by the Board before presentation to the Association at its regular annual meeting, and furnish a copy to each of the members. 
</P>
<P>(5) <I>Special officers.</I> Special officers shall have such authority and perform such duties as the Board may determine. 
</P>
<P>(6) <I>Compensation.</I> Officers may not be compensated except as may be determined by the Board, in accordance with the approved Association budget. 
</P>
<P><E T="05">Sec. 8.</E> <I>Committees.</I> A. <I>Committees to be established.</I> The Board of Directors shall establish the following committees: 
</P>
<P>(1) <I>Representation Committee</I> which shall represent members, individually and collectively, with respect to: any deficiencies in the Development or the individual Homes therein; fulfillment of the construction contract and related warranties; relationships with the Authority and others in regard to financial matters such as monthly payments, credits to and charges against reserves, settlement upon vacating the home, and acquisition of ownership; matters pertaining to project management; and matters in the Authority's official grievance mechanisms. 
</P>
<P>(2) <I>Rules Committee</I> which shall present to the Board for recommendation to the Authority policies for operation and management and, where appropriate, assist the Board in establishing Association rules in that respect. 
</P>
<P>(3) <I>Homeownership Committee</I> which shall advise and assist members in regard to maintenance and acquisition of ownership of their homes, financial matters and other matters related to homeownership and home management. 
</P>
<P>(4) <I>Selection Committee</I> which shall recommend proposed homebuyers from a list of eligible applicants. 
</P>
<P>(5) <I>Nominating Committee</I> which shall consist of a chairman, who shall be a member of the Board of Directors, and two or more members of the Association, none of whom are Directors. The Nominating Committee shall be appointed by the Board of Directors prior to each annual meeting, to serve from the close of such annual meeting until the close of the next annual meeting and such appointment shall be announced at each annual meeting. The Nominating Committee shall make as many nominations for election to the Board of Directors as it shall in its discretion determine, but not less than the number of vacancies to be filled. 
</P>
<P>B. <I>Other committees.</I> The Board may establish other committees, permanent or temporary, which it deems necessary or desirable to carry out the purposes of the Association. 
</P>
<P>C. <I>Committee Chairman and Members.</I> The chairmen of all committees, except the Nominating Committee, shall be appointed by and serve at the pleasure of the President. Committee members shall be appointed by the chairman of the committee on which they are to serve and shall serve until a new chairman is appointed. 
</P>
<P>D. <I>Committee Reports.</I> The chairman of each committee shall make a report to the President in writing of committee meetings and activities prior to each regular monthly meeting of the Board of Directors. 
</P>
<P>E. <I>Authority.</I> Unless specifically authorized in writing by the Board of Directors or the President, a committee chairman or a committee shall have no authority to legally obligate the Association or incur any expenditure on behalf of the Association. 
</P>
<P><E T="05">Sec. 9.</E> <I>Suspension of rights.</I> The Board may suspend, by a majority vote of the Board, the voting rights and rights to use the recreational facilities, of a member, and his family and guests, during any period in which the member shall be in default in the payment of any dues or assessment imposed by the Association. Such rights may also be suspended, after notice and hearing, for a period not to exceed sixty days, for violation of the Association's rules and regulations. 
</P>
<P><E T="05">Sec. 10.</E> <I>Books and records.</I> The books, records and papers of the Association shall at all times, during reasonable business hours, be subject to inspection by any member. 
</P>
<P><E T="05">Sec. 11.</E> <I>Amendments.</I> Amendments to these By-Laws may be introduced and discussed at any annual or special meeting of the Association, provided that copies of any proposed amendment shall be mailed to all the members with the notice of the meeting at which such amendment will be introduced. A vote on adopting such amendment shall be taken at the first Association meeting held at least two weeks subsequent to the meeting at which the amendment was introduced. Amendments shall be adopted by a vote of a majority of the members of the Association. 
</P>
<P><E T="05">Sec. 12.</E> <I>Corporate seal.</I> The Association shall have a seal which shall appear as follows: [<E T="04">seal</E>] 
</P>
<P><E T="05">Sec. 13.</E> <I>Fiscal year.</I> The first fiscal year of the Association shall begin on the date of incorporation and shall end on the last day of __________ (month, year). Each successive fiscal year shall begin on the first day of __________ (month) and end on the last day of __________ (month). 
</P>
<P>The foregoing By-Laws were adopted at the first annual meeting of the Association held __________ by the undersigned members of the Association. 


</P>
</DIV9>


<DIV9 N="Appendix II" NODE="24:4.1.3.1.4.4.5.10.8" TYPE="APPENDIX">
<HEAD>Appendix II to Subpart D of Part 904—Recognition Agreement Between Local Housing Authority and Homebuyers Association 
</HEAD>
<HD3>(Subpart D)
</HD3>
<P>WHEREAS, the ____________________ (“Authority”), a public body corporate and politic, has developed or acquired with the aid of loans and annual contributions from the Department of Housing and Urban Development (“HUD”), the following Development or Developments in its homeownership opportunity program (hereinafter referred to as the “Development”): 
<SU>1</SU>
<FTREF/>
</P>
<FTNT>
<P>
<SU>1</SU> List here the specific Development or Developments whose Homebuyers are represented by the Homebuyers Association with which this Agreement is entered into.</P></FTNT>
<FP-DASH>
</FP-DASH>
<FP-DASH>
</FP-DASH>
<P>WHEREAS, an organization of residents (“Homebuyers”) is an essential element in such Development for purposes of effective participation of the Homebuyers in the management of the Development and representation of the Homebuyers in their relationships with the Authority, and for other purposes; and 
</P>
<P>WHEREAS, the ____________________ Homebuyers Association (“Association”) fully represents the Homebuyers of the Development; 
</P>
<P>NOW, THEREFORE, this agreement is entered into by and between the Authority and the Association and they do hereby agree as follows: 
</P>
<P>1. The Association, whose Articles of Incorporation are attached hereto and made a part hereof, is hereby recognized as the established representative of the Homebuyers of the Development and is the sole group entitled to represent them as tenants or Homebuyers before the Authority; 
</P>
<P>2. For each fiscal year, the Authority shall make available funds to the Association for its normal expenses, in such amounts as may be available to the Authority for such purposes and subject to whatever applicable HUD regulations; 
</P>
<P>3. The Association shall be entitled to the use of office space in __________ at the Development without charge by the Authority for such use; 
</P>
<P>4. The Authority and the officers of the Association shall meet at a location convenient to both parties on the __________ (day) of each month to discuss matters of interest to either party; 
</P>
<P>5. In the event the parties later agree that the Association should assume management responsibilities now held by the Authority, a contract for such purpose will be negotiated by ____________________ the Association; 
</P>
<P>____________________ terminate upon dissolution of the Association. 
</P>
<P>IN WITNESS HEREOF, the parties have executed this Agreement on ____________________, 19____. 
</P>
<P>Local Housing Authority
</P>
<P-DASH>By (Official Title)
</P-DASH>
<P>Homebuyers Association
</P>
<P-DASH>By (Official Title)
</P-DASH>
<P-DASH>WITNESSES: 
</P-DASH>
<FRP>________________________ 


</FRP>
</DIV9>

</DIV6>

</DIV5>


<DIV5 N="905" NODE="24:4.1.3.1.5" TYPE="PART">
<HEAD>PART 905—THE PUBLIC HOUSING CAPITAL FUND PROGRAM 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437g, 42 U.S.C. 1437z-2, 42 U.S.C. 1437z-7, and 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>65 FR 14426, Mar. 16, 2000, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.3.1.5.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>78 FR 63770, Oct. 24, 2013, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 905.100" NODE="24:4.1.3.1.5.1.5.1" TYPE="SECTION">
<HEAD>§ 905.100   Purpose, general description, and other requirements.</HEAD>
<P>(a) <I>Purpose.</I> The Public Housing Capital Fund Program (Capital Fund Program or CFP) provides financial assistance to public housing agencies (PHAs) and resident management corporations (RMC) (pursuant to 24 CFR 964.225) to make improvements to existing public housing. The CFP also provides financial assistance to develop public housing, including mixed-finance developments that contain public housing units.
</P>
<P>(b) <I>General description.</I> Congress appropriates amounts for the Capital Fund in HUD's annual appropriations. In order to receive a Capital Fund grant, the PHA must:
</P>
<P>(1) Validate project-level information in HUD's data systems, as prescribed by HUD;
</P>
<P>(2) Have an approved CFP 5-Year Action Plan;
</P>
<P>(3) Enter into a Capital Fund Annual Contributions Contract (CF ACC) Amendment to the PHA's Annual Contributions Contract (as defined in 24 CFR 5.403) with HUD; and
</P>
<P>(4) Provide a written certification and counsel's opinion that all property receiving Capital Fund assistance is under a currently effective Declaration of Trust (DOT) and is in compliance with the CF ACC and the Act.
</P>
<P>(c) <I>Informational requirements.</I> Section 905.300 of this part describes the information to be submitted to HUD for the CFP. HUD uses the CF formula set forth in § 905.400 of this part, along with data provided by the PHA and other information, including, but not limited to, the high-performance information from the Real Estate Assessment Center (REAC) and location cost indices, to determine each PHA's annual grant amount. HUD notifies each PHA of the amount of the grant and provides a CF ACC Amendment that must be signed by the PHA and executed by HUD in order for the PHA to access the grant. After HUD executes the CF ACC Amendment, the PHA may draw down funds for eligible costs that have been described in its CFP Annual Statement/Performance and Evaluation Report or CFP 5-Year Action Plan.
</P>
<P>(d) <I>Eligible activities.</I> Eligible Capital Fund costs and activities as further described in subpart B of this part include, but are not limited to, making physical improvements to the public housing stock and developing public housing units to be added to the existing inventory. With HUD approval, a PHA may also leverage its public housing inventory by borrowing additional capital on the private market and pledging a portion of its annual Capital Funds for debt service, in accordance with § 905.500 of this part.
</P>
<P>(e) <I>Obligation and expenditure requirements.</I> A PHA must obligate and expend its Capital Funds in accordance with § 905.306 of this part. The PHA will directly employ labor, either temporarily or permanently, to perform work (force account) or contract for the required work in accordance with 2 CFR part 200”. Upon completion of the work, the PHA must submit an Actual Modernization Cost Certificate (AMCC) or Actual Development Cost Certificate (ADCC) and a final Performance and Evaluation Report (in accordance with § 905.322 of this part) to HUD to close out each Capital Fund grant.
</P>
<P>(f) <I>Financing and development.</I> Section 905.500 of this part regulates financing activities using Capital Funds and Operating Funds. Section 905.600 of this part contains the development requirements, including those related to mixed-finance development, formerly found in 24 CFR part 941. Section 905.700 of this part describes the criteria for the use of Capital Funds for other security interests. Section 905.800 of this part addresses PHA compliance with Capital Fund requirements and HUD capability for review and sanction for noncompliance.
</P>
<P>(g) <I>Protections for Victims of Domestic Violence, Dating Violence, Sexual Assault and Stalking.</I> Public housing agencies must apply the Violence Against Women Act (VAWA) requirements set forth in 24 CFR part 5, subpart L, to mixed finance developments covered under § 905.604.
</P>
<CITA TYPE="N">[78 FR 63770, Oct. 24, 2013, as amended at 80 FR 75942, Dec. 7, 2015; 81 FR 80815, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 905.102" NODE="24:4.1.3.1.5.1.5.2" TYPE="SECTION">
<HEAD>§ 905.102   Applicability.</HEAD>
<P>All PHAs that have public housing units under an Annual Contributions Contract (ACC), as described in 24 CFR 5.403, are eligible to receive Capital Funds.


</P>
</DIV8>


<DIV8 N="§ 905.104" NODE="24:4.1.3.1.5.1.5.3" TYPE="SECTION">
<HEAD>§ 905.104   HUD approvals.</HEAD>
<P>All HUD approvals required in this part must be in writing and from an official designated to grant such approval.


</P>
</DIV8>


<DIV8 N="§ 905.106" NODE="24:4.1.3.1.5.1.5.4" TYPE="SECTION">
<HEAD>§ 905.106   Compliance.</HEAD>
<P>PHAs or owner/management entities or their partners are required to comply with all applicable provisions of this part. Execution of the CF ACC Amendment, submissions required by this part, and disbursement of Capital Fund grants from HUD are individually and collectively deemed to be the PHA's certification that it is in compliance with the provisions of this part and all other Public Housing Program Requirements. Noncompliance with any provision of this part or other applicable requirements may subject the PHA and/or its partners to sanctions contained in § 905.804 of this part.


</P>
</DIV8>


<DIV8 N="§ 905.108" NODE="24:4.1.3.1.5.1.5.5" TYPE="SECTION">
<HEAD>§ 905.108   Definitions.</HEAD>
<P>The following definitions apply to this part:
</P>
<P><I>1937 Act.</I> The term “1937 Act” is defined in 24 CFR 5.100.
</P>
<P><I>Accessible.</I> As defined in 24 CFR 8.3.
</P>
<P><I>ACC.</I> The Annual Contributions Contract between HUD and a PHA covering a public housing project or multiple public housing projects.
</P>
<P><I>ACC Amendment.</I> An Amendment to the ACC to reflect specific changes made to a PHA's public housing inventory or funding. An ACC Amendment may be a Capital Fund ACC Amendment, a Mixed-Finance ACC Amendment, a Capital Fund Financing ACC Amendment, or other form of amendment specified by HUD.
</P>
<P><I>Additional Project Costs.</I> The sum of the following HUD-approved costs related to the development of a public housing project, which are not included in the calculation of the Total Development Cost (TDC) limit, but are included in the maximum project cost as stated in § 905.314(b). Additional project costs include the following:
</P>
<P>(1) Costs for the demolition or remediation of environmental hazards associated with public housing units that will not be rebuilt on the original site; and
</P>
<P>(2) Extraordinary site costs that have been verified by an independent state-registered, licensed engineer (e.g., removal of underground utility systems; replacement of off-site underground utility systems; extensive rock and/or soil removal and replacement; and amelioration of unusual site conditions, such as unusual slopes, terraces, water catchments, lakes, etc.); and
</P>
<P>(3) Cost effective energy-efficiency measures in excess of standard building codes.
</P>
<P><I>Capital Fund</I> (CF). The fund established under section 9(d) of the 1937 Act (42 U.S.C.) 1437g(d).
</P>
<P><I>Capital Fund Annual Contributions Contract Amendment (CF ACC).</I> An amendment to the Annual Contributions Contract (ACC) under the 1937 Act between HUD and the PHA containing the terms and conditions under which the Department assists the PHA in providing decent, safe, and sanitary housing for low-income families. The CF ACC must be in a form prescribed by HUD, under which HUD agrees to provide assistance in the development, modernization, and/or operation of a low-income housing project under the 1937 Act and the PHA agrees to modernize and operate the project in compliance with all Public Housing Requirements.
</P>
<P><I>Capital Fund Program Fee.</I> A fee that may be charged to a Capital Fund grant by the PHA to cover costs associated with oversight and management of the CFP by the PHA Central Office Cost Center (COCC). These costs include duties related to general capital planning, preparation of the Annual Plan, processing of the Line of Credit Control System (LOCCS), preparation of reports, drawing of funds, budgeting, accounting, and procurement of construction and other miscellaneous contracts. The CFP fee is the administrative cost for managing a Capital Fund grant for a PHA subject to asset management.
</P>
<P><I>Community Renewal Costs.</I> Community Renewal Costs consist of the sum of the following HUD-approved costs related to the development of a public housing project: planning (including proposal preparation); administration; site acquisition; relocation; demolition of—and site remediation of environmental hazards associated with—public housing units that will be replaced on the project site; interest and carrying charges; off-site facilities; community buildings and nondwelling facilities; contingency allowance; insurance premiums; any initial operating deficit; on-site streets; on site utilities; and other costs necessary to develop the project that are not covered under the Housing Construction Cost (HCC). Public housing capital assistance may be used to pay for Community Renewal Costs in an amount equivalent to the difference between the HCC paid for with public housing capital assistance and the TDC limit.
</P>
<P><I>Cooperation agreement.</I> An agreement, in a form prescribed by HUD, between a PHA and the applicable local governing body or bodies that assures exemption from real and personal property taxes, provides for local support and services for the development and operation of public housing, and provides for PHA payments in lieu of taxes (PILOT).
</P>
<P><I>Date of Full Availability (DOFA).</I> The last day of the month in which substantially all (95 percent or more) of the units in a public housing project are available for occupancy.
</P>
<P><I>Declaration of Restrictive Covenant.</I> The Declaration of Restrictive Covenant is a legal instrument that binds the PHA and the Owner Entity to develop mixed-finance projects in compliance with Public Housing Requirements and restricts disposition of the property, including transferring, conveying, assigning, leasing, mortgaging, pledging or otherwise encumbering the property.
</P>
<P><I>Declaration of Trust (DOT).</I> A legal instrument that grants HUD an interest in public housing property. It provides public notice that the property must be operated in accordance with all public housing federal requirements, including the requirement not to convey or otherwise encumber the property unless expressly authorized by federal law and/or HUD.
</P>
<P><I>Development.</I> Any or all undertakings necessary for planning, land acquisition, demolition, construction, or equipment in connection with a public housing project.
</P>
<P><I>Emergency work.</I> Capital Fund related physical work items that if not done pose an immediate threat to the health or safety of residents, and which must be completed within one year of funding. Management Improvements are not eligible as emergency work and therefore must be covered by the CFP 5-Year Action Plan before the PHA may carry them out.
</P>
<P><I>Energy audit.</I> A systematic review of the energy requirements and consumption for property with the intent to identify potential opportunities for energy and water savings through improved operational efficiency or more efficient components.
</P>
<P><I>Expenditure.</I> Capital Funds disbursed by the PHA to pay for obligations incurred in connection with work included in a CFP 5-Year Action Plan that has been approved by the PHA Board of Commissioners and HUD. Total funds expended means cash actually disbursed and does not include retainage.
</P>
<P><I>Federal Fiscal Year (FFY).</I> The Federal Fiscal Year begins each year on October 1 and ends on September 30 of the following year.
</P>
<P><I>Force account labor.</I> Labor employed directly by the PHA on either a permanent or a temporary basis.
</P>
<P><I>Fungibility.</I> As it relates to the Capital Fund Program, fungibility allows the PHA to substitute work items between any of the years within the latest approved CFP 5-Year Action Plan, without prior HUD approval.
</P>
<P><I>HCC.</I> The sum of the following HUD-approved costs related to the development of a public housing project: dwelling unit hard costs (including construction and equipment), builder's overhead and profit, the cost of extending utilities from the street to the public housing project, finish landscaping, and the payment of Davis-Bacon wage rates.
</P>
<P><I>Line of Credit Control System (LOCCS).</I> LOCCS is a HUD grant disbursement system. LOCCS currently provides disbursement controls for over 100 HUD grant programs. LOCCS-Web is an intranet version of LOCCS for HUD personnel. eLOCCS is the Internet link to LOCCS data for HUD business partners.
</P>
<P><I>Mixed-finance modernization.</I> Use of the mixed-finance method of development to modernize public housing projects described in § 905.604.
</P>
<P><I>Modernization.</I> Modernization means the activities and items listed in § 905.200(b)(4-18).
</P>
<P><I>Natural disaster.</I> An extraordinary event, such as an earthquake, flood, or hurricane, affecting only one or few PHAs, but excluding presidentially declared emergencies and major disasters under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 <I>et seq</I>).
</P>
<P><I>Obligation.</I> A binding agreement for work or financing that will result in outlays, immediately or in the future. All obligations must be incorporated within the CFP 5-Year Action Plan that has been approved by the PHA Board of Commissioners and HUD. This includes funds obligated by the PHA for work to be performed by contract labor (<I>i.e.</I>, contract award), or by force account labor (<I>i.e.</I>, work actually started by PHA employees). Capital Funds identified in the PHA's CFP 5-Year Action Plan to be transferred to operations are obligated by the PHA once the funds have been budgeted and drawn down by the PHA. Once these funds are drawn down they are subject to the requirements of 24 CFR part 990.
</P>
<P><I>Open grant.</I> Any grant for which a cost certificate has not been submitted and which has not reached fiscal closeout as described in § 905.322 of this part.
</P>
<P><I>Operating fund.</I> Assistance provided under 24 CFR part 990 pursuant to section 9(e) of the 1937 Act (42 U.S.C. 1437g(e)) for the purpose of operation and management of public housing.
</P>
<P><I>Owner entity.</I> An entity that owns public housing units. In mixed-finance development, the Owner Entity may be the PHA, or may be an entity in which the PHA owns a partial interest, or may be an entity in which the PHA has no ownership interest. The Owner Entity is subject to the applicable requirements of this subpart.
</P>
<P><I>Partner.</I> A third-party entity with which the PHA has entered into a partnership or other contractual arrangement to provide for the mixed-finance development of public housing units pursuant to this subpart. The partner has primary responsibility with the PHA for the development and/or operation of the public housing units and is subject to the applicable requirements of subpart F of this part.
</P>
<P><I>Physical Needs Assessment (PNA).</I> A systematic review of all the major physical components of property to result in a long-term schedule for replacement of each component and estimated capital costs required to meet the replacement need.
</P>
<P><I>PIH Information Center (PIC).</I> PIH's current system for recording data concerning: the public housing inventory, the characteristics of public housing and Housing Choice Voucher —assisted families, the characteristics of PHAs, and performance measurement of PHAs receiving Housing Choice Voucher funding.
</P>
<P><I>Public Housing Agency (PHA).</I> Any state, county, municipality, or other governmental entity or public body or agency or instrumentality of these entities that is authorized to engage or assist in the development or operation of public housing under this part.
</P>
<P><I>Public Housing Assessment System (PHAS).</I> The assessment system under 24 CFR part 902 for measuring the properties and PHA management performance in essential housing operations, including rewards for high performers and consequences for poor performers.
</P>
<P><I>Public housing capital assistance.</I> Assistance provided by HUD under the Act in connection with the development of public housing under this part, including Capital Fund assistance provided under section 9(d) of the Act, public housing development assistance provided under section 5 of the Act, Operating Fund assistance used for capital purposes under section 9(g)(2) or 9(e)(1)(I) (with HUD's approval of such financing of rehabilitation and development of public housing units) of the Act, and HOPE VI grant assistance.
</P>
<P><I>Public housing funds.</I> Any funds provided through the Capital Fund or Other Public Housing Development Sources, such as HOPE VI, Choice Neighborhoods, Development Funds, disposition proceeds that a PHA may realize under section 18 of the 1937 Act (42 U.S.C. 1437p), or any other funds appropriated by Congress for public housing.
</P>
<P><I>Public housing project.</I> The term “public housing” means low-income housing, and all necessary appurtenances thereto, assisted under the 1937 Act, other than assistance under 42 U.S.C. 1437f of the 1937 Act (section 8). The term “public housing” includes dwelling units in a mixed-finance project that are assisted by a public housing agency with public housing capital assistance or Operating Fund assistance. When used in reference to public housing, the term “project” means housing developed, acquired, or assisted by a PHA under the 1937 Act, and the improvement of any such housing.
</P>
<P><I>Public housing requirements.</I> All requirements applicable to public housing including, but not limited to, the 1937 Act; HUD regulations; the Consolidated Annual Contributions Contract, including amendments; HUD notices; and all applicable federal statutes, executive orders, and regulatory requirements, as these requirements may be amended from time to time.
</P>
<P><I>Reasonable cost.</I> An amount to rehabilitate or modernize an existing structure that is not greater than 90 percent of the TDC for a new development of the same structure type, number, and size of units in the same market area. Reasonable costs are also determined with consideration of HUD regulations including 2 CFR part 200.
</P>
<P><I>Reconfiguration.</I> The altering of the interior space of buildings (e.g., moving or removing interior walls to change the design, sizes, or number of units).
</P>
<P><I>Uniform Federal Accessibility Standards (UFAS).</I> As defined in 24 CFR 8.32; see also 24 CFR part 40.
</P>
<CITA TYPE="N">[78 FR 63770, Oct. 24, 2013, as amended at 80 FR 75942, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 905.110" NODE="24:4.1.3.1.5.1.5.6" TYPE="SECTION">
<HEAD>§ 905.110   Incorporation by reference.</HEAD>
<P>(a) Certain material is incorporated by reference into this part, with the approval of the Director of the Federal Register, under 5 U.S.C. 552(a) and 1 CFR part 51. To enforce any edition other than that specified in this section, HUD must publish notice of change in the <E T="04">Federal Register</E> and the material must be available to the public. Incorporated material is available from the sources listed below and is available for inspection at HUD's Office of Policy Development and Research, Affordable Housing Research and Technology Division, Department of Housing and Urban Development, telephone number 202-408-4370 (this is not a toll-free number). This material is also available for inspection at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030 (this is not a toll-free number) or go to <I>http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.</I>
</P>
<P>(b) American Society of Heating, Refrigerating, and Air-Conditioning Engineers, Inc., 1791 Tulle Circle NE., Atlanta, GA 30329 (<I>http://www.ashrae.org/standards-research-technology/standards-guidelines</I>).
</P>
<P>(1) ASHRAE 90.1-2010, “Energy Standard for Buildings Except Low-Rise Residential Buildings,” copyright 2010, IBR approved for §§ 905.200(b) and 905.312(b) of this part.
</P>
<P>(2) [Reserved]
</P>
<P>(c) International Code Council, 500 New Jersey Avenue NW., 6th Floor, Washington, DC 20001.
</P>
<P>(1) International Energy Conservation Code (IECC), January 2009, IBR approved for §§ 905.200(b) and 905.312(b).
</P>
<P>(2) [Reserved]


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.3.1.5.2" TYPE="SUBPART">
<HEAD>Subpart B—Eligible Activities</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>78 FR 63773, Oct. 24, 2013, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 905.200" NODE="24:4.1.3.1.5.2.5.1" TYPE="SECTION">
<HEAD>§ 905.200   Eligible activities.</HEAD>
<P>(a) <I>General.</I> Activities that are eligible to be funded with Capital Funds as identified in this section include only items specified in an approved CFP 5-Year Action Plan as identified in § 905.300, or approved by HUD for emergency and natural disaster assistance, other than presidentially declared natural disasters and emergencies.
</P>
<P>(b) <I>Eligible activities.</I> Eligible activities include the development, financing, and modernization of public housing projects, including the redesign, reconstruction, and reconfiguration of public housing sites and buildings (including compliance with the accessible design and construction requirements contained in 24 CFR 8.32, 24 CFR part 40, 24 CFR part 100, 28 CFR 35.151, and 28 CFR part 36, as applicable) and the development of mixed-finance projects, including the following:
</P>
<P>(1) <I>Modernization.</I> Modernization is defined in § 905.108 of this part;
</P>
<P>(2) <I>Development.</I> Development refers to activities and related costs to add units to a PHA's public housing inventory under § 905.600 of this part, including: construction and acquisition with or without rehabilitation; any and all undertakings necessary for planning, design, financing, land acquisition, demolition, construction, or equipment, including development of public housing units, and buildings, facilities, and/or related appurtenances (<I>i.e.</I>, nondwelling facilities/spaces). Development of mixed-finance projects include the provision of public housing through a regulatory and operating agreement, master contract, individual lease, condominium or cooperative agreement, or equity interest.
</P>
<P>(3) <I>Financing.</I> Debt and financing costs (e.g., origination fees, interest) incurred by PHAs for development or modernization of PHA projects that involves the use of Capital Funds, including, but not limited to:
</P>
<P>(i) Mixed finance as described in § 905.604 of this part;
</P>
<P>(ii) The Capital Fund Financing Program (CFFP) as described in § 905.500 of this part; and
</P>
<P>(iii) Any other use authorized by the Secretary under section 30 of the 1937 Act (42 U.S.C. 1437).
</P>
<P>(4) <I>Vacancy reduction.</I> Physical improvements to reduce the number of units that are vacant. Not included are costs for routine vacant unit turnaround, such as painting, cleaning, and minor repairs. Vacancy reduction activities must be remedies to a defined vacancy problem detailed in a vacancy reduction program included in the PHA's CFP 5-Year Action Plan.
</P>
<P>(5) <I>Nonroutine maintenance.</I> Work items that ordinarily would be performed on a regular basis in the course of maintenance of property, but have become substantial in scope because they have been postponed and involve expenditures that would otherwise materially distort the level trend of maintenance expenses. These activities also include the replacement of obsolete utility systems and dwelling equipment.
</P>
<P>(6) <I>Planned code compliance.</I> Building code compliance includes design and physical improvement costs associated with:
</P>
<P>(i) Correcting violations of local building code or the Uniform Physical Condition Standards (UPCS) under the Public Housing Assessment System (PHAS), and
</P>
<P>(ii) A national building code, such as those developed by the International Code Council or the National Fire Protection Association; and the IECC or ASHRAE 90.1-2010 (both incorporated by reference, see, § 905.110 of this part), for multifamily high-rises (four stories or higher), or a successor energy code or standard that has been adopted by HUD for new construction pursuant to section 109 of the Cranston-Gonzales National Affordable Housing Act, Public Law 101-625, codified at 42 U.S.C. 12709, or other relevant authority.
</P>
<P>(7) <I>Management improvements.</I> Noncapital activities that are project-specific or PHA-wide improvements needed to upgrade or improve the operation or maintenance of the PHA's projects, to promote energy conservation, to sustain physical improvements at those projects, or correct management deficiencies. PHAs must be able to demonstrate the linkage between the management improvement and the correction of an identified management deficiency, including sustaining the physical improvements. HUD encourages PHAs, to the greatest extent feasible, to hire residents as trainees, apprentices, or employees to carry out activities under this part, and to contract with resident owned businesses as required by section 3 of the Housing and Community Development Act of 1968, 12 U.S.C. 1701u. Management improvement costs shall be fundable only for the implementation period of the physical improvements, unless a longer period, up to a maximum of 4 years, is clearly necessary to achieve performance targets. Eligible activities include the following costs:
</P>
<P>(i) Training for PHA personnel in operations and procedures, including resident selection, rent collection and eviction;
</P>
<P>(ii) Improvements to management, financial, and accounting control systems of the PHA;
</P>
<P>(iii) Improvement of resident and project security;
</P>
<P>(iv) Activities that assure or foster equal opportunity; and
</P>
<P>(v) Activities needed in conjunction with capital expenditures to facilitate programs to improve the empowerment and economic self-sufficiency of public housing residents, including the costs for resident job training and resident business development activities to enable residents and their businesses to carry out Capital Fund-assisted activities.
</P>
<P>(vi) Resident management costs not covered by the Operating Fund include:
</P>
<P>(A) The cost of technical assistance to a resident council or RMC to assess feasibility of carrying out management functions for a specific development or developments;
</P>
<P>(B) The cost to train residents in skills directly related to the operation and management of the development(s) for potential employment by the RMC;
</P>
<P>(C) The cost to train RMC board members in community organization, board development, and leadership;
</P>
<P>(D) The cost of the formation of an RMC; and
</P>
<P>(E) Resident participation costs that promote more effective resident participation in the operation of the PHA in its Capital Fund activities, including costs for staff support, outreach, training, meeting and office space, childcare, transportation, and access to computers that are modest and reasonable.
</P>
<P>(8) <I>Economic self-sufficiency.</I> Capital expenditures to facilitate programs to improve the empowerment and economic self-sufficiency of public housing residents.
</P>
<P>(9) <I>Demolition and reconfiguration.</I> (i) The costs to demolish dwelling units or nondwelling facilities subject to prior approval by HUD, where required, and other related costs for activities such as relocation, clearing, and grading the site after demolition, and subsequent site improvements to benefit the remaining portion of the existing public housing property, as applicable.
</P>
<P>(ii) The costs to develop dwelling units or nondwelling facilities approved by HUD, where required, and other related costs for activities such as relocation, clearing and grading the site prior to development.
</P>
<P>(iii) The costs to reconfigure existing dwelling units to units with different bedroom sizes or to a nondwelling use.
</P>
<P>(10) <I>Resident relocation and mobility counseling.</I> Relocation and other assistance (e.g., reimbursement to affected residents of reasonable out-of-pocket expenses incurred in connection with temporary relocation, including the cost of moving to and from temporary housing and any increase in monthly rent/utility costs) as may be required or permitted by applicable Public Housing Requirements for permanent or temporary relocation, as a direct result of modernization, development, rehabilitation, demolition, disposition, reconfiguration, acquisition, or an emergency or disaster.
</P>
<P>(11) <I>Security and safety.</I> Capital expenditures designed to improve the security and safety of residents.
</P>
<P>(12) <I>Homeownership.</I> Activities associated with public housing homeownership, as approved by HUD, such as:
</P>
<P>(i) The cost of a study to assess the feasibility of converting rental units to homeownership units and the preparation of an application for the conversion to homeownership or for the sale of units;
</P>
<P>(ii) Construction or acquisition of units;
</P>
<P>(iii) Downpayment assistance;
</P>
<P>(iv) Closing cost assistance;
</P>
<P>(v) Subordinate mortgage loans;
</P>
<P>(vi) Construction or permanent financing such as write downs for new construction, or acquisition with or without rehabilitation; and
</P>
<P>(vii) Other activities in support of the primary homeownership activities above, including but not limited to:
</P>
<P>(A) Demolition to make way for new construction;
</P>
<P>(B) Abatement of environmentally hazardous materials;
</P>
<P>(C) Relocation assistance and mobility counseling;
</P>
<P>(D) Homeownership counseling;
</P>
<P>(E) Site improvements; and
</P>
<P>(F) Administrative and marketing costs.
</P>
<P>(13) <I>Capital Fund-related legal costs</I> (e.g., legal costs related to preparing property descriptions for the DOT, zoning, permitting, environmental review, procurement, and contracting).
</P>
<P>(14) <I>Energy efficiency.</I> Allowed costs include:
</P>
<P>(i) Energy audit or updated energy audits to the extent Operating Funds are not available and the energy audit is included within a modernization program.
</P>
<P>(ii) Integrated utility management and capital planning to promote energy conservation and efficiency measures.
</P>
<P>(iii) Energy and water conservation measures identified in a PHA's most recently updated energy audit.
</P>
<P>(iv) Improvement of energy and water-use efficiency by installing fixtures and fittings that conform to the American Society of Mechanical Engineers/American National Standards Institute standards A112.19.2-1998 and A112.18.1-2000, or any revision thereto, applicable at the time of installation, and by increasing energy efficiency and water conservation by such other means as the Secretary determines are appropriate.
</P>
<P>(v) The installation and use of Energy Star appliances whenever energy systems, devices, and appliances are replaced, unless it is not cost-effective to do so, in accordance with Section 152 of the Energy Policy Act of 2005, 42 U.S.C. 15841.
</P>
<P>(vi) Utility and energy management system automation, and metering activities, including changing mastermeter systems to individually metered systems if installed as a part of a modernization activity to upgrade utility systems; for example, electric, water, or gas systems of the PHA consistent with the requirements of 24 CFR part 965.
</P>
<P>(15) <I>Administrative costs.</I> Any administrative costs, including salaries and employee benefit contributions, other than the Capital Fund Program Fee, must be related to a specific public housing development or modernization project and detailed in the CFP 5-Year Action Plan.
</P>
<P>(16) <I>Audit.</I> Costs of the annual audit attributable to the portion of the audit covering the CFP in accordance with § 905.322(c) of this part.
</P>
<P>(17) <I>Capital Fund Program Fee.</I> This fee covers costs associated with oversight and management of the CFP attributable to the HUD-accepted COCC as described in 24 CFR part 990 subpart H. These costs include duties related to capital planning, preparing the CFP Annual Statement/Performance and Evaluation Report, preparing the CFP 5-Year Action Plan, the monitoring of LOCCS, preparing reports, drawing funds, budgeting, accounting, and procuring construction and other miscellaneous contracts. This fee is not intended to cover costs associated with construction supervisory and inspection functions that are considered a front-line cost of the project.
</P>
<P>(18) <I>Emergency activities.</I> Capital Fund related activities identified as emergency work, as defined in § 905.108 of this part, whether or not the need is indicated in the CFP 5-Year Action Plan.


</P>
</DIV8>


<DIV8 N="§ 905.202" NODE="24:4.1.3.1.5.2.5.2" TYPE="SECTION">
<HEAD>§ 905.202   Ineligible activities and costs.</HEAD>
<P>The following are ineligible activities and costs for the CFP:
</P>
<P>(a) Costs not associated with a public housing project or development, as defined in § 905.604(b)(1);
</P>
<P>(b) Activities and costs not included in the PHA's CFP 5-Year Action Plan, with the exception that expenditures for emergencies and disasters, as defined in § 905.204 of this subpart, that are not identified in the 5-year Action Plan because of their emergent nature are eligible costs;
</P>
<P>(c) Improvements or purchases that are not modest in design and cost because they include amenities, materials, and design in excess of what is customary for the locality. Air conditioning is an eligible modest amenity;
</P>
<P>(d) Any costs not authorized as outlined in 2 CFR part 200, subpart E, including, but not limited to, indirect administrative costs and indemnification;
</P>
<P>(e) Public housing operating assistance, except as provided in § 905.314(l) of this part;
</P>
<P>(f) Direct provision of social services through either force account or contract labor. Examples of ineligible direct social services include, but are not limited to, salaries for social workers or GED teachers;
</P>
<P>(g) Eligible costs that are in excess of the amount directly attributable to the public housing units when the physical or management improvements, including salaries and employee benefits and contributions, will benefit programs other than public housing, such as section 8 Housing Choice Voucher or local revitalization programs;
</P>
<P>(h) Ineligible management improvements include:
</P>
<P>(1) Costs for security guards or ongoing security services (Capital Funds may only be used for the initial capital (e.g., fencing, lights, and cameras) or noncapital (e.g., training of in-house security staff) management improvements but may not be used for the ongoing costs, such as security guards after the end of the implementation period of the physical improvements);
</P>
<P>(2) General remedial education; and
</P>
<P>(3) Job counseling, job development and placement, supportive services during training, and the hiring of a resident coordinator. No continued Capital Funds will be provided after the end of the implementation period of the management improvements. The PHA shall be responsible for finding other funding sources, reducing its ongoing management costs, or terminating the management activities;
</P>
<P>(i) Eligible cost that is funded by another source and would result in duplicate funding; and
</P>
<P>(j) Any other activities and costs that HUD may determine on a case-by-case basis.
</P>
<CITA TYPE="N">[78 FR 63770, Oct. 24, 2013, as amended at 80 FR 75942, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 905.204" NODE="24:4.1.3.1.5.2.5.3" TYPE="SECTION">
<HEAD>§ 905.204   Emergencies and natural disasters.</HEAD>
<P>(a) <I>General.</I> PHAs are required by the CF ACC to carry various types of insurance to protect it from loss. In most cases, insurance coverage will be the primary source of funding to pay repair or replacement costs associated with emergencies and natural disasters. Where the Department's Annual Appropriations Act establishes a set-aside from the Capital Fund appropriation for emergencies and natural disasters, the procedures in this section apply.
</P>
<P>(b) <I>Emergencies and natural disasters.</I> An emergency is an unforeseen or unpreventable event or occurrence that poses an immediate threat to the health and safety of the residents that must be corrected within one year of funding. A natural disaster for purposes of the Capital Fund reserve, is a non-presidentially declared disaster. In the event an emergency or natural disaster arises, HUD may require a PHA to use any other source that may legally be available, including unobligated Capital Funds, prior to providing emergency or natural disaster funds from the set-aside. The Department will review, on a case-by-case basis, requests for emergency and natural disaster funding from PHAs.
</P>
<P>(c) <I>Procedure to request emergency or natural disaster funds.</I> To obtain emergency or natural disaster funds, a PHA shall submit a written request in the form and manner prescribed by HUD. In a natural disaster where the PHA requires immediate relief to preserve the property and safety of the residents, the PHA may submit a preliminary request outlined in paragraph (d) of this section. Subsequently, the PHA is required to complete and submit the remaining information outlined in paragraph (e) of this section, at a time prescribed by HUD. For emergency requests, PHAs are to follow the procedures outlined in paragraph (e) of this section.
</P>
<P>(d) <I>Procedure to request preliminary natural disaster grant for immediate preservation.</I> A PHA may request a preliminary grant only for costs necessary for immediate preservation of the property and safety of the residents. The application should include the reasonable identification of damage and preservation costs as determined by the PHA. An independent assessment will be required when the PHA submits the final request or when the PHA reconciles the preliminary application grant with the actual amounts received from the Federal Emergency Management Agency (FEMA), insurance carriers, and other natural disaster relief sources. Regardless of whether further funding from the set-aside is requested, at a time specified by HUD, the PHA will be expected to provide a reconciliation of all funds received, to ensure that the PHA does not receive duplicate funding.
</P>
<P>(e) <I>Procedure for an emergency or a final request for natural disaster funds.</I> In the request the PHA shall:
</P>
<P>(1) Identify the public housing project(s) with the emergency or natural disaster condition(s).
</P>
<P>(2) Identify and provide the date of the conditions that present an unforeseen or unpreventable threat to the health, life, or safety of residents, in the case of emergency; or Natural disaster (e.g., hurricane, tornado, etc.).
</P>
<P>(3) Describe the activities that will be undertaken to correct the emergency or the conditions caused by the natural disaster and the estimated cost.
</P>
<P>(4) Provide an independent assessment of the extent of and the cost to correct the condition. The assessment must be specific as to the damage and costs associated with the emergency or natural disaster. An independent estimate of damage and repair cost is required as a part of the final natural disaster application. For natural disasters, the assessment must identify damage specifically caused by the natural disaster. The set-aside can be used only to pay costs to repair or replace a public housing project damaged as a result of the natural disaster, not for nonroutine maintenance or other improvements.
</P>
<P>(5) Provide a copy of a currently effective DOT covering the property and an opinion of counsel that there are no preexisting liens or other encumbrances on the property.
</P>
<P>(6) Demonstrate that without the requested funds from the set-aside, the PHA does not have adequate funds available to correct the emergency condition(s).
</P>
<P>(7) Identify all other sources of available funds (e.g., insurance proceeds, FEMA).
</P>
<P>(8) Any other material required by HUD.
</P>
<P>(f) <I>HUD Action.</I> HUD shall review all requests for emergency or natural disaster funds. If HUD determines that a PHA's request meets the requirements of this section, HUD shall approve the request subject to the availability of funds in the set-aside, in the order in which requests are received and are determined approvable.
</P>
<P>(g) <I>Submission of the CF ACC.</I> Upon being provided with a CF ACC Amendment from HUD, the PHA must sign and date the CF ACC Amendment and return it to HUD by the date established by HUD. HUD will execute the signed and dated CF ACC Amendment submitted by the PHA.


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:4.1.3.1.5.3" TYPE="SUBPART">
<HEAD>Subpart C—General Program Requirements</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>78 FR 63773, Oct. 24, 2013, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 905.300" NODE="24:4.1.3.1.5.3.5.1" TYPE="SECTION">
<HEAD>§ 905.300   Capital fund submission requirements.</HEAD>
<P>(a) <I>General.</I> Unless otherwise stated, the requirements in this section apply to both qualified PHAs (as described in § 903.3(c) of this chapter) and nonqualified PHAs. Each PHA must complete a comprehensive physical needs assessment (PNA).
</P>
<P>(1) <I>Applicability.</I> Small PHAs (PHAs that own or operate fewer than 250 public housing units) must comply with the requirements of this section beginning 30 days after the end of the federal fiscal year quarter following HUD's publication of a notice in the <E T="04">Federal Register.</E>
</P>
<P>(2) [Reserved]
</P>
<P>(b) <I>Capital Fund program submission requirements.</I> At the time that the PHA submits the ACC Amendment(s) for its Capital Fund Grants(s) to HUD, the PHA must also submit the following items:
</P>
<P>(1) <I>CFP 5-Year Action Plan.</I> (i) <I>Content.</I> The CFP 5-Year Action Plan must describe the capital improvements necessary to ensure long-term physical and social viability of the PHA's public housing developments, including the capital improvements to be undertaken within the 5-year period, their estimated costs, status of environmental review, and any other information required for participation in the CFP, as prescribed by HUD. In order to be entitled to fungibility, PHA's must have an approved 5-year Action Plan. Except in the case of emergency/disaster work, the PHA shall not spend Capital Funds on any work that is not included in an approved CFP 5-Year Action Plan and its amendments.
</P>
<P>(ii) <I>Budget.</I> The Capital Fund Budget for each of the 5 years shall be prepared by a PHA using the form(s) prescribed by HUD. Work items listed in the budget must include, but are not limited to, the following:
</P>
<P>(A) Where a PHA has an approved Capital Fund Financing Program (CFFP) loan, debt service payments for the grants from which the payments are scheduled;
</P>
<P>(B) Where a PHA has an approved CFFP loan, the PHA shall also include all work and costs, including debt service payments, in the CFP 5-Year Action Plan. Work associated with the use of financing proceeds will be reported separately in a form and manner prescribed by HUD; or
</P>
<P>(C) Work affecting health and safety and compliance with regulatory requirements such as section 504 of the Rehabilitation Act of 1973 and HUD's implementing regulations at 24 CFR part 8, and the lead-based paint poisoning prevention standards at 24 CFR part 35, before major systems (e.g., heating, roof, etc.) and other costs of lower priority.
</P>
<P>(iii) PHA Criteria for Significant Amendment or Modification. The PHA must include in the basic criteria that the PHA will use for determining a significant amendment or modification to the CFP 5-Year Action Plan. In addition to the criteria established by the PHA, for the purpose of the CFP, a proposed demolition, disposition, homeownership, Capital Fund financing, development, or mixed-finance proposal are considered significant amendments to the CFP 5-Year Action Plan.
</P>
<P>(iv) <I>Submission.</I> The PHA must submit a Board-approved CFP 5-Year Action Plan at least once every 5 years. The PHA may choose to update its CFP 5-Year Action Plan every year. The PHA shall indicate whether its CFP 5-Year Action Plan is fixed or rolling. Prior to submission to HUD, the 5-Year Action Plan must have been approved by the PHA's Board of Commissioners. In any given year that a PHA does not have a CFP 5-Year Action Plan that is approved by the PHA Board of Commissioners and HUD, the Capital Fund grant(s) for these PHAs will be reserved and obligated; however, the PHA will not have access to those funds until its CFP 5-Year Action Plan is approved by the PHA Board of Commissioners and HUD.
</P>
<P>(v) Significant amendments or modification to the CFP 5 Year Action Plan. PHAs making significant amendments or modifications to the CFP 5-Year Action Plan, as defined in paragraph (b)(1)(iii) of this section, must follow the requirements of this section.
</P>
<P>(A) A PHA after submitting its 5-Year Action Plan may amend or modify the plan. If the amendment or modification is a significant amendment or modification, as defined in paragraph (b)(1)(iii) of this section, the PHA:
</P>
<P>(1) May not adopt the amendment or modification until the PHA has duly called a meeting of its Board of Commissioners (or similar governing body) and the meeting at which the amendment or modification is adopted, is open to the public; and
</P>
<P>(2) May not implement the amendment or modification until notification of the amendment or modifications are provided to HUD and approved by HUD in accordance with HUD's plan review procedures, as provided in paragraph (b)(6) of this section.
</P>
<P>(B) Each significant amendment or modification to a plan submitted to HUD is subject to the requirement of paragraph (b)(3) of this section.
</P>
<P>(2) <I>Certifications required for receipt of Capital Fund grants.</I> The PHA is also required to submit various certifications to HUD, in a form prescribed by HUD, including, but not limited to:
</P>
<P>(i) Certification of PIC Data;
</P>
<P>(ii) Standard Form—Disclosure of Lobbying Activities;
</P>
<P>(iii) Civil Rights Compliance, in a form prescribed by HUD; and
</P>
<P>(iv) Certification of Compliance with Public Hearing Requirements.
</P>
<P>(3) <I>Conduct of public hearing and Resident Advisory Board Consultation.</I> A PHA must annually conduct a public hearing and consult with the Resident Advisory Board (RAB) of the PHA to discuss the Capital Fund submission. The PHA may elect to conduct a separate annual public hearing in order to solicit public comments or to hold the annual public hearing at the same time as the hearing for the Annual PHA Plan, the 5-Year Plan, or the required annual hearing for qualified public housing authorities. The hearing must be conducted at a location that is convenient to the residents served by the PHA.
</P>
<P>(i) Not later than 45 days before the public hearing is to take place, the PHA must:
</P>
<P>(A) Make the Capital Fund submission along with the material required under this paragraph (b) available to the residents and the RAB; and
</P>
<P>(B) Publish a notice informing the public that the information is available for review and inspection; that a public hearing will take place on the plan; and of the date, time, and location of the hearing.
</P>
<P>(C) PHAs shall conduct reasonable outreach activities to encourage broad public participation in the review of the Capital Fund submission.
</P>
<P>(4) <I>Public and RAB comments.</I> The PHA must consider the comments from the residents, the public, and the RAB on the Capital Fund submission, or any significant modification thereto. In submitting the final CFP 5-Year Action Plan to HUD for approval, or any significant amendment or modification to the 5-Year Action Plan to HUD for approval, the PHA must include a copy of the recommendations made by the RAB(s) and a description of the manner in which the PHA addressed these recommendations.
</P>
<P>(5) <I>Consistency with Consolidated Plan.</I> The Capital Fund submission must be consistent with any applicable Consolidated Plan.
</P>
<P>(6) <I>HUD review and approval.</I> The CFP submission requirements must meet the requirements of this part as well as the Public Housing Program Requirements as defined in § 905.108 of this part. A PHA is required to revise or correct information that is not in compliance, and HUD has the authority to impose administrative sanctions until the appropriate revisions are made. HUD will review the CFP submission requirements to determine whether:
</P>
<P>(i) All of the information that is required to be submitted is included;
</P>
<P>(ii) The information is consistent with the needs identified in the PNA and data available to HUD; and
</P>
<P>(iii) There are any issues of compliance with applicable laws, regulations, or contract requirements that have not been addressed with the proposed use of the Capital Fund.
</P>
<P>(7) <I>Time frame for submission of CFP requirements.</I> The requirements identified in this paragraph (b) must be submitted to HUD, in a format prescribed by HUD, at the time that the PHA submits its signed CF ACC Amendment.
</P>
<P>(8) <I>Performance and Evaluation Report.</I> (i) All PHAs must prepare a CFP Annual Statement/Performance and Evaluation Report at a time and in a format prescribed by HUD. These reports shall be retained on file for all grants for which a final Actual Modernization Cost Certificate (AMCC) or an Actual Development Cost Certificate (ADCC) has not been submitted. A final Performance and Evaluation Report must be submitted in accordance with 24 CFR 905.322, at the time the PHA submits its AMCC or ADCC.
</P>
<P>(ii) PHAs that are designated as troubled performers under PHAS (24 CFR part 902) or as troubled under the Section 8 Management Assessment Program (SEMAP) (24 CFR part 985), and/or were identified as noncompliant with section 9(j) obligation and expenditure requirements during the fiscal year, shall submit their CFP Annual Statement/Performance and Evaluation Reports to HUD for review and approval.
</P>
<P>(iii) All other PHAs, that are not designated as troubled performers under PHAS and are not designated as troubled under SEMAP, and that were in compliance with section 9(j) obligation and expenditure requirements during the fiscal year, shall prepare a CFP Annual Statement/Performance and Evaluation report for all open grants and shall retain the report(s) on file at the PHA, to be available to HUD upon request.
</P>
<P>(9) <I>Moving to Work (MTW) PHAs.</I> MTW PHAs are to submit the Capital Fund submissions as part of the MTW Plan annually, as required by the MTW Agreement.
</P>
<P>(c)-(d) [Reserved]


</P>
</DIV8>


<DIV8 N="§ 905.302" NODE="24:4.1.3.1.5.3.5.2" TYPE="SECTION">
<HEAD>§ 905.302   Timely submission of the CF ACC amendment by the PHA.</HEAD>
<P>Upon being provided with a CF ACC Amendment from HUD, the PHA must sign and date the CF ACC Amendment and return it to HUD by the date established. HUD will execute the signed and dated CF ACC Amendment submitted by the PHA. If HUD does not receive the signed and dated Amendment by the submission deadline, the PHA will receive the Capital Fund grant for that year; however, it will have less than 24 months to obligate 90 percent of the Capital Fund grant and less than 48 months to expend these funds because the PHA's obligation start date and disbursement end date for these grants will remain as previously established by HUD.


</P>
</DIV8>


<DIV8 N="§ 905.304" NODE="24:4.1.3.1.5.3.5.3" TYPE="SECTION">
<HEAD>§ 905.304   CF ACC term and covenant to operate.</HEAD>
<P>(a) <I>Period of obligation to operate as public housing.</I> The PHA shall operate all public housing projects in accordance with the CF ACC, as amended, and applicable HUD regulations, for the statutorily prescribed period. These periods shall be evidenced by a recorded DOT on all public housing property. If the PHA uses Capital Funds to develop public housing or to modernize existing public housing, the CF ACC term and the covenant to operate those projects are as follows:
</P>
<P>(1) <I>Development activities.</I> Each public housing project developed using Capital Funds shall establish a restricted use covenant, either in the DOT or as a Declaration of Restrictive Covenants, to operate under the terms and conditions applicable to public housing for a 40-year period that begins on the date on which the project becomes available for occupancy, as determined by HUD.
</P>
<P>(2) <I>Modernization activities.</I> For PHAs that receive Capital Fund assistance, the execution of each new CF ACC Amendment establishes an additional 20-year period that begins on the latest date on which modernization is completed, except that the additional 20-year period does not apply to a project that receives Capital Fund assistance only for management improvements.
</P>
<P>(3) <I>Operating Fund.</I> Any public housing project developed that receives Operating Fund assistance shall have a covenant to operate under requirements applicable to public housing for a 10-year period beginning upon the conclusion of the fiscal year for which such amounts were provided, except for such shorter period as permitted by HUD by an exception.
</P>
<P>(b) <I>Mortgage or security interests.</I> The PHA shall not allow <I>any mortgage</I> or security interest in public housing assets, including under section 30 of the 1937 Act (42 U.S.C. 1437z-2), without prior written approval from HUD. PHAs that undertake financing unsecured by public housing assets shall include the following nonrecourse language in all financing documents as follows:
</P>
<EXTRACT>
<P>“This financing is non-recourse to any public housing property (real or personal property including all public housing assets or income), or disposition proceeds approved pursuant to Section 18 of the United States Housing Act of 1937 (unless explicitly permitted by HUD in the Section 18 approval letter).”</P></EXTRACT>
<P>(c) <I>Applicability of latest expiration date.</I> All public housing subject to this part or required by law shall be maintained and operated as public housing, as prescribed, until the latest expiration date provided in section 9(d)(3) of the 1937 Act (42 U.S.C. 1437g(d)(3)) or any other provision of law or regulation mandating the operation of the housing as public housing, or under terms and conditions applicable to public housing, for a specified period of time.


</P>
</DIV8>


<DIV8 N="§ 905.306" NODE="24:4.1.3.1.5.3.5.4" TYPE="SECTION">
<HEAD>§ 905.306   Obligation and expenditure of Capital Fund grants.</HEAD>
<P>(a) <I>Obligation.</I> A PHA shall obligate each Capital Fund grant, including formula grants, Replacement Housing Factor (RHF) grants, Demolition and Disposition Transitional Funding (DDTF) grants, and natural disaster grants, no later than 24 months after, and emergency grants no later than 12 months after, the date on which the funds become available to the PHA for obligation, except as provided in paragraphs (c) and (d) of this section. However, a PHA with unobligated funds from a grant shall disregard this requirement for up to not more than 10 percent of the originally allocated funds from that grant. The funds become available to the PHA when HUD executes the CF ACC Amendment. With HUD approval, and subject to the availability of appropriations, the PHA can accumulate RHF grants for up to 5 years or until it has adequate funds to undertake replacement housing. The PHA shall obligate 90 percent of the RHF grant within 24 months from the date that the PHA accumulates adequate funds, except as provided in paragraph (c) of this section.
</P>
<P>(b) <I>Items and costs.</I> For funds to be considered obligated, all items and costs must meet the definition of “obligation” in § 905.108 of this part.
</P>
<P>(c) <I>Extension to obligation requirement.</I> The PHA may request an extension of the obligation deadline, and HUD may grant an extension for a period of up to 12 months, based on:
</P>
<P>(1) The size of the PHA;
</P>
<P>(2) The complexity of the CFP of the PHA;
</P>
<P>(3) Any limitation on the ability of the PHA to obligate the amounts allocated for the PHA from the Capital Fund in a timely manner as a result of state or local law; or
</P>
<P>(4) Any other factors that HUD determines to be relevant.
</P>
<P>(d) <I>HUD extension for other reasons.</I> HUD may extend the obligation deadline for a PHA for such a period as HUD determines to be necessary, if HUD determines that the failure of the PHA to obligate assistance in a timely manner is attributable to:
</P>
<P>(1) Litigation;
</P>
<P>(2) Delay in obtaining approvals from the Federal Government or a state or local government that is not the fault of the PHA;
</P>
<P>(3) Compliance with environmental assessment and abatement requirements;
</P>
<P>(4) Relocating residents;
</P>
<P>(5) An event beyond the control of the PHA; or
</P>
<P>(6) Any other reason established by HUD by notice in the <E T="04">Federal Register.</E>
</P>
<P>(e) <I>Failure to obligate.</I> (1) For any month during the fiscal year, HUD shall withhold all new Capital Fund grants from any PHA that has unobligated funds in violation of paragraph (a) of this section. The penalty will be imposed once the violations of paragraph (a) are known. The PHA may cure the noncompliance by:
</P>
<P>(i) Requesting in writing that HUD recapture the unobligated balance of the grant; or
</P>
<P>(ii) Continuing to obligate funds for the grant in noncompliance until the noncompliance is cured.
</P>
<P>(2) After the PHA has cured the noncompliance, HUD will release the withheld Capital Fund grant(s) minus a penalty of one-twelfth of the grant for each month of noncompliance.
</P>
<P>(f) <I>Expenditure.</I> The PHA shall expend all grant funds within 48 months after the date on which funds become available, as described in paragraph (a) of this section. The deadline to expend funds may be extended only by the period of time of a HUD-approved extension of the obligation deadline. No other extensions of the expenditure deadline will be granted. All funds not expended will be recaptured.


</P>
</DIV8>


<DIV8 N="§ 905.308" NODE="24:4.1.3.1.5.3.5.5" TYPE="SECTION">
<HEAD>§ 905.308   Federal requirements applicable to all Capital Fund activities.</HEAD>
<P>(a) The PHA shall comply with the requirements of 24 CFR part 5 (General HUD Program Requirements; Waivers), 2 CFR part 200, and this part.
</P>
<P>(b) The PHA shall also comply with the following program requirements.
</P>
<P>(1) <I>Nondiscrimination and equal opportunity.</I> The PHA shall comply with all applicable nondiscrimination and equal opportunity requirements, including, but not limited to, the Department's generally applicable nondiscrimination and equal opportunity requirements at 24 CFR 5.105(a) and the Architectural Barriers Act of 1968 (42 U.S.C. 4151 <I>et seq.</I>), and its implementing regulations at 24 CFR parts 40 and 41. The PHA shall affirmatively further fair housing in its use of funds under this part, which includes, but is not limited to, addressing modernization and development in the completion of requirements at 24 CFR 903.7(o).
</P>
<P>(2) <I>Environmental requirements.</I> All activities under this part are subject to an environmental review by a responsible entity under HUD's environmental regulations at 24 CFR part 58 and must comply with the requirements of the National Environmental Policy Act of 1969 (NEPA)(42 U.S.C. 4321 <I>et seq.</I>) and the related laws and authorities listed at 24 CFR 58.5. HUD may make a finding in accordance with 24 CFR 58.11 and may perform the environmental review itself under the provisions of 24 CFR part 50. In those cases where HUD performs the environmental review under 24 CFR part 50, it will do so before approving a proposed project, and will comply with the requirements of NEPA and the related requirements at 24 CFR 50.4.
</P>
<P>(3) <I>Wage rates.</I> (i) Davis-Bacon wage rates. For all work or contracts exceeding $2,000 in connection with development activities or modernization activities (except for nonroutine maintenance work, as defined in § 905.200(b)(5) of this part), all laborers and mechanics employed on the construction, alteration, or repair shall be paid not less than the wages prevailing in the locality, as determined by the Secretary of Labor pursuant to the Davis-Bacon Act (40 U.S.C. 3142).
</P>
<P>(ii) HUD-determined wage rates. For all operations work and contracts, including routine and nonroutine maintenance work (as defined in § 905.200(b)(5) of this part), all laborers and mechanics employed shall be paid not less than the wages prevailing in the locality, as determined or adopted by HUD pursuant to section 12(a) of the 1937 Act, 42 U.S.C. 1437j(a).
</P>
<P>(iii) <I>State wage rates.</I> Preemption of state prevailing wage rates as provided at 24 CFR 965.101.
</P>
<P>(iv) <I>Volunteers.</I> The prevailing wage requirements of this section do not apply to volunteers performing development, modernization, or nonroutine maintenance work under the conditions set out in 24 CFR part 70.
</P>
<P>(4) <I>Technical wage rates.</I> All architects, technical engineers, draftsmen, and technicians (other than volunteers under the conditions set out in 24 CFR part 70) employed in a development or modernization project shall be paid not less than the wages prevailing in the locality, as determined or adopted (subsequent to a determination under applicable state or local law) by HUD.
</P>
<P>(5) <I>Lead-based paint poisoning prevention.</I> The PHA shall comply with the Lead-Based Paint Poisoning Prevention Act (LPPPA) (42 U.S.C. 4821 <I>et seq.</I>), the Residential Lead-Based Paint Hazard Reduction Act (42 U.S.C. 4851 <I>et seq.</I>), and the Lead Safe Housing Rule and the Lead Disclosure Rule at 24 CFR part 35.
</P>
<P>(6) <I>Fire safety.</I> A PHA shall comply with the requirements of section 31 of the Federal Fire Prevention and Control Act of 1974 (15 U.S.C. 2227).
</P>
<P>(7) <I>Flood insurance and floodplain requirements.</I> The PHA will not engage in the acquisition, construction, or improvement of a public housing project located in an area that has been identified by the FEMA as having special flood hazards, unless:
</P>
<P>(i) The requirements of 24 CFR part 55, Floodplain Management, have been met, including a determination by a responsible entity under 24 CFR part 58 or by HUD under 24 CFR part 50 that there is no practicable alternative to locating in an area of special flood hazards and the minimization of unavoidable adverse impacts;
</P>
<P>(ii) Flood insurance on the building is obtained in compliance with the Flood Disaster Protection Act of 1973 (42 U.S.C. 4001 <I>et seq.</I>); and
</P>
<P>(iii) The community in which the area is situated is participating in the National Flood Insurance Program in accordance with 44 CFR parts 59 through 79, or less than one year has passed since FEMA notification regarding flood hazards.
</P>
<P>(8) <I>Coastal barriers.</I> In accordance with the Coastal Barriers Resources Act (16 U.S.C. 3501 <I>et seq.</I>), no financial assistance under this part may be made available within the Coastal Barrier Resources System.
</P>
<P>(9) <I>Displacement, relocation, and real property acquisition.</I> All acquisition or rehabilitation activities carried out under the Capital Fund, including acquisition of any property for development, shall comply with the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA) (42 U.S.C. 4601-4655) and with implementing regulations at 49 CFR part 24. Demolition or disposition under section 18 of the 1937 Act, 42 U.S.C. 1437p, is covered by the relocation provisions at 24 CFR 970.21.
</P>
<P>(10) <I>Procurement and contract requirement.</I> PHAs and their contractors shall comply with section 3 of the Housing and Community Development Act of 1968 (12 U.S.C. 1701u) and HUD's implementing rules at 24 CFR part 75.
</P>
<CITA TYPE="N">[78 FR 63770, Oct. 24, 2013, as amended at 80 FR 75942, Dec. 7, 2015; 85 FR 61568, Sept. 29, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 905.310" NODE="24:4.1.3.1.5.3.5.6" TYPE="SECTION">
<HEAD>§ 905.310   Disbursements from HUD.</HEAD>
<P>(a) The PHA shall initiate a fund requisition from HUD only when funds are due and payable, unless HUD approves another payment schedule as authorized by 2 CFR 200.305.
</P>
<P>(b) The PHA shall maintain detailed disbursement records to document eligible expenditures (e.g., contracts or other applicable documents), in a form and manner prescribed by HUD.
</P>
<CITA TYPE="N">[78 FR 63770, Oct. 24, 2013, as amended at 80 FR 75942, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 905.312" NODE="24:4.1.3.1.5.3.5.7" TYPE="SECTION">
<HEAD>§ 905.312   Design and construction.</HEAD>
<P>The PHA shall meet the following design and construction standards, as applicable, for all development and modernization.
</P>
<P>(a) Physical structures shall be designed, constructed, and equipped to be consistent with the neighborhoods they occupy; meet contemporary standards of modest design, comfort, and livability (see also § 905.202(c) of this part); promote security; promote energy conservation; and be attractive so as to harmonize with the community.
</P>
<P>(b) All development projects shall be designed and constructed in compliance with:
</P>
<P>(1) A national building code, such as those developed by the International Code Council or the National Fire Protection Association; and the IECC or ASHRAE 90.1-2010 (both incorporated by reference, see § 905.110 of this part), for multifamily high-rises (four stories or higher), or a successor energy code or standard that has been adopted by HUD pursuant to 42 U.S.C. 12709 or other relevant authority;
</P>
<P>(2) Applicable state and local laws, codes, ordinances, and regulations;
</P>
<P>(3) Other federal requirements, including fire protection and safety standards implemented under section 31 of the Fire Administration Authorization Act of 1992, 15 U.S.C. 2227 and HUD minimum property standards (e.g., 24 CFR part 200, subpart S);
</P>
<P>(4) Accessibility Requirements as required by section 504 of the Rehabilitation Act (29 U.S.C. 794) and implementing regulations at 24 CFR part 8; title II of the Americans with Disabilities Act (42 U.S.C. 12101 <I>et seq.</I>) and implementing regulations at 28 CFR part 35; and, if applicable, the Fair Housing Act (42 U.S.C. 3601-3619) and implementing regulations at 24 CFR part 100; and
</P>
<P>(5) Occupancy of high-rise elevator structures by families with children. Pursuant to 42 U.S.C. 1437d(a), a high-rise elevator structure shall not be provided for families with children regardless of density, unless the PHA demonstrates and HUD determines that there is no practical alternative.
</P>
<P>(c) All modernization projects shall be designed and constructed in compliance with:
</P>
<P>(1) The modernization standards as prescribed by HUD;
</P>
<P>(2) Accessibility requirements as required by section 504 of the Rehabilitation Act (29 U.S.C. 794) and implementing regulations at 24 CFR part 8; title II of the Americans with Disabilities Act (42 U.S.C. 12101 <I>et seq.</I>) and implementing regulations at 28 CFR part 35; and, if applicable, the Fair Housing Act (42 U.S.C. 3601-3619) and implementing regulations at 24 CFR part 100; and
</P>
<P>(3) Cost-effective energy conservation measures, identified in the PHA's most recently updated energy audit.
</P>
<P>(d) Pursuant to the Energy Policy Act of 2005, in purchasing appliances, PHAs shall purchase appliances that are Energy Star products or Federal Energy Management Program designed products, unless the PHA determines that the purchase of these appliances is not cost effective.
</P>
<P>(e) <I>Broadband infrastructure.</I> Any new construction or substantial rehabilitation, as substantial rehabilitation is defined in 24 CFR 5.100, of a building with more than 4 rental units and funded by a grant awarded or Capital Funds allocated after January 19, 2017 must include installation of broadband infrastructure, as this term is also defined in 24 CFR 5.100, except where the PHA determines and, in accordance with § 905.326, documents the determination that:
</P>
<P>(1) The location of the new construction or substantial rehabilitation makes installation of broadband infrastructure infeasible;
</P>
<P>(2) The cost of installing broadband infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden; or
</P>
<P>(3) The structure of the housing to be rehabilitated makes installation of broadband infrastructure infeasible.
</P>
<CITA TYPE="N">[78 FR 63773, Oct. 24, 2013, as amended at 81 FR 92639, Dec. 20, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 905.314" NODE="24:4.1.3.1.5.3.5.8" TYPE="SECTION">
<HEAD>§ 905.314   Cost and other limitations.</HEAD>
<P>(a) <I>Eligible administrative costs.</I> Where the physical or management improvement costs will benefit programs other than Public Housing, such as the Housing Choice Voucher program or local revitalization programs, eligible administrative costs are limited to the amount directly attributable to the public housing program.
</P>
<P>(b) <I>Maximum project cost.</I> The maximum project cost represents the total amount of public housing capital assistance used in connection with the development of a public housing project, and includes:
</P>
<P>(1) Project costs that are subject to the TDC limit (<I>i.e.</I>, HCC and Community Renewal Costs); and
</P>
<P>(2) Project costs that are not subject to the TDC limit (<I>i.e.</I>, Additional Project Costs). The total project cost to be funded with public housing capital assistance, as set forth in the proposal and as approved by HUD, becomes the maximum project cost stated in the ACC Amendment. Upon completion of the project, the actual project cost is determined based upon the amount of public housing capital assistance expended for the project, and this becomes the maximum project cost for purposes of the ACC Amendment.
</P>
<P>(c) <I>TDC limit.</I> (1) Public housing funds, including Capital Funds, may not be used to pay for HCC and Community Renewal Costs in excess of the TDC limit, as determined under paragraph (b)(2) of this section. However, HOPE VI grantees will be eligible to request a TDC exception for public housing and HOPE VI funds awarded in FFY 1996 and prior years. PHAs may also request a TDC exception for integrated utility management, capital planning, and other capital and management activities that promote energy conservation and efficiency. HUD will examine the request for TDC exceptions to ensure that they would be cost-effective, so as to ensure that up-front expenditures subject to the exceptions would be justified by future cost savings.
</P>
<P>(2) <I>Determination of TDC limit.</I> HUD will determine the TDC limit for a public housing project as follows:
</P>
<P>(i) <I>Step 1: Unit construction cost guideline.</I> HUD will first determine the applicable “construction cost guideline” by averaging the current construction costs as listed in two nationally recognized residential construction cost indices for publicly bid construction of a good and sound quality for specific bedroom sizes and structure types. The two indices HUD will use for this purpose are the R.S. Means cost index for construction of “average” quality and the Marshall &amp; Swift cost index for construction of “good” quality. HUD has the discretion to change the cost indices to other such indices that reflect comparable housing construction quality through a notice published in the <E T="04">Federal Register.</E>
</P>
<P>(ii) <I>Step 2: Bedroom size and structure types.</I> The construction cost guideline is then multiplied by the number of units for each bedroom size and structure type.
</P>
<P>(iii) <I>Step 3: Elevator and nonelevator type structures.</I> HUD will then multiply the resulting amounts from step 2 by 1.6 for elevator type structures and by 1.75 for nonelevator type structures.
</P>
<P>(iv) <I>Step 4: TDC limit.</I> The TDC limit for a project is calculated by adding the resulting amounts from step 3 for all the public housing units in the project.
</P>
<P>(3) <I>Costs not subject to the TDC limit.</I> Additional project costs are not subject to the TDC limit.
</P>
<P>(4) <I>Funds not subject to the TDC limit.</I> A PHA may use funding sources not subject to the TDC limit (e.g., Community Development Block Grant (CDBG) funds, low-income housing tax credits, private donations, private financing, etc.) to cover project costs that exceed the TDC limit or the HCC limit described in this paragraph (c). Such funds, however, may not be used for items that would result in substantially increased operating, maintenance, or replacement costs, and must meet the requirements of section 102 of the Department of Housing and Urban Development Reform Act of 1989 (Pub. L. 101-235, approved December 15, 1989) (42 U.S.C. 3545). These funds must be included in the project development cost budget.
</P>
<P>(d) <I>Housing Construction Costs (HCC).</I> (1) <I>General.</I> A PHA may not use Capital Funds to pay for HCC in excess of the amount determined under paragraph (d)(2) of this section.
</P>
<P>(2) <I>Determination of HCC limit.</I> HUD will determine the HCC limit as listed in at least two nationally recognized residential construction cost indices for publicly bid construction of a good and sound quality for specific bedroom sizes and structure types. The two indices HUD will use for this purpose are the R.S. Means cost index for construction of “average” quality and the Marshal &amp; Swift cost index for construction of “good” quality. HUD has the discretion to change the cost indices to other such indices that reflect comparable housing construction quality through a notice published in the <E T="04">Federal Register.</E> The resulting construction cost guideline is then multiplied by the number of public housing units in the project, based upon bedroom size and structure type. The HCC limit for a project is calculated by adding the resulting amounts for all public housing units in the project.
</P>
<P>(3) The HCC limit is not applicable to the acquisition of existing housing, whether or not such housing will be rehabilitated. The TDC limit is applicable to such acquisition.
</P>
<P>(e) <I>Community Renewal Costs.</I> Capital Funds may be used to pay for Community Renewal Costs in an amount equivalent to the difference between the HCC paid for with public housing capital assistance and the TDC limit.
</P>
<P>(f) <I>Rehabilitation of existing public housing projects.</I> The HCC limit is not applicable to the rehabilitation of existing public housing projects. The TDC limit for modernization of existing public housing is 90 percent of the TDC limit as determined under paragraph (c) of this section. This limitation does not apply to the rehabilitation of any property acquired pursuant to § 905.600 of this part.
</P>
<P>(g) <I>Modernization cost limits.</I> If the modernization costs are more than 90 percent of the TDC, then the project shall not be modernized. Capital Funds shall not be expended to modernize an existing public housing development that fails to meet the HUD definition of reasonable cost found in § 905.108 of this part, except for:
</P>
<P>(1) Emergency work;
</P>
<P>(2) Essential maintenance necessary to keep a public housing project habitable until the demolition or disposition application is approved; or
</P>
<P>(3) The costs of maintaining the safety and security of a site that is undergoing demolition.
</P>
<P>(h) <I>Administrative cost limits and Capital Fund Program Fee.</I> (1) Administrative cost limits (for non-asset-management PHAs). The PHA shall not budget or expend more than 10 percent of its annual Capital Fund grant on administrative costs, in accordance with the CFP 5-Year Action Plan.
</P>
<P>(2) Capital Fund Program Fee (for asset-management PHAs). For a PHA that is under asset management, the Capital Fund Program Fee and administrative cost limits are the same. For the Capital Fund Program Fee, a PHA may charge a management fee of up to 10 percent of the annual CFP formula grant(s) amount, excluding emergency and disaster grants and also excluding any costs related to lead-based paint or asbestos testing, in-house architectural and engineering work, or other special administrative costs required by state or local law.
</P>
<P>(i) Modernization. The PHA shall not budget or expend more than 10 percent of its annual Capital Fund grant on administrative costs, in accordance with its CFP 5-Year Action Plan. The 10 percent limit excludes any costs related to lead-based paint or asbestos testing, in-house Architectural and Engineering work, or other special administrative costs required by state or local law.
</P>
<P>(ii) Development. For development work with Capital Fund and RHF grants, the administrative cost limit is 3 percent of the total project budget, or, with HUD's approval, up to 6 percent of the total project budget.
</P>
<P>(i) <I>Management improvement cost limits.</I> In Fiscal Year (FY) 2014, a PHA shall not use more than 18 percent of its annual Capital Fund grant for eligible management improvement costs identified in its CFP 5-Year Action Plan. In FY 2015, a PHA shall not use more than 16 percent of its annual Capital Fund grant for eligible management improvement costs identified in its CFP 5-Year Action Plan. In FY 2016, a PHA shall not use more than 14 percent of its annual Capital Fund grant for eligible management improvement costs identified in its CFP 5-Year Action Plan. In FY 2017, a PHA shall not use more than 12 percent of its annual Capital Fund grant for eligible management improvement costs identified in its CFP 5-Year Action Plan. In FY 2018 and thereafter, a PHA shall not use more than 10 percent of its annual Capital Fund grant for eligible management improvement costs identified in its CFP 5-Year Action Plan. Management improvements are an eligible expense for PHAs participating in asset management.
</P>
<P>(j) <I>Types of labor.</I> A PHA may use force account labor for development and modernization activities if included in a CFP 5-Year Action Plan that is approved by the PHA Board of Commissioners and HUD. HUD approval to use force account labor is not required when the PHA is designated as a high performer under PHAS.
</P>
<P>(k) <I>RMC activities.</I> When the entire development, financing, or modernization activity, including the planning and architectural design, is administered by an RMC, the PHA shall not retain any portion of the Capital Funds for any administrative or other reason, unless the PHA and the RMC provide otherwise by contract.
</P>
<P>(l) <I>Capital Funds for operating costs.</I> A PHA may use Capital Funds for operating costs only if it is included in the CFP 5-Year Action Plan that is approved by the PHA Board of Commissioners and HUD, and limited as described in paragraphs (l)(1) and (2) of this section. Capital Funds identified in the CFP 5-Year Action Plan to be transferred to operations are obligated once the funds have been budgeted and drawn down by the PHA. Once such transfer of funds occurs, the PHA must follow the requirements of 24 CFR part 990 with respect to those funds.
</P>
<P>(1) <I>Large PHAs.</I> A PHA with 250 or more units may use no more than 20 percent of its annual Capital Fund grant for activities that are eligible under the Operating Fund at 24 CFR part 990.
</P>
<P>(2) <I>Small PHAs.</I> A PHA with less than 250 units, that is not designated as troubled under PHAS, may use up to 100 percent of its annual Capital Fund grant for activities that are eligible under the Operating Fund at 24 CFR part 990, except that the PHA must have determined that there are no debt service payments, significant Capital Fund needs, or emergency needs that must be met prior to transferring 100 percent of its funds to operating expenses.


</P>
</DIV8>


<DIV8 N="§ 905.316" NODE="24:4.1.3.1.5.3.5.9" TYPE="SECTION">
<HEAD>§ 905.316   Procurement and contract requirements.</HEAD>
<P>(a) <I>General.</I> PHAs shall comply with 2 CFR part 200, and HUD implementing instructions, for all capital activities including modernization and development, except as provided in paragraph (c) in this section.
</P>
<P>(b) <I>Contracts.</I> The PHA shall use all contract forms prescribed by HUD. If a form is not prescribed, the PHA may use any Office of Management and Budget (OMB) approved form that contains all applicable federal requirements and contract clauses.
</P>
<P>(c) <I>Mixed-finance development projects.</I> Mixed-finance development partners may be selected in accordance with 24 CFR 905.604(h). Contracts and other agreements with mixed-finance development partners must specify that they comply with the requirements of §§ 905.602 and 905.604 of this part.
</P>
<P>(d) <I>Assurances of completion.</I> Notwithstanding 24 CFR 85.36 (as revised April 1, 2013), for each construction contract over $100,000, the contractor shall furnish the PHA with the following:
</P>
<P>(1) A bid guarantee from each bidder, equivalent to 5 percent of the bid price; and
</P>
<P>(2) One of the following:
</P>
<P>(i) A performance bond and payment bond for 100 percent of the contract price;
</P>
<P>(ii) A performance bond and a payment bond, each for 50 percent or more of the contract price;
</P>
<P>(iii) A 20 percent cash escrow;
</P>
<P>(iv) A 10 percent irrevocable letter of credit with terms acceptable to HUD, or
</P>
<P>(v) Any other payment method acceptable to HUD.
</P>
<P>(e) <I>Procurement of recovered materials.</I> PHAs that are state agencies and agencies of a political subdivision of a state that are using assistance under this part for procurement, and any person contracting with such PHAs with respect to work performed under an assisted contract, must comply with the requirements of section 6002 of the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act. In accordance with section 6002, these agencies and persons must procure items designated in guidelines of the Environmental Protection Agency (EPA) at 40 CFR part 247 that contain the highest percentage of recovered material practicable, consistent with maintaining a satisfactory level of competition, where the purchase price of the item exceeds $10,000 or the value of the quantity acquired in the preceding fiscal year exceeded $10,000; must procure solid waste management services in a manner that promotes energy and resource recovery; and must have established an affirmative procurement program for procurement of recovered materials identified in the EPA guidelines.
</P>
<CITA TYPE="N">[78 FR 63770, Oct. 24, 2013, as amended at 80 FR 75942, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 905.318" NODE="24:4.1.3.1.5.3.5.10" TYPE="SECTION">
<HEAD>§ 905.318   Title and deed.</HEAD>
<P>The PHA, or, in the case of mixed-finance, the Owner Entity, shall obtain title insurance that guarantees the title is good and marketable before taking title to any and all sites and properties acquired with public housing funds. Immediately upon taking title to a property, the PHA or Owner Entity shall record the deed and a Declaration of Trust or, in the case of mixed finance, a Declaration of Restrictive Covenants, in the form and in the manner and order prescribed by HUD. The PHA shall at all times maintain a recorded Declaration of Trust or Declaration of Restrictive Covenants in the form and in the manner and order prescribed by HUD on all public housing projects covering the term required by this part.


</P>
</DIV8>


<DIV8 N="§ 905.320" NODE="24:4.1.3.1.5.3.5.11" TYPE="SECTION">
<HEAD>§ 905.320   Contract administration and acceptance of work.</HEAD>
<P>(a) <I>Contract administration.</I> The PHA is responsible, in accordance with 2 CFR part 200, subpart D, for all contractual and administrative issues arising out of their procurements. The PHA shall maintain full and complete records on the history of each procurement transaction.
</P>
<P>(b) <I>Inspection and acceptance.</I> The PHA, or, in the case of mixed finance, the Owner Entity shall carry out inspections of work in progress and goods delivered, as necessary, to ensure compliance with existing contracts. If, upon inspection, the PHA determines that the work and/or goods are complete, satisfactory and, as applicable, otherwise undamaged, except for any work that is appropriate for delayed completion, the PHA shall accept the work. The PHA shall determine any holdback for items of delayed completion and the amount due and payable for the work that has been accepted, including any conditions precedent to payment that are stated in the construction contract or contract of sale. The contractor shall be paid for items only after the PHA inspects and accepts that work.
</P>
<P>(c) <I>Guarantees and warranties.</I> The PHA or, in the case of mixed finance, the Owner Entity, shall specify the guaranty period and amounts to be withheld, as applicable, and shall provide that all contractor, manufacturer, and supplier warranties required by the construction and modernization documents shall be assigned to the PHA. The PHA shall inspect each dwelling unit and the overall project approximately 3 months after the beginning of the project guaranty period, 3 months before its expiration, and at other times as may be necessary to exercise its rights before expiration of any warranties. The PHA shall require repair or replacement of all defective items prior to the expiration of the guaranty or warranty periods.
</P>
<P>(d) <I>Notification of completion.</I> The PHA, or in the case of mixed finance, the Owner Entity, shall require that all contractors and developers notify the PHA in writing when the contract work, including any approved off-site work, will be completed and ready for inspection.
</P>
<CITA TYPE="N">[78 FR 63770, Oct. 24, 2013, as amended at 80 FR 75942, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 905.322" NODE="24:4.1.3.1.5.3.5.12" TYPE="SECTION">
<HEAD>§ 905.322   Fiscal closeout.</HEAD>
<P>(a) <I>General.</I> Each Capital Fund grant and/or development project is subject to fiscal closeout. Fiscal closeout includes the submission of a cost certificate; an audit, if applicable; a final Performance and Evaluation Report; and HUD approval of the cost certificate.
</P>
<P>(b) <I>Submission of cost certificate.</I> (1) When an approved development or modernization activity is completed or when HUD terminates the activity, the PHA must submit to HUD the:
</P>
<P>(i) Actual Development Cost Certificate (ADCC) within 12 months. For purposes of the CF ACC, costs incurred between the completion of the development and the date of full availability (DOFA) becomes the actual development cost; and
</P>
<P>(ii) Actual Modernization Cost Certificate (AMCC) for each grant, no later than 12 months after the expenditure deadline but no earlier than the obligation end date. A PHA with under 250 units with an approved CFP 5-Year Action Plan for use of 100 percent of the Capital Fund grant in operations may submit the cost certificate any time after the funds have been budgeted to operations and withdrawn, as described in § 905.314(l) of this part.
</P>
<P>(2) If the PHA does not submit the cost certificate and the final CFP Annual Statement/Performance and Evaluation Report within the period prescribed in this section, HUD may impose restrictions on open Capital Fund grants; e.g., establish review thresholds, set the grant to “auto review” (HUD automatically reviews it on a periodic basis), or suspend grants, until the cost certificate for the affected grant is submitted. These restrictions may be imposed by HUD after notification of the PHA.
</P>
<P>(c) <I>Audit.</I> The cost certificate is a financial statement subject to audit pursuant to 2 CFR part 200, subpart F. After submission of the cost certificate to HUD, the PHA shall provide the cost certificate to its independent public auditor (IPA) as part of its annual audit. After audit, the PHA will notify HUD of the grants included in the audit, any exceptions noted by the PHA auditor, and the schedule to complete corrective actions recommended by the auditor.
</P>
<P>(d) <I>Review and approval.</I> For PHAs exempt from the audit requirements, HUD will review and approve the cost certificate based on available information regarding the Capital Fund grant. For PHAs subject to an audit, HUD will review the information from the annual audit provided by the PHA and approve the certificate after all exceptions, if any, have been resolved.
</P>
<P>(e) <I>Recapture.</I> All Capital Funds in excess of the actual cost incurred for the grant are subject to recapture. Any funds awarded to the PHA that are returned or any funds taken back from the PHA in a fiscal year after the grant was awarded are subject to recapture.
</P>
<CITA TYPE="N">[78 FR 63770, Oct. 24, 2013, as amended at 80 FR 75942, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 905.324" NODE="24:4.1.3.1.5.3.5.13" TYPE="SECTION">
<HEAD>§ 905.324   Data reporting requirements.</HEAD>
<P>The PHA shall provide, at minimum, the following data reports, at a time and in a form prescribed by HUD:
</P>
<P>(a) The Performance and Evaluation Report as described in § 905.300(b)(8) of this part;
</P>
<P>(b) Updates on the PHA's building and unit data as required by HUD;
</P>
<P>(c) Reports of obligation and expenditure; and
</P>
<P>(d) Any other information required for participation in the Capital Fund Program.


</P>
</DIV8>


<DIV8 N="§ 905.326" NODE="24:4.1.3.1.5.3.5.14" TYPE="SECTION">
<HEAD>§ 905.326   Records.</HEAD>
<P>(a) The PHA will maintain full and complete records of the history of each Capital Fund grant, including, but not limited to, CFP 5-Year Action Plans, procurement, contracts, obligations, and expenditures.
</P>
<P>(b) The PHA shall retain for 5 years after HUD approves either the actual development or modernization cost certificate all documents related to the activities for which the Capital Fund grant was received, unless a longer period is required by applicable law.
</P>
<P>(c) HUD and its duly authorized representatives shall have full and free access to all PHA offices, facilities, books, documents, and records, including the right to audit and make copies.


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:4.1.3.1.5.4" TYPE="SUBPART">
<HEAD>Subpart D—Capital Fund Formula</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>78 FR 63773, Oct. 24, 2013, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 905.400" NODE="24:4.1.3.1.5.4.5.1" TYPE="SECTION">
<HEAD>§ 905.400   Capital Fund formula (CF formula).</HEAD>
<P>(a) <I>General.</I> This section describes the formula for allocating Capital Funds to PHAs.
</P>
<P>(b) <I>Formula allocation based on relative needs.</I> HUD shall allocate Capital Funds to the PHAs in accordance with the CF formula. The CF formula measures the existing modernization needs and accrual needs of PHAs.
</P>
<P>(c) <I>Allocation for existing modernization needs under the CF formula.</I> HUD shall allocate one-half of the available Capital Fund amount based on the relative existing modernization needs of PHAs, determined in accordance with paragraph (d) of this section.
</P>
<P>(d) <I>PHAs with 250 or more units in FFY 1999, except the New York City and Chicago Housing Authorities.</I> The estimates of the existing modernization needs for these PHAs shall be based on the following:
</P>
<P>(1) Objective measurable data concerning the following PHA, community, and project characteristics applied to each project:
</P>
<P>(i) The average number of bedrooms in the units in a project (Equation coefficient 4604.7);
</P>
<P>(ii) The total number of units in a project (Equation coefficient: 10.17);
</P>
<P>(iii) The proportion of units in a project in buildings completed in 1978 or earlier. In the case of acquired projects, HUD will use the DOFA unless the PHA provides HUD with the actual date of construction completion. When the PHA provides the actual date of construction completion, HUD will use that date (or, for scattered sites, the average dates of construction of all the buildings), subject to a 50-year cap. (Equation coefficient: 4965.4);
</P>
<P>(iv) The cost index of rehabilitating property in the area (Equation coefficient: −10608);
</P>
<P>(v) The extent to which the units of a project were in a nonmetropolitan area as defined by the United States Bureau of the Census (Census Bureau) during FFY 1996 (Equation coefficient: 2703.9);
</P>
<P>(vi) The PHA is located in the Southern census region, as defined by the Census Bureau (Equation coefficient: −269.4);
</P>
<P>(vii) The PHA is located in the Western census region, as defined by the Census Bureau (Equation coefficient: −1709.5);
</P>
<P>(viii) The PHA is located in the Midwest census region as defined by the Census Bureau (Equation coefficient: 246.2); and
</P>
<P>(2) An equation constant of 13851.
</P>
<P>(i) <I>Newly constructed units.</I> Units with a DOFA date of October 1, 1991, or after, shall be considered to have a zero existing modernization need.
</P>
<P>(ii) <I>Acquired projects.</I> Projects acquired by a PHA with a DOFA date of October 1, 1991, or after, shall be considered to have a zero existing modernization need.
</P>
<P>(3) <I>For New York City and Chicago Housing Authorities, based on a large sample of direct inspections.</I> Prior to the cost calibration in paragraph (d)(5) of this section, the number used for the existing modernization need of family projects shall be $16,680 in New York City and $24,286 in Chicago, and the number for elderly projects shall be $14,622 in New York City and $16,912 in Chicago.
</P>
<P>(i) <I>Newly constructed units.</I> Units with a DOFA date of October 1, 1991, or after, shall be considered to have a zero existing modernization need.
</P>
<P>(ii) <I>Acquired projects.</I> Projects acquired by a PHA with a DOFA date of October 1, 1991, or after, shall be considered to have a zero existing modernization need.
</P>
<P>(4) <I>PHAs with fewer than 250 units in FFY 1999.</I> The estimates of the existing modernization need shall be based on the following:
</P>
<P>(i) Objective measurable data concerning the PHA, community, and project characteristics applied to each project:
</P>
<P>(A) The average number of bedrooms in the units in a project. (Equation coefficient: 1427.1);
</P>
<P>(B) The total number of units in a project. (Equation coefficient: 24.3);
</P>
<P>(C) The proportion of units in a project in buildings completed in 1978 or earlier. In the case of acquired projects, HUD shall use the DOFA date unless the PHA provides HUD with the actual date of construction completion, in which case HUD shall use the actual date of construction completion (or, for scattered sites, the average dates of construction of all the buildings), subject to a 50-year cap. (Equation coefficient: −1389.7);
</P>
<P>(D) The cost index of rehabilitating property in the area, as of FFY 1999. (Equation coefficient: −20163);
</P>
<P>(E) The extent to which the units of a project were in a nonmetropolitan area as defined by the Census Bureau during FFY 1996. (Equation coefficient: 6157.7);
</P>
<P>(F) The PHA is located in the Southern census region, as defined by the Census Bureau. (Equation coefficient: 4379.2);
</P>
<P>(G) The PHA is located in the Western census region, as defined by the Census Bureau. (Equation coefficient: 3747.7);
</P>
<P>(H) The PHA is located in the Midwest census region as defined by the Census Bureau. (Equation coefficient: −2073.5); and
</P>
<P>(ii) An equation constant of 24762.
</P>
<P>(A) <I>Newly constructed units.</I> Units with a DOFA date of October 1, 1991, or after, shall be considered to have a zero existing modernization need.
</P>
<P>(B) <I>Acquired projects.</I> Projects acquired by a PHA with a DOFA date of October 1, 1991, or after, shall be considered by HUD to have a zero existing modernization need.
</P>
<P>(5) <I>Calibration of existing modernization need for cost index of rehabilitating property in the area.</I> The estimated existing modernization need determined under paragraphs (d)(1), (2), or (3) of this section shall be adjusted by the values of the cost index of rehabilitating property in the area.
</P>
<P>(6) <I>Freezing of the determination of existing modernization need.</I> FFY 2008 is the last fiscal year that HUD will calculate the existing modernization need. The existing modernization need will be frozen for all developments at the calculation as of FFY 2008 and will be adjusted for changes in the inventory and paragraph (d)(4) of this section.
</P>
<P>(e) <I>Allocation for accrual needs under the CF formula.</I> HUD shall allocate the other half of the remaining Capital Fund amount based on the relative accrual needs of PHAs, determined in accordance with this paragraph of this section.
</P>
<P>(1) PHAs with 250 or more units, except the New York City and Chicago Housing Authorities. The estimates of the accrual need shall be based on the following:
</P>
<P>(i) Objective measurable data concerning the following PHA, community, and project characteristics applied to each project:
</P>
<P>(A) The average number of bedrooms in the units in a project. (Equation coefficient: 324.0);
</P>
<P>(B) The extent to which the buildings in a project average fewer than 5 units. (Equation coefficient: 93.3);
</P>
<P>(C) The age of a project, as determined by the DOFA date. In the case of acquired projects, HUD shall use the DOFA date unless the PHA provides HUD with the actual date of construction completion, in which case HUD shall use the actual date of construction (or, for scattered sites, the average dates of construction of all the buildings), subject to a 50-year cap. (Equation coefficient: −7.8);
</P>
<P>(D) Whether the development is a family project. (Equation coefficient: 184.5);
</P>
<P>(E) The cost index of rehabilitating property in the area. (Equation coefficient: −252.8);
</P>
<P>(F) The extent to which the units of a project were in a nonmetropolitan area as defined by the Census Bureau during FFY 1996. (Equation coefficient: −121.3);
</P>
<P>(G) PHA size of 6,600 or more units in FFY 1999. (Equation coefficient: −150.7);
</P>
<P>(H) The PHA is located in the Southern census region, as defined by the Census Bureau. (Equation coefficient: 28.4);
</P>
<P>(I) The PHA is located in the Western census region, as defined by the Census Bureau. (Equation coefficient: −116.9);
</P>
<P>(J) The PHA is located in the Midwest census region as defined by the Census Bureau. (Equation coefficient: 60.7); and
</P>
<P>(ii) An equation constant of 1371.9.
</P>
<P>(2) For the New York City and Chicago Housing Authorities, based on a large sample of direct inspections. Prior to the cost calibration in paragraph (e)(4) of this section the number used for the accrual need of family developments is $1,395 in New York City, and $1,251 in Chicago, and the number for elderly developments is $734 in New York City and $864 in Chicago.
</P>
<P>(3) PHAs with fewer than 250 units. The estimates of the accrual need shall be based on the following:
</P>
<P>(i) Objective measurable data concerning the following PHA, community, and project characteristics applied to each project:
</P>
<P>(A) The average number of bedrooms in the units in a project. (Equation coefficient: 325.5);
</P>
<P>(B) The extent to which the buildings in a project average fewer than 5 units. (Equation coefficient: 179.8);
</P>
<P>(C) The age of a project, as determined by the DOFA date. In the case of acquired projects, HUD shall use the DOFA date unless the PHA provides HUD with the actual date of construction completion. When provided with the actual date of construction completion, HUD shall use this date (or, for scattered sites, the average dates of construction of all the buildings), subject to a 50-year cap. (Equation coefficient: −9.0);
</P>
<P>(D) Whether the project is a family development. (Equation coefficient: 59.3);
</P>
<P>(E) The cost index of rehabilitating property in the area. (Equation coefficient: −1570.5);
</P>
<P>(F) The extent to which the units of a project were in a nonmetropolitan area as defined by the Census Bureau during FFY 1996. (Equation coefficient: −122.9);
</P>
<P>(G) The PHA is located in the Southern census region, as defined by the Census Bureau. (Equation coefficient: −564.0);
</P>
<P>(H) The PHA is located in the Western census region, as defined by the Census Bureau. (Equation coefficient: −29.6);
</P>
<P>(I) The PHA is located in the Midwest census region as defined by the Census Bureau. (Equation coefficient: −418.3); and
</P>
<P>(ii) An equation constant of 3193.6.
</P>
<P>(4) <I>Calibration of accrual need for the cost index of rehabilitating property in the area.</I> The estimated accrual need determined under either paragraph (e)(2) or (3) of this section shall be adjusted by the values of the cost index of rehabilitation.
</P>
<P>(f) <I>Calculation of number of units.</I> (1) <I>General.</I> For purposes of determining the number of a PHA's public housing units and the relative modernization needs of PHAs:
</P>
<P>(i) HUD shall count as one unit:
</P>
<P>(A) Each public housing and section 23 bond-financed CF unit, except that each existing unit under the Turnkey III program shall count as one-fourth of a unit. Units receiving operating subsidy only shall not be counted.
</P>
<P>(B) Each existing unit under the Mutual Help program.
</P>
<P>(ii) HUD shall add to the overall unit count any units that the PHA adds to its inventory when the units are under CF ACC amendment and have reached DOFA by the date that HUD establishes for the FFY in which the CF formula is being run (hereafter called the “reporting date”). New CF units and those reaching DOFA after the reporting date shall be counted for CF formula purposes in the following FFY.
</P>
<P>(2) <I>Replacement units.</I> Replacement units newly constructed on or after October 1, 1998, that replace units in a project funded in FFY 1999 by the Comprehensive Grant formula system or the Comprehensive Improvement Assistance Program (CIAP) formula system shall be given a new CF ACC number as a separate project and shall be treated as a newly constructed development as outlined in § 905.600 of this part.
</P>
<P>(3) <I>Reconfiguration of units.</I> Reconfiguration of units may cause the need to be calculated by the new configuration based on the formula characteristics in the building and unit's PIC module (refer to the formula sections here). The unit counts will be determined by the CF units existing after the reconfiguration.
</P>
<P>(4) <I>Reduction of units.</I> For a project losing units as a result of demolition and disposition, the number of units on which the CF formula is based shall be the number of units reported as eligible for Capital Funds as of the reporting date. Units are eligible for funding until they are removed due to demolition and disposition in accordance with a schedule approved by HUD.
</P>
<P>(g) <I>Computation of formula shares under the CF formula.</I> (1) <I>Total estimated existing modernization need.</I> The total estimated existing modernization need of a PHA under the CF formula is the result of multiplying for each project the PHA's total number of formula units by its estimated existing modernization need per unit, as determined by paragraph (d) of this section, and calculating the sum of these estimated project needs.
</P>
<P>(2) <I>Total accrual need.</I> The total accrual need of a PHA under the CF formula is the result of multiplying for each project the PHA's total number of formula units by its estimated accrual need per unit, as determined by paragraph (e) of this section, and calculating the sum of these estimated accrual needs.
</P>
<P>(3) <I>PHA's formula share of existing modernization need.</I> A PHA's formula share of existing modernization need under the CF formula is the PHA's total estimated existing modernization need divided by the total existing modernization need of all PHAs.
</P>
<P>(4) <I>PHA's formula share of accrual need.</I> A PHA's formula share of accrual need under the CF formula is the PHA's total estimated accrual need divided by the total existing accrual need of all PHAs.
</P>
<P>(5) <I>PHA's formula share of capital need.</I> A PHA's formula share of capital need under the CF formula is the average of the PHA's share of existing modernization need and its share of accrual need (by which method each share is weighted 50 percent).
</P>
<P>(h) <I>CF formula capping.</I> (1) For units that are eligible for funding under the CF formula (including replacement housing units discussed below), a PHA's CF formula share shall be its share of capital need, as determined under the CF formula, subject to the condition that no PHA's CF formula share for units funded under the CF formula can be less than 94 percent of its formula share had the FFY 1999 formula system been applied to these CF formula-eligible units. The FFY 1999 formula system is based upon the FFY 1999 Comprehensive Grant formula system for PHAs with 250 or more units in FFY 1999 and upon the FFY 1999 Comprehensive Improvement Assistance Program (CIAP) formula system for PHAs with fewer than 250 units in FFY 1999.
</P>
<P>(2) For a Moving to Work (MTW) PHA whose MTW agreement provides that its CF formula share is to be calculated in accordance with the previously existing formula, the PHA's CF formula share, during the term of the MTW agreement, may be approximately the formula share that the PHA would have received had the FFY 1999 formula funding system been applied to the CF formula eligible units.
</P>
<P>(i) <I>Replacement Housing Factor to reflect formula need for developments with demolition or disposition occurring on or after October 1, 1998, and prior to September 30, 2013.</I> (1) <I>RHF generally.</I> PHAs that have a reduction in the number of units attributable to demolition or disposition of units during the period (reflected in data maintained by HUD) that lowers the formula unit count for the CFF calculation qualify for application of an RHF, subject to satisfaction of criteria stated in paragraph (i)(5) of this section
</P>
<P>(2) <I>When applied.</I> The RHF will be added, where applicable:
</P>
<P>(i) For the first 5 years after the reduction of units described in paragraph (i)(1) of this section; and
</P>
<P>(ii) For an additional 5 years if the planning, leveraging, obligation, and expenditure requirements are met. As a prior condition of a PHA's receipt of additional funds for replacement housing provided for the second 5-year period or any portion thereof, a PHA must obtain a firm commitment of substantial additional funds, other than public housing funds, for replacement housing, as determined by HUD.
</P>
<P>(3) <I>Computation of RHF.</I> The RHF consists of the difference between the CFF share without the CFF share reduction of units attributable to demolition or disposition and the CFF share that resulted after the reduction of units attributable to demolition or disposition.
</P>
<P>(4) <I>Replacement housing funding in FFYs 1998 and 1999.</I> Units that received replacement housing funding in FFY 1998 will be treated as if they had received 2 years of replacement housing funding by FFY 2000. Units that received replacement housing funding in FFY 1999 will be treated as if they had received one year of replacement housing funding as of FFY 2000.
</P>
<P>(5) <I>PHA Eligibility for the RHF.</I> A PHA is eligible for this factor only if the PHA satisfies the following criteria:
</P>
<P>(i) The PHA will use the funding in question only for replacement housing;
</P>
<P>(ii) The PHA will use the restored funding that results from the use of the replacement factor to provide replacement housing in accordance with the PHA's 5-Year Action Plan, as approved by HUD under part 903 of this chapter as well as the PHA's Board of Commissioners;
</P>
<P>(iii) The PHA has not received funding for public housing units that will replace the lost units under Public Housing Development, Major Reconstruction of Obsolete Public Housing, HOPE VI, Choice Neighborhoods, Rental Assistance Payment (RAP), or programs that otherwise provide for replacement with public housing units;
</P>
<P>(iv) The PHA, if designated as a troubled PHA by HUD, and not already under the direction of HUD or an appointed receiver, in accordance with part 902 of this chapter, uses an Alternative Management Entity, as defined in part 902 of this chapter, for development of replacement housing and complies with any applicable provisions of its Memorandum of Agreement executed with HUD under that part; and
</P>
<P>(v) The PHA undertakes any development of replacement housing in accordance with applicable HUD requirements and regulations.
</P>
<P>(6) <I>Failure to provide replacement housing in a timely fashion.</I> (i) A PHA will be subject to the actions described in paragraph (i)(7)(ii) of this section if the PHA does not:
</P>
<P>(A) Use the restored funding that results from the use of the RHF to provide replacement housing in a timely fashion, as provided in paragraph (i)(7)(i) of this section and in accordance with applicable HUD requirements and regulations, and
</P>
<P>(B) Make reasonable progress on such use of the funding, in accordance with applicable HUD requirements and regulations.
</P>
<P>(ii) If a PHA fails to act as described in paragraph (i)(6)(i) of this section, HUD will require appropriate corrective action under these regulations, may recapture and reallocate the funds, or may take other appropriate action.
</P>
<P>(7) <I>Requirement to obligate and expend RHF funds within the specified period.</I> (i) In addition to the requirements otherwise applicable to obligation and expenditure of funds, PHAs are required to obligate assistance received as a result of the RHF within:
</P>
<P>(A) 24 months from the date that funds become available to the PHA; or
</P>
<P>(B) With specific HUD approval, 24 months from the date that the PHA accumulates adequate funds to undertake replacement housing.
</P>
<P>(ii) To the extent the PHA has not obligated any funds provided as a result of the RHF within the time frames required by this paragraph, or has not expended such funds within a reasonable time, HUD shall recapture the unobligated amount of the grant.
</P>
<P>(j) <I>Demolition and Disposition Transitional Funding (DDTF) to reflect formula need for developments with demolition or disposition on or after October 1, 2013.</I> (1) <I>DDTF generally.</I> In FFY 2014 and thereafter, PHAs that have a reduction in the number of units occurring in FFY 2013 and attributable to demolition or disposition are automatically eligible to receive Demolition and Disposition Transitional Funding. The DDTF will be included in their annual Capital Fund grant for a 5-year period to offset the reduction in funding a PHA would receive from removing units from inventory. DDTF is subject to the criteria stated in paragraph (j)(4) of this section.
</P>
<P>(2) <I>When applied.</I> DDTF will be added to a PHA's annual CFP grant, where applicable, for 5 years after the reduction of units described in paragraph (j)(1) of this section.
</P>
<P>(3) <I>Computation of DDTF.</I> The DDTF consists of the difference between the CFF share without the CFF share reduction of units attributable to demolition or disposition and the CFF share that resulted after the reduction of units attributable to demolition or disposition.
</P>
<P>(4) <I>PHA eligibility for the DDTF.</I> A PHA is eligible for this factor only if the PHA satisfies the following criteria:
</P>
<P>(i) The PHA will automatically receive the DDTF for reduction of units in accordance with paragraph (j)(1) of this section, unless the PHA rejects the DDTF funding for that fiscal year in writing;
</P>
<P>(ii) The PHA will use the funding in question for eligible activities under the Capital Fund Program, found at 905.200—such as modernization and development—that are included in the PHA's HUD approved CFP 5-Year Action Plan.
</P>
<P>(iii) The PHA has not received funding for public housing units that will replace the lost units from disposition proceeds, or under Public Housing Development, Major Reconstruction of Obsolete Public Housing, HOPE VI, Choice Neighborhoods, RAP, or programs that otherwise provide for replacement with public housing units;
</P>
<P>(iv) The PHA, if designated as a troubled PHA by HUD, and not already under the direction of HUD or an appointed receiver, in accordance with part 902 of this chapter, uses an Alternative Management Entity, as defined in part 902 of this chapter, and complies with any applicable provisions of its Memorandum of Agreement executed with HUD under that part; and
</P>
<P>(v) The PHA undertakes any eligible activities in accordance with applicable HUD requirements and regulations.
</P>
<P>(5) <I>Requirement to obligate and expend DDTF funds within the specified period.</I> (i) In addition to the requirements otherwise applicable to obligation and expenditure of Capital Funds, including 42 U.S.C. 1437g(j) and the terms of the appropriation from Congress, PHAs are required to obligate funds received as a result of the DDTF within 24 months from the date that funds become available to the PHA; or
</P>
<P>(ii) To the extent the PHA has not obligated any funds provided as a result of the DDTF within the time frames required by this paragraph, or expended such funds within a reasonable time frame, HUD shall reduce the amount of DDTF to be provided to the PHA.
</P>
<P>(k) <I>RHF Transition.</I> (1) PHAs that would be newly eligible for RHF in FFY 2014 will receive 5 years of DDTF.
</P>
<P>(2) PHAs that received a portion of a first increment RHF grant in FY 2013, for units removed from inventory prior to the reporting date of June 30, 2012, will receive up to 10 years of funding consisting of the remainder of first-increment RHF, subject to the requirements of § 905.400(i) of this part, and, if eligible, 5 years of DDTF, subject to the requirements of § 905.400(j) of this part.
</P>
<P>(3) PHAs that received a portion of a second increment RHF grant in FY 2013, for units removed from inventory prior to the reporting date of June 30, 2012, will continue to receive the remaining portion of the 5-year increment as a separate second increment RHF grant, as described in § 905.400(i) of this part.
</P>
<P>(l) <I>Performance reward factor.</I> (1) <I>High performer.</I> A PHA that is designated a high performer under the PHA's most recent final PHAS score may receive a performance bonus that is:
</P>
<P>(i) Three (3) percent above its base formula amount in the first 5 years these awards are given (for any year in this 5-year period in which the performance reward is earned); or
</P>
<P>(ii) Five (5) percent above its base formula amount in future years (for any year in which the performance reward is earned);
</P>
<P>(2) <I>Condition.</I> The performance bonus is subject only to the condition that no PHA will lose more than 5 percent of its base formula amount as a result of the redistribution of funding from nonhigh performers to high performers.
</P>
<P>(3) <I>Redistribution.</I> The total amount of Capital Funds that HUD has recaptured or not allocated to PHAs as a sanction for violation of expenditure and obligation requirements shall be allocated to the PHAs that are designated high performers under PHAS.


</P>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:4.1.3.1.5.5" TYPE="SUBPART">
<HEAD>Subpart E—Use of Capital Funds for Financing</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>75 FR 65208, Oct. 21, 2010, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 905.500" NODE="24:4.1.3.1.5.5.5.1" TYPE="SECTION">
<HEAD>§ 905.500   Purpose and description.</HEAD>
<P>(a) This subpart provides the requirements necessary for a PHA to participate in the Capital Fund Financing Program (CFFP), under which the PHA may obtain HUD approval to borrow private capital and pledge a portion of its annual Capital Fund grant or public housing assets and other public housing property of the public housing agency as security.
</P>
<P>(b) Under the CFFP, PHAs are permitted to borrow private capital to finance public housing development or modernization activities. A PHA may use a portion of its Capital Fund for debt service payments and usual and customary financing costs associated with public housing development or modernization (including public housing in mixed-finance developments). A PHA that undertakes such financing activities may, subject to HUD's written approval, grant a security interest in its future annual Capital Fund grants, which shall be subject to the appropriation of those funds by Congress. The PHA's financing activities are not obligations or liabilities of the Federal Government. The Federal Government does not assume any liability with respect to any such pledge of future appropriations, and the Federal Government neither guarantees nor provides any full faith and credit for these financing transactions.


</P>
</DIV8>


<DIV8 N="§ 905.505" NODE="24:4.1.3.1.5.5.5.2" TYPE="SECTION">
<HEAD>§ 905.505   Program requirements.</HEAD>
<P>(a) <I>Written approval.</I> A PHA shall obtain written HUD approval for all Capital Fund financing transactions that pledge, encumber, or otherwise provide a security interest in public housing assets or other property, including Capital Funds, and use Capital Funds for the payment of debt service or other financing costs. HUD approval shall be based on:
</P>
<P>(1) The ability of the PHA to complete the financing transaction along with the associated improvements;
</P>
<P>(2) The reasonableness of the provisions in the Capital Fund Financing Proposal considering the other pledges or commitments of public housing assets, the PHA's capital needs, and the pledge being proposed; and
</P>
<P>(3) Whether the PHA meets the requirements of this subpart.
</P>
<P>(b) <I>Antideficiency.</I> Any pledge of future year Capital Fund grants under this section is subject to the availability of appropriations by Congress for that year. All financing documents related to future year Capital Fund amounts must include a statement that the pledging of funds is subject to the availability of appropriations.
</P>
<P>(c) <I>Conditions on use</I>—(1) <I>Development.</I> Any public housing that is developed using amounts under this part (including proceeds from financing authorized under this part) shall be operated under the terms and conditions applicable to public housing during the 40-year period that begins on the date on which the project becomes available for occupancy, except as otherwise provided in the 1937 Act.
</P>
<P>(2) <I>Modernization.</I> Any public housing or portion of public housing that is modernized using amounts under this part (including proceeds from financing authorized under this part) shall be maintained and operated during the 20-year period that begins on the latest date on which the modernization is completed, except as otherwise provided in the 1937 Act.
</P>
<P>(3) <I>Applicability of latest expiration date.</I> Public housing subject to the use conditions described in paragraph (c) of this section, or to any other provision of law mandating the operation of housing as public housing for a specific length of time, shall be maintained and operated as required until the latest such expiration date.
</P>
<P>(4) <I>Declaration of Trust.</I> All public housing rental projects must show evidence satisfactory to HUD of an effective Declaration of Trust being recorded in first position, meeting the requirements of paragraph (c) of this section and covering the term of the financing. If part of a mixed-finance project, this evidence will be with the mixed-finance evidentiary documents.
</P>
<P>(d) <I>Public Housing Assessment System (PHAS) designation.</I> Generally, a PHA shall be designated a standard performer or high performer under PHAS (24 CFR part 902), and must be a standard performer or higher on the management and financial condition indicators. HUD will consider requests from a PHA designated as troubled under PHAS when the PHA is able to show that it has developed appropriate management and financial capability and controls that demonstrate its ability to successfully undertake the Capital Fund Financing Proposal. The PHA must comply with all applicable fair housing and civil rights requirements in 24 CFR 5.105(a). If a PHA has received a letter of findings, charge, or lawsuit involving ongoing systemic noncompliance under Title VI of the Civil Rights Act of 1964, Section 504 of the Rehabilitation Act of 1973, the Fair Housing Act, or Section 109 of the Housing and Community Development Act of 1974, and the letter of findings, charge, or lawsuit has not been resolved to HUD's satisfaction, then unless the Capital Fund Financing Proposal is part of a plan to address such findings, charge, or lawsuit, the PHA will not be eligible for financing pursuant to the CFFP. HUD will determine if actions to resolve the charge, lawsuit, or letter of findings taken are sufficient to resolve the matter.
</P>
<P>(e) <I>Management capacity.</I> A PHA shall have the capacity to undertake and administer private financing and construction or modernization of the size and type contemplated. In order to determine capacity, HUD may require the PHA to submit a management assessment conducted by an independent third party, in a form and manner prescribed by HUD.
</P>
<P>(f) <I>Existing financing.</I> A PHA shall identify the nature and extent of any existing encumbrances, pledges, or other financing commitments of public housing funds undertaken by the PHA.
</P>
<P>(g) <I>Need for financing.</I> (1) A PHA must complete a physical needs assessment at the project level, in the form and manner prescribed by HUD that covers the PHA's entire public housing portfolio for the term of the financing and that takes into consideration existing needs and the lifecycle repair and replacement of major building components. The activity to be financed must be identified as a need in the physical needs assessment.
</P>
<P>(2) Based on the assessment under paragraph (g)(1) of this section, the PHA must demonstrate that the financing will not negatively impact the ability of the PHA to meet the ongoing needs of its public housing portfolio over the term of the financing. In making this demonstration, PHAs must reduce any projected future Capital Fund grants to account for planned or anticipated activities that would have the effect of reducing or otherwise limiting the availability of future Capital Fund grants. PHA projections must be detailed on the portfolio schedule form prescribed by HUD, and shall project a stabilized number of units (Stabilized Base Unit Count) to be reached in no more than 5 years after all planned or anticipated activities have been completed that would reduce future Capital Fund grants. PHAs must also take into consideration projected use of Capital Funds for other eligible activities under part 905, and may take into consideration alternative sources of financing that are available to help meet its needs.
</P>
<P>(3) For PHAs that are proposing to borrow more than $2 million on a cumulative basis, to the extent that:
</P>
<P>(i) Capital and other eligible Capital Fund needs exceed projected Capital Fund program funding amounts, and the PHA is not leveraging non-public housing funds as part of its Capital Fund Financing Proposal transaction, then
</P>
<P>(ii) The PHA must demonstrate that it has considered leveraging non-public housing funds, and state why the proposed financing is appropriate in light of alternative sources available.
</P>
<P>(iii) Notwithstanding paragraphs (g)(3)(i) and (ii) of this section, PHAs that size their financing by utilizing only replacement housing factor (RHF) funds, or PHAs that propose to use their Capital Fund Financing Proposal proceeds as part of a mixed-finance modernization transaction, are not required to comply with § 905.505(g).
</P>
<P>(h) <I>CFP Plan.</I> (1) The use of the CFFP proceeds shall be included in a form and manner as required by HUD for CFP planning and budgeting and in a same manner as a Capital Fund grant. The CFFP proceeds shall be included as a separate Capital Fund grant to the same extent that PHAs are required to plan and budget Capital Fund grants. The use of Capital Funds for the payment of debt service and related costs shall be planned and budgeted as would other eligible uses of Capital Funds.
</P>
<P>(2) As part of its Capital Fund Financing Proposal, the PHA shall submit a Capital Fund financing budget, in the form and manner required by HUD, detailing the proposed use of the Capital Fund Financing Proposal proceeds. There shall be no requirement for PHAs to submit a Capital Fund financing budget as part of their Capital Fund financing proceeds where the sizing of the financing is based upon the use of RHF funds for debt service, or where the Capital Fund Financing Proposal proceeds are being used as part of a mixed-finance transaction. Approval letters for mixed-finance and RHF-related Capital Fund financing transactions shall be conditioned upon the approval of the mixed-finance proposal, or, in the case of conventional development, upon the approval of the development proposal and the execution of an associated construction contract with which the Capital Fund financing proceeds would be used.
</P>
<P>(3) The work financed with Capital Funds and described in the Capital Fund financing budget will be based on the physical needs assessment. The Capital Fund financing budget shall list the work items (e.g., roof replacement, window replacement, accessibility modifications) by development. These work items will constitute performance measures upon which the PHA's performance will be evaluated. A general representation of the work (e.g., “rehabilitation of the development”) is not sufficient.
</P>
<P>(4) The CFP Plan (submission (as described in paragraph (h) of this section) shall include a copy of the physical needs assessment described in § 905.505(g).
</P>
<P>(5) Financing proceeds under this part may be used only for the modernization or development of public housing and related costs including the modernization or development of non-dwelling space. Financing proceeds may not be used for administration or central office cost center costs (except for mixed-finance projects), management improvements, or upon non-viable projects, such as those subject to required conversion. Financing proceeds may be used to reimburse predevelopment costs, but only to the extent they were incurred in conformance with applicable regulatory requirements.
</P>
<P>(i) <I>Debt Coverage Percentage.</I> (1) Except as stated in § 905.505(i)(2), a PHA shall not pledge more than 33 percent of its annual future Capital Fund grants for debt service payments, assuming level Capital Fund appropriations over the term of the debt obligation and any reduction attributable to activities projected by the PHA to occur during the term of the financing such as demolition, disposition, or conversion of public housing units or other occurrences that could limit the availability of Capital Funds, including a voluntary compliance agreement. This percentage of Capital Funds dedicated for debt service, taking into account adjustments for activities that would reduce the receipt of Capital Funds, is called the “Debt Coverage Percentage.”
</P>
<P>(2) A PHA may pledge up to 100 percent of any projected replacement housing factor (RHF) grants for debt service payments, provided that the pledge extends to the formula fund portion of its Capital Fund grants also, but that not more than 50 percent of its overall projected Capital Fund grants (including formula funds and RHF funds) are pledged. RHF projections shall account for any projected reductions in RHF over the term of the financing. Unless otherwise approved by HUD, PHAs shall be limited to sizing their loans based upon increments of RHF currently being received by the PHA. CFFP transactions pledging RHF funds shall include accelerated amortization provisions, requiring all RHF funds received by the PHA to pay debt service as those RHF funds are received. A RHF grant shall be used only to develop or pay financing costs for the development of replacement public housing units in accordance with § 905.10.
</P>
<P>(3) Subject to the reasonableness test in § 905.505(a)(2), PHAs may exceed 33 percent when pledging existing Capital Fund grants and RHF grants for the payment of debt service. Existing grants are grants that have been received by the PHA at the time of HUD's approval of the Capital Fund Financing Proposal.
</P>
<P>(j) <I>Terms and conditions of financing.</I> The terms and conditions of all financing shall be reasonable based on current market conditions. The financing documents shall include the following, as applicable:
</P>
<P>(1) <I>Term.</I> The term of the Capital Fund financing transaction shall not be more than 20 years. All Capital Fund financing transactions shall be fully amortizing. Bridge loans and other short-term loans are permitted; however, unless otherwise approved by HUD, the CFFP Financing transaction may not be structured in a manner that generates program income.
</P>
<P>(2) <I>Acceleration.</I> Unless otherwise approved by HUD, the financing documents shall provide that HUD approval is required before a lender may accelerate a PHA's debt obligation, for default or otherwise.
</P>
<P>(3) <I>Public housing assets.</I> A PHA may not pledge any public housing assets unless specifically approved in writing by HUD. PHAs seeking approval of a pledge of public housing assets must submit documentation to HUD that details the nature and priority of the pledge.
</P>
<P>(4) <I>Variable interest rate.</I> All variable-rate transactions shall include an interest-rate cap. The financing documents must specify that the PHA shall not be liable to pay debt service with public housing funds, and that there shall be no recourse to public housing assets, beyond the interest-rate cap. The limitation on the pledge of Capital Funds specified in § 905.505(i) shall be calculated based on the interest-rate cap.
</P>
<P>(5) <I>Other pledges or commitments.</I> PHAs seeking approval of a pledge of public housing assets must describe the nature and extent of existing commitments or pledges of public housing assets, providing documentation of such other commitments or pledges to the extent required by HUD.
</P>
<P>(6) <I>Terms and conditions.</I> Financing documents must include any other terms and conditions as required by HUD.
</P>
<P>(k) <I>Fairness opinion.</I> The PHA shall provide an opinion, in a form and manner prescribed by HUD, from a qualified, independent, third-party financial advisor attesting that the terms and conditions of the proposed financing transaction are reasonable given current market conditions with respect to such matters as interest rate, fees, costs of issuance, call provisions, and reserve fund requirements.
</P>
<P>(l) <I>Financial controls and construction management.</I> (1) The PHA shall have a financial control and construction management plan describing how the PHA will ensure that:
</P>
<P>(i) Adequate controls are in place regarding the use of the Capital Fund financing proceeds; and
</P>
<P>(ii) The improvements will be developed and completed in a timely manner consistent with the contract documents.
</P>
<P>(2) This plan shall contain protocols and financial control mechanisms that address the design of the improvements, construction inspections, construction draws, and requisition approval checks and balances. A PHA that is designated troubled under PHAS, or other PHAs as determined by HUD, may be required to institute risk mitigation measures to ensure that the funds are used properly and for the purposes intended.
</P>
<P>(m) <I>Work items.</I> To the extent that any changes in work items financed by Capital Fund financing proceeds meet or exceed the following threshold requirements determined by HUD, PHAs must obtain written approval of amendments to their Capital Fund financing budget from HUD:
</P>
<P>(1) A change in the type of activity being financed (for example, if the approved Capital Fund financing budget contemplated the proceeds being used for modernization, but after the proposal is approved, the PHA decides instead to pursue development);
</P>
<P>(2) A change in the project being modernized or developed with the proceeds;
</P>
<P>(3) A reduction in 20 percent or more in the number of public housing units being modernized; or
</P>
<P>(4) An increase of 20 percent or more of the cost of non-dwelling space.
</P>
<P>(n) <I>Applicability of other Federal requirements.</I> The proceeds of the Capital Fund financing are subject to all laws, regulations, and other requirements applicable to the use of Capital Fund grants made under 24 CFR part 905, unless otherwise approved by HUD in writing. PHAs undertaking CFFP transactions shall be subject to the following requirements, which shall be further enumerated in a Capital Fund Financing Amendment to the Annual Contributions Contract (CFF ACC Amendment):
</P>
<P>(1) Amounts payable to the PHA by HUD pursuant to the CFFP and pledged to the payment of debt service by the PHA shall be used exclusively for debt service in accordance with the debt service schedule approved by HUD and shall not be available for any other purpose;
</P>
<P>(2) The financing does not constitute a debt or liability of HUD or the United States, the full faith and credit of the United States are not pledged to the payment of debt service, and debt service is not guaranteed by HUD or the United States;
</P>
<P>(3) Nothing in this CFF ACC Amendment or 24 CFR part 905 is intended to diminish HUD's authority to administer, monitor, and regulate the public housing program, including HUD's authority to exercise any administrative sanction or remedy provided by law; provided, however, that except as required by law, HUD will not assert any claim or right under the ACC, including the exercise of administrative sanctions and remedies, if and to the extent that the effect of such claim or right would be to reduce the payment of Capital Fund moneys to the PHA below the level necessary to pay debt service or delay the time for payment of such moneys such that required amounts would not be available to pay debt service when due;
</P>
<P>(4) The financing is subject to mandatory prepayment prior to the obligation end date and expenditure end date of the Capital Fund financing proceeds to the extent necessary for the Capital Fund Financing Proposal proceeds to comply with section 9(j) of the 1937 Act (42 U.S.C. 1437g(j)). Bond and loan documents shall include appropriate provisions such that prepayment shall be made by the lender, trustee, or appropriate third-party servicer approved by HUD, without any action by HUD post-approval;
</P>
<P>(5) HUD agrees, subject to the availability of appropriations, to approve immediately upon receipt from the PHA (subject to any legal requirements or constraints applicable at the time), a CFP Plan document (as described in 24 CFR 905.505(h)) and/or an annual CFF ACC Amendment, to the extent and in an amount sufficient to make the applicable debt service payment;
</P>
<P>(6) Prior to cumulatively reducing its inventory of public housing units by more than 5 percent of the Stabilized Base Unit Count, if, after the removal of units from inventory, the Debt Coverage Percentage under § 905.505(i)(1) would constitute more than 33 percent of future Capital Funds, the PHA shall prepay the financing such that the reduction in inventory shall not cause the Debt Coverage Percentage to increase. If the reduction in inventory is required by law or public housing requirements, the prepayment is not required to be made prior to the reduction in inventory, but instead shall be made as soon as possible after the PHA becomes aware of the requirement of law or public housing requirements, but only to the extent that Capital Funds are not otherwise needed by the PHA to address the health and safety issues or other requirements of law in the PHA's public housing portfolio, all as determined by HUD. For PHAs that size their loans based upon the projected receipt of RHF funds, prior to undertaking an activity that will reduce its RHF units below the number of units projected in the Capital Fund Financing Proposal as required by § 905.505(i)(3), the PHA shall prepay its loan such that debt service does not exceed 100 percent of projected RHF after accounting for the reduction in RHF units, all as determined by HUD.
</P>
<P>(o) <I>Performance measures.</I> Pursuant to 24 CFR 905.505(h) a PHA is required to identify in its CFP Plan documents specific items of work that will be accomplished using the proceeds of the proposed financing. The identified items, which shall be quantifiable, shall be the basis on which HUD evaluates a PHA's performance. HUD may also utilize the Capital Fund financing budget, and Capital Fund Financing Proposal approval documents as the basis to evaluate a PHA's performance. Failure to meet performance measures may result in:
</P>
<P>(1) Failure to receive HUD approval for future financing transactions;
</P>
<P>(2) Failure to be considered for future competitive grant programs; and
</P>
<P>(3) Other sanctions HUD deems appropriate and authorized by law or regulation.
</P>
<P>(p) <I>Reporting requirements.</I> (1) The use of the CFFP proceeds shall be reported in the same manner as a Capital Fund grant. The PHA shall submit a performance and evaluation report on a quarterly basis. PHAs that utilize their Capital Fund financing proceeds as part of a mixed-finance transaction, and PHAs that size their financing based upon RHF in their Capital Fund financing transactions, are not required to submit quarterly reports.
</P>
<P>(2) Each CFFP transaction and/or development project is subject to fiscal closeout in the same manner of a Capital Fund grant. Fiscal closeout includes the submission of an Actual Modernization Cost Certificate (AMCC) or Actual Development Cost Certificate (ADCC), an audit, if applicable, a final quarterly report, and a final Performance and Evaluation report.


</P>
</DIV8>


<DIV8 N="§ 905.507" NODE="24:4.1.3.1.5.5.5.3" TYPE="SECTION">
<HEAD>§ 905.507   Streamlined application requirements for standard and high-performing PHAs.</HEAD>
<P>(a) PHAs with cumulative CFFP borrowings of less than $2 million and that are standard or high performers under PHAS; PHAs that are high performers under PHAS with cumulative CFFP borrowings of less than $20 million; PHAs that propose to use their CFFP proceeds in a mixed-finance transaction, or proposals where the sizing of the financing is based only upon the use of RHF funds for debt service, shall not be required to submit:
</P>
<P>(1) A third-party management assessment under § 905.505(e);
</P>
<P>(2) A third-party fairness opinion under § 905.505(k);
</P>
<P>(3) An assurance of financial controls and construction management under § 905.505(l).
</P>
<P>(b) Notwithstanding § 905.507(a), if HUD determines that interest or other costs do not appear to meet industry norms, or other aspects of the proposal present atypical risks, HUD retains the discretion to require assessments, opinions, or controls, or to return the proposal.


</P>
</DIV8>


<DIV8 N="§ 905.510" NODE="24:4.1.3.1.5.5.5.4" TYPE="SECTION">
<HEAD>§ 905.510   Submission requirements.</HEAD>
<P>(a) All requests for HUD approval of CFFP transactions shall be submitted to the Office of Public and Indian Housing (PIH), Attention: Office of Capital Improvements, in such form and in such number of copies as designated by PIH through direct notice.
</P>
<P>(b) Each Capital Fund Financing Proposal shall be tabbed and presented with the following information in the order listed:
</P>
<P>(1) <I>PHA transmittal letter.</I> The PHA must submit a letter signed by the PHA Executive Director (or Chief Executive Officer, if applicable) briefly describing the proposed financing and use of proceeds, the percentage of Capital Funds being dedicated to debt service, the percent of the PHA's public housing units benefiting from the financing, and the impact of the financing upon the public housing portfolio, and transmit to HUD a request for approval of the CFFP transaction. The transmittal letter shall provide any additional information required pursuant to this subpart including, but not limited to:
</P>
<P>(i) Describing the transaction being proposed;
</P>
<P>(ii) Describing in detail any existing financing or similar commitments of public housing funds;
</P>
<P>(iii) Describing and providing justification for significant financial or legal provisions, such as variable interest or acceleration provisions;
</P>
<P>(iv) Describing construction management and financial controls.
</P>
<P>(2) <I>Term sheet, table of contents, and contact information.</I> The PHA must submit the HUD-prescribed term sheet that describes the basic terms of the transaction and financing structure, including the proposed amount of the financing, the term, interest rates, security, and reserve requirements. A table of contents must identify the materials submitted, as well as list the materials the PHA is not required to submit pursuant to this rule. Contact information for all of the participating parties is also required.
</P>
<P>(3) <I>Financing schedules.</I> The PHA must submit financing schedules that include a debt service schedule, sources and uses schedule, and a portfolio schedule (including projections for RHF, as appropriate), and an adequacy-of-Capital Funds schedule, all in a format prescribed by HUD.
</P>
<P>(4) <I>Other required submissions.</I> The following submissions must be incorporated in the proposal to the extent required to be submitted by this part: Capital fund financing budget, management assessment, fairness opinion, and physical needs assessment.
</P>
<P>(5) <I>Financing documents.</I> The PHA must submit a complete set of the legal documents that the PHA will execute in connection with the CFFP transaction. The legal documents must identify the nature and extent of any security being provided, as well as the position of any security interest (e.g., first lien position, second lien position). The legal documents are to be submitted to HUD only after they have been negotiated and agreed upon by the parties to the transaction. HUD will not review preliminary documents that are still under negotiation.
</P>
<P>(6) <I>Declaration of Trust requirements.</I> The PHA must submit evidence that the PHA has conformed to the Declaration of Trust requirements in accordance with this subpart.
</P>
<P>(7) <I>Board resolution and counsel's opinion.</I> The PHA must submit evidence of a PHA Board resolution that authorizes the PHA to: Undertake the loan up to a specified amount, provide all security interests required by the loan, and repay the loan with Capital Funds (including RHF funds, when applicable) as required by the financing documents. The Board resolution must also provide authorization for the Executive Director or other executive staff to negotiate and enter into all legal documents required as part of the transaction. The PHA must submit PHA counsel's opinion, which opines that the PHA has the authority to enter into the transaction, and affirms that the transaction complies with the requirements of the 1937 Act, as amended; Federal regulations; and the ACC, as amended.
</P>
<P>(8) <I>Depository Agreement and ACC.</I> The PHA must submit a Depository Agreement (form HUD-51999) and a CFF ACC Amendment.
</P>
<P>(9) Other documents as required by HUD.


</P>
</DIV8>


<DIV8 N="§ 905.515" NODE="24:4.1.3.1.5.5.5.5" TYPE="SECTION">
<HEAD>§ 905.515   HUD review and approval.</HEAD>
<P>(a) After receipt of a Capital Fund Financing Proposal, HUD shall review the proposal for completeness. HUD will return to the PHA all incomplete or unapprovable proposals, identifying the deficiencies, and will not take any further action. HUD will also return proposals submitted by entities other than the PHA (e.g., the PHA's consultants). HUD shall review all complete proposals for compliance with the requirements under this subpart. HUD may require the PHA to make modifications to any of the CFFP documents submitted and may require the PHA to resubmit all or any portion of the proposal. After HUD determines that a proposal complies with all applicable requirements, HUD shall notify the PHA in writing of its approval and any condition(s) of the approval.
</P>
<P>(b) (1) A copy or copies of the CFF ACC Amendment shall accompany the approval letter.
</P>
<P>(2) Within 60 days of the date of HUD's approval of the transaction or, if HUD sets conditions on its approval, within 60 days of the date that the PHA satisfies such conditions (as evidenced by documentation retained in the PHA's file and available to HUD upon request), but in no event longer than 120 days after the HUD approval, unless the time has otherwise been extended by HUD in writing, the PHA must submit:
</P>
<P>(i) Closing documents as directed by HUD; and
</P>
<P>(ii) All documents required by HUD to take certain actions such as initiating debt service payments through HUD's automated systems.
</P>
<P>(3) Failure to provide the required documents to HUD within the time frame required under § 905.515(b)(2) may result in HUD rescinding its approval.


</P>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:4.1.3.1.5.6" TYPE="SUBPART">
<HEAD>Subpart F—Development Requirements</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>78 FR 63786, Oct. 24, 2013, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 905.600" NODE="24:4.1.3.1.5.6.5.1" TYPE="SECTION">
<HEAD>§ 905.600   General.</HEAD>
<P>(a) <I>Applicability.</I> This subpart F applies to the development of public housing units to be included under an ACC and which will receive funding from public housing funds. PHAs must comply, or cause the Owner Entity and its contractors to comply, as applicable, with all of the applicable requirements in this subpart. Pursuant to § 905.106 of this part, when a PHA, a PHA partner, and/or an Owner Entity submits a development proposal and, if applicable, a site acquisition proposal, and executes an ACC covering the public housing units being developed, it is deemed to have certified by those executed submissions its compliance with this subpart. Noncompliance with any provision of this subpart or other applicable statutes or regulations, or the ACC Amendment, and any amendment thereto may subject the PHA, the PHA's partner and/or the Owner Entity to sanctions contained in § 905.804 of this part.
</P>
<P>(b) <I>Description.</I> A PHA may develop public housing through the construction of new units or the acquisition, with or without rehabilitation, of existing units. A PHA may use any generally accepted method of development including, but not limited to:
</P>
<P>(1) <I>Conventional.</I> The PHA designs a project on a property it owns. The PHA then competitively selects an entity to build or rehabilitate the project.
</P>
<P>(2) <I>Turnkey.</I> The PHA advertises for and competitively selects a developer who will develop public housing units on a site owned or to be owned by the developer. Following HUD approval of the development proposal, the PHA and the developer execute a contract of sale and the developer builds the project. Once the project is complete, the developer sells it to the PHA.
</P>
<P>(3) <I>Acquisition with or without rehabilitation.</I> The PHA acquires an existing property that requires substantial, moderate, or no repair. Any repair work is done by PHA staff or contracted out by the PHA. The PHA must certify that the property was not constructed with the intent of selling it to the PHA or, alternatively, the PHA must certify that HUD requirements were followed in the development of the property.
</P>
<P>(4) <I>PHA use of force account labor.</I> The PHA uses staff to carry out new construction or rehabilitation, as provided in § 905.314(j) of this part.
</P>
<P>(5) <I>Mixed finance.</I> Development or modernization of public housing units where the public housing units are owned in whole or in part by an entity other than a PHA, pursuant to Section 905.604.
</P>
<P>(c) <I>Development process.</I> The general development process for public housing development, using any method and with any financing, is as follows:
</P>
<P>(1) The PHA will identify a site to be acquired or a public housing project to be developed or redeveloped. The PHA or its Partner and/or the Owner Entity will prepare a site acquisition proposal pursuant to § 905.608 of this part and/or a development proposal pursuant to § 905.606 of this part for submission to HUD or as otherwise directed by HUD. The PHA may request predevelopment funding necessary for preparation of the acquisition proposal and/or development proposal, as stated in § 905.612(a) of this part.
</P>
<P>(2) The PHA must consult with affected residents prior to submission of an acquisition proposal, development proposal, or both to HUD to solicit resident input into development of the public housing project.
</P>
<P>(3) After HUD approval of the site acquisition proposal and/or development proposal, HUD and the PHA shall execute the applicable ACC Amendment for the public housing units and record a Declaration of Trust or Declaration of Restrictive Covenants on all property acquired and/or to be developed. The PHA may then commence development of the units.
</P>
<P>(4) Upon completion of the public housing project, the PHA will establish the DOFA. After the DOFA, the PHA will submit a cost certificate to HUD attesting to the actual cost of the project that will be subject to audit.
</P>
<P>(d) <I>Funding sources.</I> A PHA may engage in development activities using any one or a combination of the following sources of funding:
</P>
<P>(1) Capital Funds;
</P>
<P>(2) HOPE VI funds;
</P>
<P>(3) Choice Neighborhoods funds;
</P>
<P>(4) Proceeds from the sale of units under a homeownership program in accordance with 24 CFR part 906;
</P>
<P>(5) Proceeds resulting from the disposition of PHA-owned land or improvements;
</P>
<P>(6) Private financing used in accordance with § 905.604 of this part, Mixed-finance development;
</P>
<P>(7) Capital Fund Financing Program (CFFP) proceeds under § 905.500 of this part;
</P>
<P>(8) Proceeds resulting from an Operating Fund Financing Program (OFFP) approved by HUD pursuant to 24 CFR part 990; and
</P>
<P>(9) Funds available from any other eligible sources.


</P>
</DIV8>


<DIV8 N="§ 905.602" NODE="24:4.1.3.1.5.6.5.2" TYPE="SECTION">
<HEAD>§ 905.602   Program requirements.</HEAD>
<P>(a) <I>Local cooperation.</I> Except as provided under § 905.604(i) of this part for mixed-finance projects, the PHA must enter into a Cooperation Agreement with the applicable local governing body that includes sufficient authority to cover the public housing being developed under this subpart, or provide an opinion of counsel that the existing, amended, or supplementary Cooperation Agreement between the jurisdiction and the PHA includes the project or development.
</P>
<P>(b) <I>New construction limitation.</I> These requirements apply to the development (including new construction and acquisition) of public housing. All proposed new development projects must meet both of the following requirements:
</P>
<P>(1) <I>Limitation on the number of units.</I> A PHA may not use Capital Funds to pay for the development cost of public housing units if such development would result in a net increase in the number of public housing units that the PHA owned, assisted, or operated on October 1, 1999. Subject to approval by the Secretary, a PHA may develop public housing units in excess of the limitation if:
</P>
<P>(i) The units are available and affordable to eligible low-income families and the CF formula does not provide additional funding for the specific purpose of constructing, modernizing, and operating such excess units; or
</P>
<P>(ii) The units are part of a mixed-finance project or otherwise leverage significant additional investment, and the cost of the useful life of the projects is less than the estimated cost of providing tenant-based assistance under section 8(o) of the 1937 Act.
</P>
<P>(2) <I>Limitations on cost.</I> A PHA may not construct public housing unless the cost of construction is less than the cost of acquisition or acquisition and rehabilitation of existing units, including the amount required to establish, as necessary, an upfront reserve for replacement accounts for major repairs. A PHA shall provide evidence of compliance with this subpart either by:
</P>
<P>(i) Demonstrating through a cost comparison that the cost of new construction in the neighborhood where the PHA proposes to construct the housing is less than the cost of acquisition of existing housing, with or without rehabilitation, in the same neighborhood; or
</P>
<P>(ii) Documenting that there is insufficient existing housing in the neighborhood to acquire.
</P>
<P>(c) <I>Existing PHA-owned nonpublic housing properties.</I> Nonpublic housing properties may be used in the development of public housing units provided all requirements of the 1937 Act and the development requirements of this part are met.
</P>
<P>(d) <I>Site and neighborhood standards.</I> Each proposed site to be newly acquired for a public housing project or for construction or rehabilitation of public housing must be reviewed and approved by the field office as meeting the following standards, as applicable:
</P>
<P>(1) The site must be adequate in size, exposure, and contour to accommodate the number and type of units proposed. Adequate utilities (e.g., water, sewer, gas, and electricity) and streets shall be available to service the site.
</P>
<P>(2) The site and neighborhood shall be suitable to facilitating and furthering full compliance with the applicable provisions of title VI of the Civil Rights Act of 1964, title VIII of the Civil Rights Act of 1968, Executive Order 11063, and HUD regulations issued under these statutes.
</P>
<P>(3) The site for new construction shall not be located in an area of minority concentration unless:
</P>
<P>(i) There are already sufficient, comparable opportunities outside areas of minority concentration for housing minority families in the income range that is to be served by the proposed project; or
</P>
<P>(ii) The project is necessary to meet overriding housing needs that cannot feasibly be met otherwise in that housing market area. “Overriding housing needs” shall not serve as the basis for determining that a site is acceptable if the only reason that these needs cannot otherwise feasibly be met is that, due to discrimination because of race, color, religion, creed, sex, disability, familial status, or national origin, sites outside areas of minority concentration are unavailable.
</P>
<P>(4) The site for new construction shall not be located in a racially mixed area if the project will cause a significant increase in the proportion of minority to nonminority residents in the area.
</P>
<P>(5) Notwithstanding the foregoing, after demolition of public housing units a PHA may construct public housing units on the original public housing site or in the same neighborhood if the number of replacement public housing units is significantly fewer than the number of public housing units demolished. One of the following criteria must be satisfied:
</P>
<P>(i) The number of public housing units being constructed is not more than 50 percent of the number of public housing units in the original development; or
</P>
<P>(ii) In the case of replacing an occupied development, the number of public housing units being constructed is the number needed to house current residents who want to remain at the site, so long as the number of public housing units being constructed is significantly fewer than the number being demolished; or
</P>
<P>(iii) The public housing units being constructed constitute no more than 25 units.
</P>
<P>(6) The site shall promote greater choice of housing opportunities and avoid undue concentration of assisted persons in areas containing a high proportion of low-income persons.
</P>
<P>(7) The site shall be free from adverse environmental conditions, natural or manmade, such as: Toxic or contaminated soils and substances; mudslide or other unstable soil conditions; flooding; septic tank backups or other sewage hazards; harmful air pollution or excessive smoke or dust; excessive noise or vibrations from vehicular traffic; insect, rodent, or vermin infestation; or fire hazards. The neighborhood shall not be seriously detrimental to family life. It shall not be filled with substandard dwellings nor shall other undesirable elements predominate, unless there is a concerted program in progress to remedy the undesirable conditions.
</P>
<P>(8) The site shall be accessible to social, recreational, educational, commercial, and health facilities; health services; and other municipal facilities and services that are at least equivalent to those typically found in neighborhoods consisting largely of similar unassisted standard housing. The availability of public transportation must be considered.
</P>
<P>(9) The site shall be accessible to a range of jobs for low-income workers and for other needs. The availability of public transportation must be considered, and travel time and cost via public transportation and private automobile must not be excessive. This requirement may be given less consideration for elderly housing.
</P>
<P>(10) The project may not be built on a site that has occupants unless the relocation requirements at § 905.308(b)(9) of this part are met.
</P>
<P>(11) The site shall not be in an area that HUD has identified as having special flood hazards and in which the sale of flood insurance has been made available under the National Flood Insurance Act of 1968, unless the development is covered by flood insurance required by the Flood Disaster Protection Act of 1973 and meets all applicable HUD standards and local requirements.
</P>
<P>(e) <I>Relocation.</I> All acquisition or rehabilitation activities carried out with public housing funds must comply with the provisions of § 905.308(b)(9).
</P>
<P>(f) <I>Environmental requirements.</I> All activities under this part are subject to an environmental review by a responsible entity under HUD's environmental regulations at 24 CFR Part 58 and must comply with the requirements of the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321 <I>et seq.</I>) and the related laws and authorities listed at 24 CFR 58.5. HUD may make a finding in accordance with 24 CFR 58.11 and may perform the environmental review itself under the provisions of 24 CFR Part 50. In those cases where HUD performs the environmental review under 24 CFR Part 50, it will do so before approving a proposed project, and will comply with the requirements of NEPA and the related requirements at 24 CFR 50.4.


</P>
</DIV8>


<DIV8 N="§ 905.604" NODE="24:4.1.3.1.5.6.5.3" TYPE="SECTION">
<HEAD>§ 905.604   Mixed-finance development.</HEAD>
<P>(a) <I>General.</I> Mixed-finance development refers to the development (through new construction or acquisition, with or without rehabilitation) or modernization of public housing, where the public housing units are owned in whole or in part by an entity other than a PHA. If the public housing units being developed are 100 percent owned by the PHA, the project is not a mixed-finance project and will be not be subject to mixed-finance development requirements. However, all other development requirements of part 905 are applicable, and, if the project includes both public housing funds and private funding for development, the project may be subject to other applicable program requirements; e.g., the Capital Fund Financing Program, Operating Fund Financing Program, Public Housing Mortgage Program, etc.
</P>
<P>(1) <I>Ownership.</I> There are various potential scenarios for the ownership structure of a mixed-finance project, such as: public housing units may be owned entirely by a private entity; a PHA may co-own with a private entity; or a PHA affiliate or instrumentality may own or co-own the units.
</P>
<P>(2) <I>Partnerships.</I> PHAs may choose to enter into a partnership or other contractual arrangement with a third party entity for the mixed-finance development and/or ownership of public housing units.
</P>
<P>(3) <I>Funding.</I> Funding for mixed-finance developments may include one or a combination of funding sources, pursuant to § 905.600(d) of this part.
</P>
<P>(4) <I>Modernization.</I> A mixed-finance project that involves modernization, rather than new construction, shall maintain the DOFA date that existed prior to modernization and shall be subject to the provisions of § 905.304(a)(2) of this part regarding the applicable period of obligation to operate the public housing units.
</P>
<P>(b) <I>Definitions applicable to this subpart.</I> (1) <I>Mixed-finance.</I> The development (through new construction or acquisition, with or without rehabilitation) or modernization of public housing, using public housing, nonpublic housing, or a combination of public housing and nonpublic housing funds, where the public housing units are owned in whole or in part by an entity other than the PHA. A mixed-finance development may include 100 percent public housing (if there is an Owner Entity other than the PHA) or a mixture of public housing and nonpublic housing units.
</P>
<P>(2) <I>Owner Entity.</I> As defined in § 905.108 of this part.
</P>
<P>(3) <I>PHA instrumentality.</I> An instrumentality is an entity related to the PHA whose assets, operations, and management are legally and effectively controlled by the PHA, and through which PHA functions or policies are implemented, and which utilizes public housing funds or public housing assets for the purpose of carrying out public housing development functions of the PHA. An instrumentality assumes the role of the PHA, and is the PHA under the Public Housing Requirements, for purposes of implementing public housing development activities and programs, and must abide by the Public Housing Requirements. Instrumentalities must be authorized to act for and to assume such responsibilities. For purposes of development, ownership of public housing units by an instrumentality would be considered mixed-finance development.
</P>
<P>(4) <I>PHA affiliate.</I> An affiliate is an entity, other than an instrumentality, formed by a PHA and in which a PHA has a financial or ownership interest or participates in its governance. The PHA has some measure of control over the assets, operations, or management of the affiliate, but such control does not rise to the level of control to qualify the entity as an instrumentality. For the purposes of development, ownership of public housing units by an affiliate would be considered mixed-finance development.
</P>
<P>(5) <I>Public housing funds.</I> As defined in § 905.108 of this part.
</P>
<P>(c) <I>Structure of projects.</I> Each mixed-finance project must be structured to:
</P>
<P>(1) Ensure the continued operation of the public housing units in accordance with all Public Housing Requirements;
</P>
<P>(2) Ensure that public housing funds committed to a mixed-finance project are used only to pay for costs associated with the public housing units, including such costs as demolition, site work, infrastructure, and common area improvements.
</P>
<P>(3) To ensure that the amount of public housing funds committed to a project is proportionate to the number of public housing units contained in the project. To meet this “pro rata test,” the proportion of public housing funds compared to total project funds committed to a project must not exceed the proportion of public housing units compared to total number of units contained in the project. For example, if there are a total of 120 units in the project and 50 are public housing units, the public housing units are 42 percent of the total number of units in the project. Therefore the amount of public housing funds committed to the project cannot exceed 42 percent of the total project budget, unless otherwise approved by the Secretary. However, if public housing funds are to be used to pay for more than the pro rata cost of common area improvements, HUD will evaluate the proposal to ensure that common area improvements will benefit the residents in the development in a mixed-income project; and
</P>
<P>(4) Ensure that the project is within the Total Development Cost (TDC) and Housing Construction Cost (HCC) limits pursuant to § 905.314(c) and (d) of this part.
</P>
<P>(d) <I>Process.</I> Except as provided in this section, development of a mixed-finance project under this subpart is subject to the same requirements as development of public housing by a PHA entirely with public housing funds, as stated in § 905.600 of this part. PHAs must submit an acquisition proposal under § 905.608 and/or a development proposal under § 905.606 or as otherwise specified by HUD.
</P>
<P>(e) <I>Conflicts.</I> In the event of a conflict between the requirements for a mixed-finance project and other requirements of this subpart, the mixed-finance Public Housing Requirements shall apply, unless HUD determines otherwise.
</P>
<P>(f) <I>HUD approval.</I> For purposes of this section only, any action or approval that is required by HUD pursuant to the requirements set forth in this section shall be construed to mean HUD Headquarters, unless the field office is authorized in writing by Headquarters to carry out a specific function in this section.
</P>
<P>(g) <I>Comparability.</I> Public housing units built in a mixed-financed development must be comparable in size, location, external appearance, and distribution to nonpublic housing units within the development.
</P>
<P>(h) <I>Mixed-finance procurement.</I> The requirements of 2 CFR part 200 and 24 CFR 905.316 are applicable to this subpart with the following exceptions:
</P>
<P>(1) PHAs may select a development partner using competitive proposals procedures for qualifications-based procurement, subject to negotiation of fair and reasonable compensation and compliance with TDC and other applicable cost limitations;
</P>
<P>(2) An Owner Entity (which, as a private entity, would normally not be subject to 2 CFR part 200) shall be required to comply with 2 CFR part 200 if HUD determines that the PHA or PHA instrumentality, or either of their members or employees, exercises significant decision making functions within the Owner Entity with respect to managing the development of the proposed units. HUD may, on a case-by-case basis, exempt such an Owner Entity from the need to comply with 2 CFR part 200 if it determines that the Owner Entity has developed an acceptable alternative procurement plan.
</P>
<P>(i) <I>Identity of interest.</I> If the Owner Entity or partner (or any other entity with an identity of interest with the Owner Entity or partner) of a mixed-finance project wants to serve as the general contractor for the mixed-finance project, it may award itself the construction contract only if:
</P>
<P>(1) The identity of interest general contractor's bid is the lowest bid submitted in response to a request for bids; or
</P>
<P>(2) The PHA submits a written justification to HUD that includes an independent third-party cost estimate that demonstrates that the identity of interest general contractor's costs are less than or equal to the independent third-party cost estimate; and
</P>
<P>(3) HUD approves the identity of interest general contractor in conjunction with HUD's approval of the development proposal for the mixed-finance project.
</P>
<P>(j) <I>Operating Subsidy-Only and Capital Fund-Only Assistance.</I> (1) <I>General.</I> This section refers to the mixed-finance development of public housing units that will be developed without public housing funds but will receive operating subsidy, or will be developed with public housing funds but will not receive operating subsidy.
</P>
<P>(2) <I>Operating Subsidy-Only Development.</I> Operating Subsidy-Only Development refers to mixed-finance projects where public housing units are developed without the use of public housing funds, but for which HUD agrees to provide operating subsidies under Section 9(e) of the 1937 Act. These types of project are subject to the following provisions:
</P>
<P>(i) The newly developed public housing units will be included in the calculation of the Capital Fund formula in § 905.400 of this part.
</P>
<P>(ii) An ACC Amendment will be executed to include the new public housing units. The term of the ACC Amendment will be determined based on the assistance as provided in § 905.304, unless reduced by the Secretary.
</P>
<P>(iii) There shall be no disposition of the public housing units without the prior written approval of HUD, during, and for 10 years after the end of, the period in which the public housing units receive operating subsidy from the PHA, as required by 42 U.S.C. 1437g(3), as those requirements may be amended from time to time. However, if the PHA is no longer able to provide operating subsidies to the Owner Entity pursuant to Section 9(e) of the 1937 Act, the PHA may (on behalf of the Owner Entity) request that HUD terminate the Declaration of Trust or Declaration of Restrictive Covenants, as applicable. Termination under this section does not require disposition approval from HUD pursuant to Section 18 of the 1937 Act, 42 U.S.C. 1437p. However, the PHA must provide public housing residents with a decent, safe, sanitary, and affordable unit to which they can relocate, which may include a public housing unit in another development or a Housing Choice Voucher, and pay for the tenant's reasonable moving costs. The URA is not applicable in this situation.
</P>
<P>(iv) Where the PHA elects in the future to use public housing funds for modernization of these units, the PHA must execute an ACC Amendment with a 20-year use restriction and record a Declaration of Trust or Declaration of Restrictive Covenants, in accordance with § 905.304. There may be no disposition of the public housing units without the prior written approval of HUD during the 20-year period, and the public housing units shall be maintained and operated in accordance with all applicable Public Housing Requirements (including the ACC), as those requirements may be amended from time to time.
</P>
<P>(3) <I>Capital Fund-Only Development.</I> Capital Fund-Only projects refers to mixed-finance projects where a PHA and its partners may develop public housing units using public housing funds for development of new units, but for which HUD will not be providing operating subsidy under Section 9(e) of the Act, 42 U.S.C. 1437g(e). These types of projects are subject to the following provisions:
</P>
<P>(i) The newly developed public housing units will not be included in the calculation of the Operating Fund formula.
</P>
<P>(ii) The PHA must sign an ACC Amendment, with a 40-year use restriction, for development of new units and record a Declaration of Trust or Declaration of Restrictive Covenants in accordance with § 905.304 of this part, unless the time period is reduced by the Secretary.
</P>
<P>(iii) There shall be no disposition of the public housing units, without the prior written approval of HUD, during a 40-year period, and the public housing units shall be maintained and operated in accordance with all applicable Public Housing Requirements (including the ACC), as required by section 9(d)(3) of the 1937 Act, 42 U.S.C. 1437g(d)(3), as those requirements may be amended from time to time.
</P>
<P>(4) <I>Procedures.</I> PHAs must follow the development approval process identified in § 905.600.
</P>
<P>(k) <I>Mixed-finance operations: Deviation from HUD requirements pursuant to section 35(h) of the 1937 Act, 42 U.S.C. 1437z-7(h).</I> (1) <I>Deviation.</I> If a PHA enters into a contract with an entity that owns or operates a mixed-finance project, and the terms of the contract obligate the entity to operate and maintain a specified number of units in the project as public housing units, the contract may include terms that allow the Owner Entity to deviate from otherwise applicable Public Housing Requirements regarding rents, income eligibility, and other areas of public housing management with respect to all or a portion of the public housing units, subject to the following conditions:
</P>
<P>(i) There are a significant number of units in the mixed-finance project that are not public housing units;
</P>
<P>(ii) There is a reduction in appropriations under Section 9(e) of the 1937 Act (see 42 U.S.C. 1437g(e)) or a change in applicable law that results in the PHA being unable to fulfill its contractual obligation to the Owner Entity with respect to the public housing units;
</P>
<P>(iii) Prior to implementation of the contractual terms related to deviation from the Public Housing Requirements, HUD approves an Alternative Management Plan for the mixed-finance project; and
</P>
<P>(iv) The deviation shall be to the extent necessary to preserve the viability of those units while maintaining the low-income character of the units to the maximum extent practicable.
</P>
<P>(2) <I>Preparation of an Alternative Management Plan.</I> Should the PHA and the Owner Entity determine a need to deviate from the Public Housing Requirements, the PHA, on behalf of the Owner Entity, must submit an Alternative Management Plan to HUD for review and approval prior to implementation of any changes. The Plan must include the following:
</P>
<P>(i) A statement describing the Owner Entity's reasons for deviating from the Public Housing Requirements;
</P>
<P>(ii) An explanation of the Owner Entity's proposed remedies, including, but not limited to:
</P>
<P>(A) How the Owner Entity will select the residents (including the number and income levels of the families proposed to be admitted to the public housing units) and units to be affected by the proposed change;
</P>
<P>(B) The Owner Entity's timetable for implementing the Alternative Management Plan;
</P>
<P>(C) The impact on existing residents. Note that for any resident who is unable to remain in the unit as a result of implementation of the Alternative Management Plan, the resident must be relocated to a public housing unit or given a Housing Choice Voucher by the PHA or by another entity as provided for in the contractual agreement between the PHA and the Owner Entity;
</P>
<P>(iii) An amendment to the existing contractual agreement between the PHA and the Owner Entity that includes provisions which ensure that:
</P>
<P>(A) An update on the Alternative Management Plan is submitted annually to HUD to ensure that implementation of the provisions of the Alternative Management Plan continue to be appropriate;
</P>
<P>(B) The Owner Entity complies with the requirements of this subpart in its management and operation of the public housing units in accordance with the Alternative Management Plan;
</P>
<P>(C) The Owner Entity provides the PHA any income that is generated by the public housing units in excess of the Owner Entity's expenses on behalf of those units, as a result of implementation of provisions in the Alternative Management Plan;
</P>
<P>(D) The Owner Entity reinstates all Public Housing Requirements (including rent and income eligibility requirements) with respect to the original number of public housing units and number of bedrooms in the mixed-finance development, following the PHA's reinstatement of operating subsidies at the level originally agreed to in its contract with the Owner Entity; and
</P>
<P>(iv) Additional evidence. The PHA must provide documentation that:
</P>
<P>(A) The Owner Entity has provided copies of the Alternative Management Plan to residents of the project and provided the opportunity for review and comment prior to submission to HUD. The Owner Entity must have provided written notice to each of the public housing residents in the mixed-finance development of its intention to implement the Alternative Management Plan. Such notice must comply with all relevant federal, state, and local substantive and procedural requirements and, at a minimum, provide public housing residents 90 days advance notice of any proposal to increase rents or to relocate public housing residents to alternative housing;
</P>
<P>(B) The revenues being generated by the public housing units (in combination with the reduced allocation of Operating Subsidy resulting primarily from a reduction in appropriations or changes in applicable law such that the PHA is unable to comply with its contractual obligations to the Owner Entity) are inadequate to cover the reasonable and necessary operating expenses of the public housing units. Documentation should include a financial statement showing actual operating expenses and revenues over the past 5 years and the projected expenses and revenues over the next 10 years;
</P>
<P>(C) A demonstration that the PHA cannot meet its contractual obligation, and;
</P>
<P>(D) The Owner Entity has attempted to offset with regard to the project, the impact of reduced operating subsidies or changes in applicable law by all available means; including the use of other public and private development resources, the use of cash flow from any nonpublic housing units, and funds from other operating deficient reserves.
</P>
<P>(3) <I>HUD review.</I> HUD will review the Alternative Management Plan to ensure that the plan meets the requirements of this subpart and that any proposed deviation from the Public Housing Requirements will be implemented only to the extent necessary to preserve the viability of the public housing units. Upon completion of HUD's review, HUD will either approve or disapprove the Alternative Management Plan. Reasons for HUD disapproval may include, but are not limited to, the following:
</P>
<P>(i) The justification for deviation from the Public Housing Requirements does not qualify in accordance with section 35(h) of the Act (42 U.S.C. 1437z-7(h)).
</P>
<P>(ii) The proposed deviation(s) from the Public Housing Requirements are not limited to preserving the viability of the public housing units.
</P>
<P>(iii) The information that HUD requires to be included in the Alternative Management Plan has not been included, is not accurate, or does not support the need for deviation from the Public Housing Requirements.
</P>
<P>(iv) HUD has evidence that the proposed Alternative Management Plan is not in compliance with other federal requirements, including civil rights laws.
</P>
<P>(4) <I>HUD reevaluation and reapproval.</I> The PHA, on behalf of the Owner Entity, must provide to HUD, for HUD approval, an annual update on the implementation of the Alternative Management Plan. The update must provide the status of the project and whether the circumstances originally triggering the need for the conditions contained in the Alternative Management Plan remain valid and appropriate. Any proposed changes in the Alternative Management Plan should also be identified. Once the annual update of the Alternative Management Plan is properly submitted, the existing Alternative Management Plan shall remain in effect until such time as HUD takes additional action to approve or disapprove the annual update.
</P>
<CITA TYPE="N">[78 FR 63770, Oct. 24, 2013, as amended at 80 FR 75942, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 905.606" NODE="24:4.1.3.1.5.6.5.4" TYPE="SECTION">
<HEAD>§ 905.606   Development proposal.</HEAD>
<P>(a) <I>Development proposal.</I> Prior to developing public housing, either through new construction or through acquisition, with or without rehabilitation, a PHA must submit a development proposal to HUD in the form prescribed by HUD, which will allow HUD to assess the viability and financial feasibility of the proposed development. A development proposal must be submitted for all types of public housing development, including mixed-finance. Failure to submit and obtain HUD approval of a development proposal may result in the public housing funds used in conjunction with the project being deemed ineligible expenses. In determining the amount of information to be submitted by the PHA, HUD shall consider whether the documentation is required for HUD to carry out mandatory statutory, regulatory, or Executive order reviews; the quality of the PHA's past performance in implementing development projects under this subpart; the PHA's demonstrated administrative capability; and other program requirements. The development proposal shall include some or all of the following documentation, as deemed necessary by HUD.
</P>
<P>(1) <I>Project description.</I> A description of the proposed project, including:
</P>
<P>(i) Proposed development method (e.g., mixed-finance, new construction, acquisition with or without rehabilitation, turnkey, etc.), including the extent to which the PHA will use force account labor and use procured contractors. For new construction projects, the PHA must meet the program requirements contained in § 905.602. For projects involving acquisition of existing properties less than 2 years old, the PHA must include an attestation from the PHA and the owner of the property that the property was not constructed with the intent that it would be sold to the PHA or, if it was constructed with the intent that it be sold to the PHA, that it was constructed in compliance with all applicable requirements (e.g., Davis Bacon wage rates, accessibility, etc.);
</P>
<P>(ii) Type of residents to occupy the units (e.g., family, elderly, persons with disabilities, or families that include persons with disabilities);
</P>
<P>(iii) Number and type of unit (detached, semidetached, row house, walkup, elevator), with bedroom count, broken out by public housing vs. nonpublic housing, if applicable;
</P>
<P>(iv) The type and size of nondwelling space, if applicable; and
</P>
<P>(v) Schematic drawings of the proposed buildings, unit plans, and additional information regarding plans and specifications, as needed by HUD to review the project.
</P>
<P>(2) <I>Site information.</I> An identification and description of the proposed site and neighborhood, a site plan, and a map of the neighborhood.
</P>
<P>(3) <I>Participant description.</I> Identification of participating parties and a description of the activities to be undertaken by each of the participating parties and the PHA; and the legal and business relationships between the PHA and each of the participating parties, as applicable.
</P>
<P>(4) <I>Development project schedule.</I> A schedule for the development project that includes each major stage of development, through and including the submission of an Actual Development Cost Certificate to HUD.
</P>
<P>(5) <I>Accessibility.</I> A PHA must provide sufficient information for HUD to determine that dwelling units and other public housing facilities meet accessibility requirements specified at § 905.312 of this part, including, but not limited to, the number, location, and bedroom size distribution of accessible dwelling units (see 24 CFR 8.32 and 24 CFR part 40).
</P>
<P>(6) <I>Project costs.</I> (i) <I>Budgets.</I> To allow HUD to assess sources of funding and projected uses of funds, the PHA shall submit a project budget, in the form prescribed by HUD, reflecting the total permanent development budget for the project, including all sources and uses of funds, including hard and soft costs. The PHA shall also submit a budget for the construction period and a construction draw schedule showing the timing of construction financing contributions and disbursements. In addition, the PHA shall submit an independent construction cost estimate or actual construction contract that supports the permanent and construction budgets.
</P>
<P>(ii) <I>TDC calculation.</I> The PHA must submit a calculation of the TDC and HCC, subject to § 905.314 of this part.
</P>
<P>(iii) <I>Financing.</I> A PHA must submit a detailed description of all financing necessary for the implementation of the project, specifying the sources and uses. In addition, HUD may require documents related to the financing (e.g., loan documents, partnership or operating agreement, regulatory and operating agreement, etc.) to be submitted in final draft form as part of the development proposal. Upon financial closing, HUD may also require final, executed copies of these documents to be submitted to HUD for final approval, per § 905.612(b)(2) of this part.
</P>
<P>(A) <I>Commitment of funds.</I> Documents submitted pursuant to this section must irrevocably commit funds to the project. Irrevocability of funds means that binding legal documents—such as loan agreements, mortgages, deeds of trust, partnership agreements or operating agreements, or similar documents committing funds—have been executed by the applicable parties; though disbursement of such funds may be subject to meeting progress milestones, the absence of default, and/or other conditions generally consistent with similar non-public housing transactions. For projects involving revolving loan funds, the irrevocability of funds means that funds in an amount identified to HUD as the maximum revolving loan have been committed pursuant to legally binding documents; though disbursement of such funds may be subject to meeting progress milestones, the absence of default, and/or other conditions generally consistent with similar affordable housing transactions. The PHA must confirm the availability of each party's financing, the amount and source of financing committed to the proposal by the parties, and the irrevocability of those funds.
</P>
<P>(B) <I>Irrevocability of funds.</I> To ensure the irrevocable nature of the committed funds, the PHA shall review the legal documents committing such funds to ensure that the progress milestones and conditions precedent contained in such contracts are generally consistent with similar affordable housing transactions; that the PHA and/or its Owner Entity know of no impediments that would prevent the project from moving forward consistent with the project milestones and conditions precedent; and, after conducting sufficient due diligence, that such documents are properly executed by persons or entities legally authorized to bind the entity committing such funds.
</P>
<P>(C) <I>Third-party documents.</I> The PHA is not required to ensure the availability of funds by enforcing documents to which it is not a party.
</P>
<P>(D) <I>Opinion of counsel.</I> As part of the proposal, the PHA may certify as to the irrevocability of funds through the submission of an opinion of the PHA's counsel attesting that counsel has examined the availability of the participating parties' financing, and the amount and source of financing committed to the project by the participating parties, and has determined that such financing has been irrevocably committed, as defined in paragraph (a)(6)(iii)(A) of this section, and that such commitments are consistent with the project budget submitted under paragraph (a)(6)(i) of this section.
</P>
<P>(7) <I>Operating pro-forma/Operating Fund methodology.</I> To allow HUD to assess the financial feasibility of projects, PHAs shall submit a 10-year operating pro-forma, including all assumptions, to assure that operating expenses do not exceed operating income. For mixed-finance development, the PHA must describe its methodology for providing and distributing operating subsidy to the Owner Entity for the public housing units.
</P>
<P>(8) <I>Local Cooperation Agreement.</I> A PHA may elect to exempt all public housing units in a mixed-finance project from the payment in lieu of taxes provisions under section 6(d) of the Act, 42 U.S.C. 1437d(d), and from the finding of need and cooperative agreement provisions under sections 5(e)(1)(ii) and (e)(2) of the Act, 42 U.S.C. 1437c(e)(1)(ii) and (e)(2), and instead subject units to local real estate taxes, but only if the PHA provides documentation from an authorized official of the local jurisdiction that development of the units is consistent with the jurisdiction's comprehensive housing affordability strategy. If the PHA does not elect this exemption, the Cooperation Agreement as provided in § 905.602(a) is required and must be submitted.
</P>
<P>(9) <I>Environmental requirements.</I> The PHA must provide an approved Request for Release of Funds and environmental certification, submitted in accordance with 24 CFR part 58, or approval in accordance with 24 CFR part 50. HUD will not approve a development proposal without the appropriate environmental approval.
</P>
<P>(10) <I>Market analysis.</I> For a mixed-finance development that includes nonpublic housing units, the PHA must include an analysis of the projected market for the proposed project.
</P>
<P>(11) <I>Program income and fees.</I> The PHA must provide information identifying fees to be paid to the PHA, the PHA's partner(s), the Owner Entity, and/or other participating parties identified by HUD and on the receipt and use of program income.
</P>
<P>(b) <I>Additional HUD-requested information.</I> PHAs are required to provide any additional information that HUD may need to assess the development proposal.


</P>
</DIV8>


<DIV8 N="§ 905.608" NODE="24:4.1.3.1.5.6.5.5" TYPE="SECTION">
<HEAD>§ 905.608   Site acquisition proposal.</HEAD>
<P>(a) <I>Submission.</I> When a PHA determines that it is necessary to acquire vacant land for development of public housing through new construction, using public housing funds, prior to submission and approval of a development proposal under § 905.606 of this part, the PHA must submit an acquisition proposal to HUD for review and approval prior to acquisition. The acquisition proposal shall include the following:
</P>
<P>(b) <I>Justification.</I> A justification for acquiring property prior to development proposal submission and approval.
</P>
<P>(c) <I>Description.</I> A description of the property (<I>i.e.</I>, the proposed site and/or project) to be acquired.
</P>
<P>(d) <I>Project description; site and neighborhood standards.</I> An identification and description of the proposed project, site plan, and neighborhood, together with information sufficient to enable HUD to determine that the proposed site meets the site and neighborhood standards at § 905.602(d) of this part.
</P>
<P>(e) <I>Zoning.</I> Documentation that the proposed project is permitted by current zoning ordinances or regulations, or evidence to indicate that needed rezoning is likely and will not delay the project.
</P>
<P>(f) <I>Appraisal.</I> Documentation attesting that an appraisal of the proposed property by an independent, state certified appraiser has been conducted and that the acquisition is in compliance with § 905.308(b)(9) of this part. The purchase price of the site/property may not exceed the appraised value without HUD approval.
</P>
<P>(g) <I>Schedule.</I> A schedule of the activities to be carried out by the PHA.
</P>
<P>(h) <I>Environmental assessment.</I> An environmental review or request for HUD to perform the environmental review pursuant to § 905.308(b)(2) of this part.


</P>
</DIV8>


<DIV8 N="§ 905.610" NODE="24:4.1.3.1.5.6.5.6" TYPE="SECTION">
<HEAD>§ 905.610   Technical processing.</HEAD>
<P>(a) <I>Review.</I> HUD shall review all development proposals and site acquisition proposals for compliance with the statutory, Executive order, and regulatory requirements applicable to the development of public housing and the project. HUD's review will evaluate whether the proposed sources and uses of funds are eligible and reasonable, and whether the financing and other documentation establish to HUD's satisfaction that the development is financially viable and structured so as to adequately protect the federal investment of funds in the development. For this purpose, HUD will consider the PHA's proposed methodology for allocating operating subsidies on behalf of the public housing units, the projected revenue to be generated by any nonpublic housing units in a mixed-finance development, and the 10-year operating pro forma and other information contained in the development proposal.
</P>
<P>(b) <I>Subsidy layering analysis.</I> After the PHA submits the documentation required under paragraph (a) of this section, HUD or its designee (e.g., the State Housing Finance Agency) shall carry out a subsidy layering analysis, pursuant to section 102(d) of the Department of Housing and Urban Development Reform Act of 1989 (42 U.S.C. 3545) (see 24 CFR part 4), to determine that the amount of assistance being provided for the development is not more than necessary to make the assisted activity feasible after taking into account the other governmental assistance.
</P>
<P>(c) <I>Safe harbor standards.</I> For mixed-finance projects, in order to expedite the mixed-finance review process and control costs, HUD may make available safe harbor and maximum fee ranges for a number of costs. If a project is at or below a safe harbor standard, no further review will be required by HUD. If a project is above a safe harbor standard, additional review by HUD will be necessary. In order to approve terms above the safe harbor, the PHA must demonstrate to HUD in writing that the negotiated terms are appropriate for the level of risk involved in the project, the scope of work, any specific circumstances of the development, and the local or national market for the services provided.
</P>
<P>(d) <I>Approval.</I> If HUD determines that a site acquisition proposal or a development proposal is approvable, HUD shall notify the PHA in writing of its approval. The HUD approval of a development proposal will include the appropriate form of ACC for signature. The PHA must execute the ACC and return it to HUD for execution. Until HUD approves a development proposal, a PHA may only expend public housing funds for predevelopment costs, as provided in § 905.612 of this part.
</P>
<P>(e) <I>Amendments to approved development proposals.</I> HUD must approve any material change to an approved development proposal. HUD defines material change as:
</P>
<P>(1) A change in the number of public housing units;
</P>
<P>(2) A change in the number of bedrooms by an increase/decrease of more than 10 percent;
</P>
<P>(3) A change in cost or financing by an increase/decrease of more than 10 percent; or
</P>
<P>(4) A change in the site.


</P>
</DIV8>


<DIV8 N="§ 905.612" NODE="24:4.1.3.1.5.6.5.7" TYPE="SECTION">
<HEAD>§ 905.612   Disbursement of Capital Funds—predevelopment costs.</HEAD>
<P>(a) <I>Predevelopment costs.</I> After a new development project has been included in the CFP 5-Year Action Plan that has been approved by the PHA Board of Commissioners and HUD, a PHA may use funding for predevelopment expenses. Predevelopment funds may be expended in accordance with the following requirements:
</P>
<P>(1) Predevelopment assistance may be used to pay for materials and services related to proposal development and project soft costs. It may also be used to pay for costs related to the demolition of units on a proposed site. Absent HUD approval, predevelopment assistance may not be used to pay for site work, installation of infrastructure, construction, or other hard costs related to a development.
</P>
<P>(2) For non-mixed-finance projects, predevelopment funding up to 5 percent of the total amount of the public housing funds committed to a project does not require HUD approval. HUD shall determine on a case-by-case basis that an amount greater than 5 percent may be drawn down by a PHA to pay for necessary and reasonable predevelopment costs, based upon a consideration of the nature and scope of activities proposed to be carried out by the PHA. Before a request for predevelopment assistance in excess of 5 percent may be approved, the PHA must provide to HUD information and documentation specified in §§ 905.606 and 905.608 of this part, as HUD deems appropriate.
</P>
<P>(3) For mixed-finance projects, all funding for predevelopment costs must be reviewed and approved by HUD prior to expenditure.
</P>
<P>(4) The requirements in paragraph (b) of this section to disburse funds for mixed-financed projects in an approved ratio to other public and private funding do not apply to disbursement of predevelopment funds.
</P>
<P>(b) <I>Standard drawdown requirements.</I> (1) <I>General.</I> If HUD determines that the proposed development is approvable, it may execute with the PHA the applicable ACC Amendment to provide funds for the purposes and in the amounts approved by HUD. Upon approval of the development proposal and all necessary documentation evidencing and implementing the development plan, the PHA may disburse amounts as are necessary and consistent with the approved development proposal without further HUD approval, unless HUD determines that such approval is necessary. Once HUD approves the site acquisition proposal, the PHA may request funds for acquisition activities. Each Capital Fund disbursement from HUD is deemed to be an attestation of compliance by the PHA with the requirements of this part, as prescribed in § 905.106 of this part. If HUD determines that the PHA is in noncompliance with any provision of this part, the PHA may be subject to the sanctions in § 905.800, subpart H, of this part.
</P>
<P>(2) <I>Mixed-finance projects.</I> For mixed-finance projects, prior to PHA disbursement of public housing funds, except predevelopment funds identified in paragraph (a) of this section, HUD may require a PHA to submit to HUD, for review and approval, copies of final, fully executed, and, where appropriate, recorded documents, submitted as part of the development proposal process. Upon completion of the project, the ratio of public housing funds to non-public housing funds for the overall project must remain as reflected in the executed documents. The ratio does not apply during the construction period.


</P>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:4.1.3.1.5.7" TYPE="SUBPART">
<HEAD>Subpart G—Other Security Interests</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>78 FR 63786, Oct. 24, 2013, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 905.700" NODE="24:4.1.3.1.5.7.5.1" TYPE="SECTION">
<HEAD>§ 905.700   Other security interests.</HEAD>
<P>(a) The PHA may not pledge, mortgage, enter into a transaction that provides recourse to public housing assets, or otherwise grant a security interest in any public housing project, portion thereof, or other property of the PHA without the written approval of HUD.
</P>
<P>(b) The PHA shall submit the request in the form and manner prescribed by HUD.
</P>
<P>(c) HUD shall consider:
</P>
<P>(1) The ability of the PHA to complete the financing, the improvements, and repay the financing;
</P>
<P>(2) The reasonableness of the provisions in the proposal; or
</P>
<P>(3) Any other factors HUD deems appropriate.


</P>
</DIV8>

</DIV6>


<DIV6 N="H" NODE="24:4.1.3.1.5.8" TYPE="SUBPART">
<HEAD>Subpart H—Compliance, HUD Review, Penalties, and Sanctions</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>78 FR 63786, Oct. 24, 2013, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 905.800" NODE="24:4.1.3.1.5.8.5.1" TYPE="SECTION">
<HEAD>§ 905.800   Compliance.</HEAD>
<P>As provided in § 905.106 of this part, PHAs or other owner/management entities and their partners are required to comply with all applicable provisions of this part. Execution of the CF ACC Amendment received from the PHA, submissions required by this part, and disbursement of Capital Fund grants from HUD are individually and collectively deemed to be the PHA's certification that it is in compliance with the provisions of this part and all other Public Housing Program Requirements. Noncompliance with any provision of this part or other applicable requirements may subject the PHA and/or its partners to sanctions contained in § 905.804 of this part.


</P>
</DIV8>


<DIV8 N="§ 905.802" NODE="24:4.1.3.1.5.8.5.2" TYPE="SECTION">
<HEAD>§ 905.802   HUD review of PHA performance.</HEAD>
<P>(a) <I>HUD determination.</I> HUD shall review the PHA's performance in completing work in accordance with this part. HUD may make such other reviews when and as it determines necessary. When conducting such a review, HUD shall, at minimum, make the following determinations:
</P>
<P>(1) HUD shall determine whether the PHA has carried out its activities under this part in a timely manner and in accordance with its CFP 5-Year Action Plan and other applicable requirements.
</P>
<P>(2) HUD shall determine whether the PHA has a continuing capacity to carry out its Capital Fund activities in a timely manner.
</P>
<P>(3) HUD shall determine whether the PHA has accurately reported its obligation and expenditures in a timely manner.
</P>
<P>(4) HUD shall determine whether the PHA has accurately reported required building and unit data for the calculation of the formula.
</P>
<P>(5) HUD shall determine whether the PHA has obtained approval for any CFFP or OFFP proposal and any PHA development proposal.
</P>
<P>(b) [Reserved]


</P>
</DIV8>


<DIV8 N="§ 905.804" NODE="24:4.1.3.1.5.8.5.3" TYPE="SECTION">
<HEAD>§ 905.804   Sanctions.</HEAD>
<P>(a) If at any time, HUD finds that a PHA has failed to comply substantially with any provision this part, HUD may impose one or a combination of sanctions, as it determines is necessary. Sanctions associated with failure to obligate or expend in a timely manner are specified at § 905.306 of this part. Other possible sanctions that HUD may impose for noncompliance by the PHA include, but are not limited to, the following:
</P>
<P>(1) Issue a corrective action order, at any time, by notifying the PHA of the specific program requirements that the PHA has violated, and specifying that any of the corrective actions listed in this section must be taken. Any corrective action ordered by HUD shall become a condition of the CF ACC Amendment.
</P>
<P>(2) Require reimbursement from non-HUD sources.
</P>
<P>(3) Limit, withhold, reduce, or terminate Capital Fund or Operating Fund assistance.
</P>
<P>(4) Issue a Limited Denial of Participation or Debar responsible PHA officials, pursuant to 2 CFR parts 180 and 2424.
</P>
<P>(5) Withhold assistance to the PHA under section 8 of the Act, 42 U.S.C. 1437f.
</P>
<P>(6) Declare a breach of the CF ACC with respect to some or all of the PHA's functions.
</P>
<P>(7) Take any other available corrective action or sanction as HUD deems necessary.
</P>
<P>(b) <I>Right to appeal.</I> Before taking any action described in paragraph (a) of this section, HUD shall notify the PHA of its finding and proposed action and provide to the PHA an opportunity, within a prescribed period of time, to present any arguments or additional facts and data concerning the finding and proposed action to HUD's Assistant Secretary for Public and Indian Housing.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="906" NODE="24:4.1.3.1.6" TYPE="PART">
<HEAD>PART 906—PUBLIC HOUSING HOMEOWNERSHIP PROGRAMS
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437z-4 and 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>68 FR 1172, Mar. 11, 2003, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.3.1.6.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 906.1" NODE="24:4.1.3.1.6.1.5.1" TYPE="SECTION">
<HEAD>§ 906.1   Purpose.</HEAD>
<P>(a) This part states the requirements and procedures governing public housing homeownership programs involving sales of individual dwelling units to families or to purchase and resale entities (PREs) for resale to families carried out by public housing agencies (PHAs), as authorized by section 32 of the United States Housing Act of 1937 (42 U.S.C. 1437z-4) (1937 Act). A PHA may only transfer public housing units for homeownership under a homeownership program approved by HUD under this part, except as provided under § 906.3. This section does not govern new construction or substantial rehabilitation of units sold under this part. Such construction or rehabilitation is governed by the public housing development and modernization regulations.
</P>
<P>(b) Under a public housing homeownership program, a PHA makes available for purchase by low-income families for use as their principal residences public housing dwelling units, public housing developments, and other housing units or developments owned, assisted, or operated, or otherwise acquired by the PHA for sale under a homeownership program in connection with the use of assistance provided under the 1937 Act (1937 Act funds). A PHA may sell all or a portion of a property for purposes of homeownership in accordance with a HUD-approved homeownership program, and in accordance with the PHA's annual plan under part 903 of this title.


</P>
</DIV8>


<DIV8 N="§ 906.2" NODE="24:4.1.3.1.6.1.5.2" TYPE="SECTION">
<HEAD>§ 906.2   Definitions.</HEAD>
<P><I>Annual Contributions Contract</I> (ACC) is defined in 24 CFR 5.403.
</P>
<P><I>Low-income family</I> is defined in the 1937 Act, 42 U.S.C. 1437a(b)(2).
</P>
<P><I>Non-public housing unit</I> means a housing unit that does not receive assistance under the 1937 Act (other than Section 8 assistance).
</P>
<P><I>PHA Plan</I> means the 5-year or annual plan required under section 5A of the 1937 Act, 42 U.S.C. 1437c-1, and its implementing regulations at 24 CFR part 903.
</P>
<P><I>Purchase and Resale Entity (PRE)</I> means an entity that acquires units for resale to low-income families in accordance with this part.


</P>
</DIV8>


<DIV8 N="§ 906.3" NODE="24:4.1.3.1.6.1.5.3" TYPE="SECTION">
<HEAD>§ 906.3   Requirements applicable to homeownership programs previously approved by HUD.</HEAD>
<P>(a) Any existing section 5(h) or Turnkey III homeownership program continues to be governed by the requirements of part 906 or part 904 of this title, respectively, contained in the April 1, 2002, edition of 24 CFR, parts 700 to 1699. The use of other program income for homeownership activities continues to be governed by agreements executed with HUD.
</P>
<P>(b) A PHA may convert an existing homeownership program, or a specific number of the units in such a program, to a homeownership program under this part with HUD approval.


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.3.1.6.2" TYPE="SUBPART">
<HEAD>Subpart B—Basic Program Requirements</HEAD>


<DIV8 N="§ 906.5" NODE="24:4.1.3.1.6.2.5.1" TYPE="SECTION">
<HEAD>§ 906.5   Dwelling units and types of assistance that a PHA may make available under a homeownership program under this part.</HEAD>
<P>(a) A homeownership program under this part may provide for sale of:
</P>
<P>(1) Units that are public housing units; and
</P>
<P>(2) Other units owned, operated, assisted, or acquired for homeownership sale and that have received the benefit of 1937 Act funds or are to be sold with the benefit of 1937 Act funds (non-public housing units). In selecting such units to be sold in a homeownership program under this part, the PHA shall not select units such that it could not comply with § 906.7(a).
</P>
<P>(b) A homeownership program under this part may provide for financing to eligible families (<I>see</I> § 905.15 of this title) purchasing dwelling units eligible under paragraph (a) of this section under the program, or for acquisition of housing units or developments by the PHA for sale under the program.
</P>
<P>(1) Under this part, a PHA may use assistance from amounts it receives under the Capital Fund under section 9(d) of the 1937 Act or from other income earned from its 1937 Act programs to provide assistance to public housing residents only to facilitate the purchase of homes (<I>e.g.,</I> counseling, closing costs, that portion of the down payment not required to be supplied from the purchaser's funds under the provisions of § 906.15(c), financing, and moving assistance). Public housing residents may use such assistance to purchase the unit in which they reside, another public housing unit, or a residence not located in a public housing development.
</P>
<P>(2) A PHA may provide financing assistance for other eligible purchasers from other income, <I>i.e.,</I> funds not from 1937 Act programs, such as proceeds from selling public housing units, loan repayments, and public housing debt forgiveness funding not already committed to another purpose.
</P>
<P>(3) In accordance with the rules and regulations governing the Section 8(y) Homeownership Option, found in 24 CFR part 982 subpart M, a PHA may make its housing choice voucher funds available to provide assistance to a family purchasing a unit under this part. A family receiving assistance under the Section 8(y) program and participating in a homeownership program under this part must meet the requirements of both programs.
</P>
<P>(c) A PHA must not use 1937 Act funds to rehabilitate units that are not public housing units.


</P>
</DIV8>


<DIV8 N="§ 906.7" NODE="24:4.1.3.1.6.2.5.2" TYPE="SECTION">
<HEAD>§ 906.7   Physical requirements that a property offered for sale under this part must meet.</HEAD>
<P>(a) <I>Property standards.</I> A property offered for sale under a homeownership program must meet local code requirements (or, if no local code exists, the housing quality standards established by HUD for the Section 8 Housing Choice Voucher Program, 24 CFR part 982) and the relevant requirements of the Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and the implementing regulations at 24 CFR part 35, subparts A, B, L, and R of this title. When a prospective purchaser who has known disabilities, or who has a family member with known disabilities requires accessible features, the features must be added as a reasonable accommodation to the disability, in accordance with the requirements of § 8.29 of this title. Further, the property must be in good repair, with the major components having a remaining useful life that is sufficient to justify a reasonable expectation that homeownership will be affordable by the purchasers. These standards must be met as a condition for conveyance of a dwelling to an individual purchaser.
</P>
<P>(b) A unit in this program for which the purchasing family is receiving assistance under Section 8(y) must be an eligible unit for purposes of the Homeownership Option under 24 CFR part 982, subpart M.


</P>
</DIV8>


<DIV8 N="§ 906.9" NODE="24:4.1.3.1.6.2.5.3" TYPE="SECTION">
<HEAD>§ 906.9   Title restrictions and encumbrances on properties sold under a homeownership program.</HEAD>
<P>(a) If the property is subject to indebtedness under the Annual Contributions Contract (ACC), HUD will continue to make any debt service contributions for which it is obligated under the ACC, and the property sold will not be subject to the encumbrance of that indebtedness. 
</P>
<P>(b) Upon sale of a public housing unit to a public housing tenant or eligible family, or to a PRE operating the units as non-public housing, in accordance with the HUD-approved homeownership program, HUD will execute a release of the title restrictions prescribed by the ACC. Because the property will no longer be subject to the ACC after sale, it will cease to be eligible for public housing Operating Fund or Capital Fund payments. 


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:4.1.3.1.6.3" TYPE="SUBPART">
<HEAD>Subpart C—Purchaser Requirements</HEAD>


<DIV8 N="§ 906.11" NODE="24:4.1.3.1.6.3.5.1" TYPE="SECTION">
<HEAD>§ 906.11   Eligible purchasers.</HEAD>
<P>Entities that purchase units from the PHA for resale to low-income families (purchase and resale entities or PREs) and low-income families are eligible to purchase properties made available for sale under a PHA homeownership program. 


</P>
</DIV8>


<DIV8 N="§ 906.13" NODE="24:4.1.3.1.6.3.5.2" TYPE="SECTION">
<HEAD>§ 906.13   Right of first refusal.</HEAD>
<P>(a) In selling a public housing unit under a homeownership program, the PHA or PRE must initially offer the unit to the resident occupying the unit, if any, notwithstanding the requirements of §§ 906.15(a) and 906.15(c). 
</P>
<P>(b) This program does not require the PHA, when selling a unit that is a non-public housing unit, to offer the unit for sale first to the current resident of the unit. 


</P>
</DIV8>


<DIV8 N="§ 906.15" NODE="24:4.1.3.1.6.3.5.3" TYPE="SECTION">
<HEAD>§ 906.15   Requirements applicable to a family purchasing a property under a homeownership program.</HEAD>
<P>(a) <I>Low-income requirement.</I> Except in the case of a PHA's offer of first refusal to a resident occupying the unit under § 906.13, a family purchasing a property under a PHA homeownership program must be a low-income family, as defined in section 3 of the 1937 Act (42 U.S.C. 1437a), at the time the contract to purchase the property is executed. 
</P>
<P>(b) <I>Principal residence requirement.</I> The dwelling unit sold to an eligible family must be used as the principal residence of the family. 
</P>
<P>(c) <I>Financial capacity requirement.</I> Eligibility must be limited to families who are capable of assuming the financial obligations of homeownership, under minimum income standards for affordability, taking into account the unavailability of public housing operating subsidies and modernization funds after conveyance of the property by the PHA. A homeownership program may, however, take account of any available subsidy from other sources. Under this affordability standard, an applicant must meet the following requirements: 
</P>
<P>(1) <I>Cost/income ratio.</I> On an average monthly estimate, the amount of the applicant's payments for mortgage principal and interest, plus insurance, real estate taxes, utilities, maintenance, and other regularly recurring homeownership costs (such as condominium, cooperative, or other homeownership association fees) will not exceed the sum of: 
</P>
<P>(i) 35 percent of the applicant's adjusted income as defined in 24 CFR part 913; and 
</P>
<P>(ii) Any subsidy that will be available for such payments; 
</P>
<P>(2) <I>Down payment requirement.</I> Each family purchasing housing under a homeownership program must provide a down payment in connection with any loan for acquisition of the housing, in an amount determined by the PHA or PRE, in accordance with an approved homeownership program. Except as provided in paragraph (c)(3) of this section, the PHA or PRE must permit the family to use grant amounts, gifts from relatives, contributions from private sources, and other similar amounts in making the down payment; 
</P>
<P>(3) The family must use its own resources other than grants, gifts, contributions, or similar amounts, to contribute an amount of the down payment that is not less than one percent of the purchase price of the housing. The PHA or PRE must maintain records that are verifiable by HUD through audits regarding the source of this one percent contribution. 
</P>
<P>(d) <I>Other requirements established by the PHA.</I> A PHA may establish requirements or limitations for families to purchase housing under a homeownership program, including but not limited to requirements or limitations regarding: 
</P>
<P>(1) Employment or participation in employment counseling or training activities; 
</P>
<P>(2) Criminal activity; 
</P>
<P>(3) Participation in homeownership counseling programs; and 
</P>
<P>(4) Evidence of regular income. 


</P>
</DIV8>


<DIV8 N="§ 906.17" NODE="24:4.1.3.1.6.3.5.4" TYPE="SECTION">
<HEAD>§ 906.17   PHA handling of homeownership applications.</HEAD>
<P>Families who are interested in purchasing a unit must submit applications to the PHA or PRE for that specific purpose, and those applications must be handled separately from applications for other PHA programs. Application for homeownership must not affect an applicant's place on any other PHA waiting list for rental units. 


</P>
</DIV8>


<DIV8 N="§ 906.19" NODE="24:4.1.3.1.6.3.5.5" TYPE="SECTION">
<HEAD>§ 906.19   Requirements applicable to a purchase and resale entity (PRE).</HEAD>
<P>(a) <I>In general.</I> In the case of a purchase of units for resale to low-income families by a PRE, the PHA must have an approved homeownership program that describes the use of a PRE to sell the units to low-income families within 5 years from the date of the PRE's acquisition of the units. 
</P>
<P>(b) <I>PRE requirements.</I> The PHA must demonstrate in its homeownership program that the PRE has the necessary legal capacity and administrative capability to carry out its responsibilities under the program. The PHA's homeownership program also must contain a written agreement (not required to be submitted as part of the homeownership plan) that specifies the respective rights and obligations of the PHA and the PRE, and which includes: 
</P>
<P>(1) Assurances that the PRE will comply with all provisions of the HUD-approved homeownership program; 
</P>
<P>(2) Assurances that the PRE will be subject to a title restriction providing that the property must be resold or otherwise transferred only by conveyance of individual dwellings to eligible families, in accordance with the HUD-approved homeownership program, or by reconveyance to the PHA, and that the property will not be encumbered by the PRE without the written consent of the PHA; 
</P>
<P>(3) Protection against fraud or misuse of funds or other property on the part of the PRE, its employees, and agents; 
</P>
<P>(4) Assurances that the resale proceeds will be used only for the purposes specified by the HUD-approved homeownership program; 
</P>
<P>(5) Limitation of the PRE's administrative and overhead costs, and of any compensation or profit that may be realized by the PRE, to amounts that are reasonable in relation to its responsibilities and risks; 
</P>
<P>(6) Accountability to the PHA and residents for the recordkeeping, reporting, and audit requirements of § 906.33; 
</P>
<P>(7) Assurances that the PRE will administer its responsibilities under the plan on a nondiscriminatory basis, in accordance with the Fair Housing Act, its implementing regulations, and other applicable civil rights statutes and authorities, including the authorities cited in § 5.105(a) of this title; and 
</P>
<P>(8) Adequate legal remedies for the PHA and residents, in the event of the PRE's failure to perform in accordance with the agreement. 
</P>
<P>(c) <I>Sale to low-income families.</I> The requirement for a PRE to sell units under a homeownership program only to low-income families must be recorded as a deed restriction at the time of purchase by the PRE. 
</P>
<P>(d) <I>Resale within five years.</I> A PRE must agree that, with respect to any units it acquires under a homeownership program under this part, it will transfer ownership to the PHA if the PRE fails to resell the unit to a low-income family within 5 years of the PRE's acquisition of the unit. 


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:4.1.3.1.6.4" TYPE="SUBPART">
<HEAD>Subpart D—Program Administration</HEAD>


<DIV8 N="§ 906.23" NODE="24:4.1.3.1.6.4.5.1" TYPE="SECTION">
<HEAD>§ 906.23   Protections available to non-purchasing public housing residents.</HEAD>
<P>(a) If a public housing resident does not exercise the right of first refusal under § 906.13, and the PHA determines to move the tenant for the purpose of transferring possession of the unit, the PHA must provide the notice stated in this section 90 days before the date the resident is displaced, and may not displace the resident, except as stated in paragraph (a)(1) of this section, for the full 90-day period. The PHA: 
</P>
<P>(1) Must notify the resident residing in the unit 90 days prior to the displacement date, except in cases of imminent threat to health or safety, that: 
</P>
<P>(i) The public housing unit will be sold; 
</P>
<P>(ii) The transfer of possession of the unit will not occur until the resident is relocated; and 
</P>
<P>(iii) Each resident displaced by such action will be offered comparable housing (as defined in paragraph (b) of this section); 
</P>
<P>(2) Must provide for the payment of the actual costs and reasonable relocation expenses of the resident to be displaced; 
</P>
<P>(3) Must ensure that the resident is offered comparable housing under paragraph (a)(1)(iii) of this section; 
</P>
<P>(4) Must provide counseling for displaced residents regarding their rights to comparable housing, including their rights under the Fair Housing Act to choice of a unit on a nondiscriminatory basis, without regard to race, color, religion, national origin, disability, age, sex, or familial status; and 
</P>
<P>(5) Must not transfer possession of the unit until the resident is relocated. 
</P>
<P>(b) For purposes of this section, the term “comparable housing” means housing: 
</P>
<P>(1) That meets housing quality standards; 
</P>
<P>(2) That is located in an area that is generally not less desirable than the displaced resident's original development; and 
</P>
<P>(3) Which may include: 
</P>
<P>(i) Tenant-based assistance (tenant-based assistance must only be provided upon the relocation of the resident to the comparable housing); 
</P>
<P>(ii) Project-based assistance; or 
</P>
<P>(iii) Occupancy in a unit owned, operated, or assisted by the PHA at a rental rate paid by the resident that is comparable to the rental rate applicable to the unit from which the resident is vacating. 


</P>
</DIV8>


<DIV8 N="§ 906.24" NODE="24:4.1.3.1.6.4.5.2" TYPE="SECTION">
<HEAD>§ 906.24   Protections available to non-purchasing residents of housing other than public housing.</HEAD>
<P>Residents of non-public housing that would be displaced by a homeownership program are eligible for assistance under the Uniform Relocation Act and part 42 of this title. For purposes of this part, a family that was over-income (<I>i.e.,</I> an individual or family that is not a low-income family) at the time of initial occupancy of public housing and was admitted in accordance with section 3(a)(5) of the 1937 Act, is treated as a non-purchasing resident of non-public housing. 


</P>
</DIV8>


<DIV8 N="§ 906.25" NODE="24:4.1.3.1.6.4.5.3" TYPE="SECTION">
<HEAD>§ 906.25   Ownership interests that may be conveyed to a purchaser.</HEAD>
<P>A homeownership program may provide for sale to the purchasing family of any ownership interest that the PHA considers appropriate under the homeownership program, including but not limited to: 
</P>
<P>(a) Ownership in fee simple; 
</P>
<P>(b) A condominium interest; 
</P>
<P>(c) An interest in a limited dividend cooperative; 
</P>
<P>(d) A shared appreciation interest with a PHA providing financing; or 
</P>
<P>(e) A leasehold under a bona fide lease-purchase arrangement. 


</P>
</DIV8>


<DIV8 N="§ 906.27" NODE="24:4.1.3.1.6.4.5.4" TYPE="SECTION">
<HEAD>§ 906.27   Limitations applicable to net proceeds on the sale of a property acquired through a homeownership program.</HEAD>
<P>(a) Where the family has owned a unit under this part, the following rules apply: 
</P>
<P>(1) In this section, the term <I>gain from appreciation</I> means the financial gain on resale attributable solely to the home's appreciation in value over time, and not attributable to government-provided assistance or any below-market financing provided under § 906.29. 
</P>
<P>(2) In this section, the term <I>net proceeds</I> means the financial gain on resale received by the seller after satisfying all amounts owing under mortgages, paying closing costs, and receiving an amount equal to the down payment (made from the seller's own funds) and principal payments on the mortgage(s). 
</P>
<P>(3) A PHA must have a policy that provides for the recapture of net proceeds in an amount that the PHA considers appropriate under the guidelines in this section. 
</P>
<P>(4) A PHA must have a policy that provides the recapture of the following amounts, if a family resells a homeownership unit it purchased under this part during the 5-year period beginning upon purchase of the dwelling unit: 
</P>
<P>(i) All or a portion of the gain from appreciation; and 
</P>
<P>(ii) All or a portion of the assistance provided (which includes below-market financing, but which does not include Section 8(y) assistance used for mortgage payments under this part) under the homeownership program to the family to the extent there are net proceeds, considering the factors the PHA establishes under paragraphs (b)(1)-(7) of this section. 
</P>
<P>(b) The PHA's program under this part may provide for consideration of any factors the PHA considers appropriate in determining how much of the gain from appreciation and assistance to recapture, including but not limited to the following: 
</P>
<P>(1) The aggregate amount of assistance provided under the homeownership program to the family; 
</P>
<P>(2) The contribution of equity by the purchasing family; 
</P>
<P>(3) The period of time elapsed between purchase by the homebuyer under the homeownership program and resale by the homebuyer; 
</P>
<P>(4) The reason for resale; 
</P>
<P>(5) Any improvements made by the family purchasing under the homeownership program; 
</P>
<P>(6) Any appreciation in the value of the property; and 
</P>
<P>(7) Any other factors that the PHA considers appropriate in making the recapture determination under this section. 
</P>
<P>(c) After the expiration of the 5-year period in paragraph (a)(4) of this section, the PHA must recapture all or a portion of the assistance provided under the homeownership program to the family to the extent there are net proceeds. 
</P>
<P>(d) The PHA must enforce its recapture policy through an appropriate form of title restriction. 


</P>
</DIV8>


<DIV8 N="§ 906.29" NODE="24:4.1.3.1.6.4.5.5" TYPE="SECTION">
<HEAD>§ 906.29   Below-Market sales and financing.</HEAD>
<P>A homeownership plan may provide for below-market purchase prices or below-market financing to enable below-market purchases, or a combination of the two. Discounted purchase prices may be determined on a unit-by-unit basis, based on the particular purchaser's ability to pay, or may be determined by any other fair and reasonable method (<I>e.g.,</I> uniform prices for a group of comparable dwellings, within a range of affordability by potential purchases). Below-market financing may include any lawful type of public or private financing, including but not limited to purchase-money mortgages, non-cash second mortgages, promissory notes, guarantees of mortgage loans from other lenders, shared equity, or lease-purchase arrangements. 


</P>
</DIV8>


<DIV8 N="§ 906.31" NODE="24:4.1.3.1.6.4.5.6" TYPE="SECTION">
<HEAD>§ 906.31   Requirements applicable to net proceeds resulting from sale.</HEAD>
<P>(a) <I>PHA use of net proceeds.</I> The PHA must use any net proceeds of any sales under a homeownership program remaining after payment of all costs of the sale for purposes relating to low-income housing and in accordance with its PHA plan. 
</P>
<P>(b) <I>PRE use of resale net proceeds.</I> The PHA may require the PRE to return the net proceeds from the resale of the units to the PHA. If the PHA permits the PRE to retain the net proceeds, the PRE must use these proceeds for low-income housing purposes. 
</P>
<P>(c) <I>Transfer of unsold unit to PHA.</I> In a situation where the PRE fails to sell a unit to an eligible family within 5 years, and the provision of § 906.19(d) requiring that the unit be transferred to the PHA applies: 
</P>
<P>(1) If the unit has not been operated by the PRE as a public housing unit at any time during the 5-year period, the PHA may resell the unit in accordance with this part or any successor homeownership program of the department, or apply to have the unit included in its public housing program, if it meets all statutory and regulatory requirements of the public housing program; or 
</P>
<P>(2) If the unit has been operated by the PRE as a public housing unit within such a 5-year period, the PHA must return the unit to operation in its regular public housing program. 
</P>
<P>(d) <I>Transfer of unsold unit operated as public housing to PHA.</I> Where the PRE operates the unit as public housing during the 5-year interim period under § 960.40, and fails to sell the unit to an eligible family within such 5-year period and the provision of § 906.19(d) applies, the PHA must return the unit to operation in its regular public housing program. 


</P>
</DIV8>


<DIV8 N="§ 906.33" NODE="24:4.1.3.1.6.4.5.7" TYPE="SECTION">
<HEAD>§ 906.33   Reporting and recordkeeping requirements.</HEAD>
<P>The PHA is responsible for the maintenance of records (including sale and financial records) for all activities incident to implementation of the HUD-approved homeownership program. Where a PRE is responsible for the sale of units, the PHA must ensure that the PRE's responsibilities include proper recordkeeping and accountability to the PHA, sufficient to enable the PHA to monitor compliance with the approved homeownership program and to meet its audit responsibilities. All books and records must be subject to inspection and audit by HUD and the General Accounting Office (GAO). The PHA must report annually to HUD on the progress of each program approved under this part. The PHA must report as part of the Annual Plan process under § 903.7(k) of this title, except for those PHAs under §§ 903.11(c)(1) and (2) of this title who are not required to include information on their public housing homeownership programs in their Annual Plan. Those PHAs must report by providing a description of the homeownership program to HUD, including the cumulative number of units sold. 


</P>
</DIV8>


<DIV8 N="§ 906.35" NODE="24:4.1.3.1.6.4.5.8" TYPE="SECTION">
<HEAD>§ 906.35   Inapplicability of section 18 of the United States Housing Act of 1937.</HEAD>
<P>The provisions of section 18 of the 1937 Act (42 U.S.C. 1437p) do not apply to disposition of public housing dwelling units under a homeownership program approved by HUD under this part, or to the sale of a unit to a PRE to operate as public housing and sell to a low-income family within 5 years, under the requirements of § 906.19. 


</P>
</DIV8>


<DIV8 N="§ 906.37" NODE="24:4.1.3.1.6.4.5.9" TYPE="SECTION">
<HEAD>§ 906.37   Davis-Bacon and HUD wage rate requirements.</HEAD>
<P>(a) <I>Wage rates applicable to laborers and mechanics.</I> Wage rate requirements in accordance with § 968.110(e) of this title apply to the following activities: 
</P>
<P>(1) Rehabilitation, repairs, and accessibility modifications performed under an agreement or contract with the PHA or by the PHA, pursuant to § 906.7. Davis-Bacon or HUD-determined wage rates apply as follows: 
</P>
<P>(i) Existing public housing units that will be sold under a homeownership program: Davis-Bacon rates apply, except that HUD rates apply to nonroutine maintenance as defined in § 968.105 of this title; 
</P>
<P>(ii) Non-public housing units acquired by a PHA using Capital Funds that will be sold under a homeownership program: Davis-Bacon rates apply; and 
</P>
<P>(iii) Non-public housing units owned or acquired by a PHA with the intent to use 1937 Act funds to finance the sale of the units, or otherwise provide assistance to purchasers of the units: Davis-Bacon rates apply; 
</P>
<P>(2) New construction of non-public housing units pursuant to a contract for acquisition by a PHA for the purpose of sale under a homeownership program: Davis-Bacon rates apply; 
</P>
<P>(3) Operation, rehabilitation, and repair of units operated as public housing units by a PRE: HUD rates apply to nonroutine maintenance, as defined in § 968.105 of this title, and routine maintenance. Davis-Bacon rates apply to rehabilitation and repair that does not qualify as nonroutine maintenance. 
</P>
<P>(b) <I>Technical wage rates.</I> All architects, technical engineers, draftsmen, and technicians employed in the development of units under a homeownership program shall be paid not less than the HUD-determined wage rates in accordance with § 968.100(f) of this title. 


</P>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:4.1.3.1.6.5" TYPE="SUBPART">
<HEAD>Subpart E—Program Submission and Approval</HEAD>


<DIV8 N="§ 906.38" NODE="24:4.1.3.1.6.5.5.1" TYPE="SECTION">
<HEAD>§ 906.38   Requirement of HUD approval to implement a homeownership program under this part.</HEAD>
<P>A PHA must obtain HUD approval before implementing a homeownership program under this part. A homeownership program under this part must be carried out in accordance with the requirements of this part and the PHA Plan submitted under part 903 of this title. 


</P>
</DIV8>


<DIV8 N="§ 906.39" NODE="24:4.1.3.1.6.5.5.2" TYPE="SECTION">
<HEAD>§ 906.39   Contents of a homeownership program.</HEAD>
<P>A homeownership program must include the following matters, as applicable to the particular factual situation: 
</P>
<P>(a) <I>Method of Sale:</I> The PHA should indicate how units will be sold, including a description of the exact method of sale, such as, for example, fee simple conveyance, lease-purchase, or sale of a cooperative share. PHAs may sell units directly to a tenant or eligible family directly or via a <I>bona fide</I> lease-purchase arrangement. The PHA must indicate whether it, or a PRE will sell units to families directly or via such lease-purchase method. If the PHA or PRE will use a lease-purchase method the proposal should indicate the terms of the lease-purchase arrangement. The terms of the lease-purchase arrangement shall include, but are not limited to the periodic documentation to be provided to the family regarding the amount they have accrued toward the down payment, and the length of the lease period (with regard to PREs the sales must be completed within the statutory 5-year period.); 
</P>
<P>(b) <I>Property description.</I> (1) If the program involves only financing assistance to the family purchasing the unit, the PHA need not specify property addresses, but it must describe the area(s) in which the assistance is to be used; 
</P>
<P>(2) If the PHA is selling existing public housing, it must describe the property, including identification of the property by project number, or street address if there is no project number, and the specific dwellings to be sold, with bedroom distribution by size and type broken down by development; 
</P>
<P>(3) If the PHA is acquiring units with 1937 Act funds to sell under the program, it must comply with the provisions of § 906.40 concerning this element of the program; 
</P>
<P>(c) <I>Repair or rehabilitation.</I> If applicable, a plan for any repair or rehabilitation needed to meet the requirements of § 906.7, based on the assessment of the physical condition of the property that is included in the supporting documentation. The restriction in 906.5(c) of this part applies to such repair or rehabilitation; 
</P>
<P>(d) <I>Purchaser eligibility and selection.</I> The standards and procedures to be used for homeownership applications and the eligibility and selection of purchasers, consistent with the requirements of § 906.15. If the homeownership program allows application for purchase of units by families who are not presently public housing or Section 8 residents and not already on the PHA's waiting lists for those programs, the program must include an affirmative fair housing marketing strategy for such families, including specific steps to inform them of their eligibility to apply, and to solicit applications from those in the housing market who are least likely to apply for the program without special outreach, including persons with disabilities; 
</P>
<P>(e) <I>Sale and financing.</I> Terms and conditions of sale and financing, including any below-market financing under § 906.29; 
</P>
<P>(f) <I>Consultation with residents and purchasers.</I> A description of resident input obtained during the resident consultation process required by the PHA Plan under part 903 of this title. If the PHA is one whose Plan does not require information regarding homeownership under § 903.11(b)(1) of this title, the PHA must consult with the Resident Advisory Board or Boards regarding the homeownership plan, and provide the information required in this paragraph; 
</P>
<P>(g) <I>Counseling.</I> Counseling, training, and technical assistance to be provided to purchasers; 
</P>
<P>(h) <I>Sale via PRE.</I> If the program contemplates sale to residents by an entity other than the PHA, a description of that entity's responsibilities and information demonstrating that the requirements of § 906.19 have been met or will be met in a timely fashion; 
</P>
<P>(i) <I>Non-purchasing residents.</I> If applicable, a plan for non-purchasing residents, in accordance with § 906.23; 
</P>
<P>(j) <I>Sale proceeds.</I> An estimate of the sale proceeds and an explanation of how they will be used, in accordance with § 906.31; 
</P>
<P>(k) <I>Records, accounts, and reports.</I> A description of the recordkeeping, accounting, and reporting procedures to be used, including those required by § 906.33; 
</P>
<P>(l) <I>Budget.</I> A budget estimate, showing any rehabilitation or repair cost, any financing assistance, and the costs of implementing the program, and the sources of the funds that will be used; 
</P>
<P>(m) <I>Timetable.</I> An estimated timetable for the major steps required to carry out the program; 
</P>
<P>(n) <I>Deed restrictions.</I> A deed restriction or covenant running with the land that will assure to HUD's satisfaction that the requirements of §§ 906.27 and 906.15(b) are met. 


</P>
</DIV8>


<DIV8 N="§ 906.40" NODE="24:4.1.3.1.6.5.5.3" TYPE="SECTION">
<HEAD>§ 906.40   Supporting documentation.</HEAD>
<P>The following supporting documentation must be submitted to HUD with the proposed homeownership program, as appropriate for the particular program: 
</P>
<P>(a) <I>Supporting documentation—PREs.</I> In approving homeownership programs in which the PHA contemplates selling public housing units to a PRE for operation as public housing during the 5 year interim period the department will require evidentiary materials including but not limited to: 
</P>
<P>(1) Organizational documents of the PRE; 
</P>
<P>(2) Regulatory and operating agreement between the PHA and PRE regarding the provision of operating subsidy and the operation of the public housing units in accordance with all applicable public housing requirements; 
</P>
<P>(3) Management agreement and plan; 
</P>
<P>(4) Financing documents, if any; 
</P>
<P>(5) A description of the use of operating subsidy during the PRE's period of ownership, in the form of an operating pro forma; 
</P>
<P>(6) A mixed-finance ACC amendment governing these units; 
</P>
<P>(7) A deed restriction or covenant running with the land that will assure to HUD's satisfaction that the PRE will operate the units in accordance with public housing laws and regulations, including § 906.19. 
</P>
<P>(8) A bond for repairs or proof of insurance to cover any damage to the property during the period of PRE ownership and operation; 
</P>
<P>(9) Such other materials as may be required by HUD. 
</P>
<P>(b) <I>Physical assessment.</I> An assessment of the physical condition of the properties, based on the standards specified in § 906.7; 
</P>
<P>(c) <I>Feasibility.</I> A statement demonstrating the practical feasibility of the program, based on analysis of data on such elements as purchase prices, costs of repair or rehabilitation, accessibility costs, if applicable, homeownership costs, family incomes, availability of financing, and the extent to which there are eligible residents who are expected to be interested in purchase (<I>See</I> § 906.45(a)); 
</P>
<P>(d) <I>PHA performance in homeownership.</I> A statement of the commitment and capability of the PHA (and any other entity with substantial responsibility for implementing the homeownership program) to successfully carry out the homeownership program. The statement must describe the PHA's (and other entity's) past experience in carrying out homeownership programs for low-income families, and (if applicable) its reasons for considering such programs to have been successful. A PHA that has not previously implemented a homeownership program for low-income families instead must submit a statement describing its experience in carrying out public housing modernization and development projects under part 905 of this title, respectively; 
</P>
<P>(e) <I>Nondiscrimination certification.</I> The PHA's or PRE's certification that it will administer the plan on a nondiscriminatory basis, in accordance with the Fair Housing Act, Title VI of the Civil Rights Act of 1964, Executive Order 11063, other authorities cited in § 5.105(a) of this title, and the implementing regulations, and will assure compliance with those requirements by any other entity that may assume substantial responsibilities for implementing the program; 
</P>
<P>(f) <I>Legal opinion.</I> An opinion by legal counsel to the PHA, stating that counsel has reviewed the program and finds it consistent with all applicable requirements of federal, state, and local law, including regulations as well as statutes. At a minimum, the attorney must certify that the documents to be used will ensure sales only to eligible families under § 906.15, compliance with the 5-year PRE sale guarantee in § 906.19(d), and compliance with the restriction of use of resale proceeds of § 906.27; 
</P>
<P>(g) <I>Board resolution.</I> A resolution by the PHA's Board of Commissioners, evidencing its approval of the program; 
</P>
<P>(h) <I>Section 8(y).</I> In any case where the PHA plans to provide families with assistance under the Section 8(y) homeownership option in connection with homeownership under this part, a certification that the PHA will comply with the requirements of the Section 8(y) statute and implementing regulations; 
</P>
<P>(i) <I>Other information.</I> Any other information that may reasonably be required for HUD review of the program. Except for the PHA-HUD implementing agreement under § 906.49 and the deed restriction required by § 906.39(n), HUD approval is not required for documents to be prepared and used by the PHA in implementing the program (such as contracts, applications, deeds, mortgages, promissory notes, and cooperative or condominium documents), if their essential terms and conditions are described in the program. Consequently, those documents need not be submitted as part of the program or the supporting documentation. 


</P>
</DIV8>


<DIV8 N="§ 906.41" NODE="24:4.1.3.1.6.5.5.4" TYPE="SECTION">
<HEAD>§ 906.41   Additional supporting documentation for acquisition of non-public housing for homeownership.</HEAD>
<P>(a) <I>Proposal contents.</I> The PHA must submit an acquisition proposal to the HUD field office for review and approval before its homeownership plan containing acquisition of non-public housing can be approved. This proposal must contain the following: 
</P>
<P>(1) <I>Property description.</I> A description of the properties, including the number of housing units, unit types, and number of bedrooms, and any non-dwelling facilities on the properties to be acquired; 
</P>
<P>(2) <I>Certification.</I> If the housing units were constructed under a contract or an agreement that they be sold to the PHA, a certification that the developer/owner complied with all Davis-Bacon wage rate requirements under § 906.37, including all required contractual provisions and compliance measures, and that the PHA received all applicable HUD environmental approvals and all applicable HUD releases of funds before executing the contract or agreement, in accordance with § 906.47(d). 
</P>
<P>(3) <I>Site information.</I> A description of the proposed general location of the properties to be acquired, or where specific properties have been identified, street addresses of the properties; 
</P>
<P>(4) <I>Property costs.</I> The detailed budget of costs for acquiring the properties, including relocation and closing costs, and an identification of the sources of funding; 
</P>
<P>(5) <I>Appraisal.</I> An appraisal of the proposed properties by an independent, state-certified appraiser (when the sites have been identified); 
</P>
<P>(6) <I>Property acquisition schedule.</I> A copy of the PHA acquisition schedule; 
</P>
<P>(7) <I>Environmental information.</I> (i) The environmental information required by § 906.47(f), where HUD will perform the environmental review under 24 CFR part 50, or a statement identifying the responsible entity that has performed or will perform the review under 24 CFR part 58. This paragraph (a)(7)(i) does not apply to a property where a contract or agreement for sale to the PHA has already been executed and HUD has already given prior approval of the property following environmental review under 24 CFR part 50.
</P>
<P>(ii) Where the PHA's homeownership program is submitted for approval to HUD and contemplates acquisition of properties not identified at the time of submission or approval, the procedures at § 906.47(e) apply.
</P>
<P>(8) <I>Market analysis.</I> An analysis of the potential market of eligible purchasers for the homeownership units.
</P>
<P>(9) <I>Additional HUD-requested information.</I> Any additional information that may be needed for HUD to determine whether it can approve the proposal.
</P>
<P>(b) <I>Cost limit.</I> The acquisition cost of each property is limited by the housing cost cap limit, as determined by HUD.


</P>
</DIV8>


<DIV8 N="§ 906.43" NODE="24:4.1.3.1.6.5.5.5" TYPE="SECTION">
<HEAD>§ 906.43   Where a PHA is to submit a homeownership program for HUD approval.</HEAD>
<P>A PHA must submit its proposed homeownership program together with supporting documentation, in a format prescribed by HUD, to the Special Applications Center with a copy to the appropriate HUD field office.


</P>
</DIV8>


<DIV8 N="§ 906.45" NODE="24:4.1.3.1.6.5.5.6" TYPE="SECTION">
<HEAD>§ 906.45   HUD criteria for reviewing a proposed homeownership program.</HEAD>
<P>HUD will use the following criteria in reviewing a homeownership program:
</P>
<P>(a) <I>Feasibility.</I> The program must be practically feasible, with sound potential for long-term success. Financial viability, including the capability of purchasers to meet the financial obligations of homeownership, is a critical requirement.
</P>
<P>(b) <I>Legality.</I> Counsel for the PHA shall certify that the homeownership program is consistent with applicable law, including the requirements of this part and any other applicable federal, state, and local statutes and regulations, including existing contracts, and HUD shall accept such certification unless HUD has information indicating that the certification is incorrect.
</P>
<P>(c) <I>Documentation.</I> The program must be clear and complete enough to serve as a working document for implementation, as well as a basis for HUD review.
</P>
<P>(d) <I>PHA performance in homeownership.</I> The PHA (and any other entity with substantial responsibility for implementing the homeownership program) must have demonstrated the commitment and capability to successfully implement the homeownership program based upon the criteria stated in § 906.41(d).


</P>
</DIV8>


<DIV8 N="§ 906.47" NODE="24:4.1.3.1.6.5.5.7" TYPE="SECTION">
<HEAD>§ 906.47   Environmental requirements.</HEAD>
<P>(a) <I>General.</I> HUD environmental regulations at 24 CFR part 58 apply to this part, unless, under § 58.11 of this title, HUD itself performs the environmental review under 24 CFR part 50. The PHA conducting a homeownership program under this part must comply with this section and part 50 or 58, as applicable.
</P>
<P>(b) <I>Assistance to facilitate the purchase of homes.</I> Where the PHA's homeownership program involves assistance provided under the 1937 Act solely to assist homebuyers to purchase existing dwelling units or dwelling units under construction, an environmental review is not required under part 58 or part 50 of this title. However, the requirements of § 58.6 or § 50.19(b)(15) of this title are still applicable.
</P>
<P>(c) <I>Public housing units in the PHA's inventory.</I> Before the PHA rehabilitates or repairs units in its inventory for use for homeownership, or expends or commits HUD or local funds for such activities, the responsible entity must comply with part 58 and the PHA, where required, must submit and receive HUD approval of its request for release of funds, or HUD must have completed any part 50 environmental review and notified the PHA of its approval of the property. HUD may not release funds under this part before the appropriate approval is obtained.
</P>
<P>(d) <I>Units to be acquired with federal funds and used for public housing homeownership.</I> A PHA may not enter into any contract for acquisition of real property to be used in a homeownership program unless the required environmental reviews have been performed and approvals have been obtained.
</P>
<P>(e) <I>Specific units unidentified.</I> Where the PHA's homeownership program contemplates acquisition of properties not identified at the time of submission, the PHA must certify that it will comply with this section, including paragraph (f) of this section, prior to such acquisition or construction. HUD may conditionally approve such a homeownership program; however, HUD will not give final approval of any site or unit until the required environmental review has been completed.
</P>
<P>(f) <I>Information.</I> The PHA shall supply all relevant information necessary for the responsible entity, or HUD, if applicable, to perform the environmental review for each property included in the homeownership program, and, if necessary, shall carry out mitigating measures or select alternate eligible properties. Where HUD performs the environmental review, the PHA shall comply with 24 CFR 50.3(h).
</P>
<P>(g) <I>Non-exclusivity.</I> Nothing in this section relieves the participating PHA, and its partners and contractors, from complying with all requirements of 24 CFR part 50 or part 58, as applicable.


</P>
</DIV8>


<DIV8 N="§ 906.49" NODE="24:4.1.3.1.6.5.5.8" TYPE="SECTION">
<HEAD>§ 906.49   HUD approval; implementing agreement.</HEAD>
<P>HUD may approve a homeownership program as submitted, conditionally approve it under § 906.47(e), or return it to the PHA for revision and resubmission. Where such conditional approval is given, the PHA, partners, and contractors remain subject to the restrictions in § 906.47. Upon HUD notification to the PHA that the homeownership program is approvable (in final form that satisfies all applicable requirements of this part), the PHA and HUD will execute a written implementing agreement, in a form prescribed by HUD, to evidence HUD approval and authorization for implementation. The program itself, as approved by HUD, must be incorporated in the implementing agreement. Any of the items of supporting documentation may also be incorporated, if agreeable to the PHA and HUD. The PHA is obligated to carry out the approved homeownership program and other provisions of the implementing agreement without modification, except with written approval by HUD.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="907" NODE="24:4.1.3.1.7" TYPE="PART">
<HEAD>PART 907—SUBSTANTIAL DEFAULT BY A PUBLIC HOUSING AGENCY
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437d(j), 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>76 FR 10162, Feb. 23, 2011, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 907.1" NODE="24:4.1.3.1.7.0.5.1" TYPE="SECTION">
<HEAD>§ 907.1   Purpose and scope.</HEAD>
<P>This part provides the criteria and procedures for determining and declaring substantial default by a public housing agency (PHA) and the actions available to HUD to address and remedy substantial default by a PHA. Nothing in this part shall limit the discretion of HUD to take any action available under the provisions of section 6(j)(3)(A) of the 1937 Act (42 U.S.C. 1437d(j)(3)(A)), any applicable annual contributions contract (ACC), or any other law or regulation that may authorize HUD to take actions against a PHA that is in substantial default.


</P>
</DIV8>


<DIV8 N="§ 907.3" NODE="24:4.1.3.1.7.0.5.2" TYPE="SECTION">
<HEAD>§ 907.3   Bases for substantial default.</HEAD>
<P>(a) <I>Violations of laws and agreements.</I> A PHA may be declared in substantial default when the PHA:
</P>
<P>(1) Violates a federal statute;
</P>
<P>(2) Violates a federal regulation; or
</P>
<P>(3) Violates one or more terms of an ACC, or other covenants or conditions to which the PHA is subject.
</P>
<P>(b) <I>Failure to act.</I> In addition to the violations listed in paragraph (a) of this section, in the case where a PHA is designated as a troubled performer under PHAS, the PHA shall be in substantial default if the PHA:
</P>
<P>(1) Fails to execute an MOA;
</P>
<P>(2) Fails to comply with the terms of an MOA; or
</P>
<P>(3) Fails to show substantial improvement, as provided in § 902.75(d) of this chapter.


</P>
</DIV8>


<DIV8 N="§ 907.5" NODE="24:4.1.3.1.7.0.5.3" TYPE="SECTION">
<HEAD>§ 907.5   Procedures for declaring substantial default.</HEAD>
<P>(a) <I>Notification of finding of substantial default.</I> If the PHA is found in substantial default, the PHA shall be notified of such determination in writing. Except in situations as described in paragraph (d) of this section, the PHA shall have an opportunity to respond to the written determination, and an opportunity to cure the default, if a cure of the default is determined appropriate by HUD. The determination of substantial default shall be transmitted to the Executive Director of the PHA, the Chairperson of the Board of the PHA, and the appointing authority(ies) of the PHA's Board of Commissioners, and shall:
</P>
<P>(1) Identify the specific statute, regulation, covenants, conditions, or agreements of which the PHA is determined to be in violation;
</P>
<P>(2) Identify the specific events, occurrences, or conditions that constitute the violation;
</P>
<P>(3) Specify the time period, which shall be a period of 10 but not more than 30 days, during which the PHA shall have an opportunity to demonstrate that the determination or finding is not substantively accurate, if required;
</P>
<P>(4) If determined by HUD to be appropriate, provide for an opportunity to cure and specify the time period for the cure; and
</P>
<P>(5) Notify the PHA that, absent a satisfactory response in accordance with paragraph (b) of this section, action shall be taken as determined by HUD to be appropriate.
</P>
<P>(b) <I>Receipt of notification and response.</I> Upon receipt of the notification described in paragraph (a) of this section, the PHA may submit a response, in writing and within the specified time period, demonstrating:
</P>
<P>(1) The description of events, occurrences, or conditions described in the written determination of substantial default is in error, or establish that the events, occurrences, or conditions described in the written determination of substantial default do not constitute noncompliance with the statute, regulation, covenants, conditions, or agreements that are cited in the notification under paragraph (a) of this section; or
</P>
<P>(2) If any opportunity to cure is provided, that the violations have been cured or will be cured in the time period specified by HUD.
</P>
<P>(c) <I>Waiver of notification and the opportunity to respond.</I> A PHA may waive, in writing, receipt of written notification from HUD of a finding of substantial default and the opportunity to respond to such finding. HUD may then immediately proceed with the remedies as provided in § 907.7.
</P>
<P>(d) <I>Emergency situations.</I> A PHA shall not be afforded the opportunity to respond to a written determination or to cure a substantial default in any case where:
</P>
<P>(1) HUD determines that conditions exist that pose an imminent threat to the life, health, or safety of public housing residents or residents of the surrounding neighborhood; or
</P>
<P>(2) The events or conditions precipitating the default are determined to be the result of criminal or fraudulent activity.


</P>
</DIV8>


<DIV8 N="§ 907.7" NODE="24:4.1.3.1.7.0.5.4" TYPE="SECTION">
<HEAD>§ 907.7   Remedies for substantial default.</HEAD>
<P>(a) Except as provided in § 907.7(c), upon determining that events have occurred or conditions exist that constitute a substantial default, HUD may:
</P>
<P>(1) Take any action provided for in section 6(j)(3) of the Act (42 U.S.C. 1437d(j)(3));
</P>
<P>(2) Provide technical assistance for existing PHA management staff; or
</P>
<P>(3) Provide assistance deemed necessary, in the discretion of HUD, to remedy emergency conditions.
</P>
<P>(b) HUD may take any of the actions described in paragraph (a) of this section sequentially or simultaneously in any combination.
</P>
<P>(c) In the case of a substantial default by a troubled PHA pursuant to § 902.83(b):
</P>
<P>(1) For a PHA with 1,250 or more units, HUD shall petition for the appointment of a receiver pursuant to section 6(j)(3)(A)(ii) of the 1937 Act (42 U.S.C. 1437d(j)(3)(A)(ii)); or
</P>
<P>(2) For a PHA with fewer than 1,250 units, HUD shall either petition for the appointment of a receiver pursuant to section 6(j)(3)(A)(ii) of the Act (42 U.S.C. 1437d(j)(3)(A)(ii)), or take possession of the PHA (including all or part of any project or program of the PHA) pursuant to section 6(j)(3)(A)(iv) of the 1937 Act (42 U.S.C. 1437d(j)(3)(A)(iv)), and appoint, on a competitive or noncompetitive basis, an individual or entity as an administrative receiver to assume the responsibilities of HUD for the administration of all or part of the PHA (including all or part of any project or program of the PHA).
</P>
<P>(d) To the extent feasible, while a PHA is operating under any of the actions that may have been taken by HUD, all services to residents will continue uninterrupted.
</P>
<P>(e) HUD may limit remedies under this part to one or more of a PHA's specific operational areas (<I>e.g.,</I> maintenance, capital improvement, occupancy, or financial management), to a single program or group of programs, or to a single project or a group of projects. For example, HUD may select, or participate in the selection of, an AME to assume management responsibility for a specific project, a group of projects in a geographical area, or a specific operational area, while permitting the PHA to retain responsibility for all programs, operational areas, and projects not so designated.






</P>
</DIV8>

</DIV5>


<DIV5 N="908" NODE="24:4.1.3.1.8" TYPE="PART">
<HEAD>PART 908—ELECTRONIC TRANSMISSION OF REQUIRED FAMILY DATA FOR PUBLIC HOUSING, INDIAN HOUSING, AND THE SECTION 8 RENTAL VOUCHER, AND MODERATE REHABILITATION PROGRAMS






</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437f, 3535(d), 3543, 3544, and 3608a.
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>60 FR 11628, Mar. 2, 1995, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 908.101" NODE="24:4.1.3.1.8.0.5.1" TYPE="SECTION">
<HEAD>§ 908.101   Purpose.</HEAD>
<P>The purpose of this part is to require Public Housing Agencies (PHAs), including Moving-to-Work (MTW) PHAs, that operate Public Housing, Indian Housing, or Section 8 Housing Choice Voucher (HCV), Rental Voucher, and Moderate Rehabilitation programs to electronically submit certain data to HUD for those programs. These electronically submitted data are required for HUD forms: HUD-50058, including the Family Self-Sufficiency (FSS) Addendum. Applicable program entities must retain at a minimum, the last three years of the form HUD-50058, and supporting documentation, during the term of each assisted lease, and for a period of at least 3 years from the end of participation (EOP) date, to support billings to HUD and to permit an effective audit. Electronic retention of form HUD-50058 and HUD-50058-FSS and supporting documentation fulfills the record retention requirement under this section.
</P>
<CITA TYPE="N">[74 FR 68934, Dec. 29, 2009, as amended at 89 FR 38293, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 908.104" NODE="24:4.1.3.1.8.0.5.2" TYPE="SECTION">
<HEAD>§ 908.104   Requirements.</HEAD>
<P>(a) <I>Automated HAs.</I> Housing agencies that currently use automated software packages to transmit Forms HUD-50058 and HUD-50058-FSS information by tape or diskette to the Department's data processing contractor must convert to telephonic electronic transmission of that data in a HUD specified format by June 30, 1995.
</P>
<P>(b) <I>Nonautomated HAs.</I> Housing agencies that currently prepare and transmit the HUD-50058 and HUD-50058-FSS information to HUD paper must:
</P>
<P>(1) Complete a vendor search and obtain either:
</P>
<P>(i) The necessary hardware and software required to develop and maintain an in-house automated data processing system (ADP) used to generate electronic submission of the data for these forms via telephonic network; or
</P>
<P>(ii) A service contract for the operation of an automated system to generate electronic submission of the data for these forms via telephonic network;
</P>
<P>(2) Complete their data loading; and
</P>
<P>(3) Begin electronic transmission by March 2, 1996.
</P>
<P>(c) <I>Electronic transmission of data.</I> Electronic transmission of data consists of submission of all required data fields (correctly formatted) from the forms HUD-050058 and HUD-50058-FSS telephonically, in accordance with HUD instructions. Regardless of whether an HA obtains the ADP system itself or contracts with a service bureau to provide the system, the software must be periodically updated to incorporate changes or revisions in legislation, regulations, handbooks, notices, or HUD electronic transmission data format requirements.
</P>
<P>(d) <I>Service contract.</I> HAs that determine that the purchase of hardware and/or software is not cost effective may contract out the electronic data transmission function to organizations that provide such services, including, but not limited to the following organizations: local management associations and management agents with centralized facilities. HAs that contract out the electronic transmission function must retain the ability to monitor the day-to-day operations of the project at the HA site and be able to demonstrate the ability to the relevant HUD Field Office.
</P>
<P>(e) Notwithstanding the provisions of paragraphs (a) and (b) of this section, the Department may approve transmission of the data by tape or diskette if it determines that the cost of telephonic transmission would be excessive.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0083)


</APPRO>
</DIV8>


<DIV8 N="§ 908.108" NODE="24:4.1.3.1.8.0.5.3" TYPE="SECTION">
<HEAD>§ 908.108   Cost.</HEAD>
<P>(a) <I>General.</I> The costs of the electronic transmission of the correctly formatted data, including either the purchase and maintenance of computer hardware or software, or both, the cost of contracting for those services, or the cost of centralizing the electronic transmission function, shall be considered Section 8 Administrative expenses, or eligible public and Indian housing operating expenses that can be included in the public and Indian housing operating budget. At the HA's option, the cost of the computer software may include service contracts to provide maintenance or training, or both.
</P>
<P>(b) <I>Sources of funding.</I> For public and Indian housing, costs may be covered from operating subsidy for which the HA is already eligible, or the initial cost may be covered by funds received by the HA under HUD's Comprehensive Improvement Assistance Program (CIAP) or Comprehensive Grant Program (CGP). For Section 8 programs, the costs may be covered from ongoing administrative fees or the Section 8 operating reserve.


</P>
</DIV8>


<DIV8 N="§ 908.112" NODE="24:4.1.3.1.8.0.5.4" TYPE="SECTION">
<HEAD>§ 908.112   Extension of time.</HEAD>
<P>The HUD Field Office may grant an HA an extension of time, of a reasonable period, for implementation of the requirements of § 908.104, if it determines that such electronic submission is infeasible because of one of the following:
</P>
<P>(a) Lack of staff resources;
</P>
<P>(b) Insufficient financial resources to purchase the required hardware, software or contractual services; or
</P>
<P>(c) Lack of adequate infrastructure, including, but not limited to, the inability to obtain telephone service to transmit the required data.




</P>
</DIV8>

</DIV5>


<DIV5 N="943" NODE="24:4.1.3.1.9" TYPE="PART">
<HEAD>PART 943—PUBLIC HOUSING AGENCY CONSORTIA AND JOINT VENTURES
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437k and 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>65 FR 71207, Nov. 29, 2000, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.3.1.9.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 943.100" NODE="24:4.1.3.1.9.1.5.1" TYPE="SECTION">
<HEAD>§ 943.100   What is the purpose of this part?</HEAD>
<P>This part authorizes public housing agencies (PHAs) to form consortia, joint ventures, affiliates, subsidiaries, partnerships, and other business arrangements under section 13 of the United States Housing Act of 1937 (42 U.S.C. 1437k). Under this authority, PHAs participating in a consortium enter into a consortium agreement, submit joint PHA Plans to HUD, and may combine all or part of their funding and program administration. This part does not preclude a PHA from entering cooperative arrangements to operate its programs under other authority, as long as they are consistent with other program regulations and requirements. 


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.3.1.9.2" TYPE="SUBPART">
<HEAD>Subpart B—Consortia</HEAD>


<DIV8 N="§ 943.115" NODE="24:4.1.3.1.9.2.5.1" TYPE="SECTION">
<HEAD>§ 943.115   What programs are covered under this subpart?</HEAD>
<P>(a) Except as provided in paragraph (b) of this section, this subpart applies to the following: 
</P>
<P>(1) PHA administration of public housing or Section 8 programs under an Annual Contributions Contract (ACC) with HUD; and 
</P>
<P>(2) PHA administration of grants to the PHA in connection with its public housing or Section 8 programs. 
</P>
<P>(b) This subpart does not apply to the following: 
</P>
<P>(1) PHA administration of Section 8 projects assigned to a PHA for contract administration pursuant to an ACC entered under the Request for Proposals (RFP) published May 19, 1999 (64 FR 27358); 
</P>
<P>(2) Section 8 contract administration of a restructured subsidized multifamily project by a Participating Administrative Entity in accordance with part 401 of this title; or 
</P>
<P>(3) A PHA in its capacity as owner of a Section 8 project. 


</P>
</DIV8>


<DIV8 N="§ 943.118" NODE="24:4.1.3.1.9.2.5.2" TYPE="SECTION">
<HEAD>§ 943.118   What is a consortium?</HEAD>
<P>A consortium consists of two or more PHAs that join together to perform planning, reporting, and other administrative or management functions for participating PHAs, as specified in a consortium agreement. A consortium also submits a joint PHA Plan. The lead agency collects the assistance funds from HUD that would be paid to the participating PHAs for the elements of their operations that are administered by the consortium and allocates them according to the consortium agreement. The participating PHAs must adopt the same fiscal year so that the applicable periods for submission and review of the joint PHA Plan are the same. Notwithstanding any other regulation, PHAs proposing to form consortia may request and HUD may approve changes in PHA fiscal years to make this possible. 




</P>
</DIV8>


<DIV8 N="§ 943.120" NODE="24:4.1.3.1.9.2.5.3" TYPE="SECTION">
<HEAD>§ 943.120   What programs of a PHA are included in a consortium's functions?</HEAD>
<P>(a) A PHA may enter a consortium under this subpart for administration of any of the following program categories: 
</P>
<P>(1) The PHA's public housing program (which may include either the operating fund or the capital fund, or both); 
</P>
<P>(2) The PHA's Section 8 voucher program (including the project-based voucher program and special housing types); 
</P>
<P>(3) The PHA's Section 8 Moderate Rehabilitation program, including Single Room Occupancy program; 
</P>
<P>(4) All other project-based Section 8 programs administered by the PHA under an ACC with HUD; and 
</P>
<P>(5) Any grant programs of the PHA in connection with its Section 8 or public housing programs, such as the Drug Elimination program or the Resident Opportunities and Self-Sufficiency program, to the extent not inconsistent with the terms of the governing documents for the grant program's funding source. 
</P>
<P>(b) If a PHA elects to enter a consortium with respect to a category specified in paragraph (a) of this section, the consortium must cover the PHA's whole program under the ACC with HUD for that category, including all dwelling units and all funding for that program under the ACC with HUD. 
</P>
<CITA TYPE="N">[65 FR 71207, Nov. 29, 2000, as amended at 89 FR 38293, May 7, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 943.122" NODE="24:4.1.3.1.9.2.5.4" TYPE="SECTION">
<HEAD>§ 943.122   How is a consortium organized?</HEAD>
<P>(a) PHAs that elect to form a consortium enter into a consortium agreement among the participating PHAs, specifying a lead agency (see § 943.124), and submit a joint PHA Plan (§ 943.118). HUD enters into any necessary payment agreements with the lead agency and the other participating PHAs (see § 943.126) to provide that HUD funding to the participating PHAs for program categories covered by the consortium will be paid to the lead agency. 
</P>
<P>(b) The lead agency must not be a PHA that is designated as a “troubled PHA” by HUD, that has been determined by HUD to fail the civil rights compliance threshold for new funding, or that has had a PHAS designation withheld for civil rights or other reasons. The lead agency is designated to receive HUD program payments on behalf of participating PHAs, to administer HUD requirements for administration of the funds, and to apply the funds in accordance with the consortium agreement and HUD regulations and requirements. 


</P>
</DIV8>


<DIV8 N="§ 943.124" NODE="24:4.1.3.1.9.2.5.5" TYPE="SECTION">
<HEAD>§ 943.124   What elements must a consortium agreement contain?</HEAD>
<P>(a) The consortium agreement among the participating PHAs governs the formation and operation of the consortium. The consortium agreement must be consistent with any payment agreements between the participating PHAs and HUD and must specify the following: 
</P>
<P>(1) The names of the participating PHAs and the program categories each PHA is including under the consortium agreement; 
</P>
<P>(2) The name of the lead agency; 
</P>
<P>(3) The functions to be performed by the lead agency and the other participating PHAs during the term of the consortium; 
</P>
<P>(4) The allocation of funds among participating PHAs and responsibility for administration of funds paid to the consortium; and 
</P>
<P>(5) The period of existence of the consortium and the terms under which a PHA may join or withdraw from the consortium before the end of that period. To provide for orderly transition, addition or withdrawal of a PHA and termination of the consortium must take effect on the anniversary of the consortium's fiscal year. 
</P>
<P>(b) The agreement must acknowledge that the participating PHAs are subject to the joint PHA Plan submitted by the lead agency. 
</P>
<P>(c) The agreement must be signed by an authorized representative of each participating PHA. 


</P>
</DIV8>


<DIV8 N="§ 943.126" NODE="24:4.1.3.1.9.2.5.6" TYPE="SECTION">
<HEAD>§ 943.126   What is the relationship between HUD and a consortium?</HEAD>
<P>HUD has a direct relationship with the consortium through the PHA Plan process and through one or more payment agreements, executed in a form prescribed by HUD, under which HUD and the participating PHAs agree that program funds will be paid to the lead agency on behalf of the participating PHAs. Such funds must be used in accordance with the consortium agreement, the joint PHA Plan and HUD regulations and requirements. 


</P>
</DIV8>


<DIV8 N="§ 943.128" NODE="24:4.1.3.1.9.2.5.7" TYPE="SECTION">
<HEAD>§ 943.128   How does a consortium carry out planning and reporting functions?</HEAD>
<P>(a) During the term of the consortium agreement, the consortium must submit joint five-year Plans and joint Annual Plans for all participating PHAs, in accordance with part 903 of this chapter. HUD may prescribe methods of submission for consortia generally and where the consortium does not cover all program categories. 
</P>
<P>(b) The consortium must maintain records and submit reports to HUD, in accordance with HUD regulations and requirements, for all of the participating PHAs. All PHAs will be bound by Plans and reports submitted to HUD by the consortium for programs covered by the consortium. 
</P>
<P>(c) Each PHA must keep a copy of the consortium agreement on file for inspection. The consortium agreement must also be a supporting document to the joint PHA Plan. 


</P>
</DIV8>


<DIV8 N="§ 943.130" NODE="24:4.1.3.1.9.2.5.8" TYPE="SECTION">
<HEAD>§ 943.130   What are the responsibilities of participating PHAs?</HEAD>
<P>(a) <I>Responsibilities, generally.</I> Despite participation in a consortium, each participating PHA remains responsible for its own obligations under its ACC with HUD. This means that the PHA has an obligation to assure that all program funds, including funds paid to the lead agency for administration by the consortium, are used in accordance with HUD regulations and requirements, and that the PHA program is administered in accordance with HUD regulations and requirements. Any breach of program requirements with respect to a program covered by the consortium agreement is a breach of the ACC with each of the participating PHAs, so each PHA is responsible for the performance of the consortium. 
</P>
<P>(b) <I>Applicability of independent audit and performance assessment system requirements to consortia.</I> Where the lead agency will manage substantially all program and activities of the consortium, HUD interprets financial accountability to rest with the consortium and thus HUD will apply independent audit and performance assessment requirements on a consortium-wide basis. Where the lead agency will not manage substantially all programs and activities of a consortium, the consortium shall indicate in its PHA Plan submission which PHAs have financial accountability for the programs. The determination of financial accountability shall be made in accordance with generally accepted accounting principles, as determined in consultation with an independent public accountant. In such situations, HUD will apply independent audit and performance assessment requirements consistent with that determination. With respect to any consortium, however, HUD may determine (based on a request from the consortium or other circumstances) to apply independent audit and performance requirements on a different basis where this would promote sound management. 


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:4.1.3.1.9.3" TYPE="SUBPART">
<HEAD>Subpart C—Subsidiaries, Affiliates, Joint Ventures in Public Housing</HEAD>


<DIV8 N="§ 943.140" NODE="24:4.1.3.1.9.3.5.1" TYPE="SECTION">
<HEAD>§ 943.140   What programs and activities are covered by this subpart?</HEAD>
<P>(a) This subpart applies to the provision of a PHA's public housing administrative and management functions, and to the provision (or arranging for the provision) of supportive and social services in connection with public housing. This subpart does not apply to activities of a PHA that are subject to the requirements of part 941, subpart F, of this title. 
</P>
<P>(b) For purposes of this subpart, the term “joint venture partner” means a participant (other than a PHA) in a joint venture, partnership, or other business arrangement or contract for services with a PHA. 
</P>
<P>(c) This part does not affect a PHA's authority to use joint ventures, as may be permitted under State law, when using non-1937 Act funds. 


</P>
</DIV8>


<DIV8 N="§ 943.142" NODE="24:4.1.3.1.9.3.5.2" TYPE="SECTION">
<HEAD>§ 943.142   In what types of operating organizations may a PHA participate?</HEAD>
<P>(a) A PHA may create and operate a wholly owned or controlled subsidiary or other affiliate; may enter into joint ventures, partnerships, or other business arrangements with individuals, organizations, entities, or governmental units. A subsidiary or affiliate may be a nonprofit corporation. A subsidiary or affiliate may be an organization controlled by the same persons who serve on the governing board of the PHA or who are employees of the PHA. 
</P>
<P>(b) The purpose of any of these operating organizations would be to administer programs of the PHA. 


</P>
</DIV8>


<DIV8 N="§ 943.144" NODE="24:4.1.3.1.9.3.5.3" TYPE="SECTION">
<HEAD>§ 943.144   What financial impact do operations of a subsidiary, affiliate, or joint venture have on a PHA?</HEAD>
<P>Income generated by subsidiaries, affiliates, or joint ventures formed under the authority of this subpart is to be used for low-income housing or to benefit the residents assisted by the PHA. This income will not cause a decrease in funding provided under the public housing program, except as otherwise provided under the Operating Fund and Capital Fund formulas. 


</P>
</DIV8>


<DIV8 N="§ 943.146" NODE="24:4.1.3.1.9.3.5.4" TYPE="SECTION">
<HEAD>§ 943.146   What impact does the use of a subsidiary, affiliate, or joint venture have on financial accountability to HUD and the Federal government?</HEAD>
<P>None; the subsidiary, affiliate, or joint venture is subject to the same authority of HUD, HUD's Inspector General, and the Comptroller General to audit its conduct. 


</P>
</DIV8>


<DIV8 N="§ 943.148" NODE="24:4.1.3.1.9.3.5.5" TYPE="SECTION">
<HEAD>§ 943.148   What procurement standards apply to PHAs selecting partners for a joint venture?</HEAD>
<P>(a) The requirements of part 85 of this title are applicable to this part, subject to paragraph (b) of this section, in connection with the PHA's public housing program. 
</P>
<P>(b) A PHA may use competitive proposal procedures for qualifications-based procurement (request for qualifications or “RFQ”), or may solicit a proposal from only one source (“sole source”) to select a joint venture partner to perform an administrative or management function of its public housing program or to provide or arrange to provide supportive or social services covered under this part, under the following circumstances: 
</P>
<P>(1) The proposed joint venture partner has under its control and will make available to the partnership substantial, unique and tangible resources or other benefits that would not otherwise be available to the PHA on the open market (<I>e.g.,</I> planning expertise, program experience, or financial or other resources). In this case, the PHA must maintain documentation to substantiate both the cost reasonableness of its selection of the proposed partner and the unique qualifications of the partner: or 
</P>
<P>(2) A resident group or a PHA subsidiary is willing and able to act as the PHA's partner in performing administrative and management functions or to provide supportive or social services. This entity must comply with the requirements of 2 CFR part 200 (if the entity is a nonprofit or a State or local government) with respect to its selection of the members of the team and the members must be paid on a cost-reimbursement basis only. The PHA must maintain documentation that indicates both the cost reasonableness of its selection of a resident group or PHA subsidiary and the ability of that group or subsidiary to act as the PHA's partner under this provision. 
</P>
<CITA TYPE="N">[65 FR 71207, Nov. 29, 2000, as amended at 80 FR 75942, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 943.150" NODE="24:4.1.3.1.9.3.5.6" TYPE="SECTION">
<HEAD>§ 943.150   What procurement standards apply to a PHA's joint venture partner?</HEAD>
<P>(a) <I>General.</I> A joint venture partner is not a grantee or subgrantee and, accordingly, is not required to comply with 2 CFR part 200 in its procurement of goods and services under this part. The partner must comply with all applicable State and local procurement and conflict of interest requirements with respect to its selection of entities to assist in PHA program administration. 
</P>
<P>(b) <I>Exception.</I> If the joint venture partner is a subsidiary, affiliate, or identity of interest party of the PHA, it is subject to the requirements of 2 CFR part 200 of this title. HUD may, on a case-by-case basis, exempt such a joint venture partner from the need to comply with requirements under 2 CFR part 200 of this title if HUD determines that the joint venture has developed an acceptable alternative procurement plan. 
</P>
<P>(c) <I>Contracting with identity-of-interest parties.</I> A joint venture partner may contract with an identity-of-interest party for goods or services, or a party specified in the selected bidder's response to a RFP or RFQ (as applicable), without the need for further procurement if: 
</P>
<P>(1) The PHA can demonstrate that its original competitive selection of the partner clearly anticipated the later provision of such goods or services; 
</P>
<P>(2) Compensation of all identity-of-interest parties is structured to ensure there is no duplication of profit or expenses; and 
</P>
<P>(3) The PHA can demonstrate that its selection is reasonable based upon prevailing market costs and standards, and that the quality and timeliness of the goods or services is comparable to that available in the open market. For purposes of this paragraph (c), an “identity-of-interest party” means a party that is wholly owned or controlled by, or that is otherwise affiliated with, the partner or the PHA. The PHA may use an independent organization experienced in cost valuation to determine the cost reasonableness of the proposed contracts. 
</P>
<CITA TYPE="N">[65 FR 71207, Nov. 29, 2000, as amended at 80 FR 75942, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 943.151" NODE="24:4.1.3.1.9.3.5.7" TYPE="SECTION">
<HEAD>§ 943.151   What procurement standards apply to a joint venture itself?</HEAD>
<P>(a) When the joint venture as a whole is controlled by the PHA or an identity of interest party of the PHA, the joint venture is subject to the requirements of 2 CFR part 200 of this title. 
</P>
<P>(b) If a joint venture is not controlled by the PHA or an identity of interest party of the PHA, then the rules that apply to the other partners apply. See § 943.150.
</P>
<CITA TYPE="N">[65 FR 71207, Nov. 29, 2000, as amended at 80 FR 75942, Dec. 7, 2015]


</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="945" NODE="24:4.1.3.1.10" TYPE="PART">
<HEAD>PART 945—DESIGNATED HOUSING—PUBLIC HOUSING DESIGNATED FOR OCCUPANCY BY DISABLED, ELDERLY, OR DISABLED AND ELDERLY FAMILIES 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1473e and 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>59 FR 17662, Apr. 13, 1994, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.3.1.10.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 945.101" NODE="24:4.1.3.1.10.1.5.1" TYPE="SECTION">
<HEAD>§ 945.101   Purpose.</HEAD>
<P>The purpose of this part is to provide for designated housing as authorized by section 7 of the U.S. Housing Act of 1937 (42 U.S.C. 1437e). Section 7 provides public housing agencies with the option, subject to the requirements and procedures of this part, to designate public housing projects, or portions of public housing projects, for occupancy by disabled families, elderly families, or mixed populations of disabled families and elderly families. 


</P>
</DIV8>


<DIV8 N="§ 945.103" NODE="24:4.1.3.1.10.1.5.2" TYPE="SECTION">
<HEAD>§ 945.103   General policies.</HEAD>
<P>(a) <I>Agency participation.</I> Participation in this program is limited to public housing agencies (PHAs) (as this term is defined in 24 CFR 913.102) that elect to designate public housing projects for occupancy by disabled families, elderly families, or disabled families and elderly families, as provided by this part. 
</P>
<P>(b) <I>Eligible housing</I>—(1) <I>Designation of public housing.</I> Projects eligible for designation under this part are public housing projects as described in the definition of “project” in § 945.105. 
</P>
<P>(2) <I>Additional housing resources.</I> To meet the housing and supportive service needs of elderly families, and disabled families, including non-elderly disabled families, who will not be housed in a designated project, PHAs shall utilize housing resources that they own, control, or have received preliminary notification that they will obtain (e.g., section 8 vouchers). They also may utilize housing resources for which they plan to apply during the period covered by the allocation plan, and that they have a reasonable expectation of obtaining. PHAs also may utilize, to the extent practicable, any housing facilities that they own or control in which supportive services are already provided, facilitated or coordinated, such as mixed housing, shared housing, family housing, group homes, and congregate housing. 
</P>
<P>(3) <I>Exemption of mixed population projects.</I> A PHA with a public housing project with a mixed population of elderly families and disabled families that plans to house them in such project in accordance with the requirements of 24 CFR part 960, subpart D, is not required to meet the designation requirements of this part. 
</P>
<P>(c) <I>Family Participation in designated housing</I>—(1) <I>Voluntary participation.</I> The election to reside in designated housing is voluntary on the part of a family. No disabled family or elderly family may be required to reside in designated housing, nor shall a decision not to reside in designated housing adversely affect the family with respect to occupancy of another appropriate project. 
</P>
<P>(2) <I>Meeting stated eligibility requirements.</I> Nothing in this part shall be construed to require or permit a PHA to accept for admission to a designated project a disabled family or elderly family who does not meet the stated eligibility requirements for occupancy in the project (for example, income), as set forth in HUD's regulations in 24 CFR parts 912 and 913, and in the PHA's admission policies. 
</P>
<CITA TYPE="N">[59 FR 17662, Apr. 13, 1994, as amended at 89 FR 38293, May 7, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 945.105" NODE="24:4.1.3.1.10.1.5.3" TYPE="SECTION">
<HEAD>§ 945.105   Definitions.</HEAD>
<P>The terms <I>Department, Elderly person, HUD, NAHA, Public Housing Agency (PHA),</I> and <I>Secretary</I> are defined in 24 CFR part 5.
</P>
<P><I>Act</I> means the United States Housing Act of 1937 (42 U.S.C. 1437-1440). 
</P>
<P><I>Accessible units</I> means units that meet the requirement of accessibility with respect to dwellings as set forth in the second definition of “accessible” in 24 CFR 8.3. 
</P>
<P><I>Allocation plan.</I> See § 945.201. 
</P>
<P><I>CHAS</I> means the comprehensive housing affordability strategy required by section 105 of the National Affordable Housing Act (42 U.S.C. 12705) or any successor plan prescribed by HUD. 
</P>
<P><I>Designated family</I> means the category of family for whom the project is designated (e. g., elderly family in a project designated for elderly families). 
</P>
<P><I>Designated housing</I> or <I>designated project</I> means a project (or projects), or a portion of a project (or projects) (as these terms are defined in this section), that has been designated in accordance with the requirements of this part. 
</P>
<P><I>Disabled family</I> means a family whose head or spouse or sole member is a person with disabilities. The term “disabled family” may include two or more persons with disabilities living together, and one or more persons with disabilities living with one or more persons who are determined to be essential to the care or well-being of the person or persons with disabilities. A disabled family may include persons with disabilities who are elderly. 
</P>
<P><I>Elderly family</I> means a family whose head, spouse, or sole member is an elderly person. The term “elderly family” includes an elderly person, two or more elderly persons living together, and one or more elderly persons living with one or more persons who are determined to be essential to the care or well-being of the elderly person or persons. An elderly family may include elderly persons with disabilities and other family members who are not elderly. 
</P>
<P><I>Family</I> includes but is not limited to a single person as defined in this part, a displaced person (as defined in 24 CFR part 912), a remaining member of a tenant family, a disabled family, an elderly family, a near-elderly family, and a family with children. It also includes an elderly family or a disabled family composed of one or more elderly persons living with one or more disabled persons. 
</P>
<P><I>Housing</I> has the same meaning as “project,” which is defined in this section. 
</P>
<P><I>Mixed population project</I> means a public housing project reserved for elderly families and disabled families. This is the project type referred to in NAHA as being designated for elderly and disabled families. A PHA that has a mixed population project or intends to develop one need not submit an allocation plan or request a designation. However, the project must meet the requirements of 24 CFR part 960 subpart D. 
</P>
<P><I>Near-elderly family</I> means a family whose head, spouse, or sole member is a near-elderly person. The term “near-elderly family” includes two or more near-elderly persons living together, and one or more near-elderly persons living with one or more persons who are determined to be essential to the care or well-being of the near-elderly person or persons. A near-elderly family may include other family members who are not near-elderly. 
</P>
<P><I>Near-elderly person</I> means a person who is at least 50 years of age but below the age of 62, who may be a person with a disability. 
</P>
<P><I>Non-elderly disabled person</I> means a person with a disability who is less than 62 years of age. 
</P>
<P><I>Person with disabilities</I> means a person who—
</P>
<P>(a) Has disability as defined in section 223 of the Social Security Act (42 U.S.C. 423), or 
</P>
<P>(b) Is determined to have a physical, mental, or emotional impairment that—
</P>
<P>(1) Is expected to be of long-continued and indefinite duration, 
</P>
<P>(2) Substantially impedes his or her ability to live independently, and 
</P>
<P>(3) Is of such a nature that such ability could be improved by more suitable housing conditions, or 
</P>
<P>(c) Has a developmental disability as defined in section 102 of the Developmental Disabilities Assistance and Bill of Rights Act (42 U.S.C. 6001(5)). 
</P>
<FP>The term “person with disabilities” does not exclude persons who have the disease of acquired immunodeficiency syndrome or any conditions arising from the etiologic agent for acquired immunodeficiency syndrome. 
</FP>
<P><I>Portion of project</I> includes: One or more buildings in a multi-building project; one or more floors of a project or projects; a certain number of dwelling units in a project or projects. (Designation of a portion of a project does not require that the buildings, floors or units be contiguous.) 
</P>
<P><I>Project</I> means low-income housing developed, acquired, or assisted by a PHA under the U.S. Housing Act of 1937 (other than section 8) for which there is an Annual Contributions Contract (ACC) between HUD and the PHA. For purposes of this part, the terms <I>housing</I> and <I>public housing</I> mean the same as project. Additionally, as used in this part, and unless the context indicates otherwise, the term <I>project</I> when used in the singular includes the plural, and when used in the plural, includes the singular, and also includes a “portion of a project,” as defined in this section. 
</P>
<P><I>Public housing</I> or <I>public housing project.</I> See definition of “project” in this section. 
</P>
<P><I>Service provider</I> means a person or organization qualified and experienced in the provision of supportive services, and that is in compliance with any licensing requirements imposed by State or local law for the type of service or services to be provided. The service provider may provide the service on either a for-profit or not-for-profit basis. 
</P>
<P><I>Single person</I> means a person who lives alone or intends to live alone, who is not an elderly person, a person with disabilities, a displaced person, or the remaining member of a tenant family. 
</P>
<P><I>Supportive service plan.</I> See § 945.205. 
</P>
<P><I>Supportive services</I> means services available to persons residing in a development, requested by disabled families and for which there is a need, and may include, but are not limited to, meal services, health-related services, mental health services, services for nonmedical counseling, meals, transportation, personal care, bathing, toileting, housekeeping, chore assistance, safety, group and socialization activities, assistance with medications (in accordance with any applicable State laws), case management, personal emergency response, and other appropriate services. 
</P>
<CITA TYPE="N">[59 FR 17662, Apr. 13, 1994, as amended at 61 FR 5214, Feb. 9, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.3.1.10.2" TYPE="SUBPART">
<HEAD>Subpart B—Application and Approval Procedures</HEAD>


<DIV8 N="§ 945.201" NODE="24:4.1.3.1.10.2.5.1" TYPE="SECTION">
<HEAD>§ 945.201   Approval to designate housing.</HEAD>
<P>(a) <I>Designated housing for elderly families.</I> To designate a project for occupancy by elderly families, a PHA must have a HUD-approved allocation plan that meets the requirements of § 945.203. 
</P>
<P>(b) <I>Designated housing for disabled families.</I> To designate a project for occupancy by disabled families, a PHA must have a HUD-approved allocation plan that meets the requirements of § 945.203, and a HUD-approved supportive service plan that meets the requirements of § 945.205. 
</P>
<P>(c) <I>Designated housing for elderly families and disabled families.</I> (1) A PHA that provides or intends to provide a mixed population project (a project for both elderly families <I>and</I> disabled families) is not required to meet the requirements of this part. The PHA is required to meet the requirements of 24 CFR part 960, subpart D. 
</P>
<P>(2) A PHA that intends to provide designated housing for elderly families or for disabled families must identify any existing or planned mixed population projects, reserved under 24 CFR part 960, subpart B, as additional housing resources, in its allocation plan, in accordance with § 945.203(c)(6). 


</P>
</DIV8>


<DIV8 N="§ 945.203" NODE="24:4.1.3.1.10.2.5.2" TYPE="SECTION">
<HEAD>§ 945.203   Allocation plan.</HEAD>
<P>(a) <I>Applicable terminology.</I> (1) As used in this section, the terms “initial allocation plan” refers to the PHA's first submission of an allocation plan, and “updated allocation plan” refers to the biennial update (once every two years) of this plan, which is described in paragraph (f) of this section. 
</P>
<P>(2) As provided in § 945.105, the term “project” includes the plural (“projects”) and includes a portion of a project. 
</P>
<P>(b) <I>Consultation in plan development.</I> These consultation requirements apply to the development of an initial allocation plan as provided in paragraph (c) of this section, or any update of the allocation plan as provided in paragraph (f) of this section. 
</P>
<P>(1) In preparing the draft plan, the PHA shall consult with: 
</P>
<P>(i) The State or unit of general local government where the project is located; 
</P>
<P>(ii) Public and private service providers; 
</P>
<P>(iii) Representative advocacy groups for each of these family types: disabled families, elderly families, and families with children, where such advocacy groups exist; 
</P>
<P>(iv) Representatives of the residents of the PHA's projects proposed for designation, including representatives from resident councils or resident management corporations where they exist; and 
</P>
<P>(v) Other parties that the PHA determines would be interested in the plan, or other parties that have contacted the PHA and expressed an interest in the plan. 
</P>
<P>(2) Following the completion of the draft plan, the PHA shall: 
</P>
<P>(i) Issue public notices regarding its intention to designate housing and the availability of the draft plan for review; 
</P>
<P>(ii) Contact directly those individuals, agencies and other interested parties specified in paragraph (b)(1) of this section, and advise of the availability of the draft plan for review; 
</P>
<P>(iii) Allow not less than 30 days for public comment on the draft allocation plan; 
</P>
<P>(iv) Make free copies of the draft plan available upon request, and in accessible format, when appropriate; 
</P>
<P>(v) Conduct at least one public meeting on the draft allocation plan; 
</P>
<P>(vi) Give fair consideration to all comments received; and 
</P>
<P>(vii) Retain any records of public meetings held on the allocation plan (or updated plan) and any written comments received on the plan for a period of five years commencing from the date of submission of the allocation plan to HUD. These records must be available for review by HUD. 
</P>
<P>(c) <I>Contents of initial plan.</I> The initial allocation plan shall contain, at a minimum, the information set forth in this paragraph (c). 
</P>
<P>(1) <I>Identification of the project to be designated and type of designation to be made.</I> The PHA must: 
</P>
<P>(i) Identify the type of designation to be made (i.e., housing for disabled families or housing for elderly families); 
</P>
<P>(ii) Identify the building(s), floor(s), or unit(s) to be designated and their location, or if specific units are not designated, the number to be designated; and 
</P>
<P>(iii) State the reasons the building(s), floor(s), or unit(s) were selected for designation. 
</P>
<P>(2) <I>Identification of groups and persons consulted and comments submitted.</I> The PHA must: 
</P>
<P>(i) Identify the groups and persons with whom the PHA has consulted in the development of the allocation plan; 
</P>
<P>(ii) Include a summary of comments received on the plan from the groups and persons consulted; and 
</P>
<P>(iii) Describe how the plan addresses these comments. 
</P>
<P>(3) <I>Profile of proposed designated project in pre-designation state.</I> This component of the plan must include, for the projects, buildings, or portions of buildings to be designated: 
</P>
<P>(i) The total number of families currently occupying the project, and 
</P>
<P>(A) The number of families who are members of the group for whom the project is to be designated, and 
</P>
<P>(B) The number of families who are not members of the group for whom the project is to be designated; 
</P>
<P>(ii) An estimate of the total number of elderly families and disabled families who are potential tenants of the project (i.e., as the project now exists), based on information provided by: 
</P>
<P>(A) The waiting list from which vacancies in the project are filled; and 
</P>
<P>(B) A local housing needs survey, if available, such as the CHAS, for the jurisdiction within which the area served by the PHA is located; 
</P>
<P>(iii) An estimate of the number of potential tenants who will need accessible units based on information provided by: 
</P>
<P>(A) The needs assessment prepared in accordance with 24 CFR 8.25, and 
</P>
<P>(B) A housing needs survey, if available, such as the CHAS or HUD-prescribed successor survey; 
</P>
<P>(iv) The number of units in the project that became vacant and available for occupancy during the year preceding the date of submission of the allocation plan to HUD; 
</P>
<P>(v) The average length of vacancy for dwelling units in the project for the year preceding the date of submission of the allocation plan to HUD; 
</P>
<P>(vi) An estimate of the number of units in the project that the PHA expects to become vacant and available for occupancy during the two-year period following the date of submission of the allocation plan to HUD (i.e., if the project were not to be designated); 
</P>
<P>(vii) An estimate of the average length of time elderly families and non-elderly persons with disabilities currently have to wait for a dwelling unit. 
</P>
<P>(4) <I>Projected profile of project in designated state.</I> This component of the plan must: 
</P>
<P>(i) Identify the source of the families for the designated project (e.g., current residents of the project, families currently on the waiting list, residents of other projects, and potential tenants based on information from the local housing needs survey); 
</P>
<P>(ii) For projects proposed to be designated for occupancy by elderly families an estimate of the number of: 
</P>
<P>(A) Units in the project that are anticipated to become vacant and available for occupancy during the two-year period following the date of submission of the allocation plan to HUD; 
</P>
<P>(B) Near-elderly families who may be needed to fill units in the designated project for elderly families, as provided in § 945.303(c); 
</P>
<P>(iii) Describe any impact the designation may have on the average length of time applicants in the group for which the project is designated and other applicants will have to wait for a dwelling unit. 
</P>
<P>(5) <I>PHA occupancy policies and procedures.</I> This component of the plan must describe any changes the PHA intends to make in its admission policies to accommodate the designation, including:
</P>
<P>(i) How the waiting list will be maintained; 
</P>
<P>(ii) How dwelling units will be assigned; and 
</P>
<P>(iii) How records will be maintained to document the effect on all families who would have resided in the designated project if it had not been designated. 
</P>
<P>(6) <I>Strategy for addressing the current and future housing needs of the families in the PHA's jurisdiction.</I> The PHA must: 
</P>
<P>(i) Identify the housing resources currently owned or controlled by the PHA, including any mixed population projects, in existence, as provided in 24 CFR part 960, subpart D, that will be available to these families; 
</P>
<P>(ii) Describe the steps to be taken by the PHA to respond to any need for accessible units that will no longer be available for applicants who need them. The PHA has a continuing obligation under section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) to provide accessible dwellings even if the project designation removes accessible dwellings from the inventory of possible dwellings for non-elderly persons with disabilities; 
</P>
<P>(iii) If a project is being designated for elderly families, describe the steps the PHA will take to facilitate access to supportive services by non-elderly disabled families. The services should be equivalent to those available in the designated project and requested by non-elderly disabled families. If the PHA funds supportive services for the designated project for elderly families, the PHA must provide the same level of services, upon the request of non-elderly disabled families. 
</P>
<P>(iv) If a project is being designated for elderly families, identify the additional housing resources that the PHA determines will be sufficient to provide assistance to not less than the number of non-elderly disabled families that would have been housed by the PHA if occupancy in units in the designated project were not restricted to elderly families (one-for-one replacement is not required). Among these resources may be: 
</P>
<P>(A) Normal turnover in existing projects; 
</P>
<P>(B) Existing housing stock that previously was not available to or considered for non-elderly disabled families. Examples are dwellings in general occupancy (family) projects that are reconfigured to meet the dwelling size needs of the non-elderly disabled families, or were previously occupied by elderly families who will relocate to the designated project for elderly families, or were previously vacant because there had not been a demand for dwellings of that size in that location; 
</P>
<P>(C) Housing for which the PHA has received preliminary notification that it will obtain; and 
</P>
<P>(D) Housing for which the PHA plans to apply during the period covered by the allocation plan, and which it has a reasonable expectation of obtaining. 
</P>
<P>(v) Where a project is being designated for elderly families, explain how the PHA plans to secure the required additional housing resources. In the case of housing for which the PHA plans to apply, the PHA must provide sufficient information about the housing resource and its application to establish that the PHA can reasonably expect to obtain the housing. 
</P>
<P>(vi) Describe incentives, if any, that the PHA intends to offer to: 
</P>
<P>(A) Families who are members of the group for whom a project was designated to achieve voluntary transfers <I>to</I> the designated project; and 
</P>
<P>(B) Families who are not members of the group for whom a project was designated to achieve voluntary transfers <I>from</I> the project proposed to be designated; 
</P>
<P>(d) <I>Criteria for allocation plan approval.</I> HUD shall approve an initial allocation plan, or updated allocation plan, if HUD determines that: 
</P>
<P>(1) The information contained in the plan is complete and accurate (a plan that is incomplete, i.e., missing required statements or items, will be disapproved), and the projections are reasonable; 
</P>
<P>(2) Implementation of the plan will not result in a substantial increase in the vacancy rates in the designated project; 
</P>
<P>(3) Implementation of the plan will not result in a substantial increase in delaying or denying housing assistance to families on the PHA's waiting list because of designating projects; 
</P>
<P>(4) The plan for securing sufficient additional housing resources for non-elderly disabled persons can reasonably be achieved; and 
</P>
<P>(5) The plan conforms to the requirements of this part. 
</P>
<P>(e) <I>Allocation plan approval or disapproval</I>—(1) <I>Written notification.</I> HUD shall notify each PHA, in writing, of approval or disapproval of the initial or updated allocation plan. 
</P>
<P>(2) <I>Timing of notification.</I> An allocation plan shall be considered to be approved by HUD if HUD fails to provide the PHA with notification of approval or disapproval of the plan, as required by paragraph (e)(1) of this section, within: 
</P>
<P>(i) 90 days after the date of submission of an allocation plan that contains comments, as provided in paragraph (c)(2) of this section; or 
</P>
<P>(ii) 45 days after the date of submission of all other plans, including 
</P>
<P>(A) Initial plans for which no comments were received; 
</P>
<P>(B) Updated plans, as provided in paragraph (f) of this section; and 
</P>
<P>(C) Revised initial plans or revised updated plans, as provided in paragraph (e)(4) of this section. 
</P>
<P>(3) <I>Approval limited solely to approval of designated housing.</I> HUD's approval of an initial plan or updated allocation plan under this section may not be construed to constitute approval of any request for assistance for major reconstruction of obsolete projects, assistance for development or acquisition of public housing, or assistance under 24 CFR part 890 (supportive housing for persons with disabilities). 
</P>
<P>(4) <I>Resubmission following disapproval.</I> If HUD disapproves an initial allocation plan, a PHA shall have a period of not less than 45 days or more than 90 days following notification of disapproval as provided in paragraph (e)(2) of this section, to submit amendments to the plan, or to submit a revised plan. 
</P>
<P>(f) <I>Biennial update of plan</I>—(1) <I>General.</I> Each PHA that owns or operates a public housing project that is designated for occupancy under this part shall update its allocation plan not less than once every two years, from the date of HUD approval of the initial allocation plan. A PHA that wishes to amend or revise its plan later than 90 days after HUD disapproval must begin the hearing and consultation process again. 
</P>
<P>(2) <I>Failure to submit updated plan.</I> If the PHA fails to submit the updated plan as required by this paragraph (f), the Secretary may revoke the designation in accordance with the provisions of paragraph (f)(4)(ii) of this section. 
</P>
<P>(3) <I>Contents of updated plan.</I> The updated allocation plan shall contain, at a minimum, the following information: 
</P>
<P>(i) The most recent update of the allocation plan data, and projections for the next two years; 
</P>
<P>(ii) An assessment of the accuracy of the projections contained in previous plans and in the updated allocation plan; 
</P>
<P>(iii) The number of times a vacancy was filled in accordance with § 945.303(c); 
</P>
<P>(iv) A discussion of the impact of the designation on the designated project and the other public housing projects operated by the PHA, using the data obtained from the system developed in § 945.203(c), including 
</P>
<P>(A) The number of times there was a substantial increase in delaying housing assistance to families on the PHA's waiting list because projects were designated; and 
</P>
<P>(B) The number of times there was a substantial increase in denying housing assistance to families on the PHA's waiting list because projects were designated; 
</P>
<P>(v) A plan for adjusting the allocation of designated units, if necessary. 
</P>
<P>(4) <I>Criteria for approval of updated plan.</I> (i) HUD shall approve an updated allocation plan based on HUD's review and assessment of the updated plan, using the criteria in (d) of this section. If HUD considers it appropriate, the review and assessment shall include any on-site review and monitoring of PHA performance in the administration of its designated housing and in the allocation of the PHA's housing resources. Notification of approval or disapproval of the updated allocation plan shall be provided in accordance with paragraph (e) of this section; 
</P>
<P>(ii) If a PHA's updated plan is not approved, HUD may require PHAs to change the designation of existing or planned projects to other categories, such as general occupancy or mixed population projects. 
</P>
<P>(5) <I>Notification of approval or disapproval of updated plan.</I> HUD shall notify each PHA submitting an updated plan of approval or disapproval of the updated plan, in accordance with the form of notification and within the time periods required by paragraph (e) of this section. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0192)


</APPRO>
</DIV8>


<DIV8 N="§ 945.205" NODE="24:4.1.3.1.10.2.5.3" TYPE="SECTION">
<HEAD>§ 945.205   Designated housing for disabled families.</HEAD>
<P>(a) <I>General.</I> (1) In general, HUD will approve designated projects for disabled families only if there is a clear demonstration that there is both a need and a demand by disabled families for such designation. In the absence of such demonstrated need and demand, PHAs should provide for the housing needs of disabled families in the most integrated setting possible. 
</P>
<P>(2) To designate a project for disabled families, a PHA must submit the allocation plan required by § 945.203 and the supportive service plan described in paragraph (b) of this section. 
</P>
<P>(3) In its allocation plan, 
</P>
<P>(i) The PHA may not designate a project for persons with a specific disability; 
</P>
<P>(ii) The designated project does not have to be made up of contiguous units. PHAs are encouraged to place the units in the project, whether contiguous or not, in the most integrated setting possible. 
</P>
<P>(4) The consultation process for the allocation plan provided in § 945.203(b) and consultation process for the supportive service plan provided in this section may occur concurrently. 
</P>
<P>(5) If the PHA conducts surveys to determine the need or demand for a designated project for disabled families or for supportive services in such project, the PHA must protect the confidentiality of the survey responses. 
</P>
<P>(b) <I>Supportive Service Plan.</I> The plan shall describe how the PHA will provide or arrange for the provision of the appropriate supportive services requested by the disabled families who will occupy the designated housing and who have expressed a need for these services. 
</P>
<P>(1) <I>Contents of plan.</I> The supportive service plan, at a minimum, must: 
</P>
<P>(i) Identify the number of disabled families who need the supportive services and who have expressed an interest in receiving them; 
</P>
<P>(ii) Describe the types of supportive services that will be provided, and, if known, the length of time the supportive services will be available; 
</P>
<P>(iii) Identify each service provider to be utilized, and describe the experience of the service provider in delivering supportive services; 
</P>
<P>(iv) Describe how the supportive services will be provided to the disabled families that the designated housing is expected to serve (how the services will be provided depends upon the type of service offered; e.g., if the package includes transportation assistance, how transportation assistance will be provided to disabled families); 
</P>
<P>(v) Identify all sources of funding upon which the PHA is relying to deliver supportive services to residents of the designated housing for disabled families, or the supportive service resources to be provided in lieu of funding; 
</P>
<P>(vi) Submit evidence of a specific contractual commitment or commitments provided to the PHA by the sources identified in paragraph (b)(1)(v) of this section to make funds available for supportive services, or the delivery of supportive services available to the PHA for at least two calendar years; 
</P>
<P>(vii) Identify any public and private service providers, advocates for the interests of designated housing families, and other interested parties with whom the PHA consulted in the development of this supportive service plan, and summarize the comments and recommendations made by these parties. (These comments must be maintained for a period of five years, and be available for review by HUD as provided in paragraph (b)(2)(vii) of this section.); 
</P>
<P>(viii) If applicable, address the need for residential supervision of disabled families (on-site supervision within the designated housing) and how this supervision is to be provided; 
</P>
<P>(ix) Include any other information that the PHA determines would assist HUD in assessing the suitability of the PHA's supportive service plan; and 
</P>
<P>(x) Include any additional information that HUD may request, and which is appropriate to a determination of the suitability of the supportive service plan. 
</P>
<P>(2) <I>Public review and comment on the supportive service plan.</I> In preparing the initial supportive service plan, or any update of the supportive service plan, the PHA shall: 
</P>
<P>(i) Issue public notices regarding its intention to provide supportive services to designated housing for disabled families and the availability of the draft supportive service plan; 
</P>
<P>(ii) Send notices directly to interested individuals and agencies that have contacted the PHA and have expressed an interest in the supportive service plan, and to parties specified in paragraph (b)(1)(vii) of this section; 
</P>
<P>(iii) Allow not less than 30 days for public comment on the supportive service plan; 
</P>
<P>(iv) Make free copies of the draft plan available upon request, and in accessible format, when appropriate; 
</P>
<P>(v) Conduct at least one public meeting regarding the supportive service plan; 
</P>
<P>(vi) Give fair consideration to all comments received; and 
</P>
<P>(vii) Retain any records of the public meetings held on the supportive service plan, and any written comments received on the supportive service plan for a period of five years, from the date of submission of the supportive service plan. These records must be available for review by HUD. 
</P>
<P>(c) <I>Approval.</I> HUD shall approve designated housing for disabled families if the allocation plan meets the requirements of § 945.203, including demonstrating both a need and a demand for designated housing for disabled families, and if HUD determines on the basis of the information provided in the supportive service plan that: 
</P>
<P>(1) There is a sufficient number of persons with disabilities who have expressed an interest in occupying a designated project for disabled families, and who have expressed a need and demand for the supportive services that will be provided; 
</P>
<P>(2) The supportive services are adequately designed to meet the needs of the disabled families who have indicated a desire for them; 
</P>
<P>(3) The service provider has current or past experience administering an effective supportive service delivery program for persons with disabilities; 
</P>
<P>(4) If residential supervision is required, a written commitment to provide this supervision in the designated housing.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0192)


</APPRO>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:4.1.3.1.10.3" TYPE="SUBPART">
<HEAD>Subpart C—Operating Designated Housing</HEAD>


<DIV8 N="§ 945.301" NODE="24:4.1.3.1.10.3.5.1" TYPE="SECTION">
<HEAD>§ 945.301   General requirements.</HEAD>
<P>The application procedures and operation of designated projects shall be in conformity with the regulations of this part, and the regulations applicable to PHAs in 24 CFR Chapter IX, including 24 CFR parts 913, 960 and 966, and, in particular, the nondiscrimination requirements of 24 CFR 960.211(b)(3), that include but are not limited to section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), Fair Housing Act (42 U.S.C. 3601-3619), title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d), section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u), the Age Discrimination Act (42 U.S.C. 6101-6107), Executive Order 11246 (3 CFR 1964-1965 Comp., p. 339), Executive Order 11063, as amended by Executive Order 12259 (3 CFR 1958-1963 Comp., p. 652 and 3 CFR 1980 Comp., p. 307), the Americans with Disabilities Act (42 U.S.C. 12101-12213) (to the extent the Americans with Disabilities Act is applicable) and the implementing regulations of these statutes and authorities; and other applicable Federal, State, and local laws prohibiting discrimination and promoting equal opportunity. 


</P>
</DIV8>


<DIV8 N="§ 945.303" NODE="24:4.1.3.1.10.3.5.2" TYPE="SECTION">
<HEAD>§ 945.303   Requirements governing occupancy in designated housing.</HEAD>
<P>(a) <I>Priority for occupancy.</I> Except as provided in paragraph (c) of this section, in determining priority for admission to designated housing, the PHA shall make units in the designated housing available only to designated families. 
</P>
<P>(b) <I>Compliance with preference regulations.</I> Among the designated families, the PHA shall give preference in accordance with the preferences in 24 CFR part 960, subpart B. 
</P>
<P>(c) <I>Eligibility of other families for housing designated for elderly families</I>—(1) <I>Insufficient elderly families.</I> If there are an insufficient number of elderly families for the units in a project designated for elderly families, the PHA may make dwelling units available to near-elderly families, who qualify for preferences under 24 CFR part 960, subpart B. The election to make dwelling units available to near-elderly families if there are an insufficient number of elderly families should be explained in the PHA's allocation plan. 
</P>
<P>(2) <I>Insufficient elderly families and near-elderly families.</I> If there are an insufficient number of elderly families and near-elderly families for the units in a project designated for elderly families, the PHA shall make available to all other families any dwelling unit that is: 
</P>
<P>(i) Ready for re-rental and for a new lease to take effect; and 
</P>
<P>(ii) Vacant for more than 60 consecutive days. 
</P>
<P>(d) <I>Tenant choice of housing.</I> (1) Subject to paragraph (d)(2) of this section, the decision of any disabled family or elderly family not to occupy or accept occupancy in designated housing shall not have an adverse affect on: 
</P>
<P>(i) The family's admission to or continued occupancy in public housing; or 
</P>
<P>(ii) The family's position on or placement on a public housing waiting list. 
</P>
<P>(2) The protection provided by paragraph (d)(1) of this section shall not apply to any family who refuses to occupy or accept occupancy in designated housing because of the race, color, religion, sex, disability, familial status, or national origin of the occupants of the designated housing or the surrounding area. 
</P>
<P>(3) The protection provided by paragraph (d)(1) of this section shall apply to an elderly family or disabled family that declines to accept occupancy, respectively, in a designated project for elderly families or for disabled families, and requests occupancy in a general occupancy project or in a mixed population project. 
</P>
<P>(e) <I>Appropriateness of dwelling unit to family size.</I> This part may not be construed to require a PHA to offer a dwelling in a designated project to any family who is not of appropriate family size for the dwelling unit. The temporary absence of a child from the home due to placement in foster care is not considered in determining family composition and family size. 
</P>
<P>(f) <I>Prohibition of evictions.</I> Any tenant who is lawfully residing in a dwelling unit in a public housing project may not be evicted or otherwise required to vacate the unit because of the designation of the project, or because of any action taken by HUD or the PHA in accordance with this part. 
</P>
<P>(g) <I>Prohibition of coercion to accept supportive services.</I> As with other HUD-assisted housing, no disabled family or elderly family residing in designated housing may be required to accept supportive services made available by the PHA under this part. 
</P>
<P>(h) <I>Availability of grievance procedures in 24 CFR part 966.</I> The grievance procedures in 24 CFR part 966, subpart B, which applies to public housing tenants, is applicable to this part. 


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="960" NODE="24:4.1.3.1.11" TYPE="PART">
<HEAD>PART 960—ADMISSION TO, AND OCCUPANCY OF, PUBLIC HOUSING
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437a, 1437c, 1437d, 1437n, 1437z-3, and 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>40 FR 33446, Aug. 8, 1975, unless otherwise noted. Redesignated at 49 FR 6714, Feb. 23, 1984.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.3.1.11.1" TYPE="SUBPART">
<HEAD>Subpart A—Applicability, Definitions, Equal Opportunity Requirements</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>65 FR 16724, Mar. 29, 2000, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 960.101" NODE="24:4.1.3.1.11.1.5.1" TYPE="SECTION">
<HEAD>§ 960.101   Applicability.</HEAD>
<P>This part is applicable to public housing. 


</P>
</DIV8>


<DIV8 N="§ 960.102" NODE="24:4.1.3.1.11.1.5.2" TYPE="SECTION">
<HEAD>§ 960.102   Definitions.</HEAD>
<P>(a) Definitions found elsewhere:
</P>
<P>(1) <I>General definitions.</I> The following terms are defined in 24 CFR part 5, subpart A: 1937 Act, drug, drug-related criminal activity, elderly person, federally assisted housing, guest, household, HUD, MSA, premises, public housing, public housing agency (PHA), Section 8, violent criminal activity.
</P>
<P>(2) <I>Definitions under the 1937 Act.</I> The following terms are defined in 24 CFR part 5, subpart D: annual contributions contract (ACC), applicant, elderly family, family, person with disabilities.
</P>
<P>(3) <I>Definitions and explanations concerning income and rent.</I> The following terms are defined or explained in 24 CFR part 5, subpart F (§ 5.603): Annual income, economic self-sufficiency program, extremely low-income family, low-income family, tenant rent, total tenant payment, utility allowance.
</P>
<P>(b) <I>Additional definitions.</I> In addition to the definitions in paragraph (a), the following definitions and cross-references apply: 
</P>
<P><I>Alternative non-public housing rent.</I> A monthly rent equal to the greater of—
</P>
<P>(i) The applicable fair market rent, as defined in 24 CFR part 888, subpart A, for the unit; or
</P>
<P>(ii) The amount of the monthly subsidy provided for the unit, which will be determined by adding the per unit assistance provided to a public housing property as calculated through the applicable formulas for the Public Housing Capital Fund and Public Housing Operating Fund.
</P>
<P>(A) For the Public Housing Capital Fund, the amount of Capital Funds provided to the unit will be calculated as the per unit Capital Fund assistance provided to a PHA for the development in which the family resides for the most recent funding year for which Capital Funds have been allocated;
</P>
<P>(B) For the Public Housing Operating Fund, the amount of Operating Funds provided to the unit will be calculated as the per unit amount provided to the public housing project where the unit is located for the most recent funding year for which a final funding obligation determination has been made;
</P>
<P>(C) HUD will publish such funding amounts no later than December 31 each year.
</P>
<P><I>Ceiling rent.</I> See § 960.253(d). 
</P>
<P><I>Covered housing provider.</I> For HUD's public housing program, “covered housing provider,” as such term is in used HUD's regulations at 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking), is the PHA.
</P>
<P><I>Covered person.</I> For purposes of this part, covered person means a tenant, any member of the tenant's household, a guest or another person under the tenant's control.
</P>
<P><I>Designated housing.</I> See part 945 of this chapter. 
</P>
<P><I>Disabled families.</I> See § 5.403 of this title. 
</P>
<P><I>Eligible families.</I> Low income families who are eligible for admission to the public housing program. 
</P>
<P><I>Flat rent.</I> See § 960.253(b). 
</P>
<P><I>Income-based rent.</I> See § 960.253(c). 
</P>
<P><I>Mixed population development.</I> A public housing development, or portion of a development, that was reserved for elderly and disabled families at its inception (and has retained that character). If the development was not so reserved at its inception, the PHA has obtained HUD approval to give preference in tenant selection for all units in the development (or portion of development) to elderly families and disabled families. These developments were formerly known as elderly projects. 
</P>
<P><I>Non-public housing over-income family.</I> A family whose income exceeds the over-income limit for 24 consecutive months and is paying the alternative non-public housing rent. See subpart E of this part.


</P>
<P><I>Over-income family.</I> A family whose income exceeds the over-income limit. See subpart E of this part.
</P>
<P><I>Over-income limit.</I> The over-income limit is determined by multiplying the applicable income limit for a very low-income family, as defined in § 5.603(b) of this title, by a factor of 2.4. See § 960.507(b).
</P>
<P><I>PHA plan.</I> See part 903 of this chapter. 
</P>
<P><I>Residency preference.</I> A preference for admission of persons who reside in a specified geographic area. 
</P>
<P><I>Tenant-based.</I> See § 982.1(b) of this chapter. 
</P>
<CITA TYPE="N">[65 FR 16724, Mar. 29, 2000, as amended at 66 FR 28799, May 24, 2001; 81 FR 12372, Mar. 8, 2016; 81 FR 80815, Nov. 16, 2016; 88 FR 9669, Feb. 14, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 960.103" NODE="24:4.1.3.1.11.1.5.3" TYPE="SECTION">
<HEAD>§ 960.103   Equal opportunity requirements and protection for victims of domestic violence, dating violence, sexual assault, or stalking.</HEAD>
<P>(a) <I>Applicable requirements.</I> The PHA must administer its public housing program in accordance with all applicable equal opportunity requirements imposed by contract or federal law, including the authorities cited in § 5.105(a) of this title. 
</P>
<P>(b) <I>PHA duty to affirmatively further fair housing.</I> The PHA must affirmatively further fair housing in the administration of its public housing program. 
</P>
<P>(c) <I>Equal opportunity certification.</I> The PHA must submit signed equal opportunity certifications to HUD in accordance with § 903.7(o) of this title, including certification that the PHA will affirmatively further fair housing.
</P>
<P>(d) <I>Protection for victims of domestic violence, dating violence, sexual assault, or stalking.</I> The PHA must apply the requirements in 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking).
</P>
<CITA TYPE="N">[65 FR 16724, Mar. 29, 2000, as amended at 73 FR 72344, Nov. 28, 2008; 75 FR 66262, Oct. 27, 2010; 81 FR 80815, Nov. 16, 2016]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.3.1.11.2" TYPE="SUBPART">
<HEAD>Subpart B—Admission</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>66 FR 28799, May 24, 2001, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 960.200" NODE="24:4.1.3.1.11.2.5.1" TYPE="SECTION">
<HEAD>§ 960.200   Purpose.</HEAD>
<P>(a) This subpart states HUD eligibility and selection requirements for admission to public housing. 
</P>
<P>(b) See also related HUD regulations in this title concerning these subjects: 
</P>
<P>(1) 1937 Act definitions: part 5, subpart D; 
</P>
<P>(2) Restrictions on assistance to noncitizens: part 5, subpart E; 
</P>
<P>(3) Family income and family payment: part 5, subpart F; 
</P>
<P>(4) Public housing agency plans: part 903; 
</P>
<P>(5) Rent and reexamination: part 960, subpart C; 
</P>
<P>(6) Mixed population developments: part 960, subpart D; 
</P>
<P>(7) Occupancy by over-income families or police officers: part 960, subpart E.
</P>
<P>(8) Protection for victims of domestic violence, dating violence, sexual assault, or stalking, 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking).
</P>
<CITA TYPE="N">[66 FR 28799, May 24, 2001, as amended at 73 FR 72344, Nov. 28, 2008; 75 FR 66262, Oct. 27, 2010; 81 FR 80815, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 960.201" NODE="24:4.1.3.1.11.2.5.2" TYPE="SECTION">
<HEAD>§ 960.201   Eligibility.</HEAD>
<P>(a) <I>Who is eligible?</I> (1) <I>Basic eligibility.</I> An applicant must meet all eligibility requirements in order to receive housing assistance. At a minimum, the applicant must be a family, as defined in § 5.403 of this title, must be income-eligible, as described in this section, and must meet the net asset and property ownership restriction requirements in § 5.618 of this title. Such eligible applicants include single persons.




</P>
<P>(2) <I>Low income limit.</I> No family other than a low income family is eligible for admission to a PHA's public housing program. 
</P>
<P>(b) <I>Income used for eligibility and targeting.</I> Family annual income (see § 5.609) is used both for determination of income eligibility under paragraph (a) and for PHA income targeting under § 960.202 
</P>
<P>(c) <I>Reporting.</I> The PHA must comply with HUD-prescribed reporting requirements that will permit HUD to maintain the data, as determined by HUD, necessary to monitor compliance with income eligibility and targeting requirement.

 
</P>
<CITA TYPE="N">[66 FR 28799, May 24, 2001, as amended at 88 FR 9670, Feb. 14, 2023]








</CITA>
</DIV8>


<DIV8 N="§ 960.202" NODE="24:4.1.3.1.11.2.5.3" TYPE="SECTION">
<HEAD>§ 960.202   Tenant selection policies.</HEAD>
<P>(a) <I>Selection policies, generally.</I> (1) The PHA shall establish and adopt written policies for admission of tenants. 
</P>
<P>(2) These policies shall provide for and include the following: 
</P>
<P>(i) Targeting admissions to extremely low income families as provided in paragraph (b) of this section. 
</P>
<P>(ii) Deconcentration of poverty and income-mixing in accordance with the PHA Plan regulations (see 24 CFR part 903). 
</P>
<P>(iii) Precluding admission of applicants whose habits and practices reasonably may be expected to have a detrimental effect on the residents or the project environment; 
</P>
<P>(iv) Objective and reasonable policies for selection by the PHA among otherwise eligible applicants, including requirements for applications and waiting lists (see 24 CFR 1.4), and for verification and documentation of information relevant to acceptance or rejection of an applicant, including documentation and verification of citizenship and eligible immigration status under 24 CFR part 5; and 
</P>
<P>(v) Policies of participant transfer between units, developments, and programs. For example, a PHA could adopt a criterion for voluntary transfer that the tenant had met all obligations under the current program, including payment of charges to the PHA. 
</P>
<P>(b) <I>Targeting admissions to extremely low income families</I>—(1) <I>Targeting requirement.</I> (i) Not less than 40 percent of the families admitted to a PHA's public housing program during the PHA fiscal year from the PHA waiting list shall be extremely low income families. This is called the “basic targeting requirement.” 
</P>
<P>(ii) To the extent provided in paragraph (b)(2) of this section, admission of extremely low income families to the PHA's Section 8 voucher program during the same PHA fiscal year is credited against the basic targeting requirement. 
</P>
<P>(iii) A PHA must comply with both the targeting requirement found in this part and the deconcentration requirements found in part 903 of this chapter. 
</P>
<P>(2) <I>Credit for admissions to PHA voucher program.</I> (i) If admissions of extremely low income families to the PHA's voucher program during a PHA fiscal year exceeds the 75 percent minimum targeting requirement for the PHA's voucher program (see 24 CFR 982.201(b)(2)), such excess shall be credited (subject to the limitations in paragraph (b)(2)(ii) of this section) against the PHA's basic targeting requirement for the same fiscal year. 
</P>
<P>(ii) The fiscal year credit for voucher program admissions that exceed the minimum voucher program targeting requirement shall not exceed the lower of: 
</P>
<P>(A) Ten percent of public housing waiting list admissions during the PHA fiscal year; 
</P>
<P>(B) Ten percent of waiting list admission to the PHA's Section 8 tenant-based assistance program during the PHA fiscal year; or 
</P>
<P>(C) The number of qualifying low income families who commence occupancy during the fiscal year of PHA public housing units located in census tracts with a poverty rate of 30 percent or more. For this purpose, qualifying low income family means a low income family other than an extremely low income family. 


</P>
<P>(c) <I>Priority for tenant-based and project-based voucher families displaced due to HQS non-compliance.</I> The PHA must adopt a preference for tenant-based and project-based families displaced due to HQS noncompliance in accordance with § 982.404(e)(2) and § 983.208(d)(6)(ii).


</P>
<P>(d) <I>Adoption and availability of tenant selection policies.</I> These selection policies shall: 
</P>
<P>(1) Be duly adopted and implemented; 
</P>
<P>(2) Be publicized by posting copies thereof in each office where applications are received and by furnishing copies to applicants or tenants upon request, free or at their expense, at the discretion of the PHA; and 
</P>
<P>(3) Be consistent with the fair housing and equal opportunity provisions of § 5.105 of this title; and 
</P>
<P>(4) Be submitted to the HUD field office upon request from that office. 
</P>
<CITA TYPE="N">[66 FR 28799, May 24, 2001, as amended at 89 FR 38293, May 7, 2024]






</CITA>
</DIV8>


<DIV8 N="§ 960.203" NODE="24:4.1.3.1.11.2.5.4" TYPE="SECTION">
<HEAD>§ 960.203   Standards for PHA tenant selection criteria.</HEAD>
<P>(a) The tenant selection criteria to be established and information to be considered shall be reasonably related to individual attributes and behavior of an applicant and shall not be related to those which may be imputed to a particular group or category of persons of which an applicant may be a member. The PHA may use local preferences, as provided in § 960.206. 
</P>
<P>(b) Under the Public Housing Assessment System (PHAS), PHAs that have adopted policies, implemented procedures and can document that they successfully screen out and deny admission to certain applicants with unfavorable criminal histories receive points. (See 24 CFR 902.43(a)(5).) This policy takes into account the importance of screening to public housing communities and program integrity, and the demand for assisted housing by families who will adhere to lease responsibilities. 
</P>
<P>(c) In selection of families for admission to its public housing program, or to occupy a public housing development or unit, the PHA is responsible for screening family behavior and suitability for tenancy. The PHA may consider all relevant information, which may include, but is not limited to: 
</P>
<P>(1) An applicant's past performance in meeting financial obligations, especially rent; 
</P>
<P>(2) A record of disturbance of neighbors, destruction of property, or living or housekeeping habits at prior residences which may adversely affect the health, safety or welfare of other tenants; and
</P>
<P>(3) A history of criminal activity involving crimes of physical violence to persons or property and other criminal acts which would adversely affect the health, safety or welfare of other tenants. (See § 960.204.) With respect to criminal activity described in § 960.204: 
</P>
<P>(i) The PHA may require an applicant to exclude a household member in order to be admitted to the housing program where that household member has participated in or been culpable for actions described in § 960.204 that warrants denial. 
</P>
<P>(ii) The PHA may, where a statute requires that the PHA prohibit admission for a prescribed period of time after some disqualifying behavior or event, choose to continue that prohibition for a longer period of time. 
</P>
<P>(4) PHA tenant selection criteria are subject to 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking). In cases of requests for emergency transfers under VAWA, with the written consent of the victim of domestic violence, dating violence, sexual assault, or stalking, the receiving PHA may accept and use the prior covered housing provider's determination of eligibility and tenant screening and all related verification information, including form HUD 50058 (Family Report).
</P>
<P>(d) In the event of the receipt of unfavorable information with respect to an applicant, consideration shall be given to the time, nature, and extent of the applicant's conduct (including the seriousness of the offense). 
</P>
<P>(1) In a manner consistent with the PHA's policies, procedures and practices referenced in paragraph (b) of this section, consideration may be given to factors which might indicate a reasonable probability of favorable future conduct. For example: 
</P>
<P>(i) Evidence of rehabilitation; and
</P>
<P>(ii) Evidence of the applicant family's participation in or willingness to participate in social service or other appropriate counseling service programs and the availability of such programs; 
</P>
<P>(2) <I>Consideration of rehabilitation.</I> (i) In determining whether to deny admission for illegal drug use or a pattern of illegal drug use by a household member who is no longer engaging in such use, or for abuse or a pattern of abuse of alcohol by a household member who is no longer engaging in such abuse, the PHA may consider whether such household member is participating in or has successfully completed a supervised drug or alcohol rehabilitation program, or has otherwise been rehabilitated successfully (42 U.S.C. 13661). For this purpose, the PHA may require the applicant to submit evidence of the household member's current participation in, or successful completion of, a supervised drug or alcohol rehabilitation program or evidence of otherwise having been rehabilitated successfully. 
</P>
<P>(ii) If rehabilitation is not an element of the eligibility determination (see § 960.204(a)(1)), the PHA may choose not to consider whether the person has been rehabilitated. 
</P>
<CITA TYPE="N">[66 FR 28799, May 24, 2001, as amended at 73 FR 72344, Nov. 28, 2008; 75 FR 66262, Oct. 27, 2010; 81 FR 80815, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 960.204" NODE="24:4.1.3.1.11.2.5.5" TYPE="SECTION">
<HEAD>§ 960.204   Denial of admission for criminal activity or drug abuse by household members.</HEAD>
<P>(a) <I>Required denial of admission</I>—(1) <I>Persons evicted for drug-related criminal activity.</I> The PHA standards must prohibit admission of an applicant to the PHA's public housing program for three years from the date of the eviction if any household member has been evicted from federally assisted housing for drug-related criminal activity. However, the PHA may admit the household if the PHA determines: 
</P>
<P>(i) The evicted household member who engaged in drug-related criminal activity has successfully completed a supervised drug rehabilitation program approved by the PHA; or
</P>
<P>(ii) The circumstances leading to the eviction no longer exist (for example, the criminal household member has died or is imprisoned). 
</P>
<P>(2) <I>Persons engaging in illegal use of a drug.</I> The PHA must establish standards that prohibit admission of a household to the PHA's public housing program if: 
</P>
<P>(i) The PHA determines that any household member is currently engaging in illegal use of a drug (For purposes of this section, a household member is “currently engaged in” the criminal activity if the person has engaged in the behavior recently enough to justify a reasonable belief that the behavior is current); or
</P>
<P>(ii) The PHA determines that it has reasonable cause to believe that a household member's illegal use or pattern of illegal use of a drug may threaten the health, safety, or right to peaceful enjoyment of the premises by other residents. 
</P>
<P>(3) <I>Persons convicted of methamphetamine production.</I> The PHA must establish standards that permanently prohibit admission to the PHA's public housing program if any household member has ever been convicted of drug-related criminal activity for manufacture or production of methamphetamine on the premises of federally assisted housing. 
</P>
<P>(4) <I>Persons subject to sex offender registration requirement.</I> The PHA must establish standards that prohibit admission to the PHA's public housing program if any member of the household is subject to a lifetime registration requirement under a State sex offender registration program. In the screening of applicants, the PHA must perform necessary criminal history background checks in the State where the housing is located and in other States where household members are known to have resided. (See part 5, subpart J of this title for provisions concerning access to sex offender registration records.) 
</P>
<P>(b) <I>Persons that abuse or show a pattern of abuse of alcohol.</I> The PHA must establish standards that prohibit admission to the PHA's public housing program if the PHA determines that it has reasonable cause to believe that a household member's abuse or pattern of abuse of alcohol may threaten the health, safety, or right to peaceful enjoyment of the premises by other residents. 
</P>
<P>(c) <I>Use of criminal records.</I> Before a PHA denies admission to the PHAs public housing program on the basis of a criminal record, the PHA must notify the household of the proposed action to be based on the information and must provide the subject of the record and the applicant with a copy of the criminal record and an opportunity to dispute the accuracy and relevance of that record. (See part 5, subpart J of this title for provisions concerning access to criminal records.) 
</P>
<P>(d) <I>Cost of obtaining criminal record.</I> The PHA may not pass along to the applicant the costs of a criminal records check. 


</P>
</DIV8>


<DIV8 N="§ 960.205" NODE="24:4.1.3.1.11.2.5.6" TYPE="SECTION">
<HEAD>§ 960.205   Drug use by applicants: Obtaining information from drug treatment facility.</HEAD>
<P>(a) <I>Purpose.</I> This section addresses a PHA's authority to request and obtain information from drug abuse treatment facilities concerning applicants. This section does not apply to information requested or obtained from drug abuse treatment facilities other than under the authority of section 6(t). 
</P>
<P>(b) <I>Additional terms</I> used in this section are as follows: 
</P>
<P>(1) <I>Currently engaging in illegal use of a drug.</I> Illegal use of a drug occurred recently enough to justify a reasonable belief that there is continuing illegal drug use by a household member. 
</P>
<P>(2) <I>Drug abuse treatment facility.</I> An entity: 
</P>
<P>(i) That holds itself out as providing, and provides, diagnosis, treatment, or referral for treatment with respect to the illegal drug use; and
</P>
<P>(ii) That is either an identified unit within a general care facility; or an entity other than a general medical care facility. 
</P>
<P>(c) <I>Authorization by household member for PHA to receive information from a drug abuse treatment facility.</I> (1) The PHA may require each applicant to submit for all household members who are at least 18 years of age, and for each family head or spouse regardless of age, one or more consent forms signed by such household member that: 
</P>
<P>(i) Requests any drug abuse treatment facility to inform the PHA only whether the drug abuse treatment facility has reasonable cause to believe that the household member is currently engaging in illegal drug use; 
</P>
<P>(ii) Complies with the form of written consent required by 42 CFR 2.31; and 
</P>
<P>(iii) Authorizes the PHA to receive such information from the drug abuse treatment facility, and to utilize such information in determining whether to prohibit admission of the household member to the PHA's public housing program in accordance with § 960.203. (See the Public Health Service Act, 42 U.S.C. 290dd-2, and implementing regulations at 42 CFR part 2, with respect to responsibilities of the drug abuse treatment facility.) 
</P>
<P>(2) The consent form submitted for a proposed household member must expire automatically after the PHA has made a final decision to either approve or deny the admission of such person. 
</P>
<P>(d) <I>PHA request for information from drug use treatment facility.</I> (1) The PHA may request that a drug abuse treatment facility disclose whether the drug abuse treatment facility has reasonable cause to believe that the proposed household member is currently engaging in the illegal use of a drug (as defined in § 5.100 of this title). 
</P>
<P>(2) The PHA's request to the drug abuse treatment facility must include a copy of the consent form signed by the proposed household member. 
</P>
<P>(3) A drug abuse treatment facility is not liable for damages based on any information required to be disclosed under this section if such disclosure is consistent with section 543 of the Public Health Service Act (42 U.S.C. 290dd-2). 
</P>
<P>(4) The PHA is not obligated to request information from a drug treatment facility under this section, and is not liable for damages for failing to request or receive such information. 
</P>
<P>(5) A drug abuse treatment facility may charge the PHA a reasonable fee for information provided under this section. The PHA may not pass along to the applicant or tenant the costs of obtaining this information. 
</P>
<P>(e) <I>Prohibition of discriminatory treatment of applicants.</I> (1) A PHA may request information from a drug abuse treatment facility under paragraph (d) of this section only if the PHA has adopted and has consistently implemented either of the following policies, obtaining a signed consent form from the proposed household members: 
</P>
<P>(i) <I>Policy A—Request for all families.</I> Under Policy A, the PHA must submit a request for information to a drug abuse treatment facility in accordance with paragraph (d) of this section before admitting any family to the PHA's public housing program. For each such family, the request must be submitted for each proposed household member described in paragraph (c)(1) of this section. 
</P>
<P>(ii) <I>Policy B—Request for certain household members.</I> Under Policy B, the PHA must submit a request to a drug abuse treatment facility only with respect to each proposed household member: 
</P>
<P>(A) Whose criminal record indicates prior arrest or conviction for any criminal activity that may be a basis for denial of admission under § 960.205; or 
</P>
<P>(B) Whose prior tenancy records indicate that the proposed household member: 
</P>
<P>(1) Engaged in the destruction of property; 
</P>
<P>(2) Engaged in violent activity against another person; or 
</P>
<P>(3) Interfered with the right of peaceful enjoyment of the premises of other residents. 
</P>
<P>(4) The policy adopted by the PHA must be included in the PHA administrative plan and the PHA plan. 
</P>
<P>(f) <I>Records management and confidentiality.</I> Each PHA that receives information from a drug abuse treatment facility under this section must establish and implement a system of records management that ensures that any information which the PHA receives from the drug abuse treatment facility about a person: 
</P>
<P>(1) Is maintained confidentially in accordance with section 543 of the Public Health Service Act (12 U.S.C. 290dd-2); 
</P>
<P>(2) Is not misused or improperly disseminated; and 
</P>
<P>(3) Is destroyed, as applicable: 
</P>
<P>(i) Not later than 5 business days after the PHA makes a final decision to admit the person as a household member under the PHA's public housing program; or 
</P>
<P>(ii) If the PHA denies the admission of such person as a household member, in a timely manner after the date on which the statute of limitations for the commencement of a civil action based upon that denial of admissions has expired without the filing of a civil action or until final disposition of any such litigation. 


</P>
</DIV8>


<DIV8 N="§ 960.206" NODE="24:4.1.3.1.11.2.5.7" TYPE="SECTION">
<HEAD>§ 960.206   Waiting list: Local preferences in admission to public housing program.</HEAD>
<P>(a) <I>Establishment of PHA local preferences.</I> (1) The PHA may adopt a system of local preferences for selection of families admitted to the PHA's public housing program. The PHA system of selection preferences must be based on local housing needs and priorities as determined by the PHA. In determining such needs and priorities, the PHA shall use generally accepted data sources. Such sources include public comment on the PHA plan (as received pursuant to § 903.17 of this chapter), and on the consolidated plan for the relevant jurisdiction (as received pursuant to part 91 of this title). 
</P>
<P>(2) The PHA may limit the number of applicants that qualify for any local preference. 
</P>
<P>(3) PHA adoption and implementation of local preferences is subject to HUD requirements concerning income-targeting (§ 960.202(b)), deconcentration and income-mixing (§ 903.7), and selection preferences for developments designated exclusively for elderly or disabled families or for mixed population developments (§ 960.407). 
</P>
<P>(4) The PHA must inform all applicants about available preferences and must give applicants an opportunity to show that they qualify for available preferences. 
</P>
<P>(b) <I>Particular local preferences</I>—(1) <I>Residency requirements or preferences.</I> (i) Residency requirements are prohibited. Although a PHA is not prohibited from adopting a residency preference, the PHA may only adopt or implement residency preferences in accordance with non-discrimination and equal opportunity requirements listed at § 5.105(a) of this title. 
</P>
<P>(ii) A residency preference is a preference for admission of persons who reside in a specified geographic area (“residency preference area”). A county or municipality may be used as a residency preference area. An area smaller than a county or municipality may not be used as a residency preference area. 
</P>
<P>(iii) Any PHA residency preferences must be included in the statement of PHA policies that govern eligibility, selection and admission to the program, which is included in the PHA annual plan (or supporting documents) pursuant to part 903 of this chapter. Such policies must specify that use of a residency preference will not have the purpose or effect of delaying or otherwise denying admission to the program based on the race, color, ethnic origin, gender, religion, disability, or age of any member of an applicant family. 
</P>
<P>(iv) A residency preference must not be based on how long an applicant has resided or worked in a residency preference area. 
</P>
<P>(v) Applicants who are working or who have been notified that they are hired to work in a residency preference area must be treated as residents of the residency preference area. The PHA may treat graduates of, or active participants in, education and training programs in a residency preference area as residents of the residency preference area if the education or training program is designed to prepare individuals for the job market. 
</P>
<P>(2) <I>Preference for working families.</I> The PHA may adopt a preference for admission of working families (families where the head, spouse, or sole member, is employed). However, an applicant must be given the benefit of the working family preference if the head and spouse, or sole member is age 62 or older, or is a person with disabilities. 
</P>
<P>(3) <I>Preference for person with disabilities.</I> The PHA may adopt a preference for admission of families that include a person with disabilities. However, the PHA may not adopt a preference for persons with a specific disability. 
</P>
<P>(4) <I>Preference for victims of domestic violence, dating violence, sexual assault, or stalking.</I> The PHA should consider whether to adopt a local preference for admission of families that include victims of domestic violence, dating violence, sexual assault, or stalking.
</P>
<P>(5) <I>Preference for single persons who are elderly, displaced, homeless or a person with disabilities.</I> The PHA may adopt a preference for admission of single persons who are age 62 or older, displaced, homeless, or persons with disabilities over other single persons. 
</P>
<P>(6) <I>Preference for non-public housing over-income families.</I> The PHA may adopt a preference for admission of non-public housing over-income families paying the alternative non-public housing rent and are on a NPHOI lease who become an income-eligible low-income family as defined in § 5.603(b) of this title and are eligible for admission to the public housing program.
</P>
<P>(c) <I>Selection for particular unit.</I> In selecting a family to occupy a particular unit, the PHA may match characteristics of the family with the type of unit available, for example, number of bedrooms. In selection of families to occupy units with special accessibility features for persons with disabilities, the PHA must first offer such units to families which include persons with disabilities who require such accessibility features (see §§ 8.27 and 100.202 of this title). 
</P>
<P>(d) <I>Housing assistance limitation for single persons.</I> A single person who is not an elderly or displaced person, or a person with disabilities, or the remaining member of a resident family may not be provided a housing unit with two or more bedrooms. 
</P>
<P>(e) <I>Selection method.</I> (1) The PHA must use the following to select among applicants on the waiting list with the same priority for admission: 
</P>
<P>(i) Date and time of application; or 
</P>
<P>(ii) A drawing or other random choice technique. 
</P>
<P>(2) The method for selecting applicants must leave a clear audit trail that can be used to verify that each applicant has been selected in accordance with the method specified in the PHA plan. 
</P>
<CITA TYPE="N">[66 FR 28799, May 24, 2001, as amended at 81 FR 80815, Nov. 16, 2016; 88 FR 9670, Feb. 14, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 960.208" NODE="24:4.1.3.1.11.2.5.8" TYPE="SECTION">
<HEAD>§ 960.208   Notification to applicants.</HEAD>
<P>(a) The PHA must promptly notify any applicant determined to be ineligible for admission to a project of the basis for such determination, and must provide the applicant upon request, within a reasonable time after the determination is made, with an opportunity for an informal hearing on such determination. 
</P>
<P>(b) When a determination has been made that an applicant is eligible and satisfies all requirements for admission, including the tenant selection criteria, the applicant must be notified of the approximate date of occupancy insofar as that date can be reasonably determined.


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:4.1.3.1.11.3" TYPE="SUBPART">
<HEAD>Subpart C—Rent and Reexamination</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>65 FR 16726, Mar. 29, 2000, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 960.253" NODE="24:4.1.3.1.11.3.5.1" TYPE="SECTION">
<HEAD>§ 960.253   Choice of rent.</HEAD>
<P>(a) <I>Rent options</I>—(1) <I>Annual choice by family.</I> Once a year, the PHA must give each family the opportunity to choose between the two methods for determining the amount of tenant rent payable monthly by the family. The family may choose to pay as tenant rent either a flat rent as determined in accordance with paragraph (b) of this section, or an income-based rent as determined in accordance with paragraph (c) of this section. Except for financial hardship cases as provided in paragraph (d) of this section, the family may not be offered this choice more than once a year.
</P>
<P>(2) <I>Relation to minimum rent.</I> Regardless of whether the family chooses to pay a flat rent or income-based rent, the family must pay at least the minimum rent as determined in accordance with § 5.630 of this title. 
</P>
<P>(3) <I>Relation to non-public housing over-income families.</I> Non-public housing over-income families must pay the alternative non-public housing rent, as applicable, as determined in accordance with § 960.102.
</P>
<P>(b) <I>Flat rent</I>. The flat rent is determined annually, based on the market rental value of the unit as determined by this paragraph (b).
</P>
<P>(1) The PHA must establish a flat rent for each public housing unit that is no less than 80 percent of the applicable Fair Market Rent (FMR) as determined under 24 CFR part 888, subpart A; or
</P>
<P>(2) HUD may permit a flat rent of no less than 80 percent of an applicable small area FMR (SAFMR) or unadjusted rent, if applicable, as determined by HUD, or any successor determination, that more accurately reflects local market conditions and is based on an applicable market area that is geographically smaller than the applicable market area used in paragraph (b)(1) of this section. If HUD has not determined an applicable SAFMR or unadjusted rent, the PHA must rely on the applicable FMR under paragraph (b)(1) or may apply for an exception flat rent under paragraph (b)(3).
</P>
<P>(3) The PHA may request, and HUD may approve, on a case-by-case basis, a flat rent that is lower than the amounts in paragraphs (b)(1) and (2) of this section, subject to the following requirements:
</P>
<P>(i) The PHA must submit a market analysis of the applicable market.
</P>
<P>(ii) The PHA must demonstrate, based on the market analysis, that the proposed flat rent is a reasonable rent in comparison to rent for other comparable unassisted units, based on the location, quality, size, unit type, and age of the public housing unit and any amenities, housing services, maintenance, and utilities to be provided by the PHA in accordance with the lease.
</P>
<P>(iii) All requests for exception flat rents under this paragraph (b)(3) must be submitted to HUD.
</P>
<P>(4) For units where utilities are tenant-paid, the PHA must adjust the flat rent downward by the amount of a utility allowance for which the family might otherwise be eligible under 24 CFR part 965, subpart E.
</P>
<P>(5) The PHA must revise, if necessary, the flat rent amount for a unit no later than 90 days after HUD issues new FMRs.
</P>
<P>(6) If a new flat rent would cause a family's rent to increase by more than 35 percent, the family's rent increase must be phased in at 35 percent annually until such time that the family chooses to pay the income-based rent or the family is paying the flat rent established pursuant to this paragraph.
</P>
<P>(c) <I>Income-based rent.</I> (1) An income-based rent is a tenant rent that is based on the family's income and the PHA's policies for determination of such rents. 
</P>
<P>(2) The PHA rent policies may specify that the PHA will use percentage of family income or some other reasonable system to determine income-based rents. The PHA rent policies may provide for depositing a portion of tenant rent in an escrow or savings account, for imposing a ceiling on tenant rents, for adoption of permissive income deductions (see § 5.611(b) of this title), or for another reasonable system to determining the amount of income-based tenant rent. 
</P>
<P>(3) The income-based tenant rent must not exceed the total tenant payment (§ 5.628 of this title) for the family minus any applicable utility allowance for tenant-paid utilities. If the utility allowance exceeds the total tenant payment, the PHA shall pay such excess amount (the utility reimbursement) either to the family or directly to the utility supplier to pay the utility bill on behalf of the family. 
</P>
<P>(4) The PHA may elect to establish policies regarding the frequency of utility reimbursement payments for payments made to the family.
</P>
<P>(i) The PHA will have the option of making utility reimbursement payments not less than once per calendar-year quarter, for reimbursements totaling $45 or less per quarter. In the event a family leaves the program in advance of its next quarterly reimbursement, the PHA must reimburse the family for a prorated share of the applicable reimbursement. PHAs exercising this option must have a hardship policy in place for tenants.
</P>
<P>(ii) If the PHA elects to pay the utility supplier, the PHA must notify the family of the amount of utility reimbursement paid to the utility supplier.
</P>
<P>(d) <I>Ceiling rent.</I> A PHA using ceiling rents authorized and established before October 1, 1999, may continue to use ceiling rents, provided such ceiling rents are set at the level required for flat rents under this section. PHAs must follow the requirements for calculating and adjusting flat rents in paragraph (b) of this section when calculating and adjusting ceiling rents.
</P>
<P>(e) <I>Information for families.</I> For the family to make an informed choice about its rent options, the PHA must provide sufficient information for an informed choice. Such information must include at least the following written information: 
</P>
<P>(1) The PHA's policies on switching type of rent in circumstances of financial hardship, and
</P>
<P>(2) The dollar amounts of tenant rent for the family under each option, following the procedures in paragraph (f) of this section.
</P>
<P>(f) <I>Choice between flat and income-based rents.</I> Families must be offered the choice between a flat rental amount and a previously calculated income-based rent according to the following:


</P>
<P>(1) For a family that chooses the flat rent option, the PHA must conduct a reexamination of family income and composition at least once every three years, except for families a PHA determines exceed the over-income limit described in § 960.507(b). Once a PHA determines that a family has an income exceeding the over-income limit, the PHA must follow the income examination and notification requirements under § 960.507(c).
</P>
<P>(2) At initial occupancy, or in any year in which a participating family is paying the income-based rent, the PHA must:
</P>
<P>(i) Conduct a full examination of family income and composition, following the provisions in § 960.257;
</P>
<P>(ii) Inform the family of the flat rental amount and the income-based rental amount determined by the examination of family income and composition;
</P>
<P>(iii) Inform the family of the PHA's policies on switching rent types in circumstances of financial hardship; and
</P>
<P>(iv) Apply the family's rent decision at the next lease renewal.
</P>
<P>(3) In any year in which a family chooses the flat rent option but the PHA chooses not to conduct a full examination of family income and composition for the annual rent option under the authority of paragraph (f)(1) of this section, the PHA must:
</P>
<P>(i) Use income information from the examination of family income and composition from the first annual rent option;
</P>
<P>(ii) Inform the family of the updated flat rental amount and the rental amount determined by the most recent examination of family income and composition;
</P>
<P>(iii) Inform the family of the PHA's policies on switching rent types in circumstances of financial hardship; and
</P>
<P>(iv) Apply the family's rent decision at the next lease renewal.
</P>
<P>(g) <I>Switch from flat rent to income-based rent because of hardship.</I> (1) A family that is paying a flat rent may at any time request a switch to payment of income-based rent (before the next annual option to select the type of rent) if the family is unable to pay flat rent because of financial hardship. The PHA must adopt written policies for determining when payment of flat rent is a financial hardship for the family. 
</P>
<P>(2) If the PHA determines that the family is unable to pay the flat rent because of financial hardship, the PHA must immediately allow the requested switch to income-based rent. The PHA shall make the determination within a reasonable time after the family request. 
</P>
<P>(3) The PHA policies for determining when payment of flat rent is a financial hardship must provide that financial hardship include the following situations: 
</P>
<P>(i) The family has experienced a decrease in income because of changed circumstances, including loss or reduction of employment, death in the family, or reduction in or loss of earnings or other assistance; 
</P>
<P>(ii) The family has experienced an increase in expenses, because of changed circumstances, for medical costs, child care, transportation, education, or similar items; and
</P>
<P>(iii) Such other situations determined by the PHA to be appropriate. 
</P>
<CITA TYPE="N">[65 FR 16726, Mar. 29, 2000, as amended at 80 FR 53712, Sept. 8, 2015; 81 FR 12372, Mar. 8, 2016; 88 FR 9670, Feb. 14, 2023]








</CITA>
</DIV8>


<DIV8 N="§ 960.255" NODE="24:4.1.3.1.11.3.5.2" TYPE="SECTION">
<HEAD>§ 960.255   Self-sufficiency incentives—Disallowance of increase in annual income.</HEAD>
<P>(a) <I>Definitions.</I> The following definitions apply for purposes of this section.
</P>
<P><I>Baseline income.</I> The annual income immediately prior to implementation of the disallowance described in paragraph (c)(1) of this section of a person who is a member of a qualified family.
</P>
<P><I>Disallowance.</I> Exclusion from annual income. 
</P>
<P><I>Previously unemployed</I> includes a person who has earned, in the twelve months previous to employment, no more than would be received for 10 hours of work per week for 50 weeks at the established minimum wage. 
</P>
<P><I>Qualified family.</I> A family residing in public housing:
</P>
<P>(i) Whose annual income increases as a result of employment of a family member who was unemployed for one or more years previous to employment; 
</P>
<P>(ii) Whose annual income increases as a result of increased earnings by a family member during participation in any economic self-sufficiency or other job training program; or 
</P>
<P>(iii) Whose annual income increases, as a result of new employment or increased earnings of a family member, during or within six months after receiving assistance, benefits or services under any state program for temporary assistance for needy families funded under Part A of Title IV of the Social Security Act, as determined by the PHA in consultation with the local agencies administering temporary assistance for needy families (TANF) and Welfare-to-Work (WTW) programs. The TANF program is not limited to monthly income maintenance, but also includes such benefits and services as one-time payments, wage subsidies and transportation assistance—provided that the total amount over a six-month period is at least $500. 
</P>
<P>(b) <I>Disallowance of earned income</I>—(1) <I>Initial 12-month exclusion.</I> During the 12-month period beginning on the date on which a member of a qualified family is first employed or the family first experiences an increase in annual income attributable to employment, the PHA must exclude from the annual income (as defined in § 5.609 of this title) of a qualified family any increase in the income of the family member as a result of employment over the baseline income of that family member.
</P>
<P>(2) <I>Phase-in of rent increase.</I> Upon the expiration of the 12-month period defined in paragraph (b)(1) of this section and for the subsequent 12-month period, the PHA must exclude from the annual income of a qualified family at least 50 percent of any increase in income of such family member as a result of employment over the family member's baseline income.
</P>
<P>(3) <I>Maximum 2-year disallowance.</I> The disallowance of increased income of an individual family member as provided in paragraph (b)(1) or (b)(2) of this section is limited to a lifetime 24-month period. It applies for a maximum of 12 months for disallowance under paragraph (b)(1) of this section and a maximum of 12 months for disallowance under paragraph (b)(2) of this section, during the 24-month period starting from the initial exclusion under paragraph (b)(1) of this section.
</P>
<P>(4) Effect of changes on currently participating families. Families eligible for and participating in the disallowance of earned income under this section prior to May 9, 2016 will continue to be governed by this section in effect as it existed immediately prior to that date.
</P>
<P>(c) <I>Inapplicability to admission.</I> The disallowance of increases in income as a result of employment under this section does not apply for purposes of admission to the program (including the determination of income eligibility and income targeting). 
</P>
<P>(d) <I>Individual Savings Accounts.</I> As an alternative to the disallowance of increases in income as a result of employment described in paragraph (b) of this section, a PHA may choose to provide for individual savings accounts for public housing residents who pay an income-based rent, in accordance with a written policy, which must include the following provisions:
</P>
<P>(1) The PHA must advise the family that the savings account option is available; 
</P>
<P>(2) At the option of the family, the PHA must deposit in the savings account the total amount that would have been included in tenant rent payable to the PHA as a result of increased income that is disallowed in accordance with paragraph (b) of this section; 
</P>
<P>(3) Amounts deposited in a savings account may be withdrawn only for the purpose of: 
</P>
<P>(i) Purchasing a home; 
</P>
<P>(ii) Paying education costs of family members; 
</P>
<P>(iii) Moving out of public or assisted housing; or 
</P>
<P>(iv) Paying any other expense authorized by the PHA for the purpose of promoting the economic self-sufficiency of residents of public housing; 
</P>
<P>(4) The PHA must maintain the account in an interest bearing investment and must credit the family with the net interest income, and the PHA may not charge a fee for maintaining the account; 
</P>
<P>(5) At least annually the PHA must provide the family with a report on the status of the account; and 
</P>
<P>(6) If the family moves out of public housing, the PHA shall pay the tenant any balance in the account, minus any amounts owed to the PHA. 


</P>
<P>(e) <I>Limitation.</I> This section applies to a family that is:
</P>
<P>(1) Receiving the disallowance of earned income under this section on December 31, 2023 or
</P>
<P>(2) Eligible to receive the Jobs Plus program rent incentive pursuant to the Jobs Plus FY2023 notice of funding opportunity (NOFO) or earlier appropriations and distributed through prior Jobs Plus NOFOs.
</P>
<P>(f) <I>Sunset.</I> This section will lapse on January 1, 2030.


</P>
<CITA TYPE="N">[65 FR 16726, Mar. 29, 2000, as amended at 81 FR 12373, Mar. 8, 2016; 88 FR 9670, Feb. 14, 2023]






</CITA>
</DIV8>


<DIV8 N="§ 960.257" NODE="24:4.1.3.1.11.3.5.3" TYPE="SECTION">
<HEAD>§ 960.257   Family income and composition: Annual and interim reexaminations.</HEAD>
<P>(a) <I>When PHA is required to conduct reexamination.</I> (1) For families who pay an income-based rent, the PHA must conduct a reexamination of family income and composition at least annually and must make appropriate adjustments in the rent after consultation with the family and upon verification of the information. 
</P>
<P>(2) For families who choose flat rents, the PHA must conduct a reexamination of family composition at least annually, and must conduct a reexamination of family income at least once every three years in accordance with the procedures in § 960.253(f).
</P>
<P>(3) For all families who include nonexempt individuals, as defined in § 960.601, the PHA must determine compliance once each twelve months with community service and self-sufficiency requirements in subpart F of this part. 
</P>
<P>(4) The PHA may use the results of these reexaminations to require the family to move to an appropriate size unit. 
</P>
<P>(5) For all non-public housing over-income families, the PHA may not conduct an annual reexamination of family income.
</P>
<P>(b) <I>Interim reexaminations.</I> (1) A family may request an interim reexamination of family income or composition because of any changes since the last determination. The PHA must conduct any interim reexamination within a reasonable period of time after the family request or when the PHA becomes aware of an increase in family adjusted income under paragraph (3) of this section. What qualifies as a “reasonable time” may vary based on the amount of time it takes to verify information, but generally should not be longer than 30 days after changes in income are reported.
</P>
<P>(2) The PHA may decline to conduct an interim reexamination of family income if the PHA estimates the family's adjusted income will decrease by an amount that is less than ten percent of the family's annual adjusted income (or a lower amount established by HUD by notice), or a lower threshold established by the PHA.
</P>
<P>(3) The PHA must conduct an interim reexamination of family income when the PHA becomes aware that the family's adjusted income (as defined in § 5.611 of this title) has changed by an amount that the PHA estimates will result in an increase of ten percent or more in annual adjusted income or such other amount established by HUD through notice, except:
</P>
<P>(i) The PHA may not consider any increase in the earned income of the family when estimating or calculating whether the family's adjusted income has increased, except that, based on the PHA's established written policy, the PHA may consider increases in earned income if the PHA has processed an interim reexamination for a decrease in the family's income under paragraph (b)(1) of this section within the same annual or biennial reexamination cycle; and
</P>
<P>(ii) The PHA may choose not to conduct an interim reexamination in the last three months of a family's certification period, in accordance with the PHA's established written policy.
</P>
<P>(4) For over-income families in the period of up to six months before their tenancy termination pursuant to § 960.507(d)(2), the PHA must conduct an interim reexamination of family income as otherwise required under this paragraph. However, the resulting income determination will not make the family eligible to remain in the public housing program beyond the period before termination as defined by PHA policy.
</P>
<P>(5) The PHA must adopt policies consistent with this section prescribing when and under what conditions the family must report a change in family income or composition.
</P>
<P>(6) <I>Effective date of rent changes.</I> (i) If the family has reported a change in family income or composition in a timely manner according to the PHA's policies, the PHA must provide the family with 30 days advance notice of any rent increases, and such rent increases will be effective the first day of the month beginning after the end of that 30-day period. Rent decreases will be effective on the first day of the first month after the date of the actual change leading to the interim reexamination of family income.
</P>
<P>(ii) If the family has failed to report a change in family income or composition in a timely manner according to the PHA's policies, PHAs must implement any resulting rent increases retroactively to the first of the month following the date of the change leading to the interim reexamination of family income. Any resulting rent decrease must be implemented no later than the first rent period following completion of the reexamination. However, a PHA may apply rent decreases retroactively at the discretion of the PHA, in accordance with the conditions established by the PHA in written policy and subject to paragraph (b)(6)(iii) of this section.
</P>
<P>(iii) A retroactive rent decrease may not be applied by the PHA prior to the later of the first of the month following:
</P>
<P>(A) The date of the change leading to the interim reexamination of family income; or
</P>
<P>(B) The effective date of the family's most recent previous interim or annual reexamination (or initial examination if that was the family's last examination).


</P>
<P>(c) <I>Streamlined income determination</I>—(1) <I>General.</I> A PHA may elect to apply a streamlined income determination to families receiving fixed income, as described in paragraph (c)(3) of this section.
</P>
<P>(2) <I>Definition of “fixed income”.</I> For purposes of this section, “fixed income” means periodic payments at reasonably predictable levels from one or more of the following sources:
</P>
<P>(i) Social Security, Supplemental Security Income, Supplemental Disability Insurance.
</P>
<P>(ii) Federal, state, local, or private pension plans.
</P>
<P>(iii) Annuities or other retirement benefit programs, insurance policies, disability or death benefits, or other similar types of periodic receipts.
</P>
<P>(iv) Any other source of income subject to adjustment by a verifiable COLA or current rate of interest.
</P>
<P>(3) <I>Method of streamlined income determination.</I> A PHA using the streamlined income determination must adjust a family's income according to the percentage of a family's unadjusted income that is from fixed income.
</P>
<P>(i) When 90 percent or more of a family's unadjusted income consists of fixed income, PHAs using streamlined income determinations must apply a COLA or COLAs to the family's sources of fixed income, provided that the family certifies both that 90 percent or more of their unadjusted income is fixed income and that their sources of fixed income have not changed from the previous year. For non-fixed income, the PHA is not required to make adjustments pursuant to paragraph (a) of this section.
</P>
<P>(ii) When less than 90 percent of a family's unadjusted income consists of fixed income, PHAs using streamlined income determinations must apply a COLA to each of the family's sources of fixed income individually. The PHA must determine all other income pursuant to paragraph (a) of this section.
</P>
<P>(4) <I>COLA rate applied by PHAs.</I> PHAs using streamlined income determinations must adjust a family's fixed income using a COLA or current interest rate that applies to each specific source of fixed income and is available from a public source or through tenant-provided, third-party-generated documentation. If no public verification or tenant-provided documentation is available, then the owner must obtain third-party verification of the income amounts in order to calculate the change in income for the source.
</P>
<P>(5) <I>Triennial verification.</I> For any income determined pursuant to a streamlined income determination, a PHA must obtain third-party verification of all income amounts every 3 years.


</P>
<P>(d) <I>PHA reexamination policies.</I> The PHA must adopt admission and continued occupancy policies concerning conduct of annual and interim reexaminations in accordance with this section, and shall conduct reexaminations in accordance with such policies. The PHA reexamination policies must be in accordance with the PHA plan.


</P>
<P>(e) Reviews of family income under this section are subject to the provisions in section 904 of the Stewart B. McKinney Homeless Assistance Amendments Act of 1988, as amended (42 U.S.C. 3544).
</P>
<P>(f) <I>De minimis errors.</I> The PHA will not be considered out of compliance with the requirements in this section solely due to de minimis errors in calculating family income but is still obligated to correct errors once the PHA becomes aware of the errors. A de minimis error is an error where the PHA determination of family income varies from the correct income determination by no more than $30 per month in monthly adjusted income ($360 in annual adjusted income).
</P>
<P>(i) The PHA must take any corrective action necessary to credit or repay a family if the family has been overcharged for their rent as a result of an error (including a de minimis error) in the income determination. Families will not be required to repay the PHA in instances where the PHA has miscalculated income resulting in a family being undercharged for rent or family share.
</P>
<P>(ii) HUD may revise the amount of de minimis error in this paragraph (f) through a rulemaking published in the <E T="04">Federal Register</E> for public comment.

 
</P>
<CITA TYPE="N">[65 FR 16726, Mar. 29, 2000, as amended at 81 FR 12373, Mar. 8, 2016; 82 FR 58340, Dec. 12, 2017; 85 FR 27139, May 7, 2020; 88 FR 9670, Feb. 14, 2023; 88 FR 9670, Feb. 14, 2023]






</CITA>
</DIV8>


<DIV8 N="§ 960.259" NODE="24:4.1.3.1.11.3.5.4" TYPE="SECTION">
<HEAD>§ 960.259   Family information and verification.</HEAD>
<P>(a) <I>Family obligation to supply information.</I> (1) The family must supply any information that the PHA or HUD determines is necessary in administration of the public housing program, including submission of required evidence of citizenship or eligible immigration status (as provided by part 5, subpart E of this title). “Information” includes any requested certification, release or other documentation. 
</P>
<P>(2) The family must supply any information requested by the PHA or HUD for use in a regularly scheduled reexamination or an interim reexamination of family income and composition in accordance with HUD requirements. 
</P>
<P>(3) For requirements concerning the following, see part 5, subpart B of this title: 
</P>
<P>(i) Family verification and disclosure of social security numbers; 
</P>
<P>(ii) Family execution and submission of consent forms for obtaining wage and claim information from State Wage Information Collection Agencies (SWICAs). 
</P>
<P>(4) Any information supplied by the family must be true and complete. 
</P>
<P>(b) <I>Family release and consent.</I> (1) As a condition of admission to or continued assistance under the program, the PHA shall require the family head, and such other family members as the PHA designates, to execute a consent form (including any release and consent as required under § 5.230 of this title) authorizing any depository or private source of income, or any Federal, State or local agency, to furnish or release to the PHA or HUD such information as the PHA or HUD determines to be necessary. 
</P>
<P>(2) The use or disclosure of information obtained from a family or from another source pursuant to this release and consent shall be limited to purposes directly connected with administration of the program. 


</P>
<P>(c) <I>PHA responsibility for reexamination and verification.</I> (1) Except as provided in paragraph (c)(2) of this section, the PHA must obtain and document in the family file third-party verification of the following factors, or must document in the file why third-party verification was not available:
</P>
<P>(i) Reported family annual income; 
</P>
<P>(ii) The value of assets; 
</P>
<P>(iii) Expenses related to deductions from annual income; and 
</P>
<P>(iv) Other factors that affect the determination of adjusted income or income-based rent. 
</P>
<P>(2) For a family with net family assets (as the term is defined in § 5.603 of this title) equal to or less than $50,000, which amount will be adjusted annually by HUD in accordance with the Consumer Price Index for Urban Wage Earners and Clerical Workers, a PHA may accept, for purposes of recertification of income, a family's declaration under § 5.618(b) of this title, except that the PHA must obtain third-party verification of all family assets every 3 years.






</P>
<CITA TYPE="N">[65 FR 16726, Mar. 29, 2000, as amended at 81 FR 12373, Mar. 8, 2016; 88 FR 9671, Feb. 14, 2023]












</CITA>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:4.1.3.1.11.4" TYPE="SUBPART">
<HEAD>Subpart D—Preference for Elderly Families and Disabled Families in Mixed Population Projects</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>59 FR 17667, Apr. 13, 1994, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 960.401" NODE="24:4.1.3.1.11.4.5.1" TYPE="SECTION">
<HEAD>§ 960.401   Purpose.</HEAD>
<P>This subpart establishes a preference for elderly families and disabled families for admission to mixed population public housing projects, as defined in § 960.405. 


</P>
</DIV8>


<DIV8 N="§ 960.403" NODE="24:4.1.3.1.11.4.5.2" TYPE="SECTION">
<HEAD>§ 960.403   Applicability.</HEAD>
<P>(a) This subpart applies to all dwelling units in mixed population projects (as defined in § 960.405), or portions of mixed population projects, assisted under the U.S. Housing Act of 1937. These projects formerly were known as elderly projects. 
</P>
<P>(b) This subpart does not apply to section 23 and section 10(c) leased housing projects or the section 23 Housing Assistance Payments Program where the owners enter into leases directly with the tenants, or to the Section 8 Housing Assistance Payments Program, the Low-Rent Housing Homeownership Opportunities Program (Turnkey III), the Mutual Help Homeownership Opportunities Program, or to Indian Housing Authorities. (For applicability to Indian Housing Authorities, see part 905 of this chapter.) Additionally, this subpart is not applicable to projects designated for elderly families or designated for disabled families in accordance with 24 CFR part 945. 


</P>
</DIV8>


<DIV8 N="§ 960.407" NODE="24:4.1.3.1.11.4.5.3" TYPE="SECTION">
<HEAD>§ 960.407   Selection preference for mixed population developments.</HEAD>
<P>(a) The PHA must give preference to elderly families and disabled families equally in determining priority for admission to mixed population developments. The PHA may not establish a limit on the number of elderly families or disabled families who may be accepted for occupancy in a mixed population development. 
</P>
<P>(b) In selecting elderly families and disabled families to occupy units in mixed population developments, the PHA must first offer units that have special accessibility features for persons with disabilities to families who include persons with disabilities who require the accessibility features of such units (see §§ 8.27 and 100.202 of this title). 
</P>
<CITA TYPE="N">[65 FR 16729, Mar. 29, 2000]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:4.1.3.1.11.5" TYPE="SUBPART">
<HEAD>Subpart E—Occupancy by Over-Income Families or Police Officers</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>65 FR 16729, Mar. 29, 2000, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 960.503" NODE="24:4.1.3.1.11.5.5.1" TYPE="SECTION">
<HEAD>§ 960.503   Occupancy by over-income families.</HEAD>
<P>A PHA that owns or operates fewer than two hundred fifty (250) public housing units, may lease a unit in a public housing development to an over-income family (a family whose annual income exceeds the limit for a low income family at the time of initial occupancy), in accordance with its PHA annual plan (or supporting documents), if all the following conditions are satisfied:
</P>
<P>(a) There are no eligible low income families on the PHA waiting list or applying for public housing assistance when the unit is leased to an over-income family; 
</P>
<P>(b) The PHA has publicized availability of the unit for rental to eligible low income families, including publishing public notice of such availability in a newspaper of general circulation in the jurisdiction at least thirty days before offering the unit to an over-income family; 
</P>
<P>(c) The over-income family rents the unit on a month-to-month basis for a rent that is not less than the PHA's cost to operate the unit; 
</P>
<P>(d) The lease to the over-income family provides that the family agrees to vacate the unit when needed for rental to an eligible family; and 
</P>
<P>(e) The PHA gives the over-income family at least thirty days notice to vacate the unit when the unit is needed for rental to an eligible family. 


</P>
</DIV8>


<DIV8 N="§ 960.505" NODE="24:4.1.3.1.11.5.5.2" TYPE="SECTION">
<HEAD>§ 960.505   Occupancy by police officers to provide security for public housing residents.</HEAD>
<P>(a) <I>Police officer.</I> For purpose of this subpart E, “police officer” means a person determined by the PHA to be, during the period of residence of that person in public housing, employed on a full-time basis as a duly licensed professional police officer by a Federal, State or local government or by any agency of these governments. An officer of an accredited police force of a housing agency may qualify. 
</P>
<P>(b) <I>Occupancy in public housing.</I> For the purpose of increasing security for residents of a public housing development, the PHA may allow police officers who would not otherwise be eligible for occupancy in public housing, to reside in a public housing dwelling unit. The PHA must include in the PHA annual plan or supporting documents the number and location of the units to be occupied by police officers, and the terms and conditions of their tenancies; and a statement that such occupancy is needed to increase security for public housing residents. 






</P>
</DIV8>


<DIV8 N="§ 960.507" NODE="24:4.1.3.1.11.5.5.3" TYPE="SECTION">
<HEAD>§ 960.507   Families exceeding the income limit.</HEAD>
<P>(a) <I>In general.</I> Families participating in the public housing program must not have incomes that exceed the over-income limit, as determined by paragraph (b) of this section, for more than 24 consecutive months.
</P>
<P>(1) This provision applies to all families in the public housing program, including FSS families and all families receiving EID.
</P>
<P>(i) Mixed families (as defined in § 5.504 of this title) who are non-public housing over-income families pay the alternative non-public housing rent (as defined in § 960.102), as applicable.
</P>
<P>(ii) All non-public housing over-income families are precluded from participating in a public housing resident council.
</P>
<P>(iii) Furthermore, non-public housing over-income families cannot participate in programs that are only for public housing or low-income families.
</P>
<P>(iv) PHAs cannot provide any Federal assistance, including a utility allowance, to non-public housing over-income families.
</P>
<P>(2) PHAs must implement the requirements of this section by amending all applicable admission and continued occupancy policies according to the provisions in 24 CFR part 903. All PHAs must have effective over-income policies, consistent with the requirements of this section, no later than June 14, 2023.
</P>
<P>(b) <I>Determination of over-income limit.</I> The over-income limit is determined by multiplying the applicable income limit for a very low-income family as defined in § 5.603(b) of this title, by a factor of 2.4.
</P>
<P>(c) <I>Notifying over-income families.</I> (1) If the PHA determines the family has exceeded the over-income limit pursuant to an income examination, the PHA must provide written notice to the family of the over-income determination no later than 30 days after the income examination. The notice must state that the family has exceeded the over-income limit and continuing to exceed the over-income limit for a total of 24 consecutive months will result in the PHA following its continued occupancy policy for over-income families in accordance with paragraph (d) of this section. Pursuant to 24 CFR part 966, subpart B, the PHA must afford the family an opportunity for a hearing if the family disputes within a reasonable time the PHA's determination that the family has exceeded the over-income limit.
</P>
<P>(2) The PHA must conduct an income examination 12 months after the initial over-income determination described in paragraph (c)(1) of this section, unless the PHA determined the family's income fell below the over-income limit since the initial over-income determination. If the PHA determines the family has exceeded the over-income limit for 12 consecutive months, the PHA must provide written notification of this 12-month over-income determination no later than 30 days after the income examination that led to the 12-month over-income determination. The notice must state that the family has exceeded the over-income limit for 12 consecutive months and continuing to exceed the over-income limit for a total of 24 consecutive months will result in the PHA following its continued occupancy policy for over-income families in accordance with paragraph (d) of this section. Additionally, if applicable under PHA policy, the notice must include an estimate (based on current data) of the alternative non-public housing rent for the family's unit. Pursuant to 24 CFR part 966, subpart B, the PHA must afford the family an opportunity for a hearing if the family disputes within a reasonable time the PHA's determination that the family has exceeded the over-income limit.
</P>
<P>(3) The PHA must conduct an income examination 24 months after the initial over-income determination described in paragraph (c)(1) of this section, unless the PHA determined the family's income fell below the over-income limit since the second over-income determination. If the PHA determines the family has exceeded the over-income limit for 24 consecutive months, then the PHA must provide written notification of this 24-month over-income determination no later than 30 days after the income examination that led to the 24-month over-income determination. The notice must state:
</P>
<P>(i) That the family has exceeded the over-income limit for 24 consecutive months.
</P>
<P>(ii) That the PHA must either terminate the family's tenancy or charge the family the alternative non-public housing rent, in accordance with it continued occupancy policy for over-income families in accordance with paragraph (d) of this section.
</P>
<P>(A) If the PHA determines that under its policy the family's tenancy must be terminated in accordance with paragraph (d)(2) of this section, then the notice must inform the family of this determination and state the period of time before tenancy termination.
</P>
<P>(B) If the PHA determines that under its policy the family must be charged the alternative non-public housing rent in accordance with paragraph (d)(1) of this section, then the notice must inform the family of this determination and state that the family be charged the alternative non-public housing rent in accordance with paragraph (d)(1) of this section. The PHA must also present the family with a new lease, in accordance with the requirements at § 960.509, and inform the family that the lease must be executed no later than 60 days of the date of the notice or at the next lease renewal, whichever is sooner.
</P>
<P>(iii) Pursuant to 24 CFR part 966, subpart B, the PHA must afford the family an opportunity for a hearing if the family disputes within a reasonable time the PHA's determination that the family has exceeded the over-income limit.
</P>
<P>(4) If, at any time during the consecutive 24-month period following the initial over-income determination described in paragraph (c)(1) of this section, a PHA determines that the family's income is below the over-income limit, the family is entitled to a new 24 consecutive month period of being over-income and new notices under paragraphs (c)(1), (c)(2), and (c)(3) of this section if the PHA later determines that the family income exceeds the over-income limit.
</P>
<P>(d) <I>End of the 24 consecutive month grace period.</I> Once a family has exceeded the over-income limit for 24 consecutive months, the PHA must, as detailed in its admissions and continued occupancy policies—
</P>
<P>(1) Require the family to execute a new lease consistent with § 960.509 and charge the family the alternative non-public housing rent, as defined in § 960.102, no later than 60-days after the notice is provided pursuant to paragraph (c)(3) of this section or at the next lease renewal, whichever is sooner; or
</P>
<P>(2) Terminate the tenancy of the family no more than 6 months after the notification under paragraph (c)(3) of this section as determined by the PHA's continued occupancy policy. PHAs must continue to charge these families the family's choice of income-based, flat rent, or prorated rent for mixed families during the period before termination. The PHA must give appropriate notice of lease tenancy termination (notice to vacate) in accordance with State and local laws.
</P>
<P>(e) <I>Status of families.</I> An over-income family will continue to be a public housing program participant until their tenancy is terminated by the PHA in accordance with paragraph (d)(2) of this section or the family executes a new non-public housing lease in accordance with paragraph (d)(1) of this section.
</P>
<P>(f) <I>Reporting.</I> Each PHA must submit a report annually to HUD that specifies, as of the end of the year, the number of families residing in public housing with incomes exceeding the over-income limit and the number of families on the waiting lists for admission to public housing projects and provide any other information regarding over-income families requested by HUD. These reports must also be publicly available.
</P>
<CITA TYPE="N">[88 FR 9671, Feb. 14, 2023]




</CITA>
</DIV8>


<DIV8 N="§ 960.509" NODE="24:4.1.3.1.11.5.5.4" TYPE="SECTION">
<HEAD>§ 960.509   Lease requirements for non-public housing over-income families.</HEAD>
<P>(a) <I>In general.</I> If a family, when permitted by written PHA's continued occupancy policy, elects to remain in a public housing unit paying the alternative non-public housing rent, the PHA and each non-public housing over-income (NPHOI) family (referred to as the “tenant” in this section) must enter into a lease. The tenant and the PHA must execute the lease, as presented by the PHA pursuant to § 960.507(c)(3)(ii)(B) no later than 60 days after the notice provided pursuant to § 960.507(c)(3) or at the next lease renewal, whichever is sooner. If the tenant does not execute the lease within this time period, the PHA must terminate the tenancy of the tenant no more than 6 months after the notification under § 960.507(c)(3) in accordance with 960.507(d)(2). Notwithstanding, a PHA may permit, in accordance with its policies, an over-income family to execute the lease beyond this time period, but before termination of the tenancy, if the over-income family pays the PHA the total difference between the alternative non-public housing rent and their public housing rent dating back to the point in time that the over-income family was required to execute the lease.
</P>
<P>(b) <I>Lease provisions.</I> The non-public housing over-income lease must contain at a minimum the following provisions.
</P>
<P>(1) <I>Parties, dwelling unit, and term.</I> The lease must state:
</P>
<P>(i) The name of the PHA and names of the tenants.
</P>
<P>(ii) The unit rented (address, apartment number, and any other information needed to identify the dwelling unit).
</P>
<P>(iii) The term of the lease (lease term and renewal in accordance with paragraph (b)(2) of this section).
</P>
<P>(iv) A statement of the utilities, services, and equipment to be supplied by the PHA without additional cost, and the utilities and appliances to be paid for by the tenant.
</P>
<P>(v) The composition of the household as approved by the PHA (family members, foster children and adults, and any PHA-approved live-in aides). The family must promptly inform the PHA of the birth, adoption, or court-awarded custody of a child. The family must request PHA approval to add any other family member as an occupant of the unit.
</P>
<P>(2) <I>Lease term and renewal.</I> (i) The lease must have a term as determined by the PHA and included in PHA policy.
</P>
<P>(ii) At any time, the PHA may terminate the tenancy in accordance with paragraph (b)(11) of this section.
</P>
<P>(3) <I>Payments due under the lease.</I> (i) <I>Tenant rent.</I> (A) The tenant must pay the amount of the monthly tenant rent determined by the PHA in accordance with § 960.507(e)(1).
</P>
<P>(B) The lease must specify the initial amount of the tenant rent at the beginning of the initial lease term. The PHA must comply with State or local law in giving the tenant written notice stating any change in the amount of tenant rent.
</P>
<P>(ii) <I>PHA charges.</I> The lease must provide for charges to the tenant for repair beyond normal wear and tear and for consumption of excess utilities. The lease must state the basis for the determination of such charges (<I>e.g.,</I> by a posted schedule of charges for repair, amounts charged for excess utility consumption, etc.). The imposition of charges for consumption of excess utilities is permissible only if such charges are determined by an individual check meter servicing the leased unit or result from the use of major tenant-supplied appliances.
</P>
<P>(iii) <I>Late payment penalties.</I> The lease may provide for penalties for late payment of rent.
</P>
<P>(iv) <I>When charges are due.</I> The lease must provide that charges assessed under paragraphs (b)(3)(ii) and (b)(3)(iii) of this section are due in accordance with PHA policy.
</P>
<P>(v) <I>Security deposits.</I> The lease must provide that any previously paid security deposit will be applied to the tenancy upon signing a new lease. The lease must also inform the tenant of the circumstances under which a security deposit will be returned to the tenant or when the tenant will be charged for damage to the unit, consistent with State and local security deposit laws.
</P>
<P>(4) <I>Tenant's right to use and occupancy.</I> The lease must provide that the tenant has the right to exclusive use and occupancy of the leased unit by the members of the household authorized to reside in the unit in accordance with the lease, as well as their guests. The term <I>guest</I> is defined in § 5.100 of this title.
</P>
<P>(5) <I>The PHA's obligations.</I> The PHA's obligations under the lease must include the following:
</P>
<P>(i) To maintain the dwelling unit and the project in decent, safe, and sanitary condition.
</P>
<P>(ii) To comply with requirements of applicable State and local building codes, housing codes, and HUD regulations materially affecting health and safety.
</P>
<P>(iii) To make necessary repairs to the dwelling unit.
</P>
<P>(iv) To keep project buildings, facilities, and common areas, not otherwise assigned to the tenant for maintenance and upkeep, in a clean and safe condition.
</P>
<P>(v) To maintain in good and safe working order and condition electrical, plumbing, sanitary, heating, ventilating, and other facilities, and appliances, including elevators, supplied, or required to be supplied by the PHA.
</P>
<P>(vi) To provide and maintain appropriate receptacles and facilities (except containers for the exclusive use of an individual tenant family) for the deposit of ashes, garbage, rubbish, and other waste removed from the dwelling unit by the tenant in accordance with paragraph (b)(6)(vii) of this section.
</P>
<P>(vii) To supply running water, including an adequate source of potable water, and reasonable amounts of hot water and reasonable amounts of heat at appropriate times of the year (according to local custom and usage), except where the building that includes the dwelling unit is not required by law to be equipped for that purpose, or where heat or hot water is generated by an installation within the exclusive control of the tenant and supplied by a direct utility connection.
</P>
<P>(viii) To notify the tenant of the specific grounds for any proposed adverse action by the PHA as required by State and local law.
</P>
<P>(ix) To comply with Federal, State, and local nondiscrimination and fair housing requirements, including Federal accessibility requirements and providing reasonable accommodations for persons with disabilities.
</P>
<P>(x) To establish necessary and reasonable policies for the benefit and well-being of the housing project and the tenants, post the policies in the project office, and incorporate the regulations by reference in the lease.
</P>
<P>(6) <I>Tenant's obligations.</I> The lease must, at a minimum and consistent with State and local law, provide that the tenant must:
</P>
<P>(i) Not assign the lease or sublease the dwelling unit.
</P>
<P>(ii) Not provide accommodations for boarders or lodgers.
</P>
<P>(iii) Use the dwelling unit solely as a private dwelling for the tenant and the tenant's household as identified in the lease, and not use or permit its use for any other purpose.
</P>
<P>(iv) Abide by necessary and reasonable policies established by the PHA for the benefit and well-being of the housing project and the tenants, which must be posted in the project office and incorporated by reference in the lease.
</P>
<P>(v) Comply with all applicable State and local building and housing codes materially affecting health and safety.
</P>
<P>(vi) Keep the dwelling unit and such other areas as may be assigned to the tenant for the tenant's exclusive use in a clean and safe condition.
</P>
<P>(vii) Dispose of all waste from the dwelling unit in a sanitary and safe manner.
</P>
<P>(viii) Use in a reasonable manner all electrical, plumbing, sanitary, heating, ventilating, air-conditioning and other facilities, including elevators.
</P>
<P>(ix) Refrain from, and cause members of the household and guests to refrain from destroying, defacing, damaging, or removing any part of the dwelling unit or housing project.
</P>
<P>(x) Pay reasonable charges (other than for wear and tear) for the repair of damages to the dwelling unit, or to the housing project (including damages to buildings, facilities, or common areas) caused by the tenant, a member of the household or a guest.
</P>
<P>(xi) Act, and cause household members and guests to act, in a manner which will not disturb other residents' peaceful enjoyment of their accommodations and will be conducive to maintaining the project in a decent, safe, and sanitary condition.
</P>
<P>(xii) Assure that no tenant, member of the tenant's household, guest, or any other person under the tenant's control engages in:
</P>
<P>(A) <I>Criminal activity.</I> (<I>1</I>) Any criminal activity that threatens the health, safety or right to peaceful enjoyment of the premises by other residents.
</P>
<P>(<I>2</I>) Any drug-related criminal activity on or off the premises; or
</P>
<P>(B) <I>Civil activity.</I> For non-public housing over-income units that are not within mixed-finance projects, any smoking of prohibited tobacco products in the tenant's unit as well as restricted areas, as defined by § 965.653(a) of this chapter, or in other outdoor areas that the PHA has designated as smoke-free.
</P>
<P>(xiii) To assure that no member of the household engages in an abuse or pattern of abuse of alcohol that affects the health, safety, or right to peaceful enjoyment of the premises by other residents.
</P>
<P>(7) <I>Tenant maintenance.</I> The lease may provide that the tenant must perform seasonal maintenance or other maintenance tasks, where performance of such tasks by tenants of dwellings units of a similar design and construction is customary, as long as such provisions are not for the purpose of evading the obligations of the PHA. In cases where a PHA adopts such lease provisions, the PHA must exempt tenants who are unable to perform such tasks because of age or disability.
</P>
<P>(8) <I>Defects hazardous to life, health, or safety.</I> The lease must set forth the rights and obligations of the tenant and the PHA if to the dwelling unit is damaged to the extent that conditions are created which are hazardous to life, health, or safety of the occupants. The lease must provide that:
</P>
<P>(i) The tenant must immediately notify project management of the damage.
</P>
<P>(ii) The PHA must repair the unit within a reasonable time. The PHA must charge the tenant the reasonable cost of the repairs if the damage was caused by the tenant, the tenant's household, or the tenant's guests.
</P>
<P>(iii) The PHA must offer standard alternative accommodations, if available, where necessary repairs cannot be made within a reasonable time, subject to paragraph (b)(5)(ix) of this section; and
</P>
<P>(iv) The lease must allow for abatement of rent in proportion to the seriousness of the damage and loss in value as a dwelling if repairs are not made in accordance with paragraph (b)(8)(ii) of this section or alternative accommodations not provided in accordance with paragraph (b)(8)(iii) of this section, except that no abatement of rent may occur if the tenant rejects the alternative accommodation or if the damage was caused by the tenant, tenant's household or guests.
</P>
<P>(9) <I>Entry of dwelling unit during tenancy.</I> The lease must set forth the circumstances under which the PHA may enter the dwelling unit during the tenant's possession and must include the following requirements:
</P>
<P>(i) The PHA is, upon reasonable advance notification to the tenant, permitted to enter the dwelling unit during reasonable hours for the purpose of performing routine inspections and maintenance, for making improvement or repairs, or to show the dwelling unit for re-leasing. A written statement specifying the purpose of the PHA entry delivered to the dwelling unit at least two days before such entry is reasonable advance notification.
</P>
<P>(ii) The PHA may enter the dwelling unit at any time without advance notification when there is reasonable cause to believe that an emergency exists; and
</P>
<P>(iii) If the tenant and all adult members of the household are absent from the dwelling unit at the time of entry, the PHA must leave in the dwelling unit a written statement specifying the date, time, and purpose of entry prior to leaving the dwelling unit.
</P>
<P>(10) <I>Notice procedures.</I> The lease must provide procedures, in accordance with State and local laws, the PHA and tenant must follow when giving notices, which must include:
</P>
<P>(i) Except as provided in paragraph (b)(9) of this section, notice to a tenant must be provided in a form to allow meaningful access for persons who are limited English proficient and, in a form, to ensure effective communication with individuals with disabilities; and
</P>
<P>(ii) Notice to the PHA can be in writing, hand delivered, or sent by prepaid first-class mail to PHA address provided in the lease, orally, or submitted electronically through a communications system established by the PHA for that purpose.
</P>
<P>(11) <I>Termination of tenancy and eviction.</I> (i) <I>Procedures.</I> The lease must state the procedures to be followed by the PHA and the tenant to terminate the tenancy.
</P>
<P>(ii) <I>Grounds for termination of tenancy.</I> The PHA must terminate the tenancy for good cause, which includes, but is not limited to, the following:
</P>
<P>(A) Criminal activity or alcohol abuse as provided in paragraph (b)(11)(iv) of this section.
</P>
<P>(B) Failure to accept the PHA's offer of a lease revision to an existing lease: with written notice of the offer of the revision at least 60 calendar days before the lease revision is scheduled to take effect; and with the offer specifying a reasonable time limit within that period for acceptance by the family.
</P>
<P>(iii) <I>Lease termination notice.</I> The PHA must give notice of lease termination in accordance with State and local laws.
</P>
<P>(iv) <I>PHA termination of tenancy for criminal activity or alcohol abuse.</I> (A) <I>Evicting drug criminals.</I> (<I>1</I>) <I>Methamphetamine conviction.</I> The PHA must immediately terminate the tenancy if the PHA determines that any member of the household has been convicted of drug-related criminal activity for manufacture or production of methamphetamine on the premises of Federally assisted housing.
</P>
<P>(<I>2</I>) <I>Drug crime on or off the premises.</I> The lease must provide that drug-related criminal activity engaged in on or off the premises by any tenant, member of the tenant's household or guest, and any such activity engaged in on the premises by any other person under the tenant's control, is grounds for the PHA to terminate tenancy. In addition, the lease must provide that a PHA may evict a family when the PHA determines that a household member is illegally using a drug or when the PHA determines that a pattern of illegal use of a drug interferes with the health, safety, or right to peaceful enjoyment of the premises by other residents.
</P>
<P>(B) <I>Evicting other criminals.</I> (<I>1</I>) <I>Threat to other residents.</I> The lease must provide that any criminal activity by a covered person that threatens the health, safety, or right to peaceful enjoyment of the premises by other residents (including PHA management staff residing on the premises) or threatens the health, safety, or right to peaceful enjoyment of their residences by persons residing in the immediate vicinity of the premises is grounds for termination of tenancy.
</P>
<P>(<I>2</I>) <I>Fugitive felon or parole violator.</I> The PHA may terminate the tenancy if a tenant is fleeing to avoid prosecution, or custody or confinement after conviction, for a crime, or attempt to commit a crime, that is a felony under the laws of the place from which the individual flees, or that, in the case of the State of New Jersey, is a high misdemeanor; or violating a condition of probation or parole imposed under Federal or State law.
</P>
<P>(C) <I>Eviction for criminal activity.</I> (<I>1</I>) <I>Evidence.</I> The PHA may evict the tenant by judicial action for criminal activity in accordance with this section if the PHA determines that the covered person has engaged in the criminal activity, regardless of whether the covered person has been arrested or convicted for such activity and without satisfying the standard of proof used for a criminal conviction.
</P>
<P>(<I>2</I>) <I>Notice to Post Office.</I> When a PHA evicts an individual or family for criminal activity, the PHA must notify the local post office serving the dwelling unit that the individual or family is no longer residing in the unit.
</P>
<P>(D) <I>Use of criminal record.</I> If the PHA seeks to terminate the tenancy for criminal activity as shown by a criminal record, the PHA must notify the household of the proposed action to be based on the information and must provide the subject of the record and the tenant with a copy of the criminal record before a PHA grievance hearing, as applicable, or court trial concerning the termination of tenancy or eviction. The tenant must be given an opportunity to dispute the accuracy and relevance of that record in the grievance hearing or court trial.
</P>
<P>(E) <I>Cost of obtaining criminal record.</I> The PHA may not pass along to the tenant the costs of a criminal records check.
</P>
<P>(F) <I>Evicting alcohol abusers.</I> The PHA must establish standards that allow termination of tenancy if the PHA determines that a household member has:
</P>
<P>(<I>1</I>) Engaged in abuse or pattern of abuse of alcohol that threatens the health, safety, or right to peaceful enjoyment of the premises by other residents; or
</P>
<P>(<I>2</I>) Furnished false or misleading information concerning illegal drug use, alcohol abuse, or rehabilitation of illegal drug users or alcohol abusers.
</P>
<P>(G) <I>PHA action, generally.</I> (<I>1</I>) <I>Consideration of circumstances.</I> In a manner consistent with policies, procedures and practices, the PHA may consider all circumstances relevant to a particular case such as the nature and severity of the offending action, the extent of participation by the leaseholder in the offending action, the effects that the eviction would have on family members not involved in the offending activity, the extent to which the leaseholder has taken steps to prevent or mitigate the offending action, the amount of time that has passed since the criminal conduct occurred, whether the crime or conviction was related to a disability, and whether the individual has engaged in rehabilitative or community services.
</P>
<P>(<I>2</I>) <I>Exclusion of culpable household member.</I> The PHA may require a tenant to exclude a household member to continue to reside in the dwelling unit, where that household member has participated in or been culpable for action or failure to act that warrants termination.
</P>
<P>(<I>3</I>) <I>Consideration of rehabilitation.</I> In determining whether to terminate tenancy for illegal drug use or a pattern of illegal drug use by a household member who is no longer engaging in such use, or for abuse or a pattern of abuse of alcohol by a household member who is no longer engaging in such abuse, the PHA may consider whether such household member is participating in or has successfully completed a supervised drug or alcohol rehabilitation program or has otherwise been rehabilitated successfully (42 U.S.C. 13662). For this purpose, the PHA may require the tenant to submit evidence of the household member's current participation in, or successful completion of, a supervised drug or alcohol rehabilitation program or evidence of otherwise having been rehabilitated successfully.
</P>
<P>(<I>4</I>) <I>Nondiscrimination limitation.</I> The PHA's eviction actions must be consistent with fair housing and equal opportunity provisions of § 5.105 of this title.
</P>
<P>(12) <I>No automatic lease renewal.</I> Upon expiration of the lease term, the lease shall not automatically renew.
</P>
<P>(13) <I>Grievance procedures.</I> The lease may include hearing or grievance procedures and may explain when the procedures are available to the family.
</P>
<P>(14) <I>Provision for modifications.</I> The lease may be modified at any time by written agreement of the tenant and the PHA. The lease must provide that modification of the lease must be evidenced by a written rider or amendment to the lease, executed by both parties, except as permitted under § 966.5 of this chapter, which allows modifications of the lease by posting of policies, rules and regulations.
</P>
<P>(15) <I>Signature clause.</I> The lease must provide a signature clause attesting that the lease has been executed by the parties.
</P>
<CITA TYPE="N">[88 FR 9671, Feb. 14, 2023; 88 FR 12560, Feb. 28, 2023]








</CITA>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:4.1.3.1.11.6" TYPE="SUBPART">
<HEAD>Subpart F—When Resident Must Perform Community Service Activities or Self-Sufficiency Work Activities</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>65 FR 16729, Mar. 29, 2000, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 960.600" NODE="24:4.1.3.1.11.6.5.1" TYPE="SECTION">
<HEAD>§ 960.600   Implementation.</HEAD>
<P>PHAs and residents must comply with the requirements of this subpart beginning with PHA fiscal years that commence on or after October 1, 2000. Unless otherwise provided by § 903.11 of this chapter, Annual Plans submitted for those fiscal years are required to contain information regarding the PHA's compliance with the community service requirement, as described in § 903.7 of this chapter. Non-public housing over-income families are not required to comply with the requirements of this subpart.
</P>
<CITA TYPE="N">[88 FR 9675, Feb. 14, 2023]




</CITA>
</DIV8>


<DIV8 N="§ 960.601" NODE="24:4.1.3.1.11.6.5.2" TYPE="SECTION">
<HEAD>§ 960.601   Definitions.</HEAD>
<P>(a) <I>Definitions found elsewhere</I>—(1) <I>General definitions.</I> The following terms are defined in part 5, subpart A of this title: <I>public housing, public housing agency</I> (PHA). 
</P>
<P>(2) <I>Definitions concerning income and rent.</I> The following terms are defined in part 5, subpart F of this title: <I>economic self-sufficiency program, work activities.</I> 
</P>
<P>(b) <I>Other definitions.</I> In addition to the definitions in paragraph (a) of this section, the following definitions apply: 
</P>
<P><I>Community service.</I> The performance of voluntary work or duties that are a public benefit, and that serve to improve the quality of life, enhance resident self-sufficiency, or increase resident self-responsibility in the community. Community service is not employment and may not include political activities. 


</P>
<P><I>Exempt individual.</I> An adult who:
</P>
<P>(1) Is 62 years or older;
</P>
<P>(2)(i) Is a blind or disabled individual, as defined under Section 216(i)(1) or Section 1614 of the Social Security Act (42 U.S.C. 416(i)(1); 1382c), and who certifies that because of this disability she or he is unable to comply with the service provisions of this subpart, or
</P>
<P>(ii) Is a primary caretaker of such individual;
</P>
<P>(3) Is engaged in work activities;
</P>
<P>(4) Meets the requirements for being exempted from having to engage in a work activity under the State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 <I>et seq.</I>) or under any other welfare program of the State in which the PHA is located, including a State-administered welfare-to-work program;
</P>
<P>(5) Is a member of a family receiving assistance, benefits or services under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 <I>et seq.</I>) or under any other welfare program of the State in which the PHA is located, including a State-administered welfare-to-work program, and has not been found by the State or other administering entity to be in noncompliance with such a program; or
</P>
<P>(6) is a member of a non-public housing over-income family. 
</P>
<P><I>Service requirement.</I> The obligation of each adult resident, other than an exempt individual, to perform community service or participate in an economic-self sufficiency program required in accordance with § 960.603. 
</P>
<CITA TYPE="N">[65 FR 16729, Mar. 29, 2000, as amended at 88 FR 9675, Feb. 14, 2023]




</CITA>
</DIV8>


<DIV8 N="§ 960.603" NODE="24:4.1.3.1.11.6.5.3" TYPE="SECTION">
<HEAD>§ 960.603   General requirements.</HEAD>
<P>(a) <I>Service requirement.</I> Except for any family member who is an exempt individual, each adult resident of public housing must: 
</P>
<P>(1) Contribute 8 hours per month of community service (not including political activities); or 
</P>
<P>(2) Participate in an economic self-sufficiency program for 8 hours per month; or 
</P>
<P>(3) Perform 8 hours per month of combined activities as described in paragraphs (a)(1) and (a)(2) of this section. 
</P>
<P>(b) <I>Family violation of service requirement.</I> The lease shall specify that it shall be renewed automatically for all purposes, unless the family fails to comply with the service requirement. Violation of the service requirement is grounds for nonrenewal of the lease at the end of the twelve month lease term, but not for termination of tenancy during the course of the twelve month lease term (see § 966.4(l)(2)(i) of this chapter). 


</P>
</DIV8>


<DIV8 N="§ 960.605" NODE="24:4.1.3.1.11.6.5.4" TYPE="SECTION">
<HEAD>§ 960.605   How PHA administers service requirements.</HEAD>
<P>(a) <I>PHA policy.</I> Each PHA must develop a local policy for administration of the community service and economic self-sufficiency requirements for public housing residents. 
</P>
<P>(b) <I>Administration of qualifying community service or self-sufficiency activities for residents.</I> The PHA may administer qualifying community service or economic self-sufficiency activities directly, or may make such activities available through a contractor, or through partnerships with qualified organizations, including resident organizations, and community agencies or institutions. 
</P>
<P>(c) <I>PHA responsibilities.</I> (1) The PHA policy must describe how the PHA determines which family members are subject to or exempt from the service requirement, and the process for determining any changes to exempt or non-exempt status of family members. 
</P>
<P>(2) The PHA must give the family a written description of the service requirement, and of the process for claiming status as an exempt person and for PHA verification of such status. The PHA must also notify the family of its determination identifying the family members who are subject to the service requirement, and the family members who are exempt persons. The PHA must also notify the family that it will be validating a sample of self-certifications of completion of the service requirement accepted by the PHA under § 960.607(a)(1)(ii).
</P>
<P>(3) The PHA must review family compliance with service requirements and must verify such compliance annually at least 30 days before the end of the 12-month lease term. If qualifying activities are administered by an organization other than the PHA, the PHA may obtain verification of family compliance from such third parties or may accept a signed certification from the family member that he or she has performed such qualifying activities.
</P>
<P>(4) The PHA must retain reasonable documentation of service requirement performance or exemption in a participant family's files.
</P>
<P>(5) The PHA must comply with non-discrimination and equal opportunity requirements listed at § 5.105(a) of this title and affirmatively further fair housing in all their activities in accordance with the AFFH Certification as described in § 903.7(o) of this chapter.
</P>
<CITA TYPE="N">[65 FR 16729, Mar. 29, 2000, as amended at 81 FR 12373, Mar. 8, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 960.607" NODE="24:4.1.3.1.11.6.5.5" TYPE="SECTION">
<HEAD>§ 960.607   Assuring resident compliance.</HEAD>
<P>(a) <I>Acceptable documentation demonstrating compliance.</I> (1) If qualifying activities are administered by an organization other than the PHA, a family member who is required to fulfill a service requirement must provide one of the following:
</P>
<P>(i) A signed certification to the PHA by such other organization that the family member has performed such qualifying activities; or
</P>
<P>(ii) A signed self-certification to the PHA by the family member that he or she has performed such qualifying activities.
</P>
<P>(2) The signed self-certification must include the following:
</P>
<P>(i) A statement that the tenant contributed at least 8 hours per month of community service not including political activities within the community in which the adult resides; or participated in an economic self-sufficiency program (as that term is defined in 24 CFR 5.603(b)) for at least 8 hours per month;
</P>
<P>(ii) The name, address, and a contact person at the community service provider; or the name, address, and contact person for the economic self-sufficiency program;
</P>
<P>(iii) The date(s) during which the tenant completed the community service activity, or participated in the economic self-sufficiency program;
</P>
<P>(iv) A description of the activity completed; and
</P>
<P>(v) A certification that the tenant's statement is true.
</P>
<P>(3) If a PHA accepts self-certifications under paragraph (a)(1)(ii) of this section, the PHA must validate a sample of such self-certifications using third-party certification described in paragraph (a)(1)(i) of this section.
</P>
<P>(b) <I>PHA notice of noncompliance.</I> (1) If the PHA determines that there is a family member who is required to fulfill a service requirement, but who has violated this family obligation (noncompliant resident), the PHA must notify the tenant of this determination. 
</P>
<P>(2) The PHA notice to the tenant must: 
</P>
<P>(i) Briefly describe the noncompliance; 
</P>
<P>(ii) State that the PHA will not renew the lease at the end of the twelve month lease term unless: 
</P>
<P>(A) The tenant, and any other noncompliant resident, enter into a written agreement with the PHA, in the form and manner required by the PHA, to cure such noncompliance, and in fact cure such noncompliance in accordance with such agreement; or 
</P>
<P>(B) The family provides written assurance satisfactory to the PHA that the tenant or other noncompliant resident no longer resides in the unit. 
</P>
<P>(iii) State that the tenant may request a grievance hearing on the PHA determination, in accordance with part 966, subpart B of this chapter, and that the tenant may exercise any available judicial remedy to seek timely redress for the PHA's nonrenewal of the lease because of such determination. 
</P>
<P>(c) <I>Tenant agreement to comply with service requirement.</I> If the tenant or another family member has violated the service requirement, the PHA may not renew the lease upon expiration of the term unless: 
</P>
<P>(1) The tenant, and any other noncompliant resident, enter into a written agreement with the PHA, in the form and manner required by the PHA, to cure such noncompliance by completing the additional hours of community service or economic self-sufficiency activity needed to make up the total number of hours required over the twelve-month term of the new lease, and 
</P>
<P>(2) All other members of the family who are subject to the service requirement are currently complying with the service requirement or are no longer residing in the unit. 
</P>
<CITA TYPE="N">[65 FR 16729, Mar. 29, 2000, as amended at 81 FR 12374, Mar. 8, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 960.609" NODE="24:4.1.3.1.11.6.5.6" TYPE="SECTION">
<HEAD>§ 960.609   Prohibition against replacement of PHA employees.</HEAD>
<P>In implementing the service requirement under this subpart, the PHA may not substitute community service or self-sufficiency activities performed by residents for work ordinarily performed by PHA employees, or replace a job at any location where residents perform activities to satisfy the service requirement. 


</P>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:4.1.3.1.11.7" TYPE="SUBPART">
<HEAD>Subpart G—Pet Ownership in Public Housing</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>65 FR 42522, July 10, 2000, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV8 N="§ 960.701" NODE="24:4.1.3.1.11.7.5.1" TYPE="SECTION">
<HEAD>§ 960.701   Purpose.</HEAD>
<P>The purpose of this subpart is, in accordance with section 31 of the United States Housing Act of 1937 (42 U.S.C. 1437z-3), to permit pet ownership by residents of public housing, subject to compliance with reasonable requirements established by the public housing agency (PHA) for pet ownership. 


</P>
</DIV8>


<DIV8 N="§ 960.703" NODE="24:4.1.3.1.11.7.5.2" TYPE="SECTION">
<HEAD>§ 960.703   Applicability.</HEAD>
<P>This subpart applies to public housing as that term is defined in section 3(b) of the United States Housing Act of 1937 (42 U.S.C. 1437a(b)), except that such term does not include public housing developments for the elderly or persons with disabilities. Regulations that apply to pet ownership in such developments are located in part 5, subpart C, of this title. 


</P>
</DIV8>


<DIV8 N="§ 960.705" NODE="24:4.1.3.1.11.7.5.3" TYPE="SECTION">
<HEAD>§ 960.705   Animals that assist, support, or provide service to persons with disabilities.</HEAD>
<P>(a) This subpart G does not apply to animals that assist, support or provide service to persons with disabilities. PHAs may not apply or enforce any policies established under this subpart against animals that are necessary as a reasonable accommodation to assist, support or provide service to persons with disabilities. This exclusion applies to such animals that reside in public housing, as that term is used in § 960.703, and such animals that visit these developments. 
</P>
<P>(b) Nothing in this subpart G: 
</P>
<P>(1) Limits or impairs the rights of persons with disabilities; 
</P>
<P>(2) Authorizes PHAs to limit or impair the rights of persons with disabilities; or 
</P>
<P>(3) Affects any authority that PHAs may have to regulate service animals that assist, support or provide service to persons with disabilities, under Federal, State, or local law. 


</P>
</DIV8>


<DIV8 N="§ 960.707" NODE="24:4.1.3.1.11.7.5.4" TYPE="SECTION">
<HEAD>§ 960.707   Pet ownership.</HEAD>
<P>(a) <I>Ownership Conditions.</I> A resident of a dwelling unit in public housing, as that term is used in § 960.703, may own one or more common household pets or have one or more common household pets present in the dwelling unit of such resident, subject to the reasonable requirements of the PHA, if the resident maintains each pet: 
</P>
<P>(1) Responsibly; 
</P>
<P>(2) In accordance with applicable State and local public health, animal control, and animal anti-cruelty laws and regulations; and 
</P>
<P>(3) In accordance with the policies established in the PHA Annual Plan for the agency as provided in part 903 of this chapter. 
</P>
<P>(b) <I>Reasonable requirements.</I> Reasonable requirements may include but are not limited to: 
</P>
<P>(1) Requiring payment of a non-refundable nominal fee to cover the reasonable operating costs to the development relating to the presence of pets, a refundable pet deposit to cover additional costs attributable to the pet and not otherwise covered, or both; 
</P>
<P>(2) Limitations on the number of animals in a unit, based on unit size; 
</P>
<P>(3) Prohibitions on types of animals that the PHA classifies as dangerous, provided that such classifications are consistent with applicable State and local law, and prohibitions on individual animals, based on certain factors, including the size and weight of animals; 
</P>
<P>(4) Restrictions or prohibitions based on size and type of building or project, or other relevant conditions; 
</P>
<P>(5) Registration of the pet with the PHA; and 
</P>
<P>(6) Requiring pet owners to have their pets spayed or neutered. 
</P>
<P>(c) <I>Restriction.</I> A PHA may not require pet owners to have any pet's vocal chords removed. 
</P>
<P>(d) <I>Pet deposit.</I> A PHA that requires a resident to pay a pet deposit must place the deposit in an account of the type required under applicable State or local law for pet deposits or, if State or local law has no requirements regarding pet deposits, for rental security deposits, if applicable. The PHA shall comply with such applicable law as to retention of the deposit, interest, and return of the deposit or portion thereof to the resident, and any other applicable requirements. 
</P>
<P>(e) <I>PHA Plan.</I> Unless otherwise provided by § 903.11 of this chapter, Annual Plans are required to contain information regarding the PHA's pet policies, as described in § 903.7(n) of this chapter, beginning with PHA fiscal years that commence on or after January 1, 2001.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="963" NODE="24:4.1.3.1.12" TYPE="PART">
<HEAD>PART 963—PUBLIC HOUSING—CONTRACTING WITH RESIDENT-OWNED BUSINESSES
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437 and 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>57 FR 20189, May 11, 1992, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.3.1.12.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 963.1" NODE="24:4.1.3.1.12.1.5.1" TYPE="SECTION">
<HEAD>§ 963.1   Purpose.</HEAD>
<P>The purpose of this part is to enhance the economic opportunities of public housing residents by providing public housing agencies with a method of soliciting and contracting with eligible and qualifed resident-owned businesses (as defined in this part) for public housing services, supplies, or construction. The contract award method provided by this part is based on the established procurement procedures set forth in 24 CFR 85.36 (as revised April 1, 2013), with solicitation as provided by these procedures limited to resident-owned businesses. The contract award method provided by this part is not a requirement. It is an alternative procurement method available to public housing agencies, subject to the conditions set forth in this part, and subject to permissibility under State and local laws.
</P>
<CITA TYPE="N">[57 FR 20189, May 11, 1992, as amended at 80 FR 75942, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 963.3" NODE="24:4.1.3.1.12.1.5.2" TYPE="SECTION">
<HEAD>§ 963.3   Applicability.</HEAD>
<P>The policies and procedures contained in this part apply to public housing developments that are owned by public housing agencies (PHAs) and that are covered by Annual Contributions Contracts (ACC) with the Department. Public housing contracts eligible to be awarded under the alternative procurement process provided by this part are limited to individual contracts that do not exceed $1,000,000. Resident-owned businesses eligible to participate in the alternative procurement process are limited to those that meet the eligibility requirements of § 963.10. The policies and procedures contained in this part are consistent with the objectives of section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u), and similar Federal requirements imposed on public housing programs. (See 24 CFR 941.208(a) and 24 CFR 968.110(a)).
</P>
<CITA TYPE="N">[57 FR 20189, May 11, 1992, as amended at 59 FR 33895, June 30, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 963.5" NODE="24:4.1.3.1.12.1.5.3" TYPE="SECTION">
<HEAD>§ 963.5   Definitions.</HEAD>
<P>The terms <I>HUD</I> and <I>Public housing agency (PHA)</I> are defined in 24 CFR part 5.
</P>
<P><I>Act.</I> The U.S. Housing Act of 1937 (42 U.S.C. 1437).
</P>
<P><I>Alternative procurement process.</I> The alternative method of public housing contract award available to public housing agencies and eligible resident-owned businesses under the conditions set forth in this part.
</P>
<P><I>Annual Contributions Contract (ACC).</I> See definition in 24 CFR 968.105.
</P>
<P><I>Certification.</I> A written assertion based on supporting evidence, which shall be kept available for inspection by the Secretary, the Inspector General, and the public, which assertion shall be deemed to be accurate for purposes of this part, unless the Secretary determines otherwise after inspecting the evidence and providing due notice and opportunity for comment.
</P>
<P><I>Contract</I> or <I>public housing contract.</I> Any contract awarded by a PHA for services, supplies, or construction necessary for the development, operation, modernization, or maintenance of public housing.
</P>
<P><I>Management officials.</I> The individuals who possess the power to make the day-to-day, as well as major, decisions on matters of management, policy, and operations of the resident-owned business.
</P>
<P><I>Principal.</I> An owner, partner, director, or management official of the resident-owned business with the power and authority to represent the business and to execute contract, leases, agreements, and other documents on behalf of the business.
</P>
<P><I>Public housing</I> or <I>public housing development.</I> Any public housing development which is owned by a Public Housing Agency (PHA) and is receiving funds under an Annual Contribution Contract (ACC).
</P>
<P><I>Public housing resident.</I> Any individual who resides in public housing as a signatory on a public housing lease, or as a member of the family of the individual(s) who is the signatory on the public housing lease.
</P>
<P><I>Resident-owned business.</I> Any business concern which is owned and controlled by public housing residents. (The term “resident-owned business” includes sole proprietorships.) For purposes of this part, “owned and controlled” means a business:
</P>
<P>(1) Which is at least 51 percent owned by one or more public housing residents; and 
</P>
<P>(2) Whose management and daily business operations are controlled by one or more such individuals. 
</P>
<FP>All securities which constitute ownership or control of a corporation for purposes of establishing the business as a resident-owned business shall be held directly by the public housing residents. No securities held in trust, or by any guardian for a minor, shall be considered as held by the public housing resident in determining the ownership or control of a corporation.
</FP>
<CITA TYPE="N">[57 FR 20189, May 11, 1992, as amended at 61 FR 5215, Feb. 9, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.3.1.12.2" TYPE="SUBPART">
<HEAD>Subpart B—Contracting With Resident-Owned Businesses</HEAD>


<DIV8 N="§ 963.10" NODE="24:4.1.3.1.12.2.5.1" TYPE="SECTION">
<HEAD>§ 963.10   Eligible resident-owned businesses.</HEAD>
<P>To be eligible for the alternative procurement process provided by this part, a business must meet the following requirements, and must submit evidence to the PHA, in the form described below, or as the PHA may require, that shows how each requirement has been met.
</P>
<P>(a) <I>Legally formed business.</I> The business shall submit certified copies of any State, county, or municipal licenses that may be required of the business to engage in the type of business activity for which it was formed. Where applicable (as for example, in the case of corporations), the business also shall submit a certified copy of its corporate charter or other organizational document that verifies that the business was properly formed in accordance with State law.
</P>
<P>(b) <I>Resident-owned business.</I> The business shall submit a certification that it is a resident-owned business as defined by this part. The business shall disclose to the PHA all owners of the business, and each owner's percentage of ownership interest in the business. The business also shall disclose all individuals who possess the power to make the day-to-day, as well as major, decisions on matters of management, policy, and operations (management officials). The business shall identify all owners and management officials who are not public housing residents, and shall disclose any relationship that these owners and officials may have to a business (resident- or non-resident-owned) engaged in the type of business activity with which the resident-owned business is engaged. For purposes of this part, “relationship” means employment by, or having an ownership interest in, a business. The business also shall submit such evidence as the PHA may require to verify that the owner or owners identified as public housing residents reside within public housing of the PHA.
</P>
<P>(c) <I>Responsibility to complete contract.</I> The business shall submit evidence sufficient to demonstrate to the satisfaction of the PHA that the business has the ability to perform successfully under the terms and conditions of the proposed contract. Consideration will be given to various factors, including but not limited to those identified in 24 CFR 85.36(b)(8) (as revised April 1, 2013) and also to such matters as proof of completion of courses in business administration or financial management, and proof of job training or apprenticeship in the particular trade, business, profession, or occupation.
</P>
<P>(d) <I>Limitation on alternative procurement contract awards.</I> The business shall submit a certification as to the number of contracts awarded, and the dollar amount of each contract award received, under the alternative procurement process provided by this part. A resident-owned business is not eligible to participate in the alternative procurement process provided by this part if the resident-owned business has received under this process one or more contracts with a total combined dollar value of $1,000,000.
</P>
<CITA TYPE="N">[57 FR 20189, May 11, 1992, as amended at 59 FR 33895, June 30, 1994; 80 FR 75942, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 963.12" NODE="24:4.1.3.1.12.2.5.2" TYPE="SECTION">
<HEAD>§ 963.12   Alternative procurement process.</HEAD>
<P>(a) <I>Method of procurement.</I> In contracting with resident-owned businesses, the PHA shall follow the applicable method of procurement as set forth in 24 CFR 85.36(d) (as revised April 1, 2013), with solicitation limited to resident-owned businesses. Additionally, the PHA shall ensure that the method of procurement conforms to the procurement standards set forth in 24 CFR 85.36(b) (as revised April 1, 2013).
</P>
<P>(b) <I>Contract awards.</I> Contracts awarded under this part shall be made only to resident-owned businesses that meet the requirements of § 963.10, and that comply with such other requirements as may be required of a contractor under the particular procurement and the Department's regulations. An award shall not be made to the resident-owned business if the contract award exceeds the independent cost estimate required by 24 CFR 85.36(f) (as revised April 1, 2013), and the price normally paid for comparable supplies, services, or construction in the project area.
</P>
<P>(c) <I>Contract requirements.</I> Any contract entered into between a PHA and a resident-owned business under this part shall comply with: the contract provisions of 24 CFR 85.36(i) (as revised April 1, 2013); the provisions of 24 CFR 85.36(h) (as revised April 1, 2013) or 24 CFR 905.316(d) governing bonding requirements, where applicable; and such other contract terms that may be applicable to the particular procurement under the Department's regulations. In addition to the recordkeeping requirements imposed by 24 CFR 85.36(i) (as revised April 1, 2013), the PHA also shall maintain records sufficient to detail the significant history of the procurement made under this part. These records will include, but are not necessarily limited to the following: The independent cost estimate and comparable price analysis as required by paragraph (b) of this section; the basis for contractor selection, including documentation concerning the eligibility of the selected resident-owned business under § 963.10; and the basis for determining the reasonableness of the proposed contract price.
</P>
<CITA TYPE="N">[57 FR 20189, May 11, 1992, as amended at 80 FR 75942, Dec. 7, 2015]


</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="964" NODE="24:4.1.3.1.13" TYPE="PART">
<HEAD>PART 964—TENANT PARTICIPATION AND TENANT OPPORTUNITIES IN PUBLIC HOUSING 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437d, 1437g, 1437r, 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>59 FR 43636, Aug. 24, 1994, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.3.1.13.1" TYPE="SUBPART">
<HEAD>Subpart A—General Provisions</HEAD>


<DIV8 N="§ 964.1" NODE="24:4.1.3.1.13.1.5.1" TYPE="SECTION">
<HEAD>§ 964.1   Purpose.</HEAD>
<P>The purpose of this part is to recognize the importance of resident involvement in creating a positive living environment and in actively participating in the overall mission of public housing. 


</P>
</DIV8>


<DIV8 N="§ 964.3" NODE="24:4.1.3.1.13.1.5.2" TYPE="SECTION">
<HEAD>§ 964.3   Applicability and scope.</HEAD>
<P>(a) The policies and procedures contained in this part apply to any PHA that has a Public Housing Annual Contributions Contract (ACC) with HUD. This part, except for subpart E, does not apply to PHAs with housing assistance payments contracts with HUD under section 8 of the U.S. Housing Act of 1937.
</P>
<P>(b) Subpart B of this part contains HUD policies, procedures, and requirements for the participation of residents in public housing operations. These policies, procedures, and requirements apply to all residents participating under this part. 
</P>
<P>(c)(1) Subpart C of this part contains HUD policies, procedures, and requirements for residents participating in the Tenant Opportunities Program (TOP) (replaces the Resident Management Program under Section 20 of the United States Housing Act of 1937). Resident management in public housing is viable and remains an option under TOP. 
</P>
<P>(2) Subpart C of this part is not intended to negate any pre-existing arrangements for resident management in public housing between a PHA and a resident management corporation. On or after September 23, 1994, any new, renewed or renegotiated contracts must meet the requirements of this part, the ACC and all applicable laws and regulations. 
</P>
<P>(d) Subpart D of this part includes requirements for the Family Investment Centers (FIC) Program which was established by Section 22 of the United States Housing Act of 1937 (42 U.S.C. 1437t) to provide families living in public housing and Indian housing with better access to educational and employment opportunities. 
</P>
<P>(e) Subpart E of this part implements section 2(b) of the United States Housing Act of 1937 (42 U.S.C. 1437), which provides for resident membership on the board of directors or similar governing body of a PHA. Subpart E applies to any public housing agency that has a public housing annual contributions contract with HUD or administers tenant-based rental under section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f).
</P>
<P>(f) The term “resident,” as used throughout this part, is interchangeable with the term “tenant,” to reflect the fact that local resident organizations have differing preferences for the terms. Terms such as “resident council” and “tenant council” and “resident management” and “tenant management” are interchangeable. Hereafter, for ease of discussion, the rule will use the terms resident, resident council and resident management corporation, as appropriate. 
</P>
<CITA TYPE="N">[57 FR 43636, Aug. 24, 1994, as amended at 64 FR 56879, Oct. 21, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 964.7" NODE="24:4.1.3.1.13.1.5.3" TYPE="SECTION">
<HEAD>§ 964.7   Definitions.</HEAD>
<P><I>Annual Contributions Contract (ACC).</I> A contract (in the form prescribed by HUD) under which HUD agrees to provide financial assistance, and the HA agrees to comply with HUD requirements for the development and operation of the public housing project. 
</P>
<P><I>Eligible residents for FIC.</I> A participating resident of a participating HA. If the HA is combining FIC with the Family Self-Sufficiency (FSS) program, the term also means Public Housing FSS and Section 8 families participating in the FSS program. Although Section 8 FSS families are eligible residents for FIC, they do not qualify for income exclusions that are provided for public housing residents participating in employment and supportive service programs. 
</P>
<P><I>Family Investment Centers (FIC).</I> A facility on or near public housing which provides families living in public housing with better access to educational and employment opportunities to achieve self-sufficiency and independence. 
</P>
<P><I>FIC service coordinator.</I> Any person who is responsible for: 
</P>
<P>(1) Determining the eligibility and assessing needs of families to be served by the FIC; 
</P>
<P>(2) Assessing training and service needs of eligible residents; 
</P>
<P>(3) Working with service providers to coordinate the provision of services on a HA-wide or less than HA-wide basis, and to tailor the services to the needs and characteristics of eligible residents; 
</P>
<P>(4) Mobilizing public and private resources to ensure that the supportive services identified can be funded over the five-year period, at least, following the initial receipt of funding. 
</P>
<P>(5) Monitoring and evaluating the delivery, impact, and effectiveness of any supportive service funded with capital or operating assistance under the FIC program; 
</P>
<P>(6) Coordinating the development and implementation of the FIC program with other self-sufficiency programs, and other education and employment programs; and 
</P>
<P>(7) Performing other duties and functions that are appropriate for providing eligible residents with better access to educational and employment opportunities. 
</P>
<P><I>HA</I> means the same as <I>Public Housing Agency (PHA).</I>
</P>
<P><I>Management.</I> All activities for which the HA is responsible to HUD under the ACC, within the definition of “operation” under the Act and the ACC, including the development of resident programs and services. 
</P>
<P><I>Management contract.</I> A written agreement between a resident management corporation and a HA, as provided by subpart C. 
</P>
<P><I>Public Housing Agency (PHA)</I> is defined in 24 CFR part 5.
</P>
<P><I>Public housing development (Development).</I> The term “development” has the same meaning as that provided for “low-income housing project” as that term is defined Section 3(b)(1) of the Act. 
</P>
<P><I>Resident management.</I> The performance of one or more management activities for one or more projects by a resident management corporation under a management contract with the HA. 
</P>
<P><I>Resident management corporation.</I> An entity that proposes to enter into, or enters into, a contract to manage one or more management activities of a HA. 
</P>
<P><I>Resident-owned business.</I> Any business concern which is owned and controlled by public housing residents. (The term “resident-owned business” includes sole proprietorships.) For purposes of this part, “owned and controlled” means a business: 
</P>
<P>(1) Which is at least 51 percent owned by one or more public housing residents; and 
</P>
<P>(2) Whose management and daily business operations are controlled by one or more such individuals. 
</P>
<P><I>Supportive services for FIC.</I> New or significantly expanded services that are essential to providing families living with children in public housing with better access to educational and employment opportunities to achieve self-sufficiency and independence. 
</P>
<P><I>Tenant Opportunities Program (TOP).</I> The TOP program is designed to prepare residents to experience the dignity of meaningful work, to own and operate resident businesses, to move toward financial independence, and to enable them to choose where they want to live and engage in meaningful participation in the management of housing developments in which they live. Financial assistance in the form of technical assistance grants is available to RCs/RMCs to prepare to manage activities in their public housing developments. 
</P>
<P><I>Vacant unit under FIC.</I> A dwelling unit that is not under an effective lease to an eligible family. An effective lease is a lease under which an eligible family has a right to possession of the unit and is being charged rent, even if the amount of any utility allowance equals or exceeds the amount of a total resident payment that is based on income and, as a result, the amount paid by the family to the HA is zero. 
</P>
<CITA TYPE="N">[59 FR 43636, Aug. 24, 1994, as amended at 61 FR 5215, Feb. 9, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 964.11" NODE="24:4.1.3.1.13.1.5.4" TYPE="SECTION">
<HEAD>§ 964.11   HUD policy on tenant participation.</HEAD>
<P>HUD promotes resident participation and the active involvement of residents in all aspects of a HA's overall mission and operation. Residents have a right to organize and elect a resident council to represent their interests. As long as proper procedures are followed, the HA shall recognize the duly elected resident council to participate fully through a working relationship with the HA. HUD encourages HAs and residents to work together to determine the most appropriate ways to foster constructive relationships, particularly through duly-elected resident councils. 


</P>
</DIV8>


<DIV8 N="§ 964.12" NODE="24:4.1.3.1.13.1.5.5" TYPE="SECTION">
<HEAD>§ 964.12   HUD policy on the Tenant Opportunities Program (TOP).</HEAD>
<P>HUD promotes TOP programs to support activities that enable residents to improve the quality of life and resident satisfaction, and obtain other social and economic benefits for residents and their families. Tenant opportunity programs are proven to be effective in facilitating economic uplift, as well as in improving the overall conditions of the public housing communities. 


</P>
</DIV8>


<DIV8 N="§ 964.14" NODE="24:4.1.3.1.13.1.5.6" TYPE="SECTION">
<HEAD>§ 964.14   HUD policy on partnerships.</HEAD>
<P>HUD promotes partnerships between residents and HAs which are an essential component to building, strengthening and improving public housing. Strong partnerships are critical for creating positive changes in lifestyles thus improving the quality of life for public housing residents, and the surrounding community. 


</P>
</DIV8>


<DIV8 N="§ 964.15" NODE="24:4.1.3.1.13.1.5.7" TYPE="SECTION">
<HEAD>§ 964.15   HUD policy on resident management.</HEAD>
<P>It is HUD's policy to encourage resident management. HUD encourages HAs, resident councils and resident management corporations to explore the various functions involved in management to identify appropriate opportunities for contracting with a resident management corporation. Potential benefits of resident-managed entities include improved quality of life, experiencing the dignity of meaningful work, enabling residents to choose where they want to live, and meaningful participation in the management of the housing development. 


</P>
</DIV8>


<DIV8 N="§ 964.16" NODE="24:4.1.3.1.13.1.5.8" TYPE="SECTION">
<HEAD>§ 964.16   HUD role in activities under this part.</HEAD>
<P>(a) <I>General.</I> Subject to the requirements of this part and other requirements imposed on HAs by the ACC, statute or regulation, the form and extent of resident participation including resident management are local decisions to be made jointly by resident councils/resident management corporations and their HAs. HUD will promote tenant participation and tenant opportunities programs, and will provide additional guidance, as necessary and appropriate. In addition, HUD will endeavor to provide technical assistance in connection with these initiatives. 
</P>
<P>(b) <I>Monitoring.</I> HUD shall ensure that the requirements under this part are operating efficiently and effectively. 


</P>
</DIV8>


<DIV8 N="§ 964.18" NODE="24:4.1.3.1.13.1.5.9" TYPE="SECTION">
<HEAD>§ 964.18   HA role in activities under subparts B &amp; C.</HEAD>
<P>(a) <I>HAs with 250 units or more.</I> (1) A HA shall officially recognize a duly elected resident council as the sole representative of the residents it purports to represent, and support its tenant participation activities. 
</P>
<P>(2) When requested by residents, a HA shall provide appropriate guidance to residents to assist them in establishing and maintaining a resident council. 
</P>
<P>(3) A HA may consult with residents, or resident councils (if they exist), to determine the extent to which residents desire to participate in activities involving their community, including the management of specific functions of a public housing development that may be mutually agreeable to the HA and the resident council/resident management corporation. 
</P>
<P>(4) A HA shall provide the residents or any resident council with current information concerning the HA's policies on tenant participation in management. 
</P>
<P>(5) If requested, a HA should provide a duly recognized resident council office space and meeting facilities, free of charge, preferably within the development it represents. If there is no community or rental space available, a request to approve a vacant unit for this non-dwelling use will be considered on a case-by-case basis. 
</P>
<P>(6) If requested, a HA shall negotiate with the duly elected resident council on all uses of community space for meetings, recreation and social services and other resident participation activities pursuant to HUD guidelines. Such agreements shall be put into a written document to be signed by the HA and the resident council. If a HA fails to negotiate with a resident council in good faith or, after negotiations, refuses to permit such usage of community space, the resident council may file an informal appeal with HUD, setting out the circumstances and providing copies of relevant materials evidencing the resident council's efforts to negotiate a written agreement. HUD shall require the HA to respond with a report stating the HA's reasons for rejecting the request or for refusing to negotiate. HUD shall require the parties (with or without direct HUD participation) to undertake or to resume negotiations on an agreement. If no resolution is achieved within 90 days from the date HUD required the parties to undertake or resume such negotiations, HUD shall serve notice on both parties that administrative remedies have been exhausted (except that, pursuant to mutual agreement of the parties, the time for negotiations may be extended by no more than an additional 30 days). 
</P>
<P>(7) In no event shall HUD or a HA recognize a competing resident council once a duly elected resident council has been established. Any funding of resident activities and resident input into decisions concerning public housing operations shall be made only through the officially recognized resident council. 
</P>
<P>(8) The HA shall ensure open communication and frequent meetings between HA management and resident councils and shall encourage the formation of joint HA management-resident committees to work on issues and planning. 
</P>
<P>(9) The resident council shall hold frequent meetings with the residents to ensure that residents have input, and are aware and actively involved in HA management-resident council decisions and activities. 
</P>
<P>(10) The HA and resident council shall put in writing in the form of a Memorandum of Understanding the elements of their partnership agreement and it shall be updated at least once every three (3) years. 
</P>
<P>(11) The HA, in collaboration with the resident councils, shall assume the lead role for assuring maximum opportunities for skills training for public housing residents. To the extent possible, the training resources should be local to ensure maximum benefit and on-going access. 
</P>
<P>(b) <I>HAs with fewer than 250 units.</I> (1) HAs with fewer than 250 units of public housing have the option of participating in programs under this part. 
</P>
<P>(2) HAs shall not deny residents the opportunity to organize. If the residents decide to organize and form a resident council, the HA shall comply with the following: 
</P>
<P>(i) A HA shall officially recognize a duly elected resident council as the sole representative of the residents it purports to represent, and support its tenant participation activities. 
</P>
<P>(ii) When requested by residents, a HA shall provide appropriate guidance to residents to assist them in establishing and maintaining a resident council. 
</P>
<P>(iii) A HA shall provide the residents or any resident council with current information concerning the HA's policies on tenant participation in management. 
</P>
<P>(iv) In no event shall HUD or a HA officially recognize a competing resident council once a duly elected resident council has been established. If a duly elected resident council has been formed, any input into changes concerning public housing operations shall be made only through the officially recognized resident council. 


</P>
</DIV8>


<DIV8 N="§ 964.24" NODE="24:4.1.3.1.13.1.5.10" TYPE="SECTION">
<HEAD>§ 964.24   HUD policy on FIC Program.</HEAD>
<P>HUD promotes Family Investment Centers which provide better access to educational and employment opportunities for residents living in public housing. HUD encourages resident involvement in the FIC Program and promotes resident-HA partnerships to achieve mutual goals. 


</P>
</DIV8>


<DIV8 N="§ 964.30" NODE="24:4.1.3.1.13.1.5.11" TYPE="SECTION">
<HEAD>§ 964.30   Other Program requirements.</HEAD>
<P>In addition to the requirements set forth in 24 CFR part 5, the following Federal requirements apply to this program:
</P>
<P>(a) <I>Affirmative Outreach.</I> (1) The Affirmative Fair Housing Marketing Program requirements of 24 CFR part 200, subpart M and the implementing regulations at 24 CFR part 108; and
</P>
<P>(2) The fair housing advertising and poster guidelines at 24 CFR parts 109 and 110.
</P>
<P>(b) Title II of the Americans with Disabilities Act of 1990 (42 U.S.C. 12131) and implementing regulations at 28 CFR part 35.
</P>
<CITA TYPE="N">[61 FR 5216, Feb. 9, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.3.1.13.2" TYPE="SUBPART">
<HEAD>Subpart B—Tenant Participation</HEAD>


<DIV8 N="§ 964.100" NODE="24:4.1.3.1.13.2.5.1" TYPE="SECTION">
<HEAD>§ 964.100   Role of resident council.</HEAD>
<P>The role of a resident council is to improve the quality of life and resident satisfaction and participate in self-help initiatives to enable residents to create a positive living environment for families living in public housing. Resident councils may actively participate through a working partnership with the HA to advise and assist in all aspects of public housing operations. 


</P>
</DIV8>


<DIV8 N="§ 964.105" NODE="24:4.1.3.1.13.2.5.2" TYPE="SECTION">
<HEAD>§ 964.105   Role of the jurisdiction-wide resident council.</HEAD>
<P>(a) <I>Jurisdiction-wide resident council.</I> Resident councils may come together to form an organization which can represent the interest of residents residing in units under a HA's jurisdiction. This can be accomplished by the presidents of duly elected resident councils forming an organization, by resident councils electing a representative to the organization, or through jurisdiction-wide elections. If duly elected resident councils form such an organization, the HA shall recognize it as the voice of authority-wide residents for input into housing authority policy making. 
</P>
<P>(b) <I>Function.</I> The jurisdiction-wide council may advise the Board of Commissioners and executive director in all areas of HA operations, including but not limited to occupancy, general management, maintenance, security, resident training, resident employment, social services and modernization priorities. 
</P>
<P>(c) <I>Cooperation with other groups.</I> There shall be regularly scheduled meetings between the HA and the local duly elected resident council, and the jurisdiction-wide resident council to discuss problems, plan activities and review progress. 


</P>
</DIV8>


<DIV8 N="§ 964.115" NODE="24:4.1.3.1.13.2.5.3" TYPE="SECTION">
<HEAD>§ 964.115   Resident council requirements.</HEAD>
<P>A resident council shall consist of persons residing in public housing and must meet each of the following requirements in order to receive official recognition from the HA/HUD, and be eligible to receive funds for resident council activities, and stipends for officers for their related costs for volunteer work in public housing: 
</P>
<P>(a) It may represent residents residing: 
</P>
<P>(1) In scattered site buildings; 
</P>
<P>(2) In areas of contiguous row houses; or 
</P>
<P>(3) In one or more contiguous buildings; 
</P>
<P>(4) In a development; or 
</P>
<P>(5) In a combination of these buildings or developments; 
</P>
<P>(b) It must adopt written procedures such as by-laws, or a constitution which provides for the election of residents to the governing board by the voting membership of the residents residing in public housing, described in paragraph (b) of this section, on a regular basis but at least once every three (3) years. The written procedures must provide for the recall of the resident board by the voting membership. These provisions shall allow for a petition or other expression of the voting membership's desire for a recall election, and set the number of percentage of voting membership (“threshold”) who must be in agreement in order to hold a recall election. This threshold shall not be less than 10 percent of the voting membership. 
</P>
<P>(c) It must have a democratically elected governing board that is elected by the voting membership. At a minimum, the governing board should consist of five (5) elected board members.
</P>
<P>The voting membership must consist of heads of households (any age) and other residents at least 18 years of age or older and whose name appears on a lease for the unit in the public housing that the resident council represents. 


</P>
</DIV8>


<DIV8 N="§ 964.117" NODE="24:4.1.3.1.13.2.5.4" TYPE="SECTION">
<HEAD>§ 964.117   Resident council partnerships.</HEAD>
<P>A resident council may form partnerships with outside organizations, provided that such relationships are complementary to the resident council in its duty to represent the residents, and provided that such outside organizations do not become the governing entity of the resident council. 


</P>
</DIV8>


<DIV8 N="§ 964.120" NODE="24:4.1.3.1.13.2.5.5" TYPE="SECTION">
<HEAD>§ 964.120   Resident management corporation requirements.</HEAD>
<P>A resident management corporation must consist of residents residing in public housing and have each of the following characteristics in order to receive official recognition by the HA and HUD: 
</P>
<P>(a) It shall be a non-profit organization that is validly incorporated under the laws of the State in which it is located; 
</P>
<P>(b) It may be established by more than one resident council, so long as each such council: 
</P>
<P>(1) Approves the establishment of the corporation; and 
</P>
<P>(2) Has representation on the Board of Directors of the corporation; 
</P>
<P>(c) It shall have an elected Board of Directors, and elections must be held at least once every three (3) years; 
</P>
<P>(d) Its by-laws shall require the Board of Directors to include resident representatives of each resident council involved in establishing the corporation; include qualifications to run for office, frequency of elections, procedures for recall, and term limits if desired. 
</P>
<P>(e) Its voting members shall be heads of households (any age) and other residents at least 18 years of age and whose name appears on the lease of a unit in the public housing represented by the resident management corporation; 
</P>
<P>(f) Where a resident council already exists for the development, or a portion of the development, the resident management corporation shall be approved by the resident council board and a majority of the residents. If there is no resident council, a majority of the residents of the public housing development it will represent must approve the establishment of such a corporation for the purposes of managing the project; and 
</P>
<P>(g) It may serve as both the resident management corporation and the resident council, so long as the corporation meets the requirements of this part for a resident council. 


</P>
</DIV8>


<DIV8 N="§ 964.125" NODE="24:4.1.3.1.13.2.5.6" TYPE="SECTION">
<HEAD>§ 964.125   Eligibility for resident council membership.</HEAD>
<P>(a) Any member of a public housing household, not including members of a non-public housing over-income family as defined in § 960.102 of this chapter, whose name is on the lease of a unit in the public housing development and meets the requirements of the by-laws is eligible to be a member of a resident council. The resident council may establish additional criteria that are non-discriminatory and do not infringe on rights of other residents in the development. Such criteria must be stated in the by-laws or constitution as appropriate. 
</P>
<P>(b) The right to vote for resident council board shall be limited to designated heads of households (any age) and other members of the household who are 18 years or older whose name appears on the lease of a unit in the public housing development represented by the resident council. 
</P>
<P>(c) Any qualified voting member of a resident council who meets the requirements described in the by-laws and is in compliance with the lease may seek office and serve on the resident council governing board. 
</P>
<CITA TYPE="N">[59 FR 43636, Aug. 24, 1994, as amended at 88 FR 9675, Feb. 14, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 964.130" NODE="24:4.1.3.1.13.2.5.7" TYPE="SECTION">
<HEAD>§ 964.130   Election procedures and standards.</HEAD>
<P>At a minimum, a resident council may use local election boards/commissions. The resident council shall use an independent third-party to oversee elections and recall procedures. 
</P>
<P>(a) Resident councils shall adhere to the following minimum standards regarding election procedures: 
</P>
<P>(1) All procedures must assure fair and frequent elections of resident council members—at least once every three years for each member. 
</P>
<P>(2) Staggered terms for resident council governing board members and term limits shall be discretionary with the resident council. 
</P>
<P>(3) Each resident council shall adopt and issue election and recall procedures in their by-laws. 
</P>
<P>(4) The election procedures shall include qualifications to run for office, frequency of elections, procedures for recall, and term limits if desired. 
</P>
<P>(5) All voting members of the resident community must be given sufficient notice (at least 30 days) for nomination and election. The notice should include a description of election procedures, eligibility requirements, and dates of nominations and elections. 
</P>
<P>(b) If a resident council fails to satisfy HUD minimum standards for fair and frequent elections, or fails to follow its own election procedures as adopted, HUD shall require the HA to withdraw recognition of the resident council and to withhold resident services funds as well as funds provided in conjunction with services rendered for resident participation in public housing. 
</P>
<P>(c) HAs shall monitor the resident council election process and shall establish a procedure to appeal any adverse decision relating to failure to satisfy HUD minimum standards. Such appeal shall be submitted to a jointly selected third-party arbitrator at the local level. If costs are incurred by using a third-party arbitrator, then such costs should be paid from the HAs resident services funds pursuant to § 964.150. 


</P>
</DIV8>


<DIV8 N="§ 964.135" NODE="24:4.1.3.1.13.2.5.8" TYPE="SECTION">
<HEAD>§ 964.135   Resident involvement in HA management operations.</HEAD>
<P>Residents shall be involved and participate in the overall policy development and direction of Public Housing operations. 
</P>
<P>(a) Resident management corporations (RMCs) may contract with HAs to perform one or more management functions provided the resident entity has received sufficient training and/or has staff with the necessary expertise to perform the management functions and provided the RMC meets bonding and licensing requirements. 
</P>
<P>(b) Residents shall be actively involved in a HA's decision-making process and give advice on matters such as modernization, security, maintenance, resident screening and selection, and recreation. 
</P>
<P>(c) While a HA has responsibility for management operations, it shall ensure strong resident participation in all issues and facets of its operations through the duly elected resident councils at public housing developments, and with jurisdiction-wide resident councils. 
</P>
<P>(d) A HA shall work in partnership with the duly elected resident councils. 
</P>
<P>(e) HAs, upon request from the duly elected resident council, shall ensure that the duly elected resident council officers as defined in subpart B of this part, and other residents in the development are fully trained and involved in developing and implementing Federal programs including but not limited to Comprehensive Improvement Assistance Program (CIAP), Comprehensive Grant Program, Urban Revitalization Demonstration, Drug Elimination, and FIC. 
</P>
<P>(f) HAs shall involve resident council officers and other interested residents at the development through education and direct participation in all phases of the budgetary process.
</P>
<P>(g) Resident council officers shall be encouraged to become involved in the resident screening and selection process for prospective residents at the development. Those selected to perform resident screening and selection functions must be trained by the HA in resident screening and selection and must sign a legal document committing to confidentiality. 


</P>
</DIV8>


<DIV8 N="§ 964.140" NODE="24:4.1.3.1.13.2.5.9" TYPE="SECTION">
<HEAD>§ 964.140   Resident training.</HEAD>
<P>(a) <I>Resident training opportunities.</I> HUD encourages a partnership between the residents, the HA and HUD, as well as with the public and non-profit sectors to provide training opportunities for public housing residents. The categories in which training could occur include, but are not limited to: 
</P>
<P>(1) Community organization and leadership training; 
</P>
<P>(2) Organizational development training for Resident Management Corporations and duly elected Resident Councils; 
</P>
<P>(3) Public housing policies, programs, rights and responsibilities training; and 
</P>
<P>(4) Business entrepreneurial training, planning and job skills. 
</P>
<P>(b) <I>Local training resources.</I> HUD encourages the use of local training resources to ensure the ongoing accessibility and availability of persons to provide training and technical assistance. Possible training resources may include: 
</P>
<P>(1) Resident organizations; 
</P>
<P>(2) Housing authorities; 
</P>
<P>(3) Local community colleges, vocational schools; and 
</P>
<P>(4) HUD and other Federal agencies and other local public, private and non-profit organizations. 


</P>
</DIV8>


<DIV8 N="§ 964.145" NODE="24:4.1.3.1.13.2.5.10" TYPE="SECTION">
<HEAD>§ 964.145   Conflict of interest.</HEAD>
<P>Resident council officers can not serve as contractors or employees if they are in policy making or supervisory positions at the HA. 


</P>
</DIV8>


<DIV8 N="§ 964.150" NODE="24:4.1.3.1.13.2.5.11" TYPE="SECTION">
<HEAD>§ 964.150   Funding tenant participation.</HEAD>
<P>(a) <I>Funding duly elected resident councils and jurisdiction wide resident councils.</I> (1) The HA shall provide funds it receives for this purpose to the duly elected resident council at each development and/or those jurisdiction-wide councils eligible to receive the resident portion of the tenant services account to use for resident participation activities. This shall be an addition to the Performance Funding System (PFS), as provided by 24 CFR part 990, to permit HAs to fund $25 per unit per year for units represented by duly elected resident councils for resident services, subject to the availability of appropriations. Of this amount, $15 per unit per year would be provided to fund tenant participation activities under subpart B of this part for duly elected resident councils and/or jurisdiction-wide councils and $10 per unit per year would be used by the HA to pay for costs incurred in carrying out tenant participation activities under subpart B of this part, including the expenses for conducting elections, recalls or arbitration required under § 964.130 in subpart B. This will guarantee the resources necessary to create a bona fide partnership among the duly elected resident councils, the HA and HUD. Where both local and jurisdiction-wide councils exist, the distribution will be agreed upon by the HA and the respective councils. 
</P>
<P>(2) If funds are available through appropriations, the HA must provide tenant services funding to the duly elected resident councils regardless of the HA's financial status. The resident council funds shall not be impacted or restricted by the HA financial status and all said funds must be used for the purpose set forth in subparts B and C of this part. 
</P>
<P>(3) The HA and the duly elected resident council at each development and/or those jurisdiction-wide councils shall collaborate on how the funds will be distributed for tenant participation activities. If disputes regarding funding decisions arise between the parties, the matter shall be referred to the Field Office for intervention. HUD Field Office shall require the parties to undertake further negotiations to resolve the dispute. If no resolution is achieved within 90 days from the date of the Field Office intervention, the Field Office shall refer the matter to HUD Headquarters for final resolution. 
</P>
<P>(b) <I>Stipends.</I> (1) HUD encourages HAs to provide stipends to resident council officers who serve as volunteers in their public housing developments. The amount of the stipend, up to $200 per month/per officer, shall be decided locally by the resident council and the HA. Subject to appropriations, the stipends will be funded from the resident council's portion of the operating subsidy funding for resident council expenses ($15.00 per unit per year). 
</P>
<P>(2) Pursuant to § 913.106, stipends are not to be construed as salaries and should not be included as income for calculation of rents, and are not subject to conflict of interest requirements. 
</P>
<P>(3) Funding provided by a HA to a duly elected resident council may be made only under a written agreement between the HA and a resident council, which includes a resident council budget and assurance that all resident council expenditures will not contravene provisions of law and will promote serviceability, efficiency, economy and stability in the operation of the local development. The agreement must require the local resident council to account to the HA for the use of the funds and permit the HA to inspect and audit the resident council's financial records related to the agreement. 


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:4.1.3.1.13.3" TYPE="SUBPART">
<HEAD>Subpart C—Tenant Opportunities Program</HEAD>


<DIV8 N="§ 964.200" NODE="24:4.1.3.1.13.3.5.1" TYPE="SECTION">
<HEAD>§ 964.200   General.</HEAD>
<P>(a) The Tenant Opportunities Program (TOP) provides technical assistance for various activities, including but not limited to resident management, for resident councils/resident management corporations as authorized by Section 20 of the U.S. Housing Act of 1937. The TOP provides opportunities for resident organizations to improve living conditions and resident satisfaction in public housing communities. 
</P>
<P>(b) This subpart establishes the policies, procedures and requirements for participating in the TOP with respect to applications for funding for programs identified in this subpart. 
</P>
<P>(c) This subpart contains the policies, procedures and requirements for the resident management program as authorized by section 20 of the U.S. Housing Act of 1937. 


</P>
</DIV8>


<DIV8 N="§ 964.205" NODE="24:4.1.3.1.13.3.5.2" TYPE="SECTION">
<HEAD>§ 964.205   Eligibility.</HEAD>
<P>(a) <I>Resident councils/resident management corporations.</I> Any eligible resident council/resident management corporation as defined in subpart B of this part is eligible to participate in a program administered under this subpart. 
</P>
<P>(b) <I>Activities.</I> Activities to be funded and carried out by an eligible resident council or resident management corporation, as defined in subpart B of this part, must improve the living conditions and public housing operations and may include any combination of, but are not limited to, the following: 
</P>
<P>(1) <I>Resident capacity building.</I> (i) Training Board members in community organizing, Board development, and leadership training; 
</P>
<P>(ii) Determining the feasibility of resident management enablement for a specific project or projects; and 
</P>
<P>(iii) Assisting in the actual creation of an RMC, such as consulting and legal assistance to incorporate, preparing by-laws and drafting a corporate charter. 
</P>
<P>(2) <I>Resident management.</I> (i) Training residents, as potential employees of an RMC, in skills directly related to the operation, management, maintenance and financial systems of a project; 
</P>
<P>(ii) Training of residents with respect to fair housing requirements; and 
</P>
<P>(iii) Gaining assistance in negotiating management contracts, and designing a long-range planning system. 
</P>
<P>(3) <I>Resident management business development.</I> (i) Training related to resident-owned business development and technical assistance for job training and placement in RMC developments; 
</P>
<P>(ii) Technical assistance and training in resident managed business development through: 
</P>
<P>(A) Feasibility and market studies; 
</P>
<P>(B) Development of business plans; 
</P>
<P>(C) Outreach activities; and 
</P>
<P>(D) Innovative financing methods including revolving loan funds; and 
</P>
<P>(iii) Legal advice in establishing a resident managed business entity. 
</P>
<P>(4) <I>Social support needs (such as self-sufficiency and youth initiatives).</I> (i) Feasibility studies to determine training and social services needs; 
</P>
<P>(ii) Training in management-related trade skills, computer skills, etc; 
</P>
<P>(iii) Management-related employment training and counseling; 
</P>
<P>(iv) Coordination of support services; 
</P>
<P>(v) Training for programs such as child care, early childhood development, parent involvement, volunteer services, parenting skills, before and after school programs; 
</P>
<P>(vi) Training programs on health, nutrition and safety; 
</P>
<P>(vii) Workshops for youth services, child abuse and neglect prevention, tutorial services, in partnership with community-based organizations such as local Boys and Girls Clubs, YMCA/YWCA, Boy/Girl Scouts, Campfire and Big Brother/Big Sisters, etc. Other HUD programs such as the Youth Sports Program and the Public Housing Drug Elimination Programs also provide funding in these areas; 
</P>
<P>(viii) Training in the development of strategies to successfully implement a youth program. For example, assessing the needs and problems of the youth, improving youth initiatives that are currently active, and training youth, housing authority staff, resident management corporations and resident councils on youth initiatives and program activities; and 
</P>
<P>(5) <I>Homeownership Opportunity.</I> Determining feasibility for homeownership by residents, including assessing the feasibility of other housing (including HUD owned or held single or multi-family) affordable for purchase by residents. 
</P>
<P>(6) <I>General.</I> (i) Required training on HUD regulations and policies governing the operation of low-income public housing including contracting/procurement regulations, financial management, capacity building to develop the necessary skills to assume management responsibilities at the project and property management; 
</P>
<P>(ii) Purchasing hardware, i.e., computers and software, office furnishings and supplies, in connection with business development. Every effort must be made to acquire donated or discounted hardware; 
</P>
<P>(iii) Training in accessing other funding sources; and 
</P>
<P>(iv) Hiring trainers or other experts (RCs/RMCs must ensure that this training is provided by a qualified housing management specialist, a community organizer, the HA, or other sources knowledgeable about the program). 


</P>
</DIV8>


<DIV8 N="§ 964.210" NODE="24:4.1.3.1.13.3.5.3" TYPE="SECTION">
<HEAD>§ 964.210   Notice of funding availability.</HEAD>
<P>A Notice of Funding Availability shall be published periodically in the <E T="04">Federal Register</E> containing the amounts of funds available, funding criteria, where to obtain and submit applications, and the deadline for submissions. 


</P>
</DIV8>


<DIV8 N="§ 964.215" NODE="24:4.1.3.1.13.3.5.4" TYPE="SECTION">
<HEAD>§ 964.215   Grant agreement.</HEAD>
<P>(a) <I>General.</I> HUD shall enter into a grant agreement with the recipient of a technical assistance grant which defines the legal framework for the relationship between HUD and a resident council or resident management corporation for the proposed funding. 
</P>
<P>(b) <I>Term of grant agreement.</I> A grant shall be for a term of three to five years (3-5 years), and renewable at the expiration of the term. 


</P>
</DIV8>


<DIV8 N="§ 964.220" NODE="24:4.1.3.1.13.3.5.5" TYPE="SECTION">
<HEAD>§ 964.220   Technical assistance.</HEAD>
<P>(a) <I>Financial assistance.</I> HUD will provide financial assistance, to the extent available, to resident councils or resident management corporations for technical assistance and training to further the activities under this subpart. 
</P>
<P>(b) <I>Requirements for a management specialist.</I> If a resident council or resident management corporation seeks to manage a development, it must select, in consultation with the HA, a qualified housing management specialist to assist in determining the feasibility of, and to help establish, a resident management corporation and to provide training and other duties in connection with the daily operations of the project. 


</P>
</DIV8>


<DIV8 N="§ 964.225" NODE="24:4.1.3.1.13.3.5.6" TYPE="SECTION">
<HEAD>§ 964.225   Resident management requirements.</HEAD>
<P>The following requirements apply when a HA and its residents are interested in providing for resident performance of several management functions in one or more projects. 
</P>
<P>(a) <I>Resident management corporation responsibilities.</I> Resident councils interested in contracting with a HA must establish a resident management corporation that meets the requirements for such a corporation, as specified in subpart B. The RMC and its employees must demonstrate their ability and skill to perform in the particular areas of management pursuant to the management contract. 
</P>
<P>(b) <I>HA responsibilities.</I> HAs shall give full and serious consideration to resident management corporations seeking to enter into a management contract with the HA. A HA shall enter into good-faith negotiations with a corporation seeking to contract to provide management services. 
</P>
<P>(c) <I>Duty to bargain in good faith.</I> If a HA refuses to negotiate with a resident management corporation in good faith or, after negotiations, refuses to enter into a contract, the corporation may file an informal appeal with HUD, setting out the circumstances and providing copies of relevant materials evidencing the corporation's efforts to negotiate a contract. HUD shall require the HA to respond with a report stating the HA's reasons for rejecting the corporation's contract offer or for refusing to negotiate. Thereafter, HUD shall require the parties (with or without direct HUD participation) to undertake or to resume negotiations on a contract providing for resident management, and shall take such other actions as are necessary to resolve the conflicts between the parties. If no resolution is achieved within 90 days from the date HUD required the parties to undertake or resume such negotiations, HUD shall serve notice on both parties that administrative remedies have been exhausted (except that, pursuant to mutual agreement of the parties, the time for negotiations may be extended by no more than an additional 30 days). 
</P>
<P>(d) <I>Management contract.</I> A management contract between the HA and a resident management corporation is required for property management. The HA and the resident management corporation may agree to the performance by the corporation of any or all management functions for which the HA is responsible to HUD under the ACC and any other functions not inconsistent with the ACC and applicable state and local laws, regulations and licensing requirements. 
</P>
<P>(e) <I>Procurement requirements.</I> The management contract shall be treated as a contracting out of services, and must be subject to any provision of a collective bargaining agreement regarding the contracting out of services to which the HA is subject. Provisions on competitive bidding and requirements of prior written HUD approval of contracts contained in the ACC do not apply to the decision of a HA to contract with a RMC. 
</P>
<P>(f) <I>Rights of families; operation of project.</I> If a resident management corporation is approved by the tenant organization representing one or more buildings or an area of row houses that are part of a public housing project for purposes of part 941 of this chapter, the resident management program may not, as determined by the HA, interfere with the rights of other residents of such project or harm the efficient operation of such project. 
</P>
<P>(g) <I>Comprehensive improvement assistance with RMCs.</I> (1) The HA may enter into a contract with the RMC to provide comprehensive improvement assistance under part 968 of this chapter to modernize a project managed by the RMC. 
</P>
<P>(2) The HA shall not retain, for any administrative or other reason, any portion of the comprehensive improvement assistance provided, unless the PHA and the RMC provide otherwise by contract. 
</P>
<P>(3) In assessing the modernization needs of its projects under 24 CFR part 968, or other grant mechanisms established by the Housing and Community Development Act of 1987, the HAs must consult with the tenant management corporation regarding any project managed by the corporation, in order to determine the modernization needs and preferences of resident-managed projects. Evidence of this required consultation must be included with a HA's initial submission to HUD. 
</P>
<P>(h) <I>Direct provision of operating and capital assistance to RMC</I>—(1) <I>Direct provision of assistance to RMC.</I> The ACC shall provide for the direct provision of operating and capital assistance by HUD to an RMC if: 
</P>
<P>(i) The RMC petitions HUD for the release of funds; 
</P>
<P>(ii) The contract provides for the RMC to assume the primary management responsibilities of the PHA; 
</P>
<P>(iii) The RMC has been designated as at least a “standard performer” under the Public Housing Assessment System (PHAS) (see 24 CFR part 902); and 
</P>
<P>(iv) The RMC is not in violation of any financial, accounting, procurement, civil rights, fair housing or other program requirements that HUD determines call into question the capability of the RMC to effectively discharge its responsibilities under the contract. 
</P>
<P>(2) <I>Use of assistance.</I> Any direct capital or operating assistance provided to the RMC must be used for purposes of performing eligible activities with respect to public housing as may be provided under the contract. 
</P>
<P>(3) <I>Responsibilities of PHA.</I> If HUD provides direct funding to a RMC under paragraph (h)(1) of this section, the PHA is not responsible for the actions of the RMC. 
</P>
<P>(i) <I>Prohibited activities.</I> A HA may not contract for assumption by the resident management corporation of the HA's underlying responsibilities to HUD under the ACC. 
</P>
<P>(j) <I>Bonding, insurance, and licensing</I>—(1) <I>Bonding and insurance.</I> Before assuming any management responsibility under its contract, the RMC must provide fidelity bonding and insurance, or equivalent protection that is adequate (as determined by HUD and the PHA) to protect HUD and the PHA against loss, theft, embezzlement, or fraudulent acts on the part of the RMC or its employees. 
</P>
<P>(2) <I>Licensing and other local requirements.</I> An RMC must be in compliance with any local licensing, or other local requirement, governing the qualifications or operations of a property manager. 
</P>
<P>(k) <I>Waiver of HUD requirements.</I> Upon the joint request of a resident management corporation and the HA, HUD may waive any requirement that HUD has established and that is not required by law, if HUD determines, after consultation with the resident management corporation and the HA, that the requirement unnecessarily increases the costs to the project or restricts the income of the project; and that the waiver would be consistent with the management contract and any applicable collective bargaining agreement. Any waiver granted to a resident management corporation under this section will apply as well to the HA to the extent the waiver affects the HA's remaining responsibilities relating to the resident management corporation's project. 
</P>
<P>(l) <I>Monitoring of RMC performance.</I> The HA must review periodically (but not less than annually) the management corporation's performance to ensure that it complies with all applicable requirements and meets agreed-upon standards of performance. (The method of review and criteria used to judge performance should be specified in the management contract.) 
</P>
<CITA TYPE="N">[59 FR 43636, Aug. 24, 1994, as amended at 65 FR 42515, July 10, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 964.230" NODE="24:4.1.3.1.13.3.5.7" TYPE="SECTION">
<HEAD>§ 964.230   Audit and administrative requirements.</HEAD>
<P>(a) <I>TOP grant recipients.</I> The HUD Inspector General, the Comptroller General of the United States, or any duly authorized representative shall have access to all records required to be retained by this subpart or by any agreement with HUD for the purpose of audit or other examinations. 
</P>
<P>(1) Grant recipients must comply with the requirements of 2 CFR part 200, as applicable. 
</P>
<P>(2) A final audit shall be required of the financial statements made pursuant to this subpart by a Certified Public Accountant (CPA), in accordance with generally accepted government audit standards. A written report of the audit must be forwarded to HUD within 60 days of issuance. 
</P>
<P>(b) <I>Resident management corporations.</I> Resident management corporations who have entered into a contract with a HA with respect to management of a development(s) must comply with the requirements of 2 CFR part 200, as applicable. Resident management corporations managing a development(s) must be audited annually by a licensed certified public accountant, designated by the corporation, in accordance with generally accepted government audit standards. A written report of each audit must be forwarded to HUD and the HA within 30 days of issuance. These requirements are in addition to any other Federal law or other requirement that would apply to the availability and audit of books and records of resident management corporations under this part.
</P>
<CITA TYPE="N">[59 FR 43636, Aug. 24, 1994, as amended at 80 FR 75942, Dec. 7, 2015]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:4.1.3.1.13.4" TYPE="SUBPART">
<HEAD>Subpart D—Family Investment Centers (FIC) Program</HEAD>


<DIV8 N="§ 964.300" NODE="24:4.1.3.1.13.4.5.1" TYPE="SECTION">
<HEAD>§ 964.300   General.</HEAD>
<P>The Family Investment Centers Program provides families living in public housing with better access to educational and employment opportunities by: 
</P>
<P>(a) Developing facilities in or near public housing for training and support services; 
</P>
<P>(b) Mobilizing public and private resources to expand and improve the delivery of such services; 
</P>
<P>(c) Providing funding for such essential training and support services that cannot otherwise be funded; and 
</P>
<P>(d) Improving the capacity of management to assess the training and service needs of families, coordinate the provision of training and services that meet such needs, and ensure the long-term provision of such training and services. FIC provides funding to HAs to access educational, housing, or other social service programs to assist public housing residents toward self-sufficiency. 


</P>
</DIV8>


<DIV8 N="§ 964.305" NODE="24:4.1.3.1.13.4.5.2" TYPE="SECTION">
<HEAD>§ 964.305   Eligibility.</HEAD>
<P>(a) <I>Public Housing Authorities.</I> HAs may apply to establish one or more FICs for more than one public housing development. 
</P>
<P>(b) <I>FIC Activities.</I> Activities that may be funded and carried out by eligible HAs, as defined in § 964.305(a) and § 964.310(a) may include: 
</P>
<P>(1) The renovation, conversion, or combination of vacant dwelling units in a HA development to create common areas to accommodate the provision of supportive services; 
</P>
<P>(2) The renovation of existing common areas in a HA development to accommodate the provision of supportive services; 
</P>
<P>(3) The acquisition, construction or renovation of facilities located near the premises of one or more HA developments to accommodate the provision of supportive services; 
</P>
<P>(4) The provision of not more than 15 percent of the total cost of supportive services (which may be provided directly to eligible residents by the HA or by contract or lease through other appropriate agencies or providers), but only if the HA demonstrates that: 
</P>
<P>(i) The supportive services are appropriate to improve the access of eligible residents to employment and educational opportunities; and 
</P>
<P>(ii) The HA has made diligent efforts to use or obtain other available resources to fund or provide such services; and 
</P>
<P>(5) The employment of service coordinators. 
</P>
<P>(c) <I>Follow up.</I> A HA must demonstrate a firm commitment of assistance from one or more sources ensuring that supportive services will be provided for not less than one year following the completion of activities. 
</P>
<P>(d) <I>Environmental Review.</I> Any environmental impact regarding eligible activities will be addressed through an environmental review of that activity as required by 24 CFR part 50, including the applicable related laws and authorities under § 50.4, to be completed by HUD, to ensure that any environmental impact will be addressed before assistance is provided to the HA. Grantees will be expected to adhere to all assurances applicable to environmental concerns. 


</P>
</DIV8>


<DIV8 N="§ 964.308" NODE="24:4.1.3.1.13.4.5.3" TYPE="SECTION">
<HEAD>§ 964.308   Supportive services requirements.</HEAD>
<P>HAs shall provide new or significantly expanded services essential to providing families in public housing with better access to educational and employment opportunities to achieve self-sufficiency and independence. HAs applying for funds to provide supportive services must demonstrate that the services will be provided at a higher level than currently provided. Supportive services may include: 
</P>
<P>(a) Child care, of a type that provides sufficient hours of operation and serves appropriate ages as needed to facilitate parental access to education and job opportunities; 
</P>
<P>(b) Employment training and counseling (e.g., job training, preparation and counseling, job development and placement, and follow-up assistance after job placement); 
</P>
<P>(c) Computer skills training; 
</P>
<P>(d) Education (e.g., remedial education, literacy training, completion of secondary or post-secondary education, and assistance in the attainment of certificates of high school equivalency); 
</P>
<P>(e) Business entrepreneurial training and counseling; 
</P>
<P>(f) Transportation, as necessary to enable any participating family member to receive available services or to commute to his or her place of employment; 
</P>
<P>(g) Personal welfare (e.g., substance/alcohol abuse treatment and counseling, self-development counseling, etc.); 
</P>
<P>(h) Supportive Health Care Services (e.g., outreach and referral services); and 
</P>
<P>(i) Any other services and resources, including case management, that are determined to be appropriate in assisting eligible residents. 


</P>
</DIV8>


<DIV8 N="§ 964.310" NODE="24:4.1.3.1.13.4.5.4" TYPE="SECTION">
<HEAD>§ 964.310   Audit/compliance requirements.</HEAD>
<P>HAs cannot have serious unaddressed, outstanding Inspector General audit findings or fair housing and equal opportunity monitoring review findings or Field Office management review findings. In addition, the HA must be in compliance with civil rights laws and equal opportunity requirements. A HA will be considered to be in compliance if: 
</P>
<P>(a) As a result of formal administrative proceedings, there are no outstanding findings of noncompliance with civil rights laws unless the HA is operating in compliance with a HUD-approved compliance agreement designed to correct the area(s) of noncompliance; 
</P>
<P>(b) There is no adjudication of a civil rights violation in a civil action brought against it by a private individual, unless the HA demonstrates that it is operating in compliance with a court order, or implementing a HUD-approved resident selection and assignment plan or compliance agreement, designed to correct the area(s) of noncompliance; 
</P>
<P>(c) There is no deferral of Federal funding based upon civil rights violations; 
</P>
<P>(d) HUD has not deferred application processing by HUD under Title VI of the Civil Rights Act of 1964, the Attorney General's Guidelines (28 CFR 50.3) and HUD's Title VI regulations (24 CFR 1.8) and procedures (HUD Handbook 8040.1) [HAs only] or under Section 504 of the Rehabilitation Act of 1973 and HUD regulations (24 CFR 8.57) [HAs and IHAs]; 
</P>
<P>(e) There is no pending civil rights suit brought against the HA by the Department of Justice; and
</P>
<P>(f) There is no unresolved charge of discrimination against the HA issued by the Secretary under Section 810(g) of the Fair Housing Act, as implemented by 24 CFR 103.400. 


</P>
</DIV8>


<DIV8 N="§ 964.315" NODE="24:4.1.3.1.13.4.5.5" TYPE="SECTION">
<HEAD>§ 964.315   HAs role in activities under this part.</HEAD>
<P>The HAs shall develop a process that assures that RC/RMC representatives and residents are fully briefed and have an opportunity to comment on the proposed content of the HA's application for funding. The HA shall give full and fair consideration to the comments and concerns of the residents. The process shall include: 
</P>
<P>(a) Informing residents of the selected developments regarding the preparation of the application, and providing for residents to assist in the development of the application. 
</P>
<P>(b) Once a draft application has been prepared, the HA shall make a copy available for reading in the management office; provide copies of the draft to any resident organization representing the residents of the development(s) involved; and provide adequate opportunity for comment by the residents of the development and their representative organizations prior to making the application final. 
</P>
<P>(c) After HUD approval of a grant, notify the duly elected resident organization and if none exists, notify the residents of the development of the approval of the grant; provide notification of the availability of the HUD-approved implementation schedule in the management office for reading; and develop a system to facilitate a regular resident role in all aspects of program implementation. 






</P>
</DIV8>


<DIV8 N="§ 964.320" NODE="24:4.1.3.1.13.4.5.6" TYPE="SECTION">
<HEAD>§ 964.320   HUD Policy on training, employment, contracting and subcontracting of public housing residents.</HEAD>
<P>In accordance with Section 3 of the Housing and Urban Development Act of 1968 and the implementing regulations at 24 CFR part 75, PHAs, their contractors and subcontractors shall make best efforts, consistent with existing Federal, State, and local laws and regulations, to give low and very low-income persons the training and employment opportunities generated by Section 3 covered assistance (as this term is defined in 24 CFR 75.3) and to give Section 3 business concerns the contracting opportunities generated by Section 3 covered assistance.


</P>
<CITA TYPE="N">[85 FR 61568, Sept. 29, 2020] 




</CITA>
</DIV8>


<DIV8 N="§ 964.325" NODE="24:4.1.3.1.13.4.5.7" TYPE="SECTION">
<HEAD>§ 964.325   Notice of funding availability.</HEAD>
<P>A Notice of Funding Availability will be published periodically in the <E T="04">Federal Register</E> containing the amounts of funds available, funding criteria, where to obtain and submit applications, the deadline for the submissions, and further explanation of the selection criteria. 


</P>
</DIV8>


<DIV8 N="§ 964.330" NODE="24:4.1.3.1.13.4.5.8" TYPE="SECTION">
<HEAD>§ 964.330   Grant set-aside assistance.</HEAD>
<P>The Department may make available five percent (5%) of any amounts available in each fiscal year (subsequent to the first funding cycle) available to eligible HAs to supplement grants previously awarded under this program. These supplemental grants would be awarded if the HA demonstrates that the funds cannot otherwise be obtained and are needed to maintain adequate levels of services to residents. 


</P>
</DIV8>


<DIV8 N="§ 964.335" NODE="24:4.1.3.1.13.4.5.9" TYPE="SECTION">
<HEAD>§ 964.335   Grant agreement.</HEAD>
<P>(a) <I>General.</I> HUD will enter into a grant agreement with the recipients of a Family Investment Centers grant which defines the legal framework for the relationship between HUD and a HA. 
</P>
<P>(b) <I>Term of grant agreement.</I> A grant will be for a term of three to five years depending upon the tasks undertaken, as defined under this subpart. 


</P>
</DIV8>


<DIV8 N="§ 964.340" NODE="24:4.1.3.1.13.4.5.10" TYPE="SECTION">
<HEAD>§ 964.340   Resident compensation.</HEAD>
<P>Residents employed to provide services or renovation or conversion work funded under this program shall be paid at a rate not less than the highest of: 
</P>
<P>(a) The minimum wage that would be applicable to the employees under the Fair Labor Standards Act of 1938 (FLSA), if section 6(a)(1) of the FLSA applied to the resident and if the resident were not exempt under section 13 of the FLSA; 
</P>
<P>(b) The State or local minimum wage for the most nearly comparable covered employment; or 
</P>
<P>(c) The prevailing rate of pay for persons employed in similar public occupations by the same employer. 


</P>
</DIV8>


<DIV8 N="§ 964.345" NODE="24:4.1.3.1.13.4.5.11" TYPE="SECTION">
<HEAD>§ 964.345   Treatment of income.</HEAD>
<P>Program participation shall begin on the first day the resident enters training or begins to receive services. Furthermore, the earnings of and benefits to any HA resident resulting from participation in the FIC program shall not be considered as income in computing the resident's total annual income that is used to determine the resident rental payment during: 
</P>
<P>(a) The period that the resident participates in the program; and 
</P>
<P>(b) The period that begins with the commencement of employment of the resident in the first job acquired by the resident after completion of the program that is not funded by assistance under the 1937 Act, and ends on the earlier of: 
</P>
<P>(1) The date the resident ceases to continue employment without good cause; or 
</P>
<P>(2) The expiration of the 18-month period beginning on the date of commencement of employment in the first job not funded by assistance under this program. (See § 913.106, Annual Income.) This provision does not apply to residents participating in the Family Self-Sufficiency Program who are utilizing the escrow account.


</P>
</DIV8>


<DIV8 N="§ 964.350" NODE="24:4.1.3.1.13.4.5.12" TYPE="SECTION">
<HEAD>§ 964.350   Administrative requirements.</HEAD>
<P>The HUD Inspector General, the Comptroller General of the United States, or any duly authorized representative shall have access to all records required to be retained by this subpart or by any agreements with HUD for the purpose of audit or other examinations. 
</P>
<P>(a) Each HA receiving a grant shall submit to HUD an annual progress report, participant evaluation and assessment data and other information, as needed, regarding the effectiveness of FIC in achieving self-sufficiency. 
</P>
<P>(b) The policies, guidelines, and requirements of 2 CFR part 200 are applicable with respect to the acceptance and use of assistance by private nonprofit organizations. 
</P>
<CITA TYPE="N">[59 FR 43636, Aug. 24, 1994, as amended at 80 FR 75942, Dec. 7, 2015]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:4.1.3.1.13.5" TYPE="SUBPART">
<HEAD>Subpart E—Resident Board Members</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>64 FR 56879, Oct. 21, 1999, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 964.400" NODE="24:4.1.3.1.13.5.5.1" TYPE="SECTION">
<HEAD>§ 964.400   Purpose.</HEAD>
<P>The purpose of this subpart is to implement section 2(b) of the United States Housing Act of 1937 (42 U.S.C. 1437).


</P>
</DIV8>


<DIV8 N="§ 964.405" NODE="24:4.1.3.1.13.5.5.2" TYPE="SECTION">
<HEAD>§ 964.405   Applicability.</HEAD>
<P>(a) <I>General.</I> Except as described in paragraph (b) of this section, this subpart applies to any public housing agency that has a public housing annual contributions contract with HUD or administers tenant-based rental assistance under section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f).
</P>
<P>(b) <I>Exceptions.</I> The requirements of this subpart do not apply to a public housing agency that is:
</P>
<P>(1) Located in a State that requires the members of a governing board to be salaried and to serve on a full-time basis; or
</P>
<P>(2) Not governed by a governing board.


</P>
</DIV8>


<DIV8 N="§ 964.410" NODE="24:4.1.3.1.13.5.5.3" TYPE="SECTION">
<HEAD>§ 964.410   Additional definitions.</HEAD>
<P>The following additional definitions apply to this subpart only:
</P>
<P><I>Directly assisted.</I> Directly assisted means a public housing resident or a recipient of housing assistance in the tenant-based section 8 program. Direct assistance does not include any State financed housing assistance or Section 8 project-based assistance.
</P>
<P><I>Eligible resident.</I> An eligible resident is a person:
</P>
<P>(1) Who is directly assisted by a public housing agency;
</P>
<P>(2) Whose name appears on the lease; and
</P>
<P>(3) Is eighteen years of age or older.
</P>
<P><I>Governing board.</I> Governing board means the board of directors or similar governing body of a public housing agency.
</P>
<P><I>Resident board member.</I> A resident board member is a member of the governing board who is directly assisted by that public housing agency.


</P>
</DIV8>


<DIV8 N="§ 964.415" NODE="24:4.1.3.1.13.5.5.4" TYPE="SECTION">
<HEAD>§ 964.415   Resident board members.</HEAD>
<P>(a) <I>General.</I> Except as provided in §§ 964.405(b) and 964.425, the membership of the governing board of each public housing agency must contain not less than one eligible resident board member.
</P>
<P>(b) <I>Resident board member no longer directly assisted.</I> (1) A resident board member who ceases to be directly assisted by the public housing agency is no longer an “eligible resident” as defined in § 964.410.
</P>
<P>(2) Such a board member may be removed from the PHA board for that cause, where such action is permitted under State or local law.
</P>
<P>(3) Alternatively, the board member may be allowed to complete his/her current term as a member of the governing board. However, the board member may not be re-appointed (or re-elected) to the governing board for purposes of serving as the statutorily required resident board member.
</P>
<P>(c) <I>Minimum qualifications for board membership.</I> Any generally applicable qualifications for board membership also apply to residents, unless the application of the requirements would result in the governing board not containing at least one eligible resident as a member. Further, PHAs and localities may not establish eligibility requirements for board membership that are solely applicable to residents.


</P>
</DIV8>


<DIV8 N="§ 964.420" NODE="24:4.1.3.1.13.5.5.5" TYPE="SECTION">
<HEAD>§ 964.420   Resident board member may be elected.</HEAD>
<P>(a) <I>General.</I> Residents directly assisted by a public housing agency may elect a resident board member if provided for in the public housing agency plan, adopted in accordance with 24 CFR part 903.
</P>
<P>(b) <I>Notice to residents.</I> The public housing agency must provide residents with at least 30 days advance notice for nominations and elections. The notice should include a description of the election procedures, eligibility requirements, and dates of nominations and elections. Any election procedures devised by the public housing agency must facilitate fair elections.


</P>
</DIV8>


<DIV8 N="§ 964.425" NODE="24:4.1.3.1.13.5.5.6" TYPE="SECTION">
<HEAD>§ 964.425   Small public housing agencies.</HEAD>
<P>(a) <I>General.</I> The requirements of this subpart do not apply to any public housing agency that:
</P>
<P>(1) Has less than 300 public housing units (or has no public housing units):
</P>
<P>(2) Has provided reasonable notice to the resident advisory board of the opportunity for residents to serve on the governing board;
</P>
<P>(3) Has not been notified of the intention of any resident to participate on the governing board within a reasonable time (which shall not be less than 30 days) of the resident advisory board receiving the notice described in paragraph (a)(3) of this section; and
</P>
<P>(4) Repeats the requirements of paragraphs (a)(2) and (a)(3) of this section at least once every year.
</P>
<P>(b) <I>Public housing agencies that only administer Section 8 assistance.</I> A public housing agency that has no public housing units, but administers Section 8 tenant-based assistance, is eligible for the exception described in paragraph (a) of this section, regardless of the number of Section 8 vouchers it administers.
</P>
<P>(c) <I>Failure to meet requirements for exception.</I> A public housing agency that is otherwise eligible for the exception described in paragraphs (a) and (b) of this section, but does not meet the three conditions described in paragraphs (a)(2) through (a)(4) of this section, must comply with the requirements of this subpart.


</P>
</DIV8>


<DIV8 N="§ 964.430" NODE="24:4.1.3.1.13.5.5.7" TYPE="SECTION">
<HEAD>§ 964.430   Nondiscrimination.</HEAD>
<P>(a) <I>Membership status</I>—(1) <I>General.</I> A resident board member is a full member of the governing board.
</P>
<P>(2) <I>Resident participation must include matters regarding Federal public housing and Section 8 tenant-based assistance.</I> A resident board member must be allowed to take part in decisions related to the administration, operation, and management of Federal public housing programs and Section 8 tenant-based rental assistance programs. This rule does not extend to matters that:
</P>
<P>(i) Exclusively relate to other types of housing assistance (such as State financed housing assistance); or
</P>
<P>(ii) Do not involve housing assistance (as may occur where the city or county governing body also serves as the PHA board).
</P>
<P>(3) <I>Public housing agency may expand scope of resident participation.</I> A public housing agency may choose to expand the scope of resident member involvement to matters not required under paragraph (a)(2) of this section.
</P>
<P>(b) <I>Residence status.</I> A governing board may not prohibit any person from serving on the governing board because that person is a resident of a public housing project or is assisted under section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f).
</P>
<P>(c) <I>Conflict of interest.</I> A governing board may not exclude any resident board member from participating in any matter before the governing board on the grounds that the resident board member's lease with the public housing agency, or the resident board member's status as a public housing resident or recipient of Section 8 tenant-based assistance, either results or may result in a conflict of interest, unless the matter is clearly applicable to the resident board member only in a personal capacity and applies uniquely to that member and not generally to residents or to a subcategory of residents.






</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="965" NODE="24:4.1.3.1.14" TYPE="PART">
<HEAD>PART 965—PHA-OWNED OR LEASED PROJECTS—GENERAL PROVISIONS
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437, 1437a, 1437d, 1437g, and 3535(d). Subpart H is also issued under 42 U.S.C. 4821-4846.
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>41 FR 20276, May 17, 1976, unless otherwise noted. Redesignated at 49 FR 6714, Feb. 23, 1984.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.3.1.14.1" TYPE="SUBPART">
<HEAD>Subpart A—Preemption of State Prevailing Wage Requirements</HEAD>


<DIV8 N="§ 965.101" NODE="24:4.1.3.1.14.1.5.1" TYPE="SECTION">
<HEAD>§ 965.101   Preemption of State prevailing wage requirements.</HEAD>
<P>(a) A prevailing wage rate including basic hourly rate and any fringe benefits) determined under State law shall be inapplicable to a contract or PHA-performed work item for the development, maintenance, and modernization of a project whenever:
</P>
<P>(1) The contract or work item: (i) Is otherwise subject to State law requiring the payment of wage rates determined by a State or local government or agency to be prevailing and (ii) is assisted with funds for low-income public housing under the U.S. Housing Act of 1937, as amended; and
</P>
<P>(2) The wage rate determined under State law to be prevailing with respect to an employee in any trade or position employed in the development, maintenance, and modernization of a project exceeds whichever of the following Federal wage rates is applicable:
</P>
<P>(i) The wage rate determined by the Secretary of Labor pursuant to the Davis-Bacon Act (40 U.S.C. 276a <I>et seq.</I>) to be prevailing in the locality with respect to such trade;
</P>
<P>(ii) An applicable apprentice wage rate based thereon specified in an apprenticeship program registered with the Department of Labor or a DOL-recognized State Apprenticeship Agency;
</P>
<P>(iii) An applicable trainee wage rate based thereon specified in a DOL-certified trainee program; or
</P>
<P>(iv) The wage rate determined by the Secretary of HUD to be prevailing in the locality with respect to such trade or position.
</P>
<P>(v) For the purpose of ascertaining whether a wage rate determined under State law for a trade or position exceeds the Federal wage rate: (A) Where a rate determined by the Secretary of Labor or an apprentice or trainee wage rate based thereon is applicable, the total wage rate determined under State law, including fringe benefits (if any) and basic hourly rate, shall be compared to the total wage rate determined by the Secretary of Labor or apprentice or trainee wage rate; and (B) where a rate determined by the Secretary of HUD is applicable, any fringe benefits determined under State law shall be excluded from the comparison with the rate determined by the Secretary of HUD.
</P>
<P>(b) Whenever paragraph (a)(1) of this section is applicable:
</P>
<P>(1) Any solicitation of bids or proposals issued by the PHA and any contract executed by the PHA for development, maintenance, and modernization of the project shall include a statement that any prevailing wage rate (including basic hourly rate and any fringe benefits) determined under State law to be prevailing with respect to an employee in any trade or position employed under the contract is inapplicable to the contract and shall not be enforced against the contractor or any subcontractor with respect to employees engaged under the contract whenever either of the following occurs:
</P>
<P>(i) Such nonfederal prevailing wage rate exceeds: (A) The applicable wage rate determined by the Secretary of Labor pursuant to the Davis-Bacon Act (40 U.S.C. 276a <I>et seq.</I>) to be prevailing in the locality with respect to such trade; (B) an applicable apprentice wage rate based thereon specified in an apprenticeship program registered with the Department of Labor or a DOL-recognized State Apprenticeship Agency or (C) an applicable trainee wage rate based thereon specified in a DOL-certified trainee program; or
</P>
<P>(ii) Such nonfederal prevailing wage rate, exclusive of any fringe benefits, exceeds the applicable wage rate determined by the Secretary of HUD to be prevailing in the locality with respect to such trade or position.
</P>
<FP>Failure to include this statement may constitute grounds for requiring resolicitation of the bid or proposal;
</FP>
<P>(2) The PHA itself shall not be required to pay the basic hourly rate or any fringe benefits comprising a prevailing wage rate determined under State law and described in paragraph (a)(2) of this section to any of its own employees who may be engaged in the work item for development, maintenance, and modernization of the project; and
</P>
<P>(3) Neither the basic hourly rate nor any fringe benefits comprising a prevailing wage rate determined under State law and described in paragraph (a)(2) shall be enforced against the PHA or any of its contractors or subcontractors with respect to employees engaged in the contract or PHA-performed work item for development, maintenance, and modernization of the project.
</P>
<P>(c) Nothing in this section shall affect the applicability of any wage rate established in a collective bargaining agreement with a PHA or its contractors or subcontractors where such wage rate equals or exceeds the applicable Federal wage rate referred to in paragraph (a)(2) of this section, nor does this section impose a ceiling on wage rates a PHA or its contractors or subcontractors may choose to pay independent of State law.
</P>
<P>(d) The provisions of this section shall be applicable to work performed under any prime contract entered into as a result of a solicitation of bids or proposals issued on or after October 6, 1988 and to any work performed by employees of a PHA on or after October 6, 1988, but not to work or contracts administered by Indian Housing Authorities (for which, see part 905 of this chapter).
</P>
<CITA TYPE="N">[53 FR 30217, Aug. 10, 1988, as amended at 57 FR 28358, June 24, 1992; 61 FR 8736, Mar. 5, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.3.1.14.2" TYPE="SUBPART">
<HEAD>Subpart B—Required Insurance Coverage</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>58 FR 51957, Oct. 5, 1993, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 965.201" NODE="24:4.1.3.1.14.2.5.1" TYPE="SECTION">
<HEAD>§ 965.201   Purpose and applicability.</HEAD>
<P>(a) <I>Purpose.</I> The purpose of this subpart is to implement policies concerning insurance coverage required under the Annual Contributions Contract (ACC) between the U.S. Department of Housing and Urban Development (HUD) and a Public Housing Agency (PHA).
</P>
<P>(b) <I>Applicability.</I> The provisions of this subpart apply to all housing owned by PHAs, including Turnkey III housing. However, these provisions do not apply to Section 23 and Section 10(c) PHA-leased projects or to Section 8 Housing Assistance Payments Program projects.


</P>
</DIV8>


<DIV8 N="§ 965.205" NODE="24:4.1.3.1.14.2.5.2" TYPE="SECTION">
<HEAD>§ 965.205   Qualified PHA-owned insurance entity.</HEAD>
<P>(a) <I>Contractual requirements for insurance coverage.</I> The Annual Contributions Contract (ACC) between PHAs and the U.S. Department of Housing and Urban Development requires that PHAs maintain specified insurance coverage for property and casualty losses that would jeopardize the financial stability of the PHAs. The insurance coverage is required to be obtained under procedures that provide “for open and competitive bidding.” The HUD Appropriations Act for Fiscal Year 1992 provided that a PHA could purchase insurance coverage without regard to competitive selection procedures when it purchases it from a nonprofit insurance entity owned and controlled by PHAs approved by HUD in accordance with standards established by regulation. This section specifies the standards.
</P>
<P>(b) <I>Method of selecting insurance coverage.</I> While 2 CFR 200.319 requires that grantees solicit full and open competition for their procurements, the HUD Appropriations Act for Fiscal Year 1992 provides an exception to this requirement. PHAs are authorized to obtain any line of insurance from a nonprofit insurance entity that is owned and controlled by PHAs and approved by HUD in accordance with this section, without regard to competitive selection procedures. Procurement of insurance from other entities is subject to competitive selection procedures.
</P>
<P>(c) <I>Approval of a nonprofit insurance entity.</I> Under the following conditions, HUD will approve a nonprofit self-funded insurance entity created by PHAs that limits participation to PHAs (and to nonprofit entities associated with PHAs that engage in activities or perform functions only for housing authorities or housing authority residents):
</P>
<P>(1) <I>An insurance company (including a risk retention group).</I> (i) The insurance company is licensed or authorized to do business in the State by the State Insurance Commissioner and has submitted documentation of this approval to HUD; and 
</P>
<P>(ii) The insurance company has not been suspended from providing insurance coverage in the State or been suspended or debarred from doing business with the federal government. The insurance company is obligated to send to HUD a copy of any action taken by the authorizing official to withdraw the license or authorization.
</P>
<P>(2) <I>An entity not organized as an insurance company.</I> (i) The entity has competent underwriting staff (hired directly or engaged by contract with a third party), as evidenced by professionals with an average of at least five years of experience in large risk (exceeding $100,000 in annual premiums) commercial underwriting or at least five years of experience in the underwriting of risks for public entity risk pools. This standard may be satisfied by submission of evidence of competent underwriting staff, including copies of resumes of underwriting staff for the entity;
</P>
<P>(ii) The entity has efficient and qualified management (hired directly or engaged by contract with a third party), as evidenced by the report submitted to HUD in accordance with paragraph (d)(3) of this section and by having at least one senior staff person who has a minimum of five years of experience:
</P>
<P>(A) At the management level of Vice President of a property/casualty insurance entity;
</P>
<P>(B) As a senior branch manager of a branch office with annual property/casualty premiums exceeding $5 million; or
</P>
<P>(C) As a senior manager of a public entity risk pool. Documentation for this standard must include copies of resumes of key management personnel responsible for oversight and for the day-to-day operation of the entity;
</P>
<P>(iii) The entity maintains internal controls and cost containment measures, as evidenced by an annual budget;
</P>
<P>(iv) The entity maintains sound investments consistent with the State insurance commissioner's requirements for licensed insurance companies, or other State statutory requirements controlling investments of public entities, in the State in which the entity is organized, investing only in assets that qualify as “admitted assets”;
</P>
<P>(v) The entity maintains adequate surplus and reserves for undischarged liabilities of all types, as evidenced by a current audited financial statement and an actuarial review conducted in accordance with paragraph (d) of this section; and
</P>
<P>(vi) Upon application for initial approval, the entity has proper organizational documentation, as evidenced by copies of the articles of incorporation, by-laws, business plans, copies of contracts with third party administrators, and an opinion from legal counsel that establishment of the entity conforms with all legal requirements under Federal and State law. Any material changes made to these documents after initial approval must be submitted for review and approval before becoming effective.
</P>
<P>(d) <I>Professional evaluations of performance.</I> Audits and actuarial reviews are required to be prepared and submitted annually to the HUD Office of Public and Indian Housing, for review and appropriate action, by nonprofit insurance entities that are not insurance companies approved under paragraph (c)(1) of this section. In addition, an evaluation of other management factors is required to be performed by an insurance professional every three years. For fiscal years ending on or after December 31, 1993, the initial audit, actuarial review, and insurance management review required for a nonprofit insurance entity must be submitted to HUD within 90 days after the entity's fiscal year.
</P>
<P>(1) The annual financial statement prepared in accordance with generally accepted accounting principles (including any supplementary data required under GASB 10) is to be audited by an independent auditor (see 2 CFR part 200, subpart F), in accordance with generally accepted auditing standards. The independent auditor shall express an opinion on whether the entity's financial statement is presented fairly in accordance with generally accepted accounting principles. A copy of this audit must be submitted to HUD. 
</P>
<P>(2) The actuarial review must be done consistent with requirements established by the National Association of Insurance Commissioners and must be conducted by an independent property/casualty actuary who is an Associate or Fellow of a recognized professional actuarial organization, such as the Casualty Actuary Society. The report issued, a copy of which must be submitted to HUD, must include an opinion on any over or under reserving and the adequacy of the reserves maintained for the open claims and for incurred but unreported claims.
</P>
<P>(3) A review must be conducted, a copy of which must be submitted to HUD, by an independent insurance consulting firm that has at least one person on staff who has received the professional designation of chartered property/casualty underwriter (CPCU), associate in risk management (ARM), or associate in claims (AIC), of the following: 
</P>
<P>(i) Efficiency of any Third Party Administrator; 
</P>
<P>(ii) Timeliness of the claim payments and reserving practices; and 
</P>
<P>(iii) The adequacy of reinsurance coverage. 
</P>
<P>(e) <I>Revocation of approval of a nonprofit insurance entity.</I> HUD may revoke its approval of a nonprofit insurance entity under this section when it no longer meets the requirements of this section. The nonprofit insurance entity will be notified in writing of: the proposed revocation of its approval, the reasons for the action, and the manner and time in which to request a hearing to challenge the determination. The procedure to be followed is specified in 24 CFR part 26, subpart A.
</P>
<CITA TYPE="N">[41 FR 20276, May 17, 1976, as amended at 61 FR 7969, Feb. 29, 1996; 61 FR 50219, Sept. 24, 1996; 80 FR 75942, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 965.215" NODE="24:4.1.3.1.14.2.5.3" TYPE="SECTION">
<HEAD>§ 965.215   Lead-based paint liability insurance coverage.</HEAD>
<P>(a) <I>General.</I> The purpose of this section is to specify what HUD deems reasonable insurance coverage with respect to the hazards associated with lead-based paint activities that the PHA undertakes, in accordance with the PHA's ACC with HUD. The insurance coverage does not relieve the PHA of its responsibility for assuring that lead-based paint activities are conducted in a responsible manner.
</P>
<P>(b) <I>Insurance coverage requirements.</I> When the PHA undertakes lead-based paint activities, it must assure that it has reasonable insurance coverage for itself for potential personal injury liability associated with those activities. If the work is being done by PHA employees, the PHA must obtain a liability insurance policy directly to protect the PHA. If the work is being done by a contractor, the PHA must obtain, from the insurer of the contractor performing this type of work in accordance with a contract, a certificate of insurance providing evidence of such insurance and naming the PHA as an additional insured; or obtain such insurance directly. Insurance must remain in effect during the entire period of lead-based paint activity and must comply with the following requirements:
</P>
<P>(1) <I>Named insured.</I> If purchased by the PHA, the policy shall name the PHA as insured. If purchased by an independent contractor, the policy shall name the contractor as insured and the PHA as an additional insured, in connection with performing work under the PHA's contract pertaining to lead-based paint activities. If the PHA has executed a contract with a Resident Management Corporation (RMC) to manage a building/project on behalf of the PHA, the RMC shall be an additional insured under the policy in connection with the PHA's contract related to lead-based paint activities. (The duties of the RMC are similar to those of a real estate management firm.)
</P>
<P>(2) <I>Coverage limits.</I> The minimum limit of liability shall be $500,000 per occurrence written, with a combined single limit for bodily injury and property damage.
</P>
<P>(3) <I>Deductible.</I> A deductible, if any, may not exceed $5,000 per occurrence.
</P>
<P>(4) <I>Supplementary payments.</I> Payments for such supplementary costs as the costs of defending against a claim must be in addition to, and not as a reduction of, the limit of liability. However, it will be permissible for the policy to have a limit on the amount payable for defense costs. If a limit is applicable, it must not be less than $250,000 per claim prior to such costs being deducted from the limit of liability.
</P>
<P>(5) <I>Occurrence form policy.</I> The form used must be an “occurrence” form, or a “claims made” form that contains an extended reporting period of at least five years. (Under an occurrence form, coverage applies to any loss regardless of when the claim is made.)
</P>
<P>(6) <I>Aggregate limit.</I> If the policy contains an aggregate limit, the minimum acceptable limit is $1,000,000.
</P>
<P>(7) <I>Cancellation.</I> In the event of cancellation, at least 30 days' advance notice is to be given to the insured and any additional insured.
</P>
<P>(c) <I>Exception to requirements.</I> Insurance already purchased by the PHA or contractor and enforced on the day this section is effective which provides coverage for lead-based paint activities shall be considered as meeting the requirements of this section until the expiration of the policy. This section is not applicable to architects, engineers or consultants who do not physically perform lead-based paint activities.
</P>
<P>(d) <I>Insurance for the existence of lead-based paint hazards.</I> A PHA may also purchase special liability insurance against the existence of lead-based paint hazards, although it is not a required coverage. A PHA may purchase this coverage if, in the opinion of the PHA, the policy meets the PHA's requirements, the premium is reasonable and the policy is obtained in accordance with applicable procurement standards. (See 2 CFR part 200 and § 965.205 of this title.) If this coverage is purchased, the premium must be paid from funds available under the Performance Funding System or from reserves.
</P>
<CITA TYPE="N">[59 FR 31930, June 21, 1994, as amended at 64 FR 50228, Sept. 15, 1999; 80 FR 75943, Dec. 7, 2015]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:4.1.3.1.14.3" TYPE="SUBPART">
<HEAD>Subpart C—Energy Audits and Energy Conservation Measures</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 7969, Feb. 29, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 965.301" NODE="24:4.1.3.1.14.3.5.1" TYPE="SECTION">
<HEAD>§ 965.301   Purpose and applicability.</HEAD>
<P>(a) <I>Purpose.</I> The purpose of this subpart C is to implement HUD policies in support of national energy conservation goals by requiring PHAs to conduct energy audits and undertake certain cost-effective energy conservation measures. 
</P>
<P>(b) <I>Applicability.</I> The provisions of this subpart apply to all PHAs with PHA-owned housing, but they do not apply to Indian Housing Authorities. (For similar provisions applicable to Indian housing, see part 950 of this chapter.) No PHA-leased project or Section 8 Housing Assistance Payments Program project, including a PHA-owned Section 8 project, is covered by this subpart. 


</P>
</DIV8>


<DIV8 N="§ 965.302" NODE="24:4.1.3.1.14.3.5.2" TYPE="SECTION">
<HEAD>§ 965.302   Requirements for energy audits.</HEAD>
<P>All PHAs shall complete an energy audit for each PHA-owned project under management, not less than once every five years. Standards for energy audits shall be equivalent to State standards for energy audits. Energy audits shall analyze all of the energy conservation measures, and the payback period for these measures, that are pertinent to the type of buildings and equipment operated by the PHA. 


</P>
</DIV8>


<DIV8 N="§ 965.303" NODE="24:4.1.3.1.14.3.5.3" TYPE="SECTION">
<HEAD>§ 965.303   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 965.304" NODE="24:4.1.3.1.14.3.5.4" TYPE="SECTION">
<HEAD>§ 965.304   Order of funding.</HEAD>
<P>Within the funds available to a PHA, energy conservation measures should be accomplished with the shortest pay-back periods funded first. A PHA may make adjustments to this funding order because of insufficient funds to accomplish high-cost energy conservation measures (ECM) or where an ECM with a longer pay-back period can be more efficiently installed in conjunction with other planned modernization. A PHA may not install individual utility meters that measure the energy or fuel used for space heating in dwelling units that need substantial weatherization, when installation of meters would result in economic hardship for residents. In these cases, the ECMs related to weatherization shall be accomplished before the installation of individual utility meters. 


</P>
</DIV8>


<DIV8 N="§ 965.305" NODE="24:4.1.3.1.14.3.5.5" TYPE="SECTION">
<HEAD>§ 965.305   Funding.</HEAD>
<P>(a) The cost of accomplishing cost-effective energy conservation measures, including the cost of performing energy audits, shall be funded from operating funds of the PHA to the extent feasible. When sufficient operating funds are not available for this purpose, such costs are eligible for inclusion in a modernization program, for funding from any available development funds in the case of projects still in development, or for other available funds that HUD may designate to be used for energy conservation. 
</P>
<P>(b) If a PHA finances energy conservation measures from sources other than modernization or operating reserves, such as a loan from a utility entity or a guaranteed savings agreement with a private energy service company, HUD may agree to provide adjustments in its calculation of the PHA's operating subsidy eligibility under the PFS for the project and utility involved based on a determination that payments can be funded from the reasonably anticipated energy cost savings (See § 990.107(g) of this chapter). 


</P>
</DIV8>


<DIV8 N="§ 965.306" NODE="24:4.1.3.1.14.3.5.6" TYPE="SECTION">
<HEAD>§ 965.306   Energy conservation equipment and practices.</HEAD>
<P>In purchasing original or, when needed, replacement equipment, PHAs shall acquire only equipment that meets or exceeds the minimum efficiency requirements established by the U.S. Department of Energy. In the operation of their facilities, PHAs shall follow operating practices directed to maximum energy conservation. 


</P>
</DIV8>


<DIV8 N="§ 965.307" NODE="24:4.1.3.1.14.3.5.7" TYPE="SECTION">
<HEAD>§ 965.307   Compliance schedule.</HEAD>
<P>All energy conservation measures determined by energy audits to be cost effective shall be accomplished as funds are available. 


</P>
</DIV8>


<DIV8 N="§ 965.308" NODE="24:4.1.3.1.14.3.5.8" TYPE="SECTION">
<HEAD>§ 965.308   Energy performance contracts.</HEAD>
<P>(a) <I>Method of procurement.</I> Energy performance contracting shall be conducted using one of the following methods of procurement: 
</P>
<P>(1) Competitive proposals (see 2 CFR 200.320(d)). In identifying the evaluation factors and their relative importance, as required by § 2 CFR 200.320(d) of this title, the solicitation shall state that technical factors are significantly more important than price (of the energy audit); or 
</P>
<P>(2) If the services are available only from a single source, noncompetitive proposals (see 2 CFR 200.320(f)). 
</P>
<P>(b) <I>HUD Review.</I> Solicitations for energy performance contracting shall be submitted to the HUD Field Office for review and approval prior to issuance. Energy performance contracts shall be submitted to the HUD Field Office for review and approval before award.
</P>
<CITA TYPE="N">[61 FR 7969, Feb. 29, 1996, as amended at 80 FR 75943, Dec. 7, 2015]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:4.1.3.1.14.4" TYPE="SUBPART">
<HEAD>Subpart D—Individual Metering of Utilities for Existing PHA-Owned Projects</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 7970, Feb. 29, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 965.401" NODE="24:4.1.3.1.14.4.5.1" TYPE="SECTION">
<HEAD>§ 965.401   Individually metered utilities.</HEAD>
<P>(a) All utility service shall be individually metered to residents, either through provision of retail service to the residents by the utility supplier or through the use of checkmeters, unless: 
</P>
<P>(1) Individual metering is impractical, such as in the case of a central heating system in an apartment building; 
</P>
<P>(2) Change from a mastermetering system to individual meters would not be financially justified based upon a benefit/cost analysis; or 
</P>
<P>(3) Checkmetering is not permissible under State or local law, or under the policies of the particular utility supplier or public service commission. 
</P>
<P>(b) If checkmetering is not permissible, retail service shall be considered. Where checkmetering is permissible, the type of individual metering offering the most savings to the PHA shall be selected. 


</P>
</DIV8>


<DIV8 N="§ 965.402" NODE="24:4.1.3.1.14.4.5.2" TYPE="SECTION">
<HEAD>§ 965.402   Benefit/cost analysis.</HEAD>
<P>(a) A benefit/cost analysis shall be made to determine whether a change from a mastermetering system to individual meters will be cost effective, except as otherwise provided in § 965.405. 
</P>
<P>(b) Proposed installation of checkmeters shall be justified on the basis that the cost of debt service (interest and amortization) of the estimated installation costs plus the operating costs of the checkmeters will be more than offset by reduction in future utilities expenditures to the PHA under the mastermeter system. 
</P>
<P>(c) Proposed conversion to retail service shall be justified on the basis of net savings to the PHA. This determination involves making a comparison between the reduction in utility expense obtained through eliminating the expense to the PHA for PHA-supplied utilities and the resultant allowance for resident-supplied utilities, based on the cost of utility service to the residents after conversion. 


</P>
</DIV8>


<DIV8 N="§ 965.403" NODE="24:4.1.3.1.14.4.5.3" TYPE="SECTION">
<HEAD>§ 965.403   Funding.</HEAD>
<P>The cost to change mastermeter systems to individual metering of resident consumption, including the costs of benefit/cost analysis and complete installation of checkmeters, shall be funded from operating funds of the PHA to the extent feasible. When sufficient operating funds are not available for this purpose, such costs are eligible for inclusion in a modernization project or for funding from any available development funds. 


</P>
</DIV8>


<DIV8 N="§ 965.404" NODE="24:4.1.3.1.14.4.5.4" TYPE="SECTION">
<HEAD>§ 965.404   Order of conversion.</HEAD>
<P>Conversions to individually metered utility service shall be accomplished in the following order when a PHA has projects of two or more of the designated categories, unless the PHA has a justifiable reason to do otherwise, which shall be documented in its files. 
</P>
<P>(a) In projects for which retail service is provided by the utility supplier and the PHA is paying all the individual utility bills, no benefit/cost analysis is necessary, and residents shall be billed directly after the PHA adopts revised payment schedules providing appropriate allowances for resident-supplied utilities. 
</P>
<P>(b) In projects for which checkmeters have been installed but are not being utilized as the basis for determining utility charges to the residents, no benefit/cost analysis is necessary. The checkmeters shall be used as the basis for utility charges, and residents shall be surcharged for excess utility use. 
</P>
<P>(c) Projects for which meter loops have been installed for utilization of checkmeters shall be analyzed both for the installation of checkmeters and for conversion to retail service. 
</P>
<P>(d) Low- or medium-rise family units with a mastermeter system should be analyzed for both checkmetering and conversion to retail service, because of their large potential for energy savings. 
</P>
<P>(e) Low- or medium-rise housing for the elderly should next be analyzed for both checkmetering and conversion to retail service, since the potential for energy saving is less than for family units. 
</P>
<P>(f) Electric service under mastermeters for high-rise buildings, including projects for the elderly, should be analyzed for both use of retail service and of checkmeters. 


</P>
</DIV8>


<DIV8 N="§ 965.405" NODE="24:4.1.3.1.14.4.5.5" TYPE="SECTION">
<HEAD>§ 965.405   Actions affecting residents.</HEAD>
<P>(a) Before making any conversion to retail service, the PHA shall adopt revised payment schedules, providing appropriate allowances for the resident-supplied utilities resulting from the conversion. 
</P>
<P>(b) Before implementing any modifications to utility services arrangements with the residents or charges with respect thereto, the PHA shall make the requisite changes in resident dwelling leases in accordance with 24 CFR part 966. 
</P>
<P>(c) PHAs must work closely with resident organizations, to the extent practicable, in making plans for conversion of utility service to individual metering, explaining the national policy objectives of energy conservation, the changes in charges and rent structure that will result, and the goals of achieving an equitable structure that will be advantageous to residents who conserve energy. 
</P>
<P>(d) A transition period of at least six months shall be provided in the case of initiation of checkmeters, during which residents will be advised of the charges but during which no surcharge will be made based on the readings. This trial period will afford residents ample notice of the effects the checkmetering system will have on their individual utility charges and also afford a test period for the adequacy of the utility allowances established. 
</P>
<P>(e) During and after the transition period, PHAs shall advise and assist residents with high utility consumption on methods for reducing their usage. This advice and assistance may include counseling, installation of new energy conserving equipment or appliances, and corrective maintenance. 


</P>
</DIV8>


<DIV8 N="§ 965.406" NODE="24:4.1.3.1.14.4.5.6" TYPE="SECTION">
<HEAD>§ 965.406   Benefit/cost analysis for similar projects.</HEAD>
<P>PHAs with more than one project of similar design and utilities service may prepare a benefit/cost analysis for a representative project. A finding that a change in metering is not cost effective for the representative project is sufficient reason for the PHA not to perform a benefit/cost analysis on the remaining similar projects. 


</P>
</DIV8>


<DIV8 N="§ 965.407" NODE="24:4.1.3.1.14.4.5.7" TYPE="SECTION">
<HEAD>§ 965.407   Reevaluations of mastermeter systems.</HEAD>
<P>Because of changes in the cost of utility services and the periodic changes in utility regulations, PHAs with mastermeter systems are required to reevaluate mastermeter systems without checkmeters by making benefit/cost analyses at least every 5 years. These analyses may be omitted under the conditions specified in § 965.406. 


</P>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:4.1.3.1.14.5" TYPE="SUBPART">
<HEAD>Subpart E—Resident Allowances for Utilities</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 7971, Feb. 29, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 965.501" NODE="24:4.1.3.1.14.5.5.1" TYPE="SECTION">
<HEAD>§ 965.501   Applicability.</HEAD>
<P>(a) This subpart E applies to public housing, including the Turnkey III Homeownership Opportunities program. This subpart E also applies to units assisted under sections 10(c) and 23 of the U. S. Housing Act of 1937 (42 U.S.C. 1437 <I>et seq.</I>) as in effect before amendment by the Housing and Community Development Act of 1974 (12 U.S.C. 1706e) and to which 24 CFR part 900 is not applicable. This subpart E does not apply to Indian housing projects (see 24 CFR part 950). 
</P>
<P>(b) In rental units for which utilities are furnished by the PHA but there are no checkmeters to measure the actual utilities consumption of the individual units, residents shall be subject to charges for consumption by resident-owned major appliances, or for optional functions of PHA-furnished equipment, in accordance with § 965.502(e) and 965.506(b), but no utility allowance will be established. 


</P>
</DIV8>


<DIV8 N="§ 965.502" NODE="24:4.1.3.1.14.5.5.2" TYPE="SECTION">
<HEAD>§ 965.502   Establishment of utility allowances by PHAs.</HEAD>
<P>(a) PHAs shall establish allowances for PHA-furnished utilities for all checkmetered utilities and allowances for resident-purchased utilities for all utilities purchased directly by residents from the utilities suppliers. 
</P>
<P>(b) The PHA shall maintain a record that documents the basis on which allowances and scheduled surcharges, and revisions thereof, are established and revised. Such record shall be available for inspection by residents. 
</P>
<P>(c) The PHA shall give notice to all residents of proposed allowances, scheduled surcharges, and revisions thereof. Such notice shall be given, in the manner provided in the lease or homebuyer agreement, not less than 60 days before the proposed effective date of the allowances or scheduled surcharges or revisions; shall describe with reasonable particularity the basis for determination of the allowances, scheduled surcharges, or revisions, including a statement of the specific items of equipment and function whose utility consumption requirements were included in determining the amounts of the allowances or scheduled surcharges; shall notify residents of the place where the PHA's record maintained in accordance with paragraph (b) of this section is available for inspection; and shall provide all residents an opportunity to submit written comments during a period expiring not less than 30 days before the proposed effective date of the allowances or scheduled surcharges or revisions. Such written comments shall be retained by the PHA and shall be available for inspection by residents. 
</P>
<P>(d) Schedules of allowances and scheduled surcharges shall not be subject to approval by HUD before becoming effective, but will be reviewed in the course of audits or reviews of PHA operations. 
</P>
<P>(e) The PHA's determinations of allowances, scheduled surcharges, and revisions thereof shall be final and valid unless found to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.


</P>
</DIV8>


<DIV8 N="§ 965.503" NODE="24:4.1.3.1.14.5.5.3" TYPE="SECTION">
<HEAD>§ 965.503   Categories for establishment of allowances.</HEAD>
<P>Separate allowances shall be established for each utility and for each category of dwelling units determined by the PHA to be reasonably comparable as to factors affecting utility usage. 


</P>
</DIV8>


<DIV8 N="§ 965.504" NODE="24:4.1.3.1.14.5.5.4" TYPE="SECTION">
<HEAD>§ 965.504   Period for which allowances are established.</HEAD>
<P>(a) <I>PHA-furnished utilities.</I> Allowances will normally be established on a quarterly basis; however, residents may be surcharged on a monthly basis. The allowances established may provide for seasonal variations. 
</P>
<P>(b) <I>Resident-purchased utilities.</I> Monthly allowances shall be established. The allowances established may provide for seasonal variations. 


</P>
</DIV8>


<DIV8 N="§ 965.505" NODE="24:4.1.3.1.14.5.5.5" TYPE="SECTION">
<HEAD>§ 965.505   Standards for allowances for utilities.</HEAD>
<P>(a) The objective of a PHA in designing methods of establishing utility allowances for each dwelling unit category and unit size shall be to approximate a reasonable consumption of utilities by an energy-conservative household of modest circumstances consistent with the requirements of a safe, sanitary, and healthful living environment. 
</P>
<P>(b) Allowances for both PHA-furnished and resident-purchased utilities shall be designed to include such reasonable consumption for major equipment or for utility functions furnished by the PHA for all residents (e.g., heating furnace, hot water heater), for essential equipment whether or not furnished by the PHA (e.g., range and refrigerator), and for minor items of equipment (such as toasters and radios) furnished by residents. 
</P>
<P>(c) The complexity and elaborateness of the methods chosen by the PHA, in its discretion, to achieve the foregoing objective will depend upon the nature of the housing stock, data available to the PHA and the extent of the administrative resources reasonably available to the PHA to be devoted to the collection of such data, the formulation of methods of calculation, and actual calculation and monitoring of the allowances. 
</P>
<P>(d) In establishing allowances, the PHA shall take into account relevant factors affecting consumption requirements, including: 
</P>
<P>(1) The equipment and functions intended to be covered by the allowance for which the utility will be used. For instance, natural gas may be used for cooking, heating domestic water, or space heating, or any combination of the three; 
</P>
<P>(2) The climatic location of the housing projects; 
</P>
<P>(3) The size of the dwelling units and the number of occupants per dwelling unit; 
</P>
<P>(4) Type of construction and design of the housing project; 
</P>
<P>(5) The energy efficiency of PHA-supplied appliances and equipment; 
</P>
<P>(6) The utility consumption requirements of appliances and equipment whose reasonable consumption is intended to be covered by the total resident payment; 
</P>
<P>(7) The physical condition, including insulation and weatherization, of the housing project; 
</P>
<P>(8) Temperature levels intended to be maintained in the unit during the day and at night, and in cold and warm weather; and 
</P>
<P>(9) Temperature of domestic hot water. 
</P>
<P>(e) If a PHA installs air conditioning, it shall provide, to the maximum extent economically feasible, systems that give residents the option of choosing to use air conditioning in their units. The design of systems that offer each resident the option to choose air conditioning shall include retail meters or checkmeters, and residents shall pay for the energy used in its operation. For systems that offer residents the option to choose air conditioning, the PHA shall not include air conditioning in the utility allowances. For systems that offer residents the option to choose air conditioning but cannot be checkmetered, residents are to be surcharged in accordance with § 965.506. If an air conditioning system does not provide for resident option, residents are not to be charged, and these systems should be avoided whenever possible. 


</P>
</DIV8>


<DIV8 N="§ 965.506" NODE="24:4.1.3.1.14.5.5.6" TYPE="SECTION">
<HEAD>§ 965.506   Surcharges for excess consumption of PHA-furnished utilities.</HEAD>
<P>(a) For dwelling units subject to allowances for PHA-furnished utilities where checkmeters have been installed, the PHA shall establish surcharges for utility consumption in excess of the allowances. Surcharges may be computed on a straight per unit of purchase basis (e.g., cents per kilowatt hour of electricity) or for stated blocks of excess consumption, and shall be based on the PHA's average utility rate. The basis for calculating such surcharges shall be described in the PHA's schedule of allowances. Changes in the dollar amounts of surcharges based directly on changes in the PHA's average utility rate shall not be subject to the advance notice requirements of this section. 
</P>
<P>(b) For dwelling units served by PHA-furnished utilities where checkmeters have not been installed, the PHA shall establish schedules of surcharges indicating additional dollar amounts residents will be required to pay by reason of estimated utility consumption attributable to resident-owned major appliances or to optional functions of PHA-furnished equipment. Such surcharge schedules shall state the resident-owned equipment (or functions of PHA-furnished equipment) for which surcharges shall be made and the amounts of such charges, which shall be based on the cost to the PHA of the utility consumption estimated to be attributable to reasonable usage of such equipment. 


</P>
</DIV8>


<DIV8 N="§ 965.507" NODE="24:4.1.3.1.14.5.5.7" TYPE="SECTION">
<HEAD>§ 965.507   Review and revision of allowances.</HEAD>
<P>(a) <I>Annual review.</I> The PHA shall review at least annually the basis on which utility allowances have been established and, if reasonably required in order to continue adherence to the standards stated in § 965.505, shall establish revised allowances. The review shall include all changes in circumstances (including completion of modernization and/or other energy conservation measures implemented by the PHA) indicating probability of a significant change in reasonable consumption requirements and changes in utility rates. 
</P>
<P>(b) <I>Revision as a result of rate changes.</I> The PHA may revise its allowances for resident-purchased utilities between annual reviews if there is a rate change (including fuel adjustments) and shall be required to do so if such change, by itself or together with prior rate changes not adjusted for, results in a change of 10 percent or more from the rates on which such allowances were based. Adjustments to resident payments as a result of such changes shall be retroactive to the first day of the month following the month in which the last rate change taken into account in such revision became effective. Such rate changes shall not be subject to the 60 day notice requirement of § 965.502(c). 


</P>
</DIV8>


<DIV8 N="§ 965.508" NODE="24:4.1.3.1.14.5.5.8" TYPE="SECTION">
<HEAD>§ 965.508   Individual relief.</HEAD>
<P>Requests for relief from surcharges for excess consumption of PHA-purchased utilities, or from payment of utility supplier billings in excess of the allowances for resident-purchased utilities, may be granted by the PHA on reasonable grounds, such as special needs of elderly, ill or disabled residents, or special factors affecting utility usage not within the control of the resident, as the PHA shall deem appropriate. The PHA's criteria for granting such relief, and procedures for requesting such relief, shall be adopted at the time the PHA adopts the methods and procedures for determining utility allowances. Notice of the availability of such procedures (including identification of the PHA representative with whom initial contact may be made by residents), and the PHA's criteria for granting such relief, shall be included in each notice to residents given in accordance with § 965.502(c) and in the information given to new residents upon admission. 


</P>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:4.1.3.1.14.6" TYPE="SUBPART">
<HEAD>Subpart F—Physical Condition Standards and Physical Inspection Requirements</HEAD>


<DIV8 N="§ 965.601" NODE="24:4.1.3.1.14.6.5.1" TYPE="SECTION">
<HEAD>§ 965.601   Physical condition standards; physical inspection requirements.</HEAD>
<P>Housing owned or leased by a PHA, and public housing owned by another entity approved by HUD, must be maintained in accordance with the physical condition standards in 24 CFR part 5, subpart G. For each PHA, HUD will perform an independent physical inspection of a statistically valid sample of such housing based upon the physical condition standards in 24 CFR part 5, subpart G.
</P>
<CITA TYPE="N">[63 FR 46580, Sept. 1, 1998]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:4.1.3.1.14.7" TYPE="SUBPART">
<HEAD>Subpart G—Smoke-Free Public Housing</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>81 FR 87444, Dec. 5, 2016, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 965.651" NODE="24:4.1.3.1.14.7.5.1" TYPE="SECTION">
<HEAD>§ 965.651   Applicability.</HEAD>
<P>This subpart applies to public housing units, except for dwelling units in a mixed-finance project. Public housing is defined as low-income housing, and all necessary appurtenances (<I>e.g.,</I> community facilities, public housing offices, day care centers, and laundry rooms) thereto, assisted under the U.S. Housing Act of 1937 (the 1937 Act), other than assistance under section 8 of the 1937 Act.


</P>
</DIV8>


<DIV8 N="§ 965.653" NODE="24:4.1.3.1.14.7.5.2" TYPE="SECTION">
<HEAD>§ 965.653   Smoke-free public housing.</HEAD>
<P>(a) <I>In general.</I> PHAs must design and implement a policy prohibiting the use of prohibited tobacco products in all public housing living units and interior areas (including but not limited to hallways, rental and administrative offices, community centers, day care centers, laundry centers, and similar structures), as well as in outdoor areas within 25 feet from public housing and administrative office buildings (collectively, “restricted areas”) in which public housing is located.
</P>
<P>(b) <I>Designated smoking areas.</I> PHAs may limit smoking to designated smoking areas on the grounds of the public housing or administrative office buildings in order to accommodate residents who smoke. These areas must be outside of any restricted areas, as defined in paragraph (a) of this section, and may include partially enclosed structures. Alternatively, PHAs may choose to create additional smoke-free areas outside the restricted areas or to make their entire grounds smoke-free.
</P>
<P>(c) <I>Prohibited tobacco products.</I> A PHA's smoke-free policy must, at a minimum, ban the use of all prohibited tobacco products. Prohibited tobacco products are defined as:
</P>
<P>(1) Items that involve the ignition and burning of tobacco leaves, such as (but not limited to) cigarettes, cigars, and pipes.
</P>
<P>(2) To the extent not covered by paragraph (c)(1) of this section, waterpipes (hookahs).


</P>
</DIV8>


<DIV8 N="§ 965.655" NODE="24:4.1.3.1.14.7.5.3" TYPE="SECTION">
<HEAD>§ 965.655   Implementation.</HEAD>
<P>(a) <I>Amendments.</I> PHAs are required to implement the requirements of this subpart by amending each of the following:
</P>
<P>(1) All applicable PHA plans, according to the provisions in 24 CFR part 903.
</P>
<P>(2) Tenant leases, according to the provisions of 24 CFR 966.4.
</P>
<P>(b) <I>Deadline.</I> All PHAs must be in full compliance, with effective policy amendments, by July 30, 2018.


</P>
</DIV8>

</DIV6>


<DIV6 N="H" NODE="24:4.1.3.1.14.8" TYPE="SUBPART">
<HEAD>Subpart H—Lead-Based Paint Poisoning Prevention</HEAD>


<DIV8 N="§ 965.701" NODE="24:4.1.3.1.14.8.5.1" TYPE="SECTION">
<HEAD>§ 965.701   Lead-based paint poisoning prevention.</HEAD>
<P>The requirements of the Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and implementing regulations at part 35, subparts A, B, L, and R of this title apply to this program.
</P>
<CITA TYPE="N">[64 FR 50229, Sept. 15, 1999]






</CITA>
</DIV8>

</DIV6>


<DIV6 N="I" NODE="24:4.1.3.1.14.9" TYPE="SUBPART">
<HEAD>Subpart I [Reserved]</HEAD>

</DIV6>

</DIV5>


<DIV5 N="966" NODE="24:4.1.3.1.15" TYPE="PART">
<HEAD>PART 966—PUBLIC HOUSING LEASE AND GRIEVANCE PROCEDURE 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437d and 3535(d).


</PSPACE></AUTH>

<DIV6 N="A" NODE="24:4.1.3.1.15.1" TYPE="SUBPART">
<HEAD>Subpart A—Dwelling Leases, Procedures and Requirements</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>40 FR 33402, Aug. 7, 1975, unless otherwise noted. Redesignated at 49 FR 6714, Feb. 23, 1984.


</PSPACE></SOURCE>

<DIV8 N="§ 966.1" NODE="24:4.1.3.1.15.1.5.1" TYPE="SECTION">
<HEAD>§ 966.1   Purpose and applicability.</HEAD>
<P>(a) This part is applicable to public housing. 
</P>
<P>(b) Subpart A of this part prescribes the provisions that must be incorporated in leases for public housing dwelling units. 
</P>
<P>(c) Subpart B of this part prescribes public housing grievance hearing requirements.
</P>
<CITA TYPE="N">[66 FR 28802, May 24, 2001] 


</CITA>
</DIV8>


<DIV8 N="§ 966.2" NODE="24:4.1.3.1.15.1.5.2" TYPE="SECTION">
<HEAD>§ 966.2   Definitions.</HEAD>
<P>The following terms are defined in part 5, subpart A of this title: <I>1937 Act, covered person, drug, drug-related criminal activity, federally assisted housing, guest, household, HUD, other person under the tenant's control, public housing, premises, public housing agency, Section 8, violent criminal activity.</I>
</P>
<CITA TYPE="N">[66 FR 28802, May 24, 2001]


</CITA>
</DIV8>


<DIV8 N="§ 966.3" NODE="24:4.1.3.1.15.1.5.3" TYPE="SECTION">
<HEAD>§ 966.3   Tenants' opportunity for comment.</HEAD>
<P>Each PHA shall provide at least 30 days notice to tenants and resident organizations setting forth proposed changes in the lease form used by the PHA, and providing an opportunity to present written comments. Subject to requirements of this rule, comments submitted shall be considered by the PHA before formal adoption of any new lease form.
</P>
<CITA TYPE="N">[56 FR 51576, Oct. 11, 1991]


</CITA>
</DIV8>


<DIV8 N="§ 966.4" NODE="24:4.1.3.1.15.1.5.4" TYPE="SECTION">
<HEAD>§ 966.4   Lease requirements.</HEAD>
<XREF ID="20260226" REFID="29">Link to an amendment published at 91 FR 9453, Feb. 26, 2026.</XREF>
<XREF ID="20260313" REFID="2f">Link to a delay of the above amendment published at 91 FR 12301, Mar. 13, 2026.</XREF>
<P>A lease shall be entered into between the PHA and each tenant of a dwelling unit which shall contain the provisions described hereinafter. 
</P>
<P>(a) <I>Parties, dwelling unit and term.</I> (1) The lease shall state:
</P>
<P>(i) The names of the PHA and the tenant;
</P>
<P>(ii) The unit rented (address, apartment number, and any other information needed to identify the dwelling unit);
</P>
<P>(iii) The term of the lease (lease term and renewal in accordance with paragraph (a)(2) of this section);
</P>
<P>(iv) A statement of what utilities, services, and equipment are to be supplied by the PHA without additional cost, and what utilities and appliances are to be paid for by the tenant;
</P>
<P>(v) The composition of the household as approved by the PHA (family members and any PHA-approved live-in aide). The family must promptly inform the PHA of the birth, adoption, or court-awarded custody of a child. The family must request PHA approval to add any other family member as an occupant of the unit;
</P>
<P>(vi) HUD's regulations in 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking) apply.
</P>
<P>(2) <I>Lease term and renewal.</I> (i) The lease shall have a twelve month term. Except as provided in paragraph (a)(2)(ii) of this section, the lease term must be automatically renewed for the same period. 
</P>
<P>(ii) The PHA may not renew the lease if the family has violated the requirement for resident performance of community service or participation in an economic self-sufficiency program in accordance with part 960, subpart F of this chapter. 


</P>
<P>(iii) The lease shall convert to a month-to-month term for families determined to be over-income whose tenancy will be terminated in accordance with § 960.507(d)(2) of this chapter as of the date of the notice provided under § 960.507(c)(3) of this chapter. PHAs must charge these families, who continue to be public housing program participants, the family's choice of income-based, flat rent, or prorated rent for mixed families during the period before termination.
</P>
<P>(iv) At any time, the PHA may terminate the tenancy in accordance with paragraph (l) of this section.
</P>
<P>(3) <I>Execution and modification.</I> The lease must be executed by the tenant and the PHA, except for automatic renewals of a lease. The lease may modified at any time by written agreement of the tenant and the PHA. 
</P>
<P>(b) <I>Payments due under the lease</I>—(1) <I>Tenant rent.</I> (i) The tenant shall pay the amount of the monthly tenant rent determined by the PHA in accordance with HUD regulations and other requirements. The amount of the tenant rent is subject to change in accordance with HUD requirements. 
</P>
<P>(ii) The lease shall specify the initial amount of the tenant rent at the beginning of the initial lease term. The PHA shall give the tenant written notice stating any change in the amount of tenant rent, and when the change is effective. 
</P>
<P>(2) <I>PHA charges.</I> The lease shall provide for charges to the tenant for maintenance and repair beyond normal wear and tear and for consumption of excess utilities. The lease shall state the basis for the determination of such charges (e.g., by a posted schedule of charges for repair, amounts charged for utility consumption in excess of the allowance stated in the lease, etc.). The imposition of charges for consumption of excess utilities is permissible only if such charges are determined by an individual check meter servicing the leased unit or result from the use of major tenant-supplied appliances. 
</P>
<P>(3) <I>Late payment penalties.</I> At the option of the PHA, the lease may provide for payment of penalties for late payment. 
</P>
<P>(4) <I>When charges are due.</I> The lease shall provide that charges assessed under paragraph (b) (2) and (3) of this section shall not be due and collectible until two weeks after the PHA gives written notice of the charges. Such notice constitutes a notice of adverse action, and must meet the requirements governing a notice of adverse action (see § 966.4(e)(8)). 
</P>
<P>(5) <I>Security deposits.</I> At the option of the PHA, the lease may provide for security deposits which shall not exceed one month's rent or such reasonable fixed amount as may be required by the PHA. Provision may be made for gradual accumulation of the security deposit by the tenant. Subject to applicable laws, interest earned on security deposits may be refunded to the tenant on vacation of the dwelling unit or used for tenant services or activities. 
</P>
<P>(c) <I>Redetermination of rent and family composition.</I> The lease shall provide for redetermination of rent and family composition which shall include: 
</P>
<P>(1) The frequency of regular rental redetermination and the basis for interim redetermination. 
</P>
<P>(2) An agreement by the tenant to furnish such information and certifications regarding family composition and income as may be necessary for the PHA to make determinations with respect to rent, eligibility, and the appropriateness of dwelling size. 
</P>
<P>(3) An agreement by the tenant to transfer to an appropriate size dwelling unit based on family composition, upon appropriate notice by the PHA that such a dwelling unit is available. 
</P>
<P>(4) When the PHA redetermines the amount of rent (Total Tenant Payment or Tenant Rent) payable by the tenant, not including determination of the PHA's schedule of Utility Allowances for families in the PHA's Public Housing Program, or determines that the tenant must transfer to another unit based on family composition, the PHA shall notify the tenant that the tenant may ask for an explanation stating the specific grounds of the PHA determination, and that if the tenant does not agree with the determination, the tenant shall have the right to request a hearing under the PHA grievance procedure. 
</P>
<P>(d) <I>Tenant's right to use and occupancy.</I> (1) The lease shall provide that the tenant shall have the right to exclusive use and occupancy of the leased unit by the members of the household authorized to reside in the unit in accordance with the lease, including reasonable accommodation of their guests. The term <I>guest</I> is defined in 24 CFR 5.100. 
</P>
<P>(2) With the consent of the PHA, members of the household may engage in legal profitmaking activities in the dwelling unit, where the PHA determines that such activities are incidental to primary use of the leased unit for residence by members of the household. 
</P>
<P>(3)(i) With the consent of the PHA, a foster child or a live-in aide may reside in the unit. The PHA may adopt reasonable policies concerning residence by a foster child or a live-in-aide, and defining the circumstances in which PHA consent will be given or denied. Under such policies, the factors considered by the PHA may include: 
</P>
<P>(A) Whether the addition of a new occupant may necessitate a transfer of the family to another unit, and whether such units are available. 
</P>
<P>(B) The PHA's obligation to make reasonable accommodation for handicapped persons. 
</P>
<P>(ii) <I>Live-in aide</I> means a person who resides with an elderly, disabled or handicapped person and who:
</P>
<P>(A) Is determined to be essential to the care and well-being of the person;
</P>
<P>(B) Is not obligated for the support of the person; and
</P>
<P>(C) Would not be living in the unit except to provide the necessary supportive services.
</P>
<P>(e) <I>The PHA's obligations.</I> The lease shall set forth the PHA's obligations under the lease, which shall include the following:
</P>
<P>(1) To maintain the dwelling unit and the project in decent, safe, and sanitary condition;
</P>
<P>(2) To comply with requirements of applicable building codes, housing codes, and HUD regulations materially affecting health and safety;
</P>
<P>(3) To make necessary repairs to the dwelling unit;
</P>
<P>(4) To keep project buildings, facilities, and common areas, not otherwise assigned to the tenant for maintenance and upkeep, in a clean and safe condition;
</P>
<P>(5) To maintain in good and safe working order and condition electrical, plumbing, sanitary, heating, ventilating, and other facilities and appliances, including elevators, supplied or required to be supplied by the PHA;
</P>
<P>(6) To provide and maintain appropriate receptacles and facilities (except containers for the exclusive use of an individual tenant family) for the deposit of ashes, garbage, rubbish, and other waste removed from the dwelling unit by the tenant in accordance with paragraph (f)(7) of this section;
</P>
<P>(7) To supply running water and reasonable amounts of hot water and reasonable amounts of heat at appropriate times of the year (according to local custom and usage), except where the building that includes the dwelling unit is not required by law to be equipped for that purpose, or where heat or hot water is generated by an installation within the exclusive control of the tenant and supplied by a direct utility connection; and
</P>
<P>(8)(i) To notify the tenant of the specific grounds for any proposed adverse action by the PHA. (Such adverse action includes, but is not limited to, a proposed lease termination, transfer of the tenant to another unit, or imposition of charges for maintenance and repair, or for excess consumption of utilities.)
</P>
<P>(ii) When the PHA is required to afford the tenant the opportunity for a hearing under the PHA grievance procedure for a grievance concerning a proposed adverse action:
</P>
<P>(A) The notice of proposed adverse action shall inform the tenant of the right to request such hearing. In the case of a lease termination, a notice of lease termination, in accordance with paragraph (l)(3) of this section, shall constitute adequate notice of proposed adverse action.
</P>
<P>(B) In the case of a proposed adverse action other than a proposed lease termination, the PHA shall not take the proposed action until the time for the tenant to request a grievance hearing has expired, and (if a hearing was timely requested by the tenant) the grievance process has been completed.
</P>
<P>(9) To consider lease bifurcation, as provided in 24 CFR 5.2009, in circumstances involving domestic violence, dating violence, sexual assault, or stalking addressed in 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking), provided that, if a PHA chooses to bifurcate a lease, no assistance will be given for an individual who does not meet public housing eligibility and 24 CFR 5.508(h)(2) applies to submission of evidence of citizenship or eligible immigration status.
</P>
<P>(f) <I>Tenant's obligations.</I> The lease shall provide that the tenant shall be obligated:
</P>
<P>(1) Not to assign the lease or to sublease the dwelling unit; 
</P>
<P>(2) Not to provide accommodations for boarders or lodgers;
</P>
<P>(3) To use the dwelling unit solely as a private dwelling for the tenant and the tenant's household as identified in the lease, and not to use or permit its use for any other purpose; 
</P>
<P>(4) To abide by necessary and reasonable regulations promulgated by the PHA for the benefit and well-being of the housing project and the tenants which shall be posted in the project office and incorporated by reference in the lease; 
</P>
<P>(5) To comply with all obligations imposed upon tenants by applicable provisions of building and housing codes materially affecting health and safety; 
</P>
<P>(6) To keep the dwelling unit and such other areas as may be assigned to the tenant for the tenant's exclusive use in a clean and safe condition; 
</P>
<P>(7) To dispose of all ashes, garbage, rubbish, and other waste from the dwelling unit in a sanitary and safe manner; 
</P>
<P>(8) To use only in a reasonable manner all electrical, plumbing, sanitary, heating, ventilating, air-conditioning and other facilities and appurtenances including elevators; 
</P>
<P>(9) To refrain from, and to cause the household and guests to refrain from destroying, defacing, damaging, or removing any part of the dwelling unit or project; 
</P>
<P>(10) To pay reasonable charges (other than for wear and tear) for the repair of damages to the dwelling unit, or to the project (including damages to project buildings, facilities or common areas) caused by the tenant, a member of the household or a guest. 
</P>
<P>(11) To act, and cause household members or guests to act, in a manner which will not disturb other residents' peaceful enjoyment of their accommodations and will be conducive to maintaining the project in a decent, safe and sanitary condition; 
</P>
<P>(12)



(i) To assure that no tenant, member of the tenant's household, or guest engages in:
</P>
<P>(A) <I>Criminal activity.</I> (<I>1</I>) Any criminal activity that threatens the health, safety or right to peaceful enjoyment of the premises by other residents;
</P>
<P>(<I>2</I>) Any drug-related criminal activity on or off the premises; or
</P>
<P>(B) <I>Civil activity.</I> For any units covered by 24 CFR part 965, subpart G, any smoking of prohibited tobacco products in restricted areas, as defined by 24 CFR 965.653(a), or in other outdoor areas that the PHA has designated as smoke-free.
</P>
<P>(ii) To assure that no other person under the tenant's control engages in:
</P>
<P>(A) <I>Criminal activity.</I> (<I>1</I>) Any criminal activity that threatens the health, safety or right to peaceful enjoyment of the premises by other residents;
</P>
<P>(<I>2</I>) Any drug-related criminal activity on the premises; or
</P>
<P>(B) <I>Civil activity.</I> For any units covered by 24 CFR part 965, subpart G, any smoking of prohibited tobacco products in restricted areas, as defined by 24 CFR 965.653(a), or in other outdoor areas that the PHA has designated as smoke-free.
</P>
<P>(iii) To assure that no member of the household engages in an abuse or pattern of abuse of alcohol that affects the health, safety, or right to peaceful enjoyment of the premises by other residents. 
</P>
<P>(g) <I>Tenant maintenance.</I> The lease may provide that the tenant shall perform seasonal maintenance or other maintenance tasks, as specified in the lease, where performance of such tasks by tenants of dwellings units of a similar design and construction is customary: <I>Provided,</I> That such provision is included in the lease in good faith and not for the purpose of evading the obligations of the PHA. The PHA shall exempt tenants who are unable to perform such tasks because of age or disability. 
</P>
<P>(h) <I>Defects hazardous to life, health, or safety.</I> The lease shall set forth the rights and obligations of the tenant and the PHA if the dwelling unit is damaged to the extent that conditions are created which are hazardous to life, health, or safety of the occupants and shall provide that: 
</P>
<P>(1) The tenant shall immediately notify project management of the damage; 
</P>
<P>(2) The PHA shall be responsible for repair of the unit within a reasonable time: <I>Provided,</I> That if the damage was caused by the tenant, tenant's household or guests, the reasonable cost of the repairs shall be charged to the tenant; 
</P>
<P>(3) The PHA shall offer standard alternative accommodations, if available, where necessary repairs cannot be made within a reasonable time; and 
</P>
<P>(4) Provisions shall be made for abatement of rent in proportion to the seriousness of the damage and loss in value as a dwelling if repairs are not made in accordance with paragraph (h)(2) of this section or alternative accommodations not provided in accordance with paragraph (h)(3) of this section, except that no abatement of rent shall occur if the tenant rejects the alternative accommodation or if the damage was caused by the tenant, tenant's household or guests. 
</P>
<P>(i) <I>Pre-occupancy and pre-termination inspections.</I> The lease shall provide that the PHA and the tenant or representative shall be obligated to inspect the dwelling unit prior to commencement of occupancy by the tenant. The PHA will furnish the tenant with a written statement of the condition of the dwelling unit, and the equipment provided with the unit. The statement shall be signed by the PHA and the tenant, and a copy of the statement shall be retained by the PHA in the tenant's folder. The PHA shall be further obligated to inspect the unit at the time the tenant vacates the unit and to furnish the tenant a statement of any charges to be made in accordance with paragraph (b)(2) of this section. Provision shall be made for the tenant's participation in the latter inspection, unless the tenant vacates without notice to the PHA. 
</P>
<P>(j) <I>Entry of dwelling unit during tenancy.</I> The lease shall set forth the circumstances under which the PHA may enter the dwelling unit during the tenant's possession thereof, which shall include provision that: 
</P>
<P>(1) The PHA shall, upon reasonable advance notification to the tenant, be permitted to enter the dwelling unit during reasonable hours for the purpose of performing routine inspections and maintenance, for making improvement or repairs, or to show the dwelling unit for re-leasing. A written statement specifying the purpose of the PHA entry delivered to the dwelling unit at least two days before such entry shall be considered reasonable advance notification; 
</P>
<P>(2) The PHA may enter the dwelling unit at any time without advance notification when there is reasonable cause to believe that an emergency exists; and 
</P>
<P>(3) If the tenant and all adult members of the household are absent from the dwelling unit at the time of entry, the PHA shall leave in the dwelling unit a written statement specifying the date, time and purpose of entry prior to leaving the dwelling unit. 
</P>
<P>(k) <I>Notice procedures.</I> (1) The lease shall provide procedures to be followed by the PHA and the tenant in giving notice one to the other which shall require that: 
</P>
<P>(i) Except as provided in paragraph (j) of this section, notice to a tenant shall be in writing and delivered to the tenant or to an adult member of the tenant's household residing in the dwelling or sent by prepaid first-class mail properly addressed to the tenant; and 
</P>
<P>(ii) Notice to the PHA shall be in writing, delivered to the project office or the PHA central office or sent by prepaid first-class mail properly addressed. 
</P>
<P>(2) If the tenant is visually impaired, all notices must be in an accessible format. 
</P>
<P>(l) <I>Termination of tenancy and eviction</I>—(1) <I>Procedures.</I> The lease shall state the procedures to be followed by the PHA and by the tenant to terminate the tenancy. 
</P>
<P>(2) <I>Grounds for termination of tenancy.</I> The PHA may terminate the tenancy only for: 
</P>
<P>(i) Serious or repeated violation of material terms of the lease, such as the following: 
</P>
<P>(A) Failure to make payments due under the lease; 
</P>
<P>(B) Failure to fulfill household obligations, as described in paragraph (f) of this section; 
</P>
<P>(ii) Being over the income limit for the program, as provided in 24 CFR 960.507.
</P>
<P>(iii) No longer meeting the restrictions on net assets and property ownership as provided in § 5.618 of this title.
</P>
<P>(iv) Other good cause. Other good cause includes, but is not limited to, the following: 
</P>
<P>(A) Criminal activity or alcohol abuse as provided in paragraph (1)(5) of this section; 
</P>
<P>(B) Discovery after admission of facts that made the tenant ineligible; 
</P>
<P>(C) Discovery of material false statements or fraud by the tenant in connection with an application for assistance or with reexamination of income; 
</P>
<P>(D) Failure of a family member to comply with service requirement provisions of part 960, subpart F, of this chapter—as grounds only for non-renewal of the lease and termination of tenancy at the end of the twelve-month lease term; and 
</P>
<P>(E) Failure to accept the PHA's offer of a lease revision to an existing lease: that is on a form adopted by the PHA in accordance with § 966.3; with written notice of the offer of the revision at least 60 calendar days before the lease revision is scheduled to take effect; and with the offer specifying a reasonable time limit within that period for acceptance by the family. 
</P>
<P>(3) <I>Lease termination notice.</I> (i) The PHA must give written notice of lease termination of: 
</P>
<P>(A) At least 30 days in the case of failure to pay rent;






</P>
<P>(B) A reasonable period of time considering the seriousness of the situation (but not to exceed 30 days): 
</P>
<P>(<I>1</I>) If the health or safety of other residents, PHA employees, or persons residing in the immediate vicinity of the premises is threatened; or 
</P>
<P>(<I>2</I>) If any member of the household has engaged in any drug-related criminal activity or violent criminal activity; or 
</P>
<P>(<I>3</I>) If any member of the household has been convicted of a felony; 
</P>
<P>(C) 30 days in any other case, except that if a State or local law allows a shorter notice period, such shorter period shall apply. 
</P>
<P>(ii) The notice of lease termination to the tenant shall state specific grounds for termination, and shall inform the tenant of the tenant's right to make such reply as the tenant may wish. The notice shall also inform the tenant of the right (pursuant to paragraph (m) of this section) to examine PHA documents directly relevant to the termination or eviction. When the PHA is required to afford the tenant the opportunity for a grievance hearing, the notice shall also inform the tenant of the tenant's right to request a hearing in accordance with the PHA's grievance procedure. All notices of lease termination required by paragraph (1)(3)(i)(A) of this section due to a tenant's failure to pay rent must also include the following:
</P>
<P>(A) Instructions on how the tenant can cure the nonpayment of rent violation, including an itemized amount separated by month of alleged rent owed by the tenant, any other arrearages allowed by HUD and included in the lease separated by month, and the date by which the tenant must pay the amount of rent owed before an eviction for nonpayment of rent can be filed;
</P>
<P>(B) Information on how the tenant can recertify their income pursuant to 24 CFR 960.257(b), request a hardship exemption pursuant to 24 CFR 5.630(b), or request to switch from flat rent to income-based rent pursuant to 24 CFR 960.253(g); and
</P>
<P>(C) In the event of a Presidential declaration of a national emergency, such information as required by the Secretary.


</P>
<P>(iii) A notice to vacate which is required by State or local law may be combined with, or run concurrently with, a notice of lease termination under paragraph (l)(3)(i) of this section. 
</P>
<P>(iv) When the PHA is required to afford the tenant the opportunity for a hearing under the PHA grievance procedure for a grievance concerning the lease termination (see § 966.51(a)(1)), the tenancy shall not terminate (even if any notice to vacate under State or local law has expired) until the time for the tenant to request a grievance hearing has expired, and (if a hearing was timely requested by the tenant) the grievance process has been completed. 
</P>
<P>(v) When the PHA is not required to afford the tenant the opportunity for a hearing under the PHA administrative grievance procedure for a grievance concerning the lease termination (see § 966.51(a)(2)), and the PHA has decided to exclude such grievance from the PHA grievance procedure, the notice of lease termination under paragraph (l)(3)(i) of this section shall: 
</P>
<P>(A) State that the tenant is not entitled to a grievance hearing on the termination. 
</P>
<P>(B) Specify the judicial eviction procedure to be used by the PHA for eviction of the tenant, and state that HUD has determined that this eviction procedure provides the opportunity for a hearing in court that contains the basic elements of due process as defined in HUD regulations. 
</P>
<P>(C) State whether the eviction is for a criminal activity as described in § 966.51(a)(2)(i)(A) or for a drug-related criminal activity as described in § 966.51(a)(2)(i)(B).
</P>
<P>(4) <I>How tenant is evicted.</I> The PHA may evict the tenant from the unit either:
</P>
<P>(i) By bringing a court action or; 
</P>
<P>(ii) By bringing an administrative action if law of the jurisdiction permits eviction by administrative action, after a due process administrative hearing, and without a court determination of the rights and liabilities of the parties. In order to evict without bringing a court action, the PHA must afford the tenant the opportunity for a pre-eviction hearing in accordance with the PHA grievance procedure. 
</P>
<P>(5) <I>PHA termination of tenancy for criminal activity or alcohol abuse</I>—(i) <I>Evicting drug criminals.</I> (A) <I>Methamphetamine conviction.</I> The PHA must immediately terminate the tenancy if the PHA determines that any member of the household has ever been convicted of drug-related criminal activity for manufacture or production of methamphetamine on the premises of federally assisted housing. 
</P>
<P>(B) <I>Drug crime on or off the premises.</I> The lease must provide that drug-related criminal activity engaged in on or off the premises by any tenant, member of the tenant's household or guest, and any such activity engaged in on the premises by any other person under the tenant's control, is grounds for the PHA to terminate tenancy. In addition, the lease must provide that a PHA may evict a family when the PHA determines that a household member is illegally using a drug or when the PHA determines that a pattern of illegal use of a drug interferes with the health, safety, or right to peaceful enjoyment of the premises by other residents. 
</P>
<P>(ii) <I>Evicting other criminals.</I> (A) <I>Threat to other residents.</I> The lease must provide that any criminal activity by a covered person that threatens the health, safety, or right to peaceful enjoyment of the premises by other residents (including PHA management staff residing on the premises) or threatens the health, safety, or right to peaceful enjoyment of their residences by persons residing in the immediate vicinity of the premises is grounds for termination of tenancy. 
</P>
<P>(B) <I>Fugitive felon or parole violator.</I> The PHA may terminate the tenancy if a tenant is fleeing to avoid prosecution, or custody or confinement after conviction, for a crime, or attempt to commit a crime, that is a felony under the laws of the place from which the individual flees, or that, in the case of the State of New Jersey, is a high misdemeanor; or violating a condition of probation or parole imposed under Federal or State law. 
</P>
<P>(iii) <I>Eviction for criminal activity.</I> (A) <I>Evidence.</I> The PHA may evict the tenant by judicial action for criminal activity in accordance with this section if the PHA determines that the covered person has engaged in the criminal activity, regardless of whether the covered person has been arrested or convicted for such activity and without satisfying the standard of proof used for a criminal conviction. 
</P>
<P>(B) <I>Notice to Post Office.</I> When a PHA evicts an individual or family for criminal activity, the PHA must notify the local post office serving the dwelling unit that the individual or family is no longer residing in the unit. 
</P>
<P>(iv) <I>Use of criminal record.</I> If the PHA seeks to terminate the tenancy for criminal activity as shown by a criminal record, the PHA must notify the household of the proposed action to be based on the information and must provide the subject of the record and the tenant with a copy of the criminal record before a PHA grievance hearing or court trial concerning the termination of tenancy or eviction. The tenant must be given an opportunity to dispute the accuracy and relevance of that record in the grievance hearing or court trial. 
</P>
<P>(v) <I>Cost of obtaining criminal record.</I> The PHA may not pass along to the tenant the costs of a criminal records check. 
</P>
<P>(vi) <I>Evicting alcohol abusers.</I> The PHA must establish standards that allow termination of tenancy if the PHA determines that a household member has: 
</P>
<P>(A) Engaged in abuse or pattern of abuse of alcohol that threatens the health, safety, or right to peaceful enjoyment of the premises by other residents; or 
</P>
<P>(B) Furnished false or misleading information concerning illegal drug use, alcohol abuse, or rehabilitation of illegal drug users or alcohol abusers. 
</P>
<P>(vii) <I>PHA action, generally.</I> (A) <I>Assessment under PHAS.</I> Under the Public Housing Assessment System (PHAS), PHAs that have adopted policies, implemented procedures and can document that they appropriately evict any public housing residents who engage in certain activity detrimental to the public housing community receive points. (See 24 CFR 902.43(a)(5).) This policy takes into account the importance of eviction of such residents to public housing communities and program integrity, and the demand for assisted housing by families who will adhere to lease responsibilities. 
</P>
<P>(B) <I>Consideration of circumstances.</I> In a manner consistent with such policies, procedures and practices, the PHA may consider all circumstances relevant to a particular case such as the seriousness of the offending action, the extent of participation by the leaseholder in the offending action, the effects that the eviction would have on family members not involved in the offending activity and the extent to which the leaseholder has shown personal responsibility and has taken all reasonable steps to prevent or mitigate the offending action. 
</P>
<P>(C) <I>Exclusion of culpable household member.</I> The PHA may require a tenant to exclude a household member in order to continue to reside in the assisted unit, where that household member has participated in or been culpable for action or failure to act that warrants termination. 
</P>
<P>(D) <I>Consideration of rehabilitation.</I> In determining whether to terminate tenancy for illegal drug use or a pattern of illegal drug use by a household member who is no longer engaging in such use, or for abuse or a pattern of abuse of alcohol by a household member who is no longer engaging in such abuse, the PHA may consider whether such household member is participating in or has successfully completed a supervised drug or alcohol rehabilitation program, or has otherwise been rehabilitated successfully (42 U.S.C. 13662). For this purpose, the PHA may require the tenant to submit evidence of the household member's current participation in, or successful completion of, a supervised drug or alcohol rehabilitation program or evidence of otherwise having been rehabilitated successfully. 
</P>
<P>(E) <I>Length of period of mandatory prohibition on admission.</I> If a statute requires that the PHA prohibit admission of persons for a prescribed period of time after some disqualifying behavior or event, the PHA may apply that prohibition for a longer period of time. 
</P>
<P>(F) <I>Nondiscrimination limitation.</I> The PHA's eviction actions must be consistent with fair housing and equal opportunity provisions of § 5.105 of this title. 
</P>
<P>(m) <I>Eviction: Right to examine PHA documents before hearing or trial.</I> The PHA shall provide the tenant a reasonable opportunity to examine, at the tenant's request, before a PHA grievance hearing or court trial concerning a termination of tenancy or eviction, any documents, including records and regulations, which are in the possession of the PHA, and which are directly relevant to the termination of tenancy or eviction. The tenant shall be allowed to copy any such document at the tenant's expense. A notice of lease termination pursuant to § 966.4(l) (3) shall inform the tenant of the tenant's right to examine PHA documents concerning the termination of tenancy or eviction. If the PHA does not make documents available for examination upon request by the tenant (in accordance with this § 966.4(m)), the PHA may not proceed with the eviction. 
</P>
<P>(n) <I>Grievance procedures.</I> (1) The lease must provide that all disputes concerning the obligations of the tenant or the PHA must (except as provided in § 966.51(a)(2)) be resolved in accordance with the PHA grievance procedures. The grievance procedures must comply with subpart B of this part.
</P>
<P>(2) The lease must include a description of the PHA's policies for selecting a hearing officer.
</P>
<P>(o) <I>Provision for modifications.</I> The lease shall provide that modification of the lease must be accomplished by a written rider to the lease executed by both parties, except for paragraph (c) of this section and § 966.5. 
</P>
<P>(p) <I>Signature clause.</I> The lease shall provide a signature clause attesting that the lease has been executed by the parties.
</P>
<P>(q) <I>Notification for nonpayment of rent.</I> The lease shall contain a provision or addendum that tenants will receive notification at least 30 days before an eviction for nonpayment of rent is filed.
</P>
<P>(r) <I>Time of service.</I> The PHA must not provide tenants with a termination notice prior to the day after the rent is due according to the lease. The PHA must not proceed with filing an eviction if the tenant pays the alleged amount of rent owed within the 30-day notification period.

 
</P>
<CITA TYPE="N">[56 FR 51576, Oct. 11, 1991, as amended at 61 FR 13273, Mar. 26, 1996; 65 FR 16730, Mar. 29, 2000; 66 FR 28802, May 24, 2001; 66 FR 32875, June 18, 2001; 66 FR 33134, June 20, 2001; 69 FR 68791, Nov. 26, 2004; 75 FR 66262, Oct. 27, 2010; 81 FR 12374, Mar. 8, 2016; 81 FR 80815, Nov. 16, 2016; 81 FR 87444, Dec. 5, 2016; 88 FR 9675, Feb. 14, 2023; 89 FR 101303, Dec. 13, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 966.5" NODE="24:4.1.3.1.15.1.5.5" TYPE="SECTION">
<HEAD>§ 966.5   Posting of policies, rules and regulations.</HEAD>
<P>Schedules of special charges for services, repairs and utilities and rules and regulations which are required to be incorporated in the lease by reference shall be publicly posted in a conspicuous manner in the Project Office and shall be furnished to applicants and tenants on request. Such schedules, rules and regulations may be modified from time to time by the PHA provided that the PHA shall give at least 30-day written notice to each affected tenant setting forth the proposed modification, the reasons therefor, and providing the tenant an opportunity to present written comments which shall be taken into consideration by the PHA prior to the proposed modification becoming effective. A copy of such notice shall be: 
</P>
<P>(a) Delivered directly or mailed to each tenant; or 
</P>
<P>(b) Posted in at least three (3) conspicuous places within each structure or building in which the affected dwelling units are located, as well as in a conspicuous place at the project office, if any, of if none, a similar central business location within the project. 


</P>
</DIV8>


<DIV8 N="§ 966.6" NODE="24:4.1.3.1.15.1.5.6" TYPE="SECTION">
<HEAD>§ 966.6   Prohibited lease provisions.</HEAD>
<P>Lease clauses of the nature described below shall not be included in new leases between a PHA and a tenant and shall be deleted from existing leases either by amendment thereof or execution of a new lease: 
</P>
<P>(a) <I>Confession of judgment.</I> Prior consent by the tenant to any lawsuit the landlord may bring against him in connection with the lease and to a judgment in favor of the landlord. 
</P>
<P>(b) <I>Distraint for rent or other charges.</I> Agreement by the tenant that landlord is authorized to take property of the tenant and hold it as a pledge until the tenant performs the obligation which the landlord has determined the tenant has failed to perform. 
</P>
<P>(c) <I>Exculpatory clauses.</I> Agreement by the tenant not to hold the landlord or landlord's agent liable for any acts or omissions whether intentional or negligent on the part of the landlord or the landlord's authorized representatives or agents. 
</P>
<P>(d) <I>Waiver of legal notice by tenant prior to actions for eviction or money judgments.</I> Agreements by the tenant that the landlord may institute suit without any notice to the tenant that the suit has been filed, thus preventing the tenant from defending against the lawsuit. 
</P>
<P>(e) <I>Waiver of legal proceedings.</I> Authorization to the landlord to evict the tenant or hold or sell the tenant's possessions whenever the landlord determines that a breach or default has occurred without notice to the tenant or any determination by a court of the rights and liabilities of the parties. 
</P>
<P>(f) <I>Waiver of jury trial.</I> Authorization of the landlord's lawyer to appear in court for the tenant and waive the right to a trial by jury. 
</P>
<P>(g) <I>Waiver of right to appeal judicial error in legal proceeding.</I> Authorization to the landlord's lawyer to waive the right to appeal for judicial error in any suit or to waive the right to file a suit in equity to prevent the execution of a judgment. 
</P>
<P>(h) <I>Tenant chargeable with cost of legal actions regardless of outcome.</I> Provision that the tenant agrees to pay attorney's fees or other legal costs whenever the landlord decides to take action against the tenant even though the court determines that the tenant prevails in the action. Prohibition of this type of provision does not mean that the tenant as a party to the lawsuit may not be obligated to pay attorney's fees or other costs if he loses the suit. 


</P>
</DIV8>


<DIV8 N="§ 966.7" NODE="24:4.1.3.1.15.1.5.7" TYPE="SECTION">
<HEAD>§ 966.7   Accommodation of persons with disabilities.</HEAD>
<P>(a) For all aspects of the lease and grievance procedures, a handicapped person shall be provided reasonable accommodation to the extent necessary to provide the handicapped person with an opportunity to use and occupy the dwelling unit equal to a non-handicapped person. 
</P>
<P>(b) The PHA shall provide a notice to each tenant that the tenant may, at any time during the tenancy, request reasonable accommodation of a handicap of a household member, including reasonable accommodation so that the tenant can meet lease requirements or other requirements of tenancy. 
</P>
<CITA TYPE="N">[56 FR 51579, Oct. 11, 1991] 


















</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.3.1.15.2" TYPE="SUBPART">
<HEAD>Subpart B—Grievance Procedures and Requirements</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>40 FR 33406, Aug. 7, 1975, unless otherwise noted. Redesignated at 49 FR 6714, Feb. 23, 1984.


</PSPACE></SOURCE>

<DIV8 N="§ 966.50" NODE="24:4.1.3.1.15.2.5.1" TYPE="SECTION">
<HEAD>§ 966.50   Purpose and scope.</HEAD>
<P>The purpose of this subpart is to set forth the requirements, standards and criteria for a grievance procedure to be established and implemented by public housing agencies (PHAs) to assure that a PHA tenant is afforded an opportunity for a hearing if the tenant disputes within a reasonable time any PHA action or failure to act involving the tenant's lease with the PHA or PHA regulations which adversely affect the individual tenant's rights, duties, welfare or status. 
</P>
<CITA TYPE="N">[56 FR 51579, Oct. 11, 1991]


</CITA>
</DIV8>


<DIV8 N="§ 966.51" NODE="24:4.1.3.1.15.2.5.2" TYPE="SECTION">
<HEAD>§ 966.51   Applicability.</HEAD>
<P>(a)(1) The PHA grievance procedure shall be applicable (except as provided in paragraph (a)(2) of this section) to all individual grievances as defined in § 966.53 of this subpart between the tenant and the PHA. 
</P>
<P>(2)(i) The term <I>due process determination</I> means a determination by HUD that law of the jurisdiction requires that the tenant must be given the opportunity for a hearing in court which provides the basic elements of due process (as defined in § 966.53(c)) before eviction from the dwelling unit. If HUD has issued a due process determination, a PHA may exclude from the PHA administrative grievance procedure under this subpart any grievance concerning a termination of tenancy or eviction that involves: 
</P>
<P>(A) Any criminal activity that threatens the health, safety or right to peaceful enjoyment of the premises of other residents or employees of the PHA; 
</P>
<P>(B) Any violent or drug-related criminal activity on or off such premises; or 
</P>
<P>(C) Any criminal activity that resulted in felony conviction of a household member. 
</P>
<P>(iii) For guidance of the public, HUD will publish in the <E T="04">Federal Register</E> a notice listing the judicial eviction procedures for which HUD has issued a due process determination. HUD will make available for public inspection and copying a copy of the legal analysis on which the determinations are based.
</P>
<P>(iv) If HUD has issued a due process determination, the PHA may evict the occupants of the dwelling unit through the judicial eviction procedures which are the subject of the determination. In this case, the PHA is not required to provide the opportunity for a hearing under the PHA's administrative grievance procedure. 
</P>
<P>(b) The PHA grievance procedure shall not be applicable to disputes between tenants not involving the PHA or to class grievances. The grievance procedure is not intended as a forum for initiating or negotiating policy changes between a group or groups of tenants and the PHA's Board of Commissioners. 
</P>
<CITA TYPE="N">[40 FR 33406, Aug. 7, 1975. Redesignated at 49 FR 6714, Feb. 23, 1984, and amended at 56 FR 51579, Oct. 11, 1991; 61 FR 13273, Mar. 26, 1996; 66 FR 28804, May 24, 2001]


</CITA>
</DIV8>


<DIV8 N="§ 966.52" NODE="24:4.1.3.1.15.2.5.3" TYPE="SECTION">
<HEAD>§ 966.52   Requirements.</HEAD>
<P>(a) Each PHA shall adopt a grievance procedure affording each tenant an opportunity for a hearing on a grievance as defined in § 966.53 in accordance with the requirements, standards, and criteria contained in this subpart. A PHA may establish an expedited grievance procedure as defined in § 966.53.
</P>
<P>(b) The PHA grievance procedure shall be included in, or incorporated by reference in, all tenant dwelling leases pursuant to subpart A of this part. 
</P>
<P>(c) The PHA shall provide at least 30 days notice to tenants and resident organizations setting forth proposed changes in the PHA grievance procedure, and providing an opportunity to present written comments. Subject to requirements of this subpart, comments submitted shall be considered by the PHA before adoption of any grievance procedure changes by the PHA. 
</P>
<P>(d) The PHA shall furnish a copy of the grievance procedure to each tenant and to resident organizations.
</P>
<P>(e) The PHA must not only meet the minimal procedural due process requirements contained in this subpart but also satisfy any additional requirements required by local, state, or federal law.
</P>
<CITA TYPE="N">[56 FR 51579, Oct. 11, 1991, as amended at 81 FR 12374, Mar. 8, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 966.53" NODE="24:4.1.3.1.15.2.5.4" TYPE="SECTION">
<HEAD>§ 966.53   Definitions.</HEAD>
<P>For the purpose of this subpart, the following definitions are applicable: 
</P>
<P>(a) <I>Grievance</I> shall mean any dispute which a tenant may have with respect to PHA action or failure to act in accordance with the individual tenant's lease or PHA regulations which adversely affect the individual tenant's rights, duties, welfare or status. 
</P>
<P>(b) <I>Complainant</I> shall mean any tenant whose grievance is presented to the PHA or at the project management office.
</P>
<P>(c) <I>Elements of due process</I> shall mean an eviction action or a termination of tenancy in a State or local court in which the following procedural safeguards are required: 
</P>
<P>(1) Adequate notice to the tenant of the grounds for terminating the tenancy and for eviction; 
</P>
<P>(2) Right of the tenant to be represented by counsel; 
</P>
<P>(3) Opportunity for the tenant to refute the evidence presented by the PHA including the right to confront and cross-examine witnesses and to present any affirmative legal or equitable defense which the tenant may have; 
</P>
<P>(4) A decision on the merits. 
</P>
<P>(d) <I>Expedited grievance</I> means a procedure established by the PHA for any grievance concerning a termination of tenancy or eviction that involves:
</P>
<P>(1) Any criminal activity that threatens the health, safety, or right to peaceful enjoyment of the PHA's public housing premises by other residents or employees of the PHA; or
</P>
<P>(2) Any drug-related or violent criminal activity on or off such premises.
</P>
<P>(e) <I>Hearing officer</I> means an impartial person or persons selected by the PHA, other than the person who made or approved the decision under review, or a subordinate of that person. Such individual or individuals do not need legal training. PHAs must describe their policies for selection of a hearing officer in their lease forms as required by § 966.4, changes to which are subject to a 30-day comment period as described in § 966.3.
</P>
<P>(f) <I>Tenant</I> shall mean the adult person (or persons) (other than a live-in aide): 
</P>
<P>(1) Who resides in the unit, and who executed the lease with the PHA as lessee of the dwelling unit, or, if no such person now resides in the unit, 
</P>
<P>(2) Who resides in the unit, and who is the remaining head of household of the tenant family residing in the dwelling unit. 
</P>
<P>(g) <I>Resident organization</I> includes a resident management corporation. 
</P>
<CITA TYPE="N">[40 FR 33406, Aug. 7, 1975. Redesignated at 49 FR 6714, Feb. 23, 1984, and amended at 56 FR 51579, Oct. 11, 1991; 81 FR 12374, Mar. 8, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 966.54" NODE="24:4.1.3.1.15.2.5.5" TYPE="SECTION">
<HEAD>§ 966.54   Informal settlement of grievance.</HEAD>
<P>Any grievance shall be personally presented, either orally or in writing, to the PHA office or to the office of the project in which the complainant resides so that the grievance may be discussed informally and settled without a hearing. A summary of such discussion shall be prepared within a reasonable time and one copy shall be given to the tenant and one retained in the PHA's tenant file. The summary shall specify the names of the participants, dates of meeting, the nature of the proposed disposition of the complaint and the specific reasons therefor, and shall specify the procedures by which a hearing may be obtained if the complainant is not satisfied. 
</P>
<CITA TYPE="N">[40 FR 33406, Aug. 7, 1975. Redesignated at 49 FR 6714, Feb. 23, 1984, as amended at 81 FR 12374, Mar. 8, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 966.56" NODE="24:4.1.3.1.15.2.5.6" TYPE="SECTION">
<HEAD>§ 966.56   Procedures governing the hearing.</HEAD>
<P>(a) The hearing must be scheduled promptly for a time and place reasonably convenient to both the complainant and the PHA and held before a hearing officer. A written notification specifying the time, place, and the procedures governing the hearing must be delivered to the complainant and the appropriate official.
</P>
<P>(b) The complainant shall be afforded a fair hearing, which shall include:
</P>
<P>(1) The opportunity to examine before the grievance hearing any PHA documents, including records and regulations, that are directly relevant to the hearing. (For a grievance hearing concerning a termination of tenancy or eviction, see also § 966.4(m).) The tenant shall be allowed to copy any such document at the tenant's expense. If the PHA does not make the document available for examination upon request by the complainant, the PHA may not rely on such document at the grievance hearing. 
</P>
<P>(2) The right to be represented by counsel or other person chosen as the tenant's representative and to have such person make statements on the tenant's behalf; 
</P>
<P>(3) The right to a private hearing unless the complainant requests a public hearing; 
</P>
<P>(4) The right to present evidence and arguments in support of the tenant's complaint, to controvert evidence relied on by the PHA or project management, and to confront and cross-examine all witnesses upon whose testimony or information the PHA or project management relies; and 
</P>
<P>(5) A decision based solely and exclusively upon the facts presented at the hearing. 
</P>
<P>(c) If the complainant or the PHA fails to appear at a scheduled hearing, the hearing officer may make a determination to postpone the hearing for no more than 5 business days or may make a determination that the party has waived his right to a hearing. Both the complainant and the PHA must be notified of the determination by the hearing officer. A determination that the complainant has waived the complainant's right to a hearing will not constitute a waiver of any right the complainant may have to contest the PHA's disposition of the grievance in an appropriate judicial proceeding.
</P>
<P>(d) At the hearing, the complainant must first make a showing of an entitlement to the relief sought and thereafter the PHA must sustain the burden of justifying the PHA action or failure to act against which the complaint is directed. 
</P>
<P>(e) The complainant or the PHA may arrange, in advance and at the expense of the party making the arrangement, for a transcript of the hearing. Any interested party may purchase a copy of such transcript. 
</P>
<P>(f) <I>Accommodation of persons with disabilities.</I> (1) The PHA must provide reasonable accommodation for persons with disabilities to participate in the hearing. Reasonable accommodation may include qualified sign language interpreters, readers, accessible locations, or attendants. 
</P>
<P>(2) If the tenant is visually impaired, any notice to the tenant which is required under this subpart must be in an accessible format. 
</P>
<P>(g) <I>Limited English Proficiency.</I> PHAs must comply with HUD's “Final Guidance to Federal Financial Assistance Recipients Regarding Title VI Prohibition Against National Origin Discrimination Affecting Limited English Proficient Persons” issued on January 22, 2007 and available at <I>http://portal.hud.gov/hudportal/HUD?src=/program_offices/fair_housing_equal_opp/promotingfh/lep-faq.</I>
</P>
<CITA TYPE="N">[40 FR 33406, Aug. 7, 1975. Redesignated at 49 FR 6714, Feb. 23, 1984, and amended at 56 FR 51580, Oct. 11, 1991; 81 FR 12374, Mar. 8, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 966.57" NODE="24:4.1.3.1.15.2.5.7" TYPE="SECTION">
<HEAD>§ 966.57   Decision of the hearing officer.</HEAD>
<P>(a) The hearing officer must prepare a written decision, including the reasons for the PHA's decision within a reasonable time after the hearing. A copy of the decision must be sent to the complainant and the PHA. The PHA must retain a copy of the decision in the tenant's folder. The PHA must maintain a log of all hearing officer decisions and make that log available upon request of the hearing officer, a prospective complainant, or a prospective complainant's representative.
</P>
<P>(b) The decision of the hearing officer will be binding on the PHA unless the PHA Board of Commissioners determines that:
</P>
<P>(1) The grievance does not concern PHA action or failure to act in accordance with or involving the complainant's lease on PHA regulations, which adversely affects the complainant's rights, duties, welfare or status; or
</P>
<P>(2) The decision of the hearing officer is contrary to applicable Federal, State or local law, HUD regulations or requirements of the annual contributions contract between HUD and the PHA.
</P>
<P>(c) A decision by the hearing officer or Board of Commissioners in favor of the PHA or which denies the relief requested by the complainant in whole or in part will not constitute a waiver of, nor affect in any manner whatever, any rights the complainant may have to a trial de novo or judicial review in any judicial proceedings, which may thereafter be brought in the matter.
</P>
<CITA TYPE="N">[81 FR 12375, Mar. 8, 2016]


</CITA>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="970" NODE="24:4.1.3.1.16" TYPE="PART">
<HEAD>PART 970—PUBLIC HOUSING PROGRAM—DEMOLITION OR DISPOSITION OF PUBLIC HOUSING PROJECTS 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437p and 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>71 FR 62362, Oct. 24, 2006, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 970.1" NODE="24:4.1.3.1.16.0.5.1" TYPE="SECTION">
<HEAD>§ 970.1   Purpose.</HEAD>
<P>This part states requirements for HUD approval of a public housing agency's application for demolition or disposition (in whole or in part) of public housing developments assisted under Title I of the U.S. Housing Act of 1937 (Act). The regulations in 2 CFR part 200 are not applicable to this part.


</P>
</DIV8>


<DIV8 N="§ 970.3" NODE="24:4.1.3.1.16.0.5.2" TYPE="SECTION">
<HEAD>§ 970.3   Applicability.</HEAD>
<P>(a) This part applies to public housing developments that are owned by public housing agencies (PHAs) and that are subject to annual contributions contracts (ACCs) under the Act.
</P>
<P>(b) This part does not apply to the following:
</P>
<P>(1) PHA-owned section 8 housing, or housing leased under former sections 10(c) or 23 of the Act;
</P>
<P>(2) Demolition or disposition before the date of full availability (DOFA) of property acquired incident to the development of a public housing project (however, this exception shall not apply to dwelling units under ACC);
</P>
<P>(3) The conveyance of public housing for the purpose of providing homeownership opportunities for lower-income families under sections 21 and 32 of the Act (42 U.S.C. 1437s and 42 U.S.C. 1437z-4, respectively), the homeownership program under former section 5(h) of the Act (42 U.S.C. 1437c(h)), or other predecessor homeownership programs;
</P>
<P>(4) The leasing of dwelling or non-dwelling space incidental to the normal operation of the project for public housing purposes, as permitted by the ACC;
</P>
<P>(5) Making available common areas and unoccupied dwelling units in public housing projects to provide HUD-approved economic self-sufficiency services and activities to promote employment of public housing residents;
</P>
<P>(6) The reconfiguration of the interior space of buildings (e.g., moving or removing interior walls to change the design, sizes, or number of units) without “demolition,” as defined in § 970.5. (This includes the conversion of bedroom size, occupancy type, changing the status of unit from dwelling to non-dwelling.);
</P>
<P>(7) Easements, rights-of-way, and transfers of utility systems incident to the normal operation of the development for public housing purposes, as permitted by the ACC;
</P>
<P>(8) A whole or partial taking by a public or quasi-public entity (taking agency) authorized to take real property by its use of police power or exercise of its power of eminent domain under state law. A taking does not qualify for the exception under this paragraph unless:
</P>
<P>(i) The taking agency has been authorized to acquire real property by use of its police power or power of eminent domain under its state law;
</P>
<P>(ii) The taking agency has taken at least the first step in formal proceedings under its state law; and
</P>
<P>(iii) If the taking is for a federally assisted project, the Uniform Relocation Act (URA) (42 U.S.C. 4601 <I>et seq.</I>) applies to any resulting displacement of residents and it is the responsibility of the taking agency to comply with applicable URA requirements.
</P>
<P>(9) Demolition after conveyance of a public housing project to a non-PHA entity in accordance with an approved homeownership program under Title III of the Cranston-Gonzalez National Affordable Housing Act (HOPE I) (42 U.S.C. 1437aaa note);
</P>
<P>(10) Units or land leased for non-dwelling purposes for one year or less;
</P>
<P>(11) A public housing property that is conveyed by a PHA prior to DOFA to enable an owner entity to develop the property using the mixed-finance development method;
</P>
<P>(12) Disposition of public housing property for development pursuant to the mixed-finance development method at 24 CFR part 941, subpart F;
</P>
<P>(13) Demolition under the de minimis exception in § 970.27, except that the environmental review provisions apply, including the provisions at §§ 970.7(a)(15) and (b)(13) of this part.
</P>
<P>(14) Demolition (but not disposition) of severely distressed units as part of a revitalization plan under section 24 of the Act (42 U.S.C. 1437v) (HOPE VI) approved after October 21, 1998;
</P>
<P>(15) Demolition (but not disposition) of public housing developments removed from a PHA's inventory under section 33 of the Act, 42 U.S.C. 1437z-5.
</P>
<CITA TYPE="N">[71 FR 62362, Oct. 24, 2006, as amended at 73 FR 3868, Jan. 23, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 970.5" NODE="24:4.1.3.1.16.0.5.3" TYPE="SECTION">
<HEAD>§ 970.5   Definitions.</HEAD>
<P><I>ACC</I>, or <I>annual contributions contract</I>, is defined in 24 CFR 5.403.
</P>
<P><I>Act</I> means the United States Housing Act of 1937, 42 U.S.C. 1437 <I>et seq.</I>
</P>
<P><I>Appropriate government officials</I> mean the Chief Executive Officer or officers of a unit of general local government.
</P>
<P><I>Assistant Secretary</I> means the Assistant Secretary for Public and Indian Housing at HUD.
</P>
<P><I>Chief Executive Officer of a unit of general local government</I> means the elected official or the legally designated official, who has the primary responsibility for the conduct of that entity's governmental affairs. Examples of the chief executive officer of a unit of general local government are: the elected mayor of a municipality; the elected county executive of a county; the chairperson of a county commission or board in a county that has no elected county executive; and the official designated pursuant to law by the governing body of a unit of general local government.
</P>
<P><I>Demolition</I> means the removal by razing or other means, in whole or in part, of one or more permanent buildings of a public housing development. A demolition involves any four or more of the following:
</P>
<P>(1) Envelope removal (roof, windows, exterior walls);
</P>
<P>(2) Kitchen removal;
</P>
<P>(3) Bathroom removal;
</P>
<P>(4) Electrical system removal (unit service panels and distribution circuits); or
</P>
<P>(5) Plumbing system removal (e.g., either the hot water heater or distribution piping in the unit, or both).
</P>
<P><I>Disposition</I> means the conveyance or other transfer by the PHA, by sale or other transaction, of any interest in the real estate of a public housing development, subject to the exceptions stated in § 970.3.
</P>
<P><I>DOFA</I>, or date of full availability, means the last day of the month in which substantially all (95 percent or more) of the units in a housing development are available for occupancy.
</P>
<P><I>Firm financial commitment</I> means a commitment that obligates a creditable source, lender, or equity provider, to the lending or equity investment of a specific sum of funds to be made on or before a specific date(s) and may contain contingencies or conditions that must be satisfied by the borrower (or entity receiving equity investments) before the closing of the transaction. The condition of a firm commitment must be that it is enforceable by the borrower (or entity receiving the equity investment) upon the satisfaction of all contingencies or conditions.
</P>
<P><I>PHA Plan</I>—Means the PHA's initial, annual, and 5-year submissions under section 5A of the U.S. Housing Act of 1937, 42 U.S.C. 1437c-1.
</P>
<P><I>Resident Advisory Board</I> (RAB) has the same meaning as in § 903.13(a) of this title.
</P>
<P><I>Resident Council</I> means a resident organization, the role and requirements of which are as described in 24 CFR part 964.
</P>
<P><I>Total development cost</I> has the same meaning as in 24 CFR 941.103.


</P>
</DIV8>


<DIV8 N="§ 970.7" NODE="24:4.1.3.1.16.0.5.4" TYPE="SECTION">
<HEAD>§ 970.7   General requirements for HUD approval of a PHA demolition/disposition application.</HEAD>
<P>(a) <I>Application for HUD Approval.</I> A PHA must obtain written approval from HUD before undertaking any transaction involving demolition or disposition of PHA-owned property under the ACC. Where a PHA demolishes or disposes of public housing property without HUD approval, no HUD funds may be used to fund the costs of demolition or disposition or reimburse the PHA for those costs. HUD will approve an application for demolition or disposition upon the PHA's submission of an application with the required certifications and the supporting information required by this section and §§ 970.15 or 970.17. Section 970.29 specifies criteria for disapproval of an application. Approval of the application under this part does not imply approval of a request for additional funding, which the PHA must make separately under a program that makes available funding for this purpose. The PHA shall submit the application for demolition or disposition and the timetable in a time and manner and in a form prescribed by HUD. The supporting information shall include:
</P>
<P>(1) A certification that the PHA has described the demolition or disposition in the PHA Annual Plan and timetable under 24 CFR part 903 (except in the case of small or high-performing PHAs eligible for streamlined annual plan treatment), and that the description in the PHA Annual Plan is identical to the application submitted pursuant to this part and otherwise complies with section 18 of the Act (42 U.S.C. 1437p) and this part;
</P>
<P>(2) A description of all identifiable property, by development, including land, dwelling units, and other improvements, involved in the proposed demolition or disposition;
</P>
<P>(3) A description of the specific action proposed, such as:
</P>
<P>(i) Demolition, disposition, or demolition with disposition;
</P>
<P>(ii) If disposition is involved, the method of sale;
</P>
<P>(4) A general timetable for the proposed action(s), including the initial contract for demolition, the actual demolition, and, if applicable, the closing of sale or other form of disposition;
</P>
<P>(5) A statement justifying the proposed demolition or disposition under the applicable criteria of §§ 970.15 or 970.17;
</P>
<P>(6) If applicable, a plan for the relocation of tenants who would be displaced by the proposed demolition or disposition (including persons with disabilities requiring reasonable accommodations and a relocation timetable as prescribed in § 970.21);
</P>
<P>(7) A description with supporting evidence of the PHA's consultations with residents, any resident organizations, and the Resident Advisory Board, as required under § 903.9 of this title;
</P>
<P>(8) In the case of disposition only, evidence of compliance with the offering to resident organizations, as required under § 970.9;
</P>
<P>(9) In the case of disposition, an estimate of the fair market value of the property, established on the basis of one independent appraisal, unless otherwise determined by HUD, as described in § 970.19(c);
</P>
<P>(10) In the case of disposition, estimates of the gross and net proceeds to be realized, with an itemization of estimated costs to be paid out of gross proceeds and the proposed use of any net proceeds in accordance with § 970.19;
</P>
<P>(11) An estimate of costs for any required relocation housing, moving costs, and counseling.
</P>
<P>(12) Where the PHA is requesting a waiver of the requirement for the application of proceeds for repayment of outstanding debt, the PHA must request such a waiver in its application, along with a description of the proposed use of the proceeds;
</P>
<P>(13) A copy of a resolution by the PHA's Board of Commissioners approving the specific demolition or disposition application (or, in the case of the report required under § 970.27(e) for “de minimis” demolitions, the Board of Commissioner's resolution approving the “de minimis” action) for that development or developments or portions thereof. The resolution must be signed and dated after all resident and local government consultation has been completed;
</P>
<P>(14) Evidence that the application was developed in consultation with appropriate government officials as defined in § 970.5, including:
</P>
<P>(i) A description of the process of consultation with local government officials, which summarizes dates, meetings, and issues raised by the local government officials and the PHA's responses to those issues;
</P>
<P>(ii) A signed and dated letter in support of the application from the chief executive officer of the unit of local government that demonstrates that the PHA has consulted with the appropriate local government officials on the proposed demolition or disposition;
</P>
<P>(iii) Where the local government consistently fails to respond to the PHA's attempts at consultation, including letters, requests for meetings, public notices, and other reasonable efforts, documentation of those attempts;
</P>
<P>(iv) Where the PHA covers multiple jurisdictions (such as a regional housing authority), the PHA must meet these requirements for each of the jurisdictions where the PHA is proposing demolition or disposition of PHA property;
</P>
<P>(15) An approved environmental review of the proposed demolition or disposition in accordance with 24 CFR parts 50 or 58 for any demolition or disposition of public housing property covered under this part, as required under 24 CFR 970.13;
</P>
<P>(16) A certification that the demolition or disposition application does not violate any remedial civil rights order or agreement, voluntary compliance agreement, final judgment, consent decree, settlement agreement, or other court order or agreement;
</P>
<P>(17) Any additional information necessary to support the application and assist HUD in making determinations under this part.
</P>
<P>(b) <I>Completion of demolition/disposition or rescissions of approval.</I> (1) HUD will consider a PHA's request to rescind an earlier approval to demolish or dispose of public housing property, where a PHA submits a resolution from the Board of Commissioners and submits documentation that the conditions that originally led to the request for demolition or disposition have significantly changed or been removed.
</P>
<P>(2) The Assistant Secretary will not approve any request by the PHA to either substitute units or add units to those originally included in the approved demolition or disposition application, unless the PHA submits a new application for those units that meet the requirements of this part.


</P>
</DIV8>


<DIV8 N="§ 970.9" NODE="24:4.1.3.1.16.0.5.5" TYPE="SECTION">
<HEAD>§ 970.9   Resident participation—consultation and opportunity to purchase.</HEAD>
<P>(a) <I>Resident consultation.</I> PHAs must consult with residents who will be affected by the proposed action with respect to all demolition or disposition applications. The PHA must provide with its application evidence that the application was developed in consultation with residents who will be affected by the proposed action, any resident organizations for the development, PHA-wide resident organizations that will be affected by the demolition or disposition, and the Resident Advisory Board (RAB). The PHA must also submit copies of any written comments submitted to the PHA and any evaluation that the PHA has made of the comments.
</P>
<P>(b) <I>Resident organization offer to sell—applicability.</I> In the situation where the PHA applies to dispose of a development or portion of a development:
</P>
<P>(1) The PHA shall, in appropriate circumstances as determined by the Assistant Secretary, initially offer the property proposed for disposition to any eligible resident organization, eligible resident management corporation as defined in 24 CFR part 964, or to a nonprofit organization acting on behalf of the residents at any development proposed for disposition, if the resident entity has expressed an interest in purchasing the property for continued use as low-income housing. The entity must make the request in writing to the PHA, no later than 30 days after the resident entity has received the notification of sale from the PHA;
</P>
<P>(2) If the resident entity has expressed an interest in purchasing the property for continued use as low-income housing, the entity, in order for its purchase offer to be considered, must:
</P>
<P>(i) In the case of a nonprofit organization, be acting on behalf of the residents of the development; and
</P>
<P>(ii) Demonstrate that it has obtained a firm commitment for the necessary financing within 60 days of serving its written notice of interest under paragraph (b)(1) of this section.
</P>
<P>(3) The requirements of this section do not apply to the following cases, which have been determined not to present an appropriate opportunity for purchase by a resident organization:
</P>
<P>(i) A unit of state or local government requests to acquire vacant land that is less than two acres in order to build or expand its public services (a local government wishes to use the land to build or establish a police substation); or
</P>
<P>(ii) A PHA seeks disposition outside the public housing program to privately finance or otherwise develop a facility to benefit low-income families (e.g., day care center, administrative building, mixed-finance housing under 24 CFR part 941 subpart F, or other types of low-income housing);
</P>
<P>(iii) Units that have been legally vacated in accordance with the HOPE VI program, the regulations at 24 CFR part 971, or the mandatory conversion regulations at 24 CFR part 972, excluding developments where the PHA has consolidated vacancies;
</P>
<P>(iv) Distressed units required to be converted to tenant-based assistance under section 33 of the 1937 Act (42 U.S.C. 1437z-5); or
</P>
<P>(v) Disposition of non-dwelling properties, including administration and community buildings, and maintenance facilities.
</P>
<P>(4) If the requirements of this section are not applicable, as provided in paragraph (b)(3) of this section, the PHA may proceed to submit to HUD its application under this part to dispose of the property, or a portion of the property, without affording an opportunity for purchase by a resident organization. However, PHAs must consult with their residents in accordance with paragraph (a) of this section. The PHA must submit documentation with date and signatures to support the applicability of one of the exceptions in paragraph (b)(3) of this section. Examples of appropriate documentation include, but are not limited to: a letter from the public body that wants to acquire the land, copies of memoranda or letters approving the PHA's previous application under part 970 or mandatory conversion plan, and the HUD transmittal document approving the proposed revitalization plan.
</P>
<P>(c) <I>Established eligible organizations.</I> Where there are eligible resident organizations, eligible resident management corporations as defined in 24 CFR part 964, or nonprofit organizations acting on behalf of the residents as defined in 24 CFR part 964 (collectively, “established eligible organizations”), that have expressed an interest, in writing, to the PHA within 30 days of the date of notification of the proposed sale, in purchasing the property for continued use as low-income housing at the affected development, the PHA shall follow the procedures for making the offer described in § 970.11.
</P>
<CITA TYPE="N">[71 FR 62362, Oct. 24, 2006, as amended at 73 FR 3868, Jan. 23, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 970.11" NODE="24:4.1.3.1.16.0.5.6" TYPE="SECTION">
<HEAD>§ 970.11   Procedures for the offer of sale to established eligible organizations.</HEAD>
<P>In making an offer of sale to established eligible organizations as defined in § 970.9(c) in the case of proposed disposition, the PHA shall proceed as follows:
</P>
<P>(a) <I>Initial written notification of sale of property.</I> The PHA shall send an initial written notification to each established eligible organization (for purposes of this section, an established eligible organization that has been so notified is a “notified eligible organization”) of the proposed sale of the property. The notice of sale must include, at a minimum, the information listed in paragraph (d) of this section;
</P>
<P>(b) <I>Initial expression of interest.</I> All notified eligible organizations shall have 30 days to initially express an interest, in writing, in the offer (“initial expression of interest”). The initial expression of interest need not contain details regarding financing, acceptance of an offer of sale, or any other terms of sale.
</P>
<P>(c) <I>Opportunity to obtain firm financial commitment by interested entity.</I> If a notified eligible organization expresses interest in writing during the 30-day period referred to in paragraph (b) of this section, no disposition of the property shall occur during the 60-day period beginning on the date of the receipt of the written notice of interest. During this period, the PHA must give the entity expressing interest an opportunity to obtain a firm financial commitment as defined in § 970.5 for the financing necessary to purchase the property;
</P>
<P>(d) <I>Contents of initial written notification.</I> The initial written notification to established eligible organizations under paragraph (a) of this section must include at a minimum the following:
</P>
<P>(1) An identification of the development, or portion of the development, involved in the proposed disposition, including the development number and location, the number of units and bedroom configuration, the amount and use of non-dwelling space, the current physical condition (fire damaged, friable asbestos, lead-based paint test results), and percent of occupancy;
</P>
<P>(2) A copy of the appraisal of the property and any terms of sale;
</P>
<P>(3) Disclosure and description of the PHA's plans for reuse of land, if any, after the proposed disposition;
</P>
<P>(4) An identification of available resources (including its own and HUD's) to provide technical assistance to the organization to help it to better understand its opportunity to purchase the development, the development's value, and potential use;
</P>
<P>(5) A statement that public housing developments sold to resident organizations will not continue to receive capital and operating subsidy after the completion of the sale;
</P>
<P>(6) Any and all terms of sale that the PHA will require, including a statement that the purchaser must use the property for low-income housing. If the PHA does not know all the terms of the offer of sale at the time of the notice of sale, the PHA shall include all the terms of sale of which it is aware. The PHA must supply the totality of all the terms of sale and all necessary material to the residents no later than 3 business days from the day it receives the residents' initial expression of interest;
</P>
<P>(7) A date by which an established eligible organization must express its interest, in writing, in response to the PHA's offer to sell the property proposed for demolition or disposition, which shall be up to 30 days from the date of the official written offer of sale from the PHA;
</P>
<P>(8) A statement that the established eligible organization will be given 60 days from the date of the PHA's receipt of its letter expressing interest to develop and submit a proposal to the PHA to purchase the property and to obtain a firm financial commitment, as defined in § 970.5. The statement shall explain that the PHA shall approve the proposal from an organization if the proposal meets the terms of sale and is supported by a firm commitment for financing. The statement shall also provide that the PHA can consider accepting an offer from the organization that differs from the terms of sale. The statement shall explain that if the PHA receives proposals from more than one organization, the PHA shall select the proposal that meets the terms of sale, if any. In the event that two proposals from the development to be sold meet the terms of sale, the PHA shall choose the best proposal. If no proposal meets the terms of sale, the PHA in its discretion may or may not select the best proposal.
</P>
<P>(e) <I>Response to the notice of sale.</I> The established eligible organization or organizations have up to 30 days to respond to the notice of sale from the PHA. The established eligible organization shall respond to the PHA's notice of sale by means of an initial expression of interest under paragraph (b) of this section.
</P>
<P>(f) <I>Resident proposal.</I> The established eligible organization has up to 60 days from the date the PHA receives its initial expression of interest and provides all necessary terms and information to prepare and submit a proposal to the PHA for the purchase of the property of which the PHA plans to dispose, and to obtain a firm commitment for financing. The resident's proposal shall provide all the information requested in paragraph (i) of this section.
</P>
<P>(g) <I>PHA Review of Proposals.</I> The PHA has up to 60 days from the date of receipt of the proposal or proposals to review the proposals and determine whether they meet the terms of sale described in the PHA's offer or offers. If the PHA determines that the proposal meets the terms of sale, within 14 days of the date of this determination, the PHA shall notify the organization of that fact and that the proposal has been accepted. If the PHA determines that the proposal differs from the terms of sale, the PHA may accept or reject the proposal at its discretion;
</P>
<P>(h) <I>Appeals.</I> The established eligible organization has the right to appeal the PHA's decision to the Assistant Secretary for Public and Indian Housing, or his designee, by sending a letter of appeal within 30 days of the date of the PHA's decision to the field office director. The letter of appeal must include copies of the proposal and any related correspondence, along with a statement of reasons why the organization believes the PHA should have decided differently. HUD shall render a decision within 30 days, and notify the organization and the PHA by letter within 14 days of such decision. If HUD cannot render a decision within 30 days, HUD will so notify the PHA and the established eligible organization in writing, in which case HUD will have an additional 30 days in which to render a decision. HUD may continue to extend its time for decision in 30-day increments for a total of 120 days. Once HUD renders its decision, there is no further administrative appeal or remedy available.
</P>
<P>(i) <I>Contents of the organization's proposal.</I> The established eligible organization's proposal shall at a minimum include the following:
</P>
<P>(1) The length of time the organization has been in existence;
</P>
<P>(2) A description of current or past activities that demonstrate the organization's organizational and management capability, or the planned acquisition of such capability through a partner or other outside entities (in which case the proposal should state how the partner or outside entity meets this requirement);
</P>
<P>(3) To the extent not included in paragraph (i)(2) of this section, the organization's experience in the development of low-income housing, or planned arrangements with partners or outside entities with such experience (in which case the proposal should state how the partner or outside entity meets this requirement);
</P>
<P>(4) A statement of financial capability;
</P>
<P>(5) A description of involvement of any non-resident organization (such as non-profit, for-profit, governmental, or other entities), if any, the proposed division of responsibilities between the non-resident organization and the established eligible organization, and the non-resident organization's financial capabilities;
</P>
<P>(6) A plan for financing the purchase of the property and a firm financial commitment as stated in paragraph (c) of this section for funding resources necessary to purchase the property and pay for any necessary repairs;
</P>
<P>(7) A plan for using the property for low-income housing;
</P>
<P>(8) The proposed purchase price in relation to the appraised value;
</P>
<P>(9) Justification for purchase at less than the fair market value in accordance with § 970.19(a) of this part, if appropriate;
</P>
<P>(10) Estimated time schedule for completing the transaction;
</P>
<P>(11) Any additional items necessary to respond fully to the PHA's terms of sale;
</P>
<P>(12) A resolution from the resident organization approving the proposal; and
</P>
<P>(13) A proposed date of settlement, generally not to exceed 6 months from the date of PHA approval of the proposal, or such period as the PHA may determine to be reasonable.
</P>
<P>(j) <I>PHA obligations.</I> The PHA must:
</P>
<P>(1) Prepare and distribute the initial notice of sale pursuant to 24 CFR 970.11(a), and, if any established eligible organization expresses an interest, any further documents necessary to enable the organization or organizations to make an offer to purchase;
</P>
<P>(2) Evaluate proposals received, make the selection based on the considerations set forth in paragraph (b) of this section, and issue letters of acceptance or rejection;
</P>
<P>(3) Prepare certifications, where appropriate, as provided in paragraph (k) of this section;
</P>
<P>(4) Comply with its obligations under § 970.7(a) regarding tenant consultation and provide evidence to HUD that the PHA has met those obligations. The PHA shall not act in an arbitrary manner and shall give full and fair consideration to any offer from a qualified resident management corporation, resident council of the affected development, or a nonprofit organization acting on behalf of the residents, and shall accept the proposal if the proposal meets the terms of sale.
</P>
<P>(k) <I>PHA post-offer requirements.</I> After the resident offer, if any, is made, the PHA shall:
</P>
<P>(1) Submit its disposition application to HUD in accordance with section 18 of the Act and this part. The disposition application must include complete documentation that the resident offer provisions of this part have been met. This documentation shall include:
</P>
<P>(i) A copy of the signed and dated PHA notification letter(s) to each established eligible organization informing them of the PHA's intention to submit an application for disposition, the organization's right to purchase the property to be disposed of; and
</P>
<P>(ii) The responses from each organization.
</P>
<P>(2)(i) If the PHA accepts the proposal of an established eligible organization, the PHA shall submit revisions to its disposition application to HUD in accordance with section 18 of the Act and this part reflecting the arrangement with the resident organization, with appropriate justification for a negotiated sale and for sale at less than fair market value, if applicable.
</P>
<P>(ii) If the PHA rejects the proposal of the resident organization, the resident organization may appeal as provided in paragraph (h) of this section. Once the appeal is resolved, or, if there is no appeal, and the 30 days allowed for appeal has passed, HUD shall proceed to approve or disapprove the application.
</P>
<P>(3) HUD will not process an application for disposition unless the PHA provides HUD with one of the following:
</P>
<P>(i) An official board resolution or its equivalent from each established eligible organization stating that such organization has received the PHA offer, and that it understands the offer and waives its opportunity to purchase the project, or portion of the project, covered by the disposition application;
</P>
<P>(ii) A certification from the executive director or board of commissioners of the PHA that the 30-day time frame to express interest has expired and no response was received to its offer; or
</P>
<P>(iii) A certification from the executive director or board of commissioners of the PHA with supporting documentation that the offer was otherwise rejected.


</P>
</DIV8>


<DIV8 N="§ 970.13" NODE="24:4.1.3.1.16.0.5.7" TYPE="SECTION">
<HEAD>§ 970.13   Environmental review requirements.</HEAD>
<P>(a) Activities under this part (including de minimis demolition pursuant to § 970.27) are subject to HUD environmental regulations in 24 CFR part 58. However, HUD may make a finding in accordance with 24 CFR 58.11(d) of this title and may itself perform the environmental review under the provisions of 24 CFR part 50 if a PHA objects in writing to the responsible entity performing the review under 24 CFR part 58.
</P>
<P>(b) The environmental review is limited to the demolition or disposition action and any known re-use, and is not required for any unknown future re-use. Factors that indicate that the future site reuse can reasonably be considered to be known include the following:
</P>
<P>(1) Private, Federal, state, or local funding for the site reuse has been committed;
</P>
<P>(2) A grant application involving the site has been filed with the Federal government or a state or local unit of government;
</P>
<P>(3) The Federal government or a state or unit of local government has made a commitment to take an action, including a physical action, that will facilitate a particular reuse of the site; and
</P>
<P>(4) Architectural, engineering, or design plans for the reuse exist that go beyond preliminary stages.
</P>
<P>(c) In the case of a demolition or disposition made necessary by a disaster that the President has declared under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121 <I>et seq.,</I> or a disaster that has been declared under state law by the officer or entity with legal authority to make such declaration, pursuant to 24 CFR 50.43 and 24 CFR 58.33, the provisions of 40 CFR 1506.11 will apply.


</P>
</DIV8>


<DIV8 N="§ 970.15" NODE="24:4.1.3.1.16.0.5.8" TYPE="SECTION">
<HEAD>§ 970.15   Specific criteria for HUD approval of demolition requests.</HEAD>
<P>(a) In addition to other applicable requirements of this part, HUD will approve an application for demolition upon the PHA's certification that it meets the following statutory criteria, unless the application meets the criteria for disapproval under 24 CFR 970.29. An application for the demolition of all or a portion of a public housing project must certify that the project:
</P>
<P>(1) Is obsolete as to physical condition, location, or other factors, making it unsuitable for housing purposes, and no reasonable program of modifications is cost-effective to return the public housing project or portion of the project to useful life; and
</P>
<P>(2) In the case of an application for demolition of a portion of a project, the demolition will help to ensure the viability of the remaining portion of the project.
</P>
<P>(b) As to paragraph (a)(1) of this section:
</P>
<P>(1) Major problems indicative of obsolescence are:
</P>
<P>(i) As to physical condition: Structural deficiencies that cannot be corrected in a cost-effective manner (settlement of earth below the building caused by inadequate structural fills, faulty structural design, or settlement of floors), or other design or site problems (severe erosion or flooding);
</P>
<P>(ii) As to location: physical deterioration of the neighborhood; change from residential to industrial or commercial development; or environmental conditions as determined by HUD environmental review in accord with 24 CFR part 50, which jeopardize the suitability of the site or a portion of the site and its housing structures for residential use; or
</P>
<P>(iii) There are other factors that have seriously affected the marketability, usefulness, or management of the property.
</P>
<P>(2) HUD generally shall not consider a program of modifications to be cost-effective if the costs of such program exceed 62.5 percent of total development cost (TDC) for elevator structures and 57.14 percent of TDC for all other types of structures in effect at the time the application is submitted to HUD.
</P>
<P>(c) As to paragraph (a)(2) of this section, a partial demolition will be considered to ensure the viability of the remaining portion if the application certifies that the demolition will reduce development density to permit better access by emergency, fire, or rescue services, or improve marketability by reducing the density to that of the neighborhood or other developments in the PHA's inventory.
</P>
<CITA TYPE="N">[71 FR 62362, Oct. 24, 2006, as amended at 73 FR 3868, Jan. 23, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 970.17" NODE="24:4.1.3.1.16.0.5.9" TYPE="SECTION">
<HEAD>§ 970.17   Specific criteria for HUD approval of disposition requests.</HEAD>
<P>In addition to other applicable requirements of this part, HUD will approve a request for disposition by sale or other transfer of a public housing project or other real property if the PHA certifies that the retention of the property is not in the best interests of the residents or the PHA for at least one of the following reasons, unless information available to HUD is inconsistent with the certification:
</P>
<P>(a) Conditions in the area surrounding the project (density, or industrial or commercial development) adversely affect the health or safety of the tenants or the feasible operation of the project by the PHA;
</P>
<P>(b) Disposition allows the acquisition, development, or rehabilitation of other properties that will be more efficiently or effectively operated as low-income housing developments;
</P>
<P>(c) The PHA has otherwise determined the disposition to be appropriate for reasons that are consistent with the goals of the PHA and the PHA Plan and that are otherwise consistent with the Act;
</P>
<P>(d) In the case of disposition of property other than dwelling units (community facilities or vacant land), the PHA certifies that:
</P>
<P>(1) The non-dwelling facilities or land exceeds the needs of the development (after DOFA); or
</P>
<P>(2) The disposition of the property is incidental to, or does not interfere with, continued operation of the remaining portion of the development.


</P>
</DIV8>


<DIV8 N="§ 970.19" NODE="24:4.1.3.1.16.0.5.10" TYPE="SECTION">
<HEAD>§ 970.19   Disposition of property; use of proceeds.</HEAD>
<P>(a) Where HUD approves the disposition of real property of a development, in whole or in part, the PHA shall dispose of the property promptly for not less than fair market value (in which case there is no showing of commensurate public benefit required), unless HUD authorizes negotiated sale for reasons found to be in the best interests of the PHA or the federal government; or dispose of the property for sale for less than fair market value (where permitted by state law), based on commensurate public benefits to the community, the PHA, or the federal government justifying such an exception. General public improvements, such as streets and bridges, do not qualify as commensurate public benefits.
</P>
<P>(b) A PHA may pay the reasonable costs of disposition, and of relocation of displaced tenants allowable under § 970.21, out of the gross proceeds, as approved by HUD.
</P>
<P>(c) To obtain an estimate of the fair market value before the property is advertised for bid, the PHA shall have one independent appraisal performed on the property proposed for disposition, unless HUD determines that:
</P>
<P>(1) More than one appraisal is warranted; or
</P>
<P>(2) Another method of valuation is clearly sufficient and the expense of an independent appraisal is unjustified because of the limited nature of the property interest involved or other available data.
</P>
<P>(d) To obtain an estimate of the fair market value when a property is not publicly advertised for bid, HUD may accept a reasonable valuation of the property.
</P>
<P>(e) A PHA shall use net proceeds, including any interest earned on the proceeds (after payment of HUD-approved costs of disposition and relocation under paragraph (a) of this section), subject to HUD approval, as follows:
</P>
<P>(1) Unless waived by HUD, for the retirement of outstanding obligations, if any, issued to finance original development or modernization of the project; and
</P>
<P>(2) To the extent that any net proceeds remain, after the application of proceeds in accordance with paragraph (e)(1) of this section, for:
</P>
<P>(i) The provision of low-income housing or to benefit the residents of the PHA, through such measures as modernization of lower-income housing or the acquisition, development, or rehabilitation of other properties to operate as lower-income housing; or
</P>
<P>(ii) Leveraging amounts for securing commercial enterprises, on-site in public housing developments of the PHA, appropriate to serve the needs of the residents.
</P>
<P>(f) For dispositions for the purpose stated in § 970.17(b), a PHA must demonstrate to the satisfaction of HUD that the replacement units are being provided in connection with the disposition of the property. A PHA may use sale proceeds in accordance with paragraph (e) to fund the replacement units.


</P>
</DIV8>


<DIV8 N="§ 970.21" NODE="24:4.1.3.1.16.0.5.11" TYPE="SECTION">
<HEAD>§ 970.21   Relocation of residents.</HEAD>
<P>(a) <I>Relocation of residents on a nondiscriminatory basis and relocation resources.</I> A PHA must offer each family displaced by demolition or disposition comparable housing that meets housing quality standards (HQS) and is located in an area that is generally not less desirable than the location of the displaced persons. The housing must be offered on a nondiscriminatory basis, without regard to race, color, religion, creed, national origin, handicap, age, familial status, or gender, in compliance with applicable Federal and state laws. For persons with disabilities displaced from a unit with reasonable accommodations, comparable housing should include similar accommodations. Such housing may include:
</P>
<P>(1) Tenant-based assistance, such as assistance under the Housing Choice Voucher Program, 24 CFR part 982, except that such assistance will not be considered “comparable housing” until the family is actually relocated into such housing;
</P>
<P>(2) Project-based assistance; or
</P>
<P>(3) Occupancy in a unit operated or assisted by the PHA at a rental rate paid by the family that is comparable to the rental rate applicable to the unit from which the family is vacated.
</P>
<P>(b) <I>In-place tenants.</I> A PHA may not complete disposition of a building until all tenants residing in the building are relocated.
</P>
<P>(c) <I>Financial resources.</I> (1) Sources of funding for relocation costs related to demolition or disposition may include, but are not limited to, capital funds or other federal funds currently available for this purpose;
</P>
<P>(2) If Federal financial assistance under the Community Development Block Grant (CDBG) program, 42 U.S.C. 5301 <I>et seq.</I> (including loan guarantees under section 108 of the Housing and Community Development Act of 1974, 42 U.S.C. 5308 <I>et seq.</I>); the Urban Development Action Grant (UDAG) program, 42 U.S.C. 5318 <I>et seq.;</I> or HOME program, 42 U.S.C. 12701 <I>et seq.</I> is used in connection with the demolition or disposition of public housing, the project is subject to section 104(d) of the Housing and Community Development Act of 1974, 42 U.S.C. 5304(d) (as amended)), including the relocation payment provisions and the anti-displacement provisions, which require that comparable replacement dwellings be provided within the community for the same number of occupants as could have been housed in the occupied and vacant, occupiable low- and moderate-income units demolished or converted to another use.
</P>
<P>(d) <I>Relocation timetable.</I> For the purpose of determining operating subsidy eligibility under 24 CFR part 990, a PHA must provide the following information in the application or immediately following application submission:
</P>
<P>(1) The number of occupied units at the time of demolition/disposition application approval;
</P>
<P>(2) A schedule for the relocation of those residents on a month-by-month basis.
</P>
<P>(e) The PHA is responsible for the following:
</P>
<P>(1) Notifying each family residing in the development of the proposed demolition or disposition 90 days prior to the displacement date, except in cases of imminent threat to health and safety. The notification must include a statement that:
</P>
<P>(i) The development or portion of the development will be demolished or disposed of;
</P>
<P>(ii) The demolition of the building in which the family resides will not commence until each resident of the building has been relocated;
</P>
<P>(iii) Each family displaced by such action will be provided comparable housing, which may include housing with reasonable accommodations for disability, if required under section 504 of the Rehabilitation Act of 1973 and HUD's regulations in 24 CFR part 8, as described in paragraph (a) of this section;
</P>
<P>(2) Providing for the payment of the actual and reasonable relocation expenses of each resident to be displaced, including residents requiring reasonable accommodations because of disabilities;
</P>
<P>(3) Ensuring that each displaced resident is offered comparable replacement housing as described in paragraph (b) of this section; and
</P>
<P>(4) Providing any necessary counseling for residents that are displaced.
</P>
<P>(f) In addition, the PHA's plan for the relocation of residents who would be displaced by the proposed demolition or disposition must indicate:
</P>
<P>(1) The number of individual residents to be displaced;
</P>
<P>(2) The type of counseling and advisory services the PHA plans to provide;
</P>
<P>(3) What housing resources are expected to be available to provide housing for displaced residents; and
</P>
<P>(4) An estimate of the costs for counseling and advisory services and resident moving expenses, and the expected source for payment of these costs.
</P>
<P>(g) The Uniform Relocation Act does not apply to demolitions and dispositions under this part.


</P>
</DIV8>


<DIV8 N="§ 970.23" NODE="24:4.1.3.1.16.0.5.12" TYPE="SECTION">
<HEAD>§ 970.23   Costs of demolition and relocation of displaced tenants.</HEAD>
<P>Where HUD has approved demolition of a project, or a portion of a project, and the proposed action is part of a program under the Capital Fund Program (24 CFR part 905), the costs of demolition and of relocation of displaced residents may be included in the budget funded with capital funds pursuant to section 9(d) of the Act (42 U.S.C. 1437g(d)) or awarded HOPE VI or other eligible HUD funds.


</P>
</DIV8>


<DIV8 N="§ 970.25" NODE="24:4.1.3.1.16.0.5.13" TYPE="SECTION">
<HEAD>§ 970.25   Required and permitted actions prior to approval.</HEAD>
<P>(a) A PHA may not take any action to demolish or dispose of a public housing development or a portion of a public housing development without obtaining HUD approval under this part. HUD funds may not be used to pay for the cost to demolish or dispose of a public housing development or a portion of a public housing development, unless HUD approval has been obtained under this part. Until the PHA receives HUD approval, the PHA shall continue to meet its ACC obligations to maintain and operate the property as housing for low-income families. However, the PHA may engage in planning activities, analysis, or consultations without seeking HUD approval. Planning activities may include project viability studies, capital planning, or comprehensive occupancy planning. The PHA must continue to provide full housing services to all residents that remain in the development. A PHA should not re-rent these units at turnover while HUD is considering its application for demolition or disposition. However, the PHA's operating subsidy eligibility will continue to be calculated as stated in 24 CFR part 990.
</P>
<P>(b) A PHA may consolidate occupancy within or among buildings of a development, or among developments, or with other housing for the purposes of improving living conditions of, or providing more efficient services to residents, without submitting a demolition or disposition application.


</P>
</DIV8>


<DIV8 N="§ 970.27" NODE="24:4.1.3.1.16.0.5.14" TYPE="SECTION">
<HEAD>§ 970.27   De minimis exception to demolition requirements.</HEAD>
<P>(a) A PHA may demolish units without submitting an application if the PHA is proposing to demolish not more than the lesser of:
</P>
<P>(1) five dwelling units; or
</P>
<P>(2) 5 percent of the total dwelling units owned by the PHA over any 5-year period.
</P>
<P>(b) The 5-year period referred to in paragraph (a)(2) of this section is the 5 years counting backward from the date of the proposed de minimis demolition, except that any demolition performed prior to October 21, 1998, will not be counted against the five units or 5 percent of the total, as applicable. For example, if a PHA that owns 1,000 housing units wishes to demolish units under this de minimis provision on July 1, 2004, and previously demolished two units under this provision on September 1, 2000, and two more units on July 1, 2001, the PHA would be able to demolish one additional unit for a total of five in the preceding 5 years. As another example, if a PHA that owns 60 housing units as of July 1, 2004, had demolished two units on September 1, 2000, and one unit on July 1, 2001, that PHA would not be able to demolish any further units under this “de minimis” provision until after September 1, 2005, because it would have already demolished 5 percent of its total.
</P>
<P>(c)(1) In order to qualify for this exemption, the space occupied by the demolished unit must be used for meeting the service or other needs of public housing residents (use of space to construct a laundry facility, community center, child care facility, office space for a general provider; or for use as open space or garden); or
</P>
<P>(2) The unit being demolished must be beyond repair.
</P>
<P>(d) PHAs utilizing this section will comply with environmental review requirements at 24 CFR 970.13 and, if applicable, the requirements of 24 CFR 8.23.
</P>
<P>(e) For recordkeeping purposes, PHAs that wish to demolish units under this section shall submit the information required in § 970.7(a)(1), (2), (12), (13), and (14). HUD will accept a certification from the PHA that one of the two conditions in paragraph (c) of this section apply unless HUD has independent information that requirements for “de minimis” demolition have not been met.
</P>
<CITA TYPE="N">[71 FR 62362, Oct. 24, 2006, as amended at 73 FR 3868, Jan. 23, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 970.29" NODE="24:4.1.3.1.16.0.5.15" TYPE="SECTION">
<HEAD>§ 970.29   Criteria for disapproval of demolition or disposition applications.</HEAD>
<P>HUD will disapprove an application if HUD determines that:
</P>
<P>(a) Any certification made by the PHA under this part is clearly inconsistent with:
</P>
<P>(1) The PHA Plan;
</P>
<P>(2) Any information and data available to HUD related to the requirements of this part, such as failure to meet the requirements for the justification for demolition or disposition as found in §§ 970.15 or 970.17; or
</P>
<P>(3) Information or data requested by HUD; or
</P>
<P>(b) The application was not developed in consultation with:
</P>
<P>(1) Residents who will be affected by the proposed demolition or disposition as required in § 970.9; and
</P>
<P>(2) Each resident advisory board and resident council, if any, of the project (or portion thereof) that will be affected by the proposed demolition or disposition as required in § 970.9, and appropriate government officials as required in § 970.7.


</P>
</DIV8>


<DIV8 N="§ 970.31" NODE="24:4.1.3.1.16.0.5.16" TYPE="SECTION">
<HEAD>§ 970.31   Replacement units.</HEAD>
<P>Notwithstanding any other provision of law, replacement public housing units may be built on the original public housing location or in the same neighborhood as the original public housing location if the number of the replacement public housing units is significantly fewer than the number of units demolished. Such development must comply with 24 CFR part 905, Public Housing Capital Fund Program, as well as 24 CFR part 941.


</P>
</DIV8>


<DIV8 N="§ 970.33" NODE="24:4.1.3.1.16.0.5.17" TYPE="SECTION">
<HEAD>§ 970.33   Effect on the Operating Fund Program and Capital Fund Program.</HEAD>
<P>The provisions of 24 CFR part 990, the Public Housing Operating Fund Program, and 24 CFR part 905, the Public Housing Capital Fund Program, apply.


</P>
</DIV8>


<DIV8 N="§ 970.35" NODE="24:4.1.3.1.16.0.5.18" TYPE="SECTION">
<HEAD>§ 970.35   Reports and records.</HEAD>
<P>(a) After HUD approval of demolition or disposition of all or part of a project, the PHA shall provide information on the following:
</P>
<P>(1) Actual completion of each demolition contract by entering the appropriate information into HUD's applicable data system, or providing the information by another method HUD may require, within a week of making the final payment to the demolition contractor, or expending the last remaining funds if funded by force account;
</P>
<P>(2) Execution of sales or lease contracts by entering the appropriate information into HUD's applicable data system, or providing the information by another method HUD may require, within a week of execution;
</P>
<P>(3) The PHA's use of the proceeds of sale by providing a financial statement showing how the funds were expended by item and dollar amount;
</P>
<P>(4) Amounts expended for closing costs and relocation expenses, by providing a financial statement showing this information for each property sold; and
</P>
<P>(5) Such other information as HUD may from time to time require.
</P>
<P>(b) [Reserved]


</P>
</DIV8>

</DIV5>


<DIV5 N="971" NODE="24:4.1.3.1.17" TYPE="PART">
<HEAD>PART 971—ASSESSMENT OF THE REASONABLE REVITALIZATION POTENTIAL OF CERTAIN PUBLIC HOUSING REQUIRED BY LAW 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>Pub. L. 104-134; 42 U.S.C. 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>62 FR 49576, Sept. 22, 1997, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 971.1" NODE="24:4.1.3.1.17.0.5.1" TYPE="SECTION">
<HEAD>§ 971.1   Purpose.</HEAD>
<P>Section 202 of the Omnibus Consolidated Rescissions and Appropriations Act of 1996 (Pub.L. 104-134, approved April 26, 1996) (“OCRA”) requires PHAs to identify certain distressed public housing developments that cost more than Section 8 rental assistance and cannot be reasonably revitalized. Households in occupancy that will be affected by the activities will be offered tenant-based or project-based assistance (that can include other public housing units) and will be relocated, to other decent, safe, sanitary, and affordable housing which is, to the maximum extent practicable, housing of their choice. After residents are relocated, the distressed developments (or affected buildings) for which no reasonable means of revitalization exists will be removed from the public housing inventory.


</P>
</DIV8>


<DIV8 N="§ 971.3" NODE="24:4.1.3.1.17.0.5.2" TYPE="SECTION">
<HEAD>§ 971.3   Standards for identifying developments.</HEAD>
<P>(a) PHAs shall use the following standards for identifying developments or portions thereof which are subject to section 202's requirement that PHAs develop and carry out plans for the removal over time from the public housing inventory. These standards track section 202(a) of OCRA. The development, or portions thereof, must:
</P>
<P>(1) <I>Be on the same or contiguous sites.</I> (OCRA Sec. 202(a)(1)). This standard and the standard set forth in paragraph (a)(2) of this section refer to the actual number and location of units, irrespective of HUD development project numbers.
</P>
<P>(2) <I>Total more than 300 dwelling units.</I> (OCRA Sec. 202(a)(2)).
</P>
<P>(3) <I>Have a vacancy rate of at least ten percent for dwelling units not in funded, on-schedule modernization.</I> (OCRA Sec. 202(a)(3)). For this determination, PHAs and HUD shall use the data the PHA relied upon for its last Public Housing Management Assessment Program (PHMAP) certification, as reported on the Form HUD-51234 (Report on Occupancy), or more recent data which demonstrates improvement in occupancy rates. Units in the following categories shall not be included in this calculation:
</P>
<P>(i) Vacant units in an approved demolition or disposition program;
</P>
<P>(ii) Vacant units in which resident property has been abandoned, but only if State law requires the property to be left in the unit for some period of time, and only for the period stated in the law;
</P>
<P>(iii) Vacant units that have sustained casualty damage, but only until the insurance claim is adjusted; and
</P>
<P>(iv) Units that are occupied by employees of the PHA and units that are utilized for resident services.
</P>
<P>(4) <I>Have an estimated cost of continued operation and modernization of the developments as public housing in excess of the cost of providing tenant-based assistance under section 8 of the United States Housing Act of 1937 for all families in occupancy, based on appropriate indicators of cost (such as the percentage of total development cost required for modernization).</I> (OCRA Sec. 202(a)(5)).
</P>
<P>(i) For purposes of this determination, the costs used for public housing shall be those necessary to produce a revitalized development as described in the paragraph (a)(5) of this section.
</P>
<P>(ii) These costs, including estimated operating costs, modernization costs and accrual needs must be used to develop a per unit monthly cost of continuing the development as public housing.
</P>
<P>(iii) That per unit monthly cost of public housing must be compared to the per unit monthly Section 8 cost.
</P>
<P>(iv) Both the method to be used and an example are included in the Appendix to this part.
</P>
<P>(5) <I>Be identified as distressed housing that the PHA cannot assure the long-term viability as public housing through reasonable revitalization, density reduction, or achievement of a broader range of household income.</I> (OCRA Sec. 202(a)(4)). [See § 971.5.]
</P>
<P>(b) Properties meeting the standards set forth in paragraphs (a)(1) through (3) of this section will be assumed to be “distressed” unless the PHA can show that the property fails the standard set forth in paragraph (a)(3) of this section for reasons that are temporary in duration and are unlikely to recur.
</P>
<P>(c) Where the PHA will demolish all of the units in a development, or the portion thereof, that is subject to section 202, section 202 requirements will be satisfied once the demolition occurs and its standards will not be applied further to the use of the site.
</P>
<P>(d) PHAs will meet the test for assuring long-term viability of identified housing only if it is probable that, after reasonable investment, for at least twenty years (or at least 30 years for rehabilitation equivalent to new construction) the development can sustain structural/system soundness and full occupancy; will not be excessively densely configured relative to standards for similar (typically family) housing in the community; will not constitute an excessive concentration of very low-income families; and has no other site impairments which clearly should disqualify the site from continuation as public housing.


</P>
</DIV8>


<DIV8 N="§ 971.5" NODE="24:4.1.3.1.17.0.5.3" TYPE="SECTION">
<HEAD>§ 971.5   Long-term viability.</HEAD>
<P>(a) <I>Reasonable investment.</I> (1) Proposed revitalization costs for viability must be reasonable. Such costs must not exceed, and ordinarily would be substantially less than, 90 percent of HUD's total development cost limit for the units proposed to be revitalized (100 percent of the total development cost limit for any “infill” new construction subject to this regulation). The revitalization cost estimate used in the PHA's most recent comprehensive plan for modernization is to be used for this purpose, unless a PHA demonstrates or HUD determines that another cost estimate is clearly more realistic to ensure viability and to sustain the operating costs that are described in paragraph (a)(2) of this section.
</P>
<P>(2) The overall projected cost of the revitalized development must not exceed the Section 8 cost under the method contained in the Appendix to this part, even if the cost of revitalization is a lower percentage of the TDC than the limits stated in paragraph (a)(1) of this section.
</P>
<P>(3) The source of funding for such a revitalization program must be identified and already available. In addition to other resources already available to the PHA, a PHA may assume that future formula funds provided through the Comprehensive Grant Program are available for this purpose, provided that they are sufficient to permit completion of the revitalization within the statutory five year time frame. (Comprehensive plans must be amended accordingly.)
</P>
<P>(b) <I>Density.</I> Density reduction measures would have to result in a public housing community with a density approaching that which prevails in the community for similar types of housing (typically family), or a lower density. If the development's density already meets this description, further reduction in density is not a requirement.
</P>
<P>(c) <I>Income mix.</I> (1) Measures generally will be required to broaden the range of resident incomes to include over time a significant mix of households with at least one full-time worker (for example, at least 20 percent with an income at least 30 percent of median area income). Measures to achieve a broader range of household incomes must be realistic in view of the site's location. Evidence of such realism typically would include some mix of incomes of other households located in the same census tract or neighborhood, or unique advantages of the public housing site.
</P>
<P>(2) For purposes of judging appropriateness of density reduction and broader range of income measures, overall size of the public housing site and its number of dwelling units will be considered. The concerns these measures would address generally are greater as the site's size and number of dwelling units increase.


</P>
</DIV8>


<DIV8 N="§ 971.7" NODE="24:4.1.3.1.17.0.5.4" TYPE="SECTION">
<HEAD>§ 971.7   Plan for removal of units from public housing inventories.</HEAD>
<P>(a) <I>Time frames.</I> Section 202 is a continuing requirement, and the Secretary will establish time frames for submission of necessary information annually through publication of a <E T="04">Federal Register</E> notice.
</P>
<P>(b) <I>Plan for removal.</I> With respect to any development that meets all of the standards listed, the PHA shall develop a plan for removal of the affected public housing units from the inventory. The plan should consider relocation alternatives for households in occupancy, including other public housing and Section 8 tenant-based assistance, and shall provide for relocation from the units as soon as possible. For planning purposes, PHAs shall assume that HUD will be able to provide in a timely fashion any necessary Section 8 rental assistance. The plan shall include:
</P>
<P>(1) A listing of the public housing units to be removed from the inventory;
</P>
<P>(2) The number of households to be relocated, by bedroom size;
</P>
<P>(3) Identification and obligation status of any previously approved CIAP, modernization, or major reconstruction funds for the distressed development and PHA recommendations concerning transfer of these funds to Section 8 or alternative public housing uses;
</P>
<P>(4) The relocation resources that will be necessary, including a request for any necessary Section 8 and a description of actual or potential public or other assisted housing vacancies that can be used as relocation housing;
</P>
<P>(5) A schedule for relocation and removal of units from the public housing inventory;
</P>
<P>(6) Provision for notifying families residing in the development, in a timely fashion, that the development shall be removed from the public housing inventory; informing such families that they will receive tenant-based or project-based assistance; providing any necessary counselling with respect to the relocation, including a request for any necessary counseling funds; and assuring that such families are relocated as necessary to other decent, safe, sanitary and affordable housing which is, to the maximum extent possible, housing of their choice;
</P>
<P>(7) The displacement and relocation provisions set forth in 24 CFR 970.5.
</P>
<P>(8) A record indicating compliance with the statute's requirements for consultation with applicable public housing tenants of the affected development and the unit of local government where the public housing is located, as set forth in § 971.9.
</P>
<P>(c) Section 18 of the United States Housing Act of 1937 shall not apply to demolition of developments removed from PHA inventories under this section, but shall apply to any proposed dispositions of such developments or their sites. HUD's review of any such disposition application will take into account that the development has been required to be removed from the PHA's inventory.
</P>
<P>(d) For purposes of determining operating subsidy eligibility under the Performance Funding System (PFS), the submitted plan will be considered the equivalent of a formal request to remove dwelling units from the PHA's inventory and ACC and approval (or acceptance). The PHA will receive written notification that the plan has been approved (or accepted). Units that are vacant or vacated on or after the written notification date will be treated as approved for deprogramming under § 990.108(b)(1) of this chapter and also will be provided the phase-down of subsidy pursuant to § 990.114 of this chapter.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0210)


</APPRO>
</DIV8>


<DIV8 N="§ 971.9" NODE="24:4.1.3.1.17.0.5.5" TYPE="SECTION">
<HEAD>§ 971.9   Tenant and local government consultation.</HEAD>
<P>(a) PHAs are required to proceed in consultation with affected public housing residents. PHAs must provide copies of their submissions complying with §§ 971.3(a) (1) through (3) to the appropriate tenant councils and resident groups before or immediately after these submissions are provided to HUD.
</P>
<P>(b) PHAs must:
</P>
<P>(1) Hold a meeting with the residents of the affected sites and explain the requirements of section 202 of OCRA;
</P>
<P>(2) Provide an outline of the submission(s) complying with § 971.3(a) (4) and (5) to affected residents; and
</P>
<P>(3) Provide a reasonable comment period for residents and must provide a summary of the resident comments to HUD.
</P>
<P>(c) PHAs must prepare conversion plans in consultation with affected tenants and must:
</P>
<P>(1) Hold a meeting with affected residents and provide draft copies of the plan; and
</P>
<P>(2) Provide a reasonable comment period for residents and must provide a summary of the resident comments to HUD.
</P>
<P>(d) The conversion plan must be approved by the local officials as not inconsistent with the Consolidated Plan.


</P>
</DIV8>


<DIV8 N="§ 971.11" NODE="24:4.1.3.1.17.0.5.6" TYPE="SECTION">
<HEAD>§ 971.11   HOPE VI developments.</HEAD>
<P>Developments with HOPE VI implementation grants that have approved HOPE VI revitalization plans will be treated as having shown the ability to achieve long-term viability with reasonable revitalization plans. Future HUD actions to approve or deny proposed HOPE VI implementation grant revitalization plans will be taken with consideration of the standards for section 202. Developments with HOPE VI planning or implementation grants, but without approved HOPE VI revitalization plans, are fully subject to section 202 standards and requirements.


</P>
</DIV8>


<DIV8 N="§ 971.13" NODE="24:4.1.3.1.17.0.5.7" TYPE="SECTION">
<HEAD>§ 971.13   HUD enforcement authority.</HEAD>
<P>Section 202 provides HUD authority to ensure that certain distressed developments are properly identified and removed from PHA inventories. Specifically, HUD may:
</P>
<P>(a) Direct a PHA to cease additional spending in connection with a development which meets or is likely to meet the statutory criteria, except as necessary to ensure decent, safe and sanitary housing until an appropriate course of action is approved;
</P>
<P>(b) Identify developments which fall within the statutory criteria where a PHA has failed to do so properly;
</P>
<P>(c) Take appropriate actions to ensure the removal of developments from the inventory where the PHA has failed to adequately develop or implement a plan to do so; and
</P>
<P>(d) Authorize or direct the transfer of capital funds committed to or on behalf of the development (including comprehensive improvement assistance, comprehensive grant amounts attributable to the development's share of funds under the formula, and major reconstruction of obsolete projects funds) to tenant-based assistance or appropriate site revitalization for the agency.


</P>
</DIV8>


<DIV9 N="Appendix to" NODE="24:4.1.3.1.17.0.5.8.9" TYPE="APPENDIX">
<HEAD>Appendix to Part 971—Methodology of Comparing Cost of Public Housing With Cost of Tenant-Based Assistance
</HEAD>
<HD1>I. Public Housing
</HD1>
<P>The costs used for public housing shall be those necessary to produce a revitalized development as described in the next paragraph. These costs, including estimated operating costs, modernization costs and costs to address accrual needs must be used to develop a per unit monthly cost of continuing the development as public housing. That per unit monthly cost of public housing must be compared to the per unit monthly Section 8 cost. The estimated cost of the continued operation and modernization as public housing shall be calculated as the sum of total operating, modernization, and accrual costs, expressed on a monthly per occupied unit basis. The costs shall be expressed in current dollar terms for the period for which the most recent Section 8 costs are available.
</P>
<HD1>A. Operating Costs
</HD1>
<P>1. The proposed revitalization plan must indicate how unusually high current operating expenses (e.g, security, supportive services, maintenance, utilities) will be reduced as a result of post-revitalization changes in occupancy, density and building configuration, income mix and management. The plan must make a realistic projection of overall operating costs per occupied unit in the revitalized development, by relating those operating costs to the expected occupancy rate, tenant composition, physical configuration and management structure of the revitalized development. The projected costs should also address the comparable costs of buildings or developments whose siting, configuration, and tenant mix is similar to that of the revitalized public housing development.
</P>
<P>2. The development's operating cost (including all overhead costs pro-rated to the development—including a Payment in Lieu of Taxes (PILOT) or some other comparable payment, and including utilities and utility allowances) shall be expressed as total operating costs per month, divided by the number of units occupied by households. For example, if a development will have 1,000 units occupied by households and will have $300,000 monthly in non-utility costs (including pro-rated overhead costs and appropriate P.I.L.O.T.) and $100,000 monthly in utility costs paid by the authority and $50,000 monthly in utility allowances that are deducted from tenant rental payments to the authority because tenants paid some utility bills directly to the utility company, then the development's monthly operating cost per occupied unit is $450—the sum of $300 per unit in non-utility costs, $100 per unit in direct utility costs, and $50 per unit in utility allowance costs.
</P>
<P>3. In justifying the operating cost estimates as realistic, the plan should link the cost estimates to its assumptions about the level and rate of occupancy, the per-unit funding of modernization, any physical reconfiguration that will result from modernization, any planned changes in the surrounding neighborhood and security costs. The plan should also show whether developments or buildings in viable condition in similar neighborhoods have achieved the income mix and occupancy rate projected for the revitalized development. The plan should also show how the operating costs of the similar developments or buildings compare to the operating costs projected for the development.
</P>
<P>4. In addition to presenting evidence that the operating costs of the revitalized development are plausible, when the per-unit operating cost of the renovated development is more than ten percent lower than the current per-unit operating cost of the development, then the plan should detail how the revitalized development will achieve its reduction in costs. To determine the extent to which projected operating costs are lower than current operating costs, the current per-unit operating costs of the development will be estimated as follows:
</P>
<P>a. If the development has reliable operating costs and if the overall vacancy rate is less than twenty percent, then these costs will be divided by the sum of all occupied units and vacant units fully funded under PFS plus fifty percent of all units not fully funded under PFS. For instance, if the total monthly operating costs of the current development are $6.6 million and it has 1,000 occupied units and 200 vacant units not fully funded under PFS (or a 17 percent overall vacancy rate), then the $6.6 million is divided by 1100—1000 plus 50 percent of 200—to give a per unit figure of $600 per unit month. By this example, the current costs of $600 per occupied unit are at least ten percent higher than the projected costs per occupied unit of $450 for the revitalized development, and the reduction in costs would have to be detailed.
</P>
<P>b. If the development currently lacks reliable cost data or has a vacancy rate of twenty percent or higher, then its current per unit costs will be estimated as follows. First, the per unit cost of the entire authority will be computed, with total costs divided by the sum of all occupied units and vacant units fully funded under PFS plus fifty percent of all vacant units not fully funded under PFS. Second, this amount will be multiplied by the ratio of the bedroom adjustment factor of the development to the bedroom adjustment factor of the Housing Authority. The bedroom adjustment factor, which is based on national rent averages for units grouped by the number of bedrooms and which has been used by HUD to adjust for costs of units when the number of bedrooms vary, assigns to each unit the following factors: .70 for 0-bedroom units, .85 for 1-bedroom units, 1.0 for 2-bedroom units, 1.25 for 3-bedroom units, 1.40 for 4-bedroom units, 1.61 for 5-bedroom units, and 1.82 for 6 or more bedroom units. The bedroom adjustment factor is the unit-weighted average of the distribution. For instance, if the development with one thousand occupied units had in occupancy 500 two-bedroom units and 500 three-bedroom units, then its bedroom adjustment factor would be 1.125—500 times 1.0 plus 500 times 1.25, the sum divided by 1,000. Where necessary, HUD field offices will arrange for assistance in the calculation of the bedroom adjustment factors of the Housing Authority and its affected developments.
</P>
<P>c. As an example of estimating development operating costs from PHA operating costs, suppose that the Housing Authority had a total monthly operating cost per unit of $500 and a bedroom adjustment factor of .90, and suppose that the development had a bedroom adjustment factor of 1.125. Then, the development's estimated current monthly operating cost per occupied unit would be $625—or $500 times 1.25 (the ratio of 1.125 to .90).
</P>
<HD1>B. Modernization
</HD1>
<P>The cost of modernization is the initial revitalization cost to meet viability standards, that cost amortized over twenty years (which is equivalent to fifteen years at a three percent annual real capital cost for the initial outlay). Expressed in monthly terms, the modernization cost is divided by 180 (or 15 years times 12 months). Thus, if the initial modernization outlay to meet viability standards is $60 million for 1,000 units, then the per-unit outlay is $60,000 and the amortized modernization cost is $333 per unit per month (or $60,000 divided by 180). However, when revitalization would be equivalent to new construction and the PHA thus is permitted to amortize the proposed cost over thirty years (which is equivalent to twenty-two and one-half years at a three percent annual real capital cost to the initial outlay), the modernization cost will be divided by 270, the product of 22.5 and 12, to give a cost per unit month of $222.
</P>
<HD1>C. Accrual
</HD1>
<P>The monthly per occupied unit cost of accrual (i.e., replacement needs) will be estimated by using the latest published HUD unit total development cost limits for the area and applying them to the development's structure type and bedroom distribution after modernization, then subtracting from that figure half the per-unit cost of modernization, then multiplying that figure by .02 (representing a fifty year replacement cycle), and dividing this product by 12 to get a monthly cost. For example, if the development will remain a walkup structure containing five hundred two-bedroom occupied and five hundred three-bedroom occupied units, if HUD's Total Development Cost limit for the area is $70,000 for two-bedroom walkup structures and $92,000 for three-bedroom walkup structures, and if the per unit cost of modernization is $60,000, then the estimated monthly cost of accrual per occupied unit is $85. This is the result of multiplying the value of $51,000—the cost guideline value of $81,000 minus half the modernization value of $60,000—by .02 and then dividing by 12.
</P>
<HD1>D. Overall Cost
</HD1>
<P>The overall current cost for continuing the development as public housing is the sum of its monthly post-revitalization operating cost estimates, its monthly modernization cost per occupied unit, and its estimated monthly accrual cost per occupied unit. For example, if the operating cost per occupied unit month is $450 and the amortized modernization cost is $333 and the accrual cost is $85, the overall monthly cost per occupied unit is $868.
</P>
<HD1>II. Tenant-Based Assistance
</HD1>
<P>The estimated cost of providing tenant-based assistance under Section 8 for all households in occupancy shall be calculated as the unit-weighted averaging of the monthly Fair Market Rents for units of the applicable bedroom size; plus the administrative fee applicable to newly funded Section 8 rental assistance during the year used for calculating public housing operating costs (e.g., the administrative fee for units funded from 10/1/95 through 9/30/96 is based on column C of the January 24, 1995 <E T="04">Federal Register,</E> at 60 FR 4764, and the administrative fee for units funded from 10/1/96 through 9/30/97 is based on column B of the March 12, 1997 <E T="04">Federal Register,</E> at 62 FR 11526); plus the amortized cost of demolishing the occupied public housing units, where the cost per unit is not to exceed ten percent of the TDC prior to amortization. For example, if the development has five hundred occupied two-bedroom units and five hundred occupied three-bedroom units and if the Fair Market Rent in the area is $600 for two bedroom units and is $800 for three bedroom units and if the administrative fee comes to $46 per unit, and if the cost of demolishing 1000 occupied units is $5 million, then the per unit monthly cost of tenant based assistance is $774 ($700 for the unit-weighted average of Fair Market Rents, or 500 times $600 plus 500 times $800 with the sum divided by 1,000; plus $46 for the administrative fee; plus $28 for the amortized cost of demolition and tenant relocation (including any necessary counseling), or $5000 per unit divided by 180 in this example). This Section 8 cost would then be compared to the cost of revitalized public housing development—in the example of this section, the revitalized public housing cost of $868 monthly per occupied unit would exceed the Section 8 cost of $774 monthly per occupied unit by 12 percent. The PHA would have to prepare a conversion plan for the property.
</P>
<HD1>III. Detailing the Section-8 Cost Comparison: A Summary Table
</HD1>
<P>The Section 8 cost comparison methods are summarized, using the example provided in this section III.
</P>
<P>A. Key Data, Development: The revitalized development has 1000 occupied units. All of the units are in walkup buildings. The 1000 occupied units will consist of 500 two-bedroom units and 500 three-bedroom units. The total current operating costs attributable to the development are $300,000 per month in non-utility costs, $100,000 in utility costs paid by the PHA, and $50,000 in utility allowance expenses for utilities paid directly by the tenants to the utility company. Also, the modernization cost for revitalization is $60,000,000, or $60,000 per occupied unit. This will provide standards for viability but not standards for new construction. The cost of demolition and relocation of the 1000 occupied units is $5 million, or $5000 per unit, based on recent experience.
</P>
<P>B. Key Data, Area: The unit total development cost limit is $70,000 for two-bedroom walkups and $92,000 for three-bedroom walkups. The two-bedroom Fair Market Rent is $600 and the three-bedroom Fair Market Rent is $800. The applicable monthly administrative fee amount, in column B of the March 12, 1997 <E T="04">Federal Register</E> Notice, at 62 FR 11526, is $46.
</P>
<P>C. Preliminary Computation of the Per-Unit Average Total Development Cost of the Development: This results from applying the location's unit total development cost by structure type and number of bedrooms to the occupied units of the development. In this example, five hundred units are valued at $70,000 and five hundred units are valued at $92,000 and the unit-weighted average is $81,000.
</P>
<P>D. Current Per Unit Monthly Occupied Costs of Public Housing:
</P>
<P>1. Operating Cost—$450 (total monthly costs divided by occupied units: in this example, the sum of $300,000 and $100,000 and $50,000—divided by 1,000 units).
</P>
<P>2. Amortized Modernization Cost—$333 ($60,000 per unit divided by 180 for standards less than those of new construction).
</P>
<P>3. Estimated Accrual Cost—$85 (the per-unit average total development cost minus half of the modernization cost per unit, times .02 divided by 12 months: in this example, $51,000 times .02 and then divided by 12).
</P>
<P>4. Total per unit public housing costs—$868.
</P>
<P>E. Current per unit monthly occupied costs of section 8:
</P>
<P>1. Unit-weighted Fair Market Rents—$700 (the unit-weighted average of the Fair Market Rents of occupied bedrooms: in this example, 500 times $600 plus 500 times $800, divided by 1000).
</P>
<P>2. Administrative Fee—$46.
</P>
<P>3. Amortized Demolition and Relocation Cost—$28 ($5000 per unit divided by 180).
</P>
<P>4. Total per unit section 8 costs—$774.
</P>
<P>F. Result: In this example, because revitalized public housing costs exceed current Section 8 costs, a conversion plan for the property would be required.


</P>
</DIV9>

</DIV5>


<DIV5 N="972" NODE="24:4.1.3.1.18" TYPE="PART">
<HEAD>PART 972—CONVERSION OF PUBLIC HOUSING TO TENANT-BASED ASSISTANCE
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437t, 1437z-5, and 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>66 FR 33618, June 22, 2001, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.3.1.18.1" TYPE="SUBPART">
<HEAD>Subpart A—Required Conversion of Public Housing Developments</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>68 FR 54608, Sept. 17, 2003, unless otherwise noted.


</PSPACE></SOURCE>

<DIV7 N="15" NODE="24:4.1.3.1.18.1.15" TYPE="SUBJGRP">
<HEAD>Purpose; Definition of Conversion</HEAD>


<DIV8 N="§ 972.100" NODE="24:4.1.3.1.18.1.15.1" TYPE="SECTION">
<HEAD>§ 972.100   Purpose.</HEAD>
<P>The purpose of this subpart is to implement section 33 of the United States Housing Act of 1937 (42 U.S.C. 1437z-5), which requires PHAs to annually review their public housing inventory and identify developments, or parts of developments, which must be removed from its stock of public housing operated under an Annual Contributions Contract (ACC) with HUD.
</P>
<P>This subpart provides the procedures a PHA must follow to develop and carry out a conversion plan to remove the units from the public housing inventory, including how to provide for the transition for residents of these developments to other affordable housing.


</P>
</DIV8>


<DIV8 N="§ 972.103" NODE="24:4.1.3.1.18.1.15.2" TYPE="SECTION">
<HEAD>§ 972.103   Definition of “conversion.”</HEAD>
<P>For purposes of this subpart, the term “conversion” means the removal of public housing units from the inventory of a PHA, and the provision of tenant-based or project-based assistance for the residents of the public housing units that are being removed. The term “conversion,” as used in this subpart, does not necessarily mean the physical removal of the public housing development.


</P>
</DIV8>

</DIV7>


<DIV7 N="16" NODE="24:4.1.3.1.18.1.16" TYPE="SUBJGRP">
<HEAD>Required Conversion Process</HEAD>


<DIV8 N="§ 972.106" NODE="24:4.1.3.1.18.1.16.3" TYPE="SECTION">
<HEAD>§ 972.106   Procedure for required conversion of public housing developments to tenant-based assistance.</HEAD>
<P>(a) A PHA must annually review its public housing inventory and identify developments, or parts of developments, which must be converted to tenant-based assistance, in accordance with §§ 972.121-972.127.
</P>
<P>(b) With respect to any public housing development that is identified under paragraph (a) of this section, the PHA generally must develop a 5-year plan for removal of the affected public housing units from the inventory, in accordance with §§ 972.130-972.136.
</P>
<P>(c) The PHA may proceed to convert the development if HUD approves the conversion plan.


</P>
</DIV8>


<DIV8 N="§ 972.109" NODE="24:4.1.3.1.18.1.16.4" TYPE="SECTION">
<HEAD>§ 972.109   Conversion of developments.</HEAD>
<P>(a)(1) The PHA may proceed to convert the development covered by a conversion plan after receiving written approval from HUD. This approval will be separate from the approval that the PHA receives for its Annual Plan.
</P>
<P>(2) HUD anticipates that its review of a conversion plan will ordinarily occur within 90 days following submission of a complete plan by the PHA. A longer process may be required where HUD's initial review of the plan raises questions that require further discussion with the PHA. In any event, HUD will provide all PHAs with a preliminary response within 90 days following submission of a conversion plan.
</P>
<P>(b) The PHA may not demolish or dispose of units or property until completion of the required environmental review under part 58 of this title (if a responsible entity has assumed environmental responsibility for the project) or part 50 of this title (if HUD is performing the environmental review). Further, HUD will not approve a conversion plan until completion of the required environmental review. However, before completion of the environmental review, HUD may approve the targeted units for removal from the PHA's inventory and may authorize the PHA to undertake other activities proposed in its conversion plan that do not require environmental review (such as certain activities related to the relocation of residents), as long as the buildings in question are adequately secured and maintained.
</P>
<P>(c) For purposes of determining operating subsidy eligibility, HUD will consider the conversion plan the PHA submits to be the equivalent of a formal request to remove dwelling units from the PHA's inventory and ACC. HUD will notify the PHA in writing whether it has approved the conversion plan. Units that are vacant or vacated on or after the written notification date will be treated as approved for deprogramming under § 990.108(b)(1) of this title and also will be provided any phase-down of subsidy to which the PHA is entitled pursuant to § 990.114 of this title.
</P>
<P>(d) The PHA may apply for tenant-based assistance in accordance with Section 8 program requirements, and HUD will give the PHA a priority for receiving tenant-based assistance to replace the public housing units. It is HUD's policy to provide funds for one-for-one replacement housing with either public housing or tenant-based assistance, if funds are available. HUD may require that funding for the initial year be provided from the public housing Capital Fund, Operating Fund, or both.


</P>
</DIV8>


<DIV8 N="§ 972.112" NODE="24:4.1.3.1.18.1.16.5" TYPE="SECTION">
<HEAD>§ 972.112   Relationship between required conversion and demolition/disposition requirements.</HEAD>
<P>(a) Section 18 of the United States Housing Act of 1937 does not apply to demolition of developments removed from the inventory of the PHA under this subpart. Demolition of these developments is therefore not subject to section 18(g), which provides an exclusion from the applicability of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (42 U.S.C. 4601) (URA). Accordingly, the URA will apply to the displacement of tenants as the direct result of the demolition of a development carried out pursuant to this subpart, in accordance with § 972.118. With respect to any such demolition, the PHA must comply with the requirements for environmental review found at part 58 of this title.
</P>
<P>(b) Section 18 of the United States Housing Act of 1937 does apply to any disposition of developments removed from the inventory of the PHA under this subpart. Therefore, to dispose of property, the PHA must submit a disposition application under section 18. HUD's review of any such disposition application will take into account that the development has been required to be converted.


</P>
</DIV8>


<DIV8 N="§ 972.115" NODE="24:4.1.3.1.18.1.16.6" TYPE="SECTION">
<HEAD>§ 972.115   Relationship between required conversions and HOPE VI developments.</HEAD>
<P>HUD actions to approve or deny proposed HOPE VI revitalization plans must be consistent with the requirements of this subpart. Developments with HOPE VI revitalization grants, but without approved HOPE VI revitalization plans, are fully subject to required conversion standards under this subpart.


</P>
</DIV8>


<DIV8 N="§ 972.118" NODE="24:4.1.3.1.18.1.16.7" TYPE="SECTION">
<HEAD>§ 972.118   Applicability of Uniform Relocation Act.</HEAD>
<P>To the extent that tenants are displaced as a direct result of the demolition, acquisition, or rehabilitation of federally-assisted property converted pursuant to this subpart, the requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (42 U.S.C. 4601) (URA), and the implementing regulations issued by the Department of Transportation at 49 CFR part 24, apply.


</P>
</DIV8>

</DIV7>


<DIV7 N="17" NODE="24:4.1.3.1.18.1.17" TYPE="SUBJGRP">
<HEAD>Identifying Developments Subject to Required Conversion</HEAD>


<DIV8 N="§ 972.121" NODE="24:4.1.3.1.18.1.17.8" TYPE="SECTION">
<HEAD>§ 972.121   Developments subject to this subpart.</HEAD>
<P>(a) This subpart is applicable to any development not identified before October 21, 1998, for conversion, or for assessment of whether such conversion is required, in accordance with section 202 of the Omnibus Consolidated Rescissions and Appropriations Act of 1996 (Pub. L. 104-134, approved April 26, 1996, 110 Stat. 1321-279—1321-281). Developments identified before October 21, 1998, continue to be subject to the requirements of section 202 and part 971 of this chapter until these requirements are satisfied. Thereafter, the provisions of this subpart apply to any remaining public housing on the sites of those developments.
</P>
<P>(b) The developments to which this subpart is applicable are subject to the requirements of section 33 of the United States Housing Act of 1937 (42 U.S.C. 1437z-5).
</P>
<P>(c) The provisions of this subpart cease to apply when the units in a development that are subject to the requirements of this subpart have been demolished.


</P>
</DIV8>


<DIV8 N="§ 972.124" NODE="24:4.1.3.1.18.1.17.9" TYPE="SECTION">
<HEAD>§ 972.124   Standards for identifying public housing developments subject to required conversion.</HEAD>
<P>The development, or portions thereof, must be converted if it is a general occupancy development of 250 or more dwelling units and it meets the following criteria:
</P>
<P>(a) <I>The development is on the same or contiguous sites.</I> This refers to the actual number and location of units, irrespective of HUD development project numbers.
</P>
<P>(b) <I>The development has a vacancy rate of at least a specified percent for dwelling units not in funded, on-schedule modernization, for each of the last three years, and the vacancy rate has not significantly decreased in those three years.</I> (1) For a conversion analysis performed on or before March 16, 2009, the specified vacancy rate is 15 percent. For a conversion analysis performed after that date, the specified vacancy rate is 12 percent.
</P>
<P>(2) For the determination of vacancy rates, the PHA must use the data it relied upon for the PHA's latest Public Housing Assessment System (PHAS) certification, as reported on the Form HUD-51234 (report on Occupancy). Units in the following categories must not be included in this calculation:
</P>
<P>(i) Vacant units in an approved demolition or disposition program;
</P>
<P>(ii) Vacant units in which resident property has been abandoned, but only if state law requires the property to be left in the unit for some period of time, and only for the period of time stated in the law;
</P>
<P>(iii) Vacant units that have sustained casualty damage, but only until the insurance claim is adjusted;
</P>
<P>(iv) Units that are occupied by employees of the PHA and units that are used for resident services; and
</P>
<P>(v) Units that HUD determines, in its sole discretion, are intentionally vacant and do not indicate continued distress.
</P>
<P>(c) <I>The development either is distressed housing for which the PHA cannot assure the long-term viability as public housing, or more expensive for the PHA to operate as public housing than providing tenant-based assistance.</I> (1) The development is distressed housing for which the PHA cannot assure the long-term viability as public housing through reasonable revitalization, density reduction, or achievement of a broader range of household income. (See § 972.127)
</P>
<P>(i) Properties meeting the standards set forth in paragraphs (a) and (b) of this section will be assumed to be “distressed,” unless HUD determines that the reasons a property meets such standards are temporary in duration and are unlikely to recur.
</P>
<P>(ii) A development satisfies the long-term viability test only if it is probable that, after reasonable investment, for at least 20 years (or at least 30 years for rehabilitation equivalent to new construction) the development can sustain structural/system soundness and full occupancy; will not be excessively densely configured relative to other similar rental (typically family) housing in the community; can achieve a broader range of family income; and has no other site impairments that clearly should disqualify the site from continuation as public housing.
</P>
<P>(2) The development is more expensive for the PHA to operate as public housing than to provide tenant-based assistance if it has an estimated cost, during the remaining useful life of the project, of continued operation and modernization of the development as public housing in excess of the cost of providing tenant-based assistance under section 8 of the United States Housing Act of 1937 for all families in occupancy, based on appropriate indicators of cost (such as the percentage of total development cost required for modernization).
</P>
<P>(i) For purposes of this determination, the costs used for public housing must be those necessary to produce a revitalized development as described in paragraph (c)(1) of this section.
</P>
<P>(ii) These costs, including estimated operating costs, modernization costs, and accrual needs must be used to develop a per unit monthly cost of continuing the development as public housing.
</P>
<P>(iii) That per unit monthly cost of public housing must be compared to the per unit monthly Section 8 cost.
</P>
<P>(iv) The cost methodology necessary to conduct the cost comparisons for required conversions has not yet been finalized. PHAs are not required to undertake conversions under this subpart until six months after the effective date of the cost methodology, which will be announced in the <E T="04">Federal Register.</E> Once effective, the cost methodology will be codified as an appendix to this part.


</P>
</DIV8>


<DIV8 N="§ 972.127" NODE="24:4.1.3.1.18.1.17.10" TYPE="SECTION">
<HEAD>§ 972.127   Standards for determining whether a property is viable in the long term.</HEAD>
<P>In order for a property to meet the standard of long-term viability, as discussed in § 972.124, the following criteria must be met:
</P>
<P>(a) <I>The investment to be made in the development is reasonable.</I> (1) Proposed revitalization costs for viability must be reasonable. Such costs must not exceed, and ordinarily would be substantially less than, 90 percent of HUD's total development cost (TDC) limit for the units proposed to be revitalized (100 percent of the total development cost limit for any “infill” new construction subject to this regulation). The revitalization cost estimate used in the PHA's most recent Annual Plan or 5-Year Plan is to be used for this purpose, unless the PHA demonstrates, or HUD determines, that another cost estimate is clearly more realistic to ensure viability and to sustain the operating costs that are described in paragraph (a)(2) of this section.
</P>
<P>(2) The overall projected cost of the revitalized development must not exceed the Section 8 cost under the method contained in the Appendix to this part, even if the cost of revitalization is a lower percentage of the TDC than the limits stated in paragraph (a)(1) of this section.
</P>
<P>(3) The source of funding for such a revitalization program must be identified and available. In addition to other resources already available to the PHA, it may assume that future formula funds provided through the Capital Fund over five years are available for this purpose.
</P>
<P>(b) <I>Appropriate density is achieved.</I> The resulting public housing development must have a density which is comparable to that which prevails in or is appropriate for assisted rental housing or for other similar types of housing in the community (typically family).
</P>
<P>(c) <I>A greater income mix can be achieved.</I> (1) Measures generally will be required to broaden the range of resident incomes over time to include a significant mix of households with at least one full-time worker. Measures to achieve a broader range of household incomes must be realistic in view of the site's location. Appropriate evidence typically would include census or other recent statistical evidence demonstrating some mix of incomes of other households located in the same census tract or neighborhood, or unique advantages of the public housing site.
</P>
<P>(2) For purposes of judging appropriateness of density reduction and broader range of income measures, overall size of the public housing site and its number of dwelling units will be considered. The concerns these measures would address generally are greater as the site's size and number of dwelling units increase.


</P>
</DIV8>

</DIV7>


<DIV7 N="18" NODE="24:4.1.3.1.18.1.18" TYPE="SUBJGRP">
<HEAD>Conversion Plans</HEAD>


<DIV8 N="§ 972.130" NODE="24:4.1.3.1.18.1.18.11" TYPE="SECTION">
<HEAD>§ 972.130   Conversion plan components.</HEAD>
<P>(a) With respect to any development that is identified under §§ 972.121 through 972.127, the PHA generally must develop a 5-year plan for removal of the affected public housing units from the inventory. The plan must consider relocation alternatives for households in occupancy, including other public housing and Section 8 tenant-based assistance, and must provide for relocation from the units as soon as possible. For planning purposes, the PHA must assume that HUD will be able to provide in a timely fashion any necessary Section 8 rental assistance. The plan must include:
</P>
<P>(1) A listing of the public housing units to be removed from the inventory;
</P>
<P>(2) Identification and obligation status of any previously approved modernization, reconstruction, or other capital funds for the distressed development and the PHA's recommendations concerning transfer of these funds to Section 8 or alternative public housing uses;
</P>
<P>(3) A record indicating compliance with the statute's requirements for consultation with applicable public housing tenants of the affected development and the unit of local government where the public housing is located, as set forth in § 972.133;
</P>
<P>(4) A description of the plans for demolition or disposition of the public housing units; and
</P>
<P>(5) A relocation plan, in accordance with paragraph (b) of this section.
</P>
<P>(b) <I>Relocation plan.</I> The relocation plan must incorporate all of the information identified in paragraphs (b)(1) through (b)(4) of this section. In addition, if the required conversion is subject to the URA, the relocation plan must also contain the information identified in paragraph (b)(5) of this section. The relocation plan must incorporate the following:
</P>
<P>(1) The number of households to be relocated, by bedroom size, and by the number of accessible units.
</P>
<P>(2) The relocation resources that will be necessary, including a request for any necessary Section 8 funding and a description of actual or potential public or other assisted housing vacancies that can be used as relocation housing and budget for carrying out relocation activities.
</P>
<P>(3) A schedule for relocation and removal of units from the public housing inventory (including the schedule for providing actual and reasonable relocation expenses, as determined by the PHA, for families displaced by the conversion).
</P>
<P>(4) Provide for issuance of a written notice to families residing in the development in accordance with the following requirements:
</P>
<P>(i) <I>Timing of notice.</I> If the required conversion is not subject to the URA, the notice shall be provided to families at least 90 days before displacement. If the required conversion is subject to the URA the written notice shall be provided to families no later than the date the conversion plan is submitted to HUD. For purposes of a required conversion subject to the URA, this written notice shall constitute the General Information Notice (GIN) required by the URA.
</P>
<P>(ii) <I>Contents of notice.</I> The written notice shall include all of the following:
</P>
<P>(A) The development must be removed from the public housing inventory and that the family may be displaced as a result of the conversion;
</P>
<P>(B) The family will be offered comparable housing, which may include tenant-based or project-based assistance, or occupancy in a unit operated or assisted by the PHA (if tenant-based assistance is used, the comparable housing requirement is fulfilled only upon the relocation of the family into such housing);
</P>
<P>(C) Any necessary counseling with respect to the relocation will be provided, including any appropriate mobility counseling (the PHA may finance the mobility counseling using Operating Fund, Capital Fund, or Section 8 administrative fee funding);
</P>
<P>(D) Such families will be relocated to other decent, safe, sanitary, and affordable housing that is, to the maximum extent possible, housing of their choice;
</P>
<P>(E) If the development is used as housing after conversion, the PHA must ensure that each resident may choose to remain in the housing, using tenant-based assistance towards rent; and
</P>
<P>(F) Where section 8 voucher assistance is being used for relocation, the family will be provided with the vouchers at least 90 days before displacement.
</P>
<P>(5) If the required conversion is subject to the URA, the written notice described in paragraph (b)(4) must also provide that:
</P>
<P>(i) The family will not be required to move without at least 90-days advance written notice of the earliest date by which the family may be required to move, and that the family will not be required to move permanently until the family is offered comparable housing, as provided in paragraph (b)(4)(ii)(B) of this section;
</P>
<P>(ii) Any person who is an alien not lawfully present in the United States is ineligible for relocation payments or assistance under the URA, unless such ineligibility would result in exceptional and extremely unusual hardship to a qualifying spouse, parent, or child, as provided in the URA regulations at 49 CFR 24.208;
</P>
<P>(iii) The family has a right to appeal the PHA's determination as to the family's application for relocation assistance for which the family may be eligible under this subpart and URA;
</P>
<P>(iv) Families residing in the development will be provided with the URA Notice of Relocation Eligibility or Notice of Non-displacement (as applicable) as of the date HUD approves the conversion plan (for purposes of this subpart, the date of HUD's approval of the conversion plan shall be the “date of initiation of negotiations” as that term is used in URA and the implementing regulations at 49 CFR part 24); and
</P>
<P>(v) Any family that moves into the development after submission of the conversion plan to HUD will also be eligible for relocation assistance, unless the PHA issues a written move-in notice to the family prior to leasing and occupancy of the unit advising the family of the development's possible conversion, the impact of the conversion on the family, and that the family will not be eligible for relocation assistance.
</P>
<P>(c) The conversion plan may not be more than a 5-year plan, unless the PHA applies for and receives approval from HUD for a longer period of time. HUD may allow the PHA up to 10 years to remove the units from the inventory, in exceptional circumstances where HUD determines that this is clearly the most cost effective and beneficial means of providing housing assistance over that same period. For example, HUD may allow a longer period of time to remove the units from the public housing inventory, where more than one development is being converted, and a larger number of families require relocation than can easily be absorbed into the rental market at one time, provided the housing has a remaining useful life of longer than five years and the longer time frame will assist in relocation.


</P>
</DIV8>


<DIV8 N="§ 972.133" NODE="24:4.1.3.1.18.1.18.12" TYPE="SECTION">
<HEAD>§ 972.133   Public and resident consultation process for developing a conversion plan.</HEAD>
<P>(a) The PHA must consult with appropriate public officials and with the appropriate public housing residents in developing the conversion plan.
</P>
<P>(b) The PHA may satisfy the requirement for consultation with public officials by obtaining a certification from the appropriate government official that the conversion plan is consistent with the applicable Consolidated Plan. This may be the same certification as is required for the PHA Annual Plan that includes the conversion plan, so long as the certification specifically addresses the conversion plan.
</P>
<P>(c) To satisfy the requirement for consultation with the appropriate public housing residents, in addition to the public participation requirements for the PHA Annual Plan, the PHA must:
</P>
<P>(1) Hold at least one meeting with the residents of the affected sites (including the duly elected Resident Council, if any, that covers the development in question) at which the PHA must:
</P>
<P>(i) Explain the requirements of this section, especially as they apply to the residents of the affected developments; and
</P>
<P>(ii) Provide draft copies of the conversion plan to the residents;
</P>
<P>(2) Provide a reasonable comment period for residents; and
</P>
<P>(3) Summarize the resident comments for HUD, in the conversion plan, and consider these comments in developing the final conversion plan.


</P>
</DIV8>


<DIV8 N="§ 972.136" NODE="24:4.1.3.1.18.1.18.13" TYPE="SECTION">
<HEAD>§ 972.136   Timing of submission of conversion plans to HUD.</HEAD>
<P>The requirements of this section are on-going requirements. If the PHA must submit a plan for conversion, it must submit the conversion plan as part of the PHA's Annual Plan, beginning with PHA fiscal years that commence six months after the effective date of HUD's final rule establishing the cost methodology for required conversions.


</P>
</DIV8>

</DIV7>


<DIV7 N="19" NODE="24:4.1.3.1.18.1.19" TYPE="SUBJGRP">
<HEAD>HUD Actions With Respect to Required Conversions</HEAD>


<DIV8 N="§ 972.139" NODE="24:4.1.3.1.18.1.19.14" TYPE="SECTION">
<HEAD>§ 972.139   HUD actions with respect to required conversions.</HEAD>
<P>(a) HUD will take appropriate steps to ensure that distressed developments subject to this subpart are properly identified and converted. If a PHA fails to properly identify a development for required conversion, or does not submit a conversion plan for a development in the PHA Annual Plan following the Annual Plan in which the development was identified as subject to required conversion, HUD will take the actions described in paragraph (b) of this section, and may also take any or all of the actions described in paragraph (c) of this section.
</P>
<P>(b) If a PHA fails to take the conversion activities described in paragraph (a) of this section, HUD will:
</P>
<P>(1) Disqualify the PHA from HUD funding competitions; and
</P>
<P>(2) Direct the PHA to cease additional spending in connection with a development that meets, or is likely to meet the statutory criteria, except to the extent that failure to expend such amounts would endanger health or safety.
</P>
<P>(c) If a PHA fails to take the conversion activities described in paragraph (a) of this section, HUD may also take any or all of the following actions:
</P>
<P>(1) Identify developments that fall within the statutory criteria where the PHA has failed to do so properly;
</P>
<P>(2) Take appropriate actions to ensure the conversion of developments where the PHA has failed to adequately develop or implement a conversion plan;
</P>
<P>(3) Require the PHA to revise the conversion plan, or prohibit conversion, where HUD has determined that the PHA has erroneously identified a development as being subject to the requirements of this section;
</P>
<P>(4) Authorize or direct the transfer of capital or operating funds committed to or on behalf of the development (including comprehensive improvement assistance, comprehensive grant or Capital Fund amounts attributable to the development's share of funds under the formula, and major reconstruction of obsolete projects funds) to tenant-based assistance or appropriate site revitalization for the agency; and
</P>
<P>(5) Any other action that HUD determines appropriate and has the authority to undertake.


</P>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="B" NODE="24:4.1.3.1.18.2" TYPE="SUBPART">
<HEAD>Subpart B—Voluntary Conversion of Public Housing Developments</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>68 FR 54619, Sept. 17, 2003, unless otherwise noted.


</PSPACE></SOURCE>

<DIV7 N="20" NODE="24:4.1.3.1.18.2.20" TYPE="SUBJGRP">
<HEAD>Purpose; Definition of Conversion</HEAD>


<DIV8 N="§ 972.200" NODE="24:4.1.3.1.18.2.20.1" TYPE="SECTION">
<HEAD>§ 972.200   Purpose.</HEAD>
<P>This subpart implements section 22 of the United States Housing Act of 1937 (42 U.S.C. 1437t). The purposes of this subpart are to:
</P>
<P>(a) Require PHAs to perform an assessment which considers developments for which conversion of public housing may be appropriate; and
</P>
<P>(b) Provide a basis for a PHA to take action for conversion on a voluntary basis.


</P>
</DIV8>


<DIV8 N="§ 972.203" NODE="24:4.1.3.1.18.2.20.2" TYPE="SECTION">
<HEAD>§ 972.203   Definition of “conversion.”</HEAD>
<P>For purposes of this subpart, the term “conversion” means the removal of public housing units from the inventory of a Public Housing Agency (PHA), and the provision of tenant-based, or project-based assistance for the residents of the public housing that is being removed. The term “conversion,” as used in this subpart, does not necessarily mean the physical removal of the public housing development from the site.


</P>
</DIV8>

</DIV7>


<DIV7 N="21" NODE="24:4.1.3.1.18.2.21" TYPE="SUBJGRP">
<HEAD>Required Initial Assessments</HEAD>


<DIV8 N="§ 972.206" NODE="24:4.1.3.1.18.2.21.3" TYPE="SECTION">
<HEAD>§ 972.206   Required initial assessments.</HEAD>
<P>(a) <I>General.</I> A PHA must conduct a required initial assessment (which consists of the certification described in paragraph (b) of this section), in accordance with this section, once for each of its developments, unless:
</P>
<P>(1) The development is subject to required conversion under 24 CFR part 971;
</P>
<P>(2) The development is the subject of an application for demolition or disposition that has not been disapproved by HUD;
</P>
<P>(3) A HOPE VI revitalization grant has been awarded for the development; or
</P>
<P>(4) The development is designated for occupancy by the elderly and/or persons with disabilities (<I>i.e.,</I> is not a general occupancy development).
</P>
<P>(b) <I>Certification procedure.</I> For each development, the PHA shall certify that it has:
</P>
<P>(1) Reviewed the development's operation as public housing;
</P>
<P>(2) Considered the implications of converting the public housing to tenant-based assistance; and
</P>
<P>(3) Concluded that conversion of the development may be:
</P>
<P>(i) Appropriate because removal of the development would meet the necessary conditions for voluntary conversion described in § 972.224; or
</P>
<P>(ii) Inappropriate because removal of the development would not meet the necessary conditions for voluntary conversion described § 972.224.
</P>
<P>(c) <I>Documentation.</I> A PHA must maintain documentation of the reasoning with respect to each required initial assessment.
</P>
<P>(d) <I>Timing of submission.</I> Consistent with statutory submission requirements, the results of each required initial assessment (consisting of the certification described in paragraph (b) of this section) must be submitted to HUD as part of the next PHA Annual Plan after its completion.


</P>
</DIV8>

</DIV7>


<DIV7 N="22" NODE="24:4.1.3.1.18.2.22" TYPE="SUBJGRP">
<HEAD>Voluntary Conversion Procedure</HEAD>


<DIV8 N="§ 972.209" NODE="24:4.1.3.1.18.2.22.4" TYPE="SECTION">
<HEAD>§ 972.209   Procedure for voluntary conversion of public housing developments to tenant-based assistance.</HEAD>
<P>A PHA that wishes to convert a public housing development to tenant-based assistance must comply with the following process:
</P>
<P>(a) The PHA must perform a conversion assessment, in accordance with §§ 972.218-972.224 and submit it to HUD as part of the next PHA Annual Plan submission.
</P>
<P>(b) The PHA must prepare a conversion plan, in accordance with § 972.227-972.233, and submit it to HUD, as part of its PHA Annual Plan, within one year after submitting the conversion assessment. The PHA may submit the conversion plan in the same Annual Plan as the conversion assessment.
</P>
<P>(c) The PHA may proceed to convert the development if HUD approves the conversion plan.


</P>
</DIV8>


<DIV8 N="§ 972.212" NODE="24:4.1.3.1.18.2.22.5" TYPE="SECTION">
<HEAD>§ 972.212   Timing of voluntary conversion.</HEAD>
<P>(a) A PHA may proceed to convert a development covered by a conversion plan only after receiving written approval of the conversion plan from HUD. This approval will be separate from the approval that the PHA receives for its PHA Annual Plan. A PHA may apply for tenant-based assistance in accordance with Section 8 program requirements and will be given priority for receiving tenant-based assistance to replace the public housing units.
</P>
<P>(b) A PHA may not demolish or dispose of units or property until completion of the required environmental review under part 58 of this title (if a Responsible Entity has assumed environmental responsibility for the project) or part 50 of this title (if HUD is performing the environmental review). Further, HUD will not approve a conversion plan until completion of the required environmental review. However, before completion of the environmental review, HUD may approve the targeted units for deprogramming and may authorize the PHA to undertake other activities proposed in the conversion plan that do not require environmental review (such as certain activities related to the relocation of residents), as long as the buildings in question are adequately secured and maintained.
</P>
<P>(c) For purposes of determining operating subsidy eligibility, the submitted conversion plan will be considered the equivalent of a formal request to remove dwelling units from the PHA's inventory and Annual Contributions Contract (ACC). Units that are vacant or are vacated on or after the written notification date will be treated as approved for deprogramming under § 990.108(b)(1) of this title, and will also be provided the phase down of subsidy pursuant to § 990.114 of this title.
</P>
<P>(d) HUD may require that funding for the initial year of tenant-based assistance be provided from the public housing Capital Fund, Operating Fund, or both.


</P>
</DIV8>


<DIV8 N="§ 972.215" NODE="24:4.1.3.1.18.2.22.6" TYPE="SECTION">
<HEAD>§ 972.215   Applicability of the Uniform Relocation Act.</HEAD>
<P>To the extent that tenants are displaced as a direct result of the demolition, acquisition, or rehabilitation of federally-assisted property converted under this subpart, the requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (42 U.S.C. 4601) (URA), and the implementing regulations issued by the Department of Transportation at 49 CFR part 24, apply.


</P>
</DIV8>

</DIV7>


<DIV7 N="23" NODE="24:4.1.3.1.18.2.23" TYPE="SUBJGRP">
<HEAD>Conversion Assessments</HEAD>


<DIV8 N="§ 972.218" NODE="24:4.1.3.1.18.2.23.7" TYPE="SECTION">
<HEAD>§ 972.218   Conversion assessment components.</HEAD>
<P>The conversion assessment contains five elements, as described below:
</P>
<P>(a) <I>Cost analysis.</I> A PHA must conduct a cost analysis comparing the cost of providing Section 8 tenant-based assistance with the cost of continuing to operate the development as public housing for the remainder of its useful life. The cost methodology necessary to conduct the cost comparisons for voluntary conversions has not yet been finalized. PHAs may not undertake conversions under this subpart until the effective date of the cost methodology, which will be announced in the <E T="04">Federal Register.</E> Once effective, the cost methodology will be codified as an appendix to this part.
</P>
<P>(b) <I>Analysis of the market value.</I> (1) A PHA must have an independent appraisal conducted to compare the market value of the development before and after rehabilitation. In both cases, the market value must be based on the use of the development as public housing.
</P>
<P>(2) In addition, the appraisal must compare:
</P>
<P>(i) The market value of the development before rehabilitation, based on the use of the development as public housing, with the market value of the development after conversion; with
</P>
<P>(ii) The market value of the development after rehabilitation, based on the use of the development as public housing, with the market value of the development after conversion.
</P>
<P>(3) A copy of the appraisal findings and the analysis of market value of the development in the conversion assessment must be provided in the conversion assessment.
</P>
<P>(c) <I>Analysis of rental market conditions.</I> (1) A PHA must conduct an analysis of the likely success of using tenant-based assistance for the residents of the public housing development. This analysis must include an assessment of the availability of decent, safe, and sanitary dwelling units rented at or below the applicable Section 8 payment standard established for the jurisdiction or designated part of the FMR area in which the development is located.
</P>
<P>(2) In conducting this assessment, a PHA must take into account:
</P>
<P>(i) Its overall use of rental vouchers under lease and the success rates of using Section 8 tenant-based assistance in the community for the appropriate bedroom sizes, including recent success rates for units renting at or below the established payment standard; and 
</P>
<P>(ii) Any particular characteristics of the specific residents of the public housing which may affect their ability to be housed (such as large household size or the presence of an elderly or disabled family member).
</P>
<P>(d) <I>Impact analysis.</I> A PHA must describe the likely impact of conversion of the public housing development on the neighborhood in which the public housing is located. This must include:
</P>
<P>(1) The impact on the availability of affordable housing in the neighborhood;
</P>
<P>(2) The impact on the concentration of poverty in the neighborhood; and
</P>
<P>(3) Other substantial impacts on the neighborhood.
</P>
<P>(e) <I>Conversion implementation.</I> If a PHA intends to convert the development (or a portion of it) to tenant-based assistance, the conversion assessment must include a description of any actions the PHA plans to take in converting the development. This must include a general description of the planned future uses of the development, and the means and timetable for accomplishing such uses.
</P>
<CITA TYPE="N">[68 FR 54619, Sept. 17, 2003, as amended at 89 FR 38293, May 7, 2024]






</CITA>
</DIV8>


<DIV8 N="§ 972.221" NODE="24:4.1.3.1.18.2.23.8" TYPE="SECTION">
<HEAD>§ 972.221   Timing of submission of conversion assessments to HUD.</HEAD>
<P>(a) <I>Submission with PHA Plan.</I> A PHA that wishes to convert a public housing development to tenant-based assistance must submit a conversion assessment to HUD with its next PHA Annual Plan.
</P>
<P>(b) <I>Updated conversion assessment.</I> Where a PHA proposes to convert a development to tenant-based assistance, it must submit an updated conversion assessment if the conversion assessment otherwise would be more than one year older than the conversion plan to be submitted to HUD. To update a conversion assessment, a PHA must ensure that the analysis of rental market conditions is based on the most recently available data, and must include any data that have changed since the initial conversion assessment. A PHA may submit the initial cost analysis and comparison of the market value of the public housing before and after rehabilitation and/or conversion if there is no reason to believe that such information has changed significantly.


</P>
</DIV8>


<DIV8 N="§ 972.224" NODE="24:4.1.3.1.18.2.23.9" TYPE="SECTION">
<HEAD>§ 972.224   Necessary conditions for HUD approval of conversion.</HEAD>
<P>(a) <I>Conditions.</I> In order to convert a public housing development, the PHA must conduct a conversion assessment that demonstrates that the conversion of the development:
</P>
<P>(1) Will not be more expensive than continuing to operate the development (or portion of it) as public housing;
</P>
<P>(2) Will principally benefit the residents of the public housing development (or portion thereof) to be converted, the PHA, and the community; and
</P>
<P>(3) Will not adversely affect the availability of affordable housing in the community.
</P>
<P>(b) <I>Evidence</I>—(1) <I>Relative expense.</I> The relative expense of continuing operation as public housing or conversion to tenant-based assistance may be demonstrated by the cost analysis and market value analysis.
</P>
<P>(2) <I>Benefit to residents, PHA, and the community.</I> (i) The benefit to residents, the PHA, and the community may be demonstrated in the rental market analysis, the analysis of the impact on the neighborhood, the market value analysis, and the proposed future use of the development. In determining whether a conversion will principally benefit residents, the PHA, and the community, HUD will consider whether the conversion will conflict with any litigation settlement agreements, voluntary compliance agreements, or other remedial agreements signed by the PHA with HUD.
</P>
<P>(ii) In making the determination of whether a conversion would principally benefit residents, the PHA, and the community, the PHA must consider such factors as the availability of landlords providing tenant-based assistance, as well as access to schools, jobs, and transportation.
</P>
<P>(iii) To determine the benefit to residents, the PHA must hold at least one public meeting with residents of the affected site (including the duly elected Resident Council, if any, that covers the development in question). At the meeting, the PHA must:
</P>
<P>(A) Explain the requirements of section 22 of the United States Housing Act of 1937 and these regulations, especially as they apply to residents of affected developments;
</P>
<P>(B) Provide draft copies of the conversion assessment to the residents; and
</P>
<P>(C) Provide the residents with a reasonable period of time to submit comments on the draft conversion assessment.
</P>
<P>(iv) The conversion assessment submitted to HUD must contain a summary of the resident comments, and the PHA responses to any significant issues raised by the commenters.
</P>
<P>(3) <I>Impact on affordable housing.</I> The impact on affordable housing may be demonstrated in the rental market analysis and the analysis of the impact of conversion on the neighborhood.


</P>
</DIV8>

</DIV7>


<DIV7 N="24" NODE="24:4.1.3.1.18.2.24" TYPE="SUBJGRP">
<HEAD>Conversion Plans</HEAD>


<DIV8 N="§ 972.227" NODE="24:4.1.3.1.18.2.24.10" TYPE="SECTION">
<HEAD>§ 972.227   Public and resident consultation process for developing a conversion plan.</HEAD>
<P>(a) A conversion plan must be developed in consultation with appropriate public officials and with significant participation by residents of the development.
</P>
<P>(b) The requirement for consultation with public officials may be satisfied by obtaining a certification from the appropriate state or local officials that the conversion plan is consistent with that jurisdiction's Consolidated Plan. This may be the same certification as is required for the PHA Annual Plan that includes the conversion plan, so long as the certification specifically addresses the conversion plan.
</P>
<P>(c) To satisfy the requirement for significant participation by residents of the development, in addition to the public participation requirements for the PHA Annual Plan, a PHA must:
</P>
<P>(1) Hold at least one meeting with the residents of the affected sites (including the duly elected Resident Council, if any, that covers the development in question) at which the PHA must:
</P>
<P>(i) Explain the requirements of section 22 of the United States Housing Act of 1937 and these regulations, especially as they apply to residents of affected developments; and
</P>
<P>(ii) Provide draft copies of the conversion plan to them.
</P>
<P>(2) Provide a reasonable comment period for residents; and
</P>
<P>(3) Summarize the resident comments (as well as the PHA responses to the significant issues raised by the commenters) for HUD, and consider these comments in developing the final conversion plan.


</P>
</DIV8>


<DIV8 N="§ 972.230" NODE="24:4.1.3.1.18.2.24.11" TYPE="SECTION">
<HEAD>§ 972.230   Conversion plan components.</HEAD>
<P>A conversion plan must:
</P>
<P>(a) Describe the conversion and future use or disposition of the public housing development. If the future use of the development is demolition or disposition, the PHA is not required to submit a demolition or disposition application, so long as the PHA submits, and HUD approves, a conversion plan that includes a description of the future uses of the development.
</P>
<P>(b) Include an impact analysis of the conversion on the affected community. This may include the description that is required as part of the conversion assessment.
</P>
<P>(c) Include a description of how the conversion plan is consistent with the findings of the conversion assessment undertaken in accordance with § 972.218.
</P>
<P>(d) Include a summary of the resident comments received when developing the conversion plan, and the PHA responses to the significant issues raised by the commenters (including a description of any actions taken by the PHA as a result of the comments).
</P>
<P>(e) Confirm that any proceeds received from the conversion are subject to the limitations under section 18(a)(5) of the United States Housing Act of 1937 (42 U.S.C. 1437p(a)(5)) applicable to proceeds resulting from demolition or disposition.
</P>
<P>(f) Summarize why the conversion assessment for the public housing project supports the three conditions necessary for conversion described in § 972.224.
</P>
<P>(g) Include a relocation plan that incorporates all of the information identified in paragraphs (g)(1) through (g)(4) of this section. In addition, if the required conversion is subject to the URA, the relocation plan must also contain the information identified in paragraph (g)(5) of this section. The relocation plan must incorporate the following:
</P>
<P>(1) The number of households to be relocated, by bedroom size, by the number of accessible units.
</P>
<P>(2) The relocation resources that will be necessary, including a request for any necessary Section 8 funding and a description of actual or potential public or other assisted housing vacancies that can be used as relocation housing and budget for carrying out relocation activities.
</P>
<P>(3) A schedule for relocation and removal of units from the public housing inventory (including the schedule for providing actual and reasonable relocation expenses, as determined by the PHA, for families displaced by the conversion).
</P>
<P>(4) Provide for issuance of a written notice to families residing in the development in accordance with the following requirements:
</P>
<P>(i) <I>Timing of notice.</I> If the voluntary conversion is not subject to the URA, the notice shall be provided to families at least 90 days before displacement. If the voluntary conversion is subject to the URA the written notice shall be provided to families no later than the date the conversion plan is submitted to HUD. For purposes of a voluntary conversion subject to the URA, this written notice shall constitute the General Information Notice (GIN) required by the URA.
</P>
<P>(ii) <I>Contents of notice.</I> The written notice shall include all of the following:
</P>
<P>(A) The development will no longer be used as public housing and that the family may be displaced as a result of the conversion;
</P>
<P>(B) The family will be offered comparable housing, which may include tenant-based or project-based assistance, or occupancy in a unit operated or assisted by the PHA (if tenant-based assistance is used, the comparable housing requirement is fulfilled only upon relocation of the family into such housing);
</P>
<P>(C) Any necessary counseling with respect to the relocation will be provided, including any appropriate mobility counseling (the PHA may finance the mobility counseling using Operating Fund, Capital Fund, or Section 8 administrative fee funding);
</P>
<P>(D) The family will be relocated to other decent, safe, sanitary, and affordable housing that is, to the maximum extent possible, housing of their choice;
</P>
<P>(E) If the development is used as housing after conversion, the PHA must ensure that each resident may choose to remain in the housing, using tenant-based assistance towards rent; 
</P>
<P>(F) Where Section 8 voucher assistance is being used for relocation, the family will be provided with the vouchers at least 90 days before displacement;
</P>
<P>(5) <I>Additional information required for conversions subject to the URA.</I> If the voluntary conversion is subject to the URA, the written notice described in paragraph (g)(4) must also provide that:
</P>
<P>(i) The family will not be required to move without at least 90-days advance written notice of the earliest date by which the family may be required to move, and that the family will not be required to move permanently until the family is offered comparable housing as provided in paragraph (g)(4)(ii)(B) of this section;
</P>
<P>(ii) Any person who is an alien not lawfully present in the United States is ineligible for relocation payments or assistance under the URA, unless such ineligibility would result in exceptional and extremely unusual hardship to a qualifying spouse, parent, or child, as provided in the URA regulations at 49 CFR 24.208.
</P>
<P>(iii) The family has a right to appeal the PHA's determination as to the family's application for relocation assistance for which the family may be eligible under this subpart and URA.
</P>
<P>(iv) Families residing in the development will be provided with the URA Notice of Relocation Eligibility or Notice of Non-displacement (as applicable) as of the date HUD approves the conversion plan (for purposes of this subpart, the date of HUD's approval of the conversion plan shall be the “date of initiation of negotiations” as that term is used in URA and the implementing regulations at 49 CFR part 24).
</P>
<P>(v) Any family that moves into the development after submission of the conversion plan to HUD will also be eligible for relocation assistance, unless the PHA issues a written move-in notice to the family prior to leasing and occupancy of the unit advising the family of the development's possible conversion, the impact of the conversion on the family, and that the family will not be eligible for relocation assistance.


</P>
</DIV8>


<DIV8 N="§ 972.233" NODE="24:4.1.3.1.18.2.24.12" TYPE="SECTION">
<HEAD>§ 972.233   Timing of submission of conversion plans to HUD.</HEAD>
<P>A PHA that wishes to convert a public housing project to tenant-based assistance must submit a conversion plan to HUD. A PHA must prepare a conversion plan, in accordance with § 972.230, and submit it to HUD, as part of the next PHA Annual Plan within one year after submitting the full conversion assessment, or as a significant amendment to that Annual Plan. The PHA may also submit the conversion plan in the same Annual Plan as the conversion assessment.


</P>
</DIV8>


<DIV8 N="§ 972.236" NODE="24:4.1.3.1.18.2.24.13" TYPE="SECTION">
<HEAD>§ 972.236   HUD process for approving a conversion plan.</HEAD>
<P>Although a PHA will submit its conversion plan to HUD as part of the PHA Annual Plan, the conversion plan will be treated separately for purposes of HUD approval. A PHA needs a separate written approval from HUD in order to proceed with conversion. HUD anticipates that its review of a conversion plan will ordinarily occur within 90 days following submission of a complete plan by the PHA. A longer process may be required where HUD's initial review of the plan raises questions that require further discussion with the PHA. In any event, HUD will provide all PHAs with a preliminary response within 90 days following submission of a conversion plan. A lack of a HUD response within this time frame will constitute automatic HUD approval of the conversion plan.


</P>
</DIV8>


<DIV8 N="§ 972.239" NODE="24:4.1.3.1.18.2.24.14" TYPE="SECTION">
<HEAD>§ 972.239   HUD actions with respect to a conversion plan.</HEAD>
<P>(a) When a PHA submits a conversion plan to HUD, HUD will review it to determine whether:
</P>
<P>(1) The conversion plan is complete and includes all of the information required under § 972.230; and
</P>
<P>(2) The conversion plan is consistent with the conversion assessment the PHA submitted.
</P>
<P>(b) HUD will disapprove a conversion plan only if HUD determines that:
</P>
<P>(1) The conversion plan is plainly inconsistent with the conversion assessment;
</P>
<P>(2) There is reliable information and data available to the Secretary that contradicts the conversion assessment; or
</P>
<P>(3) The conversion plan is incomplete or otherwise fails to meet the requirements under § 972.230.


</P>
</DIV8>

</DIV7>


<DIV9 N="Appendix to" NODE="24:4.1.3.1.18.2.25.15.10" TYPE="APPENDIX">
<HEAD>Appendix to Part 972—Methodology of Comparing Cost of Public Housing With the Cost of Tenant-Based Assistance 
</HEAD>
<HD1>I. Public Housing-Net Present Value
</HD1>
<P>The costs used for public housing shall be those necessary to produce a viable development for its projected useful life. The estimated cost for the continued operation of the development as public housing shall be calculated as the sum of total operating cost, modernization cost, and costs to address accrual needs. Costs will be calculated at the property level on an annual basis covering a period of 30 years (with options for 20 or 40 years). All costs expected to occur in future years will be discounted, using an OMB-specified real discount rate provided on the OMB Web site at <I>http://www.whitehouse.gov/OMB/Budget</I>, for each year after the initial year. The sum of the discounted values for each year (net present value) for public housing will then be compared to the net present value of the stream of costs associated with housing vouchers.
</P>
<P>Applicable information on discount rates may be found in Appendix C of OMB Circular A-94, “Guidelines and Discount Rates for Benefit Cost Analysis of Federal Programs,” which is updated annually, and may be found on OMB's Web site at <I>http://www.whitehouse.gov/OMB.</I> All cost adjustments conducted pursuant to this cost methodology must be performed using the real discount rates provided on the OMB Web site at <I>http://www.whitehouse.gov/OMB/Budget.</I> HUD will also provide information on current rates, along with guidance and instructions for completing the cost comparisons on the HUD Homepage (<I>http://www.hud.gov</I>). The Homepage will also include a downloadable spreadsheet calculator that HUD has developed to assist PHAs in completing the assessments. The spreadsheet calculator is designed to walk housing agencies through the calculations and comparisons laid out in the appendix and allows housing agencies to enter relevant data for their PHA and the development being assessed. Results, including net present values, are generated based on these housing agency data.
</P>
<HD2>A. Operating Costs
</HD2>
<P>1. Any proposed revitalization or modernization plan must indicate how unusually high current operating expenses (<I>e.g.</I>, security, supportive services, maintenance, tenant, and PHA-paid utilities) will be reduced as a result of post-revitalization changes in occupancy, density and building configuration, income mix, and management. The plan must make a realistic projection of overall operating costs per occupied unit in the revitalized or modernized development, by relating those operating costs to the expected occupancy rate, tenant composition, physical configuration, and management structure of the revitalized or modernized development. The projected costs should also address the comparable costs of buildings or developments whose siting, configuration, and tenant mix is similar to that of the revitalized or modernized public housing development.
</P>
<P>2. The development's operating cost (including all overhead costs pro-rated to the development—including a Payment in Lieu of Taxes (P.I.L.O.T.) or some other comparable payment, and including utilities and utility allowances) shall be expressed as total operating costs per year. For example, if a development will have 375 units occupied by households and will have $112,500 monthly non-utility costs (including pro-rated overhead costs and appropriate P.I.L.O.T.) and $37,500 monthly utility costs paid by the PHA, and $18,750 in monthly utility allowances that are deducted from tenant rental payments to the PHA because tenants paid some utility bills directly to the utility company, then the development's monthly operating cost is $168,750 (or $450 per unit per month) and its annual operating cost would be $5,400 ($450 times 12). Operating costs are assumed to begin in the initial year of the 30-year (or alternative period) calculation and will be incurred in each year thereafter.
</P>
<P>3. In justifying the operating cost estimates as realistic, the plan should link the cost estimates to its assumptions about the level and rate of occupancy, the per-unit funding of modernization, any physical reconfiguration that will result from modernization, any planned changes in the surrounding neighborhood, and security costs. The plan should also show whether developments or buildings in viable condition in similar neighborhoods have achieved the income mix and occupancy rate projected for the revitalized or modernized development. The plan should also show how the operating costs of the similar developments or buildings compare to the operating costs projected for the development.
</P>
<P>4. In addition to presenting evidence that the operating costs of the revitalized or modernized development are plausible, when the projected initial year per-unit operating cost of the renovated development is lower than the current per unit cost by more than 10 percent, then the plan should detail how the revitalized development will achieve this reduction in costs. To determine the extent to which projected operating costs are lower than current operating costs, the current per-unit operating costs of the development will be estimated as follows:
</P>
<P>a. If the development has reliable operating costs and if the overall vacancy rate is less than 20 percent, then the development-based method will be used to determine projected costs. The current costs will be divided by the sum of all occupied units and vacant units fully funded under the Operating Fund Program plus 20 percent of all units not fully funded under the Operating Fund Program. For instance, if the total monthly operating costs of the current development are $168,750 and it has 325 occupied units and 50 vacant units not fully funded under the Operating Fund Program (or a 13 percent overall vacancy rate), then the $2,250,000 is divided by 335—325 plus 20 percent of 50—to give a per unit figure of $504 per unit month. By this example, the current costs per occupied unit are at least 10 percent higher (12 percent in this example) than the projected costs per occupied unit of $450 for the revitalized development, and the reduction in costs would have to be detailed.
</P>
<P>b. If the development currently lacks reliable cost data or has a vacancy rate of 20 percent or higher, then the PHA-wide method will be used to determine projected costs. First, the current per unit cost of the entire PHA will be computed, with total costs divided by the sum of all occupied units and vacant units fully funded under the Operating Fund Program plus 20 percent of all vacant units not fully funded under the Operating Fund Program. For example, if the PHA's operating cost is $18 million, and the PHA has 4,000 units, of which 3,875 are occupied and 125 are vacant and not fully funded under the Operating Fund Program, then the PHA's vacancy adjusted operating cost is $385 per unit per month—$18,000,000 divided by the 3,825 (the sum of 3,800 occupied units and 20 percent of 125 vacant units) divided by 12 months. Second, this amount will be multiplied by the ratio of the bedroom adjustment factor of the development to the bedroom adjustment factor of the PHA. The bedroom adjustment factor, which is based on national rent averages for units grouped by the number of bedrooms and which has been used by HUD to adjust for costs of units when the number of bedrooms vary, assigns to each unit the following factors: .70 for 0-bedroom units, .85 for 1-bedroom units, 1.0 for 2-bedroom units, 1.25 for 3-bedroom units, 1.40 for 4-bedroom units, 1.61 for 5-bedroom units, and 1.82 for 6 or more bedroom units. The bedroom adjustment factor is the unit-weighted average of the distribution. For instance, consider a development with 375 occupied units that had the following under an ACC contract: 200 two-bedroom units, 150 three-bedroom units, and 25 four-bedroom units. In that example, the bedroom adjustment factor would be 1.127—200 times 1.0, plus 150 times 1.25, plus 25 times 1.4 with the sum divided by 375. Where necessary, HUD field offices will arrange for assistance in the calculation of the bedroom adjustment factors of the PHA and its affected developments.
</P>
<P>c. As an example of estimating development operating costs from PHA-wide operating costs, suppose that the PHA had a total monthly operating cost per unit of $385 and a bedroom adjustment factor of .928, and suppose that the development had a bedroom adjustment factor of 1.127. Then, the development's estimated current monthly operating cost per occupied unit would be $467—or $385 times 1.214 (the ratio of 1.127 to .928). By this example, the development's current operating costs of $467 per unit per month are not more than 10 percent higher (3.8 percent in this example) than the projected costs of $450 per unit per month and no additional justification of the cost reduction would be required.
</P>
<HD2>B. Modernization
</HD2>
<P>Under both the required and voluntary conversion programs, PHAs prepare modernization or capital repair estimates in accordance with the physical needs of the specific properties proposed for conversion. There are three key assumptions that guide how PHAs prepare modernization estimates that affect remaining useful life and determine whether the 20-, 30-, or discretionary 40-year remaining useful life evaluation period are used for the cost-test. When calculating public housing revitalization costs for a property, PHAs will use a 30-year period if the level of modernization addresses all accumulated backlog needs and the planned redesign ensures long-term viability. For modernization equivalent to new construction or when the renovations restore a property to as-new physical conditions, a 40-year remaining useful life test is used. When light or moderate rehabilitation that does not address all accumulated backlog is undertaken, but it is compliant with the International Existing Building Codes (ICC) or Public Housing Modernization Standards in the absence of a local rehabilitation code, the 20-year remaining useful life evaluation period must be used.
</P>
<P>Except for some voluntary conversion situations as explained in paragraph E below, the cost of modernization is, at a minimum, the initial revitalization cost to meet viability standards. In the absence of a local code, PHAs may refer to the Public Housing Modernization Standards Handbook (Handbook 7485.2) or the International Existing Building Codes (ICC) 2003 Edition. To justify a 40-year amortization cycle that increases the useful life period and time over which modernization costs are amortized, PHAs must demonstrate that the proposed modernization meets the applicable physical viability standards, but must also cover accumulated backlog and redesign that achieves as-new physical conditions to ensure long-term viability. To be a plausible estimate, modernization costs shall be justified by a newly created property-based needs assessment (a life-cycle physical needs assessments prepared in accordance with a PHA's Capital Fund annual or 5-year action plan and shall be able to be reconciled with standardized measures, such as components of the PHAs physical inspection and chronic vacancy due to physical condition and design. Modernization costs may be assumed to occur during years one through four, consistent with the level of work proposed and the PHA's proposed modernization schedule. For example, if the initial modernization outlay (excluding demolition costs) to meet viability standards is $21,000,000 for 375 units, a PHA might incur costs in three equal increments of $7,000,000 in years two, three, and four (based on the PHA's phased modernization plan). In comparing the net present value of public housing to voucher costs for required conversion, a 30-year amortization period will normally be used, except when revitalization would bring the property to as-new condition and a 40-year amortization would be justified. On the other hand, when the modernization falls short of meeting accumulated backlog and long-term redesign needs, only a 20-year amortization period might be justified.
</P>
<HD2>C. Accrual
</HD2>
<P>Accrual projections estimate the ongoing replacement repair needs for public housing properties and building structures and systems required to maintain the physical viability of a property throughout its useful life as the lifecycle of building structures and systems expire. The cost of accrual (i.e., replacement needs) will be estimated with an algorithm that meets all ongoing capital needs based on systems that have predictable lifecycles. The algorithm starts with the area index of housing construction costs (HCC) that HUD publishes as a component of its TDC index series. Subtracted from this HCC figure is half the estimated modernization per unit, with a coefficient of .025 multiplied by the result to provide an annual accrual figure per unit. For example, suppose that the development after modernization will remain a walkup structure containing 200 two-bedroom, 150 three-bedroom, and 25 four-bedroom occupied units, and if HUD's HCC limit for the area is $66,700 for two-bedroom walkup structures, $93,000 for three-bedroom walkup structures, and $108,400 for four-bedroom walkup structures. Then the unit-weighted HCC cost is $80,000 per unit and .75 of that figure is $60,000 per unit. Then, if the per unit cost of the modernization is $56,000, the estimated annual cost of accrual per occupied unit is $1,300. This is the result of multiplying .025 times $52,000 (the weighted HCC of $80,000) minus $28,000 (half the per-unit modernization cost of $56,000). The first year of total accrual for the development is $487,500 ($1,300 times 375 units) and should be assumed to begin in the year after modernization is complete. Accrual—like operating cost—is an annual expense and will occur in each year over the amortized period. Because the method assumes full physical renewal each year, this accrual method when combined with a modernization that meets past backlog and redesign needs justifies a 30- or 40-year amortization period, because the property is refreshed each year to as-new or almost as-new condition.
</P>
<HD2>D. Residual Value (Voluntary Conversion Only)
</HD2>
<P>Under the voluntary conversion program, PHAs are required to prepare market appraisals based on the “as-is” and post-rehabilitation condition of properties, assuming the buildings are operated as public or assisted, unassisted, or market-rate housing. Section 972.218 requires PHAs to describe the future use for a property proposed for conversion and to describe the means and timetable to complete these activities. HUD will permit a PHA to enter the appraised market value of a property into the cost-test in Years 1 through 5 when a PHA anticipates selling a property or receiving income generated from the sale or lease of a property.
</P>
<P>As a separate line item to be added to total public costs as a foregone opportunity cost, a PHA shall include in the voluntary cost-test calculations the appraised market or residual value (or net sales proceeds) from the sale or lease of a property that is to be voluntarily converted to tenant-based voucher assistance. The PHA must hire an appraiser to estimate the market value of the property using the comparable sale, tax-assessment, or revenue-based appraisal methods. PHAs are advised to select one or more of these appraisal methods to accurately determine the actual or potential market value of a property, particularly the comparable sales or revenue-based methods. The market or residual value is to be determined by calculating the estimated market value for the property based on the appraisal, minus any costs required for demolition and remediation. The residual value must be incorporated into the cost-test instead of the actual market value only when any demolition, site remediation, and clearance costs that are necessary are covered by the selling PHA. However, if the sum of the estimated per unit cost of demolition and remediation exceeds 10 percent of the average Total Development Cost (TDC) for the units, the lower of the PHA estimate or a figure based on 10 percent of TDC must be used. Suppose the estimated remediation and demolition costs necessary for conversion sale are $7,000 per unit. Also, suppose the TDC limits are $115,000 for a two-bedroom unit, $161,000 for a three-bedroom unit, and $184,000 for a four-bedroom unit. Then the average TDC of a development with 200 two-bedroom units, 150 three-bedroom units, and 25 four-bedroom units is $138,000 (200 times $115,000, plus 150 times $161,000, plus 25 times $184,000, the sum divided by 375) and 10 percent of TDC is $13,800. In this example, the estimated $7,000 per unit costs for demolition and remediation is less than 10 percent of TDC for the development, and the PHA estimate of $7,000 is used. If estimated expenses had exceeded 10 percent of TDC ($13,800 in this example), demolition and remediation expenses must be capped at the lower amount.
</P>
<HD2>E. Accumulated Discounted Cost: Public Housing
</HD2>
<P>The overall cost for continuing to operate the development as public housing is the sum of the discounted values of the yearly stream of costs up for the amortization period, which can range from 20 to 30 to 40 years, depending on the extent of modernization relative to the current physical and redesign needs of the development. In calculating net present value for required conversion, the sum of all costs in each future year is discounted back to the current year using the OMB-specified real discount rate. For voluntary conversion, the discount rate is applied forward as a direct inflation factor. To assist PHAs in completing the net present value comparison and to ensure consistency in the calculations, HUD has developed a spreadsheet calculator that is available for downloading from the HUD Internet site. Using PHA data and property specific inputs (to be entered by the housing agency), the spreadsheet will discount costs as described above and will generate net present values for amortization periods of 20, 30, and 40 years.
</P>
<HD1>II. Tenant-Based Assistance
</HD1>
<P>The estimated cost of providing tenant-based assistance under Section 8 for all households in occupancy shall be calculated as the unit-weighted average of recent movers in the local area; plus the administrative fee for providing such vouchers; plus $1,000 per unit (or a higher amount allowed by HUD) for relocation assistance costs, including counseling. However, if the sum of the estimated per unit cost of demolition, remediation, and relocation exceeds 10 percent of the average Total Development Cost (TDC) for the units, the lower of the PHA estimate or a figure based on 10 percent of TDC must be used.
</P>
<P>For example, if the development has 200 occupied two-bedroom units, 150 occupied three-bedroom units, and 25 occupied four-bedroom units, and if the monthly payment standard for voucher units occupied by recent movers is $550 for two-bedroom units, $650 for three-bedroom units, and $750 for four-bedroom units, the unit-weighted monthly payment standard is $603.33. If the administrative fee comes to $46 per unit, then the monthly per unit operating voucher costs are $649.33, which rounds to an annual total of $2,922,000 for 375 occupied units of the same bedroom size as those being demolished in public housing. To these operating voucher costs, a first-year relocation is added on the voucher side. For per-unit relocation costs of $1,000 per unit for relocation, then $375,000 for 375 units is placed on the voucher cost side of the first year.
</P>
<HD2>Accumulated Discounted Cost: Vouchers
</HD2>
<P>The overall cost for vouchers is the sum of the discounted values of the yearly stream of costs up for the amortization period, which can range from 20 to 30 to 40 years, depending on the extent of modernization relative to the current physical and redesign needs of the development. The amortization period chosen is the one that was appropriate for discounting public housing costs. In calculating net present value for required conversion, the sum of all costs in each future year is discounted back to the current year using the OMB-specified real discount rate. For voluntary conversion, the discount rate is applied forward as a direct inflation factor.
</P>
<P>To assist PHAs in completing the net present value comparison and to ensure consistency in the calculations, HUD has developed a spreadsheet calculator that will be available for downloading from the HUD Internet site.
</P>
<HD1>III. Results of the Example
</HD1>
<P>With the hypothetical data used in the examples, under an amortization period of 30 years, the discounted public housing costs under required conversion sums to $69,633,225, and the discounted voucher cost under required conversions totals $60,438,698. The ratio is 1.15, which means that public housing is 15 percent more costly than vouchers. With this amortization and this data, the PHA would be required to convert the development under the requirements of subpart A of this part, except in a situation where a PHA can demonstrate a distressed property that has failed the cost-test can be redeveloped by meeting each of the four factors that compose the long-term physical viability test to avoid removal from the inventory. With the same data, but a 40-year amortization period, public housing is still 11 percent costlier than vouchers, and with a 20-year amortization, public housing is 25 percent costlier than vouchers. In voluntary conversion, with the same hypothetical data, but a slightly different methodology (use of residual value as a public housing cost, inflating forward the discount numbers), the ratio of public housing costs to voucher costs would be 1.16 for the 20-year amortization period, 1.03 for the 30-year amortization period, and .97 for the 20-year amortization period. Thus, in voluntary conversion, the appropriate amortization period would decide whether public housing is more costly or is slightly more costly, or less than vouchers. Under a 20-year amortization assumption and possibly under a 30-year amortization period, the PHA would have the option of preparing a conversion plan for the development under subpart B of this part. Different sets of data would yield different conclusions for required and voluntary conversion determinations.
</P>
<CITA TYPE="N">[71 FR 14336, Mar. 21, 2006]


</CITA>
</DIV9>

</DIV6>

</DIV5>


<DIV5 N="982" NODE="24:4.1.3.1.19" TYPE="PART">
<HEAD>PART 982—SECTION 8 TENANT-BASED ASSISTANCE: HOUSING CHOICE VOUCHER PROGRAM








</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437f and 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>59 FR 36682, July 18, 1994, unless otherwise noted.
</PSPACE></SOURCE>
<EDNOTE>
<HED>Editorial Note:</HED><PSPACE>Nomenclature changes to part 982 appear at 64 FR 26640, May 14, 1999, and at 89 FR 38293, May 7, 2024.</PSPACE></EDNOTE>

<DIV6 N="A" NODE="24:4.1.3.1.19.1" TYPE="SUBPART">
<HEAD>Subpart A—General Information</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>60 FR 34695, July 3, 1995, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 982.1" NODE="24:4.1.3.1.19.1.33.1" TYPE="SECTION">
<HEAD>§ 982.1   Programs: purpose and structure.</HEAD>
<P>(a) <I>General description.</I> (1) In the HUD Housing Choice Voucher (HCV) program, HUD pays rental subsidies so eligible families can afford decent, safe, and sanitary housing. The HCV program is generally administered by State or local governmental entities called public housing agencies (PHAs). HUD provides housing assistance funds to the PHA. HUD also provides funds for PHA administration of the program.
</P>
<P>(2) Families select and rent units that meet program housing quality standards. If the PHA approves a family's unit and tenancy, the PHA contracts with the owner to make rent subsidy payments on behalf of the family. A PHA may not approve a tenancy unless the rent is reasonable.
</P>
<P>(3) Subsidy in the HCV program is based on a local “payment standard” that reflects the cost to lease a unit in the local housing market. If the rent is less than the payment standard, the family generally pays 30 percent of adjusted monthly income for rent. If the rent is more than the payment standard, the family pays a larger share of the rent.
</P>
<P>(b) <I>Tenant-based and project-based assistance.</I> (1) Section 8 assistance may be “tenant-based” or “project-based”. In project-based programs, rental assistance is paid for families who live in specific housing developments or units. With tenant-based assistance, the assisted unit is selected by the family. The family may rent a unit anywhere in the United States in the jurisdiction of a PHA that runs a voucher program. 
</P>
<P>(2) To receive tenant-based assistance, the family selects a suitable unit. After approving the tenancy, the PHA enters into a contract to make rental subsidy payments to the owner to subsidize occupancy by the family. The PHA contract with the owner only covers a single unit and a specific assisted family. If the family moves out of the leased unit, the contract with the owner terminates. The family may move to another unit with continued assistance so long as the family is complying with program requirements.
</P>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 64 FR 26640, May 14, 1999; 80 FR 8245, Feb. 17, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 982.2" NODE="24:4.1.3.1.19.1.33.2" TYPE="SECTION">
<HEAD>§ 982.2   Applicability.</HEAD>
<P>Part 982 contains the program requirements for the tenant-based housing assistance program under Section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f). The tenant-based program is the HCV program.
</P>
<CITA TYPE="N">[80 FR 8245, Feb. 17, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 982.3" NODE="24:4.1.3.1.19.1.33.3" TYPE="SECTION">
<HEAD>§ 982.3   HUD.</HEAD>
<P>The HUD field offices have been delegated responsibility for day-to-day administration of the program by HUD. In exercising these functions, the field offices are subject to HUD regulations and other HUD requirements issued by HUD headquarters. Some functions are specifically reserved to HUD headquarters. 


</P>
</DIV8>


<DIV8 N="§ 982.4" NODE="24:4.1.3.1.19.1.33.4" TYPE="SECTION">
<HEAD>§ 982.4   Definitions.</HEAD>
<P>(a) <I>Definitions found elsewhere.</I> (1) The following terms are defined in 24 CFR part 5, subpart A: 1937 Act, Covered person, Drug, Drug-related criminal activity, federally assisted housing, Guest, Household, HUD, MSA, Other person under the tenant's control, Public housing, Section 8, and Violent criminal activity.
</P>
<P>(2) The following terms are defined in 24 CFR part 5, subpart D: Disabled family, Elderly family, Near-elderly family, and Person with disabilities.
</P>
<P>(3) The following terms are defined in 24 CFR part 5, subpart F: Adjusted income, Annual income, Extremely low income family, Total tenant payment, Utility allowance, and Welfare assistance.




</P>
<P>(b) In addition to the terms listed in paragraph (a) of this section, the following definitions apply:


</P>
<P><I>Abatement.</I> Stopping HAP payments to an owner with no potential for retroactive payment.






</P>
<P><I>Absorption.</I> For purposes of subpart H, the point at which a receiving PHA starts making assistance payments with funding under its consolidated ACC, rather than billing, the initial PHA.
</P>
<P><I>Administrative fee.</I> Fee paid by HUD to the PHA for administration of the program. See § 982.152.
</P>
<P><I>Administrative fee reserve</I> (formerly “operating reserve”). Account established by PHA from excess administrative fee income. The administrative fee reserve must be used for housing purposes. See § 982.155.
</P>
<P><I>Administrative Plan.</I> The plan that describes PHA policies for administration of the HCV program. See § 982.54.
</P>
<P><I>Admission.</I> The point when the family becomes a participant in the program. The date used for this purpose is the effective date of the first HAP contract for a family (first day of initial lease term) in the tenant-based program.
</P>
<P><I>Applicant</I> (applicant family). A family that has applied for admission to the HCV program but is not yet a program participant.


</P>
<P><I>Authorized voucher units.</I> The number of units for which a PHA is authorized to make assistance payments to owners under its annual contributions contract.






</P>
<P><I>Budget authority.</I> An amount authorized and appropriated by the Congress for payment to PHAs under the HCV program. For each funding increment in the program, budget authority is the maximum amount that may be paid by HUD to the PHA over the ACC term of the funding increment.
</P>
<P><I>Building.</I> A structure with a roof and walls that contains one or more dwelling units.






</P>
<P><I>Common space.</I> In shared housing: Space available for use by the assisted family and other occupants of the unit.
</P>
<P><I>Congregate housing.</I> Housing for elderly persons or persons with disabilities that meets the HQS for congregate housing. A special housing type: see § 982.606 to § 982.609.
</P>
<P><I>Continuously assisted.</I> An applicant is continuously assisted under the 1937 Act if the family is already receiving assistance under any 1937 Act program when the family is admitted to the HCV program.
</P>
<P><I>Cooperative.</I> Housing owned by a corporation or association, and where a member of the corporation or association has the right to reside in a particular unit, and to participate in management of the housing. 
</P>
<P><I>Cooperative member.</I> A family of which one or more members owns membership shares in a cooperative. 
</P>
<P><I>Domicile.</I> The legal residence of the household head or spouse as determined in accordance with State and local law.
</P>
<P><I>Downpayment assistance grant.</I> A form of homeownership assistance in the homeownership option: A single downpayment assistance grant for the family. If a family receives a downpayment assistance grant, a PHA may not make monthly homeownership assistance payments for the family. A downpayment assistance grant is applied to the downpayment for purchase of the home or reasonable and customary closing costs required in connection with purchase of the home.
</P>
<P><I>Fair market rent (FMR).</I> The rent, including the cost of utilities (except telephone), as established by HUD for units of varying sizes (by number of bedrooms), that must be paid in the housing market area to rent privately owned, existing, decent, safe and sanitary rental housing of modest (non-luxury) nature with suitable amenities. In the HCV program, the FMR may be established at the ZIP code level (see definition of Small Area Fair Market Rents), metropolitan area level, or non-metropolitan county level.




















</P>
<P><I>Family.</I> A person or group of persons, as determined by the PHA consistent with 24 CFR 5.403, approved to reside in a unit with assistance under the program. See “family composition” at § 982.201(c).
</P>
<P><I>Family rent to owner.</I> In the voucher program, the portion of rent to owner paid by the family. For calculation of family rent to owner, see § 982.515(b). 
</P>
<P><I>Family self-sufficiency program</I> (FSS program). The program established by a PHA in accordance with 24 CFR part 984 to promote self-sufficiency of assisted families, including the coordination of supportive services (42 U.S.C. 1437u).
</P>
<P><I>Family share.</I> The portion of rent and utilities paid by the family. For calculation of family share, see § 982.515(a).
</P>
<P><I>Family unit size.</I> The appropriate number of bedrooms for a family, as determined by the PHA under the PHA subsidy standards.
</P>
<P><I>First-time homeowner.</I> In the homeownership option: A family of which no member owned any present ownership interest in a residence of any family member during the three years before commencement of homeownership assistance for the family. The term “first-time homeowner” includes a single parent or displaced homemaker (as those terms are defined in 12 U.S.C. 12713) who, while married, owned a home with his or her spouse, or resided in a home owned by his or her spouse.
</P>
<P><I>Foster adult.</I> A member of the household who is 18 years of age or older and meets the definition of a foster adult under State law. In general, a foster adult is a person who is 18 years of age or older, is unable to live independently due to a debilitating physical or mental condition and is placed with the family by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction.
</P>
<P><I>Foster child.</I> A member of the household who meets the definition of a foster child under State law. In general, a foster child is placed with the family by an authorized placement agency (<I>e.g.,</I> public child welfare agency) or by judgment, decree, or other order of any court of competent jurisdiction.









 
</P>
<P><I>Funding increment.</I> Each commitment of budget authority by HUD to a PHA under the consolidated annual contributions contract for the PHA program.
</P>
<P><I>Gross rent.</I> The sum of the rent to owner plus any utility allowance.
</P>
<P><I>Group home.</I> A dwelling unit that is licensed by a State as a group home for the exclusive residential use of two to twelve persons who are elderly or persons with disabilities (including any live-in aide). A special housing type: see § 982.610 to § 982.614.
</P>
<P><I>HAP contract.</I> Housing assistance payments contract.
</P>
<P><I>Home.</I> In the homeownership option: A dwelling unit for which the PHA pays homeownership assistance. 
</P>
<P><I>Homeowner.</I> In the homeownership option: A family of which one or more members owns title to the home. 
</P>
<P><I>Homeownership assistance.</I> Assistance for a family under the homeownership option. There are two alternative and mutually exclusive forms of homeownership assistance by a PHA for a family: monthly homeownership assistance payments, or a single downpayment assistance grant. Either form of homeownership assistance may be paid to the family, or to a mortgage lender on behalf of the family.
</P>
<P><I>Homeownership expenses.</I> In the homeownership option: A family's allowable monthly expenses for the home, as determined by the PHA in accordance with HUD requirements (see § 982.635). 
</P>
<P><I>Homeownership option.</I> Assistance for a homeowner or cooperative member under § 982.625 to § 982.641. A special housing type. 
</P>
<P><I>Housing assistance payment.</I> The monthly assistance payment by a PHA, which includes:
</P>
<P>(1) A payment to the owner for rent to the owner under the family's lease; and
</P>
<P>(2) An additional payment to the family if the total assistance payment exceeds the rent to owner.
</P>
<P><I>Housing quality standards (HQS).</I> The minimum quality standards developed by HUD in accordance with 24 CFR 5.703 for the HCV program, including any variations approved by HUD for the PHA under 24 CFR 5.705(a)(3).
</P>
<P><I>Independent entity.</I> (i) The unit of general local government; however, if the PHA itself is the unit of general local government or an agency of such government, then only the next level of general local government (or an agency of such government) or higher may serve as the independent entity; or
</P>
<P>(ii) A HUD-approved entity that is autonomous and recognized under State law as a separate legal entity from the PHA. The entity must not be connected financially (except regarding compensation for services performed for PHA-owned units) or in any other manner that could result in the PHA improperly influencing the entity.




</P>
<P><I>Initial PHA.</I> In portability, the term refers to both:
</P>
<P>(1) a PHA that originally selected a family that later decides to move out of the jurisdiction of the selecting PHA; and
</P>
<P>(2) a PHA that absorbed a family that later decides to move out of the jurisdiction of the absorbing PHA.
</P>
<P><I>Initial payment standard.</I> The payment standard at the beginning of the HAP contract term.
</P>
<P><I>Initial rent to owner.</I> The rent to owner at the beginning of the HAP contract term.
</P>
<P><I>Interest in the home.</I> In the homeownership option: 
</P>
<P>(1) In the case of assistance for a homeowner, “interest in the home” includes title to the home, any lease or other right to occupy the home, or any other present interest in the home. 
</P>
<P>(2) In the case of assistance for a cooperative member, “interest in the home” includes ownership of membership shares in the cooperative, any lease or other right to occupy the home, or any other present interest in the home. 
</P>
<P><I>Jurisdiction.</I> The area in which the PHA has authority under State and local law to administer the program.
</P>
<P><I>Lease.</I> (1) A written agreement between an owner and a tenant for the leasing of a dwelling unit to the tenant. The lease establishes the conditions for occupancy of the dwelling unit by a family with housing assistance payments under a HAP contract between the owner and the PHA.
</P>
<P>(2) In cooperative housing, a written agreement between a cooperative and a member of the cooperative. The agreement establishes the conditions for occupancy of the member's cooperative dwelling unit by the member's family with housing assistance payments to the cooperative under a HAP contract between the cooperative and the PHA. For purposes of this part 982, the cooperative is the Section 8 “owner” of the unit, and the cooperative member is the Section 8 “tenant.”
</P>
<P><I>Manufactured home.</I> A manufactured structure that is built on a permanent chassis, is designed for use as a principal place of residence, and meets the HQS. A special housing type: see § 982.620 and § 982.621.
</P>
<P><I>Manufactured home space.</I> In manufactured home space rental: A space leased by an owner to a family. A manufactured home owned and occupied by the family is located on the space. See § 982.622 to § 982.624.
</P>
<P><I>Membership shares.</I> In the homeownership option: shares in a cooperative. By owning such cooperative shares, the share-owner has the right to reside in a particular unit in the cooperative, and the right to participate in management of the housing. 
</P>
<P><I>Merger date.</I> October 1, 1999, which is the effective date of the merger of the two tenant-based programs (the housing voucher and housing certificate programs) into the Housing Choice Voucher (HCV) program.
</P>
<P><I>Notice of Funding Availability</I> (NOFA). For budget authority that HUD distributes by competitive process, the <E T="04">Federal Register</E> document that invites applications for funding. This document explains how to apply for assistance and the criteria for awarding the funding.
</P>
<P><I>Owner.</I> Any person or entity with the legal right to lease or sublease a unit to a participant.
</P>
<P><I>Participant</I> (participant family). A family that has been admitted to the PHA program and is currently assisted in the program. The family becomes a participant on the effective date of the first HAP contract executed by the PHA for the family (first day of initial lease term).
</P>
<P><I>Payment standard.</I> The maximum monthly assistance payment for a family assisted in the voucher program (before deducting the total tenant payment by the family).














</P>
<P><I>PHA plan.</I> The annual plan and the 5-year plan as adopted by the PHA and approved by HUD in accordance with part 903 of this chapter.
</P>
<P><I>PHA-owned unit.</I> (i) A dwelling unit in a project that is:
</P>
<P>(A) Owned by the PHA (including having a controlling interest in the entity that owns the project);
</P>
<P>(B) Owned by an entity wholly controlled by the PHA; or
</P>
<P>(C) Owned by a limited liability company or limited partnership in which the PHA (or an entity wholly controlled by the PHA) holds a controlling interest in the managing member or general partner.
</P>
<P>(ii) A controlling interest is:
</P>
<P>(A) Holding more than 50 percent of the stock of any corporation;
</P>
<P>(B) Having the power to appoint more than 50 percent of the members of the board of directors of a non-stock corporation (such as a nonprofit corporation);
</P>
<P>(C) Where more than 50 percent of the members of the board of directors of any corporation also serve as directors, officers, or employees of the PHA;
</P>
<P>(D) Holding more than 50 percent of all managing member interests in an LLC;
</P>
<P>(E) Holding more than 50 percent of all general partner interests in a partnership; or
</P>
<P>(F) Equivalent levels of control in other ownership structures.










</P>
<P><I>Portability.</I> Renting a dwelling unit with Section 8 tenant-based assistance outside the jurisdiction of the initial PHA.
</P>
<P><I>Premises.</I> The building or complex in which the dwelling unit is located, including common areas and grounds.
</P>
<P><I>Present homeownership interest.</I> In the homeownership option: “Present ownership interest” in a residence includes title, in whole or in part, to a residence, or ownership, in whole or in part, of membership shares in a cooperative. “Present ownership interest” in a residence does not include the right to purchase title to the residence under a lease-purchase agreement. 
</P>
<P><I>Private space.</I> In shared housing: The portion of a contract unit that is for the exclusive use of an assisted family.
</P>
<P><I>Program.</I> The Section 8 HCV program under this part.
</P>
<P><I>Program receipts.</I> HUD payments to the PHA under the consolidated ACC, and any other amounts received by the PHA in connection with the program.
</P>
<P><I>Public housing agency (PHA).</I> PHA includes both:
</P>
<P>(1) Any State, county, municipality, or other governmental entity or public body which is authorized to administer the program (or an agency or instrumentality of such an entity), and
</P>
<P>(2) Any of the following:
</P>
<P>(i) A consortium of housing agencies, each of which meets the qualifications in paragraph (1) of this definition, that HUD determines has the capacity and capability to efficiently administer the program (in which case, HUD may enter into a consolidated ACC with any legal entity authorized to act as the legal representative of the consortium members);
</P>
<P>(ii) Any other public or private non-profit entity that was administering a Section 8 tenant-based assistance program pursuant to a contract with the contract administrator of such program (HUD or a PHA) on October 21, 1998; or
</P>
<P>(iii) For any area outside the jurisdiction of a PHA that is administering a tenant-based program, or where HUD determines that such PHA is not administering the program effectively, a private non-profit entity or a governmental entity or public body that would otherwise lack jurisdiction to administer the program in such area.
</P>
<P><I>Reasonable rent.</I> A rent to owner that is not more than rent charged:
</P>
<P>(1) For comparable units in the private unassisted market; and
</P>
<P>(2) For comparable unassisted units in the premises.
</P>
<P><I>Receiving PHA.</I> In portability: A PHA that receives a family selected for participation in the HCV program of another PHA. The receiving PHA issues a voucher and provides program assistance to the family.
</P>
<P><I>Renewal units.</I> The number of units, as determined by HUD, for which funding is reserved on HUD books for a PHA's program. This number is used is calculating renewal budget authority in accordance with § 982.102.
</P>
<P><I>Rent to owner.</I> The total monthly rent payable to the owner under the lease for the unit. Rent to owner covers payment for any housing services, maintenance and utilities that the owner is required to provide and pay for.
</P>
<P><I>Request for Tenancy Approval (RFTA).</I> A form (form HUD-52517) submitted by or on behalf of a family to a PHA once the family has identified a unit that it wishes to rent using tenant-based voucher assistance.










</P>
<P><I>Residency preference.</I> A PHA preference for admission of families that reside anywhere in a specified area, including families with a member who works or has been hired to work in the area (“residency preference area”).
</P>
<P><I>Residency preference area.</I> The specified area where families must reside to qualify for a residency preference.
</P>
<P><I>Section 8 Management Assessment Program (SEMAP).</I> A system used by HUD to measure PHA performance in key Section 8 program areas. See 24 CFR part 985.










</P>
<P><I>Shared housing.</I> A unit occupied by two or more families. The unit consists of both common space for shared use by the occupants of the unit and separate private space for each assisted family. A special housing type: see § 982.615 to § 982.618.
</P>
<P><I>Single room occupancy housing</I> (SRO). A unit that contains no sanitary facilities or food preparation facilities, or contains either, but not both, types of facilities. A special housing type: see § 982.602 to § 982.605.
</P>
<P><I>Small Area Fair Market Rents (SAFMRs or Small Area FMRs).</I> Small Area FMRs are FMRs established for U.S. Postal Service ZIP code areas and are calculated in accordance with 24 CFR 888.113(a) and (b).












</P>
<P><I>Special admission.</I> Admission of an applicant that is not on the PHA waiting list or without considering the applicant's waiting list position.
</P>
<P><I>Special housing types.</I> See subpart M of this part 982. Subpart M of this part states the special regulatory requirements for: SRO housing, congregate housing, group home, shared housing, manufactured home (including manufactured home space rental), cooperative housing (rental assistance for cooperative member) and homeownership option (homeownership assistance for cooperative member or first-time homeowner). 
</P>
<P><I>Statement of homeowner obligations. In the homeownership option:</I> The family's agreement to comply with program obligations. 
</P>
<P><I>Subsidy standards.</I> Standards established by a PHA to determine the appropriate number of bedrooms and amount of subsidy for families of different sizes and compositions.
</P>
<P><I>Suspension.</I> The term on the family's voucher stops from the date that the family submits a request for PHA approval of the tenancy, until the date the PHA notifies the family in writing whether the request has been approved or denied.
</P>
<P><I>Tenant.</I> The person or persons (other than a live-in aide) who executes the lease as lessee of the dwelling unit.
</P>
<P><I>Tenant-paid utilities.</I> Utilities and services that are not included in the rent to owner and are the responsibility of the assisted family, regardless of whether the payment goes to the utility company or the owner. The utilities and services are those necessary in the locality to provide housing that complies with HQS. The utilities and services may also include those required by HUD through a <E T="04">Federal Register</E> notice after providing opportunity for public comment.












</P>
<P><I>Utility reimbursement.</I> The portion of the housing assistance payment which exceeds the amount of the rent to owner. (See § 982.514(b)).
</P>
<P><I>Voucher holder.</I> A family holding a voucher with an unexpired term (search time).
</P>
<P><I>Voucher (rental voucher).</I> A document issued by a PHA to a family selected for admission to the voucher program. This document describes the program and the procedures for PHA approval of a unit selected by the family. The voucher also states obligations of the family under the program.
</P>
<P><I>Waiting list admission.</I> An admission from the PHA waiting list.
</P>
<P><I>Welfare-to-work (WTW) families.</I> Families assisted by a PHA with voucher funding awarded to the PHA under the HUD welfare-to-work voucher program (including any renewal of such WTW funding for the same purpose).
</P>
<P><I>Withholding.</I> Stopping HAP payments to an owner while holding them for potential retroactive disbursement.





 
</P>
<CITA TYPE="N">[63 FR 23857, Apr. 30, 1998; 63 FR 31625, June 10, 1998, as amended at 64 FR 26641, May 14, 1999; 64 FR 49658, Sept. 14, 1999; 64 FR 56887, 56911, Oct. 21, 1999; 65 FR 16821, Mar. 30, 2000; 65 FR 55161, Sept. 12, 2000; 66 FR 28804, May 24, 2001; 66 FR 33613, June 22, 2001; 67 FR 64492, Oct. 18, 2002; 77 FR 5675, Feb. 3, 2012; 80 FR 8245, Feb. 17, 2015; 80 FR 50572, Aug. 20, 2015; 88 FR 30503, May 11, 2023; 89 FR 38293, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 982.5" NODE="24:4.1.3.1.19.1.33.5" TYPE="SECTION">
<HEAD>§ 982.5   Notices required by this part.</HEAD>
<P>Where part 982 requires any notice to be given by the PHA, the family or the owner, the notice must be in writing.


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.3.1.19.2" TYPE="SUBPART">
<HEAD>Subpart B—HUD Requirements and PHA Plan for Administration of Program</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>60 FR 34695, July 3, 1995, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 982.51" NODE="24:4.1.3.1.19.2.33.1" TYPE="SECTION">
<HEAD>§ 982.51   PHA authority to administer program.</HEAD>
<P>(a) The PHA must have authority to administer the program. The PHA must provide evidence, satisfactory to HUD, of its status as a PHA, of its authority to administer the program, and of the PHA jurisdiction.
</P>
<P>(b) The evidence submitted by the PHA to HUD must include enabling legislation and a supporting legal opinion satisfactory to HUD. The PHA must submit additional evidence when there is a change that affects its status as a PHA, its authority to administer the program, or its jurisdiction.
</P>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 64 FR 26641, May 14, 1999; 80 FR 8245, Feb. 17, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 982.52" NODE="24:4.1.3.1.19.2.33.2" TYPE="SECTION">
<HEAD>§ 982.52   HUD requirements.</HEAD>
<P>(a) The PHA must comply with HUD regulations and other HUD requirements for the program. HUD requirements are issued by HUD headquarters, as regulations, <E T="04">Federal Register</E> notices or other binding program directives. 
</P>
<P>(b) The PHA must comply with the consolidated ACC and the PHA's HUD-approved applications for program funding.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 60 FR 45661, Sept. 1, 1995]


</CITA>
</DIV8>


<DIV8 N="§ 982.53" NODE="24:4.1.3.1.19.2.33.3" TYPE="SECTION">
<HEAD>§ 982.53   Equal opportunity requirements and protection for victims of domestic violence, dating violence, sexual assault, or stalking.</HEAD>
<P>(a) The tenant-based program requires compliance with all equal opportunity requirements imposed by contract or federal law, including the authorities cited at 24 CFR 5.105(a) and title II of the Americans with Disabilities Act, 42 U.S.C. 12101 <I>et seq.</I>
</P>
<P>(b) <I>Civil rights certification.</I> The PHA must submit a signed certification to HUD that:
</P>
<P>(1) The PHA will administer the program in conformity with the Fair Housing Act, Title VI of the Civil Rights Act of 1964, section 504 of the Rehabilitation Act of 1973, and Title II of the Americans with Disabilities Act.
</P>
<P>(2) The PHA will affirmatively further fair housing in the administration of the program.
</P>
<P>(c) <I>Obligation to affirmatively further fair housing.</I> The PHA shall affirmatively further fair housing as required by § 903.7(o) of this title.
</P>
<P>(d) <I>State and local law.</I> Nothing in part 982 is intended to pre-empt operation of State and local laws that prohibit discrimination against a Section 8 voucher-holder because of status as a Section 8 voucher-holder. However, such State and local laws shall not change or affect any requirement of this part, or any other HUD requirements for administration or operation of the program.
</P>
<P>(e) <I>Protection for victims of domestic violence, dating violence, sexual assault, or stalking.</I> The PHA must apply the requirements in 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking). For purposes of compliance with HUD's regulations in 24 CFR part 5, subpart L, the covered housing provider is the PHA or owner, as applicable given the responsibilities of the covered housing provider as set forth in 24 CFR part 5, subpart L. For example, the PHA is the covered housing provider responsible for providing the Notice of occupancy rights under VAWA and certification form described at 24 CFR 5.2005(a). In addition, the owner is the covered housing provider that may choose to bifurcate a lease as described at 24 CFR 5.2009(a), while the PHA is the covered housing provider responsible for complying with emergency transfer plan provisions at 24 CFR 5.2005(e).


</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 60 FR 45661, Sept. 1, 1995; 63 FR 23859, Apr. 30, 1998; 64 FR 26641, May 14, 1999; 64 FR 56911, Oct. 21, 1999; 73 FR 72344, Nov. 28, 2008; 75 FR 66263, Oct. 27, 2010; 80 FR 8245, Feb. 17, 2015; 81 FR 80816, Nov. 16, 2016]








</CITA>
</DIV8>


<DIV8 N="§ 982.54" NODE="24:4.1.3.1.19.2.33.4" TYPE="SECTION">
<HEAD>§ 982.54   Administrative Plan.</HEAD>
<P>(a) The PHA must adopt a written Administrative Plan that establishes local policies for administration of the program in accordance with HUD requirements. The Administrative Plan and any revisions of the plan must be formally adopted by the PHA Board of Commissioners or other authorized PHA officials. The Administrative Plan states PHA policy on matters for which the PHA has discretion to establish local policies. 
</P>
<P>(b) The Administrative Plan must be in accordance with HUD regulations and requirements. The Administrative Plan is a supporting document to the PHA Plan (part 903 of this title) and must be available for public review. The PHA must revise the Administrative Plan if needed to comply with HUD requirements.




</P>
<P>(c) The PHA must administer the program in accordance with the PHA Administrative Plan. 


</P>
<P>(d) The PHA Administrative Plan must cover all the PHA's local policies for administration of the program, including the PHA's policies on the following subjects (see 24 CFR 983.10 for a list of subjects specific to the project-based voucher (PBV) program that also must be included in the Administrative Plan of a PHA that operates a PBV program):


</P>
<P>(1) Selection and admission of applicants from the PHA waiting list, including any PHA admission preferences, procedures for removing applicant names from the waiting list, and procedures for closing and reopening the PHA waiting list;
</P>
<P>(2) Issuing or denying vouchers, including PHA policy governing the voucher term and any extensions of the voucher term. If the PHA decides to allow extensions of the voucher term, the PHA Administrative Plan must describe how the PHA determines whether to grant extensions, and how the PHA determines the length of any extension.
</P>
<P>(3) Any special rules for use of available funds when HUD provides funding to the PHA for a special purpose (e.g., desegregation), including funding for specified families or a specified category of families; 
</P>
<P>(4) Occupancy policies, including: 
</P>
<P>(i) Definition of what group of persons may qualify as a “family”; 
</P>
<P>(ii) Definition of when a family is considered to be “continuously assisted”; 
</P>
<P>(iii) Standards for denying admission or terminating assistance based on criminal activity or alcohol abuse in accordance with § 982.553, or other factors in accordance with §§ 982.552, 982.554, and 982.555; and
</P>
<P>(iv) Policies concerning residency by a foster child, foster adult, or live-in aide, including defining when PHA consent for occupancy by a foster child, foster adult, or live-in aide must be given or may be denied;




</P>
<P>(5) Encouraging participation by owners of suitable units located outside areas of low income or minority concentration; 
</P>
<P>(6) Assisting a family that claims that illegal discrimination has prevented the family from leasing a suitable unit; 
</P>
<P>(7) Providing information about a family to prospective owners;
</P>
<P>(8) Disapproval of owners; 
</P>
<P>(9) Subsidy standards; 
</P>
<P>(10) Family absence from the dwelling unit; 
</P>
<P>(11) How to determine who remains in the program if a family breaks up; 
</P>
<P>(12) Informal review procedures for applicants; 
</P>
<P>(13) Informal hearing procedures for participants; 
</P>
<P>(14) Payment standard policies, including:
</P>
<P>(i) The process for establishing and revising payment standards, including whether the PHA has voluntarily adopted the use of Small Area Fair Market Rents (SAFMRs);
</P>
<P>(ii) A description of how the PHA will administer decreases in the payment standard amount for a family continuing to reside in a unit for which the family is receiving assistance (see § 982.505(c)(3)); and
</P>
<P>(iii) If the PHA establishes different payment standard amounts for designated areas within its jurisdiction, including exception areas, the criteria used to determine the designated areas and the payment standard amounts for those designated areas. (See § 982.503(a)(2)). All such areas must be described in the PHA's Administrative Plan or payment standard schedule;






</P>
<P>(15) The method of determining that rent to owner is a reasonable rent (initially and during the term of a HAP contract);
</P>
<P>(16) Special policies concerning special housing types in the program (e.g., use of shared housing); 
</P>
<P>(17) Policies concerning payment by a family to the PHA of amounts the family owes the PHA; 
</P>
<P>(18) Policies concerning interim redeterminations of family income and composition, the frequency of determinations of family income, and income-determination practices, including whether the PHA will accept a family declaration of assets;










</P>
<P>(19) Restrictions, if any, on the number of moves by a participant family (see § 982.354(c));
</P>
<P>(20) Approval by the Board of Commissioners or other authorized officials to charge the administrative fee reserve;
</P>
<P>(21) Procedural guidelines and performance standards for conducting required HQS inspections, including:
</P>
<P>(i) Any deficiency that the PHA has adopted as a life-threatening deficiency that is not a HUD-required life-threatening deficiency.
</P>
<P>(ii) For PHAs that adopt the initial inspection non-life-threatening deficiency option:
</P>
<P>(A) The PHA's policy on whether the provision will apply to all initial inspections or a portion of initial inspections.
</P>
<P>(B) The PHA's policy on whether the provision will be applied to only some inspections and how the units will be selected.
</P>
<P>(C) The PHA's policy on using withheld HAP funds to repay an owner once the unit is in compliance with HQS.
</P>
<P>(iii) For PHAs that adopt the alternative inspection provision:
</P>
<P>(A) The PHA's policy on how it will apply the provision to initial and periodic inspections.
</P>
<P>(B) The specific alternative inspection method used by the PHA.
</P>
<P>(C) The specific properties or types of properties where the alternative inspection method will be employed.
</P>
<P>(D) For initial inspections, the maximum amount of time the PHA will withhold HAP if the owner does not correct the HQS deficiencies within the cure period, and the period of time after which the PHA will terminate the HAP contract for the owner's failure to correct the deficiencies, which may not exceed 180 days from the effective date of the HAP contract.
</P>
<P>(iv) The PHA's policy on charging a reinspection fee to owners.
</P>
<P>(22) The PHA's policy on withholding HAP for units that do not meet HQS (see § 982.404(d)(1));
</P>
<P>(23) The PHA's policy on assisting families with relocating and finding a new unit (see § 982.404(e)(3));
</P>
<P>(24) The PHA's policy on screening of applicants for family behavior or suitability for tenancy;
</P>
<P>(25) Whether the PHA will permit a family to submit more than one Request for Tenancy Approval at a time (see § 982.302(b)); and
</P>
<P>(26) In the event of insufficient funding, taking into account any cost-savings measures taken by the PHA, a description of the factors the PHA will consider when determining which HAP contracts to terminate first (<I>e.g.,</I> prioritization of PBV HAP contracts over tenant-based HAP contracts or prioritization of contracts that serve vulnerable families or individuals).


</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 60 FR 45661, Sept. 1, 1995; 61 FR 27163, May 30, 1996; 63 FR 23859, Apr. 30, 1998; 64 FR 26641, May 14, 1999; 64 FR 49658, Sept. 14, 1999; 64 FR 56911, Oct. 21, 1999; 66 FR 28804, May 24, 2001; 80 FR 8245, Feb. 17, 2015; 80 FR 50572, Aug. 20, 2015; 81 FR 80582, Nov. 16, 2016; 89 FR 38294, May 7, 2024]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:4.1.3.1.19.3" TYPE="SUBPART">
<HEAD>Subpart C—Funding and PHA Application for Funding</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>60 FR 34695, July 3, 1995, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 982.101" NODE="24:4.1.3.1.19.3.33.1" TYPE="SECTION">
<HEAD>§ 982.101   Allocation of funding.</HEAD>
<P>(a) <I>Allocation of funding.</I> HUD allocates available budget authority for the tenant-based assistance program to HUD field offices.
</P>
<P>(b) <I>Section 213(d) allocation.</I> (1) Section 213(d) of the HCD Act of 1974 (42 U.S.C. 1439) establishes requirements for allocation of assisted housing budget authority. Some budget authority is exempt by law from allocation under section 213(d). Unless exempted by law, budget authority for the tenant-based programs must be allocated in accordance with section 213(d). 
</P>
<P>(2) Budget authority subject to allocation under section 213(d) is allocated in accordance with 24 CFR part 791, subpart D. There are three categories of section 213(d) funding allocations under part 791 of this title: 
</P>
<P>(i) Funding retained in a headquarters reserve for purposes specified by law;
</P>
<P>(ii) funding incapable of geographic formula allocation (e.g., for renewal of expiring funding increments); or 
</P>
<P>(iii) funding allocated by an objective fair share formula. Funding allocated by fair share formula is distributed by a competitive process. 
</P>
<P>(c) <I>Competitive process.</I> For budget authority that is distributed by competitive process, the Department solicits applications from PHAs by publishing one or more notices of funding availability (NOFAs) in the <E T="04">Federal Register.</E> See 24 CFR part 12, subpart B; and 24 CFR 791.406. The NOFA explains how to apply for assistance, and specifies the criteria for awarding the assistance. The NOFA may identify any special program requirements for use of the funding. 
</P>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 64 FR 26642, May 14, 1999; 80 FR 8246, Feb. 17, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 982.102" NODE="24:4.1.3.1.19.3.33.2" TYPE="SECTION">
<HEAD>§ 982.102   Allocation of budget authority for renewal of expiring consolidated ACC funding increments.</HEAD>
<P>(a) <I>Applicability.</I> This section applies to the renewal of consolidated ACC funding increments in the program (as described in § 982.151(a)(2)) that expire after December 31, 1999 (including any assistance that the PHA has attached to units for project-based assistance under 24 CFR part 983). This section implements section 8(dd) of the 1937 Act (42 U.S.C. 1437f(dd)).
</P>
<P>(b) <I>Renewal Methodology.</I> HUD will use the following methodology to determine the amount of budget authority to be allocated to a PHA for the renewal of expiring consolidated ACC funding increments in the program, subject to the availability of appropriated funds. If the amount of appropriated funds is not sufficient to provide the full amount of renewal funding for PHAs, as calculated in accordance with this section, HUD may establish a procedure to adjust allocations for the shortfall in funding.
</P>
<P>(c) <I>Determining the amount of budget authority allocated for renewal of an expiring funding increment.</I> Subject to availability of appropriated funds, as determined by HUD, the amount of budget authority allocated by HUD to a PHA for renewal of each program funding increment that expires during a calendar year will be equal to:
</P>
<P>(1) <I>Number of renewal units.</I> The number of renewal units assigned to the funding increment (as determined by HUD pursuant to paragraph (d) of this section); multiplied by
</P>
<P>(2) <I>Adjusted annual per unit cost.</I> The adjusted annual per unit cost (as determined by HUD pursuant to paragraph (e) of this section).
</P>
<P>(d) <I>Determining the number of renewal units</I>—(1) <I>Number of renewal units.</I> HUD will determine the total number of renewal units for a PHA's program as of the last day of the calendar year previous to the calendar year for which renewal funding is calculated. The number of renewal units for a PHA's program will be determined as follows:
</P>
<P>(i) <I>Step 1: Establishing the initial baseline.</I> HUD will establish a baseline number of units (“baseline”) for each PHA program. The initial baseline equals the number of units reserved by HUD for the PHA program as of December 31, 1999.
</P>
<P>(ii) <I>Step 2: Establishing the adjusted baseline.</I> The adjusted baseline equals the initial baseline with the following adjustments from the initial baseline as of the last day of the calendar year previous to the calendar year for which renewal funding is calculated:
</P>
<P>(A) <I>Additional units.</I> HUD will add to the initial baseline any additional units reserved for the PHA after December 31, 1999.
</P>
<P>(B) <I>Units removed.</I> HUD will subtract from the initial baseline any units de-reserved by HUD from the PHA program after December 31, 1999.
</P>
<P>(iii) <I>Step 3: Determining the number of renewal units.</I> The number of renewal units equals the adjusted baseline minus the number of units supported by contract funding increments that expire after the end of the calendar year.
</P>
<P>(2) <I>Funding increments.</I> HUD will assign all units reserved for a PHA program to one or more funding increment(s).
</P>
<P>(3) <I>Correction of errors.</I> HUD may adjust the number of renewal units to correct errors.
</P>
<P>(e) <I>Determining the adjusted per unit cost.</I> HUD will determine the PHA's adjusted per unit cost when HUD processes the allocation of renewal funding for an expiring contract funding increment. The adjusted per unit cost calculated will be determined as follows:
</P>
<P>(1) <I>Step 1: Determining monthly program expenditure</I>—(i) <I>Use of most recent HUD-approved year end statement.</I> HUD will determine the PHA's monthly per unit program expenditure for the HCV program (including project-based assistance under such program) under the consolidated ACC with HUD using data from the PHA's most recent HUD-approved year end statement.
</P>
<P>(ii) <I>Monthly program expenditure.</I> The monthly program expenditure equals:
</P>
<P>(A) <I>Total program expenditure.</I> The PHA's total program expenditure (the total of housing assistance payments and administrative costs) for the PHA fiscal year covered by the approved year end statement; divided by
</P>
<P>(B) <I>Total unit months leased.</I> The total of unit months leased for the PHA fiscal year covered by the approved year end statement.
</P>
<P>(2) <I>Step 2: Determining annual per unit cost.</I> HUD will determine the PHA's annual per unit cost. The annual per unit cost equals the monthly program expenditures (as determined under paragraph (e)(1)(ii) of this section) multiplied by 12.
</P>
<P>(3) <I>Step 3: Determining adjusted annual per unit cost.</I> (i) HUD will determine the PHA's adjusted annual per unit cost. The adjusted annual per unit cost equals the annual per unit cost (as determined under paragraph (e)(2) of this section) multiplied cumulatively by the applicable published Section 8 housing assistance payments program annual adjustment factors in effect during the period from the end of the PHA fiscal year covered by the approved year end statement to the time when HUD processes the allocation of renewal funding.
</P>
<P>(ii) <I>Use of annual adjustment factor applicable to PHA jurisdiction.</I> For this purpose, HUD will use the annual adjustment factor from the notice published annually in the <E T="04">Federal Register</E> pursuant to part 888 that is applicable to the jurisdiction of the PHA. For a PHA whose jurisdiction spans multiple annual adjustment factor areas, HUD will use the highest applicable annual adjustment factor.
</P>
<P>(iii) <I>Use of annual adjustment factors in effect subsequent to most recent Year End Statement.</I> HUD will use the Annual Adjustment Factors in effect during the time period subsequent to the time covered by the most recent HUD approved Year End Statement and the time of the processing of the contract funding increment to be renewed.
</P>
<P>(iv) <I>Special circumstances.</I> At its discretion, HUD may modify the adjusted annual per unit cost based on receipt of a modification request from a PHA. The modification request must demonstrate that because of special circumstances application of the annual adjustment factor will not provide an accurate adjusted annual per unit cost.
</P>
<P>(4) <I>Correction of errors.</I> HUD may correct for errors in the adjusted per unit cost.
</P>
<P>(f) <I>Consolidated ACC amendment to add renewal funding.</I> HUD will reserve allocated renewal funding available to the PHA within a reasonable time prior to the expiration of the funding increment to be renewed and establish a new expiration date one-year from the date of such expiration.
</P>
<P>(g) <I>Modification of allocation of budget authority</I>—(1) <I>HUD authority to conform PHA program costs with PHA program finances through Federal Register notice.</I> In the event that a PHA's costs incurred threaten to exceed budget authority and allowable reserves, HUD reserves the right, through <E T="04">Federal Register</E> notice, to bring PHA program costs and the number of families served, in line with PHA program finances.
</P>
<P>(2) <I>HUD authority to limit increases of per unit cost through Federal Register notice.</I> HUD may, by <E T="04">Federal Register</E> notice, limit the amount or percentage of increases in the adjusted annual per unit cost to be used in calculating the allocation of budget authority.
</P>
<P>(3) <I>HUD authority to limit decreases to per unit costs through Federal Register notice.</I> HUD may, by <E T="04">Federal Register</E> notice, limit the amount or percentage of decreases in the adjusted annual per unit cost to be used in calculating the allocation of budget authority.
</P>
<P>(4) <I>Contents of Federal Register notice.</I> If HUD publishes a <E T="04">Federal Register</E> notice pursuant to paragraphs (g)(1), (g)(2) or (g)(3) of this section, it will describe the rationale, circumstances and procedures under which such modifications are implemented. Such circumstances and procedures shall, be consistent with the objective of enabling PHAs and HUD to meet program goals and requirements including but not limited to:
</P>
<P>(i) Deconcentration of poverty and expanding housing opportunities;
</P>
<P>(ii) Reasonable rent burden;
</P>
<P>(iii) Income targeting;
</P>
<P>(iv) Consistency with applicable consolidated plan(s);
</P>
<P>(v) Rent reasonableness;
</P>
<P>(vi) Program efficiency and economy;
</P>
<P>(vii) Service to additional households within budgetary limitations; and
</P>
<P>(viii) Service to the adjusted baseline number of families.
</P>
<P>(5) <I>Public consultation before issuance of Federal Register notice.</I> HUD will design and undertake informal public consultation prior to issuing <E T="04">Federal Register</E> notices pursuant to paragraphs (g)(1) or (g)(2) of this section.
</P>
<P>(h) <I>Ability to prorate and synchronize contract funding increments.</I> Notwithstanding paragraphs (c) through (g) of this section, HUD may prorate the amount of budget authority allocated for the renewal of funding increments that expire on different dates throughout the calendar year. HUD may use such proration to synchronize the expiration dates of funding increments under the PHA's consolidated ACC.
</P>
<P>(i) <I>Reallocation of budget authority.</I> If a PHA has performance deficiencies, such as a failure to adequately lease units, HUD may reallocate some of its budget authority to other PHAs. If HUD determines to reallocate budget authority, it will reduce the number of units reserved by HUD for the PHA program of the PHA whose budget authority is being reallocated and increase the number of units reserved by HUD for the PHAs whose programs are receiving the benefit of the reallocation, so that such PHAs can issue vouchers. HUD will publish a notice in the <E T="04">Federal Register</E> that will describe the circumstances and procedures for reallocating budget authority pursuant to this paragraph.
</P>
<CITA TYPE="N">[64 FR 56887, Oct. 21, 1999; 65 FR 16818, Mar. 30, 2000; 80 FR 8246, Feb. 17, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 982.103" NODE="24:4.1.3.1.19.3.33.3" TYPE="SECTION">
<HEAD>§ 982.103   PHA application for funding.</HEAD>
<P>(a) A PHA must submit an application for program funding to HUD at the time and place and in the form required by HUD. 
</P>
<P>(b) For competitive funding under a NOFA, the application must be submitted by a PHA in accordance with the requirements of the NOFA. 
</P>
<P>(c) The application must include all information required by HUD. HUD requirements may be stated in the HUD-required form of application, the NOFA, or other HUD instructions. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 60 FR 45661, Sept. 1, 1995; 63 FR 23859, Apr. 30, 1998. Redesignated at 64 FR 56887, Oct. 21, 1999; 80 FR 8246, Feb. 17, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 982.104" NODE="24:4.1.3.1.19.3.33.4" TYPE="SECTION">
<HEAD>§ 982.104   HUD review of application.</HEAD>
<P>(a) <I>Competitive funding under NOFA.</I> For competitive funding under a NOFA, HUD must evaluate an application on the basis of the selection criteria stated in the NOFA, and must consider the PHA's capacity and capability to administer the program.
</P>
<P>(b) <I>Approval or disapproval of PHA funding application.</I> (1) HUD must notify the PHA of its approval or disapproval of the PHA funding application. 
</P>
<P>(2) When HUD approves an application, HUD must notify the PHA of the amount of approved funding. 
</P>
<P>(3) For budget authority that is distributed to PHAs by competitive process, documentation of the basis for provision or denial of assistance is available for public inspection in accordance with 24 CFR 12.14(b). 
</P>
<P>(c) <I>PHA disqualification.</I> HUD will not approve any PHA funding application (including an application for competitive funding under a NOFA) if HUD determines that the PHA is disbarred or otherwise disqualified from providing assistance under the program.
</P>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 64 FR 26642, May 14, 1999. Redesignated at 64 FR 56887, Oct. 21, 1999]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:4.1.3.1.19.4" TYPE="SUBPART">
<HEAD>Subpart D—Annual Contributions Contract and PHA Administration of Program</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>60 FR 34695, July 3, 1995, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 982.151" NODE="24:4.1.3.1.19.4.33.1" TYPE="SECTION">
<HEAD>§ 982.151   Annual contributions contract.</HEAD>
<P>(a) <I>Nature of ACC.</I> (1) An annual contributions contract (ACC) is a written contract between HUD and a PHA. Under the ACC, HUD agrees to make payments to the PHA, over a specified term, for housing assistance payments to owners and for the PHA administrative fee. The ACC specifies the maximum payment over the ACC term. The PHA agrees to administer the program in accordance with HUD regulations and requirements. 
</P>
<P>(2) HUD's commitment to make payments for each funding increment in the PHA program constitutes a separate ACC. However, commitments for all the funding increments in a PHA program are listed in one consolidated contractual document called the consolidated annual contributions contract (consolidated ACC). A single consolidated ACC covers funding for the PHA's HCV program. 
</P>
<P>(b) <I>Budget authority.</I> (1) Budget authority is the maximum amount that may be paid by HUD to a PHA over the ACC term of a funding increment. Before adding a funding increment to the consolidated ACC for a PHA program, HUD reserves budget authority from amounts authorized and appropriated by the Congress for the program.
</P>
<P>(2) For each funding increment, the ACC specifies the term over which HUD will make payments for the PHA program, and the amount of available budget authority for each funding increment. The amount to be paid to the PHA during each PHA fiscal year (including payment from the ACC reserve account described in § 982.154) must be approved by HUD.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 60 FR 45661, Sept. 1, 1995; 64 FR 26642, May 14, 1999; 80 FR 8246, Feb. 17, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 982.152" NODE="24:4.1.3.1.19.4.33.2" TYPE="SECTION">
<HEAD>§ 982.152   Administrative fee.</HEAD>
<P>(a) <I>Purposes of administrative fee.</I> (1) HUD may approve administrative fees to the PHA for any of the following purposes:
</P>
<P>(i) Ongoing administrative fee;
</P>
<P>(ii) Costs to help families who experience difficulty finding or renting appropriate housing under the program;
</P>
<P>(iii) The following types of extraordinary costs approved by HUD:
</P>
<P>(A) Costs to cover necessary additional expenses incurred by the PHA to provide reasonable accommodation for persons with disabilities in accordance with part 8 of this title (e.g., additional counselling costs), where the PHA is unable to cover such additional expenses from ongoing administrative fee income or the PHA administrative fee reserve;
</P>
<P>(B) Costs of audit by an independent public accountant;
</P>
<P>(C) Other extraordinary costs determined necessary by HUD Headquarters;
</P>
<P>(iv) Preliminary fee (in accordance with paragraph (c) of this section);
</P>
<P>(v) Costs to coordinate supportive services for families participating in the family self-sufficiency (FSS) program.
</P>
<P>(2) For each PHA fiscal year, administrative fees are specified in the PHA budget. The budget is submitted for HUD approval. Fees are paid in the amounts approved by HUD. Administrative fees may only be approved or paid from amounts appropriated by the Congress.
</P>
<P>(3) PHA administrative fees may only be used to cover costs incurred to perform PHA administrative responsibilities for the program in accordance with HUD regulations and requirements.
</P>
<P>(b) <I>Ongoing administrative fee.</I> (1) The PHA ongoing administrative fee is paid for each program unit under HAP contract on the first day of the month. The amount of the ongoing fee is determined by HUD in accordance with Section 8(q)(1) of the 1937 Act (42 U.S.C. 1437f(q)(1)).
</P>
<P>(2) If appropriations are available, HUD may pay a higher ongoing administrative fee for a small program or a program operating over a large geographic area. This higher fee level will not be approved unless the PHA demonstrates that it is efficiently administering its HCV program, and that the higher ongoing administrative fee is reasonable and necessary for administration of the program in accordance with HUD requirements. 
</P>
<P>(3) HUD may pay a lower ongoing administrative fee for PHA-owned units. 
</P>
<P>(c) <I>Preliminary fee.</I> (1) If the PHA was not administering a program of Section 8 tenant-based assistance prior to the merger date, HUD will pay a one-time fee in the amount of $500 in the first year the PHA administers a program. The fee is paid for each new unit added to the PHA program by the initial funding increment under the consolidated ACC.
</P>
<P>(2) The preliminary fee is used to cover expenses the PHA incurs to help families who inquire about or apply for the program, and to lease up new program units.
</P>
<P>(d) <I>Reducing PHA administrative fee.</I> HUD may reduce or offset any administrative fee to the PHA, in the amount determined by HUD, if the PHA fails to perform PHA administrative responsibilities correctly or adequately under the program (for example, PHA failure to enforce HQS requirements; or to reimburse a receiving PHA promptly under portability procedures). 
</P>
<CITA TYPE="N">[60 FR 23695, July 3, 1995, as amended at 63 FR 23860, Apr. 30, 1998; 64 FR 26642, May 14, 1999; 80 FR 8246, Feb. 17, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 982.153" NODE="24:4.1.3.1.19.4.33.3" TYPE="SECTION">
<HEAD>§ 982.153   PHA responsibilities.</HEAD>
<P>The PHA must comply with the consolidated ACC, the application, HUD regulations and other requirements, and the PHA Administrative Plan. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 60 FR 45661, Sept. 1, 1995; 61 FR 13627, Mar. 27, 1996; 63 FR 23860, Apr. 30, 1998]


</CITA>
</DIV8>


<DIV8 N="§ 982.154" NODE="24:4.1.3.1.19.4.33.4" TYPE="SECTION">
<HEAD>§ 982.154   ACC reserve account.</HEAD>
<P>(a) HUD may establish and maintain an unfunded reserve account for the PHA program from available budget authority under the consolidated ACC. This reserve is called the “ACC reserve account” (formerly “project reserve”). There is a single ACC reserve account for the PHA program.
</P>
<P>(b) The amount in the ACC reserve account is determined by HUD. HUD may approve payments for the PHA program, in accordance with the PHA's HUD-approved budget, from available amounts in the ACC reserve account.
</P>
<CITA TYPE="N">[64 FR 26642, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 982.155" NODE="24:4.1.3.1.19.4.33.5" TYPE="SECTION">
<HEAD>§ 982.155   Administrative fee reserve.</HEAD>
<P>(a) The PHA must maintain an administrative fee reserve (formerly “operating reserve”) for the program. There is a single administrative fee reserve for the PHA program. The PHA must credit to the administrative fee reserve the total of:
</P>
<P>(1) The amount by which program administrative fees paid by HUD for a PHA fiscal year exceed the PHA program administrative expenses for the fiscal year; plus 
</P>
<P>(2) Interest earned on the administrative fee reserve. 
</P>
<P>(b)(1) The PHA must use funds in the administrative fee reserve to pay program administrative expenses in excess of administrative fees paid by HUD for a PHA fiscal year. If funds in the administrative fee reserve are not needed to cover PHA administrative expenses (to the end of the last expiring funding increment under the consolidated ACC), the PHA may use these funds for other housing purposes permitted by State and local law. However, HUD may prohibit use of the funds for certain purposes. 
</P>
<P>(2) The PHA Board of Commissioners or other authorized officials must establish the maximum amount that may be charged against the administrative fee reserve without specific approval. 
</P>
<P>(3) If the PHA has not adequately administered any Section 8 program, HUD may prohibit use of funds in the administrative fee reserve, and may direct the PHA to use funds in the reserve to improve administration of the program or to reimburse ineligible expenses. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 60 FR 45661, Sept. 1, 1995; 64 FR 26642, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 982.156" NODE="24:4.1.3.1.19.4.33.6" TYPE="SECTION">
<HEAD>§ 982.156   Depositary for program funds.</HEAD>
<P>(a) Unless otherwise required or permitted by HUD, all program receipts must be promptly deposited with a financial institution selected as depositary by the PHA in accordance with HUD requirements. 
</P>
<P>(b) The PHA may only withdraw deposited program receipts for use in connection with the program in accordance with HUD requirements. 
</P>
<P>(c) The PHA must enter into an agreement with the depositary in the form required by HUD. 
</P>
<P>(d)(1) If required under a written freeze notice from HUD to the depositary: 
</P>
<P>(i) The depositary may not permit any withdrawal by the PHA of funds held under the depositary agreement unless expressly authorized by written notice from HUD to the depositary; and 
</P>
<P>(ii) The depositary must permit withdrawals of such funds by HUD. 
</P>
<P>(2) HUD must send the PHA a copy of the freeze notice from HUD to the depositary. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 60 FR 45661, Sept. 1, 1995]


</CITA>
</DIV8>


<DIV8 N="§ 982.157" NODE="24:4.1.3.1.19.4.33.7" TYPE="SECTION">
<HEAD>§ 982.157   Budget and expenditure.</HEAD>
<P>(a) <I>Budget submission.</I> Each PHA fiscal year, the PHA must submit its proposed budget for the program to HUD for approval at such time and in such form as required by HUD. 
</P>
<P>(b) <I>PHA use of program receipts.</I> (1) Program receipts must be used in accordance with the PHA's HUD-approved budget. Such program receipts may only be used for:
</P>
<P>(i) Housing assistance payments; and 
</P>
<P>(ii) PHA administrative fees. 
</P>
<P>(2) The PHA must maintain a system to ensure that the PHA will be able to make housing assistance payments for all participants within the amounts contracted under the consolidated ACC. 
</P>
<P>(c) <I>Intellectual property rights.</I> Program receipts may not be used to indemnify contractors or subcontractors of the PHA against costs associated with any judgment of infringement of intellectual property rights.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 60 FR 45661, Sept. 1, 1995; 64 FR 26642, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 982.158" NODE="24:4.1.3.1.19.4.33.8" TYPE="SECTION">
<HEAD>§ 982.158   Program accounts and records.</HEAD>
<P>(a) The PHA must maintain complete and accurate accounts and other records for the program in accordance with HUD requirements, in a manner that permits a speedy and effective audit. The records must be in the form required by HUD, including requirements governing computerized or electronic forms of record-keeping. The PHA must comply with the financial reporting requirements in 24 CFR part 5, subpart H.
</P>
<P>(b) The PHA must furnish to HUD accounts and other records, reports, documents and information, as required by HUD. For provisions on electronic transmission of required family data, see 24 CFR part 908. 
</P>
<P>(c) HUD and the Comptroller General of the United States shall have full and free access to all PHA offices and facilities, and to all accounts and other records of the PHA that are pertinent to administration of the program, including the right to examine or audit the records, and to make copies. The PHA must grant such access to computerized or other electronic records, and to any computers, equipment or facilities containing such records, and shall provide any information or assistance needed to access the records. 
</P>
<P>(d) The PHA must prepare a unit inspection report. 
</P>
<P>(e) During the term of each assisted lease, and for at least three years thereafter, the PHA must keep: 
</P>
<P>(1) A copy of the executed lease; 
</P>
<P>(2) The HAP contract; and 
</P>
<P>(3) The application from the family. 
</P>
<P>(f) The PHA must keep the following records for at least three years: 
</P>
<P>(1) Records that provide income, racial, ethnic, gender, and disability status data on program applicants and participants; 
</P>
<P>(2) An application from each ineligible family and notice that the applicant is not eligible; 
</P>
<P>(3) HUD-required reports; 
</P>
<P>(4) Unit inspection reports; 
</P>
<P>(5) Lead-based paint records as required by part 35, subpart B of this title.
</P>
<P>(6) Accounts and other records supporting PHA budget and financial statements for the program; 
</P>
<P>(7) Records to document the basis for PHA determination that rent to owner is a reasonable rent (initially and during the term of a HAP contract); and
</P>
<P>(8) Other records specified by HUD. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 60 FR 45661, Sept. 1, 1995; 61 FR 27163, May 30, 1996; 63 FR 23860, Apr. 30, 1998; 63 FR 46593, Sept. 1, 1998; 64 FR 50229, Sept. 15, 1999; 80 FR 8246, Feb. 17, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 982.159" NODE="24:4.1.3.1.19.4.33.9" TYPE="SECTION">
<HEAD>§ 982.159   Audit requirements.</HEAD>
<P>(a) The PHA must engage and pay an independent public accountant to conduct audits in accordance with HUD requirements. 
</P>
<P>(b) The PHA is subject to the audit requirements in 2 CFR part 200, subpart F. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 60 FR 45661, Sept. 1, 1995; 80 FR 75943, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 982.160" NODE="24:4.1.3.1.19.4.33.10" TYPE="SECTION">
<HEAD>§ 982.160   HUD determination to administer a local program.</HEAD>
<P>If the Assistant Secretary for Public and Indian Housing determines that there is no PHA organized, or that there is no PHA able and willing to implement the provisions of this part for an area, HUD (or an entity acting on behalf of HUD) may enter into HAP contracts with owners and perform the functions otherwise assigned to PHAs under this part with respect to the area. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 60 FR 45661, Sept. 1, 1995]


</CITA>
</DIV8>


<DIV8 N="§ 982.161" NODE="24:4.1.3.1.19.4.33.11" TYPE="SECTION">
<HEAD>§ 982.161   Conflict of interest.</HEAD>
<P>(a) Neither the PHA nor any of its contractors or subcontractors may enter into any contract or arrangement in connection with the HCV program in which any of the following classes of persons has any interest, direct or indirect, during tenure or for one year thereafter: 
</P>
<P>(1) Any present or former member or officer of the PHA (except a participant commissioner); 
</P>
<P>(2) Any employee of the PHA, or any contractor, subcontractor or agent of the PHA, who formulates policy or who influences decisions with respect to the programs; 
</P>
<P>(3) Any public official, member of a governing body, or State or local legislator, who exercises functions or responsibilities with respect to the programs; or 
</P>
<P>(4) Any member of the Congress of the United States. 
</P>
<P>(b) Any member of the classes described in paragraph (a) of this section must disclose their interest or prospective interest to the PHA and HUD. 
</P>
<P>(c) The conflict of interest prohibition under this section may be waived by the HUD field office for good cause. 
</P>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 80 FR 8246, Feb. 17, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 982.162" NODE="24:4.1.3.1.19.4.33.12" TYPE="SECTION">
<HEAD>§ 982.162   Use of HUD-required contracts and other forms.</HEAD>
<P>(a) The PHA must use program contracts and other forms required by HUD headquarters, including: 
</P>
<P>(1) The consolidated ACC between HUD and the PHA; 
</P>
<P>(2) The HAP contract between the PHA and the owner; and 
</P>
<P>(3) The tenancy addendum required by HUD (which is included both in the HAP contract and in the lease between the owner and the tenant).
</P>
<P>(b) Required program contracts and other forms must be word-for-word in the form required by HUD headquarters. Any additions to or modifications of required program contracts or other forms must be approved by HUD headquarters. 
</P>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 64 FR 26642, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 982.163" NODE="24:4.1.3.1.19.4.33.13" TYPE="SECTION">
<HEAD>§ 982.163   Fraud recoveries.</HEAD>
<P>Under 24 CFR part 792, the PHA may retain a portion of program fraud losses that the PHA recovers from a family or owner by litigation, court-order or a repayment agreement. 
</P>
<CITA TYPE="N">[60 FR 34695, July 3, 1995; 60 FR 43840, Aug. 23, 1995]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:4.1.3.1.19.5" TYPE="SUBPART">
<HEAD>Subpart E—Admission to Tenant-Based Program</HEAD>


<DIV8 N="§ 982.201" NODE="24:4.1.3.1.19.5.33.1" TYPE="SECTION">
<HEAD>§ 982.201   Eligibility and targeting.</HEAD>
<P>(a) <I>When applicant is eligible: General.</I> The PHA may admit only eligible families to the program. To be eligible, an applicant must be a “family;” must be income-eligible in accordance with paragraph (b) of this section and 24 CFR part 5, subpart F; and must be a citizen or a noncitizen who has eligible immigration status as determined in accordance with 24 CFR part 5, subpart E. If the applicant is a victim of domestic violence, dating violence, sexual assault, or stalking, 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking) applies.
</P>
<P>(b) <I>Income</I>—(1) <I>Income-eligibility.</I> To be income-eligible, the applicant must be a family in any of the following categories:
</P>
<P>(i) A “very low income” family;
</P>
<P>(ii) A low-income family that is “continuously assisted” under the 1937 Housing Act;
</P>
<P>(iii) A low-income family that meets additional eligibility criteria specified in the PHA Administrative Plan. Such additional PHA criteria must be consistent with the PHA plan and with the consolidated plans for local governments in the PHA jurisdiction;
</P>
<P>(iv) A low-income family that qualifies for voucher assistance as a non-purchasing family residing in a HOPE 1 (HOPE for public housing homeownership) or HOPE 2 (HOPE for homeownership of multifamily units) project. (Section 8(o)(4)(D) of the 1937 Act (42 U.S.C. 1437f(o)(4)(D));
</P>
<P>(v) A low-income or moderate-income family that is displaced as a result of the prepayment of the mortgage or voluntary termination of an insurance contract on eligible low-income housing as defined in § 248.101 of this title;
</P>
<P>(vi) A low-income family that qualifies for voucher assistance as a non-purchasing family residing in a project subject to a resident homeownership program under § 248.173 of this title.
</P>
<P>(2) <I>Income-targeting.</I> (i) Not less than 75 percent of the families admitted to a PHA's HCV program during the PHA fiscal year from the PHA waiting list shall be extremely low income families. Annual income of such families shall be verified within the period described in paragraph (e) of this section.
</P>
<P>(ii) A PHA may admit a lower percent of extremely low income families during a PHA fiscal year (than otherwise required under paragraph (b)(2)(i) of this section) if HUD approves the use of such lower percent by the PHA, in accordance with the PHA plan, based on HUD's determination that the following circumstances necessitate use of such lower percent by the PHA:
</P>
<P>(A) The PHA has opened its waiting list for a reasonable time for admission of extremely low income families residing in the same metropolitan statistical area (MSA) or non-metropolitan county, both inside and outside the PHA jurisdiction;
</P>
<P>(B) The PHA has provided full public notice of such opening to such families, and has conducted outreach and marketing to such families, including outreach and marketing to extremely low income families on the Section 8 and public housing waiting lists of other PHAs with jurisdiction in the same MSA or non-metropolitan county;
</P>
<P>(C) Notwithstanding such actions by the PHA (in accordance with paragraphs (b)(2)(ii)(A) and (B) of this section), there are not enough extremely low income families on the PHA's waiting list to fill available slots in the program during any fiscal year for which use of a lower percent is approved by HUD; and
</P>
<P>(D) Admission of the additional very low income families other than extremely low income families to the PHA's tenant-based voucher program will substantially address worst case housing needs as determined by HUD.
</P>
<P>(iii) If approved by HUD, the admission of a portion of very low income welfare-to-work (WTW) families that are not extremely low income families may be disregarded in determining compliance with the PHA's income-targeting obligations under paragraph (b)(2)(i) of this section. HUD will grant such approval only if and to the extent that the PHA has demonstrated to HUD's satisfaction that compliance with such targeting obligations with respect to such portion of WTW families would interfere with the objectives of the welfare-to-work voucher program. If HUD grants such approval, admission of that portion of WTW families is not counted in the base number of families admitted to a PHA's tenant-based voucher program during the fiscal year for purposes of income targeting.
</P>
<P>(iv) Admission of families as described in paragraphs (b)(1)(ii) or (b)(1)(v) of this section is not subject to targeting under paragraph (b)(2)(i) of this section.
</P>
<P>(v) If the jurisdictions of two or more PHAs that administer the HCV program cover an identical geographic area, such PHAs may elect to be treated as a single PHA for purposes of targeting under paragraph (b)(2)(i) of this section. In such a case, the PHAs shall cooperate to assure that aggregate admissions by such PHAs comply with the targeting requirement. If such PHAs do not have a single fiscal year, HUD will determine which PHA's fiscal year is used for this purpose.
</P>
<P>(vi) If a family initially leases a unit outside the PHA jurisdiction under portability procedures at admission to the HCV program, such admission shall be counted against the targeting obligation of the initial PHA (unless the receiving PHA absorbs the portable family into the receiving PHA's HCV program from the point of admission).
</P>
<P>(3) The annual income (gross income) of an applicant family is used both for determination of income-eligibility under paragraph (b)(1) of this section and for targeting under paragraph (b)(2)(i) of this section. In determining annual income of an applicant family that includes a person with disabilities, the determination must include the disallowance of increase in annual income as provided in 24 CFR 5.617, if applicable.
</P>
<P>(4) The applicable income limit for issuance of a voucher when a family is selected for the program is the highest income limit (for the family size) for areas in the PHA jurisdiction. The applicable income limit for admission to the program is the income limit for the area where the family is initially assisted in the program. At admission, the family may only use the voucher to rent a unit in an area where the family is income eligible.
</P>
<P>(c) <I>Family composition.</I> See definition of “family” in 24 CFR 5.403.
</P>
<P>(d) <I>Continuously assisted.</I> (1) An applicant is continuously assisted under the 1937 Housing Act if the family is already receiving assistance under any 1937 Housing Act program when the family is admitted to the voucher program. 
</P>
<P>(2) The PHA must establish policies concerning whether and to what extent a brief interruption between assistance under one of these programs and admission to the voucher program will be considered to break continuity of assistance under the 1937 Housing Act. 
</P>
<P>(e) <I>When PHA verifies that applicant is eligible.</I> The PHA must receive information verifying that an applicant is eligible within the period of 60 days before the PHA issues a voucher to the applicant. 
</P>
<P>(f) <I>Decision to deny assistance</I>—(1) <I>Notice to applicant.</I> The PHA must give an applicant prompt written notice of a decision denying admission to the program (including a decision that the applicant is not eligible, or denying assistance for other reasons). The notice must give a brief statement of the reasons for the decision. The notice must also state that the applicant may request an informal review of the decision, and state how to arrange for the informal review. 
</P>
<P>(2) For description of the grounds for denying assistance because of action or inaction by the applicant, see § 982.552(b) and (c) (requirement and authority to deny admission) and § 982.553(a) (crime by family members).
</P>
<CITA TYPE="N">[59 FR 36682, July 18, 1994, as amended at 60 FR 34717, July 3, 1995; 61 FR 13627, Mar. 27, 1996; 64 FR 26642, May 14, 1999; 64 FR 49658, Sept. 14, 1999; 64 FR 56911, Oct. 21, 1999; 66 FR 6226, Jan. 19, 2001; 66 FR 8174, Jan. 30, 2001; 67 FR 6820, Feb. 13, 2002; 70 FR 77744, Dec. 30, 2005; 73 FR 72344, Nov. 28, 2008; 75 FR 66263, Oct. 27, 2010; 77 FR 5676, Feb. 3, 2012; 80 FR 8246, Feb. 17, 2015; 81 FR 80816, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 982.202" NODE="24:4.1.3.1.19.5.33.2" TYPE="SECTION">
<HEAD>§ 982.202   How applicants are selected: General requirements.</HEAD>
<P>(a) <I>Waiting list admissions and special admissions.</I> The PHA may admit an applicant for participation in the program either: 
</P>
<P>(1) As a special admission (see § 982.203). 
</P>
<P>(2) As a waiting list admission (see § 982.204 through § 982.210). 
</P>
<P>(b) <I>Prohibited admission criteria</I>—(1) <I>Where family lives.</I> Admission to the program may not be based on where the family lives before admission to the program. However, the PHA may target assistance for families who live in public housing or other federally assisted housing, or may adopt a residency preference (see § 982.207). 
</P>
<P>(2) <I>Where family will live.</I> Admission to the program may not be based on where the family will live with assistance under the program. 
</P>
<P>(3) <I>Family characteristics.</I> The PHA preference system may provide a preference for admission of families with certain characteristics from the PHA waiting list. However, admission to the program may not be based on:
</P>
<P>(i) Discrimination because members of the family are unwed parents, recipients of public assistance, or children born out of wedlock; 
</P>
<P>(ii) Discrimination because a family includes children (familial status discrimination); 
</P>
<P>(iii) Discrimination because of age, race, color, religion, sex, or national origin; 
</P>
<P>(iv) Discrimination because of disability; or 
</P>
<P>(v) Whether a family decides to participate in a family self-sufficiency program. 
</P>
<P>(c) <I>Applicant status.</I> An applicant does not have any right or entitlement to be listed on the PHA waiting list, to any particular position on the waiting list, or to admission to the programs. The preceding sentence does not affect or prejudice any right, independent of this rule, to bring a judicial action challenging an PHA violation of a constitutional or statutory requirement. 
</P>
<P>(d) <I>Admission policy.</I> The PHA must admit applicants for participation in accordance with HUD regulations and other requirements, including, but not limited to, 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking), and with PHA policies stated in the PHA Administrative Plan and the PHA plan. The PHA admission policy must state the system of admission preferences that the PHA uses to select applicants from the waiting list, including any residency preference or other local preference.
</P>
<CITA TYPE="N">[59 FR 36682, July 18, 1994, as amended at 60 FR 34717, July 3, 1995; 61 FR 9048, Mar. 6, 1996; 61 FR 27163, May 30, 1996; 64 FR 26643, May 14, 1999; 65 FR 16821, Mar. 30, 2000; 73 FR 72344, Nov. 28, 2008; 75 FR 66263, Oct. 27, 2010; 81 FR 80816, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 982.203" NODE="24:4.1.3.1.19.5.33.3" TYPE="SECTION">
<HEAD>§ 982.203   Special admission (non-waiting list): Assistance targeted by HUD.</HEAD>
<P>(a) If HUD awards a PHA program funding that is targeted for families living in specified units: 
</P>
<P>(1) The PHA must use the assistance for the families living in these units. 
</P>
<P>(2) The PHA may admit a family that is not on the PHA waiting list, or without considering the family's waiting list position. The PHA must maintain records showing that the family was admitted with HUD-targeted assistance. 
</P>
<P>(b) The following are examples of types of program funding that may be targeted for a family living in a specified unit: 
</P>
<P>(1) A family displaced because of demolition or disposition of a public housing project; 
</P>
<P>(2) A family residing in a multifamily rental housing project when HUD sells, forecloses or demolishes the project; 
</P>
<P>(3) For housing covered by the Low Income Housing Preservation and Resident Homeownership Act of 1990 (41 U.S.C. 4101 <I>et seq.</I>): 
</P>
<P>(i) A non-purchasing family residing in a project subject to a homeownership program (under 24 CFR 248.173); or 
</P>
<P>(ii) A family displaced because of mortgage prepayment or voluntary termination of a mortgage insurance contract (as provided in 24 CFR 248.165); 
</P>
<P>(4) A family residing in a project covered by a project-based Section 8 HAP contract at or near the end of the HAP contract term; and 
</P>
<P>(5) A non-purchasing family residing in a HOPE 1 or HOPE 2 project. 
</P>
<CITA TYPE="N">[59 FR 36682, July 18, 1994, as amended at 64 FR 26643, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 982.204" NODE="24:4.1.3.1.19.5.33.4" TYPE="SECTION">
<HEAD>§ 982.204   Waiting list: Administration of waiting list.</HEAD>
<P>(a) <I>Admission from waiting list.</I> Except for special admissions, participants must be selected from the PHA waiting list. The PHA must select participants from the waiting list in accordance with admission policies in the PHA Administrative Plan.
</P>
<P>(b) <I>Organization of waiting list.</I> The PHA must maintain information that permits the PHA to select participants from the waiting list in accordance with the PHA admission policies. The waiting list must contain the following information for each applicant listed:
</P>
<P>(1) Applicant name; 
</P>
<P>(2) Family unit size (number of bedrooms for which family qualifies under PHA occupancy standards); 
</P>
<P>(3) Date and time of application; 
</P>
<P>(4) Qualification for any local preference;
</P>
<P>(5) Racial or ethnic designation of the head of household. 
</P>
<P>(c) <I>Removing applicant names from the waiting list.</I> (1) The PHA Administrative Plan must state PHA policy on when applicant names may be removed from the waiting list. The policy may provide that the PHA will remove names of applicants who do not respond to PHA requests for information or updates.
</P>
<P>(2) An PHA decision to withdraw from the waiting list the name of an applicant family that includes a person with disabilities is subject to reasonable accommodation in accordance with 24 CFR part 8. If the applicant did not respond to the PHA request for information or updates because of the family member's disability, the PHA must reinstate the applicant in the family's former position on the waiting list.
</P>
<P>(d) <I>Family size.</I> (1) The order of admission from the waiting list may not be based on family size, or on the family unit size for which the family qualifies under the PHA occupancy policy. 
</P>
<P>(2) If the PHA does not have sufficient funds to subsidize the family unit size of the family at the top of the waiting list, the PHA may not skip the top family to admit an applicant with a smaller family unit size. Instead, the family at the top of the waiting list will be admitted when sufficient funds are available. 
</P>
<P>(e) <I>Funding for specified category of waiting list families.</I> When HUD awards an PHA program funding for a specified category of families on the waiting list, the PHA must select applicant families in the specified category.
</P>
<P>(f) <I>Number of waiting lists.</I> A PHA must use a single waiting list for admission to its Section 8 tenant-based assistance program. However, the PHA may use a separate single waiting list for such admissions for a county or municipality.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under OMB control number 2577-0169)
</APPRO>
<CITA TYPE="N">[59 FR 36682, July 18, 1994, as amended at 60 FR 34717, July 3, 1995; 63 FR 23860, Apr. 30, 1998; 64 FR 26643, May 14, 1999; 65 FR 16821, Mar. 30, 2000]




</CITA>
</DIV8>


<DIV8 N="§ 982.205" NODE="24:4.1.3.1.19.5.33.5" TYPE="SECTION">
<HEAD>§ 982.205   Waiting list: Different programs.</HEAD>
<P>(a) <I>Merger and cross-listing</I>—(1) <I>Merged waiting list.</I> A PHA may merge the waiting list for tenant-based assistance with the PHA waiting list for admission to another assisted housing program, including a federal or local program. In admission from the merged waiting list, admission for each federal program is subject to federal regulations and requirements for the particular program. 
</P>
<P>(2) <I>Non-merged waiting list: Cross-listing.</I> If the PHA decides not to merge the waiting list for tenant-based assistance with the waiting list for the PHA's public housing program, project-based voucher program or moderate rehabilitation program: 


</P>
<P>(i) If the PHA's waiting list for tenant-based assistance is open when an applicant is placed on the waiting list for the PHA's public housing program, project-based voucher program (including any owner-maintained waiting list), or moderate rehabilitation program, the PHA must offer to place the applicant on its waiting list for tenant-based assistance. 
</P>
<P>(ii) If the PHA's waiting list for its public housing program, project-based voucher program (including any owner-maintained waiting list), or moderate rehabilitationis open when an applicant is placed on the waiting list for its tenant-based program, and if the other program includes units suitable for the applicant, the PHA must offer to place the applicant on its waiting list for the other program.

 
</P>
<P>(b) <I>Other housing assistance: Effect of application for, receipt or refusal.</I> (1) For purposes of this section, “other housing subsidy” means a housing subsidy other than assistance under the voucher program. Housing subsidy includes subsidy assistance under a federal housing program (including public housing), a State housing program, or a local housing program. 
</P>
<P>(2) The PHA may not take any of the following actions because an applicant has applied for, received, or refused other housing assistance:
</P>
<P>(i) Refuse to list the applicant on the PHA waiting list for tenant-based assistance;
</P>
<P>(ii) Deny any admission preference for which the applicant is currently qualified;
</P>
<P>(iii) Change the applicant's place on the waiting list based on preference, date and time of application, or other factors affecting selection under the PHA selection policy; or
</P>
<P>(iv) Remove the applicant from the waiting list.
</P>
<CITA TYPE="N">[59 FR 36682, July 18, 1994, as amended at 61 FR 27163, May 30, 1996; 63 FR 23860, Apr. 30, 1998; 64 FR 26643, May 14, 1999; 65 FR 16821, Mar. 30, 2000; 80 FR 8246, Feb. 17, 2015; 90 FR 56687, Dec. 8, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 982.206" NODE="24:4.1.3.1.19.5.33.6" TYPE="SECTION">
<HEAD>§ 982.206   Waiting list: Opening and closing; public notice.</HEAD>
<P>(a) <I>Public notice.</I> (1) When the PHA opens a waiting list, the PHA must give public notice that families may apply for tenant-based assistance. The public notice must state where and when to apply. 
</P>
<P>(2) The PHA must give the public notice by publication in a local newspaper of general circulation, and also by minority media and other suitable means. The notice must comply with HUD fair housing requirements.
</P>
<P>(3) The public notice must state any limitations on who may apply for available slots in the program. 
</P>
<P>(b) <I>Criteria defining what families may apply.</I> (1) The PHA may adopt criteria defining what families may apply for assistance under a public notice. 
</P>
<P>(2) If the waiting list is open, the PHA must accept applications from families for whom the list is open unless there is good cause for not accepting the application (such as denial of assistance because of action or inaction by members of the family) for the grounds stated in §§ 982.552 and 982.553.
</P>
<P>(c) <I>Closing waiting list.</I> If the PHA determines that the existing waiting list contains an adequate pool for use of available program funding, the PHA may stop accepting new applications, or may accept only applications meeting criteria adopted by the PHA. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[59 FR 36682, July 18, 1994, as amended at 60 FR 34717, July 3, 1995; 60 FR 45661, Sept. 1, 1995; 63 FR 23860, Apr. 30, 1998; 64 FR 26643, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 982.207" NODE="24:4.1.3.1.19.5.33.7" TYPE="SECTION">
<HEAD>§ 982.207   Waiting list: Local preferences in admission to program.</HEAD>
<P>(a) <I>Establishment of PHA local preferences.</I> (1) The PHA may establish a system of local preferences for selection of families admitted to the program. PHA selection preferences must be described in the PHA Administrative Plan.
</P>
<P>(2) The PHA system of local preferences must be based on local housing needs and priorities, as determined by the PHA. In determining such needs and priorities, the PHA shall use generally accepted data sources. The PHA shall consider public comment on the proposed public housing agency plan (as received pursuant to § 903.17 of this chapter) and on the consolidated plan for the relevant jurisdiction (as received pursuant to part 91 of this title).
</P>
<P>(3) The PHA may limit the number of applicants that may qualify for any local preference.
</P>
<P>(4) The PHA shall not deny a local preference, nor otherwise exclude or penalize a family in admission to the program, solely because the family resides in a public housing project. The PHA may establish a preference for families residing in public housing who are victims of a crime of violence (as defined in 18 U.S.C. 16).
</P>
<P>(b) <I>Particular local preferences</I>—(1) <I>Residency requirements or preferences.</I> (i) Residency requirements are prohibited. Although a PHA is not prohibited from adopting a residency preference, the PHA may only adopt or implement residency preferences in accordance with non-discrimination and equal opportunity requirements listed at § 5.105(a) of this title.
</P>
<P>(ii) A residency preference is a preference for admission of persons who reside in a specified geographic area (“residency preference area”). A county or municipality may be used as a residency preference area. An area smaller than a county or municipality may not be used as a residency preference area.
</P>
<P>(iii) Any PHA residency preferences must be included in the statement of PHA policies that govern eligibility, selection and admission to the program, which is included in the PHA annual plan (or supporting documents) pursuant to part 903 of this title. Such policies must specify that use of a residency preference will not have the purpose or effect of delaying or otherwise denying admission to the program based on the race, color, ethnic origin, gender, religion, disability, or age of any member of an applicant family.
</P>
<P>(iv) A residency preference must not be based on how long an applicant has resided or worked in a residency preference area.
</P>
<P>(v) Applicants who are working or who have been notified that they are hired to work in a residency preference area must be treated as residents of the residency preference area. The PHA may treat graduates of, or active participants in, education and training programs in a residency preference area as residents of the residency preference area if the education or training program is designed to prepare individuals for the job market.
</P>
<P>(2) <I>Preference for working families.</I> The PHA may adopt a preference for admission of working families (families where the head, spouse or sole member is employed). However, an applicant shall be given the benefit of the working family preference if the head and spouse, or sole member is age 62 or older, or is a person with disabilities.
</P>
<P>(3) <I>Preference for person with disabilities.</I> The PHA may adopt a preference for admission of families that include a person with disabilities. However, the PHA may not adopt a preference for admission of persons with a specific disability.
</P>
<P>(4) <I>Preference for victims of domestic violence, dating violence, sexual assault, or stalking.</I> The PHA should consider whether to adopt a local preference for admission of families that include victims of domestic violence, dating violence, sexual assault, or stalking.
</P>
<P>(5) <I>Preference for single persons who are elderly, displaced, homeless, or persons with disabilities.</I> The PHA may adopt a preference for admission of single persons who are age 62 or older, displaced, homeless, or persons with disabilities over other single persons. 
</P>
<P>(c) <I>Selection among families with preference.</I> The PHA system of preferences may use either of the following to select among applicants on the waiting list with the same preference status:
</P>
<P>(1) Date and time of application; or
</P>
<P>(2) A drawing or other random choice technique.
</P>
<P>(d) <I>Preference for higher-income families.</I> The PHA must not select families for admission to the program in an order different from the order on the waiting list for the purpose of selecting higher income families for admission to the program.
</P>
<P>(e) <I>Verification of selection method.</I> The method for selecting applicants from a preference category must leave a clear audit trail that can be used to verify that each applicant has been selected in accordance with the method specified in the Administrative Plan.
</P>
<CITA TYPE="N">[64 FR 26643, May 14, 1999, as amended at 64 FR 56912, Oct. 21, 1999; 65 FR 16821, Mar. 30, 2000; 81 FR 80816, Nov. 16, 2016]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:4.1.3.1.19.6" TYPE="SUBPART">
<HEAD>Subpart F [Reserved]</HEAD>

</DIV6>


<DIV6 N="G" NODE="24:4.1.3.1.19.7" TYPE="SUBPART">
<HEAD>Subpart G—Leasing a Unit</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>60 FR 34695, July 3, 1995, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 982.301" NODE="24:4.1.3.1.19.7.33.1" TYPE="SECTION">
<HEAD>§ 982.301   Information when family is selected.</HEAD>
<P>(a) <I>Oral briefing.</I> When the PHA selects a family to participate in a tenant-based program, the PHA must give the family an oral briefing.
</P>
<P>(1) The briefing must include information on the following subjects:
</P>
<P>(i) A description of how the program works;
</P>
<P>(ii) Family and owner responsibilities;
</P>
<P>(iii) Where the family may lease a unit, including renting a dwelling unit inside or outside the PHA jurisdiction, and any information on selecting a unit that HUD provides;
</P>
<P>(iv) An explanation of how portability works; and
</P>
<P>(v) An explanation of the advantages of areas that do not have a high concentration of low-income families.
</P>
<P>(2) The PHA may not discourage the family from choosing to live anywhere in the PHA jurisdiction, or outside the PHA jurisdiction under portability procedures, unless otherwise expressly authorized by statute, regulation, PIH Notice, or court order. The family must be informed of how portability may affect the family's assistance through screening, subsidy standards, payment standards, and any other elements of the portability process which may affect the family's assistance.
</P>
<P>(3) The PHA must take appropriate steps to ensure effective communication in accordance with 24 CFR 8.6 and 28 CFR part 35, subpart E, and must provide information on the reasonable accommodation process.



 
</P>
<P>(b) <I>Information packet.</I> When a family is selected to participate in the program, the PHA must give the family a packet that includes information on the following subjects: 
</P>
<P>(1) The term of the voucher, voucher suspensions, and PHA policy on any extensions of the term. If the PHA allows extensions, the packet must explain how the family can request an extension;
</P>
<P>(2) How the PHA determines the amount of the housing assistance payment for a family, including:
</P>
<P>(i) How the PHA determines the payment standard for a family; and
</P>
<P>(ii) How the PHA determines the total tenant payment for a family.
</P>
<P>(3) How the PHA determines the maximum rent for an assisted unit; 
</P>
<P>(4) Where the family may lease a unit and an explanation of how portability works, including information on how portability may affect the family's assistance through screening, subsidy standards, payment standards, and any other elements of the portability process which may affect the family's assistance.
</P>
<P>(5) The HUD-required “tenancy addendum” that must be included in the lease;
</P>
<P>(6) The form that the family uses to request PHA approval of the assisted tenancy, and an explanation of how to request such approval;
</P>
<P>(7) A statement of the PHA policy on providing information about a family to prospective owners;


</P>
<P>(8) PHA subsidy standards, including when the PHA will consider granting exceptions to the standards as allowed by 24 CFR 982.402(b)(8), and when exceptions are required as a reasonable accommodation for persons with disabilities under Section 504, the Fair Housing Act, or the Americans with Disabilities Act;




</P>
<P>(9) Materials (<I>e.g.</I>, brochures) on how to select a unit and any additional information on selecting a unit that HUD provides.
</P>
<P>(10) Information on Federal, State, and local equal opportunity laws, the contact information for the Section 504 coordinator, a copy of the housing discrimination complaint form, and information on how to request a reasonable accommodation or modification (including information on requesting exception payment standards as a reasonable accommodation) under Section 504, the Fair Housing Act, and the Americans with Disabilities Act;






</P>
<P>(11) A list of landlords known to the PHA who may be willing to lease a unit to the family or other resources (<I>e.g.</I>, newspapers, organizations, online search tools) known to the PHA that may assist the family in locating a unit. PHAs must ensure that the list of landlords or other resources covers areas outside of poverty or minority concentration.
</P>
<P>(12) Notice that if the family includes a person with disabilities, the PHA is subject to the requirement under 24 CFR 8.28(a)(3) to provide a current listing of accessible units known to the PHA and, if necessary, other assistance in locating an available accessible dwelling unit;
</P>
<P>(13) Family obligations under the program;
</P>
<P>(14) The advantages of areas that do not have a high concentration of low-income families which may include, access to accessible and high-quality housing, transit, employment opportunities, educational opportunities, recreational facilities, public safety stations, retail services, and health services; and
</P>
<P>(15) A description of when the PHA is required to give a participant family the opportunity for an informal hearing and how to request a hearing.
</P>
<P>(c) <I>Providing information for persons with limited English proficiency (LEP).</I> The PHA must take reasonable steps to ensure meaningful access by persons with limited English proficiency in accordance with Title VI of the Civil Rights Act of 1964 and HUD's implementing regulations at 24 CFR part 1.


</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 60 FR 45661, Sept. 1, 1995; 61 FR 27163, May 30, 1996; 64 FR 26644, May 14, 1999; 64 FR 50229, Sept. 15, 1999; 64 FR 56912, Oct. 21, 1999; 80 FR 50572, Aug. 20, 2015; 80 FR 52619, Sept. 1, 2015; 89 FR 38295, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 982.302" NODE="24:4.1.3.1.19.7.33.2" TYPE="SECTION">
<HEAD>§ 982.302   Issuance of voucher; Requesting PHA approval of assisted tenancy.</HEAD>
<P>(a) When a family is selected, or when a participant family wants to move to another unit, the PHA issues a voucher to the family. The family may search for a unit.
</P>
<P>(b) If the family finds a unit, and the owner is willing to lease the unit under the program, the family may request PHA approval of the tenancy. The PHA has the discretion whether to permit the family to submit more than one request at a time.
</P>
<P>(c) The family must submit to the PHA a request for approval of the tenancy and a copy of the lease, including the HUD-prescribed tenancy addendum. The request must be submitted during the term of the voucher.
</P>
<P>(d) The PHA specifies the procedure for requesting approval of the tenancy. The family must submit the request for approval of the tenancy in the form and manner required by the PHA.
</P>
<CITA TYPE="N">[64 FR 26644, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 982.303" NODE="24:4.1.3.1.19.7.33.3" TYPE="SECTION">
<HEAD>§ 982.303   Term of voucher.</HEAD>
<P>(a) <I>Initial term.</I> The initial term of a voucher must be at least 60 calendar days. The initial term must be stated on the voucher.
</P>
<P>(b) <I>Extensions of term.</I> (1) At its discretion, the PHA may grant a family one or more extensions of the initial voucher term in accordance with PHA policy as described in the PHA Administrative Plan. Any extension of the term is granted by PHA notice to the family.
</P>
<P>(2) If the family needs and requests an extension of the initial voucher term as a reasonable accommodation, in accordance with part 8 of this title, to make the program accessible to a family member who is a person with disabilities, the PHA must extend the voucher term up to the term reasonably required for that purpose.
</P>
<P>(c) <I>Suspension of term.</I> The PHA must provide for suspension of the initial or any extended term of the voucher from the date that the family submits a request for PHA approval of the tenancy until the date the PHA notifies the family in writing whether the request has been approved or denied.
</P>
<P>(d) <I>Progress report by family to the PHA.</I> During the initial or any extended term of a voucher, the PHA may require the family to report progress in leasing a unit. Such reports may be required at such intervals or times as determined by the PHA. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 60 FR 45661, Sept. 1, 1995; 63 FR 23860, Apr. 30, 1998; 64 FR 26644, May 14, 1999; 64 FR 56913, Oct. 21, 1999; 80 FR 50573, Aug. 20, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 982.304" NODE="24:4.1.3.1.19.7.33.4" TYPE="SECTION">
<HEAD>§ 982.304   Illegal discrimination: PHA assistance to family.</HEAD>
<P>A family may claim that illegal discrimination because of race, color, religion, sex, national origin, age, familial status or disability prevents the family from finding or leasing a suitable unit with assistance under the program. The PHA must give the family information on how to fill out and file a housing discrimination complaint. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 60 FR 45661, Sept. 1, 1995]




</CITA>
</DIV8>


<DIV8 N="§ 982.305" NODE="24:4.1.3.1.19.7.33.5" TYPE="SECTION">
<HEAD>§ 982.305   PHA approval of assisted tenancy.</HEAD>
<P>(a) <I>Program requirements.</I> The PHA may not give approval for the family of the assisted tenancy, or execute a HAP contract, until the PHA has determined that:












</P>
<P>(1) The unit is eligible;
</P>
<P>(2) The unit has been inspected by the PHA and passes HQS;
</P>
<P>(3) The lease includes the tenancy addendum;
</P>
<P>(4) The rent to owner is reasonable; and
</P>
<P>(5) At the time a family initially receives tenant-based assistance for occupancy of a dwelling unit, and where the gross rent of the unit exceeds the applicable payment standard for the family, the family share does not exceed 40 percent of the family's monthly adjusted income.
</P>
<P>(b) <I>Actions before lease term.</I> (1) The following must be completed before the beginning of the initial term of the lease for a unit:








</P>
<P>(i) The PHA has inspected the unit and has determined that the unit satisfies the HQS;
</P>
<P>(ii) The landlord and the tenant have executed the lease (including the HUD-prescribed tenancy addendum, and the lead-based paint disclosure information as required in § 35.92(b) of this title); and
</P>
<P>(iii) The PHA has approved leasing of the unit in accordance with program requirements.
</P>
<P>(2) <I>The timeframes for inspection:</I> (i) The PHA must inspect the unit, determine whether the unit satisfies the HQS, and notify the family and owner of the determination:
</P>
<P>(A) In the case of a PHA with up to 1250 budgeted units in its tenant-based program, within fifteen days after the family and the owner submit a request for approval of the tenancy.
</P>
<P>(B) In the case of a PHA with more than 1250 budgeted units in its tenant-based program, within a reasonable time after the family submits a request for approval of the tenancy. To the extent practicable, such inspection and determination must be completed within fifteen days after the family and the owner submit a request for approval of the tenancy.


</P>
<P>(ii) The 15-day clock (under paragraph (b)(2)(i) of this section) is suspended during any period when the unit is not available for inspection.
</P>
<P>(3) If the PHA has implemented, and the unit is covered by, the alternative inspection option for initial inspections under § 982.406(e), the PHA is not subject to paragraphs (a)(2), (b)(1)(i), and (b)(2) of this section.


</P>
<P>(4) In the case of a unit subject to a lease-purchase agreement, the PHA must provide written notice to the family of the environmental requirements that must be met before commencing homeownership assistance for the family (see § 982.626(c)). 
</P>
<P>(c) <I>When HAP contract is executed.</I> (1) The PHA must use best efforts to execute the HAP contract before the beginning of the lease term. The HAP contract must be executed no later than 60 calendar days from the beginning of the lease term.
</P>
<P>(2) The PHA may not pay any housing assistance payment to the owner until the HAP contract has been executed.
</P>
<P>(3) If the HAP contract is executed during the period of 60 calendar days from the beginning of the lease term, the PHA will pay housing assistance payments after execution of the HAP contract (in accordance with the terms of the HAP contract), to cover the portion of the lease term before execution of the HAP contract (a maximum of 60 days).


</P>
<P>(4) Any HAP contract executed after the 60-day period is void, and the PHA may not pay any housing assistance payment to the owner, unless there are extenuating circumstances that prevent or prevented the PHA from meeting the 60-day deadline, then the PHA may submit to the HUD field office a request for an extension. The request, which must be submitted no later than two weeks after the 60-day deadline, must include an explanation of the extenuating circumstances and any supporting documentation. HUD at its sole discretion will determine if the extension request is approved.


</P>
<P>(d) <I>Notice to family and owner.</I> After receiving the family's request for approval of the assisted tenancy, the PHA must promptly notify the family and owner whether the assisted tenancy is approved.
</P>
<P>(e) <I>Procedure after PHA approval.</I> If the PHA has given approval for the family of the assisted tenancy, the owner and the PHA execute the HAP contract.
</P>
<P>(f) <I>Initial HQS inspection requirements.</I> (1) Unless the PHA has implemented, and determined that the unit is covered by, either of the two initial HQS inspection options in paragraphs (f)(2) and (3) of this section, the unit must be inspected by the PHA and pass HQS before:
</P>
<P>(i) The PHA may approve the assisted tenancy and execute the HAP contract, and
</P>
<P>(ii) The beginning of the initial lease term.
</P>
<P>(2) If the PHA has implemented, and determines that the unit is covered by, the non-life-threatening deficiencies option at § 982.405(j), the unit must be inspected by the PHA and must have no life-threatening deficiencies before:
</P>
<P>(i) The PHA may approve the assisted tenancy and execute the HAP contract; and
</P>
<P>(ii) The beginning of the initial lease term.
</P>
<P>(3) If the PHA has implemented and determines that the unit is covered by the alternative inspection option at § 982.406(e), then the PHA must determine that the unit was inspected in the previous 24 months by an inspection that meets the requirements of § 982.406 before:
</P>
<P>(i) The PHA may approve the assisted tenancy and execute the HAP contract; and
</P>
<P>(ii) The beginning of the initial lease term.
</P>
<P>(4) If the PHA has implemented and determines that the unit is covered by both the no life-threatening deficiencies option and the alternative inspection option, the unit is subject only to paragraph (f)(3) of this section, not paragraph (f)(2) of this section.











 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 60 FR 45661, Sept. 1, 1995; 64 FR 26644, May 14, 1999; 64 FR 56913, Oct. 21, 1999; 64 FR 59622, Nov. 3, 1999; 65 FR 16818, Mar. 30, 2000; 65 FR 55161, Sept. 12, 2000; 69 FR 34276, June 21, 2004; 80 FR 8246, Feb. 17, 2015; 89 FR 38295, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 982.306" NODE="24:4.1.3.1.19.7.33.6" TYPE="SECTION">
<HEAD>§ 982.306   PHA disapproval of owner.</HEAD>
<P>(a) The PHA must not approve an assisted tenancy if the PHA has been informed (by HUD or otherwise) that the owner is debarred, suspended, or subject to a limited denial of participation under 2 CFR part 2424. 
</P>
<P>(b) When directed by HUD, the PHA must not approve an assisted tenancy if:
</P>
<P>(1) The federal government has instituted an administrative or judicial action against the owner for violation of the Fair Housing Act or other federal equal opportunity requirements, and such action is pending; or
</P>
<P>(2) A court or administrative agency has determined that the owner violated the Fair Housing Act or other federal equal opportunity requirements.
</P>
<P>(c) In its administrative discretion, the PHA may deny approval of an assisted tenancy for any of the following reasons:
</P>
<P>(1) The owner has violated obligations under a HAP contract under Section 8 of the 1937 Act (42 U.S.C. 1437f); 
</P>
<P>(2) The owner has committed fraud, bribery or any other corrupt or criminal act in connection with any federal housing program;
</P>
<P>(3) The owner has engaged in any drug-related criminal activity or any violent criminal activity;
</P>
<P>(4) The owner has a history or practice of non-compliance with the HQS for units leased under the tenant-based programs, or with applicable housing standards for units leased with project-based Section 8 assistance or leased under any other federal housing program;
</P>
<P>(5) The owner has a history or practice of failing to terminate tenancy of tenants of units assisted under Section 8 or any other federally assisted housing program for activity engaged in by the tenant, any member of the household, a guest or another person under the control of any member of the household that:
</P>
<P>(i) Threatens the right to peaceful enjoyment of the premises by other residents;
</P>
<P>(ii) Threatens the health or safety of other residents, of employees of the PHA, or of owner employees or other persons engaged in management of the housing;
</P>
<P>(iii) Threatens the health or safety of, or the right to peaceful enjoyment of their residences, by persons residing in the immediate vicinity of the premises; or
</P>
<P>(iv) Is drug-related criminal activity or violent criminal activity; or
</P>
<P>(6) The owner has a history or practice of renting units that fail to meet State or local housing codes; or
</P>
<P>(7) The owner has not paid State or local real estate taxes, fines or assessments.
</P>
<P>(d) The PHA must not approve a unit if the owner is the parent, child, grandparent, grandchild, sister, or brother of any member of the family, unless the PHA determines that approving the unit would provide reasonable accommodation for a family member who is a person with disabilities. This restriction against PHA approval of a unit only applies at the time a family initially receives tenant-based assistance for occupancy of a particular unit, but does not apply to PHA approval of a new tenancy with continued tenant-based assistance in the same unit.
</P>
<P>(e) Nothing in this rule is intended to give any owner any right to participate in the program.
</P>
<P>(f) For purposes of this section, “owner” includes a principal or other interested party. 
</P>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 63 FR 27437, May 18, 1998; 64 FR 26644, May 14, 1999; 64 FR 56913, Oct. 21, 1999; 65 FR 16821, Mar. 30, 2000; 72 FR 73496, Dec. 27, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 982.307" NODE="24:4.1.3.1.19.7.33.7" TYPE="SECTION">
<HEAD>§ 982.307   Tenant screening.</HEAD>
<P>(a) <I>PHA option and owner responsibility.</I> (1) The PHA has no liability or responsibility to the owner or other persons for the family's behavior or suitability for tenancy. However, the PHA may opt to screen applicants for family behavior or suitability for tenancy. The PHA must conduct any such screening of applicants in accordance with policies stated in the PHA Administrative Plan.
</P>
<P>(2) The owner is responsible for screening and selection of the family to occupy the owner's unit. At or before PHA approval of the tenancy, the PHA must inform the owner that screening and selection for tenancy is the responsibility of the owner.
</P>
<P>(3) The owner is responsible for screening of families on the basis of their tenancy histories. An owner may consider a family's background with respect to such factors as:
</P>
<P>(i) Payment of rent and utility bills;
</P>
<P>(ii) Caring for a unit and premises;
</P>
<P>(iii) Respecting the rights of other residents to the peaceful enjoyment of their housing;
</P>
<P>(iv) Drug-related criminal activity or other criminal activity that is a threat to the health, safety or property of others; and
</P>
<P>(v) Compliance with other essential conditions of tenancy.
</P>
<P>(b) <I>PHA information about tenant.</I> (1) The PHA must give the owner:
</P>
<P>(i) The family's current and prior address (as shown in the PHA records); and
</P>
<P>(ii) The name and address (if known to the PHA) of the landlord at the family's current and prior address.
</P>
<P>(2) When a family wants to lease a dwelling unit, the PHA may offer the owner other information in the PHA possession, about the family, including information about the tenancy history of family members, or about drug-trafficking by family members.
</P>
<P>(3) The PHA must give the family a statement of the PHA policy on providing information to owners. The statement must be included in the information packet that is given to a family selected to participate in the program. The PHA policy must provide that the PHA will give the same types of information to all families and to all owners. 
</P>
<P>(4) In cases involving a victim of domestic violence, dating violence, sexual assault, or stalking, 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking) applies.


</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 60 FR 45661, Sept. 1, 1995; 61 FR 27163, May 30, 1996; 64 FR 26645, May 14, 1999; 64 FR 49658, Sept. 14, 1999; 73 FR 72344, Nov. 28, 2008; 75 FR 66263, Oct. 27, 2010; 81 FR 80816, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 982.308" NODE="24:4.1.3.1.19.7.33.8" TYPE="SECTION">
<HEAD>§ 982.308   Lease and tenancy.</HEAD>
<P>(a) <I>Tenant's legal capacity.</I> The tenant must have legal capacity to enter a lease under State and local law. “Legal capacity” means that the tenant is bound by the terms of the lease and may enforce the terms of the lease against the owner.
</P>
<P>(b) <I>Form of lease.</I> (1) The tenant and the owner must enter a written lease for the unit. The lease must be executed by the owner and the tenant.
</P>
<P>(2) If the owner uses a standard lease form for rental to unassisted tenants in the locality or the premises, the lease must be in such standard form (plus the HUD-prescribed tenancy addendum). If the owner does not use a standard lease form for rental to unassisted tenants, the owner may use another form of lease, such as a PHA model lease (including the HUD-prescribed tenancy addendum). The HAP contract prescribed by HUD will contain the owner's certification that if the owner uses a standard lease form for rental to unassisted tenants, the lease is in such standard form.
</P>
<P>(c) <I>State and local law.</I> The PHA may review the lease to determine if the lease complies with State and local law. The PHA may decline to approve the tenancy if the PHA determines that the lease does not comply with State or local law.
</P>
<P>(d) <I>Required information.</I> The lease must specify all of the following:
</P>
<P>(1) The names of the owner and the tenant;
</P>
<P>(2) The unit rented (address, apartment number, and any other information needed to identify the contract unit);
</P>
<P>(3) The term of the lease (initial term and any provisions for renewal);
</P>
<P>(4) The amount of the monthly rent to owner; and
</P>
<P>(5) A specification of what utilities and appliances are to be supplied by the owner, and what utilities and appliances are to be supplied by the family.
</P>
<P>(e) <I>Reasonable rent.</I> The rent to owner must be reasonable (see § 982.507).
</P>
<P>(f) <I>Tenancy addendum.</I> (1) The HAP contract form required by HUD shall include an addendum (the “tenancy addendum”), that sets forth:
</P>
<P>(i) The tenancy requirements for the program (in accordance with this section and §§ 982.309 and 982.310); and
</P>
<P>(ii) The composition of the household as approved by the PHA (family members and any PHA-approved live-in aide).
</P>
<P>(2) All provisions in the HUD-required tenancy addendum must be added word-for-word to the owner's standard form lease that is used by the owner for unassisted tenants. The tenant shall have the right to enforce the tenancy addendum against the owner, and the terms of the tenancy addendum shall prevail over any other provisions of the lease.
</P>
<P>(g) <I>Changes in lease or rent.</I> (1) If the tenant and the owner agree to any changes in the lease, such changes must be in writing, and the owner must immediately give the PHA a copy of such changes. The lease, including any changes, must be in accordance with the requirements of this section.
</P>
<P>(2) In the following cases, tenant-based assistance shall not be continued unless the PHA has approved a new tenancy in accordance with program requirements and has executed a new HAP contract with the owner:
</P>
<P>(i) If there are any changes in lease requirements governing tenant or owner responsibilities for utilities or appliances;
</P>
<P>(ii) If there are any changes in lease provisions governing the term of the lease;
</P>
<P>(iii) If the family moves to a new unit, even if the unit is in the same building or complex.
</P>
<P>(3) PHA approval of the tenancy, and execution of a new HAP contract, are not required for changes in the lease other than as specified in paragraph (g)(2) of this section.
</P>
<P>(4) The owner must notify the PHA of any changes in the amount of the rent to owner at least sixty days before any such changes go into effect, and any such changes shall be subject to rent reasonableness requirements (see § 982.503).
</P>
<CITA TYPE="N">[64 FR 26645, May 14, 1999, as amended at 64 FR 56913, Oct. 21, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 982.309" NODE="24:4.1.3.1.19.7.33.9" TYPE="SECTION">
<HEAD>§ 982.309   Term of assisted tenancy.</HEAD>
<P>(a) <I>Initial term of lease.</I> (1) Except as provided in paragraph (a)(2) of this section, the initial lease term must be for at least one year.
</P>
<P>(2) The PHA may approve a shorter initial lease term if the PHA determines that:
</P>
<P>(i) Such shorter term would improve housing opportunities for the tenant; and
</P>
<P>(ii) Such shorter term is the prevailing local market practice.
</P>
<P>(3) During the initial term of the lease, the owner may not raise the rent to owner.
</P>
<P>(4) The PHA may execute the HAP contract even if there is less than one year remaining from the beginning of the initial lease term to the end of the last expiring funding increment under the consolidated ACC.
</P>
<P>(b) <I>Term of HAP contract.</I> (1) The term of the HAP contract begins on the first day of the lease term and ends on the last day of the lease term.
</P>
<P>(2) The HAP contract terminates if any of the following occurs:
</P>
<P>(i) The lease is terminated by the owner or the tenant;
</P>
<P>(ii) The PHA terminates the HAP contract; or
</P>
<P>(iii) The PHA terminates assistance for the family.
</P>
<P>(c) <I>Family responsibility.</I> (1) If the family terminates the lease on notice to the owner, the family must give the PHA a copy of the notice of termination at the same time. Failure to do this is a breach of family obligations under the program.
</P>
<P>(2) The family must notify the PHA and the owner before the family moves out of the unit. Failure to do this is a breach of family obligations under the program.
</P>
<CITA TYPE="N">[64 FR 26645, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 982.310" NODE="24:4.1.3.1.19.7.33.10" TYPE="SECTION">
<HEAD>§ 982.310   Owner termination of tenancy.</HEAD>
<P>(a) <I>Grounds.</I> During the term of the lease, the owner may not terminate the tenancy except on the following grounds:
</P>
<P>(1) Serious violation (including but not limited to failure to pay rent or other amounts due under the lease) or repeated violation of the terms and conditions of the lease;
</P>
<P>(2) Violation of federal, State, or local law that imposes obligations on the tenant in connection with the occupancy or use of the premises; or
</P>
<P>(3) Other good cause.
</P>
<P>(b) <I>Nonpayment by PHA: Not grounds for termination of tenancy.</I> (1) The family is not responsible for payment of the portion of the rent to owner covered by the housing assistance payment under the HAP contract between the owner and the PHA.
</P>
<P>(2) The PHA failure to pay the housing assistance payment to the owner is not a violation of the lease between the tenant and the owner. During the term of the lease the owner may not terminate the tenancy of the family for nonpayment of the PHA housing assistance payment.
</P>
<P>(c) <I>Criminal activity</I>—(1) <I>Evicting drug criminals due to drug crime on or near the premises.</I> The lease must provide that drug-related criminal activity engaged in, on or near the premises by any tenant, household member, or guest, or such activity engaged in on the premises by any other person under the tenant's control, is grounds for the owner to terminate tenancy. In addition, the lease must provide that the owner may evict a family when the owner determines that a household member is illegally using a drug or when the owner determines that a pattern of illegal use of a drug interferes with the health, safety, or right to peaceful enjoyment of the premises by other residents. 
</P>
<P>(2) <I>Evicting other criminals.</I> (i) <I>Threat to other residents.</I> The lease must provide that the owner may terminate tenancy for any of the following types of criminal activity by a covered person: 
</P>
<P>(A) Any criminal activity that threatens the health, safety, or right to peaceful enjoyment of the premises by other residents (including property management staff residing on the premises); 
</P>
<P>(B) Any criminal activity that threatens the health, safety, or right to peaceful enjoyment of their residences by persons residing in the immediate vicinity of the premises; or 
</P>
<P>(C) Any violent criminal activity on or near the premises by a tenant, household member, or guest, or any such activity on the premises by any other person under the tenant's control. 
</P>
<P>(ii) <I>Fugitive felon or parole violator.</I> The lease must provide that the owner may terminate the tenancy if a tenant is: 
</P>
<P>(A) Fleeing to avoid prosecution, or custody or confinement after conviction, for a crime, or attempt to commit a crime, that is a felony under the laws of the place from which the individual flees, or that, in the case of the State of New Jersey, is a high misdemeanor; or 
</P>
<P>(B) Violating a condition of probation or parole imposed under Federal or State law. 
</P>
<P>(3) <I>Evidence of criminal activity.</I> The owner may terminate tenancy and evict by judicial action a family for criminal activity by a covered person in accordance with this section if the owner determines that the covered person has engaged in the criminal activity, regardless of whether the covered person has been arrested or convicted for such activity and without satisfying the standard of proof used for a criminal conviction. (See part 5, subpart J, of this title for provisions concerning access to criminal records.) 
</P>
<P>(d) <I>Other good cause.</I> (1) “Other good cause” for termination of tenancy by the owner may include, but is not limited to, any of the following examples:
</P>
<P>(i) Failure by the family to accept the offer of a new lease or revision;
</P>
<P>(ii) A family history of disturbance of neighbors or destruction of property, or of living or housekeeping habits resulting in damage to the unit or premises;
</P>
<P>(iii) The owner's desire to use the unit for personal or family use, or for a purpose other than as a residential rental unit; or
</P>
<P>(iv) A business or economic reason for termination of the tenancy (such as sale of the property, renovation of the unit, or desire to lease the unit at a higher rental).
</P>
<P>(2) During the initial lease term, the owner may not terminate the tenancy for “other good cause”, unless the owner is terminating the tenancy because of something the family did or failed to do. For example, during this period, the owner may not terminate the tenancy for “other good cause” based on any of the following grounds: failure by the family to accept the offer of a new lease or revision; the owner's desire to use the unit for personal or family use, or for a purpose other than as a residential rental unit; or a business or economic reason for termination of the tenancy (see paragraph (d)(1)(iv) of this section).
</P>
<P>(e) <I>Owner notice</I>—(1) <I>Notice of grounds.</I> (i) The owner must give the tenant a written notice that specifies the grounds for termination of tenancy during the term of the lease. The tenancy does not terminate before the owner has given this notice, and the notice must be given at or before commencement of the eviction action.
</P>
<P>(ii) The notice of grounds may be included in, or may be combined with, any owner eviction notice to the tenant.
</P>
<P>(2) <I>Eviction notice.</I> (i) Owner eviction notice means a notice to vacate, or a complaint or other initial pleading used under State or local law to commence an eviction action.
</P>
<P>(ii) The owner must give the PHA a copy of any owner eviction notice to the tenant.
</P>
<P>(f) <I>Eviction by court action.</I> The owner may only evict the tenant from the unit by instituting a court action.
</P>
<P>(g) <I>Regulations not applicable.</I> 24 CFR part 247 (concerning evictions from certain subsidized and HUD-owned projects) does not apply to a tenancy assisted under this part 982. 
</P>
<P>(h) <I>Termination of tenancy decisions</I>—(1) <I>General.</I> If the law and regulation permit the owner to take an action but do not require action to be taken, the owner may take or not take the action in accordance with the owner's standards for eviction. The owner may consider all of the circumstances relevant to a particular eviction case, such as: 
</P>
<P>(i) The seriousness of the offending action; 
</P>
<P>(ii) The effect on the community of denial or termination or the failure of the owner to take such action; 
</P>
<P>(iii) The extent of participation by the leaseholder in the offending action; 
</P>
<P>(iv) The effect of denial of admission or termination of tenancy on household members not involved in the offending activity; 
</P>
<P>(v) The demand for assisted housing by families who will adhere to lease responsibilities; 
</P>
<P>(vi) The extent to which the leaseholder has shown personal responsibility and taken all reasonable steps to prevent or mitigate the offending action; 
</P>
<P>(vii) The effect of the owner's action on the integrity of the program. 
</P>
<P>(2) <I>Exclusion of culpable household member.</I> The owner may require a tenant to exclude a household member in order to continue to reside in the assisted unit, where that household member has participated in or been culpable for action or failure to act that warrants termination. 
</P>
<P>(3) <I>Consideration of rehabilitation.</I> In determining whether to terminate tenancy for illegal use of drugs or alcohol abuse by a household member who is no longer engaged in such behavior, the owner may consider whether such household member is participating in or has successfully completed a supervised drug or alcohol rehabilitation program, or has otherwise been rehabilitated successfully (42 U.S.C. 13661). For this purpose, the owner may require the tenant to submit evidence of the household member's current participation in, or successful completion of, a supervised drug or alcohol rehabilitation program or evidence of otherwise having been rehabilitated successfully. 
</P>
<P>(4) <I>Nondiscrimination limitation and protection for victims of domestic violence, dating violence, sexual assault, or stalking.</I> The owner's termination of tenancy actions must be consistent with the fair housing and equal opportunity provisions of 24 CFR 5.105, and with the provisions for protection of victims of domestic violence, dating violence, sexual assault, or stalking in 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking).


</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 60 FR 45661, Sept. 1, 1995; 64 FR 26645, May 14, 1999; 64 FR 56913, Oct. 21, 1999; 66 FR 28804, May 24, 2001; 73 FR 72344, Nov. 28, 2008; 75 FR 66263, Oct. 27, 2010; 81 FR 80816, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 982.311" NODE="24:4.1.3.1.19.7.33.11" TYPE="SECTION">
<HEAD>§ 982.311   When assistance is paid.</HEAD>
<P>(a) <I>Payments under HAP contract.</I> Housing assistance payments are paid to the owner in accordance with the terms of the HAP contract. Housing assistance payments may only be paid to the owner during the lease term, and while the family is residing in the unit.
</P>
<P>(b) <I>Termination of payment: When owner terminates the lease.</I> Housing assistance payments terminate when the lease is terminated by the owner in accordance with the lease. However, if the owner has commenced the process to evict the tenant, and if the family continues to reside in the unit, the PHA must continue to make housing assistance payments to the owner in accordance with the HAP contract until the owner has obtained a court judgment or other process allowing the owner to evict the tenant. The PHA may continue such payments until the family moves from or is evicted from the unit.
</P>
<P>(c) <I>Termination of payment: Other reasons for termination.</I> Housing assistance payments terminate if:
</P>
<P>(1) The lease terminates;
</P>
<P>(2) The HAP contract terminates; or
</P>
<P>(3) The PHA terminates assistance for the family.
</P>
<P>(d) <I>Family move-out.</I> (1) If the family moves out of the unit, the PHA may not make any housing assistance payment to the owner for any month after the month when the family moves out. The owner may keep the housing assistance payment for the month when the family moves out of the unit.
</P>
<P>(2) If a participant family moves from an assisted unit with continued tenant-based assistance, the term of the assisted lease for the new assisted unit may begin during the month the family moves out of the first assisted unit. Overlap of the last housing assistance payment (for the month when the family moves out of the old unit) and the first assistance payment for the new unit, is not considered to constitute a duplicative housing subsidy. 
</P>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 80 FR 8246, Feb. 17, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 982.312" NODE="24:4.1.3.1.19.7.33.12" TYPE="SECTION">
<HEAD>§ 982.312   Absence from unit.</HEAD>
<P>(a) The family may be absent from the unit for brief periods. For longer absences, the PHA Administrative Plan establishes the PHA policy on how long the family may be absent from the assisted unit. However, the family may not be absent from the unit for a period of more than 180 consecutive calendar days in any circumstance, or for any reason. At its discretion, the PHA may allow absence for a lesser period in accordance with PHA policy. 
</P>
<P>(b) Housing assistance payments terminate if the family is absent for longer than the maximum period permitted. The term of the HAP contract and assisted lease also terminate. 
</P>
<P>(The owner must reimburse the PHA for any housing assistance payment for the period after the termination.) 
</P>
<P>(c) Absence means that no member of the family is residing in the unit. 
</P>
<P>(d)(1) The family must supply any information or certification requested by the PHA to verify that the family is residing in the unit, or relating to family absence from the unit. The family must cooperate with the PHA for this purpose. The family must promptly notify the PHA of absence from the unit, including any information requested on the purposes of family absences. 
</P>
<P>(2) The PHA may adopt appropriate techniques to verify family occupancy or absence, including letters to the family at the unit, phone calls, visits or questions to the landlord or neighbors. 
</P>
<P>(e) The PHA Administrative Plan must state the PHA policies on family absence from the dwelling unit. The PHA absence policy includes: 
</P>
<P>(1) How the PHA determines whether or when the family may be absent, and for how long. For example, the PHA may establish policies on absences because of vacation, hospitalization or imprisonment; and 
</P>
<P>(2) Any provision for resumption of assistance after an absence, including readmission or resumption of assistance to the family. 


</P>
</DIV8>


<DIV8 N="§ 982.313" NODE="24:4.1.3.1.19.7.33.13" TYPE="SECTION">
<HEAD>§ 982.313   Security deposit: Amounts owed by tenant.</HEAD>
<P>(a) The owner may collect a security deposit from the tenant. 
</P>
<P>(b) The PHA may prohibit security deposits in excess of private market practice, or in excess of amounts charged by the owner to unassisted tenants. 
</P>
<P>(c) When the tenant moves out of the dwelling unit, the owner, subject to State or local law, may use the security deposit, including any interest on the deposit, in accordance with the lease, as reimbursement for any unpaid rent payable by the tenant, damages to the unit or for other amounts the tenant owes under the lease. 
</P>
<P>(d) The owner must give the tenant a written list of all items charged against the security deposit, and the amount of each item. After deducting the amount, if any, used to reimburse the owner, the owner must refund promptly the full amount of the unused balance to the tenant. 
</P>
<P>(e) If the security deposit is not sufficient to cover amounts the tenant owes under the lease, the owner may seek to collect the balance from the tenant. 


</P>
</DIV8>


<DIV8 N="§ 982.315" NODE="24:4.1.3.1.19.7.33.14" TYPE="SECTION">
<HEAD>§ 982.315   Family break-up.</HEAD>
<P>(a)(1) The PHA has discretion to determine which members of an assisted family continue to receive assistance in the program if the family breaks up. The PHA Administrative Plan must state PHA policies on how to decide who remains in the program if the family breaks up.
</P>
<P>(2) If the family break-up results from an occurrence of domestic violence, dating violence, sexual assault, or stalking as provided in 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking), the PHA must ensure that the victim retains assistance.
</P>
<P>(b) The factors to be considered in making this decision under the PHA policy may include:
</P>
<P>(1) Whether the assistance should remain with family members remaining in the original assisted unit.
</P>
<P>(2) The interest of minor children or of ill, elderly, or disabled family members.
</P>
<P>(3) Whether family members are forced to leave the unit as a result of actual or threatened domestic violence, dating violence, sexual assault, or stalking.
</P>
<P>(4) Whether any of the family members are receiving protection as victims of domestic violence, dating violence, sexual assault, or stalking, as provided in 24 CFR part 5, subpart L, and whether the abuser is still in the household.
</P>
<P>(5) Other factors specified by the PHA.
</P>
<P>(c) If a court determines the disposition of property between members of the assisted family in a divorce or separation under a settlement or judicial decree, the PHA is bound by the court's determination of which family members continue to receive assistance in the program. 
</P>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 75 FR 66264, Oct. 27, 2010; 80 FR 8246, Feb. 17, 2015; 81 FR 80816, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 982.316" NODE="24:4.1.3.1.19.7.33.15" TYPE="SECTION">
<HEAD>§ 982.316   Live-in aide.</HEAD>
<P>(a) A family that consists of one or more elderly, near-elderly or disabled persons may request that the PHA approve a live-in aide to reside in the unit and provide necessary supportive services for a family member who is a person with disabilities. The PHA must approve a live-in aide if needed as a reasonable accommodation in accordance with 24 CFR part 8 to make the program accessible to and usable by the family member with a disability. (See § 982.402(b)(6) concerning effect of live-in aide on family unit size.)
</P>
<P>(b) At any time, the PHA may refuse to approve a particular person as a live-in aide, or may withdraw such approval, if:
</P>
<P>(1) The person commits fraud, bribery or any other corrupt or criminal act in connection with any federal housing program;
</P>
<P>(2) The person commits drug-related criminal activity or violent criminal activity; or
</P>
<P>(3) The person currently owes rent or other amounts to the PHA or to another PHA in connection with Section 8 or public housing assistance under the 1937 Act.
</P>
<CITA TYPE="N">[63 FR 23860, Apr. 30, 1998; 63 FR 31625, June 10, 1998]


</CITA>
</DIV8>


<DIV8 N="§ 982.317" NODE="24:4.1.3.1.19.7.33.16" TYPE="SECTION">
<HEAD>§ 982.317   Lease-purchase agreements.</HEAD>
<P>(a) A family leasing a unit with assistance under the program may enter into an agreement with an owner to purchase the unit. So long as the family is receiving such rental assistance, all requirements applicable to families otherwise leasing units under the tenant-based program apply. Any homeownership premium (e.g., increment of value attributable to the value of the lease-purchase right or agreement such as an extra monthly payment to accumulate a downpayment or reduce the purchase price) included in the rent to the owner that would result in a higher subsidy amount than would otherwise be paid by the PHA must be absorbed by the family.
</P>
<P>(b) In determining whether the rent to owner for a unit subject to a lease-purchase agreement is a reasonable amount in accordance with § 982.503, any homeownership premium paid by the family to the owner must be excluded when the PHA determines rent reasonableness.
</P>
<CITA TYPE="N">[65 FR 55162, Sept. 12, 2000]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="H" NODE="24:4.1.3.1.19.8" TYPE="SUBPART">
<HEAD>Subpart H—Where Family Can Live and Move</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>60 FR 34695, July 3, 1995, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 982.351" NODE="24:4.1.3.1.19.8.33.1" TYPE="SECTION">
<HEAD>§ 982.351   Overview.</HEAD>
<P>This subpart describes what kind of housing is eligible for leasing, and the areas where a family can live with tenant-based assistance. The subpart covers: 
</P>
<P>(a) Assistance for a family that rents a dwelling unit in the jurisdiction of the PHA that originally selected the family for tenant-based assistance. 
</P>
<P>(b) “Portability” assistance for a family PHA rents a unit outside the jurisdiction of the initial PHA. 






</P>
</DIV8>


<DIV8 N="§ 982.352" NODE="24:4.1.3.1.19.8.33.2" TYPE="SECTION">
<HEAD>§ 982.352   Eligible housing.</HEAD>
<P>(a) <I>Ineligible housing.</I> The following types of housing may not be assisted by a PHA in the tenant-based programs: 
</P>
<P>(1) A public housing or Indian housing unit; 
</P>
<P>(2) A unit receiving project-based assistance under section 8 of the 1937 Act (42 U.S.C. 1437f); 
</P>
<P>(3) Nursing homes, board and care homes, or facilities providing continual psychiatric, medical, or nursing services; 
</P>
<P>(4) College or other school dormitories; 
</P>
<P>(5) Units on the grounds of penal, reformatory, medical, mental, and similar public or private institutions; or 
</P>
<P>(6) A unit occupied by its owner or by a person with any interest in the unit. 
</P>
<P>(7) For provisions on PHA disapproval of an owner, see § 982.306. 


</P>
<P>(b) <I>PHA-owned housing.</I> (1) PHA-owned units, as defined in § 982.4, may be assisted under the tenant-based program only if all the following conditions are satisfied:
</P>
<P>(i) The PHA must inform the family, both orally and in writing, that the family has the right to select any eligible unit available for lease.
</P>
<P>(ii) A PHA-owned unit is freely selected by the family, without PHA pressure or steering.
</P>
<P>(iii) The unit selected by the family is not ineligible housing.
</P>
<P>(iv) During assisted occupancy, the family may not benefit from any form of housing subsidy that is prohibited under paragraph (c) of this section.
</P>
<P>(v)(A) The PHA must obtain the services of an independent entity, as defined in § 982.4, to perform the following PHA functions as required under the program rule:
</P>
<P>(<I>1</I>) To determine rent reasonableness in accordance with § 982.507. The independent entity shall communicate the rent reasonableness determination to the family and the PHA.
</P>
<P>(<I>2</I>) To assist the family in negotiating the rent to owner in accordance with § 982.506.
</P>
<P>(<I>3</I>) To inspect the unit for compliance with HQS in accordance with §§ 982.305(a) and 982.405. The independent entity shall communicate the results of each such inspection to the family and the PHA.
</P>
<P>(B) The PHA may compensate the independent entity from PHA administrative fees (including fees credited to the administrative fee reserve) for the services performed by the independent entity. The PHA may not use other program receipts to compensate the independent entity for such services. The PHA and the independent entity may not charge the family any fee or charge for the services provided by the independent entity.
</P>
<P>(2) [Reserved]


</P>
<P>(c) <I>Prohibition against other housing subsidy.</I> A family may not receive the benefit of tenant-based assistance while receiving the benefit of any of the following forms of other housing subsidy, for the same unit or for a different unit: 
</P>
<P>(1) Public or Indian housing assistance; 
</P>
<P>(2) Other Section 8 assistance (including other tenant-based assistance); 
</P>
<P>(3) Assistance under former Section 23 of the United States Housing Act of 1937 (before amendment by the Housing and Community Development Act of 1974); 
</P>
<P>(4) Section 101 rent supplements; 
</P>
<P>(5) Section 236 rental assistance payments; 
</P>
<P>(6) Tenant-based assistance under the HOME Program; 
</P>
<P>(7) Rental assistance payments under Section 521 of the Housing Act of 1949 (a program of the Rural Development Administration);
</P>
<P>(8) Any local or State rent subsidy; 
</P>
<P>(9) Section 202 supportive housing for the elderly;
</P>
<P>(10) Section 811 supportive housing for persons with disabilities;
</P>
<P>(11) Section 202 projects for non-elderly persons with disabilities (Section 162 assistance); or
</P>
<P>(12) Any other duplicative federal, State, or local housing subsidy, as determined by HUD. For this purpose, “housing subsidy” does not include the housing component of a welfare payment, a social security payment received by the family, or a rent reduction because of a tax credit. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 60 FR 45661, Sept. 1, 1995; 63 FR 23860, Apr. 30, 1998; 64 FR 13057, Mar. 16, 1999; 64 FR 26645, May 14, 1999; 65 FR 55162, Sept. 12, 2000; 88 FR 30503, May 11, 2023; 89 FR 38296, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 982.353" NODE="24:4.1.3.1.19.8.33.3" TYPE="SECTION">
<HEAD>§ 982.353   Where family can lease a unit with tenant-based assistance.</HEAD>
<P>(a) <I>Assistance in the initial PHA jurisdiction.</I> The family may receive tenant-based assistance to lease a unit located anywhere in the jurisdiction (as determined by State and local law) of the initial PHA. HUD may nevertheless restrict the family's right to lease such a unit anywhere in such jurisdiction if HUD determines that limitations on a family's opportunity to select among available units in that jurisdiction are appropriate to achieve desegregation goals in accordance with obligations generated by a court order or consent decree. 
</P>
<P>(b) <I>Portability: Assistance outside the initial PHA jurisdiction.</I> Subject to paragraph (c) of this section, and to § 982.552 and § 982.553, a voucher-holder or participant family has the right to receive tenant-based voucher assistance, in accordance with requirements of this part, to lease a unit outside the initial PHA jurisdiction, anywhere in the United States, in the jurisdiction of a PHA with a tenant-based program under this part. The initial PHA must not provide such portable assistance for a participant if the family has moved out of the assisted unit in violation of the lease except as provided for in this subsection. If the family moves out in violation of the lease in order to protect the health or safety of a person who is or has been the victim of domestic violence, dating violence, sexual assault, or stalking and who reasonably believes him- or herself to be threatened with imminent harm from further violence by remaining in the dwelling unit (or any family member has been the victim of a sexual assault that occurred on the premises during the 90-calendar-day period preceding the family's move or request to move), and has otherwise complied with all other obligations under the Section 8 program, the family may receive a voucher from the initial PHA and move to another jurisdiction under the Housing Choice Voucher Program.
</P>
<P>(c) <I>Nonresident applicants.</I> (1) This paragraph (c) applies if neither the household head nor spouse of an assisted family already had a “domicile” (legal residence) in the jurisdiction of the initial PHA at the time when the family first submitted an application for participation in the program to the initial PHA. 
</P>
<P>(2) The following apply during the 12 month period from the time when a family described in paragraph (c)(1) of this section is admitted to the program:
</P>
<P>(i) The family may lease a unit anywhere in the jurisdiction of the initial PHA;
</P>
<P>(ii) The family does not have any right to portability;
</P>
<P>(iii) The initial PHA may choose to allow portability during this period.
</P>
<P>(3) If the initial PHA approves, the family may lease a unit outside the PHA jurisdiction under portability procedures.
</P>
<P>(4) Paragraph (c) of this section does not apply when the family or a member of the family is or has been the victim of domestic violence, dating violence, sexual assault, or stalking, as provided in 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking), and the move is needed to protect the health or safety of the family or family member, or any family member who has been the victim of a sexual assault that occurred on the premises during the 90-calendar-day period preceding the family's request to move.
</P>
<P>(d) <I>Income eligibility.</I> (1) For admission to the program, a family must be income eligible in the area where the family initially leases a unit with assistance under the program.
</P>
<P>(2) If a family is a participant in the initial PHA's voucher program, income eligibility is not redetermined when the family moves to the receiving PHA program under portability procedures.
</P>
<P>(e) <I>Freedom of choice.</I> The PHA may not directly or indirectly reduce the family's opportunity to select among available units, except as provided in paragraph (a) of this section, or elsewhere in this part 982 (e.g., prohibition on the use of ineligible housing, housing not meeting HQS, or housing for which the rent to owner exceeds a reasonable rent). However, the PHA must provide families the information required in § 982.301 for both the oral briefing and the information packet to ensure that they have the information they need to make an informed decision on their housing choice.
</P>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 61 FR 27163, May 30, 1996; 61 FR 42131, Aug. 13, 1996; 64 FR 26646, May 14, 1999; 73 FR 72344, Nov. 28, 2008; 75 FR 66264, Oct. 27, 2010; 80 FR 50573, Aug. 20, 2015; 81 FR 80816, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 982.354" NODE="24:4.1.3.1.19.8.33.4" TYPE="SECTION">
<HEAD>§ 982.354   Move with continued tenant-based assistance.</HEAD>
<P>(a) <I>Applicability.</I> This section states when a participant family may move to a new unit with continued tenant-based assistance: 
</P>
<P>(b) <I>When family may move.</I> A family may move to a new unit if:
</P>
<P>(1) The assisted lease for the old unit has terminated. This includes a termination because:
</P>
<P>(i) The PHA has terminated the HAP contract for the owner's breach; or
</P>
<P>(ii) The lease has terminated by mutual agreement of the owner and the tenant.
</P>
<P>(2) The owner has given the tenant a notice to vacate, or has commenced an action to evict the tenant, or has obtained a court judgment or other process allowing the owner to evict the tenant.
</P>
<P>(3) The tenant has given notice of lease termination (if the tenant has a right to terminate the lease on notice to the owner, for owner breach, or otherwise).
</P>
<P>(4) The family or a member of the family, is or has been the victim of domestic violence, dating violence, sexual assault, or stalking, as provided in 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking), and the move is needed to protect the health or safety of the family or family member, or if any family member has been the victim of a sexual assault that occurred on the premises during the 90-calendar-day period preceding the family's request to move. A PHA may not terminate assistance if the family, with or without prior notification to the PHA, moves out of a unit in violation of the lease, if such move occurs to protect the health or safety of a family member who is or has been the victim of domestic violence, dating violence, sexual assault, or stalking and who reasonably believed he or she was threatened with imminent harm from further violence if he or she remained in the dwelling unit. However, any family member that has been the victim of a sexual assault that occurred on the premises during the 90-calendar-day period preceding the family's move or request to move is not required to believe that he or she was threatened with imminent harm from further violence if he or she remained in the dwelling unit.
</P>
<P>(c) <I>How many moves.</I> (1) A participant family may move with continued assistance under the program, either inside the PHA jurisdiction, or under the portability procedures (See § 982.353) in accordance with the PHA's policies.
</P>
<P>(2) Consistent with applicable civil rights laws and regulations, the PHA may establish policies that:
</P>
<P>(i) Prohibit any move by the family during the initial lease term; 
</P>
<P>(ii) Prohibit more than one move by the family during any one-year period; and
</P>
<P>(iii) The above policies do not apply when the family or a member of the family is or has been the victim of domestic violence, dating violence, sexual assault, or stalking, as provided in 24 CFR part 5, subpart L, and the move is needed to protect the health or safety of the family or family member, or any family member has been the victim of a sexual assault that occurred on the premises during the 90-calendar-day period preceding the family's request to move.
</P>
<P>(d) <I>Notice that family wants to move.</I> If the family wants to move to a new unit, the family must notify the PHA and the owner before moving from the old unit. If the family wants to move to a new unit that is located outside the initial PHA jurisdiction, the notice to the initial PHA must specify the area where the family wants to move. See portability procedures in subpart H of this part. 
</P>
<P>(e) <I>When the PHA may deny permission to move.</I> (1) The PHA may deny permission to move if the PHA does not have sufficient funding for continued assistance. The PHA must provide written notification to the local HUD Office within 10 business days of determining it is necessary to deny moves to a higher-cost unit based on insufficient funding.
</P>
<P>(2) At any time, the PHA may deny permission to move in accordance with § 982.552 (grounds for denial or termination of assistance). 
</P>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 64 FR 56913, Oct. 21, 1999; 75 FR 66263, Oct. 27, 2010. Redesignated and amended at 80 FR 50573, Aug. 20, 2015; 81 FR 80817, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 982.355" NODE="24:4.1.3.1.19.8.33.5" TYPE="SECTION">
<HEAD>§ 982.355   Portability: Administration by initial and receiving PHA.</HEAD>
<P>(a) <I>General.</I> When a family moves under portability (in accordance with § 982.353(b)) to an area outside the initial PHA jurisdiction, the receiving PHA must administer assistance for the family if a PHA with a HCV program has jurisdiction in the area where the unit is located.
</P>
<P>(b) <I>Requirement to administer assistance.</I> A receiving PHA cannot refuse to assist incoming portable families or direct them to another neighboring PHA for assistance. If there is more than one such PHA, the initial PHA provides the family with the contact information for the receiving PHAs that serve the area, and the family selects the receiving PHA. The family must inform the initial PHA which PHA it has selected as the receiving PHA. In cases where the family prefers not to select the receiving PHA, the initial PHA selects the receiving PHA on behalf of the family. HUD may determine in certain instances that a PHA is not required to accept incoming portable families, such as a PHA in a declared disaster area. However, the PHA must have approval in writing from HUD before refusing any incoming portable families.
</P>
<P>(c) <I>Portability procedures.</I> The following portability procedures must be followed:
</P>
<P>(1) When the family decides to use the voucher outside of the PHA jurisdiction, the family must notify the initial PHA of its desire to relocate and must specify the location where it wants to live.
</P>
<P>(2) The initial PHA must determine the family's eligibility to move in accordance with §§ 982.353 and 982.354.
</P>
<P>(3) Once the receiving PHA is determined in accordance with paragraph (b) of this section, the initial PHA must contact the receiving PHA, via email or other confirmed delivery method, prior to approving the family's request to move in order to determine whether the voucher will be absorbed or billed by the receiving PHA. The receiving PHA must advise the initial PHA in writing, via email or other confirmed delivery method, of its decision.
</P>
<P>(4) If the receiving PHA notifies the initial PHA that it will absorb the voucher, the receiving PHA cannot reverse its decision at a later date without consent of the initial PHA.
</P>
<P>(5) If the receiving PHA will bill the initial PHA for the portability voucher and the cost of the HAP will increase due to the move, the initial PHA may deny the move if it does not have sufficient funding for continued assistance in accordance with § 982.354 (e)(1).
</P>
<P>(6) If a billing arrangement is approved by the initial PHA or if the voucher is to be absorbed by the receiving PHA, the initial PHA must issue the family a voucher to move, if it has not already done so, and advise the family how to contact and request assistance from the receiving PHA.
</P>
<P>(7) The initial PHA must promptly notify the receiving PHA to expect the family. The initial PHA must give the receiving PHA the form HUD-52665, the most recent form HUD 50058 (Family Report) for the family, and all related verification information.
</P>
<P>(8) The family must promptly contact the receiving PHA in order to be informed of the receiving PHA's procedures for incoming portable families and comply with these procedures. The family's failure to comply may result in denial or termination of the receiving PHA's voucher.
</P>
<P>(9) The receiving PHA does not redetermine eligibility for a participant family. However, for a family that was not already receiving assistance in the PHA's HCV program, the initial PHA must determine whether the family is eligible for admission to the receiving PHA's HCV program. In determining income eligibility, the receiving PHA's income limits are used by the initial PHA.
</P>
<P>(10) When a receiving PHA assists a family under portability, administration of the voucher must be in accordance with the receiving PHA's policies. This requirement also applies to policies of Moving to Work agencies. The receiving PHA procedures and preferences for selection among eligible applicants do not apply to the family, and the receiving PHA waiting list is not used.
</P>
<P>(11) If the receiving PHA opts to conduct a new reexamination for a current participant family, the receiving PHA may not delay issuing the family a voucher or otherwise delay approval of a unit.
</P>
<P>(12) The receiving PHA must determine the family unit size for the family, and base its determination on the subsidy standards of the receiving PHA.
</P>
<P>(13) The receiving PHA must issue a voucher to the family. The term of the receiving PHA voucher may not expire before 30 calendar days from the expiration date of the initial PHA voucher. If the voucher expires before the family arrives at the receiving PHA, the receiving PHA must contact the initial PHA to determine if it will extend the voucher.
</P>
<P>(14) Once the receiving PHA issues the portable family a voucher, the receiving PHA's policies on extensions of the voucher term apply. The receiving PHA must notify the initial PHA of any extensions granted to the term of the voucher.
</P>
<P>(15) The family must submit a request for tenancy approval to the receiving PHA during the term of the receiving PHA voucher. As required in § 982.303, if the family submits a request for tenancy approval during the term of the voucher, the PHA must suspend the term of that voucher.
</P>
<P>(16) The receiving PHA must promptly notify the initial PHA if the family has leased an eligible unit under the program, or if the family fails to submit a request for tenancy approval for an eligible unit within the term of the voucher.
</P>
<P>(17) At any time, either the initial PHA or the receiving PHA may make a determination to deny or terminate assistance to the family in accordance with § 982.552 and 982.553.
</P>
<P>(d) <I>Absorption by the receiving PHA.</I> (1) If funding is available under the consolidated ACC for the receiving PHA's HCV program, the receiving PHA may absorb the family into the receiving PHA's HCV program. After absorption, the family is assisted with funds available under the consolidated ACC for the receiving PHA's HCV program.
</P>
<P>(2) HUD may require that the receiving PHA absorb all, or a portion of, incoming portable families. Under circumstances described in a notice published in the <E T="04">Federal Register,</E> HUD may determine that receiving PHAs, or categories of receiving PHAs, should absorb all or a portion of incoming portable families. If HUD makes such a determination, HUD will provide an opportunity for public comment, for a period of no less than 60 calendar days, on such policy and procedures. After consideration of public comments, HUD will publish a final notice in the <E T="04">Federal Register</E> advising PHAs and the public of HUD's final determination on the subject of mandatory absorption of incoming portable families.
</P>
<P>(3) HUD may provide financial or nonfinancial incentives (or both) to PHAs that absorb portability vouchers.
</P>
<P>(e) <I>Portability billing.</I> (1) To cover assistance for a portable family that was not absorbed in accordance with paragraph (d) of this section, the receiving PHA may bill the initial PHA for housing assistance payments and administrative fees.
</P>
<P>(2) The initial PHA must promptly reimburse the receiving PHA for the full amount of the housing assistance payments made by the receiving PHA for the portable family. The amount of the housing assistance payment for a portable family in the receiving PHA program is determined in the same manner as for other families in the receiving PHA program.
</P>
<P>(3) The initial PHA must promptly reimburse the receiving PHA for the lesser of 80 percent of the initial PHA ongoing administrative fee or 100 percent of the receiving PHA's ongoing administrative fee for each program unit under HAP contract on the first day of the month for which the receiving PHA is billing the initial PHA under this section. If administrative fees are prorated for the HCV program, the proration will apply to the amount of the administrative fee for which the receiving PHA may bill under this section (e.g., the receiving PHA may bill for the lesser of 80 percent of the initial PHA's prorated ongoing administrative fee or 100 percent of the receiving PHA's prorated ongoing administrative fee). If both PHAs agree, the PHAs may negotiate a different amount of reimbursement.
</P>
<P>(4) When a portable family moves out of the HCV program of a receiving PHA that has not absorbed the family, the PHA in the new jurisdiction to which the family moves becomes the receiving PHA, and the first receiving PHA is no longer required to provide assistance for the family.
</P>
<P>(5) In administration of portability, the initial PHA and the receiving PHA must comply with financial procedures required by HUD, including the use of HUD-required billing forms. The initial and receiving PHA must also comply with billing and payment deadlines under the financial procedures.
</P>
<P>(6) A PHA must manage the PHA HCV program in a manner that ensures that the PHA has the financial ability to provide assistance for families that move out of the PHA's program under the portability procedures, and that have not been absorbed by the receiving PHA, as well as for families that remain in the PHA's program.
</P>
<P>(7) HUD may reduce the administrative fee to an initial or receiving PHA if the PHA does not comply with HUD portability requirements.
</P>
<P>(f) <I>Portability funding.</I> (1) HUD may transfer units and funds for assistance to portable families to the receiving PHA from funds available under the initial PHA ACC.
</P>
<P>(2) HUD may provide additional funding (e.g., funds for incremental units) to the initial PHA for funds transferred to a receiving PHA for portability purposes.
</P>
<P>(3) HUD may provide additional funding (e.g., funds for incremental units) to the receiving PHA for absorption of portable families.
</P>
<P>(4) HUD may require the receiving PHA to absorb portable families.
</P>
<P>(g) <I>Special purpose vouchers.</I> (1) The initial PHA must submit the codes used for special purpose vouchers on the form HUD-50058, Family Report, and the receiving PHA must maintain the codes on the Family Report, as long as the Receiving PHA chooses to bill the initial PHA.
</P>
<P>(2) Initial and receiving PHAs must administer special purpose vouchers, such as the HUD-Veterans Affairs Supportive Housing vouchers, in accordance with HUD-established policy in cases where HUD has established alternative program requirements of such special purpose vouchers.
</P>
<CITA TYPE="N">[80 FR 50573, Aug. 20, 2015]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="I" NODE="24:4.1.3.1.19.9" TYPE="SUBPART">
<HEAD>Subpart I—Dwelling Unit: Housing Quality Standards, Subsidy Standards, Inspection and Maintenance</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>60 FR 34695, July 3, 1995, unless otherwise noted.










</PSPACE></SOURCE>

<DIV8 N="§ 982.401" NODE="24:4.1.3.1.19.9.33.1" TYPE="SECTION">
<HEAD>§ 982.401   Housing quality standards.</HEAD>
<P>As defined in § 982.4, HQS refers to the minimum quality standards developed by HUD in accordance with 24 CFR 5.703, including any variations approved by HUD for the PHA under 24 CFR 5.705(a)(3).


</P>
<CITA TYPE="N">[89 FR 38296, May 7, 2024]








</CITA>
</DIV8>


<DIV8 N="§ 982.402" NODE="24:4.1.3.1.19.9.33.2" TYPE="SECTION">
<HEAD>§ 982.402   Subsidy standards.</HEAD>
<P>(a) <I>Purpose.</I> (1) The PHA must establish subsidy standards that determine the number of bedrooms needed for families of different sizes and compositions. 
</P>
<P>(2) For each family, the PHA determines the appropriate number of bedrooms under the PHA subsidy standards (family unit size). 
</P>
<P>(3) The family unit size number is entered on the voucher issued to the family. The PHA issues the family a voucher for the family unit size when a family is selected for participation in the program. 
</P>
<P>(b) <I>Determining family unit size.</I> The following requirements apply when the PHA determines family unit size under the PHA subsidy standards: 
</P>
<P>(1) The subsidy standards must provide for the smallest number of bedrooms needed to house a family without overcrowding. 
</P>
<P>(2) The subsidy standards must be consistent with space requirements under the HQS (See § 982.401). 
</P>
<P>(3) The subsidy standards must be applied consistently for all families of like size and composition. 
</P>
<P>(4) A child who is temporarily away from the home because of placement in foster care is considered a member of the family in determining the family unit size. 
</P>
<P>(5) A family that consists of a pregnant woman (with no other persons) must be treated as a two-person family. 
</P>
<P>(6) Any live-in aide (approved by the PHA to reside in the unit to care for a family member who is disabled or is at least 50 years of age) must be counted in determining the family unit size; 
</P>
<P>(7) Unless a live-in-aide resides with the family, the family unit size for any family consisting of a single person must be either a zero or one-bedroom unit, as determined under the PHA subsidy standards. 
</P>
<P>(8) In determining family unit size for a particular family, the PHA may grant an exception to its established subsidy standards if the PHA determines that the exception is justified by the age, sex, health, handicap, or relationship of family members or other personal circumstances. (For a single person other than a disabled or elderly person or remaining family member, such PHA exception may not override the limitation in paragraph (b)(7) of this section.) 
</P>
<P>(c) <I>Effect of family unit size-maximum subsidy in voucher program.</I> The family unit size as determined for a family under the PHA subsidy standard is used to determine the maximum rent subsidy for a family assisted in the voucher program. For a voucher tenancy, the PHA establishes payment standards by number of bedrooms. The payment standard for a family shall be the lower of:
</P>
<P>(1) The payment standard amount for the family unit size; or
</P>
<P>(2) The payment standard amount for the unit size of the unit rented by the family.
</P>
<P>(3) <I>Voucher program.</I> For a voucher tenancy, the PHA establishes payment standards by number of bedrooms. The payment standards for the family must be the lower of:
</P>
<P>(i) The payment standards for the family unit size; or
</P>
<P>(ii) The payment standard for the unit size rented by the family.
</P>
<P>(d) <I>Size of unit occupied by family.</I> (1) The family may lease an otherwise acceptable dwelling unit with fewer bedrooms than the family unit size. However, the dwelling unit must meet the applicable HQS space requirements. 
</P>
<P>(2) The family may lease an otherwise acceptable dwelling unit with more bedrooms than the family unit size. However, utility allowances must follow § 982.517(d).
</P>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 63 FR 23861, Apr. 30, 1998; 64 FR 26646, May 14, 1999; 81 FR 12375, Mar. 8, 2016; 88 FR 30503, May 11, 2023; 89 FR 38296, May 7, 2024; 89 FR 46020, May 28, 2024]






</CITA>
</DIV8>


<DIV8 N="§ 982.403" NODE="24:4.1.3.1.19.9.33.3" TYPE="SECTION">
<HEAD>§ 982.403   Terminating HAP contract when unit is too small.</HEAD>
<P>(a) <I>Violation of HQS space standards.</I> (1) If the PHA determines that a unit does not meet the HQS space standards because of an increase in family size or a change in family composition, the PHA must issue the family a new voucher, and the family and PHA must try to find an acceptable unit as soon as possible. 
</P>
<P>(2) If an acceptable unit is available for rental by the family, the PHA must terminate the HAP contract in accordance with its terms. 
</P>
<P>(b) <I>Termination.</I> When the PHA terminates the HAP contract under paragraph (a) of this section:
</P>
<P>(1) The PHA must notify the family and the owner of the termination; and 
</P>
<P>(2) The HAP contract terminates at the end of the calendar month that follows the calendar month in which the PHA gives such notice to the owner. 
</P>
<P>(3) The family may move to a new unit in accordance with § 982.354. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 60 FR 45661, Sept. 1, 1995; 64 FR 26647, May 14, 1999; 80 FR 8246, Feb. 17, 2015; 80 FR 50575, Aug. 20, 2015]




</CITA>
</DIV8>


<DIV8 N="§ 982.404" NODE="24:4.1.3.1.19.9.33.4" TYPE="SECTION">
<HEAD>§ 982.404   Maintenance: Owner and family responsibility; PHA remedies.</HEAD>
<P>(a) <I>Owner obligation.</I> (1) The owner must maintain the unit in accordance with HQS. A unit is not in compliance with HQS if the PHA or other inspector authorized by the State or local government determines that the unit has HQS deficiencies based upon an inspection, the agency or inspector notifies the owner in writing of the HQS deficiencies, and the deficiencies are not remedied within the appropriate timeframe.
</P>
<P>(2) If the owner fails to maintain the dwelling unit in accordance with HQS, the PHA must take enforcement action in accordance with this section.
</P>
<P>(3) If a deficiency is life-threatening, the owner must correct the deficiency within 24 hours of notification. For other deficiencies, the owner must correct the deficiency within 30 calendar days of notification (or any reasonable PHA-approved extension).
</P>
<P>(4) In the case of an HQS deficiency that the PHA determines is caused by the tenant, any member of the household, or any guest or other person under the tenant's control, other than any damage resulting from ordinary use, the PHA may waive the owner's responsibility to remedy the violation. The HAP to the owner may not be withheld or abated if the owner responsibility has been waived. However, the PHA may terminate assistance to a family because of an HQS breach beyond damage resulting from ordinary use caused by any member of the household or any guest or other person under the tenant's control.
</P>
<P>(b) <I>Family obligation.</I> (1) The family may be held responsible for a breach of the HQS that is caused by any of the following:
</P>
<P>(i) The family fails to pay for any utilities that the owner is not required to pay for, but which are to be paid by the tenant;
</P>
<P>(ii) The family fails to provide and maintain any appliances that the owner is not required to provide, but which are to be provided by the tenant; or
</P>
<P>(iii) Any member of the household or guest damages the dwelling unit or premises (damages beyond ordinary wear and tear)
</P>
<P>(2) If the PHA has waived the owner's responsibility to remedy the violation in accordance with paragraph (a)(4) of this section, the following applies:
</P>
<P>(i) If the HQS breach caused by the family is life-threatening, the family must take all steps permissible under the lease and State and local law to ensure the deficiency is corrected within 24 hours of notification.
</P>
<P>(ii) For other family-caused deficiencies, the family must take all steps permissible under the lease and State and local law to ensure that the deficiency is corrected within 30 calendar days of notification (or any PHA-approved extension).
</P>
<P>(3) If the family has caused a breach of the HQS, the PHA must take prompt and vigorous action to enforce the family obligations. The PHA may terminate assistance for the family in accordance with § 982.552.
</P>
<P>(c) <I>Determination of noncompliance with HQS.</I> The unit is in noncompliance with HQS if:
</P>
<P>(1) The PHA or authorized inspector determines the unit has HQS deficiencies based upon an inspection;
</P>
<P>(2) The PHA notified the owner in writing of the unit HQS deficiencies; and
</P>
<P>(3) The unit HQS deficiencies are not corrected in accordance with the timeframes established in paragraph (a)(3) of this section.
</P>
<P>(d) <I>PHA remedies for HQS deficiencies identified during inspections other than the initial inspection.</I> This subsection covers PHA actions when HQS deficiencies are identified as a result of an inspection other than the initial inspection (see § 982.405). For PHA HQS enforcement actions for HQS deficiencies under the initial HQS inspection NLT or alternative inspection options, see §§ 982.405(j) and 982.406(e), respectively.
</P>
<P>(1) A PHA may withhold assistance payments for units that have HQS deficiencies once the PHA has notified the owner in writing of the deficiencies. The PHA must identify in its Administrative Plan the conditions under which it will withhold HAP. If the unit is brought into compliance during the applicable cure period (within 24 hours of notification for life-threatening deficiencies and within 30 days of notification (or other reasonable period established by the PHA) for non-life-threatening deficiencies), the PHA:
</P>
<P>(i) Must resume assistance payments; and
</P>
<P>(ii) Must provide assistance payments to cover the time period for which the assistance payments were withheld.
</P>
<P>(2)(i) The PHA must abate the HAP, including amounts that had been withheld, if the owner fails to make the repairs within the applicable cure period (within 24 hours of notification for life-threatening deficiencies and within 30 days of notification (or other reasonable period established by the PHA) for non-life-threatening deficiencies).
</P>
<P>(ii) If a PHA abates the assistance payments under this paragraph, the PHA must notify the family and the owner that it is abating payments and that if the unit does not meet HQS within 60 days (or a reasonable longer period established by the PHA) after the determination of noncompliance in accordance with paragraph (c) of this section, the PHA will terminate the HAP contract for the unit, and the family will have to move if the family wishes to receive continued assistance. The PHA must issue the family its voucher to move at least 30 days prior to the termination of the HAP contract.
</P>
<P>(3) An owner may not terminate the tenancy of any family due to the withholding or abatement of assistance under paragraph (a) of this section. During the period that assistance is abated, the family may terminate the tenancy by notifying the owner and the PHA. If the family chooses to terminate the tenancy, the HAP contract will automatically terminate on the effective date of the tenancy termination or the date the family vacates the unit, whichever is earlier. The PHA must promptly issue the family its voucher to move.
</P>
<P>(4) If the family did not terminate the tenancy and the owner makes the repairs and the unit complies with HQS within 60 days (or a reasonable longer period established by the PHA) of the notice of abatement, the PHA must recommence payments to the owner. The PHA does not make any payments to the owner for the period of time that the payments were abated.
</P>
<P>(5) If the owner fails to make the repairs within 60 days (or a reasonable longer period established by the PHA) of the notice of abatement, the PHA must terminate the HAP contract.
</P>
<P>(e) <I>Relocation due to HQS deficiencies.</I> (1) The PHA must give any family residing in a unit for which the HAP contract is terminated under paragraph (d)(5) of this section due to a failure to correct HQS deficiencies at least 90 days or a longer period as the PHA determines is reasonably necessary following the termination of the HAP contract to lease a new unit.
</P>
<P>(2) If the family is unable to lease a new unit within the period provided by the PHA under paragraph (e)(1) of this section and the PHA owns or operates public housing, the PHA must offer, and, if accepted, provide the family a selection preference for an appropriate-size public housing unit that first becomes available for occupancy after the time period expires.
</P>
<P>(3) PHAs may assist families relocating under this paragraph (e) in finding a new unit, including using up to 2 months of the withheld and abated assistance payments for costs directly associated with relocating to a new unit, including security deposits, temporary housing costs, or other reasonable moving costs as determined by the PHA based on their locality. If the PHA uses the withheld and abated assistance payments to assist with the family's relocation costs, the PHA must provide security deposit assistance to the family as necessary. PHAs must assist families with disabilities in locating available accessible units in accordance with 24 CFR 8.28(a)(3). If the family receives security deposit assistance from the PHA for the new unit, the PHA may require the family to remit the security deposit returned by the owner of the new unit at such time that the lease is terminated, up to the amount of the security deposit assistance provided by the PHA for that unit. The PHA must include in its Administrative Plan the policies it will implement for this provision.
</P>
<P>(f) <I>Applicability.</I> This section is applicable to HAP contracts that were either executed on or after or renewed after June 6, 2024. For purposes of this paragraph, a HAP contract is renewed if the HAP contract continues beyond the initial term of the lease. For all other HAP contracts, § 982.404 as in effect on June 6, 2024 remains applicable.
</P>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 60 FR 45661, Sept. 1, 1995; 89 FR 38296, May 7, 2024]














</CITA>
</DIV8>


<DIV8 N="§ 982.405" NODE="24:4.1.3.1.19.9.33.5" TYPE="SECTION">
<HEAD>§ 982.405   PHA unit inspection.</HEAD>
<P>(a) <I>Initial Inspections.</I> The PHA must inspect the unit leased to a family prior to the initial term of the lease to determine if the unit meets the HQS. (<I>See</I> § 982.305(b)(2) concerning timing of initial inspection by the PHA.)
</P>
<P>(b) <I>Periodic Inspections.</I> The PHA must inspect the unit at least biennially during assisted occupancy to ensure that the unit continues to meet the HQS, except that a small rural PHA, as defined in § 902.101 of this title, must inspect a unit once every three years during assisted occupancy to ensure that the unit continues to meet the HQS.
</P>
<P>(c) <I>Supervisory Quality Control Inspections.</I> The PHA must conduct supervisory quality control HQS inspections.
</P>
<P>(d) <I>Interim Inspections.</I> When a participant family or government official notifies the PHA of a potential deficiency, the following conditions apply:
</P>
<P>(1) <I>Life-Threatening.</I> If the reported deficiency is life-threatening, the PHA must, within 24 hours of notification, both inspect the housing unit and notify the owner if the life-threatening deficiency is confirmed. The owner must then make the repairs within 24 hours of PHA notification.
</P>
<P>(2) <I>Non-Life-Threatening.</I> If the reported deficiency is non-life-threatening, the PHA must, within 15 days of notification, both inspect the unit and notify the owner if the deficiency is confirmed. The owner must then make the repairs within 30 days of notification from the PHA or within any PHA-approved extension.
</P>
<P>(3) <I>Extraordinary circumstances.</I> In the event of extraordinary circumstances, such as if a unit is within a presidentially declared disaster area, HUD may approve an exception of the 24-hour or the 15-day inspection requirement until such time as an inspection is feasible.
</P>
<P>(e) <I>Scheduling inspections.</I> In scheduling inspections, the PHA must consider complaints and any other information brought to the attention of the PHA.
</P>
<P>(f) <I>PHA notification of owner.</I> The PHA must notify the owner of deficiencies shown by the inspection.
</P>
<P>(g) <I>Charge to family for inspection.</I> The PHA may not charge the family for an initial inspection or reinspection of the unit.
</P>
<P>(h) <I>Charge to owner for inspection.</I> The PHA may not charge the owner for the inspection of the unit prior to the initial term of the lease or for a first inspection during assisted occupancy of the unit. The PHA may establish a reasonable fee to owners for a reinspection if an owner notifies the PHA that a repair has been made or the allotted time for repairs has elapsed and a reinspection reveals that any deficiency cited in the previous inspection that the owner is responsible for repairing, pursuant to § 982.404(a), was not corrected. The owner may not pass this fee along to the family. Fees collected under this paragraph (h) will be included in a PHA's administrative fee reserve and may be used only for activities related to the provision of the HCV program.
</P>
<P>(i) <I>Verification methods.</I> When a PHA must verify correction of a deficiency, the PHA may use verification methods other than another on-site inspection. The PHA may establish different verification methods for initial and non-initial inspections or for different HQS deficiencies. Upon either an inspection for initial occupancy or a reinspection, the PHA may accept photographic evidence or other reliable evidence from the owner to verify that a deficiency has been corrected.


</P>
<P>(j) <I>Initial HQS inspection option: No life-threatening deficiencies.</I> (1) A PHA may elect to approve an assisted tenancy, execute the HAP contract, and begin making assistance payments for a unit that failed the initial HQS inspection, provided that the unit has no life-threatening deficiencies. A PHA that implements this option (NLT option) may apply the option to all the PHA's initial inspections or may limit the use of the option to certain units. The PHA's Administrative Plan must specify the circumstances under which the PHA will exercise the NLT option. If the PHA has established, and the unit is covered by, both the NLT option and the alternative inspections option for the initial HQS inspection, see § 982.406(f).
</P>
<P>(2) The PHA must notify the owner and the family if the NLT option is available for the unit selected by the family. After completing the inspection and determining there are no life-threatening deficiencies, the PHA provides both the owner and the family with a list of all the non-life-threatening deficiencies identified by the initial HQS inspection and, should the owner not complete the repairs within 30 days, the maximum amount of time the PHA will withhold HAP before abating assistance. The PHA must also inform the family that if the family accepts the unit and the owner fails to make the repairs within the cure period, which may not exceed 180 days from the effective date of the HAP contract, the PHA will terminate the HAP contract, and the family will have to move to another unit in order to receive voucher assistance. The family may choose to decline the unit based on the deficiencies and continue its housing search.
</P>
<P>(3) If the family decides to lease the unit, the PHA and the owner execute the HAP contract, and the family enters into the assisted lease with the owner. The PHA commences making assistance payments to the owner.
</P>
<P>(4) The owner must correct the deficiencies within 30 days from the effective date of the HAP contract. If the owner fails to correct the deficiencies within the 30-day cure period, the PHA must withhold the housing assistance payments until the owner makes the repairs and the PHA verifies the correction. Once the deficiencies are corrected, the PHA may use the withheld housing assistance payments to make payments for the period that payments were withheld.
</P>
<P>(5) A PHA relying on the non-life-threatening inspection provision must identify in the PHA Administrative Plan all the optional policies identified in § 982.54(d)(21)(i) and (ii).
</P>
<P>(6) The PHA establishes in the Administrative Plan:
</P>
<P>(i) The maximum amount of time it will withhold payments if the owner fails to correct the deficiencies within the required cure period before abating payments; and
</P>
<P>(ii) The number of days after which the PHA will terminate the HAP contract for the owner's failure to correct the deficiencies, which may not exceed 180 days from the effective date of the HAP contract.


</P>
<P>(7) The owner may not terminate the tenancy of the family due to the withholding or abatement of assistance under this paragraph (j). During the period that assistance is abated, the family may terminate the tenancy by notifying the owner and the PHA. If the family chooses to terminate the tenancy, the HAP contract will automatically terminate on the effective date of the tenancy termination or the date the family vacates the unit, whichever is earlier. The PHA must promptly issue the family its voucher to move.




</P>
<CITA TYPE="N">[89 FR 38298, May 7, 2024, as amended at 90 FR 56687, Dec. 8, 2025]






</CITA>
</DIV8>


<DIV8 N="§ 982.406" NODE="24:4.1.3.1.19.9.33.6" TYPE="SECTION">
<HEAD>§ 982.406   Use of alternative inspections.</HEAD>
<P>(a) <I>In general.</I> A PHA may comply with the inspection requirements in § 982.405(a) and (b) by relying on an alternative inspection (<I>i.e.,</I> an inspection conducted for another housing program) only if the PHA is able to obtain the results of the alternative inspection. The PHA may implement the use of alternative inspections for both initial and periodic inspections or may limit the use of alternative inspections to either initial or periodic inspections. The PHA may limit the use of alternative inspections to certain units, as provided in the PHA's Administrative Plan.
</P>
<P>(b) <I>Administrative Plan.</I> A PHA relying on an alternative inspection must identify in the PHA Administrative Plan all the optional policies identified in § 982.54(d)(21)(iii).
</P>
<P>(c) <I>Eligible inspection methods.</I> (1) A PHA may rely upon inspections of housing assisted under the HOME Investment Partnerships (HOME) program or housing financed using Low-Income Housing Tax Credits (LIHTCs), or inspections performed by HUD.
</P>
<P>(2) If a PHA wishes to rely on an inspection method other than a method listed in paragraph (c)(1) of this section, then, prior to amending its Administrative Plan, the PHA must submit to the Real Estate Assessment Center (REAC) a copy of the inspection method it wishes to use, along with its analysis of the inspection method that shows that the method “provides the same or greater protection to occupants of dwelling units” as would HQS.
</P>
<P>(i) A PHA may rely upon such alternative inspection method only upon receiving approval from REAC to do so.
</P>
<P>(ii) A PHA that uses an alternative inspection method approved under this paragraph must monitor changes to the standards and requirements applicable to such method. If any change is made to the alternative inspection method, then the PHA must submit to REAC a copy of the revised standards and requirements, along with a revised comparison to HQS. If the PHA or REAC determines that the revision would cause the alternative inspection to no longer meet or exceed HQS, then the PHA may no longer rely upon the alternative inspection method to comply with the inspection requirement at § 982.405(a) and (b).
</P>
<P>(d) <I>Use of alternative inspection.</I> (1) If an alternative inspection method employs sampling, then a PHA may rely on such alternative inspection method for purposes of an initial or periodic inspection only if units occupied by voucher program participants are included in the population of units forming the basis of the sample.
</P>
<P>(2) In order for a PHA to rely upon the results of an alternative inspection for purposes of an initial or periodic inspection, a property inspected pursuant to such method must meet the standards or requirements regarding housing quality or safety applicable to properties assisted under the program using the alternative inspection method. To make the determination of whether such standards or requirements are met, the PHA must adhere to the following procedures:
</P>
<P>(i) If a property is inspected under an alternative inspection method, and the property receives a “pass” score, then the PHA may rely on that inspection.
</P>
<P>(ii) If a property is inspected under an alternative inspection method, and the property receives a “fail” score, then the PHA may not rely on that inspection.
</P>
<P>(iii) If a property is inspected under an alternative inspection method that does not employ a pass/fail determination—for example, in the case of a program where deficiencies are simply identified—then the PHA must review the list of deficiencies to determine whether any cited deficiency would have resulted in a “fail” score under HQS. If no such deficiency exists, then the PHA may rely on the inspection. If such a deficiency does exist, then the PHA may not rely on the inspection.
</P>
<P>(3) Under any circumstance described in paragraph (d)(2) of this section in which a PHA is prohibited from relying on an alternative inspection method for a property, the PHA must, within a reasonable period of time, conduct an HQS inspection of any units in the property occupied by voucher program participants and follow HQS procedures to remedy any identified deficiencies.
</P>
<P>(e) <I>Initial inspections using the alternative inspection option.</I> (1) The PHA may approve the tenancy, allow the family to enter into the lease agreement, and execute the HAP contract for a unit that has been inspected in the previous 24 months where the alternative inspection meets the requirements of this section. If the PHA has established and the unit is covered by both the NLT option under § 982.405(j) and the alternative inspections option for the initial HQS inspection, see paragraph (f) of this section.
</P>
<P>(2) The PHA notifies the owner and the family that the unit selected by the family is eligible for the alternative inspection option. The PHA must provide the family with the PHA list of HQS deficiencies that are considered life-threatening as part of this notification. If the owner and family agree to the use of this option, the PHA approves the assisted tenancy, allows the family to enter into the lease agreement with the owner, and executes the HAP contract on the basis of the alternative inspection.
</P>
<P>(3) The PHA must conduct an HQS inspection within 30 days of receiving the Request for Tenancy Approval. If the family reports a deficiency to the PHA prior to the PHA's HQS inspection, the PHA must inspect the unit within the time period required under § 982.405(d) or within 30 days of the effective date of the HAP contract, whichever time period ends first.
</P>
<P>(4) The PHA must enter into the HAP contract with the owner before conducting the HQS inspection. The PHA may not make housing assistance payments to the owner until the PHA has inspected the unit.
</P>
<P>(5) The PHA may commence housing assistance payments to the owner and make housing assistance payments retroactive to the effective date of the HAP contract only after the unit passes the PHA's HQS inspection. If the unit does not pass the HQS inspection, the PHA may not make housing assistance payments to the owner until all the deficiencies have been corrected. If a deficiency is life-threatening, the owner must correct the deficiency within 24 hours of notification from the PHA. For other deficiencies, the owner must correct the deficiency within no more than 30 calendar days (or any PHA-approved extension) of notification from the PHA. If the owner corrects the deficiencies within the required cure period, the PHA makes the housing assistance payments retroactive to the effective date of the HAP contract.
</P>
<P>(6) The PHA establishes in the Administrative Plan:
</P>
<P>(i) The maximum amount of time it will withhold payments if the owner does not correct the deficiencies within the required cure period before abating payments; and
</P>
<P>(ii) The number of days after which the PHA will terminate the HAP contract for the owner's failure to correct the deficiencies, which may not exceed 180 days from the effective date of the HAP contract.
</P>
<P>(7) The owner may not terminate the tenancy of the family due to the withholding or abatement of assistance under this paragraph (e). During the period that assistance is abated, the family may terminate the tenancy by notifying the owner and the PHA. If the family chooses to terminate the tenancy, the HAP contract will automatically terminate on the effective date of the tenancy termination or the date the family vacates the unit, whichever is earlier. The PHA must promptly issue the family its voucher to move.








</P>
<P>(f) <I>Initial inspection: using the alternative inspection option in combination with the non-life-threatening deficiencies option.</I> (1) The PHA notifies the owner and the family that both the alternative inspection option and the NLT option are available for the unit selected by the family. The PHA must provide the family the list of HQS deficiencies that are considered life-threatening as part of this notification. If the owner and family agree to the use of both options, the PHA approves the assisted tenancy, allows the family to enter into the lease agreement with the owner, and executes the HAP contract on the basis of the alternative inspection.
</P>
<P>(2) The PHA must conduct an HQS inspection within 30 days after the family and owner submit a complete Request for Tenancy Approval. If the family reports a deficiency to the PHA prior to the PHA's HQS inspection, the PHA must inspect the unit within the time period required under § 982.405(d) or within 30 days of the effective date of the HAP contract, whichever time period ends first.
</P>
<P>(3) The PHA must enter into the HAP contract with the owner before conducting the HQS inspection. The PHA may not make housing assistance payments to the owner until the PHA has inspected the unit. If the unit passes the HQS inspection, the PHA commences making housing assistance payments to the owner and makes payments retroactive to the effective date of the HAP contract.
</P>
<P>(4) If the unit fails the PHA's HQS inspection but has no life-threatening deficiencies, the PHA commences making housing assistance payments, which are made retroactive to the effective date of the HAP contract. The owner must correct the deficiencies within 30 days from the effective date of the HAP contract. If the owner fails to correct the deficiencies within the 30-day cure period, the PHA must withhold the housing assistance payments until the owner makes the repairs and the PHA verifies the correction. Once the unit is in compliance with HQS, the PHA may use the withheld housing assistance payments to make payments for the period that payments were withheld.
</P>
<P>(5) If the unit does not pass the HQS inspection and has life-threatening deficiencies, the PHA may not commence making housing assistance payments to the owner until all the deficiencies have been corrected. The owner must correct all life-threatening deficiencies within 24 hours of notification from the PHA. For other deficiencies, the owner must correct the deficiency within 30 days (or any PHA-approved extension) of notification from the PHA. If the owner corrects the deficiencies within the required cure period, the PHA makes the housing assistance payments retroactive to the effective date of the HAP contract.
</P>
<P>(6) The PHA establishes in the Administrative Plan:
</P>
<P>(i) The maximum amount of time it will withhold payments if the owner fails to correct the deficiencies within the required cure period before abating payments; and
</P>
<P>(ii) The number of days after which the PHA will terminate the HAP contract for the owner's failure to correct the deficiencies, which may not exceed 180 days from the effective date of the HAP contract.
</P>
<P>(7) The owner may not terminate the tenancy of the family due to the withholding or abatement of assistance under this paragraph (f). During the period that assistance is abated, the family may terminate the tenancy by notifying the owner and the PHA. If the family chooses to terminate the tenancy, the HAP contract will automatically terminate on the effective date of the tenancy termination or the date the family vacates the unit, whichever is earlier. The PHA must promptly issue the family its voucher to move.








</P>
<P>(g) Records retention. As with all other inspection reports, and as required by § 982.158(f)(4), reports for inspections conducted pursuant to an alternative inspection method must be obtained by the PHA. Such reports must be available for HUD inspection for at least three years from the date of the latest inspection.


</P>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 64 FR 26647, May 14, 1999; 64 FR 56914, Oct. 21, 1999; 81 FR 12375, Mar. 8, 2016; 88 FR 30503, May 11, 2023; 89 FR 38298, May 7, 2024; 90 FR 56687, Dec. 8, 2025]






























































</CITA>
</DIV8>


<DIV8 N="§ 982.407" NODE="24:4.1.3.1.19.9.33.7" TYPE="SECTION">
<HEAD>§ 982.407   Enforcement of HQS.</HEAD>
<P>Part 982 does not create any right of the family, or any party other than HUD or the PHA, to require enforcement of the HQS requirements by HUD or the PHA, or to assert any claim against HUD or the PHA, for damages, injunction or other relief, for alleged failure to enforce the HQS.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 60 FR 45661, Sept. 1, 1995; 80 FR 8246, Feb. 17, 2015. Redesignated at 81 FR 12375, Mar. 8, 2016]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="J" NODE="24:4.1.3.1.19.10" TYPE="SUBPART">
<HEAD>Subpart J—Housing Assistance Payments Contract and Owner Responsibility</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>60 FR 34695, July 3, 1995, unless otherwise noted.








</PSPACE></SOURCE>

<DIV8 N="§ 982.451" NODE="24:4.1.3.1.19.10.33.1" TYPE="SECTION">
<HEAD>§ 982.451   Housing assistance payments contract.</HEAD>
<XREF ID="20240507" REFID="65">Link to an amendment published at 89 FR 38300, May 7, 2024.</XREF>
<P>(a) <I>Form and term.</I> (1) The HAP contract must be in the form required by HUD. 
</P>
<P>(2) The term of the HAP contract is the same as the term of the lease. 


</P>
<P>(b) <I>Housing assistance payment amount.</I> (1) The amount of the monthly housing assistance payment by the PHA to the owner is determined by the PHA in accordance with HUD regulations and other requirements. The amount of the housing assistance payment is subject to change during the HAP contract term. 
</P>
<P>(2) The monthly housing assistance payment by the PHA is credited toward the monthly rent to owner under the family's lease. 
</P>
<P>(3) The total of rent paid by the tenant plus the PHA housing assistance payment to the owner may not be more than the rent to owner. The owner must immediately return any excess payment to the PHA. 


</P>
<P>(4)(i) The part of the rent to owner that is paid by the tenant may not be more than:



 
</P>
<P>(A) The rent to owner; minus 
</P>
<P>(B) The PHA housing assistance payment to the owner. 
</P>
<P>(ii) The owner may not demand or accept any rent payment from the tenant in excess of this maximum, and must immediately return any excess rent payment to the tenant. 
</P>
<P>(iii) The family is not responsible for payment of the portion of rent to owner covered by the housing assistance payment under the HAP contract between the owner and the PHA. See § 982.310(b). 
</P>
<P>(5)(i) The PHA must pay the housing assistance payment promptly when due to the owner in accordance with the HAP contract. 
</P>
<P>(ii)(A) The HAP contract shall provide for penalties against the PHA for late payment of housing assistance payments due to the owner if all the following circumstances apply:
</P>
<P>(<I>1</I>) Such penalties are in accordance with generally accepted practices and law, as applicable in the local housing market, governing penalties for late payment of rent by a tenant;
</P>
<P>(<I>2</I>) It is the owner's practice to charge such penalties for assisted and unassisted tenants; and
</P>
<P>(<I>3</I>) The owner also charges such penalties against the tenant for late payment of family rent to owner.
</P>
<P>(B) The PHA is not obligated to pay any late payment penalty if HUD determines that late payment by the PHA is due to factors beyond the PHA's control. The PHA may add HAP contract provisions which define when the housing assistance payment by the PHA is deemed received by the owner (<I>e.g.,</I> upon mailing by the PHA or actual receipt by the owner).
</P>
<P>(iii) The PHA may only use the following sources to pay a late payment penalty from program receipts under the consolidated ACC: administrative fee income for the program, or the administrative fee reserve for the program. The PHA may not use other program receipts for this purpose. 
</P>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 61 FR 27163, May 30, 1996; 63 FR 23861, Apr. 30, 1998; 64 FR 26647, May 14, 1999; 64 FR 56914, Oct. 21, 1999; 89 FR 38300, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 982.452" NODE="24:4.1.3.1.19.10.33.2" TYPE="SECTION">
<HEAD>§ 982.452   Owner responsibilities.</HEAD>
<P>(a) The owner is responsible for performing all of the owner's obligations under the HAP contract and the lease. 
</P>
<P>(b) The owner is responsible for: 
</P>
<P>(1) Performing all management and rental functions for the assisted unit, including selecting a voucher-holder to lease the unit, and deciding if the family is suitable for tenancy of the unit. The fact that an applicant is or has been a victim of domestic violence, dating violence, sexual assault, or stalking is not an appropriate basis for denial of tenancy if the applicant otherwise qualifies for tenancy.
</P>
<P>(2) Maintaining the unit in accordance with HQS, including performance of ordinary and extraordinary maintenance. For provisions on family maintenance responsibilities, see § 982.404(a)(4).
</P>
<P>(3) Complying with equal opportunity requirements. 
</P>
<P>(4) Preparing and furnishing to the PHA information required under the HAP contract. 
</P>
<P>(5) Collecting from the family: 
</P>
<P>(i) Any security deposit. 
</P>
<P>(ii) The tenant contribution (the part of rent to owner not covered by the housing assistance payment). 
</P>
<P>(iii) Any charges for unit damage by the family. 
</P>
<P>(6) Enforcing tenant obligations under the lease. 
</P>
<P>(7) Paying for utilities and services (unless paid by the family under the lease). 
</P>
<P>(c) For provisions on modifications to a dwelling unit occupied or to be occupied by a disabled person, see 24 CFR 100.203. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 60 FR 45661, Sept. 1, 1995; 63 FR 23861, Apr. 30, 1998; 64 FR 26647, May 14, 1999; 73 FR 72345, Nov. 28, 2008; 75 FR 66264, Oct. 27, 2010; 80 FR 8246, Feb. 17, 2015; 81 FR 80817, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 982.453" NODE="24:4.1.3.1.19.10.33.3" TYPE="SECTION">
<HEAD>§ 982.453   Owner breach of contract.</HEAD>
<P>(a) Any of the following actions by the owner (including a principal or other interested party) is a breach of the HAP contract by the owner: 
</P>
<P>(1) If the owner has violated any obligation under the HAP contract for the dwelling unit, including the owner's obligation to maintain the unit in accordance with the HQS. 
</P>
<P>(2) If the owner has violated any obligation under any other HAP contract under Section 8 of the 1937 Act (42 U.S.C. 1437f). 
</P>
<P>(3) If the owner has committed fraud, bribery or any other corrupt or criminal act in connection with any federal housing program. 
</P>
<P>(4) For projects with mortgages insured by HUD or loans made by HUD, if the owner has failed to comply with the regulations for the applicable mortgage insurance or loan program, with the mortgage or mortgage note, or with the regulatory agreement; or if the owner has committed fraud, bribery or any other corrupt or criminal act in connection with the mortgage or loan. 
</P>
<P>(5) If the owner has engaged in drug-related criminal activity. 
</P>
<P>(6) If the owner has committed any violent criminal activity.
</P>
<P>(b) The PHA rights and remedies against the owner under the HAP contract include recovery of overpayments, abatement or other reduction of housing assistance payments, termination of housing assistance payments, and termination of the HAP contract. 
</P>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 64 FR 26647, May 14, 1999; 64 FR 56914, Oct. 21, 1999; 65 FR 16821, Mar. 30, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 982.454" NODE="24:4.1.3.1.19.10.33.4" TYPE="SECTION">
<HEAD>§ 982.454   Termination of HAP contract: Insufficient funding.</HEAD>
<P>The PHA may terminate the HAP contract if the PHA determines, in accordance with HUD requirements, that funding under the consolidated ACC is insufficient to support continued assistance for families in the program.
</P>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 64 FR 26647, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 982.455" NODE="24:4.1.3.1.19.10.33.5" TYPE="SECTION">
<HEAD>§ 982.455   Automatic termination of HAP contract.</HEAD>
<P>The HAP contract terminates automatically 180 calendar days after the last housing assistance payment to the owner.
</P>
<CITA TYPE="N">[64 FR 26647, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 982.456" NODE="24:4.1.3.1.19.10.33.6" TYPE="SECTION">
<HEAD>§ 982.456   Third parties.</HEAD>
<P>(a) Even if the family continues to occupy the unit, the PHA may exercise any rights and remedies against the owner under the HAP contract. 
</P>
<P>(b)(1) The family is not a party to or third party beneficiary of the HAP contract. Except as provided in paragraph (b)(2) of this section, the family may not exercise any right or remedy against the owner under the HAP contract.
</P>
<P>(2) The tenant may exercise any right or remedy against the owner under the lease between the tenant and the owner, including enforcement of the owner's obligations under the tenancy addendum (which is included both in the HAP contract between the PHA and the owner; and in the lease between the tenant and the owner.)
</P>
<P>(c) The HAP contract shall not be construed as creating any right of the family or other third party (other than HUD) to enforce any provision of the HAP contract, or to assert any claim against HUD, the PHA or the owner under the HAP contract. 
</P>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 64 FR 26647, May 14, 1999]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="K" NODE="24:4.1.3.1.19.11" TYPE="SUBPART">
<HEAD>Subpart K—Rent and Housing Assistance Payment</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>63 FR 23861, Apr. 30, 1998, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 982.501" NODE="24:4.1.3.1.19.11.33.1" TYPE="SECTION">
<HEAD>§ 982.501   Overview.</HEAD>
<P>This subpart describes program requirements concerning the housing assistance payment and rent to owner under the HCV program.
</P>
<CITA TYPE="N">[80 FR 8246, Feb. 17, 2015]
















</CITA>
</DIV8>


<DIV8 N="§ 982.503" NODE="24:4.1.3.1.19.11.33.2" TYPE="SECTION">
<HEAD>§ 982.503   Payment standard areas, schedule, and amounts.</HEAD>
<P>(a) <I>Payment standard areas.</I> (1) Annually, HUD publishes fair market rents (FMRs) for U.S. Postal Service ZIP code areas, metropolitan areas, and nonmetropolitan counties (see 24 CFR 888.113). Within each of these FMR areas, the applicable FMR is:
</P>
<P>(i) The HUD-published Small Area FMR for:
</P>
<P>(A) Any metropolitan area designated as a Small Area FMR area by HUD in accordance with 24 CFR 888.113(c)(1).
</P>
<P>(B) Any area where a PHA has notified HUD that the PHA will voluntarily use SAFMRs in accordance with 24 CFR 888.113(c)(3).
</P>
<P>(ii) The HUD-published metropolitan FMR for any other metropolitan area.
</P>
<P>(iii) The HUD-published FMR for any other non-metropolitan county.
</P>
<P>(2) The PHA must adopt a payment standard schedule that establishes voucher payment standard amounts for each FMR area in the PHA jurisdiction. These payment standard amounts are used to calculate the monthly housing assistance payment for a family (§ 982.505).
</P>
<P>(3) The PHA may designate payment standard areas within each FMR area. The PHA may establish different payment standard amounts for such designated areas. If the PHA designates payment standard areas, then it must include in its Administrative Plan the criteria used to determine the designated areas and the payment standard amounts for those areas.
</P>
<P>(i) The PHA may designate payment standard areas within which payment standards will be established according to paragraph (c) (basic range) or paragraph (d) (exception payment standard), of this section.
</P>
<P>(ii) A PHA-designated payment standard area may be no smaller than a census tract block group.
</P>
<P>(b) <I>Payment standard schedule.</I> For each payment standard area, the PHA must establish a payment standard amount for each unit size, measured by number of bedrooms (zero-bedroom, one-bedroom, and so on). These payment standard amounts comprise the PHA's payment standard schedule.
</P>
<P>(c) <I>Basic range payment standard amounts.</I> A basic range payment standard amount is any dollar amount that is in the range from 90 percent up to 110 percent of the published FMR for a unit size.
</P>
<P>(1) The PHA may establish a payment standard amount within the basic range without HUD approval or prior notification to HUD.
</P>
<P>(2) The PHA's basic range payment standard amount for each unit size may be based on the same percentage of the published FMR (<I>i.e.,</I> all payment standard amounts may be set at 100 percent of the FMR), or the PHA may establish different payment standard amounts for different unit sizes (for example, 90 percent for efficiencies, 100 percent for 1-bedroom units, 110 percent for larger units).
</P>
<P>(3) The PHA must revise its payment standard amounts and schedule no later than 3 months following the effective date of the published FMR if revisions are necessary to stay within the basic range.
</P>
<P>(d) <I>Exception payment standard amounts.</I> An exception payment standard amount is a dollar amount that exceeds 110 percent of the published FMR.
</P>
<P>(1) The PHA may establish exception payment standard amounts for all units, or for units of a particular size. The exception payment standard may be established for a designated part of the FMR area (called an “exception area”) or for the entire FMR area. The exception area must meet the minimum area requirement at § 982.503(a)(3)(ii).
</P>
<P>(2) A PHA that is not in a designated Small Area FMR area or has not opted voluntarily to implement Small Area FMRs under 24 CFR 888.113(c)(3) may establish exception payment standards for a ZIP code area that exceed the basic range for the metropolitan area or county FMR as long as the amounts established by the PHA do not exceed 110 percent of the HUD published SAFMR for the applicable ZIP code. The exception payment standard must apply to the entire ZIP code area. If an exception area crosses one or more FMR boundaries, then the maximum exception payment standard amount that a PHA may adopt for the exception area without HUD approval is 110 percent of the ZIP code area with the lowest SAFMR amount. If the PHA qualifies for an exception payment standard above 110 percent of the applicable FMR under paragraph (d)(3) or (4) of this section, it may establish exception payment standards up to the same percentage of the SAFMR for the applicable ZIP code.
</P>
<P>(3) A PHA may establish exception payment standard amounts between 110 percent and 120 percent of the applicable FMR for such duration as HUD specifies by notice upon notification to HUD that the PHA meets at least one of the following criteria:
</P>
<P>(i) Fewer than 75 percent of the families to whom the PHA issued tenant-based rental vouchers during the most recent 12-month period for which there is success rate data available have become participants in the voucher program;
</P>
<P>(ii) More than 40 percent of families with tenant-based rental assistance administered by the agency pay more than 30 percent of adjusted income as the family share; or
</P>
<P>(iii) Such other criteria as the Secretary establishes by notice.
</P>
<P>(4) Except as provided in paragraphs (d)(2), (3), and (5) of this section, the PHA must request approval from HUD to establish an exception payment standard amount that exceeds 110 percent of the applicable FMR. In its request to HUD, the PHA must provide rental market data demonstrating that the requested exception payment standard amount is needed for families to access rental units. The rental market data must include a rent estimate for the entire FMR area compared with a rent estimate for the proposed exception area. To apply the exception payment standard to the entire FMR area, the rental market data provided by the PHA must also provide data that demonstrates that the annual percentage of rent inflation in the FMR area is greater than the rental inflation adjustment factor in the calculation of the published FMR. Once HUD has approved the exception payment standard for the requesting PHA, any other PHA with jurisdiction in the HUD approved exception payment standard area may also use the exception payment standard amount.
</P>
<P>(5) If required as a reasonable accommodation in accordance with 24 CFR part 8 for a person with a disability, the PHA may establish, without HUD approval or prior notification to HUD, an exception payment standard amount for an individual family that does not exceed 120 percent of the applicable FMR. A PHA may establish a payment standard greater than 120 percent of the applicable FMR as a reasonable accommodation for a person with a disability in accordance with 24 CFR part 8, after requesting and receiving HUD approval.
</P>
<P>(e) <I>Payment standard amount below 90 percent of the applicable FMR.</I> HUD may consider a PHA request for approval to establish a payment standard amount that is lower than the basic range. At HUD's sole discretion, HUD may approve PHA establishment of a payment standard lower than the basic range. In determining whether to approve the PHA request, HUD will consider appropriate factors, including rent burden of families assisted under the program. Unless it is necessary to prevent termination of program participants, HUD will not approve a lower payment standard if the proposed payment standard would, if it were used to calculate the housing assistance payments for current participants in the PHA's voucher program using currently available data, cause the family share for more than 40 percent of participants with tenant-based rental assistance to exceed 30 percent of adjusted monthly income.
</P>
<P>(f) <I>Phaseout of success rate payment standard amounts.</I> HUD will no longer approve success rate payment standards. However, a PHA that was approved to establish a success rate payment standard amount under this paragraph as in effect prior to June 6, 2024 shall not be required to reduce such payment standard amount as a result of the discontinuance of success rate payment standards.
</P>
<P>(g) <I>Payment standard protection for PHAs that meet deconcentration objectives.</I> This paragraph applies only to a PHA with jurisdiction in an FMR area where the FMR had previously been set at the 50th percentile rent to provide a broad range of housing opportunities throughout a metropolitan area, pursuant to 24 CFR 888.113(i)(3), but is now set at the 40th percentile rent.
</P>
<P>(1) Such a PHA may obtain HUD Field Office approval of a payment standard amount based on the 50th percentile rent if the PHA scored the maximum number of points on the deconcentration bonus indicator in 24 CFR 985.3(h) in the prior year, or in two of the last three years.
</P>
<P>(2) HUD approval of payment standard amounts based on the 50th percentile rent shall be for all unit sizes in the FMR area that had previously been set at the 50th percentile rent pursuant to 24 CFR 888.113(i)(3). A PHA may opt to establish a payment standard amount based on the 50th percentile rent for one or more unit sizes in all or a designated part of the PHA jurisdiction within the FMR area.
</P>
<P>(h) <I>HUD review of PHA payment standard schedules.</I> (1) HUD will monitor rent burdens of families assisted with tenant-based rental assistance in a PHA's voucher program. HUD will review the PHA's payment standard for a particular unit size if HUD finds that 40 percent or more of such families occupying units of that unit size currently pay more than 30 percent of adjusted monthly income as the family share. Such determination may be based on the most recent examinations of family income.
</P>
<P>(2) After such review, HUD may, at its discretion, require the PHA to modify payment standard amounts for any unit size on the PHA payment standard schedule. HUD may require the PHA to establish an increased payment standard amount within the basic range.




</P>
<CITA TYPE="N">[89 FR 38300, May 7, 2024]






</CITA>
</DIV8>


<DIV8 N="§ 982.504" NODE="24:4.1.3.1.19.11.33.3" TYPE="SECTION">
<HEAD>§ 982.504   Payment standard for family in restructured subsidized multifamily project.</HEAD>
<P>(a) This section applies to HCV assistance if all the following conditions are applicable:
</P>
<P>(1) Such HCV assistance is provided to a family pursuant to 24 CFR 401.421 when HUD has approved a restructuring plan, and the participating administrative entity has approved the use of tenant-based assistance to provide continued assistance for such families. Such tenant-based voucher assistance is provided for a family previously receiving project-based assistance in an eligible project (as defined in § 401.2 of this title) at the time when the project-based assistance terminates.
</P>
<P>(2) The family chooses to remain in the restructured project with HCV assistance under the program and leases a unit that does not exceed the family unit size;
</P>
<P>(3) The lease for such assisted tenancy commences during the first year after the project-based assistance terminates.
</P>
<P>(b) The initial payment standard for the family under such initial lease is the sum of the reasonable rent to owner for the unit plus the utility allowance for tenant-paid utilities. (Determination of such initial payment standard for the family is not subject to paragraphs (c)(1) and (c)(2) of § 982.505. Except for determination of the initial payment standard as specifically provided in paragraph (b) of this section, the payment standard and housing assistance payment for the family during the HAP contract term shall be determined in accordance with § 982.505.)
</P>
<CITA TYPE="N">[64 FR 26649, May 14, 1999, as amended at 80 FR 8247, Feb. 17, 2015]




</CITA>
</DIV8>


<DIV8 N="§ 982.505" NODE="24:4.1.3.1.19.11.33.4" TYPE="SECTION">
<HEAD>§ 982.505   How to calculate housing assistance payment.</HEAD>
<P>(a) <I>Use of payment standard.</I> A payment standard is used to calculate the monthly housing assistance payment for a family. The “payment standard” is the maximum monthly subsidy payment.
</P>
<P>(b) <I>Amount of monthly housing assistance payment.</I> The PHA shall pay a monthly housing assistance payment on behalf of the family that is equal to the <I>lower</I> of:
</P>
<P>(1) The payment standard for the family minus the total tenant payment; or
</P>
<P>(2) The gross rent minus the total tenant payment.




</P>
<P>(c) Payment standard for family—(1) <I>Applying the payment standard.</I> The payment standard for the family is the lower of:
</P>
<P>(i) The payment standard amount for the family unit size; or
</P>
<P>(ii) The payment standard amount for the size of the dwelling unit rented by the family.
</P>
<P>(2) <I>Separate payment standards.</I> If the PHA has established a separate payment standard amount for a designated part of an FMR area in accordance with § 982.503 (including an exception payment standard amount as determined in accordance with § 982.503(d)), and the dwelling unit is located in such designated part, the PHA must use the appropriate payment standard amount for such designated part to calculate the payment standard for the family.
</P>
<P>(3) <I>Decrease in the payment standard amount during the HAP contract term.</I> The PHA may choose not to reduce the payment standard amount used to calculate the subsidy for a family for as long as the family continues to reside in the unit for which the family is receiving assistance.
</P>
<P>(i) If the PHA chooses to reduce the payment standard amount used to calculate such a family's subsidy in accordance with its Administrative Plan, then the initial reduction to the family's payment standard amount may not be applied any earlier than two years following the effective date of the decrease in the payment standard, and then only if the family has received the notice required under paragraph (c)(3)(iii) of this section.
</P>
<P>(ii) The PHA may choose to reduce the payment standard amount for the family to the current payment standard amount in effect on the PHA voucher payment standard schedule, or it may reduce the payment standard amount to an amount that is higher than the normally applicable payment standard amount on the PHA voucher payment standard schedule. After an initial reduction, the PHA may further reduce the payment standard amount for the family during the time the family resides in the unit, provided any subsequent reductions continue to result in a payment standard amount that meets or exceeds the normally applicable payment standard amount on the PHA voucher payment standard schedule.
</P>
<P>(iii) The PHA must provide the family with at least 12 months' written notice of any reduction in the payment standard amount that will affect the family if the family remains in place. In the written notice, the PHA must state the new payment standard amount, explain that the family's new payment standard amount will be the greater of the amount listed in the current written notice or the new amount (if any) on the PHA's payment standard schedule at the end of the 12-month period, and make clear where the family will find the PHA's payment standard schedule.
</P>
<P>(iv) The PHA must administer decreases in the payment standard amount for the family in accordance with the PHA policy as described in the PHA Administrative Plan.
</P>
<P>(4) <I>Increase in the payment standard amount during the HAP contract term.</I> If the payment standard amount is increased during the term of the HAP contract, the PHA must use the increased payment standard amount to calculate the monthly housing assistance payment for the family beginning no later than the earliest of:
</P>
<P>(i) The effective date of an increase in the gross rent that would result in an increase in the family share;
</P>
<P>(ii) The family's first regular or interim reexamination; or
</P>
<P>(iii) One year following the effective date of the increase in the payment standard amount.
</P>
<P>(5) <I>PHA policy on payment standard increases.</I> The PHA may adopt a policy to apply a payment standard increase at any time earlier than the date calculated according to paragraph (c)(4).
</P>
<P>(6) <I>Changes in family unit size during the HAP contract term.</I> Irrespective of any increase or decrease in the payment standard amount, if the family unit size either increases or decreases during the HAP contract term, the new family unit size may be used to determine the payment standard amount for the family immediately but no later than the family's first regular reexamination following the change in family unit size.






</P>
<CITA TYPE="N">[64 FR 26649, May 14, 1999, as amended at 64 FR 56914, Oct. 21, 1999; 65 FR 16822, Mar. 30, 2000; 65 FR 42509, July 10, 2000; 66 FR 30568, June 6, 2001; 67 FR 56689, Sept. 4, 2002; 80 FR 8247, Feb. 17, 2014; 81 FR 12376, Mar. 8, 2016; 81 FR 80582, Nov. 16, 2016; 89 FR 38302, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 982.506" NODE="24:4.1.3.1.19.11.33.5" TYPE="SECTION">
<HEAD>§ 982.506   Negotiating rent to owner.</HEAD>
<P>The owner and the family negotiate the rent to owner. At the family's request, the PHA must help the family negotiate the rent to owner.
</P>
<CITA TYPE="N">[63 FR 23861, Apr. 30, 1998. Redesignated at 64 FR 26648, May 14, 1999]








</CITA>
</DIV8>


<DIV8 N="§ 982.507" NODE="24:4.1.3.1.19.11.33.6" TYPE="SECTION">
<HEAD>§ 982.507   Rent to owner: Reasonable rent.</HEAD>
<P>(a) <I>PHA determination.</I> (1) Except as provided in paragraph (c) of this section, the PHA may not approve a lease until the PHA determines that the initial rent to owner is a reasonable rent.
</P>
<P>(2) The PHA must redetermine the reasonable rent:
</P>
<P>(i) Before any increase in the rent to owner;
</P>
<P>(ii) If there is a 10 percent decrease in the published FMR in effect 60 days before the contract anniversary (for the unit size rented by the family) as compared with the FMR in effect 1 year before the contract anniversary.
</P>
<P>(iii) If directed by HUD.
</P>
<P>(3) The PHA may also redetermine the reasonable rent at any other time.
</P>
<P>(4) At all times during the assisted tenancy, the rent to owner may not exceed the reasonable rent as most recently determined or redetermined by the PHA.
</P>
<P>(b) <I>Comparability.</I> The PHA must determine whether the rent to owner is a reasonable rent in comparison to rent for other comparable unassisted units. To make this determination, the PHA must consider:
</P>
<P>(1) The location, quality, size, unit type, and age of the contract unit; and
</P>
<P>(2) Any amenities, housing services, maintenance and utilities to be provided by the owner in accordance with the lease.




</P>
<P>(c) <I>Units assisted by low-income housing tax credits or assistance under HUD's HOME Investment Partnerships (HOME) program.</I> (1) <I>General.</I> For a unit receiving low-income housing tax credits (LIHTCs) pursuant to section 42 of the Internal Revenue Code of 1986 or receiving assistance under HUD's HOME Program (for which the regulations are found in 24 CFR part 92), a rent comparison with unassisted units is not required if the voucher rent does not exceed the rent for other LIHTC- or HOME-assisted units in the project that are not occupied by families with tenant-based assistance.


</P>
<P>(2) <I>LIHTC.</I> If the rent requested by the owner exceeds the LIHTC rents for non-voucher families, the PHA must determine the rent to owner is a reasonable rent in accordance with paragraph (b) of this section and the rent shall not exceed the lesser of the:
</P>
<P>(i) Reasonable rent; and
</P>
<P>(ii) The payment standard established by the PHA for the unit size involved.
</P>
<P>(3) <I>HOME program.</I> If the rent requested by the owner exceeds the HOME rents for non-voucher families, the PHA must determine the rent to owner is a reasonable rent in accordance with paragraph (b) of this section and the rent shall not exceed the lesser of the:
</P>
<P>(i) Reasonable rent; and
</P>
<P>(ii) The payment standard established by the PHA for the unit size involved.




















</P>
<P>(d) <I>Owner certification of rents charged for other units.</I> By accepting each monthly housing assistance payment from the PHA, the owner certifies that the rent to owner is not more than rent charged by the owner for comparable unassisted units in the premises. The owner must give the PHA information requested by the PHA on rents charged by the owner for other units in the premises or elsewhere.
</P>
<CITA TYPE="N">[63 FR 23861, Apr. 30, 1998. Redesignated at 64 FR 26648, May 14, 1999; 79 FR 36164, June 25, 2014; 81 FR 80583, Nov. 16, 2016; 90 FR 894, Jan. 6, 2025; 90 FR 8780, Feb. 3, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 982.508" NODE="24:4.1.3.1.19.11.33.7" TYPE="SECTION">
<HEAD>§ 982.508   Maximum family share at initial occupancy.</HEAD>
<P>At the time the PHA approves a tenancy for initial occupancy of a dwelling unit by a family with tenant-based assistance under the program, and where the gross rent of the unit exceeds the applicable payment standard for the family, the family share must not exceed 40 percent of the family's adjusted monthly income. The determination of adjusted monthly income must be based on verification information received by the PHA no earlier than 60 days before the PHA issues a voucher to the family.
</P>
<CITA TYPE="N">[64 FR 59622, Nov. 3, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 982.509" NODE="24:4.1.3.1.19.11.33.8" TYPE="SECTION">
<HEAD>§ 982.509   Rent to owner: Effect of rent control.</HEAD>
<P>In addition to the rent reasonableness limit under this subpart, the amount of rent to owner also may be subject to rent control limits under State or local law.
</P>
<CITA TYPE="N">[63 FR 23861, Apr. 30, 1998. Redesignated and amended at 64 FR 26648, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 982.510" NODE="24:4.1.3.1.19.11.33.9" TYPE="SECTION">
<HEAD>§ 982.510   Other fees and charges.</HEAD>
<P>(a) The cost of meals or supportive services may not be included in the rent to owner, and the value of meals or supportive services may not be included in the calculation of reasonable rent.
</P>
<P>(b) The lease may not require the tenant or family members to pay charges for meals or supportive services. Non-payment of such charges is not grounds for termination of tenancy.
</P>
<P>(c) The owner may not charge the tenant extra amounts for items customarily included in rent in the locality, or provided at no additional cost to unsubsidized tenants in the premises.
</P>
<CITA TYPE="N">[63 FR 23861, Apr. 30, 1998. Redesignated at 64 FR 26648, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 982.514" NODE="24:4.1.3.1.19.11.33.10" TYPE="SECTION">
<HEAD>§ 982.514   Distribution of housing assistance payment.</HEAD>
<P>The monthly housing assistance payment is distributed as follows:
</P>
<P>(a) The PHA pays the owner the lesser of the housing assistance payment or the rent to owner.
</P>
<P>(b) If the housing assistance payment exceeds the rent to owner, the PHA may pay the balance of the housing assistance payment (“utility reimbursement”) either to the family or directly to the utility supplier to pay the utility bill on behalf of the family. If the PHA elects to pay the utility supplier directly, the PHA must notify the family of the amount paid to the utility supplier. 
</P>
<P>(c) The PHA may elect to establish policies regarding the frequency of utility reimbursement payments for payments made to the family.
</P>
<P>(1) The PHA will have the option of making utility reimbursement payments not less than once per calendar-year quarter, for reimbursements totaling $45 or less per quarter. In the event a family leaves the program in advance of its next quarterly reimbursement, the PHA would be required to reimburse the family for a prorated share of the applicable reimbursement. PHAs exercising this option must have a hardship policy in place for tenants.
</P>
<P>(2) If the PHA elects to pay the utility supplier directly, the PHA must notify the family of the amount paid to the utility supplier.
</P>
<CITA TYPE="N">[63 FR 23861, Apr. 30, 1998, as amended at 64 FR 56914, Oct. 21, 1999; 65 FR 16822, Mar. 30, 2000; 81 FR 12376, Mar. 8, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 982.515" NODE="24:4.1.3.1.19.11.33.11" TYPE="SECTION">
<HEAD>§ 982.515   Family share: Family responsibility.</HEAD>
<P>(a) The family share is calculated by subtracting the amount of the housing assistance payment from the gross rent.
</P>
<P>(b) The family rent to owner is calculated by subtracting the amount of the housing assistance payment to the owner from the rent to owner.
</P>
<P>(c) The PHA may not use housing assistance payments or other program funds (including any administrative fee reserve) to pay any part of the family share, including the family rent to owner. Payment of the whole family share is the responsibility of the family.
</P>
<CITA TYPE="N">[63 FR 23861, Apr. 30, 1998, as amended at 64 FR 56915, Oct. 21, 1999]




</CITA>
</DIV8>


<DIV8 N="§ 982.516" NODE="24:4.1.3.1.19.11.33.12" TYPE="SECTION">
<HEAD>§ 982.516   Family income and composition: Annual and interim examinations.</HEAD>
<P>(a) <I>PHA responsibility for reexamination and verification.</I> (1) The PHA must conduct a reexamination of family income and composition at least annually.
</P>
<P>(2) Except as provided in paragraph (a)(3) of this section, the PHA must obtain and document in the tenant file third-party verification of the following factors, or must document in the tenant file why third-party verification was not available:
</P>
<P>(i) Reported family annual income;
</P>
<P>(ii) The value of assets;
</P>
<P>(iii) Expenses related to deductions from annual income; and
</P>
<P>(iv) Other factors that affect the determination of adjusted income.
</P>
<P>(3) For a family with net family assets (as the term is defined in § 5.603 of this title) equal to or less than $50,000, which amount will be adjusted annually by HUD in accordance with the Consumer Price Index for Urban Wage Earners and Clerical Workers, a PHA may accept, for purposes of recertification of income, a family's declaration under § 5.618(b) of this title, except that the PHA must obtain third-party verification of all family assets every 3 years.
</P>
<P>(b) <I>Streamlined income determination</I>—(1) <I>General.</I> A PHA may elect to apply a streamlined income determination to families receiving fixed income as described in paragraph (b)(3) of this section.
</P>
<P>(2) <I>Definition of “fixed income”.</I> For purposes of this section, “fixed income” means periodic payments at reasonably predictable levels from one or more of the following sources:
</P>
<P>(i) Social Security, Supplemental Security Income, Supplemental Disability Insurance.
</P>
<P>(ii) Federal, state, local, or private pension plans.
</P>
<P>(iii) Annuities or other retirement benefit programs, insurance policies, disability or death benefits, or other similar types of periodic receipts.
</P>
<P>(iv) Any other source of income subject to adjustment by a verifiable COLA or current rate of interest.
</P>
<P>(3) <I>Method of streamlined income determination.</I> A PHA using the streamlined income determination must adjust a family's income according to the percentage of a family's unadjusted income that is from fixed income.
</P>
<P>(i) When 90 percent or more of a family's unadjusted income consists of fixed income, PHAs using streamlined income determinations must apply a COLA or COLAs to the family's fixed-income sources, provided that the family certifies both that 90 percent or more of their unadjusted income is fixed income and that their sources of fixed income have not changed from the previous year. For non-fixed income, the PHA is not required to make adjustments pursuant to paragraph (a) of this section.
</P>
<P>(ii) When less than 90 percent of a family's unadjusted income consists of fixed income, PHAs using streamlined income determinations must apply a COLA to each of the family's sources of fixed income individually. The PHA must determine all other income pursuant to paragraph (a) of this section.
</P>
<P>(4) <I>COLA rate applied by PHAs.</I> PHAs using streamlined income determinations must adjust a family's fixed income using a COLA or current interest rate that applies to each specific source of fixed income and is available from a public source or through tenant-provided, third-party-generated documentation. If no public verification or tenant-provided documentation is available, then the owner must obtain third-party verification of the income amounts in order to calculate the change in income for the source.
</P>
<P>(5) <I>Triennial verification.</I> For any income determined pursuant to a streamlined income determination, a PHA must obtain third-party verification of all income amounts every 3 years.
</P>
<P>(c) <I>Interim reexaminations.</I> (1) A family may request an interim determination of family income or composition because of any changes since the last determination. The PHA must conduct any interim reexamination within a reasonable period of time after the family request or when the PHA becomes aware of an increase in family adjusted income under paragraph (c)(3) of this section. What qualifies as a “reasonable time” may vary based on the amount of time it takes to verify information, but generally should not be longer than 30 days after changes in income are reported.
</P>
<P>(2) The PHA may decline to conduct an interim reexamination of family income if the PHA estimates the family's adjusted income will decrease by an amount that is less than ten percent of the family's annual adjusted income (or a lower amount established by HUD through notice), or a lower threshold established by the PHA.
</P>
<P>(3) The PHA must conduct an interim reexamination of family income when the PHA becomes aware that the family's adjusted income (as defined in § 5.611 of this title) has changed by an amount that the PHA estimates will result in an increase of ten percent or more in annual adjusted income or such other amount established by HUD through notice, except:
</P>
<P>(i) The PHA may not consider any increase in the earned income of the family when estimating or calculating whether the family's adjusted income has increased, unless the family has previously received an interim reduction under paragraph (c)(1) of this section during the certification period; and
</P>
<P>(ii) The PHA may choose not to conduct an interim reexamination in the last three months of a certification period.
</P>
<P>(4) <I>Effective date of rent changes.</I> (i) If the family has reported a change in family income or composition in a timely manner according to the PHA's policies, the PHA must provide the family with 30 days advance notice of any family share and family rent to owner increases, and such increases will be effective the first day of the month beginning after the end of that 30-day period. Family share and family rent to owner decreases will be effective on the first day of the first month after the date of the reported change leading to the interim reexamination of family income.
</P>
<P>(ii) If the family has failed to report a change in family income or composition in a timely manner according to the PHA's policies, PHAs must implement any resulting family share and family rent to owner increases retroactively to the first of the month following the date of the change leading to the interim reexamination of family income. Any resulting family share and family rent to owner decrease must be implemented no later than the first rent period following completion of the reexamination. However, a PHA may apply a family share and family rent to owner decrease retroactively at the discretion of the PHA, in accordance with the conditions established by the PHA in the Administrative Plan and subject to paragraph (c)(4)(iii) of this section.
</P>
<P>(iii) A retroactive family share and family rent to owner decrease may not be applied prior to the later of the first of the month following:
</P>
<P>(A) The date of the change leading to the interim reexamination of family income; or
</P>
<P>(B) The effective date of the family's most recent previous interim or annual reexamination (or initial examination if that was the family's last examination).
</P>
<P>(d) <I>Family reporting of change.</I> The PHA must adopt policies consistent with this section prescribing when and under what conditions the family must report a change in family income or composition.
</P>
<P>(e) <I>Effective date of reexamination.</I> (1) The PHA must adopt policies consistent with this section prescribing how to determine the effective date of a change in the housing assistance payment resulting from an interim redetermination.
</P>
<P>(2) At the effective date of a regular or interim reexamination, the PHA must make appropriate adjustments in the housing assistance payment in accordance with § 982.505.
</P>
<P>(f) <I>Accuracy of family income data.</I> The PHA must establish procedures that are appropriate and necessary to assure that income data provided by applicant or participant families is complete and accurate. The PHA will not be considered out of compliance with the requirements in this section solely due to de minimis errors in calculating family income but is still obligated to correct errors once the PHA becomes aware of the errors. A de minimis error is an error where the PHA determination of family income deviates from the correct income determination by no more than $30 per month in monthly adjusted income ($360 in annual adjusted income).
</P>
<P>(1) The PHA must take any corrective action necessary to credit or repay a family if the family has been overcharged for their rent or family share as a result of an error (including a de minimis error) in the income determination. Families will not be required to repay the PHA in instances where the PHA has miscalculated income resulting in a family being undercharged for rent or family share.
</P>
<P>(2) HUD may revise the amount of de minimis error in this paragraph (f) through a rulemaking published in the <E T="04">Federal Register</E> for public comment.
</P>
<P>(g) <I>Execution of release and consent.</I> (1) As a condition of admission to or continued assistance under the program, the PHA shall require the family head, and such other family members as the PHA designates, to execute a HUD-approved release and consent form (including any release and consent as required under § 5.230 of this title) authorizing any depository or private source of income, or any Federal, State or local agency, to furnish or release to the PHA or HUD such information as the PHA or HUD determines to be necessary.
</P>
<P>(2) The PHA and HUD must limit the use or disclosure of information obtained from a family or from another source pursuant to this release and consent to purposes directly in connection with administration of the program.
</P>
<P>(h) Reviews of family income under this section are subject to the provisions in section 904 of the Stewart B. McKinney Homeless Assistance Amendments Act of 1988, as amended (42 U.S.C. 3544).
</P>
<APPRO TYPE="N">(Information collection requirements contained in this section have been approved by the Office of Management and Budget under control number 2577-0169.)
</APPRO>
<CITA TYPE="N">[63 FR 23861, Apr. 30, 1998, as amended at 64 FR 13057, Mar. 16, 1999; 64 FR 26649, May 14, 1999; 64 FR 56915, Oct. 21, 1999; 65 FR 16822, Mar. 30, 2000; 80 FR 8247, Feb. 17, 2015; 81 FR 12376, Mar. 8, 2016; 82 FR 58341, Dec. 12, 2017; 85 FR 27139, May 7, 2020; 88 FR 9675, Feb. 14, 2023; 90 FR 56687, Dec. 8, 2025]












</CITA>
</DIV8>


<DIV8 N="§ 982.517" NODE="24:4.1.3.1.19.11.33.13" TYPE="SECTION">
<HEAD>§ 982.517   Utility allowance schedule.</HEAD>
<P>(a) <I>Maintaining schedule.</I> (1) The PHA must maintain a utility allowance schedule for all tenant-paid utilities (except telephone), for cost of tenant-supplied refrigerators and ranges, and for other tenant-paid housing services (e.g., trash collection (disposal of waste and refuse)).
</P>
<P>(2) The PHA must provide a copy of the utility allowance schedule to HUD. At HUD's request, the PHA also must provide any information or procedures used in preparation of the schedule.
</P>
<P>(b) <I>How allowances are determined.</I> (1)(i) A PHA's utility allowance schedule, and the utility allowance for an individual family, must include the utilities and services that are necessary in the locality to provide housing that complies with HQS. The PHA's utility allowance schedule and utility allowance for families must also include any utilities and services required by HUD after publication in the <E T="04">Federal Register</E> for public comment.
</P>
<P>(ii) In the utility allowance schedule, the PHA must classify utilities and other housing services according to the following general categories: space heating; air conditioning; cooking; water heating; water; sewer; trash collection (disposal of waste and refuse); other electric; refrigerator (cost of tenant-supplied refrigerator); range (cost of tenant-supplied range); applicable surcharges; and other specified housing services.
</P>
<P>(iii) The PHA must provide a utility allowance for tenant-paid air-conditioning costs if the majority of housing units in the market provide centrally air-conditioned units or there is appropriate wiring for tenant-installed air conditioners.
</P>
<P>(iv) The PHA may not provide any allowance for non-essential utility costs, such as costs of cable or satellite television.
</P>
<P>(2)(i) The PHA must maintain an area-wide utility allowance schedule. The area-wide utility allowance schedule must be determined based on the typical cost of utilities and services paid by energy-conservative households that occupy housing of similar size and type in the same locality. In developing the schedule, the PHA must use normal patterns of consumption for the community as a whole and current utility rates.
</P>
<P>(ii) The PHA may maintain an area-wide, energy-efficient utility allowance schedule to be used for units that are in a building that meets Leadership in Energy and Environmental Design (LEED) or Energy Star standards. HUD may subsequently identify additional Energy Savings Design standards or criteria for applying the allowance to retrofitted units in a building that does not meet the standard, which will be modified or added through a document published in the <E T="04">Federal Register</E> for 30 days of public comment, followed by a final document announcing the modified standards and the date on which the modifications take effect. The energy-efficient utility allowance (EEUA) schedule is to be maintained in addition to, not in place of, the area-wide utility allowance schedule described in paragraph (b)(2)(i) of this section, unless all units within a PHA's jurisdiction meet one or more of the required standards.
</P>
<P>(iii) The PHA may base its utility allowance payments on actual flat fees charged by an owner for utilities that are billed directly by the owner, but only if the flat fee charged by the owner is no greater than the PHA's applicable utility allowance for the utilities covered by the fee. If an owner charges a flat fee for only some of the utilities, then the PHA must pay a separate allowance for any tenant-paid utilities that are not covered in the flat fee.
</P>
<P>(iv) For tenant-based participants residing in units within a project that has an approved project-specific utility allowance under § 983.301(f)(4), the PHA must use the project-specific utility allowance schedule (see 24 CFR 983.301(f)(4)).
</P>
<P>(v) The PHA must state its policy for utility allowance payments in its Administrative Plan and apply it consistently to all similarly situated households.


</P>
<P>(c) <I>Revisions of utility allowance schedule.</I> (1) A PHA must review its schedule of utility allowances each year, and must revise its allowance for a utility category if there has been a change of 10 percent or more in the utility rate since the last time the utility allowance schedule was revised. The PHA must maintain information supporting its annual review of utility allowances and any revisions made in its utility allowance schedule.
</P>
<P>(2) At HUD's direction, the PHA must revise the utility allowance schedule to correct any errors, or as necessary to update the schedule.
</P>
<P>(d) <I>Use of utility allowance schedule.</I> The PHA must use the appropriate utility allowance for the lesser of the size of dwelling unit actually leased by the family or the family unit size as determined under the PHA subsidy standards. In cases where the unit size leased exceeds the family unit size as determined under the PHA subsidy standards as a result of a reasonable accommodation, the PHA must use the appropriate utility allowance for the size of the dwelling unit actually leased by the family.
</P>
<P>(e) <I>Higher utility allowance as reasonable accommodation for a person with disabilities.</I> On request from a household that includes a person with disabilities, the PHA must approve a utility allowance which is higher than the applicable amount on the utility allowance schedule if a higher utility allowance is needed as a reasonable accommodation under 24 CFR part 8, the Fair Housing Act and 24 CFR part 100, or Titles II or III of the Americans with Disabilities Act and 28 CFR parts 35 and 36, to make the program accessible to and usable by the household member with a disability.
</P>
<APPRO TYPE="N">(Information collection requirements contained in this section have been approved by the Office of Management and Budget under control number 2577-0169.)
</APPRO>
<CITA TYPE="N">[63 FR 23861, Apr. 30, 1998, as amended at 80 FR 8247, Feb. 17, 2015; 81 FR 12377, Mar. 8, 2016; 89 FR 38302, May 7, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 982.521" NODE="24:4.1.3.1.19.11.33.14" TYPE="SECTION">
<HEAD>§ 982.521   Rent to owner in subsidized project.</HEAD>
<P>(a) <I>Applicability to subsidized project.</I> This section applies to a program tenancy in any of the following types of federally subsidized project: 
</P>
<P>(1) An insured or non-insured Section 236 project; 
</P>
<P>(2) A Section 202 project; 
</P>
<P>(3) A Section 221(d)(3) below market interest rate (BMIR) project; or
</P>
<P>(4) A Section 515 project of the Rural Development Administration. 
</P>
<P>(b) <I>How rent to owner is determined.</I> The rent to owner is the subsidized rent as determined in accordance with requirements for the applicable federal program listed in paragraph (a) of this section. This determination is not subject to the prohibition against increasing the rent to owner during the initial lease term (see § 982.309). 
</P>
<CITA TYPE="N">[65 FR 16822, Mar. 30, 2000, as amended at 80 FR 8247, Feb. 17, 2015]






</CITA>
</DIV8>

</DIV6>


<DIV6 N="L" NODE="24:4.1.3.1.19.12" TYPE="SUBPART">
<HEAD>Subpart L—Family Obligations; Denial and Termination of Assistance</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>60 FR 34695, July 3, 1995, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 982.551" NODE="24:4.1.3.1.19.12.33.1" TYPE="SECTION">
<HEAD>§ 982.551   Obligations of participant.</HEAD>
<P>(a) <I>Purpose.</I> This section states the obligations of a participant family under the program. 
</P>
<P>(b) <I>Supplying required information</I>—(1) The family must supply any information that the PHA or HUD determines is necessary in the administration of the program, including submission of required evidence of citizenship or eligible immigration status (as provided by 24 CFR part 5). “Information” includes any requested certification, release or other documentation.
</P>
<P>(2) The family must supply any information requested by the PHA or HUD for use in a regularly scheduled reexamination or interim reexamination of family income and composition in accordance with HUD requirements.
</P>
<P>(3) The family must disclose and verify social security numbers (as provided by part 5, subpart B, of this title) and must sign and submit consent forms for obtaining information in accordance with part 5, subpart B, of this title. 
</P>
<P>(4) Any information supplied by the family must be true and complete. 
</P>
<P>(c) <I>HQS breach caused by family.</I> The family is responsible for an HQS breach caused by the family as described in § 982.404(b). 
</P>
<P>(d) <I>Allowing PHA inspection.</I> The family must allow the PHA to inspect the unit at reasonable times and after reasonable notice. 
</P>
<P>(e) <I>Violation of lease.</I> The family may not commit any serious or repeated violation of the lease. Under 24 CFR 5.2005(c), an incident or incidents of actual or threatened domestic violence, dating violence, sexual assault, or stalking will not be construed as a serious or repeated lease violation by the victim, or threatened victim, of the domestic violence, dating violence, sexual assault, or stalking, or as good cause to terminate the tenancy, occupancy rights, or assistance of the victim.
</P>
<P>(f) <I>Family notice of move or lease termination.</I> The family must notify the PHA and the owner before the family moves out of the unit, or terminates the lease on notice to the owner. See § 982.354(d). 
</P>
<P>(g) <I>Owner eviction notice.</I> The family must promptly give the PHA a copy of any owner eviction notice. 
</P>
<P>(h) <I>Use and occupancy of unit</I>—(1) The family must use the assisted unit for residence by the family. The unit must be the family's only residence. 
</P>
<P>(2) The composition of the assisted family residing in the unit must be approved by the PHA. The family must promptly inform the PHA of the birth, adoption or court-awarded custody of a child. The family must request PHA approval to add any other family member as an occupant of the unit. No other person [i.e., nobody but members of the assisted family] may reside in the unit (except for a foster child or live-in aide as provided in paragraph (h)(4) of this section).
</P>
<P>(3) The family must promptly notify the PHA if any family member no longer resides in the unit. 
</P>
<P>(4) If the PHA has given approval, a foster child or a live-in-aide may reside in the unit. The PHA has the discretion to adopt reasonable policies concerning residence by a foster child or a live-in-aide, and defining when PHA consent may be given or denied. 
</P>
<P>(5) Members of the household may engage in legal profitmaking activities in the unit, but only if such activities are incidental to primary use of the unit for residence by members of the family. 
</P>
<P>(6) The family must not sublease or let the unit. 
</P>
<P>(7) The family must not assign the lease or transfer the unit. 
</P>
<P>(i) <I>Absence from unit.</I> The family must supply any information or certification requested by the PHA to verify that the family is living in the unit, or relating to family absence from the unit, including any PHA-requested information or certification on the purposes of family absences. The family must cooperate with the PHA for this purpose. The family must promptly notify the PHA of absence from the unit. 
</P>
<P>(j) <I>Interest in unit.</I> The family must not own or have any interest in the unit. 
</P>
<P>(k) <I>Fraud and other program violation.</I> The members of the family must not commit fraud, bribery or any other corrupt or criminal act in connection with the programs. 
</P>
<P>(l) <I>Crime by household members.</I> The members of the household may not engage in drug-related criminal activity or violent criminal activity or other criminal activity that threatens the health, safety, or right to peaceful enjoyment of other residents and persons residing in the immediate vicinity of the premises (see § 982.553). Under 24 CFR 5.2005(b)(2), criminal activity directly related to domestic violence, dating violence, sexual assault, or stalking, engaged in by a member of a tenant's household, or any guest or other person under the tenant's control, shall not be cause for termination of tenancy, occupancy rights, or assistance of the victim, if the tenant or an affiliated individual of the tenant, as defined in 24 CFR 5.2003, is the victim.
</P>
<P>(m) <I>Alcohol abuse by household members.</I> The members of the household must not abuse alcohol in a way that threatens the health, safety or right to peaceful enjoyment of other residents and persons residing in the immediate vicinity of the premises. 
</P>
<P>(n) <I>Other housing assistance.</I> An assisted family, or members of the family, may not receive Section 8 tenant-based assistance while receiving another housing subsidy, for the same unit or for a different unit, under any duplicative (as determined by HUD or in accordance with HUD requirements) federal, State or local housing assistance program. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 60 FR 45661, Sept. 1, 1995; 61 FR 11119, Mar. 18, 1996; 61 FR 13627, Mar. 27, 1996; 61 FR 27163, May 30, 1996; 64 FR 26650, May 14, 1999; 66 FR 28805, May 24, 2001; 73 FR 72345, Nov. 28, 2008; 75 FR 66264, Oct. 27, 2010; 80 FR 50575, Aug. 20, 2015; 81 FR 80817, Nov. 16, 2016]






</CITA>
</DIV8>


<DIV8 N="§ 982.552" NODE="24:4.1.3.1.19.12.33.2" TYPE="SECTION">
<HEAD>§ 982.552   PHA denial or termination of assistance for family.</HEAD>
<P>(a) <I>Action or inaction by family.</I> (1) A PHA may deny assistance for an applicant or terminate assistance for a participant under the programs because of the family's action or failure to act as described in this section or § 982.553. The provisions of this section do not affect denial or termination of assistance for grounds other than action or failure to act by the family.
</P>
<P>(2) Denial of assistance for an applicant may include any or all of the following: denying listing on the PHA waiting list, denying or withdrawing a voucher, refusing to enter into a HAP contract or approve a lease, and refusing to process or provide assistance under portability procedures.
</P>
<P>(3) Termination of assistance for a participant may include any or all of the following: refusing to enter into a HAP contract or approve a lease, terminating housing assistance payments under an outstanding HAP contract, and refusing to process or provide assistance under portability procedures.
</P>
<P>(4) This section does not limit or affect exercise of the PHA rights and remedies against the owner under the HAP contract, including termination, suspension or reduction of housing assistance payments, or termination of the HAP contract.
</P>
<P>(b) <I>Requirement to deny admission or terminate assistance.</I> (1) For provisions on denial of admission and termination of assistance for illegal drug use, other criminal activity, and alcohol abuse that would threaten other residents, see § 982.553. 
</P>
<P>(2) The PHA must terminate program assistance for a family evicted from housing assisted under the program for serious violation of the lease.
</P>
<P>(3) The PHA must deny admission to the program for an applicant, or terminate program assistance for a participant, if any member of the family fails to sign and submit consent forms for obtaining information in accordance with part 5, subparts B and F of this title.
</P>
<P>(4) The family must submit required evidence of citizenship or eligible immigration status. See part 5 of this title for a statement of circumstances in which the PHA must deny admission or terminate program assistance because a family member does not establish citizenship or eligible immigration status, and the applicable informal hearing procedures.
</P>
<P>(5) The PHA must deny or terminate assistance if any family member fails to meet the eligibility requirements concerning individuals enrolled at an institution of higher education as specified in 24 CFR 5.612.
</P>
<P>(6) The PHA must deny or terminate assistance based on the restrictions on net assets and property ownership when required by § 5.618 of this title.








</P>
<P>(c) <I>Authority to deny admission or terminate assistance</I>—(1) <I>Grounds for denial or termination of assistance.</I> The PHA may at any time deny program assistance for an applicant, or terminate program assistance for a participant, for any of the following grounds:
</P>
<P>(i) If the family violates any family obligations under the program (see § 982.551). See § 982.553 concerning denial or termination of assistance for crime by family members.
</P>
<P>(ii) If any member of the family has been evicted from federally assisted housing in the last five years;
</P>
<P>(iii) If a PHA has ever terminated assistance under the program for any member of the family.
</P>
<P>(iv) If any member of the family has committed fraud, bribery, or any other corrupt or criminal act in connection with any Federal housing program (see also § 982.553(a)(1)); 
</P>
<P>(v) If the family currently owes rent or other amounts to the PHA or to another PHA in connection with Section 8 or public housing assistance under the 1937 Act.
</P>
<P>(vi) If the family has not reimbursed any PHA for amounts paid to an owner under a HAP contract for rent, damages to the unit, or other amounts owed by the family under the lease.
</P>
<P>(vii) If the family breaches an agreement with the PHA to pay amounts owed to a PHA, or amounts paid to an owner by a PHA. (The PHA, at its discretion, may offer a family the opportunity to enter an agreement to pay amounts owed to a PHA or amounts paid to an owner by a PHA. The PHA may prescribe the terms of the agreement.)
</P>
<P>(viii) If the family has engaged in or threatened abusive or violent behavior toward PHA personnel.
</P>
<P>(ix) If a welfare-to-work (WTW) family fails, willfully and persistently, to fulfill its obligations under the welfare-to-work voucher program. 
</P>
<P>(x) If the family has been engaged in criminal activity or alcohol abuse as described in § 982.553. 
</P>
<P>(2) <I>Consideration of circumstances.</I> In determining whether to deny or terminate assistance because of action or failure to act by members of the family: 
</P>
<P>(i) The PHA may consider all relevant circumstances such as the seriousness of the case, the extent of participation or culpability of individual family members, mitigating circumstances related to the disability of a family member, and the effects of denial or termination of assistance on other family members who were not involved in the action or failure. 
</P>
<P>(ii) The PHA may impose, as a condition of continued assistance for other family members, a requirement that other family members who participated in or were culpable for the action or failure will not reside in the unit. The PHA may permit the other members of a participant family to continue receiving assistance. 
</P>
<P>(iii) In determining whether to deny admission or terminate assistance for illegal use of drugs or alcohol abuse by a household member who is no longer engaged in such behavior, the PHA may consider whether such household member is participating in or has successfully completed a supervised drug or alcohol rehabilitation program, or has otherwise been rehabilitated successfully (42 U.S.C. 13661). For this purpose, the PHA may require the applicant or tenant to submit evidence of the household member's current participation in, or successful completion of, a supervised drug or alcohol rehabilitation program or evidence of otherwise having been rehabilitated successfully. 
</P>
<P>(iv) If the family includes a person with disabilities, the PHA decision concerning such action is subject to consideration of reasonable accommodation in accordance with part 8 of this title. 
</P>
<P>(v) <I>Nondiscrimination limitation and protection for victims of domestic violence, dating violence, sexual assault, or stalking.</I> The PHA's admission and termination actions must be consistent with fair housing and equal opportunity provisions of 24 CFR 5.105, and with the requirements of 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking).
</P>
<P>(d) <I>Information for family.</I> The PHA must give the family a written description of:
</P>
<P>(1) Family obligations under the program.
</P>
<P>(2) The grounds on which the PHA may deny or terminate assistance because of family action or failure to act.
</P>
<P>(3) The PHA informal hearing procedures. 
</P>
<P>(e) <I>Applicant screening.</I> The PHA may at any time deny program assistance for an applicant in accordance with the PHA policy, as stated in the PHA Administrative Plan, on screening of applicants for family behavior or suitability for tenancy.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[60 FR 34695, July 3, 1995]


</CITA>
<EDNOTE>
<HED>Editorial Note:</HED><PSPACE>For <E T="04">Federal Register</E> citations affecting § 982.552, see the List of CFR Sections Affected, which appears in the Finding Aids section of the printed volume and at <I>www.govinfo.gov.</I></PSPACE></EDNOTE>
</DIV8>


<DIV8 N="§ 982.553" NODE="24:4.1.3.1.19.12.33.3" TYPE="SECTION">
<HEAD>§ 982.553   Denial of admission and termination of assistance for criminals and alcohol abusers.</HEAD>
<P>(a) <I>Denial of admission</I>—(1) <I>Prohibiting admission of drug criminals.</I> (i) The PHA <I>must</I> prohibit admission to the program of an applicant for three years from the date of eviction if a household member has been evicted from federally assisted housing for drug-related criminal activity. However, the PHA may admit the household if the PHA determines: 
</P>
<P>(A) That the evicted household member who engaged in drug-related criminal activity has successfully completed a supervised drug rehabilitation program approved by the PHA; or 
</P>
<P>(B) That the circumstances leading to eviction no longer exist (for example, the criminal household member has died or is imprisoned). 
</P>
<P>(ii) The PHA must establish standards that prohibit admission if: 
</P>
<P>(A) The PHA determines that any household member is currently engaging in illegal use of a drug; 
</P>
<P>(B) The PHA determines that it has reasonable cause to believe that a household member's illegal drug use or a pattern of illegal drug use may threaten the health, safety, or right to peaceful enjoyment of the premises by other residents; or 
</P>
<P>(C) Any household member has ever been convicted of drug-related criminal activity for manufacture or production of methamphetamine on the premises of federally assisted housing. 
</P>
<P>(2) <I>Prohibiting admission of other criminals—(i) Mandatory prohibition.</I> The PHA <I>must</I> establish standards that prohibit admission to the program if any member of the household is subject to a lifetime registration requirement under a State sex offender registration program. In this screening of applicants, the PHA must perform criminal history background checks necessary to determine whether any household member is subject to a lifetime sex offender registration requirement in the State where the housing is located and in other States where the household members are known to have resided. 
</P>
<P>(ii) <I>Permissive prohibitions.</I> (A) The PHA <I>may</I> prohibit admission of a household to the program if the PHA determines that any household member is currently engaged in, or has engaged in during a reasonable time before the admission: 
</P>
<P>(1) Drug-related criminal activity; 
</P>
<P>(2) Violent criminal activity; 
</P>
<P>(3) Other criminal activity which may threaten the health, safety, or right to peaceful enjoyment of the premises by other residents or persons residing in the immediate vicinity; or 
</P>
<P>(4) Other criminal activity which may threaten the health or safety of the owner, property management staff, or persons performing a contract administration function or responsibility on behalf of the PHA (including a PHA employee or a PHA contractor, subcontractor or agent). 
</P>
<P>(B) The PHA may establish a period before the admission decision during which an applicant must not have engaged in the activities specified in paragraph (a)(2)(i) of this section (“reasonable time”). 
</P>
<P>(C) If the PHA previously denied admission to an applicant because a member of the household engaged in criminal activity, the PHA may reconsider the applicant if the PHA has sufficient evidence that the members of the household are not currently engaged in, and have not engaged in, such criminal activity during a reasonable period, as determined by the PHA, before the admission decision. 
</P>
<P>(1) The PHA would have “sufficient evidence” if the household member submitted a certification that she or he is not currently engaged in and has not engaged in such criminal activity during the specified period and provided supporting information from such sources as a probation officer, a landlord, neighbors, social service agency workers and criminal records, which the PHA verified. 
</P>
<P>(2) For purposes of this section, a household member is “currently engaged in” criminal activity if the person has engaged in the behavior recently enough to justify a reasonable belief that the behavior is current. 
</P>
<P>(3) <I>Prohibiting admission of alcohol abusers.</I> The PHA must establish standards that prohibit admission to the program if the PHA determines that it has reasonable cause to believe that a household member's abuse or pattern of abuse of alcohol may threaten the health, safety, or right to peaceful enjoyment of the premises by other residents. 
</P>
<P>(b) <I>Terminating assistance</I>—(1) <I>Terminating assistance for drug criminals.</I> (i) The PHA <I>must</I> establish standards that allow the PHA to terminate assistance for a family under the program if the PHA determines that: 
</P>
<P>(A) Any household member is currently engaged in any illegal use of a drug; or 
</P>
<P>(B) A pattern of illegal use of a drug by any household member interferes with the health, safety, or right to peaceful enjoyment of the premises by other residents. 
</P>
<P>(ii) The PHA must immediately terminate assistance for a family under the program if the PHA determines that any member of the household has ever been convicted of drug-related criminal activity for manufacture or production of methamphetamine on the premises of federally assisted housing. 
</P>
<P>(iii) The PHA must establish standards that allow the PHA to terminate assistance under the program for a family if the PHA determines that any family member has violated the family's obligation under § 982.551 not to engage in any drug-related criminal activity. 
</P>
<P>(2) <I>Terminating assistance for other criminals.</I> The PHA must establish standards that allow the PHA to terminate assistance under the program for a family if the PHA determines that any household member has violated the family's obligation under § 982.551 not to engage in violent criminal activity. 
</P>
<P>(3) <I>Terminating assistance for alcohol abusers.</I> The PHA must establish standards that allow termination of assistance for a family if the PHA determines that a household member's abuse or pattern of abuse of alcohol may threaten the health, safety, or right to peaceful enjoyment of the premises by other residents. 
</P>
<P>(c) <I>Evidence of criminal activity.</I> The PHA may terminate assistance for criminal activity by a household member as authorized in this section if the PHA determines, based on a preponderance of the evidence, that the household member has engaged in the activity, regardless of whether the household member has been arrested or convicted for such activity. 
</P>
<P>(d) <I>Use of criminal record</I>—(1) <I>Denial.</I> If a PHA proposes to deny admission for criminal activity as shown by a criminal record, the PHA must provide the subject of the record and the applicant with a copy of the criminal record. The PHA must give the family an opportunity to dispute the accuracy and relevance of that record, in the informal review process in accordance with § 982.554. (See part 5, subpart J for provision concerning access to criminal records.) 
</P>
<P>(2) <I>Termination of assistance.</I> If a PHA proposes to terminate assistance for criminal activity as shown by a criminal record, the PHA must notify the household of the proposed action to be based on the information and must provide the subject of the record and the tenant with a copy of the criminal record. The PHA must give the family an opportunity to dispute the accuracy and relevance of that record in accordance with § 982.555. 
</P>
<P>(3) <I>Cost of obtaining criminal record.</I> The PHA may not pass along to the tenant the costs of a criminal records check.
</P>
<P>(e) The requirements in 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking) apply to this section.
</P>
<CITA TYPE="N">[66 FR 28805, May 24, 2001, as amended at 73 FR 72345, Nov. 28, 2008; 75 FR 66264, Oct. 27, 2010; 80 FR 8247, Feb. 17, 2015; 81 FR 80817, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 982.554" NODE="24:4.1.3.1.19.12.33.4" TYPE="SECTION">
<HEAD>§ 982.554   Informal review for applicant.</HEAD>
<P>(a) <I>Notice to applicant.</I> The PHA must give an applicant for participation prompt notice of a decision denying assistance to the applicant. The notice must contain a brief statement of the reasons for the PHA decision. The notice must also state that the applicant may request an informal review of the decision and must describe how to obtain the informal review.
</P>
<P>(b) <I>Informal review process.</I> The PHA must give an applicant an opportunity for an informal review of the PHA decision denying assistance to the applicant. The Administrative Plan must state the PHA procedures for conducting an informal review. The PHA review procedures must comply with the following:
</P>
<P>(1) The review may be conducted by any person or persons designated by the PHA, other than a person who made or approved the decision under review or a subordinate of this person.
</P>
<P>(2) The applicant must be given an opportunity to present written or oral objections to the PHA decision.
</P>
<P>(3) The PHA must notify the applicant of the PHA final decision after the informal review, including a brief statement of the reasons for the final decision.
</P>
<P>(c) <I>When informal review is not required.</I> The PHA is not required to provide the applicant an opportunity for an informal review for any of the following:
</P>
<P>(1) Discretionary administrative determinations by the PHA.
</P>
<P>(2) General policy issues or class grievances.
</P>
<P>(3) A determination of the family unit size under the PHA subsidy standards.
</P>
<P>(4) A PHA determination not to approve an extension of the voucher term.
</P>
<P>(5) A PHA determination not to grant approval of the tenancy.
</P>
<P>(6) An PHA determination that a unit selected by the applicant is not in compliance with HQS.
</P>
<P>(7) An PHA determination that the unit is not in accordance with HQS because of the family size or composition.
</P>
<P>(d) <I>Restrictions on assistance for noncitizens.</I> The informal hearing provisions for the denial of assistance on the basis of ineligible immigration status are contained in 24 CFR part 5.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 60 FR 45661, Sept. 1, 1995; 61 FR 13627, Mar. 27, 1996; 64 FR 26650, May 14, 1999; 80 FR 50575, Aug. 20, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 982.555" NODE="24:4.1.3.1.19.12.33.5" TYPE="SECTION">
<HEAD>§ 982.555   Informal hearing for participant.</HEAD>
<P>(a) <I>When hearing is required.</I> (1) A PHA must give a participant family an opportunity for an informal hearing to consider whether the following PHA decisions relating to the individual circumstances of a participant family are in accordance with the law, HUD regulations and PHA policies: 
</P>
<P>(i) A determination of the family's annual or adjusted income, and the use of such income to compute the housing assistance payment.
</P>
<P>(ii) A determination of the appropriate utility allowance (if any) for tenant-paid utilities from the PHA utility allowance schedule.
</P>
<P>(iii) A determination of the family unit size under the PHA subsidy standards.
</P>
<P>(iv) A determination to terminate assistance for a participant family because of the family's action or failure to act (see § 982.552).
</P>
<P>(v) A determination to terminate assistance because the participant family has been absent from the assisted unit for longer than the maximum period permitted under PHA policy and HUD rules.
</P>
<P>(2) In the cases described in paragraphs (a)(1) (iv), (v) and (vi) of this section, the PHA must give the opportunity for an informal hearing before the PHA terminates housing assistance payments for the family under an outstanding HAP contract.
</P>
<P>(b) <I>When hearing is not required.</I> The PHA is not required to provide a participant family an opportunity for an informal hearing for any of the following:
</P>
<P>(1) Discretionary administrative determinations by the PHA.
</P>
<P>(2) General policy issues or class grievances.
</P>
<P>(3) Establishment of the PHA schedule of utility allowances for families in the program.
</P>
<P>(4) A PHA determination not to approve an extension of the voucher term.
</P>
<P>(5) A PHA determination not to approve a unit or tenancy.
</P>
<P>(6) A PHA determination that an assisted unit is not in compliance with HQS. (However, the PHA must provide the opportunity for an informal hearing for a decision to terminate assistance for a breach of the HQS caused by the family as described in § 982.551(c).)
</P>
<P>(7) A PHA determination that the unit is not in accordance with HQS because of the family size.
</P>
<P>(8) A determination by the PHA to exercise or not to exercise any right or remedy against the owner under a HAP contract.
</P>
<P>(c) <I>Notice to family.</I> (1) In the cases described in paragraphs (a)(1) (i), (ii) and (iii) of this section, the PHA must notify the family that the family may ask for an explanation of the basis of the PHA determination, and that if the family does not agree with the determination, the family may request an informal hearing on the decision.
</P>
<P>(2) In the cases described in paragraphs (a)(1) (iv), (v) and (vi) of this section, the PHA must give the family prompt written notice that the family may request a hearing. The notice must:
</P>
<P>(i) Contain a brief statement of reasons for the decision,
</P>
<P>(ii) State that if the family does not agree with the decision, the family may request an informal hearing on the decision, and
</P>
<P>(iii) State the deadline for the family to request an informal hearing.
</P>
<P>(d) <I>Expeditious hearing process.</I> Where a hearing for a participant family is required under this section, the PHA must proceed with the hearing in a reasonably expeditious manner upon the request of the family.
</P>
<P>(e) <I>Hearing procedures</I>—(1) <I>Administrative Plan.</I> The Administrative Plan must state the PHA procedures for conducting informal hearings for participants.
</P>
<P>(2) <I>Discovery</I>—(i) <I>By family.</I> The family must be given the opportunity to examine before the PHA hearing any PHA documents that are directly relevant to the hearing. The family must be allowed to copy any such document at the family's expense. If the PHA does not make the document available for examination on request of the family, the PHA may not rely on the document at the hearing.
</P>
<P>(ii) <I>By PHA.</I> The PHA hearing procedures may provide that the PHA must be given the opportunity to examine at PHA offices before the PHA hearing any family documents that are directly relevant to the hearing. The PHA must be allowed to copy any such document at the PHA's expense. If the family does not make the document available for examination on request of the PHA, the family may not rely on the document at the hearing.
</P>
<P>(iii) <I>Documents.</I> The term “documents” includes records and regulations.
</P>
<P>(3) <I>Representation of family.</I> At its own expense, the family may be represented by a lawyer or other representative.
</P>
<P>(4) <I>Hearing officer: Appointment and authority.</I> (i) The hearing may be conducted by any person or persons designated by the PHA, other than a person who made or approved the decision under review or a subordinate of this person.
</P>
<P>(ii) The person who conducts the hearing may regulate the conduct of the hearing in accordance with the PHA hearing procedures.
</P>
<P>(5) <I>Evidence.</I> The PHA and the family must be given the opportunity to present evidence, and may question any witnesses. Evidence may be considered without regard to admissibility under the rules of evidence applicable to judicial proceedings.
</P>
<P>(6) <I>Issuance of decision.</I> The person who conducts the hearing must issue a written decision, stating briefly the reasons for the decision. Factual determinations relating to the individual circumstances of the family shall be based on a preponderance of the evidence presented at the hearing. A copy of the hearing decision shall be furnished promptly to the family.
</P>
<P>(f) <I>Effect of decision.</I> The PHA is not bound by a hearing decision:
</P>
<P>(1) Concerning a matter for which the PHA is not required to provide an opportunity for an informal hearing under this section, or that otherwise exceeds the authority of the person conducting the hearing under the PHA hearing procedures. 
</P>
<P>(2) Contrary to HUD regulations or requirements, or otherwise contrary to federal, State, or local law. 
</P>
<P>(3) If the PHA determines that it is not bound by a hearing decision, the PHA must promptly notify the family of the determination, and of the reasons for the determination. 
</P>
<P>(g) <I>Restrictions on assistance to noncitizens.</I> The informal hearing provisions for the denial of assistance on the basis of ineligible immigration status are contained in 24 CFR part 5.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0169)
</APPRO>
<CITA TYPE="N">[60 FR 34695, July 3, 1995, as amended at 60 FR 45661, Sept. 1, 1995; 61 FR 13627, Mar. 27, 1996; 64 FR 26650, May 14, 1999; 65 FR 16823, Mar. 30, 2000; 80 FR 8247, Feb. 17, 2015; 80 FR 50575, Aug. 20, 2015]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="M" NODE="24:4.1.3.1.19.13" TYPE="SUBPART">
<HEAD>Subpart M—Special Housing Types</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>63 FR 23865, Apr. 30, 1998, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 982.601" NODE="24:4.1.3.1.19.13.33.1" TYPE="SECTION">
<HEAD>§ 982.601   Overview.</HEAD>
<P>(a) <I>Special housing types.</I> This subpart describes program requirements for special housing types. The following are the special housing types: 
</P>
<P>(1) Single room occupancy (SRO) housing; 
</P>
<P>(2) Congregate housing; 
</P>
<P>(3) Group home; 
</P>
<P>(4) Shared housing; 
</P>
<P>(5) Manufactured home; 
</P>
<P>(6) Cooperative housing (excluding families that are not cooperative members); and 
</P>
<P>(7) Homeownership option. 
</P>
<P>(b) <I>PHA choice to offer special housing type.</I> (1) The PHA may permit a family to use any of the following special housing types in accordance with requirements of the program: single room occupancy (SRO) housing, congregate housing, group home, shared housing, manufactured home when the family owns the home and leases the manufactured home space, cooperative housing or homeownership option. 
</P>
<P>(2) In general, the PHA is not required to permit families (including families that move into the PHA program under portability procedures) to use any of these special housing types, and may limit the number of families using special housing types. 
</P>
<P>(3) The PHA must permit use of any special housing type if needed as a reasonable accommodation so that the program is readily accessible to and usable by persons with disabilities in accordance with 24 CFR part 8.
</P>
<P>(4) For occupancy of a manufactured home, see § 982.620(a).
</P>
<P>(c) <I>Program funding for special housing types.</I> (1) HUD does not provide any additional or designated funding for special housing types, or for a specific special housing type (e.g., the homeownership option). Assistance for special housing types is paid from program funding available for the PHA's tenant-based program under the consolidated annual contributions contract. 
</P>
<P>(2) The PHA may not set aside program funding or program slots for special housing types or for a specific special housing type. 
</P>
<P>(d) <I>Family choice of housing and housing type.</I> The family chooses whether to use housing that qualifies as a special housing type under this subpart, or as any specific special housing type, or to use other eligible housing in accordance with requirements of the program. The PHA may not restrict the family's freedom to choose among available units in accordance with § 982.353.
</P>
<P>(e) <I>Applicability of requirements.</I> (1) Except as modified by this subpart, the requirements of other subparts of this part apply to the special housing types. 
</P>
<P>(2) Provisions in this subpart only apply to a specific special housing type. The housing type is noted in the title of each section. 
</P>
<P>(3) Housing must meet the requirements of this subpart for a single special housing type specified by the family. Such housing is not subject to requirements for other special housing types. A single unit cannot be designated as more than one special housing type.
</P>
<CITA TYPE="N">[63 FR 23865, Apr. 30, 1998, as amended at 65 FR 55162, Sept. 12, 2000; 67 FR 64493, Oct. 18, 2002; 80 FR 8247, Feb. 17, 2015]


</CITA>
</DIV8>


<DIV7 N="33" NODE="24:4.1.3.1.19.13.33" TYPE="SUBJGRP">
<HEAD>Single Room Occupancy (SRO)</HEAD>


<DIV8 N="§ 982.602" NODE="24:4.1.3.1.19.13.33.2" TYPE="SECTION">
<HEAD>§ 982.602   SRO: Who may reside in an SRO?</HEAD>
<P>A single person may reside in an SRO housing unit.
</P>
<CITA TYPE="N">[64 FR 26650, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 982.603" NODE="24:4.1.3.1.19.13.33.3" TYPE="SECTION">
<HEAD>§ 982.603   SRO: Lease and HAP contract.</HEAD>
<P>For SRO housing, there is a separate lease and HAP contract for each assisted person.


</P>
</DIV8>


<DIV8 N="§ 982.604" NODE="24:4.1.3.1.19.13.33.4" TYPE="SECTION">
<HEAD>§ 982.604   SRO: Voucher housing assistance payment.</HEAD>
<P>(a) For a person residing in SRO housing, the payment standard is 75 percent of the zero-bedroom payment standard amount on the PHA payment standard schedule. For a person residing in SRO housing in an exception area, the payment standard is 75 percent of the HUD-approved zero-bedroom exception payment standard amount.
</P>
<P>(b) The utility allowance for an assisted person residing in SRO housing is 75 percent of the zero bedroom utility allowance.
</P>
<CITA TYPE="N">[64 FR 26650, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 982.605" NODE="24:4.1.3.1.19.13.33.5" TYPE="SECTION">
<HEAD>§ 982.605   SRO: Housing quality standards.</HEAD>
<P>(a) <I>HQS standards for SRO.</I> As defined in § 982.4, HQS refers to the minimum quality standards developed by HUD in accordance with 24 CFR 5.703 for housing assisted under the HCV program, including any variations approved by HUD for the PHA under 24 CFR 5.705(a)(3). However, the standards in this section apply in place of standards related to sanitary facilities, food preparation and refuse disposal, and space and security. Since the SRO units will not house children, the standards at 24 CFR part 35, subparts A, B, H, and R, applying to the PBC program, concerning lead-based paint, do not apply to SRO housing.


</P>
<P>(b) <I>Performance requirements.</I> (1) SRO housing is subject to the additional performance requirements in this paragraph (b).
</P>
<P>(2) Sanitary facilities, and space and security characteristics must meet local code standards for SRO housing. In the absence of applicable local code standards for SRO housing, the following standards apply:
</P>
<P>(i) <I>Sanitary facilities.</I> (A) At least one flush toilet that can be used in privacy, lavatory basin, and bathtub or shower, in proper operating condition, must be supplied for each six persons or fewer residing in the SRO housing.
</P>
<P>(B) If SRO units are leased only to males, flush urinals may be substituted for not more than one-half the required number of flush toilets. However, there must be at least one flush toilet in the building.
</P>
<P>(C) Every lavatory basin and bathtub or shower must be supplied at all times with an adequate quantity of hot and cold running water.
</P>
<P>(D) All of these facilities must be in proper operating condition, and must be adequate for personal cleanliness and the disposal of human waste. The facilities must utilize an approvable public or private disposal system.
</P>
<P>(E) Sanitary facilities must be reasonably accessible from a common hall or passageway to all persons sharing them. These facilities may not be located more than one floor above or below the SRO unit. Sanitary facilities may not be located below grade unless the SRO units are located on that level.
</P>
<P>(ii) <I>Space and security.</I> (A) No more than one person may reside in an SRO unit.
</P>
<P>(B) An SRO unit must contain at least one hundred ten square feet of floor space.
</P>
<P>(C) An SRO unit must contain at least four square feet of closet space for each resident (with an unobstructed height of at least five feet). If there is less closet space, space equal to the amount of the deficiency must be subtracted from the area of the habitable room space when determining the amount of floor space in the SRO unit. The SRO unit must contain at least one hundred ten square feet of remaining floor space after subtracting the amount of the deficiency in minimum closet space.
</P>
<P>(D) Exterior doors and windows accessible from outside an SRO unit must be lockable.
</P>
<P>(3) <I>Access.</I> (i) Access doors to an SRO unit must have locks for privacy in proper operating condition.
</P>
<P>(ii) An SRO unit must have immediate access to two or more approved means of exit, appropriately marked, leading to safe and open space at ground level, and any means of exit required by State and local law.
</P>
<P>(iii) The resident must be able to access an SRO unit without passing through any other unit.
</P>
<P>(4) <I>Sprinkler system.</I> A sprinkler system that protects all major spaces, hard wired smoke detectors, and such other fire and safety improvements as State or local law may require must be installed in each building. The term “major spaces” means hallways, large common areas, and other areas specified in local fire, building, or safety codes.


</P>
<CITA TYPE="N">[63 FR 23865, Apr. 30, 1998, as amended at 88 FR 30503, May 11, 2023; 89 FR 38303, May 7, 2024]




</CITA>
</DIV8>

</DIV7>


<DIV7 N="34" NODE="24:4.1.3.1.19.13.34" TYPE="SUBJGRP">
<HEAD>Congregate Housing</HEAD>


<DIV8 N="§ 982.606" NODE="24:4.1.3.1.19.13.34.6" TYPE="SECTION">
<HEAD>§ 982.606   Congregate housing: Who may reside in congregate housing.</HEAD>
<P>(a) An elderly person or a person with disabilities may reside in a congregate housing unit.
</P>
<P>(b)(1) If approved by the PHA, a family member or live-in aide may reside with the elderly person or person with disabilities.
</P>
<P>(2) The PHA must approve a live-in aide if needed as a reasonable accommodation so that the program is readily accessible to and usable by persons with disabilities in accordance with 24 CFR part 8. See § 982.316 concerning occupancy by a live-in aide.


</P>
</DIV8>


<DIV8 N="§ 982.607" NODE="24:4.1.3.1.19.13.34.7" TYPE="SECTION">
<HEAD>§ 982.607   Congregate housing: Lease and HAP contract.</HEAD>
<P>For congregate housing, there is a separate lease and HAP contract for each assisted family.


</P>
</DIV8>


<DIV8 N="§ 982.608" NODE="24:4.1.3.1.19.13.34.8" TYPE="SECTION">
<HEAD>§ 982.608   Congregate housing: Voucher housing assistance payment.</HEAD>
<P>(a) Unless there is a live-in aide:
</P>
<P>(1) For a family residing in congregate housing, the payment standard is the zero-bedroom payment standard amount on the PHA payment standard schedule. For a family residing in congregate housing in an exception area, the payment standard is the HUD-approved zero-bedroom exception payment standard amount.
</P>
<P>(2) However, if there are two or more rooms in the unit (not including kitchen or sanitary facilities), the payment standard for a family residing in congregate housing is the one-bedroom payment standard amount.
</P>
<P>(b) If there is a live-in aide, the live-in aide must be counted in determining the family unit size.
</P>
<CITA TYPE="N">[63 FR 23865, Apr. 30, 1998, as amended at 64 FR 26650, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 982.609" NODE="24:4.1.3.1.19.13.34.9" TYPE="SECTION">
<HEAD>§ 982.609   Congregate housing: Housing quality standards.</HEAD>
<P>(a) <I>HQS standards for congregate housing.</I> As defined in § 982.4, HQS refers to the minimum quality standards developed by HUD in accordance with 24 CFR 5.703 for housing assisted under the HCV program, including any variations approved by HUD for the PHA under 24 CFR 5.705(a)(3). However, the standards in this section apply in place of standards related to food preparation and refuse disposal. Congregate housing is not subject to the requirement that the dwelling unit must have a kitchen area.


</P>
<P>(b) <I>Food preparation and refuse disposal: Additional performance requirements.</I> The following additional performance requirements apply to congregate housing:
</P>
<P>(1) The unit must contain a refrigerator of appropriate size.
</P>
<P>(2) There must be central kitchen and dining facilities on the premises. These facilities:
</P>
<P>(i) Must be located within the premises, and accessible to the residents;
</P>
<P>(ii) Must contain suitable space and equipment to store, prepare, and serve food in a sanitary manner;
</P>
<P>(iii) Must be used to provide a food service that is provided for the residents, and that is not provided by the residents; and
</P>
<P>(iv) Must be for the primary use of residents of the congregate units and be sufficient in size to accommodate the residents.
</P>
<P>(3) There must be adequate facilities and services for the sanitary disposal of food waste and refuse, including facilities for temporary storage where necessary.
</P>
<CITA TYPE="N">[63 FR 23865, Apr. 30, 1998, as amended at 88 FR 30504, May 11, 2023; 89 FR 38303, May 7, 2024]






</CITA>
</DIV8>

</DIV7>


<DIV7 N="35" NODE="24:4.1.3.1.19.13.35" TYPE="SUBJGRP">
<HEAD>Group Home</HEAD>


<DIV8 N="§ 982.610" NODE="24:4.1.3.1.19.13.35.10" TYPE="SECTION">
<HEAD>§ 982.610   Group home: Who may reside in a group home.</HEAD>
<P>(a) An elderly person or a person with disabilities may reside in a State-approved group home.
</P>
<P>(b)(1) If approved by the PHA, a live-in aide may reside with a person with disabilities.
</P>
<P>(2) The PHA must approve a live-in aide if needed as a reasonable accommodation so that the program is readily accessible to and usable by persons with disabilities in accordance with 24 CFR part 8. See § 982.316 concerning occupancy by a live-in aide.
</P>
<P>(c) Except for a live-in aide, all residents of a group home, whether assisted or unassisted, must be elderly persons or persons with disabilities.
</P>
<P>(d) Persons residing in a group home must not require continual medical or nursing care.
</P>
<P>(e) Persons who are not assisted under the tenant-based program may reside in a group home.
</P>
<P>(f) No more than 12 persons may reside in a group home. This limit covers all persons who reside in the unit, including assisted and unassisted residents and any live-in aide.


</P>
</DIV8>


<DIV8 N="§ 982.611" NODE="24:4.1.3.1.19.13.35.11" TYPE="SECTION">
<HEAD>§ 982.611   Group home: Lease and HAP contract.</HEAD>
<P>For assistance in a group home, there is a separate HAP contract and lease for each assisted person.


</P>
</DIV8>


<DIV8 N="§ 982.612" NODE="24:4.1.3.1.19.13.35.12" TYPE="SECTION">
<HEAD>§ 982.612   Group home: State approval of group home.</HEAD>
<P>A group home must be licensed, certified, or otherwise approved in writing by the State (e.g., Department of Human Resources, Mental Health, Retardation, or Social Services) as a group home for elderly persons or persons with disabilities.


</P>
</DIV8>


<DIV8 N="§ 982.613" NODE="24:4.1.3.1.19.13.35.13" TYPE="SECTION">
<HEAD>§ 982.613   Group home: Rent and voucher housing assistance payment.</HEAD>
<P>(a) <I>Meaning of pro-rata portion.</I> For a group home, the term “pro-rata portion” means the ratio derived by dividing the number of persons in the assisted household by the total number of residents (assisted and unassisted) residing in the group home. The number of persons in the assisted household equals one assisted person plus any PHA-approved live-in aide.
</P>
<P>(b) <I>Rent to owner: Reasonable rent limit.</I> (1) The rent to owner for an assisted person may not exceed the pro-rata portion of the reasonable rent for the group home.
</P>
<P>(2) The reasonable rent for a group home is determined in accordance with § 982.507. In determining reasonable rent for the group home, the PHA must consider whether sanitary facilities, and facilities for food preparation and service, are common facilities or private facilities.
</P>
<P>(c) <I>Payment standard</I>—(1) <I>Family unit size.</I> (i) Unless there is a live-in aide, the family unit size is zero or one bedroom.
</P>
<P>(ii) If there is a live-in aide, the live-in aide must be counted in determining the family unit size.
</P>
<P>(2) The payment standard for a person who resides in a group home is the lower of:
</P>
<P>(i) The payment standard amount on the PHA payment standard schedule for the family unit size; or (ii) The pro-rata portion of the payment standard amount on the PHA payment standard schedule for the group home size.
</P>
<P>(iii) If there is a live-in aide, the live-in aide must be counted in determining the family unit size.
</P>
<P>(d) <I>Utility allowance.</I> The utility allowance for each assisted person residing in a group home is the pro-rata portion of the utility allowance for the group home unit size.
</P>
<CITA TYPE="N">[63 FR 23865, Apr. 30, 1998, as amended at 64 FR 26651, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 982.614" NODE="24:4.1.3.1.19.13.35.14" TYPE="SECTION">
<HEAD>§ 982.614   Group home: Housing quality standards.</HEAD>
<P>(a) <I>Compliance with HQS.</I> The PHA may not give approval to reside in a group home unless the unit, including the portion of the unit available for use by the assisted person under the lease, meets HQS. As defined in § 982.4, HQS refers to the minimum quality standards developed by HUD in accordance with 24 CFR 5.703 for housing assisted under the HCV program, including any variations approved by HUD for the PHA under 24 CFR 5.705(a)(3).


</P>
<P>(b) <I>Applicable HQS standards.</I> (1) The standards in this section apply in place of standards in 24 CFR 5.703 that relate to sanitary facilities, food preparation and refuse disposal, space and security, structure and materials, and site and neighborhood.

 
</P>
<P>(2) The entire unit must comply with the HQS.
</P>
<P>(c) <I>Additional performance requirements.</I> The following additional performance requirements apply to a group home:
</P>
<P>(1) <I>Sanitary facilities.</I> (i) There must be a bathroom in the unit. The unit must contain, and an assisted resident must have ready access to:
</P>
<P>(A) A flush toilet that can be used in privacy;
</P>
<P>(B) A fixed basin with hot and cold running water; and
</P>
<P>(C) A shower or bathtub with hot and cold running water.
</P>
<P>(ii) All of these facilities must be in proper operating condition, and must be adequate for personal cleanliness and the disposal of human waste. The facilities must utilize an approvable public or private disposal system.
</P>
<P>(iii) The unit may contain private or common sanitary facilities. However, the facilities must be sufficient in number so that they need not be shared by more than four residents of the group home.
</P>
<P>(iv) Sanitary facilities in the group home must be readily accessible to and usable by residents, including persons with disabilities.
</P>
<P>(2) <I>Food preparation and service.</I> (i) The unit must contain a kitchen and a dining area. There must be adequate space to store, prepare, and serve foods in a sanitary manner.
</P>
<P>(ii) Food preparation and service equipment must be in proper operating condition. The equipment must be adequate for the number of residents in the group home. The unit must contain the following equipment:
</P>
<P>(A) A stove or range, and oven;
</P>
<P>(B) A refrigerator; and
</P>
<P>(C) A kitchen sink with hot and cold running water. The sink must drain into an approvable public or private disposal system.
</P>
<P>(iii) There must be adequate facilities and services for the sanitary disposal of food waste and refuse, including facilities for temporary storage where necessary.
</P>
<P>(iv) The unit may contain private or common facilities for food preparation and service.
</P>
<P>(3) <I>Space and security.</I> (i) The unit must provide adequate space and security for the assisted person.
</P>
<P>(ii) The unit must contain a living room, kitchen, dining area, bathroom, and other appropriate social, recreational or community space. The unit must contain at least one bedroom of appropriate size for each two persons.
</P>
<P>(iii) Doors and windows that are accessible from outside the unit must be lockable.
</P>
<P>(4) <I>Structure and material.</I> (i) The unit must be structurally sound to avoid any threat to the health and safety of the residents, and to protect the residents from the environment.
</P>
<P>(ii) Ceilings, walls, and floors must not have any serious defects such as severe bulging or leaning, loose surface materials, severe buckling or noticeable movement under walking stress, missing parts or other significant damage. The roof structure must be firm, and the roof must be weathertight. The exterior or wall structure and exterior wall surface may not have any serious defects such as serious leaning, buckling, sagging, cracks or large holes, loose siding, or other serious damage. The condition and equipment of interior and exterior stairways, halls, porches, walkways, etc., must not present a danger of tripping or falling. Elevators must be maintained in safe operating condition.
</P>
<P>(iii) The group home must be accessible to and usable by a resident with disabilities.
</P>
<P>(5) <I>Site and neighborhood.</I> The site and neighborhood must be reasonably free from disturbing noises and reverberations and other hazards to the health, safety, and general welfare of the residents. The site and neighborhood may not be subject to serious adverse environmental conditions, natural or manmade, such as dangerous walks or steps, instability, flooding, poor drainage, septic tank back-ups, sewage hazards or mud slides, abnormal air pollution, smoke or dust, excessive noise, vibrations or vehicular traffic, excessive accumulations of trash, vermin or rodent infestation, or fire hazards. The unit must be located in a residential setting.


</P>
<CITA TYPE="N">[63 FR 23865, Apr. 30, 1998, as amended at 88 FR 30504, May 11, 2023; 89 FR 38303, May 7, 2024]








</CITA>
</DIV8>

</DIV7>


<DIV7 N="36" NODE="24:4.1.3.1.19.13.36" TYPE="SUBJGRP">
<HEAD>Shared Housing</HEAD>


<DIV8 N="§ 982.615" NODE="24:4.1.3.1.19.13.36.15" TYPE="SECTION">
<HEAD>§ 982.615   Shared housing: Occupancy.</HEAD>
<P>(a) <I>Sharing a unit.</I> An assisted family may reside in shared housing. In shared housing, an assisted family shares a unit with the other resident or residents of the unit. The unit may be a house or an apartment.
</P>
<P>(b) <I>Who may share a dwelling unit with assisted family?</I> (1) If approved by the PHA, a live-in aide may reside with the family to care for a person with disabilities. The PHA must approve a live-in aide if needed as a reasonable accommodation so that the program is readily accessible to and usable by persons with disabilities in accordance with 24 CFR part 8. See § 982.316 concerning occupancy by a live-in aide.
</P>
<P>(2) Other persons who are assisted under the tenant-based program, or other persons who are not assisted under the tenant-based program, may reside in a shared housing unit.
</P>
<P>(3) The owner of a shared housing unit may reside in the unit. A resident owner may enter into a HAP contract with the PHA. However, housing assistance may not be paid on behalf of an owner. An assisted person may not be related by blood or marriage to a resident owner.
</P>
<CITA TYPE="N">[63 FR 23865, Apr. 30, 1998, as amended at 80 FR 8247, Feb. 17, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 982.616" NODE="24:4.1.3.1.19.13.36.16" TYPE="SECTION">
<HEAD>§ 982.616   Shared housing: Lease and HAP contract.</HEAD>
<P>For assistance in a shared housing unit, there is a separate HAP contract and lease for each assisted family.


</P>
</DIV8>


<DIV8 N="§ 982.617" NODE="24:4.1.3.1.19.13.36.17" TYPE="SECTION">
<HEAD>§ 982.617   Shared housing: Rent and voucher housing assistance payment.</HEAD>
<P>(a) <I>Meaning of pro-rata portion.</I> For shared housing, the term “pro-rata portion” means the ratio derived by dividing the number of bedrooms in the private space available for occupancy by a family by the total number of bedrooms in the unit. For example, for a family entitled to occupy three bedrooms in a five bedroom unit, the ratio would be 3/5.
</P>
<P>(b) <I>Rent to owner: Reasonable rent.</I> (1) The rent to owner for the family may not exceed the pro-rata portion of the reasonable rent for the shared housing dwelling unit.
</P>
<P>(2) The reasonable rent is determined in accordance with § 982.507.
</P>
<P>(c) <I>Payment standard.</I> The payment standard for a family that resides in a shared housing is the lower of:
</P>
<P>(1) The payment standard amount on the PHA payment standard schedule for the family unit size; or
</P>
<P>(2) The pro-rata portion of the payment standard amount on the PHA payment standard schedule for the size of the shared housing unit.
</P>
<P>(d) <I>Utility allowance.</I> The utility allowance for an assisted family residing in shared housing is the pro-rata portion of the utility allowance for the shared housing unit.
</P>
<CITA TYPE="N">[63 FR 23865, Apr. 30, 1998, as amended at 64 FR 26651, May 14, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 982.618" NODE="24:4.1.3.1.19.13.36.18" TYPE="SECTION">
<HEAD>§ 982.618   Shared housing: Housing quality standards.</HEAD>
<P>(a) <I>Compliance with HQS.</I> The PHA may not give approval to reside in shared housing unless the entire unit, including the portion of the unit available for use by the assisted family under its lease, meets HQS.


</P>
<P>(b) <I>Applicable HQS standards.</I> As defined in § 982.4, HQS refers to the minimum quality standards developed by HUD in accordance with 24 CFR 5.703 for housing assisted under the HCV program, including any variations approved by HUD for the PHA under 24 CFR 5.705(a)(3). However, the HQS standards in this section apply in place of standards related to space and security in 24 CFR 5.703.
</P>
<P>(c) <I>Facilities available for family.</I> The facilities available for the use of an assisted family in shared housing under the family's lease must include (whether in the family's private space or in the common space) a living room, sanitary facilities in accordance with the standards set in 24 CFR 5.703, and food preparation and refuse disposal facilities in accordance with 24 CFR 5.703.




</P>
<P>(d) <I>Space and security: Performance requirements.</I> (1) The entire unit must provide adequate space and security for all its residents (whether assisted or unassisted).
</P>
<P>(2)(i) Each unit must contain private space for each assisted family, plus common space for shared use by the residents of the unit. Common space must be appropriate for shared use by the residents.
</P>
<P>(ii) The private space for each assisted family must contain at least one bedroom for each two persons in the family. The number of bedrooms in the private space of an assisted family may not be less than the family unit size.
</P>
<P>(iii) A zero or one bedroom unit may not be used for shared housing.
</P>
<CITA TYPE="N">[63 FR 23865, Apr. 30, 1998, as amended at 88 FR 30504, May 11, 2023; 89 FR 38303, May 7, 2024]






</CITA>
</DIV8>

</DIV7>


<DIV7 N="37" NODE="24:4.1.3.1.19.13.37" TYPE="SUBJGRP">
<HEAD>Cooperative</HEAD>


<DIV8 N="§ 982.619" NODE="24:4.1.3.1.19.13.37.19" TYPE="SECTION">
<HEAD>§ 982.619   Cooperative housing.</HEAD>
<P>(a) <I>Assistance in cooperative housing.</I> This section applies to rental assistance for a cooperative member residing in cooperative housing. However, this section does not apply to: 
</P>
<P>(1) Assistance for a cooperative member under the homeownership option pursuant to §§ 982.625 through 982.641; or 
</P>
<P>(2) Rental assistance for a family that leases a cooperative housing unit from a cooperative member (such rental assistance is not a special housing type, and is subject to requirements in other subparts of this part 982). 
</P>
<P>(b) <I>Rent to owner.</I> (1) The reasonable rent for a cooperative unit is determined in accordance with § 982.507. For cooperative housing, the rent to owner is the monthly carrying charge under the occupancy agreement/lease between the member and the cooperative.
</P>
<P>(2) The carrying charge consists of the amount assessed to the member by the cooperative for occupancy of the housing. The carrying charge includes the member's share of the cooperative debt service, operating expenses, and necessary payments to cooperative reserve funds. However, the carrying charge does not include down-payments or other payments to purchase the cooperative unit, or to amortize a loan to the family for this purpose.
</P>
<P>(3) Gross rent is the carrying charge plus any utility allowance.
</P>
<P>(4) Adjustments are applied to the carrying charge as determined in accordance with this section.
</P>
<P>(5) The occupancy agreement/lease and other appropriate documents must provide that the monthly carrying charge is subject to Section 8 limitations on rent to owner.
</P>
<P>(c) <I>Housing assistance payment.</I> The amount of the housing assistance payment is determined in accordance with subpart K of this part.
</P>
<P>(d) <I>Maintenance.</I> (1) During the term of the HAP contract between the PHA and the cooperative, the dwelling unit and premises must be maintained in accordance with the HQS. If the dwelling unit and premises are not maintained in accordance with the HQS, the PHA may exercise all available remedies, regardless of whether the family or the cooperative is responsible for such breach of the HQS. PHA remedies for breach of the HQS include recovery of overpayments, abatement or other reduction of housing assistance payments, termination of housing assistance payments and termination of the HAP contract. 
</P>
<P>(2) The PHA may not make any housing assistance payments if the contract unit does not meet the HQS, unless any defect is corrected within the period specified by the PHA and the PHA verifies the correction. If a defect is life-threatening, the defect must be corrected within no more than 24 hours. For other defects, the defect must be corrected within the period specified by the PHA. 
</P>
<P>(3) The family is responsible for a breach of the HQS that is caused by any of the following: 
</P>
<P>(i) The family fails to perform any maintenance for which the family is responsible in accordance with the terms of the cooperative occupancy agreement between the cooperative member and the cooperative; 
</P>
<P>(ii) The family fails to pay for any utilities that the cooperative is not required to pay for, but which are to be paid by the cooperative member; 
</P>
<P>(iii) The family fails to provide and maintain any appliances that the cooperative is not required to provide, but which are to be provided by the cooperative member; or 
</P>
<P>(iv) Any member of the household or guest damages the dwelling unit or premises (damages beyond ordinary wear and tear). 
</P>
<P>(4) If the family has caused a breach of the HQS for which the family is responsible, the PHA must take prompt and vigorous action to enforce such family obligations. The PHA may terminate assistance for violation of family obligations in accordance with § 982.552. 
</P>
<P>(5) Section 982.404 does not apply to assistance for cooperative housing under this section. 
</P>
<P>(e) <I>Live-in aide.</I> (1) If approved by the PHA, a live-in aide may reside with the family to care for a person with disabilities. The PHA must approve a live-in aide if needed as a reasonable accommodation so that the program is readily accessible to and usable by persons with disabilities in accordance with 24 CFR part 8. See § 982.316 concerning occupancy by a live-in aide.
</P>
<P>(2) If there is a live-in aide, the live-in aide must be counted in determining the family unit size.
</P>
<CITA TYPE="N">[63 FR 23865, Apr. 30, 1998, as amended at 64 FR 26651, May 14, 1999; 65 FR 55162, Sept. 12, 2000; 80 FR 8247, Feb. 17, 2015]


</CITA>
</DIV8>

</DIV7>


<DIV7 N="38" NODE="24:4.1.3.1.19.13.38" TYPE="SUBJGRP">
<HEAD>Manufactured Home</HEAD>


<DIV8 N="§ 982.620" NODE="24:4.1.3.1.19.13.38.20" TYPE="SECTION">
<HEAD>§ 982.620   Manufactured home: Applicability of requirements.</HEAD>
<P>(a) <I>Assistance for resident of manufactured home.</I> (1) A family may reside in a manufactured home with assistance under the program.
</P>
<P>(2) The PHA must permit a family to lease a manufactured home and space with assistance under the program.
</P>
<P>(3) The PHA may provide assistance for a family that owns the manufactured home and leases only the space. The PHA is not required to provide such assistance under the program.
</P>
<P>(b) <I>Applicability.</I> (1) The HQS in § 982.621 always apply when assistance is provided to a family occupying a manufactured home (under paragraph (a)(2) or (a)(3) of this section).
</P>
<P>(2) Sections 982.622 to 982.624 only apply when assistance is provided to a manufactured home owner to lease a manufactured home space.
</P>
<P>(c) <I>Live-in aide.</I> (1) If approved by the PHA, a live-in aide may reside with the family to care for a person with disabilities. The PHA must approve a live-in aide if needed as a reasonable accommodation so that the program is readily accessible to and usable by persons with disabilities in accordance with 24 CFR part 8. See § 982.316 concerning occupancy by a live-in aide.
</P>
<P>(2) If there is a live-in aide, the live-in aide must be counted in determining the family unit size.


</P>
</DIV8>


<DIV8 N="§ 982.621" NODE="24:4.1.3.1.19.13.38.21" TYPE="SECTION">
<HEAD>§ 982.621   Manufactured home space rental: Housing quality standards.</HEAD>
<P>As defined in § 982.4, HQS refers to the minimum quality standards developed by HUD in accordance with 24 CFR 5.703 for housing assisted under the HCV program, including any variations approved by HUD for the PHA under 24 CFR 5.705(a)(3). 

 A manufactured home also must meet the following requirements:


</P>
<P>(a) <I>Performance requirement.</I> A manufactured home must be placed on the site in a stable manner, and must be free from hazards such as sliding or wind damage.
</P>
<P>(b) <I>Acceptability criteria.</I> A manufactured home must be securely anchored by a tie-down device that distributes and transfers the loads imposed by the unit to appropriate ground anchors to resist wind overturning and sliding.
</P>
<CITA TYPE="N">[63 FR 23865, Apr. 30, 1998, as amended at 88 FR 30504, May 11, 2023; 89 FR 38303, May 7, 2024]










</CITA>
</DIV8>

</DIV7>


<DIV7 N="39" NODE="24:4.1.3.1.19.13.39" TYPE="SUBJGRP">
<HEAD>Manufactured Home Space Rental</HEAD>


<DIV8 N="§ 982.622" NODE="24:4.1.3.1.19.13.39.22" TYPE="SECTION">
<HEAD>§ 982.622   Manufactured home space rental: Rent to owner.</HEAD>
<P>(a) <I>What is included.</I> (1) Rent to owner for rental of a manufactured home space includes payment for maintenance and services that the owner must provide to the tenant under the lease for the space.
</P>
<P>(2) Rent to owner does not include the costs of utilities and trash collection for the manufactured home. However, the owner may charge the family a separate fee for the cost of utilities or trash collection provided by the owner.
</P>
<P>(b) <I>Reasonable rent.</I> (1) During the assisted tenancy, the rent to owner for the manufactured home space may not exceed a reasonable rent as determined in accordance with this section. Section 982.503 is not applicable.
</P>
<P>(2) The PHA may not approve a lease for a manufactured home space until the PHA determines that the initial rent to owner for the space is a reasonable rent. At least annually during the assisted tenancy, the PHA must redetermine that the current rent to owner is a reasonable rent.
</P>
<P>(3) The PHA must determine whether the rent to owner for the manufactured home space is a reasonable rent in comparison to rent for other comparable manufactured home spaces. To make this determination, the PHA must consider the location and size of the space, and any services and maintenance to be provided by the owner in accordance with the lease (without a fee in addition to the rent).
</P>
<P>(4) By accepting each monthly housing assistance payment from the PHA, the owner of the manufactured home space certifies that the rent to owner for the space is not more than rent charged by the owner for unassisted rental of comparable spaces in the same manufactured home park or elsewhere. The owner must give the PHA information, as requested by the PHA, on rents charged by the owner for other manufactured home spaces.




</P>
</DIV8>


<DIV8 N="§ 982.623" NODE="24:4.1.3.1.19.13.39.23" TYPE="SECTION">
<HEAD>§ 982.623   Manufactured home space rental: Housing assistance payment.</HEAD>
<P>(a) <I>Amount of monthly housing assistance payment.</I> The monthly housing assistance payment is calculated as the lower of:
</P>
<P>(1) The PHA payment standard, determined in accordance with § 982.503 minus the total tenant payment; or
</P>
<P>(2) The family's eligible housing expenses minus the total tenant payment.
</P>
<P>(b) <I>Eligible housing expenses.</I> The family's eligible housing expenses are the total of:
</P>
<P>(1) The rent charged by the owner for the manufactured home space.
</P>
<P>(2) Charges for the maintenance and management the space owner must provide under the lease.
</P>
<P>(3) The monthly payments made by the family to amortize the cost of purchasing the manufactured home established at the time of application to a lender for financing the purchase of the manufactured home if monthly payments are still being made, including any required insurance and property taxes included in the loan payment to the lender.
</P>
<P>(i) Any increase in debt service or term due to refinancing after purchase of the home may not be included in the amortization cost.
</P>
<P>(ii) Debt service for installation charges incurred by a family may be included in the monthly amortization payments. Installation charges incurred before the family became an assisted family may be included in the amortization cost if monthly payments are still being made to amortize the charges.
</P>
<P>(4) The applicable allowances for tenant-paid utilities, as determined under §§ 982.517 and 982.624.
</P>
<P>(c) <I>Distribution of housing assistance payment.</I> In general, the monthly housing assistance payment is distributed as follows:
</P>
<P>(1) The PHA pays the owner of the space the lesser of the housing assistance payment or the portion of the monthly rent due to the owner. The portion of the monthly rent due to the owner is the total of:
</P>
<P>(i) The actual rent charged by the owner for the manufactured home space; and
</P>
<P>(ii) Charges for the maintenance and management the space owner must provide under the lease.
</P>
<P>(2) If the housing assistance payment exceeds the portion of the monthly rent due to the owner, the PHA may pay the balance of the housing assistance payment to the family. Alternatively, the PHA may pay the balance to the lender or utility company, in an amount no greater than the amount due for the month to each, respectively, subject to the lender's or utility company's willingness to accept the PHA's payment on behalf of the family. If the PHA elects to pay the lender or the utility company directly, the PHA must notify the family of the amount paid to the lender or the utility company and must pay any remaining balance directly to the family.
</P>
<P>(d) <I>PHA option: Single housing assistance payment to the family.</I> (1) If the owner of the manufactured home space agrees, the PHA may make the entire housing assistance payment to the family, and the family shall be responsible for paying the owner directly for the full amount of rent of the manufactured home space due to the owner, including owner maintenance and management charges. If the PHA exercises this option, the PHA may not make any payments directly to the lender or utility company.
</P>
<P>(2) The PHA and owner of the manufactured home space must still execute the HAP contract, and the owner is still responsible for fulfilling all of the owner obligations under the HAP contract, including but not limited to complying with HQS and rent reasonableness requirements. The owner's acceptance of the family's monthly rent payment during the term of the HAP contract serves as the owner's certification to the reasonableness of the rent charged for the space in accordance with § 982.622(b)(4).
</P>
<P>(3) If the family and owner agree to the single housing assistance payment, the owner is responsible for collecting the full amount of the rent and other charges under the lease directly from the family. The PHA is not responsible for any amounts owed by the family to the owner and may not pay any claim by the owner against the family.


</P>
<CITA TYPE="N">[89 FR 38303, May 7, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 982.624" NODE="24:4.1.3.1.19.13.39.24" TYPE="SECTION">
<HEAD>§ 982.624   Manufactured home space rental: Utility allowance schedule.</HEAD>
<P>The PHA must establish utility allowances for manufactured home space rental. For the first twelve months of the initial lease term only, the allowances must include a reasonable amount for utility hook-up charges payable by the family if the family actually incurs the expenses because of a move. Allowances for utility hook-up charges do not apply to a family that leases a manufactured home space in place. Utility allowances for manufactured home space must not cover costs payable by a family to cover the digging of a well or installation of a septic system.


</P>
</DIV8>

</DIV7>


<DIV7 N="40" NODE="24:4.1.3.1.19.13.40" TYPE="SUBJGRP">
<HEAD>Homeownership Option</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>65 FR 55163, Sept. 12, 2000, unless otherwise noted.






</PSPACE></SOURCE>

<DIV8 N="§ 982.625" NODE="24:4.1.3.1.19.13.40.25" TYPE="SECTION">
<HEAD>§ 982.625   Homeownership option: General.</HEAD>
<P>(a) <I>Applicability.</I> The homeownership option is used to assist a family residing in a home purchased and owned by one or more members of the family. 
</P>
<P>(b) <I>Family status.</I> A family assisted under the homeownership option may be a newly admitted or existing participant in the program. 
</P>
<P>(c) <I>Forms of homeownership assistance.</I> (1) <I>Allowable forms of homeownership assistance.</I> A PHA may provide one of two forms of homeownership assistance for a family: 
</P>
<P>(i) Monthly homeownership assistance payments; or 
</P>
<P>(ii) A single downpayment assistance grant. 
</P>
<P>(2) <I>Prohibition against combining forms of homeownership assistance.</I> A family may only receive one form of homeownership assistance. Accordingly, a family that includes a person who was an adult member of a family that previously received either of the two forms of homeownership assistance may not receive the other form of homeownership assistance from any PHA. 
</P>
<P>(d) <I>PHA choice to offer homeownership options.</I> (1) The PHA may choose to offer either or both forms of homeownership assistance under this subpart, or choose not to offer either form of assistance. However, the PHA must offer either form of homeownership assistance if necessary as a reasonable accommodation for a person with disabilities in accordance with § 982.601(b)(3). 
</P>
<P>(2) It is the sole responsibility of the PHA to determine whether it is reasonable to implement a homeownership program as a reasonable accommodation. The PHA will determine what is reasonable based on the specific circumstances and individual needs of the person with a disability. The PHA may determine that it is not reasonable to offer homeownership assistance as a reasonable accommodation in cases where the PHA has otherwise opted not to implement a homeownership program. 
</P>
<P>(e) <I>Family choice.</I> (1) The family chooses whether to participate in the homeownership option if offered by the PHA. 
</P>
<P>(2) If the PHA offers both forms of homeownership assistance, the family chooses which form of homeownership assistance to receive.
</P>
<P>(f) <I>Live-in aide.</I> The PHA must approve a live-in aide if needed as a reasonable accommodation so that the program is readily accessible to and useable by persons with disabilities in accordance with part 8 of this title. (See § 982.316 concerning occupancy by a live-in aide.) 
</P>
<P>(g) <I>PHA capacity.</I> The PHA must have the capacity to operate a successful Section 8 homeownership program. The PHA has the required capacity if it satisfies either paragraph (g)(1), (g)(2), or (g)(3) of this section. 
</P>
<P>(1) The PHA establishes a minimum homeowner downpayment requirement of at least 3 percent of the purchase price for participation in its Section 8 homeownership program, and requires that at least one percent of the purchase price come from the family's personal resources; 
</P>
<P>(2) The PHA requires that financing for purchase of a home under its Section 8 homeownership program: 
</P>
<P>(i) Be provided, insured, or guaranteed by the state or Federal government; 
</P>
<P>(ii) Comply with secondary mortgage market underwriting requirements; or
</P>
<P>(iii) Comply with generally accepted private sector underwriting standards; or 
</P>
<P>(3) The PHA otherwise demonstrates in its Annual Plan that it has the capacity, or will acquire the capacity, to successfully operate a Section 8 homeownership program. 
</P>
<P>(h) <I>Recapture of homeownership assistance.</I> A PHA shall not impose or enforce any requirement for the recapture of voucher homeownership assistance on the sale or refinancing of a home purchased with assistance under the homeownership option. 
</P>
<P>(i) <I>Applicable requirements.</I> The following specify what regulatory provisions (under the heading “homeownership option”) are applicable to either or both forms of homeownership assistance (except as otherwise specifically provided): 
</P>
<P>(1) <I>Common provisions.</I> The following provisions apply to both forms of homeownership assistance: 
</P>
<P>(i) Section 982.625 (General); 
</P>
<P>(ii) Section 982.626 (Initial requirements); 
</P>
<P>(iii) Section 982.627 (Eligibility requirements for families); 
</P>
<P>(iv) Section 982.628 (Eligible units); 
</P>
<P>(v) Section 982.629 (Additional PHA requirements for family search and purchase); 
</P>
<P>(vi) Section 982.630 (Homeownership counseling); 
</P>
<P>(vii) Section 982.631 (Home inspections, contract of sale, and PHA disapproval of seller); 
</P>
<P>(viii) Section 982.632 (Financing purchase of home; affordability of purchase); 
</P>
<P>(ix) Section 982.636 (Portability); 
</P>
<P>(x) Section 982.638 (Denial or termination of assistance for family); and 
</P>
<P>(xi) Section 982.641 (Applicability of other requirements). 
</P>
<P>(2) <I>Monthly homeownership assistance payments.</I> The following provisions only apply to homeownership assistance in the form of monthly homeownership assistance payments: 
</P>
<P>(i) Section 982.633 (Continued assistance requirements; family obligations); 
</P>
<P>(ii) Section 982.634 (Maximum term of homeownership assistance); 
</P>
<P>(iii) Section 982.635 (Amount and distribution of monthly homeownership assistance payment); 
</P>
<P>(iv) Section 982.637 (Move with continued tenant-based assistance); and 
</P>
<P>(v) Section 982.639 (Administrative fees). 
</P>
<P>(3) <I>Downpayment assistance grant.</I> The following provision only applies to homeownership assistance in the form of a downpayment assistance grant: Section 982.643 (Downpayment assistance grants).
</P>
<CITA TYPE="N">[65 FR 55163, Sept. 12, 2000, as amended at 67 FR 64493, Oct. 18, 2002; 80 FR 8247, Feb. 17, 2015; 89 FR 38304, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 982.626" NODE="24:4.1.3.1.19.13.40.26" TYPE="SECTION">
<HEAD>§ 982.626   Homeownership option: Initial requirements.</HEAD>
<P>(a) <I>List of initial requirements.</I> Before commencing homeownership assistance for a family, the PHA must determine that all of the following initial requirements have been satisfied: 
</P>
<P>(1) The family is qualified to receive homeownership assistance (see § 982.627); 
</P>
<P>(2) The unit is eligible (see § 982.628); and 
</P>
<P>(3) The family has satisfactorily completed the PHA program of required pre-assistance homeownership counseling (see § 982.630). 
</P>
<P>(b) <I>Additional PHA requirements.</I> Unless otherwise provided in this part, the PHA may limit homeownership assistance to families or purposes defined by the PHA, and may prescribe additional requirements for commencement of homeownership assistance for a family. Any such limits or additional requirements must be described in the PHA Administrative Plan. 
</P>
<P>(c) <I>Environmental requirements.</I> The PHA is responsible for complying with the authorities listed in § 58.6 of this title requiring the purchaser to obtain and maintain flood insurance for units in special flood hazard areas, prohibiting assistance for acquiring units in the coastal barrier resources system, and requiring notification to the purchaser of units in airport runway clear zones and airfield clear zones. In the case of units not yet under construction at the time the family enters into the contract for sale, the additional environmental review requirements referenced in § 982.628(e) of this part also apply, and the PHA shall submit all relevant environmental information to the responsible entity or to HUD to assist in completion of those requirements.
</P>
<CITA TYPE="N">[63 FR 23865, Apr. 30, 1998, as amended at 72 FR 59938, Oct. 22, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 982.627" NODE="24:4.1.3.1.19.13.40.27" TYPE="SECTION">
<HEAD>§ 982.627   Homeownership option: Eligibility requirements for families.</HEAD>
<P>(a) <I>Determination whether family is qualified.</I> The PHA may not provide homeownership assistance for a family unless the PHA determines that the family satisfies all of the following initial requirements at commencement of homeownership assistance for the family: 
</P>
<P>(1) The family has been admitted to the Section 8 Housing Choice Voucher program, in accordance with subpart E of this part. 
</P>
<P>(2) The family satisfies any first-time homeowner requirements (described in paragraph (b) of this section). 
</P>
<P>(3) The family satisfies the minimum income requirement (described in paragraph (c) of this section). 
</P>
<P>(4) The family satisfies the employment requirements (described in paragraph (d) of this section). 
</P>
<P>(5) The family has not defaulted on a mortgage securing debt to purchase a home under the homeownership option (see paragraph (e) of this section). 
</P>
<P>(6) Except for cooperative members who have acquired cooperative membership shares prior to commencement of homeownership assistance, no family member has a present ownership interest in a residence at the commencement of homeownership assistance for the purchase of any home. 
</P>
<P>(7) Except for cooperative members who have acquired cooperative membership shares prior to the commencement of homeownership assistance, the family has entered a contract of sale in accordance with § 982.631(c). 
</P>
<P>(8) The family also satisfies any other initial requirements established by the PHA (see § 982.626(b)). Any such additional requirements must be described in the PHA Administrative Plan. 
</P>
<P>(b) <I>First-time homeowner requirements.</I> At commencement of homeownership assistance for the family, the family must be any of the following: 
</P>
<P>(1) A first-time homeowner (defined at § 982.4); 
</P>
<P>(2) A cooperative member (defined at § 982.4); or 
</P>
<P>(3) A family of which a family member is a person with disabilities, and use of the homeownership option is needed as a reasonable accommodation so that the program is readily accessible to and usable by such person, in accordance with part 8 of this title. 
</P>
<P>(c) <I>Minimum income requirements.</I> (1) At commencement of monthly homeownership assistance payments for the family, or at the time of a downpayment assistance grant for the family, the family must demonstrate that the annual income, as determined by the PHA in accordance with § 5.609 of this title, of the adult family members who will own the home at commencement of homeownership assistance is not less than: 
</P>
<P>(i) In the case of a disabled family (as defined in § 5.403(b) of this title), the monthly Federal Supplemental Security Income (SSI) benefit for an individual living alone (or paying his or her share of food and housing costs) multiplied by twelve; or 
</P>
<P>(ii) In the case of other families, the Federal minimum wage multiplied by 2,000 hours. 
</P>
<P>(2)(i) Except in the case of an elderly family or a disabled family (see the definitions of these terms at § 5.403(b) of this title), the PHA shall not count any welfare assistance received by the family in determining annual income under this section. 
</P>
<P>(ii) The disregard of welfare assistance income under paragraph (c)(2)(i) of this section only affects the determination of minimum annual income used to determine if a family initially qualifies for commencement of homeownership assistance in accordance with this section, but does not affect: 
</P>
<P>(A) The determination of income-eligibility for admission to the voucher program; 
</P>
<P>(B) Calculation of the amount of the family's total tenant payment (gross family contribution); or 
</P>
<P>(C) Calculation of the amount of homeownership assistance payments on behalf of the family. 
</P>
<P>(iii) In the case of an elderly or disabled family, the PHA shall include welfare assistance for the adult family members who will own the home in determining if the family meets the minimum income requirement.
</P>
<P>(3) A PHA may establish a minimum income standard that is higher than those described in paragraph (c)(1) of this section for either or both types of families. However, a family that meets the applicable HUD minimum income requirement described in paragraph (c)(1) of this section, but not the higher standard established by the PHA shall be considered to satisfy the minimum income requirement if:
</P>
<P>(i) The family demonstrates that it has been pre-qualified or pre-approved for financing;
</P>
<P>(ii) The pre-qualified or pre-approved financing meets any PHA established requirements under § 982.632 for financing the purchase of the home (including qualifications of lenders and terms of financing); and
</P>
<P>(iii) The pre-qualified or pre-approved financing amount is sufficient to purchase housing that meets HQS in the PHA's jurisdiction.
</P>
<P>(d) <I>Employment requirements.</I> (1) Except as provided in paragraph (d)(2) of this section, the family must demonstrate that one or more adult members of the family who will own the home at commencement of homeownership assistance: 
</P>
<P>(i) Is currently employed on a full-time basis (the term “full-time employment” means not less than an average of 30 hours per week); and
</P>
<P>(ii) Has been continuously so employed during the year before commencement of homeownership assistance for the family. 
</P>
<P>(2) The PHA shall have discretion to determine whether and to what extent interruptions are considered to break continuity of employment during the year. The PHA may count successive employment during the year. The PHA may count self-employment in a business. 
</P>
<P>(3) The employment requirement does not apply to an elderly family or a disabled family (see the definitions of these terms at § 5.403(b) of this title). Furthermore, if a family, other than an elderly family or a disabled family, includes a person with disabilities, the PHA shall grant an exemption from the employment requirement if the PHA determines that an exemption is needed as a reasonable accommodation so that the program is readily accessible to and usable by persons with disabilities in accordance with part 8 of this title. 
</P>
<P>(4) A PHA may not establish an employment requirement in addition to the employment standard established by this paragraph. 
</P>
<P>(e) <I>Prohibition against assistance to family that has defaulted.</I> The PHA shall not commence homeownership assistance for a family that includes an individual who was an adult member of a family at the time when such family received homeownership assistance and defaulted on a mortgage securing debt incurred to purchase the home.
</P>
<CITA TYPE="N">[65 FR 55163, Sept. 12, 2000, as amended at 67 FR 64493, Oct. 18, 2002; 80 FR 8247, Feb. 17, 2015]








</CITA>
</DIV8>


<DIV8 N="§ 982.628" NODE="24:4.1.3.1.19.13.40.28" TYPE="SECTION">
<HEAD>§ 982.628   Homeownership option: Eligible units.</HEAD>
<P>(a) <I>Initial requirements applicable to the unit.</I> The PHA must determine that the unit satisfies all of the following requirements: 
</P>
<P>(1) The unit is eligible. (See § 982.352. Paragraphs (a)(6) and (b) of § 982.352 do not apply.) 
</P>
<P>(2) The unit is either a one-unit property (including a manufactured home) or a single dwelling unit in a cooperative or condominium.
</P>
<P>(3) The unit has been inspected by a PHA inspector and by an independent inspector designated by the family (see § 982.631). 


</P>
<P>(4) The unit satisfies the HQS (<I>see</I> 24 CFR 5.703 and § 982.631).

 
</P>
<P>(b) <I>Purchase of home where family will not own fee title to the real property.</I> Homeownership assistance may be provided for the purchase of a home where the family will not own fee title to the real property on which the home is located, but only if:
</P>
<P>(1) The home is located on a permanent foundation; and
</P>
<P>(2) The family has the right to occupy the home site for at least forty years.
</P>
<P>(c) <I>PHA disapproval of seller.</I> The PHA may not commence homeownership assistance for occupancy of a home if the PHA has been informed (by HUD or otherwise) that the seller of the home is debarred, suspended, or subject to a limited denial of participation under 2 CFR part 2424. 
</P>
<P>(d) <I>PHA-owned units.</I> A family may purchase a PHA-owned unit, as defined in § 982.4, with homeownership assistance only if the following conditions are satisfied:










</P>
<P>(1) The PHA must inform the family, both orally and in writing, that the family has the right to purchase any eligible unit and a PHA-owned unit is freely selected by the family without PHA pressure or steering; 
</P>
<P>(2) The unit is not ineligible housing; 



 


</P>
<P>(3) The PHA must obtain the services of an independent entity, as defined in § 982.4 and in accordance with § 982.352(b)(1)(v)(B), to perform the following PHA functions:
</P>
<P>(i) Inspection of the unit for compliance with the HQS, in accordance with § 982.631(a); 
</P>
<P>(ii) Review of the independent inspection report, in accordance with § 982.631(b)(4); 
</P>
<P>(iii) Review of the contract of sale, in accordance with § 982.631(c); and 
</P>
<P>(iv) Determination of the reasonableness of the sales price and any PHA provided financing, in accordance with § 982.632 and other supplementary guidance established by HUD. 
</P>
<P>(e) <I>Units not yet under construction.</I> Families may enter into contracts of sale for units not yet under construction at the time the family enters into the contract for sale. However, the PHA shall not commence homeownership assistance for the family for that unit, unless and until:
</P>
<P>(1) Either:
</P>
<P>(i) The responsible entity completed the environmental review procedures required by 24 CFR part 58, and HUD approved the environmental certification and request for release of funds prior to commencement of construction; or
</P>
<P>(ii) HUD performed an environmental review under 24 CFR part 50 and notified the PHA in writing of environmental approval of the site prior to commencement of construction;
</P>
<P>(2) Construction of the unit has been completed; and
</P>
<P>(3) The unit has passed the required HQS inspection (see § 982.631(a)) and independent inspection (see § 982.631(b)).


</P>
<CITA TYPE="N">[65 FR 55163, Sept. 12, 2000, as amended at 67 FR 64494, Oct. 18, 2002; 67 FR 65865, Oct. 28, 2002; 67 FR 67522, Nov. 6, 2002; 72 FR 59938, Oct. 22, 2007; 72 FR 73496, Dec. 27, 2007; 88 FR 30504, May 11, 2023; 89 FR 38304, May 7, 2024]






</CITA>
</DIV8>


<DIV8 N="§ 982.629" NODE="24:4.1.3.1.19.13.40.29" TYPE="SECTION">
<HEAD>§ 982.629   Homeownership option: Additional PHA requirements for family search and purchase.</HEAD>
<P>(a) The PHA may establish the maximum time for a family to locate a home, and to purchase the home. 
</P>
<P>(b) The PHA may require periodic family reports on the family's progress in finding and purchasing a home. 
</P>
<P>(c) If the family is unable to purchase a home within the maximum time established by the PHA, the PHA may issue the family a voucher to lease a unit or place the family's name on the waiting list for a voucher. 










</P>
</DIV8>


<DIV8 N="§ 982.630" NODE="24:4.1.3.1.19.13.40.30" TYPE="SECTION">
<HEAD>§ 982.630   Homeownership option: Homeownership counseling.</HEAD>
<P>(a) <I>Pre-assistance counseling.</I> Before commencement of homeownership assistance for a family, the family must attend and satisfactorily complete the pre-assistance homeownership and housing counseling program required by the PHA (pre-assistance counseling). 
</P>
<P>(b) <I>Counseling topics.</I> Suggested topics for the PHA-required pre-assistance counseling program include: 
</P>
<P>(1) Home maintenance (including care of the grounds); 
</P>
<P>(2) Budgeting and money management; 
</P>
<P>(3) Credit counseling; 
</P>
<P>(4) How to negotiate the purchase price of a home; 
</P>
<P>(5) How to obtain homeownership financing and loan preapprovals, including a description of types of financing that may be available, and the pros and cons of different types of financing; 
</P>
<P>(6) How to find a home, including information about homeownership opportunities, schools, and transportation in the PHA jurisdiction; 
</P>
<P>(7) Advantages of purchasing a home in an area that does not have a high concentration of low-income families and how to locate homes in such areas; 
</P>
<P>(8) Information on fair housing, including fair housing lending and local fair housing enforcement agencies; and 
</P>
<P>(9) Information about the Real Estate Settlement Procedures Act (12 U.S.C. 2601 <I>et seq.</I>) (RESPA), state and Federal truth-in-lending laws, and how to identify and avoid loans with oppressive terms and conditions. 
</P>
<P>(c) <I>Local circumstances.</I> The PHA may adapt the subjects covered in pre-assistance counseling (as listed in paragraph (b) of this section) to local circumstances and the needs of individual families. 
</P>
<P>(d) <I>Additional counseling.</I> The PHA may also offer additional counseling after commencement of homeownership assistance (ongoing counseling). If the PHA offers a program of ongoing counseling for participants in the homeownership option, the PHA shall have discretion to determine whether the family is required to participate in the ongoing counseling. 

 
</P>
<P>(e) <I>HUD-certified housing counselor.</I> Any homeownership counseling provided to families in connection with this section must be conducted by a HUD certified housing counselor working for an agency approved to participate in HUD's Housing Counseling Program.
</P>
<CITA TYPE="N">[65 FR 55163, Sept. 12, 2000, as amended at 89 FR 38304, May 7, 2024]






</CITA>
</DIV8>


<DIV8 N="§ 982.631" NODE="24:4.1.3.1.19.13.40.31" TYPE="SECTION">
<HEAD>§ 982.631   Homeownership option: Home inspections, contract of sale, and PHA disapproval of seller.</HEAD>
<P>(a) HQS inspection by PHA. The PHA may not commence monthly homeownership assistance payments or provide a downpayment assistance grant for the family until the PHA has inspected the unit and has determined that the unit passes HQS.
</P>
<P>(b) <I>Independent inspection.</I> (1) The unit must also be inspected by an independent professional inspector selected by and paid by the family. 
</P>
<P>(2) The independent inspection must cover major building systems and components, including foundation and structure, housing interior and exterior, and the roofing, plumbing, electrical, and heating systems. The independent inspector must be qualified to report on property conditions, including major building systems and components. 
</P>
<P>(3) The PHA may not require the family to use an independent inspector selected by the PHA. The independent inspector may not be a PHA employee or contractor, or other person under control of the PHA. However, the PHA may establish standards for qualification of inspectors selected by families under the homeownership option. 
</P>
<P>(4) The independent inspector must provide a copy of the inspection report both to the family and to the PHA. The PHA may not commence monthly homeownership assistance payments, or provide a downpayment assistance grant for the family, until the PHA has reviewed the inspection report of the independent inspector. Even if the unit otherwise complies with the HQS (and may qualify for assistance under the PHA's tenant-based rental voucher program), the PHA shall have discretion to disapprove the unit for assistance under the homeownership option because of information in the inspection report. 
</P>
<P>(c) <I>Contract of sale.</I> (1) Before commencement of monthly homeownership assistance payments or receipt of a downpayment assistance grant, a member or members of the family must enter into a contract of sale with the seller of the unit to be acquired by the family. The family must give the PHA a copy of the contract of sale (see also § 982.627(a)(7)). 
</P>
<P>(2) The contract of sale must: 
</P>
<P>(i) Specify the price and other terms of sale by the seller to the purchaser. 
</P>
<P>(ii) Provide that the purchaser will arrange for a pre-purchase inspection of the dwelling unit by an independent inspector selected by the purchaser. 
</P>
<P>(iii) Provide that the purchaser is not obligated to purchase the unit unless the inspection is satisfactory to the purchaser. 
</P>
<P>(iv) Provide that the purchaser is not obligated to pay for any necessary repairs. 
</P>
<P>(3) In addition to the requirements contained in paragraph (c)(2) of this section, a contract for the sale of units not yet under construction at the time the family is to enter into the contract for sale must also provide that:
</P>
<P>(i) The purchaser is not obligated to purchase the unit unless an environmental review has been performed and the site has received environmental approval prior to commencement of construction in accordance with 24 CFR 982.628.
</P>
<P>(ii) The construction will not commence until the environmental review has been completed and the seller has received written notice from the PHA that environmental approval has been obtained. Conduct of the environmental review may not necessarily result in environmental approval, and environmental approval may be conditioned on the contracting parties' agreement to modifications to the unit design or to mitigation actions.
</P>
<P>(iii) Commencement of construction in violation of paragraph (c)(3)(ii) of this section voids the purchase contract and renders homeownership assistance under 24 CFR part 982 unavailable for purchase of the unit.
</P>
<P>(d) <I>PHA disapproval of seller.</I> In its administrative discretion, the PHA may deny approval of a seller for any reason provided for disapproval of an owner in § 982.306(c).
</P>
<CITA TYPE="N">[65 FR 55163, Sept. 12, 2000, as amended at 67 FR 64494, Oct. 18, 2002; 72 FR 59938, Oct. 22, 2007; 72 FR 73497, Dec. 27, 2007; 80 FR 8247, Feb. 17, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 982.632" NODE="24:4.1.3.1.19.13.40.32" TYPE="SECTION">
<HEAD>§ 982.632   Homeownership option: Financing purchase of home; affordability of purchase.</HEAD>
<P>(a) The PHA may establish requirements for financing purchase of a home to be assisted under the homeownership option. Such PHA requirements may include requirements concerning qualification of lenders (for example, prohibition of seller financing or case-by-case approval of seller financing), or concerning terms of financing (for example, a prohibition of balloon payment mortgages, establishment of a minimum homeowner equity requirement from personal resources, or provisions required to protect borrowers against high cost loans or predatory loans). A PHA may not require that families acquire financing from one or more specified lenders, thereby restricting the family's ability to secure favorable financing terms. 
</P>
<P>(b) If the purchase of the home is financed with FHA mortgage insurance, such financing is subject to FHA mortgage insurance requirements. 
</P>
<P>(c) The PHA may establish requirements or other restrictions concerning debt secured by the home. 
</P>
<P>(d) The PHA may review lender qualifications and the loan terms before authorizing homeownership assistance. The PHA may disapprove proposed financing, refinancing or other debt if the PHA determines that the debt is unaffordable, or if the PHA determines that the lender or the loan terms do not meet PHA qualifications. In making this determination, the PHA may take into account other family expenses, such as child care, unreimbursed medical expenses, homeownership expenses, and other family expenses as determined by the PHA. 
</P>
<P>(e) All PHA financing or affordability requirements must be described in the PHA Administrative Plan. 
</P>
<CITA TYPE="N">[65 FR 55163, Sept. 12, 2000, as amended at 66 FR 33613, June 22, 2001]


</CITA>
</DIV8>


<DIV8 N="§ 982.633" NODE="24:4.1.3.1.19.13.40.33" TYPE="SECTION">
<HEAD>§ 982.633   Homeownership option: Continued assistance requirements; Family obligations.</HEAD>
<P>(a) <I>Occupancy of home.</I> Homeownership assistance may only be paid while the family is residing in the home. If the family moves out of the home, the PHA may not continue homeownership assistance after the month when the family moves out. The family or lender is not required to refund to the PHA the homeownership assistance for the month when the family moves out. 
</P>
<P>(b) <I>Family obligations.</I> The family must comply with the following obligations. 
</P>
<P>(1) <I>Ongoing counseling.</I> To the extent required by the PHA, the family must attend and complete ongoing homeownership and housing counseling. 
</P>
<P>(2) <I>Compliance with mortgage.</I> The family must comply with the terms of any mortgage securing debt incurred to purchase the home (or any refinancing of such debt). 
</P>
<P>(3) <I>Prohibition against conveyance or transfer of home.</I> (i) So long as the family is receiving homeownership assistance, use and occupancy of the home is subject to § 982.551(h) and (i). 
</P>
<P>(ii) The family may grant a mortgage on the home for debt incurred to finance purchase of the home or any refinancing of such debt. 
</P>
<P>(iii) Upon death of a family member who holds, in whole or in part, title to the home or ownership of cooperative membership shares for the home, homeownership assistance may continue pending settlement of the decedent's estate, notwithstanding transfer of title by operation of law to the decedent's executor or legal representative, so long as the home is solely occupied by remaining family members in accordance with § 982.551(h). 
</P>
<P>(4) <I>Supplying required information.</I> (i) The family must supply required information to the PHA in accordance with § 982.551(b). 
</P>
<P>(ii) In addition to other required information, the family must supply any information as required by the PHA or HUD concerning: 
</P>
<P>(A) Any mortgage or other debt incurred to purchase the home, and any refinancing of such debt (including information needed to determine whether the family has defaulted on the debt, and the nature of any such default), and information on any satisfaction or payment of the mortgage debt; 
</P>
<P>(B) Any sale or other transfer of any interest in the home; or
</P>
<P>(C) The family's homeownership expenses. 
</P>
<P>(5) <I>Notice of move-out.</I> The family must notify the PHA before the family moves out of the home. 
</P>
<P>(6) <I>Notice of mortgage default.</I> The family must notify the PHA if the family defaults on a mortgage securing any debt incurred to purchase the home. 
</P>
<P>(7) <I>Prohibition on ownership interest on second residence.</I> During the time the family receives homeownership assistance under this subpart, no family member may have any ownership interest in any other residential property. 
</P>
<P>(8) <I>Additional PHA requirements.</I> The PHA may establish additional requirements for continuation of homeownership assistance for the family (for example, a requirement for post-purchase homeownership counseling or for periodic unit inspections while the family is receiving homeownership assistance). The family must comply with any such requirements. 
</P>
<P>(9) <I>Other family obligations.</I> The family must comply with the obligations of a participant family described in § 982.551. However, the following provisions do not apply to assistance under the homeownership option: § 982.551(c), (d), (e), (f), (g) and (j). 
</P>
<P>(c) <I>Statement of homeowner obligations.</I> Before commencement of homeownership assistance, the family must execute a statement of family obligations in the form prescribed by HUD. In the statement, the family agrees to comply with all family obligations under the homeownership option. 


</P>
</DIV8>


<DIV8 N="§ 982.634" NODE="24:4.1.3.1.19.13.40.34" TYPE="SECTION">
<HEAD>§ 982.634   Homeownership option: Maximum term of homeownership assistance.</HEAD>
<P>(a) <I>Maximum term of assistance.</I> Except in the case of a family that qualifies as an elderly or disabled family (see paragraph (c) of this section), the family members described in paragraph (b) of this section shall not receive homeownership assistance for more than: 
</P>
<P>(1) Fifteen years, if the initial mortgage incurred to finance purchase of the home has a term of 20 years or longer; or 
</P>
<P>(2) Ten years, in all other cases. 
</P>
<P>(b) <I>Applicability of maximum term.</I> The maximum term described in paragraph (a) of this section applies to any member of the family who: 
</P>
<P>(1) Has an ownership interest in the unit during the time that homeownership payments are made; or 
</P>
<P>(2) Is the spouse of any member of the household who has an ownership interest in the unit during the time homeownership payments are made. 
</P>
<P>(c) <I>Exception for elderly and disabled families.</I> (1) As noted in paragraph (a) of this section, the maximum term of assistance does not apply to elderly and disabled families. 
</P>
<P>(2) In the case of an elderly family, the exception only applies if the family qualifies as an elderly family at the start of homeownership assistance. In the case of a disabled family, the exception applies if at any time during receipt of homeownership assistance the family qualifies as a disabled family. 
</P>
<P>(3) If, during the course of homeownership assistance, the family ceases to qualify as a disabled or elderly family, the maximum term becomes applicable from the date homeownership assistance commenced. However, such a family must be provided at least 6 months of homeownership assistance after the maximum term becomes applicable (provided the family is otherwise eligible to receive homeownership assistance in accordance with this part). 
</P>
<P>(d) <I>Assistance for different homes or PHAs.</I> If the family has received such assistance for different homes, or from different PHAs, the total of such assistance terms is subject to the maximum term described in paragraph (a) of this section. 




</P>
</DIV8>


<DIV8 N="§ 982.635" NODE="24:4.1.3.1.19.13.40.35" TYPE="SECTION">
<HEAD>§ 982.635   Homeownership option: Amount and distribution of monthly homeownership assistance payment.</HEAD>
<P>(a) <I>Amount of monthly homeownership assistance payment.</I> While the family is residing in the home, the PHA shall pay a monthly homeownership assistance payment on behalf of the family that is equal to the <I>lower of:</I> 
</P>
<P>(1) The payment standard minus the total tenant payment; or
</P>
<P>(2) The family's monthly homeownership expenses minus the total tenant payment. 
</P>
<P>(b) <I>Payment standard for family.</I> (1) The payment standard for a family is the lower of: 
</P>
<P>(i) The payment standard for the family unit size; or
</P>
<P>(ii) The payment standard for the size of the home. 
</P>
<P>(2) If the home is located in an exception payment standard area, the PHA must use the appropriate payment standard for the exception payment standard area. 
</P>
<P>(3) The payment standard amount may not be lower than what the payment standard amount was at commencement of homeownership assistance.


</P>
<P>(4) The PHA must use the same payment standard schedule, payment standard amounts, and subsidy standards pursuant to §§ 982.402 and 982.503 for the homeownership option as for the rental voucher program. 
</P>
<P>(c) <I>Determination of homeownership expenses.</I> (1) The PHA shall adopt policies for determining the amount of homeownership expenses to be allowed by the PHA in accordance with HUD requirements. 
</P>
<P>(2) Homeownership expenses for a homeowner (other than a cooperative member) may only include amounts allowed by the PHA to cover: 
</P>
<P>(i) Principal and interest on initial mortgage debt, any refinancing of such debt, and any mortgage insurance premium incurred to finance purchase of the home; 
</P>
<P>(ii) Real estate taxes and public assessments on the home; 
</P>
<P>(iii) Home insurance; 
</P>
<P>(iv) The PHA allowance for maintenance expenses; 
</P>
<P>(v) The PHA allowance for costs of major repairs and replacements; 
</P>
<P>(vi) The PHA utility allowance for the home;
</P>
<P>(vii) Principal and interest on mortgage debt incurred to finance costs for major repairs, replacements or improvements for the home. If a member of the family is a person with disabilities, such debt may include debt incurred by the family to finance costs needed to make the home accessible for such person, if the PHA determines that allowance of such costs as homeownership expenses is needed as a reasonable accommodation so that the homeownership option is readily accessible to and usable by such person, in accordance with parts 8 and 100 of this title; and
</P>
<P>(viii) Land lease payments (where a family does not own fee title to the real property on which the home is located; see § 982.628(b)).
</P>
<P>(3) Homeownership expenses for a cooperative member may only include amounts allowed by the PHA to cover: 
</P>
<P>(i) The cooperative charge under the cooperative occupancy agreement including payment for real estate taxes and public assessments on the home; 
</P>
<P>(ii) Principal and interest on initial debt incurred to finance purchase of cooperative membership shares and any refinancing of such debt; 
</P>
<P>(iii) Home insurance; 
</P>
<P>(iv) The PHA allowance for maintenance expenses; 
</P>
<P>(v) The PHA allowance for costs of major repairs and replacements; 
</P>
<P>(vi) The PHA utility allowance for the home; and
</P>
<P>(vii) Principal and interest on debt incurred to finance major repairs, replacements or improvements for the home. If a member of the family is a person with disabilities, such debt may include debt incurred by the family to finance costs needed to make the home accessible for such person, if the PHA determines that allowance of such costs as homeownership expenses is needed as a reasonable accommodation so that the homeownership option is readily accessible to and usable by such person, in accordance with parts 8 and 100 of this title. 
</P>
<P>(4) If the home is a cooperative or condominium unit, homeownership expenses may also include cooperative or condominium operating charges or maintenance fees assessed by the condominium or cooperative homeowner association. 
</P>
<P>(d) <I>Payment to lender or family.</I> The PHA must pay homeownership assistance payments either: 
</P>
<P>(1) Directly to the family or; 
</P>
<P>(2) At the discretion of the PHA, to a lender on behalf of the family. If the assistance payment exceeds the amount due to the lender, the PHA must pay the excess directly to the family. 
</P>
<P>(e) <I>Automatic termination of homeownership assistance.</I> Homeownership assistance for a family terminates automatically 180 calendar days after the last homeownership assistance payment on behalf of the family. However, a PHA has the discretion to grant relief from this requirement in those cases where automatic termination would result in extreme hardship for the family. 
</P>
<CITA TYPE="N">[65 FR 55163, Sept. 12, 2000, as amended at 67 FR 64494, Oct. 18, 2002; 89 FR 38304, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 982.636" NODE="24:4.1.3.1.19.13.40.36" TYPE="SECTION">
<HEAD>§ 982.636   Homeownership option: Portability.</HEAD>
<P>(a) <I>General.</I> A family may qualify to move outside the initial PHA jurisdiction with continued homeownership assistance under the voucher program in accordance with this section. 
</P>
<P>(b) <I>Portability of homeownership assistance.</I> Subject to § 982.353(b) and (c), § 982.552, and § 982.553, a family determined eligible for homeownership assistance by the initial PHA may purchase a unit outside of the initial PHA's jurisdiction, if the receiving PHA is administering a voucher homeownership program and is accepting new homeownership families. 
</P>
<P>(c) <I>Applicability of Housing Choice Voucher program portability procedures.</I> In general, the portability procedures described in §§ 982.353 and 982.355 apply to the homeownership option and the administrative responsibilities of the initial and receiving PHA are not altered except that some administrative functions (e.g., issuance of a voucher or execution of a tenancy addendum) do not apply to the homeownership option. 
</P>
<P>(d) <I>Family and PHA responsibilities.</I> The family must attend the briefing and counseling sessions required by the receiving PHA. The receiving PHA will determine whether the financing for, and the physical condition of the unit, are acceptable. The receiving PHA must promptly notify the initial PHA if the family has purchased an eligible unit under the program, or if the family is unable to purchase a home within the maximum time established by the PHA. 
</P>
<P>(e) <I>Continued assistance under § 982.637.</I> Such continued assistance under portability procedures is subject to § 982.637. 
</P>
<CITA TYPE="N">[65 FR 55163, Sept. 12, 2000, as amended at 80 FR 8247, Feb. 17, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 982.637" NODE="24:4.1.3.1.19.13.40.37" TYPE="SECTION">
<HEAD>§ 982.637   Homeownership option: Move with continued tenant-based assistance.</HEAD>
<P>(a) <I>Move to new unit.</I> (1) A family receiving homeownership assistance may move to a new unit with continued tenant-based assistance in accordance with this section. The family may move either with voucher rental assistance (in accordance with rental assistance program requirements) or with voucher homeownership assistance (in accordance with homeownership option program requirements). 
</P>
<P>(2) The PHA may not commence continued tenant-based assistance for occupancy of the new unit so long as any family member owns any title or other interest in the prior home. However, when the family or a member of the family is or has been the victim of domestic violence, dating violence, sexual assault, or stalking, as provided in 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking), and the move is needed to protect the health or safety of the family or family member (or any family member has been the victim of a sexual assault that occurred on the premises during the 90-calendar-day period preceding the family's request to move), such family or family member may be assisted with continued tenant-based assistance even if such family or family member owns any title or other interest in the prior home.
</P>
<P>(3) The PHA may establish policies that prohibit more than one move by the family during any one-year period. However, these policies do not apply when the family or a member of the family is or has been the victim of domestic violence, dating violence, sexual assault, or stalking, as provided in 24 CFR part 5, subpart L, and the move is needed to protect the health or safety of the family or family member, or any family member has been the victim of a sexual assault that occurred on the premises during the 90-calendar-day period preceding the family's request to move.
</P>
<P>(b) <I>Requirements for continuation of homeownership assistance.</I> The PHA must determine that all initial requirements listed in § 982.626 (including the environmental requirements with respect to a unit not yet under construction) have been satisfied if a family that has received homeownership assistance wants to move to such a unit with continued homeownership assistance. However, the following requirements do not apply:
</P>
<P>(1) The requirement for pre-assistance counseling (§ 982.630) is not applicable. However, the PHA may require that the family complete additional counseling (before or after moving to a new unit with continued assistance under the homeownership option). 
</P>
<P>(2) The requirement that a family must be a first-time homeowner (§ 982.627) is not applicable. 
</P>
<P>(c) <I>When PHA may deny permission to move with continued assistance.</I> The PHA may deny permission to move to a new unit with continued voucher assistance as follows: 
</P>
<P>(1) <I>Lack of funding to provide continued assistance.</I> The PHA may deny permission to move with continued rental or homeownership assistance if the PHA determines that it does not have sufficient funding to provide continued assistance. The PHA must provide written notification to the local HUD Office within 10 business days of determining it is necessary to deny moves based on insufficient funding.
</P>
<P>(2) <I>Termination or denial of assistance under § 982.638.</I> At any time, the PHA may deny permission to move with continued rental or homeownership assistance in accordance with § 982.638. 
</P>
<CITA TYPE="N">[63 FR 23865, Apr. 30, 1998, as amended at 72 FR 59938, Oct. 22, 2007; 80 FR 50575, Aug. 20, 2015; 81 FR 80817, Nov. 16, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 982.638" NODE="24:4.1.3.1.19.13.40.38" TYPE="SECTION">
<HEAD>§ 982.638   Homeownership option: Denial or termination of assistance for family.</HEAD>
<P>(a) <I>General.</I> The PHA shall terminate homeownership assistance for the family, and shall deny voucher rental assistance for the family, in accordance with this section. 
</P>
<P>(b) <I>Denial or termination of assistance under basic voucher program.</I> At any time, the PHA may deny or terminate homeownership assistance in accordance with § 982.552 (Grounds for denial or termination of assistance) or § 982.553 (Crime by family members). 
</P>
<P>(c) <I>Failure to comply with family obligations.</I> The PHA may deny or terminate assistance for violation of participant obligations described in § 982.551 or § 982.633. 
</P>
<P>(d) <I>Mortgage default.</I> The PHA must terminate voucher homeownership assistance for any member of family receiving homeownership assistance that is dispossessed from the home pursuant to a judgment or order of foreclosure on any mortgage (whether FHA-insured or non-FHA) securing debt incurred to purchase the home, or any refinancing of such debt. The PHA, in its discretion, may permit the family to move to a new unit with continued voucher rental assistance. However, the PHA must deny such permission, if: 
</P>
<P>(1) The family defaulted on an FHA-insured mortgage; and
</P>
<P>(2) The family fails to demonstrate that: 
</P>
<P>(i) The family has conveyed, or will convey, title to the home, as required by HUD, to HUD or HUD's designee; and
</P>
<P>(ii) The family has moved, or will move, from the home within the period established or approved by HUD.
</P>
<CITA TYPE="N">[65 FR 55163, Sept. 12, 2000, as amended at 66 FR 33613, June 22, 2001]


</CITA>
</DIV8>


<DIV8 N="§ 982.639" NODE="24:4.1.3.1.19.13.40.39" TYPE="SECTION">
<HEAD>§ 982.639   Homeownership option: Administrative fees.</HEAD>
<P>The ongoing administrative fee described in § 982.152(b) is paid to the PHA for each month that homeownership assistance is paid by the PHA on behalf of the family. 


</P>
</DIV8>


<DIV8 N="§ 982.641" NODE="24:4.1.3.1.19.13.40.40" TYPE="SECTION">
<HEAD>§ 982.641   Homeownership option: Applicability of other requirements.</HEAD>
<P>(a) <I>General.</I> The following types of provisions (located in other subparts of this part) do not apply to assistance under the homeownership option: 
</P>
<P>(1) Any provisions concerning the Section 8 owner or the HAP contract between the PHA and owner; 
</P>
<P>(2) Any provisions concerning the assisted tenancy or the lease between the family and the owner; 
</P>
<P>(3) Any provisions concerning PHA approval of the assisted tenancy; 
</P>
<P>(4) Any provisions concerning rent to owner or reasonable rent; and 
</P>
<P>(5) Any provisions concerning the issuance or term of voucher. 
</P>
<P>(b) <I>Subpart G requirements.</I> The following provisions of subpart G of this part do not apply to assistance under the homeownership option: 
</P>
<P>(1) Section 982.302 (Issuance of voucher; Requesting PHA approval of assisted tenancy); 
</P>
<P>(2) Section 982.303 (Term of voucher); 
</P>
<P>(3) Section 982.305 (PHA approval of assisted tenancy); 
</P>
<P>(4) Section 982.306 (PHA disapproval of owner) (except that a PHA may disapprove a seller for any reason described in paragraph (c), see § 982.631(d)).
</P>
<P>(5) Section 982.307 (Tenant screening); 
</P>
<P>(6) Section 982.308 (Lease and tenancy); 
</P>
<P>(7) Section 982.309 (Term of assisted tenancy); 
</P>
<P>(8) Section 982.310 (Owner termination of tenancy); 
</P>
<P>(9) Section 982.311 (When assistance is paid) (except that § 982.311(c)(3) is applicable to assistance under the homeownership option); 
</P>
<P>(10) Section 982.313 (Security deposit: Amounts owed by tenant); and
</P>
<P>(11) Section 982.354 (Move with continued tenant-based assistance).
</P>
<P>(c) <I>Subpart H requirements.</I> The following provisions of subpart H of this part do not apply to assistance under the homeownership option: 
</P>
<P>(1) Section 982.352(a)(6) (Prohibition of owner-occupied assisted unit); 
</P>
<P>(2) Section 982.352(b) (PHA-owned housing); and 
</P>
<P>(3) Those provisions of § 982.353 (Where family can lease a unit with tenant-based assistance) and § 982.355 (Portability: Administration by receiving PHA) that are inapplicable per § 982.636; 
</P>
<P>(d) <I>Subpart I requirements.</I> The following provisions of subpart I of this part do not apply to assistance under the homeownership option: 
</P>
<P>(1) Section 982.403 (Terminating HAP contract when unit is too small); 
</P>
<P>(2) Section 982.404 (Maintenance: Owner and family responsibility; PHA remedies);  
</P>
<P>(3) Section 982.405 (PHA unit inspection); and
</P>
<P>(4) Section 982.406 (Use of alternative inspections).


</P>
<P>(e) <I>Subpart J requirements.</I> The requirements of subpart J of this part (Housing Assistance Payments Contract and Owner Responsibility) (§§ 982.451-456) do not apply to assistance under the homeownership option. 
</P>
<P>(f) <I>Subpart K requirements.</I> Except for those sections listed below, the requirements of subpart K of this part (Rent and Housing Assistance Payment) (§§ 982.501-521) do not apply to assistance under the homeownership option: 
</P>
<P>(1) Section 982.503 (Voucher tenancy: Payment standard amount and schedule); 
</P>
<P>(2) Section 982.516 (Family income and composition: Regular and interim reexaminations); and 
</P>
<P>(3) Section 982.517 (Utility allowance schedule), except that § 982.517(d) does not apply because the utility allowance is always based on the size of the home bought by the family with homeownership assistance.








</P>
<P>(g) <I>Subpart L requirements.</I> The following provisions of subpart L of this part do not apply to assistance under the homeownership option: 
</P>
<P>(1) Section 982.551(c) (HQS breach caused by family); 
</P>
<P>(2) Section 982.551(d) (Allowing PHA inspection); 
</P>
<P>(3) Section 982.551(e) (Violation of lease); 
</P>
<P>(4) Section 982.551(g) (Owner eviction notice); and
</P>
<P>(5) Section 982.551(j) (Interest in unit). 
</P>
<P>(h) <I>Subpart M requirements.</I> The following provisions of subpart M of this part do not apply to assistance under the homeownership option: 
</P>
<P>(1) Sections 982.602-982.619; and
</P>
<P>(2) Sections 982.622-982.624.
</P>
<CITA TYPE="N">[65 FR 55163, Sept. 12, 2000, as amended at 67 FR 64494, Oct. 18, 2002; 80 FR 8247, Feb. 17, 2015; 80 FR 50575, Aug. 20, 2015; 89 FR 38304, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 982.642" NODE="24:4.1.3.1.19.13.40.41" TYPE="SECTION">
<HEAD>§ 982.642   Homeownership option: Pilot program for homeownership assistance for disabled families.</HEAD>
<P>(a) <I>General.</I> This section implements the pilot program authorized by section 302 of the American Homeownership and Economic Opportunity Act of 2000. Under the pilot program, a PHA may provide homeownership assistance to a disabled family residing in a home purchased and owned by one or more members of the family. A PHA that administers tenant-based assistance has the choice whether to offer homeownership assistance under the pilot program (whether or not the PHA has also decided to offer the homeownership option).
</P>
<P>(b) <I>Applicability of homeownership option requirements.</I> Except as provided in this section, all of the regulations applicable to the homeownership option (as described in §§ 982.625 through 982.641) are also applicable to the pilot program. 
</P>
<P>(c) <I>Initial eligibility requirements.</I> Before commencing homeownership assistance under the pilot program for a family, the PHA must determine that all of the following initial requirements have been satisfied: 
</P>
<P>(1) The family is a disabled family (as defined in § 5.403 of this title); 
</P>
<P>(2) The family annual income does not exceed 99 percent of the median income for the area; 
</P>
<P>(3) The family is not a current homeowner; 
</P>
<P>(4) The family must close on the purchase of the home during the period starting on July 23, 2001 and ending on July 23, 2004; and
</P>
<P>(5) The family meets the initial requirements described in § 982.626; however, the following initial requirements do not apply to a family seeking to participate in the pilot program: 
</P>
<P>(i) The income eligibility requirements of § 982.201(b)(1); 
</P>
<P>(ii) The first-time homeowner requirements of § 982.627(b); and
</P>
<P>(iii) The mortgage default requirements of § 982.627(e), if the PHA determines that the default is due to catastrophic medical reasons or due to the impact of a federally declared major disaster or emergency. 
</P>
<P>(d) <I>Amount and distribution of homeownership assistance payments.</I> (1) While the family is residing in the home, the PHA shall calculate a monthly homeownership assistance payment on behalf of the family in accordance with § 982.635 and this section. 
</P>
<P>(2) A family that is a low income family (as defined at 24 CFR 5.603(b)) as determined by HUD shall receive the full amount of the monthly homeownership assistance payment calculated under § 982.635. 
</P>
<P>(3) A family whose annual income is greater than the low income family ceiling but does not exceed 89 percent of the median income for the area as determined by HUD shall receive a monthly homeownership assistance payment equal to 66 percent of the amount calculated under § 982.635. 
</P>
<P>(4) A family whose annual income is greater than the 89 percent ceiling but does not exceed 99 percent of the median income for the area as determined by HUD shall receive a monthly homeownership assistance payment equal to 33 percent of the amount calculated under § 982.635. 
</P>
<P>(5) A family whose annual income is greater than 99 percent of the median income for the area shall not receive homeownership assistance under the pilot program. 
</P>
<P>(e) <I>Assistance payments to lender.</I> The PHA must make homeownership assistance payments to a lender on behalf of the disabled family. If the assistance payment exceeds the amount due to the lender, the PHA must pay the excess directly to the family. The provisions of § 982.635(d), which permit the PHA to make monthly homeownership assistance payments directly to the family, do not apply to the pilot program. 
</P>
<P>(f) <I>Mortgage defaults.</I> The requirements of § 982.638(d) regarding mortgage defaults are applicable to the pilot program. However, notwithstanding § 982.638(d), the PHA may, in its discretion, permit a family that has defaulted on its mortgage to move to a new unit with continued voucher homeownership assistance if the PHA determines that the default is due to catastrophic medical reasons or due to the impact of a federally declared major disaster or emergency. The requirements of §§ 982.627(a)(5) and 982.627(e) do not apply to such a family.
</P>
<CITA TYPE="N">[66 FR 33613, June 22, 2001]


</CITA>
</DIV8>


<DIV8 N="§ 982.643" NODE="24:4.1.3.1.19.13.40.42" TYPE="SECTION">
<HEAD>§ 982.643   Homeownership option: Downpayment assistance grants.</HEAD>
<P>(a) <I>General.</I> (1) A PHA may provide a single downpayment assistance grant for a participant that has received tenant-based or project-based rental assistance in the Housing Choice Voucher Program.
</P>
<P>(2) The downpayment assistance grant must be applied toward the downpayment required in connection with the purchase of the home and/or reasonable and customary closing costs in connection with the purchase of the home.
</P>
<P>(3) If the PHA permits the downpayment grant to be applied to closing costs, the PHA must define what fees and charges constitute reasonable and customary closing costs. However, if the purchase of a home is financed with FHA mortgage insurance, such financing is subject to FHA mortgage insurance requirements, including any requirements concerning closing costs (see § 982.632(b) of this part regarding the applicability of FHA requirements to voucher homeownership assistance and § 203.27 of this title regarding allowable fees, charges and discounts for FHA-insured mortgages).
</P>
<P>(b) <I>Maximum downpayment grant.</I> A downpayment assistance grant may not exceed twelve times the difference between the payment standard and the total tenant payment.
</P>
<P>(c) <I>Payment of downpayment grant.</I> The downpayment assistance grant shall be paid at the closing of the family's purchase of the home.
</P>
<P>(d) <I>Administrative fee.</I> For each downpayment assistance grant made by the PHA, HUD will pay the PHA a one-time administrative fee in accordance with § 982.152(a)(1)(iii).
</P>
<P>(e) <I>Return to tenant-based assistance.</I> A family that has received a downpayment assistance grant may apply for and receive tenant-based rental assistance, in accordance with program requirements and PHA policies. However, the PHA may not commence tenant-based rental assistance for occupancy of the new unit so long as any member of the family owns any title or other interest in the home purchased with homeownership assistance. Further, eighteen months must have passed since the family's receipt of the downpayment assistance grant.
</P>
<P>(f) <I>Implementation of downpayment assistance grants.</I> A PHA may not offer downpayment assistance under this paragraph until HUD publishes a notice in the <E T="04">Federal Register.</E>
</P>
<CITA TYPE="N">[67 FR 64494, Oct. 18, 2002]








</CITA>
</DIV8>

</DIV7>

</DIV6>

</DIV5>


<DIV5 N="983" NODE="24:4.1.3.1.20" TYPE="PART">
<HEAD>PART 983—PROJECT-BASED VOUCHER (PBV) PROGRAM 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437f and 3535(d). 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>70 FR 59913, Oct. 13, 2005, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.3.1.20.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 983.1" NODE="24:4.1.3.1.20.1.41.1" TYPE="SECTION">
<HEAD>§ 983.1   When the PBV rule (24 CFR part 983) applies.</HEAD>
<P>Part 983 applies to the project-based voucher (PBV) program. The PBV program is authorized by section 8(o)(13) of the U.S. Housing Act of 1937 (42 U.S.C. 1437f(o)(13)). 






</P>
</DIV8>


<DIV8 N="§ 983.2" NODE="24:4.1.3.1.20.1.41.2" TYPE="SECTION">
<HEAD>§ 983.2   When the tenant-based voucher rule (24 CFR part 982) applies.</HEAD>
<P>(a) <I>24 CFR Part 982.</I> Part 982 is the basic regulation for the tenant-based voucher program. Paragraphs (b) and (c) of this section describe the provisions of part 982 that do not apply to the PBV program. The rest of part 982 applies to the PBV program. For use and applicability of voucher program definitions at § 982.4, see § 983.3.
</P>
<P>(b) <I>Types of 24 CFR part 982 provisions that do not apply to PBV.</I> The following types of provisions in 24 CFR part 982 do not apply to PBV assistance under part 983.
</P>
<P>(1) Provisions on issuance or use of a voucher;
</P>
<P>(2) Provisions on portability;
</P>
<P>(3) Provisions on the following special housing types: Shared housing, manufactured home space rental, and the homeownership option.
</P>
<P>(c) <I>Specific 24 CFR part 982 provisions that do not apply to PBV assistance.</I> The following specific provisions in 24 CFR part 982 do not apply to PBV assistance under part 983:
</P>
<P>(1) In subpart D of part 982: paragraph (e)(2) of 24 CFR 982.158;
</P>
<P>(2) In subpart E of part 982: paragraph (e) of 24 CFR 982.201, paragraph (b)(2) of 24 CFR 982.202, and paragraph (d) of 24 CFR 982.204;
</P>
<P>(3) Subpart G of part 982 does not apply, with the following exceptions:
</P>
<P>(i) Section 982.310 (owner termination of tenancy) applies to the PBV program, but to the extent that those provisions differ from § 983.257, the provisions of § 983.257 govern; and
</P>
<P>(ii) Section 982.312 (absence from unit) applies to the PBV Program, but to the extent that those provisions differ from § 983.256(g), the provisions of § 983.256(g) govern; and
</P>
<P>(iii) Section 982.316 (live-in aide) applies to the PBV Program;
</P>
<P>(4) Subpart H of part 982;
</P>
<P>(5) In subpart I of part 982: 24 CFR 982.401; paragraphs (a)(3), (c), and (d) of 24 CFR 982.402; 24 CFR 982.403; 24 CFR 982.404; paragraphs (a), (b), (d), (i), and (j) of 24 CFR 982.405; paragraphs (a), (e), and (f) of 24 CFR 982.406; and 24 CFR 982.407;
</P>
<P>(6) In subpart J of part 982: paragraphs (a), (b)(3), (b)(4), and (c) of § 982.451; and § 982.455;
</P>
<P>(7) Subpart K of part 982: subpart K does not apply, except that the following provisions apply to the PBV Program:
</P>
<P>(i) In 24 CFR 982.503, paragraphs (a)(1) and (d)(1)-(4) do apply;
</P>
<P>(ii) Section 982.516 (family income and composition; regular and interim examinations);
</P>
<P>(iii) Section 982.517 of this title (utility allowance schedule), except that 24 CFR 982.517(d) does not apply.
</P>
<P>(8) In subpart M of part 982:
</P>
<P>(i) Sections 982.603, 982.607, 982.611, 982.613(c)(2), 982.619(a), (b)(1), (b)(4), (c); and
</P>
<P>(ii) Provisions concerning shared housing (§ 982.615 through § 982.618), manufactured home space rental (§ 982.622 through § 982.624), and the homeownership option (§ 982.625 through § 982.641).




</P>
<CITA TYPE="N">[70 FR 59913, Oct. 13, 2005, as amended at 79 FR 36165, June 25, 2014; 81 FR 12377, Mar. 8, 2016; 88 FR 30504, May 11, 2023; 89 FR 38304, May 7, 2024]








</CITA>
</DIV8>


<DIV8 N="§ 983.3" NODE="24:4.1.3.1.20.1.41.3" TYPE="SECTION">
<HEAD>§ 983.3   PBV definitions.</HEAD>
<P>(a) <I>General.</I> This section defines PBV terms used in this part. For administrative ease and convenience, those part 982 terms that are also used in this part are identified in this section. In limited cases, where there is a slight difference with the part 982 term, an annotation is made in this section.
</P>
<P>(b) <I>Definitions.</I> The following definitions apply to this part:
</P>
<P><I>Abatement.</I> See 24 CFR 982.4.
</P>
<P><I>Administrative fee.</I> See 24 CFR 982.4.
</P>
<P><I>Administrative fee reserve.</I> See 24 CFR 982.4.
</P>
<P><I>Administrative Plan.</I> See 24 CFR 982.4.
</P>
<P><I>Admission.</I> The point when the family becomes a participant in the PHA's tenant-based or project-based voucher program. If the family is not already a tenant-based voucher participant, the date of admission for the project-based voucher program is the first day of the initial lease term (the commencement of the assisted tenancy) in the PBV unit. After admission, and so long as the family is continuously assisted with tenant-based or project-based voucher assistance from the PHA, a shift from tenant-based or project-based assistance to the other form of voucher assistance is not a new admission.
</P>
<P><I>Agreement to enter into HAP contract (Agreement).</I> A written contract between the PHA and the owner in the form prescribed by HUD. The Agreement defines requirements for development activity undertaken for units to be assisted under this section. When development is completed by the owner in accordance with the Agreement, the PHA enters into a HAP contract with the owner. The Agreement is not used for existing housing assisted under this section.
</P>
<P><I>Applicant.</I> A family that has applied for admission to the PBV program but is not yet a program participant.
</P>
<P><I>Area where vouchers are difficult to use.</I> An area where a voucher is difficult to use is:
</P>
<P>(i) A census tract with a poverty rate of 20 percent or less, as determined by HUD;
</P>
<P>(ii) A ZIP code area where the rental vacancy rate is less than 4 percent, as determined by HUD; or
</P>
<P>(iii) A ZIP code area where 90 percent of the Small Area FMR is more than 110 percent of the metropolitan area or county FMR.
</P>
<P><I>Assisted living facility.</I> A residence facility (including a facility located in a larger multifamily property) that meets all the following criteria:
</P>
<P>(i) The facility is licensed and regulated as an assisted living facility by the State, municipality, or other political subdivision;
</P>
<P>(ii) The facility makes available supportive services to assist residents in carrying out activities of daily living; and
</P>
<P>(iii) The facility provides separate dwelling units for residents and includes common rooms and other facilities appropriate and available to provide supportive services for the residents.
</P>
<P><I>Authorized voucher units.</I> See 24 CFR 982.4.
</P>
<P><I>Budget authority.</I> See 24 CFR 982.4.
</P>
<P><I>Building.</I> See 24 CFR 982.4.
</P>
<P><I>Comparable tenant-based rental assistance.</I> A tenant-based subsidy to enable a family to obtain decent, safe, and sanitary housing in the PHA jurisdiction, which meets the following minimum requirements:
</P>
<P>(i) The family's monthly payment is not more than 40 percent of the family's adjusted monthly gross income;
</P>
<P>(ii) The rental assistance contains no limitation as to the length of time the family may receive the assistance;
</P>
<P>(iii) The family is not required to be employed, to seek employment, or to participate in supportive services in order to receive the rental assistance; and
</P>
<P>(iv) The family is able to use the rental assistance in one or more other PHAs' jurisdictions.
</P>
<P><I>Congregate housing.</I> See 24 CFR 982.4.
</P>
<P><I>Continuously assisted.</I> See 24 CFR 982.4.
</P>
<P><I>Contract units.</I> The housing units covered by a HAP contract.
</P>
<P><I>Cooperative.</I> See 24 CFR 982.4.
</P>
<P><I>Cooperative member.</I> See 24 CFR 982.4.
</P>
<P><I>Covered housing provider.</I> For the PBV program, “covered housing provider,” as such term is used in HUD's regulations in 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking) refers to the PHA or owner (as defined in 24 CFR 982.4), as applicable given the responsibilities of the covered housing provider as set forth in 24 CFR part 5, subpart L. For example, the PHA is the covered housing provider responsible for providing the notice of occupancy rights under VAWA and certification form described at 24 CFR 5.2005(a). In addition, the owner is the covered housing provider that may choose to bifurcate a lease as described at 24 CFR 5.2009(a), while the PHA is the covered housing provider responsible for complying with emergency transfer plan provisions at 24 CFR 5.2005(e).
</P>
<P><I>Development activity.</I> New construction or rehabilitation work done after the proposal or project selection date in order for a newly constructed or rehabilitated housing project to be covered by a PBV HAP contract, including work done pursuant to a rider to the HAP contract in accordance with § 983.157.
</P>
<P><I>Excepted units.</I> Units in a project not counted toward the project cap because they exclusively serve or are made available to certain families. See § 983.54(c)(2).
</P>
<P><I>Excluded units.</I> Units in a project not counted toward the program cap or project cap because they meet certain criteria. See § 983.59.
</P>
<P><I>Existing housing.</I> A project that meets the following criteria:
</P>
<P>(i) All the proposed contract units in the project either fully comply or substantially comply with HQS on the proposal or project selection date, as determined per § 983.103(a). (The units must fully comply with HQS at the time required by § 983.103(c)). The units substantially comply with HQS if:
</P>
<P>(A) The units only require repairs to current components or replacement of equipment and/or materials by items of substantially the same kind to correct deficiencies; and
</P>
<P>(B) The PHA determines all deficiencies can reasonably be corrected within a 30-day period, taking into consideration the totality of the deficiencies in the project.
</P>
<P>(ii) The PHA determines the project is not reasonably expected to require substantial improvement and the owner certifies it has no plans to undertake substantial improvement from the proposal submission date (for projects subject to competitive selection) or the project selection date (for projects excepted from competitive selection) through the first two years of the HAP contract.
</P>
<P><I>Family.</I> See 24 CFR 982.4.
</P>
<P><I>Family self-sufficiency program.</I> See 24 CFR 982.4.
</P>
<P><I>Gross rent.</I> See 24 CFR 982.4.
</P>
<P><I>Group home.</I> See 24 CFR 982.4.
</P>
<P><I>HAP contract.</I> See 24 CFR 982.4.
</P>
<P><I>Household.</I> See 24 CFR 5.100.
</P>
<P><I>Housing assistance payment.</I> The monthly assistance payment for a PBV unit by a PHA, which includes:
</P>
<P>(i) A payment to the owner for rent to owner under the family's lease minus the tenant rent; and
</P>
<P>(ii) An additional payment to or on behalf of the family, if the utility allowance exceeds the total tenant payment, in the amount of such excess.
</P>
<P><I>Housing credit agency.</I> For purposes of performing subsidy layering reviews for proposed PBV projects, a housing credit agency includes a State housing finance agency, a State participating jurisdiction under HUD's HOME program (see 24 CFR part 92), or other State housing agencies that meet the definition of “housing credit agency” as defined by Section 42 of the Internal Revenue Code of 1986.
</P>
<P><I>Housing quality standards (HQS).</I> The minimum quality standards developed by HUD in accordance with 24 CFR 5.703 for the PBV program, including any variations approved by HUD for the PHA under 24 CFR 5.705(a)(3).


</P>
<P><I>Independent entity.</I> See 24 CFR 982.4.




</P>
<P><I>Initial rent to owner.</I> See 24 CFR 982.4.
</P>
<P><I>In-place family.</I> A family residing in a proposed contract unit on the proposal or project selection date.
</P>
<P><I>Jurisdiction.</I> See 24 CFR 982.4.
</P>
<P><I>Lease.</I> See 24 CFR 982.4.
</P>
<P><I>Manufactured home.</I> See 24 CFR 982.4.
</P>
<P><I>Multifamily building.</I> A building with five or more dwelling units (assisted or unassisted).


</P>
<P><I>Newly constructed housing.</I> A project containing housing units that do not exist on the proposal or project selection date and are developed after the proposal or project selection date for use under the PBV program.


</P>
<P><I>Owner.</I> See 24 CFR 982.4.
</P>
<P><I>Partially assisted project.</I> A project in which there are fewer contract units than residential units.
</P>
<P><I>Participant.</I> A family that has been admitted and is currently assisted in the PBV (or HCV) program. If the family is not already a tenant-based voucher participant, the family becomes a participant on the effective date of the initial lease term (the commencement of the assisted tenancy) in the PBV unit.
</P>
<P><I>PHA Plan.</I> See 24 CFR 982.4.
</P>
<P><I>PHA-owned unit.</I> See 24 CFR 982.4.
</P>
<P><I>Premises.</I> The project in which the contract unit is located, including common areas and grounds.
</P>
<P><I>Program.</I> The voucher program under Section 8 of the 1937 Act, including tenant-based or project-based assistance.
</P>
<P><I>Program receipts.</I> See 24 CFR 982.4.
</P>
<P><I>Project.</I> A project can be a single building, multiple contiguous buildings, or multiple buildings on contiguous parcels of land. “Contiguous” in this definition includes “adjacent to,” as well as touching along a boundary or a point. A PHA may, in its Administrative Plan, establish the circumstances under which it will define a project as only one of the following: a single building, multiple contiguous buildings, or multiple buildings on contiguous parcels of land.
</P>
<P><I>Proposal or project selection date.</I> See § 983.51(g).
</P>
<P><I>Public housing agency (PHA).</I> See 24 CFR 982.4.
</P>
<P><I>Reasonable rent.</I> See 24 CFR 982.4.
</P>
<P><I>Rehabilitated housing.</I> A project which is developed for use under the PBV program, in which all proposed contract units exist on the proposal or project selection date, but which does not qualify as existing housing.
</P>
<P><I>Rent to owner.</I> The total monthly rent payable by the family and the PHA to the owner under the lease for a contract unit. Rent to owner includes payment for any housing services, maintenance, and utilities to be provided by the owner in accordance with the lease. (Rent to owner must not include charges for non-housing services including payment for food, furniture, or supportive services provided in accordance with the lease.)
</P>
<P><I>Responsible entity (RE) (for environmental review).</I> The unit of general local government within which the project is located that exercises land use responsibility or, if HUD determines this infeasible, the county or, if HUD determines that infeasible, the State.
</P>
<P><I>Single-family building.</I> A building with no more than four dwelling units (assisted or unassisted).
</P>
<P><I>Single room occupancy housing (SRO).</I> See 24 CFR 982.4.
</P>
<P><I>Site.</I> The grounds where the contract units are located or will be located after development.
</P>
<P><I>Small Area Fair Market Rents (SAFMRs).</I> See 24 CFR 982.4. (See also 24 CFR 888.113(c)(5).)
</P>
<P><I>Special housing type.</I> Subpart M of 24 CFR part 982 states the special regulatory requirements for different special housing types. Subpart M provisions on shared housing, manufactured home space rental, and the homeownership option do not apply to PBV assistance under this part.
</P>
<P><I>Subsidy standards.</I> See 24 CFR 982.4.
</P>
<P><I>Substantial improvement.</I> One of the following activities undertaken at a time beginning from the proposal submission date (for projects subject to competitive selection) or from the project selection date (for projects excepted from competitive selection), or undertaken during the term of the PBV HAP contract, except that development activity performed for rehabilitated housing or newly constructed housing shall not also qualify as substantial improvement:










</P>
<P>(i) Remodeling that alters the nature or type of housing units in a project;
</P>
<P>(ii) Reconstruction; or
</P>
<P>(iii) A substantial improvement in the quality or kind of equipment and materials. The replacement of equipment and/or materials rendered unsatisfactory because of normal wear and tear by items of substantially the same kind does not constitute substantial improvement.
</P>
<P><I>Tenant.</I> See 24 CFR 982.4.
</P>
<P><I>Tenant rent.</I> The amount payable monthly by the family as rent to the unit owner, as described in § 983.353(b). (See also 24 CFR 5.520(c)(1)).
</P>
<P><I>Tenant-paid utilities.</I> See 24 CFR 982.4.
</P>
<P><I>Total tenant payment.</I> See 24 CFR 5.628.
</P>
<P><I>Utility allowance.</I> See 24 CFR 5.603.
</P>
<P><I>Utility reimbursement.</I> See 24 CFR 5.603.
</P>
<P><I>Waiting list admission.</I> An admission from the PHA- or owner-maintained PBV waiting list in accordance with § 983.251.
</P>
<P><I>Wrong-size unit.</I> A unit occupied by a family that does not conform to the PHA's subsidy standard for family size, by being either too large or too small compared to the standard.


</P>
<CITA TYPE="N">[70 FR 59913, Oct. 13, 2005, as amended at 79 FR 36165, June 25, 2014; 81 FR 80818, Nov. 16, 2016; 88 FR 30504, May 11, 2023; 89 FR 38305, May 7, 2024; 90 FR 56687, Dec. 8, 2025]






</CITA>
</DIV8>


<DIV8 N="§ 983.4" NODE="24:4.1.3.1.20.1.41.4" TYPE="SECTION">
<HEAD>§ 983.4   Cross-reference to other Federal requirements.</HEAD>
<P>The following provisions apply to assistance under the PBV program.
</P>
<P><I>Civil money penalty.</I> Penalty for owner breach of HAP contract. See 24 CFR 30.68.
</P>
<P><I>Debarment.</I> Prohibition on use of debarred, suspended, or ineligible contractors. See 24 CFR 5.105(c) and 2 CFR part 2424. 


</P>
<P><I>Disclosure and verification of income information.</I> See 24 CFR part 5, subpart B.
</P>
<P><I>Environmental review.</I> See 24 CFR parts 50 and 58 (see also provisions on PBV environmental review at § 983.58).
</P>
<P><I>Fair housing.</I> Nondiscrimination and equal opportunity. See 24 CFR 5.105(a) and section 504 of the Rehabilitation Act.
</P>
<P><I>Fair market rents.</I> See 24 CFR part 888, subpart A.
</P>
<P><I>Fraud.</I> See 24 CFR part 792. PHA retention of recovered funds.
</P>
<P><I>Funds.</I> See 24 CFR part 791. HUD allocation of voucher funds.
</P>
<P><I>Income and family payment.</I> See 24 CFR part 5, subpart F (especially § 5.603 (definitions), § 5.609 (annual income), § 5.611 (adjusted income), § 5.628 (total tenant payment), § 5.630 (minimum rent), § 5.603 (utility allowance), § 5.603 (utility reimbursements), and § 5.661 (section 8 project-based assistance programs: approval for police or other security personnel to live in project).
</P>
<P><I>Labor standards.</I> Regulations implementing the Davis-Bacon Act, Contract Work Hours and Safety Standards Act (40 U.S.C. 3701-3708), 29 CFR part 5, and other federal laws and regulations pertaining to labor standards applicable to development (including rehabilitation) of a project comprising nine or more assisted units.
</P>
<P><I>Lead-based paint.</I> Regulations implementing the Lead-based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846) and the Residential Lead-based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856). See 24 CFR part 35, subparts A, B, H, and R.
</P>
<P><I>Lobbying restriction.</I> Restrictions on use of funds for lobbying. See 24 CFR 5.105(b).
</P>
<P><I>Noncitizens.</I> Restrictions on assistance. See 24 CFR part 5, subpart E.
</P>
<P><I>Program accessibility.</I> Regulations implementing Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794). See 24 CFR parts 8 and 9.
</P>
<P><I>Protection for victims of domestic violence, dating violence, or stalking.</I> See 24 CFR part 5, subpart L.
</P>
<P><I>Protection for victims of domestic violence, dating violence, sexual assault, or stalking.</I> See 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking). For purposes of compliance with HUD's regulations in 24 CFR part 5, subpart L, the covered housing provider is the PHA or owner, as applicable given the responsibilities of the covered housing provider as set forth in 24 CFR part 5, subpart L.
</P>
<P><I>Relocation assistance.</I> Regulations implementing the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA) (42 U.S.C. 4201-4655). See 49 CFR part 24.
</P>
<P><I>Uniform financial reporting standards.</I> See 24 CFR part 5, subpart H.
</P>
<P><I>Waiver of HUD rules.</I> See 24 CFR 5.110.
</P>
<CITA TYPE="N">[70 FR 59913, Oct. 13, 2005, as amended at 72 FR 73497, Dec. 27, 2007; 73 FR 72345, Nov. 28, 2008; 75 FR 66264, Oct. 24, 2010; 79 FR 36165, June 25, 2014; 81 FR 80818, Nov. 16, 2016; 85 FR 61568, Sept. 29, 2020; 89 FR 38306, May 7, 2024]








</CITA>
</DIV8>


<DIV8 N="§ 983.5" NODE="24:4.1.3.1.20.1.41.5" TYPE="SECTION">
<HEAD>§ 983.5   Description of the PBV program.</HEAD>
<P>(a) <I>How PBV works.</I> (1) The PBV program is administered by a PHA that already administers the tenant-based voucher program under the consolidated annual contributions contract (ACC) in 24 CFR 982.151. In the PBV program, the assistance is “attached to the structure,” which may be a multifamily building or single-family building. (See description of the difference between “project-based” and “tenant-based” rental assistance at 24 CFR 982.1(b)).
</P>
<P>(2) The PHA enters into a HAP contract with an owner for units in existing housing or in newly constructed or rehabilitated housing.
</P>
<P>(3) In the case of new construction or rehabilitation, the owner may develop the housing pursuant to an Agreement (§ 983.154) between the owner and the PHA. In the Agreement, the PHA agrees to execute a HAP contract after the owner completes the construction or rehabilitation of the units. Alternatively:
</P>
<P>(i) The owner may develop the housing without an Agreement, before execution of a HAP contract, in accordance with § 983.154(f); or
</P>
<P>(ii) In the case of rehabilitation, the owner may develop the housing or complete development activity after execution of the HAP contract, in accordance with § 983.157.
</P>
<P>(4) During the term of the HAP contract, the PHA makes housing assistance payments to the owner for units leased and occupied by eligible families.
</P>
<P>(b) <I>How PBV is funded.</I> If a PHA decides to operate a PBV program, the PHA's PBV program is funded with a portion of appropriated funding (budget authority) available under the PHA's voucher ACC. This funding is used to pay housing assistance for both tenant-based and project-based voucher units. Likewise, the administrative fee funding made available to a PHA is used for the administration of both tenant-based and project-based voucher assistance.
</P>
<P>(c) <I>PHA discretion to operate PBV program.</I> A PHA has discretion whether to operate a PBV program. HUD approval is not required, except that the PHA must notify HUD of its intent to project-base its vouchers and when the PHA executes, amends, or extends a HAP contract. The PHA must also state in its Administrative Plan that it will engage in project-basing and must amend its Administrative Plan to include all PBV-related matters over which the PHA is exercising its policymaking discretion, including the subjects listed in § 983.10, as applicable.


</P>
<CITA TYPE="N">[70 FR 59913, Oct. 13, 2005, as amended at 79 FR 36165, June 25, 2014; 89 FR 38306, May 7, 2024]








</CITA>
</DIV8>


<DIV8 N="§ 983.6" NODE="24:4.1.3.1.20.1.41.6" TYPE="SECTION">
<HEAD>§ 983.6   Maximum number of PBV units (percentage limitation).</HEAD>
<P>(a) <I>In general.</I> Except as provided in paragraphs (d) and (e) of this section, a PHA may commit project-based assistance to no more than 20 percent of its authorized voucher units, as adjusted as provided in paragraph (e) of this section, at the time of commitment. An analysis of impact must be conducted in accordance with § 983.58, if a PHA is project-basing 50 percent or more of the PHA's authorized voucher units.
</P>
<P>(1) A PHA is not required to reduce the number of units to which it has committed PBV assistance under an Agreement or HAP contract if the number of authorized voucher units is subsequently reduced and the number of PBV units consequently exceeds the program limitation.
</P>
<P>(2) A PHA that was within the program limit prior to April 18, 2017, and exceeded the program limit on that date due solely to the change in how the program cap is calculated is not required to reduce the number of PBV units under an Agreement or HAP contract.
</P>
<P>(3) In the circumstances described in paragraphs (a)(1) and (2) of this section, the PHA may not add units to PBV HAP contracts, or enter into new Agreements or HAP contracts (except for HAP contracts resulting from Agreements entered into before the reduction of authorized units or April 18, 2017, as applicable), unless such units meet the conditions described in paragraph (d) or (e) of this section.
</P>
<P>(b) <I>Units subject to percentage limitation.</I> All PBV units which the PHA has selected (from the time of the proposal or project selection date) or which are under an Agreement or HAP contract for PBV assistance count toward the 20 percent maximum or increased cap, as applicable, except as provided in paragraph (e).
</P>
<P>(c) <I>PHA determination.</I> The PHA is responsible for determining the amount of budget authority that is available for project-based vouchers and for ensuring that the amount of assistance that is attached to units is within the amounts available under the ACC.
</P>
<P>(d) <I>Increased cap.</I> A PHA may project-base an additional 10 percent of its authorized voucher units at the time of commitment, as adjusted as provided in paragraph (e) of this section, provided the additional units meet the conditions in paragraphs (d)(1) or (2) of this section:
</P>
<P>(1) The units are part of a HAP contract executed on or after April 18, 2017, or are added on or after that date to any current HAP contract, including a contract entered into prior to April 18, 2017, and the units fall into at least one of the following categories:
</P>
<P>(i) The units are specifically made available to house individuals and families that meet the definition of homeless under Section 103 of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11302), included in 24 CFR 578.3.
</P>
<P>(ii) The units are specifically made available to house families that are comprised of or include a veteran. For purposes of the increased cap, a veteran means a person who served in the active military, naval, air, or space service, and who was discharged or released therefrom.
</P>
<P>(iii) The units provide supportive housing to persons with disabilities or to elderly persons, as defined in 24 CFR 5.403. Supportive housing means that the project makes supportive services available for all of the assisted families in the project and provides a range of services tailored to the needs of the residents occupying such housing. Such supportive services need not be provided by the owner or on site but must be reasonably available to the families receiving PBV assistance in the project. The PHA's Administrative Plan must describe the type and availability of supportive services the PHA will consider as qualifying for the 10 percent increased cap.
</P>
<P>(iv) The units are located in an area where vouchers are difficult to use as defined in § 983.3.
</P>
<P>(v) The units replace, on a different site, the units listed in § 983.59(b)(1) and (2) for which the PHA had authority under § 983.59 to commit PBV assistance on the original site without the units counting toward the program cap or project cap. The units are eligible under this category only if the PHA has not committed and will not commit PBV assistance to the original site pursuant to the normally applicable exclusions of those units under § 983.59. If the PHA subsequently plans to commit PBV assistance to units on the original site, those proposed units count toward and must comply with the 20 percent maximum or increased cap of this section, as applicable, and the project cap requirements of § 983.54.
</P>
<P>(2) The units are part of a HAP contract executed on or after December 27, 2020, or are added on or after that date to any current HAP contract, including a contract entered into prior to December 27, 2020, and meet the following requirements:
</P>
<P>(i) The units are exclusively made available to eligible youth as described in Section 8(x)(2)(B) of the U.S. Housing Act; and
</P>
<P>(ii) If the units exclusively made available to eligible youth use Family Unification Program (FUP) assistance that is normally available for eligible families and youth described in Section 8(x)(2) of the U.S. Housing Act, the PHA determines and documents that the limitation of the units to youth is consistent with the local housing needs of both eligible FUP populations (families and youth) and amends its Administrative Plan to specify that FUP PBV assistance is solely for eligible youth.
</P>
<P>(3) The PBV HAP contract must specify, and the owner must set aside, the number of units meeting the conditions of paragraphs (d)(1)(i), (ii), (iii) and (d)(2) of this section. To qualify for the increased program cap for units meeting the conditions of paragraphs (d)(1)(i), (ii), (iii) and (d)(2) of this section, the unit must be occupied by the type of family specified in the applicable paragraph consistent with the requirements of § 983.262.
</P>
<P>(e) <I>Units previously subject to federally required rent restrictions or that received long-term rental assistance from HUD.</I> Units that meet the requirements of § 983.59 do not count toward the program cap. Such units are removed from the number of authorized voucher units for purposes of calculating the percentages under paragraphs (a) and (d) of this section.


</P>
<CITA TYPE="N">[70 FR 59913, Oct. 13, 2005, as amended at 79 FR 36165, June 25, 2014; 89 FR 38307, May 7, 2024]






</CITA>
</DIV8>


<DIV8 N="§ 983.7" NODE="24:4.1.3.1.20.1.41.7" TYPE="SECTION">
<HEAD>§ 983.7   Uniform Relocation Act.</HEAD>
<P>(a) <I>Relocation assistance for displaced person.</I> (1) A displaced person must be provided relocation assistance at the levels described in and in accordance with the requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA) (42 U.S.C. 4201-4655) and implementing regulations at 49 CFR part 24.
</P>
<P>(2) The cost of required relocation assistance may be paid with funds provided by the owner, or with local public funds, or with funds available from other sources. Relocation costs may not be paid from voucher program funds; however, provided payment of relocation benefits is consistent with state and local law, PHAs may use their administrative fee reserve to pay for relocation assistance after all other program administrative expenses are satisfied. Use of the administrative fee reserve in this manner must be consistent with legal and regulatory requirements, including the requirements of 24 CFR 982.155 and other official HUD issuances.
</P>
<P>(b) <I>Real property acquisition requirements.</I> The acquisition of real property for a PBV project is subject to the URA and 49 CFR part 24, subpart B.
</P>
<P>(c) <I>Responsibility of PHA.</I> The PHA must require the owner to comply with the URA and 49 CFR part 24.
</P>
<P>(d) <I>Definition of initiation of negotiations.</I> In computing a replacement housing payment to a residential tenant displaced as a direct result of privately undertaken rehabilitation or demolition of the real property, the term “initiation of negotiations” means the execution of the Agreement between the owner and the PHA.


</P>
</DIV8>


<DIV8 N="§ 983.8" NODE="24:4.1.3.1.20.1.41.8" TYPE="SECTION">
<HEAD>§ 983.8   Equal opportunity requirements.</HEAD>
<P>(a) The PBV program requires compliance with all equal opportunity requirements under federal law and regulation, including the authorities cited at 24 CFR 5.105(a).
</P>
<P>(b) The PHA must comply with the PHA Plan civil rights and affirmatively furthering fair housing certification submitted by the PHA in accordance with 24 CFR 903.7(o).


</P>
</DIV8>


<DIV8 N="§ 983.9" NODE="24:4.1.3.1.20.1.41.9" TYPE="SECTION">
<HEAD>§ 983.9   Special housing types.</HEAD>
<P>(a) <I>Applicability.</I> (1) For applicability of rules on special housing types at 24 CFR part 982, subpart M, see § 983.2.
</P>
<P>(2) In the PBV program, the PHA may not provide assistance for shared housing, manufactured home space rental, or the homeownership option.
</P>
<P>(b) <I>Group homes.</I> A group home may include one or more group home units. A separate lease is executed for each elderly person or person with disabilities who resides in a group home.
</P>
<P>(c) <I>Cooperative housing.</I> (1) <I>Applicability of part 983.</I> Except as provided in paragraph (c)(3) of this section, assistance under this housing type is subject to the regulations of part 983, except the following sections of part 983, subpart F: §§ 983.256(b) and (c), 983.258 and 983.259 do not apply.
</P>
<P>(2) <I>Applicability of part 982.</I> (i) Cooperative housing under the PBV program is also subject to the requirements of 24 CFR 982.619(b)(2), (b)(3), (b)(5), (d), and (e).
</P>
<P>(ii) Cooperative housing under the PBV program is not subject to the requirements of 24 CFR 982.619(a), (b)(1), (b)(4), and (c).
</P>
<P>(3) <I>Assistance in cooperative housing.</I> Rental assistance for PBV cooperative housing where families lease cooperative housing units from cooperative members is not a special housing type and all requirements of 24 CFR 983 apply.
</P>
<P>(4) <I>Rent to owner.</I> The regulations of 24 CFR part 983, subpart G, apply to PBV housing under paragraph (c) of this section. The reasonable rent for a cooperative unit is determined in accordance with § 983.303. For cooperative housing, the rent to owner is the monthly carrying charge under the occupancy agreement/lease between the member and the cooperative.
</P>
<P>(5) <I>Other fees and charges.</I> Fees such as application fees, credit report fees, and transfer fees shall not be included in the rent to owner.
</P>
<CITA TYPE="N">[70 FR 59913, Oct. 13, 2005, as amended at 79 FR 36165, June 25, 2014]














</CITA>
</DIV8>


<DIV8 N="§ 983.10" NODE="24:4.1.3.1.20.1.41.10" TYPE="SECTION">
<HEAD>§ 983.10   PBV provisions in the Administrative Plan.</HEAD>
<P>(a) <I>PHA policymaking discretion.</I> If a PHA exercises its discretion to operate a PBV program, the PHA's Administrative Plan as required by 24 CFR 982.54 of this title must include all the PHA's local policies on PBV-related matters over which the PHA is exercising its policymaking discretion.
</P>
<P>(b) <I>PHA policies.</I> The PHA Administrative Plan must cover, at a minimum, the following PHA policies, as applicable:
</P>
<P>(1) The definition of “project” as consistent with this part (§ 983.3(b));
</P>
<P>(2) The program cap:
</P>
<P>(i) A description of the types and availability of services that will qualify units under the supportive services authority under the program cap (§ 983.6(d)(1)(iii)); and
</P>
<P>(ii) The PHA's policy limiting Family Unification Program assistance normally available for eligible families and youth described in Section 8(x)(2) of the U.S. Housing Act to youth (§ 983.6(d)(2)(ii));
</P>
<P>(3) A description of the circumstances under which the PHA will use the competitive and noncompetitive selection methods and the procedures for submission and selection of PBV proposals (§ 983.51(a));


</P>
<P>(4) The project cap:
</P>
<P>(i) The PHA's policy limiting Family Unification Program assistance normally available for eligible families and youth described in Section 8(x)(2) of the U.S. Housing Act to youth (§ 983.54(c)(2)(ii)); and
</P>
<P>(ii) A description of the types and availability of services that will qualify units under the supportive services exception from the project cap (§ 983.54(c)(2)(iii));
</P>
<P>(5) The site selection standards:
</P>
<P>(i) The PHA's standard for deconcentrating poverty and expanding housing and economic opportunities (§ 983.55(b)(1)); and
</P>
<P>(ii) The PHA's site selection policy (§ 983.55(c));
</P>
<P>(6) PHA inspection policies:
</P>
<P>(i) The timing of an initial inspection of existing housing (§ 983.103(c)(1));
</P>
<P>(ii) Whether the PHA adopts for initial inspection of PBV existing housing the non-life-threatening deficiencies option, the alternative inspection option, or both, and whether the PHA adopts for periodic inspection of PBV housing the alternative inspection option. If so, state all policies as required by 24 CFR 982.54(d)(21)(ii) and (iii), as they relate to the PHA's PBV program (§ 983.103(c)(2) through (4) and (e)(3));
</P>
<P>(iii) The frequency of periodic inspections (§ 983.103(e) and (i)); and
</P>
<P>(iv) Any verification methods other than on-site inspection for different inspection types or for different HQS deficiencies (§ 983.103(h)).
</P>
<P>(7) A description of the circumstances (if any) under which the PHA will establish additional requirements for quality, architecture, or design of PBV housing at the time of initial rehabilitation or new construction (§§ 983.154(e)(11), 983.157(e)(4));
</P>
<P>(8) A description of the circumstances (if any) under which the PHA will enter a PBV HAP contract for newly constructed and rehabilitated housing without first entering into an Agreement or execute an Agreement after construction or rehabilitation that complied with applicable requirements of § 983.153 has commenced (§ 983.154(f)(1));
</P>
<P>(9) The PHA's policy on the form and manner in which the owner must submit evidence and certify that work has been completed (§ 983.155);
</P>
<P>(10) Rehabilitated housing developed after HAP contract execution:
</P>
<P>(i) A description of the circumstances (if any) under which the PHA will enter a PBV HAP contract for rehabilitated housing that allows for development activity to occur after HAP contract execution (§ 983.157(a)(2));
</P>
<P>(ii) The timing of the initial inspection (§ 983.157(c)(4));
</P>
<P>(iii) The form and manner of owner notifications of changes in the status of contract units (§ 983.157(e)(5)); and
</P>
<P>(iv) The period for compliance (if any) for development activity that has not been completed by the deadline (§ 983.157(h)(1));
</P>
<P>(11) The PHA's policy on amending PBV HAP contracts to substitute or add contract units (§ 983.207(f));
</P>
<P>(12) PHA housing quality policies;
</P>
<P>(i) A description of the circumstances (if any) under which the PHA will establish additional requirements for continued compliance with quality, architecture, or design of PBV housing during the term of the HAP contract (§ 983.208(a)(3));
</P>
<P>(ii) The PHA's policy on the conditions under which it will withhold HAP and the conditions under which it will abate HAP or terminate the contract for units other than the unit with HQS deficiencies (§ 983.208(d)); and
</P>
<P>(iii) The PHA's policy on assisting families with relocating and finding a new unit (§ 983.208(d)(6)(iii));
</P>
<P>(13) A description of the PHA's waiting list policies for admission to PBV units, including any information on the owner waiting list policy (§ 983.251(c) and (e));
</P>
<P>(14) A description of the PHA's policy on whether to conduct tenant screening and offer information to an owner (§ 983.255(a)(2) and (c)(4));
</P>
<P>(15) The PHA's policy on continued housing assistance for a family that occupies a wrong-sized unit or a unit with accessibility features that the family does not require (§ 983.260(b));
</P>
<P>(16) The PHA's policy on a family's right to move:
</P>
<P>(i) The form of tenant-based rental assistance that the PHA will offer families (§ 983.261(b)); and
</P>
<P>(ii) The procedures for tenants to request tenant-based rental assistance to move (§ 983.261(c));
</P>
<P>(17) The PHA's policy regarding which options it will take if a unit is no longer qualified for excepted status or the increased program cap (§ 983.262(b)(4));
</P>
<P>(18) The PHA's policy regarding continued occupancy of a unit under the increased program cap for supportive housing for persons with disabilities or elderly persons and units excepted based on elderly or disabled family status after a change in family composition removing the elderly family member or family member with a disability (§ 983.262(c)(3)(ii), (d)(1), and (d)(2));
</P>
<P>(19) The PHA's policy regarding the PHA-determined amount it will use to calculate rent to owner (§ 983.301(b)(1) and (c)(2)(i));
</P>
<P>(20) The PHA's policy on the required timing and form of owner requests for a rent increase (§ 983.302(a)(1));
</P>
<P>(21) The PHA's policy on providing vacancy payments, including the required form and manner of requests for vacancy payments (§ 983.352(b)(1) and (4));
</P>
<P>(22) The PHA's policy on utility reimbursements (§ 983.353(d)(2)); and
</P>
<P>(23) The PHA's policy on applying SAFMRs to its PBV program per 24 CFR 888.113(h).


</P>
<CITA TYPE="N">[89 FR 38308, May 7, 2024, as amended at 89 FR 46020, May 28, 2024]






</CITA>
</DIV8>


<DIV8 N="§ 983.11" NODE="24:4.1.3.1.20.1.41.11" TYPE="SECTION">
<HEAD>§ 983.11   Prohibition of excess public assistance.</HEAD>
<P>(a) <I>PBV assistance for newly constructed and rehabilitated housing.</I> The PHA may provide PBV assistance for newly constructed and rehabilitated housing only in accordance with HUD subsidy layering regulations (24 CFR 4.13) and other requirements.
</P>
<P>(b) <I>PBV assistance for existing housing.</I> The subsidy layering requirements are not applicable to existing housing.
</P>
<P>(c) <I>Development activity before HAP contract.</I> For the subsidy layering requirements related to development activity to place newly constructed or rehabilitated housing under a HAP contract, see § 983.153(b).
</P>
<P>(d) <I>Additional assistance after HAP contract.</I> (1) For newly constructed or rehabilitated housing under a HAP contract, the owner must disclose to the PHA, in accordance with HUD requirements, information regarding any additional related assistance from the Federal Government, a State, or a unit of general local government, or any agency or instrumentality thereof. Such related assistance includes but is not limited to any loan, grant, guarantee, insurance, payment, rebate, subsidy, credit, tax benefit, or any other form of direct or indirect assistance.
</P>
<P>(2) If the additional related assistance in paragraph (d)(1) of this section meets certain threshold and other requirements established by HUD through publication in the <E T="04">Federal Register,</E> a subsidy layering review may be required to determine if it would result in excess public assistance to the project.
</P>
<P>(3) Housing assistance payments must not be more than is necessary, as determined in accordance with HUD requirements, to provide affordable housing after taking account of such related assistance. The PHA must adjust, in accordance with HUD requirements, the amount of the housing assistance payments to the owner to compensate in whole or in part for such related assistance.


</P>
<CITA TYPE="N">[89 FR 38309, May 7, 2024]












</CITA>
</DIV8>


<DIV8 N="§ 983.12" NODE="24:4.1.3.1.20.1.41.12" TYPE="SECTION">
<HEAD>§ 983.12   Project record retention.</HEAD>
<P>(a) <I>Records retained according to the contract term.</I> For each PBV project, the PHA must maintain the following records throughout the HAP contract term and for three years thereafter:
</P>
<P>(1) Records to document the basis for PHA selection of the proposal, if selection is competitive, or project, if selection is noncompetitive, including records of the PHA's site selection determination (see § 983.55) and records to document the completion of the review of the selection process in the case of PHA-owned units and copies of the written notice of proposal selection and response of the appropriate party;
</P>
<P>(2) The analysis of impact (see § 983.58(b)), if applicable;
</P>
<P>(3) The subsidy layering determination, if applicable;
</P>
<P>(4) The environmental review record, if applicable;
</P>
<P>(5) The Agreement to enter into HAP contract, if applicable;
</P>
<P>(6) Evidence of completion (see § 983.155), if applicable;
</P>
<P>(7) The HAP contract and any rider and/or amendments, including amendments to extend the term of the contract;
</P>
<P>(8) Records to document the basis for PHA determination and redetermination of rent to owner;
</P>
<P>(9) Records to document HUD approval of the independent entity or entities, in the case of PHA-owned units;
</P>
<P>(10) Records of the accessibility features of the project and each contract unit; and
</P>
<P>(11) Other records as HUD may require.
</P>
<P>(b) [Reserved]


</P>
<CITA TYPE="N">[89 FR 38309, May 7, 2024]










</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.3.1.20.2" TYPE="SUBPART">
<HEAD>Subpart B—Selection of PBV Proposals and Projects</HEAD>

<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437f and 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>89 FR 38309, May 7, 2024, unless otherwise noted.




</PSPACE></SOURCE>

<DIV8 N="§ 983.51" NODE="24:4.1.3.1.20.2.41.1" TYPE="SECTION">
<HEAD>§ 983.51   Proposal and project selection procedures.</HEAD>
<XREF ID="20251208" REFID="19">Link to an amendment published at 90 FR 56688, Dec. 8, 2025.</XREF>
<P>(a) <I>General procedures for submission and selection.</I> The PHA Administrative Plan must describe the procedures for submission and selection of PBV proposals under the methods of competitive selection in paragraph (b) of this section and selection of projects under an exception to competitive selection under paragraph (c) of this section. The description must include under what circumstances the PHA will use the selection methods described in paragraphs (b) and (c) of this section. The PHA may allow for entities that have site control to submit proposals provided the entity will be the owner prior to entering into the Agreement or HAP contract. Before selecting a PBV proposal or project, the PHA must determine that the PBV proposal or project complies with HUD program regulations and requirements, including a determination that the property is eligible housing (§§ 983.52 and 983.53), complies with the cap on the number of PBV units per project (§ 983.54), and meets the site selection standards (§ 983.55). An owner may submit, and a PHA may select, a single proposal covering multiple projects where each project consists of a single-family building, provided all projects are the same housing type (existing, rehabilitated, or newly constructed).
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<P>(b) <I>Methods of competitive selection.</I> The PHA must select PBV proposals in accordance with the selection procedures in the PHA Administrative Plan. (See paragraph (f) of this section for information about the selection of PHA-owned units.) The PHA must select PBV proposals by either of the following two methods:
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<P>(1) The PHA may issue a request for proposals (RFP), selecting a PBV proposal through a competition. The PHA's RFP may not limit proposals to a single site or impose restrictions that explicitly or practically preclude owner submission of proposals for PBV housing on different sites. A PHA may establish selection procedures in the Administrative Plan that combine or are in conjunction with other Federal, State, or local government housing assistance, community development, or supportive services competitive selection processes. If the PHA selection process is combined and administered in conjunction with another RFP process, the PHA remains responsible for complying with § 983.51. See § 983.157(a)(2) for additional requirements for an RFP for rehabilitated housing.
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<P>(2) The PHA may select, without issuing an RFP, a proposal for housing assisted under a Federal, State, or local government housing assistance, community development, or supportive services program that required competitive selection of proposals, where the proposal has been selected in accordance with such program's competitive selection requirements within three years of the PBV proposal selection date. The PHA may not select a housing assistance proposal using this method if the competition involved any consideration that the project would receive PBV assistance.
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<P>(c) <I>Exceptions to competitive selection.</I> Prior to selection under this paragraph (c), the PHA must notify the public of its intent to noncompetitively select one or more projects for PBV assistance through its 5-Year Plan.
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<P>(1) A PHA engaged in an initiative to improve, develop, or replace a public housing property or site may select for PBV assistance an existing, newly constructed, or rehabilitated project in which the PHA has an ownership interest or over which the PHA has control without following a competitive process.
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<P>(i) With respect to replacement housing, the PHA does not have to replace the housing on the same site as the original public housing, but the number of contract units in the replacement project may not exceed the number of units in the original public housing project by more than a de minimis amount for this exception to apply.
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<P>(ii) The public housing properties or sites may be in the public housing inventory at the time of project selection or they may have been removed from the public housing inventory through any available legal removal tool within five years of the project selection date.
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<P>(2) A PHA may select for future PBV assistance a project currently under the public housing program, or a project that is replacing the public housing project, in which a PHA has no ownership interest, or which a PHA has no control over, without following a competitive process, provided:
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<P>(i) The public housing project is either still in the public housing inventory or had been removed from the public housing inventory through any available legal removal tool within five years of the project selection date;
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<P>(ii) The PHA that owned or owns the public housing project does not administer the HCV program;
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<P>(iii) The project selected for PBV assistance was specifically identified as replacement housing for the impacted public housing residents as part of the public housing demolition/disposition application, voluntary conversion application, or any other application process submitted to and approved by HUD to remove the public housing project from the public housing inventory; and
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<P>(iv) With respect to replacement housing, the PHA does not have to replace the housing on the same site as the original public housing, but the number of contract units in the replacement project may not exceed the number of units in the original public housing project by more than a de minimis amount for this exception to apply.
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<P>(3) A PHA may select for PBV assistance a project consisting of PHA-owned units as defined at 24 CFR 982.4 without following a competitive process.
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<P>(i) The project units must continue to meet the definition of PHA-owned for the initial two years of the HAP contract unless there is a transfer of ownership approved by HUD.
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<P>(ii) The PHA must meet any conditions with respect to selection for PBV assistance of a project consisting of PHA-owned units without following a competitive process as may be established by HUD through publication in the <E T="04">Federal Register</E> notice after providing opportunity for public comment.
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<P>(4) A PHA may select for PBV assistance a project that underwent an eligibility event within five years of the project selection date, in which a family (or families) qualifies for enhanced voucher assistance under Section 8(t) of the Act and provides informed consent to relinquish its enhanced voucher for PBV assistance, without following a competitive process.
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<P>(d) <I>Public notice of PHA request for PBV proposals.</I> If the PHA will be selecting proposals under paragraph (b)(1) of this section, PHA procedures for selecting PBV proposals must be designed and actually operated to provide broad public notice of the opportunity to offer PBV proposals for consideration by the PHA. The public notice procedures may include publication of the public notice in a local newspaper of general circulation and other means designed and actually operated to provide broad public notice. The public notice of the PHA request for PBV proposals must specify the submission deadline. Detailed application and selection information must be provided at the request of interested parties.
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<P>(e) <I>Inspections required prior to proposal or project selection.</I> (1) The PHA must examine the proposed site before the proposal or project selection date to determine whether the site complies with the site selection standards in accordance with § 983.55.
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<P>(2) The PHA may execute a HAP contract for existing housing if:
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<P>(i) All proposed contract units in the project fully or substantially comply with the HQS on the proposal or project selection date, which the PHA must determine via inspection;
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<P>(ii) The project meets the environmental review requirements at § 983.56, if applicable; and
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<P>(iii) The project meets the initial inspection requirements in accordance with § 983.103(c).
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<P>(f) <I>PHA written notice of proposal or project selection.</I> (1) For selection of proposals through competitive methods under paragraph (b) of this section, the PHA must give prompt written notice of proposal selection to the party that submitted a selected proposal and must also give prompt public notice of such selection. The PHA's requirement to provide public notice may be met via publication of the public notice in a local newspaper of general circulation or other means designed and actually operated to provide broad public notice. The written notice of proposal selection must require the owner or party that submitted the selected proposal to provide a written response to the PHA accepting the terms and requirements stated in the notice.
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<P>(2) For selection of projects through exceptions to competition under paragraph (c) of this section, the PHA must give prompt written notice of project selection to the owner following the PHA board's resolution approving the project-basing of assistance at the specific project. The written notice of project selection must require the owner of the project selected to provide a written response to the PHA accepting the terms and requirements stated in the notice.
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<P>(3) Regardless of the method of selection, if the project contains PHA-owned units that are not owned by a separate legal entity from the PHA, the PHA must provide the written notice of proposal or project selection to the responsible PHA official, and that official must certify in writing that the PHA accepts the terms and requirements stated in the notice.
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<P>(4) When an environmental review is required, if such a review has not been conducted prior to the proposal and project selection date, the PHA's written notice of proposal and project selection must state that the selection is subject to completion of a favorable environmental review and that the proposal and project may be rejected based on the results of the environmental review in accordance with § 983.56(c).
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<P>(5) See § 983.153(c)(3) for additional notice requirements for newly constructed housing and rehabilitated housing.
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<P>(g) <I>Proposal or project selection date.</I> (1) The proposal selection date is the date on which the PHA provides written notice to the party that submitted the selected proposal under either paragraph (b)(1) or (2) of this section.
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<P>(2) For properties selected in accordance with § 983.51(c), the project selection date is the date of the PHA's board resolution approving the project-basing of assistance at the specific project.


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<P>(h) <I>PHA-owned units.</I> A PHA-owned unit may be assisted under the PBV program only if the HUD field office or the independent entity reviews the proposal or project selection process the PHA undertook and determines that the proposal or project was appropriately selected based on the selection procedures specified in the PHA Administrative Plan. Under no circumstance may a HAP contract be effective for any of the subsidized housing types set forth in § 983.53(a). With the exception of projects selected in accordance with § 983.51(c), the PHA's selection procedures must be designed in a manner that does not effectively eliminate the submission of proposals for non-PHA-owned units or give preferential treatment (<I>e.g.,</I> additional points) to PHA-owned units.


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<P>(i) <I>Public review of PHA selection decision documentation.</I> The PHA must make documentation available for public inspection regarding the basis for the PHA selection of a PBV proposal or project.


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<P>(j) <I>Previous participation clearance.</I> HUD approval of specific proposals, projects, or owners is not required. For example, proposal or project selection does not require submission of form HUD-2530 (Previous Participation Certification) or other HUD previous participation clearance.
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<P>(k) <I>Excluded from Federal procurement.</I> A PHA may not commit project-based assistance to a proposal or project if the owner or any principal or interested party is debarred, suspended subject to a limited denial of participation, or otherwise excluded under 2 CFR part 2424 or is listed on the U.S. General Services Administration list of parties excluded from Federal procurement or non-procurement programs.
</P>
<CITA TYPE="N">[89 FR 38309, May 7, 2024, as amended at 89 FR 46020, May 28, 2024; 90 FR 56688, Dec. 8, 2025]




</CITA>
</DIV8>


<DIV8 N="§ 983.52" NODE="24:4.1.3.1.20.2.41.2" TYPE="SECTION">
<HEAD>§ 983.52   Prohibition of assistance for ineligible units.</HEAD>
<P>(a) <I>Ineligible unit.</I> A HAP contract must not be effective and no PBV assistance may be provided for any of the following:
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<P>(1) Shared housing;
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<P>(2) Units on the grounds of a penal, reformatory, medical, mental, or similar public or private institution;
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<P>(3) Nursing homes or facilities providing continuous psychiatric, medical, nursing services, board and care, or intermediate care. However, the PHA may execute a HAP contract and provide PBV assistance for a dwelling unit in an assisted living facility that provides home health care services such as nursing and therapy for residents of the housing;
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<P>(4) Units that are owned or controlled by an educational institution or its affiliate and are designated for occupancy by students of the institution;
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<P>(5) Manufactured homes are ineligible only if the manufactured home is not permanently affixed to a permanent foundation or the owner does not own fee title to the real property (land) on which the manufactured home is located; and
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<P>(6) Transitional Housing.
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<P>(b) <I>Prohibition against assistance for owner-occupied unit.</I> A HAP contract must not be effective and no PBV assistance may be provided for a unit occupied by an owner of the housing. A member of a cooperative who owns shares in the project assisted under the PBV program shall not be considered an owner for purposes of participation in the PBV program.
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<P>(c) <I>Prohibition against selecting unit occupied by an ineligible family.</I> Before a PHA places a specific unit under a HAP contract, the PHA must determine whether the unit is occupied and, if occupied, whether the unit's occupants are eligible for assistance in accordance with § 982.201 of this title. Additionally, for a family to be eligible for assistance in the specific unit, the unit must be appropriate for the size of the family under the PHA's subsidy standards and the total tenant payment for the family must be less than the gross rent for the unit, such that the unit will be eligible for a monthly HAP. The PHA must not enter into a HAP contract for a unit occupied by a family ineligible for participation in the PBV program.
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<P>(d) <I>Prohibition against assistance for units for which commencement of construction or rehabilitation occurred in violation of program requirements.</I> Unless a PHA has exercised the discretion at § 983.154(f), to undertake development activity without an Agreement or to execute an Agreement after construction or rehabilitation that complied with applicable requirements of § 983.153 has commenced, or at § 983.157, to undertake development activity after execution of the HAP contract, the PHA may not execute a HAP contract for units on which construction or rehabilitation commenced after the date of proposal submission (for housing subject to competitive selection) or the date of the PHA's board resolution approving the project-basing of assistance at the project (for housing excepted from competitive selection) and prior to the effective date of an Agreement. At HUD's sole discretion, HUD may approve a PHA's request for an exception to this prohibition. In determining whether to approve the PHA request, HUD will consider appropriate factors, including the nature and extent of the construction or rehabilitation that has commenced.
</P>
<P>(1) Units for which rehabilitation or new construction began after proposal submission or the date of board resolution but prior to the effective date of an Agreement (if applicable), as described in this paragraph (d), do not subsequently qualify as existing housing.
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<P>(2) Units that were newly constructed or rehabilitated in violation of program requirements do not qualify as existing housing.




</P>
</DIV8>


<DIV8 N="§ 983.53" NODE="24:4.1.3.1.20.2.41.3" TYPE="SECTION">
<HEAD>§ 983.53   Prohibition of assistance for units in subsidized housing.</HEAD>
<P>(a) <I>Types of subsidized housing prohibited from receiving PBV assistance.</I> A HAP contract must not be effective and no PBV assistance may be provided for any of the following:
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<P>(1) A public housing dwelling unit;
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<P>(2) A unit subsidized with any other form of Section 8 assistance (tenant-based or project-based);
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<P>(3) A unit subsidized with any governmental rent subsidy (a subsidy that pays all or any part of the rent);
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<P>(4) A unit subsidized with any governmental subsidy that covers all or any part of the operating costs of the housing;
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<P>(5) A unit subsidized with rental assistance payments under Section 521 of the Housing Act of 1949, 42 U.S.C. 1490a (a Rural Housing Service Program). However, the PHA may attach assistance for a unit subsidized with Section 515 interest reduction payments (42 U.S.C. 1485);
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<P>(6) A Section 202 project for non-elderly persons with disabilities (assistance under Section 162 of the Housing and Community Development Act of 1987, 12 U.S.C. 1701q note);
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<P>(7) Section 811 project-based supportive housing for persons with disabilities (42 U.S.C. 8013);
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<P>(8) Section 202 supportive housing for the elderly (12 U.S.C. 1701q);
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<P>(9) A unit subsidized with any form of tenant-based rental assistance (as defined at 24 CFR 982.1(b)(2)) (<I>e.g.,</I> a unit subsidized with tenant-based rental assistance under the HOME program, 42 U.S.C. 12701 <I>et seq.</I>); or
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<P>(10) A unit with any other duplicative Federal, State, or local housing subsidy, as determined by HUD or by the PHA in accordance with HUD requirements. For this purpose, “housing subsidy” does not include the housing component of a welfare payment; a social security payment; or a Federal, State, or local tax concession (such as relief from local real property taxes).
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<P>(b) [Reserved]




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</DIV8>


<DIV8 N="§ 983.54" NODE="24:4.1.3.1.20.2.41.4" TYPE="SECTION">
<HEAD>§ 983.54   Cap on number of PBV units in each project (income-mixing requirement).</HEAD>
<P>(a) <I>Project cap.</I> Except as provided in paragraph (b) or (c) of this section, a PHA may not select a proposal to provide PBV assistance or enter into an Agreement or HAP contract if the number of assisted units in a project is more than the greater of 25 percent of the number of dwelling units (assisted and unassisted, as adjusted as provided in paragraph (c)(3)) in the project or 25 units.
</P>
<P>(b) <I>Higher project cap.</I> A PHA may provide PBV assistance to the greater of 25 units or 40 percent of the number of dwelling units (assisted and unassisted, as adjusted as provided in paragraph (c)(3) of this section) in the project if the project is located in an area where vouchers are difficult to use as defined in § 983.3.
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<P>(c) <I>Exceptions to the project cap.</I> (1) A project is not limited to a single exception category but may include excepted units from any of the exception categories under paragraph (2) and excluded units under paragraph (3) below.
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<P>(2) PBV units are not counted toward the project cap in the following cases:
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<P>(i) Units exclusively serving elderly families, as defined in 24 CFR 5.403;
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<P>(ii) Units exclusively made available to eligible youth described in Section 8(x)(2)(B) of the U.S. Housing Act. If the units exclusively made available to eligible youth use Family Unification Program (FUP) assistance that is normally available for eligible families and youth, the PHA must determine that the limitation of the units to youth is consistent with the local housing needs of both eligible FUP populations (families and youth), maintain documentation to support this determination, and amend its Administrative Plan to include the limitation of these FUP PBV units to eligible youth; or
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<P>(iii) Units exclusively made available to households eligible for supportive services available to the residents of the project assisted with PBV assistance. The project must make supportive services available to all PBV-assisted families in the project, but the family may not be required to participate in the services as a condition of living in the excepted unit. Such supportive services need not be provided by the owner or on-site but must be reasonably available to the families receiving PBV assistance in the project and designed to help the families in the project achieve self-sufficiency or live in the community as independently as possible. The supportive services must be made available to the family within a reasonable time as defined by the PHA, but not to exceed 120 calendar days from the family's request. The PHA must include in its Administrative Plan the types of services offered to families that will enable the units to qualify under the exception and the extent to which such services will be provided (<I>e.g.,</I> length of time services will be provided to a family, frequency of services, and depth of services), and the reasonable time by which such services must be made available to the family, not to exceed 120 calendar days. A PHA that manages an FSS program may offer FSS to meet the exception. The PHA may also make the supportive services used in connection with the FSS program available to non-FSS PBV families at the project.
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<P>(3) Units that are excluded under § 983.59 do not count toward the project cap. Such units are removed from the number of dwelling units for purposes of calculating the percentages under paragraphs (a) and (b) of this section.
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<P>(4)(i) The PBV HAP contract must specify, and the owner must set aside, the number of excepted units made available for occupancy by families who qualify for the exception.
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<P>(ii) For a unit to be considered excepted it must be occupied by a family who qualifies for the exception.
</P>
<P>(d) <I>HAP contracts already in effect.</I> (1) In general, HAP contracts in effect prior to April 18, 2017, when the exception at paragraph (c)(2)(iii) of this section came into effect and a prior exception for disabled families was removed, or prior to December 27, 2020, when the exception at paragraph (c)(2)(ii) of this section came into effect, are governed by those HAP contracts' terms concerning the number and type of excepted units in a project. The owner must continue to designate the same number of contract units and assist the same number and type of excepted units as provided under the HAP contract during the remaining term of the HAP contract and any extension.
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<P>(2) The owner and the PHA may mutually agree to change the requirements for excepted units under the HAP contract to comply with the excepted unit requirements in subsection (c) of this section. However, any change to the HAP contract may only be made if the change does not jeopardize an assisted family's eligibility for continued assistance at the project.
</P>
<P>(e) <I>PHA determination.</I> The PHA determines the number of units in the project for which the PHA will provide project-based assistance, including whether and how many units will be excepted, subject to the provisions of this section. See § 983.262 for occupancy requirements of excepted units.
</P>
<P>(f) <I>HUD monitoring.</I> HUD may establish additional monitoring and oversight requirements for PBV projects in which more than 40 percent of the dwelling units are assisted under a PBV HAP contract through a <E T="04">Federal Register</E> Notice, subject to public comment.




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</DIV8>


<DIV8 N="§ 983.55" NODE="24:4.1.3.1.20.2.41.5" TYPE="SECTION">
<HEAD>§ 983.55   Site selection standards.</HEAD>
<P>(a) <I>Applicability.</I> The site selection requirements in paragraph (d) of this section apply only to site selection for existing housing and rehabilitated PBV housing. The site selection requirements in paragraph (e) of this section apply only to site selection for newly constructed PBV housing. Other provisions of this section apply to selection of a site for any form of PBV housing, including existing housing, newly constructed housing, and rehabilitated housing.
</P>
<P>(b) <I>Compliance with PBV goals, civil rights requirements, and site and neighborhood standards.</I> The PHA may not select a project or proposal for existing, newly constructed, or rehabilitated PBV housing on a site or enter into an Agreement or HAP contract for units on the site, unless the PHA has determined that:
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<P>(1) Project-based assistance for housing at the selected site is consistent with the goal of deconcentrating poverty and expanding housing and economic opportunities. The standard for deconcentrating poverty and expanding housing and economic opportunities must be consistent with the PHA Plan under 24 CFR part 903 and the PHA Administrative Plan. In developing the standards to apply in determining whether a proposed PBV development will be selected, a PHA must consider the following:
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<P>(i) Whether the census tract in which the proposed PBV development will be located is in a HUD-designated Enterprise Zone, Economic Community, or Renewal Community;
</P>
<P>(ii) Whether a PBV development will be located in a census tract where the concentration of assisted units will be or has decreased as a result of public housing demolition;
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<P>(iii) Whether the census tract in which the proposed PBV development will be located is undergoing significant revitalization;
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<P>(iv) Whether State, local, or Federal dollars have been invested in the area that has assisted in the achievement of the statutory requirement;
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<P>(v) Whether new market rate units are being developed in the same census tract where the proposed PBV development will be located and the likelihood that such market rate units will positively impact the poverty rate in the area;
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<P>(vi) If the poverty rate in the area where the proposed PBV development will be located is greater than 20 percent, the PHA must consider whether in the past five years there has been an overall decline in the poverty rate;
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<P>(vii) Whether there are meaningful opportunities for educational and economic advancement in the census tract where the proposed PBV development will be located.
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<P>(2) The site is suitable from the standpoint of facilitating and furthering full compliance with the applicable provisions of Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d-2000d(4)) and HUD's implementing regulations at 24 CFR part 1; Title VIII of the Civil Rights Act of 1968 (42 U.S.C. 3601-3629) and HUD's implementing regulations at 24 CFR parts 100 through 199; Executive Order 11063 (27 FR 11527; 3 CFR, 1959-1963 Comp., p. 652) and HUD's implementing regulations at 24 CFR part 107. The site must also be suitable from the standpoint of facilitating and furthering full compliance with the applicable provisions of the Americans with Disabilities Act (42 U.S.C. 12131-12134) and implementing regulations (28 CFR part 35), and Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and HUD's implementing regulations at 24 CFR part 8, including meeting the Section 504 site selection requirements described in 24 CFR 8.4(b)(5).
</P>
<P>(3) The site and neighborhood is reasonably free from disturbing noises and reverberations and other dangers to the health, safety, and general welfare of the occupants. The site and neighborhood may not be subject to serious adverse environmental conditions, natural or manmade, that could affect the health or safety of the project occupants, such as dangerous walks or steps; contamination; instability; flooding, poor drainage, septic tank back-ups or sewage hazards; mudslides; abnormal air pollution, smoke or dust; excessive noise, vibration or vehicular traffic; excessive accumulations of trash; vermin or rodent infestation; or fire hazards.
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<P>(c) <I>PHA PBV site selection policy.</I> (1) The PHA Administrative Plan must establish the PHA's policy for selection of PBV sites in accordance with this section.
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<P>(2) The site selection policy must explain how the PHA's site selection procedures promote the PBV goals.
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<P>(3) The PHA must select PBV sites in accordance with the PHA's site selection policy in the PHA Administrative Plan.
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<P>(d) <I>Existing and rehabilitated housing site and neighborhood standards.</I> A site for existing or rehabilitated housing must meet the following site and neighborhood standards. The site must:
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<P>(1) Be adequate in size, exposure, and contour to accommodate the number and type of units proposed, and adequate utilities and streets must be available to service the site. (The existence of a private disposal system and private sanitary water supply for the site, approved in accordance with law, may be considered adequate utilities.)
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<P>(2) Promote greater choice of housing opportunities and avoid undue concentration of assisted persons in areas containing a high proportion of low-income persons.
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<P>(3) Be accessible to social, recreational, educational, commercial, and health facilities and services and other municipal facilities and services that are at least equivalent to those typically found in neighborhoods consisting largely of unassisted, standard housing of similar market rents.
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<P>(4) Be so located that travel time and cost via public transportation or private automobile from the neighborhood to places of employment providing a range of jobs for lower-income workers is not excessive. While it is important that housing for the elderly not be totally isolated from employment opportunities, this requirement need not be adhered to rigidly for such projects.
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<P>(e) <I>New construction site and neighborhood standards.</I> A site for newly constructed housing must meet the following site and neighborhood standards:
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<P>(1) The site must be adequate in size, exposure, and contour to accommodate the number and type of units proposed, and adequate utilities (water, sewer, gas, and electricity) and streets must be available to service the site.
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<P>(2) The site must not be located in an area of minority concentration, except as permitted under paragraph (e)(3) of this section, and must not be located in a racially mixed area if the project will cause a significant increase in the proportion of minority to non-minority residents in the area.
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<P>(3) A project may be located in an area of minority concentration only if:
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<P>(i) Sufficient, comparable opportunities exist for housing for minority families in the income range to be served by the proposed project outside areas of minority concentration (see paragraphs (e)(3)(iii) through (v) of this section for further guidance on this criterion); or
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<P>(ii) The project is necessary to meet overriding housing needs that cannot be met in that housing market area (see paragraph (e)(3)(vi) of this section for further guidance on this criterion).
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<P>(iii) As used in paragraph (e)(3)(i) of this section, “sufficient” does not require that in every locality there be an equal number of assisted units within and outside of areas of minority concentration. Rather, application of this standard should produce a reasonable distribution of assisted units each year, that, over a period of several years, will approach an appropriate balance of housing choices within and outside areas of minority concentration. An appropriate balance in any jurisdiction must be determined in light of local conditions affecting the range of housing choices available for low-income minority families and in relation to the racial mix of the locality's population.
</P>
<P>(iv) Units may be considered “comparable opportunities,” as used in paragraph (e)(3)(i) of this section, if they have the same household type (elderly, disabled, family, large family) and tenure type (owner/renter); require approximately the same tenant contribution towards rent; serve the same income group; are located in the same housing market; and are in standard condition.
</P>
<P>(v) Application of this sufficient, comparable opportunities standard involves assessing the overall impact of HUD-assisted housing on the availability of housing choices for low-income minority families in and outside areas of minority concentration, and must take into account the extent to which the following factors are present, along with other factors relevant to housing choice:
</P>
<P>(A) A significant number of assisted housing units are available outside areas of minority concentration.
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<P>(B) There is significant integration of assisted housing projects constructed or rehabilitated in the past 10 years, relative to the racial mix of the eligible population.
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<P>(C) There are racially integrated neighborhoods in the locality.
</P>
<P>(D) Programs are operated by the locality to assist minority families that wish to find housing outside areas of minority concentration.
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<P>(E) Minority families have benefited from local activities (<I>e.g.,</I> acquisition and write-down of sites, tax relief programs for homeowners, acquisitions of units for use as assisted housing units) undertaken to expand choice for minority families outside of areas of minority concentration.
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<P>(F) A significant proportion of minority households has been successful in finding units in non-minority areas under the tenant-based assistance programs.
</P>
<P>(G) Comparable housing opportunities have been made available outside areas of minority concentration through other programs.
</P>
<P>(vi) Application of the “overriding housing needs” criterion, for example, permits approval of sites that are an integral part of an overall local strategy for the preservation or restoration of the immediate neighborhood and of sites in a neighborhood experiencing significant private investment that is demonstrably improving the economic character of the area (a “revitalizing area”). An “overriding housing need,” however, may not serve as the basis for determining that a site is acceptable, if the only reason the need cannot otherwise be feasibly met is that discrimination on the basis of race, color, religion, sex, national origin, age, familial status, or disability renders sites outside areas of minority concentration unavailable or if the use of this standard in recent years has had the effect of circumventing the obligation to provide housing choice.
</P>
<P>(4) The site must promote greater choice of housing opportunities and avoid undue concentration of assisted persons in areas containing a high proportion of low-income persons.
</P>
<P>(5) The neighborhood must not be one that is seriously detrimental to family life or in which substandard dwellings or other undesirable conditions predominate, unless there is actively in progress a concerted program to remedy the undesirable conditions.
</P>
<P>(6) The housing must be accessible to social, recreational, educational, commercial, and health facilities and services and other municipal facilities and services that are at least equivalent to those typically found in neighborhoods consisting largely of unassisted, standard housing of similar market rents.
</P>
<P>(7) Except for housing designed for elderly persons, travel time and cost via public transportation or private automobile from the neighborhood to places of employment providing a range of jobs for lower-income workers, must not be excessive.




</P>
</DIV8>


<DIV8 N="§ 983.56" NODE="24:4.1.3.1.20.2.41.6" TYPE="SECTION">
<HEAD>§ 983.56   Environmental review.</HEAD>
<P>(a) <I>HUD environmental regulations.</I> (1) HUD environmental regulations at 24 CFR parts 50 and 58 apply to activities under the PBV program, except as provided in paragraph (a)(2) of this section.
</P>
<P>(2) For projects or proposals that were selected in accordance with the site selection standards at § 983.55 in effect on or after June 6, 2024, no environmental review is required to be undertaken before entering into a HAP contract for existing housing, except to the extent a Federal environmental review is required by law or regulation relating to funding other than PBV housing assistance payments.
</P>
<P>(b) <I>Who performs the environmental review?</I> Under 24 CFR part 58, the unit of general local government within which the project is located that exercises land use responsibility, the county, or the State (the “responsible entity” or “RE”), is responsible for the Federal environmental review under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 <I>et seq.</I>) and related applicable Federal laws and authorities in accordance with 24 CFR 58.5 and 58.6. If a PHA objects in writing to having the RE perform the Federal environmental review, or if the RE declines to perform it, then HUD may perform the review itself (24 CFR 58.11). 24 CFR part 50 governs HUD performance of the review.
</P>
<P>(c) <I>Notice of applicability.</I> When an environmental review is required, if such a review has not been conducted prior to the proposal or project selection date, then the PHA's written notice of proposal or project selection must state that the selection is subject to completion of a favorable environmental review and that the project may be rejected based on the results of the environmental review.
</P>
<P>(d) <I>Environmental review limitations.</I> When an environmental review is required, a PHA may not execute an Agreement or HAP contract with an owner, and the PHA, the owner, and its contractors may not acquire, rehabilitate, convert, lease, repair, dispose of, demolish, or construct real property or commit or expend program or local funds for these activities, until one of the following occurs:
</P>
<P>(1) The responsible entity has determined that the activities to be undertaken are exempt under 24 CFR 58.34(a) or categorically excluded and not subject to compliance with environmental laws under 24 CFR 58.35(b);
</P>
<P>(2) The responsible entity has completed the environmental review procedures required by 24 CFR part 58, and HUD has approved the PHA's Request for Release of Funds and Certification (form HUD-7015.15). HUD approves the Request for Release of Funds and Certification by issuing a Letter to Proceed or form HUD-7015.16, thereby authorizing the PHA to execute an Agreement or HAP contract, as applicable; or
</P>
<P>(3) HUD has performed an environmental review under 24 CFR part 50 and has notified the PHA in writing of environmental clearance.
</P>
<P>(e) <I>Environmental review restrictions.</I> HUD will not issue a Letter to Proceed or form HUD-7015.16 to the PHA or provide environmental clearance if the PHA, the owner, or its contractors have undertaken any of the activities described in paragraph (d) of this section.
</P>
<P>(f) <I>Mitigating measures.</I> The PHA must document any mitigating measures or other conditions as provided in 24 CFR part 50 or 58, as applicable, and must complete or require the owner to carry out such measures and conditions.
</P>
<P>(g) <I>PHA duty to supply information.</I> The PHA must supply all available, relevant information necessary for the RE (or HUD, if applicable) to perform the required environmental review.




</P>
</DIV8>


<DIV8 N="§ 983.57" NODE="24:4.1.3.1.20.2.41.7" TYPE="SECTION">
<HEAD>§ 983.57   PHA-owned units.</HEAD>
<P>(a) <I>Selection of PHA-owned units.</I> The selection of PHA-owned units must be done in accordance with § 983.51(h).
</P>
<P>(b) <I>Independent entity functions.</I> In connection with PHA-owned units:
</P>
<P>(1) The independent entity must determine rent to owner, including rent reasonableness and calculating any rent adjustments by an OCAF (where applicable), in accordance with §§ 983.301 through 983.305.
</P>
<P>(2) The independent entity must perform unit inspections in accordance with § 983.103(g).
</P>
<P>(3) When the owner carries out development activity under § 983.152 or substantial improvement under §§ 983.207(d) or 983.212, the independent entity must review the evidence and work completion certification submitted by the owner in accordance with § 983.155(b) and determine if the units are complete in accordance with § 983.156.
</P>
<P>(4) The independent entity must determine whether to approve substantial improvement to units under a HAP contract in accordance with § 983.212.
</P>
<P>(c) <I>Payment to independent entity.</I> The PHA may compensate the independent entity from PHA administrative fees (including fees credited to the administrative fee reserve) for the services performed by the independent entity. The PHA may not use other program receipts to compensate the independent entity for such services. The PHA and the independent entity may not charge the family any fee or charge for the services provided by the independent entity.




</P>
</DIV8>


<DIV8 N="§ 983.58" NODE="24:4.1.3.1.20.2.41.8" TYPE="SECTION">
<HEAD>§ 983.58   PHA determination prior to selection.</HEAD>
<P>(a) <I>Analysis of units and budget.</I> A PHA must calculate the number of authorized voucher units that it is permitted to project-base in accordance with § 983.6 and determine the amount of budget authority that it has available for project-basing in accordance with § 983.5(b), before it issues a request for proposals in accordance with § 983.51(b)(1), makes a selection based on a previous competition in accordance with § 983.51(b)(2), amends an existing HAP contract to add units in accordance with § 983.207(b), or noncompetitively selects a project in accordance with § 983.51(c).
</P>
<P>(b) <I>Analysis of impact.</I> Prior to selecting a project for PBV assistance, a PHA must perform an analysis of the impact if project-basing 50 percent or more of the PHA's authorized voucher units. The analysis should consider the ability of the PHA to meet the needs of the community across its tenant-based and project-based voucher portfolio, including the impact on, among others: families on the waiting list and eligible PBV families that wish to move under § 983.261. The analysis performed by the PHA must be available as part of the public record.






</P>
</DIV8>


<DIV8 N="§ 983.59" NODE="24:4.1.3.1.20.2.41.9" TYPE="SECTION">
<HEAD>§ 983.59   Units excluded from program cap and project cap.</HEAD>
<XREF ID="20251208" REFID="20">Link to an amendment published at 90 FR 56688, Dec. 8, 2025.</XREF>
<P>(a) <I>General.</I> For HAP contracts entered into on or after April 18, 2017, the PHA may commit project-based assistance to units that meet the requirements for exclusion in paragraph (b) of this section. Such units do not count toward the program cap or project cap described in §§ 983.6 and 983.54, respectively.
</P>
<P>(b) <I>Requirements for exclusion of existing or rehabilitated units.</I> Excluded units must, in the five years prior to the request for proposals (RFP) or the proposal or project selection date in the case of selection without RFP, fall into one of the following categories provided that the units are removed from all categories prior to the effective date of the HAP contract:
</P>
<P>(1) The units have received one of the following forms of HUD assistance:
</P>
<P>(i) Public Housing Capital or Operating Funds (Section 9 of the 1937 Act);
</P>
<P>(ii) Project-Based Rental Assistance (Section 8 of the 1937 Act). Project-based rental assistance under Section 8 includes the Section 8 moderate rehabilitation program, including the single-room occupancy (SRO) program;
</P>
<P>(iii) Housing for the Elderly (Section 202 of the Housing Act of 1959);








</P>
<P>(iv) Housing for Persons with Disabilities (Section 811 of the Cranston-Gonzalez National Affordable Housing Act);
</P>
<P>(v) Rental Assistance Program (RAP) (Section 236(f)(2) of the National Housing Act); or
</P>
<P>(vi) Flexible Subsidy Program (Section 201 of the Housing and Community Development Amendments Act of 1978).
</P>
<P>(2) The units have been subject to a federally required rent restriction under one of the following programs:
</P>
<P>(i) The Low-Income Housing Tax Credit program (26 U.S.C. 42);
</P>
<P>(ii) Section 515 Rural Rental Housing Loans (42 U.S.C. 1485); 
</P>
<P>(iii) The following HUD programs:
</P>
<P>(A) Section 236;
</P>
<P>(B) Section 221(d)(3) Below Market Interest Rate;
</P>
<P>(C) Housing for the Elderly (Section 202 of the Housing Act of 1959);






</P>
<P>(D) Housing for Persons with Disabilities (Section 811 of the Cranston-Gonzalez National Affordable Housing Act);
</P>
<P>(E) Flexible Subsidy Program (Section 201 of the Housing and Community Development Amendments Act of 1978); or
</P>
<P>(iv) Any other program identified by HUD through <E T="04">Federal Register</E> notice subject to public comment.
</P>
<P>(c) <I>Replacement units.</I> Newly constructed units developed under the PBV program may be excluded from the program cap and project cap provided the primary purpose of the newly constructed units is or was to replace units that meet the criteria of paragraph (b)(1) or (2) of this section. The newly constructed unit must be located on the same site as the unit it is replacing; however, an expansion of or modification to the prior project's site boundaries as a result of the design of the newly constructed project is acceptable as long as a majority of the replacement units are built back on the site of the original project and any replacement units that are not located on the existing site are part of a project that shares a common border with, are across a public right of way from, or touch that site. In addition, in order for the replacement units to be excluded from the program and project caps, one of the following must be true:
</P>
<P>(1) Former residents of the original project must be provided with a selection preference that provides the residents with the right of first occupancy at the PBV newly constructed project when it is ready for occupancy.
</P>
<P>(2) Prior to the demolition of the original project, the PBV newly constructed project must have been identified as replacement housing for that original project as part of a documented plan for the redevelopment of the site.
</P>
<P>(d) <I>Unit size configuration and number of units for newly constructed and rehabilitated projects.</I> The unit size configuration of the PBV newly constructed or rehabilitated project may differ from the unit size configuration of the original project that the PBV units are replacing. In addition, the total number of PBV-assisted units may differ from the number of units in the original project. However, only the total number of units in the original project are excluded from the program cap and the project cap. Units that exceed the total number of covered units in the original project are subject to the program cap and the project cap.
</P>
<P>(e) <I>Inapplicability of other program and project cap exceptions.</I> The 10 percent exception under § 983.6 and the project cap exception under § 983.54(c)(2) are inapplicable to excluded units under this section.
</P>
<CITA TYPE="N">[89 FR 38309, May 7, 2024, as amended at 90 FR 56688, Dec. 8, 2025]






</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:4.1.3.1.20.3" TYPE="SUBPART">
<HEAD>Subpart C—Dwelling Units</HEAD>


<DIV8 N="§ 983.101" NODE="24:4.1.3.1.20.3.41.1" TYPE="SECTION">
<HEAD>§ 983.101   Housing quality standards.</HEAD>
<P>(a) <I>HQS applicability.</I> As defined in § 983.3, HQS refers to the minimum quality standards developed by HUD in accordance with 24 CFR 5.703 of this title for housing assisted under the PBV program, including any variations approved by HUD for the PHA under 24 CFR 5.705(a)(3).
</P>
<P>(b) <I>Requirements for special housing types.</I> For special housing types assisted under the PBV program, HQS applies to the PBV program except as specified in 24 CFR part 982, subpart M. Provisions contained within 24 CFR part 982 that are inapplicable to the PBV program pursuant to § 983.2 are also inapplicable to special housing types under the PBV program.
</P>
<P>(c) <I>Lead-based paint requirements.</I> The Lead-based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead-based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and implementing regulations at 24 CFR part 35, subparts A, B, H, and R, apply to the PBV program.




</P>
<P>(d) <I>HQS enforcement.</I> Parts 982 and 983 of this chapter do not create any right of the family or any party, other than HUD or the PHA, to require enforcement of the HQS requirements or to assert any claim against HUD or the PHA for damages, injunction, or other relief for alleged failure to enforce the HQS.


</P>
<P>(e) <I>Additional PHA quality and design requirements.</I> This section establishes the minimum federal housing quality standards for PBV housing. However, the PHA may elect to establish additional requirements for quality, architecture, or design of PBV housing.

 
</P>
<CITA TYPE="N">[70 FR 59913, Oct. 13, 2005, as amended at 79 FR 36167, June 25, 2014; 88 FR 30504, May 11, 2023; 89 FR 38315, May 7, 2024]








</CITA>
</DIV8>


<DIV8 N="§ 983.102" NODE="24:4.1.3.1.20.3.41.2" TYPE="SECTION">
<HEAD>§ 983.102   Housing accessibility for persons with disabilities.</HEAD>
<P>(a) <I>Program accessibility.</I> The housing must comply with program accessibility requirements of section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and implementing regulations at 24 CFR part 8. The PHA shall ensure that the percentage of accessible dwelling units complies with the requirements of section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), as implemented by HUD's regulations at 24 CFR part 8, subpart C.
</P>
<P>(b) <I>Design and construction.</I> Housing first occupied after March 13, 1991, must comply with design and construction requirements of the Fair Housing Amendments Act of 1988 and implementing regulations at 24 CFR 100.205, as applicable. 






</P>
</DIV8>


<DIV8 N="§ 983.103" NODE="24:4.1.3.1.20.3.41.3" TYPE="SECTION">
<HEAD>§ 983.103   Inspecting units.</HEAD>
<XREF ID="20251208" REFID="21">Link to an amendment published at 90 FR 56688, Dec. 8, 2025.</XREF>
<P>(a) <I>Pre-selection inspection.</I> If the units to be assisted already exist, the PHA must inspect all units before the proposal or project selection date and must determine if the project meets the definition of existing housing. If the project is existing housing, the PHA may not execute the HAP contract until all units meet the initial inspection requirements in accordance with paragraph (c) of this section.
</P>
<P>(b) <I>Initial inspection of newly constructed and rehabilitated projects and units that underwent substantial improvement to be added to a HAP contract.</I> Following completion of work pursuant to § 983.155, the PHA must complete the following inspection(s), as applicable in accordance with § 983.156:
</P>
<P>(1) For rehabilitated housing that is developed prior to the HAP contract term or newly constructed housing, the PHA must inspect each proposed newly constructed and rehabilitated PBV unit before execution of the HAP contract. Each proposed PBV unit must fully comply with HQS prior to HAP contract execution.
</P>
<P>(2) For rehabilitated housing that will undergo development activity after HAP contract execution per § 983.157, the PHA must conduct unit inspections in accordance with the requirements of § 983.157.
</P>
<P>(3) Inspect each unit that underwent substantial improvement pursuant to §§ 983.207(d) or 983.212. Each PBV unit that underwent substantial improvement must fully comply with HQS prior to the PHA adding the unit to the HAP contract, returning the unit temporarily removed to the HAP contract, allowing re-occupancy of the unit, and resuming housing assistance payments, as applicable.
</P>
<P>(c) <I>Initial inspection requirements for existing housing</I>—(1) <I>In general.</I> In accordance with this paragraph, the PHA may adopt in its Administrative Plan the non-life-threatening deficiencies option or the alternative inspection option, or both, for initial inspections of existing housing. If the PHA has not adopted the initial inspection non-life-threatening deficiency option (NLT option) or the alternative inspection option for the project, the PHA must inspect and determine that all of the proposed PBV units fully comply with HQS before entering the HAP contract. The PHA must establish in its Administrative Plan the amount of time that may elapse between the initial inspection of existing housing and execution of a HAP contract for that unit.
</P>
<P>(2) <I>Initial inspection—NLT option.</I> (i) A PHA may execute the HAP contract and begin making assistance payments for all of the assisted units, including units that failed the initial HQS inspection, provided that no units have life-threatening deficiencies and if the owner agrees to the NLT option. If the PHA has established and the unit is covered by both the NLT option and the alternative inspections option under paragraph (c)(3) of this section for the initial HQS inspection, see paragraph (c)(4) of this section.
</P>
<P>(ii) After completing the inspections and determining there are no life-threatening deficiencies, for any unit with non-life-threatening deficiencies, the PHA must provide both the owner and the family (any eligible in-place family (§ 983.251(d)) or any family referred from the PBV waiting list being offered that unit) a list of the non-life-threatening deficiencies identified by the initial HQS inspection and an explanation of the maximum amount of time the PHA will withhold HAP before abating assistance if the owner does not complete the repairs within 30 days. The PHA must also inform the family that if the family accepts the unit and the owner fails to make the repairs within the cure period, which may not exceed 180 days from the effective date of the HAP contract, the PHA will remove the unit from the HAP contract, and the family will be issued a voucher to move to another unit in order to receive voucher assistance. If the PHA's Administrative Plan provides that the PHA will terminate the PBV HAP contract if the owner fails to correct deficiencies in any unit in the project within the cure period, the PHA must also provide the notice described above to families referred to units without any deficiencies. The family referred from the waiting list may choose to decline the unit and remain on the waiting list. An eligible in-place family may decline the unit, and the PHA must issue the family a tenant-based voucher to move from the unit in that circumstance.
</P>
<P>(iii) If the family decides to lease the unit, the family enters into the assisted lease with the owner. The PHA commences making assistance payments to the owner.
</P>
<P>(iv) The owner must correct the deficiencies within 30 days from the effective date of the HAP contract. If the owner fails to correct the deficiencies within the 30-day cure period, the PHA must withhold the housing assistance payments for the unit until the owner makes the repairs and the PHA verifies the correction. Once the deficiencies are corrected, the PHA must use the withheld housing assistance payments to make payments for the period that payments were withheld.
</P>
<P>(v) The PHA must state in its Administrative Plan the maximum amount of time it will withhold payments before abating payments and the number of days after which the PHA will either terminate the PBV HAP contract or remove the unit from the HAP contract as a result of the owner's failure to correct the deficiencies, which may not exceed 180 days from the effective date of the HAP contract. If the PHA terminates the PBV HAP contract or removes the unit from the HAP contract as a result of the owner's failure to correct the deficiencies, the PHA must provide any affected family tenant-based assistance as provided in § 983.206(b).


</P>
<P>(vi) The owner may not terminate the tenancy of a family because of the withholding or abatement of assistance payments. During the period the assistance is abated, a family may terminate the tenancy by notifying the owner and the PHA, and the PHA must provide the family tenant-based assistance. In the case of an in-place family, the family may also choose to terminate the tenancy during the withholding period following the 30-day cure period, and the PHA must offer the family either another assisted unit in the PBV project that fully complies with HQS or tenant-based assistance.
</P>
<P>(3) <I>Initial inspection—alternative inspection option.</I> The PHA may adopt the alternative inspection option for initial inspections of existing housing, subject to the procedures and requirements specified in 24 CFR 982.406(b), (c), (d), and (g).
</P>
<P>(i) After the PHA determines the project meets the definition of existing housing in accordance with paragraph (a) of this section, the PHA may execute the HAP contract for the project if the project has been inspected in the previous 24 months using an alternative inspection that meets the requirements of 24 CFR 982.406, as opposed to re-inspecting the project to make sure all units fully comply with HQS before executing the HAP contract, if the owner agrees to the use of the alternative inspection option. If the PHA has established and the unit is covered by both the NLT option under paragraph (c)(2) of this section and the alternative inspection option for the initial HQS inspection, see paragraph (c)(4) of this section.
</P>
<P>(ii) The PHA notifies all families (any eligible in-place family (§ 983.251(d)) or any family referred from the PBV waiting list being offered a contract unit) that will occupy a contract unit before the PHA conducts the HQS inspection that the alternative inspection option is in effect for the project. The PHA must provide each family with the PHA list of HQS deficiencies that are considered life-threatening as part of this notification. A family referred from the waiting list may decline to accept an offered unit due to unit conditions and remain on the waiting list.






</P>
<P>(iii) The PHA must conduct an HQS inspection within 30 days of the proposal or project selection date. If the family reports a deficiency to the PHA prior to the PHA's inspection, the PHA must inspect the unit within the time period required under paragraph (f) of this section or within 30 days of the proposal or project selection date, whichever time period ends first.
</P>
<P>(iv) The PHA may not commence housing assistance payments to the owner until the PHA has inspected all the units under the HAP contract and determined they meet HQS.
</P>
<P>(v) If the PHA inspection finds that any contract unit contains HQS deficiencies, the PHA may not make housing assistance payments to the owner until all the deficiencies have been corrected in all contract units. The PHA must not refer families from the PBV waiting list to occupy units with deficiencies. If a deficiency is life-threatening, the owner must correct the deficiency within 24 hours of notification from the PHA. For other deficiencies, the owner must correct the deficiency within 30 calendar days (or any PHA-approved extension) of notification from the PHA. If the owner corrects the deficiencies within the required cure period, the PHA makes the housing assistance payments retroactive to the effective date of the HAP contract or the PBV lease effective dates, whichever is later.


</P>
<P>(vi) The PHA establishes in the Administrative Plan the maximum amount of time it will withhold payments if the owner does not correct the deficiencies within the required cure period before abating payments and the number of days after which the PHA will either remove the unit from the HAP contract or terminate the HAP contract for the owner's failure to correct the deficiencies, which may not exceed 180 days from the effective date of the HAP contract. If the PHA terminates the PBV HAP contract or removes the unit from the HAP contract as a result of the owner's failure to correct the deficiencies, the PHA must provide any affected family tenant-based assistance as provided in § 983.206(b) of this title.
</P>
<P>(vii) If the owner fails to make the repairs within the applicable time periods, the PHA must abate the payments for the non-compliant units, while continuing to withhold payments for the HQS compliant units until all the units meet HQS or the unit removal or contract termination occurs. If the deficiencies are corrected, the PHA must use the withheld housing assistance payments to make payments for the period that payments were withheld.
</P>
<P>(viii) The owner may not terminate the tenancy of a family because of the withholding or abatement of assistance payments. During the period the assistance is abated, a family may terminate the tenancy by notifying the owner, and the PHA must provide the family tenant-based assistance. If the PHA terminates the PBV HAP contract or removes the unit from the HAP contract as a result of the owner's failure to correct the deficiencies, the PHA must provide any affected family tenant-based assistance as provided in § 983.206(b) of this title.
</P>
<P>(4) <I>Initial inspection—use of both the NLT and alternative inspection options.</I> The PHA may adopt both the NLT option and the alternative inspection option for initial inspections of existing housing, subject to the procedures and requirements specified in 24 CFR 982.406(b), (c), (d), and (g).




</P>
<P>(i) If the owner agrees to both the NLT option and the alternative inspection option, then the PHA notifies all families (any eligible in-place family (§ 983.251(d)) or any family referred from the PBV waiting list that will occupy the unit before the PHA conducts the HQS inspection) that both the NLT option and the alternative inspection option will be used for the family's unit. As part of this notification, the PHA must provide the family with the PHA's list of HQS deficiencies that are considered life-threatening. A family referred from the waiting list may decline to move into a unit due to unit conditions and remain on the waiting list. Following inspection (see paragraph (c)(4)(ii) of this section), the PHA must provide any family referred from the PBV waiting list that will occupy a unit with non-life-threatening deficiencies a list of the non-life-threatening deficiencies identified by the initial HQS inspection and an explanation of the maximum amount of time the PHA will withhold HAP before abating assistance if the owner does not complete the repairs within 30 days. The PHA must also inform the family that if the family accepts the unit and the owner fails to make the repairs within the cure period, which may not exceed 180 days from the effective date of the HAP contract, the PHA will remove the unit from the HAP contract, and the family will be issued a voucher to move to another unit in order to receive voucher assistance. If the PHA's Administrative Plan provides that the PHA will terminate the PBV HAP contract if the owner fails to correct deficiencies in any unit in the project within the cure period, then, following inspection, the PHA must also provide the notice described in this paragraph to families referred to units without any deficiencies. The family referred from the waiting list may choose to decline the unit and remain on the waiting list.
</P>
<P>(ii) The PHA executes the HAP contract with the owner on the basis of an inspection in the previous 24 months using an alternative inspection that meets the requirements of 24 CFR 982.406.  The PHA must conduct an HQS inspection within 30 days after the proposal or project selection date. If the family reports a deficiency to the PHA during this interim period, the PHA must inspect the unit within the time period required under paragraph (f) of this section or within 30 days of the proposal or project selection date, whichever time period ends first.
</P>
<P>(iii) The PHA may not commence housing assistance payments to the owner until the PHA has inspected all the units under the HAP contract.








</P>
<P>(iv) If none of the units have any life-threatening deficiencies, the PHA commences payments and makes retroactive payments to the effective date of the HAP contract or the PBV lease effective dates, whichever is later, for all the assisted units. For any unit that failed the PHA's HQS inspection but has no life-threatening deficiencies, the owner must correct the deficiencies within no more than 30 days from the effective date of the HAP contract. If the owner fails to correct the deficiencies within the 30-day cure period, the PHA must withhold the housing assistance payments for that unit until the owner makes the repairs and the PHA verifies the correction. Once the deficiencies are corrected, the PHA must use the withheld housing assistance payments to make payments for the period that payments were withheld.








</P>
<P>(v) If any units have life-threatening deficiencies, the PHA may not commence making housing assistance payments to the owner for any units until all the HQS deficiencies (life-threatening and non-life-threatening) have been corrected. The PHA must not refer families from the PBV waiting list to occupy units with life-threatening deficiencies. The owner must correct all life-threatening deficiencies within no more than 24 hours of notification from the PHA. For other deficiencies, the owner must correct the deficiency within no more than 30 calendar days (or any PHA-approved extension) of notification from the PHA. If the owner corrects all of the deficiencies within the required cure period, the PHA must make the housing assistance payments retroactive to the effective date of the HAP contract or the PBV lease effective dates, whichever is later. If the owner fails to make the repairs within the applicable time periods, the PHA must abate the payments for the non-compliant units, while continuing to withhold payments for the HQS compliant units until all the units meet HQS or the unit removal or contract termination occurs. If the deficiencies are corrected, the PHA must use the withheld housing assistance payments to make payments for the period that payments were withheld.
</P>
<P>(vi) The owner may not terminate the tenancy of a family because of the withholding or abatement of assistance payments. During the period the assistance is abated, a family may terminate the tenancy by notifying the owner, and the PHA must provide the family tenant-based assistance. If the PHA terminates the PBV HAP contract or removes the unit from the HAP contract as a result of the owner's failure to correct the deficiencies, the PHA must provide any affected family with tenant-based assistance as provided in § 983.206(b) of this title. The PHA must establish in its Administrative Plan:
</P>
<P>(A) The maximum amount of time it will withhold payments if the owner fails to correct the deficiencies within the required cure period before abating payments; and
</P>
<P>(B) The number of days after which the PHA will terminate the HAP contract or remove the unit from the HAP contract for the owner's failure to correct the deficiencies, which may not exceed 180 days from the effective date of the HAP contract.
</P>
<P>(d) <I>Turnover inspections.</I> Before providing assistance to a new family in a contract unit, the PHA must inspect the unit. The PHA must not provide assistance on behalf of a family for a unit that fails to comply fully with HQS.
</P>
<P>(e) <I>Periodic inspections.</I> (1) At least biennially during the term of the HAP contract, the PHA must inspect a random sample, consisting of at least 20 percent of the contract units in each building, to determine if the contract units and the premises are maintained in accordance with HQS. Turnover inspections pursuant to paragraph (d) of this section are not counted toward meeting this inspection requirement. Instead of biennially, a small rural PHA, as defined in § 902.101 of this title, must inspect the random sample of units in accordance with this paragraph at least once every three years. The PHA must establish in its Administrative Plan the frequency of periodic inspections. This requirement applies in the case of a HAP contract that is undergoing development activity after HAP contract execution per § 983.157; however, if the periodic inspection occurs during the period of development activity covered by the rider and fewer than 20 percent of contract units in each building are designated in the rider as available for occupancy, the PHA is only required to inspect the units in that building that are designated as available for occupancy.
</P>
<P>(2) If more than 20 percent of the sample of inspected contract units in a building fail the initial inspection, then the PHA must reinspect 100 percent of the contract units in the building.
</P>
<P>(3) A PHA may also use alternative inspections to meet the requirements for periodic inspections in this paragraph (e), subject to the procedures and requirements specified in 24 CFR 982.406(b), (c), (d), and (g).
</P>
<P>(f) <I>Other inspections.</I> (1) <I>Interim inspections:</I> When a participant family or government official notifies the PHA of a potential deficiency, the following conditions apply:
</P>
<P>(i) <I>Life-threatening.</I> If the reported deficiency is life-threatening, the PHA must, within 24 hours, both inspect the housing unit and notify the owner if the life-threatening deficiency is confirmed. The owner must then make the repairs within 24 hours of PHA notification.
</P>
<P>(ii) <I>Non-life-threatening.</I> If the reported deficiency is non-life-threatening, the PHA must, within 15 days, both inspect the unit and notify the owner if the deficiency is confirmed. The owner must then make the repairs within 30 days of the notification from the PHA or within any PHA-approved extension.
</P>
<P>(iii) <I>Extraordinary circumstances.</I> In the event of extraordinary circumstances, such as if a unit is within a presidentially declared disaster area, HUD may approve an exception of the 24-hour or the 15-day inspection requirement until such time as an inspection is feasible.
</P>
<P>(2) <I>Follow-up inspections:</I> The PHA must conduct follow-up inspections needed to determine if the owner (or, if applicable, the family) has corrected an HQS violation, except where the PHA is using a verification method as described in paragraph (h) of this section, and must conduct inspections to determine the basis for exercise of contractual and other remedies for owner or family violation of the HQS. (Family HQS obligations are specified in 24 CFR 982.404(b).)
</P>
<P>(3) <I>Supervisory quality control inspections:</I> In conducting PHA supervisory quality control HQS inspections, the PHA should include a representative sample of both tenant-based and project-based units.
</P>
<P>(g) <I>Inspecting PHA-owned units.</I> (1) In the case of PHA-owned units, the inspections required under this section must be performed by an independent entity designated in accordance with § 983.57, rather than by the PHA.
</P>
<P>(2) The independent entity must furnish a copy of each inspection report to the PHA.
</P>
<P>(3) The PHA must take all necessary actions in response to inspection reports from the independent entity, including exercise of contractual remedies for violation of the HAP contract by the PHA owner.
</P>
<P>(h) <I>Verification methods.</I> When a PHA must verify correction of a deficiency, the PHA may use verification methods other than another on-site inspection. The PHA may establish different verification methods for initial and subsequent inspections or for different HQS deficiencies, which must be detailed in its Administrative Plan. Upon either an inspection for initial occupancy or a reinspection, the PHA may accept photographic evidence or other reliable evidence from the owner to verify that a deficiency has been corrected.
</P>
<P>(i) <I>Projects with government financing.</I> In the case of a PBV project financed under a Federal, State, or local housing program that is subject to an alternative inspection, the PHA may rely upon inspections conducted at least triennially to demonstrate compliance with the alternative inspection option under paragraph (c) of this section or the periodic inspection requirement of paragraph (e) of this section, in accordance with its policy established in the PHA Administrative Plan.
</P>
<CITA TYPE="N">[89 FR 38316, May 7, 2024, as amended at 90 FR 56688, Dec. 8, 2025]






</CITA>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:4.1.3.1.20.4" TYPE="SUBPART">
<HEAD>Subpart D—Requirements for Rehabilitated and Newly Constructed Units</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>89 FR 38318, May 7, 2024, unless otherwise noted.




</PSPACE></SOURCE>

<DIV8 N="§ 983.151" NODE="24:4.1.3.1.20.4.41.1" TYPE="SECTION">
<HEAD>§ 983.151   Applicability.</HEAD>
<P>This subpart applies to development activity, as defined in § 983.3, under the PBV program.






</P>
</DIV8>


<DIV8 N="§ 983.152" NODE="24:4.1.3.1.20.4.41.2" TYPE="SECTION">
<HEAD>§ 983.152   Nature of development activity.</HEAD>
<P>(a) <I>Purpose of development activity.</I> An owner may undertake development activity, as defined at § 983.3, for the purpose of:
</P>
<P>(1) Placing a newly constructed or rehabilitated project under a HAP contract; or
</P>
<P>(2) For a rehabilitated project that will undergo development activity after HAP contract execution, completing the requirements of the rider in accordance with § 983.157.
</P>
<P>(b) <I>Development requirements.</I> Development activity must comply with the requirements of §§ 983.153 through 983.157.




</P>
</DIV8>


<DIV8 N="§ 983.153" NODE="24:4.1.3.1.20.4.41.3" TYPE="SECTION">
<HEAD>§ 983.153   Development requirements.</HEAD>
<P>(a) <I>Environmental review requirements.</I> The development activity must comply with any applicable environmental review requirements at § 983.56.
</P>
<P>(b) <I>Subsidy layering review.</I> (1) The PHA may provide PBV assistance only in accordance with the HUD subsidy layering regulations (24 CFR 4.13) and other requirements. A subsidy layering review is required when an owner undertakes development activity and housing assistance payment subsidy under the PBV program is combined with other governmental housing assistance from Federal, State, or local agencies, including assistance such as tax concessions or tax credits. The subsidy layering review is intended to prevent excessive public assistance for the housing by combining (layering) housing assistance payment subsidy under the PBV program with other governmental housing assistance from Federal, State, or local agencies, including assistance such as tax concessions or tax credits.
</P>
<P>(2) When a subsidy layering review is required, it must occur before a PHA attaches assistance to a project. Specifically, the PHA may not execute an Agreement or HAP contract with an owner until HUD or a housing credit agency approved by HUD has conducted any required subsidy layering review and determined that the PBV assistance is in accordance with HUD subsidy layering requirements.
</P>
<P>(3) A further subsidy layering review is not required if HUD's designee has conducted a review in accordance with HUD's PBV subsidy layering review guidelines and that review included a review of PBV assistance.
</P>
<P>(4) The owner must disclose to the PHA any change to the information provided for purposes of the subsidy layering review, including the amount of assistance or number of units to be developed, that occurs after the subsidy layering review has been conducted and before all contract units are placed under the HAP contract, in accordance with HUD requirements. A subsidy layering review may be required to determine if such a change would result in excess public assistance to the project, as required by HUD through notification in the <E T="04">Federal Register</E>.
</P>
<P>(5) The HAP contract must contain the owner's certification that the project has not received and will not receive (before or during the term of the HAP contract) any public assistance for acquisition, development, or operation of the housing other than assistance disclosed in the subsidy layering review in accordance with HUD requirements, unless the owner discloses additional assistance in accordance with HUD requirements. A subsidy layering review is required for newly constructed or rehabilitated housing under a HAP contract that receives additional assistance, as described in § 983.11(d).
</P>
<P>(6) Existing housing is exempt from subsidy layering requirements.
</P>
<P>(c) <I>Labor standards.</I> (1) Labor standards as described in paragraphs (c)(2) of this section apply to development activity. When the PHA exercises its discretion at §§ 983.154(f) or 983.157(b)(2) to allow the owner to conduct some or all development activity while the proposed PBV units are not under an Agreement or HAP contract, the applicable parties must comply with the labor standards in paragraph (c)(2) of this section from the date of proposal submission (for housing subject to competitive selection) or from the date of the PHA's board resolution approving the project-basing of assistance at the project (for housing excepted from competitive selection).
</P>
<P>(2) In the case of development involving nine or more contract units (whether or not completed in stages):
</P>
<P>(i) The owner and the owner's contractors and subcontractors must pay Davis-Bacon wages to laborers and mechanics employed in development of the housing; and
</P>
<P>(ii) The owner and the owner's contractors and subcontractors must comply with the Contract Work Hours and Safety Standards Act, Department of Labor regulations in 29 CFR part 5, and other applicable Federal labor relations laws and regulations. The PHA must monitor compliance with labor standards.
</P>
<P>(3) For any project to which labor standards apply, the PHA's written notice to the party that submitted the selected proposal or board resolution approving project-basing of assistance at the specific project, as applicable per § 983.51(f), must state that any construction contracts must incorporate a Davis-Bacon contract clause and the current applicable prevailing wage determination.
</P>
<P>(d) <I>Equal employment opportunity.</I> Development activity is subject to the Federal equal employment opportunity requirements of Executive Orders 11246 as amended (3 CFR, 1964-1965 Comp., p. 339), 11625 (3 CFR, 1971-1975 Comp., p. 616), 12432 (3 CFR, 1983 Comp., p. 198), and 12138 (3 CFR, 1977 Comp., p. 393).
</P>
<P>(e) <I>Accessibility.</I> As applicable, the design and construction requirements of the Fair Housing Act and implementing regulations at 24 CFR 100.205; the accessibility requirements of Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and implementing regulations at 24 CFR part 8, including 8.22 and 8.23; and Title II of the Americans with Disabilities Act (42 U.S.C. 12131-12134) and implementing regulations at 28 CFR part 35, including §§ 35.150 and 35.151, apply to development activity. A description of any required work item resulting from these requirements must be included in the Agreement (if applicable), as specified in § 983.154(e)(6) or HAP contract (if applicable), as specified in § 983.157(e)(1).
</P>
<P>(f) <I>Broadband infrastructure.</I> (1) Any development activity that constitutes substantial rehabilitation as defined by 24 CFR 5.100 of a building with more than four rental units and where the proposal or project selection date or the start of the development activity while under a HAP contract is after January 19, 2017, must include installation of broadband infrastructure, as this term is defined in 24 CFR 5.100, except where the owner determines and documents the determination that:
</P>
<P>(i) The location of the new construction or substantial rehabilitation makes installation of broadband infrastructure infeasible;
</P>
<P>(ii) The cost of installing broadband infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden; or
</P>
<P>(iii) The structure of the housing to be substantially rehabilitated makes installation of broadband infrastructure infeasible.
</P>
<P>(2) A description of any required work item resulting from this requirement must be included in the Agreement (if applicable), as specified in § 983.154(e)(7) or HAP contract (if applicable), as specified in § 983.157(e)(2).
</P>
<P>(g) <I>Eligibility to participate in Federal programs and activities.</I> (1) An owner or project principal who is on the U.S. General Services Administration list of parties excluded from Federal procurement and non-procurement programs, or who is debarred, suspended subject to a limited denial of participation, or otherwise excluded under 2 CFR part 2424, may not participate in development activity or the rehabilitation of units subject to a HAP contract. Both the Agreement (if applicable) and the HAP contract must include a certification by the owner that the owner and other project principals (including the officers and principal members, shareholders, investors, and other parties having a substantial interest in the project) are not on such list and are not debarred, suspended subject to a limited denial of participation, or otherwise excluded under 2 CFR part 2424.
</P>
<P>(2) An owner must disclose any possible conflict of interest that would be a violation of the Agreement (if applicable), the HAP contract, or HUD regulations, in accordance with § 982.161 of this title.
</P>
<CITA TYPE="N">[89 FR 38318, May 7, 2024, as amended at 90 FR 56689, Dec. 8, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 983.154" NODE="24:4.1.3.1.20.4.41.4" TYPE="SECTION">
<HEAD>§ 983.154   Development agreement.</HEAD>
<XREF ID="20240507" REFID="93">Link to an amendment published at 89 FR 38321, May 7, 2024.</XREF>
<P>(a) <I>Agreement to enter into HAP contract (Agreement).</I> Except as specified in paragraphs (f) and (g) of this section, the PHA and owner must enter into an Agreement that will govern development activity. In the Agreement, the owner agrees to develop the contract units to comply with HQS, and the PHA agrees that, upon timely completion of such development activity in accordance with the terms of the Agreement, the PHA will enter into an initial HAP contract with the owner for the contract units. The Agreement must cover a single project, except one Agreement may cover multiple projects that each consist of a single-family building.
</P>
<P>(b) <I>Timing of Agreement.</I> The effective date of the Agreement must be on or after the date the Agreement is executed. The Agreement must be executed and effective prior to the commencement of development activity as described in paragraph (d) of this section, except as provided in paragraphs (f) and (g) of this section, and must be in the form required by HUD (see 24 CFR 982.162(b)).
</P>
<P>(c) <I>Agreement amendment.</I> The PHA and owner may agree to amend the contents of the Agreement described in paragraph (e) of this section by executing an addendum to the Agreement, so long as such amendments are consistent with all requirements of this part 983. The PHA and owner may only execute an addendum affecting a unit prior to the PHA accepting the completed unit.
</P>
<P>(d) <I>Commencement of development activity.</I> Development activity must not commence after the date of proposal submission (for housing subject to competitive selection) or the date of the PHA's board resolution approving the project-basing of assistance at the project (for housing excepted from competitive selection) and before the effective date of the Agreement, except as provided in paragraphs (f) and (g) of this section.
</P>
<P>(1) In the case of new construction, development activity begins with excavation or site preparation (including clearing of the land).
</P>
<P>(2) In the case of rehabilitation, development activity begins with the physical commencement of rehabilitation activity on the housing.
</P>
<P>(e) <I>Contents of Agreement.</I> At a minimum, the Agreement must describe the following features of the housing to be developed and assisted under the PBV program and development activity to be performed:
</P>
<P>(1) The site;
</P>
<P>(2) The location of contract units on site;
</P>
<P>(3) The number of contract units by area (square footage) and number of bedrooms and bathrooms;
</P>
<P>(4) The services, maintenance, or equipment to be supplied by the owner without charges in addition to the rent to owner;
</P>
<P>(5) The utilities available to the contract units, including a specification of utility services to be paid by the owner (without charges in addition to rent) and utility services to be paid by the tenant;
</P>
<P>(6) A description of any required work item necessary to comply with the accessibility requirements of § 983.153(e);
</P>
<P>(7) A description of any required work item if the requirement at § 983.153(f) to install broadband infrastructure applies;
</P>
<P>(8) Estimated initial rents to owner for the contract units;
</P>
<P>(9) A description of the work to be performed under the Agreement:
</P>
<P>(i) For rehabilitation, the work description must include the rehabilitation work write-up and, where determined necessary by the PHA, specifications and plans (see paragraph (g) of this section for additional requirements that apply under the option for development activity after HAP contract at 983.157); and
</P>
<P>(ii) For new construction, the work description must include the working drawings and specifications;
</P>
<P>(10) The deadline for completion of the work to be performed under the Agreement; and
</P>
<P>(11) Any requirements the PHA elects to establish in addition to HQS for design, architecture, or quality. The PHA must specify the conditions under which it will require additional housing quality requirements in the Administrative Plan.
</P>
<P>(f) <I>PHA discretion.</I> With respect to development activity, the PHA may decide not to use an Agreement or may choose to execute an Agreement after construction or rehabilitation that complied with applicable requirements of § 983.153 has commenced.
</P>
<P>(1) In its Administrative Plan, the PHA must explain the circumstances (if any) under which the PHA will enter a PBV HAP contract for newly constructed or rehabilitated housing without first entering into an Agreement and under which the PHA will enter into an Agreement after construction or rehabilitation that complied with applicable requirements of § 983.153 has commenced.
</P>
<P>(2) The following conditions apply:
</P>
<P>(i) The owner of the project must be able to document its compliance with all applicable requirements of § 983.153 from the date of proposal submission (for housing subject to competitive selection) or from the date of the PHA's board resolution approving the project-basing of assistance at the project (for housing excepted from competitive selection);
</P>
<P>(ii) For housing subject to competitive selection, the PHA must confirm prior to the proposal selection date that the owner has complied with all applicable requirements of § 983.153 from the date of proposal submission. For housing excepted from competitive selection, the PHA must confirm prior to executing the Agreement (if applicable) or HAP contract that the owner has complied with all applicable requirements of § 983.153 from the date of the PHA's board resolution approving the project-basing of assistance at the project; and
</P>
<P>(iii) The PHA must comply with the notice requirement of § 983.153(c)(3).


</P>
</DIV8>


<DIV8 N="§ 983.155" NODE="24:4.1.3.1.20.4.41.5" TYPE="SECTION">
<HEAD>§ 983.155   Completion of work.</HEAD>
<P>(a) <I>General requirement.</I> The owner must submit evidence and certify to the PHA, in the form and manner required by the PHA's Administrative Plan, that development activity under § 983.152 or substantial improvement under §§ 983.207(d) or 983.212 has been completed, and that all such work was completed in accordance with the applicable requirements. The PHA must review the evidence to determine whether the development activity or substantial improvement was completed in accordance with the applicable requirements.
</P>
<P>(b) <I>PHA-owned units.</I> In the case of PHA-owned units, the owner must submit evidence and certify to the independent entity (see § 983.57(b)(3)), in the form and manner required by the PHA's Administrative Plan, that development activity under § 983.152 or substantial improvement under §§ 983.207(d) or 983.212 has been completed, and that all such work was completed in accordance with the applicable requirements. The independent entity must review the evidence to determine whether the development activity or substantial improvement was completed in accordance with the applicable requirements.




</P>
</DIV8>


<DIV8 N="§ 983.156" NODE="24:4.1.3.1.20.4.41.6" TYPE="SECTION">
<HEAD>§ 983.156   PHA acceptance of completed units.</HEAD>
<P>(a) <I>Inspection of units.</I> After the PHA has received all required evidence of completion and the owner's certification that all work was completed in accordance with the applicable requirements, the PHA must inspect the completed units to determine whether they comply with HUD's HQS (see § 983.103(b)) and any additional design, architecture, or quality requirements specified by the PHA.
</P>
<P>(b) <I>Execution or amendment of the HAP contract.</I> If the PHA determines that the development activity or substantial improvement was completed in accordance with the applicable requirements at § 983.155 and the completed units meet HUD's HQS and any additional design, architecture, or quality requirements specified by the PHA per paragraph (a) of this section, then the PHA must:
</P>
<P>(1) For units developed pursuant to § 983.152(a)(1) which will not undergo development activity after HAP contract execution per § 983.157, submit the HAP contract for execution by the owner and execute the HAP contract;
</P>
<P>(2) For rehabilitated housing projects for which development activity has commenced prior to HAP contract execution, but which will undergo development activity after HAP contract execution under § 983.157(b), submit the HAP contract for execution by the owner and execute the HAP contract;
</P>
<P>(3) For development activity conducted after HAP contract execution, amend the HAP contract rider to designate the completed units as available for occupancy (§ 983.157(f)(1)(ii)) or, if the owner has completed all development activity as provided in the rider, amend the HAP contract to terminate the rider (§ 983.157(d)); or
</P>
<P>(4) For units that underwent substantial improvement in order to be added to the HAP contract, amend the HAP contract to add the units to the HAP contract (§ 983.207(d)).
</P>
<P>(c) <I>Staged completion of contract units.</I> Contract units developed pursuant to § 983.152(a)(1) which will not undergo development activity after HAP contract execution per § 983.157 may be placed under the HAP contract in stages commencing on different dates. In such a case, the PHA must determine separately for each stage whether the development activity was completed in accordance with the applicable requirements per § 983.155 and that the units meet HUD's HQS and any additional design, architecture, or quality requirements specified by the PHA per paragraph (a) of this section. If the first stage is determined compliant, then the PHA must submit the HAP contract for execution by the owner and must execute the HAP contract for PBV rehabilitated housing and newly constructed housing projects. As each subsequent stage is determined compliant, the PHA and owner must amend the HAP contract to add the units to the HAP contract (see § 983.207(g)).
</P>
<P>(d) <I>PHA-owned units.</I> The independent entity must perform the inspection required in paragraph (a) of this section and make the determination(s) required in paragraphs (b) and (c) of this section in the case of PHA-owned units (see § 983.57(b)(3)).




















</P>
</DIV8>


<DIV8 N="§ 983.157" NODE="24:4.1.3.1.20.4.41.7" TYPE="SECTION">
<HEAD>§ 983.157   xxx</HEAD>
<XREF ID="20240507" REFID="94">Link to an amendment published at 89 FR 38321, May 7, 2024.</XREF>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:4.1.3.1.20.5" TYPE="SUBPART">
<HEAD>Subpart E—Housing Assistance Payments Contract</HEAD>


<DIV8 N="§ 983.201" NODE="24:4.1.3.1.20.5.41.1" TYPE="SECTION">
<HEAD>§ 983.201   Applicability.</HEAD>
<P>Subpart E applies to all PBV assistance under part 983 (including assistance for existing, newly constructed, or rehabilitated housing). 


</P>
</DIV8>


<DIV8 N="§ 983.202" NODE="24:4.1.3.1.20.5.41.2" TYPE="SECTION">
<HEAD>§ 983.202   Purpose of HAP contract.</HEAD>
<P>(a) <I>Requirement.</I> The PHA must enter into a HAP contract with the owner. Except as provided in this paragraph, a HAP contract shall cover a single project. If multiple projects exist, each project shall be covered by a separate HAP contract. However, a PHA and owner may agree to place multiple projects, each consisting of a single-family building, under one HAP contract. The HAP contract must be in such form as may be prescribed by HUD.






</P>
<P>(b) <I>Purpose of HAP contract.</I> (1) The purpose of the HAP contract is to provide housing assistance payments for eligible families.
</P>
<P>(2) The PHA makes housing assistance payments to the owner in accordance with the HAP contract. Housing assistance is paid for contract units leased and occupied by eligible families during the HAP contract term. 
</P>
<CITA TYPE="N">[70 FR 59913, Oct. 13, 2005, as amended at 79 FR 36167, June 25, 2014; 89 FR 38324, May 7, 2024]






</CITA>
</DIV8>


<DIV8 N="§ 983.203" NODE="24:4.1.3.1.20.5.41.3" TYPE="SECTION">
<HEAD>§ 983.203   HAP contract information.</HEAD>
<P>The HAP contract must specify:
</P>
<P>(a) The total number of contract units by number of bedrooms;
</P>
<P>(b) Information needed to identify the site and the building or buildings where the contract units are located. The information must include the project's name, street address, city or county, state and zip code, block and lot number (if known), and any other information necessary to clearly identify the site and the building;
</P>
<P>(c) Information needed to identity the specific contract units in each building. The information must include the number of contract units in the building, the location of each contract unit, the area of each contract unit, and the number of bedrooms and bathrooms in each contract unit;
</P>
<P>(d) Services, maintenance, and equipment to be supplied by the owner without charges in addition to the rent to owner;
</P>
<P>(e) Utilities available to the contract units, including a specification of utility services to be paid by the owner (without charges in addition to rent) and utility services to be paid by the tenant;
</P>
<P>(f) Features provided to comply with program accessibility requirements of Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and implementing regulations at 24 CFR part 8, the Fair Housing Act, and the Americans with Disabilities Act, as applicable;


</P>
<P>(g) The HAP contract term;
</P>
<P>(h) The number of contract units under the increased program cap (as described in § 983.6(d)) or excepted from the project cap (as described in § 983.54(c)) which will be set aside for occupancy by families who qualify for such a unit;
</P>
<P>(i) The initial rent to owner (for the first 12 months of the HAP contract term); and
</P>
<P>(j) Whether the PHA has elected not to reduce rents below the initial rent to owner in accordance with 24 CFR 983.302(c)(2).


</P>
<CITA TYPE="N">[70 FR 59913, Oct. 13, 2005, as amended at 79 FR 36167, June 25, 2014; 89 FR 38324, May 7, 2024]










</CITA>
</DIV8>


<DIV8 N="§ 983.204" NODE="24:4.1.3.1.20.5.41.4" TYPE="SECTION">
<HEAD>§ 983.204   Execution of HAP Contract or PHA-owned Certification.</HEAD>
<XREF ID="20240507" REFID="98">Link to an amendment published at 89 FR 38325, May 7, 2024.</XREF>
<P>(a) <I>PHA inspection of housing.</I> Before execution of the HAP contract, the PHA must determine that applicable pre-HAP contract HQS requirements have been met in accordance with § 983.103(b) or (c) as applicable. The PHA may not execute the HAP contract for any contract unit that does not meet the pre-HAP contract HQS requirements, except as provided in paragraph (c).


</P>
<P>(b) <I>Existing housing.</I> For existing housing, the HAP contract must be executed and effective promptly after PHA selection of the proposal or project and PHA determination that the applicable pre-HAP contract HQS requirements have been met.
</P>
<P>(c) <I>Newly constructed or rehabilitated housing.</I> For newly constructed or rehabilitated housing developed pursuant to § 983.152(a)(1) which will not undergo development activity after HAP contract execution per § 983.157, the HAP contract must be executed and effective promptly after the PHA determines that the housing was completed in accordance with the applicable requirements, HUD's HQS, and any additional design, architecture, or quality requirements specified by the PHA, in accordance with § 983.156(b)(1) or (c). For rehabilitated housing that will undergo development activity after HAP contract execution per § 983.157, the HAP contract must be executed and effective promptly after the requirements of § 983.157(c) are met (all proposed PBV units are added to the contract at this time, including units that do not comply with HQS or that will undergo development activity).
</P>
<P>(d) <I>Effective date of the PBV HAP contract.</I> The effective date of the HAP contract must be on or after the date the HAP contract is executed. The HAP contract must be effective before the effective date of the first lease covering a contract unit occupied by an assisted family, and the PHA may not pay any housing assistance payment to the owner until the HAP contract is effective.
</P>
<CITA TYPE="N">[89 FR 38324, May 7, 2024, as amended at 90 FR 56689, Dec. 8, 2025] 
</CITA>
</DIV8>


<DIV8 N="§ 983.205" NODE="24:4.1.3.1.20.5.41.5" TYPE="SECTION">
<HEAD>§ 983.205   Term of HAP contract.</HEAD>
<P>(a) <I>Initial term.</I> The PHA may enter into a HAP contract with an owner for an initial term of up to 20 years for each contract unit. The length of the term of the HAP contract for any contract unit may not be less than one year, nor more than 20 years.
</P>
<P>(b) <I>Extension of term.</I> The PHA and owner may agree at any time before expiration of the HAP contract to execute one or more extensions of the HAP contract term. The following conditions apply:
</P>
<P>(1) Each extension executed must have a term that does not exceed 20 years;
</P>
<P>(2) At no time may the total remaining term of the HAP contract, with extensions, exceed 40 years;
</P>
<P>(3) Before agreeing to an extension, the PHA must determine that the extension is appropriate to continue providing affordable housing for low-income families or to expand housing opportunities; and
</P>
<P>(4) Each extension must be on the form and subject to the conditions prescribed by HUD at the time of the extension.
</P>
<CITA TYPE="N">[89 FR 38325, May 7, 2024]








</CITA>
</DIV8>


<DIV8 N="§ 983.206" NODE="24:4.1.3.1.20.5.41.6" TYPE="SECTION">
<HEAD>§ 983.206   Contract termination or expiration and statutory notice requirements.</HEAD>
<P>(a) <I>Nonextension by owner—notice requirements.</I> (1) Notices required in accordance with this section must be provided in the form prescribed by HUD.
</P>
<P>(2) Not less than one year before termination of a PBV HAP contract, the owner must notify the PHA and assisted tenants of the termination.
</P>
<P>(3) The term “termination” for applicability of this notice requirement means the expiration of the HAP contract, termination of the HAP contract by agreement of PHA and owner per paragraph (e) of this section, or an owner's refusal to renew the HAP contract.
</P>
<P>(4) If an owner fails to provide the required notice, the owner must permit the tenants in assisted units to remain in their units for the required notice period with no increase in the tenant portion of their rent, and with no eviction as a result of an owner's inability to collect an increased tenant portion of rent.
</P>
<P>(5) An owner and PHA may agree to extend the terminating contract for a period of time sufficient to provide tenants with the required notice, under such terms as HUD may require.
</P>
<P>(b) <I>Termination or expiration without extension—required provision of tenant-based assistance.</I> Unless a termination or expiration without extension occurs due to a determination of insufficient funding pursuant to paragraph (c)(1) of this section or other extraordinary circumstances determined by HUD, the PHA shall issue each family occupying a contract unit a tenant-based voucher based on the termination or expiration of the contract no fewer than 60 calendar days prior to the planned termination or expiration of the PBV HAP contract. However, the PHA is not required to issue the family a voucher if the PHA has offered the family an alternative housing option (<I>e.g.,</I> an assisted unit in another PBV project), and the family chooses to accept the alternative housing option instead of the voucher. Such a family is not a new admission to the tenant-based program and shall not count toward the PHA's income-targeting requirements at 24 CFR 982.201(b)(2)(i). The voucher issued to the family is the voucher attached to its unit under the expiring or terminating PBV contract. Consequently, if the family vacates the contract unit following the issuance of the tenant-based voucher and prior to the contract termination or expiration date, the PHA must remove the unit from the PBV HAP contract at the time the family vacates the unit. The PBV HAP contract must provide that, if the units continue to be used for rental housing upon termination or expiration without extension of a PBV HAP contract, each assisted family may elect to use its tenant-based assistance to remain in the same project, subject to the following:
</P>
<P>(1) The unit must comply with HUD's HQS;
</P>
<P>(2) The PHA must determine or have determined that the rent for the unit is reasonable;
</P>
<P>(3) The family must pay its required share of the rent and the amount, if any, by which the unit rent (including the amount allowed for tenant-paid utilities) exceeds the applicable payment standard (the limitation at 24 CFR 982.508 regarding maximum family share at initial occupancy shall not apply); and
</P>
<P>(4) The owner may not refuse to initially lease a unit in the project to a family that elects to use their tenant-based assistance to remain in the same project, except where the owner will use the unit for a purpose other than a residential rental unit. The owner may not later terminate the tenancy of such a family, except for the following grounds:
</P>
<P>(i) The grounds in 24 CFR 982.310 of this title, except paragraphs 24 CFR 982.310(d)(1)(iii) and (iv);
</P>
<P>(ii) The owner's desire to use the unit for a purpose other than a residential rental unit; and
</P>
<P>(iii) The owner's desire to renovate the unit, subject to the following:
</P>
<P>(A) The owner must consider whether a reasonable alternative to terminating the lease exists. If a reasonable alternative exists, the owner must not terminate the lease. The owner must consider the following alternatives:
</P>
<P>(<I>1</I>) Completing renovations without the family vacating the unit, if the renovations can be completed in a manner that does not result in life-threatening conditions, does not result in deficiencies under HQS that are not corrected within 30 days, and is mutually agreeable to the owner and the family; and
</P>
<P>(<I>2</I>) Temporarily relocating the family to complete the renovations, if the relocation and renovations can be completed within a single calendar month (beginning no sooner than the first day of a month and ending no later than the last day of the same month) and the family can be relocated to a location and in a manner mutually agreeable to the owner and the family;
</P>
<P>(B) If the owner terminates the lease for renovation, the owner must make every reasonable effort to make available and lease the family another unit within the project that meets the tenant-based voucher program requirements; and
</P>
<P>(C) If no other unit within the project is available for the family to lease during the renovation period or the family chooses to move from the project during the renovation period, the owner must make every reasonable effort to make available and lease the family a unit within the project upon completion of renovations.
</P>
<P>(c) <I>Termination by PHA.</I> (1) The HAP contract must provide that the PHA may terminate the contract for insufficient funding, subject to HUD requirements.
</P>
<P>(i) Consistent with the policies in the PHA's Administrative Plan, the PHA has the option of terminating a PBV HAP contract based on “insufficient funding” only if:
</P>
<P>(A) The PHA determines in accordance with HUD requirements that it lacks sufficient HAP funding (including HAP reserves) to continue to make housing assistance payments for all voucher units currently under a HAP contract;
</P>
<P>(B) The PHA has taken cost-saving measures specified by HUD;
</P>
<P>(C) The PHA notifies HUD of its determination and provides the information required by HUD; and
</P>
<P>(D) HUD determines that the PHA lacks sufficient funding and notifies the PHA it may terminate HAP contracts as a result.
</P>
<P>(2) If the PHA determines that the owner has breached the HAP contract, the PHA may exercise any of its rights or remedies under the HAP contract, including but not limited to contract termination. The provisions of § 983.208 apply for HAP contract breaches involving failure to comply with HQS. For any other contract termination due to breach, paragraph (b) of this section on provision of tenant-based assistance applies.
</P>
<P>(d) <I>Termination by owner—reduction below initial rent.</I> If the amount of the rent to owner for any contract unit, as adjusted in accordance with § 983.302, is reduced below the amount of the initial rent to owner, the owner may terminate the HAP contract, upon notice to the PHA no fewer than 90 calendar days prior to the planned termination, and families must be provided tenant-based assistance and may elect to remain in the project in accordance with paragraph (b) of this section. The owner is not required to provide the one-year notice of the termination of the HAP contract to the family and the PHA, as described in paragraph (a) of this section, when terminating the HAP contract due to rent reduction below the initial rent to owner.
</P>
<P>(e) <I>Termination by agreement of PHA and owner.</I> The PHA and owner may agree to terminate the HAP contract prior to the end of the term. The owner's notice in paragraph (a) of this section is required prior to termination, and the families must be provided tenant-based assistance and may elect to remain in the project in accordance with paragraph (b) of this section.
</P>
<CITA TYPE="N">[89 FR 38325, May 7, 2024, as amended at 90 FR 56689, Dec. 8, 2025]










</CITA>
</DIV8>


<DIV8 N="§ 983.207" NODE="24:4.1.3.1.20.5.41.7" TYPE="SECTION">
<HEAD>§ 983.207   HAP contract amendments (to add or substitute contract units).</HEAD>
<P>(a) <I>Amendment to substitute contract units.</I> At the discretion of the PHA, the PHA and owner may execute an amendment to the HAP contract to substitute a different unit with the same number of bedrooms in the same project for a previously covered contract unit. Prior to such substitution, the PHA must inspect the proposed substitute unit (the unit must comply with HQS to be substituted) and must determine the reasonable rent for such unit (the rent to owner must be reasonable for the unit to be substituted). The proposed substituted unit may be vacant or, subject to the requirements of paragraph (c) of this section, it may be occupied. The proposed substituted unit may undergo repairs or renovation prior to amending the PBV HAP contract to substitute the unit, as provided in paragraph (d) of this section. The proposed substituted unit must have existed at the time described in paragraph (e) of this section.
</P>
<P>(b) <I>Amendment to add contract units.</I> At the discretion of the PHA, and provided that the total number of units in a project that will receive PBV assistance will not exceed the limitations in § 983.6 or § 983.54, the PHA and owner may execute an amendment to the HAP contract to add PBV units in the same project to the contract, without a new proposal selection. Prior to such addition, the PHA must inspect the proposed added unit (the unit must comply with HQS to be added) and must determine the reasonable rent for such unit (the rent to owner must be reasonable for the unit to be added).
</P>
<P>(1) Added units that qualify for an exclusion from the program cap (as described in § 983.59) or an exception to or exclusion from the project cap (as described in § 983.54(c) and § 983.59, respectively) will not count toward such cap(s).
</P>
<P>(2) The anniversary and expiration dates of the HAP contract for the additional units must be the same as the anniversary and expiration dates of the HAP contract term for the PBV units originally placed under HAP contract.
</P>
<P>(3) The added unit may be vacant or, subject to the requirements of paragraph (c) of this section, it may be occupied.
</P>
<P>(4) The unit may undergo repairs or renovation prior to amending the PBV HAP contract to add the unit, as provided in paragraph (d) of this section.
</P>
<P>(5) The added unit must have existed at the time described in paragraph (e) of this section.
</P>
<P>(c) <I>Substituting or adding occupied units.</I> The PHA may place occupied units on the HAP contract under paragraphs (a) or (b) of this section, subject to the following:
</P>
<P>(1) The family occupying the unit must be eligible for assistance per §§ 983.53(a)(3) and 983.251(a);
</P>
<P>(2) The unit must be appropriate for the size of the family occupying the unit under the PHA's subsidy standards;
</P>
<P>(3) The family must be selected from the waiting list in accordance with the applicable selection policies; and
</P>
<P>(4) The unit may be occupied by a family who was assisted with a tenant-based voucher immediately prior to the unit being placed on the PBV HAP contract. The tenant-based HAP contract for the unit must terminate before the unit may be placed under the PBV HAP contract. The family occupying the unit is not a new admission to the voucher program. The option described in this paragraph (c)(4) is subject to the following conditions:
</P>
<P>(i) If the family is in the initial term of the tenant-based lease, the family agreed to mutually terminate the tenant-based lease with the owner and enter into a PBV lease.
</P>
<P>(ii) If the initial term of the tenant-based lease has passed or the end of that term coincides with the time at which the unit will be placed on the PBV HAP contract, upon the owner's decision not to renew the tenant-based lease or to terminate the tenant-based lease in accordance with 24 CFR 982.308 or 982.310, respectively, the family agreed to relinquish the tenant-based voucher and enter into a PBV lease.
</P>
<P>(d) <I>Substituting or adding units that underwent repairs or renovation.</I> A unit that is not under a HAP contract but is in a project with other units that are under a HAP contract may undergo repairs or renovation prior to amending the PBV HAP contract to add or substitute the unit, except in the case of a contract subject to a rider under the rehabilitated housing option for development activity after HAP contract execution in accordance with § 983.157. If such repairs or renovation constitute substantial improvement as defined in § 983.3, then:
</P>
<P>(1) The substantial improvement must not proceed prior to the first two years of the effective date of the HAP contract, except in extraordinary circumstances (<I>e.g.,</I> the units were damaged by fire, natural disaster, etc.).
</P>
<P>(2) The substantial improvement is subject to the Federal equal employment opportunity requirements of Executive Orders 11246 as amended (3 CFR, 1964-1965 Comp., p. 339), 11625 (3 CFR, 1971-1975 Comp., p. 616), 12432 (3 CFR, 1983 Comp., p. 198), and 12138 (3 CFR, 1977 Comp., p. 393).
</P>
<P>(3) As applicable, the design and construction requirements of the Fair Housing Act and implementing regulations at 24 CFR 100.205; the accessibility requirements of Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and implementing regulations at 24 CFR part 8, including 8.22 and 8.23; and Title II of the Americans with Disabilities Act (42 U.S.C. 12131-12134) and implementing regulations at 28 CFR part 35, including §§ 35.150 and 35.151, apply to substantial improvement.
</P>
<P>(4) Any substantial improvement that constitutes substantial rehabilitation as defined by 24 CFR 5.100 of a building with more than four rental units and where the proposal or project selection date or the start of the substantial improvement while under a HAP contract is after January 19, 2017, must include installation of broadband infrastructure, as this term is defined in 24 CFR 5.100, except where the owner determines and documents the determination that:
</P>
<P>(i) The location of the substantial rehabilitation makes installation of broadband infrastructure infeasible;
</P>
<P>(ii) The cost of installing broadband infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden; or
</P>
<P>(iii) The structure of the housing to be substantially rehabilitated makes installation of broadband infrastructure infeasible.
</P>
<P>(5) An owner or project principal who is on the U.S. General Services Administration list of parties excluded from Federal procurement and non-procurement programs, or who is debarred, suspended subject to a limited denial of participation, or otherwise excluded under 2 CFR part 2424, may not participate in substantial improvement. The HAP contract must include a certification by the owner that the owner and other project principals (including the officers and principal members, shareholders, investors, and other parties having a substantial interest in the project) are not on such list and are not debarred, suspended subject to a limited denial of participation, or otherwise excluded under 2 CFR part 2424.
</P>
<P>(6) An owner must disclose any possible conflict of interest that would be a violation of the HAP contract or HUD regulations, in accordance with § 982.161 of this title.
</P>
<P>(7) The requirements for additional assistance after HAP contract at § 983.11(d) apply.
</P>
<P>(8) Section 983.155, Completion of work, applies.
</P>
<P>(9) Paragraphs (a), (b)(4), and (d) of § 983.156, PHA acceptance of completed units, apply.
</P>
<P>(e) <I>Restriction on substituting or adding newly built units.</I> Units may only be added to the HAP contract or substituted for a previously covered contract unit if one of the following conditions applies:
</P>
<P>(1) The units to be added or substituted existed at the time of HAP contract execution;
</P>
<P>(2) In the case of a project completed in stages, the units to be added or substituted existed at the time of PHA acceptance of the last completed unit(s) per § 983.156(c); or
</P>
<P>(3) A unit, office space, or common area within the interior of a building containing contract units existed at the time described in paragraph (e)(1) or (2) of this section, as applicable, and is reconfigured without impacting the building envelope, subject to paragraph (d) of this section, into one or more units to be added or substituted.
</P>
<P>(f) <I>Administrative Plan requirement.</I> The PHA must describe in the Administrative Plan the circumstances under which it will add or substitute contract units, and how those circumstances support the goals of the PBV program.
</P>
<P>(g) <I>Staged completion of contract units.</I> Even if contract units are placed under the HAP contract in stages commencing on different dates, there is a single annual anniversary for all contract units under the HAP contract. The annual anniversary for all contract units is the annual anniversary date for the first contract units placed under the HAP contract. The expiration of the HAP contract for all the contract units completed in stages must be concurrent with the end of the HAP contract term for the units originally placed under HAP contract.
</P>
<P>(h) <I>Amendment to merge or bifurcate HAP contracts.</I> HUD may establish a process allowing the PHA and owner to agree to merge two or more HAP contracts for PBV assistance on the same project, or to bifurcate a HAP contract, by <E T="04">Federal Register</E> notice subject to public comment.
</P>
<CITA TYPE="N">[89 FR 38326, May 7, 2024]








</CITA>
</DIV8>


<DIV8 N="§ 983.208" NODE="24:4.1.3.1.20.5.41.8" TYPE="SECTION">
<HEAD>§ 983.208   Condition of contract units.</HEAD>
<P>(a) <I>Owner maintenance and operation.</I> (1) The owner must maintain and operate the contract units and premises in accordance with the HQS, including performance of ordinary and extraordinary maintenance.
</P>
<P>(2) The owner must provide all the services, maintenance, equipment, and utilities specified in the HAP contract with the PHA and in the lease with each assisted family.
</P>
<P>(3) At the discretion of the PHA, the HAP contract may also require continuing owner compliance during the HAP contract term with additional housing quality requirements specified by the PHA (in addition to, but not in place of, compliance with HUD's HQS). Such additional requirements may be designed to assure continued compliance with any design, architecture, or quality requirement specified by the PHA (§ 983.204(c)). The PHA must specify the conditions under which it will require additional housing quality requirements in the Administrative Plan.
</P>
<P>(b) <I>Enforcement of HQS.</I> (1) The PHA must vigorously enforce the owner's obligation to maintain contract units in accordance with HUD's HQS. If the owner fails to maintain the dwelling unit in accordance with HQS, the PHA must take enforcement action in accordance with this section.
</P>
<P>(2) The unit is in noncompliance with HQS if:
</P>
<P>(i) The PHA or other inspector authorized by the State or local government determines the unit has HQS deficiencies based upon an inspection;
</P>
<P>(ii) The agency or inspector notifies the owner in writing of the unit HQS deficiencies; and
</P>
<P>(iii) The unit HQS deficiencies are not remedied within the following timeframes:
</P>
<P>(A) For life-threatening deficiencies, the owner must correct the deficiency within 24 hours of notification.
</P>
<P>(B) For other deficiencies, the owner must correct the deficiency within 30 calendar days of notification (or any reasonable PHA-approved extension).
</P>
<P>(3) In the case of an HQS deficiency that the PHA determines is caused by the tenant, any member of the household, or any guest or other person under the tenant's control, other than any damage resulting from ordinary use, the PHA may waive the owner's responsibility to remedy the violation. Housing assistance payments to the owner may not be withheld or abated if the owner responsibility has been waived. However, the PHA may terminate assistance to a family because of an HQS breach beyond damage resulting from ordinary use caused by any member of the household or any guest or other person under the tenant's control, which may result in removing the unit from the HAP contract.
</P>
<P>(4) In the case of an HQS deficiency that is caused by fire, natural disaster, or similar extraordinary circumstances, the PHA may permit the owner to undertake substantial improvement in accordance with § 983.212. However, so long as the contract unit with deficiencies is occupied, the PHA must withhold or abate housing assistance payments and remove units from or terminate the HAP contract as described in this section.
</P>
<P>(5) In the case of a project that is undergoing development activity after HAP contract execution per § 983.157, the remedies of paragraph (d) of this section do not apply to units designated as unavailable for occupancy during the period of development activity in accordance with the rider. However, in the case of any contract unit with deficiencies that is occupied, the PHA must withhold or abate housing assistance payments and remove units from or terminate the HAP contract as described in this section.
</P>
<P>(c) <I>Family obligation.</I> (1) The family may be held responsible for a breach of the HQS that is caused by any of the following:
</P>
<P>(i) The family fails to pay for any utilities that the owner is not required to pay for, but which are to be paid by the tenant;
</P>
<P>(ii) The family fails to provide and maintain any appliances that the owner is not required to provide, but which are to be provided by the tenant; or
</P>
<P>(iii) Any member of the household or guest damages the dwelling unit or premises (damages beyond ordinary wear and tear).
</P>
<P>(2) If the PHA has waived the owner's responsibility to remedy the violation in accordance with paragraph (b)(3) of this section, the following applies:
</P>
<P>(i) If the HQS breach caused by the family is life-threatening, the family must take all steps permissible under the lease and State and local law to ensure the deficiency is corrected within 24 hours of notification.
</P>
<P>(ii) For other family-caused deficiencies, the family must take all steps permissible under the lease and State and local law to ensure the deficiency is corrected within 30 calendar days of notification (or any PHA-approved extension).
</P>
<P>(3) If the family has caused a breach of the HQS, the PHA must take prompt and vigorous action to enforce the family obligations. The PHA may terminate assistance for the family in accordance with 24 CFR 982.552.
</P>
<P>(d) <I>PHA remedies.</I> These remedies apply when HQS deficiencies are identified as the result of an inspection other than a pre-selection, initial, or turnover inspection. (See § 983.103 generally, and see § 983.103(c) in particular for PHA enforcement actions related to the initial HQS inspection for existing housing). The PHA must identify in its Administrative Plan the conditions under which it will withhold HAP and the conditions under which it will abate HAP or terminate the HAP contract for units other than the unit with HQS deficiencies.
</P>
<P>(1) A PHA may withhold HAP for an individual unit that has HQS deficiencies once the PHA has notified the owner in writing of the deficiencies. If the unit is brought into compliance during the applicable cure period (within 24 hours from notification for life-threatening deficiencies and within 30 days from notification (or other reasonable period established by the PHA for non-life-threatening deficiencies), the PHA:
</P>
<P>(i) Must resume assistance payments; and
</P>
<P>(ii) Must provide assistance payments to cover the time period for which the assistance payments were withheld.
</P>
<P>(2)(i) The PHA must abate the HAP, including amounts that had been withheld, for the PBV unit with deficiencies if the owner fails to make the repairs within the applicable cure period (within 24 hours from notification for life-threatening deficiencies and within 30 days from notification (or other reasonable period established by the PHA) for non-life-threatening deficiencies).
</P>
<P>(ii) The PHA may choose to abate payments for all units covered by the HAP contract due to a contract unit's noncompliance with the HQS, even if some of the contract units continue to meet HQS.
</P>
<P>(iii) If a PHA abates the HAP for a unit, the PHA must notify the family and the owner that it is abating payments and that if the unit with deficiencies does not meet HQS within 60 days after the determination of noncompliance (or a reasonable longer period established by the PHA), the PHA will either terminate the HAP contract or remove the unit with deficiencies from the HAP contract, and any family residing in a unit that does not comply with HQS will have to move if the family wishes to receive continued assistance.
</P>
<P>(3) An owner may not terminate the tenancy of any family due to the withholding or abatement of assistance. During the period that assistance is abated, the family may terminate the tenancy by notifying the owner and the PHA. The PHA must promptly issue the family a tenant-based voucher to move.
</P>
<P>(4) If the owner makes the repairs and the unit complies with HQS within 60 days (or a reasonable longer period established by the PHA) of the notice of abatement, the PHA must recommence payments to the owner if the unit is still occupied by an assisted family. The PHA does not make any payments for the unit to the owner for the period of time that the payments were abated.
</P>
<P>(5) If the owner fails to make the repairs within 60 days (or a reasonable longer period established by the PHA) of the notice of abatement, the PHA must either remove the unit from the HAP contract or terminate the HAP contract in its entirety. The PHA must issue the family whose unit will be removed or all families residing in contract units, if the PHA is terminating the HAP contract, a tenant-based voucher to move at least 30 days prior to the removal of the unit from the HAP contract or termination of the HAP contract. A family may elect to remain in the project in accordance with § 983.206(b) if the project contains a unit that meets the requirements of that section, with priority given to families who will remain in the same unit if there are insufficient units available to accommodate all families that wish to remain.
</P>
<P>(6)(i) The PHA must give any family residing in a unit that is either removed from the HAP contract or for which the HAP contract is terminated under this paragraph (d) due to a failure to correct HQS deficiencies at least 90 days or a longer period as the PHA determines is reasonably necessary following the termination of the HAP contract or removal of the unit from the HAP contract to lease a unit with tenant-based assistance.
</P>
<P>(ii) If the family is unable to lease a new unit within the period provided by the PHA under paragraph (d)(6)(i) of this section and the PHA owns or operates public housing, the PHA must offer, and, if accepted, provide the family a selection preference for an appropriate-size public housing unit that first becomes available for occupancy after the time period expires.
</P>
<P>(iii) PHAs may assist families relocating under this paragraph (d) in finding a new unit, including using up to 2 months of the withheld and abated assistance payments for costs directly associated with relocating to a new unit, including security deposits, temporary housing costs, or other reasonable moving costs as determined by the PHA based on their locality. PHAs must assist families with disabilities in locating available accessible units in accordance with 24 CFR 8.28(a)(3). If the PHA uses the withheld and abated assistance payments to assist with the family's relocation costs, the PHA must provide security deposit assistance to the family as necessary. If the family receives security deposit assistance from the PHA for the new unit, the PHA may require the family to remit the security deposit returned by the owner of the new unit at such time that the lease is terminated, up to the amount of the security deposit assistance provided by the PHA for that unit. The PHA must include in its Administrative Plan the policies it will implement for this provision.
</P>
<P>(e) <I>Maintenance and replacement—Owner's standard practice.</I> Maintenance and replacement (including redecoration) must be in accordance with the standard practice for the building concerned as established by the owner.
</P>
<P>(f) <I>Applicability.</I> This section is applicable to HAP contracts executed on or after or extended on or after June 6, 2024. For purposes of this paragraph, a HAP contract is extended the earlier of the effective date of the next extension period or the date the PHA and owner agree to the next extension. For all other HAP contracts, § 983.208 as in effect on June 5, 2024 remains applicable. However, the PHA and owner may agree to apply this section to a HAP contract executed before June 6, 2024 prior to extension.


</P>
<CITA TYPE="N">[70 FR 59913, Oct. 13, 2005. Redesignated at 79 FR 36168, June 25, 2014; 89 FR 38328, May 7, 2024; 90 FR 56689, Dec. 8, 2025]






</CITA>
</DIV8>


<DIV8 N="§ 983.209" NODE="24:4.1.3.1.20.5.41.9" TYPE="SECTION">
<HEAD>§ 983.209   Owner responsibilities.</HEAD>
<P>The owner is responsible for performing all of the owner responsibilities under the Agreement and the HAP contract. 24 CFR 982.452 (Owner responsibilities) applies. 
</P>
<CITA TYPE="N">[70 FR 59913, Oct. 13, 2005. Redesignated at 79 FR 36168, June 25, 2014]


</CITA>
</DIV8>


<DIV8 N="§ 983.210" NODE="24:4.1.3.1.20.5.41.10" TYPE="SECTION">
<HEAD>§ 983.210   Owner certification.</HEAD>
<P>By execution of the HAP contract, the owner certifies that at such execution and at all times during the term of the HAP contract:
</P>
<P>(a) The owner is maintaining the premises and all contract units in accordance with HUD's HQS under the requirements of this part 983.
</P>
<P>(b) The owner is providing all the services, maintenance, equipment, and utilities as agreed to under the HAP contract and the leases with assisted families.
</P>
<P>(c) Each contract unit for which the owner is receiving housing assistance payments is leased to an eligible family referred by the PHA or selected from the owner-maintained waiting list in accordance with § 983.251, and the lease is in accordance with the HAP contract and HUD requirements.
</P>
<P>(d) To the best of the owner's knowledge, the members of the family reside in each contract unit for which the owner is receiving housing assistance payments, and the unit is the family's only residence, except as provided in §§ 983.157(g)(6)(ii) and 983.212(a)(3)(ii).
</P>
<P>(e) The owner (including a principal or other interested party) is not the spouse, parent, child, grandparent, grandchild, sister, or brother of any member of a family residing in a contract unit unless needed as a reasonable accommodation under Section 504, the Fair Housing Act, or the Americans with Disabilities Act (ADA), for a household member who is a person with disabilities.
</P>
<P>(f) The amount of the housing assistance payment is the correct amount due under the HAP contract.
</P>
<P>(g) The rent to owner for each contract unit does not exceed rents charged by the owner for other comparable unassisted units.
</P>
<P>(h) Except for the housing assistance payment and the tenant rent as provided under the HAP contract, the owner has not received and will not receive any payment or other consideration (from the family, the PHA, HUD, or any other public or private source) for rental of the contract unit.
</P>
<P>(i) The family does not own or have any interest in the contract unit. The certification required by this section does not apply in the case of an assisted family's membership in a cooperative.
</P>
<CITA TYPE="N">[70 FR 59913, Oct. 13, 2005. Redesignated and amended at 79 FR 36168, June 25, 2014; 89 FR 38329, May 7, 2024]






</CITA>
</DIV8>


<DIV8 N="§ 983.211" NODE="24:4.1.3.1.20.5.41.11" TYPE="SECTION">
<HEAD>§ 983.211   Removal of unit from HAP contract based on a family's increased income.</HEAD>
<P>(a) <I>Removal of a unit based on a family's increased income.</I> Units occupied by families whose income has increased during their tenancy resulting in the total tenant payment equaling the gross rent shall be removed from the HAP contract 180 days following the last housing assistance payment on behalf of the family.
</P>
<P>(b) <I>Reinstatement or substitution of HAP contracts.</I> If the project is fully assisted, a PHA may reinstate the unit removed under <I>paragraph (a)</I> of this section to the HAP contract after the ineligible family vacates the property. If the project is partially assisted, a PHA may substitute a different unit for the unit removed under <I>paragraph (a)</I> of this section to the HAP contract when the first eligible substitute becomes available. A reinstatement or substitution of units under the HAP contract, in accordance with this paragraph, must be permissible under § 983.207(b) or (a), respectively.
</P>
<P>(c) <I>Additional requirements.</I> The anniversary and expirations dates of the reinstated or substituted unit must be the same as all other units under the HAP contract (<I>i.e.,</I> the annual anniversary and expiration dates for the first contract units placed under the HAP contract). Families must be selected in accordance with program requirements under § 983.251 of this part.
</P>
<CITA TYPE="N">[89 FR 38329, May 7, 2024]






</CITA>
</DIV8>


<DIV8 N="§ 983.212" NODE="24:4.1.3.1.20.5.41.12" TYPE="SECTION">
<HEAD>§ 983.212   Substantial improvement to units under a HAP contract.</HEAD>
<P>(a) <I>Substantial improvement to units under a HAP contract.</I> The owner may undertake substantial improvement on a unit currently under a HAP contract if approved to do so by the PHA. The owner may request PHA approval no earlier than the effective date of the HAP contract. (All work occurring on a unit in a project that is under a HAP contract subject to a rider in accordance with § 983.157 is development activity and is not subject to this section.) The following conditions apply:


</P>
<P>(1) The PHA may approve the substantial improvement only if one of the following conditions apply:
</P>
<P>(i) The unit has been damaged by fire or natural disaster, or other extraordinary circumstances exist which require a unit previously compliant with HQS to urgently undergo substantial improvement. For this purpose, “extraordinary circumstances” are unforeseen events that are not the fault of the owner. The PHA may provide approval for substantial improvement resulting from the damage or extraordinary circumstances described in this paragraph (a)(1)(i) after the owner submits the request.
</P>
<P>(ii) The owner requests to engage in substantial improvement that will commence following the first two years of the effective date of the HAP contract. The PHA may provide approval for substantial improvement occurring as described in this paragraph (a)(1)(ii) after the owner submits the request, but no earlier than twenty-one months after the effective date of the HAP contract.
</P>
<P>(2) The owner's request must include a description of the substantial improvement proposed to be undertaken and the length of time, if any, the owner anticipates that the unit, including items and components within the primary and secondary means of egress, common features, and systems equipment as described by 24 CFR 5.703(a)(2), will not meet HQS. The PHA must not approve as substantial improvement, under this section, an owner's request to demolish a building containing contract units and newly construct replacement units (see requirements for contract termination at § 983.206 and requirements for newly constructed housing in this part 983).
</P>
<P>(3) If the unit is occupied and will not meet HQS during any part of the period of the substantial improvement, the owner's request must include a description of the owner's plan to house the family during the period the unit will not meet HQS. The PHA must not approve the substantial improvement unless the owner's plan complies with one of the following requirements:
</P>
<P>(i) The owner must complete the substantial improvement without the family vacating the unit if the PHA reasonably expects that the owner can complete the substantial improvement in a manner that:
</P>
<P>(A) Does not result in life-threatening deficiencies;
</P>
<P>(B) Does not result in any other deficiencies under the HQS that are not corrected within 30 days; and
</P>
<P>(C) Is mutually agreeable to the owner and the family;
</P>
<P>(ii) If the conditions for in-place substantial improvement in paragraph (a)(3)(i) of this section cannot be achieved, the owner must temporarily relocate the family to complete the substantial improvement if:
</P>
<P>(A) The PHA reasonably expects that the owner can complete the relocation and substantial improvement within a single calendar month (beginning no sooner than the first day of a month and ending no later than the last day of the same month); and
</P>
<P>(B) The family can be relocated to a location and in a manner mutually agreeable to the owner and the family; and
</P>
<P>(iii) If the conditions for in-place substantial improvement in paragraph (a)(3)(i) of this section and temporary relocation in paragraph (a)(3)(ii) of this section cannot be achieved, the following protocol for lease termination and relocation applies:
</P>
<P>(A) If there are contract units within the project will meet HQS during the period of substantial improvement and that are vacant or expected to become vacant at the time of the planned lease termination, the PHA must refer the family to the owner for occupancy of an appropriate-size contract unit. If the family accepts the offered unit, the owner must provide the family with a reasonable time to move to the offered unit, must pay the family's reasonable moving expenses, must execute a lease with the family for the offered unit to be effective at the time of the family's move, and must terminate the lease for the family's original unit at the time of the family's move. The owner must terminate the family's lease if the family rejects the offered unit; however, the PHA must first offer the family a different unit or tenant-based assistance under paragraph (a)(3)(iii)(B) of this section if needed as a reasonable accommodation under Section 504, the Fair Housing Act, or the Americans with Disabilities Act (ADA), for a household member who is a person with disabilities. The PHA must consider other family requests for a different unit or tenant-based assistance under paragraph (a)(3)(iii)(B) of this section;
</P>
<P>(B) If no other contract unit within the project is available for the family to lease during the period of substantial improvement, the PHA must issue the family a tenant-based voucher. However, the PHA is not required to issue the family a voucher if the PHA has offered the family an alternative housing option (<I>e.g.,</I> an assisted unit in another PBV project), and the family chooses to accept the alternative housing option instead of the voucher. The PHA may also issue the family a tenant-based voucher to accommodate the family's need or request as provided in paragraph (a)(3)(iii)(A) of this section. The PHA must issue the voucher no fewer than 90 calendar days prior to the planned lease termination in the case of substantial improvement pursuant to paragraph (a)(1)(ii) of this section. The PHA must issue the voucher as soon as practicable in the case of substantial improvement pursuant to paragraph (a)(1)(i) of this section. If the family is eligible and willing to request a voucher to move in accordance with § 983.261, the PHA must issue the family the voucher to move under that section. If the family is not eligible or is unwilling to request a voucher to move under § 983.261, the PHA must remove the family's unit from the PBV HAP contract and issue the family its voucher to move with tenant-based assistance and subsequently add a unit back to the PBV HAP contract at such time that the unit is ready for occupancy. The PHA must extend the voucher term until the family either leases a unit with the tenant-based voucher or accepts a contract unit, whichever occurs first; and
</P>
<P>(C) If the family moves from the project during the period of substantial improvement, the PHA must offer the family the option to return to the project with PBV assistance, if the family is eligible for PBV assistance, following completion of substantial improvement at the project. The PHA, or owner in the case of an owner-maintained waiting list, must place the family on the PBV waiting list with an absolute selection preference for occupancy in the project.


</P>
<P>(4) The PHA must abate housing assistance payments for a unit beginning at the time the unit has any deficiency under HUD's HQS during the period of substantial improvement. The timing for the PHA to begin withholding and abatement specified in § 983.208(d) does not apply to deficiencies occurring during the period of substantial improvement. When all deficiencies in the unit are corrected, the PHA must recommence payments to the owner if the unit is still occupied by an assisted family, subject to paragraphs (a)(5) and (b)(6) of this section. Additionally, the PHA must not pay vacancy payments during the period of substantial improvement.
</P>
<P>(5) The terms of the PHA approval must be recorded in an addendum to the HAP contract. The PHA may choose to temporarily remove vacant units from the PBV HAP contract during the time the units will not meet HQS during the substantial improvement. If the PHA temporarily removes a unit, the PHA reinstates the unit in accordance with § 983.207(b). Owner failure to complete the substantial improvement as approved shall be a breach of the HAP contract and the PHA may exercise any of its rights or remedies under the HAP contract, including but not limited to contract termination pursuant to § 983.206(c)(2).
</P>
<P>(b) <I>Applicable requirements.</I> (1) Substantial improvement undertaken on units that are currently under a HAP contract is subject to the Federal equal employment opportunity requirements of Executive Orders 11246 as amended (3 CFR, 1964-1965 Comp., p. 339), 11625 (3 CFR, 1971-1975 Comp., p. 616), 12432 (3 CFR, 1983 Comp., p. 198), and 12138 (3 CFR, 1977 Comp., p. 393).
</P>
<P>(2) As applicable, the design and construction requirements of the Fair Housing Act and implementing regulations at 24 CFR 100.205; the accessibility requirements of Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and implementing regulations at 24 CFR part 8, including 8.22 and 8.23; and Title II of the Americans with Disabilities Act (42 U.S.C. 12131-12134) and implementing regulations at 28 CFR part 35, including §§ 35.150 and 35.151, apply to substantial improvement undertaken on units that are currently under a HAP contract.
</P>
<P>(3) Any substantial improvement undertaken on units that are currently under a HAP contract that constitutes substantial rehabilitation as defined by 24 CFR 5.100 of a building with more than four rental units and where the proposal or project selection date or the start of the substantial improvement while under a HAP contract is after January 19, 2017, must include installation of broadband infrastructure, as this term is defined in 24 CFR 5.100, except where the owner determines and documents the determination that:
</P>
<P>(i) The location of the substantial rehabilitation makes installation of broadband infrastructure infeasible;
</P>
<P>(ii) The cost of installing broadband infrastructure would result in a fundamental alteration in the nature of its program or activity or in an undue financial burden; or
</P>
<P>(iii) The structure of the housing to be substantially rehabilitated makes installation of broadband infrastructure infeasible.
</P>
<P>(4) An owner or project principal who is on the U.S. General Services Administration list of parties excluded from Federal procurement and non-procurement programs, or who is debarred, suspended subject to a limited denial of participation, or otherwise excluded under 2 CFR part 2424, may not participate in substantial improvement undertaken on units subject to a HAP contract. The HAP contract must include a certification by the owner that the owner and other project principals (including the officers and principal members, shareholders, investors, and other parties having a substantial interest in the project) are not on such list and are not debarred, suspended subject to a limited denial of participation, or otherwise excluded under 2 CFR part 2424.
</P>
<P>(5) An owner must disclose any possible conflict of interest that would be a violation of the HAP contract or HUD regulations, in accordance with § 982.161 of this title.
</P>
<P>(6) The requirements for additional assistance after HAP contract at § 983.11(d) apply to substantial improvement undertaken on units that are currently under a HAP contract.
</P>
<P>(7) Section 983.155, Completion of work, applies to substantial improvement undertaken on units that are currently under a HAP contract.
</P>
<P>(8) Section 983.156(a), Inspection of units, and (d), PHA-owned units, apply to substantial improvement undertaken on units that are currently under a HAP contract.
</P>
<P>(c) <I>PHA-owned units.</I> For PHA-owned units, the independent entity must determine whether to approve the PHA proposal to undertake substantial improvement as provided in paragraph (a) of this section, including making the determinations in paragraphs (a)(3)(i) and (a)(3)(ii)(A) when the owner will undertake substantial improvement in a unit currently occupied by an assisted family, as applicable (see § 983.57(b)(4)). The independent entity must approve the proposal if:
</P>
<P>(1) The proposed substantial improvement meets one of the conditions of paragraph (a)(1) of this section;
</P>
<P>(2) The description of the substantial improvement does not include plans to demolish a building containing contract units and newly construct replacement units; and
</P>
<P>(3) The plan to house each family during the period that family's unit will not meet HQS complies with the requirements of paragraph (a)(3).
</P>
<CITA TYPE="N">[89 FR 38329, May 7, 2024, as amended at 90 FR 56689, Dec. 8, 2025]




</CITA>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:4.1.3.1.20.6" TYPE="SUBPART">
<HEAD>Subpart F—Occupancy</HEAD>


<DIV8 N="§ 983.251" NODE="24:4.1.3.1.20.6.41.1" TYPE="SECTION">
<HEAD>§ 983.251   How participants are selected.</HEAD>
<P>(a) Who may receive PBV assistance? (1) The PHA may select families who are participants in the PHA's tenant-based voucher program and families who have applied for admission to the voucher program.
</P>
<P>(2) Except for voucher participants (determined eligible at original admission to the voucher program), the PHA may only select families determined eligible for admission at commencement of PBV assistance, using information received and verified by the PHA within a period of 60 days before commencement of PBV assistance. For all families, the PHA must determine the total tenant payment for the family is less than the gross rent, such that the unit will be eligible for a monthly HAP.
</P>
<P>(3) The protections for victims of domestic violence, dating violence, sexual assault, or stalking in 24 CFR part 5, subpart L, apply to admission to the project-based program.
</P>
<P>(4) A PHA may not approve a tenancy if the owner (including a principal or other interested party) of a unit is the parent, child, grandparent, grandchild, sister, or brother of any member of the family, unless the PHA determines that approving the unit would provide reasonable accommodation under Section 504, the Fair Housing Act, or the Americans with Disabilities Act (ADA), for a household member who is a person with disabilities.
</P>
<P>(b) <I>Protection of in-place families.</I> (1) To minimize displacement of in-place families, if an in-place family is determined to be eligible prior to placement of the family's unit on the HAP contract, the in-place family must be placed on the PBV waiting list (if the family is not already on the list) and given an absolute selection preference. If the PHA's waiting list for PBV assistance is not a project-specific waiting list, the PHA must refer the family to the applicable project owner for an appropriate-size PBV unit in the specific project.
</P>
<P>(2) If the in-place family is a tenant-based voucher participant, program eligibility is not re-determined. However, the PHA must determine that the total tenant payment for the family is less than the gross rent for the unit, such that the unit will be eligible for a monthly HAP, and the PHA may deny or terminate assistance for the grounds specified in 24 CFR 982.552 and 982.553.
</P>
<P>(3)(i) During the initial term of the lease under the tenant-based tenancy, an in-place tenant-based voucher family may agree, but is not required, to mutually terminate the lease with the owner and enter into a lease and tenancy under the PBV program. If the family chooses to continue the tenant-based assisted tenancy, the unit may not be added to the PBV HAP contract. The owner may not terminate the lease for other good cause during the initial term unless the owner is terminating the tenancy because of something the family did or failed to do in accordance with 24 CFR 982.310(d)(2). The owner is expressly prohibited from terminating the tenancy during the initial term of the lease based on the family's failure to accept the offer of a new lease or revision, or for a business or economic reason.
</P>
<P>(ii) If, after the initial term, the owner chooses not to renew the lease or terminates the lease for other good cause (as defined in 24 CFR 982.310(d)) to end the tenant-based assisted tenancy, the family would be required to move with continued tenant-based assistance or relinquish the tenant-based voucher and enter into a new lease to receive PBV assistance in order to remain in the unit.
</P>
<P>(4) Admission of in-place families is not subject to income-targeting under 24 CFR 982.201(b)(2)(i).
</P>
<P>(c) <I>Selection from waiting list.</I> (1) Applicants who will occupy PBV units must be selected from the waiting list for the PBV program.
</P>
<P>(2) The PHA must identify in the Administrative Plan which of the following options it will use to structure the waiting list for the PBV program:
</P>
<P>(i) The PHA may use a separate, central, waiting list comprised of more than one, or all, PBV projects;
</P>
<P>(ii) The PHA may use the same waiting list for both tenant-based assistance and some or all PBV projects; or
</P>
<P>(iii) The PHA may use separate waiting lists for PBV units in individual projects or buildings (or for sets of such units). This option may be used in combination with the option in paragraph (c)(2)(i) or (ii) of this section. The PHA must specify the name of the PBV project in the Administrative Plan. The PHA may permit the owner to maintain such waiting lists (see paragraph (c)(7) of this section for more information).
</P>
<P>(3) For any of the options under paragraph (c)(2) of this section, the PHA may establish in its Administrative Plan any preferences for occupancy of particular units including the name of the project(s) and the specific preferences that are to be used by project. Criteria for occupancy of units (<I>e.g.,</I> elderly families) may also be established; however, selection of families must be done through an admissions preference.
</P>
<P>(4) The PHA may merge the waiting list for PBV assistance with the PHA waiting list for admission to another assisted housing program.
</P>
<P>(5) Where applicable, the PHA may place families referred by the PBV owner on its PBV waiting list.
</P>
<P>(6) If the PHA chooses to use a separate waiting list for admission to PBV units under paragraphs (c)(2)(i) and (iii) of this section, the PHA must offer to place applicants who are listed on the waiting list for tenant-based assistance on the waiting list for PBV assistance (including owner-maintained PBV waiting lists).
</P>
<P>(7) PHAs using separate waiting lists for individual projects or buildings, as described in paragraph (c)(2)(iii) of this section, may establish in their Administrative Plan that owners will maintain such waiting lists. PHAs may choose to use owner-maintained PBV waiting lists for specific owners or projects. PHAs may permit an owner to maintain a single waiting list across multiple projects owned by the owner. Under an owner-maintained waiting list, the owner is responsible for carrying out responsibilities including, but not limited to, processing changes in applicant information, removing an applicant's name from the waiting list, opening and closing the waiting list. PHAs must identify in their Administrative Plans the name of the project(s), the oversight procedures the PHA will use to ensure owner-maintained waiting lists are administered properly and in accordance with program requirements, and the approval process of an owner's waiting list policy (including any preferences). Where a PHA allows for owner-maintained waiting lists, all the following apply:
</P>
<P>(i) The owner must develop and submit a written owner waiting list policy to the PHA for approval. The owner waiting list policy must include policies and procedures concerning waiting list management and selection of applicants from the project's waiting list, including any admission preferences, procedures for removing applicant names from the waiting list, and procedures for closing and reopening the waiting list. The owner must receive approval from the PHA of its owner waiting list policy in accordance with the process established in the PHA's Administrative Plan. The owner's waiting list policy must be incorporated in the PHA's Administrative Plan.
</P>
<P>(ii) The owner must receive approval from the PHA for any preferences that will be applicable to the project. The PHA will approve such preferences as part of its approval of the owner's waiting list policy. Each project may have a different set of preferences. Preferences must be consistent with the PHA Plan and listed in the owner's waiting list policy.
</P>
<P>(iii) The owner is responsible for opening and closing the waiting list, including providing public notice when the owner opens the waiting list in accordance with 24 CFR 982.206. If the owner-maintained waiting list is open and additional applicants are needed to fill vacant units, the owner must give public notice in accordance with the requirements of 24 CFR 982.206 and the owner waiting list policy.
</P>
<P>(iv) The applicant may apply directly at the project, or the applicant may request that the PHA refer the applicant to the owner for placement on the project's waiting list. The PHA must disclose to the applicant all the PBV projects available to the applicant, including the projects' contact information and other basic information about the project.
</P>
<P>(v) Applicants already on the PHA's waiting list must be permitted to place their names on the project's waiting lists.
</P>
<P>(vi) At the discretion of the PHA, the owner may make preliminary eligibility determinations for purposes of placing the family on the waiting list, and preference eligibility determinations. The PHA may choose to make this determination rather than delegating it to the owner.
</P>
<P>(vii) If the PHA delegated the preliminary eligibility and preference determinations to the owner, the owner is responsible for notifying the family of the owner's determination not to place the applicant on the waiting list and a determination that the family is not eligible for a preference. In such a case, the owner is responsible to provide the notice at 24 CFR 982.554(a) of this title. The PHA is then responsible for conducting the informal review.
</P>
<P>(viii) Once an owner selects the family from the waiting list, the owner refers the family to the PHA who then determines the family's final program eligibility. The owner may not offer a unit to the family until the PHA determines that the family is eligible for the program.
</P>
<P>(ix) All HCV waiting list administration requirements that apply to the PBV program (24 CFR part 982, subpart E, other than 24 CFR 982.201(e), 982.202(b)(2), and 982.204(d)) apply to owner-maintained waiting lists.
</P>
<P>(x) The PHA is responsible for oversight of owner-maintained waiting lists to ensure that they are administered properly and in accordance with program requirements, including but not limited to nondiscrimination and equal opportunity requirements under the authorities cited at 24 CFR 5.105(a). The owner is responsible for maintaining complete and accurate records as described in 24 CFR 982.158. The owner must give the PHA, HUD, and the Comptroller General full and free access to its offices and records concerning waiting list management, as described in 24 CFR 982.158(c). HUD may undertake investigation to determine whether the PHA or owner is in violation of authorities and, if unable to reach a voluntary resolution to correct the violation, take an enforcement action against either the owner or the PHA, or both.
</P>
<P>(8) Not less than 75 percent of the families admitted to a PHA's tenant-based and project-based voucher programs during the PHA fiscal year from the PHA waiting list shall be extremely low-income families. The income-targeting requirements at 24 CFR 982.201(b)(2) apply to the total of admissions to the PHA's project-based voucher program and tenant-based voucher program during the PHA fiscal year from the PHA waiting list (including owner-maintained PBV waiting lists) for such programs.
</P>
<P>(9) Families who require particular accessibility features for persons with disabilities must be selected first to occupy PBV units with such accessibility features (see 24 CFR 8.26, 8.27, and 100.202). Also see § 983.260. The PHA shall have some mechanism for referring to accessible PBV units a family that includes a person with a mobility or sensory impairment.
</P>
<P>(d) <I>Preference for services offered.</I> In selecting families, PHAs (or owners in the case of owner-maintained waiting lists) may give preference to families who qualify for voluntary services, including disability-specific services, offered at a particular project, consistent with the PHA Plan and Administrative Plan.
</P>
<P>(1) The prohibition on granting preferences to persons with a specific disability at 24 CFR 982.207(b)(3) continues to apply.
</P>
<P>(2) Families must not be required to accept the particular services offered at the project nor shall families be required to provide their own equivalent services if they decline the project's services.
</P>
<P>(3) In advertising the project, the owner may advertise the project as offering services for a particular type of disability; however, the preference must be provided to all applicants who qualify for the voluntary services offered in conjunction with the assisted units.
</P>
<P>(e) <I>Offer of PBV assistance or owner's rejection.</I> (1) If a family refuses the PHA's offer of PBV assistance or the owner rejects a family for admission to the owner's PBV units, the family's position on the PHA waiting list for tenant-based assistance is not affected regardless of the type of PBV waiting list used by the PHA.
</P>
<P>(2) The impact (of a family's rejection of the offer or the owner's rejection of the family) on a family's position on the PBV waiting list will be determined as follows:
</P>
<P>(i) If a central PBV waiting list is used, the PHA's Administrative Plan must address the number of offers a family may reject without good cause before the family is removed from the PBV waiting list and whether the owner's rejection will impact the family's place on the PBV waiting list.
</P>
<P>(ii) If a project-specific PBV waiting list is used, the family's name is removed from the project's waiting list connected to the family's rejection of the offer without good cause or the owner's rejection of the family. The family's position on any other project-specific PBV waiting list is not affected.
</P>
<P>(iii) The PHA must define “good cause” for purposes of paragraphs (e)(2)(i) and (ii) of this section in its Administrative Plan. The PHA's definition of good cause must include, at minimum, that:
</P>
<P>(A) The family determines the unit is not accessible to a household member with a disability or otherwise does not meet the member's disability-related needs;
</P>
<P>(B) The unit has HQS deficiencies;
</P>
<P>(C) The family is unable to accept the offer due to circumstances beyond the family's control (such as hospitalization, temporary economic hardship, or natural disaster); and
</P>
<P>(D) The family determines the unit presents a health or safety risk to a household member who is or has been a victim of domestic violence, dating violence, sexual assault, or stalking, as provided in part 5, subpart L of this title.
</P>
<P>(3) None of the following actions may be taken against an applicant solely because the applicant has applied for, received, or refused an offer of PBV assistance:
</P>
<P>(i) Refuse to list the applicant on the PHA waiting list for tenant-based assistance or any other available PBV waiting list. However, the PHA (or owner in the case of owner-maintained waiting lists) is not required to open a closed waiting list to place the family on that waiting list.
</P>
<P>(ii) Deny any admission preference for which the applicant is currently qualified.
</P>
<P>(iii) Change the applicant's place on the waiting list based on preference, date, and time of application, or other factors affecting selection from the waiting list.
</P>
<P>(iv) Remove the applicant from the waiting list for tenant-based voucher assistance.


</P>
<CITA TYPE="N">[70 FR 59913, Oct. 13, 2005, as amended at 73 FR 72345, Nov. 28, 2008; 75 FR 66264, Oct. 27, 2010; 79 FR 36168, June 25, 2014; 81 FR 80818, Nov. 16, 2016; 89 FR 38331, May 7, 2024]












</CITA>
</DIV8>


<DIV8 N="§ 983.252" NODE="24:4.1.3.1.20.6.41.2" TYPE="SECTION">
<HEAD>§ 983.252   PHA information for accepted family.</HEAD>
<P>(a) <I>Oral briefing.</I> When a family accepts an offer of PBV assistance, the PHA must give the family an oral briefing.
</P>
<P>(1) The briefing must include information on the following subjects:
</P>
<P>(i) A description of how the program works;
</P>
<P>(ii) Family and owner responsibilities; and
</P>
<P>(iii) Family right to move.
</P>
<P>(2) The PHA must take appropriate steps to ensure effective communication in accordance with 24 CFR 8.6 and 28 CFR part 35, subpart E, and must provide information on the reasonable accommodation process.
</P>
<P>(b) <I>Information packet.</I> The PHA must give the family a packet that includes information on the following subjects:
</P>
<P>(1) How the PHA determines the total tenant payment for a family;
</P>
<P>(2) Family obligations under the program; and
</P>
<P>(3) Information on Federal, State, and local equal opportunity laws, the contact information for the Section 504 coordinator, a copy of the housing discrimination complaint form, and information on how to request a reasonable accommodation or modification under Section 504, the Fair Housing Act, and the Americans with Disabilities Act;
</P>
<P>(4) PHA subsidy standards, including when the PHA will consider granting exceptions to the standards as allowed by 24 CFR 982.402(b)(8), and when exceptions are required as a reasonable accommodation for a person with disabilities under Section 504, the Fair Housing Act, or the Americans with Disabilities Act; and
</P>
<P>(5) Family right to move.
</P>
<P>(c) <I>Statement of family responsibility.</I> The PHA and family must sign the statement of family responsibility.
</P>
<P>(d) <I>Providing information for persons with limited English proficiency.</I> The PHA must take reasonable steps to ensure meaningful access by persons with limited English proficiency in accordance with obligations and procedures contained in Title VI of the Civil Rights Act of 1964, and HUD's implementing regulation at 24 CFR part 1., Executive Order 13166, and HUD's <I>Final Guidance to Federal Financial Assistance Recipients Regarding Title VI Prohibition Against National Origin Discrimination Affecting Limited English Proficient Persons</I> (72 FR 2732) or successor authority.




</P>
<CITA TYPE="N">[70 FR 59913, Oct. 13, 2005, as amended at 89 FR 38333, May 7, 2024]






















</CITA>
</DIV8>


<DIV8 N="§ 983.253" NODE="24:4.1.3.1.20.6.41.3" TYPE="SECTION">
<HEAD>§ 983.253   Leasing of contract units.</HEAD>
<P>(a) <I>Owner selection of tenants.</I> (1) During the term of the HAP contract, the owner must lease contract units only to eligible families selected from the waiting list for the PBV program in accordance with § 983.251 of this part.


</P>
<P>(2) The owner is responsible for adopting written tenant selection procedures that are consistent with the purpose of improving housing opportunities for very low-income families and reasonably related to program eligibility and an applicant's ability to perform the lease obligations.
</P>
<P>(3) An owner must promptly notify in writing any rejected applicant of the grounds for any rejection. The owner must provide a copy of such rejection notice to the PHA.


</P>
<P>(4) The owner must comply with 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking).
</P>
<P>(b) <I>Size of unit.</I> The contract unit leased to each family must be appropriate for the size of the family under the PHA's subsidy standards. 
</P>
<P>(c) The protections for victims of domestic violence, dating violence, sexual assault, or stalking in 24 CFR part 5, subpart L, apply to tenant screening.
</P>
<CITA TYPE="N">[70 FR 59913, Oct. 13, 2005, as amended at 81 FR 80818, Nov. 16, 2016; 89 FR 38334, May 7, 2024]










</CITA>
</DIV8>


<DIV8 N="§ 983.254" NODE="24:4.1.3.1.20.6.41.4" TYPE="SECTION">
<HEAD>§ 983.254   Vacancies.</HEAD>
<P>(a) <I>Filling vacant units.</I> (1) The PHA and the owner must make reasonable good-faith efforts to minimize the likelihood and length of any vacancy in a contract unit. However, contract units in a rehabilitated housing project undergoing development activity after HAP contract execution that are not available for occupancy in accordance with § 983.157(e)(5) are not subject to this requirement.
</P>
<P>(i) If an owner-maintained waiting list is used, in accordance with § 983.251, the owner must promptly notify the PHA of any vacancy or expected vacancy in a contract unit and refer the family to the PHA for final eligibility determination. The PHA must make every reasonable effort to make such final eligibility determination within 30 calendar days.
</P>
<P>(ii) If a PHA-maintained waiting list is used, in accordance with § 983.251, the owner must promptly notify the PHA of any vacancy or expected vacancy in a contract unit, and the PHA must, after receiving the owner notice, make every reasonable effort to promptly refer a sufficient number of families for the owner to fill such vacancies within 30 calendar days.
</P>
<P>(2) The owner must lease vacant contract units only to families determined eligible by the PHA.
</P>
<P>(b) <I>Reducing number of contract units.</I> If any contract units have been vacant for a period of 120 days or more since owner notice of vacancy, as required in paragraph (a) of this section, and notwithstanding the reasonable good-faith efforts of the PHA and the owner to fill such vacancies, the PHA may give notice to the owner amending the HAP contract to reduce the number of contract units by subtracting the number of contract units (by number of bedrooms) that have been vacant for such period.


</P>
<CITA TYPE="N">[89 FR 38334, May 7, 2024]








</CITA>
</DIV8>


<DIV8 N="§ 983.255" NODE="24:4.1.3.1.20.6.41.5" TYPE="SECTION">
<HEAD>§ 983.255   Tenant screening.</HEAD>
<P>(a) <I>PHA option.</I> (1) The PHA has no responsibility or liability to the owner or any other person for the family's behavior or suitability for tenancy. However, the PHA may opt to screen applicants for family behavior or suitability for tenancy and may deny admission to an applicant based on such screening.
</P>
<P>(2) The PHA must conduct tenant screening of applicants in accordance with policies stated in the PHA Administrative Plan.








</P>
<P>(b) <I>Owner responsibility.</I> (1) The owner is responsible for screening and selection of the family to occupy the owner's unit.
</P>
<P>(2) The owner is responsible for screening of families on the basis of their tenancy histories. An owner may consider a family's background with respect to such factors as:
</P>
<P>(i) Payment of rent and utility bills;
</P>
<P>(ii) Caring for a unit and premises;
</P>
<P>(iii) Respecting the rights of other residents to the peaceful enjoyment of their housing;
</P>
<P>(iv) Drug-related criminal activity or other criminal activity that is a threat to the health, safety, or property of others; and
</P>
<P>(v) Compliance with other essential conditions of tenancy;


</P>
<P>(c) <I>Providing tenant information to owner.</I> (1) The PHA must give the owner:
</P>
<P>(i) The family's current and prior address (as shown in the PHA records); and
</P>
<P>(ii) The name and address (if known to the PHA) of the landlord at the family's current and any prior address.
</P>
<P>(2) When a family wants to lease a dwelling unit, the PHA may offer the owner other information in the PHA possession about the family, including information about the tenancy history of family members or about drug trafficking and criminal activity by family members.
</P>
<P>(3) The PHA must give the family a description of the PHA policy on providing information to owners.


</P>
<P>(4) The PHA policy must be stated in the Administrative Plan and provide that the PHA will give the same types of information to all owners.





 
</P>
<P>(d) The protections for victims of domestic violence, dating violence, sexual assault, or stalking in 24 CFR part 5, subpart L, apply to tenant screening.
</P>
<CITA TYPE="N">[70 FR 59913, Oct. 13, 2005, as amended at 73 FR 72345, Nov. 28, 2008; 75 FR 66264, Oct. 27, 2010; 81 FR 80818, Nov. 16, 2016; 89 FR 38334, May 7, 2024]






</CITA>
</DIV8>


<DIV8 N="§ 983.256" NODE="24:4.1.3.1.20.6.41.6" TYPE="SECTION">
<HEAD>§ 983.256   Lease.</HEAD>
<P>(a) <I>Tenant's legal capacity.</I> The tenant must have legal capacity to enter a lease under state and local law. “Legal capacity” means that the tenant is bound by the terms of the lease and may enforce the terms of the lease against the owner.
</P>
<P>(b) <I>Form of lease.</I> (1) The tenant and the owner must enter a written lease for the unit. The lease must be executed by the owner and the tenant.
</P>
<P>(2) If the owner uses a standard lease form for rental to unassisted tenants in the locality or the premises, the lease must be in such standard form, except as provided in paragraph (b)(4) of this section. If the owner does not use a standard lease form for rental to unassisted tenants, the owner may use another form of lease, such as a PHA model lease.
</P>
<P>(3) In all cases, the lease must include a HUD-required tenancy addendum. The tenancy addendum must include, word-for-word, all provisions required by HUD.
</P>
<P>(4) The PHA may review the owner's lease form to determine if the lease complies with state and local law. The PHA may decline to approve the tenancy if the PHA determines that the lease does not comply with state or local law.
</P>
<P>(c) <I>Required information.</I> The lease must specify all of the following:
</P>
<P>(1) The names of the owner and the tenant;
</P>
<P>(2) The unit rented (address, apartment number, if any, and any other information needed to identify the leased contract unit);
</P>
<P>(3) The term of the lease (initial term and any provision for renewal);
</P>
<P>(4) The amount of the tenant rent to owner. The tenant rent to owner is subject to change during the term of the lease in accordance with HUD requirements;
</P>
<P>(5) A specification of what services, maintenance, equipment, and utilities are to be provided by the owner; and
</P>
<P>(6) The amount of any charges for food, furniture, or supportive services.
</P>
<P>(d) <I>Tenancy addendum.</I> (1) The tenancy addendum in the lease shall state:
</P>
<P>(i) The program tenancy requirements (as specified in this part);
</P>
<P>(ii) The composition of the household as approved by the PHA (names of family members and any PHA-approved live-in aide).
</P>
<P>(2) All provisions in the HUD-required tenancy addendum must be included in the lease. The terms of the tenancy addendum shall prevail over other provisions of the lease.
</P>
<P>(e) <I>Changes in lease.</I> (1) If the tenant and the owner agree to any change in the lease, such change must be in writing, and the owner must immediately give the PHA a copy of all such changes.
</P>
<P>(2) The owner must notify the PHA in advance of any proposed change in lease requirements governing the allocation of tenant and owner responsibilities for utilities. Such changes may be made only if approved by the PHA and in accordance with the terms of the lease relating to its amendment. The PHA must redetermine reasonable rent, in accordance with § 983.303(c), based on any change in the allocation of responsibility for utilities between the owner and the tenant, and the redetermined reasonable rent shall be used in calculation of rent to owner from the effective date of the change.
</P>
<P>(f) <I>Term of lease.</I> (1) The initial lease term must be for at least one year.
</P>
<P>(2) The lease must provide for automatic renewal after the initial term of the lease. The lease may provide either:
</P>
<P>(i) For automatic renewal for successive definite terms (e.g., month-to-month or year-to-year); or
</P>
<P>(ii) For automatic indefinite extension of the lease term.
</P>
<P>(3) The term of the lease terminates if any of the following occurs:
</P>
<P>(i) The owner terminates the lease for good cause;
</P>
<P>(ii) The tenant terminates the lease;
</P>
<P>(iii) The owner and the tenant agree to terminate the lease;
</P>
<P>(iv) The PHA terminates the HAP contract; or
</P>
<P>(v) The PHA terminates assistance for the family.
</P>
<P>(g) <I>Lease provisions governing absence from the unit.</I> The lease may specify a maximum period of family absence from the unit that may be shorter than the maximum period permitted by PHA policy. (PHA termination-of-assistance actions due to family absence from the unit are subject to 24 CFR 982.312, except that the unit is not terminated from the HAP contract if the family is absent for longer than the maximum period permitted.)
</P>
<CITA TYPE="N">[70 FR 59913, Oct. 13, 2005, as amended at 79 FR 36168, June 25, 2014]










</CITA>
</DIV8>


<DIV8 N="§ 983.257" NODE="24:4.1.3.1.20.6.41.7" TYPE="SECTION">
<HEAD>§ 983.257   Owner termination of tenancy and eviction.</HEAD>
<P>24 CFR 982.310 of this title applies with the exception that 24 CFR 982.310(d)(1)(iii) and (iv) does not apply to the PBV program. (In the PBV program, “good cause” does not include a business or economic reason or desire to use the unit for an individual, family, or non-residential rental purpose.) In addition, the owner may terminate the tenancy in accordance with the requirements related to lease terminations for development activity on units under a HAP contract as provided in § 983.157(g)(6)(iii) and for substantial improvement to units under a HAP contract as provided in § 983.212(a)(3)(iii). 24 CFR 5.858 through 5.861 on eviction for drug and alcohol abuse and 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking) apply to the PBV program.


</P>
<CITA TYPE="N">[89 FR 38334, May 7, 2024]






</CITA>
</DIV8>


<DIV8 N="§ 983.258" NODE="24:4.1.3.1.20.6.41.8" TYPE="SECTION">
<HEAD>§ 983.258   Continuation of housing assistance payments.</HEAD>
<P>Housing assistance payments shall continue until the tenant rent equals the rent to owner. The cessation of housing assistance payments at such point will not affect the family's other rights under its lease, nor will such cessation preclude the resumption of payments as a result of later changes in income, rents, or other relevant circumstances if such changes occur within 180 days following the date of the last housing assistance payment by the PHA. After the 180-day period, the unit shall be removed from the HAP contract pursuant to § 983.211.
</P>
<CITA TYPE="N">[79 FR 36169, June 25, 2014]








</CITA>
</DIV8>


<DIV8 N="§ 983.259" NODE="24:4.1.3.1.20.6.41.9" TYPE="SECTION">
<HEAD>§ 983.259   Security deposit: Amounts owed by tenant.</HEAD>
<P>(a) <I>Security deposit permitted.</I> The owner may collect a security deposit from the tenant.
</P>
<P>(b) <I>Amount of security deposit.</I> The PHA must prohibit the owner from charging assisted tenants security deposits in excess of private market practice, or in excess of amounts charged by the owner to unassisted tenants.
</P>
<P>(c) <I>Use of security deposit.</I> When the tenant moves out of the contract unit, the owner, subject to state and local law, may use the security deposit, including any interest on the deposit, in accordance with the lease, as reimbursement for any unpaid tenant rent, damages to the unit, or other amounts which the tenant owes under the lease.
</P>
<P>(d) <I>Security deposit reimbursement to owner.</I> The owner must give the tenant a written list of all items charged against the security deposit and the amount of each item. After deducting the amount used to reimburse the owner, the owner must promptly refund the full amount of the balance to the tenant.
</P>
<P>(e) <I>Insufficiency of security deposit.</I> If the security deposit is not sufficient to cover amounts the tenant owes under the lease, the owner may seek to collect the balance from the tenant. However, the PHA has no liability or responsibility for payment of any amount owed by the family to the owner. 
</P>
<CITA TYPE="N">[70 FR 59913, Oct. 13, 2005. Redesignated at 79 FR 36169, June 25, 2014; 89 FR 38334, May 7, 2024]












</CITA>
</DIV8>


<DIV8 N="§ 983.260" NODE="24:4.1.3.1.20.6.41.10" TYPE="SECTION">
<HEAD>§ 983.260   Overcrowded, under-occupied, and accessible units.</HEAD>
<P>(a) <I>Family occupancy of wrong-size or accessible unit.</I> (1) The PHA subsidy standards determine the appropriate unit size for the family size and composition.
</P>
<P>(2) If the PHA determines that a family is occupying a wrong-size unit, or a unit with accessibility features that the family does not require and the unit is needed by a family that requires the accessibility features (see 24 CFR 8.27), the PHA must:
</P>
<P>(i) Within 30 days from the PHA's determination, notify the family and the owner of this determination; and
</P>
<P>(ii) Within 60 days from the PHA's determination, offer the family continued housing assistance, pursuant to paragraph (b) of this section.
</P>
<P>(b) <I>PHA offer of continued assistance.</I> (1) The PHA policy on continued housing assistance must be stated in the Administrative Plan and may be in the form of:
</P>
<P>(i) PBV assistance in an appropriate-size unit (in the same project or in another project);
</P>
<P>(ii) Other project-based housing assistance (<I>e.g.,</I> by occupancy of a public housing unit);
</P>
<P>(iii) Tenant-based rental assistance under the voucher program; or
</P>
<P>(iv) Other comparable tenant-based rental assistance.
</P>
<P>(2) If no continued housing assistance as described in paragraph (b)(1) of this section is available, the PHA must remove the wrong-size or accessible unit from the HAP contract to make voucher assistance available to issue the family a tenant-based voucher. Section 983.206(b) does not apply to families issued a tenant-based voucher under the circumstance described in this paragraph (b)(2).
</P>
<P>(c) <I>PHA termination of housing assistance payments.</I> (1) If the PHA offers the family the opportunity to receive tenant-based rental assistance under the voucher program in accordance with paragraph (b)(1) of this section:
</P>
<P>(i) The PHA must terminate the housing assistance payments for a wrong-sized or accessible unit at the earlier of the expiration of the term of the family's voucher (including any extension granted by the PHA) or the date upon which the family vacates the unit.
</P>
<P>(ii) If the family does not move out of the wrong-sized unit or accessible unit by the expiration date of the term of the family's voucher, the PHA must remove the unit from the HAP contract.
</P>
<P>(2) If the PHA offers the family another form of continued housing assistance (other than tenant-based rental assistance under the voucher program), in accordance with paragraph (b)(1) of this section, the PHA must terminate the housing assistance payments for the wrong-sized or accessible unit and remove the unit from the HAP contract when:
</P>
<P>(i) In the case of an offer by the PHA of PBV assistance or other project-based housing assistance in an appropriate-size unit, the family does not accept the offer and does not move out of the PBV unit within a reasonable time as determined by the PHA, not to exceed 90 days. The family may request and the PHA may grant one extension not to exceed up to an additional 90 days to accommodate the family's efforts to locate affordable, safe, and geographically proximate replacement housing.
</P>
<P>(ii) In the case of an offer by the PHA of PBV assistance or other project-based housing assistance in an appropriate size unit, the family accepts the offer but does not move out of the PBV unit within a reasonable time as determined by the PHA, not to exceed 90 days.
</P>
<P>(iii) In the case of an offer by the PHA of other comparable tenant-based rental assistance, the family either accepts or does not accept the offer but does not move out of the PBV unit within a reasonable time as determined by the PHA, not to exceed 90 days. The family may request and the PHA may grant one extension not to exceed up to an additional 90 days to accommodate the family's efforts to locate, affordable, safe, and geographically proximate replacement housing.
</P>
<P>(d) <I>Reinstatement.</I> The PHA may reinstate a unit removed under paragraph (b)(2), (c)(1)(ii), or (c)(2) of this section to the HAP contract after the family vacates the property, in accordance with § 983.207(b).


</P>
<CITA TYPE="N">[89 FR 38334, May 7, 2024, as amended at 90 FR 56689, Dec. 8, 2025]








</CITA>
</DIV8>


<DIV8 N="§ 983.261" NODE="24:4.1.3.1.20.6.41.11" TYPE="SECTION">
<HEAD>§ 983.261   Family right to move.</HEAD>
<P>(a) <I>Termination of assisted lease after one year.</I> The family may terminate the assisted lease at any time after one year of PBV assistance. The family must give the owner advance written notice of intent to vacate (with a copy to the PHA) in accordance with the lease.
</P>
<P>(b) <I>Continued assistance.</I> If the family has elected to terminate the lease in accordance with paragraph (a) of this section, the PHA must offer the family the opportunity for continued tenant-based rental assistance. The PHA must specify in the Administrative Plan whether it will offer families assistance under the voucher program or other comparable tenant-based rental assistance. If voucher assistance is offered to the family and the search term expires, the PHA must issue the voucher to the next eligible family.
</P>
<P>(c) <I>Contacting the PHA.</I> Before providing notice to terminate the lease under <I>paragraph (a)</I> of this section, a family must contact the PHA to request a voucher or comparable tenant-based rental assistance if the family wishes to move with continued assistance. If a voucher or other comparable tenant-based rental assistance is not immediately available to the family upon the family's request to the PHA, the PHA must give the family priority to receive the next available opportunity for continued tenant-based rental assistance. The PHA must describe in its Administrative Plan its policies and procedures for how the family must contact the PHA and how the PHA documents families waiting for continued tenant-based rental assistance.
</P>
<P>(d) <I>Termination of assisted lease before one year.</I> If the family terminates the assisted lease before one year of PBV assistance, the family relinquishes the opportunity for continued tenant-based assistance under this section.
</P>
<P>(e) <I>Notice exclusion.</I> When the family or a member of the family is or has been the victim of domestic violence, dating violence, sexual assault, or stalking, as provided in 24 CFR part 5, subpart L, and the move is needed to protect the health or safety of the family or family member, the family is not required to give the owner advance written notice or contact the PHA under paragraph (a) and (c), respectively, of this section before moving from the unit. Additionally, when any family member has been the victim of a sexual assault that occurred on the premises during the 90-calendar-day period preceding the family's request to move, the family is not required to give the owner advance written notice or contact the PHA under paragraph (a) and (c), respectively, of this section before moving from the unit. A PHA may not terminate the assistance of a family due to a move occurring under the circumstances in this paragraph (e) and must offer the family the opportunity for continued tenant-based assistance if the family had received at least one year of PBV assistance prior to moving.
</P>
<P>(f) <I>Emergency Transfer Plans.</I> In the case of a move due to domestic violence, dating violence, sexual assault, or stalking, as provided in 24 CFR part 5, subpart L, PHAs must describe policies for facilitating emergency transfers for families with PBV assistance in their Emergency Transfer Plan, consistent with the requirements in 24 CFR 5.2005(e), including when the victim has received PBV assistance for less than one year and is not eligible for continued assistance under § 983.261(b).
</P>
<P>(g) <I>Family break-up.</I> If a family break-up results from an occurrence of domestic violence, dating violence, sexual assault, or stalking as provided in 24 CFR part 5, subpart L (Protection for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking), the PHA must ensure that the victim retains assistance in accordance with 24 CFR 982.315(a)(2).
</P>
<CITA TYPE="N">[89 FR 38335, May 7, 2024]










</CITA>
</DIV8>


<DIV8 N="§ 983.262" NODE="24:4.1.3.1.20.6.41.12" TYPE="SECTION">
<HEAD>§ 983.262   Occupancy of units under the increased program cap and project cap excepted units.</HEAD>
<P>(a) <I>General.</I> Pursuant to § 983.6(a), a PHA may commit project-based assistance to no more than 20 percent of its authorized voucher units at the time of commitment. There are certain units eligible for an increased program cap as described in § 983.6(d). Pursuant to § 983.54(a), the PHA may not select a proposal to provide PBV assistance or place units under an Agreement or a HAP contract in excess of the project cap. There are certain exceptions to the project cap as described in § 983.54(c). This section provides more detail on the occupancy requirements of both the excepted units from the project cap under § 983.54(c)(2) and units under the increased program cap under § 983.6(d).
</P>
<P>(b) <I>Requirements applicable to both excepted units and units under an increased program cap.</I> (1) The unit must be occupied by a family who meets the applicable exception.
</P>
<P>(2) The family must be selected from the waiting list for the PBV program through an admissions preference (see § 983.251).
</P>
<P>(3) Once the family vacates the unit, the unit must be made available to and occupied by a family that meets the applicable exception.
</P>
<P>(4) The PHA must specify in its Administrative Plan which of the options below the PHA will take if a unit is no longer qualified for its excepted status or the increased program cap:
</P>
<P>(i) Substitute the unit for another unit if it is possible to do so in accordance with § 983.207(a), so that the overall number of excepted units or units under the increased program cap in the project is not reduced. A PHA may, in conjunction with such substitution, add the original unit to the HAP contract if it is possible to do so in accordance with § 983.207(b), including that such addition does not cause the PHA to exceed the program cap or become non-compliant with the project cap.
</P>
<P>(ii) Remove the unit from the PBV HAP contract. In conjunction with the removal, the PHA may provide the family with tenant-based assistance, if the family is eligible for tenant-based assistance. The family and the owner may agree to use the tenant-based voucher in the unit; otherwise, the family must move from the unit with the tenant-based voucher. If the family later vacates the unit, the PHA may add the unit to the PBV HAP contract in accordance with § 983.207.
</P>
<P>(iii) Change the unit's status under the project cap or program cap, as applicable, provided that the change does not cause the PHA to exceed the program cap or become non-compliant with the project cap.
</P>
<P>(c) <I>Requirements for units under the increased program cap</I>—(1) <I>Homeless family.</I> A unit qualifies under the increased program cap at § 983.6(d)(1)(i) if the family meets the definition of homeless under Section 103 of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11302), included in 24 CFR 578.3, at the time the family first occupies the unit.
</P>
<P>(2) <I>Veteran family.</I> A unit qualifies under the increased program cap at § 983.6(d)(1)(ii) if the family is comprised of or includes a veteran (a person who served in the active military, naval, air, or space service, and who was discharged or released therefrom) at the time the family first occupies the unit.
</P>
<P>(3) <I>Supportive housing for persons with disabilities or elderly persons.</I> The following applies to the increased program cap category at § 983.6(d)(1)(iii):
</P>
<P>(i) A disabled or elderly member of the family must be eligible for one or more of the supportive services at the time the family first occupies the unit. The member of the family may choose not to participate in the services.
</P>
<P>(ii) The PHA must state in its Administrative Plan whether it will allow a family that initially qualified for supportive housing for persons with disabilities or elderly persons to continue to reside in a unit, where through circumstances beyond the control of the family (<I>e.g.,</I> death of the elderly family member or family member with a disability or long term or permanent hospitalization or nursing care), the elderly family member or family member with a disability no longer resides in the unit. In this case, the unit may continue to count under the increased program cap category for as long as the family resides in that unit. However, the requirements of § 983.260, concerning wrong-sized units, apply. If the PHA chooses not to exercise this discretion, the unit no longer counts under the increased program cap category and, if the family is not required to move from the unit as a result of § 983.260, the PHA may use one of the options described in paragraph (b)(4) of this section.
</P>
<P>(4) <I>Units for Family Unification Program (FUP) youth.</I> See paragraph (e) of this section for requirements relating to the increased program cap category at § 983.6(d)(2).
</P>
<P>(d) <I>Requirements for project cap excepted units</I>—(1) <I>Elderly family.</I> A unit under the project cap exception category at § 983.54(c)(2)(i) must be occupied by an elderly family, as defined in 24 CFR 5.403. The PHA must state in its Administrative Plan whether it will allow a family that initially qualified for occupancy of an excepted unit based on elderly family status to continue to reside in a unit, where through circumstances beyond the control of the family (<I>e.g.,</I> death of the elderly family member or long term or permanent hospitalization or nursing care), the elderly family member no longer resides in the unit. In this case, the unit may continue to count as an excepted unit for as long as the family resides in that unit. However, the requirements of § 983.260, concerning wrong-sized units, apply. If the PHA chooses not to exercise this discretion, the unit is no longer considered excepted and, if the family is not required to move from the unit as a result of § 983.260, the PHA may use one of the options described in paragraph (b)(4) of this section.
</P>
<P>(2) <I>Disabled family.</I> The same provisions of paragraph (d)(1) of this section apply to units previously excepted based on disabled family status under a HAP contract in effect prior to April 18, 2017.
</P>
<P>(3) <I>Supportive services.</I> The following applies under the project cap exception category at § 983.54(c)(2)(iii):
</P>
<P>(i) A unit is excepted if any member of the family is eligible for one or more of the supportive services even if the family chooses not to participate in the services.
</P>
<P>(ii) If any member of the family chooses to participate and successfully completes the supportive services, the unit continues to be excepted for as long as any member of the family resides in the unit, even if the members that continue to reside in the unit are ineligible during tenancy for all available supportive services.
</P>
<P>(iii) The unit loses its excepted status only if the entire family becomes ineligible during the tenancy for all supportive services available to the family. This provision does not apply where any member of the family has successfully completed the supportive services under paragraph (d)(3)(ii) of this section.
</P>
<P>(iv) A family cannot be terminated from the program or evicted from the unit because they become ineligible for all supportive services during the tenancy.
</P>
<P>(4) <I>Units for FUP youth.</I> See paragraph (e) of this section for requirements relating to the increased project cap exception category at § 983.54(c)(2)(ii).
</P>
<P>(e) <I>Requirements for units for FUP youth under the increased program cap and project cap exception.</I> The following applies under the project cap exception category at § 983.54(c)(2)(ii) and the increased program cap category at § 983.6(d)(2):
</P>
<P>(1) A unit is excepted from the project cap or qualifies under the increased program cap, as applicable, if the unit is occupied by an eligible youth receiving FUP assistance.
</P>
<P>(2) The youth must vacate the unit once the FUP assistance has expired. The unit loses its excepted status or no longer qualifies under the increased program cap, as applicable, if the youth does not move from the unit upon the expiration of the FUP assistance.
</P>
<CITA TYPE="N">[89 FR 38335, May 7, 2024, as amended at 90 FR 56689, Dec. 8, 2025]




</CITA>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:4.1.3.1.20.7" TYPE="SUBPART">
<HEAD>Subpart G—Rent to Owner</HEAD>


<DIV8 N="§ 983.301" NODE="24:4.1.3.1.20.7.41.1" TYPE="SECTION">
<HEAD>§ 983.301   Determining the rent to owner.</HEAD>
<P>(a) <I>Initial and redetermined rents.</I> (1) The amount of the initial and redetermined rent to owner is determined in accordance with this section and § 983.302.
</P>
<P>(2) The amount of the initial rent to owner is established at the beginning of the HAP contract term. For rehabilitated or newly constructed housing, the Agreement states the estimated amount of the initial rent to owner, but the actual amount of the initial rent to owner is established at the beginning of the HAP contract term.
</P>
<P>(3) The rent to owner is also redetermined in accordance with § 983.302.
</P>
<P>(b) <I>Amount of rent to owner.</I> Except for certain tax credit units as provided in paragraph (c) of this section, the rent to owner must not exceed the lowest of:
</P>
<P>(1) An amount determined by the PHA in accordance with the Administrative Plan not to exceed 110 percent of the applicable fair market rent (or the amount of any applicable exception payment standard) for the unit bedroom size minus any utility allowance;
</P>
<P>(2) The reasonable rent; or
</P>
<P>(3) The rent requested by the owner.
</P>
<P>(c) <I>Rent to owner for certain tax credit units.</I> (1) This paragraph (c) applies if:
</P>
<P>(i) A contract unit receives a low-income housing tax credit under the Internal Revenue Code of 1986 (see 26 U.S.C. 42);
</P>
<P>(ii) The contract unit is not located in a qualified census tract;
</P>
<P>(iii) In the same building, there are comparable tax credit units of the same unit bedroom size as the contract unit and the comparable tax credit units do not have any form of rental assistance other than the tax credit; and
</P>
<P>(iv) The tax credit rent exceeds the applicable fair market rental (or any exception payment standard) as determined in accordance with paragraph (b) of this section.
</P>
<P>(2) In the case of a contract unit described in paragraph (c)(1) of this section, the rent to owner must not exceed the lowest of:
</P>
<P>(i) An amount determined by the PHA in accordance with the Administrative Plan, not to exceed the tax credit rent minus any utility allowance;






</P>
<P>(ii) The reasonable rent; or
</P>
<P>(iii) The rent requested by the owner.
</P>
<P>(3) The “tax credit rent” is the rent charged for comparable units of the same bedroom size in the building that also receive the low-income housing tax credit but do not have any additional rental assistance (<I>e.g.</I>, additional assistance such as tenant-based voucher assistance).
</P>
<P>(4) A “qualified census tract” is any census tract (or equivalent geographic area defined by the Bureau of the Census) in which:
</P>
<P>(i) At least 50 percent of households have an income of less than 60 percent of Area Median Gross Income (AMGI); or
</P>
<P>(ii) Where the poverty rate is at least 25 percent and where the census tract is designated as a qualified census tract by HUD.
</P>
<P>(d) <I>Rent to owner for other tax credit units.</I> Except in the case of a tax-credit unit described in paragraph (c)(1) of this section, the rent to owner for all other tax credit units may be determined by the PHA pursuant to paragraph (b) of this section.
</P>
<P>(e) <I>Reasonable rent.</I> The PHA shall determine the reasonable rent in accordance with § 983.303. The rent to the owner for each contract unit may at no time exceed the reasonable rent, except in cases where, the PHA has elected within the HAP contract not to reduce rents below the initial rent to owner and, upon redetermination of the rent to owner, the reasonable rent would result in a rent below the initial rent. If the PHA has not elected within the HAP contract to establish the initial rent to owner as the rent floor, the rent to owner shall not at any time exceed the reasonable rent.
</P>
<P>(f) <I>Use of FMRs and utility allowance schedule in determining the amount of rent to owner.</I> (1) When determining the initial rent to owner, the PHA shall use the most recently published FMR in effect and the utility allowance schedule in effect at execution of the HAP contract. At its discretion, the PHA may use the amounts in effect at any time during the 30-day period immediately before the beginning date of the HAP contract.
</P>
<P>(2) When redetermining the rent to owner, the PHA shall use the most recently published FMR and the PHA utility allowance schedule in effect at the time of redetermination. At its discretion, the PHA may use the amounts in effect at any time during the 30-day period immediately before the redetermination date.
</P>
<P>(3)(i) For PBV projects that are not located in a designated SAFMR area under 24 CFR 888.113(c)(1), or for PBV projects not located in a ZIP code where the PHA has opted in under 24 CFR 888.113(c)(3), any exception payment standard amount approved under 24 CFR 982.503(d)(2)-(4) applies for purposes of paragraphs (b)(1) and (c)(1)(iv) of this section. HUD will not approve a different payment standard amount for use in the PBV program.
</P>
<P>(ii) For PBV projects that are located in a designated SAFMR area under 24 CFR 888.113(c)(1), or for PBV projects located in a ZIP code where the PHA has opted in under 24 CFR 888.113(c)(3), an exception payment standard amount approved under 24 CFR 982.503(d)(3)-(4) will apply for purposes of paragraphs (b)(1) and (c)(1)(iv) of this section only if the PHA has adopted a policy applying SAFMRs to its PBV program and met all other requirements in accordance with 24 CFR 888.113(h).
</P>
<P>(4) HUD may establish a process allowing PHAs to adopt project-specific utility allowances by notification in the <E T="04">Federal Register</E> subject to public comment. Absent the establishment of such a project-specific utility allowance, the PHA's utility allowance schedule as determined under 24 CFR 982.517(b)(2)(i) or (ii) applies to both the tenant-based and PBV programs.
</P>
<P>(5) The PHA must continue to use the applicable utility allowance schedule for the purpose of determining the initial rent to owner and redetermining the rent to owner for contract units, as outlined in this 24 CFR 983.301, regardless of whether the PHA approves a higher utility allowance as a reasonable accommodation for a person with disabilities living in a contract unit (see 24 CFR 982.517(e)).
</P>
<P>(g) <I>PHA-owned units.</I> For PHA-owned PBV units, the initial rent to owner and the annual redetermination of rent at the annual anniversary of the HAP contract must be determined by the independent entity approved by HUD in accordance with § 983.57. The PHA must use the rent to owner established by the independent entity.


</P>
<CITA TYPE="N">[70 FR 59913, Oct. 13, 2005, as amended at 79 FR 36169, June 25, 2014; 81 FR 80583, Nov. 16, 2016; 89 FR 38336, May 7, 2024]










</CITA>
</DIV8>


<DIV8 N="§ 983.302" NODE="24:4.1.3.1.20.7.41.2" TYPE="SECTION">
<HEAD>§ 983.302   Redetermination of rent to owner.</HEAD>
<P>(a) <I>Requirement to redetermine the rent to owner.</I> The PHA must redetermine the rent to owner:
</P>
<P>(1) When there is a 10 percent decrease in the published FMR;
</P>
<P>(2) Upon the owner's request consistent with requirements established in the PHA's Administrative Plan. The Administrative Plan must specify any advance notice the owner must give the PHA and the form the request must take; or
</P>
<P>(3) At the time of the automatic adjustment by an operating cost adjustment factor (OCAF) in accordance with paragraph (b)(3).
</P>
<P>(b) <I>Rent increase.</I> (1) An owner may receive an increase in the rent to owner during the term of a HAP contract. Any such increase will go into effect at the annual anniversary of the HAP contract. (Provisions for special adjustments of contract rent pursuant to 42 U.S.C. 1437f(c)(2)(B) do not apply to the voucher program.)
</P>
<P>(2) A rent increase may occur through automatic adjustment by an operating cost adjustment factor (OCAF) or as the result of an owner request for such an increase. A rent increase as the result of an owner request must be determined by the PHA pursuant to § 983.301(b) or (c), as applicable. A rent increase through an adjustment by an OCAF is likewise subject to § 983.301(b) or (c), as applicable, except there is no rent request by the owner to take into account since the PHA redetermines the rent automatically under that option.
</P>
<P>(3) By agreement of the parties, the HAP contract may provide for rent adjustments using an operating cost adjustment factor (OCAF) established by the Secretary pursuant to Section 524(c) of the Multifamily Assisted Housing Reform and Affordability Act of 1997 at each annual anniversary of the HAP contract. OCAFs are established by the Secretary and published annually in the <E T="04">Federal Register.</E> The provisions in the following paragraphs apply to a contract that provides for rent adjustments using an OCAF:
</P>
<P>(i) The contract may require an additional increase up to an amount determined by the PHA pursuant to § 983.301(b) or (c), as applicable, if requested by the owner in writing, periodically during the term of the contract.
</P>
<P>(ii) The contract shall require an additional increase up to an amount determined by the PHA pursuant to § 983.301(b) or (c), as applicable, at the point of contract extension, if requested by the owner in writing.
</P>
<P>(4) If the HAP contract does not provide for automatic adjustment by an OCAF, then an owner who wishes to receive an increase in the rent to owner must request such an increase at the annual anniversary of the HAP contract by written notice to the PHA.
</P>
<P>(5) The PHA must establish the length of the required notice period for any rent increase that requires a written request from the owner. The written request must be submitted as required by the PHA (<I>e.g.,</I> to a particular mailing address or email address).
</P>
<P>(6) The PHA may not approve and the owner may not receive any increase of rent to owner until and unless the owner has complied with all requirements of the HAP contract, including compliance with the HQS (except that HQS compliance is not required for purposes of this provision for units undergoing development activity that complies with § 983.157 or substantial improvement that complies with § 983.212). The owner may not receive any retroactive increase of rent for any period of noncompliance.
</P>
<P>(c) <I>Rent decrease.</I> (1) If the HAP contract provides for rent adjustments by an OCAF and there is a decrease in the fair market rent, tax credit rent, or reasonable rent that requires a decrease to the rent to owner (see paragraph (b)(2)), the rent to owner must be decreased. If the HAP contract does not provide for adjustment by an OCAF and there is a decrease in the rent to owner, as established in accordance with § 983.301, the rent to owner must be decreased, regardless of whether the owner requests a rent adjustment.
</P>
<P>(2) At any time during the term of the HAP contract, the PHA may elect within the HAP contract to not reduce rents below the initial rent to owner. Where a PHA makes such an election, the rent to owner shall not be reduced below the initial rent to owner, except:
</P>
<P>(i) To correct errors in calculations in accordance with HUD requirements;
</P>
<P>(ii) If additional housing assistance has been combined with PBV assistance after the execution of the initial HAP contract and a rent decrease is required pursuant to § 983.153(b); or
</P>
<P>(iii) If a decrease in rent to owner is required based on changes in the allocation of responsibility for utilities between the owner and the tenant.
</P>
<P>(d) <I>Notice of change in rent to owner.</I> Whenever there is a change in rent to owner, the PHA must provide written notice to the owner specifying the amount of the new rent to owner (as determined in accordance with §§ 983.301 and 983.302). The PHA notice of the rent change in rent to owner constitutes an amendment of the rent to owner specified in the HAP contract.
</P>
<P>(e) <I>Contract year and annual anniversary of the HAP contract.</I> (1) The contract year is the period of 12 calendar months preceding each annual anniversary of the HAP contract during the HAP contract term. The initial contract year is calculated from the first day of the first calendar month of the HAP contract term.
</P>
<P>(2) The annual anniversary of the HAP contract is the first day of the first calendar month after the end of the preceding contract year. The adjusted rent to owner amount applies for the period of 12 calendar months from the annual anniversary of the HAP contract.
</P>
<P>(3) The annual anniversary of the HAP contract for contract units completed in stages must follow § 983.207(g).


</P>
<CITA TYPE="N">[89 FR 38337, May 7, 2024]








</CITA>
</DIV8>


<DIV8 N="§ 983.303" NODE="24:4.1.3.1.20.7.41.3" TYPE="SECTION">
<HEAD>§ 983.303   Reasonable rent.</HEAD>
<P>(a) <I>Comparability requirement.</I> At all times during the term of the HAP contract, the rent to the owner for a contract unit may not exceed the reasonable rent as determined by the PHA, except that where the PHA has elected in the HAP contract to not reduce rents below the initial rent under the initial HAP contract, the rent to owner shall not be reduced below the initial rent in accordance with § 983.302(c)(2).
</P>
<P>(b) <I>Redetermination.</I> The PHA must redetermine the reasonable rent:
</P>
<P>(1) Whenever there is a 10 percent decrease in the published FMR in effect 60 days before the contract anniversary (for the unit sizes specified in the HAP contract) as compared with the FMR in effect 1 year before the contract anniversary.
</P>
<P>(2) Whenever the PHA approves a change in the allocation of responsibility for utilities between the owner and the tenant;
</P>
<P>(3) Whenever the HAP contract is amended to add a contract unit or substitute a different contract unit in the same building or project;
</P>
<P>(4) Whenever the PHA accepts a completed unit after development activity that is conducted after HAP contract execution (see § 983.156(b)(3)); and






</P>
<P>(5) Whenever there is any other change that may substantially affect the reasonable rent.
</P>
<P>(c) <I>How to determine reasonable rent.</I> (1) The reasonable rent of a contract unit must be determined by comparison to rent for other comparable unassisted units.
</P>
<P>(2) In determining the reasonable rent, the PHA must consider factors that affect market rent, such as:
</P>
<P>(i) The location, quality, size, unit type, and age of the contract unit; and
</P>
<P>(ii) Amenities, housing services, maintenance, and utilities to be provided by the owner.
</P>
<P>(3) The reasonable rent determination must be based on the condition of the assisted unit at the time of the determination and not on anticipated future unit conditions.






</P>
<P>(d) <I>Comparability analysis.</I> (1) For each unit, the PHA comparability analysis must use at least three comparable units in the private unassisted market, which may include comparable unassisted units in the premises or project.
</P>
<P>(2) The PHA must retain a comparability analysis that shows how the reasonable rent was determined, including major differences between the contract units and comparable unassisted units.
</P>
<P>(3) The comparability analysis may be performed by PHA staff or by another qualified person or entity. A person or entity that conducts the comparability analysis and any PHA staff or contractor engaged in determining the housing assistance payment based on the comparability analysis may not have any direct or indirect interest in the property.
</P>
<P>(e) <I>Owner certification of comparability.</I> By accepting each monthly housing assistance payment from the PHA, the owner certifies that the rent to owner is not more than rent charged by the owner for comparable unassisted units in the premises. The owner must give the PHA information requested by the PHA on rents charged by the owner for other units in the premises or elsewhere.




</P>
<P>(f) <I>Determining reasonable rent for PHA-owned units.</I> (1) For PHA-owned units, the amount of the reasonable rent must be determined by an independent entity in accordance with § 983.57, rather than by the PHA. The reasonable rent must be determined in accordance with this section.
</P>
<P>(2) The independent entity must furnish a copy of the independent entity determination of reasonable rent for PHA-owned units to the PHA.



 
</P>
<CITA TYPE="N">[70 FR 59913, Oct. 13, 2005, as amended at 79 FR 36170, June 25, 2014; 81 FR 80583, Nov. 16, 2016; 89 FR 38338, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 983.304" NODE="24:4.1.3.1.20.7.41.4" TYPE="SECTION">
<HEAD>§ 983.304   Other subsidy: effect on rent to owner.</HEAD>
<P>(a) <I>General.</I> In addition to the rent limits established in accordance with § 983.301 and 24 CFR 982.302, the following restrictions apply to certain units.
</P>
<P>(b) <I>HOME.</I> For units assisted under the HOME program, rents may not exceed rent limits as required by the HOME program (24 CFR 92.252).
</P>
<P>(c) <I>Subsidized projects.</I> (1) This paragraph (c) applies to any contract units in any of the following types of federally subsidized project:
</P>
<P>(i) An insured or non-insured Section 236 project;
</P>
<P>(ii) A formerly insured or non-insured Section 236 project that continues to receive Interest Reduction Payment following a decoupling action;
</P>
<P>(iii) A Section 221(d)(3) below market interest rate (BMIR) project;
</P>
<P>(iv) A Section 515 project of the Rural Housing Service;
</P>
<P>(v) Any other type of federally subsidized project specified by HUD.
</P>
<P>(2) The rent to owner may not exceed the subsidized rent (basic rent) as determined in accordance with requirements for the applicable federal program listed in paragraph (c)(1) of this section.
</P>
<P>(d) <I>Combining subsidy.</I> Rent to owner may not exceed any limitation required to comply with HUD subsidy layering requirements. See § 983.55.
</P>
<P>(e) <I>Other subsidy: rent reduction.</I> To comply with HUD subsidy layering requirements, at the direction of HUD or its designee, a PHA shall reduce the rent to owner because of other governmental subsidies, including tax credits or tax exemptions, grants, or other subsidized financing.
</P>
<P>(f) <I>Prohibition of other subsidy.</I> For provisions that prohibit PBV assistance to units in certain types of subsidized housing, see § 983.54.
</P>
<CITA TYPE="N">[70 FR 59913, Oct. 13, 2005, as amended at 72 FR 65207, Nov. 19, 2007; 79 FR 36170, June 25, 2014]


</CITA>
</DIV8>


<DIV8 N="§ 983.305" NODE="24:4.1.3.1.20.7.41.5" TYPE="SECTION">
<HEAD>§ 983.305   Rent to owner: effect of rent control and other rent limits.</HEAD>
<P>In addition to the limitation to 110 percent of the FMR in § 983.301(b)(1), the rent reasonableness limit under §§ 983.301(b)(2) and 983.303, the rental determination provisions of § 983.301(f), the special limitations for tax credit units under § 983.301(c), and other rent limits under this part, the amount of rent to owner also may be subject to rent control or other limits under local, state, or federal law. 


</P>
</DIV8>

</DIV6>


<DIV6 N="H" NODE="24:4.1.3.1.20.8" TYPE="SUBPART">
<HEAD>Subpart H—Payment to Owner</HEAD>


<DIV8 N="§ 983.351" NODE="24:4.1.3.1.20.8.41.1" TYPE="SECTION">
<HEAD>§ 983.351   PHA payment to owner for occupied unit.</HEAD>
<P>(a) <I>When payments are made.</I> (1) During the term of the HAP contract, the PHA shall make housing assistance payments to the owner in accordance with the terms of the HAP contract. The payments shall be made for the months during which a contract unit is leased to and actually occupied by an eligible family.
</P>
<P>(2) Except for discretionary vacancy payments in accordance with § 983.352, the PHA may not make any housing assistance payment to the owner for any month after the month when the family moves out of the unit (even if household goods or property are left in the unit).
</P>
<P>(b) <I>Monthly payment.</I> Each month, the PHA shall make a housing assistance payment to the owner for each contract unit that complies with the HQS and is leased to and occupied by an eligible family in accordance with the HAP contract.
</P>
<P>(c) <I>Calculating amount of payment.</I> The monthly housing assistance payment by the PHA to the owner for a contract unit leased to a family is the rent to owner minus the tenant rent (total tenant payment minus the utility allowance).
</P>
<P>(d) <I>Prompt payment.</I> The housing assistance payment by the PHA to the owner under the HAP contract must be paid to the owner on or about the first day of the month for which payment is due, unless the owner and the PHA agree on a later date.
</P>
<P>(e) <I>Owner compliance with contract.</I> To receive housing assistance payments in accordance with the HAP contract, the owner must comply with all the provisions of the HAP contract. Unless the owner complies with all the provisions of the HAP contract, the owner does not have a right to receive housing assistance payments. 


</P>
</DIV8>


<DIV8 N="§ 983.352" NODE="24:4.1.3.1.20.8.41.2" TYPE="SECTION">
<HEAD>§ 983.352   Vacancy payment.</HEAD>
<P>(a) <I>Payment for move-out month.</I> If an assisted family moves out of the unit, the owner may keep the housing assistance payment payable for the calendar month when the family moves out (“move-out month”). However, the owner may not keep the payment if the PHA determines that the vacancy is the owner's fault.
</P>
<P>(b) <I>Vacancy payment at PHA discretion.</I> (1) At the discretion of the PHA, the HAP contract may provide for vacancy payments to the owner (in the amounts determined in accordance with paragraph (b)(2) of this section) for a PHA-determined period of vacancy extending from the beginning of the first calendar month after the move-out month for a period not exceeding two full months following the move-out month. 

The PHA must include in its Administrative Plan the PHA's policy on the conditions under which it will allow vacancy payments in a HAP contract, the duration of the payments, amount of vacancy payments it will make to an owner, and the required form and manner of requests for vacancy payments, in accordance with paragraph (b)(4) of this section.


</P>
<P>(2) The vacancy payment to the owner for each month of the maximum two-month period will be determined by the PHA, and cannot exceed the monthly rent to owner under the assisted lease, minus any portion of the rental payment received by the owner (including amounts available from the tenant's security deposit). Any vacancy payment may cover only the period the unit remains vacant.
</P>
<P>(3) The PHA may make vacancy payments to the owner only if:
</P>
<P>(i) The owner gives the PHA prompt, written notice certifying that the family has vacated the unit and containing the date when the family moved out (to the best of the owner's knowledge and belief);
</P>
<P>(ii) The owner certifies that the vacancy is not the fault of the owner and that the unit was vacant during the period for which payment is claimed;
</P>
<P>(iii) The owner certifies that it has taken every reasonable action to minimize the likelihood and length of vacancy; and
</P>
<P>(iv) The owner provides any additional information required and requested by the PHA to verify that the owner is entitled to the vacancy payment.
</P>
<P>(4) The owner must submit a request for vacancy payments in the form and manner required by the PHA and must provide any information or substantiation required by the PHA to determine the amount of any vacancy payment. 
</P>
<CITA TYPE="N">[70 FR 59913, Oct. 13, 2005, as amended at 89 FR 38338, May 7, 2024]






</CITA>
</DIV8>


<DIV8 N="§ 983.353" NODE="24:4.1.3.1.20.8.41.3" TYPE="SECTION">
<HEAD>§ 983.353   Tenant rent; payment to owner.</HEAD>
<P>(a) <I>PHA determination.</I> (1) The tenant rent is the portion of the rent to owner paid by the family. The PHA determines the tenant rent in accordance with HUD requirements.
</P>
<P>(2) Any changes in the amount of the tenant rent will be effective on the date stated in a notice by the PHA to the family and the owner.
</P>
<P>(b) <I>Tenant payment to owner.</I> (1) The family is responsible for paying the tenant rent (total tenant payment minus the utility allowance).
</P>
<P>(2) The amount of the tenant rent as determined by the PHA is the maximum amount the owner may charge the family for rent of a contract unit. The tenant rent is payment for all housing services, maintenance, equipment, and utilities to be provided by the owner without additional charge to the tenant, in accordance with the HAP contract and lease.
</P>
<P>(3) The owner may not demand or accept any rent payment from the tenant in excess of the tenant rent as determined by the PHA. The owner must immediately return any excess payment to the tenant.
</P>
<P>(4) The family is not responsible for payment of the portion of the rent to owner covered by the housing assistance payment under the HAP contract. The owner may not terminate the tenancy of an assisted family for nonpayment of the PHA housing assistance payment.
</P>
<P>(c) <I>Limit of PHA responsibility.</I> (1) The PHA is responsible only for making housing assistance payments to the owner on behalf of a family in accordance with the HAP contract. The PHA is not responsible for paying the tenant rent, or for paying any other claim by the owner.
</P>
<P>(2) The PHA may not use housing assistance payments or other program funds (including any administrative fee reserve) to pay any part of the tenant rent or to pay any other claim by the owner. The PHA may not make any payment to the owner for any damage to the unit, or for any other amount owed by a family under the family's lease or otherwise.
</P>
<P>(d) <I>Utility reimbursement.</I> (1) If the amount of the utility allowance exceeds the total tenant payment, the PHA shall pay the amount of such excess as a reimbursement for tenant-paid utilities (“utility reimbursement”) and the tenant rent to the owner shall be zero.
</P>
<P>(2) The PHA must describe in its Administrative Plan its policies on paying the utility reimbursement directly to the family or directly to the utility supplier.


</P>
<P>(3) If the PHA chooses to pay the utility supplier directly, the PHA must notify the family of the amount paid to the utility supplier. 
</P>
<CITA TYPE="N">[70 FR 59913, Oct. 13, 2005, as amended at 89 FR 38338, May 7, 2024]








</CITA>
</DIV8>


<DIV8 N="§ 983.354" NODE="24:4.1.3.1.20.8.41.4" TYPE="SECTION">
<HEAD>§ 983.354   Other fees and charges.</HEAD>
<P>(a) <I>Meals and supportive services.</I> (1) Except as provided in paragraph (a)(2) of this section, the owner may not require the tenant or family members to pay charges for meals or supportive services. Non-payment of such charges is not grounds for termination of tenancy.
</P>
<P>(2) In assisted living developments receiving project-based assistance, owners may charge tenants, family members, or both for meals or supportive services. These charges may not be included in the rent to owner, nor may the value of meals and supportive services be included in the calculation of reasonable rent. Non-payment of such charges is grounds for termination of the lease by the owner in an assisted living development.
</P>
<P>(b) <I>Other charges by owner.</I> The owner may not charge the tenant or family members extra amounts for items customarily included in rent in the locality or provided at no additional cost to unsubsidized tenants in the premises.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="984" NODE="24:4.1.3.1.21" TYPE="PART">
<HEAD>PART 984—SECTION 8 AND PUBLIC HOUSING FAMILY SELF-SUFFICIENCY PROGRAM 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437f, 1437u, and 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>87 FR 30047, May 17, 2022, unless otherwise noted.
</PSPACE></SOURCE>
<EDNOTE>
<HED>Editorial Note:</HED><PSPACE>Nomenclature changes to part 984 appear at 65 FR 16731, Mar. 29, 2000.</PSPACE></EDNOTE>

<DIV6 N="A" NODE="24:4.1.3.1.21.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 984.101" NODE="24:4.1.3.1.21.1.41.1" TYPE="SECTION">
<HEAD>§ 984.101   Purpose, applicability, and scope.</HEAD>
<P>(a) <I>Purpose.</I> (1) The purpose of the Family Self-Sufficiency (FSS) program is to promote the development of local strategies to coordinate the use of Department of Housing and Urban Development (HUD or Department) assistance with public and private resources, to enable families eligible to receive HUD assistance to achieve economic independence and self-sufficiency.
</P>
<P>(2) The purpose of this part is to implement the policies and procedures applicable to operation of an FSS program, as established under section 23 of the 1937 Act (42 U.S.C. 1437u).
</P>
<P>(b) <I>Applicability.</I> This part applies to Public Housing Agencies (PHAs) administering a public housing program under section 9, a project-based and/or tenant-based assistance program under section 8(o) of the U.S. Housing Act of 1937 (1937 Act), a Housing Choice Voucher (HCV) homeownership program under section 8(y) of the U.S. Housing Act of 1937, or Section 8 Moderate Rehabilitation for low-income families and Moderate Rehabilitation Single Room Occupancy for homeless individuals under 24 CFR part 882. See part 887 of this title for program regulations applicable to owners of multifamily assisted housing.
</P>
<P>(c) <I>Scope.</I> Each PHA that administers an FSS program must do so in accordance with the requirements of this part. See § 984.105 for more information concerning PHAs that are required to administer an FSS program.
</P>
<P>(d) <I>Non-participation.</I> Participation in an FSS program is voluntary. A family's admission to the public housing or Section 8 programs cannot be conditioned on participation in FSS. A family's housing assistance cannot be terminated by reason of such election or due to an FSS family's failure to comply with FSS program requirements in this part.




</P>
</DIV8>


<DIV8 N="§ 984.102" NODE="24:4.1.3.1.21.1.41.2" TYPE="SECTION">
<HEAD>§ 984.102   Program objectives.</HEAD>
<P>The objective of the FSS program is to reduce the dependency of low-income families on welfare assistance and housing subsidies. Under the FSS program, HUD assisted families are provided opportunities for education, job training, counseling, and other forms of social service assistance, while living in assisted housing, so that they may obtain the education, employment, and business and social skills necessary to achieve self-sufficiency, as defined in § 984.103. The Department will evaluate the performance of a PHA's or owner's FSS program using a scoring system that measures criteria, such as graduation from the program, increased earned income, and program participation, as provided by HUD through a <E T="04">Federal Register</E> notice.




</P>
</DIV8>


<DIV8 N="§ 984.103" NODE="24:4.1.3.1.21.1.41.3" TYPE="SECTION">
<HEAD>§ 984.103   Definitions.</HEAD>
<P>(a) The terms <I>1937 Act, Fair Market Rent, Head of household, HUD, Low income family, Public housing, Public Housing Agency (PHA),</I> and <I>Secretary,</I> as used in this part, are defined in part 5 of this title.
</P>
<P>(b) As used in this part:
</P>
<P><I>Baseline annual earned income</I> means, for purposes of determining the FSS credit under § 984.305(b), the FSS family's total annual earned income from wages and business income (if any) as of the effective date of the FSS contract. In calculating baseline annual earned income, all applicable exclusions of income must be applied, <I>except for</I> any disregarded earned income or other adjustments associated with self-sufficiency incentives that may be applicable to the determination of annual income.
</P>
<P><I>Baseline monthly rent</I> means, for purposes of determining the FSS credit under § 984.305(b):
</P>
<P>(i) The FSS family's total tenant payment (TTP), as of the effective date of the FSS contract, for families paying an income-based rent as of the effective date of the FSS contract; or
</P>
<P>(ii) The amount of the flat or ceiling rent (which includes the applicable utility allowance), and including any hardship discounts, as of the effective date of the FSS contract, for families paying a flat or ceiling rent as of the effective date of the FSS contract.
</P>
<P><I>Certification</I> means a written assertion based on supporting evidence, provided by the FSS family or the PHA or owner, as may be required under this part, and which:
</P>
<P>(i) Shall be maintained by the PHA or owner in the case of the family's certification, or by HUD in the case of the PHA's or owner's certification;
</P>
<P>(ii) Shall be made available for inspection by HUD, the PHA or owner, and the public, as appropriate; and,
</P>
<P>(iii) Shall be deemed to be accurate for purposes of this part, unless the Secretary or the PHA or owner, as applicable, determines otherwise after inspecting the evidence and providing due notice and opportunity for comment.
</P>
<P><I>Chief executive officer (CEO)</I> means the elected official or the legally designated official of a unit of general local government, who has the primary responsibility for the conduct of that entity's governmental affairs.
</P>
<P><I>Contract of Participation (CoP)</I> means a contract, in a form with contents prescribed by HUD, entered into between an FSS family and a PHA or owner operating an FSS program that sets forth the terms and conditions governing participation in the FSS program. The CoP includes all Individual Training and Services Plans (ITSPs) entered into between the PHA or owner and all members of the family who will participate in the FSS program, and which plans are attached to the CoP as exhibits. For additional detail, see § 984.303.
</P>
<P><I>Current annual earned income</I> means, for purposes of determining the FSS credit under § 984.305(b), the FSS family's total annual earned income from wages and business income (if any) as of the most recent re-examination of income which occurs after the effective date of the FSS contract. In calculating current annual earned income, all applicable exclusions of income will apply, including any disregarded earned income and other adjustments associated with self-sufficiency incentives or other alternative rent structures that may be applicable to the determination of annual income.
</P>
<P><I>Current monthly rent</I> means, for purposes of determining the FSS credit under § 984.305(b):
</P>
<P>(i) The FSS family's TTP as of the most recent re-examination of income, which occurs after the effective date of the FSS contract, for families paying an income-based rent as of the most recent re-examination of income; or
</P>
<P>(ii) The amount of the flat rent (which includes the applicable utility allowance) or ceiling rent, including any hardship discounts, as of the most recent re-examination of income which occurs after the effective date of the FSS contract, for families paying a flat rent or ceiling rent as of the most recent re-examination of income.
</P>
<P><I>Earned income</I> means income or earnings from wages, tips, salaries, other employee compensation, and self-employment. Earned income does not include any pension or annuity, transfer payments, any cash or in-kind benefits, or funds deposited in or accrued interest on the FSS escrow account established by a PHA or owner on behalf of a FSS family.
</P>
<P><I>Effective date of Contract of Participation (CoP)</I> means the first day of the month following the date in which the FSS family and the PHA or owner entered into the CoP.
</P>
<P><I>Eligible families</I> means current residents of public housing (section 9) and current Section 8 program participants, as defined in this section, including those participating in other local self-sufficiency programs.
</P>
<P><I>Enrollment</I> means the date that the FSS family entered into the CoP with the PHA or owner.
</P>
<P><I>Family Self-Sufficiency (FSS) Program</I> means the program established by a PHA within its jurisdiction or by an owner to promote self-sufficiency among participating families, including the coordination of supportive services to these families, as authorized by section 23 of the 1937 Act.
</P>
<P><I>FSS escrow account (or, escrow)</I> means the FSS escrow account authorized by section 23 of the 1937 Act, and as provided by § 984.305.
</P>
<P><I>FSS escrow credit</I> means the amount credited by the PHA or owner to the FSS family's FSS escrow account.
</P>
<P><I>FSS family</I> means a family that resides in public housing (section 9) or receives Section 8 assistance, as defined in this section, and that elects to participate in the FSS program, and whose designated adult member (head of FSS family), as determined in accordance with § 984.303(a), has signed the CoP.
</P>
<P><I>FSS family in good standing</I> means, for purposes of this part, an FSS family that is in compliance with their FSS CoP; has either satisfied or are current on any debts owed the PHA or owner; and is in compliance with the regulations in part 5 and chapters VIII and IX of this title regarding participation in the relevant rental assistance program.
</P>
<P><I>FSS related service program</I> means any program, publicly or privately sponsored, that offers the kinds of supportive services described in the definition of “supportive services” set forth in this section.
</P>
<P><I>FSS slots</I> refers to the total number of families (as determined in the Action Plan for mandatory programs in § 984.105) that the PHA will serve in its FSS program.
</P>
<P><I>FSS Program Coordinator</I> means the person(s) who runs the FSS program. This may include (but is not limited to) performing outreach, recruitment, and retention of FSS participants; goal-setting and case management/coaching of FSS participants; working with the community and service partners; and tracking program performance.
</P>
<P><I>FY</I> means Federal fiscal year (starting October 1 and ending September 30, and year designated by the calendar year in which it ends).
</P>
<P><I>Head of FSS family</I> means the designated adult family member of the FSS family who has signed the CoP. The head of FSS family may, but is not required to be, the head of the household for purposes of determining income eligibility and rent.
</P>
<P><I>Individual Training and Services Plan (ITSP)</I> means a written plan that is prepared by the PHA or owner in consultation with a participating FSS family member (the person with for and whom the ITSP is being developed), and which sets forth:
</P>
<P>(i)(A) The final and interim goals for the participating FSS family member;
</P>
<P>(B) The supportive services to be provided to the participating FSS family member;
</P>
<P>(C) The activities to be completed by that family member; and,
</P>
<P>(D) The agreed upon completion dates for the goals, and activities.
</P>
<P>(ii) Each ITSP must be signed by the PHA or owner and the participating FSS family member and is attached to, and incorporated as part of the CoP. An ITSP must be prepared for each adult family member who elects to participate in the FSS program, including the head of FSS family who has signed the CoP.
</P>
<P><I>Multifamily assisted housing (also known as project-based rental assistance (PBRA))</I> means rental housing assisted by a Section 8 Housing Payments Program, pursuant to 24 CFR parts 880, 881, 883, 884, and 886.
</P>
<P><I>Owner</I> means the owner of multifamily assisted housing.
</P>
<P><I>Program Coordinating Committee (PCC)</I> means the committee described in § 984.202.
</P>
<P><I>Section 8</I> means assistance provided under section 8 of the 1937 Act (42 U.S.C. 1437f). Specifically, multifamily assisted housing, as defined in this section; tenant-based and project-based rental assistance under section 8(o) of the 1937 Act; the HCV homeownership option under section 8(y) of the 1937 Act; Family Unification Program (FUP) assistance under section 8(x) of the 1937 Act; and the Section 8 Moderate Rehabilitation (Mod Rehab) for low-income families and Moderate Rehabilitation Single Room Occupancy (Mod Rehab SRO) for homeless individuals under 24 CFR part 882.
</P>
<P><I>Self-sufficiency</I> means that an FSS family is no longer receiving Section 8, public housing assistance, or any Federal, State, or local rent, homeownership subsidies, or welfare assistance. Achievement of self-sufficiency, although an FSS program objective, is not a condition for receipt of the FSS escrow account funds.
</P>
<P><I>Supportive services</I> means those appropriate services that a PHA or owner will coordinate on behalf of an FSS family under a CoP, which may include, but are not limited to:
</P>
<P>(i) <I>Child care.</I> Child care (on an as-needed or ongoing basis) of a type that provides sufficient hours of operation and serves an appropriate range of ages;
</P>
<P>(ii) <I>Transportation.</I> Transportation necessary to enable a participating FSS family member to receive available services, or to commute to their place(s) of employment;
</P>
<P>(iii) <I>Education.</I> Remedial education; education for completion of high school or attainment of a high school equivalency certificate; education in pursuit of a post-secondary degree or certificate;
</P>
<P>(iv) <I>Employment supports.</I> Job training, preparation, and counseling; job development and placement; and follow-up assistance after job placement and completion of the CoP;
</P>
<P>(v) <I>Personal welfare.</I> Substance/alcohol abuse treatment and counseling, and health, dental, mental health and health insurance services;
</P>
<P>(vi) <I>Household management.</I> Training in household management;
</P>
<P>(vii) <I>Homeownership and housing counseling.</I> Homeownership education and assistance and housing counseling;
</P>
<P>(viii) <I>Financial empowerment.</I> Training in financial literacy, such as financial coaching, training in financial management, asset building, and money management, including engaging in mainstream banking, reviewing and improving credit scores, etc.; and
</P>
<P>(ix) <I>Other services.</I> Any other services and resources, including case management, optional services, and specialized services for individuals with disabilities, that are determined to be appropriate in assisting FSS families to achieve economic independence and self-sufficiency. Reasonable accommodations and modifications must be made for individuals with disabilities consistent with applicable Federal civil rights and nondiscrimination laws.
</P>
<P><I>Unit size or size of unit</I> refers to the number of bedrooms in a dwelling unit.
</P>
<P><I>Very low-income family</I> is defined as set out in § 813.102 of this title.
</P>
<P><I>Welfare assistance</I> means (for purposes of the FSS program only) income assistance from Federal (<I>i.e.,</I> Temporary Assistance for Needy Families (TANF) or subsequent program), State, or local welfare programs and includes only cash maintenance payments designed to meet a family's ongoing basic needs. Welfare assistance does not include:
</P>
<P>(i) Nonrecurrent, short-term benefits that:
</P>
<P>(A) Are designed to deal with a specific crisis or episode of need;
</P>
<P>(B) Are not intended to meet recurrent or ongoing needs; and,
</P>
<P>(C) Will not extend beyond four months;
</P>
<P>(ii) Work subsidies (<I>i.e.,</I> payments to employers or third parties to help cover the costs of employee wages, benefits, supervision, and training);
</P>
<P>(iii) Supportive services such as child care and transportation provided to families who are employed;
</P>
<P>(iv) Refundable earned income tax credits;
</P>
<P>(v) Contributions to, and distributions from, Individual Development Accounts under TANF;
</P>
<P>(vi) Services such as counseling, case management, peer support, child care information and referral, financial empowerment, transitional services, job retention, job advancement, and other employment-related services that do not provide basic income support;
</P>
<P>(vii) Amounts solely directed to meeting housing expenses;
</P>
<P>(viii) Amounts for health care;
</P>
<P>(ix) Supplemental Nutrition Assistance Program and emergency rental and utilities assistance;
</P>
<P>(x) Supplemental Security Income, Social Security Disability Income, or Social Security; and
</P>
<P>(xi) Child-only or non-needy TANF grants made to or on behalf of a dependent child solely on the basis of the child's need and not on the need of the child's current non-parental caretaker.




</P>
</DIV8>


<DIV8 N="§ 984.104" NODE="24:4.1.3.1.21.1.41.4" TYPE="SECTION">
<HEAD>§ 984.104   Basic requirements of the FSS program.</HEAD>
<P>(a) An FSS program established under this part shall be operated in conformity with the requirements of this part, including the Action Plan at § 984.201, and:
</P>
<P>(1) As applicable to voucher program participants:
</P>
<P>(i) HCV regulations at 24 CFR part 982, for HCV program participants; and
</P>
<P>(ii) Project-based voucher (PBV) regulations at 24 CFR part 983, for PBV program participants; and
</P>
<P>(iii) HCV Homeownership regulations at 24 CFR 982.625 through 982.643, for HCV homeownership participants;
</P>
<P>(2) As applicable to Mod Rehab and Mod Rehab SRO participants, 24 CFR part 882;
</P>
<P>(3) As applicable to public housing program participants, the applicable public housing regulations, including the regulations in 24 CFR parts 5, subpart F, 960, and 966; and,
</P>
<P>(4) The applicable nondiscrimination and equal opportunity requirements including, but not limited to, those set forth in 24 CFR part 5.
</P>
<P>(b) [Reserved]




</P>
</DIV8>


<DIV8 N="§ 984.105" NODE="24:4.1.3.1.21.1.41.5" TYPE="SECTION">
<HEAD>§ 984.105   Minimum program size.</HEAD>
<P>(a) <I>FSS program size</I>—(1) <I>Minimum program size requirement.</I> A PHA must operate an FSS program of the minimum program size determined in accordance with paragraph (b) of this section.
</P>
<P>(2) <I>Exceptions to program operation requirement or to operate a smaller mandatory program.</I> Paragraph (c) of this section states when HUD may grant an exception to the program operation requirement, and paragraph (d) of this section states when an exception may be granted to operate a program that is smaller than the minimum program size.
</P>
<P>(3) <I>Option to operate larger FSS program.</I> A PHA may choose to operate an FSS program larger than the minimum program size.
</P>
<P>(b) <I>How to determine FSS minimum program size</I>—(1) <I>General requirement.</I> Each PHA that was required to administer an FSS program on May 24, 2018 (enactment date of the Economic Growth, Regulatory Relief, and Consumer Protection Act), shall continue to operate such program for, at a minimum, the total number of families the PHA was required by statute to serve as of May 24, 2018, subject only to the availability of sufficient amounts for housing assistance under appropriations acts and the provisions of paragraph (b)(2) of this section.
</P>
<P>(2) <I>Reduction of minimum program size.</I> The minimum program size for a PHA's FSS program is reduced by one slot for each family from any rental assistance program (public housing or Section 8, including multifamily assisted housing) for which the PHA administers FSS under this section and that graduates from the FSS program by fulfilling its FSS CoP on or after October 21, 1998. If an FSS slot is vacated by a family that has not completed its FSS CoP obligations, the slot must be filled by a replacement family which has been selected in accordance with the FSS family selection procedures set forth in § 984.203.
</P>
<P>(c) <I>Exception to program operation.</I> (1) Upon approval by HUD, a PHA will not be required to carry out an FSS program if the PHA provides to HUD a certification, as defined in § 984.103, that the operation of such an FSS program is not feasible because of local circumstances, which may include, but are not limited to, the following:
</P>
<P>(i) Lack of supportive services accessible to eligible families, including insufficient availability of resources for programs under title I of the Workforce Innovation and Opportunity Act (29 U.S.C. 3111 <I>et seq.</I>);
</P>
<P>(ii) Lack of funding for reasonable administrative costs;
</P>
<P>(iii) Lack of cooperation by other units of State or local government; or,
</P>
<P>(iv) Lack of interest in participating in the FSS program on the part of eligible families.
</P>
<P>(2) A program operation exception will not be granted if HUD determines that local circumstances do not preclude the PHA from effectively operating an FSS program that is smaller than the minimum program size.
</P>
<P>(d) <I>Exception to operate a smaller mandatory program.</I> Upon approval by HUD in its full discretion, a PHA may be permitted to operate an FSS program that is smaller than the minimum program size if the PHA requests an exception and provides to HUD a certification, as defined in § 984.103, that the operation of an FSS program of the minimum program size is not feasible because of local circumstances, which may include, but are not limited to:
</P>
<P>(1) Decrease in or lack of supportive services available to eligible families, including insufficient availability of resources for programs under title I of the Workforce Innovation and Opportunity Act (29 U.S.C. 3111 <I>et seq.</I>);
</P>
<P>(2) Decrease in or lack of funding for reasonable administrative costs;
</P>
<P>(3) Decrease in or lack of cooperation by other units of State or local government; or
</P>
<P>(4) Decrease in or lack of interest in participating in the FSS program on the part of eligible families.
</P>
<P>(e) <I>Expiration of exception.</I> A full or partial exception to the FSS minimum program size requirement (approved by HUD in accordance with paragraph (c) or (d) of this section) expires five (5) years from the date of HUD approval of the exception. If circumstances change and a HUD-approved exception is no longer needed, the PHA is not required to effectuate the exception for the full term of the exception. If a PHA seeks to continue an exception after its expiration, the PHA must submit a new request and certification to HUD for consideration.
</P>
<P>(f) <I>Review of certification records.</I> HUD reserves the right to examine, during its management review of the PHA, or at any time, the documentation and data that a PHA relied on in certifying to the unfeasibility of its establishing and operating an FSS program, or of operating one of less than minimum program size.




</P>
</DIV8>


<DIV8 N="§ 984.106" NODE="24:4.1.3.1.21.1.41.6" TYPE="SECTION">
<HEAD>§ 984.106   Cooperative Agreements.</HEAD>
<P>(a) A PHA may enter into a Cooperative Agreement with one or more owners to voluntarily make an FSS program available to the owner's multifamily assisted housing tenants.
</P>
<P>(b) A PHA and owner that enter into a Cooperative Agreement to make an FSS program available pursuant to paragraph (a) of this section, are subject to this part and the following requirements:
</P>
<P>(1) The PHA must open its FSS waiting list to any eligible family residing in the multifamily assisted housing covered by the Cooperative Agreement.
</P>
<P>(2) The owner must provide, at the request of the PHA, information on escrow amounts for participating multifamily assisted housing tenants. The Cooperative Agreement must provide that the owner is responsible for managing the escrow account for participating multifamily assisted housing tenants, including calculating and tracking of escrow in accordance with § 984.305. The Cooperative Agreement must set forth the procedures that will be in place for the exchange of escrow information between the PHA and the owner.
</P>
<P>(3) The PHA may count multifamily assisted housing families served pursuant to a Cooperative Agreement under this subpart as part of the calculation of the FSS award under §§ 984.107 and 984.302.
</P>
<P>(4) The PHA may use FSS appropriated funds to serve multifamily assisted housing tenants subject to a Cooperative Agreement under this section.
</P>
<P>(5) The Cooperative Agreement must clearly specify the terms and conditions of such agreement, including the requirements of this section, and it must include a process for entities for PHAs and owners to communicate with each other about changes in their Action Plan.


</P>
</DIV8>


<DIV8 N="§ 984.107" NODE="24:4.1.3.1.21.1.41.7" TYPE="SECTION">
<HEAD>§ 984.107   FSS award funds formula.</HEAD>
<P>The Secretary may establish a formula by which funds for administration of the FSS program are awarded consistent with 42 U.S.C. 1437u(i), which provides the following:
</P>
<P>(a) <I>Base award.</I> A PHA or owner serving 25 or more participants in the FSS program is eligible to receive an award equal to the costs, as determined by the Secretary, of 1 full-time family self-sufficiency coordinator position. The Secretary may, by notice (including a Notice of Funding Opportunity (NOFO)), determine the policy concerning the award for an eligible entity serving fewer than 25 such participants, including providing prorated awards or allowing such entities to combine their programs under this section for purposes of employing a coordinator.
</P>
<P>(b) <I>Additional award.</I> A PHA or owner that meets performance standards set by the Secretary is eligible to receive an additional award sufficient to cover the costs of filling an additional FSS coordinator position if such entity has 75 or more participating families, and an additional coordinator for each additional 50 participating families, or such other ratio as may be established by the Secretary based on the award allocation evaluation under section 23(i)(2)(E) of the U.S. Housing Act of 1937.
</P>
<P>(c) <I>State and regional entities.</I> For purposes of calculating the award under this section, HUD may treat each administratively distinct part of a State or regional entity as a separate entity.
</P>
<P>(d) <I>Determination of number of coordinators.</I> In determining whether a PHA or owner meets a specific threshold for funding pursuant to this section, the Secretary shall consider the number of participants enrolled by the PHA or owner in its FSS program as well as other criteria determined by the Secretary.
</P>
<P>(e) <I>Renewals and allocation.</I> FSS awards shall be allocated, as established by the Secretary, in the following order of priority:
</P>
<P>(1) <I>First priority.</I> Renewal of the full cost of all FSS coordinators in the previous year at each PHA or owner with an existing FSS program that meets applicable performance standards set by the Secretary. If this first priority cannot be fully satisfied, the Secretary may prorate the funding for each PHA or owner, as long as:
</P>
<P>(i) Each PHA or owner that has received funding for at least 1 part-time coordinator in the prior fiscal year is provided sufficient funding for at least 1 part-time coordinator as part of any such proration; and
</P>
<P>(ii) Each PHA or owner that has received funding for at least 1 full-time coordinator in the prior fiscal year is provided sufficient funding for at least 1 full-time coordinator as part of any such proration.
</P>
<P>(2) <I>Second priority.</I> New or incremental coordinator funding.
</P>
<P>(f) <I>Recapture or offset.</I> Any FSS awards allocated under this section by the Secretary in a fiscal year that have not been spent by the end of the subsequent fiscal year or such other time period as determined by the Secretary may be recaptured by the Secretary and shall be available for providing additional awards pursuant to paragraph (b) of this section, or may be offset as determined by the Secretary.
</P>
<P>(g) <I>Incentives for innovation and high performance.</I> The Secretary may reserve up to 5 percent of the appropriated FSS funds to provide support to or reward FSS programs based on the rate of successful completion, increased earned income, or other factors as may be established by the Secretary.


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.3.1.21.2" TYPE="SUBPART">
<HEAD>Subpart B—Program Development and Approval Procedures</HEAD>


<DIV8 N="§ 984.201" NODE="24:4.1.3.1.21.2.41.1" TYPE="SECTION">
<HEAD>§ 984.201   Action Plan.</HEAD>
<P>(a) <I>Requirement for Action Plan.</I> A PHA or owner must have a HUD-approved Action Plan that complies with the requirements of this section before the PHA or owner operates an FSS program, whether the FSS program is a mandatory or voluntary program.
</P>
<P>(b) <I>Development of Action Plan.</I> The Action Plan shall be developed by the PHA or owner in consultation with the chief executive officer of the applicable unit of general local government and the Program Coordinating Committee. Consultation for the Action Plan by the PHA or owner shall also include representatives of current and prospective FSS program participants, any local agencies responsible for programs under title I of the Workforce Innovation and Opportunity Act (29 U.S.C. 3111 <I>et seq.</I>), other appropriate organizations (such as other local welfare and employment or training institutions, child care providers, financial empowerment providers, nonprofit service providers, and private businesses), and any other public and private service providers affected by the operation of the PHA's or owner's program.
</P>
<P>(c) <I>Plan submission</I>—(1) <I>Voluntary program.</I> The PHA or owner must submit its Action Plan and obtain HUD approval of the plan before the PHA or owner carries out a voluntary FSS program, including a program that exceeds the minimum size for a mandatory program, regardless of whether the voluntary program receives HUD funding.
</P>
<P>(2) <I>Revision.</I> Following HUD's initial approval of the Action Plan, no further approval of the Action Plan is required unless the PHA or owner proposes to make policy changes to the Action Plan or increase the size of a voluntary program; or HUD requires other changes. In such cases, the PHA or owner must submit such changes to the Action Plan to HUD for approval.
</P>
<P>(d) <I>Contents of Plan.</I> The Action Plan shall describe the policies and procedures for the operation of a PHA's or owner's FSS program, and shall contain, at a minimum, the following information:
</P>
<P>(1) <I>Family demographics.</I> A description of the number, size, characteristics, and other demographics (including racial and ethnic data), and the supportive service needs of the families expected to participate in the FSS program;
</P>
<P>(2) <I>Estimate of participating families.</I> A description of the number of eligible FSS families who can reasonably be expected to receive supportive services under the FSS program, based on available and anticipated Federal, tribal, State, local, and private resources;
</P>
<P>(3) <I>Eligible families from other self-sufficiency programs.</I> If applicable, the number of families, by program type, who are participating in other local self-sufficiency programs and are expected to agree to execute an FSS CoP;
</P>
<P>(4) <I>FSS family selection procedures.</I> A statement indicating the procedures to be utilized to select families for participation in the FSS program, subject to the requirements governing the selection of FSS families, set forth in § 984.203. This statement must include a description of how the selection procedures ensure that families will be selected without regard to race, color, religion, sex (including actual or perceived gender identity and sexual orientation), disability, familial status, or national origin;
</P>
<P>(5) <I>Incentives to encourage participation.</I> A description of the incentives that will be offered to eligible families to encourage their participation in the FSS program (incentives plan). The incentives plan shall provide for the establishment of the FSS escrow account in accordance with the requirements set forth in § 984.305, and other incentives, if any. The incentives plan shall be part of the Action Plan;
</P>
<P>(6) <I>Outreach efforts.</I> A description of:
</P>
<P>(i) The efforts, including notification and outreach efforts, to recruit FSS participants from among eligible families; and,
</P>
<P>(ii) The actions to be taken to assure that both minority and non-minority groups are informed about the FSS program, and how this information will be made available;
</P>
<P>(7) <I>FSS activities and supportive services.</I> A description of the activities and supportive services to be coordinated on behalf of participating FSS families and identification of the public and private resources which are expected to provide the supportive services;
</P>
<P>(8) <I>Method for identification of family support needs.</I> A description of how the FSS program will identify the needs and coordinate the services and activities according to the needs of the FSS families;
</P>
<P>(9) <I>Program termination; withholding of services; and available grievance procedures.</I> A description of all policies concerning termination of participation in the FSS program, or withholding of coordination of supportive services, on the basis of a family's failure to comply with the requirements of the CoP; and the grievance and hearing procedures available for FSS families;
</P>
<P>(10) <I>Assurances of non-interference with rights of non-participating families.</I> An assurance that a family's election not to participate in the FSS program will not affect the family's admission to public housing or to the Section 8 program or the family's right to occupancy in accordance with its lease;
</P>
<P>(11) <I>Timetable for program implementation.</I> A timetable for implementation of the FSS program, as provided in § 984.301(a)(1), including the schedule for filling FSS slots with eligible FSS families, as provided in § 984.301;
</P>
<P>(12) <I>Certification of coordination.</I> A certification that development of the services and activities under the FSS program has been coordinated with programs under title I of the Workforce Innovation and Opportunity Act (29 U.S.C. 3111 <I>et seq.</I>), and other relevant employment, child care, transportation, training, education, and financial empowerment programs in the area, and that implementation will continue to be coordinated, in order to avoid duplication of services and activities; and
</P>
<P>(13) <I>Optional additional information.</I> Such other information that would help HUD determine the soundness of the proposed FSS program. This may include, and is not limited to:
</P>
<P>(i) Policies related to the modification of goals in the ITSP;
</P>
<P>(ii) The circumstances in which an extension of the Contract of Participation may be granted;
</P>
<P>(iii) Policies on the interim disbursement of escrow, including limitations on the use of the funds (if any);
</P>
<P>(iv) Policies regarding eligible uses of forfeited escrow funds by families in good standing;
</P>
<P>(v) Policies regarding the re-enrollment of previous FSS participants, including graduates and those who exited the program without graduating;
</P>
<P>(vi) Policies on requirements for documentation for goal completion;
</P>
<P>(vii) Policies on documentation of the household's designation of the “head of FSS family;” and
</P>
<P>(viii) Policies for providing an FSS selection preference for porting families (if the PHA elects to offer such a preference).
</P>
<P>(e) <I>Eligibility of a combined program.</I> A PHA or owner that wishes to operate a joint FSS program with a PHA or owner may combine its resources with one or more PHAs or owners to deliver supportive services under a joint Action Plan that will provide for the coordination of a combined FSS program that meets the requirements of this part.
</P>
<P>(f) <I>Single Action Plan.</I> A PHA or owner may submit one Action Plan that covers all applicable rental assistance programs (Section 8 vouchers, PBRA, Mod Rehab, and public housing) served by the FSS program.




</P>
</DIV8>


<DIV8 N="§ 984.202" NODE="24:4.1.3.1.21.2.41.2" TYPE="SECTION">
<HEAD>§ 984.202   Program Coordinating Committee (PCC).</HEAD>
<P>(a) <I>General.</I> Each participating PHA (or joint FSS program) must establish a PCC whose functions will be to assist the PHA in securing commitments of public and private resources for the operation of the FSS program within the PHA's jurisdiction, including assistance in developing the Action Plan and in operating the program.
</P>
<P>(b) <I>Membership</I>—(1) <I>Required membership.</I> The PCC must include representatives of the PHA, including one or more FSS Program Coordinators, and one or more participants from each HUD rental assistance program served by the PHA's FSS program. The PHA may seek assistance from the following groups in identifying potential PCC members:
</P>
<P>(i) An area-wide or city-wide resident council, if one exists;
</P>
<P>(ii) If the PHA operates in a specific public housing development, the resident council or resident management corporation, if one exists, of the public housing development where the public housing FSS program is to be carried out; or
</P>
<P>(iii) Any other resident group, which the PHA believes is interested in the FSS program and would contribute to the development and coordination of the FSS program (such as the Resident Advisory Board or tenant association, as applicable).
</P>
<P>(2) <I>Recommended membership.</I> Membership on the PCC may include representatives of the unit of general local government served by the PHA, local agencies (if any) responsible for carrying out programs under title I of the Workforce Innovation and Opportunity Act (29 U.S.C. 3111 <I>et seq.</I>), and other organizations, such as other State, local, or tribal welfare and employment agencies, public and private primary, secondary, and post-secondary education or training institutions, child care providers, financial empowerment organizations, nonprofit service providers, private businesses, and any other public and private service providers with resources to assist the FSS program.
</P>
<P>(c) <I>Alternative committee.</I> The PHA may, in consultation with the chief executive officer of the unit of general local government served by the PHA and one or more residents of each HUD-assisted program served by the FSS program, utilize an existing entity as the PCC if the membership of the existing entity consists, or will consist of, the individuals identified in paragraph (b)(1) of this section, and it may also include individuals from the same or similar organizations identified in paragraph (b)(2) of this section.




</P>
</DIV8>


<DIV8 N="§ 984.203" NODE="24:4.1.3.1.21.2.41.3" TYPE="SECTION">
<HEAD>§ 984.203   FSS family selection procedures.</HEAD>
<P>(a) <I>Preference in the FSS selection process.</I> A PHA has the option of selecting eligible families for up to fifty (50) percent of its FSS slots in accordance with a written policy, provided in the PHA's FSS Action Plan, who have one or more family members currently enrolled in an FSS related service program or on the waiting list for such a program. The PHA may limit the selection preference given to participants in, and applicants for, FSS related service programs to one or more eligible FSS related service programs. A PHA that chooses to exercise the selection preference option must include the following information in its Action Plan:
</P>
<P>(1) The percentage of FSS slots, not to exceed fifty (50) percent of the total number of FSS slots, for which it will give a selection preference;
</P>
<P>(2) The FSS related service programs to which it will give a selection preference to the programs' participants and applicants; and
</P>
<P>(3) The method of outreach to, and selection of, families with one or more members participating in the identified programs.
</P>
<P>(b) <I>Selection among families with preference.</I> The PHA may use either of the following to select among applicants on the FSS waiting list with the same preference status:
</P>
<P>(1) Date and time of application to the FSS program; or,
</P>
<P>(2) A drawing or other random choice technique.
</P>
<P>(c) <I>FSS selection without preference.</I> For those FSS slots for which a selection preference is not applicable, the FSS slots must be filled with eligible families in accordance with an objective selection system, such as a lottery, the length of time living in subsidized housing, or the date the family expressed an interest in participating in the FSS program. The objective system to be used by the PHA must be described in the PHA's Action Plan.
</P>
<P>(d) <I>Motivation as a selection factor</I>—(1) <I>General.</I> A PHA may screen families for interest, and motivation to participate in the FSS program, provided that the factors utilized by the PHA are those which solely measure the family's interest and motivation to participate in the FSS program.
</P>
<P>(2) <I>Permissible motivational screening factors.</I> Permitted motivational factors include requiring attendance at FSS orientation sessions or preselection interviews and assigning certain tasks which indicate the family's willingness to undertake the obligations which may be imposed by the FSS CoP. Any tasks assigned shall be those which may be readily accomplishable by the family, based on the family members' educational level, capabilities, and disabilities, if any. Reasonable accommodations and modifications must be made for individuals with disabilities, including, <I>e.g.,</I> mobility, manual, sensory, speech, mental, intellectual, or developmental disabilities, consistent with applicable Federal civil rights and nondiscrimination laws.
</P>
<P>(3) <I>Prohibited motivational screening factors.</I> Prohibited motivational screening factors include the family's educational level, educational or standardized motivational test results, previous job history or job performance, credit rating, marital status, number of children, or other factors, such as sensory or manual skills, and any factors which may result in the exclusion, application of different eligibility requirements, or other discriminatory treatment or effect on the basis of race, color, national original, sex (including actual or perceived gender identity and sexual orientation), religion, familial status, or disability.




</P>
</DIV8>


<DIV8 N="§ 984.204" NODE="24:4.1.3.1.21.2.41.4" TYPE="SECTION">
<HEAD>§ 984.204   On-site facilities.</HEAD>
<P>Each PHA or owner may, subject to the approval of HUD, make available and utilize common areas or unoccupied dwelling units in properties owned by the entity to provide or coordinate supportive services under any FSS program.


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:4.1.3.1.21.3" TYPE="SUBPART">
<HEAD>Subpart C—Program Operations</HEAD>


<DIV8 N="§ 984.301" NODE="24:4.1.3.1.21.3.41.1" TYPE="SECTION">
<HEAD>§ 984.301   Program implementation.</HEAD>
<P>(a) <I>Voluntary program implementation.</I> Unless otherwise required under a funding notice, there is no deadline for implementation of a voluntary program. A voluntary program, however, may not be implemented before the requirements of § 984.201 have been satisfied.
</P>
<P>(b) <I>Program administration.</I> A PHA may employ appropriate staff, including a service coordinator or FSS Program Coordinator to administer its FSS program, and may contract with an appropriate organization to establish and administer all or part of the FSS program, including the FSS escrow account, as provided by § 984.305.




</P>
</DIV8>


<DIV8 N="§ 984.302" NODE="24:4.1.3.1.21.3.41.2" TYPE="SECTION">
<HEAD>§ 984.302   FSS funds.</HEAD>
<P>(a) <I>Public housing program.</I> Subject to 42 U.S.C. 1437g, 24 CFR part 990, and appropriations by Congress, PHAs may use funds provided under 42 U.S.C. 1437g to cover reasonable and eligible administrative costs incurred by PHAs in carrying out the FSS program.
</P>
<P>(b) <I>Section 8 program.</I> Subject to 42 U.S.C. 1437f, 24 CFR part 982, and appropriations by Congress, PHAs may use the administrative fees paid to PHAs for costs associated with operation of an FSS program.
</P>
<P>(c) <I>FSS funds.</I> FSS funds associated with operation of an FSS program are established by the Congress and subject to appropriations. FSS appropriated funds will be awarded to and used by PHAs or owners for costs associated with families who are enrolled in an FSS program under this part, including when an owner operates an FSS program through a Cooperative Agreement or on its own.




</P>
</DIV8>


<DIV8 N="§ 984.303" NODE="24:4.1.3.1.21.3.41.3" TYPE="SECTION">
<HEAD>§ 984.303   Contract of Participation (CoP).</HEAD>
<P>(a) <I>General.</I> Each eligible family that is selected to participate in an FSS program must enter into a CoP with the PHA or owner that operates the FSS program in which the family will participate. There will be no more than one CoP at any time for each family. There may be an ITSP for as many members of the family as wish to participate. The CoP shall be signed by a representative of the PHA or the owner and the head of FSS family, as designated by the family. This head of FSS family does not have to be the same as the official head of household for rental assistance purposes.
</P>
<P>(b) <I>Form and content of contract</I>—(1) <I>General.</I> The CoP, which incorporates the ITSP(s), shall set forth the principal terms and conditions governing participation in the FSS program. These include the rights and responsibilities of the FSS family and of the PHA or owner, the services to be provided to, and the activities to be completed by, each adult member of the FSS family who elects to participate in the program.
</P>
<P>(2) <I>FSS family goals.</I> The ITSP, incorporated in the CoP, shall establish specific interim and final goals by which the PHA or owner, and the family, measures the FSS family's progress towards fulfilling its obligations under the CoP and becoming self-sufficient. For any FSS family that is a recipient of welfare assistance at the outset of the CoP or that receives welfare assistance while in the FSS program, the PHA or owner must establish as a final goal for each FSS participant that every member of the family become independent from welfare assistance before the expiration of the term of the CoP, including any extension thereof. Also, see the employment obligation described in paragraph (b)(4) of this section. Aside from the goals specifically required in this section, PHAs or owners must work with each participant to establish realistic and individualized goals and may not include additional mandatory goals or mandatory modifications of the two mandatory goals.
</P>
<P>(3) <I>Compliance with lease terms.</I> The CoP shall provide that one of the obligations of the FSS family is to comply with the terms and conditions of the respective public housing or Section 8 lease. However, all considerations allowed for other assisted residents for repayment agreements, etc., shall also be allowed for FSS participants.
</P>
<P>(4) <I>Employment obligation</I>—(i) <I>Minimum requirement.</I> Although all members of the FSS family may seek and maintain suitable employment during the term of the contract, only the head of FSS family shall be required under the CoP to seek and maintain suitable employment during the term of the contract and any extension thereof.
</P>
<P>(ii) <I>Seek employment.</I> The obligation to seek employment means searching for jobs, applying for employment, attending job interviews, and otherwise following through on employment opportunities.
</P>
<P>(iii) <I>Determination of suitable employment.</I> A determination of suitable employment shall be made by the PHA or owner, with the agreement of the affected participant, based on the skills, education, job training, and receipt of other benefits of the household member, and based on the available job opportunities within the jurisdiction served by the PHA or in the community where the PBRA property is located.
</P>
<P>(5) <I>Consequences of noncompliance with the contract.</I> The CoP shall specify the consequences of noncompliance with the CoP as described in paragraph (i) of this section.
</P>
<P>(c) <I>Contract of Participation term.</I> The CoP shall state that each FSS family will be required to fulfill CoP obligations no later than 5 years after the first re-examination of income after the execution date of the CoP.
</P>
<P>(d) <I>Contract of Participation extension.</I> The PHA or owner shall, in writing, extend the term of the CoP for a period not to exceed two (2) years for any FSS family that requests, in writing, an extension of the contract, provided that the PHA or owner finds that good cause exists for granting the extension. The family's written request for an extension must include a description of the need for the extension. Extension of the CoP will entitle the FSS family to continue to have amounts credited to the family's FSS escrow account in accordance with § 984.304. As used in this paragraph (d), <I>good cause</I> means:
</P>
<P>(1) Circumstances beyond the control of the FSS family that impede the family's ability to complete the CoP obligations, as determined by the PHA or owner, such as a serious illness or involuntary loss of employment;
</P>
<P>(2) Active pursuit of a current or additional goal that will result in furtherance of self-sufficiency during the period of the extension (<I>e.g.,</I> completion of a college degree during which the participant is unemployed or under-employed, credit repair towards being homeownership ready, etc.) as determined by the PHA or owner; or
</P>
<P>(3) Any other circumstance that the PHA or owner determines warrants an extension, as long as the PHA or owner is consistent in its determination as to which circumstances warrant an extension.
</P>
<P>(e) <I>Unavailability of supportive services</I>—(1) <I>Good-faith effort to replace unavailable services.</I> If a social service agency fails to deliver the supportive services identified in an FSS family member's ITSP, the PHA or owner shall make a good faith effort to obtain these services from another agency.
</P>
<P>(2) <I>Assessment of necessity of services.</I> If the PHA or owner is unable to obtain the services from another agency, the PHA or owner shall reassess the family member's needs and determine whether other available services would achieve the same purpose. If other available services would not achieve the same purpose, the PHA or owner and the family shall determine whether the unavailable services are integral to the FSS family's advancement or progress toward self-sufficiency. If the unavailable services are:
</P>
<P>(i) Determined not to be integral to the FSS family's advancement toward self-sufficiency, the PHA or owner shall revise the ITSP to delete these services, and modify the CoP to remove any obligation on the part of the FSS family to accept the unavailable services, in accordance with paragraph (f) of this section; or,
</P>
<P>(ii) Determined to be integral to the FSS family's advancement toward self-sufficiency, the PHA or owner shall terminate the CoP and follow the requirements in paragraph (k) of this section regarding FSS escrow disbursement.
</P>
<P>(f) <I>Modification.</I> The PHA or owner and the FSS family may mutually agree to modify the CoP with respect to the ITSP and/or the contract term in accordance with paragraph (d) of this section, and/or designation of the head of FSS family. Modifications must be in writing.
</P>
<P>(g) <I>Completion of the contract.</I> The CoP is considered to be completed, and a family's participation in the FSS program is considered to be concluded when the FSS family has fulfilled all of its obligations under the CoP, including all family members' ITSPs, on or before the expiration of the contract term, including any extension thereof.
</P>
<P>(h) <I>Termination of the contract.</I> The CoP shall be terminated if the family's housing assistance is terminated in accordance with HUD requirements. The CoP may be terminated before the expiration of the contract term, and any extension thereof, by:
</P>
<P>(1) Mutual consent of the parties;
</P>
<P>(2) The failure of the FSS family to meet its obligations under the CoP without good cause. This includes an FSS family who has moved out of multifamily assisted housing and families receiving tenant-based assistance under section 8(o) of the 1937 Act who fail to comply with the contract requirements because the family has moved outside the jurisdiction of the PHA, and the PHA has not determined that there is good cause terminate the CoP with FSS escrow disbursement in accordance with paragraph (k)(1)(iii) of this section;
</P>
<P>(3) The family's withdrawal from the FSS program;
</P>
<P>(4) Such other act as is deemed inconsistent with the purpose of the FSS program; or
</P>
<P>(5) Operation of law.
</P>
<P>(i) <I>Option to terminate FSS participation or withhold the coordination of supportive service assistance.</I> The PHA or owner may withhold the coordination of supportive services or terminate the FSS family's participation in the FSS program, if the PHA or owner determines, in accordance with the FSS Action Plan hearing procedures, that the FSS family has failed to comply without good cause with the requirements of the CoP in accordance with this section.
</P>
<P>(j) <I>Transitional supportive service assistance.</I> A PHA or owner may continue to offer to a former FSS family that has completed its CoP, appropriate coordination of those FSS supportive services needed to become self-sufficient if the family still resides in public housing or Section 8 housing. If the family no longer resides in public housing, Section 8, or other assisted housing, then a PHA or owner may continue to coordinate supportive services for a former FSS family that completed its CoP using only funding sources that are not HUD funds or HUD-restricted funds.
</P>
<P>(k) <I>Termination with FSS escrow disbursement.</I> (1) The CoP is will be terminated with FSS disbursement when:
</P>
<P>(i) Services that the PHA or owner and the FSS family have agreed are integral to the FSS family's advancement towards self-sufficiency are unavailable, as described in paragraph (e) of this section;
</P>
<P>(ii) The head of the FSS family becomes permanently disabled and unable to work during the period of the contract, unless the PHA or owner and the FSS family determine that it is possible to modify the contract to designate a new head of the FSS family; or
</P>
<P>(iii) An FSS family in good standing moves outside the jurisdiction of the PHA (in accordance with portability requirements at § 982.353 of this chapter) for good cause, as determined by the PHA, and continuation of the CoP after the move, or completion of the CoP prior to the move, is not possible. PHAs must be consistent in their determinations of whether a family has good cause for a termination with FSS escrow disbursement under this paragraph (k).
</P>
<P>(2) Upon termination of a CoP pursuant to paragraph (k)(1) of this section, escrow funds must be handled consistent with § 984.305.




</P>
</DIV8>


<DIV8 N="§ 984.304" NODE="24:4.1.3.1.21.3.41.4" TYPE="SECTION">
<HEAD>§ 984.304   Amount of rent paid by FSS family and increases in family income.</HEAD>
<P>(a) <I>Amount of rent paid by FSS family.</I> The amount of rent paid by an FSS family is determined in accordance with the requirements of the applicable housing assistance program as specified in paragraphs (a)(1) and (2) of this section.
</P>
<P>(1) <I>Public housing program: Calculation of total tenant payment.</I> Total tenant payment for an FSS family participating in the FSS program is determined in accordance with the regulations set forth in 24 CFR part 5, subpart F.
</P>
<P>(2) <I>Section 8 programs: Calculation of rent.</I> (i) For the HCV program, rent is determined in accordance with 24 CFR part 982, subpart K; and
</P>
<P>(ii) For the PBV program, rent is determined in accordance with 24 CFR part 983, subpart G.
</P>
<P>(b) <I>Increases in FSS family income.</I> Any increase in the earned income of an FSS family during its participation in an FSS program may not be considered as income or an asset for purposes of eligibility of the FSS family under any other program administered by HUD.




</P>
</DIV8>


<DIV8 N="§ 984.305" NODE="24:4.1.3.1.21.3.41.5" TYPE="SECTION">
<HEAD>§ 984.305   FSS escrow account.</HEAD>
<P>(a) <I>Establishment of FSS escrow account</I>—(1) <I>General.</I> The PHA or owner shall deposit the FSS escrow account funds of all families participating in an FSS program into a single interest-bearing depository account. The PHA or owner must deposit the FSS escrow account funds in one or more of the HUD-approved investments. The depository account may be part of the PHA's or owner's overall accounts or a separate account, as long as it is in compliance with paragraph (a)(2) of this section. During the term of the CoP, the FSS escrow account credit amount shall be determined in accordance with paragraph (b) of this section at each re-examination of income occurring after the effective date of the CoP. Such escrow credit amount must be deposited each month by the PHA or owner to each family's FSS escrow account within the PHA's or owner's depository account.
</P>
<P>(2) <I>Accounting for FSS escrow account funds</I>—(i) <I>Accounting records.</I> The total of the combined FSS escrow account funds will be supported in the accounting records by a subsidiary ledger showing the balance applicable to each FSS family.
</P>
<P>(ii) <I>Proration of investment income.</I> The investment income for funds in the FSS escrow account must be prorated and credited to each family's FSS escrow account based on the balance in each family's FSS escrow account at the end of the period for which the investment income is credited.
</P>
<P>(iii) <I>Reduction of amounts due by FSS family.</I> If the FSS family has not paid the family contribution towards rent, or other amounts, if any, due under the public housing or Section 8-assisted lease, the balance in the family's FSS account shall be reduced by that amount (as determined by the owner or reported by the owner to the PHA in the Section 8(o) programs) at the time of final disbursement of FSS escrow funds in accordance with paragraph (c) of this section. If the FSS family has been found to have under-reported income after the baseline annual earned income was set, the amount credited to the FSS escrow account will be based on the income amounts originally reported by the FSS family. If the FSS family is found to have under-reported income in the re-examination used to set the baseline, the escrow for the entire period of the CoP will be re-calculated using the correct income to set the baseline and then calculate subsequent escrow amounts.
</P>
<P>(3) <I>Reporting on FSS escrow account.</I> Each PHA or owner will be required to make a report, at least once annually, to each FSS family on the status of the family's FSS escrow account. At a minimum, the report will include:
</P>
<P>(i) The balance at the beginning of the reporting period;
</P>
<P>(ii) The amount of the family's rent payment that was credited to the FSS escrow account, during the reporting period;
</P>
<P>(iii) Any deductions made from the account at the time of final disbursement of FSS escrow funds (see paragraphs (a)(2)(iii) and (c) of this section) for amounts due the PHA or owner;
</P>
<P>(iv) The amount of interest earned on the account during the year; and
</P>
<P>(v) The total in the account at the end of the reporting period.
</P>
<P>(b) <I>FSS credit</I>—(1) <I>Determining the family's baseline information.</I> When determining the family's baseline annual earned income and the baseline monthly rent amounts for purposes of computing the FSS escrow credit, the PHA or owner must use the amounts on the family's last income re-examination.
</P>
<P>(2) <I>Computation of amount.</I> The FSS credit amount shall be the lower of:
</P>
<P>(i) Thirty (30) percent of one-twelfth (
<FR>1/12</FR>) (<I>i.e.,</I> two and a half (2.5) percent) of the amount by which the family's current annual earned income exceeds the family's baseline annual earned income; or
</P>
<P>(ii) The increase in the family's monthly rent. The increase in the family's monthly rent shall be the lower of:
</P>
<P>(A) The amount by which the family's current monthly rent exceeds the family's baseline monthly rent;
</P>
<P>(B) For HCV families, the difference between the baseline monthly rent and the current gross rent (<I>i.e.,</I> rent to owner plus any utility allowance) or the payment standard, whichever is lower; or
</P>
<P>(C) For PBV, Mod Rehab, including Mod Rehab SRO, and PBRA families, the difference between the baseline monthly rent and the current gross rent (<I>i.e.,</I> rent to owner or contract rent, as applicable, plus any utility allowance).
</P>
<P>(3) <I>Ineligibility for FSS credit.</I> FSS families who are not low-income families (<I>i.e.,</I> whose adjusted annual income exceeds eighty (80) percent of the area median income) shall not be entitled to any FSS credit.
</P>
<P>(4) <I>Cessation of FSS credit.</I> The PHA or owner shall not make additional credits to the FSS family's FSS escrow account:
</P>
<P>(i) When the FSS family has completed the CoP, as described in § 984.303(g);
</P>
<P>(ii) When the CoP is terminated; or
</P>
<P>(iii) During the time an HCV family is in the process of moving to a new unit, in accordance with HCV program requirements in part 982 of this title, and is not under a lease.
</P>
<P>(c) <I>Disbursement of FSS escrow account funds</I>—(1) <I>General.</I> The amount in an FSS escrow account in excess of any amount owed to the PHA or owner by the FSS family, as provided in paragraph (a)(2)(iii) of this section, shall be paid to the head of FSS family when the CoP has been completed as provided in § 984.303(g), and if, at the time of contract completion, the head of FSS family submits to the PHA or owner a certification, as defined in § 984.103, that to the best of his or her knowledge and belief, no member of the FSS family is a recipient of welfare assistance.
</P>
<P>(2) <I>Disbursement before expiration of contract term.</I> (i) If the PHA or owner determines that the FSS family has fulfilled its obligations under the CoP before the expiration of the contract term, and the head of FSS family submits a certification that, to the best of his or her knowledge, no member of the FSS family is a recipient of welfare assistance, the amount in the family's FSS escrow account, in excess of any amount owed to the PHA or owner by the FSS family, as provided in paragraph (a)(2)(iii) of this section, shall be paid to the head of FSS family.
</P>
<P>(ii) If the PHA or owner determines that the FSS family has fulfilled certain interim goals established in the CoP and needs a portion of the FSS escrow account funds for purposes consistent with or in support of the CoP, such as completion of higher education (<I>i.e.,</I> college, graduate school), job training, or to meet start-up expenses involved in creation of a small business, the PHA or owner may, at the PHA's or owner's sole discretion, disburse a portion of the funds from the family's FSS escrow account to assist the family in paying those expenses. Unless the interim disbursement was made based on fraudulent information from the family, the family is not required to repay such interim disbursements if the family does not complete the CoP.
</P>
<P>(3) <I>Disbursement in cases of termination of the CoP with disbursement of escrow.</I> The PHA or owner must disburse to the family its FSS escrow account funds in excess of any amount owed to the PHA or owner by the FSS family, as provided in paragraph (a)(2)(iii) of this section, under circumstances in which HUD has determined good cause is warranted. HUD determines that there is good cause when a CoP is terminated in accordance with § 984.303(k). Therefore, if the CoP is terminated in accordance with § 984.303(k), the PHA or owner must disburse to the family its FSS escrow account funds in excess of any amount owed to the PHA or owner by the FSS family, as provided in paragraph (a)(2)(iii) of this section, as of the effective date of the termination of the contract.
</P>
<P>(4) <I>Verification of family certification.</I> Before disbursement of the FSS escrow account funds to the family, the PHA or owner may verify that the FSS family is no longer a recipient of welfare assistance by requesting copies of any documents which may indicate whether the family is receiving any welfare assistance and by contacting welfare agencies.
</P>
<P>(d) <I>Succession of FSS escrow account.</I> If the head of FSS family ceases to reside with other family members in the public housing or the Section 8-assisted unit, the remaining members of the FSS family, after consultation with the PHA or owner, shall have the right to take over the CoP or designate another family member to receive the funds in accordance with paragraph (c) of this section.
</P>
<P>(e) <I>Use of FSS escrow account funds for homeownership.</I> An FSS family may use disbursed FSS escrow account funds, in accordance with § 984.305(c), after final disbursement for the purchase of a home, including the purchase of a home under one of HUD's homeownership programs, or other Federal, State, or local homeownership programs, unless such use is prohibited by the statute or regulations governing the particular homeownership program.
</P>
<P>(f) <I>Forfeiture of FSS escrow account funds</I>—(1) <I>Conditions for forfeiture.</I> Amounts in the FSS escrow account shall be forfeited upon the occurrence of the following:
</P>
<P>(i) The CoP is terminated, as provided in § 984.303(h); or,
</P>
<P>(ii) The CoP is completed by the family, as provided in § 984.303(g), but the FSS family is receiving welfare assistance at the time the CoP term expires, including any extension thereof.
</P>
<P>(2) <I>Treatment of forfeited FSS escrow account funds.</I> FSS escrow account funds forfeited by the FSS family must be used by the PHA or owner for the benefit of the FSS participants.
</P>
<P>(i) Specifically, such funds may be used for the following eligible activities:
</P>
<P>(A) Support for FSS participants in good standing, including, but not limited to, transportation, child care, training, testing fees, employment preparation costs, and other costs related to achieving obligations outlined in the CoP;
</P>
<P>(B) Training for FSS Program Coordinator(s); or
</P>
<P>(C) Other eligible activities as determined by the Secretary.
</P>
<P>(ii) Such funds may not be used for salary and fringe benefits of FSS Program Coordinators; general administrative costs of the FSS program, for housing assistance payments (HAP) expenses or public housing operating funds; or any other activity determined ineligible by the Secretary.




</P>
</DIV8>


<DIV8 N="§ 984.306" NODE="24:4.1.3.1.21.3.41.6" TYPE="SECTION">
<HEAD>§ 984.306   HCV portability requirements for FSS participants.</HEAD>
<P>(a) <I>Initial period of CoP</I>—(1) <I>First 12 months.</I> During the first 12 months after the effective date of the FSS CoP, an FSS family may not move outside the jurisdiction of the PHA that first enrolled the family in the FSS program. However, the PHA may approve an FSS family's request to move outside of its jurisdiction under portability (in accordance with § 982.353 of this chapter) during this period. This paragraph (a)(1) applies to a former PBV family who received tenant-based rental assistance in accordance with § 983.261 of this chapter and exercised their right to move.
</P>
<P>(2) <I>After the first 12 months.</I> After the first 12 months of the FSS CoP, the FSS family with a tenant-based voucher may move outside the initial PHA jurisdiction under portability regulations (in accordance with § 982.353 of this chapter). This paragraph (a)(2) applies to former PBV families who received tenant-based rental assistance in accordance with § 983.261 of this chapter and exercised their right to move.
</P>
<P>(b) <I>An FSS family moves to the jurisdiction of a receiving PHA that administers an FSS program.</I> (1) Whether the receiving PHA bills the initial PHA or absorbs the FSS family into its HCV program, the receiving PHA must enroll an FSS family in good standing in its FSS program; unless
</P>
<P>(i) The receiving PHA is already serving the number of FSS families identified in its FSS Action Plan and determines that it does not have the resources to manage the FSS contract; or
</P>
<P>(ii) The receiving PHA and the initial PHA agree to the FSS family's continued participation in the initial PHA's FSS program. Prior to the PHAs agreeing to the continued participation, the initial PHA must determine that the relocating FSS family has demonstrated that, notwithstanding the move, it will be able to fulfill its responsibilities under the initial or a modified CoP at its new place of residence. For example, the FSS family may be able to commute to the supportive services specified in the CoP, or the family may move to obtain employment as specified in the contract.
</P>
<P>(2) Where continued FSS participation is not possible in accordance with paragraph (b)(1) of this section, the initial PHA must clearly discuss the options that may be available to the family, depending on the family's specific circumstances, which may include, but are not limited to, modification of the FSS contract, termination of the FSS contract and forfeiture of escrow, termination with FSS escrow disbursement in accordance with § 984.303(k)(1)(iii), or locating a receiving PHA that has the capacity to enroll the family into its FSS program.
</P>
<P>(c) <I>An FSS family moves to the jurisdiction of a receiving PHA that does not administer an FSS program.</I> If the receiving PHA does not administer an FSS program, the FSS family may not continue participation in the FSS program. The initial PHA must clearly discuss the options that may be available to the family, depending on the family's specific circumstances, which may include, but are not limited to, modification of the FSS contract, termination with FSS escrow disbursement in accordance with § 984.303(k)(1)(iii), termination of the FSS contract and forfeiture of escrow, or locating a receiving PHA that administers an FSS program.
</P>
<P>(d) <I>Single FSS escrow account.</I> Regardless of whether the FSS family remains in the FSS program of the initial PHA or is enrolled in the FSS program of the receiving PHA, the family will have only one FSS escrow account. If the receiving PHA is billing the initial PHA, the account will be maintained by the initial PHA. If an FSS family will be absorbed by the receiving PHA, the initial PHA will transfer the family's FSS escrow account funds to the receiving PHA and the receiving PHA will maintain the funds in its FSS account.
</P>
<P>(e) <I>FSS program termination; loss of FSS escrow account.</I> (1) If an FSS family relocates to another jurisdiction, as provided under this section, and is unable to fulfill its obligations under the CoP (or any modifications thereto), the PHA, which is a party to the CoP, must terminate the FSS family from the FSS program, and the family's FSS escrow account will be forfeited. Termination of FSS program participation and forfeiture of FSS escrow must be used only as a last resort, after the PHA determines, in consultation with the family, that the family would be unable to fulfill its obligations under the CoP after the move, that the current CoP cannot be modified to allow for graduation prior to porting, and that the current CoP cannot be terminated with FSS escrow disbursement in accordance with § 984.303(k)(1)(iii). When termination is the only option, the PHA must clearly notify the family that the move will result in the loss of escrow funds.
</P>
<P>(2) In the event of forfeiture of the family's FSS escrow account funds, the FSS escrow account funds will revert to the PHA maintaining the FSS escrow account for the family.
</P>
<P>(f) <I>Contract of Participation (CoP).</I> (1) If the FSS family enrolls in the receiving PHA's FSS program pursuant to this section, the receiving PHA will enter into a new CoP with the FSS family for the term remaining on the contract with the initial PHA. The initial PHA will terminate its CoP with the family.
</P>
<P>(2) If the FSS family remains in the FSS program of the initial PHA, pursuant to this section, the CoP executed by the initial PHA will remain as the contract in place.
</P>
<P>(g) <I>New FSS enrollment into the receiving PHA's FSS program</I>—(1)<I> Billing.</I> If the receiving PHA bills the initial PHA, the receiving PHA may, consistent with the receiving PHA's FSS enrollment policies, enroll a family that was not an FSS participant at the initial PHA into its FSS program, provided that the initial PHA manages an FSS program and agrees to such enrollment. If the receiving PHA bills the initial PHA, but the initial PHA does not manage an FSS program, the family may not enroll in the receiving PHA's FSS program.
</P>
<P>(2) <I>Absorption.</I> If the receiving PHA absorbs the family into its HCV program, the receiving PHA may, consistent with the receiving PHA's FSS enrollment policies, enroll a family that was not an FSS participant at the initial PHA into its FSS program.


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:4.1.3.1.21.4" TYPE="SUBPART">
<HEAD>Subpart D—Reporting</HEAD>


<DIV8 N="§ 984.401" NODE="24:4.1.3.1.21.4.41.1" TYPE="SECTION">
<HEAD>§ 984.401   Reporting.</HEAD>
<P>Each PHA or owner that carries out an FSS program shall submit to HUD, in the form prescribed by HUD, a report regarding its FSS program. The report shall include the following information:
</P>
<P>(a) A description of the activities carried out under the program;
</P>
<P>(b) A description of the effectiveness of the program in assisting families to achieve economic independence and self-sufficiency, including the number of families enrolled and graduated and the number of established escrow accounts and positive escrow balances;
</P>
<P>(c) A description of the effectiveness of the program in coordinating resources of communities to assist families to achieve economic independence and self-sufficiency; and
</P>
<P>(d) Any recommendations by the PHA or owner or the appropriate local Program Coordinating Committee for legislative or administrative action that would improve the FSS program and ensure the effectiveness of the program.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="985" NODE="24:4.1.3.1.22" TYPE="PART">
<HEAD>PART 985—SECTION 8 MANAGEMENT ASSESSMENT PROGRAM (SEMAP) AND SMALL RURAL PHA ASSESSMENTS










</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437a, 1437c, 1437f, 1437z-10, and 3535(d).






</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>63 FR 48555, Sept. 10, 1998, unless otherwise noted.
</PSPACE></SOURCE>
<EDNOTE>
<HED>Editorial Note:</HED><PSPACE>Nomenclature changes to part 985 appear at 64 FR 67983, Dec. 3, 1999.</PSPACE></EDNOTE>

<DIV6 N="A" NODE="24:4.1.3.1.22.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 985.1" NODE="24:4.1.3.1.22.1.41.1" TYPE="SECTION">
<HEAD>§ 985.1   Purpose and applicability.</HEAD>
<P>(a) <I>Purpose.</I> The Section 8 Management Assessment Program (SEMAP) is designed to assess whether the Section 8 tenant-based assistance programs operate to help eligible families afford decent rental units at the correct subsidy cost. SEMAP also establishes a system for HUD to measure PHA performance in key Section 8 program areas and to assign performance ratings. SEMAP provides procedures for HUD to identify PHA management capabilities and deficiencies in order to target monitoring and program assistance more effectively. PHAs can use the SEMAP performance analysis to assess and improve their own program operations.




</P>
<P>(b) <I>Applicability.</I> This rule applies to PHA administration of the tenant-based Section 8 rental program (part 982 of this chapter), the project-based voucher program (part 983 of this chapter) to the extent that PBV family and unit data are reported and measured under the stated HUD verification method, and enrollment levels and contributions to escrow accounts for Section 8 participants under the family self-sufficiency program (FSS) (part 984 of this chapter).
</P>
<P>(c) <I>Small rural PHA assessments.</I> Subpart D of this part covers the HCV and PBV assessment for a small rural PHA as defined in § 902.101 of this chapter. Section 985.3 and subparts B and C of this part do not apply to small rural PHAs.


</P>
<CITA TYPE="N">[63 FR 48555, Sept. 10, 1998, as amended at 64 FR 40497, July 26, 1999; 88 FR 30505, May 11, 2023]


</CITA>
</DIV8>


<DIV8 N="§ 985.2" NODE="24:4.1.3.1.22.1.41.2" TYPE="SECTION">
<HEAD>§ 985.2   Definitions.</HEAD>
<P>(a) The terms <I>Department, Fair Market Rent, HUD, Secretary,</I> and <I>Section 8,</I> as used in this part, are defined in 24 CFR 5.100.
</P>
<P>(b) The definitions in 24 CFR 982.4 apply to this part. As used in this part:
</P>
<P><I>Confirmatory review</I> means an on site review performed by HUD to verify the management performance of an PHA.
</P>
<P><I>Corrective action plan</I> means a HUD-required written plan that addresses PHA program management deficiencies or findings identified by HUD through remote monitoring or on-site review, and that will bring the PHA to an acceptable level of performance.
</P>
<P><I>MTCS</I> means Multifamily Tenant Characteristics System. MTCS is the Department's national database on participants and rental units in the Section 8 rental certificate, rental voucher, and moderate rehabilitation programs and in the Public and Indian Housing programs.
</P>
<P><I>PHA</I> means a Housing Agency.
</P>
<P><I>PHA's quality control sample</I> means an annual sample of files or records drawn in an unbiased manner and reviewed by an PHA supervisor (or by another qualified person other than the person who performed the original work) to determine if the work documented in the files or records conforms to program requirements. The minimum size of the PHA's quality control sample is as follows:
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Universe
</TH><TH class="gpotbl_colhed" scope="col">Minimum number of files or records
<br/>to be sampled
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">50 or less</TD><TD align="left" class="gpotbl_cell">5.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">51-600</TD><TD align="left" class="gpotbl_cell">5 plus 1 for each 50 (or part of 50) over 50.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">601-2000</TD><TD align="left" class="gpotbl_cell">16 plus 1 for each 100 (or part of 100) over 600.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Over 2000</TD><TD align="left" class="gpotbl_cell">30 plus 1 for each 200 (or part of 200) over 2000.</TD></TR></TABLE></DIV></DIV>
<FP>Where the universe is: the number of admissions in the last year for each of the two quality control samples under the SEMAP indicator at § 985.3(a) Selection from the Waiting List; the number of families assisted for the SEMAP indicators at § 985.3(b) Reasonable Rent, and 985.3(c) Determination of Adjusted Income; the number of units under HAP contract during the last completed PHA fiscal year for the SEMAP indicator at § 985.3(e) HQS Quality Control Inspections; and the number of failed HQS inspections in the last year for the SEMAP indicator at § 985.3(f) HQS Enforcement.
</FP>
<P><I>Performance indicator</I> means a standard set for a key area of Section 8 program management against which the PHA's performance is measured to show whether the PHA administers the program properly and effectively. (See § 985.3.)
</P>
<P><I>SEMAP certification</I> means the PHA's annual certification to HUD, on the form prescribed by HUD, concerning its performance in key Section 8 program areas.
</P>
<P><I>SEMAP deficiency</I> means any rating of 0 points on a SEMAP performance indicator.
</P>
<P><I>SEMAP profile</I> means a summary prepared by HUD of an PHA's ratings on each SEMAP indicator, its overall SEMAP score, and its overall performance rating (high performer, standard, troubled).
</P>
<CITA TYPE="N">[63 FR 48555, Sept. 10, 1998, as amended at 64 FR 40497, July 26, 1999]




</CITA>
</DIV8>


<DIV8 N="§ 985.3" NODE="24:4.1.3.1.22.1.41.3" TYPE="SECTION">
<HEAD>§ 985.3   Indicators, HUD verification methods and ratings.</HEAD>
<P>This section states the performance indicators that are used to assess PHA Section 8 management. HUD will use the verification method identified for each indicator in reviewing the accuracy of an PHA's annual SEMAP certification. HUD will prepare a SEMAP profile for each PHA and will assign a rating for each indicator as shown. If the HUD verification method for the indicator relies on data in MTCS and HUD determines those data are insufficient to verify the PHA's certification on the indicator due to the PHA's failure to adequately report family data, HUD will assign a zero rating for the indicator. The method for selecting the PHA's quality control sample under paragraphs (a), (b), (c) and (f) of this section must leave a clear audit trail that can be used to verify that the PHA's quality control sample was drawn in an unbiased manner.
</P>
<P>A PHA that expends less than its Federal award expenditure threshold in 2 CFR part 200, subpart F, and whose Section 8 programs are not audited by an independent auditor (IA), will not be rated under the SEMAP indicators in paragraphs (a) through (g) of this section for which the annual IA audit report is a HUD verification method.
</P>
<P>(a) <I>Selection from the waiting list.</I> (1) This indicator shows whether the PHA has written policies in its administrative plan for selecting applicants from the waiting list and whether the PHA follows these policies when selecting applicants for admission from the waiting list. (24 CFR 982.54(d)(1) and 982.204(a))
</P>
<P>(2) HUD verification method: The independent auditor (IA) annual audit report covering the PHA fiscal year entered on the SEMAP certification and on-site confirmatory review if performed.
</P>
<P>(3) Rating: (i) The PHA's SEMAP certification states that:
</P>
<P>(A) The PHA has written waiting list selection policies in its administrative plan and,
</P>
<P>(B) Based on the PHA's quality control samples, drawn separately for applicants reaching the top of the waiting list and for admissions, documentation shows that at least 98 percent of the families in both samples of applicants and admissions were selected from the waiting list for admission in accordance with these policies and met the selection criteria that determined their places on the waiting list and their order of selection. 15 points.
</P>
<P>(ii) The PHA's SEMAP certification does not support the statement in paragraph (a)(3)(i) of this section. 0 points.
</P>
<P>(b) <I>Reasonable rent.</I> (1) This indicator shows whether the PHA has and implements a reasonable written method to determine and document for each unit leased that the rent to owner is reasonable based on current rents for comparable unassisted units: At the time of initial leasing; if there is any increase in the rent to owner; at the HAP contract anniversary if there is a 10 percent decrease in the published fair market rent (FMR) in effect 60 days before the HAP contract anniversary. The PHA's method must take into consideration the location, size, type, quality and age of the units, and the amenities, housing services, and maintenance and utilities provided by the owners in determining comparability and the reasonable rent. (24 CFR 982.4, 24 CFR 982.54(d)(15), 982.158(f)(7), 982.507, and 983.303)
</P>
<P>(2) HUD verification method: The IA annual audit report covering the PHA fiscal year entered on the SEMAP certification and on-site confirmatory review if performed.
</P>
<P>(3) Rating: (i) The PHA's SEMAP certification states that:
</P>
<P>(A) The PHA has a reasonable written method to determine reasonable rent which considers location, size, type, quality and age of the units and the amenities, housing services, and maintenance and utilities provided by the owners; and
</P>
<P>(B) Based on the PHA's quality control sample of tenant files, the PHA follows its written method to determine reasonable rent and has documented its determination that the rent to owner is reasonable in accordance with §§ 982.507 and 983.303 of this chapter, as applicable for at least 98 percent of units sampled at the time of initial leasing, if there is any increase in the rent to owner, and at the HAP contract anniversary if there is a 10 percent decrease in the published FMR in effect 60 days before the HAP contract anniversary. 20 points.
</P>
<P>(ii) The PHA's SEMAP certification includes the statements in paragraph (b)(3)(i) of this section, except that the PHA documents its determination of reasonable rent for only 80 to 97 percent of units sampled at initial leasing, if there is any increase in the rent to owner, and at the HAP contract anniversary if there is a 10 percent decrease in the published FMR in effect 60 days before the HAP contract anniversary. 15 points.
</P>
<P>(iii) The PHA's SEMAP certification does not support the statements in either paragraph (b)(3)(i) or (b)(3)(ii) of this section. 0 points.
</P>
<P>(c) <I>Determination of adjusted income.</I> (1) This indicator shows whether, at the time of admission and annual reexamination, the PHA verifies and correctly determines adjusted annual income for each assisted family and, where the family is responsible for utilities under the lease, the PHA uses the appropriate utility allowances for the unit leased in determining the gross rent. (24 CFR part 5, subpart F and 24 CFR 982.516)
</P>
<P>(2) HUD verification method: The IA annual audit report covering the PHA fiscal year entered on the SEMAP certification and on-site confirmatory review if performed.
</P>
<P>(3) Rating: (i) The PHA's SEMAP certification states that, based on the PHA's quality control sample of tenant files, for at least 90 percent of families:
</P>
<P>(A) The PHA obtains third party verification, as appropriate, of reported family annual income, the value of assets, expenses related to deductions from annual income, and other factors that affect the determination of adjusted income, and uses the verified information in determining adjusted income, and/or documents tenant files to show why third party verification was not available;
</P>
<P>(B) The PHA properly attributes and calculates allowances for any medical, child care, and/or disability assistance expenses; and
</P>
<P>(C) The PHA uses the appropriate utility allowances to determine gross rent for the unit leased. 20 points.
</P>
<P>(ii) The PHA's SEMAP certification includes the statements in paragraph (c)(3)(i) of this section, except that the PHA obtains and uses independent verification of income, properly attributes allowances, and uses the appropriate utility allowances for only 80 to 89 percent of families. 15 points.
</P>
<P>(iii) The PHA's SEMAP certification does not support the statements in either paragraph (c)(3)(i) or (c)(3)(ii) of this section. 0 points.
</P>
<P>(d) <I>Utility Allowance Schedule.</I> (1) This indicator shows whether the PHA maintains an up-to-date utility allowance schedule. (24 CFR 982.517)
</P>
<P>(2) HUD verification method: The IA annual audit report covering the PHA fiscal year entered on the SEMAP certification and on-site confirmatory review if performed.
</P>
<P>(3) Rating: (i) The PHA's SEMAP certification states that the PHA reviewed utility rate data within the last 12 months, and adjusted its utility allowance schedule if there has been a change of 10 percent or more in a utility rate since the last time the utility allowance schedule was revised. 5 points.
</P>
<P>(ii) The PHA's SEMAP certification does not support the statement in paragraph (d)(3)(i) of this section. 0 points.
</P>
<P>(e) <I>HQS quality control inspections.</I> (1) This indicator shows whether an PHA supervisor or other qualified person reinspects a sample of units under contract during the PHA fiscal year, which meets the minimum sample size requirements specified at § 985.2 under PHA's quality control sample, for quality control of HQS inspections. The PHA supervisor's reinspected sample is to be drawn from recently completed HQS inspections (i.e., performed during the 3 months preceding reinspection) and is to be drawn to represent a cross section of neighborhoods and the work of a cross section of inspectors. (24 CFR 982.405(b))
</P>
<P>(2) HUD verification method: The IA annual audit report covering the PHA fiscal year entered on the SEMAP certification and on-site confirmatory review if performed.
</P>
<P>(3) Rating: (i) The PHA's SEMAP certification states that an PHA supervisor or other qualified person performed quality control HQS reinspections during the PHA fiscal year for a sample of units under contract which meets the minimum sample size requirements specified in § 985.2 under PHA's quality control sample. The PHA's SEMAP certification also states that the reinspected sample was drawn from recently completed HQS inspections (i.e., performed during the 3 months preceding the quality control reinspection) and was drawn to represent a cross section of neighborhoods and the work of a cross section of inspectors. 5 points.
</P>
<P>(ii) The PHA's SEMAP certification does not support the statements in paragraph (e)(3)(i) of this section. 0 points.
</P>
<P>(f) <I>HQS enforcement.</I> (1) This indicator shows whether, following each HQS inspection of a unit under contract where the unit fails to meet HQS, any cited life-threatening HQS deficiencies are corrected within 24 hours from the inspection and all other cited HQS deficiencies are corrected within no more than 30 calendar days from the inspection or any PHA-approved extension. In addition, if HQS deficiencies are not corrected timely, the indicator shows whether the PHA stops (abates) housing assistance payments beginning no later than the first of the month following the specified correction period or terminates the HAP contract or, for family-caused defects, takes prompt and vigorous action to enforce the family obligations. (24 CFR 982.404)
</P>
<P>(2) HUD verification method: The IA annual audit report covering the PHA fiscal year entered on the SEMAP certification and on-site confirmatory review if performed.
</P>
<P>(3) Rating: (i) The PHA's SEMAP certification states that the PHA's quality control sample of case files with failed HQS inspections shows that, for all cases sampled, any cited life-threatening HQS deficiencies were corrected within 24 hours from the inspection and, for at least 98 percent of cases sampled, all other cited HQS deficiencies were corrected within no more than 30 calendar days from the inspection or any PHA-approved extension, or, if any life-threatening HQS deficiencies were not corrected within 24 hours and all other HQS deficiencies were not corrected within 30 calendar days or any PHA-approved extension, the PHA stopped (abated) housing assistance payments beginning no later than the first of the month following the correction period, or took prompt and vigorous action to enforce family obligations. 10 points.
</P>
<P>(ii) The PHA's SEMAP certification does not support the statement in paragraph (f)(3)(i) of this section. 0 points.
</P>
<P>(g) <I>Expanding housing opportunities.</I> (1) This indicator applies only to PHAs with jurisdiction in metropolitan FMR areas. The indicator shows whether the PHA has adopted and implemented a written policy to encourage participation by owners of units located outside areas of poverty or minority concentration; informs rental voucher holders of the full range of areas where they may lease units both inside and outside the PHA's jurisdiction; and supplies a list of landlords or other parties who are willing to lease units or help families find units, including units outside areas of poverty or minority concentration. (24 CFR 982.54(d)(5), 982.301(a) and 982.301(b)(4) and 982.301(b)(12))
</P>
<P>(2) HUD verification method: The IA annual audit report covering the PHA fiscal year entered on the SEMAP certification and on-site confirmatory review if performed.
</P>
<P>(3) Rating: (i) The PHA's SEMAP certification states that:
</P>
<P>(A) The PHA has a written policy in its administrative plan which includes actions the PHA will take to encourage participation by owners of units located outside areas of poverty or minority concentration, and which clearly delineates areas in its jurisdiction that the PHA considers areas of poverty or minority concentration;
</P>
<P>(B) PHA documentation shows that the PHA has taken actions indicated in its written policy to encourage participation by owners of units located outside areas of poverty or minority concentration;
</P>
<P>(C) The PHA has prepared maps that show various areas with housing opportunities outside areas of poverty or minority concentration both within its jurisdiction and neighboring its jurisdiction; has assembled information about the characteristics of those areas which may include information about job opportunities, schools, transportation and other services in these areas; and can demonstrate that it uses the maps and area characteristics information when briefing rental voucher holders about the full range of areas where they may look for housing;
</P>
<P>(D) The PHA's information packet for rental voucher holders contains either a list of owners who are willing to lease (or properties available for lease) under the rental voucher program; or a current list of other organizations that will help families find units and the PHA can demonstrate that the list(s) includes properties or organizations that operate outside areas of poverty or minority concentration;
</P>
<P>(E) The PHA's information packet includes an explanation of how portability works and includes a list of portability contact persons for neighboring housing agencies, with the name, address and telephone number of each, for use by families who move under portability; and
</P>
<P>(F) PHA documentation shows that the PHA has analyzed whether rental voucher holders have experienced difficulties in finding housing outside areas of poverty or minority concentration and, if such difficulties have been found, PHA documentation shows that the PHA has analyzed whether it is appropriate to seek approval of exception payment standard amounts in any part of its jurisdiction and has sought HUD approval of exception payment standard amounts when necessary. 5 points.
</P>
<P>(ii) The PHA's SEMAP certification does not support the statement in paragraph (g)(3)(i) of this section. 0 points.
</P>
<P>(h) <I>Deconcentration bonus.</I> (1) Submission of deconcentration data in the HUD-prescribed format for this indicator is mandatory for a PHA using one or more payment standard amount(s) that exceed(s) 100 percent of the published FMR set at the 50th percentile rent to provide access to a broad range of housing opportunities throughout a metropolitan area in accordance with § 888.113(c) of this title, starting with the second full PHA fiscal year following initial use of payment standard amounts based on the FMR set at the 50th percentile rent. Submission of deconcentration data for this indicator is optional for all other PHAs. Additional SEMAP points are available to PHAs that have jurisdiction in metropolitan FMR areas and that choose to submit with their SEMAP certifications certain data, in a HUD-prescribed format, on the percent of their tenant-based Section 8 families with children who live in, and who have moved during the PHA fiscal year to, low poverty census tracts in the PHA's principal operating area. For purposes of this indicator, the PHA's principal operating area is the geographic entity for which the Census tabulates data that most closely matches the PHA's geographic jurisdiction under State or local law (e.g., city, county, metropolitan statistical area) as determined by the PHA, subject to HUD review. A low poverty census tract is defined as a census tract where the poverty rate of the tract is at or below 10 percent, or at or below the overall poverty rate for the principal operating area of the PHA, whichever is greater. The PHA determines the overall poverty rate for its principal operating area using the most recent available decennial Census data. Family data used for the PHA's analysis must be the same information as reported to MTCS for the PHA's tenant-based Section 8 families with children. If HUD determines that the quantity of MTCS data is insufficient for adequate analysis, HUD will not award points under this bonus indicator. Bonus points will be awarded if:
</P>
<P>(i) Half or more of all Section 8 families with children assisted by the PHA in its principal operating area at the end of the last completed PHA fiscal year reside in low poverty census tracts;
</P>
<P>(ii) The percent of Section 8 mover families with children who moved to low poverty census tracts in the PHA's principal operating area during the last completed PHA fiscal year is at least 2 percentage points higher than the percent of all Section 8 families with children who reside in low poverty census tracts at the end of the last completed PHA fiscal year; or
</P>
<P>(iii) The percent of Section 8 families with children who moved to low-poverty census tracts in the PHA's principal operating area over the last two completed PHA fiscal years is at least 2 percentage points higher than the percent of all Section 8 families with children who resided in low poverty census tracts at the end of the second to last completed PHA fiscal year.
</P>
<P>(iv) State and regional PHAs that provide Section 8 rental assistance in more than one metropolitan area within a State or region make these determinations separately for each metropolitan area or portion of a metropolitan area where the PHA has assisted at least 20 Section 8 families with children in the last completed PHA fiscal year.
</P>
<P>(2) HUD verification methods: PHA data submitted for the deconcentration bonus, the IA annual audit report covering the PHA fiscal year entered on the SEMAP certification, and on-site confirmatory review if performed.
</P>
<P>(3) Rating: (i) The data submitted by the PHA for the deconcentration bonus shows that the PHA met the requirements for bonus points in paragraph (h)(1)(i), (ii) or (iii) of this section. 5 points.
</P>
<P>(ii) The data submitted by the PHA for the deconcentration bonus does not show that the PHA met the requirements for bonus points in paragraph (h)(1)(i), (ii) or (iii) of this section. 0 points.
</P>
<P>(i) <I>Payment standards.</I> (1) This indicator shows whether the PHA has adopted payment standard schedule(s) in accordance with § 982.503.
</P>
<P>(2) HUD verification method: PHA data submitted on the SEMAP certification form concerning payment standards.
</P>
<P>(3) Rating:
</P>
<P>(i) The PHA's voucher program payment standard schedule contains payment standards set in accordance with 24 CFR 982.503. 5 points.
</P>
<P>(ii) The PHA's voucher program payment standard schedule contains payment standards that were not set in accordance with § 982.503. 0 points.
</P>
<P>(j) <I>Annual reexaminations.</I> (1) This indicator shows whether the PHA completes a reexamination for each participating family at least every 12 months. (24 CFR 5.617).
</P>
<P>(2) HUD verification method: MTCS report—Shows percent of reexaminations that are more than 2 months overdue. The 2-month allowance is provided only to accommodate a possible lag in the PHA's electronic reporting of the annual reexamination on Form HUD-50058 and to allow the processing of the data into MTCS. The 2-month allowance provided here for rating purposes does not mean that any delay in completing annual reexaminations is permitted.
</P>
<P>(3) Rating: 
</P>
<P>(i) Fewer than 5 percent of all PHA reexaminations are more than 2 months overdue. 10 points.
</P>
<P>(ii) 5 to 10 percent of all PHA reexaminations are more than 2 months overdue. 5 points.
</P>
<P>(iii) More than 10 percent of all PHA reexaminations are more than 2 months overdue. 0 points.
</P>
<P>(k) <I>Correct tenant rent calculations.</I> (1) This indicator shows whether the PHA correctly calculates the family's share of the rent to owner in the rental voucher program. (24 CFR part 982, subpart K).
</P>
<P>(2) HUD verification method: MTCS report—Shows percent of tenant rent and family's share of the rent to owner calculations that are incorrect based on data sent to HUD by the PHA on Forms HUD-50058. The MTCS data used for verification cover only voucher program tenancies, and do not include rent calculation discrepancies for manufactured home owner rentals of manufactured home spaces for proration of assistance under the noncitizen rule.
</P>
<P>(3) Ratings: 
</P>
<P>(i) 2 percent or fewer of PHA tenant rent and family's share of the rent to owner calculations are incorrect. 5 points.
</P>
<P>(ii) More than 2 percent of PHA tenant rent and family's share of the rent to owner calculations are incorrect. 0 points.
</P>
<P>(l) <I>Initial unit inspections.</I> (1) This indicator shows whether newly leased units pass HQS inspection within the time period required. This includes both initial and turnover inspections for the PBV program. (24 CFR 982.305 and 983.103(b) through (d)).
</P>
<P>(2) HUD verification method: MTCS report—Shows percent of newly leased units where the beginning date of the assistance contract is before the date the unit passed the initial unit inspection or, if the PHA employed the PHA initial inspection option for non-life- threatening deficiencies or alternative inspections, the timing requirements for the applicable PHA initial inspection option.
</P>
<P>(3) Rating:
</P>
<P>(i) 98 to 100 percent of newly leased units passed HQS inspection within the time period required. 5 points.
</P>
<P>(ii) Fewer than 98 percent of newly leased units passed HQS inspection within the time period required. 0 points.
</P>
<P>(m) <I>Periodic HQS inspections.</I> (1) This indicator shows whether the PHA has met its periodic inspection requirement for its units under contract (24 CFR 982.405 and 983.103(e)).
</P>
<P>(2) HUD verification method: MTCS report—Shows percent of HQS inspections that are more than 2 months overdue. The 2-month allowance is provided only to accommodate a possible lag in the PHA's electronic reporting of the annual HQS inspection on Form HUD-50058, and to allow the processing of the data into MTCS. The 2-month allowance provided here for rating purposes does not mean that any delay in completing annual HQS inspections is permitted.
</P>
<P>(3) Rating:
</P>
<P>(i) Fewer than 5 percent of periodic HQS inspections of units under contract are more than 2 months overdue. 10 points.
</P>
<P>(ii) 5 to 10 percent of all periodic HQS inspections of units under contract are more than 2 months overdue. 5 points.
</P>
<P>(iii) More than 10 percent of all periodic HQS inspections of units under contract are more than 2 months overdue. 0 points.
</P>
<P>(n) <I>Lease-up.</I> The provisions of this paragraph (n) apply to the first SEMAP certification due after July 2, 2012.
</P>
<P>(1) <I>The indicator:</I> This indicator shows whether the PHA enters into HAP contracts for the number of the PHA's baseline voucher units (units that are contracted under a Consolidated ACC) for the calendar year that ends on or before the PHA's fiscal year or whether the PHA has expended its allocated budget authority for the same calendar year. Allocated budget authority will be based upon the PHA's eligibility, which includes budget authority obligated for the calendar year and any portion of HAP reserves attributable to the budget authority that was offset from reserves during the calendar year. Litigation units and funding will be excluded from this indicator, and new increments will be excluded for 12 months from the effective date of the increment on the Consolidated ACC. Units assisted under the voucher homeownership option and units occupied under a project-based HAP contract are included in the measurement of this indicator.
</P>
<P>(2) <I>HUD verification method:</I> This method is based on the percent of units leased under a tenant-based or project-based HAP contract or occupied by homeowners under the voucher homeownership option during the calendar year that ends on or before the assessed PHA's fiscal year, or the percent of allocated budget authority expended during the calendar year that ends on or before the assessed PHA's fiscal year. The percent of units leased is determined by taking unit months leased under a HAP contract and unit months occupied by homeowners under the voucher homeownership option, as shown in HUD systems for the calendar year that ends on or before the assessed PHA fiscal year, and dividing that number by the number of unit months available for leasing based on the number of baseline units available at the beginning of the calendar year.
</P>
<P>(3) <I>Rating:</I> (i) The percent of units leased or occupied by homeowners under the voucher homeownership option, or the percent of allocated budget authority expended during the calendar year that ends on or before the assessed PHA fiscal year was 98 percent or more. (20 points.)
</P>
<P>(ii) The percent of units leased or occupied by homeowners under the voucher homeownership option, or the percent of allocated budget authority expended during the calendar year that ends on or before the assessed PHA fiscal year was 95 to 97 percent. (15 points.)
</P>
<P>(iii) The percent of units leased or occupied by homeowners under the voucher homeownership option, or the percent of allocated budget authority expended during the calendar year that ends on or before the assessed PHA fiscal year was less than 95 percent. (0 points.)
</P>
<P>(o) <I>Family self-sufficiency (FSS) enrollment and escrow accounts.</I> (1) This indicator applies only to PHAs with mandatory FSS programs. The indicator consists of 2 components which show whether the PHA has enrolled families in the FSS program as required, and the extent of the PHA's progress in supporting FSS by measuring the percent of current FSS participants with FSS progress reports entered in MTCS that have had increases in earned income which resulted in escrow account balances. (24 CFR 984.105 and 984.305)
</P>
<P>(2) HUD verification method: MTCS report—Shows number of families currently enrolled in FSS. This number is divided by the number of mandatory FSS slots, as determined under § 984.105 of this chapter. An MTCS report also shows the percent of FSS families with FSS progress reports who have escrow account balances. HUD also uses information reported on the SEMAP certification by initial PHAs concerning FSS families enrolled in their FSS programs but who have moved under portability to the jurisdiction of another PHA.
</P>
<P>(3) Rating: 
</P>
<P>(i) The PHA has filled 80 percent or more of its mandatory FSS slots and 30 percent or more of FSS families have escrow account balances. 10 points.
</P>
<P>(ii) The PHA has filled 60 to 79 percent of its mandatory FSS slots and 30 percent or more of FSS families have escrow account balances. 8 points.
</P>
<P>(iii) The PHA has filled 80 percent or more of its mandatory FSS slots, but fewer than 30 percent of FSS families have escrow account balances. 5 points.
</P>
<P>(iv) 30 percent or more of FSS families have escrow account balances, but fewer than 60 percent of the PHA's mandatory FSS slots are filled. 5 points.
</P>
<P>(v) The PHA has filled 60 to 79 percent of its mandatory FSS slots, but fewer than 30 percent of FSS families have escrow account balances. 3 points.
</P>
<P>(vi) The PHA has filled fewer than 60 percent of its mandatory FSS slots and less than 30 percent of FSS families have escrow account balances. 0 points.
</P>
<P>(p) <I>Success rate of voucher holders.</I> (1) This indicator shows whether voucher holders were successful in leasing units with voucher assistance. This indicator applies only to PHAs that established success rate payment standard amounts in accordance with § 982.503(f) prior to June 6, 2024.
</P>
<P>(2) HUD verification method: MTCS Report. 
</P>
<P>(3) <I>Rating (5 points):</I> (i) The proportion of families issued rental vouchers during the last PHA fiscal year that have become participants in the voucher program is more than the higher of: 
</P>
<P>(A) 75 percent; or
</P>
<P>(B) The proportion of families issued rental vouchers that became participants in the program during the six month period utilized to determine eligibility for success rate payment standards under § 982.503(f) plus 5 percentage points; and
</P>
<CITA TYPE="N">[63 FR 48555, Sept. 10, 1998, as amended at 64 FR 40497, July 26, 1999; 64 FR 67983, Dec. 3, 1999; 65 FR 16733, Mar. 29, 2000; 65 FR 16823, Mar. 30, 2000; 65 FR 58875, Oct. 2, 2000; 66 FR 50005, Oct. 1, 2001; 77 FR 32018, May 31, 2012; 81 FR 80583, Nov. 16, 2016; 89 FR 38338, May 7, 2024; 90 FR 56689, Dec. 8, 2025]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.3.1.22.2" TYPE="SUBPART">
<HEAD>Subpart B—Program Operation</HEAD>


<DIV8 N="§ 985.101" NODE="24:4.1.3.1.22.2.41.1" TYPE="SECTION">
<HEAD>§ 985.101   SEMAP certification.</HEAD>
<P>(a) An PHA must submit the HUD-required SEMAP certification form within 60 calendar days after the end of its fiscal year.
</P>
<P>(1) The certification must be approved by PHA board resolution and signed by the PHA executive director. If the PHA is a unit of local government or a state, a resolution approving the certification is not required, and the certification must be executed by the Section 8 program director.
</P>
<P>(2) An PHA that subcontracts administration of its program to one or more subcontractors shall require each subcontractor to submit the subcontractor's own SEMAP certification on the HUD-prescribed form to the PHA in support of the PHA's SEMAP certification to HUD. The PHA shall retain subcontractor certifications for 3 years.
</P>
<P>(3) An PHA may include with its SEMAP certification any information bearing on the accuracy or completeness of the information used by the PHA in providing its certification.
</P>
<P>(b) Failure of an PHA to submit its SEMAP certification within 60 calendar days after the end of its fiscal year will result in an overall performance rating of troubled and the PHA will be subject to the requirements at § 985.107.
</P>
<P>(c) An PHA's SEMAP certification is subject to HUD verification by an on-site confirmatory review at any time. 
</P>
<APPRO TYPE="N">(Information collection requirements in this section have been approved by the Office of Management and Budget under control number 2577-0215)
</APPRO>
<CITA TYPE="N">[63 FR 48555, Sept. 10, 1998, as amended at 66 FR 50006, Oct. 1, 2001]


</CITA>
</DIV8>


<DIV8 N="§ 985.102" NODE="24:4.1.3.1.22.2.41.2" TYPE="SECTION">
<HEAD>§ 985.102   SEMAP profile.</HEAD>
<P>Upon receipt of the PHA's SEMAP certification, HUD will rate the PHA's performance under each SEMAP indicator in accordance with § 985.3. HUD will then prepare a SEMAP profile for each PHA which shows the rating for each indicator, sums the indicator ratings, and divides by the total possible points to arrive at an PHA's overall SEMAP score. SEMAP scores shall be rounded off to the nearest whole percent.


</P>
</DIV8>


<DIV8 N="§ 985.103" NODE="24:4.1.3.1.22.2.41.3" TYPE="SECTION">
<HEAD>§ 985.103   SEMAP score and overall performance rating.</HEAD>
<P>(a) <I>High performer rating.</I> PHAs with SEMAP scores of at least 90 percent shall be rated high performers under SEMAP. PHAs that achieve an overall performance rating of high performer may receive national recognition by the Department and may be given competitive advantage under notices of fund availability.
</P>
<P>(b) <I>Standard rating.</I> PHAs with SEMAP scores of 60 to 89 percent shall be rated standard.
</P>
<P>(c) <I>Troubled rating.</I> PHAs with SEMAP scores of less than 60 percent shall be rated troubled.
</P>
<P>(d) <I>Modified rating on an indicator.</I> A rating on any of the indicators at §§ 985.3(a) through 985.3(h) will be subject to change after HUD receives the PHA's annual audit report or after HUD conducts a confirmatory review if the audit report or the confirmatory review report contains information that the PHA's SEMAP certification concerning an indicator is not accurate.
</P>
<P>(e) <I>Modified or withheld overall rating.</I> (1) Notwithstanding an PHA's SEMAP score, HUD may modify or withhold an PHA's overall performance rating when warranted by circumstances which have bearing on the SEMAP indicators such as an PHA's appeal of its overall rating, adverse litigation, a conciliation agreement under Title VI of the Civil Rights Act of 1964, fair housing and equal opportunity monitoring and compliance review findings, fraud or misconduct, audit findings or substantial noncompliance with program requirements.
</P>
<P>(2) Notwithstanding an PHA's SEMAP score, if the latest IA report submitted for the PHA under the Single Audit Act indicates that the auditor is unable to provide an opinion as to whether the PHA's financial statements are presented fairly in all material respects in conformity with generally accepted accounting principals, or an opinion that the schedule of expenditures of Federal awards is presented fairly in all material respects in relation to the financial statements taken as a whole, the PHA will automatically be given an overall performance rating of troubled and the PHA will be subject to the requirements at § 985.107.
</P>
<P>(3) When HUD modifies or withholds a rating for any reason, it shall explain in writing to the PHA the reasons for the modification or for withholding the rating. 
</P>
<CITA TYPE="N">[63 FR 48555, Sept. 10, 1998, as amended at 64 FR 40498, July 26, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 985.104" NODE="24:4.1.3.1.22.2.41.4" TYPE="SECTION">
<HEAD>§ 985.104   PHA right of appeal of overall rating.</HEAD>
<P>An PHA may appeal its overall performance rating to HUD by providing justification of the reasons for its appeal. An appeal made to a HUD hub or program center or to the HUD Troubled Agency Recovery Center and denied may be further appealed to the Assistant Secretary.


</P>
</DIV8>


<DIV8 N="§ 985.105" NODE="24:4.1.3.1.22.2.41.5" TYPE="SECTION">
<HEAD>§ 985.105   HUD SEMAP responsibilities.</HEAD>
<P>(a) <I>Frequency of SEMAP assessments</I>—(1) <I>Annual review.</I> Except as provided in paragraph (a)(2) of this section, HUD shall assess each PHA's performance under SEMAP annually and shall assign each PHA a SEMAP score and overall performance rating. 
</P>
<P>(2) <I>Biennial review for small PHAs.</I> HUD shall assess and score the performance of a PHA with less than 250 assisted units once every other PHA fiscal year, unless the PHA: 
</P>
<P>(i) Elects to have its performance assessed on an annual basis; or 
</P>
<P>(ii) Is designated as troubled, in accordance with § 985.103. 
</P>
<P>(b) <I>Notification to PHA.</I> No later than 120 calendar days after the PHA's fiscal year end, HUD shall notify each PHA in writing of its rating on each SEMAP indicator, of its overall SEMAP score and of its overall performance rating (high performer, standard, troubled). The HUD notification letter shall identify and require correction of any SEMAP deficiencies (indicator rating of zero) within 45 calendar days from date of HUD notice.
</P>
<P>(c) <I>On-site confirmatory review.</I> HUD may conduct an on-site confirmatory review to verify the PHA certification and the HUD rating under any indicator.
</P>
<P>(d) <I>Changing rating from troubled.</I> HUD must conduct an on-site confirmatory review of an PHA's performance before changing any annual overall performance rating from troubled to standard or high performer.
</P>
<P>(e) <I>Appeals.</I> HUD must review, consider and provide a final written determination to an PHA on its appeal of its overall performance rating.
</P>
<P>(f) <I>Corrective action plans.</I> HUD must review the adequacy and monitor implementation of PHA corrective action plans submitted under § 985.106(c) or § 985.107(c) and provide technical assistance to help the PHA improve program management. If an PHA is assigned an overall performance rating of troubled, the PHA's corrective action plan must be approved in writing by HUD.
</P>
<CITA TYPE="N">[63 FR 48555, Sept. 10, 1998, as amended at 68 FR 37671, June 24, 2003]


</CITA>
</DIV8>


<DIV8 N="§ 985.106" NODE="24:4.1.3.1.22.2.41.6" TYPE="SECTION">
<HEAD>§ 985.106   Required actions for SEMAP deficiencies.</HEAD>
<P>(a) When the PHA receives the HUD notification of its SEMAP rating, an PHA must correct any SEMAP deficiency (indicator rating of zero) within 45 calendar days from date of HUD notice.
</P>
<P>(b) The PHA must send a written report to HUD describing its correction of any identified SEMAP deficiency.
</P>
<P>(c) If an PHA fails to correct a SEMAP deficiency within 45 calendar days as required, HUD may then require the PHA to prepare and submit a corrective action plan for the deficiency within 30 calendar days from the date of HUD notice.
</P>
<APPRO TYPE="N">(Information collection requirements in this section have been approved by the Office of Management and Budget under control number 2577-0215)


</APPRO>
</DIV8>


<DIV8 N="§ 985.107" NODE="24:4.1.3.1.22.2.41.7" TYPE="SECTION">
<HEAD>§ 985.107   Required actions for PHA with troubled performance rating.</HEAD>
<P>(a) <I>On-site reviews</I>—(1) <I>Required reviews for troubled PHAs.</I> Except as provided in paragraph (a)(2) of this section, HUD will conduct an on-site review of PHA program management for any PHA assigned an overall performance rating of troubled to assess the magnitude and seriousness of the PHA's noncompliance with performance requirements. 
</P>
<P>(2) <I>On-site reviews for small PHAs.</I> Notwithstanding paragraph (a)(1) of this section, HUD may elect not to conduct an on-site review of a troubled PHA, if: 
</P>
<P>(i) The PHA has less than 250 assisted units; and 
</P>
<P>(ii) HUD determines that an on-site review is unnecessary to determine the needs of the PHA and the actions required to address the program deficiencies.
</P>
<P>(b) <I>HUD written report.</I> HUD must provide the PHA a written report of its on-site review containing HUD findings of program management deficiencies, the apparent reasons for the deficiencies, and recommendations for improvement.
</P>
<P>(c) <I>PHA corrective action plan.</I> Upon receipt of the HUD written report on its on-site review, the PHA must write a corrective action plan and submit it to HUD for approval. The corrective action plan must:
</P>
<P>(1) Specify goals to be achieved;
</P>
<P>(2) Identify obstacles to goal achievement and ways to eliminate or avoid them;
</P>
<P>(3) Identify resources that will be used or sought to achieve goals;
</P>
<P>(4) Identify an PHA staff person with lead responsibility for completing each goal;
</P>
<P>(5) Identify key tasks to reach each goal;
</P>
<P>(6) Specify time frames for achievement of each goal, including intermediate time frames to complete each key task; and
</P>
<P>(7) Provide for regular evaluation of progress toward improvement.
</P>
<P>(8) Be signed by the PHA board of commissioners chairperson and by the PHA executive director. If the PHA is a unit of local government or a state, the corrective action plan must be signed by the Section 8 program director and by the chief executive officer of the unit of government or his or her designee.
</P>
<P>(d) <I>Monitoring.</I> The PHA and HUD must monitor the PHA's implementation of its corrective action plan to ensure performance targets are met.
</P>
<P>(e) <I>Use of administrative fee reserve prohibited.</I> Any PHA assigned an overall performance rating of troubled may not use any part of the administrative fee reserve for other housing purposes (see 24 CFR 982.155(b)).
</P>
<P>(f) <I>Upgrading poor performance rating.</I> HUD shall change an PHA's overall performance rating from troubled to standard or high performer if HUD determines that a change in the rating is warranted because of improved PHA performance and an improved SEMAP score.
</P>
<APPRO TYPE="N">(Information collection requirements in this section have been approved by the Office of Management and Budget under control number 2577-0215)
</APPRO>
<CITA TYPE="N">[63 FR 48555, Sept. 10, 1998, as amended at 68 FR 37672, June 24, 2003]


</CITA>
</DIV8>


<DIV8 N="§ 985.108" NODE="24:4.1.3.1.22.2.41.8" TYPE="SECTION">
<HEAD>§ 985.108   SEMAP records.</HEAD>
<P>HUD shall maintain SEMAP files, including certifications, notifications, appeals, corrective action plans, and related correspondence for at least 3 years.
</P>
<APPRO TYPE="N">(Information collection requirements in this section have been approved by the Office of Management and Budget under control number 2577-0215)


</APPRO>
</DIV8>


<DIV8 N="§ 985.109" NODE="24:4.1.3.1.22.2.41.9" TYPE="SECTION">
<HEAD>§ 985.109   Default under the Annual Contributions Contract (ACC).</HEAD>
<P>HUD may determine that an PHA's failure to correct identified SEMAP deficiencies or to prepare and implement a corrective action plan required by HUD constitutes a default under the ACC.


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:4.1.3.1.22.3" TYPE="SUBPART">
<HEAD>Subpart C—Physical Assessment Component [Reserved]</HEAD>

</DIV6>


<DIV6 N="D" NODE="24:4.1.3.1.22.4" TYPE="SUBPART">
<HEAD>Subpart D—Small Rural PHA Assessment</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>88 FR 30505, May 11, 2023, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 985.201" NODE="24:4.1.3.1.22.4.41.1" TYPE="SECTION">
<HEAD>§ 985.201   Applicability.</HEAD>
<P>(a) This subpart applies to small rural PHAs as defined in § 902.101 of this chapter.
</P>
<P>(b) Small rural PHAs shall be assessed and rated on the indicators and methodology of this subpart and shall not be subject to the SEMAP requirements.




</P>
</DIV8>


<DIV8 N="§ 985.203" NODE="24:4.1.3.1.22.4.41.2" TYPE="SECTION">
<HEAD>§ 985.203   Assessment indicators and HUD verification methods.</HEAD>
<P>(a) This section describes the performance indicators used to assess a PHA's designation as troubled resulting from the small rural PHA assessment. HUD will use the verification method identified for each indicator. The four indicators are determined on a pass or fail basis.
</P>
<P>(b)(1) <I>Inspection standards.</I> This indicator shows whether the PHA applied the correct inspection standards to HCV and PBV unit inspections.
</P>
<P>(2) <I>HUD verification method.</I> The PHA's assessment certification and on-site HUD review when applicable.
</P>
<P>(3) <I>Rating.</I> The PHA passes the indicator if it applied the correct inspection standards for all unit HCV and PBV unit inspections conducted during the assessment period. If the PHA applied the incorrect inspection standards for any HCV or PBV unit inspection during the assessment period, the PHA fails the indicator.
</P>
<P>(c)(1) <I>Initial unit inspections.</I> This indicator determines if the PHA conducted the initial HQS inspections within the required time period.
</P>
<P>(2) <I>HUD verification method.</I> HUD systems show percent of newly leased units where the beginning date of the assistance contract is before the date the unit passed the initial unit inspection or, if the PHA employed the PHA initial inspection option for non-life-threatening deficiencies or alternative inspections, the timing requirements for the applicable PHA initial inspection option.
</P>
<P>(3) <I>Rating.</I> The PHA passes the indicator if at least 98 percent of units placed under HAP contract during the assessment period passed the initial PHA HQS inspection within the required time period. If fewer than 98 percent of units placed under HAP contract during the assessment period passed the HQS inspection within the required time periods, the PHA fails the indicator.
</P>
<P>(d)(1) <I>Frequency of HQS inspections.</I> This indicator shows, for units that have been under HAP contract for at least three years, whether the PHA re-inspected tenant-based units under HAP contract and the required sample of PBV units at least once during the three-year period from the last PHA inspection.
</P>
<P>(2) <I>HUD verification method.</I> HUD systems show the percentage of units that have been under HAP contract for at least three years that have been re-inspected within the required three-year period from the last inspection.
</P>
<P>(3) <I>Rating.</I> The PHA passes the indicator if at least 98 percent of the units that have been under HAP contract for at least three years have been re-inspected within the required three-year period from the last inspection. The PHA fails the indicator if fewer than 98 percent of these units have been re-inspected within the required three-year period.
</P>
<P>(e)(1) <I>Unit condition enforcement.</I> This indicator shows whether, following the inspection of a unit under contract where the unit fails to meet the required standards, any cited life-threatening and non-life-threatening deficiencies are corrected within the required cure period in accordance with §§ 982.404 and 983.103 of this chapter. In addition, if HQS deficiencies are not corrected timely, the indicator shows whether the PHA stops (abates) housing assistance payments beginning no later than the first of the month following the specified correction period or terminates the HAP contract or, for family-caused defects, takes prompt and vigorous action to enforce the family obligations. (§ 982.404 of this chapter)
</P>
<P>(2) <I>HUD verification method.</I> The PHA certification and on-site HUD review (if performed), and HUD system data.
</P>
<P>(3) <I>Rating.</I> In order to pass the indicator, the applicable verification method, which may include sampling, determines that the PHA took corrective action within the required timeframes for at least 98 percent of inspections with identified life-threatening or other HQS deficiencies.
</P>
<P>(f)(1) <I>PHA submission of certifications.</I> The PHA must submit its certifications for the applicable indicators within the designated timeframe required by HUD, and in the form and manner as required by HUD. HUD will issue instructions on the submission of PHA certifications by <E T="04">Federal Register</E> notification, which will be subject to public comment.
</P>
<P>(2) <I>Failure to submit.</I> Failure of the PHA to submit any certification in accordance with this paragraph will result in the PHA failing the indicator and being designated as troubled under the small rural PHA assessment.




</P>
</DIV8>


<DIV8 N="§ 985.205" NODE="24:4.1.3.1.22.4.41.3" TYPE="SECTION">
<HEAD>§ 985.205   Determination of assessment rating.</HEAD>
<P>(a) <I>High performer designation.</I> (1) A PHA is designated a high performer under the small rural PHA assessment if the PHA has passed all four indicators identified in § 985.203 and the PHA:
</P>
<P>(i) Has utilized at least 98 percent of its HCV budget authority in the two most recent calendar years, or the percent of HCV units leased by renters or occupied by homeowners in the two most recent calendar years was at least 98 percent;
</P>
<P>(ii) Did not end that calendar year with excess HAP reserves; and
</P>
<P>(iii) Did not end that calendar year in a funding shortfall or receive shortfall prevention funding from HUD.
</P>
<P>(2) HUD shall publish the calculation for determining excess HAP reserves in the <E T="04">Federal Register,</E> and such calculation shall provide for public comment before becoming effective.
</P>
<P>(b) <I>Standard performer designation.</I> A PHA that passed all four indicators but did not meet the funding utilization criteria for a high performer designation in paragraph (a) is designated as a standard performer.
</P>
<P>(c) <I>Troubled PHA designation.</I> A PHA that failed any of the four indicators under § 985.201 is designated as a troubled PHA under the small rural PHA assessment.




</P>
</DIV8>


<DIV8 N="§ 985.207" NODE="24:4.1.3.1.22.4.41.4" TYPE="SECTION">
<HEAD>§ 985.207   Frequency of assessments.</HEAD>
<P>(a) <I>Frequency of small rural PHA assessments</I>—(1) <I>Initial assessment.</I> The initial small rural PHA assessment will be effective when the PHA's next SEMAP assessment would have been applied. For PHAs that qualify for SEMAP biennial review as a small PHA (less than 250 assisted units), the transition to the small rural PHA assessment will occur when the PHA's next biennial SEMAP assessment is required.
</P>
<P>(2) <I>Triennial assessments.</I> HUD shall assess small rural PHAs no more than once every three years, except that a troubled small rural PHA shall be subject to an annual assessment in accordance with § 985.209.
</P>
<P>(b) [Reserved]




</P>
</DIV8>


<DIV8 N="§ 985.209" NODE="24:4.1.3.1.22.4.41.5" TYPE="SECTION">
<HEAD>§ 985.209   Troubled small rural PHAs.</HEAD>
<P>(a) <I>Appeals</I>—(1) <I>HUD action.</I> HUD must review, consider, and provide a final written determination to a small rural PHA that appeals its designation as a troubled PHA.
</P>
<P>(2) <I>Deciding HUD official.</I> The HUD decision on the PHA appeal shall be made by a HUD official who has not been involved in and is not subordinate to any person who has been involved in the original determination to designate the PHA as a troubled PHA under the small rural PHA assessment.
</P>
<P>(b) <I>Corrective action agreement.</I> No later than 60 days after the date on which the PHA is designated a troubled PHA, the PHA and HUD will enter into a corrective action agreement (CAA) under which the PHA shall take actions to correct the deficiencies upon which the troubled PHA designation is based. The PHA must comply with HUD requirements for the submission of the CAA, including but not limited to the date by which the CAA must be submitted to HUD. The CAA must:
</P>
<P>(1) Have a term of one year, and shall be renewable at the option of HUD;
</P>
<P>(2) Specify goals to be achieved;
</P>
<P>(3) Identify obstacles to goal achievement and ways to eliminate or avoid them;
</P>
<P>(4) Identify resources that will be used or sought to achieve goals;
</P>
<P>(5) Provide, where feasible, for technical assistance to assist the PHA in curing its deficiencies;
</P>
<P>(6) Identify a PHA staff person with lead responsibility for completing each goal;
</P>
<P>(7) Identify key tasks to reach each goal;
</P>
<P>(8) Specify time frames for achievement of each goal, including intermediate time frames to complete each key task;
</P>
<P>(9) Provide for regular evaluation of progress toward improvement;
</P>
<P>(10) Provide for the reconsideration of the PHA's designation as a troubled PHA no less than annually, and provide for the termination of the CAA when HUD determines the PHA is no longer troubled;
</P>
<P>(11) Provide that in the event of substantial noncompliance by the PHA under the CAA, HUD may (i) contract with another PHA or a private entity to administer the HCV program; and (ii) withhold funds otherwise distributable to the troubled PHA;
</P>
<P>(12) Be signed by the PHA board of commissioners chairperson and by the PHA executive director. If the PHA is a unit of local government or a State, the CAA must be signed by the Section 8 program director and by the chief executive officer of the unit of government or his or her designee.
</P>
<P>(c) <I>Monitoring.</I> The PHA and HUD must monitor the PHA's implementation of its CAA to ensure performance targets are met.
</P>
<P>(d) <I>Annual small rural assessment.</I> A troubled PHA shall be subject to the small rural assessment on an annual basis.
</P>
<P>(e) <I>Use of administrative fee reserve prohibited.</I> Any PHA designated as troubled may not use any part of the administrative fee reserve for other housing purposes (<I>see</I> § 982.155(b) of this chapter).
</P>
<P>(f) <I>Upgrading poor performance rating.</I> HUD shall change a PHA's overall performance rating from troubled to standard or high performer if HUD determines that a change in the rating is warranted because of improved PHA performance and a standard or high designation on a subsequent small rural PHA assessment.
</P>
<P>(g) <I>Default under the Annual Contributions Contract (ACC).</I> HUD may determine that a PHA's failure to correct identified deficiencies resulting from its small rural PHA assessment or to execute and implement a CAA as required by HUD constitutes a default under the ACC.




</P>
</DIV8>


<DIV8 N="§ 985.211" NODE="24:4.1.3.1.22.4.41.6" TYPE="SECTION">
<HEAD>§ 985.211   Small rural PHA assessment records.</HEAD>
<P>HUD shall maintain small rural PHA assessment files, including designations, notifications, appeals, corrective action agreements, and related correspondence for at least 3 years.




</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="990" NODE="24:4.1.3.1.23" TYPE="PART">
<HEAD>PART 990—THE PUBLIC HOUSING OPERATING FUND PROGRAM 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 1437g; 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>70 FR 54997, Sept. 19, 2005, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.3.1.23.1" TYPE="SUBPART">
<HEAD>Subpart A—Purpose, Applicability, Formula, and Definitions</HEAD>


<DIV8 N="§ 990.100" NODE="24:4.1.3.1.23.1.41.1" TYPE="SECTION">
<HEAD>§ 990.100   Purpose.</HEAD>
<P>This part implements section 9(f) of the United States Housing Act of 1937 (1937 Act), (42 U.S.C. 1437g). Section 9(f) establishes an Operating Fund for the purposes of making assistance available to public housing agencies (PHAs) for the operation and management of public housing. In the case of unsubsidized housing, the total expenses of operating rental housing should be covered by the operating income, which primarily consists of rental income and, to some degree, investment and non-rental income. In the case of public housing, the Operating Fund provides operating subsidy to assist PHAs to serve low, very low, and extremely low-income families. This part describes the policies and procedures for Operating Fund formula calculations and management under the Operating Fund Program.


</P>
</DIV8>


<DIV8 N="§ 990.105" NODE="24:4.1.3.1.23.1.41.2" TYPE="SECTION">
<HEAD>§ 990.105   Applicability.</HEAD>
<P>(a) <I>Applicability of this part.</I> (1) With the exception of subpart I of this part, this part is applicable to all PHA rental units under an Annual Contributions Contract (ACC). This includes PHAs that have not received operating subsidy previously, but are eligible for operating subsidy under the Operating Fund Formula.
</P>
<P>(2) This part is applicable to all rental units managed by a resident management corporation (RMC), including a direct-funded RMC.
</P>
<P>(b) <I>Inapplicability of this part.</I> (1) This part is not applicable to Indian Housing, section 5(h) and section 32 homeownership projects, the Housing Choice Voucher Program, the section 23 Leased Housing Program, or the section 8 Housing Assistance Payments Programs.
</P>
<P>(2) With the exception of subpart J of this part, this part is not applicable to the Mutual Help Program or the Turnkey III Homeownership Opportunity Program.


</P>
</DIV8>


<DIV8 N="§ 990.110" NODE="24:4.1.3.1.23.1.41.3" TYPE="SECTION">
<HEAD>§ 990.110   Operating fund formula.</HEAD>
<P>(a) <I>General formula.</I> (1) The amount of annual contributions (operating subsidy) each PHA is eligible to receive under this part shall be determined by a formula.
</P>
<P>(2) In general, operating subsidy shall be the difference between formula expense and formula income. If a PHA's formula expense is greater than its formula income, then the PHA is eligible for an operating subsidy.
</P>
<P>(3) Formula expense is an estimate of a PHA's operating expense and is determined by the following three components: Project Expense Level (PEL), Utility Expense Level (UEL), and other formula expenses (add-ons). Formula expense and its three components are further described in subpart C of this part. Formula income is an estimate for a PHA's non-operating subsidy revenue and is further described in subpart D of this part.
</P>
<P>(4) Certain portions of the operating fund formula (<I>e.g.</I>, PEL) are calculated in terms of per unit per month (PUM) amounts and are converted into whole dollars by multiplying the PUM amount by the number of eligible unit months (EUMs). EUMs are further described in subpart B of this part.
</P>
<P>(b) <I>Specific formula.</I> (1) A PHA's formula amount shall be the sum of the three formula expense components calculated as follows: {[(PEL multiplied by EUM) plus (UEL multiplied by EUM) plus add-ons] minus (formula income multiplied by EUM)}.
</P>
<P>(2) A PHA whose formula amount is equal to or less than zero is still eligible to receive operating subsidy equal to its most recent actual audit cost for its Operating Fund Program.
</P>
<P>(3) Operating subsidy payments will be limited to the availability of funds as described in § 990.210(c).
</P>
<P>(c) <I>Non-codified formula elements.</I> This part defines the major components of the Operating Fund Formula and describes the relationships of these various components. However, this part does not codify certain secondary elements that will be used in the revised Operating Fund Formula. HUD will more appropriately provide this information in non-codified guidance, such as a Handbook, <E T="04">Federal Register</E> notice, or other non-regulatory means that HUD determines appropriate.


</P>
</DIV8>


<DIV8 N="§ 990.115" NODE="24:4.1.3.1.23.1.41.4" TYPE="SECTION">
<HEAD>§ 990.115   Definitions.</HEAD>
<P>The following definitions apply to the Operating Fund program:
</P>
<P><I>1937 Act</I> means the United States Housing Act of 1937 (42 U.S.C. 1437 <I>et seq.</I>).
</P>
<P><I>Annual contributions contract (ACC)</I> is a contract prescribed by HUD for loans and contributions, which may be in the form of operating subsidy, whereby HUD agrees to provide financial assistance and the PHA agrees to comply with HUD requirements for the development and operation of its public housing projects.
</P>
<P><I>Asset management</I> is a management model that emphasizes project-based management, as well as long-term and strategic planning.
</P>
<P><I>Current consumption level</I> is the amount of each utility consumed at a project during the 12-month period that ended the June 30th prior to the beginning of the applicable funding period.
</P>
<P><I>Eligible unit months (EUM)</I> are the actual number of PHA units in eligible categories expressed in months for a specified time frame and for which a PHA receives operating subsidy.
</P>
<P><I>Formula amount</I> is the amount of operating subsidy a PHA is eligible to receive, expressed in whole dollars, as determined by the Operating Fund Formula.
</P>
<P><I>Formula expense</I> is an estimate of a PHA's operating expense used in the Operating Fund Formula.
</P>
<P><I>Formula income</I> is an estimate of a PHA's non-operating subsidy revenue used in the Operating Fund Formula.
</P>
<P><I>Funding period</I> is the calendar year for which HUD will distribute operating subsidy according to the Operating Fund Formula.
</P>
<P><I>Operating Fund</I> is the account/program authorized by section 9 of the 1937 Act for making operating subsidy available to PHAs for the operation and management of public housing.
</P>
<P><I>Operating Fund Formula (or Formula)</I> means the data and calculations used under this part to determine a PHA's amount of operating subsidy for a given period.
</P>
<P><I>Operating subsidy</I> is the amount of annual contributions for operations a PHA receives each funding period under section 9 of the 1937 Act as determined by the Operating Fund Formula in this part.
</P>
<P><I>Other operating costs (add-ons)</I> means PHA expenses that are recognized as formula expenses but are not included either in the project expense level or in the utility expense level.
</P>
<P><I>Payable consumption level</I> is the amount for all utilities consumed at a project that the Formula recognizes in the computation of a PHA's utility expense level at that project.
</P>
<P>Per unit per month (PUM) describes a dollar amount on a monthly basis per unit, such as Project Expense Level, Utility Expense Level, and formula income.
</P>
<P><I>Project</I> means each PHA project under an ACC to which the Operating Fund Formula is applicable. However, for purposes of asset management, as described in subpart H of this part, projects may be as identified under the ACC or may be a reasonable grouping of projects or portions of a project or projects under the ACC.
</P>
<P><I>Project-based management</I> is the provision of property management services that is tailored to the unique needs of each property, given the resources available to that property.
</P>
<P><I>Project expense level (PEL)</I> is the amount of estimated expenses for each project (excluding utilities and add-ons) expressed as a PUM cost.
</P>
<P><I>Project units</I> means all dwelling units in all of a PHA's projects under an ACC.
</P>
<P><I>Rolling base consumption level (RBCL)</I> is the average of the yearly consumption levels for the 36-month period ending on the June 30th that is 18 months prior to the beginning of the applicable funding period.
</P>
<P><I>Transition funding</I> is the timing and amount by which a PHA will realize increases and reductions in operating subsidy based on the new funding levels of the Operating Fund Formula.
</P>
<P><I>Unit months</I> are the total number of project units in a PHA's inventory expressed in months for a specified time frame.
</P>
<P><I>Utilities</I> means electricity, gas, heating fuel, water, and sewerage service.
</P>
<P><I>Utilities</I> expense level (UEL) is a product of the utility rate multiplied by the payable consumption level multiplied by the utilities inflation factor expressed as a PUM dollar amount.
</P>
<P><I>Utility rate (rate)</I> means the actual average rate for any given utility for the most recent 12-month period that ended the June 30th prior to the beginning of the applicable funding period.
</P>
<P><I>Yearly consumption level</I> is the actual amount of each utility consumed at a project during a 12-month period ending June 30th.


</P>
</DIV8>


<DIV8 N="§ 990.116" NODE="24:4.1.3.1.23.1.41.5" TYPE="SECTION">
<HEAD>§ 990.116   Environmental review requirements.</HEAD>
<P>The environmental review procedures of the National Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)) and the implementing regulations at 24 CFR parts 50 and 58 are applicable to the Operating Fund Program.


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.3.1.23.2" TYPE="SUBPART">
<HEAD>Subpart B—Eligibility for Operating Subsidy; Computation of Eligible Unit Months</HEAD>


<DIV8 N="§ 990.120" NODE="24:4.1.3.1.23.2.41.1" TYPE="SECTION">
<HEAD>§ 990.120   Unit months.</HEAD>
<P>(a) Some of the components of HUD's Operating Fund Formula are based on a measure known as unit months. Unit months represent a PHA's public housing inventory during a specified period of time. The unit months eligible for operating subsidy in a 12-month period are equal to the number of months that the units are in an operating subsidy-eligible category, adjusted for changes in inventory (<I>e.g.</I>, units added or removed), as described below.
</P>
<P>(b) A PHA is eligible to receive operating subsidy for a unit on the date it is both placed under the ACC and occupied. The date a unit is eligible for operating subsidy does not change the Date of Full Availability (DOFA) or the date of the End of Initial Operating Period (EIOP), nor does this provision place a project into management status.


</P>
</DIV8>


<DIV8 N="§ 990.125" NODE="24:4.1.3.1.23.2.41.2" TYPE="SECTION">
<HEAD>§ 990.125   Eligible units.</HEAD>
<P>A PHA is eligible to receive operating subsidy for public housing units under an ACC for:
</P>
<P>(a) Occupied dwelling units as defined in § 990.140;
</P>
<P>(b) A dwelling unit with an approved vacancy (as defined in § 990.145); and
</P>
<P>(c) A limited number of vacancies (as defined in § 990.150).


</P>
</DIV8>


<DIV8 N="§ 990.130" NODE="24:4.1.3.1.23.2.41.3" TYPE="SECTION">
<HEAD>§ 990.130   Ineligible units.</HEAD>
<P>(a) Vacant units that do not fall within the definition of § 990.145 or § 990.150 are not eligible for operating subsidy under this part.
</P>
<P>(b) Units that are eligible to receive an asset-repositioning fee, as described in § 990.190(h), are not eligible to receive operating subsidy under this subpart.


</P>
</DIV8>


<DIV8 N="§ 990.135" NODE="24:4.1.3.1.23.2.41.4" TYPE="SECTION">
<HEAD>§ 990.135   Eligible unit months (EUMs).</HEAD>
<P>(a) A PHA's total number of EUMs will be calculated for the 12-month period from July 1st to June 30th that is prior to the first day of the applicable funding period, and will consist of eligible units as defined in § 990.140, § 990.145, or § 990.150.
</P>
<P>(b)(1) The determination of whether a public housing unit satisfies the requirements of § 990.140, § 990.145, or § 990.150 for any unit month shall be based on the unit's status as of either the first or last day of the month, as determined by the PHA.
</P>
<P>(2) HUD reserves the right to determine the status of any and all public housing units based on information in its information systems.
</P>
<P>(c) The PHA shall maintain and, at HUD's request, shall make available to HUD, specific documentation of the status of all units, including, but not limited to, a listing of the units, street addresses or physical address, and project/management control numbers.
</P>
<P>(d) Any unit months that do not meet the requirements of this subpart are not eligible for operating subsidy, and will not be subsidized by the Operating Fund.


</P>
</DIV8>


<DIV8 N="§ 990.140" NODE="24:4.1.3.1.23.2.41.5" TYPE="SECTION">
<HEAD>§ 990.140   Occupied dwelling units.</HEAD>
<P>A PHA is eligible to receive operating subsidy for public housing units for each unit month that those units are under an ACC and occupied by a public housing-eligible family under lease.


</P>
</DIV8>


<DIV8 N="§ 990.145" NODE="24:4.1.3.1.23.2.41.6" TYPE="SECTION">
<HEAD>§ 990.145   Dwelling units with approved vacancies.</HEAD>
<P>(a) A PHA is eligible to receive operating subsidy for vacant public housing units for each unit month the units are under an ACC and meet one of the following HUD-approved vacancies:
</P>
<P>(1) <I>Units undergoing modernization.</I> Vacancies resulting from project modernization or unit modernization (such as work necessary to reoccupy vacant units) provided that one of the following conditions is met:
</P>
<P>(i) The unit is undergoing modernization (<I>i.e.</I>, the modernization contract has been awarded or force account work has started) and must be vacant to perform the work, and the construction is on schedule according to a HUD-approved PHA Annual Plan; or
</P>
<P>(ii) The unit must be vacant to perform the work and the treatment of the vacant unit is included in a HUD-approved PHA Annual Plan, but the time period for placing the vacant unit under construction has not yet expired. The PHA shall place the vacant unit under construction within two federal fiscal years (FFYs) after the FFY in which the capital funds are approved.
</P>
<P>(2) <I>Special use units.</I> Units approved and used for resident services, resident organization offices, and related activities, such as self-sufficiency and anti-crime initiatives.
</P>
<P>(b) On a project-by-project basis, subject to prior HUD approval and for the time period agreed to by HUD, a PHA shall receive operating subsidy for the units affected by the following events that are outside the control of the PHA:
</P>
<P>(1) <I>Litigation.</I> Units that are vacant due to litigation, such as a court order or settlement agreement that is legally enforceable; units that are vacant in order to meet regulatory and statutory requirements to avoid potential litigation (as covered in a HUD-approved PHA Annual Plan); and units under voluntary compliance agreements with HUD or other voluntary compliance agreements acceptable to HUD (<I>e.g.</I>, units that are being held vacant as part of a court-order, HUD-approved desegregation plan, or voluntary compliance agreement requiring modifications to the units to make them accessible pursuant to 24 CFR part 8).
</P>
<P>(2) <I>Disasters.</I> Units that are vacant due to a federally declared, state-declared, or other declared disaster.
</P>
<P>(3) <I>Casualty losses.</I> Damaged units that remain vacant due to delays in settling insurance claims.
</P>
<P>(c) A PHA may appeal to HUD to receive operating subsidy for units that are vacant due to changing market conditions (see subpart G of this part—Appeals).


</P>
</DIV8>


<DIV8 N="§ 990.150" NODE="24:4.1.3.1.23.2.41.7" TYPE="SECTION">
<HEAD>§ 990.150   Limited vacancies.</HEAD>
<P>(a) <I>Operating subsidy for a limited number of vacancies.</I> HUD will pay operating subsidy for a limited number of vacant units under an ACC. The limited number of vacant units must be equal to or less than 3 percent of the unit months on a project-by-project basis based on the definition of a project under § 990.265 (provided that the number of eligible unit months does not exceed 100 percent of the unit months for a project).
</P>
<P>(b) <I>Exception for PHAs with 100 or fewer units.</I> Notwithstanding paragraph (a) of this section, a PHA with 100 or fewer units will be paid operating subsidy for up to five vacant units not to exceed 100 percent of the unit months under an ACC. For example, a PHA with an inventory of 100 units and four vacancies during its fiscal year will be eligible for operating subsidy for all 100 units. A PHA with an inventory of 50 units with seven vacancies during its fiscal year will be eligible for operating subsidy for 48 units.
</P>
<CITA TYPE="N">[70 FR 54997, Sept. 19, 2005, as amended at 81 FR 12377, Mar. 8, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 990.155" NODE="24:4.1.3.1.23.2.41.8" TYPE="SECTION">
<HEAD>§ 990.155   Addition and deletion of units.</HEAD>
<P>(a) <I>Changes in public housing unit inventory.</I> To generate a change to its formula amount within each one-year funding period, PHAs shall periodically (<I>e.g.</I>, quarterly) report the following information to HUD, during the funding period:
</P>
<P>(1) New units that were added to the ACC, and occupied by a public housing-eligible family during the prior reporting period for the one-year funding period, but have not been included in the previous EUMs' data; and
</P>
<P>(2) Projects, or entire buildings in a project, that are eligible to receive an asset repositioning fee in accordance with the provisions in § 990.190(h).
</P>
<P>(b) <I>Revised EUM calculation.</I> (1) For new units, the revised calculation shall assume that all such units will be fully occupied for the balance of that funding period. The actual occupancy/vacancy status of these units will be included to calculate the PHA's operating subsidy in the subsequent funding period after these units have one full year of a reporting cycle.
</P>
<P>(2) Projects, or entire buildings in a project, that are eligible to receive an asset repositioning fee in accordance with § 990.190(h) are not to be included in the calculation of EUMs. Funding for these units is provided under the conditions described in § 990.190(h).


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:4.1.3.1.23.3" TYPE="SUBPART">
<HEAD>Subpart C—Calculating Formula Expenses</HEAD>


<DIV8 N="§ 990.160" NODE="24:4.1.3.1.23.3.41.1" TYPE="SECTION">
<HEAD>§ 990.160   Overview of calculating formula expenses.</HEAD>
<P>(a) <I>General.</I> Formula expenses represent the costs of services and materials needed by a well-run PHA to sustain the project. These costs include items such as administration, maintenance, and utilities. HUD also determines a PHA's formula expenses at a project level. HUD uses the following three factors to determine the overall formula expense level for each project:
</P>
<P>(1)The project expense level (PEL) (calculated in accordance with § 990.165);
</P>
<P>(2) The utilities expense level (UEL) (calculated in accordance with §§ 990.170, 990.175, 990.180, and 990.185); and
</P>
<P>(3)Other formula expenses (add-ons) (calculated in accordance with § 990.190).
</P>
<P>(b) <I>PEL, UEL, and Add-ons.</I> Each project of a PHA has a unique PEL and UEL. The PEL for each project is based on ten characteristics and certain adjustments described in § 990.165. The PEL represents the normal expenses of operating public housing projects, such as maintenance and administration costs. The UEL for each project represents utility expenses. Utility expense levels are based on an incentive system aimed at reducing utility expenses. Both the PEL and UEL are expressed in PUM costs. The expenses not included in these expense levels and which are unique to PHAs are titled “other formula expenses (add-ons)” and are expressed in a dollar amount.
</P>
<P>(c) <I>Calculating project formula expense.</I> The formula expense of any one project is the sum of the project's PEL and the UEL, multiplied by the total EUMs specific to the project, plus the add-ons.


</P>
</DIV8>


<DIV8 N="§ 990.165" NODE="24:4.1.3.1.23.3.41.2" TYPE="SECTION">
<HEAD>§ 990.165   Computation of project expense level (PEL).</HEAD>
<P>(a) <I>Computation of PEL.</I> The PEL is calculated in terms of PUM cost and represents the costs associated with the project, except for utility and add-on costs. Costs associated with the PEL are administration, management fees, maintenance, protective services, leasing, occupancy, staffing, and other expenses, such as project insurance. HUD will calculate the PEL using regression analysis and benchmarking for the actual costs of Federal Housing Administration (FHA) projects to estimate costs for public housing projects. HUD will use the ten variables described in paragraph (b) of this section and their associated coefficient (<I>i.e.</I>, values that are expressed in percentage terms) to produce a PEL.
</P>
<P>(b) <I>Variables.</I> The ten variables are:
</P>
<P>(1) Size of project (number of units);
</P>
<P>(2) Age of property (Date of Full Availability (DOFA));
</P>
<P>(3) Bedroom mix;
</P>
<P>(4) Building type;
</P>
<P>(5) Occupancy type (family or senior);
</P>
<P>(6) Location (an indicator of the type of community in which a property is located; location types include rural, city central metropolitan, and non-city central metropolitan (suburban) areas);
</P>
<P>(7) Neighborhood poverty rate;
</P>
<P>(8) Percent of households assisted;
</P>
<P>(9) Ownership type (profit, non-profit, or limited dividend); and
</P>
<P>(10) Geographic.
</P>
<P>(c) <I>Cost adjustments.</I> HUD will apply four adjustments to the PEL. The adjustments are:
</P>
<P>(1) Application of a $200 PUM floor for any senior property and a $215 PUM floor for any family property;
</P>
<P>(2) Application of a $420 PUM ceiling for any property except for New York City Housing Authority projects, which have a $480 PUM ceiling;
</P>
<P>(3) Application of a four percent reduction for any PEL calculated over $325 PUM, with the reduction limited so that a PEL will not be reduced to less than $325; and
</P>
<P>(4) The reduction of audit costs as reported for FFY 2003 in a PUM amount.
</P>
<P>(d) <I>Annual inflation factor.</I> The PEL for each project shall be adjusted annually, beginning in 2005, by the local inflation factor. The local inflation factor shall be the HUD-determined weighted average percentage increase in local government wages and salaries for the area in which the PHA is located, and non-wage expenses.
</P>
<P>(e) <I>Calculating a PEL.</I> To calculate a specific PEL for a given property, the sum of the coefficients for nine variables (all variables except ownership type) shall be added to a formula constant. The exponent of that sum shall be multiplied by a percentage to reflect the non-profit ownership type, which will produce an unadjusted PEL. For the calculation of the initial PEL, the cost adjustments described in paragraphs (c)(1), (c)(2), and (c)(3) of this section will be applied. After these initial adjustments are applied, the audit adjustment described in paragraph (c)(4) of this section will be applied to arrive at the PEL in year 2000 dollars. After the PEL in year 2000 dollars is created, the annual inflation factor as described in paragraph (d) of this section will be applied cumulatively to this number through 2004 to yield an initial PEL in terms of current dollars.
</P>
<P>(f) <I>Calculation of the PEL for Moving to Work PHAs.</I> PHAs participating in the Moving to Work (MTW) Demonstration authorized under section 204 of the Omnibus Consolidated Rescissions and Appropriations Act of 1996 (Pub. L. 104-134, approved April 26, 1996) shall receive an operating subsidy as provided in Attachment A of their MTW Agreements executed prior to November 18, 2005. PHAs with an MTW Agreement will continue to have the right to request extensions of or modifications to their MTW Agreements.
</P>
<P>(g) <I>Calculation of the PELs for mixed-finance developments.</I> If, prior to November 18, 2005, a PHA has either a mixed-finance arrangement that has closed or has filed documents in accordance with 24 CFR 941.606 for a mixed-finance transaction, then the project covered by the mixed-finance transaction will receive funding based on the higher of its former Allowable Expense Level or the new computed PEL.
</P>
<P>(h) <I>Calculation of PELs when data are inadequate or unavailable.</I> When sufficient data are unavailable for the calculation of a PEL, HUD may calculate a PEL using an alternative methodology. The characteristics may be used from similarly situated properties.
</P>
<P>(i) <I>Review of PEL methodology by advisory committee.</I> In 2009, HUD will convene a meeting with representation of appropriate stakeholders, to review the methodology to evaluate the PEL based on actual cost data. The meeting shall be convened in accordance with the Federal Advisory Committee Act (5 U.S.C. Appendix) (FACA). HUD may determine appropriate funding levels for each project to be effective in FY 2011 after following appropriate rulemaking procedures.


</P>
</DIV8>


<DIV8 N="§ 990.170" NODE="24:4.1.3.1.23.3.41.3" TYPE="SECTION">
<HEAD>§ 990.170   Computation of utilities expense level (UEL): Overview.</HEAD>
<P>(a) <I>General.</I> The UEL for each PHA is based on its consumption for each utility, the applicable rates for each utility, and an applicable inflation factor. The UEL for a given funding period is the product of the utility rate multiplied by the payable consumption level multiplied by the inflation factor. The UEL is expressed in terms of PUM costs.
</P>
<P>(b) <I>Utility rate.</I> The utility rate for each type of utility will be the actual average rate from the most recent 12-month period that ended June 30th prior to the beginning of the applicable funding period. The rate will be calculated by dividing the actual utility cost by the actual utility consumption, with consideration for pass-through costs (<I>e.g.</I>, state and local utility taxes, tariffs) for the time period specified in this paragraph.
</P>
<P>(c) <I>Payable consumption level.</I> The payable consumption level is based on the current consumption level adjusted by a utility consumption incentive. The incentive shall be computed by comparing current consumption levels of each utility to the rolling base consumption level. If the comparison reflects a decrease in the consumption of a utility, the PHA shall retain 75 percent of this decrease. Alternately, if the comparison reflects an increase in the consumption of a utility, the PHA shall absorb 75 percent of this increase.
</P>
<P>(d) <I>Inflation factor for utilities.</I> The UEL shall be adjusted annually by an inflation/deflation factor based upon the fuels and utilities component of the United States Department of Labor, Bureau of Labor Statistics (BLS) Consumer Price Index for All Urban Consumers (CPI-U). The annual adjustment to the UEL shall reflect the most recently published and localized data available from BLS at the time the annual adjustment is calculated.
</P>
<P>(e) <I>Increases in tenant utility allowances.</I> Increases in tenant utility allowances, as a component of the formula income, as described in § 990.195, shall result in a commensurate increase of operating subsidy. Decreases in such utility allowances shall result in a commensurate decrease in operating subsidy.
</P>
<P>(f) <I>Records and reporting.</I> (1) Appropriate utility records, satisfactory to HUD, shall be developed and maintained, so that consumption and rate data can be determined.
</P>
<P>(2) All records shall be kept by utility and by project for each 12-month period ending June 30th.
</P>
<P>(3) HUD will notify each PHA when HUD has the automated systems capacity to receive such information. Each PHA then will be obligated to provide consumption and cost data to HUD for all utilities for each project.
</P>
<P>(4) If a PHA has not maintained or cannot recapture utility data from its records for a particular utility, the PHA shall compute the UEL by:
</P>
<P>(i) Using actual consumption data for the last complete year(s) of available data or data of comparable project(s) that have comparable utility delivery systems and occupancy, in accordance with a method prescribed by HUD; or
</P>
<P>(ii) Requesting field office approval to use actual PUM utility expenses for its UEL in accordance with a method prescribed by HUD when the PHA cannot obtain necessary data to calculate the UEL in accordance with paragraph (f)(4)(i) of this section.


</P>
</DIV8>


<DIV8 N="§ 990.175" NODE="24:4.1.3.1.23.3.41.4" TYPE="SECTION">
<HEAD>§ 990.175   Utilities expense level: Computation of the current consumption level.</HEAD>
<P>The current consumption level shall be the actual amount of each utility consumed during the 12-month period ending June 30th that is 6 months prior to the first day of the applicable funding period.


</P>
</DIV8>


<DIV8 N="§ 990.180" NODE="24:4.1.3.1.23.3.41.5" TYPE="SECTION">
<HEAD>§ 990.180   Utilities expense level: Computation of the rolling base consumption level.</HEAD>
<P>(a) <I>General.</I> (1) The rolling base consumption level (RBCL) shall be equal to the average of yearly consumption levels for the 36-month period ending on the June 30th that is 18 months prior to the first day of the applicable funding period.
</P>
<P>(2) The yearly consumption level is the actual amount of each utility consumed during a 12-month period ending June 30th. For example, for the funding period January 1, 2006, through December 31, 2006, the RBCL will be the average of the following yearly consumption levels:
</P>
<P>(i) Year 1 = July 1, 2001, through June 30, 2002.
</P>
<P>(ii) Year 2 = July 1, 2002, through June 30, 2003.
</P>
<P>(iii) Year 3 = July 1, 2003, through June 30, 2004.
</P>
<NOTE>
<HED>Note to paragraph (<E T="01">a</E>)(2):</HED>
<P>In this example, the current year's consumption level will be July 1, 2004, through June 30, 2005.</P></NOTE>
<P>(b) <I>Distortions to rolling base consumption level.</I> The PHA shall have its RBCL determined so as not to distort the rolling base period in accordance with a method prescribed by HUD if:
</P>
<P>(1) A project has not been in operation during at least 12 months of the rolling base period;
</P>
<P>(2) A project enters or exits management after the rolling base period and prior to the end of the applicable funding period; or
</P>
<P>(3) A project has experienced a conversion from one energy source to another, switched from PHA-supplied to resident-purchased utilities during or after the rolling base period, or for any other reason that would cause the RBCL not to be comparable to the current year's consumption level.
</P>
<P>(c) <I>Financial incentives.</I> The three-year rolling base for all relevant utilities will be adjusted to reflect any financial incentives to the PHA to reduce consumption as described in § 990.185.


</P>
</DIV8>


<DIV8 N="§ 990.185" NODE="24:4.1.3.1.23.3.41.6" TYPE="SECTION">
<HEAD>§ 990.185   Utilities expense level: Incentives for energy conservation/rate reduction.</HEAD>
<P>(a) <I>General/consumption reduction.</I> If a PHA undertakes energy conservation measures that are financed by an entity other than HUD, the PHA may qualify for the incentives available under this section. For a PHA to qualify for these incentives, the PHA must enter into a contract to finance the energy conservation measures, and must obtain HUD approval. Such approval shall be based on a determination that payments under a contract can be funded from reasonably anticipated energy cost savings. The contract period shall not exceed 20 years. The energy conservation measures may include, but are not limited to: Physical improvements financed by a loan from a bank, utility, or governmental entity; management of costs under the performance contract; or a shared savings agreement with a private energy service company. All such contracts shall be known as energy performance contracts. PHAs may extend an executed energy performance contract with a term of less than 20 years to a term of not more than 20 years, to permit additional energy conservation improvements without the reprocurement of energy performance contractors. The PHA must obtain HUD approval to extend the term of an executed energy performance contract.
</P>
<P>(1) <I>Frozen rolling base.</I> (i) If a PHA undertakes energy conservation measures that are approved by HUD, the RBCL for the project and the utilities involved may be frozen during the contract period. Before the RBCL is frozen, it must be adjusted to reflect any energy savings resulting from the use of any HUD funding. The RBCL also may be adjusted to reflect systems repaired to meet applicable building and safety codes as well as to reflect adjustments for occupancy rates increased by rehabilitation. The RBCL shall be frozen at the level calculated for the year during which the conservation measures initially shall be implemented.
</P>
<P>(ii) The PHA operating subsidy eligibility shall reflect the retention of 100 percent of the savings from decreased consumption until the term of the financing agreement is complete. The PHA must use at least 75 percent of the cost savings to pay off the debt, <I>e.g.</I>, pay off the contractor or bank loan. If less than 75 percent of the cost savings is used for debt payment, however, HUD shall retain the difference between the actual percentage of cost savings used to pay off the debt and 75 percent of the cost savings. If at least 75 percent of the cost savings is paid to the contractor or bank, the PHA may use the full amount of the remaining cost savings for any eligible operating expense.
</P>
<P>(iii) The annual three-year rolling base procedures for computing the RBCL shall be reactivated after the PHA satisfies the conditions of the contract. The three years of consumption data to be used in calculating the RBCL after the end of the contract period shall be the yearly consumption levels for the final three years of the contract.
</P>
<P>(2) PHAs undertaking energy conservation measures that are financed by an entity other than HUD may include resident-paid utilities under the consumption reduction incentive, using the following methodology:
</P>
<P>(i) The PHA reviews and updates all utility allowances to ascertain that residents are receiving the proper allowances before energy savings measures are begun;
</P>
<P>(ii) The PHA makes future calculations of rental income for purposes of the calculation of operating subsidy eligibility based on these baseline allowances. In effect, HUD will freeze the baseline allowances for the duration of the contract;
</P>
<P>(iii) After implementation of the energy conservation measures, the PHA updates the utility allowances in accordance with provisions in 24 CFR part 965, subpart E. The new allowance should be lower than baseline allowances;
</P>
<P>(iv) The PHA uses at least 75 percent of the savings for paying the cost of the improvement (the PHA will be permitted to retain 100 percent of the difference between the baseline allowances and revised allowances);
</P>
<P>(v) After the completion of the contract period, the PHA begins using the revised allowances in calculating its operating subsidy eligibility; and
</P>
<P>(vi) The PHA may exclude from its calculation of rental income the increased rental income due to the difference between the baseline allowances and the revised allowances of the projects involved, for the duration of the contract period.
</P>
<P>(3) <I>Subsidy add-on.</I> (i) If a PHA qualifies for this incentive (i.e., the subsidy add-on, in accordance with the provisions of paragraph (a) of this section), then the PHA is eligible for additional operating subsidy each year of the contract to amortize the cost of the loan for the energy conservation measures and other direct costs related to the energy project under the contract during the term of the contract subject to the provisions of this paragraph (a)(3) of this section. The PHA's operating subsidy for the current funding year will continue to be calculated in accordance with paragraphs (a), (b), and (c) of § 990.170 (<I>i.e.</I>, the rolling base is not frozen). The PHA will be able to retain part of the cost savings in accordance with § 990.170(c).
</P>
<P>(ii) The actual cost of energy (of the type affected by the energy conservation measure) after implementation of the energy conservation measure will be subtracted from the expected energy cost, to produce the energy cost savings for the year.
</P>
<P>(iii) If the cost savings for any year during the contract period are less than the amount of operating subsidy to be made available under this paragraph to pay for the energy conservation measure in that year, the deficiency will be offset against the PHA's operating subsidy eligibility for the PHA's next fiscal year.
</P>
<P>(iv) If energy cost savings are less than the amount necessary to meet amortization payments specified in a contract, the contract term may be extended (up to the 20-year limit) if HUD determines that the shortfall is the result of changed circumstances, rather than a miscalculation or misrepresentation of projected energy savings by the contractor or PHA. The contract term may be extended only to accommodate payment to the contractor and associated direct costs.
</P>
<P>(b) <I>Rate reduction.</I> If a PHA takes action beyond normal public participation in rate-making proceedings, such as well-head purchase of natural gas, administrative appeals, or legal action to reduce the rate it pays for utilities, then the PHA will be permitted to retain one-half the annual savings realized from these actions.
</P>
<P>(c) <I>Utility benchmarking.</I> HUD will pursue benchmarking utility consumption at the project level as part of the transition to asset management. HUD intends to establish benchmarks by collecting utility consumption and cost information on a project-by-project basis. In 2009, after conducting a feasibility study, HUD will convene a meeting with representation of appropriate stakeholders to review utility benchmarking options so that HUD may determine whether or how to implement utility benchmarking to be effective in FY 2011. The meeting shall be convened in accordance with the Federal Advisory Committee Act (5 U.S.C. Appendix) (FACA). The HUD study shall take into account typical levels of utilities consumption at public housing developments based upon factors such as building and unit type and size, temperature zones, age and construction of building, and other relevant factors.
</P>
<CITA TYPE="N">[70 FR 54997, Sept. 19, 2005, as amended at 73 FR 61352, Oct. 16, 2008]


</CITA>
</DIV8>


<DIV8 N="§ 990.190" NODE="24:4.1.3.1.23.3.41.7" TYPE="SECTION">
<HEAD>§ 990.190   Other formula expenses (add-ons).</HEAD>
<P>In addition to calculating operating subsidy based on the PEL and UEL, a PHA's eligible formula expenses shall be increased by add-ons. The allowed add-ons are:
</P>
<P>(a) <I>Self-sufficiency.</I> A PHA may request operating subsidy for the reasonable cost of program coordinator(s) and associated costs in accordance with HUD's self-sufficiency program regulations and notices.
</P>
<P>(b) <I>Energy loan amortization.</I> A PHA may qualify for operating subsidy for payments of principal and interest cost for energy conservation measures described in § 990.185(a)(3).
</P>
<P>(c) <I>Payments in lieu of taxes (PILOT).</I> Each PHA will receive an amount for PILOT in accordance with section 6(d) of the 1937 Act, based on its cooperation agreement or its latest actual PILOT payment.
</P>
<P>(d) <I>Cost of independent audits.</I> A PHA is eligible to receive operating subsidy equal to its most recent actual audit costs for the Operating Fund Program when an audit is required by the Single Audit Act (31 U.S.C. 7501-7507) (see 2 CFR part 200, subpart F) or when a PHA elects to prepare and submit such an audit to HUD. For the purpose of this rule, the most recent actual audit costs include the associated costs of an audit for the Operating Fund Program only. A PHA whose operating subsidy is determined to be zero based on the formula is still eligible to receive operating subsidy equal to its most recent actual audit costs. The most recent actual audit costs are used as a proxy to cover the cost of the next audit. If a PHA does not have a recent actual audit cost, the PHA working with HUD may establish an audit cost. A PHA that requests funding for an audit shall complete an audit. The results of the audit shall be transmitted in a time and manner prescribed by HUD.
</P>
<P>(e) <I>Funding for resident participation activities.</I> Each PHA's operating subsidy calculation shall include $25 per occupied unit per year for resident participation activities, including, but not limited to, those described in 24 CFR part 964. For purposes of this section, a unit is eligible to receive resident participation funding if it is occupied by a public housing resident or it is occupied by a PHA employee, or a police officer or other security personnel who is not otherwise eligible for public housing. In any fiscal year, if appropriations are not sufficient to meet all funding requirements under this part, then the resident participation component of the formula will be adjusted accordingly.
</P>
<P>(f) <I>Asset management fee.</I> Each PHA with at least 250 units shall receive a $4 PUM asset management fee. PHAs with fewer than 250 units that elect to transition to asset management shall receive an asset management fee of $2 PUM. PHAs with fewer than 250 units that elect to have their entire portfolio treated and considered as a single project as described in § 990.260(b) or PHAs with only one project will not be eligible for an asset management fee. For all PHAs eligible to receive the asset management fee, the fee will be based on the total number of ACC units. PHAs that are not in compliance with asset management as described in subpart H of this part by FY 2011 will forfeit this fee.
</P>
<P>(g) <I>Information technology fee.</I> Each PHA's operating subsidy calculation shall include $2 PUM for costs attributable to information technology. For all PHAs, this fee will be based on the total number of ACC units.
</P>
<P>(h) <I>Asset repositioning fee.</I> (1) A PHA that transitions projects or entire buildings of a project out of its inventory is eligible for an asset-repositioning fee. This fee supplements the costs associated with administration and management of demolition or disposition, tenant relocation, and minimum protection and service associated with such efforts. The asset-repositioning fee is not intended for individual units within a multi-unit building undergoing similar activities.
</P>
<P>(2) Projects covered by applications approved for demolition or disposition shall be eligible for an asset repositioning fee on the first day of the next quarter six months after the date the first unit becomes vacant after the relocation date included in the approved relocation plan. When this condition is met, the project and all associated units are no longer considered an EUM as described in § 990.155. Each PHA is responsible for accurately applying and maintaining supporting documentation on the start date of this transition period or is subject to forfeiture of this add-on.
</P>
<P>(3) Units categorized for demolition and which are eligible for an asset repositioning fee are eligible for operating subsidy at the rate of 75 percent PEL per unit for the first twelve months, 50 percent PEL per unit for the next twelve months, and 25 percent PEL per unit for the next twelve months.
</P>
<P>(4) Units categorized for disposition and which are eligible for an asset repositioning fee are eligible for operating subsidy at the rate of 75 percent PEL per unit for the first twelve months and 50 percent PEL per unit for the next twelve months.
</P>
<P>(5) The following is an example of how eligibility for an asset-repositioning fee is determined:
</P>
<P>(i) A PHA has HUD's approval to demolish (or dispose of) a 100-unit project from its 1,000 unit inventory. On January 12th, in conjunction with the PHA's approved Relocation Plan, a unit in that project becomes vacant. Accordingly, the demolition/disposition-approved project is eligible for an asset-repositioning fee on October 1st. (This date is calculated as follows: January 12th + six months = July 12th. The first day of the next quarter is October 1st.)
</P>
<P>(ii) Although payment of the asset-repositioning fee will not begin until October 1st, the PHA will receive its full operating subsidy based on the 1,000 units through September 30th. On October 1st the PHA will begin to receive the 36-month asset-repositioning fee in accordance with paragraph (h)(3) of this section for the 100 units approved for demolition. (Asset repositioning fee requirements for projects approved for disposition are found in paragraph (h)(4) of this section.) On October 1st, the PHA's units will be 900.
</P>
<P>(i) <I>Costs attributable to changes in Federal law, regulation, or economy.</I> In the event that HUD determines that enactment of a Federal law or revision in HUD or other Federal regulations has caused or will cause a significant change in expenditures of a continuing nature above the PEL and UEL, HUD may, at HUD's sole discretion, decide to prescribe a procedure under which the PHA may apply for or may receive an adjustment in operating subsidy.
</P>
<CITA TYPE="N">[70 FR 54997, Sept. 19, 2005, as amended at 80 FR 75943, Dec. 7, 2015]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:4.1.3.1.23.4" TYPE="SUBPART">
<HEAD>Subpart D—Calculating Formula Income</HEAD>


<DIV8 N="§ 990.195" NODE="24:4.1.3.1.23.4.41.1" TYPE="SECTION">
<HEAD>§ 990.195   Calculation of formula income.</HEAD>
<P>(a) <I>General.</I> For the purpose of the formula, formula income is equal to the amount of rent charged to tenants divided by the respective unit months leased, and is therefore expressed as a PUM. Formula income will be derived from a PHA's year-end financial information. The financial information used in the formula income computation will be the audited information provided by the PHA through HUD's information systems. The information will be calculated using the following PHA fiscal year-end information:
</P>
<P>(1) April 1, 2003, through March 31, 2004;
</P>
<P>(2) July 1, 2003, through June 30, 2004;
</P>
<P>(3) October 1, 2003, through September 30, 2004; and
</P>
<P>(4) January 1, 2004, through December 31, 2004.
</P>
<P>(b) <I>Calculation of formula income.</I> To calculate formula income in whole dollars, the PUM amount will be multiplied by the EUMs as described in subpart B of this part.
</P>
<P>(c) <I>Frozen at 2004 level.</I> After a PHA's formula income is calculated as described in paragraph (a) of this section, it will not be recalculated or inflated for fiscal years 2007 through 2009, unless a PHA can show a severe local economic hardship that is impacting the PHA's ability to maintain some semblance of its formula income (see subpart G of this part—Appeals). A PHA's formula income may be recalculated if the PHA appeals to HUD for an adjustment in its formula.
</P>
<P>(d) <I>Calculation of formula income when data are inadequate or unavailable.</I> When audited data are unavailable in HUD's information systems for the calculation of formula income, HUD may use an alternative methodology, including, but not limited to, certifications, hard copy reports, and communications with the respective PHAs.
</P>
<P>(e) <I>Inapplicability of 24 CFR 85.25 (as revised April 1, 2013).</I> Formula income is not subject to the provisions regarding program income in 24 CFR 85.25 (as revised April 1, 2013).
</P>
<CITA TYPE="N">[70 FR 54997, Sept. 19, 2005; 70 FR 61367, Oct. 24, 2005; 80 FR 75943, Dec. 7, 2015]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:4.1.3.1.23.5" TYPE="SUBPART">
<HEAD>Subpart E—Determination and Payment of Operating Subsidy</HEAD>


<DIV8 N="§ 990.200" NODE="24:4.1.3.1.23.5.41.1" TYPE="SECTION">
<HEAD>§ 990.200   Determination of formula amount.</HEAD>
<P>(a) <I>General.</I> The amount of operating subsidy that a PHA is eligible for is the difference between its formula expenses (as calculated under subpart C of this part) and its formula income (as calculated under subpart D of this part).
</P>
<P>(b) <I>Use of HUD databases to calculate formula amount.</I> HUD shall utilize its databases to make the formula calculations. HUD's databases are intended to be employed to provide information on all primary factors in determining the operating subsidy amount. Each PHA is responsible for supplying accurate information on the status of each of its units in HUD's databases.
</P>
<P>(c) <I>PHA responsibility to submit timely data.</I> PHAs shall submit data used in the formula on a regular and timely basis to ensure accurate calculation under the formula. If a PHA fails to provide accurate data, HUD will make a determination as to the PHA's inventory, occupancy, and financial information using available or verified data, which may result in a lower operating subsidy. HUD has the right to adjust any or all formula amounts based on clerical, mathematical, and information system errors that affect any of the data elements used in the calculation of the formula.


</P>
</DIV8>


<DIV8 N="§ 990.205" NODE="24:4.1.3.1.23.5.41.2" TYPE="SECTION">
<HEAD>§ 990.205   Fungibility of operating subsidy between projects.</HEAD>
<P>(a) <I>General.</I> Operating subsidy shall remain fully fungible between ACC projects until operating subsidy is calculated by HUD at a project level. After subsidy is calculated at a project level, operating subsidy can be transferred as the PHA determines during the PHA's fiscal year to another ACC project(s) if a project's financial information, as described more fully in § 990.280, produces excess cash flow, and only in the amount up to those excess cash flows.
</P>
<P>(b) Notwithstanding the provisions of paragraph (a) of this section and subject to all of the other provisions of this part, the New York City Housing Authority's Development Grant Project Amendment Number 180, dated July 13, 1995, to Consolidated Annual Contributions Contract NY-333, remains in effect.


</P>
</DIV8>


<DIV8 N="§ 990.210" NODE="24:4.1.3.1.23.5.41.3" TYPE="SECTION">
<HEAD>§ 990.210   Payment of operating subsidy.</HEAD>
<P>(a) <I>Payments of operating subsidy under the formula.</I> HUD shall make monthly payments equal to 
<FR>1/12</FR> of a PHA's total annual operating subsidy under the formula by electronic funds transfers through HUD's automated disbursement system. HUD shall establish thresholds that permit PHAs to request monthly installments. Requests by PHAs that exceed these thresholds will be subject to HUD review. HUD approvals of requests that exceed these thresholds are limited to PHAs that have an unanticipated and immediate need for disbursement.
</P>
<P>(b) <I>Payments procedure.</I> In the event that the amount of operating subsidy has not been determined by HUD as of the beginning of the funding period, operating subsidy shall be provided monthly, quarterly, or annually based on the amount of the PHA's previous year's formula or another amount that HUD may determine to be appropriate.
</P>
<P>(c) <I>Availability of funds.</I> In the event that insufficient funds are available, HUD shall have discretion to revise, on a pro rata basis, the amounts of operating subsidy to be paid to PHAs.


</P>
</DIV8>


<DIV8 N="§ 990.215" NODE="24:4.1.3.1.23.5.41.4" TYPE="SECTION">
<HEAD>§ 990.215   Payments of operating subsidy conditioned upon reexamination of income of families in occupancy.</HEAD>
<P>(a) <I>General.</I> Each PHA is required to reexamine the income of each family in accordance with the provisions of the ACC, the 1937 Act, and HUD regulations. Income reexaminations shall be performed annually, except as provided in the 1937 Act, in HUD regulations, or in the MTW agreements. A PHA must be in compliance with all reexamination requirements in order to be eligible to receive full operating subsidy. A PHA's calculations of rent and utility allowances shall be accurate and timely.
</P>
<P>(b) <I>A PHA in compliance.</I> A PHA shall submit a certification that states that the PHA is in compliance with the annual income reexamination requirements and its rent and utility allowance calculations have been or will be adjusted in accordance with current HUD requirements and regulations.
</P>
<P>(c) <I>A PHA not in compliance.</I> Any PHA not in compliance with annual income reexamination requirements at the time of the submission of the calculation of operating subsidy shall furnish to the responsible HUD field office a copy of the procedures it is using to achieve compliance and a statement of the number of families that have undergone reexamination during the 12 months preceding the current funding cycle. If, on the basis of this submission or any other information, HUD determines that the PHA is not substantially in compliance with all of the annual income reexamination requirements, HUD shall withhold payments to which the PHA may be entitled under this part. Payment may be withheld in an amount equal to HUD's estimate of the loss of rental income to the PHA resulting from its failure to comply with the requirements.


</P>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:4.1.3.1.23.6" TYPE="SUBPART">
<HEAD>Subpart F—Transition Policy and Transition Funding</HEAD>


<DIV8 N="§ 990.220" NODE="24:4.1.3.1.23.6.41.1" TYPE="SECTION">
<HEAD>§ 990.220   Purpose.</HEAD>
<P>This policy is aimed at assisting all PHAs in transitioning to the new funding levels as determined by the formula set forth in this rule. PHAs will be subject to a transition funding policy that will either increase or reduce their total operating subsidy for a given year.


</P>
</DIV8>


<DIV8 N="§ 990.225" NODE="24:4.1.3.1.23.6.41.2" TYPE="SECTION">
<HEAD>§ 990.225   Transition determination.</HEAD>
<P>The determination of the amount and period of the transition funding shall be based on the difference in subsidy levels between the formula set forth in this part and the formula in effect prior to implementation of the formula set forth in this part. The difference in subsidy levels will be calculated using FY 2004 data. When actual data are not available for one of the formula components needed to calculate the formula of this part for FY 2004, HUD will use alternate data as a substitute (<I>e.g.</I>, unit months available for eligible unit months, etc.) If the difference between these formulas indicates that a PHA shall have its operating subsidy reduced as a result of this formula, the PHA will be subject to a transition policy as indicated in § 990.230. If the difference between these formulas indicates that a PHA will have its operating subsidy increased as a result of this formula, the PHA will be subject to the transition policy as indicated in § 990.235.
</P>
<CITA TYPE="N">[70 FR 54997, Sept. 19, 2005; 70 FR 61367, Oct. 24, 2005]


</CITA>
</DIV8>


<DIV8 N="§ 990.230" NODE="24:4.1.3.1.23.6.41.3" TYPE="SECTION">
<HEAD>§ 990.230   PHAs that will experience a subsidy reduction.</HEAD>
<P>(a) For PHAs that will experience a reduction in their operating subsidy, as determined in § 990.225, such reductions will have a limit of:
</P>
<P>(1) 5 percent of the difference between the two funding levels in the first year of implementation of the formula contained in this part;
</P>
<P>(2) 24 percent of the difference between the two funding levels in the second year of implementation of the formula contained in this part;
</P>
<P>(3) 43 percent of the difference between the two levels in the third year of implementation of the formula contained in this part;
</P>
<P>(4) 62 percent of the difference between the two levels in the fourth year of implementation of the formula contained in this part; and
</P>
<P>(5) 81 percent of the difference between the two levels in the fifth year of implementation of the formula contained in this part.
</P>
<P>(b) The full amount of the reduction in the operating subsidy level shall be realized in the sixth year of implementation of the formula contained in this part.
</P>
<P>(c) For example, a PHA has a subsidy reduction from $1 million, under the formula in effect prior to implementation of the formula contained in this part, to $900,000, under the formula contained in this part using FY 2004 data. The difference would be calculated at $100,000 ($1 million − $900,000 = $100,000). In the first year, the subsidy reduction would be limited to $5,000 (5 percent of the difference). Thus, the PHA would receive an operating subsidy amount pursuant to this rule plus a transition-funding amount of $95,000 (the $100,000 difference between the two subsidy amounts minus the $5,000 reduction limit).
</P>
<P>(d) If a PHA can demonstrate a successful conversion to the asset management requirements of subpart H of this part, as determined under paragraph (f) of this section, HUD will discontinue the reduction at the PHA's next subsidy calculation following such demonstration, as reflected in the schedule in paragraph (e) of this section, notwithstanding § 990.290(c).
</P>
<P>(e) The schedule for successful demonstration of conversion to asset management for discontinuation of PHA subsidy reduction is reflected in the table below:
</P>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Stop-Loss Demonstration Time Line and Effective Dates
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Demonstration date by
</TH><TH class="gpotbl_colhed" scope="col">Applications due
</TH><TH class="gpotbl_colhed" scope="col">Reduction stopped at
</TH><TH class="gpotbl_colhed" scope="col">Reduction effective for
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">September 30, 2007</TD><TD align="left" class="gpotbl_cell">October 15, 2007</TD><TD align="left" class="gpotbl_cell">5 percent of the PUM difference</TD><TD align="left" class="gpotbl_cell">Calendar Year 2007 and thereafter.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">April 1, 2008</TD><TD align="left" class="gpotbl_cell">April 15, 2008</TD><TD align="left" class="gpotbl_cell">24 percent of the PUM difference</TD><TD align="left" class="gpotbl_cell">Calendar Year 2008 and thereafter.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">October 1, 2008</TD><TD align="left" class="gpotbl_cell">October 15, 2008</TD><TD align="left" class="gpotbl_cell">43 percent of the PUM difference</TD><TD align="left" class="gpotbl_cell">Calendar Year 2009 and thereafter.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">October 1, 2009</TD><TD align="left" class="gpotbl_cell">October 15, 2009</TD><TD align="left" class="gpotbl_cell">62 percent of the PUM difference</TD><TD align="left" class="gpotbl_cell">Calendar Year 2010 and thereafter.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">October 1, 2010</TD><TD align="left" class="gpotbl_cell">October 15, 2010</TD><TD align="left" class="gpotbl_cell">81 percent of the PUM difference</TD><TD align="left" class="gpotbl_cell">Calendar Year 2011 and thereafter.</TD></TR></TABLE></DIV></DIV>
<P>(f)(1) For purposes of this section, compliance with the asset management requirements of subpart H of this part will be based on an independent assessment conducted by a HUD-approved professional familiar with property management practices in the region or state in which the PHA is located.
</P>
<P>(2) A PHA must select from a list of HUD-approved professionals to conduct the independent assessment. The professional review and recommendation will then be forwarded to the Assistant Secretary for Public and Indian Housing (or designee) for final determination of compliance with the asset management requirements of subpart H of this part.
</P>
<P>(3) Upon completion of the independent assessment, the assessor shall conduct an exit conference with the PHA. In response to the exit conference, the PHA may submit a management response and other pertinent information (including, but not limited to, an additional assessment procured at the PHAs' own expense) within ten working days of the exit conference to be included in the report submitted to HUD.
</P>
<P>(4) In the event that HUD is unable to produce a list of independent assessors on a timely basis, the PHA may submit its own demonstration of a successful conversion to asset management directly to HUD for determination of compliance.
</P>
<P>(5) The Assistant Secretary for Public and Indian Housing (or designee) shall consider all information submitted and respond with a final determination of compliance within 60 days of the independent assessor's report being submitted to HUD.
</P>
<CITA TYPE="N">[70 FR 54997, Sept. 19, 2005; 70 FR 61367, Oct. 24, 2005, as amended at 72 FR 45874, Aug. 15, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 990.235" NODE="24:4.1.3.1.23.6.41.4" TYPE="SECTION">
<HEAD>§ 990.235   PHAs that will experience a subsidy increase.</HEAD>
<P>(a) For PHAs that will experience a gain in their operating subsidy, as determined in § 990.225, such increases will have a limit of 50 percent of the difference between the two funding levels in the first year following implementation of the formula contained in this part.
</P>
<P>(b) The full amount of the increase in the operating subsidy level shall be realized in the second year following implementation of the formula contained in this part.
</P>
<P>(c) For example, a PHA's subsidy increased from $900,000 under the formula in effect prior to implementation of the formula contained in this part to $1 million under the formula contained in this part using FY 2004 data. The difference would be calculated at $100,000 ($1 million−$900,000 = $100,000). In the first year, the subsidy increase would be limited to $50,000 (50 percent of the difference). Thus, in this example the PHA will receive the operating subsidy amount of this rule minus a transition-funding amount of $50,000 (the $100,000 difference between the two subsidy amounts minus the $50,000 transition amount).
</P>
<P>(d) The schedule for a PHA whose subsidy would be increased is reflected in the table below.
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Funding
<br/>period 
</TH><TH class="gpotbl_colhed" scope="col">Increase limited to 
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Year 1</TD><TD align="left" class="gpotbl_cell">50 percent of the difference.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Year 2</TD><TD align="left" class="gpotbl_cell">Full increase reached.</TD></TR></TABLE></DIV></DIV>
<CITA TYPE="N">[70 FR 54997, Sept. 19, 2005; 70 FR 61367, Oct. 24, 2005]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:4.1.3.1.23.7" TYPE="SUBPART">
<HEAD>Subpart G—Appeals</HEAD>


<DIV8 N="§ 990.240" NODE="24:4.1.3.1.23.7.41.1" TYPE="SECTION">
<HEAD>§ 990.240   General.</HEAD>
<P>(a) PHAs will be provided opportunities for appeals. HUD will provide up to a two percent hold-back of the Operating Fund appropriation for FY 2006 and FY 2007. HUD will use the hold-back amount to fund appeals that are filed during each of these fiscal years. Hold-back funds not utilized will be added back to the formula within each of the affected fiscal years.
</P>
<P>(b) Appeals are voluntary and must cover an entire portfolio, not single projects. However, the Assistant Secretary for Public and Indian Housing (or designee) has the discretion to accept appeals of less than an entire portfolio for PHAs with greater than 5,000 public housing units.


</P>
</DIV8>


<DIV8 N="§ 990.245" NODE="24:4.1.3.1.23.7.41.2" TYPE="SECTION">
<HEAD>§ 990.245   Types of appeals.</HEAD>
<P>(a) <I>Streamlined appeal.</I> This appeal would demonstrate that the application of a specific Operating Fund formula component has a blatant and objective flaw.
</P>
<P>(b) <I>Appeal of formula income for economic hardship.</I> After a PHA's formula income has been frozen, the PHA can appeal to have its formula income adjusted to reflect a severe local economic hardship that is impacting the PHA's ability to maintain rental and other revenue.
</P>
<P>(c) <I>Appeal for specific local conditions.</I> This appeal would be based on demonstrations that the model's predictions are not reliable because of specific local conditions. To be eligible, the affected PHA must demonstrate a variance of ten percent or greater in its PEL.
</P>
<P>(d) <I>Appeal for changing market conditions.</I> A PHA may appeal to receive operating subsidy for vacant units due to changing market conditions, after a PHA has taken aggressive marketing and outreach measures to rent these units. For example, a PHA could appeal if it is located in an area experiencing population loss or economic dislocations that faces a lack of demand for housing in the foreseeable future.
</P>
<P>(e) <I>Appeal to substitute actual project cost data.</I> A PHA may appeal its PEL if it can produce actual project cost data derived from actual asset management, as outlined in subpart H of this part, for a period of at least two years.


</P>
</DIV8>


<DIV8 N="§ 990.250" NODE="24:4.1.3.1.23.7.41.3" TYPE="SECTION">
<HEAD>§ 990.250   Requirements for certain appeals.</HEAD>
<P>(a) Appeals under § 990.245 (a) and (c) must be submitted once annually. Appeals under § 990.245 (a) and (c) must be submitted for new projects entering a PHA's inventory within one year of the applicable Date of Full Availability (DOFA).
</P>
<P>(b) Appeals under § 990.245 (c) and (e) are subject to the following requirements:
</P>
<P>(1) The PHA is required to acquire an independent cost assessment of its projects;
</P>
<P>(2) The cost of services for the independent cost assessment is to be paid by the appellant PHA;
</P>
<P>(3) The assessment is to be reviewed by a professional familiar with property management practices and costs in the region or state in which the appealing PHA is located. This professional is to be procured by HUD. The professional review and recommendation will then be forwarded to the Assistant Secretary for Public and Indian Housing (or designee) for final determination; and
</P>
<P>(4) If the appeal is granted, the PHA agrees to be bound to the independent cost assessment regardless of new funding levels.


</P>
</DIV8>

</DIV6>


<DIV6 N="H" NODE="24:4.1.3.1.23.8" TYPE="SUBPART">
<HEAD>Subpart H—Asset Management</HEAD>


<DIV8 N="§ 990.255" NODE="24:4.1.3.1.23.8.41.1" TYPE="SECTION">
<HEAD>§ 990.255   Overview.</HEAD>
<P>(a) PHAs shall manage their properties according to an asset management model, consistent with the management norms in the broader multi-family management industry. PHAs shall also implement project-based management, project-based budgeting, and project-based accounting, which are essential components of asset management. The goals of asset management are to:
</P>
<P>(1) Improve the operational efficiency and effectiveness of managing public housing assets;
</P>
<P>(2) Better preserve and protect each asset;
</P>
<P>(3) Provide appropriate mechanisms for monitoring performance at the property level; and
</P>
<P>(4) Facilitate future investment and reinvestment in public housing by public and private sector entities.
</P>
<P>(b) HUD recognizes that appropriate changes in its regulatory and monitoring programs may be needed to support PHAs to undertake the goals identified in paragraph (a) of this section.


</P>
</DIV8>


<DIV8 N="§ 990.260" NODE="24:4.1.3.1.23.8.41.2" TYPE="SECTION">
<HEAD>§ 990.260   Applicability.</HEAD>
<P>(a) PHAs that own and operate 250 or more dwelling rental units under title I of the 1937 Act, including units managed by a third-party entity (for example, a resident management corporation) but excluding section 8 units, are required to operate using an asset management model consistent with this subpart.
</P>
<P>(b) PHAs that own and operate fewer than 250 dwelling rental units may treat their entire portfolio as a single project. However, if a PHA selects this option, it will not receive the add-on for the asset management fee described in § 990.190(f).


</P>
</DIV8>


<DIV8 N="§ 990.265" NODE="24:4.1.3.1.23.8.41.3" TYPE="SECTION">
<HEAD>§ 990.265   Identification of projects.</HEAD>
<P>For purposes of this subpart, project means a public housing building or set of buildings grouped for the purpose of management. A project may be as identified under the ACC or may be a reasonable grouping of projects or portions of a project under the ACC. HUD shall retain the right to disapprove of a PHA's designation of a project. PHAs may group up to 250 scattered-site dwelling rental units into a single project.


</P>
</DIV8>


<DIV8 N="§ 990.270" NODE="24:4.1.3.1.23.8.41.4" TYPE="SECTION">
<HEAD>§ 990.270   Asset management.</HEAD>
<P>As owners, PHAs have asset management responsibilities that are above and beyond property management activities. These responsibilities include decision-making on topics such as long-term capital planning and allocation, the setting of ceiling or flat rents, review of financial information and physical stock, property management performance, long-term viability of properties, property repositioning and replacement strategies, risk management responsibilities pertaining to regulatory compliance, and those decisions otherwise consistent with the PHA's ACC responsibilities, as appropriate.


</P>
</DIV8>


<DIV8 N="§ 990.275" NODE="24:4.1.3.1.23.8.41.5" TYPE="SECTION">
<HEAD>§ 990.275   Project-based management (PBM).</HEAD>
<P>PBM is the provision of property-based management services that is tailored to the unique needs of each property, given the resources available to that property. These property management services include, but are not limited to, marketing, leasing, resident services, routine and preventive maintenance, lease enforcement, protective services, and other tasks associated with the day-to-day operation of rental housing at the project level. Under PBM, these property management services are arranged, coordinated, or overseen by management personnel who have been assigned responsibility for the day-to-day operation of that property and who are charged with direct oversight of operations of that property. Property management services may be arranged or provided centrally; however, in those cases in which property management services are arranged or provided centrally, the arrangement or provision of these services must be done in the best interests of the property, considering such factors as cost and responsiveness.


</P>
</DIV8>


<DIV8 N="§ 990.280" NODE="24:4.1.3.1.23.8.41.6" TYPE="SECTION">
<HEAD>§ 990.280   Project-based budgeting and accounting.</HEAD>
<P>(a) All PHAs covered by this subpart shall develop and maintain a system of budgeting and accounting for each project in a manner that allows for analysis of the actual revenues and expenses associated with each property. Project-based budgeting and accounting will be applied to all programs and revenue sources that support projects under an ACC (<I>e.g.</I>, the Operating Fund, the Capital Fund, etc.).
</P>
<P>(b)(1) Financial information to be budgeted and accounted for at a project level shall include all data needed to complete project-based financial statements in accordance with Accounting Principles Generally Accepted in the United States of America (GAAP), including revenues, expenses, assets, liabilities, and equity data. The PHA shall also maintain all records to support those financial transactions. At the time of conversion to project-based accounting, a PHA shall apportion its assets, liabilities, and equity to its respective projects and HUD-accepted central office cost centers.
</P>
<P>(2) Provided that the PHA complies with GAAP and other associated laws and regulations pertaining to financial management (<I>e.g.,</I> 2 CFR part 200it shall have the maximum amount of responsibility and flexibility in implementing project-based accounting.
</P>
<P>(3) Project-specific operating income shall include, but is not limited to, such items as project-specific operating subsidy, dwelling and non-dwelling rental income, excess utilities income, and other PHA or HUD-identified income that is project-specific for management purposes.
</P>
<P>(4) Project-specific operating expenses shall include, but are not limited to, direct administrative costs, utilities costs, maintenance costs, tenant services, protective services, general expenses, non-routine or capital expenses, and other PHA or HUD-identified costs which are project-specific for management purposes. Project-specific operating costs also shall include a property management fee charged to each project that is used to fund operations of the central office. Amounts that can be charged to each project for the property management fee must be reasonable. If the PHA contracts with a private management company to manage a project, the PHA may use the difference between the property management fee paid to the private management company and the fee that is reasonable to fund operations of the central office and other eligible purposes.
</P>
<P>(5) If the project has excess cash flow available after meeting all reasonable operating needs of the property, the PHA may use this excess cash flow for the following purposes:
</P>
<P>(i) Fungibility between projects as provided for in § 990.205.
</P>
<P>(ii) Charging each project a reasonable asset management fee that may also be used to fund operations of the central office. However, this asset management fee may be charged only if the PHA performs all asset management activities described in this subpart (including project-based management, budgeting, and accounting). Asset management fees are considered a direct expense.
</P>
<P>(iii) Other eligible purposes.
</P>
<P>(c) In addition to project-specific records, PHAs may establish central office cost centers to account for non-project specific costs (<I>e.g.</I>, human resources, Executive Director's office, etc.). These costs shall be funded from the property-management fees received from each property, and from the asset management fees to the extent these are available.
</P>
<P>(d) In the case where a PHA chooses to centralize functions that directly support a project (<I>e.g.</I>, central maintenance), it must charge each project using a fee-for-service approach. Each project shall be charged for the actual services received and only to the extent that such amounts are reasonable.
</P>
<CITA TYPE="N">[70 FR 54997, Sept. 19, 2005, as amended at 80 FR 75943, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 990.285" NODE="24:4.1.3.1.23.8.41.7" TYPE="SECTION">
<HEAD>§ 990.285   Records and reports.</HEAD>
<P>(a) Each PHA shall maintain project-based budgets and fiscal year-end financial statements prepared in accordance with GAAP and shall make these budgets and financial statements available for review upon request by interested members of the public.
</P>
<P>(b) Each PHA shall distribute the project-based budgets and year-end financial statements to the Chairman and to each member of the PHA Board of Commissioners, and to such other state and local public officials as HUD may specify.
</P>
<P>(c) Some or all of the project-based budgets and financial statements and information shall be required to be submitted to HUD in a manner and time prescribed by HUD.


</P>
</DIV8>


<DIV8 N="§ 990.290" NODE="24:4.1.3.1.23.8.41.8" TYPE="SECTION">
<HEAD>§ 990.290   Compliance with asset management requirements.</HEAD>
<P>(a) A PHA is considered in compliance with asset management requirements if it can demonstrate substantially, as described in paragraph (b) of this section, that it is managing according to this subpart.
</P>
<P>(b) Demonstration of compliance with asset management will be based on an independent assessment.
</P>
<P>(1) The assessment is to be conducted by a professional familiar with property management practices and costs in the region or state in which the PHA is located. This professional is to be procured by HUD.
</P>
<P>(2) The professional review and recommendation will then be forwarded to the Assistant Secretary for Public and Indian Housing (or designee) for final determination of compliance to asset management.
</P>
<P>(c) Upon HUD's determination of successful compliance with asset management, PHAs will then be funded based on this information pursuant to § 990.165(i).
</P>
<P>(d) PHAs must be in compliance with the project-based accounting and budgeting requirements in this subpart by FY 2007. PHAs must be in compliance with the remainder of the components of asset management by FY 2011.


</P>
</DIV8>

</DIV6>


<DIV6 N="I" NODE="24:4.1.3.1.23.9" TYPE="SUBPART">
<HEAD>Subpart I—Operating Subsidy for Properties Managed by Resident Management Corporations (RMCs)</HEAD>


<DIV8 N="§ 990.295" NODE="24:4.1.3.1.23.9.41.1" TYPE="SECTION">
<HEAD>§ 990.295   Resident Management Corporation operating subsidy.</HEAD>
<P>(a) <I>General.</I> This part applies to all projects managed by a Resident Management Corporation (RMC), including a direct funded RMC.
</P>
<P>(b) <I>Operating subsidy.</I> Subject to paragraphs (c) and (d) of this section, the amount of operating subsidy that a PHA or HUD provides a project managed by an RMC shall not be reduced during the three-year period beginning on the date the RMC first assumes management responsibility for the project.
</P>
<P>(c) <I>Change factors.</I> The operating subsidy for an RMC-managed project shall reflect changes in inflation, utility rates, and consumption, as well as changes in the number of units in the resident managed project.
</P>
<P>(d) <I>Exclusion of increased income.</I> Any increased income directly generated by activities by the RMC or facilities operated by the RMC shall be excluded from the calculation of the operating subsidy.
</P>
<P>(e) <I>Exclusion of technical assistance.</I> Any technical assistance the PHA provides to the RMC will not be included for purposes of determining the amount of funds provided to a project under paragraph (b) of this section.
</P>
<P>(f) The following conditions may not affect the amounts to be provided under this part to a project managed by an RMC:
</P>
<P>(1) <I>Income reduction.</I> Any reduction in the subsidy or total income of a PHA that occurs as a result of fraud, waste, or mismanagement by the PHA; and
</P>
<P>(2) <I>Change in total income.</I> Any change in the total income of a PHA that occurs as a result of project-specific characteristics when these characteristics are not shared by the project managed by the RMC.
</P>
<P>(g) <I>Other project income.</I> In addition to the operating subsidy calculated in accordance with this part and the amount of income derived from the project (from sources such as rents and charges), the management contract between the PHA and the RMC may specify that income be provided to the project from other legally available sources of PHA income.


</P>
</DIV8>


<DIV8 N="§ 990.300" NODE="24:4.1.3.1.23.9.41.2" TYPE="SECTION">
<HEAD>§ 990.300   Preparation of operating budget.</HEAD>
<P>(a) The RMC and the PHA must submit operating budgets and calculations of operating subsidy to HUD for approval in accordance with § 990.200. The budget will reflect all project expenditures and will identify the expenditures related to the responsibilities of the RMC and the expenditures that are related to the functions that the PHA will continue to perform.
</P>
<P>(b) For each project or part of a project that is operating in accordance with the ACC amendment relating to this subpart and in accordance with a contract vesting maintenance responsibilities in the RMC, the PHA will transfer into a sub-account of the operating reserve of the PHA an operating reserve for the RMC project. When all maintenance responsibilities for a resident-managed project are the responsibility of the RMC, the amount of the reserve made available to a project under this subpart will be the per-unit cost amount available to the PHA operating reserve, excluding all inventories, prepaids, and receivables at the end of the PHA fiscal year preceding implementation, multiplied by the number of units in the project operated. When some, but not all, maintenance responsibilities are vested in the RMC, the management contract between the PHA and RMC may provide for an appropriately reduced portion of the operating reserve to be transferred into the RMC's sub-account.
</P>
<P>(c) The RMC's use of the operating reserve is subject to all administrative procedures applicable to the conventionally owned public housing program. Any expenditure of funds from the reserve must be for eligible expenditures that are incorporated into an operating budget subject to approval by HUD.
</P>
<P>(d) Investment of funds held in the reserve will be in accordance with HUD regulations and guidance.


</P>
</DIV8>


<DIV8 N="§ 990.305" NODE="24:4.1.3.1.23.9.41.3" TYPE="SECTION">
<HEAD>§ 990.305   Retention of excess revenues.</HEAD>
<P>(a) Any income generated by an RMC that exceeds the income estimated for the income categories specified in the RMC's management contract must be excluded in subsequent years in calculating:
</P>
<P>(1) The operating subsidy provided to a PHA under this part; and
</P>
<P>(2) The funds the PHA provides to the RMC.
</P>
<P>(b) The RMC's management contract must specify the amount of income that is expected to be derived from the project (from sources such as rents and charges) and the amount of income to be provided to the project from the other sources of income of the PHA (such as operating subsidy under this part, interest income, administrative fees, and rents). These income estimates must be calculated consistent with HUD's administrative instructions. Income estimates may provide for adjustment of anticipated project income between the RMC and the PHA, based upon the management and other project-associated responsibilities (if any) that are to be retained by the PHA under the management contract.
</P>
<P>(c) Any revenues retained by an RMC under this section may be used only for purposes of improving the maintenance and operation of the project, establishing business enterprises that employ residents of public housing, or acquiring additional dwelling units for lower income families. Units acquired by the RMC will not be eligible for payment of operating subsidy.


</P>
</DIV8>

</DIV6>


<DIV6 N="J" NODE="24:4.1.3.1.23.10" TYPE="SUBPART">
<HEAD>Subpart J—Financial Management Systems, Monitoring, and Reporting</HEAD>


<DIV8 N="§ 990.310" NODE="24:4.1.3.1.23.10.41.1" TYPE="SECTION">
<HEAD>§ 990.310   Purpose—General policy on financial management, monitoring and reporting.</HEAD>
<P>All PHA financial management systems, reporting, and monitoring of program performance and financial reporting shall be in compliance with the requirements of 2 CFR part 200. Certain HUD requirements provide exceptions for additional specialized procedures that are determined by HUD to be necessary for the proper management of the program in accordance with the requirements of the 1937 Act and the ACC between each PHA and HUD.
</P>
<CITA TYPE="N">[70 FR 54997, Sept. 19, 2005, as amended at 80 FR 75943, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 990.315" NODE="24:4.1.3.1.23.10.41.2" TYPE="SECTION">
<HEAD>§ 990.315   Submission and approval of operating budgets.</HEAD>
<P>(a) Required documentation:
</P>
<P>(1) Prior to the beginning of its fiscal year, a PHA shall prepare an operating budget in a manner prescribed by HUD. The PHA's Board of Commissioners shall review and approve the budget by resolution. Each fiscal year, the PHA shall submit to HUD, in a time and manner prescribed by HUD, the approved Board resolution.
</P>
<P>(2) HUD may direct the PHA to submit its complete operating budget with detailed supporting information and the Board resolution if the PHA has breached the ACC contract, or for other reasons, which, in HUD's determination, threaten the PHA's future serviceability, efficiency, economy, or stability. When the PHA no longer is operating in a manner that threatens the future serviceability, efficiency, economy, or stability of the housing it operates, HUD will notify the PHA that it no longer is required to submit a complete operating budget with detailed supporting information to HUD for review and approval.
</P>
<P>(b) If HUD finds that an operating budget is incomplete, inaccurate, includes illegal or ineligible expenditures, contains mathematical errors or errors in the application of accounting procedures, or is otherwise unacceptable, HUD may, at any time, require the PHA to submit additional or revised information regarding the budget or revised budget.


</P>
</DIV8>


<DIV8 N="§ 990.320" NODE="24:4.1.3.1.23.10.41.3" TYPE="SECTION">
<HEAD>§ 990.320   Audits.</HEAD>
<P>All PHAs that receive financial assistance under this part shall submit an acceptable audit and comply with the audit requirements in 2 CFR part 200, subpart F.
</P>
<CITA TYPE="N">[70 FR 54997, Sept. 19, 2005, as amended at 80 FR 75943, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 990.325" NODE="24:4.1.3.1.23.10.41.4" TYPE="SECTION">
<HEAD>§ 990.325   Record retention requirements.</HEAD>
<P>The PHA shall retain all documents related to all financial management and activities funded under the Operating Fund for a period of five fiscal years after the fiscal year in which the funds were received.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="1000" NODE="24:4.1.3.1.24" TYPE="PART">
<HEAD>PART 1000—NATIVE AMERICAN HOUSING ACTIVITIES
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>25 U.S.C. 4101 <I>et seq.;</I> 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>63 FR 12349, Mar. 12, 1998, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.3.1.24.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 1000.1" NODE="24:4.1.3.1.24.1.41.1" TYPE="SECTION">
<HEAD>§ 1000.1   What is the applicability and scope of these regulations?</HEAD>
<P>Under the Native American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4101 <I>et seq.</I>) (NAHASDA) the Department of Housing and Urban Development (HUD) provides grants, loan guarantees, and technical assistance to Indian tribes and Alaska Native villages for the development and operation of low-income housing in Indian areas. The policies and procedures described in this part apply to grants to eligible recipients under the Indian Housing Block Grant (IHBG) program for Indian tribes and Alaska Native villages. This part also applies to loan guarantee assistance under title VI of NAHASDA. The regulations in this part supplement the statutory requirements set forth in NAHASDA. This part, as much as practicable, does not repeat statutory language.


</P>
</DIV8>


<DIV8 N="§ 1000.2" NODE="24:4.1.3.1.24.1.41.2" TYPE="SECTION">
<HEAD>§ 1000.2   What are the guiding principles in the implementation of NAHASDA?</HEAD>
<P>(a) The Secretary shall use the following Congressional findings set forth in section 2 of NAHASDA as the guiding principles in the implementation of NAHASDA:
</P>
<P>(1) The Federal government has a responsibility to promote the general welfare of the Nation:
</P>
<P>(i) By using Federal resources to aid families and individuals seeking affordable homes in safe and healthy environments and, in particular, assisting responsible, deserving citizens who cannot provide fully for themselves because of temporary circumstances or factors beyond their control;
</P>
<P>(ii) By working to ensure a thriving national economy and a strong private housing market; and
</P>
<P>(iii) By developing effective partnerships among the Federal government, state, tribal, and local governments, and private entities that allow government to accept responsibility for fostering the development of a healthy marketplace and allow families to prosper without government involvement in their day-to-day activities.
</P>
<P>(2) There exists a unique relationship between the Government of the United States and the governments of Indian tribes and a unique Federal responsibility to Indian people.
</P>
<P>(3) The Constitution of the United States invests the Congress with plenary power over the field of Indian affairs, and through treaties, statutes, and historical relations with Indian tribes, the United States has undertaken a unique trust responsibility to protect and support Indian tribes and Indian people.
</P>
<P>(4) The Congress, through treaties, statutes, and the general course of dealing with Indian tribes, has assumed a trust responsibility for the protection and preservation of Indian tribes and for working with Indian tribes and their members to improve their housing conditions and socioeconomic status so that they are able to take greater responsibility for their own economic condition.
</P>
<P>(5) Providing affordable homes in safe and healthy environments is an essential element in the special role of the United States in helping Indian tribes and their members to improve their housing conditions and socioeconomic status.
</P>
<P>(6) The need for affordable homes in safe and healthy environments on Indian reservations, in Indian communities, and in Native Alaskan villages is acute and the federal government shall work not only to provide housing assistance, but also, to the extent practicable, to assist in the development of private housing finance mechanisms on Indian lands to achieve the goals of economic self-sufficiency and self-determination for Indian tribes and their members.
</P>
<P>(7) Federal assistance to meet these responsibilities shall be provided in a manner that recognizes the right of Indian self-determination and tribal self-governance by making such assistance available directly to the Indian tribes or tribally designated entities under authorities similar to those accorded Indian tribes in Public Law 93-638 (25 U.S.C. 450 <I>et seq.</I>).
</P>
<P>(b) Nothing in this section shall be construed as releasing the United States government from any responsibility arising under its trust responsibilities towards Indians or any treaty or treaties with an Indian tribe or nation.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 77 FR 71521, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.4" NODE="24:4.1.3.1.24.1.41.3" TYPE="SECTION">
<HEAD>§ 1000.4   What are the objectives of NAHASDA?</HEAD>
<P>The primary objectives of NAHASDA are:
</P>
<P>(a) To assist and promote affordable housing activities to develop, maintain and operate affordable housing in safe and healthy environments on Indian reservations and in other Indian areas for occupancy by low-income Indian families;
</P>
<P>(b) To ensure better access to private mortgage markets for Indian tribes and their members and to promote self-sufficiency of Indian tribes and their members;
</P>
<P>(c) To coordinate activities to provide housing for Indian tribes and their members and to promote self-sufficiency of Indian tribes and their members;
</P>
<P>(d) To plan for and integrate infrastructure resources for Indian tribes with housing development for Indian tribes; and
</P>
<P>(e) To promote the development of private capital markets in Indian country and to allow such markets to operate and grow, thereby benefiting Indian communities.


</P>
</DIV8>


<DIV8 N="§ 1000.6" NODE="24:4.1.3.1.24.1.41.4" TYPE="SECTION">
<HEAD>§ 1000.6   What is the nature of the IHBG program?</HEAD>
<P>The IHBG program is formula driven whereby eligible recipients of funding receive an equitable share of appropriations made by the Congress, based upon formula components specified under subpart D of this part. IHBG recipients must have the administrative capacity to undertake the affordable housing activities proposed, including the systems of internal control necessary to administer these activities effectively without fraud, waste, or mismanagement.


</P>
</DIV8>


<DIV8 N="§ 1000.8" NODE="24:4.1.3.1.24.1.41.5" TYPE="SECTION">
<HEAD>§ 1000.8   May provisions of these regulations be waived?</HEAD>
<P>Yes. Upon determination of good cause, the Secretary may, subject to statutory limitations, waive any provision of this part and delegate this authority in accordance with section 106 of the Department of Housing and Urban Development Reform Act of 1989 (42 U.S.C. 3535(q)).


</P>
</DIV8>


<DIV8 N="§ 1000.9" NODE="24:4.1.3.1.24.1.41.6" TYPE="SECTION">
<HEAD>§ 1000.9   How is negotiated rulemaking conducted when promulgating NAHASDA regulations?</HEAD>
<P>The negotiated rulemaking procedures and requirements set out in section 106(b) of NAHASDA shall be conducted as follows:
</P>
<P>(a) <I>Committee membership.</I> In forming a negotiated rulemaking committee, HUD shall appoint as committee members representatives of the Federal Government and representatives of diverse tribes and program recipients.
</P>
<P>(b) <I>Initiation of rulemaking.</I> HUD shall initiate a negotiated rulemaking not later than 90 days after the enactment of any act to reauthorize or significantly amend NAHASDA.
</P>
<P>(c) <I>Work groups.</I> Negotiated rulemaking committees may form workgroups made up of committee members and other interested parties to meet during committee sessions and between sessions to develop specific rulemaking proposals for committee consideration.
</P>
<P>(d) <I>Further review.</I> Negotiated rulemaking committees shall provide recommended rules to HUD. Once rules are proposed by HUD, they shall be published for comment in the <E T="04">Federal Register.</E> Any comments will be further reviewed by the committee and HUD before HUD determines if the rule or rules will be adopted.
</P>
<CITA TYPE="N">[77 FR 71521, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.10" NODE="24:4.1.3.1.24.1.41.7" TYPE="SECTION">
<HEAD>§ 1000.10   What definitions apply in these regulations?</HEAD>
<P>Except as noted in a particular subpart, the following definitions apply in this part:
</P>
<P>(a) The terms “<I>Adjusted income</I>,” “<I>Affordable housing</I>,” “<I>Drug-related criminal activity</I>,” “<I>Elderly families and near-elderly families</I>,” “<I>Elderly person</I>,” “<I>Grant beneficiary</I>,” “<I>Indian</I>,” “<I>Indian housing plan (IHP)</I>,” “<I>Indian tribe</I>,” “<I>Low-income family</I>,” “<I>Near-elderly persons</I>,” “<I>Nonprofit</I>,” “<I>Recipient</I>,” <I>Secretary</I>,” “<I>State</I>,” and “<I>Tribally designated housing entity (TDHE)</I>” are defined in section 4 of NAHASDA.
</P>
<P>(b) In addition to the definitions set forth in paragraph (a) of this section, the following definitions apply to this part:
</P>
<P><I>Affordable housing activities</I> are those activities identified in section 202 of NAHASDA.
</P>
<P><I>Annual Contributions Contract (ACC)</I> means a contract under the 1937 Act between HUD and an IHA containing the terms and conditions under which HUD assists the IHA in providing decent, safe, and sanitary housing for low-income families.
</P>
<P><I>Annual income</I> has one of the following meanings, as determined by the Indian tribe:
</P>
<P>(1) “Annual income” as defined for HUD's Section 8 programs in 24 CFR part 5, subpart F (except when determining the income of a homebuyer for an owner-occupied rehabilitation project, the value of the homeowner's principal residence may be excluded from the calculation of Net Family assets); or
</P>
<P>(2) Annual income as reported under the Census long-form for the most recent available decennial Census. This definition includes:
</P>
<P>(i) Wages, salaries, tips, commissions, etc.;
</P>
<P>(ii) Self-employment income;
</P>
<P>(iii) Farm self-employment income;
</P>
<P>(iv) Interest, dividends, net rental income, or income from estates or trusts;
</P>
<P>(v) Social security or railroad retirement;
</P>
<P>(vi) Supplemental Security Income, Aid to Families with Dependent Children, or other public assistance or public welfare programs;
</P>
<P>(vii) Retirement, survivor, or disability pensions; and
</P>
<P>(viii) Any other sources of income received regularly, including Veterans' (VA) payments, unemployment compensation, and alimony; or
</P>
<P>(3) Adjusted gross income as defined for purposes of reporting under Internal Revenue Service (IRS) Form 1040 series for individual Federal annual income tax purposes.
</P>
<P><I>Assistant Secretary</I> means the Assistant Secretary for Public and Indian Housing.
</P>
<P><I>Department or HUD</I> means the Department of Housing and Urban Development.
</P>
<P><I>Family</I> includes, but is not limited to, a family with or without children, an elderly family, a near-elderly family, a disabled family, a single person, as determined by the Indian tribe.
</P>
<P><I>Homebuyer payment</I> means the payment of a family purchasing a home pursuant to a lease purchase agreement.
</P>
<P><I>Homeless family</I> means a family who is without safe, sanitary and affordable housing even though it may have temporary shelter provided by the community, or a family who is homeless as determined by the Indian tribe.
</P>
<P><I>Housing related activities,</I> for purposes of program income, means any facility, community building, infrastructure, business, program, or activity, including any community development or economic development activity, that:
</P>
<P>(1) Is determined by the recipient to be beneficial to the provision of housing in an Indian area; and
</P>
<P>(2) Would meet at least one of the following conditions:
</P>
<P>(i) Would help an Indian tribe or its tribally designated housing entity to reduce the cost of construction of Indian housing;
</P>
<P>(ii) Would make housing more affordable, energy efficient, accessible, or practicable in an Indian area;
</P>
<P>(iii) Would otherwise advance the purposes of NAHASDA.
</P>
<P><I>Housing related community development:</I>
</P>
<P>(1) Means any facility, community building, business, activity, or infrastructure that:
</P>
<P>(i) Is owned by an Indian tribe or a tribally designated housing entity;
</P>
<P>(ii) Is necessary to the provision of housing in an Indian area; and
</P>
<P>(iii)(A) Would help an Indian tribe or tribally designated housing entity reduce the cost of construction of Indian housing;
</P>
<P>(B) Would make housing more affordable, energy efficient, accessible, or practicable in an Indian area; or
</P>
<P>(C) Would otherwise advance the purposes of NAHASDA.
</P>
<P>(2) Does not include any activity conducted by any Indian tribe under the Indian Gaming Regulatory Act (25 U.S.C. 2701 <I>et seq.</I>)
</P>
<P><I>IHBG</I> means Indian Housing Block Grant.
</P>
<P><I>Income</I> means annual income as defined in this subpart.
</P>
<P><I>Indian area</I> means the area within which an Indian tribe operates affordable housing programs or the area in which a TDHE, as authorized by one or more Indian tribes, operates affordable housing programs. Whenever the term “jurisdiction” is used in NAHASDA, it shall mean “Indian Area,” except where specific reference is made to the jurisdiction of a court.
</P>
<P><I>Indian Housing Authority (IHA)</I> means an entity that:
</P>
<P>(1) Is authorized to engage or assist in the development or operation of low-income housing for Indians under the 1937 Act; and
</P>
<P>(2) Is established:
</P>
<P>(i) By exercise of the power of self government of an Indian tribe independent of state law; or
</P>
<P>(ii) By operation of state law providing specifically for housing authorities for Indians, including regional housing authorities in the State of Alaska.
</P>
<P><I>Median income</I> for an Indian area is the greater of:
</P>
<P>(1) The median income for the counties, previous counties, or their equivalent in which the Indian area is located; or
</P>
<P>(2) The median income for the United States.
</P>
<P><I>NAHASDA</I> means the Native American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4101 <I>et seq.</I>).
</P>
<P><I>1937 Act</I> means the United States Housing Act of 1937 (42 U.S.C. 1437 <I>et seq.</I>).
</P>
<P><I>Office of Native American Programs (ONAP)</I> means the office of HUD which has been delegated authority to administer programs under this part. An “Area ONAP” is an ONAP field office.
</P>
<P><I>Outcomes</I> are the intended results or consequences important to program beneficiaries, the IHBG recipient, and the tribe generally from carrying out the housing or housing-related activity as determined by the tribe (and/or its TDHE).
</P>
<P><I>Person with Disabilities</I> means a person who—
</P>
<P>(1) Has a disability as defined in section 223 of the Social Security Act;
</P>
<P>(2) Has a developmental disability as defined in section 102 of the Developmental Disabilities Assistance and Bill of Rights Act;
</P>
<P>(3) Has a physical, mental, or emotional impairment which-
</P>
<P>(i) Is expected to be of long-continued and indefinite duration;
</P>
<P>(ii) Substantially impedes his or her ability to live independently; and
</P>
<P>(iii) Is of such a nature that such ability could be improved by more suitable housing conditions.
</P>
<P>(4) The term “person with disabilities” includes persons who have the disease of acquired immunodeficiency syndrome or any condition arising from the etiologic agent for acquired immunodeficiency syndrome.
</P>
<P>(5) Notwithstanding any other provision of law, no individual shall be considered a person with disabilities, for purposes of eligibility for housing assisted under this part, solely on the basis of any drug or alcohol dependence. The Secretary shall consult with Indian tribes and appropriate Federal agencies to implement this paragraph.
</P>
<P>(6) For purposes of this definition, the term “<I>physical, mental or emotional impairment</I>” includes, but is not limited to:
</P>
<P>(i) Any physiological disorder or condition, cosmetic disfigurement, or anatomical loss affecting one or more of the following body systems: Neurological, musculoskeletal, special sense organs, respiratory, including speech organs; cardiovascular; reproductive; digestive; genito-urinary; hemic and lymphatic; skin; and endocrine; or
</P>
<P>(ii) Any mental or psychological condition, such as mental retardation, organic brain syndrome, emotional or mental illness, and specific learning disabilities.
</P>
<P>(iii) The term “<I>physical, mental, or emotional impairment</I>” includes, but is not limited to, such diseases and conditions as orthopedic, visual, speech, and hearing impairments, cerebral palsy, autism, epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart disease, diabetes, Human Immunodeficiency Virus infection, mental retardation, and emotional illness.
</P>
<P><I>Tribal program year</I> means the fiscal year of the IHBG recipient.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 77 FR 71522, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.12" NODE="24:4.1.3.1.24.1.41.8" TYPE="SECTION">
<HEAD>§ 1000.12   What nondiscrimination requirements are applicable?</HEAD>
<P>(a) The requirements of the Age Discrimination Act of 1975 (42 U.S.C. 6101-6107) and HUD's implementing regulations in 24 CFR part 146.
</P>
<P>(b) Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and HUD's regulations at 24 CFR part 8 apply.
</P>
<P>(c) The Indian Civil Rights Act (Title II of the Civil Rights Act of 1968; 25 U.S.C. 1301-1303), applies to Federally recognized Indian tribes that exercise powers of self-government.
</P>
<P>(d) Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d) and Title VIII of the Civil Rights Act of 1968 (42 U.S.C. 3601 <I>et seq.</I>) apply to Indian tribes that are not covered by the Indian Civil Rights Act. The Title VI and Title VIII requirements do not apply to actions under NAHASDA by federally recognized Indian tribes and their TDHEs. State-recognized Indian tribes and their TDHEs may provide preference for tribal members and other Indian families pursuant to NAHASDA sections 201(b) and 101(k) (relating to tribal preference in employment and contracting).
</P>
<P>(e) The equal access to HUD-assisted or -insured housing requirements in 24 CFR 5.105(a)(2).
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 77 FR 71522, Dec. 3, 2012; 81 FR 80993, Nov. 17, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 1000.14" NODE="24:4.1.3.1.24.1.41.9" TYPE="SECTION">
<HEAD>§ 1000.14   What relocation and real property acquisition policies are applicable?</HEAD>
<P>The following relocation and real property acquisition policies are applicable to programs developed or operated under NAHASDA:
</P>
<P>(a) <I>Real Property acquisition requirements.</I> The acquisition of real property for an assisted activity is subject to 49 CFR part 24, subpart B. Whenever the recipient does not have the authority to acquire the real property through condemnation, it shall:
</P>
<P>(1) Before discussing the purchase price, inform the owner:
</P>
<P>(i) Of the amount it believes to be the fair market value of the property. Such amount shall be based upon one or more appraisals prepared by a qualified appraiser. However, this provision does not prevent the recipient from accepting a donation or purchasing the real property at less than its fair market value.
</P>
<P>(ii) That it will be unable to acquire the property if negotiations fail to result in an amicable agreement.
</P>
<P>(2) Request HUD approval of the proposed acquisition price before executing a firm commitment to purchase the property if the proposed acquisition payment exceeds the fair market value. The recipient shall include with its request a copy of the appraisal(s) and a justification for the proposed acquisition payment. HUD will promptly review the proposal and inform the recipient of its approval or disapproval.
</P>
<P>(b) <I>Minimize displacement.</I> Consistent with the other goals and objectives of this part, recipients shall assure that they have taken all reasonable steps to minimize the displacement of persons (households, businesses, nonprofit organizations, and farms) as a result of a project assisted under this part.
</P>
<P>(c) <I>Temporary relocation.</I> The following policies cover residential tenants and homebuyers who will not be required to move permanently but who must relocate temporarily for the project. Such residential tenants and homebuyers shall be provided:
</P>
<P>(1) Reimbursement for all reasonable out-of-pocket expenses incurred in connection with the temporary relocation, including the cost of moving to and from the temporarily occupied housing and any increase in monthly housing costs (e.g., rent/utility costs).
</P>
<P>(2) Appropriate advisory services, including reasonable advance written notice of:
</P>
<P>(i) The date and approximate duration of the temporary relocation;
</P>
<P>(ii) The location of the suitable, decent, safe and sanitary dwelling to be made available for the temporary period;
</P>
<P>(iii) The terms and conditions under which the tenant may occupy a suitable, decent, safe, and sanitary dwelling in the building/complex following completion of the repairs; and
</P>
<P>(iv) The provisions of paragraph (c)(1) of this section.
</P>
<P>(d) <I>Relocation assistance for displaced persons.</I> A displaced person (defined in paragraph (g) of this section) must be provided relocation assistance at the levels described in, and in accordance with the requirements of, the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (URA) (42 U.S.C. 4601-4655) and implementing regulations at 49 CFR part 24.
</P>
<P>(e) <I>Appeals to the recipient.</I> A person who disagrees with the recipient's determination concerning whether the person qualifies as a “displaced person,” or the amount of relocation assistance for which the person is eligible, may file a written appeal of that determination with the recipient.
</P>
<P>(f) <I>Responsibility of recipient.</I> (1) The recipient shall certify that it will comply with the URA, the regulations at 49 CFR part 24, and the requirements of this section. The recipient shall ensure such compliance notwithstanding any third party's contractual obligation to the recipient to comply with the provisions in this section.
</P>
<P>(2) The cost of required relocation assistance is an eligible project cost in the same manner and to the same extent as other project costs. However, such assistance may also be paid for with funds available to the recipient from any other source.
</P>
<P>(3) The recipient shall maintain records in sufficient detail to demonstrate compliance with this section.
</P>
<P>(g) <I>Definition of displaced person.</I> (1) For purposes of this section, the term “displaced person” means any person (household, business, nonprofit organization, or farm) that moves from real property, or moves his or her personal property from real property, permanently, as a direct result of rehabilitation, demolition, or acquisition for a project assisted under this part. The term “displaced person” includes, but is not limited to:
</P>
<P>(i) A tenant-occupant of a dwelling unit who moves from the building/complex permanently after the submission to HUD of an IHP that is later approved.
</P>
<P>(ii) Any person, including a person who moves before the date described in paragraph (g)(1)(i) of this section, that the recipient determines was displaced as a direct result of acquisition, rehabilitation, or demolition for the assisted project.
</P>
<P>(iii) A tenant-occupant of a dwelling unit who moves from the building/complex permanently after the execution of the agreement between the recipient and HUD, if the move occurs before the tenant is provided written notice offering him or her the opportunity to lease and occupy a suitable, decent, safe and sanitary dwelling in the same building/complex, under reasonable terms and conditions, upon completion of the project. Such reasonable terms and conditions include a monthly rent and estimated average monthly utility costs that do not exceed the greater of:
</P>
<P>(A) The tenant-occupant's monthly rent and estimated average monthly utility costs before the agreement; or
</P>
<P>(B) 30 percent of gross household income.
</P>
<P>(iv) A tenant-occupant of a dwelling who is required to relocate temporarily, but does not return to the building/complex, if either:
</P>
<P>(A) The tenant-occupant is not offered payment for all reasonable out-of-pocket expenses incurred in connection with the temporary relocation, including the cost of moving to and from the temporarily occupied unit, any increased housing costs and incidental expenses; or
</P>
<P>(B) Other conditions of the temporary relocation are not reasonable.
</P>
<P>(v) A tenant-occupant of a dwelling who moves from the building/complex after he or she has been required to move to another dwelling unit in the same building/complex in order to carry out the project, if either:
</P>
<P>(A) The tenant-occupant is not offered reimbursement for all reasonable out-of-pocket expenses incurred in connection with the move; or
</P>
<P>(B) Other conditions of the move are not reasonable.
</P>
<P>(2) Notwithstanding the provisions of paragraph (g)(1) of this section, a person does not qualify as a “displaced person” (and is not eligible for relocation assistance under the URA or this section), if:
</P>
<P>(i) The person moved into the property after the submission of the IHP to HUD, but, before signing a lease or commencing occupancy, was provided written notice of the project, its possible impact on the person (e.g., the person may be displaced, temporarily relocated or suffer a rent increase) and the fact that the person would not qualify as a “displaced person” or for any assistance provided under this section as a result of the project.
</P>
<P>(ii) The person is ineligible under 49 CFR 24.2(g)(2).
</P>
<P>(iii) The recipient determines the person is not displaced as a direct result of acquisition, rehabilitation, or demolition for an assisted project. To exclude a person on this basis, HUD must concur in that determination.
</P>
<P>(3) A recipient may at any time ask HUD to determine whether a specific displacement is or would be covered under this section.
</P>
<P>(h) <I>Definition of initiation of negotiations.</I> For purposes of determining the formula for computing the replacement housing assistance to be provided to a person displaced as a direct result of rehabilitation or demolition of the real property, the term “initiation of negotiations” means the execution of the agreement covering the rehabilitation or demolition (See 49 CFR part 24).


</P>
</DIV8>


<DIV8 N="§ 1000.16" NODE="24:4.1.3.1.24.1.41.10" TYPE="SECTION">
<HEAD>§ 1000.16   What labor standards are applicable?</HEAD>
<P>(a) <I>Davis-Bacon wage rates.</I> (1) As described in section 104(b) of NAHASDA, contracts and agreements for assistance, sale, or lease under NAHASDA must require prevailing wage rates determined by the Secretary of Labor under the Davis-Bacon Act (40 U.S.C. 3141-44, 3146, and 3147) to be paid to laborers and mechanics employed in the development of affordable housing.
</P>
<P>(2) When NAHASDA assistance is only used to assist homebuyers to acquire single family housing, the Davis-Bacon wage rates apply to the construction of the housing if there is a written agreement with the owner or developer of the housing that NAHASDA assistance will be used to assist homebuyers to buy the housing.
</P>
<P>(3) Prime contracts not in excess of $2000 are exempt from Davis-Bacon wage rates.
</P>
<P>(b) <I>HUD-determined wage rates.</I> Section 104(b) also mandates that contracts and agreements for assistance, sale or lease under NAHASDA require that prevailing wages determined or adopted (subsequent to a determination under applicable state, tribal or local law) by HUD shall be paid to maintenance laborers and mechanics employed in the operation, and to architects, technical engineers, draftsmen and technicians employed in the development, of affordable housing.
</P>
<P>(c) <I>Contract Work Hours and Safety Standards Act.</I> Contracts in excess of $100,000 to which Davis-Bacon or HUD-determined wage rates apply are subject by law to the overtime provisions of the Contract Work Hours and Safety Standards Act (40 U.S.C. 3701).
</P>
<P>(d) <I>Volunteers.</I> The requirements in 24 CFR part 70 concerning exemptions for the use of volunteers on projects subject to Davis-Bacon and HUD-determined wage rates are applicable.
</P>
<P>(e) Paragraphs (a) through (d) of this section shall not apply to any contract or agreement for assistance, sale, or lease pursuant to NAHASDA, or to any contract for construction, development, operations, or maintenance thereunder, if such contract or agreement for assistance, sale, or lease is otherwise covered by one or more laws or regulations adopted by an Indian tribe that requires the payment of not less than prevailing wages, as determined by the Indian tribe. Paragraphs (a) through (d) of this section shall also not apply to work performed directly by tribal or TDHE employees under a contract or agreement for assistance, sale, or lease, that is covered by one or more such laws or regulations adopted by an Indian tribe.
</P>
<P>(f) <I>Other laws and issuances.</I> Recipients, contractors, subcontractors, and other participants must comply with regulations issued under the labor standards provisions cited in this section, other applicable Federal laws and regulations pertaining to labor standards, and HUD Handbook 1344.1 (Federal Labor Standards Compliance in Housing and Community Development Programs).
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 77 FR 71522, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.18" NODE="24:4.1.3.1.24.1.41.11" TYPE="SECTION">
<HEAD>§ 1000.18   What environmental review requirements apply?</HEAD>
<P>The environmental effects of each activity carried out with assistance under this part must be evaluated in accordance with the provisions of the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321) and the related authorities listed in HUD's implementing regulations at 24 CFR parts 50 and 58. An environmental review does not have to be completed prior to HUD approval of an IHP.


</P>
</DIV8>


<DIV8 N="§ 1000.20" NODE="24:4.1.3.1.24.1.41.12" TYPE="SECTION">
<HEAD>§ 1000.20   Is an Indian tribe required to assume environmental review responsibilities?</HEAD>
<P>(a) No. It is an option an Indian tribe may choose. If an Indian tribe declines to assume the environmental review responsibilities, HUD will perform the environmental review in accordance with 24 CFR part 50. The timing of HUD undertaking the environmental review will be subject to the availability of resources. A HUD environmental review must be completed for any NAHASDA assisted activities not excluded from review under 24 CFR 50.19(b) before a recipient may acquire, rehabilitate, convert, lease, repair or construct property, or commit HUD or local funds used in conjunction with such NAHASDA assisted activities with respect to the property.
</P>
<P>(b) If an Indian tribe assumes environmental review responsibilities:
</P>
<P>(1) Its certifying officer must certify that he/she is authorized and consents on behalf of the Indian tribe and such officer to accept the jurisdiction of the Federal courts for the purpose of enforcement of the responsibilities of the certifying officer as set forth in section 105(c) of NAHASDA; and
</P>
<P>(2) The Indian tribe must follow the requirements of 24 CFR part 58.
</P>
<P>(3) No funds may be committed to a grant activity or project before the completion of the environmental review and approval of the request for release of funds and related certification required by sections 105(b) and 105(c) of NAHASDA, except as authorized by 24 CFR part 58 such as for the costs of environmental reviews and other planning and administrative expenses.
</P>
<P>(c) Where an environmental assessment (EA) is appropriate under 24 CFR part 50, instead of an Indian tribe assuming environmental review responsibilities under paragraph (b) of this section or HUD preparing the EA itself under paragraph (a) of this section, an Indian tribe or TDHE may prepare an EA for HUD review. In addition to complying with the requirements of 40 CFR 1506.5(a), HUD shall make its own evaluation of the environmental issues and take responsibility for the scope and content of the EA in accordance with 40 CFR 1506.5(b).


</P>
</DIV8>


<DIV8 N="§ 1000.21" NODE="24:4.1.3.1.24.1.41.13" TYPE="SECTION">
<HEAD>§ 1000.21   Under what circumstances are waivers of the environmental review procedures available to tribes?</HEAD>
<P>A tribe or recipient may request that the Secretary waive the requirements under section 105 of NAHASDA. The Secretary may grant the waiver if the Secretary determines that a failure on the part of a recipient to comply with provisions of this section:
</P>
<P>(a) Will not frustrate the goals of the National Environmental Policy Act of 1969 (42 U.S.C. 4321 <I>et seq.</I>) or any other provision of law that furthers the goals of that Act;
</P>
<P>(b) Does not threaten the health or safety of the community involved by posing an immediate or long-term hazard to residents of that community;
</P>
<P>(c) Is a result of inadvertent error, including an incorrect or incomplete certification provided under section 105(c)(1) of NAHASDA; and
</P>
<P>(d) May be corrected through the sole action of the recipient.
</P>
<CITA TYPE="N">[77 FR 71522, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.22" NODE="24:4.1.3.1.24.1.41.14" TYPE="SECTION">
<HEAD>§ 1000.22   Are the costs of the environmental review an eligible cost?</HEAD>
<P>Yes, costs of completing the environmental review are eligible.


</P>
</DIV8>


<DIV8 N="§ 1000.24" NODE="24:4.1.3.1.24.1.41.15" TYPE="SECTION">
<HEAD>§ 1000.24   If an Indian tribe assumes environmental review responsibility, how will HUD assist the Indian tribe in performing the environmental review?</HEAD>
<P>As set forth in section 105(a)(2)(B) of NAHASDA and 24 CFR 58.77, HUD will provide for monitoring of environmental reviews and will also facilitate training for the performance for such reviews by Indian tribes.


</P>
</DIV8>


<DIV8 N="§ 1000.26" NODE="24:4.1.3.1.24.1.41.16" TYPE="SECTION">
<HEAD>§ 1000.26   What are the administrative requirements under NAHASDA?</HEAD>
<P>(a) Except as addressed in § 1000.28, recipients shall comply with the requirements and standards of 2 CFR part 200, “Uniform Administrative Requirements, Cost Principles, And Audit Requirements for Federal Awards”, except for the following sections:
</P>
<P>(1) Section 200.113 applies, except that, in lieu of the remedies described in § 200.338, HUD shall be authorized to seek remedies under subpart F of this part.
</P>
<P>(2) Section 200.302(a), “Financial management.”
</P>
<P>(3) Section 200.305, “Payment,” applies, except that HUD shall not require a recipient to expend retained program income before drawing down or expending IHBG funds.
</P>
<P>(4) Section 200.306, “Cost sharing or matching.”
</P>
<P>(5) Section 200.307, “Program income.”
</P>
<P>(6) Section 200.308, “Revision of budget and program plans.”
</P>
<P>(7) Section 200.311, “Real property,” except as provided in 24 CFR 5.109.
</P>
<P>(8) Section 200.313, “Equipment,” applies, except that in all cases in which the equipment is sold, the proceeds shall be program income.
</P>
<P>(9) Section 200.314, “Supplies,” applies, except in all cases in which the supplies are sold, the proceeds shall be program income.
</P>
<P>(10) Section 200.317, “Procurement by states.”
</P>
<P>(11) Sections 200.318 through 200.326 apply, as modified in this paragraph (a)(11):
</P>
<P>(i) <I>De minimis procurement.</I> A recipient shall not be required to comply with 2 CFR 200.318 through 200.326 with respect to any procurement, using a grant provided under NAHASDA, of goods and services with a value of less than $5,000.
</P>
<P>(ii) <I>Utilizing Federal supply sources in procurement.</I> In accordance with Section 101(j) of NAHASDA, recipients may use Federal supply sources made available by the General Services Administration pursuant to 40 U.S.C. 501.
</P>
<P>(12) Section 200.325, “Bonding requirements,” applies. There may be circumstances under which the bonding requirements of 2 CFR 200.325 are inconsistent with other responsibilities and obligations of the recipient. In such circumstances, acceptable methods to provide performance and payment assurance may include:
</P>
<P>(i) Deposit with the recipient of a cash escrow of not less than 20 percent of the total contract price, subject to reduction during the warranty period, commensurate with potential risk;
</P>
<P>(ii) Letter of credit for 25 percent of the total contract price, unconditionally payable upon demand of the recipient, subject to reduction during any warranty period commensurate with potential risk; or
</P>
<P>(iii) Letter of credit for 10 percent of the total contract price, unconditionally payable upon demand of the recipient, subject to reduction during any warranty period commensurate with potential risk, and compliance with the procedures for monitoring of disbursements by the contractor.
</P>
<P>(13) Section 200.328(b) through (d) and (f), “Monitoring and reporting program performance.”
</P>
<P>(14) Section 200.333, “Retention requirements for records.”
</P>
<P>(15) Section 200.338, “Remedies for noncompliance.”
</P>
<P>(16) Section 200.343, “Closeout.”
</P>
<P>(b)(1) With respect to the applicability of cost principles, all items of cost listed in 2 CFR part 200, subpart E, which require prior Federal agency approval are allowable without the prior approval of HUD to the extent that they comply with the general policies and principles stated in 2 CFR part 200, subpart E and are otherwise eligible under this part, except for the following:
</P>
<P>(i) Depreciation method for fixed assets shall not be changed without the approval of the Federal cognizant agency.
</P>
<P>(ii) Penalties, damages, fines and other settlements are unallowable costs to the IHBG program.
</P>
<P>(iii) Costs of housing (<I>e.g.,</I> depreciation, maintenance, utilities, furnishings, rent), housing allowances and personal living expenses (goods or services for personal use), regardless of whether reported as taxable income to the employees (2 CFR 200.445) requires HUD prior approval.
</P>
<P>(2) In addition, no person providing consultant services in an employer-employee type of relationship shall receive more than a reasonable rate of compensation for personal services paid with IHBG funds. In no event, however, shall such compensation exceed the equivalent of the daily rate paid for Level IV of the Executive Schedule.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 77 FR 71523, Dec. 3, 2012; 80 FR 75943, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 1000.28" NODE="24:4.1.3.1.24.1.41.17" TYPE="SECTION">
<HEAD>§ 1000.28   May a self-governance Indian tribe be exempted from the applicability of § 1000.26?</HEAD>
<P>Yes. A self-governance Indian tribe shall certify that its administrative requirements, standards and systems meet or exceed the comparable requirements of § 1000.26. For purposes of this section, a self-governance Indian tribe is an Indian tribe that participates in tribal self-governance as authorized under Public Law 93-638, as amended (25 U.S.C. 450 <I>et seq.</I>).


</P>
</DIV8>


<DIV8 N="§ 1000.30" NODE="24:4.1.3.1.24.1.41.18" TYPE="SECTION">
<HEAD>§ 1000.30   What prohibitions regarding conflict of interest are applicable?</HEAD>
<P>(a) <I>Applicability.</I> In the procurement of supplies, equipment, other property, construction and services by recipients and subrecipients, the conflict of interest provisions of 2 CFR 200.318 shall apply. In all cases not governed by 2 CFR 200.318, the following provisions of this section shall apply.
</P>
<P>(b) <I>Conflicts prohibited.</I> No person who participates in the decision-making process or who gains inside information with regard to NAHASDA assisted activities may obtain a personal or financial interest or benefit from such activities, except for the use of NAHASDA funds to pay salaries or other related administrative costs. Such persons include anyone with an interest in any contract, subcontract or agreement or proceeds thereunder, either for themselves or others with whom they have business or immediate family ties. Immediate family ties are determined by the Indian tribe or TDHE in its operating policies.
</P>
<P>(c) The conflict of interest provision does not apply in instances where a person who might otherwise be included under the conflict provision is low-income and is selected for assistance in accordance with the recipient's written policies for eligibility, admission and occupancy of families for housing assistance with IHBG funds, provided that there is no conflict of interest under applicable tribal or state law. The recipient must make a public disclosure of the nature of assistance to be provided and the specific basis for the selection of the person. The recipient shall provide the appropriate Area ONAP with a copy of the disclosure before the assistance is provided to the person.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 80 FR 75944, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 1000.32" NODE="24:4.1.3.1.24.1.41.19" TYPE="SECTION">
<HEAD>§ 1000.32   May exceptions be made to the conflict of interest provisions?</HEAD>
<P>(a) Yes. HUD may make exceptions to the conflict of interest provisions set forth in § 1000.30(b) on a case-by-case basis when it determines that such an exception would further the primary objective of NAHASDA and the effective and efficient implementation of the recipient's program, activity, or project.
</P>
<P>(b) A public disclosure of the conflict must be made and a determination that the exception would not violate tribal laws on conflict of interest (or any applicable state laws) must also be made.


</P>
</DIV8>


<DIV8 N="§ 1000.34" NODE="24:4.1.3.1.24.1.41.20" TYPE="SECTION">
<HEAD>§ 1000.34   What factors must be considered in making an exception to the conflict of interest provisions?</HEAD>
<P>In determining whether or not to make an exception to the conflict of interest provisions, HUD must consider whether undue hardship will result, either to the recipient or to the person affected, when weighed against the public interest served by avoiding the prohibited conflict.


</P>
</DIV8>


<DIV8 N="§ 1000.36" NODE="24:4.1.3.1.24.1.41.21" TYPE="SECTION">
<HEAD>§ 1000.36   How long must a recipient retain records regarding exceptions made to the conflict of interest provisions?</HEAD>
<P>A recipient must maintain all such records for a period of at least 3 years after an exception is made.


</P>
</DIV8>


<DIV8 N="§ 1000.38" NODE="24:4.1.3.1.24.1.41.22" TYPE="SECTION">
<HEAD>§ 1000.38   What flood insurance requirements are applicable?</HEAD>
<P>Under the Flood Disaster Protection Act of 1973, as amended (42 U.S.C. 4001-4128), a recipient may not permit the use of Federal financial assistance for acquisition and construction purposes (including rehabilitation) in an area identified by the Federal Emergency Management Agency (FEMA) as having special flood hazards, unless the following conditions are met:
</P>
<P>(a) The community in which the area is situated is participating in the National Flood Insurance Program in accord with section 202(a) of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4106(a)), or less than a year has passed since FEMA notification regarding such flood hazards. For this purpose, the “community” is the governmental entity, such as an Indian tribe or authorized tribal organization, an Alaska Native village, or authorized Native organization, or a municipality or county, that has authority to adopt and enforce flood plain management regulations for the area; and
</P>
<P>(b) Where the community is participating in the National Flood Insurance Program, flood insurance on the building is obtained in compliance with section 102(a) of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4012(a)); provided, that if the financial assistance is in the form of a loan or an insurance or guaranty of a loan, the amount of flood insurance required need not exceed the outstanding principal balance of the loan and need not be required beyond the term of the loan.


</P>
</DIV8>


<DIV8 N="§ 1000.40" NODE="24:4.1.3.1.24.1.41.23" TYPE="SECTION">
<HEAD>§ 1000.40   Do lead-based paint poisoning prevention requirements apply to affordable housing activities under NAHASDA?</HEAD>
<P>Yes, lead-based paint requirements apply to housing activities assisted under NAHASDA. The applicable requirements for NAHASDA are HUD's regulations at part 35, subparts A, B, H, J, K, M and R of this title, which implement the Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4822-4846) and the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856).
</P>
<CITA TYPE="N">[64 FR 50230, Sept. 15, 1999; 65 FR 3387, Jan. 21, 2000]






</CITA>
</DIV8>


<DIV8 N="§ 1000.42" NODE="24:4.1.3.1.24.1.41.24" TYPE="SECTION">
<HEAD>§ 1000.42   Are the requirements of Section 3 of the Housing and Urban Development Act of 1968 applicable?</HEAD>
<P>No. Recipients shall comply with Indian preference requirements of Section 7(b) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 5307(b)), or employment and contract preference laws adopted by the recipient's tribe in accordance with Section 101(k) of NAHASDA.


</P>
<CITA TYPE="N">[85 FR 61568, Sept. 29, 2020]




</CITA>
</DIV8>


<DIV8 N="§ 1000.44" NODE="24:4.1.3.1.24.1.41.25" TYPE="SECTION">
<HEAD>§ 1000.44   What prohibitions on the use of debarred, suspended, or ineligible contractors apply?</HEAD>
<P>In addition to any tribal requirements, the prohibitions in 2 CFR part 2424 on the use of debarred, suspended, or ineligible contractors apply.
</P>
<CITA TYPE="N">[72 FR 73497, Dec. 27, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 1000.46" NODE="24:4.1.3.1.24.1.41.26" TYPE="SECTION">
<HEAD>§ 1000.46   Do drug-free workplace requirements apply?</HEAD>
<P>Yes. In addition to any tribal requirements, the Drug-Free Workplace Act of 1988 (41 U.S.C. 701, <I>et seq.</I>) and HUD's implementing regulations in 2 CFR part 2429 apply.
</P>
<CITA TYPE="N">[76 FR 45168, July 28, 2011]


</CITA>
</DIV8>


<DIV8 N="§ 1000.48" NODE="24:4.1.3.1.24.1.41.27" TYPE="SECTION">
<HEAD>§ 1000.48   Are Indian or tribal preference requirements applicable to IHBG activities?</HEAD>
<P>Grants under this part are subject to Indian preference under section 7(b) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450e(b)) or, if applicable under section 101(k) of NAHASDA, tribal preference in employment and contracting.
</P>
<P>(a)(1) Section 7(b) provides that any contract, subcontract, grant, or subgrant pursuant to an act authorizing grants to Indian organizations or for the benefit of Indians shall require that, to the greatest extent feasible:
</P>
<P>(i) Preference and opportunities for training and employment shall be given to Indians; and
</P>
<P>(ii) Preference in the award of contracts and subcontracts shall be given to Indian organizations and Indian-owned economic enterprises as defined in section 3 of the Indian Financing Act of 1974 (25 U.S.C. 1452).
</P>
<P>(2) The following definitions apply:
</P>
<P>(i) The Indian Self-Determination and Education Assistance Act defines “Indian” to mean a person who is a member of an Indian tribe and defines “Indian tribe” to mean any Indian tribe, band, nation, or other organized group or community, including any Alaska Native village or regional or village corporation as defined or established pursuant to the Alaska Native Claims Settlement Act, which is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians.
</P>
<P>(ii) In section 3 of the Indian Financing Act of 1974, “economic enterprise” is defined as any Indian-owned commercial, industrial, or business activity established or organized for the purpose of profit, except that Indian ownership must constitute not less than 51 percent of the enterprise. This act defines “Indian organization” to mean the governing body of any Indian tribe or entity established or recognized by such governing body.
</P>
<P>(b) If tribal employment and contract preference laws have not been adopted by the Indian tribe, section 7(b) Indian preference provisions shall apply.
</P>
<P>(c) Exception for de minimis procurements. A recipient shall not be required to apply Indian preference requirements under Section 7(b) of the Indian Self-Determination and Education Assistance Act with respect to any procurement, using a grant provided under NAHASDA, of goods and services with a value less than $5,000.
</P>
<CITA TYPE="N">[77 FR 71523, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.50" NODE="24:4.1.3.1.24.1.41.28" TYPE="SECTION">
<HEAD>§ 1000.50   What tribal or Indian preference requirements apply to IHBG administration activities?</HEAD>
<P>(a) In accordance with Section 101(k) of NAHASDA, a recipient shall apply the tribal employment and contract preference laws (including regulations and tribal ordinances) adopted by the Indian tribe that receives a benefit from funds granted to the recipient under NAHASDA.
</P>
<P>(b) In the absence of tribal employment and contract preference laws, a recipient must, to the greatest extent feasible, give preference and opportunities for training and employment in connection with the administration of grants awarded under this part to Indians in accordance with section 7(b) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450e(b)).
</P>
<CITA TYPE="N">[77 FR 71523, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.52" NODE="24:4.1.3.1.24.1.41.29" TYPE="SECTION">
<HEAD>§ 1000.52   What tribal or Indian preference requirements apply to IHBG procurement?</HEAD>
<P>(a) In accordance with Section 101(k) of NAHASDA, a recipient shall apply the tribal employment and contract preference laws (including regulations and tribal ordinances) adopted by the Indian tribe that receives a benefit from funds granted to the recipient under NAHASDA.
</P>
<P>(b) In the absence of tribal employment and contract preference laws, a recipient must, to the greatest extent feasible, give preference in the award of contracts for projects funded under this part to Indian organizations and Indian-owned economic enterprises in accordance with Section 7(b) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450e(b)).
</P>
<P>(c) The following provisions apply to the application of Indian preference under paragraph (b) of this section:
</P>
<P>(1) In applying Indian preference, each recipient shall:
</P>
<P>(i) Certify to HUD that the policies and procedures adopted by the recipient will provide preference in procurement activities consistent with the requirements of section 7(b) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450e(b)) (An Indian preference policy that was previously approved by HUD for a recipient will meet the requirements of this section); or
</P>
<P>(ii) Advertise for bids or proposals limited to qualified Indian organizations and Indian-owned enterprises; or
</P>
<P>(iii) Use a two-stage preference procedure, as follows:
</P>
<P>(A) <I>Stage 1.</I> Invite or otherwise solicit Indian-owned economic enterprises to submit a statement of intent to respond to a bid announcement or request for proposals limited to Indian-owned firms.
</P>
<P>(B) <I>Stage 2.</I> If responses are received from more than one Indian enterprise found to be qualified, advertise for bids or proposals limited to Indian organizations and Indian-owned economic enterprises.
</P>
<P>(2) If the recipient selects a method of providing preference that results in fewer than two responsible qualified organizations or enterprises submitting a statement of intent, a bid, or a proposal to perform the contract at a reasonable cost, then the recipient shall:
</P>
<P>(i) Readvertise the contract, using any of the methods described in paragraph (c)(1) of this section; or
</P>
<P>(ii) Readvertise the contract without limiting the advertisement for bids or proposals to Indian organizations and Indian-owned economic enterprises; or
</P>
<P>(iii) If one approvable bid or proposal is received, request Area ONAP review and approval of the proposed contract and related procurement documents, in accordance with 2 CFR 200.318 through 200.326, in order to award the contract to the single bidder or offeror.
</P>
<P>(3) Procurements that are within the dollar limitations established for small purchases under 2 CFR 200.320 need not follow the formal bid or proposal procedures of since these procurements are governed by the small purchase procedures of 2 CFR 200.320. However, a recipient's small purchase procurement shall, to the greatest extent feasible, provide Indian preference in the award of contracts.
</P>
<P>(4) All preferences shall be publicly announced in the advertisement and bidding or proposal solicitation documents and the bidding and proposal documents.
</P>
<P>(5) A recipient, at its discretion, may require information of prospective contractors seeking to qualify as Indian organizations or Indian-owned economic enterprises. Recipients may require prospective contractors to provide the following information before submitting a bid or proposal, or at the time of submission:
</P>
<P>(i) Evidence showing fully the extent of Indian ownership and interest;
</P>
<P>(ii) Evidence of structure, management, and financing affecting the Indian character of the enterprise, including major subcontracts and purchase agreements; materials or equipment supply arrangements; management salary or profit-sharing arrangements; and evidence showing the effect of these on the extent of Indian ownership and interest; and
</P>
<P>(iii) Evidence sufficient to demonstrate to the satisfaction of the recipient that the prospective contractor has the technical, administrative, and financial capability to perform contract work of the size and type involved.
</P>
<P>(6) The recipient shall incorporate the following clause (referred to as the section 7(b) clause) in each contract awarded in connection with a project funded under this part:
</P>
<P>(i) The work to be performed under this contract is on a project subject to section 7(b) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450e(b)) (the Indian Act). Section 7(b) requires that, to the greatest extent feasible:
</P>
<P>(A) Preferences and opportunities for training and employment shall be given to Indians; and
</P>
<P>(B) Preferences in the award of contracts and subcontracts shall be given to Indian organizations and Indian-owned economic enterprises.
</P>
<P>(ii) The parties to this contract shall comply with the provisions of section 7(b) of the Indian Act.
</P>
<P>(iii) In connection with this contract, the contractor shall, to the greatest extent feasible, give preference in the award of any subcontracts to Indian organizations and Indian-owned economic enterprises, and preferences and opportunities for training and employment to Indians.
</P>
<P>(iv) The contractor shall include this section 7(b) clause in every subcontract in connection with the project; shall require subcontractors at each level to include this section 7(b) clause in every subcontract they execute in connection with the project; and shall, at the direction of the recipient, take appropriate action pursuant to the subcontract upon a finding by the recipient or HUD that the subcontractor has violated the section 7(b) clause of the Indian Act.
</P>
<P>(d) A recipient shall not be required to apply Indian preference requirements under Section 7(b) of the Indian Self-Determination and Education Assistance Act with respect to any procurement, using a grant provided under NAHASDA, of goods and services with a value less than $5,000.
</P>
<CITA TYPE="N">[77 FR 71523, Dec. 3, 2012, as amended at 80 FR 75944, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 1000.54" NODE="24:4.1.3.1.24.1.41.30" TYPE="SECTION">
<HEAD>§ 1000.54   What procedures apply to complaints arising out of any of the methods of providing for Indian preference?</HEAD>
<P>The following procedures are applicable to complaints arising out of any of the methods of providing for Indian preference contained in this part, including alternate methods. Tribal policies that meet or exceed the requirements of this section shall apply.
</P>
<P>(a) Each complaint shall be in writing, signed, and filed with the recipient.
</P>
<P>(b) A complaint must be filed with the recipient no later than 20 calendar days from the date of the action (or omission) upon which the complaint is based.
</P>
<P>(c) Upon receipt of a complaint, the recipient shall promptly stamp the date and time of receipt upon the complaint, and immediately acknowledge its receipt.
</P>
<P>(d) Within 20 calendar days of receipt of a complaint, the recipient shall either meet, or communicate by mail or telephone, with the complainant in an effort to resolve the matter. The recipient shall make a determination on a complaint and notify the complainant, in writing, within 30 calendar days of the submittal of the complaint to the recipient. The decision of the recipient shall constitute final administrative action on the complaint.


</P>
</DIV8>


<DIV8 N="§ 1000.56" NODE="24:4.1.3.1.24.1.41.31" TYPE="SECTION">
<HEAD>§ 1000.56   How are NAHASDA funds paid by HUD to recipients?</HEAD>
<P>(a) Each year funds shall be paid directly to a recipient in a manner that recognizes the right of Indian self-determination and tribal self-governance and the trust responsibility of the Federal government to Indian tribes consistent with NAHASDA.
</P>
<P>(b) Payments shall be made as expeditiously as practicable.


</P>
</DIV8>


<DIV8 N="§ 1000.58" NODE="24:4.1.3.1.24.1.41.32" TYPE="SECTION">
<HEAD>§ 1000.58   Are there limitations on the investment of IHBG funds?</HEAD>
<P>(a) A recipient may invest IHBG funds for the purposes of carrying out affordable housing activities in investment securities and other obligations as provided in this section.
</P>
<P>(b) The recipient may invest IHBG funds so long as it demonstrates to HUD:
</P>
<P>(1) That there are no unresolved significant and material audit findings or exceptions in the most recent annual audit completed under the Single Audit Act or in an independent financial audit prepared in accordance with generally accepted auditing principles; and
</P>
<P>(2) That it is a self-governance Indian tribe or that it has the administrative capacity and controls to responsibly manage the investment. For purposes of this section, a self-governance Indian tribe is an Indian tribe that participates in tribal self-governance as authorized under Public Law 93-638, as amended (25 U.S.C. 450 <I>et seq.</I>).
</P>
<P>(c) Recipients shall invest IHBG funds only in:
</P>
<P>(1) Obligations of the United States; obligations issued by Government sponsored agencies; securities that are guaranteed or insured by the United States; mutual (or other) funds registered with the Securities and Exchange Commission and which invest only in obligations of the United States or securities that are guaranteed or insured by the United States; or
</P>
<P>(2) Accounts that are insured by an agency or instrumentality of the United States or fully collateralized to ensure protection of the funds, even in the event of bank failure.
</P>
<P>(d) IHBG funds shall be held in one or more accounts separate from other funds of the recipient. Each of these accounts shall be subject to an agreement in a form prescribed by HUD sufficient to implement the regulations in this part and permit HUD to exercise its rights under § 1000.60.
</P>
<P>(e) Expenditure of funds for affordable housing activities under section 204(a) of NAHASDA shall not be considered investment.
</P>
<P>(f) A recipient may invest its IHBG annual grant in an amount equal to the annual formula grant amount.
</P>
<P>(g) Investments under this section may be for a period no longer than 5 years.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 77 FR 71524, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.60" NODE="24:4.1.3.1.24.1.41.33" TYPE="SECTION">
<HEAD>§ 1000.60   Can HUD prevent improper expenditure of funds already disbursed to a recipient?</HEAD>
<P>Yes. In accordance with the standards and remedies contained in § 1000.532 relating to substantial noncompliance, HUD will use its powers under a depository agreement and take such other actions as may be legally necessary to suspend funds disbursed to the recipient until the substantial noncompliance has been remedied. In taking this action, HUD shall comply with all appropriate procedures, appeals, and hearing rights prescribed elsewhere in this part.
</P>
<CITA TYPE="N">[77 FR 71524, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.62" NODE="24:4.1.3.1.24.1.41.34" TYPE="SECTION">
<HEAD>§ 1000.62   What is considered program income?</HEAD>
<P>(a) Program income is defined as any income that is realized from the disbursement of grant amounts. Program income does not include any amounts generated from the operation of 1937 Act units unless the units are assisted with grant amounts and the income is attributable to such assistance. Program income includes income from fees for services performed from the use of real or rental of real or personal property acquired with grant funds, from the sale of commodities or items developed, acquired, etc. with grant funds, and from payments of principal and interest earned on grant funds prior to disbursement.
</P>
<P>(b) If the amount of income received in a single year by a recipient and all its subrecipients, which would otherwise be considered program income, does not exceed $25,000, such funds may be retained but will not be considered to be or treated as program income.
</P>
<P>(c) If program income is realized from an eligible activity funded with both grant funds as well as other funds (i.e., funds that are not grant funds), then the amount of program income realized will be based on a percentage calculation that represents the proportional share of funds provided for the activity generating the program income.
</P>
<P>(d) Costs incident to the generation of program income shall be deducted from gross income to determine program income.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 77 FR 71524, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.64" NODE="24:4.1.3.1.24.1.41.35" TYPE="SECTION">
<HEAD>§ 1000.64   What are the permissible uses of program income?</HEAD>
<P>Program income may be used for any housing or housing related activity and is not subject to other federal requirements.
</P>
<CITA TYPE="N">[77 FR 71524, Dec. 3, 2012]








</CITA>
</DIV8>


<DIV8 N="§ 1000.66" NODE="24:4.1.3.1.24.1.41.36" TYPE="SECTION">
<HEAD>§ 1000.66   Housing counseling.</HEAD>
<P>Housing counseling, as defined in 24 CFR 5.100, that is required under or provided in connection with IHBG funds must be carried out in accordance with 24 CFR 5.111. Housing counseling conducted in connection with the IHBG program may only be conducted by individuals who are HUD-certified in accordance with 24 CFR part 214, subpart F.
</P>
<CITA TYPE="N">[89 FR 49808, June 12, 2024]






</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.3.1.24.2" TYPE="SUBPART">
<HEAD>Subpart B—Affordable Housing Activities</HEAD>


<DIV8 N="§ 1000.101" NODE="24:4.1.3.1.24.2.41.1" TYPE="SECTION">
<HEAD>§ 1000.101   What is affordable housing?</HEAD>
<P>Eligible affordable housing is defined in section 4(2) of NAHASDA and is described in title II of NAHASDA.


</P>
</DIV8>


<DIV8 N="§ 1000.102" NODE="24:4.1.3.1.24.2.41.2" TYPE="SECTION">
<HEAD>§ 1000.102   What are eligible affordable housing activities?</HEAD>
<P>Eligible affordable housing activities are those described in section 202 of NAHASDA.


</P>
</DIV8>


<DIV8 N="§ 1000.103" NODE="24:4.1.3.1.24.2.41.3" TYPE="SECTION">
<HEAD>§ 1000.103   How may IHBG funds be used for tenant-based or project-based rental assistance?</HEAD>
<P>(a) IHBG funds may be used for project-based or tenant-based rental assistance.
</P>
<P>(b) IHBG funds may be used for project-based or tenant-based rental assistance that is provided in a manner consistent with section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f).
</P>
<P>(c) IHBG funds used for project-based or tenant-based rental assistance must comply with the requirements of NAHASDA and this part.
</P>
<CITA TYPE="N">[72 FR 59004, Oct. 18, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 1000.104" NODE="24:4.1.3.1.24.2.41.4" TYPE="SECTION">
<HEAD>§ 1000.104   What families are eligible for affordable housing activities?</HEAD>
<P>The following families are eligible for affordable housing activities:
</P>
<P>(a) Low income Indian families on a reservation or Indian area.
</P>
<P>(b) A non-low-income family may receive housing assistance in accordance with § 1000.110.
</P>
<P>(c) A family may receive housing assistance on a reservation or Indian area if the family's housing needs cannot be reasonably met without such assistance and the recipient determines that the presence of that family on the reservation or Indian area is essential to the well-being of Indian families.
</P>
<P>(d) A recipient may provide housing or housing assistance provided through affordable housing activities assisted with grant amounts under NAHASDA for a law enforcement officer on an Indian reservation or other Indian area, if:
</P>
<P>(1) The officer:
</P>
<P>(i) Is employed on a full-time basis by the federal government or a state, county, or other unit of local government, or lawfully recognized tribal government; and
</P>
<P>(ii) In implementing such full-time employment, is sworn to uphold, and make arrests for, violations of federal, state, county, or tribal law; and
</P>
<P>(2) The recipient determines that the presence of the law enforcement officer on the Indian reservation or other Indian area may deter crime.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 77 FR 71524, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.106" NODE="24:4.1.3.1.24.2.41.5" TYPE="SECTION">
<HEAD>§ 1000.106   What families receiving assistance under title II of NAHASDA require HUD approval?</HEAD>
<P>(a) Housing assistance for non-low-income families requires HUD approval only as required in §§ 1000.108 and 1000.110.
</P>
<P>(b) Assistance for essential families under section 201(b)(3) of NAHASDA does not require HUD approval but only requires that the recipient determine that the presence of that family on the reservation or Indian area is essential to the well-being of Indian families and that the family's housing needs cannot be reasonably met without such assistance.
</P>
<CITA TYPE="N">[77 FR 71525, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.108" NODE="24:4.1.3.1.24.2.41.6" TYPE="SECTION">
<HEAD>§ 1000.108   How is HUD approval obtained by a recipient for housing for non-low-income families and model activities?</HEAD>
<P>Recipients are required to submit proposals to operate model housing activities as defined in section 202(6) of NAHASDA and to provide assistance to non-low-income families in accordance with section 201(b)(2) of NAHASDA. Assistance to non-low-income families must be in accordance with § 1000.110. Proposals may be submitted in the recipient's IHP or at any time by amendment of the IHP, or by special request to HUD at any time. HUD may approve the remainder of an IHP, notwithstanding disapproval of a model activity or assistance to non-low-income families.
</P>
<CITA TYPE="N">[77 FR 71525, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.110" NODE="24:4.1.3.1.24.2.41.7" TYPE="SECTION">
<HEAD>§ 1000.110   Under what conditions may non-low-income Indian families participate in the program?</HEAD>
<P>(a) A family that was low-income at the times described in § 1000.147 but subsequently becomes a non-low-income family due to an increase in income may continue to participate in the program in accordance with the recipient's admission and occupancy policies. The 10 percent limitation in paragraph (c) of this section shall not apply to such families. Such families may be made subject to the additional requirements in paragraph (d) of this section based on those policies. This includes a family member or household member who takes ownership of a homeownership unit under § 1000.146.
</P>
<P>(b) A recipient must determine and document that there is a need for housing for each family that cannot reasonably be met without such assistance.
</P>
<P>(c) A recipient may use up to 10 percent of the amount planned for the tribal program year for families whose income falls within 80 to 100 percent of the median income without HUD approval. HUD approval is required if a recipient plans to use more than 10 percent of the amount planned for the tribal program year for such assistance or to provide housing for families with income over 100 percent of median income.
</P>
<P>(d) Non-low-income families cannot receive the same benefits provided low-income Indian families. The amount of assistance non-low-income families may receive will be determined as follows:
</P>
<P>(1) The rent (including homebuyer payments under a lease purchase agreement) to be paid by a non-low-income family cannot be less than: (Income of non-low-income family/Income of family at 80 percent of median income) × (Rental payment of family at 80 percent of median income), but need not exceed the fair market rent or value of the unit.
</P>
<P>(2) Other assistance, including down payment assistance, to non-low-income families, cannot exceed: (Income of family at 80 percent of median income/Income of non-low-income family) × (Present value of the assistance provided to family at 80 percent of median income).
</P>
<P>(e) The requirements set forth in paragraphs (c) and (d) of this section do not apply to non-low-income families that the recipient has determined to be essential under § 1000.106(b).
</P>
<CITA TYPE="N">[77 FR 71525, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.112" NODE="24:4.1.3.1.24.2.41.8" TYPE="SECTION">
<HEAD>§ 1000.112   How will HUD determine whether to approve model housing activities?</HEAD>
<P>HUD will review all proposals with the goal of approving the activities and encouraging the flexibility, discretion, and self-determination granted to Indian tribes under NAHASDA to formulate and operate innovative housing programs that meet the intent of NAHASDA.


</P>
</DIV8>


<DIV8 N="§ 1000.114" NODE="24:4.1.3.1.24.2.41.9" TYPE="SECTION">
<HEAD>§ 1000.114   How long does HUD have to review and act on a proposal to provide assistance to non-low-income families or a model housing activity?</HEAD>
<P>Whether submitted in the IHP or at any other time, HUD will have 60 calendar days after receiving the proposal to notify the recipient in writing that the proposal to provide assistance to non-low-income families or for model activities is approved or disapproved. If no decision is made by HUD within 60 calendar days of receiving the proposal, the proposal is deemed to have been approved by HUD.
</P>
<CITA TYPE="N">[77 FR 71525, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.116" NODE="24:4.1.3.1.24.2.41.10" TYPE="SECTION">
<HEAD>§ 1000.116   What should HUD do before declining a proposal to provide assistance to non low-income families or a model housing activity?</HEAD>
<P>HUD shall consult with a recipient regarding the recipient's proposal to provide assistance to non-low-income families or a model housing activity. To the extent that resources are available, HUD shall provide technical assistance to the recipient in amending and modifying the proposal, if necessary. In case of a denial, HUD shall give the specific reasons for the denial.
</P>
<CITA TYPE="N">[77 FR 71525, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.118" NODE="24:4.1.3.1.24.2.41.11" TYPE="SECTION">
<HEAD>§ 1000.118   What recourse does a recipient have if HUD disapproves a proposal to provide assistance to non-low-income families or a model housing activity?</HEAD>
<P>(a) Within 30 calendar days of receiving HUD's denial of a proposal to provide assistance to non-low-income families or a model housing activity, the recipient may request reconsideration of the denial in writing. The request shall set forth justification for the reconsideration.
</P>
<P>(b) Within twenty calendar days of receiving the request, HUD shall reconsider the recipient's request and either affirm or reverse its initial decision in writing, setting forth its reasons for the decision. If the decision was made by the Assistant Secretary, the decision will constitute final agency action. If the decision was made at a lower level, then paragraphs (c) and (d) of this section will apply.
</P>
<P>(c) The recipient may appeal any denial of reconsideration by filing an appeal with the Assistant Secretary within twenty calendar days of receiving the denial. The appeal shall set forth the reasons why the recipient does not agree with HUD's decision and set forth justification for the reconsideration.
</P>
<P>(d) Within twenty calendar days of receipt of the appeal, the Assistant Secretary shall review the recipient's appeal and act on the appeal, setting forth the reasons for the decision.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 77 FR 71525, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.120" NODE="24:4.1.3.1.24.2.41.12" TYPE="SECTION">
<HEAD>§ 1000.120   May a recipient use Indian preference or tribal preference in selecting families for housing assistance?</HEAD>
<P>Yes. The IHP may set out a preference for the provision of housing assistance to Indian families who are members of the Indian tribe or to other Indian families if the recipient has adopted the preference in its admissions policy. The recipient shall ensure that housing activities funded under NAHASDA are subject to the preference.


</P>
</DIV8>


<DIV8 N="§ 1000.122" NODE="24:4.1.3.1.24.2.41.13" TYPE="SECTION">
<HEAD>§ 1000.122   May NAHASDA grant funds be used as matching funds to obtain and leverage funding, including any Federal or state program and still be considered an affordable housing activity?</HEAD>
<P>There is no prohibition in NAHASDA against using grant funds as matching funds.


</P>
</DIV8>


<DIV8 N="§ 1000.124" NODE="24:4.1.3.1.24.2.41.14" TYPE="SECTION">
<HEAD>§ 1000.124   What maximum and minimum rent or homebuyer payment can a recipient charge a low-income rental tenant or homebuyer residing in housing units assisted with NAHASDA grant amounts?</HEAD>
<P>A recipient can charge a low-income rental tenant or homebuyer rent or homebuyer payments not to exceed 30 percent of the adjusted income of the family. The recipient may also decide to compute its rental and homebuyer payments on any lesser percentage of adjusted income of the family. This requirement applies only to units assisted with NAHASDA grant amounts. NAHASDA does not set minimum rents or homebuyer payments; however, a recipient may do so.


</P>
</DIV8>


<DIV8 N="§ 1000.126" NODE="24:4.1.3.1.24.2.41.15" TYPE="SECTION">
<HEAD>§ 1000.126   May a recipient charge flat or income-adjusted rents?</HEAD>
<P>Yes, providing the rental or homebuyer payment of the low-income family does not exceed 30 percent of the family's adjusted income.


</P>
</DIV8>


<DIV8 N="§ 1000.128" NODE="24:4.1.3.1.24.2.41.16" TYPE="SECTION">
<HEAD>§ 1000.128   Is income verification required for assistance under NAHASDA?</HEAD>
<P>(a) Yes, the recipient must verify that the family is income eligible based on anticipated annual income. The family is required to provide documentation to verify this determination. The recipient is required to maintain the documentation on which the determination of eligibility is based.
</P>
<P>(b) The recipient may require a family to periodically verify its income in order to determine housing payments or continued occupancy consistent with locally adopted policies. When income verification is required, the family must provide documentation which verifies its income, and this documentation must be retained by the recipient.


</P>
</DIV8>


<DIV8 N="§ 1000.130" NODE="24:4.1.3.1.24.2.41.17" TYPE="SECTION">
<HEAD>§ 1000.130   May a recipient charge a non low-income family rents or homebuyer payments which are more than 30 percent of the family's adjusted income?</HEAD>
<P>Yes. A recipient may charge a non low-income family rents or homebuyer payments which are more than 30 percent of the family's adjusted income.


</P>
</DIV8>


<DIV8 N="§ 1000.132" NODE="24:4.1.3.1.24.2.41.18" TYPE="SECTION">
<HEAD>§ 1000.132   Are utilities considered a part of rent or homebuyer payments?</HEAD>
<P>Utilities may be considered a part of rent or homebuyer payments if a recipient decides to define rent or homebuyer payments to include utilities in its written policies on rents and homebuyer payments required by section 203(a)(1) of NAHASDA. A recipient may define rents and homebuyer payments to exclude utilities.


</P>
</DIV8>


<DIV8 N="§ 1000.134" NODE="24:4.1.3.1.24.2.41.19" TYPE="SECTION">
<HEAD>§ 1000.134   When may a recipient (or entity funded by a recipient) demolish or dispose of current assisted stock?</HEAD>
<P>(a) A recipient (or entity funded by a recipient) may undertake a planned demolition or disposal of current assisted stock owned by the recipient or an entity funded by the recipient when:
</P>
<P>(1) A financial analysis demonstrates that it is more cost-effective or housing program-effective for the recipient to demolish or dispose of the unit than to continue to operate or own it; or
</P>
<P>(2) The housing unit has been condemned by the government which has authority over the unit; or
</P>
<P>(3) The housing unit is an imminent threat to the health and safety of housing residents; or
</P>
<P>(4) Continued habitation of a housing unit is inadvisable due to cultural or historical considerations.
</P>
<P>(b) No action to demolish or dispose of the property other than performing the analysis cited in paragraph (a) of this section can be taken until HUD has been notified in writing of the recipient's intent to demolish or dispose of the housing units consistent with section 102(c)(4)(H) of NAHASDA. The written notification must set out the analysis used to arrive at the decision to demolish or dispose of the property and may be set out in a recipient's IHP or in a separate submission to HUD.
</P>
<P>(c) In any disposition sale of a housing unit, a sale process designed to maximize the sale price will be used. However, where the sale is to a low-income Indian family, the home may be disposed of without maximizing the sale price so long as such price is consistent with a recipient's IHP. The sale proceeds from the disposition of any housing unit are program income under NAHASDA and must be used in accordance with the requirements of NAHASDA and these regulations.


</P>
</DIV8>


<DIV8 N="§ 1000.136" NODE="24:4.1.3.1.24.2.41.20" TYPE="SECTION">
<HEAD>§ 1000.136   What insurance requirements apply to housing units assisted with NAHASDA grants?</HEAD>
<P>(a) The recipient shall provide adequate insurance either by purchasing insurance or by indemnification against casualty loss by providing insurance in adequate amounts to indemnify the recipient against loss from fire, weather, and liability claims for all housing units owned or operated by the recipient.
</P>
<P>(b) The recipients shall not require insurance on units assisted by grants to families for privately owned housing if there is no risk of loss or exposure to the recipient or if the assistance is in an amount less than $5000, but will require insurance when repayment of all or part of the assistance is part of the assistance agreement.
</P>
<P>(c) The recipient shall require contractors and subcontractors to either provide insurance covering their activities or negotiate adequate indemnification coverage to be provided by the recipient in the contract.
</P>
<P>(d) These requirements are in addition to applicable flood insurance requirements under § 1000.38.


</P>
</DIV8>


<DIV8 N="§ 1000.138" NODE="24:4.1.3.1.24.2.41.21" TYPE="SECTION">
<HEAD>§ 1000.138   What constitutes adequate insurance?</HEAD>
<P>Insurance is adequate if it is a purchased insurance policy from an insurance provider or a plan of self-insurance in an amount that will protect the financial stability of the recipient's IHBG program. Recipients may purchase the required insurance without regard to competitive selection procedures from nonprofit insurance entities which are owned and controlled by recipients and which have been approved by HUD.


</P>
</DIV8>


<DIV8 N="§ 1000.139" NODE="24:4.1.3.1.24.2.41.22" TYPE="SECTION">
<HEAD>§ 1000.139   What are the standards for insurance entities owned and controlled by recipients?</HEAD>
<P>(a) <I>General.</I> A recipient may provide insurance coverage required by section 203(c) of NAHASDA and §§ 1000.136 and 1000.138 through a self-insurance plan, approved by HUD in accordance with this section, provided by a nonprofit insurance entity that is wholly owned and controlled by IHBG recipients.
</P>
<P>(b) <I>Self-insurance plan.</I> An Indian housing self-insurance plan must be shown to meet the requirements of paragraph (c) of this section.
</P>
<P>(c) <I>Application.</I> For a self-insurance plan to be approved by HUD, an application and supporting materials must be submitted containing the information specified in paragraphs (c)(1) through (c)(9) of this section. Any material changes made to these documents after initial approval must be submitted to HUD. Adverse material changes may cause HUD to revoke its approval of a self-insurance entity. The application submitted to HUD must show that:
</P>
<P>(1) The plan is organized as an insurance entity, tribal self-insurance plan, tribal risk retention group, or Indian housing self-insurance risk pool;
</P>
<P>(2) The plan limits participation to IHBG recipients;
</P>
<P>(3) The plan operates on a nonprofit basis;
</P>
<P>(4)(i) The plan employs or contracts with a third party to provide competent underwriting and management staff;
</P>
<P>(A) The underwriting staff must be composed of insurance professionals with an average of at least five years of experience in large risk commercial underwriting exceeding $100,000 in annual premiums or at least five years of experience in underwriting risks for public entity plans of self-insurance;
</P>
<P>(B) The management staff must have at least one senior manager who has a minimum of five years of insurance experience at the level of vice president of a property or casualty insurance entity; as a senior branch manager of a branch office with annual property or casualty premiums exceeding five million dollars; or as a senior manager of a public entity self-insurance risk pool;
</P>
<P>(ii) Satisfaction of this requirement may be demonstrated by evidence such as résumés and employment history of the underwriting staff for the plan and of the key management staff with day-to-day operational oversight of the plan;
</P>
<P>(5) The plan maintains internal controls and cost containment measures, as shown by the annual budget;
</P>
<P>(6) The plan maintains sound investments consistent with its articles of incorporation, charter, bylaws, risk pool agreement, or other applicable organizational document or agreement concerning investments;
</P>
<P>(7) The plan maintains adequate surplus and reserves, as determined by HUD, for undischarged liabilities of all types, as shown by a current audited financial statement and an actuarial review conducted in accordance with paragraph (e) of this section;
</P>
<P>(8) The plan has proper organizational documentation, as shown by copies of the articles of incorporation, charter, bylaws, subscription agreement, business plan, contracts with third-party administrators, and other organizational documents; and
</P>
<P>(9) A plan's first successful application for approval under this section must also include an opinion from the plan's legal counsel that the plan is properly chartered, incorporated, or otherwise formed under applicable law.
</P>
<P>(d) <I>HUD consideration of plan.</I> HUD will consider an application for approval of a self-insurance plan submitted under this section and approve or disapprove that application no later than 90 days from the date of receipt of a complete application. If an application is disapproved, HUD shall notify the applicant of the reasons for disapproval and may offer technical assistance to a recipient to help the recipient correct the deficiencies in the application. The recipient may then resubmit the application under this section.
</P>
<P>(e) <I>Annual reporting.</I> An approved plan must undergo an audit and actuarial review annually. In addition, an evaluation of the plan's management must be performed by an insurance professional every three years. These audits, actuarial reviews, and management reviews must be submitted to HUD within 90 days after the end of the insuring entity's fiscal year and be prepared in accordance with the following standards:
</P>
<P>(1) The annual financial statement must be prepared in accordance with generally accepted accounting principles (GAAP) and audited by an independent auditor in accordance with generally accepted government auditing standards. The independent auditor shall state in writing an opinion on whether the plan's financial statement is presented fairly, in accordance with GAAP;
</P>
<P>(2) The actuarial review of the plan shall be done consistently with requirements established by the Association of Governmental Risk Pools and conducted by an independent property or casualty actuary who is a member of a recognized professional actuarial organization, such as the American Academy of Actuaries. The report issued and submitted to HUD must include the actuary's written opinion on any over- or under-reserving and the adequacy of the reserve maintained for open claims and for incurred but unreported claims;
</P>
<P>(3) The management review must be prepared by an independent insurance consultant who has received the professional designation of a chartered property/casualty underwriter (CPCU), associate in risk management (ARM), or associate in claims (AIC), and must cover the following:
</P>
<P>(i) The efficiency of the management or third-party administrator of the plan;
</P>
<P>(ii) Timeliness of the claim payments and reserving practices; and
</P>
<P>(iii) The adequacy of reinsurance or excess insurance coverage.
</P>
<P>(f) <I>Revocation of approval.</I> HUD may revoke its approval of a plan under this section when the plan no longer meets the requirements of this section. The plan's management will be notified in writing of the proposed revocation of its approval and of the manner and time in which to request a hearing to challenge the determination, in accordance with the dispute resolution procedures set forth in this part for model housing activities (§ 1000.118).
</P>
<P>(g) <I>Preemption.</I> In order that tribally owned Indian housing insurance entities that provide insurance for IHBG-assisted housing will not be subject to conflicting state laws and widely varying and costly requirements, any self-insurance plan under this section that meets the requirements of this section and that has been approved by HUD shall be governed by the regulations of this subpart in its provision of insurance for IHBG-assisted housing.
</P>
<CITA TYPE="N">[72 FR 29740, May 29, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 1000.140" NODE="24:4.1.3.1.24.2.41.23" TYPE="SECTION">
<HEAD>§ 1000.140   May a recipient use grant funds to purchase insurance for privately owned housing to protect NAHASDA grant amounts spent on that housing?</HEAD>
<P>Yes. All purchases of insurance must be in accordance with §§ 1000.136 and 1000.138.


</P>
</DIV8>


<DIV8 N="§ 1000.141" NODE="24:4.1.3.1.24.2.41.24" TYPE="SECTION">
<HEAD>§ 1000.141   What is “useful life” and how is it related to affordability?</HEAD>
<P>Useful life is the time period during which an assisted property must remain affordable, as defined in section 205(a) of NAHASDA.
</P>
<CITA TYPE="N">[77 FR 71525, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.142" NODE="24:4.1.3.1.24.2.41.25" TYPE="SECTION">
<HEAD>§ 1000.142   How does a recipient determine the “useful life” during which low-income rental housing and low-income homebuyer housing must remain affordable as required in sections 205(a)(2) and 209 of NAHASDA?</HEAD>
<P>To the extent required in the IHP, each recipient shall describe its determination of the useful life of the assisted housing units in its developments in accordance with the local conditions of the Indian area of the recipient. By approving the plan, HUD determines the useful life in accordance with section 205(a)(2) of NAHASDA and for purposes of section 209.
</P>
<CITA TYPE="N">[77 FR 71525, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.143" NODE="24:4.1.3.1.24.2.41.26" TYPE="SECTION">
<HEAD>§ 1000.143   How does a recipient implement its useful life requirements?</HEAD>
<P>A recipient implements its useful life requirements by placing a binding commitment, satisfactory to HUD, on the assisted property.
</P>
<CITA TYPE="N">[77 FR 71526, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.144" NODE="24:4.1.3.1.24.2.41.27" TYPE="SECTION">
<HEAD>§ 1000.144   What are binding commitments satisfactory to HUD?</HEAD>
<P>A binding commitment satisfactory to HUD is a written use restriction agreement, developed by the recipient, and placed on an assisted property for the period of its useful life.
</P>
<CITA TYPE="N">[77 FR 71526, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.145" NODE="24:4.1.3.1.24.2.41.28" TYPE="SECTION">
<HEAD>§ 1000.145   Are Mutual Help homes developed under the 1937 Act subject to the useful life provisions of section 205(a)(2)?</HEAD>
<P>No.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998. Redesignated at 77 FR 71526, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.146" NODE="24:4.1.3.1.24.2.41.29" TYPE="SECTION">
<HEAD>§ 1000.146   Are binding commitments for the remaining useful life of property applicable to a family member or household member who subsequently takes ownership of a homeownership unit?</HEAD>
<P>No. The transfer of a homeownership unit to a family member or household member is not subject to a binding commitment for the remaining useful life of the property. Any subsequent transfer by the family member or household member to a third party (not a family member or household member) is subject to any remaining useful life under a binding commitment.
</P>
<CITA TYPE="N">[77 FR 71526, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.147" NODE="24:4.1.3.1.24.2.41.30" TYPE="SECTION">
<HEAD>§ 1000.147   When does housing qualify as affordable housing under NAHASDA?</HEAD>
<P>(a) Housing qualifies as affordable housing, provided that the family occupying the unit is low-income at the following times:
</P>
<P>(1) In the case of rental housing, at the time of the family's initial occupancy of such unit;
</P>
<P>(2) In the case of a contract to purchase existing housing, at the time of purchase;
</P>
<P>(3) In the case of a lease-purchase agreement for existing housing or for housing to be constructed, at the time the agreement is signed; and
</P>
<P>(4) In the case of a contract to purchase housing to be constructed, at the time the contract is signed.
</P>
<P>(b) Families that are not low-income as described in this section may be eligible under § 1000.104 or § 1000.110.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998. Redesignated at 77 FR 71526, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.150" NODE="24:4.1.3.1.24.2.41.31" TYPE="SECTION">
<HEAD>§ 1000.150   How may Indian tribes and TDHEs receive criminal conviction information on applicants for employment and on adult applicants for housing assistance, or tenants?</HEAD>
<P>(a) As required by section 208 of NAHASDA, the National Crime Information Center, police departments, and other law enforcement agencies shall provide criminal conviction information to Indian tribes and TDHEs upon request. Information regarding juveniles shall only be released to the extent such release is authorized by the law of the applicable state, Indian tribe or locality.
</P>
<P>(b) For purposes of this section, the term “<I>tenants</I>” includes homebuyers who are purchasing a home pursuant to a lease purchase agreement.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 77 FR 71526, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.152" NODE="24:4.1.3.1.24.2.41.32" TYPE="SECTION">
<HEAD>§ 1000.152   How is the recipient to use criminal conviction information?</HEAD>
<P>(a) With regard to adult tenants and applicants for housing assistance, the recipient shall use the criminal conviction information described in § 1000.150 only for applicant screening, lease enforcement, and eviction actions.
</P>
<P>(b) With regard to applicants for employment, the recipient shall use the criminal conviction information described in § 1000.150 for the purposes set out in section 208 of NAHASDA.
</P>
<P>(c) The criminal conviction information described in § 1000.150 may be disclosed only to any person who has a job-related need for the information and who is an authorized officer, employee, or representative of the recipient or the owner of housing assisted under NAHASDA.
</P>
<CITA TYPE="N">[77 FR 71526, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.154" NODE="24:4.1.3.1.24.2.41.33" TYPE="SECTION">
<HEAD>§ 1000.154   How is the recipient to keep criminal conviction information confidential?</HEAD>
<P>(a) The recipient will keep all the criminal conviction record information it receives from the official law enforcement agencies listed in § 1000.150 in files separate from all other housing records.
</P>
<P>(b) These criminal conviction records will be kept under lock and key and be under the custody and control of the recipient's housing executive director/lead official and/or his designee for such records.
</P>
<P>(c) These criminal conviction records may only be accessed with the written permission of the Indian tribe's or TDHE's housing executive director/lead official and/or his designee and are only to be used for the purposes stated in section 208 of NAHASDA and these regulations.


</P>
</DIV8>


<DIV8 N="§ 1000.156" NODE="24:4.1.3.1.24.2.41.34" TYPE="SECTION">
<HEAD>§ 1000.156   Is affordable housing developed, acquired, or assisted under the IHBG program subject to limitations on cost or design standards?</HEAD>
<P>Yes. Affordable housing must be of moderate design. For these purposes, moderate design is defined as housing that is of a size and with amenities consistent with unassisted housing offered for sale in the Indian tribe's general geographic area to buyers who are at or below the area median income. The local determination of moderate design applies to all housing assisted under an affordable housing activity, including development activities (<I>e.g.,</I> acquisition, new construction, reconstruction, moderate or substantial rehabilitation of affordable housing and homebuyer assistance) and model activities. Acquisition includes assistance to a family to buy housing. Units with the same number of bedrooms must be comparable with respect to size, cost and amenities.
</P>
<CITA TYPE="N">[66 FR 49790, Sept. 28, 2001]


</CITA>
</DIV8>


<DIV8 N="§ 1000.158" NODE="24:4.1.3.1.24.2.41.35" TYPE="SECTION">
<HEAD>§ 1000.158   How will a NAHASDA grant recipient know that the housing assisted under the IHBG program meets the requirements of § 1000.156?</HEAD>
<P>(a) A recipient must use one of the methods specified in paragraph (b) or (c) of this section to determine if an assisted housing project meets the moderate design requirements of § 1000.156. For purposes of this requirement, a project is one or more housing units, of comparable size, cost, amenities and design, developed with assistance provided by the Act. 
</P>
<P>(b) The recipient may adopt written standards for its affordable housing programs that reflect the requirement specified in § 1000.156. The standards must describe the type of housing, explain the basis for the standards, and use similar housing in the Indian tribe's general geographic area. For each affordable housing project, the recipient must maintain documentation substantiating compliance with the adopted housing standards. The standards and documentation substantiating compliance for each activity must be available for review by the general public and, upon request, by HUD. Prior to awarding a contract for the construction of housing or beginning construction using its own workforce, the recipient must complete a comparison of the cost of developing or acquiring/rehabilitating the affordable housing with the limits provided by the TDC discussed in paragraph (c) of this section and may not, without prior HUD approval, exceed by more than 10 percent the TDC maximum cost for the project. In developing standards under this paragraph, the recipient must establish, maintain, and follow policies that determine a local definition of moderate design which considers: 
</P>
<P>(1) Gross area; 
</P>
<P>(2) Total cost to provide the housing; 
</P>
<P>(3) Environmental concerns and mitigations; 
</P>
<P>(4) Climate; 
</P>
<P>(5) Comparable housing in geographical area; 
</P>
<P>(6) Local codes, ordinances and standards; 
</P>
<P>(7) Cultural relevance in design; 
</P>
<P>(8) Design and construction features that are reasonable, and necessary to provide decent, safe, sanitary and affordable housing; and 
</P>
<P>(9) Design and construction features that are accessible to persons with a variety of disabilities. 
</P>
<P>(c) If the recipient has not adopted housing standards specified in paragraph (b) of this section, Total Development Cost (TDC) limits published periodically by HUD establish the maximum amount of funds (from all sources) that the recipient may use to develop or acquire/rehabilitate affordable housing. The recipient must complete a comparison of the cost of developing or acquiring/rehabilitating the affordable housing with the limits provided by the TDC and may not, without prior HUD approval, exceed the TDC maximum cost for the project. 
</P>
<CITA TYPE="N">[66 FR 49790, Sept. 28, 2001]


</CITA>
</DIV8>


<DIV8 N="§ 1000.160" NODE="24:4.1.3.1.24.2.41.36" TYPE="SECTION">
<HEAD>§ 1000.160   Are non-dwelling structures developed, acquired or assisted under the IHBG program subject to limitations on cost or design standards?</HEAD>
<P>Yes. Non-dwelling structures must be of a design, size and with features or amenities that are reasonable and necessary to accomplish the purpose intended by the structures. The purpose of a non-dwelling structure must be to support an affordable housing activity, as defined by the Act. 
</P>
<CITA TYPE="N">[66 FR 49790, Sept. 28, 2001]


</CITA>
</DIV8>


<DIV8 N="§ 1000.162" NODE="24:4.1.3.1.24.2.41.37" TYPE="SECTION">
<HEAD>§ 1000.162   How will a recipient know that non-dwelling structures assisted under the IHBG program meet the requirements of 1000.160?</HEAD>
<P>(a) The recipient must use one of the methods described in paragraph (b) or (c) of this section to determine if a non-dwelling structure meets the limitation requirements of § 1000.160. If the recipient develops, acquires, or rehabilitates a non-dwelling structure with funds from NAHASDA and other sources, then the cost limit standard established under these regulations applies to the entire structure. If funds are used from two different sources, the standards of the funding source with the more restrictive rules apply. 
</P>
<P>(b)(1) The recipient may adopt written standards for non-dwelling structures. The standards must describe the type of structures and must clearly describe the criteria to be used to guide the cost, size, design, features, amenities, performance or other factors. The standards for such structures must be able to support the reasonableness and necessity for these factors and to clearly identify the affordable housing activity that is being provided. 
</P>
<P>(2) When the recipient applies a standard to particular structures, it must document the following: (i) Identification of targeted population to benefit from the structures; 
</P>
<P>(ii) Identification of need or problem to be solved; 
</P>
<P>(iii) Affordable housing activity provided or supported by the structures; 
</P>
<P>(iv) Alternatives considered; 
</P>
<P>(v) Provision for future growth and change; 
</P>
<P>(vi) Cultural relevance of design; 
</P>
<P>(vii) Size and scope supported by population and need; 
</P>
<P>(viii) Design and construction features that are accessible to persons with a variety of disabilities; 
</P>
<P>(ix) Cost; and 
</P>
<P>(x) Compatibility with community infrastructure and services. 
</P>
<P>(c) If the recipient has not adopted program standards specified in paragraph (b) of this section, then it must demonstrate and document that the non-dwelling structure is of a cost, size, design and with amenities consistent with similarly designed and constructed structures in the recipient's general geographic area.
</P>
<CITA TYPE="N">[66 FR 49790, Sept. 28, 2001]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:4.1.3.1.24.3" TYPE="SUBPART">
<HEAD>Subpart C—Indian Housing Plan (IHP)</HEAD>


<DIV8 N="§ 1000.201" NODE="24:4.1.3.1.24.3.41.1" TYPE="SECTION">
<HEAD>§ 1000.201   How are funds made available under NAHASDA?</HEAD>
<P>Every fiscal year HUD will make grants under the IHBG program to recipients who have submitted to HUD for a tribal program year an IHP in accordance with § 1000.220 to carry out affordable housing activities.
</P>
<CITA TYPE="N">[77 FR 71526, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.202" NODE="24:4.1.3.1.24.3.41.2" TYPE="SECTION">
<HEAD>§ 1000.202   Who are eligible recipients?</HEAD>
<P>Eligible recipients are Indian tribes, or TDHEs when authorized by one or more Indian tribes.


</P>
</DIV8>


<DIV8 N="§ 1000.204" NODE="24:4.1.3.1.24.3.41.3" TYPE="SECTION">
<HEAD>§ 1000.204   How does an Indian tribe designate itself as recipient of the grant?</HEAD>
<P>(a) By resolution of the Indian tribe; or
</P>
<P>(b) When such authority has been delegated by an Indian tribe's governing body to a tribal committee(s), by resolution or other written form used by such committee(s) to memorialize the decisions of that body, if applicable.


</P>
</DIV8>


<DIV8 N="§ 1000.206" NODE="24:4.1.3.1.24.3.41.4" TYPE="SECTION">
<HEAD>§ 1000.206   How is a TDHE designated?</HEAD>
<P>(a)(1) By resolution of the Indian tribe or Indian tribes to be served; or
</P>
<P>(2) When such authority has been delegated by an Indian tribe's governing body to a tribal committee(s), by resolution or other written form used by such committee(s) to memorialize the decisions of that body, if applicable.
</P>
<P>(b) In the absence of a designation by the Indian tribe, the default designation as provided in section 4(21) of NAHASDA shall apply.


</P>
</DIV8>


<DIV8 N="§ 1000.208" NODE="24:4.1.3.1.24.3.41.5" TYPE="SECTION">
<HEAD>§ 1000.208   What happens if an Indian tribe had two IHAs as of September 30, 1996?</HEAD>
<P>Indian tribes which had established and were operating two IHAs as of September 30, 1996, under the 1937 Act shall be allowed to form and operate two TDHEs under NAHASDA. Nothing in this section shall affect the allocation of funds otherwise due to an Indian tribe under the formula.


</P>
</DIV8>


<DIV8 N="§ 1000.210" NODE="24:4.1.3.1.24.3.41.6" TYPE="SECTION">
<HEAD>§ 1000.210   What happens to existing 1937 Act units in those jurisdictions for which Indian tribes do not or cannot submit an IHP?</HEAD>
<P>NAHASDA does not provide the statutory authority for HUD to grant NAHASDA grant funds to an Indian housing authority, Indian tribe or to a default TDHE which cannot obtain a tribal certification, if the requisite IHP is not submitted by an Indian tribe or is determined to be out of compliance by HUD. There may be circumstances where this may happen, and in those cases, other methods of tribal, Federal, or private market support may have to be sought to maintain and operate those 1937 Act units.


</P>
</DIV8>


<DIV8 N="§ 1000.212" NODE="24:4.1.3.1.24.3.41.7" TYPE="SECTION">
<HEAD>§ 1000.212   Is submission of an IHP required?</HEAD>
<P>Yes. An Indian tribe or, with the consent of its Indian tribe(s), the TDHE, must submit an IHP to HUD to receive funding under NAHASDA, except as provided in section 101(b)(2) of NAHASDA. If a TDHE has been designated by more than one Indian tribe, the TDHE can submit a separate IHP for each Indian tribe or it may submit a single IHP based on the requirements of § 1000.220 with the approval of the Indian tribes.


</P>
</DIV8>


<DIV8 N="§ 1000.214" NODE="24:4.1.3.1.24.3.41.8" TYPE="SECTION">
<HEAD>§ 1000.214   What is the deadline for submission of an IHP?</HEAD>
<P>IHPs must be initially sent by the recipient to the Area ONAP no later than 75 days before the beginning of a tribal program year. Grant funds cannot be provided until the plan due under this section is determined to be in compliance with section 102 of NAHASDA and funds are available.
</P>
<CITA TYPE="N">[77 FR 71526, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.216" NODE="24:4.1.3.1.24.3.41.9" TYPE="SECTION">
<HEAD>§ 1000.216   What happens if the recipient does not submit the IHP to the Area ONAP by no later than 75 days before the beginning of the tribal program year?</HEAD>
<P>If the IHP is not initially sent by at least 75 days before the beginning of the tribal program year, the recipient will not be eligible for IHBG funds for that fiscal year. Any funds not obligated because an IHP was not received before this deadline has passed shall be distributed by formula in the following year.
</P>
<CITA TYPE="N">[77 FR 71526, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.218" NODE="24:4.1.3.1.24.3.41.10" TYPE="SECTION">
<HEAD>§ 1000.218   Who prepares and submits an IHP?</HEAD>
<P>An Indian tribe, or with the authorization of a Indian tribe, in accordance with section 102(d) of NAHASDA a TDHE may prepare and submit a plan to HUD.


</P>
</DIV8>


<DIV8 N="§ 1000.220" NODE="24:4.1.3.1.24.3.41.11" TYPE="SECTION">
<HEAD>§ 1000.220   What are the requirements for the IHP?</HEAD>
<P>The IHP requirements are set forth in section 102(b) of NAHASDA. In addition, §§ 1000.56, 1000.108, 1000.120, 1000.134, 1000.142, 1000.238, 1000.302, and 1000.328 require or permit additional items to be set forth in the IHP for HUD determinations required by those sections. Recipients are only required to provide IHPs that contain these elements in a form prescribed by HUD. If a TDHE is submitting a single IHP that covers two or more Indian tribes, the IHP must contain a separate certification in accordance with section 102(d) of NAHASDA and IHP Tables for each Indian tribe when requested by such Indian tribes. However, Indian tribes are encouraged to perform comprehensive housing needs assessments and develop comprehensive IHPs and not limit their planning process to only those housing efforts funded by NAHASDA. An IHP should be locally driven.
</P>
<CITA TYPE="N">[77 FR 71526, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.222" NODE="24:4.1.3.1.24.3.41.12" TYPE="SECTION">
<HEAD>§ 1000.222   Are there separate IHP requirements for small Indian tribes and small TDHEs?</HEAD>
<P>No. HUD requirements for IHPs are reasonable.


</P>
</DIV8>


<DIV8 N="§ 1000.224" NODE="24:4.1.3.1.24.3.41.13" TYPE="SECTION">
<HEAD>§ 1000.224   Can any part of the IHP be waived?</HEAD>
<P>Yes. HUD has general authority under section 101(b)(2) of NAHASDA to waive any IHP requirements when an Indian tribe cannot comply with IHP requirements due to exigent circumstances beyond its control, for a period of not more than 90 days. The waiver authority under section 101(b)(2) of NAHASDA provides flexibility to address the needs of every Indian tribe, including small Indian tribes. The waiver may be requested by the Indian tribe or its TDHE (if such authority is delegated by the Indian tribe), and such waiver shall not be unreasonably withheld.
</P>
<CITA TYPE="N">[77 FR 71526, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.225" NODE="24:4.1.3.1.24.3.41.14" TYPE="SECTION">
<HEAD>§ 1000.225   When may a waiver of the IHP submission deadline be requested?</HEAD>
<P>A recipient may request a waiver for a period of not more than 90 days beyond the IHP submission due date.
</P>
<CITA TYPE="N">[77 FR 71526, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.226" NODE="24:4.1.3.1.24.3.41.15" TYPE="SECTION">
<HEAD>§ 1000.226   Can the certification requirements of section 102(c)(5) of NAHASDA be waived by HUD?</HEAD>
<P>Yes. HUD may waive these certification requirements as provided in section 101(b)(2) of NAHASDA.


</P>
</DIV8>


<DIV8 N="§ 1000.227" NODE="24:4.1.3.1.24.3.41.16" TYPE="SECTION">
<HEAD>§ 1000.227   What shall HUD do upon receipt of an IHP submission deadline waiver request?</HEAD>
<P>The waiver shall be decided upon by HUD within 45 days of receipt of the waiver request. HUD shall notify the recipient in writing within 45 days of receipt of the waiver request whether the request is approved or denied.
</P>
<CITA TYPE="N">[77 FR 71526, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.228" NODE="24:4.1.3.1.24.3.41.17" TYPE="SECTION">
<HEAD>§ 1000.228   If HUD changes its IHP format will Indian tribes be involved?</HEAD>
<P>Yes. HUD will first consult with Indian tribes before making any substantial changes to HUD's IHP format.


</P>
</DIV8>


<DIV8 N="§ 1000.230" NODE="24:4.1.3.1.24.3.41.18" TYPE="SECTION">
<HEAD>§ 1000.230   What is the process for HUD review of IHPs and IHP amendments?</HEAD>
<P>HUD will conduct the IHP review in the following manner:
</P>
<P>(a) HUD will conduct a limited review of the IHP to ensure that its contents:
</P>
<P>(1) Comply with the requirements of section 102 of NAHASDA, which outlines the IHP submission requirements; however, the recipient may use either the HUD-estimated IHBG amount or the IHBG amount from their most recent compliant IHP;
</P>
<P>(2) Are consistent with information and data available to HUD;
</P>
<P>(3) Are not prohibited by or inconsistent with any provision of NAHASDA or other applicable law; and
</P>
<P>(4) Include the appropriate certifications.
</P>
<P>(b) If the IHP complies with the provisions of paragraphs (a)(1), (a)(2), and (a)(3) of this section, HUD will notify the recipient of IHP compliance within 60 days after receiving the IHP. If HUD fails to notify the recipient, the IHP shall be considered to be in compliance with the requirements of section 102 of NAHASDA and the IHP is approved.
</P>
<P>(c) If the submitted IHP does not comply with the provisions of paragraphs (a)(1), and (a)(3) of this section, HUD will notify the recipient of the determination of non-compliance. HUD will provide this notice no later than 60 days after receiving the IHP. This notice will set forth:
</P>
<P>(1) The reasons for noncompliance;
</P>
<P>(2) The modifications necessary for the IHP to meet the submission requirements; and
</P>
<P>(3) The date by which the revised IHP must be submitted.
</P>
<P>(d) If the recipient does not submit a revised IHP by the date indicated in the notice provided under paragraph (c) of this section, the IHP will be determined by HUD to be in non-compliance unless a waiver is requested and approved under section 101(b)(2) of NAHASDA. If the IHP is determined by HUD to be in non-compliance and no waiver is granted, the recipient may appeal this determination following the appeal process in § 1000.234.
</P>
<P>(e)(1) If the IHP does not contain the certifications identified in paragraph (a)(4) of this section, the recipient will be notified within 60 days of submission of the IHP that the plan is incomplete. The notification will include a date by which the certification must be submitted.
</P>
<P>(2) If the recipient has not complied or cannot comply with the certification requirements due to circumstances beyond the control of the Indian tribe(s), within the timeframe established, the recipient can request a waiver in accordance with section 101(b)(2) of NAHASDA. If the waiver is approved, the recipient is eligible to receive its grant in accordance with any conditions of the waiver.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 77 FR 71527, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.232" NODE="24:4.1.3.1.24.3.41.19" TYPE="SECTION">
<HEAD>§ 1000.232   Can an Indian tribe or TDHE amend its IHP?</HEAD>
<P>Yes. Section 103(c) of NAHASDA specifically provides that a recipient may submit modifications or revisions of its IHP to HUD. Unless the initial IHP certification provided by an Indian tribe allowed for the submission of IHP amendments without further tribal certifications, a tribal certification must accompany submission of IHP amendments by a TDHE to HUD. HUD's review of an amendment and determination of compliance will be limited to modifications of an IHP which adds new activities or involve a decrease in the amount of funds provided to protect and maintain the viability of housing assisted under the 1937 Act. HUD will consider these modifications to the IHP in accordance with § 1000.230. HUD will act on amended IHPs within 30 days.


</P>
</DIV8>


<DIV8 N="§ 1000.234" NODE="24:4.1.3.1.24.3.41.20" TYPE="SECTION">
<HEAD>§ 1000.234   Can HUD's determination regarding the non-compliance of an IHP or a modification to an IHP be appealed?</HEAD>
<P>(a) Yes. Within 30 days of receiving HUD's disapproval of an IHP or of a modification to an IHP, the recipient may submit a written request for reconsideration of the determination. The request shall include the justification for the reconsideration.
</P>
<P>(b) Within 21 days of receiving the request, HUD shall reconsider its initial determination and provide the recipient with written notice of its decision to affirm, modify, or reverse its initial determination. This notice will also contain the reasons for HUD's decision.
</P>
<P>(c) The recipient may appeal any denial of reconsideration by filing an appeal with the Assistant Secretary within 21 days of receiving the denial. The appeal shall set forth the reasons why the recipient does not agree with HUD's decision and include justification for the reconsideration.
</P>
<P>(d) Within 21 days of receipt of the appeal, the Assistant Secretary shall review the recipient's appeal and act on the appeal. The Assistant Secretary will provide written notice to the recipient setting forth the reasons for the decision. The Assistant Secretary's decision constitutes final agency action.


</P>
</DIV8>


<DIV8 N="§ 1000.236" NODE="24:4.1.3.1.24.3.41.21" TYPE="SECTION">
<HEAD>§ 1000.236   What are eligible administrative and planning expenses?</HEAD>
<P>(a) Eligible administrative and planning expenses of the IHBG program include, but are not limited to:
</P>
<P>(1) Costs of overall program and/or administrative management;
</P>
<P>(2) Coordination monitoring and evaluation;
</P>
<P>(3) Preparation of the IHP including data collection and transition costs;
</P>
<P>(4) Preparation of the annual performance report;
</P>
<P>(5) Challenge to and collection of data for purposes of challenging the formula; and
</P>
<P>(6) Administrative and planning expenses associated with expenditure of non-IHBG funds on affordable housing activities if the source of the non-IHBG funds limits expenditure of its funds on such administrative expenses.
</P>
<P>(b) Staff and overhead costs directly related to carrying out affordable housing activities or comprehensive and community development planning activities can be determined to be eligible costs of the affordable housing activity or considered as administration or planning at the discretion of the recipient.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 77 FR 71527, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.238" NODE="24:4.1.3.1.24.3.41.22" TYPE="SECTION">
<HEAD>§ 1000.238   What percentage of the IHBG funds can be used for administrative and planning expenses?</HEAD>
<P>Recipients receiving in excess of $500,000 may use up to 20 percent of their annual expenditures of grant funds or may use up to 20 percent of their annual grant amount, whichever is greater. Recipients receiving $500,000 or less may use up to 30 percent of their annual expenditures of grant funds or up to 30 percent of their annual grant amount, whichever is greater. When a recipient is receiving grant funds on behalf of one or more grant beneficiaries, the recipient may use up to 30 percent of the annual expenditure of grant funds or up to 30 percent of the annual grant amount, whichever is greater, of each grant beneficiary whose allocation is $500,000 or less, and up to 20 percent of the annual expenditure of grant funds or up to 20 percent of the annual grant amount, whichever is greater, of each grant beneficiary whose allocation is greater than $500,000. HUD approval is required if a higher percentage is requested by the recipient. Recipients combining grant funds with other funding may request HUD approval to use a higher percentage based on its total expenditure of funds from all sources for that year. When HUD approval is required, HUD must take into consideration any cost of preparing the IHP, challenges to and collection of data, the recipient's grant amount, approved cost allocation plans, and any other relevant information with special consideration given to the circumstances of recipients receiving minimal funding.
</P>
<CITA TYPE="N">[77 FR 71527, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.239" NODE="24:4.1.3.1.24.3.41.23" TYPE="SECTION">
<HEAD>§ 1000.239   May a recipient establish and maintain reserve accounts for administration and planning?</HEAD>
<P>Yes. In addition to the amounts established for planning and administrative expenses under §§ 1000.236 and 1000.238, a recipient may establish and maintain separate reserve accounts only for the purpose of accumulating amounts for administration and planning relating to affordable housing activities. These amounts may be invested in accordance with § 1000.58(c). Interest earned on reserves is not program income and shall not be included in calculating the maximum amount of reserves. The maximum amount of reserves, whether in one or more accounts, that a recipient may have available at any one time is calculated as follows:
</P>
<P>(a) Determine the 5-year average of administration and planning amounts, not including reserve amounts, expended in a tribal program year.
</P>
<P>(b) Establish 
<FR>1/4</FR> of that amount for the total eligible reserve.
</P>
<CITA TYPE="N">[77 FR 71527, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.240" NODE="24:4.1.3.1.24.3.41.24" TYPE="SECTION">
<HEAD>§ 1000.240   When is a local cooperation agreement required for affordable housing activities?</HEAD>
<P>The requirement for a local cooperation agreement applies only to rental and lease-purchase homeownership units assisted with IHBG funds which are owned by the Indian tribe or TDHE.


</P>
</DIV8>


<DIV8 N="§ 1000.242" NODE="24:4.1.3.1.24.3.41.25" TYPE="SECTION">
<HEAD>§ 1000.242   When does the requirement for exemption from taxation apply to affordable housing activities?</HEAD>
<P>The requirement for exemption from taxation applies only to rental and lease-purchase homeownership units assisted with IHBG funds which are owned by the Indian tribe or TDHE.


</P>
</DIV8>


<DIV8 N="§ 1000.244" NODE="24:4.1.3.1.24.3.41.26" TYPE="SECTION">
<HEAD>§ 1000.244   If the recipient has made a good-faith effort to negotiate a cooperation agreement and tax-exempt status but has been unsuccessful through no fault of its own, may the Secretary waive the requirement for a cooperation agreement and a tax exemption?</HEAD>
<P>Yes. Recipients must submit a written request for waiver to the recipient's Area ONAP. The request must detail a good faith effort by the recipient, identify the housing units involved, and include all pertinent background information about the housing units. The recipient must further demonstrate that it has pursued and exhausted all reasonable channels available to it to reach an agreement to obtain tax-exempt status, and that failure to obtain the required agreement and tax-exempt status has been through no fault of its own. The Area ONAP will forward the request, its recommendation, comments, and any additional relevant documentation to the Deputy Assistant Secretary for Native American Programs for processing to the Assistant Secretary.
</P>
<CITA TYPE="N">[77 FR 71527, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.246" NODE="24:4.1.3.1.24.3.41.27" TYPE="SECTION">
<HEAD>§ 1000.246   How must HUD respond to a request for waiver of the requirement for a cooperation agreement and a tax exemption?</HEAD>
<P>(a) HUD shall make a determination to such request for a waiver within 30 days of receipt or provide a reason to the requestor for the delay, identify all additional documentation necessary, and provide a timeline within which a determination will be made.
</P>
<P>(b) If the waiver is granted, HUD shall notify the recipient of the waiver in writing and inform the recipient of any special condition or deadlines with which it must comply. Such waiver shall remain effective until revoked by the Secretary.
</P>
<P>(c) If the waiver is denied, HUD shall notify the recipient of the denial and the reason for the denial in writing. If the request is denied, IHBG funds may not be spent on the housing units. If IHBG funds have been spent on the housing units prior to the denial, the recipient must reimburse the grant for all IHBG funds expended.
</P>
<CITA TYPE="N">[77 FR 71527, Dec. 3, 2012]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:4.1.3.1.24.4" TYPE="SUBPART">
<HEAD>Subpart D—Allocation Formula</HEAD>


<DIV8 N="§ 1000.301" NODE="24:4.1.3.1.24.4.41.1" TYPE="SECTION">
<HEAD>§ 1000.301   What is the purpose of the IHBG formula?</HEAD>
<P>The IHBG formula is used to allocate equitably and fairly funds made available through NAHASDA among eligible Indian tribes. A TDHE may be a recipient on behalf of an Indian tribe.


</P>
</DIV8>


<DIV8 N="§ 1000.302" NODE="24:4.1.3.1.24.4.41.2" TYPE="SECTION">
<HEAD>§ 1000.302   What are the definitions applicable for the IHBG formula?</HEAD>
<P><I>Allowable Expense Level (AEL) factor.</I> In rental projects, AEL is the per-unit per-month dollar amount of expenses which was used to compute the amount of operating subsidy used prior to October 1, 1997 for the Low Rent units developed under the 1937 Act. The “AEL factor” is the relative difference between a local area AEL and the national weighted average for AEL.
</P>
<P><I>Date of Full Availability (DOFA)</I> means the last day of the month in which substantially all the units in a housing development are available for occupancy.
</P>
<P><I>Fair Market Rent (FMR) factors</I> are gross rent estimates; they include shelter rent plus the cost of all utilities, except telephones. HUD estimates FMRs on an annual basis for 354 metropolitan FMR areas and 2,355 non-metropolitan county FMR areas. The “FMR factor” is the relative difference between a local area FMR and the national weighted average for FMR.
</P>
<P><I>Formula Annual Income.</I> For purposes of the IHBG formula, annual income is a household's total income as currently defined by the U.S. Census Bureau.
</P>
<P><I>Formula area.</I> (1) Formula areas are:
</P>
<P>(i) Reservations for federally recognized Indian tribes, as defined by the U.S. Census;
</P>
<P>(ii) Trust lands;
</P>
<P>(iii) Department of the Interior Near-Reservation Service Areas;
</P>
<P>(iv) Former Indian Reservation Areas in Oklahoma Indian Areas, as defined by the U.S. Census as Oklahoma Tribal Statistical Areas (OTSAs);
</P>
<P>(v) Congressionally Mandated Service Areas;
</P>
<P>(vi) State Tribal Areas as defined by the U.S. Census as State Designated American Indian Statistical Areas (SDAISAs);
</P>
<P>(vii) Tribal Designated Statistical Areas (TDSAs);
</P>
<P>(viii) California Tribal Jurisdictional Areas established or reestablished by federal court judgment; and
</P>
<P>(ix) Alaska formula areas described in paragraph (4) of this definition.
</P>
<P>(2)(i) For a geographic area not identified in paragraph (1) of this definition, and for expansion or re-definition of a geographic area from the prior year, including those identified in paragraph (1) of this definition, the Indian tribe must submit, on a form agreed to by HUD, information about the geographic area it wishes to include in its Formula Area, including proof that the Indian tribe, where applicable, has agreed to provide housing services pursuant to a Memorandum of Agreement (MOA) with the tribal and public governing entity or entities of the area, or has attempted to establish such an MOA, and is providing substantial housing services and will continue to expend or obligate funds for substantial housing services, as reflected in its Indian Housing Plan and Annual Performance Report for this purpose.
</P>
<P>(ii) Upon receiving a request for recognition of a geographic area not identified in paragraph (1) of this definition, HUD shall make a preliminary determination. HUD shall notify all potentially affected Indian tribes of the basis for its preliminary determination by certified mail and provide the Indian tribes with the opportunity to comment for a period of not less than 90 days. After consideration of the comments, HUD shall announce its final determination through <E T="04">Federal Register</E> notice.
</P>
<P>(iii) No Indian tribe may expand or redefine its Formula Area without complying with the requirements of paragraphs (2)(i) and (ii) of this definition, notwithstanding any changes recognized by the U.S. Census Bureau.
</P>
<P>(iv) The geographic area into which an Indian tribe may expand under this paragraph (2) shall be the smallest U.S. Census unit or units encompassing the physical location where substantial housing services have been provided by the Indian tribe.
</P>
<P>(3) Subject to a challenge by an Indian tribe with a Formula Area described under paragraph (1)(iv) of this definition, any federally recognized Indian tribe assigned Formula Area geography in Fiscal Year 2003 not identified in paragraphs (1) and (2) of this definition, shall continue to be assigned such Formula Area in subsequent fiscal years, provided that the Indian tribe continues to provide an appropriate level of housing services within the Formula Area as monitored by HUD using the definition of substantial housing services contained in this section as a guideline but not as a requirement.
</P>
<P>(4) Notwithstanding paragraphs (1), (2), and (3) of this definition, Alaska needs data shall be credited as set forth in § 1000.327 to the Alaska Native Village (ANV), the regional Indian tribe, or to the regional corporation established pursuant to the Alaska Native Claims Settlement Act (33 U.S.C. 1601 <I>et seq.</I>) (ANCSA). For purposes of § 1000.327 and this definition:
</P>
<P>(i) The formula area of the ANV shall be the geographic area of the village or that area delineated by the TDSA established for the ANV for purposes of the 1990 U.S. Census or the Alaska Native Village Statistical Area (ANVSA) established for the ANV. To the extent that the area encompassed by such designation may substantially exceed the actual geographic area of the village, such designation is subject to challenge pursuant to § 1000.336. If the ANVSA or the TDSA is determined pursuant to such challenge to substantially exceed the actual area of the village, then the geographic formula area of the ANV for purposes of § 1000.327 shall be such U.S. Census designation as most closely approximates the actual geographic area of the village.
</P>
<P>(ii) The geographic formula area of the regional corporation shall be the area established for the corporation by the ANCSA.
</P>
<P>(iii) An Indian tribe may seek to expand its Alaska formula area within its ANCSA region pursuant to the procedures set out in paragraph (2) of this definition. Formula Area added in this way shall be treated as overlapping pursuant to § 1000.326, unless the Indian tribe's members in the expanded area are less than 50 percent of the AIAN population. In cases where the Indian tribe is not treated as overlapping, the Indian tribe shall be credited with population and housing data only for its own tribal member residents within the new or added area. All other population and housing data for the area shall remain with the Indian tribe or tribes previously credited with such data.
</P>
<P>(5) In some cases the population data for an Indian tribe within its Formula Area is greater than its tribal enrollment. In general, to maintain fairness for all Indian tribes, the tribe's population data will not be allowed to exceed twice an Indian tribe's enrolled population. However, an Indian tribe subject to this cap may receive an allocation based on more than twice its total enrollment if it can show that it is providing housing assistance to substantially more non-member Indians and Alaska Natives who are members of another federally recognized Indian tribe than it is to members. For state-recognized Indian tribes, the population data and formula allocation shall be limited to their tribal enrollment figures as determined under enrollment criteria in effect in 1996.
</P>
<P>(6) In cases where an Indian tribe is seeking to receive an allocation more than twice its total enrollment, the tribal enrollment multiplier will be determined by the total number of Indians and Alaska Natives to whom the Indian tribe is providing housing assistance (on July 30 of the year before funding is sought) divided by the number of members to whom the Indian tribe is providing housing assistance. For example, an Indian tribe that provides housing to 300 Indians and Alaska Natives, of which 100 are members, the Indian tribe would then be able to receive an allocation for up to three times its tribal enrollment if the Indian and Alaska Native population in the area is three or more times the tribal enrollment.
</P>
<P><I>Formula Median Income.</I> For purposes of the formula median income is determined in accordance with section 567 of the Housing and Community Development Act of 1987 (42 U.S.C. 1437a note).
</P>
<P><I>Formula Response Form</I> is the form recipients use to report changes to their Formula Current Assisted stock, formula area, and other formula related information before each year's formula allocation.
</P>
<P><I>Indian Housing Authority (IHA) financed</I> means a homeownership program where title rests with the homebuyer and a security interest rests with the IHA.
</P>
<P><I>Mutual Help Occupancy Agreement (MHOA)</I> means a lease with option to purchase contract between an IHA and a homebuyer under the 1937 Act.
</P>
<P><I>National per unit subsidy</I> is the Fiscal Year 1996 national per unit subsidy (adjusted to full funding level) multiplied by an adjustment factor for inflation.
</P>
<P><I>Overcrowded</I> means households with more than 1.01 persons per room as defined by the U.S. Decennial Census.
</P>
<P><I>Section 8</I> means the making of housing assistance payments to eligible families leasing existing housing pursuant to the provisions of the 1937 Act.


</P>
<P><I>Section 8 unit</I> means the contract annualized housing assistance payments (vouchers, and project based) under the Section 8 program.




</P>
<P><I>Substantial housing services</I> are:
</P>
<P>(1) Affordable housing activities funded from any source provided to AIAN households with incomes 80 percent of the median income as defined in NAHASDA (25 U.S.C. 4103 (14)) or lower, equivalent to 100 percent or more of the increase in the IHBG formula allocation that the Indian tribe would receive as a result of adding the proposed geography; or
</P>
<P>(2) Affordable housing activities funded with IHBG funds provided to AIAN households with incomes 80 percent of the median income as defined in NAHASDA (25 U.S.C. 4104(14)) or lower, equivalent to 51 percent or more of the Indian tribe's current total IHBG grant; and either:
</P>
<P>(i) Fifty-one percent or more of the Indian tribe's official enrollment resides within the geographic area; or
</P>
<P>(ii) The Indian tribe's official enrollment constitutes 51 percent or more of the total AIAN persons within the geography.
</P>
<P>(3) HUD shall require that the Indian tribe annually provide written verification, in its Indian Housing Plan and Annual Performance Report, that the affordable housing activities it is providing meet the definition of substantial housing services.
</P>
<P><I>Total Development Cost (TDC)</I> is the sum of all costs for a project including all undertakings necessary for administration, planning, site acquisition, demolition, construction or equipment and financing (including payment of carrying charges) and for otherwise carrying out the development of the project, excluding off site water and sewer. Total Development Cost amounts will be based on a moderately designed house and will be determined by averaging the current construction costs as listed in not less than two nationally recognized residential construction cost indices.
</P>
<P><I>Without kitchen or plumbing</I> means, as defined by the U.S. Decennial Census, an occupied house without one or more of the following items:
</P>
<P>(1) Hot and cold piped water;
</P>
<P>(2) A flush toilet;
</P>
<P>(3) A bathtub or shower;
</P>
<P>(4) A sink with piped water;
</P>
<P>(5) A range or cookstove; or
</P>
<P>(6) A refrigerator.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 72 FR 20023, Apr. 20, 2007; 77 FR 71527, Dec. 3, 2012; 81 FR 83680, Nov. 22, 2016; 89 FR 38339, May 7, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 1000.304" NODE="24:4.1.3.1.24.4.41.3" TYPE="SECTION">
<HEAD>§ 1000.304   May the IHBG formula be modified?</HEAD>
<P>Yes, as long as any modification does not conflict with the requirements of NAHASDA.


</P>
</DIV8>


<DIV8 N="§ 1000.306" NODE="24:4.1.3.1.24.4.41.4" TYPE="SECTION">
<HEAD>§ 1000.306   How can the IHBG formula be modified?</HEAD>
<P>(a) The IHBG formula can be modified upon development of a set of measurable and verifiable data directly related to Indian and Alaska Native housing need. Any data set developed shall be compiled with the consultation and involvement of Indian tribes and examined and/or implemented not later than 5 years from the date of issuance of these regulations and periodically thereafter.
</P>
<P>(b) The IHBG Formula shall be reviewed not later than May 21, 2012 to determine if a subsidy is needed to operate and maintain NAHASDA units or if any other changes are needed in respect to funding under the Formula Current Assisted Stock component of the formula.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 72 FR 20024, Apr. 20, 2007; 81 FR 83680, Nov. 22, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 1000.308" NODE="24:4.1.3.1.24.4.41.5" TYPE="SECTION">
<HEAD>§ 1000.308   Who can make modifications to the IHBG formula?</HEAD>
<P>HUD can make modifications in accordance with § 1000.304 and § 1000.306 provided that any changes proposed by HUD are published and made available for public comment in accordance with applicable law before their implementation.


</P>
</DIV8>


<DIV8 N="§ 1000.310" NODE="24:4.1.3.1.24.4.41.6" TYPE="SECTION">
<HEAD>§ 1000.310   What are the components of the IHBG formula?</HEAD>
<P>The IHBG formula consists of four components:
</P>
<P>(a) Formula Current Assisted Stock (FCAS) (§ 1000.316);
</P>
<P>(b) Need (§ 1000.324);
</P>
<P>(c) 1996 Minimum (§ 1000.340); and
</P>
<P>(d) Undisbursed IHBG funds factor (§ 1000.342).
</P>
<CITA TYPE="N">[81 FR 83680, Nov. 22, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 1000.312" NODE="24:4.1.3.1.24.4.41.7" TYPE="SECTION">
<HEAD>§ 1000.312   What is current assisted stock?</HEAD>
<P>Current assisted stock consists of housing units owned or operated pursuant to an ACC. This includes all low rent, Mutual Help, and Turnkey III housing units under management as of September 30, 1997, as indicated in the Formula Response Form.


</P>
</DIV8>


<DIV8 N="§ 1000.314" NODE="24:4.1.3.1.24.4.41.8" TYPE="SECTION">
<HEAD>§ 1000.314   What is formula current assisted stock?</HEAD>
<P>Formula current assisted stock is current assisted stock as described in § 1000.312 plus 1937 Act units in the development pipeline when they become owned or operated by the recipient and are under management as indicated in the Formula Response Form. Formula current assisted stock also includes Section 8 units when their current contract expires and the Indian tribe continues to manage the assistance in a manner similar to the Section 8 program, as reported on the Formula Response Form.


</P>
</DIV8>


<DIV8 N="§ 1000.315" NODE="24:4.1.3.1.24.4.41.9" TYPE="SECTION">
<HEAD>§ 1000.315   Is a recipient required to report changes to the Formula Current Assisted Stock (FCAS) on the Formula Response Form?</HEAD>
<P>(a) A recipient shall report changes to information related to the IHBG formula on the Formula Response Form, including corrections to the number of Formula Current Assisted Stock (FCAS), during the time period required by HUD. This time period shall be not less than 60 days from the date of the HUD letter transmitting the form to the recipient.
</P>
<P>(b) The Formula Response Form is the only mechanism that a recipient shall use to report changes to the number of FCAS.
</P>
<CITA TYPE="N">[72 FR 20025, Apr. 20, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 1000.316" NODE="24:4.1.3.1.24.4.41.10" TYPE="SECTION">
<HEAD>§ 1000.316   How is the Formula Current Assisted Stock (FCAS) Component developed?</HEAD>
<P>The Formula Current Assisted Stock component consists of two elements. They are:
</P>
<P>(a) <I>Operating subsidy.</I> The operating subsidy consists of three variables which are:
</P>
<P>(1) The number of low-rent FCAS units multiplied by the national per unit subsidy;
</P>
<P>(2) The number of Section 8 units whose contract has expired but had been under contract on September 30, 1997, multiplied by the FY 1996 national per unit subsidy; and
</P>
<P>(3) The number of Mutual Help and Turnkey III FCAS units multiplied by the national per unit subsidy.
</P>
<P>(b) <I>Modernization allocation.</I> (1) For Indian tribes with an Indian Housing Authority that owned or operated 250 or more public housing units on October 1, 1997, the modernization allocation equals the number of Low Rent, Mutual Help, and Turnkey III FCAS units multiplied by the national per-unit amount of allocation for FY 1996 modernization multiplied by an adjustment factor for inflation.
</P>
<P>(2) For Indian tribes with an Indian Housing Authority that owned or operated fewer than 250 public housing units on October 1, 1997, the modernization allocation equals the average amount of funds received under the assistance program authorized by section 14 of the 1937 Act (not including funds provided as emergency assistance) for FYs 1992 through 1997.
</P>
<P>(c) <I>Conversion.</I> Conversion of FCAS units from homeownership (Mutual Help or Turnkey III) to low-rent or from low-rent to a home ownership program.
</P>
<P>(1) If units were converted before October 1, 1997, as evidenced by an amended ACC, then those units will be counted for formula funding and eligibility purposes as the type of unit to which they were converted.
</P>
<P>(2) If units were converted on or after October 1, 1997, the following applies:
</P>
<P>(i) <I>Funding type.</I> Units that converted after October 1, 1997 will be funded as the type of unit specified on the original ACC in effect on September 30, 1997.
</P>
<P>(ii) <I>Continued FCAS eligibility.</I> Whether or not it is the first conversion, a unit converted after October 1, 1997, will be considered as the type converted to when determining continuing FCAS eligibility. A unit that is converted to low-rent will be treated as a low-rent unit for purposes of determining continuing FCAS eligibility. A unit that is converted to homeownership will be treated as a homeownership unit for purposes of determining continuing FCAS eligibility.
</P>
<P>(3) The Indian tribe, TDHE, or IHA shall report conversions on the Formula Response Form.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 72 FR 20025, Apr. 20, 2007; 81 FR 83680, Nov. 22, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 1000.317" NODE="24:4.1.3.1.24.4.41.11" TYPE="SECTION">
<HEAD>§ 1000.317   Who is the recipient for funds for current assisted stock which is owned by state-created Regional Native Housing Authorities in Alaska?</HEAD>
<P>If housing units developed under the 1937 Act are owned by a state-created Regional Native Housing Authority in Alaska, and are not located on an Indian reservation, then the recipient for funds allocated for the current assisted stock portion of NAHASDA funds for the units is the regional Indian tribe.


</P>
</DIV8>


<DIV8 N="§ 1000.318" NODE="24:4.1.3.1.24.4.41.12" TYPE="SECTION">
<HEAD>§ 1000.318   When do units under Formula Current Assisted Stock cease to be counted or expire from the inventory used for the formula?</HEAD>
<P>(a) Mutual Help and Turnkey III units shall no longer be considered Formula Current Assisted Stock when the Indian tribe, TDHE, or IHA no longer has the legal right to own, operate, or maintain the unit, whether such right is lost by conveyance, demolition, or otherwise, provided that:
</P>
<P>(1) Conveyance of each Mutual Help or Turnkey III unit occurs as soon as practicable after a unit becomes eligible for conveyance by the terms of the MHOA; and
</P>
<P>(2) The Indian tribe, TDHE, or IHA actively enforce strict compliance by the homebuyer with the terms and conditions of the MHOA, including the requirements for full and timely payment.
</P>
<P>(b)(1) A Mutual Help or Turnkey III unit not conveyed after the unit becomes eligible for conveyance by the terms of the MHOA may continue to be considered Formula Current Assisted Stock only if a legal impediment prevented conveyance; the legal impediment continues to exist; the tribe, TDHE, or IHA has taken all other steps necessary for conveyance and all that remains for conveyance is a resolution of the legal impediment; and the tribe, TDHE, or IHA made the following reasonable efforts to overcome the impediments:
</P>
<P>(i) No later than four months after the unit becomes eligible for conveyance, the tribe, TDHE, or IHA creates a written plan of action, which includes a description of specific legal impediments as well as specific, ongoing, and appropriate actions for each applicable unit that have been taken and will be taken to resolve the legal impediments within a 24-month period; and
</P>
<P>(ii) The tribe, TDHE, or IHA has carried out or is carrying out the written plan of action; and
</P>
<P>(iii) The tribe, TDHE, or IHA has documented undertaking the plan of action.
</P>
<P>(2) No Mutual Help or Turnkey III unit will be considered FCAS 24 months after the date the unit became eligible for conveyance, unless the tribe, TDHE, or IHA provides evidence from a third party, such as a court or state or federal government agency, documenting that a legal impediment continues to prevent conveyance. FCAS units that have not been conveyed due to legal impediments on December 22, 2016 shall be treated as having become eligible for conveyance on December 22, 2016.
</P>
<P>(c) Rental units shall continue to be included for formula purposes as long as they continue to be operated as low income rental units by the Indian tribe, TDHE, or IHA.
</P>
<P>(d) Expired contract Section 8 units shall continue as rental units and be included in the formula as long as they are operated as low income rental units as included in the Indian tribe's or TDHE's Formula Response Form.
</P>
<P>(e) A unit that is demolished pursuant to a planned demolition may be considered eligible as a FCAS unit if, after demolition is completed, the unit is rebuilt within one year. Demolition is completed when the site of the demolished unit is ready for rebuilding. If the unit cannot be rebuilt within one year because of relative administrative capacities and other challenges faced by the recipient, including, but not limited to geographic distribution within the Indian area and technical capacity, the Indian tribe, TDHE or IHA may request approval for a one-time, one-year extension. Requests must be submitted in writing and include a justification for the request.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 81 FR 83680, Nov. 22, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 1000.319" NODE="24:4.1.3.1.24.4.41.13" TYPE="SECTION">
<HEAD>§ 1000.319   What would happen if a recipient misreports or fails to correct Formula Current Assisted Stock (FCAS) information on the Formula Response Form?</HEAD>
<P>(a) A recipient is responsible for verifying and reporting changes to their Formula Current Assisted Stock (FCAS) on the Formula Response Form to ensure that data used for the IHBG Formula are accurate (see § 1000.315). Reporting shall be completed in accordance with requirements in this Subpart D and the Formula Response Form.
</P>
<P>(b) If a recipient receives an overpayment of funds because it failed to report such changes on the Formula Response Form in a timely manner, the recipient shall be required to repay the funds within 5 fiscal years. HUD shall subsequently distribute the funds to all Indian tribes in accordance with the next IHBG Formula allocation.
</P>
<P>(c) A recipient will not be provided back funding for any units that the recipient failed to report on the Formula Response Form in a timely manner.
</P>
<P>(d) HUD shall have 3 years from the date a Formula Response Form is sent out to take action against any recipient that fails to correct or make appropriate changes on that Formula Response Form. Review of FCAS will be accomplished by HUD as a component of A-133 audits, routine monitoring, FCAS target monitoring, or other reviews.
</P>
<CITA TYPE="N">[72 FR 20025, Apr. 20, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 1000.320" NODE="24:4.1.3.1.24.4.41.14" TYPE="SECTION">
<HEAD>§ 1000.320   How is Formula Current Assisted Stock adjusted for local area costs?</HEAD>
<P>There are two adjustment factors that are used to adjust the allocation of funds for the Current Assisted Stock portion of the formula. They are:
</P>
<P>(a) Operating Subsidy as adjusted by the greater of the AEL factor or FMR factor (AELFMR); and
</P>
<P>(b) Modernization as adjusted by TDC.


</P>
</DIV8>


<DIV8 N="§ 1000.322" NODE="24:4.1.3.1.24.4.41.15" TYPE="SECTION">
<HEAD>§ 1000.322   Are IHA financed units included in the determination of Formula Current Assisted Stock?</HEAD>
<P>No. If these units are not owned or operated at the time (September 30, 1997) pursuant to an ACC then they are not included in the determination of Formula Current Assisted Stock.


</P>
</DIV8>


<DIV8 N="§ 1000.324" NODE="24:4.1.3.1.24.4.41.16" TYPE="SECTION">
<HEAD>§ 1000.324   How is the need component developed?</HEAD>
<P>After determining the FCAS allocation, remaining funds are allocated by need component. The need component consists of seven criteria. They are:
</P>
<P>(a) American Indian and Alaskan Native (AIAN) Households with housing cost burden greater than 50 percent of formula annual income weighted at 22 percent;
</P>
<P>(b) AIAN Households which are overcrowded or without kitchen or plumbing weighted at 25 percent;
</P>
<P>(c) Housing Shortage which is the number of AIAN households with an annual income less than or equal to 80 percent of formula median income reduced by the combination of current assisted stock and units developed under NAHASDA weighted at 15 percent;
</P>
<P>(d) AIAN households with annual income less than or equal to 30 percent of formula median income weighted at 13 percent;
</P>
<P>(e) AIAN households with annual income between 30 percent and 50 percent of formula median income weighted at 7 percent;
</P>
<P>(f) AIAN households with annual income between 50 percent and 80 percent of formula median income weighted at 7 percent;
</P>
<P>(g) AIAN persons weighted at 11 percent.


</P>
</DIV8>


<DIV8 N="§ 1000.325" NODE="24:4.1.3.1.24.4.41.17" TYPE="SECTION">
<HEAD>§ 1000.325   How is the need component adjusted for local area costs?</HEAD>
<P>The need component is adjusted by the TDC.


</P>
</DIV8>


<DIV8 N="§ 1000.326" NODE="24:4.1.3.1.24.4.41.18" TYPE="SECTION">
<HEAD>§ 1000.326   What if a formula area is served by more than one Indian tribe?</HEAD>
<P>(a) If an Indian tribe's formula area overlaps with the formula area of one or more other Indian tribes, the funds allocated to that Indian tribe for the geographic area in which the formula areas overlap will be divided based on:
</P>
<P>(1) The Indian tribe's proportional share of the population in the overlapping geographic area; and
</P>
<P>(2) The Indian tribe's commitment to serve that proportional share of the population in such geographic area.
</P>
<P>(3) In cases where a State recognized tribe's formula area overlaps with the formula area of a Federally recognized Indian tribe, the Federally recognized Indian tribe receives the allocation for the formula area up to its population cap, and the State recognized tribe receives the balance of the overlapping area (if any) up to its population cap.
</P>
<P>(b) Tribal membership in the geographic area (not to include dually enrolled tribal members) will be based on data that all Indian tribes involved agree to use. Suggested data sources include tribal enrollment lists, the U.S. Census, Indian Health Service User Data, and Bureau of Indian Affairs data.
</P>
<P>(c) Upon receiving a request for expansion or redefinition of a tribe's formula area, if approving the request would create an overlap, HUD shall follow the notice and comment procedures set forth in paragraph (2)(ii) of the definition of “Formula area” in § 1000.302.
</P>
<P>(d) If the Indian tribes involved cannot agree on what data source to use, HUD will make the decision on what data will be used to divide the funds between the Indian tribes by August 1.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 72 FR 20025, Apr. 20, 2007; 81 FR 83681, Nov. 22, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 1000.327" NODE="24:4.1.3.1.24.4.41.19" TYPE="SECTION">
<HEAD>§ 1000.327   What is the order of preference for allocating the IHBG formula needs data for Indian tribes in Alaska not located on reservations due to the unique circumstances in Alaska?</HEAD>
<P>(a) Data in areas without reservations. The data on population and housing within an Alaska Native Village is credited to the Alaska Native Village. Accordingly, the village corporation for the Alaska Native Village has no needs data and no formula allocation. The data on population and housing outside the Alaska Native Village is credited to the regional Indian tribe, and if there is no regional Indian tribe, the data will be credited to the regional corporation.
</P>
<P>(b) Deadline for notification on whether an IHP will be submitted. By September 15 of each year, each Indian tribe in Alaska not located on a reservation, including each Alaska Native village, regional Indian tribe, and regional corporation, or its TDHE must notify HUD in writing whether it or its TDHE intends to submit an IHP. If an Alaska Native village notifies HUD that it does not intend either to submit an IHP or to designate a TDHE to do so, or if HUD receives no response from the Alaska Native village or its TDHE, the formula data which would have been credited to the Alaska Native village will be credited to the regional Indian tribe, or if there is no regional Indian tribe, to the regional corporation.


</P>
</DIV8>


<DIV8 N="§ 1000.328" NODE="24:4.1.3.1.24.4.41.20" TYPE="SECTION">
<HEAD>§ 1000.328   What is the minimum amount that an Indian tribe may receive under the need component of the formula?</HEAD>
<P>(a) Subject to the eligibility criteria described in paragraph (b) of this section, the minimum allocation in any fiscal year to an Indian tribe under the need component of the IHBG Formula shall equal 0.007826 percent of the available appropriations for that fiscal year after set asides.
</P>
<P>(b) To be eligible for the minimum allocation described in paragraph (a) of this section, an Indian tribe must:
</P>
<P>(1) Receive less than $200,000 under the FCAS component of the IHBG Formula for the fiscal year; and
</P>
<P>(2) Certify in its Indian Housing Plan the presence of any households at or below 80 percent of median income.
</P>
<CITA TYPE="N">[72 FR 20025, Apr. 20, 2007, as amended at 77 FR 71527, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.329" NODE="24:4.1.3.1.24.4.41.21" TYPE="SECTION">
<HEAD>§ 1000.329   What is the minimum total grant allocated to a tribe if there is carryover funds available?</HEAD>
<P>(a) If in any given year there are carryover funds, then HUD will hold the lesser amount of $3 million or available carryover funds for additional allocations to tribes with grant allocations of less than 0.011547 percent of that year's appropriations. All tribes eligible under this section shall receive a grant allocation equal to 0.011547 percent of that year's appropriations.
</P>
<P>(b)(1) If the set-aside carryover funds are insufficient to fund all eligible tribes at 0.011547 percent of that year's appropriations, the minimum total grant shall be reduced to an amount which can be fully funded with the available set-aside carryover funds.
</P>
<P>(2) If less than $3 million is necessary to fully fund tribes under paragraph (a) of this section, any remaining carryover amounts of the set aside shall be carried forward to the next year's formula.
</P>
<P>(c) To be eligible, an Indian tribe must certify in its Indian Housing Plan the presence of any households at or below 80 percent of median income.
</P>
<P>(d) For purposes of this section, carryover funds means grant funds voluntarily returned to the formula or not accepted by tribes in a fiscal year.
</P>
<CITA TYPE="N">[81 FR 83681, Nov. 22, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 1000.330" NODE="24:4.1.3.1.24.4.41.22" TYPE="SECTION">
<HEAD>§ 1000.330   What are the data sources for the need variables?</HEAD>
<P>(a) The sources of data for the need variables shall be data that are available and collected in a uniform manner that can be confirmed and verified for all AIAN households and persons living in an identified area. Until fiscal year 2018, the data used are 2000 U.S. Decennial Census data and any HUD-accepted Census challenges. The 2000 U.S. Decennial Census data shall be adjusted annually using IHS projections based upon birth and death rate data provided by the National Center for Health Statistics.
</P>
<P>(b)(1) Beginning fiscal year 2018, the data source used to determine the AIAN persons variable described in § 1000.324(g) shall be the most recent U.S. Decennial Census data adjusted for any statistically significant undercount for AIAN population confirmed by the U.S. Census Bureau and updated annually using the U.S. Census Bureau county level Population Estimates for Native Americans. For Remote Alaska as designated by the U.S. Census Bureau, Alaska Formula Areas in Remote Alaska shall be treated as Reservation and Trust Lands, unless the U.S. Census Bureau includes Remote Alaska in their Census Coverage Measurement or comparable study. The data under this paragraph (b) shall be updated annually using the U.S. Census Bureau county level Population Estimates for Native Americans.
</P>
<P>(2) Beginning fiscal year 2018, the data source used to determine the variables described in paragraphs (a) through (f) of § 1000.324 shall initially be the American Community Survey (ACS) 5-year Estimates.
</P>
<P>(c) Indian tribes may challenge the data described in this section pursuant to § 1000.336.
</P>
<CITA TYPE="N">[81 FR 83681, Nov. 22, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 1000.331" NODE="24:4.1.3.1.24.4.41.23" TYPE="SECTION">
<HEAD>§ 1000.331   How will the impacts from adoption of a new data source be minimized as the new data source is implemented?</HEAD>
<P>(a) To minimize the impact of funding changes based on the introduction of a new data source under § 1000.330, in fiscal year 2018 and each year thereafter, if, solely as a direct result of the introduction of a new data source, an Indian tribe's allocation under the need component of the formula is less than 90 percent of the amount it received under the need component in the immediate previous fiscal year, the Indian tribe's need allocation shall be adjusted up to an amount equal to 90 percent of the previous year's need allocation.
</P>
<P>(b) Nothing in this section shall impact other adjustments under this part, including minimum funding, census challenges, formula area changes, or an increase in the total amount of funds available under the need component.
</P>
<P>(c) In the event of a decrease in the total amount of funds available under the need component, an Indian tribe's adjusted allocation under paragraph (a) of this section shall be reduced by an amount proportionate to the reduced amount available for distribution under the need component of the formula.
</P>
<P>(d) Adjustments under paragraph (b) or (c) of this section shall be made to a tribe's need allocation after adjusting that allocation under paragraph (a) of this section.
</P>
<CITA TYPE="N">[81 FR 83681, Nov. 22, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 1000.332" NODE="24:4.1.3.1.24.4.41.24" TYPE="SECTION">
<HEAD>§ 1000.332   Will data used by HUD to determine an Indian tribe's or TDHE's formula allocation be provided to the Indian tribe or TDHE before the allocation?</HEAD>
<P>Yes. HUD shall provide the Indian tribe or TDHE notice of the data to be used for the formula and projected allocation amount by June 1.
</P>
<CITA TYPE="N">[77 FR 71528, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.334" NODE="24:4.1.3.1.24.4.41.25" TYPE="SECTION">
<HEAD>§ 1000.334   May Indian tribes, TDHEs, or HUD challenge the data from the U.S. Decennial Census or provide an alternative source of data?</HEAD>
<P>Yes. Provided that the data are gathered, evaluated, and presented in a manner acceptable to HUD and that the standards for acceptability are consistently applied throughout the Country.


</P>
</DIV8>


<DIV8 N="§ 1000.336" NODE="24:4.1.3.1.24.4.41.26" TYPE="SECTION">
<HEAD>§ 1000.336   How may an Indian tribe, TDHE, or HUD challenge data or appeal HUD formula determinations?</HEAD>
<P>(a) An Indian tribe, TDHE, or HUD may challenge data used in the IHBG Formula and HUD formula determinations regarding:
</P>
<P>(1) U.S. Census data;
</P>
<P>(2) Tribal enrollment;
</P>
<P>(3) Formula area;
</P>
<P>(4) Formula Current Assisted Stock (FCAS);
</P>
<P>(5) Total Development Cost (TDC);
</P>
<P>(6) Fair Market Rents (FMRs); 
</P>
<P>(7) Indian Health Service projections based upon birth and death rate data provided by the National Center for Health Statistics; and
</P>
<P>(8) The undisbursed funds factor.
</P>
<P>(b) An Indian tribe or TDHE may not challenge data or HUD formula determinations regarding Allowable Expense Level (AEL) and the inflation factor.
</P>
<P>(c) The challenge and the collection of data and the appeal of HUD formula determinations is an allowable cost for IHBG funds.
</P>
<P>(d) An Indian tribe or TDHE that seeks to appeal data or a HUD formula determination, and has data in its possession that are acceptable to HUD, shall submit the challenge or appeal in writing with data and proper documentation to HUD. An Indian tribe or TDHE may appeal the undisbursed funds factor no later than 30 days after the receipt of the formula determination. Data used to challenge data contained in the U.S. Census must meet the requirements described in § 1000.330(a). Further, in order for a census challenge to be considered for the upcoming fiscal year allocation, documentation must be submitted by March 30th.
</P>
<P>(e) HUD shall respond to all challenges or appeals no later than 45 days after receipt and either approve or deny the appeal in writing, setting forth the reasons for its decision.
</P>
<P>(1) If HUD challenges the validity of the submitted data HUD and the Indian tribe or TDHE shall attempt in good faith to resolve any discrepancies so that such data may be included in the formula allocation.
</P>
<P>(2) If HUD denies a challenge or appeal, the Indian tribe or TDHE may request reconsideration of HUD's denial within 30 calendar days of receipt of HUD's denial. The request shall be in writing and set forth justification for reconsideration.
</P>
<P>(3) HUD shall in writing affirm or deny the Indian tribe's or TDHE's request for reconsideration, setting forth HUD's reasons for the decision, within 20 calendar days of receiving the request. HUD's denial of a request for reconsideration shall constitute final agency action.
</P>
<P>(4) If HUD approves the Indian tribe or TDHE's appeal, HUD will adjust to the Indian tribe's or TDHE's subsequent fiscal year allocation to include only the disputed fiscal year(s).
</P>
<P>(f) In the event HUD questions whether the data contained in the formula accurately represents the Indian tribe's need, HUD shall request the Indian tribe to submit supporting documentation to justify the data and, if applicable, to provide a commitment to serve the population indicated in the geographic area.
</P>
<CITA TYPE="N">[72 FR 20025, Apr. 20, 2007, as amended at 81 FR 83681, Nov. 22, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 1000.340" NODE="24:4.1.3.1.24.4.41.27" TYPE="SECTION">
<HEAD>§ 1000.340   What if an Indian tribe is allocated less funding under the IHBG Formula than it received in Fiscal Year (FY) 1996 for operating subsidy and modernization?</HEAD>
<P>(a) If an Indian tribe is allocated less funding under the modernization allocation of the formula pursuant to § 1000.316(b)(2) than the calculation of the number of Low Rent, Mutual Help, and Turnkey III FCAS units multiplied by the national per-unit amount of allocation for FY 1996 modernization multiplied by an adjustment factor for inflation, the Indian tribe's modernization allocation is calculated under § 1000.316(b)(1). The remaining grants are adjusted to keep the allocation within available appropriations.
</P>
<P>(b) If an Indian tribe is allocated less funding under the formula than an IHA received on its behalf in FY 1996 for operating subsidy and modernization, its grant is increased to the amount received in FY 1996 for operating subsidy and modernization. The remaining grants are adjusted to keep the allocation within available appropriations.
</P>
<CITA TYPE="N">[72 FR 20026, Apr. 20, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 1000.342" NODE="24:4.1.3.1.24.4.41.28" TYPE="SECTION">
<HEAD>§ 1000.342   Are undisbursed IHBG funds a factor in the grant formula?</HEAD>
<P>Yes, beginning fiscal year 2018. After calculating the initial allocation calculation for the current fiscal year by calculating FCAS, need, the 1996 Minimum, and repayments or additions for past over- or under-funding for each Indian tribe, the undisbursed funds factor shall be applied as follows:
</P>
<P>(a) The undisbursed funds factor applies if an Indian tribe's initial allocation calculation is $5 million or more and the Indian tribe has undisbursed IHBG funds in an amount that is greater than the sum of the prior 3 years' initial allocation calculations.
</P>
<P>(b) If subject to paragraph (a) of this section, the Indian tribe's grant allocation shall be the greater of the initial allocation calculation minus the amount of undisbursed IHBG funds that exceed the sum of the prior 3 years' initial allocation calculations, or its 1996 Minimum.
</P>
<P>(c) For purposes of this section, “undisbursed IHBG funds” means the amount of IHBG funds allocated to an Indian tribe in HUD's line of credit control system on October 1 of the fiscal year for which the allocation is made. For Indian tribes under an umbrella TDHE (a recipient that has been designated to receive grant amounts by more than one Indian tribe), if the Indian tribe's initial allocation calculation is $5 million or more, its undisbursed IHBG funds is the amount calculated by multiplying the umbrella TDHE's total balance in HUD's line of credit control system on October 1 of the fiscal year for which the allocation is made by a percentage based on the Indian tribe's proportional share of the initial allocation calculation of all tribes under the umbrella.
</P>
<P>(d) Amounts subtracted from an initial allocation calculation under this section shall be redistributed under the need component among all Indian tribes not subject to paragraph (a) of this section (while also retaining the 1996 Minimum).
</P>
<CITA TYPE="N">[81 FR 83682, Nov. 22, 2016]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:4.1.3.1.24.5" TYPE="SUBPART">
<HEAD>Subpart E—Federal Guarantees for Financing of Tribal Housing Activities</HEAD>


<DIV8 N="§ 1000.401" NODE="24:4.1.3.1.24.5.41.1" TYPE="SECTION">
<HEAD>§ 1000.401   What terms are used throughout this subpart?</HEAD>
<P>As used throughout title VI of NAHASDA and in this subpart:
</P>
<P><I>Applicant</I> means the entity that requests a HUD guarantee under the provisions of this subpart.
</P>
<P><I>Borrower</I> means an Indian tribe or TDHE that receives funds in the form of a loan with the obligation to repay in full, with interest, and has executed notes or other obligations that evidence that transaction.
</P>
<P><I>Issuer</I> means an Indian tribe or TDHE that issues or executes notes or other obligations. An issuer can also be a borrower.


</P>
</DIV8>


<DIV8 N="§ 1000.402" NODE="24:4.1.3.1.24.5.41.2" TYPE="SECTION">
<HEAD>§ 1000.402   Are State recognized Indian tribes eligible for guarantees under title VI of NAHASDA?</HEAD>
<P>Those State recognized Indian tribes that meet the definition set forth in section 4(12)(C) of NAHASDA are eligible for guarantees under title VI of NAHASDA.


</P>
</DIV8>


<DIV8 N="§ 1000.404" NODE="24:4.1.3.1.24.5.41.3" TYPE="SECTION">
<HEAD>§ 1000.404   What lenders are eligible for participation?</HEAD>
<P>Eligible lenders are those approved under and meeting the qualifications established in this subpart, except that loans otherwise insured or guaranteed by an agency of the United States, or made by an organization of Indians from amounts borrowed from the United States, shall not be eligible for guarantee under this part. The following lenders are deemed to be eligible under this subpart:
</P>
<P>(a) Any mortgagee approved by HUD for participation in the single family mortgage insurance program under title II of the National Housing Act;
</P>
<P>(b) Any lender whose housing loans under chapter 37 of title 38, United States Code, are automatically guaranteed pursuant to section 1802(d) of such title;
</P>
<P>(c) Any lender approved by the Department of Agriculture to make guaranteed loans for single family housing under the Housing Act of 1949;
</P>
<P>(d) Any other lender that is supervised, approved, regulated, or insured by any agency of the United States; and
</P>
<P>(e) Any other lender approved by the Secretary.


</P>
</DIV8>


<DIV8 N="§ 1000.406" NODE="24:4.1.3.1.24.5.41.4" TYPE="SECTION">
<HEAD>§ 1000.406   What constitutes tribal approval to issue notes or other obligations under title VI of NAHASDA?</HEAD>
<P>Tribal approval is evidenced by a written tribal resolution that authorizes the issuance of notes or obligations by the Indian tribe or a TDHE on behalf of the Indian tribe.


</P>
</DIV8>


<DIV8 N="§ 1000.410" NODE="24:4.1.3.1.24.5.41.5" TYPE="SECTION">
<HEAD>§ 1000.410   What conditions shall HUD prescribe when providing a guarantee for notes or other obligations issued by an Indian tribe?</HEAD>
<P>HUD shall provide that:
</P>
<P>(a) Any loan, note or other obligation guaranteed under title VI of NAHASDA may be sold or assigned by the lender to any financial institution that is subject to examination and supervision by an agency of the Federal government, any State, or the District of Columbia without destroying or otherwise negatively affecting the guarantee; and
</P>
<P>(b) Indian tribes and housing entities are encouraged to explore creative financing mechanisms and in so doing shall not be limited in obtaining a guarantee. These creative financing mechanisms include but are not limited to:
</P>
<P>(1) Borrowing from private or public sources or partnerships;
</P>
<P>(2) Issuing tax exempt and taxable bonds where permitted; and
</P>
<P>(3) Establishing consortiums or trusts for borrowing or lending, or for pooling loans.
</P>
<P>(c) The repayment period may exceed 20 years, and the length of the repayment period cannot be the sole basis for HUD disapproval;
</P>
<P>(d) Lender and issuer/borrower must certify that they acknowledge and agree to comply with all applicable tribal laws; and
</P>
<P>(e) A guarantee made under Title VI of NAHASDA shall guarantee repayment of 95 percent of the unpaid principal and interest due on the notes or other obligations guaranteed.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 77 FR 71528, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.412" NODE="24:4.1.3.1.24.5.41.6" TYPE="SECTION">
<HEAD>§ 1000.412   Can an issuer obtain a guarantee for more than one note or other obligation at a time?</HEAD>
<P>Yes. To obtain multiple guarantees, the issuer shall demonstrate that:
</P>
<P>(a) The issuer will not exceed a total for all notes or other obligations in an amount equal to five times its grant amount, excluding any amount no longer owed on existing notes or other obligations; and
</P>
<P>(b) Issuance of additional notes or other obligations is within the financial capacity of the issuer.


</P>
</DIV8>


<DIV8 N="§ 1000.414" NODE="24:4.1.3.1.24.5.41.7" TYPE="SECTION">
<HEAD>§ 1000.414   How is an issuer's financial capacity demonstrated?</HEAD>
<P>An issuer must demonstrate its financial capacity to:
</P>
<P>(a) Meet its obligations; and
</P>
<P>(b) Protect and maintain the viability of housing developed or operated pursuant to the 1937 Act.


</P>
</DIV8>


<DIV8 N="§ 1000.416" NODE="24:4.1.3.1.24.5.41.8" TYPE="SECTION">
<HEAD>§ 1000.416   What is a repayment contract in a form acceptable to HUD?</HEAD>
<P>(a) The Secretary's signature on a contract shall signify HUD's acceptance of the form, terms and conditions of the contract.
</P>
<P>(b) In loans under title VI of NAHASDA, involving a contract between an issuer and a lender other than HUD, HUD's approval of the loan documents and guarantee of the loan shall be deemed to be HUD's acceptance of the sufficiency of the security furnished. No other security can or will be required by HUD at a later date.


</P>
</DIV8>


<DIV8 N="§ 1000.418" NODE="24:4.1.3.1.24.5.41.9" TYPE="SECTION">
<HEAD>§ 1000.418   Can grant funds be used to pay costs incurred when issuing notes or other obligations?</HEAD>
<P>Yes. Other costs that can be paid using grant funds include but are not limited to the costs of servicing and trust administration, and other costs associated with financing of debt obligations.


</P>
</DIV8>


<DIV8 N="§ 1000.420" NODE="24:4.1.3.1.24.5.41.10" TYPE="SECTION">
<HEAD>§ 1000.420   May grants made by HUD under section 603 of NAHASDA be used to pay net interest costs incurred when issuing notes or other obligations?</HEAD>
<P>Yes. Other costs that can be paid using grant funds include but are not limited to the costs of servicing and trust administration, and other costs associated with financing of debt obligations, not to exceed 30 percent of the net interest cost.


</P>
</DIV8>


<DIV8 N="§ 1000.422" NODE="24:4.1.3.1.24.5.41.11" TYPE="SECTION">
<HEAD>§ 1000.422   What are the procedures for applying for loan guarantees under title VI of NAHASDA?</HEAD>
<P>(a) The borrower applies to the lender for a loan using a guarantee application form prescribed by HUD.
</P>
<P>(b) The lender provides the loan application to HUD to determine if funds are available for the guarantee. HUD will reserve these funds for a period of 90 days if the funds are available and the applicant is otherwise eligible under this subpart. HUD may extend this reservation period for an extra 90 days if additional documentation is necessary.
</P>
<P>(c) The borrower and lender negotiate the terms and conditions of the loan in consultation with HUD.
</P>
<P>(d) The borrower and lender execute documents.
</P>
<P>(e) The lender formally applies for the guarantee.
</P>
<P>(f) HUD reviews and provides a written decision on the guarantee.


</P>
</DIV8>


<DIV8 N="§ 1000.424" NODE="24:4.1.3.1.24.5.41.12" TYPE="SECTION">
<HEAD>§ 1000.424   What are the application requirements for guarantee assistance under title VI of NAHASDA?</HEAD>
<P>The application for a guarantee must include the following:
</P>
<P>(a) An identification of each of the activities to be carried out with the guaranteed funds and a description of how each activity qualifies:
</P>
<P>(1) As an affordable housing activity as defined in section 202 of NAHASDA; or
</P>
<P>(2) As a housing related community development activity under section 601(a) of NAHASDA.
</P>
<P>(b) A schedule for the repayment of the notes or other obligations to be guaranteed that identifies the sources of repayment, together with a statement identifying the entity that will act as the borrower.
</P>
<P>(c) A copy of the executed loan documents, if applicable, including, but not limited to, any contract or agreement between the borrower and the lender.
</P>
<P>(d) Certifications by the borrower that:
</P>
<P>(1) The borrower possesses the legal authority to pledge and that it will, if approved, make the pledge of grants required by section 602(a)(2) of NAHASDA.
</P>
<P>(2) It possesses the legal authority to borrow or issue obligations and to use the guaranteed funds in accordance with the requirements of this subpart.
</P>
<P>(3) Its governing body has duly adopted or passed as an official act a resolution, motion, or similar official action that:
</P>
<P>(i) Identifies the official representative of the borrower, and directs and authorizes that person to provide such additional information as may be required; and
</P>
<P>(ii) Authorizes such official representative to issue the obligation or to execute the loan or other documents, as applicable.
</P>
<P>(4) The borrower has complied with section 602(a) of NAHASDA.
</P>
<P>(5) The borrower will comply with the requirements described in subpart A of this part and other applicable laws.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 77 FR 71528, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.426" NODE="24:4.1.3.1.24.5.41.13" TYPE="SECTION">
<HEAD>§ 1000.426   How does HUD review a guarantee application?</HEAD>
<P>The procedure for review of a guarantee application includes the following steps:
</P>
<P>(a) HUD will review the application for compliance with title VI of NAHASDA and these implementing regulations.
</P>
<P>(b) HUD will accept the certifications submitted with the application. HUD may, however, consider relevant information that challenges the certifications and require additional information or assurances from the applicant as warranted by such information.


</P>
</DIV8>


<DIV8 N="§ 1000.428" NODE="24:4.1.3.1.24.5.41.14" TYPE="SECTION">
<HEAD>§ 1000.428   For what reasons may HUD disapprove an application or approve an application for an amount less than that requested?</HEAD>
<P>HUD may disapprove an application or approve a lesser amount for any of the following reasons:
</P>
<P>(a) HUD determines that the guarantee constitutes an unacceptable risk. Factors that will be considered in assessing financial risk shall include, but not be limited to, the following:
</P>
<P>(1) The ratio of the expected annual debt service requirements to the expected available annual grant amount, taking into consideration the obligations of the borrower under the provisions of section 203(b) of NAHASDA;
</P>
<P>(2) Evidence that the borrower will not continue to receive grant assistance under this part during the proposed repayment period;
</P>
<P>(3) The borrower's inability to furnish adequate security pursuant to section 602(a) of NAHASDA; and
</P>
<P>(4) The amount of program income the proposed activities are reasonably estimated to contribute toward repayment of the guaranteed loan or other obligations.
</P>
<P>(b) The loan or other obligation for which the guarantee is requested exceeds any of the limitations specified in sections 601(c) or section 605(d) of NAHASDA.
</P>
<P>(c) Funds are not available in the amount requested.
</P>
<P>(d) Evidence that the performance of the borrower under this part has been determined to be unacceptable pursuant to the requirements of subpart F of this part, and that the borrower has failed to take reasonable steps to correct performance.
</P>
<P>(e) The activities to be undertaken are not eligible under either:
</P>
<P>(1) Section 202 of NAHASDA; or
</P>
<P>(2) Section 601(a) of NAHASDA.
</P>
<P>(f) The loan or other obligation documents for which a guarantee is requested do not meet the requirements of this subpart.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 77 FR 71528, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.430" NODE="24:4.1.3.1.24.5.41.15" TYPE="SECTION">
<HEAD>§ 1000.430   When will HUD issue notice to the applicant if the application is approved at the requested or reduced amount?</HEAD>
<P>(a) HUD shall make every effort to approve a guarantee within 30 days of receipt of a completed application including executed documents and, if unable to do so, will notify the applicant within the 30 day timeframe of the need for additional time and/or if additional information is required.
</P>
<P>(b) HUD shall notify the applicant in writing that the guarantee has either been approved, reduced, or disapproved. If the request is reduced or disapproved, the applicant will be informed of the specific reasons for reduction or disapproval.
</P>
<P>(c) HUD shall issue a certificate to guarantee the debt obligation of the issuer subject to compliance with NAHASDA including but not limited to sections 105, 601(a), and 602(c) of NAHASDA, and such other reasonable conditions as HUD may specify in the commitment documents in a particular case.


</P>
</DIV8>


<DIV8 N="§ 1000.432" NODE="24:4.1.3.1.24.5.41.16" TYPE="SECTION">
<HEAD>§ 1000.432   Can an amendment to an approved guarantee be made?</HEAD>
<P>(a) Yes. An amendment to an approved guarantee can occur if an applicant wishes to allow a borrower/issuer to carry out an activity not described in the loan or other obligation documents, or substantially to change the purpose, scope, location, or beneficiaries of an activity.
</P>
<P>(b) Any changes to an approved guarantee must be approved by HUD.


</P>
</DIV8>


<DIV8 N="§ 1000.434" NODE="24:4.1.3.1.24.5.41.17" TYPE="SECTION">
<HEAD>§ 1000.434   How will HUD allocate the availability of loan guarantee assistance?</HEAD>
<P>(a) Each fiscal year HUD may allocate a percentage of the total available loan guarantee assistance to each Area ONAP equal to the percentage of the total NAHASDA grant funds allocated to the Indian tribes in the geographic area of operation of that office.
</P>
<P>(b) These allocated amounts shall remain exclusively available for loan guarantee assistance for Indian tribes or TDHEs in the area of operation of that office until committed by HUD for loan guarantees or until the end of the second quarter of the fiscal year. At the beginning of the third quarter of the fiscal year, any residual loan guarantee commitment amount shall be made available to guarantee loans for Indian tribes or TDHEs regardless of their location. Applications for residual loan guarantee money must be submitted on or after April 1.
</P>
<P>(c) In approving applications for loan guarantee assistance, HUD shall seek to maximize the availability of such assistance to all interested Indian tribes or TDHEs. HUD may limit the proportional share approved to any one Indian tribe or TDHE to its proportional share of the block grant allocation based upon the annual plan submitted by the Indian tribe or TDHE indicating intent to participate in the loan guarantee allocation process.


</P>
</DIV8>


<DIV8 N="§ 1000.436" NODE="24:4.1.3.1.24.5.41.18" TYPE="SECTION">
<HEAD>§ 1000.436   How will HUD monitor the use of funds guaranteed under this subpart?</HEAD>
<P>HUD will monitor the use of funds guaranteed under this subpart as set forth in section 403 of NAHASDA, and the lender is responsible for monitoring performance with the documents.


</P>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:4.1.3.1.24.6" TYPE="SUBPART">
<HEAD>Subpart F—Recipient Monitoring, Oversight and Accountability</HEAD>


<DIV8 N="§ 1000.501" NODE="24:4.1.3.1.24.6.41.1" TYPE="SECTION">
<HEAD>§ 1000.501   Who is involved in monitoring activities under NAHASDA?</HEAD>
<P>The recipient, the grant beneficiary and HUD are involved in monitoring activities under NAHASDA.


</P>
</DIV8>


<DIV8 N="§ 1000.502" NODE="24:4.1.3.1.24.6.41.2" TYPE="SECTION">
<HEAD>§ 1000.502   What are the monitoring responsibilities of the recipient, the grant beneficiary and HUD under NAHASDA?</HEAD>
<P>(a) The recipient is responsible for monitoring grant activities, ensuring compliance with applicable Federal requirements and monitoring performance goals under the IHP. The recipient is responsible for preparing at least annually: a compliance assessment in accordance with section 403(b) of NAHASDA; a performance report covering the assessment of program progress and goal attainment under the IHP; and an audit in accordance with the Single Audit Act, as applicable. The recipient's monitoring should also include an evaluation of the recipient's performance in accordance with performance objectives and measures. At the request of a recipient, other Indian tribes and/or TDHEs may provide assistance to aid the recipient in meeting its performance goals or compliance requirements under NAHASDA.
</P>
<P>(b) Where the recipient is a TDHE, the grant beneficiary (Indian tribe) is responsible for monitoring programmatic and compliance requirements of the IHP and NAHASDA by requiring the TDHE to prepare periodic progress reports including the annual compliance assessment, performance and audit reports.
</P>
<P>(c) HUD is responsible for reviewing the recipient as set forth in § 1000.520.
</P>
<P>(d) HUD monitoring will consist of on-site as well as off-site review of records, reports and audits. To the extent funding is available, HUD or its designee will provide technical assistance and training, or funds to the recipient to obtain technical assistance and training. In the absence of funds, HUD shall make best efforts to provide technical assistance and training.


</P>
</DIV8>


<DIV8 N="§ 1000.503" NODE="24:4.1.3.1.24.6.41.3" TYPE="SECTION">
<HEAD>§ 1000.503   What is an appropriate extent of HUD monitoring?</HEAD>
<P>(a) Subject to any conflicting or supplementary requirement of specific legislation, and upon the effective date of this regulation, the frequency of HUD monitoring of a particular recipient will be determined by application of the HUD standard risk assessment factors, provided that when a recipient requests to be monitored, HUD shall conduct such monitoring as soon as practicable. The HUD standard risk assessment factors may be but are not limited to the following:
</P>
<P>(1) Annual grant amount;
</P>
<P>(2) Disbursed amounts—all open grants;
</P>
<P>(3) Months since last on-site monitoring;
</P>
<P>(4) Delinquent audits under 2 CFR part 200, subpart F;
</P>
<P>(5) Open 2 CFR part 200, subpart F, or Inspector General audit findings;
</P>
<P>(6) Conclusions of 2 CFR part 200, subpart F, auditor;
</P>
<P>(7) Open monitoring findings;
</P>
<P>(8) Delinquent Annual Performance Reports or Annual Status and Evaluation Reports;
</P>
<P>(9) Status of Corrective Action Plan (CAP) or Performance Agreement (PA);
</P>
<P>(10) Recipient Self-Monitoring;
</P>
<P>(11) Inspection of 1937 Act units;
</P>
<P>(12) Preservation of 1937 Act units; and
</P>
<P>(13) Any other additional factors that may be determined by HUD, consistent with HUD's Tribal Consultation Policy, by which HUD will send written notification and provide a comment period. Such additional factors shall be provided by program guidance.
</P>
<P>(b) If monitoring indicates noncompliance, HUD may undertake additional sampling and review to determine the extent of such noncompliance. The level of HUD monitoring of a recipient once that recipient has been selected for HUD monitoring is as follows:
</P>
<P>(1) Review recipient program compliance for the current program year and the 2 prior program years;
</P>
<P>(2) On-site inspection of no more than 10 dwelling units or no more than 10 percent of total dwelling units, whichever is greater;
</P>
<P>(3) Review of no more than 10 client files or no more than 10 percent of client files, whichever is greater.
</P>
<P>(c) Notwithstanding paragraph (b) of this section, HUD may at any time undertake additional sampling and review of prior program years, subject to the records retention limitations of § 1000.552, if HUD has credible information suggesting noncompliance. HUD will share this information with the recipient as appropriate.
</P>
<P>(d) A recipient may request ONAP to enter into Self-Monitoring Mutual Agreements or other self-monitoring arrangements with recipients. ONAP will monitor the recipient only in accordance with such agreement or arrangement, unless ONAP finds reasonable evidence of fraud, a pattern of noncompliance, or the significant unlawful expenditure of IHBG funds.
</P>
<CITA TYPE="N">[77 FR 71528, Dec. 3, 2012, as amended at 80 FR 75944, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 1000.506" NODE="24:4.1.3.1.24.6.41.4" TYPE="SECTION">
<HEAD>§ 1000.506   If the TDHE is the recipient, must it submit its monitoring evaluation/results to the Indian tribe?</HEAD>
<P>Yes. The Indian tribe as the grant beneficiary must receive a copy of the monitoring evaluation/results so that it can fully carry out its oversight responsibilities under NAHASDA.


</P>
</DIV8>


<DIV8 N="§ 1000.508" NODE="24:4.1.3.1.24.6.41.5" TYPE="SECTION">
<HEAD>§ 1000.508   If the recipient monitoring identifies programmatic concerns, what happens?</HEAD>
<P>If the recipient's monitoring activities identify areas of concerns, the recipient will take corrective actions which may include but are not limited to one or more of the following actions:
</P>
<P>(a) Depending upon the nature of the concern, the recipient may obtain additional training or technical assistance from HUD, other Indian tribes or TDHEs, or other entities.
</P>
<P>(b) The recipient may develop and/or revise policies, or ensure that existing policies are better enforced.
</P>
<P>(c) The recipient may take appropriate administrative action to remedy the situation.
</P>
<P>(d) The recipient may refer the concern to an auditor or to HUD for additional corrective action.


</P>
</DIV8>


<DIV8 N="§ 1000.510" NODE="24:4.1.3.1.24.6.41.6" TYPE="SECTION">
<HEAD>§ 1000.510   What happens if tribal monitoring identifies compliance concerns?</HEAD>
<P>The Indian tribe shall have the responsibility to ensure that appropriate corrective action is taken.


</P>
</DIV8>


<DIV8 N="§ 1000.512" NODE="24:4.1.3.1.24.6.41.7" TYPE="SECTION">
<HEAD>§ 1000.512   Are performance reports required?</HEAD>
<P>Yes. An annual report shall be submitted by the recipient to HUD and the Indian tribe being served in a format acceptable by HUD. Annual performance reports shall contain:
</P>
<P>(a) The information required by sections 403(b) and 404(b) of NAHASDA;
</P>
<P>(b) Brief information on the following:
</P>
<P>(1) A comparison of actual accomplishments to the planned activities established for the period;
</P>
<P>(2) The reasons for slippage if established planned activities were not met; and
</P>
<P>(3) Analysis and explanation of cost overruns or high unit costs;
</P>
<P>(c) Any information regarding the recipient's performance in accordance with HUD's performance measures, as set forth in section § 1000.524; and
</P>
<P>(d) Annual performance data to reflect the accomplishments of the recipient to include, as specified in the IHP:
</P>
<P>(1) Permanent and temporary jobs supported with IHBG funds;
</P>
<P>(2) Outputs by eligible activity, including:
</P>
<P>(i) Units completed or assisted, and
</P>
<P>(ii) Families assisted; and
</P>
<P>(3) Outcomes by eligible activity.
</P>
<P>(e) As applicable, items required under §§ 1000.302 and 1000.544.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 77 FR 71528, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.514" NODE="24:4.1.3.1.24.6.41.8" TYPE="SECTION">
<HEAD>§ 1000.514   When must the annual performance report be submitted?</HEAD>
<P>The annual performance report must be submitted within 90 days of the end of the recipient's program year. If a justified request is submitted by the recipient, the Area ONAP may extend the due date for submission of the annual performance report.
</P>
<CITA TYPE="N">[72 FR 41213, July 26, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 1000.516" NODE="24:4.1.3.1.24.6.41.9" TYPE="SECTION">
<HEAD>§ 1000.516   What reporting period is covered by the annual performance report?</HEAD>
<P>For the first annual performance report to be submitted under NAHASDA, the period to be covered is October 1, 1997, through September 30, 1998. This first report must be submitted by January 31, 1999. Subsequent annual performance reports must cover the period that coincides with the recipient's program year.
</P>
<CITA TYPE="N">[64 FR 3015, Jan. 20, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 1000.518" NODE="24:4.1.3.1.24.6.41.10" TYPE="SECTION">
<HEAD>§ 1000.518   When must a recipient obtain public comment on its annual performance report?</HEAD>
<P>The recipient must make its report publicly available to tribal members, non-Indians served under NAHASDA, and other citizens in the Indian area, in sufficient time to permit comment before submission of the report to HUD. The recipient determines the manner and times for making the report available.
</P>
<P>The recipient shall include a summary of any comments received by the grant beneficiary or recipient from tribal members, non-Indians served under NAHASDA, and other citizens in the Indian area.


</P>
</DIV8>


<DIV8 N="§ 1000.520" NODE="24:4.1.3.1.24.6.41.11" TYPE="SECTION">
<HEAD>§ 1000.520   What are the purposes of HUD's review of the Annual Performance Report?</HEAD>
<P>HUD will review each recipient's Annual Performance Report when submitted to determine whether the recipient:
</P>
<P>(a) Has carried out its eligible activities in a timely manner, has carried out its eligible activities and certifications in accordance with the requirements and the primary objective of NAHASDA and with other applicable laws and has a continuing capacity to carry out those activities in a timely manner;
</P>
<P>(b) Has complied with the IHP of the grant beneficiary; and
</P>
<P>(c) Whether the Annual Performance Report of the recipient is accurate.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 77 FR 71528, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.521" NODE="24:4.1.3.1.24.6.41.12" TYPE="SECTION">
<HEAD>§ 1000.521   After the receipt of the recipient's performance report, how long does HUD have to make recommendations under section 404(c) of NAHASDA?</HEAD>
<P>60 days.


</P>
</DIV8>


<DIV8 N="§ 1000.522" NODE="24:4.1.3.1.24.6.41.13" TYPE="SECTION">
<HEAD>§ 1000.522   How will HUD give notice of on-site reviews?</HEAD>
<P>HUD shall generally provide a 30 day written notice of an impending on-site review to the Indian tribe and TDHE. Prior written notice will not be required in emergency situations. All notices shall state the general nature of the review.


</P>
</DIV8>


<DIV8 N="§ 1000.524" NODE="24:4.1.3.1.24.6.41.14" TYPE="SECTION">
<HEAD>§ 1000.524   What are HUD's performance measures for the review?</HEAD>
<P>HUD has the authority to develop performance measures which the recipient must meet as a condition for compliance under NAHASDA. The performance measures are:
</P>
<P>(a) The recipient has complied with the required certifications in its IHP and all policies and the IHP have been made available to the public.
</P>
<P>(b) Fiscal audits have been conducted on a timely basis and in accordance with the requirements of the Single Audit Act, as applicable. Any deficiencies identified in audit reports have been addressed within the prescribed time period.
</P>
<P>(c) Accurate annual performance reports were submitted to HUD in accordance with § 1000.514. 
</P>
<P>(d) The recipient has met the IHP-planned activities in the one-year plan.
</P>
<P>(e) The recipient has substantially complied with the requirements of 24 CFR part 1000 and all other applicable Federal statutes and regulations.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 72 FR 41213, July 26, 2007; 77 FR 71529, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.526" NODE="24:4.1.3.1.24.6.41.15" TYPE="SECTION">
<HEAD>§ 1000.526   What information will HUD use for its review?</HEAD>
<P>In reviewing each recipient's performance, HUD may consider the following:
</P>
<P>(a) The approved IHP and any amendments thereto;
</P>
<P>(b) Reports prepared by the recipient;
</P>
<P>(c) Records maintained by the recipient;
</P>
<P>(d) Results of HUD's monitoring of the recipient's performance, including on-site evaluation of the quality of the work performed;
</P>
<P>(e) Audit reports;
</P>
<P>(f) Records of drawdown(s) of grant funds;
</P>
<P>(g) Records of comments and complaints by citizens and organizations within the Indian area;
</P>
<P>(h) Litigation; and
</P>
<P>(i) Any other reliable relevant information which relates to the performance measures under § 1000.524.


</P>
</DIV8>


<DIV8 N="§ 1000.528" NODE="24:4.1.3.1.24.6.41.16" TYPE="SECTION">
<HEAD>§ 1000.528   What are the procedures for the recipient to comment on the result of HUD's review when HUD issues a report under section 405(b) of NAHASDA?</HEAD>
<P>HUD will issue a draft report to the recipient and Indian tribe within 60 days of the completion of HUD's review. The recipient will have at least 60 days to review and comment on the draft report, as well as provide any additional information relating to the draft report. Upon written notification to HUD, the recipient may exercise the right to take an additional 30 days to complete its review and comment to the draft report. Additional extensions of time for the recipient to complete review and comment may be mutually agreed upon in writing by HUD and the recipient. HUD shall consider the comments and any additional information provided by the recipient. HUD may also revise the draft report based on the comments and any additional information provided by the recipient. HUD shall make the recipient's comments and a final report readily available to the recipient, grant beneficiary, and the public not later than 30 days after receipt of the recipient's comments and additional information.
</P>
<CITA TYPE="N">[77 FR 71529, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.530" NODE="24:4.1.3.1.24.6.41.17" TYPE="SECTION">
<HEAD>§ 1000.530   What corrective and remedial actions will HUD request or recommend to address performance problems prior to taking action under § 1000.532?</HEAD>
<P>(a) The following actions are designed, first, to prevent the continuance of the performance problem(s); second, to mitigate any adverse effects or consequences of the performance problem(s); and third, to prevent a recurrence of the same or similar performance problem. The following actions, at least one of which must be taken prior to a sanction under paragraph (b), may be taken by HUD singly or in combination, as appropriate for the circumstances:
</P>
<P>(1) Issue a letter of warning advising the recipient of the performance problem(s), describing the corrective actions that HUD believes should be taken, establishing a completion date for corrective actions, and notifying the recipient that more serious actions may be taken if the performance problem(s) is not corrected or is repeated;
</P>
<P>(2) Request the recipient to submit progress schedules for completing activities or complying with the requirements of this part;
</P>
<P>(3) Recommend that the recipient suspend, discontinue, or not incur costs for the affected activity;
</P>
<P>(4) Recommend that the recipient redirect funds from affected activities to other eligible activities;
</P>
<P>(5) Recommend that the recipient reimburse the recipient's program account in the amount improperly expended; and
</P>
<P>(6) Recommend that the recipient obtain appropriate technical assistance using existing grant funds or other available resources to overcome the performance problem(s).
</P>
<P>(b) Failure of a recipient to address performance problems specified in paragraph (a) of this section may result in the imposition of sanctions as prescribed in § 1000.532.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 77 FR 71529, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.532" NODE="24:4.1.3.1.24.6.41.18" TYPE="SECTION">
<HEAD>§ 1000.532   What are the remedial actions that HUD may take in the event of recipient's substantial noncompliance?</HEAD>
<P>(a) If HUD finds after reasonable notice and opportunity for hearing that a recipient has failed to comply substantially with any provision of NAHASDA or the regulations in this part, HUD shall carry out any of the following actions with respect to the recipient's current or future grants, as appropriate:
</P>
<P>(1) Terminate payments under NAHASDA to the recipient;
</P>
<P>(2) Reduce payments under NAHASDA to the recipient by an amount equal to the amount of such payments that were not expended in accordance with NAHASDA or these regulations;
</P>
<P>(3) Limit the availability of payments under NAHASDA to programs, projects, or activities not affected by the failure to comply; or
</P>
<P>(4) In the case of noncompliance described in § 1000.542, provide a replacement TDHE for the recipient.
</P>
<P>(b) Before undertaking any action in accordance with paragraph (a) of this section, HUD will notify the recipient in writing of the action it intends to take and provide the recipient an opportunity for an informal meeting to resolve the deficiency. Before taking any action under paragraph (a) of this section, HUD shall provide the recipient with the opportunity for a hearing no less than 30 days prior to taking the proposed action. The hearing shall be held in accordance with § 1000.540. The amount in question shall not be reallocated under the provisions of § 1000.536, until 15 days after the hearing has been conducted and HUD has rendered a final decision.
</P>
<P>(c) Notwithstanding paragraphs (a) and (b) of this section, if HUD makes a determination that the failure of a recipient to comply substantially with any material provision of NAHASDA or these regulations is resulting, and would continue to result, in a continuing expenditure of funds provided under NAHASDA in a manner that is not authorized by law, HUD may, in accordance with section 401(a)(4) of NAHASDA, take action under paragraph (a)(3) of this section prior to conducting a hearing under paragraph (b) of this section. HUD shall provide notice to the recipient at the time that HUD takes that action and conducts a hearing, in accordance with section 401(a)(4)(B) of NAHASDA, within 60 days of such notice.
</P>
<P>(d) Notwithstanding paragraph (a) of this section, if HUD determines that the failure to comply substantially with the provisions of NAHASDA or these regulations is not a pattern or practice of activities constituting willful noncompliance, and is a result of the limited capability or capacity of the recipient, if the recipient requests, HUD shall provide technical assistance for the recipient (directly or indirectly) that is designed to increase the capability or capacity of the recipient to administer assistance under NAHASDA in compliance with the requirements under NAHASDA. A recipient's eligibility for technical assistance under this subsection is contingent on the recipient's execution of, and compliance with, a performance agreement pursuant to Section 401(b) of NAHASDA.
</P>
<P>(e) In lieu of, or in addition to, any action described in this section, if the Secretary has reason to believe that the recipient has failed to comply substantially with any provisions of NAHASDA or these regulations, HUD may refer the matter to the Attorney General of the United States, with a recommendation that appropriate civil action be instituted.
</P>
<CITA TYPE="N">[77 FR 71529, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.534" NODE="24:4.1.3.1.24.6.41.19" TYPE="SECTION">
<HEAD>§ 1000.534   What constitutes substantial noncompliance?</HEAD>
<P>HUD will review the circumstances of each noncompliance with NAHASDA and the regulations on a case-by-case basis to determine if the noncompliance is substantial. This review is a two step process. First, there must be a noncompliance with NAHASDA or these regulations. Second, the noncompliance must be substantial. A noncompliance is substantial if:
</P>
<P>(a) The noncompliance has a material effect on the recipient meeting its planned activities as described in its Indian Housing Plan;
</P>
<P>(b) The noncompliance represents a material pattern or practice of activities constituting willful noncompliance with a particular provision of NAHASDA or the regulations, even if a single instance of noncompliance would not be substantial;
</P>
<P>(c) The noncompliance involves the obligation or expenditure of a material amount of the NAHASDA funds budgeted by the recipient for a material activity; or
</P>
<P>(d) The noncompliance places the housing program at substantial risk of fraud, waste or abuse.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 77 FR 71529, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.536" NODE="24:4.1.3.1.24.6.41.20" TYPE="SECTION">
<HEAD>§ 1000.536   What happens to NAHASDA grant funds adjusted, reduced, withdrawn, or terminated under § 1000.532?</HEAD>
<P>Such NAHASDA grant funds shall be distributed by HUD in accordance with the next NAHASDA formula allocation.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 77 FR 71529, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.540" NODE="24:4.1.3.1.24.6.41.21" TYPE="SECTION">
<HEAD>§ 1000.540   What hearing procedures will be used under NAHASDA?</HEAD>
<P>The hearing procedures in 24 CFR part 26 shall be used.


</P>
</DIV8>


<DIV8 N="§ 1000.542" NODE="24:4.1.3.1.24.6.41.22" TYPE="SECTION">
<HEAD>§ 1000.542   When may HUD require replacement of a recipient?</HEAD>
<P>(a) In accordance with section 402 of NAHASDA, as a condition of HUD making a grant on behalf of an Indian tribe, the Indian tribe shall agree that, notwithstanding any other provisions of law, HUD may, only in the circumstances discussed below, require that a replacement TDHE serve as the recipient for the Indian tribe.
</P>
<P>(b) HUD may require a replacement TDHE for an Indian tribe only upon a determination by HUD on the record after opportunity for hearing that the recipient for the Indian tribe has engaged in a pattern or practice of activities that constitute substantial or willful noncompliance with the requirements of NAHASDA.


</P>
</DIV8>


<DIV8 N="§ 1000.544" NODE="24:4.1.3.1.24.6.41.23" TYPE="SECTION">
<HEAD>§ 1000.544   What audits are required?</HEAD>
<P>Pursuant to NAHASDA section 405(a), the recipient must comply with the requirements of the Single Audit Act (chapter 75 of title 31, United States Code), implemented by 2 CFR part 200, subpart F, which require annual audits of recipients that expend federal funds equal to or in excess of an amount specified by the Office of Management and Budget (OMB), as set out in 2 CFR 200.501. If applicable, a certification that the recipient has not expended federal funds in excess of the audit threshold that is set by OMB shall be included in the recipient's Annual Performance Report.
</P>
<CITA TYPE="N">[77 FR 71529, Dec. 3, 2012, as amended at 80 FR 75944, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 1000.546" NODE="24:4.1.3.1.24.6.41.24" TYPE="SECTION">
<HEAD>§ 1000.546   Are audit costs eligible program or administrative expenses?</HEAD>
<P>Yes, audit costs are an eligible program or administrative expense. If the Indian tribe is the recipient then program funds can be used to pay a prorated share of the tribal audit or financial review cost that is attributable to NAHASDA funded activities. For a recipient not covered by the Single Audit Act, but which chooses to obtain a periodic financial review, the cost of such a review would be an eligible program expense.


</P>
</DIV8>


<DIV8 N="§ 1000.548" NODE="24:4.1.3.1.24.6.41.25" TYPE="SECTION">
<HEAD>§ 1000.548   Must a copy of the recipient's audit pursuant to the Single Audit Act relating to NAHASDA activities be submitted to HUD?</HEAD>
<P>No. A copy of the recipient audit under the Single Audit Act relating to NAHASDA activities is only required to be submitted to the Federal Audit Clearinghouse pursuant to 2 CFR part 200, subpart F.
</P>
<CITA TYPE="N">[80 FR 75944, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 1000.550" NODE="24:4.1.3.1.24.6.41.26" TYPE="SECTION">
<HEAD>§ 1000.550   If the TDHE is the recipient, does it have to submit a copy of its audit to the Indian tribe?</HEAD>
<P>Yes. The Indian tribe as the grant beneficiary must receive a copy of the audit report so that it can fully carry out its oversight responsibilities with NAHASDA.


</P>
</DIV8>


<DIV8 N="§ 1000.552" NODE="24:4.1.3.1.24.6.41.27" TYPE="SECTION">
<HEAD>§ 1000.552   How long must the recipient maintain program records?</HEAD>
<P>(a) This section applies to all financial and programmatic records, supporting documents, and statistical records of the recipient which are required to be maintained by the statute, regulation, or grant agreement.
</P>
<P>(b) Except as otherwise provided herein, records must be retained for 3 years from the end of the tribal program year during which the funds were expended.
</P>
<P>(c) If any litigation, claim, negotiation, audit or other action involving the records has been started before the expiration of the 3-year period, the records must be retained until completion of the action and resolution of all issues which arise from it, or until the end of the regular 3-year period, whichever is later.
</P>
<CITA TYPE="N">[63 FR 12349, Mar. 12, 1998, as amended at 77 FR 71530, Dec. 3, 2012]


</CITA>
</DIV8>


<DIV8 N="§ 1000.554" NODE="24:4.1.3.1.24.6.41.28" TYPE="SECTION">
<HEAD>§ 1000.554   Which agencies have right of access to the recipient's records relating to activities carried out under NAHASDA?</HEAD>
<P>(a) HUD and the Comptroller General of the United States, and any of their authorized representatives, shall have the right of access to any pertinent books, documents, papers, or other records of recipients which are pertinent to NAHASDA assistance, in order to make audits, examinations, excerpts, and transcripts.
</P>
<P>(b) The right of access in this section lasts as long as the records are maintained.


</P>
</DIV8>


<DIV8 N="§ 1000.556" NODE="24:4.1.3.1.24.6.41.29" TYPE="SECTION">
<HEAD>§ 1000.556   Does the Freedom of Information Act (FOIA) apply to recipient records?</HEAD>
<P>FOIA does not apply to recipient records. However, there may be other applicable State and tribal access laws or recipient policies which may apply.


</P>
</DIV8>


<DIV8 N="§ 1000.558" NODE="24:4.1.3.1.24.6.41.30" TYPE="SECTION">
<HEAD>§ 1000.558   Does the Federal Privacy Act apply to recipient records?</HEAD>
<P>The Federal Privacy Act does not apply to recipient records. However, there may be other applicable State and tribal access laws or recipient policies which may apply.


</P>
</DIV8>

</DIV6>


<DIV6 N="0" NODE="24:4.1.3.1.24.7" TYPE="SUBPART">
<HEAD> </HEAD>

</DIV6>


<DIV9 N="Appendix A" NODE="24:4.1.3.1.24.8.41.1.11" TYPE="APPENDIX">
<HEAD>Appendix A to Part 1000—Indian Housing Block Grant Formula Mechanics
</HEAD>
<P>This appendix shows the different components of the Indian Housing Block Grant (IHBG) formula. The following text explains how each component of the IHBG formula is calculated.
</P>
<P>1. The first step in running the IHBG formula is to determine the amount available for allocation in the Fiscal Year (FY). It is the sum of:
</P>
<P>(a) The FY appropriation for the IHBG program less amounts in the Appropriations Act mandated for purposes other than the formula allocation.
</P>
<P>(b) The net amount, if any, made available as a result of corrections for over- or under-allocations in prior FYs.
</P>
<P>(c) The amount, if any, made available pursuant to § 1000.536.
</P>
<P>(d) The amounts, if any, made available because tribes voluntarily returned, or did not accept, the amounts allocated to them in prior FYs, defined as “carryover” (see § 1000.329).
</P>
<P>2. If there is carryover as defined in § 1000.329, the amount of carryover up to $3 million, is then held aside for allocation under the minimum total grant provisions of the formula (see 11 below).
</P>
<P>3. The IHBG formula first calculates the amount each tribe is allocated under the Formula Current Assisted Stock (FCAS) component (See §§ 1000.310 through 1000.322). The FCAS component is comprised of two parts, Operating Subsidy (§ 1000.316(a)) and Modernization (§ 1000.316(b)).
</P>
<P>(a) The Operating Subsidy component is calculated in two steps, as follows:
</P>
<P>(i) Each tribe's counts of Low Rent, Homeownership (Mutual Help and Turnkey III), and Section 8 units are multiplied by the National Per Unit Subsidy for operations for that category of unit, which is a 1996 index for the type of unit that is adjusted for inflation (see § 1000.302 defining National Per Unit Subsidy). The amounts are summed to create an initial calculation of the operating subsidy component.
</P>
<P>(ii) The initial operating subsidy component amount is then adjusted for local area costs, using an adjustment factor called the AELFMR. The AELFMR factor is calculated for each tribe in three steps. First, an Allowable Expense Level (AEL) factor is calculated by dividing the tribe's AEL, a historic per-unit measure of operating cost, by the national weighted average AEL (see § 1000.302 defining Allowable Expense Level). Second, a Fair Market Rent (FMR) factor is calculated by dividing the tribe's FMR amount, an area-specific index published annually by HUD (see § 1000.302 Fair Market Rent factor), by the national weighted average FMR. Third, an AELFMR factor is created by assigning each tribe the greater of its AEL or FMR factor, and dividing that figure by the national weighted average AELFMR. In all cases, when the national average figure is calculated, tribes are weighted by the amount of their initial operating subsidy as calculated in 3(a)(i).
</P>
<P>(See § 1000.320).
</P>
<P>(b) The Modernization component is determined using two methods depending on the number of public housing units that a tribe's housing authority operated prior to the Native American Housing and Self-Determination Act.
</P>
<P>(i) For all tribes, the number of Low Rent, Mutual Help, and Turnkey III units are multiplied by the National Per Unit Subsidy for modernization from 1996 adjusted for inflation (see § 1000.302 defining National Per Unit Subsidy).
</P>
<P>(ii) For Indian tribes with an Indian Housing Authority (IHA) that owned or operated fewer than 250 units on October 1, 1997, an alternative modernization component is calculated from the amount of funds the IHA received under the assistance program authorized by Section 14 of the 1937 Act (not including funds provided as emergency assistance) for FYs 1992 through 1997 (see § 1000.316(b)(2)). If this alternative calculation is greater than the amount calculated in paragraph (a) above, it is used to calculate the tribe's modernization component.
</P>
<P>(iii) The Modernization component is then multiplied by a local area cost adjustment factor based on the Total Development Cost (TDC) for the tribe (see § 1000.302) divided by the national weighted average of all TDCs weighted by each tribe's pre-adjustment Modernization calculation in paragraph (b)(i) or (ii) above as applicable.
</P>
<P>4. The total amounts calculated under the FCAS component for each tribe are then added together to determine the national total amount allocated under the FCAS component. That total is subtracted from the funds available for allocation less the carryover amount held aside for allocation under the minimum total grant provision in § 1000.329. The remainder is the total amount available for allocation under the need component of the IHBG formula.
</P>
<P>5. The first step in calculating need component is identifying weighted needs variables and adjusting for local area cost differences.
</P>
<P>(a) Need is first calculated using seven factors, where each factor is a tribe's share of the national totals for each of seven variables. The data used for the seven variables is described in § 1000.330. The person count variable is adjusted for statistically significant undercounts for reservations, trust lands and remote Alaska and for growth in population since the latest Decennial Census. The Population Cap provision in § 1000.302 Formula Area (5) is then applied. Needs data are capped if the American Indian and Alaska Native (AIAN) population counts exceed twice tribal enrollment unless a tribe can demonstrate that it serves more than twice as many non-tribal members as tribal members, in which case the cap is adjusted upward.
</P>
<P>The factors are weighted as set forth in § 1000.324, as follows:
</P>
<P>(i) 22 percent of the amount available for allocation under the needs component are allocated by the share of the total AIAN households paying more than 50 percent of their income for housing and living in each tribe's Formula Area (see § 1000.302);
</P>
<P>(ii) 25 percent are allocated by the share of the total AIAN households living in overcrowded housing and/or without kitchen or plumbing in each tribe's Formula Area;
</P>
<P>(iii) 15 percent are allocated by the share of the total AIAN households with an annual income less than or equal to 80 percent of Formula Median Income (see § 1000.302) living in each tribe's Formula Area less the tribe's number of FCAS.
</P>
<P>(iv) 13 percent are allocated by the share of AIAN households with annual income less than or equal to 30 percent of Formula Median Income living in each tribe's Formula Area;
</P>
<P>(v) 7 percent are allocated by the share of AIAN households with annual income between 30 percent and 50 percent of Formula Median Income living in each tribe's Formula Area;
</P>
<P>(vi) 7 percent are allocated by the share of AIAN households with annual income between 50 percent and 80 percent of Formula Median Income living in each tribe's Formula Area;
</P>
<P>(vii) 11 percent are allocated by the share of AIAN persons living in each tribe's Formula Area.
</P>
<P>(b) The result of these calculations for each tribe is then multiplied by a local area cost adjustment based on the Total Development Cost for the tribe (see § 1000.302) divided by the national weighted average of TDCs weighted by each tribe's pre-adjustment need calculation. (See § 1000.325).
</P>
<P>6. Each tribe's initial need allocation amount is then adjusted under the minimum need allocation provision of § 1000.328. Tribes that are allocated less than $200,000 under the FCAS component of the IHBG formula and that certify the presence of any households at or below 80 percent of median income in their Indian Housing Plans will be allocated no less than a specified minimum under the needs component of the formula. The specified minimum amount shall equal 0.007826 percent of the appropriation for that FY after set-asides. The increase in funding for the tribes allocated the minimum need amount is funded by a reallocation from other tribes whose needs allocation exceeds the minimum need amount. This is necessary in order to keep the total allocation within the appropriation level (See § 1000.328).
</P>
<P>7. Whenever a new Data Source is first introduced, provision is made to moderate extreme impacts through phase down adjustments. For purposes of these adjustments, new data sources (see § 1000.331) include the initial introduction of the American Community Survey and 2010 Decennial Census in 2018, and the initial introduction of the 2020 Decennial Census when it becomes available. Tribes whose allocation under the need component decrease by more than ten percent in the first year of introduction will have that decrease moderated by subsequent adjustments, as required to prevent a drop of more than ten percent per year in the tribes' needs allocation attributable solely to the introduction of the New Data Source. After allocation adjustments are made under § 1000.331 for a FY, the needs allocation of an Indian tribe whose needs allocation increased as a result of the introduction of a New Data Source under § 1000.331 shall be adjusted downward proportionate to its share of the total increase in funding resulting from the introduction of a New Data Source to keep the overall needs allocation within available appropriations.
</P>
<P>8. A tribe's preliminary total allocation for a grant is calculated by summing the amounts calculated under the FCAS and need components. This amount is compared to how much a tribe received in FY 1996 for operating subsidy and modernization under the 1937 Housing Act. If a tribe received more in FY 1996 for operating subsidy and modernization than it does under the IHBG formula allocation, its preliminary total allocation is adjusted up to the FY 1996 amount (See § 1000.340(b)). Indian tribes receiving more under the IHBG formula than in FY 1996 have their grant allocations adjusted downward to offset the upward adjustments for the other tribes.
</P>
<P>9. The initial allocation amount for the current FY is calculated by adding any adjustments for over- or under-funding occurring in prior FYs to the allocation calculated in the previous step. These adjustments typically result from late reporting of FCAS changes, or conveyances which occur in a timely manner following the removal of units from eligibility due to conveyance eligibility.
</P>
<P>10. The Undisbursed Funds Factor component is calculated based on the initial allocation amounts calculated above. Tribes with an initial allocation of $5 million or more and undisbursed IHBG grant amounts (the amount available to the tribe in HUD's line of credit control on October 1 of the FY for which the allocation is being made) in an amount greater than the sum of the prior 3 years' initial allocation calculations will have their initial allocation amount adjusted down by the difference between the tribe's undisbursed grant amounts and the sum of its prior 3 years' initial allocation calculations. If this adjustment would bring the tribe below its FY 1996 minimum (see § 1000.340(b)), then the tribe will be allocated its FY 1996 minimum. The sum of the adjustments will be reallocated among the other tribes proportionally under the need component.
</P>
<P>11. A final adjustment is made under § 1000.329 which allocates available carryover amounts up to $3 million to achieve minimum total allocations. Tribes that certify in their Indian Housing Plans the presence of any eligible households at or below 80 percent of median income and whose current FY formula allocation after the Undisbursed Funds Factor adjustment determined in the preceding step is less than 0.011547 percent of the FY appropriation after set-asides, will have their allocation adjusted upwards to 0.011547 percent of the FY appropriation after set-asides, or to a lesser percentage which can be achieved for all eligible tribes with available carryover held for this adjustment (see 2 above).
</P>
<CITA TYPE="N">[81 FR 83682, Nov. 22, 2016]


</CITA>
</DIV9>


<DIV9 N="Appendix B" NODE="24:4.1.3.1.24.8.41.1.12" TYPE="APPENDIX">
<HEAD>Appendix B to Part 1000—IHBG Block Grant Formula Mechanisms
</HEAD>
<P>1. The first step in running the Indian Housing Block Grant (IHBG) formula is to determine the total amount available for allocation in the current Fiscal Year (FY).
</P>
<FP-2>ALLOCAMT = APPROP + ADJ1 + ADJ2 + CARRYOVER.
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>ALLOCAMT = amount available for allocation under the formula.
</FP-2>
<FP-2>APPROP = current FY appropriation for the IHBG program less amounts in the Appropriations Act mandated for purposes other than the formula allocation.
</FP-2>
<FP-2>ADJ1= net amount, if any, made available as a result of corrections for over-or under allocations in prior FYs.
</FP-2>
<FP-2>ADJ2 = amount, if any, made available under § 1000.536.
</FP-2>
<FP-2>CARRYOVER = amounts, if any, made available because tribes voluntarily returned, or did not accept, the amounts allocated to them in prior FYs.
</FP-2>
<P>2. If there is carryover as defined in § 1000.329, the amount of carryover up to $3 million, is then held aside for allocation under the minimum total grant provisions of the formula (see Step 10), then:
</P>
<FP-2>MGHOLD = amount set-aside for allocation under minimum total grant provision.
</FP-2>
<FP-2>If CARRYOVER = 0, MGHOLD = 0.
</FP-2>
<FP-2>If CARRYOVER &gt; 0 and CARRYOVER &lt; = $3 million, MGHOLD = CARRYOVER.
</FP-2>
<FP-2>If CARRYOVER &gt; $3 million, MGHOLD = $3 million.
</FP-2>
<P>3. The FCAS component is calculated first. FCAS consists of two parts, Operating Subsidy (OPSUB) and Modernization (MOD), such that:
</P>
<FP-2>FCAS = OPSUB + MOD.
</FP-2>
<P>a. OPSUB is calculated in two steps, as follows:
</P>
<P>(i) First, the number of Low-Rent, Section 8 and homeownership units are multiplied by the applicable national per unit subsidy (§ 1000.302 National Per Unit Subsidy). The amounts are summed to create an initial calculation of the Operating Subsidy component.
</P>
<FP-2>OPSUB1 = [LR * LRSUB] + [(MH + TK) * HOSUB] + [S8 * S8SUB].
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>OPSUB1 = initial calculation of Operating Subsidy component.
</FP-2>
<FP-2>LR = number of Low-Rent units.
</FP-2>
<FP-2>LRSUB = national per unit subsidy for Low-Rent units ($2,440 * INF).
</FP-2>
<FP-2>INF = adjustment for inflation since 1995, as determined by the Consumer Price Index for housing.
</FP-2>
<FP-2>MH + TK = number of Mutual Help and Turnkey III units.
</FP-2>
<FP-2>HOSUB = national per unit subsidy for Homeownership units ($528 * INF).
</FP-2>
<FP-2>S8 = number of Section 8 units.
</FP-2>
<FP-2>S8SUB = national per unit subsidy for Section 8 units = ($3,625 * INF).
</FP-2>
<P>(ii) The initial Operating Subsidy component amount is then adjusted for local area costs, using an adjustment factor called the AELFMR. The AELFMR factor is calculated for each tribe in three steps. First, an AEL factor is calculated by dividing the tribe's Allowable Expense Level (AEL), a historic per-unit measure of operating cost, by the national weighted average AEL (see § 1000.302 defining Allowable Expense Level)
</P>
<FP-2>AEL FACTOR = AEL/NAEL.
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>AEL = local Allowable Expense Level.
</FP-2>
<FP-2>NAEL = national weighted average for AEL, where the weight is a tribe's initial calculation of operating subsidy.
</FP-2>
<P>Second, an FMR factor is calculated by dividing the tribe's Fair Market Rent amount (FMR), an area-specific index published annually by HUD (see § 1000.302 Fair Market Rent factor), by the national weighted average FMR.
</P>
<FP-2>FMR FACTOR = FMR/NFMR.
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>FMR= local Fair Market Rent.
</FP-2>
<FP-2>NFMR = national weighted average for FMR, where the weight is a tribe's initial calculation of operating subsidy.
</FP-2>
<P>Third, an AELFMR factor is created by assigning each tribe the greater of its AEL or FMR factor, and dividing that figure by the national weighted average AELFMR. In all cases, when the national average figure is calculated, tribes are weighted by the amount of their initial operating subsidy as calculated in 3(a)(i) above. (See § 1000.320).
</P>
<FP-2>AELFMRFACTOR = final local area cost adjustment factor (AELFACTOR or FMRFACTOR)/NAELFMR.
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>NAELFMR = national weighted average for greater of AEL Factor or FMR factor, where weight is a tribe's initial calculation of operating subsidy
</FP-2>
<P>Finally, the AELFMR factor is used to adjust the initial operating subsidy calculation for differences in local area costs.
</P>
<FP-2>OPSUB = OPSUB1 * AELFMRFACTOR.
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>OPSUB = Operating Subsidy component after adjustment for local cost differences.
</FP-2>
<P>b. The modernization component, MOD, is calculated by two different methods, depending on whether the tribe had an Indian housing authority (IHA) that owned or operated more than 250 public housing units on October 1, 1997.
</P>
<P>(i) MOD1 is calculated for all tribes and considers the number of Low-Rent, and Mutual Help and Turnkey III FCAS units. Each of these is adjusted by the national per-unit modernization subsidy
</P>
<FP-2>MOD1 = [LR + MH + TK] * MODPU.
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>LR = number of Low-Rent units.
</FP-2>
<FP-2>MH = number of Mutual Help units.
</FP-2>
<FP-2>TK = number of Turnkey III units.
</FP-2>
<FP-2>MODPU = national per-unit amount for modernization in 1996 adjusted for inflation ($1,974 * INF).
</FP-2>
<FP-2>INF = adjustment for inflation since 1995, as determined by the Consumer Price Index for housing.
</FP-2>
<P>(ii) MODAVG is calculated only for tribes that had an IHA that owned or operated fewer than 250 public housing units on October 1, 1997, as the annual average amount they received for FYs 1992 through 1997 under the assistance program authorized by section 14 of the 1937 Act (not including emergency assistance). If this alternative calculation is greater than the amount calculated in (i), it is used to calculate the tribe's modernization component.
</P>
<FP-2>MODAVG = Average (FY 1992 to FY 1997) amount received by Section 14 of the 1937 Act.
</FP-2>
<FP-2>If MODAVG &gt; MOD1, MOD1 = MODAVG.
</FP-2>
<P>c. The modernization calculation is adjusted for local area costs:
</P>
<FP-2>MOD = MOD1 * (TDC/NTDC).
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>TDC = Local Total Development Costs defined in § 1000.302.
</FP-2>
<FP-2>NTDC = weighted national average for TDC, where the weight is the initial calculation of modernization amount of tribe with CAS.
</FP-2>
<P>4. Now that calculation for FCAS is complete, the amount allocated using the need component of the formula can be determined:
</P>
<FP-2>NEEDALLOCAMT = ALLOCAMT − MGHOLD − NATCAS.
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>NEEDALLOCAMT = amount allocated using the need component of the formula.
</FP-2>
<FP-2>ALLOCAMT = amount available for allocation under the formula.
</FP-2>
<FP-2>MGHOLD = amount held for allocation under minimum total grant provision.
</FP-2>
<FP-2>NATCAS = national summation of FCAS allocation for all tribes.
</FP-2>
<P>5. The first step in calculating needs is identifying weighted needs variables and adjusting for local area cost differences.
</P>
<P>a. The basic needs calculation uses seven weighted criteria based on population and housing data in a tribe's Formula Area or share of Formula Area if Formula Areas overlap (see § 1000.302 Formula Area and § 1000.326) to allocate the funds available for the needs component. The person count variable is adjusted for statistically significant undercounts for reservations, trust lands and remote Alaska and for changes in population since the latest Decennial Census.
</P>
<FP-2>PERADJ = PER * UCFACTOR * POPCHGFACTOR.
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>PER = American Indian and Alaskan Native (AIAN) persons as reported in the most recent Decennial Census.
</FP-2>
<FP-2>UCFACTOR= 1+ the percentage undercount identified by the Census by type of land (in 2010 1.0488 for reservation and trust lands only and assumed also to apply to remote Alaska).
</FP-2>
<FP-2>POPCHGFACTOR = the ratio of the most recent AIAN Census population estimate for county to the AIAN count for county from the Decennial Census.
</FP-2>
<P>The Population Cap provision in § 1000.302 Formula Area (5) is then applied. Needs data are capped if AIAN population counts exceed twice tribal enrollment unless a tribe can demonstrate that it serves more than twice as many non-tribal members as tribal members, in which case the cap is adjusted upward.
</P>
<FP-2>POPCAPTEST=1 if PERADJ &gt; TEmultiplier * TE
</FP-2>
<P>If POPCAPTEST=1, (tribes subject to Population Cap) then:
</P>
<FP-2>PER = TEmultiplier * TE
</FP-2>
<FP-2>POPCAPADJF = PER/PERADJ
</FP-2>
<P>For tribes NOT subject to Population Cap,
</P>
<FP-2>PER = PERADJ and POPCAPADJF = 1.
</FP-2>
<P>Where:
</P>
<FP-2>POPCAPTEST = an indicator showing whether a tribe's needs data must be adjusted downward because its Formula Area population is disproportionally large relative to tribe's enrollment,
</FP-2>
<FP-2>TEmultiplier = 2, or a larger factor if justified by tribe on annual basis.
</FP-2>
<FP-2>TE = Tribal enrollment.
</FP-2>
<FP-2>POPCAPADJF = factor used to adjust household needs variables.
</FP-2>
<P>An initial calculation of the needs component is then calculated by determining each tribe's share of national totals on each variable, and applying weights to the variables as specified in regulation.
</P>
<FP-2>BASENEED = [(0.11 * (PER)/NPER) + (0.13 * HHLE30/NHHLE30) + (0.07 * HH30T50/NHH30T50) + (0.07 * HH50T80/NHH50T80) + (0.25 * OCRPR/NOCRPR) + (0.22 * SCBTOT/NSCBTOT) + (0.15 * HOUSHOR/NHOUSHOR)] * NEEDALLOCAMT.
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>PER = count of AIAN persons after adjustments.
</FP-2>
<FP-2>NPER = national total of PER.
</FP-2>
<FP-2>HHLE30 = count of AIAN households less than 30% of formula median income multiplied by POPCAPADJF.
</FP-2>
<FP-2>NHHLE30 = national total of HHLE30.
</FP-2>
<FP-2>HH30T50 = count of AIAN households 30% to 50% of formula median income multiplied by POPCAPADJF.
</FP-2>
<FP-2>NHH30T50 = national total of HH30T50.
</FP-2>
<FP-2>HH50T80 = count of AIAN households 50% to 80% of formula median income multiplied by POPCAPADJF.
</FP-2>
<FP-2>NHH50T80 = national total of HH50T80.
</FP-2>
<FP-2>OCRPR = count of AIAN households crowded or without complete kitchen or plumbing multiplied by POPCAPADJF.
</FP-2>
<FP-2>NOCRPR = national total of OCRPR.
</FP-2>
<FP-2>SCBTOT = count of AIAN households paying more than 50% of their income for housing multiplied by POPCAPADJF.
</FP-2>
<FP-2>NSCBTOT = national total SCBTOT.
</FP-2>
<FP-2>HOUSHOR = a measure of housing shortage calculated as (HHLE30 + HH30T50 + HH50T80)—(LR + MH + TKIII)
</FP-2>
<FP-2>NHOUSHOR = national total of HOUSHOR.
</FP-2>
<FP-2>NEEDALLOCAMT = amount allocated using the need component of the formula.
</FP-2>
<P>b. The basic needs calculation is adjusted to reflect differences in local area costs.
</P>
<FP-2>NEED = BASENEED * (TDC/NATDC).
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>TDC = Local Total Development Costs defined in § 1000.302.
</FP-2>
<FP-2>NATDC = average for TDC for all tribes weighted using BASENEED.
</FP-2>
<P>6. The need allocation computed above is adjusted to take into account the minimum needs provision. Tribes allocated less than $200,000 under the FCAS component of the IHBG formula and that certify the presence of any households at or below 80 percent of median income in their Indian Housing Plan are allocated an additional amount so their needs allocation equals 0.007826 percent of the available appropriations for that FY after set-asides.
</P>
<FP-2>MINNEED = APPROP * 0.00007826.
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>APPROP = current FY appropriation for the IHBG program less amounts in the Appropriations Act mandated for purposes other than the formula allocation.
</FP-2>
<P>If in the first need computation, a qualified tribe is allocated less than the minimum needs funding level, its need allocation will go up. Other tribes whose needs allocations are greater than the minimum needs amount will have their allocations adjusted downward to keep the total allocation within available funds:
</P>
<FP-2>If NEED &lt; MINNEED and FCAS &lt; $200,000 and income-based need has been identified in a tribe's IHP, then NEED1 = MINNEED.
</FP-2>
<FP-2>If NEED &gt; = MINNEED, then NEED1 = NEED1 − {UNDERMIN$ * [(NEED1 − MINNEED)/OVERMIN$]}.
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>MINNEED = minimum needs amount.
</FP-2>
<FP-2>UNDERMIN$ = for all tribes qualifying for an increase under the minimum needs provision, sum of the differences between MINNEED and NEED1.
</FP-2>
<FP-2>OVERMIN$ = for all tribes with needs allocations larger than the minimum needs amount, the sum of the difference between NEED1 and MINNEED.
</FP-2>
<FP-2>7. Whenever a new data source (see § 1000.331) is first introduced, provision is made to moderate extreme impacts through phase down adjustments. Tribes whose allocation under the need component decrease by more than ten percent in the first year of introduction will have that decrease moderated by subsequent adjustments, as required to prevent a drop of more than ten percent per year in the tribes' needs allocation attributable solely to the introduction of the new data source. A phase down adjustment schedule is calculated, containing adjustment amounts (PDADJ<E T="52">n</E>) for the first and all subsequent FYs, based on the amount allocated to a tribe under the need component in the FY prior to the introduction of the new data source using the old data source. That is,
</FP-2>
<FP-2>If NEED1NewDS &lt; 0.9 * NEED1OldDS, then a tribe qualifies for a phase down adjustment (PDADJ) (see § 1000.331(c)).
</FP-2>
<FP-2>PDADJ<E T="52">n</E> = (((0.9
<SU>n</SU><I>)</I> * NEED1OldDS)—NEED1NewDS), where n = 1 to ∞ provided PDADJ<E T="52">n</E> &gt; 0 for at least one tribe.
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>NEED1NewDS = the amount the tribe would have received in the FY prior to the introduction of the new data source had the new data source been used to determine their need component in that FY.
</FP-2>
<FP-2>NEED1OldDS = the amount a tribe actually received in the FY prior to the introduction of the new data source based on the old data source.
</FP-2>
<FP-2>PDADJ<E T="52">n</E> = the size of the adjustment that qualifying tribes will receive in each year n, where the n represents the number of years elapsed since the introduction of the new data source and is equal to one in the first year.
</FP-2>
<P>After allocation adjustments are made under § 1000.331 for a FY, the needs allocation of an Indian tribe whose needs allocation increased as a result of the introduction of a new data source shall be adjusted downward proportionate to its share of the total increase in funding resulting from the introduction of a new data source to keep the overall need component within available appropriations. For each tribe which benefitted from the introduction of the new data source, their share of the total gain is calculated and that share is used to determine the amount of contribution they will make in each year following the introduction of the new data source to allow the phase down adjustments to be made without exceeding the amount available for allocation.
</P>
<FP-2>If NEED1NewDS &gt; NEED1OldDS, then tribe gained from the introduction of the new data source and contributes a portion of their gain to offset the phase down adjustments.
</FP-2>
<FP-2>GAINSHR = (NEED1NewDS -NEED1OldDS)/TOTGAINYR1.
</FP-2>
<FP-2>CONTRIB<E T="52">n</E> = GAINSHR * TOTPDADJ<E T="52">n,</E>
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>NEEDd1NewDS = the amount the tribe would have received in the FY prior to the of introduction of the new data source had the new data source been used to determine their needs funding in that FY.
</FP-2>
<FP-2>NEED1OldDS = the amount a tribe actually received in the FY prior to the introduction the new data source based on the old data source.
</FP-2>
<FP-2>GAINSHR = a tribe's share of the total gains realized by all tribes that benefitted from the introduction of the new data source.
</FP-2>
<FP-2>TOTGAINYR1 = the sum of the amounts that tribes gain from the introduction of the new data source in year one.
</FP-2>
<FP-2>CONTRIB<E T="52">n</E> = the size of the contribution that non-qualifying tribes give in each year n, where the n represents the number of years elapsed since the introduction of the new data source and equal to one in the first year.
</FP-2>
<FP-2>TOTPDADJ<E T="52">n</E> = the total amount in each year n required to cover the cost of phase down adjustments in that year, <I>i.e.</I> <E T="8151">S</E> PDADJ<E T="52">n.</E>
</FP-2>
<P>The initial needs allocation for each tribe is adjusted based on the phase down adjustments and contribution amounts in the phase down schedule.
</P>
<FP-2>NEED1PD = NEED1 +__PDADJ<E T="52">n</E> − CONTRIB<E T="52">n</E>.
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>NEED1PD = a tribe's allocation under the need component after applying the phase down adjustment schedule.
</FP-2>
<FP-2>NEED1= the initial calculation of need in the current FY from step 6 above.
</FP-2>
<FP-2>PDADJ<E T="52">n</E> = the size of the adjustment that qualifying tribes will receive in each year n, where the n represents the number of years elapsed since the introduction of the new data source and is equal to one in the first year.
</FP-2>
<FP-2>CONTRIB<E T="52">n</E> = the size of the contribution that non-qualifying tribes give in each year n, where the n represents the number of years elapsed since the introduction of the new data source and equal to one in the first year.
</FP-2>
<P>PDADJ<E T="52">n</E> and CONTRIB<E T="52">n</E> as calculated in the initial phase down adjustment schedule may have to be adjusted downward in subsequent FYs if the total amount available for allocation under the needs Component (<I>i.e.</I> NEEDALLOCAMT in Step 4) is lower than the amount available for that purpose in the FY prior to the introduction of the new data source. If so, both PDADJ<E T="52">n</E> and CONTRIB<E T="52">n</E> will be reduced by a factor which is the ratio of NEEDALLOCAMT in current FY to NEEDALLOCAMT in the year prior to the introduction of the new data source.
</P>
<P>Furthermore, when the 2020 Decennial Census or other new data source is introduced, a new phase down adjustment schedule will be calculated in a similar manner as that was calculated for FY 2018.
</P>
<P>8. A tribe's preliminary total allocation is calculated by summing the amounts calculated under the FCAS and need components that will serve as the basis for further adjustments in accordance with § 1000.340.
</P>
<FP-2>GRANT1 = FCAS + NEED1PD.
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>GRANT1 = preliminary total allocation before applying 1996 Operating Subsidy and Modernization minimum funding (see Step 8), Undisbursed Funds Factor (see Step 9) and Minimum Grant provision (see Step 10).
</FP-2>
<FP-2>FCAS = Formula Current Assisted Stock component equal to OPSUB + MOD.
</FP-2>
<FP-2>NEED1PD = the Tribe's needs allocation after applying the phase down adjustment schedule.
</FP-2>
<P>GRANT1 is compared to how much a tribe received in FY 1996 for operating subsidy and modernization under the 1937 Housing Act. If a tribe received more in FY 1996 for operating subsidy and modernization than its IHBG formula allocation, its preliminary total allocation is adjusted up to the FY 1996 amount (See § 1000.340(b)). Indian tribes receiving more under the IHBG formula than in FY 1996 have their grant allocations adjusted downward to offset the upward adjustment for the other tribes.
</P>
<FP-2>TEST = GRANT1 − OPMOD96.
</FP-2>
<FP-2>If TEST is &lt; = than 0, then GRANT2 = OPMOD96.
</FP-2>
<FP-2>If TEST is greater than 0 and GRANT1 &gt; MINNEED, then:
</FP-2>
<FP-2>GRANT2 = GRANT1 − [UNDER1996 * (TEST/OVER1996)].
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>TEST = variable to decide whether tribes qualify for adjustments under 1996 minimum funding.
</FP-2>
<FP-2>GRANT1 = preliminary total allocation before applying 1996 Operating Subsidy and Modernization minimum funding (see Step 8), Undisbursed Funds Factor (see Step 9) and Minimum Grant provision (see Step 10).
</FP-2>
<FP-2>OPMOD96 = funding received by tribe in FY 1996 for Operating Subsidy and Modernization.
</FP-2>
<FP-2>MINNEED = minimum needs amount.
</FP-2>
<FP-2>UNDER1996 = for all tribes with TEST less than 0, sum of the absolute value of TEST.
</FP-2>
<FP-2>OVER1996 = for all tribes with TEST greater than 0, sum of TEST.
</FP-2>
<FP-2>GRANT2 = preliminary total allocation after applying 1996 Operating Subsidy and Modernization minimum funding (see Step 8) but before applying the Undisbursed Funds Factor (see Step 9) and Minimum Grant provision (see Step 10).
</FP-2>
<P>9. The initial allocation amount for the current FY is calculated by adding any adjustments for over- or under-funding occurring in prior FYs to the allocation calculated in the previous step. These adjustments typically result from late reporting of FCAS changes, or conveyances.
</P>
<FP-2>REPGRANT = GRANT2 + ADJUST1.
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>REPGRANT = Initial Allocation Amount in current FY (see § 1000.342).
</FP-2>
<FP-2>GRANT2 = preliminary total allocation after applying 1996 Operating Subsidy and Modernization minimum funding (see Step 8) but before applying the Undisbursed Funds Factor (see Step 9) and Minimum Grant provision (see Step 10).
</FP-2>
<FP-2>ADJUST1 = adjustments for over- or under-funding occurring in prior FYs.
</FP-2>
<FP-2>10. The Undisbursed Funds Factor is determined by subtracting the sum of each tribe's Initial Allocation Amount for the prior three FYs from the IHBG amounts in HUD's Line of Credit Control System (LOCCS) on October 1 of the FY for which the new allocation is being determined. If the undisbursed funds factor is &gt; $0 and the tribe's initial allocation for the FY exceeds $5 million, its final allocation will be the initial allocation minus the Undisbursed Funds Factor or its 1996 minimum, whichever is greater. Reductions to the initial allocation amounts due to the Undisbursed Funds Factor are summed and redistributed to other tribes in proportion to their initial needs allocation, NEED1PD, calculated above.
</FP-2>
<FP-2>If REPGRANT &gt; = $5 MILLION and UNDISB$ &gt; (REPGRANTYR1 + REPGRANTYR2 + REPGRANTYR3), then UDFFtest = 1.
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>REPGRANT = Initial Allocation Amount in current FY.
</FP-2>
<FP-2>REPGRANTYR1 = Initial Allocation Amount in one year prior to current FY.
</FP-2>
<FP-2>REPGRANTYR2 = Initial Allocation Amount in two years prior to current FY.
</FP-2>
<FP-2>REPGRANTYR3 = Initial Allocation Amount in three years prior to current FY.
</FP-2>
<FP-2>UDFFTest = is an indicator as to whether the tribe will give up a portion of its needs allocation due to an excessive amount of undisbursed funds.
</FP-2>
<P/>
<FP-2>For tribes whose UDFFtest = 1, a reduction will occur as follows:
</FP-2>
<FP-2>REPGRANTaftUDFF = (GRANT2 − (UNDISB$ − (REPGRANTYR1 + REPGRANTYR2 + REPGRANTYR3))
</FP-2>
<FP-2>Except if, OPMOD96 &gt; (GRANT2 − (UNDISB$ − (REPGRANTYR + REPGRANTYR2 + REPGRANTYR3)) then, REPGRANTaftUDFF = OPMOD96.
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>REPGRANTaftUDFF = Initial Allocation Amount in current FY adjusted for the Undisbursed Funds Factor.
</FP-2>
<FP-2>GRANT2 = preliminary total allocation after applying 1996 Operating Subsidy and Modernization minimum funding (see Step 8) but before applying the Undisbursed Funds Factor (see Step 9) and Minimum Grant provision (see Step 10).
</FP-2>
<FP-2>UNDISB$ = amount in HUD's LOCCS on October 1 of the FY.
</FP-2>
<FP-2>REPGRANTYR1 = Initial Allocation Amount in one year prior to current FY.
</FP-2>
<FP-2>REPGRANTYR2 = Initial Allocation Amount in two years prior to current FY.
</FP-2>
<FP-2>REPGRANTYR3 = Initial Allocation Amount in three years prior to current FY.
</FP-2>
<FP-2>OPMOD96 = funding received by tribe in FY 1996 for Operating Subsidy and Modernization.
</FP-2>
<P>So the UDFFadj = REPGRANTaftUDFF − GRANT2 and UDFFadjTOT= Absolute value of the sum of UDFF adjustments for tribes subject to reduction.
</P>
<P>If UDFFtest is not equal to 1, tribes receive a portion of the funds recovered under the UDFF provision based on their share of total needs excluding any tribes with UDFFtest = 1. For these tribes, then:
</P>
<FP-2>UDFFadj = (NEED1PD/<E T="8151">S</E> Need1PD) * UDFFadjTOT).
</FP-2>
<FP-2>REPGRANTaftUDFF = REPGRANT + UDFFadj.
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>UDFFadj = amount of the Undisbursed Fund Factor adjustments. Negative amount represents excess undisbursed funds. Positive represents amounts being transferred to other tribes without excess undisbursed funds.
</FP-2>
<FP-2>NEED1PD = the Tribe's needs allocation after applying the phase down adjustment schedule.
</FP-2>
<FP-2>UDFFadjTOT = absolute value of the sum of Undisbursed Fund Factor adjustments for tribes that meet the criteria for reduction and is equal to the sum available for redistribution among other tribes based on their initial needs allocation.
</FP-2>
<FP-2>REPGRANTaftUDFF = Initial Allocation Amount in current FY adjusted for the Undisbursed Funds Factor.
</FP-2>
<FP-2>REPGRANT = Initial Allocation Amount in current FY.
</FP-2>
<P>11. A final adjustment is made under § 1000.329 which allocates available carryover amounts up to $3 million to achieve minimum total allocations. Tribes that certify in their Indian Housing Plans the presence of any eligible households at or below 80 percent of median income and whose total allocation determined in the preceding step is less than 0.011547 percent of the FY appropriation after set-asides, will have their allocation adjusted upwards to 0.011547 percent of the FY appropriation after set-asides, or to a lesser percentage which can be achieved for all eligible tribes with available carryover funds set-aside for this purpose.
</P>
<FP-2>MINGRANT = APPROP * 0.0001547.
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>APPROP = current FY appropriation for the IHBG program less amounts in the Appropriations Act mandated for purposes other than the formula allocation.
</FP-2>
<P>If (GRANT2 + UDFFADJ) &lt; MINGRANT and income-based need has been identified in a tribe's IHP, then tribe qualifies for MINGRANTADJ. For Tribes that qualify, calculate:
</P>
<FP-2>MINGRTADJTEST = MINGRANT—(GRANT2 + UDFFADJ).
</FP-2>
<FP-2>If the Sum for all tribes of MINGRTADJTEST &lt; MGHOLD, then:
</FP-2>
<FP-2>MINGRANTADJ = MINGRTADJTEST.
</FP-2>
<P>If the Sum for all tribes of MINGRANTADJTEST &gt; MGHOLD, then:
</P>
<FP-2>MINGRANTADJ = MINGRANTADJTEST * (MGHOLD/<E T="8151">S</E> MINGRANTADJ)
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>GRANT2 is the approximate grant allocation in any given year for any given tribe.
</FP-2>
<FP-2>UDFFADJ = amount of UDFF adjustment.
</FP-2>
<FP-2>MINGRANT = Minimum total allocation established in § 1000.329.
</FP-2>
<FP-2>MINGRANTADJTEST = amount required to bring all qualifying tribes' allocations up to the minimum total allocation amount. This amount can then be compared.
</FP-2>
<FP-2>MGHOLD = amount set-aside for allocation under minimum total grant provision (see Step 2).
</FP-2>
<FP-2>MINGRANTADJ = actual amount of the minimum grant adjustment that can be accommodated with the amount set aside from carryover for this purpose.
</FP-2>
<P>12. A tribe's final allocation consists of the initial current FY formula allocation with three adjustments.
</P>
<FP-2>FINALALLOCATION = GRANT2 + ADJUST1 + UDFFadj + MINGRANTADJ
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>FINALALLOCATION = total amount a tribe is eligible to receive as a grant in the current FY.
</FP-2>
<FP-2>GRANT2 = preliminary total allocation after applying 1996 Operating Subsidy and Modernization minimum funding (see Step 8) but before applying the Undisbursed Funds Factor (see Step 9) and Minimum Grant provision (see Step 10).
</FP-2>
<FP-2>ADJUST1 = adjustments for over- or under-funding occurring in prior FYs.
</FP-2>
<FP-2>UDFFadj = amount of the Undisbursed Fund Factor adjustments. Negative amount represents excess undisbursed funds. Positive represents amounts being transferred to other tribes without excess undisbursed funds.
</FP-2>
<FP-2>MINGRANTADJ = actual amount of the minimum grant adjustment that can be accommodated with the amount set aside from carryover for this purpose.
</FP-2>
<CITA TYPE="N">[81 FR 83682, Nov. 22, 2016]


</CITA>
</DIV9>

</DIV5>


<DIV5 N="1001-1002" NODE="24:4.1.3.1.25" TYPE="PART">
<HEAD>PARTS 1001-1002 [RESERVED]


</HEAD>
</DIV5>


<DIV5 N="1003" NODE="24:4.1.3.1.26" TYPE="PART">
<HEAD>PART 1003—COMMUNITY DEVELOPMENT BLOCK GRANTS FOR INDIAN TRIBES AND ALASKA NATIVE VILLAGES 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d) and 5301 <I>et seq.</I> 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 40090, July 31, 1996, unless otherwise noted. Redesignated at 62 FR 12349, Mar. 12, 1998.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.3.1.26.1" TYPE="SUBPART">
<HEAD>Subpart A—General Provisions</HEAD>


<DIV8 N="§ 1003.1" NODE="24:4.1.3.1.26.1.41.1" TYPE="SECTION">
<HEAD>§ 1003.1   Applicability and scope.</HEAD>
<P>The policies and procedures described in this part apply to grants to eligible applicants under the Community Development Block Grant (CDBG) program for Indian tribes and Alaska native villages. 


</P>
</DIV8>


<DIV8 N="§ 1003.2" NODE="24:4.1.3.1.26.1.41.2" TYPE="SECTION">
<HEAD>§ 1003.2   Program objective.</HEAD>
<P>The primary objective of the Indian CDBG (ICDBG) Program and of the community development program of each grantee covered under the Act is the development of viable Indian and Alaska native communities, including decent housing, a suitable living environment, and economic opportunities, principally for persons of low and moderate income. The Federal assistance provided in this part is not to be used to reduce substantially the amount of tribal financial support for community development activities below the level of such support before the availability of this assistance. 


</P>
</DIV8>


<DIV8 N="§ 1003.3" NODE="24:4.1.3.1.26.1.41.3" TYPE="SECTION">
<HEAD>§ 1003.3   Nature of program.</HEAD>
<P>The selection of single purpose grantees under subpart B of this part is competitive in nature. Therefore, selection of grantees for funds will reflect consideration of the relative adequacy of applications in addressing tribally determined need. The selection of grantees of imminent threat grants under the provisions of subpart B of this part is not competitive in nature. However, applicants for funding under either subpart must have the administrative capacity to undertake the community development activities proposed, including the systems of internal control necessary to administer these activities effectively without fraud, waste, or mismanagement. 


</P>
</DIV8>


<DIV8 N="§ 1003.4" NODE="24:4.1.3.1.26.1.41.4" TYPE="SECTION">
<HEAD>§ 1003.4   Definitions.</HEAD>
<P><I>Act</I> means Title I of the Housing and Community Development Act of 1974, as amended (42 U.S.C. 5301 <I>et seq.</I>) 
</P>
<P><I>Area ONAPs</I> mean the HUD Offices of Native American Programs having field office responsibility for the ICDBG Program. 
</P>
<P><I>Assistant Secretary</I> means the Assistant Secretary for Public and Indian Housing. 
</P>
<P><I>Buildings for the general conduct of government</I> mean office buildings and other facilities in which the legislative, judicial or general administrative affairs of the government are conducted. This term does not include such facilities as neighborhood service centers or special purpose buildings located in low and moderate income areas that house various non-legislative functions or services provided by the government at decentralized locations. 
</P>
<P><I>Chief executive officer</I> means the elected official or legally designated official who has the prime responsibility for the conduct of the affairs of an Indian tribe or Alaska native village. 
</P>
<P><I>Eligible Indian population</I> means the most accurate and uniform population data available from data compiled and published by the United States Bureau of the Census available from the latest census referable to the same point or period of time for Indian tribes and Alaska native villages eligible under this part. 
</P>
<P><I>Extent of overcrowded housing</I> means the number of housing units with 1.01 or more persons per room, based on data compiled and published by the United States Bureau of the Census available from the latest census referable to the same point or period of time. 
</P>
<P><I>Extent of poverty</I> means the number of persons whose incomes are below the poverty level, based on data compiled and published by the United States Bureau of the Census referable to the same point or period in time and the latest reports from the Office of Management and Budget. 
</P>
<P><I>HUD</I> means the Department of Housing and Urban Development. 
</P>
<P><I>ICDBG</I> Program means the Indian Community Development Block Grant Program. 
</P>
<P><I>Identified service area</I> means: 
</P>
<P>(1) A geographic location within the jurisdiction of a tribe (but not the entire jurisdiction) designated in comprehensive plans, ordinances, or other tribal documents as a service area; 
</P>
<P>(2) The Bureau of Indian Affairs (BIA) service area, including residents of areas outside the geographic jurisdiction of the tribe; or 
</P>
<P>(3) The entire area under the jurisdiction of a tribe which has a population of members of under 10,000. 
</P>
<P><I>Imminent threat</I> means a problem which if unresolved or not addressed will have an immediate negative impact on public health or safety. 
</P>
<P><I>Low and moderate income beneficiary</I> means a family, household, or individual whose income does not exceed 80 percent of the median income for the area, as determined by HUD, with adjustments for smaller and larger households or families. However, HUD may establish income ceilings higher or lower than 80 percent of the median for the area on the basis of HUD's findings that such variations are necessary because of unusually high or low household or family incomes. In reporting income levels to HUD, the applicant must include and identify the distributions of tribal or village income to families, households, or individuals. 
</P>
<P><I>Microenterprise</I> means a business that has five or fewer employees, one or more of whom owns the enterprise. 
</P>
<P><I>Secretary</I> means the Secretary of HUD. 
</P>
<P><I>Small business</I> means a business that meets the criteria set forth in section 3(a) of the Small Business Act (15 U.S.C. 631, 636, and 637).
</P>
<P><I>Subrecipient</I> means a public or private nonprofit agency, authority or organization, or a for-profit entity described in § 1003.201(l), receiving ICDBG funds from the grantee or another subrecipient to undertake activities eligible for assistance under subpart C of this part. The term excludes a CBDO receiving ICDBG funds from the grantee under the authority of § 1003.204, unless the grantee explicitly designates it as a subrecipient. The term does not include contractors providing supplies, equipment, construction or services subject to the procurement requirements in 2 CFR 200.318 through 200.326. 
</P>
<P><I>Tribal government, Tribal governing body</I> or <I>Tribal council</I> means the governing body of an Indian tribe or Alaska native village as recognized by the Bureau of Indian Affairs. 
</P>
<P><I>Tribal resolution</I> means the formal manner in which the tribal government expresses its legislative will in accordance with its organic documents. In the absence of such organic documents, a written expression adopted pursuant to tribal practices will be acceptable. 
</P>
<P><I>URA</I> means the Uniform Relocation and Real Property Acquisition Policies Act of 1970, as amended (42 U.S.C. 4601 <I>et. seq.</I>). 
</P>
<CITA TYPE="N">[62 FR 12349, Mar. 12, 1998, as amended at 80 FR 75944, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 1003.5" NODE="24:4.1.3.1.26.1.41.5" TYPE="SECTION">
<HEAD>§ 1003.5   Eligible applicants.</HEAD>
<P>(a) Eligible applicants are any Indian tribe, band, group, or nation, including Alaska Indians, Aleuts, and Eskimos, and any Alaska native village of the United States which is considered an eligible recipient under Title I of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450) or which had been an eligible recipient under the State and Local Fiscal Assistance Act of 1972 (31 U.S.C. 1221). Eligible recipients under the Indian Self-Determination and Education Assistance Act will be determined by the Bureau of Indian Affairs and eligible recipients under the State and Local Fiscal Assistance Act of 1972 are those that have been determined eligible by the Department of Treasury, Office of Revenue Sharing. 
</P>
<P>(b) Tribal organizations which are eligible under Title I of the Indian Self-Determination and Education Assistance Act may apply on behalf of any Indian tribe, band, group, nation, or Alaska native village eligible under that act for funds under this part when one or more of these entities have authorized the tribal organization to do so through concurring resolutions. Such resolutions must accompany the application for funding. Eligible tribal organizations under Title I of the Indian Self-Determination and Education Assistance Act will be determined by the Bureau of Indian Affairs or the Indian Health Service, as appropriate. 
</P>
<P>(c) To apply for funding in a given fiscal year, an applicant must be eligible as an Indian tribe or Alaska native village, as provided in paragraph (a) of this section, or as a Tribal organization, as provided in paragraph (b) of this section, by the application submission date. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0191)


</APPRO>
</DIV8>


<DIV8 N="§ 1003.6" NODE="24:4.1.3.1.26.1.41.6" TYPE="SECTION">
<HEAD>§ 1003.6   Waivers.</HEAD>
<P>Upon determination of good cause, HUD may waive any provision of this part not required by statute. Each waiver must be in writing and must be supported by documentation of the pertinent facts and grounds. 


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.3.1.26.2" TYPE="SUBPART">
<HEAD>Subpart B—Allocation of Funds</HEAD>


<DIV8 N="§ 1003.100" NODE="24:4.1.3.1.26.2.41.1" TYPE="SECTION">
<HEAD>§ 1003.100   General.</HEAD>
<P>(a) <I>Types of grants.</I> Two types of grants are available under the Indian CDBG Program. 
</P>
<P>(1) <I>Single purpose grants</I> provide funds for one or more single purpose projects consisting of an activity or set of activities designed to meet a specific community development need. This type of grant is awarded through competition with other single purpose projects. 
</P>
<P>(2) <I>Imminent threat grants</I> alleviate an imminent threat to public health or safety that requires immediate resolution. This type of grant is awarded only after an Area ONAP determines that such conditions exist and if funds are available for such grants. 
</P>
<P>(b) <I>Size of grants</I>—(1) <I>Ceilings.</I> Each Area ONAP may recommend grant ceilings for single purpose grant applications. Single purpose grant ceilings for each Area ONAP shall be established in the NOFA (Notice of Funding Availability). 
</P>
<P>(2) <I>Individual grant amounts.</I> An Area ONAP may approve a grant amount less than the amount requested. In doing so, the Area ONAP may take into account the size of the applicant, the level of demand, the scale of the activity proposed relative to need and operational capacity, the number of persons to be served, the amount of funds required to achieve project objectives, the reasonableness of the project costs, and the administrative capacity of the applicant to complete the activities in a timely manner.
</P>
<CITA TYPE="N">[61 FR 40090, July 31, 1996. Redesignated at 62 FR 12349, Mar. 12, 1998, as amended at 66 FR 4580, Jan. 17, 2001; 66 FR 8176, Jan. 30, 2001]


</CITA>
</DIV8>


<DIV8 N="§ 1003.101" NODE="24:4.1.3.1.26.2.41.2" TYPE="SECTION">
<HEAD>§ 1003.101   Area ONAP allocation of funds.</HEAD>
<P>(a) Except as provided in paragraph (b) of this section, funds will be allocated to the Area ONAPs responsible for the program on the following basis: 
</P>
<P>(1) Each Area ONAP will be allocated $1,000,000 as a base amount, to which will be added a formula share of the balance of the ICDBG Program funds, as provided in paragraph (a)(2) of this section. 
</P>
<P>(2) The amount remaining after the base amount is allocated and any amount retained by the Headquarters ONAP to fund imminent threat grants pursuant to the provisions of § 1003.402 is subtracted, will be allocated to each Area ONAP based on the most recent data complied and published by the United States Bureau of the Census referable to the same point or period in time, as follows: 
</P>
<P>(i) Forty percent (40%) of the funds will be allocated based upon each Area ONAP's share of the total eligible Indian population; 
</P>
<P>(ii) Forty percent (40%) of the funds will be allocated based upon each Area ONAP's share of the total extent of poverty among the eligible Indian population; and 
</P>
<P>(iii) Twenty percent (20%) of the funds will be allocated based upon each Area ONAP's share of the total extent of overcrowded housing among the eligible Indian population. 
</P>
<P>(b) HUD will use other criteria to determine an allocation formula for distributing funds to the Area ONAPs if funds are set aside by statute for a specific purpose in any fiscal year if it is determined that the formula in paragraph (a) of this section is inappropriate to accomplish the purpose. HUD will use other criteria if it is determined that, based on a limited appropriation of funds, the use of the formula in paragraph (a) of this section is inappropriate to obtain an equitable allocation of funds. 
</P>
<P>(c) Data used for the allocation of funds will be based upon the Indian population of those tribes and villages that are determined to be eligible ninety (90) days before the beginning of each fiscal year. 


</P>
</DIV8>


<DIV8 N="§ 1003.102" NODE="24:4.1.3.1.26.2.41.3" TYPE="SECTION">
<HEAD>§ 1003.102   Use of recaptured and unawarded funds.</HEAD>
<P>(a) The Assistant Secretary will determine on a case-by-case basis the use of grant funds which are: 
</P>
<P>(1) Recaptured by HUD under the provisions of § 1003.703 or § 1003.704; 
</P>
<P>(2) Recaptured by HUD at the time of the closeout of a program; or 
</P>
<P>(3) Unawarded after the completion by an Area ONAP of a funding competition. 
</P>
<P>(b) The recaptured or unawarded funds will remain with the Area ONAP to which they were originally allocated unless the Assistant Secretary determines that there is an overriding reason to redistribute these funds outside of the Area ONAP's jurisdiction. The recaptured funds may be used to fund the highest ranking unfunded project from the most recent funding competition, an imminent threat, or other uses. Unawarded funds may be used to fund an imminent threat or other uses. 


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:4.1.3.1.26.3" TYPE="SUBPART">
<HEAD>Subpart C—Eligible Activities</HEAD>


<DIV8 N="§ 1003.200" NODE="24:4.1.3.1.26.3.41.1" TYPE="SECTION">
<HEAD>§ 1003.200   General policies.</HEAD>
<P>An activity may be assisted in whole or in part with ICDBG funds only if the activity meets the eligibility requirements of section 105 of the Act as further defined in this subpart and if the criteria for compliance with the primary objective of the Act set forth under § 1003.208 have been met. The requirements for compliance with the primary objective of the Act do not apply to imminent threat grants funded under subpart E of this part. 


</P>
</DIV8>


<DIV8 N="§ 1003.201" NODE="24:4.1.3.1.26.3.41.2" TYPE="SECTION">
<HEAD>§ 1003.201   Basic eligible activities.</HEAD>
<P>ICDBG funds may be used for the following activities: 
</P>
<P>(a) <I>Acquisition.</I> Acquisition in whole or in part by the grantee, or other public or private nonprofit entity, by purchase, long-term lease, donation, or otherwise, of real property (including air rights, water rights, rights-of-way, easements, and other interests therein) for any public purpose, subject to the limitations of § 1003.207. 
</P>
<P>(b) <I>Disposition.</I> Disposition, through sale, lease, donation, or otherwise, of any real property acquired with ICDBG funds or its retention for public purposes, including reasonable costs of temporarily managing such property or property acquired under urban renewal, provided that the proceeds from any such disposition shall be program income subject to the requirements set forth in § 1003.503. 
</P>
<P>(c) <I>Public facilities and improvements.</I> Acquisition, construction, reconstruction, rehabilitation or installation of public facilities and improvements, except as provided in § 1003.207(a), carried out by the grantee or other public or private nonprofit entities. In undertaking such activities, design features and improvements which promote energy efficiency may be included. [However, activities under this paragraph may be directed to the removal of material and architectural barriers that restrict the mobility and accessibility of elderly or severely disabled persons to publicly owned and privately owned buildings, facilities, and improvements including those provided for in § 1003.207(a)(1).] Such activities may also include the execution of architectural design features, and similar treatments intended to enhance the aesthetic quality of facilities and improvements receiving ICDBG assistance. Facilities designed for use in providing shelter for persons having special needs are considered public facilities and not subject to the prohibition of new housing construction described in § 1003.207(b)(3). Such facilities include shelters for the homeless; convalescent homes; hospitals, nursing homes; battered spouse shelters; halfway houses for run-away children, drug offenders or parolees; group homes for mentally retarded persons and temporary housing for disaster victims. In certain cases, nonprofit entities and subrecipients including those specified in § 1003.204 may acquire title to public facilities. When such facilities are owned by nonprofit entities or subrecipients, they shall be operated so as to be open for use by the general public during all normal hours of operation. Public facilities and improvements eligible for assistance under this paragraph (c) are subject to the following policies in paragraphs (c)(1) through (c)(3) of this section: 
</P>
<P>(1) <I>Special policies governing facilities.</I> The following special policies apply to: 
</P>
<P>(i) <I>Facilities containing both eligible and ineligible uses.</I> A public facility otherwise eligible for assistance under the ICDBG program may be provided with ICDBG funds even if it is part of a multiple use building containing ineligible uses, if: 
</P>
<P>(A) The facility which is otherwise eligible and proposed for assistance will occupy a designated and discrete area within the larger facility; and 
</P>
<P>(B) The grantee can determine the costs attributable to the facility proposed for assistance as separate and distinct from the overall costs of the multiple-use building and/or facility. Allowable costs are limited to those attributable to the eligible portion of the building or facility. 
</P>
<P>(ii) <I>Equipment purchase.</I> As stated in § 1003.207(b)(1), the purchase of equipment with ICDBG funds is generally ineligible. However, the purchase of construction equipment for use as part of a solid waste facility is eligible. In addition, the purchase of fire protection equipment is considered to be an integral part of a public facility, and, therefore, the purchase of such equipment is also eligible. 
</P>
<P>(2) <I>Fees for use of facilities.</I> Reasonable fees may be charged for the use of the facilities assisted with ICDBG funds, but charges such as excessive membership fees, which will have the effect of precluding low and moderate income persons from using the facilities, are not permitted. 
</P>
<P>(3) <I>Special assessments under the ICDBG program.</I> The following policies relate to special assessments under the ICDBG program: 
</P>
<P>(i) <I>Definition of special assessment.</I> The term <I>special assessment</I> means the recovery of the capital costs of a public improvement, such as streets, water or sewer lines, curbs, and gutters, through a fee or charge levied or filed as a lien against a parcel of real estate as a direct result of benefit derived from the installation of a public improvement, or a one-time charge made as a condition of access to a public improvement. This term does not relate to taxes, or the establishment of the value of real estate for the purpose of levying real estate, property, or ad valorem taxes, and does not include periodic charges based on the use of a public improvement, such as water or sewer user charges, even if such charges include the recovery of all or some portion of the capital costs of the public improvement. 
</P>
<P>(ii) <I>Special assessments to recover capital costs.</I> Where ICDBG funds are used to pay all or part of the cost of a public improvement, special assessments may be imposed as follows: 
</P>
<P>(A) Special assessments to recover the ICDBG funds may be made only against properties owned and occupied by persons not of low and moderate income. Such assessments constitute program income. 
</P>
<P>(B) Special assessments to recover the non-ICDBG portion may be made provided that ICDBG funds are used to pay the special assessment on behalf of all properties owned and occupied by low and moderate income persons; except that ICDBG funds need not be used to pay the special assessments on behalf of properties owned and occupied by moderate income persons if the grantee certifies that it does not have sufficient ICDBG funds to pay the assessments in behalf of all of the low and moderate income owner-occupant persons. Funds collected through such special assessments are not program income. 
</P>
<P>(iii) <I>Public improvements not initially assisted with ICDBG funds.</I> The payment of special assessments with ICDBG funds constitutes ICDBG assistance to the public improvement. Therefore, ICDBG funds may be used to pay special assessments provided: 
</P>
<P>(A) The installation of the public improvements was carried out in compliance with requirements applicable to activities assisted under this part including environmental and citizen participation requirements; and 
</P>
<P>(B) The installation of the public improvement meets a criterion for the primary objective in § 1003.208; and, 
</P>
<P>(C) The requirements of § 1003.201(c)(3)(ii))(B) are met. 
</P>
<P>(d) <I>Clearance activities.</I> Clearance, demolition, and removal of buildings and improvements, including movement of structures to other sites. Demolition of HUD-assisted housing units may be undertaken only with the prior approval of HUD. 
</P>
<P>(e) <I>Public services.</I> Provision of public services (including labor, supplies, materials, and the purchase of personal property and furnishings) which are directed toward improving the community's public services and facilities, including but not limited to those concerned with employment, crime prevention, child care, health, drug abuse, education, fair housing counseling, energy conservation, welfare (but excluding the provision of income payments identified under § 1003.207(b)(4)), homebuyer downpayment assistance or recreational needs. To be eligible for ICDBG assistance, a public service must be either a new service, or a quantifiable increase in the level of an existing service above that which has been provided by or on behalf of the grantee through funds raised by the grantee, or received by the grantee from the Federal government in the twelve calendar months before the submission of the application for ICDBG assistance. (An exception to this requirement may be made if HUD determines that any decrease in the level of a service was the result of events not within the control of the grantee.) The amount of ICDBG funds used for public services shall not exceed 15 percent of the grant. Such projects must therefore be submitted with one or more other projects, which must comprise at least 85 percent of the total requested ICDBG grant amount. 
</P>
<P>(f) <I>Interim assistance.</I> (1) The following activities may be undertaken on an interim basis in areas exhibiting objectively determinable signs of physical deterioration where the grantee has determined that immediate action is necessary to arrest the deterioration and that permanent improvements will be carried out as soon as practicable: 
</P>
<P>(i) The repairing of streets, sidewalks, parks, playgrounds, publicly owned utilities, and public buildings; and 
</P>
<P>(ii) The execution of special garbage, trash, and debris removal, including neighborhood cleanup campaigns, but not the regular curbside collection of garbage or trash in an area. 
</P>
<P>(2) In order to alleviate emergency conditions threatening the public health and safety in areas where the chief executive officer of the grantee determines that such an emergency condition exists and requires immediate resolution, ICDBG funds may be used for: 
</P>
<P>(i) The activities specified in paragraph (f)(1) of this section, except for the repair of parks and playgrounds; 
</P>
<P>(ii) The clearance of streets, including snow removal and similar activities; and 
</P>
<P>(iii) The improvement of private properties. 
</P>
<P>(3) All activities authorized under paragraph (f)(2) of this section are limited to the extent necessary to alleviate emergency conditions. 
</P>
<P>(g) <I>Payment of non-Federal share.</I> Payment of the non-Federal share required in connection with a Federal grant-in-aid program undertaken as part of ICDBG activities, provided, that such payment shall be limited to activities otherwise eligible and in compliance with applicable requirements under this subpart. 
</P>
<P>(h) <I>Relocation.</I> Relocation payments and other assistance for permanently and temporarily relocated individuals families, businesses, nonprofit organizations, and farm operations where the assistance is: 
</P>
<P>(1) Required under the provisions of § 1003.602 (b) or (c); or 
</P>
<P>(2) Determined by the grantee to be appropriate under the provisions of § 1003.602(d). 
</P>
<P>(i) <I>Loss of rental income.</I> Payments to housing owners for losses of rental income incurred in holding, for temporary periods, housing units to be used for the relocation of individuals and families displaced by program activities assisted under this part. 
</P>
<P>(j) <I>Housing services.</I> Housing services, as provided in section 105(a)(21) of the Housing and Community Development Act of 1974 [42 U.S.C. 5305(a)(21)]. 
</P>
<P>(k) <I>Privately owned utilities.</I> ICDBG funds may be used to acquire, construct, reconstruct, rehabilitate, or install the distribution lines and facilities of privately owned utilities, including the placing underground of new or existing distribution facilities and lines. 
</P>
<P>(l) <I>The provision of assistance to facilitate economic development.</I> (1) The provision of assistance either through the grantee directly or through public and private organizations, agencies, and other subrecipients (including nonprofit and for-profit subrecipients) to facilitate economic development by: 
</P>
<P>(i) Providing credit, including, but not limited to, grants, loans, loan guarantees, and other forms of financial support, for the establishment, stabilization, and expansion of microenterprises; 
</P>
<P>(ii) Providing technical assistance, advice, and business support services to owners of microenterprises and persons developing microenterprises; and 
</P>
<P>(iii) Providing general support, including, but not limited to, peer support programs, counseling, child care, transportation, and other similar services, to owners of microenterprises and persons developing microenterprises. 
</P>
<P>(2) Services provided under paragraph (l)(1) of this section shall not be subject to the restrictions on public services contained in § 1003.201(e). 
</P>
<P>(3) For purposes of this paragraph (l), <I>persons developing microenterprises</I> means such persons who have expressed interest and who are, or after an initial screening process are expected to be, actively working toward developing businesses, each of which is expected to be a microenterprise at the time it is formed. 
</P>
<P>(m) <I>Technical assistance.</I> Provision of technical assistance to public or nonprofit entities to increase the capacity of such entities to carry out eligible neighborhood revitalization or economic development activities. Capacity building for private or public entities (including grantees) for other purposes may be eligible as a planning cost under § 1003.205. 
</P>
<P>(n) <I>Assistance to institutions of higher education.</I> Provision of assistance by the grantee to institutions of higher education where the grantee determines that such an institution has demonstrated a capacity to carry out eligible activities under this subpart. 
</P>
<P>(o) <I>Homeownership assistance.</I> ICDBG funds may be used to provide direct homeownership assistance to low- and moderate-income households to: 
</P>
<P>(1) Subsidize interest rates and mortgage principal amounts for low-and moderate-income homebuyers; 
</P>
<P>(2) Finance the acquisition by low-and moderate-income homebuyers of housing that is occupied by the homebuyers; 
</P>
<P>(3) Acquire guarantees for mortgage financing obtained by low-and moderate-income homebuyers form private lenders (except that ICDBG funds may not be used to guarantee such mortgage financing directly, and grantees may not provide such guarantees directly); 
</P>
<P>(4) Provide up to 50 percent of any downpayment required from a low-and moderate-income homebuyer; or 
</P>
<P>(5) Pay reasonable closing costs (normally associated with the purchase of a home) incurred by a low-or moderate-income homebuyer. 


</P>
</DIV8>


<DIV8 N="§ 1003.202" NODE="24:4.1.3.1.26.3.41.3" TYPE="SECTION">
<HEAD>§ 1003.202   Eligible rehabilitation and preservation activities.</HEAD>
<P>(a) Types of buildings and improvements eligible for rehabilitation or reconstruction assistance. ICDBG funds may be used to finance the rehabilitation of: 
</P>
<P>(1) Privately owned buildings and improvements for residential purposes; improvements to a single-family residential property which is also used as a place of business, which are required in order to operate the business, need not be considered to be rehabilitation of a commercial or industrial building, if the improvements also provide general benefit to the residential occupants of the building; 
</P>
<P>(2) Low-income public housing and other publicly owned residential buildings and improvements; 
</P>
<P>(3) Publicly or privately owned commercial or industrial buildings, except that the rehabilitation of such buildings owned by a private for-profit business is limited to improvements to the exterior of the building and the correction of code violations (further improvements to such buildings may be undertaken pursuant to § 1003.203(b)); and 
</P>
<P>(4) Nonprofit-owned nonresidential buildings and improvements not eligible under § 1003.201(c); 
</P>
<P>(5) Manufactured housing when such housing constitutes part of the community's permanent housing stock. 
</P>
<P>(b) <I>Types of assistance.</I> ICDBG funds may be used to finance the following types of rehabilitation or reconstruction activities, and related costs, either singly, or in combination, through the use of grants, loans, loan guarantees, interest supplements, or other means for buildings and improvements described in paragraph (a) of this section, except that rehabilitation of commercial or industrial buildings is limited as described in paragraph (a)(3) of this section. 
</P>
<P>(1) Assistance to private individuals and entities, including profit making and nonprofit organizations, to acquire for the purpose of rehabilitation, and to rehabilitate properties, for use or resale for residential purposes; 
</P>
<P>(2) Labor, materials, and other costs of rehabilitation of properties, including repair directed toward an accumulation of deferred maintenance, replacement of principal fixtures and components of existing structures, installation of security devices, including smoke detectors and dead bolt locks, and renovation through alterations, additions to, or enhancement of existing structures, which may be undertaken singly, or in combination; 
</P>
<P>(3) Loans for refinancing existing indebtedness secured by a property being rehabilitated with ICDBG funds if such financing is determined by the grantee to be necessary or appropriate to achieve the grantee's community development objectives; 
</P>
<P>(4) Improvements to increase the efficient use of energy in structures through such means as installation of storm windows and doors, siding, wall and attic insulation, and conversion, modification, or replacement of heating and cooling equipment, including the use of solar energy equipment; 
</P>
<P>(5) Improvements to increase the efficient use of water through such means as water saving faucets and shower heads and repair of water leaks; 
</P>
<P>(6) Connection of residential structures to water distribution lines or local sewer collection lines; 
</P>
<P>(7) For rehabilitation carried out with ICDBG funds, costs of: 
</P>
<P>(i) Initial homeowner warranty premiums; 
</P>
<P>(ii) Hazard insurance premiums, except where assistance is provided in the form of a grant; and 
</P>
<P>(iii) Flood insurance premiums for properties covered by the Flood Disaster Protection Act of 1973, pursuant to 24 CFR 58.6(a). 
</P>
<P>(iv) Lead-based paint activities in part 35 of this title.
</P>
<P>(8) Costs of acquiring tools to be lent to owners, tenants, and others who will use such tools to carry out rehabilitation; 
</P>
<P>(9) Rehabilitation services, such as rehabilitation counseling, energy auditing, preparation of work specifications, loan processing, inspections, and other services related to assisting owners, tenants, contractors, and other entities, participating or seeking to participate in rehabilitation activities authorized under this section; 
</P>
<P>(10) Improvements designed to remove material and architectural barriers that restrict the mobility and accessibility of elderly or severely disabled persons to buildings and improvements eligible for assistance under paragraph (a) of this section. 
</P>
<P>(c) <I>Code enforcement.</I> Code enforcement in deteriorating or deteriorated areas where such enforcement together with public or private improvements, rehabilitation, or services to be provided, may be expected to arrest the decline of the area. 
</P>
<P>(d) <I>Historic preservation.</I> ICDBG funds may be used for the rehabilitation, preservation or restoration of historic properties, whether publicly or privately owned. Historic properties are those sites or structures that are either listed in or eligible to be listed in the National Register of Historic Places, listed in a State or local inventory of historic places, or designated as a State or local landmark or historic district by appropriate law or ordinance. Historic preservation, however, is not authorized for buildings for the general conduct of government. 
</P>
<P>(e) <I>Renovation of closed buildings.</I> ICDBG funds may be used to renovate closed buildings, such as closed school buildings, for use as an eligible public facility or to rehabilitate such buildings for housing. 
</P>
<CITA TYPE="N">[61 FR 40090, July 31, 1996, as amended at 64 FR 50230, Sept. 15, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 1003.203" NODE="24:4.1.3.1.26.3.41.4" TYPE="SECTION">
<HEAD>§ 1003.203   Special economic development activities.</HEAD>
<P>A grantee may use ICDBG funds for special economic development activities in addition to other activities authorized in this subpart which may be carried out as part of an economic development project. Special activities authorized under this section do not include assistance for the construction of new housing. Special economic development activities include: 
</P>
<P>(a) The acquisition, construction, reconstruction, rehabilitation or installation of commercial or industrial buildings, structures, and other real property equipment and improvements, including railroad spurs or similar extensions. Such activities may be carried out by the grantee or public or private nonprofit subrecipients. 
</P>
<P>(b) The provision of assistance to a private for-profit business, including, but not limited to, grants, loans, loan guarantees, interest supplements, technical assistance, and other forms of support, for any activity where the assistance is necessary or appropriate to carry out an economic development project, excluding those described as ineligible in § 1003.207(a). In order to ensure that any such assistance does not unduly enrich the for-profit business, the grantee shall conduct an analysis to determine that the amount of any financial assistance to be provided is not excessive, taking into account the actual needs of the business in making the project financially feasible and the extent of public benefit expected to be derived from the economic development project. The grantee shall document the analysis as well as any factors it considered in making its determination that the assistance is necessary or appropriate to carry out the project. The requirement for making such a determination applies whether the business is to receive assistance from the grantee or through a subrecipient. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0191)


</APPRO>
</DIV8>


<DIV8 N="§ 1003.204" NODE="24:4.1.3.1.26.3.41.5" TYPE="SECTION">
<HEAD>§ 1003.204   Special activities by Community-Based Development Organizations (CBDOs).</HEAD>
<P>(a) <I>Eligible activities.</I> The grantee may provide ICDBG funds as grants or loans to any CBDO qualified under this section to carry out a neighborhood revitalization, community economic development, or energy conservation project. The funded project activities may include those listed as eligible under this subpart, and, except as described in paragraph (b) of this section, activities not otherwise listed as eligible under this subpart. For purposes of qualifying as a project under paragraphs (a)(1), (a)(2), and (a)(3) of this section, the funded activity or activities may be considered either alone or in concert with other project activities either being carried out or for which funding has been committed. For purposes of this section: 
</P>
<P>(1) Neighborhood revitalization project includes activities of sufficient size and scope to have an impact on the decline of a geographic location within the jurisdiction of a grantee (but not the entire jurisdiction) designated in comprehensive plans, ordinances, or other local documents as a neighborhood, village, or similar geographical designation; or the entire jurisdiction of a grantee which is under 25,000 population; 
</P>
<P>(2) Community economic development project includes activities that increase economic opportunity, principally for persons of low- and moderate-income, or that stimulate or retain businesses or permanent jobs, including projects that include one or more such activities that are clearly needed to address a lack of affordable housing accessible to existing or planned jobs; 
</P>
<P>(3) Energy conservation project includes activities that address energy conservation, principally for the benefit of the residents of the grantee's jurisdiction; and 
</P>
<P>(4) To carry out a project means that the CBDO undertakes the funded activities directly or through contract with an entity other than the grantee, or through the provision of financial assistance for activities in which it retains a direct and controlling involvement and responsibilities. 
</P>
<P>(b) <I>Ineligible activities.</I> Notwithstanding that CBDOs may carry out activities that are not otherwise eligible under this subpart, this section does not authorize: 
</P>
<P>(1) Carrying out an activity described as ineligible in § 1003.207(a); 
</P>
<P>(2) Carrying out public services that do not meet the requirements of § 1003.201(e), except services carried out under this section that are specifically designed to increase economic opportunities through job training and placement and other employment support services, including, but not limited to, peer support programs, counseling, child care, transportation, and other similar services; 
</P>
<P>(3) Carrying out an activity that would otherwise be eligible under § 1003.205 or § 1003.206, but that would result in the grantee's exceeding the spending limitation in § 1003.206. 
</P>
<P>(c) <I>Eligible CBDOs.</I> (1) A CBDO qualifying under this section is an organization which has the following characteristics: 
</P>
<P>(i) Is an association or corporation organized under State or local law to engage in community development activities (which may include housing and economic development activities) primarily within an identified geographic area of operation within the jurisdiction of the grantee; and 
</P>
<P>(ii) Has as its primary purpose the improvement of the physical, economic or social environment of its geographic area of operation by addressing one or more critical problems of the area, with particular attention to the needs of persons of low and moderate income; and 
</P>
<P>(iii) May be either non-profit or for-profit, provided any monetary profits to its shareholders or members must be only incidental to its operations; and 
</P>
<P>(iv) Maintains at least 51 percent of its governing body's membership for low- and moderate-income residents of its geographic area of operation, owners or senior officers of private establishments and other institutions located in and serving its geographic area of operation, or representatives of low- and moderate-income neighborhood organizations located in its geographic area of operation; and 
</P>
<P>(v) Is not an agency or instrumentality of the grantee and does not permit more than one-third of the membership of its governing body to be appointed by, or to consist of, elected or other public officials or employees or officials of an ineligible entity (even though such persons may be otherwise qualified under paragraph (c)(1)(iv) of this section); and 
</P>
<P>(vi) Except as otherwise authorized in paragraph (c)(1)(v) of this section, requires the members of its governing body to be nominated and approved by the general membership of the organization, or by its permanent governing body; and 
</P>
<P>(vii) Is not subject to requirements under which its assets revert to the grantee upon dissolution; and 
</P>
<P>(viii) Is free to contract for goods and services from vendors of its own choosing. 
</P>
<P>(2) A CBDO that does not meet the criteria in paragraph (c)(1) of this section may also qualify as an eligible entity under this section if it meets one of the following requirements: 
</P>
<P>(i) Is an entity organized pursuant to section 301(d) of the Small Business Investment Act of 1958 (15 U.S.C. 681(d)), including those which are profit making; or 
</P>
<P>(ii) Is an SBA-approved Section 501 State Development Company or Section 502 Local Development Company, or an SBA Certified Section 503 Company under the Small Business Investment Act of 1958, as amended; or 
</P>
<P>(iii) Is a Community Housing Development Organization (CHDO) under 24 CFR 92.2, designated as a CHDO by the HOME Investment Partnerships program participating jurisdiction, with a geographic area of operation of no more than one neighborhood, and has received HOME funds under 24 CFR 92.300 or is expected to receive HOME funds as described in and documented in accordance with 24 CFR 92.300(e); or 
</P>
<P>(iv) Is a tribal-based nonprofit organization. Such organizations are associations or corporations duly organized to promote and undertake community development activities on a not-for-profit basis within an identified service area. 
</P>
<P>(3) A CBDO that does not qualify under paragraphs (c)(1) or (2) of this section may also be determined to qualify as an eligible entity under this section if the grantee demonstrates to the satisfaction of HUD, through the provision of information regarding the organization's charter and by-laws, that the organization is sufficiently similar in purpose, function, and scope to those entities qualifying under paragraphs (c)(1) or (2) of this section. 


</P>
</DIV8>


<DIV8 N="§ 1003.205" NODE="24:4.1.3.1.26.3.41.6" TYPE="SECTION">
<HEAD>§ 1003.205   Eligible planning, urban environmental design and policy-planning-management-capacity building activities.</HEAD>
<P>(a) Planning activities which consist of all costs of data gathering, studies, analysis, and preparation of plans and the identification of actions that will implement such plans, including, but not limited to comprehensive plans, community development plans and functional plans in areas such as housing and economic development. In addition, other plans and studies such as capital improvements programs, individual project plans, general environmental studies, and strategies and action programs to implement plans, including the development of codes and ordinances are also eligible activities. With respect to the costs of individual project plans, engineering and design costs related to a specific activity are eligible as part of the cost of such activity under §§ 1003.201 through 1003.204 and are not considered planning costs. Also, costs necessary to comply with the requirements of 24 CFR part 58, including project specific environmental assessments and clearances for activities eligible under this part are eligible as part of the cost of such activities under §§ 1003.201 through 1003.204. 
</P>
<P>(b) Policy—planning—management—capacity building activities including those which will enable the grantee to determine its needs, set long term goals and short term objectives, devise programs to meet these goals and objectives, evaluate the progress being made in accomplishing the goals and objectives. In addition, actions necessary to carry out management, coordination and monitoring of activities necessary for effective planning implementation are eligible planning activities, however the costs necessary to implement the plans are not. 


</P>
</DIV8>


<DIV8 N="§ 1003.206" NODE="24:4.1.3.1.26.3.41.7" TYPE="SECTION">
<HEAD>§ 1003.206   Program administration costs.</HEAD>
<P>ICDBG funds may be used for the payment of reasonable administrative costs and carrying charges related to the planning and execution of community development activities assisted in whole or in part with funds provided under this part. No more than 20 percent of the sum of any grant plus program income received shall be expended for activities described in this section and in § 1003.205—Eligible planning, urban environmental design and policy-planning-management capacity building activities. This does not include staff and overhead costs directly related to carrying out activities eligible under §§ 1003.201 through 1003.204, since those costs are eligible as part of such activities. In addition, technical assistance costs associated with developing the capacity to undertake a specific funded activity are also not considered program administration costs. These costs must not, however, exceed 10% of the total grant award. 
</P>
<P>(a) <I>General management, oversight and coordination.</I> Reasonable costs of overall program management, coordination, monitoring, and evaluation. Such costs include, but are not necessarily limited to, necessary expenditures for the following: 
</P>
<P>(1) Salaries, wages, and related costs of the grantee's staff, the staff of local public agencies, or other staff engaged in program administration. In charging costs to this category the grantee may either include the entire salary, wages, and related costs allocable to the program of each person whose primary responsibilities with regard to the program involve program administration assignments, or the pro rata share of the salary, wages, and related costs of each person whose job includes any program administration assignments. The grantee may use only one of these methods during the grant period. Program administration includes the following types of assignments: 
</P>
<P>(i) Providing tribal officials and citizens with information about the program; 
</P>
<P>(ii) Preparing program budgets and schedules, and amendments thereto; 
</P>
<P>(iii) Developing systems for assuring compliance with program requirements; 
</P>
<P>(iv) Developing interagency agreements and agreements with subrecipients and contractors to carry out program activities; 
</P>
<P>(v) Monitoring program activities for progress and compliance with program requirements; 
</P>
<P>(vi) Preparing reports and other documents related to the program for submission to HUD; 
</P>
<P>(vii) Coordinating the resolution of audit and monitoring findings; 
</P>
<P>(viii) Evaluating program results against stated objectives; and 
</P>
<P>(ix) Managing or supervising persons whose primary responsibilities with regard to the program include such assignments as those described in paragraph (a)(1) (i) through (viii) of this section. 
</P>
<P>(2) Travel costs incurred for official business in carrying out the program; 
</P>
<P>(3) Administrative services performed under third party contracts or agreements, including such services as general legal services, accounting services, and audit services; and
</P>
<P>(4) Other costs for goods and services required for administration of the program, including such goods and services as rental or purchase of equipment, furnishings, or other personal property (or the payment of depreciation for such items in accordance with 2 CFR part 200, subpart E , insurance, utilities, office supplies, and rental and maintenance (but not purchase) of office space.)
</P>
<P>(b) <I>Public information.</I> The provisions of information and other resources to residents and citizen organizations participating in the planning, implementation, or assessment of activities being assisted with ICDBG funds. 
</P>
<P>(c) <I>Indirect costs.</I> Indirect costs may be charged to the ICDBG program under a cost allocation plan prepared in accordance with 2 CFR part 200, subpart E. 
</P>
<P>(d) <I>Submission of applications for Federal programs.</I> Preparation of documents required for submission to HUD to receive funds under the ICDBG program. In addition, ICDBG funds may be used to prepare applications for other Federal programs where the grantee determines that such activities are necessary or appropriate to achieve its community development objectives. 
</P>
<CITA TYPE="N">[62 FR 12349, Mar. 12, 1998, as amended at 80 FR 75944, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 1003.207" NODE="24:4.1.3.1.26.3.41.8" TYPE="SECTION">
<HEAD>§ 1003.207   Ineligible activities.</HEAD>
<P>The general rule is that any activity that is not authorized under the provisions of §§ 1003.201 through 1003.206 is ineligible to be assisted with ICDBG funds. This section identifies specific activities that are ineligible and provides guidance in determining the eligibility of other activities frequently associated with housing and community development. 
</P>
<P>(a) The following activities may not be assisted with ICDBG funds: 
</P>
<P>(1) Buildings or portions thereof used for the general conduct of government as defined at § 1003.4 cannot be assisted with ICDBG funds. This does not include, however, the removal of architectural barriers under § 1003.201(c) involving any such building. Also, where acquisition of real property includes an existing improvement which is to be used in the provision of a building for the general conduct of government, the portion of the acquisition cost attributable to the land is eligible, provided such acquisition meets the primary objective described in § 1003.208. 
</P>
<P>(2) <I>General government expenses.</I> Except as otherwise specifically authorized in this subpart or under 2 CFR part 200, subpart E, expenses required to carry out the regular responsibilities of the grantee are not eligible for assistance under this part. 
</P>
<P>(3) <I>Political activities.</I> ICDBG funds shall not be used to finance the use of facilities or equipment for political purposes or to engage in other partisan political activities, such as candidate forums, voter transportation, or voter registration. However, a facility originally assisted with ICDBG funds may be used on an incidental basis to hold political meetings, candidate forums, or voter registration campaigns, provided that all parties and organizations have access to the facility on an equal basis, and are assessed equal rent or use charges, if any. 
</P>
<P>(b) The following activities may not be assisted with ICDBG funds unless authorized under provisions of § 1003.203 or as otherwise specifically noted herein, or when carried out by a CBDO under the provisions of § 1003.204. 
</P>
<P>(1) <I>Purchase of equipment.</I> The purchase of equipment with ICDBG funds is generally ineligible. 
</P>
<P>(i) <I>Construction equipment.</I> The purchase of construction equipment is ineligible, but compensation for the use of such equipment through leasing or depreciation pursuant to 2 CFR part 200, subpart E, for an otherwise eligible activity is an eligible use of ICDBG funds. 
</P>
<P>(ii) <I>Furnishings and personal property.</I> The purchase of equipment, fixtures, motor vehicles, furnishings, or other personal property not an integral structural fixture is generally ineligible. Exceptions to this general prohibition are set forth in § 1003.201(o). 
</P>
<P>(2) <I>Operating and maintenance expenses.</I> The general rule is that any expense associated with repairing, operating or maintaining public facilities, improvements and services is ineligible. Specific exceptions to this general rule are operating and maintenance expenses associated with public service activities, interim assistance, and office space for program staff employed in carrying out the ICDBG program. For example, the use of ICDBG funds to pay the allocable costs of operating and maintaining a facility used in providing a public service would be eligible under § 1003.201(e), even if no other costs of providing such a service are assisted with such funds. Examples of ineligible operating and maintenance expenses are: 
</P>
<P>(i) Maintenance and repair of streets, parks, playgrounds, water and sewer facilities, neighborhood facilities, senior centers, centers for persons with a disability, parking and similar public facilities; and 
</P>
<P>(ii) Payment of salaries for staff, utility costs and similar expenses necessary for the operation of public works and facilities. 
</P>
<P>(3) <I>New housing construction.</I> ICDBG funds may not be used for the construction of new permanent residential structures or for any program to subsidize or assist such new construction, except: 
</P>
<P>(i) As provided under the last resort housing provisions set forth in 24 CFR part 42; or 
</P>
<P>(ii) When carried out by a CBDO pursuant to § 1003.204(a); 
</P>
<P>(4) <I>Income payments.</I> The general rule is that ICDBG funds may not be used for income payments. For purposes of the ICDBG program, income payments means a series of subsistence-type grant payments made to an individual or family for items such as food, clothing, housing (rent or mortgage) or utilities, but excludes emergency payments made over a period of up to three months to the provider of such items or services on behalf of an individual or family. 
</P>
<CITA TYPE="N">[62 FR 12349, Mar. 12, 1998, as amended at 80 FR 75944, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 1003.208" NODE="24:4.1.3.1.26.3.41.9" TYPE="SECTION">
<HEAD>§ 1003.208   Criteria for compliance with the primary objective.</HEAD>
<P>The Act establishes as its primary objective the development of viable communities by providing decent housing and a suitable living environment and expanding economic opportunities, principally for persons of low and moderate income. Consistent with this objective, not less than 70 percent of the expenditures of each single purpose grant shall be for activities which meet the criteria set forth in paragraphs (a), (b), (c) and (d) of this section. Activities meeting these criteria as applicable will be considered to benefit low and moderate income persons unless there is substantial evidence to the contrary. In assessing any such evidence, the full range of direct effects of the assisted activity will be considered. (The grantee shall appropriately ensure that activities that meet these criteria do not benefit moderate income persons to the exclusion of low income persons.) 
</P>
<P>(a) <I>Area benefit activities.</I> (1) An activity, the benefits of which are available to all the residents in a particular area, where at least 51 percent of the residents are low and moderate income persons. Such an area need not be coterminous with census tracts or other officially recognized boundaries but must be the entire area served by the activity. An activity that serves an area that is not primarily residential in character shall not qualify under this criterion. 
</P>
<P>(2) For purposes of determining qualification under this criterion, activities of the same type that serve different areas will be considered separately on the basis of their individual service area. 
</P>
<P>(3) In determining whether there is a sufficiently large percentage of low and moderate income persons residing in the area served by an activity to qualify under paragraph (a) (1) or (2) of this section, the most recently available decennial census information shall be used to the fullest extent feasible, together with the Section 8 income limits that would have applied at the time the income information was collected by the Census Bureau. Grantees that believe that the census data does not reflect current relative income levels in an area, or where census boundaries do not coincide sufficiently well with the service area of an activity, may conduct (or have conducted) a current survey of the residents of the area to determine the percent of such persons that are low and moderate income. HUD will accept information obtained through such surveys, to be used in lieu of the decennial census data, where it determines that the survey was conducted in such a manner that the results meet standards of statistical reliability that are comparable to that of the decennial census data for areas of similar size. Where there is substantial evidence that provides a clear basis to believe that the use of the decennial census data would substantially overstate the proportion of persons residing there that are low and moderate income, HUD may require that the grantee rebut such evidence in order to demonstrate compliance with section 105(c)(2) of the Act. 
</P>
<P>(b) <I>Limited clientele activities.</I> (1) An activity which benefits a limited clientele, at least 51 percent of whom are low or moderate income persons. (The following kinds of activities may not qualify under paragraph (b) of this section: Activities, the benefits of which are available to all the residents of an area; activities involving the acquisition, construction or rehabilitation of property for housing; or activities where the benefit to low and moderate income persons to be considered is the creation or retention of jobs except as provided in paragraph (b)(4) of this section.) To qualify under paragraph (b) of this section, the activity must meet one of the following tests: 
</P>
<P>(i) Benefit a clientele who are generally presumed to be principally low and moderate income persons. Activities that exclusively serve a group of persons in any one of the following categories may be presumed to benefit persons, 51 percent of whom are low-and moderate-income: abused children, battered spouses, elderly persons, adults meeting the Bureau of the Census' current Population Reports definition of “severely disabled”, homeless persons, illiterate adults, persons living with AIDS, and migrant workers; or 
</P>
<P>(ii) Require information on family size and income so that it is evident that at least 51 percent of the clientele are persons whose family income does not exceed the low and moderate income limit; or 
</P>
<P>(iii) Have income eligibility requirements which limit the activity exclusively to low and moderate income persons; or 
</P>
<P>(iv) Be of such nature and be in such location that it may be concluded that the activity's clientele will primarily be low and moderate income persons. 
</P>
<P>(2) An activity that serves to remove material or architectural barriers to the mobility or accessibility of elderly persons or adults meeting the Bureau of the Census' Current Population Reports definition of “severely disabled” will be presumed to qualify under this criterion if it is restricted, to the extent practicable, to the removal of such barriers by assisting: 
</P>
<P>(i) The reconstruction of a public facility or improvement, or portion thereof, that does not qualify under § 1003.208(a); or 
</P>
<P>(ii) The rehabilitation of a privately-owned nonresidential building or improvement that does not qualify under § 1003.208 (a) or (d); or 
</P>
<P>(iii) The rehabilitation of the common areas of a residential structure that contains more than one dwelling unit. 
</P>
<P>(3) A microenterprise assistance activity carried out in accordance with the provisions of § 1003.201(l) with respect to those owners of microenterprises and persons developing microenterprises assisted under the activity during the grant period who are low and moderate income persons. For purposes of this paragraph, persons determined to be low and moderate income may be presumed to continue to qualify for up to a three year period. 
</P>
<P>(4) An activity designed to provide job training and placement and/or other employment support services, including but not limited to, peer support programs, counseling, child care, transportation, and other similar services, in which the percentage of low and moderate income persons assisted is less than 51 percent may qualify under this paragraph in the following limited circumstance: 
</P>
<P>(i) In such cases where such training or provision of supportive services assists business(es), the only use of ICDBG assistance for the project is to provide the job training and/or supportive services; and 
</P>
<P>(ii) The proportion of the total cost of the project borne by ICDBG funds is no greater than the proportion of the total number of persons assisted who are low or moderate income. 
</P>
<P>(c) <I>Housing activities.</I> An eligible activity carried out for the purpose of providing or improving permanent residential structures which, upon completion, will be occupied by low and moderate income households. This would include, but not necessarily be limited to, the acquisition or rehabilitation of property, conversion of non-residential structures, and new housing construction. Funds expended for activities which qualify under the provisions of this paragraph shall be counted as benefiting low and moderate income persons but shall be limited to an amount determined by multiplying the total cost (including ICDBG and non-ICDBG costs) of the acquisition, construction or rehabilitation by the percent of units in such housing to be occupied by low and moderate income persons. If the structure assisted contains two dwelling units, at least one must be occupied by low and moderate income households, and if the structure contains more than two dwelling units, at least 51 percent of the units must be so occupied. Where two or more rental buildings being assisted are or will be located on the same or contiguous properties, and the buildings will be under common ownership and management, the grouped buildings may be considered for this purpose as a single structure. For rental housing, occupancy by low and moderate income households must be at affordable rents to qualify under this criterion. The grantee shall adopt and make public its standards for determining “affordable rents” for this purpose. The following shall also qualify under this criterion: 
</P>
<P>(1) When less than 51 percent of the units in a structure will be occupied by low and moderate income households, ICDBG assistance may be provided in the following limited circumstances: 
</P>
<P>(i) The assistance is for an eligible activity to reduce the development cost of the new construction of a multifamily, non-elderly rental housing project; 
</P>
<P>(ii) Not less than 20 percent of the units will be occupied by low and moderate income households at affordable rents; and 
</P>
<P>(iii) The proportion of the total cost of developing the project to be borne by ICDBG funds is no greater than the proportion of units in the project that will be occupied by low and moderate income households. 
</P>
<P>(2) When ICDBG funds are used for housing services eligible under § 1003.201(j), such funds shall be considered to benefit low-and moderate-income persons if the housing for which the services are provided is to be occupied by low-and moderate-income households. 
</P>
<P>(d) <I>Job creation or retention activities.</I> An activity designed to create or retain permanent jobs where at least 51 percent of the jobs, computed on a full time equivalent basis, involve the employment of low and moderate persons. For purposes of determining whether a job is held by or made available to a low or moderate income person, the person may be presumed to be a low or moderate income person if: he/she resides within a census tract (or block numbering area) where not less than 70 percent of the residents have incomes at or below 80 percent of the area median; or, if he/she resides in a census tract (or block numbering area) which meets the Federal Empowerment Zone or Enterprise Community eligibility criteria; or, if the assisted business is located in and the job under consideration is to be located in such a tract or area. As a general rule, each assisted business shall be considered to be a separate activity for purposes of determining whether the activity qualifies under this paragraph. However, in certain cases such as where ICDBG funds are used to acquire, develop or improve a real property (e.g., a business incubator or an industrial park) the requirement may be met by measuring jobs in the aggregate for all the businesses which locate on the property, provided such businesses are not otherwise assisted by ICDBG funds. Where ICDBG funds are used to pay for the staff and overhead costs of a CBDO under the provisions of § 1003.204 making loans to businesses from non-ICDBG funds, this requirement may be met by aggregating the jobs created by all of the businesses receiving loans during any one year period. For an activity that creates jobs, the grantee must document that at least 51 percent of the jobs will be held by, or will be available to, low and moderate income persons. For an activity that retains jobs, the grantee must document that the jobs would actually be lost without the ICDBG assistance and that either or both of the following conditions apply with respect to at least 51 percent of the jobs at the time the ICDBG assistance is provided: The job is known to be held by a low or moderate income person; or the job can reasonably be expected to turn over within the following two years and that steps will be taken to ensure that it will be filled by, or made available to, a low or moderate income person upon turnover. Jobs will be considered to be available to low and moderate income persons for these purposes only if: 
</P>
<P>(1) Special skills that can only be acquired with substantial training or work experience or education beyond high school are not a prerequisite to fill such jobs, or the business agrees to hire unqualified persons and provide training; and 
</P>
<P>(2) The grantee and the assisted business take actions to ensure that low and moderate income persons receive first consideration for filling such jobs. 
</P>
<P>(e) <I>Additional criteria.</I> (1) Where the assisted activity is acquisition of real property, a preliminary determination of whether the activity addresses the primary objective may be based on the planned use of the property after acquisition. A final determination shall be based on the actual use of the property, excluding any short-term, temporary use. 
</P>
<P>(2) Where the assisted activity is relocation assistance that the grantee is required to provide, such relocation assistance shall be considered to address the primary objective as addressed by the displacing activity. 
</P>
<P>(3) In any case where the activity undertaken for the purpose of creating or retaining jobs is a public improvement and the area served is primarily residential, the activity must meet the requirements of paragraph (a) of this section as well as those of paragraph (d) of this section in order to qualify as benefiting low and moderate income persons. 
</P>
<P>(4) Expenditures for activities meeting the criteria for benefiting low and moderate income persons shall be used in determining the extent to which the grantee's overall program benefits such persons. In determining the percentage of funds expended for such activities: 
</P>
<P>(i) Costs of administration and planning, eligible under § 1003.205 and § 1003.206 respectively, will be assumed to benefit low and moderate income persons in the same proportion as the remainder of the ICDBG funds and, accordingly, shall be excluded from the calculation. 
</P>
<P>(ii) Funds expended for the acquisition, new construction or rehabilitation of property for housing those qualified under § 1003.208(c) shall be counted for this purpose, but shall be limited to an amount determined by multiplying the total cost (including ICDBG and non-ICDBG costs) of the acquisition, construction, or rehabilitation by the percent of units in such housing occupied by low and moderate income persons. 
</P>
<P>(iii) Funds expended for any other activity which qualifies under § 1003.208 shall be counted for this purpose in their entirety.


</P>
</DIV8>


<DIV8 N="§ 1003.209" NODE="24:4.1.3.1.26.3.41.10" TYPE="SECTION">
<HEAD>§ 1003.209   Prohibition on use of assistance for employment relocation activities.</HEAD>
<P>(a) <I>Prohibition.</I> ICDBG funds may not be used to directly assist a business, including a business expansion, in the relocation of a plant, facility, or operation from one Identified Service Area to another Identified Service Area, if the relocation is likely to result in a significant loss of jobs in the Identified Service Area from which the relocation occurs.
</P>
<P>(b) <I>Definitions.</I> The following definitions apply to this section:
</P>
<P>(1) <I>Directly assist.</I> Directly assist means the provision of ICDBG funds for activities pursuant to:
</P>
<P>(i) § 1003.203(b); or
</P>
<P>(ii) §§ 1003.201(a)-(d), 1003.201(k), 1003.203(a), or § 1003.204 when the grantee, subrecipient, or, in the case of an activity carried out pursuant to § 1003.204, a Community Based Development Organization (CBDO) enters into an agreement with a business to undertake one or more of these activities as a condition of the business relocating a facility, plant, or operation to the grantee's Identified Service Area. Provision of public facilities and indirect assistance that will provide benefit to multiple businesses does not fall under the definition of “directly assist,” unless it includes the provision of infrastructure to aid a specific business that is the subject of an agreement with the specific assisted business.
</P>
<P>(2) <I>Area.</I> The relevant definition of “area” for a Native American economic development project is the “Identified Service Area” for the eligible applicant, as defined in § 1003.4.
</P>
<P>(3) <I>Operation.</I> A business operation includes, but is not limited to, any equipment, employment opportunity, production capacity, or product line of the business.
</P>
<P>(4) <I>Significant loss of jobs.</I> (i) A loss of jobs is significant if the number of jobs to be lost in the Identified Service Area in which the affected business is currently located is equal to or greater than one-tenth of one percent of the total number of persons in the labor force of that area; or, in all cases, a loss of 500 or more jobs. Notwithstanding the aforementioned, a loss of 25 jobs or fewer does not constitute a significant loss of jobs.
</P>
<P>(ii) A job is considered to be lost due to the provision of ICDBG assistance if the job is relocated within 3 years of the provision of assistance to the business; or the time period within which jobs are to be created, as specified by the agreement between the business and the recipient, is longer than 3 years.
</P>
<P>(c) <I>Written agreement.</I> Before directly assisting a business with ICDBG funds, the recipient, subrecipient, or a CBDO (in the case of an activity carried out pursuant to § 1003.204) shall sign a written agreement with the assisted business. The written agreement shall include:
</P>
<P>(1) <I>Statement.</I> A statement from the assisted business as to whether the assisted activity will result in the relocation of any industrial or commercial plant, facility, or operation from one Identified Service Area to another, and, if so, the number of jobs that will be relocated from each Identified Service Area; and
</P>
<P>(2) <I>Required certification.</I> If the assistance will not result in a relocation covered by this section, a certification from the assisted business that neither it, nor any of its subsidiaries, has plans to relocate jobs, at the time the agreement is signed, that would result in a significant job loss as defined in this rule.
</P>
<P>(d) <I>Assistance not covered by this section.</I> This section does not apply to:
</P>
<P>(1) <I>Relocation assistance.</I> Relocation assistance under § 1003.602(b), (c), or (d);
</P>
<P>(2) <I>Microenterprises.</I> Assistance to microenterprises as defined by section 102(a)(22) of the Housing and Community Development Act of 1974; and
</P>
<P>(3) <I>Arms-length transactions.</I> Assistance to a business that purchases business equipment, inventory, or other physical assets in an arms-length transaction, including the assets of an existing business, provided that the purchase does not result in the relocation of the sellers' business operation (including customer base or list, goodwill, product lines, or trade names) from one Identified Service Area to another Identified Service Area and does not produce a significant loss of jobs in the Identified Service Area from which the relocation occurs.
</P>
<CITA TYPE="N">[74 FR 1869, Jan. 13, 2009]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:4.1.3.1.26.4" TYPE="SUBPART">
<HEAD>Subpart D—Single Purpose Grant Application and Selection Process</HEAD>


<DIV8 N="§ 1003.300" NODE="24:4.1.3.1.26.4.41.1" TYPE="SECTION">
<HEAD>§ 1003.300   Application requirements.</HEAD>
<P>(a) <I>Application information.</I> A Notice of Funding Availability (NOFA) shall be published in the <E T="04">Federal Register</E> not less than 30 days before the deadline for application submission. The NOFA will provide information relating to the date and time for application submission, the form and content requirements of the application, specific information regarding the rating and ranking criteria to be used, and any other information pertinent to the application process. 
</P>
<P>(b) <I>Costs incurred by applicant.</I> Costs incurred by an applicant prior to the submission of the single purpose grant application to HUD will not be recognized by HUD as eligible ICDBG expenses. 
</P>
<P>(c) HUD will not normally reimburse or recognize costs incurred before HUD approval of the application for funding. However, under unusual circumstances, the Area ONAP may consider and approve written requests to recognize and reimburse costs incurred after submission of the application where failure to do so would impose undue hardship on the applicant. Such written authorization will be made only before the costs are incurred and where the requirements for reimbursement have been met in accordance with 24 CFR 58.22 and with the understanding that HUD has no obligation whatsoever to approve the application or to reimburse the applicant should the application be disapproved. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0191)


</APPRO>
</DIV8>


<DIV8 N="§ 1003.301" NODE="24:4.1.3.1.26.4.41.2" TYPE="SECTION">
<HEAD>§ 1003.301   Selection process.</HEAD>
<P>(a) <I>Threshold requirement.</I> An applicant that has an outstanding ICDBG obligation to HUD that is in arrears, or one that has not agreed to a repayment schedule, will be disqualified from the competition. 
</P>
<P>(b) <I>Application rating.</I> NOFAs will define and establish weights for the selection criteria, will specify the maximum points available, and will describe how point awards will be made.
</P>
<CITA TYPE="N">[66 FR 4581, Jan. 17, 2001; 66 FR 8176, Jan. 30, 2001]


</CITA>
</DIV8>


<DIV8 N="§ 1003.302" NODE="24:4.1.3.1.26.4.41.3" TYPE="SECTION">
<HEAD>§ 1003.302   Project specific threshold requirements.</HEAD>
<P>(a) <I>Housing rehabilitation projects.</I> All applicants for housing rehabilitation projects shall adopt rehabilitation standards and rehabilitation policies before submitting an application. The applicant shall assure that it will use project funds to rehabilitate units only when the homeowner's payments are current or the homeowner is current in a repayment agreement that is subject to approval by the Area ONAP. The Area ONAP administrator may grant exceptions to this requirement on a case-by-case basis. 
</P>
<P>(b) <I>New housing construction projects.</I> New housing construction can only be implemented through a nonprofit organization that is eligible under § 1003.204 or is otherwise eligible under § 1003.207(b)(3). All applicants for new housing construction projects shall adopt, by current tribal resolution, construction standards before submitting an application. All applications which include new housing construction projects must document that: 
</P>
<P>(1) No other housing is available in the immediate reservation area that is suitable for the household(s) to be assisted; and 
</P>
<P>(2) No other sources can meet the needs of the household(s) to be assisted; and 
</P>
<P>(3) Rehabilitation of the unit occupied by the household(s) to be assisted is not economically feasible; or 
</P>
<P>(4) The household(s) to be housed currently is in an overcrowded housing unit (sharing with another household); or 
</P>
<P>(5) The household(s) to be assisted has no current residence. 
</P>
<P>(c) <I>Economic development projects.</I> All applicants for economic development projects must provide an analysis which shows public benefit commensurate with the ICDBG assistance requested will result from the assisted project. This analysis should also establish that to the extent practicable: reasonable financial support will be committed from non-Federal sources prior to disbursement of Federal funds; any grant amount provided will not substantially reduce the amount of non-Federal financial support for the activity; not more than a reasonable rate of return on investment is provided to the owner; and, that grant funds used for the project will be disbursed on a pro rata basis with amounts from other sources. In addition, it must be established that the project is financially feasible and that it has a reasonable chance of success. 


</P>
</DIV8>


<DIV8 N="§ 1003.303" NODE="24:4.1.3.1.26.4.41.4" TYPE="SECTION">
<HEAD>§ 1003.303   Project rating.</HEAD>
<P>Each project included in an application that meets the threshold requirements shall be competitively rated within each Area ONAP's jurisdiction under the five following rating factors. Additional details regarding the rating factors will be provided in the periodic NOFAs. 
</P>
<P>(a) <I>Capacity.</I> This factor will address the applicant's organizational resources necessary to successfully implement the proposed activities in a timely manner. 
</P>
<P>(b) <I>Need/Extent of the problem.</I> This factor will address the extent to which there is a need for the proposed project to address a documented problem among the intended beneficiaries. 
</P>
<P>(c) <I>Soundness of Approach.</I> This factor will address the quality and cost effectiveness of the proposed project, the commitment to sustain the proposed activities, and the degree to which the proposed project provides other benefits to community members. 
</P>
<P>(d) <I>Leveraging of resources.</I> This factor will address the level of tribal resources and resources from other entities that are used in conjunction with ICDBG funds to support the proposed project. HUD will evaluate the level of non-ICDBG resources based on the percentage of non-ICDBG resources provided relative to project costs. 
</P>
<P>(e) <I>Comprehensiveness and coordination.</I> This factor will address the extent to which the applicant's proposed activities are consistent with the strategic plans or policy goals of the community and further on-going priorities and activities of the community.
</P>
<CITA TYPE="N">[66 FR 4581, Jan. 17, 2001, as amended at 66 FR 8176, Jan. 30, 2001]


</CITA>
</DIV8>


<DIV8 N="§ 1003.304" NODE="24:4.1.3.1.26.4.41.5" TYPE="SECTION">
<HEAD>§ 1003.304   Funding process.</HEAD>
<P>(a) <I>Notification.</I> Area ONAPs will notify applicants of the approval or disapproval of their applications. Grant amounts offered may reflect adjustments made by the Area ONAPs in accordance with § 1003.100(b)(2). 
</P>
<P>(b) <I>Grant award.</I> (1) As soon as the Area ONAP determines that the applicant has complied with any pre-award requirements and absent information which would alter the threshold determinations under § 1003.302, the grant will be awarded. The regulations become part of the grant agreement. 
</P>
<P>(2) All grants shall be conditioned upon the completion of all environmental obligations and approval of release of funds by HUD in accordance with the requirements of part 58 of this title and, in particular, subpart J of part 58 of this title, except as otherwise provided in part 58 of this title. 
</P>
<P>(3) HUD may impose other grant conditions where additional actions or approvals are required before the use of funds. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under OMB Control No. 2577-0191)


</APPRO>
</DIV8>


<DIV8 N="§ 1003.305" NODE="24:4.1.3.1.26.4.41.6" TYPE="SECTION">
<HEAD>§ 1003.305   Program amendments.</HEAD>
<P>(a) Grantees shall request prior HUD approval for program amendments which will significantly change the scope, location, objective, or class of beneficiaries of the approved activities, as originally described in the application. 
</P>
<P>(b) Amendment requests of $100,000 or more shall include all application components required by the NOFA published for the last application cycle; those requests of less than $100,000 do not have to include the components which address the selection criteria. 
</P>
<P>(c) Approval of an amendment request is subject to the following: 
</P>
<P>(1) A rating equal to or greater than the lowest rating received by a funded project during the most recent funding competition must be attained by the amended project if the request is for $100,000 or more; 
</P>
<P>(2) Demonstration by the grantee of the capacity to promptly complete the modified or new activities; 
</P>
<P>(3) Demonstration by the grantee of compliance with the requirements of § 1003.604 for citizen participation; and 
</P>
<P>(4) The preparation of an amended or new environmental review in accordance with part 58 of this title, if there is a significant change in the scope or location of approved activities. 
</P>
<P>(d) Amendments which address imminent threats to health and safety shall be reviewed and approved in accordance with the requirements of subpart E of this part. 
</P>
<P>(e) If a program amendment fails to be approved and the original project is no longer feasible, the grant funds proposed for amendment shall be recaptured by HUD. 


</P>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:4.1.3.1.26.5" TYPE="SUBPART">
<HEAD>Subpart E—Imminent Threat Grants</HEAD>


<DIV8 N="§ 1003.400" NODE="24:4.1.3.1.26.5.41.1" TYPE="SECTION">
<HEAD>§ 1003.400   Criteria for funding.</HEAD>
<P>The following criteria apply to requests for assistance under this subpart: 
</P>
<P>(a) In response to requests for assistance, HUD may make funds available under this subpart to applicants to alleviate or remove imminent threats to health or safety. The urgency and immediacy of the threat shall be independently verified before the approval of an application. Funds may only be used to deal with imminent threats that are not of a recurring nature and which represent a unique and unusual circumstance, and which impact on an entire service area. 
</P>
<P>(b) Funds to alleviate imminent threats may be granted only if the applicant can demonstrate to the satisfaction of HUD that other tribal or Federal funding sources cannot be made available to alleviate the threat. 
</P>
<P>(c) HUD will establish grant ceilings for imminent threat applications. 


</P>
</DIV8>


<DIV8 N="§ 1003.401" NODE="24:4.1.3.1.26.5.41.2" TYPE="SECTION">
<HEAD>§ 1003.401   Application process.</HEAD>
<P>(a) <I>Letter to proceed.</I> The Area ONAP may issue the applicant a letter to proceed to incur costs to alleviate imminent threats to health and safety only if the assisted activities do not alter environmental conditions and are for temporary or permanent improvements limited to protection, repair, or restoration actions necessary only to control or arrest the effects of imminent threats or physical deterioration. Reimbursement of such costs is dependent upon HUD approval of the application. 
</P>
<P>(b) <I>Applications.</I> Applications shall include the information specified in the Notice of Funding Availability (NOFA). 
</P>
<P>(c) <I>Application approval.</I> Applications which meet the requirement of this section may be approved by the Area ONAP without competition in accordance with the applicable requirements of § 1003.304. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0191)


</APPRO>
</DIV8>


<DIV8 N="§ 1003.402" NODE="24:4.1.3.1.26.5.41.3" TYPE="SECTION">
<HEAD>§ 1003.402   Availability of funds.</HEAD>
<P>Of the funds made available by the NOFA for the ICDBG program, an amount to be determined by the Assistant Secretary may be reserved by HUD for grants under this subpart. The amount of funds reserved for imminent threat funding during each funding cycle will be stated in the NOFA. If any of the reserved funds are not used to fund imminent threat grants during a fiscal year, they will be added to the allocation of ICDBG funds for the subsequent fiscal year and will be used as if they were a part of the new allocation. 


</P>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:4.1.3.1.26.6" TYPE="SUBPART">
<HEAD>Subpart F—Grant Administration</HEAD>


<DIV8 N="§ 1003.500" NODE="24:4.1.3.1.26.6.41.1" TYPE="SECTION">
<HEAD>§ 1003.500   Responsibility for grant administration.</HEAD>
<P>(a) One or more tribal departments or authorities, including existing tribal public agencies, may be designated by the chief executive officer of the grantee to undertake activities assisted by this part. A public agency so designated shall be subject to the same requirements as are applicable to subrecipients. 
</P>
<P>(b) The grantee is responsible for ensuring that ICDBG funds are used in accordance with all program requirements. The use of designated public agencies, subrecipients, or contractors does not relieve the grantee of this responsibility. The grantee is also responsible for determining the adequacy of performance under subrecipient agreements and procurement contracts, and for taking appropriate action when performance problems arise, such as the actions described in § 1003.701. 


</P>
</DIV8>


<DIV8 N="§ 1003.501" NODE="24:4.1.3.1.26.6.41.2" TYPE="SECTION">
<HEAD>§ 1003.501   Applicability of uniform administrative requirements and cost principles.</HEAD>
<P>(a) Grantees and subrecipients shall comply with the requirements and standards of 2 CFR part 200, except for the following sections:
</P>
<P>(1) Paragraph (a) of § 200.302, “Financial management.”
</P>
<P>(2) Section 200.306, “Cost sharing or matching.”
</P>
<P>(3) Section 200.307, “Program income” applies as modified by § 1003.503.
</P>
<P>(4) Section 200.308, “Revisions of budget and program plans.”
</P>
<P>(5) Section 200.311, “Real property,” except as provided in § 1003.600.
</P>
<P>(6) Section 200.313, “Equipment” applies, except that in all cases in which the equipment is sold, the proceeds shall be program income.
</P>
<P>(7) Section 200.314, “Supplies,” applies, except in all cases in which the supplies are sold, the proceeds shall be program income.
</P>
<P>(8) Section 200.325, “Bonding requirements” applies. However, there may be circumstances under which the bonding requirements of 2 CFR 200.325 are inconsistent with other responsibilities and obligations of the grantee. In such circumstances, acceptable methods to provide performance and payment assurance may include:
</P>
<P>(i) Deposit with the grantee of a cash escrow of not less than 20 percent of the total contract price, subject to reduction during the warranty period, commensurate with potential risk; or
</P>
<P>(ii) Letter of credit for 25 percent of the total contract price, unconditionally payable upon demand of the grantee, subject to reduction during the warranty period commensurate with potential risk.
</P>
<P>(9) Paragraphs (b) through (d) and (f) of § 200.328, “Monitoring and reporting program performance.”
</P>
<P>(10) Section 200.333, “Retention requirements for records” applies. However, the retention period referenced in 2 CFR 200.333 pertaining to individual ICDBG activities starts from the date of the submission of the final status and evaluation report as prescribed in § 1003.506(a) in which the specific activity is reported.
</P>
<P>(11) Section 200.343, “Closeout.”
</P>
<P>(b) <I>Cost principles.</I> (1) All items of cost listed in 2 CFR part 200, subpart E, which require prior Federal agency approval are allowable without the prior approval of HUD to the extent that they comply with the general policies and principles stated in 2 CFR part 200, subpart E, and are otherwise eligible under subpart C of this part, except for the following: 
</P>
<P>(i) Depreciation methods for fixed assets shall not be changed without the approval of the Federal cognizant agency. 
</P>
<P>(ii) Fines, penalties, damages, and other settlements are unallowable costs to the ICDBG program. 
</P>
<P>(iii) Costs of housing (<I>e.g.,</I> depreciation, maintenance, utilities, furnishings, rent), housing allowances and personal living expenses (goods or services for personal use), regardless of whether reported as taxable income to the employees (2 CFR 200.445), require HUD prior approval.
</P>
<P>(iv) Organization costs (2 CFR 200.455) require HUD prior approval.
</P>
<P>(2) No person providing consultant services in an employer-employee type of relationship shall receive more than a reasonable rate of compensation for personal services paid with ICDBG funds. In no event, however, shall such compensation exceed the equivalent of the daily rate paid for Level IV of the Executive Schedule. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0191)
</APPRO>
<CITA TYPE="N">[62 FR 12349, Mar. 12, 1998, as amended at 80 FR 75944, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 1003.502" NODE="24:4.1.3.1.26.6.41.3" TYPE="SECTION">
<HEAD>§ 1003.502   Agreements with subrecipients.</HEAD>
<P>(a) Before disbursing any ICDBG funds to a subrecipient, the grantee shall sign a written agreement with the subrecipient. The agreement shall remain in effect during any period that the subrecipient has control over ICDBG funds, including program income. 
</P>
<P>(b) At a minimum, the written agreement with the subrecipient shall include provisions concerning the following items: 
</P>
<P>(1) <I>Statement of work.</I> The agreement shall include a description of the work to be performed, a schedule for completing the work, and a budget. These items shall be in sufficient detail to provide a sound basis for the grantee effectively to monitor performance under the agreement. 
</P>
<P>(2) <I>Records and reports.</I> The grantee shall specify in the agreement the particular records the subrecipient must maintain and the particular reports the subrecipient must submit in order to assist the grantee in meeting its recordkeeping and reporting requirements. 
</P>
<P>(3) <I>Program income.</I> The agreement shall include the program income requirements set forth in § 2 CFR 200.307 as modified by § 1003.503. 
</P>
<P>(4) <I>Uniform administrative requirements.</I> The agreement shall require the subrecipient to comply with applicable administrative requirements, as described in § 1003.501. 
</P>
<P>(5) <I>Other program requirements.</I> The agreement shall require the subrecipient to carry out each activity in compliance with all Federal laws and regulations described in subpart G of this part, except that the subrecipient does not assume the grantee's environmental responsibilities described at § 1003.605. 
</P>
<P>(6) <I>Conditions for religious organizations.</I> Where applicable, the conditions prescribed by HUD for the use of ICDBG funds by religious organizations shall be included in the agreement. 
</P>
<P>(7) <I>Suspension and termination.</I> The agreement shall set forth remedies for noncompliance and provisions on termination in accordance with 2 CFR part 200, subpart D.
</P>
<P>(8) <I>Reversion of assets.</I> The agreement shall specify that upon its expiration the subrecipient shall transfer to the grantee any ICDBG funds on hand at the time of expiration and any accounts receivable attributable to the use of ICDBG funds. It shall also include provisions designed to ensure that any real property under the subrecipient's control that was acquired or improved in whole or in part with ICDBG funds (including ICDBG funds provided to the subrecipient in the form of a loan) in excess of $25,000 is either: 
</P>
<P>(i) Used to meet the primary objective as stated in § 1003.208 until five years after expiration of the agreement, or for such longer period of time as determined to be appropriate by the grantee; or 
</P>
<P>(ii) Not used in accordance with paragraph (b)(8)(i) of this section, in which event the subrecipient shall pay to the grantee an amount equal to the current market value of the property less any portion of the value attributable to expenditures of non-ICDBG funds for the acquisition of, or improvement to, the property. The payment is program income to the grantee if it is received during the grant period. (No payment is required after the period of time specified in paragraph (b)(8)(i) of this section.) 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0191)
</APPRO>
<CITA TYPE="N">[62 FR 12349, Mar. 12, 1998, as amended at 80 FR 75945, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 1003.503" NODE="24:4.1.3.1.26.6.41.4" TYPE="SECTION">
<HEAD>§ 1003.503   Program income.</HEAD>
<P>(a) Program income requirements for ICDBG grantees are set forth in 2 CFR 200.307, as modified by this section. 
</P>
<P>(b) <I>Program income</I> means gross income received by the grantee or a subrecipient directly generated from the use of ICDBG funds during the grant period, except as provided in paragraph (b)(4) of this section. When program income is generated by an activity that is only partially assisted with ICDBG funds, the income shall be prorated to reflect the percentage of ICDBG funds used. 
</P>
<P>(1) Program income includes, but is not limited to, the following: 
</P>
<P>(i) Proceeds from the disposition by sale or long-term lease of real property purchased or improved with ICDBG funds; 
</P>
<P>(ii) Proceeds from the disposition of equipment purchased with ICDBG funds; 
</P>
<P>(iii) Gross income from the use or rental of real or personal property acquired by the grantee or by a subrecipient with ICDBG funds, less costs incidental to generation of the income; 
</P>
<P>(iv) Gross income from the use or rental of real property, owned by the grantee or by a subrecipient, that was constructed or improved with ICDBG funds, less costs incidental to generation of the income; 
</P>
<P>(v) Payments of principal and interest on loans made using ICDBG funds, except as provided in paragraph (b)(3) of this section; 
</P>
<P>(vi) Proceeds from the sale of loans made with ICDBG funds except as provided in paragraph (b)(4) of this section; 
</P>
<P>(vii) Proceeds from sale of obligations secured by loans made with ICDBG funds; 
</P>
<P>(viii) Interest earned on funds held in a revolving fund account; 
</P>
<P>(ix) Interest earned on program income pending its disposition; and 
</P>
<P>(x) Funds collected through special assessments made against properties owned and occupied by households not of low and moderate income, where the assessments are used to recover all or part of the ICDBG portion of a public improvement. 
</P>
<P>(2) Program income does not include income earned on grant advances from the U.S. Treasury. The following items of income earned on grant advances must be remitted to HUD for transmittal to the U.S. Treasury and will not be reallocated: 
</P>
<P>(i) Interest earned from the investment of the initial proceeds of a grant advance by the U.S. Treasury; 
</P>
<P>(ii) Income (e.g., interest) earned on loans or other forms of assistance provided with ICDBG funds that are used for activities determined by HUD either to be ineligible or that fail substantially to meet any other requirement of this part. 
</P>
<P>(3) The calculation of the amount of program income for the grantee's ICDBG program as a whole (i.e., comprising activities carried out by a grantee and its subrecipients) shall exclude payments made by subrecipients of principal and/or interest on loans received from grantees where such payments are made from program income received by the subrecipient. (By making such payments, the subrecipient shall be deemed to have transferred program income to the grantee.) The amount of program income derived from this calculation shall be used for reporting purposes and in determining limitations on planning and administration and public services activities to be paid for with ICDBG funds. 
</P>
<P>(4) Program income does not include any income received in a single year by the grantee and all its subrecipients if the total amount of such income does not exceed $25,000. 
</P>
<P>(5) Examples of other receipts that are not considered program income are proceeds from fundraising activities carried out by subrecipients receiving ICDBG assistance; funds collected through special assessments used to recover the non-ICDBG portion of a public improvement; and proceeds from the disposition of real property acquired or improved with ICDBG funds when the disposition occurs after the applicable time period specified in § 1003.502(b)(8) for subrecipient-controlled property, or in § 1003.504 for grantee-controlled property. 
</P>
<P>(6) For purposes of determining the applicability of the program income requirements included in this part and in 2 CFR 200.307, the grant period is the time between the effective date of the grant agreement and the close-out of the grant pursuant to the requirements of § 1003.508. 
</P>
<P>(7) As provided for in 2 CFR 200.307(e)(2), program income received will be added to the funds committed to the grant agreement and shall be used for purposes and under the conditions of the grant agreement. 
</P>
<P>(8) Recording program income. The receipt and expenditure of program income as defined in § 1003.503(b) shall be recorded as part of the financial transactions of the grant program.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0191)
</APPRO>
<CITA TYPE="N">[62 FR 12349, Mar. 12, 1998, as amended at 80 FR 75945, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 1003.504" NODE="24:4.1.3.1.26.6.41.5" TYPE="SECTION">
<HEAD>§ 1003.504   Use of real property.</HEAD>
<P>The standards described in this section apply to real property within the grantee's control which was acquired or improved in whole or in part using ICDBG funds in excess of $25,000. These standards shall apply from the date ICDBG funds are first spent for the property until five years after the closeout of the grant from which the assistance to the property was provided.
</P>
<P>(a) A grantee may not change the use or planned use of any such property (including the beneficiaries of such use) from that for which the acquisition or improvement was made unless the grantee provides affected citizens with reasonable notice of, and opportunity to comment on, any proposed change, and either:
</P>
<P>(1) The new use of such property qualifies as meeting the primary objective set forth in § 1003.208 and is not a building for the general conduct of government; or
</P>
<P>(2) The requirements in paragraph (b) of this section are met.
</P>
<P>(b) If the grantee determines, after consultation with affected citizens, that it is appropriate to change the use of the property to a use which does not qualify under paragraph (a)(1) of this section, it may retain or dispose of the property for the changed use if the grantee's ICDBG program is reimbursed in the amount of the current fair market value of the property, less any portion of the value attributable to expenditures of non-ICDBG funds for acquisition of, and improvements to, the property.
</P>
<P>(c) If the change of use occurs after program closeout, the proceeds from the disposition of the real property shall be used for activities which meet the eligibility requirements set forth in subpart C of this part and the primary objective set forth in § 1003.208.
</P>
<P>(d) Following the reimbursement of the ICDBG program in accordance with paragraph (b) of this section, the property no longer will be subject to any ICDBG requirements.


</P>
</DIV8>


<DIV8 N="§ 1003.505" NODE="24:4.1.3.1.26.6.41.6" TYPE="SECTION">
<HEAD>§ 1003.505   Records to be maintained.</HEAD>
<P>Each grantee shall establish and maintain sufficient records to enable the Secretary to determine whether the grantee has met the requirements of this part. This includes establishing and maintaining records demonstrating that the recipient has made the determinations required as a condition of eligibility of certain activities, including as prescribed in § 1003.209.
</P>
<CITA TYPE="N">[74 FR 1869, Jan. 13, 2009]


</CITA>
</DIV8>


<DIV8 N="§ 1003.506" NODE="24:4.1.3.1.26.6.41.7" TYPE="SECTION">
<HEAD>§ 1003.506   Reports.</HEAD>
<P>(a) <I>Status and evaluation report.</I> Grantees shall submit a status and evaluation report on previously funded open grants 45 days after the end of the Federal fiscal year and at the time of grant close-out. The report shall be in a narrative form addressing these areas.
</P>
<P>(1) <I>Progress.</I> The progress made in completing approved activities should be described. This description should include a listing of work remaining together with a revised implementation schedule, if necessary.
</P>
<P>(2) <I>Expenditure of funds.</I> A breakdown of funds spent on each major project activity or category should be provided.
</P>
<P>(3) <I>Program performance.</I> Data on program outputs and outcomes, in a form prescribed by HUD.
</P>
<P>(4) <I>Grantee assessment.</I> If the project has been completed, an evaluation of the effectiveness of the project in meeting the community development needs of the grantee should be provided.
</P>
<P>(b) <I>Minority business enterprise reports.</I> Grantees shall submit to HUD, by October 10, a report on contract and subcontract activity during the fiscal year.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0191)
</APPRO>
<CITA TYPE="N">[61 FR 40090, July 31, 1996. Redesignated at 62 FR 12349, Mar. 12, 1998, as amended at 75 FR 20271, Apr. 19, 2010]


</CITA>
</DIV8>


<DIV8 N="§ 1003.507" NODE="24:4.1.3.1.26.6.41.8" TYPE="SECTION">
<HEAD>§ 1003.507   Public access to program records.</HEAD>
<P>Notwithstanding the provisions of 2 CFR 200.337, grantees shall provide citizens with reasonable access to records regarding the past use of ICDBG funds, consistent with applicable State and tribal laws regarding privacy and obligations of confidentiality.
</P>
<CITA TYPE="N">[62 FR 12349, Mar. 12, 1998, as amended at 80 FR 75945, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 1003.508" NODE="24:4.1.3.1.26.6.41.9" TYPE="SECTION">
<HEAD>§ 1003.508   Grant closeout procedures.</HEAD>
<P>(a) <I>Criteria for closeout.</I> A grant will be closed out when the Area ONAP determines, in consultation with the grantee, that the following criteria have been met:
</P>
<P>(1) All costs to be paid with ICDBG funds have been incurred, with the exception of closeout costs (e.g., audit costs) and costs resulting from contingent liabilities described in the closeout agreement pursuant to paragraph (c) of this section. Contingent liabilities include, but are not limited to, third-party claims against the grantee, as well as related administrative costs.
</P>
<P>(2) With respect to activities which are financed by means of escrow accounts, loan guarantees, or similar mechanisms, the work to be assisted with ICDBG funds has actually been completed.
</P>
<P>(3) Other responsibilities of the grantee under the grant agreement and applicable laws and regulations appear to have been carried out satisfactorily or there is no further Federal interest in keeping the grant agreement open for the purpose of securing performance.
</P>
<P>(b) <I>Closeout actions.</I> (1) Within 90 days of the date it is determined that the criteria for closeout have been met, the grantee shall submit to the Area ONAP a copy of the final status and evaluation report described in § 1003.506(a) and a completed Financial Status Report (SF-269). If acceptable reports are not submitted, an audit of the grantee's program activities may be conducted by HUD. 
</P>
<P>(2) Based on the information provided in the status report and other relevant information, the grantee, in consultation with the Area ONAP, will prepare a closeout agreement in accordance with paragraph (c) of this section. 
</P>
<P>(3) The Area ONAP will cancel any unused portion of the awarded grant, as shown in the signed grant closeout agreement. Any unused grant funds disbursed from the U.S. Treasury which are in the possession of the grantee shall be refunded to HUD. 
</P>
<P>(4) Any costs paid with ICDBG funds which were not audited previously shall be subject to coverage in the grantee's next single audit performed in accordance with 2 CFR part 200, subpart F. The grantee may be required to repay HUD any disallowed costs based on the results of the audit, or on additional HUD reviews provided for in the closeout agreement. 
</P>
<P>(c) <I>Closeout agreement.</I> Any obligations remaining as of the date of the closeout shall be covered by the terms of a closeout agreement. The agreement shall be prepared by the grantee in consultation with the Area ONAP. The agreement shall identify the grant being closed out, and include provisions with respect to the following: 
</P>
<P>(1) Identification of any closeout costs or contingent liabilities subject to payment with ICDBG funds after the closeout agreement is signed; 
</P>
<P>(2) Identification of any unused grant funds to be canceled by HUD; 
</P>
<P>(3) Identification of any program income on deposit in financial institutions at the time the closeout agreement is signed; 
</P>
<P>(4) Description of the grantee's responsibility after closeout for: 
</P>
<P>(i) Compliance with all program requirements, certifications and assurances in using program income on deposit at the time the closeout agreement is signed and in using any other remaining ICDBG funds available for closeout costs and contingent liabilities; 
</P>
<P>(ii) Use of real property assisted with ICDBG funds in accordance with the principles described in § 1003.504; and 
</P>
<P>(iii) Ensuring that flood insurance coverage for affected property owners is maintained for the mandatory period; 
</P>
<P>(5) Other provisions appropriate to any special circumstances of the grant closeout, in modification of or in addition to the obligations in paragraphs (c) (1) through (4) of this section. The agreement shall authorize monitoring by HUD, and shall provide that findings of noncompliance may be taken into account by HUD as unsatisfactory performance of the grantee in the consideration of any future grant award under this part. 
</P>
<P>(d) <I>Termination of grant for convenience.</I> Grant assistance provided under this part may be terminated for convenience in whole or in part before the completion of the assisted activities, in accordance with the provisions of 2 CFR 200.339. The grantee shall not incur new obligations for the terminated portions after the effective date, and shall cancel as many outstanding obligations as possible. HUD shall allow full credit to the grantee for those portions of obligations which could not be canceled and which had been properly incurred by the grantee in carrying out the activities before the termination. The closeout policies contained in this section shall apply in such cases, except where the approved grant is terminated in its entirety. Responsibility for the environmental review to be performed under 24 CFR part 50 or 24 CFR part 58, as applicable, shall be determined as part of the closeout process. 
</P>
<P>(e) <I>Termination for cause.</I> In cases in which HUD terminates the grantee's grant under the authority of subpart H of this part, or under the terms of the grant agreement, the closeout policies contained in this section shall apply, except where the approved grant is canceled in its entirety. The provisions in 2 CFR 200.342 on the effects of termination shall also apply. HUD shall determine whether an environmental review is required, and if so, HUD shall perform it in accordance with 24 CFR part 50. 
</P>
<CITA TYPE="N">[62 FR 12349, Mar. 12, 1998, as amended at 80 FR 75945, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 1003.509" NODE="24:4.1.3.1.26.6.41.10" TYPE="SECTION">
<HEAD>§ 1003.509   Force account construction.</HEAD>
<P>(a) The use of tribal work forces for construction or renovation activities performed as part of the activities funded under this part shall be approved by the Area ONAP before the start of project implementation. In reviewing requests for an approval of force account construction or renovation, the area ONAP may require that the grantee provide the following: 
</P>
<P>(1) Documentation to indicate that it has carried out or can carry out successfully a project of the size and scope of the proposal; 
</P>
<P>(2) Documentation to indicate that it has obtained or can obtain adequate supervision for the workers to be used; 
</P>
<P>(3) Information showing that the workers to be used are, or will be, listed on the tribal payroll and are employed directly by a unit, department or other governmental instrumentality of the tribe or village. 
</P>
<P>(b) Any and all excess funds derived from the force account construction or renovation activities shall accrue to the grantee and shall be reprogrammed for other activities eligible under this part in accordance with § 1003.305 or returned to HUD promptly. 
</P>
<P>(c) Insurance coverage for force account workers and activities shall, where applicable, include worker's compensation, public liability, property damage, builder's risk, and vehicular liability. 
</P>
<P>(d) The grantee shall specify and apply reasonable labor performance, construction, or renovation standards to work performed under the force account. 
</P>
<P>(e) The contracting and procurement standards set forth in 2 CFR part 200, subpart D, apply to material, equipment, and supply procurement from outside vendors under this section. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0191)
</APPRO>
<CITA TYPE="N">[62 FR 12349, Mar. 12, 1998, as amended at 80 FR 75945, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 1003.510" NODE="24:4.1.3.1.26.6.41.11" TYPE="SECTION">
<HEAD>§ 1003.510   Indian preference requirements.</HEAD>
<P>(a) Applicability. HUD has determined that grants under this part are subject to Section 7(b) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b). Section 7(b) provides that any contract, subcontract, grant or subgrant pursuant to an act authorizing grants to Indian organizations or for the benefit of Indians shall require that, to the greatest extent feasible: 
</P>
<P>(1) Preference and opportunities for training and employment shall be given to Indians; and 
</P>
<P>(2) Preference in the award of contracts and subcontracts shall be given to Indian organizations and Indian-owned economic enterprises as defined in section 3 of the Indian Financing Act of 1974 (25 U.S.C. 1452). 
</P>
<P>(b) <I>Definitions.</I> (1) The Indian Self-Determination and Education Assistance Act [25 U.S.C. 450b] defines “Indian” to mean a person who is a member of an Indian tribe and defines “Indian tribe” to mean any Indian tribe, band, nation, or other organized group or community including any Alaska native village or regional or village corporation as defined or established pursuant to the Alaska Native Claims Settlement Act, which is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians. 
</P>
<P>(2) In section 3 of the Indian Financing Act of 1974 (25 U.S.C. 1452) <I>economic enterprise</I> is defined as any Indian—owned commercial, industrial, or business activity established or organized for the purpose of profit, except that Indian ownership must constitute not less than 51 percent of the enterprise. This act defines <I>Indian organization</I> to mean the governing body of any Indian tribe or entity established or recognized by such governing body. 
</P>
<P>(c) <I>Preference in administration of grant.</I> To the greatest extent feasible, preference and opportunities for training and employment in connection with the administration of grants awarded under this part shall be given to Indians. 
</P>
<P>(d) <I>Preference in contracting.</I> To the greatest extent feasible, grantees shall give preference in the award of contracts for projects funded under this part to Indian organizations and Indian-owned economic enterprises. 
</P>
<P>(1) Each grantee shall: 
</P>
<P>(i) Advertise for bids or proposals limited to qualified Indian organizations and Indian-owned enterprises; or 
</P>
<P>(ii) Use a two-stage preference procedure, as follows: 
</P>
<P>(A) <I>Stage 1.</I> Invite or otherwise solicit Indian-owned economic enterprises to submit a statement of intent to respond to a bid announcement or request for proposals limited to Indian-owned firms. 
</P>
<P>(B) <I>Stage 2.</I> If responses are received from more than one Indian enterprise found to be qualified, advertise for bids or proposals limited to Indian organizations and Indian-owned economic enterprises; or 
</P>
<P>(iii) Develop, subject to Area ONAP one-time approval, the grantee's own method of providing preference. 
</P>
<P>(2) If the grantee selects a method of providing preference that results in fewer than two responsible qualified organizations or enterprises submitting a statement of intent, a bid or a proposal to perform the contract at a reasonable cost, then the grantee shall: 
</P>
<P>(i) Re-advertise the contract, using any of the methods described in paragraph (d)(1) of this section; or 
</P>
<P>(ii) Re-advertise the contract without limiting the advertisement for bids or proposals to Indian organizations and Indian-owned economic enterprises; or 
</P>
<P>(iii) If one approvable bid or proposal is received, request Area ONAP review and approval of the proposed contract and related procurement documents, in accordance with 2 CFR 200.320, in order to award the contract to the single bidder or offeror. 
</P>
<P>(3) Procurements that are within the dollar limitations established for small purchases under 2 CFR 200.320 need not follow the formal bid or proposal procedures of paragraph (d) of this section, since these procurements are governed by the small purchase procedures of2 CFR 200.320. However, a grantee's small purchase procurement shall, to the greatest extent feasible, provide Indian preference in the award of contracts. 
</P>
<P>(4) All preferences shall be publicly announced in the advertisement and bidding or proposal solicitation documents and the bidding and proposal documents. 
</P>
<P>(5) A grantee, at its discretion, may require information of prospective contractors seeking to qualify as Indian organizations or Indian-owned economic enterprises. Grantees may require prospective contractors to include the following information prior to submitting a bid or proposal, or at the time of submission: 
</P>
<P>(i) Evidence showing fully the extent of Indian ownership and interest; 
</P>
<P>(ii) Evidence of structure, management and financing affecting the Indian character of the enterprise, including major subcontracts and purchase agreements; materials or equipment supply arrangements; and management salary or profit-sharing arrangements; and evidence showing the effect of these on the extent of Indian ownership and interest; and 
</P>
<P>(iii) Evidence sufficient to demonstrate to the satisfaction of the grantee that the prospective contractor has the technical, administrative, and financial capability to perform contract work of the size and type involved. 
</P>
<P>(6) The grantee shall incorporate the following clause (referred to as the Section 7(b) clause) in each contract awarded in connection with a project funded under this part: 
</P>
<P>(i) The work to be performed under this contract is on a project subject to Section 7(b) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b) (Indian Act). Section 7(b) requires that to the greatest extent feasible: 
</P>
<P>(A) Preferences and opportunities for training and employment shall be given to Indians; and 
</P>
<P>(B) Preferences in the award of contracts and subcontracts shall be given to Indian organizations and Indian-owned economic enterprises. 
</P>
<P>(ii) The parties to this contract shall comply with the provisions of Section 7(b) of the Indian Act. 
</P>
<P>(iii) In connection with this contract, the contractor shall, to the greatest extent feasible, give preference in the award of any subcontracts to Indian organizations and Indian-owned economic enterprises, and preferences and opportunities for training and employment to Indians. 
</P>
<P>(iv) The contractor shall include this Section 7(b) clause in every subcontract in connection with the project, and shall, at the direction of the grantee, take appropriate action pursuant to the subcontract upon a finding by the grantee or HUD that the subcontractor has violated the Section 7(b) clause of the Indian Act. 
</P>
<P>(e) <I>Complaint procedures.</I> The following complaint procedures are applicable to complaints arising out of any of the methods of providing for Indian preference contained in this part, including alternate methods enacted and approved in a manner described in this section: 
</P>
<P>(1) Each complaint shall be in writing, signed, and filed with the grantee. 
</P>
<P>(2) A complaint must be filed with the grantee no later than 20 calendar days from the date of the action (or omission) upon which the complaint is based. 
</P>
<P>(3) Upon receipt of a complaint, the grantee shall promptly stamp the date and time of receipt upon the complaint, and immediately acknowledge its receipt. 
</P>
<P>(4) Within 20 calendar days of receipt of a complaint, the grantee shall either meet, or communicate by mail or telephone, with the complainant in an effort to resolve the matter. The grantee shall make a determination on a complaint and notify the complainant, in writing, within 30 calendar days of the submittal of the complaint to the grantee. The decision of the grantee shall constitute final administrative action on the complaint.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0191)
</APPRO>
<CITA TYPE="N">[62 FR 12349, Mar. 12, 1998, as amended at 80 FR 75945, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 1003.511" NODE="24:4.1.3.1.26.6.41.12" TYPE="SECTION">
<HEAD>§ 1003.511   Use of escrow accounts for rehabilitation of privately owned residential property.</HEAD>
<P>(a) <I>Limitations.</I> A grantee may withdraw funds from its line of credit for immediate deposit into an escrow account for use in funding loans and grants for the rehabilitation of privately owned residential property under § 1003.202(a)(1). The following additional limitations apply to the use of escrow accounts for residential rehabilitation loans and grants closed after September 7, 1990: 
</P>
<P>(1) The use of escrow accounts under this section is limited to loans and grants for the rehabilitation of primarily residential properties containing no more than four dwelling units (and accessory neighborhood-scale non-residential space within the same structure, if any, e.g., a store front below a dwelling unit). 
</P>
<P>(2) An escrow account shall not be used unless the contract between the property owner and the contractor selected to do the rehabilitation work specifically provides that payment to the contractor shall be made through an escrow account maintained by the grantee, by a subrecipient as defined in § 1003.4, by a public agency designated under § 1003.500(a), or by an agent under a procurement contact governed by the requirements of 2 CFR part 200, subpart D. No deposit to the escrow account shall be made until after the contract has been executed between the property owner and the rehabilitation contractor. 
</P>
<P>(3) All funds withdrawn under this section shall be deposited into one interest earning account with a financial institution. Separate bank accounts shall not be established for individual loans and grants. 
</P>
<P>(4) The amount of funds deposited into an escrow account shall be limited to the amount expected to be disbursed within 10 working days from the date of deposit. If the escrow account, for whatever reason, at any time contains funds exceeding 10 days cash needs, the grantee immediately shall transfer the excess funds to its program account. In the program account, the excess funds shall be treated as funds erroneously drawn in accordance with the requirements of U.S. Treasury Financial Manual, paragraph 6-2075.30. 
</P>
<P>(5) Funds deposited into an escrow account shall be used only to pay the actual costs of rehabilitation incurred by the owner under the contract with a private contractor. Other eligible costs related to the rehabilitation loan or grant, e.g., the grantee's administrative costs under § 1003.206 or rehabilitation services costs under § 1003.202(b)(9), are not permissible uses of escrowed funds. Such other eligible rehabilitation costs shall be paid under normal ICDBG payment procedures (e.g., from withdrawals of grant funds under the grantee's line of credit with the Treasury). 
</P>
<P>(b) <I>Interest.</I> Interest earned on escrow accounts established in accordance with this section, less any service charges for the account, shall be remitted to HUD at least quarterly but not more frequently than monthly. Interest earned on escrow accounts is not required to be remitted to HUD to the extent the interest is attributable to the investment of program income. 
</P>
<P>(c) <I>Remedies for noncompliance.</I> If HUD determines that a grantee has failed to use an escrow account in accordance with this section, HUD may, in addition to imposing any other sanctions provided for under this part, require the grantee to discontinue the use of escrow accounts, in whole or in part. 
</P>
<CITA TYPE="N">[62 FR 12349, Mar. 12, 1998, as amended at 80 FR 75945, Dec. 7, 2015]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:4.1.3.1.26.7" TYPE="SUBPART">
<HEAD>Subpart G—Other Program Requirements</HEAD>


<DIV8 N="§ 1003.600" NODE="24:4.1.3.1.26.7.41.1" TYPE="SECTION">
<HEAD>§ 1003.600   Equal participation of faith-based organizations.</HEAD>
<P>The HUD program requirements in § 5.109 of this title apply to the ICDBG program, including the requirements regarding disposition and change in use of real property by a faith-based organization.
</P>
<CITA TYPE="N">[81 FR 19418, Apr. 4, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 1003.601" NODE="24:4.1.3.1.26.7.41.2" TYPE="SECTION">
<HEAD>§ 1003.601   Nondiscrimination.</HEAD>
<P>(a) Under the authority of section 107(e)(2) of the Act, the Secretary waives the requirement that grantees comply with section 109 of the Act except with respect to the prohibition of discrimination based on age, sex, religion, or against an otherwise qualified disabled individual. 
</P>
<P>(b) A grantee shall comply with the provisions of title II of Pub. L. 90-284 (24 U.S.C. 1301—the Indian Civil Rights Act) in the administration of a program or activity funded in whole or in part with funds made available under this part. For purposes of this section, “program or activity” is defined as any function conducted by an identifiable administrative unit of the grantee; and “funded in whole or in part with funds made available under this part” means that ICDBG funds in any amount have been transferred by the grantee to an identifiable administrative unit and disbursed in a program or activity.
</P>
<P>(c) A grantee shall comply with the equal access to HUD-assisted or -insured housing requirements in 24 CFR 5.105(a)(2).
</P>
<CITA TYPE="N">[61 FR 40090, July 31, 1996, as amended at 81 FR 80993, Nov. 17, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 1003.602" NODE="24:4.1.3.1.26.7.41.3" TYPE="SECTION">
<HEAD>§ 1003.602   Relocation and real property acquisition.</HEAD>
<P>(a) <I>Minimize displacement.</I> Consistent with the other goals and objectives of this part, grantees shall assure that they have taken all reasonable steps to minimize the displacement of persons (households, businesses, nonprofit organizations, and farms) as a result of a project assisted under this part. 
</P>
<P>(b) <I>Temporary relocation.</I> The following policies cover residential tenants who will not be required to move permanently but who must relocate temporarily for the project. Such tenants must be provided: 
</P>
<P>(1) Reimbursement for all reasonable out-of-pocket expenses incurred in connection with the temporary relocation, including the cost of moving to and from the temporarily occupied housing and any increase in monthly housing costs (e.g., rent/utility costs). 
</P>
<P>(2) Appropriate advisory services, including reasonable advance written notice of: 
</P>
<P>(i) The date and approximate duration of the temporary relocation; 
</P>
<P>(ii) The location of the suitable, decent, safe and sanitary dwelling to be made available for the temporary period; 
</P>
<P>(iii) The terms and conditions under which the tenant may occupy a suitable, decent, safe, and sanitary dwelling in the building/complex following completion of the repairs; and 
</P>
<P>(iv) The provisions of paragraph (b)(1) of this section. 
</P>
<P>(c) <I>Relocation assistance for displaced persons.</I> A displaced person (defined in paragraph (g) of this section) must be provided relocation assistance at the levels described in, and in accordance with the requirements of, the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (URA)(42 U.S.C. 4601-4655) and implementing regulations at 49 CFR part 24. 
</P>
<P>(d) <I>Optional relocation assistance.</I> Under section 105(a)(11) of the Act, the grantee may provide relocation payments and other relocation assistance to persons displaced by a project that is not subject to paragraph (c) of this section. The grantee may also provide relocation assistance to persons receiving assistance under paragraph (c) of this section at levels in excess of those required. For assistance that is not required by State or tribal law, the grantee shall adopt a written policy available to the public that describes the relocation assistance that it has elected to furnish and provides for equal relocation assistance within each class of displaced persons. 
</P>
<P>(e) <I>Real Property acquisition requirements.</I> The acquisition of real property for an assisted activity is subject to 49 CFR part 24, subpart B. Whenever the grantee does not have the authority to acquire the real property through condemnation, it shall: 
</P>
<P>(1) Before discussing the purchase price, inform the owner: 
</P>
<P>(i) Of the amount it believes to be the fair market value of the property. Such amount shall be based upon one or more appraisals prepared by a qualified appraiser. However, this provision does not prevent the grantee from accepting a donation or purchasing the real property at less than its fair market value. 
</P>
<P>(ii) That it will be unable to acquire the property if negotiations fail to result in an amicable agreement. 
</P>
<P>(2) Request HUD approval of the proposed acquisition price before executing a firm commitment to purchase the property. The grantee shall include with its request a copy of the appraisal(s) and, when applicable, a justification for any proposed acquisition payment that exceeds the fair market value of the property. HUD will promptly review the proposal and inform the grantee of its approval or disapproval. 
</P>
<P>(f) <I>Appeals.</I> A person who disagrees with the grantee's determination concerning whether the person qualifies as a “displaced person,” or the amount of relocation assistance for which the person is eligible, may file a written appeal of that determination with the grantee. A person who is dissatisfied with the grantee's determination on his or her appeal may submit a written request for review of that determination to the HUD Area ONAP. 
</P>
<P>(g) <I>Responsibility of grantee.</I> (1) The grantee shall certify that it will comply with the URA, the regulations at 49 CFR part 24, and the requirements of this section, <I>i.e.,</I> provide assurance of compliance as required by 49 CFR part 24. The grantee shall ensure such compliance notwithstanding any third party's contractual obligation to the grantee to comply with these provisions. 
</P>
<P>(2) The cost of required relocation assistance is an eligible project cost in the same manner and to the same extent as other project costs. However, such assistance may also be paid for with funds available to the grantee from any other source. 
</P>
<P>(3) The grantee shall maintain records in sufficient detail to demonstrate compliance with this section. 
</P>
<P>(h) <I>Definition of displaced person.</I> (1) For purposes of this section, the term <I>displaced person</I> means any person (household, business, nonprofit organization, or farm) that moves from real property, or moves his or her personal property from real property, permanently, as a direct result of rehabilitation, demolition, or acquisition for a project assisted under this part. The term “displaced person” includes, but is not limited to: 
</P>
<P>(i) A tenant-occupant of a dwelling unit who moves from the building/complex permanently after the submission to HUD of an application for financial assistance that is later approved. 
</P>
<P>(ii) Any person, including a person who moves before the date described in paragraph (h)(1)(i) of this section, that either HUD or the grantee determines was displaced as a direct result of acquisition, rehabilitation, or demolition for the assisted project. 
</P>
<P>(iii) A tenant-occupant of a dwelling who moves from the building/complex permanently, after the execution of the agreement between the grantee and HUD, if the move occurs before the tenant is provided written notice offering him or her the opportunity to lease and occupy a suitable, decent, safe and sanitary dwelling in the same building/complex, under reasonable terms and conditions, upon completion of the project. Such reasonable terms and conditions include a monthly rent and estimated average monthly utility costs that do not exceed the greater of: 
</P>
<P>(A) The tenant's monthly rent and estimated average monthly utility costs before the agreement; or 
</P>
<P>(B) 30 percent of gross household income. 
</P>
<P>(iv) A tenant-occupant of a dwelling who is required to relocate temporarily, but does not return to the building/complex, if either: 
</P>
<P>(A) The tenant is not offered payment for all reasonable out-of-pocket expenses incurred in connection with the temporary relocation, including the cost of moving to and from the temporarily occupied unit, any increased housing costs and incidental expenses; or 
</P>
<P>(B) Other conditions of the temporary relocation are not reasonable. 
</P>
<P>(v) A tenant-occupant of a dwelling who moves from the building/complex after he or she has been required to move to another dwelling unit in the same building/complex in order to carry out the project, if either: 
</P>
<P>(A) The tenant is not offered reimbursement for all reasonable out-of-pocket expenses incurred in connection with the move; or 
</P>
<P>(B) Other conditions of the move are not reasonable. 
</P>
<P>(2) Notwithstanding the provisions of paragraph (h)(1) of this section, a person does not qualify as a “displaced person” (and is not eligible for relocation assistance under the URA or this section), if: 
</P>
<P>(i) The person moved into the property after the submission of the application for financial assistance to HUD, but, before signing a lease or commencing occupancy, was provided written notice of the project, its possible impact on the person (e.g., the person may be displaced, temporarily relocated or suffer a rent increase) and the fact that the person would not qualify as a “displaced person” or for any assistance provided under this section as a result of the project; 
</P>
<P>(ii) The person is ineligible under 49 CFR 24.2(g)(2). 
</P>
<P>(iii) The grantee determines the person is not displaced as a direct result of acquisition, rehabilitation, or demolition for an assisted project. To exclude a person on this basis, HUD must concur in that determination. 
</P>
<P>(3) A grantee may at any time ask HUD to determine whether a specific displacement is or would be covered under this section. 
</P>
<P>(i) <I>Definition of initiation of negotiations.</I> For purposes of determining the formula for computing the replacement housing assistance to be provided to a person displaced as a direct result of rehabilitation or demolition of the real property, the term “initiation of negotiations” means the execution of the agreement covering the rehabilitation or demolition.
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0191)


</APPRO>
</DIV8>


<DIV8 N="§ 1003.603" NODE="24:4.1.3.1.26.7.41.4" TYPE="SECTION">
<HEAD>§ 1003.603   Labor standards.</HEAD>
<P>In accordance with the authority under section 107(e)(2) of the Act, the Secretary waives the provisions of section 110 of the Act (Labor Standards) with respect to this part, including the requirement that laborers and mechanics employed by the contractor or subcontractor in the performance of construction work financed in whole or in part with assistance received under this part be paid wages at rates not less than those prevailing on similar construction in the locality, as determined by the Secretary of Labor in accordance with the Davis-Bacon Act (40 U.S.C. 276 a to a-7). 


</P>
</DIV8>


<DIV8 N="§ 1003.604" NODE="24:4.1.3.1.26.7.41.5" TYPE="SECTION">
<HEAD>§ 1003.604   Citizen participation.</HEAD>
<P>(a) In order to permit residents of Indian tribes and Alaska native villages to examine and appraise the applicant's application for funds under this part, the applicant shall follow traditional means of resident involvement which, at the least, include the following: 
</P>
<P>(1) Furnishing residents with information concerning the amounts of funds available for proposed community development and housing activities and the range of activities that may be undertaken. 
</P>
<P>(2) Holding one or more meetings to obtain the views of residents on community development and housing needs. Meetings shall be scheduled in ways and at times that will allow participation by residents. 
</P>
<P>(3) Developing and publishing or posting a community development statement in such a manner as to afford affected residents an opportunity to examine its contents and to submit comments. 
</P>
<P>(4) Affording residents an opportunity to review and comment on the applicant's performance under any active community development block grant. 
</P>
<P>(b) Prior to submission of the application to HUD, the applicant shall certify by an official Tribal resolution that it has met the requirements of paragraph (a) of this section; and 
</P>
<P>(1) Considered any comments and views expressed by residents and, if it deems it appropriate, modified the application accordingly; and 
</P>
<P>(2) Made the modified application available to residents. 
</P>
<P>(c) No part of the requirement under paragraph (a) of this section shall be construed to restrict the responsibility and authority of the applicant for the development of the application and the execution of the grant. Accordingly, the citizen participation requirements of this section do not include concurrence by any person or group in making final determinations on the contents of the application. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0191)


</APPRO>
</DIV8>


<DIV8 N="§ 1003.605" NODE="24:4.1.3.1.26.7.41.6" TYPE="SECTION">
<HEAD>§ 1003.605   Environment.</HEAD>
<P>(a) In order to assure that the policies of the National Environmental Policy Act of 1969 and other provisions of Federal law which further the purposes of that act (as specified in 24 CFR 58.5) are most effectively implemented in connection with the expenditure of ICDBG funds, the grantee shall comply with the Environment Review Procedures for Entities Assuming HUD Environmental Responsibilities (24 CFR part 58). Upon completion of an environmental review, the grantee shall submit a certification and request for release of funds for particular projects in accordance with 24 CFR part 58. The grantee shall also be responsible for compliance with flood insurance, coastal barrier resource and airport clear zone requirements under 24 CFR 58.6. 
</P>
<P>(b) In accordance with 24 CFR 58.34(a)(8), grants for imminent threats to health or safety approved under the provisions of subpart E of this part are exempt from some or all of the environmental review requirements of 24 CFR part 58, to the extent provided in that section. 


</P>
</DIV8>


<DIV8 N="§ 1003.606" NODE="24:4.1.3.1.26.7.41.7" TYPE="SECTION">
<HEAD>§ 1003.606   Conflict of interest.</HEAD>
<P>(a) <I>Applicability.</I> (1) In the procurement of supplies, equipment, construction, and services by grantees and subgrantees, the conflict of interest provisions in 2 CFR 200.112, 200.318(c), and 200.319(a)(5) shall apply. 
</P>
<P>(2) In all cases not governed by 2 CFR 200.318, the provisions of this section shall apply. Such cases include the provision of assistance by the grantee or by its subrecipients to businesses, individuals, and other private entities under eligible activities that authorize such assistance (e.g., rehabilitation, preservation, and other improvements of private properties or facilities under § 1003.202; or grants, loans, and other assistance to businesses, individuals, and other private entities under § 1003.203 or § 1003.204.). 
</P>
<P>(b) <I>Conflicts prohibited.</I> Except for the use of ICDBG funds to pay salaries and other related administrative or personnel costs, the general rule is that no persons described in paragraph (c) of this section who exercise or have exercised any functions or responsibilities with respect to ICDBG activities assisted under this part or who are in a position to participate in a decision-making process or gain inside information with regard to such activities, may obtain a personal or financial interest or benefit from an ICDBG assisted activity, or have an interest in any contract, subcontract or agreement with respect thereto, or the proceeds thereunder, either for themselves or those with whom they have family or business ties, during their tenure or for one year thereafter. 
</P>
<P>(c) <I>Persons covered.</I> The conflict of interest provisions of paragraph (b) of this section apply to any person who is an employee, agent, consultant, officer, or elected or appointed official of the grantee, or of any designated public agencies, or CBDOs under § 1003.204, receiving funds under this part. 
</P>
<P>(d) <I>Exceptions requiring HUD approval</I>—(1) <I>Threshold requirements.</I> Upon the written request of a grantee, HUD may grant an exception to the provisions of paragraph (b) of this section on a case-by-case basis, when it determines that such an exception will serve to further the purposes of the Act and the effective and efficient administration of the grantee's program or project. An exception may be considered only after the grantee has provided the following: 
</P>
<P>(i) A disclosure of the nature of the possible conflict, accompanied by an assurance that there has been public disclosure of the conflict and a description of how the public disclosure was made; and 
</P>
<P>(ii) An opinion of the grantee's attorney that the interest for which the exception is sought would not violate Tribal laws on conflict of interest, or applicable State laws. 
</P>
<P>(2) <I>Factors to be considered for exceptions:</I> In determining whether to grant a requested exception after the grantee has satisfactorily met the requirements of paragraph (d)(1) of this section, HUD shall consider the cumulative effect of the following factors, where applicable: 
</P>
<P>(i) Whether the exception would provide a significant cost benefit or essential expert knowledge to the program or project which would otherwise not be available; 
</P>
<P>(ii) Whether an opportunity was provided for open competitive bidding or negotiation; 
</P>
<P>(iii) Whether the affected person has withdrawn from his or her functions or responsibilities, or from the decision-making process, with reference to the specific assisted activity in question; 
</P>
<P>(iv) Whether the interest or benefit was present before the affected person was in a position as described in paragraph (b) of this section; 
</P>
<P>(v) Whether undue hardship will result, either to the grantee or to the person affected, when weighed against the public interest served by avoiding the prohibited conflict; 
</P>
<P>(vi) Any other relevant considerations. 
</P>
<P>(e) <I>Circumstances under which the conflict prohibition does not apply.</I> (1) In instances where a person who might otherwise be deemed to be included under the conflict prohibition is a member of a group or class of beneficiaries of the assisted activity and receives generally the same interest or benefits as are being made available or provided to the group or class, the prohibition does not apply, except that if, by not applying the prohibition against conflict of interest, a violation of Tribal or State laws on conflict of interest would result, the prohibition does apply. However, if the assistance to be provided is housing rehabilitation (or repair) or new housing, a public disclosure of the nature of the assistance to be provided and the specific basis for the selection of the proposed beneficiaries must be made prior to the submission of an application to HUD. Evidence of this disclosure must be provided as a component of the application. 
</P>
<P>(f) <I>Record retention.</I> All records pertaining to the grantee's decision under this section shall be maintained for HUD review upon request. 
</P>
<APPRO TYPE="N">(Approved by the Office of Management and Budget under control number 2577-0191)
</APPRO>
<CITA TYPE="N">[62 FR 12349, Mar. 12, 1998, as amended at 80 FR 75945, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 1003.607" NODE="24:4.1.3.1.26.7.41.8" TYPE="SECTION">
<HEAD>§ 1003.607   Lead-based paint.</HEAD>
<P>The requirements of the Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and implementing regulations part 35, subparts A, B, J, K, and R of this title apply to activities conducted under this program.
</P>
<CITA TYPE="N">[64 FR 50230, Sept. 15, 1999]


</CITA>
</DIV8>


<DIV8 N="§ 1003.608" NODE="24:4.1.3.1.26.7.41.9" TYPE="SECTION">
<HEAD>§ 1003.608   Debarment and suspension.</HEAD>
<P>The requirements in 2 CFR part 2424 are applicable. ICDBG funds cannot be provided to excluded or disqualified persons.
</P>
<CITA TYPE="N">[72 FR 73497, Dec. 27, 2007]






</CITA>
</DIV8>


<DIV8 N="§ 1003.609" NODE="24:4.1.3.1.26.7.41.10" TYPE="SECTION">
<HEAD>§ 1003.609   Housing counseling.</HEAD>
<P>Housing counseling, as defined in 24 CFR 5.100, that is funded with or provided in connection with ICDBG funds must be carried out in accordance with 24 CFR 5.111. Housing counseling conducted in connection with the ICDBG program may only be conducted by individuals who are HUD-certified in accordance with 24 CFR part 214, subpart F.


</P>
<CITA TYPE="N">[89 FR 49808, June 12, 2024]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="H" NODE="24:4.1.3.1.26.8" TYPE="SUBPART">
<HEAD>Subpart H—Program Performance</HEAD>


<DIV8 N="§ 1003.700" NODE="24:4.1.3.1.26.8.41.1" TYPE="SECTION">
<HEAD>§ 1003.700   Review of grantee's performance.</HEAD>
<P>(a) <I>Objective.</I> HUD will review each grantee's performance to determine whether the grantee has: 
</P>
<P>(1) Complied with the requirements of the Act, this part, the grant agreement and other applicable laws and regulations; 
</P>
<P>(2) Carried out its activities substantially as described in its application; 
</P>
<P>(3) Made substantial progress in carrying out its approved program; 
</P>
<P>(4) A continuing capacity to carry out the approved activities in a timely manner; and 
</P>
<P>(5) The capacity to undertake additional activities funded under this part. 
</P>
<P>(b) <I>Basis for review.</I> In reviewing each grantee's performance, HUD will consider all available evidence which may include, but not be limited to, the following: 
</P>
<P>(1) The approved application and any amendments thereto; 
</P>
<P>(2) Reports prepared by the grantee; 
</P>
<P>(3) Records maintained by the grantee; 
</P>
<P>(4) Results of HUD's monitoring of the grantee's performance, including field evaluation of the quality of the work performed; 
</P>
<P>(5) Audit reports; 
</P>
<P>(6) Records of drawdowns on the line of credit; 
</P>
<P>(7) Records of comments and complaints by citizens and organizations; and 
</P>
<P>(8) Litigation. 


</P>
</DIV8>


<DIV8 N="§ 1003.701" NODE="24:4.1.3.1.26.8.41.2" TYPE="SECTION">
<HEAD>§ 1003.701   Corrective and remedial action.</HEAD>
<P>(a) <I>General.</I> One or more corrective or remedial actions will be taken by HUD when, on the basis of the performance review, HUD determines that the grantee has not:
</P>
<P>(1) Complied with the requirements of the Act, this part, and other applicable laws and regulations, including the environmental responsibilities assumed under section 104(g) of title I of the Act;
</P>
<P>(2) Carried out its activities substantially as described in its applications;
</P>
<P>(3) Made substantial progress in carrying out its approved program; or
</P>
<P>(4) Shown the continuing capacity to carry out its approved activities in a timely manner.
</P>
<P>(b) <I>Action.</I> The action taken by HUD will be designed, first, to prevent the continuance of the deficiency; second, to mitigate any adverse effects or consequences of the deficiency; and third, to prevent a recurrence of the same or similar deficiencies. The following actions may be taken singly or in combination, as appropriate for the circumstances:
</P>
<P>(1) Request the grantee to submit progress schedules for completing approved activities or for complying with the requirements of this part;
</P>
<P>(2) Issue a letter of warning advising the grantee of the deficiency (including environmental review deficiencies and housing assistance deficiencies), describing the corrective actions to be taken, establishing a date for corrective actions, and putting the grantee on notice that more serious actions will be taken if the deficiency is not corrected or is repeated;
</P>
<P>(3) Advise the grantee to suspend, discontinue, or not incur costs for the affected activity;
</P>
<P>(4) Advise the grantee to reprogram funds from affected activities to other eligible activities, provided that such action shall not be taken in connection with any substantial violation of part 58 and provided that such reprogramming is subjected to the environmental review procedures of part 58 of this title;
</P>
<P>(5) Advise the grantee to reimburse the grantee's program account or line of credit in any amount improperly expended;
</P>
<P>(6) Change the method of payment from a line of credit basis to a reimbursement basis; and/or
</P>
<P>(7) Suspend the line of credit until corrective actions are taken.


</P>
</DIV8>


<DIV8 N="§ 1003.702" NODE="24:4.1.3.1.26.8.41.3" TYPE="SECTION">
<HEAD>§ 1003.702   Reduction or withdrawal of grant.</HEAD>
<P>(a) <I>General.</I> A reduction or withdrawal of a grant under paragraph (b) of this section will not be made until at least one of the corrective or remedial actions specified in § 1003.701(b) has been taken and only then if the grantee has not made an appropriate and timely response. Before making such a grant reduction or withdrawal, the grantee also shall be notified and given an opportunity within a prescribed time for an informal consultation regarding the proposed action.
</P>
<P>(b) <I>Reduction or withdrawal.</I> When the Area ONAP determines, on the basis of a review of the grantee's performance, that the objectives set forth in § 1003.700(a)(2) or (3) have not been met, the Area ONAP may reduce or withdraw the grant, except that funds already expended on eligible approved activities shall not be recaptured.


</P>
</DIV8>


<DIV8 N="§ 1003.703" NODE="24:4.1.3.1.26.8.41.4" TYPE="SECTION">
<HEAD>§ 1003.703   Other remedies for noncompliance.</HEAD>
<P>(a) <I>Secretarial actions.</I> If the Secretary finds a grantee has failed to comply with any provision of this part even after corrective actions authorized under § 1003.701 have been applied, the following actions may be taken provided that reasonable notice and opportunity for hearing is made to the grantee. (The Administrative Procedure Act (5 U.S.C. 551 <I>et seq.</I>), where applicable, shall be a guide in any situation involving adjudications where the Secretary desires to take actions requiring reasonable notice and opportunity for a hearing):
</P>
<P>(1) Terminate the grant to the grantee;
</P>
<P>(2) Reduce the grant to the grantee by an amount equal to the amount which was not expended in accordance with this part; or 
</P>
<P>(3) Limit the availability of funds to projects or activities not affected by such failure to comply; provided, however, that the Secretary may on due notice revoke the grantee's line of credit in whole or in part at any time if the Secretary determines that such action is necessary to preclude the further expenditure of funds for activities affected by such failure to comply.
</P>
<P>(b) <I>Secretarial referral to the Attorney General.</I> If there is reason to believe that a grantee has failed to comply substantially with any provision of the Act, the Secretary may refer the matter to the Attorney General of the United States with a recommendation that an appropriate civil action be instituted. Upon such a referral, the Attorney General may bring a civil action in any United States district court having venue thereof for such relief as may be appropriate, including an action to recover the amount of the assistance furnished under this part which was not expended in accordance with this part or for mandatory or injunctive relief.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="1004" NODE="24:4.1.3.1.27" TYPE="PART">
<HEAD>PART 1004 [RESERVED]


</HEAD>
</DIV5>


<DIV5 N="1005" NODE="24:4.1.3.1.28" TYPE="PART">
<HEAD>PART 1005—LOAN GUARANTEES FOR INDIAN HOUSING












</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1715z-13a; 15 U.S.C. 1639c; 42 U.S.C. 3535(d).


</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>89 FR 20056, Mar. 20, 2024; 89 FR 22084, Mar. 29, 2024, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.3.1.28.1" TYPE="SUBPART">
<HEAD>Subpart A—General Program Requirements</HEAD>


<DIV8 N="§ 1005.101" NODE="24:4.1.3.1.28.1.56.1" TYPE="SECTION">
<HEAD>§ 1005.101   Purpose.</HEAD>
<P>This part implements the Section 184 Indian Housing Loan Guarantee Program (“Section 184 Program”) authorized under Section 184 of the Housing and Community Development Act of 1992, as amended, codified at 12 U.S.C. 1715z-13a. Section 184 authorizes the U.S. Department of Housing and Urban Development (HUD) to establish a loan guarantee program for American Indian and Alaskan Native families, Tribes, and tribally Designated Housing Entities (TDHE). The loans guaranteed under the Section 184 Program are used to construct, acquire, refinance, or rehabilitate one- to four-family standard housing located on Trust Land, land located in an Indian or Alaska Native area, and Section 184 Approved Program Area. These regulations apply to Lender Applicants, Holders, Direct and Non-Direct Guarantee Lenders, Servicers and Tribes seeking to or currently participating in the Section 184 Program.




</P>
</DIV8>


<DIV8 N="§ 1005.102" NODE="24:4.1.3.1.28.1.56.2" TYPE="SECTION">
<HEAD>§ 1005.102   Severability.</HEAD>
<P>Any provision of this part held to be invalid or unenforceable as applied to any action should be construed so as to continue to give the maximum effect to the provision permitted by law, unless such holding is that the provision of this part is invalid and unenforceable in all circumstances, in which event the provision should be severable from the remainder of this part and shall not affect the remainder thereof.




</P>
</DIV8>


<DIV8 N="§ 1005.103" NODE="24:4.1.3.1.28.1.56.3" TYPE="SECTION">
<HEAD>§ 1005.103   Definitions.</HEAD>
<P>The following definitions apply throughout this part:
</P>
<P><I>Acquisition Cost</I> means the sum of the sales price or construction cost for a property and the cost of allowable repairs or improvements for the same property, less any unallowable sales concession(s). For the purposes of this definition, the term “sales concession” means an inducement to purchase a property paid by the seller to consummate a sales transaction.
</P>
<P><I>Amortization</I> means the calculated schedule of repayment of a Section 184 Guaranteed Loan in full, through structured, regular payments of principal and interest within a certain time frame.
</P>
<P><I>Amortization Schedule</I> means the document generated at the time of loan approval outlining the Borrower's schedule of payments of principal and interest for the life of the loan and the unpaid principal balance with and without the financed Upfront Loan Guarantee Fee, where applicable.
</P>
<P><I>Annual Loan Guarantee Fee</I> means a fee calculated on an annual basis and paid in monthly installments by the Borrower, which is collected by the Servicer and remitted to HUD for the purposes of financing the Indian Housing Loan Guarantee Fund.
</P>
<P><I>BIA</I> means the United States Department of Interior, Bureau of Indian Affairs.
</P>
<P><I>Borrower</I> means every individual on the mortgage application. For the purposes of servicing the loan, Borrower refers to every original Borrower who signed the note and their heirs, executors, administrators, assigns, and approved substitute Borrowers. Borrowers include Tribes and TDHEs.
</P>
<P><I>Claim</I> means the Servicer's application to HUD for payment of benefits under the Loan Guarantee Certificate for a Section 184 Guaranteed Loan.
</P>
<P><I>Conflict of Interest</I> means any party to the transaction who has a direct or indirect personal business or financial relationship sufficient to appear that it may cause partiality or influence the transaction, or both.
</P>
<P><I>Date of Default</I> means the day after the Borrower's obligation to make a loan payment or perform an obligation under the terms of the loan.
</P>
<P><I>Day</I> means calendar day, except where the term “business day” is used.
</P>
<P><I>Default</I> means when the Borrower has failed to make a loan payment or perform an obligation under the terms of the Section 184 Guaranteed Loan.
</P>
<P><I>Direct Guarantee Lender</I> means a Lender approved by HUD under § 1005.21 to Originate, underwrite, close, service, purchase, hold, or sell Section 184 Guaranteed Loans.
</P>
<P><I>Eligible Nonprofit Organization</I> means a nonprofit organization established under Tribal law or organization of the type described in section 501(c)(3) of the Internal Revenue Code of 1986 as an organization exempt from taxation under section 501(a) of the Code, which has:
</P>
<P>(1) Two years' experience as a provider of low- or moderate-income housing;
</P>
<P>(2) A voluntary board; and
</P>
<P>(3) No part of its net earnings inuring to the benefit of any member, founder, contributor or individual.
</P>
<P><I>Financial Statements</I> means audited financial statements or other financial records as required by HUD.
</P>
<P><I>Firm Commitment</I> means a commitment by HUD to reserve funds, for a specified period of time, to guarantee a Loan under the Section 184 Program, when a Loan for a specific Borrower and property meets standards as set forth in subpart D of this part.
</P>
<P><I>First Legal Action</I> means the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process.
</P>
<P><I>Good and Marketable Title</I> means title that contains exceptions or restrictions, if any, which are permissible under subpart D of this part; and any objections to title that have been waived by HUD or otherwise cleared by HUD; and any discrepancies have been resolved to ensure the Section 184 Guaranteed Loan is in first lien position. In the case of Section 184 Guaranteed Loans on Trust Land, evidence of Good and Marketable Title must be reported in the Title Status Report issued by the BIA, or other HUD approved document issued by the Tribe, as prescribed by Section 184 Program Guidance and the document evidences the property interest rights.
</P>
<P><I>Holder</I> means an entity that is named on the Promissory Note and any successor or assigns for the Section 184 Guaranteed Loan and has the right and responsibilities to enforce the Section 184 requirements and the Holder's interests arising under the mortgage or deed of trust.
</P>
<P><I>Identity of Interest</I> means a sales transaction between family members, business partners, or other business affiliates.
</P>
<P><I>Indian</I> means a person who is recognized as being an Indian or Alaska Native by a federally recognized Indian Tribe, a regional or village corporation as defined in the Alaska Native Claims Settlement Act, or a State recognized Tribe eligible to receive assistance under Title I of the Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA).
</P>
<P><I>Indian Family</I> means one or more persons maintaining a household where at least one Borrower is an Indian.
</P>
<P><I>Indian Housing Loan Guarantee Fund</I> or <I>Fund</I> means a fund established at the U.S. Department of Treasury for the purpose of providing loan guarantees under the Section 184 Program.
</P>
<P><I>Lease or Leasehold Interest</I> means a written contract between a Borrower and a Tribe, entity, or individual, whereby the Borrower, as lessee, is granted a right of possession of Trust Land for a specific purpose and duration, according to applicable Tribal, Federal or State Law.
</P>
<P><I>Lender Applicant</I> means:
</P>
<P>(1) A financial institution engaging in mortgage lending that is eligible to participate in the Section 184 Program under § 1005.203 or § 1005.205;
</P>
<P>(2) The financial institution has applied or will apply to HUD for approval to participate in the Section 184 Program; and
</P>
<P>(3) Has not received approval from HUD.
</P>
<P><I>Loan</I> means a loan application or mortgage loan that has not received a Loan Guarantee Certificate.
</P>
<P><I>Loan Guarantee Certificate</I> means evidence of endorsement by HUD of a Loan for guarantee issued under § 1005.525.
</P>
<P><I>Loss Mitigation</I> means an alternative to foreclosure offered by the Holder that is made available through the Servicer to the Borrower.
</P>
<P><I>Non-Direct Guarantee Lender</I> means a Lender approved by HUD under § 1005.207 who has selected a level of program participation limited to Originating Section 184 Guaranteed Loans.
</P>
<P><I>Month</I> or <I>monthly</I> means thirty days in a month, regardless of the actual number of days.
</P>
<P><I>Origination, originate,</I> or <I>originating</I> means the process by which the Lender accepts a new loan application along with all required supporting documentation. Origination does not include underwriting the loan.
</P>
<P><I>Owner of Record</I> means, for fee simple properties, the owner of the property as shown on the records of the recorder in the county where the property is located. For Trust Land Properties, the current lessee or owner of property, as shown on the Title Status Report provided by the BIA or other HUD approved document issued by the Tribe, as prescribed by Section 184 Program Guidance and the document evidences the property interest rights.
</P>
<P><I>Partial Payment</I> means a Borrower payment of any amount less than the full amount due under the terms of the Section 184 Guaranteed Loan at the time the payment is tendered.
</P>
<P><I>Property</I> means one to four-family dwellings that meet the requirements for standard housing under § 1005.419 and located on Trust Land, land located in an Indian or Alaska Native area, or Section 184 Approved Program Area.
</P>
<P><I>Section 184 Guaranteed Loan</I> is a Loan that has received a Loan Guarantee Certificate.
</P>
<P><I>Section 184 Approved Program Area</I> means the Indian Housing Block Grant (IHBG) Formula Area as defined in 24 CFR 1000.302 or any other area approved by HUD, in which HUD may guarantee Loans.
</P>
<P><I>Section 184 Program Guidance</I> means administrative guidance documents that may be issued by HUD, including but not limited to <E T="04">Federal Register</E> documents, Dear Lender Letters, handbooks, guidebooks, manuals, and user guides.
</P>
<P><I>Security</I> means any collateral authorized under existing Tribal, Federal, or State law.
</P>
<P><I>Servicer</I> means a Direct Guarantee Lender that chooses to service Section 184 Guaranteed Loans or a Non-Direct Guarantee Lender or a financial institution approved by HUD under § 1005.705 to service Section 184 Guaranteed Loans.
</P>
<P><I>Sponsor</I> means an approved Direct Guarantee Lender that enters into a relationship with a Non-Direct Guarantee Lender or another Direct Guarantee Lender (Sponsored Entity), whereby the Sponsor provides underwriting, closing, purchasing, and holding of Section 184 Guaranteed Loans and may provide servicing.
</P>
<P><I>Sponsored Entity</I> means a Non-Direct Guarantee or Direct Guarantee Lender operating under an agreement with a Sponsor to Originate Section 184 Guaranteed Loans in accordance with § 1005.213.
</P>
<P><I>Tax-exempt Bond Financing</I> means financing which is funded in whole or in part by the proceeds of qualified mortgage bonds described in section 143 of the Internal Revenue Code of 1986, or any successor section, on which the interest is exempt from Federal income tax. The term does not include financing by qualified veterans' mortgage bonds as defined in section 143(b) of the Code.
</P>
<P><I>Title Status Report</I> is defined in 25 CFR 150.2, as may be amended.
</P>
<P><I>Tribe</I> means any Indian Tribe, band, nation, or other organized group or community of Indians, including any Alaska Native village or regional or village corporation as defined in or established pursuant to the Alaska Native Claims Settlement Act (43 U.S.C. 1601, <I>et seq.</I>), that is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians pursuant to the Indian Self Determination and Education Assistance Act of 1975.
</P>
<P><I>Tribally Designated Housing Entity (TDHE)</I> means any entity as defined in the Indian Housing Block Grant Program under the Native American Housing Assistance and Self Determination Act at 25 U.S.C. 4103(22).
</P>
<P><I>Trust Land</I> means land title which is held by the United States for the benefit of an Indian or Tribe or title which is held by a Tribe subject to a restriction against alienation imposed by the United States or the Tribe. This definition shall include but is not limited to Tribal, individual, assigned trust, or restricted fee lands.
</P>
<P><I>Upfront Loan Guarantee Fee</I> means a fee, paid by the Borrower at closing, collected by the Direct Guarantee Lender and remitted to HUD for the purposes of financing the Indian Housing Loan Guarantee Fund.


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.3.1.28.2" TYPE="SUBPART">
<HEAD>Subpart B—Lender Eligibility and Requirements</HEAD>


<DIV8 N="§ 1005.201" NODE="24:4.1.3.1.28.2.56.1" TYPE="SECTION">
<HEAD>§ 1005.201   Lender Applicant approval and participation.</HEAD>
<P>(a) <I>Approval types.</I> The Section 184 Program has two types of Lender Applicant approvals:
</P>
<P>(1) Lender Applicants deemed approved by statute, as described in § 1005.203; or
</P>
<P>(2) Lender Applicants required to obtain secretarial approval under § 1005.205.
</P>
<P>(b) <I>Lender Applicant participation.</I> In accordance with § 1005.207, Lender Applicants must select a level of program participation and submit a completed application package, as prescribed by Section 184 Program Guidance, to participate in the Section 184 Program.




</P>
</DIV8>


<DIV8 N="§ 1005.203" NODE="24:4.1.3.1.28.2.56.2" TYPE="SECTION">
<HEAD>§ 1005.203   Lender Applicants deemed approved by statute.</HEAD>
<P>The following Lender Applicants are deemed approved by statute:
</P>
<P>(a) Any mortgagee approved by HUD for participation in the single-family mortgage insurance program under title II of the National Housing Act;
</P>
<P>(b) Any Lender Applicant whose housing loan under chapter 37 of title 38, United States Code are automatically guaranteed pursuant to 38 U.S.C. 3702(d);
</P>
<P>(c) Any Lender Applicant approved by the U.S. Department of Agriculture to make Guaranteed Loans for single family housing under the Housing Act of 1949; and
</P>
<P>(d) Any other Lender Applicant that is supervised, approved, regulated, or insured by any other Federal agency of the United States, including but not limited to Community Development Financial Institutions.




</P>
</DIV8>


<DIV8 N="§ 1005.205" NODE="24:4.1.3.1.28.2.56.3" TYPE="SECTION">
<HEAD>§ 1005.205   Lender Applicants required to obtain Secretarial approval.</HEAD>
<P>(a) <I>Lender Applicant application process.</I> Lender Applicants not meeting the requirements of § 1005.203 must apply to HUD for approval to participate in the Section 184 Program by submitting to HUD a completed application package, as prescribed by Section 184 Program Guidance. The application must establish that the Lender meets the following qualifications:
</P>
<P>(1) <I>Business form.</I> The Lender Applicant shall be a corporation or other chartered institution, a permanent organization having succession, or a partnership, organized under Tribal or State law.
</P>
<P>(i) <I>Partnership requirements.</I> A partnership must meet the following requirements:
</P>
<P>(A) Each general partner must be a corporation or other chartered institution consisting of two or more partners.
</P>
<P>(B) One general partner must be designated as the managing general partner. The managing general partner shall also comply with the requirements specified in paragraphs (a)(1)(i)(C) and (D) of this section. The managing general partner must have as its principal activity the management of one or more partnerships, all of which are mortgage lending institutions or property improvement or manufactured home lending institutions and must have exclusive authority to deal directly with HUD on behalf of each partnership. Newly admitted partners must agree to the management of the partnership by the designated managing general partner. If the managing general partner withdraws or is removed from the partnership for any reason, a new managing general partner shall be substituted, and HUD must be notified in writing within 15 days of the substitution.
</P>
<P>(C) The partnership agreement shall specify that the partnership shall exist for a minimum term of ten years, as required by HUD. All Section 184 Guaranteed Loans held by the partnership shall be transferred to a Lender Applicant approved under this part prior to the termination of the partnership. The partnership shall be specifically authorized to continue its existence if a partner withdraws.
</P>
<P>(D) HUD must be notified in writing within 15 days of any amendments to the partnership agreement that would affect the partnership's actions under the Section 184 Program.
</P>
<P>(ii) <I>Use of business name.</I> The Lender Applicant must use its HUD-registered business name in all advertisements and promotional materials related to the Guaranteed Loan. HUD-registered business names include any alias or “doing business as” (DBA) on file with HUD. The Lender must keep copies of all print and electronic advertisements and promotional materials for a period of 2 years from the date that the materials are circulated or used to advertise.
</P>
<P>(2) <I>Identification and certification of employees.</I> The Lender Applicant shall identify personnel and certify that they are trained and competent to perform their assigned responsibilities in mortgage lending, including origination, servicing, collection, and conveyance activities, and shall maintain adequate staff and facilities to Originate or service mortgages, or both, in accordance with applicable Tribal, Federal, or State requirements, to the extent it engages in such activities.
</P>
<P>(3) <I>Identification and certification of officers.</I> The Lender Applicant shall identify officers and certify that all employees who will sign applications for Guaranteed Loans on behalf of the Lender Applicant shall be corporate officers or shall otherwise be authorized to bind the Lender in the Origination transaction. The Lender Applicant shall certify that only authorized person(s) report on guarantees, purchases, and sales of Guaranteed Loans to HUD for the purpose of obtaining or transferring guarantee coverage.
</P>
<P>(4) <I>Financial statements.</I> The Lender Applicant shall:
</P>
<P>(i) Furnish to HUD a copy of its most current annual financial statements, as prescribed by Section 184 Program Guidance.
</P>
<P>(ii) Furnish such other information as HUD may request; and
</P>
<P>(iii) Submit to examination of the portion of its records that relates to its activities under the Section 184 Program.
</P>
<P>(5) <I>Quality control plan.</I> The Lender Applicant shall submit a written quality control plan in accordance with § 1005.217.
</P>
<P>(6) <I>Identification of branch offices.</I> A Lender Applicant may maintain branch offices. A financial institution's branch office must be registered with HUD to originate or submit applications for Guaranteed Loans. The financial institution shall remain responsible to HUD for the actions of its branch offices.
</P>
<P>(7) <I>Certification of conflict of interest policy.</I> The Lender Applicant must certify that the lender shall not pay anything of value, directly or indirectly, in connection with any Guaranteed Loan to any person or entity if such person or entity has received any other consideration from the seller, builder, or any other person for services related to such transactions or related to the purchase or sale of the property, except that consideration, approved by HUD, may be paid for services actually performed. The Lender Applicant shall not pay a referral fee to any person or organization.
</P>
<P>(8) <I>Licensing certification.</I> A Lender Applicant shall certify that it has not been refused a license or has not been sanctioned by any Tribal, Federal, State, or other authority related to any lending activity.
</P>
<P>(9) <I>Minimum net worth.</I> Irrespective of size, a Lender Applicant shall have a net worth of not less than $1 million, or amount as provided in Section 184 Program Guidance.
</P>
<P>(10) <I>Identification of operating area.</I> The Lender Applicant must submit a list of states in which they wish to participate in the Section 184 Program and evidence of Lender Applicant's license to operate in those states, as may be prescribed by Section 184 Program Guidance.
</P>
<P>(11) <I>Other qualifications.</I> Other qualifications by notice for comment.
</P>
<P>(b) <I>HUD approval.</I> HUD shall review applications under § 1005.203(a) and any other publicly available information related to the Lender Applicant, its officers, and employees. If HUD determines the Lender Applicant meets the requirements for participation in this subpart, HUD shall provide written notification of the approval to be a Non-Direct Guarantee Lender.
</P>
<P>(c) <I>Limitations on approval.</I> A Lender Applicant may only operate in the Section 184 Approved Program Area where they are licensed.
</P>
<P>(d) <I>Denial of participation.</I> A Lender Applicant may be denied approval to become a Section 184 Lender if HUD determines the Lender Applicant does not meet the qualification requirements of this subpart. HUD will provide written notification of denial and that decision may be appealed in accordance with the procedures set forth in § 1005.909.




</P>
</DIV8>


<DIV8 N="§ 1005.207" NODE="24:4.1.3.1.28.2.56.4" TYPE="SECTION">
<HEAD>§ 1005.207   Lender Applicant participation options.</HEAD>
<P>(a) <I>Levels of participation.</I> Lender Applicants must choose one of two levels of program participation, a Non-Direct Guarantee Lender or a Direct Guarantee Lender and submit an application to participate on a form prescribed by Section 184 Program guidance. A participation level must be selected by the Lender Applicant and approved by HUD before initiating any Section 184 Program activities.
</P>
<P>(b) <I>Non-Direct Guarantee Lender.</I> (1) A Non-Direct Guarantee Lender originates loans.
</P>
<P>(2) A Non-Direct Guarantee Lender must be a Sponsored Entity under § 1005.213.
</P>
<P>(3) A Non-Direct Guarantee Lender must submit documentation supporting their eligibility as a Lender under § 1005.203 or approved by HUD under § 1005.205 and other documentation as prescribed by Section 184 Program Guidance to HUD through their Sponsor.
</P>
<P>(c) <I>Direct Guarantee Lender.</I> (1) A Direct Guarantee Lender may originate, underwrite, close, service, purchase, hold, and sell Section 184 Guaranteed Loans.
</P>
<P>(2) A Direct Guarantee Lender may sponsor Non-Direct Guarantee Lenders or other Direct Guarantee Lenders in accordance with § 1005.213.
</P>
<P>(3) To become a Direct Guarantee Lender, Lender Applicants must submit additional documentation as provided in § 1005.209 and obtain HUD approval under § 1005.211.




</P>
</DIV8>


<DIV8 N="§ 1005.209" NODE="24:4.1.3.1.28.2.56.5" TYPE="SECTION">
<HEAD>§ 1005.209   Direct Guarantee Lender application process.</HEAD>
<P>(a) For purposes of this section, Lender Applicants shall include Non-Direct Guarantee Lenders, Lender Applicants and financial institutions approved by HUD to only service under § 1005.705. Lender Applicants may apply to HUD for approval to participate in the Section 184 Program as a Direct Guarantee Lender. Lenders Applicants must submit a completed application package in accordance with Section 184 Program Guidance.
</P>
<P>(b) To be approved as a Direct Guarantee Lender, a Lender Applicant must establish in its application that it meets the following qualifications:
</P>
<P>(1) Eligibility under § 1005.203 or HUD approval under § 1005.205, as evidenced by approval documents and most recent recertification documents.
</P>
<P>(2) Has a principal officer with a minimum of five years' experience in the origination of Loans guaranteed or insured by an agency of the Federal Government. HUD may approve a Lender applicant with less than five years of experience, if a principal officer has had a minimum of five years of managerial experience in the origination of Loans guaranteed or insured by an agency of the Federal Government.
</P>
<P>(3) Has on its permanent staff an underwriter(s) that meets the following criteria:
</P>
<P>(i) Two years' experience underwriting Loans guaranteed or insured by an agency of the Federal Government;
</P>
<P>(ii) Is an exclusive employee of the Lender Applicant;
</P>
<P>(iii) Authorized by the Lender Applicant to obligate the Lender Applicant on matters involving the origination of Loans;
</P>
<P>(iv) Is registered with HUD as an underwriter and continues to maintain such registration; and
</P>
<P>(v) Other qualifications as may be prescribed by Section 184 Program Guidance.
</P>
<P>(c) The Lender Applicant must submit a list of States or geographic regions in which it is licensed to operate, evidenced by submitting the active approvals for each State or region, and declare its interest in participating in the Section 184 Program.
</P>
<P>(d) The Lender Applicant must submit the quality control plan as required by its approving agency, modified for the Section 184 Program.
</P>
<P>(e) If a Lender Applicant wants to service Section 184 Guaranteed Loans as Direct Guarantee Lender, they must meet qualifications and apply in accordance with § 1005.703.




</P>
</DIV8>


<DIV8 N="§ 1005.211" NODE="24:4.1.3.1.28.2.56.6" TYPE="SECTION">
<HEAD>§ 1005.211   Direct Guarantee Lender approval.</HEAD>
<P>HUD shall review all documents submitted by a Lender Applicant under § 1005.209 and make a determination of conditional approval or denial.
</P>
<P>(a) <I>Conditional approval.</I> Conditional approval is signified by written notification from HUD that the Lender Applicant is a conditionally approved Direct Guarantee Lender under the Section 184 Program subject to the following conditions:
</P>
<P>(1) The Lender Applicant signs an agreement to comply with requirements of this part, and any applicable Tribal, Federal, or State law; and
</P>
<P>(2) If applicable, the Lender Applicant submits a list of entities it currently sponsors under another Federal Loan program and intends to sponsor in the Section 184 Program. This list shall include the following for each Sponsored Entity:
</P>
<P>(i) Contact information, including mailing address, phone number, and email address for corporate officers.
</P>
<P>(ii) The Federal tax identification number (TIN) for the Sponsored Entity, and
</P>
<P>(iii) Names and Nationwide Multistate Licensing System and Registry numbers for all Loan originators and processors.
</P>
<P>(3) The Lender Applicant certifies it monitors and provides oversight of Sponsored Entities to ensure compliance with this part, and any applicable Tribal, Federal, or State law.
</P>
<P>(4) The Lender Applicant must, for each underwriter, submit ten test endorsement case binders, or a number prescribed by Section 184 Program Guidance, which meet the requirements of subparts D and E. Unsatisfactory performance by an underwriter during HUD's test case review may constitute grounds for denial of approval to participate as a Direct Guarantee Lender. If participation is denied, such denial is effective immediately and may be appealed in accordance with the procedures set forth in § 1005.909; and
</P>
<P>(5) The Lender Applicant will operate only in accordance with the Lender's licensing in Section 184 Approved Program Areas.
</P>
<P>(b) <I>Final approval.</I> Final approval is signified by written notification from HUD that the Lender Applicant is an approved Direct Guarantee Lender under the Section 184 Program without further submission of test case endorsement case binders to HUD. HUD retains the right to request additional test cases as determined necessary.
</P>
<P>(c) <I>Limitations on approval.</I> (1) A Lender Applicant may only operate as a Direct Guarantee Lender in accordance with the Lender's Tribal or State licensing and within Section 184 Approved Program Areas.
</P>
<P>(2) The Lender Applicant must employ and retain an underwriter with the qualifications as provided in § 1005.209(b)(3). Failure to comply with this provision may subject the Lender Applicant to sanctions under § 1005.907.
</P>
<P>(d) <I>Denial of participation.</I> A Lender Applicant may be denied approval to become a Direct Guarantee Lender if HUD determines the Lender Applicant does not meet the qualification requirements of this subpart. HUD will provide written notification of denial and that decision may be appealed in accordance with the procedures set forth in § 1005.909.




</P>
</DIV8>


<DIV8 N="§ 1005.213" NODE="24:4.1.3.1.28.2.56.7" TYPE="SECTION">
<HEAD>§ 1005.213   Non-Direct Guarantee Lender application, approval, and Direct Guarantee Lender sponsorship.</HEAD>
<P>(a) <I>Sponsorship.</I> A Sponsorship is a contractual relationship between a Sponsor and a Sponsored Entity.
</P>
<P>(b) <I>General responsibility requirements of a Sponsor.</I> (1) The Sponsor must determine the eligibility of a Lender and submit to HUD, as prescribed in Section 184 Program Guidance, a recommendation for approval under § 1005.207(b) or evidence of HUD approval under §§ 1005. 205(b) or 211(b).
</P>
<P>(2) Upon HUD approval of eligibility under § 1005.207(b), or HUD acknowledgement of the evidence of HUD approval under § 1005.205(b) or § 1005.211(b), the Sponsor may enter into a Sponsorship with the Sponsored Entity.
</P>
<P>(3) The Sponsor must notify HUD of changes in a Sponsorship within 10 days.
</P>
<P>(4) The Sponsor must provide HUD-approved training to the Sponsored Entity on the requirements of the Section 184 Program before the Sponsored Entity may originate Section 184 Guaranteed Loans for the Sponsor.
</P>
<P>(5) Each Sponsor shall be responsible to HUD for the actions of its Sponsored Entity in Originating Loans. If Tribal or State law requires specific knowledge by the Sponsor or the Sponsored Entity, HUD shall presume the Sponsor had such knowledge and shall remain liable.
</P>
<P>(6) The Sponsor is responsible for conducting quality control reviews of the Sponsored Entity's origination case binders and Loan performance to ensure compliance with this part.
</P>
<P>(7) The Sponsor is responsible for maintaining all records for Loans Originated by a Sponsored Entity in accordance with this part.
</P>
<P>(c) <I>Responsibilities of the Sponsored Entity.</I> A Sponsor must ensure that a Sponsored Entity complies with this part and any other Tribal, Federal, or State law requirements.




</P>
</DIV8>


<DIV8 N="§ 1005.215" NODE="24:4.1.3.1.28.2.56.8" TYPE="SECTION">
<HEAD>§ 1005.215   Direct Guarantee Lender annual reporting requirements.</HEAD>
<P>Direct Guarantee Lenders must submit an annual report on Loan performance, including reporting on all its Sponsored Entities, where applicable, along with any other required reporting under § 1005.903 and other such reports as prescribed by Section 184 Program Guidance.




</P>
</DIV8>


<DIV8 N="§ 1005.217" NODE="24:4.1.3.1.28.2.56.9" TYPE="SECTION">
<HEAD>§ 1005.217   Quality control plan.</HEAD>
<P>(a) A quality control plan sets forth a Lender Applicant, Direct Guarantee Lender, or Non-Direct Guarantee Lender's procedures for ensuring the quality of the Direct Guarantee or Non-Direct Guarantee Lender's Section 184 Guaranteed Loan Origination, underwriting, closing, and/or servicing, as applicable. The purpose of the quality control plan is to ensure the Lender Applicant, Direct Guarantee and non-Direct Guarantee Lender's compliance with Section 184 Program requirements and protect HUD and the entities from unacceptable or unreasonable risks. A Lender Applicant, Direct Guarantee Lender, and Non-Direct Guarantee Lender must adopt and implement a quality control plan.
</P>
<P>(b) A quality control plan must:
</P>
<P>(1) Be maintained and updated, as needed, to comply with all applicable Section 184 Program requirements.
</P>
<P>(2) Cover all policies and procedures, whether performed by the Lender or an agent, to ensure full compliance with all Section 184 Program requirements.
</P>
<P>(3) Provide the Lender with information sufficient to adequately monitor and oversee the Lender's compliance and measure performance, as it relates to the Lender's Section 184 Guaranteed Loan activity.
</P>
<P>(4) Require the Lender Applicant, Direct Guarantee or Non-Direct Guarantee Lender to retain all quality control plan related documentation, including selection criteria, review documentation, findings, and actions to mitigate findings, for a period of three years from initial quality control review, or from the last action taken to mitigate findings, whichever is later.
</P>
<P>(5) Allow the Lender Applicant, Direct Guarantee or Non-Direct Guarantee Lender to use employees or agents to perform the quality control functions, so long as they do not directly participate in any Loan administration processes as outlined in Section 184 Program Guidance.
</P>
<P>(6) Ensure the Lender Applicant, Direct Guarantee or Non-Direct Guarantee Lender assumes full responsibility for any agent's conduct of quality control reviews.
</P>
<P>(7) Require the Lender Applicant, Direct Guarantee or Non-Direct Guarantee Lender to train all staff, agents working with the Section 184 Program on Loan administration and quality control processes and provide staff access to all current Section 184 legal authorities and policy guidance. The Lender, Direct Guarantee or Non-Direct Guarantee Lender must retain copies of training documentation for all staff working on the Section 184 Program in accordance with § 1005.219(d)(3). Failure to comply with the training and documentation requirements may subject the Direct Guarantee Lender and Non-Direct Guarantee Lender to sanctions in accordance with § 1005.907.
</P>
<P>(8) Require the Lender Applicant, Direct Guarantee or Non-Direct Guarantee Lender to review a random statistical sample of rejected Loan applications within 90 days from the end of the month in which the decision was made. The reviews must be conducted no less frequently than monthly and with the goal of ensuring that the reasons given for the rejection were valid and each rejection received concurrence of an appropriate staff person with sufficient approval authority. The Lender Applicant, Direct Guarantee or Non-Direct Guarantee Lender must submit a report of this review in form and timeframe as prescribed in Section 184 Program Guidance.
</P>
<P>(9) Ensure that the Lender Applicant, Direct Guarantee or Non-Direct Guarantee Lender's employees and agents are eligible to participate in the Section 184 Program. Any employees or agents deemed ineligible shall be restricted from participating in the Section 184 Program.
</P>
<P>(10) Require the Lender Applicant, Direct Guarantee or Non-Direct Guarantee Lender to refer any suspected fraud or material misrepresentation by any party whatsoever directly to HUD's Office of Inspector General (OIG) and the Office of Native American Programs.
</P>
<P>(11) Require the Lender Applicant, Direct Guarantee or Non-Direct Guarantee Lender to report all material deficiencies and submit a corrective action plan to HUD within 30 days, or a timeframe as prescribed by Section 184 Program Guidance.
</P>
<P>(12) Require the Lender Applicant, Direct Guarantee or Non-Direct Guarantee Lender to conduct appropriate Loan level quality control procedures, in accordance with Section 184 Program Guidance.
</P>
<P>(13) Require the Lender Applicant to comply with any other administrative requirement as may be prescribed by Section 184 Program Guidance.
</P>
<P>(c) Lender Applicants applying to be a Direct Guarantee Lender under § 1005.209, must submit a quality control plan in accordance with paragraph (b) of this section and include the following additional requirements:
</P>
<P>(1) Require the Lender Applicant to collect and forward all Loan Guarantee Fees in accordance with the Section 184 Program requirements, with sufficient documentation evidencing the timely collection and payment of the fees to HUD.
</P>
<P>(2) Require the Lender Applicant to verify that the endorsement case binder is submitted to HUD for guarantee within required time frames.
</P>
<P>(3) Require the Lender Applicant to review a random statistical sample of its endorsement case binders for potential fraud, material misrepresentations, or other findings on a quarterly basis. The Lender Applicant must investigate and determine if fraud, material misrepresentation or other findings occurred.
</P>
<P>(4) Require the Lender Applicant to perform quality control review of its Sponsored Entities in the same manner and under the same conditions as required for the Lender's own operation.
</P>
<P>(5) Where applicable, require the Sponsor to apply paragraph (b) of this section to its Sponsored Entities.
</P>
<P>(d) All Sponsored Entities shall comply with paragraph (b) of this section and provide a quality control plan directly to their Sponsor in accordance with their sponsorship agreement.




</P>
</DIV8>


<DIV8 N="§ 1005.219" NODE="24:4.1.3.1.28.2.56.10" TYPE="SECTION">
<HEAD>§ 1005.219   Other requirements.</HEAD>
<P>(a) <I>Tribal, Federal, and State law.</I> All Holders, Direct Guarantee Lenders, Non-Direct Guarantee Lenders and Servicers must comply with all applicable Tribal, Federal, and State laws which impact mortgage-related activities.
</P>
<P>(b) <I>Dual employment.</I> All Non-Direct Guarantee Lenders and Direct Guarantee Lenders must require its employees to be exclusive employees, unless the Non-Direct Guarantee and Direct Guarantee Lender has determined that the employee's other employment, including any self-employment, does not create a Conflict of Interest.
</P>
<P>(c) <I>Reporting requirements.</I> All Direct Guarantee Lenders must submit reports in accordance with § 1005.903. Non-Direct Guarantee Lenders must submit required reports to their Sponsor, under this part or any requirements as prescribed by Section 184 Program Guidance.
</P>
<P>(d) <I>Records retention.</I> Records retention requirements are as follows:
</P>
<P>(1) Direct Guarantee Lenders must maintain an endorsement case binder for a period of three years beyond the date of satisfaction or maturity date of the Loan, whichever is sooner. However, where there is a payment of Claim, the endorsement case binder must be retained for a period of at least five years after the final Claim has been paid. Section 184 Program Guidance shall prescribe additional records retention time depending on the circumstances of the Claim.
</P>
<P>(2) All Direct Guarantee Lenders and Non-Direct Guarantee Lenders must retain personnel files of employees for one year beyond the employee's separation.
</P>
<P>(3) All Direct Guarantee Lenders and Non-Direct Guarantee Lenders must follow the applicable records retention requirements imposed by applicable Tribal, Federal, and State laws.
</P>
<P>(4) Direct Guarantee Lenders and Non-Direct Guarantee Lenders must maintain the quality control plan records for a period prescribed in § 1005.217(b)(4).
</P>
<P>(e) <I>Minimum level of lending on Trust Land.</I> (1) Direct Guarantee Lenders must actively market, Originate, underwrite, and close Loans on Trust Land. A Sponsor must ensure its Sponsored Entities actively market and Originate Loans on Trust Land. HUD may impose a minimum level of lending on Trust Land, which may be adjusted periodically, through publication in the <E T="04">Federal Register</E>.
</P>
<P>(2) Failure to meet the minimum level of lending on Trust Land may result in sanctions in accordance with §§ 1005.905 and 1005.907.
</P>
<P>(3) HUD may grant exceptions for Direct Guarantee Lenders and Non-Direct Guarantee Lenders licensed and doing business in a State or States with limited Trust Lands. The process to request the exception will be prescribed by Section 184 Program Guidance.




</P>
</DIV8>


<DIV8 N="§ 1005.221" NODE="24:4.1.3.1.28.2.56.11" TYPE="SECTION">
<HEAD>§ 1005.221   Business change reporting.</HEAD>
<P>(a) Within a timeframe as prescribed by Section 184 Program Guidance, Direct Guarantee Lenders shall provide written notification to HUD, in such a form as prescribed by Section 184 Program Guidance of:
</P>
<P>(1) All changes in the Direct Guarantee Lender or Sponsored Entity's legal structure, including, but not limited to, mergers, acquisitions, terminations, name, location, control of ownership, and character of business;
</P>
<P>(2) Staffing changes with senior leadership and Loan underwriters for Direct Guarantee Lenders and Sponsored Entities; and
</P>
<P>(3) Any sanctions by another supervising entity.
</P>
<P>(b) Failure to report changes within a reasonable timeframe prescribed in Section 184 Program Guidance may result in sanctions in accordance with §§ 1005.905 and 1005.907.




</P>
</DIV8>


<DIV8 N="§ 1005.223" NODE="24:4.1.3.1.28.2.56.12" TYPE="SECTION">
<HEAD>§ 1005.223   Direct Guarantee Lender Annual recertification requirements.</HEAD>
<P>(a) All Direct Guarantee Lenders are subject to annual recertification on a date and form as prescribed by Section 184 Program Guidance.
</P>
<P>(b) With each annual recertification, Direct Guarantee Lenders must submit updated contact information, continued eligibility documentation and other pertinent materials as prescribed by Section 184 Program Guidance, including but not limited to:
</P>
<P>(1) A certification that it has not been refused a license or sanctioned by any Tribe, State, or Federal entity or other governmental authority related to any lending activity;
</P>
<P>(2) A certification that the Direct Guarantee Lender is in good standing with any Tribe, State, or Federal entity in which it will perform Direct Guarantee Lender activities; and
</P>
<P>(3) Renewal documents and certification of continued eligibility from an authorizing entity listed in § 1005.203.
</P>
<P>(4) Lenders approved under § 1005.205 must submit documentation supporting continued eligibility as prescribed by Section 184 Program Guidance.
</P>
<P>(c) All Sponsored Entities shall comply with this requirement and provide the annual recertification documentation directly to their Sponsor in accordance with their sponsorship agreement.
</P>
<P>(d) Direct Guarantee Lenders must also submit the following in accordance with Section 184 Program Guidance:
</P>
<P>(1) A certification that the Direct Guarantee Lender continues to meet the direct guarantee program eligibility requirements in accordance with § 1005.209;
</P>
<P>(2) A list of all Sponsored Entities with which the Direct Guarantee Lender has a sponsorship relationship, and a certification of their continued eligibility; and
</P>
<P>(3) All reports.
</P>
<P>(e) Direct Guarantee Lenders must retain documentation related to the continued eligibility of their Sponsored Entities for a period as prescribed by Section 184 Program Guidance.
</P>
<P>(f) Direct Guarantee Lenders may request an extension of the recertification deadline, but such a request must be presented to HUD at least 30 days before the recertification deadline.
</P>
<P>(g) HUD will review the annual recertification submission and may request any further information required to determine recertification.
</P>
<P>(h) HUD will provide written notification of approval to continue participation in the Section 184 Program or denial. A denial may be appealed pursuant to § 1005.909.
</P>
<P>(1) If an annual recertification is not submitted by a reasonable deadline prescribed in Section 184 Program Guidance, HUD may subject the Direct Guarantee Lender to sanctions under § 1005.907.
</P>
<P>(2) [Reserved]




</P>
</DIV8>


<DIV8 N="§ 1005.225" NODE="24:4.1.3.1.28.2.56.13" TYPE="SECTION">
<HEAD>§ 1005.225   Program ineligibility.</HEAD>
<P>A Lender Applicant, Direct Guarantee Lender or Non-Direct Guarantee Lender may be deemed ineligible for Section 184 Program participation when HUD becomes aware that the entity or any officer, partner, director, principal, manager or supervisor, loan processor, loan underwriter, or loan originator of the entity was:
</P>
<P>(a) Suspended, debarred, under a limited denial of participation (LDP), or otherwise restricted under 2 CFR part 2424, or under similar procedures of any other Federal agency;
</P>
<P>(b) Indicted for, or have been convicted of, an offense that reflects adversely upon the integrity, competency, or fitness to meet the responsibilities of the Lender, Direct Guarantee Lender or Non-Direct Guarantee Lender to participate in the title I or title II programs of the National Housing Act, or Section 184 Program;
</P>
<P>(c) Found to have unresolved findings as a result of HUD or other governmental audit, investigation, or review;
</P>
<P>(d) Engaged in business practices that do not conform to generally accepted practices of prudent Lender Applicants, Direct or Non-Direct Guarantee Lenders or that demonstrate irresponsibility;
</P>
<P>(e) Convicted of, or have pled guilty or nolo contendere to, a felony related to participation in the real estate or mortgage loan industry during the 7-year period preceding the date of the application for licensing and registration, or at any time preceding such date of application, if such felony involved an act of fraud, dishonesty, or a breach of trust or money laundering;
</P>
<P>(f) In violation of provisions of the Secure and Fair Enforcement Mortgage Licensing Act of 2008 (12 U.S.C. 5101, <I>et seq.</I>) or any applicable provision of Tribal or State law; or
</P>
<P>(g) In violation of 12 U.S.C. 1715z-13a.


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:4.1.3.1.28.3" TYPE="SUBPART">
<HEAD>Subpart C—Lending on Trust Land</HEAD>


<DIV8 N="§ 1005.301" NODE="24:4.1.3.1.28.3.56.1" TYPE="SECTION">
<HEAD>§ 1005.301   Tribal legal and administrative framework.</HEAD>
<P>(a) <I>Tribal requirements.</I> (1) A Tribe seeking to allow eligible Borrowers to place a mortgage lien on Trust Land under the Section 184 Program must apply to HUD for approval to participate in the program.
</P>
<P>(2) Tribes electing to make Trust Land available under the Section 184 Program must provide to HUD a legal and administrative framework for leasing, foreclosure, and eviction on Trust Land to protect the interests of the Borrower, Tribe, Direct Guarantee Lender, and HUD.
</P>
<P>(3) When Tribes are notified of the Borrower's default in accordance with § 1005.501(j) or when the Tribe receives notice of Tribal right of first refusal pursuant to § 1005.759, Tribes must assist, where practical, in facilitating loss mitigation and disposition, such as assisting with identifying potential purchasers or identifying Tribal members who may wish to assume the loan, encouraging Borrower to execute Lease-in-Lieu, and providing other general assistance to the Borrower.
</P>
<P>(4) Tribes must notify HUD in writing when the Tribe determines a property is vacant or abandoned and the property is not secured by the Servicer or HUD.
</P>
<P>(b) <I>Legal and administrative framework.</I> A Tribe may enact legal procedures through Tribal council resolution or any other recognized legislative action. These procedures must be legally enforceable and include the following requirements:
</P>
<P>(1) <I>Foreclosure and assignment.</I> When a Borrower is in default, and is unwilling or unable to successfully complete loss mitigation in accordance with subpart G of this part; and Servicer either completes First Legal Action against the Borrower, or assigns the loan to HUD after completing Tribal first right of refusal in accordance with § 1005.759:
</P>
<P>(i) The Tribe must demonstrate that a foreclosure will be processed through the legal systems having jurisdiction over the Section 184 Guaranteed Loan. A foreclosure must be held in a court of competent jurisdiction, which includes Federal courts, when HUD forecloses on the property.
</P>
<P>(ii) Foreclosure ordinances must allow for the legal systems with jurisdiction to assign Borrower's property interest to HUD or Holder.
</P>
<P>(iii) Where applicable, if the Holder assigns the Section 184 Guaranteed Loan to HUD without initiating or completing the foreclosure process, or the property becomes vacant and abandoned during the loss mitigation or foreclosure process, the Tribe may assign the lease to HUD to facilitate disposition of the property, so long as the Tribe provides due process to the lessee in compliance with Tribal law.
</P>
<P>(2) <I>Property disposition.</I> Once a lease is vacated or reassigned, or the property interest has otherwise been conveyed to HUD or the Holder, the Tribe or the TDHE shall work with HUD or the Holder to sell the property to an eligible party.
</P>
<P>(3) <I>Eviction.</I> The Tribe must have a legal and administrative framework implementing eviction procedures, allowing for the expedited removal of the Borrower in default, all household residents, and any unauthorized occupants of the property. Eviction procedures must enable the Servicer or the Tribe to secure possession of the property. Eviction may be required upon:
</P>
<P>(i) The completion of a foreclosure;
</P>
<P>(ii) The involuntary termination of the lease;
</P>
<P>(iii) The reassignment of the lease or conveyance of the property interest to HUD or the Holder; or
</P>
<P>(iv) The sale of the property.
</P>
<P>(4) <I>Lien priority.</I> Section 184 Guaranteed Loans must be in a first lien position securing the property.
</P>
<P>(i) To ensure that each Section 184 Guaranteed Loan holds a first lien position, the Tribe must enact an ordinance that either:
</P>
<P>(A) Provides for the satisfaction of the Section 184 Guaranteed Loan before any and all other obligations; or
</P>
<P>(B) Follows State law to determine the priority of liens against the property. If a Tribal jurisdiction spans two or more states, the State in which the property is located is the applicable State law.
</P>
<P>(ii) For lien to be considered valid on Trust Land, the lien must be:
</P>
<P>(A) Approved by the Tribe, and BIA as applicable; and
</P>
<P>(B) Recorded by the Tribe and/or BIA, as applicable.
</P>
<P>(5) <I>Lease provisions for Trust Land.</I> Where applicable, the lease provisions for Trust Land must meet the following requirements:
</P>
<P>(i) Tribes may use a HUD model lease for Section 184 Guaranteed Loan lending on Trust Land. The Tribe may make modifications to the HUD model lease, with the approval of HUD and, as applicable, BIA.
</P>
<P>(ii) Tribes may draft their own lease in compliance with Federal requirements and contain mandatory lease terms and language as prescribed in Section 184 Program Guidance, with approval of HUD and, as applicable, BIA. At a minimum the lease must:
</P>
<P>(A) Identify lessor;
</P>
<P>(B) Identify the lessee;
</P>
<P>(C) Provide a legal description of the land and identify the property address covered by the lease;
</P>
<P>(D) The lease must have a minimum term of 50 years unless an extended term is approved by the Secretary. For refinances or lease transfers the lease must have a remaining term which exceeds the maturity date of the Loan by a minimum of ten years, or other period as prescribed by Section 184 Program Guidance.
</P>
<P>(E) The lease must be executed by all interested parties to be enforceable;
</P>
<P>(F) The Tribe shall require HUD consent for any lease termination or assignment of the lease when the Section 184 Guaranteed Loan is secured by the property.
</P>
<P>(G)(<I>1</I>) The lease must contain the following provision: “In the case of a default on a Section 184 Guaranteed Loan:
</P>
<P>(<I>i</I>) The lessee may assign the lease and deliver possession of the leased premises, including any improvements thereon, to HUD; or
</P>
<P>(<I>ii</I>) The lessor may assign the lease and deliver possession of the leased premises, including any improvements thereon, to HUD when the Tribe has provided due process to lessee in compliance with Tribal law.
</P>
<P>(<I>2</I>) HUD may transfer this lease and the leased premises to a successor lessee if the successor lessee is another member of the Tribe or Tribal entity, as approved by the Tribe.”
</P>
<P>(H) Lease language as prescribed by Section 184 Program Guidance.
</P>
<P>(I) The lease must also provide that in the event of foreclosure, the lease will not be subject to any forfeiture or reversion and will not be otherwise subject to termination.




</P>
</DIV8>


<DIV8 N="§ 1005.303" NODE="24:4.1.3.1.28.3.56.2" TYPE="SECTION">
<HEAD>§ 1005.303   Tribal application.</HEAD>
<P>A Tribe shall submit an application on a form prescribed by HUD. The application must include a copy of the Tribe's foreclosure, eviction, lease, priority lien ordinances, all cross-referenced ordinances in those sections, and any other documents in accordance with Section 184 Program Guidance.




</P>
</DIV8>


<DIV8 N="§ 1005.305" NODE="24:4.1.3.1.28.3.56.3" TYPE="SECTION">
<HEAD>§ 1005.305   Approval of Tribal application.</HEAD>
<P>HUD shall review applications under § 1005.303 and where all requirements of § 1005.301 are met, HUD shall provide written notification of the approval of the Tribe to participate in the Section 184 Program. If HUD determines the application is incomplete, or the documents submitted do not comply with the requirements of this subpart or any process prescribed in Section 184 Program Guidance, HUD will work with the Tribe to cure the deficiencies before there is a denial of the application.




</P>
</DIV8>


<DIV8 N="§ 1005.307" NODE="24:4.1.3.1.28.3.56.4" TYPE="SECTION">
<HEAD>§ 1005.307   Tribal annual recertification.</HEAD>
<P>A Tribe shall recertify annually to HUD whether it continues to meet the requirements of this subpart, on a form and by a deadline prescribed by Section 184 Program Guidance. Recertification shall include Tribal certification of no changes to the Tribe's foreclosure, eviction, lease, and lien priority ordinances. The Tribe shall provide any updated contact information and similar information that may be required under Section 184 Program Guidance.




</P>
</DIV8>


<DIV8 N="§ 1005.309" NODE="24:4.1.3.1.28.3.56.5" TYPE="SECTION">
<HEAD>§ 1005.309   Tribal duty to report proposed changes and actual changes.</HEAD>
<P>Based on the timeframe as prescribed by Section 184 Program Guidance, the Tribe must notify HUD of any proposed changes in the Tribe's foreclosure, eviction, lease, and lien priority ordinances or contact information. Tribes shall obtain HUD approval of the changes in the foreclosure, eviction, lease, and lien priority ordinances. HUD will provide written notification to the Tribe of HUD's review of the proposed ordinance changes and advise the Tribe whether the updated documents meet the requirements of this subpart.




</P>
</DIV8>


<DIV8 N="§ 1005.311" NODE="24:4.1.3.1.28.3.56.6" TYPE="SECTION">
<HEAD>§ 1005.311   HUD notification of any lease default.</HEAD>
<P>In cases where the lessee is in default under the lease for any reason, the lessor shall provide written notification to HUD within 30 days of the lease default.




</P>
</DIV8>


<DIV8 N="§ 1005.313" NODE="24:4.1.3.1.28.3.56.7" TYPE="SECTION">
<HEAD>§ 1005.313   Tribal reporting requirements.</HEAD>
<P>The Tribe shall provide accurate reports and certifications to HUD, as may be prescribed by Section 184 Program Guidance.


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:4.1.3.1.28.4" TYPE="SUBPART">
<HEAD>Subpart D—Underwriting</HEAD>


<DIV7 N="56" NODE="24:4.1.3.1.28.4.56" TYPE="SUBJGRP">
<HEAD>Eligible Borrowers</HEAD>


<DIV8 N="§ 1005.401" NODE="24:4.1.3.1.28.4.56.1" TYPE="SECTION">
<HEAD>§ 1005.401   Eligible Borrowers.</HEAD>
<P>(a) <I>Eligible Borrowers.</I> Eligible Borrowers are Indian Families, Tribes, or TDHEs.
</P>
<P>(b) <I>Documentation.</I> Indian Family Borrowers must document their status as American Indian or Alaska Native through evidence as prescribed by Section 184 Program Guidance.
</P>
<P>(c) <I>Limitation on the number of loans.</I> An Indian Family Borrower is limited to one Section 184 Guaranteed Loan, for primary residence, at a time unless the Indian Family Borrower is a non-occupant co-Borrower on one other Section 184 Guaranteed Loan. An Indian Family Borrower and/or non-occupant co-Borrower must meet all other applicable requirements of this subpart and any guidance provided in Section 184 Program Guidance.




</P>
</DIV8>


<DIV8 N="§ 1005.403" NODE="24:4.1.3.1.28.4.56.2" TYPE="SECTION">
<HEAD>§ 1005.403   Principal Residence.</HEAD>
<P>(a) <I>Principal Residence.</I> Means the dwelling where the Indian Family Borrower maintains as a permanent place of abode. An Indian Family Borrower may have only one Principal Residence at any one time.
</P>
<P>(b) <I>Occupancy requirement.</I> An Indian Family Borrower must occupy the property as a Principal Residence. Borrowers who are a TDHE or a Tribe do not need to occupy the property as a Principal Residence and are not subject to the occupancy requirement.
</P>
<P>(c) <I>Non-occupant co-Borrower.</I> A co-Borrower who does not occupy the property as a principal resident is permitted and is not subject to paragraphs (a) and (b) of this section. A non-occupant co-Borrower must be related by blood, or an unrelated individual who can document evidence of a family-type, longstanding, and substantial relationship not arising out of the loan transaction. A non-occupant co-Borrower must meet all other applicable requirements of this subpart and any requirements as may be established in Section 184 Program Guidance.




</P>
</DIV8>


<DIV8 N="§ 1005.405" NODE="24:4.1.3.1.28.4.56.3" TYPE="SECTION">
<HEAD>§ 1005.405   Borrower residency status.</HEAD>
<P>(a) An eligible Borrower who is an Indian must be:
</P>
<P>(1) A U.S. citizen; or
</P>
<P>(2) A lawful permanent resident alien.






</P>
<P>(b) Documentation must be provided to the Direct Guarantee Lender to support lawful residency status as defined in the Immigration and Nationality Act, codified at 8 U.S.C. 1101, <I>et seq.</I>
</P>
<CITA TYPE="N">[89 FR 20056, Mar. 20, 2024, as amended at 90 FR 42706, Sept. 4, 2025]


</CITA>
</DIV8>


<DIV8 N="§ 1005.407" NODE="24:4.1.3.1.28.4.56.4" TYPE="SECTION">
<HEAD>§ 1005.407   Relationship of income to loan payments.</HEAD>
<P>(a) <I>Adequacy of Borrower gross income.</I> (1) All Borrowers must establish, in accordance with Section 184 Program Guidance, that their income is and will be adequate to meet:
</P>
<P>(i) The periodic payments required by the loan to be guaranteed by the Section 184 Program; and
</P>
<P>(ii) Other long-term obligations.
</P>
<P>(2) In cases where there is a non-occupant Co-Borrower, the occupying Borrower must meet a minimum qualifying threshold, in accordance with Section 184 Program Guidance.
</P>
<P>(b) <I>Non-discrimination.</I> Determinations of adequacy of Borrower income under this section shall be made in a uniform manner without regard to age, race, color, national origin, religion, sex (including gender identity and sexual orientation), familial status, disability, marital status, source of income of the Borrower, location of the property.




</P>
</DIV8>


<DIV8 N="§ 1005.409" NODE="24:4.1.3.1.28.4.56.5" TYPE="SECTION">
<HEAD>§ 1005.409   Credit standing.</HEAD>
<P>(a) A Borrower must have a general credit standing satisfactory to HUD. A Direct Guarantee Lender must not use a Borrower's credit score when evaluating the Borrower's credit worthiness. The Direct Guarantee Lender must analyze the Borrower's credit history and payment pattern to determine credit worthiness.
</P>
<P>(b) If a Borrower had a previous default on a Section 184 Guaranteed Loan which resulted in a Claim payment by HUD, the Borrower shall be subject to a 7-year waiting period or other period as may be prescribed by Section 184 Program Guidance.




</P>
</DIV8>


<DIV8 N="§ 1005.411" NODE="24:4.1.3.1.28.4.56.6" TYPE="SECTION">
<HEAD>§ 1005.411   Disclosure and verification of Social Security and Employer Identification Numbers or Tax Identification Number.</HEAD>
<P>All Borrowers must meet applicable requirements for the disclosure and verification of Social Security, Employer Identification Numbers, or Tax Identification Numbers.


</P>
</DIV8>

</DIV7>


<DIV7 N="57" NODE="24:4.1.3.1.28.4.57" TYPE="SUBJGRP">
<HEAD>Eligible Properties</HEAD>


<DIV8 N="§ 1005.413" NODE="24:4.1.3.1.28.4.57.7" TYPE="SECTION">
<HEAD>§ 1005.413   Acceptable title.</HEAD>
<P>To be considered acceptable title, a Section 184 Guaranteed Loan must be secured by an interest in real estate held in fee simple or other property interest on Trust Land. Where the title evidences a lease that is used in conjunction with the Section 184 Guaranteed Loan on Trust Land, the lease must comply with relevant provisions of § 1005.301.




</P>
</DIV8>


<DIV8 N="§ 1005.415" NODE="24:4.1.3.1.28.4.57.8" TYPE="SECTION">
<HEAD>§ 1005.415   Sale of property.</HEAD>
<P>(a) <I>Owner of Record requirement.</I> The property must be or have been purchased from the Owner of Record and the transaction may not involve or had not involved any sale or assignment of the sales contract.
</P>
<P>(b) <I>Supporting documentation.</I> The Direct Guarantee Lender shall obtain and submit to HUD documentation verifying that the seller is the Owner of Record as part of the application for a loan guarantee under the Section 184 Program. Documentation must conform with the requirements set out in Section 184 Program Guidance. This documentation may include, but is not limited to, a property ownership history report from the State or local government, a copy of the recorded deed or other HUD approved document issued by the Tribe, as provided by Section 184 Program Guidance and the document evidences the property interest rights, as permitted by this subpart from the seller, or other documentation (such as a copy of a property tax bill, title commitment, or binder) demonstrating the seller's ownership.
</P>
<P>(c) <I>Time restrictions on re-sales</I>—(1) <I>General.</I> The eligibility of a property for a Loan guaranteed by HUD is dependent on the time that has elapsed between the date the seller acquired the property (based upon the date of settlement) and the date of execution of the sales contract that will result in the HUD guarantee (the re-sale date). The Direct Guarantee Lender shall obtain documentation verifying compliance with the time restrictions described in this paragraph and must submit this documentation to HUD as part of the application for the Section 184 Guaranteed Loan, in accordance with § 1005.501.
</P>
<P>(2) <I>Re-sales occurring 90 days or less following acquisition.</I> If the re-sale date is 90 days or less following the date of acquisition by the seller, the property is not eligible under the Section 184 Program.
</P>
<P>(3) <I>Re-sales occurring between 91 days and 180 days following acquisition.</I> (i) If the re-sale date is between 91 days and 180 days following acquisition by the seller, the property is generally eligible under the Section 184 Program.
</P>
<P>(ii) However, HUD will require that the Direct Guarantee Lender obtain additional documentation if the re-sale price is 100 percent over the purchase price. Such documentation must include a second appraisal from a different appraiser. The Direct Guarantee Lender may also document its Loan file to support the increased value by establishing that the increased value results from the rehabilitation of the property.
</P>
<P>(iii) Additional documentation may be required, as prescribed by Section 184 Program Guidance.
</P>
<P>(4) <I>Authority to address property re-sales occurring between 181 days and 12 months following acquisition.</I> (i) If the re-sale date is more than 181 days after the date of acquisition by the seller, but before the end of the twelfth month after the date of acquisition, the property is eligible under the Section 184 Program.
</P>
<P>(ii) However, HUD may require that the Direct Guarantee Lender provide additional documentation to support the re-sale value of the property if the re-sale price is 5 percent or greater than the lowest sales price of the property during the preceding 12 months (as evidenced by the contract of sale). At HUD's discretion, such documentation must include, but is not limited to, a second appraisal from a different appraiser. HUD may exclude re-sales of less than a specific dollar amount from the additional value documentation requirements.
</P>
<P>(iii) If the additional value documentation supports a value of the property that is more than 5 percent lower than the value supported by the first appraisal, the lower value will be used to calculate the maximum principal loan amount under § 1005.443. Otherwise, the value supported by the first appraisal will be used to calculate the maximum principal loan amount.
</P>
<P>(iv) Additional value documentation may be prescribed by Section 184 Program Guidance.
</P>
<P>(5) <I>Re-sales occurring more than 12 months following acquisition.</I> If the re-sale date is more than 12 months following the date of acquisition by the seller, the property is eligible under the Section 184 Program.
</P>
<P>(d) <I>Exceptions to the time restrictions on sales.</I> The time restrictions on sales described in paragraph (b) of this section do not apply to:
</P>
<P>(1) Sales by HUD of real estate owned (REO) properties under 24 CFR part 291 and of single-family assets in revitalization areas pursuant to section 204 of the National Housing Act (12 U.S.C. 1710);
</P>
<P>(2) Sales by an agency of the United States Government of REO single family properties pursuant to programs operated by such agencies;
</P>
<P>(3) Sales of properties by Tribes, TDHEs, State, or local governments, or Eligible Nonprofit Organizations approved to purchase HUD REO single family properties at a discount with resale restrictions;
</P>
<P>(4) Sales of properties that were acquired by the sellers by death, devise, or intestacy;
</P>
<P>(5) Sales of properties purchased by an employer or relocation agency in connection with the relocation of an employee;
</P>
<P>(6) Sales of properties by Tribes, TDHEs, State and local government agencies; and
</P>
<P>(7) Only upon announcement by HUD through issuance of a notice, sales of properties located in areas designated by the President as federally declared disaster areas. The notice will specify how long the exception will be in effect.
</P>
<P>(8) HUD may approve other exceptions on a case-by-case basis.




</P>
</DIV8>


<DIV8 N="§ 1005.417" NODE="24:4.1.3.1.28.4.57.9" TYPE="SECTION">
<HEAD>§ 1005.417   Location of property.</HEAD>
<P>At the time a loan is guaranteed, the property must be for residential use under Tribal, State, or local law and be located within a Section 184 Approved Program Area.




</P>
</DIV8>


<DIV8 N="§ 1005.419" NODE="24:4.1.3.1.28.4.57.10" TYPE="SECTION">
<HEAD>§ 1005.419   Requirements for standard housing.</HEAD>
<P>(a) <I>General standards.</I> Each dwelling unit located on a property guaranteed under the Section 184 Program must:
</P>
<P>(1) Be decent, safe, sanitary, and modest in size and design;
</P>
<P>(2) Conform with International Building Code, applicable general construction standards for the region, or other code as prescribed by Section 184 Program Guidance;
</P>
<P>(3) Contain a heating system that:
</P>
<P>(i) Has the capacity to maintain a minimum temperature in the dwelling of 65 degrees Fahrenheit during the coldest weather in the area;
</P>
<P>(ii) Is safe to operate and maintain;
</P>
<P>(iii) Delivers a uniform distribution of heat; and
</P>
<P>(iv) Conforms to any applicable Tribal heating code, or if there is no applicable Tribal code, an appropriate local, State, or International Building Code, or other code as prescribed by Section 184 Program Guidance.
</P>
<P>(4) Contains a plumbing system that:
</P>
<P>(i) Uses a properly installed system of piping;
</P>
<P>(ii) Includes a kitchen sink and partitional bathroom with lavatory, toilet, and bath or shower; and
</P>
<P>(iii) Uses water supply, plumbing, and sewage disposal systems that conform to any applicable Tribal building code or, if there is no applicable Tribal code, the minimum building standards established by the appropriate local or State code, or the International Building Code, or other code as prescribed by Section 184 Program Guidance;
</P>
<P>(5) Contain an electrical system using wiring and equipment properly installed to safely supply electrical energy for adequate lighting and for operation of appliances that conforms to any applicable Tribal code or, if there is no applicable Tribal code, an appropriate local, State, or International Building Code, or other code as prescribed by Section 184 Program Guidance;
</P>
<P>(6) Meets minimum square footage requirements and be not less than:
</P>
<P>(i) 570 square feet in size, if designed for a family of not more than 4 persons;
</P>
<P>(ii) 850 square feet in size, if designed for a family of not less than 5 and not more than 7 persons;
</P>
<P>(iii) 1020 square feet in size, if designed for a family of not less than 8 persons; or
</P>
<P>(iv) Current locally adopted standards for size of dwelling units, documented by the Direct Guarantee Lender.
</P>
<P>(v) Upon the written request of a Tribe, or TDHE, HUD may waive the minimum square footage requirements under paragraphs (a)(6)(i) through (iv) of this section.
</P>
<P>(7) Conform with the energy performance requirements for new construction established by HUD under section 526(a) of the National Housing Act (12 U.S.C. 1735f-4(a)).
</P>
<P>(b) <I>Additional requirements.</I> HUD may prescribe any additional requirements to permit the use of various designs and materials in housing acquired under this part.
</P>
<P>(c) <I>One to four dwelling unit properties.</I> Properties containing one to four dwelling units:
</P>
<P>(1) Must meet local zoning requirements;
</P>
<P>(2) For 2-4 dwelling unit properties, units may be attached or detached; and
</P>
<P>(3) Must have all dwelling unit(s) located on the property and included in the parcel legal description recorded under the loan.
</P>
<P>(d) <I>Lead-based paint.</I> The relevant requirements of the Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and implementing regulations at 24 CFR part 35, subparts A, B, H, J, K, M, and R shall apply.
</P>
<P>(e) <I>Environmental review procedures.</I> (1) The regulations in 24 CFR 1000.20 apply to an environmental review for Trust Land and for fee land within an Indian reservation, and on fee land owned by the Indian Tribe outside of the Tribe's Indian reservation boundaries, in connection with a Loan guaranteed under this part. That section permits a Tribe to choose to assume environmental review responsibility.
</P>
<P>(2) Before HUD issues a commitment to guarantee any loan, or before HUD guarantees a loan if there is no commitment, the Tribe or HUD must comply with environmental review procedures to the extent applicable under 24 CFR part 58 or 50, as appropriate.
</P>
<P>(3) If the Loan involves proposed or new construction, HUD will require the Direct Guarantee Lender to submit a signed Builder's Certification of Plans, Specifications and Site (Builder's Certification). The Builder's Certification must be in a form prescribed by Section 184 Program Guidance and must cover:
</P>
<P>(i) Flood hazards;
</P>
<P>(ii) Noise;
</P>
<P>(iii) Explosive and flammable materials storage hazards;
</P>
<P>(iv) Runway clear zones/clear zones;
</P>
<P>(v) Toxic waste hazards;
</P>
<P>(vi) Other foreseeable hazards or adverse conditions (<I>i.e.,</I> rock formations, unstable soils or slopes, high ground water levels, inadequate surface drainage, springs, etc.) that may affect the health and safety of the occupants or the structural soundness of the improvements.
</P>
<P>(4) The Builder's Certification must be provided to the appraiser for reference before the performance of an appraisal on the property.
</P>
<P>(f) <I>Flood insurance</I>—(1) <I>Special Flood Hazard Areas.</I> A property is not eligible for a Section 184 loan guarantee if a residential building and related improvements to the property are located within a Special Flood Hazard Area (SFHA) designated by a FEMA Flood Insurance Rate Map unless insurance under the National Flood Insurance Program (NFIP), or notwithstanding 24 CFR 58.6(a), private flood insurance in lieu of NFIP insurance is secured for the property.
</P>
<P>(2) <I>Eligibility for new construction in SFHAs.</I> If any portion of the dwelling, related structures or equipment essential to the value of the property and subject to flood damage is located within an SFHA, the property is not eligible for a Section 184 Guaranteed Loan unless the Direct Guarantee Lender obtains from FEMA a final Letter of Map Amendment (LOMA) or final Letter of Map Revision (LOMR) that removes the property from the SFHA; or obtains a FEMA National Flood Insurance Program Elevation Certificate (FEMA Form 086-0-33) prepared by a licensed engineer or surveyor. The elevation certificate must document that the lowest floor including the basement of the residential building, and all related improvements/equipment essential to the value of the property, is built at or above the 100-year flood elevation in compliance with the NFIP criteria, and flood insurance must be obtained., notwithstanding 24 CFR 58.6(a),
</P>
<P>(3) <I>Required flood insurance amount.</I> Where flood insurance is required under paragraph (f)(1) of this section, flood insurance, whether NFIP insurance or private flood insurance in lieu of NFIP, must be maintained for the life of the Section 184 Guaranteed Loan in an amount that is not less than the lessor of:
</P>
<P>(i) The project cost less the estimated land cost;
</P>
<P>(ii) The outstanding principal balance of the loan; or,
</P>
<P>(iii) For NFIP insurance only, the maximum amount available with respect to the property improvements;
</P>
<P>(4) <I>Required documentation.</I> The Direct Guarantee Lender must obtain a Life of Loan Flood Certification for all Properties. If applicable, the Direct Guarantee Lender must provide all eligibility documentation obtained under paragraph (e)(2) of this section.
</P>
<P>(g) <I>Restrictions on property within Coastal Barrier Resources System.</I> In accordance with the Coastal Barrier Resources Act, a property is not eligible for a Section 184 Loan Guarantee if the improvements are or are proposed to be located within the Coastal Barrier Resources System.
</P>
<P>(h) <I>Airport hazards</I>—(1) <I>Existing Construction.</I> If a property is Existing Construction and is located within a Runway Clear Zone (also known as a Runway Protection Zone) at a civil airport or within a Clear Zone at a military airfield, the Direct Guarantee Lender must obtain a Borrower's acknowledgement of the hazard.
</P>
<P>(2) <I>New Construction.</I> If a New Construction property is located within a Runway Clear Zone (also known as a Runway Protection Zone) at a civil airport or within a Clear Zone at a military airfield, the Direct Guarantee Lender must reject the property for loan guarantee. Properties located in Accident Potential Zone 1 (APZ 1) at a military airfield may be eligible for a Section 184 loan guarantee provided that the Direct Guarantee Lender determines that the property complies with Department of Defense guidelines.




</P>
</DIV8>


<DIV8 N="§ 1005.421" NODE="24:4.1.3.1.28.4.57.11" TYPE="SECTION">
<HEAD>§ 1005.421   Certification of appraisal amount.</HEAD>
<P>A Section 184 Guaranteed Loan must be accompanied by a sales contract satisfactory to HUD, executed by the seller, whereby the seller agrees that before any sale of the property, the seller will deliver to the purchaser of the property a certification of the appraisal, in a form satisfactory to HUD, setting forth the amount of the appraised value of the property.




</P>
</DIV8>


<DIV8 N="§ 1005.423" NODE="24:4.1.3.1.28.4.57.12" TYPE="SECTION">
<HEAD>§ 1005.423   Legal Restrictions on Conveyance.</HEAD>
<P>(a) Legal Restrictions on Conveyance means any provision in any legal instrument, law, or regulation applicable to the Borrower or the mortgaged property, including but not limited to a lease, deed, sales contract, declaration of covenants, declaration of condominium, option, right of first refusal, will, or trust agreement, that attempts to cause a conveyance (including a lease) made by the Borrower to:
</P>
<P>(1) Be void or voidable by a third party;
</P>
<P>(2) Be the basis of contractual liability of the Borrower for breach of an agreement not to convey, including rights of first refusal, pre-emptive rights or options related to Borrower efforts to convey;
</P>
<P>(3) Terminate or subject to termination all or a part of the interest held by the Borrower in the property if a conveyance is attempted;
</P>
<P>(4) Be subject to the consent of a third party;
</P>
<P>(5) Be subject to limits on the amount of sales proceeds retainable by the seller; or
</P>
<P>(6) Be grounds for acceleration of the Guaranteed Loan or increase in the interest rate.
</P>
<P>(b) Section 184 Guaranteed Loans shall not be subject to any Legal Restrictions on Conveyance, except for restrictions in paragraphs (b)(1) through (4) of this section:
</P>
<P>(1) A lease or any other legal document that restricts the assignment of interest in properties held in trust or otherwise restricted to an eligible Indian Family.
</P>
<P>(2) A mortgage funded through tax-exempt bond financing and includes a due-on-sale provision in a form approved by HUD that permits the Direct Guarantee Lender to accelerate a mortgage that no longer meets Federal requirements for tax-exempt bond financing or for other reasons acceptable to HUD. A mortgage funded through tax-exempt bond financing shall comply with all form requirements prescribed under this subpart and shall contain no other provisions designed to enforce compliance with Federal or State requirements for tax-exempt bond financing.
</P>
<P>(3) A mortgaged property subject to protective covenants which restrict occupancy by, or transfer to, persons of a defined population if:
</P>
<P>(i) The restrictions do not have an undue effect on marketability as determined in the original plan.
</P>
<P>(ii) The restrictions do not constitute illegal discrimination and are consistent with the Fair Housing Act and all other applicable nondiscrimination laws under Tribal, Federal, State, or local law, where applicable.
</P>
<P>(4) HUD shall require that the previously approved restrictions automatically terminate if the lease or title to the mortgaged property is transferred by foreclosure, deed-in-lieu/lease-in-lieu of foreclosure, or if the loan is assigned to HUD.




</P>
</DIV8>


<DIV8 N="§ 1005.425" NODE="24:4.1.3.1.28.4.57.13" TYPE="SECTION">
<HEAD>§ 1005.425   Rental properties.</HEAD>
<P>(a) <I>When a Borrower is an Indian Family.</I> A Section 184 Guaranteed Loan may be used to purchase, construct, rehabilitate, or refinance a property, which may contain up to four dwelling units. The Borrower must occupy one unit on the property as a Principal Residence and may rent the additional units.
</P>
<P>(b) <I>When the Borrower is a Tribe or TDHE.</I> There is no limit to the number of properties a Tribe or TDHE may purchase or own with a Section 184 Guaranteed Loan(s) on or off Trust Land. However, the Tribe or TDHE must meet all applicable Section 184 program requirements.




</P>
</DIV8>


<DIV8 N="§ 1005.427" NODE="24:4.1.3.1.28.4.57.14" TYPE="SECTION">
<HEAD>§ 1005.427   Refinancing.</HEAD>
<P>(a) <I>Refinance eligibility.</I> HUD may permit a Borrower to refinance any qualified mortgage, including an existing Section 184 Guaranteed Loan, so long as the Borrower and property meet all Section 184 Program requirements.
</P>
<P>(b) <I>Types of refinances.</I> HUD may guarantee a Rate and Term refinance, a Streamline refinance, or a Cash-Out refinance, consistent with paragraphs (c) through (f) of this section.
</P>
<P>(c) <I>General requirements.</I> All types of refinances are subject to the following requirements:
</P>
<P>(1) The term of the refinancing may not exceed a term of 30 years.
</P>
<P>(2) The Borrower must have a payment history on the existing mortgage that is acceptable to HUD.
</P>
<P>(3) The Direct Guarantee Lender may not require a minimum principal amount to be outstanding on the loan secured by the existing mortgage.
</P>
<P>(4) If an Up-Front Loan Guarantee Fee was financed as part of the existing Section 184 Guaranteed Loan, no refund will be given. However, the maximum amount of the refinancing loan computed in accordance with § 1005.443 may be increased by the amount of the Up-Front Loan Guarantee Fee associated with the new refinancing loan and exceed the applicable Section 184 Guaranteed Loan limit as established by HUD for an area pursuant to § 1005.441.
</P>
<P>(5) The new loan must meet all other applicable Section 184 requirements, including maximum loan to value ratios, as prescribed by Section 184 Program Guidance.
</P>
<P>(d) <I>Rate and Term Refinance Transaction.</I> (1) Rate and term refinance is the refinancing of an existing mortgage for the purpose of changing the interest rate or term, or both, of a loan without advancing new funds on the loan, with the exception of allowable closing costs.
</P>
<P>(2) A Rate and Term Refinance Transaction must meet the following requirements:
</P>
<P>(i) The new loan must be in an amount that does not exceed the lesser of the original principal amount of the existing mortgage; or the sum of the unpaid principal balance of the existing mortgage plus loan closing charges and allowable fees approved by HUD.
</P>
<P>(ii) The new loan must result in a reduction in regular monthly payments by the Borrower, except when refinancing a mortgage for a shorter term will result in an increase in the Borrower's regular monthly payments.
</P>
<P>(iii) The new Loan is not subject to paragraphs (d)(2)(i) and (ii) of this section for an existing mortgage used to construct the property and where the property has been completed for less than one year. The new loan must be in an amount not to exceed the unpaid principal balance plus loan closing charges and allowable fees approved by HUD, plus, at Borrower's option, additional construction costs paid in cash by the Borrower, that were not included in the original construction contract.
</P>
<P>(e) <I>Streamline Refinance Transaction.</I> Streamline Refinance Transaction refers to the refinance of an existing Section 184 Guaranteed Loan requiring limited Borrower credit documentation and underwriting.
</P>
<P>(1) The new loan must be in an amount that does not exceed the unpaid principal balance of the existing Section 184 Guaranteed Loan.
</P>
<P>(2) The new loan with an appraisal may be in the amount equal to the unpaid principal balance of the existing mortgage plus Loan closing charges and allowable fees approved by HUD. The new loan must be subject to an appraisal.
</P>
<P>(f) <I>Cash-out refinance transaction.</I> (1) A Cash-out refinance transaction is when the new Loan is made for an amount larger than the existing mortgage's unpaid principal balance, utilizing the property's equity.
</P>
<P>(2) A Cash-out refinance Loan amount cannot exceed a maximum loan to value ratio, as established by HUD.
</P>
<P>(3) A Borrower may elect to receive a portion of equity in the form of cash in an amount up to a maximum allowed amount as prescribed by Section 184 Program Guidance.
</P>
<P>(4) All cash advances, except cash amounts to the Borrower, must be used for approved purposes in accordance with HUD and BIA requirements, and must be supported by verified documentation.
</P>
<P>(5) The Cash-out refinance must meet all other applicable Section 184 Program requirements.




</P>
</DIV8>


<DIV8 N="§ 1005.429" NODE="24:4.1.3.1.28.4.57.15" TYPE="SECTION">
<HEAD>§ 1005.429   Eligibility of Loans covering manufactured homes.</HEAD>
<P>A Loan covering a manufactured home (as defined in 24 CFR part 3280), shall be eligible for a Section 184 Guaranteed Loan when the following requirements have been met:
</P>
<P>(a) <I>For manufactured homes located on a fee simple property.</I> (1) A manufactured home, as erected on the property, must be installed in accordance with 24 CFR part 3286; conform with property standards under § 1005.419; and shall have been constructed in accordance with 24 CFR part 3280, as evidenced by the certification label.
</P>
<P>(2) The Loan shall cover the manufactured home(s) and site, shall constitute a loan on a property, and classified and taxed as real estate, as applicable.
</P>
<P>(3) In the case of a manufactured home which has not been permanently erected on a site for more than one year prior to the date of the application for the Loan Guarantee Certificate:
</P>
<P>(i) A manufactured home shall be erected on a site-built permanent foundation and shall be permanently attached thereto by anchoring devices adequate for all loads in accordance with 24 CFR part 3286. The towing hitch or running gear, which includes axles, brakes, wheels, and other parts of the chassis that operate only during transportation, shall have been removed. The finished grade level beneath the manufactured home shall be at least two feet above the 100-year return frequency flood elevation. The site, site improvements, and all other features of the property not addressed by the Manufactured Home Construction and Safety Standards shall meet or exceed applicable requirements of the Minimum Property Standards (MPS).
</P>
<P>(ii) The space beneath a manufactured home shall be enclosed by continuous foundation-type construction designed to resist all forces to which it is subject without transmitting forces to the building superstructure. The enclosure shall be adequately secured to the perimeter of the manufactured home and be constructed of materials that conform to MPS requirements for foundations.
</P>
<P>(iii) A manufactured home shall be braced and stiffened before it leaves the factory to resist racking and potential damage during transportation.
</P>
<P>(iv) Section 1005.433 is modified to the extent provided in this paragraph. Applications relating to the guarantee of loans under this paragraph (a) must be accompanied by an agreement in a form satisfactory to HUD executed by the seller or manufacturer or such other person as HUD may require, agreeing that in the event of any sale or conveyance of the property within a period of one year beginning with the date of initial occupancy, the seller, manufacturer, or such other person will, at the time of such sale or conveyance, deliver to the purchaser or owner of such property the manufacturer's warranty on a form prescribed by HUD. This warranty shall provide that the manufacturer's warranty is in addition to and not in derogation of all other rights and remedies the purchaser or owner may have, and a warranty in form satisfactory to HUD warranting that the manufactured home, the foundation, positioning, and anchoring of the manufactured home to its permanent foundation, and all site improvements are constructed in substantial conformity with the plans and specifications (including amendments thereof or changes and variations therein which have been approved in writing by HUD) on which HUD has based its valuation of the property. The warranty shall also expressly state that the manufactured home sustained no hidden damage during transportation, and if the manufactured home is a double-wide, that the sections were properly joined and sealed. The warranty must provide that upon the sale or conveyance of the property and delivery of the warranty, the seller, builder, or such other person will promptly furnish HUD with a conformed copy of the warranty establishing by the purchaser's receipt thereon that the original warranty has been delivered to the purchaser in accordance with this section.
</P>
<P>(4) In the case of a manufactured home which has been permanently erected on a site for more than one year prior to the date of the application for the Section 184 Guaranteed Loan:
</P>
<P>(i) A manufactured home shall be permanently anchored to and supported by permanent footings and shall have permanently installed utilities that are protected from freezing. The space beneath the manufactured home shall be a properly enclosed crawl space.
</P>
<P>(ii) The site, site improvements, and all other features of the property not addressed by 24 CFR parts 3280 and 3286 shall meet or exceed HUD requirements. The finished grade level beneath the manufactured home shall be at or above the 100-year return frequency flood elevation.
</P>
<P>(b) <I>For manufactured homes located on Trust Land.</I> Manufactured homes on Trust Land shall meet manufactured home installation standards pursuant to Tribal laws, if any. In the absence of Tribal laws, the requirements in paragraphs (a)(1), (3), and (4) of this section shall apply and other such requirements as established by Section 184 Program Guidance.




</P>
</DIV8>


<DIV8 N="§ 1005.431" NODE="24:4.1.3.1.28.4.57.16" TYPE="SECTION">
<HEAD>§ 1005.431   Acceptance of individual residential water purification.</HEAD>
<P>If a property does not have access to a continuing supply of safe and potable water as part of its plumbing system without the use of a water purification system, the requirements of this section apply. The Direct Guarantee Lender must provide appropriate documentation with the submission for a Section 184 Guaranteed Loan to address each of the requirements of this section.
</P>
<P>(a) <I>Equipment.</I> Water purification equipment must be approved by a nationally recognized testing laboratory acceptable to Tribal, State, or local health authority.
</P>
<P>(b) <I>Certification by Tribal, State, or local health authority.</I> A Tribal, State, or local health authority certification must be submitted to HUD, which certifies that a point-of entry or point-of-use water purification system is used for the water supply, the treatment equipment meets the requirements of the Tribal, State, or local health authority, and has been determined to meet Tribal, State, or local health authority quality standards for drinking water. If neither Tribal, State, nor local health authority standards are applicable, then quality shall be determined in accordance with standards set by the Environmental Protection Agency (EPA) pursuant to the Safe Drinking Water Act. (EPA standards are prescribed in the National Primary Drinking Water requirements, 40 CFR parts 141 and 142.)
</P>
<P>(c) <I>Borrower notices and certification.</I> (1) The prospective Borrower must have received written notification, when the Borrower signs a sales contract, that the property does not have access to a continuing supply of safe and potable water without the use of a water purification system to remain safe and acceptable for human consumption.
</P>
<P>(2) Prior to final ratification of the sales contract, the Borrower must have received:
</P>
<P>(i) A water safety report identifying specific contaminants in the water supply serving the property, and the related health hazard arising from the presence of those contaminants.
</P>
<P>(ii) A written good faith estimate of the maintenance and replacement costs of the equipment necessary to assure continuing safe drinking water.
</P>
<P>(3) The prospective Borrower must sign a certification, acknowledging the required notices have been received by the Borrower, in the form prescribed by Section 184 Program Guidance, at the time the application for mortgage credit approval is signed by the Direct Guarantee Lender. The required certification must be submitted to HUD with the request for the Loan Guarantee Certificate.




</P>
</DIV8>


<DIV8 N="§ 1005.433" NODE="24:4.1.3.1.28.4.57.17" TYPE="SECTION">
<HEAD>§ 1005.433   Builder warranty.</HEAD>
<P>(a) Applications relating to proposed construction must be accompanied by an agreement in a form satisfactory to HUD, executed by the seller or builder or such other person as HUD may require, and agreeing that in the event of any sale or conveyance of the property, within a period of one year beginning with the date of initial occupancy, the seller, builder, or such other person will, at the time of such sale or conveyance, deliver to the purchaser or owner of such property a warranty in a form satisfactory to HUD, warranting that the property is constructed in substantial conformity with the plans and specifications (including amendments thereof or changes and variations therein which have been approved in writing by HUD) on which HUD has based on the valuation of the property.
</P>
<P>(b) Such agreement must provide that upon the sale or conveyance of the property and delivery of the warranty, the seller, builder, or such other person will promptly furnish HUD with a confirmed copy of the warranty, establishing by the purchaser's receipt thereon that the original warranty has been delivered to the purchaser in accordance with this section.


</P>
</DIV8>

</DIV7>


<DIV7 N="58" NODE="24:4.1.3.1.28.4.58" TYPE="SUBJGRP">
<HEAD>Eligible Loans</HEAD>


<DIV8 N="§ 1005.435" NODE="24:4.1.3.1.28.4.58.18" TYPE="SECTION">
<HEAD>§ 1005.435   Eligible collateral.</HEAD>
<P>A Section 184 Guaranteed Loan may be secured by any collateral authorized under existing Federal law or applicable State or Tribal law. The collateral must be sufficient to cover the amount of the loan, as determined by the Direct Guarantee Lender and approved by HUD. Improvements on Trust Lands may be considered as eligible collateral. Trust Land cannot be considered as part of the eligible collateral.




</P>
</DIV8>


<DIV8 N="§ 1005.437" NODE="24:4.1.3.1.28.4.58.19" TYPE="SECTION">
<HEAD>§ 1005.437   Loan provisions.</HEAD>
<P>(a) <I>Loan form.</I> (1) The Loan shall be in a form meeting the requirements of HUD. HUD may prescribe loan closing documents. For each case in which HUD does not prescribe loan closing documents, HUD shall require specific language in the loan which shall be uniform for every loan. HUD may also prescribe the language or substance of additional provisions for all loans, as well as the language or substance of additional provisions for use only in particular jurisdictions.
</P>
<P>(2) Each Loan shall also contain any provisions necessary to create a valid and enforceable security interest under Tribal law or the laws of the jurisdiction in which the property is located.
</P>
<P>(b) <I>Loan multiples.</I> A Loan, in whole dollars, shall be in an amount not to exceed the maximum principal loan amount (as calculated under § 1005.443) for the area where the property is located.
</P>
<P>(c) <I>Payments.</I> The Loan payments shall:
</P>
<P>(1) Be due on the first of the month;
</P>
<P>(2) Contain complete Amortization provisions in accordance with § 1005.453 and an Amortization period not in excess of the term of the loan; and
</P>
<P>(3) Provide for payments to principal and interest to begin no later than the first day of the month, 60 days after the date the loan is executed. For closings taking place within the first seven days of the month, interest credit is acceptable.
</P>
<P>(d) <I>Maturity.</I> The Loan shall have a repayment term of not more than the maximum period as approved by HUD and fully amortized.
</P>
<P>(e) <I>Property standards.</I> The Loan must be a first lien upon the property that conforms with the requirements for standard housing under § 1005.419.
</P>
<P>(f) <I>Disbursement.</I> The entire principal amount of the Loan must have been disbursed to the Borrower or to the Borrower's creditors for the Borrower's account and with the Borrower's consent.
</P>
<P>(g) <I>Disbursement for construction advances.</I> HUD may guarantee loans from which advances will be made during construction when all applicable Section 184 Program requirements are met and all the following conditions are satisfied:
</P>
<P>(1) The Direct Guarantee Lender and Borrower execute a building Loan agreement, in the form prescribed by Section 184 Program Guidance, setting forth the terms and conditions under which advances will be made.
</P>
<P>(2) The advances may be made only as provided in the building loan agreement.
</P>
<P>(3) The principal amount of the loan is held by the Direct Guarantee Lender in an interest-bearing account, trust, or escrow for the benefit of the Borrower, pending advancement to the Borrower or Borrower's creditors as provided in the building loan agreement;
</P>
<P>(4) The loan shall bear interest on the amount advanced to the Borrower or the Borrower's creditors and on the amount held in an account or trust for the benefit of the Borrower.
</P>
<P>(h) <I>Changes to the Loan Agreement.</I> Notwithstanding paragraph (g)(2) of this section, changes to the building loan Agreement must be approved and documented by the Direct Guarantee Lender prior to the construction advance.
</P>
<P>(i) <I>Documentation.</I> Direct Guarantee Lender must submit a construction completion package to HUD, as prescribed in Section 184 Program guidance.
</P>
<P>(j) <I>Prepayment privilege.</I> The Loan must contain a provision permitting the Borrower to prepay the Loan in whole or in part at any time. The Loan may not provide for the payment of any fee or penalty on account of such prepayment.




</P>
</DIV8>


<DIV8 N="§ 1005.439" NODE="24:4.1.3.1.28.4.58.20" TYPE="SECTION">
<HEAD>§ 1005.439   Loan lien.</HEAD>
<P>(a) <I>First lien.</I> A Borrower must establish that, after the loan offered for guarantee has been recorded, the property will be free and clear of all liens other than such loan, and that there will not be outstanding any other unpaid obligations contracted in connection with the loan transaction or the purchase of the property, except obligations that are secured by property or collateral owned by the Borrower independently of the property.
</P>
<P>(b) <I>Junior lien.</I> The property may be subject to a junior lien held by a Tribe, Direct Guarantee Lender, TDHE, Federal, State, local government, or an Eligible Nonprofit Organization. Where applicable, a junior lien when intended to be utilized in conjunction with a Section 184 loan, must be evaluated in the Section 184 underwriting process by the Direct Guarantee underwriter in accordance with Section 184 Program Guidance. In cases where a junior lien is recorded after the Section 184 Loan Guarantee Certificate is issued, the junior lien must comply with this section.
</P>
<P>(1) Periodic payments, if any, shall be collected monthly and be substantially the same;
</P>
<P>(2) The monthly Loan payments for the Section 184 Guaranteed Loan and the junior lien shall not exceed the Borrower's reasonable ability to pay, as determined by HUD;
</P>
<P>(3) The sum of the principal amount of the Section 184 Guaranteed Loan and the junior lien shall not exceed the loan-to-value limitation applicable to the Section 184 Program, and shall not exceed the loan limit for the area, except as otherwise permitted by HUD;
</P>
<P>(4) The repayment terms shall not provide for a balloon payment before ten years unless approved by HUD;
</P>
<P>(5) The junior lien must become due and payable on sale or refinancing of the secured property covered by the Section 184 Guaranteed Loan, unless otherwise approved by HUD; and
</P>
<P>(6) The junior lien shall contain a provision permitting the Borrower to prepay the junior lien in whole or in part at any time and shall not require a prepayment penalty.
</P>
<P>(c) <I>Junior liens to reduce Borrower monthly payments.</I> With prior HUD acceptance, the property may be subject to a junior lien advanced to reduce the Borrower's monthly payments on the Section 184 Guaranteed Loan following the date it is guaranteed, if the junior lien meets the following requirements:
</P>
<P>(1) The junior lien shall not provide for any payment of principal or interest until the property securing the junior lien is sold or the Section 184 Guaranteed Loan is refinanced, at which time the junior lien shall become due and payable.
</P>
<P>(2) The junior lien shall not provide for any payment of principal or interest so long as the occupancy requirements are met; and, where applicable, shall provide for forgiveness of the junior lien amount at the end of the term of the junior lien.
</P>
<P>(d) <I>Junior liens related to tax-exempt bond financing and low-income housing tax credits.</I> HUD approval shall be required when Borrower seeks to encumber property with a junior lien pursuant to § 1005.423(b).




</P>
</DIV8>


<DIV8 N="§ 1005.441" NODE="24:4.1.3.1.28.4.58.21" TYPE="SECTION">
<HEAD>§ 1005.441   Section 184 Guaranteed Loan limit.</HEAD>
<P>The Section 184 Guaranteed Loan limit is the level set by HUD for the Section 184 Approved Program Area and is based upon the location of the property. The limit that is in effect on the date the Section 184 Program case number is issued in accordance with § 1005.445 shall apply, regardless of the closing date. The limit shall be revised periodically by HUD and published in Section 184 Program guidance.




</P>
</DIV8>


<DIV8 N="§ 1005.443" NODE="24:4.1.3.1.28.4.58.22" TYPE="SECTION">
<HEAD>§ 1005.443   Loan amount.</HEAD>
<P>(a) <I>Minimum required investment.</I> The Borrower is required to make a minimum investment in the property. This investment must come from the Borrower's own funds, gifts, or Tribal, State, or local funds awarded to the Borrower. The minimum investment in the property is the difference between the sales price and the base loan amount.
</P>
<P>(b) <I>Calculating base loan amount.</I> (1) The base loan amount is determined by calculating:
</P>
<P>(i) 97.75 percent of the appraised value of the property or the Acquisition Cost, whichever is less; or
</P>
<P>(ii) 98.75 percent of the lesser of the appraised value or sales price when the appraised value or sales price is $50,000 or less.
</P>
<P>(2) The base loan amount cannot exceed the Section 184 Guaranteed Loan limits established under § 1005.441.
</P>
<P>(c) <I>Maximum principal loan amount.</I> The maximum principal loan amount is the base loan amount and the Up-Front Loan Guarantee Fee. The Section 184 Guaranteed Loan limit may only be exceeded by the amount of the Up-Front Loan Guarantee Fee.
</P>
<P>(d) <I>Minimum principal loan amount.</I> A Direct Guarantee Lender may not require a minimum loan amount for a Section 184 Guaranteed Loan.




</P>
</DIV8>


<DIV8 N="§ 1005.445" NODE="24:4.1.3.1.28.4.58.23" TYPE="SECTION">
<HEAD>§ 1005.445   Case numbers.</HEAD>
<P>(a) Section 184 case numbers may only be obtained by a Direct Guarantee Lender.
</P>
<P>(b) To obtain a case number, the Direct Guarantee Lender must:
</P>
<P>(1) Have an active loan application from a Borrower(s) with an identified property;
</P>
<P>(2) Provide evidence of borrower eligibility, as prescribed in § 1005.401(a);
</P>
<P>(3) Verify that the property is located in a Section 184 Approved Program Area;
</P>
<P>(4) Confirm that the Loan does not exceed the Section 184 Loan limit; and
</P>
<P>(5) Submit Loan specific information as prescribed in Section 184 Program Guidance.
</P>
<P>(c) Case numbers are automatically cancelled after a period as identified in Section 184 Program Guidance, unless a Firm Commitment is issued, or an extension is granted by HUD in accordance with Section 184 Program Guidance prior to the expiration of the case number.




</P>
</DIV8>


<DIV8 N="§ 1005.447" NODE="24:4.1.3.1.28.4.58.24" TYPE="SECTION">
<HEAD>§ 1005.447   Maximum age of Loan documents.</HEAD>
<P>Documents reviewed at underwriting and at loan closing may not be older than the 120 days, or another time period prescribed by Section 184 Program Guidance. Documents whose validity for underwriting purposes is not affected by the passage of time, such as divorce decrees or tax returns, are not subject to time limitations.




</P>
</DIV8>


<DIV8 N="§ 1005.449" NODE="24:4.1.3.1.28.4.58.25" TYPE="SECTION">
<HEAD>§ 1005.449   Qualified mortgage.</HEAD>
<P>A Section 184 Guaranteed Loan, except for mortgage transactions exempted under 15 U.S.C. 1639c(b)(3)(ii), is afforded safe harbor as a qualified mortgage that meets the ability-to-repay requirements in 15 U.S.C. 1639c(a).




</P>
</DIV8>


<DIV8 N="§ 1005.451" NODE="24:4.1.3.1.28.4.58.26" TYPE="SECTION">
<HEAD>§ 1005.451   Agreed interest rate.</HEAD>
<P>The loan shall bear interest at the rate agreed upon by the Direct Guarantee Lender and the Borrower and determined by HUD to be reasonable. The agreed upon interest rate may not exceed the rate generally charged in the area for mortgage loans not guaranteed or insured by any agency or instrumentality of the Federal Government, or a rate determined by HUD, whichever is lower. The agreed upon interest rate must not take into consideration a Borrower's credit score in accordance with § 1005.409 and must not be based on risk-based pricing.




</P>
</DIV8>


<DIV8 N="§ 1005.453" NODE="24:4.1.3.1.28.4.58.27" TYPE="SECTION">
<HEAD>§ 1005.453   Amortization provisions.</HEAD>
<P>The loan must contain complete Amortization provisions satisfactory to HUD, requiring payments due on the first day of each month by the Borrower. The sum of the principal and interest payments in each month shall be substantially the same.


</P>
</DIV8>

</DIV7>


<DIV7 N="59" NODE="24:4.1.3.1.28.4.59" TYPE="SUBJGRP">
<HEAD>Underwriting</HEAD>


<DIV8 N="§ 1005.455" NODE="24:4.1.3.1.28.4.59.28" TYPE="SECTION">
<HEAD>§ 1005.455   Direct guarantee underwriting.</HEAD>
<P>(a) <I>Underwriter due diligence.</I> A Direct Guarantee Lender shall exercise the same level of care which it would exercise in obtaining and verifying information for a Loan in which the Direct Guarantee Lender would be entirely dependent on the property as security to protect its investment. Direct Guarantee Lender procedures that evidence such due diligence shall be incorporated as part of the quality control plan required under § 1005.219. Compliance with HUD-prescribed underwriting guidelines shall be the minimum standard of due diligence in underwriting the Loans. Failure to comply with HUD-prescribed underwriting guidelines may result in sanctions in accordance with §§ 1005.905 and 1005.907.
</P>
<P>(b) <I>Evaluating the Borrower(s) qualifications.</I> The Direct Guarantee Lender shall evaluate the Borrower's credit characteristics, the adequacy and stability of the Borrower's income to meet the periodic payments under the loan and all other obligations, the adequacy of the Borrower's available assets to close the transaction, the Borrower's management capacity and grant performance, if applicable, and render an underwriting decision in accordance with applicable regulations, policies, and procedures.
</P>
<P>(c) <I>Assumption.</I> Applications for the assumption of an existing Section 184 Guaranteed Loan shall be underwritten using the same Borrower eligibility and underwriting standards in accordance with this subpart.




</P>
</DIV8>


<DIV8 N="§ 1005.457" NODE="24:4.1.3.1.28.4.59.29" TYPE="SECTION">
<HEAD>§ 1005.457   Appraisal.</HEAD>
<P>(a) A Direct Guarantee Lender shall have the property appraised in accordance with all applicable Federal requirements, including but not limited to the Uniform Standards of Professional Appraisal Practice, Equal Credit Opportunity Act (15 U.S.C. 1691-1691f), and the Fair Housing Act (42 U.S.C. 3601-19). HUD may establish alternative requirements to Uniform Standards of Professional Appraisal Practice, when necessitated by location and availability of an appraiser, and publish such alternative requirements in Section 184 Program Guidance.
</P>
<P>(b) A Direct Guarantee Lender must select an appraiser identified on the Federal Housing Administration Appraiser Roster, compiled in accordance with 24 CFR part 200, subpart G. The Direct Guarantee Lender shall not discriminate on the basis of race, color, religion, sex (including gender identity and sexual orientation), disability, familial status, national origin, or age in the selection of an appraiser. HUD may establish guidance regarding the alternatives to the use of an appraiser identified on the Federal Housing Administration Appraiser Roster, when necessitated by a rural or remote location and the availability of an appraiser.
</P>
<P>(c) A Direct Guarantee Lender and an appraiser must ensure that an appraisal and related documentation satisfy Federal Housing Administration, Fannie Mae, or Freddie Mac appraisal requirements, and both bear responsibility for the quality of the appraisal in satisfying such requirements.
</P>
<P>(d) A Direct Guarantee Lender that submits, or causes to be submitted, an appraisal or related documentation that does not satisfy requirements under paragraphs (a) through (d) of this section may be subject to sanctions by HUD pursuant to §§ 1005.905 and 1005.907.
</P>
<P>(e) The validity period of appraisals is 180 days or as provided by Section 184 Program Guidance.
</P>
<P>(f) Where the initial appraisal report will be more than 180 days at closing, an appraisal update may be performed to extend the appraisal validity period prior to closing, in accordance with Section 184 Program Guidance. The updated appraisal is valid for one year after the effective date of the initial appraisal report; and
</P>
<P>(g) The appraisal shall meet other guidance as prescribed in Section 184 Program Guidance.




</P>
</DIV8>


<DIV8 N="§ 1005.459" NODE="24:4.1.3.1.28.4.59.30" TYPE="SECTION">
<HEAD>§ 1005.459   Loan submission to HUD for endorsement.</HEAD>
<P>(a) <I>Deadline for submission.</I> Within 60 days after the date of closing the loan, a Direct Guarantee Lender must submit an endorsement case binder to HUD, in accordance with § 1005.503.
</P>
<P>(b) <I>Late submission.</I> If the endorsement case binder is submitted past 60 days, the Direct Guarantee Lender must include, as part of the case binder, a late endorsement request with supporting documentation, affirming:
</P>
<P>(1) The loan is not currently in default;
</P>
<P>(2) All escrow accounts for taxes, hazard insurance, and monthly Loan Guarantee Fees are current;
</P>
<P>(3) Neither the Direct Guarantee Lender nor Servicer provided the funds to bring or keep the loan current or to bring about the appearance of acceptable payment history; and
</P>
<P>(4) Notwithstanding paragraph (b)(3) of this section, with prior approval from HUD, Direct Guarantee Lender or Servicer may provide funds to bring or keep the loan current.




</P>
</DIV8>


<DIV8 N="§ 1005.461" NODE="24:4.1.3.1.28.4.59.31" TYPE="SECTION">
<HEAD>§ 1005.461   HUD issuance of Firm Commitment.</HEAD>
<P>HUD may underwrite and issue a Firm Commitment when it is in the interest of HUD.


</P>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="" NODE="24:4.1.3.1.28.5" TYPE="SUBPART">
<HEAD>Subpart-E—Closing and Endorsement</HEAD>


<DIV7 N="60" NODE="24:4.1.3.1.28.5.60" TYPE="SUBJGRP">
<HEAD>Closing</HEAD>


<DIV8 N="§ 1005.501" NODE="24:4.1.3.1.28.5.60.1" TYPE="SECTION">
<HEAD>§ 1005.501   Direct Guarantee Lender closing requirements.</HEAD>
<P>The Direct Guarantee Lender shall close the loan in accordance with the following:
</P>
<P>(a) <I>Chain of title/interest.</I> (1) For fee simple Properties, the Direct Guarantee Lender must obtain evidence of all prior ownership within 12 months of the case number assignment date. The Direct Guarantee Lender must review the evidence of prior ownership to determine any undisclosed Identity of Interest transactions.
</P>
<P>(i) If an Identity of Interest is discovered, the Direct Guarantee Lender must review for any possible Conflict of Interest.
</P>
<P>(ii) As a requirement of closing, all Borrowers must execute a Section 184 Borrower's Certification, addressing any Identity of Interest and Conflict of Interest.
</P>
<P>(2) For Trust Land transactions, the requirements for the determination of ownership title interest shall be prescribed by HUD in Section 184 Program Guidance.
</P>
<P>(b) <I>Title/Title Status Report.</I> The Direct Guarantee Lender must ensure that all objections to title binder/initial certified Title Status Report have been cleared, and any discrepancies have been resolved, to ensure that the Section 184 Guaranteed Loan will be in first security interest position.
</P>
<P>(c) <I>Closing in compliance with Direct Guarantee Lender approval.</I> The Direct Guarantee Lender must instruct the settlement agent to close the Section 184 Guaranteed Loan on the same terms or on the same assumptions in which it was underwritten and approved.
</P>
<P>(d) <I>Closing in the Direct Guarantee Lender's name.</I> A Section 184 Guaranteed Loan must close in the name of the Direct Guarantee Lender issuing the underwriting approval.
</P>
<P>(e) <I>Required HUD documents at closing.</I> The Direct Guarantee Lender must use the forms and language as prescribed in Section 184 Program Guidance.
</P>
<P>(f) <I>Projected escrow.</I> The Direct Guarantee Lender must establish an escrow account in accordance with § 1005.717 and the Real Estate Settlement Procedures Act and any other escrow requirements as prescribed under applicable Tribal and Federal laws and regulations.
</P>
<P>(g) <I>Closing costs and fees.</I> The Direct Guarantee Lender may charge the Borrower reasonable and customary fees in accordance with § 1005.515.
</P>
<P>(h) <I>Closing date.</I> The closing date must occur before the expiration of the Firm Commitment.
</P>
<P>(i) <I>Per diem interest and interest credits.</I> The Direct Guarantee Lender may collect per diem interest from the closing date to the date Amortization begins. Alternatively, the Direct Guarantee Lender may begin Amortization up to 7 days prior to the closing date and provide a per diem interest credit. Any per diem interest credit may not be used to meet Borrower's minimum required investment. Per diem interest must be computed using a factor of 1/365th of the annual rate.
</P>
<P>(j) <I>Authorization of Tribal notification in the event of default.</I> At closing and on a form provided by HUD, the Borrower must elect whether to authorize the Direct Guarantee Lender or Servicer to notify the Tribe in the event of a default, as prescribed in the Section 184 Program Guidance.
</P>
<P>(k) <I>Signatures.</I> Direct Guarantee Lender must ensure that the note, security instrument, and all closing documents are signed by the required parties.
</P>
<P>(l) <I>Other requirements.</I> Direct Guarantee Lender shall close the loan in accordance with any applicable Tribal, State, or Federal requirements. Direct Guarantee Lenders must execute any other documents as may be required by applicable Tribal, Federal, or State law.




</P>
</DIV8>


<DIV8 N="§ 1005.503" NODE="24:4.1.3.1.28.5.60.2" TYPE="SECTION">
<HEAD>§ 1005.503   Contents of endorsement case binder.</HEAD>
<P>The Direct Guarantee Lender's endorsement case binder shall be submitted in a format as prescribed by HUD and contain the documents meeting the requirements of § 1005.501 and any other documents supporting the Direct Guarantee Lender's underwriting determination.




</P>
</DIV8>


<DIV8 N="§ 1005.505" NODE="24:4.1.3.1.28.5.60.3" TYPE="SECTION">
<HEAD>§ 1005.505   Payment of Upfront Loan Guarantee Fee.</HEAD>
<P>The Direct Guarantee Lender, shall provide evidence of the remittance of the Upfront Loan Guarantee Fee, as required under § 1005.607, in accordance with a process provided by HUD in Section 184 Program Guidance.




</P>
</DIV8>


<DIV8 N="§ 1005.507" NODE="24:4.1.3.1.28.5.60.4" TYPE="SECTION">
<HEAD>§ 1005.507   Borrower's payments to include other charges and escrow payments.</HEAD>
<P>(a) The Direct Guarantee Lender must include in the Section 184 Guaranteed Loan monthly payment the following charges and escrow payments:
</P>
<P>(1) The ground rents, if any, when the Tribe or TDHE does not have an existing withholding or payment policy in place;
</P>
<P>(2) Annual Loan Guarantee Fee, as prescribed in § 1005.607, if any;
</P>
<P>(3) The estimated amount of all taxes;
</P>
<P>(4) Special assessments, if any;
</P>
<P>(5) Flood insurance premiums, if flood insurance is required;
</P>
<P>(6) Fire and other hazard insurance premiums, except master policy premiums payable to a condominium association or a Tribe and paid directly by the Borrower:
</P>
<P>(7) Other charges as allowed in Section 184 Program Guidance.
</P>
<P>(b) The Section 184 Guaranteed Loan shall further provide that such payments shall be held by the Direct Guarantee Lender in a manner satisfactory to HUD for the purpose of paying such ground rents, taxes, assessments, and insurance premiums before the same become delinquent, for the benefit and account of the Borrower. The Section 184 Guaranteed Loan must also make provisions for adjustments in case the estimated amount of such taxes, assessments, and insurance premiums shall prove to be more, or less, than the actual amount thereof so paid by the Borrower. Such payments shall be held in an escrow subject to § 1005.717.
</P>
<P>(c) The Borrower shall not be required to pay premiums for fire or other hazard insurance which protects only the interests of the Direct Guarantee Lender, or for life or disability income insurance, or fees charged for obtaining information necessary for the payment of property taxes. The foregoing does not apply to charges made or penalties exacted by the taxing authority, except that a penalty assessed, or interest charged, by a taxing authority for failure to timely pay taxes or assessments shall not be charged by the Direct Guarantee Lender to the Borrower if the Direct Guarantee Lender had sufficient funds in escrow for the account of the Borrower to pay such taxes or assessments prior to the date on which penalty or interest charges are imposed.




</P>
</DIV8>


<DIV8 N="§ 1005.509" NODE="24:4.1.3.1.28.5.60.5" TYPE="SECTION">
<HEAD>§ 1005.509   Application of payments.</HEAD>
<P>All monthly payments to be made by the Borrower to the Servicer shall be added together, and the aggregate amount shall be paid by the Borrower each month in a single payment by the Borrower, in accordance with the loan documents. The Servicer shall apply the Borrower's funds in accordance with § 1005.715.




</P>
</DIV8>


<DIV8 N="§ 1005.511" NODE="24:4.1.3.1.28.5.60.6" TYPE="SECTION">
<HEAD>§ 1005.511   Late fee.</HEAD>
<P>When the monthly Section 184 Guaranteed Loan payment is 15 or more days in arrears, the Servicer may collect from Borrower a late fee of up to four percent of the overdue payment of principal and interest, or any other limit as established by HUD through public notice with an opportunity for comment. The late fee provision must appear on the note executed at closing.




</P>
</DIV8>


<DIV8 N="§ 1005.513" NODE="24:4.1.3.1.28.5.60.7" TYPE="SECTION">
<HEAD>§ 1005.513   Borrower's payments when Section 184 Guaranteed Loan is executed.</HEAD>
<P>The Borrower must pay to the Direct Guarantee Lender, upon execution of the Section 184 Guaranteed Loan, where applicable, the:
</P>
<P>(a) One-time Up-Front Loan Guarantee Fee or any portion payable pursuant to § 1005.603; and
</P>
<P>(b) All other applicable monthly charges pursuant to § 1005.507, including the Annual Loan Guarantee Fee pursuant to § 1005.607 covering the period from the closing date to the due date of the first installment payment under the Section 184 Guaranteed Loan.




</P>
</DIV8>


<DIV8 N="§ 1005.515" NODE="24:4.1.3.1.28.5.60.8" TYPE="SECTION">
<HEAD>§ 1005.515   Charges, fees, or discounts.</HEAD>
<P>(a) The Direct Guarantee Lender must ensure that all fees charged and disclosure requirements at closing to the Borrower comply with all applicable Tribal, Federal, State, and local laws.
</P>
<P>(b) The Direct Guarantee Lender may collect from the Borrower the following charges, fees, or discounts at closing:
</P>
<P>(1) A charge to compensate the Direct Guarantee Lender for expenses incurred in originating and closing the Loan. HUD may establish limitations on the amount of any such charge in Section 184 Program Guidance.
</P>
<P>(2) Reasonable and customary amounts, but not more than the amount actually paid by the Direct Guarantee Lender, for any of the following items:
</P>
<P>(i) Recording fees and recording taxes or other charges incident to recordation;
</P>
<P>(ii) Credit report;
</P>
<P>(iii) Survey, if required by Direct Guarantee Lender or Borrower;
</P>
<P>(iv) Title examination;
</P>
<P>(v) Title insurance, if any;
</P>
<P>(vi) Fees paid to an appraiser or inspector approved by HUD for the appraisal and inspection, if required, of the property;
</P>
<P>(vii) Reasonable and customary charges in the nature of discounts; and
</P>
<P>(viii) Interest calculations in accordance with § 1005.501(i).
</P>
<P>(ix) Such other reasonable and customary charges as may be authorized by HUD.
</P>
<P>(c) All charges, fees or discounts are subject to review by HUD after endorsement.




</P>
</DIV8>


<DIV8 N="§ 1005.517" NODE="24:4.1.3.1.28.5.60.9" TYPE="SECTION">
<HEAD>§ 1005.517   Certificate of nondiscrimination by the Direct Guarantee Lender.</HEAD>
<P>(a) Where applicable, a Direct Guarantee Lender shall certify to HUD as to each of the following:
</P>
<P>(1) That neither the Direct Guarantee Lender, nor anyone authorized to act for the Direct Guarantee Lender, will refuse to sell, after the making of a bona fide offer, or refuse to negotiate for the sale otherwise make unavailable or deny the property covered by the Section 184 Guaranteed Loan to any eligible purchaser or discriminate in making a loan or engaging in a residential real estate-related transaction (as defined in 42 U.S.C. 3605) because of age, race, color, religion, sex (including gender identity and sexual orientation), disability, familial status, or national origin, source of income of the Borrower, location of the property, or because the Borrower exercised any right under the Consumer Credit Protection Act, except as provided by law.
</P>
<P>(2) That any restrictive covenant, other than permissible restrictions on Trust Land, on such property relating to race, color, religion, sex (including gender identity and sexual orientation), disability, familial status, or national origin is hereby illegal, unenforceable, or void.
</P>
<P>(b) That civil action for preventative relief may be brought by the Attorney General in any appropriate U.S. District Court against any person responsible for a violation of this certification.


</P>
</DIV8>

</DIV7>


<DIV7 N="61" NODE="24:4.1.3.1.28.5.61" TYPE="SUBJGRP">
<HEAD>Endorsement and Post-Closing</HEAD>


<DIV8 N="§ 1005.519" NODE="24:4.1.3.1.28.5.61.10" TYPE="SECTION">
<HEAD>§ 1005.519   Creation of the contract.</HEAD>
<P>The loan shall be a Section 184 Guaranteed Loan from the date of the issuance of a Loan Guarantee Certificate. The Direct Guarantee Lender is thereafter bound by the regulations in this subpart with the same force and to the same extent as if a separate contract had been executed relating to the Section 184 Guaranteed Loan, including the provisions of the regulations in this subpart and 12 U.S.C. 1715z-13a.




</P>
</DIV8>


<DIV8 N="§ 1005.521" NODE="24:4.1.3.1.28.5.61.11" TYPE="SECTION">
<HEAD>§ 1005.521   Pre-endorsement review and requirements.</HEAD>
<P>Direct Guarantee Lender must complete a pre-endorsement review of the endorsement case binder. This review must be conducted by staff not involved in the originating, processing, or underwriting of the Loan. This review must also confirm that the loan was underwritten by an approved Direct Guarantee Lender. The endorsement case binder must contain all documentation relied upon by the Direct Guarantee Lender to justify its decision to approve the Loan in accordance with subpart D of this part. Upon finalizing the pre-endorsement review, the Direct Guarantee Lender must certify that all required documents are submitted and meet the requirements of § 1005.503.




</P>
</DIV8>


<DIV8 N="§ 1005.523" NODE="24:4.1.3.1.28.5.61.12" TYPE="SECTION">
<HEAD>§ 1005.523   HUD pre-endorsement review.</HEAD>
<P>(a) Direct Guarantee Lender shall submit to HUD within 60 days after the date of the closing of the Loan, or such additional time as permitted by HUD, the endorsement case binder.
</P>
<P>(b) Upon submission by a Direct Guarantee Lender of the endorsement case binder containing those documents required by § 1005.503, HUD will review the documents to ensure that the Loan meets all statutory, regulatory, and administrative requirements, including but not limited to:
</P>
<P>(1) There is no fee, late charge, or interest due to HUD;
</P>
<P>(2) The Loan was not in default when submitted for the Loan Guarantee Certificate, unless otherwise approved by HUD, or if submitted for guarantee more than 60 days after the date of closing, the loan shows an acceptable payment history; and
</P>
<P>(3) The loan was underwritten by an approved Direct Guarantee Lender.
</P>
<P>(c) Upon review, if HUD determines the loan to meet program requirements, HUD will issue a Loan Guarantee Certificate. If HUD determines the loan is ineligible, HUD will provide the Direct Guarantee Lender with a written determination and specify any available corrective actions that may be available. If there is information indicating that any certification or required document is false, misleading, or constitutes fraud or misrepresentation on the part of any party, or that the loan fails to meet a statutory or regulatory requirement, HUD will conduct a complete audit of the endorsement case binder. Repeated submission of deficient endorsement case binders may subject the Direct Guarantee Lender to sanctions or civil money penalties pursuant to §§ 1005.905 and 1005.907.




</P>
</DIV8>


<DIV8 N="§ 1005.525" NODE="24:4.1.3.1.28.5.61.13" TYPE="SECTION">
<HEAD>§ 1005.525   Loan Guarantee Certificate.</HEAD>
<P>(a) HUD shall issue a Loan Guarantee Certificate as evidence of the guarantee when HUD completes a review of the Direct Guarantee Lender's endorsement case binder and determines the Loan complies with all applicable Section 184 Program requirements. HUD's issuance of the Loan Guarantee Certificate does not preclude HUD from conducting post-endorsement reviews under § 1005.527, seeking indemnification under § 1005.529, or imposing sanctions from originating Direct Guarantee Lender, Holder and/or Servicer under §§ 1005.905 and 1005.907.
</P>
<P>(b) HUD may issue a Loan Guarantee Certificate for a loan involving a security interest in Trust Land before HUD receives the required trailing documents from BIA, where applicable, if the Direct Guarantee Lender agrees to indemnify HUD. The indemnification agreement between HUD and the Direct Guarantee Lender will terminate only upon receipt of the Trailing Documents in a form and manner acceptable to HUD. Trailing Documents may include the following documents:
</P>
<P>(1) A final certified TSR that identifies that the BIA or Tribe approved and recorded the mortgage instrument and residential lease related to the Section 184 Loan, as applicable;
</P>
<P>(2) A certified true copy of the recorded mortgage instrument;
</P>
<P>(3) A certified true copy of the recorded lease, if applicable;
</P>
<P>(4) A certified true copy of the recorded executed mortgage release documents for all prior mortgages identified on the initial certified TSR, if applicable; and
</P>
<P>(5) A certified true copy of any BIA approved and executed subordination agreements;
</P>
<P>(c) The Loan Guarantee Certificate is conclusive evidence of the eligibility of the Loan for guarantee under this part. Such evidence will be incontestable in the hands of the bearer and the full faith and credit of the United States is pledged to the payment of amounts agreed to be paid by HUD as security for such obligations.
</P>
<P>(d) This section may not be construed to preclude HUD from conducting a post-endorsement review. With respect to the original Direct Guarantee Lender, HUD may establish defenses against the original Direct Guarantee Lender based on fraud or material misrepresentation. This section may not be construed to bar HUD from establishing partial defenses to the amount payable on the Section 184 Guaranteed Loan.




</P>
</DIV8>


<DIV8 N="§ 1005.527" NODE="24:4.1.3.1.28.5.61.14" TYPE="SECTION">
<HEAD>§ 1005.527   Post-endorsement review.</HEAD>
<P>(a) HUD may review an endorsement case binder at any time, including but not limited to a quality control review of all documents in § 1005.503.
</P>
<P>(b) Within three business days of a request by HUD, the Direct Guarantee Lender must make available for review, or forward to HUD, copies of the identified endorsement case binder(s).
</P>
<P>(c) A Direct Guarantee Lender's failure to provide HUD access to any files may be grounds for sanctions in accordance with §§ 1005.905 and 1005.907.
</P>
<P>(d) Based on HUD's review under paragraph (a) of this section, if HUD determines that:
</P>
<P>(1) The Loan does not satisfy the requirements of subpart F of this part;
</P>
<P>(2) The Direct Guarantee Lender or Sponsored Entity committed fraud or a material misrepresentation; or
</P>
<P>(3) The Direct Guarantee Lender or Sponsored Entity had known or should have known of fraud or a material misrepresentation in violation of this part, such that the Loan should not have been approved by the Direct Guarantee Lender;
</P>
<P>(e) HUD may request indemnification from the originating Direct Guarantee Lender and impose sanctions on the Direct Guarantee Lender and Sponsored Entity pursuant to §§ 1005.905 and 1005.907.




</P>
</DIV8>


<DIV8 N="§ 1005.529" NODE="24:4.1.3.1.28.5.61.15" TYPE="SECTION">
<HEAD>§ 1005.529   Indemnification.</HEAD>
<P>(a) When HUD conducts a pre- or post-endorsement review and HUD determines there is an underwriting deficiency where the Section 184 Guaranteed Loan should not have been approved, HUD may request the originating Direct Guarantee Lender to indemnify HUD.
</P>
<P>(b) Underwriting deficiencies with respect to the Section 184 Guaranteed Loan may include but is not limited to fraud or misrepresentation by the originating Direct Guarantee Lender.
</P>
<P>(c) HUD will notify the originating Direct Guarantee Lender in writing when an indemnification is required.
</P>
<P>(d) Under an indemnification, the originating Direct Guarantee Lender must reimburse HUD when a subsequent Holder files a Claim and HUD suffers a financial loss.
</P>
<P>(e) If the originating Direct Guarantee Lender fails to indemnify HUD, HUD may impose sanctions pursuant to §§ 1005.905 and 1005.907.


</P>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="F" NODE="24:4.1.3.1.28.6" TYPE="SUBPART">
<HEAD>Subpart F—Section 184 Guaranteed Loan Fees</HEAD>


<DIV8 N="§ 1005.601" NODE="24:4.1.3.1.28.6.62.1" TYPE="SECTION">
<HEAD>§ 1005.601   Scope and method of payment.</HEAD>
<P>HUD shall charge a one-time Section 184 Up-Front Loan Guarantee Fee, and a recurring Annual Loan Guarantee Fee where applicable, which will be collected by a Direct Guarantee Lender or Servicer as required by §§ 1005.603 and 1005.607 and remitted to HUD as required by §§ 1005.605 and 1005.609. The fees collected by the Direct Guarantee Lender or Servicer on behalf of HUD shall be payable to HUD in cash, in the manner prescribed by Section 184 Program Guidance.




</P>
</DIV8>


<DIV8 N="§ 1005.603" NODE="24:4.1.3.1.28.6.62.2" TYPE="SECTION">
<HEAD>§ 1005.603   Up-Front Loan Guarantee Fee.</HEAD>
<P>At settlement, the Direct Guarantee Lender will collect from the Borrower a one-time Up-Front Loan Guarantee Fee in an amount not exceeding three percent of the principal obligation of the Section 184 Guaranteed Loan. The amount will be set by HUD through a notice in the <E T="04">Federal Register</E>.




</P>
</DIV8>


<DIV8 N="§ 1005.605" NODE="24:4.1.3.1.28.6.62.3" TYPE="SECTION">
<HEAD>§ 1005.605   Remittance of Up-Front Loan Guarantee Fee.</HEAD>
<P>The Direct Guarantee Lender shall remit the Up-Front Loan Guarantee Fee to HUD within 15 days after settlement, using the payment system as prescribed by Section 184 Program Guidance. The Direct Guarantee Lender shall provide an account reconciliation of the Up-Front Loan Guarantee Fee in the time and manner as may be prescribed in Section 184 Program Guidance.




</P>
</DIV8>


<DIV8 N="§ 1005.607" NODE="24:4.1.3.1.28.6.62.4" TYPE="SECTION">
<HEAD>§ 1005.607   Annual Loan Guarantee Fee.</HEAD>
<P>(a) <I>Percentage of Annual Loan Guarantee Fee.</I> Where applicable the Servicer must collect a monthly installment for the Annual Loan Guarantee Fee from the Borrower in an amount not exceeding one percent of the principal obligation of the loan. The percentage used to calculate the Annual Loan Guarantee Fee amount will be prescribed by notice in the <E T="04">Federal Register</E>.
</P>
<P>(b) <I>Payment of Annual Loan Guarantee Fee.</I> Where applicable, the Section 184 Guaranteed Loan shall require monthly payments by the Borrower to the Servicer in an amount equal to one-twelfth of the Annual Loan Guarantee Fee, payable by the Servicer to HUD in accordance with the Amortization Schedule issued with the Loan approval.
</P>
<P>(c) <I>Amortization Schedule.</I> The amount of the Borrower's monthly installment will be based on an Amortization Schedule as prescribed in Section 184 Program Guidance.




</P>
</DIV8>


<DIV8 N="§ 1005.609" NODE="24:4.1.3.1.28.6.62.5" TYPE="SECTION">
<HEAD>§ 1005.609   Remittance of Annual Loan Guarantee Fee.</HEAD>
<P>(a) Where applicable, monthly installment of the Annual Loan Guarantee Fee shall be due and payable to HUD no later than the 15th day of each month, beginning in the month in which the Borrower is required to make the first monthly loan payment. Monthly payments of the Annual Loan Guarantee Fee must be submitted using a HUD prescribed payment system, as prescribed by Section 184 Program Guidance.
</P>
<P>(b) Where applicable, subject to the exception in paragraph (d) of this section, the Servicer shall continue to collect from the Borrower, as established by a schedule provided in § 1005.607(b) and pay HUD the monthly installment of the Annual Loan Guarantee Fee, without taking into account Borrower's default, loss mitigation, prepayments, agreements to postpone payments, or agreements to recast the loan. Any changes to the Annual Loan Guarantee Fee will be published in the <E T="04">Federal Register</E>.
</P>
<P>(c) Where applicable, the Servicer shall adjust the monthly installment of the Annual Loan Guarantee Fee in accordance the schedule provided in § 1005.607(b). Notwithstanding paragraph (a) of this section, the Servicer shall refund to the Borrower any overpayment of Annual Loan Guarantee Fees collected from the Borrower, due to a delayed adjustment of the Loan Guarantee Fee, within 30 days of the overpayment. Failure to refund the Borrower within this timeframe will result in a penalty in accordance with § 1005.611.
</P>
<P>(d) Where applicable, the Servicer shall cease collecting the monthly installment of the Annual Loan Guarantee Fee when the amortized loan to value ratio equals an amount less than the Annual Loan Guarantee Fee termination threshold loan-to-value ratio as established by the Secretary in the <E T="04">Federal Register</E> and established by a schedule provided in § 1005.607(b). Notwithstanding paragraph (a) of this section, the Servicer shall refund to the Borrower any overpayment of Annual Loan Guarantee Fees collected when the loan-to-value ratio falls below the threshold established by the Secretary in the <E T="04">Federal Register,</E> within 30 days of the overpayment. Failure to refund the Borrower within this timeframe will result in penalty in accordance with § 1005.611.
</P>
<P>(e) Annual Loan Guarantee Fees paid, if any, in accordance with the schedule provided in § 1005.607(b) shall not be refundable to the Borrower.
</P>
<P>(f) Where applicable, if the Servicer submits the monthly installment of the Annual Loan Guarantee Fee to HUD after the due date, the amount paid must include the required payment of penalties pursuant to § 1005.611(c).
</P>
<P>(g)(1) When transfer of servicing occurs in accordance with § 1005.707:
</P>
<P>(i) The schedule of monthly installment payments provided in § 1005.607(b) must be provided to the new Servicer; and
</P>
<P>(ii) The account reconciliation of the Upfront Guarantee Fee and Annual Loan Guarantee Fee due and remitted to HUD must be provided to the new Servicer.
</P>
<P>(2) The new Servicer is responsible for compliance with all requirements of this part, including, but not limited to, any outstanding Annual Loan Guarantee Fee payments and penalties owed to HUD, or any Annual Loan Guarantee Fee adjustments or refunds due to the Borrower.
</P>
<P>(3) If a transfer results in missed monthly installment(s) of the Annual Loan Guarantee Fee, the new Servicer shall pay the overdue installment(s) in a lump sum to HUD within 30 days of acquisition of the loan and include any applicable penalties in accordance with § 1005.611.
</P>
<P>(h) The Direct Guarantee Lender shall provide an account reconciliation of the Annual Loan Guarantee Fee in the time and manner as may be prescribed in Section 184 Program Guidance.




</P>
</DIV8>


<DIV8 N="§ 1005.611" NODE="24:4.1.3.1.28.6.62.6" TYPE="SECTION">
<HEAD>§ 1005.611   HUD imposed penalties.</HEAD>
<P>(a) <I>Prohibited penalty pass through.</I> The Holder, Direct Guarantee Lender or Servicer shall not recover or attempt to recover from the Borrower any penalties HUD imposes upon the Holder, Direct Guarantee Lender or Servicer.
</P>
<P>(b) <I>Failure of Direct Guarantee Lender to timely remit Up-Front loan guarantee to HUD.</I> (1) The Direct Guarantee Lender shall include a late fee if the Up-Front Loan Guarantee Fee is not remitted to HUD within 15 days of settlement.
</P>
<P>(2) Failure to remit the Up-Front Loan Guarantee Fee, with a late fee where applicable, may result in HUD rejecting the endorsement or Claim case binder.
</P>
<P>(c) <I>Failure of Servicer to timely remit the monthly installment of the Annual Loan Guarantee Fee to HUD.</I> (1) The Servicer shall include a late fee for each monthly installment of the Annual Loan Guarantee Fee remitted to HUD after the15th of each month.
</P>
<P>(2) Failure to remit monthly installment of the Annual Loan Guarantee Fee to HUD, with late fee, may result in HUD rejecting the Claim case binder, where applicable.
</P>
<P>(d) <I>Failure of Servicer to adjust the amount of the Annual Loan Guarantee Fee.</I> (1) When a Servicer fails to make the annual adjustment to the amount of the monthly installment of the Annual Loan Guarantee Fee in accordance with § 1005.607(b), the Holder shall, in addition to reimbursing the Borrower as required in § 1005.609(c), pay HUD a penalty for each month the Servicer collects an overpayment of the Annual Loan Guarantee Fee.
</P>
<P>(2) The Servicer shall provide annual written notice, in the manner prescribed by Section 184 Program Guidance to the Borrower prior to the scheduled change in the monthly installment of the Annual Loan Guarantee Fee, with such advance notice as required by 12 CFR 1026.9, or other applicable Federal law.
</P>
<P>(e) <I>Failure to cease collection of the Annual Loan Guarantee Fee.</I> When a Servicer fails to cease collection of the monthly installment of the Annual Loan Guarantee Fee after the loan to value ratio reaches the threshold described in § 1005.609(d), the Holder shall, in addition to reimbursing the Borrower as required in § 1005.609(d), pay HUD a penalty for each month the Servicer collects an overpayment of the Annual Loan Guarantee Fee.
</P>
<P>(f) <I>Late fee and penalty amounts.</I> Late fees and penalty amounts under this section shall be prescribed by HUD in Section 184 Program Guidance.


</P>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:4.1.3.1.28.7" TYPE="SUBPART">
<HEAD>Subpart G—Servicing</HEAD>


<DIV7 N="62" NODE="24:4.1.3.1.28.7.62" TYPE="SUBJGRP">
<HEAD>Servicing Section 184 Guaranteed Loans Generally</HEAD>


<DIV8 N="§ 1005.701" NODE="24:4.1.3.1.28.7.62.1" TYPE="SECTION">
<HEAD>§ 1005.701   Section 184 Guaranteed Loan servicing generally.</HEAD>
<P>This subpart identifies the servicing requirements for Section 184 Guaranteed Loans. All Section 184 Guaranteed Loans must be serviced by Section 184 approved Servicers, including Section 184 Guaranteed Loans owned by Holders. Holders are responsible for all servicing actions, including the acts of its Servicers. Servicers are responsible for their actions in servicing Section 184 Guaranteed Loans, including actions taken on behalf of, or at the direction of, the Holder. Failure to comply with this subpart may result in the reduction of the Claims amount in accordance with subpart H of this part or may subject Holder and/or Servicer to sanctions pursuant to subpart I. Holders and Servicers must comply with all applicable Tribal, Federal, and State requirements related to mortgage servicing.




</P>
</DIV8>


<DIV8 N="§ 1005.703" NODE="24:4.1.3.1.28.7.62.2" TYPE="SECTION">
<HEAD>§ 1005.703   Servicer eligibility and application process.</HEAD>
<P>(a) To be eligible to service Section 184 Guaranteed Loans, a Direct Guarantee Lender, Non-Direct Guarantee Lender or other financial institution must be an approved mortgage Servicer for FHA or another agency of the Federal Government.
</P>
<P>(b) All eligible Direct Guarantee Lenders, Non-Direct Guarantee Lenders and other financial institutions must apply to become a Servicer in accordance with Section 184 Program Guidance.
</P>
<P>(c) Direct Guarantee Lenders servicing Section 184 Guaranteed Loans prior to June 18, 2024 may request an exemption from paragraph (a) of this section.




</P>
</DIV8>


<DIV8 N="§ 1005.705" NODE="24:4.1.3.1.28.7.62.3" TYPE="SECTION">
<HEAD>§ 1005.705   Servicer approval.</HEAD>
<P>(a) <I>Final approval.</I> Approval is signified by:
</P>
<P>(1) Written notification from HUD that the Direct Guarantee Lender, Non-Direct Guarantee Lender, or other financial institution is approved as a Servicer under the Section 184 Program; and
</P>
<P>(2) Agreement by the Direct Guarantee Lender, Non-Direct Guarantee Lender, or other financial institution to comply with requirements of this part and any applicable Federal, State, or Tribal law requirement.
</P>
<P>(b) <I>Limitations on approval.</I> The Direct Guarantee Lender, Non-Direct Guarantee Lender or other financial institution may only be approved to service Section 184 Guaranteed Loans in areas where the Direct Guarantee Lender, Non-Direct Guarantee Lender or financial institution is licensed, as applicable.
</P>
<P>(c) <I>Denial of participation.</I> A Direct Guarantee Lender, Non-Direct Guarantee Lender or other financial institution may be denied approval to become a Servicer if HUD determines the Direct Guarantee Lender, Non-Direct Guarantee Lender or other financial institution does not meet the qualification requirements of § 1005.703. HUD will provide written notification of denial and of the right to submit a written appeal in accordance with § 1005.909.




</P>
</DIV8>


<DIV8 N="§ 1005.707" NODE="24:4.1.3.1.28.7.62.4" TYPE="SECTION">
<HEAD>§ 1005.707   Responsibility for servicing.</HEAD>
<P>(a) <I>Program compliance.</I> (1) The Servicer must participate in HUD training on the Section 184 program.
</P>
<P>(2) A Servicer shall provide written notification to HUD of any changes that affect qualifications under this subpart within a timeframe prescribed by Section 184 Program Guidance.
</P>
<P>(b) <I>Sub-Servicer.</I> (1) If a Servicer elects to use a sub-servicer, the sub-servicer must be an approved Servicer under § 1005.705.
</P>
<P>(2) Servicers are responsible for the actions of their sub-servicers. The Holder and Servicer shall remain fully responsible to HUD for Section 184 Guaranteed Loan servicing in accordance with this subpart, and the actions of a sub-Servicer shall be considered the actions of the Servicer.
</P>
<P>(c) <I>Change in Servicer.</I> (1) When the responsibility of servicing a Section 184 Guaranteed Loan is transferred from one Servicer to another, the acquiring Servicer shall assume responsibility for compliance with this part, this includes addressing any noncompliance by the former Servicer.
</P>
<P>(2) The former Servicer must notify HUD of the change in Servicer within 15 days of the transfer, or timeframe as prescribed by Section 184 Program Guidance.
</P>
<P>(3) The acquiring Servicer shall provide notice to the Borrower of the transfer of servicing in accordance with applicable Tribal, Federal and/or State laws that may require such notice.
</P>
<P>(4) HUD will hold the acquiring Servicer responsible for errors, omissions, and unresolved HUD review findings on the part of the former Servicer (or former sub-Servicer), discovered after the transfer is reported even when the errors or omissions took place prior to the transfer.
</P>
<P>(d) <I>Transfer of servicing rights.</I> The Servicer must submit written notification to HUD, within 15 days of transfer, or other time period as prescribed by Section 184 Program Guidance, of the transfer of servicing rights through the acquisition or sale of any Section 184 Guaranteed Loans.
</P>
<P>(e) <I>Reporting requirements.</I> (1) On a date and manner established by Section 184 Program Guidance, the Servicer shall report to HUD the status of all Section 184 Guaranteed Loans in its Servicing portfolio.
</P>
<P>(2) Where applicable, Servicer shall provide an Annual Loan Guarantee Fee reconciliation to the Borrower and HUD, in a manner and timeframe as prescribed by Section 184 Program Guidance.
</P>
<P>(3) Servicer must comply with any other reporting requirements under § 1005.903.
</P>
<P>(4) The Servicer's failure to submit required reports on time may subject the Holder and/or Servicer to sanctions and civil money penalties pursuant to §§ 1005.905 and 1005.907.
</P>
<P>(f) <I>Business change reporting.</I> Within a timeframe and on a form as prescribed by Section 184 Program Guidance, the Servicer shall provide written notification to HUD of:
</P>
<P>(1) All changes in the Servicer's legal structure, including, but not limited to, mergers, acquisitions, terminations, name, location, control of ownership, and character of business;
</P>
<P>(2) Staffing changes related to servicing Section 184 Guaranteed Loans; and
</P>
<P>(3) Any sanctions by another supervising entity.
</P>
<P>(4) Failure to report changes within the timeframe prescribed in Section 184 Program Guidance may result in sanctions in accordance with §§ 1005.905 and 1005.907.
</P>
<P>(g) <I>Annual recertification.</I> (1) All Servicers are subject to annual recertification on a date and manner as prescribed by Section 184 Program Guidance. With each annual recertification, Servicers must submit updated contact information, current FHA or another Federal agency recertification status, and other pertinent documents as prescribed by Section 184 Program Guidance.
</P>
<P>(2) Servicers may request an extension of the recertification deadline in accordance with Section 184 Program Guidance.
</P>
<P>(3) HUD will review the annual recertification submission and may request any further information required to determine recertification. HUD will provide written notification of approval to continue participation in the Section 184 Program or denial. A denial may be appealed pursuant to § 1005.909.
</P>
<P>(4) If an annual recertification is not submitted by the reasonable deadline as prescribed in Section 184 Program Guidance, HUD may subject the Servicer to sanctions under § 1005.907.
</P>
<P>(h) <I>Program ineligibility.</I> Servicer may be deemed ineligible for Section 184 Program participation when HUD becomes aware that the entity or any officer, partner, director, principal, manager or supervisor of the entity was:
</P>
<P>(1) Suspended, debarred, under a limited denial of participation (LDP), or otherwise restricted under 2 CFR part 2424, or under similar procedures of any other Federal agency
</P>
<P>(2) Indicted for, or have been convicted of, an offense during the 7-year period preceding the date of the application for licensing and registration, or at any time preceding such date of the application, if such indictment or conviction reflects adversely upon the integrity, competency, or fitness to meet the responsibilities of the Servicer to participate in the title I or title II programs of the National Housing Act, or Section 184 Program;
</P>
<P>(3) Found to have unresolved findings as a result of HUD or other governmental audit, investigation, or review;
</P>
<P>(4) Engaged in business practices that do not conform to generally accepted practices of prudent Servicers or that demonstrate irresponsibility;
</P>
<P>(5) Convicted of, or have pled guilty or nolo contendere to, a felony related to participation in the real estate or mortgage Loan industry during the 7-year period preceding the date of the application for licensing and registration, or at any time preceding such date of application, if such felony involved an act of fraud, dishonesty, or a breach of trust or money laundering;
</P>
<P>(6) In violation of provisions of the Secure and Fair Enforcement Mortgage Licensing Act of 2008 (12 U.S.C. 5101, <I>et seq.</I>) or any applicable provision of Tribal or State law; or
</P>
<P>(7) In violation of 12 U.S.C. 1715z-13a or any other requirement established by HUD.
</P>
<P>(i) <I>Records retention.</I> Servicers must maintain the servicing case binder for a period of three years beyond the date of satisfaction or maturity date of the Loan, whichever is sooner. However, where there is a payment of Claim, the Claim case binder must be retained for a period of at least five years after the final Claim has been paid. Section 184 Program Guidance shall prescribe additional records retention time depending on the circumstances of the Claim.
</P>
<P>(ii) [Reserved]




</P>
</DIV8>


<DIV8 N="§ 1005.709" NODE="24:4.1.3.1.28.7.62.5" TYPE="SECTION">
<HEAD>§ 1005.709   Providing information to Borrower and HUD.</HEAD>
<P>(a) Servicers shall provide Section 184 Guaranteed Loan information to Borrowers and arrange for individual loan consultation on request. The Servicer must establish written procedures and controls to assure prompt responses to inquiries. At a minimum, the Servicer must provide contact information to the Borrower in accordance with applicable Tribal, Federal and/or State laws, including:
</P>
<P>(1) A written address a Borrower can use to request and submit information; and
</P>
<P>(2) A toll-free telephone number a Borrower can use to verbally ask questions and seek information.
</P>
<P>(b) All Borrowers must be informed of the system available for obtaining answers to loan inquiries, the Servicer's office from which needed information may be obtained and reminded of the system at least annually.
</P>
<P>(c) Within 30 days after the end of each calendar year, the Servicer shall furnish to the Borrower a statement of the interest paid, and of the taxes disbursed from the escrow account during the preceding year.
</P>
<P>(d) At the Borrower's request, the Servicer shall furnish a statement of the escrow account sufficient to enable the Borrower to reconcile the account.
</P>
<P>(e) Each Servicer shall deliver to the Borrower a written notice of any transfer of the Servicing of the Section 184 Guaranteed Loan. The notice must be sent in accordance with applicable Tribal, Federal and/or State laws. Servicers must respond to Borrower inquiries pertaining to the transfer of Servicing in accordance applicable Tribal, Federal and/or State laws.
</P>
<P>(f) Servicers must respond to HUD's written or electronic requests for information concerning individual accounts within three business days, or other timeframe established by Section 184 Program Guidance, or the deadline placed by other applicable law, whichever is sooner.




</P>
</DIV8>


<DIV8 N="§ 1005.711" NODE="24:4.1.3.1.28.7.62.6" TYPE="SECTION">
<HEAD>§ 1005.711   Assumption and release of personal liability.</HEAD>
<P>(a) <I>Assumption.</I> Section 184 Guaranteed Loans may be fully assumed by an eligible substitute Borrower(s), based on the following:
</P>
<P>(1) <I>Creditworthiness.</I> At least one person acquiring ownership must be determined to be creditworthy under subpart D of this part. If the Servicer is approved as a Direct Guarantee Lender, the Servicer performs a creditworthiness determination under § 1005.409. If the Servicer or Holder is not approved as a Direct Guarantee Lender, then the Servicer shall request a creditworthiness determination in a manner prescribed by Section 184 Program Guidance.
</P>
<P>(2) <I>Trust Lands.</I> (i) As applicable, a lease approved by HUD, the Tribe or the BIA in the new Borrower's name is required. Servicers shall not proceed to closing on the assumption until and unless the Tribe has consented to assign the property interest to the new Borrower at closing. Where applicable, a final certified Title Status Report documenting the assignment of the lease or recordation of a new lease is required.
</P>
<P>(ii) Where applicable, the lease may contain other conveyance restrictions. Servicer must review the lease for conveyance restrictions and ensure the lease complies with § 1005.303(b)(2).
</P>
<P>(iii) Other requirements prescribed in Section 184 Program Guidance.
</P>
<P>(b) <I>Fees.</I> The Servicer may collect from the Borrower the following fees and costs:
</P>
<P>(1) A charge to compensate the Direct Guarantee Lender for reasonable and necessary expenses incurred as part of the assumption review and processing. HUD may establish limitations on the amount of any such charge.
</P>
<P>(2) Reasonable and customary costs, but not more than the amount actually paid by the Direct Guarantee Lender, for any of the following items: credit report, verification of employment and the execution of additional release of liability forms.
</P>
<P>(3) Additional fees and costs over and above the assumption fee and reasonable and customary costs cannot be assessed.
</P>
<P>(c) <I>Release of liability.</I> At closing, the Servicer must release the existing Borrower from any personal liability on a form approved by HUD; the eligible and approved substitute Borrower assumes personal liability of the Section 184 Guaranteed Loan when the release is executed.
</P>
<P>(d) <I>Modification of Loan Guarantee Certificate.</I> Upon completion of an assumption, the Servicer shall submit copies of the documentation required in this section to HUD, in a manner and form prescribed by HUD. HUD will review the assumption for compliance prior to issuing a revised Loan Guarantee Certificate.




</P>
</DIV8>


<DIV8 N="§ 1005.713" NODE="24:4.1.3.1.28.7.62.7" TYPE="SECTION">
<HEAD>§ 1005.713   Due-on-sale provision.</HEAD>
<P>A Section 184 Guaranteed Loan shall contain a due-on-sale clause permitting acceleration, as prescribed by Section 184 Program Guidance. The Servicer shall promptly advise HUD of any prohibited sale or other transfer of the property or leasehold interest that occurs. The Servicer must request approval from HUD to accelerate the Loan when any prohibited sale or transfer occurs. If acceleration is permitted by applicable Tribal, Federal, or State law, the Servicer shall certify as to the legal authority as part of the request for approval, in a form and manner prescribed by Section 184 Program Guidance. Within 30 days of receipt of HUD approval to accelerate, the Servicer shall notify the Borrower of default and acceleration.




</P>
</DIV8>


<DIV8 N="§ 1005.715" NODE="24:4.1.3.1.28.7.62.8" TYPE="SECTION">
<HEAD>§ 1005.715   Application of Borrower payments.</HEAD>
<P>(a) Servicer shall comply with § 1005.509 with respect to the application of Borrower payments. The Servicer shall apply the payments in the following order:
</P>
<P>(1) Escrow items, including monthly payments of the Annual Loan Guarantee Fee, rents, taxes, special assessments, and if required, flood insurance, fire, and other hazard insurance premiums;
</P>
<P>(2) Interest accrued on the Section 184 Guaranteed Loan;
</P>
<P>(3) Principal of the Section 184 Guaranteed Loan; and
</P>
<P>(4) Late charges, if permitted under the terms of the Section 184 Guaranteed Loan and subject to such conditions as HUD may prescribe.
</P>
<P>(b) Partial Payments shall be applied in accordance with § 1005.723.




</P>
</DIV8>


<DIV8 N="§ 1005.717" NODE="24:4.1.3.1.28.7.62.9" TYPE="SECTION">
<HEAD>§ 1005.717   Administering escrow accounts.</HEAD>
<P>(a) The Servicer shall not use escrow funds for any purpose other than that for which they were received. It shall segregate escrow commitment deposits, work completion deposits, and all periodic payments received on account of leasehold rents, taxes, assessments, monthly payments of Annual Loan Guarantee Fee, and insurance charges or premiums, and shall deposit such funds with one or more financial institutions in a special account or accounts that are fully insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration. Leasehold rents on Trust Lands may require additional escrow segregation by Servicers, as may be prescribed in Section 184 Program Guidance.
</P>
<P>(b) It is the Servicer's responsibility to ensure timely escrow disbursements and their proper application. Servicers must establish controls to ensure that accounts payable from the escrow account or the information needed to pay such accounts payable is obtained on a timely basis. Penalties for late payments for accounts payable from the escrow account must not be charged to the Borrower or HUD unless the Servicer can show that the penalty was the direct result of the Borrower's error or omission. The Servicer shall further comply with applicable Tribal, Federal, or State laws, including method of calculations related to escrow, the methods of collection and accounting, and the payment of the accounts payable for which the money has been escrowed.
</P>
<P>(c) The Servicer shall not initiate foreclosure for escrow account shortfalls resulting from advances made pursuant to this section.
</P>
<P>(d) When a Loan Guarantee Certificate is terminated voluntarily or due to Borrower's prepayment, in total satisfaction of the Section 184 Guaranteed Loan, amounts in the escrow account designated to pay any HUD required program fees shall be remitted to HUD in a form approved by HUD at the time of the required reporting related to the voluntary termination or prepayment. When a Section 184 Guaranteed Loan is prepaid in full, amounts held in escrow for taxes, hazard insurance, or rents, if applicable, that are not yet due or incurred, shall be released to the Borrower.




</P>
</DIV8>


<DIV8 N="§ 1005.719" NODE="24:4.1.3.1.28.7.62.10" TYPE="SECTION">
<HEAD>§ 1005.719   Fees and costs after endorsement.</HEAD>
<P>(a) After endorsement, the Servicer may collect reasonable and customary fees and costs from the Borrower only as provided below. The Servicer may collect these fees or costs from the Borrower only to the extent that the Servicer is not reimbursed for such fees or costs by HUD. Permissible fees and costs include:
</P>
<P>(1) Late fee in accordance with § 1005.511;
</P>
<P>(2) Costs for processing or reprocessing a check returned as uncollectible (where bank policy permits, the Servicer must deposit a check for collection a second time before assessing an insufficient funds charge);
</P>
<P>(3) Fees for processing a change of ownership of the property;
</P>
<P>(4) Fees and costs for processing an assumption of the Section 184 Guaranteed Loan in connection with the sale or transfer of the property;
</P>
<P>(5) Costs for processing a request for credit approval incurred in the course of processing an assumption or substitute Borrower;
</P>
<P>(6) Costs for substitution of a hazard insurance policy at other than the expiration of term of the existing hazard insurance policy;
</P>
<P>(7) Costs for modification of the Section 184 Guaranteed Loan requiring recordation of the agreement, including those for extension of term or re-amortization;
</P>
<P>(8) Fees and costs for processing a partial release of the property;
</P>
<P>(9) Attorney's and trustee's fees and costs actually incurred (including the cost of appraisals and advertising) when a Section 184 Guaranteed Loan has been referred to foreclosure counsel and subsequently the Section 184 Guaranteed Loan is reinstated. No attorney's fee and cost that exceeds the reasonable limits prescribed by Section 184 Program Guidance may be collected from the Borrower, unless approved by HUD;
</P>
<P>(10) A trustee's fee, if the security instrument provides for payment of such a fee, for execution of a satisfactory release when the deed of trust is paid in full;
</P>
<P>(11) Where permitted by the security instrument, attorney's fees and costs actually incurred in the defense of any suit or legal proceeding wherein the Servicer shall be made a party thereto by reason of the Section 184 Guaranteed Loan. No attorney's fee may be charged for the services of the Servicer's staff attorney or other employee;
</P>
<P>(12) property preservation costs incurred, subject to reasonable limits prescribed by Section 184 Program Guidance, or otherwise approved by HUD;
</P>
<P>(13) Fees permitted for providing a beneficiary notice under applicable Tribal, Federal and/or State law, if such a fee is not otherwise prohibited by the applicable law(s); and
</P>
<P>(14) Such other reasonable and customary costs as may be authorized by HUD.
</P>
<P>(b) Reasonable and customary fees must be based upon the actual cost of the work performed, including out-of-pocket expenses. HUD may establish maximum fees and costs which are reasonable and customary in different geographic areas. Except as provided in this part, no fee or costs shall be based on a percentage of either the face amount of the Section 184 Guaranteed Loan or the unpaid principal balance due.




</P>
</DIV8>


<DIV8 N="§ 1005.721" NODE="24:4.1.3.1.28.7.62.11" TYPE="SECTION">
<HEAD>§ 1005.721   Enforcement of late fees.</HEAD>
<P>(a) A Servicer shall not commence foreclosure when the Borrower's only default is his or her failure to pay a late fee(s).
</P>
<P>(b) A late fee that may be assessed under the Section 184 Guaranteed Loan but unpaid by the Borrower shall not justify Servicer's return of Borrower's payment. However, if the Servicer thereafter notifies the Borrower of his obligation to pay a late fee, such a fee may be deducted from any subsequent payment or payments submitted by the Borrower or on his behalf if this is not inconsistent with the terms of the Section 184 Guaranteed Loan. Partial Payments shall be treated as provided in § 1005.723.
</P>
<P>(c) A payment submission may be returned because of failure to include a late fee only if the Servicer notifies the Borrower before imposition of the charge of the amount of the monthly payment, the date when the late fee will be imposed, and either the amount of the late charge or the total amount due when the late fee is included.
</P>
<P>(d) During the 60-day period beginning on the effective date of transfer of the Servicing of a Section 184 Guaranteed Loan, a late fee shall not be assessed. If a payment is received by the prior Servicer on or before the due date (including any applicable grace period allowed by the Section 184 Guaranteed Loan), no late fees shall be assessed by the new Servicer.
</P>
<P>(e) A Servicer shall not assess a late fee for failure to pay a late fee, as prohibited under 12 CFR 1026.36.




</P>
</DIV8>


<DIV8 N="§ 1005.723" NODE="24:4.1.3.1.28.7.62.12" TYPE="SECTION">
<HEAD>§ 1005.723   Partial Payments.</HEAD>
<P>(a) A Servicer must have a written policy on how it handles Partial Payments, in compliance with this section and that policy shall be readily available to the public.
</P>
<P>(b) Upon receipt of a Partial Payment, a Servicer must provide the Borrower a copy of the Servicer's written Partial Payment policy and a letter explaining how it will handle the received Partial Payment. The Servicer may:
</P>
<P>(1) Accept a Partial Payment and either apply it to the Borrower's account;
</P>
<P>(2) Identify it with the Borrower's account number and hold it in a trust account pending disposition; or
</P>
<P>(3) Return the Partial Payment(s) to the Borrower.




</P>
</DIV8>


<DIV8 N="§ 1005.725" NODE="24:4.1.3.1.28.7.62.13" TYPE="SECTION">
<HEAD>§ 1005.725   Handling prepayments.</HEAD>
<P>Notwithstanding the terms of the Section 184 Guaranteed Loan, the Servicer shall accept a prepayment at any time and in any amount. Monthly interest on the Section 184 Guaranteed Loan must be calculated on the actual unpaid principal balance of the Section 184 Guaranteed Loan as of the date the prepayment is received, and not as of the next payment due date.




</P>
</DIV8>


<DIV8 N="§ 1005.727" NODE="24:4.1.3.1.28.7.62.14" TYPE="SECTION">
<HEAD>§ 1005.727   Substitute Borrowers.</HEAD>
<P>Where an original Borrower requests the substitution of an existing Borrower on the Section 184 Guaranteed Loan:
</P>
<P>(a) A Servicer who is Non-Direct Guarantee Lender or financial institution must obtain HUD approval for the substitution. A remaining original Borrower must be maintained and continue to be personally liable for the Section 184 Guaranteed Loan, notwithstanding any discharge entered in accordance with applicable Tribal, Federal, or State law.
</P>
<P>(b) A Servicer who is a Direct Guarantee Lender may, subject to limitations established by HUD, approve an eligible substitute Borrower that meets the requirements for Section 184 Guaranteed Loans which they own or service, without specific approval from HUD. The remaining original Borrower must be maintained and continue to be personally liable for the Section 184 Guaranteed Loan, notwithstanding any discharge entered in accordance with applicable Tribal, Federal, or State law.


</P>
</DIV8>

</DIV7>


<DIV7 N="63" NODE="24:4.1.3.1.28.7.63" TYPE="SUBJGRP">
<HEAD>Servicing Default Section 184 Guaranteed Loans</HEAD>


<DIV8 N="§ 1005.729" NODE="24:4.1.3.1.28.7.63.15" TYPE="SECTION">
<HEAD>§ 1005.729   Section 184 Guaranteed Loan collection action.</HEAD>
<P>A Servicer shall take prompt action to collect amounts due from Borrowers to minimize the number of accounts in default status. The Servicer must exhaust all reasonable possibilities of collection, including assessing the Borrower's financial circumstances for loss mitigation options in accordance with § 1005.739. No Servicer shall commence foreclosure, assign the loan to HUD, or acquire title to a property until the requirements of this subpart have been completed.




</P>
</DIV8>


<DIV8 N="§ 1005.731" NODE="24:4.1.3.1.28.7.63.16" TYPE="SECTION">
<HEAD>§ 1005.731   Default notice to Borrower.</HEAD>
<P>The Servicer shall provide notice to the Borrower as prescribed by applicable Tribal, Federal, or State law.




</P>
</DIV8>


<DIV8 N="§ 1005.733" NODE="24:4.1.3.1.28.7.63.17" TYPE="SECTION">
<HEAD>§ 1005.733   Loss mitigation application, timelines, and appeals.</HEAD>
<P>(a) <I>Servicer response to loss mitigation application.</I> Within five days after the Servicer receives the Borrower's loss mitigation application, the Servicer must, in writing:
</P>
<P>(1) Acknowledge receipt of the application;
</P>
<P>(2) Determine if the application is complete or incomplete;
</P>
<P>(3) If incomplete, notify the Borrower which documentation is required and missing, and that submission of the missing documents is required no later than fourteen days from the date of the response to provide missing documents to the Servicer. If the Borrower does not timely submit the requested documents, the Servicer must initiate live contact with the Borrower.
</P>
<P>(b) <I>Servicer timeframe for evaluating complete loss mitigation application.</I> Within fourteen days of receipt of a complete application from Borrower, the Servicer must evaluate the application.
</P>
<P>(c) <I>Notification of Servicer determination.</I> The Servicer shall provide written notification:
</P>
<P>(1) Informing the Borrower of all available loss mitigation options;
</P>
<P>(2) Encouraging the Borrower to review all available loss mitigation options and to contact the Servicer with any questions;
</P>
<P>(3) Encouraging Borrowers, when feasible, to consider pursuing simultaneous loss mitigation options, to the extent it is offered by the Servicer;
</P>
<P>(4) Informing the Borrower that if no loss mitigation option is elected or if all elected loss mitigation options fail, the Servicer may proceed with Tribal notice under § 1005.757(a) or First Legal Action at 180 days of default in accordance with § 1005.757 or § 1005.761; and
</P>
<P>(5) Informing the Borrower that, upon First Legal Action or the assignment of the Section 184 Guaranteed Loan to HUD, the Servicer may no longer offer or authorize a pre-foreclosure sale as an alternative to foreclosure, and that the primary alternative to foreclosure shall be a deed-in-lieu/lease-in-lieu of foreclosure, subject to applicable Tribal, Federal, or State law or contractual requirements. HUD may permit other loss mitigation on a case-by-case basis if requested by the Servicer.
</P>
<P>(d) <I>Appeal.</I> (1) If, after the Borrower receives the Servicer's loss mitigation options, the Borrower disagrees with Servicer's loss mitigation determination, the Borrower may appeal in writing and request that the Servicer re-evaluate the Borrower's loss mitigation application. The Borrower must submit its appeal no later than 14 days from the date of notification of the Servicer's loss mitigation determination, or any other deadline as may be prescribed by Section 184 Program Guidance. Upon receipt of the Borrower's appeal of the Servicer's loss mitigation determination, the Servicer shall re-evaluate the Borrower's loss mitigation application within thirty days but may not use the same staff that made the initial loss mitigation determination and shall notify the Borrower of its appeal decision in writing.
</P>
<P>(2) If the Borrower submits a timely written appeal, the 180-day deadline for First Legal Action shall be suspended during the appeal process.




</P>
</DIV8>


<DIV8 N="§ 1005.735" NODE="24:4.1.3.1.28.7.63.18" TYPE="SECTION">
<HEAD>§ 1005.735   Occupancy inspection.</HEAD>
<P>(a) <I>Occupancy inspection.</I> An occupancy inspection is a visual inspection of a Section 184 Guaranteed Loan property by the Servicer to determine if the property is vacant or abandoned and to confirm the identity of any occupants.
</P>
<P>(b) <I>Occupancy follow-up.</I> An occupancy follow-up is an attempt to communicate with the Borrower via letter, telephone, or other method of communication, other than on-site inspection, to determine occupancy when the Section 184 Guaranteed Loan remains in default after the initial occupancy inspection that did not result in determination of the Borrower's occupancy status.
</P>
<P>(c) <I>Initial occupancy inspection.</I> The Servicer must perform the initial occupancy inspection after the 45th day of default but no later than the 60th day of the default when:
</P>
<P>(1) A payment has not been received within 45 days of the due date or for any other defaults under the Section 184 Guaranteed Loan; and
</P>
<P>(2) Efforts to reach the Borrower or occupant have been unsuccessful.
</P>
<P>(d) <I>Occupancy follow-ups and continued inspections.</I> If the Servicer is unable to determine the Borrower's occupancy status through the initial occupancy inspection, the Servicer must perform occupancy follow-ups and, if necessary, occupancy inspections every 25-35 days from the last inspection until the occupancy status is determined.
</P>
<P>(e) <I>Occupancy inspections during bankruptcy.</I> When payments are not submitted and a Borrower is a debtor in bankruptcy, the Servicer must contact either the bankruptcy trustee or the Borrower's bankruptcy attorney, if the Borrower is represented, for information concerning the occupancy status of the property or if an occupancy inspection is necessary or requires authorization. If the Servicer cannot determine that the property is vacant or abandoned during the period of the automatic stay, the Servicer must document in the servicing case binder with evidence that it timely contacted the attorney or trustee.
</P>
<P>(f) <I>Occupancy inspections on Trust Land.</I> Servicers must make an initial contact with the Tribe in advance of any occupancy inspection on Trust Land to review the Tribe's protocol for conducting occupancy inspections. After the initial contact, Servicers must contact the Tribe in advance of an occupancy inspection on Trust Land in accordance with the Tribe's protocol.
</P>
<P>(g) <I>Alternative deadlines.</I> HUD may prescribe alternative extended deadlines to the requirements in paragraphs (c) and (d) of this section through Section 184 Program Guidance.
</P>
<P>(h) <I>Conflicts with other law.</I> Nothing in this section shall require a Servicer to conduct an inspection when prohibited by applicable Tribal, Federal, State, or local law.




</P>
</DIV8>


<DIV8 N="§ 1005.737" NODE="24:4.1.3.1.28.7.63.19" TYPE="SECTION">
<HEAD>§ 1005.737   Vacant or abandoned property procedures.</HEAD>
<P>If the Servicer determines through an occupancy inspection or occupancy follow-up that the property is vacant or abandoned, or if the Servicer is notified by HUD that the Tribe or the TDHE determined the property is vacant or abandoned, the Servicer must send a letter, via certified mail or other method providing delivery confirmation, to all Borrowers at the property address, or other known address of Borrower, informing them of the Servicer's determination that the property is vacant or abandoned. This letter must include the Servicer's contact information.
</P>
<P>(a) If occupancy is verified through the delivery confirmation, the Servicer shall continue pursuing collection efforts and loss mitigation as required by §§ 1005.729 and 1005.739 until the Servicer has the authority to proceed to First Legal Action in accordance with § 1005.763 or Tribal First Right of Refusal in accordance with § 1005.759.
</P>
<P>(b) If the Servicer verifies through the delivery confirmation process that the property is vacant or abandoned; then the Servicer shall:
</P>
<P>(1) Commence first-time vacant property inspection;
</P>
<P>(2) Take appropriate property preservation and protection actions to secure and maintain the property;
</P>
<P>(3) For properties on Trust Land:
</P>
<P>(i) Notify the Tribe that the property is vacant or abandoned; and
</P>
<P>(ii) Complete Tribal First Right of Refusal under § 1005.759;
</P>
<P>(4) For fee simple Properties, complete First Legal Action within 30 days;
</P>
<P>(5) Continue to perform vacant property inspections every 25-35 days until the default is cured, the property is disposed of, or the bankruptcy court has granted approval for the Servicer to contact the Borrower or to take any required property preservation actions; and
</P>
<P>(6) Retain documentation in the servicing case binder providing evidence of activities required by HUD in this section or otherwise provided in Section 184 Program Guidance.
</P>
<P>(c) <I>Alternative deadlines.</I> HUD may prescribe alternative extended deadlines to the time requirements of this section in Section 184 Program Guidance.
</P>
<P>(d) <I>Conflicts with other law.</I> Nothing in this section shall require a Servicer to communicate with a Borrower in a manner prohibited by applicable Tribal, Federal, or State law.


</P>
</DIV8>

</DIV7>


<DIV7 N="64" NODE="24:4.1.3.1.28.7.64" TYPE="SUBJGRP">
<HEAD>Servicing Default Section 184 Guaranteed Loans Under the Loss Mitigation Program</HEAD>


<DIV8 N="§ 1005.739" NODE="24:4.1.3.1.28.7.64.20" TYPE="SECTION">
<HEAD>§ 1005.739   Loss mitigation.</HEAD>
<P>(a) The purpose of loss mitigation is to attempt to cure the Borrower's default and minimize financial loss to HUD.
</P>
<P>(b) The Servicer must offer a loss mitigation option, if applicable, to the Borrower and if practical under the circumstances, within 180 days of the Date of Default, or any extended timeframe prescribed by Section 184 Program Guidance.
</P>
<P>(c) Loss mitigation options include:
</P>
<P>(1) A forbearance plan;
</P>
<P>(2) Assumption;
</P>
<P>(3) A loan modification;
</P>
<P>(4) Loss mitigation advance;
</P>
<P>(5) Pre-foreclosure sale;
</P>
<P>(6) A deed-in-lieu/lease-in-lieu of foreclosure; or
</P>
<P>(7) Other options, as may be prescribed in Section 184 Program Guidance.
</P>
<P>(d) A loss mitigation review shall, to the greatest extent possible, be based on a full financial assessment of the Borrower at time of default, and the collection technique(s) must take into account the circumstances particular to each Borrower.
</P>
<P>(e) HUD may prescribe conditions and requirements in Section 184 Program Guidance for the eligibility and appropriate use of loss mitigation options.
</P>
<P>(f) Within 180 days of default, or any extended timeframe prescribed by Section 184 Guidance, if the Borrower fails to meet their loss mitigation option requirements, the Servicer shall have up to 45 days from the date of the failure of the loss mitigation to determine whether the Borrower should continue with the current loss mitigation option or have Borrower enter into an alternate loss mitigation option.
</P>
<P>(g) If a Borrower does not accept, is not eligible for, or fails loss mitigation, the Servicer shall complete First Legal Action in accordance with § 1005.763 or Tribal First Right of Refusal in accordance with § 1005.759.
</P>
<P>(h) Documentation must be maintained for the initial and all subsequent evaluations and resulting loss mitigation actions in the servicing case binder in accordance with § 1005.219(d)(2).
</P>
<P>(i) A Servicer that is found to have failed to engage in and comply with loss mitigation as required under this subpart may be subject to enforcement action by HUD, including but not limited to sanctions under §§ 1005.905 and 1005.907.
</P>
<P>(j) HUD may provide alternative requirements to this section when there is a national emergency or disaster and publish such alternative requirements in Section 184 Program Guidance.




</P>
</DIV8>


<DIV8 N="§ 1005.741" NODE="24:4.1.3.1.28.7.64.21" TYPE="SECTION">
<HEAD>§ 1005.741   Notice to Tribe and BIA—Borrower default.</HEAD>
<P>(a) When two consecutive Section 184 Guaranteed Loan payments are in default or sixty days after other default under the Section 184 Guaranteed Loan, the Servicer shall provide notice of default to:
</P>
<P>(1) The BIA, where applicable, for Section 184 Guaranteed Loan property that is on Trust Land, in accordance with applicable BIA requirements; and,
</P>
<P>(2) The Tribe, where applicable, for any Section 184 Guaranteed Loan property where a Borrower has provided consent of notification in accordance with § 1005.501(j).
</P>
<P>(b) The Servicer shall continue exploring loss mitigation options, consistent with the requirements under this subpart, with the Borrower during the notification process to the Tribe and/or BIA, as applicable.




</P>
</DIV8>


<DIV8 N="§ 1005.743" NODE="24:4.1.3.1.28.7.64.22" TYPE="SECTION">
<HEAD>§ 1005.743   Relief for Borrower in military service.</HEAD>
<P>(a) <I>Postponement of principal payments.</I> If the Borrower is a person in “military service,” as such term is defined in the Servicemembers Civil Relief Act (50 U.S.C. 3901-4043), the Servicer may, by written agreement with the Borrower, postpone for the period of military service and three months thereafter any part of the monthly payment which represents the Amortization of principal. The agreement shall contain a provision for the resumption of monthly payments after such a period in amounts which will completely amortize the Section 184 Guaranteed Loan within the maturity as provided in the original loan term.
</P>
<P>(b) <I>Forbearance.</I> Forbearance plans may be available to Borrowers in military service pursuant to § 1005.745(e).
</P>
<P>(c) <I>Postponement of foreclosure.</I> If at any time during default the Borrower is a person in “military service,” as such term is defined in the Servicemembers Civil Relief Act, the period during which the Borrower is in such military service shall be excluded in computing the period within which the Servicer shall complete First Legal Action to acquire the property or Tribal notice under § 1005.759(a). No postponement or delay in the prosecution of foreclosure proceedings during the period the Borrower is in such military service shall be construed as failure on the part of the Servicer to exercise reasonable diligence in prosecuting such proceedings to completion as required by this subpart.




</P>
</DIV8>


<DIV8 N="§ 1005.745" NODE="24:4.1.3.1.28.7.64.23" TYPE="SECTION">
<HEAD>§ 1005.745   Forbearance plans.</HEAD>
<P>(a) <I>General.</I> Forbearance plans are arrangements between a Servicer and Borrower that may allow for a period of reduced and/or suspended payments and specific terms for the repayment plan. During the Forbearance period, where Borrower is in compliance with the Forbearance plan, the Servicer shall not proceed to First Legal Action or complete Tribal First Right of Refusal notice under § 1005.759 until expiration or default of the Agreement.
</P>
<P>(b) <I>Informal forbearance.</I> Informal forbearance plans are oral agreements, where permitted under Tribal or State law, between a Servicer and Borrower allowing for reduced or suspended payments and may provide specific terms for repayment.
</P>
<P>(1) <I>Eligibility.</I> The Servicer may offer an informal forbearance plan to a Borrower with a delinquent Section 184 Guaranteed Loan who is not experiencing a loss of income or an increase in living expenses that can be verified.
</P>
<P>(2) <I>Duration.</I> The period shall be three months or less.
</P>
<P>(c) <I>Formal forbearance.</I> Formal forbearance plans are written agreements executed by the Servicer and Borrower, allowing for reduced or suspended payments and such plans may include specific terms for repayment.
</P>
<P>(1) <I>Eligibility.</I> The Servicer may offer a formal forbearance plan when:
</P>
<P>(i) The Borrower is not experiencing a loss of income or increase in living expenses that can be verified; or
</P>
<P>(ii) If the Servicer determines that the Borrower is otherwise ineligible for other loss mitigation options but has sufficient surplus income or other assets that could repay the indebtedness.
</P>
<P>(2) <I>Agreement.</I> The Servicer shall execute a written agreement with the Borrower outlining the terms and conditions of the formal forbearance. The Servicer must include in the formal forbearance agreement a provision for the resumption of monthly payments on a date certain, with repayment in amounts which will completely reinstate the Section 184 Guaranteed Loan no later than the original maturity date. The Servicer must retain in the servicing case binder a copy of the written formal forbearance agreement postponing principal and interest payments.
</P>
<P>(3) <I>Duration.</I> The repayment period shall be equal to or greater than three months but not to exceed six months, unless authorized by HUD.
</P>
<P>(4) <I>Required documents.</I> The Servicer must obtain from the Borrower any necessary supporting documentation and retain this documentation in the servicing case binder.
</P>
<P>(5) <I>Property condition.</I> The Servicer must conduct any review it deems necessary, including a property inspection, when the Servicer has reason to believe that the physical condition of the property adversely impacts the Borrower's use or ability to support the debt as follows:
</P>
<P>(i) Financial information provided by the Borrower indicating large expenses for property maintenance;
</P>
<P>(ii) The Servicer receives notice from local government or other third parties regarding property condition; or
</P>
<P>(iii) The property may be affected by a disaster event.
</P>
<P>(iv) If significant maintenance costs contributed to the default or are affecting the Borrower's ability to make payments under the loan or formal forbearance agreement, the Servicer may provide in the formal forbearance agreement a period of loan forbearance during which repairs specified in the agreement will be completed at the Borrower's expense.
</P>
<P>(d) <I>Special forbearance-unemployment.</I> The special forbearance-unemployment loss mitigation option is available when one or more of the Borrowers has become unemployed and the loss of employment has negatively affected the Borrower's ability to continue to make their monthly Section 184 Guaranteed Loan payment. It is a formal forbearance plan with a written agreement executed by the Servicer and Borrower, allowing for reduced or suspended payments and such plan may include specific terms for repayment.
</P>
<P>(1) <I>Eligibility.</I> The Servicer must ensure that the Borrower meets all the following eligibility requirements:
</P>
<P>(i) The Section 184 Guaranteed Loan must be at least three months in default.
</P>
<P>(ii) The Borrower is experiencing a verified loss of income or increase in living expenses due to loss of employment.
</P>
<P>(iii) The Borrower must continue to occupy the property as a Principal Residence.
</P>
<P>(iv) The Borrower must have a verified unemployment status and no Borrower is currently receiving continuous income; or an analysis of the Borrower's financial information indicates that special forbearance-unemployment is the best or only option available for the Borrower.
</P>
<P>(2) <I>Agreement.</I> The Servicer shall execute a written special forbearance-unemployment agreement with the Borrower outlining the terms and conditions of the special forbearance-unemployment. The Servicer must include in the special forbearance-unemployment agreement a provision for the resumption of monthly payments on a date certain, with repayment in amounts which will completely reinstate the Section 184 Guarantee Loan no later than the original maturity. The Servicer must retain in the servicing case binder a copy of the written special forbearance-unemployment agreement postponing principal and interest payments.
</P>
<P>(3) <I>Duration.</I> The repayment period shall not exceed six months.
</P>
<P>(4) <I>Required documents.</I> The Servicer must obtain from the Borrower such supporting third party documentation, including receipts of unemployment benefits or an affidavit signed by the Borrower, stating the date that the Borrower became unemployed and stating that the Borrower is actively seeking, and is available, for employment. The Servicer must retain this documentation in the servicing case binder.
</P>
<P>(5) <I>Property condition.</I> The Servicer must conduct any review it deems necessary, including a property inspection, when the Servicer has reason to believe that the physical condition of the property adversely impacts the Borrower's use or ability to support the debt as follows:
</P>
<P>(i) Financial information provided by the Borrower indicating large expenses for property maintenance;
</P>
<P>(ii) The Servicer receives notice from local government or other third parties regarding property condition; or
</P>
<P>(iii) The property may be affected by a disaster event.
</P>
<P>(iv) If significant maintenance costs contributed to the default or are affecting the Borrower's ability to make payments under the Section 184 Guaranteed Loan or special forbearance-unemployment agreement, the Servicer may provide in the special forbearance-unemployment agreement a period of forbearance during which repairs specified in the agreement will be completed at the Borrower's expense.
</P>
<P>(e) <I>Special forbearance-servicemember.</I> The Servicer may, by written special forbearance-servicemember agreement with the Borrower, postpone any part of the monthly Section 184 Guaranteed Loan that represents Amortization of principal, for the period permitted by HUD under § 1005.743.
</P>
<P>(1) <I>Eligibility.</I> The servicemember must be in active-duty military service and meet the criteria established in 50 U.S.C. 3911. Dependents of servicemembers are entitled to protections in limited situations per the Servicemembers Civil Relief Act, as amended.
</P>
<P>(2) <I>Duration.</I> The repayment period shall be for the period of military service and three months thereafter.
</P>
<P>(3) <I>Required documents.</I> The Borrower shall provide the Servicer with a copy of the servicemember's deployment orders.
</P>
<P>(4) <I>Agreement.</I> (i) The Servicer shall execute a written special forbearance-servicemember agreement with the Borrower outlining the terms and conditions of the special forbearance-servicemember agreement. The Servicer must include in the special forbearance-servicemember agreement a provision for the resumption of monthly payments on a date certain, with repayment in amounts which will completely reinstate the Section 184 Guaranteed Loan no later than the original maturity date. The Servicer must retain in the servicing case binder a copy of the written special forbearance-servicemember agreement postponing principal and interest payments.
</P>
<P>(ii) The Servicer shall comply with all applicable requirements under the Servicemembers Civil Relief Act.
</P>
<P>(f) <I>Continued review and re-evaluation.</I> The Servicer shall monitor the Borrower's compliance with an agreement under § 1005.743 every 30 days, until the end of the agreement.
</P>
<P>(g) <I>Other special forbearances.</I> HUD may provide for a special forbearance in response to a disaster or other national emergency or other circumstances approved by the Secretary.




</P>
</DIV8>


<DIV8 N="§ 1005.747" NODE="24:4.1.3.1.28.7.64.24" TYPE="SECTION">
<HEAD>§ 1005.747   Assumption.</HEAD>
<P>The Servicer shall explore assumption as a loss mitigation option with the Borrower in accordance with § 1005.711. Assumptions associated with loss mitigation must result in the cure of the default and reinstatement of the Section 184 Guaranteed Loan.




</P>
</DIV8>


<DIV8 N="§ 1005.749" NODE="24:4.1.3.1.28.7.64.25" TYPE="SECTION">
<HEAD>§ 1005.749   Loan modification.</HEAD>
<P>(a) <I>General.</I> A Section 184 Guaranteed Loan modification may include a change in one or more of the following: interest rate; capitalization of delinquent principal, interest, or escrow items; or re-Amortization of the balance due. A Section 184 Guaranteed Loan modification may not be used as a means to reinstate the Section 184 Guaranteed Loan prior to sale or assumption.
</P>
<P>(b) <I>Eligibility.</I> The Servicer must ensure that the Borrower is able to support the monthly loan payment after the loan is modified.
</P>
<P>(c) <I>Borrower qualifications.</I> The Servicer must ensure that the Borrower meets the following eligibility criteria:
</P>
<P>(1) At least 12 months have elapsed since the closing date of the original Section 184 Guaranteed Loan.
</P>
<P>(2) The Borrower has not executed a loan modification agreement in the past 24 months. The number of loan modification agreements may be limited as prescribed by Section 184 Program Guidance. The Servicer may approve the first loan modification agreement under the Loan, and HUD must approve any subsequent loan modifications.
</P>
<P>(3) The Borrower's default is due to a verified loss of income or increase in living expenses.
</P>
<P>(4) One or more Borrowers receive continuous income sufficient to support the monthly payment under the modified rate and term, although not sufficient to sustain the original Section 184 Guaranteed Loan and repay the arrearage.
</P>
<P>(5) The Borrower's minimum percentage of net income shall be prescribed by HUD.
</P>
<P>(6) The Borrower's monthly payment, which consists of principal, interest, taxes, insurance, and other escrow, can be reduced by the greater of 10 percent of the existing monthly Section 184 Guaranteed Loan payment amount but no less than $100, using an agreed upon interested rate in accordance with § 1005.451 and amortizing for a term up to 30 years or any other period as may be prescribed by HUD.
</P>
<P>(7) The Borrower has successfully completed a three-month trial payment plan based on the Section 184 Guaranteed Loan estimated modification monthly payment amount.
</P>
<P>(d) <I>Property conditions.</I> The Servicer must conduct any review it deems necessary, including a property inspection, when the Servicer has reason to believe that the physical conditions of the property adversely impact the Borrower's use or ability to support the debt as follows:
</P>
<P>(1) Financial information provided by the Borrower indicates large expenses for property maintenance;
</P>
<P>(2) The Servicer receives notice from local government or other third parties regarding property condition; or
</P>
<P>(3) The property is affected by a disaster event.
</P>
<P>(e) <I>Trial payment plans.</I> A trial payment plan is a written agreement executed by all parties on the Section 184 Guaranteed Loan, for a minimum period of three months, during which the Borrower must make the agreed-upon consecutive monthly payments prior to execution of the final loan modification.
</P>
<P>(1) <I>Trial payment plan terms.</I> The Servicer must ensure that the following apply to interest rates and monthly payment amounts under trial payment plan:
</P>
<P>(i) The interest rate for the trial payment plan and the loan modification must in accordance with § 1005.451.
</P>
<P>(ii) The interest rate is established when the trial payment plan is offered to the Borrower.
</P>
<P>(iii) The established monthly loan modification payment must be the same or less than the established monthly trial payment.
</P>
<P>(2) <I>Start of trial payments.</I> The Servicer must send the proposed trial payment plan agreement to the Borrower at least 30 days before the date the first trial payment is due.
</P>
<P>(3) <I>Trial payment plan signatures.</I> (i) All parties on the Section 184 Guaranteed Loan and all parties that will be subject to the modified loan must execute the trial payment plan agreement unless:
</P>
<P>(A) A Borrower or co-Borrower is deceased;
</P>
<P>(B) A Borrower and a co-Borrower are divorced; or
</P>
<P>(C) A Borrower or co-Borrower on the Section 184 Guaranteed Loan has been released from liability as the result of an approved substitute Borrower.
</P>
<P>(ii) When a Borrower uses a non-Borrower household member's income to qualify for a loan modification, the non-Borrower household member must be on the modified note and Section 184 Guaranteed Loan and sign the trial payment plan agreement.
</P>
<P>(4) <I>Application of trial payments.</I> The Servicer must treat payments made under the trial payment plan as Partial Payments, held in a suspense account and applied in accordance with procedures in the Section 184 Program Guidance and applicable Federal regulations.
</P>
<P>(5) <I>End of trial payment plan period.</I> The Servicer must offer the Borrower a permanent loan modification after the Borrower's successful completion of a trial payment plan.
</P>
<P>(6) <I>Trial payment plan failure.</I> The Borrower fails a trial payment plan when one of the following occurs:
</P>
<P>(i) The Borrower does not return the executed trial payment plan agreement within the month the first trial payment is due;
</P>
<P>(ii) The Borrower vacates or abandons the property; or
</P>
<P>(iii) The Borrower does not make a scheduled trial payment plan payment by the last day of the month it was due.
</P>
<P>(7) <I>Alternatives to foreclosure after trial payment plan failure.</I> If a Borrower fails to successfully complete a trial payment plan, the Servicer must:
</P>
<P>(i) Provide notice to the Borrower of the failure to comply with the trial payment plan; and
</P>
<P>(ii) Offer the Borrower the opportunity for a deed-in-lieu/lease-in-lieu of foreclosure, with seven days to respond to the offer.
</P>
<P>(8) <I>Funds remaining at the end of trial payment period.</I> (i) At the end of a successful trial payment plan, any remaining funds that do not equal a full payment must be applied to any escrow shortage or be used to reduce the amount that would be capitalized onto the principal balance.
</P>
<P>(ii) <I>Trial payment plan failure.</I> If the Borrower does not complete the trial payment plan, the Servicer must apply all funds held in suspense to the Borrower's account in the established order of priority.
</P>
<P>(9) <I>Reporting of trial payment plans.</I> The Servicer must report the trial payment plans to HUD in the manner prescribed in Section 184 Program Guidance.
</P>
<P>(f) <I>Loan modification documents.</I> HUD does not require a specific format for the loan modification documents; however, the Servicer must use documents that conform to all applicable Tribal, Federal, and State laws.
</P>
<P>(g) <I>Post-modification review and modification of Loan Guarantee Certificate.</I> Upon completion of a successful trial payment plan and within 30 days of the execution of the loan modification documents, the Servicer shall provide copies of the loan modification documents to HUD. The Servicer shall comply with additional processing instructions as prescribed by Section 184 Program Guidance.




</P>
</DIV8>


<DIV8 N="§ 1005.751" NODE="24:4.1.3.1.28.7.64.26" TYPE="SECTION">
<HEAD>§ 1005.751   Loss mitigation advance.</HEAD>
<P>(a) <I>General.</I> A loss mitigation advance is a reimbursement by HUD to the Holder for the advancement of funds on behalf of the Borrower in the amount necessary to assist in the reinstatement of the Borrower's Section 184 Guaranteed Loan. The loss mitigation advance is a subordinate lien in favor of HUD. More than one loss mitigation advance may be made to an eligible Borrower.
</P>
<P>(b) <I>Borrower eligibility.</I> To be eligible for a loss mitigation advance:
</P>
<P>(1) The Borrower's Section 184 Guaranteed Loan is 90 or more days past due:
</P>
<P>(2) The Borrower has the ability to resume making on-time monthly loan payments and the property is owner occupied.
</P>
<P>(3) [Reserved]
</P>
<P>(c) <I>Terms.</I> The loss mitigation advance shall:
</P>
<P>(1) Include all arrearages, which refers to any amounts needed to bring the Borrower's Section 184 Guaranteed Loan current;
</P>
<P>(2) Provide that all prior loss mitigation advances, if any, in total must not exceed 30 percent of the unpaid principal balance as of the date of default;
</P>
<P>(3) Include any other terms and conditions, as may be prescribed by Section 184 Program Guidance; and
</P>
<P>(4) Along with another loss mitigation, where applicable, fully reinstate the Section 184 Guaranteed Loan upon the Borrower's acceptance of the loss mitigation advance.




</P>
</DIV8>


<DIV8 N="§ 1005.753" NODE="24:4.1.3.1.28.7.64.27" TYPE="SECTION">
<HEAD>§ 1005.753   Pre-foreclosure sale.</HEAD>
<P>(a) <I>General.</I> A pre-foreclosure sale, also known as a short sale, refers to the sale of real estate that generates proceeds that are less than the amount owed on the property and any junior lien holders have agreed to release their liens and forgive the deficiency balance on the real estate.
</P>
<P>(b) <I>Eligibility.</I> To be eligible for a pre-foreclosure sale, a Servicer must ensure:
</P>
<P>(1) The Section 184 Guaranteed Loan was Originated at least 12 months prior to default;
</P>
<P>(2) The default was due to an adverse and unavoidable financial situation impacting the Borrower;
</P>
<P>(3) The property has a current fair market value that is equal to or less than the unpaid principal balance;
</P>
<P>(4) The Borrower elected the pre-foreclosure sale option within 120 days, or any other date as prescribed by Section 184 Program Guidance, from default; and
</P>
<P>(5) All other requirements of the pre-foreclosure sale loss mitigation option under this section are met.
</P>
<P>(c) <I>Surchargeable damages.</I> Surchargeable damage is damage to the Section 184 Guaranteed Loan property caused by fire, flood, earthquake, tornado, boiler explosion (for condominiums only) or Servicer neglect. The Servicer is responsible for the cost of surchargeable damage, and these amounts are not reimbursable by HUD. The Servicer must request HUD approval before approving the use of the pre-foreclosure sale loss mitigation option when the property has sustained surchargeable damage. If the damage is not surchargeable damage, the Servicer is not required to obtain HUD approval prior to approving the Approval to Participate Agreement with Borrower. The Servicer must comply with paragraph (p) of this regulation where a hazard insurance claim must be filed.
</P>
<P>(d) <I>Condition of title or Title Status Report.</I> (1) For Section 184 Guaranteed Loans on fee simple lands, a Servicer must ensure the property has Good and Marketable Title. Before approving a pre-foreclosure sale loss mitigation option, the Servicer must obtain title evidence or a preliminary report verifying that the title is not impaired by unresolvable title defects or junior liens that cannot be discharged.
</P>
<P>(2) For Section 184 Guaranteed Loans on Trust Land, the Servicer shall obtain a certified Title Status Report from the BIA. Before approving a pre-foreclosure sale loss mitigation option, the Servicer must verify that the property is not encumbered by unresolvable title defects or junior liens that cannot be discharged.
</P>
<P>(e) <I>Discharge of junior liens.</I> The Servicer must contact all junior lienholders to verify the Borrower has secured a discharge of the junior liens.
</P>
<P>(f) <I>Property list price and valuation</I>—(1) <I>List price.</I> The Servicer must ensure that the Borrower lists the property for sale at no less than the “as-is” value, as determined by an appraisal completed in accordance with the requirements in § 1005.457.
</P>
<P>(2) <I>Appraisals.</I> The Servicer must have the property appraised in accordance with § 1005.457 and pursuant to the following requirements:
</P>
<P>(i) The appraisal must contain an “as-is” fair market value for the subject property;
</P>
<P>(ii) A copy of the appraisal must be provided to HUD. A copy of the appraisal must be provided to the Borrower or sales agent, upon request;
</P>
<P>(iii) A Servicer must present HUD with a request for a variance to approve a pre-foreclosure sale transaction if one of the following conditions exists:
</P>
<P>(A) The current appraised value of the property is less than the unpaid principal balance by an amount of $75,000 or greater;
</P>
<P>(B) The appraised value is less than 50 percent of the unpaid principal balance; or
</P>
<P>(C) The appraisal is deemed unacceptable because the as-is value cannot be affirmed using a Broker's Price Opinion or Automated Valuation Model within 10 percent of the value.
</P>
<P>(iv) Paragraph (f)(2)(iii) of this section is not applicable to property on Trust Land unless there is a viable real estate market;
</P>
<P>(v) Under paragraph (f)(2)(iii) of this section, the Servicer must note on the variance request the specific reason for the request and attach any supporting documents needed for HUD review;
</P>
<P>(vi) The Servicer must obtain HUD approval before authorizing the marketing of the property; and
</P>
<P>(vii) All pre-foreclosure appraisals must be accompanied by a broker's price opinion or an automated valuation model unless the property is located on Trust Land.
</P>
<P>(g) <I>Required documents.</I> After determining that a Borrower and property meet the pre-foreclosure sale eligibility requirements, the Servicer shall send to the Borrower:
</P>
<P>(1) <I>Pre-foreclosure sale approval to participate agreement.</I> The agreement, on a form prescribed by Section 184 Program Guidance, shall list the pre-foreclosure sale requirements, including the date by which the Borrower's sales contract must be executed during the pre-foreclosure sale marketing period; and
</P>
<P>(2) <I>Pre-foreclosure addendum.</I> The addendum shall be in the form prescribed by Section 184 Program Guidance. The pre-foreclosure sale addendum must be fully executed at closing.
</P>
<P>(h) <I>Delivery of documents to Borrower.</I> Documents listed under paragraphs (g)(1) and (2) of this section must be sent to the Borrower via methods providing delivery confirmation with a date and time stamp of delivery. The Servicer must inform the Borrower that the documents must be signed and returned to the Servicer within 10 days of receipt.
</P>
<P>(i) <I>Copies to HUD.</I> The Servicer must send signed copies of the documents in paragraphs (g)(1) and (2) of this section to HUD within 15 days of receipt from the Borrower.
</P>
<P>(j) <I>Tribal Notification for Properties on Trust Land.</I> At the same time the Servicer sends the Approval to Participate Agreement to the Borrower, in accordance with the requirements as prescribed by Section 184 Program Guidance, the Servicer shall send a notice to the Tribe and the TDHE of the option to assume the Section 184 Guaranteed Loan or purchase the property.
</P>
<P>(k) <I>Use of a real estate broker.</I> The Borrower is responsible for retaining the services of a HUD-approved real estate broker/agent within seven days of the signed Approval to Participate Agreement. For Trust Land, the Borrower may request, through the Servicer, an exception to this section. If an exception is granted, HUD will work with the Borrower, Servicer and Tribe or TDHE to sell the property or pursue another loss mitigation option.
</P>
<P>(l) <I>Required listing disclosure.</I> The Servicer shall require the listing agreement between the seller and the agent/broker to include the following cancellation clause: “Seller may cancel this Agreement prior to the ending date of the listing period without advance notice to the Broker, and without payment of a commission or any other consideration if the property is conveyed to HUD or the Holder. The sale completion is subject to approval by the Servicer and HUD.” This section is not applicable to property on Trust Land unless a HUD-approved real estate broker/agent is utilized.
</P>
<P>(m) <I>Pre-foreclosure sale marketing, settlement period, failure to complete pre-foreclosure sale.</I> The Borrower has seven days, or other timeframe as prescribed by Section 184 Program Guidance from the date of the signed approval to participate agreement to market the property in the Multiple Listing Service, or other marketing resource if the property is on Trust Land.
</P>
<P>(1) The property must be marketed in the Multiple Listing Service or other marketing resource for a period of 90 days, or other timeframe as prescribed by Section 184 Program Guidance before Borrower may consider any offers.
</P>
<P>(2) During the marketing period, Servicers must conduct a monthly review of the property's marketing status with the real estate broker/agent or the Tribe or TDHE, for property on Trust Land.
</P>
<P>(3) The maximum marketing period for the sale of the property is 120 days from the execution date of the Approval to Participate Agreement and the date of the property settlement. If there is a signed contract of sale, but property settlement has not occurred by the end of the 120 Days, the marketing period may be extended up to 60 days to allow for closing to occur.
</P>
<P>(4) Within 30 days of the end the marketing period, or no earlier than 120 days of default, whichever is later, if no settlement has occurred, Servicer shall provide electronic or written notice to the Borrower of the Borrower's default under the pre-foreclosure sale agreement and present the agreed upon deed-in-lieu/lease-in-lieu of foreclosure, with title being taken in the name of the Secretary. The Borrower shall have ten days from the date of the notice to respond in writing or by electronic means. If the Servicer receives no response or if the Servicer receives notice of the Borrower's rejection of the alternative to foreclosure, the Servicer must complete First Legal Action within 30 days or Tribal First Right of Refusal within 14 days of the Borrower's deadline to respond or actual rejection response date, whichever is sooner.
</P>
<P>(n) <I>Property inspections and maintenance.</I> The Servicer shall inspect the property in accordance with § 1005.735 and follow § 1005.739, where applicable.
</P>
<P>(o) <I>Disclosure of damage after pre-foreclosure sale approval.</I> In the event the property becomes damaged, the Borrower must report damage to the Servicer in accordance with the pre-foreclosure sale agreement. When the Servicer becomes aware that the property has sustained damage after a Borrower has received the Approval to Participate Agreement, the Servicer must evaluate the property to determine if it continues to qualify for the pre-foreclosure sale program or terminate participation if the extent of the damage changes the property's fair market value.
</P>
<P>(p) <I>Hazard insurance claim.</I> Where applicable, the Servicer must work with the Borrower to file a hazard insurance claim and either: use the proceeds to repair the property; or adjust the Claim by the amount of the insurance settlement (Non-Surchargeable Damage) or the Secretary's repair cost estimate.
</P>
<P>(q) <I>Evaluation of offers.</I> The Servicer must receive from the listing real estate broker/agent an offer that yields the highest net return to HUD and meets HUD's requirements for bids, as follows:
</P>
<P>(1) <I>Real estate broker/agent to ensure execution of documents.</I> The real estate broker/agent must ensure that the accepted offer and the pre-foreclosure sale addendum are signed by all applicable parties before submitting to the Servicer for approval, and
</P>
<P>(2) <I>Arm's length transaction.</I> The transaction must be between two unrelated parties who are each acting in their own best interest.
</P>
<P>(3<I>) Back-up offers.</I> Once an offer has been submitted to the Servicer for approval, the real estate broker/agent must retain any offer that the seller elects to hold as backup offer until a determination has been made on the previously submitted offer.
</P>
<P>(r) <I>Contract approval by Servicer</I>—(1) <I>Review of sales contract.</I> In reviewing the contract of sale, the Servicer must:
</P>
<P>(i) Ensure that the pre-foreclosure sale is an outright sale of the property and not a sale by assumption.
</P>
<P>(ii) Review the sales documentation to determine that there are no hidden terms or special agreements existing between any of the parties involved in the pre-foreclosure sale transaction; and no contingencies that might delay or jeopardize a timely settlement.
</P>
<P>(iii) Determine that the property was marketed pursuant to HUD requirements.
</P>
<P>(iv) Not approve a Borrower for a pre-foreclosure sale if the Servicer knows or has reason to know of the Borrower's fraud or misrepresentation of information.
</P>
<P>(2) <I>Sales contract review period.</I> After receiving an executed contract of sale and pre-foreclosure sale addendum from the Borrower, the Servicer must send to the Borrower a Sales Contract Review, on a form prescribed by Section 184 Program Guidance, no later than five business days after the Servicer's receipt of an executed contract for sale.
</P>
<P>(3) <I>Net sale proceeds.</I> (i) Net sale proceeds are the proceeds of a pre-foreclosure sale, calculated by subtracting reasonable and customary closing and settlement costs from the property sales price.
</P>
<P>(ii) Regardless of the property sale price, a Servicer may only approve a pre-foreclosure sale contract for sale if the net sale proceeds are at or above minimum allowable thresholds established by HUD. The net sale proceeds must conform to the requirements on the Pre-Foreclosure Sale Approval to Participate Agreement.
</P>
<P>(iii) The Servicer is liable for any Claim overpayment on a pre-foreclosure sale transaction that closes with less than the required net sale proceeds unless a variance has been granted by HUD.
</P>
<P>(4) <I>Unacceptable settlement costs.</I> The Servicer must not include the following costs in the Net Sale Proceeds calculation:
</P>
<P>(i) Repair reimbursements or allowances;
</P>
<P>(ii) Home warranty fees;
</P>
<P>(iii) Discount points or loan fees;
</P>
<P>(iv) Servicer's title insurance fee;
</P>
<P>(v) Third-party fees incurred by the Servicer or Borrower to negotiate a pre-foreclosure sale; and
</P>
<P>(vi) Any other costs as may be prohibited in Section 184 Program Guidance.
</P>
<P>(5) <I>Other third-party fees.</I> (i) With the exception of reasonable and customary real estate commissions, the Servicer must ensure that third-party fees incurred by the Servicer or Borrower to negotiate a pre-foreclosure sale are not included on the Closing Disclosure or similar legal documents unless explicitly permitted by Tribal or State law.
</P>
<P>(ii) The Servicer, its agents, or any outsourcing firm it employs must not charge any fee to the Borrower for participation in the pre-foreclosure sale.
</P>
<P>(s) <I>Closing and post-closing responsibilities.</I> For the purpose of this section, with respect to Trust Land, the closing agent may be selected by the Tribe or TDHE.
</P>
<P>(1) <I>Closing worksheet.</I> Prior to closing, the Servicer must provide the closing agent with a Closing Worksheet, on a form prescribed by HUD, listing all amounts payable from net sale proceeds; and a pre-foreclosure sale addendum signed by all parties.
</P>
<P>(2) <I>Servicer review of final terms of pre-foreclosure sale transaction.</I> The Servicer will receive from the closing agent a calculation of the actual net sale proceeds and a copy of the Closing Disclosure or similar legal document. The Servicer must ensure that:
</P>
<P>(i) The final terms of the pre-foreclosure sale transaction are consistent with the purchase contract;
</P>
<P>(ii) Only allowable settlement costs have been deducted from the seller's proceeds;
</P>
<P>(iii) The net sale proceeds will be equal to or greater than the allowable thresholds;
</P>
<P>(iv) A Closing Worksheet form is included in the claim case binder; and
</P>
<P>(v) It reports the pre-foreclosure sale to consumer reporting agencies.
</P>
<P>(3) <I>Closing agent responsibilities after final approval.</I> Once the Servicer gives final approval for the pre-foreclosure sale and the settlement occurs, the closing agent must:
</P>
<P>(i) Pay the expenses out of the Net Sale Proceeds and forward the Net Sale Proceeds to the Servicer;
</P>
<P>(ii) Forward a copy of the Closing Disclosure or similar legal document to the Servicer to be included in the Claim case binder no later than three business days after the pre-foreclosure sale transaction closes; and,
</P>
<P>(iii) Sign the pre-foreclosure sale Addendum on or before the date the pre-foreclosure sale transaction closes, unless explicitly prohibited by Tribal or State statute.
</P>
<P>(4) <I>Satisfaction of debt.</I> Upon receipt of the portion of the net sale proceeds designated for Section 184 Guaranteed Loan satisfaction, the Servicer must apply the funds to the outstanding balance and discharge any remaining debt, release the lien in the appropriate jurisdiction, and may file a Claim.
</P>
<P>(5) <I>Discharge of junior liens.</I> The Servicer must verify the pre-foreclosure sale will result in the discharge of junior liens as follows:
</P>
<P>(i) If the Borrower has the financial ability, the Borrower must be required to satisfy or otherwise obtain release of liens.
</P>
<P>(ii) If no other sources are available, the Borrower may obligate up to a maximum amount from sale proceeds towards discharging the liens or encumbrances, such maximum amount will be prescribed by HUD.
</P>
<P>(t) <I>Early termination of pre-foreclosure participation</I>—(1) <I>Borrower-initiated termination.</I> The Servicer must permit a Borrower to voluntarily terminate participation in the pre-foreclosure sale loss mitigation option at any time.
</P>
<P>(2) <I>Servicer-initiated termination.</I> The Servicer shall terminate a Borrower's pre-foreclosure sale program participation for any of the following reasons:
</P>
<P>(i) Discovery of unresolvable title problems;
</P>
<P>(ii) Determination that the Borrower is not acting in good faith to market the property;
</P>
<P>(iii) Significant change in property condition or value;
</P>
<P>(iv) Re-evaluation based on new financial information provided by the Borrower that indicates that the case does not qualify for the pre-foreclosure sale option; or
</P>
<P>(v) Borrower has failed to complete a pre-foreclosure sale within the time limits prescribed by Section 184 Program Guidance and no extensions of time have been granted by HUD.
</P>
<P>(3) <I>Notification of pre-foreclosure sale Program Participation Termination.</I> The Servicer must forward to the Borrower a written explanation for terminating their program participation. This letter is to include the “end-of-participation” date for the Borrower.
</P>
<P>(4) <I>Failure to complete a pre-foreclosure sale.</I> Should the Borrower be unable to complete a pre-foreclosure sale transaction, the Servicer must proceed with a deed-in-lieu/lease-in-lieu of foreclosure in accordance with § 1005.755. If the Servicer is unable to obtain a deed-in-lieu/lease-in-lieu of foreclosure, the Servicer must proceed to First Legal Action or assignment in accordance with §§ 1005.763 and 1005.765.




</P>
</DIV8>


<DIV8 N="§ 1005.755" NODE="24:4.1.3.1.28.7.64.28" TYPE="SECTION">
<HEAD>§ 1005.755   Deed-in-lieu/lease-in-lieu of foreclosure.</HEAD>
<P>(a) <I>Requirements.</I> In lieu of instituting or completing a foreclosure, the Servicer or HUD may acquire a property by voluntary conveyance from the Borrowers. Conveyance of the property by deed-in-lieu/lease-in-lieu of foreclosure is allowed subject to the Servicer's compliance with the following requirements:
</P>
<P>(1) The lease-in-lieu of foreclosure for a property on Trust Land shall be approved by the Tribe prior to execution and by the BIA at recordation.
</P>
<P>(2) The Section 184 Guaranteed Loan is in default at the time of the deed-in-lieu/lease-in-lieu of foreclosure is executed and delivered;
</P>
<P>(3) The Section 184 Guaranteed Loan is satisfied of record as a part of the consideration for such conveyance;
</P>
<P>(4) The deed-in-lieu/lease-in-lieu of foreclosure from the Borrower contains a covenant which warrants against the acts of the grantor and all claiming by, through, or under the grantor and conveys Good and Marketable Title, or for leases, assigns without objectionable encumbrances;
</P>
<P>(5) With respect to Section 184 Guaranteed Loans on fee simple lands, the Servicer transfers to HUD Good and Marketable Title accompanied by satisfactory title evidence.
</P>
<P>(6) With respect to Section 184 Guaranteed Loans on Trust Lands, the Servicer provides to HUD a certified Title Status Report, or other HUD approved document issued by the Tribe, as prescribed by Section 184 Program Guidance evidencing assignment to HUD without any objectionable encumbrances.
</P>
<P>(7) The property must meet the property conditions under § 1005.769. HUD may consent to conveyance of the property by deed-in-lieu/lease-in-lieu of foreclosure when property does not meet § 1005.769 in accordance with procedures in Section 184 Program Guidance.
</P>
<P>(b) <I>Required documentation.</I> A written agreement must be executed by the Borrower and Servicer which contains all of the conditions under which the deed-in-lieu/lease-in-lieu of foreclosure will be accepted.
</P>
<P>(c) <I>Conveyance to Servicer.</I> Upon execution of the deed-in-lieu/lease-in-lieu of foreclosure document(s), the Servicer must file for record no later than two business days from receipt.
</P>
<P>(d) <I>Conveyance to HUD, where applicable.</I> After evidence of recordation is available, the Servicer shall convey the property to HUD in accordance with § 1005.771.
</P>
<P>(e) <I>Reporting for Credit Purposes.</I> The Servicer must comply with all applicable Tribal, Federal, State, and local reporting requirements, including but not limited to reporting to credit reporting agencies.




</P>
</DIV8>


<DIV8 N="§ 1005.757" NODE="24:4.1.3.1.28.7.64.29" TYPE="SECTION">
<HEAD>§ 1005.757   Incentive payments.</HEAD>
<P>As an alternative to foreclosure, or eviction where applicable, as prescribed by Section 184 Program Guidance, HUD may authorize, an incentive payment to:
</P>
<P>(a) Borrowers that complete certain loss mitigation options or for their agreement to vacate the property after foreclosure, under the terms established by the Secretary;
</P>
<P>(b) Holders or Servicers for their completion of certain loss mitigation options; and
</P>
<P>(c) Tribes or TDHEs for their assistance in loss mitigation, sale, or transfer of the Trust Land property.


</P>
</DIV8>

</DIV7>


<DIV7 N="65" NODE="24:4.1.3.1.28.7.65" TYPE="SUBJGRP">
<HEAD>Assignment of the Loan to HUD; Foreclosure and Conveyance</HEAD>


<DIV8 N="§ 1005.759" NODE="24:4.1.3.1.28.7.65.30" TYPE="SECTION">
<HEAD>§ 1005.759   Property on Trust Land—Tribal First Right of Refusal; foreclosure or assignment.</HEAD>
<P>(a) Tribal First Right of Refusal is written notice to the Tribe of the options to assume the Section 184 Guaranteed Loan or purchase the Note based on the current unpaid principal balance or appraised value for any property on Trust Land or other reasonable options as prescribed by Section 184 Program Guidance.
</P>
<P>(b) The Servicer shall provide Tribal First Right of Refusal no later than 14 days, or any extended timeframe prescribed by Section 184 Program Guidance, after the earlier of:
</P>
<P>(1) Any lease provision addressing Tribal First Right of Refusal;
</P>
<P>(2) 120 days after default, unless the Borrower is in active loss mitigation;
</P>
<P>(3) Failure of loss mitigation after 180 days from default;
</P>
<P>(4) The failure of loss mitigation after an extension of the loss mitigation period under § 1005.739(f).
</P>
<P>(5) The date the property was determined vacant or abandoned in accordance § 1005.737 or the earliest date the Servicer should have known the property was vacant or abandoned.
</P>
<P>(c) The Tribe shall have either the time frame provided in the lease or, if not defined in the lease, 60 days, or any extended timeframe prescribed by Section 184 Program Guidance, to accept or decline the offer of Tribal First Right of Refusal.
</P>
<P>(d) If the Tribe declines or does not respond to the Tribal First Right of Refusal within 60 days, or any extended timeframe prescribed by Section 184 Guidance, the Servicer must either complete First Legal Action or assignment to HUD, within the timeframes prescribed in §§ 1005.763 and 1005.765.
</P>
<P>(e) Any costs associated with failure to initiate Tribal First Right of Refusal may be deemed ineligible for claim payment.




</P>
</DIV8>


<DIV8 N="§ 1005.761" NODE="24:4.1.3.1.28.7.65.31" TYPE="SECTION">
<HEAD>§ 1005.761   Fee simple properties—foreclosure or assignment with HUD approval.</HEAD>
<P>(a) Unless a Borrower has completed a pre-foreclosure sale or a deed-in-lieu of foreclosure in accordance with §§ 1005.753 and 1005.755, the Servicer must complete First Legal Action on the Section 184 Guaranteed Loan pursuant to § 1005.763.
</P>
<P>(b) Under limited circumstances, HUD may approve an assignment of a Section 184 Guaranteed Loan to HUD for fee simple land properties.




</P>
</DIV8>


<DIV8 N="§ 1005.763" NODE="24:4.1.3.1.28.7.65.32" TYPE="SECTION">
<HEAD>§ 1005.763   First Legal Action deadline and automatic extensions.</HEAD>
<P>(a) <I>Deadline for First Legal Action.</I> The Servicer must complete First Legal Action, within 180 days of default, unless a later date is authorized under this part.
</P>
<P>(b) <I>Automatic extensions to the First Legal Action deadline.</I> HUD permits automatic extensions to the First Legal Action deadline for the following reasons and HUD approval is not required.
</P>
<P>(1) If Federal law or the laws of the Tribe or State, in which the Section 184 Guaranteed Loan property is located, do not permit First Legal Action within the deadline designated above, then the Servicer must complete First Legal Action within 30 days after the expiration of the time during which First Legal Action is prohibited; or
</P>
<P>(2) If the Borrower is in compliance with an approved loss mitigation plan at 180 days of default and the Borrower subsequently fails loss mitigation, First Legal Action must be completed within 30 days of the loss mitigation failure or the Borrower's request to terminate the loss mitigation plan, whichever is sooner.
</P>
<P>(3) If the Borrower does not continue with their current loss mitigation option or enter into an alternative loss mitigation option during the 45-day period under § 1005.739(f), the First Legal Action must be completed within 30 days or
</P>
<P>(4) If a Tribal First Right of Refusal was offered under § 1005.759, and the Servicer decides to pursue foreclosure in Tribal court, instead of assigning the Loan to HUD, First Legal Action must be completed within 30 days of completing the Tribal First Right of Refusal.
</P>
<P>(c) <I>Other extensions.</I> Other necessary and reasonable extensions may be allowed, as prescribed by Section 184 Program Guidance.
</P>
<P>(d) <I>Notice to HUD.</I> The Servicer must provide notice to HUD, in a form as may be prescribed in Section 184 Program Guidance, within 15 days of completing First Legal Action.
</P>
<P>(e) <I>Submission of claim.</I> The Servicer must submit a claim to HUD within 45 days from the date the foreclosure was complete in accordance with § 1005.809(a) or (c).




</P>
</DIV8>


<DIV8 N="§ 1005.765" NODE="24:4.1.3.1.28.7.65.33" TYPE="SECTION">
<HEAD>§ 1005.765   Assignment of the Section 184 Guaranteed Loan.</HEAD>
<P>(a) <I>Fee simple land properties.</I> (1) The assignment of Section 184 Guaranteed Loans involving fee simple land properties requires prior HUD approval. The Servicer must submit a request for an assignment within 135 days of default, or any extended timeframe prescribed by Section 184 Program Guidance, unless the Servicer has determined the property is vacant pursuant to § 1005.737.
</P>
<P>(2) The Servicer shall have five business days from HUD approval, or any extended timeframe prescribed by Section 184 Program Guidance, to submit the executed assignment for recordation with the appropriate jurisdiction.
</P>
<P>(b) <I>Properties on Trust Land.</I> HUD may accept assignment of the Section 184 Guaranteed Loan if HUD determines that the assignment is in the best interest of the United States. In cases where HUD accepts the assignment, upon completing the Tribal First Right of Refusal in accordance with § 1005.759, the Servicer shall have five business days, or any extended timeframe prescribed by Section 184 Program Guidance, to submit the executed assignment for recordation with the BIA, as applicable, or other HUD approved document, as prescribed by Section 184 Program Guidance, that evidences the assignment.
</P>
<P>(c) <I>Notice to HUD.</I> The Servicer must provide notice to HUD, in a form as may be prescribed in Section 184 Program Guidance, within 15 days of submitting the assignment for recordation.
</P>
<P>(d) <I>Submission of Claim.</I> The Servicer shall have 45 days to submit the assignment and evidence of recordation as part of a Claim in accordance with 1005.809(b). The Servicer shall submit to HUD evidence of the filing and of a Claim in a manner so prescribed by Section 184 Program Guidance.
</P>
<P>(e) <I>Acceptance by HUD.</I> HUD will accept assignment of the Section 184 Guaranteed Loan in accordance with 1005.773.




</P>
</DIV8>


<DIV8 N="§ 1005.767" NODE="24:4.1.3.1.28.7.65.34" TYPE="SECTION">
<HEAD>§ 1005.767   Inspection and preservation of properties.</HEAD>
<P>(a) If at any time the Servicer knows or should have known the property is vacant or abandoned, the Servicer shall comply with the inspection requirements under § 1005.737.
</P>
<P>(b) The Servicer shall take appropriate action to protect and preserve the property until its conveyance to HUD, if such action does not constitute an illegal trespass or is not otherwise prohibited by Tribal, State, or Federal law. Taking “appropriate action” includes First Legal Action or assignment within the time required by §§ 1005.763 and 1005.765, as applicable.




</P>
</DIV8>


<DIV8 N="§ 1005.769" NODE="24:4.1.3.1.28.7.65.35" TYPE="SECTION">
<HEAD>§ 1005.769   Property condition.</HEAD>
<P>(a) <I>Condition at time of transfer.</I> (1) When the property is transferred, or a Section 184 Guaranteed Loan is assigned to HUD in accordance with § 1005.765, the property must be undamaged by fire, earthquake, flood, tornado, and Servicer neglect, except as set forth in this subpart.
</P>
<P>(2) A vacant property must be in broom-swept condition, meaning the property is, at a minimum, reasonably free of dust and dirt, and free of hazardous materials or conditions, personal belongings, and interior and exterior debris.
</P>
<P>(3) A vacant property is secured and, if applicable, winterized.
</P>
<P>(b) <I>Damage to property.</I> The Servicer shall not be liable for documented damage to the property by waste, deterioration, or neglect committed by the Borrower, or heirs, successors, or assigns.
</P>
<P>(c) <I>Servicer responsibility.</I> The Servicer shall be responsible for:
</P>
<P>(1) Damage by fire, flood, earthquake, or tornado;
</P>
<P>(2) Damage to or destruction of property which is vacant or abandoned when such damage or destruction is due to the Servicer's failure to take reasonable action to inspect, protect, and preserve such property as required by § 1005.737; and
</P>
<P>(3) Any damage, whatsoever, that the property has sustained while in the possession of the Servicer, when the property has been conveyed to HUD without notice or approval by HUD as required by § 1005.765.




</P>
</DIV8>


<DIV8 N="§ 1005.771" NODE="24:4.1.3.1.28.7.65.36" TYPE="SECTION">
<HEAD>§ 1005.771   Conveyance of property to HUD at or after foreclosure; time of conveyance.</HEAD>
<P>(a) At or after foreclosure, the Servicer shall convey the property to HUD by one of the following:
</P>
<P>(1) <I>Direct conveyance to HUD.</I> The Servicer shall cause for the deed to be transferred directly to HUD. The Servicer shall be responsible for determining that such conveyance will comply with all provisions of this part, including conveying Good and Marketable Title and producing satisfactory title evidence to HUD.
</P>
<P>(2) <I>Conveyance by the Holder to HUD.</I> The Holder shall acquire Good and Marketable Title and transfer the property to HUD within 30 days of the later of:
</P>
<P>(i) Execution of the foreclosure deed;
</P>
<P>(ii) Acquiring possession of the property;
</P>
<P>(iii) Expiration of the redemption period;
</P>
<P>(iv) Such further time as may be necessary to complete the title examination and perfect the title; or
</P>
<P>(v) Such further time as HUD may approve in writing.
</P>
<P>(b) On the date the deed is filed for record, the Servicer shall notify HUD, on a form prescribed by HUD, advising HUD of the filing of such conveyance and shall assign all rights without recourse or warranty any or all claims which the Servicer has acquired in connection with the loan transaction, and as a result of the foreclosure proceedings or other means by which the Servicer acquired or conveyed such property, except such claims as may have been released with the approval of HUD. The Servicer must file for record the deed no later than two business days after execution. The Servicer must document evidence of the submission in the file.




</P>
</DIV8>


<DIV8 N="§ 1005.773" NODE="24:4.1.3.1.28.7.65.37" TYPE="SECTION">
<HEAD>§ 1005.773   HUD acceptance of assignment or conveyance.</HEAD>
<P>(a) <I>Effective date of assignment.</I> HUD accepts the assignment of a Section 184 Guaranteed Loan when:
</P>
<P>(1) The Servicer has assigned the Section 184 Guaranteed Loan to HUD;
</P>
<P>(2) The Servicer has provided HUD evidence of the recordation; and
</P>
<P>(3) HUD pays a claim for the unpaid principal balance under § 1005.807(a).
</P>
<P>(b) <I>Effective date of conveyance.</I> HUD accepts conveyance of the property when:
</P>
<P>(1) The Servicer has deeded the property to HUD;
</P>
<P>(2) The Servicer has provided HUD evidence of the recordation; and
</P>
<P>(3) HUD pays a claim for the unpaid principal balance under § 1005.807(a).
</P>
<P>(c) <I>Servicer ongoing obligation.</I> Notwithstanding the assignment of the Section 184 Guarantee Loan or the filing of the deed or other legal instrument conveying the property interest to the HUD, the Servicer remains responsible for ensuring compliance with this part, including any loss or damage to the property, and such responsibility is retained by the Servicer until the claim has been paid by HUD.


</P>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="H" NODE="24:4.1.3.1.28.8" TYPE="SUBPART">
<HEAD>Subpart H—Claims</HEAD>


<DIV7 N="66" NODE="24:4.1.3.1.28.8.66" TYPE="SUBJGRP">
<HEAD>Claims Application, Submission Categories and Types</HEAD>


<DIV8 N="§ 1005.801" NODE="24:4.1.3.1.28.8.66.1" TYPE="SECTION">
<HEAD>§ 1005.801   Purpose.</HEAD>
<P>This subpart sets forth requirements that are applicable to a Servicer's submission of an application for a Claim for a Section 184 Guaranteed Loan benefits to HUD. The Servicer's submission of the Claim shall be in compliance with this subpart and must follow the process details as set forth in Section 184 Program Guidance. This subpart also sets forth requirements for processing and payment of the Claim.




</P>
</DIV8>


<DIV8 N="§ 1005.803" NODE="24:4.1.3.1.28.8.66.2" TYPE="SECTION">
<HEAD>§ 1005.803   Claim case binder; HUD authority to review records.</HEAD>
<P>(a) A Servicer must maintain a claim case binder for each claim submitted for payment in accordance with § 1005.219(d)(2). The claim case binder must contain documentation supporting all information submitted in the claim.
</P>
<P>(b) HUD may review a claim case binder and the associated endorsement case binder at any time. A Servicer's denial of HUD access to any files may be grounds for sanctions in accordance with §§ 1005.905 and 1005.907.
</P>
<P>(c) Within three business days of a request by HUD, the Servicer must make available for review, or forward to HUD, copies of identified claim case binders.




</P>
</DIV8>


<DIV8 N="§ 1005.805" NODE="24:4.1.3.1.28.8.66.3" TYPE="SECTION">
<HEAD>§ 1005.805   Effect of noncompliance.</HEAD>
<P>(a) When a claim case binder is submitted to HUD for consideration, HUD may conduct a post-endorsement review in accordance with § 1005.527. If HUD determines that the Section 184 Guaranteed Loan does not satisfy the requirements of subpart D, HUD will take one or more of the following actions:
</P>
<P>(1) Reject the claim submission when the Holder is the Originating Direct Guarantee Lender.
</P>
<P>(2) Pay the claim to the current Holder and demand reimbursement of the claim from the Originating Direct Guarantee Lender.
</P>
<P>(3) Reconvey the property or reassign the deed of trust or mortgage in accordance with § 1005.849.
</P>
<P>(4) Pursue sanctions against the Originating Direct Guarantee Lender or Sponsored Entity pursuant to §§ 1005.905 and 1005.907.
</P>
<P>(b) When reviewing a claim case binder, if HUD determines:
</P>
<P>(1) The Servicer failed to service the Section 184 Guaranteed Loan in accordance with subpart G of this part;
</P>
<P>(2) The Servicer committed fraud or a material misrepresentation; or
</P>
<P>(3) The Servicer had known or should have known of fraud or a material misrepresentation in violation of this part.
</P>
<P>(4) HUD may take one or more of the following actions.
</P>
<P>(i) Place a hold on processing the claim for reimbursement of eligible reasonable expenses under § 1005.807(b) and provide the Servicer the opportunity to remedy the deficiency.
</P>
<P>(ii) Reject the claim for reimbursement of eligible reasonable expenses under § 1005.807(b) partially or in its entirety.
</P>
<P>(iii) Reconvey the property or reassign the deed of trust or mortgage in accordance with § 1005.849, where applicable, and require the Holder to refund the claim payment of the unpaid principal balance under § 1005.807(a) and expenses under § 1005.807(b). The Holder may resubmit the claim when the deficiencies identified by HUD are cured.
</P>
<P>(iv) Pursue administrative offset for any unpaid amounts owed to HUD pursuant to 24 CFR part 17.
</P>
<P>(v) Pursue sanctions against the Servicer or Holder pursuant to §§ 1005.905 and 1005.907.
</P>
<P>(vi) Pursue other remedies as determined by HUD.
</P>
<P>(c) If a property is reconveyed or the deed of trust or mortgage is reassigned to the Holder, the Holder may not be reimbursed for any expenses incurred after conveyance or reassignment.
</P>
<P>(d) If a claim is resubmitted after reconveyance or reassignment and HUD determines a decrease in the value of the property at the time of the resubmission, HUD may reduce the claim payment accordingly.




</P>
</DIV8>


<DIV8 N="§ 1005.807" NODE="24:4.1.3.1.28.8.66.4" TYPE="SECTION">
<HEAD>§ 1005.807   Claim submission categories.</HEAD>
<P>There are three claim submission categories:
</P>
<P>(a) Payment of the unpaid principal balance;
</P>
<P>(b) Reimbursement of eligible reasonable expenses, including interest, from the Date of Default to the earlier of the deadlines provided in § 1005.839(a) through (e). Allowable reasonable exceptions will be provided by Section 184 Program Guidance; and
</P>
<P>(c) Supplemental claim for eligible reasonable expenses incurred prior to the earlier of the deadlines provided in § 1005.839(a)(1) through (5), for expenses omitted from the Servicer's prior claim or for a calculation error made by either Servicer or HUD.




</P>
</DIV8>


<DIV8 N="§ 1005.809" NODE="24:4.1.3.1.28.8.66.5" TYPE="SECTION">
<HEAD>§ 1005.809   Claim types.</HEAD>
<P>HUD recognizes five different claim types. The Servicer must submit a claim based upon the type of property disposition. The Servicer shall submit claims within timeframes established below or any extended timeframe prescribed by Section 184 Program Guidance. The Claim types are:
</P>
<P>(a) <I>Conveyance.</I> When the property is deeded to HUD through foreclosure:
</P>
<P>(1) The Servicer must submit a claim under § 1005.807(a) to HUD no later than 2 business days from the date the deed to HUD is executed.
</P>
<P>(2)(i) <I>Fee simple land.</I> The claim must include the final title policy evidencing HUD's ownership through foreclosure or transfer of the ownership of the property through deed-in-lieu to HUD, in accordance with § 1005.817.
</P>
<P>(ii) <I>Trust Land.</I> The claim must include a certified Title Status Report evidencing HUD's property interest through foreclosure.
</P>
<P>(3) In cases where the Servicer is unable to comply with paragraph (a)(2)(ii) of this section, the Servicer shall submit the claim pending the certified Title Status Report in accordance with the time frame specified in paragraph (a)(1) of this section.
</P>
<P>(4) Servicers must submit claims under § 1005.807(b) no later than 15 days following the submission of a claim under § 1005.807(a).
</P>
<P>(b) <I>Assignment of the loan.</I> When the Holder assigns the Section 184 Guaranteed Loan to HUD:
</P>
<P>(1) The Servicer must submit a claim under § 1005.807(a) and (b) no later than 45 days from the date of the assignment of the Section 184 Guaranteed Loan to HUD is executed.
</P>
<P>(2)(i) <I>Trust Land.</I> The claim must include the recorded assignment and a certified Title Status Report evidencing the assignment of the mortgage to HUD.
</P>
<P>(ii) <I>Fee simple land.</I> The claim must include the final title policy providing coverage through the transfer of the mortgage to HUD.
</P>
<P>(3) In cases where the Servicer is unable to comply with paragraph (b)(2)(i) of this section, the Servicer shall submit the claim pending the certified Title Status Report in accordance with the time frame specified in paragraph (b)(1) of this section.
</P>
<P>(4) At the time of assignment of the Section 184 Guaranteed Loan, the Servicer shall certify to HUD that:
</P>
<P>(i) <I>Priority of Section 184 Guaranteed Loan.</I> The Section 184 Guaranteed Loan has priority over all judgments, mechanics' and materialmen's liens, or any other liens, regardless of when such liens attached, unless approved by HUD;
</P>
<P>(ii) <I>Amount due.</I> The amount reported to HUD in accordance with § 1005.707(d) prior to assignment is verified to be due and owing under the Section 184 Guaranteed Loan;
</P>
<P>(iii) <I>Offsets or counterclaims and authority to assign.</I> There are no offsets or counterclaims thereto and the Holder has the authority to assign; and
</P>
<P>(iv) The assignment of the Section 184 Guaranteed Loan to HUD meets the requirements of § 1005.765.
</P>
<P>(c) <I>Post-foreclosure claims without conveyance of title.</I> When a third-party purchases the property at foreclosure, the Servicer must submit a claim under § 1005.807(a) and (b) to HUD no later than 30 days from the date the property is conveyed to the third-party. If the Holder purchases the property at foreclosure and subsequently sells the property, the Servicer may submit a claim under this section.
</P>
<P>(d) <I>Pre-foreclosure sale, deed-in-lieu or lease-in-lieu.</I> When a property is sold or conveyed prior to foreclosure in accordance with § 1005.753 or § 1005.755, the Servicer must submit a claim under § 1005.807(a) and (b) to HUD no later than 30 days from the date the sale or conveyance is executed.
</P>
<P>(e) <I>Supplemental claim.</I> The Servicer shall be limited to one supplemental claim for each Claim under submission categories in paragraphs (a) through (d) of this section.
</P>
<P>(1) The supplemental claim shall be limited to:
</P>
<P>(i) Reasonable eligible expenses incurred up to the date of conveyance of the property or assignment of the Section 184 Guaranteed Loan, when invoices are received after the payment of the claim under § 1005.807(b); or
</P>
<P>(ii) Calculation error(s) made by either the Servicer or HUD.
</P>
<P>(2) Supplemental claims must be submitted within six months of the claim submission under § 1005.807(b). Supplemental claims received after six months of the claim submission will not be reviewed or paid by HUD.
</P>
<P>(3) Any supplemental claim paid by HUD shall be considered final satisfaction of the Loan Guarantee Certificate.


</P>
</DIV8>

</DIV7>


<DIV7 N="67" NODE="24:4.1.3.1.28.8.67" TYPE="SUBJGRP">
<HEAD>Submission of Claims</HEAD>


<DIV8 N="§ 1005.811" NODE="24:4.1.3.1.28.8.67.6" TYPE="SECTION">
<HEAD>§ 1005.811   Claims supporting documentation.</HEAD>
<P>The Servicer shall submit supporting documentation to the satisfaction of HUD for each Claim. Such documentation will be provided for in Section 184 Program Guidance.




</P>
</DIV8>


<DIV8 N="§ 1005.813" NODE="24:4.1.3.1.28.8.67.7" TYPE="SECTION">
<HEAD>§ 1005.813   Up-front and Annual Loan Guarantee Fee reconciliation.</HEAD>
<P>(a) The Servicer must include in the claims case binder a reconciliation evidencing the payment of the Up-front and Annual Loan Guarantee Fees to HUD.
</P>
<P>(b) Where the Servicer fails to comply with paragraph (a) of this section or the reconciliation shows unpaid amounts owed to HUD, and the unpaid amounts, along with late fees, have not been satisfied by the Servicer, HUD shall reject the claim.
</P>
<P>(c) The Servicer may resubmit the claim after providing the reconciliation required under paragraph (a) of this section or after the Annual Loan Guarantee Fee amounts, along with late fees, owed to HUD are paid by the Servicer.
</P>
<P>(d) Allowance to resubmit in accordance with paragraph (c) of this section shall not be construed to extend any deadlines to file claims specified in this subpart.




</P>
</DIV8>


<DIV8 N="§ 1005.815" NODE="24:4.1.3.1.28.8.67.8" TYPE="SECTION">
<HEAD>§ 1005.815   Conditions for withdrawal of claim.</HEAD>
<P>With HUD's consent, a Holder may withdraw a claim. When HUD consent is granted, the Holder shall agree, where applicable, in writing that it will:
</P>
<P>(a) Accept a reconveyance of the property under a conveyance which warrants against the acts of HUD and all claiming by, through or under HUD;
</P>
<P>(b) Promptly file for record the reconveyance from HUD;
</P>
<P>(c) Accept without continuation, the title evidence which the Servicer furnished to HUD; and
</P>
<P>(d) Reimburse HUD for the expenditures and amounts set forth in § 1005.851.


</P>
</DIV8>

</DIV7>


<DIV7 N="68" NODE="24:4.1.3.1.28.8.68" TYPE="SUBJGRP">
<HEAD>Property Title Transfers and Title Waivers</HEAD>


<DIV8 N="§ 1005.817" NODE="24:4.1.3.1.28.8.68.9" TYPE="SECTION">
<HEAD>§ 1005.817   Conveyance of Good and Marketable Title.</HEAD>
<P>(a) <I>Satisfactory conveyance of title and transfer of possession.</I> The Servicer shall tender to HUD a satisfactory conveyance of title and transfer of possession of the property. The deed or other instrument of conveyance shall convey Good and Marketable Title to the property, which shall be accompanied by title evidence satisfactory to HUD.
</P>
<P>(b) <I>Conveyance of property without Good and Marketable Title.</I> (1) If the title to the property conveyed by the Holder to HUD does not have Good and Marketable Title, the Holder must correct any title defect within 60 days after receiving notice from HUD, or within such further time as HUD may approve in writing.
</P>
<P>(2) If the defect is not corrected within 60 days, or such further time as HUD approves in writing, the Holder must reimburse HUD's costs of holding the property. Such holding costs accrue on a daily basis and include interest on the amount of the loan guarantee benefits paid to the Holder at an interest rate set in conformity with the Treasury Fiscal Requirements Manual from the date of such notice to the date the defect is corrected or until HUD reconveys the property to the Holder, as described in paragraph (b)(3) of this section. The daily holding costs to be charged to the Holder shall also include the costs specified in § 1005.851.
</P>
<P>(3) If the title defect is not corrected within a reasonable time, as determined by HUD, HUD will, after notice, reconvey the property to the Holder and the Holder must reimburse HUD in accordance with §§ 1005.849 and 1005.851.




</P>
</DIV8>


<DIV8 N="§ 1005.819" NODE="24:4.1.3.1.28.8.68.10" TYPE="SECTION">
<HEAD>§ 1005.819   Types of satisfactory title evidence.</HEAD>
<P>The following types of title evidence shall be satisfactory to HUD:
</P>
<P>(a) <I>Fee or owner's title policy.</I> A fee or owner's policy of title insurance, a guaranty or guarantee of title, or a certificate of title, issued by a title company, duly authorized by law and qualified by experience to issue such instruments. If an owner's policy of title insurance is furnished, it shall show title in HUD's name and inure to the benefit of the Department. The policy must be drawn in favor of the Holder and HUD, “and their successors and assigns, as their interests may appear”, with the consent of the title company endorsed thereon.
</P>
<P>(b) <I>Policy of title insurance.</I> A Holder's policy of title insurance supplemented by an abstract and an attorney's certificate of title covering the period subsequent to the date of the loan, the terms of the policy shall be such that the liability of the title company will continue in favor of HUD after title is conveyed to HUD. The policy must be drawn in favor of the Servicer and HUD, “and their successors and assigns, as their interests may appear”, with the consent of the title company endorsed thereon;
</P>
<P>(c) <I>Abstract and legal opinion.</I> An abstract of title prepared by an abstract company or individual engaged in the business of preparing abstracts of title and accompanied by the legal opinion as to the quality of such title signed by an attorney at law experienced in examination of titles. If title evidence consists of an abstract and an attorney's certificate of title, the search shall extend for at least forty years prior to the date of the Certificate to a well-recognized source of good title;
</P>
<P>(d) <I>Torrens or similar certificate.</I> A Torrens or similar title certificate;
</P>
<P>(e) <I>Title standard of U.S., Tribal, or State government.</I> Evidence of title conforming to the standards of a supervising branch of the Government of the United States or of any Tribe, State or Territory thereof; or
</P>
<P>(f) <I>Title Status Report.</I> Certified Title Status Report issued by the BIA or other comparable document approved by HUD in accordance with Section 184 Program Guidance, shall not be more than sixty (60) days from the date of the § 1005.807(a) claim submission. Extensions may be granted under certain reasonable circumstances, as prescribed by Section 184 Program Guidance.




</P>
</DIV8>


<DIV8 N="§ 1005.821" NODE="24:4.1.3.1.28.8.68.11" TYPE="SECTION">
<HEAD>§ 1005.821   Coverage of title evidence.</HEAD>
<P>(a) Evidence of title or Title Status Report shall include the recordation of the conveyance or assignment to HUD. The evidence of title, the Title Status Report or direct verification from the Tribe or TDHE, shall further show that, according to the public or Tribal records, there are no outstanding prior liens, including any past-due and unpaid ground rents, general taxes or special assessments, if applicable, on the date of conveyance or assignment.
</P>
<P>(b) If the title evidence and Title Status Report are acceptable generally in the community in which the property is situated, such title evidence and Title Status Report shall be satisfactory to HUD and shall be considered Good and Marketable Title. In cases of disagreement, HUD will make the final determination in its sole discretion.




</P>
</DIV8>


<DIV8 N="§ 1005.823" NODE="24:4.1.3.1.28.8.68.12" TYPE="SECTION">
<HEAD>§ 1005.823   Waived title objections for properties on fee simple land.</HEAD>
<P>Reasonable title objections for fee simple land properties shall be waived by HUD. Reasonable title objections will be prescribed in Section 184 Program Guidance.




</P>
</DIV8>


<DIV8 N="§ 1005.825" NODE="24:4.1.3.1.28.8.68.13" TYPE="SECTION">
<HEAD>§ 1005.825   Waived title objections for properties on Trust Land.</HEAD>
<P>HUD shall not object to title restrictions placed on the tract of Trust Land by the Tribe or the BIA so long as those restrictions do not adversely impact the property or marketability.


</P>
</DIV8>

</DIV7>


<DIV7 N="69" NODE="24:4.1.3.1.28.8.69" TYPE="SUBJGRP">
<HEAD>Condition of the Property</HEAD>


<DIV8 N="§ 1005.827" NODE="24:4.1.3.1.28.8.69.14" TYPE="SECTION">
<HEAD>§ 1005.827   Damage or neglect.</HEAD>
<P>(a) If the property has been damaged by fire, flood, earthquake, or tornado, or if the property has suffered damage because of the Servicer 's failure to take action as required by § 1005.767 or for any other reason, the Servicer must submit a claim to the hazard insurance policy, as applicable and the damage must be repaired before conveyance of the property or assignment of the Section 184 Guaranteed Loan to HUD.
</P>
<P>(b) If the property has been damaged as described in paragraph (a) of this section and the damage is not covered by a hazard insurance policy, the Servicer must provide notice of such damage to HUD. The property may not be conveyed or assigned until directed to do so by HUD. Upon receipt of such notice, HUD will either:
</P>
<P>(1) Allow the Holder to convey the damaged property;
</P>
<P>(2) Require the Holder to repair the damage before conveyance, and HUD will reimburse the Holder for reasonable payments, not in excess of HUD's estimate of the cost of repair, less any hazard insurance recovery; or
</P>
<P>(3) Require the Holder to repair the damage before conveyance, at the Holder's own expense.
</P>
<P>(c) In the event the damaged property is conveyed to HUD without prior notice or approval as provided in paragraph (a) or (b) of this section, HUD may, after notice, reconvey the property and demand reimbursement to HUD for the expenses in accordance with §§ 1005.849 and 1005.851.




</P>
</DIV8>


<DIV8 N="§ 1005.829" NODE="24:4.1.3.1.28.8.69.15" TYPE="SECTION">
<HEAD>§ 1005.829   Certificate of property condition.</HEAD>
<P>(a) As part of the claim submission, the Servicer shall either:
</P>
<P>(1) Certify that as of the date of the deed or assignment of the loan to HUD the property was:
</P>
<P>(i) Undamaged by fire, flood, earthquake, or tornado;
</P>
<P>(ii) Undamaged due to failure of the Servicer to act as required by § 1005.767; and,
</P>
<P>(iii) Undamaged while the property was in the possession of the Borrower; or,
</P>
<P>(2) Include a copy of HUD's authorization to convey the property in damaged condition.
</P>
<P>(b) In the absence of evidence to the contrary, the Servicer's certificate or description of the damage shall be accepted by HUD as establishing the condition of the property, as of the date of the deed or assignment of the Section 184 Guaranteed Loan.




</P>
</DIV8>


<DIV8 N="§ 1005.831" NODE="24:4.1.3.1.28.8.69.16" TYPE="SECTION">
<HEAD>§ 1005.831   Cancellation of hazard insurance.</HEAD>
<P>The Holder shall cancel any hazard insurance policy as of the date of the deed to HUD, subject to the following conditions:
</P>
<P>(a) The amount of premium refund due to the Servicer resulting from such cancellation must be deducted from the total amount claimed.
</P>
<P>(b) If the Holder's calculation of the premium refund is less than the actual premium refund, the amount of the difference between the actual refund and the calculated refund shall be remitted to HUD, accompanied by the insurance company's or agent's statement.
</P>
<P>(c) If the Holder's calculation of the premium refund is more than the actual refund, the Servicer must include in a supplemental Claim submission in accordance with § 1005.809(c), accompanied by the insurance company's or agent's statement, the amount of the difference as an eligible cost in accordance with § 1005.843(c).


</P>
</DIV8>

</DIV7>


<DIV7 N="70" NODE="24:4.1.3.1.28.8.70" TYPE="SUBJGRP">
<HEAD>Payment of Guarantee Benefits</HEAD>


<DIV8 N="§ 1005.833" NODE="24:4.1.3.1.28.8.70.17" TYPE="SECTION">
<HEAD>§ 1005.833   Method of payment.</HEAD>
<P>If the claim is acceptable to HUD, payment of the guarantee benefits shall be made by electronic transfer of funds to the Holder or other such allowable payment method.




</P>
</DIV8>


<DIV8 N="§ 1005.835" NODE="24:4.1.3.1.28.8.70.18" TYPE="SECTION">
<HEAD>§ 1005.835   Claim payment not conclusive evidence of claim meeting all HUD requirements.</HEAD>
<P>Payment of any claim by HUD is not conclusive evidence of compliance with the subparts D or G of this part. HUD reserves the right to conduct post-claim payment review of claims. Where non-compliance with any requirements of this part is identified, HUD will take appropriate action against the Holder, Originating Direct Guarantee Lender and/or Servicer, including but not limited to HUD's remedies under § 1005.805 and sanctions under §§ 1005.905 and 1005.907.




</P>
</DIV8>


<DIV8 N="§ 1005.837" NODE="24:4.1.3.1.28.8.70.19" TYPE="SECTION">
<HEAD>§ 1005.837   Payment of claim: unpaid principal balance.</HEAD>
<P>HUD will pay a claim under § 1005.807(a) in the amount of the unpaid principal balance less all receipts for the sale or transfer of the property, if applicable, in accordance with the requirements of this subpart.




</P>
</DIV8>


<DIV8 N="§ 1005.839" NODE="24:4.1.3.1.28.8.70.20" TYPE="SECTION">
<HEAD>§ 1005.839   Payment of claim: interest on unpaid principal balance.</HEAD>
<P>HUD shall pay interest on the unpaid principal balance from the date of default to the earlier of the following:
</P>
<P>(a) The execution of deed-in-lieu/lease-in-lieu of foreclosure;
</P>
<P>(b) The execution of the conveyance to either Holder, HUD or a third-party;
</P>
<P>(c) The execution of the assignment of the Section 184 Guaranteed Loan to HUD;
</P>
<P>(d) The expiration of the reasonable diligence timeframe; or
</P>
<P>(e) Other event as prescribed by Section 184 Program Guidance.




</P>
</DIV8>


<DIV8 N="§ 1005.841" NODE="24:4.1.3.1.28.8.70.21" TYPE="SECTION">
<HEAD>§ 1005.841   Payment of claim: reimbursement of eligible and reasonable costs.</HEAD>
<P>The claim will be paid in accordance with § 1005.807(b) and will include eligible and reasonable costs, as prescribed by Section 184 Program Guidance.




</P>
</DIV8>


<DIV8 N="§ 1005.843" NODE="24:4.1.3.1.28.8.70.22" TYPE="SECTION">
<HEAD>§ 1005.843   Reductions to the claim submission amount.</HEAD>
<P>A Holder shall reduce the claim when the following amounts are received or held by the Holder:
</P>
<P>(a) All amounts received by the Holder to the account of the borrower after default.
</P>
<P>(b) All amounts received by the Holder from any source relating to the property on account of rent, reimbursement or other payments.
</P>
<P>(c) All cash retained by the Holder including amounts held or deposited in the account of the Borrower or to which it is entitled under the loan transaction that have not been applied in reduction of the principal loan indebtedness.




</P>
</DIV8>


<DIV8 N="§ 1005.845" NODE="24:4.1.3.1.28.8.70.23" TYPE="SECTION">
<HEAD>§ 1005.845   Rights and liabilities under Indian Housing Loan Guarantee Fund.</HEAD>
<P>(a) No Borrower, Direct Guarantee Lender, Non-Direct Guarantee Lender, Holder, or Servicer shall have any vested right in the Indian Housing Loan Guarantee Fund.
</P>
<P>(b) No Borrower, Direct Guarantee Lender, Non-Direct Guarantee Lender, Holder, or Servicer shall be subject to any liability arising under the Indian Housing Loan Guarantee Fund.
</P>
<P>(c) The Indian Housing Loan Guarantee Fund will be credited and debited in accordance with 12 U.S.C. 1715z-13a(i)(2).




</P>
</DIV8>


<DIV8 N="§ 1005.847" NODE="24:4.1.3.1.28.8.70.24" TYPE="SECTION">
<HEAD>§ 1005.847   Final payment.</HEAD>
<P>(a) HUD's payment of a claim(s) shall be deemed as final payment to the Holder, notwithstanding the Holder's ability to present additional claim(s) in accordance with § 1005.807 as applicable. The Holder shall have no further rights against the Borrower or HUD when there is a final payment. This paragraph does not preclude HUD from seeking reimbursement of costs and return of amounts from the Holder or Originating Direct Guarantee Lender pursuant to §§ 1005.849 and 1005.851.
</P>
<P>(b) In cases where HUD reconveys the property to the Holder and HUD is reimbursed for all expenses and Holder returns all amounts pursuant to §§ 1005.849 and 1005.851, provisions under paragraph (a) of this section shall not apply. However, the resubmission of the Claim, if any, shall be subject to § 1005.849(b) and any additional processes as prescribed by Section 184 Program Guidance.




</P>
</DIV8>


<DIV8 N="§ 1005.849" NODE="24:4.1.3.1.28.8.70.25" TYPE="SECTION">
<HEAD>§ 1005.849   Reconveyance and reassignment.</HEAD>
<P>(a) HUD may reconvey the property or reassign the deed of trust or mortgage to the Holder due to:
</P>
<P>(1) Noncompliance with this part or any requirements as prescribed by Section 184 Program Guidance; or
</P>
<P>(2) An authorized withdrawal of a claim in accordance with § 1005.815.
</P>
<P>(b) HUD may take appropriate action against the Holder associated with the reconveyance or reassignment authorized in paragraph (a) of this section, including but not limited to, seeking reimbursement of all claim costs paid by HUD and carrying costs incurred by HUD in accordance with § 1005.851.
</P>
<P>(c) Notwithstanding any other provision in this subpart, in cases where HUD has conveyed the property or reassigned the deed of trust or mortgage back to the Holder in accordance with § 1005.851, and where the Servicer resubmits the claim, HUD will not reimburse the Holder any expenses incurred after the date of the HUD conveyance or assignment.
</P>
<P>(d) Additional reasonable and necessary restrictions may be imposed, as prescribed by Section 184 Program Guidance.




</P>
</DIV8>


<DIV8 N="§ 1005.851" NODE="24:4.1.3.1.28.8.70.26" TYPE="SECTION">
<HEAD>§ 1005.851   Reimbursement of expenses to HUD.</HEAD>
<P>Where reconveyance or reassignment is sought by HUD pursuant to § 1005.849 or when HUD determines noncompliance, the Holder or the Originating Direct Guarantee Lender shall reimburse HUD for:
</P>
<P>(a) All Claim costs paid by HUD.
</P>
<P>(b) HUD's cost of holding the property, including but not limited to expenses based on the estimated taxes, maintenance and operating expenses of the property, and administrative expenses. Adjustments shall be made by HUD for any income received from the property.
</P>
<P>(c) The reimbursement shall include interest on the amount of the claim payment returned by the Holder or the originating Direct Guarantee Lender from the date the claim was paid to the date HUD receives the reimbursement from Holder or the originating Direct Guarantee Lender. The interest rate set shall be in conformity with the Treasury Fiscal Requirements Manual.


</P>
</DIV8>

</DIV7>

</DIV6>


<DIV6 N="I" NODE="24:4.1.3.1.28.9" TYPE="SUBPART">
<HEAD>Subpart I—Program Performance, Reporting, Sanctions, and Appeals</HEAD>


<DIV8 N="§ 1005.901" NODE="24:4.1.3.1.28.9.71.1" TYPE="SECTION">
<HEAD>§ 1005.901   Performance reviews.</HEAD>
<P>HUD may conduct periodic performance reviews of Direct Guarantee Lenders, Non-Direct Guarantee Lenders, Holders, and Servicers. These may include analytical reviews, customer surveys and on-site or remote monitoring reviews. These reviews may include, but are not limited to, an evaluation of compliance with this part. HUD will provide written notice of its assessment and any proposed corrective action, if applicable.




</P>
</DIV8>


<DIV8 N="§ 1005.903" NODE="24:4.1.3.1.28.9.71.2" TYPE="SECTION">
<HEAD>§ 1005.903   Reporting and certifications.</HEAD>
<P>(a) The Direct Guarantee Lender, Non-Direct Guarantee Lender or Servicer shall provide timely and accurate reports and certifications to HUD, which may include but is not limited to reports in connection with performance reviews under § 1005.901, any special request for information from HUD, and any reasonable reports prescribed by Section 184 Program Guidance, within reasonable time frames prescribed by HUD.
</P>
<P>(b) The Direct Guarantee Lender, Non-Direct Guarantee Lender or Servicer's failure to provide timely and accurate reports and certifications to HUD may subject the Direct Guarantee Lender, Non-Direct Guarantee Lender, Holder, or Servicer to sanctions and civil money penalties pursuant to §§ 1005.905 and 1005.907.




</P>
</DIV8>


<DIV8 N="§ 1005.905" NODE="24:4.1.3.1.28.9.71.3" TYPE="SECTION">
<HEAD>§ 1005.905   Notice of sanctions.</HEAD>
<P>(a) Prior to the notice of sanctions or civil money penalties, HUD shall inform the Direct Guarantee Lender, Non-Direct Guarantee Lender, Holder, or Servicer of the specific non-compliance with this part and, where applicable, afford the Direct Guarantee Lender, Non-Direct Guarantee Lender, Holder, or Servicer a reasonable time, as prescribed in Section 184 Program Guidance, to return to compliance.
</P>
<P>(b) If it is determined that the Direct Guarantee Lender, Non-Direct Guarantee Lender, Holder or Servicer fails to return to compliance within the allowed time, HUD shall provide written notice of the sanctions and civil money penalties to be imposed and the basis for the action.




</P>
</DIV8>


<DIV8 N="§ 1005.907" NODE="24:4.1.3.1.28.9.71.4" TYPE="SECTION">
<HEAD>§ 1005.907   Sanctions and civil money penalties.</HEAD>
<P>(a) Where the Direct Guarantee Lender, Non-Direct Guarantee Lender, Holder or Servicer fails to comply with this part, including failure to maintain adequate accounting records, failure to adequately service loans, or failure to exercise proper credit or underwriting judgment, or becomes ineligible to participate pursuant to § 1005.225, or has engaged in practices otherwise detrimental to the interest of a Borrower or the United States, including but not limited to, failure to provide timely reporting, or failure to follow underwriting requirements set forth in this part, or failure to comply with Section 184 Program Guidance when it specifically provides times, processes, and procedures for complying with the requirements of this part, HUD may take any combination of the following actions:
</P>
<P>(1) Either temporarily or permanently terminate a Director Guarantee Lender or Non-Direct Guarantee Lender's status. If such action is taken and the terminated Direct Guarantee Lender wishes to maintain servicing rights to the Section 184 Guaranteed Loans, the terminated Direct Guarantee Lender must seek HUD approval as prescribed in Section 184 Program Guidance.
</P>
<P>(2) Bar the Direct Guarantee Lender or Holder from acquiring additional Section 184 Guaranteed Loans.
</P>
<P>(3) Require that the Direct Guarantee Lender assume not less than 10 percent of any loss on further Section 184 Guaranteed Loans made by the Direct Guarantee Lender.
</P>
<P>(4) Require that the Direct Guarantee Lender, Non-Direct Guarantee Lender, Holder, or Servicer comply with a corrective action plan or amend the Direct Guarantee Lender, Non-Direct Guarantee Lender or Holder's quality control plan, subject to HUD approval, to remedy the non-compliance with this part and any process prescribed by Section 184 Program Guidance. The plan shall also address methods to prevent the reoccurrence of any practices that are detrimental to the interest of the Borrower or HUD. The corrective action plan or amended quality control plan shall afford the Direct Guarantee Lender, Non-Direct Guarantee Lender, or Holder reasonable time to return to compliance.
</P>
<P>(b) HUD is authorized pursuant to 12 U.S.C. 1715z-13a(g)(2) to impose civil money penalties upon Direct Guarantee Lenders, Non-Direct Guarantee Lender, or Holders as set forth in 24 CFR part 30. The violations for which a civil money penalty may be imposed are listed in subpart B of 24 CFR part 30.




</P>
</DIV8>


<DIV8 N="§ 1005.909" NODE="24:4.1.3.1.28.9.71.5" TYPE="SECTION">
<HEAD>§ 1005.909   Appeals process.</HEAD>
<P>(a) Lenders denied participation in the Section 184 Program pursuant to subpart B of this part, or a Direct Guarantee Lender, Non-Direct Guarantee Lender, Holder, or Servicer subject to sanctions pursuant to § 1005.907, may appeal to HUD's Office of Loan Guarantee within 15 days, or other timeframe as prescribed in Section 184 Program Guidance. After consideration of the Lender, Direct Guarantee Lender, Non-Direct Guarantee Lender, Holder or Servicer's appeal, HUD shall advise the Lender, Direct Guarantee Lender, Non-Direct Guarantee Lender, Holder or Servicer in writing whether the denial is rescinded, modified or affirmed. The Lender, Direct Guarantee Lender, Non-Direct Guarantee Lender, Holder, or Servicer may then appeal such decision to the Deputy Assistant Secretary for Office of Native American Programs, or his or her designee. A decision by the Deputy Assistant Secretary or designee shall constitute final agency action.
</P>
<P>(b) Hearings to challenge the imposition of civil money penalties shall be conducted according to the applicable rules of 24 CFR part 30.












</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="1006" NODE="24:4.1.3.1.29" TYPE="PART">
<HEAD>PART 1006—NATIVE HAWAIIAN HOUSING BLOCK GRANT PROGRAM 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1701x, 1701x-1; 25 U.S.C. 4221 <I>et seq.;</I> 42 U.S.C. 3535(d), Pub. L. 115-141, Pub. L. 116-6, Pub. L. 116-94, Pub. L. 116-260, Pub. L. 117-103, Pub. L. 117-328.








</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>67 FR 40776, June 13, 2002, unless otherwise noted. 


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:4.1.3.1.29.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 1006.1" NODE="24:4.1.3.1.29.1.71.1" TYPE="SECTION">
<HEAD>§ 1006.1   Applicability.</HEAD>
<P>The requirements and procedure of this part apply to grants under the Native Hawaiian Housing Block Grant (NHHBG) Program, authorized by the Hawaiian Homelands Homeownership Act of 2000 (HHH Act), which adds Title VIII—Housing Assistance For Native Hawaiians (25 U.S.C. 4221 <I>et seq.</I>), to the Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA) (25 U.S.C. 4101 <I>et seq.</I>). 


</P>
</DIV8>


<DIV8 N="§ 1006.10" NODE="24:4.1.3.1.29.1.71.2" TYPE="SECTION">
<HEAD>§ 1006.10   Definitions.</HEAD>
<P>The following definitions apply in this part: 
</P>
<P><I>Act</I> means title VIII of NAHASDA, as amended. 
</P>
<P><I>Adjusted income</I> means the annual income that remains after excluding the following amounts: 
</P>
<P>(1) <I>Youths, students, and persons with disabilities.</I> $480 for each member of the family residing in the household (other than the head of the household or the spouse of the head of the household): 
</P>
<P>(i) Who is under 18 years of age; or 
</P>
<P>(ii) Who is: 
</P>
<P>(A) 18 years of age or older; and 
</P>
<P>(B) A person with disabilities or a full-time student. 
</P>
<P>(2) <I>Elderly and disabled families.</I> $400 for an elderly or disabled family. 
</P>
<P>(3) <I>Medical and attendant expenses.</I> The amount by which 3 percent of the annual income of the family is exceeded by the aggregate of: 
</P>
<P>(i) Medical expenses, in the case of an elderly or disabled family; and 
</P>
<P>(ii) Reasonable attendant care and auxiliary apparatus expenses for each family member who is a person with disabilities, to the extent necessary to enable any member of the family (including a member who is a person with disabilities) to be employed. 
</P>
<P>(4) <I>Child care expenses.</I> Child care expenses, to the extent necessary to enable another member of the family to be employed or to further his or her education. 
</P>
<P>(5) <I>Earned income of minors.</I> The amount of any earned income of any member of the family who is less than 18 years of age. 
</P>
<P>(6) <I>Travel expenses.</I> Excessive travel expenses, not to exceed $25 per family per week, for employment—or education-related travel. 
</P>
<P>(7) <I>Other amounts.</I> Such other amounts as may be provided in the housing plan for Native Hawaiians. 
</P>
<P><I>Affordable Housing</I> means housing that complies with the requirements of the Act and this part. The term includes permanent housing for homeless persons who are persons with disabilities, transitional housing, and single room occupancy housing.

 
</P>
<P><I>Annual income</I> has one or more of the following meanings, as determined by the Department of Hawaiian Home Lands:
</P>
<P>(1) “Annual income” as defined for HUD's Section 8 programs in 24 CFR part 5, subpart F (except when determining the income of a homebuyer for an owner-occupied rehabilitation project, the value of the homeowner's principal residence may be excluded from the calculation of net family assets); or
</P>
<P>(2) The definition of income as used by the U.S. Census Bureau. This definition includes:
</P>
<P>(i) Wages, salaries, tips, commissions, etc.;
</P>
<P>(ii) Self-employment income;
</P>
<P>(iii) Farm self-employment income;
</P>
<P>(iv) Interest, dividends, net rental income, or income from estates or trusts;
</P>
<P>(v) Social security or railroad retirement;
</P>
<P>(vi) Supplemental Security Income, Aid to Families with Dependent Children, or other public assistance or public welfare programs;
</P>
<P>(vii) Retirement, survivor, or disability pensions; and
</P>
<P>(viii) Any other sources of income received regularly, including Veterans' (VA) payments, unemployment compensation, and alimony; or
</P>
<P>(3) Adjusted gross income as defined for purposes of reporting under Internal Revenue Service (IRS) Form 1040 series for individual Federal annual income tax purposes.








</P>
<P><I>Assistant Secretary</I> means HUD's Assistant Secretary for Public and Indian Housing. 
</P>
<P><I>Department of Hawaiian Home Lands (DHHL)</I> means the agency or department of the government of the State of Hawaii that is responsible for the administration of the Hawaiian Homes Commission Act, 1920 (HHCA 1920) (42 Stat. 108 <I>et seq.</I>). 
</P>
<P><I>Director</I> means the Director of the Department of Hawaiian Home Lands. 
</P>
<P><I>Drug-Related Criminal Activity</I> means the illegal manufacture, sale, distribution, use, or possession with intent to manufacture, sell, distribute, or use a controlled substance (as such term is defined in section 102 of the Controlled Substances Act). 
</P>
<P><I>Elderly families; near-elderly families</I> means: 
</P>
<P>(1) <I>In general.</I> The term “elderly family” or “near-elderly family” means a family whose head (or his or her spouse), or whose sole member, is: 
</P>
<P>(i) For an elderly family, an elderly person; or 
</P>
<P>(ii) For a near-elderly family, a near-elderly person. 
</P>
<P>(2) <I>Certain families included.</I> The term “elderly family” or “near-elderly family” includes: 
</P>
<P>(i) Two or more elderly persons or near-elderly persons, as the case may be, living together; and 
</P>
<P>(ii) One or more persons described in paragraph (2)(i) of this definition living with one or more persons determined under the housing plan to be essential to their care or well-being. 
</P>
<P><I>Elderly person</I> means an individual who is at least 62 years of age. 
</P>
<P><I>Family</I> includes, but is not limited to, a family with or without children, an elderly family, a near-elderly family, a disabled family, a single person, as determined by the DHHL. 
</P>
<P><I>Hawaiian Home Lands</I> means lands that: 
</P>
<P>(1) Have the status as Hawaiian home lands under section 204 of the HHCA 1920 (42 Stat. 110); or 
</P>
<P>(2) Are acquired pursuant to the HHCA 1920. 
</P>
<P><I>Homebuyer payment</I> means the payment of a family purchasing a home pursuant to a long-term lease purchase agreement. 
</P>
<P><I>Housing area</I> means an area of Hawaiian Home Lands with respect to which the DHHL is authorized to provide assistance for affordable housing under the Act and this part. 
</P>
<P><I>Housing plan</I> means a plan developed by the DHHL pursuant to the Act and this part, particularly § 1006.101. 
</P>
<P><I>HUD</I> means the Department of Housing and Urban Development.
</P>
<P><I>Income</I> means the term “income” as defined in Section 4(9) of NAHASDA.





 
</P>
<P><I>Low-income family</I> means a family whose income does not exceed 80 percent of the median income for the area, as determined by HUD with adjustments for smaller and larger families, except that HUD may, for purposes of this paragraph, establish income ceilings higher or lower than 80 percent of the median for the area on the basis of the findings of HUD or the agency that such variations are necessary because of prevailing levels of construction costs or unusually high or low family incomes. 
</P>
<P><I>Median income</I> means, with respect to an area that is a housing area, the greater of: 
</P>
<P>(1) The median income for the housing area, which shall be determined by HUD; or 
</P>
<P>(2) The median income for the State of Hawaii.


</P>
<P><I>NAHASDA</I> means the Native American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4101 <I>et seq.</I>).

 
</P>
<P><I>Native Hawaiian</I> means any individual who is: 
</P>
<P>(1) A citizen of the United States; and 
</P>
<P>(2) A descendant of the aboriginal people, who, prior to 1778, occupied and exercised sovereignty in the area that currently constitutes the State of Hawaii, as evidenced by: 
</P>
<P>(i) Genealogical records; 
</P>
<P>(ii) Verification by kupuna (elders) or kama'aina (long-term community residents); or 
</P>
<P>(iii) Birth records of the State of Hawaii. 
</P>
<P><I>Native Hawaiian Housing Block Grant (NHHBG) Funds</I> means funds made available under the Act, plus program income. 
</P>
<P><I>Near-elderly person</I> means an individual who is at least 55 years of age and less than 62 years of age. 
</P>
<P><I>Nonprofit</I> means, with respect to an organization, association, corporation, or other entity, that no part of the net earnings of the entity inures to the benefit of any member, founder, contributor, or individual. 


</P>
<P><I>Person with a disability,</I> as further explained in 28 CFR 35.108, is defined as follows:
</P>
<P>(1) Definition of person with a disability. “Person with a disability” means a person who:
</P>
<P>(i) Has a physical or mental impairment which substantially limits one or more major life activities;
</P>
<P>(ii) Has a record of having such an impairment;
</P>
<P>(iii) Is regarded as having such an impairment;
</P>
<P>(iv) Has a disability as defined in section 223 of the Social Security Act; or
</P>
<P>(v) Has a developmental disability as defined in section 102 of the Developmental Disabilities Assistance and Bill of Rights Act.
</P>
<P>(2) Definition of physical or mental impairment. For the purposes of this definition, the term “physical or mental impairment” means:
</P>
<P>(i) Any physiological disorder or condition, cosmetic disfigurement, or anatomical loss affecting one or more body systems, such as: neurological, musculoskeletal, special sense organs, respiratory (including speech organs), cardiovascular, reproductive, digestive, genitourinary, immune, circulatory, hemic, lymphatic, skin, and endocrine; or
</P>
<P>(ii) Any mental or psychological disorder such as intellectual disability, organic brain syndrome, emotional or mental illness, and specific learning disability.
</P>
<P>(3) <I>Nonexhaustive list of physical and mental impairments.</I> For the purposes of this definition, the term “physical or mental impairment” includes, but is not limited to, contagious and noncontagious diseases and conditions such as the following: orthopedic, visual, speech, and hearing impairments, and cerebral palsy, epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart disease, diabetes, intellectual disability, emotional illness, dyslexia and other specific learning disabilities, Attention Deficit Hyperactivity Disorder, Human Immunodeficiency Virus infection (whether symptomatic or asymptomatic), tuberculosis, drug addiction, and alcoholism.
</P>
<P>(4) <I>Nonexhaustive list of major life activities.</I> For the purposes of this definition, the term “major life activities” includes, but is not limited to:
</P>
<P>(i) Caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, sitting, reaching, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, writing, communicating, interacting with others, and working; and
</P>
<P>(ii) The operation of a major bodily function, such as the functions of the immune system, special sense organs and skin, normal cell growth, and digestive, genitourinary, bowel, bladder, neurological, brain, respiratory, circulatory, cardiovascular, endocrine, hemic, lymphatic, musculoskeletal, and reproductive systems. The operation of a major bodily function includes the operation of an individual organ within a body system.


</P>
<P><I>Project-based rental assistance</I> means rental assistance provided through an agreement for use of a DHHL property or a contract with the owner of an existing structure, where the owner agrees to lease the subsidized units to program participants. Program participants will not retain the rental assistance if they move from the project.




</P>
<P><I>Secretary</I> means the Secretary of Housing and Urban Development. 
</P>
<P><I>Tenant-based rental assistance</I> means a form of rental assistance in which the assisted tenant may move from a dwelling unit with a right to continued assistance. Tenant-based rental assistance under this part also includes security deposits for rental of dwelling units. 
</P>
<P><I>Transitional housing</I> means housing that: 
</P>
<P>(1) Is designed to provide housing and appropriate supportive services to persons, including (but not limited to) deinstitutionalized individuals with disabilities, homeless individuals with disabilities, and homeless families with children; and 
</P>
<P>(2) Has as its purpose facilitating the movement of individuals and families to independent living within a time period that is set by the DHHL or project owner before occupancy. 
</P>
<CITA TYPE="N">[67 FR 40776, June 13, 2002, as amended at 89 FR 9760, Feb. 12, 2024]






</CITA>
</DIV8>


<DIV8 N="§ 1006.20" NODE="24:4.1.3.1.29.1.71.3" TYPE="SECTION">
<HEAD>§ 1006.20   Grants for affordable housing activities.</HEAD>
<P>(a) <I>Annual grant.</I> Each fiscal year, HUD will make a grant (to the extent that amounts are made available) under the Act to the DHHL to carry out affordable housing activities for Native Hawaiian families who are eligible to reside on the Hawaiian Home Lands, if: 
</P>
<P>(1) The Director has submitted to HUD a housing plan for that fiscal year; and 
</P>
<P>(2) HUD has determined that the housing plan complies with the requirements of § 1006.101. 
</P>
<P>(b) <I>Waiver.</I> HUD may waive housing plan requirements if HUD finds that the DHHL has not complied or cannot comply with those requirements due to circumstances beyond the control of the DHHL. 


</P>
</DIV8>


<DIV8 N="§ 1006.30" NODE="24:4.1.3.1.29.1.71.4" TYPE="SECTION">
<HEAD>§ 1006.30   Waivers.</HEAD>
<P>Upon determination of good cause, the Secretary may, subject to statutory limitations, waive any provision of this part and delegate this authority in accordance with section 106 of the Department of Housing and Urban Development Reform Act of 1989 (42 U.S.C. 3535(q)). 


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:4.1.3.1.29.2" TYPE="SUBPART">
<HEAD>Subpart B—Housing Plan</HEAD>


<DIV8 N="§ 1006.101" NODE="24:4.1.3.1.29.2.71.1" TYPE="SECTION">
<HEAD>§ 1006.101   Housing plan requirements.</HEAD>
<P>The DHHL must submit a housing plan each year prior to the start of its fiscal year. The housing plan has two components, a five-year plan and a one-year plan, as follows:

 

 
</P>
<P>(a) <I>Five-year plan.</I> Each housing plan must contain, for the 5-year period beginning with the fiscal year for which the plan is first submitted, the following information: 
</P>
<P>(1) <I>Mission statement.</I> A general statement of the mission of the DHHL to serve the needs of the low-income Native Hawaiian families eligible to live on the Hawaiian Home Lands to be served by the DHHL; 
</P>
<P>(2) <I>Goals and objectives.</I> A statement of the goals and objectives of the DHHL to enable the DHHL to serve the needs identified in paragraph (a)(1), of this section during the 5-year period; and 
</P>
<P>(3) <I>Activities plans.</I> An overview of the activities planned during the 5-year period including an analysis of the manner in which the activities will enable the DHHL to meet its mission, goals, and objectives. 
</P>
<P>(b) <I>One-year plan.</I> The housing plan must contain the following information for the fiscal year for which the assistance under the Act is to be made available: 
</P>
<P>(1) <I>Goals and objectives.</I> A statement of the goals and objectives to be accomplished by the DHHL with its annual grant allocation that are measurable in a quantitative way. 
</P>
<P>(2) <I>Statement of needs.</I> A statement of the housing needs of the low-income families served by the DHHL and the means by which those needs will be addressed during the period covered by the plan, including: 
</P>
<P>(i) A description of the estimated housing needs and the need for assistance for the low-income families to be served by the DHHL, including a description of the manner in which the geographical distribution of assistance is consistent with: 
</P>
<P>(A) The geographical needs of those families; and 
</P>
<P>(B) Needs for various categories of housing assistance; and 
</P>
<P>(ii) A description of the estimated housing needs for all families to be served by the DHHL. 
</P>
<P>(3) <I>Financial resources.</I> An operating budget for the DHHL that includes an identification and a description of: 
</P>
<P>(i) The NHHBG funds and other financial resources reasonably available to the DHHL to carry out eligible activities, including an explanation of the manner in which NHHBG funds will be used to leverage additional resources; and 
</P>
<P>(ii) Eligible activities to be undertaken and their projected cost, including administrative expenses. 
</P>
<P>(4) <I>Affordable housing resources.</I> A statement of the affordable housing resources currently available at the time of the submittal of the plan and to be made available during the period covered by the plan, including: 
</P>
<P>(i) A description of the significant characteristics of the housing market in the State of Hawaii, including the availability of housing from other public sources and private market housing; 
</P>
<P>(ii) The effect of the characteristics identified under paragraph (b)(4)(i) of this section, on the DHHL's decision to use the NHHBG for: 
</P>
<P>(A) Rental assistance; 
</P>
<P>(B) The production of new units; 
</P>
<P>(C) The acquisition of existing units; or 
</P>
<P>(D) The rehabilitation of units; 
</P>
<P>(iii) A description of the structure, coordination, and means of cooperation between the DHHL and any other governmental entities in the development, submission, or implementation of the housing plan, including a description of: 
</P>
<P>(A) The involvement of private, public, and nonprofit organizations and institutions; 
</P>
<P>(B) The use of loan guarantees under section 184A of the Housing and Community Development Act of 1992; and 
</P>
<P>(C) Other housing assistance provided by the United States, including loans, grants, and mortgage insurance; 
</P>
<P>(iv) A description of the manner in which the plan will address the needs identified pursuant to paragraph (b)(2) of this section; 
</P>
<P>(v) A description of: 
</P>
<P>(A) Any existing or anticipated homeownership programs and rental programs to be carried out during the period covered by the plan; and 
</P>
<P>(B) The requirements and assistance available under the programs referred to in paragraph (b)(4)(v)(A) of this section; 
</P>
<P>(vi) A description of: 
</P>
<P>(A) Any existing or anticipated housing rehabilitation programs necessary to ensure the long-term viability of housing to be carried out during the period covered by the plan; and 
</P>
<P>(B) The requirements and assistance available under the programs referred to in paragraph (b)(4)(vi)(A) of this section; 
</P>
<P>(vii) A description of: 
</P>
<P>(A) All other existing or anticipated housing assistance provided by the DHHL during the period covered by the plan, including transitional housing; homeless housing; college housing; and supportive services housing; and 
</P>
<P>(B) The requirements and assistance available under such programs; (viii) A description of: 
</P>
<P>(A) Any housing to be demolished or disposed of; 
</P>
<P>(B) A timetable for that demolition or disposition; 
</P>
<P>(C) A financial analysis of the proposed demolition/disposition; and 
</P>
<P>(D) Any additional information HUD may request with respect to that demolition or disposition. 
</P>
<P>(ix) A description of the manner in which the DHHL will coordinate with welfare agencies in the State of Hawaii to ensure that residents of the affordable housing will be provided with access to resources to assist in obtaining employment and achieving self-sufficiency; 
</P>
<P>(x) A description of the requirements established by the DHHL to: 
</P>
<P>(A) Promote the safety of residents of the affordable housing; 
</P>
<P>(B) Facilitate the undertaking of crime prevention measures; 
</P>
<P>(C) Allow resident input and involvement, including the establishment of resident organizations; and 
</P>
<P>(D) Allow for the coordination of crime prevention activities between the DHHL and local law enforcement officials; and 
</P>
<P>(xi) A description of the entities that will carry out the activities under the plan, including the organizational capacity and key personnel of the entities. 
</P>
<P>(5) <I>Certifications of compliance.</I> The DHHL must certify that it: 
</P>
<P>(i) Will comply with: 
</P>
<P>(A) Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d <I>et seq.</I>) and with the Fair Housing Act (42 U.S.C. 3601 <I>et seq.</I>), to the extent applicable as described in § 1006.355, in carrying out the Native Hawaiian Housing Block Grant Program; and 
</P>
<P>(B) Other applicable Federal statutes; 
</P>
<P>(ii) Will require adequate insurance coverage for housing units that are owned and operated or assisted with NHHBG funds, in compliance with the requirements of § 1006.330; 
</P>
<P>(iii) Has policies in effect and available for review by HUD and the public governing the eligibility, admission, and occupancy of families for housing assisted with NHHBG funds and governing the selection of families receiving other assistance under the Act and this part; 
</P>
<P>(iv) Has policies in effect and available for review by HUD and the public governing rents charged, including the methods by which such rents or homebuyer payments are determined, for housing assisted with NHHBG funds; and 
</P>
<P>(v) Has policies in effect and available for review by HUD and the public governing the management and maintenance of rental and lease-purchase housing assisted with NHHBG funds. 
</P>
<P>(c) <I>Updates to plan</I>—(1) <I>In general.</I> Subject to paragraph (c)(2) of this section, after the housing plan has been submitted for a fiscal year, the DHHL may comply with the provisions of this section for any succeeding fiscal year with respect to information included for the 5-year period under paragraph (a) of this section by submitting only such information regarding such changes as may be necessary to update the 5-year period of the plan previously submitted. Information for the 1-year period under paragraph (b) of this section must be submitted each fiscal year.
</P>
<P>(2) <I>Complete plans.</I> The DHHL shall submit a complete plan that includes a new five-year plan under this section not later than 4 years after submitting an initial plan, and not less frequently than every 4 years thereafter.
</P>
<P>(d) <I>Amendments to plan.</I> The DHHL must submit any amendment to the one-year housing plan for HUD review before undertaking any new activities that are not addressed in the current plan that was reviewed by HUD and found to be in compliance with section 803 of NAHASDA and this part. The amendment must include a description of the new activity and a revised budget reflecting the changes. HUD will review the revised plan and will notify DHHL within 30 days whether the amendment complies with applicable requirements.




</P>
<CITA TYPE="N">[67 FR 40776, June 13, 2002, as amended at 89 FR 9761, Feb. 12, 2024]






</CITA>
</DIV8>


<DIV8 N="§ 1006.110" NODE="24:4.1.3.1.29.2.71.2" TYPE="SECTION">
<HEAD>§ 1006.110   Review of plans.</HEAD>
<P>(a) <I>Review</I>—(1) <I>In general.</I> Within 60 days of receipt of the housing plan, HUD will conduct a limited review to ensure that the contents of the plan comply with the requirements of § 1006.101, are consistent with information and data available to HUD, and are not prohibited by or inconsistent with any provision of the Act and this part or any other applicable law. 
</P>
<P>(2) <I>Limitation.</I> HUD will review the housing plan only to the extent that HUD considers that the review is necessary. 
</P>
<P>(3) <I>Incomplete plans.</I> If HUD determines that any of the required certifications are not included in the housing plan, the plan shall be considered to be incomplete. HUD may also consider a housing plan to be incomplete if it does not address all of the requirements of § 1006.101, and the DHHL has not requested a waiver of the missing requirement. 
</P>
<P>(b) <I>Notice</I>—(1) <I>In general.</I> Not later than 60 days after receiving the housing plan, HUD will notify the DHHL whether or not the plan complies with applicable requirements. 
</P>
<P>(2) <I>Notice of reasons for determination of noncompliance.</I> If HUD determines that the contents of the housing plan do not comply with the requirements of § 1006.101, or are not consistent with information and data available to HUD, or are prohibited by or inconsistent with any provision of the Act and this part or any other applicable law, HUD will specify in the notice under paragraph (b)(1) of this section: 
</P>
<P>(i) The reasons for noncompliance; and 
</P>
<P>(ii) Any modifications necessary for the plan to be in compliance. 
</P>
<P>(3) <I>Effect of HUD's failure to take action.</I> If HUD does not notify the DHHL, upon the expiration of the 60-day period described in paragraph (a)(1) of this section, the plan shall be considered to have been determined to comply with the requirements under § 1006.101 and the DHHL shall be considered to have been notified of compliance. 


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:4.1.3.1.29.3" TYPE="SUBPART">
<HEAD>Subpart C—Eligible Activities</HEAD>


<DIV8 N="§ 1006.201" NODE="24:4.1.3.1.29.3.71.1" TYPE="SECTION">
<HEAD>§ 1006.201   Eligible affordable housing activities.</HEAD>
<P>Eligible affordable housing activities are development, housing services, housing management services, crime prevention and safety activities, and model activities. Affordable housing activities under this part are activities conducted in accordance with subpart D of this part to develop, operate, maintain, or support housing for rental or homeownership; or provide services with respect to affordable housing through the activities described in this subpart. NHHBG funds may only be used for eligible activities that are consistent with the DHHL's housing plan.
</P>
<CITA TYPE="N">[89 FR 9761, Feb. 12, 2024]






</CITA>
</DIV8>


<DIV8 N="§ 1006.205" NODE="24:4.1.3.1.29.3.71.2" TYPE="SECTION">
<HEAD>§ 1006.205   Development.</HEAD>
<P>(a) NHHBG funds may be used for the acquisition, new construction, reconstruction, or moderate or substantial rehabilitation of affordable housing for homeownership or rental, which may include: 
</P>
<P>(1) Real property acquisition; 
</P>
<P>(2) Acquisition of affordable housing; 
</P>
<P>(3) Financing acquisition of affordable housing by homebuyers through: 
</P>
<P>(i) Down payment assistance; 
</P>
<P>(ii) Closing costs assistance; 
</P>
<P>(iii) Direct lending; and 
</P>
<P>(iv) Interest subsidies or other financial assistance 
</P>
<P>(4) New construction of affordable housing; 
</P>
<P>(5) Reconstruction of affordable housing; 
</P>
<P>(6) Moderate rehabilitation of affordable housing, including but not limited to: 
</P>
<P>(i) Lead-based paint hazards elimination or reduction; 
</P>
<P>(ii) Improvements to provide physical accessibility for disabled persons; and 
</P>
<P>(iii) Energy-related improvements; 
</P>
<P>(7) Substantial rehabilitation of affordable housing, including but not limited to: 
</P>
<P>(i) Lead-based paint hazards elimination or reduction; 
</P>
<P>(ii) Improvements to provide physical accessibility for disabled persons; and 
</P>
<P>(iii) Energy-related improvements; 
</P>
<P>(8) Site improvement, including recreational areas and playgrounds for use by residents of affordable housing and on-site streets and sidewalks; 
</P>
<P>(9) The development and rehabilitation of utilities, necessary infrastructure, and utility services;




</P>
<P>(10) Conversion; 
</P>
<P>(11) Demolition; 
</P>
<P>(12) Administration and planning; and 
</P>
<P>(13) Other related activities, such as environmental review and architectural and engineering plans for the affordable housing project. 
</P>
<P>(b) <I>Multi-unit projects.</I> NHHBG funds may be used to assist one or more housing units in a multi-unit project. Only the actual NHHBG eligible development costs of the assisted units may be charged to the NHHBG Program. If the assisted and unassisted units are not comparable, the actual costs may be determined based upon a method of cost allocation. If the assisted and unassisted units are comparable in terms of size, features, and number of bedrooms, the actual cost of the NHHBG-assisted units can be determined by pro-rating the total NHHBG eligible development costs of the project so that the proportion of the total development costs charged to the NHHBG Program does not exceed the proportion of the NHHBG-assisted units in the project.

 
</P>
<CITA TYPE="N">[67 FR 40776, June 13, 2002, as amended at 89 FR 9761, Feb. 12, 2024]








</CITA>
</DIV8>


<DIV8 N="§ 1006.210" NODE="24:4.1.3.1.29.3.71.3" TYPE="SECTION">
<HEAD>§ 1006.210   Housing services.</HEAD>
<P>NHHBG funds may be used for the provision of housing-related services for affordable housing, including: 
</P>
<P>(a) Housing counseling, as defined in § 5.100, in connection with rental or homeownership assistance must be carried out in accordance with 24 CFR 5.111;
</P>
<P>(b) The establishment and support of resident organizations and resident management corporations; 
</P>
<P>(c) Energy auditing; 
</P>
<P>(d) Activities related to the provisions of self-sufficiency and other services; 
</P>
<P>(e) Homelessness prevention activities, which may include short term subsidies to defray rent and utility bills of an eligible family; 
</P>
<P>(f) Payments to prevent foreclosure on a home; 
</P>
<P>(g) Other services related to assisting owners, tenants, contractors, and other entities participating or seeking to participate in other housing activities assisted pursuant to the Act and this part. 
</P>
<CITA TYPE="N">[67 FR 40776, June 13, 2002, as amended at 81 FR 90660, Dec. 14, 2016; 89 FR 9761, Feb. 12, 2024]








</CITA>
</DIV8>


<DIV8 N="§ 1006.215" NODE="24:4.1.3.1.29.3.71.4" TYPE="SECTION">
<HEAD>§ 1006.215   Housing management services.</HEAD>
<P>NHHBG funds may be used for the provision of management services for affordable housing, including: 
</P>
<P>(a) The preparation of work specifications; 
</P>
<P>(b) Loan processing; 
</P>
<P>(c) Inspections; 
</P>
<P>(d) Tenant selection; 
</P>
<P>(e) Management of tenant-based rental assistance;
</P>
<P>(f) The costs of operation and maintenance of units occupied by NHHBG eligible families; and


</P>
<P>(g) Management of affordable housing projects. 
</P>
<CITA TYPE="N">[67 FR 40776, June 13, 2002, as amended at 89 FR 9761, Feb. 12, 2024]






</CITA>
</DIV8>


<DIV8 N="§ 1006.220" NODE="24:4.1.3.1.29.3.71.5" TYPE="SECTION">
<HEAD>§ 1006.220   Crime prevention and safety activities.</HEAD>
<P>NHHBG funds may be used for the provision of safety, security, and law enforcement measures and activities appropriate to protect residents of affordable housing from crime, including the costs of: 
</P>
<P>(a) Physical improvements for affordable housing to enhance security, such as, fences, monitors, locks, and additional lighting; 
</P>
<P>(b) Security personnel for affordable housing; and 
</P>
<P>(c) Equipment for patrols. 


</P>
</DIV8>


<DIV8 N="§ 1006.225" NODE="24:4.1.3.1.29.3.71.6" TYPE="SECTION">
<HEAD>§ 1006.225   Model activities.</HEAD>
<P>NHHBG funds may be used for housing activities under model programs that are: 
</P>
<P>(a) Designed to carry out the purposes of the Act and this part; and 
</P>
<P>(b) Specifically approved by HUD as appropriate for those purposes. 














</P>
</DIV8>


<DIV8 N="§ 1006.227" NODE="24:4.1.3.1.29.3.71.7" TYPE="SECTION">
<HEAD>§ 1006.227   Tenant-based or project-based rental assistance.</HEAD>
<P>NHHBG funds may be used for the provision of tenant-based rental assistance, which may include security deposits and first month's rent, and project-based rental assistance.
</P>
<P>(a) Rental assistance must comply with the requirements of this part and be provided to eligible families.
</P>
<P>(b) Rental assistance may be provided to eligible families both on and off the Hawaiian Home Lands provided such use is consistent with the applicable appropriations acts governing the use of the NHHBG funds.
</P>
<CITA TYPE="N">[89 FR 9761, Feb. 12, 2024]






</CITA>
</DIV8>


<DIV8 N="§ 1006.230" NODE="24:4.1.3.1.29.3.71.8" TYPE="SECTION">
<HEAD>§ 1006.230   Administrative and planning costs.</HEAD>
<P>Up to such amount as HUD may authorize, or such other limit as may be specified by statute, of each grant received under the Act may be used for any reasonable administrative and planning expenses of the DHHL relating to carrying out the Act and this part and activities assisted with NHHBG funds, including: 
</P>
<P>(a) <I>General management, oversight and coordination.</I> Reasonable costs of overall program management, coordination, monitoring, and evaluation. Such costs include, but are not limited to, necessary expenditures for the following: 
</P>
<P>(1) Salaries, wages, and related costs of the DHHL's staff. In charging costs to this category the DHHL may either include the entire salary, wages, and related costs allocable to the NHHBG Program of each person whose <I>primary</I> responsibilities with regard to the program involves program administration assignments, or the prorated share of the salary, wages, and related costs of each person whose job includes <I>any</I> program administration assignments. The DHHL may use only one of these methods. Program administration includes the following types of assignments: 
</P>
<P>(i) Developing systems and schedules for ensuring compliance with program requirements; 
</P>
<P>(ii) Developing interagency agreements and agreements with entities receiving NHHBG funds; 
</P>
<P>(iii) Monitoring NHHBG-assisted housing for progress and compliance with program requirements; 
</P>
<P>(iv) Preparing reports and other documents related to the program for submission to HUD; 
</P>
<P>(v) Coordinating the resolution of audit and monitoring findings; 
</P>
<P>(vi) Evaluating program results against stated objectives; and 
</P>
<P>(vii) Managing or supervising persons whose primary responsibilities with regard to the program include such assignments as those described in paragraphs (a)(1)(i) through (vi) of this section; 
</P>
<P>(2) Travel costs incurred for official business in carrying out the program; 
</P>
<P>(3) Administrative services performed under third party contracts or agreements, including such services as general legal services, accounting services, and audit services; and 
</P>
<P>(4) Other costs for goods and services required for administration of the program, including such goods and services as rental or purchase of equipment, insurance, utilities, office supplies, and rental and maintenance (but not purchase) of office space. 
</P>
<P>(b) <I>Staff and overhead.</I> Staff and overhead costs directly related to carrying out a project or service, such as work specifications preparation, loan processing, inspections, and other services related to assisting potential owners, tenants, and homebuyers (<I>e.g.,</I> housing counseling); and staff and overhead costs directly related to providing advisory and other relocation services to persons displaced by the a project, including timely written notices to occupants, referrals to comparable and suitable replacement property, property inspections, counseling, and other assistance necessary to minimize hardship. These costs may be charged as administrative costs or as project costs under § 1006.205 or service costs under §§ 1006.210 or 1006.215, at the discretion of the DHHL. 
</P>
<P>(c) <I>Public information.</I> The provision of information and other resources to residents and citizen organizations participating in the planning, implementation, or assessment of projects being assisted with NHHBG funds. 
</P>
<P>(d) <I>Indirect costs.</I> Indirect costs may be charged to the NHHBG Program under a cost allocation plan prepared in accordance with 2 CFR part 200, subpart E. 
</P>
<P>(e) <I>Preparation of the housing plan and reports.</I> Preparation of the housing plan under § 1006.101 and performance reports under § 1006.410. Preparation includes the costs of public hearings, consultations, and publication. 
</P>
<P>(f) <I>Other Federal requirements.</I> Costs of complying with the Federal requirements in §§ 1006.370, 1006.375, and 1006.377 of this part. Project-specific environmental review costs may be charged as administrative costs or as project costs, at the discretion of the DHHL. 
</P>
<CITA TYPE="N">[67 FR 40776, June 13, 2002, as amended at 80 FR 75945, Dec. 7, 2015; 89 FR 9761, Feb. 12, 2024]






</CITA>
</DIV8>


<DIV8 N="§ 1006.235" NODE="24:4.1.3.1.29.3.71.9" TYPE="SECTION">
<HEAD>§ 1006.235   Types of investments and forms of assistance.</HEAD>
<P>Subject to the requirements of this part and to the DHHL's housing plan, the DHHL has the discretion to use NHHBG funds for affordable housing activities in the form of equity investments, interest-bearing loans or advances, noninterest-bearing loans or advances, interest subsidies, the leveraging of private investments, and other forms of assistance that HUD determines to be consistent with the purposes of the Act. The DHHL has the right to establish the terms of assistance provided with NHHBG funds. 
</P>
<CITA TYPE="N">[67 FR 40776, June 13, 2002, as amended at 89 FR 9761, Feb. 12, 2024]






</CITA>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:4.1.3.1.29.4" TYPE="SUBPART">
<HEAD>Subpart D—Program Requirements</HEAD>


<DIV8 N="§ 1006.301" NODE="24:4.1.3.1.29.4.71.1" TYPE="SECTION">
<HEAD>§ 1006.301   Eligible families.</HEAD>
<P>(a) <I>General.</I> Assistance for eligible housing activities under the Act and this part is limited to low-income Native Hawaiian families who are eligible to reside on the Hawaiian Home Lands, except as provided under paragraphs (b) and (c) of this section.
</P>
<P>(b) <I>Exception to low-income requirement</I>—(1) <I>Other Native Hawaiian families.</I> The DHHL may provide assistance for homeownership activities, which may include assistance in conjunction with loan guarantee activities to Native Hawaiian families who are not low-income families, as approved by HUD, to address a need for housing for those families that cannot be reasonably met without that assistance. DHHL must determine and document the need for housing for each family that cannot reasonably be met without such assistance.
</P>
<P>(2) <I>HUD approval.</I> HUD approval is required, except as provided in paragraph (b)(3)(i) of this section, if the DHHL plans to use grant amounts provided under the Act for assistance in accordance with paragraph (b)(1) of this section. HUD approval shall be obtained by DHHL submitting proposals in its housing plan, by amendment of the housing plan, or by special request to HUD at any time.
</P>
<P>(3) <I>Limitations.</I> (i) DHHL may use up to 10 percent of the amount planned in its Housing Plan for its fiscal year for families whose income is 81 to 100 percent of the median income without HUD approval. HUD approval is required if DHHL plans to use more than 10 percent of the amount planned for its fiscal year for such assistance or to provide housing for families with income over 100 percent of median income.
</P>
<P>(ii) Non-low-income families cannot receive the same benefits provided low-income Native Hawaiian families. The amount of assistance non-low-income families may receive will be determined by DHHL as established in its written policies.
</P>
<P>(iii) The requirements set forth in paragraphs 3(i) and (ii) of this section do not apply to other families who are non-low income that DHHL has determined to be essential under paragraph (c) of this section.
</P>
<P>(c) <I>Other families.</I> The DHHL may provide housing or NHHBG assistance to a family that is not low-income and is not a Native Hawaiian family without HUD approval if the DHHL documents that:
</P>
<P>(1) The presence of the family in the housing involved is essential to the well-being of Native Hawaiian families; and
</P>
<P>(2) The need for housing for the family cannot be reasonably met without the assistance.
</P>
<P>(d) <I>Written policies.</I> The DHHL must develop, follow, and have available for review by HUD written policies governing the eligibility, admission, and occupancy of families for housing assisted with NHHBG funds and governing the selection of families receiving other assistance under the Act and this part.


</P>
<CITA TYPE="N">[89 FR 9761, Feb. 12, 2024]






</CITA>
</DIV8>


<DIV8 N="§ 1006.305" NODE="24:4.1.3.1.29.4.71.2" TYPE="SECTION">
<HEAD>§ 1006.305   Low-income requirement and income targeting.</HEAD>
<P>(a) <I>In general.</I> Housing qualifies as affordable housing for purposes of the Act and this part, provided that the family occupying the unit is low-income at the following times:
</P>
<P>(1) In the case of rental housing, at the time of the family's initial occupancy of such unit;
</P>
<P>(2) In the case of housing for homeownership, at the time of purchase. When DHHL enters into a loan contract with the family for NHHBG assistance to purchase or construct a homeownership unit, the time of purchase means the time that loan contract is executed;
</P>
<P>(3) In the case of owner-occupied housing units, at the time the family receives NHHBG assistance;
</P>
<P>(4) In the case of a lease-purchase agreement for existing housing or for housing to be constructed, at the time the lease-purchase agreement is signed; and
</P>
<P>(5) In the case of emergency assistance to prevent homelessness or foreclosure, at the time the family receives NHHBG assistance.
</P>
<P>(b) <I>Affordability requirements.</I> NHHBG-assisted rental and homeownership units must meet the affordability requirements for the remaining useful life of the property, as determined by HUD, or such other period as HUD determines in accordance with section 813(a)(2)(B) of the Act.

 
</P>
<P>(c) <I>Enforceable agreements.</I> (1) The DHHL, through binding contractual agreements with owners or other authorized entities, shall ensure long-term compliance with the provisions of this part. 
</P>
<P>(2) The agreements referred to in paragraph (c)(1) of this section shall provide for: 
</P>
<P>(i) To the extent allowable by Federal and State law, the enforcement of the provisions of the Act and this part by the DHHL and HUD; and 
</P>
<P>(ii) Remedies for breach of the provisions of the Act and this part. 
</P>
<P>(d) <I>Exception.</I> Notwithstanding the requirements of this section, housing assisted with NHHBG funds pursuant to § 1006.301(b) shall be considered affordable housing for purposes of the Act and this part. 
</P>
<CITA TYPE="N">[67 FR 40776, June 13, 2002, as amended at 89 FR 9762, Feb. 12, 2024]












</CITA>
</DIV8>


<DIV8 N="§ 1006.306" NODE="24:4.1.3.1.29.4.71.3" TYPE="SECTION">
<HEAD>§ 1006.306   Income verification for receipt of NHHBG assistance.</HEAD>
<P>(a) <I>Initial determination of eligibility.</I> DHHL must verify that the family is income eligible based on anticipated annual income. The family is required to provide documentation to verify this determination. DHHL is required to maintain the documentation on which the determination of eligibility is based.
</P>
<P>(b) <I>Periodic verification.</I> DHHL may require a family to periodically verify its income in order to determine housing payments or continued occupancy consistent with DHHL's written policies. When income verification is required, the family must provide documentation which verifies its income, and this documentation must be retained by DHHL.


</P>
<CITA TYPE="N">[89 FR 9762, Feb. 12, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 1006.307" NODE="24:4.1.3.1.29.4.71.4" TYPE="SECTION">
<HEAD>§ 1006.307   Non-low-income families.</HEAD>
<P>A family that was low-income at the times described in § 1006.305 but subsequently becomes a non-low-income family may continue to participate in the program in accordance with DHHL's admission and occupancy policies. The 10 percent limitation in § 1006.301(b)(3)(i) in this part shall not apply to such families. Such families may be made subject to the additional requirements in § 1006.301(b)(3)(ii) of this part based on those policies.</P>
<CITA TYPE="N">[89 FR 9762, Feb. 12, 2024]










</CITA>
</DIV8>


<DIV8 N="§ 1006.310" NODE="24:4.1.3.1.29.4.71.5" TYPE="SECTION">
<HEAD>§ 1006.310   Rent and lease-purchase limitations.</HEAD>
<P>(a) <I>Rents.</I> The DHHL must develop and follow written policies governing rents for rental housing units assisted with NHHBG funds, including methods by which rents are determined.
</P>
<P>(1) <I>Maximum and minimum rent.</I> The maximum monthly tenant rent payment for a low-income family may not exceed 30 percent of the family's monthly adjusted income. DHHL may also decide to compute rental or homebuyer payments on any lesser percentage of the adjusted income of the family. The Act does not set minimum rent or homebuyer payments; however, DHHL may do so.
</P>
<P>(2) <I>Flat or income-adjusted rent.</I> Flat rent means the tenant's rent payment is set at a specific dollar amount or specific percent of market rent. Income-adjusted rent means the tenant's rent payment varies based on the tenant's income (<I>i.e.,</I> 30 percent of monthly adjusted income). DHHL may charge flat or income-adjusted rents, provided the rental or homebuyer payment of the low-income family does not exceed 30 percent of the family's adjusted income.
</P>
<P>(3) <I>Utilities.</I> Utilities may be considered a part of rent or homebuyer payments if DHHL decides to define rent or homebuyer payments to include utilities in its written policies on rents and homebuyer payments required by section 811(a)(1) of NAHASDA. DHHL may define rents and homebuyer payments to exclude utilities.
</P>
<P>(b) <I>Lease-purchase.</I> If DHHL assists low-income families to become homeowners of rental housing through a long-term lease (<I>i.e.,</I> 10 or more years) with an option to purchase the housing, DHHL must develop and follow written policies governing lease-purchase payments (<I>i.e.,</I> homebuyer payments) for rental housing units assisted with NHHBG funds, including methods by which payments are determined. The maximum monthly payment for a low-income family may not exceed 30 percent of the family's monthly adjusted income.
</P>
<P>(c) <I>Exception for certain homeownership payments.</I> Homeownership payments for families who are not low-income, as permitted under § 1006.301(b), are not subject to the requirement that homebuyer payments may not exceed 30 percent of the monthly adjusted income of that family.
</P>
<P>(d) <I>Applicability.</I> Low-income families who receive homeownership assistance other than lease-purchase assistance are not subject to the limitations in paragraphs (a) and (b) of this section.


</P>
<CITA TYPE="N">[89 FR 9762, Feb. 12, 2024]








</CITA>
</DIV8>


<DIV8 N="§ 1006.315" NODE="24:4.1.3.1.29.4.71.6" TYPE="SECTION">
<HEAD>§ 1006.315   Lease requirements.</HEAD>
<P>Except to the extent otherwise provided by or inconsistent with the laws of the State of Hawaii, in renting dwelling units in affordable housing assisted with NHHBG funds, the DHHL, owner, or manager must use leases that: 
</P>
<P>(a) Do not contain unreasonable terms and conditions; 
</P>
<P>(b) Require the DHHL, owner, or manager to maintain the housing in compliance with applicable local housing codes and quality standards; 
</P>
<P>(c) Require the DHHL, owner, or manager to give adequate written notice of termination of the lease, which shall be the period of time required under applicable State or local law; 
</P>
<P>(d) Specify that, with respect to any notice of eviction or termination, notwithstanding any State or local law, a resident shall be informed of the opportunity, before any hearing or trial, to examine any relevant documents, record, or regulations directly related to the eviction or termination; 
</P>
<P>(e) Require that the DHHL, owner, or manager may not terminate the tenancy, during the term of the lease, except for serious or repeated violation of the terms and conditions of the lease, violation of applicable Federal, State, or local law, or for other good cause; and 
</P>
<P>(f) Provide that the DHHL, owner, or manager may terminate the tenancy of a resident for any activity, engaged in by the resident, any member of the household of the resident, or any guest or other person under the control of the resident, that: 
</P>
<P>(1) Threatens the health or safety of, or right to peaceful enjoyment of the premises by, other residents or employees of the DHHL, owner, or manager; 
</P>
<P>(2) Threatens the health or safety of, or right to peaceful enjoyment of their premises by, persons residing in the immediate vicinity of the premises; or 
</P>
<P>(3) Involves criminal activity (including drug-related criminal activity) on or off the premises. 


</P>
</DIV8>


<DIV8 N="§ 1006.320" NODE="24:4.1.3.1.29.4.71.7" TYPE="SECTION">
<HEAD>§ 1006.320   Tenant or homebuyer selection.</HEAD>
<P>As a condition to receiving grant amounts under the Act, the DHHL must adopt and use written tenant and homebuyer selection policies and criteria that: 
</P>
<P>(a) Are consistent with the purpose of providing housing for low-income families; 
</P>
<P>(b) Are reasonably related to program eligibility and the ability of the tenant or homebuyer assistance applicant to perform the obligations of the lease; and 
</P>
<P>(c) Provide for: 
</P>
<P>(1) The selection of tenants and homebuyers from a written waiting list in accordance with the policies and goals set forth in the housing plan; and 
</P>
<P>(2) The prompt notification in writing of any rejected applicant of the grounds for that rejection. 


</P>
</DIV8>


<DIV8 N="§ 1006.325" NODE="24:4.1.3.1.29.4.71.8" TYPE="SECTION">
<HEAD>§ 1006.325   Maintenance, management and efficient operation.</HEAD>
<P>(a) <I>Written policies.</I> The DHHL must develop and enforce policies governing the management and maintenance of rental housing assisted with NHHBG funds. 
</P>
<P>(b) <I>Disposal of housing.</I> This section may not be construed to prevent the DHHL, or any entity funded by the DHHL, from demolishing or disposing of housing, pursuant to regulations established by HUD. 


</P>
</DIV8>


<DIV8 N="§ 1006.330" NODE="24:4.1.3.1.29.4.71.9" TYPE="SECTION">
<HEAD>§ 1006.330   Insurance coverage.</HEAD>
<P>(a) <I>In general.</I> As a condition to receiving NHHBG funds, the DHHL must require adequate insurance coverage for housing units that are owned or operated or assisted with more than $5,000 of NHHBG funds, including a loan of more than $5,000 that includes payback provisions. 
</P>
<P>(b) <I>Adequate insurance.</I> Insurance is adequate if it is a purchased insurance policy from an insurance provider or a plan of self-insurance in an amount to cover replacement cost. 
</P>
<P>(c) <I>Loss covered.</I> The DHHL must provide for or require insurance in adequate amounts to indemnify against loss from fire, weather, and liability claims for all housing units owned, operated or assisted by the DHHL. NHHBG funds may only be used to purchase insurance for low-income homeowners and only in amounts sufficient to protect against the loss of the NHHBG funds at risk in the property. The cost of such insurance may not include coverage for a resident's personal property. 
</P>
<P>(d) <I>Exception.</I> The DHHL shall not require insurance if the assistance is in an amount less than $5000. 
</P>
<P>(e) <I>Contractor's coverage.</I> The DHHL shall require contractors and subcontractors to either provide insurance covering their activities or negotiate adequate indemnification coverage to be provided by the DHHL in the contract. 


</P>
</DIV8>


<DIV8 N="§ 1006.335" NODE="24:4.1.3.1.29.4.71.10" TYPE="SECTION">
<HEAD>§ 1006.335   Use of nonprofit organizations and public-private partnerships.</HEAD>
<P>(a) <I>Nonprofit organizations.</I> The DHHL must, to the extent practicable, provide for private nonprofit organizations experienced in the planning and development of affordable housing for Native Hawaiians to carry out affordable housing activities with NHHBG funds. 
</P>
<P>(b) <I>Public-private partnerships.</I> The DHHL must make all reasonable efforts to maximize participation by the private sector, including nonprofit organizations and for-profit entities, in implementing its housing plan. 




</P>
</DIV8>


<DIV8 N="§ 1006.340" NODE="24:4.1.3.1.29.4.71.11" TYPE="SECTION">
<HEAD>§ 1006.340   Treatment of program income.</HEAD>
<P>(a) <I>Defined.</I> Program income is income realized from the use of NHHBG funds. If gross income is used to pay costs incurred that are essential or incidental to generating the income, these costs may be deducted from gross income to determine program income. Program income includes income from fees for services performed; from the use or rental of real or personal property acquired or assisted with NHHBG funds; from the sale of property acquired or assisted with NHHBG funds; from payments of principal and interest on loans made with NHHBG funds; and from payments of interest earned on investment of NHHBG funds pursuant to section 812(b) of the Act. 
</P>
<P>(b) <I>Authority to retain.</I> The DHHL may retain any program income that is realized from any NHHBG funds if: 
</P>
<P>(1) That income was realized after the initial disbursement of the NHHBG funds received by the DHHL; and 
</P>
<P>(2) The DHHL agrees to use the program income for affordable housing activities in accordance with the provisions of the Act and this part; and 
</P>
<P>(3) The DHHL disburses program income before disbursing additional NHHBG funds in accordance with 2 CFR 200.305. 
</P>
<P>(c) <I>Exclusion of amounts.</I> If the amount of income received in a single fiscal year by the DHHL, which would otherwise be considered program income, does not exceed $25,000, such funds may be retained but will not be considered program income. 
</P>
<CITA TYPE="N">[67 FR 40776, June 13, 2002, as amended at 80 FR 75945, Dec. 7, 2015; 89 FR 9763, Feb. 12, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 1006.345" NODE="24:4.1.3.1.29.4.71.12" TYPE="SECTION">
<HEAD>§ 1006.345   Labor standards.</HEAD>
<P>(a) <I>Davis-Bacon wage rates.</I> (1) As described in section 805(b) of the Act, contracts and agreements for assistance, sale or lease under this part must require prevailing wage rates determined by the Secretary of Labor under the Davis-Bacon Act (40 U.S.C. 276a-276a-5) to be paid to laborers and mechanics employed in the development of affordable housing. 
</P>
<P>(2) When NHHBG assistance is only used to assist homebuyers to acquire single family housing, the Davis-Bacon wage rates apply to the construction of the housing if there is a written agreement with the owner or developer of the housing that NHHBG assistance will be used to assist homebuyers to buy the housing. 
</P>
<P>(3) Prime contracts not in excess of $2000 are exempt from Davis-Bacon wage rates. 
</P>
<P>(b) <I>HUD-determined wage rates.</I> Section 805(b) of the Act also mandates that contracts and agreements for assistance, sale or lease under the Act require that prevailing wages determined or adopted (subsequent to a determination under applicable State or local law) by HUD shall be paid to maintenance laborers and mechanics employed in the operation, and to architects, technical engineers, draftsmen and technicians employed in the development, of affordable housing. 
</P>
<P>(c) <I>Contract Work Hours and Safety Standards Act.</I> Contracts in excess of $100,000 to which Davis-Bacon or HUD-determined wage rates apply are subject by law to the overtime provisions of the Contract Work Hours and Safety Standards Act (40 U.S.C. 327). 
</P>
<P>(d) <I>Volunteers.</I> The requirements in 24 CFR part 70 concerning exemptions for the use of volunteers on projects subject to Davis-Bacon and HUD-determined wage rates are applicable. 
</P>
<P>(e) <I>Other laws and issuances.</I> The DHHL, contractors, subcontractors, and other participants must comply with regulations issued under the labor standards provisions cited in this section, and other applicable Federal laws and regulations pertaining to labor standards. 








</P>
</DIV8>


<DIV8 N="§ 1006.350" NODE="24:4.1.3.1.29.4.71.13" TYPE="SECTION">
<HEAD>§ 1006.350   Environmental review.</HEAD>
<P>(a) In order to ensure that the policies of the National Environmental Policy Act of 1969 (42 U.S.C. 4321 <I>et seq.</I>) (NEPA) and other provisions of Federal law which further the purposes of that act (as specified in 24 CFR 58.5) are most effectively implemented in connection with the expenditure of NHHBG funds, HUD will provide for the release of funds for specific projects to the DHHL if the Director of the DHHL assumes all of the responsibilities for environmental review, decision-making, and action under NEPA and other provisions of Federal law which further the purposes of that act (as specified in 24 CFR 58.5) that would apply to HUD were HUD to undertake those projects as Federal projects.

 
</P>
<P>(b) An environmental review does not have to be completed before a HUD finding of compliance for the housing plan or amendments to the housing plan submitted by the DHHL. 
</P>
<P>(c) No funds may be committed to a grant activity or project before the completion of the environmental review and approval of the request for release of funds and related certification required by sections 806(b) and 806(c) of the Act, except as authorized by 24 CFR part 58. 
</P>
<P>(d) As set forth in section 806(a)(2)(B) of the Act and 24 CFR 58.77, HUD will: 
</P>
<P>(1) Provide for the monitoring of environmental reviews performed by the DHHL under this section; 
</P>
<P>(2) At its discretion, facilitate training for the performance of such reviews by the DHHL; and, 
</P>
<P>(3) At its discretion, provide for the suspension or termination of the assumption of responsibilities under this section based upon a finding of substantial failure of the DHHL to execute responsibilities under this section. 


</P>
<CITA TYPE="N">[67 FR 40776, June 13, 2002, as amended at 89 FR 9763, Feb. 12, 2024]






</CITA>
</DIV8>


<DIV8 N="§ 1006.355" NODE="24:4.1.3.1.29.4.71.14" TYPE="SECTION">
<HEAD>§ 1006.355   Nondiscrimination requirements.</HEAD>
<P>Program eligibility under the Act and this part may be restricted to Native Hawaiians. Subject to the preceding sentence, no person may be discriminated against on the basis of race, color, national origin, religion, sex, familial status, or disability, or excluded from program eligibility because of actual or perceived sexual orientation, gender identity, or marital status. The following nondiscrimination requirements are applicable to the use of NHHBG funds:
</P>
<P>(a) The requirements of the Age Discrimination Act of 1975 (42 U.S.C. 6101-6107) and HUD's implementing regulations in 24 CFR part 146; 
</P>
<P>(b) Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and HUD's regulations at 24 CFR part 8; and 
</P>
<P>(c) Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d <I>et seq.</I>) and the Fair Housing Act (42 U.S.C. 3601 <I>et seq.</I>), to the extent that nothing in their requirements concerning discrimination on the basis of race shall be construed to prevent the provision of NHHBG assistance: 
</P>
<P>(1) To the DHHL on the basis that the DHHL served Native Hawaiians; or 
</P>
<P>(2) To an eligible family on the basis that the family is a Native Hawaiian family. 
</P>
<P>(d) The equal access to HUD-assisted or -insured housing requirements in 24 CFR 5.105(a)(2).
</P>
<CITA TYPE="N">[67 FR 40776, June 13, 2002, as amended at 81 FR 80993, Nov. 17, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 1006.360" NODE="24:4.1.3.1.29.4.71.15" TYPE="SECTION">
<HEAD>§ 1006.360   Conflict of interest.</HEAD>
<P>In the procurement of property and services by the DHHL and contractors, the conflict of interest provisions in 2 CFR 200.317 (for DHHL) and 2 CFR 200.318 (for subrecipients). 
</P>
<CITA TYPE="N">[67 FR 40776, June 13, 2002, as amended at 80 FR 75945, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 1006.365" NODE="24:4.1.3.1.29.4.71.16" TYPE="SECTION">
<HEAD>§ 1006.365   Program administration responsibilities.</HEAD>
<P>(a) <I>Responsibilities.</I> The DHHL is responsible for managing the day-to-day operations of the NHHBG Program, ensuring that NHHBG funds are used in accordance with all program requirements and written agreements, and taking appropriate action when performance problems arise. The use of contractors does not relieve the DHHL of this responsibility. 
</P>
<P>(b) <I>Agreements with contractors.</I> The DHHL may enter into agreements with private contractors selected under the provisions of 2 CFR part 200, subpart D, for purposes of administering all or part of the NHHBG program for the DHHL. 
</P>
<CITA TYPE="N">[67 FR 40776, June 13, 2002, as amended at 80 FR 75945, Dec. 7, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 1006.370" NODE="24:4.1.3.1.29.4.71.17" TYPE="SECTION">
<HEAD>§ 1006.370   Uniform administrative, requirements, cost principles, and audit requirements for Federal awards.</HEAD>
<P>(a) The DHHL and subrecipients receiving NHHBG funds shall comply with the requirements and standards of 2 CFR part 200, “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards”.
</P>
<P>(b)(1) With respect to the applicability of cost principles, all items of cost listed in 2 CFR part 200, subpart E, which require prior Federal agency approval are allowable without the prior approval of HUD to the extent that they comply with the general policies and principles stated in 2 CFR part 200, subpart E, and are otherwise eligible under this part, except for the following:
</P>
<P>(i) Depreciation methods for fixed assets shall not be changed without the approval of the Federal cognizant agency.
</P>
<P>(ii) Fines, penalties, damages, and other settlements are unallowable costs to the NHHBG program.
</P>
<P>(iii) Costs of housing (<I>e.g.,</I> depreciation, maintenance, utilities, furnishings, rent), housing allowances and personal living expenses (goods or services for personal use) regardless of whether reported as taxable income to the employees (2 CFR 200.445).
</P>
<P>(iv) Organization costs (2 CFR 200.455).
</P>
<P>(2) In addition, no person providing consultant services in an employer-employee type of relationship shall receive funds. In no event, however, shall such compensation exceed the equivalent of the daily rate paid for Level IV of the Executive Schedule. The Executive Pay Schedule may be obtained by <I>https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages.</I>
</P>
<CITA TYPE="N">[80 FR 75945, Dec. 7, 2015]








</CITA>
</DIV8>


<DIV8 N="§ 1006.375" NODE="24:4.1.3.1.29.4.71.18" TYPE="SECTION">
<HEAD>§ 1006.375   Other Federal requirements.</HEAD>
<P>(a) <I>Lead-based paint.</I> The following subparts of HUD's lead-based paint regulations at 24 CFR part 35, which implement the Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4822-4846) and the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), apply to the use of assistance under this part:
</P>
<P>(1) Subpart A (§§ 35.80 through 35.98) for disclosures of known lead-based paint hazards upon sale or lease of residential property;
</P>
<P>(2) Subpart B (§§ 35.100 through 35.175) for general lead-based paint requirements and definitions;
</P>
<P>(3) Subpart H (§§ 35.700 through 35.830) for project-based rental assistance;
</P>
<P>(4) Subpart J (§§ 35.900 through 35.940) for rehabilitation;
</P>
<P>(5) Subpart K (§§ 35.1000 through 35.1020) for acquisition, leasing, support services, or operation;
</P>
<P>(6) Subpart M (§§ 35.1200 through 35.1225) for tenant-based rental assistance; and
</P>
<P>(7) Subpart R (§§ 35.1300 through 35.1355) for methods and standards for lead-based paint hazard evaluation and Reduction activities.
</P>
<P>(b) <I>Drug-free workplace.</I> The Drug-Free Workplace Act of 1988 (41 U.S.C. 701, <I>et seq.</I>) and HUD's implementing regulations in 2 CFR part 2429 apply to the use of assistance under this part.
</P>
<P>(c) <I>Audits.</I> The DHHL must comply with the requirements of the Single Audit Act and 2 CFR part 200, subpart F, with the audit report providing a schedule of expenditures for each grant. A copy of each audit must be submitted to the Federal Audit Clearinghouse.
</P>
<P>(d) <I>Housing counseling.</I> Housing counseling, as defined in § 5.100, that is funded with or provided in connection with NHHBG funds must be carried out in accordance with 24 CFR 5.111.
</P>
<P>(e) <I>Section 3.</I> Requirements under Section 3 of the Housing and Urban Development Act of 1968 and 24 CFR part 75 apply.
</P>
<P>(f) <I>Debarment and suspension.</I> The nonprocurement, debarment, and suspension requirements at 2 CFR part 2424 are applicable.


</P>
<CITA TYPE="N">[89 FR 9763, Feb. 12, 2024]














</CITA>
</DIV8>


<DIV8 N="§ 1006.377" NODE="24:4.1.3.1.29.4.71.19" TYPE="SECTION">
<HEAD>§ 1006.377   Other Federal requirements: Displacement, Relocation, and Acquisition.</HEAD>
<P>The following relocation and real property acquisition policies are applicable to programs developed or operated under the Act and this part:
</P>
<P>(a) <I>Real property acquisition requirements.</I> The acquisition of real property for an assisted activity is subject to the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (42 U.S.C. 4601 <I>et seq.</I>) (URA) and the requirements of 49 CFR part 24, subpart B.
</P>
<P>(b) <I>Minimize displacement.</I> Consistent with the other goals and objectives of the Act and this part, the DHHL shall assure that it has taken all reasonable steps to minimize the displacement of persons (households, businesses, nonprofit organizations, and farms) as a result of a project assisted under the Act and this part.
</P>
<P>(c) <I>Relocation assistance for displaced persons.</I> A displaced person (defined in paragraph (f) of this section) must be provided relocation assistance at the levels described in, and in accordance with the URA and the requirements of 49 CFR part 24. A displaced person must be advised of his or her rights under the Fair Housing Act (42 U.S.C. 3601 <I>et seq.</I>). Whenever possible, minority persons shall be given reasonable opportunities to relocate to comparable and suitable decent, safe, and sanitary replacement dwellings, not located in an area of minority concentration, that are within their financial means. For a displaced person with a disability, a unit is not a comparable replacement dwelling under the URA unless it is free of any barriers which would preclude reasonable ingress, egress, or use of the dwelling by such a displaced person in accordance with the definition of “Decent, safe, and sanitary dwelling” at 49 CFR 24.2. Furthermore, the unit must also meet the requirements of section 504 of the Rehabilitation Act (29 U.S.C. 794) as implemented by HUD's regulations at 24 CFR part 8, subpart C.
</P>
<P>(d) <I>Appeals to the DHHL.</I> A person who disagrees with the DHHL's determination concerning whether the person qualifies as a “displaced person,” or the amount of relocation assistance for which the person is eligible, may file a written appeal of that determination with the DHHL in accordance with URA requirements of 49 CFR 24.10.
</P>
<P>(e) <I>Responsibility of DHHL.</I> (1) The DHHL shall certify that it will comply with the URA requirements of 49 CFR part 24, and the requirements of this section. The DHHL shall ensure such compliance notwithstanding any third party's contractual obligation to the DHHL to comply with the provisions in this section.
</P>
<P>(2) The cost of required relocation assistance is an eligible project cost in the same manner and to the same extent as other project costs. However, such assistance may also be paid for with funds available to the DHHL from any other source.
</P>
<P>(3) DHHL must provide proper and timely distribution of notices to residents in accordance with the URA regulations. This includes the General Information Notice (GIN), the Notice of Relocation Eligibility, the Notice to Owner, and the 90-Day Notice. All notices must be sent in accordance with 49 CFR 24.203 and 24.102. Notices of Relocation Eligibility are typically triggered by the Initiation of Negotiation (ION).
</P>
<P>(4) The DHHL shall maintain records in sufficient detail to demonstrate compliance with this section.
</P>
<P>(f) <I>Definition of displaced person.</I> (1) For purposes of this section, the term “displaced person” means any person (household, business, nonprofit organization, or farm) that moves from real property, or moves his or her personal property from real property, permanently, as a direct result of rehabilitation, demolition, or acquisition for a project assisted under the Act. The term “displaced person” includes, but is not limited to:
</P>
<P>(i) A tenant-occupant of a dwelling unit who moves from the building/complex permanently after the submission to HUD of a housing plan that is later approved;
</P>
<P>(ii) Any person, including a person who moves before the date the housing plan is submitted to HUD, that the DHHL determines was displaced as a direct result of acquisition, rehabilitation, or demolition for the assisted project;
</P>
<P>(iii) A tenant-occupant of a dwelling unit who moves from the building/complex permanently after execution of the agreement between the DHHL and HUD, if the move occurs before the tenant is provided written notice offering him or her the opportunity to lease and occupy a suitable, decent, safe and sanitary dwelling in the same building/complex, under reasonable terms and conditions, upon completion of the project. Such reasonable terms and conditions include a monthly rent and estimated average monthly utility costs that do not exceed the greater of:
</P>
<P>(A) The tenant-occupant's monthly rent and estimated average monthly utility costs before the agreement; or
</P>
<P>(B) Thirty percent of gross household income.
</P>
<P>(iv) A tenant-occupant of a dwelling who is required to relocate temporarily, but does not return to the building/complex, if:
</P>
<P>(A) The tenant-occupant is not offered payment for all reasonable out-of-pocket expenses incurred in connection with the temporary relocation, including the cost of moving to and from the temporarily occupied unit, any increased housing costs and incidental expenses;
</P>
<P>(B) The tenant-occupant is required to temporarily relocate for more than one year; or
</P>
<P>(C) Other conditions of the temporary relocation are not reasonable.
</P>
<P>(v) A tenant-occupant of a dwelling who moves from the building/complex after he or she has been required to move to another dwelling unit in the same building/complex in order to carry out the project, if either:
</P>
<P>(A) The tenant-occupant is not offered reimbursement for all reasonable out-of-pocket expenses incurred in connection with the move; or
</P>
<P>(B) Other conditions of the move are not reasonable.
</P>
<P>(2) Notwithstanding the provisions of this section for the definition of “Displaced Person,” a person does not qualify as a “displaced person” (and is not eligible for relocation assistance under the URA or this section), if:
</P>
<P>(i) The person moved into the property after the submission of the housing plan to HUD, but before signing a lease or commencing occupancy, was provided written notice of the project, its possible impact on the person (<I>e.g.,</I> the person may be displaced, temporarily relocated or suffer a rent increase) and the fact that the person would not qualify as a “displaced person” or for any assistance provided under this section as a result of the project;
</P>
<P>(ii) The person meets the definition of “persons not displaced” as defined in 49 CFR 24.2; or
</P>
<P>(iii) The DHHL determines the person is not displaced as a direct result of acquisition, rehabilitation, or demolition for an assisted project. To exclude a person on this basis, HUD must concur in that determination in accordance with 49 CFR 24.2.
</P>
<P>(3) The DHHL may at any time ask HUD to determine whether a specific displacement is or would be covered under this section.
</P>
<P>(g) <I>Definition of initiation of negotiations.</I> For purposes of determining the formula for computing the replacement housing assistance to be provided to a person displaced from a dwelling as a direct result of acquisition, rehabilitation, or demolition of the real property, the term Initiation of Negotiations (ION) date means the execution of the written agreement covering the acquisition, rehabilitation, or demolition (<I>See</I> 49 CFR 24.2).


</P>
<CITA TYPE="N">[89 FR 9763, Feb. 12, 2024]






</CITA>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:4.1.3.1.29.5" TYPE="SUBPART">
<HEAD>Subpart E—Monitoring and Accountability</HEAD>


<DIV8 N="§ 1006.401" NODE="24:4.1.3.1.29.5.71.1" TYPE="SECTION">
<HEAD>§ 1006.401   Monitoring of compliance.</HEAD>
<P>(a) <I>Periodic reviews and monitoring.</I> At least annually, the DHHL must review the activities conducted and housing assisted with NHHBG funds to assess compliance with the requirements of the Act and this part. This review must encompass and incorporate the results of the monitoring by the DHHL of all contractors involved in the administration of NHHBG activities. 
</P>
<P>(b) <I>Review.</I> Each review under paragraph (a) of this section must include on-site inspection of housing to determine compliance with applicable requirements. 
</P>
<P>(c) <I>Results.</I> The results of each review under paragraph (a) of this section must be: 
</P>
<P>(1) Included in a performance report of the DHHL submitted to HUD under § 1006.410; and 
</P>
<P>(2) Made available to the public. 


</P>
</DIV8>


<DIV8 N="§ 1006.410" NODE="24:4.1.3.1.29.5.71.2" TYPE="SECTION">
<HEAD>§ 1006.410   Performance reports.</HEAD>
<P>(a) <I>Requirement.</I> For each fiscal year, the DHHL must: 
</P>
<P>(1) Review the progress the DHHL has made during that fiscal year in achieving goals stated in its housing plan; and 
</P>
<P>(2) Submit a report in a form acceptable to HUD, within 90 days of the end of the DHHL's fiscal year, describing the conclusions of the review.
</P>
<P>(3) DHHL may submit a written request for an extension of the deadline. HUD will establish a new date for submission if the extension is granted.


</P>
<P>(b) <I>Content.</I> Each report submitted under this section for a fiscal year shall: 
</P>
<P>(1) Describe the use of grant amounts provided to the DHHL for that fiscal year; 
</P>
<P>(2) Assess the relationship of the use referred to in paragraph (b)(1), of this section, to the goals identified in its housing plan; 
</P>
<P>(3) Indicate the programmatic accomplishments of the DHHL; and 
</P>
<P>(4) Describe the manner in which the DHHL would change its housing plan as a result of its experiences administering the grant under the Act. 
</P>
<P>(c) <I>Public availability</I>—(1) <I>Comments by Native Hawaiians.</I> In preparing a report under this section, the DHHL shall make the report publicly available to Native Hawaiians who are eligible to reside on the Hawaiian Home Lands and give a sufficient amount of time to permit them to comment on that report, in such manner and at such time as the DHHL may determine, before it is submitted to HUD.




</P>
<P>(2) <I>Summary of comments.</I> The report under this section must include a summary of any comments received by the DHHL from beneficiaries under paragraph (c)(1) of this section, regarding the program to carry out the housing plan. 
</P>
<P>(d) <I>HUD review.</I> HUD will: 
</P>
<P>(1) Review each report submitted under the Act and this part; and 
</P>
<P>(2) With respect to each such report, make recommendations as HUD considers appropriate to carry out the purposes of the Act. 
</P>
<CITA TYPE="N">[67 FR 40776, June 13, 2002, as amended at 89 FR 9764, Feb. 12, 2024]








</CITA>
</DIV8>


<DIV8 N="§ 1006.420" NODE="24:4.1.3.1.29.5.71.3" TYPE="SECTION">
<HEAD>§ 1006.420   Review of DHHL's performance.</HEAD>
<P>(a) <I>Objective.</I> HUD will, at least annually, review DHHL's performance to determine whether the DHHL has: 
</P>
<P>(1) Carried out eligible activities in a timely manner; 
</P>
<P>(2) Carried out and made certifications in accordance with the requirements and the primary objectives of the Act and this part and with other applicable laws; 
</P>
<P>(3) A continuing capacity to carry out the eligible activities in a timely manner; 
</P>
<P>(4) Complied with its housing plan; and 
</P>
<P>(5) Submitted accurate performance reports. 
</P>
<P>(b) <I>Basis for review.</I> In reviewing DHHL's performance, HUD will consider all available evidence, which may include, but not be limited to, the following: 
</P>
<P>(1) The DHHL's housing plan and any amendments thereto; 
</P>
<P>(2) Reports prepared by the DHHL; 
</P>
<P>(3) Records maintained by the DHHL, including their retention under 2 CFR 200.333, noting that the NHHBG Annual Performance Report is the program's final expenditure report; 
</P>
<P>(4) Results of HUD's monitoring of the DHHL's performance, including field evaluation of the quality of the work performed; 
</P>
<P>(5) Audit reports; 
</P>
<P>(6) Records of drawdowns on the line of credit; 
</P>
<P>(7) Records of comments and complaints by citizens and organizations; and
</P>
<P>(8) Litigation. 
</P>
<P>(c) <I>Failure to maintain records.</I> The DHHL's failure to maintain records may result in a finding that the DHHL failed to meet the applicable requirement to which the record pertains. 
</P>
<CITA TYPE="N">[67 FR 40776, June 13, 2002, as amended at 80 FR 75945, Dec. 7, 2015; 89 FR 9764, Feb. 12, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 1006.430" NODE="24:4.1.3.1.29.5.71.4" TYPE="SECTION">
<HEAD>§ 1006.430   Corrective and remedial action.</HEAD>
<P>(a) <I>General.</I> One or more corrective or remedial actions will be taken by HUD when, on the basis of a performance review, HUD determines that the DHHL has not: 
</P>
<P>(1) Complied with the requirements of the Act and this part and other applicable laws and regulations, including the environmental responsibilities assumed under § 1006.350; 
</P>
<P>(2) Carried out its activities substantially as described in its housing plan; 
</P>
<P>(3) Made substantial progress in carrying out its program and achieving its quantifiable goals as described in its housing plan; or 
</P>
<P>(4) Shown the continuing capacity to carry out its approved activities in a timely manner. 
</P>
<P>(b) <I>Action.</I> The action taken by HUD will be designed, first, to prevent the continuance of the deficiency; second, to mitigate any adverse effects or consequences of the deficiency; and third, to prevent a recurrence of the same or similar deficiencies. The following actions may be taken singly or in combination, as appropriate for the circumstances: 
</P>
<P>(1) Issue a letter of warning advising the DHHL of the performance problem(s), describing the corrective actions that HUD believes should be taken, establishing a completion date for corrective actions, and notifying the DHHL that more serious actions may be taken if the performance problem(s) is not corrected or is repeated; 
</P>
<P>(2) Request the DHHL to submit progress schedules for completing activities or complying with the requirements of the Act and this part; 
</P>
<P>(3) Recommend that the DHHL suspend, discontinue, or not incur costs for the affected activity; 
</P>
<P>(4) Recommend that the DHHL redirect funds from affected activities to other eligible activities; 
</P>
<P>(5) Recommend that the DHHL reimburse its program account or line of credit under the Act in the amount improperly expended and reprogram the use of the funds; and 
</P>
<P>(6) Recommend that the DHHL obtain appropriate technical assistance using existing grant funds or other available resources to overcome the performance problem(s). 


</P>
</DIV8>


<DIV8 N="§ 1006.440" NODE="24:4.1.3.1.29.5.71.5" TYPE="SECTION">
<HEAD>§ 1006.440   Remedies for noncompliance.</HEAD>
<P>(a) <I>Remedies.</I> If HUD finds that the DHHL has failed to comply substantially with any provision of the Act or this part, the following actions may be taken by HUD: 
</P>
<P>(1) Terminate payments to the DHHL; 
</P>
<P>(2) Reduce payments to the DHHL by an amount equal to the amount not expended in accordance with the Act or this part; 
</P>
<P>(3) Limit the availability of payments to programs, projects, or activities not affected by such failure to comply; or 
</P>
<P>(4) Adjust, reduce or withdraw grant amounts or take other action as appropriate in accordance with reviews and audits. 
</P>
<P>(b) <I>Exception.</I> Grant amounts already expended on affordable housing activities may not be recaptured or deducted from future assistance provided to the DHHL. 
</P>
<P>(c) HUD may, upon due notice, suspend payments at any time after the issuance of the opportunity for hearing pending such hearing and final decision, to the extent HUD determines such action necessary to preclude the further expenditure of funds for activities affected by such failure to comply. 
</P>
<P>(d) <I>Hearing requirement.</I> Before imposing remedies under this section, HUD will: 
</P>
<P>(1) Take at least one of the corrective or remedial actions specified under § 1006.430 and permit the DHHL to make an appropriate and timely response; 
</P>
<P>(2) Provide the DHHL with the opportunity for an informal consultation with HUD regarding the proposed action; and 
</P>
<P>(3) Provide DHHL with reasonable notice and opportunity for a hearing. 
</P>
<P>(e) <I>Continuance of actions.</I> If HUD takes an action under paragraph (a) of this section, the action will continue until HUD determines that the failure of the DHHL to comply with the provision has been remedied and the DHHL is in compliance with the provision. 
</P>
<P>(f) <I>Referral to the Attorney General.</I> In lieu of, or in addition to, any action HUD may take under paragraph (a) of this section, if HUD has reason to believe that the DHHL has failed to comply substantially with any provision of the Act or this part, HUD may refer the matter to the Attorney General of the United States with a recommendation that an appropriate civil action be instituted. Upon receiving a referral, the Attorney General may bring a civil action in any United States district court of appropriate jurisdiction for such relief as may be appropriate, including an action to recover the amount of the assistance furnished under the Act that was not expended in accordance with the Act or this part or for mandatory or injunctive relief. 


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="1007" NODE="24:4.1.3.1.30" TYPE="PART">
<HEAD>PART 1007—SECTION 184A LOAN GUARANTEES FOR NATIVE HAWAIIAN HOUSING 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 1715z-13b; 15 U.S.C. 1639c; 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>67 FR 40776, June 13, 2002, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 1007.1" NODE="24:4.1.3.1.30.0.71.1" TYPE="SECTION">
<HEAD>§ 1007.1   Purpose.</HEAD>
<P>This part provides the requirements and procedures that apply to loan guarantees for Native Hawaiian Housing under section 184A of the Housing and Community Development Act of 1992. Section 184A permits HUD to guarantee an amount not to exceed 100 percent of the unpaid principal and interest that is due on an eligible loan. The purpose of section 184A and this part is to provide access to sources of private financing to Native Hawaiian families who otherwise could not acquire housing financing because of the unique legal status of the Hawaiian Home Lands or as a result of a lack of access to private financial markets. 


</P>
</DIV8>


<DIV8 N="§ 1007.5" NODE="24:4.1.3.1.30.0.71.2" TYPE="SECTION">
<HEAD>§ 1007.5   Definitions.</HEAD>
<P>The following definitions apply in this part: 
</P>
<P><I>Department of Hawaiian Home Lands (DHHL)</I> means the agency or department of the government of the State of Hawaii that is responsible for the administration of the Hawaiian Homes Commission Act, 1920 (42 Stat. 108 <I>et seq.</I>). 
</P>
<P><I>Eligible entity</I> means a Native Hawaiian family, the Department of Hawaiian Home Lands, the Office of Hawaiian Affairs, and private nonprofit or private for-profit organizations experienced in the planning and development of affordable housing for Native Hawaiians. 
</P>
<P><I>Family</I> means one or more persons maintaining a household, and includes, but is not limited to, a family with or without children, an elderly family, a near-elderly family, a disabled family, or a single person. 
</P>
<P><I>Guarantee Fund</I> means the Native Hawaiian Housing Loan Guarantee Fund under this part. 
</P>
<P><I>Hawaiian Home Lands</I> means lands that: 
</P>
<P>(1) Have the status of Hawaiian Home Lands under section 204 of the Hawaiian Homes Commission Act (42 Stat. 110); or 
</P>
<P>(2) Are acquired pursuant to that Act. 
</P>
<P><I>HUD</I> means the Department of Housing and Urban Development. 
</P>
<P><I>Native Hawaiian</I> means any individual who is: 
</P>
<P>(1) A citizen of the United States; and 
</P>
<P>(2) A descendant of the aboriginal people, who, prior to 1778, occupied and exercised sovereignty in the area that currently constitutes the State of Hawaii, as evidenced by: 
</P>
<P>(i) Genealogical records; 
</P>
<P>(ii) Verification by kupuna (elders) or kama'aina (long-term community residents); or 
</P>
<P>(iii) Birth records of the State of Hawaii. 
</P>
<P><I>Native Hawaiian family</I> means a family with at least one member who is a Native Hawaiian. 
</P>
<P><I>Office of Hawaiian Affairs</I> means the entity of that name established under the constitution of the State of Hawaii. 


</P>
</DIV8>


<DIV8 N="§ 1007.10" NODE="24:4.1.3.1.30.0.71.3" TYPE="SECTION">
<HEAD>§ 1007.10   Eligible borrowers.</HEAD>
<P>A loan guaranteed under this part may only be made to the following borrowers: 
</P>
<P>(a) A Native Hawaiian family; 
</P>
<P>(b) The Department of Hawaiian Home Lands; 
</P>
<P>(c) The Office of Hawaiian Affairs; or 
</P>
<P>(d) A private, nonprofit organization experienced in the planning and development of affordable housing for Native Hawaiians. 


</P>
</DIV8>


<DIV8 N="§ 1007.15" NODE="24:4.1.3.1.30.0.71.4" TYPE="SECTION">
<HEAD>§ 1007.15   Eligible uses.</HEAD>
<P>(a) <I>In general.</I> A loan guaranteed under this part may only be used to construct, acquire, or rehabilitate eligible housing. 
</P>
<P>(b) <I>Construction advances.</I> Advances made by the lender during construction are eligible if: 
</P>
<P>(1) The mortgagor and the mortgagee execute a building loan agreement, approved by HUD, setting forth the terms and conditions under which advances will be made; 
</P>
<P>(2) The advances are made only as provided in the building loan agreement; 
</P>
<P>(3) The principal amount of the mortgage is held by the mortgagee in an interest bearing account, trust, or escrow for the benefit of the mortgagor, pending advancement to the mortgagor or to his or her creditors as provided in the loan agreement; and 
</P>
<P>(4) The mortgage bears interest on the amount advanced to the mortgagor or to his or her creditors and on the amount held in an account or trust for the benefit of the mortgagor. 


</P>
</DIV8>


<DIV8 N="§ 1007.20" NODE="24:4.1.3.1.30.0.71.5" TYPE="SECTION">
<HEAD>§ 1007.20   Eligible housing.</HEAD>
<P>(a) A loan guaranteed under this part may only be made for one to four-family dwellings that are standard housing, in accordance with paragraph (b), of this section. The housing must be located on Hawaiian Home Lands for which a housing plan that provides for the use of loan guarantees under this part has been submitted and approved under part 1006 of this chapter. 
</P>
<P>(b) Standard housing must meet housing safety and quality standards that: 
</P>
<P>(1) Provide sufficient flexibility to permit the use of various designs and materials; and 
</P>
<P>(2) Require each dwelling unit to: 
</P>
<P>(i) Be decent, safe, sanitary, and modest in size and design; 
</P>
<P>(ii) Conform with applicable general construction standards for the region in which the housing is located; 
</P>
<P>(iii) Contain a plumbing system that: 
</P>
<P>(A) Uses a properly installed system of piping; 
</P>
<P>(B) Includes a kitchen sink and a partitional bathroom with lavatory, toilet, and bath or shower; and 
</P>
<P>(C) Uses water supply, plumbing, and sewage disposal systems that conform to any minimum standards established by the applicable county or State; 
</P>
<P>(iv) Contain an electrical system using wiring and equipment properly installed to safely supply electrical energy for adequate lighting and for operation of appliances that conforms to any appropriate county, State, or national code; 
</P>
<P>(v) Be not less than the size provided under the applicable locally adopted standards for size of dwelling units, except that HUD, upon request of the DHHL may waive the size requirements under this paragraph; and 
</P>
<P>(vi) Conform with the energy performance requirements for new construction established by HUD under section 526(a) of the National Housing Act (12 U.S.C.A. 1735f-4), unless HUD determines that the requirements are not applicable. 
</P>
<P>(c) The relevant requirements of the Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and implementing regulations at part 35, subparts A, B, and R of this title and §§ 200.805 and 200.810 of this title apply to housing eligible for a loan guaranteed under this part. 
</P>
<P>(d) Housing that meets the minimum property standards for Section 247 mortgage insurance (12 U.S.C. 1715z-12) is deemed to meet the required housing safety and quality standards.
</P>
<CITA TYPE="N">[67 FR 40776, June 13, 2002, as amended at 68 FR 66985, Nov. 28, 2003]


</CITA>
</DIV8>


<DIV8 N="§ 1007.25" NODE="24:4.1.3.1.30.0.71.6" TYPE="SECTION">
<HEAD>§ 1007.25   Eligible lenders.</HEAD>
<P>(a) <I>In general.</I> To qualify for a guarantee under this part, a loan shall be made only by a lender meeting qualifications established in this part and approved by HUD, including any lender described in paragraph (b), of this section, except that a loan otherwise insured or guaranteed by an agency of the Federal Government or made by the DHHL from amounts borrowed from the United States shall not be eligible for a guarantee under this part. 
</P>
<P>(b) <I>Approval.</I> The following lenders shall be considered to be lenders that have been approved by HUD: 
</P>
<P>(1) Any mortgagee approved by HUD for participation in the single family mortgage insurance program under title II of the National Housing Act (12 U.S.C.A. 1707 <I>et seq.</I>); 
</P>
<P>(2) Any lender that makes housing loans under chapter 37 of title 38, United States Code, that are automatically guaranteed under section 3702(d) of title 38, United States Code; 
</P>
<P>(3) Any lender approved by the Secretary of Agriculture to make guaranteed loans for single family housing under the Housing Act of 1949 (42 U.S.C.A. 1441 <I>et seq.</I>); 
</P>
<P>(4) Any other lender that is supervised, approved, regulated, or insured by any agency of the Federal Government; and 
</P>
<P>(5) Any other lender approved by HUD under this part. 


</P>
</DIV8>


<DIV8 N="§ 1007.30" NODE="24:4.1.3.1.30.0.71.7" TYPE="SECTION">
<HEAD>§ 1007.30   Security for loan.</HEAD>
<P>(a) <I>In general.</I> A loan guaranteed under section 184A of the Housing and Community Development Act of 1992 and this part may be secured by any collateral authorized under and not prohibited by Federal or State law and determined by the lender and approved by HUD to be sufficient to cover the amount of the loan. Eligible collateral may include, but is not limited to, the following: 
</P>
<P>(1) The property and/or improvements to be acquired, constructed, or rehabilitated, to the extent that an interest in such property is not subject to any restrictions against alienation applicable to Hawaiian Home Lands; 
</P>
<P>(2) A security interest in non-Hawaiian Home Lands property; 
</P>
<P>(3) Personal property; or 
</P>
<P>(4) Cash, notes, an interest in securities, royalties, annuities, or any other property that is transferable and whose present value may be determined. 
</P>
<P>(b) <I>Hawaiian Home Lands property interest as collateral.</I> If a property interest in Hawaiian Home Lands is used as collateral or security for the loan, the following additional provisions apply: 
</P>
<P>(1) <I>Approved Lease.</I> Any land lease for a unit financed under section 184A of the Housing and Community Development Act of 1992 must be on a form approved by both the DHHL and HUD. 
</P>
<P>(2) <I>Assumption or sale of leasehold.</I> The lease form must contain a provision requiring the DHHL's consent before any assumption of an existing lease, except where title to the leasehold interest is obtained by HUD through foreclosure of the guaranteed mortgage or a deed in lieu of foreclosure. A mortgagee other than HUD must obtain the DHHL's consent before obtaining title through a foreclosure sale. The DHHL's consent must be obtained on any subsequent transfer from the purchaser, including HUD, at foreclosure sale. The lease may not be terminated by the lessor without HUD's approval while the mortgage is guaranteed or held by HUD. 
</P>
<P>(3) <I>Liquidation.</I> The lender or HUD shall only pursue liquidation after offering to transfer the account to another eligible Native Hawaiian family or the DHHL. The lender or HUD shall not sell, transfer, or otherwise dispose of or alienate the property except to another eligible Native Hawaiian family or the DHHL. 
</P>
<P>(4) <I>Eviction procedures.</I> Before HUD will guarantee a loan secured by a Hawaiian Home Lands property, the DHHL must notify HUD that it has adopted and will enforce procedures for eviction of defaulted mortgagors where the guaranteed loan has been foreclosed. 
</P>
<P>(i) <I>Enforcement.</I> If HUD determines that the DHHL has failed to enforce adequately its eviction procedures, HUD will cease issuing guarantees for loans under this part except pursuant to existing commitments. 
</P>
<P>(ii) <I>Review.</I> If HUD ceases issuing guarantees for the DHHL's failure to enforce its eviction procedures, HUD shall notify the DHHL of such action and that the DHHL may, within 30 days after notification of HUD's action, file a written appeal with the Deputy Assistant Secretary, Office of Native American Programs (ONAP). Upon notification of an adverse decision by the Deputy Assistant Secretary, the DHHL has 30 additional days to file an appeal with the Assistant Secretary for Public and Indian Housing. The determination of the Assistant Secretary shall be final, but the DHHL may resubmit the issue to the Assistant Secretary for review at any subsequent time if new evidence or changed circumstances warrant reconsideration.
</P>
<CITA TYPE="N">[67 FR 40776, June 13, 2002, as amended at 68 FR 66985, Nov. 28, 2003]


</CITA>
</DIV8>


<DIV8 N="§ 1007.35" NODE="24:4.1.3.1.30.0.71.8" TYPE="SECTION">
<HEAD>§ 1007.35   Loan terms.</HEAD>
<P>To be eligible for guarantee under this part, the loan shall: 
</P>
<P>(a) Be made for a term not exceeding 30 years; 
</P>
<P>(b) Bear interest (exclusive of the guarantee fee under § 1007.55 and service charges, if any) at a rate agreed upon by the borrower and the lender and determined by HUD to be reasonable, but not to exceed the rate generally charged in the area (as determined by HUD) for home mortgage loans not guaranteed or insured by any agency or instrumentality of the Federal Government; 
</P>
<P>(c) Involve a principal obligation not exceeding: 
</P>
<P>(1) 97.75 percent of the appraised value of the property as of the date the loan is accepted for guarantee (or 98.75 percent if the value of the property is $50,000 or less); or 
</P>
<P>(2) The amount approved by HUD under this section; and 
</P>
<P>(d) Involve a payment on account of the property: 
</P>
<P>(1) In cash or its equivalent; or 
</P>
<P>(2) Through the value of any improvements, appraised in accordance with generally accepted practices and procedures. 


</P>
</DIV8>


<DIV8 N="§ 1007.40" NODE="24:4.1.3.1.30.0.71.9" TYPE="SECTION">
<HEAD>§ 1007.40   Environmental requirements.</HEAD>
<P>Before HUD issues a commitment to guarantee any loan or (if no commitment is issued) before guarantee of any loan, there must be compliance with environmental review procedures to the extent applicable under part 50 of this title. If the loan involves proposed or new construction, HUD will require compliance with procedures similar to those required by § 203.12(b)(2) of this title for FHA mortgage insurance. 


</P>
</DIV8>


<DIV8 N="§ 1007.45" NODE="24:4.1.3.1.30.0.71.10" TYPE="SECTION">
<HEAD>§ 1007.45   Nondiscrimination.</HEAD>
<P>(a) To the extent that the requirements of title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d <I>et seq.</I>) or of the Fair Housing Act (42 U.S.C.A. 3601 <I>et seq.</I>) apply to a guarantee provided under this part, nothing in the requirements concerning discrimination on the basis of race shall be construed to prevent the provision of the guarantee to an eligible entity on the basis that the entity serves Native Hawaiian families or is a Native Hawaiian family.
</P>
<P>(b) The equal access to HUD-assisted or -insured housing requirements in 24 CFR 5.105(a)(2) apply to this part. 
</P>
<CITA TYPE="N">[67 FR 40776, June 13, 2002, as amended at 81 FR 80993, Nov. 17, 2016]


</CITA>
</DIV8>


<DIV8 N="§ 1007.50" NODE="24:4.1.3.1.30.0.71.11" TYPE="SECTION">
<HEAD>§ 1007.50   Certificate of guarantee.</HEAD>
<P>(a) <I>Approval process</I>—(1) <I>In general.</I> Before HUD approves any loan for guarantee under this section, the lender shall submit the application for the loan to HUD for examination. 
</P>
<P>(2) <I>Approval.</I> If HUD approves the application submitted under paragraph (a)(1) of this section, HUD will issue a certificate as evidence of the loan guarantee approved. 
</P>
<P>(b) <I>Standard for approval.</I> HUD may approve a loan for guarantee under this part and issue a certificate under this section only if HUD determines that there is a reasonable prospect of repayment of the loan. 
</P>
<P>(c) <I>Effect</I>—(1) <I>As evidence.</I> A certificate of guarantee issued under this part by HUD shall be conclusive and incontestable evidence in the hands of the bearer of the eligibility of the loan for guarantee under this part and the amount of that guarantee. 
</P>
<P>(2) <I>Full faith and credit.</I> The full faith and credit of the United States is pledged to the payment of all amounts agreed to be paid by HUD as security for the obligations made by HUD under this section. 
</P>
<P>(d) <I>Fraud and misrepresentation.</I> This section may not be construed: 
</P>
<P>(1) To preclude HUD from establishing defenses against the original lender based on fraud or material misrepresentation; or 
</P>
<P>(2) To bar HUD from establishing regulations that are (on the date of issuance or disbursement, whichever is earlier) partial defenses to the amount payable on the guarantee. 


</P>
</DIV8>


<DIV8 N="§ 1007.55" NODE="24:4.1.3.1.30.0.71.12" TYPE="SECTION">
<HEAD>§ 1007.55   Guarantee fee.</HEAD>
<P>The lender shall pay to HUD, at the time of issuance of the guarantee, a fee for the guarantee of loans under this part, in an amount equal to 1 percent of the principal obligation of the loan. This amount is payable by the borrower at closing. 


</P>
</DIV8>


<DIV8 N="§ 1007.60" NODE="24:4.1.3.1.30.0.71.13" TYPE="SECTION">
<HEAD>§ 1007.60   Liability under guarantee.</HEAD>
<P>The liability under a guarantee provided under this section shall decrease or increase on a pro rata basis according to any decrease or increase in the amount of the unpaid obligation under the provisions of the loan agreement involved. 


</P>
</DIV8>


<DIV8 N="§ 1007.65" NODE="24:4.1.3.1.30.0.71.14" TYPE="SECTION">
<HEAD>§ 1007.65   Transfer and assumption.</HEAD>
<P>Notwithstanding any other provision of law, any loan guaranteed under this section, including the security given for the loan, may be sold or assigned by the lender to any financial institution subject to examination and supervision by an agency of the Federal Government or of any State or the District of Columbia. 


</P>
</DIV8>


<DIV8 N="§ 1007.70" NODE="24:4.1.3.1.30.0.71.15" TYPE="SECTION">
<HEAD>§ 1007.70   Disqualification of lenders and civil money penalties.</HEAD>
<P>(a) <I>In general</I>—(1) <I>Grounds for action.</I> HUD may take action under paragraph (a)(2) of this section if HUD determines that any lender or holder of a guarantee certificate: 
</P>
<P>(i) Has failed: 
</P>
<P>(A) To maintain adequate accounting records; 
</P>
<P>(B) To service adequately loans guaranteed under this section; or 
</P>
<P>(C) To exercise proper credit or underwriting judgment; or 
</P>
<P>(ii) Has engaged in practices otherwise detrimental to the interest of a borrower or the United States. 
</P>
<P>(2) <I>Actions.</I> Upon a determination by HUD that any of the grounds for action in paragraph (a)(1)(i), of this section apply to the holder of a guarantee certificate, HUD may: 
</P>
<P>(i) Refuse, either temporarily or permanently, to guarantee any further loans made by such lender or holder; 
</P>
<P>(ii) Bar such lender or holder from acquiring additional loans guaranteed under this part; and 
</P>
<P>(iii) Require that such lender or holder assume not less than 10 percent of any loss on further loans made or held by the lender or holder that are guaranteed under this part. 
</P>
<P>(b) <I>Civil money penalties for intentional violations</I>—(1) <I>In general.</I> HUD may impose a civil monetary penalty on a lender or holder of a guarantee certificate if HUD determines that the holder or lender has intentionally failed: 
</P>
<P>(i) To maintain adequate accounting records; 
</P>
<P>(ii) To adequately service loans guaranteed under this section; or 
</P>
<P>(iii) To exercise proper credit or underwriting judgment. 
</P>
<P>(2) <I>Penalties.</I> A civil monetary penalty imposed under this section shall be imposed in the manner and be in an amount provided under section 536 of the National Housing Act (12 U.S.C.A. 1735f-1) with respect to mortgagees and lenders under that Act. 
</P>
<P>(c) <I>Payment on loans made in good faith.</I> Notwithstanding paragraphs (a) and (b) of this section, if a loan was made in good faith, HUD may not refuse to pay a lender or holder of a valid guarantee on that loan, without regard to whether the lender or holder is barred under this section. 


</P>
</DIV8>


<DIV8 N="§ 1007.75" NODE="24:4.1.3.1.30.0.71.16" TYPE="SECTION">
<HEAD>§ 1007.75   Payment under guarantee.</HEAD>
<P>(a) <I>Lender options</I>—(1) <I>Notification.</I> If a borrower on a loan guaranteed under this part defaults on the loan, the holder of the guarantee certificate shall provide written notice of the default to HUD. 
</P>
<P>(2) <I>Payment.</I> Upon providing the notice required under paragraph (a)(1), of this section, the holder of the guarantee certificate shall be entitled to payment under the guarantee (subject to the provisions of this section) and may proceed to obtain payment in one of the following manners: 
</P>
<P>(i) <I>Foreclosure.</I> The holder of the certificate may initiate foreclosure proceedings (after providing written notice of that action to HUD). Upon a final order by the court authorizing foreclosure and submission to HUD of a claim for payment under the guarantee, HUD will pay to the holder of the certificate the pro rata portion of the amount guaranteed (as determined under § 1007.60) plus reasonable fees and expenses as approved by HUD. HUD's rights will be subrogated to the rights of the holder of the guarantee, who shall assign the obligation and security to HUD. 
</P>
<P>(ii) <I>No foreclosure.</I> Without seeking foreclosure (or in any case in which a foreclosure proceeding initiated under paragraph (a)(2)(i) of this section continues for a period in excess of 1 year), the holder of the guarantee may submit to HUD a request to assign the obligation and security interest to HUD in return for payment of the claim under the guarantee. HUD may accept assignment of the loan if HUD determines that the assignment is in the best interest of the United States. Upon assignment, HUD will pay to the holder of the guarantee the pro rata portion of the amount guaranteed (as determined under § 1007.60). HUD's rights will be subrogated to the rights of the holder of the guarantee, who shall assign the obligation and security to HUD. 
</P>
<P>(b) <I>Requirements.</I> Before any payment under a guarantee is made under paragraph (a) of this section, the holder of the guarantee shall exhaust all reasonable possibilities of collection. Upon payment, in whole or in part, to the holder, the note or judgment evidencing the debt shall be assigned to the United States and the holder shall have no further claim against the borrower or the United States. HUD will then take such action to collect as HUD determines to be appropriate.


</P>
</DIV8>


<DIV8 N="§ 1007.80" NODE="24:4.1.3.1.30.0.71.17" TYPE="SECTION">
<HEAD>§ 1007.80   Qualified mortgage.</HEAD>
<P>A mortgage guaranteed under section 184A of the Housing and Community Development Act of 1992 (1715z-13b), except for mortgage transactions exempted under § 203.19(c)(2), is a safe harbor qualified mortgage that meets the ability-to-repay requirements in 15 U.S.C. 1639c(a).
</P>
<CITA TYPE="N">[78 FR 75238, Dec. 11, 2013]


</CITA>
</DIV8>

</DIV5>


<DIV5 N="1008-1699" NODE="24:4.1.3.1.31" TYPE="PART">
<HEAD>PARTS 1008-1699 [RESERVED]


</HEAD>
</DIV5>

</DIV3>

</DIV2>

</DIV1>

</ECFRBRWS>
<ECFRBRWS>
<AMDDATE>Sept. 15, 2025
</AMDDATE>

<DIV1 N="5" NODE="24:5" TYPE="TITLE">

<HEAD>Title 24—Housing and Urban Development--Volume 5</HEAD>
<CFRTOC>
<SUBTI>
<HED>SUBTITLE B—<E T="04">Regulations Relating to Housing and Urban Development (Continued)</E>
</HED></SUBTI>
<PTHD>Part
</PTHD>
<CHAPTI>
<SUBJECT><E T="04">chapter xii</E>—Office of Inspector General, Department of Housing and Urban Development
</SUBJECT>
<PG>2002
</PG></CHAPTI>
<CHAPTI>
<SUBJECT><E T="04">chapter xx</E>—Office of Assistant Secretary for Housing—Federal Housing Commissioner, Department of Housing and Urban Development
</SUBJECT>
<PG>3280 
</PG></CHAPTI>
<CHAPTI>
<SUBJECT><E T="04">chapter xxv</E>—Neighborhood Reinvestment Corporation 
</SUBJECT>
<PG>4100 


</PG></CHAPTI></CFRTOC>
<DIV2 N="Subtitle B" NODE="24:5.1" TYPE="SUBTITLE">
<HEAD>Subtitle B—Regulations Relating to Housing and Urban Development (Continued)




</HEAD>

<DIV3 N="XII" NODE="24:5.1.1" TYPE="CHAPTER">

<HEAD> CHAPTER XII—OFFICE OF INSPECTOR GENERAL, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT</HEAD>

<DIV5 N="2000-2001" NODE="24:5.1.1.1.1" TYPE="PART">
<HEAD>PARTS 2000-2001 [RESERVED]


</HEAD>
</DIV5>


<DIV5 N="2002" NODE="24:5.1.1.1.2" TYPE="PART">
<HEAD>PART 2002—AVAILABILITY OF INFORMATION TO THE PUBLIC
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>5 U.S.C. 552; 5 U.S.C. App. 3; 42 U.S.C. 3535(d); Delegation of Authority, 46 FR 2389.


</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>83 FR 7391, Feb. 21, 2018, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 2002.1" NODE="24:5.1.1.1.2.0.1.1" TYPE="SECTION">
<HEAD>§ 2002.1   Scope of this part and applicability of other HUD regulations.</HEAD>
<P>(a) <I>General.</I> This part contains the regulations of the Office of Inspector General (OIG) that implement the Freedom of Information Act (FOIA) (5 U.S.C. 552). It informs the public how to request records and information from the OIG and explains the procedure to use if a request is denied. Requests made by individuals for records about themselves under the Privacy Act of 1974, 5 U.S.C. 552a, are processed in accordance with 24 CFR part 2003 as well as this part. Requests for documents made by subpoena or other demands of courts or other authorities are governed by procedures contained in part 2004 of this chapter. These rules should be read in conjunction with the text of the FOIA and the Uniform Freedom of Information Fee Schedule and Guidelines published by the Office of Management and Budget. This policy does not create any right enforceable in court.
</P>
<P>(b) <I>Applicability of HUD's FOIA regulations.</I> In addition to the regulations in this part, §§ 15.2 and 15.106 of this title apply to the production or disclosure of information in the possession of the OIG, except as limited in paragraph (c) of this section or otherwise expressly stated in this part.
</P>
<P>(c) <I>Limited applicability of §§ 15.2 and 15.106 of this title.</I> The OIG has different people and entities involved in the FOIA process than those defined in § 15.2 and these people and entities are specifically identified in this part. For purposes of this part, when the words “HUD” or “Department” are used in § 15.2 or § 15.106, the term means the OIG. The OIG will follow the fee schedule at § 15.106 except as otherwise provided in this part. Where § 15.106 references § 15.103, the OIG reference in this part is § 2002.15.


</P>
</DIV8>


<DIV8 N="§ 2002.3" NODE="24:5.1.1.1.2.0.1.2" TYPE="SECTION">
<HEAD>§ 2002.3   OIG's overall policy concerning disclosable records.</HEAD>
<P>(a) The OIG will administer its FOIA program with a presumption of openness. This policy does not create any right enforceable in court. The OIG will fully and responsibly disclose its identifiable records and information consistent with competing public interests, such as national security, personal privacy, grand jury and investigative secrecy, complainant confidentiality, and agency deliberative process, as are recognized by FOIA and other Federal statutes. The OIG will apply the FOIA exemptions if release could foreseeably harm an interest protected by a FOIA exemption. Release of records will be made as promptly as possible.
</P>
<P>(b) The OIG FOIA Public Liaison is the Deputy Counsel to the Inspector General. Requesters who have questions or comments concerning their FOIA request may contact the FOIA Public Liaison at 202-708-1613, or through the FOIA email at <I>FOIARequests@hudoig.gov.</I>


</P>
</DIV8>


<DIV8 N="§ 2002.5" NODE="24:5.1.1.1.2.0.1.3" TYPE="SECTION">
<HEAD>§ 2002.5   How to make a request for OIG records; records produced.</HEAD>
<P>(a) Any request for OIG records must be made in writing. The easiest way to make a FOIA request is electronically through our public website at <I>www.hudoig.gov.</I> A request may also be made by submitting the written request to The Office of Inspector General; Department of Housing and Urban Development; 451 Seventh Street SW, Suite 8260, Washington, DC 20410. The envelope should indicate it is a FOIA request. A request for OIG records may also be made in person during normal business hours at any office where OIG employees are permanently stationed.
</P>
<P>(b) Each request must reasonably describe the desired record, including the title or name, author, subject matter, and number or date, where possible, so that the record may be identified and located. The more specific the FOIA request for records, the more likely OIG officials will be able to locate the records requested. The request should also include the name, address and telephone number of the requester, the fee category that the requester believes applies to the request, and the form or format in which the requester would like the desired record to be reproduced, if the requester has a preference. In order to enable the OIG to comply with the time limitations set forth in § 2002.15, both the envelope containing a written request and the letter itself should clearly indicate that the subject is a Freedom of Information Act request.
</P>
<P>(c) The request must be accompanied by the fee or an offer to pay the fee as determined in § 15.106 of this title and § 2002.13.
</P>
<P>(d) The OIG may require information verifying the requester's identity, if the requester requests agency records pertaining to the requester, a minor, or an individual who is legally incompetent. Failure to provide the information when requested will result in the request being found insufficient and closed. It will not prevent the future refiling of the request.
</P>
<P>(e) Duplication of available records will be made as promptly as possible. Such duplication can take the form of paper copy, audiovisual materials, or machine-readable documentation (<I>e.g.,</I> electronic documents on CD, DVD, flash drive, etc.). Records that are published or available for sale will not be reproduced.
</P>
<P>(f) The OIG shall honor a requester's specified preference of form or format of disclosure if the record is readily reproducible with reasonable efforts in the requested form or format by the office responding to the request.
</P>
<P>(g) If the requester makes a request for expedited processing, the request must provide a detailed explanation of the basis for the request. The requester should also include a statement certifying the truth of the circumstances supporting the requester's compelling need. Requests for expedited processing that simply recite the statutory language are generally not granted.


</P>
</DIV8>


<DIV8 N="§ 2002.7" NODE="24:5.1.1.1.2.0.1.4" TYPE="SECTION">
<HEAD>§ 2002.7   OIG processing of requests, multi-tracking, and expedited processing.</HEAD>
<P>(a) <I>Tracking number.</I> FOIA requests will be logged in the order that they are received and be assigned a tracking number, except as provided in paragraph (c) of this section. A requester should use the tracking number to identify his or her request when contacting the FOIA office for any reason. An acknowledgement of receipt of the request, with the assigned tracking number, will be sent to the requester by the FOIA office.
</P>
<P>(b) <I>Multi-track processing</I>—(1) <I>Types of tracks.</I> For requests that do not qualify for expedited processing, the OIG places each request in one of two tracks, simple or complex, based on the amount of work and time involved in processing the request. In doing so, the OIG will consider whether the request involves the processing of voluminous documents or responsive documents from more than one organizational unit. Within each track, the OIG processes requests in the order in which they are received.
</P>
<P>(2) <I>Unusual circumstances.</I> Requests for audit work papers are considered complex requests and generally qualify as an unusual circumstance under 5 U.S.C. 552(a)(6)(B)(iii), taking longer than 20 working days to process. Requests for “all” specified records over a span of time, if they are accepted as reasonably describing a specific group of records, are considered complex requests and usually qualify as an unusual circumstance under 5 U.S.C. 552(a)(6)(B)(iii), taking longer than 20 working days to process. Requesters who make requests qualifying as unusual circumstances will be offered an opportunity to narrow the scope of their request or arrange for an alternative time period.
</P>
<P>(3) <I>Misdirected requests.</I> For requests that have been sent to the wrong office, the OIG will assign the request within each track using the earlier of either:
</P>
<P>(i) The date on which the request was referred to the appropriate office; or
</P>
<P>(ii) The end of the 10 working-day period in which the request should have been referred to the appropriate office.
</P>
<P>(c) <I>Expedited processing.</I> (1) The OIG may take your request or appeal out of normal order if the OIG determines that you have a compelling need for the records or in other cases as determined by the OIG. Any requester may ask for expedited processing at any time. If expedited processing is requested, the OIG will notify the requester within 10 working days whether it will grant expedited processing.
</P>
<P>(2) The OIG will grant requests for expedited processing if it finds a compelling need under 5 U.S.C. 552(a)(6)(E). Evidence of a compelling need by a person making a request for expedited processing must be made in a statement certified by such person to be true and correct to the best of such person's knowledge and belief. A compelling need exists if:
</P>
<P>(i) Your failure to obtain the requested records on an expedited basis could reasonably be expected to pose an imminent threat to the life or physical safety of an individual;
</P>
<P>(ii) You are primarily engaged in disseminating information and there is an urgency to inform the public concerning actual or alleged Federal Government activity; or
</P>
<P>(iii) Your failure to obtain the requested records on an expedited basis could result in the loss of substantial due process rights.
</P>
<P>(3) If the OIG grants the request for expedited processing, the OIG will give the request priority and will process it as soon as practicable.


</P>
</DIV8>


<DIV8 N="§ 2002.9" NODE="24:5.1.1.1.2.0.1.5" TYPE="SECTION">
<HEAD>§ 2002.9   Proactive disclosures of records.</HEAD>
<P>(a) You may review records that section 552(a)(2) of FOIA requires the OIG to make available to the public in the electronic reading rooms identified in paragraph (b) of this section. That is the preferable method; however, you may also ask to review those documents that are in hardcopy at the Headquarters offices at HUD's Library, 451 Seventh Street SW, Suite 8141, Washington, DC 20410. This request should be coordinated through Office of Legal Counsel, Office of Inspector General, Suite 8254. Local offices may coordinate local requests for hardcopy reviews.
</P>
<P>(b) As required by 5 U.S.C. 552(a)(2), the OIG makes records created on or after November 1, 1996, available through its Electronic FOIA Reading Room, located at <I>https://www.hudoig.gov/foia.</I> These records include:
</P>
<P>(1) Copies of all records, regardless of form or format that have been released to any person under this part: and
</P>
<P>(i) Because of the nature of their subject matter, the agency determines that the records have become or are likely to become the subject of subsequent requests for substantially the same records; or
</P>
<P>(ii) Have been requested three or more times.
</P>
<P>(2) Report for the preceding fiscal year submitted to the U.S. Attorney General and the Director of the Office of Government Information Services as required by 5 U.S.C. 552(e) and the raw statistical data used in each report. This report will be made available:
</P>
<P>(i) Without charge, license, or registration requirement;
</P>
<P>(ii) In an aggregated, searchable format; and
</P>
<P>(iii) In a format that may be downloaded in bulk.
</P>
<P>(c) The OIG also makes other documents, such as audits and semiannual reports, available to the public at <I>https://www.hudoig.gov/.</I>


</P>
</DIV8>


<DIV8 N="§ 2002.11" NODE="24:5.1.1.1.2.0.1.6" TYPE="SECTION">
<HEAD>§ 2002.11   Agency review of records and aggregating requests.</HEAD>
<P>(a) <I>Review of records.</I> Only requesters who are seeking documents for commercial use may be charged for the time the OIG spends reviewing records to determine whether the records are exempt from mandatory disclosure. Charges will be assessed only for the initial review; <I>i.e.,</I> the review undertaken the first time the OIG reviews a particular record or portion of a record to apply an exemption. The OIG will not charge for review at the administrative appeal level of an exemption already applied. However, records or portions of records withheld under an exemption that is subsequently determined not to apply may be reviewed again to determine the applicability of other exemptions not previously considered. The costs for such a subsequent review would be properly assessable. Review time will be assessed at the same rates established for search time in §§ 2002.13 and 15.106 of this title.
</P>
<P>(b) <I>Aggregating requests.</I> (1) The OIG may aggregate multiple requests in cases where unusual circumstances exist and the OIG determines that:
</P>
<P>(i) Certain requests from the same requester or from a group of requesters acting in concert actually constitute a single request; and
</P>
<P>(ii) The requests involve clearly related matters.
</P>
<P>(2) Aggregation of requests for this purpose will be conducted independent of aggregation of requests for fee purposes under § 15.106(h) of this title.


</P>
</DIV8>


<DIV8 N="§ 2002.13" NODE="24:5.1.1.1.2.0.1.7" TYPE="SECTION">
<HEAD>§ 2002.13   Fee schedule, advance payment, interest charges, and waiving or reducing fees.</HEAD>
<P>The OIG will charge for processing requests under the FOIA in accordance with § 15.106 of this title, except where those provisions conflict with provisions of this part; more specifically, where § 15.106 references § 15.103 of this title replace such reference with § 2002.15.


</P>
</DIV8>


<DIV8 N="§ 2002.15" NODE="24:5.1.1.1.2.0.1.8" TYPE="SECTION">
<HEAD>§ 2002.15   Time limitations.</HEAD>
<P>(a) <I>General.</I> Upon receipt of a request for records, the appropriate Assistant Inspector General or an appointed designee will generally make a determination whether to comply with a FOIA request within 20 working days. The Assistant Inspector General or designee will immediately notify the requestor in writing of the determination and the reason(s) for such determination and the right of the person to request assistance from the FOIA Public Liaison. The 20-day period will begin on the day the request is received by the OIG, but in any event not later than 10 working days after the request is received by any component designated to receive FOIA requests, and after any fees or advance payment of fees under § 2002.13 has been made.
</P>
<P>(b) <I>Scope of responsive records.</I> In determining which records are responsive to a request, an agency ordinarily will include only records in its possession as of the date that it begins its search. If any other date is used, the agency must inform the requester of that date. A record that is excluded from the requirements of the FOIA pursuant to 5 U.S.C. 552(c) is not considered responsive to a request.
</P>
<P>(c) <I>Unusual circumstances.</I> Under unusual circumstances, as specified in this paragraph (c), the OIG may extend the time period for processing a FOIA request. In such circumstances, the OIG will provide the requester with written notice setting forth the unusual circumstances for the extension and the date on which a determination is expected to be made. This date will not exceed 10 working days beyond the general time established in paragraph (a) of this section. If processing a request would require more than 10 working days beyond the general time limit established in paragraph (a) of this section, the OIG will offer the requester an opportunity to reduce or limit the scope of the request in order to allow the OIG to process it within the extra 10-day working period or arrange an alternative time period within which the FOIA request will be processed. To aid the requester, the OIG shall make available its FOIA Public Liaison, who shall assist in the resolution of any disputes between the requester and the OIG, and notify the requester of the right of the requester to seek dispute resolution services from the Office of Government Information Services. Unusual circumstances mean that there is a need:
</P>
<P>(1) To search for and collect the requested records from field facilities or other establishments that are separate from the office processing the request;
</P>
<P>(2) To search for, collect, and appropriately examine a voluminous amount of separate and distinct records that are demanded in a single request (<I>e.g.</I> audit work papers); or
</P>
<P>(3) For consultation, which shall be conducted with all practicable speed, with another agency having a substantial interest in the determination of the request or among two or more offices of the Office of Inspector General having a substantial interest in the subject matter of the request.


</P>
</DIV8>


<DIV8 N="§ 2002.17" NODE="24:5.1.1.1.2.0.1.9" TYPE="SECTION">
<HEAD>§ 2002.17   Authority to release records or duplications.</HEAD>
<P>Any Assistant Inspector General or an appointed designee is authorized to release any record (or duplication) pertaining to activities for which he or she has primary responsibility, unless disclosure is clearly inappropriate under this part. No authorized person may release records for which another officer has primary responsibility without the consent of the officer or his or her designee.


</P>
</DIV8>


<DIV8 N="§ 2002.19" NODE="24:5.1.1.1.2.0.1.10" TYPE="SECTION">
<HEAD>§ 2002.19   Authority to deny requests for records and form of denial, exemptions, and exclusions.</HEAD>
<P>(a) <I>Process for denying requests.</I> An Assistant Inspector General or the Counsel to the Inspector General, or their designees, may deny a request for a record. Any denial will:
</P>
<P>(1) Be in writing;
</P>
<P>(2) State simply the reasons for the denial;
</P>
<P>(3) Provide an estimate of the volume of records or information withheld, when appropriate, in number of pages or in some other reasonable form of estimation. This estimate does not need to be provided if the volume is otherwise indicated through deletions on records disclosed in part, or if providing an estimate would harm an interest protected by an applicable exemption;
</P>
<P>(4) Identify the person(s) responsible for the denial by name and title;
</P>
<P>(5) Provide notice of the right of the requester to appeal to the Deputy Inspector General, within a period determined by the head of the agency that is not less than 90 days after the date of such adverse determination, consistent with § 2002.23; and
</P>
<P>(6) Provide notice of the right of the requester to seek dispute resolution services from the FOIA Public Liaison of the agency or the Office of Government Information Services.
</P>
<P>(b) <I>Denying requests generally.</I> The OIG shall withhold information only if the OIG reasonably foresees that disclosure would harm an interest protected by an exemption as provided in this section, or disclosure is prohibited by law. The OIG will consider whether partial disclosure of information is possible whenever the OIG determines that a full disclosure of a requested record is not possible and will take reasonable steps necessary to segregate and release nonexempt information. Nothing in this section requires disclosure of information that is otherwise prohibited from disclosure by law or otherwise exempted from disclosure as provided in this section.
</P>
<P>(c) <I>FOIA exemptions.</I> The FOIA contains nine exemptions (5 U.S.C. 552(b)) that authorize agencies to withhold various records from disclosure, and two exclusions to the statute that may be used by the OIG. With regard to the records normally requested, the OIG generally applies the exemptions and exclusions as follows:
</P>
<P>(1) <I>Classified documents.</I> Exemption 1 (5 U.S.C. 552(b)(1)) protects classified national defense and foreign relations information. The OIG seldom relies on this exception to withhold documents. However, where applicable, the OIG will refer a request for records classified under Executive Order 13526 and the pertinent records to the originating agency for processing. The OIG may refuse to confirm or deny the existence of the requested information if the originating agency determines that the fact of the existence of the information itself is classified.
</P>
<P>(2) <I>Internal agency rules and practices.</I> Exemption 2 (5 U.S.C. 552(b)(2)) protects records relating to internal personnel rules and practices.
</P>
<P>(3) <I>Information prohibited from disclosure by another statute.</I> Exemption 3 (5 U.S.C. 552(b)(3)) protects information that is prohibited from disclosure by another Federal law. Some investigative records contain information that could reveal grand jury proceedings, which are protected from disclosure by Federal Rule of Criminal Procedure 6(e). Section 7 of the Inspector General Act of 1978 prohibits the OIG from disclosing the identity of employees who make protected disclosures. The OIG generally will not disclose competitive proposals prior to contract award, competitive proposals that are not set forth or incorporated by reference into the awarded contract, (see 41 U.S.C. 4702), or, during the selection process, any covered selection information regarding such selection, either directly or indirectly (see 42 U.S.C. 3537a).
</P>
<P>(4) <I>Commercial or financial information.</I> Exemption 4 (5 U.S.C. 552(b)(4)) protects trade secrets and commercial or financial information obtained from a person that is privileged and confidential. The OIG frequently obtains this information through its audits. The OIG will process the release of this category of information pursuant to Executive Order 12600 and give notice to the affected business and an opportunity for the business to present evidence of its confidentiality claim. If the OIG is sued by a requester under the FOIA for nondisclosure of confidential business information, the OIG expects the affected business to cooperate to the fullest extent possible in defending such a decision.
</P>
<P>(5) <I>Certain interagency or intra-agency communications.</I> Exemption 5 (5 U.S.C. 552(b)(5)) protects interagency or intra-agency communications that are protected by legal privileges, such as the attorney-client privilege, attorney work-product privilege, or communications reflecting the agency's deliberative process. These communications may include communications with the Department of Justice and with HUD. The deliberative process privilege shall not apply to records created 25 years or more before the date on which the records were requested.
</P>
<P>(6) <I>Personal privacy.</I> Exemption 6 (5 U.S.C. 552(b)(6)) protects information involving matters of personal privacy. This information may be found in personnel, medical, and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy. Names, addresses, telephone numbers, and email addresses of persons identified in audits or complaints generally will not be disclosed. The OIG has learned through experience that some of its employees (<I>i.e.</I> Hotline employees) will be harassed if their identities are known, and the OIG will protect the identities of these employees. As a law enforcement agency, the OIG finds individuals generally have a heightened privacy interest for not having their identities associated with the OIG.
</P>
<P>(7) <I>Law enforcement records.</I> Exemption 7 (5 U.S.C. 552(b)(7)) protects certain records or information compiled for law enforcement purposes. This exemption protects records where the production could reasonably be expected to interfere with enforcement proceedings. The protection of this exemption also encompasses, but is not limited to, information in law enforcement files that could reasonably be expected to constitute an unwarranted invasion of personal privacy; the names of confidential informants; and techniques and procedures for law enforcement investigations, or guidelines for law enforcement investigations if such disclosure could reasonably be expected to risk circumvention of the law. It is the policy of the OIG in responding to all FOIA requests for investigative records pertaining to specifically named individuals to refuse to confirm or deny the existence of such records. Lacking the subject individuals consent, proof of death, an official acknowledgement of an investigation, or an overriding public interest, even to acknowledge the existence of such records could reasonably be expected to constitute an unwarranted invasion of personal privacy.
</P>
<P>(8) <I>Supervision of financial institutions.</I> Exemption 8 (5 U.S.C. 552(b)(8)) protects information relating to the supervision of financial institutions. It is unlikely that the OIG will have these documents.
</P>
<P>(9) <I>Wells.</I> Exemption 9 (5 U.S.C. 552(b)(9)) protects geological information on wells. It is unlikely that the OIG will have these documents.
</P>
<P>(d) <I>FOIA exclusion.</I> Some law enforcement records are excluded from the FOIA. 5 U.S.C. 552(c)(1) permits a law enforcement agency to exclude a document from the FOIA if there is reason to believe that:
</P>
<P>(1) The subject of the investigation or proceeding is not aware of its pendency; and
</P>
<P>(2) Disclosure of the existence of the records could reasonably be expected to interfere with enforcement proceedings, in which case the agency may, during only such time as that circumstance continues, treat the records as not subject to the requirements of the FOIA. Section 552(c)(2) of FOIA allows the exclusion of informant records, unless the existence of the informant has been officially confirmed.


</P>
</DIV8>


<DIV8 N="§ 2002.21" NODE="24:5.1.1.1.2.0.1.11" TYPE="SECTION">
<HEAD>§ 2002.21   Effect of denial of request.</HEAD>
<P>Denial of a request shall terminate the authority of the Assistant Inspector General or his or her designee to release or disclose the requested record, which thereafter may not be made publicly available except with express authorization of the Inspector General, Deputy Inspector General, or Counsel to the Inspector General.


</P>
</DIV8>


<DIV8 N="§ 2002.23" NODE="24:5.1.1.1.2.0.1.12" TYPE="SECTION">
<HEAD>§ 2002.23   Administrative review.</HEAD>
<P>(a) Review is available only from a written determination denying a request for a record and only if a written request for review is filed within 90 days after issuance of the written determination. If mailed, the requester's letter of appeal must be postmarked within 90 calendar days of the date of the letter of determination. If the letter of appeal is transmitted electronically or by a means other than the United States Postal Service, it must be received in the appropriate office by the close of business on the 90th calendar day after the date of the letter of determination. Before seeking court review of an adverse determination, a requester must exhaust their administrative remedies under this section.
</P>
<P>(b) A review may be initiated by sending a request for review to the Office of Inspector General; Department of Housing and Urban Development; 451 Seventh Street SW, Room 8256, Washington, DC 20410 or to <I>FOIArequests@hudoig.gov.</I> In order to enable the OIG to comply with the time limitations set forth in § 2002.17, both the envelope containing the request for review and the letter itself should clearly indicate that the subject is a Freedom of Information Act request for review. Each request for review must contain the following:
</P>
<P>(1) A copy of the original request;
</P>
<P>(2) A copy of the written denial; and
</P>
<P>(3) A statement of the circumstances, reasons, or arguments advanced in support of disclosure of the original records requested.
</P>
<P>(c) Review will be made promptly by the Deputy Inspector General, or designee, on the basis of the written record. The OIG will decide an appeal of a denial of a request to expedite processing of a FOIA request within 10 working days of receipt of the appeal. The OIG will make a determination on all other appeals within 20 working days of receipt, unless unusual circumstances require the OIG to extend the time for an additional 10 working days.
</P>
<P>(d) The time of receipt for processing of a request is the time it is received by the Inspector General. If a request is misdirected by the requester and is received by one other than the Inspector General, the OIG official who receives the request will forward it promptly to the Inspector General and will advise the requester about the delayed time of receipt.
</P>
<P>(e) The decision after review will be in writing, will constitute final agency action on the request, and, if the denial of the request for records is in full or in part upheld, the Inspector General will notify the person making the request of his or her right to seek judicial review under 5 U.S.C. 552(a)(4).
</P>
<P>(f) Adverse decisions will include the name and contact information of dispute resolution services that offer mediation services to resolve disputes between FOIA requesters and Federal agencies as a nonexclusive alternative to litigation.




</P>
</DIV8>

</DIV5>


<DIV5 N="2003" NODE="24:5.1.1.1.3" TYPE="PART">
<HEAD>PART 2003—IMPLEMENTATION OF THE PRIVACY ACT OF 1974
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>5 U.S.C. 552a; 5 U.S.C. App. 3 (Inspector General Act of 1978); 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>57 FR 62142, Dec. 29, 1992, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 2003.1" NODE="24:5.1.1.1.3.0.1.1" TYPE="SECTION">
<HEAD>§ 2003.1   Scope of the part and applicability of other HUD regulations.</HEAD>
<P>(a) <I>General.</I> This part contains the regulations of the Office of Inspector General (“OIG”) implementing the Privacy Act of 1974 (5 U.S.C. 552a). The regulations inform the public that the Inspector General has the responsibility for carrying out the requirements of the Privacy Act and for issuing internal OIG orders and directives in connection with the Privacy Act. These regulations apply to all records that are contained in systems of records maintained by the OIG and that are retrieved by an individual's name or personal identifier. 
</P>
<P>(b) <I>Applicability of part 16.</I> In addition to these regulations, the provisions of 24 CFR part 16 apply to the OIG, except that appendix A to part 16 is not applicable. The provisions of this part shall govern in the event of any conflict with the provisions of part 16. 


</P>
</DIV8>


<DIV8 N="§ 2003.2" NODE="24:5.1.1.1.3.0.1.2" TYPE="SECTION">
<HEAD>§ 2003.2   Definitions.</HEAD>
<P>For purposes of this part: 
</P>
<P><I>Department</I> means the OIG, except that in the context of §§ 16.1(d); 16.11(b) (1), (3), and (4); and 16.12(e), when those sections are incorporated by reference, the term means the Department of Housing and Urban Development. 
</P>
<P><I>Privacy Act Officer</I> means an Assistant Inspector General. 
</P>
<P><I>Privacy Appeals Officer</I> means the Inspector General. 
</P>
<CITA TYPE="N">[59 FR 14098, Mar. 25, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 2003.3" NODE="24:5.1.1.1.3.0.1.3" TYPE="SECTION">
<HEAD>§ 2003.3   Requests for records.</HEAD>
<P>(a) A request from an individual for an OIG record about that individual which is not contained in an OIG system of records will be considered to be a Freedom of Information Act (FOIA) request and will be processed under 24 CFR part 2002. 
</P>
<P>(b) A request from an individual for an OIG record about that individual which is contained in an OIG system of records will be processed under both the Privacy Act and the FOIA in order to ensure maximum access under both statutes. This practice will be undertaken regardless of how an individual characterizes the request. 
</P>
<P>(1) The procedures for inquiries and requirements for access to records under the Privacy Act are more specifically set forth in 24 CFR part 16, except that appendix A to part 16 does not apply to the OIG. 
</P>
<P>(2) An individual will not be required to state a reason or otherwise justify his or her request for access to a record. 


</P>
</DIV8>


<DIV8 N="§ 2003.4" NODE="24:5.1.1.1.3.0.1.4" TYPE="SECTION">
<HEAD>§ 2003.4   Officials to receive requests and inquiries.</HEAD>
<P>Officials to receive requests and inquiries for access to, or correction of, records in OIG systems of records are the Privacy Act Officers described in § 2003.2 of this part. Written requests may be addressed to the appropriate Privacy Act Officer at: Office of Inspector General, Department of Housing and Urban Development, Washington, DC 20410.
</P>
<CITA TYPE="N">[57 FR 62142, Dec. 29, 1992, as amended at 59 FR 14098, Mar. 25, 1994]


</CITA>
</DIV8>


<DIV8 N="§ 2003.5" NODE="24:5.1.1.1.3.0.1.5" TYPE="SECTION">
<HEAD>§ 2003.5   Initial denial of access to records.</HEAD>
<P>(a) Access by an individual to a record about that individual which is contained in an OIG system of records will be denied only upon a determination by the Privacy Act Officer that: 
</P>
<P>(1) The record was compiled in reasonable anticipation of a civil action or proceeding; or the record is subject to a Privacy Act exemption under § 2003.8 or § 2003.9 of this part; and 
</P>
<P>(2) The record is also subject to a FOIA exemption under § 2002.21(b) of this chapter. 
</P>
<P>(b) If a request is partially denied, any portions of the responsive record that can be reasonably segregated will be provided to the individual after deletion of those portions determined to be exempt. 
</P>
<P>(c) The provisions of 24 CFR 16.6(b) and 16.7, concerning notification of an initial denial of access and administrative review of the initial denial, apply to the OIG, except that: 
</P>
<P>(1) The final determination of the Inspector General, as Privacy Appeals Officer for the OIG, will be in writing and will constitute final action of the Department on a request for access to a record in an OIG system of records; and 
</P>
<P>(2) If the denial of the request is in whole or in part upheld, the final determination of the Inspector General will include notice of the right to judicial review. 


</P>
</DIV8>


<DIV8 N="§ 2003.6" NODE="24:5.1.1.1.3.0.1.6" TYPE="SECTION">
<HEAD>§ 2003.6   Disclosure of a record to a person other than the individual to whom it pertains.</HEAD>
<P>(a) The OIG may disclose an individual's record to a person other than the individual to whom the record pertains in the following instances: 
</P>
<P>(1) Upon written request by the individual, including authorization under 24 CFR 16.5(e); 
</P>
<P>(2) With the prior written consent of the individual; 
</P>
<P>(3) To a parent or legal guardian of the individual under 5 U.S.C. 552a(h); or 
</P>
<P>(4) When permitted by the provisions of 5 U.S.C. 552a(b) (1) through (12). 
</P>
<P>(b) [Reserved]


</P>
</DIV8>


<DIV8 N="§ 2003.7" NODE="24:5.1.1.1.3.0.1.7" TYPE="SECTION">
<HEAD>§ 2003.7   Authority to make law enforcement-related requests for records maintained by other agencies.</HEAD>
<P>(a) The Inspector General is authorized by written delegation from the Secretary of HUD and under the Inspector General Act to make written requests under 5 U.S.C. 552a(b)(7) for transfer of records maintained by other agencies which are necessary to carry out an authorized law enforcement activity under the Inspector General Act. 
</P>
<P>(b) The Inspector General delegates the authority under paragraph (a) of this section to the following OIG officials: 
</P>
<P>(1) Deputy Inspector General; 
</P>
<P>(2) Assistant Inspector General for Audit; 
</P>
<P>(3) Assistant Inspector General for Investigation; and 
</P>
<P>(4) Assistant Inspector General for Management and Policy. 
</P>
<P>(c) The officials listed in paragraph (b) of this section may not redelegate the authority described in paragraph (a) of this section. 


</P>
</DIV8>


<DIV8 N="§ 2003.8" NODE="24:5.1.1.1.3.0.1.8" TYPE="SECTION">
<HEAD>§ 2003.8   General exemptions.</HEAD>
<P>(a) The systems of records entitled “Investigative Files of the Office of Inspector General,” “Hotline Complaint Files of the Office of Inspector General,” “Name Indices System of the Office of Inspector General,” and “AutoInvestigation of the Office of Inspector General” consist, in part, of information compiled by the OIG for the purpose of criminal law enforcement investigations. Therefore, to the extent that information in these systems falls within the scope of exemption (j)(2) of the Privacy Act, 5 U.S.C. 552a(j)(2), these systems of records are exempt from the requirements of the following subsections of the Privacy Act, for the reasons stated in paragraphs (a)(1) through (6) of this section.
</P>
<P>(1) From subsection (c)(3), because release of an accounting of disclosures to an individual who is the subject of an investigation could reveal the nature and scope of the investigation and could result in the altering or destruction of evidence, improper influencing of witnesses, and other evasive actions that could impede or compromise the investigation. 
</P>
<P>(2) From subsection (d)(1), because release of investigative records to an individual who is the subject of an investigation could interfere with pending or prospective law enforcement proceedings, constitute an unwarranted invasion of the personal privacy of third parties, reveal the identity of confidential sources, or reveal sensitive investigative techniques and procedures. 
</P>
<P>(3) From subsection (d)(2), because amendment or correction of investigative records could interfere with pending or prospective law enforcement proceedings, or could impose an impossible administrative and investigative burden by requiring the OIG to continuously retrograde its investigations attempting to resolve questions of accuracy, relevance, timeliness and completeness. 
</P>
<P>(4) From subsection (e)(1), because it is often impossible to determine relevance or necessity of information in the early stages of an investigation. The value of such information is a question of judgment and timing; what appears relevant and necessary when collected may ultimately be evaluated and viewed as irrelevant and unnecessary to an investigation. In addition, the OIG may obtain information concerning the violation of laws other than those within the scope of its jurisdiction. In the interest of effective law enforcement, the OIG should retain this information because it may aid in establishing patterns of unlawful activity and provide leads for other law enforcement agencies. Further, in obtaining evidence during an investigation, information may be provided to the OIG which relates to matters incidental to the main purpose of the investigation but which may be pertinent to the investigative jurisdiction of another agency. Such information cannot readily be identified.
</P>
<P>(5) From subsection (e)(2), because in a law enforcement investigation it is usually counterproductive to collect information to the greatest extent practicable directly from the subject thereof. It is not always feasible to rely upon the subject of an investigation as a source for information which may implicate him or her in illegal activities. In addition, collecting information directly from the subject could seriously compromise an investigation by prematurely revealing its nature and scope, or could provide the subject with an opportunity to conceal criminal activities, or intimidate potential sources, in order to avoid apprehension.
</P>
<P>(6) From subsection (e)(3), because providing such notice to the subject of an investigation, or to other individual sources, could seriously compromise the investigation by prematurely revealing its nature and scope, or could inhibit cooperation, permit the subject to evade apprehension, or cause interference with undercover activities.
</P>
<P>(b) [Reserved]
</P>
<CITA TYPE="N">[57 FR 62142, Dec. 29, 1992, as amended at 65 FR 50904, Aug. 21, 2000]


</CITA>
</DIV8>


<DIV8 N="§ 2003.9" NODE="24:5.1.1.1.3.0.1.9" TYPE="SECTION">
<HEAD>§ 2003.9   Specific exemptions.</HEAD>
<P>(a) The systems of records entitled “Investigative Files of the Office of Inspector General,” “Hotline Complaint Files of the Office of Inspector General,” “Name Indices System of the Office of Inspector General,” and “AutoInvestigation of the Office of Inspector General” consist, in part, of investigatory material compiled by the OIG for law enforcement purposes. Therefore, to the extent that information in these systems falls within the coverage of exemption (k)(2) of the Privacy Act, 5 U.S.C. 552a(k)(2), these systems of records are exempt from the requirements of the following subsections of the Privacy Act, for the reasons stated in paragraphs (a) (1) through (4) of this section.
</P>
<P>(1) From subsection (c)(3), because release of an accounting of disclosures to an individual who is the subject of an investigation could reveal the nature and scope of the investigation and could result in the altering or destruction of evidence, improper influencing of witnesses, and other evasive actions that could impede or compromise the investigation.
</P>
<P>(2) From subsection (d)(1), because release of investigative records to an individual who is the subject of an investigation could interfere with pending or prospective law enforcement proceedings, constitute an unwarranted invasion of the personal privacy of third parties, reveal the identity of confidential sources, or reveal sensitive investigative techniques and procedures.
</P>
<P>(3) From subsection (d)(2), because amendment or correction of investigative records could interfere with pending or prospective law enforcement proceedings, or could impose an impossible administrative and investigative burden by requiring the OIG to continuously retrograde its investigations attempting to resolve questions of accuracy, relevance, timeliness and completeness.
</P>
<P>(4) From subsection (e)(1), because it is often impossible to determine relevance or necessity of information in the early stages of an investigation. The value of such information is a question of judgment and timing; what appears relevant and necessary when collected may ultimately be evaluated and viewed as irrelevant and unnecessary to an investigation. In addition, the OIG may obtain information concerning the violation of laws other than those within the scope of its jurisdiction. In the interest of effective law enforcement, the OIG should retain this information because it may aid in establishing patterns of unlawful activity and provide leads for other law enforcement agencies. Further, in obtaining evidence during an investigation, information may be provided to the OIG which relates to matters incidental to the main purpose of the investigation but which may be pertinent to the investigative jurisdiction of another agency. Such information cannot readily be identified.
</P>
<P>(b) The systems of records entitled “Investigative Files of the Office of Inspector General,” “Hotline Complaint Files of the Office of Inspector General,” “Name Indices System of the Office of Inspector General,” and “Autoinvestigation of the Office of Inspector General” consist in part of investigatory material compiled by the OIG for the purpose of determining suitability, eligibility, or qualifications for Federal civilian employment or Federal contracts, the release of which would reveal the identity of a source who furnished information to the Government under an express promise that the identity of the source would be held in confidence. Therefore, to the extent that information in these systems fall within the coverage of exemption (k)(5) of the Privacy Act, 5 U.S.C. 552a(k)(5), these systems of records are exempt from the requirements of subsection (d)(1), because release would reveal the identity of a source who furnished information to the Government under an express promise of confidentiality. Revealing the identity of a confidential source could impede future cooperation by sources, and could result in harassment or harm to such sources.
</P>
<CITA TYPE="N">[57 FR 62142, Dec. 29, 1992, as amended at 65 FR 50904, Aug. 21, 2000]


</CITA>
</DIV8>

</DIV5>


<DIV5 N="2004" NODE="24:5.1.1.1.4" TYPE="PART">
<HEAD>PART 2004—SUBPOENAS AND PRODUCTION IN RESPONSE TO SUBPOENAS OR DEMANDS OF COURTS OR OTHER AUTHORITIES
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>Inspector General Act of 1978, as amended (5 U.S.C. app.) and 42 U.S.C. 3535(d).
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>68 FR 3366, Jan. 23, 2003, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:5.1.1.1.4.1" TYPE="SUBPART">
<HEAD>Subpart A—General Requirements</HEAD>


<DIV8 N="§ 2004.1" NODE="24:5.1.1.1.4.1.1.1" TYPE="SECTION">
<HEAD>§ 2004.1   Scope and purpose.</HEAD>
<P>(a) This part sets forth the policy for service of a subpoena issued by the Office of Inspector General (OIG), and policies and procedures that you must follow when you submit a demand or request to an employee of the OIG to produce official records and information, or provide testimony relating to official information, in connection with a legal proceeding. You must comply with these requirements when you request the release or disclosure of official records and information. 
</P>
<P>(b) The OIG intends these provisions to: 
</P>
<P>(1) Promote economy and efficiency in its programs and operations; 
</P>
<P>(2) Minimize the possibility of involving OIG in controversial issues not related to OIG's functions; 
</P>
<P>(3) Maintain OIG's impartiality among private litigants where OIG is not a named party; and 
</P>
<P>(4) Protect sensitive, confidential information and the deliberative processes of OIG. 
</P>
<P>(c) In providing for these requirements, OIG does not waive the sovereign immunity of the United States. 
</P>
<P>(d) This part provides guidance for the internal operations of OIG. This part does not create any right or benefit, substantive or procedural, that a party may rely upon in any legal proceeding against the United States. 


</P>
</DIV8>


<DIV8 N="§ 2004.2" NODE="24:5.1.1.1.4.1.1.2" TYPE="SECTION">
<HEAD>§ 2004.2   Applicability.</HEAD>
<P>This subpart applies to demands and requests to employees for factual or expert testimony relating to official information, or for production of official records or information, in legal proceedings in which HUD or OIG is not a named party. However, this subpart does not apply to: 
</P>
<P>(a) Demands upon or requests for an OIG employee to testify as to facts or events that are unrelated to his or her official duties or that are unrelated to the functions of OIG; 
</P>
<P>(b) Requests for the release of records under the Freedom of Information Act, 5 U.S.C. 552, or the Privacy Act, 5 U.S.C. 552a; and 
</P>
<P>(c) Congressional demands and Congressional requests for testimony or records. 


</P>
</DIV8>


<DIV8 N="§ 2004.3" NODE="24:5.1.1.1.4.1.1.3" TYPE="SECTION">
<HEAD>§ 2004.3   Definitions.</HEAD>
<P><I>Counsel</I> means the Counsel to the Inspector General. 
</P>
<P><I>Demand</I> means a subpoena, or an order or other command of a court or other competent authority, for the production, disclosure, or release of records or for the appearance and testimony of an OIG employee that is issued in a legal proceeding. 
</P>
<P><I>Legal proceeding</I> means any matter before a court of law, administrative board or tribunal, commission, administrative law judge, hearing officer, or other body that conducts a legal or administrative proceeding. Legal proceeding includes all phases of litigation. 
</P>
<P><I>OIG</I> means the Office of Inspector General, U.S. Department of Housing and Urban Development. 
</P>
<P><I>OIG employee</I> or <I>employee means:</I> 
</P>
<P>(1) Any current or former officer or employee of OIG; 
</P>
<P>(2) Any other individual hired through contractual agreement by or on behalf of OIG or who has performed or is performing services under such an agreement for OIG; and 
</P>
<P>(3) Any individual who served or is serving in any consulting or advisory capacity to OIG, whether formal or informal. 
</P>
<P><I>Records or official records or information means:</I> 
</P>
<P>(1) All documents and materials that are OIG agency records under the Freedom of Information Act, 5 U.S.C. 552; 
</P>
<P>(2) All other documents and materials contained in OIG files; and 
</P>
<P>(3) All other information or materials acquired by an OIG employee in the performance of his or her official duties or because of his or her official status. 
</P>
<P><I>Request</I> means any informal request, by whatever method, for the production of records and information or for testimony that has not been ordered by a court or other competent authority. 
</P>
<P><I>Testimony</I> means any written or oral statements, including depositions, answers to interrogatories, affidavits, declarations, recorded interviews, and statements made by an individual in connection with a legal proceeding. 


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:5.1.1.1.4.2" TYPE="SUBPART">
<HEAD>Subpart B—Office of Inspector General Subpoenas</HEAD>


<DIV8 N="§ 2004.10" NODE="24:5.1.1.1.4.2.1.1" TYPE="SECTION">
<HEAD>§ 2004.10   Service of an Office of Inspector General subpoena.</HEAD>
<P>Service of a subpoena issued by OIG may be accomplished as follows: 
</P>
<P>(a) <I>Personal service.</I> Service may be made by delivering the subpoena to the person to whom it is addressed. If the subpoena is addressed to a corporation or other business entity, it may be served upon an employee of the corporation or entity. Service made to an employee, agent, or legal representative of the addressee shall constitute service upon the addressee. 
</P>
<P>(b) <I>Service by mail.</I> Service may also be made by mailing the subpoena, certified mail—return receipt requested, to the addressee at his or her last known business or personal address. 


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:5.1.1.1.4.3" TYPE="SUBPART">
<HEAD>Subpart C—Requests for Testimony and Production of Documents</HEAD>


<DIV8 N="§ 2004.20" NODE="24:5.1.1.1.4.3.1.1" TYPE="SECTION">
<HEAD>§ 2004.20   General prohibition.</HEAD>
<P>No employee may produce official records and information or provide any testimony relating to official information in response to a demand or request without the prior, written approval of the Inspector General or the Counsel. 


</P>
</DIV8>


<DIV8 N="§ 2004.21" NODE="24:5.1.1.1.4.3.1.2" TYPE="SECTION">
<HEAD>§ 2004.21   Factors OIG will consider.</HEAD>
<P>The Counsel or Inspector General, in their discretion, may grant an employee permission to testify on matters relating to official information, or produce official records and information, in response to a demand or request. Among the relevant factors that the Inspector General or the Counsel may consider in making this decision are whether: 
</P>
<P>(a) The purposes of this part are met; 
</P>
<P>(b) OIG has an interest in the decision that may be rendered in the legal proceeding; 
</P>
<P>(c) Allowing such testimony or production of records would assist or hinder OIG in performing its statutory duties or use OIG resources where responding to the request will interfere with the ability of OIG employees to do their work; 
</P>
<P>(d) The records or testimony can be obtained from other sources; 
</P>
<P>(e) The demand or request is unduly burdensome or otherwise inappropriate under the applicable rules of discovery or the rules of procedure governing the case or matter in which the demand or request arose; 
</P>
<P>(f) Disclosure would violate or be inconsistent with a statute, Executive Order, or regulation; 
</P>
<P>(g) Disclosure would reveal confidential or privileged information, trade secrets, or similar, confidential commercial, or financial information; 
</P>
<P>(h) Disclosure would impede or interfere with an ongoing law enforcement investigation or proceedings, or compromise constitutional rights; 
</P>
<P>(i) Disclosure would result in OIG appearing to favor one litigant over another; 
</P>
<P>(j) Disclosure relates to documents that were produced by another agency; 
</P>
<P>(k) The demand or request is in conformance with all other applicable rules; 
</P>
<P>(l) The demand or request is sufficiently specific to be answered; and 
</P>
<P>(m) For any other good cause. 


</P>
</DIV8>


<DIV8 N="§ 2004.22" NODE="24:5.1.1.1.4.3.1.3" TYPE="SECTION">
<HEAD>§ 2004.22   Filing requirements for demands or requests for documents or testimony.</HEAD>
<P>You must comply with the following requirements whenever you issue demands or requests to an OIG employee for official records and information or testimony. 
</P>
<P>(a) Your request must be in writing and must be submitted to the Counsel. If you serve a subpoena on OIG or on an OIG employee before submitting a written request and receiving a final determination from the Counsel, OIG will oppose the subpoena on grounds that your request was not submitted in accordance with this subpart. 
</P>
<P>(b) Your written request must contain the following information: 
</P>
<P>(1) The caption of the legal proceeding, docket number, and name and address of the court or other authority involved; 
</P>
<P>(2) A copy of the complaint or equivalent document setting forth the assertions in the case and any other pleading or document sufficient to show relevance; 
</P>
<P>(3) A list of categories of records sought, a detailed description of how the information sought is relevant to the issues in the legal proceeding, and a specific description of the substance of the testimony or records sought; 
</P>
<P>(4) A statement as to how the need for the information outweighs the need to maintain any confidentiality of the information and outweighs the burden on OIG to produce the records or provide testimony; 
</P>
<P>(5) A statement indicating that the information sought is not available from another source, from other persons or entities, or from the testimony of someone other than an OIG employee, such as a retained expert; 
</P>
<P>(6) If testimony is requested, the intended use of the testimony, a general summary of the desired testimony, and a showing that no document could be provided and used in lieu of testimony; 
</P>
<P>(7) A description of all prior decisions, orders, or pending motions in the case that bear upon the relevance of the requested records or testimony; 
</P>
<P>(8) The name, address, and telephone number of counsel to each party in the case; and 
</P>
<P>(9) An estimate of the amount of time that the requester and other parties will require with each OIG employee for time spent by the employee to prepare for testimony, in travel, and for attendance in the legal proceeding. 
</P>
<P>(c) The OIG reserves the right to require additional information to complete your request where appropriate. 
</P>
<P>(d) Your request should be submitted at least 30 days before the date that records or testimony are required. Requests submitted less than 30 days before records or testimony are required must be accompanied by a written explanation stating the reasons for the late request and the reasons for expedited processing. 
</P>
<P>(e) Failure to cooperate in good faith to enable the Counsel to make an informed decision may serve as the basis for a determination not to comply with your request. 


</P>
</DIV8>


<DIV8 N="§ 2004.23" NODE="24:5.1.1.1.4.3.1.4" TYPE="SECTION">
<HEAD>§ 2004.23   Service of subpoenas or requests.</HEAD>
<P>Subpoenas or requests for official records or information or testimony must be served on the Counsel to the Inspector General, Office of Inspector General, U.S. Department of Housing and Urban Development, 451 Seventh Street, SW, Room 8260, Washington, DC 20410-4500. 


</P>
</DIV8>


<DIV8 N="§ 2004.24" NODE="24:5.1.1.1.4.3.1.5" TYPE="SECTION">
<HEAD>§ 2004.24   Processing demands or requests.</HEAD>
<P>(a) After service of a demand or request to testify, the Counsel will review the demand or request and, in accordance with the provisions of this subpart, determine whether, or under what conditions, to authorize the employee to testify on matters relating to official information and/or to produce official records and information. 
</P>
<P>(b) The OIG will process requests in the order in which they are received. Absent exigent or unusual circumstances, OIG will respond within 30 days from the date that we receive all information necessary to the evaluation of the demand or request. The time for response will depend upon the scope of the request. 
</P>
<P>(c) The Counsel may grant a waiver of any procedure described in this subpart where a waiver is considered necessary to promote a significant interest of OIG, HUD, and the United States, or for other good cause. 


</P>
</DIV8>


<DIV8 N="§ 2004.25" NODE="24:5.1.1.1.4.3.1.6" TYPE="SECTION">
<HEAD>§ 2004.25   Final determination.</HEAD>
<P>The Counsel makes the final determination on demands and requests to employees for production of official records and information or testimony. All final determinations are within the sole discretion of the Counsel. The Counsel will notify the requester of the final determination, the reasons for the grant or denial of the demand or request, and any conditions that the Counsel may impose on the release of records or information, or on the testimony of an OIG employee. 


</P>
</DIV8>


<DIV8 N="§ 2004.26" NODE="24:5.1.1.1.4.3.1.7" TYPE="SECTION">
<HEAD>§ 2004.26   Restrictions that apply to testimony.</HEAD>
<P>(a) The Counsel may impose conditions or restrictions on the testimony of OIG employees including, for example, limiting the areas of testimony or requiring the requester and other parties to the legal proceeding to agree that the transcript of the testimony will be kept under seal or will only be used or made available in the particular legal proceeding for which testimony was requested. The Counsel may also require a copy of the transcript of testimony at the requester's expense. 
</P>
<P>(b) The OIG may offer the employee's written declaration in lieu of testimony. 
</P>
<P>(c) If authorized to testify pursuant to this part, an employee may testify as to facts within his or her personal knowledge, but, unless specifically authorized to do so by the Counsel, the employee shall not: 
</P>
<P>(1) Disclose confidential or privileged information; 
</P>
<P>(2) Testify as to facts when the Counsel determines such testimony would not be in the best interest of OIG, HUD and the United States; or 
</P>
<P>(3) Testify as an expert or opinion witness with regard to any matter arising out of the employee's official duties or the functions of OIG. This provision does not apply to requests from the United States for expert or opinion testimony. 


</P>
</DIV8>


<DIV8 N="§ 2004.27" NODE="24:5.1.1.1.4.3.1.8" TYPE="SECTION">
<HEAD>§ 2004.27   Restrictions that apply to released records.</HEAD>
<P>(a) The Counsel may impose conditions or restrictions on the release of official records and information, including the requirement that parties to the proceeding obtain a protective order or execute a confidentiality agreement to limit access and any further disclosure. The terms of the protective order or of a confidentiality agreement must be acceptable to the Counsel. In cases where protective orders or confidentiality agreements have already been executed, OIG may condition the release of official records and information on an amendment to the existing protective order or confidentiality agreement. 
</P>
<P>(b) If the Counsel so determines, original OIG records may be presented for examination in response to a demand or request, but they are not to be presented as evidence or otherwise used in a manner by which they could lose their identity as official OIG records, nor are they to be marked or altered. In lieu of the original records, certified copies will be presented for evidentiary purposes. 


</P>
</DIV8>


<DIV8 N="§ 2004.28" NODE="24:5.1.1.1.4.3.1.9" TYPE="SECTION">
<HEAD>§ 2004.28   Procedure in the event of an adverse ruling.</HEAD>
<P>(a) <I>Opportunity to review adverse ruling.</I> Any person aggrieved by a decision made by the Counsel under this part denying a request for documents or testimony, or restricting the release of documents or testimony, may seek review of that decision pursuant to paragraph (c) of this section.
</P>
<P>(b) <I>Procedure in the event of conflicting court order.</I> If the Inspector General or Counsel declines to approve a demand for records or testimony and a court or other authority rules that the demand must be complied with irrespective of the instructions from the OIG not to produce the material or disclose the information sought, the employee or former employee upon whom the demand has been made shall respectfully decline to comply with the demand, citing <I>United States ex rel. Touhy</I> v. <I>Ragen,</I> 340 U.S. 462 (1951).
</P>
<P>(c) <I>Procedure</I>—(1) <I>Notice of intention to petition for review.</I> A party or any person aggrieved by the decision made pursuant to this part denying or restricting the release of documents or testimony may seek review of the decision by filing a written Notice of Intention to Petition for Review (Notice) within five business days of the date of this decision. The Notice shall identify the petitioner, the adverse decision, and any dates (such as deposition, hearing, or court dates) that are significant to the party. The Notice shall be served in accordance with § 2004.23.
</P>
<P>(2) <I>Petition for review.</I> Within five business days of the filing of a Notice, the person or party seeking review shall file a Petition for Review (Petition) containing a clear and concise statement of the issues to be reviewed and the reasons why the review is appropriate. The petition shall include exceptions to any findings of fact or conclusions of law made, together with supporting reasons and arguments for such exceptions based on appropriate citations to such record or law as may exist. These reasons may be stated in summary form. Decisions on the Petition may be made by either the Inspector General or the Counsel and shall become the final decisions of the OIG. The Petition will be served in accordance with § 2004.23.
</P>
<P>(d) <I>Prerequisite to judicial review.</I> Pursuant to Section 704 of the Administrative Procedure Act, 5 U.S.C. 704, a petition to the agency for review of a decision made under the authority of this part is a prerequisite to the seeking of judicial review of the final decision.
</P>
<CITA TYPE="N">[70 FR 36791, June 24, 2005]


</CITA>
</DIV8>


<DIV8 N="§ 2004.29" NODE="24:5.1.1.1.4.3.1.10" TYPE="SECTION">
<HEAD>§ 2004.29   Fees.</HEAD>
<P>(a) <I>Generally.</I> The Counsel may condition the production of records or appearance for testimony upon advance payment of a reasonable estimate of the costs to OIG. 
</P>
<P>(b) <I>Fees for records.</I> Fees for producing records will include fees for searching, reviewing, and duplicating records, costs of attorney time spent in reviewing the demand or request, and expenses generated by materials and equipment used to search for, produce, and copy the responsive information. Costs for employee time will be calculated on the basis of the hourly pay of the employee (including all pay, allowance, and benefits). Fees for duplication will be the same as those charged by OIG in its Freedom of Information Act Regulations at 24 CFR part 2002. 
</P>
<P>(c) <I>Witness fees.</I> Fees for attendance by a witness will include fees, expenses, and allowances prescribed by the court's rules. If no such fees are prescribed, witness fees will be determined based upon the rule of the federal district court closest to the location where the witness will appear. Such fees will include cost of time spent by the witness to prepare for testimony, in travel, and for attendance in the legal proceeding. 
</P>
<P>(d) <I>Payment of fees.</I> You must pay any applicable witness fees for current OIG employees and any records certification fees by submitting to the Counsel a check or money order for the appropriate amount made payable to the Treasury of the United States. In the case of testimony by former OIG employees, you must pay applicable fees directly to the former employee in accordance with applicable statutes. 
</P>
<P>(e) <I>Waiver or reduction of fees.</I> The Counsel, in his or her sole discretion, may, upon a showing of reasonable cause, waive or reduce any fees in connection with the testimony or production of records. Additionally, fees will not be assessed if the total charge would be $10.00 or less.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="2005-2099" NODE="24:5.1.1.1.5" TYPE="PART">
<HEAD>PARTS 2005-2099 [RESERVED]




</HEAD>
</DIV5>

</DIV3>


<DIV3 N="XX" NODE="24:5.1.2" TYPE="CHAPTER">

<HEAD> CHAPTER XX—OFFICE OF ASSISTANT SECRETARY FOR HOUSING—FEDERAL HOUSING COMMISSIONER, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT</HEAD>

<DIV5 N="3200-3279" NODE="24:5.1.2.1.1" TYPE="PART">
<HEAD>PARTS 3200-3279 [RESERVED]


</HEAD>
</DIV5>


<DIV5 N="3280" NODE="24:5.1.2.1.2" TYPE="PART">
<HEAD>PART 3280—MANUFACTURED HOME CONSTRUCTION AND SAFETY STANDARDS 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>15 U.S.C. 2697, 42 U.S.C. 3535(d), 5403, and 5424.
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>40 FR 58752, Dec. 18, 1975, unless otherwise noted. Redesignated at 44 FR 20679, Apr. 6, 1979.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:5.1.2.1.2.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 3280.1" NODE="24:5.1.2.1.2.1.1.1" TYPE="SECTION">
<HEAD>§ 3280.1   Scope.</HEAD>
<P>This standard covers all equipment and installations in the design, construction, transportation, fire safety, plumbing, heat-producing and electrical systems of manufactured homes which are designed to be used as dwelling units. This standard seeks to the maximum extent possible to establish performance requirements. In certain instances, however, the use of specific requirements is necessary. 
</P>
<CITA TYPE="N">[58 FR 55002, Oct. 25, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 3280.2" NODE="24:5.1.2.1.2.1.1.2" TYPE="SECTION">
<HEAD>§ 3280.2   Definitions.</HEAD>
<P>Definitions in this subpart are those common to all subparts of the standard and are in addition to the definitions provided in individual parts. The definitions are as follows: 
</P>
<P><I>Approved,</I> when used in connection with any material, appliance or construction, means complying with the requirements of the Department of Housing and Urban Development. 
</P>
<P><I>Attached accessory building or structure</I> means any awning, cabana, deck, ramada, storage cabinet, carport, windbreak, garage or porch for which the attachment of such is designed by the home manufacturer to be structurally supported by the manufactured home.
</P>
<P><I>Bay window</I>—a window assembly whose maximum horizontal projection is not more than two feet from the plane of an exterior wall and is elevated above the floor level of the home. 
</P>
<P><I>Certification label</I> means the approved form of certification by the manufacturer that, under § 3280.11, is permanently affixed to each transportable section of each manufactured home manufactured for sale in the United States.
</P>
<P><I>Dwelling</I> means any structure that contains one to a maximum of four dwelling units, designed to be permanently occupied for residential living purposes.
</P>
<P><I>Dwelling unit</I> means a single unit that provides complete independent living facilities for one or more persons, where the occupancy is primarily permanent in nature, including permanent provisions for separate living, sleeping, cooking, eating, and sanitation. 
</P>
<P><I>Equipment</I> includes materials, appliances, devices, fixtures, fittings or accessories both in the construction of, and in the fire safety, plumbing, heat-producing and electrical systems of manufactured homes. 
</P>
<P><I>Federal manufactured home construction and safety standard</I> means a reasonable standard for the construction, design, and performance of a manufactured home which meets the needs of the public including the need for quality, durability, and safety. 
</P>
<P><I>Installations</I> means all arrangements and methods of construction, as well as fire safety, plumbing, heat-producing and electrical systems used in manufactured homes. 
</P>
<P><I>Labeled</I> means a label, symbol or other identifying mark of a nationally recognized testing laboratory, inspection agency, or other organization concerned with product evaluation that maintains periodic inspection of production of labeled equipment or materials, and by whose labeling is indicated compliance with nationally recognized standards or tests to determine suitable usage in a specified manner. 
</P>
<P><I>Length of a manufactured home</I> means its largest overall length in the traveling mode, including cabinets and other projections which contain interior space. Length does not include bay windows, roof projections, overhangs, or eaves under which there is no interior space, nor does it include drawbars, couplings or hitches.
</P>
<P><I>Listed or certified</I> means included in a list published by a nationally recognized testing laboratory, inspection agency, or other organization concerned with product evaluation that maintains periodic inspection of production of listed equipment or materials, and whose listing states either that the equipment or material meets nationally recognized standards or has been tested and found suitable for use in a specified manner. 
</P>
<P><I>Manufacturer</I> means any person engaged in manufacturing or assembling manufactured homes, including any person engaged in importing manufactured homes for resale. 
</P>
<P><I>Manufactured home</I> means a structure, transportable in one or more sections, which in the traveling mode is 8 body feet or more in width or 40 body feet or more in length or which when erected on-site is 320 or more square feet, and which is built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities, and includes the plumbing, heating, air-conditioning, and electrical systems contained in the structure. This term includes all structures that meet the above requirements except the size requirements and with respect to which the manufacturer voluntarily files a certification pursuant to § 3282.13 of this chapter and complies with the construction and safety standards set forth in this part 3280. The term does not include any self-propelled recreational vehicle. Calculations used to determine the number of square feet in a structure will include the total of square feet for each transportable section comprising the completed structure and will be based on the structure's exterior dimensions measured at the largest horizontal projections when erected on site. These dimensions will include all expandable rooms, cabinets, and other projections containing interior space, but do not include bay windows. Nothing in this definition should be interpreted to mean that a manufactured home necessarily meets the requirements of HUD's Minimum Property Standards (HUD Handbook 4900.1) or that it is automatically eligible for financing under 12 U.S.C. 1709(b).
</P>
<P><I>Manufactured home construction</I> means all activities relating to the assembly and manufacture of a manufactured home including, but not limited to, those relating to durability, quality and safety. 
</P>
<P><I>Manufactured home safety</I> means the performance of a manufactured home in such a manner that the public is protected against any unreasonable risk of the occurrence of accidents due to the design or construction of such manufactured home, or any unreasonable risk of death or injury to the user or to the public if such accidents do occur. 
</P>
<P><I>Multipurpose fire sprinkler system</I> means a system that supplies domestic water to both plumbing fixtures and fire sprinklers.
</P>
<P><I>Registered Engineer or Architect</I> means a person licensed to practice engineering or architecture in a state and subject to all laws and limitations imposed by the state's Board of Engineering and Architecture Examiners and who is engaged in the professional practice of rendering service or creative work requiring education, training and experience in engineering sciences and the application of special knowledge of the mathematical, physical and engineering sciences in such professional or creative work as consultation, investigation, evaluation, planning or design and supervision of construction for the purpose of securing compliance with specifications and design for any such work. 
</P>
<P><I>Secretary</I> means the Secretary of Housing and Urban Development, or an official of the Department delegated the authority of the Secretary with respect to title VI of Pub. L. 93-383. 
</P>
<P><I>Stand-alone fire sprinkler system</I> means a system that is separate and independent from the water distribution system.
</P>
<P><I>State</I> includes each of the several States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands, the Canal Zone, and American Samoa. 
</P>
<P><I>Water resistive barrier</I> means a material behind the exterior wall covering that is intended to prevent liquid water that has penetrated behind the exterior covering from intruding further into the exterior wall assembly.
</P>
<P><I>Width of a manufactured home</I> means its largest overall width in the traveling mode, including cabinets and other projections which contain interior space. Width does not include bay windows, roof projections, overhangs, or eaves under which there is no interior space.
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975, as amended at 42 FR 960, Jan. 4, 1977. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 47 FR 28092, June 29, 1982; 58 FR 55002, Oct. 25, 1993; 61 FR 5216, Feb. 9, 1996; 72 FR 27228, May 14, 2007; 86 FR 2516, Jan. 12, 2021; 89 FR 75737, Sept. 16, 2024] 


</CITA>
</DIV8>


<DIV8 N="§ 3280.3" NODE="24:5.1.2.1.2.1.1.3" TYPE="SECTION">
<HEAD>§ 3280.3   Manufactured home procedural and enforcement regulations, and consumer manual requirements.</HEAD>
<P>(a) A manufacturer must comply with the requirements of this part, part 3282 of this chapter, and 42 U.S.C. 5416.
</P>
<P>(b) Consumer manuals must be in accordance with § 3282.207 of this chapter.
</P>
<CITA TYPE="N">[86 FR 2516, Jan. 12, 2021]




</CITA>
</DIV8>


<DIV8 N="§ 3280.4" NODE="24:5.1.2.1.2.1.1.4" TYPE="SECTION">
<HEAD>§ 3280.4   Incorporation by reference.</HEAD>
<P>(a)(1) Certain material is incorporated by reference in this part with the approval of the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. To enforce any edition other than that specified in this section, the U.S. Department of Housing and Urban Development (Department) must publish a document in the <E T="04">Federal Register</E> and the material must be available to the public. All approved incorporation by reference (IBR) material is available for inspection at the Department and at the National Archives and Records Administration (NARA). Contact the Department at: Office of Manufactured Housing Programs, 451 Seventh Street SW, Washington, DC 20410; email <I>mhs@hud.gov;</I> (202) 402-2698. For information on the availability of this material at NARA, visit <I>www.archives.gov/federal-register/cfr/ibr-locations</I> or email <I>fr.inspection@nara.gov.</I>
</P>
<P>(2) The IBR material may be obtained from the sources in this paragraph (a)(2) or from one or more private resellers listed in this paragraph (a)(2). For material that is no longer commercially available, contact the Office of Manufactured Housing Programs (see paragraph (a)(1) of this section).
</P>
<P>(i) Accuris Standards Store, phone: (800) 332-6077; website: <I>https://store.accuristech.com.</I>
</P>
<P>(ii) American National Standards Institute (see paragraph (h) of this section).
</P>
<P>(iii) EverySpec LLC, 710 Lake Louise Ct., Gibsonia, PA 10544; website: <I>http://everyspec.com.</I> (Government and military standards only.)
</P>
<P>(iv) GlobalSpec, 257 Fuller Road, Suite NFE 1100, Albany, NY 12203-3621; phone: (800) 261-2052; website: <I>https://standards.globalspec.com.</I>
</P>
<P>(v) Nimonik Document Center, 401 Roland Way, Suite 224, Oakland, CA, 94624; phone (650)591-7600; email: <I>info@document-center.com;</I> website: <I>www.document-center.com.</I>
</P>
<P>(b) Air Conditioning, Heating &amp; Refrigeration Institute (AHRI), 2311 Wilson Blvd., Suite 400, Arlington, VA 22201; telephone: 703-524-8800; fax: 703-528-3816; website: <I>www.ahrinet.org.</I>
</P>
<P>(1) ANSI/AHRI Standard 210/240-2008 with Addenda 1 and 2, 2008 Standard for Performance Rating of Unitary Air-Conditioning and Air-Source Heat Pump Equipment, ANSI-approved December 2012; IBR approved for §§ 3280.511(b); 3280.703(d); 3280.714(a).
</P>
<P>(2) [Reserved]
</P>
<P>(c) Aluminum Association (AA), 1525 Wilson Blvd., Suite 600, Arlington, VA 22209; telephone: 703-358-2960; fax: 703-358-3921; website: <I>www.aluminum.org.</I>
</P>
<P>(1) Aluminum Design Manual, Specifications and Guidelines for Aluminum Structures, Part 1-A, Sixth Edition, October 1994; IBR approved for § 3280.304(b).
</P>
<P>(2) Aluminum Design Manual, Specifications and Guidelines for Aluminum Structures, Part 1-B, First Edition, October 1994; IBR approved for § 3280.304(b).
</P>
<P>(d) American Forest and Paper Association (AFPA), 1101 K Street NW, Suite 700, Washington, DC 20005; telephone: 202-463-2700; website: <I>www.afandpa.org.</I>
</P>
<P>(1) AFPA, Wood Structural Design Data, 1986 Edition with 1992 Revisions; IBR approved for § 3280.304(b).
</P>
<P>(2) [Reserved]
</P>
<P>(e) American Gas Association (AGA), 400 North Capitol Street NW, Washington, DC 20001: telephone: 202-824-7000; website: <I>www.aga.org.</I>
</P>
<P>(1) AGA No. 3-87, Requirements for Gas Connectors for Connection of Fixed Appliances for Outdoor Installation, Park Trailers, and Manufactured (Mobile) Homes to the Gas Supply; IBR approved for § 3280.703(d).
</P>
<P>(2) [Reserved]
</P>
<P>(f) American Institute of Steel Construction (AISC), 130 East Randolph Street, Suite 2000, Chicago, IL 60601-6219; telephone: 312-670-2400; fax: 312-626-2402; website: <I>www.aisc.org.</I>
</P>
<P>(1) ANSI/AISC 360-10, Specification for Structural Steel Buildings, Second Printing: February 2012 (AISC 360-10); IBR approved for §§ 3280.304(b); 3280.305(j).
</P>
<P>(2) [Reserved]
</P>
<P>(g) American Iron and Steel Institute (AISI), 25 Massachusetts Avenue NW, Suite 800, Washington, DC 20001; telephone: 202-452-7100; website: <I>www.steel.org.</I>
</P>
<P>(1) AISI S100-12, North American Specification for the Design of Cold-Formed Steel Structural Members, 2012 Edition, 2nd Printing—June 2014, including AISI S100-12-E3 errata dated December 10, 2014; IBR approved for §§ 3280.304(b); 3280.305(j).
</P>
<P>(2) [Reserved]
</P>
<P>(h) American National Standards Institute (ANSI), 25 West 43rd Street, 4th Floor, New York, NY 10018; telephone: 212-642-4900; fax: 212-398-0023; website: <I>www.ansi.org.</I>
</P>
<P>(1) ANSI A112.14.1-1975, Backflow Valves; IBR approved for § 3280.604(c).
</P>
<P>(2) ANSI A112.19.5-1979, Trim for Water Closet, Bowls, Tanks, and Urinals; IBR approved for § 3280.604(c).
</P>
<P>(3) ANSI/AITC A190.1-1992, For wood products—Structural Glued Laminated Timber; IBR approved for § 3280.304(b).
</P>
<P>(4) ANSI A208.2-2002, Medium Density Fiberboard (MDF) For Interior Applications, approved May 13, 2002; IBR approved for § 3280.304(b).
</P>
<P>(5) ANSI B16.18-1984, Cast Copper Alloy Solder-Joint Pressure Fittings; IBR approved for § 3280.604(c).
</P>
<P>(6) ANSI C72.1-1972, section 4.3.1, Household Automatic Electric Storage Type Water Heaters; IBR approved for § 3280.707(d).
</P>
<P>(7) ANSI Z21.22-1999, Relief Valves for Hot Water Supply Systems; IBR approved for §§ 3280.604(c); 3280.703(d).
</P>
<P>(8) ANSI Z34.1-1993, Third-Party Certification Programs for Products, Processes, and Services; IBR approved for §§ 3280.403(e); 3280.405(e).
</P>
<P>(9) ANSI Z97.1-2009<E T="7333">e</E>, American National Standard for safety glazing materials used in buildings—safety performance specifications and methods of test, approved November 2009; IBR approved for §§ 3280.113(d); 3280.304(b); 3280.403(d); 3280.604(c); 3280.607(b); 3280.703(d).
</P>
<P>(10) ANSI Z124.1-1987, Plastic Bathtub Units with Addendum Z124.1a-1990 and Z124.1b-1991; IBR approved for § 3280.604(c).
</P>
<P>(11) ANSI Z124.2-1987, Plastic Shower Receptors and Shower Stalls with Addendum Z124.2a-1990; IBR approved for § 3280.604(c).
</P>
<P>(12) ANSI Z124.3-1986, Plastic Lavatories with Addendum Z124.3a-1990; IBR approved for § 3280.604(c).
</P>
<P>(13) ANSI Z124.4-1986, Plastic Water Closets, Bowls, and Tanks with Addenda Z124.4a-1990; IBR approved for § 3280.604(c).
</P>
<P>(14) ANSI Z124.5-1997, Plastic Toilet (Water Closets) Seats; IBR approved for § 3280.604(c).
</P>
<P>(15) ANSI Z124.7-1997, Prefabricated Plastic Spa Shells; IBR approved for § 3280.604(c).
</P>
<P>(16) ANSI Z-124.9-1994, Plastic Urinal Fixtures; IBR approved for § 3280.604(c).
</P>
<P>(i) American Society of Civil Engineers (ASCE), 1801 Alexander Bell Drive, Reston, VA 20191; telephone: 800-548-2723; website: <I>www.asce.org.</I>
</P>
<P>(1) ANSI/ASCE 7-88, Minimum Design Loads for Buildings and Other Structures, IBR approved for §§ 3280.5(f); 3280.304(b); 3280.305(c).
</P>
<P>(2) SEI/ASCE 8-02, Specification for the Design of Cold-Formed Stainless Steel Structural Members, 2002; IBR approved for §§ 3280.304(b); 3280.305(j).
</P>
<P>(3) ASCE 19-96, Structural Applications of Steel Cables for Buildings; IBR approved for § 3280.304(b).
</P>
<P>(j) American Society of Heating, Refrigeration and Air Conditioning Engineers (ASHRAE), 1791 Tullie Circle NE, Atlanta, GA 30329; telephone: 404-636-8400; fax: 404-321-5478; website: <I>www.ashrae.org/home/.</I>
</P>
<P>(1) 1997 ASHRAE Handbook of Fundamentals, chapters 22 through 27, (except for the following parts of this standard that are not incorporated by reference: 23.1 Steel Frame Construction; 23.2 Masonry Construction; 23.3 Foundations and Floor Systems; 23.15 Pipes; 23.17 Tanks, Vessels, and Equipment; 23.18 Refrigerated Rooms and Buildings; 24.18 Mechanical and Industrial Systems; 25.19 Commercial Building Envelope Leakage; 27.9 Calculation of Heat Loss from Crawl Spaces), Inch-Pound Edition, 1997; IBR approved for §§ 3280.508(a) and (e); 3280.511(a).
</P>
<P>(2) ANSI/ASHRAE Standard 62.2-2013, Ventilation and Acceptable Indoor Air Quality in Low-Rise Residential Buildings, approved January 30, 2013 (ANSI/ASHRAE 62.2); IBR approved for §§ 3280.103(d) and (e); 3280.703(d).
</P>
<P>(k) American Society of Mechanical Engineers (ASME), Two Park Avenue, New York, NY 10016-5990; telephone: 800-843-2763; website: <I>www.asme.org/.</I>
</P>
<P>(1) ASME A112.1.2-1991, Air Gaps in Plumbing Systems; IBR approved for § 3280.604(c).
</P>
<P>(2) ANSI/ASME A112.4.1-1993, Water Heater Relief Valve Drain Tubes; IBR approved for § 3280.604(c).
</P>
<P>(3) ANSI/ASME A112.4.3-1999, Plastic Fittings for Connecting Water Closets to the Sanitary Drainage System; IBR approved for § 3280.604(c).
</P>
<P>(4) ASME/ANSI A112.18.1M-1989, Plumbing Fixture Fittings; IBR approved for § 3280.604(c).
</P>
<P>(5) ASME A112.18.3M-1996, Performance Requirements for Backflow Protection Devices and Systems in Plumbing Fixture Fittings; IBR approved for § 3280.604(c).
</P>
<P>(6) ASME A112.18.6-1999, Flexible Water Connectors; IBR approved for § 3280.604(c).
</P>
<P>(7) ASME A112.18.7-1999, Deck Mounted Bath/Shower Transfer Valves with Integral Backflow Protection; IBR approved for § 3280.604(c).
</P>
<P>(8) ANSI/ASME A112.19.1M-1987, Enameled Cast Iron Plumbing Fixtures; IBR approved for § 3280.604(c).
</P>
<P>(9) ANSI/ASME A112.19.2(M)-1990, Vitreous China Plumbing Fixtures; IBR approved for § 3280.604(c).
</P>
<P>(10) ANSI/ASME A112.19.3M-1987, Stainless Steel Plumbing Fixtures (Designed for Residential Use); IBR approved for § 3280.604(c).
</P>
<P>(11) ANSI/ASME A112.19.4(M)-1984, Porcelain Enameled Formed Steel Plumbing Fixtures; IBR approved for § 3280.604(c).
</P>
<P>(12) ASME A112.19.6-1995, Hydraulic Performance Requirements for Water Closets and Urinals; IBR approved for § 3280.604(c).
</P>
<P>(13) ASME/ANSI A112.19.7M-1987, Whirlpool Bathtub Appliances; IBR approved for § 3280.604(c).
</P>
<P>(14) ASME/ANSI A112.19.8M-1989, Suction Fittings for Use in Swimming Pools, Wading Pools, Spas, Hot Tubs, and Whirlpool Bathtub Appliances; IBR approved for § 3280.604(c).
</P>
<P>(15) ASME A112.19.9M-1991, Non-Vitreous Ceramic Plumbing Fixtures; IBR approved for § 3280.604(c).
</P>
<P>(16) ASME A112.19.10-1994, Dual Flush Devices for Water Closets; IBR approved for § 3280.604(c).
</P>
<P>(17) ANSI/ASME A112.21.3M-1985, Hydrants for Utility and Maintenance Use; IBR approved for § 3280.604(c).
</P>
<P>(18) ANSI/ASME B1.20.1-2013, Pipe Threads, General Purpose (Inch), reaffirmed 2018; IBR approved for §§ 3280.604(c); 3280.703(b); 3280.705(e); 3280.706(d).
</P>
<P>(19) ANSI/ASME B16.3-1992, Malleable Iron Threaded Fittings; IBR approved for § 3280.604(c).
</P>
<P>(20) ANSI/ASME B16.4-1992, Gray Iron Threaded Fittings; IBR approved for § 3280.604(c).
</P>
<P>(21) ANSI/ASME B16.15-1985, Cast Bronze Threaded Fittings, Classes 125 and 250; IBR approved for § 3280.604(c).
</P>
<P>(22) ASME/ANSI B16.22-1989, Wrought-Copper and Copper Alloy Solder-Joint Pressure Fitting; IBR approved for § 3280.604(c).
</P>
<P>(23) ASME B16.23-1992, Cast Copper Alloy Solder-Joint Drainage Fittings-DWV; IBR approved for § 3280.604(c).
</P>
<P>(24) ASME/ANSI B16.26-1988, Cast Copper Alloy Fittings for Flared Copper Tubes; IBR approved for § 3280.604(c).
</P>
<P>(25) ASME/ANSI B16.29-1986, Wrought Copper and Wrought Copper Alloy Solder-Joint Drainage Fittings-DWV; IBR approved for § 3280.604(c).
</P>
<P>(26) ANSI/ASME B36.10-2004, Welded and Seamless Wrought Steel Pipe, ANSI-approved June 23, 2004; IBR approved for §§ 3280.604(c); 3280.703(b), 3280.705(b); 3280.706(b).
</P>
<P>(l) American Society of Sanitary Engineering (ASSE), 901 Canterbury, Suite A, Westlake, OH 44145; telephone: 440-835-3040; fax: 440-835-3488; website: <I>www.asse-plumbing.org.</I>
</P>
<P>(1) ASSE 1001, Performance Requirements for Pipe Applied Atmospheric Type Vacuum Breakers, ANSI-approved 1990; IBR approved for § 3280.604(c).
</P>
<P>(2) ASSE 1002 (ANSI/ASSE-1979), Performance Requirements for Water Closet Flush Tank Fill Valves (Ballcocks), Revision 5, 1986; IBR approved for § 3280.604(c).
</P>
<P>(3) ASSE 1006, Plumbing Requirements for Residential Use (Household) Dishwashers, ASSE/ANSI-1986; IBR approved for § 3280.604(c).
</P>
<P>(4) ASSE 1007-1986, Performance Requirements for Home Laundry Equipment; IBR approved for § 3280.604(c).
</P>
<P>(5) ASSE 1008-1986, Performance Requirements for Household Food Waste Disposer Units; IBR approved for § 3280.604(c).
</P>
<P>(6) ASSE 1011-1981, Performance Requirements for Hose Connection Vacuum Breakers, ANSI-approved 1982; IBR approved for § 3280.604(c).
</P>
<P>(7) ASSE 1014-1989, Performance Requirements for Hand-held Showers, ANSI-approved 1990; IBR approved for § 3280.604(c).
</P>
<P>(8) ASSE 1016-2005, Performance Requirements for Automatic Compensating Values for Individual Shower and Tub/Shower Combinations, approved January 2005; IBR approved for §§ 3280.604(c); 3280.607(b).
</P>
<P>(9) ASSE 1017-1986, Performance Requirements for Temperature Activated Mixing Valves for Primary Domestic Use, 1986; IBR approved for § 3280.604(c).
</P>
<P>(10) ANSI/ASSE 1019-1978, Performance Requirements for Wall Hydrants, Frost Proof Automatic Draining, Anti-Backflow Types, 1978; IBR approved for § 3280.604(c).
</P>
<P>(11) ASSE 1023, Performance Requirements for Hot Water Dispensers, Household Storage Type Electrical, ANSI/ASSE-1979; IBR approved for § 3280.604(c).
</P>
<P>(12) ASSE 1025, Performance Requirements for Diverters for Plumbing Faucets with Hose Spray, Anti-Siphon Type, Residential Applications, ANSI/ASSE-1978; IBR approved for § 3280.604(c).
</P>
<P>(13) ASSE 1037-1990, Performance Requirements for Pressurized Flushing Devices (Flushometers) for Plumbing Fixtures, ANSI-approved 1990; IBR approved for § 3280.604(c).
</P>
<P>(14) ASSE 1051, Performance Requirements for Air Admittance Valves for Plumbing Drainage Systems—Fixture and Branch Devices Revised 1996, ANSI-approved 1998; IBR approved for § 3280.604(c).
</P>
<P>(15) ASSE 1070-2004, Performance Requirements for Water Temperature Limiting Devices, 2004; IBR approved for §§ 3280.604(c); 3280.607(b).
</P>
<P>(m) APA—The Engineered Wood Association (APA) (formerly the American Plywood Association), 7011 South 19th Street, Tacoma, WA 98411; telephone: 253-565-6600; fax: 253-565-7265; website: <I>www.apawood.org.</I>
</P>
<P>(1) APA D510C, Panel Design Specification, copyright 2012; IBR approved for § 3280.304(b).
</P>
<P>(2) APA E30P-1996, APA Design/Construction Guide, Residential and Commercial Structures; IBR approved for § 3280.304(b).
</P>
<P>(3) APA E30V, Engineered Wood Construction Guide, copyright 2011; IBR approved for § 3280.304(b).
</P>
<P>(4) APA H815G, Plywood Design Specification Supplement 5-12, Design and Fabrication of All-Plywood Beams, December 2013; IBR approved for § 3280.304(b).
</P>
<P>(5) APA S811P, Plywood Design Specification Supplement 1-12, Design and Fabrication of Plywood Curved Panels, December 2013; IBR approved for § 3280.304(b).
</P>
<P>(6) APA S812S, Plywood Design Specification Supplement 2-12, Design and Fabrication of Glued Plywood-Lumber Beams, December 2013; IBR approved for § 3280.304(b).
</P>
<P>(7) APA U813M, Plywood Design Specification Supplement 3-12, Design and Fabrication of Plywood Stressed-Skin Panels, December 2013; IBR approved for § 3280.304(b).
</P>
<P>(8) APA U814J, Plywood Design Specification Supplement 4-12, Design and Fabrication of Plywood Sandwiched Panels, December 2013; IBR approved for § 3280.304(b).
</P>
<P>(9) APA Y510, Plywood Design, January 1997; IBR approved for § 3280.304(b).
</P>
<P>(n) ASTM, International (ASTM), 100 Barr Harbor Drive, West Conshohocken, PA 19428-2959; telephone:877-909-2786 (USA &amp; Canada); fax: 610-832-9555; website: <I>www.astm.org.</I>
</P>
<P>(1) ASTM A53/A53M-12, Standard Specification for Pipe, Steel, Black and Hot-Dipped, Zinc-Coated, Welded and Seamless, approved March 1, 2012; IBR approved for §§ 3280.604(c); 3280.703(b).
</P>
<P>(2) ASTM A74-92, Standard Specification for Cast Iron Soil Pipe and Fittings, 1992; IBR approved for § 3280.604(c).
</P>
<P>(3) ASTM A539-99, Standard Specification for Electric-Resistance-Welded Coiled Steel Tubing for Gas and Fuel Oil Lines, 1999; IBR approved for §§ 3280.703(b); 3280.705(b); 3280.706(b).
</P>
<P>(4) ASTM B42-10, Standard Specification for Seamless Copper Pipe, Standard Sizes, approved October 1, 2010; IBR approved for §§ 3280.604(c); 3280.703(c).
</P>
<P>(5) ASTM B43-91, Standard Specification for Seamless Red Brass Pipe, Standard Sizes, 1991; IBR approved for §§ 3280.604(c); 3280.705(b).
</P>
<P>(6) ASTM B88-14, Standard Specification for Seamless Copper Water Tube, approved September 1, 2014; IBR approved for §§ 3280.604(c); 3280.703(c); 3280.705(b); 3280.706(b).
</P>
<P>(7) ASTM B251-10, Standard Specification for General Requirements for Wrought Seamless Copper and Copper-Alloy Tube, approved October 1, 2010; IBR approved for §§ 3280.604(c); 3280.703(c).
</P>
<P>(8) ASTM B280-13, Standard Specification for Seamless Copper Tube for Air Conditioning and Refrigeration Field Service, approved April 1, 2013; IBR approved for §§ 3280.703(c); 3280.705(b); 3280.706(b).
</P>
<P>(9) ASTM B306-92, Standard Specification for Copper Drainage Tube (DWV), 1992; IBR approved for § 3280.604(c).
</P>
<P>(10) ASTM C564-97, Standard Specification for Rubber Gaskets for Case Iron Soil Pipe and Fittings, approved December 10, 1997; IBR approved for §§ 3280.604(c); 3280.611(d).
</P>
<P>(11) ASTM C920-02, Standard Specification for Elastomeric Joint Sealants, approved January 10, 2002; IBR approved for § 3280.611(d).
</P>
<P>(12) ASTM C1396/C1396M-14a, Standard Specification for Gypsum Board, approved October 1, 2014; IBR approved for § 3280.304(b).
</P>
<P>(13) ASTM D781-68 (Reapproved 1973), Standard Test Methods for Puncture and Stiffness of Paperboard, and Corrugated and Solid Fiberboard, 1973; IBR approved for §§ 3280.304(b); 3280.305(g).
</P>
<P>(14) ASTM D2235-88, Standard Specification for Solvent Cement for Acrylonitrile-Butadiene-Styrene (ABS) Plastic Pipe and Fittings, 1988; IBR approved for § 3280.604(c).
</P>
<P>(15) ASTM D2564-91a, Standard Specification for Solvent Cements for Poly (Vinyl Chloride) (PVC) Plastic Piping Systems, 1991; IBR approved for § 3280.604(c).
</P>
<P>(16) ASTM D2661-91, Standard Specification for Acrylonitrile-Butadiene-Styrene (ABS) Schedule 40 Plastic Drain, Waste, and Vent Pipe and Fittings, 1991; IBR approved for § 3280.604(c).
</P>
<P>(17) ASTM D2665-91b, Standard Specification for Poly (Vinyl Chloride) (PVC) Plastic Drain, Waste, and Vent Pipe and Fittings, 1991; IBR approved for § 3280.604(c).
</P>
<P>(18) ASTM D2846-92, Standard Specification for Chlorinated Poly (Vinyl Chloride) (CPVC) Plastic Hot- and Cold-Water Distribution Systems, 1992; IBR approved for § 3280.604(c).
</P>
<P>(19) ASTM D3309-92a, Standard Specification for Polybutylene (PB) Plastic Hot- and Cold-Water Distribution Systems, 1992; IBR approved for § 3280.604(c).
</P>
<P>(20) ASTM D3311-92, Standard Specification for Drain, Waste, and Vent (DWV) Plastic Fittings Patterns, 1992; IBR approved for § 3280.604(c).
</P>
<P>(21) ASTM D3679-09a, Standard Specification for Rigid Poly (Vinyl Chloride) (PVC) Siding, approved November 1, 2009; IBR approved for §§ 3280.304(b); 3280.309(b).
</P>
<P>(22) ASTM D3953-97, Standard Specification for Strapping, Flat Steel, and Seals, approved April 10, 1997; IBR approved for §§ 3280.304(b); 3280.306(g).
</P>
<P>(23) ASTM D4442-07, Standard Test Methods for Direct Moisture Content Measurement of Wood and Wood-Base Materials, approved November 15, 2007; IBR approved for § 3280.304(b).
</P>
<P>(24) ASTM D4444-13, Standard Test Method for Laboratory Standardization and Calibration of Hand-Held Moisture Meters, approved April 1, 2013; IBR approved for § 3280.304(b).
</P>
<P>(25) ASTM D4635-01, Standard Specification for Polyethylene Films Made from Low-Density Polyethylene for General Use and Packaging Applications, approved June 10, 2001; IBR approved for § 3280.611(d).
</P>
<P>(26) ASTM D4756-06, Standard Practice for Installation of Rigid Poly(Vinyl Chloride) (PVC) Siding and Soffit, approved April 1, 2006; IBR approved for §§ 3280.304(b); 3280.309(c).
</P>
<P>(27) ASTM D6007-14, Standard Test Method for Determining Formaldehyde Concentrations in Air from Wood Products Using a Small Air Chamber, approved October 1, 2014; IBR approved for § 3280.406(b).
</P>
<P>(28) ASTM D7254-07, Standard Specification for Polypropylene (PP) Siding, January 1, 2007; IBR approved for §§ 3280.304(b); 3280.309(c).
</P>
<P>(29) ASTM E84-01, Standard Test Method for Surface Burning Characteristics of Building Materials, 2001; IBR approved for § 3280.203(a).
</P>
<P>(30) ASTM E90-09, Standard Test Method for Laboratory Measurement of Airborne Sound Transmission Loss of Building Partitions and Elements, approved July 1, 2009; IBR approved for § 3280.115(b).
</P>
<P>(31) ASTM E96/E96M-13, Standard Test Methods for Water Vapor Transmission of Materials, approved November 1, 2013; IBR approved for § 3280.504(a) and (c).
</P>
<P>(32) ASTM E119-14, Standard Test Methods for Fire Tests of Building Construction and Materials, approved October 1, 2014; IBR approved for §§ 3280.215(a) and (d); 3280.304(b); 3280.1003(a).
</P>
<P>(33) ASTM E162-94, Standard Test Method for Surface Flammability of Materials Using a Radiant Heat Energy Source, 1994; IBR approved for § 3280.203(a).
</P>
<P>(34) ASTM E492-09, Standard Test Method for Laboratory Measurement of Impact Sound Transmission Through Floor-Ceiling Assemblies Using the Tapping Machine, approved April 1, 2009; IBR approved for § 3280.115(b).
</P>
<P>(35) ASTM E773-97, Standard Test Methods for Accelerated Weathering of Sealed Insulating Glass Units, 1997; IBR approved for § 3280.403(d).
</P>
<P>(36) ASTM E774-97, Standard Specification for the Classification of the Durability of Sealed Insulating Glass Units, 1997; IBR approved for § 3280.403(d).
</P>
<P>(37) ASTM E814-13, Standard Test Method for Fire Tests of Penetration Firestop Systems, approved November 1, 2013; IBR approved for § 3280.215(d).
</P>
<P>(38) ASTM E1333-14, Standard Test Method for Determining Formaldehyde Concentrations in Air and Emission Rates from Wood Products Using a Large Air Chamber, approved October 1, 2014; IBR approved for § 3280.406(b).
</P>
<P>(39) ASTM F628-91, Standard Specification for Acrylonitrile-Butadiene-Styrene (ABS) Schedule 40, Plastic Drain, Waste, and Vent Pipe with a Cellular Core, 1991; IBR approved for § 3280.604(c).
</P>
<P>(40) ASTM F876-10, Standard Specification for Crosslinked Polyethylene (PEX) Tubing, approved February 10, 2010; IBR approved for § 3280.604(c).
</P>
<P>(41) ASTM F877-07, Standard Specification for Crosslinked Polyethylene (PEX) Plastic Hot- and Cold-Water Distribution Systems, approved February 1, 2007; IBR approved for § 3280.604(c).
</P>
<P>(o) American Wood Council (AWC), 222 Catoctin Circle SE, Suite 201, Leesburg, VA 20175; telephone: 202-463-2766; website: <I>www.awc.org.</I>
</P>
<P>(1) AWC NDS-2015, National Design Specifications for Wood Construction with Supplement; IBR approved for §§ 3280.215(a); 3280.304(b):
</P>
<P>(i) ANSI/AWC NDS-2015, 2015 Edition, ANSI-approved September 30, 2014; and
</P>
<P>(ii) NDS Supplement, Design Values for Wood Construction, 2015 Edition, November 2014.
</P>
<P>(2) Span Tables for Joists and Rafters: American Softwood Lumber Standard (PS 20-10) Sizes, 2012 Edition (AWC-2012—Span Tables for Joists and Rafters); IBR approved for § 3280.304(b).
</P>
<P>(3) Design Values for Joists and Rafters, Supplement to Span Tables for Joists and Rafters (2012 Edition), March 2013 (AWC-2012 Design Values for Joists and Rafters); IBR approved for § 3280.304(b).
</P>
<P>(p) Cast Iron Soil Pipe Institute (CISPI), 1064 Delaware Avenue SE, Atlanta, GA 30316; telephone: 404-622-0073; fax: 404-973-2845; website: <I>www.cispi.org/.</I>
</P>
<P>(1) CISPI-301-90, Standard Specification for Hubless Cast Iron Soil Pipe and Fittings for Sanitary and Storm Drain, Waste, and Vent Piping Applications; IBR approved for § 3280.604(c).
</P>
<P>(2) CISPI-HSN-85, Specification for Neoprene Rubber Gaskets for HUB and Spigot Cast Iron Soil Pipe and Fittings; IBR approved for §§ 3280.604(c), 3280.611(d).
</P>
<P>(q) Composite Panel Association (formerly the American Hardboard Association), 19465 Deerfield Ave, Suite 306, Leesburg, VA 20176; telephone: 703-724-1128; website: <I>compositepanel.org.</I>
</P>
<P>(1) ANSI A135.4-2012, Basic Hardboard, approved June 8, 2012; IBR approved for § 3280.304(b).
</P>
<P>(2) ANSI A135.5-2012, Prefinished Hardboard Paneling, approved March 29, 2012; IBR approved for § 3280.304(b).
</P>
<P>(3) ANSI A135.6-2012 (R2020), Engineered Wood Siding, Reaffirmation approved March 13, 2020; IBR approved for § 3280.304(b).
</P>
<P>(4) ANSI A208.1-2009, Particleboard, approved February 2, 2009; IBR approved for § 3280.304(b).
</P>
<P>(r) CSA Group, formerly known as the Canadian Standards Association (CSA), 178 Rexdale Boulevard, Toronto, ON, M9W 1R3, Canada; telephone: 216-524-4990; website: <I>www.csagroup.org.</I>
</P>
<P>(1) AAMA/WDMA/CSA 101/I.S.2/A440-17, North American Fenestration Standard/Specification for Windows, Doors, and Skylights, revised September 2018; IBR approved for §§ 3280.304(b); 3280.403(b) and (e); 3280.404(b) and (e); 3280.405(b) and (e).
</P>
<P>(2) ANSI LC 1-2014/CSA 6.26-2014, Fuel gas piping systems using corrugated stainless steel tubing, Published March 2014 (ANSI LC 1); IBR approved for § 3280.705(b).
</P>
<P>(3) ANSI Z21.1-2016/CSA 1.1-2016, household cooking gas appliances, Published February 2016 (ANSI Z21.1); IBR approved for § 3280.703(a).
</P>
<P>(4) ANSI Z21.5.1-2015/CSA 7.1-2015, gas clothes dryers, volume I, type 1 clothes dryers, Published January 2015 (ANSI Z21.5.1); IBR approved for § 3280.703(a).
</P>
<P>(5) ANSI Z21.10.1-2014/CSA 4.1-2014, Gas water heaters, volume I, storage water heaters with input ratings of 75,000 BTU per hour or less, Published November 2014 (ANSI Z21.10.1); IBR approved for §§ 3280.703(a); 3280.707(d).
</P>
<P>(6) ANSI Z21.10.3-2014/CSA 4.3-2014, Gas-fired water heaters, volume III, storage water heaters with input ratings above 75,000 BTU per hour, circulating and instantaneous, Published August 2014 (ANSI Z21.10.3); IBR approved for § 3280.703(a).
</P>
<P>(7) ANSI Z21.15-2009 (reaffirmed 2019)/CSA 9.1-2009 (reaffirmed 2019), American National Standard/CSA Standard for Manually Operated Gas Valves for Appliances, Appliance Connector Valves and Hose End Valves, Second Edition—2009, Published July 2009 (ANSI Z21.15); IBR approved for §§ 3280.703(c); 3280.705(c) and (l).
</P>
<P>(8) ANSI Z21.19-2014/CSA1.4-2014, Refrigerators using gas fuel, Published May 2014 (ANSI Z21.19); IBR approved for § 3280.703(a).
</P>
<P>(9) ANSI Z21.20-2014 (reaffirmed 2019)/CAN/CSA C22.2 No.60730-2-5-14 (reaffirmed 2019), Automatic electrical controls for household and similar use—Part 2-5: Particular requirements for automatic electrical burner control systems, Reprinted September 30, 2019 (ANSI Z21.20); IBR approved for § 3280.703(d).
</P>
<P>(10) ANSI Z21.21-2012/CSA 6.5-2012, Automatic valves for gas appliances, Fourth Edition—2012, Published November 2012 (ANSI Z21.21); IBR approved for § 3280.703(d).
</P>
<P>(11) ANSI Z21.23, Gas Appliance Thermostats and addenda; IBR approved for § 3280.703(d):
</P>
<P>(i) ANSI Z21.23-2000, Tenth Edition—2000, ANSI-approved September 27, 2000;
</P>
<P>(ii) ANSI Z21.23a-2003, Addenda to the Tenth Edition of Gas Appliance Thermostats, ANSI-approved September 17, 2003; and
</P>
<P>(iii) ANSI Z21.23b-2005, Addenda to the Tenth Edition of ANSI Z21.23-2000 and Addenda Z21.23a-2003: Gas Appliance Thermostats, ANSI-approved March 9, 2005.
</P>
<P>(12) ANSI Z21.24-2006/CSA 6.10-2006 (reaffirmed 2011), Connectors for Gas Appliances, Third Edition—2006, Published February 2007 (ANSI Z21.24); IBR approved for § 3280.703(c).
</P>
<P>(13) ANSI Z21.40.1-1996/CGA 2.91-M96, Gas-Fired, Heat Activated Air Conditioning and Heat Pump Appliances); IBR approved for §§ 3280.703(a); 3280.714(a).
</P>
<P>(14) ANSI Z21.47-2012/CSA 2.3-2012, Gas-fired central furnaces, Sixth Edition—2012, ANSI-approved March 27, 2012 (ANSI Z21.47); IBR approved for § 3280.703(a).
</P>
<P>(15) ANSI Z21.75-2007/CSA 6.27-2007 (reaffirmed 2012), Connectors for Outdoor Gas Appliances And Manufactured Homes, Second Edition, Published 2007 (ANSI Z21.75); IBR approved for § 3280.703(a).
</P>
<P>(s) Decorative Hardwoods Association (formerly HPVA), 42777 Trade West Drive, Sterling, VA 20166; telephone: 703-435-2900; fax: 703-435-2537; website: <I>www.decorativehardwoods.org.</I>
</P>
<P>(1) ANSI/HPVA HP-1-2009, American National Standard for Hardwood and Decorative Plywood, approved January 26, 2010; IBR approved for § 3280.304(b).
</P>
<P>(2) HP-SG-96, Structural Design Guide for Hardwood Plywood Wall Panels, revised 1996; IBR approved for § 3280.304(b).
</P>
<P>(t) FS—Federal Specifications, General Services Administration, Specifications Branch, Room 6039, GSA Building, 7th and D Streets SW, Washington, DC 20407.
</P>
<P>(1) FS WW-P-541E/GEN-1980, Plumbing Fixtures (General Specifications); IBR approved for § 3280.604(c).
</P>
<P>(2) FS ZZ-R-765B-1970, Silicone Rubber, (with 1971 Amendment); IBR approved for § 3280.611(d).
</P>
<P>(3) TT-P-1536A, Plumbing Fixture Setting Compound, July 8, 1975; IBR approved for § 3280.604(b).
</P>
<P>(u) Fenestration and Glazing Industry Alliance (FGIA) (formerly known as American Architectural Manufacturers Association (AAMA)), 1900 E Golf Road, Schaumburg, Illinois 60173; website: <I>www.fgiaonline.org.</I>
</P>
<P>(1) AAMA 1503.1-88, Voluntary Test Method for Thermal Transmittance and Condensation Resistance of Windows, Doors, and Glazed Wall Sections; IBR approved for § 3280.508(e).
</P>
<P>(2) AAMA 1600/I.S.7-00, Voluntary Specification for Skylights, 2003; IBR approved for § 3280.305(c).
</P>
<P>(3) AAMA 1701.2-12, Voluntary Standard for Utilization in Manufactured Housing for Primary Windows and Sliding Glass Doors, published November 2012; IBR approved for §§ 3280.403(b) and (e); 3280.404(b) and (e).
</P>
<P>(4) AAMA 1702.2-12, Voluntary Standard for Utilization in Manufactured Housing for Swinging Exterior Passage Doors, published November 2012, including errata dated February 16, 2015 and March 29, 2017; IBR approved for §§ 3280.403(e); 3280.405(b) and (e).
</P>
<P>(5) AAMA 1704-12, Voluntary Standard Egress Window Systems for Utilization in Manufactured Housing, published November 2012; IBR approved for § 3280.404(b) and (e).
</P>
<P>(v) HUD User, 11491 Sunset Hills Road, Reston, VA 20190-5254; telephone: 800-245-2691; website: <I>www.huduser.gov.</I>
</P>
<P>(1) HUD User No. 0005945, Overall U-values and Heating/Cooling Loads—Manufactured Homes, February 1992; IBR approved for § 3280.508(b).
</P>
<P>(2) [Reserved]
</P>
<P>(w) IIT Research Institute (IITRI), 10 West 35th Street, Chicago, IL 60616; telephone: 312-567-4000; website: <I>www.iitri.org/.</I>
</P>
<P>(1) IITRI Fire and Safety Research Project J-6461 “Development of Mobile Home Fire Test Methods to Judge the Fire-Safe Performance of Foam Plastic Sheathing and Cavity Insulation”, 1979; IBR approved for § 3280.207(a).
</P>
<P>(2) [Reserved]
</P>
<P>(x) International Association of Plumbing and Mechanical Officials (IAPMO), 4755 East Philadelphia Street, Ontario, CA 91716; telephone: 909-472-4100; fax: 909-472-4150; website: <I>www.iapmo.org.</I>
</P>
<P>(1) IAPMO PS 2-89, Material and Property Standard for Cast Brass and Tubing P-Traps. 1989; IBR approved for § 3280.604(c).
</P>
<P>(2) IAPMO PS 4-90, Material and Property Standard for Drains for Prefabricated and Precast Showers, 1990; IBR approved for § 3280.604(c).
</P>
<P>(3) IAPMO PS 5-84, Material and Property Standard for Special Cast Iron Fittings, 1984; IBR approved for § 3280.604(c).
</P>
<P>(4) IAPMO PS 9-84, Material and Property Standard for Diversion Tees and Twin Waste Elbow, 1984; IBR approved for § 3280.604(c).
</P>
<P>(5) IAPMO PS 14-89, Material and Property Standard for Flexible Metallic Water Connectors, 1989; IBR approved for § 3280.604(c).
</P>
<P>(6) IAPMO PS 23-89, Material and Property Standard for Dishwasher Drain Airgaps, 1989; IBR approved for § 3280.604(c).
</P>
<P>(7) IAPMO PS 31-91, Material and Property Standards for Backflow Prevention Assemblies, 1989; IBR approved for § 3280.604(c).
</P>
<P>(8) IAPMO TS 9-2003, Standard for Gas Supply Connectors for Manufactured Homes, revised 2003; IBR approved for § 3280.703(c).
</P>
<P>(9) IAPMO TSC 22-85, Standard for Porcelain Enameled Formed Steel Plumbing Fixtures; IBR approved for § 3280.604(c).
</P>
<P>(y) International Code Council Evaluation Service (ICC-ES), 3060 Saturn Street, Suite 100, Brea, CA 92821; telephone: 800-423-6587; fax: 562-695-4694; website: <I>www.icc-es.org.</I>
</P>
<P>(1) ESR 1539, ICC-ES Evaluation Report; Power Driven Staples and Nails, reissued June 2014; IBR approved for § 3280.304(b).
</P>
<P>(2) [Reserved]
</P>
<P>(z) International Organization for Standardization, Chemin de Blandonnet 8, CP 401—1214 Vernier, Geneva, Switzerland; telephone: +41 22 749 01 11; website: <I>www.iso.org.</I>
</P>
<P>(1) ISO/IEC 17065:2012(E) Conformity assessment—requirements for bodies certifying products, processes and services, approved September 15, 2012; IBR approved for §§ 3280.403(e); 3280.404(e); 3280.405(e).
</P>
<P>(2) [Reserved]
</P>
<P>(aa) Military Specifications and Standards, Naval Publications and Forms Center (MIL), 5801 Tabor Avenue, Philadelphia, PA 19120; website: <I>www.dsp.dla.mil/.</I>
</P>
<P>(1) MIL-L-10547E-1975, Liners, Case, and Sheet, Overwrap; Water-Vapor Proof or Waterproof, Flexible, 1975; IBR approved for § 3280.611(d).
</P>
<P>(2) [Reserved]
</P>
<P>(bb) National Electrical Manufacturers Association (NEMA), 1300 North 17th Street, Suite 1752, Arlington, VA 22209; telephone: 703-841-3200; fax: 703-841-5900; website: <I>www.nema.org/Pages/default.aspx.</I>
</P>
<P>(1) ANSI/NEMA WD-6-1997 Wiring Devices-Dimensional Specifications, 1997; IBR approved for § 3280.803(f).
</P>
<P>(2) [Reserved]
</P>
<P>(cc) National Fenestration Rating Council (NFRC), 6305 Ivy Lane, Suite 140, Greenbelt, MD 20770; telephone: 301-589-1776; fax: 301-589-3884; website: <I>www.nfrc.org.</I>
</P>
<P>(1) NFRC 100, Procedure for Determining Fenestration Product U-factors, 1997 Edition, 1997; IBR approved for § 3280.508(e).
</P>
<P>(2) [Reserved]
</P>
<P>(dd) National Fire Protection Association (NFPA), 1 Batterymarch Park, Quincy, MA 02269; telephone: 617-770-3000; fax: 617-770-0700; website: <I>www.nfpa.org.</I>
</P>
<P>(1) NFPA 13D, Standard for the Installation of Sprinkler Systems in One- and Two- Family Dwellings and Manufactured Homes, 2010 Edition, approved August 26, 2009; IBR approved for § 3280.214(b), (e) and (o).
</P>
<P>(2) NFPA 31, Standard for the Installation of Oil-Burning Equipment, 2011 Edition, approved January 3, 2011; IBR approved for §§ 3280.703(d); 3280.707(f).
</P>
<P>(3) NFPA 54/ANSI Z223.1, National Fuel Gas Code, 2015 Edition, approved September 3, 2014; IBR approved for § 3280.703(d).
</P>
<P>(4) NFPA 58, Liquefied Petroleum Gas Code, 2014 Edition, approved August 1, 2013; IBR approved for § 3280.703(d).
</P>
<P>(5) NFPA 70, National Electrical Code, 2014 Edition, approved August 21, 2013; IBR approved for §§ 3280.607(c); 3280.801(b); 3280.803(k); 3280.804(a) and (k); 3280.805(a); 3280.806(a) and (d); 3280.807(c); 3280.808(a), (l), and (p); 3280.810(b); 3280.811(b).
</P>
<P>(6) NFPA 90B, Standard for the Installation of Warm Air Heating and Air-Conditioning Systems, 2015 Edition, approved May 19, 2015; IBR approved for § 3280.703(d).
</P>
<P>(7) NFPA 220, Standard on Types of Building Construction, Chapter 2: definitions of “limited combustible” and “noncombustible material”, 1995 Edition; IBR approved for § 3280.202.
</P>
<P>(8) NFPA 253, Standard Method of Test for Critical Radiant Flux of Floor Covering Systems Using a Radiant Heat Energy Source, 2000; IBR approved for § 3280.207(c).
</P>
<P>(9) NFPA 255, Standard Method of Test of Surface Burning Characteristics of Building Materials, 1996; IBR approved for §§ 3280.203(a); 3280.207(a).
</P>
<P>(10) NFPA 720, Standard for Installation of Carbon Monoxide Detection (CO) Detection and Warning Equipment, 2015 Edition, Copyright 2014; IBR approved for § 3280.211(b).
</P>
<P>(ee) U.S. Department of Commerce, National Institute of Standards and Technology (NIST), Office of Engineering Standards, Room A-166, Technical Building, Washington, DC 20234 and Voluntary Product Division, 100 Bureau Drive, Stop 2100, Gaithersburg, MD 20899-2100; telephone: 301-975-4000; fax: 301-975-4715; website: <I>www.nist.gov.</I>
</P>
<P>(1) Voluntary Product Standard PS 1-09, Structural Plywood (With Typical APA Trademarks), effective May 1, 2009 (NIST PS 1); IBR approved for § 3280.304(b).
</P>
<P>(2) Voluntary Product Standard PS 2-04, Performance Standard for Wood-Based Structural-Use Panels, December 2004 (NIST PS 2); IBR approval for § 3280.304(b).
</P>
<P>(ff) National Sanitation Foundation (NSF), 789 North Dixboro Road, Ann Arbor, MI 48105; telephone: 734-769-8010 fax: 734-769-0109; website: <I>www.nsf.org.</I>
</P>
<P>(1) ANSI/NSF 14-1990, Plastic Piping Components and Related Materials; IBR approved for § 3280.604(c).
</P>
<P>(2) ANSI/NSF 24-1988, Plumbing System Components for Manufactured Homes and Recreational Vehicles; IBR approved for § 3280.604(c).
</P>
<P>(3) ANSI/NSF 61-2001, Drinking Water System Components-Health Effects; IBR approved for § 3280.604(b).
</P>
<P>(gg) Resources, Applications, Designs, &amp; Controls (RADCO), 3220 East 59th Street, Long Beach, CA 90805; telephone: 562-272-7231; fax: 562-529-7513; website: <I>www.radcoinc.com.</I>
</P>
<P>(1) RADCO DS-010-91, Decorative Gas Appliances for Installation in Solid Fuel Burning Fireplaces, May 1991; IBR approved for § 3280.703(a).
</P>
<P>(2) [Reserved]
</P>
<P>(hh) Society of Automotive Engineers (SAE), 400 Commonwealth Drive, Warrendale, PA 15096; telephone: 724-776-0790; website: <I>www.sae.org/.</I>
</P>
<P>(1) SAE J533 (REV SEP 2007), (R) Flares for Tubing, revised September 2007; IBR approved for §§ 3280.703(d); 3280.705(f).
</P>
<P>(2) [Reserved]
</P>
<P>(ii) Steel Joist Institute (SJI), 234 West Cheves Street, Florence, SC 29501; telephone: 843-407-4091; website: <I>www.steeljoist.org.</I>
</P>
<P>(1) SJI 1994, Standard Specifications Load Tables and Weight Tables for Steel Joists and Girders, Fortieth Edition, 1994; IBR approved for § 3280.304(b).
</P>
<P>(2) [Reserved]
</P>
<P>(jj) Truss Plate Institute (TPI), 2670 Crain Highway, Suite 203, Waldorf, MD 20601; telephone: 240-587-5582; fax: 866-501-4012; website: <I>www.tpinst.org.</I>
</P>
<P>(1) TPI 1, National Design Standard for Metal Plate Connected Wood Truss Construction, Commentary, and Appendices, copyright 2008; IBR approved for § 3280.304(b):
</P>
<P>(i) ANSI/TPI 1-2007;
</P>
<P>(ii) TPI 1-2007 Commentary and Appendices.
</P>
<P>(2) [Reserved]
</P>
<P>(kk) Underwriters' Laboratories, Inc. (UL), 333 Pfingsten Road, Northbrook, IL 60062; telephone: 847-272-8800; fax: 847-509-6257; website: <I>www.ul.com.</I>
</P>
<P>(1) UL 94-1996, with 2001 revisions, Test for Flammability of Plastic Materials for Parts in Devices and Appliances, Fifth Edition; IBR approved for § 3280.715(e).
</P>
<P>(2) UL 103, Standard for Safety, Factory-Built Chimneys for Residential Type and Building Heating Appliances, Eleventh Edition, dated October 15, 2010; IBR approved for § 3280.703(d).
</P>
<P>(3) UL 109, Tube Fittings for Flammable and Combustible Fluids, Refrigeration Service, and Marine Use, Sixth Edition, dated June 19, 1997, including revisions through January 11, 2005; IBR approved for § 3280.703(d).
</P>
<P>(4) UL 127-1996, with 1999 revisions, Factory-Built Fireplaces, Seventh Edition; IBR approved for § 3280.703(d).
</P>
<P>(5) UL 174, Standard for Safety Household Electric Storage Tank Water Heaters, Eleventh Edition, dated April 29, 2004, including revisions through December 15, 2016; IBR approved for § 3280.703(a).
</P>
<P>(6) UL 181, Standard for Safety Factory-Made Air Ducts and Air Connectors, Eleventh Edition, dated July 25, 2013, including revisions through April 18, 2017; IBR approved for §§ 3280.702, 3280.703(d); 3280.715(a) and (e).
</P>
<P>(7) UL 181A, Standard for Safety Closure Systems for Use with Rigid Air Ducts, Fourth Edition, dated January 8, 2013, including revisions through March 22, 2017; IBR approved for §§ 3280.703(d); 3280.715(c).
</P>
<P>(8) UL 181B, Standard for Safety Closure Systems for use with Flexible Air Ducts and Air Connectors, First Edition, 1995, with 1998 revisions; IBR approved for §§ 3280.703(d); 3280.715(c).
</P>
<P>(9) UL 217, Single and Multiple Station Smoke Alarms, Fifth Edition, dated January 4, 1999; IBR approved for §§ 3280.209(a); 3280.211(a).
</P>
<P>(10) UL 263, Standard for Safety Fire Tests of Building Construction and Materials, Fourteenth Edition, dated June 21, 2011, including revisions through January 31, 2019; IBR approved for § 3280.215(a) and (d).
</P>
<P>(11) UL 268, Smoke Detectors for Fire Protective Signaling Systems, Fourth Edition, dated December 30, 1996, including revisions through January 4, 1999; IBR approved for §§ 3280.209(a); 3280.703(a).
</P>
<P>(12) UL 307A, Liquid Fuel Burning Heating Appliances for Manufactured Homes and Recreational Vehicles, Eighth Edition, dated February 25, 2009; IBR approved for §§ 3280.703(a); 3280.707(f).
</P>
<P>(13) UL 307B, Gas Burning Heating Appliances for Manufactured Homes and Recreational Vehicles, Fifth Edition, dated October 31, 2006, including revisions through September 17, 2013; IBR approved for § 3280.703(a).
</P>
<P>(14) UL 311, Roof Jacks for Manufactured Homes and Recreational Vehicles, Eighth Edition, 1994, with 1998 revisions; IBR approved for § 3280.703(d).
</P>
<P>(15) UL 441, Gas Vents, Tenth Edition, dated March 5, 2010, including revisions through June 12, 2014; IBR approved for § 3280.703(d).
</P>
<P>(16) UL 499, Standard for Safety Electric Heating Appliances, Fourteenth Edition, dated November 7, 2014, including revisions through February 23, 2017; IBR approved for § 3280.703(a).
</P>
<P>(17) UL 569, Standard for Safety Pigtails and Flexible Hose Connectors for LP-Gas, 2013; IBR approved for §§ 3280.703(d); 3280.705(l).
</P>
<P>(18) UL 737, Fireplace Stoves, Eighth Edition, 1996, with 2000 revisions; IBR approved for § 3280.703(d).
</P>
<P>(19) UL 923 Microwave Cooking Appliances, Fifth Edition, May 23, 2002; IBR approved for § 3280.204(c).
</P>
<P>(20) UL 1042, Standards for Safety Electric Baseboard Heating Equipment, Fifth Edition, dated August 31, 2009, including revisions through December 14, 2016; IBR approved for § 3280.703(a).
</P>
<P>(21) UL 1096, Electric Central Air Heating Equipment, Fourth Edition, 1986, with revisions July 16, 1986, and January 30, 1988; IBR approved for § 3280.703(a).
</P>
<P>(22) UL 1479, Fire Tests of Penetration Firestops, Fourth Edition, dated June 10, 2015; IBR approved for § 3280.215(d).
</P>
<P>(23) UL 1482, Solid-Fuel Type Room Heaters, Fifth Edition, 1996, with 2000 revisions; IBR approved for § 3280.703(d).
</P>
<P>(24) UL 2021-1997. Fixed and Location-Dedicated Electric Room Heaters, Second Edition, with 1998 revisions; IBR approved for § 3280.703(a).
</P>
<P>(25) UL 2034, Standard for Safety Single and Multiple Station Carbon Monoxide Alarms, Fourth Edition, dated March 31, 2017; IBR approved for §§ 3280.209(a); 3280.211(a); 3280.703(a).
</P>
<P>(26) UL 60335-2-40-2012, Standard for Safety: Household and Similar Electrical Appliances—Part 2-40: Particular Requirements for Electrical Heat Pumps, Air-Conditioners and Dehumidifiers, First Edition, dated November 30, 2012; IBR approved for § 3280.703(a).
</P>
<P>(ll) Underwriters' Laboratories of Canada (ULC), 7 Underwriters Road, Toronto, Ontario, Canada M1 R 3A9; telephone: 866-937-3852; fax: 416-757-8727; website: <I>www.ul.com/canada/eng/pages/.</I>
</P>
<P>(1) CAN/ULC S102.2-M88, Standard Method of Test for Surface Burning Characteristics of Floor Coverings and Miscellaneous Materials and Assemblies, Fourth Edition, April 1988; IBR approved for § 3280.207(b).
</P>
<P>(2) [Reserved]
</P>
<P>(mm) Window and Door Manufacturers Association (WDMA), 2001 K Street NW, 3rd Floor North, Washington, DC 20006; telephone: 202-367-1157; website: <I>www.wdma.com.</I>
</P>
<P>(1) WDMA I.S.4-09, Industry Specification for Preservative Treatment for Millwork, copyright 2009; IBR approved for § 3280.405(c).
</P>
<P>(2) [Reserved] 
</P>
<CITA TYPE="N">[78 FR 73976, Dec. 9, 2013, as amended at 79 FR 31863, June 3, 2014; 85 FR 5566, Jan. 31, 2020; 86 FR 2516, Jan. 12, 2021; 89 FR 75737, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.5" NODE="24:5.1.2.1.2.1.1.5" TYPE="SECTION">
<HEAD>§ 3280.5   Data plate.</HEAD>
<P>Each dwelling unit of a manufactured home must bear a data plate affixed in a permanent manner near the main electrical panel or other readily accessible and visible location. Each data plate shall be made of material what will receive typed information as well as preprinted information, and which can be cleaned of ordinary smudges or household dirt without removing information contained on the data plate; or the data plate shall be covered in a permanent manner with materials that will make it possible to clean the data plate of ordinary dirt and smudges without obscuring the information. Each data plate shall contain not less than the following information:
</P>
<P>(a) The name and address of the manufacturing plant in which the manufactured home was manufactured.
</P>
<P>(b) The serial number and model designation of the unit, and the date the unit was manufactured.
</P>
<P>(c) The applicable statement:
</P>
<EXTRACT>
<P>This manufactured home is designed to comply with the Federal Manufactured Home Construction and Safety Standards in force at the time of manufacture.or
</P>
<P>This manufactured home has been substantially completed in accordance with an approved design and has been inspected (except for the components specifically identified in the instructions for completion on-site) in accordance with the Federal Manufactured Home Construction and Safety Standards and the requirements of the Department of Housing and Urban Development (HUD) in effect on the date of manufacture.</P></EXTRACT>
<P>(d) The applicable statement:
</P>
<P>This manufactured home IS designed to accommodate the additional loads imposed by the attachment of an attached accessory building or structure in accordance with the manufacturer installation instructions. The additional loads are in accordance with the design load(s) identified on this Data Plate; or
</P>
<P>This manufactured home IS NOT designed to accommodate the additional loads imposed by the attachment of an attached accessory building or structure in accordance with the manufacturer installation instructions.
</P>
<P>(e) A list of the certification label(s) number(s) that are affixed to each transportable manufactured section under § 3280.8.
</P>
<P>(f) A list of major factory-installed equipment, including the manufacturer's name and the model designation of each appliance.
</P>
<P>(g) Reference to the roof load zone and wind load zone for which the home is designed and duplicates of the maps as set forth in § 3280.305(c). This information may be combined with the heating/cooling certificate and insulation zone map required by §§ 3280.510 and 3280.511. The Wind Zone Map on the Data Plate shall also contain the statement:
</P>
<EXTRACT>
<P>This home has not been designed for the higher wind pressures and anchoring provisions required for ocean/coastal areas and should not be located within 1500′ of the coastline in Wind Zones II and III, unless the home and its anchoring and foundation system have been designed for the increased requirements specified for Exposure D in ANSI/ASCE 7-88.</P></EXTRACT>
<P>(h) The statement:
</P>
<EXTRACT>
<P>This home has—has not—(appropriate blank to be checked by manufacturer) been equipped with storm shutters or other protective coverings for windows and exterior door openings. For homes designed to be located in Wind Zones II and III, which have not been provided with shutters or equivalent covering devices, it is strongly recommended that the home be made ready to be equipped with these devices in accordance with the method recommended in the manufacturers printed instructions.</P></EXTRACT>
<P>(i) The statement: “Design Approval by”, followed by the name of the agency that approved the design.
</P>
<P>(j) The statement: The manufacturer certifies this home is compliant with the Title VI, Toxic Substances Control Act.
</P>
<CITA TYPE="N">[59 FR 2469, Jan. 14, 1994, as amended at 80 FR 53727, Sept. 8, 2015; 85 FR 5566, Jan. 31, 2020; 86 FR 2516, Jan. 12, 2021; 89 FR 75743, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.6" NODE="24:5.1.2.1.2.1.1.6" TYPE="SECTION">
<HEAD>§ 3280.6   Serial number.</HEAD>
<P>(a) A manufactured home serial number which will identify the manufacturer and the state in which the manufactured home is manufactured, must be stamped into the foremost cross member. Letters and numbers must be 
<FR>3/8</FR> inch minimum in height. Numbers must not be stamped into hitch assembly or drawbar. 


</P>
</DIV8>


<DIV8 N="§ 3280.7" NODE="24:5.1.2.1.2.1.1.7" TYPE="SECTION">
<HEAD>§ 3280.7   Excluded structures.</HEAD>
<P>Certain structures may be excluded from these Standards as modular homes under 24 CFR 3282.12.
</P>
<CITA TYPE="N">[52 FR 4581, Feb. 12, 1987]


</CITA>
</DIV8>


<DIV8 N="§ 3280.8" NODE="24:5.1.2.1.2.1.1.8" TYPE="SECTION">
<HEAD>§ 3280.8   Waivers.</HEAD>
<P>(a) Where any material piece of equipment, or system which does not meet precise requirements or specifications set out in the standard is shown, to the satisfaction of the Secretary, to meet an equivalent level of performance, the Secretary may waive the specifications set out in the Standard for that material, piece of equipment, or system. 
</P>
<P>(b) Where the Secretary is considering issuing a waiver to a Standard, the proposed waiver shall be published in the <E T="04">Federal Register</E> for public comment, unless the Secretary, for good cause, finds that notice is impractical, unnecessary or contrary to the public interest, and incorporates into the waiver that finding and a brief statement of the reasons therefor. 
</P>
<P>(c) Each proposed and final waiver shall include: 
</P>
<P>(1) A statement of the nature of the waiver; and 
</P>
<P>(2) Identification of the particular standard affected. 
</P>
<P>(d) All waivers shall be published in the <E T="04">Federal Register</E> and shall state their effective date. Where a waiver has been issued, the requirements of the Federal Standard to which the waiver relates may be met either by meeting the specifications set out in the Standard or by meeting the requirements of the waiver published in the <E T="04">Federal Register.</E> 
</P>
<CITA TYPE="N">[58 FR 55003, Oct. 25, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 3280.9" NODE="24:5.1.2.1.2.1.1.9" TYPE="SECTION">
<HEAD>§ 3280.9   Interpretative bulletins.</HEAD>
<P>Interpretative bulletins may be issued for the following purposes: 
</P>
<P>(a) To clarify the meaning of the Standard; and 
</P>
<P>(b) To assist in the enforcement of the Standard. 
</P>
<CITA TYPE="N">[58 FR 55003, Oct. 25, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 3280.10" NODE="24:5.1.2.1.2.1.1.10" TYPE="SECTION">
<HEAD>§ 3280.10   Use of alternative construction.</HEAD>
<P>Requests for alternative construction can be made pursuant to 24 CFR 3282.14 of this chapter. 
</P>
<CITA TYPE="N">[58 FR 55003, Oct. 25, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 3280.11" NODE="24:5.1.2.1.2.1.1.11" TYPE="SECTION">
<HEAD>§ 3280.11   Certification label.</HEAD>
<P>(a) A permanent label shall be affixed to each transportable section of each manufactured home for sale or lease in the United States. This label shall be separate and distinct from the data plate which the manufacturer is required to provide under § 3280.5 of the standards. 
</P>
<P>(b) The label shall be approximately 2 in. by 4 in. in size and shall be permanently attached to the manufactured home by means of 4 blind rivets, drive screws, or other means that render it difficult to remove without defacing it. It shall be etched on 0.32 in. thick aluminum plate. The label number shall be etched or stamped with a 3 letter designation which identifies the production inspection primary inspection agency and which the Secretary shall assign. Each label shall be marked with a 6 digit number which the label supplier shall furnish. The labels shall be stamped with numbers sequentially. 
</P>
<P>(c) The label shall read as follows: 
</P>
<EXTRACT>
<P>As evidenced by this label No. ABC 000001, the manufacturer certifies to the best of the manufacturer's knowledge and belief that this manufactured home has been inspected in accordance with the requirements of the Department of Housing and Urban Development and is constructed in conformance with the Federal manufactured home construction and safety standards in effect on the date of manufacture. See date plate.</P></EXTRACT>
<P>(d) The label must be located at the taillight end of each transportable section of the manufactured home approximately 1 foot up from the floor and 1 foot in from the road side, or as near that location on a permanent part of the exterior of the manufactured home section as practicable. The road side is the right side of the manufactured home when one views the manufactured home from the tow bar end of the manufactured home. If locating the label on the taillight end of a transportable section will prevent the label from being visible after the manufactured home section is installed at the installation site, the label must be installed on a permanent part of the exterior of the manufactured home section, in a visible location as specified in the approved design.




</P>
<CITA TYPE="N">[42 FR 960, Jan. 4, 1977. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 52 FR 47553, Dec. 15, 1987. Redesignated and amended at 58 FR 55003, Oct. 25, 1993; 86 FR 2517, Jan. 12, 2021] 


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:5.1.2.1.2.2" TYPE="SUBPART">
<HEAD>Subpart B—Planning Considerations</HEAD>


<DIV8 N="§ 3280.101" NODE="24:5.1.2.1.2.2.1.1" TYPE="SECTION">
<HEAD>§ 3280.101   Scope.</HEAD>
<P>Subpart B states the planning requirements in manufactured homes. The intent of this subpart is to assure the adequacy of architectural planning considerations which assist in determining a safe and healthful environment. 


</P>
</DIV8>


<DIV8 N="§ 3280.102" NODE="24:5.1.2.1.2.2.1.2" TYPE="SECTION">
<HEAD>§ 3280.102   Definitions.</HEAD>
<P><I>Air, exhaust</I> means air discharged from any space to the outside by an exhaust system.
</P>
<P><I>Air, outdoor</I> means air from outside the building taken into a ventilation system or air from outside the building that enters a space through infiltration or natural ventilation openings.
</P>
<P><I>Exhaust system</I> means one or more exhaust fans that remove air from the building, causing outdoor air to enter by ventilation inlets or normal leakage paths through the building envelope.
</P>
<P><I>Gross floor area</I> means all space, wall to wall, including recessed entries not to exceed five (5) square feet and areas under built-in vanities and similar furniture. When the ceiling height is less than that specified in § 3280.104, the floor area under such ceilings must not be included in the gross floor area. Floor area of closets must also not be included in the gross floor area.
</P>
<P><I>Habitable room</I> means a room or enclosed floor space arranged for living, eating, food preparation, or sleeping purposes not including bathrooms, foyers, hallways, and other accessory floor space.
</P>
<P><I>Laundry area</I> means an area containing or designed to contain a laundry tray, clothes washer and/or clothes dryer.
</P>
<P><I>Mechanical ventilation</I> means the active process of supplying air to or removing air from an indoor space by powered equipment such as motor-driven fans and blowers but not by devices such as wind-turbine ventilators and mechanically operated windows.
</P>
<P><I>Natural ventilation</I> means ventilation occurring as a result of natural forces, such as wind pressure or differences in air density, through intentional openings such as open windows or doors.
</P>
<P><I>Supply system</I> means one or more fans that supply outdoor air to the building, causing indoor air to leave by normal air leakage through the building envelope.
</P>
<P><I>Ventilation</I> means the process of supplying outdoor air to or removing indoor air from the manufactured home by natural or mechanical means. Such air may or may not have been conditioned. 
</P>
<CITA TYPE="N">[89 FR 75744, Sept. 16, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 3280.103" NODE="24:5.1.2.1.2.2.1.3" TYPE="SECTION">
<HEAD>§ 3280.103   Light and ventilation.</HEAD>
<P>(a) <I>Lighting.</I> Each habitable room shall be provided with exterior windows and/or doors having a total glazed area of not less than 8 percent of the gross floor area. 
</P>
<P>(1) Kitchens, bathrooms, toilet compartments, laundry areas, and utility rooms may be provided with artificial light in place of windows. 
</P>
<P>(2) Rooms and areas may be combined for the purpose of providing the required natural lighting provided that at least one half of the common wall area is open and unobstructed, and the open area is at least equal to 10 percent of the combined floor area or 25 square feet whichever is greater. 
</P>
<P>(b) <I>Whole-house ventilation.</I> Each dwelling unit of a manufactured home must be provided with a whole-house mechanical ventilation having the capability to provide a minimum capacity of 0.035 ft
<SU>3</SU>/min/ft
<SU>2</SU> of interior floor space or its hourly average equivalent. This ventilation capacity must be in addition to any openable window area. In no case shall the installed ventilation capacity of the system be less than 50 cfm. The following criteria must be adhered to:
</P>
<P>(1) The ventilation capacity must be provided by a mechanical ventilation system or a combination natural and mechanical ventilation system.
</P>
<P>(2) The ventilation system or provisions for ventilation must exchange air directly with the exterior of the home, except the ventilation system, or provisions for ventilation must not draw or expel air with the space underneath the home. The ventilation system or provisions for ventilation must not draw or expel air into the floor, wall, or ceiling/roof systems, even if those systems are vented. The ventilation system must be designed to ensure that outside air is distributed to all bedrooms and main living areas. The combined use of undercut doors or transom grills connecting those areas to the room where the mechanical system is located is deemed to meet this requirement.
</P>
<P>(3) The ventilation supply system or a portion of the ventilation supply system is permitted to be integral with the home's heating or cooling system. The supply system must be capable of operating independently of the heating and cooling modes. A mechanical ventilation supply system that is integral with the heating and cooling system is to be listed as part of the heating and cooling system or listed as suitable for use with that system.
</P>
<P>(4) A mechanical ventilation system, or mechanical portion thereof, must be provided with a manual control, and must be permitted to be provided with automatic timers or humidistats.
</P>
<P>(5) A whole-house ventilation label must be attached to the whole-house ventilation control, must be permanent, and must state: “WHOLE-HOUSE VENTILATION”.
</P>
<P>(6) Instructions for correctly operating and maintaining whole-house ventilation systems must be included with the homeowner's manual. The instructions must encourage occupants to operate these systems whenever the home is occupied, and must refer to the labeled whole-house ventilation control.
</P>
<P>(c) <I>Additional ventilation.</I> (1) At least half of the minimum required glazed area in paragraph (a) of this section shall be openable directly to the outside of the manufactured home for unobstructed ventilation. These same ventilation requirements apply to rooms combined in accordance with § 3280.103(a)(2). 
</P>
<P>(2) Kitchens must be provided with a local exhaust system that is capable of exhausting 100 cfm to the outside of the home. The local exhaust system must be located as close as possible to the range or cook top, but in no case farther than 3 feet horizontally from the range or cooktop.
</P>
<P>(3) Each bathroom and separate toilet compartment must be provided with a local exhaust system capable of exhausting 50 cfm to the outside of the home. A separate toilet compartment may be provided with 1.5 square feet of openable glazed area in place of a local exhaust system, except in Uo value Zone 3.
</P>
<P>(d) <I>Optional ventilation provisions.</I> As an option to complying with the provisions of paragraphs (b) and (c) of this section, ventilation systems complying with ANSI/ASHRAE 62.2 (incorporated by reference, see § 3280.4) may be used.
</P>
<P>(e) <I>Airflow rating.</I> During the design stage, the airflow rating at a pressure of 0.25 inch water column may be used, provided the duct sizing meets the prescriptive requirements of table 5.3 in ANSI/ASHRAE 62.2 (incorporated by reference, see § 3280.4) or ventilation system manufacturer's design criteria.
</P>
<CITA TYPE="N">[58 FR 55003, Oct. 25, 1993, as amended at 70 FR 72042, Nov. 30, 2005; 86 FR 2517, Jan. 12, 2021; 89 FR 75744, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.104" NODE="24:5.1.2.1.2.2.1.4" TYPE="SECTION">
<HEAD>§ 3280.104   Ceiling heights.</HEAD>
<P>(a) Every habitable room and bathroom shall have a minimum ceiling height of not less than 7 feet, 0 inches for a minimum of 50 percent of the room's floor area. The remaining area may have a ceiling with a minimum height of 5 feet, 0 inches. Minimum height under dropped ducts, beams, etc. shall be 6 feet, 4 inches. 
</P>
<P>(b) Hallways and foyers shall have a minimum ceiling height of 6 feet, 6 inches. 


</P>
</DIV8>


<DIV8 N="§ 3280.105" NODE="24:5.1.2.1.2.2.1.5" TYPE="SECTION">
<HEAD>§ 3280.105   Exit facilities; exterior doors.</HEAD>
<P>(a) <I>Number and location of exterior doors.</I> Each dwelling unit of a manufactured home must have a minimum of two exterior doors located remotely from each other. 
</P>
<P>(1) Required egress doors shall not be located in rooms where a lockable interior door must be used in order to exit. 
</P>
<P>(2) In order for exit doors to be considered <I>remote</I> from each other, they must comply with all of the following: 
</P>
<P>(i) Both of the required doors must not be in the same room. Rooms are defined by their use or purpose. 
</P>
<P>(ii) <I>Single wide units.</I> Doors may not be less than 12 ft. c-c from each other as measured in any straight line direction regardless of the length of path of travel between doors. 
</P>
<P>(iii) <I>Double wide units.</I> Doors may not be less than 20 ft. c-c from each other as measured in any straight line direction regardless of the length of path of travel between doors. 
</P>
<P>(iv) One of the required exit doors must be accessible from the doorway of each bedroom without traveling more than 35 feet. The travel distance to the exit door must be measured on the floor or other walking surface along the center-line of the natural and unobstructed path of travel starting at the center of the bedroom door, curving around any corners or permanent obstructions with a one-foot clearance from, and ending at, the center of the exit door.
</P>
<P>(b) <I>Door design and construction.</I> (1) Exterior swinging doors shall be constructed in accordance with § 3280.405 the “Standard for Swinging Exterior Passage Doors for Use in Manufactured Homes”. Exterior sliding glass doors shall be constructed in accordance with § 3280.403 the “Standard for Windows and Sliding Glass Doors Used in Manufactured Homes”. 
</P>
<P>(2) All exterior swinging doors must provide a minimum 28 inch wide by 74 inch high clear opening. Door seals and/or door stops are permitted to reduce the opening, either vertically or horizontally, by a maximum of one inch, except for the one egress door where door seals and/or door stops are not permitted to reduce the opening. All exterior sliding glass doors must provide a minimum 28 inch wide by 72 inch high clear opening. At least one exterior egress door must provide a minimum of 32 inch wide by 74 inch high clear opening and door seals and/or door stops are not permitted to reduce the opening.
</P>
<P>(3) Each swinging exterior door other than screen or storm doors shall have a key-operated lock that has a deadlocking latch or a key-operated dead bolt with a passage latch. Locks shall not require the use of a key for operation from the inside. 
</P>
<P>(4) All exterior doors, including storm and screen doors, opening outward shall be provided with a safety door check. 
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 50 FR 9269, Mar. 7, 1985; 78 FR 73981, Dec. 9, 2013; 89 FR 75744, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.106" NODE="24:5.1.2.1.2.2.1.6" TYPE="SECTION">
<HEAD>§ 3280.106   Exit facilities; egress windows and devices.</HEAD>
<P>(a) Every room designed expressly for sleeping purposes, unless it has an exit door (<I>see</I> § 3280.105), shall have at least one outside window or approved exit device which meets the requirements of § 3280.404, the “Standard for Egress Windows and Devices for Use in Manufactured Homes.”
</P>
<P>(b) The bottom of the window opening shall not be more than 36 inches above the floor. 
</P>
<P>(c) Locks, latches, operating handles, tabs, and any other window screen or storm window devices which need to be operated in order to permit exiting, shall not be located in excess of 54 inches from the finished floor.
</P>
<P>(d) Integral rolled-in screens shall not be permitted in an egress window unless the window is of the hinged-type.
</P>
<CITA TYPE="N">[49 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 49 FR 36086, Sept. 14, 1984; 52 FR 4581, Feb. 12, 1987]


</CITA>
</DIV8>


<DIV8 N="§ 3280.107" NODE="24:5.1.2.1.2.2.1.7" TYPE="SECTION">
<HEAD>§ 3280.107   Interior privacy.</HEAD>
<P>Bathroom and toilet compartment doors shall be equipped with a privacy lock. 


</P>
</DIV8>


<DIV8 N="§ 3280.108" NODE="24:5.1.2.1.2.2.1.8" TYPE="SECTION">
<HEAD>§ 3280.108   Interior passage.</HEAD>
<P>(a) Interior doors having passage hardware without a privacy lock, or with a privacy lock not engaged, shall open from either side by a single movement of the hardware mechanism in any direction. 
</P>
<P>(b) Each manufactured home interior door, when provided with a privacy lock, shall have a privacy lock that has an emergency release on the outside to permit entry when the lock has been locked by a locking knob, lever, button, or other locking device on the inside. 
</P>
<P>(c) All interior swinging doors must have a minimum clear opening of 27 inches except doors to toilet compartments in single-section homes (see § 3280.111(b)), and doors to closets and pantries.
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975, as amended at 86 FR 2517, Jan. 12, 2021]

 


</CITA>
</DIV8>


<DIV8 N="§ 3280.109" NODE="24:5.1.2.1.2.2.1.9" TYPE="SECTION">
<HEAD>§ 3280.109   Room requirements.</HEAD>
<P>(a) Each dwelling unit of a manufactured home must have at least one living area with a minimum of 150 square feet of gross floor area. 
</P>
<P>(b) Rooms designed for sleeping purposes shall have a minimum gross square foot floor area as follows: 
</P>
<P>(1) All bedrooms shall have at least 50 sq. ft. of floor area. 
</P>
<P>(2) Bedrooms designed for two or more people shall have 70 sq. ft. of floor area plus 50 sq. ft. for each person in excess of two. 
</P>
<P>(c) Every room designed for sleeping purposes shall have accessible clothes hanging space with a minimum inside depth of 22 inches and shall be equipped with a rod and shelf. 
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, and further redesignated at 58 FR 55004, Oct. 25, 1993, as amended at 89 FR 75744, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.110" NODE="24:5.1.2.1.2.2.1.10" TYPE="SECTION">
<HEAD>§ 3280.110   Minimum room dimensions.</HEAD>
<P>The gross floor area required by § 3280.110 (a) and (b) shall have no clear horizontal dimension less than 5 feet except as permitted by § 3280.102(a). 
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, and further redesignated at 58 FR 55004, Oct. 25, 1993]




</CITA>
</DIV8>


<DIV8 N="§ 3280.111" NODE="24:5.1.2.1.2.2.1.11" TYPE="SECTION">
<HEAD>§ 3280.111   Toilet compartments.</HEAD>
<P>(a) Each toilet compartment must be a minimum of 30 inches wide, except, when the toilet is located adjacent to the short dimension of the tub, the distance from the tub, to the center line of the toilet must not be less than 12 inches. At least 21 inches of clear space must be provided in front of each toilet.
</P>
<P>(b) All bathroom passage doors in single-section homes must have a minimum clear opening width of 23 inches, and bathroom passage doors in multi-section homes must have a minimum clear opening width of 27 inches.
</P>
<CITA TYPE="N">[86 FR 2517, Jan. 12, 2021]


</CITA>
</DIV8>


<DIV8 N="§ 3280.112" NODE="24:5.1.2.1.2.2.1.12" TYPE="SECTION">
<HEAD>§ 3280.112   Hallways.</HEAD>
<P>Hallways must have a minimum horizontal dimension of 28 inches measured from the interior finished surface to the interior finished surface of the opposite wall. For manufactured homes with 14 feet of inside width or more, hallways must have a minimum horizontal dimension of 30 inches measured from the interior finished surface to the interior finished surface of the opposite wall. When appliances are installed in a laundry area, the measurement must be from the front of the appliance to the opposite finished interior surface. When appliances are not installed and a laundry area is provided, the area must have a minimum clear depth of 27 inches in addition to the 28 inches, or 30 inches for manufactured homes with 14 feet of inside width or greater, required for passage. In addition, a notice of the available clearance for washer/dryer units must be posted in the laundry area. Minor protrusions into the minimum hallway width by doorknobs, trim, smoke alarms or light fixtures are permitted. 
</P>
<CITA TYPE="N">[89 FR 75744, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.113" NODE="24:5.1.2.1.2.2.1.13" TYPE="SECTION">
<HEAD>§ 3280.113   Glass and glazed openings.</HEAD>
<P>(a) <I>Windows and sliding glass doors.</I> All windows and sliding glass doors shall meet the requirements of § 3280.403 the “Standard for Windows and Sliding Glass Doors Used in Manufactured Homes”. 
</P>
<P>(b) Required glazed openings shall be permitted to face into a roofed porch where the porch abuts a street, yard, or court and the longer side of the porch is at least 65 percent open and unobstructed and the ceiling height is not less than 7 feet.
</P>
<P>(c)<I>Hazardous locations requiring safety glazing.</I> Except as provided in paragraph (d) of this section, the following locations and areas require the use of safety glazing conforming to the requirements of paragraph (c) of this section:
</P>
<P>(1) Glazing in all entrance or exit doors;
</P>
<P>(2) Glazing in fixed and sliding panels of sliding glass doors;
</P>
<P>(3) Glazing in storm-type doors;
</P>
<P>(4) Glazing in unframed side-hinged swinging doors;
</P>
<P>(5) Glazing in doors and fixed panels less than 60 inches above the room floor level that enclose bathtubs, showers, hydromassage tubs, hot tubs, whirlpools, saunas;
</P>
<P>(6) Glazing within 12 inches horizontally, as measured from the edge of the door in the closed position, and 60 inches vertically as measured from the room floor level, adjacent to and in the same plane of a door;
</P>
<P>(7) Glazing within 36 inches of an interior room walking surface when the glazing meets all of the following:
</P>
<P>(i) Individual glazed panels exceed 9 square feet in area in an exposed surface area;
</P>
<P>(ii) The bottom edge of the exposed glazing is less than 19 inches above the room floor level; and
</P>
<P>(iii) The top edge of the exposed glazing is greater than 36 inches above the room floor level.
</P>
<P>(8) Glazing in rails and guardrails; and
</P>
<P>(9) Glazing in unbacked mirrored wardrobe doors (i.e., mirrors that are not secured to a backing that is capable of being the door itself).
</P>
<P>(d) Safety glazing is any glazing material capable of meeting the requirements of Consumer Product Safety Commission 16 CFR part 1201, or ANSI Z97.1 (incorporated by reference, see § 3280.4).
</P>
<P>(e) Glazing in the following locations is not required to meet the requirements in paragraph (b) of this section:
</P>
<P>(1) Openings in doors through which a 3-inch sphere is unable to pass;
</P>
<P>(2) Leaded and decorative glazed panels;
</P>
<P>(3) Glazing in jalousie-type doors;
</P>
<P>(4) Glazing as described in paragraph (b)(6) of this section when an intervening wall or other permanent barrier exists between the door and the glazing;
</P>
<P>(5) Glazing as described in paragraph (b)(7) of this section when a protective bar or member is installed horizontally between 34 inches and 38 inches above the room floor level, as long as the bar or member is a minimum of 1
<FR>1/2</FR> inches in height and capable of resisting a horizontal load of 50 pounds per lineal foot; and
</P>
<P>(6) Mirrors mounted on a flush door surface or solid wall surface.
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 52 FR 4581, Feb. 12, 1987. Redesignated at 58 FR 55004, Oct. 25, 1993; 78 FR 73981, Dec. 9, 2013; 86 FR 2517, Jan. 12, 2021; 89 FR 75745, Sept. 16, 2024] 




</CITA>
</DIV8>


<DIV8 N="§ 3280.114" NODE="24:5.1.2.1.2.2.1.14" TYPE="SECTION">
<HEAD>§ 3280.114   Stairways.</HEAD>
<P>(a) <I>Stairways</I>—(1) <I>General.</I> These minimum standards apply to stairways that are designed and constructed as part of the factory-completed transportable section(s) of a manufactured home, such as interior stairways for multi-level or multi-story homes or external stairways for multi-level construction features that are designed and constructed in the factory on a transportable section and integral to the access and egress needs within the transportable section(s) of a home. These standards do not apply to exterior stairways that are built at the home site or stairways to basement areas that are not designed and built as part of a transportable section of a manufactured home.
</P>
<P>(2) <I>Width.</I> Stairways must not be less than 36 inches in clear width at all points above permitted handrail height and below the required headroom height. Handrails must not project more than 4
<FR>1/2</FR> inches on either side of the stairway and the minimum clear width of the stairway at and below the handrail height, including treads and landings, must not be less than 31
<FR>1/2</FR> inches where a handrail is installed on one side and 27 inches where handrails are provided on both sides.
</P>
<P>(3) <I>Stair treads and risers</I>—(i) <I>Riser height and tread depth.</I> The maximum riser height must not exceed 8
<FR>1/4</FR> inches and the minimum tread depth must not be less than 9 inches. The riser height must be measured vertically between leading edges of the adjacent treads. The tread depth must be measured horizontally between the vertical planes of the foremost projection of adjacent treads and at a right angle to the tread's leading edge. The walking surface of treads and landings of a stairway must be sloped no steeper than one unit vertical in 48 units horizontal (a 2-percent slope). The greatest riser height within any flight of stairs must not exceed the smallest by more than 
<FR>3/8</FR> inch. The greatest tread depth within any flight of stairs must not exceed the smallest by more than 
<FR>3/8</FR> inch.
</P>
<P>(ii) <I>Profile.</I> The radius of curvature at the leading edge of the tread must not be greater than 
<FR>9/16</FR> inch. A nosing not less than 
<FR>3/4</FR> inch but not more than 1
<FR>1/4</FR> inches shall be provided on stairways with solid risers. The greatest nosing projection must not exceed the smallest nosing projection by more than 
<FR>3/4</FR> inch between two stories, including the nosing at the level of floors and landings. Beveling of nosing must not exceed 
<FR>1/2</FR> inch. Risers must be vertical or sloped from the underside of the leading edge of the tread above at an angle not more than 30 degrees from the vertical. Open risers are permitted, provided that the opening between treads does not permit the passage of a 4-inch diameter sphere. A nosing is not required where the tread depth is a minimum of 11 inches. The opening between adjacent treads is not limited on stairs with a total rise of 30 inches or less.
</P>
<P>(4) <I>Headroom.</I> The minimum headroom in all parts of the stairway must not be less than 6 feet 8 inches, measured vertically from the sloped plane adjoining the tread nosing or from the floor surface of the landing or platform.
</P>
<P>(5) <I>Winders (winding stairways).</I> Winders are permitted, provided that the width of the tread at a point not more than 12 inches from the side where the treads are narrower is not less than 10 inches and the minimum width of any tread is not less than 6 inches. Within any flight of stairs, the greatest winder tread depth at the 12-inch walk line must not exceed the smallest by more than 
<FR>3/8</FR> inch. The continuous handrail required by paragraph (c)(3) of this section must be located on the side where the tread is narrower.
</P>
<P>(6) <I>Spiral stairways.</I> Spiral stairways are permitted provided the minimum width is a minimum 26 inches with each tread having 7
<FR>1/2</FR> inch minimum tread width at 12 inches from the narrow edge. All treads must be identical, and the rise must be no more than 9
<FR>1/2</FR> inches. Minimum headroom of 6 feet, 6 inches must be provided.
</P>
<P>(7) <I>Circular stairways.</I> Circular stairways must have a tread depth at a point not more than 12 inches from the side where the treads are narrower of not less than 11 inches and the minimum depth of any tread must not be less than 6 inches. Tread depth at any walking line, measured a consistent distance from a side of the stairway, must be uniform as specified in paragraph (a)(2)(i) of this section.
</P>
<P>(b) <I>Landings.</I> Every landing must have a minimum dimension of 36 inches measured in the direction of travel. Landings must be located as follows:
</P>
<P>(1) There must be a floor or landing at the top and bottom of each stairway, except at the top of an interior flight of basement stairs, provided a door does not swing over the stairs.
</P>
<P>(2) A landing or floor must be located on each side of an interior doorway and exterior doorway, to the extent the external stairway is designed by the home manufacturer and constructed in the factory, and the width of each landing must not be less than the door it serves. The maximum threshold height above the floor or landing must be 1
<FR>1/2</FR>-inches.
</P>
<P>(c) <I>Handrails</I>—(1) <I>General.</I> A minimum of one handrail meeting the requirements of this section must be installed on all stairways consisting of four or more risers. Handrails must be securely attached to structural framing members. A minimum space of 1
<FR>1/2</FR> inches must be provided between the adjoining wall surface and the handrail.
</P>
<P>(2) <I>Handrail height.</I> Handrails must be installed between 34 inches and 38 inches measured vertically from the leading edge of the stairway treads except that handrails installed up to 42 inches high must be permitted if serving as the upper rails of guards required by paragraph (d) of this section.
</P>
<P>(3) <I>Continuity.</I> Required handrails must be continuous from a point directly above the leading edge of the lowest stair tread to a point directly above the leading edge of the landing or floor surface at the top of the stairway. If the handrail is extended at the top of the stairway flight, the extension must parallel the floor or landing surface and must be at the same height as the handrail above the leading edges of the treads. If the handrail is extended at the base of the stair, it must continue to slope parallel to the stair flight for a distance of one tread depth, measured horizontally, before being terminated or returned or extended horizontally. The ends of handrails must return into a wall or terminate in a safety terminal or newel post.
</P>
<P>(4) <I>Graspability.</I> Required handrails must, if circular in cross section, have a minimum 1
<FR>1/4</FR>-inch and a maximum 2-inch diameter dimension. Handrails with a noncircular cross section must have a perimeter dimension of at least 4 inches and not more than 6
<FR>1/4</FR> inches (with a maximum cross-section dimension of not more than 2
<FR>1/4</FR> inches). The handgrip portion of the handrail must have a smooth surface. Edges must have a minimum 
<FR>1/8</FR>-inch radius. Handrails must be continuously graspable along their entire length except that brackets or balusters are not considered obstructions to graspability if they do not project horizontally beyond the sides of the handrail within 1
<FR>1/2</FR> inches of the bottom of the handrail.
</P>
<P>(5) <I>Required resistance of handrails.</I> Handrails must be designed to resist a load of 20 lb./ft applied in any direction at the top and to transfer this load through the supports to the structure. All handrails must be able to resist a single concentrated load of 200 lbs., applied in any direction at any point along the top, and have attachment devices and supporting structures to transfer this loading to appropriate structural elements of the building. This load is not required to be assumed to act concurrently with the loads specified in this section.
</P>
<P>(d) <I>Guards.</I> (1) Porches, balconies, or raised floor surfaces located more than 30 inches above the floor or grade below must have guards not less than 36 inches in height. Open sides of stairs with a total rise of more than 30 inches above the floor or grade below must have guards not less than 34 inches in height measured vertically from the nosing of the treads. Balconies and porches on the second floor or higher must have guards a minimum of 42 inches in height.
</P>
<P>(2) Required guards on open sides of stairways, raised floor areas, balconies, and porches must have intermediate rails or ornamental closures that do not allow passage of a sphere 4 inches in diameter.
</P>
<P>(i) The triangular openings formed by the riser, tread and bottom rail of a guard at the open side of the stairway must be of such a size that a sphere of 6 inches cannot pass through.
</P>
<P>(ii) Guard systems must be designed to resist a load of 20 lb./ft applied in any direction at the top and to transfer this load through the supports to the structure. All guard systems must be able to resist a single concentrated load of 200 lb., applied in any direction at any point along the top and have attachment devices and supporting structures to transfer this loading to appropriate structural elements of the building. This load is not required to be assumed to act concurrently with the loads specified in this section.
</P>
<P>(e) <I>Stairway illumination.</I> All interior and exterior stairways must be provided with a means to illuminate the stairways, including the landings and treads.
</P>
<P>(1) Interior stairways must be provided with an artificial light source located in the immediate vicinity of each landing of the stairway. For interior stairs, the artificial light sources must be capable of illuminating treads and landings to levels not less than one (1) foot-candle measured at the center of treads and landings. The control and activation of the required interior stairway lighting must be accessible at the top and bottom of each stairway without traversing any steps.
</P>
<P>(2) Exterior stairways designed by the home manufacturer and constructed in the factory must be provided with an artificial light source located in the immediate vicinity of the top landing of the stairway. An artificial light source is not required at the top and bottom landing, provided an artificial light source is located directly over each stairway section. The illumination of exterior stairways must be controlled from inside the home.
</P>
<CITA TYPE="N">[86 FR 2517, Jan. 12, 2021]




</CITA>
</DIV8>


<DIV8 N="§ 3280.115" NODE="24:5.1.2.1.2.2.1.15" TYPE="SECTION">
<HEAD>§ 3280.115   Sound transmission between multi-dwelling unit manufactured homes.</HEAD>
<P>(a) <I>Scope.</I> This section applies to common interior walls, partitions, and floor/ceiling assemblies between adjacent dwelling units.
</P>
<P>(b) <I>Air-borne sound.</I> Walls, partitions, and floor/ceiling assemblies between stories separating dwelling units from each other must have a sound transmission class (STC) of not less than 34 for air-borne noise when tested in accordance with ASTM E90 (incorporated by reference, see § 3280.4) or calculated. Penetrations or openings in construction assemblies for piping; electrical devices; recessed cabinets; bathtubs; soffits; or heating, ventilating, or exhaust ducts must be sealed, lined, insulated or otherwise treated to maintain the required ratings. This requirement does not apply to dwelling unit entrance doors; however, such doors must be tight fitting to the frame and sill.
</P>
<P>(c) <I>Structure-borne sound.</I> Floor/ceiling assemblies between stories separating dwelling units must have an impact insulation class (IIC) rating of not less than 34 when tested in accordance with ASTM E492 (incorporated by reference, see § 3280.4).
</P>
<CITA TYPE="N">[89 FR 75745, Sept. 16, 2024]




</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:5.1.2.1.2.3" TYPE="SUBPART">
<HEAD>Subpart C—Fire Safety</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>49 FR 32008, Aug. 9, 1984, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 3280.201" NODE="24:5.1.2.1.2.3.1.1" TYPE="SECTION">
<HEAD>§ 3280.201   Scope.</HEAD>
<P>The purpose of this subpart is to set forth requirements that will assure reasonable fire safety to the occupants by reducing fire hazards and by providing measures for early detection.


</P>
</DIV8>


<DIV8 N="§ 3280.202" NODE="24:5.1.2.1.2.3.1.2" TYPE="SECTION">
<HEAD>§ 3280.202   Definitions.</HEAD>
<P>The following definitions are applicable to subparts C, H, and I of the Standards: 
</P>
<P><I>Combustible material:</I> Any material not meeting the definition of limited-combustible or non-combustible material. 
</P>
<P><I>Flame-spread rating:</I> The measurement of the propagation of flame on the surface of materials or their assemblies as determined by recognized standard tests conducted as required by this subpart. 
</P>
<P><I>Interior finish:</I> The surface material of walls, fixed or movable partitions, ceilings, columns, and other exposed interior surfaces affixed to the home's structure including any materials such as paint or wallpaper and the substrate to which they are applied. Interior finish does not include: 
</P>
<P>(1) Trim and sealant 2 inches or less in width adjacent to the cooking range and in furnace and water heater spaces provided it is installed in accordance with the requirements of § 3280.203(b)(3) or (4), and trim 6 inches or less in width in all other areas; 
</P>
<P>(2) Windows and frames; 
</P>
<P>(3) Single doors and frames and a series of doors and frames not exceeding 5 feet in width; 
</P>
<P>(4) Skylights and frames; 
</P>
<P>(5) Casings around doors, windows, and skylights not exceeding 4 inches in width; 
</P>
<P>(6) Furnishings which are not permanently affixed to the home's structure;
</P>
<P>(7) Baseboards not exceeding 6 inches in height; 
</P>
<P>(8) Light fixtures, cover plates of electrical receptacle outlets, switches, and other devices; 
</P>
<P>(9) Decorative items attached to walls and partitions (i.e., pictures, decorative objects, etc.) constituting no more than 10% of the aggregate wall surface area in any room or space not more than 32 square feet in surface area, whichever is less; 
</P>
<P>(10) Plastic light diffusers when suspended from a material which meets the interior finish provisions of § 3280.203(b); 
</P>
<P>(11) Coverings and surfaces of exposed wood beams; and 
</P>
<P>(12) Decorative items including the following: 
</P>
<P>(i) Non-structural beams not exceeding 6 inches in depth and 6 inches in width and spaced not closer than 4 feet on center; 
</P>
<P>(ii) Non-structural lattice work; 
</P>
<P>(iii) Mating and closure molding; and 
</P>
<P>(iv) Other items not affixed to the home's structure. 
</P>
<P><I>Limited combustible:</I> A material meeting:
</P>
<P>(1) The definition contained in Chapter 2 of NFPA 220-1995, Standard on Types of Building Construction; or
</P>
<P>(2) 
<FR>5/16</FR>-inch or thicker gypsum board.
</P>
<P><I>Noncombustible material:</I> A material meeting the definition contained in Chapter 2 of NFPA 220-1995, Standard on Types of Building Construction.
</P>
<P><I>Smoke alarm:</I> An alarm device that is responsive to smoke.
</P>
<P><I>Tactile notification appliance:</I> A notification appliance that alerts by the sense of touch or vibration.
</P>
<CITA TYPE="N">[58 FR 55004, Oct. 25, 1993, as amended at 67 FR 12817, Mar. 19, 2002; 70 FR 72042, Nov. 30, 2005]


</CITA>
</DIV8>


<DIV8 N="§ 3280.203" NODE="24:5.1.2.1.2.3.1.3" TYPE="SECTION">
<HEAD>§ 3280.203   Flame spread limitations and fire protection requirements.</HEAD>
<P>(a) <I>Establishment of flame spread rating.</I> The surface flame spread rating of interior-finish material must not exceed the value shown in § 3280.203(b) when tested by Standard Test Method for Surface Burning Characteristics of Building Materials, ASTM E84-01, 2001, or Standard Method of Test of Surface Burning Characteristics of Building Materials NFPA 255, 1996, except that the surface flame spread rating of interior-finish materials required by § 3280.203(b)(5) and (6) may be determined by using the Standard Test Method for Surface Flammability of Materials Using a Radiant Heat Energy Source, ASTM E 162-94. However, the following materials need not be tested to establish their flame spread rating unless a lower rating is required by the standards in this part:
</P>
<P>(1) Flame-spread rating—76 to 200. 
</P>
<P>(i) .035-inch or thicker high pressure laminated plastic panel countertop; 
</P>
<P>(ii) 
<FR>1/4</FR>-inch or thicker unfinished plywood with phenolic or urea glue; 
</P>
<P>(iii) Unfinished dimension lumber (1-inch or thicker nominal boards); 
</P>
<P>(iv) 
<FR>3/8</FR>-inch or thicker unfinished particleboard with phenolic or urea binder; 
</P>
<P>(v) Natural gum-varnished or latex- or alkyd-painted: 
</P>
<P>(A) 
<FR>1/4</FR>-inch or thicker plywood, or 
</P>
<P>(B) 
<FR>3/8</FR>-inch or thicker particleboard, or 
</P>
<P>(C) 1-inch or thicker nominal board; 
</P>
<P>(vi) 
<FR>5/16</FR>-inch gypsum board with decorative wallpaper; and 
</P>
<P>(vii) 
<FR>1/4</FR>-inch or thicker unfinished hardboard, 
</P>
<P>(2) Flame-spread rating-25 to 200, 
</P>
<P>(i) Painted metal; 
</P>
<P>(ii) Mineral-base acoustic tile; 
</P>
<P>(iii) 
<FR>5/16</FR>-inch or thicker unfinished gypsum wallboard (both latex- or alkyd-painted); and 
</P>
<P>(iv) Ceramic tile. 
</P>
<FP>(The above-listed material applications do not waive the requirements of § 3280.203(c) or § 3280.204 of this subpart.) 
</FP>
<P>(b) Flame-spread rating requirements.
</P>
<P>(1) The interior finish of all walls, columns, and partitions shall not have a flame spread rating exceeding 200 except as otherwise specified herein. 
</P>
<P>(2) Ceiling interior finish shall not have a flame spread rating exceeding 75.
</P>
<P>(3) Walls adjacent to or enclosing a furnace or water heater and ceilings above them shall have an interior finish with a flame spread rating not exceeding 25. Sealants and other trim materials 2 inches or less in width used to finish adjacent surfaces within these spaces are exempt from this provision provided that all joints are completely supported by framing members or by materials having a flame spread rating not exceeding 25.
</P>
<P>(4) Exposed interior finishes adjacent to the cooking range shall have a flame spread rating not exceeding 50, except that backsplashes not exceeding 6 inches in height are exempted. Adjacent surfaces are the exposed vertical surfaces between the range top height and the overhead cabinets and/or ceiling and within 6 horizontal inches of the cooking range. (Refer also to § 3280.204(a), Kitchen Cabinet Protection.) Sealants and other trim materials 2 inches or less in width used to finish adjacent surfaces are exempt from this provision provided that all joints are completely supported by a framing member. 
</P>
<P>(5) Kitchen cabinet doors, countertops, backsplashes, exposed bottoms, and end panels shall have a flame spread rating not to exceed 200. Cabinet rails, stiles, mullions, and top strips are exempted.
</P>
<P>(6) Finish surfaces of plastic bathtubs, shower units, and tub or shower doors shall not exceed a flame spread rating of 200.
</P>
<P>(c) Fire protective requirements.
</P>
<P>(1) Materials used to surface the following areas shall be of limited combustible material (e.g., 
<FR>5/16</FR>-inch gypsum board, etc.):
</P>
<P>(i) The exposed wall adjacent to the cooking range (see § 3280.203(b)(4));
</P>
<P>(ii) Exposed bottoms and sides of kitchen cabinets as required by § 3280.204 except that non-horizontal surfaces above the horizontal plane formed by the bottom of the range hood are not considered exposed;
</P>
<P>(iii) Interior walls and ceilings enclosing furnace and/or water heater spaces; and
</P>
<P>(iv) Combustible doors which provide interior or exterior access to furnace and/or water heater spaces. The surface may be interrupted for louvers ventilating the enclosure. However, the louvers shall not be constructed of a material of greater combustibility than the door itself (e.g., plastic louvers on a wooden door).
</P>
<P>(2) No burner of a surface cooking unit shall be closer than 12 horizontal inches to a window or an exterior door with glazing.
</P>
<CITA TYPE="N">[49 FR 32008, Aug. 9, 1984, as amended at 58 FR 55005, Oct. 25, 1993; 70 FR 72042, Nov. 30, 2005; 89 FR 75745, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.204" NODE="24:5.1.2.1.2.3.1.4" TYPE="SECTION">
<HEAD>§ 3280.204   Kitchen cabinet protection.</HEAD>
<P>(a) The exposed bottom and sides of combustible kitchen cabinets over cooking ranges to a horizontal distance of 6 inches from the outside edge of the cooking range must be protected with at least 
<FR>5/16</FR> inch thick gypsum board or equivalent limited combustible material. One-inch nominal framing members and trim are exempted from this requirement. The cabinet area over the cooking range or cooktops shall be protected by a metal hood (26-gauge sheet metal, or .017 stainless steel, or .024 aluminum, or .020 copper) with not less than a 3-inch eyebrow projecting horizontally from the front cabinet face. The 
<FR>5/16</FR>-inch thick gypsum board or equivalent material which is above the top of the hood may be supported by the hood. A 
<FR>3/8</FR>-inch enclosed air space shall be provided between the bottom surface of the cabinet and the gypsum board or equivalent material. The hood shall be at least as wide as the cooking range.
</P>
<P>(b) The 3-inch metal eyebrow required by paragraph (a) of this section will project from the front and rear cabinet faces when there is no adjacent surface behind the range, or the 
<FR>5/16</FR>-inch thick gypsum board or equivalent material shall be extended to cover all exposed rear surfaces of the cabinet.
</P>
<P>(c) <I>Alternative compliance.</I> When all exposed surfaces along the bottoms and sides of combustible kitchen cabinets are protected as described in paragraph (a) of this section, the metal hood, the 
<FR>5/16</FR>-inch thick gypsum board or equivalent material, and the 
<FR>3/8</FR>-inch airspace required by paragraph (a) of this section can be omitted, provided that:
</P>
<P>(1) A microwave oven is installed between the cabinet and the range; and
</P>
<P>(2) The microwave oven is equivalent in fire protection to the metal range hood required by paragraph (a) of this section; and
</P>
<P>(3) The microwave oven is certified to be in conformance with Microwave Cooking Appliances, UL 923-2002 (incorporated by reference, see § 3280.4).
</P>
<P>(d) When a manufactured home is designed for the future installation of a cooking range, the metal hood and cabinet protection required by paragraph (a) of this section and the wall-surfacing protection behind the range required by § 3280.203 shall be installed in the factory.
</P>
<P>(e) Vertical clearance above cooking top. Ranges shall have a vertical clearance above the cooking top of not less than 24 inches to the bottom of combustible cabinets.
</P>
<P>(f) Range hood finish materials must be installed with at least 
<FR>5/16</FR> inch thick gypsum board or equivalent limited combustible material between the metal range hood and finish materials. Except for sealants and other trim materials 2 inches or less in width, finish materials shall have a flame spread rating not exceeding the Flame Spread Index of 200.
</P>
<CITA TYPE="N">[49 FR 32008, Aug. 9, 1984, as amended at 78 FR 73982, Dec. 9, 2013; 89 FR 75745, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.205" NODE="24:5.1.2.1.2.3.1.5" TYPE="SECTION">
<HEAD>§ 3280.205   Carpeting.</HEAD>
<P>Carpeting shall not be used in a space or compartment designed to contain only a furnace and/or water heater. Carpeting may be used in other areas where a furnace or water heater is installed, provided that it is not located under the furnace or water heater.


</P>
</DIV8>


<DIV8 N="§ 3280.206" NODE="24:5.1.2.1.2.3.1.6" TYPE="SECTION">
<HEAD>§ 3280.206   Fireblocking.</HEAD>
<P>(a) <I>General.</I> Fireblocking must comply with the requirements of this section. The integrity of all fireblocking materials must be maintained.
</P>
<P>(b) <I>Fireblocking materials.</I> Fireblocking must consist of the following materials:
</P>
<P>(1) Minimum one inch nominal lumber, 
<FR>5/16</FR> inch thick gypsum board, or equivalent fire resistive materials; or
</P>
<P>(2) Other Listed or Approved Materials;
</P>
<P>(c) <I>Fireblocking locations.</I> (1) Fireblocking must be installed in concealed spaces of stud walls, partitions, and furred spaces at the floor and ceiling levels. Concealed spaces must not communicate between floor levels. Concealed spaces must not communicate between a ceiling level and a concealed roof area, or an attic space.
</P>
<P>(2) Fireblocking must be installed at the interconnection of a concealed vertical space and a concealed horizontal space that occurs:
</P>
<P>(i) Between a concealed wall cavity and the ceiling joists above; and
</P>
<P>(ii) At soffits, drop ceilings, cover ceilings, and similar locations.
</P>
<P>(3) Fireblocking must be installed around the openings for pipes, vents, and other penetrations in walls, floors, and ceilings of furnace and water heater spaces. Pipes, vents, and other penetrations that cannot be moved freely within their opening are considered to be fireblocked. Materials used to fireblock heat producing vent penetrations must be noncombustible or limited combustible types.
</P>
<CITA TYPE="N">[71 FR 72042, Nov. 30, 2005]


</CITA>
</DIV8>


<DIV8 N="§ 3280.207" NODE="24:5.1.2.1.2.3.1.7" TYPE="SECTION">
<HEAD>§ 3280.207   Requirements for thermal insulating materials.</HEAD>
<P>(a) <I>General.</I> Except for foam plastic materials and as provided in this section, exposed and concealed thermal insulating materials, including any facings, must be tested in accordance with NFPA 255-96, Standard Method of Test of Surface Burning Characteristics of Building Materials (incorporated by reference, see § 3280.4) and must have a flame spread index of 25 or less and a smoke developed index of 450 or less. The flame spread and smoke developed limitations do not apply to:
</P>
<P>(1) Coverings and facings of insulation batts or blankets installed in concealed spaces when the facings are in substantial contact with the unexposed surface of wall, floor, or ceiling finish; or
</P>
<P>(2) Cellulose loose-fill insulation that complies with paragraph (b) of this section.
</P>
<P>(b) <I>Loose-fill insulation.</I> (1) Cellulose loose-fill insulation that is not spray-applied or self-supporting must comply with, and each package must be labeled in accordance with the Consumer Product Safety Commission requirements in 16 CFR parts 1209 and 1404.
</P>
<P>(2) Other loose-fill insulation that cannot be mounted in the NFPA 255-96, test apparatus without a screen or other artificial support must be tested in accordance with CAN/ULC S102.2-M88, Standard Method of Test for Surface Burning Characteristics of Floor Coverings and Miscellaneous Materials and Assemblies (incorporated by reference, see § 3280.4), and must have a flame spread index of 25 or less and a smoke developed index of 450 or less.
</P>
<P>(c) <I>Attic locations.</I> Exposed insulation installed on the floor or ceiling forming the lower boundary of the attic must be tested in accordance with NFPA 253-2000, Standard Method of Test for Critical Radiant Flux of Floor Covering Systems Using a Radiant Heat Energy Source (incorporated by reference, see § 3280.4) and must have a critical radiant flux of not less than 0.12 watt/cm
<SU>2</SU>.


</P>
</DIV8>


<DIV8 N="§ 3280.208" NODE="24:5.1.2.1.2.3.1.8" TYPE="SECTION">
<HEAD>§ 3280.208   Requirements for foam plastic thermal insulating materials.</HEAD>
<P>(a) <I>General.</I> Foam plastic thermal insulating materials shall not be used within the cavity of walls (not including doors) or ceilings or be exposed to the interior of the home unless:
</P>
<P>(1) The foam plastic insulating material is protected by an interior finish of 
<FR>5/16</FR>-inch thick gypsum board or equivalent material for all cavities where the material is to be installed; or 
</P>
<P>(2) The foam plastic is used as a sheathing or siding backerboard, and it: 
</P>
<P>(i) Has a flame spread rating of 75 or less and a smoke-developed rating of 450 or less (not including outer covering of sheathing);
</P>
<P>(ii) Does not exceed 
<FR>3/8</FR>-inch in thickness; and
</P>
<P>(iii) Is separated from the interior of the manufactured home by a minimum of 2 inches of mineral fiber insulation or an equivalent thermal barrier; or 
</P>
<P>(3) The foam plastic insulating material has been previously accepted by the Department for use in wall and/or ceiling cavities of manufactured homes, and it is installed in accordance with any restrictions imposed at the time of that acceptance; or 
</P>
<P>(4) The foam plastic insulating material has been tested as required for its location in wall and/or ceiling cavities in accordance with testing procedures described in the Illinois Institute of Technology Research Institute (IIT) Report, “Development of Mobile Home Fire Test Methods to Judge the Fire-Safe Performance of Foam Plastic Sheathing and Cavity Insulation, IITRI Fire and Safety Research Project J-6461, 1979” or other full-scale fire tests accepted by HUD, and it is installed in a manner consistent with the way the material was installed in the foam plastic test module. The materials must be capable of meeting the following acceptance criteria required for their location:
</P>
<P>(i) <I>Wall assemblies.</I> The foam plastic system shall demonstrate equivalent or superior performance to the control module as determined by:
</P>
<P>(A) Time to reach flashover (600 °C in the upper part of the room);
</P>
<P>(B) Time to reach an oxygen (O<E T="52">2</E>) level of 14% (rate of O<E T="52">2</E> depletion), a carbon monoxide (CO) level of 1%, a carbon dioxide (CO<E T="52">2</E>) level of 6%, and a smoke level of 0.26 optical density/meter measured at 5 feet high in the doorway; and 
</P>
<P>(C) Rate of change concentration for O<E T="52">2</E>, CO, CO<E T="52">2</E> and smoke measured 3 inches below the top of the doorway. 
</P>
<P>(ii) <I>Ceiling assemblies.</I> A minimum of three valid tests of the foam plastic system and one valid test of the control module shall be evaluated to determine if the foam plastic system demonstrates equivalent or superior performance to the control module. Individual factors to be evaluated include intensity of cavity fire (temperature-time) and post-test damage. 
</P>
<P>(iii) <I>Post-test damage assessment for wall and ceiling assemblies.</I> The overall performance of each total system shall also be evaluated in determining the acceptability of a particular foam plastic insulating material. 
</P>
<P>(b) All foam plastic thermal insulating materials used in manufactured housing shall have a flame spread rating of 75 or less (not including outer covering or sheathing) and a maximum smoke-developed rating of 450.
</P>
<CITA TYPE="N">[49 FR 32008, Aug. 9, 1984, as amended at 70 FR 72043, Nov. 30, 2005. Redesignated at 78 FR 73982, Dec. 9, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 3280.209" NODE="24:5.1.2.1.2.3.1.9" TYPE="SECTION">
<HEAD>§ 3280.209   Smoke alarm requirements.</HEAD>
<P>(a) <I>Labeling.</I> Each smoke alarm required under paragraph (b) of this section must conform with the requirements of UL 217 (incorporated by reference, see § 3280.4) or UL 268 (incorporated by reference, see § 3280.4), and must bear a label to evidence conformance. Combination smoke and carbon monoxide alarms shall be listed and must bear a label to evidence conformance with UL 217 and UL 2034.
</P>
<P>(b) <I>Combination alarms.</I> Combination smoke and carbon monoxide alarms shall be permitted to be used in lieu of smoke alarms. If installed, such alarms must meet location requirements for both smoke alarms and carbon monoxide alarms.
</P>
<P>(c) <I>Required smoke alarm locations.</I> (1) At least one smoke alarm must be installed in each of the following locations:
</P>
<P>(i) To protect both the living area and kitchen space. Manufacturers are encouraged to locate the alarm in the living area remote from the kitchen and cooking appliances. A smoke alarm located within 20 feet horizontally of a cooking appliance must incorporate a temporary silencing feature or be of a photoelectric type.
</P>
<P>(ii) In each room designed for sleeping.
</P>
<P>(iii) On the ceiling of the upper level near the top or above each stairway, other than a basement stairway, in any multistory home completed in accordance with this part or part 3282 of this chapter. The alarm must be located so that smoke rising in the stairway cannot be prevented from reaching the alarm by an intervening door or obstruction.
</P>
<P>(2) For each home designed to be placed over a basement, the manufacturer must provide a smoke alarm for the basement and must install at the factory an electrical junction box for the installation of this smoke alarm and for its interconnection to other smoke alarms required by this section. The instructions for installers and information for homeowners required in paragraph (f) of this section must clearly indicate that a smoke alarm should be installed and is to be located on the basement ceiling near the stairway.
</P>
<P>(3) A smoke alarm required under this section must not be placed in a location that impairs its effectiveness or in any of the following locations:
</P>
<P>(i) Within 3 feet horizontally from any discharge grille when a home is equipped or designed for future installation of a roof-mounted evaporative cooler or other equipment discharging conditioned air through a ceiling grille into the living space; and
</P>
<P>(ii) In any location or environment that is prohibited by the terms of its listing, except as permitted by this section.
</P>
<P>(d) <I>Mounting requirements.</I> (1) Except in rooms with peaked sloping or shed sloping ceilings with a slope of more than 1.5/12 or as permitted pursuant to paragraph (e) of this section, smoke alarms must be mounted either:
</P>
<P>(i) On the ceiling at least 4 inches from each wall; or
</P>
<P>(ii) On a wall with the top of the alarm not less than 4 inches below the ceiling, and not farther from the ceiling than 12 inches or the distance from the ceiling specified in the smoke alarm manufacturer's listing and instructions, whichever is less.
</P>
<P>(2) Except as permitted pursuant to paragraph (e) of this section, in rooms with peaked sloping ceilings with a slope of more than 1.5/12, smoke alarms must be mounted on the ceiling within 3 feet, measured horizontally, from the peak of the ceiling; at least 4 inches, measured vertically, below the peak of the ceiling; and at least 4 inches from any projecting structural element.
</P>
<P>(3) Except as permitted pursuant to paragraph (e) of this section, in rooms with shed sloping ceilings with a slope of more than 1.5/12, smoke alarms must be mounted on the ceiling within 3 feet, measured horizontally, of the high side of the ceiling, and not closer than 4 inches from any adjoining wall surface and from any projecting structural element.
</P>
<P>(e) <I>Connection to power source.</I> (1) Each smoke alarm must be powered from:
</P>
<P>(i) The electrical system of the home as the primary power source and a battery as a secondary power source; or
</P>
<P>(ii) A battery rated for a 10-year life, provided the smoke alarm is listed for use with a 10-year battery.
</P>
<P>(2) Each smoke alarm whose primary power source is the home electrical system must be mounted on an electrical outlet box and connected by a permanent wiring method to a general electrical circuit. More than one smoke alarm is permitted to be placed on the same electrical circuit. The wiring circuit for the alarm must not include any switches between the over-current protective device and the alarm, and must not be protected by a ground fault circuit interrupter.
</P>
<P>(3) Smoke alarms required under this section must be interconnected such that the activation of any one smoke alarm causes the alarm to be triggered in all required smoke alarms in the home.
</P>
<P>(f) <I>Visible and tactile notification appliances.</I> (1) In addition to the smoke alarms required pursuant to this section, the manufacturer must provide visible and listed tactile notification appliances if these appliances are ordered by the purchaser or retailer before the home enters the first stage of production. These appliances are required to operate from the primary power source, but are not required to operate from a secondary power source.
</P>
<P>(2) A visible notification appliance in a room designed for sleeping must have a minimum rating of 177 candela, except that when the visible notification appliance is wall-mounted or suspended more than 24 inches below the ceiling, a minimum rating of 110 candela is permitted.
</P>
<P>(3) A visible notification appliance in an area other than a room designed for sleeping must have a minimum rating of 15 candela.
</P>
<P>(g) <I>Testing and maintenance.</I> (1) Each required smoke alarm installed at the factory must be operationally tested, after conducting the dielectric test specified in § 3280.810(a), in accordance with the alarm manufacturer's instructions. A smoke alarm that does not function as designed during the test and is not fixed so that it functions properly in the next retest must be replaced. Any replacement smoke alarm must be successfully tested in accordance with this paragraph.
</P>
<P>(2) Home manufacturers must provide specific written instructions for installers on how to inspect and test the operation of smoke alarms during installation of the home. These instructions must indicate that any smoke alarm that does not meet the inspection or testing requirements needs to be replaced and retested.
</P>
<P>(3) Home manufacturers must provide the homeowner with the alarm manufacturer's information describing the operation, method and frequency of testing, and proper maintenance of the smoke alarm. This information must be provided in same manner and location as the consumer manual required by § 3282.207 of this chapter, but does not have to be incorporated into the consumer manual. No dealer, distributor, construction contractor, or other person shall interfere with the distribution of this information
</P>
<CITA TYPE="N">[67 FR 12817, Mar. 19, 2002, as amended at 67 FR 49795, July 31, 2002. Redesignated at 78 FR 73982, Dec. 9, 2013; 86 FR 2518, Jan. 12, 2021; 89 FR 75745, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.210" NODE="24:5.1.2.1.2.3.1.10" TYPE="SECTION">
<HEAD>§ 3280.210   Fire testing.</HEAD>
<P>All fire testing conducted in accordance with this subpart shall be performed by nationally recognized testing laboratories which have expertise in fire technology. In case of dispute, the Secretary shall determine if a particular agency is qualified to perform such fire tests.
</P>
<CITA TYPE="N">[49 FR 32011, Aug. 9, 1984. Redesignated at 78 FR 73982, Dec. 9, 2013] 


</CITA>
</DIV8>


<DIV8 N="§ 3280.211" NODE="24:5.1.2.1.2.3.1.11" TYPE="SECTION">
<HEAD>§ 3280.211   Carbon monoxide alarm requirements.</HEAD>
<P>(a) <I>Labeling.</I> Carbon monoxide alarms shall be listed and must bear a label to evidence conformance with UL 2034 (incorporated by reference, see § 3280.4). Combination carbon monoxide and smoke alarms shall be listed and must bear a label to evidence conformance with UL 2034 and UL 217 (incorporated by reference, see § 3280.4).
</P>
<P>(b) <I>Required carbon monoxide alarm locations.</I> Carbon monoxide alarms must be installed in each home containing either a fuel burning appliance or designed by the home manufacturer to include an attached garage. Carbon monoxide alarms must be installed outside of each separate sleeping area in the immediate vicinity of the bedrooms and in accordance with the alarm manufacturer's installation instructions. Where a fuel-burning appliance is located within a bedroom or its attached bathroom, a carbon monoxide alarm must be installed within the bedroom and in accordance with the manufacturer's installation instructions. Carbon monoxide alarms must be installed in conformance with NFPA 720 (incorporated by reference, see § 3280.4).
</P>
<P>(c) <I>Interconnectivity.</I> Where more than one carbon monoxide alarm is required to be installed, the alarm devices shall be interconnected in such a manner that the actuation of one alarm will activate all the alarms installed.
</P>
<P>(d) <I>Connection to power source.</I> Each carbon monoxide alarm must be powered from the electrical system of the home as the primary power source and a battery as a secondary power source.
</P>
<P>(e) <I>Combination alarms.</I> Combination carbon monoxide and smoke alarms shall be permitted to be used in lieu of carbon monoxide alarms. When combination carbon monoxide and smoke alarms are used, they shall be installed to also comply with § 3280.209.
</P>
<P>(f) <I>Basement applications.</I> For each home designed to be placed over a basement, the manufacturer must provide a carbon monoxide alarm for the basement and must install the electrical junction box for the installation of this carbon monoxide alarm for its interconnection with other alarms required by this section.
</P>
<P>(g) <I>Testing.</I> Each required carbon monoxide alarm installed at the factory must be operationally tested, after conducting the dielectric test specified in §  3280.810(a), in accordance with the alarm manufacturer's instructions. A carbon monoxide alarm that does not function as designed during the test and is not satisfactorily repaired so that it functions properly in the next retest must be replaced. Any replacement carbon monoxide alarm must be successfully tested in accordance with this section.
</P>
<CITA TYPE="N">[86 FR 2519, Jan. 12, 2021, as amended at 89 FR 75745, Sept. 16, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 3280.212" NODE="24:5.1.2.1.2.3.1.12" TYPE="SECTION">
<HEAD>§ 3280.212   Factory constructed or site-built attached garages.</HEAD>
<P>(a) When a manufactured home is designed for factory construction with an attached garage or is designed for construction of an attached site-built garage that is not self-supported, the manufacturer must design the manufactured home to accommodate all appropriate live and dead loads from the attached garage structure that will be transferred through the manufactured home structure to the home's support and anchoring systems.
</P>
<P>(b) The design must specify the following home and garage characteristics including maximum width, maximum sidewall height, maximum roof slope, live and dead loads, and other design limitations or restrictions using loads provided by this Code.
</P>
<P>(c) When a manufactured home is factory constructed with an attached garage or is constructed for the attachment of a site-built garage, provisions must be made to provide fire separation between the garage and the manufactured home.
</P>
<P>(1) The garage must be separated from the manufactured home and its attic by not less than 
<FR>1/2</FR>-inch gypsum board or equivalent applied to the garage side of the manufactured home, separation shall be from the underside of the floor to the underside of the roof deck and may be provided on-site as part of an On Site Completion of Construction approval. Garages beneath habitable rooms must be separated from all habitable rooms by 
<FR>5/8</FR>-inch, Type X gypsum board or equivalent. Where the separation is a floor ceiling assembly, the structure supporting the separation must also be protected by not less than 
<FR>1/2</FR>-inch gypsum board or equivalent. The design approval and the manufacturer's installation instructions must also include provision for equivalent vertical or horizontal separation between the garage and the manufactured home as appropriate.
</P>
<P>(2) [Reserved]
</P>
<P>(d) Openings from a garage directly into a room designated for sleeping purposes are not permitted.
</P>
<P>(e) Other openings between the garage and the manufactured home must:
</P>
<P>(1) Be equipped with solid wood doors not less than 1
<FR>3/8</FR> inch in thickness, or solid or honeycomb steel doors not less than 1
<FR>3/8</FR> inch in thickness, or 20-minute fire-rated doors, and all doors shall be of the self-closing type; and
</P>
<P>(2) Be in addition to the two exterior doors required by § 3280.105.
</P>
<P>(f) Ducts penetrating the walls or ceilings separating the manufactured home from the garage must be constructed of a minimum No. 26 gauge steel or other approved material and must have no openings into the garage.
</P>
<P>(g) Installation instructions shall be provided by the home manufacturer that, in addition to addressing the fire separation as required in this section, shall identify acceptable attachment locations, indicate design limitations for the attachment of the garage including acceptable live and dead loads for which the home has been designed to accommodate, and provide support and anchorage designs as necessary to transfer all imposed loads to the ground in accordance with §§ 3285.301 and 3285.401 of this chapter.
</P>
<P>(h) A site-built, self-supported garage is considered an add-on, per 3282.8(j)(1), that does not affect the ability of the manufactured home to comply with the Construction and Safety Standards. The design and construction of the garage is subject to state and or local authorities having jurisdiction.
</P>
<CITA TYPE="N">[86 FR 2519, Jan. 12, 2021]






</CITA>
</DIV8>


<DIV8 N="§ 3280.213" NODE="24:5.1.2.1.2.3.1.13" TYPE="SECTION">
<HEAD>§ 3280.213   Factory constructed or site-built attached carports.</HEAD>
<P>(a) When a manufactured home is designed for factory construction with an attached carport or is designed for construction of an attached site-built carport, the manufacturer must design the manufactured home to accommodate all appropriate live and dead loads from the attached carport structure that will be transferred through the manufactured home structure to the home's support and anchoring systems.
</P>
<P>(b) The design, including the home's installation instructions, must specify the following home and carport characteristics including maximum width, maximum sidewall height, live and dead loads, and other design limitations or restrictions.
</P>
<P>(1) Alternatively, the manufacturer may provide, by design and home installation instructions, the maximum live and dead loads, and the applied loading locations, that the home is designed to resist from the carport, and other design limitations or restrictions.
</P>
<P>(2) [Reserved].
</P>
<P>(c) Homes may be designed with a factory-installed host beam (<I>i.e.,</I> ledger board) or specific roof truss rail for the attachment of the carport to the exterior wall of the home. The host beam (<I>i.e.,</I> ledger board) must be designed to transmit the appropriate live and dead loads at the interface between the carport and the manufactured home. In cases where the carport is designed to be supported by the roof truss overhang, the roof trusses must be designed to support the additional live and dead loads from the carport.
</P>
<P>(1) Any portion of the host beam (<I>i.e.,</I> ledger board) and all fasteners exposed to the weather shall be protected in accordance with § 3280.307.
</P>
<P>(2) [Reserved].
</P>
<P>(d) To ensure that the attachment of the carport does not interfere with roof or attic ventilation, the manufacturer must provide specific instructions to ensure continued compliance with the manufactured home roof or attic ventilation requirements in accordance with § 3280.504(d).
</P>
<P>(e) Installation instructions shall be provided by the home manufacturer that identify acceptable attachment locations, indicate design limitations for the attachment of the carport including acceptable live and dead loads for which the home has been designed to accommodate, and provide support and anchorage designs as necessary to transfer all imposed loads to the ground in accordance with §§ 3285.301 and 3285.401 of this chapter.
</P>
<P>(1) The manufacturer must ensure that any anchoring system designs incorporating anchorage to resist combined shear wall and carport uplift loads are evaluated for adequacy to resist the combined loads, taking into consideration the limitations of the ground anchor test and certification.
</P>
<P>(2) [Reserved].
</P>
<P>(f) A site-built, self-supported carport is considered an add-on, as provided by § 3282.8(j)(1), that does not affect the ability of the manufactured home to comply with the standards. The design and construction of the carport is subject to state and or local authorities having jurisdiction.
</P>
<CITA TYPE="N">[86 FR 2519, Jan. 12, 2021]




</CITA>
</DIV8>


<DIV8 N="§ 3280.214" NODE="24:5.1.2.1.2.3.1.14" TYPE="SECTION">
<HEAD>§ 3280.214   Fire sprinkler system requirements.</HEAD>
<P>(a) <I>General.</I> (1) Fire sprinkler systems are not required by this subpart; however, when a manufacturer installs a fire sprinkler system as an optional feature selected by the consumer or to meet State or local laws and regulations, this section establishes the requirements for the installation of a fire sprinkler system in a manufactured home.
</P>
<P>(2) This section applies to both stand-alone and multipurpose fire sprinkler systems that do not include the use of antifreeze.
</P>
<P>(3) A back-flow preventer is not required to separate a stand-alone sprinkler system from the water distribution system.
</P>
<P>(b) <I>Design.</I> The design of the fire sprinkler system itself shall be in accordance with NFPA 13D (incorporated by reference, see § 3280.4) or a design which is deemed to be equivalent to the design method used in NFPA 13D.
</P>
<P>(c) <I>Sprinkler location.</I> Sprinklers must be installed to protect all areas inside the manufactured home except:
</P>
<P>(1) Attics and normally unoccupied concealed spaces;
</P>
<P>(2) Closets not exceeding 24 square feet in area, with the smallest dimension not greater than three feet and having at least one base layer of minimum 5/16 inch thick gypsum board on wall and ceiling surfaces;
</P>
<P>(3) Bathrooms not more than 55 square feet in area;
</P>
<P>(4) Garages, carports, open attached porches and similar structures; and
</P>
<P>(5) Closets or alcoves containing heat-producing appliance, regardless of size if the closet or alcove complies with § 3280.203(b)(3).
</P>
<P>(d) <I>Sprinklers.</I> Sprinklers shall be new, listed residential sprinklers and shall be installed in accordance with the sprinkler manufacturer's installation instructions.
</P>
<P>(e) <I>Temperature rating and separation from heat sources.</I> Sprinklers are to have a temperature rating and be separated from heat sources as follows:
</P>
<P>(1) Sprinklers separated from heat sources as required by the sprinkler manufacturer's installation instructions are to a have a temperature rating of no less than 135 °F (57 °C) and not more than 170 °F (77 °C).
</P>
<P>(2) Sprinklers located within the distance to a heat source as specified in table 7.5.5.3 of NFPA 13D (incorporated by reference, see § 3280.4) are to have an intermediate temperature rating not less than 175 °F (79 °C) and not more than 225 °F (107 °C) when installed in the following locations:
</P>
<P>(i) Attics;
</P>
<P>(ii) Concealed spaces located directly beneath a roof; and
</P>
<P>(iii) Directly under skylights where the sprinkler is exposed to direct sunlight.
</P>
<P>(f) <I>Freezing areas.</I> Piping must be protected from freezing as required by § 3280.603(b)(4). Where sprinklers are required in areas subject to freezing, dry-sidewall or dry-pendent sprinklers extending from nonfreezing area into a freezing area, must be installed.
</P>
<P>(g) <I>Sprinkler area of coverage.</I> The area of coverage of a single sprinkler shall not exceed 400 square feet and shall be based on the sprinkler listing and the sprinkler manufacturer's installation instructions. Sprinkler discharge shall not be blocked by obstructions unless additional sprinklers are installed to protect the obstructed area. Sprinkler separation from obstructions shall comply with the minimum distances specified in the sprinkler manufacturer's instructions. Pendent sprinklers within 3 feet of the center of a ceiling fan, surface-mounted ceiling light or other similar object shall be considered to be obstructed and additional sprinklers shall be installed, except that in all closets 50 square feet or less in size, one sprinkler shall be sufficient. Sidewall sprinklers within 5 feet of the center of a ceiling fan, surface-mounted ceiling light or other similar object shall be considered to be obstructed and additional sprinklers shall be installed.
</P>
<P>(h) <I>Sprinkler installation on systems assembled with solvent cement.</I> The solvent cementing of threaded adapter fittings shall be completed and threaded adapters for sprinklers shall be verified as being clear of excess cement prior to the installation of sprinklers on systems assembled with solvent cement.
</P>
<P>(i) <I>Painting, caulking or modifying sprinklers is prohibited.</I> Painted, caulked, modified, or damaged sprinklers shall be replaced.
</P>
<P>(j) <I>Sprinkler piping support.</I> Sprinkler piping shall be supported in accordance with § 3280.608. Sprinkler piping must comply with all requirements for cold-water distribution piping. For multipurpose piping systems, the sprinkler piping shall connect to and be part of the cold-water distribution piping system. Nonmetallic pipe and tubing, such as CPVC and PEX, shall be listed for use in residential fire sprinkler systems. Nonmetallic pipe and tubing systems shall be protected from exposure to the living space by a layer of not less than 
<FR>5/16</FR> inch thick gypsum wallboard, 1/2 inch thick plywood, or other material having a 15 minute fire rating. Pipe protection shall not be required where exposed piping is permitted by the pipe listing and in areas that do not require protection with sprinklers as specified in paragraph (c) of this section.
</P>
<P>(k) <I>Shutoff valves.</I> Shutoff valves shall not be installed in any location where the valve would isolate piping serving one or more sprinklers, except for shutoff valves installed for the entire water distribution system.
</P>
<P>(l) <I>Means of drainage.</I> A means to drain the sprinkler system shall be provided on the system side of the water supply inlet.
</P>
<P>(m) <I>Minimum flow rate.</I> The sprinkler system must provide at least the flow rate required to produce a minimum discharge density of 0.05 gpm/ft
<SU>2</SU> from each sprinkler and be determined by using the sprinkler manufacturer's published data for the specific sprinkler model based on the area of coverage, ceiling configuration, temperature rating and any other conditions specified by the sprinkler manufacturer.
</P>
<P>(n) <I>Design flow rate.</I> The design flow rate for the sprinkler system shall be based on the following:
</P>
<P>(1) The design flow rate for a room having only one sprinkler shall be the flow rate required for that sprinkler, as determined by paragraph (m) of this section.
</P>
<P>(2) The design flow rate for a room having two or more sprinklers shall be determined by identifying the sprinkler in that room with the highest required flow rate, based on paragraph (m) of this section, and multiplying that flow rate by two.
</P>
<P>(3) Where the sprinkler manufacturer's instructions specify different criteria for ceiling configurations that are not smooth, flat and horizontal, the required design flow rate for the room shall comply with the sprinkler manufacturer's instructions.
</P>
<P>(4) The design flow rate for the sprinkler system shall be the flow required by the room with the largest flow rate, based on paragraph (n)(1), (2), or (3) of this section.
</P>
<P>(5) For the purposes of this section, it shall be permissible to reduce the design flow rate for a room by subdividing the space into two or more rooms, where each room is evaluated separately with respect to the required design flow rate. Walls and a ceiling shall bound each room. Openings in walls shall have a lintel (header) not less than 8 inches in depth and each lintel shall form a solid barrier between the ceiling and the top of the opening.
</P>
<P>(o) <I>Pipe sizing and minimum required supply pressure.</I> (1) The piping to sprinklers shall be sized for the flow required by paragraph (n) of this section. The flow rate required to supply the plumbing fixtures shall not be required to be added to the sprinkler design flow rate. The minimum pipe size from the water supply inlet to any sprinkler shall be 
<FR>3/4</FR> inch diameter. Threaded adapter fittings at the point where sprinklers are attached to the piping shall be a minimum of 
<FR>1/2</FR> inch diameter.
</P>
<P>(2) Piping shall be sized by determining the Available Pressure to offset friction loss in piping and identifying a piping material, diameter and length in accordance with the following:
</P>
<P>(i) <I>Minimum supply pressure required.</I> The following equation shall be used to determine the required supply pressure at the fire sprinkler system supply inlet.
</P>
<EXTRACT>
<HD2>Equation 1 to Paragraph <E T="01">(o)(2)(i):</E>
</HD2>
<FP-2>PSUP = PT+PLE+PSP
</FP-2>
<FP-2>Where:
</FP-2>
<FP-2>PSUP = Pressure required at the fire sprinkler system supply inlet. (<I>Note:</I> This is the pressure which is entered on the Fire Sprinkler System Certificate under “Minimum Water Supply Required.”)
</FP-2>
<FP-2>PT = Pressure loss in the fire sprinkler system piping.
</FP-2>
<FP-2>PLE = Pressure loss from elevation change. (<I>Note:</I> Normally 4.4 psi for single story houses and 8.7 psi for two story houses).
</FP-2>
<FP-2>PSP = Maximum pressure required by a sprinkler.</FP-2></EXTRACT>
<P>(ii) [Reserved]
</P>
<P>(3) Determination of PSUP shall be in accordance with the following procedure:
</P>
<P>(i) <I>Step 1.</I> Determine PT. For the specific design in question determine the distance (developed length) from the fire sprinkler system supply inlet to the most remote sprinkler. Refer to tables 8.4.10.2(d) through (i) of NFPA 13D (incorporated by reference, see § 3280.4) and select the correct table for the fire sprinkler system pipe material and pipe size used. Using the system design flow rate from paragraph (n) of this section find the “Allowable length of pipe” column, which is closest to, but not less than, the developed length for the design in question. The “Available Pressure” in the column heading is PT. (<I>Note:</I> Interpolation between “Allowable length of pipe” (developed length) and “Available Pressure” (PT) is permitted. Example: Using table 8.4.10.2(d) of NFPA 13D, Sprinkler Flow Rate = 16 gpm, developed length = 70 feet, Available Pressure (PT) = 17.5 psi.)
</P>
<P>(ii) <I>Step 2.</I> Determine PLE. Refer to table 8.4.10.2.(c) of NFPA 13D. The elevation used in applying the table shall be the difference between the highest sprinkler and the fire sprinkler system supply inlet. Interpolation is permitted. (<I>Note:</I> If the highest sprinkler is lower than the fire sprinkler system supply inlet then subtract this value in equation 1 to paragraph (o)(2)(i), instead of adding it.)
</P>
<P>(iii) <I>Step 3.</I> Determine PSP. Determine the maximum pressure required by any individual sprinkler based on the flow rate for each sprinkler as set forth in paragraph (n) of this section. The required pressure is provided in the data provided by the sprinkler manufacturer for the specific model based on the selected flow rate.
</P>
<P>(p) <I>Testing.</I> The fire sprinkler system piping shall be subject to the same test as the water distribution system in § 3280.612(a). For multipurpose fire sprinkler systems, it shall be permitted to test the fire sprinkler system piping simultaneously with the domestic water distribution system.
</P>
<P>(q) <I>Fire Sprinkler System Certificate.</I> The manufacturer must permanently affix a Fire Sprinkler System Certificate adjacent to the data plate. The manufacturer must specify on the Fire Sprinkler System Certificate the minimum required pressure in pounds per square inch (psi) and flow rate in gallons per minute (gpm) for the water supply system. The Fire Sprinkler System Certificate is to include all the statements and required information arranged in substantially the same layout as shown in the following example.


</P>
<EXTRACT>
<HD1>Example 1 to Paragraph (<E T="01">q</E>)—Example Certificate
</HD1>
<HD1>Fire Sprinkler System Certificate
</HD1>
<NOTE>
<HED>Note:</HED>
<P>This label contains important information about the fire sprinkler system installed in this home. Please do not remove, alter, or cover this label.</P></NOTE>
<HD3>General Information
</HD3>
<FP-DASH>Name of Manufacturer:
</FP-DASH>
<FP-DASH>Manufactured Home Serial Number:
</FP-DASH>
<P>The residential fire sprinkler system installed in this dwelling unit is in compliance with 24 CFR part 3280.214 Fire Sprinkler System Requirements. The manufactured home installer must ensure that water supply testing is completed by a fire protection technician, as required below at the home site.
</P>
<P><E T="04">Warning:</E> When necessary, replace components only with identical components or those determined to have equivalent performance characteristics with respect to flows and pressures.
</P>
<HD1>Minimum Water Supply Required
</HD1>
<P><E T="04">Warning:</E> For this system to operate properly, the following minimum supply of water must be available at the point of connection to the residential fire sprinkler system (to be completed by the home manufacturer):
</P>
<FP>gpm (gallons per minute) at not less than___</FP>
<FP>psi (pounds per square inch)
</FP>
<P>The water supply shall have the capacity to provide the above required design flow rate for the sprinklers for a period of time as follows:
</P>
<P>1. Seven minutes for manufactured homes one story in height and less than 2,000 square feet in area.
</P>
<P>2. Ten minutes for manufactured homes two or more stories in height or equal to or greater than 2,000 square feet in area.
</P>
<P>Where a water supply tank, a well system or a combination thereof is used, any combination of tank storage or well system shall be permitted to meet the capacity requirement.


</P>
<P>An installer shall ensure that a fire protection technician completes and signs this Fire Sprinkler System Certificate and shall maintain a copy of the test report from the onsite testing in accordance with the home manufacturer's instructions and that the above listed required minimum water supply is available.
</P>
<FP>Company and/or Individual Name of Fire Protection Technician:
</FP>
<FP-DASH>
</FP-DASH>
<FP>License/Certification Number of Technician:
</FP>
<FP-DASH>
</FP-DASH>
<FP>Address of Technician:
</FP>
<FP-DASH>
</FP-DASH>
<FP>Date Water Supply Tested:
</FP>
<FP-DASH>
</FP-DASH>
<P><E T="04">Warning:</E> This structure contains a residential fire sprinkler system. Do not alter or make additions to the water supply without first contacting the home manufacturer or a fire protection technician. Any control valve(s) on the water supply to the residential fire sprinkler system must be in the full, open position for the system to operate properly. If the valves must be closed temporarily to service the sprinkler, verify that they are left fully open and secured when service is complete.</P></EXTRACT>
<P>(r) <I>Sign or valve tag.</I> A sign or valve tag shall be installed at the fire sprinkler system supply inlet stating the following:
</P>
<EXTRACT>
<P>Warning, the water supply system supplies fire sprinklers that require specific flows and pressures to fight a fire. Devices that restrict the flow or decrease the pressure or automatically shut off the water to the fire sprinkler system, such as water filtration systems, water softeners and automatic shutoff valves, shall not be added to this system during installation without HUD approval. Later actions that may impact the water supply system should not be completed without first contacting the home manufacturer or a fire protection technician. Please do not remove this sign.</P></EXTRACT>
<P>(s) <I>Component instructions.</I> If the manufacturer of a fire sprinkler system component used in a system provides written instructions and procedures for the operation, maintenance, periodic testing, and/or repair of the component, a copy of the instructions and procedures shall be left in each home for the consumer.
</P>
<P>(t) <I>Manufacturer's installation instructions for fire sprinkler systems.</I> Manufacturer's installation instructions must provide the following:
</P>
<P>(1) <I>Specific instructions for the inspection and testing of the fire sprinkler system during the installation of the home.</I> Testing requirements are to be consistent with § 3280.612(a).
</P>
<P>(2) <I>Required statement.</I> If this manufactured home contains a fire sprinkler system, an installer shall ensure a fire protection technician tests the water supply at the site and completes the Fire Safety System Certificate and that the test reports the minimum conditions described on the Fire Sprinkler System Certificate in the home (located next to the data plate).
</P>
<CITA TYPE="N">[89 FR 75745, Sept. 16, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 3280.215" NODE="24:5.1.2.1.2.3.1.15" TYPE="SECTION">
<HEAD>§ 3280.215   Multi-dwelling unit manufactured homes.</HEAD>
<P>(a) <I>General.</I> In manufactured homes with more than one dwelling unit, each dwelling unit must be separated from each other by wall and floor assemblies having not less than a 1 hour fire resistance rating when tested in accordance with ASTM E119 or UL 263 (both incorporated by reference, see § 3280.4) or having a fire resistance rating of not less than a 1 hour when calculated in accordance with chapter 16 of the AWC National Design Specification (NDS) for Wood Construction, with Supplement (incorporated by reference, see § 3280.4).
</P>
<P>(b) <I>Fire resistance walls.</I> Fire-resistance-rated floor/ceiling and wall assemblies must extend to and be tight against the exterior wall, and wall assemblies must extend from the foundation to the underside of the roof sheathing except as follows:
</P>
<P>(1) Wall assemblies need not extend through attic spaces where the ceiling is protected by not less than 
<FR>5/8</FR> inch Type X gypsum board and attic draftstop constructed as specified in § 3280.216 is provided above and along the wall assembly separating the dwelling units; and
</P>
<P>(2) The structural framing supporting the ceiling is protected by not less than 
<FR>1/2</FR> inch gypsum board or equivalent.
</P>
<P>(3) A fire resistance rating of 
<FR>1/2</FR> hour shall be permitted in buildings equipped throughout with an automatic sprinkler system installed in accordance with § 3280.214.
</P>
<P>(c) <I>Supporting construction.</I> Where floor assemblies are required to be fire resistant rated by this section, the supporting construction of such assemblies must have an equal or greater fire resistance rating.
</P>
<P>(d) <I>Dwelling unit rated penetrations.</I> Penetrations of wall or floor-ceiling assemblies in multi-dwelling unit manufactured homes are required to be fire-resistance rated in accordance with this section.
</P>
<P>(1) <I>Through penetrations.</I> (i) Through penetrations must be installed as tested in the approved fire-resistance rated assembly; or
</P>
<P>(ii) Through penetrations must be protected by an approved penetration fire stop system installed as tested in accordance with ASTM E814 or UL 1479 (both incorporated by reference, see § 3280.4), with a positive pressure differential of not less than 0.01 inch of water and must have an <I>F</I> rating of not less than the required fire resistance rating of the wall or floor-ceiling assembly penetrated; or
</P>
<P>(iii) Where the penetrating items are steel, ferrous or copper pipes, tubes, or conduits, the material used to fill the annular space must prevent the passage of flame and hot gasses sufficient to ignite cotton waste where subjected to ASTM E119 or UL 263 (both incorporated by reference, see § 3280.4) time temperature fire conditions under a positive pressure differential of not less than 0.01 inch of water at the location of the through penetration for the time period equivalent to the fire resistance rating of the construction penetrated.
</P>
<P>(2) <I>Membrane penetrations.</I> Membrane penetrations must comply with paragraph (d)(1) of this section. Where walls are required to have a fire resistance rating, recessed fixtures must be installed so that the required fire resistance rating will not be reduced except as follows:
</P>
<P>(i) By membrane penetrations of fire-resistant-rated walls, ceiling/floors and partitions by steel electrical boxes provided they do not exceed 16 square inches in area and the aggregate area of the openings through the membrane does not exceed 100 square inches in any 100 square feet of wall area. The annular space between the wall membrane and the box must not exceed 
<FR>1/8</FR> inch. Such boxes on opposite sides of the wall must be separated by one of the following:
</P>
<P>(A) A horizontal distance of not less than 24 inches where the wall or partition is constructed with individual non-communicating stud cavities; or
</P>
<P>(B) A horizontal distance of not less than the depth of the wall cavity, where the wall cavity is filled with loose-fill insulation; or
</P>
<P>(C) Solid fire blocking in accordance with § 3280.206; or
</P>
<P>(D) Protecting both boxes with listed putty pads; or
</P>
<P>(E) Other listed materials and methods.
</P>
<P>(ii) By membrane penetrations of listed electrical boxes of any materials provided that the boxes have been tested for use in fire resistance rated assemblies and are installed in accordance with the instructions included with the listing. The annular space between the wall membrane and the box must not exceed 
<FR>1/8</FR> inch unless otherwise noted. Such boxes on opposite sides of the wall must be separated by one of the following:
</P>
<P>(A) The horizontal distance specified in the listing of the electrical boxes; or
</P>
<P>(B) Sold fire blocking in accordance with § 3280.206; or
</P>
<P>(C) Protecting boxes with listed putty pads; or
</P>
<P>(D) Other listed materials and methods.
</P>
<P>(iii) By the annular space created by the penetration of a fire sprinkler provided that it is covered by a metal escutcheon plate.
</P>
<CITA TYPE="N">[89 FR 75745, Sept. 16, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 3280.216" NODE="24:5.1.2.1.2.3.1.16" TYPE="SECTION">
<HEAD>§ 3280.216   Draftstopping requirements for multi-dwelling unit manufactured homes.</HEAD>
<P>(a) When there is usable space both above and below the concealed space of a floor/ceiling assembly in multi-dwelling unit manufactured homes, draftstops must be installed so that the area of the concealed space does not exceed 1,000 square feet. Draftstopping must divide the concealed space into approximately equal areas. Where the assembly is enclosed by a floor membrane above and a ceiling membrane below, draftstopping shall be provided in floor-ceiling assemblies under the following circumstances:
</P>
<P>(1) Ceiling is suspended under the floor framing; or
</P>
<P>(2) Floor framing is constructed of truss type open-web or perforated members.
</P>
<P>(b) Draftstopping materials must not be less than 
<FR>1/2</FR> inch gypsum board, 
<FR>3/8</FR> inch wood structural panels, or other approved materials adequately supported.
</P>
<P>(c) Draftstopping must be installed parallel to the floor framing members.
</P>
<P>(d) The integrity of all draftstops must be maintained.
</P>
<CITA TYPE="N">[89 FR 75745, Sept. 16, 2024]




</CITA>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:5.1.2.1.2.4" TYPE="SUBPART">
<HEAD>Subpart D—Body and Frame Construction Requirements</HEAD>


<DIV8 N="§ 3280.301" NODE="24:5.1.2.1.2.4.1.1" TYPE="SECTION">
<HEAD>§ 3280.301   Scope.</HEAD>
<P>This subpart covers the minimum requirements for materials, products, equipment, and workmanship needed to assure that the manufactured home will provide the following:
</P>
<P>(a) Structural strength and rigidity;
</P>
<P>(b) Protection against corrosion, decay, insects, rodents, and other similar destructive forces;
</P>
<P>(c) Protection against wind hazards;
</P>
<P>(d) Resistance to the elements; and
</P>
<P>(e) Durability and economy of maintenance. 
</P>
<CITA TYPE="N">[78 FR 73982, Dec. 9, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 3280.302" NODE="24:5.1.2.1.2.4.1.2" TYPE="SECTION">
<HEAD>§ 3280.302   Definitions.</HEAD>
<P>The following definitions are applicable to subpart D only: 
</P>
<P><I>Anchor assembly</I> means any device or other means designed to transfer home anchoring loads to the ground.
</P>
<P><I>Anchoring equipment</I> means ties, straps, cables, turnbuckles, chains, and other approved components, including tensioning devices that are used to secure a manufactured home to anchor assemblies.
</P>
<P><I>Anchoring system</I> means a combination of anchoring equipment and anchor assemblies that will, when properly designed and installed, resist the uplift, overturning, and lateral forces on the manufactured home and on its support and foundation system.
</P>
<P><I>Diagonal tie</I> means a tie intended to resist horizontal or shear forces, but which may resist vertical, uplift, and overturning forces.
</P>
<P><I>Footing:</I> means that portion of the support system that transmits loads directly to the soil. 
</P>
<P><I>Foundation system</I> means a system of support that is capable of transferring all design loads to the ground, including elements of the support system as defined in this section, or a site-built permanent foundation that meets the requirements of 24 CFR 3282.12.
</P>
<P><I>Ground anchor</I> means a specific anchoring assembly device designed to transfer home anchoring loads to the ground.
</P>
<P><I>Loads:</I> (1) <I>Dead load:</I> means the weight of all permanent construction including walls, floors, roof, partition, and fixed service equipment. 
</P>
<P>(2) <I>Live load:</I> means the weight superimposed by the use and occupancy of the manufactured home, including wind load and snow load, but not including dead load. 
</P>
<P>(3) <I>Wind load:</I> means the lateral or vertical pressure or uplift on the manufactured home due to wind blowing in any direction. 
</P>
<P><I>Main frame:</I> means the structural component on which is mounted the body of the manufactured home. 
</P>
<P><I>Pier:</I> means that portion of the support system between the footing and manufactured home exclusive of caps and shims. 
</P>
<P><I>Sheathing:</I> means material which is applied on the exterior side of a building frame under the exterior weather resistant covering. 
</P>
<P><I>Stabilizing devices</I> means all components of the anchoring and support systems, such as piers, footings, ties, anchoring equipment, anchoring assemblies, or any other equipment, materials, and methods of construction that support and secure the manufactured home to the ground.
</P>
<P><I>Support system:</I> means a combination of footings, piers, caps, and shims that will, when properly installed, support the manufactured home. 
</P>
<P><I>Support system</I> means any pilings, columns, footings, piers, foundation walls, shims, and any combination thereof that, when properly installed, support the manufactured home.
</P>
<P><I>Tie:</I> means straps, cable, or securing devices used to connect the manufactured home to ground anchors. 
</P>
<P><I>Vertical tie:</I> means a tie intended to resist the uplifting or overturning forces. 
</P>
<CITA TYPE="N">[58 FR 55005, Oct. 25, 1993; 59 FR 15113, Mar. 31, 1994, as amended at 72 FR 59361, Oct. 19, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 3280.303" NODE="24:5.1.2.1.2.4.1.3" TYPE="SECTION">
<HEAD>§ 3280.303   General requirements.</HEAD>
<P>(a) <I>Minimum requirements.</I> The design and construction of a manufactured home shall conform with the provisions of this standard. Requirements for any size, weight, or quality of material modified by the terms of <I>minimum, not less than, at least,</I> and similar expressions are minimum standards. The manufacturer or installer may exceed these standards provided such deviation does not result in any inferior installation or defeat the purpose and intent of this standard. 
</P>
<P>(b) <I>Construction.</I> All Construction methods must be in conformance with an approved quality assurance manual as provided by §§ 3282.203 and 3282.361(c) and accepted engineering practices to ensure durable, livable, and safe housing. 
</P>
<P>(c) <I>Structural analysis.</I> The strength and rigidity of the component parts and/or the integrated structure shall be determined by engineering analysis or by suitable load tests to simulate the actual loads and conditions of application that occur. (See subparts E and J.) 
</P>
<P>(d) [Reserved]
</P>
<P>(e) <I>New materials and methods.</I> (1) Any new material or method of construction not provided for in this standard and any material or method of questioned suitability proposed for use in the manufacture of the structure shall nevertheless conform in performance to the requirements of this standard. 
</P>
<P>(2) Unless based on accepted engineering design for the use indicated, all new manufactured home materials, equipment, systems or methods of construction not provided for in this standard shall be subjected to the tests specified in paragraph (g) of this section. 
</P>
<P>(f) <I>Allowable design stress.</I> The design stresses of all materials shall conform to accepted engineering practice. The use of materials not certified as to strength or stress grade shall be limited to the minimum allowable stresses under accepted engineering practice. 
</P>
<P>(g) <I>Alternative test procedures.</I> In the absence of recognized testing procedures either in the Standards in this part or in the applicable provisions of those standards incorporated in this part by reference, the manufacturer electing this option must develop or cause to be developed testing procedures to demonstrate the structural properties and significant characteristics of the material, assembly, subassembly component, or member, except for testing methods involving one-piece metal roofing as would be required in § 3280.305(c)(1)(iii). Such testing procedures become part of the manufacturer's approved design. Such tests must be witnessed by an independent licensed professional engineer or architect or by a recognized testing organization. Copies of the test results must be kept on file by the manufactured home manufacturer.
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 58 FR 55005, Oct. 25, 1993; 59 FR 2469, Jan. 14, 1994; 70 FR 72043, Nov. 30, 2005; 89 FR 75748, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.304" NODE="24:5.1.2.1.2.4.1.4" TYPE="SECTION">
<HEAD>§ 3280.304   Materials.</HEAD>
<P>(a) Dimension and board lumber must not exceed 19 percent moisture content at the time of installation, except that treated lumber used for exterior purposes only and does not extend into the main home construction may have a moisture content exceeding 19 percent.
</P>
<P>(b) The standards for some of the generally used materials and methods of construction that are listed in this paragraph (b) are incorporated by reference (see § 3280.4).
</P>
<P>(1) <I>Aluminum.</I> (i) Aluminum Design Manual, Specifications and Guidelines for Aluminum Structures, Part 1-A (Aluminum Association).
</P>
<P>(ii) Aluminum Design Manual, Specifications and Guidelines for Aluminum Structures, Part 1-B (Aluminum Association).
</P>
<P>(2) <I>Steel.</I> (i) Specification for Structural Steel Buildings—AISC 360.
</P>
<P>(ii) North American Specification for the Design of Cold-Formed Steel Structural Members—AISI S100.
</P>
<P>(iii) Specification for the Design of Cold-Formed Stainless Steel Structural Members—SEI/ASCE 8.
</P>
<P>(iv) Standard Specifications Load Tables and Weight Tables for Steel Joists and Joist Girders—SJI.
</P>
<P>(v) Structural Applications of Steel Cables for Buildings—ASCE 19.
</P>
<P>(vi) Standard Specification for Strapping, Flat Steel and Seals—ASTM D3953.
</P>
<P>(3) <I>Wood and wood products.</I> (i) Basic Hardboard—ANSI A135.4 (Composite Panel Association).
</P>
<P>(ii) Prefinished Hardboard Paneling—ANSI A135.5 (Composite Panel Association).
</P>
<P>(iii) Engineered Wood Siding—ANSI A135.6 (Composite Panel Association).
</P>
<P>(iv) American National Standard for Hardwood and Decorative Plywood—ANSI/HPVA HP-1 (Decorative Hardwoods Association).
</P>
<P>(v) Structural Design Guide for Hardwood Plywood Wall Panels—HP-SG (Decorative Hardwoods Association).
</P>
<P>(vi) For Wood Products—Structural Glued Laminated Timber—ANSI/AITC A190.1.
</P>
<P>(vii) Structural Plywood (With Typical APA Trademarks)—NIST PS 1.
</P>
<P>(viii) APA Design/Construction Guide, Residential and Commercial Structures—APA E30-P.
</P>
<P>(ix) National Design Standard for Metal Plate Connected Wood Truss Construction, TPI 1.
</P>
<P>(x) Design and Fabrication of All-Plywood Beams—H815G.
</P>
<P>(xi) Panel Design Specification—APA D510C.
</P>
<P>(xii) Design and Fabrication of Glued Plywood-Lumber Beams—APA S812S.
</P>
<P>(xiii) Design and Fabrication of Plywood Curved Panels—APA S811P.
</P>
<P>(xiv) Design and Fabrication of Plywood Sandwich Panels, APA U814J.
</P>
<P>(xv) Performance Standard for Wood-Based Structural Use Panels—NIST PS 2.
</P>
<P>(xvi) Design and Fabrication of Plywood Stressed-Skin Panels—APA U813M.
</P>
<P>(xvii) National Design Specifications for Wood Construction, with Supplement, Design Values for Wood Construction—AWC NDS.
</P>
<P>(xviii) Wood Structural Design Data (AFPA).
</P>
<P>(xix) Span Tables for Joists and Rafters: American Softwood Lumber Standard (PS 20-10) Sizes—AWC-2012.
</P>
<P>(xx) Design Values for Joists and Rafters, Supplement to Span Tables for Joists and Rafters—AWC-2012.
</P>
<P>(xxi) Particleboard—ANSI A208.1 (Composite Panel Association).
</P>
<P>(xxii) North American Fenestration Standard/Specification for Windows, Doors and Skylights—AAMA/WDMA/CSA 101/I.S.2/A440 (CSA Group).
</P>
<P>(xxiii) Standard Test Methods for Puncture and Stiffness of Paperboard, and Corrugated and Solid Fiberboard—ASTM D781.
</P>
<P>(xxiv) Standard Test Methods for Direct Moisture Content Measurement of Wood and Wood-Base Materials—ASTM D4442.
</P>
<P>(xxv) Standard Test Method for Laboratory Standardization and Calibration of Hand-Held Moisture Meters—ASTM D4444.
</P>
<P>(xxvi) Medium Density Fiberboard (MDF) For Interior Applications—ANSI A208.2.
</P>
<P>(xxvii) Standard Test Methods for Fire Tests of Building Construction and Materials—ASTM E119.
</P>
<P>(xxviii) Engineered Wood Construction Guide—APA E30V.
</P>
<P>(xxix) Plywood Design—APA Y510.
</P>
<P>(4) <I>Other.</I> (i) Standard Specification for Gypsum Board—ASTM C1396/C1396M.
</P>
<P>(ii) [Reserved]
</P>
<P>(5) <I>Fasteners.</I> (i) ICC-ES Evaluation Report: Power Driven Staples and Nails—ESR 1539.
</P>
<P>(ii) [Reserved]
</P>
<P>(6) <I>Unclassified.</I> (i) Minimum Design Loads for Buildings and Other Structures—ANSI/ASCE.
</P>
<P>(ii) Safety Glazing Materials Used in Buildings—Safety Performance Specifications and Methods of Test—ANSI Z97.1.
</P>
<P>(iii) Standard Specification for Rigid Poly (Vinyl Chloride) (PVC) Siding—ASTM D3679-09a.
</P>
<P>(iv) Standard Practice for Installation of Rigid Poly (Vinyl Chloride) (PVC) Siding and Soffit—ASTM D4756.
</P>
<P>(v) Standard Specification for Polypropylene (PP) Siding—ASTM D7254.
</P>
<P>(c) Materials and methods of construction utilized in the design and construction of manufactured homes which are covered by the standards listed in this section, or any applicable portion thereof shall comply with these requirements.
</P>
<P>(d) Engineering analysis and testing methods contained in these references shall be utilized to judge conformance with accepted engineering practices required in § 3280.303(c).
</P>
<P>(e) Materials and methods of installation conforming to these standards shall be considered acceptable when installed in conformance with the requirements of this part.
</P>
<P>(f) Materials meeting the standards listed in this section (or the applicable portion thereof) are considered acceptable unless otherwise specified herein or unless substantial doubt exists as to conformance.
</P>
<P>(g) Wood products shall be identified as complying with the appropriate standards.
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975, as amended at 42 FR 961, Jan. 4, 1977. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 58 FR 55006, Oct. 25, 1993; 59 FR 15113, Mar. 31, 1994; 70 FR 72043, Nov. 30, 2005; 78 FR 73982, Dec. 9, 2013; 89 FR 75748, Sept. 16, 2024] 


</CITA>
</DIV8>


<DIV8 N="§ 3280.305" NODE="24:5.1.2.1.2.4.1.5" TYPE="SECTION">
<HEAD>§ 3280.305   Structural design requirements.</HEAD>
<P>(a) <I>General.</I> Each manufactured home must be designed and constructed as a completely integrated structure capable of sustaining the design load requirements of this part and must be capable of transmitting these loads to stabilizing devices without exceeding the allowable stresses or deflections. Roof framing must be securely fastened to wall framing, walls to floor structure, and floor structure to chassis to secure and maintain continuity between the floor and chassis, so as to resist wind overturning, uplift, and sliding as imposed by design loads in this part. In multistory construction, each story must be securely fastened to the story above and/or below to provide continuity and resist design loads in this part. Uncompressed finished flooring greater than 
<FR>1/8</FR> inch in thickness must not extend beneath load-bearing walls that are fastened to the floor structure.
</P>
<P>(b) <I>Design loads</I>—(1) <I>Design dead loads.</I> Design dead loads shall be the actual dead load supported by the structural assembly under consideration. 
</P>
<P>(2) <I>Design live loads.</I> The design live loads and wind and snow loads shall be as specified in this section and shall be considered to be uniformly distributed. The roof live load or snow load shall not be considered as acting simultaneously with the wind load and the roof live or snow load and floor live loads shall not be considered as resisting the overturning moment due to wind. 
</P>
<P>(3) When engineering calculations are performed, allowable unit stresses may be increased as provided in the documents referenced in § 3280.304 except as otherwise indicated in §§ 3280.304(b)(1) and 3280.306(a). 
</P>
<P>(4) Whenever the roof slope does not exceed 20 degrees, the design horizontal wind loads required by § 3280.305(c)(1) may be determined without including the vertical roof projection of the manufactured home. However, regardless of the roof slope of the manufactured home, the vertical roof projection shall be included when determining the wind loading for split level or clerestory-type roof systems. 
</P>
<P>(c) <I>Wind, snow, and roof loads</I>—(1) <I>Wind loads—design requirements.</I> (i) <I>Standard wind loads (Zone I</I>). When a manufactured home is not designed to resist the wind loads for high-wind areas (Zone II or Zone III) specified in paragraph (c)(1)(ii) of this section, the manufactured home and each of its wind-resisting parts and portions must be designed for horizontal wind loads of not less than 15 psf and a net uplift roof load of not less than 9 psf. The net uplift roof load must not be reduced by the dead load of the roof structure for the purposes of engineering design or structural load testing.
</P>
<P>(ii) <I>Wind loads for high wind areas (Zone II and Zone III).</I> When designed for high wind areas (Zone II and Zone III), the manufactured home, each of its wind resisting parts (including, but not limited to, shear walls, diaphragms, ridge beams, and their fastening and anchoring systems), and its components and cladding materials (including, but not limited to, roof trusses, wall studs, exterior sheathing, roofing and siding materials, exterior glazing, and their connections and fasteners) shall be designed by a Professional Engineer or Architect to resist: 
</P>
<P>(A) The design wind loads for Exposure C specified in ANSI/ASCE 7-88, “Minimum Design Loads for Buildings and Other Structures,” for a fifty-year recurrence interval, and a design wind speed of 100 mph, as specified for Wind Zone II, or 110 mph, as specified for Wind Zone III (Basic Wind Zone Map); or 
</P>
<P>(B) The wind pressures specified in the following table:
</P>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Table of Design Wind Pressures
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Element 
</TH><TH class="gpotbl_colhed" scope="col">Wind zone II design wind speed 100 MPH
</TH><TH class="gpotbl_colhed" scope="col">Wind zone III design wind speed 110 MPH
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Anchorage for lateral and vertical stability (See § 3280.306(a)): 
</TD><TD align="right" class="gpotbl_cell"/><TD align="right" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row" style="padding-left: 4em">Net Horizontal Drag 
<sup>1 2</sup>:</TD><TD align="right" class="gpotbl_cell">
<sup>3</sup> ±39 PSF</TD><TD align="right" class="gpotbl_cell">
<sup>3</sup> ±47 PSF 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row" style="padding-left: 4em">Uplift 
<sup>4</sup>:</TD><TD align="right" class="gpotbl_cell">
<sup>5</sup> −27 PSF</TD><TD align="right" class="gpotbl_cell">−32 PSF 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Main wind force resisting system:
</TD><TD align="right" class="gpotbl_cell"/><TD align="right" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row" style="padding-left: 4em">Shearwalls, Diaphragms and their Fastening and Anchorage Systems 
<sup>1 2</sup></TD><TD align="right" class="gpotbl_cell">±39 PSF</TD><TD align="right" class="gpotbl_cell">±47 PSF 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row" style="padding-left: 4em">Ridge beams and other Main Roof Support Beams (Beams supporting expanding room sections, etc.)</TD><TD align="right" class="gpotbl_cell">−30 PSF</TD><TD align="right" class="gpotbl_cell">−36 PSF
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Components and cladding:
</TD><TD align="right" class="gpotbl_cell"/><TD align="right" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row" style="padding-left: 4em">Roof trusses 
<sup>4</sup> in all areas; trusses shall be doubled within 3′-0′ from each end of the roof</TD><TD align="right" class="gpotbl_cell">
<sup>5</sup> −39 PSF</TD><TD align="right" class="gpotbl_cell">
<sup>5</sup> −47 PSF
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row" style="padding-left: 4em">Exterior roof coverings, sheathing and fastenings 
<sup>4</sup>,
<sup>6</sup>,
<sup>7</sup> in all areas except the following</TD><TD align="right" class="gpotbl_cell">
<sup>5</sup> −39 PSF</TD><TD align="right" class="gpotbl_cell">
<sup>5</sup> −47 PSF
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row" style="padding-left: 8em">Within 3′-0′ from each gable end (overhang at end wall) of the roof or endwall if no overhang is provided 
<sup>4</sup>,
<sup>6</sup>,
<sup>7</sup></TD><TD align="right" class="gpotbl_cell">
<sup>5</sup> −73 PSF</TD><TD align="right" class="gpotbl_cell">
<sup>5</sup> −89 PSF
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row" style="padding-left: 8em">Within 3′-0′ from the ridge and eave (overhang at sidewall) or sidewall if no eave is provided 
<sup>4</sup>,
<sup>6</sup>,
<sup>7</sup></TD><TD align="right" class="gpotbl_cell">
<sup>5</sup> −51 PSF</TD><TD align="right" class="gpotbl_cell">
<sup>5</sup> −62 PSF
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row" style="padding-left: 4em">Eaves (Overhangs at Sidewalls) 
<sup>4</sup>,
<sup>6</sup>,
<sup>7</sup></TD><TD align="right" class="gpotbl_cell">
<sup>5</sup> −51 PSF</TD><TD align="right" class="gpotbl_cell">
<sup>5</sup> −62 PSF
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row" style="padding-left: 4em">Gables (Overhangs at Endwalls) 
<sup>4</sup>,
<sup>6</sup>,
<sup>7</sup></TD><TD align="right" class="gpotbl_cell">
<sup>5</sup> −73 PSF</TD><TD align="right" class="gpotbl_cell">
<sup>5</sup> −89 PSF
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Wall studs in sidewalls and endwalls, exterior windows and sliding glass doors (glazing and framing), exterior coverings, sheathing and fastenings 
<sup>8</sup>: 
</TD><TD align="right" class="gpotbl_cell"/><TD align="right" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row" style="padding-left: 8em">Within 3′-0′ from each corner of the sidewall and endwall</TD><TD align="right" class="gpotbl_cell">±48 PSF</TD><TD align="right" class="gpotbl_cell">±58 PSF
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row" style="padding-left: 8em">All other areas</TD><TD align="right" class="gpotbl_cell">±38 PSF</TD><TD align="right" class="gpotbl_cell">±46 PSF 
</TD></TR></TABLE></DIV><DIV class="table_foot"><P class="gpotbl_note">NOTES:
</P><P class="gpotbl_note">
<sup>1</sup> The net horizontal drag of ±39 PSF to be used in calculating Anchorage for Lateral and Vertical Stability and for the design of Main Wind Force Resisting Systems is based on a distribution of wind pressures of + 0.8 or + 24 PSF to the windward wall and −0.5 or −15 PSF to the leeward wall. 
</P><P class="gpotbl_note">
<sup>2</sup> Horizontal drag pressures need not be applied to roof projections when the roof slope does not exceed 20 degrees. 
</P><P class="gpotbl_note">
<sup>3</sup> + sign would mean pressures are acting towards or on the structure; − sign means pressures are acting away from the structure; ±sign means forces can act in either direction, towards or away from the structure. 
</P><P class="gpotbl_note">
<sup>4</sup> Design values in this “Table” are only applicable to roof slopes between 10 degrees (nominal 2/12 slope) and 30 degrees. 
</P><P class="gpotbl_note">
<sup>5</sup> The design uplift pressures are the same whether they are applied normal to the surface of the roof or to the horizontal projection of the roof. 
</P><P class="gpotbl_note">
<sup>6</sup> Shingle roof coverings that are secured with 6 fasteners per shingle through an underlayment which is cemented to a 3/8” structural rated roof sheathing need not be evaluated for these design wind pressures. 
</P><P class="gpotbl_note">
<sup>7</sup> Structural rated roof sheathing that is at least 3/8” in thickness, installed with the long dimension perpendicular to roof framing supports, and secured with fasteners at 4” on center within 3′-0′ of each gable end or endwall if no overhang is provided and 6” on center in all other areas, need not be evaluated for these design wind pressures. 
</P><P class="gpotbl_note">
<sup>8</sup> Exterior coverings that are secured at 6″ o.c. to a 3/8″ structural rated sheathing that is fastened to wall framing members at 6″ on center need not be evaluated for these design wind pressures.</P></DIV></DIV>
<P>(iii) One-piece metal roofing capable of resisting the design wind pressures for “Components and Cladding: (Exterior roof coverings)” in the Table for Design Wind Pressures in this section is allowed to be used without structural sheathing, provided the metal roofing is tested using procedures that have been approved by HUD and that meet all requirements of §§ 3280.303(c) and (g) and 3280.401.
</P>
<P>(2) <I>Wind loads—zone designations.</I> The Wind Zone and specific wind design load requirements are determined by the fastest basic wind speed (mph) within each Zone and the intended location, based on the Basic Wind Zone Map, as follows: 
</P>
<P>(i) <I>Wind Zone I.</I> Wind Zone I consists of those areas on the Basic Wind Zone Map that are not identified in paragraphs (c)(2)(ii) or (iii) of this section as being within Wind Zone II or III, respectively. 
</P>
<P>(ii) <I>Wind Zone II.</I>....100 mph. The following areas are deemed to be within Wind Zone II of the Basic Wind Zone Map: 
</P>
<EXTRACT>
<P><I>Local governments:</I> The following local governments listed by State (counties, unless specified otherwise): 
</P>
<P><I>Alabama:</I> Baldwin and Mobile. 
</P>
<P><I>Florida:</I> All counties except those identified in paragraph (c)(1)(i)(C) of this section as within Wind Zone III. 
</P>
<P><I>Georgia:</I> Bryan, Camden, Chatham, Glynn, Liberty, McIntosh. 
</P>
<P><I>Louisiana:</I> Parishes of Acadia, Allen, Ascension, Assumption, Calcasieu, Cameron, East Baton Rouge, East Feliciana, Evangeline, Iberia, Iberville, Jefferson Davis, LaFayette, Livingston, Pointe Coupee, St. Helena, St. James, St. John the Baptist, St. Landry, St. Martin, St. Tammany, Tangipahoa, Vermillion, Washington, West Baton Rouge, and West Feliciana. 
</P>
<P><I>Maine:</I> Hancock and Washington. 
</P>
<P><I>Massachusetts:</I> Barnstable, Bristol, Dukes, Nantucket, and Plymouth. 
</P>
<P><I>Mississippi:</I> George, Hancock, Harrison, Jackson, Pearl River, and Stone. 
</P>
<P><I>North Carolina:</I> Beaufort, Brunswick, Camden, Chowan, Columbus, Craven, Currituck, Jones, New Hanover, Onslow, Pamlico, Pasquotank, Pender, Perquimans, Tyrrell, and Washington. 
</P>
<P><I>South Carolina:</I> Beaufort, Berkeley, Charleston, Colleton, Dorchester, Georgetown, Horry, Jasper, and Williamsburg. 
</P>
<P><I>Texas:</I> Aransas, Brazoria, Calhoun, Cameron, Chambers, Galveston, Jefferson, Kenedy, Kleberg, Matagorda, Nueces, Orange, Refugio, San Patricio, and Willacy. 
</P>
<P><I>Virginia:</I> Cities of Chesapeake, Norfolk, Portsmouth, Princess Anne, and Virginia Beach.</P></EXTRACT>
<P>(iii) <I>Wind Zone III.</I>....110 mph. The following areas are considered to be within Wind Zone III of the Basic Wind Zone Map: 
</P>
<P>(A) <I>States and Territories:</I> The entire State of Hawaii, the coastal regions of Alaska (as determined by the 90 mph isotach on the ANSI/ASCE 7-88 map), and all of the U.S. Territories of American Samoa, Guam, Northern Mariana Islands, Puerto Rico, Trust Territory of the Pacific Islands, and the United States Virgin Islands. 
</P>
<P>(B) <I>Local governments:</I> The following local governments listed by State (counties, unless specified otherwise): 
</P>
<EXTRACT>
<P><I>Florida:</I> Broward, Charlotte, Collier, Dade, Franklin, Gulf, Hendry, Lee, Martin, Manatee, Monroe, Palm Beach, Pinellas, and Sarasota. 
</P>
<P><I>Louisiana:</I> Parishes of Jefferson, La Fourche, Orleans, Plaquemines, St. Bernard, St. Charles, St. Mary, and Terrabonne. 
</P>
<P><I>North Carolina:</I> Carteret, Dare, and Hyde.</P></EXTRACT>
<P>(iv) <I>Consideration of local requirements.</I> For areas where wind mapping data or records or the requirements of the State or local authority indicate wind speeds in excess of those identified in this section, the Department may establish, through rulemaking, more stringent requirements for manufactured homes to be installed in such areas.
</P>
<P>(3) <I>Snow and roof loads.</I> (i) Flat, curved and pitched roofs shall be designed to resist the following live loads, applied downward on the horizontal projection as appropriate for the design zone marked on the manufactured home:
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Zone (see Map in § 3280.305(c)(4))
</TH><TH class="gpotbl_colhed" scope="col">Pounds per square foot
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">North Zone</TD><TD align="right" class="gpotbl_cell">40
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Middle Zone</TD><TD align="right" class="gpotbl_cell">30
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">South Zone</TD><TD align="right" class="gpotbl_cell">20</TD></TR></TABLE></DIV></DIV>
<P>(A) <I>North Roof Load Zone.</I> The following counties in each of the following states are deemed to be within the North Roof Load Zone:
</P>
<EXTRACT>
<P>Maine—Aroostook, Piscataquis, Somerset, Penobscot, Waldo, Knox, Hancock, and Washington.
</P>
<P>Alaska—All Counties</P></EXTRACT>
<P>(B) <I>Middle Roof Load Zone.</I> The following counties in each of the following states are deemed to be within the Middle Roof Load Zone:
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">States 
</TH><TH class="gpotbl_colhed" scope="col">Counties 
</TH><TH class="gpotbl_colhed" scope="col">  
</TH><TH class="gpotbl_colhed" scope="col">  
</TH><TH class="gpotbl_colhed" scope="col">  
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">South Dakota</TD><TD align="left" class="gpotbl_cell">Grant</TD><TD align="left" class="gpotbl_cell">Brookings</TD><TD align="left" class="gpotbl_cell">Hanson</TD><TD align="left" class="gpotbl_cell">Lincoln 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Codington</TD><TD align="left" class="gpotbl_cell">Miner</TD><TD align="left" class="gpotbl_cell">Minnehaha</TD><TD align="left" class="gpotbl_cell">Yankton 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Deuel</TD><TD align="left" class="gpotbl_cell">Lake</TD><TD align="left" class="gpotbl_cell">Hutchinson</TD><TD align="left" class="gpotbl_cell">Union 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Hamlin</TD><TD align="left" class="gpotbl_cell">Moody</TD><TD align="left" class="gpotbl_cell">Turner</TD><TD align="left" class="gpotbl_cell">Clay 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Kingsbury</TD><TD align="left" class="gpotbl_cell">McCook 
</TD><TD align="left" class="gpotbl_cell"/><TD align="left" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Minnesota</TD><TD align="left" class="gpotbl_cell">Koochiching</TD><TD align="left" class="gpotbl_cell">Stearns</TD><TD align="left" class="gpotbl_cell">Renville</TD><TD align="left" class="gpotbl_cell">Sibley 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Itasca</TD><TD align="left" class="gpotbl_cell">Swift</TD><TD align="left" class="gpotbl_cell">McLeod</TD><TD align="left" class="gpotbl_cell">Nicollet 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Hubbard</TD><TD align="left" class="gpotbl_cell">Kandiyohi</TD><TD align="left" class="gpotbl_cell">Carver</TD><TD align="left" class="gpotbl_cell">Blue Earth 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Cass</TD><TD align="left" class="gpotbl_cell">Meeker</TD><TD align="left" class="gpotbl_cell">Dakota</TD><TD align="left" class="gpotbl_cell">Martin 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Crow Wing</TD><TD align="left" class="gpotbl_cell">Wright</TD><TD align="left" class="gpotbl_cell">Goodhue</TD><TD align="left" class="gpotbl_cell">Watonwan 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Aitkin</TD><TD align="left" class="gpotbl_cell">Lac qui Parle</TD><TD align="left" class="gpotbl_cell">Wabasha</TD><TD align="left" class="gpotbl_cell">Brown 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">St. Louis</TD><TD align="left" class="gpotbl_cell">Chippewa</TD><TD align="left" class="gpotbl_cell">Winona</TD><TD align="left" class="gpotbl_cell">Redwood 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Lake</TD><TD align="left" class="gpotbl_cell">Yellow Medicine</TD><TD align="left" class="gpotbl_cell">Fillmore</TD><TD align="left" class="gpotbl_cell">Lyon 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Cook</TD><TD align="left" class="gpotbl_cell">Mille Lacs</TD><TD align="left" class="gpotbl_cell">Mower</TD><TD align="left" class="gpotbl_cell">Lincoln 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Carlton</TD><TD align="left" class="gpotbl_cell">Kanabec</TD><TD align="left" class="gpotbl_cell">Olmsted</TD><TD align="left" class="gpotbl_cell">Pipestone 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Pine</TD><TD align="left" class="gpotbl_cell">Benton</TD><TD align="left" class="gpotbl_cell">Dodge</TD><TD align="left" class="gpotbl_cell">Murray 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Wadena</TD><TD align="left" class="gpotbl_cell">Isanti</TD><TD align="left" class="gpotbl_cell">Rice</TD><TD align="left" class="gpotbl_cell">Cottonwood 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Todd</TD><TD align="left" class="gpotbl_cell">Sherburne</TD><TD align="left" class="gpotbl_cell">Steele</TD><TD align="left" class="gpotbl_cell">Jackson 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Morrison</TD><TD align="left" class="gpotbl_cell">Anoka</TD><TD align="left" class="gpotbl_cell">Freeborn</TD><TD align="left" class="gpotbl_cell">Nobles 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Douglas</TD><TD align="left" class="gpotbl_cell">Chisapo</TD><TD align="left" class="gpotbl_cell">Faribault</TD><TD align="left" class="gpotbl_cell">Rock 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Grant</TD><TD align="left" class="gpotbl_cell">Washington</TD><TD align="left" class="gpotbl_cell">Waseca 
</TD><TD align="left" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Stevens</TD><TD align="left" class="gpotbl_cell">Hennepin</TD><TD align="left" class="gpotbl_cell">Le Sueur 
</TD><TD align="left" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Pope</TD><TD align="left" class="gpotbl_cell">Ramsey</TD><TD align="left" class="gpotbl_cell">Scott 
</TD><TD align="left" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Iowa</TD><TD align="left" class="gpotbl_cell">Hancock</TD><TD align="left" class="gpotbl_cell">Mitchell</TD><TD align="left" class="gpotbl_cell">Hamilton</TD><TD align="left" class="gpotbl_cell">Buena Vista 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Lyon</TD><TD align="left" class="gpotbl_cell">Howard</TD><TD align="left" class="gpotbl_cell">Webster</TD><TD align="left" class="gpotbl_cell">Cherokee 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Osceola</TD><TD align="left" class="gpotbl_cell">Chickasaw</TD><TD align="left" class="gpotbl_cell">Calhoun</TD><TD align="left" class="gpotbl_cell">Plymouth 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Dickinson</TD><TD align="left" class="gpotbl_cell">Butler</TD><TD align="left" class="gpotbl_cell">Sac</TD><TD align="left" class="gpotbl_cell">Sioux 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Emmet</TD><TD align="left" class="gpotbl_cell">Floyd</TD><TD align="left" class="gpotbl_cell">Ida</TD><TD align="left" class="gpotbl_cell">O'Brien 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Kossuth</TD><TD align="left" class="gpotbl_cell">Cerro Gordo</TD><TD align="left" class="gpotbl_cell">Humboldt</TD><TD align="left" class="gpotbl_cell">Clay 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Winnebago</TD><TD align="left" class="gpotbl_cell">Franklin</TD><TD align="left" class="gpotbl_cell">Pocahontas</TD><TD align="left" class="gpotbl_cell">Wright 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Worth</TD><TD align="left" class="gpotbl_cell">Hardin</TD><TD align="left" class="gpotbl_cell">Palo Alto 
</TD><TD align="left" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Wisconsin</TD><TD align="left" class="gpotbl_cell">Douglas</TD><TD align="left" class="gpotbl_cell">Oconto</TD><TD align="left" class="gpotbl_cell">Pepin</TD><TD align="left" class="gpotbl_cell">Lincoln 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Bayfield</TD><TD align="left" class="gpotbl_cell">Menominee</TD><TD align="left" class="gpotbl_cell">Pierce</TD><TD align="left" class="gpotbl_cell">Oneida 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Ashland</TD><TD align="left" class="gpotbl_cell">Langlade</TD><TD align="left" class="gpotbl_cell">Dunn</TD><TD align="left" class="gpotbl_cell">Polk 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Iron</TD><TD align="left" class="gpotbl_cell">Marathon</TD><TD align="left" class="gpotbl_cell">Eau Claire</TD><TD align="left" class="gpotbl_cell">Burnett 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Vilas</TD><TD align="left" class="gpotbl_cell">Clark</TD><TD align="left" class="gpotbl_cell">Chippewa</TD><TD align="left" class="gpotbl_cell">Washburn 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Forest</TD><TD align="left" class="gpotbl_cell">Jackson</TD><TD align="left" class="gpotbl_cell">Rusk</TD><TD align="left" class="gpotbl_cell">Sawyer 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Florence</TD><TD align="left" class="gpotbl_cell">Trempealeau</TD><TD align="left" class="gpotbl_cell">Barron</TD><TD align="left" class="gpotbl_cell">Price 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Marinette</TD><TD align="left" class="gpotbl_cell">Buffalo</TD><TD align="left" class="gpotbl_cell">Taylor</TD><TD align="left" class="gpotbl_cell">Door 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">St. Croix 
</TD><TD align="left" class="gpotbl_cell"/><TD align="left" class="gpotbl_cell"/><TD align="left" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Michigan</TD><TD align="left" class="gpotbl_cell">Houghton</TD><TD align="left" class="gpotbl_cell">Iron</TD><TD align="left" class="gpotbl_cell">Presque Isle</TD><TD align="left" class="gpotbl_cell">Wexford 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Baraga</TD><TD align="left" class="gpotbl_cell">Dickinson</TD><TD align="left" class="gpotbl_cell">Charlevoix</TD><TD align="left" class="gpotbl_cell">Benzie 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Marquette</TD><TD align="left" class="gpotbl_cell">Menominee</TD><TD align="left" class="gpotbl_cell">Montmorency</TD><TD align="left" class="gpotbl_cell">Grand Traverse 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Alger</TD><TD align="left" class="gpotbl_cell">Delta</TD><TD align="left" class="gpotbl_cell">Alpena</TD><TD align="left" class="gpotbl_cell">Kalkaska 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Luce</TD><TD align="left" class="gpotbl_cell">Schoolcraft</TD><TD align="left" class="gpotbl_cell">Alcona</TD><TD align="left" class="gpotbl_cell">Oscoda 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Chippewa</TD><TD align="left" class="gpotbl_cell">Mackinac</TD><TD align="left" class="gpotbl_cell">Ogemaw</TD><TD align="left" class="gpotbl_cell">Otsego 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Keweenaw</TD><TD align="left" class="gpotbl_cell">Cheyboygan</TD><TD align="left" class="gpotbl_cell">Roscommon</TD><TD align="left" class="gpotbl_cell">Leelanau 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Ontonagon</TD><TD align="left" class="gpotbl_cell">Emmet</TD><TD align="left" class="gpotbl_cell">Missaukee</TD><TD align="left" class="gpotbl_cell">Antrim 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Gogebic</TD><TD align="left" class="gpotbl_cell">Crawford 
</TD><TD align="left" class="gpotbl_cell"/><TD align="left" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row">New York</TD><TD align="left" class="gpotbl_cell">St. Lawrence</TD><TD align="left" class="gpotbl_cell">Herkimer</TD><TD align="left" class="gpotbl_cell">Onondaga</TD><TD align="left" class="gpotbl_cell">Genesee 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Franklin</TD><TD align="left" class="gpotbl_cell">Lewis</TD><TD align="left" class="gpotbl_cell">Madison</TD><TD align="left" class="gpotbl_cell">Orleans 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Clinton</TD><TD align="left" class="gpotbl_cell">Oswego</TD><TD align="left" class="gpotbl_cell">Cayuga</TD><TD align="left" class="gpotbl_cell">Niagara 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Essex</TD><TD align="left" class="gpotbl_cell">Jefferson</TD><TD align="left" class="gpotbl_cell">Seneca</TD><TD align="left" class="gpotbl_cell">Erie 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Hamilton</TD><TD align="left" class="gpotbl_cell">Oneida</TD><TD align="left" class="gpotbl_cell">Wayne</TD><TD align="left" class="gpotbl_cell">Wyoming 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Warren</TD><TD align="left" class="gpotbl_cell">Fulton</TD><TD align="left" class="gpotbl_cell">Ontario</TD><TD align="left" class="gpotbl_cell">Monroe 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Saratoga</TD><TD align="left" class="gpotbl_cell">Montgomery</TD><TD align="left" class="gpotbl_cell">Yates 
</TD><TD align="left" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Washington</TD><TD align="left" class="gpotbl_cell">Schenectady</TD><TD align="left" class="gpotbl_cell">Livingston 
</TD><TD align="left" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Massachusetts</TD><TD align="left" class="gpotbl_cell">Essex 
</TD><TD align="left" class="gpotbl_cell"/><TD align="left" class="gpotbl_cell"/><TD align="left" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Maine</TD><TD align="left" class="gpotbl_cell">Franklin</TD><TD align="left" class="gpotbl_cell">Kennebec</TD><TD align="left" class="gpotbl_cell">Lincoln</TD><TD align="left" class="gpotbl_cell">Cumberland 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Oxford</TD><TD align="left" class="gpotbl_cell">Androscoggin</TD><TD align="left" class="gpotbl_cell">Sagadahoc</TD><TD align="left" class="gpotbl_cell">York 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Montana</TD><TD align="left" class="gpotbl_cell">All Counties 
</TD><TD align="left" class="gpotbl_cell"/><TD align="left" class="gpotbl_cell"/><TD align="left" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Idaho</TD><TD align="left" class="gpotbl_cell">All Counties 
</TD><TD align="left" class="gpotbl_cell"/><TD align="left" class="gpotbl_cell"/><TD align="left" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Colorado</TD><TD align="left" class="gpotbl_cell">All Counties 
</TD><TD align="left" class="gpotbl_cell"/><TD align="left" class="gpotbl_cell"/><TD align="left" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Wyoming</TD><TD align="left" class="gpotbl_cell">All Counties 
</TD><TD align="left" class="gpotbl_cell"/><TD align="left" class="gpotbl_cell"/><TD align="left" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Utah</TD><TD align="left" class="gpotbl_cell">All Counties 
</TD><TD align="left" class="gpotbl_cell"/><TD align="left" class="gpotbl_cell"/><TD align="left" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Vermont</TD><TD align="left" class="gpotbl_cell">Franklin</TD><TD align="left" class="gpotbl_cell">Orleans</TD><TD align="left" class="gpotbl_cell">Caledonia</TD><TD align="left" class="gpotbl_cell">Addison 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Grand Isle</TD><TD align="left" class="gpotbl_cell">Essex</TD><TD align="left" class="gpotbl_cell">Washington</TD><TD align="left" class="gpotbl_cell">Rutland 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">Lamoille</TD><TD align="left" class="gpotbl_cell">Chittenden</TD><TD align="left" class="gpotbl_cell">Orange</TD><TD align="left" class="gpotbl_cell">Windsor 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">New Hampshire</TD><TD align="left" class="gpotbl_cell">All Counties</TD><TD align="left" class="gpotbl_cell"/><TD align="left" class="gpotbl_cell"/><TD align="left" class="gpotbl_cell"/></TR></TABLE></DIV></DIV>
<P>(C) <I>South Roof Load Zone.</I> The states and counties that are not listed for the North Roof Load Zone in paragraph (c)(3)(i)(A) of this section, or the Middle Roof Load Zone in paragraph (c)(3)(i)(B) of this section, are deemed to be within the South Roof Load Zone.
</P>
<P>(ii) <I>Consideration of local requirements.</I> For exposures in areas (mountainous or other) where recognized snow records, wind records, or the requirements of the State or local authority indicate significant differences from the loads stated in this paragraph (c)(3), the Department may establish, through rulemaking, more stringent requirements for manufactured homes to be installed in such areas. For snow loads, such requirements must be based on a roof snow load of 0.6 of the ground snow load for areas exposed to wind and a roof snow load of 0.8 of the ground snow load for sheltered areas.
</P>
<P>(iii) Eaves and cornices shall be designed for a net uplift pressure of 2.5 times the design uplift wind pressure cited in § 3280.305(c)(1)(i) for Wind Zone I, and for the design pressures cited in § 3280.305(c)(1)(ii) for Wind Zones II and III. 
</P>
<P>(iv) Skylights must be capable of withstanding roof loads as specified in paragraphs (c)(3)(i) or (c)(3)(ii) of this section. Skylights must be listed and tested in accordance with AAMA 1600/I.S.7-00, 2003, Voluntary Specification for Skylights.
</P>
<P>(4) <I>Data plate requirements.</I> The Data Plate posted in the manufactured home (see § 3280.5) shall designate the wind and roof load zones or, if designed for higher loads, the actual design external snow and wind loads for which the home has been designed. The Data Plate shall include reproductions of the Load Zone Maps shown in this paragraph (c)(4), with any related information. The Load Zone Maps shall be not less than either 3
<FR>1/2</FR> in. by 2
<FR>1/4</FR> in., or one-half the size illustrated in the Code of Federal Regulations.
</P>
<img src="/graphics/er14ja94.000.gif"/>
<img src="/graphics/er20oc97.004.gif"/>
<P>(d) <I>Design load deflection.</I> (1) When a structural assembly is subjected to total design live loads, the deflection for structural framing members shall not exceed the following (where L equals the clear span between supports or two times the length of a cantilever):
</P>
<EXTRACT>
<FP-1>Floor—L/240 
</FP-1>
<FP-1>Roof and ceiling—L/180 
</FP-1>
<FP-1>Headers, beams, and girders (vertical load)—L/180 
</FP-1>
<FP-1>Walls and partitions—L/180</FP-1></EXTRACT>
<P>(2) The allowable eave or cornice deflection for uplift is to be measured at the design uplift load of 9 psf for Wind Zone I, and at the design uplift pressure cited in paragraph (c)(1)(ii) of this section for Wind Zones II and III. The allowable deflection shall be (2 × Lc)/180, where Lc is the measured horizontal eave projection from the wall. 
</P>
<P>(e) <I>Fastening of structural systems.</I> (1) Roof framing must be securely fastened to wall framing, walls to floor structure, and floor structure to chassis, to secure and maintain continuity between the floor and chassis in order to resist wind overturning, uplift, and sliding, and to provide continuous load paths for these forces to the foundation or anchorage system. The number and type of fasteners used must be capable of transferring all forces between elements being joined. In multistory construction, each story must be securely fastened to the story above and/or below to provide continuity and resist design loads in this section.
</P>
<P>(2) For Wind Zone II and Wind Zone III, roof framing members must be securely fastened at the vertical bearing points to resist design overturning, uplift, and sliding forces. When engineered connectors are not installed, roof framing members must be secured at the vertical bearing points to wall framing members (studs), and wall framing members (studs) must be secured to floor framing members, with 0.016 inch base metal, minimum steel strapping or engineered connectors, or by a combination of 0.016 inch base metal, minimum steel strapping or engineered connectors, and structural-rated wall sheathing that overlaps the roof and floor system if substantiated by structural analysis or by suitable load tests. Steel strapping or engineered connectors are to be installed at a maximum spacing of 24 inches on center in Wind Zone II, and 16 inches on center in Wind Zone III. <I>Exception:</I> Where substantiated by structural analysis or suitable load tests, the 0.016 inch base metal minimum steel strapping or engineered connectors may be omitted at the roof to wall and/or wall to floor connections, when structural rated sheathing that overlaps the roof and wall and/or wall and floor is capable of resisting the applicable design wind loads.
</P>
<P>(f) <I>Walls.</I> The walls shall be of sufficient strength to withstand the load requirements as defined in § 3280.305(c) of this part, without exceeding the deflections as specified in § 3280.305(d). The connections between the bearing walls, floor, and roof framework members shall be fabricated in such a manner as to provide support for the material used to enclose the manufactured home and to provide for transfer of all lateral and vertical loads to the floor and chassis. 
</P>
<P>(1) Except where substantiated by engineering analysis or tests, studs shall not be notched or drilled in the middle one-third of their length. 
</P>
<P>(2) Interior walls and partitions shall be constructed with structural capacity adequate for the intended purpose and shall be capable of resisting a horizontal load of not less than five pounds per square foot. An allowable stress increase of 1.33 times the permitted published design values may be used in the design of wood framed interior partitions. Finish of walls and partitions shall be securely fastened to wall framing. 
</P>
<P>(g) <I>Floors.</I> (1) Floor assemblies shall be designed in accordance with accepted engineering practice standards to support a minimum uniform live load of 40 lb/ft 
<SU>2</SU> plus the dead load of the materials. In addition (but not simultaneously), floors shall be able to support a 200-pound concentrated load on a one-inch diameter disc at the most critical location with a maximum deflection not to exceed one-eighth inch relative to floor framing. Perimeter wood joists of more than six inches depth shall be stabilized against overturning from superimposed loads as follows: at ends by solid blocking not less than two-inch thickness by full depth of joist, or by connecting to a continuous header not less than two-inch thickness and not less than the depth of the joist with connecting devices; at eight-feet maximum intermediate spacing by solid blocking or by wood cross-bridging of not less than one inch by three inches, metal cross-bridging of equal strength, or by other approved methods. 
</P>
<P>(2) Wood, wood fiber or plywood floors or subfloors in kitchens, bathrooms (including toilet compartments), laundry areas, water heater compartments, and any other areas subject to excessive moisture shall be moisture resistant or shall be made moisture resistant by sealing or by an overlay of nonabsorbent material applied with water-resistant adhesive. Use of one of the following methods would meet this requirement: 
</P>
<P>(i) Sealing the floor with a water-resistant sealer; or 
</P>
<P>(ii) Installing an overlay of a non-absorbent floor covering material applied with water-resistant adhesive; or 
</P>
<P>(iii) Direct application of a water-resistant sealer to the exposed wood floor area when covered with a non-absorbent overlay; or 
</P>
<P>(iv) The use of a non-absorbent floor covering which may be installed without a continuous application of a water-resistant adhesive or sealant when the floor covering meets the following criteria: 
</P>
<P>(A) The covering is a continuous membrane with any seams or patches seam bonded or welded to preserve the continuity of the floor covering; and 
</P>
<P>(B) The floor is protected at all penetrations in these areas by sealing with a compatible water-resistant adhesive or sealant to prevent moisture from migrating under the nonabsorbent floor covering; and
</P>
<P>(C) The covering is fastened around the perimeter of the subfloor in accordance with the floor covering manufacturer's instructions; and, 
</P>
<P>(D) The covering is designed to be installed to prevent moisture penetration without the use of a water-resistant adhesive or sealer except as required in this paragraph (g). The vertical edges of penetrations for plumbing shall be covered with a moisture-resistant adhesive or sealant. The vertical penetrations located under the bottom plates of perimeter walls of rooms, areas, or compartments are not required to be sealed; this does not include walls or partitions within the rooms or areas. 
</P>
<P>(3) Wood panel products used as floor or subfloor materials on the exterior of the home, such as in recessed entryways, must be rated for exterior exposure and protected from moisture by sealing or applying nonabsorbent overlay with water resistant adhesive.
</P>
<P>(4) Carpet or carpet pads shall not be installed under concealed spaces subject to excessive moisture, such as plumbing fixture spaces, floor areas under installed laundry equipment. Carpet may be installed in laundry space provided: 
</P>
<P>(i) The appliances are not provided; 
</P>
<P>(ii) The conditions of paragraph (g)(2) of this section are followed; and 
</P>
<P>(iii) Instructions are provided to remove carpet when appliances are installed. 
</P>
<P>(5) Except where substantiated by engineering analysis or tests: 
</P>
<P>(i) Notches on the ends of joists shall not exceed one-fourth the joist depth. 
</P>
<P>(ii) Holes bored in joists shall not be within 2 inches of the top or bottom of the joist, and the diameter of any such hole shall not exceed one-third the depth of the joist. 
</P>
<P>(iii) Notches in the top or bottom of the joists shall not exceed one-sixth the depth and shall not be located in the middle third of the span. 
</P>
<P>(6) Bottom board material (with or without patches) must meet or exceed the level of 48 inch-pounds of puncture resistance as tested by the Beach Puncture Test in accordance with Standard Test Methods for Puncture and Stiffness of Paperboard, and Corrugated and Solid Fiberboard, ASTM D781-1968 (Reapproved 1973) (incorporated by reference, see § 3280.4). The material must be suitable for patches and the patch life must be equivalent to the material life. Patch installation instruction must be included in the manufactured home manufacturer's instructions. The bottom board material must be tight fitted against all penetrations.
</P>
<P>(h) <I>Roofs.</I> (1) Roofs shall be of sufficient strength to withstand the load requirements as defined in § 3280.305 (b) and (c) without exceeding the deflections specified in § 3280.305(d). The connections between roof framework members and bearing walls shall be fabricated in such a manner to provide for the transfer of design vertical and horizontal loads to the bearing walls and to resist uplift forces. 
</P>
<P>(2) Roofing membranes shall be of sufficient rigidity to prevent deflection which would permit ponding of water or separation of seams due to wind, snow, ice, erection or transportation forces. 
</P>
<P>(3) Cutting of roof framework members for passage of electrical, plumbing or mechanical systems shall not be allowed except where substantiated by engineering analysis. 
</P>
<P>(4) All roof penetrations for electrical, plumbing or mechanical systems shall be properly flashed and sealed. In addition, where a metal roof membrane is penetrated, a wood backer shall be installed. The backer plate shall be not less than 
<FR>5/16</FR> inch plywood, with exterior glues, secured to the roof framing system beneath the metal roof, and shall be of a size to assure that all screws securing the flashing are held by the backer plate. 
</P>
<P>(5) Portions of roof assemblies, including, but not limited to, dormers, gables, crickets, hinged roof sections, sheathing, roof coverings, underlayments, flashings, and eaves and overhangs are permitted to be assembled and installed on site in accordance with 24 CFR part 3282, subpart M, provided that the requirements in paragraphs (h)(5)(i) through (iv) of this section are met.
</P>
<P>(i) Approved installation instructions must be provided that include requirements for the following items:
</P>
<P>(A) Materials, installation, and structural connections complying with this section;
</P>
<P>(B) Installation and fastening of sheathing and roof coverings;
</P>
<P>(C) Installation of appliance vent systems in accordance with § 3280.710;
</P>
<P>(D) Installation of plumbing vents as required by § 3280.611; and
</P>
<P>(E) Installation of attic ventilation in accordance with § 3280.504(c).
</P>
<P>(ii) The installation instructions specified in paragraph (h)(5)(i) of this section must include drawings, details, and instructions as necessary to assure that the on-site work complies with the approved design.
</P>
<P>(iii) The installation instructions specified in paragraph (h)(5)(i) of this section must provide for inspection of the work at the installation site. As necessary to ensure conformance, inspection panels may be required, or inspections may need to occur in stages that assure inspections are performed before any work is concealed. Such inspection procedures shall be addressed in the approved installation instructions.
</P>
<P>(iv) Temporary weather protection must be provided per § 3280.307(e).


</P>
<P>(i) <I>Frame construction.</I> The frame shall be capable of transmitting all design loads to stabilizing devices without exceeding the allowable load and deflections of this section. The frame shall also be capable of withstanding the effects of transportation shock and vibration without degradation as required by subpart J. 
</P>
<P>(1) [Reserved] 
</P>
<P>(2) <I>Protection of metal frames against corrosion.</I> Metal frames shall be made corrosion resistant or protected against corrosion. Metal frames may be protected against corrosion by painting. 
</P>
<P>(j) <I>Welded connections.</I> (1) All welds must be made in accordance with the applicable provisions of the Specification for Structural Steel Buildings, AISC 360 (incorporated by reference, see § 3280.4); the North American Specification for the Design of Cold-Formed Steel Structural Members, AISI S100 (incorporated by reference, see § 3280.4); and the Specification for the Design of Cold-Formed Stainless Steel Structural Members, SEI/ASCE 8 (incorporated by reference, see § 3280.4).
</P>
<P>(2) Regardless of the provisions of any reference standard contained in this subpart, deposits of weld slag or flux shall be required to be removed only from welded joints at the following locations: 
</P>
<P>(i) Drawbar and coupling mechanisms; 
</P>
<P>(ii) Main member splices, and
</P>
<P>(iii) Spring hanger to main member connections. 
</P>
<P>(k) <I>Attics.</I> (1) For roofs with slopes 7:12 or greater, the area of the attic floor that meets the ceiling-height/living-space requirements of these construction and safety standards must be designed to resist a minimum design live load of 40 pounds per square foot (psf) in accordance with paragraph (g) of this section.
</P>
<P>(2) For roofs with slopes less than 7:12 that contain an attic area or for portions of roofs with slopes 7:12 or greater that do meet the ceiling height/living space requirements of the standards, the attic floor must be designed for a storage live load of 20 pounds per square foot (psf).
</P>
<P>(i) Attic area as used within this section are those spaces where the maximum clear height between joist and rafters is 42 inches or greater or where there are two or more adjacent trusses with web configurations capable of accommodating an assumed rectangle 42 inches high by 24 inches in width or greater, within the plane of the trusses.
</P>
<P>(ii) The live load need only be applied to those portions of the joist or truss bottom chords where all of the following criteria are met:
</P>
<P>(A) The attic area is accessible from an opening not less than 20 inches in width and 30 inches in length that is located where the clear height in the attic is a minimum of 30 inches; and
</P>
<P>(B) The slope of the joists of the truss bottom chord are no greater than 2 inches vertical to 12 inches horizontal; and
</P>
<P>(C) Required insulation depth is less than the joist or truss bottom chord member depth.
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 44 FR 66195, Nov. 19, 1979; 52 FR 4582, Feb. 12, 1987; 58 FR 55006, Oct. 25, 1993; 59 FR 2469, Jan. 14, 1994; 59 FR 15113, 15114, Mar. 31, 1994; 62 FR 54547, Oct. 20, 1997; 70 FR 72043, Nov. 30, 2005; 71 FR 19638, Apr. 17, 2006; 78 FR 73983, Dec. 9, 2013;  80 FR 53727, Sept. 8, 2015; 86 FR 2520, Jan. 12, 2021; 86 FR 10457, Feb. 22, 2021; 89 FR 75749, Sept. 16, 2024] 


</CITA>
</DIV8>


<DIV8 N="§ 3280.306" NODE="24:5.1.2.1.2.4.1.6" TYPE="SECTION">
<HEAD>§ 3280.306   Windstorm protection.</HEAD>
<P>(a) <I>Provisions for support and anchoring systems.</I> Each manufactured home shall have provisions for support/anchoring or foundation systems that, when properly designed and installed, will resist overturning and lateral movement (sliding) of the manufactured home as imposed by the respective design loads. For Wind Zone I, the design wind loads to be used for calculating resistance to overturning and lateral movement shall be the simultaneous application of the wind loads indicated in § 3280.305(c)(1)(i), increased by a factor of 1.5. The 1.5 factor of safety for Wind Zone I is also to be applied simultaneously to both the vertical building projection, as horizontal wind load, and across the surface of the full roof structure, as uplift loading. For Wind Zones II and III, the resistance shall be determined by the simultaneous application of the horizontal drag and uplift wind loads, in accordance with § 3280.305(c)(1)(ii). The basic allowable stresses of materials required to resist overturning and lateral movement shall not be increased in the design and proportioning of these members. No additional shape or location factors need to be applied in the design of the tiedown system. The dead load of the structure may be used to resist these wind loading effects in all Wind Zones. 
</P>
<P>(1) The provisions of this section shall be followed and the support and anchoring systems shall be designed by a Registered Professional Engineer or Architect. 
</P>
<P>(2) The manufacturer of each manufactured home is required to make provision for the support and anchoring systems but is not required to provide the anchoring equipment or stabilizing devices. When the manufacturer's installation instructions provide for the main frame structure to be used as the points for connection of diagonal ties, no specific connecting devices need be provided on the main frame structure. 
</P>
<P>(b) <I>Contents of instructions.</I> (1) The manufacturer must provide printed instructions with each manufactured home that specify the location and required capacity of stabilizing devices on which the home's design is based. The manufacturer must identify by paint, label, decal stencil, or other means: the location of each column support pier location required along the marriage line(s) of multi-section manufactured homes; each pier location required along the perimeter of the home; each required shear wall pier support; and any other special pier support locations specified in the manufacturer's printed instructions. Such identifications must be visible after the home is installed. The manufacturer must provide drawings and specifications, certified by a registered professional engineer or architect, that indicate at least one acceptable system of anchoring, including the details or required straps or cables, their end connections, and all other devices needed to transfer the wind loads from the manufactured home to an anchoring or foundation system.
</P>
<P>(2) For anchoring systems, the instructions shall indicate: 
</P>
<P>(i) The minimum anchor capacity required; 
</P>
<P>(ii) That anchors should be certified by a professional engineer, architect, or a nationally recognized testing laboratory as to their resistance, based on the maximum angle of diagonal tie and/or vertical tie loading (see paragraph (c)(3) of this section) and angle of anchor installation, and type of soil in which the anchor is to be installed; 
</P>
<P>(iii) That ground anchors are to be embedded below the frost line, unless the foundation system is frost-protected in accordance with §§ 3285.312(b) and 3285.404 of the Model Manufactured Home Installation Standards in this chapter.
</P>
<P>(iv) That ground anchors must be installed to their full depth, and stabilizer plates must be installed in accordance with the ground anchor listing or certification to provide required resistance to overturning and sliding.
</P>
<P>(v) That anchoring equipment should be certified by a registered professional engineer or architect to resist these specified forces in accordance with testing procedures in ASTM D3953-97, Standard Specification for Strapping, Flat Steel and Seals (incorporated by reference, see § 3280.4).
</P>
<P>(c) <I>Design criteria.</I> The provisions made for anchoring systems shall be based on the following design criteria for manufactured homes. 
</P>
<P>(1) The minimum number of ties provided per side of each home shall resist design wind loads required in § 3280.305(c)(1). 
</P>
<P>(2) Ties shall be as evenly spaced as practicable along the length of the manufactured home, with not more than two (2) feet open-end spacing on each end. 
</P>
<P>(3) Vertical ties or straps shall be positioned at studs. Where a vertical tie and a diagonal tie are located at the same place, both ties may be connected to a single anchor, provided that the anchor used is capable of carrying both loadings, simultaneously. 
</P>
<P>(4) Add-on sections of expandable manufactured homes shall have provisions for vertical ties at the exposed ends. 
</P>
<P>(d) <I>Requirements for ties.</I> Manufactured homes in Wind Zone I require only diagonal ties. These ties shall be placed along the main frame and below the outer side walls. All manufactured homes designed to be located in Wind Zones II and III shall have a vertical tie installed at each diagonal tie location. 
</P>
<P>(e) <I>Protection requirements.</I> Protection shall be provided at sharp corners where the anchoring system requires the use of external straps or cables. Protection shall also be provided to minimize damage to siding by the cable or strap. 
</P>
<P>(f) <I>Anchoring equipment—load resistance.</I> Anchoring equipment shall be capable of resisting an allowable working load equal to or exceeding 3,150 pounds and shall be capable of withstanding a 50 percent overload (4,725 pounds total) without failure of either the anchoring equipment or the attachment point on the manufactured home. 
</P>
<P>(g) <I>Anchoring equipment—weatherization.</I> Anchoring equipment exposed to weathering shall have a resistance to weather deterioration at least equivalent to that provided by a coating of zinc on steel of not less than 0.30 ounces per square foot of surface coated, and in accordance with the following: 
</P>
<P>(1) Slit or cut edges of zinc-coated steel strapping do not need to be zinc coated. 
</P>
<P>(2) Type 1, Finish B, Grade 1 steel strapping, 1
<FR>1/4</FR> inches wide and 0.035 inches in thickness, certified by a registered professional engineer or architect as conforming with ASTM D3953-97, Standard Specification for Strapping, Flat Steel and Seals (incorporated by reference, see § 3280.4).
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 52 FR 4583, Feb. 12, 1987; 59 FR 2473, Jan. 14, 1994; 70 FR 72045, Nov. 30, 2005; 72 FR 59362, Oct. 19, 2007; 78 FR 73983, Dec. 9, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 3280.307" NODE="24:5.1.2.1.2.4.1.7" TYPE="SECTION">
<HEAD>§ 3280.307   Resistance to elements and use.</HEAD>
<P>(a) Exterior coverings shall be of moisture and weather resistive materials attached with corrosion resistant fasteners to resist wind, snow and rain. Metal coverings and exposed metal structural members shall be of corrosion resistant materials or shall be protected to resist corrosion. All joints between portions of the exterior covering shall be designed, and assembled to protect against the infiltration of air and water, except for any designed ventilation of wall or roof cavity. 
</P>
<P>(b) Joints between dissimilar materials and joints between exterior coverings and frames of openings shall be protected with a compatible sealant suitable to resist infiltration of air or water. 
</P>
<P>(c) Where adjoining materials or assemblies of materials are of such nature that separation can occur due to expansion, contraction, wind loads or other loads induced by erection or transportation, sealants shall be of a type that maintains protection against infiltration or penetration by air, moisture or vermin. 
</P>
<P>(d) Exterior surfaces shall be sealed to resist the entrance of rodents. 
</P>
<P>(e) Multi-section and attached manufactured homes (see subpart K of this part) are not required to comply with the factory installation of weather-resistant exterior finishes for those areas left open for field connection of the sections provided the following conditions are satisfied:
</P>
<P>(1) Temporary weather protection for exposed, unprotected construction is provided in accordance with methods to be included in the approved design.
</P>
<P>(2) Methods for on-site completion and finishing of these elements are included in the approved design.
</P>
<P>(3) Complete installation instructions and the required materials for finishing these elements are provided.
</P>
<P>(f) The exterior wall envelope must be designed and constructed in a manner that prevents the accumulation of water within the wall assembly by providing a Water Resistive Barrier (WRB) behind the exterior cladding and a means of draining water that enters the assembly.
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975, as amended at 86 FR 2520, Jan. 12, 2021; 89 FR 75749, Sept. 16, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 3280.308" NODE="24:5.1.2.1.2.4.1.8" TYPE="SECTION">
<HEAD>§ 3280.308   Formaldehyde emission controls for composite wood products</HEAD>
<P>(a) <I>Definitions.</I> For purposes of this section, the definitions found in 40 CFR 770.3 apply.
</P>
<P>(b) <I>Formaldehyde emission levels.</I> The following maximum formaldehyde emission standards apply whether the composite wood product is in the form of a panel or is incorporated into a component part or finished good:
</P>
<P>(1) For hardwood plywood made with a veneer core or composite core, the maximum level is 0.05 parts per million (ppm) of formaldehyde;
</P>
<P>(2) For medium density fiberboard, the maximum level is 0.11 ppm of formaldehyde;
</P>
<P>(3) For thin medium density fiberboard, the maximum level is 0.13 ppm of formaldehyde; and
</P>
<P>(4) For particleboard, the maximum level is 0.09 ppm of formaldehyde.
</P>
<P>(c) <I>Product certification and continuing qualification.</I> Only certified composite wood products whether in the form of panels or incorporated into component parts or finished goods, are permitted to be used in manufactured homes sold, supplied, offered for sale, or manufactured in or imported into the United States, consistent with Environmental Protection Agency (EPA) product testing requirements at 40 CFR 770.15. See § 3280.406 for testing requirements for product certification and testing requirements for continuing qualification of formaldehyde emission levels.
</P>
<P>(d) <I>Panel label.</I> Manufactured homes must use panels or bundles of panels that are labeled by a panel producer consistent with the labeling requirements at 40 CFR 770.45.
</P>
<P>(e) <I>Finished good certification label.</I> Each manufactured home must be provided with a finished good certification label indicating that the home has been produced with composite wood products, or finished goods that contain composite wood products, that comply with the formaldehyde emission requirements of this part and 40 CFR part 770, consistent with § 3280.5(i).
</P>
<P>(f) <I>Non-complying lots.</I> Composite wood products from non-complying lots (<I>i.e.,</I> lots that exceed the applicable formaldehyde ppm) are not certified composite wood products and may not be used in manufactured homes except in accordance with 40 CFR 770.22.
</P>
<P>(g) <I>Stockpiling.</I> The use of stockpiled inventory of composite wood products, whether in the form of panels or incorporated into component parts or finished goods, in manufactured homes, is prohibited in accordance with EPA regulations at 40 CFR 770.12(b) through (d).
</P>
<P>(h) <I>Third party certification.</I> All composite wood products in paragraph (b) of this section must be certified by an agency or organization that has been recognized to participate in the EPA Toxic Substances Control Act (TSCA) Title VI Third Party Certification Program.</P>
<CITA TYPE="N">[85 FR 5566, Jan. 31, 2020]




</CITA>
</DIV8>


<DIV8 N="§ 3280.309" NODE="24:5.1.2.1.2.4.1.9" TYPE="SECTION">
<HEAD>§ 3280.309   Standard for vinyl siding and polypropylene siding used in manufactured homes.</HEAD>
<P>(a) <I>Scope.</I> This section establishes the requirements for vinyl siding and polypropylene siding used in manufactured homes.
</P>
<P>(b) <I>Standards</I>—(1) <I>Vinyl siding.</I> All vinyl siding must comply with the requirements of ASTM D3679 (incorporated by reference, see § 3280.4) and must be certified or listed and labeled as conforming to those requirements.
</P>
<P>(2) <I>Polypropylene siding.</I> All polypropylene siding must comply with the requirements of ASTM D7254 (incorporated by reference, see § 3280.4) and must be certified or listed and labeled as conforming to those requirements.
</P>
<P>(c) <I>Installation.</I> Vinyl siding and soffit installation must be installed in accordance with the manufacturer's installation instructions. Vinyl siding and soffit installation must be based on ASTM D4756 (incorporated by reference, see § 3280.4).
</P>
<CITA TYPE="N">[89 FR 75749, Sept. 16, 2024]




</CITA>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:5.1.2.1.2.5" TYPE="SUBPART">
<HEAD>Subpart E—Testing</HEAD>


<DIV8 N="§ 3280.401" NODE="24:5.1.2.1.2.5.1.1" TYPE="SECTION">
<HEAD>§ 3280.401   Structural load tests.</HEAD>
<P>Every structural assembly tested shall be capable of meeting the Proof Load Test or the Ultimate Load Test as follows: 
</P>
<P>(a) <I>Proof load tests.</I> Every structural assembly tested must be capable of sustaining its dead load plus superimposed live loads equal to 1.75 times the required live loads for a period of 12 hours without failure. Tests must be conducted with loads applied and deflections recorded in 
<FR>1/4</FR> design live load increments at 10-minute intervals until 1.25 times design live load plus dead load has been reached. Additional load shall then be applied continuously until 1.75 times design live load plus dead load has been reached. Assembly failure shall be considered as design live load deflection (or residual deflection measured 12 hours after live load removal) that is greater than the limits set in § 3280.305(d), rupture, fracture, or excessive yielding. Design live load deflection criteria do not apply when the structural assembly being evaluated does not include structural framing members. An assembly to be tested shall be of the minimum quality of materials and workmanship of the production. Each test assembly, component, or subassembly shall be identified as to type and quality or grade of material. All assemblies, components, or subassemblies qualifying under this test shall be subject to a continuing qualification testing program acceptable to HUD.
</P>
<P>(b) <I>Ultimate load tests.</I> Ultimate load tests must be performed on a minimum of three assemblies or components to generally evaluate the structural design. Every structural assembly or component tested must be capable of sustaining its total dead load plus the design live load increased by a factor of safety of at least 2.5. A factor of safety greater than 2.5 shall be used when required by an applicable reference standard in § 3280.304(b)(1). Tests shall be conducted with loads applied and deflections recorded in 1/4 design live load increments at 10-minute intervals until 1.25 times design live load plus dead load has been reached. Additional loading shall then be applied continuously until failure occurs, or the total of the factor of safety times the design live load plus the dead load is reached. Assembly failure shall be considered as design live load deflection greater than the limits set in § 3280.305(d), rupture, fracture, or excessive yielding. Design live load deflection criteria do not apply when the structural assembly being evaluated does not include structural framing members. Assemblies to be tested shall be representative of average quality or materials and workmanship of the production. Each test assembly, component, or subassembly shall be identified as to type and quality or grade of material. All assemblies, components, or subassemblies qualifying under this test shall be subject to a periodic qualification testing program acceptable to HUD.
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 58 FR 55007, Oct. 25, 1993; 70 FR 72045, Nov. 30, 2005]


</CITA>
</DIV8>


<DIV8 N="§ 3280.402" NODE="24:5.1.2.1.2.5.1.2" TYPE="SECTION">
<HEAD>§ 3280.402   Test procedures for roof trusses.</HEAD>
<P>(a) <I>Roof load tests.</I> This section provides the roof truss test procedure for vertical loading conditions. Where roof trusses act as support for other members, have eave or cornice projections, or support concentrated loads, roof trusses must also be tested for those conditions. These test procedures are required for new truss designs in all three wind zones and for existing truss designs used in Wind Zones II and III.
</P>
<P>(b) <I>General.</I> Trusses must be tested in a truss test fixture that replicates the design loads, and actual support points, and does not restrain horizontal movement. When tested singly or in groups of two or more trusses, trusses shall be mounted on supports and positioned as intended to be installed in the manufactured home in order to give the required clear span distance (L) and eave or cornice distance (Lo), if applicable, as specified in the design.
</P>
<P>(l) When trusses are tested singly, trusses shall be positioned in a test fixture, with supports properly located and the roof loads evenly applied. See Figure 3280.402(b)(1).
</P>
<img src="/graphics/er18ja13.001.gif"/>
<P>(2) When tested in groups of two or more, the top chords are permitted to be sheathed with nominal 1/4-inch × 12-inch plywood strips. The plywood strips shall be at least long enough to cover the top chords of the trusses at the designated design truss spacing. Adjacent plywood strips shall be separated by at least 1/8-inch. The plywood strips shall be nailed with 4d nails or equivalent staples no closer than 8 inches on center along the top chord. The bottom chords of the adjacent trusses shall be permitted to be one of the following:
</P>
<P>(i) Unbraced; or
</P>
<P>(ii) Laterally braced together (not cross-braced) with 1-inch × 2-inch stripping no closer than 24 inches on center, nailed with only one 8d nail at each truss. See Figure 3280.402(b)(2).
</P>
<img src="/graphics/er18ja13.002.gif"/>
<P>(c) <I>Measuring and loading methods.</I> Deflections must be measured at the free end of an eave or cornice projection and at least at the truss mid-span and quarter points. Scissors or other unique truss configurations are to be measured at as many additional bottom chord panel points as necessary to obtain an accurate representation of the deflected shape of the truss so as to be able to locate and record the point(s) of maximum deflection. Deflections must be read and recorded relative to a fixed reference datum. Deflections must be read and recorded to the nearest 1/32-inch. Dead load must be applied to the top and bottom chord, and live load must be applied to the top chord through a suitable hydraulic, pneumatic, or mechanical system or weights to simulate design loads. Load unit weights for uniformly distributed top chord loads must be separated so that arch action does not occur and be spaced not more than 12 inches on center so as to simulate uniform loading. Bottom chord loading must be spaced as uniformly as practical. Truss gravity loads must be calculated based on the overall truss length (horizontal projection), including eave or cornice projections.
</P>
<P>(d) <I>Testing procedures.</I> Either the testing method in paragraph (d)(1) or (d)(2) of this section may be used, however, the testing method in paragraph (d)(3) of this section must be used, to test trusses to establish compliance with the provisions of these standards.
</P>
<P>(1) <I>Proof load truss test procedure.</I> At least three average quality/consecutively tested trusses must pass all requirements of the test, for initial qualification of the truss design. All tests for initial qualification of the truss designs evaluated by this procedure must be certified by a Registered Engineer or Architect, or by a nationally recognized testing laboratory. An in-house quality control and follow-up testing program (see paragraphs (e) and (f) of this section) must be approved prior to entering production of any truss design evaluated by this procedure.
</P>
<P>(i) <I>Dead load.</I> Measure and record initial elevation of the truss or trusses in the test position at no load. Apply to the top and bottom chords of the truss dead loads that are representative of the actual weights of materials to be supported by the truss. However, the dead load may only be applied as indicated in paragraph (e)(4) of this section for ongoing follow-up testing. Dead loads to be applied to the truss test assembly are permitted to include only the weights of materials supported by the truss and not the weight of the truss itself. However, readings from load cells (when used) on which the test truss rests must reflect the sum of the applied load plus the weight of the truss. Apply dead loads and hold for 5 minutes. Measure and record the deflections.
</P>
<P>(ii) <I>Live load.</I> Maintaining the dead loads, apply live load to the top chord in approximate 
<FR>1/4</FR> live load increments until dead load plus the live load is reached. Measure and record the deflections no sooner than one minute after each 
<FR>1/4</FR> live load increment has been applied and 5 minutes after the full live load has been reached.
</P>
<P>(iii) <I>Initial recovery phase.</I> Remove the design live load but not the dead load. Measure and record the deflections 5 minutes after the total live load has been removed.
</P>
<P>(iv) Continue to load the truss to:
</P>
<P>(A) Dead load plus 2.0 times the design live load. Maintain this loading for 6 hours and inspect the truss for failure. Failure is rupture, fracture, or excessive yielding; or
</P>
<P>(B) Dead load plus 1.75 times the design live load. Maintain this loading for 12 hours and inspect the truss for failure. Failure is rupture, fracture, or excessive yielding.
</P>
<P>(v) <I>Final recovery phase.</I> Remove 2.0 times the design live load, but not the dead load or 1.75 times the design live load, but not the dead load. Measure and record deflections within 4 hours after removing 2.0 times the design live load or 1.75 times the design live load.
</P>
<P>(vi) <I>Acceptance criteria.</I> The truss design is acceptable if all of the following conditions are met:
</P>
<P>(A) The maximum deflection between no load and dead load must be L/480 or less for simply supported clear spans and Lo/180 or less for eave and cornice projections; and
</P>
<P>(B) The maximum deflection between dead load and design live load must be L/180 or less for simply supported clear spans and Lo/90 or less for eave and cornice projections; and
</P>
<P>(C) After the design live load is removed, and with the dead load still applied, the maximum recovery deflection must be L/360 or less for simply supported spans and Lo/180 or less for eave and cornice projections; and
</P>
<P>(D) The truss must maintain the overload condition for 6 hours without rupture or fracture, or excessive yielding; and
</P>
<P>(E) After 2.0 times the design live load has been removed, and with the dead load still applied, the maximum recovery deflection must be L/180 or less for simply supported clear spans and Lo/90 or less for eave and cornice projections; and
</P>
<P>(F) As applicable, each truss design must also meet all requirements for uplift loads required by paragraph (d)(3) of this section. For Wind Zone I uplift load requirements, see paragraph (d)(3)(i) of this section. For Wind Zones II and III uplift load requirements, see paragraph (d)(3)(ii) of this section.
</P>
<P>(2) <I>Ultimate load truss test procedure.</I> (i) At least two average quality/consecutively tested trusses must pass all requirements of the test, for initial qualification of the truss design. All tests for initial qualification of the truss designs evaluated by this procedure must be certified by a Registered Engineer or Architect, or by a nationally recognized testing laboratory. An in-house quality control and follow-up testing program (see paragraph (e) and (f) of this section) must be approved prior to entering production of any truss design evaluated by this procedure.
</P>
<P>(ii) <I>Dead load.</I> Measure and record initial elevation of the truss or trusses in the test position at no load. Apply to the top and bottom chords of the truss dead loads that are representative of the actual weights of materials to be supported by the truss. However, the dead load may only be applied as indicated in paragraph (e)(4) of this section for ongoing follow-up testing. Dead loads to be applied to the truss test assembly shall be permitted to include only the weights of materials supported by the truss, and not the weight of the truss itself. However, readings from load cells (when used) on which the test truss rests must reflect the sum of the applied load plus the weight of the truss. Apply dead loads and hold for 5 minutes. Measure and record the deflections.
</P>
<P>(iii) <I>Live load.</I> Maintaining the dead loads, apply live load at a uniform rate to the top chord in approximate 
<FR>1/4</FR> live load increments until the dead load plus the live load is reached. Measure and record the deflections no sooner than one minute after each 
<FR>1/4</FR> live load increment has been applied and 5 minutes after the full live load has been reached.
</P>
<P>(iv) <I>Initial recovery phase.</I> Remove the design live load but not the dead load. Measure and record the deflections 5 minutes after the design live load has been removed.
</P>
<P>(v) <I>Overload phase.</I> After the recovery phase is completed, reapply the full live load to the truss assembly. Additional loading shall then be applied continuously until the dead load plus 2.5 times the design live load is reached. This overload condition must be maintained for at least 5 minutes.
</P>
<P>(vi) <I>Final recovery phase.</I> Remove 2.5 times the design live load but not the dead load. Measure and record deflections within 4 hours after 2.5 times the design live load has been removed.
</P>
<P>(vii) <I>Acceptance criteria.</I> The truss design is acceptable if all of the following conditions are met:
</P>
<P>(A) The maximum deflection between no load and dead load must be L/480 or less for simply supported clear spans and Lo/180 or less for eave and cornice projections; and
</P>
<P>(B) Dead load to design live load deflections shall be L/180 or less for simply supported clear spans and Lo/90 or less for eave and cornice projections; and
</P>
<P>(C) After the design live load is removed and with the dead load still applied, the maximum recovery deflection must be L/360 or less for simply supported spans and Lo/180 or less for eave and cornice projections; and
</P>
<P>(D) The truss shall maintain the overload condition for 5 minutes without rupture, fracture, or excessive yielding; and
</P>
<P>(E) After 2.5 times the design live load is removed, and with the dead load still applied, the truss must recover to at least L/180 for simply supported clear spans and Lo/90 for eave and cornice within 4 hours after the total live load has been removed; and
</P>
<P>(F) As applicable, each truss design must also meet all requirements for uplift loads in Wind Zone I or Wind Zone II and III, as required by paragraph (d)(3) of this section. For Wind Zone I uplift load requirements, see paragraph (d)(3)(i) of this section. For Wind Zones II and III uplift load requirements, see paragraph (d)(3)(ii) of this section.
</P>
<P>(3) <I>Uplift load tests.</I> Each truss design must also pass all requirements of the uplift load test, as applicable, in paragraph (d)(3)(i) or (d)(3)(ii) and paragraphs (d)(3)(iii) and (d)(3)(iv) of this section.
</P>
<P>(i) <I>Wind Zone I uplift load test.</I> Where there are engineered connectors between the top chord and web members of the truss, such as metal connector plates or wood gussets or their equivalents, uplift testing in Wind Zone I is at the discretion of the Registered Engineer or Architect or nationally recognized testing laboratory certifying the truss design. When testing is deemed necessary by the Registered Engineer or Architect or nationally recognized testing laboratory certifying the truss design, a minimum of one average quality uplift load test is to be conducted for each such truss design and must pass all requirements of the test for initial qualification of the truss design. The net uplift load for trusses designed for use in Wind Zone I is 9 psf for the clear span of the truss and 22.5 psf for eave or cornice projections.
</P>
<P>(ii) <I>Wind Zones II and III uplift loads test.</I> This test is required for all trusses designed for use in Wind Zones II and III. A minimum of three average quality/consecutive uplift load tests are to be conducted for each truss design when tested in the inverted position and a minimum of two average quality/consecutive uplift load tests are to be conducted for trusses in the upright position. The trusses must pass all requirements of the test for initial qualification of the truss design. The uplift load for trusses designed to be used in Wind Zones II and III for the clear span or eave cornice projections is to be determined by subtracting the dead load applied to the truss from the uplift load provided in the Table of Design Wind Pressures in § 3280.305(c)(1)(ii)(B).
</P>
<P>(iii) Trusses designed for use in Wind Zone I, when tested (see paragraph (d)(3)(i) of this section), must be tested in either the inverted position to 2.5 times the net wind uplift load or in the upright position to 1.75 times the net wind uplift load. Trusses designed for use in Wind Zones II and III (see paragraph (d)(3)(ii) of this section) must be tested to 2.0 times the uplift load minus the dead load in the inverted position and to 1.75 times the uplift load minus the dead load in the upright position. See Figure 3280.402(b)(3).
</P>
<P>(iv) The following describes how to conduct the uplift test with the truss in the upright position. Similar procedures must be used if conducting the test in the inverted position.
</P>
<P>(A) Place the truss in the test fixture and position as it is intended to be installed in the manufactured home. See Figure 3280.402(b)(3).
</P>
<img src="/graphics/er18ja13.003.gif"/>
<P>(B) Position the load measurement devices to register the wind uplift loads that will be applied to the top chord of the truss. The uplift loads shall be applied through tension devices not wider than one inch and spaced not greater than approximately 12 inches on center and shall be applied as uniform as possible, so as to simulate uniform loading. Gravity and wind uplift load tests may be performed on the same truss in this single setup mode. For the wind uplift test, it is permissible to stabilize the bottom chord of the truss in the test fixture to simulate ceiling materials or purlin supports. Measure and record the initial elevation of the bottom chord of the truss in the test position at the mid-span and quarter points of the truss, and at the free end of an eave or cornice projection greater than 12 inches. Scissors or other unique truss configurations are to be measured at as many additional bottom chord panel points as necessary to obtain an accurate representation of the deflected shape of the truss, so as to be able to locate and record the point(s) of maximum deflection. Eave or cornice projection loads are applied separately for eaves or cornice projections greater than 12 inches. For eave or cornice projections greater than 12 inches, the additional required load must be applied to the eave simultaneously with the main body load. For eave or cornice projections of 12 inches or less, add the additional required load to the main body load and apply it to the entire top chord.
</P>
<P>(C) Measure and record the deflection 5 minutes after the net uplift load has been applied. Design load deflection shall be L/180 or less for a simply supported clear span and Lo/90 or less for eave or cornice projections.
</P>
<P>(D) For trusses tested in the upright position, continue to load the truss to 1.75 times the net uplift load in paragraph (d)(3)(i) of this section for Wind Zone I and 1.75 times the uplift load in paragraph (d)(3)(ii) for Wind Zones II and III, and maintain the load for one minute. For trusses tested in the inverted position, continue to load the truss to 2.50 times the net uplift load in paragraph (d)(3)(i) for Wind Zone I and to 2.0 times the uplift load minus the dead load in paragraph (d)(3)(ii) for Wind Zones II and III, and maintain the full load for one minute. Regardless of the test position of the truss, upright or inverted, trusses must maintain the overload for the specified time period without rupture, fracture, or excessive yielding.
</P>
<P>(e) <I>Follow-up testing.</I> Follow-up testing procedures must include the following:
</P>
<P>(1) All trusses qualifying under these test procedures must be subject to a quality control and follow-up testing program.
</P>
<P>(i) Manufacturers of listed or labeled trusses must follow an in-house quality control program with follow-up testing approved by a nationally recognized testing program as specified in paragraph (e)(3) of this section. The in-house quality control program must include, at a minimum, procedures for quality of materials including, but not limited to, grade(s) of materials, allowable splits, knots, and other applicable lumber qualities; workmanship including, but not limited to, plate placement and embedment tolerances; other manufacturing tolerances; description and calibration of test equipment; truss retesting criteria; and procedures in the event of noncomplying results.
</P>
<P>(ii) Those home manufacturers producing trusses for their own use, and which are not listed or labeled, must have an in-house quality control program (see paragraph (i) of this section) that includes follow-up testing, as specified in this section, and is approved by their Design Approval Primary Inspection Agency (DAPIA).
</P>
<P>(2) Truss designs that are qualified but not in production are not subject to follow-up testing until produced. When the truss design is brought into production, a follow-up test is to be performed if the truss design has been out of production for more than 6 months.
</P>
<P>(3) The frequency of truss manufacturer's quality control follow-up testing for trusses must be at least:
</P>
<P>(i) One test for the first 100 trusses produced, with a subsequent test for every 2,500 trusses for trusses qualified under the proof load truss test procedure or inverted uplift test procedure for trusses used in Wind Zones II and III or once every 6 months, whichever is more frequent, for every truss design produced; or
</P>
<P>(ii) One test for every 4,000 trusses produced for trusses qualified under the ultimate load truss test procedure or upright uplift test procedure for trusses used in Wind Zones II and III or once every 6 months, whichever is more frequent, for every truss design produced.
</P>
<P>(4) For follow-up testing only, the full dead load may be applied to the top chord of the truss, when the bottom chord dead load is 5 psf or less.
</P>
<CITA TYPE="N">[78 FR 4065, Jan. 18, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 3280.403" NODE="24:5.1.2.1.2.5.1.3" TYPE="SECTION">
<HEAD>§ 3280.403   Requirements for windows, sliding glass doors, and skylights.</HEAD>
<P>(a) <I>Scope.</I> This section establishes the requirements for prime windows and sliding glass doors, except that windows used in an entry door are components of the door and are excluded from these requirements.
</P>
<P>(b)(1) All primary windows and sliding glass doors must comply with AAMA 1701.2 or AAMA/WDMA/CSA 101/I.S.2/A440 (both incorporated by reference, see § 3280.4), except the exterior and interior pressure tests must be conducted at the minimum design wind loads required for components in § 3280.305(c)(1).
</P>
<P>(2) All skylights must comply with AAMA/WDMA/CSA 101/I.S.2/A440 (incorporated by reference, see § 3280.4).
</P>
<P>(2) All skylights must comply with AAMA/WDMA/CSA/101/I.S.2/A440-08: North American Fenestration Standard/Specifications for Windows, Doors and Skylights (incorporated by reference, see § 3280.4). Skylights must withstand the roof loads for the applicable Roof Load Zone specified in § 3280.305(c)(3), and the following wind loads:
</P>
<P>(i) For Wind Zone I, the wind loads specified in § 3280.305(c)(1)(i); and
</P>
<P>(ii) For Wind Zones II and III, the wind loads specified for exterior roof coverings, sheathing, and fastenings in § 3280.305(c)(1)(ii).
</P>
<P>(c) <I>Installation.</I> All primary windows, sliding glass doors, and skylights must be installed in a manner that allows proper operation and provides protection against the elements, as required by § 3280.307.
</P>
<P>(d) <I>Glass.</I> (1) Safety glazing materials, where used shall meet ANSI Z97.1 (incorporated by reference, see § 3280.4).
</P>
<P>(2) Sealed insulating glass, where used, must meet all performance requirements for Class C in accordance with ASTM E 774-97, Standard Specification for the Classification of the Durability of Sealed Insulating Glass Units. The sealing system must be qualified in accordance with ASTM E 773-97, Standard Test Methods for Accelerated Weathering of Sealed Insulating Glass Units. Each glass unit must be permanently identified with the name of the insulating glass manufacturer.
</P>
<P>(e) <I>Certification.</I> All primary windows and sliding glass doors to be installed in manufactured homes must be certified as complying with AAMA 1701.2 or AAMA/WDMA/CSA 101/I.S.2/A440 (both incorporated by reference, see § 3280.4). This certification must be based on tests conducted at the design wind loads specified in § 3280.305(c)(1).
</P>
<P>(1) All such windows and doors must show evidence of certification by affixing a quality certification label to the product from an independent product certification body accredited to ISO/IEC 17065 (incorporated by reference, see § 3280.4).
</P>
<P>(2) In determining certifiability of the products, an independent quality assurance agency must conduct pre-production specimen tests in accordance with AAMA 1702.2 or AAMA/WDMA/CSA 101/I.S.2/A440 (both incorporated by reference, see § 3280.4). Further, such agency must inspect the product manufacturer's facility at least twice per year.
</P>
<P>(3) All skylights installed in manufactured homes must be certified as complying with AAMA 1701.2 or AAMA/WDMA/CSA 101/I.S.2/A440 (both incorporated by reference, see 3280.4).
</P>
<P>(f) <I>Protection of primary window and sliding glass door openings in high wind areas.</I> For homes designed to be located in Wind Zones II and III, manufacturers shall design exterior walls surrounding the primary window and sliding glass door openings to allow for the installation of shutters or other protective covers, such as plywood, to cover these openings. Although not required, the Department encourages manufacturers to provide the shutters or protective covers and to install receiving devices, sleeves, or anchors for fasteners to be used to secure the shutters or protective covers to the exterior walls. If the manufacturer does not provide shutters or other protective covers to cover these openings, the manufacturer must provide to the homeowner instructions for at least one method of protecting primary window and sliding glass door openings. This method must be capable of resisting the design wind pressures specified in § 3280.305 without taking the home out of conformance with the standards in this part. These instructions must be included in the printed instructions that accompany each manufactured home. The instructions shall also indicate whether receiving devices, sleeves, or anchors, for fasteners to be used to secure the shutters or protective covers to the exterior walls, have been installed or provided by the manufacturer. 
</P>
<CITA TYPE="N">[52 FR 4583, Feb. 12, 1987, as amended at 52 FR 35543, Sept. 22, 1987; 58 FR 55009, Oct. 25, 1993; 59 FR 2474, Jan. 14, 1994; 70 FR 72046, Nov. 30, 2005; 78 FR 73983, Dec. 9, 2013; 89 FR 75750, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.404" NODE="24:5.1.2.1.2.5.1.4" TYPE="SECTION">
<HEAD>§ 3280.404   Standard for egress windows and devices for use in manufactured homes.</HEAD>
<P>(a) <I>Scope and purpose.</I> The purpose of this section is to establish the requirements for the design, construction, and installation of windows and approved devices intended to be used as an emergency exit during conditions encountered in a fire or similar disaster. 
</P>
<P>(b) <I>Performance.</I> Egress windows including auxiliary frame and seals, if any, must meet all requirements of AAMA 1701.2 and AAMA 1704 or AAMA/WDMA/CSA 101/I.S.2/A440 (all incorporated by reference, see § 3280.4).
</P>
<P>(1) <I>Loading.</I> Exterior and interior pressure tests for components and cladding must be conducted meeting or exceeding the minimum design wind loads required by § 3280.305(c)(1).
</P>
<P>(2) <I>Dimensions.</I> All egress systems must have a minimum clear horizontal dimension of 20 inches and a minimum clear vertical dimension of 24 inches and have a clear opening of at least 5 ft
<SU>2</SU>.
</P>
<P>(c) <I>Installation.</I> (1) The installation of egress windows or devices shall be installed in a manner which allows for proper operation and provides protection against the elements. (<I>See</I> § 3280.307.) 
</P>
<P>(2) An operational check of each installed egress window or device must be made at the manufactured home factory. All egress windows and devices must be capable of being opened to the minimum required dimensions by normal operation of the window without binding or requiring the use of tools. Any window or device failing this check must be repaired or replaced. A repaired window must conform to its certification. Any repaired or replaced window or device must pass the operational check.
</P>
<P>(3) Windows that require the removal of the sash to meet egress size requirements are prohibited.
</P>
<P>(d) <I>Operating instructions.</I> Operating instructions shall be affixed to each egress window and device and carry the legend “Do Not Remove.” 
</P>
<P>(e) <I>Certification of egress windows and devices.</I> (1) Egress windows and devices must be listed in accordance with the procedures and requirements of AAMA 1701.2 and AAMA 1704 or AAMA/WDMA/CSA 101/I.S.2/A440 (all incorporated by reference, see § 3280.4). This certification must be based on tests conducted meeting or exceeding the minimum design wind loads specified in § 3280.305(c)(1).
</P>
<P>(2) All such windows and devices must show evidence of certification by affixing a quality certification label to the product from an independent product certification body accredited to ISO/IEC 17065 (incorporated by reference, see § 3280.4).
</P>
<P>(f) <I>Protection of egress window openings in high wind areas.</I> For homes designed to be located in Wind Zones II and III, manufacturers shall design exterior walls surrounding the egress window openings to allow for the installation of shutters or other protective covers, such as plywood, to cover these openings. Although not required, the Department encourages manufacturers to provide the shutters or protective covers and to install receiving devices, sleeves, or anchors for fasteners to be used to secure the shutters or protective covers to the exterior walls. If the manufacturer does not provide shutters or other protective covers to cover these openings, the manufacturer must provide to the homeowner instructions for at least one method of protecting egress window openings. This method must be capable of resisting the design wind pressures specified in § 3280.305 without taking the home out of conformance with the standards in this part. These instructions must be included in the printed instructions that accompany each manufactured home. The instructions shall also indicate whether receiving devices, sleeves, or anchors, for fasteners to be used to secure the shutters or protective covers to the exterior walls, have been installed or provided by the manufacturer. 
</P>
<CITA TYPE="N">[52 FR 4583, Feb. 12, 1987, as amended at 59 FR 2474, Jan. 14, 1994; 70 FR 72046, Nov. 30, 2005; 78 FR 73983, Dec. 9, 2013; 89 FR 75750, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.405" NODE="24:5.1.2.1.2.5.1.5" TYPE="SECTION">
<HEAD>§ 3280.405   Standard for swinging exterior passage doors for use in manufactured homes.</HEAD>
<P>(a) <I>Introduction.</I> This standard applies to all exterior passage door units, excluding sliding doors and doors used for access to utilities and compartments. This standard applies only to the door frame consisting of jambs, head and sill and the attached door or doors. 
</P>
<P>(b) <I>Performance requirements.</I> The design and construction of exterior door units must meet all requirements of AAMA 1702.2 or AAMA/WDMA/CSA 101/I.S.2/A440 (both incorporated by reference, see § 3280.4).
</P>
<P>(c) <I>Materials and methods.</I> Any material or method of construction must conform to the performance requirements as outlined in paragraph (b) of this section. Plywood must be exterior type and preservative treated in accordance with WDMA I.S.4 (incorporated by reference, see § 3280.4).
</P>
<P>(d) <I>Exterior doors.</I> All swinging exterior doors shall be installed in a manner which allows proper operation and provides protection against the elements (<I>see</I> § 3280.307). 
</P>
<P>(e) <I>Certification.</I> All swinging exterior doors to be installed in manufactured homes must be certified as complying with AAMA 1702.2 or AAMA/WDMA/CSA 101/I.S.2/A440 (both incorporated by reference, see § 3280.4).
</P>
<P>(1) All such doors must show evidence of certification by affixing a quality certification label to the product from an independent product certification body accredited to ISO/IEC 17065 (incorporated by reference, see § 3280.4).
</P>
<P>(2) In determining certifiability of the products, an independent quality assurance agency must conduct a pre-production specimen test in accordance with AAMA 1702.2 or AAMA/WDMA/CSA 101/I.S.2/A440 (both incorporated by reference, see § 3280.4).
</P>
<P>(f) <I>Protection of exterior doors in high wind areas.</I> For homes designed to be located in Wind Zones II and III, manufacturers shall design exterior walls surrounding the exterior door openings to allow for the installation of shutters or other protective covers, such as plywood, to cover these openings. Although not required, the Department encourages manufacturers to provide the shutters or protective covers and to install receiving devices, sleeves, or anchors for fasteners to be used to secure the shutters or protective covers to the exterior walls. If the manufacturer does not provide shutters or other protective covers to cover these openings, the manufacturer must provide to the homeowner instructions for at least one method of protecting exterior door openings. This method must be capable of resisting the design wind pressures specified in § 3280.305 without taking the home out of conformance with the standards in this part. These instructions must be included in the printed instructions that accompany each manufactured home. The instructions shall also indicate whether receiving devices, sleeves, or anchors, for fasteners to be used to secure the shutters or protective covers to the exterior walls, have been installed or provided by the manufacturer. 
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 52 FR 4583, Feb. 12, 1987; 52 FR 35543, Sept. 22, 1987; 58 FR 55009, Oct. 25, 1993; 59 FR 2474, Jan. 14, 1994; 70 FR 72046, Nov. 30, 2005; 89 FR 75750, Sept. 16, 2024] 




</CITA>
</DIV8>


<DIV8 N="§ 3280.406" NODE="24:5.1.2.1.2.5.1.6" TYPE="SECTION">
<HEAD>§ 3280.406   Air chamber test methods for certification and continuing qualification of formaldehyde emission levels.</HEAD>
<P>(a) <I>Definitions.</I> For purposes of this section, the definitions found in 40 CFR 770.3 apply.
</P>
<P>(b) <I>Testing requirements.</I> Testing of composite wood products must be performed pursuant to the general requirements of 40 CFR 770.20(a) and (b). Certification testing must be performed pursuant to one of the air chamber test methods specified in 40 CFR 770.15 (ASTM E1333-14, or ASTM D6007-14, both incorporated by reference, see § 3280.4). Quarterly testing must be performed pursuant to one of the air chamber test methods specified in 40 CFR 770.20(c) (ASTM E1333-14 or ASTM D6007-14).
</P>
<P>(c) <I>Samples for testing.</I> Samples for testing shall comply with 40 CFR 770.24.
</P>
<CITA TYPE="N">[85 FR 5566, Jan. 31, 2020]




</CITA>
</DIV8>


<DIV8 N="§ 3280.407" NODE="24:5.1.2.1.2.5.1.7" TYPE="SECTION">
<HEAD>§ 3280.407   Quality control testing, manuals, facilities, and personnel.</HEAD>
<P>(a) <I>Definitions.</I> For purposes of this section, the definitions found in 40 CFR 770.3 apply.
</P>
<P>(b) <I>Quality control testing.</I> Quality control testing is required for hardwood plywood made with a veneer core or composite core, medium density fiberboard, thin medium density fiberboard, and particleboard and must be performed in accordance with the general requirements in 40 CFR 770.20(a) and by one of the test methods and at the frequency specified in 40 CFR 770.20(b). Panels being tested with an equivalence and correlation must be determined in accordance with 40 CFR 770.20(d).
</P>
<P>(c) <I>Quality control manuals, facilities, and personnel.</I> A panel producer must have a written quality control manual, must designate a quality control facility for conducting quality control formaldehyde testing under this section, and must designate a person as quality control manager with adequate experience and/or training to be responsible for formaldehyde emissions quality control consistent with 40 CFR 770.21. A panel producer means a manufacturing plant or other facility that manufactures (excluding facilities that solely import products) composite wood products (hardwood plywood made with a veneer or composite core, medium-density fiberboard, and particleboard) on the premises.
</P>
<CITA TYPE="N">[85 FR 5566, Jan. 31, 2020]




</CITA>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:5.1.2.1.2.6" TYPE="SUBPART">
<HEAD>Subpart F—Thermal Protection</HEAD>


<DIV8 N="§ 3280.501" NODE="24:5.1.2.1.2.6.1.1" TYPE="SECTION">
<HEAD>§ 3280.501   Scope.</HEAD>
<P>This subpart sets forth the requirements for condensation control, air infiltration, thermal insulation and certification for heating and comfort cooling. 


</P>
</DIV8>


<DIV8 N="§ 3280.502" NODE="24:5.1.2.1.2.6.1.2" TYPE="SECTION">
<HEAD>§ 3280.502   Definitions.</HEAD>
<P>(a) The following definitions are applicable to subpart F only: 
</P>
<P>(1) <I>Pressure envelope</I> means that primary air barrier surrounding the living space which serves to limit air leakage. In construction using ventilated cavities, the pressure envelope is the interior skin. 
</P>
<P>(2) <I>Thermal envelope area</I> means the sum of the surface areas of outside walls, ceiling and floor, including all openings. The wall area is measured by multiplying outside wall lengths by the inside wall height from floor to ceiling. The floor and ceiling areas are considered as horizontal surfaces using exterior width and length. 


</P>
</DIV8>


<DIV8 N="§ 3280.503" NODE="24:5.1.2.1.2.6.1.3" TYPE="SECTION">
<HEAD>§ 3280.503   Materials.</HEAD>
<P>Materials used for insulation shall be of proven effectiveness and adequate durability to assure that required design conditions concerning thermal transmission are attained. 


</P>
</DIV8>


<DIV8 N="§ 3280.504" NODE="24:5.1.2.1.2.6.1.4" TYPE="SECTION">
<HEAD>§ 3280.504   Condensation control and installation of vapor retarders.</HEAD>
<P>(a) <I>Ceiling vapor retarders.</I> (1) In U<E T="52">o</E> Value Zones 2 and 3, ceilings must have a vapor retarder with a permeance of not greater than 1 perm as measured by ASTM E96/E96M (incorporated by reference, see § 3280.4), installed on the living space side of the roof cavity.
</P>
<P>(2) For manufactured homes designed for Uo Value Zone 1, the vapor retarder may be omitted. 
</P>
<P>(3) In multi-story manufactured homes, the ceiling vapor retarder is permitted to be omitted when the story directly above is part of the same manufactured home.
</P>
<P>(b) <I>Exterior walls.</I> Exterior walls must be provided with a system or method to manage moisture and vapor accumulation with one of the elements in paragraphs (b)(1) through (4) of this section. For purposes of the requirement in this paragraph (b), the fire separation wall between each attached manufactured home must be considered to be an exterior wall. See subpart K of this part.
</P>
<P>(1) Exterior walls shall have a vapor barrier no greater than 1 perm (dry cup method) installed on the living space side of the wall, or
</P>
<P>(2) Unventilated wall cavities must have an external covering and/or sheathing that forms the pressure envelope. The covering and/or sheathing must have a combined permeance of not less than 5.0 perms. In the absence of test data, combined permeance is permitted to be computed using the following formula: P total = (1/[(1/P<E T="52">1</E>) + (1/P<E T="52">2</E>)]), where P<E T="52">1</E> and P<E T="52">2</E> are the permeance values of the exterior covering and sheathing in perms. Formed exterior siding applied in sections with joints not caulked or sealed, are not considered to restrict water vapor transmission; or
</P>
<P>(3) Wall cavities must be constructed so that ventilation is provided to dissipate any condensation occurring in these cavities; or
</P>
<P>(4) Homes manufactured to be sited in “humid climates” or “fringe climates” as shown on the Humid and Fringe Climate Map in this paragraph are permitted to have a vapor retarder specified in paragraph (b)(1) of this section installed on the exterior side of the wall insulation or be constructed with an external covering and sheathing with a combined permeance of not greater than 1.0 perms, provided the interior finish and interior wall panel materials have a combined permeance of not less than 5.0 perms. The following need not meet the minimum combined permeance rating of not less than 5.0 perms for interior finish or wall panel materials:
</P>
<P>(i) Kitchen back splash materials, less than 50 square feet in area installed around countertops, sinks, and ranges;
</P>
<P>(ii) Bathroom tub areas, shower compartments;
</P>
<P>(iii) Cabinetry and built-in furniture;
</P>
<P>(iv) Trim materials;
</P>
<P>(v) Hardboard wall paneling of less than 50 square feet in area under chair rails.
</P>
<img src="/graphics/er30no05.067.gif"/>
<P>(5) The following areas of local governments (counties or similar areas, unless otherwise specified), listed by state are deemed to be within the humid and fringe climate areas shown on the Humid and Fringe Climate Map in paragraph (b)(4) of this section, and the vapor retarder or construction methods specified in paragraph (b)(4) of this section may be applied to homes built to be sited within these jurisdictions:
</P>
<EXTRACT>
<HD1>Alabama
</HD1>
<P>Baldwin, Barbour, Bullock, Butler, Choctaw, Clarke, Coffee, Conecuh, Covington, Crenshaw, Dale, Escambia, Geneva, Henry, Houston, Lowndes, Marengo, Mobile, Monroe, Montgomery, Pike, Washington, Wilcox.
</P>
<HD1>Florida
</HD1>
<P>All counties and locations within the State of Florida.
</P>
<HD1>Georgia
</HD1>
<P>Appling, Atkinson, Bacon, Baker, Ben Hill, Berrien, Brantley, Brooks, Bryan, Calhoun, Camden, Charlton, Chatham, Clay, Clinch, Coffee, Colquitt, Cook, Crisp, Decatur, Dougherty, Early, Echols, Effingham, Evans, Glynn, Wayne, Grady, Irwin, Jeff Davis, Lanier, Lee, Liberty, Long, Lowndes, McIntosh, Miller, Mitchell, Pierce, Quitman, Randolph, Seminole, Tattnall, Terrell, Thomas, Tift, Turner, Ware, Worth.
</P>
<HD1>Hawaii
</HD1>
<P>All counties and locations within the State of Hawaii.
</P>
<HD1>Louisiana
</HD1>
<P>All counties and locations within the State of Louisiana.
</P>
<HD1>Mississippi
</HD1>
<P>Adams, Amite, Claiborne, Clarke, Copiah, Covington, Forrest, Franklin, George, Greene, Hancock, Harrison, Hinds, Issaquena, Jackson, Jasper, Jefferson, Jefferson Davis, Jones, Lamar, Lawrence, Lincoln, Marion, Pearl River, Perry, Pike, Rankin, Simpson, Smith, Stone, Walthall, Warren, Wayne, Wilkinson.
</P>
<HD1>North Carolina
</HD1>
<P>Brunswick, Carteret, Columbus, New Hanover, Onslow, Pender.
</P>
<HD1>South Carolina
</HD1>
<P>Jasper, Beaufort, Colleton, Dorchester, Charleston, Berkeley, Georgetown, Horry.
</P>
<HD1>Texas
</HD1>
<P>Anderson, Angelina, Aransas, Atascosa, Austin, Bastrop, Bee, Bexar, Brazoria, Brazos, Brooks, Burleson, Caldwell, Calhoun, Cameron, Camp, Cass, Chambers, Cherokee, Colorado, Comal, De Witt, Dimmit, Duval, Falls, Fayette, Fort Bend, Franklin, Freestone, Frio, Galveston, Goliad, Gonzales, Gregg, Grimes, Guadalupe, Hardin, Harris, Harrison, Hays, Henderson, Hidalgo, Hopkins, Houston, Jackson, Jasper, Jefferson, Jim Hogg, Jim Wells, Karnes, Kaufman, Kennedy, Kinney, Kleberg, La Salle, Lavaca, Lee, Leon, Liberty, Limestone, Live Oak, Madison, Marion, Matagorda, Maverick, McMullen, Medina, Milam, Montgomery, Morris, Nacogdoches, Navarro, Newton, Nueces, Orange, Panola, Polk, Rains, Refugio, Robertson, Rusk, Sabine, San Augustine, San Jacinto, San Patricio, Shelby, Smith, Starr, Titus, Travis, Trinity, Tyler, Upshur, Uvalde, Val Verde, Van Zandt, Victoria, Walker, Waller, Washington, Webb, Wharton, Willacy, Williamson, Wilson, Wood, Zapata, Zavala.</P></EXTRACT>
<P>(c) <I>Liquid applied vapor retarders.</I> Each liquid applied vapor retarder must be tested by a nationally recognized testing agency for use on the specific substrate to which it is applied. The test report must include the perm rating, as measured by ASTM E96/E96M (incorporated by reference, see § 3280.4), and associated application rate for each specific substrate.
</P>
<P>(d) <I>Attic or roof ventilation.</I> (1) Attic and roof cavities shall be vented in accordance with one of the following: 
</P>
<P>(i) A minimum free ventilation area of not less than 1/300 of the attic or roof cavity floor area. At least 50 percent of the required free ventilation area shall be provided by ventilators located in the upper portion of the space to be ventilated. At least 40 percent shall be provided by eave, soffit or low gable vents. The location and spacing of the vent openings and ventilators shall provide cross-ventilation to the entire attic or roof cavity space. A clear air passage space having a minimum height of 1 inch shall be provided between the top of the insulation and the roof sheathing or roof covering. Baffles or other means shall be provided where needed to insure the 1 inch height of the clear air passage space is maintained. 
</P>
<P>(ii) A mechanical attic or roof ventilation system may be installed instead of providing the free ventilation area when the mechanical system provides a minimum air change rate of 0.02 cubic feet per minute (cfm) per sq. ft. of attic floor area. Intake and exhaust vents shall be located so as to provide air movement throughout space. 
</P>
<P>(2) Single section manufactured homes constructed with metal roofs and having no sheathing or underlayment installed, are not required to be provided with attic or roof cavity ventilation provided that the air leakage paths from the living space to the roof cavity created by electrical outlets, electrical junctions, electrical cable penetrations, plumbing penetrations, flue pipe penetrations and exhaust vent penetrations are sealed. 
</P>
<P>(3) Parallel membrane roof section of a closed cell type construction are not required to be ventilated. 
</P>
<P>(4) The vents provided for ventilating attics and roof cavities shall be designed to resist entry of rain and insects. 
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 58 FR 55009, Oct. 25, 1993; 70 FR 72046, Nov. 30, 2005; 71 FR 19639, Apr. 17, 2006; 78 FR 73984, Dec. 9, 2013; 86 FR 2521, Jan. 12, 2021; 89 FR 75750, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.505" NODE="24:5.1.2.1.2.6.1.5" TYPE="SECTION">
<HEAD>§ 3280.505   Air infiltration.</HEAD>
<P>(a) <I>Envelope air infiltration.</I> The opaque envelope shall be designed and constructed to limit air infiltration to the living area of the home. Any design, material, method or combination thereof which accomplishes this goal may be used. The goal of the infiltration control criteria is to reduce heat loss/heat gain due to infiltration as much as possible without impinging on health and comfort and within the limits of reasonable economics. 
</P>
<P>(1) <I>Envelope penetrations.</I> Plumbing, mechanical and electrical penetrations of the pressure envelope not exempted by this part, and installations of window and door frames shall be constructed or treated to limit air infiltration. Penetrations of the pressure envelope made by electrical equipment, other than distribution panel boards and cable and conduit penetrations, are exempt from this requirement. Cable penetrations through outlet boxes are considered exempt. 
</P>
<P>(2) <I>Joints between major envelope elements.</I> Joints not designed to limit air infiltration between wall-to-wall, wall-to-ceiling and wall-to-floor connections shall be caulked or otherwise sealed. When walls are constructed to form a pressure envelope on the outside of the wall cavity, they are deemed to meet this requirement. 


</P>
</DIV8>


<DIV8 N="§ 3280.506" NODE="24:5.1.2.1.2.6.1.6" TYPE="SECTION">
<HEAD>§ 3280.506   Heat loss/heat gain.</HEAD>
<P>(a) The manufactured home heat loss/heat gain shall be determined by methods outlined in §§ 3280.508 and 3280.509. The Uo (Coefficient of heat transmission) value zone for which the manufactured home is acceptable and the lowest outdoor temperature to which the installed heating equipment will maintain a temperature of 70 F shall be certified as specified in § 3280.510. The Uo value zone shall be determined from the map in figure 1 to this paragraph (a). 
</P>
<P>Figure 1 to Paragraph (a)
</P>
<img src="/graphics/ec17oc91.005.gif"/>
<P>(b) The overall coefficient of heat transmission (Uo) of the manufactured home for the respective zones and an indoor design temperature of 70 F, including internal and external ducts, and excluding infiltration, ventilation, and condensation control, shall not exceed the Btu/(hr.) (sq. ft.) (F) of the manufactured home envelope are as tabulated in the table to this paragraph (b):


</P>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Table 1 to Paragraph (b)
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Uo value zone 
</TH><TH class="gpotbl_colhed" scope="col">Maximum coefficient of heat transmission
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1</TD><TD align="left" class="gpotbl_cell">0.116 Btu/(hr.) (sq. ft.) (F). 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">2</TD><TD align="left" class="gpotbl_cell">0.096 Btu/(hr.) (sq. ft.) (F). 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">3</TD><TD align="left" class="gpotbl_cell">0.079 Btu/(hr.) (sq. ft.) (F).</TD></TR></TABLE></DIV></DIV>
<P>(c) To assure uniform heat transmission in manufactured homes, cavities in exterior walls, floors, and ceilings must be provided with thermal insulation. For insulation purposes, the fire separation wall between each single family attached manufactured home shall be considered an exterior wall (see subpart K of this part).
</P>
<P>(d) Manufactured homes designed for Uo Value Zone 3 shall be factory equipped with storm windows or insulating glass. 
</P>
<CITA TYPE="N">[58 FR 55009, Oct. 25, 1993; 59 FR 15113, Mar. 31, 1994; 86 FR 2521, Jan. 12, 2021]


</CITA>
</DIV8>


<DIV8 N="§ 3280.507" NODE="24:5.1.2.1.2.6.1.7" TYPE="SECTION">
<HEAD>§ 3280.507   Comfort heat gain.</HEAD>
<P>Information necessary to calculate the home cooling load shall be provided as specified in this part. 
</P>
<P>(a) <I>Transmission heat gains.</I> Homes complying with this section shall meet the minimum heat loss transmission coefficients specified in § 3280.506(a). 


</P>
</DIV8>


<DIV8 N="§ 3280.508" NODE="24:5.1.2.1.2.6.1.8" TYPE="SECTION">
<HEAD>§ 3280.508   Heat loss, heat gain and cooling load calculations.</HEAD>
<P>(a) Information, values and data necessary for heat loss and heat gain determinations must be taken from the 1997 ASHRAE Handbook of Fundamentals, Inch-Pound Edition, chapters 22 through 27. The following portions of those chapters are not applicable:
</P>
<EXTRACT>
<FP-1>23.1 Steel Frame Construction
</FP-1>
<FP-1>23.2 Masonry Construction
</FP-1>
<FP-1>23.3 Foundations and Floor Systems
</FP-1>
<FP-1>23.15 Pipes
</FP-1>
<FP-1>23.17 Tanks, Vessels, and Equipment
</FP-1>
<FP-1>23.18 Refrigerated Rooms and Buildings
</FP-1>
<FP-1>24.18 Mechanical and Industrial Systems
</FP-1>
<FP-1>25.19 Commercial Building Envelope Leakage
</FP-1>
<FP-1>27.9 Calculation of Heat Loss from Crawl Spaces</FP-1></EXTRACT>
<P>(b) The calculation of the manufactured home's transmission heat loss coefficient (Uo) must be in accordance with the fundamental principles of the 1997 ASHRAE Handbook of Fundamentals, Inch-Pound Edition, and, at a minimum, must address all the heat loss or heat gain considerations in a manner consistent with the calculation procedures provided in the document, Overall U-values and Heating/Cooling Loads—Manufactured Homes—February 1992-PNL 8006, HUD User No. 0005945.
</P>
<P>(c) Areas where the insulation does not fully cover a surface or is compressed shall be accounted for in the U-calculation (see § 3280.506). The effect of framing on the U-value must be included in the Uo calculation. Other low-R-value heat-flow paths (“thermal shorts”) shall be explicitly accounted for in the calculation of the transmission heat loss coefficient if in the aggregate all types of low-R-value paths amount to more than 1% of the total exterior surface area. Areas are considered low-R-value heat-flow paths if: 
</P>
<P>(1) They separate conditioned and unconditioned space; and 
</P>
<P>(2) They are not insulated to a level that is at least one-half the nominal insulation level of the surrounding building component. 
</P>
<P>(d) <I>High efficiency heating and cooling equipment credit.</I> The calculated transmission heat loss coefficient (Uo) used for meeting the requirement in § 3280.506(a) may be adjusted for heating and cooling equipment above that required by the National Appliance Energy Conservation Act of 1987 (NAECA) by applying the following formula:
</P>
<FP-2>Uo adjusted = Uo standard × [1 + (0.6) (heating efficiency increase factor) + (cooling multiplier) (cooling efficiency increase factor)]
</FP-2>
<EXTRACT>
<FP>where:
</FP>
<FP-2>Uo standard = Maximum Uo for Uo Zone required by § 3280.506(a) 
</FP-2>
<FP-2>Uo adjusted = Maximum Uo standard adjusted for high efficiency HVAC equipment 
</FP-2>
<FP-2>Heating efficiency increase factor = The increase factor in heating equipment efficiency measured by the Annual Fuel Utilization Efficiency (AFUE), or the Heating Seasonal Performance Factor (HSPF) for heat pumps, above that required by NAECA (indicated as “NAECA” in formula). The formula is heating efficiency increase factor = AFUE (HSPF) home − AFUE (or HSPF) NAECA divided by AFUE (HSPF) NAECA. 
</FP-2>
<FP-2>Cooling efficiency increase factor = the increase factor in the cooling equipment efficiency measured by the Seasonal Energy Efficiency Ratio (SEER) above that required by NAECA. 
</FP-2>
<FP-2>The formula being cooling equipment = SEER home—SEER NAECA divided by SEER NAECA.
</FP-2>
<P>The cooling multiplier for the Uo Zone is from the following table:</P></EXTRACT>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Uo zone 
</TH><TH class="gpotbl_colhed" scope="col">Cooling multiplier (Cm)
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1</TD><TD align="left" class="gpotbl_cell">0.60 (Florida only).
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1</TD><TD align="left" class="gpotbl_cell">0.20 (All other locations).
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">2</TD><TD align="left" class="gpotbl_cell">0.07.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">3</TD><TD align="left" class="gpotbl_cell">0.03.</TD></TR></TABLE></DIV></DIV>
<P>(e) U values for any glazing (e.g., windows, skylights, and the glazed portions of any door) must be based on tests using AAMA 1503.1-1988, Voluntary Test Method for Thermal Transmittance and Condensation Resistance of Windows, Doors, and Glazed Wall Sections, or the National Fenestration Rating Council 100, 1997 Edition, Procedure for Determining Fenestration Product U-factors. In the absence of tests, manufacturers are to use the residential window U values contained in Chapter 29, Table 5 of the 1997 ASHRAE Handbook of Fundamentals, Inch-Pound Edition. In the event that the classification of the window type is indeterminate, the manufacturer must use the classification that gives the higher U value. Where a composite of materials from two different product types is used, the product is to be assigned the higher U value. For the purpose of calculating U<E T="52">o</E> values, storm windows are treated as an additional pane.
</P>
<P>(f) <I>Annual energy used based compliance.</I> As an alternative, homes may demonstrate compliance with the annual energy used implicit in the coefficient of heat transmission (Uo) requirement. The annual energy use determination must be based on generally accepted engineering practices. The general requirement is to demonstrate that the home seeking compliance approval has a projected annual energy use, including both heating and cooling, less than or equal to a similar “base case” home that meets the standard. The energy use for both homes must be calculated based on the same assumptions; including assuming the same dimensions for all boundaries between conditioned and unconditioned spaces, site characteristics, usage patterns and climate. 
</P>
<CITA TYPE="N">[58 FR 55011, Oct. 25, 1993, as amended at 70 FR 72047, Nov. 30, 2005]


</CITA>
</DIV8>


<DIV8 N="§ 3280.509" NODE="24:5.1.2.1.2.6.1.9" TYPE="SECTION">
<HEAD>§ 3280.509   Criteria in absence of specific data.</HEAD>
<P>In the absence of specific data, for purposes of heat-loss/gain calculation, the following criteria shall be used: 
</P>
<P>(a) <I>Infiltration heat loss.</I> In the absence of measured infiltration heat loss data, the following formula shall be used to calculate heat loss due to infiltration and intermittently operated fans exhausting to the outdoors. The perimeter calculation shall be based on the dimensions of the pressure envelope. 
</P>
<FP-2>Infiltration Heat-Loss = 0.7 (T) (ft. of perimeter), BTU/hr.
</FP-2>
<EXTRACT>
<FP-2>where: T = 70 minus the heating system capacity certification temperature stipulated in the Heating Certificate, in F.</FP-2></EXTRACT>
<P>(b) <I>Framing areas.</I>
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TD align="left" class="gpotbl_cell" scope="row">Wall</TD><TD align="left" class="gpotbl_cell">15 percent of wall area less windows and doors.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Floor and Ceiling</TD><TD align="left" class="gpotbl_cell">10 percent of the area.</TD></TR></TABLE></DIV></DIV>
<P>(c) <I>Insulation compression.</I> Insulation compressed to less than nominal thickness and loose-fill insulation in sloping cavities must have its nominal R-values reduced in compressed areas in accordance with the following table:
</P>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Table to Paragraph (c)—Effect of Insulation Compression and Restriction on <E T="03">R</E>-Values
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" rowspan="2" scope="col">Original thickness
<br/>(%)
</TH><TH class="gpotbl_colhed" colspan="2" scope="col">Non-uniform (a) restriction 
</TH><TH class="gpotbl_colhed" rowspan="2" scope="col">Uniform (b)
<br/>compression batt
<br/>(%)
</TH></TR><TR><TH class="gpotbl_colhed" scope="col">Batt
<br/>(%) 
</TH><TH class="gpotbl_colhed" scope="col">Blown
<br/>(%)
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">0</TD><TD align="right" class="gpotbl_cell">20</TD><TD align="right" class="gpotbl_cell">15</TD><TD align="right" class="gpotbl_cell">0
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1</TD><TD align="right" class="gpotbl_cell">26</TD><TD align="right" class="gpotbl_cell">21</TD><TD align="right" class="gpotbl_cell">1
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">2</TD><TD align="right" class="gpotbl_cell">32</TD><TD align="right" class="gpotbl_cell">25</TD><TD align="right" class="gpotbl_cell">2
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">3</TD><TD align="right" class="gpotbl_cell">36</TD><TD align="right" class="gpotbl_cell">28</TD><TD align="right" class="gpotbl_cell">4
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">4</TD><TD align="right" class="gpotbl_cell">38</TD><TD align="right" class="gpotbl_cell">30</TD><TD align="right" class="gpotbl_cell">5
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">5</TD><TD align="right" class="gpotbl_cell">41</TD><TD align="right" class="gpotbl_cell">32</TD><TD align="right" class="gpotbl_cell">7
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">6</TD><TD align="right" class="gpotbl_cell">43</TD><TD align="right" class="gpotbl_cell">33</TD><TD align="right" class="gpotbl_cell">8
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">7</TD><TD align="right" class="gpotbl_cell">45</TD><TD align="right" class="gpotbl_cell">35</TD><TD align="right" class="gpotbl_cell">10
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">8</TD><TD align="right" class="gpotbl_cell">46</TD><TD align="right" class="gpotbl_cell">36</TD><TD align="right" class="gpotbl_cell">11
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">9</TD><TD align="right" class="gpotbl_cell">48</TD><TD align="right" class="gpotbl_cell">38</TD><TD align="right" class="gpotbl_cell">13
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">10</TD><TD align="right" class="gpotbl_cell">49</TD><TD align="right" class="gpotbl_cell">39</TD><TD align="right" class="gpotbl_cell">14
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">11</TD><TD align="right" class="gpotbl_cell">51</TD><TD align="right" class="gpotbl_cell">40</TD><TD align="right" class="gpotbl_cell">15
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">12</TD><TD align="right" class="gpotbl_cell">52</TD><TD align="right" class="gpotbl_cell">42</TD><TD align="right" class="gpotbl_cell">17
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">13</TD><TD align="right" class="gpotbl_cell">53</TD><TD align="right" class="gpotbl_cell">43</TD><TD align="right" class="gpotbl_cell">18
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">14</TD><TD align="right" class="gpotbl_cell">54</TD><TD align="right" class="gpotbl_cell">44</TD><TD align="right" class="gpotbl_cell">20
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">15</TD><TD align="right" class="gpotbl_cell">55</TD><TD align="right" class="gpotbl_cell">45</TD><TD align="right" class="gpotbl_cell">21
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">16</TD><TD align="right" class="gpotbl_cell">57</TD><TD align="right" class="gpotbl_cell">46</TD><TD align="right" class="gpotbl_cell">22
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">17</TD><TD align="right" class="gpotbl_cell">58</TD><TD align="right" class="gpotbl_cell">47</TD><TD align="right" class="gpotbl_cell">24
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">18</TD><TD align="right" class="gpotbl_cell">59</TD><TD align="right" class="gpotbl_cell">48</TD><TD align="right" class="gpotbl_cell">25
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">19</TD><TD align="right" class="gpotbl_cell">59</TD><TD align="right" class="gpotbl_cell">49</TD><TD align="right" class="gpotbl_cell">26
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">20</TD><TD align="right" class="gpotbl_cell">60</TD><TD align="right" class="gpotbl_cell">50</TD><TD align="right" class="gpotbl_cell">28
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">21</TD><TD align="right" class="gpotbl_cell">61</TD><TD align="right" class="gpotbl_cell">51</TD><TD align="right" class="gpotbl_cell">29
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">22</TD><TD align="right" class="gpotbl_cell">62</TD><TD align="right" class="gpotbl_cell">52</TD><TD align="right" class="gpotbl_cell">30
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">23</TD><TD align="right" class="gpotbl_cell">63</TD><TD align="right" class="gpotbl_cell">52</TD><TD align="right" class="gpotbl_cell">31
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">24</TD><TD align="right" class="gpotbl_cell">64</TD><TD align="right" class="gpotbl_cell">53</TD><TD align="right" class="gpotbl_cell">33
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">25</TD><TD align="right" class="gpotbl_cell">65</TD><TD align="right" class="gpotbl_cell">54</TD><TD align="right" class="gpotbl_cell">34
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">26</TD><TD align="right" class="gpotbl_cell">65</TD><TD align="right" class="gpotbl_cell">55</TD><TD align="right" class="gpotbl_cell">35
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">27</TD><TD align="right" class="gpotbl_cell">66</TD><TD align="right" class="gpotbl_cell">56</TD><TD align="right" class="gpotbl_cell">36
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">28</TD><TD align="right" class="gpotbl_cell">67</TD><TD align="right" class="gpotbl_cell">57</TD><TD align="right" class="gpotbl_cell">37
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">29</TD><TD align="right" class="gpotbl_cell">68</TD><TD align="right" class="gpotbl_cell">57</TD><TD align="right" class="gpotbl_cell">39
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">30</TD><TD align="right" class="gpotbl_cell">68</TD><TD align="right" class="gpotbl_cell">58</TD><TD align="right" class="gpotbl_cell">40
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">31</TD><TD align="right" class="gpotbl_cell">69</TD><TD align="right" class="gpotbl_cell">59</TD><TD align="right" class="gpotbl_cell">41
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">32</TD><TD align="right" class="gpotbl_cell">70</TD><TD align="right" class="gpotbl_cell">60</TD><TD align="right" class="gpotbl_cell">42
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">33</TD><TD align="right" class="gpotbl_cell">70</TD><TD align="right" class="gpotbl_cell">60</TD><TD align="right" class="gpotbl_cell">43
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">34</TD><TD align="right" class="gpotbl_cell">71</TD><TD align="right" class="gpotbl_cell">61</TD><TD align="right" class="gpotbl_cell">44
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">35</TD><TD align="right" class="gpotbl_cell">72</TD><TD align="right" class="gpotbl_cell">62</TD><TD align="right" class="gpotbl_cell">45
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">36</TD><TD align="right" class="gpotbl_cell">72</TD><TD align="right" class="gpotbl_cell">63</TD><TD align="right" class="gpotbl_cell">47
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">37</TD><TD align="right" class="gpotbl_cell">73</TD><TD align="right" class="gpotbl_cell">63</TD><TD align="right" class="gpotbl_cell">48
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">38</TD><TD align="right" class="gpotbl_cell">74</TD><TD align="right" class="gpotbl_cell">64</TD><TD align="right" class="gpotbl_cell">49
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">39</TD><TD align="right" class="gpotbl_cell">74</TD><TD align="right" class="gpotbl_cell">65</TD><TD align="right" class="gpotbl_cell">50
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">40</TD><TD align="right" class="gpotbl_cell">75</TD><TD align="right" class="gpotbl_cell">65</TD><TD align="right" class="gpotbl_cell">51
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">41</TD><TD align="right" class="gpotbl_cell">75</TD><TD align="right" class="gpotbl_cell">66</TD><TD align="right" class="gpotbl_cell">52
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">42</TD><TD align="right" class="gpotbl_cell">76</TD><TD align="right" class="gpotbl_cell">67</TD><TD align="right" class="gpotbl_cell">53
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">43</TD><TD align="right" class="gpotbl_cell">76</TD><TD align="right" class="gpotbl_cell">68</TD><TD align="right" class="gpotbl_cell">54
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">44</TD><TD align="right" class="gpotbl_cell">77</TD><TD align="right" class="gpotbl_cell">68</TD><TD align="right" class="gpotbl_cell">55
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">45</TD><TD align="right" class="gpotbl_cell">78</TD><TD align="right" class="gpotbl_cell">69</TD><TD align="right" class="gpotbl_cell">56
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">46</TD><TD align="right" class="gpotbl_cell">78</TD><TD align="right" class="gpotbl_cell">70</TD><TD align="right" class="gpotbl_cell">57
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">47</TD><TD align="right" class="gpotbl_cell">79</TD><TD align="right" class="gpotbl_cell">70</TD><TD align="right" class="gpotbl_cell">58
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">48</TD><TD align="right" class="gpotbl_cell">79</TD><TD align="right" class="gpotbl_cell">71</TD><TD align="right" class="gpotbl_cell">59
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">49</TD><TD align="right" class="gpotbl_cell">80</TD><TD align="right" class="gpotbl_cell">71</TD><TD align="right" class="gpotbl_cell">60
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">50</TD><TD align="right" class="gpotbl_cell">80</TD><TD align="right" class="gpotbl_cell">72</TD><TD align="right" class="gpotbl_cell">61
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">51</TD><TD align="right" class="gpotbl_cell">81</TD><TD align="right" class="gpotbl_cell">73</TD><TD align="right" class="gpotbl_cell">62
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">52</TD><TD align="right" class="gpotbl_cell">81</TD><TD align="right" class="gpotbl_cell">73</TD><TD align="right" class="gpotbl_cell">63
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">53</TD><TD align="right" class="gpotbl_cell">82</TD><TD align="right" class="gpotbl_cell">74</TD><TD align="right" class="gpotbl_cell">64
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">54</TD><TD align="right" class="gpotbl_cell">82</TD><TD align="right" class="gpotbl_cell">75</TD><TD align="right" class="gpotbl_cell">65
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">55</TD><TD align="right" class="gpotbl_cell">83</TD><TD align="right" class="gpotbl_cell">75</TD><TD align="right" class="gpotbl_cell">65
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">56</TD><TD align="right" class="gpotbl_cell">83</TD><TD align="right" class="gpotbl_cell">76</TD><TD align="right" class="gpotbl_cell">66
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">57</TD><TD align="right" class="gpotbl_cell">84</TD><TD align="right" class="gpotbl_cell">76</TD><TD align="right" class="gpotbl_cell">67
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">58</TD><TD align="right" class="gpotbl_cell">84</TD><TD align="right" class="gpotbl_cell">77</TD><TD align="right" class="gpotbl_cell">68
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">59</TD><TD align="right" class="gpotbl_cell">84</TD><TD align="right" class="gpotbl_cell">78</TD><TD align="right" class="gpotbl_cell">69
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">60</TD><TD align="right" class="gpotbl_cell">85</TD><TD align="right" class="gpotbl_cell">78</TD><TD align="right" class="gpotbl_cell">70
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">61</TD><TD align="right" class="gpotbl_cell">85</TD><TD align="right" class="gpotbl_cell">79</TD><TD align="right" class="gpotbl_cell">71
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">62</TD><TD align="right" class="gpotbl_cell">86</TD><TD align="right" class="gpotbl_cell">79</TD><TD align="right" class="gpotbl_cell">72
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">63</TD><TD align="right" class="gpotbl_cell">86</TD><TD align="right" class="gpotbl_cell">80</TD><TD align="right" class="gpotbl_cell">73
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">64</TD><TD align="right" class="gpotbl_cell">87</TD><TD align="right" class="gpotbl_cell">81</TD><TD align="right" class="gpotbl_cell">74
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">65</TD><TD align="right" class="gpotbl_cell">87</TD><TD align="right" class="gpotbl_cell">81</TD><TD align="right" class="gpotbl_cell">74
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">66</TD><TD align="right" class="gpotbl_cell">88</TD><TD align="right" class="gpotbl_cell">82</TD><TD align="right" class="gpotbl_cell">75
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">67</TD><TD align="right" class="gpotbl_cell">88</TD><TD align="right" class="gpotbl_cell">82</TD><TD align="right" class="gpotbl_cell">76
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">68</TD><TD align="right" class="gpotbl_cell">88</TD><TD align="right" class="gpotbl_cell">83</TD><TD align="right" class="gpotbl_cell">77
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">69</TD><TD align="right" class="gpotbl_cell">89</TD><TD align="right" class="gpotbl_cell">84</TD><TD align="right" class="gpotbl_cell">78
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">70</TD><TD align="right" class="gpotbl_cell">89</TD><TD align="right" class="gpotbl_cell">84</TD><TD align="right" class="gpotbl_cell">78
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">71</TD><TD align="right" class="gpotbl_cell">90</TD><TD align="right" class="gpotbl_cell">85</TD><TD align="right" class="gpotbl_cell">79
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">72</TD><TD align="right" class="gpotbl_cell">90</TD><TD align="right" class="gpotbl_cell">85</TD><TD align="right" class="gpotbl_cell">80
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">73</TD><TD align="right" class="gpotbl_cell">90</TD><TD align="right" class="gpotbl_cell">86</TD><TD align="right" class="gpotbl_cell">81
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">74</TD><TD align="right" class="gpotbl_cell">91</TD><TD align="right" class="gpotbl_cell">86</TD><TD align="right" class="gpotbl_cell">82
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">75</TD><TD align="right" class="gpotbl_cell">91</TD><TD align="right" class="gpotbl_cell">87</TD><TD align="right" class="gpotbl_cell">82
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">76</TD><TD align="right" class="gpotbl_cell">92</TD><TD align="right" class="gpotbl_cell">87</TD><TD align="right" class="gpotbl_cell">83
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">77</TD><TD align="right" class="gpotbl_cell">92</TD><TD align="right" class="gpotbl_cell">88</TD><TD align="right" class="gpotbl_cell">84
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">78</TD><TD align="right" class="gpotbl_cell">92</TD><TD align="right" class="gpotbl_cell">89</TD><TD align="right" class="gpotbl_cell">85
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">79</TD><TD align="right" class="gpotbl_cell">93</TD><TD align="right" class="gpotbl_cell">89</TD><TD align="right" class="gpotbl_cell">85
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">80</TD><TD align="right" class="gpotbl_cell">93</TD><TD align="right" class="gpotbl_cell">90</TD><TD align="right" class="gpotbl_cell">86
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">81</TD><TD align="right" class="gpotbl_cell">93</TD><TD align="right" class="gpotbl_cell">90</TD><TD align="right" class="gpotbl_cell">87
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">82</TD><TD align="right" class="gpotbl_cell">94</TD><TD align="right" class="gpotbl_cell">91</TD><TD align="right" class="gpotbl_cell">88
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">83</TD><TD align="right" class="gpotbl_cell">94</TD><TD align="right" class="gpotbl_cell">91</TD><TD align="right" class="gpotbl_cell">88
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">84</TD><TD align="right" class="gpotbl_cell">95</TD><TD align="right" class="gpotbl_cell">92</TD><TD align="right" class="gpotbl_cell">89
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">85</TD><TD align="right" class="gpotbl_cell">95</TD><TD align="right" class="gpotbl_cell">92</TD><TD align="right" class="gpotbl_cell">90
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">86</TD><TD align="right" class="gpotbl_cell">95</TD><TD align="right" class="gpotbl_cell">93</TD><TD align="right" class="gpotbl_cell">91
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">87</TD><TD align="right" class="gpotbl_cell">96</TD><TD align="right" class="gpotbl_cell">93</TD><TD align="right" class="gpotbl_cell">91
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">88</TD><TD align="right" class="gpotbl_cell">96</TD><TD align="right" class="gpotbl_cell">94</TD><TD align="right" class="gpotbl_cell">92
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">89</TD><TD align="right" class="gpotbl_cell">96</TD><TD align="right" class="gpotbl_cell">94</TD><TD align="right" class="gpotbl_cell">93
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">90</TD><TD align="right" class="gpotbl_cell">97</TD><TD align="right" class="gpotbl_cell">95</TD><TD align="right" class="gpotbl_cell">93
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">91</TD><TD align="right" class="gpotbl_cell">97</TD><TD align="right" class="gpotbl_cell">95</TD><TD align="right" class="gpotbl_cell">94
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">92</TD><TD align="right" class="gpotbl_cell">97</TD><TD align="right" class="gpotbl_cell">96</TD><TD align="right" class="gpotbl_cell">95
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">93</TD><TD align="right" class="gpotbl_cell">98</TD><TD align="right" class="gpotbl_cell">96</TD><TD align="right" class="gpotbl_cell">95
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">94</TD><TD align="right" class="gpotbl_cell">98</TD><TD align="right" class="gpotbl_cell">97</TD><TD align="right" class="gpotbl_cell">96
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">95</TD><TD align="right" class="gpotbl_cell">98</TD><TD align="right" class="gpotbl_cell">97</TD><TD align="right" class="gpotbl_cell">97
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">96</TD><TD align="right" class="gpotbl_cell">99</TD><TD align="right" class="gpotbl_cell">98</TD><TD align="right" class="gpotbl_cell">97
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">97</TD><TD align="right" class="gpotbl_cell">99</TD><TD align="right" class="gpotbl_cell">98</TD><TD align="right" class="gpotbl_cell">98
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">98</TD><TD align="right" class="gpotbl_cell">99</TD><TD align="right" class="gpotbl_cell">99</TD><TD align="right" class="gpotbl_cell">99
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">99</TD><TD align="right" class="gpotbl_cell">100</TD><TD align="right" class="gpotbl_cell">99</TD><TD align="right" class="gpotbl_cell">99
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">100</TD><TD align="right" class="gpotbl_cell">100</TD><TD align="right" class="gpotbl_cell">100</TD><TD align="right" class="gpotbl_cell">100
</TD></TR></TABLE></DIV><DIV class="table_foot"><P class="gpotbl_note"> Note: To use this table, first compute the restricted insulation thickness as a fraction of the uncompressed (full) insulation thickness. Then look up the <E T="03">R</E>-value remaining from the appropriate column (Non-uniform Restriction, Batt Non-uniform Restriction, Blown or Uniform Compression, Batt). Example: Assume a section of loose-fill ceiling insulation went from <E T="03">R</E>-25 insulation at a height of 10 inches to a minimum height of 2 inches at the edge of the ceiling. The ratio of minimum to full thickness is 0.20 (2 divided by 10). Look up 0.20 (20 percent), read across to column 3 (Non-uniform Restriction, Blown), and read 50 percent. Therefore, the <E T="03">R</E>-value of the loose-fill insulation over the restricted area would be <E T="03">R</E>-12.5 (50 percent of 25).
</P><P class="gpotbl_note">(a) Non-uniform restriction is that which occurs between non-parallel planes, such as in the ceiling near the eaves.
</P><P class="gpotbl_note">(b) Uniform compression is compression between parallel planes, such as that which occurs in a wall.</P></DIV></DIV>
<P>(d) <I>Air supply ducts within floor cavity.</I> Air supply ducts located within a floor cavity shall be assumed to be heating or cooling the floor cavity to living space temperatures unless the duct is structurally isolated by the framing system or thermally insulated from the rest of the floor cavity with a thermal insulation at least equal to R-4. 
</P>
<P>(e) <I>Air supply ducts within ceiling cavity.</I> Where supply ducts are located in ceiling cavities, the influence of the duct on cavity temperatures shall be considered in calculating envelope heat loss or heat gain. 
</P>
<P>(f) The supply duct loss (and/or heat gain where applicable—See § 3280.511) shall be calculated using the actual duct surface area and the actual thickness of insulation between the duct and outside of the manufactured home. If there is an air space of at least 
<FR>1/2</FR> inch between the duct and the insulation, heat loss/gain need not be calculated if the cavity in which the duct is located is assumed to be at living space temperature. The average temperature inside the supply duct, including ducts installed outside the manufactured home, shall be assumed to be 130 F for purposes of calculation of heat loss and 60 F for heat gain. 
</P>
<P>(g) <I>Return air cavities.</I> Cavities used as return air plenums shall be considered to be at living space temperature. 
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 78 FR 73984, Dec. 9, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 3280.510" NODE="24:5.1.2.1.2.6.1.10" TYPE="SECTION">
<HEAD>§ 3280.510   Heat loss certificate.</HEAD>
<P>The manufactured home manufacturer must permanently affix the following “Certificate” to an interior surface of each dwelling unit that is readily visible to the occupant. The “Certificate” shall specify the following: 
</P>
<P>(a) <I>Heating zone certification.</I> The design zone at which the manufactured home heat loss complies with § 3280.506(a). 
</P>
<P>(b) <I>Outdoor certification temperature.</I> The lowest outdoor temperature at which the installed heating equipment will maintain a 70 °F temperature inside the home without storm sash or insulating glass for Zones 1 and 2, and with storm sash or insulating glass for Zone 3 and complying with § 3280.508 and § 3280.509. 
</P>
<P>(c) <I>Operating economy certification temperature.</I> The temperature to be specified for operating economy and energy conservation shall be 20 °F or 30% of the design temperature difference, whichever is greater, added to the temperature specified as the heating system capacity certification temperature without storm windows or insulating glass in Zones 1 and 2 and with storm windows or insulating glass in Zone 3. Design temperature difference is 70° minus the heating system capacity certification temperature in degrees Fahrenheit. 
</P>
<EXTRACT>
<HD1>HEATING CERTIFICATE 
</HD1>
<FP-DASH>Home Manufacturer 
</FP-DASH>
<FP-DASH>Plant Location 
</FP-DASH>
<FP-DASH>Home Model 
</FP-DASH>
<HD3>(Include Uo Value Zone Map)
</HD3>
<P>This manufactured home has been thermally insulated to conform with the requirements of the Federal Manufactured Home Construction and Safety Standards for all locations within Uo Value Zone ____. 
</P>
<FP-DASH>Heating Equipment Manufacturer 
</FP-DASH>
<FP-DASH>Heating Equipment Model
</FP-DASH>
<P>The above heating equipment has the capacity to maintain an average 70F temperature in this home at outdoor temperatures of [see paragraph (b) of this section] F. To maximize furnace operating economy and to conserve energy, it is recommended that this home be installed where the outdoor winter design temperature (97 1/2%) is not higher than [see paragraph (c) of this section] F degrees Fahrenheit. 
</P>
<P>The above information has been calculated assuming a maximum wind velocity of 15 MPH at standard atmospheric pressure.</P></EXTRACT>
<P>(d) The following additional statement must be provided on the heating certificate and data plate required by § 3280.5 when the home is built with a vapor retarder of not greater than one perm (dry cup method) on the exterior side of the insulation: “This home is designed and constructed to be sited only in humid or fringe climate regions as shown on the Humid and Fringe Climate Map.” A reproduction of the Humid and Fringe Climate Map in § 3280.504 is to be provided on the heating certificate and data plate. The map must be not less than 3
<FR>1/2</FR> inch × 2
<FR>1/4</FR> inch in size and may be combined with the U<E T="52">o</E> Value Zone Map for Manufactured Housing in § 3280.506.
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 58 FR 55011, Oct. 25, 1993; 70 FR 72048, Nov. 30, 2005; 89 FR 75750, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.511" NODE="24:5.1.2.1.2.6.1.11" TYPE="SECTION">
<HEAD>§ 3280.511   Comfort cooling certificate and information.</HEAD>
<P>(a) The manufactured home manufacturer must permanently affix a “Comfort Cooling Certificate” to an interior surface of each dwelling unit that is readily visible to the occupant. This certificate may be combined with the heating certificate required in § 3280.510. The manufacturer shall comply with one of the following three alternatives in providing the certificate and additional information concerning the cooling of the manufactured home: 
</P>
<P>(1) <I>Alternative I.</I> If a central air conditioning system is provided by the home manufacturer, the heat gain calculation necessary to properly size the air conditioning equipment shall be in accordance with procedures outlined in chapter 22 of the 1989 ASHRAE Handbook of Fundamentals, with an assumed location and orientation. The following shall be supplied in the Comfort Cooling Certificate:
</P>
<EXTRACT>
<FP-DASH>Air Conditioner Manufacturer 
</FP-DASH>
<FP-DASH>Air Conditioner Model
</FP-DASH>
<P>Certified Capacity ______ BTU/Hr. in accordance with the appropriate Air Conditioning and Refrigeration Institute Standards 
</P>
<P>The central air conditioning system provided with this home has been sized, assuming an orientation of the front (hitch) end of the home facing ______ and is designed on the basis of a 75 °F indoor temperature and an outdoor temperature of __ °F dry bulb and __ °F wet bulb. 
</P>
<HD1>Example Alternate I 
</HD1>
<HD1>COMFORT COOLING CERTIFICATE 
</HD1>
<FP-DASH>Manufactured Home Mfg 
</FP-DASH>
<FP-DASH>Plant Location 
</FP-DASH>
<FP-DASH>Manufactured Home Model 
</FP-DASH>
<FP-DASH>Air Conditioner Manufacturer
</FP-DASH>
<P>Certified Capacity ______ BTU/Hr. in accordance with the appropriate Air Conditioning and Refrigeration Institute Standards. 
</P>
<P>The central air conditioning system provided with this home has been sized assuming an orientation of the front (hitch end) of the home facing ______. On this basis, the system is designed to maintain an indoor temperature of 75 °F when outdoor temperatures are __ °F dry bulb and __ °F wet bulb. 
</P>
<P>The temperature to which this home can be cooled will change depending upon the amount of exposure of the windows to the sun's radiant heat. Therefore, the home's heat gains will vary dependent upon its orientation to the sun and any permanent shading provided. Information concerning the calculation of cooling loads at various locations, window exposures and shadings are provided in chapter 22 of the 1989 edition of the ASHRAE Handbook of Fundamentals.</P></EXTRACT>
<P>(2) <I>Alternative 2.</I> For each home suitable for a central air cooling system, the manufacturer shall provide the following statement: “This air distribution system of this home is suitable for the installation of a central air conditioning system.” 
</P>
<EXTRACT>
<HD1>Example Alternate 2
</HD1>
<HD1>COMFORT COOLING CERTIFICATE 
</HD1>
<FP-DASH>Manufactured Home Manufacturer 
</FP-DASH>
<FP-DASH>Plant Location 
</FP-DASH>
<FP-DASH>Manufactured Home Model 
</FP-DASH>
<P>This air distribution system of this home is suitable for the installation of central air conditioning. 
</P>
<P>The supply air distribution system installed in this home is sized for Manufactured Home Central Air Conditioning System of up to ______ B.T.U./Hr. rated capacity which are certified in accordance with the appropriate Air Conditioning and Refrigeration Institute Standards. When the air circulators of such air conditioners are rated at 0.3 inch water column static pressure or greater for the cooling air delivered to the manufactured home supply air duct system. 
</P>
<P>Information necessary to calculate cooling loads at various locations and orientations is provided in the special comfort cooling information provided with this manufactured home.</P></EXTRACT>
<P>(3) <I>Alternative 3.</I> If the manufactured home is not equipped with an air supply duct system, or if the manufacturer elects not to designate the home as being suitable for the installation of a central air conditioning system, the manufacturer shall provide the following statement: “This air distribution system of this home has not been designed in anticipation of its use with a central air conditioning system.” 
</P>
<EXTRACT>
<HD1>Example Alternate 3
</HD1>
<HD1>COMFORT COOLING CERTIFICATE 
</HD1>
<FP-DASH>Manufactured Home Mfg 
</FP-DASH>
<FP-DASH>Plant Location 
</FP-DASH>
<FP-DASH>Manufactured Home Model 
</FP-DASH>
<P>The air distribution system of this home has not been designed in anticipation of its use with a central air conditioning system.</P></EXTRACT>
<P>(b) For each home designated as suitable for central air conditioning the manufacturer shall provide the maximum central manufactured home air conditioning capacity certified in accordance with the ANSI/AHRI Standard 210/240 with Addenda 1 and 2 (incorporated by reference, see § 3280.4) and in accordance with § 3280.715(a)(3). If the capacity information provided is based on entrances to the air supply duct at other than the furnace plenum, the manufacturer shall indicate the correct supply air entrance and return air exit locations. 
</P>
<P>(c) <I>Comfort cooling information.</I> For each manufactured home designated, either “suitable for” or “provided with” a central air conditioning system, the manufacturer shall provide comfort cooling information specific to the manufactured home necessary to complete the cooling load calculations. The comfort cooling information shall include a statement to read as follows: 
</P>
<EXTRACT>
<P>To determine the required capacity of equipment to cool a home efficiently and economically, a cooling load (heat gain) calculation is required. The cooling load is dependent on the orientation, location and the structure of the home. Central air conditioners operate most efficiently and provide the greatest comfort when their capacity closely approximates the calculated cooling load. Each home's air conditioner should be sized in accordance with chapter 22 of the American Society of Heating, Refrigerating and Air Conditioning Engineers (ASHRAE) Handbook of Fundamentals, 1989 Edition, once the location and orientation are known. 
</P>
<HD1>Information Provided by the Manufacturer Necessary To Calculate Sensible Heat Gain 
</HD1>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TD align="left" class="gpotbl_cell" scope="row">Walls (without windows and doors)</TD><TD align="right" class="gpotbl_cell">U 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Ceilings and roofs of light color</TD><TD align="right" class="gpotbl_cell">U 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Ceilings and roofs of dark color</TD><TD align="right" class="gpotbl_cell">U 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Floors</TD><TD align="right" class="gpotbl_cell">U 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Air ducts in floor</TD><TD align="right" class="gpotbl_cell">U 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Air ducts in ceiling</TD><TD align="right" class="gpotbl_cell">U 
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Air ducts installed outside the home</TD><TD align="right" class="gpotbl_cell">U</TD></TR></TABLE></DIV></DIV>
<FP>Information necessary to calculate duct areas.</FP></EXTRACT>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 58 FR 55012, Oct. 25, 1993; 89 FR 75751, Sept. 16, 2024]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:5.1.2.1.2.7" TYPE="SUBPART">
<HEAD>Subpart G—Plumbing Systems</HEAD>


<DIV8 N="§ 3280.601" NODE="24:5.1.2.1.2.7.1.1" TYPE="SECTION">
<HEAD>§ 3280.601   Scope.</HEAD>
<P>Subpart G of this standard covers the plumbing materials, fixtures, and equipment installed within or on manufactured homes. It is the intent of this subpart to assure water supply, drain, waste and vent systems which permit satisfactory functioning and provide for health and safety under all conditions of normal use. 


</P>
</DIV8>


<DIV8 N="§ 3280.602" NODE="24:5.1.2.1.2.7.1.2" TYPE="SECTION">
<HEAD>§ 3280.602   Definitions.</HEAD>
<P>The following definitions are applicable to subpart G only: 
</P>
<P><I>Accessible,</I> when applied to a fixture, connection, appliance or equipment, means having access thereto, but which may require removal of an access panel or opening of a door. 
</P>
<P><I>Air gap (water distribution system)</I> means the unobstructed vertical distance through the free atmosphere between the lowest opening from any pipe or faucet supplying water to a tank, plumbing fixture, water supplied appliances, or other device and the flood level rim of the receptacle. 
</P>
<P><I>Backflow</I> means the flow of water or other liquids, mixtures, or substances into the distributing pipes of a potable supply of water from any source or sources other than its intended sources. 
</P>
<P><I>Backflow connection</I> means any arrangement whereby backflow can occur. 
</P>
<P><I>Backflow preventer</I> means a device or means to prevent backflow. 
</P>
<P><I>Branch</I> means any part of the piping system other than a riser, main or stack. 
</P>
<P><I>Common vent</I> means a vent connecting at the junction of fixture drains and serving as a vent for more than one fixture. 
</P>
<P><I>Continuous vent</I> means a vertical vent that is a continuation of the drain to which it connects. 
</P>
<P><I>Continuous waste</I> means a drain from two or more fixtures connected to a single trap. 
</P>
<P><I>Critical level</I> means a point established by the testing laboratory (usually stamped on the device by the manufacturer) which determines the minimum elevation above the flood level rim of the fixture or receptacle served on which the device may be installed. When a backflow prevention device does not bear a critical level marking, the bottom of the vacuum breaker, combination valve, or of any such approved or listed device shall constitute the critical level. 
</P>
<P><I>Cross connection</I> means any physical connection or arrangement between two otherwise separate systems or sources, one of which contains potable water and the other either water, steam, gas or chemical of unknown or questionable safety whereby there may be a flow from one system or source to the other, the direction of flow depending on the pressure differential between the two systems. 
</P>
<P><I>Developed length</I> means that length of pipe measured along the center line of the pipe and fittings. 
</P>
<P><I>Diameter,</I> unless otherwise specifically stated, means the nominal (inside) diameter designated commercially. 
</P>
<P><I>Drain</I> means a pipe that carries waste, water, or water-borne waste in a drainage system. 
</P>
<P><I>Drain connector</I> means the removable extension, consisting of all pipes, fittings and appurtenances, from the drain outlet to the drain inlet serving the manufactured home. 
</P>
<P><I>Drain outlet</I> means the lowest end of the main or secondary drain to which a sewer connection is made. 
</P>
<P><I>Drainage system</I> means all piping within or attached to the structure that conveys sewage or other liquid waste to the drain outlet, not including the drain connector. 
</P>
<P><I>Fixture drain</I> means the drain from the trap of a fixture to the junction of that drain with any other drain pipe. 
</P>
<P><I>Fixture supply</I> means the water supply pipe connecting a fixture to a branch water supply pipe or directly to a main water supply pipe. 
</P>
<P><I>Flood-level</I> means the level in the receptacle over which water would overflow to the outside of the receptacle. 
</P>
<P><I>Flooded</I> means the condition which results when the liquid in a container or receptacle rises to the flood-level. 
</P>
<P><I>Flush tank</I> means that portion of a water closet that is designed to contain sufficient water to adequately flush the fixture. 
</P>
<P><I>Flush valve</I> means a device located at the bottom of a flush tank for flushing a water closet. 
</P>
<P><I>Flushometer tank:</I> means a device integrated within an air accumulator vessel which is designed to discharge a predetermined quantity of water to fixtures for flushing purposes. 
</P>
<P><I>Flushometer valve</I> means a device which discharges a predetermined quantity of water to a fixture for flushing purposes and is closed by direct water pressure. 
</P>
<P><I>Grade</I> means the fall (slope) of a pipe in reference to a horizontal plane expressed in inches per foot length. 
</P>
<P><I>Horizontal branch</I> means any pipe extending laterally, which receives the discharge from one or more fixture drains and connects to the main drain. 
</P>
<P><I>Horizontal pipe</I> means any pipe or fitting which makes an angle of not more than 45 degrees with the horizontal. 
</P>
<P><I>Indirect waste receptor</I> means a receptor that receives a discharge waste pipe that is not directly connected to a receptor but maintains a suitable air gap between the end of the pipe and the top of the drain.
</P>
<P><I>Individual vent</I> means a pipe installed to vent a fixture drain. 
</P>
<P><I>Inlet coupling</I> means the terminal end of the water system to which the water service connection is attached. It may be a swivel fitting or threaded pipe end. 
</P>
<P><I>Main</I> means the principal artery of the system to which branches may be connected. 
</P>
<P><I>Main drain</I> means the lowest pipe of a drainage system which receives sewage from all the fixtures within a manufactured home and conducts these wastes to the drain outlet. 
</P>
<P><I>Main vent</I> means the principal artery of the venting system to which vent branches may be connected. 
</P>
<P><I>Mechanical trap vent device</I> means a device that automatically opens to admit air to a fixture drain above the connection of the trap arm so as to prevent siphonage, and closes tightly when the pressure within the drainage system is equal to or greater than atmospheric pressure, so as to prevent the escape of gases from the drainage system into the manufactured home.
</P>
<P><I>Offset</I> means a combination of pipe and/or fittings that brings one section of the pipe out of line but into a line parallel with the other section. 
</P>
<P><I>Pitch.</I> See <I>Grade.</I> 
</P>
<P><I>Plumbing appliance:</I> means any one of a special class of plumbing fixture which is intended to perform a special plumbing function. Its operation and/or control may be dependent upon one or more energized components, such as motors, control, heating elements, or pressure or temperature-sensing elements. Such fixture may operate automatically through one or more of the following actions: A time cycle, a temperature range, a pressure range, a measured volume or weight, or the fixture may be manually adjusted or controlled by the user or operator. 
</P>
<P><I>Plumbing appurtenance:</I> means a manufactured device, or a prefabricated assembly, or an on-the-job assembly of component parts, and which is an adjunct to the basic piping system and plumbing system and plumbing fixtures. An appurtenance demands no additional water supply, nor does it add any discharge load to a fixture or the drainage system. 
</P>
<P><I>Plumbing fixtures</I> means receptacles, devices, or appliances which are supplied with water or which receive liquid or liquid-borne wastes for discharge into the drainage system. 
</P>
<P><I>Plumbing system</I> means the water supply and distribution pipes; plumbing fixtures, faucets and traps; soil, waste and vent pipes; and water-treating or water-using equipment. 
</P>
<P><I>Primary vent.</I> See <I>main vent.</I> 
</P>
<P><I>Relief vent</I> means an auxiliary vent which permits additional circulation of air in or between drainage and vent systems. 
</P>
<P><I>Secondary vent</I> means any vent other than the main vent or those serving each toilet. 
</P>
<P><I>Sewage</I> means any liquid waste containing animal or vegetable matter in suspension or solution, and may include liquids containing chemicals in solution. 
</P>
<P><I>Siphonage</I> means the loss of water seal from fixture traps resulting from partial vacuum in the drainage system which may be of either of the following two types, or a combination of the two:
</P>
<P>(a) Self-siphonage resulting from vacuum in a fixture drain generated solely by the discharge of the fixture served by that drain, or,
</P>
<P>(b) Induced siphonage resulting from vacuum in the drainage system generated by the discharge of one or more fixtures other than the one under observation. 
</P>
<P><I>Trap</I> means a fitting or device designed and constructed to provide a liquid seal that will prevent the back passage of air without materially affecting the flow of liquid waste through it. 
</P>
<P><I>Trap arm</I> means the portion of a fixture drain between a trap and its vent. 
</P>
<P><I>Trap seal</I> means the vertical depth of liquid that a trap will retain. 
</P>
<P><I>Vacuum breaker.</I> See <I>backflow preventer.</I> 
</P>
<P><I>Vent cap</I> means the device or fitting which protects the vent pipe from foreign substance with an opening to the atmosphere equal to the area of the vent it serves. 
</P>
<P><I>Vent system</I> means that part of a piping installation which provides circulation of air within a drainage system. 
</P>
<P><I>Vertical pipe</I> means any pipe or fitting which makes an angle of not more than 45 degrees with the vertical. 
</P>
<P><I>Water closet drain</I> means that part of the drainage piping which receives the discharge from each individual water closet. 
</P>
<P><I>Water connection</I> means the fitting or point of connection for the manufactured home water distribution system designed for connection to a water supply. 
</P>
<P><I>Water connector</I> means the removable extension connecting the manufactured home water distribution system to the water supply. 
</P>
<P><I>Water distribution system</I> means potable water piping within or permanently attached to the manufactured home. 
</P>
<P><I>Wet vent</I> means a vent which also serves as a drain for one or more fixtures. 
</P>
<P><I>Wet vented drainage system</I> means the specially designed system of drain piping that also vents one or more plumbing fixtures by means of a common waste and vent pipe. 
</P>
<P><I>Whirlpool bathtub</I> means a plumbing appliance consisting of a bathtub fixture which is equipped and fitted with a circulation piping system, pump, and other appurtenances and is so designed to accept, circulate, and discharge bathtub water upon each use. 
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 52 FR 4584, Feb. 12, 1987; 52 FR 47553, Dec. 15, 1987; 58 FR 55012, Oct. 25, 1993; 78 FR 73984, Dec. 9, 2013' 86 FR 2521, Jan. 12, 2021] 


</CITA>
</DIV8>


<DIV8 N="§ 3280.603" NODE="24:5.1.2.1.2.7.1.3" TYPE="SECTION">
<HEAD>§ 3280.603   General requirements.</HEAD>
<P>(a) <I>Minimum requirements.</I> Any plumbing system installed in a manufactured home shall conform, at least, with the provisions of this subpart. 
</P>
<P>(1) <I>General.</I> The plumbing system shall be of durable material, free from defective workmanship, and so designed and constructed as to give satisfactory service for a reasonable life expectancy. 
</P>
<P>(2) <I>Conservation.</I> Each water closet must not use more than 1.6 gallons of water per flush.
</P>
<P>(3) <I>Connection to drainage system.</I> All plumbing, fixtures, drains, appurtenances, and appliances designed or used to receive or discharge liquid waste or sewage shall be connected to the manufactured home drainage system in a manner provided by this standard. 
</P>
<P>(4) <I>Workmanship.</I> All design, construction, and workmanship shall be in conformance with accepted engineering practices and shall be of such character as to secure the results sought to be obtained by this standard. 
</P>
<P>(5) <I>Components.</I> Plumbing materials, devices, fixtures, fittings, equipment, appliances, appurtenance, and accessories intended for use in or attached to a manufactured home shall conform to one of the applicable standards referenced in § 3280.604. Where an applicable standard is not referenced, or an alternative recognized standard is utilized, the plumbing component shall be listed by a nationally recognized testing laboratory, inspection agency or other qualified organization as suitable for the intended use. 
</P>
<P>(6) <I>Prohibited fittings and practices.</I> (i) Drainage or vent piping shall not be drilled and tapped for the purpose of making connections. 
</P>
<P>(ii) Except as specifically provided elsewhere in this standard, vent pipes shall not be used as waste or drain pipes. 
</P>
<P>(iii) Fittings, connections, devices, or methods of installation that obstruct or retard the flow of sewage, or air in the drainage or venting systems in an amount greater than the normal frictional resistance to flow shall not be used unless their use is acceptable in this standard or their use is accepted as having a desirable and acceptable function of ultimate benefit to the proper and continued functioning of the plumbing system. 
</P>
<P>(iv) Cracks, holes, or other imperfections in materials shall not be concealed by welding, brazing, or soldering or by paint, wax, tar, or other leak-sealing or repairing agents. 
</P>
<P>(v) Piping, fixtures or equipment shall be located so as not to interfere with the normal use or with the normal operation and use of windows, doors or other required facilities. 
</P>
<P>(vi) Galvanized pipe shall not be bent or welded. 
</P>
<P>(7) <I>Alignment of fittings.</I> All valves, pipes, and fittings shall be installed in correct relationship to the direction of flow. 
</P>
<P>(b) <I>Protective requirements.</I> (1) Cutting structural members. Structural members shall not be unnecessarily or carelessly weakened by cutting or notching. 
</P>
<P>(2) <I>Exposed piping.</I> All piping, pipe threads, hangers, and support exposed to the weather, water, mud, and road hazard, and subject to damage therefrom, shall be painted, coated, wrapped, or otherwise protected from deterioration. 
</P>
<P>(3) <I>Road damage.</I> Pipes, supports, drains, outlets, or drain hoses shall not extend or protrude in a manner where they could be unduly subjected to damage during transit. 
</P>
<P>(4) <I>Freezing.</I> All piping and fixtures subject to freezing temperatures shall be insulated or protected to prevent freezing, under normal occupancy. The manufacturer shall provide:
</P>
<P>(i) Written installation instructions for the method(s) required for compliance to this section;
</P>
<P>(ii) A statement in the installation instructions required by § 3280.306(b), stating that if the heat tape or pipe heating cable is used, it must be listed or certified for its intended purpose.
</P>
<P>(iii) A receptacle outlet complying with § 3280.806(d)(10).
</P>
<P>(5) All piping, except the fixture trap, shall be designed to allow drainage. 
</P>
<P>(6) <I>Rodent resistance.</I> All exterior openings around piping and equipment shall be sealed to resist the entrance of rodents. 
</P>
<P>(7) Piping and electrical wiring shall not pass through the same holes in walls, floors or roofs. Plastic piping shall not be exposed to heat in excess of manufacturers recommendation or radiation from heat producing appliances.
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975, as amended at 42 FR 54383, Oct. 5, 1977. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 58 FR 55012, Oct. 25, 1993; 78 FR 73985, Dec. 9, 2013; 89 FR 75751, Sept. 16, 2024] 


</CITA>
</DIV8>


<DIV8 N="§ 3280.604" NODE="24:5.1.2.1.2.7.1.4" TYPE="SECTION">
<HEAD>§ 3280.604   Materials.</HEAD>
<P>(a) <I>Minimum standards.</I> Materials, devices, fixtures, fittings, equipment, appliances, appurtenances and accessories shall conform to one of the standards listed in this section (all incorporated by reference, see § 3280.4) and be free from defects. Where an appropriate standard is not listed in this section or a standard not listed is preferred, the item may be used if it is listed. A listing is also required when so specified in other sections of this subpart.
</P>
<P>(b) <I>Compliance when there is more than one listed standard.</I> Where more than one standard is referenced for a particular material or component, compliance with only one of those standards is acceptable. Exceptions:
</P>
<P>(1) When one of the reference standards requires evaluation of chemical, toxicity or odor properties which are not included in the other standard, then conformance to the applicable requirements of each standard shall be demonstrated; or
</P>
<P>(2) When a plastic material or component is not covered by the standards in this section, it must be certified as non-toxic in accordance with Drinking water system components-Health effects—ANSI/NSF 61 (incorporated by reference, see § 3280.4).
</P>
<P>(c) <I>List of standards.</I> Standards for some of the generally used materials and methods of construction are listed as following:
</P>
<P>(1) <I>Ferrous pipe and fittings.</I> (i) Gray Iron Threaded Fittings—ANSI/ASME B16.4.
</P>
<P>(ii) Malleable Iron Threaded Fittings—ANSI/ASME B16.3.
</P>
<P>(iii) Material and Property Standard for Special Cast Iron Fittings—IAPMO PS 5.
</P>
<P>(iv) Welded and Seamless Wrought Steel Pipe—ANSI/ASME B36.10.
</P>
<P>(v) Standard Specification for Pipe, Steel, Black and Hot-Dipped, Zinc-Coated, Welded and Seamless—ASTM A53/A53M.
</P>
<P>(vi) Pipe Threads, General Purpose (Inch)—ANSI/ASME B1.20.1.
</P>
<P>(vii) Standard Specification for Cast Iron Soil Pipe and Fittings—ASTM A74.
</P>
<P>(viii) Standard Specification for Hubless Cast Iron Soil Pipe and Fittings for Sanitary and Storm Drain, Waste, and Vent Piping Applications—CISPI-301.
</P>
<P>(2) <I>Nonferrous pipe and fittings.</I> (i) Standard Specification for Seamless Copper Pipe, Standard Sizes—ASTM B42.
</P>
<P>(ii) Standard Specification for General Requirements for Wrought Seamless Copper and Copper-Alloy Tube—ASTM B251.
</P>
<P>(iii) Standard Specification for Seamless Copper Water Tube—ASTM B88.
</P>
<P>(iv) Standard Specification for Copper Drainage Tube (DWV)—ASTM B306.
</P>
<P>(v) Wrought-Copper and Copper Alloy Solder-Joint Pressure Fitting—ASME/ANSI B16.22.
</P>
<P>(vi) Wrought Copper and Wrought Copper Alloy Solder-Joint Drainage Fittings-DWV—ASME/ANSI B16.29.
</P>
<P>(vii) Cast Copper Alloy Solder-Joint Pressure Fittings—ANSI B16.18.
</P>
<P>(viii) Cast Copper Alloy Solder-Joint Drainage Fittings-DWV—ASME B16.23.
</P>
<P>(ix) Cast Copper Alloy Fittings for Flared Copper Tubes—ASME/ANSI B16.26.
</P>
<P>(x) Standard Specification for Seamless Red Brass Pipe, Standard Sizes—ASTM B43.
</P>
<P>(xi) Cast Bronze Threaded Fittings, Classes 125 and 250—ANSI/ASME B16.15.
</P>
<P>(3) <I>Plastic pipe and fittings.</I> (i) Standard Specification Acrylonitrile-Butadiene-Styrene (ABS) Schedule 40 Plastic Drain, Waste, and Vent Pipe and Fittings—ASTM D2661.
</P>
<P>(ii) Standard Specification for Poly (Vinyl Chloride) (PVC) Plastic Drain, Waste, and Vent Pipe and Fittings—ASTM D2665.
</P>
<P>(iii) Standard Specification for Drain, Waste, and Vent (DWV) Plastic Fittings Patterns—ASTM D3311.
</P>
<P>(iv) Standard Specification for Acrylonitrile-Butadiene-Styrene (ABS) Schedule 40, Plastic Drain, Waste, and Vent Pipe with a Cellular Core—ASTM F628.
</P>
<P>(v) Standard Specification for Chlorinated Poly (Vinyl Chloride) (CPVC) Plastic Hot- and Cold-Water Distribution Systems—ASTM D2846.
</P>
<P>(vi) Standard Specification for Polybutylene (PB) Plastic Hot- and Cold-Water Distribution Systems—ASTM D3309.
</P>
<P>(vii) Plastic Piping Components and Related Materials—ANSI/NSF 14.
</P>
<P>(viii) Standard Specification for Crosslinked Polyethylene (PEX) Tubing—ASTM F876.
</P>
<P>(ix) Standard Specification for Crosslinked Polyethylene (PEX) Plastic Hot- and Cold-Water Distribution Systems—ASTM F877.
</P>
<P>(4) <I>Miscellaneous.</I> (i) Standard Specification for Rubber Gaskets for Cast Iron Soil Pipe and Fittings, ASTM C564.
</P>
<P>(ii) Backflow Valves—ANSI A112.14.1.
</P>
<P>(iii) Plumbing Fixture Setting Compound—TTP 1536A.
</P>
<P>(iv) Material and Property Standard for Cast Brass and Tubing P-Traps—IAPMO PS 2.
</P>
<P>(v) Relief Valves for Hot Water Supply Systems—ANSI Z21.22.
</P>
<P>(vi) Standard Specification for Solvent Cement for Acrylonitrile-Butadiene-Styrene (ABS) Plastic Pipe and Fittings—ASTM D2235.
</P>
<P>(vii) Standard Specification for Solvent Cements for Poly (Vinyl Chloride) (PVC) Plastic Piping Systems—ASTM D2564.
</P>
<P>(viii) Specification for Neoprene Rubber Gaskets for HUB and Spigot Cast Iron Soil Pipe and Fittings—CISPI-HSN.
</P>
<P>(ix) Plumbing System Components for Manufactured Homes and Recreational Vehicles—ANSI/NSF 24.
</P>
<P>(x) Material and Property Standard for Diversion Tees and Twin Waste Elbow—IAPMO PS 9.
</P>
<P>(xi) Material and Property Standard for Flexible Metallic Water Connectors—IAPMO PS 14.
</P>
<P>(xii) Material and Property Standard for Dishwasher Drain Airgaps—IAPMO PS 23.
</P>
<P>(xiii) Material and Property Standards for Backflow Prevention Assemblies—IAPMO PS 31.
</P>
<P>(xiv) Performance Requirements for Air Admittance Valves for Plumbing Drainage Systems, Fixture and Branch Devices—ASSE 1051.
</P>
<P>(xv) Drinking Water System Components-Health Effects—ANSI/NSF 61.
</P>
<P>(5) <I>Plumbing fixtures.</I> (i) Plumbing Fixtures (General Specifications)—FS WW-P-541E/GEN.
</P>
<P>(ii) Vitreous China Plumbing Fixtures—ANSI/ASME A112.19.2(M).
</P>
<P>(iii) Enameled Cast Iron Plumbing Fixtures—ANSI/ASME A112.19.1M.
</P>
<P>(iv) Porcelain Enameled Formed Steel Plumbing Fixtures—ANSI/ASME A112.19.4(M).
</P>
<P>(v) Plastic Bathtub Units with Addenda Z124.1a and Z124.1b—ANSI Z124.1.
</P>
<P>(vi) Standard for Porcelain Enameled Formed Steel Plumbing Fixtures—IAPMO TSC 22.
</P>
<P>(vii) Plastic Shower Receptors and Shower Stalls with Addendum Z124.2a—ANSI Z124.2.
</P>
<P>(viii) Stainless Steel Plumbing Fixtures (Designed for Residential Use)—ANSI/ASME A112.19.3M.
</P>
<P>(ix) Material and Property Standard for Drains for Prefabricated and Precast Showers—IAPMO PS 4.
</P>
<P>(x) Plastic Lavatories with Addendum Z124.3a—ANSI Z124.3.
</P>
<P>(xi) Standard for Safety Glazing Materials used in Buildings—Safety Performance Specifications and Methods of Test—ANSI Z97.1.
</P>
<P>(xii) Water Heater Relief Valve Drain Tubes—ASME A112.4.1.
</P>
<P>(xiii) Flexible Water Connectors—ASME A112.18.6.
</P>
<P>(xiv) Performance Requirements for Backflow Protection Devices and Systems in Plumbing Fixture Fittings—ASME A112.18.3M.
</P>
<P>(xv) Non-Vitreous Ceramic Plumbing Fixtures—ASME A112.19.9M.
</P>
<P>(xvi) Dual Flush Devices for Water Closets—ASME A119.19.10.
</P>
<P>(xvii) Deck Mounted Bath/Shower Transfer Valves with Integral Backflow Protection—ASME A112.18.7.
</P>
<P>(xviii) Plastic Fittings for Connecting Water Closets to the Sanitary Drainage System—ASME A112.4.3.
</P>
<P>(xix) Hydraulic Performance Requirements for Water Closets and Urinals—ASME A112.19.6.
</P>
<P>(xx) Plumbing Fixture Fittings—ASME/ANSI A112.18.1M.
</P>
<P>(xxi) Trim for Water Closet, Bowls, Tanks, and Urinals—ANSI A112.19.5.
</P>
<P>(xxii) Plastic Water Closets, Bowls, and Tanks with Addenda Z124.4a—ANSI Z124.4.
</P>
<P>(xxiii) Plastic Toilet (Water Closets) Seats—ANSI Z124.5.
</P>
<P>(xxiv) Prefabricated Plastic Spa Shells—ANSI Z124.7.
</P>
<P>(xxv) Whirlpool Bathtub Appliances—ASME/ANSI A112.19.7M.
</P>
<P>(xxvi) Plastic Urinal Fixtures—ANSI Z-124.9.
</P>
<P>(xxvii) Performance Requirements for Automatic Compensating Values for Individual Shower and Tub/Shower Combinations—ASSE 1016.
</P>
<P>(xxviii) Performance Requirements for Pressurized Flushing Devices (Flushometers) for Plumbing Fixtures—ASSE 1037.
</P>
<P>(xxix) Performance Requirements for Water Closet Flush Tank Fill Valves (Ballcocks)—ASSE 1002.
</P>
<P>(xxx) Performance Requirements for Hand-held Showers—ASSE 1014.
</P>
<P>(xxxi) Hydrants for Utility and Maintenance Use—ANSI/ASME A112.21.3M.
</P>
<P>(xxxii) Performance Requirements for Home Laundry Equipment—ASSE 1007.
</P>
<P>(xxxiii) Performance Requirements for Hot Water Dispensers, Household Storage Type Electrical—ASSE 1023.
</P>
<P>(xxxiv) Plumbing Requirements for Residential Use (Household) Dishwashers—ASSE 1006.
</P>
<P>(xxxv) Performance Requirements for Household Food Waste Disposer Units—ASSE 1008.
</P>
<P>(xxxvi) Performance Requirements for Temperature Activated Mixing Valves for Primary Domestic Use—ASSE 1017.
</P>
<P>(xxxv) Water Hammer Arresters—ANSI A112.26.1.
</P>
<P>(xxxvi) Suction Fittings for Use in Swimming Pools, Wading Pools, Spas, Hot Tubs, and Whirlpool Bathtub Appliances—ASME/ANSI A112.19.8M.
</P>
<P>(xxxvii) Air Gaps in Plumbing Systems—ASME A112.1.2.
</P>
<P>(xxxviii) Performance Requirements for Diverters for Plumbing Faucets with Hose Spray, Anti-Siphon Type, Residential Applications—ASSE 1025.
</P>
<P>(xxxix) Performance Requirements for Pipe Applied Atmospheric Type Vacuum Breakers—ASSE 1001.
</P>
<P>(xl) Performance Requirements for Hose Connection Vacuum Breakers—ASSE 1011.
</P>
<P>(xli) Performance Requirements for Wall Hydrants, Frost Proof Automatic Draining, Anti-Backflow Types—ANSI/ASSE 1019.
</P>
<P>(xlii) Performance Requirements for Automatic Compensating Values for Individual Shower and Tub/Shower Combinations—ASSE 1016.
</P>
<P>(xliii) Performance Requirements for Water Temperature Limiting Devices—ASSE 1070.
</P>
<CITA TYPE="N">[58 FR 55013, Oct. 25, 1993, as amended at 70 FR 72048, Nov. 30, 2005; 78 FR 73985, Dec. 9, 2013; 79 FR 31863, June 3, 2014; 89 FR 75751, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.605" NODE="24:5.1.2.1.2.7.1.5" TYPE="SECTION">
<HEAD>§ 3280.605   Joints and connections.</HEAD>
<P>(a) <I>Tightness.</I> Joints and connections in the plumbing system shall be gastight and watertight for the pressures required under testing procedures. 
</P>
<P>(b) <I>Assembling of pipe.</I> All joints and connections shall be correctly assembled for tightness. Pipe threads shall be fully engaged with the threads of the fitting. Plastic pipe and copper tubing shall be inserted to the full depth of the solder cup or welding sockets of each fitting. Pipe threads and slip joints shall not be wrapped with string, paper, putty, or similar fillers. 
</P>
<P>(c) <I>Threaded joints.</I> Threads for screw pipe and fittings shall conform to the approved or listed standard. Pipe ends shall be reamed out to size of bore. All burrs, chips, cutting oil and foreign matter shall be removed. Pipe joint cement or thread lubricant shall be of approved type and applied to male threads only. 
</P>
<P>(d) <I>Solder joints.</I> Solder joints for tubing shall be made with approved or listed solder type fittings. Surfaces to be soldered shall be cleaned bright. The joints shall be properly fluxed with noncorrosive paste type flux and, for manufactured homes to be connected to a public water system, made with solder having not more than 0.2 percent lead. 
</P>
<P>(e) <I>Plastic pipe, fittings and joints.</I> Plastic pipe and fittings shall be joined by installation methods recommended by the manufacturer or in accordance with the provisions of a recognized, approved, or listed standard. 
</P>
<P>(f) <I>Union joints.</I> Metal unions in water piping shall have metal-to-metal ground seats. 
</P>
<P>(g) <I>Flared joints.</I> Flared joints for soft-copper water tubing shall be made with approved or listed fittings. The tubing shall be expanded with a proper flaring tool. 
</P>
<P>(h) <I>Cast iron soil pipe joints.</I> Approved or listed cast iron pipe may be joined as follows:
</P>
<P>(1) Approved or listed hub-less pipe and fittings must be permitted to be joined with listed couplings or adapters, per the manufacturer's recommendations.
</P>
<P>(2) Hub and plain-end soil pipe may be joined by compression fittings per the manufacturer's recommendation.
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 53 FR 23611, June 23, 1988; 78 FR 73985, Dec. 9, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 3280.606" NODE="24:5.1.2.1.2.7.1.6" TYPE="SECTION">
<HEAD>§ 3280.606   Traps and cleanouts.</HEAD>
<P>(a) <I>Traps</I>—(1) <I>Traps required.</I> Each plumbing fixture, except listed toilets, shall be separately trapped by approved water seal “P” traps. All traps shall be effectively vented. 
</P>
<P>(2) <I>Combination Fixtures.</I> For the purposes of drainage and ventilation requirements, a two- or three-compartment sink, up to three single sinks, or up to three lavatories may be connected to one “P” trap and considered as a single fixture, so long as the sinks and lavatories are in the same room, have waste outlets not more than 30 inches apart, and have flood level rims at the same level. The “P” trap must be installed at the center fixture when three such fixtures are installed.
</P>
<P>(3) <I>Prohibited traps.</I> A trap which depends for its seal upon concealed interior partitions shall not be used. Full “S” traps, bell traps, drum traps, crown-vented traps, and running traps are prohibited. Fixtures shall not be double-trapped. 
</P>
<P>(4) <I>Material and design.</I> Each trap shall be self-cleaning with a smooth and uniform interior waterway. Traps shall be manufactured of cast iron, cast brass, or drawn brass tubing of not less than No. 20 Brown and Sharpe gage, or approved or listed plastic, or other approved or listed material. Union joints for a trap shall be beaded to provide a shoulder for the union nut. Each trap shall have the manufacturer's name stamped or cast in the body of the trap, and each tubing trap shall show the gage of the tubing. 
</P>
<P>(5) <I>Trap seal.</I> Each “P” trap shall have a water seal of not less than 2 inches and not more than 4 inches and shall be set true to its seal. 
</P>
<P>(6) <I>Size.</I> Traps shall be not less than 1
<FR>1/4</FR> inches in diameter. A trap shall not be larger than the waste pipe to which it is connected. 
</P>
<P>(7) <I>Location.</I> Each trap shall be located as close to its vent and to its fixture outlet as structural conditions will permit. 
</P>
<P>(8) <I>Length of tailpiece.</I> The vertical distance from a trap to the fixture outlet shall not exceed 24 inches. 
</P>
<P>(9) <I>Installation.</I> (i) <I>Grade of trap arm.</I> The piping between a “P” trap and the fixture tee or the vented waste line shall be graded 
<FR>1/4</FR> inch per foot towards the vent and in no event shall have a slope greater than its diameter. The vent opening at fixture tees shall not be below the weir of the “P” trap outlet. 
</P>
<P>(ii) <I>Trap arm offset.</I> The piping between the “P” trap and vent may change direction or be offset horizontally with the equivalent of no more than 180 degrees total change in direction with a maximum of 90 degrees by any one fitting. 
</P>
<P>(iii) <I>Concealed traps.</I> Traps with mechanical joints shall be accessible for repair and inspection. 
</P>
<P>(iv) <I>Removability of traps, etc.</I> Traps shall be designed and installed so the “U” bend is removable without removing the strainers from the fixture. Continuous waste and tail pieces which are permanently attached to the “U” bend shall also be removable without removing the strainer from the fixture. 
</P>
<P>(b) <I>Cleanout openings</I>—(1) <I>Location of cleanout fittings.</I> (i) Cleanouts shall be installed if the drainage system cannot be cleaned through fixtures, drains, or vents. Cleanouts shall also be provided when fittings of more than 45 degrees are used to affect an offset except where long turn ells are used which provide sufficient “sweep” for cleaning. 
</P>
<P>(ii) A full size cleanout shall be installed at the upper end of any section of drain piping which does not have the required minimum slope of 
<FR>1/4</FR> inch per foot grade. 
</P>
<P>(iii) A cleaning tool shall not be required to pass through more than 360 degrees of fittings, excluding removable “P” traps, to reach any part of the drainage system. Water closets may be removed for drainage system access. 
</P>
<P>(2) <I>Access to cleanouts.</I> Cleanouts shall be accessible through an unobstructed minimum clearance of 12 inches directly in front of the opening. Each cleanout fitting shall open in a direction opposite to the flow or at right angles to the pipe. Concealed cleanouts that are not provided with access covers shall be extended to a point above the floor or outside of the manufactured home, with pipe and fittings installed, as required, for drainage piping without sags and pockets. 
</P>
<P>(3) <I>Material.</I> Plugs and caps shall be brass or approved or listed plastic, with screw pipe threads. 
</P>
<P>(4) <I>Design.</I> Cleanout plugs shall have raised heads except that plugs at floor level shall have counter-sunk slots. 
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 58 FR 55014, Oct. 25, 1993; 78 FR 73985, Dec. 9, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 3280.607" NODE="24:5.1.2.1.2.7.1.7" TYPE="SECTION">
<HEAD>§ 3280.607   Plumbing fixtures.</HEAD>
<P>(a) <I>General requirements</I>—(1) <I>Quality of fixtures.</I> Plumbing fixtures shall have smooth impervious surfaces, be free from defects and concealed fouling surfaces, be capable of resisting road shock and vibration, and shall conform in quality and design to listed standards. Fixtures shall be permanently marked with the manufacturer's name or trademark. 
</P>
<P>(2) <I>Strainers.</I> The waste outlet of all plumbing fixtures, other than toilets, shall be equipped with a drain fitting that will provide an adequate unobstructed waterway. 
</P>
<P>(3) <I>Fixture Connections.</I> Fixture tailpieces and continuous wastes in exposed or accessible locations must be of not less than No. 20 Brown and Sharpe gauge seamless drawn-brass tubing or other approved pipe or tubing materials. Inaccessible fixture connections must be constructed according to the requirements for drainage piping. The diameter of each fixture tailpiece, continuous waste, or waste and overflow must be not less than:
</P>
<P>(i) 1
<FR>1/2</FR> inches, for sinks of two or more compartments, dishwashers, clothes washing machines, laundry tubs, bathtubs, and showers; and
</P>
<P>(ii) Not less than 1
<FR>1/4</FR> inches for lavatories or single compartment sinks having a 2-inch maximum drain opening.
</P>
<P>(4) <I>Concealed connections.</I> Concealed slip joint connections shall be provided with adequately sized unobstructed access panels and shall be accessible for inspection and repair. 
</P>
<P>(5) <I>Directional fitting.</I> An approved or listed “Y” or other directional-type branch fitting shall be installed in every tailpiece or continuous waste that receives the discharge from food waste disposal units, dishwashing, or other force-discharge fixture or appliance. (See also § 3280.607(b)(4)(ii).) 
</P>
<P>(6) <I>Water conservation.</I> All lavatory faucets, showerheads, and sink faucets must not exceed a flow of 2.5 gallons per minute (gpm).
</P>
<P>(b) <I>Fixtures</I>—(1) <I>Spacing.</I> All plumbing fixtures shall be so installed with regard to spacing as to be reasonably accessible for their intended use. 
</P>
<P>(2) <I>Water closets.</I> (i) Water closets shall be designed and manufactured according to approved or listed standards and shall be equipped with a water flushing device capable of adequately flushing and cleaning the bowl at each operation of the flushing mechanism. 
</P>
<P>(ii) Water closet flushing devices shall be designed to replace the water seal in the bowl after each operation. Flush valves, flushometer valves, flushometer tanks and ballcocks shall operate automatically to shut off at the end of each flush or when the tank is filled to operating capacity. 
</P>
<P>(iii) All water closets must be low consumption (1.6 gallons per flush (gpf)) closets.
</P>
<P>(iv) Flush tanks shall be fitted with an overflow pipe large enough to prevent flooding at the maximum flow rate of the ball cock. Overflow pipes shall discharge into the toilet, through the tank. 
</P>
<P>(v) <I>Floor Connection.</I> Water closets must be securely bolted to an approved flange or other approved fitting that is secured to the floor by means of corrosion-resistant screws. The bolts must be of solid brass or other corrosion-resistant material and must not be less than 
<FR>1/4</FR> inch in diameter. A watertight seal must be made between the water closet and flange or other approved fitting by use of a gasket, sealing compound, or listed connector device.
</P>
<P>(vi) <I>Floor connection.</I> Water closets shall be securely bolted to an approved flange or other approved fitting which is secured to the floor by means of corrosion-resistant screws. The bolts shall be of solid brass or other corrosion-resistant material and shall be not less than one-fourth inch in diameter. A watertight seal shall be made between the water closet and flange or other approved fitting by use of a gasket or sealing compound. 
</P>
<P>(3) <I>Shower compartment.</I> (i) Each compartment stall must be provided with an approved watertight receptor with sides and back extending with sides and back extending at least 1 inch above the finished dam or threshold. Except as provided by paragraph (b)(3)(v) of this section, the depth of a shower receptor must not be less than 2 inches or more than 9 inches measured from the top of the finished dam or threshold to the top of the drain. The wall area must be constructed of smooth, non-corrosive, and non-absorbent materials to a height not less than 6 feet above the bathroom floor level. Such walls must form a watertight joint with each other and with the bathtub, receptor or shower floor. The floor or compartment must slope uniformly to the drain not less than one-fourth nor more than 
<FR>1/2</FR> inch per foot.
</P>
<P>(ii) The joint around the drain connection shall be made watertight by a flange, clamping ring, or other approved listed means.
</P>
<P>(iii) Shower doors and tub and shower enclosures must be constructed so as to be waterproof and, if glazed, glazing must comply with ANSI Z97.1 (incorporated by reference, see § 3280.4)
</P>
<P>(iv) Prefabricated plumbing fixtures shall be approved or listed.
</P>
<P>(v) Thresholds in roll-in-type shower compartments must be 
<FR>1/2</FR> inch maximum in height in accordance with paragraph (b)(3)(vi) of this section. In transfer type shower compartments, thresholds 
<FR>1/2</FR> inch maximum in height must be beveled, rounded, or be vertical.
</P>
<P>(vi) Changes in level of 
<FR>1/4</FR> inch maximum in height must be permitted to be vertical. Changes in level greater than 
<FR>1/4</FR> inch in height and not more than 
<FR>1/2</FR> inch maximum in height must be beveled with a slope not steeper than 1:2.
</P>
<P>(vii) Shower and tub-shower combination valves must be balanced pressure, thermostatic, or combination mixing valves that conform to the requirements of ASSE 1016 (incorporated by reference, see § 3280.4). Such valves must be equipped with handle position stops that are adjustable in accordance with the valve manufacturer's instructions and to a maximum setting of 120 °F. Hot water supplied to bathtubs and whirlpool bathtubs are to be limited to a temperature of not greater than 120 °F by a water temperature limiting device that conforms to the requirements of ASSE 1070 (incorporated by reference, see § 3280.4).
</P>
<P>(4) <I>Dishwashing machines.</I> (i) A dishwashing machine must discharge its waste through a fixed air gap installed above the machine, through a high loop as specified by the dishwashing machine manufacturer, or into an open standpipe receptor with a height greater than the washing compartment of the machine. When a standpipe is used, it must be at least 18 inches, but not more than 30 inches, above the trap weir. The drain connections from the air gap or high loop are permitted to connect to an individual trap to a directional fitting installed in the sink tailpiece or to an opening provided on the inlet side of a food waste disposal unit.</P>
<P>(ii) Drain from a dishwashing machine shall not be connected to a sink tailpiece, continuous waste line, or trap on the discharge side of a food waste disposal unit. 
</P>
<P>(5) <I>Clothes washing machines.</I> (i) Clothes washing machines shall drain either into a properly vented trap, into a laundry tub tailpiece with watertight connections, into an open standpipe receptor, or over the rim of a laundry tub. 
</P>
<P>(ii) Standpipes must be either 1
<FR>1/2</FR> inch diameter minimum nominal iron pipe size, 1
<FR>1/2</FR> inch diameter nominal brass tubing of not less than No. 20 Brown and Sharp gauge, or 1
<FR>1/2</FR> inch diameter approved plastic materials. Receptors must discharge into a vented trap or must be connected to a laundry tub appliance by means of an approved or listed directional fitting. Each standpipe must extend not less than 18 inches or more than 42 inches above its trap and must terminate in an accessible location no lower than the top of the clothes washing machine. A removable, tight-fitting cap or plug must be installed on the standpipe when the clothes washer is not provided.
</P>
<P>(iii) Clothes washing machine drain shall not be connected to the tailpiece, continuous waste, or trap of any sink or dishwashing machine. 
</P>
<P>(c) <I>Installation</I>—(1) <I>Access.</I> Each plumbing fixture and standpipe receptor shall be located and installed in a manner to be accessible for usage, cleaning, repair and replacement. Access to diverter valves and other connections from the fixture hardware is not required. 
</P>
<P>(2) <I>Alignment.</I> Fixtures shall be set level and in true alignment with adjacent walls. Where practical, piping from fixtures shall extend to nearest wall. 
</P>
<P>(3) <I>Brackets.</I> Wall-hung fixtures shall be rigidly attached to walls by metal brackets or supports without any strain being transmitted to the piping connections. Flush tanks shall be securely fastened to toilets or to the wall with corrosive-resistant materials. 
</P>
<P>(4) <I>Tub supports.</I> Bathtub rims at wall shall be supported on metal hangers or on end-grain wood blocking attached to the wall unless otherwise recommended by the manufacturer of the tub. 
</P>
<P>(5) <I>Fixture fittings.</I> Faucets and diverters shall be installed so that the flow of hot water from the fittings corresponds to the left-hand side of the fitting. 
</P>
<P>(6) <I>Hydromassage bathtub</I>—(i) <I>Access panel.</I> A door or panel of sufficient size must be installed to provide access to the pump for repair or replacement.
</P>
<P>(ii) <I>Piping drainage.</I> The circulation pump must be accessibly located above the crown weir of the trap. The pump drain line must be properly sloped to drain the volute after fixture use.
</P>
<P>(iii) <I>Piping.</I> Hydromassage bathtub circulation piping must be installed to be self-draining.
</P>
<P>(iv) <I>Electrical.</I> Wiring must comply with Articles 680.70, 680.71, and 680.72 of NFPA 70 (incorporated by reference, see § 3280.4).
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975, as amended at 42 FR 961, Jan. 4, 1977. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 52 FR 4586, Feb. 12, 1987; 58 FR 55014, Oct. 25, 1993; 70 FR 72049, Nov. 30, 2005; 71 FR 19639, Apr. 17, 2006; 78 FR 73985, Dec. 9, 2013; 79 FR 31863, June 3, 2014; 89 FR 75752, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.608" NODE="24:5.1.2.1.2.7.1.8" TYPE="SECTION">
<HEAD>§ 3280.608   Hangers and supports.</HEAD>
<P>(a) <I>Strains and stresses.</I> Piping in a plumbing system shall be installed without undue strains and stresses, and provision shall be made for expansion, contraction, and structural settlement.
</P>
<P>(b) <I>Piping supports.</I> Piping must be secured at sufficiently close intervals to keep the pipe in alignment and carry the weight of the pipe and contents. Unless otherwise stated in the standards incorporated by reference for specific materials at § 3280.604(a), or unless specified by the pipe manufacturer, horizontal plastic drainage piping must be supported at intervals not to exceed 4 feet and horizontal plastic water piping must be supported at intervals not to exceed 3 feet. Vertical drainage and water piping must be supported at each story height.
</P>
<P>(c) <I>Hangers and anchors.</I> (1) Hangers and anchors shall be of sufficient strength to support their proportional share of the pipe alignments and prevent rattling. 
</P>
<P>(2) Piping shall be securely attached to the structure by hangers, clamps, or brackets which provide protection against motion, vibration, road shock, or torque in the chassis. 
</P>
<P>(3) Hangers and straps supporting plastic pipe shall not compress, distort, cut or abrade the piping and shall allow free movement of the pipe. 
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975, as amended at 86 FR 2521, Jan. 12, 2021]




</CITA>
</DIV8>


<DIV8 N="§ 3280.609" NODE="24:5.1.2.1.2.7.1.9" TYPE="SECTION">
<HEAD>§ 3280.609   Water distribution systems.</HEAD>
<P>(a) <I>Water supply</I>—(1) <I>Supply piping.</I> Piping systems shall be sized to provide an adequate quantity of water to each plumbing fixture at a flow rate sufficient to keep the fixture in a clean and sanitary condition without any danger of backflow or siphonage. (See table in § 3280.609(f)(1)). The manufacturer shall include in his written installation instructions that the manufactured home has been designed for an inlet water pressure of 80 psi, and a statement that when the manufactured home is to be installed in areas where the water pressure exceeds 80 psi, a pressure reducing valve should be installed. 
</P>
<P>(2) <I>Hot water supply.</I> Each dwelling unit equipped with a kitchen sink, and bathtub and/or shower must be provided with a hot water supply system including a listed water heater. 
</P>
<P>(b) <I>Water outlets and supply connections</I>—(1) <I>Water connection.</I> Each manufactured home with a water distribution system shall be equipped with a 
<FR>3/4</FR> inch threaded inlet connection. This connection shall be tagged or marked “Fresh Water Connection” (or marked “Fresh Water Fill”). A matching cap or plug shall be provided to seal the water inlet when it is not in use, and shall be permanently attached to the manufactured home or water supply piping. When a master cold water shutoff full flow valve is not installed on the main feeder line in an accessible location, the manufacturer's installation instructions shall indicate that such a valve is to be installed in the water supply line adjacent to the home. When a manufactured home includes expandable rooms or is composed of two or more units, fittings or connectors designed for such purpose shall be provided to connect any water piping. When not connected, the water piping shall be protected by means of matching threaded caps or plugs. 
</P>
<P>(2) <I>Prohibited connections.</I> (i) The installation of potable water supply piping or fixture or appliance connections shall be made in a manner to preclude the possibility of backflow. 
</P>
<P>(ii) No part of the water system shall be connected to any drainage or vent piping. 
</P>
<P>(3) <I>Rim outlets.</I> The outlets of faucets, spouts, and similar devices shall be spaced at least 1 inch above the flood level of the fixture. 
</P>
<P>(4) <I>Appliance connections.</I> Water supplies connected to clothes washing or dishwashing machines shall be protected by an approved or listed fixed air gap provided within the appliance by the manufacturer. 
</P>
<P>(5) <I>Flushometer valves or manually operated flush valves.</I> An approved or listed vacuum breaker shall be installed and maintained in the water supply line on the discharge side of a water closet flushometer valve or manually operated flush valve. Vacuum breakers shall have a minimum clearance of 6 inches above the flood level of the fixture to the critical level mark unless otherwise permitted in their approval. 
</P>
<P>(6) <I>Flush tanks.</I> Water closet flush tanks shall be equipped with an approved or listed anti-siphon ball cock which shall be installed and maintained with its outlet or critical level mark not less than 1 inch above the full opening of the overflow pipe. 
</P>
<P>(7) <I>Hose bibbs.</I> When provided, all exterior hose bibbs and laundry sink hose connections must be protected by a listed nonremovable backflow prevention device. This requirement is not applicable to hose connections provided for automatic washing machines with built-in backflow prevention or water heater drain valves.
</P>
<P>(8) <I>Flushometer tanks.</I> Flushometer tanks must be equipped with an approved air gap or vacuum breaker assembly that is located above the flood-level rim above the fixture.
</P>
<P>(c) <I>Water heater safety devices</I>—(1) <I>Relief valves.</I> (i) All water heaters shall be installed with approved and listed fully automatic valve or valves designed to provide temperature and pressure relief. 
</P>
<P>(ii) Any temperature relief valve or combined pressure and temperature relief valve installed for this purpose shall have the temperature sensing element immersed in the hottest water within the upper 6 inches of the tank. It shall be set to start relieving at a pressure of 150 psi or the rated working pressure of the tank whichever is lower and at or below a water temperature of 210 °F. 
</P>
<P>(iii) Relief valves must be provided with full-sized drains, with cross sectional areas equivalent to that of the relief valve outlet. The outlet of a pressure relief valve, temperature relief valve, or combination thereof, must not be directly connected to the drainage system. The discharge from the relief valve must be piped full size separately to the exterior of the manufactured home, not underneath the home, or to an indirect waste receptor located inside the manufactured home. Exterior relief drains shall be directed down and shall terminate between 6″ and 24″ above finished grade. Drain lines must be of a material listed for hot water distribution and must drain fully by gravity, must not be trapped, and must not have their outlets threaded, and the end of the drain must be visible for inspection.
</P>
<P>(iv) Relief valve piping designed to be located underneath the manufactured home is not required to be installed at the factory provided the manufacturer designs the system for site assembly and also provides all materials and components including piping, fittings, cement, supports, and instructions for proper site installation.
</P>
<P>(d) <I>Materials</I>—(1) <I>Piping material.</I> Water pipe shall be of standard weight brass, galvanized wrought iron, galvanized steel, Type K, L or M copper tubing, approved or listed plastic or other approved or listed material. 
</P>
<P>(i) <I>Plastic piping.</I> All plastic water piping and fittings in manufactured homes must be listed for use with hot water. 
</P>
<P>(ii) [Reserved]
</P>
<P>(2) <I>Fittings.</I> Appropriate fittings shall be used for all changes in size and where pipes are joined. The material and design of fittings shall conform to the type of piping used. Special consideration shall be given to prevent corrosion when dissimilar metals are joined. 
</P>
<P>(i) Fittings for screw piping shall be standard weight galvanized iron for galvanized iron and steel pipe, and of brass for brass piping. They shall be installed where required for change in direction, reduction of size, or where pipes are joined together. 
</P>
<P>(ii) Fittings for copper tubing shall be cast brass or drawn copper (sweat-soldered) or shall be approved or listed fittings for the purpose intended. 
</P>
<P>(3) <I>Prohibited material.</I> Used piping materials shall not be permitted. Those pipe dopes, solder, fluxes, oils, solvents, chemicals, or other substances that are toxic, corrosive, or otherwise detrimental to the water system shall not be used. In addition, for those manufactured homes to be connected to a public water system, all water piping shall be lead-free (as defined in section 109(c)(2) of the Safe Drinking Water Act Amendments of 1986) with solders and flux containing not more than 0.2 percent lead and pipes and pipe fittings containing not more than 8.0 percent lead. 
</P>
<P>(e) <I>Installation of piping</I>—(1) <I>Minimum requirement.</I> All piping equipment, appurtenances, and devices shall be installed in workmanlike manner and shall conform with the provisions and intent of this standard. 
</P>
<P>(2) <I>Screw pipe.</I> Iron pipe-size brass or galvanized iron or steel pipe fittings shall be joined with approved or listed standard pipe threads fully engaged in the fittings. Pipe ends shall be reamed to the full bore of the pipe. Pipe-joint compound shall be insoluble in water, shall be nontoxic and shall be applied to male threads only. 
</P>
<P>(3) <I>Solder fittings.</I> Joints in copper water tubes shall be made by the appropriate use of approved cast brass or wrought copper fittings, properly soldered together. The surface to be soldered shall be thoroughly cleaned bright mechanically. The joints shall be properly fluxed and made with a solder that contains no more than 0.2 percent lead. 
</P>
<P>(4) <I>Flared fittings.</I> A flaring tool shall be used to shape the ends of flared tubing to match the flare of fittings. 
</P>
<P>(5) <I>Plastic pipe and fittings.</I> Plastic pipe and fittings shall be joined by installation methods recommended by the manufacturer or in accordance with provisions of a listed standard. 
</P>
<P>(f) <I>Size of water supply piping</I>—(1) <I>Minimum size.</I> The size of water supply piping and branch lines shall not be less than sizes shown in the following table:
</P>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Minimum Size Tubing and Pipe for Water Distribution Systems
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" rowspan="2" scope="col">Number of fixtures
</TH><TH class="gpotbl_colhed" colspan="2" scope="col">Tubing (nominal)
</TH><TH class="gpotbl_colhed" rowspan="2" scope="col">Pipe iron pipe size (inches)
</TH></TR><TR><TH class="gpotbl_colhed" scope="col">Diameter (inches)
</TH><TH class="gpotbl_colhed" scope="col">Outer diameter (inches)
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1</TD><TD align="right" class="gpotbl_cell">*
<fr>1/4</fr></TD><TD align="right" class="gpotbl_cell">
<fr>3/8</fr></TD><TD align="right" class="gpotbl_cell">
<fr>1/2</fr>
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">2</TD><TD align="right" class="gpotbl_cell">
<fr>3/8</fr></TD><TD align="right" class="gpotbl_cell">
<fr>1/2</fr></TD><TD align="right" class="gpotbl_cell">
<fr>1/2</fr>
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">3</TD><TD align="right" class="gpotbl_cell">
<fr>1/2</fr></TD><TD align="right" class="gpotbl_cell">
<fr>5/8</fr></TD><TD align="right" class="gpotbl_cell">
<fr>1/2</fr>
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">4</TD><TD align="right" class="gpotbl_cell">
<fr>1/2</fr></TD><TD align="right" class="gpotbl_cell">
<fr>5/8</fr></TD><TD align="right" class="gpotbl_cell">
<fr>1/2</fr>
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">5 or more</TD><TD align="right" class="gpotbl_cell">
<fr>3/4</fr></TD><TD align="right" class="gpotbl_cell">
<fr>7/8</fr></TD><TD align="right" class="gpotbl_cell">
<fr>3/4</fr>
</TD></TR></TABLE></DIV><DIV class="table_foot"><P class="gpotbl_note">*6 ft maximum length.</P></DIV></DIV>
<FP><I>Exceptions to table:</I> 
<FR>3/8</FR> inch nominal diameter or 
<FR>1/2</FR> inch OD minimum size for clothes washing or dishwashing machines, unless larger size is recommended by the fixture manufacturer. 
<FR>1/2</FR> inch nominal diameter or 
<FR>5/8</FR> inch OD minimum size for flushometer or metering type valves unless otherwise specified in their listing. No galvanized screw piping shall be less than 
<FR>1/2</FR> inch iron pipe size. 
</FP>
<P>(2) <I>Sizing procedure.</I> Both hot and cold water piping systems shall be computed by the following method:
</P>
<P>(i) <I>Size of branch.</I> Start at the most remote outlet on any branch of the hot or cold water piping and progressively count towards the water service connection, computing the total number of fixtures supplied along each section of piping. Where branches are joined together, the number of fixtures on each branch shall be totalled so that no fixture is counted twice. Following down the left-hand column of the preceding table a corresponding number of fixtures will be found. The required pipe or tubing size is indicated in the other columns on the same line. 
</P>
<P>(ii) A water heater, food waste disposal unit, evaporative cooler or ice maker shall not be counted as a water-using fixture when computing pipe sizes. 
</P>
<P>(g) <I>Line valves.</I> Valves, when installed in the water supply distribution system (except those immediately controlling one fixture supply) and when fully opened, shall have a cross-sectional area of the smallest orifice or opening, through which the water flows, at least equal to the cross-sectional area of the nominal size of the pipe in which the valve is installed. 
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 52 FR 4586, Feb. 12, 1987; 53 FR 23611, June 23, 1988; 58 FR 55014, Oct. 25, 1993; 78 FR 73986, Dec. 9, 2013; 86 FR 2521, Jan. 12, 2021; 89 FR 75753, Sept. 16, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 3280.610" NODE="24:5.1.2.1.2.7.1.10" TYPE="SECTION">
<HEAD>§ 3280.610   Drainage systems.</HEAD>
<P>(a) <I>General.</I> (1) Each fixture directly connected to the drainage system shall be installed with a water seal trap (§ 3280.606(a)). 
</P>
<P>(2) The drainage system shall be designed to provide an adequate circulation of air in all piping with no danger of siphonage, aspiration, or forcing of trap seals under conditions of ordinary use. 
</P>
<P>(b) <I>Materials</I>—(1) <I>Pipe.</I> Drainage piping must be standard weight galvanized steel, brass, copper tube DWV, listed Scheduled 40 ABS plastic, listed Scheduled 40 PVC plastic, cast iron, or other listed or approved materials.</P>
<P>(2) <I>Fittings.</I> Drainage fittings shall be recessed drainage pattern with smooth interior waterways of the same diameter as the piping and shall be of a material conforming to the type of piping used. Drainage fittings shall be designed to provide for a 
<FR>1/4</FR> inch per foot grade in horizontal piping.
</P>
<P>(i) Fittings for screw pipe shall be cast iron, malleable iron, brass, or listed plastic with standard pipe threads.
</P>
<P>(ii) Fittings for copper tubing shall be cast brass or wrought copper.
</P>
<P>(iii) Socket-type fittings for plastic piping shall comply with listed standards.
</P>
<P>(iv) Brass or bronze adaptor or wrought copper fittings shall be used to join copper tubing to threaded pipe. 
</P>
<P>(c) <I>Drain outlets.</I>  (1) <I>General.</I> Each manufactured home shall have only one drain outlet. 
</P>
<P>(2) <I>Clearance from drain outlet.</I> The drain outlet shall be provided with a minimum clearance of 3 inches in any direction from all parts of the structure or appurtenances and with not less than 18 inches unrestricted clearance directly in front of the drain outlet. 
</P>
<P>(3) <I>Drain connector.</I> The drain connector shall not be smaller than the piping to which it is connected and shall be equipped with a water-tight cap or plug matching the drain outlet. The cap or plug shall be permanently attached to the manufactured home or drain outlet. 
</P>
<P>(4) <I>Size Requirement.</I> The drain outlet and drain connector shall not be less than 3 inches inside diameter. 
</P>
<P>(5) <I>Preassembly of drain lines.</I> Section(s) of the drain system, designed to be located underneath the manufactured home or between stories of the manufactured home, are not required to be factory installed when the manufacturer designs the system for site assembly and also provides all materials and components, including piping, fittings, cement, supports, and instructions necessary for proper site installation.
</P>
<P>(d) <I>Fixture connections.</I> Drainage piping shall be provided with approved or listed inlet fittings for fixture connections, correctly located according to the size and type of fixture to be connected. 
</P>
<P>(1) <I>Water closet connection.</I> The drain connection for each water closet shall be 3 inches minimum inside diameter and shall be fitted with an iron, brass, or listed plastic floor flange adaptor ring securely screwed, soldered or otherwise permanently attached to the drain piping, in an approved manner and securely fastened to the floor. 
</P>
<P>(2) [Reserved]
</P>
<P>(e) <I>Size of drainage piping.</I> Fixture drains must be sized as follows:
</P>
<P>(1) Fixture drains serving a single lavatory must be a minimum of 1
<FR>1/4</FR> inches in diameter.
</P>
<P>(2) Fixture drains serving two or three fixtures must be a minimum of 1
<FR>1/2</FR> inches in diameter.
</P>
<P>(3) Fixture drains serving four or more fixtures that are individually vented must be a minimum of 2 inches in diameter.
</P>
<P>(4) Fixture drains for water closets must be a minimum of 3 inches in diameter.
</P>
<P>(f) <I>Wet-vented drainage system.</I> Plumbing fixture traps may connect into a wet-vented drainage system which shall be designed and installed to accommodate the passage of air and waste in the same pipe. 
</P>
<P>(1) <I>Horizontal piping.</I> All parts of a wet-vented drainage system, including the connected fixture drains, shall be horizontal except for wet-vented vertical risers which shall terminate with a 1
<FR>1/2</FR> inch minimum diameter continuous vent. Where required by structural design, wet-vented drain piping may be offset vertically when other vented fixture drains or relief vents are connected to the drain piping at or below the vertical offsets. 
</P>
<P>(2) <I>Size.</I> A wet-vented drain pipe shall be 2 inches minimum diameter and at least one pipe size larger than the largest connected trap or fixture drain. Not more than three fixtures may connect to a 2-inch diameter wet-vented drain system. 
</P>
<P>(3) <I>Length of trap arm.</I> Fixture traps shall be located within the distance given in § 3280.611(c)(5). Not more than one trap shall connect to a trap arm. 
</P>
<P>(g) <I>Offsets and branch fittings</I>—(1) <I>Changes in direction.</I> Changes in direction of drainage piping shall be made by the appropriate use of approved or listed fittings, and shall be of the following angles: 11
<FR>1/4</FR>, 22
<FR>1/2</FR>, 45, 60, or 90 degrees; or other approved or listed fittings or combinations of fittings with equivalent radius or sweep. 
</P>
<P>(2) <I>Horizontal to vertical.</I> Horizontal drainage lines, connecting with a vertical pipe shall enter through 45-degree “Y” branches, 60-degree “Y” branches, long-turn “TY” branches, sanitary “T” branches, or other approved or listed fittings or combination of fittings having equivalent sweep. Fittings having more than one branch at the same level shall not be used, unless the fitting is constructed so that the discharge from any one branch cannot readily enter any other branch. However, a double sanitary “T” may be used when the drain line is increased not less than two pipe sizes. 
</P>
<P>(3) <I>Horizontal to horizontal and vertical to horizontal.</I> Horizontal drainage lines connecting with other horizontal drainage lines or vertical drainage lines connected with horizontal drainage lines shall enter through 45-degree “Y” branches, long-turn “TY” branches, or other approved or listed fittings or combination of fittings having equivalent sweep. 
</P>
<P>(h) <I>Grade of horizontal drainage piping.</I> Except for fixture connections on the inlet side of the trap, horizontal drainage piping shall be run in practical alignment and have a uniform grade of not less than 
<FR>1/4</FR> inch per foot toward the manufactured home drain outlet. Where it is impractical, due to the structural features or arrangement of any manufactured home, to obtain a grade of 
<FR>1/4</FR> inch per foot, the pipe or piping may have a grade of not less than 
<FR>1/8</FR> inch per foot, when a full size cleanout is installed at the upper end. 
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 52 FR 4586, Feb. 12, 1987; 58 FR 55015, Oct. 25, 1993; 78 FR 73986, Dec. 9, 2013; 86 FR 2521, Jan. 12, 2021]


</CITA>
</DIV8>


<DIV8 N="§ 3280.611" NODE="24:5.1.2.1.2.7.1.11" TYPE="SECTION">
<HEAD>§ 3280.611   Vents and venting.</HEAD>
<P>(a) <I>General.</I> Each plumbing fixture trap shall be protected against siphonage and back pressure, and air circulation shall be ensured throughout all parts of the drainage system by means of vents installed in accordance with the requirements of this section and as otherwise required by this standard. 
</P>
<P>(b) <I>Materials</I>—(1) <I>Pipe.</I> Vent piping must be standard weight galvanized steel, brass, copper tube DWV, listed Scheduled 40 ABS plastic, listed Scheduled 40 PVC plastic, cast iron, or other listed or approved materials.</P>
<P>(2) <I>Fittings.</I> Appropriate fittings shall be used for all changes in direction or size and where pipes are joined. The material and design of vent fittings shall conform to the type of piping used. 
</P>
<P>(i) Fittings for screw pipe shall be cast iron, malleable iron, plastic, or brass, with standard pipe threads. 
</P>
<P>(ii) Fittings for copper tubing shall be cast brass or wrought copper. 
</P>
<P>(iii) Fittings for plastic piping shall be made to approved applicable standards. 
</P>
<P>(iv) Brass adaptor fittings or wrought copper shall be used to join copper tubing to threaded pipe. 
</P>
<P>(v) Listed rectangular tubing may be used for vent piping only providing it has an open cross section at least equal to the circular vent pipe required. Listed transition fittings shall be used. 
</P>
<P>(c) <I>Size of vent piping</I>—(1) <I>Main vent.</I> The drain piping for each toilet shall be vented by a 1
<FR>1/2</FR> inch minimum diameter vent or rectangular vent of venting cross section equivalent to or greater than the venting cross section of a 1
<FR>1/2</FR> inch diameter vent, connected to the toilet drain by one of the following methods:
</P>
<P>(i) A 1
<FR>1/2</FR> inch diameter (min.) individual vent pipe or equivalent directly connected to the toilet drain within the distance allowed in § 3280.611(c)(5), for 3-inch trap arms undiminished in size through the roof;
</P>
<P>(ii) A 1
<FR>1/2</FR>-inch diameter (min.) continuous vent or equivalent, indirectly connected to the toilet drain piping within the distance allowed in paragraph (c)(5) of this section for 3 inch trap arms through a 2-inch wet vented drain that carries the waste of not more than one fixture. Sections of the wet vented drain that are 3 inches in diameter are permitted to carry the waste of an unlimited number of fixtures; or
</P>
<P>(iii) Two or more vented drains when at least one is wet-vented, or 2-inch diameter (minimum), and each drain is separately connected to the toilet drain. At least one of the drains shall connect within the distance allowed in § 3280.611(c)(5) for 3-inch trap arms. 
</P>
<P>(2) <I>Vent pipe areas.</I> Each individually vented fixture with a 1
<FR>1/2</FR> inch or smaller trap shall be provided with a vent pipe equivalent in area to a 1
<FR>1/4</FR> inch nominal pipe size. The main vent, toilet vent and relief vent, and the continuous vent of wet-vented systems shall have an area equivalent to 1
<FR>1/2</FR> inch nominal pipe size. 
</P>
<P>(3) <I>Common vent.</I> When two fixture traps located within the distance allowed from their vent have their trap arms connected separately at the same level into an approved double fitting, an individual vent pipe may serve as a common vent without any increase in size. 
</P>
<P>(4) <I>Intersecting vents.</I> Where two or more vent pipes are joined together, no increase in size shall be required; however, the largest vent pipe shall extend full size through the roof. 
</P>
<P>(5) The distance of the fixture trap from the vent must not exceed the values given in the following table:
</P>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Table 1 to Paragraph <E T="01">(c)(5)</E>—Maximum Distance of Fixtures From Vent Trap
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Size of fixture drain


<br/>(inches)
</TH><TH class="gpotbl_colhed" scope="col">Distance trap to vent
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1 
<fr>1/4</fr></TD><TD align="left" class="gpotbl_cell">5 ft.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1 
<fr>1/2</fr></TD><TD align="left" class="gpotbl_cell">6 ft.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">2</TD><TD align="left" class="gpotbl_cell">8 ft.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">3</TD><TD align="left" class="gpotbl_cell">12 ft.</TD></TR></TABLE></DIV></DIV>
<P>(d) <I>Mechanical Vents.</I> Where mechanical vents are used as a secondary vent system for plumbing fixtures that are protected by traps, the mechanical vents must comply with paragraphs (d)(1) or (2) of this section.
</P>
<P>(1) Spring-operated mechanical (anti-siphon) vents must comply with the following:
</P>
<P>(i) No more than two fixtures individually protected by the spring-operated mechanical vent may be drained by a common 1
<FR>1/2</FR> inch diameter drain.
</P>
<P>(ii) The drain size for three or more fixtures individually protected by a spring-operated mechanical vent must be at least 2 inches in diameter.
</P>
<P>(iii) Spring-operated mechanical vents are restricted to venting fixtures with 1
<FR>1/2</FR> inch traps.
</P>
<P>(iv) A spring-operated mechanical vent must be installed in a location that allows a free flow of air and is accessible for inspection, maintenance, and replacement. The sealing function must be at least 6 inches above the top of the trap arm.
</P>
<P>(v) Materials for the spring-operated mechanical vents must be as follows:
</P>
<P>(A) Cap and housing must be listed acrylonitrile-butadiene-styrene, DWV grade;
</P>
<P>(B) Stem must be DWV grade nylon or acetal;
</P>
<P>(C) Spring must be stainless steel wire, Type 302; and
</P>
<P>(D) Sealing disc must be either:
</P>
<P>(<I>1</I>) Neoprene, conforming to CISPI-HSN-85, Specification for Neoprene Rubber Gaskets for HUB and Spigot Cast Iron Soil Pipe and Fittings (incorporated by reference, see § 3280.4), and to ASTM C564-97, Standard Specification for Rubber Gaskets for Cast Iron Soil Pipe and Fittings (incorporated by reference, see § 3280.4); or
</P>
<P>(<I>2</I>) Other material, conforming to ASTM C920-02, Standard Specification for Elastomeric Joint Sealants (incorporated by reference, see § 3280.4), and to ASTM D4635-01, Standard Specification for Polyethylene Films Made from Low-Density Polyethylene for General Use and Packaging Applications (incorporated by reference, see § 3280.4).
</P>
<P>(2) Gravity-operated mechanical (air admittance valves) vents must comply with the following:
</P>
<P>(i) Where installed to vent any fixture, the drain system must have a minimum 1
<FR>1/2</FR> inch diameter vent that terminates outside the manufactured home.
</P>
<P>(ii) Where gravity-operated mechanical vent devices terminate in the attic cavity, the following requirements must be met:
</P>
<P>(A) The attic cavity must be accessible;
</P>
<P>(B) The sealing device must be installed a minimum of 6 inches above the insulation materials; and
</P>
<P>(C) The attic must be vented in accordance with § 3280.504(c)(1)(i);
</P>
<P>(3) Mechanical vents must be installed in accordance with the vent manufacturer's instructions. 
</P>
<P>(e) <I>Grade and connections</I>—(1) <I>Horizontal vents.</I> Each vent shall extend vertically from its fixture “T” or point of connection with the waste piping to a point not less than 6 inches above the extreme flood level of the fixture it is venting before offsetting horizontally or being connected with any other vent pipe. Vents for horizontal drains shall connect above the centerline of the drain piping ahead (downstream) of the trap. Where required by structural conditions, vent piping may offset below the rim of the fixture at the maximum angle or height possible. 
</P>
<P>(f) <I>Vent terminal.</I> Vents must terminate through the roof or wall, or to a mechanical vent device in accordance with paragraph (d) of this section.
</P>
<P>(1) <I>Roof extension.</I> Each vent pipe must extend through its flashing and terminate vertically. Vents that extend through the roof must extend undiminished in size, not less than 2 inches above the roof. Vent openings must be at least 3 feet away from any motor-driven air intake that opens into any habitable area.
</P>
<P>(2) <I>Wall extensions.</I> Extensions through exterior walls must terminate downward, have a screen to prevent entrance of birds and rodents, and be located as follows:
</P>
<P>(i) Extensions must not be located beneath a door, window, or other opening;
</P>
<P>(ii) Extensions must be a minimum of 10 feet above the finished floor;
</P>
<P>(iii) Extensions must be located a minimum of 2 feet above any building opening that is within 10 feet horizontally of any extension; and
</P>
<P>(iv) Extensions must not terminate under an overhang with soffit vents.
</P>
<P>(3) <I>Flashing.</I> The opening around each vent pipe shall be made watertight by an adequate flashing or flashing material.</P>
<P>(g) <I>Vent caps.</I> Vent caps, if provided, shall be of the removable type (without removing the flashing from the roof). When vent caps are used for roof space ventilation and the caps are identical to vent caps used for the plumbing system, plumbing system caps shall be identified with permanent markings. 
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975, as amended at 42 FR 961, Jan. 4, 1977. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 58 FR 55015, Oct. 25, 1993; 78 FR 73986, Dec. 9, 2013; 86 FR 2521, Jan. 12, 2021; 89 FR 75753, Sept. 16, 2024] 


</CITA>
</DIV8>


<DIV8 N="§ 3280.612" NODE="24:5.1.2.1.2.7.1.12" TYPE="SECTION">
<HEAD>§ 3280.612   Tests and inspection.</HEAD>
<P>(a) <I>Water system.</I> All water piping in the water distribution system must be subjected to a pressure test. The test must be made by subjecting the system to air or water at 80 psi + or − 5 psi for 15 minutes without loss of pressure. The water used for the test must be obtained from a potable water source.
</P>
<P>(b) <I>Drainage and vent system and plumbing fixtures.</I> The waste and vent system shall be tested by one of the three following alternate methods for evidence or indication of leakage: 
</P>
<P>(1) <I>Water test.</I> Before plumbing fixtures are connected, all of the openings into the piping shall be plugged and the entire piping system subjected to a static water test for 15 minutes by filling it with water to the top of the highest vent opening. There shall be no evidence of leakage. 
</P>
<P>(2) <I>Air test.</I> After all fixtures have been installed, the traps filled with water, and the remaining openings securely plugged, the entire system shall be subjected to a 2-inch (manometer) water column air pressure test. If the system loses pressure, leaks may be located with smoke pumped into the system, or with soap suds spread on the exterior of the piping (Bubble test). 
</P>
<P>(3) <I>Flood level test.</I> The manufactured home shall be in a level position, all fixtures shall be connected, and the entire system shall be filled with water to the rim of the water closet bowl. (Tub and shower drains shall be plugged). After all trapped air has been released, the test shall be sustained for not less than 15 minutes without evidence of leaks. Then the system shall be unplugged and emptied. The waste piping above the level of the water closet bowl shall then be tested and show no indication of leakage when the high fixtures are filled with water and emptied simultaneously to obtain the maximum possible flow in the drain piping. 
</P>
<P>(c) <I>Fixture test.</I> The plumbing fixtures and connections shall be subjected to a flow test by filling them with water and checking for leaks and retarded flow while they are being emptied. 
</P>
<P>(d) <I>Shower compartments.</I> Shower compartments and receptors shall be tested for leaks prior to being covered by finish material. Each pan shall be filled with water to the top of the dam for not less than 15 minutes without evidence of leakage. 
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975, as amended at 42 FR 961, Jan. 4, 1977; 42 FR 54383, Oct. 5, 1977. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 58 FR 55015, Oct. 25, 1993; 86 FR 2521, Jan. 12, 2021] 


</CITA>
</DIV8>

</DIV6>


<DIV6 N="H" NODE="24:5.1.2.1.2.8" TYPE="SUBPART">
<HEAD>Subpart H—Heating, Cooling and Fuel Burning Systems</HEAD>


<DIV8 N="§ 3280.701" NODE="24:5.1.2.1.2.8.1.1" TYPE="SECTION">
<HEAD>§ 3280.701   Scope.</HEAD>
<P>Subpart H of this standard covers the heating, cooling and fuel burning equipment installed within, on, or external to a manufactured home. 


</P>
</DIV8>


<DIV8 N="§ 3280.702" NODE="24:5.1.2.1.2.8.1.2" TYPE="SECTION">
<HEAD>§ 3280.702   Definitions.</HEAD>
<P>The definitions in this subpart apply to subpart H only. 
</P>
<P><I>Accessible,</I> when applied to a fixture, connection, appliance or equipment, means having access thereto, but which may require the removal of an access panel, door or similar obstruction. 
</P>
<P><I>Air conditioner blower coil system</I> means a comfort cooling appliance where the condenser section is placed external to the manufactured home and evaporator section with circulating blower attached to the manufactured home air supply duct system. Provision must be made for a return air system to the evaporator/blower section. Refrigerant connection between the two parts of the system is accomplished by tubing. 
</P>
<P><I>Air conditioner split system</I> means a comfort cooling appliance where the condenser section is placed external to the manufactured home and the evaporator section incorporated into the heating appliance or with a separate blower/coil section within the manufactured home. Refrigerant connection between the two parts of the system is accomplished by tubing. 
</P>
<P><I>Air conditioning condenser section</I> means that portion of a refrigerated air cooling or (in the case of a heat pump) heating system which includes the refrigerant pump (compressor) and the external heat exchanger. 
</P>
<P><I>Air conditioning evaporator section</I> means a heat exchanger used to cool or (in the case of a heat pump) heat air for use in comfort cooling (or heating) the living space. 
</P>
<P><I>Air conditioning self contained system</I> means a comfort cooling appliance combining the condenser section, evaporator and air circulating blower into one unit with connecting ducts for the supply and return air systems. 
</P>
<P><I>Air duct</I> means conduits or passageways for conveying air to or from heating, cooling, air conditioning or ventilation equipment, but not including the plenum. 
</P>
<P><I>Automatic pump (oil lifter)</I> means a pump, not an integral part of the oil-burning appliance, that automatically pumps oil from the supply tank and delivers the oil under a constant head to an oil-burning appliance. 
</P>
<P><I>Btu. British thermal units</I> means the quantity of heat required to raise the temperature of one pound of water one degree Fahrenheit. 
</P>
<P><I>Btuh</I> means British thermal units per hour. 
</P>
<P><I>Burner</I> means a device for the final conveyance of fuel or a mixture of fuel and air to the combustion zone. 
</P>
<P><I>Central air conditioning system</I> means either an air conditioning split system or an external combination heating/cooling system. 
</P>
<P><I>Class 0 air ducts and air connectors</I> means air ducts and air connectors having a fire hazard classification of zero when tested in accordance with UL 181 (incorporated by reference, see § 3280.4).
</P>
<P><I>Class 1 air ducts and air connectors</I> means air ducts and air connectors having a flame spread rating of not over 25 without evidence of continued progressive combustion and a smoke developed rating of not over 50 when tested in accordance with UL 181 (incorporated by reference, see § 3280.4).
</P>
<P><I>Clearance</I> means the distance between the appliance, chimney, vent, chimney or vent connector or plenum and the nearest surface.
</P>
<P><I>Combination space heating and water heating appliance</I> means a listed unit that is designed to provide space heating and water heating from a single primary energy source.
</P>
<P><I>Connector-Gas appliance:</I> means a flexible or semi-rigid connector used to convey fuel gas between a gas outlet and a gas appliance. 
</P>
<P><I>Direct-vent system</I> means a system or method of construction where all air for combustion is derived directly from the outside atmosphere and all flue gases are discharged to the outside atmosphere.
</P>
<P><I>Direct-vent system appliance</I> means an appliance that is installed with a direct vent system.
</P>
<P><I>External combination heating/cooling system</I> means a comfort conditioning system placed external to the manufactured home with connecting ducts to the manufactured home for the supply and return air systems. 
</P>
<P><I>Factory-built fireplace</I> means a hearth, fire chamber and chimney assembly composed of listed factory-built components assembled in accordance with the terms of listing to form a complete fireplace. 
</P>
<P><I>Fireplace stove</I> means a chimney connected solid fuel-burning stove having part of its fire chamber open to the room. 
</P>
<P><I>Fuel gas piping system</I> means the arrangement of piping, tubing, fittings, connectors, valves and devices designed and intended to supply or control the flow of fuel gas to the appliance(s). 
</P>
<P><I>Fuel oil piping system</I> means the arrangement of piping, tubing, fittings, connectors, valves and devices designed and intended to supply or control the flow of fuel oil to the appliance(s). 
</P>
<P><I>Gas clothes dryer</I> means a device used to dry wet laundry by means of heat derived from the combustion of fuel gases. 
</P>
<P><I>Gas refrigerator</I> means a gas-burning appliance which is designed to extract heat from a suitable chamber. 
</P>
<P><I>Gas supply connection</I> means the terminal end or connection to which a gas supply connector is attached. 
</P>
<P><I>Gas supply connector, manufactured home</I> means a listed flexible connector designed for connecting the manufactured home to the gas supply source. 
</P>
<P><I>Gas vents</I> means factory-built vent piping and vent fittings listed by an approved testing agency, that are assembled and used in accordance with the terms of their listings, for conveying flue gases to the outside atmosphere.
</P>
<P>(1) <I>Type B gas vent</I> means a gas vent for venting gas appliances with draft hoods and other gas appliances listed for use with Type B gas vents.
</P>
<P>(2) <I>Type BW gas vent</I> means a gas vent for venting listed gas-fired vented wall furnaces. 
</P>
<P><I>Heat producing appliance</I> means all heating and cooking appliances and fuel burning appliances. 
</P>
<P><I>Heating appliance</I> means an appliance for comfort heating, domestic water heating, or a combination of comfort heating and domestic water heating.
</P>
<P><I>Liquefied petroleum gases.</I> The terms <I>Liquefied petroleum gases, LPG</I> and <I>LP-Gas</I> as used in this standard shall mean and include any material which is composed predominantly of any of the following hydrocarbons, or mixtures of them: propane, propylene butanes (normal butane or isobutane), and butylenes. 
</P>
<P><I>Plenum</I> means an air compartment which is part of an air-distributing system, to which one or more ducts or outlets are connected.
</P>
<P>(1) Furnace supply plenum is a plenum attached directly to, or an integral part of, the air supply outlet of the furnace.
</P>
<P>(2) Furnace return plenum is a plenum attached directly to, or an integral part of, the return inlet of the furnace. 
</P>
<P><I>Quick-disconnect device</I> means a hand-operated device which provides a means for connecting and disconnecting a gas supply or connecting gas systems and which is equipped with an automatic means to shut off the gas supply when the device is disconnected. 
</P>
<P><I>Readily accessible</I> means direct access without the necessity of removing any panel, door, or similar obstruction. 
</P>
<P><I>Roof jack</I> means that portion of a manufactured home heater flue or vent assembly, including the cap, insulating means, flashing, and ceiling plate, located in and above the roof of a manufactured home. 
</P>
<P><I>Sealed combustion system appliance</I> means an appliance which by its inherent design is constructed so that all air supplied for combustion, the combustion system of the appliance, and all products of combustion are completely isolated from the atmosphere of the space in which it is installed. 
</P>
<P><I>Water heater</I> means an appliance for heating water for domestic purposes.
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 52 FR 4586, Feb. 12, 1987; 58 FR 55015, Oct. 25, 1993; 78 FR 73987, Dec. 9, 2013; 89 FR 75753, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.703" NODE="24:5.1.2.1.2.8.1.3" TYPE="SECTION">
<HEAD>§ 3280.703   Minimum standards.</HEAD>
<P>Heating, cooling, and fuel burning appliances and systems in manufactured homes shall be free of defects and shall conform to applicable standards (incorporated by reference, see § 3280.4) in this section unless otherwise specified in this part. When more than one standard is referenced, compliance with any one such standard shall meet the requirements of this part.
</P>
<P>(a) <I>Appliances.</I> (1) Liquid Fuel-Burning Heating Appliances for Manufactured Homes and Recreational Vehicles—UL 307A.
</P>
<P>(2) Fixed and Location-Dedicated Electric Room Heaters—UL 2021.
</P>
<P>(3) Electric Baseboard Heating Equipment—UL 1042.
</P>
<P>(4) Electric Central Air Heating Equipment—UL 1096.
</P>
<P>(5) Gas-Burning Heating Appliances for Manufactured Homes and Recreational Vehicles—UL 307B.
</P>
<P>(6) Gas Clothes Dryers Volume I, Type 1 Clothes Dryers—ANSI Z21.5.1 (CSA Group).
</P>
<P>(7) Gas-fired Water Heaters, Volume III, Storage Water Heaters with Input Ratings Above 75,000 BTU per Hour, Circulating and Instantaneous—ANSI Z21.10.3 (CSA Group).
</P>
<P>(8) Gas-Fired, Heat Activated Air Conditioning and Heat Pump Appliances—ANSI Z21.40.1 (CSA Group).
</P>
<P>(9) Gas-Fired Central Furnaces (Except Direct Vent Systems)—ANSI Z21.47(CSA Group).
</P>
<P>(10) Connectors for Outdoor Gas Appliances and Manufactured Homes—ANSI Z21.75 (CSA Group).
</P>
<P>(11) Decorative Gas Appliances for Installation in Solid Fuel Burning Fireplaces—RADCO DS-010.
</P>
<P>(12) Household Cooking Gas Appliances—ANSI Z21.1 (CSA Group).
</P>
<P>(13) Refrigerators Using Gas Fuel—ANSI Z21.19 (CSA Group).
</P>
<P>(14) Gas Water Heaters, Volume I, Storage Water Heaters with Input Ratings of 75,000 BTU per hour or Less—ANSI Z21.10.1 (CSA Group).
</P>
<P>(15) Household Electric Storage Tank Water Heaters—UL 174.
</P>
<P>(16) Household and Similar Electrical Appliances—Part 2-40: Particular Requirements for Electrical Heat Pumps, Air-Conditioners and Dehumidifiers—UL 60335-2-40.
</P>
<P>(17) Smoke Detectors for Fire Protective Signaling Systems—UL 268.
</P>
<P>(18) Single and Multiple Station Carbon Monoxide Alarms—UL 2034.
</P>
<P>(19) Electric Heating Appliances—UL 499.
</P>
<P>(b) <I>Ferrous pipe and fittings.</I> (1) Standard Specification for Pipe, Steel, Black and Hot-Dipped, Zinc-Coated, Welded and Seamless—ASTM A53/A53M.
</P>
<P>(2) Standard Specification for Electric-Resistance-Welded Coiled Steel Tubing for Gas and Fuel Oil Lines—ASTM A539.
</P>
<P>(3) Pipe Threads, General Purpose (Inch)—ANSI/ASME B1.20.1.
</P>
<P>(4) Welding and Seamless Wrought Steel Pipe—ANSI/ASME B36.10.
</P>
<P>(c) <I>Nonferrous pipe, tubing, and fittings.</I> (1) Standard Specification for Seamless Copper Water Tube—ASTM B88.
</P>
<P>(2) Standard Specification for Seamless Copper Tube for Air Conditioning and Refrigeration Field Service—ASTM B280.
</P>
<P>(3) Connectors for Gas Appliances—ANSI Z21.24 (CSA Group).
</P>
<P>(4) Manually Operated Gas Valves for Appliances, Appliance Connector Valves and Hose End Valves—ANSI Z21.15 (CSA Group).
</P>
<P>(5) Standard for Gas Supply Connectors for Manufactured Homes—IAPMO TS 9.
</P>
<P>(6) Standard Specification for General Requirements for Wrought Seamless Copper and Copper-Alloy Tube—ASTM B251.
</P>
<P>(7) Standard Specification for Seamless Copper Pipe, Standard Sizes—ASTM B42.
</P>
<P>(d) <I>Miscellaneous.</I> (1) Factory-Made Air Ducts and Air Connectors—UL 181.
</P>
<P>(2) Closure Systems for use with Rigid Air Ducts and Air Connectors—UL 181A.
</P>
<P>(3) Closure Systems for use with Flexible Air Ducts and Air Connectors—UL 181B.
</P>
<P>(4) Safety Glazing Materials Used in Buildings—Safety Performance Specifications and Methods of Test—ANSI Z97.1.
</P>
<P>(5) Tube Fittings for Flammable and Combustible Fluids, Refrigeration Service, and Marine Use—UL 109.
</P>
<P>(6) Pigtails and Flexible Hose Connectors for LP-Gas—UL 569.
</P>
<P>(7) Roof Jacks for Manufactured Homes and Recreational Vehicles—UL 311.
</P>
<P>(8) Relief Valves for Hot Water Supply Systems—ANSI Z21.22.
</P>
<P>(9) Automatic electrical controls for household and similar use—Part 2-5: Particular requirements for automatic electrical burner control systems—ANSI Z21.20 (CSA Group).
</P>
<P>(10) Automatic Valves for Gas Appliances—ANSI Z21.21 (CSA Group).
</P>
<P>(11) Gas Appliance Thermostats—ANSI Z21.23 (CSA Group).
</P>
<P>(12) Gas Vents—UL 441.
</P>
<P>(13) Installation of Oil-Burning Equipment—NFPA 31.
</P>
<P>(14) National Fuel Gas Code—NFPA 54/ANSI Z223.1.
</P>
<P>(15) Warm Air Heating and Air Conditioning Systems—NFPA 90B.
</P>
<P>(16) Liquefied Petroleum Gases Code—NFPA 58.
</P>
<P>(17) Flares for Tubing—SAE J533.
</P>
<P>(18) Factory Built Chimneys for Residential Type and Building Heating Appliances—UL 103.
</P>
<P>(19) Factory-Built Fireplaces—UL 127.
</P>
<P>(20) Solid-Fuel Type Room Heaters—UL 1482.
</P>
<P>(21) Fireplace Stoves—UL 737.
</P>
<P>(22) Rating of Unitary Air-Conditioning and Air-Source Heat Pump Equipment—ANSI/AHRI Standard 210/240 with Addenda 1 and 2.
</P>
<P>(23) Ventilation and Acceptable Indoor Air Quality in Low-Rise Residential Buildings—ANSI/ASHRAE 62.2.
</P>
<P>(24) Requirements for Gas Connectors for Connection of Fixed Appliances for Outdoor Installation, Park Trailers, and Manufactured (Mobile) Homes to the Gas Supply—AGA No. 3.
</P>
<CITA TYPE="N">[58 FR 55015, Oct. 25, 1993, as amended at 70 FR 72046, Nov. 30, 2005; 78 FR 73987, Dec. 9, 2013; 89 FR 75753, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.704" NODE="24:5.1.2.1.2.8.1.4" TYPE="SECTION">
<HEAD>§ 3280.704   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 3280.705" NODE="24:5.1.2.1.2.8.1.5" TYPE="SECTION">
<HEAD>§ 3280.705   Gas piping systems.</HEAD>
<P>(a) <I>General.</I> The requirements of this section shall govern the installation of all fuel gas piping attached to any manufactured home. The gas piping supply system shall be designed for a pressure not exceeding 14 inch water column (
<FR>1/2</FR> psi) and not less than 7 inch water column (
<FR>1/4</FR> psi). The manufacturer shall indicate in his written installation instructions the design pressure limitations for safe and effective operation of the gas piping system. None of the requirements listed in this section shall apply to the piping supplied as a part of an appliance. All exterior openings around piping, ducts, plenums or vents shall be sealed to resist the entrance of rodents. 
</P>
<P>(b) <I>Materials.</I> All materials used for the installation, extension, alteration, or repair of any gas piping system shall be new and free from defects or internal obstructions. It shall not be permissible to repair defects in gas piping or fittings. Inferior or defective materials shall be removed and replaced with acceptable material. The system shall be made of materials having a melting point of not less than 1,450 F, except as provided in § 3280.705(e). They shall consist of one or more of the materials described in § 3280.705(b) (1) through (4). 
</P>
<P>(1) Steel or wrought-iron pipe shall comply with ASME B36.10 (incorporated by reference, see § 3280.4). Threaded brass pipe in iron pipe sizes may be used. Threaded brass pipe shall comply with ASTM B43. (incorporated by reference, see § 3280.4). 
</P>
<P>(2) Fittings for gas piping shall be wrought iron, malleable iron, steel, or brass (containing not more than 75 percent copper). 
</P>
<P>(3) Copper tubing must be annealed type, Grade K or L, conforming to ASTM B88 (incorporated by reference, see § 3280.4), or must comply with the ASTM B280 (incorporated by reference, see § 3280.4). Copper tubing must be internally tinned.
</P>
<P>(4) Steel tubing must have a minimum wall thickness of 0.032 inch for tubing of 
<FR>1/2</FR> inch diameter and smaller and 0.049 inch for diameters 
<FR>1/2</FR> inch and larger. Steel tubing must be in accordance with ASTM Standard Specification for Electric-Resistance-Welded Coiled Steel Tubing for Gas and Fuel Oil Lines, ASTM A539-1999, and must be externally corrosion protected.
</P>
<P>(5) Corrugated stainless steel tubing (CSST) systems must be listed and installed in accordance with ANSI LC 1 (CSA Group; incorporated by reference, see § 3280.4), and the requirements of this section.
</P>
<P>(c) <I>Piping design.</I> Each manufactured home requiring fuel gas for any purpose shall be equipped with a natural gas piping system acceptable for LP-gas. Where fuel gas piping is to be installed in more than one section of an expandable or multiple unit home, the design and construction of the crossover(s) shall be as follows:
</P>
<P>(1) All points of crossover beneath the transportable sections must be readily accessible from the exterior of the home. In multi-story manufactured homes, the interconnections between stories must be accessible through a panel on the exterior or interior of the manufactured home.
</P>
<P>(2) The connection(s) between units must be made with a connector(s) listed for exterior use or direct plumbing sized in accordance with paragraph (d) of this section. A shutoff valve of the non-displaceable rotor type conforming to ANSI Z21.15 (CSA Group; incorporated by reference, see § 3280.4), suitable for outdoor use must be installed at each crossover point upstream of the connection.
</P>
<P>(3) The connection(s) may be made by a listed quick disconnect device which shall be designed to provide a positive seal of the supply side of the gas system when such device is separated. 
</P>
<P>(4) The flexible connector, direct plumbing pipe, or “quick disconnect” device shall be provided with protection from mechanical and impact damage and located to minimize the possibility of tampering. 
</P>
<P>(5) For gas line cross over connections made with either hard pipe or flexible connectors, the crossover point(s) shall be capped on the supply side to provide a positive seal and covered on the other side with a suitable protective covering. 
</P>
<P>(6) Suitable protective coverings for the connection device(s) when separated, shall be permanently attached to the device or flexible connector. 
</P>
<P>(7) When a quick disconnect device is installed, a 3 inch by 1
<FR>3/4</FR> inch minimum size tag made of etched, metal-stamped or embossed brass, stainless steel, anodized or alcalde aluminum not less than 0.020 inch thick or other approved material (e.g., 0.005 inch plastic laminates) shall be permanently attached on the exterior wall adjacent to the access to the “quick disconnect” device. Each tag shall be legibly inscribed with the following information using letters no smaller than 
<FR>1/4</FR> inch high: 
</P>
<EXTRACT>
<HD3>Do Not Use Tools To Separate the “Quick-Disconnect” Device</HD3></EXTRACT>
<P>(d) <I>Gas pipe sizing.</I> Gas piping systems shall be sized so that the pressure drop to any appliance inlet connection from any gas supply connection, when all appliances are in operation at maximum capacity, is not more than 0.5 inch water column as determined on the basis of test, or in accordance with table 3280.705(d). When determining gas pipe sizing in the table, gas shall be assumed to have a specific gravity of 0.65 and rated at 1000 B.T.U. per cubic foot. The natural gas supply connection(s) shall be not less than the size of the gas piping but shall be not smaller than 
<FR>3/4</FR> inch nominal pipe size.
</P>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Table to paragraph (<E T="01">d</E>)—Maximum Capacity of Different Sizes of Pipe and Tubing in Thousands of Btu/hr of Natural Gas for Gas Pressures of 0.5 psig or Less, and a Maximum Pressure Drop of 
<fr>1/2</fr> in. Water Column
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">ID (in.)
</TH><TH class="gpotbl_colhed" scope="col">10 ft
</TH><TH class="gpotbl_colhed" scope="col">20 ft
</TH><TH class="gpotbl_colhed" scope="col">30 ft
</TH><TH class="gpotbl_colhed" scope="col">40 ft
</TH><TH class="gpotbl_colhed" scope="col">50 ft
</TH><TH class="gpotbl_colhed" scope="col">60 ft
</TH><TH class="gpotbl_colhed" scope="col">70 ft
</TH><TH class="gpotbl_colhed" scope="col">80 ft
</TH><TH class="gpotbl_colhed" scope="col">90 ft
</TH><TH class="gpotbl_colhed" scope="col">100 ft
</TH></TR><TR><TD align="center" class="gpotbl_cell" colspan="11" scope="row"><E T="02">Iron Pipe Sizes—Length</E>
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">
<fr>1/4</fr></TD><TD align="right" class="gpotbl_cell">43</TD><TD align="right" class="gpotbl_cell">29</TD><TD align="right" class="gpotbl_cell">24</TD><TD align="right" class="gpotbl_cell">20</TD><TD align="right" class="gpotbl_cell">18</TD><TD align="right" class="gpotbl_cell">16</TD><TD align="right" class="gpotbl_cell">15</TD><TD align="right" class="gpotbl_cell">14</TD><TD align="right" class="gpotbl_cell">13</TD><TD align="right" class="gpotbl_cell">12
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">
<fr>3/8</fr></TD><TD align="right" class="gpotbl_cell">95</TD><TD align="right" class="gpotbl_cell">65</TD><TD align="right" class="gpotbl_cell">52</TD><TD align="right" class="gpotbl_cell">45</TD><TD align="right" class="gpotbl_cell">40</TD><TD align="right" class="gpotbl_cell">36</TD><TD align="right" class="gpotbl_cell">33</TD><TD align="right" class="gpotbl_cell">31</TD><TD align="right" class="gpotbl_cell">29</TD><TD align="right" class="gpotbl_cell">27
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">
<fr>1/2</fr></TD><TD align="right" class="gpotbl_cell">175</TD><TD align="right" class="gpotbl_cell">120</TD><TD align="right" class="gpotbl_cell">97</TD><TD align="right" class="gpotbl_cell">82</TD><TD align="right" class="gpotbl_cell">73</TD><TD align="right" class="gpotbl_cell">66</TD><TD align="right" class="gpotbl_cell">61</TD><TD align="right" class="gpotbl_cell">57</TD><TD align="right" class="gpotbl_cell">53</TD><TD align="right" class="gpotbl_cell">50
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">
<fr>3/4</fr></TD><TD align="right" class="gpotbl_cell">360</TD><TD align="right" class="gpotbl_cell">250</TD><TD align="right" class="gpotbl_cell">200</TD><TD align="right" class="gpotbl_cell">170</TD><TD align="right" class="gpotbl_cell">151</TD><TD align="right" class="gpotbl_cell">138</TD><TD align="right" class="gpotbl_cell">125</TD><TD align="right" class="gpotbl_cell">118</TD><TD align="right" class="gpotbl_cell">110</TD><TD align="right" class="gpotbl_cell">103
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1</TD><TD align="right" class="gpotbl_cell">680</TD><TD align="right" class="gpotbl_cell">465</TD><TD align="right" class="gpotbl_cell">375</TD><TD align="right" class="gpotbl_cell">320</TD><TD align="right" class="gpotbl_cell">285</TD><TD align="right" class="gpotbl_cell">260</TD><TD align="right" class="gpotbl_cell">240</TD><TD align="right" class="gpotbl_cell">220</TD><TD align="right" class="gpotbl_cell">215</TD><TD align="right" class="gpotbl_cell">195</TD></TR></TABLE></DIV></DIV>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">EHD 
<sup>2</sup></TH><TH class="gpotbl_colhed" scope="col">ID (in.)
</TH><TH class="gpotbl_colhed" scope="col">10 ft
</TH><TH class="gpotbl_colhed" scope="col">20 ft
</TH><TH class="gpotbl_colhed" scope="col">30 ft
</TH><TH class="gpotbl_colhed" scope="col">40 ft
</TH><TH class="gpotbl_colhed" scope="col">50 ft
</TH><TH class="gpotbl_colhed" scope="col">60 ft
</TH><TH class="gpotbl_colhed" scope="col">70 ft
</TH><TH class="gpotbl_colhed" scope="col">80 ft
</TH><TH class="gpotbl_colhed" scope="col">90 ft
</TH><TH class="gpotbl_colhed" scope="col">100 ft
</TH></TR><TR><TD align="center" class="gpotbl_cell" colspan="12" scope="row"><E T="02">Corrugated Stainless Steel Tubing—Length</E> 
<sup>1</sup>
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">13</TD><TD align="right" class="gpotbl_cell">
<fr>3/8</fr></TD><TD align="right" class="gpotbl_cell">31</TD><TD align="right" class="gpotbl_cell">21</TD><TD align="right" class="gpotbl_cell">17</TD><TD align="right" class="gpotbl_cell">14</TD><TD align="right" class="gpotbl_cell">13</TD><TD align="right" class="gpotbl_cell">12</TD><TD align="right" class="gpotbl_cell">11</TD><TD align="right" class="gpotbl_cell">10</TD><TD align="right" class="gpotbl_cell">10</TD><TD align="right" class="gpotbl_cell">9
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">15</TD><TD align="right" class="gpotbl_cell">
<fr>3/8</fr></TD><TD align="right" class="gpotbl_cell">42</TD><TD align="right" class="gpotbl_cell">30</TD><TD align="right" class="gpotbl_cell">24</TD><TD align="right" class="gpotbl_cell">20</TD><TD align="right" class="gpotbl_cell">18</TD><TD align="right" class="gpotbl_cell">16</TD><TD align="right" class="gpotbl_cell">15</TD><TD align="right" class="gpotbl_cell">14</TD><TD align="right" class="gpotbl_cell">13</TD><TD align="right" class="gpotbl_cell">12
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">18</TD><TD align="right" class="gpotbl_cell">
<fr>1/2</fr></TD><TD align="right" class="gpotbl_cell">79</TD><TD align="right" class="gpotbl_cell">56</TD><TD align="right" class="gpotbl_cell">45</TD><TD align="right" class="gpotbl_cell">39</TD><TD align="right" class="gpotbl_cell">36</TD><TD align="right" class="gpotbl_cell">33</TD><TD align="right" class="gpotbl_cell">30</TD><TD align="right" class="gpotbl_cell">28</TD><TD align="right" class="gpotbl_cell">27</TD><TD align="right" class="gpotbl_cell">25
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">19</TD><TD align="right" class="gpotbl_cell">
<fr>1/2</fr></TD><TD align="right" class="gpotbl_cell">91</TD><TD align="right" class="gpotbl_cell">64</TD><TD align="right" class="gpotbl_cell">52</TD><TD align="right" class="gpotbl_cell">45</TD><TD align="right" class="gpotbl_cell">40</TD><TD align="right" class="gpotbl_cell">36</TD><TD align="right" class="gpotbl_cell">35</TD><TD align="right" class="gpotbl_cell">32</TD><TD align="right" class="gpotbl_cell">31</TD><TD align="right" class="gpotbl_cell">29
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">23</TD><TD align="right" class="gpotbl_cell">
<fr>3/4</fr></TD><TD align="right" class="gpotbl_cell">155</TD><TD align="right" class="gpotbl_cell">111</TD><TD align="right" class="gpotbl_cell">92</TD><TD align="right" class="gpotbl_cell">80</TD><TD align="right" class="gpotbl_cell">72</TD><TD align="right" class="gpotbl_cell">65</TD><TD align="right" class="gpotbl_cell">60</TD><TD align="right" class="gpotbl_cell">58</TD><TD align="right" class="gpotbl_cell">55</TD><TD align="right" class="gpotbl_cell">52
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">25</TD><TD align="right" class="gpotbl_cell">
<fr>3/4</fr></TD><TD align="right" class="gpotbl_cell">184</TD><TD align="right" class="gpotbl_cell">132</TD><TD align="right" class="gpotbl_cell">108</TD><TD align="right" class="gpotbl_cell">93</TD><TD align="right" class="gpotbl_cell">84</TD><TD align="right" class="gpotbl_cell">77</TD><TD align="right" class="gpotbl_cell">71</TD><TD align="right" class="gpotbl_cell">66</TD><TD align="right" class="gpotbl_cell">62</TD><TD align="right" class="gpotbl_cell">60
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">30</TD><TD align="right" class="gpotbl_cell">1</TD><TD align="right" class="gpotbl_cell">317</TD><TD align="right" class="gpotbl_cell">222</TD><TD align="right" class="gpotbl_cell">180</TD><TD align="right" class="gpotbl_cell">156</TD><TD align="right" class="gpotbl_cell">138</TD><TD align="right" class="gpotbl_cell">126</TD><TD align="right" class="gpotbl_cell">116</TD><TD align="right" class="gpotbl_cell">108</TD><TD align="right" class="gpotbl_cell">103</TD><TD align="right" class="gpotbl_cell">97
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">31</TD><TD align="right" class="gpotbl_cell">1</TD><TD align="right" class="gpotbl_cell">368</TD><TD align="right" class="gpotbl_cell">258</TD><TD align="right" class="gpotbl_cell">209</TD><TD align="right" class="gpotbl_cell">180</TD><TD align="right" class="gpotbl_cell">161</TD><TD align="right" class="gpotbl_cell">147</TD><TD align="right" class="gpotbl_cell">135</TD><TD align="right" class="gpotbl_cell">127</TD><TD align="right" class="gpotbl_cell">120</TD><TD align="right" class="gpotbl_cell">113
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">37</TD><TD align="right" class="gpotbl_cell">1
<fr>1/4</fr></TD><TD align="right" class="gpotbl_cell">598</TD><TD align="right" class="gpotbl_cell">426</TD><TD align="right" class="gpotbl_cell">350</TD><TD align="right" class="gpotbl_cell">304</TD><TD align="right" class="gpotbl_cell">273</TD><TD align="right" class="gpotbl_cell">250</TD><TD align="right" class="gpotbl_cell">231</TD><TD align="right" class="gpotbl_cell">217</TD><TD align="right" class="gpotbl_cell">205</TD><TD align="right" class="gpotbl_cell">195</TD></TR></TABLE></DIV></DIV>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">OD (in.)
</TH><TH class="gpotbl_colhed" scope="col">10 ft
</TH><TH class="gpotbl_colhed" scope="col">20 ft
</TH><TH class="gpotbl_colhed" scope="col">30 ft
</TH><TH class="gpotbl_colhed" scope="col">40 ft
</TH><TH class="gpotbl_colhed" scope="col">50 ft
</TH><TH class="gpotbl_colhed" scope="col">60 ft
</TH><TH class="gpotbl_colhed" scope="col">70 ft
</TH><TH class="gpotbl_colhed" scope="col">80 ft
</TH><TH class="gpotbl_colhed" scope="col">90 ft
</TH><TH class="gpotbl_colhed" scope="col">100 ft
</TH></TR><TR><TD align="center" class="gpotbl_cell" colspan="11" scope="row"><E T="02">Copper Tubing—Length</E>
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">
<fr>1/4</fr></TD><TD align="right" class="gpotbl_cell">27</TD><TD align="right" class="gpotbl_cell">18</TD><TD align="right" class="gpotbl_cell">15</TD><TD align="right" class="gpotbl_cell">13</TD><TD align="right" class="gpotbl_cell">11</TD><TD align="right" class="gpotbl_cell">10</TD><TD align="right" class="gpotbl_cell">9</TD><TD align="right" class="gpotbl_cell">9</TD><TD align="right" class="gpotbl_cell">8</TD><TD align="right" class="gpotbl_cell">8
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">
<fr>3/8</fr></TD><TD align="right" class="gpotbl_cell">56</TD><TD align="right" class="gpotbl_cell">38</TD><TD align="right" class="gpotbl_cell">31</TD><TD align="right" class="gpotbl_cell">26</TD><TD align="right" class="gpotbl_cell">23</TD><TD align="right" class="gpotbl_cell">21</TD><TD align="right" class="gpotbl_cell">19</TD><TD align="right" class="gpotbl_cell">18</TD><TD align="right" class="gpotbl_cell">17</TD><TD align="right" class="gpotbl_cell">16
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">
<fr>1/2</fr></TD><TD align="right" class="gpotbl_cell">113</TD><TD align="right" class="gpotbl_cell">78</TD><TD align="right" class="gpotbl_cell">62</TD><TD align="right" class="gpotbl_cell">53</TD><TD align="right" class="gpotbl_cell">47</TD><TD align="right" class="gpotbl_cell">43</TD><TD align="right" class="gpotbl_cell">39</TD><TD align="right" class="gpotbl_cell">37</TD><TD align="right" class="gpotbl_cell">34</TD><TD align="right" class="gpotbl_cell">33
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">
<fr>3/4</fr></TD><TD align="right" class="gpotbl_cell">197</TD><TD align="right" class="gpotbl_cell">136</TD><TD align="right" class="gpotbl_cell">109</TD><TD align="right" class="gpotbl_cell">93</TD><TD align="right" class="gpotbl_cell">83</TD><TD align="right" class="gpotbl_cell">75</TD><TD align="right" class="gpotbl_cell">69</TD><TD align="right" class="gpotbl_cell">64</TD><TD align="right" class="gpotbl_cell">60</TD><TD align="right" class="gpotbl_cell">57
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1</TD><TD align="right" class="gpotbl_cell">280</TD><TD align="right" class="gpotbl_cell">193</TD><TD align="right" class="gpotbl_cell">155</TD><TD align="right" class="gpotbl_cell">132</TD><TD align="right" class="gpotbl_cell">117</TD><TD align="right" class="gpotbl_cell">106</TD><TD align="right" class="gpotbl_cell">98</TD><TD align="right" class="gpotbl_cell">91</TD><TD align="right" class="gpotbl_cell">85</TD><TD align="right" class="gpotbl_cell">81
</TD></TR></TABLE></DIV><DIV class="table_foot"><P class="gpotbl_note">
<sup>1</sup> Includes losses for four 90-degree bends and two end fittings. Tubing runs with larger numbers of bend and/or fittings shall be increased by an equivalent length of tubing according to the following equation: <E T="03">L</E> = 1.3<E T="03">n,</E> where <E T="03">L</E> is actual length (ft) of tubing and <E T="03">n</E> is the number of additional fittings and/or bends.
</P><P class="gpotbl_note">
<sup>2</sup> EHD (Equivalent Hydraulic Diameter)—A measure of the hydraulic efficiency between different tubing sizes.</P></DIV></DIV>
<P>(e) <I>Joints for gas pipe.</I> All pipe joints in the piping system, unless welded or brazed, shall be threaded joints that comply with ANSI/ASME B1.20.1 (incorporated by reference, see § 3280.4). Right and left nipples or couplings shall not be used. Unions, if used, shall be of ground joint type. The material used for welding or brazing pipe connections shall have a melting temperature in excess of 1,000  °F.
</P>
<P>(f) <I>Joints for tubing.</I> (1) Tubing joints shall be made with either a single or a double flare of 45 degrees in accordance with SAE J533 (incorporated by reference, see § 3280.4) or with other listed vibration-resistant fittings, or joints may be brazed with material having a melting point exceeding 1,000  °F. Metallic ball sleeve compression-type tubing fittings shall not be used.
</P>
<P>(2) Steel tubing joints shall be made with a double-flare in accordance with SAE J533 (incorporated by reference, see § 3280.4). 
</P>
<P>(g) <I>Pipe joint compound.</I> Screw joints shall be made up tight with listed pipe joint compound, insoluble in liquefied petroleum gas, and shall be applied to the male threads only. 
</P>
<P>(h) <I>Concealed tubing.</I> (1) Copper tubing must not be run inside walls, floors, partitions, or roofs. Corrugated stainless steel tubing (CSST) may be run inside walls, floors, partitions, and roofs under the following conditions:
</P>
<P>(i) The CSST is protected from accidental puncture by a steel strike barrier not less than 0.058 inch thick, or the barrier's equivalent, installed between the tubing and the finished wall and extending 4 inches beyond concealed penetrations of plates, firestops, and wall studs, or specified by the tubing manufacturer's instructions; and
</P>
<P>(ii) The CSST is installed in single runs and is not rigidly secured.
</P>
<P>(2) Where tubing passes through exterior walls, floors, partitions, or similar construction, the tubing must be protected by the use of weather-resistant grommets that snugly fit both the tubing and the hole through which the tubing passes, or protected as specified in the tubing manufacturer's instructions.
</P>
<P>(3) Concealed joints: Piping or tubing joints must not be located in any wall, floor, partition, or similar concealed construction space.
</P>
<P>(i) <I>Concealed joints.</I> Piping or tubing joints shall not be located in any floor, wall partition, or similar concealed construction space. 
</P>
<P>(j) <I>Gas supply connection.</I> When gas appliances are installed, at least one gas supply connection must be provided on each dwelling unit. The connection must not be located beneath an exit door. Where more than one connection is provided, the piping system must be sized to provide adequate capacity from each supply connection. 
</P>
<P>(k) <I>Identification of gas supply connections.</I> Each manufactured home must have permanently affixed to the exterior skin at or near each gas supply connection or the end of the pipe, a tag of 3 inches by 1
<FR>3/4</FR> inches minimum size, made of etched, metal-stamped or embossed brass, stainless steel, anodized or alcalde aluminum not less than 0.020 inch thick, or other approved material [<I>e.g.,</I> 0.005 inch plastic laminates], with the information shown in Figure 1 to this paragraph (k). The connector capacity indicated on this tag must be equal to or greater than the total Btu/hr rating of all intended gas appliances.
</P>
<img src="/graphics/er12ja21.000.gif"/>
<P>(l) <I>LP-gas supply connectors</I>—(1) <I>General.</I> A listed LP-Gas flexible connection conforming to UL 569 (incorporated by reference, see § 3280.4), or equal, must be supplied when LP-Gas cylinder(s) and regulator(s) are supplied.
</P>
<P>(2) <I>Appliance connections.</I> All gas burning appliances shall be connected to the fuel piping. Materials as provided in § 3280.705(b) or listed appliance connectors shall be used. Listed appliance connectors when used shall not run through walls, floors, ceilings or partitions, except for cabinetry, and shall be 3 feet or less in length or 6 feet or less for cooking appliances. Connectors of aluminum shall not be used outdoors. A manufactured home containing a combination LP-natural-gas-system may be provided with a gas outlet to supply exterior appliances when installed in accordance with the following: 
</P>
<P>(i) No portion of the completed installation shall project beyond the wall of the manufactured home. 
</P>
<P>(ii) The outlet must be provided with an approved quick-disconnect device, which must be designed to provide a positive seal on the supply side of the gas system when the appliance is disconnected. A shutoff valve of the non-displaceable rotor type conforming to ANSI Z21.15 (CSA Group; incorporated by reference, see § 3280.4), must be installed immediately upstream of the quick-disconnect device. The complete device must be provided as part of the original installation.
</P>
<P>(iii) Protective caps or plugs for the “quick-disconnect” device, when disconnected, shall be permanently attached to the manufactured home adjacent to the device. 
</P>
<P>(iv) A tag shall be permanently attached to the outside of the exterior wall of the manufactured home as close as possible to the gas supply connection. The tag shall indicate the type of gas and the Btuh capacity of the outlet and shall be legibly inscribed as follows: 
</P>
<EXTRACT>
<P>THIS OUTLET IS DESIGNED FOR USE WITH GAS PORTABLE APPLIANCES WHOSE TOTAL INPUT DO NOT EXCEED ______ BTUH. REPLACE PROTECTIVE COVERING OVER CONNECTOR WHEN NOT IN USE.</P></EXTRACT>
<P>(3) <I>Valves.</I> A shutoff valve must be installed in the fuel piping at each appliance inside the dwelling unit structure or connector in addition to any valve on the appliance and so arranged to be accessible to permit servicing of the appliance and removal of its components. The shutoff valve must be located within 6 feet of any cooking appliance and within 3 feet of any other appliance. A shutoff valve may serve more than one appliance if located as required by this paragraph (l)(3). The shutoff valve must be of the non-displaceable rotor type and conform to ANSI Z21.15 (CSA Group; incorporated by reference, see § 3280.4).
</P>
<P>(4) <I>Gas piping system openings.</I> All openings in the gas piping system shall be closed gas-tight with threaded pipe plugs or pipe caps. 
</P>
<P>(5) <I>Electrical ground.</I> Gas piping shall not be used for an electrical ground. 
</P>
<P>(6) <I>Couplings.</I> Pipe couplings and unions shall be used to join sections of threaded piping. Right and left nipples or couplings shall not be used. 
</P>
<P>(7) <I>Hangers and supports.</I> All horizontal gas piping must be adequately supported by galvanized or equivalently protected metal straps or hangers at intervals of not more than 4 feet, except where adequate support and protection is provided by structural members. Vertical gas piping in multi-story dwelling units must be supported at intervals of not more than 6 feet. Solid iron-pipe connection(s) must be rigidly anchored to a structural member within 6 inches of the supply connection(s).
</P>
<P>(8) <I>Testing for leakage.</I> (i) Before appliances are connected, piping systems must stand a pressure of three ± 0.2 psi gauge for a period of not less than ten minutes without showing any drop in pressure. Pressure must be measured with a mercury manometer or slope gauge calibrated so as to be read in increments of not greater than one-tenth pound, or an equivalent device. The source of normal operating pressure must be isolated before the pressure tests are made. Before a test is begun, the temperature of the ambient air and of the piping must be approximately the same, and constant air temperature must be maintained throughout the test. 
</P>
<P>(ii) After appliances are connected, the piping system shall be pressurized to not less than 10 inches nor more than 14 inches water column and the appliance connections tested for leakage with soapy water or bubble solution. 
</P>
<P>(iii) Where gas piping between transportable sections must be made on site, the installation instructions must contain provisions for onsite testing for leakage consistent with the provisions in paragraph (l)(8)(i) of this section.
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975, as amended at 42 FR 54383, Oct. 5, 1977. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 52 FR 4587, Feb. 12, 1987; 58 FR 55016, Oct. 25, 1993; 70 FR 72050, Nov. 30, 2005; 78 FR 73987, Dec. 9, 2013; 86 FR 2522, Jan. 12, 2021; 89 FR 75754, Sept. 16, 2024] 


</CITA>
</DIV8>


<DIV8 N="§ 3280.706" NODE="24:5.1.2.1.2.8.1.6" TYPE="SECTION">
<HEAD>§ 3280.706   Oil piping systems.</HEAD>
<P>(a) <I>General.</I> The requirements of this section shall govern the installation of all liquid fuel piping attached to any manufactured home. None of the requirements listed in this section shall apply to the piping in the appliance(s). 
</P>
<P>(b) <I>Materials.</I> All materials used for the installation extension, alteration, or repair, of any oil piping systems shall be new and free from defects or internal obstructions. The system shall be made of materials having a melting point of not less than 1,450 F, except as provided in § 280.706(d) and (e). They shall consist of one or more of the materials described in § 3280.706(b) (1) through (4). 
</P>
<P>(1) Steel or wrought-iron pipe shall comply with ANSI/ASME B36.10 (incorporated by reference, see § 3280.4). Threaded copper or brass paper in iron pipe sizes may be used. 
</P>
<P>(2) Fittings for oil piping shall be wrought-iron, malleable iron, steel, or brass (containing not more than 75 percent copper). 
</P>
<P>(3) Copper tubing must be annealed type, Grade K or L conforming to ASTM B88 (incorporated by reference, see § 3280.4), or shall comply with ASTM B280 (incorporated by reference, see § 3280.4).
</P>
<P>(4) Steel tubing shall have a minimum wall thickness of 0.032 inch for diameters up to 
<FR>1/2</FR> inch and 0.049 inch for diameters 
<FR>1/2</FR> inch and larger. Steel tubing shall be constructed in accordance with the Specification for Electric-Resistance-Welded Coiled Steel Tubing for Gas and Field Oil Lines, ASTM, A539-90a, and shall be externally corrosion protected. 
</P>
<P>(c) <I>Size of oil piping.</I> The minimum size of all fuel oil tank piping connecting outside tanks to the appliance shall be no smaller than 
<FR>3/8</FR> inch OD copper tubing or 
<FR>1/4</FR> inch IPS. If No. 1 fuel oil is used with a listed automatic pump (fuel lifter), copper tubing shall be sized as specified by the pump manufacturer. 
</P>
<P>(d) <I>Joints for oil piping.</I> All pipe joints in the piping system, unless welded or brazed, shall be threaded joints which comply with ANSI/ASME B1.20.1 (incorporated by reference, see § 3280.4). The material used for brazing pipe connections shall have a melting temperature in excess of 1,000 °F. 
</P>
<P>(e) <I>Joints for tubing.</I> Joints in tubing shall be made with either a single or double flare of the proper degree, as recommended by the tubing manufacturer, by means of listed tubing fittings, or brazed with materials having a melting point in excess of 1,000 F. 
</P>
<P>(f) <I>Pipe joint compound.</I> Threaded joints shall be made up tight with listed pipe joint compound which shall be applied to the male threads only. 
</P>
<P>(g) <I>Couplings.</I> Pipe couplings and unions shall be used to join sections of threaded pipe. Right and left nipples or couplings shall not be used. 
</P>
<P>(h) <I>Grade of piping.</I> Fuel oil piping installed in conjunction with gravity feed systems to oil heating equipment shall slope in a gradual rise upward from a central location to both the oil tank and the appliance in order to eliminate air locks. 
</P>
<P>(i) <I>Strap hangers.</I> All oil piping shall be adequately supported by galvanized or equivalently protected metal straps or hangers at intervals of not more than 4 feet, except where adequate support and protection is provided by structural members. Solid-iron-pipe oil supply connection(s) shall be rigidly anchored to a structural member within 6 inches of the supply connection(s). 
</P>
<P>(j) <I>Testing Tag.</I> A tag must be affixed to each oil-fired appliance stating: “Before setting the system in operation, tank installations and piping must be checked for oil leaks with fuel oil of the same grade that will be burned in the appliance. No other material may be used for testing fuel oil tanks and piping. Tanks must be filled to maximum capacity for the final check for oil leakage.”
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 52 FR 4588, Feb. 12, 1987; 58 FR 55017, Oct. 25, 1993; 70 FR 72050, Nov. 30, 2005; 78 FR 73988, Dec. 9, 2013; 89 FR 75754, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.707" NODE="24:5.1.2.1.2.8.1.7" TYPE="SECTION">
<HEAD>§ 3280.707   Heat producing appliances.</HEAD>
<P>(a) Heat producing appliances and vents, roof jacks and chimneys necessary for their installation in manufactured homes must be listed or certified for residential use by a nationally recognized testing agency. 
</P>
<P>(1) A manufactured home shall be provided with a comfort heating system. 
</P>
<P>(i) When a manufactured home is manufactured to contain a heating appliance, the heating appliance shall be installed by the manufacturer of the manufactured home in compliance with applicable sections of this subpart.
</P>
<P>(ii) When a manufactured home is manufactured for field application of an external heating or combination heating/cooling appliance, preparation of the manufactured home for this external application shall comply with the applicable sections of this part.
</P>
<P>(2) Each gas and oil burning comfort heating appliance must have an Annual Fuel Utilization Efficiency of not less than that specified in 10 CFR part 430, Energy Conservation Program for Consumer Products: Test Procedures for Furnaces/Boilers, Vented Home Heating Equipment and Pool Heaters.
</P>
<P>(b) Fuel-burning heat-producing appliances and refrigeration appliances, except ranges and ovens, shall be of the vented type and vented to the outside. 
</P>
<P>(c) Fuel-burning appliances shall not be converted from one fuel to another fuel unless converted in accordance with the terms of their listing and the appliance manufacturer's instructions. 
</P>
<P>(d) <I>Performance efficiency.</I> Each automatic storage water heater must comply with the efficiency requirements of 10 CFR part 430, Energy Conservation Program for Consumer Products: Energy Conservation Standards for Water Heaters.
</P>
<P>(1) All automatic electric storage water heaters installed in manufactured homes shall have a standby loss not exceeding 43 watts/meter
<SU>2</SU> (4 watts/ft
<SU>2</SU>) of tank surface area. The method of test for standby loss shall be as described in section 4.3.1 of Household Automatic Electric Storage Type Water Heaters, ANSI C72.1-1972. 
</P>
<P>(2) All gas and oil-fired automatic storage water heaters shall have a recovery efficiency, E, and a standby loss, S, as described below. The method of test of E and S shall be as described in section 2.7 of Gas Water heaters, Vol. I, Storage Water Heaters with Input/Ratings of 75,000 BTU per hour or less, ANSI Z21.10.1 (CSA Group; incorporated by reference, see § 3280.4), except that for oil-fired units. CF = 1.0, Q = total gallons of oil consumed and H = total heating value of oil in BTU/gallon.
</P>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Table 1 to Paragraph <E T="01">(d)</E>(2)
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Storage capacity in gallons
</TH><TH class="gpotbl_colhed" scope="col">Recovery efficiency
</TH><TH class="gpotbl_colhed" scope="col">Standby loss
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Less than 25</TD><TD align="left" class="gpotbl_cell">At least 75 percent</TD><TD align="left" class="gpotbl_cell">Not more than 7.5 percent.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">25 up to 35</TD><TD align="left" class="gpotbl_cell">00</TD><TD align="left" class="gpotbl_cell">Not more than 7 percent.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">35 or more</TD><TD align="left" class="gpotbl_cell">00</TD><TD align="left" class="gpotbl_cell">Not more than 6 percent.</TD></TR></TABLE></DIV></DIV>
<P>(e) Each space heating, cooling or combination heating and cooling system shall be provided with at least one readily adjustable automatic control for regulation of living space temperature. The control shall be placed a minimum of 3 feet from the vertical edge of the appliance compartment door. It shall not be located on an exterior wall or on a wall separating the appliance compartment from a habitable room.
</P>
<P>(f) <I>Oil-fired heating equipment.</I> All oil-fired heating equipment must conform to UL 307A (incorporated by reference, see § 3280.4) and be installed in accordance with NFPA 31 (incorporated by reference, see § 3280.4). Regardless of the requirements of the above-referenced standards, or any other standards referenced in this part, the following are not required:
</P>
<P>(1) External switches or remote controls which shut off the burner or the flow of oil to the burner, or
</P>
<P>(2) An emergency disconnect switch to interrupt electric power to the equipment under conditions of excessive temperature.
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 17, 1975, as amended at 42 FR 54383, Oct. 5, 1977. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 47 FR 49391, Nov. 1, 1982; 52 FR 4588, Feb. 12, 1987; 52 FR 47553, Dec. 15, 1987; 58 FR 55017, Oct. 25, 1993; 70 FR 72050, Nov. 30, 2005; 78 FR 73988, Dec. 9, 2013; 89 FR 75754, Sept. 16, 2024] 


</CITA>
</DIV8>


<DIV8 N="§ 3280.708" NODE="24:5.1.2.1.2.8.1.8" TYPE="SECTION">
<HEAD>§ 3280.708   Exhaust duct system and provisions for the future installation of a clothes dryer.</HEAD>
<P>(a) <I>Clothes dryers.</I>  (1) All gas and electric clothes dryers must be exhausted to the outside by a moisture/lint exhaust duct and termination fitting. When the manufacturer supplies the clothes dryer, the exhaust duct and termination fittings must be completely installed by the manufacturer. If the exhaust duct system is subject to damage during transportation, or a field connection between transportable sections is required, complete factory installation of the exhaust duct system is not required when the following apply: 
</P>
<P>(i) The exhaust duct system is connected to the clothes dryer, and
</P>
<P>(ii) A moisture lint exhaust duct system is roughed in and installation instructions are provided in accordance with paragraph (b)(3) or (c) of this section.
</P>
<P>(2) A clothes dryer moisture-lint exhaust duct shall not be connected to any other duct, vent or chimney. 
</P>
<P>(3) The exhaust duct shall not terminate beneath the manufactured home. 
</P>
<P>(4) Moisture-lint exhaust ducts shall not be connected with sheet metal screws or other fastening devices which extend into the interior of the duct. 
</P>
<P>(5) Moisture-lint exhaust duct and termination fittings shall be installed in accordance with the appliance manufacturer's printed instructions.
</P>
<P>(b) <I>Provisions for future installation of a gas clothes dryer.</I> A manufactured home may be provided with “stubbed in” equipment at the factory to supply a gas clothes dryer for future installation by the owner provided it complies with the following provisions:
</P>
<P>(1) The “stubbed in” gas outlet shall be provided with a shutoff valve, the outlet of which is closed by threaded pipe plug or cap;
</P>
<P>(2) The “stubbed in” gas outlet shall be permanently labeled to identify it for use only as the supply connection for a gas clothes dryer;
</P>
<P>(3) A moisture lint duct system consisting of a complete access space (hole) through the wall or floor cavity with a cap or cover on the interior and exterior of the cavity secured in such a manner that they can be removed by a common household tool shall be provided. The cap or cover in place shall limit air infiltration and be designed to resist the entry of water or rodents. The manufacturer is not required to provide the moisture-lint exhaust duct or the termination fitting. The manufacturer shall provide written instructions to the owner on how to complete the exhaust duct installation in accordance with provisions of § 3280.708(a)(1) through (5). 
</P>
<P>(c) <I>Provisions for future installation of electric clothes dryers.</I> When wiring is installed to supply an electric clothes dryer for future installation by the owner, the manufacturer shall: 
</P>
<P>(1) Provide a roughed in moisture-lint exhaust duct system consisting of a complete access space (hole) through the wall or floor cavity with a cap or cover on the interior and exterior of the cavity which are secured in such a manner that they can be removed by the use of common household tools. The cap or cover in place shall limit air filtration and be designed to resist the entry of water or rodents into the home. The manufacturer is not required to provide the moisture-lint exhaust duct or the termination fitting; 
</P>
<P>(2) Install a receptacle for future connection of the dryer; 
</P>
<P>(3) Provide written instructions on how to complete the exhaust duct installation in accordance with the provisions of paragraphs (a)(1) through (5) of this section. 
</P>
<CITA TYPE="N">[42 FR 54383, Oct. 5, 1977. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 58 FR 55018, Oct. 25, 1993; 86 FR 2522, Jan. 12, 2021] 




</CITA>
</DIV8>


<DIV8 N="§ 3280.709" NODE="24:5.1.2.1.2.8.1.9" TYPE="SECTION">
<HEAD>§ 3280.709   Installation of appliances.</HEAD>
<P>(a) The installation of each appliance must conform to the terms of its listing and the manufacturer's instructions. Every appliance must be secured in place to avoid displacement. For the purpose of servicing and replacement, each appliance must be both accessible and removable.
</P>
<P>(1) A direct vent space heating appliance is permitted to be shipped loose for on-site installation in a basement provided the following:
</P>
<P>(i) The heating appliance is listed for the installation.
</P>
<P>(ii) Approved installation instructions are provided that include requirements for completion of all gas and electrical connections and provide for the manufacturer's inspection and/or testing of all connections.
</P>
<P>(iii) Approved instructions are provided to assure connection of the vent and combustion air systems in accordance with § 3280.710(b), and to provide for the manufacturer's inspection of the systems for compliance.
</P>
<P>(iv) Approved installation and the manufacturer's inspection procedures are provided for the connection of the site-installed heating appliance to the factory-installed circulation air system and return air systems.
</P>
<P>(2) The procedures must include revisions to assure compliance of the installed systems with § 3280.715.
</P>
<P>(b) Heat-producing appliances shall be so located that no doors, drapes, or other such material can be placed or swing closer to the front of the appliance than the clearances specified on the labeled appliances. 
</P>
<P>(c) Clearances surrounding heat producing appliances shall not be less than the clearances specified in the terms of their listings. 
</P>
<P>(1) Prevention of storage. The area surrounding heat producing appliances installed in areas with interior or exterior access shall be framed-in or guarded with noncombustible material such that the distance from the appliance to the framing or guarding material is not greater than three inches unless the appliance is installed in compliance with paragraph (c)(2), of this section. When clearance required by the listing is greater than three inches, the guard or frame shall not be closer to the appliance than the distance provided in the listing. 
</P>
<P>(2) Clearance spaces surrounding heat producing appliances are not required to be framed-in or guarded when: 
</P>
<P>(i) A space is designed specifically for a clothes washer or dryer;
</P>
<P>(ii) Dimensions surrounding the appliance do not exceed three inches; or
</P>
<P>(iii) The manufacturer affixes either to a side of an alcove or compartment containing the appliance, or to the appliance itself, in a clearly visible location, a 3″ × 5″ adhesive backed plastic laminated label or the equivalent which reads as follows:
</P>
<EXTRACT>
<HD3>“Warning”
</HD3>
<P>This compartment is not to be used as a storage area. Storage of combustible materials or containers on or near any appliance in this compartment may create a fire hazard. Do not store such materials or containers in this compartment.</P></EXTRACT>
<P>(d) All fuel-burning appliances, except ranges, ovens, illuminating appliances, clothes dryers, solid fuel-burning fireplaces and solid fuel-burning fireplace stoves, shall be installed to provide for the complete separation of the combustion system from the interior atmosphere of the manufactured home. Combustion air inlets and flue gas outlets shall be listed or certified as components of the appliance. The required separation may be obtained by: 
</P>
<P>(1) The installation of direct vent system (sealed combustion system) appliances, or 
</P>
<P>(2) The installation of appliances within enclosures so as to separate the appliance combustion system and venting system from the interior atmosphere of the manufactured home. There shall not be any door, removable access panel, or other opening into the enclosure from the inside of the manufactured home. Any opening for ducts, piping, wiring, etc., shall be sealed. 
</P>
<P>(e) A forced air appliance and its return-air system shall be designed and installed so that negative pressure created by the air-circulating fan cannot affect its or another appliance's combustion air supply or act to mix products of combustion with circulating air. 
</P>
<P>(1) The air circulating fan of a furnace installed in an enclosure with another fuel-burning appliance shall be operable only when any door or panel covering an opening in the furnace fan compartment or in a return air plenum or duct is in the closed position. This does not apply if both appliances are direct vent system (sealed combustion system) appliances. 
</P>
<P>(2) If a warm air appliance is installed within an enclosure to conform to § 3280.709(d)(2), each warm-air outlet and each return air inlet shall extend to the exterior of the enclosure. Ducts, if used for that purpose, shall not have any opening within the enclosure and shall terminate at a location exterior to the enclosure. 
</P>
<P>(3) Cooling coils installed as a portion of, or in connection with, any forced-air furnace shall be installed on the downstream side unless the furnace is specifically otherwise listed. 
</P>
<P>(4) An air conditioner evaporator section shall not be located in the air discharge duct or plenum of any forced-air furnace unless the manufactured home manufacturer has complied with certification required in § 3280.511. 
</P>
<P>(5) If a cooling coil is installed with a forced-air furnace, the coil shall be installed in accordance with its listing. When a furnace-coil unit has a limited listing, the installation must be in accordance with that listing. 
</P>
<P>(6) When an external heating appliance or combination cooling/heating appliance is to be field installed, the home manufacturer shall make provision for proper location of the connections to the supply and return air systems. The manufacturer is not required to provide said appliance(s). The preparation by the manufacturer for connection to the home's supply and return air system shall include all fittings and connection ducts to the main duct and return air system such that the installer is only required to provide: 
</P>
<P>(i) The appliance; 
</P>
<P>(ii) Any appliance connections to the home; and 
</P>
<P>(iii) The connecting duct between the external appliance and the fitting installed on the home by the manufacturer. The above connection preparations by the manufacturer do not apply to supply or return air systems designed only to accept external cooling (i.e., self contained air conditioning systems, etc.) 
</P>
<P>(7) The installation of a self contained air conditioner comfort cooling appliance shall meet the following requirements:
</P>
<P>(i) The installation on a duct common with an installed heating appliance shall require the installation of an automatic damper or other means to prevent the cooled air from passing through the heating appliance unless the heating appliance is certified or listed for such application and the supply system is intended for such an application. 
</P>
<P>(ii) The installation shall prevent the flow of heated air into the external cooling appliance and its connecting ducts to the manufactured home supply and return air system during the operation of the heating appliance installed in the manufactured home. 
</P>
<P>(iii) The installation shall prevent simultaneous operation of the heating and cooling appliances. 
</P>
<P>(f) <I>Vertical clearance above cooking top.</I> Ranges shall have a vertical clearance above the cooking top of not less than 24 inches. (See § 3280.204). 
</P>
<P>(g) Solid fuel burning fireplaces and fireplace stoves listed for residential use may be installed in manufactured homes provided they and their installation conform to paragraphs (g)(1)(i) through (vii) of this section. A fireplace or fireplace stove is not to be considered as a heating facility for determining compliance with subpart F of this part. 
</P>
<P>(1) A solid fuel-burning fireplace or fireplace stove shall be equipped with integral door(s) or shutter(s) designed to close the fireplace or fireplace stove fire chamber opening and shall include complete means for venting through the roof, a combustion air inlet, a hearth extension, and means to securely attach the fireplace or the fireplace stove to the manufactured home structure. The installation shall conform to the following paragraphs (g)(1) (i) to (vii) inclusive: 
</P>
<P>(i) A listed factory-built chimney designed to be attached directly to the fireplace or fireplace stove shall be used. The listed factory built chimney shall be equipped with and contain as part of its listing a termination device(s) and a spark arrester(s). 
</P>
<P>(ii) A fireplace or fireplace stove, air intake assembly, hearth extension and the chimney shall be installed in accordance with the terms of their listings and their manufacturer's instructions. 
</P>
<P>(iii) The combustion air inlet shall conduct the air directly into the fire chamber and shall be designed to prevent material from the hearth dropping onto the area beneath the manufactured home. 
</P>
<P>(iv) The fireplace or fireplace stove shall not be installed in a sleeping room. 
</P>
<P>(v) Hearth extension shall be of noncombustible material not less than 
<FR>3/8</FR>-inch thick. The hearth shall extend at least 16 inches in front or and at least 8 inches beyond each side of the fireplace or fireplace stove opening. Furthermore the hearth shall extend over the entire surface beneath a fireplace stove and beneath an elevated or overhanging fireplace. 
</P>
<P>(vi) The label on each solid fuel-burning fireplace and solid fuel-burning fireplace stove shall include the following wording: For use with solid fuel only. 
</P>
<P>(vii) The chimney shall extend at least three feet above the part of the roof through which it passes and at least two feet above the highest elevation of any part of the manufactured home within 10 feet of the chimney. Portions of the chimney and termination that exceed an elevation of 13
<FR>1/2</FR> ft. above ground level may be designed to be removed for transporting the manufactured home. 
</P>
<P>(2) [Reserved]
</P>
<P>(h) A corrosion-resistant water drip collection and drain pan must be installed under each storage tank-type water heater or a hot water storage tank that will allow water leaking from the water heater to drain to the exterior of the manufactured home, or to a drain.
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 44 FR 66195, Nov. 19, 1979; 58 FR 55018, Oct. 25, 1993; 70 FR 72050, Nov. 30, 2005; 86 FR 2523, Jan. 12, 2021; 89 FR 75755, Sept. 16, 2024] 


</CITA>
</DIV8>


<DIV8 N="§ 3280.710" NODE="24:5.1.2.1.2.8.1.10" TYPE="SECTION">
<HEAD>§ 3280.710   Venting, ventilation and combustion air.</HEAD>
<P>(a) The venting as required by § 3280.707(b) shall be accomplished by one or more of the methods given in (a)(1) and (2) of this section: 
</P>
<P>(1) An integral vent system listed or certified as part of the appliance. 
</P>
<P>(2) A venting system consisting entirely of listed components, including roof jack, installed in accordance with the terms of the appliance listing and the appliance manufacturer's instructions. 
</P>
<P>(b) Venting and combustion air systems shall be installed in accordance with the following: 
</P>
<P>(1) Components shall be securely assembled and properly aligned at the factory in accordance with the appliance manufacturer's instructions except vertical or horizontal sections of a fuel fired heating appliance venting system that extend beyond the roof line or outside the wall line may be installed at the site. Sectional venting systems shall be listed for such applications and installed in accordance with the terms of their listings and manufacturers' instructions. In cases where sections of the venting system are removed for transportation, a label shall be permanently attached to the appliance indicating the following: 
</P>
<EXTRACT>
<P>Sections of the venting system have not been installed. Warning-do not operate the appliance until all sections have been assembled and installed in accordance with the manufacturer's instructions.</P></EXTRACT>
<P>(2) Draft hood connectors shall be firmly attached to draft hood outlets or flue collars by sheet metal screws or by equivalent effective mechanical fasteners. 
</P>
<P>(3) Every joint of a vent, vent connector, exhaust duct and combustion air intake shall be secure and in alignment. 
</P>
<P>(c) Venting systems shall not terminate underneath a manufactured home. 
</P>
<P>(d) Venting systems of fuel-burning appliances must terminate at least three feet above any motor-driven air intake discharging into habitable rooms when located within ten feet of the air intake.
</P>
<P>(e) The area in which cooking appliances are located shall be ventilated by a metal duct which may be single wall, not less than 12.5 square inches in cross-sectional area (minimum dimension shall be two inches) located above the appliance(s) and terminating outside the manufactured home, or by listed mechanical ventilating equipment discharging outside the home, that is installed in accordance with the terms of listing and the manufacturer's instructions. Gravity or mechanical ventilation shall be installed within a horizontal distance of not more than ten feet from the vertical front of the appliance(s). 
</P>
<P>(f) Mechanical ventilation which exhausts directly to the outside atmosphere from the living space of a home shall be equipped with an automatic or manual damper. Operating controls shall be provided such that mechanical ventilation can be separately operated without directly energizing other energy consuming devices. 
</P>
<CITA TYPE="N">[49 FR 32012, Aug. 9, 1984, as amended at 58 FR 55018, Oct. 25, 1993; 86 FR 2523, Jan. 12, 2021]


</CITA>
</DIV8>


<DIV8 N="§ 3280.711" NODE="24:5.1.2.1.2.8.1.11" TYPE="SECTION">
<HEAD>§ 3280.711   Instructions.</HEAD>
<P>Operating instructions for each appliance must be provided with the homeowner's manual. An additional copy of the operating instructions must be provided with each appliance unless the appliance is affixed with a permanent Quick Response (QR) Code.
</P>
<CITA TYPE="N">[89 FR 75755, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.712" NODE="24:5.1.2.1.2.8.1.12" TYPE="SECTION">
<HEAD>§ 3280.712   Marking.</HEAD>
<P>(a) Information on clearances, input rating, lighting and shutdown shall be attached to the appliances with the same permanence as the nameplate, and so located that it is easily readable when the appliance is properly installed or shutdown for transporting of manufactured home. 
</P>
<P>(b) Each fuel-burning appliance shall bear permanent marking designating the type(s) of fuel for which it is listed. 


</P>
</DIV8>


<DIV8 N="§ 3280.713" NODE="24:5.1.2.1.2.8.1.13" TYPE="SECTION">
<HEAD>§ 3280.713   Accessibility.</HEAD>
<P>Every appliance shall be accessible for inspection, service, repair, and replacement without removing permanent construction. For those purposes, inlet piping supplying the appliance shall not be considered permanent construction. Sufficient room shall be available to enable the operator to observe the burner, control, and ignition means while starting the appliance. 
</P>
<CITA TYPE="N">[58 FR 55018, Oct. 25, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 3280.714" NODE="24:5.1.2.1.2.8.1.14" TYPE="SECTION">
<HEAD>§ 3280.714   Appliances, cooling.</HEAD>
<P>(a) Every air conditioning unit or a combination air conditioning and heating unit shall be listed or certified by a nationally recognized testing agency for the application for which the unit is intended and installed in accordance with the terms of its listing. 
</P>
<P>(1) Mechanical air conditioners shall be rated in accordance with the ANSI/AHRI Standard 210/240 with Addenda 1 and 2 (incorporated by reference, see § 3280.4) and certified by AHRI or other nationally recognized testing agency capable of providing follow-up service.
</P>
<P>(i) Electric motor-driven unitary air-cooled air conditioners and heat pumps in the cooling mode with rated capacity less than 65,000 BTU/hour (19,045 watts), when rated at AHRI standard rating conditions in ANSI/AHRI Standard 210/240 with Addenda 1 and 2 (incorporated by reference, see § 3280.4), must have seasonal energy efficiency (SEER) values not less than as specified in 10 CFR part 430, Energy Conservation Program for Consumer Products: Central Air Conditioners and Heat Pumps Energy Conservation Standards.
</P>
<P>(ii) Heat pumps must be certified to comply with all requirements of the ANSI/AHRI Standard 210/240 with Addenda 1 and 2 (incorporated by reference, see § 3280.4). Electric motor-driven vapor compression heat pumps with supplemental electrical resistance heat must be sized to provide by compression at least 60 percent of the calculated annual heating requirements for the manufactured home being served. A control must be provided and set to prevent operation of supplemental electrical resistance heat at outdoor temperatures above 40 °F (4 °C), except for defrost conditions. Electric motor-driven vapor compression heat pumps with supplemental electric resistance heat conforming to ANSI/AHRI Standard 210/240 with Addenda 1 and 2, must have Heating Season Performance Factor (HSPF) efficiencies not less than as specified in the 10 CFR part 430, Energy Conservation Program for Consumer Products: Central Air Conditioners and Heat Pumps Energy Conservation Standards.
</P>
<P>(iii) Electric motor-driven vapor compression heat pumps with supplemental electric resistance heat conforming to ANSI/AHRI Standard 210/240 with Addenda 1 and 2 (incorporated by reference, see § 3280.4), shall show coefficient of performance ratios not less than shown below:
</P>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Table 1 to Paragraph <E T="01">(a)(1)(iii)</E>—COP
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Temperature degrees Fahrenheit
</TH><TH class="gpotbl_colhed" scope="col">Coefficient of


<br/>performance
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">47</TD><TD align="right" class="gpotbl_cell">2.5
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">17</TD><TD align="right" class="gpotbl_cell">1.7
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">0</TD><TD align="right" class="gpotbl_cell">1.0</TD></TR></TABLE></DIV></DIV>
<P>(2) Gas fired absorption air conditioners must be listed or certified in accordance with ANSI Z21.40.1, (CSA Group; incorporated by reference, see § 3280.4), and certified by a nationally recognized testing agency capable of providing follow-up service.
</P>
<P>(3) Direct refrigerating systems serving any air conditioning or comfort-cooling system installed in a manufactured home shall employ a type of refrigerant that ranks no lower than Group 5 in the Underwriters' Laboratories, Inc. “Classification of Comparative Life Hazard of Various Chemicals.” 
</P>
<P>(4) When a cooling or heat pump coil and air conditioner blower are installed with a furnace or heating appliance, they shall be tested and listed in combination for heating and safety performance by a nationally recognized testing agency. 
</P>
<P>(5) Cooling or heat pump indoor coils and outdoor sections shall be certified, listed and rated in combination for capacity and efficiency by a nationally recognized testing agency(ies). Rating procedures shall be based on U.S. Department of Energy test procedures. 
</P>
<P>(b) <I>Installation and instructions.</I> (1) The installation of each appliance shall conform to the terms of its listing as specified on the appliance and in the manufacturer's instructions. The installer shall include the manufacturer's installation instructions in the manufactured home. Appliances shall be secured in place to avoid displacement and movement from vibration and road shock. 
</P>
<P>(2) Operating instructions shall be provided with the appliance. 
</P>
<P>(c) Fuel-burning air conditioners shall also comply with § 280.707. 
</P>
<P>(d) The appliance rating plate shall be so located that it is easily readable when the appliance is properly installed. 
</P>
<P>(e) Every installed appliance shall be accessible for inspection, service, repair and replacement without removing permanent construction. 
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 58 FR 55018, Oct. 25, 1993; 70 FR 72051, Nov. 30, 2005; 78 FR 73989, Dec. 9, 2013; 89 FR 75755, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.715" NODE="24:5.1.2.1.2.8.1.15" TYPE="SECTION">
<HEAD>§ 3280.715   Circulating air systems.</HEAD>
<P>(a) <I>Supply system.</I> (1) Supply air ducts, fittings, and any dampers contained there-in must be made of galvanized steel, tin-plated steel, or aluminum, or must be listed as Class 0 or Class 1 air ducts in accordance with UL 181 (incorporated by reference, see § 3280.4). Air ducts and air connectors located within three feet of the furnace discharge must be rated to withstand the maximum air discharge temperature of the equipment. Air connectors must not be used for exterior manufactured home duct connections. A duct system integral with the structure must be of durable construction that can be demonstrated to be equally resistant to fire and deterioration as required by this section. Ducts constructed of sheet metal must be in accordance with the following table:
</P>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Table 1 to Paragraph <E T="01">(a)</E>(1)—Minimum Metal Thickness for Ducts 
<sup>1</sup>
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Duct type
</TH><TH class="gpotbl_colhed" scope="col">Diameter 14 in.


<br/>or less
</TH><TH class="gpotbl_colhed" scope="col">Width over


<br/>14 in.
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Round</TD><TD align="right" class="gpotbl_cell">0.013</TD><TD align="right" class="gpotbl_cell">0.016
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Enclosed rectangular</TD><TD align="right" class="gpotbl_cell">0.013</TD><TD align="right" class="gpotbl_cell">0.016
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Exposed rectangular</TD><TD align="right" class="gpotbl_cell">0.016</TD><TD align="right" class="gpotbl_cell">0.019
</TD></TR></TABLE></DIV><DIV class="table_foot"><P class="gpotbl_note">
<sup>1</sup> When “nominal” thickness are specified, 0.003 in. shall be added to these “minimum” metal thicknesses.</P></DIV></DIV>
<P>(2) <I>Sizing of ducts for heating.</I> (i) Ducts shall be so designed that when a labeled forced-air furnace is installed and operated continuously at its normal heating air circulating rate in the manufactured home, with all registers in the full open position, the static pressure measured in the casing shall not exceed 90% of that shown on the label of the appliance. For upflow furnaces the static pressure shall be taken in the duct plenum. For external heating or combination heating/cooling appliances the static pressure shall be taken at the point used by the agency listing or certifying the appliance. 
</P>
<P>(ii) When an evaporator-coil specifically designed for the particular furnace is installed between the furnace and the duct plenum, the total static pressure shall be measured downstream of the coil in accordance with the appliance label and shall not exceed 90 percent of that shown on the label of the appliance. 
</P>
<P>(iii) When any other listed air-cooler coil is installed between the furnace and the duct plenum, the total static pressure shall be measured between the furnace and the coil and it shall not exceed 90 percent of that shown on the label of the furnace. 
</P>
<P>(iv) The minimum dimension of any branch duct shall be at least 1
<FR>1/2</FR> inches, and of any main duct, 2
<FR>1/2</FR> inches. 
</P>
<P>(3) <I>Sizing of ducts.</I> (i) The manufactured home manufacturer shall certify the capacity of the air cooling supply duct system for the maximum allowable output of ARI certified central air conditioning systems. The certification shall be at operating static pressure of 0.3 inches of water or greater. (See § 3280.511). 
</P>
<P>(ii) The refrigerated air cooling supply duct system including registers must be capable of handling at least 300 cfm per 10,000 btuh with a static pressure no greater than 0.3 inches of water when measured at room temperature. In the case of application of external self contained comfort cooling appliances or the cooling mode of combination heating/cooling appliances, either the external ducts between the appliance and the manufactured home supply system shall be considered part of, and shall comply with the requirements for the refrigerated air cooling supply duct system, or the connecting duct between the external appliance and the mobile supply duct system shall be a part of the listed appliance. The minimum dimension of any branch duct shall be at least 1
<FR>1/2</FR> inches, and of any main duct, 2
<FR>1/2</FR> inches. 
</P>
<P>(4) <I>Airtightness of supply duct systems.</I> A supply duct system shall be considered substantially airtight when the static pressure in the duct system, with all registers sealed and with the furnace air circulator at high speed, is at least 80 percent of the static pressure measured in the furnace casing, with its outlets sealed and the furnace air circulator operating at high speed. For the purpose of this paragraph and § 3280.715(b) pressures shall be measured with a water manometer or equivalent device calibrated to read in increments not greater than 
<FR>1/10</FR> inch water column. 
</P>
<P>(5) <I>Expandable or multiple manufactured home connections.</I> (i) An expandable or multiple manufactured home may have ducts of the heating system installed in the various units. The points of connection must be so designed and constructed that when the manufactured home is fully expanded or coupled, the resulting duct joint will conform to the requirements of this part.
</P>
<P>(ii) The manufacturer must provide installation instructions for supporting, mechanically fastening, sealing, and insulating each crossover duct. The instructions must indicate that no portion of the crossover duct is to be in contact with the ground, and must describe the means to support the duct without compressing the insulation and restricting airflow.
</P>
<P>(6) Air supply ducts shall be insulated with material having an effective thermal resistance (R) of not less than 4.0 unless they are within manufactured home insulation having a minimum effective value of R-4.0 for floors or R-6.0 for ceilings. 
</P>
<P>(7) Unless installed in a basement, supply and return ducts, fittings, and crossover duct plenums exposed directly to outside air, such as those under-chassis crossover ducts or ducts connecting external heating, cooling, or combination heating/cooling appliances, must be insulated with material having a minimum thermal resistance of R-8 in all Thermal Zones. All such insulating materials must have a continuous vapor barrier retarder having a perm rating of not more than 1 perm. Where ducts are exposed underneath the manufactured home, they must comply with paragraph (a)(5)(ii) of this section, and shall be listed for exterior use.
</P>
<P>(b) <I>Return air systems</I>—(1) <I>Return air openings.</I> Provisions shall be made to permit the return of circulating air from all rooms and living spaces, except toilet room(s), to the circulating air supply inlet of the furnace. 
</P>
<P>(2) <I>Duct material.</I> Return ducts and any diverting dampers contained therein shall be in accordance with the following:
</P>
<P>(i) Portions of return ducts directly above the heating surfaces, or closer than 2 feet from the outer jacket or casing of the furnace shall be constructed of metal in accordance with § 3280.715(a)(1) or shall be listed Class 0 or Class 1 air ducts. 
</P>
<P>(ii) Return ducts, except as required by paragraph (a) of this section, shall be constructed of one-inch (nominal) wood boards (flame spread classification of not more than 200), other suitable material no more flammable than one-inch board or in accordance with § 3280.715(a)(1). 
</P>
<P>(iii) The interior of combustible ducts shall be lined with noncombustible material at points where there might be danger from incandescent particles dropped through the register or furnace such as directly under floor registers and the bottom return. 
</P>
<P>(iv) Factory made air ducts used for connecting external heating, cooling or combination heating/cooling appliances to the supply system and return air system of a manufactured home shall be listed by a nationally recognized testing agency. Ducts applied to external heating appliances or combination heating/cooling appliances supply system outlets shall be constructed of metal in accordance with § 3280.715(a)(1) or shall be listed Class 0 or Class 1 air ducts for those portions of the duct closer than 2 feet from the outer casing of the appliance. 
</P>
<P>(v) Ducts applied to external appliances shall be resistant to deteriorating environmental effects, including but not limited to ultraviolet rays, cold weather, or moisture and shall be resistant to insects and rodents. 
</P>
<P>(3) <I>Sizing.</I> The cross-sectional areas of the return air duct shall not be less than 2 square inches for each 1,000 Btu per hour input rating of the appliance. Dampers shall not be placed in a combination fresh air intake and return air duct so arranged that the required cross-sectional area will not be reduced at all possible positions of the damper. 
</P>
<P>(4) <I>Permanent uncloseable openings.</I> Living areas not served by return air ducts or closed off from the return opening of the furnace by doors, sliding partitions, or other means shall be provided with permanent uncloseable openings in the doors or separating partitions to allow circulated air to return to the furnace. Such openings may be grilled or louvered. The net free area of each opening shall be not less than 1 square inch for every 5 square feet of total living area closed off from the furnace by the door or partition serviced by that opening. Undercutting doors connecting the closed-off space may be used as a means of providing return air area. However, in the event that doors are undercut, they shall be undercut a minimum of 2 inches and not more than 2
<FR>1/2</FR> inches, as measured from the top surface of the floor decking to the bottom of the door and no more than one half of the free air area so provided shall be counted as return air area. 
</P>
<P>(c) <I>Joints and seams.</I> Joints and seams of sheet metal and factory-made flexible ducts, including trunks, branches, risers, crossover ducts, and crossover duct plenums, shall be mechanically secured and made substantially airtight. Slip joints in sheet metal ducts shall have a lap of at least one inch (1″) and shall be mechanically fastened. Tapes or caulking compounds shall be permitted to be used for sealing mechanically secure joints. Sealants and tapes shall be applied only to surfaces that are dry and dust-, dirt-, oil-, and grease-free. Tapes and mastic closure systems for use with factory-made rigid fiberglass air ducts and air connectors shall be listed in accordance with UL 181A (incorporated by reference, see § 3280.4). Tapes and mastic closure systems used with factory-made flexible air ducts and air connectors shall be listed in accordance with UL 181B (incorporated by reference, see § 3280.4).
</P>
<P>(d) <I>Supports and protection.</I> Ducts must be securely supported. Nails or other fasteners must not be driven or penetrate through duct walls. Where vertical ducts are installed within closets or rooms, they must be enclosed with materials equivalent to those used in the closet or room construction.
</P>
<P>(e) <I>Registers and grilles.</I> Fittings connecting the registers and grilles to the duct system must be constructed of metal or material that complies with the requirements of Class 1 or 2 ducts under UL 181 (incorporated by reference, see § 3280.4). Air supply terminal devices (registers) when installed in kitchen, bedrooms, and bathrooms must be equipped with adjustable closeable dampers. Registers or grilles must be constructed of metal or conform with the following:
</P>
<P>(1) Be made of a material classified 94V-0 or 94V-1, when tested as described in UL 94-1996, with 2001 revisions, Test for Flammability of Plastic Materials for Parts in Devices and Appliances, Fifth Edition; and
</P>
<P>(2) Floor registers or grilles shall resist without structural failure a 200 lb. concentrated load on a 2-inch diameter disc applied to the most critical area of the exposed face of the register or grille. For this test the register or grille is to be at a temperature of not less than 165 °F and is to be supported in accordance with the manufacturer's instructions. 
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 52 FR 4589, Feb. 12, 1987; 58 FR 55019, Oct. 25, 1993; 70 FR 72051, Nov. 30, 2005; 78 FR 73989, Dec. 9, 2013; 89 FR 75755, Sept. 16, 2024] 


</CITA>
</DIV8>

</DIV6>


<DIV6 N="I" NODE="24:5.1.2.1.2.9" TYPE="SUBPART">
<HEAD>Subpart I—Electrical Systems</HEAD>


<DIV8 N="§ 3280.801" NODE="24:5.1.2.1.2.9.1.1" TYPE="SECTION">
<HEAD>§ 3280.801   Scope.</HEAD>
<P>(a) This subpart I incorporates by reference NFPA 70 (incorporated by reference, see § 3280.4) including Part II of Article 550 of NFPA 70, and covers the electrical conductors and equipment installed within or on manufactured homes and the conductors that connect manufactured homes to a supply of electricity. However, Articles 550.4(A) and 550.4(B) of NFPA 70 shall not apply.
</P>
<P>(b) In addition to the requirements of this part and Part II of Article 550 of NFPA 70, the applicable portions of other Articles of NFPA 70 referenced in this part must be followed for electrical installations in manufactured homes. The use of arc-fault breakers under the NFPA 70, are only required for general lighting circuits. Smoke alarms installed on a dedicated circuit do not require arc fault protection. Wherever arc-fault breakers are provided, such use must be in accordance with NFPA 70. Wherever the requirements of these standards differ from NFPA 70, these standards apply.
</P>
<P>(c) The provisions of this standard apply to manufactured homes intended for connection to a wiring system nominally rated 120/240 volts, 3-wire AC, with grounded neutral. 
</P>
<P>(d) All electrical materials, devices, appliances, fittings and other equipment shall be listed or labeled by a nationally recognized testing agency and shall be connected in an approved manner when in service. 
</P>
<P>(e) Aluminum conductors, aluminum alloy conductors, and aluminum core conductors such as copper clad aluminum; are not acceptable for use in branch circuit wiring in manufactured homes. 
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 58 FR 55019, Oct. 25, 1993; 70 FR 72051, Nov. 30, 2005; 71 FR 19639, Apr. 17, 2006; 89 FR 75756, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.802" NODE="24:5.1.2.1.2.9.1.2" TYPE="SECTION">
<HEAD>§ 3280.802   Definitions.</HEAD>
<P>(a) The following definitions are applicable to subpart I only. 
</P>
<P>(1) <I>Accessible</I> (i) (<I>As applied to equipment</I>) means admitting close approach because not guarded by locked doors, elevation, or other effective means. (See <I>readily accessible.</I>) 
</P>
<P>(ii) (<I>As applied to wiring methods</I>) means capable of being removed or exposed without damaging the manufactured home structure or finish, or not permanently closed-in by the structure or finish of the manufactured home (see <I>concealed</I> and <I>exposed</I>). 
</P>
<P>(2) <I>Air conditioning or comfort cooling equipment</I> means all of that equipment intended or installed for the purpose of processing the treatment of air so as to control simultaneously its temperature, humidity, cleanliness, and distribution to meet the requirements of the conditioned space. 
</P>
<P>(3)(i) <I>Appliance</I> means utilization equipment, generally other than industrial, normally built in standardized sizes or types, which is installed or connected as a unit to perform one or more functions, such as clothes washing, air conditioning, food mixing, deep frying, etc. 
</P>
<P>(ii) <I>Appliance, fixed</I> means an appliance which is fastened or otherwise secured at a specific location. 
</P>
<P>(iii) <I>Appliance, portable</I> means an appliance which is actually moved or can easily be moved from one place to another in normal use. For the purpose of this Standard, the following major appliances are considered portable if cord-connected: refrigerators, clothes washers, dishwashers without booster heaters, or other similar appliances. 
</P>
<P>(iv) <I>Appliance, stationary</I> means an appliance which is not easily moved from one place to another in normal use. 
</P>
<P>(4) <I>Attached accessory building or structure</I> means any awning, cabana, deck, ramada, storage cabinet, carport, windbreak, garage, or porch for which the attachment of such is designed by the home manufacturer to be structurally supported by the manufactured home.
</P>
<P>(5) <I>Attachment plug (plug cap) (cap)</I> means a device which, by insertion in a receptacle, establishes connection between the conductors of the attached flexible cord and the conductors connected permanently to the receptacle. 
</P>
<P>(6) <I>Bonding</I> means the permanent joining of metallic parts to form an electrically conductive path which will assure electrical continuity and the capacity to conduct safely any current likely to be imposed. 
</P>
<P>(7) <I>Branch circuit</I> (i) means the circuit conductors between the final overcurrent device protecting the circuit and the outlet(s). A device not approved for branch circuit protection, such as a thermal cutout or motor overload protective device, is not considered as the overcurrent device protecting the circuit. 
</P>
<P>(ii) <I>Branch circuit—appliance</I> means a branch circuit supplying energy to one or more outlets to which appliances are to be connected, such circuits to have no permanently connected lighting fixtures not a part of an appliance. 
</P>
<P>(iii) <I>Branch circuit—general purpose</I> means a circuit that supplies a number of outlets for lighting and appliances. 
</P>
<P>(iv) <I>Branch circuit—individual</I> means a branch circuit that supplies only one utilization equipment. 
</P>
<P>(8) <I>Cabinet</I> means an enclosure designed either for surface or flush mounting, and provided with a frame, mat, or trim in which swinging doors are hung. 
</P>
<P>(9) <I>Circuit breaker</I> means a device designed to open and close a circuit by nonautomatic means, and to open the circuit automatically on a predetermined overload of current without injury to itself when properly applied within its rating. 
</P>
<P>(10) <I>Concealed</I> means rendered inaccessible by the structure or finish of the manufactured home. Wires in concealed raceways are considered concealed, even though they may become accessible by withdrawing them. (See <I>accessible (As applied to wiring methods)</I>) 
</P>
<P>(11) <I>Connector, pressure (solderless)</I> means a device that establishes a connection between two or more conductors or between one or more conductors and a terminal by means of mechanical pressure and without the use of solder. 
</P>
<P>(12) <I>Dead front (as applied to switches, circuit-breakers, switchboards, and distribution panelboard)</I> means so designed, constructed, and installed that no current-carrying parts are normally exposed on the front. 
</P>
<P>(13) <I>Demand factor</I> means the ratio of the maximum demand of a system, or part of a system, to the total connected load of a system or the part of the system under consideration. 
</P>
<P>(14) <I>Device</I> means a unit of an electrical system that is intended to carry but not utilize electrical energy. 
</P>
<P>(15) <I>Disconnecting means</I> means a device, or group of devices, or other means by which the conductors of a circuit can be disconnected from their source of supply. 
</P>
<P>(16) <I>Distribution panelboard</I> means a single panel or a group of panel units designed for assembly in the form of a single panel, including buses, and with or without switches or automatic overcurrent protective devices or both, for the control of light, heat, or power circuits of small individual as well as aggregate capacity; designed to be placed in a cabinet placed in or against a wall or partition and accessible only from the front. 
</P>
<P>(17) <I>Enclosed</I> means surrounded by a case that will prevent a person from accidentally contacting live parts. 
</P>
<P>(18) <I>Equipment</I> means a general term, including material, fittings, devices, appliances, fixtures, apparatus, and the like used as a part of, or in connection with, an electrical installation. 
</P>
<P>(19) <I>Exposed</I> (i) (As applied to live parts) means capable of being inadvertently touched or approached nearer than a safe distance by a person. It is applied to parts not suitably guarded, isolated, or insulated. (See <I>accessible</I> and <I>concealed.</I>) 
</P>
<P>(ii) (As applied to <I>wiring method</I>) means on or attached to the surface or behind panels designed to allow access. (See <I>Accessible (as applied to wiring methods)</I>) 
</P>
<P>(20) <I>Externally operable</I> means capable of being operated without exposing the operator to contact with live parts. 
</P>
<P>(21) <I>Feeder assembly</I> means the overhead or under-chassis feeder conductors, including the grounding conductor, together with the necessary fittings and equipment, or a power supply cord approved for manufactured home use, designed for the purpose of delivering energy from the source of electrical supply to the distribution panelboard within each dwelling unit. 
</P>
<P>(22) <I>Fitting</I> means an accessory, such as a locknut, bushing, or other part of a wiring system, that is intended primarily to perform a mechanical rather than an electrical function. 
</P>
<P>(23) <I>Ground</I> means a conducting connection, whether intentional or accidental, between an electrical circuit or equipment and earth, or to some conducting body that serves in place of the earth. 
</P>
<P>(24) <I>Grounded</I> means connected to earth or to some conducting body that serves in place of the earth. 
</P>
<P>(25) <I>Grounded conductor</I> means a system or circuit conductor that is intentionally grounded. 
</P>
<P>(26) <I>Grounding conductor</I> means a conductor used to connect equipment or the grounded circuit of a wiring system to a grounding electrode or electrodes. 
</P>
<P>(27) <I>Guarded</I> means covered, shielded, fenced, enclosed, or otherwise protected by means of suitable covers, casings, barriers, rails, screens, mats or platforms to remove the likelihood of approach or contact by persons or objects to a point of danger. 
</P>
<P>(28) <I>Isolated</I> means not readily accessible to persons unless special means for access are used. 
</P>
<P>(29) <I>Laundry area</I> means an area containing or designed to contain either a laundry tray, clothes washer and/or clothes dryer. 
</P>
<P>(30) <I>Lighting outlet</I> means an outlet intended for the direct connection of a lampholder, a lighting fixture, or a pendant cord terminating in a lampholder. 
</P>
<P>(31) <I>Manufactured home accessory building or structure</I> means any awning, cabana, ramada, storage cabinet, carport, fence, windbreak or porch established for the use of the occupant of the manufactured home upon a manufactured home lot. 
</P>
<P>(32) <I>Manufactured home service equipment</I> means the equipment containing the disconnecting means, overcurrent protective devices, and receptacles or other means for connecting a manufactured home feeder assembly. 
</P>
<P>(33) <I>Outlet</I> means a point on the wiring system at which current is taken to supply utilization equipment. 
</P>
<P>(34) <I>Panelboard</I> means a single panel or group of panel units designed for assembly in the form of a single panel; including buses, automatic overcurrent protective devices, and with or without switches for the control of light, heat, or power circuits; designed to be placed in a cabinet or cutout box placed in or against a wall or partition and accessible only from the front. 
</P>
<P>(35) <I>Raceway</I> means any channel for holding wires, cables, or busbars that is designed expressly for, and used solely for, this purpose. Raceways may be of metal or insulating material, and the term includes rigid metal conduit, rigid nonmetallic conduit, flexible metal conduit, electrical metallic tubing, underfloor raceways, cellular concrete floor raceways, cellular metal floor raceways, surface raceways, structural raceways, wireways, and busways. 
</P>
<P>(36) <I>Raintight</I> means so constructed or protected that exposure to a beating rain will not result in the entrance of water. 
</P>
<P>(37) <I>Readily accessible</I> means capable of being reached quickly for operation, renewal, or inspection, without requiring those to whom ready access is requisite to climb over or remove obstacles or to resort to portable ladders, chairs, etc. (See <I>Accessible.</I>) 
</P>
<P>(38) <I>Receptacle</I> means a contact device installed at the outlet for the connection of an attachment plug. A single receptacle is a single contact device with no other contact device on the same yoke. A multiple receptacle is a device with two or more contact devices on the same yoke.
</P>
<P>(39) <I>Receptacle outlet</I> means an outlet where one or more receptacles are installed. 
</P>
<P>(40) <I>Utilization equipment</I> means equipment that utilizes electric energy for electronic, electromechanical, chemical, heating, lighting, or similar purposes.
</P>
<P>(41) <I>Voltage (of a circuit)</I> means the greatest root-mean-square (effective) difference of potential between any two conductors of the circuit concerned. Some systems, such as 3-phase 4-wire, single-phase 3-wire, and 3-wire direct-current may have various circuits of various voltages. 
</P>
<P>(42) <I>Weatherproof</I> means so constructed or protected that exposure to the weather will not interfere with successful operation. Rainproof, raintight, or watertight equipment can fulfill the requirements for weatherproof where varying weather conditions other than wetness, such as snow, ice, dust, or temperature extremes, are not a factor. 
</P>
<P>(b) [Reserved]
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 78 FR 73989, Dec. 9, 2013; 86 FR 2523, Jan. 12, 2021; 89 FR 75756, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.803" NODE="24:5.1.2.1.2.9.1.3" TYPE="SECTION">
<HEAD>§ 3280.803   Power supply.</HEAD>
<P>(a) The power supply to the manufactured home must be a feeder assembly consisting of not more than one listed 50 ampere manufactured home power supply cord, or a permanently installed circuit. A manufactured home that is factory equipped with gas or oil-fired heating equipment and cooking appliances is permitted to be provided with a listed power supply cord rated 40 amperes. This section does not apply to multi-dwelling unit manufactured homes. 
</P>
<P>(b) If the manufactured home has a power-supply cord, it shall be permanently attached to the distribution panelboard or to a junction box permanently connected to the distribution panelboard, with the free end terminating in an attachment plug cap. 
</P>
<P>(c) Cords with adapters and pigtail ends, extension cords, and similar items shall not be attached to, or shipped with, a manufactured home. 
</P>
<P>(d) A suitable clamp or the equivalent must be provided at the distribution panelboard knockout to afford strain relief for the cord to prevent strain from being transmitted to the terminals when the power supply cord is handled in its intended manner.
</P>
<P>(e) The cord shall be of an approved type with four conductors, one of which shall be identified by a continuous green color or a continuous green color with one or more yellow stripes for use as the grounding conductor. 
</P>
<P>(f) The attachment plug cap must be a 3-pole, 4-wire, grounding type, rated 50 amperes, 125/250 volts, intended for use with the 50-ampere, 125/250-volt receptacle configuration, as shown below. The cap must be listed, by itself or as part of a power-supply cord assembly, for the purpose, and must be molded to or installed on the flexible cord so that it is secured tightly to the cord at the point where the cord enters the attachment plug cap. If a right-angle cap is used, the configuration must be so oriented that the grounding member is farthest from the cord.
</P>
<img src="/graphics/er09de13.000.gif"/>
<P>(g) The overall length of a power-supply cord, measured from the end of the cord, including bared leads, to the face of the attachment-plug cap shall not be less than 21 feet and shall not exceed 36
<FR>1/2</FR> feet. The length of cord from the face of the attachment-plug cap to the point where the cord enters the manufactured home shall not be less than 20 feet. 
</P>
<P>(h) The power supply cord shall bear the following marking: “For use with manufactured homes—40 amperes” or “For use with manufactured homes—50 amperes.” 
</P>
<P>(i) Where the cord passes through walls or floors, it must be protected by means of conduits and bushings or the equivalent. The cord is permitted to be installed within the manufactured home walls, provided that a continuous raceway having a maximum size of 1
<FR>1/4</FR> inch is installed from the branch-circuit panelboard to the underside of the manufactured home floor.
</P>
<P>(j) Permanent provisions shall be made for the protection of the attachment-plug cap of the power supply cord and any connector cord assembly or receptacle against corrosion and mechanical damage if such devices are in an exterior location while the manufactured home is in transit. 
</P>
<P>(k) Where the calculated load exceeds 50 amperes or where a permanent feeder is used, the supply shall be by means of: 
</P>
<P>(1) One mast weatherhead installation installed in accordance with Article 230 of NFPA 70 (incorporated by reference, see § 3280.4), containing four continuous insulated, color-coded, feeder conductors, one of which shall be an equipment grounding conductor; or
</P>
<P>(2) A listed metal raceway or listed rigid nonmetallic conduit from the disconnecting means in the manufactured home to the underside of the manufactured home, with provisions for the attachment of a suitable junction box or fitting to the raceway on the underside of the manufactured home. The manufacturer must provide written installation instructions stating the proper feeder conductor sizes for the raceway and the size of the junction box to be used; or
</P>
<P>(3) Service equipment installed in or on the manufactured home, provided that all of the following conditions are met:
</P>
<P>(i) In its written installation instructions, the manufacturer must include information indicating that the home must be secured in place by an anchoring system or installed on and secured to a permanent foundation;
</P>
<P>(ii) The installation of the service equipment complies with Article 230 of NFPA 70 (incorporated by reference, see § 3280.4). Exterior service equipment or the enclosure in which it is to be installed must be weatherproof, and conductors must be suitable for use in wet locations;
</P>
<P>(iii) Bonding and grounding of the service must be in accordance with Article 250 of NFPA 70 (incorporated by reference, see § 3280.4);
</P>
<P>(iv) The manufacturer must include in its installation instructions one method of grounding the service equipment at the installation site. The instructions must clearly state that other methods of grounding are found in Article 250 of NFPA 70;
</P>
<P>(v) The minimum size grounding electrode conductor must be specified in the instructions; and
</P>
<P>(vi) A red warning label must be mounted on or adjacent to the service equipment. The label must state the following: WARNING—DO NOT PROVIDE ELECTRICAL POWER UNTIL THE GROUNDING ELECTRODE(S) IS INSTALLED AND CONNECTED (SEE INSTALLATION INSTRUCTIONS).
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 52 FR 4589, Feb. 12, 1987; 58 FR 55019, Oct. 25, 1993; 70 FR 72051, Nov. 30, 2005; 78 FR 73990, Dec. 9, 2013; 89 FR 75756, Sept. 16, 2024] 


</CITA>
</DIV8>


<DIV8 N="§ 3280.804" NODE="24:5.1.2.1.2.9.1.4" TYPE="SECTION">
<HEAD>§ 3280.804   Disconnecting means and branch-circuit protective equipment.</HEAD>
<P>(a) The branch-circuit equipment is permitted to be combined with the disconnecting means as a single assembly. Such a combination is permitted to be designated as a distribution panelboard. If a fused distribution panelboard is used, the maximum fuse size for the mains shall be plainly marked, with the lettering at least 
<FR>1/4</FR> inch high and visible when fuses are changed. See Article 110.22 of NFPA 70 (incorporated by reference, see § 3280.4), concerning the identification of each disconnecting means and each service, feeder, or branch circuit at the point where it originated, and the type of marking needed.
</P>
<P>(b) Plug fuses and fuseholders shall be tamper-resistant, Type “S,” enclosed in dead-front fuse panelboards. Electrical distribution panels containing circuit breakers shall also be dead-front type. 
</P>
<P>(c) A single disconnecting means must be provided in each dwelling unit, consisting of a circuit breaker, or a switch and fuses and its accessories, installed in a readily accessible location near the point of entrance of the supply cord or conductors into the dwelling unit.
</P>
<P>(d) The disconnecting equipment shall have a rating suitable for the connected load. The distribution equipment, either circuit breaker or fused type, shall be located a minimum of 24 inches from the bottom of such equipment to the floor level of the manufactured home. 
</P>
<P>(e) A distribution panelboard employing a main circuit breaker must be rated not less than 50 amperes and employ a 2-pole circuit breaker rated 40 amperes for a 40-ampere supply cord, or 50 amperes for a 50-ampere supply cord. A distribution panelboard employing a disconnect switch and fuses must be rated not less than 60 amperes and must employ a single, 2-pole fuseholder rated not less than 60-amperes with 40- or 50-ampere main fuses for 40- or 50-ampere supply cords, respectively. The outside of the distribution panelboard must be plainly marked with the fuse size.
</P>
<P>(f) The distribution panelboard must be located in an accessible location, and must not be located in a bathroom or a clothes closet. A clear working space at least 30 inches wide and 30 inches in front of the distribution panelboard must be provided. This space must extend from the floor to the top of the distribution panelboard. Where used as switches, circuit breakers must be installed so that the center of the grip of the operating handle of the circuit breaker, when in its highest position, will not be more than 6 feet, 7 inches above the floor.
</P>
<P>(g) Branch-circuit distribution equipment must be installed in each dwelling unit and must include overcurrent protection for each branch circuit consisting of either circuit breakers or fuses. 
</P>
<P>(1) The branch circuit overcurrent devices shall be rated: 
</P>
<P>(i) Not more than the circuit conductors; and 
</P>
<P>(ii) Not more than 150 percent of the rating of a single appliance rated 13.3 amperes or more which is supplied by an individual branch circuit; but 
</P>
<P>(iii) Not more than the fuse size marked on the air conditioner or other motor-operated appliance. 
</P>
<P>(2) [Reserved]
</P>
<P>(h) A 15-ampere multiple receptacle shall be acceptable when connected to a 20-ampere laundry circuit. 
</P>
<P>(i) When circuit breakers are provided for branch-circuit protection 240 circuits shall be protected by 2-pole common or companion trip, or handle-tied paired circuit breakers. 
</P>
<P>(j) A 3 inch by 1-3/4 inch minimum size tag made of etched, metal-stamped or embossed brass, stainless steel, anodized or alclad aluminum not less than 0.020 inch thick, or other approval material (e.g., 0.005 inch plastic laminates) shall be permanently affixed on the outside adjacent to the feeder assembly entrance and shall read: This connection for 120/240 Volt, 3-Pole, 4-Wire, 60 Hertz, ________ Ampere Supply. The correct ampere rating shall be marked on the blank space. 
</P>
<P>(k) When a home is provided with installed service equipment, a single disconnecting means for disconnecting the branch circuit conductors from the service entrance conductors must be provided in accordance with Article 230, Part VI of NFPA 70 (incorporated by reference, see § 3280.4). The disconnecting means shall be listed for use as service equipment. The disconnecting means may be combined with the disconnect required by paragraph (c) of this section. The disconnecting means shall be rated not more than the ampere supply or service capacity indicated on the tag required by paragraph (l) of this section. 
</P>
<P>(l) When a home is provided with installed service equipment, the electrical nameplate required by § 3280.804(j) shall read: “This connection for 120/240 volt, 3 pole, 3 wire, 60 Hertz, ________ Ampere Supply.” The correct ampere rating shall be marked in the blank space.
</P>
<P>(m) A service distribution panel must be factory installed and connected to the subpanels on multi-dwelling unit manufactured homes. 
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975, as amended at 42 FR 961, Jan. 4, 1977. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 52 FR 4589, Feb. 12, 1987; 58 FR 55019, Oct. 25, 1993; 70 FR 72051, Nov. 30, 2005; 78 FR 73990, Dec. 9, 2013; 89 FR 75756, Sept. 16, 2024] 


</CITA>
</DIV8>


<DIV8 N="§ 3280.805" NODE="24:5.1.2.1.2.9.1.5" TYPE="SECTION">
<HEAD>§ 3280.805   Branch circuits required.</HEAD>
<P>(a) The number of branch circuits required shall be determined in accordance with the following: 
</P>
<P>(1) <I>Lighting.</I> For lighting, the number of 15 or 20 ampere lighting circuits is based on a 3 volt-amperes per square foot times the outside dimensions of each story of each dwelling unit (coupler excluded) divided by 120 volts times the amperes.
</P>
<HD1>Example 1 to Paragraph (a)(1)
</HD1>
<P># of Lighting Circuits = (3 × L × W × # of Stories)/(120 × (15 or 20))
</P>
<P>(2) <I>Small Appliances.</I> For the small appliance load in kitchens, pantries, dining rooms, and breakfast rooms of manufactured homes, two or more 20-ampere appliance branch circuits, in addition to the branch circuit specified in paragraph (a)(1) of this section, must be provided for all receptacle outlets in these rooms, and such circuits must have no other outlets. Countertop receptacle outlets installed in the kitchen must be supplied by not less than two small appliance branch circuits. One or more of the small appliance branch circuits may also supply other receptacle outlets in the kitchen, pantry, dining room, and breakfast room. Receptacles installed solely for the electrical supply to an electric clock and receptacles installed to provide power for supplemental equipment and lighting on gas-fired ranges, ovens, or counter-mounted cooking units are not subject to the requirements of this paragraph (a)(2).
</P>
<P>(3) <I>General appliances</I> (<I>Including furnace, water heater, range, and central or room air conditioner, etc.</I>). There shall be one or more circuits of adequate rating in accordance with the following:
</P>
<P>(i) The ampere rating of fixed appliances must not exceed 50 percent of the circuit rating if lighting outlets are on the same circuit (receptacles in the kitchen, dining area, and laundry are not considered to be lighting outlets);
</P>
<P>(ii) For fixed appliances on a circuit without lighting outlets, the sum of rated amperes shall not exceed the branch-circuit rating. Motor loads or other continuous duty loads shall not exceed 80 percent of the branch circuit rating. 
</P>
<P>(iii) The rating of a single cord and plug connected appliances on a circuit having no other outlets, shall not exceed 80 percent of the circuit rating. 
</P>
<P>(iv) The rating of the range branch circuit is based on the range demand as specified for ranges in § 3280.811(a)(5). For central air conditioning, see Article 440 of NFPA 70 (incorporated by reference, see § 3280.4).
</P>
<P>(v) Where a laundry area is provided, a 20 ampere branch circuit shall be provided to supply laundry receptacle outlets. This circuit shall have no other outlets. See § 3280.806(a)(7). 
</P>
<P>(vi) Bathroom receptacle outlets must be supplied by at least one 20-ampere branch circuit. Such circuits must have no other outlets, except that it is permissible to place the receptacle outlet for a heat tape or pipe heating cable required by § 3280.806(d)(10) on a bathroom circuit. (See § 3280.806(b).)
</P>
<P>(b) [Reserved]
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 58 FR 55020, Oct. 25, 1993; 70 FR 72051, Nov. 30, 2005; 78 FR 73991, Dec. 9, 2013; 89 FR 75757, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.806" NODE="24:5.1.2.1.2.9.1.6" TYPE="SECTION">
<HEAD>§ 3280.806   Receptacle outlets.</HEAD>
<P>(a) All receptacle outlets shall be: 
</P>
<P>(1) Of grounding type; 
</P>
<P>(2) Installed according to Article 406.3 of NFPA 70 (incorporated by reference, see § 3280.4).
</P>
<P>(3) Except when supplying specific appliances, be parallel-blade, 15-ampere, 125-volt, either single or duplex. 
</P>
<P>(b) All 125-volt, single-phase, 15- and 20-ampere receptacle outlets installed outdoors, or in compartments accessible from outside the manufactured home, and in bathrooms, including receptacles in light fixtures, must have ground-fault circuit-interrupter protection for personnel. Ground-fault circuit-interrupter protection for personnel must be provided for receptacles serving countertops in kitchens and receptacle outlets located within 6 feet of a wet bar sink, except for receptacles installed for appliances in dedicated spaces, such as dishwashers, disposals, refrigerators, freezers, and laundry equipment.
</P>
<P>(c) There shall be an outlet of the grounding type for each cord-connected fixed appliance installed. 
</P>
<P>(d) <I>Receptacle outlets required.</I> Except in the bath, closet, and hall areas, receptacle outlets must be installed at wall spaces 2 feet or more wide, so that no point along the floor line is more than 6 feet, measured horizontally, from an outlet in that space. Receptacle outlets in floors shall not be counted as part of the required number of receptacle outlets, unless located within 18 inches of the wall. In addition, a receptacle outlet must be installed in the following locations:
</P>
<P>(1) Over or adjacent to counter tops in the kitchen (at least one on each side of the sink if counter tops are on each side and 12 inches or over in width). 
</P>
<P>(2) Adjacent to the refrigerator and free-standing gas-range space. A duplex receptacle may serve as the outlet for a countertop and a refrigerator. 
</P>
<P>(3) At counter top spaces for built-in vanities. 
</P>
<P>(4) At counter top spaces under wall-mounted cabinets. 
</P>
<P>(5) In the wall, at the nearest point where a bar type counter attaches to the wall. 
</P>
<P>(6) In the wall at the nearest point where a fixed room divider attaches to the wall. 
</P>
<P>(7) In laundry areas within 6 feet of the intended location of the appliance(s). 
</P>
<P>(8) At least one receptacle outlet shall be installed outdoors. Additional outdoor receptacles shall be installed in accordance with Article 210.52(E)(3) of NFPA 70 (incorporated by reference, see § 3280.4), except those balconies, decks, or porches with an area of less than 20 square feet are not required to have an additional receptacle installed. 
</P>
<P>(9) At least one wall receptacle outlet shall be installed in bathrooms within 36 inches (914 mm) of the outside edge of each basin. The receptacle outlet must be located on a wall that is adjacent to the basin location. This receptacle is in addition to any receptacle that is part of a lighting fixture or appliance. The receptacle must not be enclosed within a bathroom cabinet or vanity.
</P>
<P>(10) On the underside of the home for the connection of pipe heating cable(s) or heat tape(s), and the outlet must:
</P>
<P>(i) Be located within 2 feet of the cold water inlet;
</P>
<P>(ii) Be connected to an interior branch circuit, other than a small appliance branch circuit;
</P>
<P>(iii) Be located on a circuit where all of the outlets are on the load side of the ground-fault circuit-interrupter protection for personnel; and
</P>
<P>(iv) Not be considered as the receptacle outlet required by paragraph (8) of this section.
</P>
<P>(11) Receptacle outlets are not required in the following locations:
</P>
<P>(i) Wall space occupied by built-in kitchen or wardrobe cabinets,
</P>
<P>(ii) Wall space behind doors which may be opened fully against a wall surface,
</P>
<P>(iii) Room dividers of the lattice type, less than 8 feet long, not solid within 6 inches of the floor,
</P>
<P>(iv) Wall space afforded by bar type counters. 
</P>
<P>(e) Receptacle outlets shall not be installed in or within reach (30 inches) of a shower or bathtub space. 
</P>
<P>(f) Receptacle outlets shall not be installed above electric baseboard heaters. 
</P>
<P>(g) Receptacles must not be in a face-up position in any countertop.
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 58 FR 55020, Oct. 25, 1993; 70 FR 72052, Nov. 30, 2005; 78 FR 73991, Dec. 9, 2013; 89 FR 75757, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.807" NODE="24:5.1.2.1.2.9.1.7" TYPE="SECTION">
<HEAD>§ 3280.807   Fixtures and appliances.</HEAD>
<P>(a) Electrical materials, devices, appliances, fittings, and other equipment installed, intended for use in, or attached to the manufactured home shall be approved for the application and shall be connected in an approved manner when in service. Facilities shall be provided to securely fasten appliances when the manufactured home is in transit. (See § 3280.809.) 
</P>
<P>(b) Specifically listed pendant-type fixtures or pendant cords shall be permitted in manufactured homes. 
</P>
<P>(c) Where a lighting fixture is installed over a bathtub or in a shower stall, it must be listed for wet locations. See also Article 410.410(D) of NFPA 70 (incorporated by reference, see § 3280.4).
</P>
<P>(d) The switch for shower lighting fixtures and exhaust fans located over a tub or in a shower stall shall be located outside the tub shower space. (See § 3280.806(e).) 
</P>
<P>(e) Any combustible wall or ceiling finish exposed between the edge of a fixture canopy, or pan and an outlet box shall be covered with non-combustible or limited combustible material. 
</P>
<P>(f) Every appliance shall be accessible for inspection, service, repair, or replacement without removal of permanent construction. 
</P>
<P>(g) In bathrooms, ceiling-mounted lighting fixtures and wall-mounted lighting fixtures must not be controlled by the same switch.
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 52 FR 35543, Sept. 22, 1987; 58 FR 55020, Oct. 25, 1993; 70 FR 72052, Nov. 30, 2005; 78 FR 73991, Dec. 9, 2013; 86 FR 2523, Jan. 12, 2021; 89 FR 75757, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.808" NODE="24:5.1.2.1.2.9.1.8" TYPE="SECTION">
<HEAD>§ 3280.808   Wiring methods and materials.</HEAD>
<P>(a) Except as specifically permitted by this part, the wiring methods and materials specified in NFPA 70 (incorporated by reference, see § 3280.4) must be used in manufactured homes.
</P>
<P>(b) Nonmetallic outlet boxes shall be acceptable only with nonmetallic cable. 
</P>
<P>(c) Nonmetallic cable located 15 inches or less above the floor, if exposed, shall be protected from physical damage by covering boards, guard strips, or conduit. Cable likely to be damaged by stowage shall be so protected in all cases. 
</P>
<P>(d) Nonmetallic sheathed cable shall be secured by staples, straps, or similar fittings so designed and installed as not to injure any cable. Cable shall be secured in place at intervals not exceeding 4
<FR>1/2</FR> feet and within 12 inches from every cabinet, box or fitting. 
</P>
<P>(e) Metal-clad and nonmetallic cables shall be permitted to pass through the centers of the wide side of 2-inch by 4-inch studs. However, they shall be protected where they pass through 2-inch by 2-inch studs or at other studs or frames where the cable or armor would be less than 1
<FR>1/2</FR> inches from the inside or outside surface of the studs when the wall covering materials are in contact with the studs. Steel plates on each side of the cable, or a tube, with not less than No. 16 MSG wall thickness shall be required to protect the cable. These plates or tubes shall be securely held in place. 
</P>
<P>(f) Where metal faceplates are used, they must be effectively grounded.
</P>
<P>(g) If the range, clothes dryer, or similar appliance is connected by metalclad cable or flexible conduit, a length of not less than three feet of free cable or conduit shall be provided to permit moving the appliance. Type NM or Type SE cable shall not be used to connect a range or a dryer. This shall not prohibit the use of Type NM or Type SE cable between the branch circuit overcurrent protective device and a junction box or range or dryer receptacle. 
</P>
<P>(h) Where rigid metal conduit or intermediate metal conduit is terminated at an enclosure with a locknut and bushing connection, two locknuts must be provided, one inside and one outside of the enclosure. Rigid nonmetallic conduit or electrical nonmetallic tubing is permitted. All cut ends of conduit and tubing must be reamed or otherwise finished to remove rough edges.
</P>
<P>(i) Switches must be rated as follows:
</P>
<P>(1) For lighting circuits, switches must be rated not less than 10 amperes, 120 to 125 volts, and in no case less than the connected load.
</P>
<P>(2) For motors or other loads, switches shall have ampere or horsepower ratings, or both, adequate for loads controlled. (An “AC general-use” snap switch shall be permitted to control a motor 2 horsepower or less with full-load current not over 80 percent of the switch ampere rating). 
</P>
<P>(j) At least 4 inches of free conductor shall be left at each outlet box except where conductors are intended to loop without joints. 
</P>
<P>(k) Where outdoor or under-chassis line voltage (120 volts, nominal or higher) wiring is exposed to moisture or subject to physical damage, it must be protected by a conduit or raceway approved for use in wet locations. The conductors must be suitable for use in wet locations.
</P>
<P>(l) Outlet boxes of dimensions less than those required in table 314.16(A) of NFPA 70 (incorporated by reference, see § 3280.4), are permitted provided the box has been tested and approved for that purpose.
</P>
<P>(m) Boxes, fittings, and cabinets shall be securely fastened in place, and shall be supported from a structural member of the home, either directly or by using a substantial brace. Snap-in type boxes provided with special wall or ceiling brackets that securely fasten boxes in walls or ceilings shall be permitted. 
</P>
<P>(n) Outlet boxes must fit closely to openings in combustible walls and ceilings and must be flush with the finish surface or project therefrom. In walls and ceilings of noncombustible material, outlet boxes and fittings must be installed so that the front edge of the box or fitting will not be set back from the finished surface more than 
<FR>1/4</FR> inch. Plaster, drywall, or plasterboard surfaces that are broken or incomplete must be repaired so that there will be no gaps or open spaces greater than 
<FR>1/8</FR> inch at the edge of the box or fitting.
</P>
<P>(o) Appliances having branch-circuit terminal connections which operate at temperatures higher than 60 °C (140 °F) shall have circuit conductors as described in paragraphs (p) (1) and (2) of this section: 
</P>
<P>(1) Branch-circuit conductors having an insulation suitable for the temperature encountered shall be permitted to run directly to the appliance. 
</P>
<P>(2) Conductors having an insulation suitable for the temperature encountered may be run from the appliance terminal connections to a readily accessible outlet box placed at least one foot from the appliance. If provided, these conductors must be in a suitable raceway or Type AC or MC cable, of at least 18 inches but not more than 6 feet in length.
</P>
<P>(p) A substantial brace for securing a box, fitting, or cabinet must be as described in Article 314.23(B) of NFPA 70 (incorporated by reference, see § 3280.4), or the brace, including the fastening mechanism to attach the brace to the home structure, must withstand a force of 50 lbs. applied to the brace at the intended point(s) of attachment for the box in a direction perpendicular to the surface on which the box is installed.
</P>
<P>(q) Where the sheathing of NM cable has been cut or damaged and visual inspection reveals that the conductor and its insulation has not been damaged, it shall be permitted to repair the cable sheath with electrical tape which provides equivalent protection to the sheath. 
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 58 FR 55020, Oct. 25, 1993; 70 FR 72052, Nov. 30, 2005; 78 FR 73991, Dec. 9, 2013; 89 FR 75757, Sept. 16, 2024] 


</CITA>
</DIV8>


<DIV8 N="§ 3280.809" NODE="24:5.1.2.1.2.9.1.9" TYPE="SECTION">
<HEAD>§ 3280.809   Grounding.</HEAD>
<P>(a) <I>General.</I> Grounding of both electrical and nonelectrical metal parts in a manufactured home shall be through connection to a grounding bus in the manufactured home distribution panelboard. The grounding bus shall be grounded through the green-colored conductor in the supply cord or the feeder wiring to the service ground in the service-entrance equipment located adjacent to the manufactured home location. Neither the frame of the manufactured home nor the frame of any appliance shall be connected to the neutral conductor in the manufactured home. 
</P>
<P>(b) <I>Insulated neutral.</I> (1) The grounded circuit conductor (neutral) shall be insulated from the grounding conductors and from equipment enclosures and other grounded parts. The grounded (neutral) circuit terminals in the distribution panelboard and in ranges, clothes dryers, counter-mounted cooking units, and wall-mounted ovens shall be insulated from the equipment enclosure. Bonding screws, straps, or buses in the distribution panelboard or in appliances shall be removed and discarded. However, when service equipment is installed on the manufactured home, the neutral and the ground bus may be connected in the distribution panel. 
</P>
<P>(2) Connection of ranges and clothes dryers with 120/240 volt, 3-wire ratings shall be made with 4 conductor cord and 3 pole, 4-wire grounding type plugs, or by type AC metal clad conductors enclosed in flexible metal conduit. For 120 volt rated devices a 3-conductor cord and a 2-pole, 3-wire grounding type plug shall be permitted. 
</P>
<P>(c) <I>Equipment grounding means.</I> (1) The green-colored grounding wire in the supply cord or permanent feeder wiring shall be connected to the grounding bus in the distribution panelboard or disconnecting means. 
</P>
<P>(2) In the electrical system, all exposed metal parts, enclosures, frames, lamp fixture canopies, etc., shall be effectively bonded to the grounding terminal or enclosure of the distribution panelboard. 
</P>
<P>(3) Cord-connected appliances, such as washing machines, clothes dryers, refrigerators, and the electrical system of gas ranges, etc., shall be grounded by means of an approved cord with grounding conductor and grounding-type attachment plug. 
</P>
<P>(d) <I>Bonding of noncurrent-carrying metal parts.</I> (1) All exposed noncurrent-carrying metal parts that may become energized shall be effectively bonded to the grounding terminal or enclosure of the distribution panelboard. A bonding conductor shall be connected between each distribution panelboard and an accessible terminal on the chassis. 
</P>
<P>(2) Grounding terminals shall be of the solderless type and approved as pressure-terminal connectors recognized for the wire size used. Star washers or other approved paint-penetrating fitting shall be used to bond terminals to chassis or other coated areas. The bonding conductor shall be solid or stranded, insulated or bare and shall be No. 8 copper minimum, or equal. The bonding conductor shall be routed so as not to be exposed to physical damage. Protection can be afforded by the configuration of the chassis. 
</P>
<P>(3) Metallic gas, water and waste pipes and metallic air-circulating ducts shall be considered bonded if they are connected to the terminal on the chassis (see § 3280.809) by clamps, solderless connectors, or by suitable grounding-type straps. 
</P>
<P>(4) Any metallic roof and exterior covering shall be considered bonded if (i) the metal panels overlap one another and are securely attached to the wood or metal frame parts by metallic fasteners, and (ii) if the lower panel of the metallic exterior covering is secured by metallic fasteners at a cross member of the chassis by two metal straps per manufactured home unit or section at opposite ends. The bonding strap material shall be a minimum of 4 inches in width of material equivalent to the skin or a material of equal or better electrical conductivity. The straps shall be fastened with paint-penetrating fittings (such as screws and star washers or equivalent). 
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 58 FR 55020, Oct. 25, 1993]


</CITA>
</DIV8>


<DIV8 N="§ 3280.810" NODE="24:5.1.2.1.2.9.1.10" TYPE="SECTION">
<HEAD>§ 3280.810   Electrical testing.</HEAD>
<P>(a) <I>Dielectric strength test.</I> The wiring of each manufactured home shall be subjected to a 1-minute, 900 to 1079 volt dielectric strength test (with all switches closed) between live parts and the manufactured home ground, and neutral and the manufactured home ground. Alternatively, the test may be performed at 1080 to 1250 volts for 1 second. This test shall be performed after branch circuits are complete and after fixtures or appliances are installed. Fixtures or appliances which are listed shall not be required to withstand the dielectric strength test.
</P>
<P>(b) <I>Additional testing.</I> Each manufactured home must be subjected to the following tests:
</P>
<P>(1) An electrical continuity test to assure that metallic parts are effectively bonded;
</P>
<P>(2) An operational test of all devices and utilization equipment, except water heaters, electric ranges, electric furnaces, dishwashers, clothes washers/dryers, and portable appliances, to demonstrate they are connected and in working order; and
</P>
<P>(3) Electrical polarity checks to determine that connections have been made in accordance with applicable provisions of these standards and Article 550.17 of NFPA 70 (incorporated by reference, see § 3280.4). Visual verification is an acceptable electrical polarity check.
</P>
<CITA TYPE="N">[58 FR 55020, Oct. 25, 1993, as amended at 86 FR 2523, Jan. 12, 2021; 89 FR 75757, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.811" NODE="24:5.1.2.1.2.9.1.11" TYPE="SECTION">
<HEAD>§ 3280.811   Calculations.</HEAD>
<P>(a) The following method shall be employed in computing the supply cord and distribution-panelboard load for each feeder assembly for each manufactured home and shall be based on a 3-wire, 120/240 volt supply with 120 volt loads balanced between the two legs of the 3-wire system. The total load for determining power supply by this method is the summation of: 
</P>
<P>(1) Lighting and small appliance load as calculated below: 
</P>
<P>(i) Lighting volt-amperes: Length time width of manufactured home (outside dimensions exclusive of coupler) times 3 volt-amperes per square foot; e.g. Length × width × 3 = lighting volt-amperes. 
</P>
<P>(ii) Small appliance volt-amperes: Number of circuits time 1,500 volt-amperes for each 20-ampere appliance receptacle circuit (see definition of “Appliance Portable” with Note): e.g. Number of circuits × 1,500 = small appliance volt-amperes. 
</P>
<P>(iii) Total volts-amperes: Lighting volts-amperes plus small appliance = total volt-amperes. 
</P>
<P>(iv) First 3,000 total volts-amperes at 100 percent plus remainder at 35 percent = watts to be divided by 240 volts to obtain current (amperes) per leg. 
</P>
<P>(2) Nameplate amperes for motors and heater loads (exhaust fans, air conditioners, electric, gas, or oil heating). Omit smaller of air conditioning and heating except include blower motor if used as air conditioner evaporator motor. When an air conditioner is not installed and a 40-ampere power supply cord is provided, allow 15 amperes per leg for air conditioning. 
</P>
<P>(3) 25 percent of current of largest motor in paragraph (a)(2) of this section. 
</P>
<P>(4) Total of nameplate amperes for: Disposal, dishwasher, water heater, clothes dryer, wall-mounted oven, cooking units. Where number of these appliances exceeds three, use 75 percent of total. 
</P>
<P>(5) Derive amperes for free-standing range (as distinguished from separate ovens and cooking units) by dividing values below by 240 volts. 
</P>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Nameplate rating (in watts)
</TH><TH class="gpotbl_colhed" scope="col">Use (in watts)
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">10,000 or less</TD><TD align="left" class="gpotbl_cell">80 percent of rating.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">10,001 to 12,500</TD><TD align="left" class="gpotbl_cell">8,000.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">12,501 to 13,500</TD><TD align="left" class="gpotbl_cell">8,400.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">13,501 to 14,500</TD><TD align="left" class="gpotbl_cell">8,800.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">14,501 to 15,500</TD><TD align="left" class="gpotbl_cell">9,200.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">15,501 to 16,500</TD><TD align="left" class="gpotbl_cell">9,600.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">16,501 to 17,500</TD><TD align="left" class="gpotbl_cell">10,000.</TD></TR></TABLE></DIV></DIV>
<P>(6) If outlets or circuits are provided for other than factory-installed appliances, include the anticipated load. The following example is given to illustrate the application of this Method of Calculation: 
</P>
<EXAMPLE>
<HED>Example:</HED><PSPACE>A manufactured home is 70 × 10 feet and has two portable appliance circuits, a 1000 volt-ampere 240 volt heater, a 200 volt-ampere 120 volt exhaust fan, a 400 volts-ampere 120 volt dishwasher and a 7000 volt-ampere electric range.</PSPACE></EXAMPLE>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Lighting and small appliance load 
</TH><TH class="gpotbl_colhed" scope="col">Volt-ampheres 
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Lighting 70 × 10 × 3</TD><TD align="right" class="gpotbl_cell">2,100
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Small Appliance</TD><TD align="right" class="gpotbl_cell">3,000
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row" style="padding-left: 6em">Total</TD><TD align="right" class="gpotbl_cell">5,100
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1st. 3,000 Volt-Ampheres at 100%</TD><TD align="right" class="gpotbl_cell">3,000
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Remainder (5,100 −3,000 = 2,100, at 35%</TD><TD align="right" class="gpotbl_cell">735
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row" style="padding-left: 6em">Total</TD><TD align="right" class="gpotbl_cell">3,735</TD></TR></TABLE></DIV></DIV>
<DIV width="100%"><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col"> 
</TH><TH class="gpotbl_colhed" scope="col">Amperes per leg A 
</TH><TH class="gpotbl_colhed" scope="col">Amperes per leg B
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Lighting and small Appliance</TD><TD align="right" class="gpotbl_cell">15.5</TD><TD align="right" class="gpotbl_cell">15.5
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Heater 240 volt</TD><TD align="right" class="gpotbl_cell">4.1</TD><TD align="right" class="gpotbl_cell">4.1
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Fan 120 volt</TD><TD align="right" class="gpotbl_cell">1.7</TD><TD align="right" class="gpotbl_cell"></TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Dishwasher 120 volt</TD><TD align="right" class="gpotbl_cell"></TD><TD align="right" class="gpotbl_cell">3.3
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Range</TD><TD align="right" class="gpotbl_cell">23.3</TD><TD align="right" class="gpotbl_cell">23.3
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row" style="padding-left: 6em">Total</TD><TD align="right" class="gpotbl_cell">44.6</TD><TD align="right" class="gpotbl_cell">46.2 
</TD></TR></TABLE></DIV><DIV class="table_foot"><P class="gpotbl_note">Note: Based on the higher current calculated for either leg, use one 50-A supply cord.</P></DIV></DIV>
<P>(b) The following is an optional method of calculation for lighting and appliance loads for manufactured homes served by single 3-wire 120/240 volt set of feeder conductors with an ampacity of 100 or greater. The total load for determining the feeder ampacity may be computed in accordance with the following table instead of the method previously specified. Feeder conductors whose demand load is determined by this optional calculation are permitted to have the neutral load determined by Article 220.61 of NFPA 70 (incorporated by reference, see § 3280.4). The loads identified in the table as “other load” and as “Remainder of other load” must include the following:
</P>
<P>(1) 1500 volt-amperes for each 2-wire, 20-ampere small appliance branch circuit and each laundry branch circuit specified. 
</P>
<P>(2) 3 volt-amperes per square foot for general lighting and general-use receptacles. 
</P>
<P>(3) The nameplate rating of all fixed appliances, ranges, wall-mounted ovens, counter-mounted cooking units, and including 4 or more separately controlled space heating loads. 
</P>
<P>(4) The nameplate ampere or kVA rating of all motors and of all low-power-factor loads. 
</P>
<P>(5) The largest of the following: 
</P>
<P>(i) Air conditioning load; 
</P>
<P>(ii) The 65 percent diversified demand of the central electric space heating load; 
</P>
<P>(iii) The 65 percent diversified demand of the load of less than four separately-controlled electric space heating units. 
</P>
<P>(iv) The connected load of four or more separately-controlled electric space heating units. 
</P>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Optional Calculation for Manufactured Homes With 110-Ampere or Larger Service
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Load (in kilowatt or kilovoltampere)
</TH><TH class="gpotbl_colhed" scope="col">Demand factor
<br/>(percent)
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Air-conditioning and cooling including heat pump compressors</TD><TD align="right" class="gpotbl_cell">100
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Central electric space heating</TD><TD align="right" class="gpotbl_cell">65
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Less than 4 separately controlled electric space heating units</TD><TD align="right" class="gpotbl_cell">65
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1st 10 kW of all other load</TD><TD align="right" class="gpotbl_cell">100
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">Remainder of other load</TD><TD align="right" class="gpotbl_cell">40</TD></TR></TABLE></DIV></DIV>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 58 FR 55021, Oct. 25, 1993; 70 FR 72052, Nov. 30, 2005; 89 FR 75757, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3280.812" NODE="24:5.1.2.1.2.9.1.12" TYPE="SECTION">
<HEAD>§ 3280.812   Wiring of expandable units and dual units.</HEAD>
<P>(a) Expandable or multiple unit manufactured homes shall use fixed-type wiring methods and materials for connecting such units to each other. 
</P>
<P>(b) Expandable or multiple unit manufactured homes not having permanently installed feeders and which are to be moved from one location to another, shall be permitted to have disconnecting means with branch circuit protective equipment in each unit when so located that after assembly or joining together of units the requirements of § 3280.803 will be met. 


</P>
</DIV8>


<DIV8 N="§ 3280.813" NODE="24:5.1.2.1.2.9.1.13" TYPE="SECTION">
<HEAD>§ 3280.813   Outdoor outlets, fixtures, air-conditioning equipment, etc.</HEAD>
<P>(a) Outdoor fixtures and equipment shall be listed for use in wet locations, except that if located on the underside of the home or located under roof extensions or similarly protected locations, they may be listed for use in damp locations. 
</P>
<P>(b) A manufactured home provided with a branch circuit designed to energize outside heating equipment or air-conditioning equipment, other than room air conditioners, or both, located outside the manufactured home, other than room air conditioners, must have such branch-circuit conductors terminate in a listed outlet box, or disconnecting means, located on the outside of the manufactured home.
</P>
<P>(1) A label must be permanently affixed adjacent to the outlet box. The label must be not less than 0.020-inches thick etched brass, stainless steel, anodized or alclad aluminum, or equivalent, and must not be less than 3 inches × 1
<FR>3/4</FR> inches in size.
</P>
<P>(2)(i) The label must include the correct voltage and ampere rating and the following information:
</P>
<EXTRACT>
<P>THIS CONNECTION IS FOR HEATING AND/OR AIR-CONDITIONING EQUIPMENT. THE BRANCH CIRCUIT IS RATED AT NOT MORE THAN____AMPERES, AT____VOLTS, 60-HERTZ,____CONDUCTOR AMPACITY. A DISCONNECTING MEANS IS LOCATED WITHIN SIGHT OF THE EQUIPMENT.</P></EXTRACT>
<P>(ii) The correct voltage and ampere rating shall be given. The tag must be not less than 0.020-inches thick etched brass, stainless steel, anodized or alclad aluminum, or equivalent. The tag must have a minimum size of not less than 3 inches × 1
<FR>3/4</FR> inches.
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975, as amended at 42 FR 961, Jan. 4, 1977. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 58 FR 55021, Oct. 25, 1993; 78 FR 73992, Dec. 9, 2013] 


</CITA>
</DIV8>


<DIV8 N="§ 3280.814" NODE="24:5.1.2.1.2.9.1.14" TYPE="SECTION">
<HEAD>§ 3280.814   Painting of wiring.</HEAD>
<P>During painting or staining of the manufactured home, it shall be permitted to paint metal raceways (except where grounding continuity would be reduced) or the sheath of the nonmetallic cable. Some arrangement, however, shall be made so that no paint shall be applied to the individual wires, as the color coding may be obliterated by the paint. 


</P>
</DIV8>


<DIV8 N="§ 3280.815" NODE="24:5.1.2.1.2.9.1.15" TYPE="SECTION">
<HEAD>§ 3280.815   Polarization.</HEAD>
<P>(a)(1) Except as provided in paragraph (a)(2) of this section, the white conductor must be employed for the grounded (neutral) circuit conductors only and must be connected to the white terminal or lead on receptacle outlets and fixtures. The grounded conductor must be the unswitched wire in switched circuits.
</P>
<P>(2) A cable containing an insulated conductor with a white or natural gray outer finish or a marking of three continuous white stripes may be used for single-pole, three-way, or four-way switch loops, where this conductor is used for the supply to the switch, but not as a return conductor from the switch to the switched outlet. In these applications, the conductor with white or natural gray insulation or with three continuous white stripes must be permanently re-identified to indicate its use by painting or other effective means at its terminations and at each location where the conductor is visible and accessible.
</P>
<P>(b) If the identified (white) conductor of a cable is used for other than grounded conductors or for other than switch loops as explained above (for a 240 volt circuit for example), the conductor shall be finished in a color other than white at each outlet where the conductors are visible and accessible. 
</P>
<P>(c) Green-colored wires or green with yellow stripe shall be used for grounding conductors only. 
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 58 FR 55021, Oct. 25, 1993; 78 FR 73992, Dec. 9, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 3280.816" NODE="24:5.1.2.1.2.9.1.16" TYPE="SECTION">
<HEAD>§ 3280.816   Examination of equipment for safety.</HEAD>
<P>The examination or inspection of equipment for safety, according to this standard, shall be conducted under uniform conditions and by organizations properly equipped and qualified for experimental testing, inspections of the run of goods at factories, and service-value determinations through field examinations. 


</P>
</DIV8>

</DIV6>


<DIV6 N="J" NODE="24:5.1.2.1.2.10" TYPE="SUBPART">
<HEAD>Subpart J—Transportation</HEAD>


<DIV8 N="§ 3280.901" NODE="24:5.1.2.1.2.10.1.1" TYPE="SECTION">
<HEAD>§ 3280.901   Scope.</HEAD>
<P>Subpart J of this standard covers the general requirement for designing the structure of the manufactured home to fully withstand the adverse effects of transportation shock and vibration without degradation of the integrated structure or of its component parts and the specific requirements pertaining to the transportation system and its relationship to the structure. 


</P>
</DIV8>


<DIV8 N="§ 3280.902" NODE="24:5.1.2.1.2.10.1.2" TYPE="SECTION">
<HEAD>§ 3280.902   Definitions.</HEAD>
<P>(a) <I>Chassis</I> means the entire transportation system comprising the following subsystems: drawbar and coupling mechanism, frame, running gear assembly, and lights. 
</P>
<P>(b) <I>Drawbar and coupling mechanism</I> means the rigid assembly, (usually a rigid substructure) upon which is mounted a coupling mechanism, which connects the manufactured home's frame to the towing vehicle. 
</P>
<P>(c) <I>Frame</I> means the fabricated rigid substructure which provides considerable support to the affixed manufactured home structure both during transport and on-site; and also provides a platform for securement of the running gear assembly, the drawbar and coupling mechanism. 
</P>
<P>(d) <I>Running gear assembly</I> means the subsystem consisting of suspension springs, axles, bearings, wheels, hubs, tires, and brakes, with their related hardware. 
</P>
<P>(e) <I>Lights</I> means those safety lights and associated wiring required by applicable U.S. Department of Transportation regulations. 
</P>
<P>(f) <I>Transportation system,</I> (Same as chassis, above). 
</P>
<P>(g) <I>Highway,</I> includes all roads and streets to be legally used in transporting the manufactured home.
</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975. Redesignated at 44 FR 20679, Apr. 6, 1979, as amended at 47 FR 28093, June 29, 1982; 86 FR 2523, Jan. 12, 2021]






</CITA>
</DIV8>


<DIV8 N="§ 3280.903" NODE="24:5.1.2.1.2.10.1.3" TYPE="SECTION">
<HEAD>§ 3280.903   General requirements for designing the structure to withstand transportation shock and vibration.</HEAD>
<P>(a) <I>General.</I> The manufactured home and its transportation system (as defined in § 3280.902(f)) must withstand the effects of highway movement such that the home is capable of being transported safely and installed as a habitable structure. Structural, plumbing, mechanical, and electrical systems must be designed to function after set-up. The home must remain weather protected during the transportation sequence to prevent internal damage.
</P>
<P>(b) <I>Testing or analysis requirements.</I> Suitability of the transportation system and home structure to withstand the effects of transportation must be permitted to be determined by testing, or engineering analysis, or a combination of the two as required by paragraphs (b)(1) and (2) of this section.
</P>
<P>(1) <I>Road tests.</I> Tests must be witnessed by an independent registered professional engineer or architect, manufacturer's IPIA or DAPIA, or by a recognized testing organization. Such testing procedures must be part of the manufacturer's approved design.
</P>
<P>(2) <I>Engineering analysis.</I> Engineering analysis methods based on the principles of mechanics and/or structural engineering may be used to substantiate the adequacy of the transportation system to withstand in-transit loading conditions. As transportation loadings are typically critical in the longitudinal direction, analysis should, in particular, provide emphasis on design of longitudinal structural components of the manufactured home (<I>e.g.,</I> main chassis girder beams, sidewalls, and rim joists, etc.). Notwithstanding, all structural elements necessary to the structural integrity of the manufactured home during in-transit loading are also to be evaluated (<I>e.g.,</I> transverse chassis members and floor framing members, etc.).
</P>
<P>(i)(A) The summation of the design loads in paragraphs (b)(2)(i)(A)(<I>1</I>) through (<I>3</I>) of this section may be used to determine the adequacy of the chassis in conjunction with the manufactured home structure to resist in-transit loading:
</P>
<P>(<I>1</I>) Dead load, the vertical load due to the weight of all structural and non-structural components of the manufactured home at the time of shipment.
</P>
<P>(<I>2</I>) Floor load, a minimum of 3 pounds per square foot.
</P>
<P>(<I>3</I>) Dynamic loading factor, (0.25)[(b2iA) + (b2iB)].
</P>
<P>(B) However, the in-transit design loading need not exceed twice the dead load of the manufactured home.
</P>
<P>(ii) To determine the adequacy of individual longitudinal structural components to resist the in-transit design loading, a load distribution based on the relative flexural rigidity and shear stiffness of each component may be utilized. For the purpose of loading distribution, the sidewall may be considered to be acting as a “deep beam” in conjunction with other load carrying elements in determining the relative stiffness of the integrated structure. Further, by proper pre-cambering of the chassis assembly, additional loading may be distributed to the chassis, and the remaining loading may be distributed to each of the load carrying members by the relative stiffness principle.
</P>
<P>(iii) The analysis is also to include consideration for:
</P>
<P>(A) Location of openings in the sidewall during transport and, when appropriate,
</P>
<P>provisions for reinforcement of the structure and/or chassis at the opening.
</P>
<P>(B) Sidewall component member sizing and joint-splice analysis (<I>i.e.,</I> top and bottom plates, etc.), and connections between load carrying elements.</P>
<CITA TYPE="N">[86 FR 2523, Jan. 12, 2021]




</CITA>
</DIV8>


<DIV8 N="§ 3280.904" NODE="24:5.1.2.1.2.10.1.4" TYPE="SECTION">
<HEAD>§ 3280.904   Specific requirements for designing the transportation system.</HEAD>
<P>(a) <I>General.</I> The transportation system must be designed and constructed as an integrated unit which is safe and suitable for its specified use. In operation, the transportation system must effectively respond to the control of the towing vehicle tracking and braking, while traveling at applicable highway speeds and in normal highway traffic conditions.


</P>
<P>(b) <I>Specific requirements</I>—(1) <I>Drawbar.</I> The drawbar must be constructed of sufficient strength, rigidity, and durability to safely withstand those dynamic forces experienced during highway transportation. It must be securely fastened to the manufactured home substructure.
</P>
<P>(2) <I>Coupling mechanism.</I> The coupling mechanism (which is usually of the socket type) must be securely fastened to the drawbar in such a manner as to assure safe and effective transfer of the maximum loads, including dynamic loads, between the manufactured home structure and the hitch-assembly of the towing vehicle. The coupling must be equipped with a manually operated mechanism so adapted as to prevent disengagement of the unit while in operation. The coupling must be so designed that it can be disconnected regardless of the angle of the manufactured home to the towing vehicle.
</P>
<P>(3) <I>Chassis.</I> The chassis, in conjunction with the manufactured home structure, must be constructed to effectively sustain the design loads. The integrated structure must be capable of ensuring the integrity of the complete manufactured home and ensuring against excessive deformation of structural or finish members.
</P>
<P>(4) <I>Running gear assembly</I>—(i) <I>Design criteria.</I> The design load used to size running gear components must be the gross static dead weight minus the static tongue weight supported by the drawbar. Running gear must be designed to accept shock and vibration, both from the highway and the towing vehicle and effectively dampen these forces so as to protect the manufactured home structure from damage and fatigue. Its components must be designed to facilitate routine maintenance, inspection, and replacement.
</P>
<P>(ii) <I>Location.</I> Location of the running gear assembly must be determined by documented engineering analysis, taking into account the gross weight (including all contents), total length of the manufactured home, the necessary coupling hitch weight, span distance, and turning radius. Weights shall be checked with the home in a level position ready for transport. The coupling weight must be not less than 12 percent nor more than 25 percent of the gross weight.




</P>
<P>(5) <I>Spring assemblies.</I> Spring assemblies (springs, hangers, shackles, bushings, and mounting bolts) must be capable of supporting the running gear design loads, without exceeding maximum allowable stresses for design spring assembly life as recommended by the spring assembly manufacturer. The capacity of the spring system must ensure that under maximum operating load conditions, sufficient clearance is maintained between the tire and manufactured home's frame or structure to permit unimpeded wheel movement and for changing tires.


</P>
<P>(6) <I>Axles.</I> Axles, and their connecting hardware, must be capable of supporting the static running gear design loads, without exceeding maximum allowable design axle loads as recommended by the axle manufacturer. The number and load capacity necessary to provide a safe tow must not be less than those required to support the design load.
</P>
<P>(i) <I>Recycled axles.</I> Before reuse, all axles, including all component parts, must be reconditioned as required pursuant to a program accepted by a nationally recognized testing agency. The recycling program must be approved, and the axles must be labeled by a nationally recognized testing agency. Recycled axles and their components must utilize compatible components and be of the same size and rating as the original equipment.
</P>
<P>(ii) [Reserved].
</P>
<P>(7) <I>Hubs and bearings.</I> Hubs and bearings shall meet the requirements of § 3280.904(b)(3) and good engineering practice. Both of these components shall be accessible for inspection, routine maintenance and replacement of parts. 
</P>
<P>(8) <I>Tires, wheels, and rims.</I> Tires, wheels, and rims must be selected, sized, and fitted to axles so that static dead load supported by the running gear does not exceed the load capacity of the tires. Tires must not be loaded beyond the load rating marked on the sidewall of the tire or, in the absence of such a marking, the load rating specified in any of the publications of any of the organizations listed in Federal Motor Vehicle Safety Standard (FMVSS) No. 119 in 49 CFR 571.119, S5.1(b). Wheels and rims must be sized in accordance with the tire manufacturer's recommendations as suitable for use with the tires selected.
</P>
<P>(i) <I>Inflation pressure.</I> The load and cold inflation pressure imposed on the rim or wheel must not exceed the rim and wheel manufacturer's instructions even if the tire has been approved for a higher load or inflation. Tire cold inflation pressure limitations and the inflation pressure measurement correction for heat must be as specified in 49 CFR 393.75(h).
</P>
<P>(ii) <I>Used tires.</I> Whenever the tread depth is at least 
<FR>1/16</FR> inch as determined by a tread wear indicator, used tires are permitted to be sized in accordance with 49 CFR 571.119. The determination as to whether a used tire is acceptable must also include a visual inspection for thermal and structural defects (<I>e.g.,</I> dry rotting, excessive tire sidewall splitting, etc.). Used tires with such structural defects must not be installed on manufactured homes.


</P>
<P>(9) <I>Brake assemblies</I>—(i) <I>Braking axles.</I> The number, type, size, and design of brake assemblies required to assist the towing vehicle in providing effective control and stopping of the manufactured home must be determined and documented by engineering analysis. Those alternatives listed in § 3280.903(c) may be accepted in place of such an analysis. Unless substantiated in the design to the satisfaction of the approval agency by either engineering analysis in accordance with § 3280.903(a)(1) or tests in accordance with paragraph (b)(9)(ii) of this section, there must be a minimum of two axles equipped with brake assemblies on each manufactured home transportable section.
</P>
<P>(ii) <I>Stopping distance.</I> Brakes on the towing vehicle and the manufactured home (a drive-away/tow-away) must be capable of ensuring that the maximum stopping distance from an initial speed of 20 miles per hour does not exceed 35 feet in accordance with 49 CFR 393.52(d) for 2 or fewer vehicles in drive away or tow away operation.
</P>
<P>(iii) <I>Electrical brake wiring.</I> Brake wiring must be provided for each brake. The brake wire must not be less than the value specified in the brake manufacturer's instructions. Aluminum wire, when used, must be provided with suitable termination that is protected against corrosion.


</P>
<P>(10) <I>Lamps and associated wiring.</I> Stop lamps, turn signal/lamps, and associated wiring must meet the appropriate sections of FMVSS No. 108 in 49 CFR 571.108, which specify the performance and location of these lamps and their wiring. The manufacturer may meet these requirements by utilizing a temporary light/wiring harness, which has components that meet the FMVSS No. 108. The temporary harness is permitted to be provided by the manufactured home transportation carrier.


</P>
<CITA TYPE="N">[40 FR 58752, Dec. 18, 1975, as amended at 86 FR 2524, Jan. 12, 2021]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="K" NODE="24:5.1.2.1.2.11" TYPE="SUBPART">
<HEAD>Subpart K—Attached Manufactured Homes and Special Construction Considerations</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>86 FR 2525, Jan. 12, 2021, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 3280.1001" NODE="24:5.1.2.1.2.11.1.1" TYPE="SECTION">
<HEAD>§ 3280.1001   Scope.</HEAD>
<P>This subpart covers the requirements for attached manufactured homes and other related construction associated with manufactured homes not addressed elsewhere within this part.


</P>
</DIV8>


<DIV8 N="§ 3280.1002" NODE="24:5.1.2.1.2.11.1.2" TYPE="SECTION">
<HEAD>§ 3280.1002   Definitions.</HEAD>
<P>The following definitions are applicable to this subpart only:
</P>
<P><I>Attached manufactured home.</I> Two or more adjacent manufactured homes that are structurally independent from foundation to roof and with open space on at least two sides, but which have the appearance of a physical connection (<I>i.e.,</I> zero lot line).
</P>
<P><I>Fire separation wall.</I> An adjoining wall of a manufactured home that separates attached manufactured homes with a fire separation distance of less than three feet.


</P>
</DIV8>


<DIV8 N="§ 3280.1003" NODE="24:5.1.2.1.2.11.1.3" TYPE="SECTION">
<HEAD>§ 3280.1003   Attached manufactured home unit separation.</HEAD>
<P>(a) <I>Separation requirements.</I> (1) Attached manufactured homes shall be separated from each other by a fire separation wall of not less than1-hour fire-resistive rating with exposure from both sides on each attached manufactured home unit when rated based on tests in accordance with ASTM E119 (incorporated by reference, see § 3280.4).
</P>
<P>(2) Fire-resistance-rated floor/ceiling and wall assemblies shall extend to and be tight against the exterior wall, and wall assemblies shall extend from the foundation to the underside of the roof sheathing.
</P>
<P>(b) <I>Fire separation penetrations.</I> (1) Fire rated fire separation walls must not contain through penetrations or openings.
</P>
<P>(2) Membrane penetrations for electrical boxes are permitted on the living side of the wall under the following conditions:
</P>
<P>(i) Steel electrical boxes not exceeding 16 square inches may be installed provided that the total area of such boxes does not exceed 100 square inches in any 100 square feet wall area. Steel electrical boxes in adjacent fire separation walls must be separated by a horizontal distance of not less than 24 inches.
</P>
<P>(ii) Listed 2-hour fire-resistant nonmetallic electrical boxes are installed in accordance with the listings.
</P>
<P>(iii) No other membrane penetrations are allowed.
</P>
<P>(c) <I>Continuity of walls.</I> The fire separation walls for single-family attached dwelling units must be continuous from the foundation to the underside of the roof sheathing, deck, or slab and must extend the full length of the fire separation walls.
</P>
<P>(d) <I>Parapets.</I> (1) Parapets constructed in accordance with paragraph (d)(2) of this section must be provided for attached manufactured homes as an extension of fire separation walls in accordance with the following:
</P>
<P>(i) Where roof surfaces adjacent to the fire separation walls are at the same elevation, the parapet must extend not less than 30 inches above the roof surfaces.
</P>
<P>(ii) Where roof surfaces adjacent to the wall or walls are at different elevations and the higher roof is not more than 30 inches above the lower roof surface, the parapet must not extend less than 30 inches above the lower roof surface.
</P>
<P>(A) Parapets must be provided unless roofs are of a Class C roof covering and the roof decking or sheathing is of noncombustible materials or approved fire-retardant-treated wood for a distance of four feet on each side of the common fire separation walls; or one layer of 
<FR>5/8</FR> inch Type X gypsum board or equivalent is installed directly beneath the roof decking or sheathing for a distance of four feet on each side of the fire separation walls.
</P>
<P>(B) A parapet must not be required where roof surfaces adjacent to the common walls are at different elevations and the higher roof is more than 30 inches above the lower roof. The fire separation wall construction from the lower roof to the underside of the higher roof deck must not have less than a 1-hour fire-resistive rating. The wall must be rated for exposure from both sides.
</P>
<P>(2) Parapets must have the same fire resistance rating as that required for the supporting wall or walls. On any side adjacent to a roof surface, the parapet must have noncombustible faces for the uppermost 18 inches, to include counter flashing and coping materials. Where the roof slopes toward a parapet at slopes greater than 
<FR>2/12</FR> (16.7 percent slope), the parapet must extend to the same height as any portion of the roof within a distance of three feet, but in no case will the height be less than 30 inches.
</P>
<CITA TYPE="N">[86 FR 2525, Jan. 12, 2021, as amended at 89 FR 75757, Sept. 16, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 3280.1004" NODE="24:5.1.2.1.2.11.1.4" TYPE="SECTION">
<HEAD>§ 3280.1004   Exterior walls.</HEAD>
<P>(a) The requirements of § 3280.504 for condensation control and vapor retarder installation are required to be provided on each fire separation wall of each attached manufactured home.
</P>
<P>(b) The requirements of § 3280.506 for heat loss/gain insulation apply to the fire separation wall on each attached manufactured home.


</P>
</DIV8>


<DIV8 N="§ 3280.1005" NODE="24:5.1.2.1.2.11.1.5" TYPE="SECTION">
<HEAD>§ 3280.1005   Electrical service.</HEAD>
<P>(a) Each attached manufactured home must be supplied by only one service.
</P>
<P>(b) Service conductors supplying one manufactured home must not pass through the interior of another manufactured home.


</P>
</DIV8>


<DIV8 N="§ 3280.1006" NODE="24:5.1.2.1.2.11.1.6" TYPE="SECTION">
<HEAD>§ 3280.1006   Water service.</HEAD>
<P>(a) Each manufactured home must have an individual water supply that will service only that unit.
</P>
<P>(b) Each manufactured home must have a hot water supply system that will service only that unit.






</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="3282" NODE="24:5.1.2.1.3" TYPE="PART">
<HEAD>PART 3282—MANUFACTURED HOME PROCEDURAL AND ENFORCEMENT REGULATIONS
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>15 U.S.C. 2697, 28 U.S.C. 2461 note, 42 U.S.C. 3535(d), 5403, and 5424.


</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>41 FR 19852, May 13, 1976, unless otherwise noted. 
</PSPACE></SOURCE>
<EDNOTE>
<HED>Editorial Note:</HED><PSPACE>Nomenclature changes to part 3282 appear at 78 FR 60199, Oct. 1, 2013.</PSPACE></EDNOTE>

<DIV6 N="A" NODE="24:5.1.2.1.3.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 3282.1" NODE="24:5.1.2.1.3.1.1.1" TYPE="SECTION">
<HEAD>§ 3282.1   Scope and purpose.</HEAD>
<P>(a) The National Manufactured Housing Construction and Safety Standards Act of 1974 (title VI of Pub. L. 93-383, 88 Stat. 700, 42 U.S.C. 5401, <I>et seq.</I>) (hereinafter referred to as the Act), requires the Secretary of the Department of Housing and Urban Development to establish Federal manufactured home construction and safety standards and to issue regulations to carry out the purpose of the Act. The standards promulgated pursuant to the Act appear at part 3280 of chapter XX of this title, and apply to all manufactured homes manufactured for sale to purchasers in the United States on or after the effective date of the standards (June 15, 1976). A manufactured home is manufactured on or after June 15, 1976, if it enters the first stage of production on or after that date. 
</P>
<P>(b) The Secretary is also authorized by the Act to conduct inspections and investigations necessary to enforce the standards, to determine that a manufactured home fails to comply with an applicable standard or contains a defect or an imminent safety hazard, and to direct the manufacturer to furnish notification thereof, and in some cases, to remedy the defect or imminent safety hazard. The purpose of this part is to prescribe procedures for the implementation of these responsibilities of the Secretary under the Act through the use of private and State inspection organizations and cooperation with State manufactured home agencies. It is the policy of the Department to involve State agencies in the enforcement of the Federal manufactured home standards to the maximum extent possible consistent with the capabilities of such agencies and the public interest. The procedures for investigations and investigational proceedings are set forth in 24 CFR part 3800. 
</P>
<CITA TYPE="N">[41 FR 19852, May 13, 1976, as amended at 61 FR 10442, Mar. 13, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 3282.6" NODE="24:5.1.2.1.3.1.1.2" TYPE="SECTION">
<HEAD>§ 3282.6   Separability of provisions.</HEAD>
<P>If any clause, sentence, paragraph, section or other portion of part 3282 shall, for any reason, be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair, or invalidate the remainder thereof, but shall be confined by its operation to the clause, sentence, paragraph, or part thereof directly involved in the controversy in which such judgment shall have been rendered. 


</P>
</DIV8>


<DIV8 N="§ 3282.7" NODE="24:5.1.2.1.3.1.1.3" TYPE="SECTION">
<HEAD>§ 3282.7   Definitions.</HEAD>
<P>The terms <I>Department, HUD,</I> and <I>Secretary</I> are defined in 24 CFR part 5. 
</P>
<P>(a) <I>Act</I> means the National Manufactured Housing Construction and Safety Standards Act of 1974, title VI of the Housing and Community Development Act of 1974 (42 U.S.C. 5401 <I>et seq.</I>) 
</P>
<P>(b) <I>Add-on</I> means any structure (except a structure designed or produced as an integral part of a manufactured home) which, when attached to the basic manufactured home unit, increases the area, either living or storage, of the manufactured home. 
</P>
<P>(c) <I>Alteration</I> means the replacement, addition, and modification, or removal of any equipment or installation after sale by a manufacturer to a retailer or distributor but prior to sale by a retailer to a purchaser which may affect the construction, fire safety, occupancy, plumbing, heat-producing or electrical system. It includes any modification made in the manufactured home that may affect the compliance of the home with the standards, but it does not include the repair or replacement of a component or appliance requiring plug-in to an electrical receptacle where the replaced item is of the same configuration and rating as the one being replaced. It also does not include the addition of an appliance requiring <I>plug-in</I> to an electrical receptacle, which appliance was not provided with the manufactured home by the manufacturer, if the rating of the appliance does not exceed the rating of the receptacle to which it is connected.
</P>
<P>(d) <I>Attached accessory building or structure</I> means any awning, cabana, deck, ramada, storage cabinet, carport, windbreak, garage, or porch for which the attachment of such is designed by the home manufacturer to be structurally supported by the manufactured home.
</P>
<P>(e) <I>Certification label</I> see <I>label.</I> 
</P>
<P>(f) <I>Certification report</I> means the report prepared by an IPIA (see definition z) for each manufactured home manufacturing plant under § 3282.203 in which the IPIA provides a complete description of the initial comprehensive inspection of the plant, an evaluation of the quality assurance program under the approved quality assurance manual, and the identity of the DAPIA (see definition z) which approved the designs and quality assurance manual used in the plant. Where appropriate under § 3282.362(b)(5), the certification report may be made by a DAPIA. 
</P>
<P>(g) <I>Component</I> means any part, material or appliance which is built in as an integral part of the manufactured home during the manufacturing process. 
</P>
<P>(h) <I>Cost information</I> means information submitted by a manufacturer under section 607 of the Act with respect to alleged cost increases resulting from action by the Secretary, in such form as to permit the public and the Secretary to make an informed judgment on the validity of the manufacturer's statements. Such term includes both the manufacturer's cost and the cost to retail purchasers. 
</P>
<P>(i) <I>Date of manufacture</I> means the date on which the label required by § 3282.205(c) is affixed to the manufactured home. 
</P>
<P>(j) [Reserved] 
</P>
<P>(k) <I>Defect</I> means a failure to comply with an applicable Federal manufactured home safety and construction standard that renders the manufactured home or any part or component thereof not fit for the ordinary use for which it was intended, but does not result in an unreasonable risk of injury or death to occupants of the affected manufactured home. See related definitions of <I>imminent safety hazard</I> (definition q), <I>noncompliance</I> (definition x), and <I>serious defect</I> (definition ff). 
</P>
<P>(l) <I>Design</I> means drawings, specifications, sketches and the related engineering calculations, tests and data in support of the configurations, structures and systems to be incorporated in manufactured homes manufactured in a plant. 
</P>
<P>(m) [Reserved] 
</P>
<P>(n) <I>Distributor</I> means any person engaged in the sale and distribution of manufactured homes for resale. 
</P>
<P>(o) <I>Failure to conform</I> means an imminent safety hazard related to the standards, a serious defect, defect, or noncompliance and is used as a substitute for all of those terms. 
</P>
<P>(p) <I>Finished good</I> has the meaning provided in 40 CFR 770.3.
</P>
<P>(q) <I>Imminent safety hazard</I> means a hazard that presents an imminent and unreasonable risk of death or severe personal injury that may or may not be related to failure to comply with an applicable Federal manufactured home construction or safety standard. See related definitions of <I>defect</I> (definition j), <I>noncompliance</I> (paragraph x) and <I>serious defect</I> (paragraph ff). 
</P>
<P>(r) <I>Joint monitoring team</I> means a monitoring inspection team composed of personnel provided by the various State Administrative Agencies, or by HUD or its contract agent, operating under a contract with HUD for the purpose of monitoring, or otherwise aiding in the enforcement of the Federal standards. 
</P>
<P>(s) <I>Label</I> or <I>certification label</I> means the approved form of certification by the manufacturer that, under § 3282.362(c)(2)(i), is permanently affixed to each transportable section of each manufactured home manufactured for sale to a purchaser in the United States. 
</P>
<P>(t) <I>Length of manufactured home</I> is defined in § 3280.2 of this chapter.
</P>
<P>(u) <I>Manufacturer</I> means any person engaged in manufacturing or assembling manufactured homes, including any person engaged in importing manufactured homes for resale. 
</P>
<P>(v) <I>Manufactured home</I> is defined in § 3280.2 of this chapter.
</P>
<P>(w) <I>Manufactured home construction</I> means all activities relating to the assembly and manufacture of a manufactured home including, but not limited to, those relating to durability, quality, and safety, but does not include those activities regulated under the installation standards in this chapter.
</P>
<P>(x) <I>Manufactured home safety</I> means the performance of a manufactured home in such a manner that the public is protected against any unreasonable risk of the occurrence of accidents due to the design or construction of such manufactured home, or any unreasonable risk of death or injury to the user or to the public if such accidents do occur. 
</P>
<P>(y) <I>Noncompliance</I> means a failure of a manufactured home to comply with a Federal manufactured home construction or safety standard that does not constitute a defect, serious defect, or imminent safety hazard. See related definitions or <I>defect</I> (definition j), <I>imminent safety hazard</I> (definition q), and <I>serious defect</I> (definition ff). 
</P>
<P>(z) <I>Owner</I> means any person purchasing a manufactured home from any other person after the first purchase of the manufactured home, in good faith, for purposes other than resale. 
</P>
<P>(aa) <I>Primary Inspection Agency</I> (PIA) means a State/or private organization that has been accepted by the Secretary in accordance with the requirement of subpart H of this part. There are two types of PIA: 
</P>
<P>(1) Design Approval PIA (DAPIA), which evaluates and approves or disapproves manufactured home designs and quality control procedures, and 
</P>
<P>(2) Production Inspection PIA (IPIA), which evaluates the ability of manufactured home manufacturing plants to follow approved quality control procedures and provides ongoing surveillance of the manufacturing process. Organizations may act as one or both of these types. 
</P>
<P>(bb) <I>Purchaser</I> means the first person purchasing a manufactured home in good faith for purposes other than resale. 
</P>
<P>(cc) <I>Quality Assurance Manual</I> means a manual, prepared by each manufacturer for its manufacturing plants and approved by a DAPIA which contains: a statement of the manufacturer's quality assurance program, a chart of the organization showing, by position, all personnel accountable for quality assurance, a list of tests and test equipment required, a station-by-station description of the manufacturing process, a list of inspections required at each station, and a list by title of personnel in the manufacturer's organization to be held responsible for each inspection. Where necessary, the quality assurance manual used in a particular plant shall contain information specific to that plant. 
</P>
<P>(dd) <I>To red tag</I> means to affix a notice to a manufactured home which has been found to contain an imminent safety hazard or a failure to conform with any applicable standard. A <I>red tag</I> is the notice so affixed to the manufactured home. 
</P>
<P>(ee) <I>Retailer</I> means any person engaged in the sale, leasing, or distribution of new manufactured homes primarily to persons who in good faith purchase or lease a manufactured home for purposes other than resale.
</P>
<P>(ff) <I>Secretary's agent</I> means a party operating as an independent contractor under a contract with HUD. 
</P>
<P>(gg) <I>Serious defect</I> means any failure to comply with an applicable Federal manufactured home construction and safety standard that renders the manufactured home or any part thereof not fit for the ordinary use for which it was intended and which results in an unreasonable risk of injury or death to occupants of the affected manufactured home. 
</P>
<P>(hh) <I>Standards</I> means the Federal manufactured home construction and safety standards promulgated under section 604 of the Act, 42 U.S.C. 5403, as part 3280 of these regulations. 
</P>
<P>(ii) <I>State</I> includes each of the several States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands, the Canal Zone, and American Samoa. 
</P>
<P>(jj) <I>State Administrative Agency</I> (SAA) means an agency of a State which has been approved or conditionally approved to carry out the State plan for enforcement of the standards pursuant to section 623 of the Act, 42 U.S.C. 5422, and subpart G of this part. 
</P>
<P>(kk) <I>State plan application</I> means the application of any State organization which is submitted to the Secretary for approval as a State Administrative Agency under subpart G. 
</P>
<P>(ll) <I>Substantial completion.</I> A manufactured home is substantially completed if all aspects of construction that can be finished in the manufacturer's plant are completed, except as provided in § 3282.603.
</P>
<P>(mm) <I>System</I> means a set or arrangement of materials or components related or connected as to form an operating entity, i.e., heating, ventilating and air-conditioning systems, evaporative coolers. 
</P>
<P>(nn) <I>United States District Courts</I> means the Federal district courts of the United States and the United States courts of the Commonwealth of Puerto Rico, Guam, the Virgin Islands, the Canal Zone, and American Samoa.
</P>
<CITA TYPE="N">[41 FR 19852, May 13, 1976, as amended at 41 FR 24971, June 21, 1976; 47 FR 28093, June 29, 1982; 61 FR 5216, Feb. 9, 1996; 61 FR 10859, Mar. 15, 1996; 78 FR 60199, Oct. 1, 2013; 80 FR 53727, Sept. 8, 2015; 85 FR 5566, Jan. 31, 2020; 86 FR 2525, Jan. 12, 2021; 89 FR 75758, Sept. 16, 2024] 


</CITA>
</DIV8>


<DIV8 N="§ 3282.8" NODE="24:5.1.2.1.3.1.1.4" TYPE="SECTION">
<HEAD>§ 3282.8   Applicability.</HEAD>
<P>(a) <I>Manufactured homes.</I> This part applies to all manufactured homes that enter the first stage of production on or after June 15, 1976, and to all manufactured homes that enter the first stage of production before June 15, 1976, to which labels are applied under § 3282.205(d). 
</P>
<P>(b) <I>States.</I> This part applies to States that desire to assume responsibility under the Federal manufactured home construction and safety standards enforcement program. It includes requirements which must be met in order for State agencies to be approved by the Secretary under section 623(c) of the Act, 42 U.S.C. 5422(c). It also includes requirements for States wishing to act as primary inspection agencies, as defined in § 3282.7, or to participate in monitoring activities under § 3282.308. 
</P>
<P>(c) <I>Primary inspection and engineering organizations.</I> This part applies to each private inspection and engineering organization that wishes to qualify as a primary inspection agency under subpart H. 
</P>
<P>(d) <I>Manufactured home manufacturers.</I> This part applies to all manufacturers producing manufactured homes for sale in the United States. It includes: 
</P>
<P>(1) Inspection procedures to be carried out in the manufacturing plants. 
</P>
<P>(2) Procedures by which a manufacturer obtains approval of manufactured home designs. 
</P>
<P>(3) Procedures by which a manufacturer obtains approval of manufacturing quality control and assurance programs. 
</P>
<P>(4) Procedures by which a manufacturer may obtain production inspections and certification labels for its manufactured homes. 
</P>
<P>(e) <I>Manufactured home retailers and distributors.</I> This part applies to any person selling, leasing, or distributing new manufactured homes for use in the United States. It includes prohibitions of the sale of new manufactured homes to which labels have not been affixed pursuant to subpart H of these regulations or that have been altered, damaged, or otherwise caused not to be in compliance with the Federal standards. 
</P>
<P>(f) <I>Purchasers, owners and consumers.</I> This part applies to purchasers, owners and consumers of manufactured homes in that it sets out procedures to be followed when purchasers, owners and consumers complain to manufacturers, States, the Secretary or others concerning problems in manufactured homes for which remedies are provided under the Act. 
</P>
<P>(g) [Reserved]
</P>
<P>(h) <I>Imported manufactured homes.</I> Imported manufactured homes are covered by the regulations except as modified by regulations promulgated jointly by the Secretary and the Secretary of the Treasury. 
</P>
<P>(i) <I>Export manufactured homes.</I> Manufactured Homes intended solely for export are not governed by this part or by part 3280 of this title if a label or tag stating that the manufactured home is intended solely for export is placed on the manufactured home or the outside of the container, if any, in which it is to be exported. However, any manufactured home so tagged or labeled that is not exported but is sold to a purchaser in the United States is subject to this part and part 3280 of this title. 
</P>
<P>(j) <I>Add-on.</I> An add-on including an attached accessory building or structure added by the retailer or some party other than the manufacturer (except where the manufacturer acts as a retailer) as part of a simultaneous transaction involving the sale of a new manufactured home, is not governed by the standards and is not subject to the regulations in this part except as identified in this section and part 3280 of this chapter. The addition of any add-on or attached accessory building or structure must not affect the ability of the manufactured home to comply with the standards. If the addition of an add-on or attached accessory building or structure causes the manufactured home to fail to conform to the standards, then sale, lease, and offer for sale or lease of the home are prohibited until the manufactured home is brought into conformance with the standards.
</P>
<P>(1) With the exception of attached accessory buildings or structures, add-ons must be structurally independent and any attachment between the home and the add-on must be for weatherproofing or cosmetic purposes only.
</P>
<P>(2) If an attached accessory building or structure is not structurally independent all the following must be met for attachment to the manufactured home:
</P>
<P>(i) Manufactured home must be designed and constructed to accommodate all imposed loads, including any loads imposed on the home by the attached accessory building or structure, in accordance with part 3280 of this chapter.
</P>
<P>(ii) Data plate must indicate that home has been designed to accommodate the additional loads imposed by the attachment of the attached accessory buildings or structures and must identify the design loads.
</P>
<P>(iii) Installation instructions shall be provided by the home manufacturer which identifies acceptable attachment locations, indicates design limitations for the attached accessory building or structure including acceptable live and dead loads for which the home has been designed to accommodate and provide support and anchorage designs as necessary to transfer all imposed loads to the ground in accordance with part 3285 of this chapter.
</P>
<P>(k) A structure (including an expandable room, tip-out, or tag-along unit) which is designed and produced as an integral part of a manufactured home when assembled on site, is governed by the standards and these regulations regardless of the dimensions of such structure. 
</P>
<CITA TYPE="N">[41 FR 19852, May 13, 1976, as amended at 41 FR 24970, June 21, 1976; 42 FR 35013, July 7, 1977; 44 FR 68733, Nov. 29, 1979; 47 FR 28093, June 29, 1982; 80 FR 53727, Sept. 8, 2015; 83 FR 57688, Nov. 16, 2018; 86 FR 2526, Jan. 12, 2021; 89 FR 75758, Sept. 16, 2024] 


</CITA>
</DIV8>


<DIV8 N="§ 3282.9" NODE="24:5.1.2.1.3.1.1.5" TYPE="SECTION">
<HEAD>§ 3282.9   Computation of time.</HEAD>
<P>(a) In computing any period of time prescribed by the regulations in this part, refer to § 26.16(a) of this title.
</P>
<P>(b) Extensions of any of the time periods set out in these regulations may be granted by the Secretary or, as appropriate, by a State Administrative Agency, upon a showing of good cause by the party governed by the time period. 
</P>
<CITA TYPE="N">[42 FR 2580, Jan. 12, 1977, as amended at 61 FR 10859, Mar. 15, 1996] 






</CITA>
</DIV8>


<DIV8 N="§ 3282.10" NODE="24:5.1.2.1.3.1.1.6" TYPE="SECTION">
<HEAD>§ 3282.10   Civil and criminal penalties.</HEAD>
<P>Failure to comply with these regulations may subject the party in question to the civil and criminal penalties provided for in section 611 of the Act, 42 U.S.C. 5410. The maximum penalty imposed under section 611 of the Act shall be $3,650 for each violation, up to a maximum of $4,562,282 for any related series of violations occurring within one year from the date of the first violation.
</P>
<CITA TYPE="N">[90 FR 24748, June 12, 2025]




</CITA>
</DIV8>


<DIV8 N="§ 3282.11" NODE="24:5.1.2.1.3.1.1.7" TYPE="SECTION">
<HEAD>§ 3282.11   Preemption and reciprocity.</HEAD>
<P>(a) No State manufactured home standard regarding manufactured home construction and safety which covers aspects of the manufactured home governed by the Federal standards shall be established or continue in effect with respect to manufactured homes subject to the Federal standards and these regulations unless it is identical to the Federal standards. 
</P>
<P>(b) No State may require, as a condition of entry into or sale in the State, a manufactured home certified (by the application of the label required by § 3282.362(c)(2)(i)) as in conformance with the Federal standards to be subject to State inspection to determine compliance with any standard covering any aspect of the manufactured home covered by the Federal standards. Nor may any State require that a State label be placed on the manufactured home certifying conformance to the Federal standard or an identical standard. Certain actions that States are permitted to take are set out in § 3282.303.
</P>
<P>(c) States may participate in the enforcement of the Federal standards enforcement program under these regulations either as SAAs or PIAs or both. These regulations establish the exclusive system for enforcement of the Federal standards. No State may establish or keep in effect through a building code enforcement system or otherwise, procedures or requirements which constitute systems for enforcement of the Federal standards or of identical State standards which are outside the system established in these regulations or which go beyond this system to require remedial actions which are not required by the Act and these regulations. A State may establish or continue in force consumer protections, such as warranty or warranty performance requirements, which respond to individual consumer complaints and so do not constitute systems of enforcement of the Federal standards, regardless of whether the State qualifies as an SAA or PIA. 
</P>
<P>(d) No State or locality may establish or enforce any rule or regulation or take any action that stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress. The test of whether a State rule or action is valid or must give way is whether the State rule can be enforced or the action taken without impairing the Federal superintendence of the manufactured home industry as established by the Act. 
</P>
<CITA TYPE="N">[42 FR 2580, Jan. 12, 1977, as amended at 56 FR 65186, Dec. 16, 1991; 61 FR 10859, Mar. 15, 1996] 


</CITA>
</DIV8>


<DIV8 N="§ 3282.12" NODE="24:5.1.2.1.3.1.1.8" TYPE="SECTION">
<HEAD>§ 3282.12   Excluded structures—modular homes.</HEAD>
<P>(a) The purpose of this section is to provide the certification procedure authorized by section 604(h) of the National Manufactured Housing Construction and Safety Standards Act under which modular homes may be excluded from coverage of the Act if the manufacturer of the structure elects to have them excluded. If a manufacturer wishes to construct a structure that is both a manufactured home and a modular home, the manufacturer need not make the certification provided for by this section and may meet both the Federal manufactured home requirements and any modular housing requirements. When the certification is not made, all provisions of the Federal requirements shall be met. 
</P>
<P>(b) Any structure that meets the definition of <I>manufactured home</I> at 24 CFR 3282.7(u) is excluded from the coverage of the National Manufactured Housing Construction and Safety Standards Act, 42 U.S.C. 5401 <I>et seq.,</I> if the manufacturer certifies as prescribed in paragraph (c) of this section that: 
</P>
<P>(1) The structure is designed only for erection or installation on a site-built permanent foundation; 
</P>
<P>(i) A structure meets this criterion if all written materials and communications relating to installation of the structure, including but not limited to designs, drawings, and installation or erection instructions, indicate that the structure is to be installed on a permanent foundation. 
</P>
<P>(ii) A site-built permanent foundation is a system of supports, including piers, either partially or entirely below grade which is: 
</P>
<P>(A) Capable of transferring all design loads imposed by or upon the structure into soil or bedrock without failure, 
</P>
<P>(B) Placed at an adequate depth below grade to prevent frost damage, and
</P>
<P>(C) Constructed of concrete, metal, treated lumber or wood, or grouted masonry; and
</P>
<P>(2) The structure is not designed to be moved once erected or installed on a site-built permanent foundation; 
</P>
<P>(i) A structure meets this criterion if all written materials and communications relating to erection or installation of the structure, including but not limited to designs, drawings, calculations, and installation or erection instructions, indicate that the structure is not intended to be moved after it is erected or installed and if the towing hitch or running gear, which includes axles, brakes, wheels and other parts of the chassis that operate only during transportation, are removable and designed to be removed prior to erection or installation on a site-built permanent foundation; and 
</P>
<P>(3) The structure is designed and manufactured to comply with the currently effective version of one of the following: 
</P>
<P>(i) One of the following nationally recognized building codes: 
</P>
<P>(A) That published by Building Officials and Code Administrators (BOCA) and the National Fire Protection Association (NFPA) and made up of the following: 
</P>
<P>(<I>1</I>) BOCA Basic Building Code, 
</P>
<P>(<I>2</I>) BOCA Basic Industrialized Dwelling Code, 
</P>
<P>(<I>3</I>) BOCA Basic Plumbing Code, 
</P>
<P>(<I>4</I>) BOCA Basic Mechanical Code, and 
</P>
<P>(<I>5</I>) National Electrical Code, or 
</P>
<P>(B) That published by the Southern Building Code Congress (SBCC) and the NFPA and made up of the following: 
</P>
<P>(<I>1</I>) Standard Building Code, 
</P>
<P>(<I>2</I>) Standard Gas Code, 
</P>
<P>(<I>3</I>) Standard Mechanical Code, 
</P>
<P>(<I>4</I>) Standard Plumbing Code, and 
</P>
<P>(<I>5</I>) National Electrical Code, or 
</P>
<P>(C) That published by the International Conference of Building Officials (ICBO), the International Association of Plumbing and Mechanical Officials (IAPMO), and the NFPA and made up of the following: 
</P>
<P>(<I>1</I>) Uniform Building Code, 
</P>
<P>(<I>2</I>) Uniform Mechanical Code, 
</P>
<P>(<I>3</I>) Uniform Plumbing Code, and 
</P>
<P>(<I>4</I>) National Electrical Code or 
</P>
<P>(D) The codes included in paragraphs (b)(3)(i)(A), (B), or (C) in connection with the One- and Two-Family Dwelling Code, or 
</P>
<P>(E) Any combination of the codes included in paragraphs (b)(3)(i)(A), (B), (C), and (D), that is approved by the Secretary, including combinations using the National Standard Plumbing Code published by the National Association of Plumbing, Heating and Cooling Contractors (PHCC), or
</P>
<P>(F) Any other building code accepted by the Secretary as a nationally recognized model building code, or
</P>
<P>(ii) Any local code or State or local modular building code accepted as generally equivalent to the codes included under paragraph (b)(3)(i), (the Secretary will consider the manufacturer's certification under paragraph (c) of this section to constitute a certification that the code to which the structure is built is generally equivalent to the referenced codes. This certification of equivalency is subject to the provisions of paragraph (f) of this section) or 
</P>
<P>(iii) The minimum property standards adopted by the Secretary pursuant to title II of the National Housing Act; and 
</P>
<P>(4) To the manufacturer's knowledge, the structure is not intended to be used other than on a site-built permanent foundation. 
</P>
<P>(c) When a manufacturer makes a certification provided for under paragraph (b) of this section, the certification shall state as follows:
</P>
<EXTRACT>
<P>The manufacturer of this structure, Name ____________________ Address ____________________ (location where structure was manufactured).
</P>
<P>Certifies that this structure (Ser. No. ________) is not a manufactured home subject to the provisions of the National Manufactured Housing Construction and Safety Standards Act and is—
</P>
<P>(1) designed only for erection or installation on a site-built permanent foundation, 
</P>
<P>(2) not designed to be moved once so erected or installed, 
</P>
<P>(3) designed and manufactured to comply with ______________ (Here state which code included in paragraph (b)(3) of this section has been followed), and 
</P>
<P>(4) to the manufacturer's knowledge is not intended to be used other than on a site-built permanent foundation.</P></EXTRACT>
<P>(d) This certification shall be affixed in a permanent manner near the electrical panel, on the inside of a kitchen cabinet door, or in any other readily accessible and visible location. 
</P>
<P>(e) As part of this certification, the manufacturer shall identify each certified structure by a permanent serial number placed on the structure during the first stage of production. If the manufacturer also manufactures manufactured homes that are certified under §§ 3282.205 and 3282.362(c), the series of serial numbers for structures certified under this section shall be distinguishable on the structures and in the manufacturer's records from the series of serial numbers for the manufactured homes that are certified under §§ 3282.205 and 3282.362(c). 
</P>
<P>(1) If a manufacturer wishes to certify a structure as a manufactured home under §§ 3282.205 and 3282.362(c) after having applied a serial number identifying it as exempted under this section, the manufacturer may do so only with the written consent of the Production Inspection Primary Inspection Agency (IPIA) after thorough inspection of the structure by the IPIA at at least one stage of production and such removal or equipment, components, or materials as the IPIA may require to perform inspections to assure that the structure conforms to the Federal manufactured home standards. The manufacturer shall remove the original serial number and add the serial number required by § 3280.6. 
</P>
<P>(2) A manufacturer may not certify a structure under this section after having applied the manufactured home serial number under § 3280.6. 
</P>
<P>(f) All certifications made under this section are subject to investigation by the Secretary to determine their accuracy. If a certification is false or inaccurate, the certification for purposes of this section is invalid and the structures that have been or may be the subject of the certification are not excluded from the coverage of the Act, the Federal Manufactured Home Construction and Safety Standards, or these Regulations. 
</P>
<P>(1) If the Secretary has information that a certification may be false or inaccurate, the manufacturer will be given written notice of the nature of this information by certified mail and the procedure of this subparagraph will be followed. 
</P>
<P>(i) The manufacturer must investigate this matter and report its findings in writing as to the validity of this information to the Secretary within 15 days from the receipt of the Secretary's notice. 
</P>
<P>(ii) If a written report is received within the time prescribed in paragraph (f)(1)(i) of this section, the Secretary will review this report before determining whether a certification is false or inaccurate. If a report is not received within 15 days from the receipt of the Secretary's notice, the Secretary will make the determination on the basis of the information presented. 
</P>
<P>(iii) If the Secretary determines that a certification is false or inaccurate, the manufacturer will be given written notice and the reasons for this determination by certified mail. 
</P>
<P>(2) The Secretary may seek civil and criminal penalties provided for in section 611 of the Act, 42 U.S.C. 5410, if the party in question in the exercise of due care has reason to know that such certification is false or misleading as to any material fact. 
</P>
<CITA TYPE="N">[44 FR 68733, Nov. 29, 1979, as amended at 49 FR 10666, Mar. 22, 1984] 


</CITA>
</DIV8>


<DIV8 N="§ 3282.13" NODE="24:5.1.2.1.3.1.1.9" TYPE="SECTION">
<HEAD>§ 3282.13   Voluntary certification.</HEAD>
<P>(a) The purpose of this section is to provide a procedure for voluntary certification of non-conforming manufactured homes as required by 42 U.S.C. 5402(6) as amended by section 308(d)(B) of the Housing and Community Development Act of 1980. 
</P>
<P>(b) Structures which meet all of the requirements of a <I>manufactured home</I> as set out in § 3282.7(u), except the size requirements, shall be <I>manufactured homes</I> if the manufacturer files with the Secretary a certification in the following form:
</P>
<EXTRACT>
<P>[Name of manufacturer and address where structures are to be manufactured] certifies that it intends to manufacture structures that meet all of the requirements of manufactured homes set forth at 42 U.S.C. 5402(6) except the size requirements. Such structures are to be treated as manufactured homes for the purposes of the National Manufactured Housing Construction and Safety Standards Act of 1974 and the regulations promulgated pursuant thereto. Such structures will be built in conformance with the Standards. [Name of manufacturer] further certifies that if, at any time it manufactures structures which are not manufactured homes, it will identify each such structure by a permanent serial number placed on the structure during the first stage of production and that the series of serial numbers for such structures shall be distinguishable on the structures and in its records from the series of serial numbers used for manufactured homes.</P></EXTRACT>
<P>(c) Whenever a manufacturer which has filed a certification pursuant to § 3282.13(b) produces structures which are not manufactured homes, it must identify each such structure by placing a permanent serial number on the structure during the first stage of production. The series of serial numbers placed on these structures shall be distinguishable on the structure and in the manufacturer's records from the series of serial numbers used for manufactured homes. 
</P>
<P>(d) A manufacturer may certify a structure as a manufactured home after having applied a serial number identifying it as a structure which is not a manufactured home. To do so, the manufacturer must secure the written consent of the IPIA. This consent may only be given after a DAPIA has approved the manufacturer's design and quality assistance manual in accordance with § 3282.361, and after the IPIA has thoroughly inspected the structure in at least one stage of production and after such removal of equipment, components or materials as the IPIA may require to assure that the structure conforms to the standards. After certification as a manufactured home has been approved, the manufacturer shall remove the original serial number and add the serial number required by § 3280.6.
</P>
<P>(e) Once a manufacturer has certified under § 3282.13(b) that it intends to build structures which are manufactured homes in all respects except size, the manufacturer must then, with respect to those structures, comply with all of the requirements of the Act and its regulations. The structures may not thereafter be exempted under any other section of these regulations.
</P>
<CITA TYPE="N">[47 FR 28093, June 29, 1982] 


</CITA>
</DIV8>


<DIV8 N="§ 3282.14" NODE="24:5.1.2.1.3.1.1.10" TYPE="SECTION">
<HEAD>§ 3282.14   Alternative construction of manufactured homes.</HEAD>
<P>(a) <I>Policy.</I> In order to promote the purposes of the Act, the Department will permit the sale or lease of one or more manufactured homes not in compliance with the standards under circumstances wherein no affirmative action is needed to protect the public interest. An add-on, including an attached accessory building or structure which does not affect the performance and ability of the manufactured home to comply with the standards in accordance with § 3282.8(j), is not governed by this section. The Department encourages innovation and the use of new technology in manufactured homes. Accordingly, HUD will permit manufacturers to utilize new designs or techniques not in compliance with the standards in cases:




</P>
<P>(1) Where a manufacturer proposes to utilize construction that would be prohibited by the Standards; 
</P>
<P>(2) Where such construction would provide performance that is equivalent to or superior to that required by the Standards; and 
</P>
<P>(3) Where (i) compliance with the Standards would be unreasonable because of the circumstances of the particular case, or (ii) the alternative construction would be for purposes of research, testing or development of new techniques or designs. If a request for alternative construction is submitted and the facts are consistent with these principles, the Secretary may issue a letter under paragraph (c) of this section stating that no action will be taken under the Act based upon specific failures to conform to the Standards or these regulations, provided that certain conditions are met. The issuance of a letter under paragraph (c) of this section will not affect any right that any purchaser may have under the Act or other applicable law and will not preclude any further agency action that may become necessary. 
</P>
<P>(b) <I>Request for alternative construction.</I> A manufacturer may submit a request for alternative construction of a manufactured home. The request should be sent to the U.S. Department of Housing and Urban Development, Manufactured Housing Standards Division, 451 Seventh Street, SW., Washington, DC 20410. The request must include: 
</P>
<P>(1) A copy of the manufactured design or plan for each nonconforming model which a manufacturer plans to build; 
</P>
<P>(2) An explanation of the manner in which the design fails to conform with the Standards, including a list of the specific standards involved; 
</P>
<P>(3) An explanation of how the design will result in homes that provide the same level of performance, quality, durability and safety as would be provided under the Standards; 
</P>
<P>(4) A copy of data adequate to support the request, including applicable test data, engineering calculations or certifications from nationally recognized laboratories; 
</P>
<P>(5) An estimate of the maximum number of manufactured home units affected and the location, if known, to which the units will be shipped; 
</P>
<P>(6) An indication of the period of time during which the manufacturer proposes to engage in the manufacture, sale or lease of the nonconforming homes;
</P>
<P>(7) A copy of the proposed notice to be provided to home purchasers;
</P>
<P>(8) A list of the names and addresses of any retailers that would be selling the nonconforming homes; and
</P>
<P>(9) A letter from the manufacturer's DAPIA indicating that the design(s) to which any nonconforming homes would be built meet the Standards in all other respects. 
</P>
<P>(c) <I>Issuance of the letter by the Secretary</I>—(1) <I>Contents of the letter.</I> If the Secretary issues a letter in response to a request for alternative construction, the letter shall include the specific standards affected, an explanation of the proposed activity or design, an explanation of how the request is consistent with the objectives of the Act, and any conditions that the manufacturer must meet.
</P>
<P>(2) <I>Letter sent to IPIA, DAPIA and SAA.</I> The Secretary shall forward a copy of the letter to the manufacturer's IPIA and DAPIA along with a letter authorizing the DAPIA to approve plans containing the alternative construction, and authorizing the IPIA to permit use of the alternative construction, provided that the conditions set forth in the letter are met. The Secretary shall also forward a copy of the letter to the SAAs in the State of manufacture and the State(s) in which the homes are to be located, if known. 
</P>
<P>(3) <I>Alternative construction in additional models.</I> In cases where the Secretary grants a letter under this paragraph that is not model-specific, the Secretary may permit the manufacturer to include the alternative construction in additional models. In such cases, the DAPIA shall notify the Department of additional models that incorporate the alternative construction. 
</P>
<P>(d) <I>Revocation.</I> The Secretary may revoke or amend a letter issued under paragraph (c) of this section at any time. Such revocation or amendment will be prospective only. Where manufacturers have requested alternative construction for research, testing or development such alternative construction may not achieve the anticipated results. Therefore, the Secretary may require a manufacturer to bring those homes into compliance with the standards if, after the alternative construction has been in use for a period of time specified by the Secretary, these homes are not, in the Secretary's judgment, providing the levels of safety, quality and durability which would have been provided had the homes been built in compliance with the Standards. 
</P>
<P>(e) <I>Notice to prospective purchasers.</I> Manufacturers receiving letters under paragraph (c) of this section shall provide notice to prospective purchasers that the home does not conform to the Standards. Such notice shall be delivered to each prospective purchase before he or she enters into an agreement to purchase the home. The notice shall be in the following form or in such other form as may be approved by the Secretary:
</P>
<EXTRACT>
<HD1>Notice to Purchasers
</HD1>
<P>The Department of Housing and Urban Development has issued a letter to (Name of Manufacturer) concerning the homes in (location if known). As designed, the homes do not meet Federal Manufactured Home Construction and Safety Standards regarding (brief statement of manufacturer's nonconformance).
</P>
<P>HUD has evaluated the alternative construction and believes that it provides an equivalent level of quality, durability and safety to that provided by the Standards. 
</P>
<P>For further information about the specific Federal Standards involved, a copy of the letter issued pursuant to 24 CFR 3282.14(c) is available from this retailer or manufacturer upon request.</P></EXTRACT>
<P>(f) <I>Serial numbers of homes constructed using alternative construction.</I> Manufacturers shall provide the Department with the serial numbers assigned to each home produced in conformance with the letter issued under paragraph (c) of this section within 90 days of their date of manufacture. Each serial number shall include the letters “AC” to indicate that the homes was produced under alternative construction procedures. 
</P>
<CITA TYPE="N">[49 FR 1967, Jan. 16, 1984, as amended at 86 FR 2526, Jan. 12, 2021] 


</CITA>
</DIV8>


<DIV8 N="§ 3282.15" NODE="24:5.1.2.1.3.1.1.11" TYPE="SECTION">
<HEAD>§ 3282.15   Exemption for recreational vehicles.</HEAD>
<P>(a) <I>Exemption.</I> A recreational vehicle that meets the requirements of this section is exempt from 24 CFR parts 3280 and 3282.
</P>
<P>(b) <I>Definition.</I> A recreational vehicle is:
</P>
<P>(1) A vehicle or vehicular structure not certified as a manufactured home;
</P>
<P>(2) Designed only for recreational use and not as a primary residence or for permanent occupancy; and is either:
</P>
<P>(i) Built and certified in accordance with either NFPA 1192 (incorporated by reference, see § 3282.16) or ANSI A119.5 (incorporated by reference, see § 3282.16) as provided by paragraph (c) of this section; or
</P>
<P>(ii) Any vehicle which is self-propelled.
</P>
<P>(c) <I>Notice and certification requirements.</I> In order for the exemption to apply to an ANSI A119.5-15 certified recreational vehicle, a Manufacturer's Notice must be delivered to the consumer prior to the completion of the sales transaction. The Manufacturer's Notice must also be prominently displayed in a temporary manner in the kitchen (<I>i.e.,</I> countertop or exposed cabinet face). The Manufacturer's Notice must meet the following requirements:
</P>
<P>(1) <I>Title of Manufacturer's Notice.</I> The title of the Manufacturer's Notice shall be “*****MANUFACTURER'S NOTICE*****” which shall be legible and typed using bold letters at least 1 inch in size.
</P>
<P>(2) <I>Content of Notice.</I> The content of the Manufacturer's Notice text shall be as follows:
</P>
<P>The Manufacturer of this unit certifies that it is a Park Model Recreational Vehicle designed only for recreational use, and not for use as a primary residence or for permanent occupancy. The manufacturer of this unit further certifies that this unit has been built in accordance with the ANSI A119.5-15 consensus standard for Park Model Recreational Vehicles.
</P>
<P>(3) <I>Text of Notice.</I> The text of the Manufacturer's Notice, aside from the Manufacturer's Notice's title shall be legible and typed using letters at least 
<FR>1/2</FR> inch in size.
</P>
<P>(4) <I>Removal of Manufacturer's Notice.</I> The Manufacturer's Notice shall not be removed by any party until the entire sales transaction has been completed.
</P>
<P>(5) <I>Completion of sales transaction.</I> A sales transaction with a Park Model Recreational Vehicle purchaser is considered completed when all the goods and services that the dealer agreed to provide at the time the contract was formed have been provided. Completion of a retail sale will be at the time the dealer completes installation of the Park Model Recreational Vehicle, if the dealer has agreed to provide the installation, or at the time the dealer delivers the recreational vehicle to a transporter, if the dealer has not agreed to transport or install the Park Model Recreational Vehicle. The sale is also complete upon delivery to the site if the dealer has not agreed to provide installation as completion of sale.
</P>
<CITA TYPE="N">[83 FR 57688, Nov. 16, 2018]


</CITA>
</DIV8>


<DIV8 N="§ 3282.16" NODE="24:5.1.2.1.3.1.1.12" TYPE="SECTION">
<HEAD>§ 3282.16   Incorporation by reference.</HEAD>
<P>(a) Certain material is incorporated by reference into this part with the approval of the Director of the Federal Register under 5 U.S.C. 552(a) and 1 CFR part 51. To enforce any edition other than that specified in this section, the Department must publish a document in the <E T="04">Federal Register</E> and the material must be available to the public. All approved material is available for inspection at the Office of Manufactured Housing Programs, Manufactured Housing and Construction Standards Division, U.S. Department of Housing and Urban Development, 451 7th Street SW, Room B-133, Washington, DC 20410, 202-402-5216, and is available from the sources listed below. Copies of incorporated standards that are not available from their producer organizations may be obtained from the Office of Manufactured Housing Programs. These standards are also available for inspection at the National Archives and Records Administration (NARA). For more information on the availability of this material at NARA, call 202-741-6030 or go to <I>http://www.archives.gov/federal-register/cfr/ibr-locations.html.</I>
</P>
<P>(b) National Fire Protection Association (NFPA), 1 Batterymarch Park, Quincy, MA 02169, telephone number 800-344-3555, website <I>http://www.nfpa.org.</I>
</P>
<P>(1) NFPA 1192, Standard on Recreational Vehicles, 2015 Edition, issued August 14, 2014, IBR approved for § 3282.15(b).
</P>
<P>(2) [Reserved]
</P>
<P>(c) Recreational Vehicle Industry Association (RVIA), 1896 Preston White Drive, Reston, VA 20191, telephone number 703-620-6003, website <I>http://www.rvia.org.</I>
</P>
<P>(1) ANSI A119.5: Park Model Recreational Vehicle Standard, 2015 Edition, ANSI-approved April 7, 2015, IBR approved for § 3282.15(b).
</P>
<P>(2) [Reserved]
</P>
<CITA TYPE="N">[83 FR 57688, Nov. 16, 2018]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:5.1.2.1.3.2" TYPE="SUBPART">
<HEAD>Subpart B—Formal Procedures</HEAD>


<DIV8 N="§ 3282.51" NODE="24:5.1.2.1.3.2.1.1" TYPE="SECTION">
<HEAD>§ 3282.51   Scope.</HEAD>
<P>This subpart contains rules of procedure generally applicable to the transaction of official business under the National Manufactured Housing Construction and Safety Standards Act, including the rules governing public availability of information. 


</P>
</DIV8>


<DIV8 N="§ 3282.52" NODE="24:5.1.2.1.3.2.1.2" TYPE="SECTION">
<HEAD>§ 3282.52   Address of communications.</HEAD>
<P>Unless otherwise specified, communications shall be addressed to the Administrator, Office of Manufactured Housing Programs, Office of Housing, Department of Housing and Urban Development, 451 7th Street SW., Washington, DC 20410.
</P>
<CITA TYPE="N">[78 FR 60199, Oct. 1, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 3282.53" NODE="24:5.1.2.1.3.2.1.3" TYPE="SECTION">
<HEAD>§ 3282.53   Service of process on foreign manufacturers and importers.</HEAD>
<P>The designation of an agent required by section 612(e) of the Act, 42 U.S.C. 5411(e), shall be in writing, dated, and signed by the manufacturer and the designated agent.
</P>
<CITA TYPE="N">[61 FR 10860, Mar. 15, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 3282.54" NODE="24:5.1.2.1.3.2.1.4" TYPE="SECTION">
<HEAD>§ 3282.54   Public information.</HEAD>
<P>(a) <I>General.</I> Subject to the provisions of 24 CFR part 15 covering the production or disclosure of material or information and the provisions of 24 CFR part 16 at 40 FR 39729 relating to the Privacy Act, and except as otherwise provided by paragraphs (b), (c), (d), and (e) of this section, the Secretary may make available to the public: 
</P>
<P>(1) Any information which may indicate the existence of an imminent safety hazard, and 
</P>
<P>(2) Any information which may indicate the failure of a manufactured home to comply with applicable manufactured home construction and safety standards, and 
</P>
<P>(3) Such other information as the Secretary determines is necessary to carry out the Secretary's functions under the Act. 
</P>
<P>(b) <I>Protected information.</I> Data and information submitted or otherwise provided to the Secretary or an agent of the Secretary or a PIA or SAA which fall within the definitions of a trade secret or confidential commercial or financial information are exempt from disclosure under this section, only if the party submitting or providing the information so requests under paragraph (c) of this section. However, the Secretary may disclose such information to any person requesting it after deletion of the portions which are exempt, or in such combined or summary form as does not disclose the portions which are exempt from disclosure or in its entirety in accordance with section 614 of the Act, U.S.C. 5413. 
</P>
<P>(c) <I>Obtaining exemption.</I> Any party submitting any information to the Secretary in any form under this part, or otherwise in relation to the program established by the Act shall, if the party desires the information to be exempt from disclosure, at the time of submittal of the information or at any time thereafter, request that the information or any part thereof be protected from disclosure. The request for nondisclosure shall include the basis for the request under the Act or other authority and complete justification supporting the claim that the material should be exempt from disclosure. The request should also include a statement of the information in such combined or summary form that alleged trade secrets or other protected information and the identity of the submitting party would not be disclosed. This request need not be made with respect to information which was submitted to the Secretary, an SAA or a PIA prior to the effective date of these regulations. 
</P>
<P>(d) <I>Request for information from PIAs or SAAs.</I> Whenever a PIA or SAA receives requests for disclosure of information, it shall disclose the information unless the party from which the information was originally obtained has submitted to the PIA or SAA a request that the information not be disclosed under paragraph (c) of this section, except that the PIA or SAA shall be governed by the provisions of 24 CFR part 16 (40 FR 39729) relating to the Privacy Act which may limit the disclosure of information. If a request for nondisclosure under paragraph (c) of this section has been received with respect to information whose disclosure is requested, the PIA or SAA shall refer the matter to the Secretary within 5 days of the request for disclosure. If a PIA or SAA receives a request for disclosure of information related to this program, which information was submitted to the PIA or SAA prior to the effective date of these regulations, the PIA or SAA shall refer the request for nondisclosure and required information to the Secretary. 
</P>
<CITA TYPE="N">[41 FR 19852, May 13, 1976, as amended at 61 FR 10860, Mar. 15, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:5.1.2.1.3.3" TYPE="SUBPART">
<HEAD>Subpart C—Rules and Rulemaking Procedures</HEAD>


<DIV8 N="§ 3282.101" NODE="24:5.1.2.1.3.3.1.1" TYPE="SECTION">
<HEAD>§ 3282.101   Generally.</HEAD>
<P>Procedures that apply to the formulation, issuance, amendment, and revocation of rules pursuant to the Act are governed by the Act, the Administrative Procedure Act, 5 U.S.C. 551 <I>et seq.,</I> and part 10 of this title, except that the Secretary shall respond to a petition for rulemaking by an interested party within 180 days of receipt of the petition.
</P>
<CITA TYPE="N">[61 FR 10860, Mar. 15, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 3282.111" NODE="24:5.1.2.1.3.3.1.2" TYPE="SECTION">
<HEAD>§ 3282.111   Petitions for reconsideration of final rules.</HEAD>
<P>(a) <I>Definition.</I> A petition for reconsideration of a final rule issued by the Secretary is a request in writing from any interested person which must be received not later than 60 days after publication of the rule in the <E T="04">Federal Register.</E> The petition shall state that it is a petition for reconsideration of a final rule, and shall contain an explanation as to why compliance with the rule is not practicable, is unreasonable, or is not in the public interest. If the petitioner requests the consideration of additional facts, the petitioner shall state the reason they were not presented to be treated as petitions for rulemaking. 
</P>
<P>(b) <I>Proceedings on petitions for reconsideration.</I> The Secretary may grant or deny, in whole or in part, any petition for reconsideration without further proceedings. The Secretary may issue a final decision on reconsideration without further proceeding, or may provide such opportunity to submit comments or information and data as the Secretary deems appropriate. 
</P>
<P>(c) Unless the Secretary determines otherwise, the filing of a petition under this section does not stay the effectiveness of the rule in question. 
</P>
<P>(d) Any party seeking to challenge any rule or regulation issued under the Act, except orders issued under section 604 42 U.S.C. 5403, if the challenge is brought before the expiration of the 60 day period set out in paragraph (a) of this section, shall file a timely petition for reconsideration under this section prior to seeking any other remedy. 


</P>
</DIV8>


<DIV8 N="§ 3282.113" NODE="24:5.1.2.1.3.3.1.3" TYPE="SECTION">
<HEAD>§ 3282.113   Interpretative bulletins.</HEAD>
<P>When appropriate, the Secretary shall issue interpretative bulletins interpreting the standards under the authority of § 3280.9 of this chapter or interpreting the provisions of this part. Issuance of interpretative bulletins shall be treated as rulemaking under this subpart C unless the Secretary deems such treatment not to be in the public interest and the interpretation is not otherwise required to be treated as rulemaking. All interpretative bulletins shall be indexed and made available to the public at the Manufactured Housing Standards Division and a copy of the index shall be published periodically in the <E T="04">Federal Register.</E>
</P>
<CITA TYPE="N">[61 FR 10860, Mar. 15, 1996]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:5.1.2.1.3.4" TYPE="SUBPART">
<HEAD>Subpart D—Informal and Formal Presentations of Views, Hearings and Investigations</HEAD>


<DIV8 N="§ 3282.151" NODE="24:5.1.2.1.3.4.1.1" TYPE="SECTION">
<HEAD>§ 3282.151   Applicability and scope.</HEAD>
<P>(a) This subpart sets out procedures to be followed when an opportunity to present views provided for in the Act is requested by an appropriate party. Section 3282.152 provides for two types of procedures that may be followed, one informal and nonadversary, and one more formal and adversary. Section 3282.152 also sets out criteria to govern which type of procedure will be followed in particular cases. 
</P>
<P>(b) The procedures of § 3282.152 also apply to: 
</P>
<P>(1) Proceedings held by the Secretary whenever the suspension or disqualification of a primary inspection agency, which has been granted final approval, is recommended under § 3282.356 of these regulations, and 
</P>
<P>(2) Resolution of disputes where an SAA or manufacturer disagrees with a determination of a DAPIA under § 3282.361 that a manufactured home design does or does not conform to the standards or that a quality assurance manual is or is not adequate with a decision by an IPIA to red tag or not to red tag or to provide or not to provide a certification label for a manufactured home under § 3282.362 when the IPIA believes that the manufactured home does or does not conform to the standards. 
</P>
<P>(c) The procedures set out in § 3282.152 shall also be followed whenever State Administrative Agencies hold Formal or Informal Presentations of Views under § 3282.309.
</P>
<P>(d) To the extent that these regulations provide for Formal or Informal Presentations of Views for parties that would otherwise qualify for hearings under 2 CFR part 2424, the procedures of 2 CFR part 2424 shall not be available and shall not apply.
</P>
<CITA TYPE="N">[41 FR 19852, May 13, 1976, as amended at 51 FR 34467, Sept. 29, 1986; 61 FR 10442, Mar. 13, 1996; 72 FR 73497, Dec. 27, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 3282.152" NODE="24:5.1.2.1.3.4.1.2" TYPE="SECTION">
<HEAD>§ 3282.152   Procedures to present views and evidence.</HEAD>
<P>(a) <I>Policy.</I> All Formal and Informal Presentations of Views under this subpart shall be public, unless, for good cause, the Secretary determines it is in the public interest that a particular proceeding should be closed. If the Secretary determines that a proceeding should be closed, the Secretary shall state and make publicly available the basis for that determination.
</P>
<P>(b) <I>Request.</I> Upon receipt of a request to present views and evidence under the Act, the Secretary shall determine whether the proceeding will be a Formal or an Informal Presentation of Views, and shall issue a notice under paragraph (c) of this section.
</P>
<P>(c) <I>Notice.</I> When the Secretary decides to conduct a Formal or an Informal Presentation of Views under this section, the Secretary shall provide notice as follows:
</P>
<P>(1) Except where the need for swift resolution of the question involved prohibits it, notice of a proceeding hereunder shall be published in the <E T="04">Federal Register</E> at least 10 days prior to the date of the proceeding. In any case, notice shall be provided to interested persons to the maximum extent practicable. Direct notice shall be sent by certified mail to the parties involved in the hearing. 
</P>
<P>(2) The notice, whether published or mailed, shall include a statement of the time, place and nature of the proceeding; reference to the authority under which the proceeding will be held; a statement of the subject matter of the proceeding, the parties and issues involved; and a statement of the manner in which interested persons shall be afforded the opportunity to participate in the hearing. 
</P>
<P>(3) The notice shall designate the official who shall be the presiding officer for the proceedings and to whom all inquiries should be directed concerning such proceedings. 
</P>
<P>(4) The notice shall state whether the proceeding shall be held in accordance with the provisions of paragraph (f)—(Informal Presentation of Views) or paragraph (g)—(Formal Presentation of Views) of this section, except that when the Secretary makes the determinations provided for in sections 623 (d) and (f) of the Act, the requirements of paragraph (g) of this section shall apply. In determining whether the requirements of paragraph (f) or those of paragraph (g) of this section shall apply the Secretary shall consider the following:
</P>
<P>(i) The necessity for expeditious action; 
</P>
<P>(ii) The risk of injury to affected members of the public;
</P>
<P>(iii) The economic consequences of the decisions to be rendered; and
</P>
<P>(iv) Such other factors as the Secretary determines are appropriate.
</P>
<P>(d) <I>Department representative.</I> If the Department is to be represented by Counsel, such representation shall be by a Department hearing attorney designated by the General Counsel. 
</P>
<P>(e) <I>Reporting and transcription.</I> Oral proceedings shall be stenographically or mechanically reported and transcribed under the supervision of the presiding officer, unless the presiding officer and the parties otherwise agree, in which case a summary approved by the presiding officer shall be kept. The original transcript or summary shall be a part of the record and the sole official transcript, or summary. A copy of the transcript or summary shall be available to any person at a fee established by the Secretary, which fee the Secretary may waive in the public interest. Any information contained in the transcript or summary which would be exempt from required disclosure under § 3282.54 of these regulations may be protected from disclosure if appropriate under that section upon a request for such protection under § 3282.54(c). 
</P>
<P>(f) <I>Informal presentation of views.</I> (1) An Informal Presentation of Views may be written or oral, and may include an opportunity for an oral presentation, whether requested or not, whenever the Secretary concludes that an oral presentation would be in the public interest, and so states in the notice. A presiding officer shall preside over all oral presentations held under this subsection. The purpose of any such presentation shall be to gather information to allow fully informed decision making. Informal Presentations of Views shall not be adversary proceedings. Oral presentations shall be conducted in an informal but orderly manner. The presiding officer shall have the duty and authority to conduct a fair proceeding, to take all necessary action to avoid delay, and to maintain order. In the absence of extraordinary circumstances, the presiding officer at an oral Informal Presentation of Views shall not require that testimony be given under an oath or affirmation, and shall not permit either cross-examination of witnesses by other witnesses or their representatives, or the presentation of rebuttal testimony by persons who have already testified. The rules of evidence prevailing in courts of law or equity shall not control the conduct of oral Informal Presentations of Views.
</P>
<P>(2) Within 10 days after an Informal Presentation of Views, the presiding officer shall refer to the Secretary all documentary evidence submitted, the transcript, if any, a summary of the issues involved and information presented in the Informal Presentation of Views and the presiding official's recommendations, with the rationale therefor. The presiding officer shall make any appropriate statements concerning the apparent veracity of witnesses or the validity of factual assertions which may be within the competence of the presiding officer. The Secretary shall issue a Final Determination concerning the matters at issue within 30 days of receipt of the presiding officer's summary. The Final Determination shall include:
</P>
<P>(i) A statement of findings, with specific references to principal supporting items of evidence in the record and conclusions, as well as the reasons or bases therefor, upon all of the material issues of fact, law, or discretion as presented on the record, and 
</P>
<P>(ii) An appropriate order. Notice of the Final Determination shall be given in writing and transmitted by certified mail, return receipt requested, to all participants in the presentation of views. The Final Determination shall be conclusive, with respect to persons whose interests were represented.
</P>
<P>(g) <I>Formal presentation of views.</I> (1) A Formal Presentation of Views is an adversary proceeding and includes an opportunity for the oral presentation of evidence. All witnesses shall testify under oath or affirmation, which shall be administered by the presiding officer. Participants shall have the right to present such oral or documentary evidence and to conduct such cross-examination as the presiding officer determines is required for a full and true disclosure of facts. The presiding officer shall receive relevant and material evidence, rule upon offers of proof and exclude all irrelevant, immaterial or unduly repetitious evidence. However, the technicalities of the rules of evidence prevailing in courts of law or equity shall not control the conduct of a Formal Presentation of Views. The presiding officer shall take all necessary action to regulate the course of the Formal Presentation of Views to avoid delay and to maintain order. The presiding officer may exclude the attorney or witness from further participation in the particular Formal Presentation of Views and may render a decision adverse to the interests of the excluded party in his absence.
</P>
<P>(2) <I>Decision.</I> The presiding officer shall make and file an initial written decision on the matter in question. The decision shall be filed within 10 days after completion of the oral presentation. The decision shall include: 
</P>
<P>(i) A statement of findings of fact, with specific references to principal supporting items of evidence in the record and conclusions, as well as the reasons or bases therefor, upon all of the material issues of law or discretion presented on the record, and
</P>
<P>(ii) An appropriate order.
</P>
<FP>The presiding officer's decision shall be final and shall constitute the Final Determination of the Secretary unless reversed or modified within 30 days by the Secretary. Notice of the Final Determination shall be given in writing, and transmitted by registered or certified mail, return receipt requested, to all participants in the proceeding. The Final Determination shall be conclusive with respect to persons whose interests were represented. 
</FP>
<CITA TYPE="N">[41 FR 19852, May 13, 1976, as amended at 51 FR 34467, Sept. 29, 1986]


</CITA>
</DIV8>


<DIV8 N="§ 3282.153" NODE="24:5.1.2.1.3.4.1.3" TYPE="SECTION">
<HEAD>§ 3282.153   Public participation in formal or informal presentation of views.</HEAD>
<P>(a) Any interested persons may participate, in writing, in any Formal or Informal Presentation of Views held under the provisions of paragraph (f) or (g) of § 3282.152. The presiding officer shall, to the extent practicable, consider any such written materials.
</P>
<P>(b) Any interested person may participate in the oral portion of any Formal or Informal Presentation of Views held under paragraphs (f) and (g) of § 3282.152 unless the presiding officer determines that participation should be limited or barred so as not unduly to prejudice the rights of the parties directly involved or unnecessarily to delay the proceedings.
</P>
<CITA TYPE="N">[51 FR 34468, Sept. 29, 1986]


</CITA>
</DIV8>


<DIV8 N="§ 3282.154" NODE="24:5.1.2.1.3.4.1.4" TYPE="SECTION">
<HEAD>§ 3282.154   Petitions for formal or informal presentations of views, and requests for extraordinary interim relief.</HEAD>
<P>Any person entitled to a Formal or an Informal Presentation of Views under paragraph (f) or paragraph (g) of § 3282.152 in order to address issues as provided for in § 3282.151(a) may petition the Secretary to initiate such a Presentation of Views. The petition may be accompanied by a request that the Secretary provide appropriate interim relief pending the issuance of the final determination or decision. No interim relief will be granted unless there is a showing of extraordinary cause. Upon receipt of a petition, the Secretary shall grant the petition and issue the notice provided for in § 3282.152(b) for Formal or Informal Presentation of Views, and may grant, deny or defer decision on any request for interim relief. 
</P>
<CITA TYPE="N">[51 FR 34468, Sept. 29, 1986]


</CITA>
</DIV8>


<DIV8 N="§ 3282.155" NODE="24:5.1.2.1.3.4.1.5" TYPE="SECTION">
<HEAD>§ 3282.155   Investigations.</HEAD>
<P>The procedures for investigations and investigational proceedings are set forth in part 3800 of this chapter. 
</P>
<CITA TYPE="N">[61 FR 10442, Mar. 13, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 3282.156" NODE="24:5.1.2.1.3.4.1.6" TYPE="SECTION">
<HEAD>§ 3282.156   Petitions for investigations.</HEAD>
<P>(a) Any person may petition the Secretary in writing to open an investigation into whether noncompliances, defects, serious defects, or imminent safety hazards exist in manufactured homes. A petition shall include the reasons that the petitioner believes warrant an investigation, and it shall state any steps which have previously been taken to remedy the situation. The petition shall include all information known to the petitioner concerning the identity of manufactured homes which may be affected and where those manufactured homes were manufactured. The Secretary shall respond to petitions concerning alleged imminent safety hazards and serious defects within 60 days and to petitions alleging the existence of defects or noncompliances within 120 days. 
</P>
<P>(b) Any person may petition the Secretary in writing to undertake an investigation for the purpose of determining whether a primary inspection agency should be disqualified. The petition shall set out all facts and information on which the petition is based and a detailed statement of why such information justifies disqualification. The Secretary shall consider such petitions when making determinations on final acceptance and continued acceptance. The Secretary shall respond to such petition within 120 days. 


</P>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:5.1.2.1.3.5" TYPE="SUBPART">
<HEAD>Subpart E—Manufacturer Inspection and Certification Requirements</HEAD>


<DIV8 N="§ 3282.201" NODE="24:5.1.2.1.3.5.1.1" TYPE="SECTION">
<HEAD>§ 3282.201   Scope and purpose.</HEAD>
<P>(a) This subpart sets out requirements which must be met by manufacturers of manufactured homes for sale to purchasers in the United States with respect to certification of manufactured home designs, inspection of designs, quality assurance programs, and manufactured home production, and certification of manufactured homes. Other than references and a general description of responsibilities, this subpart does not set out requirements with respect to remedial actions or reports which must be taken or filed under the Act and these regulations. 
</P>
<P>(b) The purpose of this subpart is to require manufacturers to participate in a system of design approvals and inspections which serve to assist them in assuring that manufactured homes which they manufacture will conform to Federal standards. Such approvals and inspections provide significant protection to the public by decreasing the number of manufactured homes with possible defects in them, and provide protection to manufacturers by reducing the number of instances in which costly remedial actions must be undertaken after manufactured homes are sold. 


</P>
</DIV8>


<DIV8 N="§ 3282.202" NODE="24:5.1.2.1.3.5.1.2" TYPE="SECTION">
<HEAD>§ 3282.202   Primary inspection agency contracts.</HEAD>
<P>Each manufacturer shall enter into a contract or other agreement with as many Design Inspection Primary Inspection Agencies (DAPIAs) as it wishes and with enough Production Inspection Primary Inspection Agencies (IPIAs) to provide IPIA services for each manufacturing plant as set out in this subpart and in subpart H of this part. In return for the services provided by the DAPIAs and IPIAs, each manufacturer shall pay such reasonable fees as are agreed upon between the manufacturer and the primary inspection agency or, in the case of a State acting as an exclusive IPIA under § 3282.3 such fees as may be established by the State. 


</P>
</DIV8>


<DIV8 N="§ 3282.203" NODE="24:5.1.2.1.3.5.1.3" TYPE="SECTION">
<HEAD>§ 3282.203   DAPIA services.</HEAD>
<P>(a) Each manufacturer shall have each manufactured home design and each quality assurance manual which it intends to follow approved by a DAPIA under § 3282.361. The manufacturer is free to choose which DAPIA will evaluate and approve its designs and quality assurance materials manufacturer may obtain design and quality assurance manual approval from a single DAPIA regardless of the number of plants in which the design and quality assurance manual will be followed. A manufacturer may also obtain approval for the same design and quality assurance manual from more than one DAPIA. The choice of which DAPIA or DAPIAs to employ is left to the manufacturer. 
</P>
<P>(b) The manufacturer shall submit to the DAPIA such information as the DAPIA may require in order to carry out design approvals. This information shall, except where the manufacturer demonstrates to the DAPIA that it is not necessary, include the following: 
</P>
<P>(1) Construction drawings and/or specifications showing structural details and layouts of frames, floors, walls and roofs, and chassis; material specifications, framing details, door locations, etc., for each floor plan proposed to be manufactured, 
</P>
<P>(2) Structural analysis and calculations, test data and/or other accepted engineering practices used by the manufacturer to validate the design, 
</P>
<P>(3) Complete heat loss calculations for each significant variation of home design, 
</P>
<P>(4) Floor plans showing room arrangement and sizes, window sizes, emergency exists and locations, locations of smoke alarms, fixed appliance range hoods, and other standards related aspects of the manufactured home that can be shown on the floor plans, 
</P>
<P>(5) Diagrams of the fuel supply system, potable water system and drain, waste and vent systems. The diagrams shall specify the types of materials used, types of fittings and methods of installing required safety equipment, 
</P>
<P>(6) Wiring diagrams, including circuit allocation of electrical load and branch circuit calculations, a table of the branch circuit protection provided, the type of wiring used, and wiring methods, 
</P>
<P>(7) Details showing the design of air supply and return systems, 
</P>
<P>(8) Details of chassis construction, components, connections and running gear including rating capacities of tires, 
</P>
<P>(9) A list of fixed and portable appliances furnished with the manufactured home, including type of appliance, rating of appliance, and applicable minimum and maximum performance ratings and/or energy requirements, 
</P>
<P>(10) Detailed manufacturer installation instructions including specifications and procedures for the erection and hook-up of the home at its permanent location, and 
</P>
<P>(11) Reports of all tests that were run to validate the conformance of the design to the standards. 
</P>
<P>(c) The manufacturer shall submit to the DAPIA such information as the DAPIA may require in order to carry out quality assurance manual approvals. At a minimum, this information shall include the quality assurance manual for which approval is sought. That manual shall include the manufacturer's quality assurance program, an organizational chart showing the accountability, by position, of the manufacturer's quality control personnel, a description of production tests and test equipment required for compliance with the standards, a station-by-station description of the manufacturing process, a list of quality control inspections required by the manufacturer at each station, and identification by title of each person who will be held accountable for each quality control inspection. 
</P>
<P>(d) Manufacturers may be required to furnish supplementary information to the DAPIA if the design information or the quality assurance manual is not complete or if any information is not in accordance with accepted engineering practice. 
</P>
<P>(e) When a manufacturer wishes to make a change in an approved design or quality assurance manual, the manufacturer shall obtain the approval of the DAPIA which approved the design or manual prior to production for sale. The procedures for obtaining such approval are set out in § 3282.361. When applicable under § 3282.605, the IPIA must concur in the change before it can be approved by the DAPIA.
</P>
<P>(f) The information to be submitted to a DAPIA under § 3282.203 (b) and (c) may be prepared by the manufacturer's staff or outside consultants, including other DAPIAs. However, a DAPIA may not perform design or quality assurance manual approvals for any manufacturer whose design or manual has been created or prepared in whole or in part by members of the DAPIA's organization or of any affiliated organization. 
</P>
<P>(g) Each manufacturer shall maintain a copy of the drawings, specifications, and sketches from each approved design received from a DAPIA under § 3282.361(b)(4) in each plant in which manufactured homes are being produced to the design. Each manufacturer shall also maintain in each manufacturing plant a copy of the approved quality assurance manual received from a DAPIA under § 3282.361(c)(3) that is being followed in the plant. These materials shall be kept current and shall be readily accessible for use by the Secretary or other parties acting under these regulations.
</P>
<CITA TYPE="N">[41 FR 19852, May 13, 1976, as amended at 67 FR 12818, Mar. 19, 2002; 80 FR 53727, Sept. 8, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 3282.204" NODE="24:5.1.2.1.3.5.1.4" TYPE="SECTION">
<HEAD>§ 3282.204   IPIA services.</HEAD>
<P>(a) Each manufacturer shall obtain the services of an IPIA as set out in § 3282.362 for each manufacturing plant operated by the manufacturer. 
</P>
<P>(b) The manufacturer shall make available to the IPIA operating in each of its plants a copy of the drawings and specifications from the DAPIA approved design and the quality assurance manual for that plant, and the IPIA shall perform an initial factory inspection as set out in § 3282.362(b). If the IPIA issues a deviation report after the initial factory inspection, the manufacturer shall make any corrections or adjustments which are necessary to conform with the DAPIA approved designs and manuals. After the corrections required by the deviation report are completed to the satisfaction of the IPIA, the IPIA shall issue the certification report as described in § 3282.362(b)(2). In certain instances a DAPIA may provide the certification report. (See § 3282.362) The manufacturer shall maintain a current copy of each certification report in the plant to which the certification report relates. 
</P>
<P>(c) After the certification report has been signed by the IPIA, the manufacturer shall obtain labels from the IPIA and shall affix them to completed manufactured homes as set out in § 3282.362(c)(2). During the initial factory certification, the IPIA may apply labels to manufactured homes which it knows to be in compliance with the standards if it is performing complete inspections of all phases of production of each manufactured home and the manufacturer authorizes it to apply labels. 
</P>
<P>(d) During the course of production the manufacturer shall maintain a complete set of approved drawings, specifications, and approved design changes for the use of the IPIA's inspector and always available to that inspector when in the manufacturing plant. 
</P>
<P>(e) If during the course of production, an IPIA finds a failure to conform to a standard exists in a manufactured home under production, the manufacturer must correct the failure to conform in any manufactured home still in the factory and held by distributors or retailers and shall carry out remedial actions under § 3282.416(a) with respect to any other manufactured homes which may contain the same failure to conform.
</P>
<CITA TYPE="N">[41 FR 19852, May 13, 1976, as amended at 78 FR 60199, Oct. 1, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 3282.205" NODE="24:5.1.2.1.3.5.1.5" TYPE="SECTION">
<HEAD>§ 3282.205   Certification requirements.</HEAD>
<P>(a) Every manufacturer shall make a record of the serial number of each manufactured home produced, and a duly authorized representative of the manufacturer shall certify that each manufactured home has been constructed in accordance with the Federal standards. The manufacturer shall furnish a copy of that certification to the IPIA for the purpose of determining which manufactured homes are subject to the notification and correction requirements of subpart I of this part.
</P>
<P>(b) Every manufacturer of manufactured homes shall certify on the data plate as set out in § 3280.5 of chapter XX of 24 CFR and § 3282.362(c)(3) that the manufactured home is designed to comply with the Federal manufactured home construction and safety standards in force at the time of manufacture in addition to providing other information required to be completed on the data plate. 
</P>
<P>(c) Every manufacturer of manufactured homes shall furnish to the retailer or distributor of each of its manufactured homes a certification that such manufactured home, to the best of the manufacturer's knowledge and belief, conforms to all applicable Federal construction and safety standards. This certification shall be in the form of the label provided by the IPIA under § 3282.362(c)(2). The label shall be affixed only at the end of the last stage of production of the manufactured home.
</P>
<P>(d) The manufacturer shall apply a label required or allowed by the regulations in this part only to a manufactured home that the manufacturer knows by its inspections to be in compliance with the standards.
</P>
<CITA TYPE="N">[41 FR 19852, May 13, 1976, as amended at 41 FR 24970, June 21, 1976; 61 FR 10860, Mar. 15, 1996] 


</CITA>
</DIV8>


<DIV8 N="§ 3282.206" NODE="24:5.1.2.1.3.5.1.6" TYPE="SECTION">
<HEAD>§ 3282.206   Disagreement with IPIA or DAPIA.</HEAD>
<P>Whenever a manufacturer disagrees with a finding by a DAPIA or an IPIA acting in accordance with subpart H of this part, the manufacturer may request a Formal or Informal Presentation of Views as provided in § 3282.152. The manufacturer shall not, however, produce manufactured homes pursuant to designs which have not been approved by a DAPIA or produce manufactured homes which the relevant IPIA believes not to conform to the standards unless and until: 
</P>
<P>(a) The Secretary determines that the manufacturer is correct in believing the design of the manufactured home conforms to the standards; or
</P>
<P>(b) Extraordinary interim relief is granted under § 3282.154; or
</P>
<P>(c) The DAPIA or IPIA otherwise resolves the disagreement.
</P>
<CITA TYPE="N">[41 FR 19852, May 13, 1976, as amended at 51 FR 34468, Sept. 29, 1986; 61 FR 10860, Mar. 15, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 3282.207" NODE="24:5.1.2.1.3.5.1.7" TYPE="SECTION">
<HEAD>§ 3282.207   Manufactured home consumer manual requirements.</HEAD>
<P>(a) The manufacturer shall provide a consumer manual with each manufactured home that enters the first stage of production on or after July 31, 1977, pursuant to section 617 of the National Manufactured Housing Construction and Safety Standards Act, 42 U.S.C. 5416.
</P>
<P>(b) The manufacturer shall provide the consumer manual by placing a manual in each such manufactured home before the manufactured home leaves the manufacturing plant. The manual shall be placed in a conspicuous location in a manner likely to assure that it is not removed until the purchaser removes it.
</P>
<P>(c) If a manufacturer is informed that a purchaser did not receive a consumer manual, the manufacturer shall provide the appropriate manual to the purchaser within 30 days of being so informed.
</P>
<P>(d) No retailer or distributor may interfere with the distribution of the consumer manual. When necessary, the retailer or distributor shall take any appropriate steps to assure that the purchaser receives a consumer manual from the manufacturer.
</P>
<P>(e) <I>Dispute resolution information.</I> (1) The manufacturer must include the following language under a heading of “Dispute Resolution Process” in the consumer manual:
</P>
<EXTRACT>
<P>Many states have a consumer assistance or dispute resolution program that homeowners may use to resolve problems with manufacturers, retailers, or installers concerning defects in their manufactured homes that render part of the home unfit for its intended use. Such state programs may include a process to resolve a dispute among a manufacturer, a retailer, and an installer about who will correct the defect. In states where there is not a dispute resolution program that meets the federal requirements, the HUD Manufactured Home Dispute Resolution Program will operate. These are “HUD-administered states.” The HUD Manufactured Home Dispute Resolution Program is not for cosmetic or minor problems in the home. You may contact the HUD Manufactured Housing Program Office at (202) 708-6423 or (800) 927-2891, or visit the HUD website at <I>www.hud.gov</I> to determine whether your state has a state program or whether you should use the HUD Manufactured Home Dispute Resolution Program. Contact information for state programs is also available on the HUD website. If your state has a state program, please contact the state for information about the program, how it operates, and what steps to take to request dispute resolution. When there is no state dispute resolution program, a homeowner may use the HUD Manufactured Home Dispute Resolution Program to resolve disputes among the manufacturer, retailer, and installer about responsibility for the correction or repair of defects in the manufactured home that were reported during the 1-year period starting on the date of installation. Even after the 1-year period, manufacturers have continuing responsibility to review certain problems that affect the intended use of the manufactured home or its parts, but for which correction may no longer be required under federal law.</P></EXTRACT>
<P>(2) The manufacturer must include the following language under a heading of “Additional Information “ HUD Manufactured Home Dispute Resolution Program” in the consumer manual:
</P>
<EXTRACT>
<P>The steps and information outlined below apply only to the HUD Manufactured Home Dispute Resolution Program that operates in HUD-administered states, as described under the heading “Dispute Resolution Information” in this manual. Under the HUD Manufactured Home Dispute Resolution Program, homeowners must report defects to the manufacturer, retailer, installer, a State Administrative Agency, or HUD within 1 year after the date of the first installation. Homeowners are encouraged to report defects in writing, including, but not limited to, email, written letter, certified mail, or fax, but they may also make a report by telephone. To demonstrate that the report was made within 1 year after the date of installation, homeowners should report defects in a manner that will create a dated record of the report: for example, by certified mail, by fax, or by email. When making a report by telephone, homeowners are encouraged to make a note of the phone call, including names of conversants, date, and time. No particular format is required to submit a report of an alleged defect, but any such report should at a minimum include a description of the alleged defect, the name of the homeowner, and the address of the home.
</P>
<P>Homeowners are encouraged to send reports of an alleged defect first to the manufacturer, retailer, or installer of the manufactured home, or a State Administrative Agency. Reports of alleged defects may also be sent to HUD at: HUD, Office of Regulatory Affairs and Manufactured Housing, Attn: Dispute Resolution, 451 Seventh Street, SW., Washington, DC 20410-8000; faxed to (202) 708-4213; e-mailed to <I>mhs@hud.gov,</I> or reported telephonically at (202) 708-6423 or (800) 927-2891.
</P>
<P>If, after taking the steps outlined above, the homeowner does not receive a satisfactory response from the manufacturer, retailer, or installer, the homeowner may file a dispute resolution request with the dispute resolution provider in writing, or by making a request by phone. No particular format is required to make a request for dispute resolution, but the request should generally include the following information:
</P>
<P>(1) The name, address, and contact information of the homeowner;
</P>
<P>(2) The name and contact information of the manufacturer, retailer, and installer of the manufactured home;
</P>
<P>(3) The date or dates the report of the alleged defect was made;
</P>
<P>(4) Identification of the entities or persons to whom each report of the alleged defect was made and the method that was used to make the report;
</P>
<P>(5) The date of installation of the manufactured home affected by the alleged defect; and
</P>
<P>(6) A description of the alleged defect.
</P>
<P>Information about the dispute resolution provider and how to make a request for dispute resolution is available at <I>http://www.hud.gov</I> or by contacting the Office of Manufactured Housing Programs at (202) 708-6423 or (800) 927-2891.
</P>
<P>A screening agent will review the request and, as appropriate, forward the request to the manufacturer, retailer, installer, and mediator. The mediator will mediate the dispute and attempt to facilitate a settlement. The parties to a settlement include, as applicable, the manufacturer, retailer, and installer. If the parties are unable to reach a settlement that results in correction or repair of the alleged defect, any party or the homeowner may request nonbinding arbitration. Should any party refuse to participate, the arbitration shall proceed without that party's input. Once the arbitrator makes a non-binding recommendation, the arbitrator will forward it to the parties and HUD. HUD will have the option of adopting, modifying, or rejecting the recommendation when issuing an order requiring the responsible party or parties to make any corrections or repairs in the home. At any time before HUD issues a final order, the parties may submit an offer of settlement to HUD that may, at HUD's discretion, be incorporated into the order.
</P>
<P>In circumstances where the parties agree that one or more of them, and not the homeowner, is responsible for the alleged defect, the parties will have the opportunity to resolve the dispute outside of the HUD Mediation and Arbitration process by using the Alternative Process. Homeowners will maintain the right to be informed in writing of the outcome when the Alternative Process is used, within 5 days of the outcome. At any time after 30 days of the Alternative Process notification, any participant or the homeowner may invoke the HUD Manufactured Home Dispute Resolution Program and proceed to mediation.
</P>
<P>The HUD Manufactured Home Dispute Resolution Program is not a warranty program and does not replace the manufacturer's or any other warranty program.</P></EXTRACT>
<P>(f) If a consumer manual or a change or revision to a manual does not substantially comply with the guidelines issued by HUD, the manufacturer shall cease distribution of the consumer manual and shall provide a corrected manual for each manufactured home for which the inadequate or incorrect manual or revision was provided. A manual substantially complies with the guidelines if it includes the language in paragraph (e) of this section and presents current material on each of the subjects covered in the guidelines in sufficient detail to inform consumers about the operation, maintenance, and repair of manufactured homes. An updated copy of guidelines published in the <E T="04">Federal Register</E> on March 15, 1996, can be obtained by contacting the Office of Manufactured Housing and Regulatory Functions, Department of Housing and Urban Development, 451 Seventh Street, SW., Washington, DC, 20410; the Information Center, Department of Housing and Urban Development, Room 1202, 451 Seventh Street, SW., Washington, DC, 20410; or any HUD Area or State Office.
</P>
<CITA TYPE="N">[61 FR 10860, Mar. 15, 1996, as amended at 72 FR 27228, May 14, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 3282.208" NODE="24:5.1.2.1.3.5.1.8" TYPE="SECTION">
<HEAD>§ 3282.208   Remedial actions—general description.</HEAD>
<P>(a) <I>Notification.</I> A manufacturer may be required to provide formal notice to manufactured home owners and retailers, as set out in subpart I of this part, if the manufacturer, the Secretary, or a State Administrative Agency determines under that subpart that an imminent safety hazard, serious defect, defect, or noncompliance exists or may exist in a manufactured home produced by that manufacturer. 
</P>
<P>(b) <I>Correction.</I> A manufacturer may be required to correct imminent safety hazards and serious defects which the manufacturer or the Secretary determines under subpart I exist in manufactured homes produced by the manufacturer. This correction would be carried out in addition to the sending of formal notice as described in paragraph (a) of this section. 
</P>
<P>(c) <I>Cooperation.</I> The manufacturer shall be responsible for working with the DAPIA, IPIA, any SAA, the Secretary, and the Secretary's agent as necessary in the course of carrying out investigations and remedial actions under subpart I. 
</P>
<P>(d) <I>Avoidance of formalities.</I> The provisions for notification and required correction outlined in paragraphs (a) and (b) of this section and described more fully in subpart I may be waived or avoided in certain circumstances under that subpart. 


</P>
</DIV8>


<DIV8 N="§ 3282.209" NODE="24:5.1.2.1.3.5.1.9" TYPE="SECTION">
<HEAD>§ 3282.209   Report requirements.</HEAD>
<P>The manufacturer shall submit reports to the PIAs, SAAs, and the Secretary as required by subpart L of these regulations. 


</P>
</DIV8>


<DIV8 N="§ 3282.210" NODE="24:5.1.2.1.3.5.1.10" TYPE="SECTION">
<HEAD>§ 3282.210   Payment of monitoring fee.</HEAD>
<P>(a) Each manufacturer shall pay the monitoring fee established under §§ 3282.307 and 3282.454 for each transportable section of each manufactured housing unit that it manufactures under the Federal standards.
</P>
<P>(b) The monitoring fee shall be paid in the form of a check made payable to the Secretary or the Secretary's agent. The manufacturer shall give to the IPIA (or to any other person or agency designated in writing by the Secretary) the required check in the amount of the number of labels, as required by § 3282.365, multiplied by the amount of the fee per transportable section of each manufactured housing unit.
</P>
<CITA TYPE="N">[50 FR 28398, July 12, 1985]


</CITA>
</DIV8>


<DIV8 N="§ 3282.211" NODE="24:5.1.2.1.3.5.1.11" TYPE="SECTION">
<HEAD>§ 3282.211   Record of purchasers.</HEAD>
<P>(a) <I>Information requirements for purchasers.</I> (1) Every manufacturer of manufactured homes shall, for each manufactured home manufactured under the Federal standards, provide with the manufactured home a booklet containing at least 3 detachable cards as described in paragraph (a)(2) of this section. On the front of the booklet, in bold faced type, shall be printed the following language: 
</P>
<EXTRACT>
<P>“Keep this booklet with your manufactured home. Title VI of the Housing and Community Development Act of 1974 provides you with protection against certain construction and safety hazards in your manufactured home. To help assure your protection, the manufacturer of your manufactured home needs the information which these cards, when completed and mailed, will supply. If you bought your home from a retailer, please be sure that your retailer has completed and mailed a card for you. If you acquired your home from someone who is not a retailer, you should promptly fill out and send a card to the manufacturer. It is important that you keep this booklet and give it to any person who buys the manufactured home from you.”</P></EXTRACT>
<P>(2) The detachable cards shall contain blanks for the following information: 
</P>
<P>(i) Name and address of the retailer or other person selling the manufactured home to the purchaser; 
</P>
<P>(ii) Name and complete mailing address of the manufactured home purchaser; 
</P>
<P>(iii) Address where the manufactured home will be located, if not the same as item (a)(2)(ii) of this section. 
</P>
<P>(iv) Date of sale to the purchaser; 
</P>
<P>(v) Month, day and year of manufacture; 
</P>
<P>(vi) Identification number of the manufactured home; 
</P>
<P>(vii) Model and/or type designation of the manufactured home as provided by the manufacturer; and 
</P>
<P>(viii) A designation of the zones for which the manufactured home is equipped, as set forth in § 3280.305 in this title.
</P>
<FP>Additionally, the cards shall have the name and address of the manufacturer printed clearly on the reverse side and shall contain adequate postage or business reply privileges to ensure return to the manufacturer. The manufacturer shall have the responsibility for filing in the blanks on the cards for paragraphs (a)(2) (v), (vi), (vii), and (viii) of this section. 
</FP>
<P>(3) The manufacturer shall maintain all cards received so that the manufacturer has a readily accessible record of the current purchaser or owner and the current address of all manufactured homes manufactured by it for which a card has been received. 


</P>
</DIV8>


<DIV8 N="§ 3282.212" NODE="24:5.1.2.1.3.5.1.12" TYPE="SECTION">
<HEAD>§ 3282.212   Toxic Substances Control Act (TSCA) Title VI requirements.</HEAD>
<P>Manufacturers must maintain bills of lading, invoices, or comparable documents that include a written statement from the supplier that the component or finished goods are TSCA Title VI compliant for a minimum of 3 years from the date of import, purchase, or shipment, consistent with 40 CFR 770.30(c) and 770.40.


</P>
<CITA TYPE="N">[85 FR 5566, Jan. 31, 2020]




</CITA>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:5.1.2.1.3.6" TYPE="SUBPART">
<HEAD>Subpart F—Retailer and Distributor Responsibilities</HEAD>


<DIV8 N="§ 3282.251" NODE="24:5.1.2.1.3.6.1.1" TYPE="SECTION">
<HEAD>§ 3282.251   Scope and purpose.</HEAD>
<P>(a) This subpart sets out the responsibilities which shall be met by distributors and retailers with respect to manufactured homes manufactured after the effective date of the standards for sale to purchasers in the United States. It prohibits the sale, lease, or offer for sale or lease of manufactured homes known by the distributor or retailer not to be in conformance with the standards, and it includes responsibilities for maintaining certain records and assisting in the gathering of certain information. 
</P>
<P>(b) The purpose of this subpart is to inform distributors and retailers when they may sell manufactured homes, when they are prohibited from selling manufactured homes, and what they may do in order to prepare a manufactured home for sale if it is not in conformance with the standards. 
</P>
<P>(c) For purposes of this part, any manufacturer or distributor who sells, leases, or offers for sale or lease a manufactured home to a purchaser shall be a retailer for purposes of that transaction. 


</P>
</DIV8>


<DIV8 N="§ 3282.252" NODE="24:5.1.2.1.3.6.1.2" TYPE="SECTION">
<HEAD>§ 3282.252   Prohibition of sale.</HEAD>
<P>(a) No distributor or retailer shall make use of any means of transportation affecting interstate or foreign commerce or the mails to sell, lease, or offer for sale or lease in the United States any manufactured home manufactured on or after the effective date of an applicable standard unless: 
</P>
<P>(1) There is affixed to the manufactured home a label certifying that the manufactured home conforms to applicable standards as required by § 3282.205(c), and 
</P>
<P>(2) The distributor or retailer, acting as a reasonable distributor or retailer, does not know that the manufactured home does not conform to any applicable standards. 
</P>
<P>(b) This prohibition applies to any affected manufactured homes until the completion of the entire sales transaction. A sales transaction with a purchaser is considered completed when all the goods and services that the retailer agreed to provide at the time the contract was entered into have been provided. Completion of a retail sale will be at the time the retailer completes installation of the manufactured home, if the retailer has agreed to provide the installation, or at the time the retailer delivers the home to a transporter, if the retailer has not agreed to transport or install the manufactured home. The sale is also complete upon delivery to the site if the retailer has not agreed to provide installation as completion of sale, except that any sale or lease under subpart M and as provided in § 3286.117(a) will not be considered complete until the purchaser or lessor, as applicable, has been provided with a final site inspection report.
</P>
<P>(c) This prohibition of sale does not apply to manufactured homes which are placed in production prior to the effective date of the standards, and it does not apply to “used” manufactured homes which are being sold or offered for sale after the first purchase in good faith for purposes other than the resale. 
</P>
<CITA TYPE="N">[41 FR 19852, May 13, 1976, as amended at 80 FR 53727, Sept. 8, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 3282.253" NODE="24:5.1.2.1.3.6.1.3" TYPE="SECTION">
<HEAD>§ 3282.253   Removal of prohibition of sale.</HEAD>
<P>(a) If a distributor or retailer has a manufactured home in its possession or a manufactured home with respect to a sales transaction has not yet been completed, and a distributor or retailer knows as a result of notification by the manufacturer or otherwise that the manufactured home contains a failure to conform or imminent safety hazard, the distributor or retailer may seek the remedies available under § 3282.415.
</P>
<P>(b) When, in accordance with § 3282.415, a manufacturer corrects a failure to conform to the applicable standard or an imminent safety hazard, the distributor or retailer, acting as a reasonable distributor or retailer, may accept the remedies provided by the manufacturer as having corrected the failure to conform or imminent safety hazard. The distributor or retailer, therefore, may sell, lease, or offer for sale or lease any manufactured home so corrected by the manufacturer. 
</P>
<P>(c) When a distributor or retailer is authorized by a manufacturer to correct a failure to conform to the applicable standard or an imminent safety hazard and completes the correction in accordance with the manufacturer's instructions, the distributor or retailer may sell, or lease or offer for sale or lease the manufactured home in question, provided that the distributor or retailer, acting as a reasonable distributor or retailer knows that the manufactured home conforms to the standards. A distributor or retailer and a manufacturer, at the manufacturer's option, may agree in advance that the distributor or retailer is authorized to make such corrections as the manufacturer believes are within the expertise of the dealer. 
</P>
<P>(d) If the corrections made under paragraphs (b) and (c) of this section do not bring the manufactured home into conformance or correct the imminent safety hazard, the provisions of § 3282.415 will continue in effect prior to completion of the sales transaction. 
</P>
<CITA TYPE="N">[41 FR 19852, May 13, 1976, as amended at 78 FR 60199, Oct. 1, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 3282.254" NODE="24:5.1.2.1.3.6.1.4" TYPE="SECTION">
<HEAD>§ 3282.254   Distributor and retailer alterations.</HEAD>
<P>(a) If a distributor or retailer alters a manufactured home in such a way as to create an imminent safety hazard or to create a condition which causes a failure to conform with applicable Federal standards, the manufactured home affected may not be sold, leased, or offered for sale or lease. 
</P>
<P>(b) After correction by the distributor or retailer of the failure to conform or imminent safety hazard, the corrected manufactured home may be sold, leased, or offered for sale or lease. 
</P>
<P>(c) Distributors and retailers shall maintain complete records of all alterations made under paragraphs (a) and (b) of this section. 


</P>
</DIV8>


<DIV8 N="§ 3282.255" NODE="24:5.1.2.1.3.6.1.5" TYPE="SECTION">
<HEAD>§ 3282.255   Completion of information card.</HEAD>
<P>(a) Whenever a distributor or retailer sells a manufactured home subject to the standards to a purchaser, the distributor or retailer shall fill out the card with information provided by the purchaser and shall send the card to the manufacturer. (See § 3282.211.) 
</P>
<P>(b) Whenever a distributor or retailer sells a manufactured home to an owner which was originally manufactured under the standards, the distributor or retailer shall similarly use one of the detachable cards which was originally provided with the manufactured home. If such a card is no longer available, the distributor or retailer shall obtain the information which the card would require and send it to the manufacturer of the manufactured home in an appropriate format. 


</P>
</DIV8>


<DIV8 N="§ 3282.256" NODE="24:5.1.2.1.3.6.1.6" TYPE="SECTION">
<HEAD>§ 3282.256   Distributor or retailer complaint handling.</HEAD>
<P>(a) When a distributor or retailer believes that a manufactured home in its possession which it has not yet sold to a purchaser contains an imminent safety hazard, serious defect, defect, or noncompliance, the distributor or retailer shall refer the matter to the manufacturer for remedial action under § 3282.415. If the distributor or retailer is not satisfied with the action taken by the manufacturer, it may refer the matter to the SAA in the state in which the manufactured home is located, or to the Secretary if there is no such SAA. 
</P>
<P>(b) Where a distributor or retailer receives a consumer complaint or other information concerning a manufactured home sold by the distributor or retailer, indicating the possible existence of an imminent safety hazard, serious defect, defect, or noncompliance in the manufactured home, the distributor or retailer shall refer the matter to the manufacturer. 




</P>
</DIV8>


<DIV8 N="§ 3282.257" NODE="24:5.1.2.1.3.6.1.7" TYPE="SECTION">
<HEAD>§ 3282.257   TSCA Title VI requirements.</HEAD>
<P>Retailers and distributors must maintain bills of lading, invoices, or comparable documents that include a written statement from the supplier that the component or finished goods are TSCA Title VI compliant for a minimum of 3 years from the date of import, purchase, or shipment, consistent with 40 CFR 770.30(c) and 770.40.


</P>
<CITA TYPE="N">[85 FR 5567, Jan. 31, 2020]




</CITA>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:5.1.2.1.3.7" TYPE="SUBPART">
<HEAD>Subpart G—State Administrative Agencies</HEAD>


<DIV8 N="§ 3282.301" NODE="24:5.1.2.1.3.7.1.1" TYPE="SECTION">
<HEAD>§ 3282.301   General—scope.</HEAD>
<P>This subpart sets out procedures to be followed and requirements to be met by States which wish to participate as State Administrative Agencies (SAA) under the Federal standards enforcement program. Requirements relating to States which wish to participate as primary inspection agencies under the Federal standards enforcement program are set out in subpart H of this part. Requirements which States must meet in order to receive full or conditional approval as SAAs and the responsibilities of such agencies are set out in § 3282.302. Reporting requirements for approved and conditionally approved SAAs are set out in subpart L. 


</P>
</DIV8>


<DIV8 N="§ 3282.302" NODE="24:5.1.2.1.3.7.1.2" TYPE="SECTION">
<HEAD>§ 3282.302   State plan.</HEAD>
<P>A State wishing to qualify and act as an SAA under this subpart shall make a State Plan Application under this section. The State Plan Application shall be made to the Administrator, Office of Manufactured Housing Programs, Office of Housing, Department of Housing and Urban Development, 451 7th Street SW., Washington, DC 20410, and shall include:
</P>
<P>(a) An original and one copy of a cover sheet which shall show the following: 
</P>
<P>(1) The name and address of the State agency designated as the sole agency responsible for administering the plan throughout the State, 
</P>
<P>(2) The name of the administrator in charge of the agency, 
</P>
<P>(3) The name, title, address, and phone number of the person responsible for handling consumer complaints concerning standards related problems in manufactured homes under subpart I of this part, 
</P>
<P>(4) A list of personnel who will carry out the State plan, 
</P>
<P>(5) The number of manufactured home manufacturing plants presently operating in the State, 
</P>
<P>(6) The estimated total number of manufactured homes manufactured in the State per year, 
</P>
<P>(7) The estimated total number of manufactured homes set up in the State per year, and 
</P>
<P>(8) A certification signed by the administrator in charge of the designated State agency stating that, if it is approved by the Secretary, the State plan will be carried out in full, and that the regulations issued under the Act shall be followed, 
</P>
<P>(b) An original and one copy of appropriate materials which: 
</P>
<P>(1) Demonstrate how the designated State agency shall ensure effective handling of consumer complaints and other information referred to it that relate to noncompliances, defects, serious defects or imminent safety hazards as set out in subpart I of this part, including the holding of Formal and Informal Presentations of Views and the fulfilling of all other responsibilities of SAAs as set out in this subpart G, 
</P>
<P>(2) Provide that personnel of the designated agency shall, under State law or as agents of HUD, have the right at any reasonable time to enter and inspect all factories, warehouses, or establishments in the State in which manufactured homes are manufactured, 
</P>
<P>(3) Provide for the imposition under State authority of civil and criminal penalties which are identical to those set out in section 611 of the Act, 42 U.S.C. 5410 except that civil penalties shall be payable to the State rather than to the United States, 
</P>
<P>(4) Provide for the notification and correction procedures under subpart I of this part where the SAA is to act under that subpart by providing the required approval by the SAA of the plan for notification and correction described in §§ 3282.408, 3282.409, and 3282.410, including approval of the number of units that may be affected and the proposed repairs, and by providing for approval of corrective actions where appropriate under subpart I,
</P>
<P>(5) Provide for oversight by the SAA of:
</P>
<P>(i) Remedial actions carried out by manufacturers for which the SAA approved the plan for notification and correction or for which the SAA has waived formal notification under subpart I.
</P>
<P>(ii) A manufacturer's handling of consumer complaints and other information under subpart I as to plants located in the State.
</P>
<P>(6) Provide for the setting of monitoring inspection fees in accordance with guidelines established by the Secretary and provide for participation in the fee distribution system set out in § 3282.307. 
</P>
<P>(7) Contain satisfactory assurances in whatever form is appropriate under State law that the designated agency has or will have the legal authority necessary to carry out the State plan as submitted for full or conditional approval, 
</P>
<P>(8) Contain satisfactory assurances that the designated agency has or will have, in its own staff or provided by other agencies of the state or otherwise, the personnel, qualified by education or experience necessary to carry out the State plan, 
</P>
<P>(9) Include the resumes of administrative personnel in policy making positions and of all inspectors and engineers to be utilized by the designated agency in carrying out the State plan, 
</P>
<P>(10) Include a certification that none of the personnel who may be involved in carrying out the State plan in any way are subject to any conflict of interest of the type discussed in § 3282.359 or otherwise, except that members of councils, committees, or similar bodies providing advice to the designated agency are not subject to the requirement, 
</P>
<P>(11) Include an estimate of the cost to the State of carrying out all activities called for in the State plan, under this section and § 3282.303, which estimate shall be broken down by particular function and indicate the correlation between the estimate and the number of manufactured homes manufactured in the State and the number of manufactured homes imported into the State, and the relationship of these factors to any fees currently charged and any fees charged during the preceding two calendar years. A description of all current and past State activities with respect to manufactured homes shall be included with this estimate. 
</P>
<P>(12) Give satisfactory assurances that the State shall devote adequate funds to carrying out its State plan, 
</P>
<P>(13) Indicate that State Law requires manufacturers, distributors, and retailers in the State to make reports pursuant to section 614 of the Act 42 U.S.C. 5413 and this chapter of these regulations in the same manner and to the same extent as if the State plan were not in effect, 
</P>
<P>(14) Provide that the designated agency shall make reports to the Secretary as required by subpart L of this part in such form and containing such information as the Secretary shall from time to time require, 
</P>
<P>(c) A state plan may be granted conditional approval if all of the requirements of § 3282.302 (a) and (b) are met except paragraphs (b)(2), (b)(3), (b)(6) or (b)(13). When conditional approval is given, the state shall not be considered approved under section 623 of the Act, 42 U.S.C. 5422, but it will participate in all phases of the program as called for in its State plan. Conditional approval shall last for a maximum of five years, by which time all requirements shall be met for full approval, or conditional approval shall lapse. However, the Secretary may for good cause grant an extension of conditional approval upon petition by the SAA.
</P>
<P>(d) If a State wishes to discontinue participation in the Federal enforcement program as an SAA, it shall provide the Secretary with a minimum of 90 days notice. 
</P>
<P>(e) <I>Exclusive IPIA status.</I> (1) A State that wishes to act as an exclusive IPIA under § 3282.352 shall so indicate in its State Plan and shall include in the information provided under paragraph (b)(11) of this section the fee schedule for the State's activities as an IPIA and the relationship between the proposed fees and the other information provided under paragraph (b)(11) of this section. If the Secretary determines that the fees to be charged by a State acting as an IPIA are unreasonable, the Secretary shall not grant the State status as an exclusive IPIA.
</P>
<P>(2) The State shall also demonstrate in its State Plan that it has the present capability to act as an IPIA for all plants operating in the State.
</P>
<CITA TYPE="N">[41 FR 19852, May 13, 1976, as amended at 47 FR 5888, Feb. 9, 1982; 51 FR 34468, Sept. 29, 1986; 61 FR 10860, Mar. 15, 1996; 78 FR 60199, Oct. 1, 2013] 


</CITA>
</DIV8>


<DIV8 N="§ 3282.303" NODE="24:5.1.2.1.3.7.1.3" TYPE="SECTION">
<HEAD>§ 3282.303   State plan—suggested provisions.</HEAD>
<P>The following are not required to be included in the State plan, but they are urged as necessary to provide full consumer protection and assurances of manufactured home safety: 
</P>
<P>(a) Provision for monitoring of retailers' lots within the State for transit damage, seal tampering, and retailer performance generally, 
</P>
<P>(b) Provision of approvals of all alterations made to certified manufactured homes by retailer in the State. Under this program, the State would assure that alterations did not result in the failure of the manufactured home to comply with the standards. 
</P>
<P>(c) Provision for monitoring of the installation of manufactured homes set up in the State to assure that the homes are properly installed and, where necessary, tied down, 
</P>
<P>(d) Provision for inspection of used manufactured homes and requirements under State authority that used manufactured homes meet a minimal level of safety and durability at the time of sale, and, 
</P>
<P>(e) Provision for regulation of manufactured home transportation over the road to the extent that such regulation is not preempted by Federal authority. 


</P>
</DIV8>


<DIV8 N="§ 3282.304" NODE="24:5.1.2.1.3.7.1.4" TYPE="SECTION">
<HEAD>§ 3282.304   Inadequate State plan.</HEAD>
<P>If the Secretary determines that a State plan submitted under this subpart is not adequate, the designated State agency shall be informed of the additions and corrections required for approval. A revised State plan shall be submitted within 30 days of receipt of such determination. If the revised State plan is inadequate or if the State fails to resubmit within the 30 day period or otherwise indicates that it does not intend to change its State plan as submitted, the Secretary shall notify the designated State agency that the State plan is not approved and that it has a right to a hearing on the disapproval in accordance with subpart D of this part. 


</P>
</DIV8>


<DIV8 N="§ 3282.305" NODE="24:5.1.2.1.3.7.1.5" TYPE="SECTION">
<HEAD>§ 3282.305   State plan approval.</HEAD>
<P>The Secretary's approval or conditional approval of a State plan Application shall qualify that State to perform the functions for which it has been approved. 


</P>
</DIV8>


<DIV8 N="§ 3282.306" NODE="24:5.1.2.1.3.7.1.6" TYPE="SECTION">
<HEAD>§ 3282.306   Withdrawal of State approval.</HEAD>
<P>The Secretary shall, on the basis of reports submitted by the State, and on the basis of HUD monitoring, make a continuing evaluation of the manner in which each State is carrying out its State plan and shall submit the reports of such evaluation to the appropriate committees of the Congress. Whenever the Secretary finds, after affording due notice and opportunity for a hearing in accordance with subpart D of this part, that in the administration of the State program there is a failure to comply substantially with any provision of the State plan or that the State plan has become inadequate, the Secretary shall notify the State of withdrawal of approval or conditional approval of the State program. The State program shall cease to be in effect at such time as the Secretary may establish. 


</P>
</DIV8>


<DIV8 N="§ 3282.307" NODE="24:5.1.2.1.3.7.1.7" TYPE="SECTION">
<HEAD>§ 3282.307   Monitoring inspection fee establishment and distribution.</HEAD>
<P>(a) Each approved State shall establish a monitoring inspection fee in an amount required by the Secretary. This fee shall be an amount paid by each manufactured home manufacturer in the State for each transportable section of each manufactured housing unit produced by the manufacturer in that State. In non-approved and conditionally-approved States, the fee shall be set by the Secretary.
</P>
<P>(b) The monitoring inspection fee shall be paid by the manufacturer to the Secretary or to the Secretary's Agent, who shall distribute a portion of the fees collected from all manufactured home manufacturers among the approved and conditionally-approved States in accordance with an agreement between the Secretary and the States and based upon the following formula subject to the availability of appropriations:
</P>
<P>(1) $9.00 of the monitoring inspection fee collected for each transportable section of each new manufactured housing unit that is first located on the premises of a retailer, distributor, or purchaser in that State; plus
</P>
<P>(2) $14.00 of the monitoring inspection fee collected for each transportable section of each new manufactured housing unit produced in a manufacturing plant in that State.




</P>
<P>(c) A portion of the monitoring inspection fee collected also shall be distributed by the Secretary or the Secretary's Agent based on the extent of participation of the State in the Joint Team Monitoring Program set out in § 3282.308.
</P>
<P>(d) To assure that a State devotes adequate funds to carry out its State Plan, a State may impose an additional reasonable inspection fee to offset expenses incurred by that State in conducting inspections. Such fee shall not exceed that amount which is the difference between the amount of funds distributed to the State as provided in paragraph (b) of this section and the amount necessary to cover the costs of inspections. Such fee shall be part of the State Plan pursuant to § 3282.302(b) (11) and (12) and shall be subject to the approval of the Secretary pursuant to § 3282.305.
</P>
<P>(e) The Secretary may establish by notice in the <E T="04">Federal Register</E> a monitoring inspection fee which is to be paid by manufacturers for each transportable section of each manufactured housing unit manufactured in nonapproved and conditionally approved States as described in § 3282.210. To determine the amount of the inspection fee to be paid for each transportable section of each manufactured home, the Secretary shall divide the (estimated) number of transportable sections of manufactured homes (based on recent industry production figures) into the anticipated aggregate cost of conducting the inspection program in the foreseeable feature. The time period selected for projecting the Department's inspection-related costs and number of transportable sections need not always be the same, but must be for a period of sufficient duration to provide for access to reasonable underlying data. To determine the aggregate cost of conducting the inspection program, the Secretary shall calculate the sum necessary to support:
</P>
<P>(1) Inspection-related activities of State Administrative Agencies;
</P>
<P>(2) Inspection-related activities performed by the Department of Housing and Urban Development;
</P>
<P>(3) Inspection-related activities performed by monitoring inspection contractors;
</P>
<P>(4) Miscellaneous activities involving the performance of inspection-related activities by the Department, including on-site inspections on an ad hoc basis; and
</P>
<P>(5) Maintenance of adequate funds to offset short-term fluctuations in costs that do not warrant revising the fee under the authority of this section.
</P>
<P>(f) The Secretary may at any time revise the amount of the fees established under paragraph (a) or (e) of this section by placing a notice of the amount of the revised fee in the <E T="04">Federal Register.</E>
</P>
<CITA TYPE="N">[50 FR 28398, July 12, 1985, as amended at 56 FR 65186, Dec. 16, 1991; 85 FR 71834, Nov. 12, 2020]


</CITA>
</DIV8>


<DIV8 N="§ 3282.308" NODE="24:5.1.2.1.3.7.1.8" TYPE="SECTION">
<HEAD>§ 3282.308   State participation in monitoring of primary inspection agencies.</HEAD>
<P>(a) An SAA may provide personnel to participate in joint team monitoring of primary inspection agencies as set out in subpart J. If an SAA wishes to do so, it must include in its State plan a list of what personnel would be supplied for the teams, their qualifications, and how many person-years the State would supply. All personnel will be subject to approval by the Secretary or the Secretary's agent. A person-year is 2,080 hours of work. 
</P>
<P>(b) If an SAA wishes to monitor the performance of primary inspection agencies acting within the State, it must include in its State plan a description of how extensively, how often, and by whom this will be carried out. This monitoring shall be coordinated by the Secretary, or the Secretary's agent with monitoring carried out by joint monitoring teams, and in no event shall an SAA provide monitoring where the State is also acting as a primary inspection agency. 


</P>
</DIV8>


<DIV8 N="§ 3282.309" NODE="24:5.1.2.1.3.7.1.9" TYPE="SECTION">
<HEAD>§ 3282.309   Formal and informal presentations of views held by SAAs.</HEAD>
<P>(a) When an SAA is the appropriate agency to hold a Formal or Informal Presentation of Views under § 3282.412 of subpart I, the SAA shall follow the procedures set out in §§ 3282.152 and 3282.153, with the SAA acting as the Secretary otherwise would under that section. Where § 3282.152 requires publication of notice in the <E T="04">Federal Register,</E> the SAA shall, to the maximum extent possible, provide equivalent notice throughout the State by publication in the newspaper or newspapers having statewide coverage or otherwise. The determination of whether to provide an Informal Presentation of Views under § 3282.152(f), or a Formal Presentation of Views under § 3282.152(g), is left to the SAA.
</P>
<P>(b) Notwithstanding the provisions of § 3282.152(f)(2) and (g)(2) relating to the conclusive effect of a final determination, any party, in a proceeding held at an SAA under this section, including specifically the owners of affected manufactured homes, States in which affected manufactured homes are located, consumer groups representing affected owners and manufacturers (but limited to parties with similar substantial interest) may appeal to the Secretary in writing any Final Determination by an SAA which is adverse to the interest of that party. This appeal on the record shall be made within 30 days of the date on which the Final Determination was made by the SAA. 
</P>
<CITA TYPE="N">[41 FR 19852, May 13, 1976, as amended at 51 FR 34468, Sept. 29, 1986; 78 FR 60199, Oct. 1, 2013]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="H" NODE="24:5.1.2.1.3.8" TYPE="SUBPART">
<HEAD>Subpart H—Primary Inspection Agencies</HEAD>


<DIV8 N="§ 3282.351" NODE="24:5.1.2.1.3.8.1.1" TYPE="SECTION">
<HEAD>§ 3282.351   General.</HEAD>
<P>(a) This subpart sets out the requirements which must be met by States or private organizations which wish to qualify as primary inspection agencies under these regulations. It also sets out the various functions which will be carried out by primary inspection agencies. 
</P>
<P>(b) There are four basic functions which are performed by primary inspection agencies: 
</P>
<P>(1) Approval of the manufacturer's manufactured home design to assure that it is in compliance with the standard;
</P>
<P>(2) Approval of the manufacturer's quality control program to assure that it is compatible with the design;
</P>
<P>(3) Approval of the manufacturer's plant facility and manufacturing process to assure that the manufacturer can perform its approved quality control program and can produce manufactured homes in conformance with its approved design, and 
</P>
<P>(4) Performance of ongoing inspections of the manufacturing process in each manufacturing plant to assure that the manufacturer is continuing to perform its approved quality control program and, with respect to those aspects of manufactured homes inspected, is continuing to produce manufactured homes in performance with its approved designs and in conformance with the standards (see § 3282.362(c)(1)). 
</P>
<P>(c) There are two types of primary inspection agencies which perform these functions:
</P>
<P>(1) Those which approve designs and quality control programs (Design Approval Primary Inspection Agencies—DAPIAs) and
</P>
<P>(2) Those which approve plants and perform ongoing inspections in the manufacturing plants (Production Inspection Primary Inspection Agencies—IPIAs). 
</P>
<P>(d) States and private organizations whose submissions under this subpart are acceptable shall be granted provisional acceptance. Final acceptance shall be conditioned upon adequate performance, which will be determined through monitoring of the actions of the primary inspection agencies. Monitoring of all primary inspection agencies shall be carried out as set out in subpart J. HUD accepted agencies can perform DAPIA functions for any manufacturer in any State and IPIA functions in any State except those in which the State has been approved to act as the exclusive IPIA under § 3282.352. 
</P>
<P>(e) Primary inspection agencies approved under this subpart may contract with manufactured home manufacturers (see § 3282.202) to provide the services set out in this subpart. Any PIA which charges fees which are excessive in relation to the services rendered shall be subject to disqualification under § 3282.356. 


</P>
</DIV8>


<DIV8 N="§ 3282.352" NODE="24:5.1.2.1.3.8.1.2" TYPE="SECTION">
<HEAD>§ 3282.352   State exclusive IPIA functions.</HEAD>
<P>(a) Any State which has an approved State Administrative Agency may, if accepted as an IPIA, act as the exclusive IPIA within the State. A State which acts as an IPIA but is not approved as an SAA may not act as the exclusive IPIA in the State. A State which acts as an exclusive IPIA shall be staffed to provide IPIA services to all manufacturers within the state and may not charge unreasonable fees for those services. 
</P>
<P>(b) States which wish to act as exclusive IPIAs shall apply for approval to do so in their State plan applications. They shall specify the fees they will charge for IPIA services and shall submit proposed fee revisions to the Secretary prior to instituting any change in fees. If at any time the Secretary finds that those fees are not commensurate with the fees generally being charged for similar services, the Secretary will withhold or revoke approval to act as an exclusive IPIA. States acting as DAPIAs and also as exclusive IPIAs shall establish separate fees for the two functions and shall specify what additional services (such as approval of design changes and full time inspections) these fees cover. As provided in § 3282.302(b)(11), each State shall submit fee schedules for its activities and, where appropriate, the fees presently charged for DAPIA and IPIA services, and any fees charged for DAPIA and IPIA services during the preceding two calendar years. 
</P>
<P>(c) A State's status as an exclusive IPIA shall commence upon approval of the State Plan Application and acceptance of the State's submission under § 3282.355. Where a private organization accepted or provisionally accepted as an IPIA under this subpart H is operating in a manufacturing plant within the State on the date the State's status as an exclusive IPIA commences, the private organization may provide IPIA services in that plant for 90 days after that date.
</P>
<CITA TYPE="N">[61 FR 10861, Mar. 15, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 3282.353" NODE="24:5.1.2.1.3.8.1.3" TYPE="SECTION">
<HEAD>§ 3282.353   Submission format.</HEAD>
<P>States and private organizations that wish to act as primary inspection agencies shall submit to the Administrator, Office of Manufactured Housing Programs, Office of Housing, Department of Housing and Urban Development, 451 7th Street SW., Washington, DC 20410, an application that includes the following:
</P>
<P>(a) A cover sheet which shall show the following: 
</P>
<P>(1) Name and address of the party making the application; 
</P>
<P>(2) The capacity (DAPIA, IPIA) in which the party wishes to be approved to act; 
</P>
<P>(3) A list of the key personnel who will perform the various functions required under these regulations; 
</P>
<P>(4) The number of manufactured home manufacturers and manufacturing plants for which the submitting party proposes to act in each of the capacities for which it wishes to be approved to act; 
</P>
<P>(5) The estimated total number of manufactured homes produced by those manufacturers and in those plants per year; 
</P>
<P>(6) The number of years the proposed primary inspection agency has been actively engaged in the enforcement of manufactured home standards; and
</P>
<P>(7) A certification by the party applying that it will follow the Federal manufactured home construction and safety standards set out at 24 CFR part 3280 and any interpretations of those standards which may be made by the Secretary.
</P>
<P>(b) A detailed schedule of fees to be charged broken down by the services for which they will be charged. 
</P>
<P>(c) A detailed description of how the submitting party intends to carry out all of the functions for which it wishes to be approved under this subpart, with appropriate cross-references to sections of this subpart, including examples and complete descriptions of all reports, tests, and evaluations which the party would be required to make. Where appropriate, later sections of this subpart identify particular items which must be included in the submission. The Secretary may request further detailed information, when appropriate. 
</P>
<P>(d) A party wishing to be approved as a DAPIA shall submit a copy of a manufactured home design that it has approved (or if it has not approved a design, one that it has evaluated and a deviation report showing where the design is not in conformance with the standards) and a copy of a quality assurance manual that it has approved (or if it was not approved a manual, one that it has evaluated and a deviation report showing where the manual is inadequate). 
</P>
<P>(e) A party wishing to be approved as an IPIA shall submit a copy of a certification report which it has prepared for a manufactured home plant or, if it has not prepared such a report, an evaluation of a manufacturing plant which it has inspected with a description of what changes shall be made before a certification report can be issued. A party that has not previously inspected manufactured homes may nevertheless be accepted on the basis of the qualifications of its personnel and its commitment to perform the required functions. 
</P>
<CITA TYPE="N">[41 FR 19852, May 13, 1976, as amended at 61 FR 10861, Mar. 15, 1996; 78 FR 60199, Oct. 1, 2013]


</CITA>
</DIV8>


<DIV8 N="§ 3282.354" NODE="24:5.1.2.1.3.8.1.4" TYPE="SECTION">
<HEAD>§ 3282.354   Submittal of false information or refusal to submit information.</HEAD>
<P>The submittal of false information or the refusal to submit information required under this subpart may be sufficient cause for the Secretary to revoke or withhold acceptance. 


</P>
</DIV8>


<DIV8 N="§ 3282.355" NODE="24:5.1.2.1.3.8.1.5" TYPE="SECTION">
<HEAD>§ 3282.355   Submission acceptance.</HEAD>
<P>(a) A party whose submission is determined by the Department to be adequate shall be granted provisional acceptance until December 15, 1976, or for a six month period from the date of such determination, whichever is later. 
</P>
<P>(b) Final acceptance of a party to act as a primary inspection agency will be contingent upon adequate performance during the period of provisional acceptance as determined through monitoring carried out under subpart J and upon satisfactory acceptance under § 3282.361(e) or § 3282.362(e). Final acceptance shall be withheld if performance is inadequate. 
</P>
<P>(c) Continued acceptance as a primary inspection agency shall be contingent upon continued adequacy of performance as determined through monitoring carried out under subpart J. If the Secretary determines that a primary inspection agency that has been granted final acceptance is performing inadequately, the Secretary shall suspend the acceptance, and the primary inspection agency shall be entitled to a Formal or Informal Presentation of Views as set out in subpart D of this part. 
</P>
<CITA TYPE="N">[41 FR 19852, May 13, 1976, as amended at 51 FR 34468, Sept. 29, 1986; 61 FR 10861, Mar. 15, 1996]


</CITA>
</DIV8>


<DIV8 N="§ 3282.356" NODE="24:5.1.2.1.3.8.1.6" TYPE="SECTION">
<HEAD>§ 3282.356   Disqualification and requalification of primary inspection agencies.</HEAD>
<P>(a) The Secretary, based on monitoring reports or on other reliable information, may determine that a primary inspection agency which has been accepted under this subpart is not adequately carrying out one or more of its required functions. In so determining, the Secretary shall consider the impact of disqualification on manufacturers and other affected parties and shall seek to assure that the manufacturing process is not disrupted unnecessarily. Whenever the Secretary disqualifies a primary inspection agency under this section, the primary inspection agency shall have a right to a Formal or Informal Presentation of Views under subpart D of this part.
</P>
<P>(b) Interested persons may petition the Secretary to disqualify a primary inspection agency under the provisions of § 3282.156(b). 
</P>
<P>(c) A primary inspection agency which has been disqualified under paragraph (a) may resubmit an application under § 3282.353. The submission shall include a full explanation of how problems or inadequacies which resulted in disqualifications have been rectified and how the primary inspection agency shall assure that such problems shall not recur. 
</P>
<P>(d) When appropriate, the Secretary shall publish in the <E T="04">Federal Register</E> or otherwise make available to the public for comment a disqualified PIA's application for requalification, subject to the provisions of § 3282.54. 
</P>
<P>(e) Both provisional and final acceptance of any IPIA (or DAPIA) automatically expires at the end of any period of one year during which it has not acted as an IPIA (or DAPIA). An IPIA (or DAPIA) has not acted as such unless it has actively performed its services as an IPIA (or DAPIA) for at least one manufacturer by which it has been selected. An IPIA (or DAPIA) whose acceptance has expired pursuant to this section may resubmit an application under § 3282.353 in order to again be qualified as an IPIA (or DAPIA), when it can show a bona fide prospect of performing IPIA (or DAPIA) services.
</P>
<CITA TYPE="N">[41 FR 19852, May 13, 1976, as amended at 45 FR 59311, Sept. 9, 1980; 51 FR 34468, Sept. 29, 1986]


</CITA>
</DIV8>


<DIV8 N="§ 3282.357" NODE="24:5.1.2.1.3.8.1.7" TYPE="SECTION">
<HEAD>§ 3282.357   Background and experience.</HEAD>
<P>All private organizations shall submit statements of the organizations' experience in the housing industry, including a list of housing products, equipment, and structures for which evaluation, testing and follow-up inspection services have been furnished. They shall also submit statements regarding the length of time these services have been provided by them. In addition, all such submissions shall include a list of other products for which the submitting party provides evaluation, inspection, and listing or labeling services and the standard applied to each product, as well as the length of time it has provided these additional services. 


</P>
</DIV8>


<DIV8 N="§ 3282.358" NODE="24:5.1.2.1.3.8.1.8" TYPE="SECTION">
<HEAD>§ 3282.358   Personnel.</HEAD>
<P>(a) Each primary inspection agency shall have qualified personnel capable of carrying out all of the functions for which the primary inspection agency is seeking to be approved or disapproved. Where a State intends to act as the exclusive IPIA in the State, it shall show that it has adequate personnel to so act in all plants in the State. 
</P>
<P>(b) Each submission shall indicate the total number of personnel employed by the submitting party, the number of personnel available for this program, and the locations of the activities of the personnel to be used in the program. 
</P>
<P>(c) Each submission shall include the names and qualifications of the administrator and the supervisor who will be directly responsible for the program, and résumés of their experience. 
</P>
<P>(d) Each submission shall contain the information set out in paragraphs (d)(1) through (d)(9) of this section. Depending upon the functions (DAPIA or IPIA) to be undertaken by a particular primary inspection agency, some of the categories of personnel listed may not be required. In such cases, the submission should indicate which of the categories of information are not required and explain why they are not needed. The submission should identify which personnel will carry out each of the functions the party plans to perform. The qualifications of the personnel to perform one or more of the functions will be judged in accordance with the requirements of ASTM Standard E-541 except that the requirement for registration as a professional engineer or architect may be waived for personnel whose qualifications by experience or education equal those of a registered engineer or architect. The categories of personnel to be included in the submission are as follows: 
</P>
<P>(1) The names of engineers practicing structural engineering who will be involved in the evaluation, testing, or followup inspection services, and résumés of their experience. 
</P>
<P>(2) The names of engineers practicing mechanical engineering who will be involved in the evaluation, testing, or followup, inspection services and résumés of their experience. 
</P>
<P>(3) The names of engineers practicing electrical engineering who will be involved in the evaluation, testing, or followup inspection services and résumés of their experience. 
</P>
<P>(4) The names of engineers practicing fire protection engineering who will be involved in the evaluation, testing, or followup inspection services, and résumés of their experience. 
</P>
<P>(5) The names of all other engineers assigned to this program, the capacity in which they will be employed, and résumés of their experience. 
</P>
<P>(6) The names of all full-time and part-time consulting architects and engineers, their registration, and résumés of their experience. 
</P>
<P>(7) The names of inspectors and other technicians along with résumés of experience and a description of the type of work each will perform. 
</P>
<P>(8) A general outline of the applicant agency's training program for assuring that all inspectors and other technicians are properly trained to do each specific job assigned. 
</P>
<P>(9) The names and qualifications of individuals serving on advisory panels that assist the applicant agency in making its policies conform with the public interest in the field of public health and safety. 
</P>
<P>(e) All information required by this section shall be kept current. The Secretary shall be notified of any change in personnel or management or change of ownership or State jurisdiction within 30 days of such change. 


</P>
</DIV8>


<DIV8 N="§ 3282.359" NODE="24:5.1.2.1.3.8.1.9" TYPE="SECTION">
<HEAD>§ 3282.359   Conflict of interest.</HEAD>
<P>(a) All submissions by private organizations shall include a statement that the submitting party is independent in that it does not have any actual or potential conflict of interest and is not affiliated with or influenced or controlled by any producer, supplier, or vendor of products in any manner which might affect its capacity to render reports of findings objectively and without bias. 
</P>
<P>(b) A private organization shall be judged to be free of conflicting affiliation, influence, and control if it demonstrates compliance with all of the following criteria: 
</P>
<P>(1) It has no managerial affiliation with any producer, supplier, or vendor of products for which it performs PIA services, and is not engaged in the sale or promotion of any such product or material; 
</P>
<P>(2) The results of its work do not accrue financial benefits to the organization via stock ownership of any producer, supplier or vendor of the products involved; 
</P>
<P>(3) Its directors and other management personnel and its engineers and inspectors involved in certification activities hold no stock in and receive no stock option or other benefits, financial, or otherwise, from any producer, supplier, or vendor of the product involved, other than compensation under § 3282.202 of this part; 
</P>
<P>(4) The employment security status of its personnel is free of influence or control of any producer, supplier, or vendor, and 
</P>
<P>(5) It does not perform design or quality assurance manual approval services for any manufacturer whose design or manual has been created or prepared in whole or in part by engineers of its organization or engineers of any affiliated organization. 
</P>
<P>(c) All submissions by States shall include a statement that personnel who will be in any way involved in carrying out the State plan or PIA function are free of any conflict of interest except that with respect to members of councils, committees or similar bodies providing advice to the designated agency are not subject to this requirement. 


</P>
</DIV8>


<DIV8 N="§ 3282.360" NODE="24:5.1.2.1.3.8.1.10" TYPE="SECTION">
<HEAD>§ 3282.360   PIA acceptance of product certification programs or listings.</HEAD>
<P>In determining whether products to be included in a manufactured home are acceptable under the standards set out in part 3280 of 24 CFR, all PIAs shall accept all product verification programs, labelings, and listings unless the PIA has reason to believe that a particular certification is not acceptable, in which case, the PIA shall so inform the Secretary and provide the Secretary with full documentation and information on which it bases its belief. Pending a determination by the Secretary, the PIA shall provisionally accept the certification. The Secretary's determination shall be binding on all PIAs. 


</P>
</DIV8>


<DIV8 N="§ 3282.361" NODE="24:5.1.2.1.3.8.1.11" TYPE="SECTION">
<HEAD>§ 3282.361   Design Approval Primary Inspection Agency (DAPIA).</HEAD>
<P>(a) <I>General.</I> (1) The DAPIA selected by a manufacturer under § 3282.203 shall be responsible for evaluating all manufactured home designs submitted to it by the manufacturer and for assuring that they conform to the standards. It shall also be responsible for evaluating all quality control programs submitted to it by the manufacturer by reviewing the quality assurance manuals in which the programs are set out to assure that the manuals reflect programs which are compatible with the designs to be followed and which commit the manufacturer to make adequate inspections and tests of every part of every manufactured home produced. 
</P>
<P>(2) A design or quality assurance manual approved by a DAPIA shall be accepted by all IPIAs acting under § 3282.362 who deal with the design, quality assurance manual, or manufactured homes built to them, and by all other parties, as, respectively, being in conformance with the Federal standards or as providing for adequate quality control to assure conformance. However, each design and quality assurance manual is subject to review and verification by the Secretary or the Secretary's agent at any time. 
</P>
<P>(b) <I>Designs.</I> (1) In evaluating designs for compliance with the standards, the DAPIA will not allow any deviations from accepted engineering practice standards for design calculations or any deviations from accepted test standards, except that the DAPIA, for good cause, may request the Secretary to accept innovations which are not yet accepted practices. Acceptances by the Secretary shall be published in the form of interpretative bulletins, where appropriate.
</P>
<P>(2) The DAPIA shall require the manufacturer to submit floor plans and specific information for each manufactured home design or variation which the DAPIA is to evaluate. It shall also require the submission of drawings, specifications, calculations, and test records of the structural, electrical and mechanical systems of each such manufactured home design or variation. The manufacturer need not supply duplicate information where systems are common to several floor plans. Each DAPIA shall develop and carry out procedures for evaluating original manufactured home designs by requiring manufacturers to submit necessary drawings and calculations and carry out such verifications and calculations as it deems necessary. Where compliance with the standards cannot be determined on the basis of drawings and calculations, the DAPIA shall require any necessary tests to be carried out at its own facility, at separate testing facilities or at the manufacturer's plant. 
</P>
<P>(3) <I>Design deviation report.</I> After evaluating the manufacturer's design, the DAPIA shall furnish the manufacturer with a design deviation report which specifies in detail, item by item with appropriate citations to the standards, the specific deviations in the manufacturer's design which must be rectified in order to produce manufactured homes which comply with the standards. The design deviation report may acknowledge the possibility of alternative designs, tests, listings, and certifications and state the conditions under which they will be acceptable. The design deviation report shall, to the extent practicable, be complete for each design evaluated in order to avoid repeated rejections and additional costs to the manufacturer. 
</P>
<P>(4) <I>Design approval.</I> The DAPIA shall signify approval of a design by placing its stamp of approval or authorized signature on each drawing and each sheet of test results. The DAPIA shall clearly cross-reference the calculations and test results to applicable drawings. The DAPIA may require the manufacturer to do the cross-referencing if it wishes. It shall indicate on each sheet how any deviations from the standards have been or shall be resolved. Within 5 days after approving a design, the DAPIA shall forward a copy of the design to the manufacturer and the Secretary or the Secretary's agent (prior to the effective date of the standards the latter copy shall go to the Secretary.)
</P>
<FP>The DAPIA shall maintain a complete up-to-date set of approved designs and design changes approved under paragraph (b)(5) of this section which it can duplicate and copies of which it can furnish to interested parties as needed when disputes arise. 
</FP>
<P>(5) <I>Design change approval.</I> The DAPIA shall also be responsible for approving all changes which a manufacturer wishes to make in a design approved by the DAPIA. In reviewing design changes, the DAPIA shall respond as quickly as possible to avoid disruption of the manufacturing process. Within 5 days after approving a design change, the DAPIA shall forward a copy of this change to the manufacturer and the Secretary or the Secretary's agent as set out in paragraph (b)(4) of this section to be included in the design to which the change was made. 
</P>
<P>(c) <I>Quality assurance manuals.</I> (1) In evaluating a quality assurance manual, the DAPIA shall identify any aspects of designs to be manufactured under the manual which require special quality control procedures. The DAPIA shall determine whether the manual under which a particular design is to be manufactured reflects those special procedures, and shall also determine whether the manuals which it evaluates provide for such inspections and testing of each manufactured home so that the manufacturer, by following the manual, can assure that each manufactured home it manufactures will conform to the standards. The manual shall, at a minimum, include the information set out in § 3282.203(c). 
</P>
<P>(2) <I>Manual deviation report.</I> After evaluating a manufacturer's quality assurance manual, the DAPIA shall furnish the manufacturer with a manual deviation report which specifies in detail any changes which a manufacturer must make in order for the quality assurance manual to be acceptable. The manual deviation report shall, to the extent practicable, be complete for each design in order to avoid repeated rejections and additional costs to the manufacturer. 
</P>
<P>(3) <I>Manual approval.</I> The DAPIA shall signify approval of the manufacturer's quality assurance manual by placing its stamp of approval or authorized signature on the cover page of the manual. Within 5 days of approving a quality assurance manual, the DAPIA shall forward a copy of the quality assurance manual to the manufacturer and the Secretary or the Secretary's agent (prior to the effective date of the standards, the latter copy shall go to the Secretary). The DAPIA shall maintain a complete up-to-date set of approved manuals and manual changes approved under paragraph (c)(4) of this section which it can duplicate and copies of which it can furnish to interested parties as needed when disputes arise. 
</P>
<P>(4) <I>Manual change approval.</I> Each change the manufacturer wishes to make in its quality assurance manual must be approved by the DAPIA, and, when subject to § 3282.604, concurred in by the IPIA. Within 5 days after approving a manual change, the DAPIA shall forward a copy of the change to the manufacturer and the Secretary or the Secretary's agent as set out in paragraph (c)(3) of this section to be included in the manual to which the change was made. 
</P>
<P>(d) <I>Requirements for full acceptance—DAPIA.</I> (1) Before granting full acceptance to a DAPIA, the Secretary or the Secretary's agent shall review and evaluate at least one complete design and one quality assurance manual which has been approved by the DAPIA. These shall be designs and manuals approved to the Federal standards, and they shall be chosen at random from those approved by the DAPIA during the period of provisional acceptance. 
</P>
<P>(2) If the Secretary determines that a design or quality assurance manual shows an inadequate level of performance, the Secretary or the Secretary's agent shall carry out further evaluations. If the Secretary finds the level of performance to be unacceptable, the Secretary shall not grant full acceptance. If full acceptance has not been granted by the end of the provisional acceptance period, provisional acceptance shall lapse unless the Secretary determines that the failure to obtain full acceptance resulted from the fact that the Secretary or her agent has not had adequate time in which to complete an evaluation. 
</P>
<CITA TYPE="N">[41 FR 19852, May 13, 1976, as amended at 61 FR 10861, Mar. 15, 1996; 80 FR 53727, Sept. 8, 2015]


</CITA>
</DIV8>


<DIV8 N="§ 3282.362" NODE="24:5.1.2.1.3.8.1.12" TYPE="SECTION">
<HEAD>§ 3282.362   Production Inspection Primary Inspection Agencies (IPIAs).</HEAD>
<P>(a) <I>General</I>—(1) <I>IPIA responsibilities.</I> An IPIA selected by a manufacturer under § 3282.204 to act in a particular manufacturing plant shall be responsible for assuring: 
</P>
<P>(i) That the plant is capable of following the quality control procedures set out in the quality assurance manual to be followed in that plant; 
</P>
<P>(ii) That the plant continues to follow the quality assurance manual; 
</P>
<P>(iii) That any part of any manufactured home that it actually inspects conforms with the design, or where the design is not specific with respect to an aspect of the standards, to the standards; 
</P>
<P>(iv) That whenever it finds a manufactured home in production which fails to conform to the design or where the design is not specific, to the standards, the failure to conform is corrected before the manufactured home leaves the manufacturing plant; and 
</P>
<P>(v) That if a failure to conform to the design, or where the design is not specific, to the standards, is found in one manufactured home, all other homes still in the plant which the IPIA's records or the records of the manufacturer indicate might not conform to the design or to standards are inspected and, if necessary, brought up to the standards before they leave the plant. 
</P>
<P>(2) No more than one IPIA shall operate in any one manufacturing plant, except that where a manufacturer decides to change from one IPIA to another, the two may operate in the plant simultaneously for a limited period of time to the extent necessary to assure a smooth transition. 
</P>
<P>(b) <I>Plant approval.</I> (1) Each IPIA shall, with respect to each manufacturing plant for which it is responsible, evaluate the quality control procedures being followed by the manufacturer in the plant to determine whether those procedures are consistent with and fulfill the procedures set out in the DAPIA approved quality assurance manual being followed in the plant. As part of this evaluation, and prior to the issuance of any labels to the manufacturer, the IPIA shall make a complete inspection of the manufacture of at least one manufactured home through all of the operations in the manufacturer's plant. The purpose of this initial factory inspection is to determine whether the manufacturer is capable of producing manufactured homes in conformance with the approved design and, to the extent the design is not specific with respect to an aspect of the standards, with the standards and to determine whether the manufacturer's quality control procedures as set out in the quality assurance manual, plant equipment, and personnel, will assure that such conformance continues. This inspection should be made by one or more qualified engineers who have reviewed the approved design and by an inspector who has been carefully briefed by the engineers on the restrictive aspects of the design. The manufactured home shall be inspected to the approved design for the home except that where the design is not specific with respect to any aspect of the standards, the inspection shall be to the standards as to that aspect of the manufactured home. If the first manufactured home inspected fails to conform to the design or, with respect to any aspect of the standards not specifically covered by the design, to the standards, additional units shall be similarly inspected until the IPIA is satisfied that the manufacturer is conforming to the approved design, or where the design is not specific with respect to any aspect of the standards, to the standards and quality assurance manual. 
</P>
<P>(2) <I>Certification report.</I> If, on the basis of the initial comprehensive factory inspection required by paragraph (b)(1) of this section, the IPIA determines that the manufacturer is performing adequately, the IPIA shall prepare and forward to the manufacturer, to HUD, and to HUD's agent a certification report as described in this paragraph (b)(2) of this section. The issuance of the certification report is a prerequisite to the commencement of production surveillance under paragraph (c) of this section in the plant for which the report is issued. At the time the certification report is issued, the IPIA may provide the manufacturer with a two to four week supply of labels to be applied to manufactured homes produced in the plant. The IPIA shall maintain a copy of each certification report which it issues. 
</P>
<P>(3) The certification report shall include: 
</P>
<P>(i) The name of the DAPIA which approved the manufacturer's design and quality assurance manual and the dates of those approvals, 
</P>
<P>(ii) The names and titles of the IPIA engineers and inspectors who performed the initial comprehensive inspection, 
</P>
<P>(iii) A full report of inspections made, serial numbers inspected, any failures to comply which were observed, corrective actions taken, and dates of inspections, and 
</P>
<P>(iv) A certification that at least one manufactured home has been completely inspected in all phases of its production in the plant, that the manufacturer is performing in conformance with the approved designs and quality assurance manual and, to the extent the design is not specific with respect to any aspects of the standards, with the standards, and the IPIA is satisfied that the manufacturer can produce manufactured homes in conformance with the designs, and where the designs are not specific, with the standards on a continuing basis. 
</P>
<P>(4) <I>Inadequate manufacturer performance.</I> Where an IPIA determines that the performance of a manufacturer is not yet adequate to justify the issuance of a certification report and labels to the manufacturer, the IPIA may label manufactured homes itself by using such of its personnel as it deems necessary to perform complete inspections of all phases of production of each manufactured home being produced and labeling only those determined after any necessary corrections to be in conformance with the design and, as appropriate, with the standards. This procedure shall continue until the IPIA determines that the manufacturer's performance is adequate to justify the issuance of a certification report. 
</P>
<P>(c) <I>Production surveillance.</I> (1) After it has issued a certification report under paragraph (b) of this section, the IPIA shall carry out ongoing surveillance of the manufacturing process in the plant. The IPIA shall be responsible for conducting representative inspections to assure that the manufacturer is performing its quality control program pursuant to and consistent with its approved quality assurance manual and to assure that whatever part of a manufactured home is actually inspected by the IPIA is fully in conformance with the design and, as appropriate under paragraph (a)(1)(iii) of this section, with the standards before a label is issued for or placed on that manufactured home. The surveillance visits shall commence no later than that date on which the IPIA determines they must commence so that the IPIA can assure that every manufactured home to be produced after the effective date of the standards to which a label provided for in paragraph (c)(2) of this section is affixed, is inspected in at least one stage of its production. The frequency of subsequent visits to the plant shall continue to be such that every manufactured home is inspected at some stage in its production. In the course of each visit, the IPIA shall make a complete inspection of every phase of production and of every visible part of every manufactured home which is at each stage of production. The inspection shall be made to the approved design except where the design is not specific with respect to an aspect of the standards, in which case the inspection of that aspect of the manufactured home shall be made to the standards. The IPIA shall assure that no label is placed on any manufactured home which it finds fails to conform with the approved design or, as appropriate, the standards in the course of these inspections and shall assure that no labels are placed on other manufactured homes still in the plant which may also not conform until those homes are inspected and if necessary corrected to the design or the standards. If an IPIA finds a manufactured home that fails to conform to the design, or as appropriate under paragraph (a)(1)(iii) of this section, to the standards, the IPIA may, in addition to withholding the label for the unit, proceed to red tag the home until the failure to conform is corrected. Only the IPIA is authorized to remove a red tag. When manufactured homes repeatedly fail to conform to the design, or as appropriate under paragraph (a)(1)(iii) of this section, to the standards in the same assembly station or when there is evidence that the manufacturer is ignoring or not performing under its approved quality assurance manual, the IPIA shall increase the frequency of these inspections until it is satisfied that the manufacturer is performing to its approved quality assurance manual. Failure to perform to the approved manual justifies withholding labels until an adequate level of performance is attained. As part of its function of assuring quality control, the IPIA shall inspect materials in storage and test equipment used by the manufacturer at least once a month, and more frequently if unacceptable conditions are observed. With the prior approval of the Secretary, an IPIA may decrease the frequency of any inspections. 
</P>
<P>(2) <I>Labeling</I>—(i) <I>Labels required.</I> (A) The IPIA shall continuously provide the manufacturer with a two- to four-week supply (at the convenience of the IPIA and the manufacturer) of the labels described in this subsection, except that no labels shall be issued for use when the IPIA is not present if the IPIA is not satisfied that the manufacturer can and is producing manufactured homes which conform to the design and, as appropriate, to the standards. Where necessary, the IPIA shall reclaim labels already given to the manufacturer. In no event shall the IPIA allow a label to be affixed to a manufactured home if the IPIA believes that the manufactured home fails to conform to the design, or, where the design is not specific with respect to an aspect of the standards, to the standards. Labels for such manufactured homes shall be provided only after the failure to conform has been remedied, or after the Secretary has determined that there is no failure to conform. 
</P>
<P>(B) A permanent label shall be affixed to each transportable section of each manufactured home for sale or lease to a purchaser or lessor in the United States in such a manner that removal will damage the label so that it cannot be reused. This label is provided by the IPIA and is separate and distinct from the data plate that the manufacturer is required to provide under § 3280.5. 
</P>
<P>(C) The label shall read as follows: 
</P>
<EXTRACT>
<P>“As evidenced by this label No. ABC 000 001, the manufacturer certifies to the best of the manufacturer's knowledge and belief that this manufactured home has been inspected in accordance with the requirements of the Department of Housing and Urban Development and is constructed in conformance with the Federal Manufactured Home Construction and Safety Standards in effect on the date of manufacture. See data plate.”</P></EXTRACT>
<P>(D) The label shall be 2 in. by 4 in. in size and shall be permanently attached to the manufactured home by means of 4 blind rivets, drive screws, or other means that render it difficult to remove without defacing it. It shall be etched on .032 in. thick aluminum plate. The label number shall be etched or stamped with a 3 letter IPIA designation which the Secretary shall assign and a 6 digit number which the label supplier shall stamp sequentially on labels supplied to each IPIA.
</P>
<P>(E) The label shall be located at the tail-light end of each transportable section of the manufactured home approximately one foot up from the floor and one foot in from the road side, or as near that location on a permanent part of the exterior of the manufactured home as practicable. The roadside is the right side of the manufactured home when one views the manufactured home from the tow bar end of the manufactured home. It shall be applied to the manufactured home unit in the manufacturing plant by the manufacturer or the IPIA, as appropriate. 
</P>
<P>(F) The label shall be provided to the manufacturer only by the IPIA. The IPIA shall provide the labels in sequentially numbered series. The IPIA may obtain labels from the Secretary or the Secretary's agent, or where the IPIA obtains the prior approval of the Secretary, from a label manufacturer. However, if the IPIA obtains labels directly from a label supplier, those labels must be sequentially numbered without any duplication of label numbers. 
</P>
<P>(G) Whenever the IPIA determines that a manufactured home which has been labeled, but which has not yet been released by the manufacturer may not conform to the design or, as appropriate under paragraph (a)(1)(iii) of this section, to the standards, the IPIA by itself or through an agent shall red tag the manufactured home. Where the IPIA determines that a manufactured home which has been labeled and released by the manufacturer, but not yet sold to a purchaser (as described in § 3282.252(b)) may not conform, the IPIA may, in its discretion, proceed to red tag the manufactured home. Only the IPIA is authorized to remove red tags, though it may do so through agents which it deems qualified to determine that the failure to conform has been corrected. Red tags may be removed when the IPIA is satisfied, through inspections, assurances from the manufacturer, or otherwise, that the affected homes conform. 
</P>
<P>(H) Labels that are damaged, destroyed, or otherwise made illegible or removed shall be replaced by the IPIA, after determination that the manufactured home is in compliance with the standards, by a new label of a different serial number. The IPIA's labeling record shall be permanently marked with the number of the replacement label and a corresponding record of the replacement label. 
</P>
<P>(ii) <I>Label control.</I> The labels used in each plant shall be under the direct control of the IPIA acting in that plant. Only the IPIA shall provide the labels to the manufacturer. The IPIA shall assure that the manufacturer does not use any other label to indicate conformance to the standards. 
</P>
<P>(A) The IPIA shall be responsible for obtaining labels. Labels shall be obtained from HUD or its agent, or with the approval of the Secretary, from a label manufacturer. The labels shall meet the requirements of this section. Where the IPIA obtains labels directly from a label manufacturer, the IPIA shall be responsible for assuring that the label manufacturer does not provide labels directly to the manufacturer of manufactured homes. If the label manufacturer fails to supply correct labels or allows labels to be released to parties other than the IPIA, the IPIA shall cease dealing with the label manufacturer.
</P>
<P>(B) The labels shall be shipped to and stored by the IPIA's at a location which permits ready access to manufacturing plants under its surveillance. The labels shall be stored under strict security and inventory control. They shall be released only by the IPIA to the manufacturer under these regulations.
</P>
<P>(C) The IPIA shall be able to account for all labels which it has obtained through the date on which the manufactured home leaves the manufacturing plant, and it shall be able to identify the serial number of the manufactured home to which each particular label is affixed.
</P>
<P>(D) The IPIA shall keep in its central record office a list of the serial numbers of labels issued from the label producer to the IPIA and by the IPIA to the manufacturing plant.
</P>
<P>(E) Failure to maintain control of labels through the date the manufactured home leaves the manufacturing plant and failure to keep adequate records of which label is on which manufactured home shall render the IPIA subject to disqualification under § 3282.356.
</P>
<P>(3) <I>Data plate.</I> (i) The IPIA shall assure that each manufactured home produced in each manufacturing plant under its surveillance is supplied with a data plate which meets the requirements of this section and of § 3280.5 of chapter XX of 24 CFR. The data plate shall be furnished by the manufacturer and affixed inside the manufactured home on or near the main electrical distribution panel. The data plate shall contain the following information: 
</P>
<P>(A) The name and address of the manufacturing plant in which the manufactured home was manufactured, 
</P>
<P>(B) The serial number and model designation of the unit and the date the unit was manufactured, 
</P>
<P>(C) The statement “This manufactured home is designed to comply with the Federal Manufactured Home Construction and Safety Standards in force at the time of manufacture.”, 
</P>
<P>(D) A list of major factory-installed equipment including the manufacturer's name and the model designation of each appliance, 
</P>
<P>(E) Reference to the roof load zone and wind load zone for which the home is designed and duplicates of the maps as set forth in § 3280.305. This information may be combined with the heating/cooling certificate and insulation zone map required by §§ 3280.510 and 3280.511. The Wind Zone Map on the Data Plate shall also contain the statement: 
</P>
<EXTRACT>
<P>This home has not been designed for the higher wind pressures and anchoring provisions required for ocean/coastal areas and should not be located within 1500′ of the coastline in Wind Zones II and III, unless the home and its anchoring and foundation system have been designed for the increased requirements specified for Exposure D in ANSI/ASCE 7-88.</P></EXTRACT>
<P>(F) The statement: 
</P>
<EXTRACT>
<P>This home has ____ has not ____ (appropriate blank to be checked by manufacturer) been equipped with storm shutters or other protective coverings for windows and exterior door openings. For homes designed to be located in Wind Zones II and III, which have not been provided with shutters or equivalent covering devices, it is strongly recommended that the home be made ready to be equipped with these devices in accordance with the method recommended in the manufacturers printed instructions.</P></EXTRACT>
<P>(G) The statement: “Design Approval by”, followed by the name of the agency that approved the design. 
</P>
<P>(ii) A copy of the data plate shall be furnished to the IPIA, and the IPIA shall keep a permanent record of the data plate as part of its labeling record so that the information is available during the life of the manufactured home in case the data plate in the manufactured home is defaced or destroyed. 
</P>
<P>(d) <I>Permanent records.</I> The IPIA shall maintain the following records as appropriate: 
</P>
<P>(1) Records of all labels issued, applied, removed, and replaced by label number, manufactured home serial number, manufactured home type, manufacturer's name, retailer destination, and copies of corresponding data plates. 
</P>
<P>(2) Records of all manufactured homes which are red tagged, and the status of each home. 
</P>
<P>(3) Records of all inspections made at each manufacturing plant on each manufactured home serial number, each failure to conform found, and the action taken in each case. 
</P>
<P>(4) Records of all inspections made at other locations of manufactured homes identified by manufacturer and serial number, all manufactured homes believed to contain the same failure to conform, and the action taken in each case. 
</P>
<FP>All records shall specify the precise section of the standard which is in question and contain a clear and concise explanation of the process by which the IPIA reached any conclusions. All records shall be traceable to specific manufactured home serial numbers and through the manufacturer's records to retailers and purchasers. 
</FP>
<P>(5) Records of all site inspections made as required under procedures applicable to approval of AC or on-site completion pursuant to §§ 3282.14 or 3282.610.
</P>
<P>(e) <I>Requirements for full acceptance—IPIA.</I> (1) Before granting full acceptance to an IPIA, the Secretary or the Secretary's agent shall review and evaluate at least one certification report which has been prepared by the IPIA during the period of provisional acceptance. The Secretary or the Secretary's agent shall also review in depth the IPIA's administrative capabilities and otherwise review the IPIA's performance of its responsibilities under these regulations. 
</P>
<P>(2) Where the Secretary determines on the basis of these reviews that an IPIA is not meeting an adequate level of performance, the Secretary or the Secretary's agent shall carry out further evaluations. If the Secretary finds the level of performance to be unacceptable, the Secretary shall not grant full acceptance. If full acceptance has not been granted by the end of the provisional acceptance period, provisional acceptance shall lapse unless the Secretary determines that the failure to obtain full acceptance resulted from the fact that the Secretary or the Secretary's agent has not had adequate time in which to complete an evaluation. 
</P>
<CITA TYPE="N">[41 FR 19852, May 13, 1976, as amended at 42 FR 2580, Jan. 12, 1977; 42 FR 35157, July 8, 1977; 59 FR 2474, Jan. 14, 1994; 61 FR 10861, Mar. 15, 1996; 80 FR 53727, Sept. 8, 2015] 


</CITA>
</DIV8>


<DIV8 N="§ 3282.363" NODE="24:5.1.2.1.3.8.1.13" TYPE="SECTION">
<HEAD>§ 3282.363   Right of entry and inspection.</HEAD>
<P>Each primary inspection agency shall secure from each manufacturer and manufacturing plant under its surveillance an agreement that the Secretary, the State Administrative Agency and the primary inspection agency have the right to inspect the plant and its manufactured home inspection, labeling, and delivery records, and any of its manufactured homes in the hands of retailers or distributors at any reasonable time. 


</P>
</DIV8>


<DIV8 N="§ 3282.364" NODE="24:5.1.2.1.3.8.1.14" TYPE="SECTION">
<HEAD>§ 3282.364   Inspection responsibilities and coordination.</HEAD>
<P>All primary inspection agencies shall be responsible for acting as necessary under their contractual commitment with the manufacturer to determine whether alleged failures to conform to the standards may exist in manufactured homes produced under their surveillance and to determine the source of the problems. The DAPIA may be required to examine the designs in question or the quality assurance manual under which the manufactured homes were produced. The IPIA may be required to reexamine the quality control procedures which it has approved to determine if they conform to the quality assurance manual, and the IPIA shall have primary responsibility for inspecting actual units produced and, where necessary, for inspecting units released by the manufacturer. All primary inspection agencies acting with respect to particular manufacturer or plant shall act in close coordination so that all necessary functions are performed effectively and efficiently. 


</P>
</DIV8>


<DIV8 N="§ 3282.365" NODE="24:5.1.2.1.3.8.1.15" TYPE="SECTION">
<HEAD>§ 3282.365   Forwarding monitoring fee.</HEAD>
<P>The IPIA shall, whenever it provides labels to a manufacturer, obtain from the manufacturer the monitoring fee to be forwarded to the Secretary or the Secretary's agent as set out in § 3282.210. If a manufacturer fails to provide the monitoring fee as required by § 3282.210 to be forwarded by the IPIA under this section, the IPIA shall immediately inform the Secretary; or the Secretary's Agent. 


</P>
</DIV8>


<DIV8 N="§ 3282.366" NODE="24:5.1.2.1.3.8.1.16" TYPE="SECTION">
<HEAD>§ 3282.366   Notification and correction campaign responsibilities.</HEAD>
<P>(a) Both IPIAs and DAPIAs are responsible for assisting the Secretary or an SAA in identifying the class of manufactured homes that may have been affected where the Secretary or an SAA makes or is contemplating making a preliminary determination of imminent safety hazard, serious defect, defect, or noncompliance under § 3282.412 with respect to manufactured homes for which the IPIA and DAPIA provided either plant inspection or design approval services.
</P>
<P>(b) The IPIA must in each manufacturing plant review at least monthly the manufacturer's service and inspection records to verify if appropriate determinations are being made by the manufacturer under § 3282.404 and, if not, take the actions required by this section and § 3282.404.
</P>
<P>(c) The IPIA in each manufacturing plant is also responsible for reviewing manufacturer determinations of the class of manufactured homes affected when the manufacturer is acting under subpart I. The IPIA must concur in the method used to determine the class of potentially affected manufactured homes or is to state why it finds the method to be inappropriate, inadequate, or incorrect.
</P>
<CITA TYPE="N">[78 FR 60200, Oct. 1, 2013]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="I" NODE="24:5.1.2.1.3.9" TYPE="SUBPART">
<HEAD>Subpart I—Consumer Complaint Handling and Remedial Actions</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>78 FR 60200, Oct. 1, 2013, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 3282.401" NODE="24:5.1.2.1.3.9.1.1" TYPE="SECTION">
<HEAD>§ 3282.401   Purpose and scope.</HEAD>
<P>(a) <I>Purpose.</I> The purpose of this subpart is to establish a system of protections provided by the Act with respect to imminent safety hazards and failures to conform to the construction and safety standards with a minimum of formality and delay, while protecting the rights of all parties.
</P>
<P>(b) <I>Scope.</I> This subpart sets out the procedures to be followed by manufacturers, retailers, and distributors, SAAs, primary inspection agencies, and the Secretary to assure that notification and correction are provided with respect to manufactured homes when required under this subpart. Notification and correction may be required with respect to manufactured homes that have been sold or otherwise released by the manufacturer to another party.


</P>
</DIV8>


<DIV8 N="§ 3282.402" NODE="24:5.1.2.1.3.9.1.2" TYPE="SECTION">
<HEAD>§ 3282.402   General provisions.</HEAD>
<P>(a) <I>Purchaser's rights.</I> Nothing in this subpart shall limit the rights of the purchaser under any contract or applicable law.
</P>
<P>(b) <I>Manufacturer's liability limited.</I> A manufacturer is not responsible for failures that occur in any manufactured home or component as the result of normal wear and aging, consumer abuse, or neglect of maintenance. The life of a component warranty may be one of the indicators used to establish normal wear and aging. A failure of any component may not be attributed by the manufacturer to normal wear and aging under this subpart during the term of any applicable warranty provided by the original manufacturer of the affected component.


</P>
</DIV8>


<DIV8 N="§ 3282.403" NODE="24:5.1.2.1.3.9.1.3" TYPE="SECTION">
<HEAD>§ 3282.403   Consumer complaint and information referral.</HEAD>
<P>(a) <I>Retailer responsibilities.</I> When a retailer receives a consumer complaint or other information about a home in its possession, or that it has sold or leased, that likely indicates a noncompliance, defect, serious defect, or imminent safety hazard, the retailer must forward the complaint or information to the manufacturer of the manufactured home in question as early as possible, in accordance with § 3282.256.
</P>
<P>(b) <I>SAA and HUD responsibilities.</I> (1) When an SAA or the Secretary receives a consumer complaint or other information that likely indicates a noncompliance, defect, serious defect, or imminent safety hazard in a manufactured home, the SAA or HUD must:
</P>
<P>(i) Forward the complaint or information to the manufacturer of the home in question as early as possible; and
</P>
<P>(ii) Send a copy of the complaint or other information to the SAA of the State where the manufactured home was manufactured or to the Secretary if there is no such SAA.
</P>
<P>(2) When it appears from the complaint or other information that an imminent safety hazard or serious defect may be involved, the SAA of the State where the home was manufactured must also send a copy of the complaint or other information to the Secretary.
</P>
<P>(c) <I>Manufacturer responsibilities.</I> Whenever the manufacturer receives information from any source that the manufacturer believes in good faith relates to a noncompliance, defect, serious defect, or imminent safety hazard in any of its manufactured homes, the manufacturer must, for each such occurrence, make the determinations required by § 3282.404.


</P>
</DIV8>


<DIV8 N="§ 3282.404" NODE="24:5.1.2.1.3.9.1.4" TYPE="SECTION">
<HEAD>§ 3282.404   Manufacturers' determinations and related concurrences.</HEAD>
<P>(a) <I>Initial determination.</I> (1) Not later than 30 days after a manufacturer receives information that it believes in good faith may indicate a noncompliance, defect, serious defect, or imminent safety hazard, the manufacturer must make a specific initial determination that there is a noncompliance, defect, serious defect, or imminent safety hazard, or that the information requires no further action under this subpart. If a manufacturer makes a final determination of noncompliance for an individual home (see § 3282.412(b)) and a class of homes is not involved, no further action is needed by the manufacturer other than to keep a record of its determination as required by § 3282.417. If the manufacturer determines that it is not the cause of the problem, but a problem still exists, the manufacturer must forward the information in its possession to the appropriate retailer (see § 3282.254), and, if known, to the installer (see §§ 3286.115 and 3286.811) for their consideration. Alternatively, the manufacturer, retailer, or installer may choose to submit the issue for resolution under dispute resolution (see 24 CFR part 3288).
</P>
<P>(2) When a manufacturer makes an initial determination that there is a serious defect or an imminent safety hazard, the manufacturer must immediately notify the Secretary, the SAA in the state of manufacture, and the manufacturer's IPIA.
</P>
<P>(3) In making the determination of noncompliance, defect, serious defect, or imminent safety hazard, or that no further action is required under this subpart, the manufacturer must review the information it received and carry out investigations, including, a review of service records, IPIA inspection records, and, as appropriate, inspections of homes in the class. The manufacturer must review the information, the known facts, and the circumstances relating to the complaint or information, including service records, approved designs, and audit findings, as applicable, to decide what investigations are reasonable.
</P>
<P>(b) <I>Class determination.</I> (1) When the manufacturer makes an initial determination of defect, serious defect, or imminent safety hazard, the manufacturer must also make a good-faith determination of the class that includes each manufactured home in which the same defect, serious defect, or imminent safety hazard exists or likely exists. Multiple occurrences of defects may be considered the same defect if they have the same cause, are related to a specific workstation description, or are related to the same failure to follow the manufacturer's approved quality assurance manual. Good faith may be used as a defense to the imposition of a penalty, but does not relieve the manufacturer of its responsibilities for notification or correction under this subpart I. The manufacturer must make this class determination not later than 20 days after making a determination of defect, serious defect, or imminent safety hazard.
</P>
<P>(2) Paragraph (c) of this section sets out methods for a manufacturer to use in determining the class of manufactured homes. If the manufacturer can identify the precise manufactured homes affected by the defect, serious defect, or imminent safety hazard, the class of manufactured homes may include only those manufactured homes actually affected by the same defect, serious defect, or imminent safety hazard. The manufacturer is also permitted to exclude from the class those manufactured homes for which the manufacturer has information that indicates the homes were not affected by the same cause. If it is not possible to identify the precise manufactured homes affected, the class must include every manufactured home in the group of homes that is identifiable, since the same defect, serious defect, or imminent safety hazard exists or likely exists in some homes in that group of manufactured homes.
</P>
<P>(3) For purposes related to this section, a defect, a serious defect, or an imminent safety hazard likely exists in a manufactured home if the cause of the defect, serious defect, or imminent safety hazard is such that the same defect, serious defect, or imminent safety hazard would likely have been introduced systematically into more than one manufactured home. Indications that the defect, serious defect, or imminent safety hazard would likely have been introduced systematically may include, but are not limited to, complaints that can be traced to the same faulty design or faulty construction, problems known to exist in supplies of components or parts, information related to the performance of a particular employee or use of a particular process, and information signaling a failure to follow quality control procedures with respect to a particular aspect of the manufactured home.
</P>
<P>(4) If the manufacturer must determine the class of homes pursuant to paragraph (b) of this section, the manufacturer must obtain from the IPIA, and the IPIA must provide, either:
</P>
<P>(i) The IPIA's written concurrence on the methods used by the manufacturer to identify the homes that should be included in the class of homes; or
</P>
<P>(ii) The IPIA's written statement explaining why it believes the manufacturer's methods for determining the class of homes were inappropriate or inadequate.
</P>
<P>(c) <I>Methods for determining class.</I> (1) In making a class determination under paragraph (b) of this section, a manufacturer is responsible for carrying out reasonable investigations. In carrying out investigations, the manufacturer must review the information, the known facts, and the relevant circumstances, and generally must establish the cause of the defect, serious defect, or imminent safety hazard. Based on the results of such investigations and all information received or developed, the manufacturer must use an appropriate method or appropriate methods to determine the class of manufactured homes in which the same defect, serious defect, or imminent safety hazard exists or likely exists.
</P>
<P>(2) Methods that may be used in determining the class of manufactured homes include, but are not limited to:
</P>
<P>(i) Inspection of the manufactured home in question, including its design, to determine whether the defect, serious defect, or imminent safety hazard resulted from the design itself;
</P>
<P>(ii) Physical inspection of manufactured homes of the same design or construction, as appropriate, that were produced before and after a home in question;
</P>
<P>(iii) Inspection of the service records of a home in question and of homes of the same design or construction, as appropriate, produced before and after that home, if it is clear that the cause of the defect, serious defect, or imminent safety hazard is such that the defect, serious defect, or imminent safety hazard would be visible to and reportable by consumers or retailers;
</P>
<P>(iv) Inspection of manufacturer quality control records to determine whether quality control procedures were followed and, if not, the time frame during which they were not;
</P>
<P>(v) Inspection of IPIA records to determine whether the defect, serious defect, or imminent safety hazard was either detected or specifically found not to exist in some manufactured homes;
</P>
<P>(vi) Identification of the cause as relating to a particular employee whose work, or to a process whose use, would have been common to the production of the manufacturer's homes for a period of time; and
</P>
<P>(vii) Inspection of records relating to components supplied by other parties and known to contain or suspected of containing a defect, a serious defect, or an imminent safety hazard.
</P>
<P>(3) When the Secretary or an SAA decides the method chosen by the manufacturer to conduct an investigation in order to make a class determination is not the most appropriate method, the Secretary or SAA must explain in writing to the manufacturer why the chosen method is not the most appropriate.
</P>
<P>(d) <I>Documentation required.</I> The manufacturer must comply with the recordkeeping requirements in § 3282.417 as applicable to its determinations and any IPIA concurrence or statement that it does not concur.


</P>
</DIV8>


<DIV8 N="§ 3282.405" NODE="24:5.1.2.1.3.9.1.5" TYPE="SECTION">
<HEAD>§ 3282.405   Notification pursuant to manufacturer's determination.</HEAD>
<P>(a) <I>General requirement.</I> Every manufacturer of manufactured homes must provide notification, as set out in this section, with respect to any manufactured home produced by the manufacturer in which the manufacturer determines, in good faith, that there exists or likely exists in more than one home, the same defect introduced systematically, a serious defect, or an imminent safety hazard.
</P>
<P>(b) <I>Requirements by category.</I> (1) <I>Noncompliance.</I> A manufacturer must provide notification of a noncompliance only when ordered to do so by the Secretary or an SAA, pursuant to §§ 3282.412 and 3282.413.
</P>
<P>(2) <I>Defects.</I> When a manufacturer has made a class determination in accordance with § 3282.404 that a defect exists or likely exists in more than one home, the manufacturer must prepare a plan for notification in accordance with § 3282.408, and must provide notification with respect to each manufactured home in the class of manufactured homes.
</P>
<P>(3) <I>Serious defects and imminent safety hazards.</I> When a manufacturer has made an initial determination in accordance with § 3282.404(a) that a serious defect or imminent safety hazard exists or likely exists, the manufacturer must prepare a plan for notification in accordance with § 3282.408, must provide notification with respect to all manufactured homes in which the serious defect or imminent safety hazard exists or likely exists, and must correct the home or homes in accordance with § 3282.406.
</P>
<P>(c) <I>Plan for notification required.</I> (1) If a manufacturer determines that it is responsible for providing notification under this section, the manufacturer must prepare and receive approval on a plan for notification as set out in § 3282.408, unless the manufacturer meets alternative requirements established in § 3282.407.
</P>
<P>(2) If the Secretary or SAA orders a manufacturer to provide notification in accordance with the procedures in §§ 3282.412 and 3282.413, the Secretary or SAA has the option of requiring a manufacturer to prepare and receive approval on a plan for notification.
</P>
<P>(d) <I>Method of notification.</I> When a manufacturer provides notification as required under this section, notification must be:
</P>
<P>(1) By certified mail or other more expeditious means that provides a receipt to each retailer or distributor to whom any manufactured home in the class of homes containing the defect, serious defect, or imminent safety hazard was delivered;
</P>
<P>(2) By certified mail or other more expeditious means that provides a receipt to the first purchaser of each manufactured home in the class of manufactured homes containing the defect, serious defect, or imminent safety hazard, and, to the extent feasible, to any subsequent owner to whom any warranty provided by the manufacturer or required by federal, state, or local law on such manufactured home has been transferred, except that notification need not be sent to any person known by the manufacturer not to own the manufactured home in question if the manufacturer has a record of a subsequent owner of the manufactured home; and
</P>
<P>(3) By certified mail or other more expeditious means that provides a receipt to each other person who is a registered owner of a manufactured home in the class of homes containing the defect, serious defect, or imminent safety hazard and whose name has been ascertained pursuant to § 3282.211 or is known to the manufacturer.


</P>
</DIV8>


<DIV8 N="§ 3282.406" NODE="24:5.1.2.1.3.9.1.6" TYPE="SECTION">
<HEAD>§ 3282.406   Required manufacturer correction.</HEAD>
<P>(a) <I>Correction of noncompliances and defects.</I> (1) Section 3282.415 sets out requirements with respect to a manufacturer's correction of any noncompliance or defect that exists in each manufactured home that has been sold or otherwise released to a retailer but that has not yet been sold to a purchaser.
</P>
<P>(2) In accordance with section 623 of the Act and Part 3288, “Manufactured Home Dispute Resolution Program,” of this chapter, the manufacturer, retailer, or installer of a manufactured home deemed responsible for correction of repairs or defects must correct, at its expense, each failure in the performance, construction, components, or material of the home that renders the home or any part of the home not fit for the ordinary use for which it was intended and that is reported during the one-year period beginning on the date of installation of the home (see § 3286.115).
</P>
<P>(b) <I>Correction of serious defects and imminent safety hazards.</I> (1) A manufacturer required to furnish notification under § 3282.405 or § 3282.413 must correct, at its expense, any serious defect or imminent safety hazard that can be related to an error in design or assembly of the manufactured home by the manufacturer, including an error in design or assembly of any component or system incorporated into the manufactured home by the manufacturer.
</P>
<P>(2) If, while making corrections under any of the provisions of this subpart, the manufacturer creates an imminent safety hazard or serious defect, the manufacturer shall correct the imminent safety hazard or serious defect.
</P>
<P>(3) Each serious defect or imminent safety hazard corrected under this paragraph (b) must be brought into compliance with applicable construction and safety standards or, where those standards are not specific, with the manufacturer's approved design.
</P>
<P>(c) <I>Inclusion in plan.</I> (1) In the plan required by § 3282.408, the manufacturer must provide for correction of those homes that are required to be corrected pursuant to paragraph (b) of this section.
</P>
<P>(2) If the Secretary or SAA orders a manufacturer to provide correction in accordance with the procedures in § 3282.413, the Secretary or SAA has the option of requiring a manufacturer to prepare and receive approval on a plan for correction.
</P>
<P>(d) <I>Corrections by owners.</I> A manufacturer that is required to make corrections under paragraph (b) of this section, or that elects to make corrections in accordance with § 3282.407, must reimburse any owner of an affected manufactured home who choses to make the correction before the manufacturer did so, for the reasonable cost of correction.
</P>
<P>(e) <I>Correction of appliances, components, or systems.</I> (1) If any appliance, component, or system in a manufactured home is covered by a product warranty, the manufacturer, retailer, or installer that is responsible under this section for correcting a noncompliance, defect, serious defect, or imminent safety hazard in the appliance, component, or system may seek the required correction directly from the producer. The SAA that approves any plan of notification required pursuant to § 3282.408 or the Secretary, as applicable, may establish reasonable time limits for the manufacturer of the home and the producer of the appliance, component, or system to agree on who is to make the correction and for completing the correction.
</P>
<P>(2) Nothing in this section shall prevent the manufacturer, retailer, or installer from seeking indemnification from the producer of the appliance, component, or system for correction work done on any appliance, component, or system.


</P>
</DIV8>


<DIV8 N="§ 3282.407" NODE="24:5.1.2.1.3.9.1.7" TYPE="SECTION">
<HEAD>§ 3282.407   Voluntary compliance with the notification and correction requirements under the Act.</HEAD>
<P>A manufacturer that takes corrective action that complies with one of the following three alternatives to the requirement in § 3282.408 for preparing a plan will be deemed to have provided any notification required by § 3282.405:
</P>
<P>(a) <I>Voluntary action—one home.</I> When a manufacturer has made a determination that only one manufactured home is involved, the manufacturer is not required to provide notification pursuant to § 3282.405 or to prepare or submit a plan if:
</P>
<P>(1) The manufacturer has made a determination of defect; or
</P>
<P>(2) The manufacturer has made a determination of serious defect or imminent safety hazard and corrects the home within the 20-day period. The manufacturer must maintain, in the plant where the manufactured home was manufactured, a complete record of the correction. The record must describe briefly the facts of the case and any known cause of the serious defect or imminent safety hazard, state what corrective actions were taken, and be maintained in the service records in a form that will allow the Secretary or an SAA to review all such corrections.
</P>
<P>(b) <I>Voluntary action—multiple homes.</I> Regardless of whether a plan has been submitted under § 3282.408, the manufacturer may act prior to obtaining approval of the plan. Such action is subject to review and disapproval by the SAA of the state where the home was manufactured or by the Secretary, unless the manufacturer obtains the written agreement of the SAA or the Secretary that the corrective action is adequate. If such an agreement is obtained, the correction must be accepted as adequate by all SAAs and the Secretary, if the manufacturer makes the correction as agreed to and any imminent safety hazard or serious defect is eliminated.
</P>
<P>(c) <I>Waiver.</I> (1) A manufacturer may obtain a waiver of the notification requirements in § 3282.405 and the plan requirements in § 3282.408 either from the SAA of the state of manufacture, when all of the manufactured homes that would be covered by the plan were manufactured in that state, or from the Secretary. As of the date of a request for a waiver, the notification and plan requirements are deferred pending timely submission of any additional documentation as the SAA or the Secretary may require and final resolution of the waiver request. If a waiver request is not granted, the plan required by § 3282.408 must be submitted within 5 days after the expiration of the time frame established in § 3282.408, if the manufacturer is notified that the request was not granted.
</P>
<P>(2) The waiver may be approved if, not later than 20 days after making the determination that notification is required, the manufacturer presents evidence that it, in good faith, believes would show to the satisfaction of the SAA or the Secretary that:
</P>
<P>(i) The manufacturer has identified all homes that would be covered by the plan in accordance with § 3282.408;
</P>
<P>(ii) The manufacturer will correct, at its expense, all of the identified homes, either within 60 days of being informed that the request for waiver has been granted or within another time limit approved in the waiver;
</P>
<P>(iii) The proposed repairs are adequate to remove the defect, serious defect, or imminent safety hazard that gave rise to the determination that correction is required; and
</P>
<P>(3) The manufacturer must correct all affected manufactured homes within 60 days of being informed that the request for waiver has been granted or within the time limit approved in the waiver, as applicable. The manufacturer must record the known cause of the problem and the correction in the service records, in an approved form that will allow the Secretary or SAA to review the cause and correction.


</P>
</DIV8>


<DIV8 N="§ 3282.408" NODE="24:5.1.2.1.3.9.1.8" TYPE="SECTION">
<HEAD>§ 3282.408   Plan of notification required.</HEAD>
<P>(a) <I>Manufacturer's plan required.</I> Except as provided in § 3282.407, if a manufacturer determines that it is responsible for providing notification under § 3282.405, the manufacturer must prepare a plan in accordance with this section and § 3282.409. The manufacturer must, as soon as practical, but not later than 20 days after making the determination of defect, serious defect, or imminent safety hazard, submit the plan for approval to one of the following, as appropriate:
</P>
<P>(1) The SAA of the State of manufacture, when all of the manufactured homes covered by the plan were manufactured in that State; or
</P>
<P>(2) The Secretary, when the manufactured homes were manufactured in more than one State or there is no SAA in the State of manufacture.
</P>
<P>(b) <I>Implementation of plan.</I> Upon approval of the plan, including any changes for cause required by the Secretary or SAA after consultation with the manufacturer, the manufacturer must carry out the approved plan within the agreed time limits.


</P>
</DIV8>


<DIV8 N="§ 3282.409" NODE="24:5.1.2.1.3.9.1.9" TYPE="SECTION">
<HEAD>§ 3282.409   Contents of plan.</HEAD>
<P>(a) <I>Purpose of plan.</I> This section sets out the requirements that must be met by a manufacturer in preparing any plan it is required to submit under § 3282.408. The underlying requirement is that the plan show how the manufacturer will fulfill its responsibilities with respect to notification and correction.
</P>
<P>(b) <I>Contents of plan.</I> The plan must:
</P>
<P>(1) Identify, by serial number and other appropriate identifying criteria, all manufactured homes for which notification is to be provided, as determined pursuant to § 3282.404;
</P>
<P>(2) Include a copy of the notice that the manufacturer proposes to use to provide the notification required by § 3282.405;
</P>
<P>(3) Provide for correction of those manufactured homes that are required to be corrected pursuant to § 3282.406(b);
</P>
<P>(4) Include the IPIA's written concurrence or statement on the methods used by the manufacturer to identify the homes that should be included in the class of homes, as required pursuant to § 3282.404(b); and
</P>
<P>(5) Include a deadline for completion of all notifications and corrections.
</P>
<P>(c) <I>Contents of notice.</I> Except as otherwise agreed by the Secretary or the SAA reviewing the plan under § 3282.408, the notice to be approved as part of the plan must include the following:
</P>
<P>(1) An opening statement that reads: “This notice is sent to you in accordance with the requirements of the National Manufactured Housing Construction and Safety Standards Act.”
</P>
<P>(2) The following statement: “[choose one, as appropriate: Manufacturer's name, or the Secretary, or the (insert State) SAA] has determined that [insert identifying criteria of manufactured home] may not comply with an applicable Federal Manufactured Home Construction or Safety Standard.”
</P>
<P>(3) Except when the manufacturer is providing notice pursuant to an approved plan or agreement with the Secretary or an SAA under § 3282.408, each applicable statement must read as follows:
</P>
<P>(i) “An imminent safety hazard may exist in (identifying criteria of manufactured home).”
</P>
<P>(ii) “A serious defect may exist in (identifying criteria of manufactured home).”
</P>
<P>(iii) “A defect may exist in (identifying criteria of manufactured home).”
</P>
<P>(4) A clear description of the defect, serious defect, or imminent safety hazard and an explanation of the risk to the occupants, which must include:
</P>
<P>(i) The location of the defect, serious defect, or imminent safety hazard in the manufactured home;
</P>
<P>(ii) A description of any hazards, malfunctions, deterioration, or other consequences that may reasonably be expected to result from the defect, serious defect, or imminent safety hazard;
</P>
<P>(iii) A statement of the conditions that may cause such consequences to arise; and
</P>
<P>(iv) Precautions, if any, that the owner can, should, or must take to reduce the chance that the consequences will arise before the manufactured home is repaired;
</P>
<P>(5) A statement of whether there will be any warning that a dangerous occurrence may take place and what that warning would be, and of any signs that the owner might see, hear, smell, or feel that might indicate danger or deterioration of the manufactured home as a result of the defect, serious defect, or imminent safety hazard;
</P>
<P>(6) A statement that the manufacturer will correct the manufactured home, if the manufacturer will correct the manufactured home under this subpart or otherwise;
</P>
<P>(7) A statement in accordance with whichever of the following is appropriate:
</P>
<P>(i) Where the manufacturer will correct the manufactured home at no cost to the owner, the statement must indicate how and when the correction will be done, how long the correction will take, and any other information that may be helpful to the owner; or
</P>
<P>(ii) When the manufacturer does not bear the cost of repair, the notification must include a detailed description of all parts and materials needed to make the correction; a description of all steps to be followed in making the correction, including appropriate illustrations; and an estimate of the cost of the purchaser or owner of the correction;
</P>
<P>(8) A statement informing the owner that the owner may submit a complaint to the SAA or Secretary if the owner believes that:
</P>
<P>(i) The notification or the remedy described therein is inadequate;
</P>
<P>(ii) The manufacturer has failed or is unable to remedy the problem in accordance with its notification; or
</P>
<P>(iii) The manufacturer has failed or is unable to remedy the problem within a reasonable time after the owner's first attempt to obtain remedy; and
</P>
<P>(9) A statement that any actions taken by the manufacturer under the Act in no way limit the rights of the owner or any other person under any contract or other applicable law and that the owner may have further rights under contract or other applicable law.


</P>
</DIV8>


<DIV8 N="§ 3282.410" NODE="24:5.1.2.1.3.9.1.10" TYPE="SECTION">
<HEAD>§ 3282.410   Implementation of plan.</HEAD>
<P>(a) <I>Deadline for notifications.</I> (1) The manufacturer must complete the notifications carried out under a plan approved by an SAA or the Secretary under § 3282.408 on or before the deadline approved by the SAA or Secretary. In approving each deadline, an SAA or the Secretary will allow a reasonable time to complete all notifications, taking into account the number of manufactured homes involved and the difficulty of completing the notifications.
</P>
<P>(2) The manufacturer must, at the time of dispatch, furnish to the SAA or the Secretary a true or representative copy of each notice, bulletin, and other written communication sent to retailers, distributors, or owners of manufactured homes regarding any serious defect or imminent safety hazard that may exist in any homes produced by the manufacturer, or regarding any noncompliance or defect for which the SAA or Secretary requires, under § 3282.413(c), the manufacturer to submit a plan for providing notification.
</P>
<P>(b) <I>Deadline for corrections.</I> A manufacturer that is required to correct a serious defect or imminent safety hazard pursuant to § 3282.406(b) must complete implementation of the plan required by § 3282.408 on or before the deadline approved by the SAA or the Secretary. The deadline must be no later than 60 days after approval of the plan. In approving the deadline, the SAA or the Secretary will allow a reasonable amount of time to complete the plan, taking into account the seriousness of the problem, the number of manufactured homes involved, the immediacy of any risk, and the difficulty of completing the action. The seriousness and immediacy of any risk posed by the serious defect or imminent safety hazard will be given greater weight than other considerations.
</P>
<P>(c) <I>Extensions.</I> An SAA that approved a plan or the Secretary may grant an extension of the deadlines included in a plan, if the manufacturer requests such an extension in writing and shows good cause for the extension, if the SAA or the Secretary decides that the extension is justified and not contrary to the public interest. When the Secretary grants an extension for completion of any corrections, the Secretary will notify the manufacturer and must publish notice of such extension in the <E T="04">Federal Register.</E> When an SAA grants an extension for completion of any corrections, the SAA must notify the Secretary and the manufacturer.
</P>
<P>(d) <I>Recordkeeping.</I> The manufacturer must provide the report and maintain the records that are required by § 3282.417 for all notification and correction actions.


</P>
</DIV8>


<DIV8 N="§ 3282.411" NODE="24:5.1.2.1.3.9.1.11" TYPE="SECTION">
<HEAD>§ 3282.411   SAA initiation of remedial action.</HEAD>
<P>(a) <I>SAA review of information.</I> Whenever an SAA has information indicating the possible existence of a noncompliance, defect, serious defect, or imminent safety hazard in a manufactured home, the SAA may initiate administrative review of the need for notification and correction. An SAA initiates administrative review by either:
</P>
<P>(1) Referring the matter to another SAA in accordance with paragraph (b) of this section or to the Secretary; or
</P>
<P>(2) Taking action itself, in accordance with § 3282.412, when it appears that all of the homes affected by the noncompliance, defect, serious defect, or imminent safety hazard were manufactured in the SAA's State.
</P>
<P>(b) <I>SAA referral of matter.</I> If at any time it appears that the affected manufactured homes were manufactured in more than one State, an SAA that decides to initiate such administrative review must refer the matter to the Secretary for possible action pursuant to § 3282.412. If it appears that all of the affected manufactured homes were manufactured in another State, an SAA that decides to initiate administrative review must refer the matter to the SAA in the State of manufacture or to the Secretary, for possible action pursuant to § 3282.412.


</P>
</DIV8>


<DIV8 N="§ 3282.412" NODE="24:5.1.2.1.3.9.1.12" TYPE="SECTION">
<HEAD>§ 3282.412   Preliminary and final administrative determinations.</HEAD>
<P>(a) <I>Grounds for issuance of preliminary determination.</I> The Secretary or, in accordance with § 3282.411, an SAA in the State of manufacture, may issue a Notice of Preliminary Determination when:
</P>
<P>(1) The manufacturer has not provided to the Secretary or SAA the necessary information to make a determination that:
</P>
<P>(i) A noncompliance, defect, serious defect, or imminent safety hazard possibly exists; or
</P>
<P>(ii) A manufacturer had information that likely indicates a noncompliance, defect, serious defect, or imminent safety hazard for which the manufacturer failed to make the determinations required under § 3282.404;
</P>
<P>(2) The Secretary or SAA has information that indicates a noncompliance, defect, serious defect, or imminent safety hazard possibly exists, and, in the case of the SAA, the SAA believes that:
</P>
<P>(i) The affected manufactured home has been sold or otherwise released by a manufacturer to a retailer or distributor, but there is no completed sale of the home to a purchaser;
</P>
<P>(ii) Based on the same factors that are established for a manufacturer's class determination in § 3282.404(b), the information indicates a class of homes in which a noncompliance or defect possibly exists; or
</P>
<P>(iii) The information indicates one or more homes in which a serious defect or an imminent safety hazard possibly exists;
</P>
<P>(3) The Secretary or SAA is reviewing a plan under § 3282.408 and the Secretary or SAA disagree with the manufacturer on proposed changes to the plan;
</P>
<P>(4) The Secretary or SAA believes that the manufacturer has failed to fulfill the requirements of a waiver granted under § 3282.407(c); or
</P>
<P>(5) There is information that a manufacturer failed to make the determinations required under § 3282.404.
</P>
<P>(b) <I>Additional requirements—SAA issuance.</I> (1) An SAA that receives information that indicates a serious defect or an imminent safety hazard possibly exists in a home manufactured in that SAA's State must notify the Secretary about that information.
</P>
<P>(2) An SAA that issues a preliminary determination must provide a copy of the preliminary determination to the Secretary at the time of its issuance. Failure to comply with this requirement does not affect the validity of the preliminary determination.
</P>
<P>(c) <I>Additional requirements—Secretary issuance.</I> The Secretary will notify the SAA of each State where the affected homes were manufactured, and, to the extent reasonable, the SAA of each State where the homes are located, of the issuance of a preliminary determination. Failure to comply with this requirement does not affect the validity of the preliminary determination.
</P>
<P>(d) <I>Notice of Preliminary Determination.</I> (1) The Notice of Preliminary Determination must be sent by certified mail or express delivery and must:
</P>
<P>(i) Include the factual basis for the determination;
</P>
<P>(ii) Include the criteria used to identify any class of homes in which the noncompliance, defect, serious defect, or imminent safety hazard possibly exists;
</P>
<P>(iii) If applicable, indicate that the manufacturer may be required to make corrections on a home or in a class of homes; and
</P>
<P>(iv) If the preliminary determination is that the manufacturer failed to make an initial determination required under § 3282.404(a), include an allegation that the manufacturer failed to act in good faith.
</P>
<P>(2) The Notice of Preliminary Determination must inform the manufacturer that the preliminary determination will become final unless the manufacturer requests a hearing or presentation of views under subpart D of this part.
</P>
<P>(e) <I>Presentation of views.</I> (1) If a manufacturer elects to exercise its right to a hearing or presentation of views, the Secretary or the SAA, as applicable, must receive the manufacturer's request for a hearing or presentation of views:
</P>
<P>(i) Within 15 days of delivery of the Notice of Preliminary Determination of serious defect, defect, or noncompliance; or
</P>
<P>(ii) Within 5 days of delivery of the Notice of Preliminary Determination of imminent safety hazard.
</P>
<P>(2) A Formal or an Informal Presentation of Views will be held in accordance with § 3282.152 promptly upon receipt of a manufacturer's request under paragraph (c) of this section.
</P>
<P>(f) <I>Issuance of Final Determination.</I> (1) The SAA or the Secretary, as appropriate, may make a Final Determination that is based on the allegations in the preliminary determination and adverse to the manufacturer if:
</P>
<P>(i) The manufacturer fails to respond to the Notice of Preliminary Determination within the time period established in paragraph (c)(2) of this section; or
</P>
<P>(ii) The SAA or the Secretary decides that the views and evidence presented by the manufacturer or others are insufficient to rebut the preliminary determination.
</P>
<P>(2) At the time that the SAA or Secretary makes a Final Determination that an imminent safety hazard, serious defect, defect, or noncompliance exists, the SAA or Secretary, as appropriate, must issue an order in accordance with § 3282.413.


</P>
</DIV8>


<DIV8 N="§ 3282.413" NODE="24:5.1.2.1.3.9.1.13" TYPE="SECTION">
<HEAD>§ 3282.413   Implementation of Final Determination.</HEAD>
<P>(a) <I>Issuance of orders.</I> (1) The SAA or the Secretary, as appropriate, must issue an order directing the manufacturer to furnish notification if:
</P>
<P>(i) The SAA makes a Final Determination that a defect or noncompliance exists in a class of homes;
</P>
<P>(ii) The Secretary makes a Final Determination that an imminent safety hazard, serious defect, defect, or noncompliance exists; or
</P>
<P>(iii) The SAA makes a Final Determination that an imminent safety hazard or a serious defect exists in any home, and the SAA has received the Secretary's concurrence on the issuance of the Final Determination and order.
</P>
<P>(2) The SAA or the Secretary, as appropriate, must issue an order directing the manufacturer to make corrections in any affected manufactured home if:
</P>
<P>(i) The SAA or the Secretary makes a Final Determination that a defect or noncompliance exists in a manufactured home that has been sold or otherwise released by a manufacturer to a retailer or distributor but for which the sale to a purchaser has not been completed;
</P>
<P>(ii) The Secretary makes a Final Determination that an imminent safety hazard or serious defect exists; or
</P>
<P>(iii) The SAA makes a Final Determination that an imminent safety hazard or serious defect exists in any home, and the SAA has received the Secretary's concurrence on the issuance of the Final Determination and order.
</P>
<P>(3) Only the Secretary may issue an order directing a manufacturer to repurchase or replace any manufactured home already sold to a purchaser, unless the Secretary authorizes an SAA to issue such an order.
</P>
<P>(4) An SAA that has a concurrence or authorization from the Secretary on any order issued under this section must have the Secretary's concurrence on any subsequent changes to the order. An SAA that has issued a Preliminary Determination must have the Secretary's concurrence on any waiver of notification or any settlement when the concerns addressed in the Preliminary Determination involve a serious defect or an imminent safety hazard.
</P>
<P>(5) If an SAA or the Secretary makes a Final Determination that the manufacturer failed to make, in good faith, an initial determination required under § 3282.404(a):
</P>
<P>(i) The SAA may impose any penalties or take any action applicable under State law and may refer the matter to the Secretary for appropriate action; and
</P>
<P>(ii) The Secretary may take any action permitted by law.
</P>
<P>(b) <I>Decision to order replacement or repurchase.</I> The SAA or the Secretary will order correction of any manufactured home covered by an order issued in accordance with paragraph (a)(2) of this section, unless any requirements and factors applicable under § 3282.414 and § 3282.415 indicate that the SAA or the Secretary should order replacement or repurchase of the home.
</P>
<P>(c) <I>Time for compliance with order.</I> (1) The SAA or the Secretary may require the manufacturer to submit a plan for providing any notification and any correction, replacement, or repurchase remedy that results from an order under this section. The manufacturer's plan must include the method and date by which notification and any corrective action will be provided.
</P>
<P>(2) The manufacturer must provide any such notification and correction, replacement, or repurchase remedy as early as practicable, but not later than:
</P>
<P>(i) Thirty days after issuance of the order, in the case of a Final Determination of imminent safety hazard or when the SAA or Secretary has ordered replacement or repurchase of a home pursuant to § 3282.414; or
</P>
<P>(ii) Sixty days after issuance of the order, in the case of a Final Determination of serious defect, defect, or noncompliance.
</P>
<P>(3) Subject to the requirements of paragraph (a)(3) of this section, the SAA that issued the order or the Secretary may grant an extension of the deadline for compliance with an order if:
</P>
<P>(i) The manufacturer requests such an extension in writing and shows good cause for the extension; and
</P>
<P>(ii) The SAA or the Secretary is satisfied that the extension is justified in the public interest.
</P>
<P>(4) When the SAA grants an extension, it must notify the manufacturer and forward to the Secretary a draft of a notice of the extension for the Secretary to publish in the <E T="04">Federal Register.</E> When the Secretary grants an extension, the Secretary must notify the manufacturer and publish notice of such extension in the <E T="04">Federal Register.</E>
</P>
<P>(d) <I>Appeal of SAA determination.</I> Within 10 days of a manufacturer receiving notice that an SAA has made a Final Determination that an imminent safety hazard, a serious defect, a defect, or noncompliance exists or that the manufacturer failed to make the determinations required under § 3282.404, the manufacturer may appeal the Final Determination to the Secretary under § 3282.309.
</P>
<P>(e) <I>Settlement offers.</I> A manufacturer may propose in writing, at any time, an offer of settlement and shall submit it for consideration by the Secretary or the SAA that issued the Notice of Preliminary Determination. The Secretary or the SAA has the option of providing the manufacturer making the offer with an opportunity to make an oral presentation in support of such offer. If the manufacturer is notified that an offer of settlement is rejected, the offer is deemed to have been withdrawn and will not constitute a part of the record in the proceeding. Final acceptance by the Secretary or an SAA of any offer of settlement automatically terminates any proceedings related to the matter involved in the settlement.
</P>
<P>(f) <I>Waiver of notification.</I> (1) At any time after the Secretary or an SAA has issued a Notice of Preliminary Determination, the manufacturer may ask the Secretary or SAA to waive any formal notification requirements. When requesting a waiver, the manufacturer must certify that:
</P>
<P>(i) The manufacturer has made a class determination in accordance with § 3282.404(b);
</P>
<P>(ii) The manufacturer will correct, at the manufacturer's expense, all affected manufactured homes in the class within a time period specified by the Secretary or SAA, but not later than 60 days after the manufacturer is notified of the acceptance of the request for waiver or the issuance of any Final Determination, whichever is later; and
</P>
<P>(iii) The proposed repairs are adequate to correct the noncompliance, defect, serious defect, or imminent safety hazard that gave rise to the issuance of the Notice of Preliminary Determination.
</P>
<P>(2) If the Secretary or SAA grants a waiver, the manufacturer must reimburse any owner of an affected manufactured home who chose to make the correction before the manufacturer did so, for the reasonable cost of correction.
</P>
<P>(g) <I>Recordkeeping.</I> The manufacturer must provide the report and maintain the records that are required by § 3282.417 for all notification and correction actions.


</P>
</DIV8>


<DIV8 N="§ 3282.414" NODE="24:5.1.2.1.3.9.1.14" TYPE="SECTION">
<HEAD>§ 3282.414   Replacement or repurchase of homes after sale to purchaser.</HEAD>
<P>(a) <I>Order to replace or repurchase.</I> Whenever a manufacturer cannot correct or remove an imminent safety hazard or a serious defect in a manufactured home, for which there is a completed sale to a purchaser, within 60 days of the issuance of an order under § 3282.413 or any extension of the 60-day deadline that has been granted by the Secretary in accordance with § 3282.413(c)(3), the Secretary or, if authorized in writing by the Secretary in accordance with § 3282.413(a)(3), the SAA may require that the manufacturer:
</P>
<P>(1) Replace the manufactured home with a home that:
</P>
<P>(i) Is substantially equal in size, equipment, and quality; and
</P>
<P>(ii) Either is new or is in the same condition that the defective manufactured home would have been in at the time of discovery of the imminent safety hazard or serious defect had the imminent safety hazard or serious defect not existed; or
</P>
<P>(2) Take possession of the manufactured home, if the Secretary or the SAA so orders, and refund the purchase price in full, except that the amount of the purchase price may be reduced by a reasonable amount for depreciation if the home has been in the possession of the owner for more than one year and the amount of depreciation is based on:
</P>
<P>(i) Actual use of the home; and
</P>
<P>(ii) An appraisal system approved by the Secretary or the SAA that does not take into account damage or deterioration resulting from the imminent safety hazard or serious defect.
</P>
<P>(b) <I>Factors affecting order.</I> In determining whether to order replacement or refund by the manufacturer, the Secretary or the SAA will consider:
</P>
<P>(1) The threat of injury or death to manufactured home occupants;
</P>
<P>(2) Any costs and inconvenience to manufactured-home owners that will result from the lack of adequate repair within the specified period;
</P>
<P>(3) The expense to the manufacturer;
</P>
<P>(4) Any obligations imposed on the manufacturer under contract, or other applicable law of which the Secretary or the SAA has knowledge; and
</P>
<P>(5) Any other relevant factors that may be brought to the attention of the Secretary or the SAA.
</P>
<P>(c) <I>Owner's election of remedy.</I> When under contract or other applicable law the owner has the right of election between replacement and refund, the manufacturer must inform the owner of such right of election and must inform the Secretary of the election, if any, made by the owner.
</P>
<P>(d) <I>Recordkeeping.</I> The manufacturer must provide the report that is required by § 3282.417 when a manufactured home has been replaced or repurchased under this section.


</P>
</DIV8>


<DIV8 N="§ 3282.415" NODE="24:5.1.2.1.3.9.1.15" TYPE="SECTION">
<HEAD>§ 3282.415   Correction of homes before sale to purchaser.</HEAD>
<P>(a) <I>Sale or lease prohibited.</I> Manufacturers, retailers, and distributors must not sell, lease, or offer for sale or lease any manufactured home that they have reason to know, in the exercise of due care, contains a noncompliance, defect, serious defect, or imminent safety hazard. The sale of a home to a purchaser is complete when all contractual obligations of the manufacturer, retailer, and distributor to the purchaser and conditions specified in § 3282.252 have been met.
</P>
<P>(b) <I>Retailer/distributor notification to manufacturer.</I> When a retailer, acting as a reasonable retailer, or a distributor, acting as a reasonable distributor, believes that a manufactured home that has been sold to the retailer or distributor, but for which there is no completed sale to a purchaser, likely contains a noncompliance, defect, serious defect, or imminent safety hazard, the retailer or distributor must notify the manufacturer of the home in a timely manner.
</P>
<P>(c) <I>Manufacturer's remedial responsibilities.</I> Upon a Final Determination pursuant to § 3282.412(f) by the Secretary or an SAA, a determination by a court of appropriate jurisdiction, or a manufacturer's own determination that a manufactured home that has been sold to a retailer but for which there is no completed sale to a purchaser contains a noncompliance, defect, serious defect, or imminent safety hazard, the manufacturer must do one of the following:
</P>
<P>(1) Immediately repurchase such manufactured home from the retailer or distributor at the price paid by the retailer or distributor, plus pay all transportation charges involved, if any, and a reasonable reimbursement of not less than one percent per month of such price paid, prorated from the date the manufacturer receives notice by certified mail of the noncompliance, defect, serious defect, or imminent safety hazard; or
</P>
<P>(2) At its expense, immediately furnish to the retailer or distributor all required parts or equipment for installation in the home by the retailer or distributor, and the manufacturer must reimburse the retailer or distributor for the reasonable value of the retailer's or distributor's work, plus a reasonable reimbursement of not less than one percent per month of the manufacturer's or distributor's selling price, prorated from the date the manufacturer receives notice by certified mail to the date the noncompliance, defect, serious defect, or imminent safety hazard is corrected, so long as the retailer or distributor proceeds with reasonable diligence with the required work; or
</P>
<P>(3) Carry out all needed corrections to the home.
</P>
<P>(d) <I>Establishing costs.</I> The value of reasonable reimbursements as specified in paragraph (c) of this section will be fixed by either:
</P>
<P>(1) Mutual agreement of the manufacturer and retailer or distributor; or
</P>
<P>(2) A court in an action brought under section 613(b) of the Act (42 U.S.C. 5412(b)).
</P>
<P>(e) <I>Records required.</I> The manufacturer and the retailer or distributor must maintain records of their actions taken under this section in accordance with § 3282.417.
</P>
<P>(f) <I>Exception for leased homes.</I> This section does not apply to any manufactured home purchased by a retailer or distributor that has been leased by such retailer or distributor to a tenant for purposes other than resale. Other remedies that may be available to a retailer or distributor under subpart I of this part continue to be applicable.
</P>
<P>(g) <I>Indemnification.</I> A manufacturer may indemnify itself through agreements or contracts with retailers, distributors, transporters, installers, or others for the costs of repurchase, parts, equipment, and corrective work incurred by the manufacturer pursuant to paragraph (c).


</P>
</DIV8>


<DIV8 N="§ 3282.416" NODE="24:5.1.2.1.3.9.1.16" TYPE="SECTION">
<HEAD>§ 3282.416   Oversight of notification and correction activities.</HEAD>
<P>(a) <I>IPIA responsibilities.</I> The IPIA in each manufacturing plant must:
</P>
<P>(1) Assure that notifications required under this subpart I are sent to all owners, purchasers, retailers, and distributors of whom the manufacturer has knowledge;
</P>
<P>(2) Audit the certificates required by § 3282.417 to assure that the manufacturer has made required corrections;
</P>
<P>(3) Whenever a manufacturer is required to determine a class of homes pursuant to § 3282.404(b), provide either:
</P>
<P>(i) The IPIA's written concurrence on the methods used by the manufacturer to identify the homes that should be included in the class of homes; or
</P>
<P>(ii) The IPIA's written statement explaining why it believes the manufacturer's methods for determining the class of homes were inappropriate or inadequate; and
</P>
<P>(4) Conduct, at least monthly, a review the manufacturer's service records of determinations under § 3282.404 and take appropriate action in accordance with §§ 3282.362(c) and 3282.364.
</P>
<P>(b) <I>SAA and Secretary's responsibilities.</I> (1) SAA oversight of manufacturer compliance with this subpart will be done primarily by periodically checking the records that manufacturers are required to keep under § 3282.417.
</P>
<P>(2) The SAA or Secretary to which the report required by § 3282.417(a) is sent is responsible for assuring, through oversight, that remedial actions have been carried out as described in the report. The SAA of the State in which an affected manufactured home is located may inspect that home to determine whether any correction required under this subpart I is carried out in accordance with the approved plan or, if there is no plan, with the construction and safety standards or other approval obtained by the manufacturer.


</P>
</DIV8>


<DIV8 N="§ 3282.417" NODE="24:5.1.2.1.3.9.1.17" TYPE="SECTION">
<HEAD>§ 3282.417   Recordkeeping requirements.</HEAD>
<P>(a) <I>Manufacturer report on notifications and corrections.</I> Within 30 days after the deadline for completing any notifications, corrections, replacement, or repurchase required pursuant to this subpart, the manufacturer must provide a complete report of the action taken to, as appropriate, the Secretary or the SAA that approved the plan under § 3282.408, granted a waiver, or issued the order under § 3282.413. If any other SAA or the Secretary forwarded the relevant consumer complaint or other information to the manufacturer in accordance with § 3282.403, the manufacturer must send a copy of the report to that SAA or the Secretary, as applicable.
</P>
<P>(b) <I>Records of manufacturer's determinations.</I> (1) A manufacturer must record each initial and class determination required under § 3282.404, in a manner approved by the Secretary or an SAA and that identifies who made each determination, what each determination was, and all bases for each determination. Such information must be available for review by the IPIA.
</P>
<P>(2) The manufacturer records must include:
</P>
<P>(i) The information it received that likely indicated a noncompliance, defect, serious defect, or imminent safety hazard;
</P>
<P>(ii) All of the manufacturer's determinations and each basis for those determinations;
</P>
<P>(iii) The methods used by the manufacturer to establish any class, including, when applicable, the cause of the defect, serious defect, or imminent safety hazard; and
</P>
<P>(iv) Any IPIA concurrence or statement that it does not concur with the manufacturer's class determination, in accordance with § 3282.404(b).
</P>
<P>(3) When the records that a manufacturer is required to keep in accordance with this paragraph (b) involve a class of manufactured homes that have the same noncompliance, defect, serious defect, or imminent safety hazard, the manufacturer has the option of meeting the requirements of this paragraph by establishing a class determination file, instead of including the same information in the file required by paragraph (e) of this section for each affected home. Such class determination file must contain the records of each class determination, notification, and correction, as applicable. For each class determination, the manufacturer must record once in each class determination file the information common to the class, and must identify by serial number all of the homes that the class comprises and that are subject to notification and correction, as applicable.
</P>
<P>(c) <I>Manufacturer records of notifications.</I> When a manufacturer is required to provide notification under this subpart, the manufacturer must maintain a record of each type of notice sent and a complete list of the persons notified and their addresses. The manufacturer must maintain these records in a manner approved by the Secretary or an SAA to identify each notification campaign.
</P>
<P>(d) <I>Manufacturer records of corrections.</I> When a manufacturer is required to provide or provides correction under this subpart, the manufacturer must maintain a record of one of the following, as appropriate, for each manufactured home involved:
</P>
<P>(1) If the correction is made, a certification by the manufacturer that the repair was made to conform to the federal construction and safety standards in effect at the time the home was manufactured and that each identified imminent safety hazard or serious defect has been corrected; or
</P>
<P>(2) If the owner refuses to allow the manufacturer to repair the home, a certification by the manufacturer that:
</P>
<P>(i) The owner has been informed of the problem that may exist in the home;
</P>
<P>(ii) The owner has been provided with a description of any hazards, malfunctions, deterioration, or other consequences that may reasonably be expected to result from the defect, serious defect, or imminent safety hazard; and
</P>
<P>(iii) An attempt has been made to repair the problems, but the owner has refused the repair.
</P>
<P>(e) <I>Maintenance of manufacturer's records.</I> (1) Except as provided in paragraph (b)(3) of this section, for each manufactured home produced by a manufacturer, the manufacturer must maintain in a printed or electronic format all of the information required by paragraphs (b), (c), and (d) of this section, and must consolidate the information in a readily accessible file or in a readily accessible combination of a printed file and an electronic file. For each home, the manufacturer also must include in such file a copy of the homes data plate; all information related to manufacture, handling, and assembly of the home; any checklist or similar documentation used by the manufacturer in the transport of the home; the name and address of the retailer; the original or a copy of each purchaser's registration record received by the manufacturer; all correspondence with the retailer and homeowner that is related to the home; any information received by the manufacturer regarding setup of the home; all work orders for servicing the home; and the information that the manufacturer is required to keep pursuant to § 3282.211. The manufacturer must organize all such files in order of the serial numbers of the homes produced.
</P>
<P>(2) The manufacturer must maintain each of these manufactured-home records at the plant where the home was produced. If that plant is no longer in existence, the manufacturer must keep the records at its nearest production plant in the same State, or, if such a plant does not exist, at the manufacturer's corporate headquarters.


</P>
</DIV8>


<DIV8 N="§ 3282.418" NODE="24:5.1.2.1.3.9.1.18" TYPE="SECTION">
<HEAD>§ 3282.418   Factors for appropriateness and amount of civil penalties.</HEAD>
<P>In determining whether to seek a civil penalty for a violation of the requirements of this subpart, and the amount of such penalty to be recommended, the Secretary will consider the provisions of the Act and the following factors:
</P>
<P>(a) The gravity of the violation;
</P>
<P>(b) The degree of the violator's culpability, including whether the violator had acted in good faith in trying to comply with the requirements;
</P>
<P>(c) The injury to the public;
</P>
<P>(d) Any injury to owners or occupants of manufactured homes
</P>
<P>(e) The ability to pay the penalty;
</P>
<P>(f) Any benefits received by the violator;
</P>
<P>(g) The extent of potential benefits to other persons;
</P>
<P>(h) Any history of prior violations;
</P>
<P>(i) Deterrence of future violations; and
</P>
<P>(j) Such other factors as justice may require.


</P>
</DIV8>

</DIV6>


<DIV6 N="J" NODE="24:5.1.2.1.3.10" TYPE="SUBPART">
<HEAD>Subpart J—Monitoring of Primary Inspection Agencies</HEAD>


<DIV8 N="§ 3282.451" NODE="24:5.1.2.1.3.10.1.1" TYPE="SECTION">
<HEAD>§ 3282.451   General.</HEAD>
<P>The actions of all primary inspection agencies accepted under subpart H shall be monitored by the Secretary or the Secretary's agent to determine whether the PIAs are fulfilling their responsibilities under these regulations. This monitoring shall be carried out primarily through joint monitoring teams made up of personnel supplied by SAAs and by the Secretary or the Secretary's agent. Monitoring parties shall make recommendations to the Secretary with respect to final acceptance of PIAs under §§ 3282.361(e) and 3282.362(e), continued acceptance, and disqualification or requalification under § 3282.356, and with respect to any changes which PIAs should make in their operations in order to continue to be approved. Based on this monitoring, the Secretary shall determine whether PIAs should continue to be approved under these regulations. 


</P>
</DIV8>


<DIV8 N="§ 3282.452" NODE="24:5.1.2.1.3.10.1.2" TYPE="SECTION">
<HEAD>§ 3282.452   Participation in monitoring.</HEAD>
<P>(a) <I>Joint monitoring teams.</I> (1) The Secretary or the Secretary's agent shall develop and coordinate joint monitoring teams which shall be made up of qualified personnel provided by SAAs and by the Secretary or the Secretary's agent. The Secretary or the Secretary's agent shall determine whether personnel are qualified based on education or experience. 
</P>
<P>(2) The joint monitoring teams will operate generally on a regional basis. To the extent possible, the teams shall be so scheduled that personnel provided by an SAA will be monitoring operations in manufactured home plants from which manufactured homes are shipped into their State. 
</P>
<P>(3) Personnel from an SAA shall not participate on joint monitoring teams operating within their State. 
</P>
<P>(4) States are encouraged but not required to participate on joint monitoring teams. 
</P>
<P>(b) <I>State monitoring.</I> A State may carry out monitoring of IPIA functions at plant facilities within the State if the State is not acting as an IPIA. Where a State wishes to carry out monitoring activities it shall do so in coordination with the Secretary and the Secretary's agent. To the extent that the State is performing adequate monitoring, the frequency of the joint team monitoring may be reduced to one visit per year consistent with the requirements of § 3282.453. 
</P>
<P>(c) <I>Review of staff capability.</I> The monitoring party shall review the capability of the PIA's staff to perform the functions it is required to perform. 
</P>
<P>(d) <I>Review of interpretations.</I> The monitoring party shall review all records of interpretations of the standards made by the PIA to determine whether they are consistent and to determine whether there are any conflicts which should be referred to the Secretary for determination. 
</P>
<P>(e) <I>DAPIA.</I> Monitoring parties shall review on a random basis at least 10 percent of the design and quality assurance manual approvals made by each DAPIA in each year. 
</P>
<P>(f) <I>IPIA.</I> The monitoring parties shall assure that the IPIAs are carrying out all of the functions for which they have been accepted. In particular, they shall assure that the manufacturing process is as stated in the certification reports, that the IPIAs are carrying out the required number of inspections, that inspections are effective, and that the IPIAs are maintaining complete label control as required by § 3282.362. A monitoring team shall monitor the IPIA's office procedures, files, and label control and the monitoring team shall send copies of its report to the Secretary or the Secretary's agent, which shall send copies to all monitoring teams which monitor the operations of the subject IPIA. 
</P>
<P>(g) <I>Remedial actions.</I> The monitoring parties shall review the remedial action records of the manufacturers and of the primary inspection agencies closely to determine whether the primary inspection agencies have been carrying out their responsibilities with respect to remedial actions. 


</P>
</DIV8>


<DIV8 N="§ 3282.453" NODE="24:5.1.2.1.3.10.1.3" TYPE="SECTION">
<HEAD>§ 3282.453   Frequency and extent of monitoring.</HEAD>
<P>(a) The actions of all primary inspection agencies shall be monitored at a frequency adequate to assure that they are performing consistently and fulfilling their responsibilities under these regulations. Every aspect of the primary inspection agencies' performance shall be monitored. 
</P>
<P>(b) Frequency of monitoring. The performance of each primary inspection agency shall be monitored during its period of provisional acceptance by a complete review of its records and, in the case of IPAs, by a complete inspection of the operations of at least one manufacturing plant which it has approved or in which it is operating. After the initial inspection, the performance of each primary inspection agency shall be monitored four times per year, except that the number of monitoring visits may be decreased to a minimum of one per year if the performance of the primary inspection agency is deemed by the Secretary or the Secretary's agent to be superior, and it may be increased as necessary if performance is suspect. There shall be a minimum of one review per year of the records of each primary inspection agency, and there shall be more reviews as needed. 


</P>
</DIV8>

</DIV6>


<DIV6 N="K" NODE="24:5.1.2.1.3.11" TYPE="SUBPART">
<HEAD>Subpart K—Departmental Oversight</HEAD>


<DIV8 N="§ 3282.501" NODE="24:5.1.2.1.3.11.1.1" TYPE="SECTION">
<HEAD>§ 3282.501   General.</HEAD>
<P>The Secretary shall oversee the performance of SAAs, the Secretary's agent, and primary inspection agencies as follows: 
</P>
<P>(a) The Secretary shall review SAA reports to ensure that States are taking appropriate actions with regard to the enforcement of the standards and with respect to the functions for which they are approved under these regulations. 
</P>
<P>(b) The Secretary shall review monitoring reports submitted by the Secretary's agent to determine that it is performing in accordance with the contract between it and the Secretary. 
</P>
<P>(c) The Secretary shall review monitoring reports to determine whether PIAs are fulfilling their responsibilities under these regulations. 
</P>
<P>(d) The Secretary shall make random visits for the purpose of overseeing the activities of SAAs and the Secretary's agent. 
</P>
<P>(e) The Secretary shall take such other actions to oversee the system established by these regulations as it deems appropriate. 
</P>
<P>(f) All records maintained by all parties acting under these regulations with respect to those actions shall be available to the Secretary, the Secretary's agent, and where appropriate, SAAs and PIAs for review at any reasonable time. 


</P>
</DIV8>


<DIV8 N="§ 3282.502" NODE="24:5.1.2.1.3.11.1.2" TYPE="SECTION">
<HEAD>§ 3282.502   Departmental implementation.</HEAD>
<P>To the extent that SAAs or any parties contracting with the Secretary do not perform functions called for under these regulations, those functions shall be carried out by the Secretary with its own personnel or through other appropriate parties. 


</P>
</DIV8>


<DIV8 N="§ 3282.503" NODE="24:5.1.2.1.3.11.1.3" TYPE="SECTION">
<HEAD>§ 3282.503   Determinations and hearings.</HEAD>
<P>The Secretary shall make all the determinations and hold such hearings as are required by these regulations, and the Secretary shall resolve all disputes arising under these regulations. 


</P>
</DIV8>

</DIV6>


<DIV6 N="L" NODE="24:5.1.2.1.3.12" TYPE="SUBPART">
<HEAD>Subpart L—Manufacturer, IPIA and SAA Reports</HEAD>


<DIV8 N="§ 3282.551" NODE="24:5.1.2.1.3.12.1.1" TYPE="SECTION">
<HEAD>§ 3282.551   Scope and purpose.</HEAD>
<P>This subpart describes the reports which shall be submitted by manufacturers, PIAs and SAAs as part of the system of enforcement established under these regulations. Additional reports described in subpart I are required when corrective actions are taken under that subpart. 




</P>
</DIV8>


<DIV8 N="§ 3282.552" NODE="24:5.1.2.1.3.12.1.2" TYPE="SECTION">
<HEAD>§ 3282.552   Manufacturer reports for joint monitoring fees.</HEAD>
<P>The manufacturer must submit to the IPIA in each of its manufacturing plants, and to HUD or to the Secretary's agent, a monthly production report that includes the serial numbers of each manufactured home manufactured and labeled at that plant during the preceding month. The report must also include the date of manufacture, State of first location of these manufactured homes after leaving the plant, type of unit, number of dwelling units, and any other information required under this part. For all homes to be completed pursuant to subpart M of this part, the production report must also include a brief description of the work to be completed on site. The State of first location is the State of the premises of the retailer or purchaser to whom the manufactured home is first shipped. The monthly report must be submitted by the 10th day of each month and contain information describing the manufacturer's previous month's activities. The manufacturer is encouraged to submit the report electronically, when feasible.
</P>
<CITA TYPE="N">[89 FR 75758, Sept. 16, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 3282.553" NODE="24:5.1.2.1.3.12.1.3" TYPE="SECTION">
<HEAD>§ 3282.553   IPIA reports.</HEAD>
<P>Each IPIA shall submit by the twentieth day of each month to each SAA, or if no SAA to the Secretary, in each state where it is engaged in the inspection of manufacturing plants, a report of the operations of each manufacturer in that State for the preceding month which includes the following information: 
</P>
<P>(a) The number of single-wide and double-wide manufactured homes labeled in the preceding month; 
</P>
<P>(b) The number of inspection visits made to each manufacturing plant in the preceding month; and 
</P>
<P>(c) The number of manufactured homes with a failure to conform to the standards or an imminent safety hazard during the preceding month found in the manufacturing plant. 
</P>
<FP>The manufacturers report for the preceding month described in § 3282.552 shall be attached to each such IPIA report as an appendix thereto. 


</FP>
</DIV8>


<DIV8 N="§ 3282.554" NODE="24:5.1.2.1.3.12.1.4" TYPE="SECTION">
<HEAD>§ 3282.554   SAA reports.</HEAD>
<P>Each SAA shall submit, prior to the last day of each month, to the Secretary a report covering the preceding month which includes: 
</P>
<P>(a) The description and status of all presentations of views, hearings and other legal actions during the preceding month; and 
</P>
<P>(b) The description of the SAA's oversight activities and findings regarding consumer complaints, notification, and correction actions during the preceding month. The IPIA report for the preceding month described in § 3282.553, as well as any orders issued pursuant to 3282.413 and manufacturer reports under § 3282.417(a), which were received during the preceding month, are to be attached to each such SAA report as an Appendix thereto.
</P>
<CITA TYPE="N">[41 FR 19852, May 13, 1976, as amended at 78 FR 60208, Oct. 1, 2013]


</CITA>
</DIV8>

</DIV6>


<DIV6 N="M" NODE="24:5.1.2.1.3.13" TYPE="SUBPART">
<HEAD>Subpart M—On-Site Completion of Construction of Manufactured Homes</HEAD>

<SOURCE>
<HED>Source:</HED><PSPACE>80 FR 53727, Sept. 8, 2015, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 3282.601" NODE="24:5.1.2.1.3.13.1.1" TYPE="SECTION">
<HEAD>§ 3282.601   Purpose and applicability.</HEAD>
<P>(a) <I>Purpose of section.</I> Under HUD oversight, this section establishes the procedure for limited on-site completion of some aspects of construction that cannot be completed at the factory.
</P>
<P>(b) <I>Applicability.</I> This section may be applied when all requirements of this subpart are met. To be applicable a manufactured home must:
</P>
<P>(1) Be substantially completed in the factory;
</P>
<P>(2) Meet the requirements of the Construction and Safety Standards upon completion of the site work; and
</P>
<P>(3) Be inspected by the manufacturer's IPIA as provided in this subpart, unless specifically exempted as installation under HUD's Model Installation Standards, 24 CFR part 3285. This subpart does not apply to Alternative Construction (see § 3282.14) that does not comply with the Manufactured Home Construction and Safety Standards.
</P>
<P>(c) <I>Exception.</I> An add-on or attached accessory building or structure which does not affect the performance and ability of the manufactured home to comply with the standards in accordance with § 3282.8(j) is not governed by this section.


</P>
<CITA TYPE="N">[80 FR 53727, Sept. 8, 2015, as amended at 86 FR 2526, Jan. 12, 2021]




</CITA>
</DIV8>


<DIV8 N="§ 3282.602" NODE="24:5.1.2.1.3.13.1.2" TYPE="SECTION">
<HEAD>§ 3282.602   Construction qualifying for on-site completion.</HEAD>
<P>(a) The manufacturer, the manufacturer's DAPIA acting on behalf of HUD, and the manufacturer's IPIA acting on behalf of HUD may agree to permit certain aspects of construction of a manufactured home to be completed to the Construction and Safety Standards on-site in accordance with the requirements of this subpart. The aspects of construction that may be approved to be completed on-site are the partial completion of structural assemblies or systems (<I>e.g.,</I> electrical, plumbing, heating, cooling, fuel burning, and fire safety systems) and components built as an integral part of the home, when the partial completion on-site is warranted because completion of the partial structural assembly or system during the manufacturing process in the factory would not be practicable (<I>e.g.,</I> because of the home design or which could result in transportation damage or if precluded because of road restrictions). Examples of construction that may be completed on-site include:
</P>
<P>(1) Hinged roof and eave construction, unless exempted as installation by § 3285.801(f) of the Model Manufactured Home Installation Standards and completed and inspected in accordance with the Manufactured Home Installation Program;


</P>
<P>(2) Any work required by the home design that cannot be completed in the factory, or when the manufacturer authorizes the retailer to provide an add-on to the home during installation, when that work would take the home out of conformance with the construction and safety standards and then bring it back into conformance;


</P>
<P>(3) Appliances provided by the manufacturer, installer, retailer, or purchaser, including fireplaces to be installed on site;
</P>
<P>(4) Components or parts that are shipped loose with the manufactured home and that will be installed on-site, unless exempted as installation by the installation standards;
</P>
<P>(5) Exterior applications such as brick siding, stucco, or tile roof systems; and
</P>
<P>(6) Other construction such as roof extensions (dormers), site-installed windows in roofs, removable or open floor sections for basement stairs, and sidewall bay windows.
</P>
<P>(b) The manufacturer or a licensed contractor or similarly qualified professional with prior authorization from the manufacturer may perform the on-site work in accordance with the DAPIA approvals and site completion instructions. However, the manufacturer is responsible for the adequacy of all on-site completion work regardless of who does the work, and must prepare and provide all site inspection reports, as well as the certification of completion, and must fulfill all of its responsibilities and maintain all records at the factory of origin as required by § 3282.609.


</P>
<CITA TYPE="N">[80 FR 53727, Sept. 8, 2015, as amended at 86 FR 2526, Jan. 12, 2021]


</CITA>
</DIV8>


<DIV8 N="§ 3282.603" NODE="24:5.1.2.1.3.13.1.3" TYPE="SECTION">
<HEAD>§ 3282.603   Request for approval; DAPIA review, notification, and approval.</HEAD>
<P>(a) <I>Manufacturer's request for approval.</I> The manufacturer must request, in writing, and obtain approval of its DAPIA for any aspect of construction that is to be completed on-site under this subpart. The manufacturer, its IPIA, and its DAPIA must work together to reach agreements necessary to enable the request to be reviewed and approved.
</P>
<P>(b) <I>DAPIA notification.</I> The DAPIA, acting on behalf of HUD, must notify the manufacturer of the results of the DAPIA's review of the manufacturer's request, and must retain a copy of the notification in the DAPIA's records. The DAPIA shall also forward a copy of the approval to HUD or the Secretary's agent as provided under § 3282.361(a)(4). The notification must either:
</P>
<P>(1) Approve the request if it is consistent with this section and the objectives of the Act; or
</P>
<P>(2) Deny the proposed on-site completion and set out the reasons for the denial.
</P>
<P>(c) <I>Manner of DAPIA approval.</I> Notification of DAPIA approval must include, by incorporation or by listing, the information required by paragraph (d) of this section, and must be indicated by the DAPIA placing its stamp of approval or authorized signature on each page of the manufacturer's designs submitted with its request for approval. The DAPIA must include an “SC” designation on each page that includes an element of construction that is to be completed on-site and must include those pages as part of the approved design package.
</P>
<P>(d) <I>Contents of DAPIA approval.</I> Any approval by the DAPIA under this section must:
</P>
<P>(1) Include a unique site completion numeric identification for each approval for each manufacturer (<I>i.e.,</I> manufacturer name or abbreviation, SC-XX);
</P>
<P>(2) Identify the work to be completed on-site;
</P>
<P>(3) List all models to which the approval applies, or indicate that the approval is not model-specific;
</P>
<P>(4) Include acceptance by the DAPIA of a quality assurance manual for on-site completion meeting the requirements of paragraph (e) of this section;
</P>
<P>(5) Include the IPIA's written agreement to accept responsibility for completion of the necessary on-site inspections and accompanying records;
</P>
<P>(6) Identify instructions authorized for completing the work on-site that meet the requirements of paragraph (f) of this section;
</P>
<P>(7) Include the manufacturer's system for tracking the status of homes built under the approval until the on-site work and necessary inspections have been completed, to assure that the work is being performed properly;
</P>
<P>(8) Include a quality control checklist to be used by the manufacturer and IPIA and approved by the DAPIA to verify that all required components, materials, labels, and instructions needed for site completion are provided in each home prior to shipment;
</P>
<P>(9) Include an inspection checklist developed by the IPIA and manufacturer and approved by the DAPIA, that is to be used by the final site inspectors;
</P>
<P>(10) Include a Consumer Information Notice developed by the manufacturer and approved by the DAPIA that explains the on-site completion process and identifies the work to be completed on-site; and
</P>
<P>(11) Include any other requirements and limitations that the DAPIA deems necessary or appropriate to accomplish the purposes of the Act.
</P>
<P>(e) <I>Quality assurance manual for on-site completion requirements.</I> The portion of the quality assurance manual for on-site completion required by paragraph (d)(3) of this section must receive the written concurrence of the manufacturer's IPIA with regard to its acceptability and applicability to the on-site completion of the affected manufactured homes. It must include a commitment by the manufacturer to prepare a final site inspection report that will be submitted to the IPIA for its review. When appropriate, this portion of the quality assurance manual for on-site completion will be deemed a change in the manufacturer's quality assurance manual for the applicable models, in accordance with §§ 3282.203 and 3282.361.
</P>
<P>(f) <I>Instructions for completion on-site.</I> The DAPIA must include instructions authorized for completing the work on-site as a separate part of the manufacturer's approved design package. The manufacturer must provide a copy of these instructions and the inspection checklist required by paragraph (d)(9) of this section to the IPIA for monitoring and inspection purposes.


</P>
</DIV8>


<DIV8 N="§ 3282.604" NODE="24:5.1.2.1.3.13.1.4" TYPE="SECTION">
<HEAD>§ 3282.604   DAPIA responsibilities.</HEAD>
<P>The DAPIA, acting on behalf of HUD, for any manufacturer proceeding under this section is responsible for:
</P>
<P>(a) Verifying that all information required by § 3282.603 has been submitted by the manufacturer;
</P>
<P>(b) Reviewing and approving the manufacturer's designs, quality control checklist, site inspection checklist, site completion instructions, and quality assurance manuals for site work to be performed;
</P>
<P>(c) Maintaining all records and approvals for at least 5 years;
</P>
<P>(d) Revoking or amending its approvals in accordance with § 3282.609; and
</P>
<P>(e) Reviewing its approvals under this section at least every 3 years or more frequently if there are changes made to the Manufactured Home Construction and Safety Standards, 24 CFR part 3280, to verify continued compliance with the Standards.


</P>
</DIV8>


<DIV8 N="§ 3282.605" NODE="24:5.1.2.1.3.13.1.5" TYPE="SECTION">
<HEAD>§ 3282.605   Requirements applicable to completion of construction.</HEAD>
<P>(a) <I>Serial numbers of homes completed on-site.</I> The serial number of each home completed in conformance with this section must include the prefix or suffix “SC”.
</P>
<P>(b) <I>Labeling.</I> A manufacturer that has received a DAPIA approval under § 3282.604 may certify and label a manufactured home that is substantially completed in the manufacturer's plant at the proper completion of the in-plant production phase, even though some aspects of construction will be completed on-site in accordance with the DAPIA's approval. Any such homes or sections of such homes must have a label affixed in accordance with § 3282.362(c)(2) and be shipped with a Consumer Information Notice that meets the requirements of § 3282.606.
</P>
<P>(c) <I>Site inspection.</I> Prior to occupancy, the manufacturer must ensure that each home is inspected on-site. The manufacturer is responsible for inspecting all aspects of construction that are completed on-site as provided in its approved designs and quality assurance manual for on-site completion.
</P>
<P>(d) <I>Site inspection report.</I> (1) In preparing the site inspection report, the manufacturer must use the inspection checklist approved by the DAPIA in accordance with § 3282.603(d)(9), and must prepare a final site inspection report and provide a copy to the IPIA within 5 business days of completing the report. Within 5 business days after the date that the IPIA notifies the manufacturer of the IPIA's approval of the final site inspection report, the manufacturer must provide a copy of the approved report to the lessor or purchaser prior to occupancy and, as applicable, the appropriate retailer and any person or entity other than the manufacturer that performed the on-site construction work.
</P>
<P>(2) Each approved final site inspection report must include:
</P>
<P>(i) The name and address of the manufacturer;
</P>
<P>(ii) The serial number of the manufactured home;
</P>
<P>(iii) The address of the home site;
</P>
<P>(iv) The name of the person and/or agency responsible for the manufacturer's final site inspection;
</P>
<P>(v) The name of each person and/or agency who performs on-site inspections on behalf of the IPIA, the name of the person responsible for acceptance of the manufacturer's final on-site inspection report on behalf of the IPIA, and the IPIA's name, mailing address, and telephone number;
</P>
<P>(vi) A description of the work performed on-site and the inspections made;
</P>
<P>(vii) When applicable, verification that any problems noted during inspections have been corrected prior to certification of compliance; and
</P>
<P>(viii) Certification by the manufacturer of completion in accordance with the DAPIA-approved instructions and that the home conforms with the approved design or, as appropriate under § 3282.362(a)(1)(iii), the construction and safety standards.
</P>
<P>(3) The IPIA must review each manufacturer's final on-site inspection report and determine whether to accept that inspection report.
</P>
<P>(i) Concurrent with the manufacturer's final site inspection, the IPIA or the IPIA's agent must inspect all of the on-site work for homes completed using an approval under this section. The IPIA must use the inspection checklist approved by the DAPIA in accordance with § 3282.603(d)(9).
</P>
<P>(ii) If the IPIA determines that the manufacturer is not performing adequately in conformance with the approval, the IPIA must redtag and reinspect until it is satisfied that the manufacturer is conforming to the conditions included in the approval. The home may not be occupied until the manufacturer and the IPIA have provided reports, required by this section, confirming compliance with the Construction and Safety Standards.
</P>
<P>(iii) The IPIA must notify the manufacturer of the IPIA's acceptance of the manufacturer's final site inspection report. The IPIA may indicate acceptance by issuing its own final site inspection report or by indicating, in writing, its acceptance of the manufacturer's site inspection report showing that the work completed on-site is in compliance with the DAPIA approval and the Construction and Safety Standards.
</P>
<P>(4) Within 5 business days of the date of IPIA's notification to the manufacturer of the acceptance of its final site inspection report, the manufacturer must provide to the purchaser or lessor, as applicable, the manufacturer's final site inspection report. For purposes of establishing the manufacturer's and retailer's responsibilities under the Act and subparts F and I of this part, the sale or lease of the manufactured home will not be considered complete until the purchaser or lessor, as applicable, has been provided with the report.
</P>
<P>(e) <I>Report to HUD.</I> (1) The manufacturer must report to HUD through its IPIA, on the manufacturer's monthly production report required in accordance with § 3282.552, the serial number and site completion numeric identification (see § 3282.603(d)(1)) of each home produced under an approval issued pursuant to this section.
</P>
<P>(2) The report must be consistent with the DAPIA approval issued pursuant to this section.
</P>
<P>(3) The manufacturer must submit a copy of the report, or a separate listing of all information provided on each report for homes that are completed under an approval issued pursuant to this section, to the SAAs of the States where the home is substantially completed in the factory and where the home is sited, as applicable.


</P>
</DIV8>


<DIV8 N="§ 3282.606" NODE="24:5.1.2.1.3.13.1.6" TYPE="SECTION">
<HEAD>§ 3282.606   Consumer information.</HEAD>
<P>(a) <I>Notice.</I> Any home completed under the procedures established in this section must be shipped with a temporary notice that explains that the home will comply with the requirements of the construction and safety standards only after all of the site work has been completed and inspected. The notice must be legible and typed, using letters at least 
<FR>1/4</FR> inch high in the text of the notice and 
<FR>3/4</FR> inch high for the title. The notice must read as follows:
</P>
<EXTRACT>
<HD1>IMPORTANT CONSUMER INFORMATION NOTICE
</HD1>
<P><E T="04">WARNING: DO NOT LIVE IN THIS HOME UNTIL THE ON-SITE WORK HAS BEEN COMPLETED AND THE MANUFACTURER HAS PROVIDED A COPY OF THE INSPECTION REPORT THAT CERTIFIES THAT THE HOME HAS BEEN INSPECTED AND IS CONSTRUCTED IN ACCORDANCE WITH APPROVED INSTRUCTIONS FOR MEETING THE CONSTRUCTION AND SAFETY STANDARDS.</E>
</P>
<P>This home has been substantially completed at the factory and certified as having been constructed in conformance with the Federal Manufactured Home Construction and Safety Standards when specified work is performed and inspected at the home site. This on-site work must be performed in accordance with manufacturer's instructions that have been approved for this purpose. The work to be performed on-site is [insert description of all work to be performed in accordance with the construction and safety standards].
</P>
<P>This notice may be removed by the purchaser or lessor when the manufacturer provides the first purchaser or lessor with a copy of the manufacturer's final site inspection report, as required by regulation. This final report must include the manufacturer's certification of completion. All manufactured homes may also be subject to separate regulations requiring approval of items not covered by the Federal Manufactured Home Construction and Safety Standards, such as installation and utility connections.</P></EXTRACT>
<P>(b) <I>Placement of notice in home.</I> The notice required by paragraph (a) of this section must be displayed in a conspicuous and prominent location within the manufactured home and in a manner likely to assure that it is not removed until, or under the authorization of, the purchaser or lessor. The notice is to be removed only by the first purchaser or lessor. No retailer, installation or construction contractor, or other person may interfere with the required display of the notice.
</P>
<P>(c) <I>Providing notice before sale.</I> The manufacturer or retailer must also provide a copy of the Consumer Information Notice to prospective purchasers of any home to which the approval applies before the purchasers enter into an agreement to purchase the home.
</P>
<P>(d) <I>When sale or lease of home is complete.</I> For purposes of establishing the manufacturer's and retailer's responsibilities for on-site completion under the Act and subparts F and I of this part, the sale or lease of the manufactured home will not be considered complete until the purchaser or lessor, as applicable, has been provided with a copy of the final site inspection report required under § 3282.605(d) and a copy of the manufacturer's certification of completion required under § 3282.609(k) and (l). For 5 years from the date of the sale or lease of each home, the manufacturer must maintain in its records an indication that the final on-site inspection report and certification of completion has been provided to the lessor or purchaser and, as applicable, the appropriate retailer.


</P>
</DIV8>


<DIV8 N="§ 3282.607" NODE="24:5.1.2.1.3.13.1.7" TYPE="SECTION">
<HEAD>§ 3282.607   IPIA responsibilities.</HEAD>
<P>The IPIA, acting on behalf of HUD, for any manufacturer proceeding under this section is responsible for:
</P>
<P>(a) Working with the manufacturer and the manufacturer's DAPIA to incorporate into the DAPIA-approved quality assurance manual for on-site completion any changes that are necessary to ensure that homes completed on-site conform to the requirements of this section;
</P>
<P>(b) Providing the manufacturer with a supply of the labels described in this section, in accordance with the requirements of § 3282.362(c)(2)(i)(A);
</P>
<P>(c) Overseeing the effectiveness of the manufacturer's quality control system for assuring that on-site work is completed to the DAPIA-approved designs, which must include:
</P>
<P>(1) Verifying that the manufacturer's quality control manual at the installation site is functioning and being followed;
</P>
<P>(2) Monitoring the manufacturer's system for tracking the status of each home built under the approval until the on-site work and necessary inspections have been completed;
</P>
<P>(3) Reviewing all of the manufacturer's final on-site inspection reports; and
</P>
<P>(4) Inspecting all of the on-site construction work for each home utilizing an IPIA inspector or an independent qualified third-party inspector acceptable to the IPIA and acting as the designee or representative:
</P>
<P>(i) Prior to close-up, unless access panels are provided to allow the work to be inspected after all work is completed on-site; and
</P>
<P>(ii) After all work is completed on-site, except for close-up;
</P>
<P>(d) Designating an IPIA inspector or an independent qualified third-party inspector acceptable to the IPIA, as set forth under § 3282.358(d), who is not associated with the manufacturer and is not involved with the site construction or completion of the home and is free of any conflict of interest in accordance with § 3282.359, to inspect the work done on-site for the purpose of determining compliance with:
</P>
<P>(1) The approved design or, as appropriate under § 3282.362(a)(1)(iii), the Construction and Safety Standards; and
</P>
<P>(2) The DAPIA-approved quality assurance manual for on-site completion applicable to the labeling and completion of the affected manufactured homes;
</P>
<P>(e) Notifying the manufacturer of the IPIA's acceptance of the manufacturer's final site inspection report (see § 3282.605(d)(3)(iii));
</P>
<P>(f) Preparing final site inspection reports and providing notification to the manufacturer of its acceptance of the manufacturer's final site inspection report within 5 business days of preparing its report. The IPIA is to maintain its final site inspection reports and those of the manufacturer for a period of at least 5 years. All reports must be available for HUD and SAA review in the IPIA's central record office as part of the labeling records; and
</P>
<P>(g) Reporting to HUD, the DAPIA, and the manufacturer if one or more homes has not been site inspected prior to occupancy or when arrangements for one or more manufactured homes to be site inspected have not been made.


</P>
</DIV8>


<DIV8 N="§ 3282.608" NODE="24:5.1.2.1.3.13.1.8" TYPE="SECTION">
<HEAD>§ 3282.608   Manufacturer responsibilities.</HEAD>
<P>A manufacturer proceeding under this section is responsible for:
</P>
<P>(a) Obtaining DAPIA approval for completion of construction on-site, in accordance with § 3282.603;
</P>
<P>(b) Obtaining the IPIA's agreement to perform on-site inspections as necessary under this section and the terms of the DAPIA's approval;
</P>
<P>(c) Notifying the IPIA that the home is ready for inspection;
</P>
<P>(d) Paying the IPIA's costs for performing on-site inspections of work completed under this section;
</P>
<P>(e) Either before or at the time on-site work commences, providing the IPIA with a copy of any applicable DAPIA-approved quality assurance manual for on-site completion, the approved instructions for completing the construction work on-site, and an approved inspection checklist, and maintaining this information on the job site until all on-site work is completed and accepted by the IPIA;
</P>
<P>(f) Satisfactorily completing all on-site construction and required repairs or authorizing a licensed contractor or similarly qualified person to complete all site construction and any needed repairs;
</P>
<P>(g) Providing a written certification to the lessor or purchaser, when all site construction work is completed, that each home, to the best of the manufacturer's knowledge and belief, is constructed in conformance with the Construction and Safety Standards;
</P>
<P>(h) Ensuring that the consumer notification requirements of § 3282.606 are met for any home completed under this subpart;
</P>
<P>(i) Maintaining a system for tracking the status of homes built under the approval until the on-site work and necessary inspections have been completed, such that the system will assure that the work is performed in accordance with the quality control manual and other conditions of the approval;
</P>
<P>(j) Ensuring performance of all work as necessary to assure compliance with the Construction and Safety Standards upon completion of the site work, including § 3280.303(b) of this chapter, regardless of who does the work or where the work is completed;
</P>
<P>(k) Preparing a site inspection report upon completion of the work on-site, certifying completion in accordance with DAPIA-approved instruction and that the home conforms with the approved design or, as appropriate under § 3282.362(a)(1)(iii), the construction and safety standards;
</P>
<P>(l) Arranging for an on-site inspection of each home upon completion of the on-site work by the IPIA or its authorized designee prior to occupancy to verify compliance of the work with the DAPIA-approved designs and the Construction and Safety Standards;
</P>
<P>(m) Providing its final on-site inspection report and certification of completion to the IPIA and, after approval, to the lessor or purchaser and, as applicable, the appropriate retailer, and to the SAA upon request;
</P>
<P>(n) Maintaining in its records the approval notification from the DAPIA, the manufacturer's final on-site inspection report and certification of completion, and the IPIA's acceptance of the final site inspection report and certification, and making all such records available for review by HUD in the factory of origin;
</P>
<P>(o) Reporting to HUD or its agent the serial numbers assigned to each home completed in conformance with this section and as required by § 3282.552; and
</P>
<P>(p) Providing cumulative quarterly production reports to HUD or its agent that include the site completion numeric identification number(s) for each home (see § 3282.603(d)(1)); the serial number(s) for each home; the HUD label number(s) assigned to each home; the retailer's name and address for each home; the name, address, and phone number for each home purchaser; the dates of the final site completion inspection for each home; and whether each home was inspected prior to occupancy.
</P>
<P>(q) Maintaining copies of all records for on-site completion for each home, as required by this section, in the unit file to be maintained by the manufacturer.


</P>
</DIV8>


<DIV8 N="§ 3282.609" NODE="24:5.1.2.1.3.13.1.9" TYPE="SECTION">
<HEAD>§ 3282.609   Revocation or amendment of DAPIA approval.</HEAD>
<P>(a) The DAPIA that issued an approval or the Secretary may revoke or amend, prospectively, an approval notification issued under § 3282.603. The approval may be revoked or amended whenever the DAPIA or HUD determines that:
</P>
<P>(1) The manufacturer is not complying with the terms of the approval or the requirements of this section;
</P>
<P>(2) The approval was not issued in conformance with the requirements of § 3282.603;
</P>
<P>(3) A home produced under the approval fails to comply with the Federal construction and safety standards or contains an imminent safety hazard; or
</P>
<P>(4) The manufacturer fails to make arrangements for one or more manufactured homes to be inspected by the IPIA prior to occupancy.
</P>
<P>(b) The DAPIA must immediately notify the manufacturer, the IPIA, and HUD of any revocation or amendment of DAPIA approval.


</P>
</DIV8>


<DIV8 N="§ 3282.610" NODE="24:5.1.2.1.3.13.1.10" TYPE="SECTION">
<HEAD>§ 3282.610   Failure to comply with the procedures of this subpart.</HEAD>
<P>In addition to other sanctions available under the Act and this part, HUD may prohibit any manufacturer or PIA found to be in violation of the requirements of this section from carrying out their functions of this Subpart in the future, after providing an opportunity for an informal presentation of views in accordance with § 3282.152(f). Repeated infractions of the requirements of this section may be grounds for the suspension or disqualification of a PIA under §§ 3282.355 and 3282.356.


</P>
</DIV8>


<DIV8 N="§ 3282.611" NODE="24:5.1.2.1.3.13.1.11" TYPE="SECTION">
<HEAD>§ 3282.611   Compliance with this subpart.</HEAD>
<P>If the manufacturer and IPIA, as applicable, complies with the requirements of this section and the home complies with the construction and safety standards for those aspects of construction covered by the DAPIA approval, then HUD will consider a manufacturer or retailer that has permitted a manufactured home approved for on-site completion under this section to be sold, leased, offered for sale or lease, introduced, delivered, or imported to be in compliance with the certification requirements of the Act and the applicable implementing regulations in this part 3282 for those aspects of construction covered by the approval.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="3284" NODE="24:5.1.2.1.4" TYPE="PART">
<HEAD>PART 3284—MANUFACTURED HOUSING PROGRAM FEE 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d), 5419 and 5424. 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>67 FR 52835, Aug. 13, 2002, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 3284.1" NODE="24:5.1.2.1.4.0.1.1" TYPE="SECTION">
<HEAD>§ 3284.1   Applicability.</HEAD>
<P>This part applies to manufacturers that are subject to the requirements of the National Manufactured Housing Construction and Safety Standards Act of 1974 (the Act), and to States having State plans approved in accordance with the Act. The amounts established under this part for any fee collected from manufacturers will be used, to the extent approved in advance in an annual appropriations Act, to offset the expenses incurred by HUD in connection with the manufactured housing program authorized by the Act. 


</P>
</DIV8>


<DIV8 N="§ 3284.5" NODE="24:5.1.2.1.4.0.1.2" TYPE="SECTION">
<HEAD>§ 3284.5   Amount of fee.</HEAD>
<P>Each manufacturer, as defined in § 3282.7 of this chapter, must pay a fee of $100 per transportable section of each manufactured housing unit that it manufactures under the requirements of part 3280 of this chapter.
</P>
<CITA TYPE="N">[79 FR 47377, Aug. 13, 2014]


</CITA>
</DIV8>


<DIV8 N="§ 3284.10" NODE="24:5.1.2.1.4.0.1.3" TYPE="SECTION">
<HEAD>§ 3284.10   <I>Minimum payments to states.</I></HEAD>
<P>For every State that has a State plan fully or conditionally approved pursuant to § 3282.302 of this chapter, and subject to the availability of appropriations, HUD will pay such State annually a total amount that is the greater of either the amount of cumulative payments resulting from production and shipments due to that State for the period between October 1, 2013, and September 30, 2014; or the total amount determined by adding:
</P>
<P>(a) $9.00 for every transportable section that is first located on the premises of a retailer, distributor, or purchaser in that State after leaving the manufacturing plant (or $0, if it is not) during the year for which payment is received; and
</P>
<P>(b) 14.00 for every transportable section that is produced in a manufacturing plant in that State (or $0, if it is not) during the year for which payment is received.
</P>
<CITA TYPE="N">[85 FR 71834, Nov. 12, 2020]




</CITA>
</DIV8>

</DIV5>


<DIV5 N="3285" NODE="24:5.1.2.1.5" TYPE="PART">
<HEAD>PART 3285—MODEL MANUFACTURED HOME INSTALLATION STANDARDS
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d), 5403, 5404, and 5424.
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>72 FR 59362, Oct. 19, 2007, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:5.1.2.1.5.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 3285.1" NODE="24:5.1.2.1.5.1.1.1" TYPE="SECTION">
<HEAD>§ 3285.1   Administration.</HEAD>
<P>(a) <I>Scope.</I> These Model Installation Standards provide minimum requirements for the initial installation of new manufactured homes, in accordance with section 605 of the Act (42 U.S.C. 5404). The Model Installation Standards are one component of the Manufactured Home Installation Program in Part 3286 of this chapter, upon effect, and serve as the basis for developing the manufacturers' installation instructions required by § 3285.2 of this subpart. The manufacturer's installation instructions, including specific methods for performing a specific operation or assembly, will be deemed to comply with these Model Installation Standards, provided they meet or exceed the minimum requirements of these Model Installation Standards and do not take the home out of compliance with the Manufactured Home Construction and Safety Standards (24 CFR part 3280). Work necessary to join all sections of a multi-section home specifically identified in Subparts G, H, and I of this part, or work associated with connecting exterior lights, chain-hung light fixtures, or ceiling-suspended fans, as specifically identified in Subpart I, is not considered assembly or construction of the home, although the design of those elements of a manufactured home must comply with the Manufactured Home Construction and Safety Standards (MHCSS). However, work associated with the completion of hinged roofs and eaves in § 3285.801 and other work done on-site and not specifically identified in this part as close-up is considered construction and assembly and is subject to the requirements of the Manufactured Home Construction and Safety Standards (24 CFR part 3280) and the Manufactured Home Procedural and Enforcement Regulations (24 CFR part 3282).
</P>
<P>(1) States that choose to operate an installation program for manufactured homes in lieu of the federal program must implement installation standards that provide protection to its residents that equals or exceeds the protection provided by these Model Installation Standards.
</P>
<P>(2) In states that do not choose to operate their own installation program for manufactured homes, these Model Installation Standards serve as the minimum standards for manufactured home installations.
</P>
<P>(b) <I>Applicability.</I> The standards set forth herein have been established to accomplish certain basic objectives and are not to be construed as relieving manufacturers, retailers, installers, or other parties of responsibility for compliance with other applicable ordinances, codes, regulations, and laws. The manufactured homes covered by this standard must comply with requirements of the U.S. Department of Housing and Urban Development's (HUD) MHCSS Program, as set forth in 24 CFR part 3280, Manufactured Home Construction and Safety Standards, and 24 CFR part 3282, Manufactured Home Procedural and Enforcement Regulations, as well as with, upon effect, the Manufactured Home Installation Program, 24 CFR part 3286, and the Dispute Resolution Program, 24 CFR part 3288. The requirements of this part do not apply to homes installed on site-built permanent foundations when the manufacturer certifies the home in accordance with § 3282.12 of this chapter.
</P>
<P>(c) <I>Consultation with the Manufactured Housing Consensus Committee.</I> The Secretary will seek input from the Manufactured Housing Consensus Committee (MHCC) when revising the installation standards in this part 3285. Before publication of a proposed rule to revise the installation standards, the Secretary will provide the MHCC with a 120-day opportunity to comment on such revision. The MHCC may send to the Secretary any of the MHCC's own recommendations to adopt new installation standards or to modify or repeal any of the installation standards in this part. Along with each recommendation, the MHCC must set forth pertinent data and arguments in support of the action sought. The Secretary will either:
</P>
<P>(1) Accept or modify the recommendation and publish it for public comment in accordance with section 553 of the Administrative Procedure Act (5 U.S.C. 553), along with an explanation of the reasons for any such modification; or
</P>
<P>(2) Reject the recommendation entirely, and provide to the MHCC a written explanation of the reasons for the rejection.


</P>
</DIV8>


<DIV8 N="§ 3285.2" NODE="24:5.1.2.1.5.1.1.2" TYPE="SECTION">
<HEAD>§ 3285.2   Manufacturer installation instructions.</HEAD>
<P>(a) <I>Instructions required.</I> A manufacturer must provide with each new manufactured home, installation designs and instructions that have been approved by the Secretary or DAPIA. The approved installation instructions must include all topics covered in the Model Installation Standards for the installation of manufactured homes. These installation instructions and any variations thereto that are prepared to comply with paragraph (c) of this section must provide protection to residents of the manufactured homes that equals or exceeds the protection provided by these Model Installation Standards and must not take the manufactured home out of compliance with the MHCSS. These instructions must insure that each home will be supported and anchored in a manner that is capable of meeting or exceeding the design loads required by the MHCSS.
</P>
<P>(b) <I>Professional engineer or registered architect certification.</I> A professional engineer or registered architect must prepare and certify that the manufacturer's installation instructions meet or exceed the Model Installation Standards for foundation support and anchoring whenever:
</P>
<P>(1) The manufacturer's installation instructions do not conform in their entirety to the minimum requirements or tables or their conditions for foundation support and anchoring of this Standard; or
</P>
<P>(2) An alternative foundation system or anchoring system is employed, including designs for basements and perimeter support foundation systems, whether or not it is included in the installation instructions; or
</P>
<P>(3) Materials such as metal piers or alternatives to concrete footing materials are required by the installation instructions; or
</P>
<P>(4) Foundation support and anchoring systems are designed for use in areas subject to freezing or for use in areas subject to flood damage or high seismic risk; or
</P>
<P>(5) Foundations support and anchoring systems are designed to be used in special snow load conditions or in severe wind design areas; or
</P>
<P>(6) Site conditions do not allow the use of the manufacturer's installation instructions; or
</P>
<P>(7) There are any other circumstances in which the manufacturer's installation instructions would not permit the home to be installed in conformance with the Installation Standards or the MHCSS.
</P>
<P>(c) <I>Variations to installation instructions.</I> (1) Before an installer provides support or anchorage that are different than those methods specified in the manufacturer's installation instructions, or when the installer encounters site or other conditions (such as areas that are subject to flood damage or high seismic risk) that prevent the use of the instructions, the installer must:
</P>
<P>(i) First attempt to obtain DAPIA-approved designs and instructions prepared by the manufacturer; or
</P>
<P>(ii) If designs and instructions are not available from the manufacturer, obtain an alternate design prepared and certified by a registered professional engineer or registered architect for the support and anchorage of the manufactured home that is consistent with the manufactured home design, conforms to the requirements of the MHCSS, and has been approved by the manufacturer and the DAPIA.
</P>
<P>(2) The manufacturer's installation instructions must include an explanation of the requirement in paragraph (c)(1) of this section.
</P>
<P>(d) <I>Installer certification.</I> In making the certification of the installation required under part 3286 of this chapter, upon effect, an installer must certify that it completed the installation in compliance with either the manufacturer's instructions or with an alternate installation design and instructions that have been prepared by the manufacturer or prepared in compliance with paragraph (c) of this section.
</P>
<P>(e) <I>Temporary storage.</I> The installation instructions must provide at least one method for temporarily supporting each transportable section of a manufactured home, to prevent structural and other damage to the structure, when those section(s) are temporarily sited at the manufacturer's facility, retailer's lot, or the home site.


</P>
</DIV8>


<DIV8 N="§ 3285.3" NODE="24:5.1.2.1.5.1.1.3" TYPE="SECTION">
<HEAD>§ 3285.3   Alterations during initial installation.</HEAD>
<P>Additions, modifications, or replacement or removal of any equipment that affects the installation of the home made by the manufacturer, retailer, or installer prior to completion of the installation by an installer must equal or exceed the protections and requirements of these Model Installation Standards, the MHCSS (24 CFR part 3280) and the Manufactured Home Procedural and Enforcement Regulations (24 CFR part 3282). An alteration, as defined in § 3282.7 of this chapter, must not affect the ability of the basic manufactured home to comply with the MHCSS, and the alteration must not impose additional loads to the manufactured home or its foundation, unless the alteration is included in the manufacturer's DAPIA-approved designs and installation instructions, or is designed by a registered professional engineer or architect consistent with the manufacturer's design and that conforms to the requirements of the MHCSS.


</P>
</DIV8>


<DIV8 N="§ 3285.4" NODE="24:5.1.2.1.5.1.1.4" TYPE="SECTION">
<HEAD>§ 3285.4   Incorporation by reference (IBR).</HEAD>
<P>(a) The materials listed in this section are incorporated by reference in the corresponding sections noted. These incorporations by reference were approved by the Director of the Federal Register, in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. The materials are available for purchase at the corresponding addresses noted below, and all are available for inspection at the Office of Manufactured Housing Programs, U.S. Department of Housing and Urban Development, 451 Seventh Street, SW., Room 9164, Washington, DC 20410; or the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call (202) 741-6030, or go to: <I>http://www.archives.gov/federal-register/cfr/ibr-locations.html.</I>
</P>
<P>(b) The materials listed below are available for purchase from the Air Conditioning Contractors of America (ACCA), 2800 Shirlington Road, Suite 300, Arlington, Virginia 22206.
</P>
<P>(1) ACCA Manual J, Residential Load Calculation, 8th Edition, IBR approved for § 3285.503(a)(1)(i)(A).
</P>
<P>(2) [Reserved]
</P>
<P>(c) The materials listed below are available for purchase from APA—The Engineered Wood Association, 7011 South 19th Street, Tacoma, Washington 98411, telephone number (253) 565-6600, fax number (253) 565-7265.
</P>
<P>(1) PS1-95, Construction and Industrial Plywood (with typical APA trademarks), 1995 edition, IBR approved for § 3285.312(a)(2)(i).
</P>
<P>(2) [Reserved]
</P>
<P>(d) The materials listed below are available for purchase from American Society of Heating, Refrigerating and Air Conditioning Engineers (ASHRAE), 1791 Tullie Circle, NE., Atlanta, Georgia 30329-2305.
</P>
<P>(1) ASHRAE Handbook of Fundamentals, 1997 Inch-Pound Edition, IBR approved for § 3285.503(a)(1)(i)(A).
</P>
<P>(2) [Reserved]
</P>
<P>(e) The materials listed below are available for purchase from American Society for Testing and Materials (ASTM), 100 Barr Harbor Drive, West Conshohocken, Pennsylvania 19428-2959.
</P>
<P>(1) ASTM C 90-02a, Standard Specification for Loadbearing Concrete Masonry Units, 2002, IBR approved for § 3285.312(a)(1)(i).
</P>
<P>(2) ASTM D 1586-99, Standard Test Method for Penetration Test and Split-Barrel Sampling of Soils, 1999, IBR approved for the table at § 3285.202(c).
</P>
<P>(3) ASTM D 2487-00, Standard Practice for Classification of Soils for Engineering Purposes (Unified Soil Classification System), 2000, IBR approved for the table at § 3285.202(c).
</P>
<P>(4) ASTM D 2488-00, Standard Practice for Description and Identification of Soils (Visual-Manual Procedure), 2000, IBR approved for the table at § 3285.202(c).
</P>
<P>(5) ASTM D 3953-97, Standard Specification for Strapping, Flat Steel and Seals, 1997, IBR approved for § 3285.402(b)(2) and Note 10 to Table 1 to § 3285.402.
</P>
<P>(f) The materials listed below are available for purchase from American Wood-Preservers' Association (AWPA), P.O. Box 388, Selma, Alabama 36702.
</P>
<P>(1) AWPA M4-02, Standard for the Care of Preservative-Treated Wood Products, 2002, IBR approved for § 3285.312(a)(2)(iii).
</P>
<P>(2) AWPA U1-04, Use Category System; User Specification for Treated Wood, 2004, IBR approved for §§ 3285.303(b)(1), 3285.312(a)(2)(ii), and 3285.504(c).
</P>
<P>(g) The materials listed below are available for purchase from the Federal Emergency Management Administration (FEMA), 500 C Street, SW., Washington, DC 20472.
</P>
<P>(1) FEMA 85/September 1985, Manufactured Home Installation in Flood Hazard Areas, 1985, IBR approved for § 3285.102(d)(3).
</P>
<P>(2) [Reserved]
</P>
<P>(h) The materials listed below are available for purchase from the National Fire Protection Association (NFPA), 1 Batterymarch Park, Quincy, Massachusetts 02169-7471.
</P>
<P>(1) NFPA 31, Standard for the Installation of Oil Burning Equipment, 2001 edition, IBR approved for §§ 3285.905(a) and 3285.905(d)(3).
</P>
<P>(2) NFPA 70, National Electrical Code, 2005 edition, IBR approved for §§ 3285.702(e)(1) and 3285.906.
</P>
<P>(3) NFPA 501A, Standard for Fire Safety Criteria for Manufactured Home Installations, Sites, and Communities, 2003 edition, IBR approved for § 3285.101.
</P>
<P>(i) The materials listed below are available for purchase from the Structural Engineering Institute/American Society of Civil Engineers (SEI/ASCE), 1801 Alexander Bell Drive, Reston, Virginia 20191.
</P>
<P>(1) SEI/ASCE 32-01, Design and Construction of Frost-Protected Shallow Foundations, 2001, IBR approved for §§ 3285.312(b)(2)(ii) and 3285.312(b)(3)(ii).
</P>
<P>(2) [Reserved]
</P>
<P>(j) The materials listed below are available for purchase from Underwriters Laboratories (UL), 333 Pfingsten Road, Northbrook, Illinois 60062.
</P>
<P>(1) UL 181A, Closure Systems for Use With Rigid Air Ducts and Air Connectors, 1994, with 1998 revisions, IBR approved for § 3285.606(a).
</P>
<P>(2) UL 181B, Closure Systems for Use With Flexible Air Ducts and Air Connectors, 1995, with 1998 revisions, IBR approved for § 3285.606(a).


</P>
</DIV8>


<DIV8 N="§ 3285.5" NODE="24:5.1.2.1.5.1.1.5" TYPE="SECTION">
<HEAD>§ 3285.5   Definitions.</HEAD>
<P>The definitions contained in this section apply to the terms used in these Model Installation Standards. Where terms are not included, common usage of the terms applies. The definitions are as follows:
</P>
<P><I>Act.</I> The National Manufactured Housing Construction and Safety Standards Act of 1974, 42 U.S.C. 5401-5426.
</P>
<P><I>Anchor assembly.</I> Any device or other means designed to transfer home anchoring loads to the ground.
</P>
<P><I>Anchoring equipment.</I> Ties, straps, cables, turnbuckles, chains, and other approved components, including tensioning devices that are used to secure a manufactured home to anchor assemblies.
</P>
<P><I>Anchoring system.</I> A combination of anchoring equipment and anchor assemblies that will, when properly designed and installed, resist the uplift, overturning, and lateral forces on the manufactured home and on its support and foundation system.
</P>
<P><I>Approved.</I> When used in connection with any material, appliance or construction, means complying with the requirements of the Department of Housing and Urban Development.
</P>
<P><I>Arid region.</I> An area subject to 15 inches or less of annual rainfall.
</P>
<P><I>Attached accessory building or structure</I> means any awning, cabana, deck, ramada, storage cabinet, carport, windbreak, garage, or porch for which the attachment of such is designed by the home manufacturer to be structurally supported by the manufactured home.
</P>
<P><I>Base flood.</I> The flood having a one percent chance of being equaled or exceeded in any given year.
</P>
<P><I>Base flood elevation (BFE).</I> The elevation of the base flood, including wave height, relative to the datum specified on a LAHJ's flood hazard map.
</P>
<P><I>Comfort cooling certificate.</I> A certificate permanently affixed to an interior surface of the home specifying the factory design and preparations for air conditioning the manufactured home.
</P>
<P><I>Crossovers.</I> Utility interconnections in multi-section homes that are located where the sections are joined. Crossover connections include heating and cooling ducts, electrical circuits, water pipes, drain plumbing, and gas lines.
</P>
<P><I>Design Approval Primary Inspection Agency (DAPIA).</I> A state or private organization that has been accepted by the Secretary in accordance with the requirements of Part 3282, Subpart H of this chapter, which evaluates and approves or disapproves manufactured home designs and quality control procedures.
</P>
<P><I>Diagonal tie.</I> A tie intended to resist horizontal or shear forces, but which may resist vertical, uplift, and overturning forces.
</P>
<P><I>Flood hazard area.</I> The greater of either: The special flood hazard area shown on the flood insurance rate map; or the area subject to flooding during the design flood and shown on a LAHJ's flood hazard map, or otherwise legally designated.
</P>
<P><I>Flood hazard map.</I> A map delineating the flood hazard area and adopted by a LAHJ.
</P>
<P><I>Footing.</I> That portion of the support system that transmits loads directly to the soil.
</P>
<P><I>Foundation system.</I> A system of support that is capable of transferring all design loads to the ground, including elements of the support system, as defined in this section, or a site-built permanent foundation that meets the requirements of 24 CFR 3282.12.
</P>
<P><I>Ground anchor.</I> A specific anchoring assembly device designed to transfer home anchoring loads to the ground.
</P>
<P><I>Installation instructions.</I> DAPIA-approved instructions provided by the home manufacturer that accompany each new manufactured home and detail the home manufacturer requirements for support and anchoring systems, and other work completed at the installation site to comply with these Model Installation Standards and the Manufactured Home Construction and Safety Standards in 24 CFR part 3280.
</P>
<P><I>Installation standards.</I> Reasonable specifications for the installation of a new manufactured home, at the place of occupancy, to ensure proper siting; the joining of all sections of the home; and the installation of stabilization, support, or anchoring systems.
</P>
<P><I>Labeled.</I> A label, symbol, or other identifying mark of a nationally recognized testing laboratory, inspection agency, or other organization concerned with product evaluation that maintains periodic inspection of production of labeled equipment or materials, and by whose labeling is indicated compliance with nationally recognized standards or tests to determine suitable usage in a specified manner.
</P>
<P><I>Listed or certified.</I> Included in a list published by a nationally recognized testing laboratory, inspection agency, or other organization concerned with product evaluation that maintains periodic inspection of production of listed equipment or materials, and whose listing states either that the equipment or material meets nationally recognized standards or has been tested and found suitable for use in a specified manner.
</P>
<P><I>Local authority having jurisdiction (LAHJ).</I> The state, city, county, city and county, municipality, utility, or organization that has local responsibilities and requirements that must be complied with during the installation of a manufactured home.
</P>
<P><I>Lowest floor.</I> The floor of the lowest enclosed area of a manufactured home. An unfinished or flood-resistant enclosure, used solely for vehicle parking, home access, or limited storage, must not be considered the lowest floor, provided the enclosed area is not constructed so as to render the home in violation of the flood-related provisions of this standard.
</P>
<P><I>Manufactured home.</I> A structure, transportable in one or more sections, which in the traveling mode is 8 body feet or more in width or 40 body feet or more in length, or which when erected on site is 320 or more square feet, and which is built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities, and includes the plumbing, heating, air-conditioning, and electrical systems contained in the structure. This term includes all structures that meet the above requirements, except the size requirements and with respect to which the manufacturer voluntarily files a certification, pursuant to § 3282.13 of this chapter, and complies with the MHCSS set forth in part 3280 of this chapter. The term does not include any self-propelled recreational vehicle. Calculations used to determine the number of square feet in a structure will include the total of square feet for each transportable section comprising the completed structure and will be based on the structure's exterior dimensions measured at the largest horizontal projections when erected on-site. These dimensions will include all expandable rooms, cabinets, and other projections containing interior space, but do not include bay windows. Nothing in this definition should be interpreted to mean that a manufactured home necessarily meets the requirements of HUD's Minimum Property Standards (HUD Handbook 4900.1) or that it is automatically eligible for financing under 12 U.S.C. 1709(b) certification.
</P>
<P><I>Manufactured Home Construction and Safety Standards or MHCSS.</I> The Manufactured Home Construction and Safety Standards established in part 3280 of this chapter, pursuant to section 604 of the Act, 42 U.S.C. 5403.
</P>
<P><I>Manufactured home gas supply connector.</I> A listed connector designed for connecting the manufactured home to the gas supply source.
</P>
<P><I>Manufactured home site.</I> A designated parcel of land designed for the installation of one manufactured home for the exclusive use of the occupants of the home.
</P>
<P><I>Manufactured Housing Consensus Committee or MHCC.</I> The consensus committee established pursuant to section 604(a)(3) of the Act, 42 U.S.C. 5403(a)(3).
</P>
<P><I>Model Installation Standards.</I> The installation standards established in part 3285 of this chapter, pursuant to section 605 of the Act, 42 U.S.C. 5404.
</P>
<P><I>Peak cap assembly</I> means any roof peak assembly that is either shipped loose or site completed and is site installed to finish the roof ridge/peak of a home.
</P>
<P><I>Peak cap construction</I> means any roof peak construction that is either shipped loose or site constructed and is site installed to complete the roof ridge/peak of a home.
</P>
<P><I>Peak flip assembly</I> means any roof peak assembly that requires the joining of two or more cut top chord members on site. The cut top chords must be joined at the factory by straps, hinges, or other means.
</P>
<P><I>Peak flip construction</I> means any roof peak construction that requires the joining of two or more cut top chord members on site. The cut top chords must be joined at the factory by straps, hinges, or other means.
</P>
<P><I>Pier.</I> That portion of the support system between the footing and the manufactured home, exclusive of shims. Types of piers include, but are not limited to: Manufactured steel stands; pressure-treated wood; manufactured concrete stands; concrete blocks; and portions of foundation walls.
</P>
<P><I>Ramada.</I> Any freestanding roof or shade structure, installed or erected above a manufactured home or any portion thereof.
</P>
<P><I>Secretary.</I> The Secretary of Housing and Urban Development, or an official of HUD delegated the authority of the Secretary with respect to the Act.
</P>
<P><I>Site.</I> An area of land upon which a manufactured home is installed.
</P>
<P><I>Skirting.</I> A weather-resistant material used to enclose the perimeter, under the living area of the home, from the bottom of the manufactured home to grade.
</P>
<P><I>Stabilizing devices.</I> All components of the anchoring and support systems, such as piers, footings, ties, anchoring equipment, anchoring assemblies, or any other equipment, materials, and methods of construction, that support and secure the manufactured home to the ground.
</P>
<P><I>State.</I> Each of the several states, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands, and American Samoa.
</P>
<P><I>Support system.</I> Pilings, columns, footings, piers, foundation walls, shims, and any combination thereof that, when properly installed, support the manufactured home.
</P>
<P><I>Tie.</I> Straps, cable, or securing devices used to connect the manufactured home to anchoring assemblies.
</P>
<P><I>Ultimate load.</I> The absolute maximum magnitude of load that a component or system can sustain, limited only by failure.
</P>
<P><I>Utility connection.</I> The connection of the manufactured home to utilities that include, but are not limited to, electricity, water, sewer, gas, or fuel oil.
</P>
<P><I>Vertical tie.</I> A tie intended to resist uplifting and overturning forces.
</P>
<P><I>Wind zone.</I> The areas designated on the Basic Wind Zone Map, as further defined in § 3280.305(c) of the Manufactured Home Construction and Safety Standards in this chapter, which delineate the wind design load requirements.
</P>
<P><I>Working load.</I> The maximum recommended load that may be exerted on a component or system determined by dividing the ultimate load of a component or system by an appropriate factor of safety.
</P>
<CITA TYPE="N">[72 FR 59362, Oct. 19, 2007, as amended at 79 FR 53614, Sept. 10, 2014; 80 FR 53731, Sept. 8, 2015; 86 FR 2526, Jan. 12, 2021; 89 FR 75758, Sept. 16, 2024]


</CITA>
</DIV8>


<DIV8 N="§ 3285.6" NODE="24:5.1.2.1.5.1.1.6" TYPE="SECTION">
<HEAD>§ 3285.6   Final leveling of manufactured home.</HEAD>
<P>The manufactured home must be adequately leveled prior to completion of the installation, so that the home's performance will not be adversely affected. The home will be considered adequately leveled if there is no more than 
<FR>1/4</FR> inch difference between adjacent pier supports (frame or perimeter) and the exterior doors and windows of the home do not bind and can be properly operated.


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:5.1.2.1.5.2" TYPE="SUBPART">
<HEAD>Subpart B—Pre-Installation Considerations</HEAD>


<DIV8 N="§ 3285.101" NODE="24:5.1.2.1.5.2.1.1" TYPE="SECTION">
<HEAD>§ 3285.101   Fire separation.</HEAD>
<P>Fire separation distances must be in accordance with the requirements of Chapter 6 of NFPA 501A, 2003 edition (incorporated by reference, see § 3285.4) or the requirements of the LAHJ. The installation instructions must clearly indicate this requirement in a separate section and must caution installers to take into account any local requirements on fire separation.


</P>
</DIV8>


<DIV8 N="§ 3285.102" NODE="24:5.1.2.1.5.2.1.2" TYPE="SECTION">
<HEAD>§ 3285.102   Installation of manufactured homes in flood hazard areas.</HEAD>
<P>(a) <I>Definitions.</I> Except to the extent otherwise defined in Subpart A, the terms used in this subpart are as defined in 44 CFR 59.1 of the National Flood Insurance Program (NFIP) regulations.
</P>
<P>(b) <I>Applicability.</I> The provisions of this section apply to the initial installation of new manufactured homes located wholly or partly within a flood hazard area.
</P>
<P>(c) <I>Pre-installation considerations.</I> Prior to the initial installation of a new manufactured home, the installer is responsible for determining whether the manufactured home site lies wholly or partly within a special flood hazard area as shown on the LAHJ's Flood Insurance Rate Map, Flood Boundary and Floodway Map, or Flood Hazard Boundary Map, or if no LAHJ, in accordance with NFIP regulations. If so located, and before an installation method is agreed upon, the map and supporting studies adopted by the LAHJ must be used to determine the flood hazard zone and base flood elevation at the site.
</P>
<P>(d) <I>General elevation and foundation requirements</I>—(1) <I>Methods and practices.</I> Manufactured homes located wholly or partly within special flood hazard areas must be installed on foundations engineered to incorporate methods and practices that minimize flood damage during the base flood, in accordance with the requirements of the LAHJ, 44 CFR 60.3(a) through (e), and other provisions of 44 CFR referenced by those paragraphs.
</P>
<P>(2) <I>Outside appliances.</I> (i) Appliances installed on the manufactured home site in flood hazard areas must be anchored and elevated to or above the same elevation as the lowest elevation of the lowest floor of the home.
</P>
<P>(ii) Appliance air inlets and exhausts in flood hazard areas must be located at or above the same elevation as the lowest elevation of the lowest floor of the home.
</P>
<P>(3) <I>Related guidance.</I> Refer to FEMA 85/September 1985, Manufactured Home Installation in Flood Hazard Areas, 1985 (incorporated by reference, see § 3285.4).


</P>
</DIV8>


<DIV8 N="§ 3285.103" NODE="24:5.1.2.1.5.2.1.3" TYPE="SECTION">
<HEAD>§ 3285.103   Site suitability with design zone maps.</HEAD>
<P>Prior to the initial installation of a new manufactured home and as part of making the certification of the installation required under part 3286, upon effect, the installer is to verify that the design and construction of the manufactured home, as indicated on the design zone maps provided with the home, are suitable for the site location where the home is to be installed. The design zone maps are those identified in part 3280 of this chapter.
</P>
<P>(a) <I>Wind zone.</I> Manufactured homes must not be installed in a wind zone that exceeds the design wind loads for which the home has been designed, as evidenced by the wind zone indicated on the home's data plate and as further defined by counties or local governments within affected states, as applicable, in § 3280.305(c)(2) of the Manufactured Home Construction and Safety Standards in this chapter.
</P>
<P>(b) <I>Roof load zone.</I> Manufactured homes must not be located in a roof load zone that exceeds the design roof load for which the home has been designed, as evidenced by the roof load zone indicated on the home's data plate and as further defined by counties or local governments within affected states, as applicable, in § 3280.305(c)(3) of the Manufactured Home Construction and Safety Standards in this chapter. Refer to § 3285.315 for Special Snow Load Conditions.
</P>
<P>(c) <I>Thermal zone.</I> Manufactured homes must not be installed in a thermal zone that exceeds the thermal zone for which the home has been designed, as evidenced by the thermal zone indicated on the heating/cooling certificate and insulation zone map and as further defined by counties or local governments within affected states, as applicable, in § 3280.504(b)(5) of the Manufactured Home Construction and Safety Standards in this chapter. The manufacturer may provide the heating/cooling information and insulation zone map on the home's data plate.


</P>
</DIV8>


<DIV8 N="§ 3285.104" NODE="24:5.1.2.1.5.2.1.4" TYPE="SECTION">
<HEAD>§ 3285.104   Moving manufactured home to location.</HEAD>
<P>Refer to § 3285.902 for considerations related to moving the manufactured home to the site of installation.


</P>
</DIV8>


<DIV8 N="§ 3285.105" NODE="24:5.1.2.1.5.2.1.5" TYPE="SECTION">
<HEAD>§ 3285.105   Permits, other alterations, and on-site structures.</HEAD>
<P>Refer to § 3285.903 for considerations related to permitting, other alterations, and on-site structures.


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:5.1.2.1.5.3" TYPE="SUBPART">
<HEAD>Subpart C—Site Preparation</HEAD>


<DIV8 N="§ 3285.201" NODE="24:5.1.2.1.5.3.1.1" TYPE="SECTION">
<HEAD>§ 3285.201   Soil conditions.</HEAD>
<P>To help prevent settling or sagging, the foundation must be constructed on firm, undisturbed soil or fill compacted to at least 90 percent of its maximum relative density. All organic material such as grass, roots, twigs, and wood scraps must be removed in areas where footings are to be placed. After removal of organic material, the home site must be graded or otherwise prepared to ensure adequate drainage, in accordance with § 3285.203.


</P>
</DIV8>


<DIV8 N="§ 3285.202" NODE="24:5.1.2.1.5.3.1.2" TYPE="SECTION">
<HEAD>§ 3285.202   Soil classifications and bearing capacity.</HEAD>
<P>The soil classification and bearing capacity of the soil must be determined before the foundation is constructed and anchored. The soil classification and bearing capacity must be determined by one or more of the following methods, unless the soil bearing capacity is established as permitted in paragraph (f) of this section:
</P>
<P>(a) <I>Soil tests.</I> Soil tests that are in accordance with generally accepted engineering practice; or
</P>
<P>(b) <I>Soil records.</I> Soil records of the applicable LAHJ; or
</P>
<P>(c) <I>Soil classifications and bearing capacities.</I> If the soil class or bearing capacity cannot be determined by test or soil records, but its type can be identified, the soil classification, allowable pressures, and torque values shown in Table to § 3285.202 may be used.
</P>
<P>(d) A pocket penetrometer; or
</P>
<P>(e) In lieu of determining the soil bearing capacity by use of the methods shown in the table, an allowable pressure of 1,500 psf may be used, unless the site-specific information requires the use of lower values based on soil classification and type.
</P>
<P>(f) If the soil appears to be composed of peat, organic clays, or uncompacted fill, or appears to have unusual conditions, a registered professional geologist, registered professional engineer, or registered architect must determine the soil classification and maximum allowable soil bearing capacity.
</P>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Table to § 3285.202
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" colspan="2" scope="col">Soil classification
</TH><TH class="gpotbl_colhed" rowspan="2" scope="col">Soil description
</TH><TH class="gpotbl_colhed" rowspan="2" scope="col">Allowable soil bearing
<br/>pressure (psf) 
<sup>1</sup>
</TH><TH class="gpotbl_colhed" rowspan="2" scope="col">Blow count ASTM D 1586-99
</TH><TH class="gpotbl_colhed" rowspan="2" scope="col">Torque probe 
<sup>3</sup> value 
<sup>4</sup>
<br/>(inch-pounds)-
</TH></TR><TR><TH class="gpotbl_colhed" scope="col">Classification number
</TH><TH class="gpotbl_colhed" scope="col">ASTM D 2487-00
<br/>or D 2488-00
<br/>(incorporated by
<br/>reference, see § 3285.4)
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1</TD><TD align="left" class="gpotbl_cell"></TD><TD align="left" class="gpotbl_cell">Rock or hard pan</TD><TD align="left" class="gpotbl_cell">4000 + </TD><TD align="right" class="gpotbl_cell"> 
</TD><TD align="left" class="gpotbl_cell"/></TR><TR><TD align="left" class="gpotbl_cell" scope="row">2</TD><TD align="left" class="gpotbl_cell">GW, GP, SW, SP, GM, SM</TD><TD align="left" class="gpotbl_cell">Sandy gravel and gravel; very than dense and/orcemented sands;coursegravel/cobbles;preloaded silts,clays and coral</TD><TD align="left" class="gpotbl_cell">2000</TD><TD align="right" class="gpotbl_cell">40 + </TD><TD align="left" class="gpotbl_cell">More than 550.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">3</TD><TD align="left" class="gpotbl_cell">GC, SC, ML, CL</TD><TD align="left" class="gpotbl_cell">Sand; silty sand; clayey sand; siltygravel; medium dense course sands; sandygravel; and very stiff silt, sand clays</TD><TD align="left" class="gpotbl_cell">1500</TD><TD align="right" class="gpotbl_cell">24-39</TD><TD align="left" class="gpotbl_cell">351-550.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">4A</TD><TD align="left" class="gpotbl_cell">CG, MH 
<sup>2</sup></TD><TD align="left" class="gpotbl_cell">Loose to medium dense sands; firm to stiff clays and silts; alluvial fills</TD><TD align="left" class="gpotbl_cell">1000</TD><TD align="right" class="gpotbl_cell">18-23</TD><TD align="left" class="gpotbl_cell">276-350.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">4B</TD><TD align="left" class="gpotbl_cell">CH, MH 
<sup>2</sup></TD><TD align="left" class="gpotbl_cell">Loose sands; firm clays; alluvial fills</TD><TD align="left" class="gpotbl_cell">1000</TD><TD align="right" class="gpotbl_cell">12-17</TD><TD align="left" class="gpotbl_cell">175-275.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">5</TD><TD align="left" class="gpotbl_cell">OL, OH, PT</TD><TD align="left" class="gpotbl_cell">Uncompacted fill; peat; organic clays</TD><TD align="left" class="gpotbl_cell">Refer to 3285.202(e)</TD><TD align="right" class="gpotbl_cell">0-11</TD><TD align="left" class="gpotbl_cell">Less than 175.
</TD></TR></TABLE></DIV><DIV class="table_foot"><P class="gpotbl_note">Notes:
</P><P class="gpotbl_note">
<sup>1</sup> The values provided in this table have not been adjusted for overburden pressure, embedment depth, water table height, or settlement problems.
</P><P class="gpotbl_note">
<sup>2</sup> For soils classified as CH or MH, without either torque probe values or blow count test results, selected anchors must be rated for a 4B soil.
</P><P class="gpotbl_note">
<sup>3</sup> The torque test probe is a device for measuring the torque value of soils to assist in evaluating the holding capacity of the soil in which the ground anchor is placed. The shaft must be of suitable length for the full depth of the ground anchor.
</P><P class="gpotbl_note">
<sup>4</sup> The torque value is a measure of the load resistance provided by the soil when subject to the turning or twisting force of the probe.</P></DIV></DIV>
</DIV8>


<DIV8 N="§ 3285.203" NODE="24:5.1.2.1.5.3.1.3" TYPE="SECTION">
<HEAD>§ 3285.203   Site Drainage.</HEAD>
<P>(a) <I>Purpose.</I> Drainage must be provided to direct surface water away from the home to protect against erosion of foundation supports and to prevent water build-up under the home, as shown in Figure to § 3285.203.
</P>
<P>(b) The home site must be graded as shown in Figure to § 3285.203, or other methods, such as a drain tile and automatic sump pump system, must be provided to remove any water that may collect under the home.
</P>
<P>(c) All drainage must be diverted away from the home and must slope a minimum of one-half inch per foot away from the foundation for the first ten feet. Where property lines, walls, slopes, or other physical conditions prohibit this slope, the site must be provided with drains or swales or otherwise graded to drain water away from the structure, as shown in Figure to § 3285.203.
</P>
<P>(d) <I>Sloped site considerations.</I> The home, where sited, must be protected from surface runoff from the surrounding area.
</P>
<P>(e) Refer to § 3285.902 regarding the use of drainage structures to drain surface runoff.
</P>
<P>(f) <I>Gutters and downspouts.</I> Manufacturers must specify in their installation instructions whether the home is suitable for the installation of gutters and downspouts. If suitable, the installation instructions must indicate that when gutters and downspouts are installed, the runoff must be directed away from the home.
</P>
<img src="/graphics/er19oc07.006.gif"/>
</DIV8>


<DIV8 N="§ 3285.204" NODE="24:5.1.2.1.5.3.1.4" TYPE="SECTION">
<HEAD>§ 3285.204   Ground moisture control.</HEAD>
<P>(a) <I>Vapor retarder.</I> If the space under the home is to be enclosed with skirting or other materials, a vapor retarder must be installed to cover the ground under the home, unless the home is installed in an arid region with dry soil conditions.
</P>
<P>(b) <I>Vapor retarder material.</I> A minimum of six mil polyethylene sheeting or its equivalent must be used.
</P>
<P>(c) <I>Proper installation.</I> (1) The entire area under the home must be covered with the vapor retarder, as noted in § 3285.204(a), except for areas under open porches, decks, and recessed entries. Joints in the vapor retarder must be overlapped at least 12 inches.
</P>
<P>(2) The vapor retarder may be placed directly beneath footings, or otherwise installed around or over footings placed at grade, and around anchors or other obstructions.
</P>
<P>(3) Any voids or tears in the vapor retarder must be repaired. At least one repair method must be provided in the manufacturer's installation instructions.


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:5.1.2.1.5.4" TYPE="SUBPART">
<HEAD>Subpart D—Foundations</HEAD>


<DIV8 N="§ 3285.301" NODE="24:5.1.2.1.5.4.1.1" TYPE="SECTION">
<HEAD>§ 3285.301   General.</HEAD>
<P>(a) Foundations for manufactured home installations must be designed and constructed in accordance with this subpart and must be based on site conditions, home design features, and the loads the home was designed to withstand, as shown on the home's data plate.
</P>
<P>(b) Foundation systems that are not pier and footing type configurations may be used when verified by engineering data and designed in accordance with § 3285.301(d), consistent with the design loads of the MHCSS. Pier and footing specifications that are different than those provided in this subpart, such as block size, metal piers, section width, loads, and spacing, may be used when verified by engineering data that comply with §§ 3285.301(c) and (d) and are capable of resisting all design loads of the MHCSS.
</P>
<P>(c) All foundation details, plans, and test data must be designed and certified by a registered professional engineer or registered architect, and must not take the home out of compliance with the MHCSS. (See 3285.2)
</P>
<P>(d) Alternative foundation systems or designs are permitted in accordance with either of the following:
</P>
<P>(1) Systems or designs must be manufactured and installed in accordance with their listings by a nationally recognized testing agency, based on a nationally recognized testing protocol; or
</P>
<P>(2) System designs must be prepared by a professional engineer or a registered architect or tested and certified by a professional engineer or registered architect in accordance with acceptable engineering practice and must be manufactured and installed so as not to take the home out of compliance with the Manufactured Home Construction and Safety Standards (part 3280 of this chapter).


</P>
</DIV8>


<DIV8 N="§ 3285.302" NODE="24:5.1.2.1.5.4.1.2" TYPE="SECTION">
<HEAD>§ 3285.302   Flood hazard areas.</HEAD>
<P>In flood hazard areas, foundations, anchorings, and support systems must be capable of resisting loads associated with design flood and wind events or combined wind and flood events, and homes must be installed on foundation supports that are designed and anchored to prevent floatation, collapse, or lateral movement of the structure. Manufacturer's installation instructions must indicate whether:
</P>
<P>(a) The foundation specifications have been designed for flood-resistant considerations, and, if so, the conditions of applicability for velocities, depths, or wave action; or
</P>
<P>(b) The foundation specifications are not designed to address flood loads.


</P>
</DIV8>


<DIV8 N="§ 3285.303" NODE="24:5.1.2.1.5.4.1.3" TYPE="SECTION">
<HEAD>§ 3285.303   Piers.</HEAD>
<P>(a) <I>General.</I> The piers used must be capable of transmitting the vertical live and dead loads to the footings or foundation.
</P>
<P>(b) <I>Acceptable piers—materials specification.</I> (1) Piers are permitted to be concrete blocks; pressure-treated wood with a water borne preservative, in accordance with AWPA Standard U1-04 (incorporated by reference, see § 3285.4) for Use Category 4B ground contact applications; or adjustable metal or concrete piers.
</P>
<P>(2) Manufactured piers must be listed or labeled for the required vertical load capacity, and, where required by design, for the appropriate horizontal load capacity.
</P>
<P>(c) <I>Design requirements.</I> (1) <I>Load-bearing capacity.</I> The load bearing capacity for each pier must be designed to include consideration for the dimensions of the home, the design dead and live loads, the spacing of the piers, and the way the piers are used to support the home.
</P>
<P>(2) Center beam/mating wall support must be required for multi-section homes and designs must be consistent with Tables 2 and 3 to § 3285.303 and Figures A, B, and C to § 3285.310.
</P>
<P>(d) <I>Pier loads.</I> (1) Design support configurations for the pier loads, pier spacing, and roof live loads must be in accordance with Tables 1, 2, and 3 to § 3285.303 and the MHCSS. Other pier designs are permitted in accordance with the provisions of this subpart.
</P>
<P>(2) Manufactured piers must be rated at least to the loads required to safely support the dead and live loads, as required by § 3285.301, and the installation instructions for those piers must be consistent with Tables 1, 2, and 3 to this section.
</P>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Table 1 to § 3285.303—Frame Blocking Only/Perimeter Support Not Required Except at Openings
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Pier spacing
</TH><TH class="gpotbl_colhed" scope="col">Roof live load (psf)
</TH><TH class="gpotbl_colhed" scope="col">Location
</TH><TH class="gpotbl_colhed" scope="col">Load (lbs.)
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">20</TD><TD align="left" class="gpotbl_cell">Frame</TD><TD align="right" class="gpotbl_cell">2,900
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">4 ft. 0 in.</TD><TD align="right" class="gpotbl_cell">30</TD><TD align="left" class="gpotbl_cell">Frame</TD><TD align="right" class="gpotbl_cell">3,300
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">40</TD><TD align="left" class="gpotbl_cell">Frame</TD><TD align="right" class="gpotbl_cell">3,600
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">20</TD><TD align="left" class="gpotbl_cell">Frame</TD><TD align="right" class="gpotbl_cell">4,200
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">6 ft. 0 in.</TD><TD align="right" class="gpotbl_cell">30</TD><TD align="left" class="gpotbl_cell">Frame</TD><TD align="right" class="gpotbl_cell">4,700
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">40</TD><TD align="left" class="gpotbl_cell">Frame</TD><TD align="right" class="gpotbl_cell">5,200
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">20</TD><TD align="left" class="gpotbl_cell">Frame</TD><TD align="right" class="gpotbl_cell">5,500
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">8 ft. 0 in.</TD><TD align="right" class="gpotbl_cell">30</TD><TD align="left" class="gpotbl_cell">Frame</TD><TD align="right" class="gpotbl_cell">6,200
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">40</TD><TD align="left" class="gpotbl_cell">Frame</TD><TD align="right" class="gpotbl_cell">6,900
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">20</TD><TD align="left" class="gpotbl_cell">Frame</TD><TD align="right" class="gpotbl_cell">6,800
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">10 ft. 0 in.</TD><TD align="right" class="gpotbl_cell">30</TD><TD align="left" class="gpotbl_cell">Frame</TD><TD align="right" class="gpotbl_cell">7,600
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">40</TD><TD align="left" class="gpotbl_cell">Frame</TD><TD align="right" class="gpotbl_cell">8,500</TD></TR></TABLE></DIV></DIV>
<NOTE>
<HED>Notes:</HED>
<P>1. See Table to § 3285.312 for cast-in-place footing design by using the noted loads.
</P>
<P>2. Table 1 is based on the following design assumptions: maximum 16 ft. nominal section width (15 ft. actual width), 12” eave, 10” I-beam size, 300 lbs. pier dead load, 10 psf roof dead load, 6 psf floor dead load, 35 plf wall dead load, and 10 plf chassis dead load.
</P>
<P>3. Interpolation for other pier spacing is permitted.
</P>
<P>4. The pier spacing and loads shown in the above table do not consider flood or seismic loads and are not intended for use in flood or seismic hazard areas. In those areas, the foundation support system is to be designed by a professional engineer or architect.
</P>
<P>5. See Table to § 3285.312 for sizing of footings.</P></NOTE>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Table 2 to § 3285.303—Frame Plus Perimeter Blocking/Perimeter Blocking Required
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Maximum pier spacing
</TH><TH class="gpotbl_colhed" scope="col">Roof live load(psf)
</TH><TH class="gpotbl_colhed" scope="col">Location
</TH><TH class="gpotbl_colhed" scope="col">Load (lbs.)
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell"> </TD><TD align="left" class="gpotbl_cell">Frame</TD><TD align="right" class="gpotbl_cell">1,400
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">4 ft. 0 in.</TD><TD align="right" class="gpotbl_cell">20</TD><TD align="left" class="gpotbl_cell">Perimeter</TD><TD align="right" class="gpotbl_cell">1,900
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell"> </TD><TD align="left" class="gpotbl_cell">Mating</TD><TD align="right" class="gpotbl_cell">3,200
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell"> </TD><TD align="left" class="gpotbl_cell">Frame</TD><TD align="right" class="gpotbl_cell">1,400
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">4 ft. 0 in.</TD><TD align="right" class="gpotbl_cell">30</TD><TD align="left" class="gpotbl_cell">Perimeter</TD><TD align="right" class="gpotbl_cell">2,300
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell"> </TD><TD align="left" class="gpotbl_cell">Mating</TD><TD align="right" class="gpotbl_cell">3,800
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell"> </TD><TD align="left" class="gpotbl_cell">Frame</TD><TD align="right" class="gpotbl_cell">1,400
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">4 ft. 0 in.</TD><TD align="right" class="gpotbl_cell">40</TD><TD align="left" class="gpotbl_cell">Perimeter</TD><TD align="right" class="gpotbl_cell">2,600
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell"> </TD><TD align="left" class="gpotbl_cell">Mating</TD><TD align="right" class="gpotbl_cell">4,400
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell"> </TD><TD align="left" class="gpotbl_cell">Frame</TD><TD align="right" class="gpotbl_cell">1,900
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">6 ft. 0 in.</TD><TD align="right" class="gpotbl_cell">20</TD><TD align="left" class="gpotbl_cell">Perimeter</TD><TD align="right" class="gpotbl_cell">2,700
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell"> </TD><TD align="left" class="gpotbl_cell">Mating</TD><TD align="right" class="gpotbl_cell">4,700
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell"> </TD><TD align="left" class="gpotbl_cell">Frame</TD><TD align="right" class="gpotbl_cell">1,900
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">6 ft. 0 in.</TD><TD align="right" class="gpotbl_cell">30</TD><TD align="left" class="gpotbl_cell">Perimeter</TD><TD align="right" class="gpotbl_cell">3,200
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell"> </TD><TD align="left" class="gpotbl_cell">Mating</TD><TD align="right" class="gpotbl_cell">5,600
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell"> </TD><TD align="left" class="gpotbl_cell">Frame</TD><TD align="right" class="gpotbl_cell">1,900
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">6 ft. 0 in.</TD><TD align="right" class="gpotbl_cell">40</TD><TD align="left" class="gpotbl_cell">Perimeter</TD><TD align="right" class="gpotbl_cell">3,700
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell"> </TD><TD align="left" class="gpotbl_cell">Mating</TD><TD align="right" class="gpotbl_cell">6,500
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell"> </TD><TD align="left" class="gpotbl_cell">Frame</TD><TD align="right" class="gpotbl_cell">2,400
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">8 ft. 0 in.</TD><TD align="right" class="gpotbl_cell">20</TD><TD align="left" class="gpotbl_cell">Perimeter</TD><TD align="right" class="gpotbl_cell">3,500
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell"> </TD><TD align="left" class="gpotbl_cell">Mating</TD><TD align="right" class="gpotbl_cell">6,100
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell"> </TD><TD align="left" class="gpotbl_cell">Frame</TD><TD align="right" class="gpotbl_cell">2,400
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">8 ft. 0 in.</TD><TD align="right" class="gpotbl_cell">30</TD><TD align="left" class="gpotbl_cell">Perimeter</TD><TD align="right" class="gpotbl_cell">4,200
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell"> </TD><TD align="left" class="gpotbl_cell">Mating</TD><TD align="right" class="gpotbl_cell">7,300
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell"> </TD><TD align="left" class="gpotbl_cell">Frame</TD><TD align="right" class="gpotbl_cell">2,400
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">8 ft. 0 in.</TD><TD align="right" class="gpotbl_cell">40</TD><TD align="left" class="gpotbl_cell">Perimeter</TD><TD align="right" class="gpotbl_cell">4,800
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell"> </TD><TD align="left" class="gpotbl_cell">Mating</TD><TD align="right" class="gpotbl_cell">8,500
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell"> </TD><TD align="left" class="gpotbl_cell">Frame</TD><TD align="right" class="gpotbl_cell">2,900
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">10 ft. 0 in.</TD><TD align="right" class="gpotbl_cell">20</TD><TD align="left" class="gpotbl_cell">Perimeter</TD><TD align="right" class="gpotbl_cell">4,300
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell"> </TD><TD align="left" class="gpotbl_cell">Mating</TD><TD align="right" class="gpotbl_cell">7,600
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell"> </TD><TD align="left" class="gpotbl_cell">Frame</TD><TD align="right" class="gpotbl_cell">2,900
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">10 ft. 0 in.</TD><TD align="right" class="gpotbl_cell">30</TD><TD align="left" class="gpotbl_cell">Perimeter</TD><TD align="right" class="gpotbl_cell">5,100
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell"> </TD><TD align="left" class="gpotbl_cell">Mating</TD><TD align="right" class="gpotbl_cell">9,100
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell"> </TD><TD align="left" class="gpotbl_cell">Frame</TD><TD align="right" class="gpotbl_cell">2,900
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">10 ft. 0 in.</TD><TD align="right" class="gpotbl_cell">40</TD><TD align="left" class="gpotbl_cell">Perimeter</TD><TD align="right" class="gpotbl_cell">6,000
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell"> </TD><TD align="left" class="gpotbl_cell">Mating</TD><TD align="right" class="gpotbl_cell">10,600</TD></TR></TABLE></DIV></DIV>
<NOTE>
<HED>Notes:</HED>
<P>1. See Table to § 3285.312 for cast-in-place footing design by using the noted loads.
</P>
<P>2. Mating wall perimeter piers and footings only required under full height mating walls supporting roof loads. Refer to Figures A and B to § 3285.310.
</P>
<P>3. Table 2 is based on the following design assumptions: maximum 16 ft. nominal section width (15 ft. actual width), 12” eave, 10” I-beam size, 300 lbs. pier dead load, 10 psf roof dead load, 6 psf floor dead load, 35 plf wall dead load, and 10 plf chassis dead load.
</P>
<P>4. Interpolation for other pier spacing is permitted.
</P>
<P>5. The pier spacing and loads shown in the above table do not consider flood or seismic loads and are not intended for use in flood or seismic hazard areas. In those areas, the foundation support system is to be designed by a professional engineer or architect.
</P>
<P>6. See Table to § 3285.312 for sizing of footings.</P></NOTE>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Table 3 to § 3285.303—Ridge Beam Span Footing Capacity
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Mating wall opening (ft)
</TH><TH class="gpotbl_colhed" scope="col">Roof live load (psf)
</TH><TH class="gpotbl_colhed" scope="col">Pier and footing load (lbs.)
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">20</TD><TD align="right" class="gpotbl_cell">1,200
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">5</TD><TD align="right" class="gpotbl_cell">30</TD><TD align="right" class="gpotbl_cell">1,600
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">40</TD><TD align="right" class="gpotbl_cell">1,900
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">20</TD><TD align="right" class="gpotbl_cell">2,300
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">10</TD><TD align="right" class="gpotbl_cell">30</TD><TD align="right" class="gpotbl_cell">3,100
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">40</TD><TD align="right" class="gpotbl_cell">3,800
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">20</TD><TD align="right" class="gpotbl_cell">3,500
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">15</TD><TD align="right" class="gpotbl_cell">30</TD><TD align="right" class="gpotbl_cell">4,700
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">40</TD><TD align="right" class="gpotbl_cell">5,800
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">20</TD><TD align="right" class="gpotbl_cell">4,700
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">20</TD><TD align="right" class="gpotbl_cell">30</TD><TD align="right" class="gpotbl_cell">6,200
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">40</TD><TD align="right" class="gpotbl_cell">7,500
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">20</TD><TD align="right" class="gpotbl_cell">5,800
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">25</TD><TD align="right" class="gpotbl_cell">30</TD><TD align="right" class="gpotbl_cell">7,800
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">40</TD><TD align="right" class="gpotbl_cell">9,700
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">20</TD><TD align="right" class="gpotbl_cell">7,000
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">30</TD><TD align="right" class="gpotbl_cell">30</TD><TD align="right" class="gpotbl_cell">9,300
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">40</TD><TD align="right" class="gpotbl_cell">11,600
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">20</TD><TD align="right" class="gpotbl_cell">8,100
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">35</TD><TD align="right" class="gpotbl_cell">30</TD><TD align="right" class="gpotbl_cell">10,900
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">40</TD><TD align="right" class="gpotbl_cell">13,600</TD></TR></TABLE></DIV></DIV>
<NOTE>
<HED>Notes:</HED>
<P>1. See Table to § 3285.312 for cast-in-place footing design by using the noted loads.
</P>
<P>2. Table 3 is based on the following design assumptions: maximum 16 ft. nominal section width (15 ft. actual width), 10″ I-beam size, 300 lbs. pier dead load, 10 psf roof dead load, 6 psf floor dead load, 35 plf wall dead load, and 10 plf chassis dead load.
</P>
<P>3. Loads listed are maximum column loads for each section of the manufactured home.
</P>
<P>4. Interpolation for maximum allowable pier and column loads is permitted for mate-line openings between those shown in the table.
</P>
<P>5. The pier spacing and loads shown in the above table do not consider flood or seismic loads and are not intended for use in flood or seismic hazard areas. In those areas, the foundation support system must be designed by a professional engineer or registered architect.
</P>
<P>6. See Table to § 3285.312 for sizing of footings.</P></NOTE>
</DIV8>


<DIV8 N="§ 3285.304" NODE="24:5.1.2.1.5.4.1.4" TYPE="SECTION">
<HEAD>§ 3285.304   Pier configuration.</HEAD>
<P>(a) <I>Concrete blocks.</I> Installation instructions for concrete block piers must be developed in accordance with the following provisions and must be consistent with Figures A and B to § 3285.306.
</P>
<P>(1) Load-bearing (not decorative) concrete blocks must have nominal dimensions of at least 8 inches × 8 inches × 16 inches;
</P>
<P>(2) The concrete blocks must be stacked with their hollow cells aligned vertically; and
</P>
<P>(3) When piers are constructed of blocks stacked side-by-side, each layer must be at right angles to the preceding one, as shown in Figure B to § 3285.306.
</P>
<P>(b) <I>Caps.</I> (1) Structural loads must be evenly distributed across capped-hollow block piers, as shown in Figures A and B to § 3285.306.
</P>
<P>(2) Caps must be solid concrete or masonry at least 4 inches in nominal thickness, or hardboard lumber at least 2 inches nominal in thickness; or be corrosion-protected minimum one-half inch thick steel; or be of other listed materials.
</P>
<P>(3) All caps must be of the same length and width as the piers on which they rest.
</P>
<P>(4) When split caps are used on double-stacked blocks, the caps must be installed with the long dimension across the joint in the blocks below.
</P>
<P>(c) <I>Gaps.</I> Any gaps that occur during installation between the bottom of the main chassis beam and foundation support system must be filled by:
</P>
<P>(1) Nominal 4 inch × 6 inch × 1 inch shims to level the home and fill any gaps between the base of the main chassis beam and the top of the pier cap;
</P>
<P>(2) Shims must be used in pairs, as shown in Figures A and B to § 3285.306, and must be driven in tightly so that they do not occupy more than one inch of vertical height; and
</P>
<P>(3) Hardwood plates no thicker than 2 inches nominal in thickness or 2 inch or 4 inch nominal concrete block must be used to fill in any remaining vertical gaps.
</P>
<P>(d) <I>Manufactured pier heights.</I> Manufactured pier heights must be selected so that the adjustable risers do not extend more than 2 inches when finally positioned.


</P>
</DIV8>


<DIV8 N="§ 3285.305" NODE="24:5.1.2.1.5.4.1.5" TYPE="SECTION">
<HEAD>§ 3285.305   Clearance under homes.</HEAD>
<P>A minimum clearance of 12 inches must be maintained between the lowest member of the main frame (I-beam or channel beam) and the grade under all areas of the home.


</P>
</DIV8>


<DIV8 N="§ 3285.306" NODE="24:5.1.2.1.5.4.1.6" TYPE="SECTION">
<HEAD>§ 3285.306   Design procedures for concrete block piers.</HEAD>
<P>(a) <I>Frame piers less than 36 inches high.</I> (1) Frame piers less than 36 inches high are permitted to be constructed of single, open, or closed-cell concrete blocks, 8 inches “ 8 inches “ 16 inches, when the design capacity of the block is not exceeded.
</P>
<P>(2) The frame piers must be installed so that the long sides are at right angles to the supported I-beam, as shown in Figure A to this section.
</P>
<P>(3) The concrete blocks must be stacked with their hollow cells aligned vertically and must be positioned at right angles to the footings.
</P>
<P>(4) Horizontal offsets from the top to the bottom of the pier must not exceed one-half inch.
</P>
<P>(5) Mortar is not required, unless specified in the installation instructions or required by a registered professional engineer or registered architect.
</P>
<P>(b) <I>Frame piers 36 inches to 67 inches high and corner piers.</I> (1) All frame piers between 36 inches and 67 inches high and all corner piers over three blocks high must be constructed out of double, interlocked concrete blocks, as shown in Figure B to this section, when the design capacity of the block is not exceeded. Mortar is not required for concrete block piers, unless otherwise specified in the installation instructions or required by a professional engineer or registered architect.
</P>
<P>(2) Horizontal offsets from the top to the bottom of the pier must not exceed one inch.
</P>
<P>(c) <I>All piers over 67 inches high.</I> Piers over 67 inches high must be designed by a registered professional engineer or registered architect, in accordance with acceptable engineering practice. Mortar is not required for concrete block piers, unless otherwise specified in the manufacturer installation instructions or by the design.
</P>
<img src="/graphics/er19oc07.007.gif"/>
<img src="/graphics/er19oc07.008.gif"/>
</DIV8>


<DIV8 N="§ 3285.307" NODE="24:5.1.2.1.5.4.1.7" TYPE="SECTION">
<HEAD>§ 3285.307   Perimeter support piers.</HEAD>
<P>(a) Piers required at mate-line supports, perimeter piers, and piers at exterior wall openings are permitted to be constructed of single open-cell or closed-cell concrete blocks, with nominal dimensions of 8 inches × 8 inches × 16 inches, to a maximum height of 54 inches, as shown in Figure A to this section, when the design capacity of the block is not exceeded.
</P>
<P>(b) Piers used for perimeter support must be installed with the long dimension parallel to the perimeter rail.


</P>
</DIV8>


<DIV8 N="§ 3285.308" NODE="24:5.1.2.1.5.4.1.8" TYPE="SECTION">
<HEAD>§ 3285.308   Manufactured piers.</HEAD>
<P>(a) Manufactured piers must be listed and labeled and installed to the pier manufacturer's installation instructions. See § 3285.303(d)(2) for additional requirements.
</P>
<P>(b) Metal or other manufactured piers must be provided with protection against weather deterioration and corrosion at least equivalent to that provided by a coating of zinc on steel of .30 oz./ft.
<SU>2</SU> of surface coated.


</P>
</DIV8>


<DIV8 N="§ 3285.309" NODE="24:5.1.2.1.5.4.1.9" TYPE="SECTION">
<HEAD>§ 3285.309   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 3285.310" NODE="24:5.1.2.1.5.4.1.10" TYPE="SECTION">
<HEAD>§ 3285.310   Pier location and spacing.</HEAD>
<P>(a) The location and spacing of piers depends upon the dimensions of the home, the live and dead loads, the type of construction (single-or multi-section), I-beam size, soil bearing capacity, footing size, and such other factors as the location of doors or other openings.
</P>
<P>(b) Mate-line and column pier supports must be in accordance with this subpart and consistent with Figures A through C to this section, unless the pier support and footing configuration is designed by a registered professional engineer or registered architect.
</P>
<P>(c) Piers supporting the frame must be no more than 24 inches from both ends and not more than 120 inches center to center under the main rails.
</P>
<P>(d) <I>Pier support locations.</I> Pier support locations and spacing must be presented to be consistent with Figures A and B to § 3285.312, as applicable, unless alternative designs are provided by a professional engineer or registered architect in accordance with acceptable engineering practice.
</P>
<img src="/graphics/er19oc07.009.gif"/>
<NOTE>
<HED>Notes:</HED>
<P>1. Bottom of footings must extend below frost line depth, unless designed for placement above the frost line. (See § 3285.312(b)).
</P>
<P>2. Piers may be offset up to 6 in. in either direction along the supported members to allow for plumbing, electrical, mechanical, equipment, crawlspaces, or other devices.
</P>
<P>3. Single-stack concrete block pier loads must not exceed 8,000 lbs.
</P>
<P>4. Prefabricated piers must not exceed their approved or listed maximum vertical or horizontal design loads.
</P>
<P>5. When a full-height mating wall does not support the ridge beam, this area is considered an unsupported span—Span B.
</P>
<P>6. Piers are not required at openings in the mating wall that are less than 48 inches in width. Place piers on both sides of mating wall openings that are 48 inches or greater in width. For roof loads of 40 psf or greater, a professional engineer or registered architect must determine the maximum mating wall opening permitted without pier or other supports.</P></NOTE>
<img src="/graphics/er19oc07.010.gif"/>
<NOTE>
<HED>Notes:</HED>
<P>1. Bottom of footings must be below the frost line depth, unless designed for placement above the frost line. (See § 3285.312(b)).
</P>
<P>2. Piers may be offset 6 in. in either direction along supported members to allow for plumbing electrical, mechanical equipment, crawlspaces, or other devices.
</P>
<P>3. Single stack concrete block pier loads must not exceed 8,000 lbs.
</P>
<P>4. Piers are not required at openings in the mating wall that are less than 48 inches in width. Place piers on both sides of mating wall openings that are 48 inches or greater in width. For roof loads of 40 psf or greater, a professional engineer or registered architect must determine the maximum mating wall opening permitted without pier or other supports.
</P>
<P>5. When a full-height mating wall does not support the ridge beam, this area is considered an unsupported span—Span B.
</P>
<P>6. In areas where the open span is greater than 10 ft., intermediate piers and footings must be placed at maximum 10 ft. on center.
</P>
<P>7. Prefabricated piers must not exceed their approved or listed maximum horizontal or vertical design loads.
</P>
<P>8. Column piers are in addition to piers required under full-height mating walls.</P></NOTE>
<img src="/graphics/er19oc07.011.gif"/>
<NOTE>
<HED>Notes:</HED>
<P>1. Mate-line column support piers are installed with the long dimension of the concrete block perpendicular to the rim joists.
</P>
<P>2. Pier and footing designed to support both floor sections. Loads as listed in Table 3 to § 3285.303 are total column loads for both sections.</P></NOTE>
</DIV8>


<DIV8 N="§ 3285.311" NODE="24:5.1.2.1.5.4.1.11" TYPE="SECTION">
<HEAD>§ 3285.311   Required perimeter supports.</HEAD>
<P>(a) Perimeter pier or other supports must be located as follows:
</P>
<P>(1) On both sides of side wall exterior doors (such as entry, patio, and sliding glass doors) and any other side wall openings of 48 inches or greater in width, and under load-bearing porch posts, factory installed fireplaces, and fireplace stoves).
</P>
<P>(2) Other perimeter supports must be:
</P>
<P>(i) Located in accordance with Table 2 to § 3285.303; or
</P>
<P>(ii) Provided by other means such as additional outriggers or floor joists. When this alternative is used, the designs required by § 3285.301 must consider the additional loads in sizing the pier and footing supports under the main chassis beam.
</P>
<P>(b) For roof live loads of 40 psf or greater, a professional engineer or architect must determine the maximum sidewall opening permitted without perimeter pier or other supports.
</P>
<P>(c) The location and installation of any perimeter pier support must not take the home out of compliance with the Manufactured Home Construction and Safety Standards (part 3280 of this chapter).


</P>
</DIV8>


<DIV8 N="§ 3285.312" NODE="24:5.1.2.1.5.4.1.12" TYPE="SECTION">
<HEAD>§ 3285.312   Footings.</HEAD>
<P>(a) Materials approved for footings must provide equal load-bearing capacity and resistance to decay, as required by this section. Footings must be placed on undisturbed soil or fill compacted to 90 percent of maximum relative density. A footing must support every pier. Footings are to be either:
</P>
<P>(1) <I>Concrete.</I>
</P>
<P>(i) Four inch nominal precast concrete pads meeting or exceeding ASTM C 90-02a, Standard Specification for Loadbearing Concrete Masonry Units (incorporated by reference, see § 3285.4), without reinforcement, with at least a 28-day compressive strength of 1,200 pounds per square inch (psi); or
</P>
<P>(ii) Six inch minimum poured-in-place concrete pads, slabs, or ribbons with at least a 28-day compressive strength of 3,000 pounds per square inch (psi). Site-specific soil conditions or design load requirements may also require the use of reinforcing steel in cast-in-place concrete footings.
</P>
<P>(2) <I>Pressure-treated wood.</I>
</P>
<P>(i) Pressure-treated wood footings must consist of a minimum of two layers of nominal 2-inch thick pressure-treated wood, a single layer of nominal 
<FR>3/4</FR>-inch thick, pressure-treated plywood with a maximum size of 16 inches by 16 inches, or at least two layers of 
<FR>3/4</FR>-inch thick, pressure-treated plywood for sizes greater than 16 inches by 16 inches. Plywood used for this purpose is to be rated exposure 1 or exterior sheathing, in accordance with PS1-95, Construction and Industrial Plywood (incorporated by reference, see § 3285.4).
</P>
<P>(ii) Pressure treated lumber is to be treated with a water-borne adhesive, in accordance with AWPA Standard U1-04 (incorporated by reference, see § 3285.4) for Use Category 4B ground contact applications.
</P>
<P>(iii) Cut ends of pressure treated lumber must be field-treated, in accordance with AWPA Standard M4-02 (incorporated by reference, see § 3285.4).
</P>
<P>(3) <I>ABS footing pads.</I>
</P>
<P>(i) ABS footing pads are permitted, provided they are installed in accordance with the pad manufacturer installation instructions and certified for use in the soil classification at the site.
</P>
<P>(ii) ABS footing pads must be listed or labeled for the required load capacity.
</P>
<P>(4) Other Materials. Footings may be of other materials than those identified in this section, provided they are listed for such use and meet all other applicable requirements of this subpart.
</P>
<P>(b) <I>Placement in freezing climates.</I> Footings placed in freezing climates must be designed using methods and practices that prevent the effects of frost heave by one of the following methods:
</P>
<P>(1) Conventional footings. Conventional footings must be placed below the frost line depth for the site unless an insulated foundation or monolithic slab is used (refer to §§ 3285.312(b)(2) and 3285.312(b)(3)). When the frost line depth is not available from the LAHJ, a registered professional engineer, registered architect, or registered geologist must be consulted to determine the required frost line depth for the manufactured home site. This is not subject to the provisions in § 3285.2(c) that also require review by the manufacturer and approval by its DAPIA for any variations to the manufacturer's installation instructions for support and anchoring.
</P>
<P>(2) <I>Monolithic slab systems.</I> A monolithic slab is permitted above the frost line when all relevant site-specific conditions, including soil characteristics, site preparation, ventilation, and insulative properties of the under floor enclosure, are considered and anchorage requirements are accommodated as set out in § 3285.401. The monolithic slab system must be designed by a registered professional engineer or registered architect:
</P>
<P>(i) In accordance with acceptable engineering practice to prevent the effects of frost heave; or
</P>
<P>(ii) In accordance with SEI/ASCE 32-01 (incorporated by reference, see § 3285.4).
</P>
<P>(3) <I>Insulated foundations.</I> An insulated foundation is permitted above the frost line, when all relevant site-specific conditions, including soil characteristics, site preparation, ventilation, and insulative properties of the under floor enclosure, are considered, and the foundation is designed by a registered professional engineer or registered architect:
</P>
<P>(i) In accordance with acceptable engineering practice to prevent the effects of frost heave; or
</P>
<P>(ii) In accordance with SEI/ASCE 32-01 (incorporated by reference, see § 3285.4).
</P>
<P>(c) <I>Sizing of footings.</I> The sizing and layout of footings depends on the load-bearing capacity of the soil, footings, and the piers. See §§ 3285.202 and 3285.303, and Table to 3285.312.
</P>
<img src="/graphics/er19oc07.012.gif"/>
<NOTE>
<HED>Notes:</HED>
<P>1. Refer to Table 1 of § 3285.303 for pier and footing requirements when frame blocking only is used.
</P>
<P>2. In addition to blocking required by § 3285.311, see Table 2 to § 3285.303 for maximum perimeter blocking loads.
</P>
<P>3. End piers under main I-beams may be set back a maximum of 24 inches, as measured from the outside edge of the floor to the center of the pier.
</P>
<P>4. Place piers on both sides of sidewall exterior doors, patio doors, and sliding glass doors; under porch posts, factory-installed fireplaces, and fireplace stoves; under jamb studs at multiple window openings; and at any other sidewall openings 48 inches or greater in width. For roof loads of 40 psf or greater, a professional engineer or registered architect must determine the maximum sidewall opening permitted without perimeter supports. See §§ 3285.307 and 3285.311 for additional requirements and for locating perimeter supports.</P></NOTE>
<img src="/graphics/er19oc07.013.gif"/>
<NOTE>
<HED>Notes:</HED>
<P>1. Refer to Table 1 to § 3285.303 for pier and footing requirements when frame blocking only is used.
</P>
<P>2. In addition to blocking required by § 3285.311, see Tables 2 and 3 to § 3285.303 for maximum perimeter blocking loads.
</P>
<P>3. End piers under main I-beams may be set back a maximum of 24 inches, as measured from the outside edge of the floor to the center of the pier.
</P>
<P>4. Place piers on both sides of sidewall exterior doors, patio doors, and sliding glass doors; under porch posts, factory-installed fireplaces, and fireplace stoves; under jamb studs at multiple window openings; and at any other sidewall openings of 48 inches or greater in width. For roof loads of 40 psf or greater, a professional engineer or registered architect must determine the maximum side wall opening permitted without perimeter supports or mating wall opening permitted without pier or other supports. See §§ 3285.307 and 3285.311 for additional information on requirements and for locating perimeter supports.
</P>
<P>5. When an end pier under the mate-line also serves as a column pier, it may be set back a maximum of 6 in., as measured from the inside edge of the exterior wall to the center of the pier.</P></NOTE>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Table to § 3285.312—The Size and Capacity for Unreinforced Cast-in-Place Footings
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" rowspan="2" scope="col">Soil capacity
<br/>(psf)
</TH><TH class="gpotbl_colhed" rowspan="2" scope="col">Minimum footing size
<br/>(in.)
</TH><TH class="gpotbl_colhed" colspan="2" scope="col">8 in. × 16 in. pier
</TH><TH class="gpotbl_colhed" colspan="2" scope="col">16 in. × 16 in. pier
</TH></TR><TR><TH class="gpotbl_colhed" scope="col">Maximum footing capacity
<br/>(lbs.)
</TH><TH class="gpotbl_colhed" scope="col">Unreinforced cast-in-place minimum thickness
<br/>(in.)
</TH><TH class="gpotbl_colhed" scope="col">Maximum footing capacity
<br/>(lbs.)
</TH><TH class="gpotbl_colhed" scope="col">Unreinforced cast-in-place minimum thickness
<br/>(in.)
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1,000</TD><TD align="right" class="gpotbl_cell">16 × 16</TD><TD align="right" class="gpotbl_cell">1,600</TD><TD align="right" class="gpotbl_cell">6</TD><TD align="right" class="gpotbl_cell">1,600</TD><TD align="right" class="gpotbl_cell">6
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">20 × 20</TD><TD align="right" class="gpotbl_cell">2,600</TD><TD align="right" class="gpotbl_cell">6</TD><TD align="right" class="gpotbl_cell">2,600</TD><TD align="right" class="gpotbl_cell">6
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">24 × 24</TD><TD align="right" class="gpotbl_cell">3,700</TD><TD align="right" class="gpotbl_cell">6</TD><TD align="right" class="gpotbl_cell">3,700</TD><TD align="right" class="gpotbl_cell">6
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">30 × 30</TD><TD align="right" class="gpotbl_cell">5,600</TD><TD align="right" class="gpotbl_cell">8</TD><TD align="right" class="gpotbl_cell">5,800</TD><TD align="right" class="gpotbl_cell">6
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">36 × 36</TD><TD align="right" class="gpotbl_cell">7,900</TD><TD align="right" class="gpotbl_cell">10</TD><TD align="right" class="gpotbl_cell">8,100</TD><TD align="right" class="gpotbl_cell">8
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">42 × 42</TD><TD align="right" class="gpotbl_cell">
<sup>4</sup> 10,700</TD><TD align="right" class="gpotbl_cell">10</TD><TD align="right" class="gpotbl_cell">10,700</TD><TD align="right" class="gpotbl_cell">10
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">48 × 48</TD><TD align="right" class="gpotbl_cell">
<sup>4</sup> 13,100</TD><TD align="right" class="gpotbl_cell">12</TD><TD align="right" class="gpotbl_cell">13,600</TD><TD align="right" class="gpotbl_cell">10
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">1,500</TD><TD align="right" class="gpotbl_cell">16 × 16</TD><TD align="right" class="gpotbl_cell">2,500</TD><TD align="right" class="gpotbl_cell">6</TD><TD align="right" class="gpotbl_cell">2,500</TD><TD align="right" class="gpotbl_cell">6
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">20 × 20</TD><TD align="right" class="gpotbl_cell">4,000</TD><TD align="right" class="gpotbl_cell">6</TD><TD align="right" class="gpotbl_cell">4,000</TD><TD align="right" class="gpotbl_cell">6
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">24 × 24</TD><TD align="right" class="gpotbl_cell">5,600</TD><TD align="right" class="gpotbl_cell">8</TD><TD align="right" class="gpotbl_cell">5,700</TD><TD align="right" class="gpotbl_cell">6
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">30 × 30</TD><TD align="right" class="gpotbl_cell">
<sup>4</sup> 8,500</TD><TD align="right" class="gpotbl_cell">10</TD><TD align="right" class="gpotbl_cell">8,900</TD><TD align="right" class="gpotbl_cell">8
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">36 × 36</TD><TD align="right" class="gpotbl_cell">
<sup>4</sup> 12,400</TD><TD align="right" class="gpotbl_cell">10</TD><TD align="right" class="gpotbl_cell">12,600</TD><TD align="right" class="gpotbl_cell">8
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">42 × 42</TD><TD align="right" class="gpotbl_cell">
<sup>4</sup> 16,500</TD><TD align="right" class="gpotbl_cell">12</TD><TD align="right" class="gpotbl_cell">
<sup>4</sup>16,800</TD><TD align="right" class="gpotbl_cell">10
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">48 × 48</TD><TD align="right" class="gpotbl_cell">
<sup>4</sup> 21,200</TD><TD align="right" class="gpotbl_cell">14</TD><TD align="right" class="gpotbl_cell">
<sup>4</sup>21,600</TD><TD align="right" class="gpotbl_cell">12
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">2,000</TD><TD align="right" class="gpotbl_cell">16 × 16</TD><TD align="right" class="gpotbl_cell">3,400</TD><TD align="right" class="gpotbl_cell">6</TD><TD align="right" class="gpotbl_cell">3,400</TD><TD align="right" class="gpotbl_cell">6
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">20 × 20</TD><TD align="right" class="gpotbl_cell">5,300</TD><TD align="right" class="gpotbl_cell">6</TD><TD align="right" class="gpotbl_cell">5,300</TD><TD align="right" class="gpotbl_cell">6
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">24 × 24</TD><TD align="right" class="gpotbl_cell">7,600</TD><TD align="right" class="gpotbl_cell">8</TD><TD align="right" class="gpotbl_cell">7,700</TD><TD align="right" class="gpotbl_cell">6
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">30 × 30</TD><TD align="right" class="gpotbl_cell">
<sup>4</sup> 11,700</TD><TD align="right" class="gpotbl_cell">10</TD><TD align="right" class="gpotbl_cell">11,900</TD><TD align="right" class="gpotbl_cell">8
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">36 × 36</TD><TD align="right" class="gpotbl_cell">
<sup>4</sup> 16,700</TD><TD align="right" class="gpotbl_cell">15</TD><TD align="right" class="gpotbl_cell">
<sup>4</sup> 16,900</TD><TD align="right" class="gpotbl_cell">10
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">42 × 42</TD><TD align="right" class="gpotbl_cell">
<sup>4</sup> 21,700</TD><TD align="right" class="gpotbl_cell">18</TD><TD align="right" class="gpotbl_cell">
<sup>4</sup> 22,700</TD><TD align="right" class="gpotbl_cell">12
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">2,500</TD><TD align="right" class="gpotbl_cell">16 × 16</TD><TD align="right" class="gpotbl_cell">4,300</TD><TD align="right" class="gpotbl_cell">6</TD><TD align="right" class="gpotbl_cell">4,300</TD><TD align="right" class="gpotbl_cell">6
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">20 × 20</TD><TD align="right" class="gpotbl_cell">6,700</TD><TD align="right" class="gpotbl_cell">6</TD><TD align="right" class="gpotbl_cell">6,700</TD><TD align="right" class="gpotbl_cell">6
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">24 × 24</TD><TD align="right" class="gpotbl_cell">
<sup>4</sup> 9,600</TD><TD align="right" class="gpotbl_cell">8</TD><TD align="right" class="gpotbl_cell">9,700</TD><TD align="right" class="gpotbl_cell">6
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">30 × 30</TD><TD align="right" class="gpotbl_cell">
<sup>4</sup> 14,800</TD><TD align="right" class="gpotbl_cell">10</TD><TD align="right" class="gpotbl_cell">15,000</TD><TD align="right" class="gpotbl_cell">8
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">36 × 36</TD><TD align="right" class="gpotbl_cell">
<sup>4</sup> 20,700</TD><TD align="right" class="gpotbl_cell">12</TD><TD align="right" class="gpotbl_cell">
<sup>4</sup> 21,400</TD><TD align="right" class="gpotbl_cell">10
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">3,000</TD><TD align="right" class="gpotbl_cell">16 × 16</TD><TD align="right" class="gpotbl_cell">5,200</TD><TD align="right" class="gpotbl_cell">6</TD><TD align="right" class="gpotbl_cell">5,200</TD><TD align="right" class="gpotbl_cell">6
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">20 × 20</TD><TD align="right" class="gpotbl_cell">8,100</TD><TD align="right" class="gpotbl_cell">8</TD><TD align="right" class="gpotbl_cell">8,100</TD><TD align="right" class="gpotbl_cell">6
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">24 × 24</TD><TD align="right" class="gpotbl_cell">
<sup>4</sup> 11,500</TD><TD align="right" class="gpotbl_cell">10</TD><TD align="right" class="gpotbl_cell">11,700</TD><TD align="right" class="gpotbl_cell">6
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">30 × 30</TD><TD align="right" class="gpotbl_cell">
<sup>4</sup> 17,800</TD><TD align="right" class="gpotbl_cell">12</TD><TD align="right" class="gpotbl_cell">
<sup>4</sup> 18,100</TD><TD align="right" class="gpotbl_cell">8
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">36 × 36</TD><TD align="right" class="gpotbl_cell">
<sup>4</sup> 25,400</TD><TD align="right" class="gpotbl_cell">14</TD><TD align="right" class="gpotbl_cell">
<sup>4</sup> 25,900</TD><TD align="right" class="gpotbl_cell">10
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">4,000</TD><TD align="right" class="gpotbl_cell">16 × 16</TD><TD align="right" class="gpotbl_cell">7,000</TD><TD align="right" class="gpotbl_cell">6</TD><TD align="right" class="gpotbl_cell">7,000</TD><TD align="right" class="gpotbl_cell">6
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">20 × 20</TD><TD align="right" class="gpotbl_cell">
<sup>4</sup> 10,800</TD><TD align="right" class="gpotbl_cell">8</TD><TD align="right" class="gpotbl_cell">10,900</TD><TD align="right" class="gpotbl_cell">6
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">24 × 24</TD><TD align="right" class="gpotbl_cell">
<sup>4</sup> 15,500</TD><TD align="right" class="gpotbl_cell">10</TD><TD align="right" class="gpotbl_cell">15,600</TD><TD align="right" class="gpotbl_cell">8
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="right" class="gpotbl_cell">30 × 30</TD><TD align="right" class="gpotbl_cell">
<sup>4</sup> 23,300</TD><TD align="right" class="gpotbl_cell">12</TD><TD align="right" class="gpotbl_cell">
<sup>4</sup> 24,200</TD><TD align="right" class="gpotbl_cell">10</TD></TR></TABLE></DIV></DIV>
<NOTE>
<HED>Notes:</HED>
<P>1. The footing sizes shown are for square pads and are based on the area (in.
<SU>2</SU>), shear and bending required for the loads shown. Other configurations, such as rectangular or circular configurations, can be used, provided the area and depth is equal to or greater than the area and depth of the square footing shown in the table, and the distance from the edge of the pier to the edge of the footing is not less than the thickness of the footing.
</P>
<P>2. The 6 in. cast-in-place values can be used for 4 in. unreinforced precast concrete footings.
</P>
<P>3. The capacity values listed have been reduced by the dead load of the concrete footing.
</P>
<P>4. Concrete block piers must not exceed their design capacity of 8,000 lbs. for 8″ × 16″ single stack block and 16,000 lbs. for 16″ × 16″ double stack block.
</P>
<P>5. A registered professional engineer or registered architect must prepare the design, if the design loads exceed the capacity for single or double stack concrete block piers shown in footnote 4. </P></NOTE>
</DIV8>


<DIV8 N="§ 3285.313" NODE="24:5.1.2.1.5.4.1.13" TYPE="SECTION">
<HEAD>§ 3285.313   Combination systems.</HEAD>
<P>Support systems that combine both load-bearing capacity and uplift resistance must also be sized and designed for all applicable design loads.


</P>
</DIV8>


<DIV8 N="§ 3285.314" NODE="24:5.1.2.1.5.4.1.14" TYPE="SECTION">
<HEAD>§ 3285.314   [Reserved]</HEAD>
</DIV8>


<DIV8 N="§ 3285.315" NODE="24:5.1.2.1.5.4.1.15" TYPE="SECTION">
<HEAD>§ 3285.315   Special snow load conditions.</HEAD>
<P>(a) <I>General.</I> Foundations for homes designed for and located in areas with roof live loads greater than 40 psf must be designed by the manufacturer for the special snow load conditions, in accordance with acceptable engineering practice. Where site or other conditions prohibit the use of the manufacturer's instructions, a registered professional engineer or registered architect must design the foundation for the special snow load conditions.
</P>
<P>(b) <I>Ramadas.</I> Ramadas may be used in areas with roof live loads greater than 40 psf. Ramadas are to be self-supporting, except that any connection to the home must be for weatherproofing only.


</P>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:5.1.2.1.5.5" TYPE="SUBPART">
<HEAD>Subpart E—Anchorage Against Wind</HEAD>


<DIV8 N="§ 3285.401" NODE="24:5.1.2.1.5.5.1.1" TYPE="SECTION">
<HEAD>§ 3285.401   Anchoring instructions.</HEAD>
<P>(a) After blocking and leveling, the manufactured home must be secured against the wind by use of anchor assembly type installations or by connecting the home to an alternative foundation system. See § 3285.301.
</P>
<P>(b) For anchor assembly type installations, the installation instructions must require the home to be secured against the wind, as described in this section. The installation instructions and design for anchor type assemblies must be prepared by a registered professional engineer or registered architect, in accordance with acceptable engineering practice, the design loads of the MHCSS, and § 3285.301(d).
</P>
<P>(c) All anchoring and foundation systems must be capable of meeting the loads that the home was designed to withstand required by part 3280, subpart D of this chapter, as shown on the home's data plate. Exception: Manufactured homes that are installed in less restrictive roof load zone and wind zone areas may have foundation or anchorage systems that are capable of meeting the lower design load provisions of the Standards, if the design for the lower requirements is either provided in the installation instructions or the foundation and anchorage system is designed by a professional engineer or registered architect.
</P>
<P>(d) The installation instructions are to include at least the following information and details for anchor assembly-type installations:
</P>
<P>(1) The maximum spacing for installing diagonal ties and any required vertical ties or straps to ground anchors;
</P>
<P>(2) The minimum and maximum angles or dimensions for installing diagonal ties or straps to ground anchors and the main chassis members of the manufactured home;
</P>
<P>(3) Requirements for connecting the diagonal ties to the main chassis members of the manufactured home. If the diagonal ties are attached to the bottom flange of the main chassis beam, the frame must be designed to prevent rotation of the beam;
</P>
<P>(4) Requirements for longitudinal and mating wall tie-downs and anchorage;
</P>
<P>(5) The method of strap attachment to the main chassis member and ground anchor, including provisions for swivel-type connections;
</P>
<P>(6) The methods for protecting vertical and diagonal strapping at sharp corners by use of radius clips or other means; and
</P>
<P>(7) As applicable, the requirements for sizing and installation of stabilizer plates.


</P>
</DIV8>


<DIV8 N="§ 3285.402" NODE="24:5.1.2.1.5.5.1.2" TYPE="SECTION">
<HEAD>§ 3285.402   Ground anchor installations.</HEAD>
<P>(a) <I>Ground anchor certification and testing.</I> (1) Each ground anchor assembly must be manufactured and provided with installation instructions, and must be labeled or otherwise identified and subject to an on-going quality assurance surveillance program in accordance with its listing or certification (see 24 CFR 3285.5) by a nationally recognized testing laboratory. A registered professional engineer or architect must certify that each ground anchor assembly is capable of resisting all loads in paragraph (c) of this section based on the test methods in paragraph (b) of this section for use in soil(s) classified in accordance with § 3285.202.
</P>
<P>(2) Each ground anchor assembly that has been listed prior to November 10, 2014 is not subject to paragraph (b) of this section, provided it has been previously tested in accordance with this paragraph. A professional engineer or registered architect must have certified the testing. The ground anchor must be listed by a nationally recognized testing agency and the listing or certification includes or has met all of the following requirements:
</P>
<P>(i) A minimum of three tests meeting all of the requirements of this section were conducted for each ground anchor assembly design;
</P>
<P>(ii) Each of the ground anchor assembly designs tested must have met or exceeded a working load of 3,150 pounds and sustained an ultimate load of 4,725 pounds in the weakest soil classification for which the anchors were tested and certified;
</P>
<P>(iii) The soil in which the anchor was certified has been classified by one of the methods indicated in § 3285.202 of these Standards and the anchor is not listed for use in a weaker/higher soil classification than tested and identified in the Table to § 3285.202;
</P>
<P>(iv) A test report was provided for each ground anchor assembly design that identifies the soil classification in which the ground anchor was tested and listed and includes complete specifications and dimensions for the ground anchor assembly;
</P>
<P>(v) For each of the ground anchor assemblies tested, the maximum deflection at 3,150 pounds did not exceed two inches vertically or three inches horizontally;
</P>
<P>(vi) For each of the ground anchor assemblies tested, the maximum deflection at 4,725 pounds did not exceed two inches vertically or three inches horizontally;
</P>
<P>(vii) For the stabilizer plate test method, at least three tests were performed at the minimum angle of pull to the horizontal specified in the listing and the minimum angle of pull to the horizontal must have been at least 30 degrees. Any existing ground anchor assembly tests and certifications where the angle of pull was less than 30 degrees will need to be re-evaluated in accordance with paragraph (b) of this section; and
</P>
<P>(viii) For the stabilizer plate test method, the minimum angle of pull to the horizontal is specified in the listing.
</P>
<P>(b) <I>Standard test methods for establishing working load design values of ground anchor assemblies used for new manufactured home installations</I>—(1) <I>Scope.</I> (i) These testing procedures provide standard test methods for establishing both ultimate loads and load resistance design values.
</P>
<P>(ii) Each assembly or component of an anchor assembly must be tested by the methods established by this section, and therefore be suitable, as listed or certified for installation in an appropriately classified soil, for installation of manufactured homes.
</P>
<P>(iii) To secure approval of ground anchor assembly products and components, ground anchor manufacturers must have their products tested and listed by a nationally recognized testing laboratory, or tested and certified by an independent registered professional engineer.
</P>
<P>(iv) The testing laboratory or independent registered engineer must be free from any conflict of interest from the product manufacturer and any of the product manufacturer's affiliates.
</P>
<P>(2) <I>Definitions.</I> The definitions contained in this section apply to the terms used in subpart E of this part.
</P>
<P><I>Allowable displacement limits.</I> Criteria establishing the maximum amount of displacement of a material, assembly, or component under load.
</P>
<P><I>Certification test site.</I> A site used for the purpose of anchor assembly qualification testing in accordance with this section.
</P>
<P><I>Cohesive soil.</I> A soil with sufficient clay content to exhibit substantial plastic behavior when moist or wet (i.e., able to be readily molded or rolled into a 
<FR>1/8</FR> -inch thread at a wide range of moisture contents).
</P>
<P><I>Ground anchor manufacturer.</I> Any person or company engaged in manufacturing or importing ground anchor assemblies.
</P>
<P><I>Non-Cohesive soil.</I> Sand, gravel, and similar soils that are predominantly granular and lack a sufficient quantity of fine, clay-sized particles to exhibit the behavior of cohesive soil as defined in this section.
</P>
<P><I>Ultimate anchor load.</I> The lower of either the highest load achieved during an individual test prior to failure due to exceeding allowable displacement limits or the load at failure of the anchoring equipment or its attachment point to the testing apparatus.
</P>
<P><I>Working anchor load.</I> The ultimate anchor load in pounds divided by a factor of safety of 1.5.
</P>
<P>(3) <I>Determination of soil classification</I>—(i) <I>General description of soil classification.</I> The general description of soil classification is to be determined in accordance with the methods specified in the Table to § 3285.202.
</P>
<P>(ii) <I>Standards for identification of soil and soil classification.</I> The soil test torque probe method must be used at the certification test site for soil classification. At a minimum, the soil test torque probe must be used at three sample locations representative of the extent of the certification site test area. Soil characteristics must be measured at a depth below ground surface of not greater than the anchor helix depth and not less than 
<FR>2/3</FR> of the anchor helix depth for each ground anchor depth evaluated within the test area. The lowest torque probe value resulting in the highest soil classification number must be used. Additional guidance regarding the soil test torque probe method is available at the Appendix to this section and at § 3282.202.
</P>
<P>(iii) <I>Classification in non-cohesive soils.</I> Ground anchor assemblies must be tested and listed or certified, and labeled for use in non-cohesive soil. Ground anchor assemblies are permitted to be tested, listed or certified, and labeled for use in cohesive soil.
</P>
<P>(4) <I>Field testing apparatus.</I> (i) The testing equipment for conducting tests to list or certify a ground anchor assembly for use in a classified soil must be capable of meeting the requirements of paragraph (b)(7) of this section as determined by the testing agency.
</P>
<P>(ii) The testing equipment shall be calibrated to meet the testing requirements of paragraph (b)(7) of this section as determined by the testing agency.
</P>
<P>(5) <I>Test specimens details and selection.</I> (i) Test specimens are to be examined by the independent testing, listing, or certifying entity for conformance with engineered drawings, specifications, and other information provided by the ground anchor manufacturer or producer including:
</P>
<P>(A) Dimensions and specifications on all welds and fasteners;
</P>
<P>(B) Dimensions and specifications of all metal or material;
</P>
<P>(C) Model number and its location on the ground anchor; and
</P>
<P>(ii) Necessary test specimens and products for the installed anchor assembly tests must be randomly selected by the independent testing, listing, or certifying entity.
</P>
<P>(6) <I>Test requirements.</I> (i) Field tests must be performed on each anchor assembly installed in a classified soil as defined in paragraph (b)(3) of this section.
</P>
<P>(ii) Field test apparatuses must be as specified in paragraph (b)(4) of this section, and must conform to the testing requirements of paragraph (b)(7) of this section.
</P>
<P>(iii) Testing equipment shall be adequate for testing as determined by the testing agency.
</P>
<NOTE>
<HED>Note to paragraph (<E T="01">b</E>)(6):</HED>
<P>As a recommended practice, the test rig soil reactions (bearing pads) should not be located closer to the center of the anchor assembly (anchor head) than the lesser of D, 4d, or 32 inches where D is the depth of the anchor helix and d is the diameter of the anchor helix, both in inches. However, experience with a particular test rig, types of anchors, and soil conditions may justify other acceptable dimensional tolerances.</P></NOTE>
<P>(7) <I>Field tests of anchor assemblies.</I> (i) The soil characteristics at the certification test site must be identified and recorded according to paragraph (b)(3) of this section. The date, approximate time, and names of persons conducting and witnessing the anchor assembly tests must also be recorded at each certification test site.
</P>
<P>(ii) Connection of the testing apparatus to the anchor assembly head must provide loading conditions to the anchor head, similar to actual site conditions. Adequacy of the connection must be determined by the testing agency or test engineer.
</P>
<P>(iii) For soil classifications 3, 4A, and 4B, testing must be performed in the lower 50 percentile torque probe value of the soil classification being tested. For soil classifications 1 and 2 the torque probe value must not exceed 750 inch-pounds.
</P>
<P>(iv) A minimum of three tests must be performed and the result of each test must meet or exceed 4,725 pounds pull (3,150 × 1.5 factor of safety) in the direction of pull.
</P>
<P>(v) Special-purpose anchor assemblies, including those needed to accommodate unique design loads identified by manufacturers in their installation instructions, may be certified under this section or to more stringent requirements such as higher working loads, more restrictive anchor head displacements and/or tested angle limitations.
</P>
<P>(vi) <I>Angle of pull.</I> Where the test apparatus configuration results in a changing angle of pull due to anchor assembly displacement during a lateral angle pull test, the angle of pull at the ultimate anchor load is to be recorded as the load angle for the test. Load angles are to be measured relative to the plane of the ground surface and shall be permitted to be rounded to the nearest 5-degree increment.
</P>
<P>(vii) <I>Displacement measurement.</I> Vertical displacement (for all tests) and horizontal displacement (for lateral angle pull tests) must be measured relative to the centerline of the test apparatus' connection to the ground anchor assembly (anchor head) and the ground. A stable ground reference point for displacement measurements must be located independent of the test apparatus and not closer to the anchor assembly than the soil reaction points of the test apparatus. Displacement measurements shall be taken using a device with not less than 
<FR>1/8</FR>-inch reading increments. Measurements shall be permitted to be rounded to the nearest 
<FR>1/8</FR>-inch increment.
</P>
<P>(8) <I>Anchor assembly field test methods.</I> (i) An anchor assembly must be tested in accordance with one or more of the assembly configurations addressed in paragraphs (b)(8)(iii), (iv) and (v) of this section. The as-tested configuration of any anchor assembly is a condition of the listing or certification. Alternate configurations are acceptable provided test conditions appropriately simulate actual end-use conditions and the as-tested configuration is addressed in the manufacturer's installation instructions.
</P>
<P>(ii) Anchor assemblies designed for multiple connections to the manufactured home must be individually tested as specified in paragraphs (b)(8)(iii) and (iv) of this section.
</P>
<P>(iii) Anchor assembly/stabilizer plate method. The following anchor assembly installation and testing must be consistently applied for all tests:
</P>
<P>(A) The ground anchor is to be installed at an angle of 10-15 degrees from vertical to a depth of one-half (
<FR>1/2</FR>) to two-thirds (
<FR>2/3</FR>) of the anchor length.
</P>
<P>(B) A stabilizer plate is to be driven vertically on the side of the ground anchor shaft facing the tensioning equipment three inches (3″) from the shaft and the top of the plate must be installed flush with the soil surface or not more than one inch below the soil surface.
</P>
<P>(C) The ground anchor is to be driven to its full depth into the soil with the bottom of the anchor head not more than 
<FR>3/4</FR> inch (
<FR>3/4</FR>″) above the stabilizer plate.
</P>
<P>(D) The ground anchor head is to be attached to the tensioning equipment such that the tension load and displacement can be recorded. The tensioning equipment must be positioned to load the ground anchor and stabilizer plate at the minimum angle to the test site ground surface for which the anchor is being evaluated.
</P>
<P>(E) The ground anchor is to be pre-tensioned to 500 pounds so that the anchor shaft contacts the stabilizer plate. If the anchor shaft does not come into contact with the stabilizer plate an anchor setting load not to exceed 1,000 pounds is permitted to be applied and then released prior to re-application of the 500-pound pre-tension force.
</P>
<P>(F) The location of the ground anchor head is to be marked after it is pre-tensioned for measuring subsequent movement under test loading.
</P>
<P>(G) Increase the load throughout the test. The recommended rate of load application must be such that the loading to not less than 4725 pounds is reached in not less than 2 minutes from the time the 500 pound pre-tension load is achieved.
</P>
<P>(H) Record the load and displacement, at a minimum of 500-1000 pound increments, such that a minimum of five data points will be obtained to determine a load deflection curve. For each datum, the applied load and the ground anchor head displacement is to be recorded. In addition, the load and displacement is to be recorded at the Failure Mode identified in paragraph (b)(10) of this section. It is permissible to halt the addition of load at each loading increment for up to 60 seconds to facilitate taking displacement readings. The ultimate anchor load of the ground anchor assembly and corresponding displacement is to be recorded. The pre-tension load of 500 pounds should be included in the 4725 pound ultimate anchor load test. It is permissible to interpolate between displacement and load measurements to determine the ultimate anchor load.
</P>
<P>(I) All ground anchor assemblies must be tested to the following:
</P>
<P>(<I>1</I>) Failure due to displacement of the ground anchor assembly as established in paragraph (b)(9) of this section, or
</P>
<P>(<I>2</I>) Failure of either the anchoring equipment or its attachment point to the testing apparatus, or to a minimum of 4725 pounds (when possible tests should be taken to 6000 pounds to provide additional data but this is not required).
</P>
<P>(iv) Vertical in-line anchor assembly method. Anchor assembly installation and withdrawal procedures for test purposes are to be as follows, and be used consistently throughout all tests;
</P>
<P>(A) The ground anchor must be installed vertically.
</P>
<P>(B) The ground anchor must be driven to its full depth into the soil.
</P>
<P>(C) The ground anchor head must be attached to the tensioning equipment such that the load and ground anchor head displacement can be recorded.
</P>
<P>(D) The ground anchor must be pulled in line with the ground anchor shaft.
</P>
<P>(E) The ground anchor shall be pre-tensioned to 500 pounds.
</P>
<P>(F) The location of the ground anchor head must be marked after it is pre-tensioned for measuring subsequent movement under test loading.
</P>
<P>(G) Increase the load throughout the test. The recommended rate of load application shall be such that the loading to not less than 4725 pounds is reached in not less than 2 minutes from the time the 500 pound pre-tension load is achieved.
</P>
<P>(H) Record the load and displacement, at a minimum of 500-1000 pound increments, such that a minimum of five data points will be obtained to determine a load deflection curve. For each datum, the applied load and the ground anchor head displacement is to be recorded. In addition, the load and displacement is to be recorded at the Failure Mode identified in paragraph (b)(10) of this section. It is permissible to halt the addition of load at each loading increment for up to 60 seconds to facilitate taking displacement readings. The ultimate anchor load of the ground anchor assembly and corresponding displacement is to be recorded. The pre-tension load of 500 pounds should be included in the 4725 pound ultimate anchor load test. It shall be permissible to interpolate between displacement and load measurements to determine the Ultimate anchor load.
</P>
<P>(I) All ground anchor assemblies must be tested to the following:
</P>
<P>(<I>1</I>) Failure due to displacement of the ground anchor assembly as established in paragraph (b)(9) of this section, or
</P>
<P>(<I>2</I>) Failure of either the anchoring equipment or its attachment point to the testing apparatus, or to a minimum of 4725 pounds (when possible tests should be taken to 6000 pounds to provide additional data but this is NOT required).
</P>
<P>(v) In line ground anchor assembly method. Ground anchor assembly installation and withdrawal procedures for test purposes must be as follows, and must be used consistently throughout all tests.
</P>
<P>(A) The ground anchor must be installed at an angle from the horizontal ground surface at which it is to be rated.
</P>
<P>(B) The ground anchor must be driven to its full depth into the soil.
</P>
<P>(C) The ground anchor head must be attached to the tensioning equipment such that tension and displacement can be recorded.
</P>
<P>(D) The anchor must be pulled in line with the ground anchor shaft.
</P>
<P>(E) The ground anchor shall be pre-tensioned 500 pounds.
</P>
<P>(F) The location of the ground anchor head is to be marked after it is pre-tensioned for measuring subsequent movement under test loading.
</P>
<P>(G) Increase the load throughout the test. The recommended rate of load application must be such that the loading to not less than 4725 pounds is reached in not less than 2 minutes from the time the 500 pound pre-tension load is achieved.
</P>
<P>(H) Record the load and displacement, at a minimum of 500-1000 pound increments, such that a minimum of five data points will be obtained to determine a load deflection curve. For each datum, the applied load and the ground anchor head displacement is to be recorded. In addition, the load and displacement is to be recorded at the Failure Mode identified in paragraph (b)(10) of this section. It shall be permissible to halt the addition of load at each loading increment for up to 60 seconds to facilitate taking displacement readings. The ultimate anchor load of the ground anchor assembly and corresponding displacement must be recorded. The pre-tension load of 500 pounds should be included in the 4725 pound ultimate anchor load test. It is permissible to interpolate between displacement and load measurements to determine the Ultimate anchor load.
</P>
<P>(I) All ground anchor assemblies must be tested to the following:
</P>
<P>(<I>1</I>) failure due to displacement of the ground anchor assembly as established in paragraph (b)(9) of this section, or
</P>
<P>(<I>2</I>) Failure of either the anchoring equipment or its attachment point to the testing apparatus, or to a minimum of 4725 pounds (when possible tests should be taken to 6000 pounds to provide additional data but this is NOT required)
</P>
<P><I>Note to paragraph (</I><E T="01">b</E><I>)(8).</I> Additional testing at angles of pull greater than the minimum angle of pull may be used to provide design values for specific angles of pull greater than the minimum angle for which evaluation is sought.
</P>
<P>(9) <I>Failure criteria.</I> The following conditions constitute failure of the ground anchor test assembly:
</P>
<P>(i) When the ground anchor head, or its attachment point, displaces 2 inches in the vertical or horizontal direction from its pre-tensioned measurement position prior to reaching a total load of 3150 pounds (including any pretension load).
</P>
<P>(ii) When the ground anchor head, or its attachment point, displaces 2 inches (2″) in the vertical direction or 3 inches (3″) in the horizontal direction from its pre-tensioned measurement position prior to reaching a total load of 4725 pounds (including any pretension load).
</P>
<P>(iii) When breakage of any component of the ground anchor shaft occurs prior to reaching a total load of 4725 pounds.
</P>
<P>(10) <I>Use of ultimate anchor loads to establish the working load design value.</I> (i) The working load design value is the lowest ultimate anchor load determined by testing, divided by a 1.5 factor of safety.
</P>
<P>(ii) The working load design value, for each installation method and soil classification, shall be stated in the ground anchor assembly listing or certification. An anchor tested in a given soil classification number must not be approved for use in a higher/weaker soil classification number. For example an anchor tested in soil classification 3 must not be approved for soil classification 4A or 4B unless it is also tested in those soils. The 500 pound pre-tension is included in the ultimate anchor load.
</P>
<P>(11) <I>Test report.</I> The test report to support the listing or certification for each ground anchor assembly tested is to include all conditions under which the ground anchor assembly was tested, including the following:
</P>
<P>(i) A copy of all test data accumulated during the testing.
</P>
<P>(ii) The soil characteristics including moisture content and methods for determining soil characteristics for each type of soil for which the ground anchoring assembly was evaluated.
</P>
<P>(iii) The model of the ground anchor assembly tested.
</P>
<P>(iv) The ground anchor assembly test method used.
</P>
<P>(v) Detailed drawings including all dimensions of the ground anchor assembly and its components.
</P>
<P>(vi) Method of installation at the test site.
</P>
<P>(vii) Date of installation and date of testing.
</P>
<P>(viii) Location of the certification test site.
</P>
<P>(ix) Test equipment used.
</P>
<P>(x) For each anchor specimen tested: For each load increment the load in pounds and resultant displacements in inches in chart or graph form.
</P>
<P>(xi) The working load design value and ultimate anchor load determined in accordance with paragraph (b)(10) of this section.
</P>
<P>(xii) If required, a description of the stabilizer plate used in each ground anchor assembly/stabilizer plate test, including the name of the manufacturer.
</P>
<P>(xiii) Angle(s) of pull for which the anchor has been tested.
</P>
<P>(xiv) Embedment depth of the ground anchor assembly.
</P>
<P>(xv) The application and orientation of the applied load.
</P>
<P>(xvi) A description of the mode and location of failure for each ground anchor assembly tested.
</P>
<P>(xvii) Name and signature of the nationally recognized testing agency or registered professional engineer certifying the testing and evaluation.
</P>
<P>(xviii) The soil classification(s) for which each ground anchor assembly is certified for use and the working load design value and minimum ultimate load capacity for those soil classification(s).
</P>
<P>(12) <I>Approved ground anchor assemblies.</I> Each ground anchor manufacturer or producer must provide the following information for use of approved ground anchor assemblies and this information must also be included in the listing or certification for each ground anchor assembly:
</P>
<P>(i) Drawings showing ground anchor installation.
</P>
<P>(ii) Specifications for the ground anchor assembly including:
</P>
<P>(A) Soils classifications listed or certified for use;
</P>
<P>(B) The working load and minimum ultimate anchor load capacity for the anchor assembly in the soil classification(s) it is listed or certified for use;
</P>
<P>(C) Model number and its location on the anchor;
</P>
<P>(D) Instructions for use, including pre-tensioning;
</P>
<P>(E) Angle(s) of pull for which the anchor has been listed and certified; and
</P>
<P>(F) Manufacturer, size and type of stabilizer plate required.
</P>
<P>(c) <I>Specifications for tie-down straps and ground anchors</I>—(1) <I>Ground anchors.</I> Ground anchors must be installed in accordance with their listing or certification, be installed to their full depth, be provided with protection against weather deterioration and corrosion at least equivalent to that provided by a coating of zinc on steel of not less than 0.30 oz./ft.
<SU>2</SU> of surface coated, and be capable of resisting a minimum ultimate load of 4,725 lbs. and a working load of 3,150 lbs., as installed, unless reduced capacities are noted in accordance with note 11 of Table 1 to this section or note 12 of Tables 2 and 3 to this section. The ultimate load and working load of ground anchors and anchoring equipment must be determined by a registered professional engineer, registered architect, or tested by a nationally recognized third-party testing agency in accordance with a nationally recognized testing protocol.
</P>
<P>(2) <I>Tie-down straps.</I> A 1
<FR>1/4</FR> inch × 0.035 inch or larger steel strapping conforming to ASTM D 3953—97, Standard Specification for Strapping, Flat Steel and Seals (incorporated by reference, see § 3285.4), Type 1, Grade 1, Finish B, with a minimum total capacity of 4,725 pounds (lbs.) and a working capacity of 3,150 pounds (lbs.) must be used. The tie-down straps must be provided with protection against weather deterioration and corrosion at least equivalent to that provided by a coating of zinc on steel of not less than 0.30 oz./ft.
<SU>2</SU> of surface coated. Slit or cut edges of coated strapping need not be zinc coated.
</P>
<P>(d) <I>Number and location of ground anchors.</I> (1) Ground anchor and anchor strap spacing must be:
</P>
<P>(i) No greater than the spacing shown in Tables 1 through 3 to this section and Figures A and B to this section; or
</P>
<P>(ii) Designed by a registered engineer or architect, in accordance with acceptable engineering practice and the requirements of the MHCSS for any conditions that are outside the parameters and applicability of the Tables 1 through 3 to this section.
</P>
<P>(2) The requirements in paragraph (c) of this section must be used to determine the maximum spacing of ground anchors and their accompanying anchor straps, based on the soil classification determined in accordance with § 3285.202:
</P>
<P>(i) The installed ground anchor type and size (length) must be listed for use in the soil class at the site and for the minimum and maximum angle permitted between the diagonal strap and the ground; and
</P>
<P>(ii) All ground anchors must be installed in accordance with their listing or certification and the ground anchor manufacturer installation instructions; and
</P>
<P>(iii) If required by the ground anchor listing or certification, the correct size and type of stabilizer plate is installed. If metal stabilizer plates are used, they must be provided with protection against weather deterioration and corrosion at least equivalent to that provided by a coating of zinc on steel of not less than 0.30 oz./ft.2 of surface coated. Alternatively, ABS stabilizer plates may be used when listed and certified for such use.
</P>
<P>(3) <I>Longitudinal anchoring.</I> Manufactured homes must also be stabilized against wind in the longitudinal direction in all Wind Zones. Manufactured homes located in Wind Zones II and III must have longitudinal ground anchors installed on the ends of the manufactured home transportable section(s) or be provided with alternative systems that are capable of resisting wind forces in the longitudinal direction. See Figure C to § 3285.402 for an example of one method that may be used to provide longitudinal anchoring. A professional engineer or registered architect must certify the longitudinal anchoring method or any alternative system used as adequate to provide the required stabilization, in accordance with acceptable engineering practice.
</P>
<img src="/graphics/er19oc07.014.gif"/>
<NOTE>
<HED>Notes:</HED>
<P>1. Refer to Tables 1, 2, and 3 to this section for maximum ground anchor spacing.
</P>
<P>2. Longitudinal anchors not shown for clarity; refer to 3285.402(b)(2) for longitudinal anchoring requirements.</P></NOTE>
<img src="/graphics/er19oc07.015.gif"/>
<NOTE>
<HED>Notes:</HED>
<P>1. Vertical Straps are not required in Wind Zone I.
</P>
<P>2. The frame must be designed to prevent rotation of the main chassis beam, when the diagonal ties are not attached to the top flange of the beam. See § 3285.401(d)(3).</P></NOTE>
<img src="/graphics/er19oc07.016.gif"/>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Table 1 to § 3285.402—Maximum Diagonal Tie-Down Strap Spacing, Wind Zone I
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" scope="col">Nominal floor width, single section/multi-section
</TH><TH class="gpotbl_colhed" scope="col">Max. heightfrom ground to diagonal strap attachment
</TH><TH class="gpotbl_colhed" scope="col">I-beam spacing
<br/>82.5 in.
</TH><TH class="gpotbl_colhed" scope="col">I-beamspacing
<br/>99.5 in.
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">12/24 ft. 144 in. nominal section(s)</TD><TD align="left" class="gpotbl_cell">25 in</TD><TD align="left" class="gpotbl_cell">14 ft. 2 in</TD><TD align="left" class="gpotbl_cell">N/A.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">33 in</TD><TD align="left" class="gpotbl_cell">11 ft. 9in</TD><TD align="left" class="gpotbl_cell">N/A.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">46 in</TD><TD align="left" class="gpotbl_cell">9 ft. 1in</TD><TD align="left" class="gpotbl_cell">N/A.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">67 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">14/28 ft. 168 in. nominal section(s)</TD><TD align="left" class="gpotbl_cell">25 in</TD><TD align="left" class="gpotbl_cell">18 ft. 2in</TD><TD align="left" class="gpotbl_cell">15 ft. 11 in.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">33 in</TD><TD align="left" class="gpotbl_cell">16 ft. 1 in</TD><TD align="left" class="gpotbl_cell">13 ft. 6 in.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">46 in</TD><TD align="left" class="gpotbl_cell">13 ft. 3 in</TD><TD align="left" class="gpotbl_cell">10 ft. 8in.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">67 in</TD><TD align="left" class="gpotbl_cell">10 ft. 0 in</TD><TD align="left" class="gpotbl_cell">N/A.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">16/32 ft. 180 in. to 192 in. nominal section(s)</TD><TD align="left" class="gpotbl_cell">25 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">19 ft. 5in.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">33 in</TD><TD align="left" class="gpotbl_cell">19 ft. 0 in</TD><TD align="left" class="gpotbl_cell">17 ft. 5 in.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">46 in</TD><TD align="left" class="gpotbl_cell">16 ft. 5 in</TD><TD align="left" class="gpotbl_cell">14 ft. 7 in.
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">67 in</TD><TD align="left" class="gpotbl_cell">13 ft. 1 in</TD><TD align="left" class="gpotbl_cell">11 ft. 3 in.</TD></TR></TABLE></DIV></DIV>
<NOTE>
<HED>Notes:</HED>
<P>1. Table is based on maximum 90 in. sidewall height.
</P>
<P>2. Table is based on maximum 4 in. inset for ground anchor head from edge of floor or wall.
</P>
<P>3. Table is based on main rail (I-beam) spacing per given column.
</P>
<P>4. Table is based on maximum 4 in. eave width for single-section homes and maximum 12 in. for multi-section homes.
</P>
<P>5. Table is based on maximum 20-degree roof pitch (4.
<FR>3/12</FR>).
</P>
<P>6. Table is based upon the minimum height between the ground and the bottom of the floor joist being 18 inches. Interpolation may be required for other heights from ground to strap attachment.
</P>
<P>7. Additional tie-downs may be required per the home manufacturer instructions.
</P>
<P>8. Ground anchors must be certified for these conditions by a professional engineer, architect, or listed by a nationally recognized testing laboratory.
</P>
<P>9. Ground anchors must be installed to their full depth, and stabilizer plates, if required by the ground anchor listing or certification, must also be installed in accordance with the listing or certification and in accordance with the ground anchor and home manufacturer instructions.
</P>
<P>10. Strapping and anchoring equipment must be certified by a registered professional engineer or registered architect, or listed by a nationally recognized testing agency to resist these specified forces, in accordance with testing procedures in ASTM D 3953-97, Standard Specification for Strapping, Flat Steel and Seals (incorporated by reference, see § 3285.4).
</P>
<P>11. A reduced ground anchor or strap working load capacity will require reduced tie-down strap and anchor spacing.
</P>
<P>12. Ground anchors must not be spaced closer than the minimum spacing permitted by the listing or certification.
</P>
<P>13. Table is based on a 3,150 lbs. working load capacity, and straps must be placed within 2 ft. of the ends of the home.
</P>
<P>14. Table is based on a minimum angle of 30 degrees and a maximum angle of 60 degrees between the diagonal strap and the ground.
</P>
<P>15. Table does not consider flood or seismic loads and is not intended for use in flood or seismic hazard areas. In those areas, the anchorage system is to be designed by a professional engineer or architect.</P></NOTE>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Table 2 to § 3285.402—Maximum Diagonal Tie-Down Strap Spacing, Wind Zone II.
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" rowspan="2" scope="col">Nominal floor width, single section/multi-section
</TH><TH class="gpotbl_colhed" rowspan="2" scope="col">Max. height from ground to diagonal strap attachment
</TH><TH class="gpotbl_colhed" colspan="2" scope="col">Near beam method I-beam spacing
</TH><TH class="gpotbl_colhed" colspan="2" scope="col">Second beam method I-beam spacing
</TH></TR><TR><TH class="gpotbl_colhed" scope="col">82.5 in.
</TH><TH class="gpotbl_colhed" scope="col">99.5 in.
</TH><TH class="gpotbl_colhed" scope="col">82.5 in.
</TH><TH class="gpotbl_colhed" scope="col">99.5 in.
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">12 ft/24 ft. 144 in. nominal section(s)</TD><TD align="left" class="gpotbl_cell">25 in</TD><TD align="left" class="gpotbl_cell">6 ft. 2 in</TD><TD align="left" class="gpotbl_cell">4 ft. 3 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">33 in</TD><TD align="left" class="gpotbl_cell">5 ft. 2 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">46 in</TD><TD align="left" class="gpotbl_cell">4 ft. 0 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">67 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">6 ft 1 in</TD><TD align="left" class="gpotbl_cell">6 ft 3 in
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">14 ft/28 ft. 168 in. nominal section(s)</TD><TD align="left" class="gpotbl_cell">25 in</TD><TD align="left" class="gpotbl_cell">7 ft. 7 in</TD><TD align="left" class="gpotbl_cell">6 ft. 9 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">33 in</TD><TD align="left" class="gpotbl_cell">6 ft. 10 in</TD><TD align="left" class="gpotbl_cell">5 ft. 9 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">46 in</TD><TD align="left" class="gpotbl_cell">5 ft. 7 in</TD><TD align="left" class="gpotbl_cell">4 ft. 6 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">67 in</TD><TD align="left" class="gpotbl_cell">4 ft. 3 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">16 ft/32 ft. 180 in. to 192 in. nominal section(s)</TD><TD align="left" class="gpotbl_cell">25 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">7 ft. 10 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">33 in</TD><TD align="left" class="gpotbl_cell">7 ft. 6 in</TD><TD align="left" class="gpotbl_cell">7 ft. 2 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">46 in</TD><TD align="left" class="gpotbl_cell">6 ft. 9 in</TD><TD align="left" class="gpotbl_cell">6 ft. 0 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">67 in</TD><TD align="left" class="gpotbl_cell">5 ft. 4 in</TD><TD align="left" class="gpotbl_cell">4 ft. 7 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A</TD></TR></TABLE></DIV></DIV>
<NOTE>
<HED>Notes:</HED>
<P>1. Table is based on maximum 90 in. sidewall height.
</P>
<P>2. Table is based on maximum 4 in. inset for ground anchor head from edge of floor or wall.
</P>
<P>3. Tables are based on main rail (I-beam) spacing per given column.
</P>
<P>4. Table is based on maximum 4 in. eave width for single-section homes and maximum 12 in. for multi-section homes.
</P>
<P>5. Table is based on maximum 20-degree roof pitch (4.3/12).
</P>
<P>6. All manufactured homes designed to be located in Wind Zone II must have a vertical tie installed at each diagonal tie location.
</P>
<P>7. Table is based upon the minimum height between the ground and the bottom of the floor joist being 18 inches. Interpolation may be required for other heights from ground to strap attachment.
</P>
<P>8. Additional tie downs may be required per the home manufacturer instructions.
</P>
<P>9. Ground anchors must be certified by a professional engineer, or registered architect, or listed by a nationally recognized testing laboratory.
</P>
<P>10. Ground anchors must be installed to their full depth, and stabilizer plates, if required by the ground anchor listing or certification, must also be installed in accordance with the listing or certification and in accordance with the ground anchor and home manufacturer instructions.
</P>
<P>11. Strapping and anchoring equipment must be certified by a registered professional engineer or registered architect or must be listed by a nationally recognized testing agency to resist these specified forces, in accordance with testing procedures in ASTM D 3953—97, Standard Specification for Strapping, Flat Steel and Seals (incorporated by reference, see § 3285.4).
</P>
<P>12. A reduced ground anchor or strap working load capacity will require reduced tie-down strap and anchor spacing.
</P>
<P>13. Ground anchors must not be spaced closer than the minimum spacing permitted by the listing or certification.
</P>
<P>14. Table is based on a 3,150 lbs. working load capacity, and straps must be placed within 2 ft. of the ends of the home.
</P>
<P>15. Table is based on a minimum angle of 30 degrees and a maximum of 60 degrees between the diagonal strap and the ground.
</P>
<P>16. Table does not consider flood or seismic loads and is not intended for use in flood or seismic hazard areas. In those areas, the anchorage system is to be designed by a professional engineer or architect.</P></NOTE>
<DIV width="100%"><DIV class="table_head"><P class="gpotbl_title">Table 3 to § 3285.402—Maximum Diagonal Tie-down Strap Spacing, Wind Zone III.
</P></DIV><DIV class="gpotbl_div"><TABLE border="1" cellpadding="1" cellspacing="1" class="gpotbl_table" frame="void" width="100%"><TR><TH class="gpotbl_colhed" rowspan="2" scope="col">Nominal floor width, single section/multi-section
</TH><TH class="gpotbl_colhed" rowspan="2" scope="col">Max. height from ground to diagonal strap attachment
</TH><TH class="gpotbl_colhed" colspan="2" scope="col">Near beam method I-beam spacing
</TH><TH class="gpotbl_colhed" colspan="2" scope="col">Second beam method I-beam spacing
</TH></TR><TR><TH class="gpotbl_colhed" scope="col">82.5 in.
</TH><TH class="gpotbl_colhed" scope="col">99.5 in.
</TH><TH class="gpotbl_colhed" scope="col">82.5 in.
</TH><TH class="gpotbl_colhed" scope="col">99.5 in.
</TH></TR><TR><TD align="left" class="gpotbl_cell" scope="row">12 ft./24 ft. 144 in. nominal section(s)</TD><TD align="left" class="gpotbl_cell">25 in</TD><TD align="left" class="gpotbl_cell">5 ft. 1 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">33 in</TD><TD align="left" class="gpotbl_cell">4 ft. 3 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">46 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">67 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">14 ft./28 ft. 168 in. nominal section(s)</TD><TD align="left" class="gpotbl_cell">25 in</TD><TD align="left" class="gpotbl_cell">6 ft. 2 in.</TD><TD align="left" class="gpotbl_cell">5 ft. 7 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">33 in</TD><TD align="left" class="gpotbl_cell">5 ft. 8 in</TD><TD align="left" class="gpotbl_cell">4 ft. 9 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">46 in</TD><TD align="left" class="gpotbl_cell">4 ft. 8 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">67 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row">16 ft./32 ft. 180 in. to 192 in. nominal sections</TD><TD align="left" class="gpotbl_cell">25 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">6 ft. 3 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">33 in</TD><TD align="left" class="gpotbl_cell">6 ft. 1 in</TD><TD align="left" class="gpotbl_cell">5 ft. 11 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">46 in</TD><TD align="left" class="gpotbl_cell">5 ft. 7 in</TD><TD align="left" class="gpotbl_cell">5 ft. 0 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A
</TD></TR><TR><TD align="left" class="gpotbl_cell" scope="row"> </TD><TD align="left" class="gpotbl_cell">67 in</TD><TD align="left" class="gpotbl_cell">4 ft. 5 in</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A</TD><TD align="left" class="gpotbl_cell">N/A</TD></TR></TABLE></DIV></DIV>
<NOTE>
<HED>Notes:</HED>
<P>1. Table is based on maximum 90 in. sidewall height.
</P>
<P>2. Table is based on maximum 4 in. inset for ground anchor head from edge of floor or wall.
</P>
<P>3. Table is based on main rail (I-beam) spacing per given column.
</P>
<P>4. Table is based on maximum 4 in. eave width for single-section homes and maximum 12 in. for multi-section homes.
</P>
<P>5. Table is based on maximum 20-degree roof pitch (4.3/12).
</P>
<P>6. All manufactured homes designed to be located in Wind Zone III must have a vertical tie installed at each diagonal tie location.
</P>
<P>7. Table is based upon the minimum height between the ground and the bottom of the floor joist being 18 inches. Interpolation may be required for other heights from ground to strap attachment.
</P>
<P>8. Additional tie downs may be required per the home manufacturer instructions.
</P>
<P>9. Ground anchors must be certified by a professional engineer, or registered architect, or listed by a nationally recognized testing laboratory.
</P>
<P>10. Ground anchors must be installed to their full depth, and stabilizer plates, if required by the ground anchor listing or certification, must also be installed in accordance with the listing or certification and per the ground anchor and home manufacturer instructions.
</P>
<P>11. Strapping and anchoring equipment must be certified by a registered professional engineer or registered architect or must be listed by a nationally recognized testing agency to resist these specified forces, in accordance with testing procedures in ASTM D 3953-97, Standard Specification for Strapping, Flat Steel and Seals (incorporated by reference, see § 3285.4).
</P>
<P>12. A reduced ground anchor or strap working load capacity will require reduced tie-down strap and anchor spacing.
</P>
<P>13. Ground anchors must not be spaced closer than the minimum spacing permitted by the listing or certification.
</P>
<P>14. Table is based on a 3,150 lbs. working load capacity, and straps must be placed within 2 ft. of the ends of the home.
</P>
<P>15. Table is based on a minimum angle of 30 degrees and a maximum angle of 60 degrees between the diagonal strap and the ground.
</P>
<P>16. Table does not consider flood or seismic loads and is not intended for use in flood or seismic hazard areas. In those areas, the anchorage system is to be designed by a professional engineer or architect.</P></NOTE>
<EXTRACT>
<HD1>Appendix to § 3285.402
</HD1>
<P>Torque Probe Method for determining soil classification: This kit contains a 5-foot long steel earth-probe rod, with a helix at the end. It resembles a wood-boring bit on a larger scale. The tip of the probe is inserted as deep as the bottom helix of the ground anchor assembly that is being considered for installation. The torque wrench is placed on the top of the probe. The torque wrench is used to rotate the probe steadily so one can read the scale on the wrench. If the torque wrench reads 551 inch-pounds or greater, then a Class 2 soil is present according to the Table to 24 CFR 3285.202(a)(3). A Class 3 soil is from 351 to 550 inch-pounds. A Class 4A soil is from 276 to 350 inch-pounds, and a Class 4B soil is from 175 to 275 inch-pounds. When the torque wrench reading is below 175 inch-pounds, a professional engineer should be consulted.</P></EXTRACT>
<CITA TYPE="N">[72 FR 59362, Oct. 19, 2007, as amended at 79 FR 53614, Sept. 10, 2014]


</CITA>
</DIV8>


<DIV8 N="§ 3285.403" NODE="24:5.1.2.1.5.5.1.3" TYPE="SECTION">
<HEAD>§ 3285.403   Sidewall, over-the-roof, mate-line, and shear wall straps.</HEAD>
<P>If sidewall, over-the-roof, mate-line, or shear wall straps are installed on the home, they must be connected to an anchoring assembly.


</P>
</DIV8>


<DIV8 N="§ 3285.404" NODE="24:5.1.2.1.5.5.1.4" TYPE="SECTION">
<HEAD>§ 3285.404   Severe climatic conditions.</HEAD>
<P>In frost-susceptible soil locations, ground anchor augers must be installed below the frost line, unless the foundation system is frost-protected to prevent the effects of frost heave, in accordance with acceptable engineering practice and § 3280.306 of this chapter and § 3285.312.


</P>
</DIV8>


<DIV8 N="§ 3285.405" NODE="24:5.1.2.1.5.5.1.5" TYPE="SECTION">
<HEAD>§ 3285.405   Severe wind zones.</HEAD>
<P>When any part of a home is installed within 1,500 feet of a coastline in Wind Zones II or III, the manufactured home must be designed for the increased requirements, as specified on the home's data plate (refer to § 3280.5(f) of this chapter) in accordance with acceptable engineering practice. Where site or other conditions prohibit the use of the manufacturer's instructions, a registered professional engineer or registered architect, in accordance with acceptable engineering practice, must design anchorage for the special wind conditions.


</P>
</DIV8>


<DIV8 N="§ 3285.406" NODE="24:5.1.2.1.5.5.1.6" TYPE="SECTION">
<HEAD>§ 3285.406   Flood hazard areas.</HEAD>
<P>Refer to § 3285.302 for anchoring requirements in flood hazard areas.


</P>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:5.1.2.1.5.6" TYPE="SUBPART">
<HEAD>Subpart F—Optional Features</HEAD>


<DIV8 N="§ 3285.501" NODE="24:5.1.2.1.5.6.1.1" TYPE="SECTION">
<HEAD>§ 3285.501   Home installation manual supplements.</HEAD>
<P>Supplemental instructions for optional equipment or features must be approved by the DAPIA as not taking the home out of conformance with the requirements of this part, or part 3280 of this chapter, and included with the manufacturer installation instructions.


</P>
</DIV8>


<DIV8 N="§ 3285.502" NODE="24:5.1.2.1.5.6.1.2" TYPE="SECTION">
<HEAD>§ 3285.502   Expanding rooms.</HEAD>
<P>The support and anchoring systems for expanding rooms must be installed in accordance with designs provided by the home manufacturer or prepared by a registered professional engineer or registered architect, in accordance with acceptable engineering practice.


</P>
</DIV8>


<DIV8 N="§ 3285.503" NODE="24:5.1.2.1.5.6.1.3" TYPE="SECTION">
<HEAD>§ 3285.503   Optional appliances.</HEAD>
<P>(a) <I>Comfort cooling systems.</I> When not provided and installed by the home manufacturer, any comfort cooling systems that are installed must be installed according to the appliance manufacturer's installation instructions.
</P>
<P>(1) <I>Air conditioners.</I> Air conditioning equipment must be listed or certified by a nationally recognized testing agency for the application for which the unit is intended and installed in accordance with the terms of its listing or certification (see § 3280.714 of this chapter).
</P>
<P>(i) <I>Energy efficiency.</I> (A) Site-installed central air conditioning equipment must be sized to meet the home's heat gain requirement, in accordance with Chapter 28 of the 1997 ASHRAE Handbook of Fundamentals (incorporated by reference, see § 3285.4) or ACCA Manual J, Residential Cooling Load, 8th Edition (incorporated by reference, see § 3285.4). Information necessary to calculate the home's heat gain can be found on the home's comfort cooling certificate.
</P>
<P>(B) The BTU/hr. rated capacity of the site-installed air conditioning equipment must not exceed the air distribution system's rated BTU/hr. capacity as shown on the home's compliance certificate.
</P>
<P>(ii) <I>Circuit rating.</I> If a manufactured home is factory-provided with an exterior outlet to energize heating and/or air conditioning equipment, the branch circuit rating on the tag adjacent to this outlet must be equal to or greater than the minimum circuit amperage identified on the equipment rating plate.
</P>
<P>(iii) <I>A-coil units.</I> (A) A-coil air conditioning units must be compatible and listed for use with the furnace in the home and installed in accordance with the appliance manufacturer's instructions.
</P>
<P>(B) The air conditioner manufacturer instructions must be followed.
</P>
<P>(C) All condensation must be directed beyond the perimeter of the home by means specified by the equipment manufacturer.
</P>
<P>(2) <I>Heat pumps.</I> Heat pumps must be listed or certified by a nationally recognized testing agency for the application for which the unit is intended and installed in accordance with the terms of its listing or certification. (See § 3280.714 of this chapter).
</P>
<P>(3) <I>Evaporative coolers.</I> (i) A roof-mounted cooler must be listed or certified by a nationally recognized testing agency for the application for which the unit is intended and installed in accordance with the terms of its listing (see § 3280.714 of this chapter).
</P>
<P>(A) Any discharge grill must not be closer than three feet from a smoke alarm.
</P>
<P>(B) Before installing a roof-mounted evaporative cooler on-site, the installer must ensure that the roof will support the weight of the cooler.
</P>
<P>(C) A rigid base must be provided to distribute the cooler weight over multiple roof trusses to adequately support the weight of the evaporative cooler.
</P>
<P>(ii) An evaporative cooler that is not roof-mounted is to be installed in accordance with the requirements of its listing or the equipment manufacturer's instructions, whichever is the more restrictive.
</P>
<P>(b) <I>Fireplaces and wood-stoves.</I> When not provided by the home manufacturer, fireplaces and wood-stoves must be listed for residential use and must be installed in accordance with their listings.
</P>
<P>(c) <I>Appliance venting.</I> (1) All fuel burning heat producing appliances of the vented type except ranges and ovens must be vented to the exterior of the home.
</P>
<P>(2) Upon completion, the venting system must comply with all requirements of §§ 3280.707(b) and 3280.710 of the Manufactured Home Construction and Safety Standards in this chapter.
</P>
<P>(3) When the vent exhausts through the floor, the vent must not terminate under the home and must extend to the home's exterior and through any skirting that may be installed.
</P>
<P>(d) <I>Clothes dryer exhaust duct system.</I> A clothes dryer exhaust duct system must conform with and be completed in accordance with the appliance manufacturer instructions and § 3280.708 of this chapter. The vents must exhaust to the exterior of the home, beyond any perimeter skirting installed around it, as shown in Figure to § 3285.503.
</P>
<img src="/graphics/er19oc07.017.gif"/>
<NOTE>
<HED>Notes:</HED>
<P>1. Installation of the exhaust system must be in accordance with the dryer manufacturer instructions.
</P>
<P>2. Dryer exhaust system must not contain reverse slope or terminate under the home.</P></NOTE>
<CITA TYPE="N">[72 FR 59362, Oct. 19, 2007, as amended at 89 FR 75758, Sept. 16, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 3285.504" NODE="24:5.1.2.1.5.6.1.4" TYPE="SECTION">
<HEAD>§ 3285.504   Skirting.</HEAD>
<P>(a) Skirting, if used, must be of weather-resistant materials or provided with protection against weather deterioration at least equivalent to that provided by a coating of zinc on steel of not less than 0.30 oz./ft.
<SU>2</SU> of surface coated.
</P>
<P>(b) Skirting must not be attached in a manner that can cause water to be trapped between the siding and trim or forced up into the wall cavities trim to which it is attached.
</P>
<P>(c) All wood skirting within 6 inches of the ground must be pressure-treated in accordance with AWPA Standard U1 (incorporated by reference, see § 3285.4) for Use Category 4A, Ground Anchor Contact Applications, or be naturally resistant to decay and termite infestations.
</P>
<P>(d) Skirting must not be attached in a manner that impedes the contraction and expansion characteristics of the home's exterior covering.


</P>
</DIV8>


<DIV8 N="§ 3285.505" NODE="24:5.1.2.1.5.6.1.5" TYPE="SECTION">
<HEAD>§ 3285.505   Crawlspace ventilation.</HEAD>
<P>(a) A crawlspace with skirting must be provided with ventilation openings. The minimum net area of ventilation openings must not be less than one square foot (ft.
<SU>2</SU>) for every 150 square feet (ft.
<SU>2</SU>) of the home's floor area. The total area of ventilation openings may be reduced to one square foot (ft.
<SU>2</SU>) for every 1,500 square feet (ft.
<SU>2</SU>) of the home's floor area, where a uniform 6-mil polyethylene sheet material or other acceptable vapor retarder is installed, according to § 3285.204, on the ground surface beneath the entire floor area of the home.
</P>
<P>(b) Ventilation openings must be placed as high as practicable above the ground.
</P>
<P>(c) Ventilation openings must be located on at least two opposite sides to provide cross-ventilation.
</P>
<P>(d) Ventilation openings must be covered for their full height and width with a perforated corrosion and weather-resistant covering that is designed to prevent the entry of rodents. In areas subject to freezing, the coverings for the ventilation openings must also be of the adjustable type, permitting them to be in the open or closed position, depending on the climatic conditions.
</P>
<P>(e) Access opening(s) not less than 18 inches in width and 24 inches in height and not less than three square feet (ft.
<SU>2</SU>) in area must be provided and must be located so that any utility connections located under the home are accessible.
</P>
<P>(f) Dryer vents and combustion air inlets must pass through the skirting to the outside. Any surface water runoff from the furnace, air conditioning, or water heater drains must be directed away from under the home or collected by other methods identified in § 3285.203.




</P>
</DIV8>


<DIV8 N="§ 3285.506" NODE="24:5.1.2.1.5.6.1.6" TYPE="SECTION">
<HEAD>§ 3285.506   Testing and certification for fire sprinkler systems.</HEAD>
<P>The installer shall ensure that a fire protection technician certifies and tests residential fire sprinkler systems on site in accordance with the home manufacturer's instructions and as outlined in § 3280.214 of this chapter. The fire protection technician conducting the required testing should complete and Fire Sprinkler System Certificate so that a required listed minimum water supply is reported as available for the system. The installer will provide the testing requirements specified in § 3280.612(a) of this chapter and maintain a copy of the test report collected from the fire protection technician.
</P>
<CITA TYPE="N">[89 FR 75758, Sept. 16, 2024]




</CITA>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:5.1.2.1.5.7" TYPE="SUBPART">
<HEAD>Subpart G—Ductwork and Plumbing and Fuel Supply Systems</HEAD>


<DIV8 N="§ 3285.601" NODE="24:5.1.2.1.5.7.1.1" TYPE="SECTION">
<HEAD>§ 3285.601   Field assembly.</HEAD>
<P>Home manufacturers must provide specific installation instructions for the proper field assembly of manufacturer-supplied and shipped loose ducts, plumbing, and fuel supply system parts that are necessary to join all sections of the home and are designed to be located underneath the home. The installation instructions must be designed in accordance with applicable requirements of part 3280, subparts G and H, of this chapter, as specified in this subpart.


</P>
</DIV8>


<DIV8 N="§ 3285.602" NODE="24:5.1.2.1.5.7.1.2" TYPE="SECTION">
<HEAD>§ 3285.602   Utility connections.</HEAD>
<P>Refer to § 3285.904 for considerations for utility system connections.


</P>
</DIV8>


<DIV8 N="§ 3285.603" NODE="24:5.1.2.1.5.7.1.3" TYPE="SECTION">
<HEAD>§ 3285.603   Water supply.</HEAD>
<P>(a) <I>Crossover.</I> Multi-section homes with plumbing in both sections require water-line crossover connections to join all sections of the home. The crossover design requirements are located in, and must be designed in accordance with, § 3280.609 of this chapter.
</P>
<P>(b) <I>Maximum supply pressure and reduction.</I> When the local water supply pressure exceeds 80 psi to the manufactured home, a pressure-reducing valve must be installed.
</P>
<P>(c) <I>Mandatory shutoff valve.</I> (1) An identified and accessible shutoff valve must be installed between the water supply and the inlet.
</P>
<P>(2) The water riser for the shutoff valve connection must be located underneath or adjacent to the home.
</P>
<P>(3) The shutoff valve must be a full-flow gate or ball valve, or equivalent valve.
</P>
<P>(d) <I>Freezing protection.</I> Water line crossovers completed during installation must be protected from freezing. The freeze protection design requirements are located in, and must be designed in accordance with, § 3280.603 of this chapter.
</P>
<P>(1) If subject to freezing temperatures, the water connection must be wrapped with insulation or otherwise protected to prevent freezing.
</P>
<P>(2) In areas subject to freezing or subfreezing temperatures, exposed sections of water supply piping, shutoff valves, pressure reducers, and pipes in water heater compartments must be insulated or otherwise protected from freezing.
</P>
<P>(3) Only heat tape or pipe heating cable listed and certified for its intended purpose is permitted for use, and it must be installed in accordance with tape or cable manufacturer installation instructions.
</P>
<P>(e) <I>Testing procedures.</I> (1) The water system must be inspected and tested for leaks after completion at the site. The installation instructions must provide testing requirements that are in accordance with the piping manufacturer's instructions.
</P>
<P>(2) The water heater must be disconnected when using an air-only test.
</P>
<CITA TYPE="N">[72 FR 59362, Oct. 19, 2007, as amended at 89 FR 75758, Sept. 16, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 3285.604" NODE="24:5.1.2.1.5.7.1.4" TYPE="SECTION">
<HEAD>§ 3285.604   Drainage system.</HEAD>
<P>(a) <I>Crossovers.</I> Multi-section homes with plumbing in more than one section require drainage system crossover connections to join all sections of the home. The crossover design requirements are located in, and must be designed in accordance with, § 3280.610 of this chapter.
</P>
<P>(b) <I>Assembly and support.</I> If portions of the drainage system were shipped loose because they were necessary to join all sections of the home and designed to be located underneath the home, they must be installed and supported in accordance with § 3280.608 of this chapter.
</P>
<P>(c) <I>Proper slopes.</I> Drains must be completed in accordance with § 3280.610 of this chapter.
</P>
<P>(1) Drain lines must not slope less than one-quarter inch per foot, unless otherwise noted on the schematic diagram, as shown in Figure to § 3285.604.
</P>
<P>(2) A slope of one-eight inch per foot may be permitted when a clean-out is installed at the upper end of the run.
</P>
<P>(d) <I>Testing procedures.</I> The drainage system must be inspected and tested for leaks after completion at the site. The installation instructions must provide testing requirements that are consistent with § 3280.612 of this chapter.
</P>
<img src="/graphics/er19oc07.018.gif"/>
</DIV8>


<DIV8 N="§ 3285.605" NODE="24:5.1.2.1.5.7.1.5" TYPE="SECTION">
<HEAD>§ 3285.605   Fuel supply system.</HEAD>
<P>(a) <I>Proper supply pressure.</I> The gas piping system in the home is designed for a pressure that is at least 7 inches of water column [4oz./in.
<SU>2</SU> or 0.25 psi] and not more than 14 inches of water column [8 oz./in.
<SU>2</SU> or 0.5 psi]. If gas from any supply source exceeds, or could exceed this pressure, a regulator must be installed if required by the LAHJ.
</P>
<P>(b) <I>Crossovers.</I> (1) Multi-section homes with fuel supply piping in both sections require crossover connections to join all sections of the home. The crossover design requirements are located in, and must be designed in accordance with, § 3280.705 of this chapter.
</P>
<P>(2) Tools must not be required to connect or remove the flexible connector quick-disconnect.
</P>
<P>(c) <I>Testing procedures.</I> The gas system must be inspected and tested for leaks after completion at the site. The installation instructions must provide testing requirements that are consistent with § 3280.705 of this chapter.


</P>
</DIV8>


<DIV8 N="§ 3285.606" NODE="24:5.1.2.1.5.7.1.6" TYPE="SECTION">
<HEAD>§ 3285.606   Ductwork connections.</HEAD>
<P>(a) Multi-section homes with ductwork in more than one section require crossover connections to complete the duct system of the home. All ductwork connections, including duct collars, must be sealed to prevent air leakage. Galvanized metal straps or tape and mastics listed to UL 181A (incorporated by reference, see § 3285.4), for closure systems with rigid air ducts and connectors, or UL 181B (incorporated by reference, see § 3285.4), for closure systems with flexible air ducts and connectors, must be used around the duct collar and secured tightly to make all connections.
</P>
<P>(b) If metal straps are used, they must be secured with galvanized sheet metal screws.
</P>
<P>(c) Metal ducts must be fastened to the collar with a minimum of three galvanized sheet metal screws equally spaced around the collar.
</P>
<P>(d) Air conditioning or heating ducts must be installed in accordance with applicable requirements of the duct manufacturer installation instructions.
</P>
<P>(e) The duct must be suspended or supported above the ground by straps or other means that are spaced at a maximum distance not to exceed 4′-0″ or as otherwise permitted by the installation instructions. When straps are used to support a flexible type duct, the straps must be at least 
<FR>1/2</FR>″ wider than the spacing of the metal spirals encasing the duct. The ducts must be installed such that the straps cannot slip between any two spirals and arranged under the floor to prevent compression or kinking in any location, as shown in Figures A and B to this section. In-floor crossover ducts are permitted, in accordance with § 3285.606(g).
</P>
<P>(f) Crossover ducts outside the thermal envelope must be insulated with materials that conform to designs consistent with part 3280, subpart F of this chapter.
</P>
<P>(g) In-floor or ceiling crossover duct connections must be installed and sealed to prevent air leakage.
</P>
<img src="/graphics/er19oc07.019.gif"/>
<NOTE>
<HED>Notes:</HED>
<P>1. This system is typically used when a crossover duct has not been built into the floor and the furnace is outside the I-Beam. With this type of installation, it is necessary for two flexible ducts to be installed.
</P>
<P>2. The crossover duct must be listed for exterior use.</P></NOTE>
<img src="/graphics/er19oc07.020.gif"/>
<NOTE>
<HED>Notes:</HED>
<P>1. This system is typically used when a crossover duct has not been built into the floor and the furnace is situated directly over the main duct in one section of the home. A single flexible duct is then used to connect the two sections to each other.
</P>
<P>2. The crossover duct must be listed for exterior use.</P></NOTE>
</DIV8>

</DIV6>


<DIV6 N="H" NODE="24:5.1.2.1.5.8" TYPE="SUBPART">
<HEAD>Subpart H—Electrical Systems and Equipment</HEAD>


<DIV8 N="§ 3285.701" NODE="24:5.1.2.1.5.8.1.1" TYPE="SECTION">
<HEAD>§ 3285.701   Electrical crossovers.</HEAD>
<P>Multi-section homes with electrical wiring in more than one section require crossover connections to join all sections of the home. The crossover must be designed in accordance with part 3280, subpart I of this chapter, and completed in accordance with the directions provided in the installation instructions.


</P>
</DIV8>


<DIV8 N="§ 3285.702" NODE="24:5.1.2.1.5.8.1.2" TYPE="SECTION">
<HEAD>§ 3285.702   Miscellaneous lights and fixtures.</HEAD>
<P>(a) When the home is installed, exterior lighting fixtures, ceiling-suspended (paddle) fans, and chain-hung lighting fixtures are permitted to be installed in accordance with their listings and part 3280, subpart I of this chapter.
</P>
<P>(b) <I>Grounding.</I> (1) All the exterior lighting fixtures and ceiling fans installed per § 3285.702(a) must be grounded by a fixture-grounding device or by a fixture-grounding wire.
</P>
<P>(2) For chain-hung lighting fixtures, as shown in Figure A to this section, both a fixture-grounding device and a fixture-grounding wire must be used. The identified conductor must be the neutral conductor.
</P>
<P>(c) Where lighting fixtures are mounted on combustible surfaces such as hardboard, a limited combustible or noncombustible ring, as shown in Figures A and B to this section, must be installed to completely cover the combustible surface exposed between the fixture canopy and the wiring outlet box.
</P>
<P>(d) <I>Exterior lights.</I> (1) The junction box covers must be removed and wire-to-wire connections must be made using listed wire connectors.
</P>
<P>(2) Wires must be connected black-to-black, white-to-white, and equipment ground-to-equipment ground.
</P>
<P>(3) The wires must be pushed into the box, and the lighting fixture must be secured to the junction box.
</P>
<P>(4) The lighting fixture must be caulked around its base to ensure a watertight seal to the sidewall.
</P>
<P>(5) The light bulb must be installed and the globe must be attached.
</P>
<P>(e) <I>Ceiling fans.</I> (1) Ceiling-suspended (paddle) fans must be connected to junction box listed and marked for ceiling fan application, in accordance with Article 314.27(b) of the National Electrical Code, NFPA No. 70-2005 (incorporated by reference, see § 3285.4); and
</P>
<P>(2) The ceiling fan must be installed with the trailing edges of the blades at least 6 feet 4 inches above the finished floor; and
</P>
<P>(3) The wiring must be connected in accordance with the product manufacturer installation instructions.
</P>
<P>(f) <I>Testing.</I> (1) After completion of all electrical wiring and connections, including crossovers, electrical lights, and ceiling fans, the electrical system must be inspected and tested at the site, in accordance with the testing requirements of § 3280.810(b) of this chapter.
</P>
<P>(2) The installation instructions must indicate that each manufactured home must be subjected to the following tests:
</P>
<P>(i) An electrical continuity test to ensure that metallic parts are effectively bonded;
</P>
<P>(ii) Operational tests of all devices and utilization equipment, except water heaters, electric ranges, electric furnaces, dishwashers, clothes washers/dryers, and portable appliances, to demonstrate that they are connected and in working order; and
</P>
<P>(iii) For electrical equipment installed or completed during installation, electrical polarity checks must be completed to determine that connections have been made properly. Visual verification is an acceptable electrical polarity check.
</P>
<img src="/graphics/er19oc07.021.gif"/>
<img src="/graphics/er19oc07.022.gif"/>
<CITA TYPE="N">[72 FR 59362, Oct. 19, 2007; 72 FR 62308, Nov. 2, 2007]


</CITA>
</DIV8>


<DIV8 N="§ 3285.703" NODE="24:5.1.2.1.5.8.1.3" TYPE="SECTION">
<HEAD>§ 3285.703   Smoke alarms.</HEAD>
<P>Smoke alarms must be functionally tested in accordance with applicable requirements of the smoke alarm manufacturer instructions and must be consistent with § 3280.208 of this chapter.


</P>
</DIV8>


<DIV8 N="§ 3285.704" NODE="24:5.1.2.1.5.8.1.4" TYPE="SECTION">
<HEAD>§ 3285.704   Telephone and cable TV.</HEAD>
<P>Refer to § 3285.906 for considerations pertinent to installation of telephone and cable TV.


</P>
</DIV8>

</DIV6>


<DIV6 N="I" NODE="24:5.1.2.1.5.9" TYPE="SUBPART">
<HEAD>Subpart I—Exterior and Interior Close-Up</HEAD>


<DIV8 N="§ 3285.801" NODE="24:5.1.2.1.5.9.1.1" TYPE="SECTION">
<HEAD>§ 3285.801   Exterior close-up.</HEAD>
<P>(a) Exterior siding and roofing necessary to join all sections of the home must be installed according to the product manufacturer installation instructions and must be fastened in accordance with designs and manufacturer instructions, consistent with §§ 3280.305 and 3280.307 of this chapter. Exterior close-up strips/trim must be fastened securely and sealed with exterior sealant (see figure A to this section).
</P>
<P>(b) <I>Joints and seams.</I> All joints and seams in exterior wall coverings that were disturbed during location of the home must be made weatherproof.
</P>
<P>(c) Prior to installing the siding, the polyethylene sheeting covering exterior walls for transit must be completely removed.
</P>
<P>(d) Prior to completing the exterior close-up, any holes in the roofing must be made weatherproof and sealed with a sealant or other material that is suitable for use with the roofing in which the hole is made.
</P>
<P>(e) <I>Mate-line gasket.</I> The home manufacturer must provide materials and designs for mate-line gaskets or other methods designed to resist the entry of air, water, water vapor, insects, and rodents at all mate-line locations exposed to the exterior (see Figure B to this section).
</P>
<P>(f) <I>Hinged roofs and eaves.</I> Hinged roofs and eaves must be completed during installation in compliance with all requirements of the Manufactured Home Construction and Safety Standards (24 CFR part 3280) and the Manufactured Home Procedural and Enforcement Regulations (24 CFR part 3282). Unless exempted by the following provisions, hinged roofs are also subject to a final inspection for compliance with the Manufactured Home Construction and Safety Standards (24 CFR part 3280) by the IPIA or a qualified independent inspector acceptable to the IPIA. Homes with hinged roofs that are exempted from IPIA inspection are instead to be completed and inspected in accordance with the Manufactured Home Installation Program (24 CFR part 3286). This includes homes:
</P>
<P>(1) That are designed to be located in Wind Zone I;
</P>
<P>(2) In which the roof pitch of the hinged roof is less than 7:12, including designs incorporating peak cap or peak flip assembly components; and
</P>
<P>(3) In which fuel burning appliance flue penetrations are not above the hinge.
</P>
<img src="/graphics/er19oc07.023.gif"/>
<NOTE>
<HED>Notes:</HED>
<P>1. Multi-section homes with horizontal-lap siding can be shipped with no siding on the front and rear end walls.
</P>
<P>2. The manufacturer must install doors/windows trimmed with J-rail or the equivalent and protect all exposed materials not designed for exposure to the weather with plastic sheeting for transport. Siding, starter trim, and vents may be shipped loose in the home for installation on set-up.
</P>
<P>3. All home installers must ensure that all field installed trim, windows, doors, and other openings are properly sealed according to the siding manufacturer installation instructions.</P></NOTE>
<img src="/graphics/er19oc07.024.gif"/>
<NOTE>
<HED>Note:</HED>
<P>On multi-section manufactured homes, install the sealer gasket on the ceiling, end walls, and floor mate-line prior to joining the sections together.</P></NOTE>
<CITA TYPE="N">[72 FR 59362, Oct. 19, 2007, as amended at 80 FR 53731, Sept. 8, 2015; 89 FR 75758, Sept. 16, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 3285.802" NODE="24:5.1.2.1.5.9.1.2" TYPE="SECTION">
<HEAD>§ 3285.802   Structural interconnection of multi-section homes.</HEAD>
<P>(a) For multi-section homes, structural interconnections along the interior and exterior at the mate-line are necessary to join all sections of the home.
</P>
<P>(b) Structural interconnection must be designed in accordance with the requirements located in § 3280.305 of this chapter to ensure a completely integrated structure.
</P>
<P>(c) Upon completion of the exterior close-up, no gaps are permitted between the structural elements being interconnected along the mate-line of multi-section homes. However, prior to completion of the exterior close-up, gaps that do not exceed one inch are permitted between structural elements provided:
</P>
<P>(1) The gaps are closed before completion of close-up;
</P>
<P>(2) The home sections are in contact with each other; and
</P>
<P>(3) The mating gasket is providing a proper seal. All such gaps must be shimmed with dimensional lumber, and fastener lengths used to make connections between the structural elements must be increased to provide adequate penetration into the receiving member.


</P>
</DIV8>


<DIV8 N="§ 3285.803" NODE="24:5.1.2.1.5.9.1.3" TYPE="SECTION">
<HEAD>§ 3285.803   Interior close-up.</HEAD>
<P>(a) All shipping blocking, strapping, or bracing must be removed from appliances, windows, and doors.
</P>
<P>(b) Interior close up items necessary to join all sections of the home or items subject to transportation damage may be packaged or shipped with the home for site installation.
</P>
<P>(c) Shipped-loose wall paneling necessary for the joining of all sections of the home must be installed by using polyvinyl acetate (PVA) adhesive on all framing members and fastened with minimum 1
<FR>1/2</FR> inch long staples or nails at 6 inches on center panel edges and 12 inches on center in the field, unless alternative fastening methods are permitted in the installation instructions (see Figure A to § 3285.803).
</P>
<img src="/graphics/er19oc07.025.gif"/>
<NOTE>
<HED>Note:</HED>
<P>Specific designs must be approved by a DAPIA and included in the home manufacturer installation instructions.</P></NOTE>
</DIV8>


<DIV8 N="§ 3285.804" NODE="24:5.1.2.1.5.9.1.4" TYPE="SECTION">
<HEAD>§ 3285.804   Bottom board repair.</HEAD>
<P>(a) The bottom board covering must be inspected for any loosening or areas that might have been damaged or torn during installation or transportation. Any missing insulation is to be replaced prior to closure and repair of the bottom board.
</P>
<P>(b) Any splits or tears in the bottom board must be resealed with tape or patches in accordance with methods provided in the manufacturers installation instructions.
</P>
<P>(c) Plumbing P-traps must be checked to be sure they are well-insulated and covered.
</P>
<P>(d) All edges of repaired areas must be taped or otherwise sealed.


</P>
</DIV8>

</DIV6>


<DIV6 N="J" NODE="24:5.1.2.1.5.10" TYPE="SUBPART">
<HEAD>Subpart J—Optional Information for Manufacturer's Installation Instructions</HEAD>


<DIV8 N="§ 3285.901" NODE="24:5.1.2.1.5.10.1.1" TYPE="SECTION">
<HEAD>§ 3285.901   General.</HEAD>
<P>The planning and permitting processes, as well as utility connection, access, and other requirements, are outside of HUD's authority and may be governed by LAHJs. These Model Installation Standards do not attempt to comprehensively address such requirements. However, HUD recommends that the manufacturer's installation instructions include the information and advisories in this Subpart J, in order to protect the manufactured home, as constructed in accordance with the MHCSS.


</P>
</DIV8>


<DIV8 N="§ 3285.902" NODE="24:5.1.2.1.5.10.1.2" TYPE="SECTION">
<HEAD>§ 3285.902   Moving manufactured home to location.</HEAD>
<P>It is recommended that the installation instructions indicate that the LAHJ be informed before moving the manufactured home to the site. It is also recommended that the installation instructions indicate that the manufactured home is not to be moved to the site until the site is prepared in accordance with subpart C of this part and when the utilities are available as required by the LAHJ. Examples of related areas that might be addressed in the installation instructions for meeting this recommendation include:
</P>
<P>(a) <I>Access for the transporter.</I> Before attempting to move a home, ensure that the transportation equipment and home can be routed to the installation site and that all special transportation permits required by the LAHJ have been obtained.
</P>
<P>(b) <I>Drainage structures.</I> Ditches and culverts used to drain surface runoff meet the requirements of the LAHJ and are considered in the overall site preparation.


</P>
</DIV8>


<DIV8 N="§ 3285.903" NODE="24:5.1.2.1.5.10.1.3" TYPE="SECTION">
<HEAD>§ 3285.903   Permits, alterations, and on-site structures.</HEAD>
<P>It is recommended that the installation instructions include the following information related to permits, alterations, and on-site structures:
</P>
<P>(a) <I>Issuance of permits.</I> All necessary LAHJ fees should be paid and permits should be obtained, which may include verification that LAHJ requirements regarding encroachments in streets, yards, and courts are obeyed and that permissible setback and fire separation distances from property lines and public roads are met.
</P>
<P>(b) <I>Alterations.</I> Prior to making any alteration to a home or its installation, contact the LAHJ to determine if plan approval and permits are required.
</P>
<P>(c) <I>Installation of an add-on or attached accessory building or structure.</I> Each attached accessory building or structure or add-on is designed to support all of its own live and dead loads, unless the attached accessory building or structure is otherwise included in the installation instructions or designed by a registered professional engineer or registered architect in accordance with this part.


</P>
<CITA TYPE="N">[72 FR 59362, Oct. 19, 2007, as amended at 86 FR 2526, Jan. 12, 2021]


</CITA>
</DIV8>


<DIV8 N="§ 3285.904" NODE="24:5.1.2.1.5.10.1.4" TYPE="SECTION">
<HEAD>§ 3285.904   Utility system connections.</HEAD>
<P>(a) It is recommended that the manufacturer's installation instructions indicate the following procedures be used prior to making any utility system connection:
</P>
<P>(1) Where an LAHJ and utility services are available, that the LAHJ and all utility services each be consulted before connecting the manufactured home to any utilities, or
</P>
<P>(2) Where no LAHJ exists and utility services are available, that the utilities be consulted before connecting the manufactured home to any utility service; or
</P>
<P>(3) In rural areas where no LAHJ or utility services are available, that a professional be consulted prior to making any system connections.
</P>
<P>(b) <I>Qualified personnel.</I> Only qualified personnel familiar with local requirements are permitted to make utility site connections and conduct tests.
</P>
<P>(c) <I>Drainage system.</I> The main drain line must be connected to the site's sewer hookup, using an elastomeric coupler or by other methods acceptable to the LAHJ, as shown in Figure A to this section.
</P>
<P>(d) <I>Fuel supply system.</I> (1) <I>Conversion of gas appliances.</I> A service person acceptable to the LAHJ must convert the appliance from one type of gas to another, following instructions by the manufacturer of each appliance.
</P>
<P>(2) <I>Orifices and regulators.</I> Before making any connections to the site supply, the inlet orifices of all gas-burning appliances must be checked to ensure they are correctly set up for the type of gas to be supplied.
</P>
<P>(3) <I>Connection procedures.</I> Gas-burning appliance vents must be inspected to ensure that they are connected to the appliance and that roof jacks are properly installed and have not come loose during transit.
</P>
<P>(4) <I>Gas appliance start-up procedures.</I> The LAHJ should be consulted concerning the following gas appliance startup procedures:
</P>
<P>(i) One at a time, opening equipment shutoff valves, lighting pilot lights when provided, and adjusting burners and spark igniters for automatic ignition systems, in accordance with each appliance manufacturer instructions.
</P>
<P>(ii) Checking the operation of the furnace and water heater thermostats.
</P>
<img src="/graphics/er19oc07.026.gif"/>
<NOTE>
<HED>Note:</HED>
<P>Fittings in the drainage system that are subject to freezing, such as P-traps in the floor, are protected with insulation by the manufacturer. Insulation must be replaced if it is removed for access to the P-trap.</P></NOTE>
</DIV8>


<DIV8 N="§ 3285.905" NODE="24:5.1.2.1.5.10.1.5" TYPE="SECTION">
<HEAD>§ 3285.905   Heating oil systems.</HEAD>
<P>It is recommended that the installation instructions include the following information related to heating oil systems, when applicable:
</P>
<P>(a) Homes equipped with oil burning furnaces should have their oil supply tank and piping installed and tested on-site, in accordance with NFPA 31, Standard for the Installation of Oil Burning Equipment, 2001 (incorporated by reference, see § 3285.4) or the LAHJ, whichever is more stringent.
</P>
<P>(b) The oil burning furnace manufacturer's instructions should be consulted for pipe size and installation procedures.
</P>
<P>(c) Oil storage tanks and pipe installations should meet all applicable local regulations.
</P>
<P>(d) <I>Tank installation requirements.</I> (1) The tank should be located where it is accessible to service and supply and where it is safe from fire and other hazards.
</P>
<P>(2) In flood hazard areas, the oil storage tank should be anchored and elevated to or above the design flood elevation, or anchored and designed to prevent flotation, collapse, or permanent lateral movement during the design flood.
</P>
<P>(3) <I>Leak test procedure.</I> Before the system is operated, it should be checked for leaks in the tank and supply piping, in accordance with NFPA 31, Standard for the Installation of Oil Burning Equipment, 2001 (incorporated by reference, see § 3285.4) or the requirements of the LAHJ, whichever is more stringent.


</P>
</DIV8>


<DIV8 N="§ 3285.906" NODE="24:5.1.2.1.5.10.1.6" TYPE="SECTION">
<HEAD>§ 3285.906   Telephone and cable TV.</HEAD>
<P>It is recommended that the installation instructions explain that telephone and cable TV wiring should be installed in accordance with requirements of the LAHJ and the National Electrical Code, NFPA No. 70-2005 (incorporated by reference, see § 3285.4).


</P>
</DIV8>


<DIV8 N="§ 3285.907" NODE="24:5.1.2.1.5.10.1.7" TYPE="SECTION">
<HEAD>§ 3285.907   Manufacturer additions to installation instructions.</HEAD>
<P>A manufacturer may include in its installation instructions items that are not required by this chapter as long as the items included by the manufacturer are consistent with the Model Installation Standards in this part and do not take the manufactured home out of compliance with the MHCSS.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="3286" NODE="24:5.1.2.1.6" TYPE="PART">
<HEAD>PART 3286—MANUFACTURED HOME INSTALLATION PROGRAM
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d), 5404, and 5424.
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>73 FR 35292, June 20, 2008, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:5.1.2.1.6.1" TYPE="SUBPART">
<HEAD>Subpart A—Generally Applicable Provisions and Requirements</HEAD>


<DIV8 N="§ 3286.1" NODE="24:5.1.2.1.6.1.1.1" TYPE="SECTION">
<HEAD>§ 3286.1   Purpose.</HEAD>
<P>(a) <I>Purpose.</I> The purpose of this part is to establish the regulations that are applicable to HUD's administration of an installation program that meets the requirements of sections 602 (42 U.S.C. 5401) and 605 (42 U.S.C. 5404) of the National Manufactured Housing Construction and Safety Standards Act of 1974. The purpose of this subpart A is to establish the regulations that are applicable with respect to all manufactured homes before they are sold to a purchaser. The requirements in subpart A apply regardless of whether the actual installation of a manufactured home is regulated by HUD or a state with a qualifying installation program.
</P>
<P>(b) <I>Implementation.</I> This part is effective on October 20, 2008. Implementation will be undertaken in accordance with the phased-in schedule provided by notice published in the <E T="04">Federal Register.</E>


</P>
</DIV8>


<DIV8 N="§ 3286.2" NODE="24:5.1.2.1.6.1.1.2" TYPE="SECTION">
<HEAD>§ 3286.2   Applicability.</HEAD>
<P>(a) <I>All states.</I> The requirements in subpart A are applicable in all states.
</P>
<P>(b) <I>States without installation programs.</I> The requirements in subparts B through H of this part are applicable only in those states where HUD is administering an installation program in accordance with this part.
</P>
<P>(c) <I>States with installation programs.</I> The requirements in subpart I of this part are applicable to only those states that want to administer their own installation programs in lieu of the installation program administered by HUD in accordance with this part.
</P>
<P>(d) <I>Exclusion.</I> None of the requirements of this part apply to:
</P>
<P>(1) Any structure that a manufacturer certifies as being excluded from the coverage of the Act in accordance with § 3282.12 of this chapter; or
</P>
<P>(2) Temporary housing units provided under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 <I>et seq.</I>) to victims of Presidentially declared disasters, when the manufactured home is installed by persons holding an emergency contractor license issued by the state in which the home is sited or installed by the Federal Emergency Management Agency; or
</P>
<P>(3) Any manufactured home after the initial installation of the home following the first purchase of the home in good faith for purposes other than resale. State installation programs may regulate subsequent installations of manufactured homes.
</P>
<P>(4) Any manufactured home installed on Indian reservations.


</P>
</DIV8>


<DIV8 N="§ 3286.3" NODE="24:5.1.2.1.6.1.1.3" TYPE="SECTION">
<HEAD>§ 3286.3   Definitions.</HEAD>
<P>The following definitions apply in this part, except as otherwise noted in the regulations in this part:
</P>
<P><I>Act</I> means the National Manufactured Housing Construction and Safety Standards Act of 1974, 42 U.S.C. 5401-5425.
</P>
<P><I>Certification of installation</I> means the certification, provided by an installer under the HUD-administered installation program in accordance with § 3286.111, that indicates that the manufactured home has been installed in compliance with the appropriate design and instructions and has been inspected as required by this part.
</P>
<P><I>Defect</I> means any defect in the performance, construction, components, or material of a manufactured home that renders the home or any part thereof not fit for the ordinary use for which it was intended.
</P>
<P><I>Design Approval Primary Inspection Agency (DAPIA)</I> means a state agency or private organization that has been accepted by the Secretary, in accordance with the requirement of subpart H of part 3282, to evaluate and either approve or disapprove manufactured home designs and quality control procedures.
</P>
<P><I>Distributor</I> means any person engaged in the sale and distribution of manufactured homes for resale.
</P>
<P><I>HUD</I> means the United States Department of Housing and Urban Development.
</P>
<P><I>HUD-administered installation program</I> means the installation program to be administered by HUD, in accordance with this part, in those states that do not have a qualifying installation program.
</P>
<P><I>Installation</I> means completion of work done specified in § 3286.505 to stabilize, support, anchor, and close up a manufactured home and to join sections of a multi-section manufactured home, when any such work is governed by the federal installation standards in part 3285 of this chapter or by state installation standards that are certified as part of a qualifying installation program.
</P>
<P><I>Installation defect</I> means any defect in the performance, installation, installation components, installation material, or close-up of a manufactured home that renders the home or any part thereof not fit for the ordinary use for which it was intended or otherwise takes the home out of compliance with the Manufactured Home Construction and Safety Standards in 24 CFR part 3280.
</P>
<P><I>Installation design</I> means drawings, specifications, sketches, and the related engineering calculations, tests, and data in support of the installation configurations and systems to be incorporated in the installation of manufactured homes.
</P>
<P><I>Installation instructions</I> means DAPIA-approved instructions provided by the home manufacturer that accompany each new manufactured home and detail the home manufacturer requirements for support and anchoring systems and other work completed at the installation site to comply with the Model Manufactured Home Installation Standards in 24 CFR part 3285 and the Manufactured Home Construction and Safety Standards in 24 CFR part 3280.
</P>
<P><I>Installation standards</I> means the standards established by HUD in 24 CFR part 3285, or any set of state standards that the Secretary has determined provide protection to the residents of manufactured homes that equals or exceeds the protection provided by the standards in 24 CFR part 3285.
</P>
<P><I>Installer</I> means the person or entity who is retained to engage in, or who engages in, the business of directing, supervising, controlling, or correcting the initial installation of a manufactured home, as governed by part 3285 of this chapter.
</P>
<P><I>Installer's license</I> or <I>installation license</I> means the evidence that an installer has met the requirements for installing manufactured homes under the HUD-administered installation program. The term does not incorporate a state-issued installation license or certification, except to the extent provided in this part. The term does not imply that HUD approves or recommends an installer or warrants the work of an installer, and should not be used in any way that indicates HUD approval in violation of 18 U.S.C. 709.
</P>
<P><I>Lessee</I> means the first person who leases a manufactured home from a retailer after the initial installation.
</P>
<P><I>Manufactured home</I> means a structure, transportable in one or more sections, which, in the traveling mode, is 8 body feet or more in width or 40 body feet or more in length, or, when erected on-site, is 320 or more square feet, and which is built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities, and includes the plumbing, heating, air-conditioning, and electrical systems contained therein. The term also includes any structure that meets all the requirements of this paragraph except the size requirements and with respect to which the manufacturer voluntarily files a certification pursuant to § 3282.13 of this chapter and complies with the installation standards established under part 3285 and the construction and safety standards in part 3280 of this chapter, but such term does not include any self-propelled recreational vehicle. Calculations used to determine the number of square feet in a structure will include the total of square feet for each transportable section comprising the completed structure and will be based on the structure's exterior dimensions measured at the largest horizontal projections when erected on-site. These dimensions will include all expandable rooms, cabinets, and other projections containing interior space, but do not include bay windows. Nothing in this definition should be interpreted to mean that a manufactured home necessarily meets the requirements of HUD's Minimum Property Standards (HUD Handbook 4900.1) or that it is automatically eligible for financing under 12 U.S.C. 1709(b).
</P>
<P><I>Manufactured Housing Consensus Committee</I>, or <I>MHCC</I>, means the consensus committee established pursuant to section 604(a)(3) of the Act, 42 U.S.C. 5403(a)(3).
</P>
<P><I>Manufacturer</I> means any person engaged in manufacturing or assembling manufactured homes, including any person engaged in importing manufactured homes for resale.
</P>
<P><I>Manufacturer's certification label</I> means the permanent label that is required by § 3280.11 of this chapter to be affixed to each transportable section of each manufactured home.
</P>
<P><I>Person</I> includes, unless the context indicates otherwise, corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals, but does not include any agency of government or tribal government entity.
</P>
<P><I>Professional engineer or registered architect</I> means an individual or entity: licensed to practice engineering or architecture in a state; and subject to all laws and limitations imposed by the state agency that regulates the applicable profession, and who is engaged in the professional practice of rendering service or creative work requiring education, training, and experience in architecture or engineering sciences and the application of special knowledge of the mathematical, physical, and engineering sciences in such professional or creative work as consultation, investigation, evaluation, planning or design, and supervision of construction for the purpose of securing compliance with specifications and design for any such work.
</P>
<P><I>Purchaser</I> means the first person purchasing a manufactured home in good faith for purposes other than resale.
</P>
<P><I>Qualified trainer</I> means a person who has met the requirements established in subpart D of this part to be recognized as qualified to provide training to installers for purposes of the HUD-administered installation program.
</P>
<P><I>Qualifying installation program</I> means an installation program that a state certifies, in accordance with the requirements set out in subpart I of this part, as meeting the requirements of 42 U.S.C. 5404(c)(3).
</P>
<P><I>Resident</I> means any person residing in the manufactured home.
</P>
<P><I>Retailer</I> means any person engaged in the sale, leasing, or distribution of new manufactured homes primarily to persons who in good faith purchase or lease a manufactured home for purposes other than resale, and, for purposes of this part, the term includes any manufacturer or distributor that sells a manufactured home directly to a purchaser.
</P>
<P><I>Secretary</I> means the Secretary of Housing and Urban Development.
</P>
<P><I>Set up</I> means any assembly or installation of a manufactured home on-site that includes aspects of work that are governed by parts 3280 or 3285 of this chapter.
</P>
<P><I>State</I> includes each of the 50 states, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands, and American Samoa.


</P>
</DIV8>


<DIV8 N="§ 3286.5" NODE="24:5.1.2.1.6.1.1.4" TYPE="SECTION">
<HEAD>§ 3286.5   Overview of installation program.</HEAD>
<P>(a) <I>HUD-administered installation program.</I> HUD will administer the installation program, as established and set out in subparts A through H of this part, in a state unless that state administers its own qualifying installation program. The states in which HUD administers an installation program can be identified under this part by referring to a list on a Web site maintained by HUD or by calling HUD. For convenience only, the current URL of the Web site is <I>http://www.hud.gov/offices/hsg/sfh/mhs/mhshome.cfm</I> and the current toll-free telephone number to contact the HUD Office of Manufactured Housing Programs is 1-800-927-2891, extension 57.
</P>
<P>(b) <I>State-administered installation programs.</I> States that have qualifying installation programs, as established through the procedures set out in subpart I of this part, will administer their own programs, except for generally applicable requirements in this subpart A.
</P>
<P>(c) <I>Manufacturer and retailer requirements.</I> (1) Manufacturers and retailers are responsible for compliance of the home with the construction and safety standards in part 3280 of this chapter, in accordance with the Act and applicable regulations. Manufacturers and retailers must also comply with applicable requirements in this part relating to the installation of the manufactured home.
</P>
<P>(2) In the installation instructions required pursuant to part 3285 of this chapter, the manufacturer must include instructions for supporting the manufactured home or sections of homes temporarily and protecting the interior of the manufactured home or sections of homes from damage, pending the first siting of the home for occupancy. The instructions must be adequate to assure that the temporary supports and weatherization used will be sufficient to prevent the home and its transportable sections from being brought out of conformance with the construction and safety standards in part 3280 of this chapter if the home or its sections is either:
</P>
<P>(i) Stored at any location for more than 30 days; or
</P>
<P>(ii) In the possession of any entity for more than 30 days.
</P>
<P>(d) <I>HUD oversight.</I> The Secretary may take such actions as are authorized by the Act to oversee the system established by the regulations in this part, as the Secretary deems appropriate.


</P>
</DIV8>


<DIV8 N="§ 3286.7" NODE="24:5.1.2.1.6.1.1.5" TYPE="SECTION">
<HEAD>§ 3286.7   Consumer information.</HEAD>
<P>(a) <I>Manufacturer's consumer manual.</I> In each consumer manual provided by a manufacturer as required in § 3282.207 of this chapter, the manufacturer must include a recommendation that any home that has been reinstalled after its original installation should be inspected after it is set up, in order to assure that it has not been damaged and is properly installed.
</P>
<P>(b) <I>Retailer disclosures before sale or lease.</I> Prior to execution of the sales contract to purchase or agreement to lease a manufactured home, the retailer must provide the purchaser or lessee with a consumer disclosure. This disclosure must be in a document separate from the sales or lease agreement. The disclosure must include the following information, as applicable:
</P>
<P>(1) When the installation of the home is in a state that administers its own qualifying installation program, the consumer disclosure must clearly state that the home will be required to comply with all state requirements for the installation of the home;
</P>
<P>(2) When the installation of the home is in a state that does not administer its own qualifying installation program, the consumer disclosure must clearly state that the home will be required to comply with federal requirements, including installation in accordance with federal installation standards set forth in 24 CFR part 3285 and certification by a licensed installer of installation work, regardless of whether the work is performed by the homeowner or anyone else, and when certification includes inspection by an appropriate person;
</P>
<P>(3) For all homes, the home may also be required to comply with additional state and local requirements for its installation;
</P>
<P>(4) For all homes, additional information about the requirements disclosed under paragraphs (b)(1) through (b)(4) of this section is available from the retailer and, in the case of the federal requirements, is available in part 3286 of Title 24 of the Code of Federal Regulations and from the U.S. Department of Housing and Urban Development;
</P>
<P>(5) For all homes, compliance with any additional federal, state, and local requirements, including a requirement for inspection of the installation of the home, may involve additional costs to the purchaser or lessee; and
</P>
<P>(6) For all homes, a recommendation that any home that has been reinstalled after its original installation should be professionally inspected after it is set up, in order to assure that it has not been damaged in transit and is properly installed.


</P>
</DIV8>


<DIV8 N="§ 3286.9" NODE="24:5.1.2.1.6.1.1.6" TYPE="SECTION">
<HEAD>§ 3286.9   Manufacturer shipment responsibilities.</HEAD>
<P>(a) <I>Providing information to HUD.</I> At or before the time that each manufactured home is shipped by a manufacturer, the manufacturer must provide HUD, through the Production Inspection Primary Inspection Agency (IPIA), in accordance with § 3282.552 of this chapter, with information, as applicable, about:
</P>
<P>(1) The serial number and manufacturer's certification label number of the home;
</P>
<P>(2) The manufacturer of the home; and
</P>
<P>(3) The name and address of the retailer or distributor that has arranged for the home to be shipped.
</P>
<P>(b) <I>Manufacturer's installation instructions.</I> The manufacturer is required to provide with each manufactured home, installation designs and instructions for the installation of the manufactured home that have been approved by a DAPIA. A DAPIA must give approval only if the installation designs and instructions provide equal or greater protection than the protection provided under the installation standards.


</P>
</DIV8>


<DIV8 N="§ 3286.11" NODE="24:5.1.2.1.6.1.1.7" TYPE="SECTION">
<HEAD>§ 3286.11   Temporary storage of units.</HEAD>
<P>Pursuant to § 3286.5(c), the manufacturer is required to provide instructions for the temporary support and protection of the interior from damage of its manufactured homes or sections of homes. Every manufacturer, distributor, retailer, or installer that has possession of a home is required to support each transportable section of a manufactured home that is temporarily located on a site used by that manufacturer, distributor, retailer, or installer in accordance with the manufacturer's instructions.


</P>
</DIV8>


<DIV8 N="§ 3286.13" NODE="24:5.1.2.1.6.1.1.8" TYPE="SECTION">
<HEAD>§ 3286.13   Waiver of rights invalid.</HEAD>
<P>Any provision of a contract or agreement entered into by a manufactured home purchaser that seeks to waive any recourse to either the HUD installation program or a state-qualifying installation program is void.


</P>
</DIV8>


<DIV8 N="§ 3286.15" NODE="24:5.1.2.1.6.1.1.9" TYPE="SECTION">
<HEAD>§ 3286.15   Consultation with the Manufactured Housing Consensus Committee (MHCC).</HEAD>
<P>The Secretary will seek input from the MHCC when revising the installation program regulations in this part 3286. Before publication of a proposed rule to revise these regulations, the Secretary will provide the MHCC with a 120-day opportunity to comment on such revision. The MHCC may send to the Secretary any of the MHCC's own recommendations to adopt new installation program regulations or to modify or repeal any of the regulations in this part. Along with each recommendation, the MHCC must set forth pertinent data and arguments in support of the action sought. The Secretary will either: Accept or modify the recommendation and publish it for public comment in accordance with section 553 of the Administrative Procedure Act (5 U.S.C. 553), along with an explanation of the reasons for any such modification; or reject the recommendation entirely, and provide to the MHCC a written explanation of the reasons for the rejection. This section does not supersede section 605 of the National Manufactured Housing Construction and Safety Standards Act.


</P>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:5.1.2.1.6.2" TYPE="SUBPART">
<HEAD>Subpart B—Certification of Installation in HUD-Administered States</HEAD>


<DIV8 N="§ 3286.101" NODE="24:5.1.2.1.6.2.1.1" TYPE="SECTION">
<HEAD>§ 3286.101   Purpose.</HEAD>
<P>The purpose of this subpart B is to establish the systems for tracking and certifying a manufactured home installation that is to be completed in accordance with the HUD-administered installation program.


</P>
</DIV8>


<DIV8 N="§ 3286.102" NODE="24:5.1.2.1.6.2.1.2" TYPE="SECTION">
<HEAD>§ 3286.102   Information provided by manufacturer.</HEAD>
<P>(a) <I>Shipment of home to retailer or distributor.</I> At the time the manufactured home is shipped to a retailer or distributor, the manufacturer must provide notice to the retailer or distributor that tracking information for the home is being provided to HUD, and the information must be updated by the retailer or distributor in accordance with the requirements in § 3286.113. Such notice must include all of the information required in § 3286.9(a). The manufacturer is also encouraged to provide notice to the retailer that reminds the retailer of its other responsibilities under this part.
</P>
<P>(b) <I>Manufacturer's installation instructions.</I> The manufacturer is required to include in its installation instructions for the home a notice that the home is required to be installed in accordance with:
</P>
<P>(1) An installation design and instructions that have been provided by the manufacturer and approved by the Secretary directly or through review by the DAPIA; or
</P>
<P>(2) An installation design and instructions that have been prepared and certified by a professional engineer or registered architect, that have been approved by the manufacturer and the DAPIA as providing a level of protection for residents of the home that equals or exceeds the protection provided by the federal installation standards in part 3285 of this chapter.


</P>
</DIV8>


<DIV8 N="§ 3286.103" NODE="24:5.1.2.1.6.2.1.3" TYPE="SECTION">
<HEAD>§ 3286.103   DAPIA-approved installation instructions.</HEAD>
<P>(a) <I>Providing instructions to purchaser or lessee.</I> (1) For each manufactured home sold or leased to a purchaser or lessee, the retailer must provide the purchaser or lessee with the manufacturer's DAPIA-approved installation instructions for the home, a copy of which is shipped with the home in accordance with § 3285.2 of this chapter.
</P>
<P>(2) If the installation requires a design that is different from that provided by the manufacturer in paragraph (a)(1) of this section, the installation design and instructions must be prepared and certified by a professional engineer or registered architect, that have been approved by the manufacturer and the DAPIA as providing a level of protection for residents of the home that equals or exceeds the protection provided by the Federal installation standards in part 3285 of this chapter. The retailer or manufacturer must provide the installation design and instructions to the purchaser or lessee.
</P>
<P>(b) <I>Providing instructions to installer.</I> When the retailer or manufacturer agrees to provide any set up in connection with the sale of the home, the retailer or manufacturer must provide to the licensed installer a copy of the approved installation instructions required in paragraph (a)(1) or (2) of this section or, as applicable, to each company or, in the case of sole proprietor, to each individual who performs setup or installation work on the home.
</P>
<CITA TYPE="N">[89 FR 75758, Sept. 16, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 3286.105" NODE="24:5.1.2.1.6.2.1.4" TYPE="SECTION">
<HEAD>§ 3286.105   Requirement for installer licensing.</HEAD>
<P>(a) <I>Installer Licensing.</I> The installer that installs a manufactured home in a state that does not have a qualifying installation program must be certified or licensed in accordance with the requirements in subpart C of this part.
</P>
<P>(b) <I>Use of licensed installer.</I> When the retailer or manufacturer agrees to provide any set up in connection with the sale or lease of the home, the retailer or manufacturer must ensure that the installer is licensed in accordance with these regulations.


</P>
</DIV8>


<DIV8 N="§ 3286.107" NODE="24:5.1.2.1.6.2.1.5" TYPE="SECTION">
<HEAD>§ 3286.107   Installation in accordance with standards.</HEAD>
<P>(a) <I>Compliance with installation requirements.</I> (1) For purposes of determining installer compliance, a manufactured home that is subject to the requirements of this subpart B must be installed in accordance with:
</P>
<P>(i) An installation design and instructions that have been provided by the manufacturer and approved by the Secretary directly or through review by the DAPIA; or
</P>
<P>(ii) An installation design and instructions that have been prepared and certified by a professional engineer or registered architect, that have been approved by the manufacturer and the DAPIA as providing a level of protection for residents of the home that equals or exceeds the protection provided by the federal installation standards in part 3285 of this chapter.
</P>
<P>(2) If the installation instructions do not comply with the installation standards, the manufacturer is responsible for any aspect of installation that is completed in accordance with the installation instructions and that does not comply with the installation standards.
</P>
<P>(3) All installation work must be in conformance with accepted practices to ensure durable, livable, and safe housing, and must demonstrate acceptable workmanship reflecting, at a minimum, journeyman quality of work of the various trades.
</P>
<P>(4) Except as set out in paragraph (a)(2) of this section, all installation defects due to the work of the installer are the responsibility of the installer or retailer or manufacturer that retained the installer and must be corrected.
</P>
<P>(5) If the manufacturer or retailer retains the installer, they are jointly and severally responsible with the installer for correcting installation defects.
</P>
<P>(6) Installation defects must be corrected within 60 days after the date of discovery of the installation defect.
</P>
<P>(b) <I>Secretarial approval of manufacturer's designs.</I> A manufacturer that seeks a Secretarial determination under paragraph (a) of this section that its installation designs and instructions provide protection to residents of manufactured homes that equals or exceeds the protection provided by the HUD federal installation standards in part 3285 of this chapter must send the request for such determination and a copy of the applicable designs and instructions to: Administrator, Office of Manufactured Housing Programs, HUD, 451 Seventh Street, SW., Room 9164, Washington, DC 20410-8000, or to a fax number or e-mail address obtained by calling the Office of Manufactured Housing Programs at the toll-free telephone number 1-800-927-2891, extension 57.
</P>
<P>(c) <I>Compliance with construction and safety standards.</I> The installer must not take the home out of compliance with the construction and safety standards applicable under part 3280 of this chapter.
</P>
<P>(d) <I>Homeowner installations.</I> The purchaser of a home sited in a state in which HUD administers the installation program may perform installation work on the home that is in accordance with paragraph (a) of this section, provided that the work is certified in accordance with § 3286.111.
</P>
<P>(e) <I>Compliance with construction and safety standards.</I> This rule does not alter or affect the requirements of the Act concerning compliance with the construction and safety standards, and the implementing regulations in parts 3280 and 3282 of this chapter, which apply regardless of where the work is completed.


</P>
</DIV8>


<DIV8 N="§ 3286.109" NODE="24:5.1.2.1.6.2.1.6" TYPE="SECTION">
<HEAD>§ 3286.109   Inspection requirements—generally.</HEAD>
<P>The installer or the retailer must arrange for the inspection of the installation work on any manufactured home that is sited in a state without a qualifying installation program. Before the home can be occupied, the installer must certify, and the inspector must verify, the home as having been installed in conformance with the requirements of § 3286.107(a). The requirements for installer certification are set out in subpart E of this part.


</P>
</DIV8>


<DIV8 N="§ 3286.111" NODE="24:5.1.2.1.6.2.1.7" TYPE="SECTION">
<HEAD>§ 3286.111   Installer certification of installation.</HEAD>
<P>(a) <I>Certification required.</I> When the installation work is complete, a licensed installer must visit the jobsite and certify that:
</P>
<P>(1) The manufactured home has been installed in accordance with:
</P>
<P>(i) An installation design and instructions that have been provided by the manufacturer and approved by the Secretary directly or through review by the DAPIA; or
</P>
<P>(ii) An installation design and instructions that have been prepared and certified by a professional engineer or registered architect, that have been approved by the manufacturer and the DAPIA as providing a level of protection for residents of the home that equals or exceeds the protection provided by the federal installation standards in part 3285 of this chapter.
</P>
<P>(2) The installation of the home has been inspected as required by § 3286.503 and an inspector has verified the installation as meeting the requirements of this part.
</P>
<P>(3) All installation defects brought to the installer's attention have been corrected.
</P>
<P>(b) <I>Recipients of certification.</I> The installer must provide a signed copy of its certification to the retailer that contracted with the purchaser or lessee for the sale or lease of the home, and to the purchaser or other person with whom the installer contracted for the installation work.


</P>
</DIV8>


<DIV8 N="§ 3286.113" NODE="24:5.1.2.1.6.2.1.8" TYPE="SECTION">
<HEAD>§ 3286.113   Information provided by retailer.</HEAD>
<P>(a) <I>Tracking information.</I> Within 30 days from the time a purchaser or lessee enters into a contract to purchase or lease a manufactured home, the retailer or distributor of the home must provide HUD with the following information:
</P>
<P>(1) The home's serial number and manufacturer's certification label number;
</P>
<P>(2) The name and address of the retailer or distributor that is selling or leasing the home;
</P>
<P>(3) The state and address where the home is to be sited, and, if known, the name of the local jurisdiction; and
</P>
<P>(4) The name of the purchaser or lessee.
</P>
<P>(b) <I>Installation information.</I> Within 30 days from the date of installation, the retailer or distributor of the home must provide HUD with the following information:
</P>
<P>(1) The name, address, telephone number, and license number of the licensed installer;
</P>
<P>(2) The date of installer certification of completion of the installation;
</P>
<P>(3) The date a qualified inspector verified the installation as being in compliance with the requirements of this part; and
</P>
<P>(4) The name, address, and telephone number of the qualified inspector who performed the inspection of the installation as required by § 3286.109.
</P>
<P>(c) <I>Method of providing information.</I> (1) The retailer or distributor must provide a copy of the information set forth in paragraphs (a) and (b) of this section to HUD by providing a copy of the information to HUD by facsimile, e-mail, or first-class or overnight delivery.
</P>
<P>(2) The information must be sent to: Administrator, Office of Manufactured Housing Programs, HUD, 451 Seventh Street, SW., Room 9164, Washington, DC 20410-8000, or to a fax number or e-mail address obtained by calling the Office of Manufactured Housing Programs. For convenience only, the URL of the Web site is <I>http://www.hud.gov/offices/hsg/sfh/mhs/mhshome.cfm</I> and the toll-free telephone number to contact the Office of Manufactured Housing Programs is 1-800-927-2891, extension 57.
</P>
<P>(d) <I>Correcting information.</I> If the information provided by the retailer changes after it has been provided to HUD, the retailer must correct the information within 10 business days after the retailer learns of the change.
</P>
<P>(e) <I>Record retention requirements.</I> The retailer or distributor must maintain a copy of the records required in paragraphs (a) and (b) of this section for 3 years from the date of installation, as under § 3286.115.


</P>
</DIV8>


<DIV8 N="§ 3286.115" NODE="24:5.1.2.1.6.2.1.9" TYPE="SECTION">
<HEAD>§ 3286.115   Date of installation.</HEAD>
<P>The date of installation will be the date the installer has certified that all required inspections have been completed, all utilities are connected, and the manufactured home is ready for occupancy as established, if applicable, by a certificate of occupancy, except as follows: If the manufactured home has not been sold to the first person purchasing the home in good faith for purposes other than resale by the date the home is ready for occupancy, the date of installation is the date of the purchase agreement or sales contract for the manufactured home.


</P>
</DIV8>


<DIV8 N="§ 3286.117" NODE="24:5.1.2.1.6.2.1.10" TYPE="SECTION">
<HEAD>§ 3286.117   Completion of sale date.</HEAD>
<P>(a) <I>Date of sale defined.</I> For purposes of determining the responsibilities of a manufacturer, retailer, or distributor under subpart I of part 3282 of this chapter, the sale of a manufactured home will not be considered complete until all the goods and services that the manufacturer, retailer, or distributor agreed to provide at the time the contract was entered into have been provided.
</P>
<P>(b) <I>Compliance with construction and safety standards.</I> When a retailer or manufacturer is providing the installation and an installer installs a home in such a way as to create an imminent safety hazard or cause the home to not comply with the construction and safety standards in part 3280 of this chapter, and those issues are discovered during the installation of the home, the sale or lease of the home is not complete until the home is corrected.


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:5.1.2.1.6.3" TYPE="SUBPART">
<HEAD>Subpart C—Installer Licensing in HUD-Administered States</HEAD>


<DIV8 N="§ 3286.201" NODE="24:5.1.2.1.6.3.1.1" TYPE="SECTION">
<HEAD>§ 3286.201   Purpose.</HEAD>
<P>The purpose of this subpart C is to establish the requirements for a person to qualify to install a manufactured home in accordance with the HUD-administered installation program. Installers will be required to meet licensing, training, and insurance requirements established in this part. Licensed installers will self-certify their installations of manufactured homes to be in compliance with the Model Manufactured Home Installation Standards in part 3285 of this chapter. In order for such an installer to self-certify compliance with the installation standards, the installer will have to assure that acceptable inspections, as required in subpart F of this part, are performed.


</P>
</DIV8>


<DIV8 N="§ 3286.203" NODE="24:5.1.2.1.6.3.1.2" TYPE="SECTION">
<HEAD>§ 3286.203   Installation license required.</HEAD>
<P>(a) <I>Installation license required.</I> (1) Any individual or entity that engages in the business of directing, supervising, or controlling initial installations of new manufactured homes in a state without a qualifying installation program must itself have, or must employ someone who has, a valid manufactured home installation license issued in accordance with the requirements of this subpart C. For each installation covered under these requirements, the licensed installer, and any company that employs the licensed installer, will be responsible for the proper and competent performance of all employees working under the licensed installer's supervision and for assuring that the installation work complies with this part.
</P>
<P>(2) A business that employs a licensed installer to represent the business and hold the installer's license retains primary responsibility for performance of the installation work in compliance with the requirements of this part.
</P>
<P>(3) A license is not required for individuals working as direct employees of a licensed installer or for the company that employs a licensed installer, provided that those individuals are supervised by a licensed installer.
</P>
<P>(4) The installer must display an original or a copy of a valid installation license at the site of the installation while performing work related to the installation of the home.
</P>
<P>(5) The installer is responsible for understanding and following, as applicable, the approved manufacturer installation instructions and any alternative installation design and instructions that have been certified by a professional engineer or registered architect, that have been approved by the manufacturer and DAPIA as providing a level of protection for residents of the home that equals or exceeds the protection provided by the federal installation standards in part 3285 of this chapter.
</P>
<P>(b) <I>Installation license not required.</I> An installation license is not required for:
</P>
<P>(1) Site preparation that is not subject to the requirements of part 3285 of this chapter;
</P>
<P>(2) Connection of utilities to the manufactured home;
</P>
<P>(3) Add-ons subject to the requirements of § 3282.8(j) of this chapter;
</P>
<P>(4) Temporary installations on dealer, distributor, manufacturer, or other sales or storage lots, when the manufactured home is not serving as an occupied residence;
</P>
<P>(5) Home maintenance, repairs, or corrections, or other noninstallation-related work performed by the home manufacturer under warranty or other obligations or service agreements;
</P>
<P>(6) Installations performed by authorized representatives of the Federal Emergency Management Agency in order to provide emergency housing after a natural disaster; or
</P>
<P>(7) Work performed at the home site that is not covered by the federal installation standards in part 3285 of this chapter or the requirements of this part.


</P>
</DIV8>


<DIV8 N="§ 3286.205" NODE="24:5.1.2.1.6.3.1.3" TYPE="SECTION">
<HEAD>§ 3286.205   Prerequisites for installation license.</HEAD>
<P>(a) <I>Required experience.</I> (1) In order to obtain an installation license to perform manufactured home installations under the HUD-administered installation program, an individual must meet at least one of the following minimum experience requirements:
</P>
<P>(i) 1,800 hours of experience installing manufactured homes;
</P>
<P>(ii) 3,600 hours of experience in the construction of manufactured homes;
</P>
<P>(iii) 3,600 hours of experience as a building construction supervisor;
</P>
<P>(iv) 1,800 hours as an active manufactured home installation inspector;
</P>
<P>(v) Completion of one year of a college program in a construction-related field; or
</P>
<P>(vi) Any combination of experience or education from paragraphs (a)(1)(i) through (a)(1)(v) of this section that totals 3,600 hours.
</P>
<P>(2) An installer who is certified or licensed to perform manufactured home installations in a state with a qualifying installation program may be exempted by the Secretary from complying with these experience requirements, if the Secretary determines that the state requirements are substantially equal to the HUD experience requirements.
</P>
<P>(b) <I>Required training</I>—(1) <I>Initial applicant.</I> An applicant for an installation license must complete 12 hours of training, at least 4 hours of which must consist of training on the federal installation standards in part 3285 of this chapter and the installation program regulations in this part. An installer who is licensed to perform installations in a state with a qualified installation program may postpone the training requirements of this section until October 20, 2009.
</P>
<P>(2) <I>Renewal applicant.</I> In order to qualify for renewal of an installation license, the licensed installer must complete 8 hours of continuing education during the 3-year license period, including in any particular subject area that may be required by HUD to be covered in order to assure adequate understanding of installation requirements.
</P>
<P>(3) The training required under this paragraph (b) must be conducted by trainers who meet the requirements of subpart D of this part and must meet the curriculum requirements established in § 3286.308 or § 3286.309, as applicable.
</P>
<P>(c) <I>Testing.</I> An applicant for an installation license must have successfully received a passing grade of 70 percent on a HUD-administered or HUD-approved examination covering the Manufactured Home Installation Program and the federal installation standards in part 3285.
</P>
<P>(d) <I>Insurance and either a surety bond or irrevocable letter of credit.</I> An applicant for an installation license must provide evidence of and must maintain, when available in the State of installation, insurance and either a surety bond or irrevocable letter of credit that will cover the cost of repairing all damage to the home and its supports caused by the installer during the installation up to and including replacement of the home. HUD may require the licensed installer to provide proof of the surety bond or insurance at any time. The licensed installer must notify HUD of any changes or cancellations with the insurance coverage, surety bond, or irrevocable letter of credit.
</P>
<CITA TYPE="N">[73 FR 35292, June 20, 2008, as amended at 89 FR 75759, Sept. 16, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 3286.207" NODE="24:5.1.2.1.6.3.1.4" TYPE="SECTION">
<HEAD>§ 3286.207   Process for obtaining installation license.</HEAD>
<P>(a) <I>Where to apply.</I> An applicant for an initial or renewed installation license must provide the applicant's legal name, address, and telephone number to HUD. The application, with all required information, must be sent to: Administrator, Office of Manufactured Housing Programs, HUD, 451 Seventh Street, SW., Room 9164, Washington, DC 20410-8000, or to a fax number or e-mail address obtained by calling the Office of Manufactured Housing Programs. For convenience only, the current URL of the Web site is <I>http://www.hud.gov/offices/hsg/sfh/mhs/mhshome.cfm,</I> and the current toll-free telephone number to contact the Office of Manufactured Housing Programs is 1-800-927-2891, extension 57.
</P>
<P>(b) <I>Proof of experience.</I> Every applicant for an initial installation license must submit verification of the experience required in § 3286.205(a). This verification may be in the form of statements by past or present employers or a self-certification that the applicant meets those experience requirements, but HUD may contact the applicant for additional verification at any time. The applicant must also provide to HUD employment information relevant to the applicant's experience as an installer, including the dates and type of such employment. An installer who is certified or licensed to perform manufactured home installations in a state with a qualifying installation program may seek an exemption from the experience requirement by submitting proof of such certification or license.
</P>
<P>(c) <I>Proof of training.</I> Every applicant for an initial installation license, or the renewal of an installation license, must submit verification of successful completion of the training required in § 3286.205(b). This verification must be in the form of a certificate of completion from a qualified trainer that the applicant has completed the requisite number of hours of a qualifying curriculum, as set out in § 3286.308 or § 3286.309.
</P>
<P>(d) <I>Proof of insurance and either a surety bond or irrevocable letter of credit.</I> Every applicant for an installation license must submit the name and proof of the applicant's insurance carrier and the number of the policy, surety bond, or irrevocable letter of credit required in § 3286.205(d).
</P>
<P>(e) <I>Other application submissions.</I> (1) Every applicant for an installation license must submit a list of all states in which the applicant holds a similar installation certification or license, and a list of all states in which the applicant has had such a certification or license revoked, suspended, or denied.
</P>
<P>(2) When the examination is not administered by HUD, every applicant for an initial installation license must submit certification of a passing grade on the examination required by § 3286.205(c).
</P>
<P>(f) <I>Issuance or denial of an installation license.</I> (1) When HUD confirms that an applicant has met the requirements in this subpart C, HUD will either:
</P>
<P>(i) Provide an installation license to the applicant that, as long as the installation license remains in effect, establishes the applicant's qualification to install manufactured homes in a state subject to the HUD-administered installation program; or
</P>
<P>(ii) Provide a written explanation of why HUD deems the applicant to not qualify for an installation license, including on grounds applicable under § 3286.209 for suspension or revocation of an installation license and any other specified evidence of inability to adequately meet the requirements of this part.
</P>
<P>(2) An applicant who is denied an installation license under this subpart C, other than for failure to pass the installation license test, may request from HUD an opportunity for a presentation of views, in accordance with subpart D of part 3282 of this chapter, for the purpose of establishing the applicant's qualifications to obtain an installation license.
</P>
<P>(g) <I>Assignment of license prohibited.</I> An installation license issued under this part may not be transferred, assigned, or pledged to another entity or individual.
</P>
<CITA TYPE="N">[73 FR 35292, June 20, 2008, as amended at 89 FR 75759, Sept. 16, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 3286.209" NODE="24:5.1.2.1.6.3.1.5" TYPE="SECTION">
<HEAD>§ 3286.209   Denial, suspension, or revocation of installation license.</HEAD>
<P>(a) <I>Oversight.</I> The Secretary may make a continuing evaluation of the manner in which each licensed installer is carrying out his or her responsibilities under this subpart C.
</P>
<P>(b) <I>Denial, suspension, or revocation.</I> After notice and an opportunity for a presentation of views in accordance with subpart D of part 3282 of this chapter, the Secretary may deny, suspend, or revoke an installation license under this part. An installation license may be denied, suspended, or revoked for, among other things:
</P>
<P>(1) Providing false records or information to any party;
</P>
<P>(2) Refusing to submit information that the Secretary requires to be submitted;
</P>
<P>(3) Failure to comply with applicable requirements of parts 3285, 3286, or 3288 of this chapter;
</P>
<P>(4) Failure to take appropriate actions upon a failed inspection, as provided in § 3286.509;
</P>
<P>(5) Fraudulently obtaining or attempting to obtain an installation license, or fraudulently or deceptively using an installation license;
</P>
<P>(6) Using or attempting to use an expired, suspended, or revoked installation license;
</P>
<P>(7) Violating state or federal laws that relate to the fitness and qualification or ability of the applicant to install homes; or
</P>
<P>(8) Engaging in poor conduct or workmanship as evidenced by one or more of the following:
</P>
<P>(i) Installing one or more homes that fail to meet the requirements of § 3286.107;
</P>
<P>(ii) An unsatisfied judgment in favor of a consumer;
</P>
<P>(iii) Repeatedly engaging in fraud, deception, misrepresentation, or knowing omissions of material facts relating to installation contracts;
</P>
<P>(iv) Having a similar state installation license or certification denied, suspended, or revoked;
</P>
<P>(v) Having the renewal of a similar state installation license or certification denied for any cause other than failure to pay a renewal fee; or
</P>
<P>(vi) Failure to maintain the insurance and either a surety bond or irrevocable letter of credit, required by § 3286.205(d).
</P>
<P>(c) <I>Other criteria.</I> In deciding whether to suspend or revoke an installation license, the Secretary will consider the impact of the suspension or revocation on other affected parties and will seek to assure that the sales and siting of manufactured homes are not unduly disrupted.
</P>
<P>(d) <I>Reinstating an installation license.</I> An installer whose installation license has been denied, suspended, or revoked may submit a new application in accordance with this subpart C. Installers whose installation licenses have been suspended may also reinstate their installation licenses in any manner provided under the terms of their suspensions.
</P>
<CITA TYPE="N">[73 FR 35292, June 20, 2008, as amended at 89 FR 75759, Sept. 16, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 3286.211" NODE="24:5.1.2.1.6.3.1.6" TYPE="SECTION">
<HEAD>§ 3286.211   Expiration and renewal of installation licenses.</HEAD>
<P>(a) <I>Expiration.</I> Each installation license issued or renewed under this subpart C will expire 3 years after the date of its issuance or renewal.
</P>
<P>(b) <I>Renewal.</I> An application for the renewal of an installation license must include the information required by, and must be submitted to, HUD in accordance with § 3286.207, and must be submitted at least 60 days before the date the license expires. Any person applying for a license renewal after the date the license expires must apply for a new installation license following the requirements established under this subpart C for application for an initial installation license.


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:5.1.2.1.6.4" TYPE="SUBPART">
<HEAD>Subpart D—Training of Installers in HUD-Administered States</HEAD>


<DIV8 N="§ 3286.301" NODE="24:5.1.2.1.6.4.1.1" TYPE="SECTION">
<HEAD>§ 3286.301   Purpose.</HEAD>
<P>The purpose of this subpart D is to establish the requirements for a person to qualify to provide the training required under subpart C of this part. This training is required for manufactured home installers who want to be licensed in accordance with the HUD-administered installation program.


</P>
</DIV8>


<DIV8 N="§ 3286.303" NODE="24:5.1.2.1.6.4.1.2" TYPE="SECTION">
<HEAD>§ 3286.303   Responsibilities of qualified trainers.</HEAD>
<P>(a) <I>Curriculum and hours.</I> In providing training to installers for the purpose of qualifying installers under the HUD-administered installation program, qualified trainers must adequately address the curriculum and instruction-time requirements established in subparts C and D of this part.
</P>
<P>(b) <I>Attendance records.</I> Qualified trainers must maintain records of the times, locations, names of attendees at each session, and content of all courses offered. When an attendee misses a significant portion of any training session, the trainer must assure that the attendee makes up the missed portion of the instruction.
</P>
<P>(c) <I>Certificates of completion of training.</I> Qualified trainers must provide certificates of completion to course attendees that indicate the level of compliance with the applicable curriculum and time requirements under subparts C and D of this part.
</P>
<P>(d) <I>Record retention.</I> All records maintained by trainers and continuing education providers must be retained for 3 years, and must be made available to HUD upon request.
</P>
<P>(e) <I>Testing of installers.</I> Qualified trainers may be authorized to administer the installation license testing required for initial licensing of installers, as set forth in § 3286.205(c).


</P>
</DIV8>


<DIV8 N="§ 3286.305" NODE="24:5.1.2.1.6.4.1.3" TYPE="SECTION">
<HEAD>§ 3286.305   Installation trainer criteria.</HEAD>
<P>(a) <I>Trainer qualification required.</I> (1) All classes that provide manufactured home installation education classes used to satisfy the requirements for the initial issuance and renewal of installation licenses under subpart C of this part must be taught by trainers who are registered with HUD as qualified trainers. In order to register with HUD as a qualified trainer, a person must meet the experience requirements of this section.
</P>
<P>(2) Any entity other than a natural person may also provide initial training and continuing education, as long as such entity establishes its qualification as a trainer by providing evidence and assurance that the entity's individual trainers meet the requirements of this section.
</P>
<P>(b) <I>Experience prerequisites.</I> In order to qualify as a trainer, an individual or other training entity must provide to HUD evidence that each individual who will be responsible for providing training:
</P>
<P>(1) Has a minimum of 3,600 hours of experience in one or more of the following:
</P>
<P>(i) As a supervisor of manufactured home installations;
</P>
<P>(ii) As a supervisor in the building construction industry;
</P>
<P>(iii) In design work related to the building construction industry; or
</P>
<P>(2) Has completed a 2-year educational program in a construction-related field.
</P>
<P>(c) <I>Certification of curriculum.</I> In order to register as a qualified trainer, an individual or other training entity must submit to HUD certification that training provided in accordance with this subpart D will meet the curriculum requirements established in § 3286.308 or § 3286.309, as applicable.


</P>
</DIV8>


<DIV8 N="§ 3286.307" NODE="24:5.1.2.1.6.4.1.4" TYPE="SECTION">
<HEAD>§ 3286.307   Process for obtaining trainer's qualification.</HEAD>
<P>(a) <I>Where to apply.</I> An applicant for qualification as a trainer must provide the applicant's legal name, address, and telephone number to HUD. The application, with all required information, must be sent to: Administrator, Office of Manufactured Housing Programs, HUD, 451 Seventh Street, SW., Room 9164, Washington DC 20410-8000, or to a fax number or e-mail address obtained by calling the Office of Manufactured Housing Programs. For convenience only, the URL of the Web site is <I>http://www.hud.gov/offices/hsg/sfh/mhs/mhshome.cfm,</I> and the toll-free telephone number to contact the Office of Manufactured Housing Programs is 1-800-927-2891, extension 57.
</P>
<P>(b) <I>Proof of experience.</I> (1) Every individual applicant for initial qualification as a trainer must submit verification of the experience required in § 3286.305. This verification may be in the form of statements by past or present employers or a self-certification that the applicant meets those experience requirements, but HUD may contact the applicant for additional verification at any time. The applicant must also provide to HUD employment information relevant to the applicant's experience as a trainer, including the dates and type of such employment. A trainer who is licensed, or otherwise certified, to provide manufactured home installation training in a state with a qualifying installation program may seek an exemption from the experience requirement by submitting proof of such license or other certification. An individual who applies for renewal qualification as a trainer is not required to submit additional proof of experience.
</P>
<P>(2) An entity that seeks to be designated as a qualified trainer must provide evidence and assurance that the entity's individual trainers meet the experience requirements in § 3286.305.
</P>
<P>(c) <I>Other qualification information.</I> (1) An applicant for initial or renewal qualification as a trainer must submit to HUD a list of all states in which the applicant has had a similar training qualification revoked, suspended, or denied.
</P>
<P>(2) An applicant also must submit to HUD a certification that training provided in accordance with this subpart D will meet the curriculum requirements established in § 3286.308 or § 3286.309, as applicable.
</P>
<P>(d) <I>Confirmation or denial of qualification.</I> (1) When HUD confirms that an applicant has met the experience and curriculum requirements in this section, HUD will either:
</P>
<P>(i) Provide to the applicant a written confirmation that the applicant is a qualified trainer under this part, and will add the applicant's name to a list maintained by HUD of qualified trainers; or
</P>
<P>(ii) Provide a written explanation of why HUD deems the applicant to not qualify as a trainer, including on grounds applicable under § 3286.311 for suspension or revocation of a qualification and any other specified evidence of inability to meet the requirements of this part.
</P>
<P>(2) An applicant whose qualification is denied by HUD may request an opportunity for a presentation of views, in accordance with subpart D of part 3282 of this chapter, for the purpose of establishing the applicant's qualifications to be a qualified trainer or the adequacy of any training curriculum that is challenged by HUD.
</P>
<P>(e) <I>Assignment of qualification prohibited.</I> A qualification issued under this subpart D may not be transferred, assigned, or pledged to another entity or individual.


</P>
</DIV8>


<DIV8 N="§ 3286.308" NODE="24:5.1.2.1.6.4.1.5" TYPE="SECTION">
<HEAD>§ 3286.308   Training curriculum.</HEAD>
<P>(a) <I>Curriculum for initial installer licensing.</I> The training provided by qualified trainers to installers to meet the initial requirements of the HUD-administered installation program must include at least 12 hours of training, at least 4 hours of which must consist of training on the federal installation standards in part 3285 of this chapter and the installation program regulations in this part. The curriculum must include, at a minimum, training in the following areas:
</P>
<P>(1) An overview of the Act and the general regulatory structure of the HUD manufactured housing program;
</P>
<P>(2) An overview of the manufactured home installation standards and regulations established in parts 3285 and 3286 of this chapter, and specific instruction including:
</P>
<P>(i) Preinstallation considerations;
</P>
<P>(ii) Site preparation;
</P>
<P>(iii) Foundations;
</P>
<P>(iv) Anchorage against wind;
</P>
<P>(v) Optional features, including comfort cooling systems;
</P>
<P>(vi) Ductwork and plumbing and fuel supply systems;
</P>
<P>(vii) Electrical systems; and
</P>
<P>(viii) Exterior and interior close-up work;
</P>
<P>(3) An overview of the construction and safety standards and regulations found in parts 3280 and 3282 of this chapter;
</P>
<P>(4) Licensing requirements applicable to installers;
</P>
<P>(5) Installer responsibilities for correction of improper installation, including installer obligations under applicable state and HUD manufactured housing dispute resolution programs;
</P>
<P>(6) Inspection requirements and procedures;
</P>
<P>(7) Problem-reporting mechanisms;
</P>
<P>(8) Operational checks and adjustments; and
</P>
<P>(9) Penalties for any person's failure to comply with the requirements of this part 3286 and parts 3285 and 3288 of this chapter.
</P>
<P>(b) <I>Updating curriculum.</I> Qualified trainers must revise and modify course curriculum as needed to include, at a minimum, any relevant modifications to the Act or the implementing standards and regulations in this chapter, as well as to provide any training further mandated by HUD.


</P>
</DIV8>


<DIV8 N="§ 3286.309" NODE="24:5.1.2.1.6.4.1.6" TYPE="SECTION">
<HEAD>§ 3286.309   Continuing education-trainers and curriculum.</HEAD>
<P>(a) <I>HUD-mandated elements.</I> Only qualified trainers are permitted to provide any training on particular subject areas that are required by HUD to be an element of the continuing education requirement set out in § 3286.205(b)(2) for the renewal of an installer's license. In implementing this requirement, HUD will:
</P>
<P>(1) Establish the minimum number of hours and the required curriculum for such subject areas, according to experience with the program and changes in program requirements; and
</P>
<P>(2) Provide information about the hours and curriculum directly to qualified trainers and licensed installers, or through general publication of the information.
</P>
<P>(b) <I>Other training.</I> (1) The remainder of the 8 hours required to meet the continuing education requirement may be met through training provided either by qualified trainers or by any combination of the following:
</P>
<P>(i) Accredited educational institutions, including community colleges and universities;
</P>
<P>(ii) A provider of continuing education units who is certified by the International Association for Continuing Education and Training;
</P>
<P>(iii) Agencies at any level of government; and
</P>
<P>(iv) State or national professional associations.
</P>
<P>(2) The curriculum for the remainder of the 8 hours of continuing education training must relate to any aspect of manufactured home installation or construction, or to the general fields of building construction or contracting.


</P>
</DIV8>


<DIV8 N="§ 3286.311" NODE="24:5.1.2.1.6.4.1.7" TYPE="SECTION">
<HEAD>§ 3286.311   Suspension or revocation of trainer's qualification.</HEAD>
<P>(a) <I>Oversight.</I> The Secretary may make a continuing evaluation of the manner in which each qualified trainer is carrying out the trainer's responsibilities under this subpart D.
</P>
<P>(b) <I>Suspension or revocation of qualification.</I> After notice and an opportunity for a presentation of views in accordance with subpart D of part 3282 of this chapter, the Secretary may suspend or revoke a trainer's qualification under this part. A trainer's qualification may be suspended or revoked for cause, which may include:
</P>
<P>(1) Providing false records or information to HUD;
</P>
<P>(2) Refusing to submit information required to be submitted by the Secretary in accordance with the Act;
</P>
<P>(3) Certifying, or improperly assisting certification of, a person as having met the training requirements established in this part when that person has not completed the required training;
</P>
<P>(4) Failing to appropriately supervise installation training that is used to meet the requirements of this part and that is provided by other persons; and
</P>
<P>(5) Any other failures to comply with the requirements of this part.
</P>
<P>(c) <I>Other criteria.</I> In deciding whether to suspend or revoke a trainer's qualification, the Secretary will consider the impact of the suspension or revocation on other affected parties and will seek to assure that the sales and siting of manufactured homes are not unduly disrupted.
</P>
<P>(d) <I>Reinstating qualification.</I> A trainer whose qualification has been suspended or revoked may submit a new application to be qualified in accordance with this subpart D no sooner than 6 months after the date of suspension or revocation. A trainer whose qualification has been suspended may also reinstate the qualification in any manner provided under the terms of the suspension.


</P>
</DIV8>


<DIV8 N="§ 3286.313" NODE="24:5.1.2.1.6.4.1.8" TYPE="SECTION">
<HEAD>§ 3286.313   Expiration and renewal of trainer qualification.</HEAD>
<P>(a) <I>Expiration.</I> Each notice of qualification issued or renewed under this subpart D will expire 5 years after the date of its issuance or renewal.
</P>
<P>(b) <I>Renewal.</I> An application for the renewal of a trainer qualification must be submitted to HUD in accordance with § 3286.307, and must be submitted at least 60 days before the date the trainer's term of qualification expires. Any person applying for a qualification renewal after the date the qualification expires must apply for a new qualification, following the requirements established under this subpart D for application for initial qualification as an installation trainer.


</P>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:5.1.2.1.6.5" TYPE="SUBPART">
<HEAD>Subpart E—Installer Responsibilities of Installation in HUD-Administered States</HEAD>


<DIV8 N="§ 3286.401" NODE="24:5.1.2.1.6.5.1.1" TYPE="SECTION">
<HEAD>§ 3286.401   Purpose.</HEAD>
<P>The purpose of this subpart E is to set out the responsibilities of the installer who is accountable for the installation of a manufactured home in compliance with the requirements of the HUD-administered installation program.


</P>
</DIV8>


<DIV8 N="§ 3286.403" NODE="24:5.1.2.1.6.5.1.2" TYPE="SECTION">
<HEAD>§ 3286.403   Licensing requirements.</HEAD>
<P>An installer of manufactured homes must comply with the licensing requirements set forth in subpart C of this part.


</P>
</DIV8>


<DIV8 N="§ 3286.405" NODE="24:5.1.2.1.6.5.1.3" TYPE="SECTION">
<HEAD>§ 3286.405   Installation suitability.</HEAD>
<P>(a) <I>Site appropriateness.</I> Before installing a manufactured home at any site, the installer must assure that the site is suitable for installing the home by verifying that:
</P>
<P>(1) The site is accessible;
</P>
<P>(2) The site is appropriate for the foundation or support and stabilization system that is to be used to install the home in accordance with the federal installation standards or alternative requirements in part 3285 of this chapter;
</P>
<P>(3) The data plate required by § 3280.5 of this chapter is affixed to the home, that the home is designed for the roof load, wind load, and thermal zones that are applicable to the intended site; and
</P>
<P>(4) The installation site is protected from surface run-off and can be graded in accordance with part 3285.
</P>
<P>(b) <I>Installer notification of unsuitable site.</I> If the installer determines that the home cannot be installed properly at the site, the installer must:
</P>
<P>(1) Notify the purchaser or other person with whom the installer contracted for the installation work, identifying the reasons why the site is unsuitable;
</P>
<P>(2) Notify the retailer that contracted with the purchaser for the sale of the home, identifying the reasons why the site is unsuitable;
</P>
<P>(3) Notify HUD, identifying the reasons why the site is unsuitable;
</P>
<P>(4) Decline to install the home until the site and the home are both verified by the installer as suitable for the site under this section; and
</P>
<P>(5) Ensure that all unique characteristics of the site have been fully addressed.
</P>
<P>(c) <I>Installer notification of failures to comply with the construction and safety standards.</I> If the installer notices and recognizes failures to comply with the construction and safety standards in part 3280 of this chapter prior to beginning any installation work, during the course of the installation work, or after the installation work is complete, the installer must notify the manufacturer and retailer of each failure to comply.
</P>
<P>(d) <I>Retailer notification.</I> The retailer must provide a copy of the notification received in paragraphs (b) and (c) of this section to any subsequent installer.


</P>
</DIV8>


<DIV8 N="§ 3286.407" NODE="24:5.1.2.1.6.5.1.4" TYPE="SECTION">
<HEAD>§ 3286.407   Supervising work of crew.</HEAD>
<P>The installer will be responsible for the work performed by each person engaged to perform installation tasks on a manufactured home, in accordance with the HUD-administered installation program.


</P>
</DIV8>


<DIV8 N="§ 3286.409" NODE="24:5.1.2.1.6.5.1.5" TYPE="SECTION">
<HEAD>§ 3286.409   Obtaining inspection.</HEAD>
<P>(a) <I>Inspection obligations.</I> Ten business days prior to the completion of installation, the installer must arrange for a third-party inspection of the work performed, in accordance with subpart F of this part, unless the installer and retailer who contracted with the purchaser for the sale of the home agree, in writing, that during the same time period the retailer will arrange for the inspection. Such inspection must be performed as soon as practicable by an inspector who meets the qualifications set forth in § 3286.511. The scope of the inspections that are required to be performed is addressed in § 3286.505.
</P>
<P>(b) <I>Contract rights not affected.</I> Failure to arrange for an inspection of a home within 10 business days will not affect the validity or enforceability of any sale or contract for the sale of any manufactured home.
</P>
<P>(c) <I>State or local permits.</I> The licensed installer should obtain all necessary permits required under state or local laws.
</P>
<CITA TYPE="N">[73 FR 35292, June 20, 2008, as amended at 89 FR 75759, Sept. 16, 2024]




</CITA>
</DIV8>


<DIV8 N="§ 3286.411" NODE="24:5.1.2.1.6.5.1.6" TYPE="SECTION">
<HEAD>§ 3286.411   Certifying installation.</HEAD>
<P>(a) <I>Certification required.</I> When the installation work is complete, a licensed installer must visit the jobsite and certify that:
</P>
<P>(1) The manufactured home has been installed in accordance with:
</P>
<P>(i) An installation design and instructions that have been provided by the manufacturer and approved by the Secretary directly or through review by the DAPIA; or
</P>
<P>(ii) An installation design and instructions that have been prepared and certified by a professional engineer or registered architect, that have been approved by the manufacturer and the DAPIA as providing a level of protection for residents of the home that equals or exceeds the protection provided by the federal installation standards in part 3285 of this chapter.
</P>
<P>(2) The installation of the home has been inspected as required by § 3286.503, and an inspector has verified the installation as meeting the requirements of this part.
</P>
<P>(3) All installation defects brought to the installer's attention have been corrected.
</P>
<P>(b) <I>Recipients of certification.</I> The installer must provide a signed copy of its certification to the retailer that contracted with the purchaser or lessee for the sale or lease of the home, and to the purchaser or other person with whom the installer contracted for the installation work.


</P>
</DIV8>


<DIV8 N="§ 3286.413" NODE="24:5.1.2.1.6.5.1.7" TYPE="SECTION">
<HEAD>§ 3286.413   Recordkeeping.</HEAD>
<P>(a) <I>Records to be retained.</I> The installer must retain:
</P>
<P>(1) A record of the name and address of the purchaser or other person with whom the installer contracted for the installation work and the address of the home installed;
</P>
<P>(2) A copy of the contract pursuant to which the installer performed the installation work;
</P>
<P>(3) A copy of any notice from an inspector disapproving the installation work;
</P>
<P>(4) A copy of the qualified inspector's verification of the installation work;
</P>
<P>(5) A copy of the installer's certification of completion of installation in accordance with the requirements of this part; and
</P>
<P>(6) A copy of foundation designs used to install the home, if different from the designs provided by the manufacturer, including evidence that the foundation designs and instructions were certified by a professional engineer or registered architect, including the name, address, and telephone number of the professional engineer or architect certifying the designs.
</P>
<P>(b) Retention requirement. The records listed in paragraph (a) of this section must be maintained for a period of 3 years after the installer certifies completion of installation.


</P>
</DIV8>

</DIV6>


<DIV6 N="F" NODE="24:5.1.2.1.6.6" TYPE="SUBPART">
<HEAD>Subpart F—Inspection of Installations in HUD-Administered States</HEAD>


<DIV8 N="§ 3286.501" NODE="24:5.1.2.1.6.6.1.1" TYPE="SECTION">
<HEAD>§ 3286.501   Purpose.</HEAD>
<P>The purpose of this subpart F is to provide additional detail about the inspection that must be performed by a qualified third-party inspector before the installation of a manufactured home may be verified by the inspector and certified by the installer under the HUD-administered installation program.


</P>
</DIV8>


<DIV8 N="§ 3286.503" NODE="24:5.1.2.1.6.6.1.2" TYPE="SECTION">
<HEAD>§ 3286.503   Inspection required.</HEAD>
<P>(a) <I>Timing of requirements.</I> Ten business days prior to the completion of the installation of each manufactured home, the installer must arrange for a third-party inspection of the work performed, unless the installer and retailer who contracted with the purchaser for the sale of the home agree, in writing, that during the same time period the retailer will arrange for the inspection. Such inspection must be performed as soon as practicable by an inspector that meets the qualifications set out in § 3286.511. The scope of the inspections that are required to be performed is addressed in § 3286.505.
</P>
<P>(b) <I>Disclosure of requirement.</I> At the time of sale, the retailer must disclose to the purchaser, in a manner provided in § 3286.7, that the manufactured home must be installed in accordance with applicable federal and state law, including requirements for a third-party inspection of the installation. If the cost of inspection of the home's installation is not included in the sales price of the home, the sales contract must include a clear disclosure about whether the purchaser will be charged separately for the inspection of the home's installation and the amount of such charge.
</P>
<P>(c) <I>Providing instructions to inspectors.</I> Installation instructions must be made available to the inspector at the installation site by the installer.


</P>
</DIV8>


<DIV8 N="§ 3286.505" NODE="24:5.1.2.1.6.6.1.3" TYPE="SECTION">
<HEAD>§ 3286.505   Minimum elements to be inspected.</HEAD>
<P>The installation of every manufactured home that is subject to the HUD-administered installation program is required to be inspected for each of the installation elements included in a checklist. The checklist must include assurance that each of the following elements complies with the requirements of part 3285 of this chapter:
</P>
<P>(a) Site location with respect to home design and construction;
</P>
<P>(b) Consideration of site-specific conditions;
</P>
<P>(c) Site preparation and grading for drainage;
</P>
<P>(d) Foundation construction;
</P>
<P>(e) Anchorage including verification that the ground anchors have been installed in accordance with the manufacturer's instructions, in a soil classification permitted by the anchor listing or certification, with the required size and type of stabilizer plate, if required by the listing or certification, and at an orientation and angle of pull permitted by its listing or certification.
</P>
<P>(f) Installation of optional features;
</P>
<P>(g) Completion of ductwork, plumbing, and fuel supply systems;
</P>
<P>(h) Electrical systems;
</P>
<P>(i) Exterior and interior close-up;
</P>
<P>(j) Skirting, if installed; and
</P>
<P>(k) Completion of operational checks and adjustments.
</P>
<CITA TYPE="N">[73 FR 35292, June 20, 2008, as amended at 79 FR 53618, Sept. 10, 2014]


</CITA>
</DIV8>


<DIV8 N="§ 3286.507" NODE="24:5.1.2.1.6.6.1.4" TYPE="SECTION">
<HEAD>§ 3286.507   Verifying installation.</HEAD>
<P>(a) <I>Verification by inspector.</I> When an inspector is satisfied that the manufactured home has been installed in accordance with the requirements of this part, the inspector must provide verification of the installation in writing and return the evidence of such verification to the installer.
</P>
<P>(b) <I>Certification by installer.</I> (1) Once an installation has been inspected and verified, the installer is permitted to certify the installation as provided in § 3286.111. The installer must provide a signed copy of the certification to:
</P>
<P>(i) The retailer that contracted with the purchaser for the sale of the home;
</P>
<P>(ii) The purchaser; and
</P>
<P>(iii) Any other person that contracted to obtain the services of the installer for the installation work on the home.
</P>
<P>(2) The installer must retain records in accordance with § 3286.413.


</P>
</DIV8>


<DIV8 N="§ 3286.509" NODE="24:5.1.2.1.6.6.1.5" TYPE="SECTION">
<HEAD>§ 3286.509   Reinspection upon failure to pass.</HEAD>
<P>(a) <I>Procedures for failed inspection.</I> If the inspector cannot verify the installation of the manufactured home, the inspector must immediately notify the installer of any failures to comply with the installation standards and explain the reasons why the inspector cannot issue verification that the installation complies with the requirements of this part. After the installation is corrected, it must be reinspected before verification can be issued.
</P>
<P>(b) <I>Cost of reinspection.</I> If there is any cost for the reinspection of an installation that an inspector has refused to verify, that cost must be paid by the installer or the retailer and, absent a written agreement with the purchaser that specifically states otherwise, that cost cannot be charged to the purchaser of the manufactured home.


</P>
</DIV8>


<DIV8 N="§ 3286.511" NODE="24:5.1.2.1.6.6.1.6" TYPE="SECTION">
<HEAD>§ 3286.511   Inspector qualifications.</HEAD>
<P>(a) Qualifications. Any individual or entity who meets at least one of the following qualifications is permitted to review the work and verify the installation of a manufactured home that is subject to the requirements of the HUD-administered installation program:
</P>
<P>(1) A manufactured home or residential building inspector employed by the local authority having jurisdiction over the site of the home, provided that the jurisdiction has a residential code enforcement program;
</P>
<P>(2) A professional engineer;
</P>
<P>(3) A registered architect;
</P>
<P>(4) A HUD-accepted Production Inspection Primary Inspection Agency (IPIA) or a Design Approval Primary Inspection Agency (DAPIA); or
</P>
<P>(5) An International Code Council certified inspector.
</P>
<P>(b) <I>Independence required.</I> The inspector must be independent of the manufacturer, the retailer, the installer, and any other person that has a monetary interest, other than collection of an inspection fee, in the completion of the sale of the home to the purchaser.
</P>
<P>(c) <I>Suspension or revocation of inspection authority.</I> After notice and an opportunity for a presentation of views in accordance with subpart D of part 3282 of this chapter, the Secretary may suspend or revoke an inspector's authority to inspect manufactured home installations under this part in HUD-administered states. An inspector's authority may be suspended or revoked for cause. In deciding whether to suspend or revoke an inspector's authority to conduct such installation inspections, the Secretary will consider the impact of the suspension or revocation on other affected parties and will seek to assure that the sales and siting of manufactured homes are not unduly disrupted.
</P>
<P>(d) <I>Reinstating inspection authority.</I> An inspector whose authority to inspect manufactured home installations in HUD-administered states has been suspended or revoked under this section may apply for reauthorization by contacting: Administrator, Office of Manufactured Housing Programs, HUD, 451 Seventh Street, SW., Room 9164, Washington, DC 20410-8000, or to a fax number or e-mail address obtained by calling the Office of Manufactured Housing Programs at the toll-free telephone number 1-800-927-2891, extension 57.


</P>
</DIV8>

</DIV6>


<DIV6 N="G" NODE="24:5.1.2.1.6.7" TYPE="SUBPART">
<HEAD>Subpart G—Retailer Responsibilities in HUD-Administered States</HEAD>


<DIV8 N="§ 3286.601" NODE="24:5.1.2.1.6.7.1.1" TYPE="SECTION">
<HEAD>§ 3286.601   Purpose.</HEAD>
<P>The purpose of this subpart G is to set out the requirements that apply to a retailer with respect to the federal installation requirements applicable to new manufactured homes that the retailer sells or leases and that will be installed in states that do not have qualifying installation programs. These requirements are in addition to other requirements that apply to retailers of manufactured homes pursuant to other parts of this chapter.


</P>
</DIV8>


<DIV8 N="§ 3286.603" NODE="24:5.1.2.1.6.7.1.2" TYPE="SECTION">
<HEAD>§ 3286.603   At or before sale.</HEAD>
<P>(a) <I>Before contract.</I> (1) The retailer is required to support each transportable section of a manufactured home that is temporarily or permanently located on a site used by a retailer in accordance with the manufacturer's instructions.
</P>
<P>(2) Before a purchaser or lessee signs a contract of sale or lease for a manufactured home, the retailer must:
</P>
<P>(i) Provide the purchaser or lessee with a copy of the consumer disclosure statement required in § 3286.7(b); and
</P>
<P>(ii) Verify that the wind, thermal, and roof load zones of the home being purchased or leased are appropriate for the site where the purchaser or lessee plans to install the home for occupancy; and
</P>
<P>(iii) If the cost of inspection of the home's installation is not included in the sales price of the home, provide the disclosure required in § 3286.7(b).
</P>
<P>(b) <I>Occupancy site not known.</I> When at the time of purchase the purchaser does not know the locale for the initial siting of the home for occupancy, the retailer must advise the purchaser that:
</P>
<P>(1) The home was designed and constructed for specific wind, thermal, and roof load zones; and
</P>
<P>(2) If the home is sited in a different zone, the home may not pass the required installation inspection because the home will have been installed in a manner that would take it out of compliance with the construction and safety standards in part 3280 of this chapter.
</P>
<P>(c) <I>Verification of installer license.</I> When the retailer or manufacturer agrees to provide any set up in connection with the sale or lease of the home, the retailer or manufacturer must verify that the installer is licensed in accordance with these regulations.


</P>
</DIV8>


<DIV8 N="§ 3286.605" NODE="24:5.1.2.1.6.7.1.3" TYPE="SECTION">
<HEAD>§ 3286.605   After sale.</HEAD>
<P>(a) <I>Tracking installation information.</I> The retailer is responsible for providing to HUD the information required pursuant to § 3286.113.
</P>
<P>(b) <I>Other tracking and compliance requirements.</I> The retailer continues to be responsible for compliance with the tracking and compliance requirements set out in subpart F of part 3282 of this chapter, which are related to HUD construction and safety standards.


</P>
</DIV8>


<DIV8 N="§ 3286.607" NODE="24:5.1.2.1.6.7.1.4" TYPE="SECTION">
<HEAD>§ 3286.607   Recordkeeping.</HEAD>
<P>The retailer is responsible for the reporting and recordkeeping requirements under § 3286.113.


</P>
</DIV8>

</DIV6>


<DIV6 N="H" NODE="24:5.1.2.1.6.8" TYPE="SUBPART">
<HEAD>Subpart H—Oversight and Enforcement in HUD-Administered States</HEAD>


<DIV8 N="§ 3286.701" NODE="24:5.1.2.1.6.8.1.1" TYPE="SECTION">
<HEAD>§ 3286.701   Purpose.</HEAD>
<P>The purpose of this subpart H is to set out the mechanisms by which manufacturers, retailers, distributors, installers, and installation inspectors will be held accountable for assuring the appropriate installation of manufactured homes. The requirements in subpart A of this part are applicable in all states, the requirements in subparts B through H are applicable in states where the HUD-administered installation program operates, and the requirements in subpart I are applicable in states with qualifying installation programs. It is the policy of the Secretary, regarding manufactured home installation program enforcement matters, to cooperate with state or local agencies having authority to regulate the installation of manufactured homes. In addition to actions expressly recognized under this subpart H and other provisions in this part, however, HUD may take any actions authorized by the Act in order to oversee the system established by the regulations in this part.


</P>
</DIV8>


<DIV8 N="§ 3286.703" NODE="24:5.1.2.1.6.8.1.2" TYPE="SECTION">
<HEAD>§ 3286.703   Failure to comply.</HEAD>
<P>(a) <I>Penalties and injunctive relief.</I> Failure to comply with the requirements of this part is a prohibited act under section 610(a)(7) of the Act, 42 U.S.C. 5409(a). Any person who fails to comply with the requirements of this part is subject to civil and criminal penalties, and to actions for injunctive relief, in accordance with sections 611 and 612 of the Act, 42 U.S.C. 5410 and 5411.
</P>
<P>(b) <I>Presentation of views.</I> When practicable, the Secretary will provide notice to any person against whom an action for injunctive relief is contemplated and will afford such person an opportunity to request a presentation of views. The procedures set forth in §§ 3282.152 through 3282.154 of this chapter shall apply to each request to present views and to each presentation of views authorized in accordance with this section.
</P>
<P>(c) <I>Investigations.</I> The procedures for investigations and investigational proceedings are set forth in part 3800 of this chapter.


</P>
</DIV8>


<DIV8 N="§ 3286.705" NODE="24:5.1.2.1.6.8.1.3" TYPE="SECTION">
<HEAD>§ 3286.705   Applicability of dispute resolution program.</HEAD>
<P>(a) <I>Generally.</I> Regardless of any action taken under § 3286.703, for any defect in a manufactured home that is reported during the one-year period beginning on the date of installation, as specified in § 3286.115, any rights and remedies available under the HUD dispute resolution program, as implemented in part 3288 of this chapter, continue to apply as provided in that part.
</P>
<P>(b) <I>Waiver of rights invalid.</I> Any provision of a contract or agreement entered into by a manufactured home purchaser that seeks to waive any recourse to either HUD or a state dispute resolution program is void.


</P>
</DIV8>

</DIV6>


<DIV6 N="I" NODE="24:5.1.2.1.6.9" TYPE="SUBPART">
<HEAD>Subpart I—State Programs</HEAD>


<DIV8 N="§ 3286.801" NODE="24:5.1.2.1.6.9.1.1" TYPE="SECTION">
<HEAD>§ 3286.801   Purpose.</HEAD>
<P>The purpose of this subpart I is to establish the requirements that must be met by a state to implement and administer its own installation program, either as part of its approved state plan or under this subpart, in such a way that the state would not be covered by the HUD-administered installation program. This subpart I also establishes the procedure for determining whether a state installation program meets the requirements of the Act for a qualifying installation program that will operate in lieu of the HUD-administered installation program.


</P>
</DIV8>


<DIV8 N="§ 3286.803" NODE="24:5.1.2.1.6.9.1.2" TYPE="SECTION">
<HEAD>§ 3286.803   State qualifying installation programs.</HEAD>
<P>(a) <I>Qualifying installation program supersedes.</I> The HUD-administered installation program will not be implemented in any state that is identified as fully or conditionally accepted under the requirements and procedures of this subpart I or in accordance with part 3282 of this chapter.
</P>
<P>(b) <I>Minimum elements.</I> To be accepted as a fully qualifying installation program, a state installation program must include the following elements:
</P>
<P>(1) Installation standards that meet or exceed the requirements of § 3286.107(a) and that apply to every initial installation of a new manufactured home within the state;
</P>
<P>(2) The training of manufactured home installers;
</P>
<P>(3) The licensing of, or other method of certifying or approving, manufactured home installers to perform the initial installations of new manufactured homes in the state;
</P>
<P>(4) A method for inspecting the initial installations of new manufactured homes in the state that is implemented and used to hold installers responsible for the work they perform; and
</P>
<P>(5) Provision of adequate funding and personnel to administer the state installation program.
</P>
<P>(c) <I>Conditional acceptance.</I> (1) A state installation program that meets the minimum requirements set forth under paragraphs (b)(1), (4), and (5) of this section may be conditionally accepted by the Secretary if the state provides assurances deemed adequate by the Secretary that the state is moving to meet all of the requirements for full acceptance. If the Secretary conditionally accepts a state's installation program, the Secretary will provide to the state an explanation of what is necessary to obtain full acceptance.
</P>
<P>(2) A conditionally accepted state will be permitted to implement its own installation program in lieu of the HUD-administered program for a period of not more than 3 years. The Secretary may for good cause grant an extension of conditional approval upon petition by the state.
</P>
<P>(d) <I>Limited exemptions from requirements.</I> A state installation program may be accepted by the Secretary as a qualifying installation program if the state can demonstrate that it lacks legal authority, as a matter of federal law, to impose the minimum requirements set forth under paragraph (b) of this section in certain geographic areas of the state, but that the minimum requirements do apply in all other geographic areas of the state.


</P>
</DIV8>


<DIV8 N="§ 3286.805" NODE="24:5.1.2.1.6.9.1.3" TYPE="SECTION">
<HEAD>§ 3286.805   Procedures for identification as qualified installation program.</HEAD>
<P>(a) <I>Submission of certification.</I> (1) A state seeking identification as having a qualified installation program must submit a completed State Installation Program Certification form to the Secretary for review and acceptance and indicate if the installation program will be part of its approved state plan in accordance with part 3282 of this chapter.
</P>
<P>(2) A state must include a qualified installation program as part of any state plan application submitted for approval under § 3282.302 of this chapter, if the state does not have a fully or conditionally approved state plan in effect at the time of submission of the state plan application. In all other cases, a qualified installation program is permitted, but is not required, to be submitted as a part of a state plan approved in accordance with § 3282.305 of this chapter.
</P>
<P>(b) <I>HUD review and action.</I> (1) The Secretary will review the State Installation Program Certification form submitted by a state and may request that the state submit additional information as necessary. Unless the Secretary has contacted the state for additional information or has conditionally accepted or rejected the state installation program, the state installation program will be considered to have been accepted by the Secretary as a fully qualifying installation program as of the earlier of:
</P>
<P>(i) Ninety days after the Secretary receives the state's completed State Installation Program Certification form; or
</P>
<P>(ii) The date that the Secretary issues notification to the state of its full acceptance.
</P>
<P>(2) A notice of full or conditional acceptance will include the effective date of acceptance.
</P>
<P>(c) <I>Rejection of state installation program.</I> (1) If the Secretary intends to reject a state's installation program, the Secretary will provide to the state an explanation of what is necessary to obtain full or conditional acceptance. The state will be given 90 days from the date the Secretary provides such explanation to submit a revised State Installation Program Certification form.
</P>
<P>(2) If the Secretary decides that any revised State Installation Program Certification form is inadequate, or if the state fails to submit a revised form within the 90-day period or otherwise indicates that it does not intend to change its form, the Secretary will notify the state that its installation program is not accepted.
</P>
<P>(3) A state whose State Installation Program Certification form is rejected has a right to a presentation of views on the rejection using the procedures set forth under subpart D of part 3282 of this chapter. The state's request for a presentation of views must be submitted to the Secretary within 60 days after the Secretary has provided notification that the state's installation program has been rejected.


</P>
</DIV8>


<DIV8 N="§ 3286.807" NODE="24:5.1.2.1.6.9.1.4" TYPE="SECTION">
<HEAD>§ 3286.807   Recertification required.</HEAD>
<P>(a) <I>Recertification.</I> To maintain its status as a qualified installation program when the installation program is not part of the approved state plan in accordance with part 3282 of this chapter, a state must submit a new State Installation Program Certification form to the Secretary for review and action as follows:
</P>
<P>(1) Every 5 years after the state's most recent certification as a qualified installation program; and
</P>
<P>(2) Whenever there is a change to the state's installation program or a change in the HUD requirements applicable to qualifying installation programs such that the state's installation program no longer complies with the minimum requirements set forth in § 3286.803(b), regardless of when the state's next regular recertification of its installation program would be due.
</P>
<P>(b) <I>Due date of recertification.</I> (1) A state's recertification required in paragraph (a) of this section must be filed within 90 days of, as applicable:
</P>
<P>(i) The 5-year anniversary of the effective date of the Secretary's acceptance of the state's most recent certification as a qualified installation program; and
</P>
<P>(ii) The effective date of the state or HUD action that makes a significant change to the state's installation program.
</P>
<P>(2) Upon petition by the state, the Secretary may for good cause grant an extension of the deadline for recertification.
</P>
<P>(c) <I>Failure to Recertify.</I> (1) A state whose certification of its installation program, when the installation program is not part of the approved state plan in accordance with part 3282 of this chapter, has been accepted by the Secretary is permitted to administer its installation program in lieu of the HUD-administered installation program until the effective date of a notification by the Secretary that the state's certification of its installation program is no longer approved.
</P>
<P>(2) A state whose recertification of its installation program is rejected by the Secretary has a right to a presentation of views on the rejection using the procedures set forth under subpart D of part 3282 of this chapter. The state's request for a presentation of views must be submitted to the Secretary within 60 days after the Secretary has provided notification that the state's recertification of its installation program has been rejected.


</P>
</DIV8>


<DIV8 N="§ 3286.809" NODE="24:5.1.2.1.6.9.1.5" TYPE="SECTION">
<HEAD>§ 3286.809   Withdrawal of qualifying installation program status.</HEAD>
<P>(a) <I>Voluntary withdrawal.</I> Any state that intends to withdraw from its responsibilities to administer a qualifying installation program should provide the Secretary with a minimum of 90 days notice.
</P>
<P>(b) <I>Involuntary withdrawal.</I> Whenever the Secretary finds, after affording notice and an opportunity for a hearing in accordance with subpart D of part 3282 of this chapter, that a state installation program fails to comply substantially with any provision of the installation program requirements or that the state program has become inadequate, the Secretary will notify the state of withdrawal of acceptance or conditional acceptance of the state installation program. The HUD-administered installation program will begin to operate in such state at such time as the Secretary establishes in issuing the finding.


</P>
</DIV8>


<DIV8 N="§ 3286.811" NODE="24:5.1.2.1.6.9.1.6" TYPE="SECTION">
<HEAD>§ 3286.811   Effect on other manufactured housing program requirements.</HEAD>
<P>A state with a qualifying installation program will operate in lieu of HUD with respect to only the installation program established under subparts B through H of this part. No state may permit its installation program, even if it is a qualified installation program under this part, to supersede the requirements applicable to HUD's Manufactured Housing Construction and Safety Standards and enforcement programs. Regardless of whether a state has a qualified installation program:
</P>
<P>(a) <I>Construction and safety standards.</I> Any responsibilities, rights, and remedies applicable under the Manufactured Home Construction and Safety Standards Act in part 3280 of this chapter and the Manufactured Home Procedural and Enforcement Regulations in part 3282 of this chapter continue to apply as provided in those parts; and
</P>
<P>(b) <I>Dispute resolution.</I> For any defect in a manufactured home that is reported during the one-year period beginning on the date of installation defined in § 3286.115, any responsibilities, rights, and remedies applicable under the HUD dispute resolution program as implemented in part 3288 of this chapter continue to apply as provided in that part.


</P>
</DIV8>


<DIV8 N="§ 3286.813" NODE="24:5.1.2.1.6.9.1.7" TYPE="SECTION">
<HEAD>§ 3286.813   Inclusion in state plan.</HEAD>
<P>If a state installation program is included in a state plan approved in accordance with § 3282.302 of this chapter, the state installation program is subject to all of the requirements for such a state plan, including annual review by HUD.


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="3288" NODE="24:5.1.2.1.7" TYPE="PART">
<HEAD>PART 3288—MANUFACTURED HOME DISPUTE RESOLUTION PROGRAM 
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>42 U.S.C. 3535(d), 5422 and 5424.
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>72 FR 27229, May 14, 2007, unless otherwise noted.


</PSPACE></SOURCE>

<DIV6 N="A" NODE="24:5.1.2.1.7.1" TYPE="SUBPART">
<HEAD>Subpart A—General</HEAD>


<DIV8 N="§ 3288.1" NODE="24:5.1.2.1.7.1.1.1" TYPE="SECTION">
<HEAD>§ 3288.1   Purpose and scope.</HEAD>
<P>(a) <I>Purpose.</I> The Act is intended, in part, to protect the quality, safety, durability, and affordability of manufactured homes. Section 623(c)(12) of the Act (42 U.S.C. 5422 (c)(12)) requires the implementation of “a dispute resolution program for the timely resolution of disputes between manufacturers, retailers, and installers of manufactured homes regarding responsibility, and for the issuance of appropriate orders, for the correction or repair of defects in manufactured homes that are reported during the 1-year period beginning on the date of installation.” The purpose of this part is to provide a dispute resolution program for the timely resolution of disputes among manufacturers, retailers, and installers regarding the responsibility for correction or repair of defects reported by the homeowner or others and reported in the 1-year period after the first installation of the manufactured home.
</P>
<P>(b) <I>Scope</I>—(1) <I>Applicability.</I> In carrying out this purpose, it is presumed that if a manufactured home contains an alleged defect that is reported in the first year after installation and was not caused by the homeowner, then the manufacturer, retailer, or installer is responsible for the alleged defect and the dispute resolution process recognized in this part is an appropriate means for resolving disputes about responsibility for correction and repair of the alleged defect. For purposes of the dispute resolution process recognized in this part, only alleged defects reported in the first year after the first installation are covered by the process. The state where the home is sited determines whether the HUD Manufactured Home Dispute Resolution Program or a state program applies. Subpart A of this part establishes general provisions applicable to HUD's implementation of a dispute resolution program as required by the Act. Subpart B of this part establishes the HUD Manufactured Home Dispute Resolution Program that HUD will administer in any state that does not establish a program that complies with the Act and been accepted by HUD as provided in subpart D of this part. Subpart C of this part provides an Alternative Process for manufacturers, retailers, and installers who agree that a homeowner is not responsible for the alleged defect to resolve their disputes about responsibility for correction or repair outside of the HUD Mediation and Arbitration Process under subpart B. Subpart D of this part establishes the minimum requirements that must be met by a state applying to implement its own dispute resolution program that complies with the Act, and the procedure for determining whether the requirements for complying have been met. Subpart E of this part establishes special rulemaking procedures that apply to the issuance of new regulations that implement the dispute resolution requirements set forth in section 623 of the Act (42 U.S.C. 5422).
</P>
<P>(2) <I>Warranties not affected.</I> This part is not a warranty program and the requirements established in this part do not replace the manufacturer's or any other warranty program. Such warranty program may have its own requirements.


</P>
</DIV8>


<DIV8 N="§ 3288.3" NODE="24:5.1.2.1.7.1.1.2" TYPE="SECTION">
<HEAD>§ 3288.3   Definitions.</HEAD>
<P>The following definitions apply in this part:
</P>
<P><I>Act</I> means the National Manufactured Housing Construction and Safety Standards Act of 1974, 42 U.S.C. 5401-5426.
</P>
<P><I>Appropriate order</I> means an order issued by HUD or an order that is enforceable under state law.
</P>
<P><I>Date of installation</I> means the date all utilities are connected and the manufactured home is ready for occupancy as established, if applicable, by a certificate of occupancy, except as follows: if the manufactured home has not been sold to the first person purchasing the home in good faith for purposes other than resale by the date the home is ready for occupancy, the date of installation is the date of closing under the purchase agreement or sales contract for the manufactured home.
</P>
<P><I>Day</I> means a calendar day.
</P>
<P><I>Defect</I> means any defect in the performance, construction, components, or material of a manufactured home that renders the home or any part of the home not fit for the ordinary use for which it was intended, including, but not limited to, a defect in the construction, safety, or installation of the home. For purposes of state certification under § 3288.205, HUD will find it acceptable if the threshold for the state's program is functionally equivalent to this definition.
</P>
<P><I>Dispute resolution provider</I> means a person or entity providing dispute resolution services for HUD.
</P>
<P><I>Homeowner</I> means a person who purchased or leased the manufactured home in good faith for purposes other than resale.
</P>
<P><I>HUD</I> means the U.S. Department of Housing and Urban Development.
</P>
<P><I>Installer</I> means the person who is retained to engage in, or who engages in, the business of directing, supervising, controlling, or correcting the initial installation of a manufactured home.
</P>
<P><I>Manufactured home</I> has the same meaning as the term “manufactured home” as defined in 24 CFR 3280.2.
</P>
<P><I>Manufactured Housing Consensus Committee or MHCC</I> means the consensus committee established pursuant to section 604(a)(3) of the Act, 42 U.S.C. 5403(a)(3).
</P>
<P><I>Party or parties</I> means, individually or collectively, the manufacturer, retailer, or installer of a manufactured home in which a defect has been reported in accordance with § 3288.20.
</P>
<P><I>State Administrative Agency</I> means an agency of a state that has been approved or conditionally approved to carry out the state plan for enforcement of the standards pursuant to section 623 of the Act, 42 U.S.C. 5422.
</P>
<P><I>Timely reporting</I> means the reporting of an alleged defect within 1 year after the date of installation of a manufactured home in accordance with § 3288.20.
</P>
<P><I>Timely resolution</I> means the resolution of disputes among manufacturers, retailers, and installers within 120 days of the time a request for dispute resolution is made, except that if the defect presents an unreasonable risk of injury, death, or significant loss or damage to valuable personal property, the resolution must be within 60 days of the time a request for dispute resolution is made.


</P>
</DIV8>


<DIV8 N="§ 3288.5" NODE="24:5.1.2.1.7.1.1.3" TYPE="SECTION">
<HEAD>§ 3288.5   Retailer notification at sale.</HEAD>
<P><I>Retailer notice at the time of signing.</I> At the time of signing a contract for sale or lease for a manufactured home, the retailer must provide the purchaser with a retailer notice. This notice may be in a separate document from the sales contract or may be incorporated clearly in a separate section on consumer dispute resolution information at the top of the sales contract. The notice must include the following language:
</P>
<EXTRACT>
<P>The U.S. Department of Housing and Urban Development (HUD) Manufactured Home Dispute Resolution Program is available to resolve disputes among manufacturers, retailers, or installers concerning defects in manufactured homes. Many states also have a consumer assistance or dispute resolution program. For additional information about these programs, see sections titled “Dispute Resolution Process” and “Additional Information—HUD Manufactured Home Dispute Resolution Program” in the Consumer Manual required to be provided to the purchaser. These programs are not warranty programs and do not replace the manufacturer's, or any other person's, warranty program.</P></EXTRACT>
</DIV8>

</DIV6>


<DIV6 N="B" NODE="24:5.1.2.1.7.2" TYPE="SUBPART">
<HEAD>Subpart B—HUD Manufactured Home Dispute Resolution Program in HUD-Administered States</HEAD>


<DIV8 N="§ 3288.10" NODE="24:5.1.2.1.7.2.1.1" TYPE="SECTION">
<HEAD>§ 3288.10   Applicability.</HEAD>
<P>The requirements of the HUD Manufactured Home Dispute Resolution Program established in this subpart B apply in each state that does not establish a state dispute resolution program that complies with the Act and has been accepted by HUD as provided in subpart D of this part.


</P>
</DIV8>


<DIV8 N="§ 3288.15" NODE="24:5.1.2.1.7.2.1.2" TYPE="SECTION">
<HEAD>§ 3288.15   Eligibility for dispute resolution.</HEAD>
<P>(a) <I>Initiation of actions.</I> Manufacturers, retailers, and installers of manufactured homes are eligible to initiate and participate in the HUD Manufactured Home Dispute Resolution Program. Homeowners may initiate action under, and be observers to, the HUD Manufactured Home Dispute Resolution Program.
</P>
<P>(b) <I>Eligible disputes.</I> Only disputes concerning alleged defects that have been reported to the manufacturer, retailer, installer, HUD, or a State Administrative Agency within 1 year after the date of the first installation of the manufactured home are eligible for resolution through the HUD Manufactured Home Dispute Resolution Program. The eligible dispute includes the defect alleged in a timely report and any related issues.


</P>
</DIV8>


<DIV8 N="§ 3288.20" NODE="24:5.1.2.1.7.2.1.3" TYPE="SECTION">
<HEAD>§ 3288.20   Reporting a defect.</HEAD>
<P>(a) <I>Making a report.</I> To preserve the right to request dispute resolution through HUD, alleged defects must be reported to the manufacturer, retailer, installer, HUD, or a State Administrative Agency. An alleged defect may be reported by a homeowner, manufacturer, retailer, or installer.
</P>
<P>(b) <I>Form of report.</I> It is recommended that alleged defects be reported in writing, including, but not limited to, e-mail, written letter, certified mail, or fax. The existence of an alleged defect may also be reported by telephone.
</P>
<P>(c) <I>Content of report.</I> No particular form or format is required to report an alleged defect, but any such report must, at a minimum, include a description of the alleged defect, the name of homeowner, and the address of the home.
</P>
<P>(d) <I>Record of report</I>—(1) <I>To evidence timeliness.</I> To establish timely reporting, the report of an alleged defect that is made to the manufacturer, retailer, installer, or a State Administrative Agency of the manufactured home should be done in a manner that will create a dated record of the report that demonstrates that the report was made within 1 year after the date of installation; for example, by certified mail, fax, or email. Persons who report an alleged defect by telephone should make a contemporaneous note of the telephone call, including date, time, the name of the person who received the report, the name of the business contacted, and the telephone number called. If the matter goes to arbitration, the arbitrator and HUD will review whether there is sufficient evidence to believe the report was made on a timely basis.
</P>
<P>(2) <I>Obligation to retain.</I> Each report of a defect, including logs of telephonic complaints, received by a manufacturer, retailer, a State Administrative Agency or installer, must be maintained for 3 years from the date of receipt.
</P>
<P>(e) <I>Reports made to a State Administrative Agency.</I> Reports of defects in the manufactured home that are made in the first year after its installation can be sent to the appropriate State Administrative Agency. Contact information about a State Administrative Agency is available at <I>http://www.hud.gov.</I> Contact the appropriate State Administrative Agency to determine the method for making the report.
</P>
<P>(f) <I>Reports made to HUD.</I> Reports of alleged defects in the manufactured home that are made in the first year after its installation can be sent to HUD. The report to HUD may be made using any of the following methods:
</P>
<P>(1) In writing at: HUD, Office of Regulatory Affairs and Manufactured Housing, Attn: Dispute Resolution, 451 Seventh Street, SW., Washington, DC 20410-8000;
</P>
<P>(2) By telephone at: (202) 708-6423 or (800) 927-2891;
</P>
<P>(3) By fax at: (202) 708-4213; or
</P>
<P>(4) By e-mail at <I>mhs@hud.gov.</I>
</P>
<P>(g) <I>Effect of report.</I> The reporting of an alleged defect does not initiate the HUD Manufactured Home Dispute Resolution Program, but only establishes whether the requirement of timely reporting in accordance with § 3288.15(b) has been met. The HUD Manufactured Home Dispute Resolution Process is initiated when a request for dispute resolution is submitted to HUD in accordance with § 3288.25.


</P>
</DIV8>


<DIV8 N="§ 3288.25" NODE="24:5.1.2.1.7.2.1.4" TYPE="SECTION">
<HEAD>§ 3288.25   Initiation of dispute resolution.</HEAD>
<P>(a) <I>Preliminary effort.</I> HUD strongly encourages the homeowner or party reporting an alleged defect to seek to resolve the dispute directly with any manufacturer, retailer, or installer that the person reporting the defect believes to be responsible before initiating the HUD dispute resolution process.
</P>
<P>(b) <I>Request for dispute resolution.</I> Any of the parties or the homeowner may initiate the HUD Manufactured Home Dispute Resolution Program at any time after an alleged defect has been reported, by requesting dispute resolution, as follows:
</P>
<P>(1) By mailing, e-mailing, or otherwise delivering a written request for dispute resolution to the dispute resolution provider at the address or e-mail address provided either at <I>http://www.hud.gov,</I> or by contacting HUD's Office of Regulatory Affairs and Manufactured Housing at (202) 708-6423 or (800) 927-2891;
</P>
<P>(2) By faxing a request for dispute resolution to the fax number provided either at <I>http://www.hud.gov,</I> or by contacting HUD's Office of Regulatory Affairs and Manufactured Housing at (202) 708-6423 or (800) 927-2891; or
</P>
<P>(3) By telephoning a request for dispute resolution to the number provided either at <I>http://www.hud.gov,</I> or by contacting HUD's Office of Regulatory Affairs and Manufactured Housing at (202) 708-6423 or (800) 927-2891.
</P>
<P>(c) <I>Requested information.</I> The dispute resolution provider will request at least the following information when a person seeks to initiate dispute resolution under the HUD Manufactured Home Dispute Resolution Program:
</P>
<P>(1) The name, address, and contact information of the homeowner;
</P>
<P>(2) The name and contact information of the manufacturer, retailer, and installer of the manufactured home, to the extent available;
</P>
<P>(3) The date the report of the alleged defect was made;
</P>
<P>(4) The name and contact information of the recipient or recipients of the report of the alleged defect;
</P>
<P>(5) The date of installation of the manufactured home affected by the alleged defect; and
</P>
<P>(6) A description of the alleged defect.


</P>
</DIV8>


<DIV8 N="§ 3288.30" NODE="24:5.1.2.1.7.2.1.5" TYPE="SECTION">
<HEAD>§ 3288.30   Screening of dispute resolution request.</HEAD>
<P>(a) <I>Review for sufficiency.</I> When the request for dispute resolution has been received by the dispute resolution provider, a screening neutral will review the sufficiency of the information provided in the request for dispute resolution and determine if the dispute resolution process should proceed. If the screening neutral determines that a defect is properly alleged and timely reported, notice of the request will be forwarded, as provided in § 3288.33, to the manufacturer, retailer, and installer, as appropriate and to the extent the appropriate parties can be identified based on the information in the request.
</P>
<P>(b) <I>Insufficient information.</I> If a request for dispute resolution is lacking any information necessary to determine if the dispute resolution process should proceed, the screening neutral will contact the requester or the parties about supplementing the initial request. If information necessary to qualify the matter for the HUD Manufactured Home Dispute Resolution Program is not received within a reasonable time established by the screening neutral, the request for dispute resolution will be considered withdrawn.
</P>
<P>(c) <I>Denial of a dispute.</I> Denial by all of the parties that there is a dispute does not preclude the dispute resolution process from going forward to mediation. A screening neutral's determination that a defect is properly alleged is prima facie evidence of a dispute. If the defect has not been corrected or repaired, the matter will be referred to mediation.
</P>
<P>(d) <I>Determination of unreasonable risk.</I> If the screening neutral determines there is sufficient documentation of an alleged defect presenting an unreasonable risk of injury or death, he or she will send a copy of the request to HUD.


</P>
</DIV8>


<DIV8 N="§ 3288.33" NODE="24:5.1.2.1.7.2.1.6" TYPE="SECTION">
<HEAD>§ 3288.33   Notice of dispute resolution.</HEAD>
<P>(a) Once the screening neutral determines that a defect is properly alleged and timely reported, notice about the request will be forwarded to the parties by overnight delivery, commercial carrier, or fax.
</P>
<P>(b) If the parties have not initiated the Alternative Process in accordance with § 3288.105 of this part within 7 days of the screening neutral's notification, the screening neutral will refer the matter to mediation.


</P>
</DIV8>


<DIV8 N="§ 3288.35" NODE="24:5.1.2.1.7.2.1.7" TYPE="SECTION">
<HEAD>§ 3288.35   Mediation.</HEAD>
<P>(a) <I>Mediator.</I> The dispute resolution provider will provide for the selection of a mediator. The selected mediator will not be the person who screened the dispute resolution request. The selected mediator will mediate the dispute and attempt to facilitate a settlement. If a party identifies any other party that should be included in the mediation, the mediator will contact the other party and provide information about the scheduled mediation meetings.
</P>
<P>(b) <I>Time</I>—(1) <I>For reaching settlement.</I> Except as provided in paragraph (b)(2) of this section, the parties are allowed 30 days from the commencement of the mediation to reach a mediated settlement. In every case, the dispute resolution provider will notify the parties and the homeowner, in writing, of the date of the commencement of the mediation.
</P>
<P>(2) <I>Alleged defects presenting an unreasonable risk of injury, death, or significant loss or damage to valuable personal property.</I> For mediations involving alleged defects that appear to present an unreasonable risk of injury, death, or significant loss or damage to valuable personal property as determined by the screening neutral, the parties have a maximum 10 days from the commencement of the mediation to reach a settlement.
</P>
<P>(3) <I>For corrective repairs.</I> Unless a longer period is agreed to in writing by the parties to the mediated settlement and the homeowner, corrective repairs must be completed no later than 30 days after the date the settlement agreement is signed by the applicable parties.
</P>
<P>(c) <I>Denial of dispute.</I> During mediation, denial of a dispute by all parties without acceptance of responsibility will result in the mediator referring the matter to arbitration for determination of the defect and responsibility for the defect.
</P>
<P>(d) <I>Written settlement agreement.</I> (1) Upon reaching an agreement, the parties will sign a written settlement agreement. The dispute resolution provider will forward copies of the agreements with the original signatures of the parties to the parties, the homeowner, and to HUD.
</P>
<P>(2) Sample agreements will be made available to the parties as drafting guidance by the dispute resolution provider.
</P>
<P>(e) <I>Failure of mediation.</I> If mediation is not successful, parties or the homeowner may proceed to nonbinding arbitration, as provided in § 3288.40 of this part.
</P>
<P>(f) <I>Confidentiality.</I> Except for the report of an alleged defect, any request for dispute resolution, and any written settlement agreement, all other documents and communications provided in confidence and used in the mediation will be confidential, in accordance with the Administrative Dispute Resolution Act of 1996 (5 U.S.C. 571 <I>et seq.</I>).


</P>
</DIV8>


<DIV8 N="§ 3288.40" NODE="24:5.1.2.1.7.2.1.8" TYPE="SECTION">
<HEAD>§ 3288.40   Nonbinding arbitration.</HEAD>
<P>(a) <I>When initiated.</I> (1) If, following mediation under § 3288.35, the parties fail to reach a settlement, any party or the homeowner may, within 15 days of the expiration of the deadline applicable under § 3288.35(b), initiate nonbinding arbitration.
</P>
<P>(2) In addition, arbitration may be initiated upon referral by the mediator pursuant to § 3288.35(c).
</P>
<P>(b) <I>Written request</I>—(1) <I>Submission to HUD.</I> A written request for arbitration must be submitted to the dispute resolution provider. Information about the dispute resolution provider and how to make a request for dispute resolution will be available at <I>http://www.hud.gov</I> or by contacting HUD's Office of Manufactured Housing Programs at (202) 708-6423 or (800) 927-2891.
</P>
<P>(2) <I>Contents of request.</I> The written request for arbitration must include:
</P>
<P>(i) The name and address of the party making the request;
</P>
<P>(ii) A brief description of the alleged defect or a copy of the report of the alleged defect; and
</P>
<P>(iii) A copy of the request for dispute resolution.
</P>
<P>(c) <I>Appointment and authority of arbitrator.</I> Upon receipt of the request, the dispute resolution provider will select an arbitrator. The arbitrator will have the authority to:
</P>
<P>(1) Set hearing dates and deadlines;
</P>
<P>(2) Conduct on-site inspections;
</P>
<P>(3) Issue requests for documentation and information necessary to complete the record;
</P>
<P>(4) Dismiss frivolous allegations;
</P>
<P>(5) Make proposed findings, including findings of defect and culpability and a disposition recommendation to HUD; and
</P>
<P>(6) Recommend apportionment of the responsibility of paying for or providing any correction or repair of the home when recommending that culpability be assessed to more than one party.
</P>
<P>(d) <I>Denial of dispute.</I> If the parties deny a dispute exists and the arbitrator determines there is a defect, the arbitrator will make a determination of responsibility for the defect.
</P>
<P>(e) <I>Notice to parties.</I> The dispute resolution provider will provide the parties and the homeowner with a notice setting forth the date, place, and time an arbitration is to be held.
</P>
<P>(f) <I>Proceedings.</I> (1) If all parties do not request an in-person hearing under paragraph (f)(2) of this section within 5 days of the dispute resolution provider's receipt of the request for arbitration, or if the arbitrator rejects the request for an in-person hearing, the arbitrator may conduct either a record review or a telephonic hearing.
</P>
<P>(2) If any party wants to request an in-person hearing, in which the parties or their representatives may personally appear before the arbitrator, the arbitrator will consider such a request if it is made by all of the parties that are participating in the arbitration. Such an in-person hearing will be held at the discretion of the arbitrator, after considering appropriate factors, such as cost.
</P>
<P>(g) <I>Effect on nonparticipating parties.</I> If a party chooses not to participate in the arbitration, the process will continue without further input from that party. In such a case, the arbitrator may rely on the record developed through the arbitration to find a nonparticipating party responsible for correction or repair of a defect.
</P>
<P>(h) <I>Completion of arbitration.</I> (1) Unless an extension is granted for good cause by HUD, the arbitrator, within 21 days of the dispute resolution provider's receipt of the request for arbitration, the arbitrator will complete the arbitration process and provide HUD with all background information used during the arbitration and with a written, nonbinding recommendation as to which party or parties are responsible for the defect, and what corrective actions should be taken.
</P>
<P>(2) Unless an extension is granted for good cause by HUD, the arbitrator, within 21 days of the dispute resolution provider's receipt of the request for arbitration, will provide the parties with a copy of the nonbinding recommendation that was delivered to HUD, in accordance with § 3288.40(h)(1).
</P>
<P>(i) <I>Settlement offers.</I> At any time before HUD issues a final order, the parties may submit to HUD a proposal to resolve the dispute.


</P>
</DIV8>


<DIV8 N="§ 3288.45" NODE="24:5.1.2.1.7.2.1.9" TYPE="SECTION">
<HEAD>§ 3288.45   HUD review and order.</HEAD>
<P>(a) <I>Appropriate order.</I> HUD will review the arbitrator's recommendation provided in accordance with § 3288.40(h), any settlement offers presented by the parties in accordance with § 3288.40(i), and the information gathered during the arbitration, and will issue an appropriate order in which HUD may accept, modify, or reject the recommendations. HUD will forward a copy of the order to the arbitrator and to each of the parties and the homeowner, whether or not a party chose to participate in the arbitration.
</P>
<P>(b) <I>Contents of order.</I> If HUD finds that a defect exists, the order will include the following:
</P>
<P>(1) Assignment of responsibility for the correction and repair of all defects and associated costs; and
</P>
<P>(2) If the manufacturer, retailer, or installer is responsible for corrective action, a date by which the correction and repair of each defect must be completed, taking into consideration the seriousness of the defect.
</P>
<P>(c) <I>Failure to comply.</I> Failure to comply with an order issued by HUD is a violation of section 610(a)(5) of the Act (42 U.S.C. 5409(a)(5)).


</P>
</DIV8>

</DIV6>


<DIV6 N="C" NODE="24:5.1.2.1.7.3" TYPE="SUBPART">
<HEAD>Subpart C—Alternative Process in HUD-Administered States</HEAD>


<DIV8 N="§ 3288.100" NODE="24:5.1.2.1.7.3.1.1" TYPE="SECTION">
<HEAD>§ 3288.100   Scope and applicability.</HEAD>
<P>The requirements of this subpart C may be followed in lieu of the requirements of subpart B of this part to resolve disputes among manufacturers, retailers, and installers of manufactured homes in any state where subpart B of this part would otherwise apply. In limited circumstances, this subpart C permits manufacturers, retailers, and installers of manufactured homes to use neutrals of their choosing to resolve disputes concerning alleged defects in manufactured homes.


</P>
</DIV8>


<DIV8 N="§ 3288.105" NODE="24:5.1.2.1.7.3.1.2" TYPE="SECTION">
<HEAD>§ 3288.105   Time when Alternative Process is available.</HEAD>
<P>(a) The Alternative Process may be invoked after an alleged defect has been reported, pursuant to § 3288.15(b). However, the Alternative Process may not be invoked more than 7 days after notification of a request for dispute resolution has been received by all of the parties. The notification must be delivered by overnight delivery, commercial carrier, or fax by the screening neutral, in accordance with § 3288.30. If within 7 days of the receipt of notification, the Alternative Process is not initiated, the screening neutral will refer the matter to the mediator. Once the Alternative Process is invoked, neither the parties nor the homeowner may invoke the Mediation and Arbitration Process in the HUD Manufactured Home Dispute Resolution Program for 30 days.
</P>
<P>(b) No particular form or format is required to provide notification for the Alternative Process, but the party or parties submitting the notification must include a statement from the parties participating in the Alternative Process stating that the homeowner is not responsible for the alleged defect and that one or more of the parties will correct or repair the defect. All required agreements are set forth in § 3288.110 of this part. The parties must also make reasonable efforts to include the following information in the notification:
</P>
<P>(1) Identification of the case; and
</P>
<P>(2) Identification of the parties participating in the Alternative Process.
</P>
<P>(c) The screening neutral will notify the parties if the case is referred to the Alternative Process for resolution.


</P>
</DIV8>


<DIV8 N="§ 3288.110" NODE="24:5.1.2.1.7.3.1.3" TYPE="SECTION">
<HEAD>§ 3288.110   Alternative Process agreements.</HEAD>
<P>(a) <I>Required agreement.</I> To use the Alternative Process, the manufacturer, retailer, and installer of the manufactured home at issue, as appropriate, must agree:
</P>
<P>(1) That there is a defect in the manufactured home;
</P>
<P>(2) That the manufacturer, retailer, or installer is responsible for the defect;
</P>
<P>(3) That the homeowner is not responsible for the defect;
</P>
<P>(4) To engage a neutral to evaluate the dispute and make an assignment of responsibility for correction and repair; and
</P>
<P>(5) To notify the homeowner of, and allow the homeowner to be present at, any meetings and to inform the homeowner of the outcome.
</P>
<P>(b) <I>Additional element of agreement.</I> In addition, the parties should agree to act upon the neutral's assignment of responsibility for correction and repair.


</P>
</DIV8>

</DIV6>


<DIV6 N="D" NODE="24:5.1.2.1.7.4" TYPE="SUBPART">
<HEAD>Subpart D—State Dispute Resolution Programs in Non-HUD Administered States</HEAD>


<DIV8 N="§ 3288.200" NODE="24:5.1.2.1.7.4.1.1" TYPE="SECTION">
<HEAD>§ 3288.200   Applicability.</HEAD>
<P>This subpart D establishes the minimum requirements that must be met by a state to implement its own dispute resolution program and therefore not be covered by the HUD Manufactured Home Dispute Resolution Program established in accordance with subpart B. The subpart also establishes the procedure for determining whether the state dispute resolution program meets the requirements of the Act for operating in lieu of the HUD Manufactured Home Dispute Resolution Program.


</P>
</DIV8>


<DIV8 N="§ 3288.205" NODE="24:5.1.2.1.7.4.1.2" TYPE="SECTION">
<HEAD>§ 3288.205   Minimum requirements.</HEAD>
<P>(a) <I>List of requirements.</I> The HUD Manufactured Home Dispute Resolution Program will not be implemented in any state that complies with the procedures of this subpart D and that has a dispute resolution program that provides for the following minimum requirements:
</P>
<P>(1) The timely resolution of disputes among manufacturers, retailers, or installers regarding responsibility for correction and repair of defects in manufactured homes;
</P>
<P>(2) The issuance of appropriate orders for correction and repair of defects in such homes;
</P>
<P>(3) A coverage period for disputes that includes at least defects that are reported within 1 year after the date of first installation; and
</P>
<P>(4) Adequate funding and personnel.
</P>
<P>(b) <I>Applicability to programs in state plans.</I> (1) In order to include a dispute resolution program in a state plan that on February 8, 2008 is fully or conditionally approved under § 3282.302 of this chapter, a state must amend its state plan to provide for the requirements of paragraphs (a)(1) through (3) of this section.
</P>
<P>(2) After February 8, 2008, a state that submits a state plan for approval in accordance with § 3282.302 of this chapter must provide for the requirements of paragraphs (a)(1) through (3) of this section in its state plan.


</P>
</DIV8>


<DIV8 N="§ 3288.210" NODE="24:5.1.2.1.7.4.1.3" TYPE="SECTION">
<HEAD>§ 3288.210   Acceptance and recertification process.</HEAD>
<P>(a) <I>Submission of certification.</I> A state seeking HUD acceptance of its state dispute resolution program under this subpart must submit to HUD a completed Dispute Resolution Certification Form, which is available by contacting HUD by telephone at (202) 708-6423 or by e-mail at <I>mhs@hud.gov.</I> The certification may be submitted as a part of, or independent of, a state plan under § 3282.302 of this chapter. If included as part of a state plan, the state does not have to separately certify that it meets the requirements of § 3288.205(a)(4).
</P>
<P>(b) <I>HUD review and action.</I> (1) HUD will review the Dispute Resolution Certification Form submitted by a state and may contact the state to request additional clarification or information as necessary. Upon completing its review, HUD will provide the state with notice of acceptance, conditional acceptance, or rejection of its dispute resolution program.
</P>
<P>(2) A notice of acceptance will include the date of acceptance.
</P>
<P>(3) If HUD rejects a state's dispute resolution program, HUD will provide an explanation of what is necessary to obtain full acceptance. A revised Dispute Resolution Certification Form may be submitted within 30 days of receipt of such notification. If the revised Dispute Resolution Certification Form is inadequate or if the state fails to resubmit within the 30-day period or otherwise indicates that it does not intend to change its Dispute Resolution Certification Form, HUD will notify the state that its dispute resolution program is not accepted and that it has a right to a hearing on the rejection using the procedures set forth under subpart D of part 3282 of this chapter.
</P>
<P>(c) <I>Conditional acceptance.</I> A state meeting three of the four minimum requirements set forth under § 3288.205(a)(1) through (4) will be conditionally accepted by HUD. If HUD conditionally accepts a state's dispute resolution program, HUD will provide an explanation of what is necessary to obtain full acceptance. A revised Dispute Resolution Certification Form may be submitted within 30 days of receipt of such notification. Any state conditionally accepted will be permitted to implement its own dispute resolution program for a period of not more than 3 years, absent extension of this period by HUD.
</P>
<P>(d) <I>Revocation.</I> If HUD becomes aware at any time that a state no longer meets the minimum requirements set forth under § 3288.205, HUD may revoke acceptance of the state's certification after an opportunity for a hearing, using the procedures set forth under subpart D of part 3282.
</P>
<P>(e) <I>Recertification of a program not included in state plan.</I> Except as provided in paragraph (f), to maintain its accepted status, a state whose program is not included in an approved or conditionally approved state plan must submit a current Dispute Resolution Certification Form to HUD for review and acceptance as follows:
</P>
<P>(1) Every 3 years within 90 days of the day and month of the most recent date of HUD's acceptance of the state's program or
</P>
<P>(2) Whenever there is a significant change to the program.
</P>
<P>(f) <I>Inclusion in state plan.</I> If a state dispute resolution program is part of a state plan, it will be reviewed annually as part of the state plan and separate recertification of the state's dispute resolution program is not required.


</P>
</DIV8>


<DIV8 N="§ 3288.215" NODE="24:5.1.2.1.7.4.1.4" TYPE="SECTION">
<HEAD>§ 3288.215   Effect on other manufactured home program requirements.</HEAD>
<P>A state with an accepted dispute resolution program will operate in lieu of HUD's Manufactured Home Dispute Resolution Program established under subpart B of this part 3288. A state dispute resolution program, even if it is an accepted dispute resolution program under this part, does not supersede the requirements applicable to any other aspect of HUD's manufactured home program. Any responsibilities, rights, and remedies applicable under the Manufactured Home Construction and Safety Standards in part 3280 of this chapter and the Manufactured Home Procedural and Enforcement Regulations in part 3282 of this chapter continue to apply as provided in those parts in all states.


</P>
</DIV8>

</DIV6>


<DIV6 N="E" NODE="24:5.1.2.1.7.5" TYPE="SUBPART">
<HEAD>Subpart E—Dispute Resolution Program Rulemaking Procedures</HEAD>


<DIV8 N="§ 3288.300" NODE="24:5.1.2.1.7.5.1.1" TYPE="SECTION">
<HEAD>§ 3288.300   Applicability.</HEAD>
<P>This subpart establishes special regulatory procedures for issuing or revising dispute resolution program regulations as codified in this part.


</P>
</DIV8>


<DIV8 N="§ 3288.305" NODE="24:5.1.2.1.7.5.1.2" TYPE="SECTION">
<HEAD>§ 3288.305   Consultation with the Manufactured Housing Consensus Committee.</HEAD>
<P>HUD will seek input from the MHCC when revising the HUD Manufactured Home Dispute Resolution Program regulations in this part 3288. Before publication of a proposed rule to revise these regulations, HUD will provide the MHCC with an opportunity to comment on such revision. The MHCC may send to HUD any of the MHCC's own recommendations to adopt new dispute resolution program regulations or to modify or repeal any of the regulations in this part. Along with each recommendation, the MHCC must set forth pertinent data and arguments in support of the action sought. HUD will either: accept or modify the recommendation and publish it for public comment in accordance with section 553 of the Administrative Procedure Act (5 U.S.C. 553), along with an explanation of the reasons for any such modification; or reject the recommendation entirely, and provide to the MHCC a written explanation of the reasons for the rejection. This section does not supersede section 605 of the National Manufactured Housing Construction and Safety Standards Act of 1974 (42 U.S.C. 5404).


</P>
</DIV8>

</DIV6>

</DIV5>


<DIV5 N="3289-3799" NODE="24:5.1.2.1.8" TYPE="PART">
<HEAD>PARTS 3289-3799 [RESERVED]


</HEAD>
</DIV5>


<DIV5 N="3800" NODE="24:5.1.2.1.9" TYPE="PART">
<HEAD>PART 3800—INVESTIGATIONS IN CONSUMER REGULATORY PROGRAMS
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>12 U.S.C. 2601 <I>et seq.;</I> 15 U.S.C. 1714; 42 U.S.C. 3535(d) and 5413. 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>61 FR 10441, Mar. 13, 1996, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 3800.10" NODE="24:5.1.2.1.9.0.1.1" TYPE="SECTION">
<HEAD>§ 3800.10   Scope of rules.</HEAD>
<P>This part applies to investigations and investigational proceedings undertaken by the Secretary, or the Secretary's designee, pursuant to the following: 
</P>
<P>(a) The Interstate Land Sales Full Disclosure Act, 15 U.S.C. 1701 <I>et seq.;</I> 
</P>
<P>(b) The National Manufactured Housing Construction and Safety Standards Act of 1974, 42 U.S.C. 5401 <I>et seq.;</I> and 
</P>
<P>(c) The Real Estate Settlement Procedures Act of 1974, 12 U.S.C. 2601 <I>et seq.</I> 


</P>
</DIV8>


<DIV8 N="§ 3800.20" NODE="24:5.1.2.1.9.0.1.2" TYPE="SECTION">
<HEAD>§ 3800.20   Subpoenas in investigations.</HEAD>
<P>(a) The Secretary may issue subpoenas relating to any matter under investigation. A subpoena may: 
</P>
<P>(1) Require testimony to be taken by interrogatories; 
</P>
<P>(2) Require the attendance and testimony of witnesses at a specific time and place; 
</P>
<P>(3) Require access to, examination of, and the right to copy documents; and 
</P>
<P>(4) Require the production of documents at a specific time and place. 
</P>
<P>(b) A subpoenaed person may petition the Secretary or the Secretary's designee to modify or withdraw a subpoena by filing the petition within 10 days after service of the subpoena. The petition may be in letter form, but must set forth the facts and law upon which the petition is based. 


</P>
</DIV8>


<DIV8 N="§ 3800.30" NODE="24:5.1.2.1.9.0.1.3" TYPE="SECTION">
<HEAD>§ 3800.30   Subpoena enforcement in district court.</HEAD>
<P>In the case of contumacy of a witness or a witness's refusal to obey a subpoena or order of the Secretary, the United States district court for the jurisdiction in which an investigation is carried on may issue an order requiring compliance with the subpoena. HUD headquarters in Washington, DC, is one of the locations in which the Secretary carries on investigations of its consumer regulatory programs. 


</P>
</DIV8>


<DIV8 N="§ 3800.40" NODE="24:5.1.2.1.9.0.1.4" TYPE="SECTION">
<HEAD>§ 3800.40   Investigational proceedings.</HEAD>
<P>(a) For the purpose of hearing the testimony of witnesses and receiving documents and other data relating to any subject under investigation, the Secretary, or the Secretary's designee, may conduct an investigational proceeding. 
</P>
<P>(b) The Secretary, or the Secretary's designee, (“presiding official”) shall preside over the investigational proceeding. The proceeding shall be stenographically or mechanically reported. A transcript shall be a part of the record of the investigation. 
</P>
<P>(c) Unless the presiding official determines otherwise, investigational proceedings shall be public. 
</P>
<P>(d) The presiding official shall take all necessary action to regulate the course of the proceeding to avoid delay and to maintain order. If necessary to maintain order, the presiding official may exclude a witness or counsel from a proceeding. The Department may also take further action as permitted by statute. 


</P>
</DIV8>


<DIV8 N="§ 3800.50" NODE="24:5.1.2.1.9.0.1.5" TYPE="SECTION">
<HEAD>§ 3800.50   Rights of witnesses in investigational proceedings.</HEAD>
<P>(a) Any person who testifies at a public investigational proceeding shall be entitled, on payment of costs, to purchase a copy of a transcript of the testimony the person provided. 
</P>
<P>(b) In a nonpublic investigational proceeding, the presiding official may for good cause limit a witness to an inspection of the official transcript of that witness's testimony. 
</P>
<P>(c) Any person subpoenaed to appear at an investigational proceeding may be represented by counsel as follows: 
</P>
<P>(1) With respect to any question asked of a witness, a witness may obtain confidential advice from counsel; 
</P>
<P>(2) If a witness refuses to answer a question, counsel for the witness may briefly state the legal grounds for the refusal; 
</P>
<P>(3) Counsel for the witness may object to a question or a request for production of documents that is beyond the scope of the investigation or for which a privilege of the witness to refuse to answer may be invoked. In so doing, counsel for the witness may state briefly the grounds for the objection. Objections will be deemed continuing throughout the course of the proceeding. Repetitious or cumulative statements of an objection or the grounds for an objection are unnecessary and impermissible; and 
</P>
<P>(4) After the Department's examination of a witness, counsel for the witness may request that the witness be permitted to clarify any answers to correct any ambiguity, equivocation, or incompleteness in the witness's testimony. The decision to grant or deny this request is within the sole discretion of the presiding official. 


</P>
</DIV8>


<DIV8 N="§ 3800.60" NODE="24:5.1.2.1.9.0.1.6" TYPE="SECTION">
<HEAD>§ 3800.60   Settlements.</HEAD>
<P>(a) At any time during an investigation, the Department and the parties subject to an investigation may conduct settlement negotiations. 
</P>
<P>(b) When the Secretary or Secretary's designee deems it appropriate, the Department may enter into a settlement agreement.


</P>
</DIV8>

</DIV5>


<DIV5 N="3801-3899" NODE="24:5.1.2.1.10" TYPE="PART">
<HEAD>PARTS 3801-3899 [RESERVED]




</HEAD>
</DIV5>

</DIV3>


<DIV3 N="XXV" NODE="24:5.1.3" TYPE="CHAPTER">

<HEAD> CHAPTER XXV—NEIGHBORHOOD REINVESTMENT CORPORATION</HEAD>

<DIV5 N="4100" NODE="24:5.1.3.1.1" TYPE="PART">
<HEAD>PART 4100—ORGANIZATION AND CHANNELING OF FUNCTIONS
</HEAD>
<AUTH>
<HED>Authority:</HED><PSPACE>Title VI, Pub. L. 95-557, 92 Stat. 2115 (42 U.S.C. 8101 <I>et seq.</I>); as amended by sec. 315, Pub. L. 96-399, 94 Stat. 1645; sec. 710, Pub. L. 97-320, 96 Stat. 1544; and sec. 520, Pub. L. 100-242, 101 Stat. 1815. 
</PSPACE></AUTH>
<SOURCE>
<HED>Source:</HED><PSPACE>49 FR 12700, Mar. 30, 1984, unless otherwise noted.


</PSPACE></SOURCE>

<DIV8 N="§ 4100.1" NODE="24:5.1.3.1.1.0.1.1" TYPE="SECTION">
<HEAD>§ 4100.1   Functions and activities.</HEAD>
<P>(a) <I>General statement.</I> The Neighborhood Reinvestment Corporation (referred to in this part as <I>the Corporation</I>) was established by Congress in the Neighborhood Reinvestment Corporation Act (title VI of the Housing and Community Development Amendments of 1978, Pub. L. 95-557, October 31, 1978). The Corporation is not a department, agency, or instrumentality of the Federal Government.
</P>
<P>(b) The Corporation is authorized to receive and expend Federal appropriations and other public and private revenues to conduct a variety of programs designed primarily to revitalize older urban neighborhoods by mobilizing public, private, and community resources at the neighborhood level. These programs include:
</P>
<P>(1) <I>Neighborhood Housing Services.</I> The major effort of the Corporation is to assist local communities in the development, expansion and provision of technical services to local Neighborhood Housing Services (NHS) programs. NHS programs are based upon partnerships of community residents, and representatives of local governments and financial institutions. Each local program is administered by an autonomous, private, non-profit corporation, and conducts a comprehensive revitalization effort in locally selected neighborhoods. Services to neighborhood residents include rehabilitation counseling, construction assistance, financial counseling, loan referrals and loans at flexible rates and terms to homeowners who do not meet private lending criteria. Programs and strategies to remove blighting influences, obtain improved public services and amenities, and improve the neighborhood's image and the functioning of its real estate market are also undertaken. To insure the continuing effectiveness of NHS programs, the Corporation provides grants, training, information and technical services to NHS programs.'
</P>
<P>(2) <I>Mutual Housing Associations.</I> The Corporation also supports the organizational development of, and provides technical assistance to, Mutual Housing Associations. Mutual Housing Associations are private, nonprofit organizations which own, manage and continually develop affordable housing. Mutual Housing residents are members of the Association which owns and manages their buildings; thus they enjoy the security of long-term housing tenure. Mutual Housing developments are capitalized through up-front grants and mortgages in a combination that ensures permanent affordability to low- and moderate-income families. Monthly housing charges to residents are kept at affordable levels on a continuing basis. A key element of Mutual Housing is the Association's commitment to use all resources in excess of operating and maintenance costs for the production of additional units. A Mutual Housing Association's board of directors includes current member-residents, potential residents, and representatives from the community, local government and business. Residents and community members make up the majority on the board. A highly qualified professional staff, employed by the Mutual Housing Association, carries out the day-to-day activities of the organization. In addition to creating new affordable housing opportunities, Mutual Housing Associations offer a creative alternative for subsidized rental housing developments whose subsidies are scheduled to expire.
</P>
<P>(3) <I>Neighborhood preservation projects.</I> The Corporation identifies, monitors, evaluates and supports through demonstration grants and technical assistance other promising neighborhood preservation strategies based on local, public-private partnerships.
</P>
<P>(4) <I>Programmatic supplements.</I> Proven, replicable programmatic tools are offered as broadly as resources permit. Often, these selected strategies are supported by Neighborhood Reinvestment grants. The Corporation's major programmatic supplements include the following: 
</P>
<P>(i) <I>Neighborhood economic development and commercial revitalization strategies.</I> The Corporation's neighborhood economic development and commercial revitalization strategies offer NHSs a variety of tools designed to stabilize and enhance the economic base of NHS neighborhoods. They complement NHSs' revitalization mission by focusing the energies and resources of the partnership on the economic issues underlying neighborhood decline. Neighborhood economic development and commercial revitalization assures a viable neighborhood economy by strengthening small businesses and improving the physical environment of the area, thus providing additional goods, services, and employment opportunities for the community. 
</P>
<P>(ii) <I>Housing Development Strategies.</I> The Corporation's Housing Development Strategies program addresses the shortage of affordable, quality housing available to low to moderate income families in NHS neighborhoods, as well as the blighting effect of vacant lots and substandard properties. Home ownership opportunities are created through the planning and implementation of a variety of housing mechanisms by the NHS, which are intended to reverse negative real estate market trends, enhance new residential growth, and create renewed neighborhood pride. The mechanisms being used to achieve these goals include the following. 
</P>
<P>(A) The Owner Built Housing program is a supervised housing construction process that helps moderate-income homeowners to collectively build their own homes. The NHS provides technical assistance while private lenders and public bodies providing financing. 
</P>
<P>(B) The Owner Rehab Housing program assists low to moderate income families in collectively rehabilitating existing blighted and vacant structures. 
</P>
<P>(C) The Infill Housing program provides a mechanism for assisting NHSs in building new units on vacant land to meet the needs of prospective lower income homeowners. 
</P>
<P>(D) The Urban Subdivisions program focuses on providing low cost, new housing for low-to-moderate income families on tracts of land suitable for the construction of 20 or more units. 
</P>
<P>(iii) <I>Problem properties strategies.</I> This program assists NHSs in addressing specific problem areas beyond the scope of basic NHS services and typical financial resources. Through the implementation of various problem properties strategies, NHS programs are able to assist tenants to purchase, improve the physical condition of target blocks, eliminate vacant neighborhood eyesores, develop housing and service facilities for special populations, and stimulate private reinvestment and new conventional mortgages in the NHS community. 
</P>
<P>(5) <I>Apartment Improvement Program.</I> The goal of the Apartment Improvement Program is to provide an effective, economical means of revitalizing and preserving neighborhoods with multi-family housing for the benefit of the current residents. The program is based upon a partnership of tenants and community representatives, property owners and managers, financial institutions and local government. The program assists in the development of an individually tailored improvement plan of activities from which each building may benefit, including tenant participation, tax assessment reviews, and increased investment or restructured mortgages to improve the economic viability of the buildings and to finance improvements.
</P>
<P>(6) <I>Neighborhood Housing Services of America.</I> The Corporation also supports Neighborhood Housing Services of America (NHSA), an independent, private, non-profit corporation which provides a variety of services to local NHS programs, including a secondary market for NHS revolving loan fund loans, and the strengthening of private sector resources available to the network of local NHSs.
</P>
<CITA TYPE="N">[49 FR 12700, Mar. 30, 1984, as amended at 54 FR 13061, Mar. 30, 1989]


</CITA>
</DIV8>


<DIV8 N="§ 4100.2" NODE="24:5.1.3.1.1.0.1.2" TYPE="SECTION">
<HEAD>§ 4100.2   General organization.</HEAD>
<P>(a) <I>The Board of Directors.</I> (1) The Corporation is under the direction of a Board of Directors composed of six members: the Chairman of the Federal Home Loan Bank Board or a member of the Federal Home Loan Bank Board designated by the Chairman; the Secretary of Housing and Urban Development; the Chairman of the Board of Governors of the Federal Reserve System, or a member of the Board of Governors of the Federal Reserve System designated by the Chairman; the Chairman of the Federal Deposit Insurance Corporation or the appointive member of the Board of Directors of the Federal Deposit Insurance Corporation if so designated by the Chairman; the Comptroller of the Currency; and the Chairman of the National Credit Union Administration, or a member of the Board of the National Credit Union Administration designated by the Chairman. Members of the Board serve without additional compensation. The Board elects from among its members a Chairman and Vice-Chairman. The Bylaws of the Corporation provide for the creation of an Audit Committee, and such other committees as the Board may from time to time establish.
</P>
<P>(2) The Board holds an Annual Meeting each year during the month of May (or as the Bylaws or the Board may specify). The Board also holds regular meetings at least quarterly and special meetings as required. The meetings of the Board are conducted in accordance with provisions of the Neighborhood Reinvestment Corporation Act, the Government in the Sunshine Act (5 U.S.C. 552b), the Corporation's Bylaws, and when not inconsistent with the foregoing, with Robert's Rules of Order. Every portion of every meeting of the Board is open to public observation except as provided by the Government in the Sunshine Act. Interested members of the public may attend such meetings, but may not participate therein unless invited or permitted to do so by the Board.
</P>
<P>(3) The Secretary of the Corporation, in consultation with the Corporation's General Counsel, is responsible for taking such steps as are required to ensure the Corporation's compliance with the Government in the Sunshine Act, as that Act may be amended from time to time. Consistent with this responsibility, the Secretary of the Corporation provides to the Communications Department at the principal office of the Corporation such records as the Act requires to be made available to the public for access during regular office hours on regular business days.
</P>
<P>(b) <I>The Officers.</I> (1) The officers of the Corporation are the Executive Director, the Deputy Executive Director, the Secretary, the Treasurer, and such other officer positions as the Board may, in consultation with the Executive Director, create. The Board elects the officers of the Corporation annually.
</P>
<P>(2) The Neighborhood Reinvestment Corporation Act provides that the Executive Director shall serve as the chief executive officer of the Corporation. Consistent with that authority, the Corporation's Bylaws provide that the Executive Director shall have the responsibility and authority for the day-to-day administration of the affairs of the Corporation under the general supervision of the Board. The Board periodically reviews the activities of the Executive Director and, from time to time, provides guidance and policy direction to the Executive Director in the exercise of his or her authority.
</P>
<P>(3) The responsibilities and authorities of the other officers of the Corporation are set forth in the Corporation's Bylaws, resolutions and policies adopted by the Board, duties and authorities delegated to each officer, other statutes and this statement. (See, for example, the Government in the Sunshine Act and paragraph (a)(3) of this section for specific duties of the Secretary and General Counsel.)
</P>
<P>(c) <I>Principal office.</I> The Corporation maintains its principal office in the District of Columbia. Currently, the principal office is maintained at 1325 G Street NW., Suite 800, Washington, DC 20005. 
</P>
<CITA TYPE="N">[49 FR 12700, Mar. 30, 1984, as amended at 54 FR 13062, Mar. 30, 1989]


</CITA>
</DIV8>


<DIV8 N="§ 4100.3" NODE="24:5.1.3.1.1.0.1.3" TYPE="SECTION">
<HEAD>§ 4100.3   Field activities.</HEAD>
<P>The Corporation conducts its field activities from district and field offices around the country. District offices provide coordination of field activities in support of local programs within the geographic limits of each district. Field offices within each district provide assistance in the development and support of local programs. A current directory of all district and field offices can be obtained upon request from the Communications Department, Neighborhood Reinvestment Corporation, 1325 G Street NW., Suite 800, Washington, DC 20005.
</P>
<CITA TYPE="N">[49 FR 12700, Mar. 30, 1984, as amended at 54 FR 13061, Mar. 30, 1989]


</CITA>
</DIV8>


<DIV8 N="§ 4100.4" NODE="24:5.1.3.1.1.0.1.4" TYPE="SECTION">
<HEAD>§ 4100.4   Inquiries.</HEAD>
<P>(a) <I>General.</I> All requests for information, forms, and records should be addressed to: Communications Department, Neighborhood Reinvestment Corporation, 1325 G Street NW., Suite 800, Washington, DC 20005. 
</P>
<P>(b) <I>Applications.</I> Applications for the Corporation's assistance in the development of NHS programs and complementary programs and strategies, or the support of other promising neighborhood strategies are accepted on an ongoing basis. Local governmental or nonprofit entities should submit completed applications (forms are available upon request), including supportive materials, to the Corporation at the address stated in paragraph (a) of this section. The Corporation reviews applications to determine their readiness for development or support. Promising applications are selected for field reviews. Subject to the availability of the Corporation's resources, the Corporation may enter into agreements with top ranking applicants to provide financial and technical assistance in the development or support of selected programs. The application form contains a list of the criteria used for determining the readiness and promise of applications.
</P>
<P>(c) <I>Records.</I> (1) The Corporation maintains such records and information for public inspection and copying as are required by the Freedom of Information Act (5 U.S.C. 552), as that Act may be amended from time to time. Records are available for public inspection and copying during regular business hours on regular business days at the address stated in paragraph (a) of this section. Requests for records should be submitted in writing and state the full name and address of the person requesting the records and a description of the records or other information sought that is reasonably sufficient to permit their identification without undue difficulty. A request should be submitted sufficiently in advance of the date inspection or copying is desired, preferably by mail. 
</P>
<P>(2) Although the Corporation finds that the publication of indexes of statements of policy and interpretations or administrative staff manuals and instructions would be unnecessary and impracticable, such information will be made available upon request. 
</P>
<P>(d) <I>Fees for providing copies for records.</I> Fees shall be assessed pursuant to the Freedom of Information Act (5 U.S.C. 552) in order to recover the full allowable direct costs of providing copies of records. For purposes of this section, the term <I>direct costs</I> means those expenditures which the Corporation actually incurs in searching for and duplicating (and in the case of commercial use requesters, reviewing) documents to respond to a Freedom of Information Act (“FOIA”) request. Direct costs include, for example, the salaries of the employees performing the work (the basic rate of pay plus 16 percent of that rate to cover benefits) and the cost of operating duplicating equipment. The term <I>search</I> includes all time spent looking for material that is responsive to a request, including page-by-page or line-by-line identification of material within documents. Searches may be done manually or by computer using existing programming. The term <I>duplication</I> refers to the process of making a copy of a document necessary to respond to a FOIA request. Such copies can take the form of paper copy, microfilm, audiovisual materials, or machine readable documentation (e.g., magnetic tape or disk), among others. The term <I>review</I> refers to the process of examining documents located in response to a commercial use request to determine whether any portion of any document is permitted to be withheld. It also includes processing any documents for disclosure, e.g., doing all that is necessary to exise them and otherwise prepare them for release. Review does not include time spent resolving general legal or policy issues regarding the application of exemptions. A schedule based on these principles is set forth in paragraph (d)(9) of this section.
</P>
<P>(1) <I>Categories of requesters.</I> Fees will be assessed according to the category of the requester. There are four categories:
</P>
<P>(i) <I>Commercial use requesters.</I> For purposes of this section, the term <I>commercial use request</I> refers to a request from or on behalf of one who seeks information for a use or purpose that furthers the commercial, trade, or profit interests of the requester or the person on whose behalf the request is made. In determining whether a requester properly belongs in this category, the Corporation will look to the use to which the requester will put the documents requested. If the use is not clear from the request itself, or if there is reasonable cause to doubt the requester's stated use, the Corporation shall seek additional clarification before assigning the request to a specific category.
</P>
<P>(ii) <I>Educational and noncommercial scientific institution requesters.</I> For purposes of this section, the term <I>educational institution</I> refers to a preschool, a public or private elementary or secondary school, an institution of graduate higher education, an institution of undergraduate higher education, an institution of professional education, or an institution of vocational education, which operates a program or programs of scholarly research. The term <I>noncommercial scientific institution</I> refers to an institution that is not operated on a <I>commercial</I> basis, as that term is used in paragraph (d)(1)(i) of this section, and which is operated solely for the purpose of conducting scientific research the results of which are not intended to promote any particular product or industry. To be eligible for inclusion in this category, requesters must show that the request is made as authorized by and under the auspices of a qualifying institution, and that the records are not sought for a commercial use, but are sought in furtherance of scholarly (if the request is from an educational institution) or scientific (if the request is from a noncommercial scientific institution) research.
</P>
<P>(iii) <I>Requesters who are representatives of the news media.</I> For purposes of this section, the term <I>representative of the news media</I> refers to any person actively gathering information for an entity that is organized and operated to publish or broadcast news to the public. Examples of news media entities include television or radio stations broadcasting to the public at large, and publishers of periodicals (but only in those instances when they can qualify as disseminators of <I>news</I>) who make their products available for purchase or subscription by the general public. These examples are not intended to be all-inclusive. In the case of <I>freelance</I> journalists, they may be regarded as working for a news organization if they demonstrate a solid basis for expecting publication through that organization, even though not actually employed by it. A publication contract would be the clearest proof, but the Corporation may also look at the past publication record of a requester in making this determination. To be eligible for inclusion in this category, a requester must meet the criteria above, and his or her request must not be made for a commercial use. In reference to this class of requester, a request for records supporting the news dissemination function of the requester shall not be considered to be a request that is for a commercial use.
</P>
<P>(iv) All other requesters.
</P>
<P>(2) <I>Limitations on fees to be charged</I>—(i) <I>Commercial use requesters.</I> Commercial use requesters shall be assessed the full direct costs for searching for, reviewing, and duplicating records, in accordance with the fee schedule at paragraph (d)(9) of this section. Commercial use requesters are not entitled to the free search time or free pages of duplication provided to other categories of requesters.
</P>
<P>(ii) <I>Educational and noncommercial scientific institution requesters.</I> Requesters in this category may be assessed fees only for duplication of records in excess of the first 100 pages. Requesters in this category may not be assessed fees for search or review.
</P>
<P>(iii) <I>Requesters who are representatives of the news media.</I> Requesters in this category may be assessed fees only for duplication of records in excess of the first 100 pages. Requesters in this category may not be assessed fees for research or review.
</P>
<P>(iv) <I>All other requesters.</I> Requesters who do not fit into any of the categories above shall be assessed fees only for searching and duplicating records, except that the first 100 pages of duplication and the first two hours of search time shall be furnished without charge. Requesters in this category may not be assessed fees for review.
</P>
<P>(v) <I>Review of records.</I> Charges will be assessed only for the initial review of the located documents and not for time spent at the administrative appeal level on an exemption applied at the initial determination level. However, where records or portions of records are withheld in full under an exemption which is subsequently determined not to apply, and these records are reviewed again to determine the applicability of other exemptions not previously considered, charges for review are properly assessable.
</P>
<P>(vi) <I>Additional copies.</I> The Corporation will normally furnish only one copy of any record. The allowance of 100 free pages of duplication under paragraphs (d)(2) (ii), (iii), and (iv) of this section shall not apply to additional copies furnished at the request of the record requester. Full duplication fees shall be assessed for each page of each such additional copy.
</P>
<P>(3) <I>Charges for unsuccessful search.</I> Where applicable under paragraph (d)(2) of this section search fees may be assessed for time spent searching, even if the Corporation fails to locate the records or if records located are determined to be exempt from disclosure.
</P>
<P>(4) <I>Notice of anticipated fees in excess of $25.00.</I> Unless the person making the request states in his or her initial request that he or she will pay all costs regardless of amount, the Corporation will notify him or her as soon as possible if there is reason to believe that the cost for obtaining access to and/or copies of such records will exceed $25. If such notice is given, the time limitations contained in the Freedom of Information Act shall not commence until the person making the intitial request agrees in writing to pay such cost.
</P>
<P>(5) <I>Advance payments.</I> The Communications Director is authorized to require an advance payment of an amount up to the full estimated charges whenever he or she determines that:
</P>
<P>(i) The allowable charges that a requester may be required to pay are likely to exceed $250 and the requester has no history of payment and cannot provide satisfactory assurance that payment will be made; or
</P>
<P>(ii) A requester has previously failed to pay a fee charged in a timely manner.
</P>
<FP>If such a payment is required, the time limitations contained in the Freedom of Information Act shall not commence until payment is made.
</FP>
<P>(6) <I>Charging interest.</I> The Corporation will assess interest charges on any unpaid fees starting on the 31st day following the day on which the billing for fees was sent to the requester. Interest will be at the rate prescribed in 31 U.S.C. 3717 and will accrue from the date of the billing. Receipt of the fee by the Corporation, even if not processed, will stay the accrual of interest. Interest is not chargeable for unpaid advance payments under paragraph (d)(5) of this section.
</P>
<P>(7) <I>Aggregating requests.</I> A requester may not file multiple requests at the same time, each seeking portions of the document or documents, solely in order to avoid payment of fees. When the Corporation reasonably believes that a requester, or a group of requesters acting in concert, is attempting to break a request down into a series of requests for the purpose of evading the assessment of fees, the Corporation may aggregate any such requests and charge accordingly.
</P>
<P>(8) <I>Waiver or reduction of fee.</I> The Corporation will furnish documents without charge or at a reduced charge when it is determined that disclosure of the information is in the public interest because it is likely to contribute significantly to public understanding of the operations or activities of the Corporation and is not primarily in the commercial interest of the requester. In making a request for a waiver or reduction of fees, a requester should include a clear statement of his or her interest in the requested documents: The proposed use for the documents and whether the requester will derive income or other benefit from such use; and a statement of how the public will benefit from such use. Determinations concerning waiver or reduction of fees shall be made by the Executive Director, or his or her designee.
</P>
<P>(9) <I>Schedule of fees.</I> Fees for searching for, reviewing, duplicating, and providing records and information of the Corporation under this section will be assessed in accordance with the following schedule:
</P>
<P>(i) <I>Manual search.</I> For each quarter hour or fraction thereof: $3.37.
</P>
<P>(ii) <I>Computer search.</I> For each quarter hour or fraction thereof: $3.37.
</P>
<P>(iii) <I>Review.</I> For each quarter hour or fraction thereof: $4.87.
</P>
<P>(iv) <I>Duplication.</I> 
</P>
<P>(A) For a paper photocopy of an existing paper record, $.10 per page.
</P>
<P>(B) For duplication of records other than existing paper records (such as computer-stored information, audio or video tapes, microfiche or microfilm), the fee shall equal the actual direct cost of production and duplication of the records or information in a form that is reasonably usable by the requester.
</P>
<P>(10) <I>Processing costs.</I> The Communications Director will waive payment in instances in which the costs of routine collection and processing of the fee are likely to equal or exceed the amount of the fee.
</P>
<CITA TYPE="N">[49 FR 12700, Mar. 30, 1984, as amended at 54 FR 50953, Dec. 19, 1989]


</CITA>
</DIV8>

</DIV5>


<DIV5 N="4101-4199" NODE="24:5.1.3.1.2" TYPE="PART">
<HEAD>PARTS 4101-4199 [RESERVED]


</HEAD>
</DIV5>

</DIV3>

</DIV2>

</DIV1>

</ECFRBRWS>
</BODY>
</TEXT>
</DLPSTEXTCLASS>
